INCOME TAXES

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

For the third quarter of 2023, the Company recorded income tax expense of $15.3 million resulting in an effective tax rate of 19.5% compared to income tax benefit of $8.6 million and an effective tax rate of negative 18.3% for the comparable period in 2022. For the first nine months of 2023, income tax expense was $48.1 million, resulting in an effective tax rate of 19.4% compared with $13.7 million and an effective tax rate of 8.5% for the comparable period in 2022. The increase in the effective tax rate is primarily driven by tax credits realized in the 2022 as well as increased taxable income and the resolution of unrecognized tax benefits.

At September 30, 2023, First Financial had no unrecognized tax benefits compared to $1.9 million at December 31, 2022. As defined by FASB ASC Topic 740-10, Income Taxes, an unrecognized tax benefit is a position that if recognized would favorably impact the effective income tax rate in future periods. The unrecognized tax benefits in 2022 were related to state income tax exposures where the Company believed it was likely that, upon examination, a state may have taken a position contrary to the position taken by First Financial. A resolution regarding the Company's uncertain tax position resulted in partial recognition of the benefit in the second quarter of 2023. First Financial recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. At September 30, 2023 and December 31, 2022, the Company had no interest or penalties recorded.

First Financial and its subsidiaries are subject to U.S. federal income tax as well as state and local income tax in several jurisdictions.  Tax years prior to 2019 have been closed and are no longer subject to U.S. federal income tax examinations. Tax years 2019 through 2022 remain open to examination by the federal taxing authority. First Financial is no longer subject to state and local income tax examinations for years prior to 2018.