Regulatory Matters

12 Months Ended

Dec. 31, 2014

Banking and Thrift [Abstract]

Regulatory Matters

14. REGULATORY MATTERS:

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, each of Bankshares’ subsidiaries must meet specific capital guidelines that involve quantitative measures of the subsidiaries’ assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The subsidiaries’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and its subsidiaries to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). As of December 31, 2014 and 2013, the Company and its subsidiaries met all capital adequacy requirements to which they were subject.

As of December 31, 2014 and 2013, the most recent notification from our primary regulator categorized the Company and its bank subsidiary as well-capitalized. To be categorized as well-capitalized, we must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following table.

There are no conditions or events since that notification that management believes has changed the institutions’ categories. The Company’s and its bank subsidiary’s actual capital amounts and ratios are presented in the table below (in thousands):

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes:					Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2014:
Total Capital (to Risk-Weighted Assets):
Consolidated	$	587,094		17	%	³$	273,764	³	8	%		N/A
First Financial Bank, N.A.	$	492,668		14	%	³$	272,318	³	8	%	³$	340,397	³	10	%
Tier 1 Capital (to Risk-Weighted Assets):
Consolidated	$	549,124		16	%	³$	136,882	³	4	%		N/A
First Financial Bank, N.A.	$	454,698		13	%	³$	136,159	³	4	%	³$	204,238	³	6	%
Tier 1 Capital (to Average Assets):
Consolidated	$	549,124		10	%	³$	166,489	³	3	%		N/A
First Financial Bank, N.A.	$	454,698		8	%	³$	165,598	³	3	%	³$	275,996	³	5	%
As of December 31, 2013:
Total Capital (to Risk-Weighted Assets):
Consolidated	$	525,460		17	%	³$	247,985	³	8	%		N/A
First Financial Bank, N.A.	$	433,538		14	%	³$	246,788	³	8	%	³$	308,484	³	10	%
Tier 1 Capital (to Risk-Weighted Assets):
Consolidated	$	490,460		16	%	³$	123,993	³	4	%		N/A
First Financial Bank, N.A.	$	398,538		13	%	³$	123,394	³	4	%	³$	185,091	³	6	%
Tier 1 Capital (to Average Assets):
Consolidated	$	490,460		10	%	³$	149,488	³	3	%		N/A
First Financial Bank, N.A.	$	398,538		8	%	³$	148,690	³	3	%	³$	247,816	³	5	%

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, 2014, our Trust Company had tangible net assets totaling $11,659,000.

Our subsidiary bank may be required at times to maintain reserve balances with the Federal Reserve Bank. At December 31, 2014 and 2013, the subsidiary bank’s reserve balances were $14,334,000 and $5,916,000, respectively.