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What changed in FIRST FINANCIAL CORP /IN/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FIRST FINANCIAL CORP /IN/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+177 added−159 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-11)

Top changes in FIRST FINANCIAL CORP /IN/'s 2024 10-K

177 paragraphs added · 159 removed · 139 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

9 edited+1 added−0 removed156 unchanged
Biggest changeIn addition, these regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements. The agencies proposed such regulations in April 2011, but the regulations have not been finalized. If the regulations are adopted in the form initially proposed, they will impose limitations on the manner in which the Corporation may structure compensation for its executives.
Biggest changeIn addition, these regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements. The agencies proposed such regulations in April 2011. These regulations were later amended in 2016, however rulings have not yet been finalized.
The Bank paid a total FDIC assessment of $2.8 million in 2023. In addition to the FDIC insurance premiums, the Bank is required to make quarterly payments on bonds issued by the Financing Corporation (“FICO”), an agency of the Federal government established to recapitalize a predecessor deposit insurance fund. These assessments will continue until the FICO bonds are repaid.
The Bank paid a total FDIC assessment of $2.8 million in 2024. In addition to the FDIC insurance premiums, the Bank is required to make quarterly payments on bonds issued by the Financing Corporation (“FICO”), an agency of the Federal government established to recapitalize a predecessor deposit insurance fund. These assessments will continue until the FICO bonds are repaid.
The Corporation believes that, as of December 31, 2023, the Bank was “well capitalized” based on the aforementioned ratios. Temporary Regulatory Capital Relief Related to Impact of CECL.
The Corporation believes that, as of December 31, 2024, the Bank was “well capitalized” based on the aforementioned ratios. Temporary Regulatory Capital Relief Related to Impact of CECL.
It operates seven full-service banking branches within the county; three in Clay County, Ind.; one in Daviess County, Ind.; one in Greene County, Ind.; one in Knox County, Ind.; two in Parke County, Ind.; one in Putnam County, Ind., two in Sullivan County, Ind.; one in Vanderburgh, County, Ind.; three in Vermillion County, Ind.; four in Champaign County, Illinois; one in Clark County, Ill.; one in Coles County, Ill.; one in Crawford County, Ill.; one in Franklin County, Ill.; one in Jasper County, Ill.; two in Jefferson County, Ill.; one in Lawrence County, Ill.; two in Livingston County, Ill.; two in Marion County, Ill.; two in McLean County, Ill.; one in Richland County, Ill.; five in Vermilion County, Ill.; one in Wayne County, Ill; one in Breckinridge County, Kentucky; one in Calloway County, Ky; three in Christian County, Ky; two in Fulton County, Ky; two in Hancock County, Ky; two in Hopkins County, Ky; two in Marshall County, Ky; one in Todd County, Ky; one in Trigg County, Ky; one in Warren County, Ky; three in Cheatham County, Tennessee; and three in Montgomery County, Tn.
It operates seven full-service banking branches within the county; three in Clay County, Ind.; one in Daviess County, Ind.; one in Greene County, Ind.; one in Knox County, Ind.; two in Parke County, Ind.; one in Putnam County, Ind., two in Sullivan County, Ind.; one in Vanderburgh, County, Ind.; three in Vermillion County, Ind.; four in Champaign County, Illinois; one in Clark County, Ill.; one in Coles County, Ill.; one in Crawford County, Ill.; one in Franklin County, Ill.; one in Jasper County, Ill.; two in Jefferson County, Ill.; one in Lawrence County, Ill.; two in Livingston County, Ill.; two in Marion County, Ill.; two in McLean County, Ill.; one in Richland County, Ill.; five in Vermilion County, Ill.; one in Wayne County, Ill; one in Breckinridge County, Kentucky; one in Calloway County, Ky; three in Christian County, Ky; two in Fulton County, Ky; two in Hancock County, Ky; two in Hopkins County, Ky; two in Marshall County, Ky; one in Todd County, Ky; one in Trigg County, Ky; one in Warren County, Ky; one in Bradley County, Tennessee; three in Cheatham County, Tn; two in Hamilton County, Tn; one in Meigs County, Tn; three in Montgomery County, Tn; one in Polk County, Tn; three in Rhea County, Tn; and two in Roane County, Tn.
The Corporation, which is headquartered in Terre Haute, Indiana, offers a wide variety of financial services including commercial, mortgage and consumer lending, lease financing, trust account services, and depositor services through its subsidiary. At the close of business in 2023 the Corporation and its subsidiaries had 861 full-time equivalent employees.
The Corporation, which is headquartered in Terre Haute, Indiana, offers a wide variety of financial services including commercial, mortgage and consumer lending, lease financing, trust account services, and depositor services through its subsidiary. At the close of business in 2024 the Corporation and its subsidiaries had 937 full-time equivalent employees.
There are six loan production offices, one in Allen County, Indiana; one in Hamilton County, Indiana; one in Monroe County, Indiana; one in Vanderburgh County, Indiana; one in Rutherford County, Tennessee; and one in Williamson County, Tn.
There are seven loan production offices, one in Allen County, Indiana; one in Hamilton County, Indiana; one in Monroe County, Indiana; one in Vanderburgh County, Indiana; one in Hamilton County, Tennessee; one in Rutherford County, Tn; and one in Williamson County, Tn.
The Corporation’s business activities are centered in west-central Indiana, east-central Illinois, western Kentucky, and central Tennessee. The Corporation has no foreign activities.
The Corporation’s business activities are centered in west-central Indiana, east-central Illinois, western Kentucky, eastern and central Tennessee, and northern Georgia. The Corporation has no foreign activities.
Certain regulatory capital ratios for the Bank as of December 31, 2023, are shown below: ● 13.84% CET1 to risk-weighted assets; ● 13.84% Tier 1 capital to risk-weighted assets; ● 14.89% Total capital to risk-weighted assets; and ● 10.73% leverage ratio. The Corporation The Bank Holding Company Act .
Certain regulatory capital ratios for the Bank as of December 31, 2024, are shown below: ● 12.76% CET1 to risk-weighted assets; ● 12.76% Tier 1 capital to risk-weighted assets; ● 13.81% Total capital to risk-weighted assets; and ● 10.26% leverage ratio. The Corporation The Bank Holding Company Act .
Certain regulatory capital ratios for the Corporation as of December 31, 2023, are shown below: ● 14.76% CET1 to risk-weighted assets; ● 14.76% Tier 1 capital to risk-weighted assets; ● 15.80% Total capital to risk-weighted assets; and ● 12.14% leverage ratio.
Certain regulatory capital ratios for the Corporation as of December 31, 2024, are shown below: ● 12.43% CET1 to risk-weighted assets; ● 12.43% Tier 1 capital to risk-weighted assets; ● 13.46% Total capital to risk-weighted assets; and ● 10.38% leverage ratio.
Added
If the regulations are adopted in the form initially proposed, they will impose limitations on the manner in which the Corporation may structure compensation for its executives.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+24 added−10 removed108 unchanged
Biggest changeLosses of accounts managed by key personnel could have a material adverse impact on our business. ​ Terrorist attacks, threats, or actual war, natural disasters, global climate change, pandemics, other catastrophic events, trade policies, civil unrest, protests, and other global and domestic conflicts may impact all aspects of our operations, revenues, costs, and stock price in unpredictable ways. ​ Terrorist attacks in the U.S. and abroad, as well as future events occurring in response to or in connection with them, including, without limitation, future terrorist attacks against U.S. targets, rumors or threats of war, actual conflicts involving the U.S. or its allies, or military or trade disruptions, may impact our operations as well as the operations of some of our customers.
Biggest changeAdditionally, if we were to experience the unexpected loss of a large number of personnel, whether or not such personnel were considered key personnel, we could experience a material adverse impact on our business because of the loss of their skills and the costs and difficulty of finding a large number of qualified replacement personnel. ​ Terrorist attacks, threats, or actual war, natural disasters, global climate change, pandemics, other catastrophic events, trade policies, civil unrest, protests, and other global and domestic conflicts may impact all aspects of our operations, revenues, costs, and stock price in unpredictable ways. ​ Terrorist attacks in the U.S. and abroad, as well as future events occurring in response to or in connection with them, including, without limitation, future terrorist attacks against U.S. targets, rumors or threats of war, actual conflicts involving the U.S. or its allies, including any escalation of or increased U.S. involvement in currently ongoing conflicts, such as the Russia-Ukraine war or conflicts in the Middle East, military or trade disruptions, may impact our operations as well as the operations of some of our customers.
Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than the Corporation can. ​ The Corporation’s ability to compete successfully depends on a number of factors, including, among other things: ​ • the ability to develop, maintain and build upon long-term customer relationships based on top quality service, and safe, sound assets; • the ability to expand the Corporation's market position; • the scope, relevance and pricing of products and services offered to meet customer needs and demands; 20 Table of Contents • the rate at which the Corporation introduces new products and services relative to its competitors; • customer satisfaction with the Corporation's level of service; and • industry and general economic trends. ​ Failure to perform in any of these areas could significantly weaken the Corporation's competitive position, which could adversely affect the Corporation's growth and profitability, which, in turn, could have a material adverse effect on the Corporation's financial condition and results of operations. ​ The Corporation’s accounting estimates and risk management processes rely on analytical and forecasting models, which, if inadequate, may result in a material adverse effect on our business, financial condition, or results of operation. ​ The processes the Corporation uses to estimate its allowance for credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on the Corporation’s financial condition and results of operations, depend upon the use of analytical and forecasting models.
Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than the Corporation can. ​ The Corporation’s ability to compete successfully depends on a number of factors, including, among other things: ​ • the ability to develop, maintain and build upon long-term customer relationships based on top quality service, and safe, sound assets; • the ability to expand the Corporation's market position; • the scope, relevance and pricing of products and services offered to meet customer needs and demands; • the rate at which the Corporation introduces new products and services relative to its competitors; • customer satisfaction with the Corporation's level of service; and 20 Table of Contents • industry and general economic trends. ​ Failure to perform in any of these areas could significantly weaken the Corporation's competitive position, which could adversely affect the Corporation's growth and profitability, which, in turn, could have a material adverse effect on the Corporation's financial condition and results of operations. ​ The Corporation’s accounting estimates and risk management processes rely on analytical and forecasting models, which, if inadequate, may result in a material adverse effect on our business, financial condition, or results of operation. ​ The processes the Corporation uses to estimate its allowance for credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on the Corporation’s financial condition and results of operations, depend upon the use of analytical and forecasting models.
Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including, among other things: ​ • the time and costs associated with identifying and evaluating potential new markets, hiring experienced local management, and opening new offices, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion; • the time and costs associated with identifying potential acquisition and merger targets; • the accuracy of the estimates and judgments used to evaluate credit, operations, management, and market risks with respect to a target company; • the diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combined businesses; • our ability to finance an acquisition and possible dilution to our existing shareholders; • closing delays and expenses related to the resolution of lawsuits filed by shareholders of targets; • entry into new markets where we lack experience; • introduction of new products and services into our business; • potential exposure to unknown or contingent liabilities of the target company; • exposure to potential asset quality issues of the target company; • the risk of loss of key employees and customers; and 24 Table of Contents • incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations. ​ Acquisitions typically involve the payment of a premium over book and market values and, therefore, some dilution of the Corporation’s tangible book value and net income per common share may occur in connection with any future transaction.
Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including, among other things: ​ • the time and costs associated with identifying and evaluating potential new markets, hiring experienced local management, and opening new offices, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion; • the time and costs associated with identifying potential acquisition and merger targets; • the accuracy of the estimates and judgments used to evaluate credit, operations, management, and market risks with respect to a target company; • the diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combined businesses; • our ability to finance an acquisition and possible dilution to our existing shareholders; • closing delays and expenses related to the resolution of lawsuits filed by shareholders of targets; • entry into new markets where we lack experience; • introduction of new products and services into our business; • potential exposure to unknown or contingent liabilities of the target company; • exposure to potential asset quality issues of the target company; • the risk of loss of key employees and customers; and • incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations. ​ Acquisitions typically involve the payment of a premium over book and market values and, therefore, some dilution of the Corporation’s tangible book value and net income per common share may occur in connection with any future transaction.
The Corporation’s common stock price can fluctuate significantly in response to a variety of factors, including: ​ • announcements and news reports relating to the Corporation’s business and trends, concerns, and other issues in the financial services industry generally; • fluctuations in the Corporation’s results of operations; • sales or purchases of substantial amounts of the Corporation’s securities in the marketplace; • a shortfall or excess in revenues or earnings compared to securities analysts’ expectations; • changes in analysts’ recommendations or projections; • actual or expected economic conditions that are perceived to affect the Corporation, such as changes in real estate values or interest rates; • perceptions in the marketplace regarding the Corporation and/or our competitors; • new technology used, or services offered, by competitors; • changes in applicable government regulation; • macroeconomic and geopolitical factors discussed in this Risk Factors section; and • the Corporation’s announcement of new acquisitions or other projects. ​ As such, the market price of the Corporation’s common stock may not accurately reflect the underlying value of the stock, and investors should consider this before relying on the market prices of the Corporation’s common stock when making an investment decision. ​ Future capital needs could result in dilution of shareholder investment.
The Corporation’s common stock price can fluctuate significantly in response to a variety of factors, including: ​ • announcements and news reports relating to the Corporation’s business and trends, concerns, and other issues in the financial services industry generally; • fluctuations in the Corporation’s results of operations; • sales or purchases of substantial amounts of the Corporation’s securities in the marketplace; • a shortfall or excess in revenues or earnings compared to securities analysts’ expectations; • changes in analysts’ recommendations or projections; • actual or expected economic conditions that are perceived to affect the Corporation, such as changes in real estate values or interest rates; • perceptions in the marketplace regarding the Corporation and/or our competitors; • new technology used, or services offered, by competitors; • changes in applicable government regulation; • macroeconomic and geopolitical factors discussed in this Risk Factors section; and • the Corporation’s announcement of new acquisitions or other projects. ​ As such, the market price of the Corporation’s common stock may not accurately reflect the underlying value of the stock, and investors should consider this before relying on the market prices of the Corporation’s common stock when making an investment decision. ​ 28 Table of Contents Future capital needs could result in dilution of shareholder investment.
The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of the markets in which we operate, years of industry experience, and the difficulty of promptly finding qualified replacement personnel.
The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of the markets in which we operate, years of industry experience, and the difficulty and costs of promptly finding qualified replacement personnel.
ITEM 1A. RISK FACTORS An investment in the Corporation involves risk, some of which, including market, liquidity, credit, operational, legal, compliance, reputational, and strategic risks, could be substantial and is inherent in our business.
ITEM 1A. RISK FACTORS An investment in the Corporation involves risk, some of which, including market, liquidity, credit, operational, legal, compliance, regulatory, reputational, and strategic risks, could be substantial and is inherent in our business.
If the models the Corporation uses to measure the fair value of our financial instruments are inadequate, the fair value of our financial instruments may fluctuate unexpectedly or may not accurately reflect what the Corporation could realize upon sale or settlement of our financial instruments.
Additionally, if the models the Corporation uses to measure the fair value of our financial instruments are inadequate, the fair value of our financial instruments may fluctuate unexpectedly or may not accurately reflect what the Corporation could realize upon sale or settlement of our financial instruments.
If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or otherwise, our business and, therefore, our operating results, may be materially adversely affected. ​ Our operational systems and networks are subject to an increasing risk of continually evolving cybersecurity or other technological risks, which could result in a loss of customer business, financial liability, regulatory penalties, damage to our reputation, or the disclosure of confidential information. ​ Information technology systems are critical to our business.
If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, by any government or regulatory action, or otherwise, our business and, therefore, our operating results, may be materially adversely affected. ​ Our operational systems and networks are subject to an increasing risk of continually evolving cybersecurity or other technological risks, which could result in a loss of customer business, financial liability, regulatory penalties, damage to our reputation, or the disclosure of confidential information. ​ Information technology systems are critical to our business.
We could also incur increased costs and expenses to improve our anti-money laundering procedures and systems to comply with any regulatory requirements or actions. Failure to maintain and implement adequate programs to combat money laundering and terrorist 26 Table of Contents financing could also have serious reputational consequences for us.
We 27 Table of Contents could also incur increased costs and expenses to improve our anti-money laundering procedures and systems to comply with any regulatory requirements or actions. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
This regulatory framework affects our lending practices, capital structure, investment practices, and growth, among other things. ​ 25 Table of Contents If, as a result of an examination, a banking regulator were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate.
This regulatory framework affects our lending practices, capital structure, investment practices, and growth, among other things. ​ If, as a result of an examination, a banking regulator were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate.
Changes in monetary policy, including changes in interest rates, could influence not only the interest that is received on loans and securities and the interest that is paid on deposits and borrowings, but such changes could also affect the Corporation’s ability to originate loans and obtain deposits and the fair value of the Corporation’s financial assets and liabilities. ​ If the interest received on loans and other interest-earning assets decreases at a faster rate than the interest rates paid on deposits and other interest-bearing liabilities, our net interest income, and, therefore, our earnings could be adversely affected.
Changes in monetary policy, including changes in interest rates, including the target fed funds rate, could influence not only the interest that is received on loans and securities and the interest that is paid on deposits and borrowings, but such changes could also affect the Corporation’s ability to originate loans and obtain deposits and the fair value of the Corporation’s financial assets and liabilities. ​ If the interest received on loans and other interest-earning assets decreases at a faster rate than the interest rates paid on deposits and other interest-bearing liabilities, our net interest income, and, therefore, our earnings could be adversely affected.
The remediation costs and any other financial liabilities 23 Table of Contents associated with an environmental hazard could have a material adverse effect on the Corporation’s business, financial condition, and results of operations. ​ The Corporation may become subject to claims and litigation pertaining to intellectual property. ​ Banking and other financial services companies, such as the Corporation, rely on technology companies to provide information technology products and services necessary to support the Corporation’s day-to-day operations.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Corporation’s business, financial condition, and results of operations. ​ The Corporation may become subject to claims and litigation pertaining to intellectual property. ​ Banking and other financial services companies, such as the Corporation, rely on technology companies to provide information technology products and services necessary to support the Corporation’s day-to-day operations.
The Corporation’s financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services that the Corporation offers, is highly dependent upon the business environment in the markets where the Corporation operates and in the U.S. 16 Table of Contents as a whole.
The Corporation’s financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services that the Corporation offers, is highly dependent upon the business environment in the markets where the Corporation operates and in the U.S. as a whole.
The Corporation’s Board of Directors may determine from time to time there is a need to or, if our or the Bank’s regulatory capital ratios fall below the required minimums, we could be forced to raise additional capital through the issuance of additional shares of 27 Table of Contents stock or other securities, including debt securities and senior or subordinated notes.
The Corporation’s Board of Directors may determine from time to time there is a need to or, if our or the Bank’s regulatory capital ratios fall below the required minimums, we could be forced to raise additional capital through the issuance of additional shares of stock or other securities, including debt securities and senior or subordinated notes.
In addition, large loans, letters of credit, and contracts with individual counterparties in our portfolio magnify the credit risk that we face, as the impact of large borrowers and counterparties not repaying their loans or performing according to the terms of their contracts would have a disproportionately significant impact on our credit losses and reserves. ​ The Corporation has significant exposure to risks associated with commercial and commercial real estate loans. ​ As of December 31, 2023, approximately 57.5% of the Corporation’s loan portfolio consisted of commercial and commercial real estate loans.
In addition, large loans, letters of credit, and contracts with individual counterparties in our portfolio magnify the credit risk that we face, as the impact of large borrowers and counterparties not repaying their loans or performing according to the terms of their contracts would have a disproportionately significant impact on our credit losses and reserves. ​ The Corporation has significant exposure to risks associated with commercial and commercial real estate loans. ​ As of December 31, 2024, approximately 57.3% of the Corporation’s loan portfolio consisted of commercial and commercial real estate loans.
These restrictions could negatively impact the Corporation’s ability to operate or further expand its operations through acquisitions or the establishment of additional branches and may result in increases in operating expenses and reductions in revenues that could have a material adverse effect on its financial condition and results of operations. ​ The value of the Corporation’s goodwill and other intangible assets may decline in the future. ​ As of December 31, 2023, the Corporation had $92.6 million of goodwill and other intangible assets.
These restrictions could negatively impact the Corporation’s ability to operate or further expand its operations through acquisitions or the establishment of additional branches and may result in increases in operating expenses and reductions in revenues that could have a material adverse effect on its financial condition and results of operations. ​ The value of the Corporation’s goodwill and other intangible assets may decline in the future. ​ As of December 31, 2024, the Corporation had $121.6 million of goodwill and other intangible assets.
It led regulators, investors, and institutions to focus on the on-balance sheet liquidity, customer deposit base, including level of deposits uninsured by the FDIC, the amount of accumulated other comprehensive loss, capital levels, interest rate risk management, and securities holdings of financial institutions.
It led regulators, investors, and institutions to focus on the on-balance sheet liquidity, customer deposit base, including level of deposits uninsured by the FDIC, the 16 Table of Contents amount of accumulated other comprehensive loss, capital levels, interest rate risk management, and securities holdings of financial institutions.
Deterioration in economic conditions in the Corporation’s markets could result in one or more of the following, which may adversely affect our business: ​ • an increase in loan delinquencies; • an increase in problem assets and foreclosures; • an increase in our allowance for credit losses; • a decrease in the demand for our products and services; • a decrease in the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the value of assets associated with problem loans and collateral coverage; • a decrease in net worth and liquidity of loan guarantors, which may impair their ability to honor guarantees made to us; and • a decrease in deposits balances. ​ ​ Risks Related to Our Business A lack of liquidity could affect our operations and jeopardize our financial condition. ​ The Corporation requires liquidity to meet our deposit and other obligations as they come due.
Deterioration in economic conditions in the Corporation’s markets could result in one or more of the following, which may increase our costs, reduce our net income, or otherwise adversely affect our business: ​ • an increase in loan delinquencies; • an increase in problem assets and foreclosures; • an increase in our allowance for credit losses; • a decrease in the demand for our products and services; • a decrease in the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the value of assets associated with problem loans and collateral coverage; • a decrease in net worth and liquidity of loan guarantors, which may impair their ability to honor guarantees made to us; and • a decrease in deposits balances. 18 Table of Contents ​ Risks Related to Our Business A lack of liquidity could affect our operations and jeopardize our financial condition. ​ The Corporation requires liquidity to meet our deposit and other obligations as they come due.
Accordingly, the Corporation may not be able to raise capital when needed or on favorable terms. If the Corporation cannot raise additional capital when needed, it will be subject to increased regulatory supervision and the imposition of restrictions on its growth and business.
Accordingly, the Corporation may not be able to raise capital when needed or on favorable terms. If the Corporation cannot raise additional capital when needed, it will be 25 Table of Contents subject to increased regulatory supervision and the imposition of restrictions on its growth and business.
This process, which is critical to our financial results and condition, requires difficult, subjective, and complex judgments, including 19 Table of Contents reviews of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans.
This process, which is critical to our financial results and condition, requires difficult, subjective, and complex judgments, including reviews of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans.
In addition, natural 18 Table of Contents disasters, global climate change, pandemics, other catastrophic events, trade policies, domestic civil unrest, protest, and other global or domestic conflicts may impact our operations or the operations of some of our customers as well.
In addition, natural disasters, global climate change, pandemics, other catastrophic events, trade policies, domestic civil unrest, protest, and other global or domestic conflicts may impact our operations or the operations of some of our customers as well.
Any security breach 21 Table of Contents could result in the misappropriation, loss, or unauthorized disclosure of sensitive customer information, severely damage our reputation, expose us to the risk of litigation and liability, disrupt our operations, and have a material adverse effect on our business. ​ We also rely on the integrity and security of a variety of third-party processors and payment, clearing, and settlement systems, as well as the various participants involved in these systems, many of which have no direct relationship with us.
Any security breach, including security breaches that occur as a result of employee error or misconduct, could result in the misappropriation, loss, or unauthorized disclosure of sensitive customer information, severely damage our reputation, expose us to the risk of litigation and liability, disrupt our operations, and have a material adverse effect on our business. 21 Table of Contents ​ We also rely on the integrity and security of a variety of third-party processors and payment, clearing, and settlement systems, as well as the various participants involved in these systems, many of which have no direct relationship with us.
Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of the Corporation’s competitors have fewer regulatory constraints and may have lower cost structures.
Also, technology has lowered barriers to entry and made it possible for non-banks, including cryptocurrencies and other digital assets, to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of the Corporation’s competitors have fewer regulatory constraints and may have lower cost structures.
Certain expenditures associated with the ownership of real estate, principally real estate taxes, insurance, and maintenance costs, may adversely affect the income from the real estate.
Certain expenditures associated with 23 Table of Contents the ownership of real estate, principally real estate taxes, insurance, and maintenance costs, may adversely affect the income from the real estate.
Depending upon any adopted change in legislation or directives from regulators, we may need to adjust our strategy and operations to comply with such changing laws or regulatory directives and it could materially impact our operating results. ​ Continued elevated levels of inflation could adversely impact our business and results of operations.
Depending upon any adopted change in legislation or directives from regulators, we may need to adjust our strategy and operations to comply with such changing laws or regulatory directives, which can result in additional operating expenses and could materially impact our operating results. ​ Continued elevated levels of inflation could adversely impact our business and results of operations.
The deterioration of one or a few of these loans could cause a significant increase in nonperforming loans and a reduction in interest income.
The deterioration of one or a few of these loans could cause a significant increase in nonperforming loans, an increase in the costs of servicing these nonperforming loans, and a reduction in interest income.
Failure by these participants or their systems to protect our customers’ transaction data may put us at risk for possible losses due to fraud or operational disruption. In addition, a number of our third-party service providers are large national entities with dominant market presence in their respective fields.
Failure by these participants, including their employees either as a result of employee error or misconduct, or their systems to protect our customers’ transaction data may put us at risk for possible losses due to fraud or operational disruption. In addition, a number of our third-party service providers are large national entities with dominant market presence in their respective fields.
The Corporation may not be able to effectively implement new technology-driven products and services, be successful in marketing these products and services to its customers, or incur significant costs in implementing new technology-driven products and services. Further, many of our competitors have substantially greater resources to invest in technological improvements.
The Corporation may not be able to effectively implement new technology-driven products and services, be successful in marketing these products and services to its customers, or incur significant costs in implementing new technology-driven products and services. Further, many of our competitors have substantially greater resources to invest in technological improvements and may do so in a more cost effective manner.
Our success depends, in large part, on our ability to attract and retain key personnel. Key personnel that have regular direct contact with customers and clients often build strong relationships that are important to our business. In addition, we rely on key personnel to manage and operate our business, including major revenue producing functions, such as loan and deposit generation.
Key personnel that have regular direct contact with customers and clients often build strong relationships that are important to our business. In addition, we rely on key personnel to manage and operate our business, including major revenue producing functions, such as loan and deposit generation.
An increase in nonperforming loans could result in an increase in the provision for loan losses and an increase in loan charge-offs, both of which could have a material adverse effect on the Corporation’s business, financial condition, and results of operations. ​ The information that we use in managing our credit risk may be inaccurate or incomplete, which may result in an increased risk of default and otherwise have an adverse effect on our business, results of operations, and financial condition. ​ In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished by or on behalf of clients and counterparties, including financial statements and other financial information.
An increase in nonperforming loans, workouts, foreclosures, and charge-offs to our commercial and commercial real estate loans could have a material adverse effect on the Corporation’s business, financial condition, and results of operations. ​ 19 Table of Contents ​ The information that we use in managing our credit risk may be inaccurate or incomplete, which may result in an increased risk of default and otherwise have an adverse effect on our business, results of operations, and financial condition. ​ In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished by or on behalf of clients and counterparties, including financial statements and other financial information.
For example, consumers can pay bills and transfer funds directly without going through a bank. This process of eliminating banks as intermediaries could result in the loss of fee income, as well as the loss of customer deposits and income generated from those deposits.
For example, consumers can pay bills and transfer funds directly without going through a bank. This process of eliminating banks as intermediaries could result in the loss of fee income, as well as the loss of customer deposits and the use of customer deposits as a source of liquidity for income generating activities.
We are currently authorized to issue up to 40 million shares of common stock, of which 11,795,024 shares were outstanding as of December 31, 2023, and up to 10 million shares of preferred stock, of which no shares are outstanding.
We are currently authorized to issue up to 40 million shares of common stock, of which 11,842,539 shares were outstanding as of December 31, 2024, and up to 10 million shares of preferred stock, of which no shares are outstanding.
Factors that could reduce our access to liquidity sources include a downturn in the markets in which our loans are concentrated or adverse regulatory actions against the Corporation. The Corporation’s access to deposits may also be affected by the liquidity needs of depositors.
Factors that could reduce our access to liquidity sources include a downturn in the markets in which our loans are concentrated, a decline in demand in the secondary market for long-term fixed mortgages, or adverse regulatory actions against the Corporation. The Corporation’s access to deposits may also be affected by the liquidity needs of depositors.
Accordingly, the Corporation’s operations are exposed to risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements.
Accordingly, the Corporation’s operations are exposed to risk that these vendors or their employees, agents, or other representatives will not perform in accordance with the contracted arrangements under service level agreements.
While the Federal Reserve has taken steps to combat the heightened levels of inflation that began in 2021, continued levels of inflation and monetary policy adopted by the Federal Reserve to combat such inflation, could have complex effects on our business and results of operations, some of which could be materially adverse.
While the Federal Reserve took steps to combat the heightened levels of inflation that began in 2021, primarily through increases to the target fed funds rate, continued levels of inflation and monetary policy adopted by the Federal Reserve to combat such inflation, could have complex effects on our business and results of operations, some of which could be materially adverse.
While the higher payment amounts we would receive on adjustable-rate or variable-rate loans in a rising interest rate environment may increase our interest income, some borrowers may be unable to afford the higher payment amounts, and this could result in a higher rate of default.
While the higher payment amounts we would receive on adjustable-rate or variable-rate loans in a rising interest rate environment may increase our interest income, some borrowers may be unable to afford the higher payment amounts, and this could result in a higher rate of default which could result in a decrease in the value of the collateral securing these loans if the demand for the collateral decreases.
Unlike larger banking organizations that are more geographically diversified, the Corporation’s operations are currently concentrated in west central Indiana, east central Illinois, western Kentucky, and middle and western Tennessee, and most of our customers are located in these markets. Additionally, we will expand further into eastern Tennessee and northern Georgia provided we successfully consummate the Merger.
Unlike larger banking organizations that are more geographically diversified, the Corporation’s operations are currently concentrated in west central Indiana, east central Illinois, western Kentucky, eastern, middle and western Tennessee, northern Georgia, and most of our customers are located in these markets.
Interest rates are highly sensitive to many factors that are beyond the Corporation’s control, including general economic conditions, domestic and international events, changes in U.S. and other financial markets, and policies of various governmental and regulatory agencies.
Interest rates are highly sensitive to many factors that are beyond the Corporation’s control, including general economic conditions, domestic and international events, changes in U.S. and other financial markets, and policies of various governmental and regulatory agencies. In 2024, the Federal Reserve cut the target of the fed funds rate by 100 basis points.
Competition for qualified personnel in the financial services industry can be intense and we may not be able to hire or retain the key personnel that we depend upon for success.
Competition for qualified personnel in the financial services industry can be intense and we may not be able to hire or retain the key personnel that we depend upon for success. Frequently, we compete in the market for talent with entities that are not subject to comprehensive regulation.
Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this report.
Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this report. Risks Related to Economic and Market Conditions Economic conditions have affected and could adversely affect our revenue and profits.
If the models the Corporation uses for interest rate risk and asset-liability management are inadequate, the Corporation may incur increased or unexpected losses upon changes in market interest rates or other market measures. If the models the Corporation uses for determining its probable credit losses are inadequate, the allowance for credit losses may not be sufficient to support future charge-offs.
For example, if the models the Corporation uses for interest rate risk and asset-liability management are inadequate, the Corporation may incur increased or unexpected losses upon changes in market interest rates or other market measures.
The continued effects from elevated levels of inflation recently experienced could also increase volatility and uncertainty in the business environment, which 17 Table of Contents could adversely affect loan demand and our clients’ ability to repay indebtedness.
The continued effects from elevated levels of inflation recently experienced could also increase volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness. It is also possible that governmental policy responses to the current inflation environment could further affect our business, such as changes to monetary and fiscal policy.
Failure to successfully keep pace with technological change affecting the financial services industry could negatively affect the Corporation’s growth, revenue, and profit. ​ The Corporation’s controls and procedures may fail or be circumvented, and the Corporation’s methods of reducing risk exposure may not be effective. ​ The Corporation’s internal operations are subject to risks, including, but not limited to, data processing system failures and errors, customer or employee fraud, and catastrophic failures resulting from terrorist acts or natural disasters.
The realization of these risks could result in the Corporation failing to realize any anticipated benefits from the implementation of AI and could negatively affect the Corporation’s growth, reputation, revenue, expenses, and results of operations. ​ The Corporation’s controls and procedures may fail or be circumvented, and the Corporation’s methods of reducing risk exposure may not be effective. ​ The Corporation’s internal operations are subject to risks, including, but not limited to, data processing system failures and errors, customer or employee fraud, and catastrophic failures resulting from terrorist acts or natural disasters.
Also, the loss of key personnel could jeopardize our relationships with customers and clients and could lead to the loss of accounts.
Also, the loss of key personnel could jeopardize our relationships with customers and clients and could lead to the loss of accounts. Losses of accounts managed by key personnel could have a material adverse impact on our business.
Rising interest rates also may reduce the demand for loans and the value of fixed-rate investment securities. Accordingly, changes in interest rates could adversely affect our results of operations and financial condition. ​ Labor shortages and the loss of one or more of those key personnel may materially and adversely affect our business.
Accordingly, changes in interest rates could adversely affect our results of operations and financial condition. ​ Labor shortages and the loss of one or more of those key personnel may materially and adversely affect our business. Our success depends, in large part, on our ability to attract and retain key personnel.
Furthermore, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures arising from operational and security risks.
Furthermore, as technology, including the increasing use of artificial intelligence, machine learning, large language models, and other similar technologies, and cyberattacks change over time, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures arising from operational and security risks.
Any regulatory action against us or failure to comply with applicable laws and regulations could have an adverse effect on our reputation, business, financial condition, and results of operations. ​ Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, regulatory structure, financial condition, and/or results of operations. ​ Since the 2007-2008 financial crisis, federal and state banking laws and regulations, as well as interpretations and implementations of these laws and regulations, have undergone substantial review and change.
It is currently unknown whether the CFPB will continue its pursuit related to “junk fees”, however if it does, the rules and regulations generated from this undertaking may require us to modify our fee structures and incur costs to comply with any new rules or regulations. ​ Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, regulatory structure, financial condition, and/or results of operations. ​ Since the 2007-2008 financial crisis, federal and state banking laws and regulations, as well as interpretations and implementations of these laws and regulations, have undergone substantial review and change.
In addition, changes in consumer spending and savings habits could adversely affect the Corporation’s operations, and the Corporation may be unable to timely develop competitive new products and services in response to these changes. ​ Potential acquisitions may disrupt the Corporation’s business and dilute shareholder value. ​ The Corporation generally seeks merger or acquisition partners that are culturally similar and have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale, or expanded services.
If these risks occur, the Corporation may not realize the improved profitability it anticipated when it acquired SimplyBank and could realize a material adverse effect on its business, reputation, financial condition, standing with its regulators, and results of operations. ​ Potential acquisitions may disrupt the Corporation’s business and dilute shareholder value. ​ The Corporation generally seeks merger or acquisition partners that are culturally similar and have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale, or expanded services or geographic reach.
If these events or circumstances were to occur, it could result in a potential loss of revenue and have an adverse effect on our business, results of operations, and financial condition. ​ The Corporation operates in a highly competitive industry and market, and our business will suffer if we are unable to compete effectively. ​ The Corporation faces substantial competition in all areas of its operations from a variety of different competitors, many of which are larger and may have more financial resources.
If these events or circumstances were to occur, it could result in a potential loss of revenue and have an adverse effect on our business, results of operations, and financial condition. ​ Decreased demand from secondary market purchasers of the Corporation’s long-term fixed residential mortgages could adversely affect our business, liquidity, results of operations, and financial condition. ​ The Corporation sells substantially all of its long-term fixed residential mortgages to secondary market purchasers.
Removed
Risks Related to the Acquisition of SimplyBank ​ Our proposed transaction with SimplyBank may create incremental business, regulatory and reputational risks. ​ As previously disclosed on November 13, 2023, we entered into a merger agreement (the “Merger Agreement”) with SimplyBank., a Tennessee-chartered commercial bank (“SimplyBank”) which sets forth the terms of our proposed transaction (the “Merger”).
Added
During 2024, the Federal Reserve began cutting the target fed funds rate and decreased the target by 100 basis points. The Federal Reserve is still considering additional changes to the target fed funds rate, and the monetary policy adopted in 2025 by the Federal Reserve may impact the results of operations.
Removed
The Merger with SimplyBank comes with important risks, including, but not limited to: the expected timing and likelihood of completion of the Merger, including the timing, receipt, and terms and conditions of any required governmental, regulatory, or stockholder approvals or clearance of the Merger; the occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement; the initiation or outcome of any legal proceedings that may in the future be initiated against the parties and others following the announcement of the Merger; the risks of expanding the Corporation’s business into new territories; the inability to consummate the Merger due to the failure to satisfy other conditions to complete the Merger; the risks that the Merger disrupts our current plans and operations; the potential effect of the announcement and or consummation of the Merger on relationships, including with associates, competitors, employees, and customers; the risk that management’s attention is diverted from other matters of the business to focus on the Merger; the risk that the transaction and/or integration costs are greater than expected; the risks that personnel, business, operational, regulatory, or other issues arise during the integration of the SimplyBank; the occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement; and other risks described in our filings with the SEC. ​ We may be unable to retain personnel successfully as a result of the acquisition. ​ The success of the Merger will depend in part on the Corporation’s ability to retain the talents and dedication of key employees from SimplyBank.
Added
The Federal Reserve may take additional actions with respect to the target fed funds rate in 2025, which will have an impact on our net interest income.
Removed
It is possible that these employees may decide not to remain with the Corporation.
Added
A higher rate of default may also increase our costs associated with servicing these loans, foreclosing on properties, property maintenance on 17 Table of Contents foreclosed properties, and the liquidation of any foreclosed properties. Rising interest rates also may reduce the demand for loans and the value of fixed-rate investment securities.
Removed
If the Corporation is unable to retain key employees, including management, who are critical to the successful integration and future operations of the combined company, the Corporation could face disruptions in its operations, loss of existing customers, loss of key information, expertise or know-how and incur unanticipated recruitment costs.
Added
The increased frequency of remote work opportunities has also increased the competition to attract and retain talent, as these opportunities have allowed companies from outside our geographic footprint to recruit talent inside our geographic footprint.
Removed
If key employees terminate their employment, the Corporation’s business activities may be adversely affected and the Corporation will incur costs to locate or retain suitable replacements, or may be unable to locate or retain suitable replacements at all. ​ We may be unable to retain customers as a result of the acquisition. ​ The success of the Merger will depend in part on the Corporation’s ability to retain some of its and SimplyBank’s customers.
Added
An increase in nonperforming loans could also result an in increase in costs associated with workouts and foreclosures, including costs of foreclosing on collateral, and maintaining and liquidating the underlying collateral. An increase in nonperforming loans could also result in an increase in the provision for loan losses and an increase in loan charge-offs.
Removed
It is possible that current customers of SimplyBank or the Corporation may decide to move their banking activities as a result of the Merger.
Added
These mortgages are underwritten to specific guidelines. Decreased demand for our long-term fixed residential mortgages, changed government laws or regulations related to these secondary market purchases, or other disruptions in the secondary market for long-term fixed residential mortgages could adversely affect our business, liquidity, results of operations, and financial condition.
Removed
If the Corporation is unable to retain its or SimplyBank’s key customers, loses a large number of customers, or otherwise does not realize all of the anticipated benefits of the Merger, it could have a material adverse effect on the Corporation’s business, financial condition, and result of operations.
Added
Decreased demand in the secondary market may also have downstream effects to the residential real estate market as a whole, decreasing real estate market prices, volume of home sales, the value of collateral securing the mortgage loans that we hold, income generated from originations of mortgage loans, and our profit margin on those long-term fixed residential mortgages we sell to secondary market purchasers.
Removed
Risks Related to Economic and Market Conditions Economic conditions have affected and could adversely affect our revenue and profits.
Added
Decreased demand in the secondary market may also lead to increase the volume of long-term fixed residential mortgages we hold in our loan portfolio, which would increase our exposure to the residential real estate market and the risks associated with holdings in the residential real estate market, as described in the Risk Factor titled “ The Corporation may foreclose on collateral property and would be subject to the increased costs associated with ownership of real property, resulting in reduced revenues and earnings. ” on Page 23. ​ The Corporation operates in a highly competitive industry and market, and our business will suffer if we are unable to compete effectively. ​ The Corporation faces substantial competition in all areas of its operations from a variety of different competitors, many of which are larger and may have more financial resources.
Removed
It is also possible that governmental policy responses to the current inflation environment could further affect our business, such as changes to monetary and fiscal policy.
Added
If the models the Corporation uses for determining its probable credit losses are inadequate, the allowance for credit losses may not be sufficient to support future charge-offs.
Removed
In addition, we face additional risks of loss of key personnel from our acquisition of SimplyBank, as discussed in the Risk Factor titled “ We may be unable to retain personnel successfully as a result of the acquisition. ” Frequently, we compete in the market for talent with entities that are not subject to comprehensive regulation.
Added
Failure to successfully keep pace with technological change affecting the financial services industry could negatively affect the Corporation’s growth, revenue, and profit. ​ The implementation of artificial intelligence, machine learning, and other large language models and similar technologies may subject the Corporation to increased regulatory risk, reputational risk, and may have material adverse effects on the Corporation’s business, financial condition, and results of operations. ​ The growth of artificial intelligence, machine learning, and other large language models and similar technologies (collectively referred to as “AI”), has spurned a new industry of technological advances.
Added
The Corporation implemented a form of AI with its intelligent digital assistant, Gabby, available through the Bank’s website. Use of AI can expose us to new or increased operation risks, including risks related to our internal controls.
Added
As the use of AI expands and grows, it may become subject to additional regulations or restrictions on use from the U.S. government and/or our banking regulators.
Added
Additionally, ineffective implementation or failures by any implemented AI could have an adverse effect on our reputation, cause the Corporation to incur additional costs to make the implementation successful, or otherwise result in a loss of expenses incurred if the Corporation decides to terminate the pursuit of a failed AI implementation.
Added
Further, many of our competitors have substantially greater resources to invest in technological improvements and may do so in a more cost effective manner.
Added
New technologies can also impact consumer use of banks, including the increased prevalence of digital assets or cryptocurrencies, which can present risks that consumers move money out of bank deposits and into these digital assets or cryptocurrencies, decreasing our deposits and source of liquidity.
Added
In addition, changes in consumer spending and savings habits could adversely affect the Corporation’s operations, and the Corporation may be unable to timely develop competitive new products and services in response to these changes. ​ ​ 24 Table of Contents Our acquisition of SimplyBank presents certain additional risks to our business and operations. ​ On July 1, 2024, the Corporation completed our previously announced acquisition of SimplyBank., a Tennessee-chartered commercial bank (“SimplyBank”).
Added
While we anticipate that this transaction will improve profitability through geographic expansion, financial management, economies of scale, and expanded services, the recognition of such improved profitability is not guaranteed.
Added
Additionally, as SimplyBank and its personnel are integrated into the Corporation, there remains the presence of ongoing risks, including: the diversion of management’s attention from other areas of the Corporation; the loss of customers or employees as a result of the transaction; and other business, operational, and regulatory risks.
Added
As part of the transaction, SimplyBank provided a number of representations and warranties, including, but not limited to, representations and warranties regarding tax liabilities, interactions with regulators, and compliance procedures, with respect to SimplyBank and its operations.
Added
If such representations and warranties are inaccurate, we may face liabilities, including tax and/or regulatory liabilities, as a result of such inaccurate representations and warranties.
Added
Any regulatory action against us or failure to comply with applicable laws and regulations could have an adverse effect on our reputation, business, financial condition, and results of operations. ​ The new U.S. presidential administration’s regulatory reform agenda could result in a material impact to our regulatory compliance and operations procedures. ​ We anticipate that the new U.S. presidential administration will seek to implement a regulatory reform agenda that is significantly different than that of the former U.S. presidential administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal agencies, include those federal banking regulators responsible for the Corporation’s oversight.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis building is held in fee. Facilities of the Corporation’s banking center in Vermilion County include four offices in Danville, Illinois, and an office in Westville, Illinois. One of the buildings in Danville is leased and the lease expires on December 31, 2028 and the other four buildings are held in fee.
Biggest changeOne of the buildings in Danville is leased and the lease expires on December 31, 2028 and the other four buildings are held in fee. Facilities of the Corporation’s banking center in Wayne County includes an office in Fairfield, Illinois. This building is held in fee.
Facilities of the Corporation’s loan production offices, include an office in Bloomington, Indiana, an office in Carmel, Indiana, an office in Evansville, Indiana, an office in Fort Wayne, Indiana, an office in Murfreesboro, Tennessee, and an office in Brentwood, Tennessee. The loan production offices are leased by the Bank.
Facilities of the Corporation’s loan production offices, include an office in Bloomington, Indiana, an office in Carmel, Indiana, an office in Evansville, Indiana, an office in Fort Wayne, Indiana, an office in Murfreesboro, Tennessee, an office in Brentwood, Tennessee, and an office in Chattanooga, Tennessee. The loan production offices are leased by the Bank.
Facilities of the Corporation’s banking center in Trigg County include an office in Cadiz, Kentucky. The building is held in fee. Facilities of the Corporation’s banking center in Warren County include an office in Bowling Green, Kentucky. The building is held in fee.
Facilities of the Corporation’s banking center in Todd County include an office in Elkton, Kentucky. The building is held in fee. Facilities of the Corporation’s banking center in Trigg County include an office in Cadiz, Kentucky. The building is held in fee. Facilities of the Corporation’s banking center in Warren County include an office in Bowling Green, Kentucky.
Facilities of the Corporation’s banking centers in Sullivan County include offices in Sullivan and Farmersburg, Indiana. Both buildings are held in fee. Facilities of the Corporation’s banking center in Vanderburgh County include an office in Evansville, Indiana. This building is held in fee.
Facilities of the Corporation’s banking centers in Sullivan County include offices in Sullivan and Farmersburg, Indiana. Both buildings are held in fee. Facilities of the Corporation’s banking center in Vanderburgh County include an office in Evansville, Indiana.
Facilities of the Corporation’s banking center in Hancock County include an office in Hawesville, Kentucky, and an office in Lewisport, Kentucky. The buildings are held in fee. Facilities of the Corporation’s banking center in Hopkins County include two offices in Madisonville, Kentucky.
The buildings are held in fee. Facilities of the Corporation’s banking center in Fulton County include two offices in Fulton, Kentucky. The buildings are held in fee. Facilities of the Corporation’s banking center in Hancock County include an office in Hawesville, Kentucky, and an office in Lewisport, Kentucky.
Facilities of the Corporation’s banking centers in Crawford County include its main office and a drive-up facility in Robinson, Illinois. Both buildings are held in fee. Facilities of the Corporation’s banking center in Franklin County include an office in Benton, Illinois. This building is held in fee.
This building is held in fee. Facilities of the Corporation’s banking centers in Coles County include an office in Charleston, Illinois. This building is held in fee. Facilities of the Corporation’s banking centers in Crawford County include its main office and a drive-up facility in Robinson, Illinois. Both buildings are held in fee.
The expiration dates on the leases are January 31, 2029, April 30, 2028, August 15, 2025, November 30, 2030, February 28, 2026, and September 30, 2026. ​
The expiration dates on the leases are January 31, 2029, April 30, 2028, August 15, 2025, November 30, 2030, February 28, 2026, September 30, 2026, and February 28, 2028. ​ ​ ​ 32 Table of Contents
Facilities of the Corporation’s banking center in Jasper County include an office in Newton, Illinois. This building is held in fee. Facilities of the Corporation’s banking centers in Jefferson County include an office and a drive-up facility in Mt. Vernon, Illinois. Both buildings are held in fee.
Facilities of the Corporation’s banking center in Franklin County include an office in Benton, Illinois. This building is held in fee. Facilities of the Corporation’s banking center in Jasper County include an office in Newton, Illinois. This building is held in fee. Facilities of the Corporation’s banking centers in Jefferson County include an office and a drive-up facility in Mt.
Facilities of the Corporation’s banking center in Lawrence County include an office in Lawrenceville, Illinois. This building is held in fee. Facilities of the Corporation’s banking centers in Livingston include two offices in Pontiac, Illinois. Both buildings are held in fee. Facilities of the Corporation’s banking centers in Marion County include an office and a drive-up facility in Salem, Illinois.
Vernon, Illinois. Both buildings are held in fee. Facilities of the Corporation’s banking center in Lawrence County include an office in Lawrenceville, Illinois. This building is held in fee. Facilities of the Corporation’s banking centers in Livingston include two offices in Pontiac, Illinois. Both buildings are held in fee.
Both buildings are held in fee. Facilities of the Corporation’s banking center in McLean County include two offices in Bloomington, Illinois. A banking center in Bloomington is leased and the lease expires on June 30, 2026. The other building is held in fee. Facilities of the Corporation’s banking center in Richland County includes an office in Olney, Illinois.
Facilities of the Corporation’s banking centers in Marion County include an office and a drive-up facility in Salem, Illinois. Both buildings are held in fee. Facilities of the Corporation’s banking center in McLean County include two offices in Bloomington, Illinois. A banking center in Bloomington is leased and the lease expires on June 30, 2026.
Facilities of the Corporation’s banking center in Wayne County includes an office in Fairfield, Illinois. This building is held in fee. Facilities of the Corporation’s banking center in Breckinridge County includes an office in Cloverport, Kentucky. The building is held in fee. Facilities of the Corporation’s banking center in Calloway County include an office in Murray, Kentucky.
Facilities of the Corporation’s banking center in Breckinridge County includes an office in Cloverport, Kentucky. The building is held in fee. Facilities of the Corporation’s banking center in Calloway County include an office in Murray, Kentucky. The building is held in fee. Facilities of the Corporation’s banking center in Christian County include three offices in Hopkinsville, Kentucky.
Facilities of the Corporation’s banking centers in Vermillion County include two offices in Clinton, Indiana and an office in Cayuga, Indiana. All three buildings are held in fee. 29 Table of Contents Facilities of the Corporation’s banking center in Champaign County include two offices in Champaign, Illinois, an office in Mahomet, Illinois, and an office in Urbana, Illinois.
This building is held in fee. 30 Table of Contents Facilities of the Corporation’s banking centers in Vermillion County include two offices in Clinton, Indiana and an office in Cayuga, Indiana. All three buildings are held in fee.
The buildings are held in fee. 30 Table of Contents Facilities of the Corporation’s banking center in Marshall County include an office in Benton, Kentucky, and an office in Calvert City, Kentucky. The buildings are held in fee. Facilities of the Corporation’s banking center in Todd County include an office in Elkton, Kentucky. The building is held in fee.
The buildings are held in fee. 31 Table of Contents Facilities of the Corporation’s banking center in Hopkins County include two offices in Madisonville, Kentucky. The buildings are held in fee. Facilities of the Corporation’s banking center in Marshall County include an office in Benton, Kentucky, and an office in Calvert City, Kentucky. The buildings are held in fee.
Facilities of the Corporation’s banking center in Cheatham County include an office in Ashland City, Tennessee, an office in Kingston Springs, Tennessee, and an office in Pleasant View, Tennessee. The buildings are held in fee. Facilities of the Corporation’s banking center in Montgomery County include three offices in Clarksville, Tennessee. The buildings are held in fee.
The building is held in fee. Facilities of the Corporation’s banking center in Bradley County include an office in Cleveland, Tennessee. The building is held in fee. Facilities of the Corporation’s banking center in Cheatham County include an office in Ashland City, Tennessee, an office in Kingston Springs, Tennessee, and an office in Pleasant View, Tennessee.
One of the banking centers in Champaign is held in fee while the land is leased. The land lease expires September 6, 2036. One of the banking centers in Champaign is leased and the lease expires on December 31, 2027. The banking center in Mahomet is leased and the lease expires on June 4, 2024.
Facilities of the Corporation’s banking center in Champaign County include two offices in Champaign, Illinois, an office in Mahomet, Illinois, and an office in Urbana, Illinois. One of the banking centers in Champaign is held in fee while the land is leased. The land lease expires September 6, 2036.
The banking center in Urbana is held in fee. Facilities of the Corporation’s banking center in Clark County include an office in Marshall, Illinois. This building is held in fee. Facilities of the Corporation’s banking centers in Coles County include an office in Charleston, Illinois. This building is held in fee.
One of the banking centers in Champaign is leased and the lease expires on December 31, 2027. The banking center in Mahomet is leased and the lease expires on March 31, 2026. The banking center in Urbana is held in fee. Facilities of the Corporation’s banking center in Clark County include an office in Marshall, Illinois.
The building is held in fee. Facilities of the Corporation’s banking center in Christian County include three offices in Hopkinsville, Kentucky. The buildings are held in fee. Facilities of the Corporation’s banking center in Fulton County include two offices in Fulton, Kentucky. The buildings are held in fee.
Facilities of the Corporation’s banking center in Polk County include an office in Benton, Tennessee. The building is held in fee. Facilities of the Corporation’s banking center in Rhea County include two offices in Dayton, Tennessee, and one office in Spring City, Tennessee. The buildings are held in fee.
Added
The other building is held in fee. Facilities of the Corporation’s banking center in Richland County includes an office in Olney, Illinois. This building is held in fee. Facilities of the Corporation’s banking center in Vermilion County include four offices in Danville, Illinois, and an office in Westville, Illinois.
Added
The buildings are held in fee. Facilities of the Corporation’s banking center in Hamilton County include one office in Chattanooga, Tennessee, and an office in Soddy-Daisy, Tennessee. The building in Chattanooga is leased and the lease expires on July 31, 2031. The building in Soddy-Daisy is held in fee.
Added
Facilities of the Corporation’s banking center in Meigs County include an office in Decatur, Tennessee. The building is leased and the lease expires on November 30, 2026. Facilities of the Corporation’s banking center in Montgomery County include three offices in Clarksville, Tennessee. The buildings are held in fee.
Added
Facilities of the Corporation’s banking center in Roane County include one office in Harriman, Tennessee, and an office in Rockwood, Tennessee. The buildings are held in fee. Facilities of the Corporation’s banking center in Catoosa County include an office in Ringgold, Georgia. The building is held in fee.
Added
Facilities of the Corporation’s banking center in Walker County include one office in Rossville, Georgia, and an office in Flintstone, Georgia. The buildings are held in fee.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS (a) There are no material pending legal proceedings to which the Corporation or its subsidiaries is a party or of which any of their property is the subject, other than ordinary routine litigation incidental to its business. (b) Not applicable. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 31 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS (a) There are no material pending legal proceedings to which the Corporation or its subsidiaries is a party or of which any of their property is the subject, other than ordinary routine litigation incidental to its business. (b) Not applicable. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 33 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures ​ 31 PART II ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 32 Item 6. Selected Financial Data ​ 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 35 Item 7A.
Biggest changeItem 4. Mine Safety Disclosures ​ 33 PART II ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 34 Item 6. Selected Financial Data ​ 36 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 37 Item 7A.
Quantitative and Qualitative Disclosures about Market Risk ​ 47 Item 8. Financial Statements and Supplementary Data ​ 48
Quantitative and Qualitative Disclosures about Market Risk ​ 49 Item 8. Financial Statements and Supplementary Data ​ 50

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table gives quarterly high and low trade prices and dividends per share during each quarter for 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ Cash ​ ​ ​ ​ ​ ​ ​ Cash ​ ​ Trade Price ​ Dividends ​ Trade Price ​ Dividends Quarter ended High Low Declared High Low Declared March 31 ​ $ 45.36 ​ $ 36.98 ​ ​ ​ ​ $ 46.75 ​ $ 43.09 ​ ​ ​ June 30 ​ $ 37.15 ​ $ 31.68 ​ $ 0.54 ​ $ 45.16 ​ $ 41.42 ​ $ 0.54 September 30 ​ $ 39.02 ​ $ 32.30 ​ ​ ​ ​ $ 48.76 ​ $ 42.94 ​ ​ ​ December 31 ​ $ 44.66 ​ $ 31.83 ​ $ 0.45 ​ $ 49.26 ​ $ 44.82 ​ $ 0.74 ​ ​ 32 Table of Contents The graph below represents the five-year total return of the Corporation’s stock.
Biggest changeThe following table gives quarterly high and low trade prices and dividends per share during each quarter for 2024 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ Cash ​ ​ ​ ​ ​ ​ ​ Cash ​ ​ Trade Price ​ Dividends ​ Trade Price ​ Dividends Quarter ended High Low Declared High Low Declared March 31 ​ $ 43.03 ​ $ 36.13 ​ ​ 0.45 ​ $ 45.36 ​ $ 36.98 ​ ​ ​ June 30 ​ $ 39.17 ​ $ 34.84 ​ $ 0.45 ​ $ 37.15 ​ $ 31.68 ​ $ 0.54 September 30 ​ $ 46.46 ​ $ 35.62 ​ ​ 0.45 ​ $ 39.02 ​ $ 32.30 ​ ​ ​ December 31 ​ $ 50.61 ​ $ 41.17 ​ $ 0.51 ​ $ 44.66 ​ $ 31.83 ​ $ 0.45 ​ ​ 34 Table of Contents The graph below represents the five-year total return of the Corporation’s stock.
Following is certain information regarding shares of common stock purchased by the Corporation during the quarter ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 * October 1-31, 2023 ​ — ​ — ​ — ​ — November 1-30, 2023 — ​ — — — December 1-31, 2023 — ​ — — — Total — ​ — — 518,860 ​ ​
Following is certain information regarding shares of common stock purchased by the Corporation during the quarter ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 * October 1-31, 2024 ​ — ​ — ​ — ​ — November 1-30, 2024 — ​ — — — December 1-31, 2024 — ​ — — — Total — ​ — — 518,860 ​ ​
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. MARKET AND DIVIDEND INFORMATION (a) As of March 1, 2024 shareholders owned 11,814,093 shares of the Corporation’s common stock. The stock is traded on the NASDAQ Global Select Market under the symbol “THFF”.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. MARKET AND DIVIDEND INFORMATION (a) As of March 3, 2025 shareholders owned 11,853,489 shares of the Corporation’s common stock. The stock is traded on the NASDAQ Global Select Market under the symbol “THFF”.
On March 1, 2024, approximately 9,635 shareholders of record held our common stock. Historically, the Corporation paid cash dividends semi-annually. Beginning with the dividend declared in the fourth quarter 2023, the Corporation will be paying cash dividends quarterly, and expects that comparable cash dividends will continue to be paid in the future.
On March 3, 2025, approximately 11,439 shareholders of record held our common stock. Historically, the Corporation paid cash dividends semi-annually. Beginning with the dividend declared in the fourth quarter 2023, the Corporation began paying cash dividends quarterly, and expects that comparable cash dividends will continue to be paid in the future.
The five year total return for our stock during this time was 23.83%.
The five-year total return for our stock during this time was 17.81%.
There were 319,664 and 626,574 purchases of common stock by the Corporation during the years ended December 31, 2023 and December 31, 2022. The Corporation contributed 40,496 shares of treasury stock to the ESOP 33 Table of Contents in November of 2023.
There were 8,734 and 319,664 purchases of common stock by the Corporation during the years ended December 31, 2024 and December 31, 2023. The Corporation contributed 34,235 shares of treasury stock to the ESOP 35 Table of Contents in November of 2024.
During this same period, the return on The Russell 2000 Index was 60.85% and the SNL Index of Banks $1 - $5 Billion had a return of 30.91%. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending ​ ​ Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 First Financial Corporation 100.00 116.79 101.91 121.74 127.16 123.83 Russell 2000 100.00 125.53 150.58 172.90 137.56 160.85 SNL Bank $1B-$5B 100.00 127.64 118.58 165.90 141.42 130.91 ​ (b) Not applicable.
During this same period, the return on The Russell 2000 Index was 42.93% and the SNL Index of Banks $1 - $5 Billion had a return of 22.17%. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending ​ ​ Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 First Financial Corporation 100.00 87.26 104.25 108.88 106.03 117.81 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 SNL Bank $1B-$5B 100.00 92.90 129.98 110.80 102.56 122.17 ​ (b) Not applicable.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeSELECTED FINANCIAL DATA FIVE YEAR COMPARISON OF SELECTED FINANCIAL DATA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands, except per share amounts) 2023 2022 2021 2020 2019 BALANCE SHEET DATA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 4,851,146 ​ $ 4,989,281 ​ $ 5,175,099 ​ $ 4,560,520 ​ $ 4,023,250 ​ Securities ​ 1,259,137 ​ 1,330,481 ​ 1,359,514 ​ 1,020,744 ​ 926,717 ​ Loans ​ 3,167,821 ​ 3,067,438 ​ 2,815,895 ​ 2,610,294 ​ 2,656,390 ​ Deposits ​ 4,090,068 ​ 4,368,871 ​ 4,409,569 ​ 3,755,945 ​ 3,275,357 ​ Borrowings ​ 175,798 ​ 80,464 ​ 109,311 ​ 121,920 ​ 111,092 ​ Shareholders’ equity ​ 527,976 ​ 475,293 ​ 582,576 ​ 596,992 ​ 557,608 ​ INCOME STATEMENT DATA ​ ​ ​ ​ ​ ​ Interest income ​ 228,397 ​ 183,301 ​ 152,198 ​ 160,485 ​ 149,121 ​ Interest expense ​ 61,135 ​ 18,259 ​ 8,797 ​ 14,139 ​ 17,469 ​ Net interest income ​ 167,262 ​ 165,042 ​ 143,401 ​ 146,346 ​ 131,652 ​ Provision for credit losses ​ 7,295 ​ (2,025) ​ 2,466 ​ 10,528 ​ 4,700 ​ Other income ​ 42,702 ​ 46,716 ​ 42,084 ​ 42,476 ​ 38,452 ​ Other expenses ​ 130,176 ​ 126,023 ​ 117,406 ​ 112,758 ​ 104,405 ​ Net income ​ 60,672 ​ 71,109 ​ 52,987 ​ 53,844 ​ 48,872 ​ PER SHARE DATA: ​ ​ ​ ​ ​ ​ Net Income ​ 5.08 ​ 5.82 ​ 4.02 ​ 3.93 ​ 3.80 ​ Cash dividends ​ 1.28 ​ 1.17 ​ 1.06 ​ 1.04 ​ 1.03 ​ PERFORMANCE RATIOS: ​ ​ ​ ​ ​ ​ Return on average assets ​ 1.26 % 1.41 % 1.10 % 1.25 % 1.42 % Return on average shareholders’ equity ​ 12.47 ​ 14.37 ​ 8.87 ​ 9.07 ​ 9.83 ​ Average total capital to average assets ​ 10.95 ​ 10.64 ​ 13.36 ​ 14.31 ​ 15.05 ​ Average shareholders’ equity to average assets ​ 10.13 ​ 9.81 ​ 12.41 ​ 13.77 ​ 14.46 ​ Dividend payout ​ 19.41 ​ 21.68 ​ 28.22 ​ 26.58 ​ 27.69 ​ ​ ​ 34 Table of Contents
Biggest changeSELECTED FINANCIAL DATA FIVE YEAR COMPARISON OF SELECTED FINANCIAL DATA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands, except per share amounts) 2024 2023 2022 2021 2020 BALANCE SHEET DATA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 5,560,348 ​ $ 4,851,146 ​ $ 4,989,281 ​ $ 5,175,099 ​ $ 4,560,520 ​ Securities ​ 1,195,990 ​ 1,259,137 ​ 1,330,481 ​ 1,359,514 ​ 1,020,744 ​ Loans ​ 3,837,141 ​ 3,167,821 ​ 3,067,438 ​ 2,815,895 ​ 2,610,294 ​ Deposits ​ 4,718,914 ​ 4,090,068 ​ 4,368,871 ​ 4,409,569 ​ 3,755,945 ​ Borrowings ​ 215,177 ​ 175,798 ​ 80,464 ​ 109,311 ​ 121,920 ​ Shareholders’ equity ​ 549,041 ​ 527,976 ​ 475,293 ​ 582,576 ​ 596,992 ​ INCOME STATEMENT DATA ​ ​ ​ ​ ​ ​ Interest income ​ 264,742 ​ 228,397 ​ 183,301 ​ 152,198 ​ 160,485 ​ Interest expense ​ 89,756 ​ 61,135 ​ 18,259 ​ 8,797 ​ 14,139 ​ Net interest income ​ 174,986 ​ 167,262 ​ 165,042 ​ 143,401 ​ 146,346 ​ Provision for credit losses ​ 16,166 ​ 7,295 ​ (2,025) ​ 2,466 ​ 10,528 ​ Other income ​ 42,772 ​ 42,702 ​ 46,716 ​ 42,084 ​ 42,476 ​ Other expenses ​ 144,438 ​ 130,176 ​ 126,023 ​ 117,406 ​ 112,758 ​ Net income ​ 47,275 ​ 60,672 ​ 71,109 ​ 52,987 ​ 53,844 ​ PER SHARE DATA: ​ ​ ​ ​ ​ ​ Net Income ​ 4.00 ​ 5.08 ​ 5.82 ​ 4.02 ​ 3.93 ​ Cash dividends ​ 1.80 ​ 1.28 ​ 1.17 ​ 1.06 ​ 1.04 ​ PERFORMANCE RATIOS: ​ ​ ​ ​ ​ ​ Return on average assets ​ 0.92 % 1.26 % 1.41 % 1.10 % 1.25 % Return on average shareholders’ equity ​ 8.82 ​ 12.47 ​ 14.37 ​ 8.87 ​ 9.07 ​ Average total capital to average assets ​ 11.21 ​ 10.95 ​ 10.64 ​ 13.36 ​ 14.31 ​ Average shareholders’ equity to average assets ​ 10.40 ​ 10.13 ​ 9.81 ​ 12.41 ​ 13.77 ​ Dividend payout ​ 46.49 ​ 19.41 ​ 21.68 ​ 28.22 ​ 26.58 ​ ​ ​ 36 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeEarning asset yields increased 120 basis points while the rate on interest-bearing liabilities increased by 123 basis points. ​ 37 Table of Contents CONSOLIDATED BALANCE SHEET - AVERAGE BALANCES AND INTEREST RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ Average ​ Yield/ Average ​ Yield/ Average ​ Yield/ ​ (Dollar amounts in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate ​ ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ Loans (1) (2) ​ $ 3,111,784 ​ 190,947 6.14 % $ 2,884,053 ​ 147,398 5.11 % $ 2,602,344 ​ 128,978 4.96 % Taxable investment securities ​ 895,120 ​ 24,643 2.75 % 981,453 ​ 21,014 2.14 % 890,563 ​ 13,110 1.47 % Tax-exempt investments (2) ​ 463,541 ​ 16,591 3.58 % 451,228 ​ 14,216 3.15 % 387,935 ​ 13,544 3.49 % Cash and due from banks ​ 90,582 ​ 1,546 1.71 % 479,854 ​ 5,224 1.09 % 726,412 ​ 888 0.12 % Federal funds sold ​ 3,108 ​ 124 3.99 % 3,893 ​ 106 2.72 % 4,487 ​ 42 0.94 % Total interest-earning assets ​ 4,564,135 ​ 233,851 5.12 % 4,800,481 ​ 187,958 3.92 % 4,611,741 ​ 156,562 3.39 % Non-interest earning assets: ​ ​ ​ ​ ​ ​ ​ Premises and equipment, net ​ 67,468 ​ ​ ​ ​ ​ 68,911 ​ ​ ​ ​ ​ 64,787 ​ ​ ​ Other assets ​ 210,277 ​ ​ ​ ​ ​ 216,592 ​ ​ ​ ​ ​ 183,589 ​ ​ ​ Less allowance for loan losses ​ (39,432) ​ ​ ​ ​ ​ (41,997) ​ ​ ​ ​ ​ (45,767) ​ ​ ​ TOTALS ​ $ 4,802,448 ​ ​ ​ ​ ​ ​ $ 5,043,987 ​ ​ ​ ​ ​ ​ $ 4,814,350 ​ ​ ​ LIABILITIES AND SHAREHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Transaction accounts ​ $ 2,869,873 ​ 42,594 ​ 1.48 % $ 3,034,430 ​ 13,483 ​ 0.44 % $ 2,799,227 ​ 2,751 0.10 % Time deposits ​ 434,943 ​ 9,100 ​ 2.09 % 483,038 ​ 3,260 ​ 0.67 % 520,885 ​ 5,407 1.04 % Short-term borrowings ​ 117,235 ​ 5,370 ​ 4.58 % 83,959 ​ 1,243 ​ 1.48 % 99,805 ​ 387 0.39 % Other borrowings ​ 82,316 ​ 4,071 ​ 4.95 % 13,175 ​ 273 ​ 2.07 % 7,562 ​ 252 3.33 % Total interest-bearing liabilities: ​ 3,504,367 ​ 61,135 ​ 1.74 % 3,614,602 ​ 18,259 ​ 0.51 % 3,427,479 ​ 8,797 0.26 % Non interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ 801,316 ​ ​ ​ ​ ​ ​ 891,042 ​ ​ ​ ​ ​ ​ 717,764 ​ ​ ​ Other ​ 10,193 ​ ​ ​ ​ ​ ​ 43,506 ​ ​ ​ ​ ​ ​ 71,738 ​ ​ ​ ​ ​ 4,315,876 ​ ​ ​ ​ ​ ​ 4,549,150 ​ ​ ​ ​ ​ ​ ​ 4,216,981 ​ ​ ​ ​ ​ ​ Shareholders' equity ​ 486,572 ​ ​ ​ ​ ​ ​ 494,837 ​ ​ ​ ​ ​ ​ 597,369 ​ ​ ​ TOTALS ​ $ 4,802,448 ​ ​ ​ ​ ​ ​ $ 5,043,987 ​ ​ ​ ​ ​ ​ $ 4,814,350 ​ ​ ​ Net interest earnings ​ ​ ​ ​ $ 172,716 ​ ​ ​ ​ ​ ​ $ 169,699 ​ ​ ​ ​ $ 147,765 ​ Net yield on interest- earning assets ​ ​ ​ ​ ​ 3.78 % ​ ​ ​ ​ 3.54 % ​ 3.20 % (1)For purposes of these computations, non-accruing loans are included in the daily average loan amounts outstanding.
Biggest changeEarning asset yields increased 43 basis points while the rate on interest-bearing liabilities increased by 54 basis points. 39 Table of Contents CONSOLIDATED BALANCE SHEET - AVERAGE BALANCES AND INTEREST RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ Average ​ Yield/ Average ​ Yield/ Average ​ Yield/ ​ (Dollar amounts in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate ​ ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ Loans (1) (2) ​ $ 3,468,534 ​ 227,580 6.56 % $ 3,111,784 ​ 190,947 6.14 % $ 2,884,053 ​ 147,398 5.11 % Taxable investment securities ​ 851,935 ​ 24,237 2.84 % 895,120 ​ 24,643 2.75 % 981,453 ​ 21,014 2.14 % Tax-exempt investments (2) ​ 458,328 ​ 17,125 3.74 % 463,541 ​ 16,591 3.58 % 451,228 ​ 14,216 3.15 % Cash and due from banks ​ 83,690 ​ 947 1.13 % 90,582 ​ 1,546 1.71 % 479,854 ​ 5,224 1.09 % Federal funds sold ​ 8,806 ​ 452 5.13 % 3,108 ​ 124 3.99 % 3,893 ​ 106 2.72 % Total interest-earning assets ​ 4,871,293 ​ 270,341 5.55 % 4,564,135 ​ 233,851 5.12 % 4,800,481 ​ 187,958 3.92 % Non-interest earning assets: ​ ​ ​ ​ ​ ​ ​ Premises and equipment, net ​ 73,774 ​ ​ ​ ​ ​ 67,468 ​ ​ ​ ​ ​ 68,911 ​ ​ ​ ​ Other assets ​ 251,222 ​ ​ ​ ​ ​ 210,277 ​ ​ ​ ​ ​ 216,592 ​ ​ ​ ​ Less allowance for loan losses ​ (41,969) ​ ​ ​ ​ ​ (39,432) ​ ​ ​ ​ ​ (41,997) ​ ​ ​ ​ TOTALS ​ $ 5,154,320 ​ ​ ​ ​ ​ ​ $ 4,802,448 ​ ​ ​ ​ ​ ​ $ 5,043,987 ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Transaction accounts ​ $ 3,092,818 ​ 56,500 ​ 1.83 % $ 2,869,873 ​ 42,594 ​ 1.48 % $ 3,034,430 ​ 13,483 0.44 % Time deposits ​ 674,441 ​ 24,571 ​ 3.64 % 434,943 ​ 9,100 ​ 2.09 % 483,038 ​ 3,260 0.67 % Short-term borrowings ​ 97,176 ​ 4,284 ​ 4.41 % 117,235 ​ 5,370 ​ 4.58 % 83,959 ​ 1,243 1.48 % Other borrowings ​ 69,201 ​ 4,401 ​ 6.36 % 82,316 ​ 4,071 ​ 4.95 % 13,175 ​ 273 2.07 % Total interest-bearing liabilities: ​ 3,933,636 ​ 89,756 ​ 2.28 % 3,504,367 ​ 61,135 ​ 1.74 % 3,614,602 ​ 18,259 0.51 % Non interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ 638,420 ​ ​ ​ ​ ​ ​ 801,316 ​ ​ ​ ​ ​ ​ 891,042 ​ ​ ​ ​ Other ​ 46,301 ​ ​ ​ ​ ​ ​ 10,193 ​ ​ ​ ​ ​ ​ 43,506 ​ ​ ​ ​ ​ ​ 4,618,357 ​ ​ ​ ​ ​ ​ 4,315,876 ​ ​ ​ ​ ​ ​ ​ 4,549,150 ​ ​ ​ ​ ​ ​ Shareholders' equity ​ 535,963 ​ ​ ​ ​ ​ ​ 486,572 ​ ​ ​ ​ ​ ​ 494,837 ​ ​ ​ ​ TOTALS ​ $ 5,154,320 ​ ​ ​ ​ ​ ​ $ 4,802,448 ​ ​ ​ ​ ​ ​ $ 5,043,987 ​ ​ ​ ​ Net interest earnings ​ ​ ​ ​ $ 180,585 ​ ​ ​ ​ ​ ​ $ 172,716 ​ ​ ​ ​ $ 169,699 ​ ​ Net yield on interest- earning assets ​ ​ ​ ​ ​ 3.71 % ​ ​ ​ ​ 3.78 % ​ 3.54 % (1)For purposes of these computations, non-accruing loans are included in the daily average loan amounts outstanding.
The portfolio structure will continue to provide cash flows to be reinvested during 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 year and less 1 to 5 years 5 to 10 years Over 10 Years 2023 (Dollar amounts in thousands) Balance ​ Rate Balance Rate Balance Rate Balance Rate Total U.S. government sponsored entity mortgage-backed securities and agencies and U.S.
The portfolio structure will continue to provide cash flows to be reinvested during 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 year and less 1 to 5 years 5 to 10 years Over 10 Years 2024 (Dollar amounts in thousands) Balance ​ Rate Balance Rate Balance Rate Balance Rate Total U.S. government sponsored entity mortgage-backed securities and agencies and U.S.
The change in non-interest income from 2021 to 2022 was primarily driven by a $4.0 million legal settlement received in February 2022, and a $2.5 million bank owned life insurance mortality payment. The Corporation does not expect these items to reoccur.
The change in non-interest income from 2022 to 2023 was primarily driven by a $4.0 million legal settlement received in February 2022, and a $2.5 million bank owned life insurance mortality payment. The Corporation does not expect these items to reoccur.
The loan quality monitoring process includes assigning loan grades and the use of a watch list to identify loans of concern. 42 Table of Contents The analysis of the allowance for credit losses includes the allocation of specific amounts of the allowance to individually evaluated loans, generally based on an analysis of the collateral securing those loans.
The loan quality monitoring process includes assigning loan grades and the use of a watch list to identify loans of concern. 44 Table of Contents The analysis of the allowance for credit losses includes the allocation of specific amounts of the allowance to individually evaluated loans, generally based on an analysis of the collateral securing those loans.
Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale securities was needed at December 31, 2023. Goodwill .
Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale securities was needed at December 31, 2024. Goodwill .
Liquidity Risk Liquidity is measured by the bank’s ability to raise funds to meet the obligations of its customers, including deposit withdrawals and credit needs. This is accomplished primarily by maintaining sufficient liquid assets in the form of investment securities and core deposits. The Corporation has $12.4 million of investments that mature throughout the coming 12 months.
Liquidity Risk Liquidity is measured by the bank’s ability to raise funds to meet the obligations of its customers, including deposit withdrawals and credit needs. This is accomplished primarily by maintaining sufficient liquid assets in the form of investment securities and core deposits. The Corporation has $13.0 million of investments that mature throughout the coming 12 months.
(2)Interest income includes the effect of tax equivalent adjustments using a federal tax rate of 21%. 38 Table of Contents The following table sets forth the components of net interest income due to changes in volume and rate.
(2)Interest income includes the effect of tax equivalent adjustments using a federal tax rate of 21%. 40 Table of Contents The following table sets forth the components of net interest income due to changes in volume and rate.
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. ​ 45 Table of Contents The table below shows the Corporation’s estimated sensitivity profile as of December 31, 2023.
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. ​ 47 Table of Contents The table below shows the Corporation’s estimated sensitivity profile as of December 31, 2024.
These components are added together and compared to the balance of our allowance at the evaluation date. The allowance for credit losses as a percentage of total loans decreased to 1.26% at year-end 2023 compared to 1.30% at year-end 2022.
These components are added together and compared to the balance of our allowance at the evaluation date. The allowance for credit losses as a percentage of total loans decreased to 1.22% at year-end 2024 compared to 1.26% at year-end 2023.
Commitments: The following table details the amount and expected maturities of significant commitments as of December 31, 2023.
Commitments: The following table details the amount and expected maturities of significant commitments as of December 31, 2024.
The amounts shown below represent non-accrual loans and those loans which are past due more than 90 days where the Corporation continues to accrue interest. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 2020 2019 Non-accrual loans ​ $ 23,596 ​ $ 8,481 ​ $ 9,590 ​ $ 14,213 ​ $ 9,535 ​ Accruing loans past due over 90 days ​ 960 ​ 1,119 ​ 515 ​ 2,324 ​ 1,610 ​ ​ ​ $ 24,556 ​ $ 9,600 ​ $ 10,105 ​ $ 16,537 ​ $ 11,145 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of the allowance for credit losses as a percentage of non-performing loans ​ ​ 161.9 % ​ 414.4 % ​ 478.0 % ​ 284.5 % ​ 178.9 % ​ ​ 43 Table of Contents The ratio of the allowance for loan losses as a percentage of nonperforming loans was 161.9% at December 31, 2023, compared to 414.4% in 2022.
The amounts shown below represent non-accrual loans and those loans which are past due more than 90 days where the Corporation continues to accrue interest. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 2022 2021 2020 Non-accrual loans ​ $ 11,479 ​ $ 23,596 ​ $ 8,481 ​ $ 9,590 ​ $ 14,213 ​ Accruing loans past due over 90 days ​ 1,821 ​ 960 ​ 1,119 ​ 515 ​ 2,324 ​ ​ ​ $ 13,300 ​ $ 24,556 ​ $ 9,600 ​ $ 10,105 ​ $ 16,537 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of the allowance for credit losses as a percentage of non-performing loans ​ ​ 351.4 % ​ 161.9 % ​ 414.4 % ​ 478.0 % ​ 284.5 ​ ​ ​ 45 Table of Contents The ratio of the allowance for loan losses as a percentage of nonperforming loans was 351.4% at December 31, 2024, compared to 161.9% in 2023.
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. Non-performing loans of $24.6 million at December 31, 2023 increased from $9.6 million at December 31, 2022.
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. Non-performing loans of $13.3 million at December 31, 2024 decreased from $24.6 million at December 31, 2023.
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 1.28% over the next 12 months and increase 1.33% over the following 12 months.
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 1.51% over the next 12 months and increase 0.94% over the following 12 months.
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.
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.
The analysis is governed by Accounting Standards Codification (ASC 326), implemented in 2020, which used an economic forecast that included the impact of the COVID-19 pandemic. For the year ended December 31, 2023, the provision for credit losses was $7.3 million, an increase of $9.3 million, or 460%, compared to 2022.
The analysis is governed by Accounting Standards Codification (ASC 326), implemented in 2020, which used an economic forecast that included the impact of the COVID-19 pandemic. For the year ended December 31, 2024, the provision for credit losses was $16.2 million, an increase of $8.9 million, or 122%, compared to 2023.
The table below presents the allocation of the allowance to the loan portfolios at year-end. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, (Dollar amounts in thousands) 2023 2022 2021 2020 2019 Commercial ​ $ 13,264 ​ $ 12,949 ​ $ 18,883 ​ $ 13,925 ​ $ 8,945 Residential ​ 14,327 ​ 14,568 ​ 18,316 ​ 19,142 ​ 1,302 Consumer ​ 11,797 ​ 12,104 ​ 10,721 ​ 11,009 ​ 8,304 Unallocated ​ 379 ​ 158 ​ 385 ​ — ​ 1,392 TOTAL ALLOWANCE FOR CREDIT LOSSES ​ $ 39,767 ​ $ 39,779 ​ $ 48,305 ​ $ 44,076 ​ $ 19,943 ​ NONPERFORMING LOANS Management monitors the components and status of nonperforming loans as a part of the evaluation procedures used in determining the adequacy of the allowance for loan losses.
The table below presents the allocation of the allowance to the loan portfolios at year-end. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, (Dollar amounts in thousands) 2024 2023 2022 2021 2020 Commercial ​ $ 16,963 ​ $ 13,264 ​ $ 12,949 ​ $ 18,883 ​ $ 13,925 Residential ​ 17,470 ​ 14,327 ​ 14,568 ​ 18,316 ​ 19,142 Consumer ​ 12,046 ​ 11,797 ​ 12,104 ​ 10,721 ​ 11,009 Unallocated ​ 253 ​ 379 ​ 158 ​ 385 ​ — TOTAL ALLOWANCE FOR CREDIT LOSSES ​ $ 46,732 ​ $ 39,767 ​ $ 39,779 ​ $ 48,305 ​ $ 44,076 ​ NONPERFORMING LOANS Management monitors the components and status of nonperforming loans as a part of the evaluation procedures used in determining the adequacy of the allowance for loan losses.
The Corporation also has $197.7 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $237.5 million available with the Federal Reserve Bank, and $125 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.
The Corporation also has $388.5 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $295.1 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.
Periodic review of this exposure is performed to identify and monitor any potential weaknesses within a specific credit. ​ ALLOWANCE FOR CREDIT LOSSES The activity in the Corporation’s allowance for credit losses is shown in the following analysis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 2021 2020 2019 Amount of loans outstanding at December 31, ​ $ 3,160,072 ​ $ 3,060,263 ​ $ 2,812,601 ​ $ 2,606,113 ​ $ 2,652,530 ​ Average amount of loans by year ​ $ 3,111,784 ​ $ 2,884,053 ​ $ 2,602,344 ​ $ 2,702,225 ​ $ 2,270,313 ​ Allowance for credit losses at beginning of year ​ $ 39,779 ​ $ 48,305 ​ $ 44,076 ​ $ 19,943 ​ $ 20,436 ​ Loans charged off: ​ ​ ​ ​ ​ ​ Commercial ​ 966 ​ 3,917 ​ 2,158 ​ 1,097 ​ 2,616 ​ Residential ​ 216 ​ 657 ​ 812 ​ 944 ​ 1,050 ​ Consumer ​ 14,314 ​ 11,132 ​ 5,246 ​ 6,355 ​ 7,007 ​ Total loans charged off ​ 15,496 ​ 15,706 ​ 8,216 ​ 8,396 ​ 10,673 ​ Recoveries of loans previously charged off: ​ ​ ​ ​ ​ ​ Commercial ​ 1,083 ​ 2,062 ​ 1,069 ​ 856 ​ 1,092 ​ Residential ​ 292 ​ 759 ​ 616 ​ 657 ​ 1,360 ​ Consumer ​ 6,814 ​ 6,384 ​ 3,884 ​ 3,404 ​ 3,028 ​ Total recoveries ​ 8,189 ​ 9,205 ​ 5,569 ​ 4,917 ​ 5,480 ​ Net loans charged off ​ 7,307 ​ 6,501 ​ 2,647 ​ 3,479 ​ 5,193 ​ Provision charged to expense ​ 7,295 ​ (2,025) ​ 2,466 ​ 10,528 ​ 4,700 ​ CECL adoption ​ — ​ — ​ — ​ 17,084 ​ — ​ PCD ACL on acquired loans ​ — ​ — ​ 4,410 ​ — ​ — ​ Balance at end of year ​ $ 39,767 ​ $ 39,779 ​ $ 48,305 ​ $ 44,076 ​ $ 19,943 ​ Ratio of net charge-offs during period to average loans outstanding ​ 0.23 % 0.23 % 0.10 % 0.13 % 0.23 % ​ The allowance is maintained at an amount management believes sufficient to absorb expected losses in the loan portfolio.
Periodic review of this exposure is performed to identify and monitor any potential weaknesses within a specific credit. ​ ALLOWANCE FOR CREDIT LOSSES The activity in the Corporation’s allowance for credit losses is shown in the following analysis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2024 2023 2022 2021 2020 Amount of loans outstanding at December 31, ​ $ 3,831,795 ​ $ 3,160,072 ​ $ 3,060,263 ​ $ 2,812,601 ​ $ 2,606,113 ​ Average amount of loans by year ​ $ 3,468,534 ​ $ 3,111,784 ​ $ 2,884,053 ​ $ 2,602,344 ​ $ 2,702,225 ​ Allowance for credit losses at beginning of year ​ $ 39,767 ​ $ 39,779 ​ $ 48,305 ​ $ 44,076 ​ $ 19,943 ​ Loans charged off: ​ ​ ​ ​ ​ ​ Commercial ​ 7,890 ​ 966 ​ 3,917 ​ 2,158 ​ 1,097 ​ Residential ​ 343 ​ 216 ​ 657 ​ 812 ​ 944 ​ Consumer ​ 11,056 ​ 14,314 ​ 11,132 ​ 5,246 ​ 6,355 ​ Total loans charged off ​ 19,289 ​ 15,496 ​ 15,706 ​ 8,216 ​ 8,396 ​ Recoveries of loans previously charged off: ​ ​ ​ ​ ​ ​ Commercial ​ 1,946 ​ 1,083 ​ 2,062 ​ 1,069 ​ 856 ​ Residential ​ 451 ​ 292 ​ 759 ​ 616 ​ 657 ​ Consumer ​ 4,685 ​ 6,814 ​ 6,384 ​ 3,884 ​ 3,404 ​ Total recoveries ​ 7,082 ​ 8,189 ​ 9,205 ​ 5,569 ​ 4,917 ​ Net loans charged off ​ 12,207 ​ 7,307 ​ 6,501 ​ 2,647 ​ 3,479 ​ Provision charged to expense ​ 16,166 ​ 7,295 ​ (2,025) ​ 2,466 ​ 10,528 ​ CECL adoption ​ — ​ — ​ — ​ — ​ 17,084 ​ PCD ACL on acquired loans ​ 3,006 ​ — ​ — ​ 4,410 ​ — ​ Balance at end of year ​ $ 46,732 ​ $ 39,767 ​ $ 39,779 ​ $ 48,305 ​ $ 44,076 ​ Ratio of net charge-offs during period to average loans outstanding ​ 0.35 % 0.23 % 0.23 % 0.10 % 0.13 % ​ The allowance is maintained at an amount management believes sufficient to absorb expected losses in the loan portfolio.
Net unrealized gain/loss on available for sale securities increased $14.8 million from a net unrealized loss of $168.2 million in 2022 to a net unrealized loss of $153.4 million in 2023. The Corporation does not expect realized losses, as there is no intent to sell at a loss.
Net unrealized gain/loss on available for sale securities decreased $12.4 million from a net unrealized loss of $153.4 million in 2023 to a net unrealized loss of $165.8 million in 2024. The Corporation does not expect realized losses, as there is no intent to sell at a loss.
Given a 100 basis point decrease in rates, net interest income would increase 0.74% over the next 12 months and decrease 2.08% over the following 12 months.
Given a 100 basis point decrease in rates, net interest income would increase 4.07% over the next 12 months and increase 0.68% over the following 12 months.
The Corporation also anticipates $109.9 million of principal payments from mortgage-backed securities. Given the current rate environment, the Corporation anticipates $13.0 million in securities to be called within the next 12 months.
The Corporation also anticipates $112.8 million of principal payments from mortgage-backed securities. Given the current rate environment, the Corporation anticipates $31.1 million in securities to be called within the next 12 months.
The provision for credit losses decreased $4.5 million from $2.5 million in 2021 to a negative provision of $2.0 million in 2022. Non-interest income increased $4.6 million and non-interest expenses increased $8.6 million.
The provision for credit losses increased $9.3 million from a negative provision of $2.0 million in 2022 to a provision of $7.3 million in 2023. Non-interest income decreased $4.0 million and non-interest expenses increased $4.2 million.
The following loan categories comprise significant components of the nonperforming loans at December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Non-accrual loans ​ ​ ​ ​ Commercial loans ​ $ 18,380 78 % $ 3,481 41 % Residential loans ​ 2,065 9 % 2,035 24 % Consumer loans ​ 3,151 13 % 2,965 35 % ​ ​ $ 23,596 100 % $ 8,481 100 % Past due 90 days or more ​ ​ ​ Commercial loans ​ $ 4 0 % $ 112 10 % Residential loans ​ 911 95 % 1,007 90 % Consumer loans ​ 45 5 % — — % ​ ​ $ 960 100 % $ 1,119 100 % ​ Management considers the present allowance to be appropriate and adequate to cover expected losses inherent in the loan portfolio based on the current economic environment.
The following loan categories comprise significant components of the nonperforming loans at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Non-accrual loans ​ ​ ​ ​ Commercial loans ​ $ 6,697 58 % $ 18,380 78 % Residential loans ​ 2,050 18 % 2,065 9 % Consumer loans ​ 2,732 24 % 3,151 13 % ​ ​ $ 11,479 100 % $ 23,596 100 % Past due 90 days or more ​ ​ ​ Commercial loans ​ $ 42 2 % $ 4 0 % Residential loans ​ 1,778 98 % 911 95 % Consumer loans ​ 1 0 % 45 5 % ​ ​ $ 1,821 100 % $ 960 100 % ​ Management considers the present allowance to be appropriate and adequate to cover expected losses inherent in the loan portfolio based on the current economic environment.
Further discussion of these commitments is included in Note 15 to the consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ Amount ​ One year ​ Over One (Dollar amounts in thousands) Committed or less Year Commitments to extend credit: ​ ​ ​ Unused loan commitments ​ $ 729,495 ​ $ 286,858 ​ $ 442,927 Commercial letters of credit ​ 7,456 ​ 7,456 ​ — 46 Table of Contents ​ Commitments to extend credit, including loan commitments, standby and commercial letters of credit do not necessarily represent future cash requirements, in that these commitments often expire without being drawn upon. ​
Further discussion of these commitments is included in Note 15 to the consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ Amount ​ One year ​ Over One (Dollar amounts in thousands) Committed or less Year Commitments to extend credit: ​ ​ ​ Unused loan commitments ​ $ 852,791 ​ $ 344,393 ​ $ 508,398 Commercial letters of credit ​ 12,725 ​ 12,725 ​ — 48 Table of Contents ​ Commitments to extend credit, including loan commitments, standby and commercial letters of credit do not necessarily represent future cash requirements, in that these commitments often expire without being drawn upon. ​
The ACL and allowance for unfunded commitments were $39.8 million and $2.0 million, respectively at December 31, 2023, compared to $39.8 million and $2.1 million, respectively at December 31, 2022. The qualitative amount of the reserve decreased $44 thousand to $11.0 million. The quantitative amount is $28.4 million at December 31, 2023, compared to $28.6 million at December 31, 2022.
The ACL and allowance for unfunded commitments were $46.7 million and $2.1 million, respectively at December 31, 2024, compared to $39.8 million and $2.0 million, respectively at December 31, 2023. The qualitative amount of the reserve increased $1.9 million to $12.8 million. The quantitative amount is $33.6 million at December 31, 2024, compared to $28.4 million at December 31, 2023.
The maturities of certificates of deposit of more than $100 thousand outstanding at December 31, 2023, are summarized as follows: ​ ​ ​ ​ ​ (Dollar amounts in thousands) ​ ​ 3 months or less ​ $ 49,370 Over 3 through 6 months ​ 78,788 Over 6 through 12 months ​ 101,309 Over 12 months ​ 15,678 TOTAL ​ $ 245,145 ​ (1) Uninsured deposits include the Call Report estimate of uninsured deposits less affiliate deposits, estimated insured portion of servicing deposits, additional structured FDIC coverage and collateral deposits. 44 Table of Contents OTHER BORROWINGS Advances from the Federal Home Loan Bank increased to $108.6 million in 2023 compared to $9.6 million in 2022.
The maturities of certificates of deposit of more than $100 thousand outstanding at December 31, 2024, are summarized as follows: ​ ​ ​ ​ ​ (Dollar amounts in thousands) ​ ​ 3 months or less ​ $ 135,907 Over 3 through 6 months ​ 143,187 Over 6 through 12 months ​ 83,708 Over 12 months ​ 28,638 TOTAL ​ $ 391,440 ​ (1) Uninsured deposits include the Call Report estimate of uninsured deposits less affiliate deposits, estimated insured portion of servicing deposits, additional structured FDIC coverage and collateral deposits. ​ 46 Table of Contents OTHER BORROWINGS Advances from the Federal Home Loan Bank decreased to $7.3 million in 2024 compared to $108.6 million in 2023.
RESULTS OF OPERATIONS - SUMMARY FOR 2023 COMPARISON OF 2023 TO 2022 Net income for 2023 was $60.7 million, or $5.08 per share versus $71.1 million, or $5.82 per share for 2022.
RESULTS OF OPERATIONS - SUMMARY FOR 2024 COMPARISON OF 2024 TO 2023 Net income for 2024 was $47.3 million, or $4.00 per share versus $60.7 million, or $5.08 per share for 2023.
LOAN PORTFOLIO Loans outstanding by major category as of December 31 for each of the last five years and the maturities at year end 2023 are set forth in the following analyses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 2021 2020 2019 Loan Category ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 1,817,526 ​ $ 1,798,260 ​ $ 1,674,066 ​ $ 1,521,711 ​ $ 1,584,447 Residential ​ 695,788 ​ 673,464 ​ 664,509 ​ 604,652 ​ 682,077 Consumer ​ 646,758 ​ 588,539 ​ 474,026 ​ 479,750 ​ 386,006 TOTAL ​ $ 3,160,072 ​ $ 3,060,263 ​ $ 2,812,601 ​ $ 2,606,113 ​ $ 2,652,530 41 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ After One ​ ​ ​ ​ ​ ​ ​ ​ Within But Within After Five (Dollar amounts in thousands) ​ One Year ​ Five Years ​ Years ​ Total MATURITY DISTRIBUTION ​ ​ ​ ​ Commercial, financial and agricultural ​ $ 703,017 ​ $ 825,507 ​ $ 289,002 ​ $ 1,817,526 TOTAL ​ ​ ​ ​ Residential ​ ​ ​ ​ ​ ​ 695,788 Consumer ​ ​ ​ ​ ​ ​ 646,758 TOTAL ​ ​ ​ ​ ​ ​ $ 3,160,072 Loans maturing after one year with: ​ ​ ​ ​ Fixed interest rates ​ ​ ​ ​ $ 389,958 ​ $ 256,312 ​ Variable interest rates ​ ​ ​ ​ 435,549 ​ 32,690 ​ TOTAL ​ ​ ​ ​ $ 825,507 ​ $ 289,002 ​ ​ Commercial Real Estate represents $1.3 million of total exposure as of December 31, 2023, and is within regulatory guidance.
LOAN PORTFOLIO Loans outstanding by major category as of December 31 for each of the last five years and the maturities at year end 2024 are set forth in the following analyses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2024 2023 2022 2021 2020 Loan Category ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 2,196,351 ​ $ 1,817,526 ​ $ 1,798,260 ​ $ 1,674,066 ​ $ 1,521,711 Residential ​ 967,386 ​ 695,788 ​ 673,464 ​ 664,509 ​ 604,652 Consumer ​ 668,058 ​ 646,758 ​ 588,539 ​ 474,026 ​ 479,750 TOTAL ​ $ 3,831,795 ​ $ 3,160,072 ​ $ 3,060,263 ​ $ 2,812,601 ​ $ 2,606,113 43 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ After One ​ ​ ​ ​ ​ ​ ​ ​ Within But Within After Five (Dollar amounts in thousands) ​ One Year ​ Five Years ​ Years ​ Total MATURITY DISTRIBUTION ​ ​ ​ ​ Commercial, financial and agricultural ​ $ 850,958 ​ $ 1,041,890 ​ $ 303,503 ​ $ 2,196,351 TOTAL ​ ​ ​ ​ Residential ​ ​ ​ ​ ​ ​ 967,386 Consumer ​ ​ ​ ​ ​ ​ 668,058 TOTAL ​ ​ ​ ​ ​ ​ $ 3,831,795 Loans maturing after one year with: ​ ​ ​ ​ Fixed interest rates ​ ​ ​ ​ $ 552,382 ​ $ 281,149 ​ Variable interest rates ​ ​ ​ ​ 489,508 ​ 22,354 ​ TOTAL ​ ​ ​ ​ $ 1,041,890 ​ $ 303,503 ​ ​ Commercial Real Estate represents $1.8 billion of total exposure as of December 31, 2024, and is within regulatory guidance.
There was a $100 thousand decrease in the allowance for unfunded commitments. See additional discussion of ACL in the Allowance for Credit Losses section below. 35 Table of Contents Based on management’s analysis of the current portfolio, management believes the allowance is adequate.
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.
DEPOSITS The information below presents the average amount of deposits and rates paid on those deposits for 2023, 2022 and 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 (Dollar amounts in thousands) Amount Rate Amount Rate Amount Rate Non-interest-bearing demand deposits ​ $ 801,316 ​ ​ ​ $ 891,042 ​ ​ ​ $ 717,764 ​ ​ ​ Interest-bearing demand deposits ​ 1,440,411 ​ 2.15 % 1,511,232 ​ 0.65 % 1,309,682 ​ 0.15 % Savings deposits ​ 1,429,462 ​ 0.82 % 1,523,198 ​ 0.24 % 1,489,545 ​ 0.05 % Time deposits: $100,000 or more ​ 176,453 ​ 2.89 % 172,916 ​ 1.15 % 214,976 ​ 1.36 % Other time deposits ​ 258,490 ​ 1.54 % 310,122 ​ 0.41 % 305,909 ​ 0.81 % TOTAL ​ $ 4,106,132 ​ ​ ​ $ 4,408,510 $ 4,037,876 ​ ​ Deposits decreased 6.86% to $4.1 billion at September 30, 2023 compared to December 31, 2022.
DEPOSITS The information below presents the average amount of deposits and rates paid on those deposits for 2024, 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ 2022 (Dollar amounts in thousands) Amount Rate Amount Rate Amount Rate Non-interest-bearing demand deposits ​ $ 638,420 ​ ​ ​ $ 801,316 ​ ​ ​ $ 891,042 ​ ​ ​ Interest-bearing demand deposits ​ 1,681,079 ​ 2.61 % 1,440,411 ​ 2.15 % 1,511,232 ​ 0.65 % Savings deposits ​ 1,411,739 ​ 0.90 % 1,429,462 ​ 0.82 % 1,523,198 ​ 0.24 % Time deposits: $100,000 or more ​ 318,400 ​ 4.15 % 176,453 ​ 2.89 % 172,916 ​ 1.15 % Other time deposits ​ 356,041 ​ 3.19 % 258,490 ​ 1.54 % 310,122 ​ 0.41 % TOTAL ​ $ 4,405,679 ​ ​ ​ $ 4,106,132 $ 4,408,510 ​ ​ Deposits increased 7.30% to $4.4 billion at December 31, 2024 compared to December 31, 2023.
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. Net charge-offs for 2023 were $7.3 million as compared to $6.5 million for 2022 and $2.6 million for 2021.
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.
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 ​ 2.45 % (6.68) % (16.82) % Down 200 ​ 1.54 ​ (4.30) ​ (11.06) ​ Down 100 ​ 0.74 ​ (2.08) ​ (5.44) ​ Up 100 ​ (1.28) ​ 1.33 ​ 4.42 ​ Up 200 ​ (5.73) ​ (0.64) ​ 5.73 ​ Up 300 ​ (8.32) ​ (0.66) ​ 9.12 ​ ​ Typical rate shock analysis does not reflect management’s ability to react and thereby reduce the effects of rate changes, and represents a worst-case scenario.
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 ​ 2.65 % (8.59) % (18.36) % Down 200 ​ 3.39 ​ (3.84) ​ (10.47) ​ Down 100 ​ 4.07 ​ 0.68 ​ (2.70) ​ Up 100 ​ (1.51) ​ 0.94 ​ 3.98 ​ Up 200 ​ (5.84) ​ (0.97) ​ 5.21 ​ Up 300 ​ (8.84) ​ (1.52) ​ 7.76 ​ ​ Typical rate shock analysis does not reflect management’s ability to react and thereby reduce the effects of rate changes, and represents a worst-case scenario.
The Corporation’s dividend payout ratio for 2023 and 2022 was 19.4% and 21.7%, respectively. The Corporation expects to continue its policy of paying regular cash dividends, subject to future earnings and regulatory restrictions and capital requirements. INTEREST RATE SENSITIVITY AND LIQUIDITY First Financial Corporation has established risk measures, limits and policy guidelines for managing interest rate risk and liquidity.
The Corporation expects to continue its policy of paying regular cash dividends, subject to future earnings and regulatory restrictions and capital requirements. 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 table information compares 2023 to 2022 and 2022 to 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 Compared to 2022 Increase 2022 Compared to 2021 Increase ​ ​ (Decrease) Due to ​ (Decrease) Due to ​ ​ ​ ​ ​ ​ Volume/ ​ ​ ​ ​ ​ ​ ​ Volume/ ​ ​ (Dollar amounts in thousands) Volume Rate Rate Total Volume Rate Rate Total Interest earned on interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ Loans (1) (2) ​ $ 11,639 ​ $ 29,575 ​ $ 2,335 ​ $ 43,549 ​ $ 13,962 ​ $ 4,023 ​ $ 436 ​ $ 18,421 Taxable investment securities ​ (1,848) ​ 6,006 ​ (528) ​ 3,630 ​ 1,338 ​ 5,958 ​ 608 ​ 7,904 Tax-exempt investment securities (2) ​ 388 ​ 1,934 ​ 53 ​ 2,375 ​ 2,210 ​ (1,322) ​ (216) ​ 672 Cash and due from banks ​ (4,238) ​ 2,966 ​ (2,406) ​ (3,678) ​ (301) ​ 7,020 ​ (2,383) ​ 4,336 Federal funds sold ​ (21) ​ 49 ​ (10) ​ 18 ​ (6) ​ 80 ​ (11) ​ 63 Total interest income ​ $ 5,920 ​ $ 40,530 ​ $ (556) ​ $ 45,894 ​ $ 17,203 ​ $ 15,759 ​ $ (1,566) ​ $ 31,396 Interest paid on interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Transaction accounts ​ (731) ​ 31,553 ​ (1,711) ​ 29,111 ​ 231 ​ 9,687 ​ 814 ​ 10,732 Time deposits ​ (325) ​ 6,846 ​ (682) ​ 5,839 ​ (393) ​ (1,892) ​ 137 ​ (2,148) Short-term borrowings ​ 493 ​ 2,603 ​ 1,032 ​ 4,128 ​ (61) ​ 1,091 ​ (173) ​ 857 Other borrowings ​ 1,433 ​ 379 ​ 1,987 ​ 3,799 ​ 187 ​ (95) ​ (71) ​ 21 Total interest expense ​ 870 ​ 41,381 ​ 626 ​ 42,877 ​ (36) ​ 8,791 ​ 707 ​ 9,462 Net interest income ​ $ 5,050 ​ $ (851) ​ $ (1,182) ​ $ 3,017 ​ $ 17,239 ​ $ 6,968 ​ $ (2,273) ​ $ 21,934 (1)For purposes of these computations, non-accruing loans are included in the daily average loan amounts outstanding.
The table information compares 2024 to 2023 and 2023 to 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 Compared to 2023 Increase 2023 Compared to 2022 Increase ​ ​ (Decrease) Due to ​ (Decrease) Due to ​ ​ ​ ​ ​ ​ Volume/ ​ ​ ​ ​ ​ ​ ​ Volume/ ​ ​ (Dollar amounts in thousands) Volume Rate Rate Total Volume Rate Rate Total Interest earned on interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ Loans (1) (2) ​ $ 21,891 ​ $ 13,226 ​ $ 1,516 ​ $ 36,633 ​ $ 11,639 ​ $ 29,575 ​ $ 2,335 ​ $ 43,549 Taxable investment securities ​ (1,189) ​ 823 ​ (40) ​ (406) ​ (1,848) ​ 6,006 ​ (528) ​ 3,630 Tax-exempt investment securities (2) ​ (187) ​ 729 ​ (8) ​ 534 ​ 388 ​ 1,934 ​ 53 ​ 2,375 Cash and due from banks ​ (118) ​ (521) ​ 40 ​ (599) ​ (4,238) ​ 2,966 ​ (2,406) ​ (3,678) Federal funds sold ​ 227 ​ 36 ​ 65 ​ 328 ​ (21) ​ 49 ​ (10) ​ 18 Total interest income ​ $ 20,624 ​ $ 14,293 ​ $ 1,573 ​ $ 36,490 ​ $ 5,920 ​ $ 40,530 ​ $ (556) ​ $ 45,894 Interest paid on interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Transaction accounts ​ 3,309 ​ 9,833 ​ 764 ​ 13,906 ​ (731) ​ 31,553 ​ (1,711) ​ 29,111 Time deposits ​ 5,011 ​ 6,746 ​ 3,714 ​ 15,471 ​ (325) ​ 6,846 ​ (682) ​ 5,839 Short-term borrowings ​ (919) ​ (202) ​ 35 ​ (1,086) ​ 493 ​ 2,603 ​ 1,032 ​ 4,128 Other borrowings ​ (649) ​ 1,164 ​ (185) ​ 330 ​ 1,433 ​ 379 ​ 1,987 ​ 3,799 Total interest expense ​ 6,752 ​ 17,541 ​ 4,328 ​ 28,621 ​ 870 ​ 41,381 ​ 626 ​ 42,877 Net interest income ​ $ 13,872 ​ $ (3,248) ​ $ (2,755) ​ $ 7,869 ​ $ 5,050 ​ $ (851) ​ $ (1,182) ​ $ 3,017 (1)For purposes of these computations, non-accruing loans are included in the daily average loan amounts outstanding.
The primary components of income and expense affecting net income are discussed in the following analysis. NET INTEREST INCOME The principal source of the Corporation’s earnings is net interest income, which represents the difference between interest earned on loans and investments and the interest cost associated with deposits and other sources of funding.
NET INTEREST INCOME The principal source of the Corporation’s earnings is net interest income, which represents the difference between interest earned on loans and investments and the interest cost associated with deposits and other sources of funding. Net interest income increased in 2024 to $175.0 million compared to $167.3 million in 2023.
SECURITIES The Corporation’s investment strategy seeks to maximize income from the investment portfolio while using it as a risk management tool and ensuring safety of principal and capital. During 2023 the portfolio’s balance decreased by 5.4%. Given the performance of the 40 Table of Contents market, the Corporation shifted away from purchases to replace maturities in 2023.
Following is an analysis of the components of the Corporation’s balance sheet. ​ 42 Table of Contents SECURITIES The Corporation’s investment strategy seeks to maximize income from the investment portfolio while using it as a risk management tool and ensuring safety of principal and capital. During 2024 the portfolio’s balance decreased by 5.0%.
The increase in non-interest expenses is consistent with the rate of increases in prior years and considered normal with the growth of our business. INCOME TAXES The Corporation’s federal income tax provision was $11.8 million in 2023 compared to $16.7 million in 2022.
The year-over-year changes in non-interest expenses are consistent with the rate of increases in prior years and considered normal with the growth of our business. The provision for income taxes decreased $4.8 million from 2022 to 2023 and the effective tax rate decreased to 16.3% in 2023 from 19.0% in 2022.
Total average interest-bearing liabilities decreased to $3.50 billion in 2023 from $3.61 billion in 2022. The average cost of these interest-bearing liabilities increased to 1.74% in 2023 from 0.51% in 2022. 36 Table of Contents The net interest margin increased from 3.54% in 2022 to 3.78% in 2023.
The average cost of these interest-bearing liabilities increased to 2.28% in 2024 from 1.74% in 2023. The net interest margin decreased from 3.78% in 2023 to 3.71% in 2024.
First Financial Corporation’s objective continues to be to maintain adequate capital to merit the confidence of its customers and shareholders. To warrant this confidence, the Corporation’s management maintains a capital position which they believe is sufficient to absorb unforeseen financial shocks without unnecessarily restricting dividends to its shareholders.
To warrant this confidence, the Corporation’s management maintains a capital position which they believe is sufficient to absorb unforeseen financial shocks without unnecessarily restricting dividends to its shareholders. The Corporation’s dividend payout ratio for 2024 and 2023 was 46.5% and 19.4%, respectively.
Treasury (1) ​ $ 7,654 3.02 % $ 27,010 3.34 % $ 25,843 3.38 % $ 609,701 2.50 % $ 670,208 Collateralized mortgage obligations (1) ​ — — % 6,291 1.83 % 8,637 2.78 % 165,902 2.43 % 180,830 States and political subdivisions ​ 4,766 3.28 % 30,812 2.84 % 95,840 2.75 % 273,679 2.62 % 405,097 Collateralized debt obligations ​ — — % — — % 3,002 — % — — % 3,002 TOTAL ​ $ 12,420 3.12 % $ 64,113 2.95 % $ 133,322 2.81 % $ 1,049,282 2.52 % $ 1,259,137 (1) Distribution of maturities is based on the estimated life of the asset. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 year and less 1 to 5 years 5 to 10 years Over 10 Years 2022 (Dollar amounts in thousands) Balance Rate Balance Rate Balance Rate Balance Rate Total U.S. government sponsored entity mortgage-backed securities and agencies (1) ​ $ 5,066 1.91 % $ 22,871 2.05 % $ 37,360 3.91 % $ 666,045 2.44 % $ 731,342 Collateralized mortgage obligations (1) ​ 11 1.66 % 6,473 2.18 % 7,727 2.70 % 189,274 2.47 % 203,485 States and political subdivisions ​ 5,018 3.58 % 31,550 2.80 % 76,442 2.70 % 279,658 2.62 % 392,668 Collateralized debt obligations ​ — — % — — % — — % 2,986 — % 2,986 TOTAL ​ 10,095 2.74 % $ 60,894 2.45 % $ 121,529 3.07 % $ 1,137,963 2.48 % 1,330,481 (1) Distribution of maturities is based on the estimated life of the asset.
Treasury (1) ​ $ 3,555 2.40 % $ 21,926 3.64 % $ 30,151 3.43 % $ 578,331 2.76 % $ 633,963 Collateralized mortgage obligations (1) ​ 3,778 2.15 % 1,190 1.86 % 6,378 2.98 % 151,680 2.44 % 163,026 States and political subdivisions ​ 5,677 2.89 % 37,074 2.85 % 106,461 2.87 % 246,893 2.60 % 396,105 Collateralized debt obligations ​ — — % — — % 2,896 — % — — % 2,896 TOTAL ​ $ 13,010 2.54 % $ 60,190 3.12 % $ 145,886 2.93 % $ 976,904 2.67 % $ 1,195,990 (1) Distribution of maturities is based on the estimated life of the asset. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 year and less 1 to 5 years 5 to 10 years Over 10 Years 2023 (Dollar amounts in thousands) Balance Rate Balance Rate Balance Rate Balance Rate Total U.S. government sponsored entity mortgage-backed securities and agencies (1) ​ $ 7,654 3.02 % $ 27,010 3.34 % $ 25,843 3.38 % $ 609,701 2.50 % $ 670,208 Collateralized mortgage obligations (1) ​ — — % 6,291 1.83 % 8,637 2.78 % 165,902 2.43 % 180,830 States and political subdivisions ​ 4,766 3.28 % 30,812 2.84 % 95,840 2.75 % 273,679 2.62 % 405,097 Collateralized debt obligations ​ — — % — — % 3,002 — % — — % 3,002 TOTAL ​ 12,420 3.12 % $ 64,113 2.95 % $ 133,322 2.81 % $ 1,049,282 2.52 % 1,259,137 (1) Distribution of maturities is based on the estimated life of the asset.
Brokered time deposits decreased to $747 thousand at December 31, 2023, from $8.5 million at December 31, 2022. ​ The Corporation estimates that uninsured deposits (1) totaled $938.9 million, or 23% of total deposits, at December 31, 2023, compared to $1.27 billion, or 29%, at December 31, 2022.
The increase is due to the acquisition of SimplyBank. ​ The Corporation estimates that uninsured deposits (1) totaled $980.5 million, or 21% of total deposits, at December 31, 2024, compared to $938.9 million, or 23%, at December 31, 2023.
The decrease in 2023 net income is primarily due to increased provision for credit losses, as well as decreased non-interest income and increased non-interest expenses, as described in those respective sections in the following pages. Return on average assets at December 31, 2023 decreased 10.64% to 1.26% compared to 1.41% at December 31, 2022.
The decrease in 2023 net income is primarily due to increased provision for credit losses, as well as decreased non-interest income and increased non-interest expenses . ​ Net interest income increased $2.3 million in 2023 compared to 2022.
The increase in income tax expense is primarily due to the overall increase in net income before income taxes. COMPARISON AND DISCUSSION OF 2023 BALANCE SHEET TO 2022 The Corporation’s total assets decreased 2.8% or $138.1 million at December 31, 2023, from a year earlier. Available-for-sale securities decreased $71.3 million at December 31, 2023, from the previous year.
The decrease in income tax expense is due to a $1 million increase in tax credit investments, as well as increase in tax exempt interest income. COMPARISON AND DISCUSSION OF 2024 BALANCE SHEET TO 2023 The Corporation’s total assets increased 14.6% or $709.2 million at December 31, 2024, from a year earlier.
Net interest income increased in 2023 to $167.3 million compared to $165.0 million in 2022. Total average interest earning assets decreased to $4.56 billion in 2023 from $4.80 billion in 2022. The tax-equivalent yield on these assets increased to 5.12% in 2023 from 3.92% in 2022.
Total average interest earning assets increased to $4.87 billion in 2024 from $4.56 billion in 2023. The tax-equivalent yield on these assets increased to 5.55% in 2024 from 5.12% in 2023. Total average interest- 38 Table of Contents bearing liabilities increased to $3.93 billion in 2024 from $3.50 billion in 2023.
The average life of the portfolio decreased from 6.9 years in 2022 to 6.5 years in 2023.
Given the performance of the market, the Corporation shifted away from purchases to replace maturities in 2024. The average life of the portfolio decreased from 6.5 years in 2023 to 6.4 years in 2024.
The increase in nonperforming loans is due to a commercial relationship that was downgraded.
The decrease in nonperforming loans is due to a commercial relationship that was downgraded in 2023. That relationship was subsequently charged off in 2024, thus reducing the balance of non-performing loans.
These standards relate capital to level of risk by assigning different weightings to assets and certain off-balance-sheet activity. As shown in the footnote to the consolidated financial statements (“Regulatory Matters”), the Corporation’s subsidiary banking institutions capital exceeds the requirements to be considered well capitalized at December 31, 2023.
As shown in the footnote to the consolidated financial statements (“Regulatory Matters”), the Corporation’s subsidiary banking institutions capital exceeds the requirements to be considered well capitalized at December 31, 2024. First Financial Corporation’s objective continues to be to maintain adequate capital to merit the confidence of its customers and shareholders.
In 2023 dividends declared by the Corporation totaled $0.99 per share. There were also 40,496 shares from the treasury with a value of $1.52 million that were contributed to the ESOP plan in 2023 compared to 29,966 shares with a value of $1.45 million in 2022. Following is an analysis of the components of the Corporation’s balance sheet.
There were also 34,235 shares from the treasury with a value of $1.67 million that were contributed to the ESOP plan in 2024 compared to 40,496 shares with a value of $1.52 million in 2023.
Non-accrual loans, increased to $23.6 million at December 31, 2023 from $8.5 million at December 31, 2022. The increase in non-accrual loans is due to a commercial relationship that was downgraded. Loans past due 90 days and still on accrual decreased to $960 thousand compared to $1.1 million at December 31, 2022.
Loans past due 90 days and still on accrual increased to $1.8 million compared to $960 thousand at December 31, 2023. NON-INTEREST INCOME Non-interest income of $42.8 million remained stable compared to the $42.7 million earned in 2023. 41 Table of Contents NON-INTEREST EXPENSES Non-interest expenses increased to $144.4 million in 2024 from $130.2 million in 2023.
The Asset/Liability Committee reviews these funding sources and considers the related strategies on a monthly basis. See Interest Rate Sensitivity and Liquidity below for more information. CAPITAL RESOURCES Bank regulatory agencies have established capital adequacy standards which are used extensively in their monitoring and control of the industry.
First Financial Corporation borrowed $25 million on a note payable in June 2024 for the acquisition of SimplyBank. On December 31, 2024, the balance on the note was $20.8 million. The Asset/Liability Committee reviews these funding sources and considers the related strategies on a monthly basis. See Interest Rate Sensitivity and Liquidity below for more information.
COMPARISON OF 2022 TO 2021 Net income for 2022 was $71.1 million, or $5.82 per share versus $53.0 million, or $4.02 per share for 2021. The increase in 2022 net income is primarily due to increased interest rates and growth in earning assets . ​ Net interest income increased $21.6 million in 2022 compared to 2021.
The overall effective tax rate in 2024 of 17.3% increased as compared to a 2023 effective rate of 16.3%. COMPARISON OF 2023 TO 2022 Net income for 2023 was $60.7 million, or $5.08 per share versus $71.1 million, or $5.82 per share for 2022.
Loans, net increased by $100.4 million to $3.13 billion. Deposits decreased $278.8 million while borrowings increased by $95.3 million. Total shareholders’ equity increased $52.7 million to $528.0 million at December 31, 2023. Accumulated other comprehensive income increased $12.9 million primarily due to the market value of the securities portfolio, which reflected a slight increase in securities pricing.
Available-for-sale securities decreased $63.1 million at December 31, 2024, from the previous year. Loans, net increased by $662.4 million to $3.79 billion. Deposits increased $628.8 million while borrowings increased by $39.4 million. Total shareholders’ equity increased $21.1 million to $549.0 million at December 31, 2024.
Removed
The negative provision for the first quarter of 2022 was the result of several factors. The first was the annual model recalibration. Each year, in the first quarter, management reviews each model variable to determine if adjustments are necessary to improve the model’s predictability. In the first quarter 2022 the delay periods were shortened to pick up more recent losses.
Added
There was a $100 thousand increase in the allowance for unfunded commitments. The Corporation recorded $5.5 million in Day 2 provision on non-PCD loans acquired from SimplyBank. Additionally, the increase in allowance was related to one previously identified credit, 37 Table of Contents reflecting further deterioration in collateral values in the year.
Removed
Also, the qualitative factor maximum scorecard ranges for certain cohorts were reduced, which reduced the reserve. Secondly, management removed two qualitative factors that were deemed no longer applicable. The first was related to acquisition uncertainty, which management believes to have seasoned adequately that it was no longer warranted. The second was related to the CECL model and the related uncertainty.
Added
The decrease in 2024 net income is primarily due to increased provision for credit losses associated with the acquisition of SimplyBank, as well as non-interest expenses, which included increased operating expenses, as a result of the acquisition and expenses associated with the acquisition, as described in those respective sections in the following pages.
Removed
The uncertainty surrounded the newness of the model and potential regulatory scrutiny. Following two exam cycles, management elected to remove the factor. Also, during the quarter, historical loss rates continued to decline, which lowers the required reserve. The historical loss rate declined in most segments.
Added
Return on average assets at December 31, 2024 decreased 26.98% to 0.92% compared to 1.26% at December 31, 2023. The primary components of income and expense affecting net income are discussed in the following analysis.
Removed
On July 12, 2022, the Corporation sold seven classified non-farm nonresidential commercial loans, which were acquired in the two acquisitions in 2019 and 2021, with a total principal balance of $14.9 million.
Added
The Corporation recorded $5.5 million in Day 2 provision on non-PCD loans acquired from SimplyBank. Additionally, the increase in provision as well as charge-offs were related to one previously identified credit, reflecting further deterioration in collateral values in the year. No further losses are expected on this credit.
Removed
The net recovery on the sale of $361 thousand includes the charge-off of the seven loans of $2,145 thousand, netted by the $2,072 thousand reserve on those loans, previously 39 Table of Contents charged off in the period, and the $434 thousand unamortized discount remaining from the acquisitions.
Added
Net charge-offs for 2024 were $12.2 million as compared to $7.3 million for 2023 and $6.5 million for 2022 with current year over year increases driven from the previously identified credit discussed above. Non-accrual loans, decreased to $11.5 million at December 31, 2024 from $23.6 million at December 31, 2023.
Removed
As the related charge offs were previously reserved for and related to acquired loans, the increase in net charge offs for 2022 does not have a significant impact on the future expected losses. NON-INTEREST INCOME Non-interest income of $42.7 million decreased $4.0 million from the $46.7 million earned in 2022.
Added
The increase in non-interest expenses is primarily due to $1.7 million of expenses associated with the acquisition, as well as increases in operating expenses as a result of the acquisition. INCOME TAXES The Corporation’s federal income tax provision was $9.9 million in 2024 compared to $11.8 million in 2023.
Removed
The change in non-interest income from 2022 to 2023 was primarily driven by a $4.0 million legal settlement received in February, 2022. The Corporation does not expect this item to reoccur. NON-INTEREST EXPENSES Non-interest expenses increased to $130.2 million in 2023 from $126.0 million in 2022.
Added
Accumulated other comprehensive income decreased $5.2 million primarily due to the market value of the securities portfolio, which reflected a decrease in securities pricing. In 2024 dividends declared by the Corporation totaled $1.86 per share.
Removed
The overall effective tax rate in 2023 of 16.3% decreased as compared to a 2022 effective rate of 19.0%. The decrease in effective tax rate is due to a $1 million increase in tax credit investments, as well as an increase in tax exempt interest income.
Added
CAPITAL RESOURCES Bank regulatory agencies have established capital adequacy standards which are used extensively in their monitoring and control of the industry. These standards relate capital to level of risk by assigning different weightings to assets and certain off-balance-sheet activity.
Removed
The year-over-year changes in non-interest expenses are, in part, impacted by the acquisition of Hancock Bancorp in the fourth quarter of 2021. The provision for income taxes increased $4.1 million from 2021 to 2022 and the effective tax rate decreased to 19.0% in 2022 from 19.2% in 2021.
Removed
The decline was in part driven by a decline in interest bearing public funds checking, and a decline in institutional deposits as a result of a pricing decision.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the preceding pages of this Form 10-K is incorporated herein by reference in response to this item. ​ 47 Table of Contents
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the preceding pages of this Form 10-K is incorporated herein by reference in response to this item. ​ 49 Table of Contents

Other THFF 10-K year-over-year comparisons