First Financial Bank and National Community Reinvestment Coalition Announce $2.4 Billion Community Benefits Agreement

Rhea-AI Summary

First Financial Bank (Nasdaq: FFBC) has signed a $2.4 billion, five-year Community Benefits Agreement (CBA) with the National Community Reinvestment Coalition (NCRC) and related partner organizations. The agreement aims to set goals for lending and investments to low- and moderate-income (LMI) clients and census tracts. This follows the successful completion of First Financial's previous CBA, where it exceeded its $1.75 billion goal in lending and investments for 2018-2023.

Insights

Financial Analyst

The new $2.4 billion Community Benefits Agreement (CBA) by First Financial Bank represents a significant commitment to low- and moderate-income (LMI) communities. This move can be seen as both a strategic business decision and a response to regulatory expectations for financial institutions to support economic inclusion. The substantial overachievement of the previous CBA goal suggests a robust framework for community reinvestment activities, which could reflect positively on the bank's reputation and customer base expansion in these demographics.

From a financial perspective, the initiative could lead to a diversified loan and investment portfolio. However, it also entails a careful balancing act, as investments in LMI areas carry different risk profiles compared to traditional banking activities. The bank's risk management strategies and the performance of these investments will be crucial in maintaining financial stability and shareholder confidence.

Moreover, shareholders and investors will be interested in the impact of such agreements on the bank's profitability. While the long-term benefits include potential market growth and risk mitigation through diversification, the short-term financial returns may not be immediately evident. It's important to monitor how the bank plans to measure the success of this CBA, beyond the capital allocation, to understand its implications on future financial results.

Economist

First Financial Bank's CBA initiative is an example of how private financial institutions can play a role in addressing economic disparities. By channeling capital into LMI areas, the bank contributes to economic development and job creation in communities that are often underserved by the mainstream financial system. This can have a multiplicative effect on the local economy, potentially leading to increased consumer spending and improved economic indicators over time.

The agreement aligns with broader economic trends where social impact and sustainability are becoming important to corporate strategy. This alignment could enhance the bank's competitiveness, particularly among socially conscious investors. Nonetheless, the effectiveness of such CBAs in generating economic growth should be evaluated against the opportunity cost of alternative investments and the potential need for increased provisions for credit losses, which could affect the bank's balance sheet.

Market Research Analyst

In the context of the banking industry, CBAs like the one undertaken by First Financial Bank can be a strategic tool for market differentiation. The bank's focus on LMI communities can attract customers who prioritize doing business with socially responsible institutions. This could potentially increase the bank's market share in a niche segment. Additionally, the positive public relations impact of exceeding its previous CBA goals by 192% could enhance the bank's brand value and customer loyalty.

However, the success of such agreements depends on the bank's ability to effectively assess and manage the needs of LMI clients, who may require different financial products and services than traditional clients. The bank's adaptability and innovation in product offerings will be key to realizing the potential benefits of the CBA. It would be insightful to analyze customer feedback and satisfaction levels among LMI clients served under the previous CBA to gauge the potential for continued success under the new agreement.

CINCINNATI, Jan. 30, 2024 /PRNewswire/ -- First Financial Bank (Nasdaq: FFBC) has entered into a new $2.4 billion, five-year Community Benefits Agreement (CBA) with the National Community Reinvestment Coalition (NCRC) and related partner organizations, establishing goals for lending and investments to low- and moderate-income (LMI) clients and census tracts. The new agreement follows the successful conclusion of First Financial's previous CBA, during which it achieved 192 percent of its $1.75 billion goal in lending and investments for 2018-2023.

"Our new Community Benefits Agreement is a bold statement about how First Financial intends to continue its mission to improve lives and help communities thrive," said Archie Brown, president and CEO of First Financial. "These are neighborhoods where we live and work, and we are taking a leading role in helping our neighbors achieve goals and improve their financial wellbeing."

"First Financial exceeded the goals we set together in our previous CBA and agreed to continue this strategic collaboration by negotiating new commitments to low- and moderate-income communities," said NCRC President and CEO Jesse Van Tol. "These new commitments will directly improve the material conditions of under-resourced neighborhoods within the bank's footprint. Every bank should take notice and embrace the same collaborative approach that First Financial continues to take on these issues."

First Financial's goals under the new CBA include:

• $700 million in mortgage lending through the use of products providing greater access to LMI communities and borrowers, an intentional effort in rural communities, a commitment to community development mortgage loan officers and providing small-dollar mortgages and home improvement loans,
• $600 million in small business lending through support of small business development corporations and business incubators, and through the issuance of microloans,
• $1.075 billion in community development lending and investments in affordable housing, community services, revitalization and stabilization, and projects that create permanent jobs, which benefit LMI areas,
• $18 million in philanthropy, targeting donations to organizations that create and preserve affordable housing and workforce development, plus those that provide housing counseling and promote financial and economic inclusion,
• $9 million in branch distribution and access, with three new financial centers located in LMI communities,
• Commitment to a minimum source-able vendor spend of 25 percent with minority-owned business enterprises (MBE), women-owned business enterprises (WBE), disability-owned business enterprises (DBE) and veteran owned businesses by 2028,
• $1.2 million in marketing and communications to benefit clients and communities in LMI and majority-minority census tracts (MMCT).

"We have much to accomplish under this new agreement and already have a head start working in many of these areas," said Roddell McCullough, chief corporate responsibility officer for First Financial. "Our previous CBA was an incredible success, touching thousands of lives for the better. I am excited at the prospect of helping many more individuals, families and businesses in the next five years."

First Financial's commitment to its communities over recent years was further validated when it achieved a rating of Outstanding from the Federal Reserve Board in 2021 for its performance under the Community Reinvestment Act (CRA). This rating, the highest available, came after a broad evaluation of First Financial's lending, investment and service levels from 2017-2020. The review specifically looked at First Financial's work that benefitted customers who met income guidelines or resided in LMI census tracts.

About First Financial Bancorp.
First Financial Bancorp. is a Cincinnati, Ohio based bank holding company. As of December 31, 2023, the Company had $17.5 billion in assets, $10.9 billion in loans, $13.4 billion in deposits and $2.3 billion in shareholders' equity. The Company's subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its six lines of business: Commercial, Retail Banking, Investment Commercial Real Estate, Mortgage Banking, Commercial Finance and Wealth Management. These business units provide traditional banking services to business and retail clients. Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $3.5 billion in assets under management as of December 31, 2023. The Company operated 130 full service banking centers as of December 31, 2023, located in Ohio, Indiana, Kentucky and Illinois, while the Commercial Finance business lends into targeted industry verticals on a nationwide basis. Additional information about the Company, including its products, services and banking locations, is available at www.bankatfirst.com.

About NCRC
The National Community Reinvestment Coalition is a network of organizations and individuals dedicated to creating a nation that not only promises but delivers opportunities for all Americans to build wealth and live well. Learn more at ncrc.org.

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SOURCE First Financial Bancorp.

FAQ

What is the value of the new Community Benefits Agreement (CBA) signed by First Financial Bank (Nasdaq: FFBC)?

First Financial Bank signed a $2.4 billion, five-year CBA with the National Community Reinvestment Coalition (NCRC) and related partner organizations.

What are the goals of the new CBA signed by First Financial Bank (Nasdaq: FFBC)?

The new CBA aims to establish goals for lending and investments to low- and moderate-income (LMI) clients and census tracts.

How did First Financial Bank perform in its previous CBA for 2018-2023?

First Financial Bank exceeded its $1.75 billion goal in lending and investments, achieving 192 percent of the target.

Who is the partner organization involved in the new CBA with First Financial Bank (Nasdaq: FFBC)?

The National Community Reinvestment Coalition (NCRC) and related partner organizations are involved in the new CBA with First Financial Bank.

What is the stock ticker symbol for First Financial Bank?

The stock ticker symbol for First Financial Bank is FFBC.