FIRST FINANCIAL BANCORP /OH/FFBC
FIRST FINANCIAL BANCORP /OH/ Fair Value Disclosure
Fair Value Disclosures
The fair value framework as disclosed in the Fair Value Topic includes a hierarchy which focuses on prioritizing the inputs used in valuation techniques. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), a lower priority to observable inputs other than quoted prices in active markets for identical assets and liabilities (Level 2) and the lowest priority to unobservable inputs (Level 3). When determining the fair value measurements for assets and liabilities, First Financial looks to active markets to price identical assets or liabilities whenever possible and classifies such items in Level 1. When identical assets and liabilities are not traded in active markets, First Financial looks to observable market data for similar assets and liabilities and classifies such items as Level 2. Certain assets and liabilities are not actively traded in observable markets and First Financial must use alternative techniques, based on unobservable inputs, to determine the fair value and classifies such items as Level 3. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.
The estimated fair values of First Financial's financial instruments not measured at fair value on a recurring or nonrecurring basis in the consolidated financial statements were as follows:
| Carrying | Estimated fair value | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | value | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Financial assets | ||||||||||||||||||||||||||||||||
| Cash and interest-bearing deposits with other banks | $ | 775,891 | $ | 775,891 | $ | 775,891 | $ | 0 | $ | 0 | ||||||||||||||||||||||
| Investment securities held-to-maturity | 58,545 | 54,334 | 0 | 54,334 | 0 | |||||||||||||||||||||||||||
Other investments (1) | 12,898 | 12,898 | 1,850 | 40 | 11,008 | |||||||||||||||||||||||||||
| Loans and leases, net | 13,237,583 | 13,061,341 | 0 | 0 | 13,061,341 | |||||||||||||||||||||||||||
| Accrued interest receivable | 71,940 | 71,940 | 0 | 17,833 | 54,107 | |||||||||||||||||||||||||||
| Financial liabilities | ||||||||||||||||||||||||||||||||
| Deposits | 16,421,842 | 16,415,852 | 0 | 16,415,852 | 0 | |||||||||||||||||||||||||||
| Short-term borrowings | 675,332 | 675,332 | 675,332 | 0 | 0 | |||||||||||||||||||||||||||
| Long-term debt | 514,052 | 473,291 | 0 | 473,291 | 0 | |||||||||||||||||||||||||||
| Accrued interest payable | 38,304 | 38,304 | 2,918 | 35,386 | 0 | |||||||||||||||||||||||||||
| Carrying | Estimated Fair Value | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | Value | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Financial assets | ||||||||||||||||||||||||||||||||
| Cash and interest-bearing deposits with other banks | $ | 904,486 | $ | 904,486 | $ | 904,486 | $ | 0 | $ | 0 | ||||||||||||||||||||||
| Investment securities held-to-maturity | 76,960 | 68,989 | 0 | 68,989 | 0 | |||||||||||||||||||||||||||
Other investments (1) | 11,570 | 11,570 | 1,530 | 40 | 10,000 | |||||||||||||||||||||||||||
| Loans and leases, net | 11,604,987 | 11,417,941 | 0 | 0 | 11,417,941 | |||||||||||||||||||||||||||
| Accrued interest receivable | 67,420 | 67,420 | 0 | 14,263 | 53,157 | |||||||||||||||||||||||||||
| Financial liabilities | ||||||||||||||||||||||||||||||||
| Deposits | 14,329,138 | 14,322,815 | 0 | 14,322,815 | 0 | |||||||||||||||||||||||||||
| Short-term borrowings | 755,452 | 755,452 | 755,452 | 0 | 0 | |||||||||||||||||||||||||||
| Long-term debt | 347,509 | 346,613 | 0 | 346,613 | 0 | |||||||||||||||||||||||||||
| Accrued interest payable | 43,411 | 43,411 | 4,663 | 38,748 | 0 | |||||||||||||||||||||||||||
(1) FHLB stock and FRB stock of $116.7 million and $103.0 million as of December 31, 2025 and 2024, respectively, are excluded from the numbers above.
The following methods, assumptions and valuation techniques were used by First Financial to measure different financial assets and liabilities at fair value on a recurring or nonrecurring basis.
Investment securities. Investment securities classified as available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar investment securities. First Financial compiles prices from various sources who may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for the specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment securities not valued based upon the methods previously described are considered Level 3.
First Financial utilizes values provided by third-party pricing vendors to price the investment securities portfolio in accordance with the fair value hierarchy of the Fair Value Topic and reviews the pricing methodologies utilized by the pricing vendors to
ensure that the fair value determination is consistent with the applicable accounting guidance. First Financial’s pricing process includes a series of quality assurance activities where prices are compared to recent market conditions, historical prices and other independent pricing services. Further, the Company periodically validates the fair value of a sample of securities in the portfolio by comparing the fair values to prices from other independent sources for the same or similar securities. First Financial analyzes unusual or significant variances, conducts additional research with the pricing vendor, and if necessary, takes appropriate action based on its findings. The results of the quality assurance process are incorporated into the selection of pricing providers by the portfolio manager.
Loans held for sale. The fair value of the Company’s residential mortgage loans held for sale is determined on a recurring basis based on quoted prices for similar loans in active markets, and therefore, is classified as Level 2 in the fair value hierarchy.
Derivatives. The fair values of derivative instruments, which includes interest rate derivatives, foreign exchange derivatives, floors, collars and commodities contracts, are based primarily on a net present value calculation of the cash flows related to the contracts at the reporting date, using primarily observable market inputs such as interest rate yield curves which represents the cost to terminate the swap if First Financial should choose to do so. Additionally, First Financial utilizes an internally-developed model to value the credit risk component of derivative assets and liabilities, which is recorded as an adjustment to the fair value of the derivative asset or liability on the reporting date. Derivative instruments are classified as Level 2 in the fair value hierarchy.
Collateral dependent loans. Collateral dependent loans are defined as loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrowers are experiencing financial difficulty. Collateral dependent loans are carried at fair value when the value of the operation or collateral less any costs to sell is not sufficient to cover the remaining balance. In these instances, the loans will either be partially charged-off or receive specific allocations of the allowance for credit losses. For collateral dependent loans, fair value is generally based on real estate appraisals, a calculation of enterprise value or a valuation of business assets including equipment, inventory and accounts receivable. These loans had a principal amount of $38.1 million and $3.9 million at December 31, 2025 and December 31, 2024, respectively, with a valuation allowance of $16.1 million and $2.1 million at December 31, 2025 and December 31, 2024, respectively.
The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed third-party appraiser (Level 3). These appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales approach and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Collateral is then adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and the client’s business, resulting in a Level 3 fair value classification. Collateral dependent loans are evaluated on a quarterly basis for additional write-downs and are adjusted accordingly.
Enterprise value is defined as imputed value for the entire underlying business. To determine an appropriate range of enterprise value, FFB relies on a standardized set of valuation methodologies that take into account future projected cash flows, market based multiples as well as asset values. Valuations involve both quantitative and qualitative considerations and professional judgments concerning differences in financial and operating characteristics in addition to other factors that may impact values over time (Level 3).
The value of business equipment is based on an outside appraisal, if deemed significant, or the net book value on the applicable borrower financial statements. Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports on a discounted basis as appropriate (Level 3).
The fair value of collateral dependent loans is measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses on the Consolidated Statements of Income.
Mortgage servicing rights. Mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount. If the carrying amount of the servicing asset exceeds fair value, impairment is recorded so that the servicing asset is carried at fair value. Fair value is determined based on a valuation model that calculates the present value of estimated future net servicing income. At December 31, 2025 and 2024, the fair value of MSR was $33.7 million and $29.8 million, respectively. The valuation model utilizes a discount rate of 11.66% and 11.52% for 2025 and 2024, respectively, weighted average prepayment speeds of 6.49% and 5.96% for 2025 and 2024, respectively, and other economic
factors that market participants would use in estimating future net servicing income and that can be validated against available market data.
The financial assets and liabilities measured at fair value on a recurring basis in the consolidated financial statements, were as follows:
| Fair Value Measurements Using | Assets/Liabilities | |||||||||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | at Fair Value | ||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Investment securities available-for-sale | $ | 95 | $ | 3,926,021 | $ | 45,816 | $ | 3,971,932 | ||||||||||||||||||
| Loans held for sale | 0 | 16,953 | 0 | 16,953 | ||||||||||||||||||||||
| Interest rate derivative contracts | 0 | 69,481 | 0 | 69,481 | ||||||||||||||||||||||
| Foreign exchange derivative contracts | 0 | 322,172 | 0 | 322,172 | ||||||||||||||||||||||
| Interest rate collars and floors | 0 | 708 | 0 | 708 | ||||||||||||||||||||||
| Commodities contracts | 0 | 1,578 | 0 | 1,578 | ||||||||||||||||||||||
| Total | $ | 95 | $ | 4,336,913 | $ | 45,816 | $ | 4,382,824 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Interest rate derivative contracts | $ | 0 | $ | 69,570 | $ | 0 | $ | 69,570 | ||||||||||||||||||
| Foreign exchange derivative contracts | 0 | 322,172 | 0 | 322,172 | ||||||||||||||||||||||
| Interest rate collars and floors | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| Commodities contracts | 0 | 2,078 | 0 | 2,078 | ||||||||||||||||||||||
| Total | $ | 0 | $ | 393,820 | $ | 0 | $ | 393,820 | ||||||||||||||||||
| Fair Value Measurements Using | Assets/Liabilities | |||||||||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | at Fair Value | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Investment securities available-for-sale | $ | 91 | $ | 3,139,503 | $ | 44,182 | $ | 3,183,776 | ||||||||||||||||||
| Loans held for sale | 0 | 13,181 | 0 | 13,181 | ||||||||||||||||||||||
| Interest rate derivative contracts | 0 | 102,152 | 0 | 102,152 | ||||||||||||||||||||||
| Foreign exchange derivative contracts | 0 | 294,418 | 0 | 294,418 | ||||||||||||||||||||||
| Interest rate collars and floors | 0 | 387 | 0 | 387 | ||||||||||||||||||||||
| Commodities contracts | 0 | 158 | 0 | 158 | ||||||||||||||||||||||
| Total | $ | 91 | $ | 3,549,799 | $ | 44,182 | $ | 3,594,072 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Interest rate derivative contracts | $ | 0 | $ | 102,265 | $ | 0 | $ | 102,265 | ||||||||||||||||||
| Foreign exchange derivative contracts | 0 | 294,418 | 0 | 294,418 | ||||||||||||||||||||||
| Interest rate collars and floors | 0 | 619 | 0 | 619 | ||||||||||||||||||||||
| Commodities contracts | 0 | 158 | 0 | 158 | ||||||||||||||||||||||
| Total | $ | 0 | $ | 397,460 | $ | 0 | $ | 397,460 | ||||||||||||||||||
The following table presents a reconciliation for certain AFS securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2025, 2024 and 2023.
| (dollars in thousands) | December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||||
| Beginning balance | $ | 44,182 | $ | 32,945 | $ | 35,857 | ||||||||||||||
| (4,808) | (93) | (104) | ||||||||||||||||||
| Increase (decrease) in fair value | 3,752 | (865) | (99) | |||||||||||||||||
| Purchases (settlements) | (8,125) | (4,977) | (2,709) | |||||||||||||||||
| Transfers into level 3 | 10,815 | 17,172 | 0 | |||||||||||||||||
| Ending balance | $ | 45,816 | $ | 44,182 | $ | 32,945 | ||||||||||||||
Two securities with a fair value of $10.8 million as of December 31, 2025, as well as four commercial mortgage-backed securities with a fair value of $17.2 million as of December 31, 2024, were transferred from level 2 to level 3 due to credit deterioration and a lack of observable market data for these investments due to a decrease in market activity for these securities. The Company's valuations were supported by an analysis prepared by an independent third party and approved by management. The approach to determining fair value involved several steps which included: 1) detailed collateral analysis; 2) collateral performance projections and 3) discounted cash flow modeling.
Certain financial assets and liabilities are measured at fair value on a nonrecurring basis. Adjustments to the fair value of these assets usually result from the application of fair value accounting or write-downs of individual assets. The following table summarizes financial assets and liabilities measured at fair value on a nonrecurring basis:
| Fair Value Measurements Using | ||||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Collateral dependent loans | ||||||||||||||||||||
| Commercial & industrial | $ | 0 | $ | 0 | $ | 8,517 | ||||||||||||||
| Lease financing | 0 | 0 | 2,499 | |||||||||||||||||
| Commercial real estate | 0 | 0 | 11,020 | |||||||||||||||||
| Fair Value Measurements Using | ||||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Collateral dependent loans | ||||||||||||||||||||
| Commercial & industrial | $ | 0 | $ | 0 | $ | 793 | ||||||||||||||
| Leasing | 0 | 0 | 1,012 | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 23, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.