Regulatory Matters

12 Months Ended

Dec. 31, 2018

Banking and Thrift [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 2016, 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 increasing 0.625% each year thereafter, until it reaches 2.5% on January 1, 2019. 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, 2018 and 2017, we had a total risk-based capital ratio of 20.61% and 19.85%, a Tier 1 capital to risk-weighted assets ratio of 19.47% and 18.66%; a common equity Tier 1 capital to risk-weighted assets ratio of 19.47% and 18.66%, and a Tier 1 leverage ratio of 11.85% and 11.09%, respectively. The regulatory capital ratios as of December 31, 2018 and 2017 were calculated under Basel III rules. There is no threshold for well-capitalized status for bank holding companies.

As of December 31, 2018 and 2017, the regulatory capital ratios of the Company and Bank under the Basel III regulatory capital framework are as follows:

	Actual					Minimum Capital Required Under Basel III Phase-In					Minimum Capital Required-Basel III Fully Phased-In					Required to be Considered Well- Capitalized
As of December 31, 2018:	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital to Risk-Weighted Assets:
Consolidated	$	940,026		20.61	%	$	450,459		9.875	%	$	478,969		10.50	%		—		N/A
First Financial Bank, N.A	$	824,428		18.12	%	$	449,350		9.875	%	$	477,790		10.50	%	$	455,038		10.00	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	888,015		19.47	%	$	359,226		7.875	%	$	387,737		8.50	%		—		N/A
First Financial Bank, N.A	$	772,417		16.97	%	$	358,342		7.875	%	$	386,782		8.50	%	$	364,030		8.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	888,015		19.47	%	$	290,802		6.375	%	$	319,312		7.00	%		—		N/A
First Financial Bank, N.A	$	772,417		16.97	%	$	290,087		6.375	%	$	318,526		7.00	%	$	295,775		6.50	%
Leverage Ratio:
Consolidated	$	888,015		11.85	%	$	299,682		4.00	%	$	299,682		4.00	%		—		N/A
First Financial Bank, N.A	$	772,417		10.35	%	$	298,576		4.00	%	$	298,576		4.00	%	$	373,220		5.00	%

	Actual					Minimum Capital Required Under Basel III Phase-In					Minimum Capital Required-Basel III Fully Phased-In					Required to be Considered Well- Capitalized
As of December 31, 2017:	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital to Risk-Weighted Assets:
Consolidated	$	814,634		19.85	%	$	379,578		9.250	%	$	430,872		10.50	%		—		N/A
First Financial Bank, N.A	$	723,563		17.68	%	$	378,614		9.250	%	$	429,777		10.50	%	$	409,312		10.00	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	765,882		18.66	%	$	297,507		7.250	%	$	348,801		8.50	%		—		N/A
First Financial Bank, N.A	$	674,811		16.49	%	$	296,751		7.250	%	$	347,915		8.50	%	$	327,450		8.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:
Consolidated	$	765,882		18.66	%	$	235,954		5.750	%	$	287,248		7.00	%		—		N/A
First Financial Bank, N.A	$	674,811		16.49	%	$	235,354		5.750	%	$	286,518		7.00	%	$	266,053		6.50	%
Leverage Ratio:
Consolidated	$	765,882		11.09	%	$	276,296		4.000	%	$	276,296		4.00	%		—		N/A
First Financial Bank, N.A	$	674,811		9.80	%	$	275,320		4.000	%	$	275,320		4.00	%	$	344,151		5.00	%

We have performed a preliminary assessment using the regulatory capital estimation tool made available by the OCC and believe the Company and Bank are prepared to meet the new requirements upon full adoption of Basel III that will be effective in 2019.

In connection with the adoption of the Basel III regulatory capital framework, our subsidiary bank made the election to continue to exclude most accumulated other comprehensive income (“AOCI”) from capital in connection with its March 31, 2015 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, National Association’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, 2018, our Trust Company had tangible net assets totaling $22,503,000.

Our subsidiary bank may be required at times to maintain reserve balances with the Federal Reserve Bank. At December 31, 2018 and 2017, the subsidiary bank’s reserve balances were $11,372,000 and $11,504,000, respectively.