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Economy, Business and Finance

First Financial Corporation

11/05/2025 | Press release | Distributed by Public on 11/05/2025 13:11

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-16759

FIRST FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Indiana	35-1546989
(State or other jurisdiction	(I.R.S. Employer
incorporation or organization)	Identification No.)

One First Financial Plaza, Terre Haute, IN	47807
(Address of principal executive office)	(Zip Code)

(812)	238-6000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.125 per share	THFF	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer (Do not check if a smaller reporting company)	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐No ☑.

As of November 1, 2025, the registrant had outstanding 11,850,645 shares of common stock, without par value.

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FIRST FINANCIAL CORPORATION

FORM 10-Q

INDEX


	Page No.
PART I. Financial Information

Item 1. Financial Statements:

Consolidated Balance Sheets	3

Consolidated Statements of Income and Comprehensive Income	4

Consolidated Statements of Shareholders' Equity	5

Consolidated Statements of Cash Flows	7

Notes to Consolidated Financial Statements	8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3. Quantitative and Qualitative Disclosures about Market Risk	36

Item 4. Controls and Procedures	42

PART II. Other Information:

Item 1. Legal Proceedings	43

Item 1A. Risk Factors	43

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3. Defaults upon Senior Securities	43

Item 4. Mine Safety Disclosures	43

Item 5. Other Information	43

Item 6. Exhibits	44

Signatures	45

Table of Contents

Part I - Financial Information

Item 1.Financial Statements

FIRST FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share data)


	September 30,		December 31,
	2025		2024
	(unaudited)
ASSETS
Cash and due from banks	$	87,438	$	93,526
Federal funds sold		157		820
Securities available-for-sale		1,186,107		1,195,990
Loans:
Commercial		2,282,062		2,196,351
Residential		997,915		967,386
Consumer		682,438		668,058
		3,962,415		3,831,795
(Less) plus:
Net deferred loan (fees)/costs		4,986		5,346
Allowance for credit losses		(47,411)		(46,732)
		3,919,990		3,790,409
Restricted stock		18,761		17,555
Accrued interest receivable		26,526		26,934
Premises and equipment, net		79,351		81,508
Bank-owned life insurance		130,747		128,766
Goodwill		98,229		100,026
Other intangible assets		17,385		21,545
Other real estate owned		138		523
Other assets		104,857		102,746
TOTAL ASSETS	$	5,669,686	$	5,560,348
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing	$	849,978	$	859,014
Interest-bearing:
Certificates of deposit exceeding the FDIC insurance limits		138,603		144,982
Other interest-bearing deposits		3,626,724		3,714,918
		4,615,305		4,718,914
Short-term borrowings		182,522		187,057
Other borrowings		170,453		28,120
Other liabilities		79,188		77,216
TOTAL LIABILITIES		5,047,468		5,011,307
Shareholders' equity
Common stock, $0.125 stated value per share; Authorized shares - 40,000,000; Issued shares-16,190,157in 2025 and 16,165,023 in 2024; Outstanding shares - 11,850,645 in 2025 and 11,842,539 in 2024		2,020		2,018
Additional paid-in capital		146,624		145,927
Retained earnings		726,989		687,366
Accumulated other comprehensive loss		(98,635)		(132,285)
Less: Treasury shares at cost - 4,339,512 in 2025 and 4,322,484 in 2024		(154,780)		(153,985)
TOTAL SHAREHOLDERS' EQUITY		622,218		549,041
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	5,669,686	$	5,560,348

See accompanying notes.

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FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Dollar amounts in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
INTEREST INCOME:
Loans, including related fees	$	67,070	$	61,367	$	195,457	$	162,878
Securities:
Taxable		5,985		6,319		17,902		18,083
Tax-exempt		2,689		2,715		7,915		7,919
Other		900		1,294		2,579		2,989
TOTAL INTEREST INCOME		76,644		71,695		223,853		191,869
INTEREST EXPENSE:
Deposits		18,002		22,197		54,696		59,622
Short-term borrowings		1,916		993		5,007		2,928
Other borrowings		2,123		1,335		4,901		3,935
TOTAL INTEREST EXPENSE		22,041		24,525		64,604		66,485
NET INTEREST INCOME		54,603		47,170		159,249		125,384
Provision for credit losses		1,950		9,400		5,850		14,166
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES		52,653		37,770		153,399		111,218
NON-INTEREST INCOME:
Trust and financial services		1,278		1,251		4,161		3,903
Service charges and fees on deposit accounts		8,104		8,139		23,243		21,576
Other service charges and fees		251		191		823		700
Securities gains (losses), net		24		103		21		104
Interchange income		176		177		570		490
Loan servicing fees		338		274		830		957
Gain on sales of mortgage loans		494		411		1,149		886
Other		484		677		1,244		1,943
TOTAL NON-INTEREST INCOME		11,149		11,223		32,041		30,559
NON-INTEREST EXPENSE:
Salaries and employee benefits		19,788		18,521		58,725		53,231
Occupancy expense		2,738		2,556		7,886		7,116
Equipment expense		4,811		4,280		13,903		12,736
FDIC Expense		690		558		2,235		1,721
Other		10,021		12,649		30,334		29,833
TOTAL NON-INTEREST EXPENSE		38,048		38,564		113,083		104,637
INCOME BEFORE INCOME TAXES		25,754		10,429		72,357		37,140
Provision for income taxes		4,992		1,688		14,603		6,106
NET INCOME		20,762		8,741		57,754		31,034
OTHER COMPREHENSIVE INCOME
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes		19,596		31,628		33,642		24,067
Change in funded status of post retirement benefits, net of taxes		3		73		8		220
COMPREHENSIVE INCOME	$	40,361	$	40,442	$	91,404	$	55,321
PER SHARE DATA
Basic and Diluted Earnings per Share	$	1.75	$	0.74	$	4.87	$	2.63
Weighted average number of shares outstanding (in thousands)		11,851		11,808		11,848		11,809

See accompanying notes.

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FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three Months Ended

September 30, 2025, and 2024

(Dollar amounts in thousands, except per share data)

(Unaudited)


							Accumulated
							Other
	Common		Additional		Retained		Comprehensive		Treasury
	Stock		Capital		Earnings		Income/(Loss)		Stock		Total
Balance, July 1, 2024	$	2,016	$	144,632	$	673,728	$	(134,501)	$	(155,205)	$	530,670
Net income		-		-		8,741		-		-		8,741
Other comprehensive income		-		-		-		31,701		-		31,701
Omnibus Equity Incentive Plan		-		153		-		-		-		153
Cash dividends, $.45 per share		-		-		(5,314)		-		-		(5,314)
Balance, September 30, 2024	$	2,016	$	144,785	$	677,155	$	(102,800)	$	(155,205)	$	565,951

Balance, July 1, 2025	$	2,020	$	146,391	$	712,271	$	(118,234)	$	(154,780)	$	587,668
Net income		-		-		20,762		-		-		20,762
Other comprehensive income		-		-		-		19,599		-		19,599
Omnibus Equity Incentive Plan		-		233		-		-		-		233
Cash dividends, $.51 per share		-		-		(6,044)		-		-		(6,044)
Balance, September 30, 2025	$	2,020	$	146,624	$	726,989	$	(98,635)	$	(154,780)	$	622,218

See accompanying notes.

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FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Nine Months Ended

September 30, 2025, and 2024

(Dollar amounts in thousands, except per share data)

(Unaudited)


							Accumulated
							Other
	Common		Additional		Retained		Comprehensive		Treasury
	Stock		Capital		Earnings		Income/(Loss)		Stock		Total
Balance, January 1, 2024	$	2,014	$	144,152	$	663,726	$	(127,087)	$	(154,829)	$	527,976
Cumulative change in accounting principle ASU 2023-02		-		-		(1,659)		-		-		(1,659)
Net income		-		-		31,034		-		-		31,034
Other comprehensive income		-		-		-		24,287		-		24,287
Omnibus Equity Incentive Plan		2		633		-		-		-		635
Treasury shares purchased (8,734 shares)		-		-		-		-		(376)		(376)
Cash dividends, $.90 per share		-		-		(15,946)		-		-		(15,946)
Balance, September 30, 2024	$	2,016	$	144,785	$	677,155	$	(102,800)	$	(155,205)	$	565,951

Balance, January 1, 2025	$	2,018	$	145,927	$	687,366	$	(132,285)	$	(153,985)	$	549,041
Net income		-		-		57,754		-		-		57,754
Other comprehensive income		-		-		-		33,650		-		33,650
Omnibus Equity Incentive Plan		2		697		-		-		-		699
Treasury shares purchased (17,028 shares)		-		-		-		-		(795)		(795)
Cash dividends, $1.53 per share		-		-		(18,131)		-		-		(18,131)
Balance, September 30, 2025	$	2,020	$	146,624	$	726,989	$	(98,635)	$	(154,780)	$	622,218

See accompanying notes.

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FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands, except per share data)


	Nine Months Ended
	September 30,
	2025		2024

	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	57,754	$	31,034
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of premiums and discounts on investments		2,981		3,489
Provision for credit losses		5,850		14,166
Securities (gains)		(21)		(104)
Depreciation and amortization		9,104		6,617
Restricted stock compensation		699		635
Gain on sale of mortgage loans		(1,149)		(886)
(Gain) on sale of other real estate		(66)		(60)
Other, net		(14,523)		(10,376)
NET CASH FROM OPERATING ACTIVITIES		60,629		44,515
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available-for-sale		-		50,662
Calls, maturities and principal reductions on securities available-for-sale		93,280		82,204
Purchases of securities available-for-sale		(42,477)		(40,096)
Loans made to customers, net of repayment		(129,816)		(85,682)
Net change in federal funds sold		663		(1,074)
Redemption of restricted stock		62		745
Purchase of restricted stock		(1,268)		(21)
Cash received from acquisitions, net		-		28,152
Proceeds from sales of other real estate owned		449		316
Additions to premises and equipment		(2,787)		(5,070)
NET CASH FROM INVESTING ACTIVITIES		(81,894)		30,136
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits		(103,580)		4,947
Net change in short-term borrowings		(4,535)		17,142
Dividends paid		(18,120)		(15,934)
Purchase of treasury shares		(795)		(376)
Proceeds from other borrowings		1,850,000		1,525,000
Maturities of other borrowings		(1,707,793)		(1,604,877)
NET CASH FROM FINANCING ACTIVITIES		15,177		(74,098)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(6,088)		553
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD		93,526		76,759
CASH AND DUE FROM BANKS, END OF PERIOD	$	87,438	$	77,312

See accompanying notes.

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FIRST FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accompanying September 30, 2025 and 2024 consolidated financial statements are unaudited. The December 31, 2024 consolidated financial statements are as reported in the First Financial Corporation (the "Corporation") 2024 annual report. The information presented does not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The following notes should be read together with notes to the consolidated financial statements included in the 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2024.

1. Significant Accounting Policies

The significant accounting policies followed by the Corporation and its subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments which are, in the opinion of management, necessary for a fair statement of the results for the periods reported have been included in the accompanying consolidated financial statements and are of a normal recurring nature. The Corporation reports financial information for only one segment, banking. Some items in the prior year financials were reclassified to conform to the current presentation.

The Omnibus Equity Incentive Plan is a long-term incentive plan that was designed to align the interests of participants with the interests of shareholders. Under the plan, awards may be made based on certain performance measures. The grants are made in restricted stock units that are subject to a vesting schedule. These shares vest over 3 years in increments of 33%, 33%, and 34% respectively. For the nine months ended 2025 and 2024, 25,134 and 27,803 shares were awarded, respectively. These shares had a grant date value of $1.2 million and $1.0 million for 2025 and 2024, vest over three years, and their grant is not subject to future performance measures. Outstanding shares are increased at the award date for the total shares awarded.

On July 4, 2025, President Trump signed into law the legislation formally titled, "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14," and commonly referred to as the One Big Beautiful Bill ("the Act"). The Corporation is currently evaluating income tax implications of the Act. The Corporation does not expect the Act to have a material impact on the Corporation's financial statements.

2. New accounting standards

Accounting Pronouncements Adopted:

In March 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-02 "Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This guidance is effective for public business entities for fiscal years including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted in any interim period. The Corporation adopted ASU 2023-02 on January 1, 2024 on a modified retrospective basis. As a result of the adoption, other assets increased $19 million, other liabilities increased $21 million, and retained earnings decreased $1.7 million.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Corporation adopted ASU 2023-07 on January 1, 2024 for fiscal year activity and will apply ASU 2023-07 in interim periods within fiscal years beginning January 1, 2025.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." Among other things, these amendments require that public

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business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate.) The amendments also require that all entities disclose on an annual basis the following information about income taxes paid: (1) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and (2) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received.) This guidance is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis although retrospective application is permitted. The Corporation adopted ASU 2023-09 January 1, 2025, and will provide the required disclosures in the Corporation's 2025 annual filings.

Recent Accounting Pronouncements:

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." This update is intended to provide investors more detailed disclosures around specific types of expenses. This ASU requires certain details for expenses presented on the face of the consolidated statements of income as well as selling expenses to be presented in the notes to the financial statements. This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Corporation is assessing ASU 2024-03 and its effect on its consolidated financial statements and related disclosures.

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3. Allowance for Credit Losses

The following table presents the activity of the allowance for credit losses by portfolio segment for the three months ended September 30.


Allowance for Credit Losses:			September 30, 2025
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Unallocated		Total
Beginning balance	$	16,408	$	17,795	$	12,559	$	325	$	47,087
Provision for credit losses		1,584		(787)		1,100		53		1,950
Loans charged-off		(364)		(8)		(2,854)		-		(3,226)
Recoveries		248		74		1,278		-		1,600
Ending Balance	$	17,876	$	17,074	$	12,083	$	378	$	47,411


Allowance for Credit Losses:			September 30, 2024
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Unallocated		Total
Beginning balance	$	12,015	$	14,324	$	11,986	$	9	$	38,334
PCD ACL on acquired loans		3,006		-		-		-		3,006
Provision for credit losses		4,246		2,766		2,113		275		9,400
Loans charged-off		(3,800)		(58)		(3,078)		-		(6,936)
Recoveries		1,197		93		1,075		-		2,365
Ending Balance	$	16,664	$	17,125	$	12,096	$	284	$	46,169

The following table presents the activity of the allowance for credit losses by portfolio segment for the nine months ended September 30.


Allowance for Credit Losses:			September 30, 2025
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Unallocated		Total
Beginning balance	$	16,963	$	17,470	$	12,046	$	253	$	46,732
Provision for credit losses		1,339		(507)		4,893		125		5,850
Loans charged -off		(1,063)		(125)		(8,207)		-		(9,395)
Recoveries		637		236		3,351		-		4,224
Ending Balance	$	17,876	$	17,074	$	12,083	$	378	$	47,411


Allowance for Credit Losses:			September 30, 2024
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Unallocated		Total
Beginning balance	$	13,264	$	14,327	$	11,797	$	379	$	39,767
PCD ACL on acquired loans		3,006		-		-		0		3,006
Provision for credit losses		6,328		2,686		5,247		(95)		14,166
Loans charged -off		(7,579)		(114)		(8,526)		-		(16,219)
Recoveries		1,645		226		3,578		-		5,449
Ending Balance	$	16,664	$	17,125	$	12,096	$	284	$	46,169

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The tables below present the recorded investment in non-performing loans by class of loans.


	September 30, 2025
	Loans Past				Nonaccrual
	Due Over				With No
	90 Days				Allowance
	and Greater
(Dollar amounts in thousands)	Still Accruing		Nonaccrual		For Credit Loss
Commercial
Commercial & Industrial	$	-	$	5,652	$	418
Farmland		177		-		-
Non Farm, Non Residential		-		1,979		72
Agriculture		29		867		-
All Other Commercial		-		1,640		143
Residential
First Liens		919		907		84
Home Equity		227		462		-
Junior Liens		189		47		-
Multifamily		232		267		212
All Other Residential		74		2,884		20
Consumer
Motor Vehicle		-		2,564		-
All Other Consumer		-		201		-
TOTAL	$	1,847	$	17,470	$	949


	December 31, 2024
	Loans Past				Nonaccrual
	Due Over				With No
	90 Days				Allowance
	and Greater
(Dollar amounts in thousands)	Still Accruing		Nonaccrual		For Credit Loss
Commercial
Commercial & Industrial	$	43	$	2,092	$	-
Farmland		-		1,047		806
Non Farm, Non Residential		-		1,733		897
Agriculture		-		644		623
All Other Commercial		-		1,181		1,116
Residential
First Liens		459		1,464		694
Home Equity		822		107		-
Junior Liens		243		85		27
Multifamily		321		291		225
All Other Residential		-		103		46
Consumer
Motor Vehicle		-		2,364		-
All Other Consumer		-		368		-
TOTAL	$	1,888	$	11,479	$	4,434

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The following tables present the amortized cost basis of collateral dependent loans by class of loans:


	September 30, 2025
	Collateral Type
(Dollar amounts in thousands)	Real Estate		Other
Commercial
Commercial & Industrial	$	3,868	$	5,413
Farmland		48		-
Non Farm, Non Residential		4,543		-
Agriculture		-		906
All Other Commercial		1,586		-
Residential
First Liens		84		-
Home Equity		-		-
Junior Liens		-		-
Multifamily		212		-
All Other Residential		2,864		-
Consumer
Motor Vehicle		-		-
All Other Consumer		-		-
Total	$	13,205	$	6,319


	December 31, 2024
	Collateral Type
(Dollar amounts in thousands)	Real Estate		Other
Commercial
Commercial & Industrial	$	1	$	5,978
Farmland		996		-
Non Farm, Non Residential		4,111		-
Agriculture		-		623
All Other Commercial		1,116		-
Residential
First Liens		694		-
Home Equity		-		-
Junior Liens		27		-
Multifamily		225		-
All Other Residential		46		-
Consumer
Motor Vehicle		-		-
All Other Consumer		-		-
Total	$	7,216	$	6,601

Table of Contents

The following tables presents the aging of the recorded investment in loans by past due category and class of loans.


	September 30, 2025
					90 Days
	30-59 Days		60-89 Days		and Greater		Total
(Dollar amounts in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Total
Commercial
Commercial & Industrial	$	3,378	$	58	$	974	$	4,410	$	587,651	$	592,061
Farmland		-		-		177		177		127,989		128,166
Non Farm, Non Residential		220		-		-		220		884,491		884,711
Agriculture		75		328		231		634		131,935		132,569
All Other Commercial		-		64		1,567		1,631		556,583		558,214
Residential
First Liens		818		437		1,067		2,322		458,644		460,966
Home Equity		599		99		633		1,331		99,387		100,718
Junior Liens		443		231		200		874		69,801		70,675
Multifamily		706		-		253		959		329,224		330,183
All Other Residential		-		-		2,952		2,952		36,129		39,081
Consumer
Motor Vehicle		6,132		1,575		761		8,468		647,706		656,174
All Other Consumer		400		118		32		550		28,731		29,281
TOTAL	$	12,771	$	2,910	$	8,847	$	24,528	$	3,958,271	$	3,982,799


	December 31, 2024
					90 Days
	30-59 Days		60-89 Days		and Greater		Total
(Dollar amounts in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Total
Commercial
Commercial & Industrial	$	746	$	768	$	208	$	1,722	$	571,244	$	572,966
Farmland		598		-		806		1,404		131,582		132,986
Non Farm, Non Residential		1,619		-		-		1,619		811,252		812,871
Agriculture		-		-		642		642		148,647		149,289
All Other Commercial		1,297		152		-		1,449		540,948		542,397
Residential
First Liens		4,304		1,361		1,224		6,889		444,792		451,681
Home Equity		639		157		906		1,702		88,137		89,839
Junior Liens		356		101		290		747		64,154		64,901
Multifamily		529		74		345		948		318,763		319,711
All Other Residential		25		-		108		133		44,477		44,610
Consumer
Motor Vehicle		10,176		1,435		808		12,419		627,119		639,538
All Other Consumer		555		122		123		800		30,843		31,643
TOTAL	$	20,844	$	4,170	$	5,460	$	30,474	$	3,821,958	$	3,852,432

Table of Contents

Loan Modifications Made to Borrowers Experiencing Financial Difficulty:

Modification of the terms of such loans typically include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

The following table presents the amortized cost of loans and leases at September 30, 2025 that were both experiencing financial difficulty and modified during the twelve months ended September 30, 2025, by class and by type of modification.The percentage of the amortized cost of loans and leases that were modified to borrowers in financial distress as compared to the amortized cost of each class of financial receivable is also presented below.



										Combination		Combination
										Term		Term		Total
										Extension and		Extension		Class of
	Principal		Payment		Term		Interest Rate			Principal		Interest Rate		Financing
(Dollar amounts in thousands)	Forgiveness		Delay		Extension		Reduction		Forgiveness		Reduction		Receivable
Residential
First Liens	$	-	$	-	$	-	$	104	$	-	$	136		0.05	%
Junior Liens		-		-		-		-		-		53		0.08	%
Consumer
Motor Vehicle		-		-		-		-		193		90		0.04	%
TOTAL	$	-	$	-	$	-	$	104	$	193	$	279		0.01	%

The Corporation has no commitments to lend additional amounts to the borrowers included in the table above.

The Corporation closely monitors the performance of loans and leases that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified in the last twelve months:


	September 30, 2025

	30 - 59		60 - 89		Greater Than
	Days		Days		89 Days		Total
(Dollar amounts in thousands)	Past Due		Past Due		Past Due		Past Due

Consumer
Motor Vehicle	$	-	$	2	$	-	$	2
TOTAL	$	-	$	2	$	-	$	2

The following table presents the financial effect of loan and lease modifications presented above to borrowers experiencing financial difficulty for the twelve months ended September 30, 2025.


			Weighted-			Weighted-
			Average			Average
	Principal		Interest Rate			Term
(Dollar amounts in thousands)	Forgiveness		Reduction			Extension
Residential
First Liens	$	-		1.17	%		83
Junior Liens	$	-		1.25	%		60
Consumer
Motor Vehicle		97		1.95	%		22
TOTAL	$	97		1.36	%		49

Table of Contents

The following table presents the amortized cost basis of loans that had a payment default during the twelve months ended September 30, 2025 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.



	Principal		Payment		Term		Interest Rate
(Dollar amounts in thousands)	Forgiveness		Delay		Extension		Reduction

Consumer
Motor Vehicle	$	2	$	-	$	2	$	2
TOTAL	$	2	$	-	$	2	$	2

Upon the Corporation's determination that a modified loan has subsequently been deemed uncollectible, the loan is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial loans, with an outstanding balance greater than $250 thousand. Any consumer loans outstanding to a borrower who had commercial loans analyzed will be similarly risk rated. This analysis is performed on a quarterly basis. The Corporation uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and debt service capacity of the borrower or of any pledged collateral. These loans have a well-defined weakness or weaknesses which have clearly jeopardized repayment of principal and interest as originally intended. They are characterized by the distinct possibility that the institution will sustain some future loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those graded substandard, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values.

Furthermore, non-homogeneous loans which were not individually analyzed, but are 90+ days past due or on non-accrual are classified as substandard. Loans included in homogeneous pools, such as residential or consumer may be classified as substandard due to 90+ days delinquency, non-accrual status, bankruptcy, or loan restructuring.

Table of Contents

The following tables present the commercial loan portfolio by risk category. These balances do not include accrued interest:


		September 30, 2025
		Term Loans at Amortized Cost Basis by Origination Year												Revolving
		2025		2024		2023		2022		2021		Prior		Loans		Total
Commercial
Commercial and Industrial	Pass	$	65,788	$	72,987	$	33,466	$	93,192	$	73,177	$	100,567	$	113,843	$	553,020
	Special Mention		-		4,691		3,742		135		5,606		3,892		1,431	$	19,497
	Substandard		-		11		45		613		1,556		3,609		7,765	$	13,599
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		1,320		1,207		599		425		159		73		-	$	3,783
	Subtotal	$	67,108	$	78,896	$	37,852	$	94,365	$	80,498	$	108,141	$	123,039	$	589,899

	Current period gross charge-offs	$	81	$	52	$	-	$	54	$	43	$	185	$	-	$	415

Farmland	Pass	$	10,469	$	9,795	$	17,947	$	14,332	$	16,126	$	51,864	$	1,260	$	121,793
	Special Mention		-		1,151		701		-		-		89		-	$	1,941
	Substandard		-		-		478		-		173		686		-	$	1,337
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		-		-		-		11		-	$	11
	Subtotal	$	10,469	$	10,946	$	19,126	$	14,332	$	16,299	$	52,650	$	1,260	$	125,082

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Non Farm, Non Residential	Pass	$	113,601	$	165,330	$	88,358	$	154,745	$	147,159	$	180,382	$	8,813	$	858,388
	Special Mention		-		-		-		1,034		-		239		-	$	1,273
	Substandard		-		-		-		2,264		15,373		4,214		-	$	21,851
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		-		-		-		703		-	$	703
	Subtotal	$	113,601	$	165,330	$	88,358	$	158,043	$	162,532	$	185,538	$	8,813	$	882,215

	Current period gross charge-offs	$	-	$	-	$	-	$	33	$	-	$	-	$	-	$	33

Agriculture	Pass	$	8,187	$	10,573	$	6,493	$	6,733	$	3,613	$	19,645	$	58,268	$	113,512
	Special Mention		221		95		-		914		181		1,004		4,072	$	6,487
	Substandard		-		332		224		152		28		4,138		4,336	$	9,210
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		2		-		3		21		13		-	$	39
	Subtotal	$	8,408	$	11,002	$	6,717	$	7,802	$	3,843	$	24,800	$	66,676	$	129,248

	Current period gross charge-offs	$	-	$	3	$	-	$	-	$	-	$	52	$	-	$	55

Other Commercial	Pass	$	54,812	$	91,816	$	62,942	$	90,871	$	89,058	$	155,635	$	7,885	$	553,019
	Special Mention		-		-		-		-		-		-		-	$	-
	Substandard		-		-		-		1,443		548		216		-	$	2,207
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		-		18		-		374		-	$	392
	Subtotal	$	54,812	$	91,816	$	62,942	$	92,332	$	89,606	$	156,225	$	7,885	$	555,618

	Current period gross charge-offs	$	560	$	-	$	-	$	-	$	-	$	-	$	-	$	560

Residential
Multifamily >5 Residential	Pass	$	25,418	$	85,258	$	65,416	$	56,186	$	36,575	$	38,848	$	634	$	308,335
	Special Mention		-		-		-		12,193		-		6,643		-	$	18,836
	Substandard		-		-		-		212		-		21		-	$	233
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		-		-		421		927		-	$	1,348
	Subtotal	$	25,418	$	85,258	$	65,416	$	68,591	$	36,996	$	46,439	$	634	$	328,752

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total	Pass	$	278,275	$	435,759	$	274,622	$	416,059	$	365,708	$	546,941	$	190,703	$	2,508,067
	Special Mention		221		5,937		4,443		14,276		5,787		11,867		5,503	$	48,034
	Substandard		-		343		747		4,684		17,678		12,884		12,101	$	48,437
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		1,320		1,209		599		446		601		2,101		-	$	6,276
		$	279,816	$	443,248	$	280,411	$	435,465	$	389,774	$	573,793	$	208,307	$	2,610,814

Table of Contents


		December 31, 2024
		Term Loans at Amortized Cost Basis by Origination Year												Revolving
		2024		2023		2022		2021		2020		Prior		Loans		Total
Commercial
Commercial and Industrial	Pass	$	92,372	$	38,454	$	104,695	$	76,691	$	35,180	$	90,984	$	85,448	$	523,824
	Special Mention		354		137		870		9,953		2,931		1,052		1,078	$	16,375
	Substandard		4,464		3,461		233		1,478		374		10,244		5,904	$	26,158
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		2,041		924		735		353		153		75		-	$	4,281
	Subtotal	$	99,231	$	42,976	$	106,533	$	88,475	$	38,638	$	102,355	$	92,430	$	570,638

	Current period gross charge-offs	$	-	$	-	$	1,982	$	4,716	$	54	$	96	$	-	$	6,848

Farmland	Pass	$	12,676	$	19,782	$	15,526	$	20,086	$	7,565	$	51,413	$	494	$	127,542
	Special Mention		-		-		-		-		-		817		-	$	817
	Substandard		-		-		35		237		-		1,292		-	$	1,564
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		-		-		-		11		-	$	11
	Subtotal	$	12,676	$	19,782	$	15,561	$	20,323	$	7,565	$	53,533	$	494	$	129,934

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Non Farm, Non Residential	Pass	$	145,512	$	85,201	$	162,233	$	167,505	$	40,094	$	164,625	$	19,286	$	784,456
	Special Mention		-		107		411		12,976		-		-		-	$	13,494
	Substandard		636		50		2,596		2,736		102		5,602		-	$	11,722
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		-		-		658		62		-	$	720
	Subtotal	$	146,148	$	85,358	$	165,240	$	183,217	$	40,854	$	170,289	$	19,286	$	810,392

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Agriculture	Pass	$	12,492	$	7,810	$	9,281	$	4,815	$	4,824	$	20,925	$	81,991	$	142,138
	Special Mention		-		-		84		-		5		1,353		1,750	$	3,192
	Substandard		-		-		-		-		-		649		-	$	649
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		12		-		27		23		13		-		-	$	75
	Subtotal	$	12,504	$	7,810	$	9,392	$	4,838	$	4,842	$	22,927	$	83,741	$	146,054

	Current period gross charge-offs	$	-	$	-	$	53	$	-	$	-	$	-	$	-	$	53

Other Commercial	Pass	$	61,991	$	56,715	$	99,257	$	112,668	$	93,030	$	102,823	$	10,435	$	536,919
	Special Mention		-		-		-		-		-		758		-	$	758
	Substandard		-		-		940		-		21		240		-	$	1,201
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		26		-		9		420		-	$	455
	Subtotal	$	61,991	$	56,715	$	100,223	$	112,668	$	93,060	$	104,241	$	10,435	$	539,333

	Current period gross charge-offs	$	889	$	100	$	-	$	-	$	-	$	-	$	-	$	989

Residential
Multifamily >5 Residential	Pass	$	78,426	$	65,289	$	58,565	$	42,191	$	22,950	$	26,018	$	4,662	$	298,101
	Special Mention		-		-		12,538		-		342		6,259		-	$	19,139
	Substandard		-		-		225		-		-		24		-	$	249
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		-		-		-		424		-		653		-	$	1,077
	Subtotal	$	78,426	$	65,289	$	71,328	$	42,615	$	23,292	$	32,954	$	4,662	$	318,566

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total	Pass	$	403,469	$	273,251	$	449,557	$	423,956	$	203,643	$	456,788	$	202,316	$	2,412,980
	Special Mention		354		244		13,903		22,929		3,278		10,239		2,828	$	53,775
	Substandard		5,100		3,511		4,029		4,451		497		18,051		5,904	$	41,543
	Doubtful		-		-		-		-		-		-		-	$	-
	Not Rated		2,053		924		788		800		833		1,221		-	$	6,619
		$	410,976	$	277,930	$	468,277	$	452,136	$	208,251	$	486,299	$	211,048	$	2,514,917

Table of Contents

The Corporation evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and lease financing loans, based primarily on the aging status of the loan and payment activity. Accordingly, loans on non-accrual status and loans past due 90 days or more and still accruing interest are considered to be nonperforming for purposes of credit quality evaluation. The following table presents the other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming. These balances do not include accrued interest:


		September 30, 2025
		Term Loans at Amortized Cost Basis by Origination Year												Revolving
		2025		2024		2023		2022		2021		Prior		Loans		Total
Residential
First Liens	Performing	$	50,005	$	66,465	$	43,592	$	80,422	$	63,100	$	152,136	$	1,788	$	457,508
	Non-performing		-		105		-		-		46		1,716		-	$	1,867
	Subtotal	$	50,005	$	66,570	$	43,592	$	80,422	$	63,146	$	153,852	$	1,788	$	459,375

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	11	$	-	$	11

Home Equity	Performing	$	338	$	933	$	706	$	808	$	260	$	1,288	$	95,371	$	99,704
	Non-performing		-		-		-		34		42		182		431	$	689
	Subtotal	$	338	$	933	$	706	$	842	$	302	$	1,470	$	95,802	$	100,393

	Current period gross charge-offs	$	-	$	-	$	-	$	22	$	-	$	19	$	-	$	41

Junior Liens	Performing	$	16,119	$	15,342	$	10,230	$	9,865	$	5,125	$	11,017	$	2,537	$	70,235
	Non-performing		-		43		79		20		-		88		-	$	230
	Subtotal	$	16,119	$	15,385	$	10,309	$	9,885	$	5,125	$	11,105	$	2,537	$	70,465

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	73	$	-	$	73

Other Residential	Performing	$	7,378	$	10,403	$	7,687	$	4,937	$	3,646	$	1,797	$	108	$	35,956
	Non-performing		-		2,844		72		-		49		9		-	$	2,974
	Subtotal	$	7,378	$	13,247	$	7,759	$	4,937	$	3,695	$	1,806	$	108	$	38,930

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer
Motor Vehicle	Performing	$	217,368	$	187,404	$	129,967	$	89,487	$	18,349	$	8,181	$	10	$	650,766
	Non-performing		212		441		547		876		242		224		-	$	2,542
	Subtotal	$	217,580	$	187,845	$	130,514	$	90,363	$	18,591	$	8,405	$	10	$	653,308

	Current period gross charge-offs	$	250	$	1,543	$	1,799	$	3,205	$	649	$	207	$	-	$	7,653

Other Consumer	Performing	$	4,394	$	6,751	$	3,392	$	1,792	$	1,303	$	1,080	$	10,181	$	28,893
	Non-performing		3		54		78		5		39		21		37	$	237
	Subtotal	$	4,397	$	6,805	$	3,470	$	1,797	$	1,342	$	1,101	$	10,218	$	29,130

	Current period gross charge-offs	$	10	$	177	$	145	$	53	$	38	$	4	$	127	$	554

Total	Performing	$	295,602	$	287,298	$	195,574	$	187,311	$	91,783	$	175,499	$	109,995	$	1,343,062
	Non-performing		215		3,487		776		935		418		2,240		468	$	8,539
Total other loans		$	295,817	$	290,785	$	196,350	$	188,246	$	92,201	$	177,739	$	110,463	$	1,351,601

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		December 31, 2024
		Term Loans at Amortized Cost Basis by Origination Year												Revolving
		2024		2023		2022		2021		2020		Prior		Loans		Total
Residential
First Liens	Performing	$	64,953	$	47,930	$	89,205	$	69,090	$	37,658	$	136,805	$	2,279	$	447,920
	Non-performing		-		-		-		180		113		2,019		-	$	2,312
	Subtotal	$	64,953	$	47,930	$	89,205	$	69,270	$	37,771	$	138,824	$	2,279	$	450,232

	Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	221	$	-	$	221

Home Equity	Performing	$	966	$	562	$	1,017	$	31	$	143	$	1,149	$	84,723	$	88,591
	Non-performing		-		-		41		-		38		108		720	$	907
	Subtotal	$	966	$	562	$	1,058	$	31	$	181	$	1,257	$	85,443	$	89,498

	Current period gross charge-offs	$	-	$	-	$	22	$	-	$	-	$	28	$	51	$	101

Junior Liens	Performing	$	16,989	$	12,371	$	12,590	$	6,431	$	5,200	$	9,229	$	1,578	$	64,388
	Non-performing		-		39		41		38		60		146		-	$	324
	Subtotal	$	16,989	$	12,410	$	12,631	$	6,469	$	5,260	$	9,375	$	1,578	$	64,712

	Current period gross charge-offs	$	-	$	15	$	-	$	-	$	-	$	-	$	-	$	15

Other Residential	Performing	$	17,542	$	13,123	$	6,960	$	4,392	$	628	$	1,559	$	53	$	44,257
	Non-performing		-		-		-		80		5		36		-	$	121
	Subtotal	$	17,542	$	13,123	$	6,960	$	4,472	$	633	$	1,595	$	53	$	44,378

	Current period gross charge-offs	$	-	$	-	$	-	$	6	$	-	$	-	$	-	$	6

Consumer
Motor Vehicle	Performing	$	247,368	$	187,134	$	139,251	$	37,043	$	20,130	$	3,290	$	11	$	634,227
	Non-performing		144		346		1,112		398		286		59		-	$	2,345
	Subtotal	$	247,512	$	187,480	$	140,363	$	37,441	$	20,416	$	3,349	$	11	$	636,572

	Current period gross charge-offs	$	478	$	2,692	$	4,839	$	1,751	$	587	$	97	$	-	$	10,444

Other Consumer	Performing	$	11,580	$	6,883	$	3,270	$	2,161	$	1,094	$	576	$	5,501	$	31,065
	Non-performing		32		92		155		75		24		3		40	$	421
	Subtotal	$	11,612	$	6,975	$	3,425	$	2,236	$	1,118	$	579	$	5,541	$	31,486

	Current period gross charge-offs	$	50	$	197	$	121	$	22	$	16	$	24	$	182	$	612

Total	Performing	$	359,398	$	268,003	$	252,293	$	119,148	$	64,853	$	152,608	$	94,145	$	1,310,448
	Non-performing		176		477		1,349		771		526		2,371		760	$	6,430
Total other loans		$	359,574	$	268,480	$	253,642	$	119,919	$	65,379	$	154,979	$	94,905	$	1,316,878

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4. Securities

The amortized cost and fair value of the Corporation's investments are shown below. All securities are classified as available-for-sale.


	September 30, 2025
	Amortized		Unrealized		Unrealized
(Dollar amounts in thousands)	Cost		Gains		Losses		Fair Value
U.S. Government agencies	$	87,559	$	95	$	(8,472)	$	79,182
Mortgage Backed Securities - residential		596,918		897		(62,313)		535,502
Mortgage Backed Securities - commercial		12,821		2		(313)		12,510
Collateralized mortgage obligations		176,523		74		(22,736)		153,861
State and municipal obligations		394,013		834		(29,211)		365,636
Municipal taxable		40,200		83		(3,710)		36,573
Collateralized debt obligations		-		2,843		-		2,843
TOTAL	$	1,308,034	$	4,828	$	(126,755)	$	1,186,107


	December 31, 2024
	Amortized		Unrealized		Unrealized
(Dollar amounts in thousands)	Cost		Gains		Losses		Fair Value
U.S. Government agencies	$	90,649	$	3	$	(11,670)	$	78,982
Mortgage Backed Securities-residential		630,556		15		(89,251)		541,320
Mortgage Backed Securities-commercial		14,182		2		(523)		13,661
Collateralized mortgage obligations		190,552		29		(27,555)		163,026
State and municipal obligations		394,696		171		(34,539)		360,328
Municipal taxable		41,162		11		(5,396)		35,777
Collateralized debt obligations		-		2,896		-		2,896
TOTAL	$	1,361,797	$	3,127	$	(168,934)	$	1,195,990

Contractual maturities of debt securities at September 30, 2025 were as follows.


	Available-for-Sale
	Amortized		Fair
(Dollar amounts in thousands)	Cost		Value
Due in one year or less	$	11,654	$	11,621
Due after one but within five years		44,532		43,683
Due after five but within ten years		131,477		128,522
Due after ten years		334,109		300,408
		521,772		484,234
Mortgage-backed securities and collateralized mortgage obligations		786,262		701,873
TOTAL	$	1,308,034	$	1,186,107

For the three and nine months ended September 30, 2025, there were $25 thousand in gross gains realized for both periods and $1 thousand and $4 thousand in gross losses realized on sales/calls of investment securities. For the three and nine months ended September 30, 2024, there were $132 thousand and $133 thousand in gross gains and $29 thousand in gross losses realized for both periods.

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The following tables show the securities' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position, at September 30, 2025 and December 31, 2024.


	September 30, 2025
	Less Than 12 Months				More Than 12 Months				Total
			Unrealized				Unrealized				Unrealized
(Dollar amounts in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Government agencies	$	2,970	$	(21)	$	70,049	$	(8,451)	$	73,019	$	(8,472)
Mortgage Backed Securities - Residential		10,126		(1)		462,925		(62,312)		473,051		(62,313)
Mortgage Backed Securities - Commercial		5,963		(138)		5,246		(175)		11,209		(313)
Collateralized mortgage obligations		-		-		144,998		(22,736)		144,998		(22,736)
State and municipal obligations		36,044		(358)		225,304		(28,853)		261,348		(29,211)
Municipal taxable		-		-		32,079		(3,710)		32,079		(3,710)
Total temporarily impaired securities	$	55,103	$	(518)	$	940,601	$	(126,237)	$	995,704	$	(126,755)


	December 31, 2024
	Less Than 12 Months				More Than 12 Months				Total
			Unrealized				Unrealized				Unrealized
(Dollar amounts in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Government agencies	$	3,696	$	(107)	$	74,636	$	(11,563)	$	78,332	$	(11,670)
Mortgage Backed Securities - Residential		51,996		(1,113)		481,270		(88,138)		533,266		(89,251)
Mortgage Backed Securities - Commercial		6,937		(161)		5,388		(362)		12,325		(523)
Collateralized mortgage obligations		85		-		158,244		(27,555)		158,329		(27,555)
State and municipal obligations		89,321		(953)		232,247		(33,586)		321,568		(34,539)
Municipal taxable		1,587		(20)		31,918		(5,376)		33,505		(5,396)
Total temporarily impaired securities	$	153,622	$	(2,354)	$	983,703	$	(166,580)	$	1,137,325	$	(168,934)

Management evaluates securities for impairment related to credit losses at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for impairment related to credit losses by segregating the portfolio into two general segments.

In evaluating for impairment, management considers the reason for the decline, the extent of the decline, the duration of the decline and whether the Corporation intends to sell a security or is more likely than not to be required to sell a security before recovery of its amortized cost. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the security's amortized cost is written down to fair value through income. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.

Gross unrealized losses on investment securities were $126.76 million as of September 30, 2025 and $168.93 million as of December 31, 2024. Management believes these losses represent negative adjustments to market value relative to the interest rate environment reflecting the increase in market rates and not losses related to the creditworthiness of the issuer. The portfolio contains primarily government agency, agency backed mortgage backed securities ("MBS"), and collateralized mortgage obligations ("CMO"), which are issued by government sponsored enterprises and are backed by the full faith and credit of the United States government. Secondarily, the Corporation invests in municipal securities issued by state and local governments. Of these, almost half are either insured or contain state enhancements. On the remaining, credit is monitored by the investment committee. Based upon our review of the issuers, we do not believe these investments to be other than temporarily impaired. Management does not intend to sell these securities and it is not more likely than not that we will be required to sell them before their anticipated recovery.

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The table below presents a rollforward of the credit losses recognized in earnings for the three and nine month period ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollar amounts in thousands)	2025		2024		2025		2024
Beginning balance	$	2,974	$	2,974	$	2,974	$	2,974
Reductions for securities called during the period		-		-		-		-
Ending balance	$	2,974	$	2,974	$	2,974	$	2,974

5. Qualified Affordable Housing Project Investments

The Corporation invests in qualified affordable housing projects. The balance of investment for qualified housing projects was $39.2 million at September 30, 2025 and $27.2 million at December 31, 2024. These balances are reflected in the other assets line on the consolidated balance sheets. Total unfunded commitments related to the investments in qualified affordable housing projects totaled $22.2 million at September 30, 2025 and $17.7 million at December 31, 2024. These balances are reflected in the other liabilities line on the consolidated balance sheets.The Corporation expects to fulfill these commitments by the end of December 31, 2037.

The Corporation recognized amortization expense of $47 thousand during the nine months ended September 30, 2025, and $232 thousand during the nine months ended September 30, 2024, which was included within other noninterest expense on the consolidated statements of income. The Corporation recognized amortization expense of $2.2 million during the nine months ended September 30, 2025, and $1.7 million during the nine months ended September 30, 2024, which was included within income tax expense on the consolidated statements of income. Additionally, the Corporation recognized tax credits and other benefits from its investment in affordable housing tax credits of $2.8 million during the nine months ended September 30, 2025, and $2.4 million during the nine months ended September 30, 2024.

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6. Fair Value

FASB ASC No. 820-10 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) of identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level I prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair value of most securities available for sale is determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs).

For those securities that cannot be priced using quoted market prices or observable inputs a Level 3 valuation is determined. These securities are primarily trust preferred securities and investments in state and municipal securities. The fair value of state and municipal obligations are derived by comparing the securities to current market rates plus an appropriate credit spread to determine an estimated value. Illiquidity spreads are then considered. Credit reviews are performed on each of the issuers. The significant unobservable inputs used in the fair value measurement of the Corporation's state and municipal obligations are credit spreads related to specific issuers. Significantly higher credit spread assumptions would result in significantly lower fair value measurement. Conversely, significantly lower credit spreads would result in a significantly higher fair value measurements.

The fair value of derivatives is based on valuation models using observable market data as of the measurement date (Level 2 inputs).

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	September 30, 2025
	Fair Value Measurements Using
	Significant Unobservable Inputs (Level 3)
(Dollar amounts in thousands)	Level 1		Level 2		Level 3		Total
U.S. Government agencies	$	-	$	79,182	$	-	$	79,182
Mortgage Backed Securities-residential		-		535,502		-		535,502
Mortgage Backed Securities-commercial		-		12,510		-		12,510
Collateralized mortgage obligations		-		153,861		-		153,861
State and municipal		-		365,636		-		365,636
Municipal taxable		-		36,573		-		36,573
Collateralized debt obligations		-		-		2,843		2,843
TOTAL	$	-	$	1,183,264	$	2,843	$	1,186,107
Derivative Assets				2,866
Derivative Liabilities				(2,866)


	December 31, 2024
	Fair Value Measurements Using
	Significant Unobservable Inputs (Level 3)
(Dollar amounts in thousands)	Level 1		Level 2		Level 3		Total
U.S. Government agencies	$	-	$	78,982	$	-	$	78,982
Mortgage Backed Securities-residential		-		541,320		-		541,320
Mortgage Backed Securities-commercial		-		13,661		-		13,661
Collateralized mortgage obligations		-		163,026		-		163,026
State and municipal		-		359,523		805		360,328
Municipal taxable		-		35,777		-		35,777
Collateralized debt obligations		-		-		2,896		2,896
TOTAL	$	-	$	1,192,289	$	3,701	$	1,195,990
Derivative Assets				3,060
Derivative Liabilities				(3,060)

There were no transfers between Level 1 and Level 2 during 2025 and 2024.

The tables below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2025 and the year ended December 31, 2024.


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Three Months Ended
	September 30, 2025
	State and
	municipal		Collateralized
(Dollar amounts in thousands)	obligations		debt obligations		Total
Beginning balance, July 1	$	-	$	2,909	$	2,909
Total realized/unrealized gains or losses
Included in earnings		-		-		-
Included in other comprehensive income		-		(66)		(66)
Transfers		-		-		-
Settlements		-		-		-
Ending balance, September 30	$	-	$	2,843	$	2,843

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	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Nine Months Ended
	September 30, 2025
	State and
	municipal		Collateralized
(Dollar amounts in thousands)	obligations		debt obligations		Total
Beginning balance, January 1	$	805	$	2,896	$	3,701
Total realized/unrealized gains or losses
Included in earnings		-		-		-
Included in other comprehensive income		-		(53)		(53)
Transfers		-		-		-
Settlements		(805)		-		(805)
Ending balance, September 30	$	-	$	2,843	$	2,843


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Year Ended
	December 31, 2024
	State and
	municipal		Collateralized
(Dollar amounts in thousands)	obligations		debt obligations		Total
Beginning balance, January 1	$	1,180	$	3,002	$	4,182
Total realized/unrealized gains or losses
Included in earnings		-		-		-
Included in other comprehensive income		-		(106)		(106)
Purchases		-		-		-
Settlements		(375)		-		(375)
Ending balance, December 31	$	805	$	2,896	$	3,701

Other real estate owned is valued at Level 3. Other real estate owned at September 30, 2025 with a value of $138 thousand was reduced by $20 thousand for fair value adjustment. At September 30, 2025 other real estate owned was comprised of $138 thousand from residential loans. Other real estate owned at December 31, 2024 with a value of $523 thousand was reduced by zero for fair value adjustment. At December 31, 2024 other real estate owned was comprised of $433 thousand from commercial loans and $90 thousand from residential loans.

Fair value is measured based on the value of the collateral securing those loans, and is determined using several methods. Generally the fair value of real estate is determined based on appraisals by qualified licensed appraisers. Appraisals for real estate generally use three methods to derive value: cost, sales or market comparison and income approach. The cost method bases value on the cost to replace current property. The market comparison evaluates the sales price of similar properties in the same market area. The income approach considers net operating income generated by the property and the investor's required return. The final fair value is based on a reconciliation of these three approaches. If an appraisal is not available, the fair value may be determined by using a cash flow analysis, a broker's opinion of value, the net present value of future cash flows, or an observable market price from an active market. Fair value of other real estate is based upon the current appraised values of the properties as determined by qualified licensed appraisers and the Company's judgment of other relevant market conditions. Appraisals are obtained annually and reductions in value are recorded as a valuation through a charge to expense. The primary unobservable input used by management in estimating fair value are additional discounts to the appraised value to consider market conditions and the age of the appraisal, which are based on management's past experience in resolving these types of properties. These discounts range from 20% to 100% with an average discount of 62%. Values for non-real estate collateral, such as business equipment, are based on appraisals performed by qualified licensed appraisers or the customers financial statements. Values for non real estate collateral use much higher discounts than real estate collateral. Other real estate and individually evaluated loans carried at fair value are primarily comprised of smaller balance properties.

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The following table presents quantitative information about recurring and non-recurring Level 3 fair value measurements at September 30, 2025.


(Dollar amounts in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
Collateralized debt obligations	$	2,843	Discounted cash flow	Discount rate	6.26	%
Collateral dependent loans	$	12,092	Discounted cash flow	Discount rate for age of appraisal and market conditions	20.00%-100.00	%

The following table presents quantitative information about recurring and non-recurring Level 3 fair value measurements at December 31, 2024.


(Dollar amounts in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
State and municipal obligations	$	805	Discounted cash flow	Discount rate	4.24%-4.44	%
Collateralized debt obligations	$	2,896	Discounted cash flow	Discount rate	6.62	%
Collateral dependent loans		3,099	Discounted cash flow	Discount rate for age of appraisal and market conditions	20.00%-100.00	%

The carrying amounts and estimated fair value of financial instruments at September 30, 2025 and December 31, 2024, are shown below. Carrying amount is the estimated fair value for cash and due from banks, federal funds sold, short-term borrowings, accrued interest receivable and payable, demand deposits, short-term debt and variable-rate loans or deposits that reprice frequently and fully. Security fair values were described previously. For fixed-rate, collectively evaluated loans or deposits, variable rate loans or deposits with infrequent repricing or repricing limits, and for longer-term borrowings, fair value is based on discounted cash flows using current market rates applied to the estimated life and considering credit risk. The valuation of individually evaluated loans was described previously. Loan fair value estimates represent an exit price. Fair values of loans held for sale are based on market bids on the loans or similar loans. It was not practicable to determine the fair value of Federal Home Loan Bank stock due to restrictions placed on its transferability. Fair value of debt is based on current rates for similar financing. The fair value of off-balance sheet items is not considered material.


	September 30, 2025
	Carrying		Fair Value
(Dollar amounts in thousands)	Value		Level 1		Level 2		Level 3		Total
Cash and due from banks	$	87,438	$	36,798	$	50,640	$	-	$	87,438
Federal funds sold		157		-		157		-		157
Securities available-for-sale		1,186,107		-		1,183,264		2,843		1,186,107
Restricted stock		18,761		n/a		n/a		n/a		n/a
Loans, net		3,919,990		-		-		3,858,240		3,858,240
Accrued interest receivable		26,526		-		6,577		19,949		26,526
Deposits		(4,615,305)		-		(4,610,086)		-		(4,610,086)
Short-term borrowings		(182,522)		-		(182,522)		-		(182,522)
Other borrowings		(170,453)		-		(170,453)		-		(170,453)
Accrued interest payable		(2,965)		-		(2,965)		-		(2,965)


	December 31, 2024
	Carrying		Fair Value
(Dollar amounts in thousands)	Value		Level 1		Level 2		Level 3		Total
Cash and due from banks	$	93,526	$	35,889	$	57,637	$	-	$	93,526
Federal funds sold		820		-		820		-		820
Securities available-for-sale		1,195,990		-		1,192,289		3,701		1,195,990
Restricted stock		17,555		n/a		n/a		n/a		n/a
Loans, net		3,790,409		-		-		3,717,843		3,717,843
Accrued interest receivable		26,934		-		6,543		20,391		26,934
Deposits		(4,718,914)		-		(4,723,356)		-		(4,723,356)
Short-term borrowings		(187,057)		-		(187,057)		-		(187,057)
Other borrowings		(28,120)		-		(29,693)		-		(29,693)
Accrued interest payable		(3,799)		-		(3,799)		-		(3,799)

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7. Borrowings

Short-term borrowings:

Period-end short-term borrowings were comprised of the following:


(Dollar amounts in thousands)	September 30, 2025		December 31, 2024
Federal Funds Purchased	$	151,100	$	154,250
Repurchase Agreements		31,422		32,807
	$	182,522	$	187,057

The Corporation enters into sales of securities under agreements to repurchase. The amounts received under these agreements represent short-term borrowings and are reflected as a liability in the consolidated balance sheets. The securities underlying these agreements are included in investment securities in the consolidated balance sheets. The Corporation has no control over the market value of the securities, which fluctuates due to market conditions. However, the Corporation is obligated to promptly transfer additional securities if the market value of the securities falls below the repurchase agreement price. The Corporation manages this risk by maintaining an unpledged securities portfolio that it believes is sufficient to cover a decline in the market value of the securities sold under agreements to repurchase.

Collateral pledged to repurchase agreements by remaining maturity are as follows:

September 30, 2025

Repurchase Agreements

Remaining Contractual Maturity of the Agreements

Overnight

Greater

and

Up to 30

30 - 90

than 90

(Dollar amounts in thousands)

continuous

days

Total

Mortgage Backed Securities - Residential and Collateralized
Mortgage Obligations

25,964

585

2,379

2,494

31,422

December 31, 2024

Repurchase Agreements

Remaining Contractual Maturity of the Agreements

Overnight

Greater

and

Up to 30

30 - 90

than 90

(Dollar amounts in thousands)

continuous

days

Total

Mortgage Backed Securities - Residential and Collateralized
Mortgage Obligations

24,380

552

5,150

2,725

32,807

Other borrowings:

Other borrowings at September 30, 2025 and December 31, 2024 are summarized as follows:


(Dollar amounts in thousands)	September 30, 2025		December 31, 2024
FHLB advances	$	155,870	$	7,287
Notes payable		14,583		20,833
TOTAL	$	170,453	$	28,120

The aggregate minimum annual retirements of other borrowings are as follows:

Twelve Months Ended September 30,


2026	$	155,013
2027		14,583
2028		857
2029		-
2030		-
Thereafter		-
	$	170,453

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At September 30, 2025 and December 31, 2024, other borrowings are summarized as follows: The Corporation's subsidiary bank is a member of the Federal Home Loan Bank (FHLB) and accordingly are permitted to obtain advances. There are $155.9 million of advances from the FHLB at September 30, 2025, and $7.3 million of advances at December 31, 2024. FHLB advances are, generally due in full at maturity. They are secured by eligible securities and a blanket pledge on real estate loan collateral. In addition the Corporation secured a note payable to a commercial bank in the second quarter 2024. The balance at September 30, 2025 is $14.6 million.

8. Components of Net Periodic Benefit Cost


	Three Months Ended September 30,								Nine Months Ended September 30,
					Post-Retirement								Post-Retirement
	Pension Benefits				Health Benefits				Pension Benefits				Health Benefits
(Dollar amounts in thousands)	2025		2024		2025		2024		2025		2024		2025		2024
Service cost	$	108	$	142	$	3	$	4	$	323	$	424	$	9	$	12
Interest cost		1,016		947		32		34		3,049		2,841		96		103
Expected return on plan assets		(1,094)		(1,051)		-		-		(3,281)		(3,154)		-		-
Net amortization of prior service cost		-		-		-		-		-		-		-		-
Net amortization of net (gain) loss		-		109		(39)		(20)		-		326		(117)		(60)
Net Periodic Benefit Cost	$	30	$	147	$	(4)	$	18	$	91	$	437	$	(12)	$	55

Employer Contributions

First Financial Corporation previously disclosed in its financial statements for the year ended December 31, 2024 that it expected to contribute $570 thousand and $563 thousand respectively to its Pension Plan and ESOP and $243 thousand to the Post Retirement Health Benefits Plan in 2025. Contributions of $905 thousand have been made to the Pension Plan thus far in 2025. Contributions of $188 thousand have been made through the first nine months of 2025 for the Post Retirement Health Benefits plan. No contributions have been made in 2025 for the ESOP. The Pension plan was frozen for most employees at the end of 2012 and for those employees there will be discretionary contributions to the ESOP plan and a 401K plan in place of the former Pension benefit. In the first nine months of 2025 and 2024 there has been $2.4 million and $2.4 million of expense accrued for potential contributions to these alternative retirement benefit options.

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9. Revenue from Contracts with Customers

All of the Corporation's revenue from contracts with customers in the scope of ASC 606 is recognized within Non-Interest Income. The following table presents the Corporation's sources of Non-Interest Income for the three and nine months ended September 30, 2025 and 2024. Items outside the scope of ASC 606 are noted as such.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollar amounts in thousands)	2025		2024		2025		2024
Non-interest income
Service charges on deposits and debit card fee income	$	8,104	$	8,139	$	23,243	$	21,576
Trust and financial services		1,278		1,251		4,161		3,903
Interchange income		176		177		570		490
Net gains on sales of loans ^(a)		494		411		1,149		886
Loan servicing fees ^(a)		338		274		830		957
Net gains/(losses) on sales of securities ^(a)		24		103		21		104
Other service charges and fees ^(a)		251		191		823		700
Other ^(b)		484		677		1,244		1,943
Total non-interest income	$	11,149	$	11,223	$	32,041	$	30,559

(a)Not within the scope of ASC 606.

(b)The Other category includes gains/(losses) on the sale of OREO for the three months ended September 30, 2025 and September 30, 2024, totaling $57thousand and $(25)thousand, respectively, and for the nine months ended for the same periods, totaling $(123)thousand and $61thousand, which is within the scope of ASC 606; the remaining balance is outside the scope of ASC 606.

(c)

Service charges on deposits: The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Trust and financial services: The Corporation earns asset management fees from its contracts with trust customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Corporation provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management at month-end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Other related services provided and the fees the Corporation earns, which are based on a fixed fee schedule, are recognized when the services are rendered.

Interchange income: The Corporation earns interchange fees from debit and credit cardholder transactions conducted through the payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Gains/Losses on sales of OREO: The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Corporation finances the sale of OREO to the buyer, the Corporation assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Corporation adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

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10. Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes, net of tax, within each classification of accumulated other comprehensive income/(loss) for the three and nine months ended September 30, 2025 and 2024.


	Unrealized
	gains and
	(Losses) on available-		2025
	for-sale		Retirement
(Dollar amounts in thousands)	Securities		plans		Total
Beginning balance, July 1,	$	(113,761)	$	(4,473)	$	(118,234)
Change in other comprehensive income (loss) before reclassification		19,614		-		19,614
Amounts reclassified from accumulated other comprehensive income		(18)		3		(15)
Net current period other comprehensive income (loss)		19,596		3		19,599
Ending balance, September 30,	$	(94,165)	$	(4,470)	$	(98,635)


	Unrealized
	gains and
	(Losses) on available-		2025
	for-sale		Retirement
(Dollar amounts in thousands)	Securities		plans		Total
Beginning balance, January 1,	$	(127,807)	$	(4,478)	$	(132,285)
Change in other comprehensive income (loss) before reclassification		33,658		-		33,658
Amounts reclassified from accumulated other comprehensive income		(16)		8		(8)
Net current period other comprehensive income (loss)		33,642		8		33,650
Ending balance, September 30,	$	(94,165)	$	(4,470)	$	(98,635)


	Unrealized
	gains and
	(Losses) on available-		2024
	for-sale		Retirement
(Dollar amounts in thousands)	Securities		plans		Total
Beginning balance, July 1,	$	(125,561)	$	(8,940)	$	(134,501)
Change in other comprehensive income (loss) before reclassification		31,705		-		31,705
Amounts reclassified from accumulated other comprehensive income		(77)		73		(4)
Net current period other comprehensive income (loss)		31,628		73		31,701
Ending balance, September 30,	$	(93,933)	$	(8,867)	$	(102,800)


	Unrealized
	gains and
	(Losses) on available-		2024
	for-sale		Retirement
(Dollar amounts in thousands)	Securities		plans		Total
Beginning balance, January 1,	$	(118,000)	$	(9,087)	$	(127,087)
Change in other comprehensive income (loss) before reclassification		24,145		-		24,145
Amounts reclassified from accumulated other comprehensive income		(78)		220		142
Net current period other comprehensive income (loss)		24,067		220		24,287
Ending balance, September 30,	$	(93,933)	$	(8,867)	$	(102,800)


	Balance at		Current Period		Balance at
(Dollar amounts in thousands)	7/1/2025		Change		9/30/2025
Unrealized gains (losses) on securities available-for-sale without other than temporary impairment	$	(115,942)	$	19,645	$	(96,297)
Unrealized gains (losses) on securities available-for-sale with other than temporary impairment		2,181		(49)		2,132
Total unrealized loss on securities available-for-sale	$	(113,761)	$	19,596	$	(94,165)
Unrealized gain (loss) on retirement plans		(4,473)		3		(4,470)
TOTAL	$	(118,234)	$	19,599	$	(98,635)

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	Balance at		Current Period		Balance at
(Dollar amounts in thousands)	1/1/2025		Change		9/30/2025
Unrealized gains (losses) on securities available-for-sale without other than temporary impairment	$	(129,979)	$	33,682	$	(96,297)
Unrealized gains (losses) on securities available-for-sale with other than temporary impairment		2,172		(40)		2,132
Total unrealized gain (loss) on securities available-for-sale	$	(127,807)	$	33,642	$	(94,165)
Unrealized gain (loss) on retirement plans		(4,478)		8		(4,470)
TOTAL	$	(132,285)	$	33,650	$	(98,635)


	Balance at		Current Period		Balance at
(Dollar amounts in thousands)	7/1/2024		Change		9/30/2024
Unrealized gains (losses) on securities available-for-sale without other than temporary impairment	$	(127,730)	$	31,640	$	(96,090)
Unrealized gains (losses) on securities available-for-sale with other than temporary impairment		2,169		(12)		2,157
Total unrealized gain (loss) on securities available-for-sale	$	(125,561)	$	31,628	$	(93,933)
Unrealized loss on retirement plans		(8,940)		73		(8,867)
TOTAL	$	(134,501)	$	31,701	$	(102,800)


	Balance at		Current Period		Balance at
(Dollar amounts in thousands)	1/1/2024		Change		9/30/2024
Unrealized gains (losses) on securities available-for-sale without other than temporary impairment	$	(120,252)	$	24,162	$	(96,090)
Unrealized gains (losses) on securities available-for-sale with other than temporary impairment		2,252		(95)		2,157
Total unrealized income (loss) on securities available-for-sale	$	(118,000)	$	24,067	$	(93,933)
Unrealized gain (loss) on retirement plans		(9,087)		220		(8,867)
TOTAL	$	(127,087)	$	24,287	$	(102,800)


	Three Months Ended September 30, 2025
Details about accumulated	Amount reclassified from			Affected line item in
other comprehensive	accumulated other			the statement where
income components	comprehensive income			net income is presented
	(in thousands)
Unrealized gains and losses	$	24		Net securities gains (losses)
on available-for-sale		(6)		Income tax expense
securities	$	18		Net of tax

Amortization of	$	(4)	(a)	Salary and benefits
retirement plan items		1		Income tax expense
	$	(3)		Net of tax
Total reclassifications for the period	$	15		Net of tax

(a)

Included in the computation of net periodic benefit cost. (see Footnote 8 for additional details).

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	Nine Months Ended September 30, 2025
Details about accumulated	Amount reclassified from			Affected line item in
other comprehensive	accumulated other			the statement where
income components	comprehensive income			net income is presented
	(in thousands)
Unrealized gains and losses	$	21		Net securities gains (losses)
on available-for-sale		(5)		Income tax expense
securities	$	16		Net of tax

Amortization of	$	(11)	(a)	Salary and benefits
retirement plan items		3		Income tax expense
	$	(8)		Net of tax
Total reclassifications for the period	$	8		Net of tax

(a)

Included in the computation of net periodic benefit cost. (see Footnote 8 for additional details).


	Three Months Ended September 30, 2024
Details about accumulated	Amount reclassified from			Affected line item in
other comprehensive	accumulated other			the statement where
income components	comprehensive income			net income is presented
	(in thousands)
Unrealized gains and losses	$	103		Net securities gains (losses)
on available-for-sale		(26)		Income tax expense
securities	$	77		Net of tax

Amortization of	$	(97)	(a)	Salary and benefits
retirement plan items		24		Income tax expense
	$	(73)		Net of tax
Total reclassifications for the period	$	4		Net of tax

(a)

Included in the computation of net periodic benefit cost. (see Footnote 8 for additional details).


	Nine Months Ended September 30, 2024
Details about accumulated	Amount reclassified from			Affected line item in
other comprehensive	accumulated other			the statement where
income components	comprehensive income			net income is presented
	(in thousands)
Unrealized gains and losses	$	104		Net securities gains (losses)
on available-for-sale		(26)		Income tax expense
securities	$	78		Net of tax

Amortization of	$	(293)	(a)	Salary and benefits
retirement plan items		73		Income tax expense
	$	(220)		Net of tax
Total reclassifications for the period	$	(142)		Net of tax

(a)

Included in the computation of net periodic benefit cost. (see Footnote 8 for additional details).

(a)

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11. Leases

The Corporation leases certain branches under operating leases. At September 30, 2025, the Corporation had lease liabilities totaling $7,807,000 and right-of-use assets totaling $7,660,000 related to these leases. At December 31, 2024, the Corporation had lease liabilities totaling $7,829,000 and right-of-use assets totaling $7,725,000 related to these leases. Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively. At September 30, 2025, the weighted average remaining lease term for operating leases was 10.2 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.31%.

The calculated amount of the lease liabilities and right-of-use assets are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Corporation's lease agreements often include one or more options to renew at the Corporation's discretion. If at lease inception, the Corporation considers the exercising of a renewal option to be reasonably certain, the Corporation will include the extended term in the calculation of the lease liability and right-of-use asset. Regarding the discount rate, the new standard requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Corporation utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

The following table represents lease costs and other lease information. As the Corporation elected, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.

Lease costs were as follows:


	Nine Months Ended
(Dollar amounts in thousands)	September 30, 2025
Operating lease cost	$	1,058
Short-term lease cost		41
Variable lease cost		4
Total lease cost	$	1,103

Other information:
Cash paid for amounts included in the measurement of operating lease liabilities		936
Right-of-use assets obtained in exchange for new operating lease liabilities		713

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2025 were as follows:


(Dollar amounts in thousands)	September 30, 2025
Twelve Months Ended September 30,
2026	$	1,304
2027		1,273
2028		1,220
2029		903
2030		782
Thereafter		4,202
Total Future Minimum Lease Payments		9,684
Amounts Representing Interest		(1,877)
Present Value of Net Future Minimum Lease Payments	$	7,807

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12. Acquisitions

On July 1, 2024, the Corporation completed its acquisition of SimplyBank. Therefore, the results of SimplyBank have been included in the results of operations beginning on July 1, 2024. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Interim Merger (the "Effective Time"), other than dissenting shares, each share of SimplyBank Common Stock issued and outstanding immediately prior to the Effective Time, was converted into the right to receive $718.38 per share in cash. The aggregate value of the transaction was approximately $73.4 million. Acquisition-related costs of $1.7 million were included in the Corporation's income statement for the year-to-date period ended December 31, 2024.

Goodwill of $11.2 million arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies. The goodwill value is subject to change pending receipt of the final valuation. The goodwill for SimplyBank is deductible for income tax purposes as the transaction was accounted for as a taxable acquisition. The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date.


			Measurement
	As Initially		Period
(Dollar amounts in thousands)	Reported		Adjustments		As Adjusted
Consideration
Cash consideration	$	73,400	$	-	$	73,400

Fair value of total consideration transferred	$	73,400	$	-	$	73,400

Assets acquired
Cash	$	101,553	$	-	$	101,553
Investment securities available-for-sale		77,350		-		77,350
Federal funds sold		-		-		-
Bank owned life insurance		12,816		-		12,816
Federal Home Loan Bank stock		726		-		726
Loans		467,997		(2,731)		465,266
Premises and equipment		14,231		-		14,231
Core deposit intangibles		19,788		-		19,788
Other assets		6,184		-		6,184
Total assets acquired		700,645		(2,731)		697,914

Liabilities assumed
Deposits		622,937		-		622,937
FHLB advances		1,719		-		1,719
Other liabilities		12,899		(1,797)		11,102
Total liabilities assumed		637,555		(1,797)		635,758

Net identifiable assets		63,090		(934)		62,156
Goodwill	$	10,310	$	934	$	11,244

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Corporation believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to guidance relating to purchase credit deteriorated loans, which have shown evidence of credit deterioration since origination. Adjustments made above were within the allowable one year measurement period.

The fair value of purchased financial assets with credit deterioration was $1.7 million on the date of acquisition. The gross contractual amounts receivable relating to the purchased financial assets with credit deterioration was $4.7 million. The Corporation estimates, on the date of acquisition, that $3.0 million of the contractual cash flows specific to the purchased financial assets with credit deterioration will not be collected.

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The following table presents supplemental pro forma information as if the acquisition had occurred at the beginning of 2023. The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, interest expense on deposits acquired, and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed dates.


	Year Ended December 31,
(Dollar amounts in thousands, except per share data)	2024		2023
Net interest income	$	188,441	$	196,646
Net income	$	36,425	$	70,586
Basic and diluted earnings per share	$	3.08	$	5.91

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ITEMS 2. and 3. Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative andQualitative Disclosures About Market Risk

The purpose of this discussion is to point out key factors in the Corporation's recent performance compared with earlier periods. The discussion should be read in conjunction with the financial statements beginning on page three of this report. All figures are for the consolidated entities. It is presumed the readers of these financial statements and of the following narrative have previously read the Corporation's financial statements for 2024 in the 10-K filed for the fiscal year ended December 31, 2024.

This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Corporation's ability to effectively execute its business plans; changes in general economic and financial market conditions; changes in interest rates; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Corporation's business; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. Additional information concerning factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements is available in the Corporation's Form 10-K for the year ended December 31, 2024, and subsequent filings with the United States Securities and Exchange Commission (SEC). Copies of these filings are available at no cost on the SEC's Web site at www.sec.gov or on the Corporation's Web site at www.first-online.com. Management may elect to update forward-looking statements at some future point; however, it specifically disclaims any obligation to do so.

Critical Accounting Policies

Certain of the Corporation's accounting policies are important to the portrayal of the Corporation's financial condition and results of operations, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, without limitation, changes in interest rates, in the performance of the economy or in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for credit losses and the valuation of goodwill and valuing investment securities. See further discussion of these critical accounting policies in the 2024 Form 10-K.

Allowance for credit losses. The allowance for credit losses (ACL) represents management's estimate of expected losses inherent within the existing loan portfolio. The allowance for credit losses is increased by the provision for credit losses charged to expense and reduced by loans charged off, net of recoveries. The allowance for credit losses is determined based on management's assessment of several factors: reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions, nonperforming loans, determination of acquired loans as purchase credit deteriorated, and reasonable and supportable forecasts. Loans are individually evaluated when they do not share risk characteristics with other loans in the respective pool. Loans evaluated individually are excluded from the collective evaluation. Management elected the collateral dependent practical expedient upon adoption of ASC 326. Expected credit losses on individually evaluated loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Management utilizes a cohort methodology to determine the allowance for credit losses. This method identifies and captures the balance of a pool of loans with similar risk characteristics, as of a particular point in time to form a cohort, then tracks the respective losses generated by that cohort of loans over their remaining life. The cohorts track loan balances and historical loss experience since 2008, and management extends the look back period each quarter to capture all available data points in the historical loss rate calculation. The quantitative component of the ACL involves assumptions that require a significant level of estimation; these include historical losses as a predictor of future performance, appropriateness of selected delay periods, and the reasonableness of the portfolio segmentation.

A historical data set is expected to provide the best indication of future credit performance. Delay periods represent the amount of time it takes a cohort of loans to become seasoned, or incur sufficient attrition through pay downs, renewals, or charge-offs. Portfolio segmentation relates to the pooling of loans with similar risk characteristics, such as industry types, collateral, and consumer purpose.

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On an annual basis, in the first quarter, management performs a recalibration of the delay periods and portfolio segmentation to determine whether they are reasonable and appropriate based on the information available at that time.

Management considers qualitative adjustments to expected credit loss estimates for information not already captured in the loss estimation process. Where past performance may not be representative of future losses, loss rates are adjusted for qualitative and economic forecast factors. Management uses the peak three consecutive quarter net charge off rate to capture maximum potential volatility over the reasonable and supportable forecast period. Historical losses utilized in setting the qualitative factor ranges are anchored to 2008 and may be supplemented by peer information when needed. The qualitative factor ranges are recalibrated annually to capture recent behavior that is indicative of the credit profile of the current portfolio.

Qualitative factors include items, such as changes in lending policies or procedures, asset specific risks, and economic uncertainty in forward-looking forecasts. Economic indicators utilized in forecasting include unemployment rate, gross domestic product, housing starts, and interest rates. Management uses a two-year reasonable and supportable period across all loan segments to forecast economic conditions. Management believes the two-year time horizon aligns with available industry guidance and various forecasting sources. Economic forecast adjustments are overlaid onto historical loss rates. As such, reversion from forecast rates to historical loss rates is immediate.

The ACL and allowance for unfunded commitments were $47.4 million and $2.2 million, respectively at September 30, 2025, compared to $46.7 million and $2.1 million, respectively at December 31, 2024. The qualitative amount of the reserve increased $1.1 million to $13.9 million. The quantitative amount is $33.1 million at September 30, 2025, compared to $33.6 million at December 31, 2024. There was an increase of $100 thousand in the allowance for unfunded commitments. See additional discussion of ACL in the Allowance for Credit Losses section below.

Based on management's analysis of the current portfolio, management believes the allowance is adequate. Changes in the financial condition of individual borrowers, economic conditions, historical loss experience, or the condition of the various markets in which collateral may be sold may affect the required level of the allowance for credit losses and the associated provision for credit losses. As management monitors these changes, as well as those factors discussed above, adjustments may be recorded to the allowance for credit losses and the associated provision for credit losses in the future.

Summary of Operating Results

Net income for the three months ended September 30, 2025 was $20.8 million, compared to $8.7 million for the same period in 2024. Basic earnings per share increased to $1.75 for the third quarter of 2025 compared to $0.74 for the same period in 2024. Return on average assets and return on average equity were 1.48% and 13.82% respectively, for the three months ended September 30, 2025 compared to 0.64% and 6.39% for the three months ended September 30, 2024. Net income for the nine months ended September 30, 2025 was $57.8 million, compared to $31.0 million for the same period in 2024. Basic earnings per share increased to $4.87 for the nine months of 2025 compared to $2.63 for the same period in 2024. Return on average assets and return on average equity were 1.39% and 13.23% respectively, for the nine months ended September 30, 2025 compared to 0.82% and 7.80% for the nine months ended September 30, 2024.

In light of events in the banking sector, including bank failures, continuing interest rate activity and recessionary concerns, the Corporation has proactively positioned the balance sheet to mitigate the risks affecting the Corporation and the overall banking industry in order to serve its clients and communities.

●

Liquidity remains strong, with cash and available for sale securities representing approximately 22.5% of assets at September 30, 2025. The Corporation maintains the ability to access considerable sources of contingent liquidity at the Federal Home Loan Bank and several correspondent banks. Management considers the Corporation's current liquidity position to be adequate to meet both short-term and long-term liquidity needs. Refer to the section Liquidity Risk for additional information.

●

Capital remains strong, with ratios of the Corporation, and its subsidiary bank, well above the standards to be considered well-capitalized under regulatory requirements. Refer to the section Capital Adequacy, included elsewhere in this report for additional details.

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●

Asset quality remains solid, with a non-performing asset ratio of 0.39% of total assets as of September 30, 2025 and net charge-offs of 0.17% to average loans and leases, reflecting the Company's disciplined underwriting and conservative lending philosophy which has supported the Corporation's strong credit performance during prior financial crises. Refer to the section Non-Performing Loan for additional information.

The primary components of income and expense affecting net income are discussed in the following analysis.

Net Interest Income

The Corporation's primary source of earnings is net interest income, which is the difference between the interest earned on loans and other investments and the interest paid for deposits and other sources of funds. Net interest income increased $7.4 million in the three months ended September 30, 2025 to $54.6 million from $47.2 million in the same period in 2024. The net interest margin for the three months ended September 30, 2025 is 4.25% compared to 3.78% for the same period in 2024, a 12.42% increase. Net interest income increased $33.9 million in the nine months ended September 30, 2025 to $159.2 million from $125.4 million in the same period in 2024. The net interest margin for the nine months ended September 30, 2025 is 4.17% compared to 3.63% for the same period in 2024, a 14.98% increase.

The increase in yields on net loans and leases of 24 basis points is the primary contributor to the improved yield on average earning assets for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Comparing the nine months ended September 30, 2025 to the nine months ended September 30, 2024, the effective rate paid on average interest-bearing deposits decreased 23 basis points. For the same period discussed above, interest paid on other borrowings decreased 93 basis points.

Non-Interest Income

Non-interest income for the three months ended September 30, 2025 was $11.1 million compared to $11.2 million for the same period in 2024. Non-interest income for the nine months ended September 30, 2025 was $32.0 million compared to $30.6 million for the same period in 2024.

Non-Interest Expenses

The Corporation's non-interest expense for the quarter ended September 30, 2025 was $38.0 million compared to $38.6 million for the same period in 2024. The Corporation's non-interest expense for the nine months ended September 30, 2025 increased $8.4 million to $113.1 million compared to the same period in 2024. This includes an overall increase in operating expenses as a result of the acquisition.

Allowance for Credit Losses

The Corporation's provision for credit losses for the three months ended September 30, 2025, was $2.0 million, compared to provision of $9.4 million for the same period of 2024. Net charge-offs for the third quarter of 2025 were $1.6 million compared to net charge-offs of $4.6 million for the same period of 2024. The provision for credit losses decreased $8.3 million to $5.9 million for the nine months ended September 30, 2025, compared to a provision of $14.2 million for the same period in 2024. Net charge-offs for the first nine months of 2025 decreased $5.6 million to $5.2 million compared to the same period of 2024. The Corporation recorded $5.5 million in provision on non-PCD loans acquired from SimplyBank subsequent to the acquisition in the third quarter 2024. Also in the third quarter 2024, additional provision as well as charge-offs were related to one previously identified credit, reflecting further deterioration in collateral values in the third quarter 2024. No further losses were recorded on this credit. Based on management's analysis of the current portfolio, an evaluation that includes consideration of changes in CECL model assumptions of credit quality, economic conditions, and loan composition, management believes the allowance is adequate. In the first nine months of 2025, no significant changes were made.

Income Tax Expense

The Corporation's effective income tax rate for the first nine months of 2025 was 20.18% compared to 16.44% for the same period in 2024. Pretax income for the first nine months in 2025 was significantly higher than pretax income for first nine months in 2024. Since our permanent differences remained similar, income was the driving factor for the increase in effective tax rate.

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Non-performing Loans

Non-performing loans consist of (1) non-accrual loans on which the ultimate collectability of the full amount of interest is uncertain, and (2) loans past due ninety days or more as to principal or interest. Non-performing loans increased to $19.3 million at September 30, 2025 compared to $13.3 million at December 31, 2024. Nonperforming loans increased 36.3% compared to $14.1 million as of September 30, 2024.

A summary of non-performing loans at September 30, 2025 and December 31, 2024 follows:


	(000's)
	September 30, 2025			December 31, 2024
Non-accrual loans	$	17,470		$	11,479
Accruing loans past due over 90 days		1,792			1,821
	$	19,262		$	13,300

Ratio of the allowance for credit losses as a percentage of non-performing loans		246.1	%		351.4	%

The following loan categories comprise significant components of the nonperforming non-restructured loans:


	September 30, 2025		December 31, 2024
Non-accrual loans
Commercial loans	$	10,138	$	6,697
Residential loans		4,567		2,050
Consumer loans		2,765		2,732
	$	17,470	$	11,479
Past due 90 days or more and still accruing
Commercial loans	$	201	$	42
Residential loans		1,591		1,778
Consumer loans		-		1
	$	1,792	$	1,821

Interest Rate Sensitivity and Liquidity

First Financial Corporation has established risk measures, limits and policy guidelines for managing interest rate risk and liquidity. Responsibility for management of these functions resides with the Asset Liability Committee. The primary goal of the Asset Liability Committee is to maximize net interest income within the interest rate risk limits approved by the Board of Directors.

Interest Rate Risk

Management considers interest rate risk to be the Corporation's most significant market risk. Interest rate risk is the exposure to changes in net interest income as a result of changes in interest rates. Consistency in the Corporation's net interest income is largely dependent on the effective management of this risk.

The Asset Liability position is measured using sophisticated risk management tools, including earning simulation and market value of equity sensitivity analysis. These tools allow management to quantify and monitor both short-term and long-term exposure to interest rate risk. Simulation modeling measures the effects of changes in interest rates, changes in the shape of the yield curve and the effects of embedded options on net interest income. This measure projects earnings in the various environments over the next three years. It is important to note that measures of interest rate risk have limitations and are dependent on various assumptions. These assumptions are inherently uncertain and, as a result, the model cannot precisely predict the impact of interest rate fluctuations on net interest income. Actual results will differ from simulated results due to timing, frequency and amount of interest rate changes as well as overall market conditions. The Committee has performed a thorough analysis of these assumptions and believes them to be valid and theoretically sound. These assumptions are continuously monitored for behavioral changes.

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The Corporation from time to time utilizes derivatives to manage interest rate risk. Management continuously evaluates the merits of such interest rate risk products but does not anticipate the use of such products to become a major part of the Corporation's risk management strategy.

The table below shows the Corporation's estimated sensitivity profile as of September 30, 2025. The change in interest rates assumes a parallel shift in interest rates of 100, 200, and 300 basis points. Given a 100 basis point increase in rates, net interest income would decrease 1.80% over the next 12 months and increase 1.17% over the following 12 months. Given a 100 basis point decrease in rates, net interest income would increase 3.99% over the next 12 months and increase 0.57% over the following 12 months. These estimates assume all rate changes occur overnight and management takes no action as a result of this change.


Basis Point	Percentage Change in Net Interest Income
Interest Rate Change	12 months		24 months		36 months
Down 300	5.11	%	(6.79)	%	(16.76)	%
Down 200	5.84		(1.55)		(8.20)
Down 100	3.99		0.57		(2.74)
Up 100	(1.80)		1.17		4.41
Up 200	(6.42)		(0.49)		5.97
Up 300	(9.49)		(0.76)		8.93

Typical rate shock analysis does not reflect management's ability to react and thereby reduce the effect of rate changes, and represents a worst-case scenario.

Liquidity Risk

Liquidity represents an institution's ability to provide funds to satisfy demands from depositors, borrowers, and other creditors by either converting assets into cash or accessing new or existing sources of incremental funds. Generally the Corporation relies on deposits, loan repayments and repayments of investment securities as its primary sources of funds. The Corporation has $11.9 million of investments that mature throughout the next 12 months. The Corporation also anticipates $108.7 million of principal payments from mortgage-backed and other securities. Given the current rate environment, the Corporation anticipates $29.2 million in securities to be called within the next 12 months. The Corporation also has $203.1 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $898 million available with the Federal Reserve Bank, and $90 million of available fed funds lines with correspondent banks. With these sources of funds, the Corporation currently anticipates adequate liquidity to meet the expected obligations of its customers.

Financial Condition

Comparing the first nine months of 2025 to year-ended December 31, 2024, loans net of deferred loan costs, have increased $130 million to $4.0 billion. Deposits decreased 2.2% to $4.6 billion at September 30, 2025 compared to December 31, 2024. Other borrowings increased $142.3 million to $170.5 million at September 30, 2025 compared to December 31, 2024. Shareholders' equity increased 13.33% or $73.2 million. This financial performance increased book value per share 13.24% to $52.50 at September 30, 2025 from $46.36 at December 31, 2024. Book value per share is calculated by dividing the total shareholders' equity by the number of shares outstanding. Accumulated other comprehensive loss increased $33.7 million primarily due to the market value of the securities portfolio, which reflected the increase in securities pricing.

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Capital Adequacy

The Federal Reserve, OCC and Federal Deposit Insurance Corporation (collectively, joint agencies) establish regulatory capital guidelines for U.S. banking organizations. Regulatory capital guidelines require that capital be measured in relation to the credit and market risks of both on- and off-balance sheet items using various risk weights. On January 1, 2015, the Basel 3 rules became effective and include transition provisions through January 1, 2019. Under Basel 3, Total capital consists of two tiers of capital, Tier 1 and Tier 2. Tier 1 capital is further composed of Common equity tier 1 capital and additional tier 1 capital.

Common equity tier 1 capital primarily includes qualifying common shareholders' equity, retained earnings and certain minority interests. Goodwill, disallowed intangible assets and certain disallowed deferred tax assets are excluded from Common equity tier 1 capital.

Additional tier 1 capital primarily includes qualifying non-cumulative preferred stock, trust preferred securities (Trust Securities) subject to phase-out and certain minority interests. Certain deferred tax assets are also excluded.

Tier 2 capital primarily consists of qualifying subordinated debt, a limited portion of the allowance for loan and lease losses, Trust Securities subject to phase-out and reserves for unfunded lending commitments. The Corporation's Total capital is the sum of Tier 1 capital plus Tier 2 capital.

To meet adequately capitalized regulatory requirements, an institution must maintain a Tier 1 capital ratio of 8.50 percent and a Total capital ratio of 10.50 percent. A "well-capitalized" institution must generally maintain capital ratios 200 bps higher than the minimum guidelines. The risk-based capital rules have been further supplemented by a Tier 1 leverage ratio, defined as Tier 1 capital divided by quarterly average total assets, after certain adjustments. BHCs must have a minimum Tier 1 leverage ratio of at least 4.0 percent. National banks must maintain a Tier 1 leverage ratio of at least 5.0 percent to be classified as "well capitalized." Failure to meet the capital requirements established by the joint agencies can lead to certain mandatory and discretionary actions by regulators that could have a material adverse effect on the Corporation's financial position. Below are the capital ratios for the Corporation and lead bank.

The fully phased in capital conservation buffer set the minimum ratios for common equity Tier 1 capital at 7%, the Tier 1 capital at 8.5% and the total capital at 10.5%. Currently the Corporation exceeds all of these minimums.


	September 30, 2025		December 31, 2024		To Be Well Capitalized
Common equity tier 1 capital
Corporation	13.12	%	12.43	%	N/A
First Financial Bank	13.05	%	12.76	%	6.50	%
Total risk-based capital
Corporation	14.15	%	13.46	%	N/A
First Financial Bank	14.09	%	13.81	%	10.00	%
Tier I risk-based capital
Corporation	13.12	%	12.43	%	N/A
First Financial Bank	13.05	%	12.76	%	8.00	%
Tier I leverage capital
Corporation	11.05	%	10.38	%	N/A
First Financial Bank	10.63	%	10.26	%	5.00	%

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ITEM 4.Controls and Procedures

First Financial Corporation's management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. As of September 30, 2025, an evaluation was performed under the supervision and with the participation of management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures. Based on that evaluation, management, including the principal executive officer and principal financial officer, concluded that the Corporation's disclosure controls and procedures as of September 30, 2025 were effective in ensuring material information required to be disclosed in this Quarterly Report on Form 10-Q was recorded, processed, summarized, and reported on a timely basis. Additionally, there was no change in the Corporation's internal control over financial reporting that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

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PART II - Other Information

ITEM 1.Legal Proceedings.

There are no material pending legal proceedings, other than routine litigation incidental to the business of the Corporation or its subsidiaries, to which the Corporation or any of the subsidiaries is a party to or of which any of their respective property is subject. Further, there is no material legal proceeding in which any director, officer, principal shareholder, or affiliate of the Corporation or any of its subsidiaries, or any associate of such director, officer, principal shareholder or affiliate is a party, or has a material interest, adverse to the Corporation or any of its subsidiaries.

ITEM 1A. Risk Factors.

There have been no material changes in the risk factors from those disclosed in the Corporation's 2024 Form 10-K filed for December 31, 2024.

ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

None.

(b)

Not applicable.

(c)

Purchases of Equity Securities

The Corporation periodically acquires shares of its common stock directly from shareholders in individually negotiated transactions. On April 21, 2022 First Financial Corporation issued a press release announcing that its Board of Directors has authorized a stock repurchase program pursuant to which up to 10% of the Corporations outstanding shares of common stock, or approximately 1,243,531 shares may be repurchased.

Following is certain information regarding shares of common stock purchased by the Corporation during the quarter covered by this report.


			(c)
			Total Number Of Shares	(c)
	(a)	(b)	Purchased As Part Of	Maximum
	Total Number Of	Average Price	Publicly Announced Plans	Number of Shares That May Yet
	Shares Purchased	Paid Per Share	Or Programs *	Be Purchased *
July 1-31, 2025	-	-	-	-
August 1-31, 2025	-	-	-	-
September 1-30, 2025	-	-	-	-
Total	-	-	-	518,860

ITEM 3.Defaults upon Senior Securities.

Not applicable.

ITEM 4.Mine Safety Disclosures

Not applicable.

ITEM 5.Other Information.

During the three months ended September 30, 2025, there were no Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements adopted, modified or terminated by any director or officer of the Corporation.

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ITEM 6.Exhibits.


Exhibit No.:		Description of Exhibit:
3.1		Amended and Restated Articles of Incorporation of First Financial Corporation, incorporated by reference to Exhibit 3(i) of the Corporation's Form 10-Q filed for the quarter ended September 30, 2002.
3.2		Amended and Restated Code of By-Laws of First Financial Corporation, incorporated by reference to Exhibit 3.2 of the Corporation's Form 8-K filed on February 22, 2021.
3.3		Articles of Amendment to the Amended and Restated Articles of Incorporation of First Financial Corporation, incorporated by reference to Exhibit 3.1 of the Corporation's Form 8-K filed on April 27, 2021.
10.2*		2001 Long-Term Incentive Plan of First Financial Corporation, incorporated by reference to Exhibit 10.3 of the Corporation's Form 10-Q filed for the quarter ended September 30, 2002.
10.5*		2005 Long-Term Incentive Plan of First Financial Corporation, incorporated by reference to Exhibit 10.7 of the Corporation's Form 8-K filed on September 4, 2007.
10.6*		2005 Executives Deferred Compensation Plan, incorporated by reference to Exhibit 10.5 of the Corporation's Form 8-K filed on September 4, 2007.
10.7*		2005 Executives Supplemental Retirement Plan, incorporated by reference to Exhibit 10.6 of the Corporation's Form 8-K filed on September 4, 2007.
10.9*		First Financial Corporation 2010 Long-Term Incentive Compensation Plan incorporated by reference to Exhibit 10. 9 of the Corporation's Form 10-K filed March 15, 2011.
10.10*		First Financial Corporation 2011 Short-Term Incentive Compensation Plan incorporated by reference to Exhibit 10.10 of the Corporation's Form 10-K filed March 15, 2011.
10.11*		First Financial Corporation Amended and Restated 2011 Omnibus Equity Incentive Plan incorporated by reference to Exhibit 10.1 of the Corporation's Form 8-K for the annual meeting filed on April 27, 2021.
10.12*		Form of Restricted Stock Award Agreement under the First Financial Corporation 2011 Omnibus Equity Incentive Plan incorporated by reference to Exhibit 10.12 of the Corporation's Form 10-Q for the quarter ended March 31, 2012 filed on May 10, 2012.
10.13*		Employment Agreement for Norman D. Lowery, effective July 1, 2025, incorporated by reference to Exhibit 10.1 of the Corporation's Form 8-K filed June 3, 2025.
10.14*		Employment Agreement for Rodger A. McHargue, effective July 1, 2025, incorporated by reference to Exhibit 10.2 of the Corporation's Form 8-K filed June 3, 2025.
10.15*		Employment Agreement for Stephen P. Panagouleas, effective July 1, 2025, incorporated by reference to Exhibit 10.3 of the Corporation's Form 8-K filed June 3, 2025.
10.16*		Employment Agreement for Mark A. Franklin, effective July 1, 2025, incorporated by reference to Exhibit 10.4 of the Corporation's Form 8-K filed June 3, 2025.
31.1		Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 by Principal Executive Officer, dated November 5, 2025.
31.2		Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 by Principal Financial Officer, dated November 5, 2025.
32.1		Certification, dated November 5, 2025, of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2005 on Form 10-Q for the quarter ended September 30, 2025.
101.1		Financial statements from the Quarterly Report on Form 10-Q of the Corporation for the quarter ended September 30, 2025, formatted in XBRL pursuant to Rule 405 : (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Shareholders' Equity, and (v) Notes to Consolidated Financial Statements, as blocks of text and in detail**.

*Management contract or compensatory plan or arrangement.

**Furnished, not filed, for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	FIRST FINANCIAL CORPORATION
	(Registrant)

Date: November 5, 2025	By /s/ Norman D. Lowery
	Norman D. Lowery, President, CEO & Director
	(Principal Executive Officer)

Date: November 5, 2025	By /s/ Rodger A. McHargue
	Rodger A. McHargue, Treasurer and CFO
	(Principal Financial Officer)

First Financial Corporation published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 19:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]

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