KBRA Affirms Ratings for First Financial Bancorp

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Cincinnati, Ohio-based First Financial Bancorp (NASDAQ: FFBC) ("First Financial"). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for its main subsidiary, First Financial Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by FFBC’s differentiated business model, which reflects greater diversity in product offerings and services than many similarly sized community and regional banks, including national specialty lending verticals and a broad suite of fee-generating businesses. The franchise is anchored by a well-entrenched community banking presence across its legacy markets, including leading deposit market share among similarly sized institutions in Ohio and Cincinnati, supporting a solid deposit base and organic growth opportunities. Moreover, consistent strategic execution has supported a comparatively strong acquisition currency and greater M&A flexibility. Recent transactions have further diversified the franchise geographically, most notably establishing meaningful scale in Chicago while strengthening the funding and liquidity base, developments we view favorably from a credit perspective.

The successful acquisition strategy, broader product and service offering, along with a healthy NIM (~4.0% in 1H26) have helped support comparatively strong earnings (core ROA of ~1.5% in 1H26) and meaningful revenue diversification, with noninterest income generally representing ~30% of operating revenue, including sizable contributions from foreign exchange and equipment leasing. It has also contributed to a more diversified loan portfolio, with less reliance on investor CRE than many similarly sized banks; the bank-level regulatory CRE concentration remains below 200% of Tier 1 capital + ACL.

While the acquisitive strategy can result in periodic pressure on capital, with the Finward Bancorp acquisition expected to reduce the CET1 ratio by ~50 bps (CET1 ratio of 12.3% at 2Q26), FFBC’s internal capital generation and demonstrated ability to rebuild capital relatively quickly provide an important offset. Additionally, the strategic and balance-sheet benefits associated with recent M&A help mitigate the capital impact, including the addition of attractive core funding that has enhanced liquidity (loan-to-deposit ratio of 78% at 2Q26) and reduced the need to aggressively compete for relatively costly deposit growth.

Other rating constraints include modestly higher and more volatile levels of NPAs and NCO activity, which are not unexpected given the specialty C&I lending verticals. However, these businesses have generated strong risk-adjusted returns, providing a meaningful offset to the higher level of credit costs.

Rating Sensitivities

A rating upgrade is not currently expected, though successful integration and seasoning of recent acquisitions, alongside greater visibility into normalized financial performance, which we believe could trend toward the higher end of the rating category, could support positive rating momentum over time. Conversely, a downgrade is unlikely, though a meaningful deterioration in asset quality or the funding/liquidity profile, or more aggressive capital management, could pressure the ratings.

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