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LOANS
 12 Months Ended
Dec. 31, 2022
Receivables [Abstract]  
LOANS (excluding covered loans) Loans and Leases
First Financial offers clients a variety of commercial and consumer loan and lease products with various interest rates and payment terms. Commercial loan categories include C&I, CRE, construction real estate and lease financing. Consumer loan categories include residential real estate, home equity, installment and credit card.

Lending activities are primarily concentrated in states where the Bank operates banking centers (Ohio, Indiana, Kentucky and Illinois). First Financial also offers two nationwide lending platforms, one that provides equipment and leasehold improvement financing for franchisees in the quick service and casual dining restaurant sector and another that provides loans that are secured by commissions and cash collateral accounts to insurance agents and brokers.

In accordance with the CARES Act and the 2021 Consolidated Appropriations Act, First Financial participated in offering PPP loans to its customers. These loans provide a direct incentive for small businesses to keep their workers on the payroll and to maintain their operations during the COVID-19 pandemic. PPP loans are eligible to be forgiven provided certain conditions are met. As of December 31, 2022, First Financial had $3.0 million in PPP loans, net of unearned fees of $0.1 million. As of December 31, 2021, First Financial had $55.6 million in PPP loans, net of unearned income of $2.6 million.

Credit quality. To facilitate the monitoring of credit quality for commercial loans, First Financial utilizes the following categories of credit grades:

Pass - Higher quality loans that do not fit any of the other categories described below.

Special Mention - First Financial assigns a special mention rating to loans and leases with potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or in First Financial's credit position at some future date.

Substandard - First Financial assigns a substandard rating to loans or leases that are inadequately protected by the current sound financial worth and paying capacity of the borrower or the collateral pledged, if any. Substandard loans and leases have well-defined weaknesses that jeopardize repayment of the debt. Substandard loans and leases are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not addressed.

Doubtful - First Financial assigns a doubtful rating to loans and leases with all of the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

The credit grades previously described are derived from standard regulatory rating definitions and are assigned upon initial approval of credit to borrowers and updated periodically thereafter.

First Financial considers repayment performance to be the best indicator of credit quality for consumer loans. Consumer loans that have principal and interest payments that are past due by 90 days or more are generally classified as nonperforming. Additionally, consumer loans that have been modified in a TDR are classified as nonperforming.
The following table sets forth the Company's loan portfolio at December 31, 2022 by risk attribute and origination date:
(Dollars in thousands)20222021202020192018PriorTerm TotalRevolvingTotal
Commercial & industrial
Pass$879,836 $561,890 $348,123 $209,758 $112,282 $206,656 $2,318,545 $971,080 $3,289,625 
Special mention2,740 13,821 4,125 14,047 8,523 5,544 48,800 18,055 66,855 
Substandard2,335 5,176 11,886 8,016 3,331 13,812 44,556 9,236 53,792 
Doubtful0 0 0 0 0 0 0 0 0 
Total$884,911 $580,887 $364,134 $231,821 $124,136 $226,012 $2,411,901 $998,371 $3,410,272 
Lease financing
Pass$167,035 $25,638 $13,705 $12,797 $9,402 $2,930 $231,507 $0 $231,507 
Special mention007000070070
Substandard4,363001641194,54704,547
Doubtful000000000
Total$171,398 $25,638 $13,775 $12,961 $9,413 $2,939 $236,124 $0 $236,124 
Construction real estate
Pass$89,116 $276,639 $96,823 $4,902 $390 $353 $468,223 $23,266 $491,489 
Special mention0 14,395 0 0 6,166 0 20,561 0 20,561 
Substandard0 0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 0 
Total$89,116 $291,034 $96,823 $4,902 $6,556 $353 $488,784 $23,266 $512,050 
Commercial real estate - investor
Pass$643,174 $470,085 $301,510 $719,699 $300,772 $508,639 $2,943,879 $26,153 $2,970,032 
Special mention0 13,090 23,111 9,297 26,079 13,804 85,381 861 86,242 
Substandard0 6,950 6 4,025 17,178 9,631 37,790 0 37,790 
Doubtful0 0 0 0 0 0 0 0 0 
Total$643,174 $490,125 $324,627 $733,021 $344,029 $532,074 $3,067,050 $27,014 $3,094,064 
Commercial real estate - owner
Pass$165,411 $155,041 $170,587 $101,137 $112,063 $211,377 $915,616 $11,125 $926,741 
Special mention0 0 0 1,479 0 14,040 15,519 0 15,519 
Substandard0 525 844 5,114 3,501 6,451 16,435 0 16,435 
Doubtful0 0 0 0 0 0 0 0 0 
Total$165,411 $155,566 $171,431 $107,730 $115,564 $231,868 $947,570 $11,125 $958,695 
Residential real estate
Performing$320,676 $274,816 $205,948 $110,745 $51,583 $114,642 $1,078,410 $0 $1,078,410 
Nonperforming414 1,615 1,286 2,554 1,755 6,231 13,855 0 13,855 
Total$321,090 $276,431 $207,234 $113,299 $53,338 $120,873 $1,092,265 $0 $1,092,265 
Home equity
Performing$26,411 $33,414 $38,226 $11,733 $8,051 $24,985 $142,820 $585,712 $728,532 
Nonperforming5 136 298 78 104 430 1,051 4,208 5,259 
Total$26,416 $33,550 $38,524 $11,811 $8,155 $25,415 $143,871 $589,920 $733,791 
Installment
Performing$100,256 $38,694 $7,244 $3,915 $2,861 $3,242 $156,212 $51,854 $208,066 
Nonperforming650 794 18 6 20 42 1,530 299 1,829 
Total$100,906 $39,488 $7,262 $3,921 $2,881 $3,284 $157,742 $52,153 $209,895 
Credit cards
Performing$0 $0 $0 $0 $0 $0 $0 $51,287 $51,287 
Nonperforming0 0 0 0 0 0 0 528 528 
Total$0 $0 $0 $0 $0 $0 $0 $51,815 $51,815 
Grand Total$2,402,422 $1,892,719 $1,223,810 $1,219,466 $664,072 $1,142,818 $8,545,307 $1,753,664 $10,298,971 
The following table sets forth the Company's loan portfolio at December 31, 2021 by risk attribute and origination date:
(Dollars in thousands)20212020201920182017PriorTerm TotalRevolvingTotal
Commercial & industrial
Pass$711,198 $442,064 $339,507 $164,273 $119,580 $154,835 $1,931,457 $700,246 $2,631,703 
Special mention389 4,867 5,993 16,057 6,511 4,918 38,735 21,505 60,240 
Substandard2,220 434 2,843 1,224 12,640 1,465 20,826 7,259 28,085 
Doubtful0 0 0 0 0 0 0 0 0 
Total$713,807 $447,365 $348,343 $181,554 $138,731 $161,218 $1,991,018 $729,010 $2,720,028 
Lease financing
Pass$31,697 $21,536 $19,095 $15,494 $6,821 $4,765 $99,408 $0 $99,408 
Special mention010,216000010,216010,216 
Substandard000000000 
Doubtful000000000 
Total$31,697 $31,752 $19,095 $15,494 $6,821 $4,765 $109,624 $0 $109,624 
Construction real estate
Pass$95,991 $200,421 $96,726 $15,886 $317 $12,719 $422,060 $18,299 $440,359 
Special mention0 6,531 0 9,004 0 0 15,535 0 15,535 
Substandard0 0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 0 
Total$95,991 $206,952 $96,726 $24,890 $317 $12,719 $437,595 $18,299 $455,894 
Commercial real estate - investor
Pass$537,183 $379,217 $944,915 $367,946 $294,147 $434,641 $2,958,049 $66,579 $3,024,628 
Special mention0 7,479 18,136 18,006 15,566 34,153 93,340 0 93,340 
Substandard1,616 6 21,312 6,628 6,918 307 36,787 0 36,787 
Doubtful0 0 0 0 0 0 0 0 0 
Total$538,799 $386,702 $984,363 $392,580 $316,631 $469,101 $3,088,176 $66,579 $3,154,755 
Commercial real estate - owner
Pass$204,291 $184,564 $121,150 $135,463 $119,489 $259,504 $1,024,461 $7,565 $1,032,026 
Special mention970 2,283 2,262 3,751 1,381 5,512 16,159 0 16,159 
Substandard162 727 6,541 12,513 1,730 1,963 23,636 38 23,674 
Doubtful0 0 0 0 0 0 0 0 0 
Total$205,423 $187,574 $129,953 $151,727 $122,600 $266,979 $1,064,256 $7,603 $1,071,859 
Residential real estate
Performing$258,537 $230,699 $138,239 $64,310 $34,606 $162,924 $889,315 $0 $889,315 
Nonperforming236 970 1,193 598 339 3,418 6,754 0 6,754 
Total$258,773 $231,669 $139,432 $64,908 $34,945 $166,342 $896,069 $0 $896,069 
Home equity
Performing$42,298 $45,638 $14,713 $11,221 $7,603 $30,588 $152,061 $553,245 $705,306 
Nonperforming72 161 44 67 56 234 634 2,459 3,093 
Total$42,370 $45,799 $14,757 $11,288 $7,659 $30,822 $152,695 $555,704 $708,399 
Installment
Performing$58,209 $12,768 $8,213 $5,541 $3,925 $2,201 $90,857 $28,353 $119,210 
Nonperforming6 61 32 9 1 56 165 79 244 
Total$58,215 $12,829 $8,245 $5,550 $3,926 $2,257 $91,022 $28,432 $119,454 
Credit cards
Performing$0 $0 $0 $0 $0 $0 $0 $51,772 $51,772 
Nonperforming0 0 0 0 0 0 0 445 445 
Total$0 $0 $0 $0 $0 $0 $0 $52,217 $52,217 
Grand Total$1,945,075 $1,550,642 $1,740,914 $847,991 $631,630 $1,114,203 $7,830,455 $1,457,844 $9,288,299 

Delinquency. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.
Loan delinquency, including nonaccrual loans, was as follows:
 As of December 31, 2022
(Dollars in thousands)30 – 59
days
past due		60 – 89
days
past due		> 90 days
past due		Total
past
due		CurrentTotal> 90 days
past due
and still
accruing
Loans      
Commercial & industrial$5,375 $72 $501 $5,948 $3,404,324 $3,410,272 $0 
Lease financing5,212 1,052 843 7,107 229,017 236,124 742 
Construction real estate0 0 0 0 512,050 512,050 0 
Commercial real estate-investor0 0 0 0 3,094,064 3,094,064 0 
Commercial real estate-owner26 5,216 44 5,286 953,409 958,695 0 
Residential real estate4,254 2,074 3,260 9,588 1,082,677 1,092,265 0 
Home equity1,725 729 1,209 3,663 730,128 733,791 0 
Installment874 490 414 1,778 208,117 209,895 0 
Credit card261 150 116 527 51,288 51,815 115 
Total$17,727 $9,783 $6,387 $33,897 $10,265,074 $10,298,971 $857 
 As of December 31, 2021
(Dollars in thousands)30 - 59
days
past due		60 - 89
days
past due		> 90 days
past due		Total
past
due		CurrentTotal> 90 days
past due and still accruing
Loans      
Commercial & industrial$303 $2,006 $2,775 $5,084 $2,714,944 $2,720,028 $0 
Lease financing93 0 0 93 109,531 109,624 0 
Construction real estate0 0 0 0 455,894 455,894 0 
Commercial real estate-investor89 42 6,409 6,540 3,148,215 3,154,755 0 
Commercial real estate-owner56 2,207 637 2,900 1,068,959 1,071,859 0 
Residential real estate4,379 262 2,114 6,755 889,314 896,069 0 
Home equity1,214 692 1,186 3,092 705,307 708,399 0 
Installment162 37 45 244 119,210 119,454 0 
Credit card223 134 137 494 51,723 52,217 137 
Total$6,519 $5,380 $13,303 $25,202 $9,263,097 $9,288,299 $137 

Nonaccrual. Loans are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful or when principal or interest payments are 90 days or more past due. Generally, loans are classified as nonaccrual due to the continued failure to adhere to contractual payment terms by the borrower, coupled with other pertinent factors. When a loan is classified as nonaccrual, the accrual of interest income is discontinued and previously accrued but unpaid interest is reversed. Any payments received while a loan is on nonaccrual status are applied as a reduction to the carrying value of the loan. A loan classified as nonaccrual may return to accrual status if none of the principal and interest is due and unpaid, and the Bank expects repayment of the remaining contractual principal and interest.

Troubled debt restructurings. A loan modification is considered a TDR when the borrower is experiencing financial difficulty and concessions are made by the Company that would not otherwise be considered for a borrower with similar credit characteristics. The most common types of modifications include interest rate reductions, bankruptcies, maturity extensions and modifications to principal amortization, including interest-only structures. Modified terms are dependent upon the financial position and needs of the individual borrower. If the modification agreement is violated, the loan is managed by the Company’s credit administration group for resolution, which may result in foreclosure in the case of real estate.

TDRs are generally classified as nonaccrual for a minimum period of six months and may qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement.

First Financial had 134 TDRs totaling $21.0 million at December 31, 2022, including $11.0 million of loans on accrual status and $10.0 million of loans classified as nonaccrual. First Financial had no commitments outstanding to lend additional funds to borrowers whose loan terms had been modified through TDRs, and the ACL included reserves of $5.0 million related to TDRs
as of December 31, 2022. For the year ended December 31, 2022, First Financial charged off $3.2 million for the portion of TDRs determined to be uncollectible. Additionally, as of December 31, 2022, approximately $5.6 million of the accruing TDRs have been performing in accordance with the restructured terms for more than one year.

First Financial had 150 TDRs totaling $27.6 million at December 31, 2021, including $11.6 million of loans on accrual status and $16.0 million of loans classified as nonaccrual. First Financial had $0.2 million of commitments outstanding to lend additional funds to borrowers whose loan terms had been modified through TDRs and the ACL included reserves of $6.3 million related to TDRs as of December 31, 2021. For the year ended December 31, 2021, First Financial charged off $1.7 million for the portion of TDRs determined to be uncollectible. Additionally, as of December 31, 2021, approximately $5.0 million of the accruing TDRs have been performing in accordance with the restructured terms for more than one year.

First Financial had 155 TDRs totaling $21.8 million at December 31, 2020, including $7.1 million of loans on accrual status and $14.7 million of loans classified as nonaccrual. First Financial had $0.3 million of commitments outstanding to lend additional funds to borrowers whose loan terms had been modified through TDRs. Additionally, First Financial charged off $1.7 million for the portion of TDRs determined to be uncollectible for the year ended December 31, 2020.

The following table provides information on loan modifications classified as TDRs during the years ended December 31, 2022, 2021 and 2020:
Years ended December 31,
202220212020
(Dollars in thousands)Number of loansPre-modification loan balancePeriod end balanceNumber of loansPre-modification loan balancePeriod end balanceNumber of loansPre-modification loan balancePeriod end balance
Commercial & industrial6 $10,049 $8,825 7$9,311 $8,039 8$14,984 $14,984 
Construction
real estate		0 0 0 00 0 00 0 
Commercial
real estate		2 6,337 3,115 816,850 9,807 0 0 0 
Residential
real estate		15 1,376 1,317 171,585 1,553 241,953 1,847 
Home equity1 32 32 230 30 11351 349 
Installment1 1 1 10 0 235 22 
Total25 $17,795 $13,290 35 $27,776 $19,429 45 $17,323 $17,202 
 
The following table provides information on how TDRs were modified during the years ended December 31, 2022, 2021 and 2020:
Years Ended December 31,
(Dollars in thousands)202220212020
Extended maturities$3,346 $0 $0 
Adjusted interest rates3,106 0 0 
Combination of rate and maturity changes0 0 0 
Forbearance4,4777,328 4,759 
Bankruptcies906,723 678 
Other (1)
2,2715,378 11,765 
Total$13,290 $19,429 $17,202 
(1) Other includes covenant modifications and other concessions or combination of concessions that do not consist of interest rate adjustments, forbearance, bankruptcy and maturity extensions.

First Financial considers repayment performance as an indication of the effectiveness of the Company's loan modifications. Borrowers that are 90 days or more past due on any principal or interest payments, or who prematurely terminate a restructured loan agreement without paying off the contractual principal balance, are considered to be in payment default of the terms of the TDR agreement.
For the twelve months ended December 31, 2022, there were two TDRs with a balance of $0.2 million for which there was a payment default during the period that occurred within twelve months of the loan modification. For the twelve months ended December 31, 2021 and 2020, there was one TDR with an insignificant balance for which there was a payment default during the period that occurred within twelve months of the loan modification.

As stated in the CARES Act and subsequently modified by the Consolidated Appropriations Act, loan modifications in response to COVID-19 executed on loans that were not more than 30 days past due as of December 31, 2019 and executed between March 1, 2020 and the January 1, 2022 are not required to be reported as a TDR.

As of December 31, 2022, the Company's loan portfolio included no active loan modifications made under the guidance of the CARES Act that were not classified as TDR. As of December 31, 2021, the Company's loan portfolio included $16.5 million of active loan modifications made under the guidance of the CARES Act that were not classified as TDR. These modifications were comprised of two commercial loans making interest only payments.

As of December 31, 2020, the Company's loan portfolio included $320.2 million of active loan modifications made under the guidance of the CARES Act that were not classified as TDR. These modifications included $291.5 million of borrowers making interest only payments at year end, and full principal and interest deferrals of $28.7 million. Active modifications as of December 31, 2020 were primarily hotel and franchise loans, which were $186.2 million and $44.3 million respectively as of December 31, 2020, or 58.2% and 13.8% of the total active modifications at December 31, 2020. As of December 31, 2020, the Company's loan portfolio included 90 commercial loans with balances of $312.5 million and 53 consumer loans with balances of $7.7 million that were modified in response to COVID-19 that were not considered TDRs.
Nonperforming loans. Loans classified as nonaccrual and loans modified as TDRs are considered nonperforming. The following table provides information on nonperforming loans as of December 31:
202220212020
(Dollars in thousands)Nonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrualNonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrualNonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrual
Nonaccrual loans (1)
  
Commercial & industrial$6,692 $1,550 $8,242 $11,077 $6,285 $17,362 $18,711 $10,519 $29,230 
Lease financing0 178 178 0 203 203 0 0 0 
Construction real estate0 0 0 0 0 0 0 0 0 
Commercial real estate5,216 570 5,786 17,716 1,796 19,512 6,957 27,725 34,682 
Residential real estate0 10,691 10,691 0 8,305 8,305 251 11,350 11,601 
Home equity0 3,123 3,123 0 2,922 2,922 0 5,076 5,076 
Installment0 603 603 0 88 88 0 163 163 
Total nonaccrual loans$11,908 $16,715 $28,623 $28,793 $19,599 $48,392 $25,919 $54,833 $80,752 
Interest income effect202220212020
Gross amount of interest that would have been recorded under original terms$3,247 $5,132 $5,892 
Interest included in income
Nonaccrual loans1,134 1,618 1,636 
Troubled debt restructurings424 314 426 
Total interest included in income1,558 1,932 2,062 
Net impact on interest income$1,689 $3,200 $3,830 
Commitments outstanding to borrowers with nonaccrual loans$0 $0 $0 
(1) Nonaccrual loans include nonaccrual TDRs of $10.0 million, $16.0 million and $14.7 million as of December 31, 2022, 2021 and 2020, respectively.

First Financial individually reviews all nonperforming loan relationships greater than $250,000 to determine if an individually evaluated allowance is necessary based on the borrower’s overall financial condition, resources and payment record, support
from guarantors and the realizable value of any collateral. Individually evaluated allowances are based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans.

A loan is considered to be collateral dependent when the borrower is experiencing financial difficulty and the repayment is expected to be provided substantially through the operation or sale of collateral. The following table presents the amortized cost basis of collateral dependent loans by class of loan.
December 31, 2022
Type of Collateral
(Dollar in thousands)Business assetsCommercial real estateEquipmentLandResidential real estateOtherTotal
Class of loan
Commercial & industrial$8,205 $0 $0 $0 $0 $37 $8,242 
Lease financing00 178 0 0 0 178 
Commercial real estate-investor0353 0 0 22 0 375 
Commercial real estate-owner03,399 1,893 119 0 0 5,411 
Residential real estate00 0 0 10,691 0 10,691 
Home equity00003,123 03,123 
Installment00000603603 
Total$8,205 8205000$3,752 $2,071 $119 $13,836 $640 $28,623 
December 31, 2021
Type of Collateral
(Dollar in thousands)Business assetsCommercial real estateEquipmentLandResidential real estateOtherTotal
Class of loan
Commercial & industrial$13,171 $15 $833 $0 $0 $3,343 $17,362 
Lease financing00203000203 
Commercial real estate-investor06,3620042206,784 
Commercial real estate-owner06,6735,9373880012,728 
Residential real estate00008,30508,305 
Home equity00002,92202,922 
Installment000008888 
Total$13,171 $13,050 $6,973 $38 $11,729 $3,431 $48,392 

Lease financing - Lessor. First Financial originates both sales-type and direct financing leases, and the Company manages and reviews lease residuals in accordance with its credit policies. Payments are generally fixed. However, in some agreements, lease payments may be indexed to a rate or index. Sales-type lease contracts contain the ability to purchase the underlying equipment at lease maturity and profit or loss is recognized at lease commencement.  Direct financing leases are generally three to five years in length and may be extended at maturity, however, early cancellation may result in a fee to the borrower.  For direct financing leases, the net unearned income is deferred and amortized over the life of the lease. 

Effective December 31, 2021, First Financial acquired Summit Funding Group, Inc., which is a full-service equipment leasing company. In conjunction with this acquisition, First Financial acquired $41.9 million of financing leases, which were included in Loans and leases on the Consolidated Balance Sheets. For further detail on the acquisition, see Note 24 - Business Combinations.

The components of the Company's net investments in direct financing and sales-type leases, which are included in Lease financing on the Consolidated Balance Sheets are as follows:
(Dollar in thousands)December 31, 2022December 31, 2021
Direct financing leases
Lease receivables$35,081 $49,843 
Unguaranteed residual values16,058 19,714 
Sales-type leases
Lease receivables184,985 40,067 
Unguaranteed residual values0 0 
Total net investment in direct financing and sales-type leases$236,124 $109,624 

Interest income for direct financing and sales-type leases was $11.8 million, $2.7 million and $3.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The remaining maturities of lease receivables were as follows:
(Dollars in thousands)Direct financing and Sales-type
2023$56,640 
202446,366 
202539,495 
202637,877 
202731,826 
Thereafter37,512 
Total lease payments249,716 
Less: unearned interest income(29,650)
Net lease receivables$220,066 

OREO. OREO is comprised of properties acquired by the Company primarily through the loan foreclosure or repossession process, that result in partial or total satisfaction of problem loans.

Changes in OREO were as follows:
 Years ended December 31,
(Dollars in thousands)202220212020
Balance at beginning of year$98 $1,287 $2,033 
Additions
Commercial0 98 510 
Residential327 0 507 
Total additions327 98 1,017 
Disposals  
Commercial(98)(947)(217)
Residential(94)(331)(1,859)
Total disposals(192)(1,278)(2,076)
Valuation adjustments  
Commercial0 (9)448 
Residential(42)0 (135)
Total valuation adjustments(42)(9)313 
Balance at end of year$191 $98 $1,287