First Financial in Ohio charges off $10M loan to restaurant franchise
First Financial Bancorp in Cincinnati will take a quarterly hit tied to a bad loan to a restaurant franchise.
The $14 billion-asset company disclosed in a regulatory filing Tuesday that it charged off $10 million in the first quarter for a loan made by its First Franchise Capital unit. The $16.8 million loan was placed on nonaccrual status in the fourth quarter.
"Based on further investigation and certain actions taken by one of the franchisors during the first quarter ... the company believes that the borrower’s assets, consisting of numerous quick-serve franchise stores, have substantially deteriorated," the filing said.
The charge-off is expected to reduce net income by about $8 million, or 8 cents a share. First Financial said it expects to report quarterly earnings of 47 cents a share.
First Financial, which said its overall credit quality should remain stable this year, said it is taking action to enforce its rights against the borrower and its collateral, including preserving and recovering the borrower’s assets.
The company will report first-quarter earnings on April 25.