Regulatory Matters

12 Months Ended

Dec. 31, 2023

Deposits [Abstract]

Regulatory Matters

16. REGULATORY MATTERS:

Banking regulators measure capital adequacy by means of the risk-based capital ratios and the leverage ratio under the Basel III regulatory capital framework and prompt corrective action regulations. The risk-based capital rules provide for the weighting of assets and off-balance-sheet commitments and contingencies according to prescribed risk categories. Regulatory capital is then divided by risk-weighted assets to determine the risk-adjusted capital ratios. The leverage ratio is computed by dividing shareholders’ equity less intangible assets by quarter-to-date average assets less intangible assets.

As of January 1, 2019, a 2.5% capital conservation buffer Basel III was fully phased in. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the amount of the buffer will result in restrictions on the Company’s ability to make capital distributions, including dividend payments and stock repurchases, and to pay discretionary bonuses to executive officers.

As of December 31, 2023 and 2022, we had a total risk-based capital ratio of 19.62% and 19.29%, a Tier 1 capital to risk-weighted assets ratio of 18.50% and 18.22%; a common equity Tier 1 capital to risk-weighted assets ratio of 18.50% and 18.22%, and a Tier 1 leverage ratio of 12.06% and 10.96%, respectively. The regulatory capital ratios as of December 31, 2023 and 2022 were calculated under Basel III rules.

As of December 31, 2023 and 2022, the regulatory capital ratios of the Company and Bank under the Basel III regulatory capital framework are as follows:

	Actual					Minimum Capital Required-Basel III Fully Phased-In*					Required to be Considered Well- Capitalized
As of December 31, 2023:	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital to Risk-Weighted Assets:
Consolidated	$	1,697,999		19.62	%	$	908,870		10.50	%	$	865,590		10.00	%
First Financial Bank, N.A	$	1,518,365		17.59	%	$	906,541		10.50	%	$	863,372		10.00	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	1,601,361		18.50	%	$	735,752		8.50	%	$	519,354		6.00	%
First Financial Bank, N.A	$	1,421,727		16.47	%	$	733,866		8.50	%	$	690,698		8.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	1,601,361		18.50	%	$	605,913		7.00	%		—	N/A
First Financial Bank, N.A	$	1,421,727		16.47	%	$	604,361		7.00	%	$	561,192		6.50	%
Leverage Ratio:
Consolidated	$	1,601,361		12.06	%	$	346,236		4.00	%		—	N/A
First Financial Bank, N.A	$	1,421,727		10.75	%	$	345,349		4.00	%	$	431,686		5.00	%

	Actual					Minimum Capital Required-Basel III Fully Phased-In*					Required to be Considered Well- Capitalized
As of December 31, 2022:	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital to Risk-Weighted Assets:
Consolidated	$	1,586,888		19.29	%	$	863,622		10.50	%	$	822,497		10.00	%
First Financial Bank, N.A	$	1,442,902		17.58	%	$	861,860		10.50	%	$	820,819		10.00	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	1,498,731		18.22	%	$	699,122		8.50	%	$	493,498		6.00	%
First Financial Bank, N.A	$	1,354,745		16.50	%	$	697,696		8.50	%	$	656,655		8.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	1,498,731		18.22	%	$	575,748		7.00	%		—	N/A
First Financial Bank, N.A	$	1,354,745		16.50	%	$	574,573		7.00	%	$	533,532		6.50	%
Leverage Ratio:
Consolidated	$	1,498,731		10.96	%	$	546,983		4.00	%		—	N/A
First Financial Bank, N.A	$	1,354,745		9.95	%	$	544,886		4.00	%	$	681,107		5.00	%

In connection with the adoption of the Basel III regulatory capital framework, our subsidiary bank made the election to continue to exclude accumulated other comprehensive income from available-for-sale securities (“AOCI”) from capital in connection with its quarterly financial filing and, in effect, to retain the AOCI treatment under the prior capital rules.

In connection with the First Financial Trust & Asset Management Company, N.A.’s (the “Trust Company”) application to obtain our trust charter, the Trust Company is required to maintain tangible net assets of $2,000,000 at all times. As of December 31, 2023, our Trust Company had tangible net assets totaling $56,731,000.

Our subsidiary bank may be required at times to maintain reserve balances with the Federal Reserve Bank. At December 31, 2023 and 2022, there was no subsidiary bank’s reserve balance required, respectively.