Regulatory Matters

12 Months Ended

Dec. 31, 2022

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.

Beginning in January 2015, under the Basel III regulatory capital framework, the implementation of the capital conservation buffer was effective for the Company starting at the 0.625% level and increased 0.625% each year thereafter, until it reached 2.50% on January 1, 2019. As of January 1, 2019, the 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, 2022 and 2021, we had a total risk-based capital ratio of 19.29% and 20.34%, a Tier 1 capital to risk-weighted assets ratio of 18.22% and 19.35%; a common equity Tier 1 capital to risk-weighted assets ratio of 18.22% and 19.35%, and a Tier 1 leverage ratio of 10.96% and 11.13%, respectively. The regulatory capital ratios as of December 31, 2022 and 2021 were calculated under Basel III rules.

As of December 31, 2022 and 2021, 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, 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	%

	Actual					Minimum Capital Required-Basel III Fully Phased-In*					Required to be Considered Well- Capitalized
As of December 31, 2021:	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital to Risk-Weighted Assets:
Consolidated	$	1,425,907		20.34	%	$	736,003		10.50	%	$	700,955		10.00	%
First Financial Bank, N.A	$	1,258,965		17.99	%	$	734,604		10.50	%	$	699,623		10.00	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	1,356,006		19.35	%	$	595,812		8.50	%	$	420,573		6.00	%
First Financial Bank, N.A	$	1,189,064		17.00	%	$	594,679		8.50	%	$	559,698		8.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	1,356,006		19.35	%	$	490,669		7.00	%		—	N/A
First Financial Bank, N.A	$	1,189,064		17.00	%	$	489,736		7.00	%	$	454,755		6.50	%
Leverage Ratio:
Consolidated	$	1,356,006		11.13	%	$	487,459		4.00	%		—	N/A
First Financial Bank, N.A	$	1,189,064		9.79	%	$	485,926		4.00	%	$	607,407		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, 2022, our Trust Company had tangible net assets totaling $47,766,000.

Our subsidiary bank may be required at times to maintain reserve balances with the Federal Reserve Bank. At December 31, 2022 and 2021, there was no subsidiary bank’s reserve balance required, respectively.