FIRST FINANCIAL BANCORP /OH/FFBC
FIRST FINANCIAL BANCORP /OH/ Income Taxes Disclosure
Income Taxes
All of the Company's income tax expense as reported for the years ended December 31, 2025, 2024, and 2023 is attributable to domestic operations. Income tax expense consisted of the following components:
| (Dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current expense | ||||||||||||||||||||
| Federal | $ | 36,608 | $ | 15,133 | $ | 46,800 | ||||||||||||||
| State | 10,150 | 3,159 | 2,568 | |||||||||||||||||
| Total current expense | 46,758 | 18,292 | 49,368 | |||||||||||||||||
| Deferred expense (benefit) | ||||||||||||||||||||
| Federal | 23,964 | 21,014 | 11,769 | |||||||||||||||||
| State | (5,057) | 188 | 1,596 | |||||||||||||||||
| Total deferred expense (benefit) | 18,907 | 21,202 | 13,365 | |||||||||||||||||
| Income tax expense | $ | 65,665 | $ | 39,494 | $ | 62,733 | ||||||||||||||
The difference between the federal income tax rates applied to income before income taxes and the effective rates were due to the following:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||
| U.S. federal statutory rate | $ | 67,467 | 21.0 | % | $ | 56,348 | 21.0 | % | $ | 66,905 | 21.0 | % | ||||||||||||||||||||||||||
State and local income taxes, net of federal tax effect(1) | 4,023 | 1.3 | % | 1,676 | 0.6 | % | 3,290 | 1.0 | % | |||||||||||||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||||||||||||||||
Energy related tax credits(2) | (1,640) | (0.5) | % | (9,977) | (3.7) | % | 0 | 0.0 | % | |||||||||||||||||||||||||||||
Low income housing credit(2) | (3,083) | (1.0) | % | (3,427) | (1.3) | % | (2,465) | (0.8) | % | |||||||||||||||||||||||||||||
| Other | (531) | (0.2) | % | (1,702) | (0.6) | % | (621) | (0.2) | % | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Tax-exempt interest, net of TEFRA penalty | (3,534) | (1.1) | % | (3,945) | (1.5) | % | (4,741) | (1.5) | % | |||||||||||||||||||||||||||||
| Other | 2,117 | 0.7 | % | 569 | 0.2 | % | (313) | (0.1) | % | |||||||||||||||||||||||||||||
| Other adjustments | 846 | 0.3 | % | (48) | 0.0 | % | 678 | 0.2 | % | |||||||||||||||||||||||||||||
| Income tax expense | $ | 65,665 | 20.4 | % | $ | 39,494 | 14.7 | % | $ | 62,733 | 19.7 | % | ||||||||||||||||||||||||||
(1)State taxes in Indiana, New York, and California comprise the majority (greater than 50%) of the tax effect in this category for 2025. State taxes in Indiana and Illinois made up the majority of the tax effect in this category for 2024 and 2023.
(2) Includes tax credits, investment amortization, and projected tax losses associated with tax-advantaged investments.
Income taxes paid as of December 31, 2025, 2024, and 2023 were:
| (Dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Federal | $ | 4,866 | $ | 25,000 | $ | 5,000 | ||||||||||||||
| State and local | ||||||||||||||||||||
| New York | 984 | * | 810 | |||||||||||||||||
| California | 663 | * | * | |||||||||||||||||
| Illinois | 625 | * | 1,175 | |||||||||||||||||
| New Jersey | * | * | 655 | |||||||||||||||||
| Tennessee | * | * | 640 | |||||||||||||||||
| All other states | 2,075 | 2,523 | 1,796 | |||||||||||||||||
| Foreign | 0 | 0 | 0 | |||||||||||||||||
| Income taxes paid | $ | 9,213 | $ | 27,523 | $ | 10,076 | ||||||||||||||
* Jurisdiction below the 5% disclosure threshold for the periods presented.
The major components of the temporary differences that gave rise to deferred tax assets and liabilities at December 31, 2025 and 2024, were as follows:
| (Dollars in thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets | ||||||||||||||
| Allowance for credit losses | $ | 43,905 | $ | 35,984 | ||||||||||
| Fair value adjustments on business combinations | 2,000 | 0 | ||||||||||||
| Deferred compensation | 541 | 430 | ||||||||||||
| Postretirement benefits other than pension liability | 492 | 502 | ||||||||||||
| Accrued stock-based compensation | 2,118 | 2,701 | ||||||||||||
| Interest on nonaccrual loans | 1,992 | 398 | ||||||||||||
| Accrued expenses | 8,626 | 7,978 | ||||||||||||
| Net unrealized losses on investment securities and derivatives | 46,279 | 72,818 | ||||||||||||
| State net operating loss | 4,636 | 1,462 | ||||||||||||
| Leasing liability | 13,987 | 14,185 | ||||||||||||
| Reserve for unfunded commitments | 4,749 | 3,902 | ||||||||||||
| Section 174 capitalized expense | 703 | 1,373 | ||||||||||||
| Tax credit carryforwards | 1,949 | 0 | ||||||||||||
| Other | 4,585 | 283 | ||||||||||||
| Total deferred tax assets | 136,562 | 142,016 | ||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Tax depreciation in excess of book depreciation | (9,365) | (5,652) | ||||||||||||
| FHLB and FRB stock | (4,380) | (3,910) | ||||||||||||
| Mortgage-servicing rights | (5,169) | (4,262) | ||||||||||||
| Leasing activities | (84,261) | (42,654) | ||||||||||||
| Retirement obligation | (10,464) | (10,608) | ||||||||||||
| Intangible assets | (25,592) | (23,138) | ||||||||||||
| Deferred loan fees and costs | (4,398) | (3,406) | ||||||||||||
| Prepaid expenses | (380) | (408) | ||||||||||||
| Limited partnership investments | (3,939) | (9,394) | ||||||||||||
| Fair value adjustments on business combinations | 0 | (5,716) | ||||||||||||
| ASU 2016-01 unrealized gain/loss-equity securities | (284) | (207) | ||||||||||||
| Right of use assets | (11,697) | (11,839) | ||||||||||||
| Other | (7,698) | (4,811) | ||||||||||||
| Total deferred tax liabilities | (167,627) | (126,005) | ||||||||||||
| Total net deferred tax asset (liability) | $ | (31,065) | $ | 16,011 | ||||||||||
At December 31, 2025, the Company had tax credit carryforwards of $1.9 million compared to none at December 31, 2024. These carryforwards expire in 2044. The Company expects to fully utilize these tax credit carryforwards and, therefore, a valuation allowance was not required at December 31, 2025.
At both December 31, 2025 and 2024, the Company had a state net operating loss carryforward from MSFG of $2.3 million and $1.9 million, respectively. This carryforward begins to expire in 2026 and is subject to IRC Section 382 and limited annually. At December 31, 2025, the Company also had a state net operating loss carryforward of $0.5 million that expires in 2039. The Company expects to fully utilize these net operating losses and, therefore, no valuation allowance was required at December 31, 2025 and 2024.
The realization of the Company’s deferred tax assets is dependent upon the Company’s ability to generate taxable income in future periods and the reversal of deferred tax liabilities during the same period. The Company has evaluated the available evidence supporting the realization of its deferred tax assets and determined it is more likely than not that the assets will be realized and thus no valuation allowance was recorded at December 31, 2025 and 2024.
The Bank’s retained earnings at December 31, 2025 and 2024 included base-year bad debt reserves of $16.1 million. Base-year reserves are subject to recapture in the event the Bank redeems its stock, makes distributions in excess of current and accumulated earnings and profits (as calculated for federal income tax purposes), loses its “bank” status or liquidates. The Bank does not expect to meet any of the criteria for recapture, therefore, a deferred income tax liability of $3.4 million has not been recorded.
On July 4, 2025, the legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14,” which is commonly referred to as the One Big Beautiful Bill (“the Act”) was signed into law. First Financial has evaluated the income tax implications of the Act and has applied the new law to current and deferred income tax calculations in 2025.
First Financial had no unrecognized tax benefits at December 31, 2025, 2024 or 2023. 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. First Financial recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. At December 31, 2025, 2024 and 2023, the Company had no interest or penalties recorded.
A progression of gross unrecognized tax benefits as of December 31, 2025, 2024 and 2023 is as follows:
| (Dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance at beginning of year | $ | 0 | $ | 0 | $ | 2,386 | ||||||||||||||
| Reductions for tax positions of prior years | 0 | 0 | (1,909) | |||||||||||||||||
| Settlements | 0 | 0 | (477) | |||||||||||||||||
| Balance at end of year | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
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 2022 have been closed and are no longer subject to U.S. federal income tax examinations. Tax years 2022 through 2025 remain open to examination by the federal taxing authority. With limited exception, First Financial is no longer subject to state and local income tax examinations for years prior to 2021.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 23, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.