FIRST FINANCIAL CORP /IN/ 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of First Financial Corporation (the “Corporation”) has prepared and is responsible for the preparation and accuracy of the consolidated financial statements and related financial information included in the Annual Report. The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Corporation’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Corporation’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Corporation are being made only in accordance with authorizations of management and directors of the Corporation; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the Corporation’s system of internal control over financial reporting as of December 31, 2023, in relation to criteria for effective internal control over financial reporting as described in “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on this assessment, management concluded that, as of December 31, 2023, its system of internal control over financial reporting is effective and meets the criteria of the “Internal Control—Integrated Framework.” Crowe LLP (PCAOB ID: 173 ) , independent registered public accounting firm, has audited the Corporation’s internal control over financial reporting as of December 31, 2023 and has issued a report dated March 11, 2024. ​ 48 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and the Board of Directors of First Financial Corporation Terre Haute, Indiana Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of First Financial Corporation (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income and, comprehensive income/(loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ​ In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. ​ Basis for Opinions ​ The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. ​ Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. ​ Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 49 Table of Contents ​ Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ​ Critical Audit Matter ​ The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ Allowance for Credit Losses on Loans As discussed in Notes 1 and 7, the allowance for credit losses (the “ACL”) is an accounting estimate of expected credit losses over the estimated life of financial assets carried at amortized cost and off-balance-sheet credit exposures in accordance with Accounting Standards Update (the “ASU”) 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires financial assets, including the Company's loan portfolio, measured at amortized cost, to be presented at the net amount expected to be collected. Estimates of expected credit losses for loans are based on relevant information about past events, current conditions, and reasonable and supportable forecasts related to macroeconomic conditions, resulting in recognition of lifetime expected credit losses upon loan origination. Provision for credit loss expense for the year ending December 31, 2023 was $7.3 million and the Allowance for Credit Losses at December 31, 2023 was $39.8 million. ​ The Company utilizes the cohort or open pool methodology for determining the allowance for credit losses on loans. The open pool methodology identifies and captures the balance of a pool of loans with similar risk characteristics, as of a particular point in time to form a cohort. The methodology then tracks the respective losses generated by that cohort of loans over their remaining lives. When past performance may not be representative of future losses, the historical loss experience is supplemented with other current factors based on the risks present for each portfolio segment. These current factors include changes in lending policies or procedures, asset specific risks, and economic uncertainty in forward-looking forecasts. Economic indicators that are used in determining the economic forecast factors include unemployment rate, gross domestic product, housing starts and interest rates. ​ The allowance for credit losses on loans was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management throughout the determination process. The principal considerations resulting in our determination included the following: ​ ● Significant auditor judgment and effort were used in evaluating the qualitative factors used in the calculation. ● Significant auditor judgment in evaluating the selection and application of the reasonable and supportable forecast of economic variables. ● Significant audit effort to test the relevance and reliability of the critical data used in the methodology. ​ ​ 50 Table of Contents The primary procedures performed to address this critical audit matter included: ● Testing the effectiveness of management’s internal controls over the Company’s significant model assumptions and judgments, loan segmentation, reasonable and supportable forecasts, qualitative factor adjustments, relevance and reliability of data used in the model, charge-off approval, information systems and model validation ● Testing the effectiveness of controls over the Company’s preparation and review of the allowance for credit loss calculation, including data used as the basis for adjustments related to the qualitative factors, the development and reasonableness of qualitative factors and mathematical accuracy and appropriateness of the overall calculation ● Evaluating management’s judgments in the selection and application of reasonable and supportable forecast of economic variables ● Testing management’s process for developing the qualitative factors and assessing reasonableness, relevance and reliability of data used to develop factors, including evaluating their judgments and assumptions for reasonableness. ​ ​ ​ ​ ​ /s/ Crowe LLP ​ Crowe LLP ​ We have served as the Corporation’s auditor since 1999. Indianapolis, Indiana March 11, 2024 ​ 51 Table of Contents CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ ASSETS ​ ​ ​ Cash and due from banks ​ $ 76,759 ​ $ 222,517 Federal funds sold ​ 282 ​ 9,374 Securities available-for-sale ​ 1,259,137 ​ 1,330,481 Loans: ​ ​ ​ ​ ​ Commercial ​ ​ 1,817,526 ​ ​ 1,798,260 Residential ​ ​ 695,788 ​ ​ 673,464 Consumer ​ ​ 646,758 ​ ​ 588,539 ​ ​ ​ 3,160,072 ​ ​ 3,060,263 (Less) plus: ​ ​ ​ ​ ​ ​ Net deferred loan (fees)/costs ​ ​ 7,749 ​ ​ 7,175 Allowance for credit losses ​ ​ ( 39,767 ) ​ ​ ( 39,779 ) ​ ​ ​ 3,128,054 ​ ​ 3,027,659 Restricted stock ​ 15,364 ​ 15,378 Accrued interest receivable ​ 24,877 ​ 21,288 Premises and equipment, net ​ 67,286 ​ 66,147 Bank-owned life insurance ​ 114,122 ​ 115,704 Goodwill ​ 86,985 ​ 86,985 Other intangible assets ​ 5,586 ​ 6,714 Other real estate owned ​ 107 ​ 337 Other assets ​ 72,587 ​ 86,697 TOTAL ASSETS ​ $ 4,851,146 ​ $ 4,989,281 LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ Deposits: ​ ​ Non-interest-bearing ​ $ 750,335 ​ $ 857,920 Interest-bearing: ​ ​ ​ ​ Certificates of deposit exceeding the FDIC insurance limits ​ 92,921 ​ 50,608 Other interest-bearing deposits ​ 3,246,812 ​ 3,460,343 ​ ​ 4,090,068 ​ 4,368,871 Short-term borrowings ​ 67,221 ​ 70,875 Other borrowings ​ 108,577 ​ 9,589 Other liabilities ​ 57,304 ​ 64,653 TOTAL LIABILITIES ​ 4,323,170 ​ 4,513,988 Shareholders’ equity ​ ​ Common stock, $ 0.125 stated value per share; Authorized shares - 40,000,000 ; Issued shares- 16,137,220 in 2023 and 16,114,992 in 2022; Outstanding shares - 11,795,024 in 2023 and 12,051,964 in 2022 ​ 2,014 ​ 2,012 Additional paid-in capital ​ 144,152 ​ 143,185 Retained earnings ​ 663,726 ​ 614,829 Accumulated other comprehensive loss ​ ( 127,087 ) ​ ( 139,974 ) Less: Treasury shares at cost - 4,342,196 in 2023 and 4,063,028 in 2022 ​ ( 154,829 ) ​ ( 144,759 ) TOTAL SHAREHOLDERS’ EQUITY ​ 527,976 ​ 475,293 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY ​ $ 4,851,146 ​ $ 4,989,281 ​ See accompanying notes. ​ 52 Table of Contents CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME/(LOSS) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2023 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST INCOME: ​ ​ ​ ​ Loans, including related fees ​ $ 189,641 ​ $ 146,295 ​ $ 128,000 Securities: ​ ​ ​ Taxable ​ 24,643 ​ 21,014 ​ 13,110 Tax-exempt ​ 10,573 ​ 9,974 ​ 8,762 Other ​ 3,540 ​ 6,018 ​ 2,326 TOTAL INTEREST INCOME ​ 228,397 ​ 183,301 ​ 152,198 INTEREST EXPENSE: ​ ​ ​ Deposits ​ 51,694 ​ 16,743 ​ 8,158 Short-term borrowings ​ 5,370 ​ 1,243 ​ 387 Other borrowings ​ 4,071 ​ 273 ​ 252 TOTAL INTEREST EXPENSE ​ 61,135 ​ 18,259 ​ 8,797 NET INTEREST INCOME ​ 167,262 ​ 165,042 ​ 143,401 Provision for credit losses ​ 7,295 ​ ( 2,025 ) ​ 2,466 NET INTEREST INCOME AFTER PROVISION ​ ​ ​ ​ ​ ​ ​ ​ FOR CREDIT LOSSES ​ 159,967 ​ 167,067 ​ 140,935 NON-INTEREST INCOME: ​ ​ ​ Trust and financial services ​ 5,155 ​ 5,155 ​ 5,255 Service charges and fees on deposit accounts ​ 28,079 ​ 27,540 ​ 24,700 Other service charges and fees ​ 801 ​ 665 ​ 1,163 Securities gains/(losses), net ​ ​ ( 1 ) ​ 3 ​ 114 Interchange income ​ ​ 676 ​ ​ 559 ​ ​ 438 Loan servicing fees ​ 1,176 ​ ​ 1,554 ​ ​ 1,849 Gain on sales of mortgage loans ​ 966 ​ 1,994 ​ 5,003 Other ​ 5,850 ​ 9,246 ​ 3,562 TOTAL NON-INTEREST INCOME ​ 42,702 ​ 46,716 ​ 42,084 NON-INTEREST EXPENSE: ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and employee benefits ​ 68,525 ​ 65,555 ​ 64,474 Occupancy expense ​ 9,351 ​ 9,764 ​ 8,774 Equipment expense ​ 14,020 ​ 12,391 ​ 10,174 FDIC Expense ​ 2,907 ​ 2,327 ​ 1,294 Other ​ 35,373 ​ 35,986 ​ 32,690 TOTAL NON-INTEREST EXPENSE ​ 130,176 ​ 126,023 ​ 117,406 INCOME BEFORE INCOME TAXES ​ 72,493 ​ 87,760 ​ 65,613 Provision for income taxes ​ 11,821 ​ 16,651 ​ 12,626 NET INCOME ​ 60,672 ​ 71,109 ​ 52,987 OTHER COMPREHENSIVE INCOME (LOSS) ​ ​ ​ Change in unrealized gains/(losses) on securities, net of reclassifications and taxes ​ 10,896 ​ ( 144,570 ) ​ ( 18,488 ) Change in funded status of post retirement benefits, net of taxes ​ 1,991 ​ 7,022 ​ 6,298 COMPREHENSIVE INCOME (LOSS) ​ $ 73,559 ​ $ ( 66,439 ) ​ $ 40,797 PER SHARE DATA ​ ​ ​ Basic and Diluted Earnings per Share ​ $ 5.08 ​ $ 5.82 ​ $ 4.02 Weighted average number of shares outstanding (in thousands) ​ 11,937 ​ 12,211 ​ 13,190 ​ See accompanying notes. ​ 53 Table of Contents CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common ​ Additional ​ Retained ​ Comprehensive ​ Treasury ​ ​ ​ (Dollar amounts in thousands, except per share data) ​ Stock ​ Capital ​ Earnings ​ Income/(Loss) ​ Stock ​ Total Balance, January 1, 2021 ​ $ 2,007 ​ 140,820 ​ 521,103 ​ 9,764 ​ ( 76,702 ) ​ $ 596,992 Net income ​ — ​ — ​ 52,987 ​ — ​ — ​ 52,987 Other comprehensive income (loss) ​ — ​ — ​ — ​ ( 12,190 ) ​ — ​ ( 12,190 ) Omnibus Equity Incentive Plan, net ​ 2 ​ 805 ​ — ​ — ​ — ​ 807 Treasury stock purchases ( 981,132 shares) ​ — ​ — ​ — ​ — ​ ( 42,471 ) ​ ( 42,471 ) Contribution of 31,355 shares to ESOP ​ — ​ 354 ​ — ​ — ​ 1,048 ​ 1,402 Cash Dividends, $ 1.16 per share ​ — ​ — ​ ( 14,951 ) ​ — ​ — ​ ( 14,951 ) Balance, December 31, 2021 ​ 2,009 ​ 141,979 ​ 559,139 ​ ( 2,426 ) ​ ( 118,125 ) ​ 582,576 Net income ​ — ​ — ​ 71,109 ​ — ​ — ​ 71,109 Other comprehensive income (loss) ​ — ​ — ​ — ​ ( 137,548 ) ​ — ​ ( 137,548 ) Omnibus Equity Incentive Plan, net ​ 3 ​ 822 ​ — ​ — ​ — ​ 825 Treasury stock purchases ( 626,574 shares) ​ — ​ — ​ — ​ — ​ ( 27,701 ) ​ ( 27,701 ) Contribution of 29,966 shares to ESOP ​ — ​ 384 ​ — ​ — ​ 1,067 ​ 1,451 Cash Dividends, $ 1.28 per share ​ — ​ — ​ ( 15,419 ) ​ — ​ — ​ ( 15,419 ) Balance, December 31, 2022 ​ 2,012 ​ 143,185 ​ 614,829 ​ ( 139,974 ) ​ ( 144,759 ) ​ 475,293 Net income ​ — ​ — ​ 60,672 ​ — ​ — ​ 60,672 Other comprehensive income (loss) ​ — ​ — ​ — ​ 12,887 ​ — ​ 12,887 Omnibus Equity Incentive Plan, net ​ 2 ​ 893 ​ — ​ — ​ — ​ 895 Treasury stock purchases ( 319,664 shares) ​ — ​ — ​ — ​ — ​ ( 11,514 ) ​ ( 11,514 ) Contribution of 40,496 shares to ESOP ​ — ​ 74 ​ — ​ — ​ 1,444 ​ 1,518 Cash Dividends, $ 0.99 per share ​ — ​ — ​ ( 11,775 ) ​ — ​ — ​ ( 11,775 ) Balance, December 31, 2023 ​ $ 2,014 ​ $ 144,152 ​ $ 663,726 ​ $ ( 127,087 ) ​ $ ( 154,829 ) ​ $ 527,976 ​ See accompanying notes. ​ 54 Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​ Net Income ​ $ 60,672 ​ $ 71,109 ​ $ 52,987 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ Net amortization (accretion) of premiums and discounts on investments ​ 5,057 ​ 6,551 ​ 8,433 Provision for credit losses ​ 7,295 ​ ( 2,025 ) ​ 2,466 Securities (gains)/losses ​ 1 ​ ( 3 ) ​ ( 114 ) Depreciation and amortization ​ 6,530 ​ 6,111 ​ 6,154 Provision for deferred income taxes ​ ( 472 ) ​ ( 3,150 ) ​ ( 1,568 ) Net change in accrued interest receivable ​ ( 3,589 ) ​ ( 4,342 ) ​ 982 Contribution of shares to ESOP ​ 1,518 ​ 1,451 ​ 1,402 Restricted stock compensation ​ 895 ​ 825 ​ 807 Gain on sale of mortgage loans ​ ( 966 ) ​ ( 1,994 ) ​ ( 5,003 ) (Gain) Loss on sale of other real estate ​ 31 ​ 55 ​ 18 Origination of loans held for sale ​ ( 31,498 ) ​ ( 65,412 ) ​ ( 115,144 ) Proceeds from loans held for sale ​ 31,611 ​ 69,946 ​ 123,079 Other, net ​ 9,005 ​ ( 335 ) ​ ( 19,432 ) NET CASH FROM OPERATING ACTIVITIES ​ 86,090 ​ 78,787 ​ 55,067 CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ Proceeds from sales of securities available-for-sale ​ — ​ — ​ 9,369 Calls, maturities and principal reductions on securities available-for-sale ​ 111,541 ​ 179,597 ​ 262,209 Purchases of securities available-for-sale ​ ( 30,460 ) ​ ( 345,201 ) ​ ( 589,802 ) Proceeds from loans sold previously classified as portfolio loans ​ ​ — ​ ​ 12,802 ​ ​ — Loans made to customers, net of repayment ​ ( 106,031 ) ​ ( 271,503 ) ​ 31,628 Net change in federal funds sold ​ 9,092 ​ ( 9,066 ) ​ 10,463 Purchase of bank owned life insurance ​ — ​ — ​ ( 10,000 ) Redemption of restricted stock ​ 40 ​ 1,871 ​ — Purchase of restricted stock ​ ( 26 ) ​ ( 1,049 ) ​ ( 25 ) Cash received (disbursed) from acquisitions ​ — ​ — ​ ( 23,092 ) Proceeds from sales of other real estate owned ​ 287 ​ 286 ​ 929 Additions to premises and equipment ​ ( 6,541 ) ​ ( 1,426 ) ​ ( 3,835 ) NET CASH FROM INVESTING ACTIVITIES ​ ( 22,098 ) ​ ( 433,689 ) ​ ( 312,156 ) CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ Net change in deposits ​ ( 278,199 ) ​ ( 39,547 ) ​ 367,985 Net change in short-term borrowings ​ ( 3,654 ) ​ ( 22,499 ) ​ ( 22,687 ) Dividends paid ​ ( 15,383 ) ​ ( 14,459 ) ​ ( 14,181 ) Purchase of treasury stock ​ ( 11,514 ) ​ ( 27,701 ) ​ ( 42,471 ) Proceeds from other borrowings ​ 2,080,000 ​ — ​ — Maturities of other borrowings ​ ( 1,981,000 ) ​ ( 6,402 ) ​ ( 1,000 ) NET CASH FROM FINANCING ACTIVITIES ​ ( 209,750 ) ​ ( 110,608 ) ​ 287,646 NET CHANGE IN CASH AND CASH EQUIVALENTS ​ ( 145,758 ) ​ ( 465,510 ) ​ 30,557 CASH AND DUE FROM BANKS, BEGINNING OF PERIOD ​ 222,517 ​ 688,027 ​ 657,470 CASH AND DUE FROM BANKS, END OF PERIOD ​ $ 76,759 ​ $ 222,517 ​ $ 688,027 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND NONCASH INFORMATION: ​ ​ ​ Cash paid for the year for: ​ ​ ​ Interest ​ $ 59,031 ​ $ 18,463 ​ $ 9,144 Income Taxes ​ $ 11,350 ​ $ 13,525 ​ $ 15,025 ​ See accompanying notes. ​ 55 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES: BUSINESS Organization: The consolidated financial statements of First Financial Corporation and its subsidiaries (the Corporation) include the parent company and its wholly-owned subsidiary, First Financial Bank, N.A., headquartered in Vigo County, Indiana. Inter-company transactions and balances have been eliminated. First Financial Bank also has two investment subsidiaries, Portfolio Management Specialists A (Specialists A) and Portfolio Management Specialists B (Specialists B), which were established to hold and manage certain assets as part of a strategy to better manage various income streams and provide opportunities for capital creation as needed. Specialists A and Specialists B subsequently entered into a limited partnership agreement, Global Portfolio Limited Partners. Portfolio Management Specialists B also owns First Financial Real Estate, LLC. At December 31, 2023, $ 1.0 billion of securities and loans were owned by these subsidiaries. Specialists A, Specialists B, Global Portfolio Limited Partners and First Financial Real Estate LLC are included in the consolidated financial statements. First Financial Bank also has wholly-owned subsidiaries JBMM, LLC and Fort Webb LP, LLC. 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. The Corporation’s primary source of revenue is derived from loans to customers and investment activities. The Corporation operates 70 branches in west-central Indiana, east-central Illinois, western Kentucky, and central Tennessee. First Financial Bank is the largest bank in Vigo County. It operates seven full-service banking branches within the county; one in Daviess County, Indiana.; three in Clay County, Indiana; one in Greene County, Indiana; one in Knox County, Indiana; two in Parke County, Indiana; one in Putnam County, Indiana; two in Sullivan County, Indiana; one in Vanderburgh County, Indiana,; three in Vermillion County, Indiana; four in Champaign County, Illinois; one in Clark County, Illinois; one in Coles County, Illinois; two in Crawford County, Illinois; one in Franklin County, Illinois; one in Jasper County, Illinois; two in Jefferson County, Illinois; one in Lawrence County, Illinois; two in Livingston County, Illinois; two in Marion County, Illinois; two in McLean County, Illinois; one in Richland County, Illinois; five in Vermilion County, Illinois; one in Wayne County, Illinois; one in Breckinridge County, Kentucky; one in Calloway County, Kentucky; three in Christian County, Kentucky; two in Fulton County, Kentucky; two in Hancock County, Kentucky; two in Hopkins County, Kentucky; two in Marshall County, Kentucky; one in Todd County, Kentucky; one in Trigg County, Kentucky; one in Warren County, Kentucky; three in Cheatham County, Tennessee; and three in Montgomery County, Tennessee. 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, Tennessee. The bank also has a main office in downtown Terre Haute and an operations center/office building in southern Terre Haute. Regulatory Agencies: First Financial Corporation is a bank holding company and as such is regulated by various banking agencies. The holding company is regulated by the Seventh District of the Federal Reserve System. The national bank subsidiary is regulated by the Office of the Comptroller of the Currency. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates: To prepare financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ. Cash Flows : Cash and cash equivalents include cash and demand deposits with other financial institutions. Cash flows are reported for customer loan and deposit transactions and short-term borrowings. Non-cash transactions include loans transferred to other real estate of $ 88 thousand, $ 570 thousand and $ 43 thousand for the years ended December 31, 2023, 2022 and 2021 respectively. Securities : The Corporation classifies all securities as “available for sale.” Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value with unrealized holdings gains and losses, net of taxes, reported in other comprehensive income within shareholders’ equity. 56 Table of Contents Interest income includes amortization of purchase premium or discount. Premiums and discounts are amortized on the level yield method without anticipating prepayments. Mortgage-backed securities are amortized over the expected life. Realized gains and losses on sales are based on the amortized cost of the security sold. Management evaluates securities for impairment related to credit losses at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. Loans: Loans that management has the intent and ability to hold for the foreseeable future until maturity or pay-off are reported at the principal balance outstanding, net of unearned interest, purchase premiums and discounts, deferred loan fees and costs, and allowance for credit losses. Loans held for sale are reported at the lower of cost or fair value, on an aggregate basis. Interest income is accrued on the unpaid principal balance and includes amortization of net deferred loan fees and costs over the loan term without anticipating prepayments. The recorded investment in loans includes accrued interest receivable and net deferred loan fees and costs. Interest income is not reported when full loan repayment is in doubt, typically when the loan is collateral dependent or payments are significantly past due. Past-due status is based on the contractual terms of the loan. All interest accrued but not received for loans placed on non-accrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. In all cases, loans are placed on non-accrual or charged-off if collection of principal or interest is considered doubtful. The above policies are consistent for all segments of loans. Purchased Credit Deteriorated (PCD) Loans: The Corporation purchases individual loans and groups of loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and initial allowance for credit losses becomes its amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is accreted or amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision for credit losses. Concentration of Credit Risk: Most of the Corporation’s business activity is with customers located within west-central Indiana, east-central Illinois, western Kentucky, and middle and western Tennessee. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economy of this area. A major economic downturn in this area would have a negative effect on the Corporation’s loan portfolio. The risk characteristics of each loan portfolio segment are as follows: Commercial Commercial loans are predominately loans to expand a business or finance asset purchases. The underlying risk in the Commercial loan segment is primarily a function of the reliability and sustainability of the cash flows of the borrower and secondarily on the underlying collateral securing the transaction. From time to time, the cash flows of borrowers may be less than historical or as planned. In addition, the underlying collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets financed or other business assets and most commercial loans are further supported by a personal guarantee. However, in some instances, short term loans are made on an unsecured basis. Agriculture production loans are typically secured by growing crops and generally secured by other assets such as farm equipment. Production loans are subject to weather and market pricing risks. The Corporation has established underwriting standards and guidelines for all commercial loan types. The Corporation strives to maintain a geographically diverse commercial real estate portfolio. Commercial real estate loans are primarily underwritten based upon the cash flows of the underlying real estate or from the cash flows of the business conducted at the real estate. Generally, these types of loans will be fully guaranteed by the principal owners of the real estate and loan amounts must be supported by adequate collateral value. Commercial real estate loans may be adversely affected by factors in the local market, the regional economy, or industry specific factors. In addition, Commercial Construction loans are a specific type of commercial real estate loan which inherently carry more risk than loans for completed projects. Since these types of loans are underwritten utilizing estimated costs, feasibility studies, and estimated absorption rates, the underlying value of the project may change based upon the inaccuracy of these projections. Commercial construction loans are closely monitored, subject to industry standards, and disbursements are controlled during the construction process. 57 Table of Contents Residential Real estate mortgages that are secured by 1-4 family residences are generally owner occupied and include residential real estate and residential real estate construction loans. The Corporation typically establishes a maximum loan-to-value ratio and generally requires private mortgage insurance if the ratio is exceeded. The Corporation sells substantially all of its long-term fixed mortgages to secondary market purchasers. Mortgages sold to secondary market purchasers are underwritten to specific guidelines. The Corporation originates some mortgages that are maintained in the bank’s loan portfolio. Portfolio loans are generally adjustable rate mortgages and are underwritten to conform to Qualified Mortgage standards. Several factors are considered in underwriting all Mortgages including the value of the underlying real estate, debt-to-income ratio and credit history of the borrower. Repayment is primarily dependent upon the personal income of the borrower and can be impacted by changes in borrower’s circumstances such as changes in employment status and changes in real estate property values. Risk is mitigated by the sale of substantially all long-term fixed rate mortgages, the underwriting of portfolio loans to Qualified Mortgage standards and the fact that mortgages are generally smaller individual amounts spread over a large number of borrowers. Consumer The consumer portfolio primarily consists of home equity loans and lines (typically secured by a subordinate lien on a 1-4 family residence), secured loans (typically secured by automobiles, boats, recreational vehicles, or motorcycles), cash/CD secured, and unsecured loans. Pricing, loan terms, and loan to value guidelines vary by product line. The underlying value of collateral dependent loans may vary based on a number of economic conditions, including fluctuations in home prices and unemployment levels. Underwriting of consumer loans is based on the individual credit profile and analysis of the debt repayment capacity for each borrower. Payments for consumer loans is typically set-up on equal monthly installments, however, future repayment may be impacted by a change in economic conditions or a change in the personal income levels of individual customers. Overall risks within the consumer portfolio are mitigated by the mix of various loan products, lending in various markets and the overall make-up of the portfolio (small loan sizes and a large number of individual borrowers). Allowance for Credit Losses: Credit quality of loans is continuously monitored by management and is reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loan portfolio. Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimating expected credit losses. The allowance for credit losses is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. We have made a policy election to report accrued interest receivable as a separate line item on the balance sheet. The allowance for credit loss estimation process involves procedures to appropriately consider the unique characteristics of the loan portfolio segments. These segments are further disaggregated into loan classes based on the level at which credit risk is monitored. When computing the level of expected credit losses, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods. We utilize a cohort methodology to determine the allowance for credit losses. This method identifies and captures the balance of a pool of loans with similar risk characteristics at a particular point in time to form a cohort. Then it tracks the respective losses generated by that cohort of loans over their remaining life. When past performance may not be representative of future losses, loss rates are adjusted for qualitative and economic forecast factors. The allowance level is influenced by loan volumes, loan quality rating migration or delinquency status, changes in historical loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses consists of specific and pooled components. The specific component relates to loans that are individually evaluated. A loan is individually evaluated when the loan no longer shares similar risk characteristics with other loans in its respective loan pool. If a loan is individually evaluated, a portion of the allowance is allocated so that the loan is reported at the fair value of collateral, adjusted for selling costs, if repayment is expected solely from the collateral. The pooled component covers pools of loans that share similar risk characteristics, and is based on historical 58 Table of Contents loss experienced since 2008. This historical loss experience is supplemented with other current factors based on the risks present for each portfolio segment. These current factors include items such as changes in lending policies or procedures, asset specific risks, and economic uncertainty in forward-looking forecasts. Economic indicators utilized in forecasting include unemployment rate, gross domestic product, housing starts, and interest rates. We maintain an allowance for credit losses on unfunded lending commitments to provide for the risk of loss inherent in these arrangements. Unfunded commitments include funds available for disbursement on commercial and agriculture operating lines, commercial real estate and residential construction loans, and home equity lines of credit. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded commitments was $ 2.0 million at December 31, 2023, and $ 2.1 million at December 31, 2022. Foreclosed Assets: Assets acquired through or instead of loan foreclosures are initially recorded at fair value less estimated selling costs when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or similar legal agreement. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed. Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed over the useful lives of the assets, which range from 3 to 5 years for furniture and equipment and 33 to 39 years for buildings and leasehold improvements. Restricted Stock: Restricted stock includes Federal Home Loan Bank (FHLB) of Indianapolis and Federal Reserve stock. This restricted stock is carried at cost and periodically evaluated for impairment. Because this stock is viewed as a long-term investment, impairment is based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Servicing Rights: Servicing rights are recognized separately when they are acquired through sales of loans. When mortgage loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on third-party valuations that incorporate assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, ancillary income, prepayment speeds and default rates and losses. All classes of servicing assets are subsequently measured using the amortization method, which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Corporation later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with Other Service Charges and Fees on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Servicing fee income, which is included in Other Service Charges and Fees on the income statement, is for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees totaled $ 1.3 million, $ 1.4 million and $ 1.3 million for the years ended December 31, 2023, 2022 and 2021. Late fees and ancillary fees related to loan servicing are not material. Stock based compensation: Compensation cost is recognized for restricted stock awards and units issued to employees based on the fair value of these awards at the date of grant. Market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. Compensation expense is recognized over the requisite service period. 59 Table of Contents Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Corporation, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Bank-Owned Life Insurance: The Corporation has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at its cash surrender value, or the amount that can be realized. Income on the investments in life insurance is included in other interest income. Goodwill and Other Intangible Assets: Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009 represents the future economic benefits arising from other assets acquired that are not individually identified and separately recognized. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Corporation has selected October 31 as the date to perform the annual impairment test. The final results determined that there was no impairment of goodwill. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet. Other intangible assets consist of core deposit assets arising from the whole bank and branch acquisitions. They are initially measured at fair value and then are amortized on an accelerated basis over their estimated useful lives, which are 10 and 12 years , respectively. Long-Term Assets: Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. Benefit Plans: Pension expense is the net of service and interest cost, return on plan assets and amortization of gains and losses not immediately recognized. The amount contributed is determined by a formula as decided by the Board of Directors. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service. Employee Stock Ownership Plan: Shares of treasury stock are issued to the ESOP and compensation expense is recognized based upon the total market price of shares when contributed. Deferred Compensation Plan: Prior to 2011, a deferred compensation plan covered all directors. Under the plan, the Corporation pays each director, or their beneficiary, the amount of fees deferred plus interest over 10 years , beginning when the director achieves age 65. A liability is accrued for the obligation under these plans. The expense incurred for the deferred compensation for each of the last three years was $ 49 thousand, $ 78 thousand, and $ 117 thousand, resulting in a deferred compensation liability of $ 1.1 million at December 31, 2023 and $ 1.2 million at December 31, 2022. There are no deferred compensation plans now in effect for directors. Incentive Plans: A long-term incentive plan established in 2000 provides for the payment of incentive rewards as a 15-year annuity to all directors and certain key officers. That plan was in place through December 31, 2009, and compensation expense is recognized over the service period. Payments under the plan generally did not begin until the earlier of January 1, 2015, or the January 1 immediately following the year in which the participant reaches age 65. There was no compensation expense related to this plan for 2023, 2022 and 2021. There is a liability of $ 3.8 million and $ 4.8 million as of year-end 2023 and 2022. In 2011 the Corporation adopted the 2011 Short-term Incentive Plan and the 2011 Omnibus Equity Incentive Plan designed to reward key officers based on certain performance measures. The short-term portion of the plan is paid out within 75 days of year end and the long-term plan vests over a three year period and is paid out within 75 days of the end of each vesting period. The compensation expense related to the plans in 2023, 2022 and 2021 was $ 2.9 million, $ 2.0 million and $ 2.3 million, respectively, and resulted in a liability of $ 1.8 million at December 31, 2023 and $ 1.6 million at December 31, 2022. The Omnibus Equity Incentive Plan is a long term incentive plan that was designed to align the interests of participants with the interest of shareholders. Under the plan, awards may be made based on certain performance measures. The grants are made in restricted stock units that are subject to a vesting schedule. 60 Table of Contents Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense. Loan Commitments and Related Financial Instruments: Financial instruments include credit instruments, such as commitments to make loans and standby letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. Earnings Per Share: Earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. The Corporation does not have any potentially dilutive securities as the restricted stock awards are included in outstanding shares. Earnings and dividends per share are restated for stock splits and dividends through the date of issue of the financial statements. Comprehensive Income (Loss): Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and changes in the funded status of the retirement plans, net of taxes, which are also recognized as separate components of equity. Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount of range of loss can be reasonably estimated. Management does not believe there are currently such matters that will have a material effect on the financial statements. Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders. Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or market conditions could significantly affect the estimates. Operating Segment: While the Corporation’s chief decision-makers monitor the revenue streams of the various products and services, the operating results of significant segments are similar and operations are managed and financial performance is evaluated on a corporate-wide basis. Accordingly, all of the Corporation’s financial service operations are considered by management to be aggregated in one reportable operating segment, which is banking. Accounting Pronouncements Adopted: In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-02, “Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures” (ASU 2022-02). ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (TDRs) in ASC 310-40, “Receivables - Troubled Debt Restructurings by Creditors” for entities that have adopted the current expected credit loss (CECL) model introduced by ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2022-02 also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, “Financial Instruments—Credit Losses—Measured at Amortized Cost”. ASU 2022-02 is effective for the Corporation for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Corporation adopted ASU 2022-02 on January 1, 2023, and has applied the disclosure changes in this document. See Note 7. Allowance for Credit Losses for the additional disclosures. 61 Table of Contents Recently Issued Not Yet Effective Accounting Pronouncements: In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-03 “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. ASU 2022-03 is effective for the Corporation for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption is permitted. The Corporation is evaluating the effect that ASU 2022-03 will have on its consolidated financial statements and related disclosures. In March 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-02 “ Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This guidance is effective for public business entities for fiscal years including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted in any interim period. The Corporation is evaluating ASU 2023-02 and its effect on its consolidated financial statements and related disclosures. In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all periods presented in the financial statements. The Corporation is assessing ASU 2023-07 and its effect on its consolidated financial statements and related disclosures. In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” Among other things, these amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate.) The amendments also require that all entities disclose on an annual basis the following information about income taxes paid: (1) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and (2) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received.) This guidance is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis although retrospective application is permitted. The Corporation is assessing ASU 2023-09 and i ts effect on its consolidated financial statements and related disclosures . 62 Table of Contents 2. FAIR VALUES OF FINANCIAL INSTRUMENTS: Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) of identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The fair value of securities available-for-sale is determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For those securities that cannot be priced using quoted market prices or observable inputs, a Level 3 valuation is determined. These securities are primarily trust preferred securities, which are priced using Level 3 due to current market illiquidity, and state and municipal securities. The fair value of the trust preferred securities is obtained from a third party provider without adjustment. Management obtains values from other pricing sources to validate the Standard & Poors pricing that they currently utilizes. The fair value of state and municipal obligations are derived by comparing the securities to current market rates plus an appropriate credit spread to determine an estimated value. Illiquidity spreads are then considered. Credit reviews are performed on each of the issuers. The significant unobservable inputs used in the fair value measurement of the Corporation’s state and municipal obligations are credit spreads related to specific issuers. Significantly higher credit spread assumptions would result in significantly lower fair value measurement. Conversely, significantly lower credit spreads would result in a significantly higher fair value measurement. The fair value of derivatives is based on valuation models using observable market data as of the measurement date (Level 2 inputs). ​ 63 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Fair Value Measurements Using ​ ​ Significant Unobservable Inputs (Level 3) (Dollar amounts in thousands) Level 1 Level 2 Level 3 Total U.S. Government agencies ​ $ — ​ $ 91,440 ​ $ — ​ $ 91,440 Mortgage Backed Securities-residential ​ — ​ 569,885 ​ — ​ 569,885 Mortgage Backed Securities-commercial ​ — ​ 7,483 ​ — ​ 7,483 Collateralized mortgage obligations ​ — ​ 180,829 ​ — ​ 180,829 State and municipal ​ — ​ 369,631 ​ 1,180 ​ 370,811 Municipal taxable ​ — ​ 34,285 ​ — ​ 34,285 U.S. Treasury ​ — ​ 1,402 ​ — ​ 1,402 Collateralized debt obligations ​ — ​ — ​ 3,002 ​ 3,002 TOTAL ​ $ — ​ $ 1,254,955 ​ $ 4,182 ​ $ 1,259,137 Derivative Assets ​ ​ ​ ​ ​ 2,878 ​ ​ Derivative Liabilities ​ ​ ​ ​ ( 2,878 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Fair Value Measurements Using ​ ​ Significant Unobservable Inputs (Level 3) (Dollar amounts in thousands) Level 1 Level 2 Level 3 Total U.S. Government agencies ​ $ — ​ $ 98,473 ​ $ — ​ $ 98,473 Mortgage Backed Securities-residential ​ ​ — ​ ​ 620,248 ​ ​ — ​ ​ 620,248 Mortgage Backed Securities-commercial ​ — ​ 9,677 ​ — ​ 9,677 Collateralized mortgage obligations ​ — ​ 203,485 ​ — ​ 203,485 State and municipal ​ — ​ 358,608 ​ 1,545 ​ 360,153 Municipal taxable ​ — ​ 32,515 ​ — ​ 32,515 U.S. Treasury ​ — ​ 2,944 ​ — ​ 2,944 Collateralized debt obligations ​ — ​ — ​ 2,986 ​ 2,986 TOTAL ​ $ — ​ $ 1,325,950 ​ $ 4,531 ​ $ 1,330,481 Derivative Assets ​ ​ ​ ​ ​ 2,838 ​ ​ Derivative Liabilities ​ ​ ​ ​ ( 2,838 ) ​ ​ ​ There were no transfers between Level 1 and Level 2 during 2023 and 2022. ​ 64 Table of Contents The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the twelve months ended December 31, 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using Significant Unobservable Inputs (Level 3) ​ ​ Year Ended ​ ​ December 31, 2023 ​ State and ​ ​ ​ ​ ​ ​ municipal ​ Collateralized ​ ​ ​ (Dollar amounts in thousands) obligations debt obligations Total Beginning balance, January 1 ​ $ 1,545 ​ $ 2,986 ​ $ 4,531 Total realized/unrealized gains or losses ​ ​ ​ ​ ​ ​ Included in earnings ​ — ​ — ​ — Included in other comprehensive income ​ — ​ 16 ​ 16 Transfers ​ — ​ — ​ — Settlements ​ ( 365 ) ​ — ​ ( 365 ) Ending balance, December 31 ​ $ 1,180 ​ $ 3,002 ​ $ 4,182 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using Significant Unobservable Inputs (Level 3) ​ ​ Year Ended ​ ​ December 31, 2022 ​ ​ State and ​ ​ ​ ​ ​ ​ ​ ​ municipal ​ Collateralized ​ ​ ​ (Dollar amounts in thousands) obligations debt obligations ​ Total Beginning balance, January 1 ​ $ 1,895 ​ $ 3,359 ​ $ 5,254 Total realized/unrealized gains or losses ​ ​ ​ ​ Included in earnings ​ — ​ — ​ ​ — Included in other comprehensive income ​ — ​ ( 373 ) ​ ​ ( 373 ) Purchases ​ — ​ — ​ ​ — Settlements ​ ( 350 ) ​ — ​ ​ ( 350 ) Ending balance, December 31 ​ $ 1,545 ​ $ 2,986 ​ $ 4,531 ​ There were no unrealized gains and losses recorded in earnings for the years ended December 31, 2023, 2022 or 2021. Other real estate owned is valued at Level 3. Other real estate owned at December 31, 2023 with a value of $ 107 thousand was reduced by $ 57 thousand for fair value adjustment. At December 31, 2023 other real estate owned was comprised of $ 26 thousand from commercial loans and $ 81 thousand from residential loans. Other real estate owned at December 31, 2022 with a value of $ 337 thousand was reduced by $ 25 thousand for fair value adjustment. At December 31, 2022 other real estate owned was comprised of $ 39 thousand from commercial loans and $ 298 thousand from residential loans. Fair value for collateral dependent loans is measured based on the value of the collateral securing those loans, and is determined using several methods. Generally the fair value of real estate is determined based on appraisals by qualified licensed appraisers. Appraisals for real estate generally use three methods to derive value: cost, sales or market comparison and income approach. The cost method bases value on the cost to replace current property. The market comparison evaluates the sales price of similar properties in the same market area. The income approach considers net operating income generated by the property and the investor’s required return. The final fair value is based on a reconciliation of these three approaches. If an appraisal is not available, the fair value may be determined by using a cash flow analysis, a broker’s opinion of value, the net present value of future cash flows, or an observable market price from an active market. Fair value of other real estate is based upon the current appraised values of the properties as determined by qualified licensed appraisers and the Company’s judgment of other relevant market conditions. Appraisals are obtained annually and reductions in value are recorded as a valuation through a charge to expense. The primary unobservable input used by management in estimating fair value are additional discounts to the appraised value to consider market conditions and the age of the appraisal, which are based on management’s past experience in resolving these types of properties. These discounts range from 0 % to 100 % with an average discount of 36 %. Values for non-real estate collateral, such as business equipment, are based on appraisals performed by qualified licensed appraisers or the customers financial statements. Values for non real estate collateral use much higher discounts than real estate collateral. Other real estate and collateral dependent loans carried at fair value are primarily comprised of smaller balance properties. 65 Table of Contents The following tables present quantitative information about recurring and non-recurring Level 3 fair value measurements at December 31, 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) Fair Value Valuation Technique(s) Unobservable Input(s) Range State and municipal obligations ​ $ 1,180 Discounted cash flow Discount rate 4.04 %- 4.44 % Collateralized debt obligations ​ $ 3,002 Discounted cash flow Discount rate 7.36 % Collateral dependent loans ​ $ 11,306 Discounted cash flow Discount rate for age of appraisal and market conditions 0.00 %- 100.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) Fair Value Valuation Technique(s) Unobservable Input(s) Range State and municipal obligations ​ $ 1,545 Discounted cash flow Discount rate 3.73 %- 4.44 % Collateralized debt obligations ​ $ 2,986 Discounted cash flow Discount rate 5.34 % Collateral dependent loans ​ ​ 4,477 Discounted cash flow Discount rate for age of appraisal and market conditions 0.00 %- 50.00 % ​ The carrying amounts and estimated fair values of financial instruments are shown below. Carrying amount is the estimated fair value for cash and due from banks, federal funds sold, accrued interest receivable and payable, demand deposits, short-term and certain other borrowings, and variable-rate loans or deposits that reprice frequently and fully. Security fair values are determined as previously described. It is not practicable to determine the fair value of restricted stock due to restrictions placed on their transferability. For fixed-rate loans or deposits, variable rate loans or deposits with infrequent repricing or repricing limits, and for longer-term borrowings, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Loan fair value estimates represent an exit price for 2023 and 2022. Fair values for collateral dependent loans are estimated using discounted cash flow analysis or underlying collateral values. Fair value of debt is based on current rates for similar financing. The fair value of off-balance sheet items is not considered material. The carrying amount and estimated fair value of financial assets and liabilities are presented in the tables below and were determined based on the above assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Carrying ​ Fair Value (Dollar amounts in thousands) Value Level 1 Level 2 Level 3 Total Cash and due from banks ​ $ 76,759 ​ $ 25,467 ​ $ 51,292 ​ $ — ​ $ 76,759 Federal funds sold ​ ​ 282 ​ ​ — ​ ​ 282 ​ ​ — ​ ​ 282 Securities available-for-sale ​ 1,259,137 ​ — ​ 1,254,955 ​ 4,182 ​ 1,259,137 Restricted stock ​ 15,364 ​ n/a ​ n/a ​ n/a ​ n/a Loans, net ​ 3,128,054 ​ — ​ — ​ 3,025,621 ​ 3,025,621 Accrued interest receivable ​ 24,877 ​ — ​ 6,755 ​ 18,122 ​ 24,877 Deposits ​ ( 4,090,068 ) ​ — ​ ( 4,094,552 ) ​ — ​ ( 4,094,552 ) Short-term borrowings ​ ( 67,221 ) ​ — ​ ( 67,221 ) ​ — ​ ( 67,221 ) Other borrowings ​ ( 108,577 ) ​ — ​ ( 108,496 ) ​ — ​ ( 108,496 ) Accrued interest payable ​ ( 2,588 ) ​ — ​ ( 2,588 ) ​ — ​ ( 2,588 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Carrying ​ Fair Value (Dollar amounts in thousands) Value Level 1 Level 2 Level 3 Total Cash and due from banks ​ $ 222,517 ​ $ 29,400 ​ $ 193,117 ​ $ — ​ $ 222,517 Federal funds sold ​ ​ 9,374 ​ ​ — ​ ​ 9,374 ​ ​ — ​ ​ 9,374 Securities available-for-sale ​ 1,330,481 ​ — ​ 1,325,950 ​ 4,531 ​ 1,330,481 Restricted stock ​ 15,378 ​ n/a ​ n/a ​ n/a ​ n/a Loans, net ​ 3,027,659 ​ — ​ — ​ 2,930,680 ​ 2,930,680 Accrued interest receivable ​ 21,288 ​ — ​ 5,529 ​ 15,759 ​ 21,288 Deposits ​ ( 4,368,871 ) ​ — ​ ( 4,369,402 ) ​ — ​ ( 4,369,402 ) Short-term borrowings ​ ( 70,875 ) ​ — ​ ( 70,875 ) ​ — ​ ( 70,875 ) Other borrowings ​ ( 9,589 ) ​ — ​ ( 8,788 ) ​ — ​ ( 8,788 ) Accrued interest payable ​ ( 483 ) ​ — ​ ( 483 ) ​ — ​ ( 483 ) ​ 66 Table of Contents ​ 3. RESTRICTIONS ON CASH AND DUE FROM BANKS: Certain affiliate banks are required to maintain average reserve balances with the Federal Reserve Bank. The amount of those reserve balances was zero at December 31, 2023 and 2022. 4. SECURITIES: The fair value of securities available-for-sale and related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Amortized ​ Unrealized ​ Unrealized ​ ​ ​ (Dollar amounts in thousands) ​ Cost Gains Losses Fair Value U.S. Government agencies ​ $ 102,978 ​ $ 4 ​ $ ( 11,542 ) ​ $ 91,440 Mortgage Backed Securities - residential ​ ​ 653,507 ​ ​ 53 ​ ​ ( 83,675 ) ​ ​ 569,885 Mortgage Backed Securities - commercial ​ 7,919 ​ — ​ ( 436 ) ​ 7,483 Collateralized mortgage obligations ​ 209,398 ​ 6 ​ ( 28,575 ) ​ 180,829 State and municipal obligations ​ 397,413 ​ 1,407 ​ ( 28,009 ) ​ 370,811 Municipal taxable ​ 39,872 ​ 12 ​ ( 5,599 ) ​ 34,285 U.S. Treasury ​ 1,411 ​ — ​ ( 9 ) ​ 1,402 Collateralized debt obligations ​ — ​ 3,002 ​ — ​ 3,002 TOTAL ​ $ 1,412,498 ​ $ 4,484 ​ $ ( 157,845 ) ​ $ 1,259,137 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Amortized ​ Unrealized ​ Unrealized ​ ​ ​ (Dollar amounts in thousands) ​ Cost Gains Losses Fair Value U.S. Government agencies ​ $ 110,226 ​ $ 24 ​ $ ( 11,777 ) ​ $ 98,473 Mortgage Backed Securities-residential ​ ​ 711,131 ​ ​ 133 ​ ​ ( 91,016 ) ​ ​ 620,248 Mortgage Backed Securities-commercial ​ 10,103 ​ — ​ ( 426 ) ​ 9,677 Collateralized mortgage obligations ​ 228,344 ​ 60 ​ ( 24,919 ) ​ 203,485 State and municipal obligations ​ 396,522 ​ 745 ​ ( 37,114 ) ​ 360,153 Municipal taxable ​ 39,321 ​ 41 ​ ( 6,847 ) ​ 32,515 U.S. Treasury ​ 2,979 ​ — ​ ( 35 ) ​ 2,944 Collateralized debt obligations ​ — ​ 2,986 ​ — ​ 2,986 TOTAL ​ $ 1,498,626 ​ $ 3,989 ​ $ ( 172,134 ) ​ $ 1,330,481 ​ As of December 31, 2023, the Corporation does not have any securities from any issuer, other than the U.S. Government, with an aggregate book or fair value that exceeds ten percent of shareholders’ equity. Securities with a carrying value of approximately $ 992.1 million and $ 946.3 million at December 31, 2023 and 2022, respectively, were pledged as collateral for short-term borrowings and for other purposes. Below is a summary of the gross gains and losses realized by the Corporation on investment sales and calls during the years ended December 31, 2023, 2022 and 2021, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) ​ 2023 ​ 2022 ​ 2021 Proceeds ​ $ 330 ​ $ 1,565 ​ $ 12,886 Gross gains ​ 1 ​ 6 ​ 274 Gross losses ​ ( 2 ) ​ ( 3 ) ​ ( 160 ) ​ Gains of $ 1 thousand and losses of $ 2 thousand in 2023 and gains of $ 6 thousand and losses of $ 3 thousand in 2022 and gains of $ 274 thousand and losses of $ 160 thousand in 2021 resulted from redemption premiums on called and sold securities. 67 Table of Contents Contractual maturities of debt securities at year-end 2023 were as follows. Securities not due at a single maturity or with no maturity date, primarily mortgage-backed and collateralized mortgage obligations, are shown separately. ​ ​ ​ ​ ​ ​ ​ ​ ​ Available-for-Sale ​ ​ Amortized ​ Fair (Dollar amounts in thousands) Cost Value Due in one year or less ​ $ 10,464 ​ $ 10,346 Due after one but within five years ​ ​ 41,818 ​ ​ 40,271 Due after five but within ten years ​ 107,538 ​ 104,878 Due after ten years ​ 381,854 ​ 345,445 ​ ​ 541,674 ​ 500,940 Mortgage-backed securities and collateralized mortgage obligations ​ 870,824 ​ 758,197 TOTAL ​ $ 1,412,498 ​ $ 1,259,137 ​ The following tables show the securities’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position, at December 31, 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Less Than 12 Months More Than 12 Months Total ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized (Dollar amounts in thousands) ​ Fair Value Losses Fair Value Losses Fair Value Losses U.S. Government agencies ​ $ 3,757 ​ $ ( 73 ) ​ $ 87,291 ​ $ ( 11,469 ) ​ $ 91,048 ​ $ ( 11,542 ) Mortgage Backed Securities - Residential ​ 3,810 ​ ​ ( 41 ) ​ ​ 556,414 ​ ​ ( 83,634 ) ​ ​ 560,224 ​ ​ ( 83,675 ) Mortgage Backed Securities - Commercial ​ ​ — ​ ​ — ​ ​ 7,483 ​ ​ ( 436 ) ​ ​ 7,483 ​ ​ ( 436 ) Collateralized mortgage obligations ​ 12,981 ​ ( 303 ) ​ 164,871 ​ ( 28,272 ) ​ 177,852 ​ ( 28,575 ) State and municipal obligations ​ 45,154 ​ ​ ( 319 ) ​ ​ 212,022 ​ ​ ( 27,690 ) ​ ​ 257,176 ​ ​ ( 28,009 ) Municipal taxable ​ — ​ — ​ 31,958 ​ ( 5,599 ) ​ 31,958 ​ ( 5,599 ) U.S. Treasury ​ 1,402 ​ ( 9 ) ​ — ​ — ​ 1,402 ​ ( 9 ) Total temporarily impaired securities ​ $ 67,104 ​ $ ( 745 ) ​ $ 1,060,039 ​ $ ( 157,100 ) ​ $ 1,127,143 ​ $ ( 157,845 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Less Than 12 Months More Than 12 Months Total ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized (Dollar amounts in thousands) Fair Value Losses Fair Value Losses Fair Value Losses U.S. Government agencies ​ $ 58,462 ​ $ ( 4,034 ) ​ $ 38,959 ​ $ ( 7,743 ) ​ $ 97,421 ​ $ ( 11,777 ) Mortgage Backed Securities - Residential ​ ​ 234,488 ​ ( 19,757 ) ​ 379,520 ​ ( 71,259 ) ​ 614,008 ​ ( 91,016 ) Mortgage Backed Securities - Commercial ​ ​ 9,677 ​ ​ ( 426 ) ​ ​ — ​ ​ — ​ ​ 9,677 ​ ​ ( 426 ) Collateralized mortgage obligations ​ 135,135 ​ ( 11,331 ) ​ 63,792 ​ ( 13,588 ) ​ 198,927 ​ ( 24,919 ) State and municipal obligations ​ ​ 233,439 ​ ( 24,291 ) ​ 41,510 ​ ( 12,823 ) ​ 274,949 ​ ( 37,114 ) Municipal taxable ​ 18,637 ​ ( 3,706 ) ​ 12,837 ​ ( 3,141 ) ​ 31,474 ​ ( 6,847 ) U.S. Treasury ​ 2,944 ​ ( 35 ) ​ — ​ — ​ 2,944 ​ ( 35 ) Total temporarily impaired securities ​ $ 692,782 ​ $ ( 63,580 ) ​ $ 536,618 ​ $ ( 108,554 ) ​ $ 1,229,400 ​ $ ( 172,134 ) ​ The Corporation held 844 investment securities with an amortized cost greater than fair value as of December 31, 2023. The unrealized losses on collateralized mortgage obligations, all mortgage-backed securities and state and municipal obligations represent negative adjustments to fair value relative to the rate of interest paid on the securities and not losses related to the creditworthiness of the issuer. Gross unrealized losses on investment securities were $ 157.8 million as of December 31, 2023 and $ 172.1 million as of December 31, 2022. Management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery. Management believes the value will recover as the securities approach maturity or market rates change. Management evaluates securities for impairment related to credit losses at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for impairment related to credit losses by segregating the portfolio into two general segments. 68 Table of Contents In evaluating for impairment, management considers the reason for the decline, the extent of the decline, and whether the Corporation intends to sell a security or is more likely than not to be required to sell a security before recovery of its amortized cost. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the security’s amortized cost is written down to fair value through income. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. In prior years, a significant portion of the total unrealized losses relates to collateralized debt obligations that were separately evaluated under FASB ASC 325-40, Beneficial Interests in Securitized Financial Assets. Based upon qualitative considerations, such as a downgrade in credit rating or further defaults of underlying issuers during the year, and an analysis of expected cash flows, we determined that three CDOs included in collateralized debt obligations were other-than-temporarily impaired. One of the CDO’s was called in first quarter 2017. A second was called in second quarter 2018. The remaining CDO has a contractual balance of $ 3.7 million at December 31, 2023 which has been reduced to $ 3.0 million by $ 750 thousand of interest payments received, $ 3.0 million of cumulative credit loss charges recorded through earnings to date and increased by $ 3.0 million recorded in other comprehensive income. These securities are collateralized by trust preferred securities issued primarily by bank holding companies, but certain pools do include a limited number of insurance companies. The table below presents a rollforward of the credit losses recognized in earnings for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) ​ 2023 2022 ​ 2021 Beginning balance ​ $ 2,974 ​ $ 2,974 ​ $ 2,974 Reductions for securities called during the period ​ ​ — ​ — ​ — Ending balance ​ $ 2,974 ​ $ 2,974 ​ $ 2,974 ​ ​ 69 Table of Contents 5. LOANS: ​ Loans are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollar amounts in thousands) ​ 2023 2022 Commercial ​ $ 1,817,526 ​ $ 1,798,260 Residential ​ ​ 695,788 ​ ​ 673,464 Consumer ​ 646,758 ​ 588,539 Total gross loans ​ 3,160,072 ​ 3,060,263 Deferred costs, net ​ 7,749 ​ 7,175 Allowance for credit losses ​ ( 39,767 ) ​ ( 39,779 ) TOTAL ​ $ 3,128,054 ​ $ 3,027,659 ​ The Corporation periodically sells residential mortgage loans it originates based on the overall loan demand of the Corporation and the outstanding balances in the residential mortgage portfolio. At December 31, 2023 and 2022, loans held for sale were $ 2.5 million and $ 1.7 million, respectively, and are included in the totals above. In the normal course of business, the Corporation’s subsidiary bank makes loans to directors and executive officers and to their associates. In 2023, the aggregate dollar amount of these loans to directors and executive officers who held office amounted to $ 46.1 million at the beginning of the year. During 2023, advances of $ 46.7 million, and repayments of $ 48.1 million were made with respect to related party loans for an aggregate dollar amount outstanding of $ 44.7 million at December 31, 2023. Loans serviced for others, which are not reported as assets, total $ 462.6 million and $ 518.1 million at year-end 2023 and 2022. Custodial escrow balances maintained in connection with serviced loans were $ 2.1 million and $ 2.7 million at year-end 2023 and 2022. Activity for capitalized mortgage servicing rights (included in other assets) was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollar amounts in thousands) ​ 2023 2022 2021 Servicing rights: ​ ​ ​ ​ ​ ​ Beginning of year ​ $ 1,767 ​ $ 1,959 ​ $ 1,601 Additions ​ — ​ 489 ​ 1,094 Amortized to expense ​ ( 556 ) ​ ( 681 ) ​ ( 736 ) End of year ​ $ 1,211 ​ $ 1,767 ​ $ 1,959 ​ Third party valuations are conducted periodically for mortgage servicing rights. Based on these valuations, fair values were approximately $ 2.9 million and $ 3.3 million at year end 2023 and 2022. There was no valuation allowance in 2023 or 2022. Fair value for 2023 was determined using a discount rate of 12.5 %, prepayment speeds ranging from 100 % to 197 %, depending on the stratification of the specific right. Fair value at year end 2022 was determined using a discount rate of 12.5 %, prepayment speeds ranging from 113 % to 238 %, depending on the stratification of the specific right. Mortgage servicing rights are amortized over 8 years , the expected life of the sold loans. 6. ACQUISITIONS: On November 5, 2021, the Corporation completed its acquisition of Hancock Bancorp, Inc. and its banking subsidiary, Hancock Bank and Trust Company. Therefore, the results of Hancock Bancorp have been included in the results of operations beginning on November 5, 2021. Pursuant to the terms of the merger agreement, each issued and outstanding share of Hancock Bancorp, Inc. common stock, issued and outstanding, was converted into the right to receive $ 18.38 per share in cash. The aggregate value of the transaction was $ 31.36 million. Acquisition-related costs of $ 1.2 million are included in the Corporation’s income statement for the year ended December 31, 2021. 70 Table of Contents Goodwill of $ 8.4 million arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies. The goodwill is not deductible for income tax purposes as the transaction was accounted for as a tax-free exchange. The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Measurement ​ ​ ​ ​ ​ ​ As Initially ​ Period ​ ​ ​ ​ (Dollar amounts in thousands) Reported ​ Adjustments ​ As Adjusted ​ Consideration ​ ​ ​ ​ ​ ​ ​ Cash consideration ​ $ 31,358 ​ $ — ​ $ 31,358 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of total consideration transferred ​ $ 31,358 ​ $ — ​ $ 31,358 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets acquired ​ ​ ​ ​ Cash ​ $ 3,046 ​ $ 5,220 ​ $ 8,266 ​ Investment securities available-for-sale ​ 57,054 ​ ( 5,220 ) ​ 51,834 ​ Federal funds sold ​ 10,470 ​ — ​ 10,470 ​ Bank owned life insurance ​ 9,753 ​ — ​ 9,753 ​ Federal Home Loan Bank stock ​ 1,362 ​ — ​ 1,362 ​ Loans ​ 227,827 ​ — ​ 227,827 ​ Premises and equipment ​ 8,180 ​ — ​ 8,180 ​ Core deposit intangibles ​ 652 ​ — ​ 652 ​ Other assets ​ 4,567 ​ ( 850 ) ​ 3,717 ​ Total assets acquired ​ 322,911 ​ ( 850 ) ​ 322,061 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities assumed ​ ​ ​ ​ Deposits ​ 286,098 ​ — ​ 286,098 ​ FHLB advances ​ 11,042 ​ — ​ 11,042 ​ Other liabilities ​ 1,956 ​ — ​ 1,956 ​ Total liabilities assumed ​ 299,096 ​ — ​ 299,096 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net identifiable assets ​ 23,815 ​ ( 850 ) ​ 22,965 ​ Goodwill ​ $ 7,543 ​ $ 850 ​ $ 8,393 ​ ​ The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Corporation believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to guidance relating to purchase credit impaired loans, which have shown evidence of credit deterioration since origination. The following table presents supplemental pro forma information as if the acquisition had occurred at the beginning of 2020. The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, interest expense on deposits acquired, and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (Dollar amounts in thousands, except per share data) ​ 2021 ​ 2020 Net interest income ​ $ 150,806 ​ $ 156,051 Net income ​ $ 53,714 ​ $ 55,958 Basic and diluted earnings per share ​ $ 4.07 ​ $ 4.08 ​ The fair value of purchased financial assets with credit deterioration was $ 12.9 million on the date of acquisition. The gross contractual amounts receivable relating to the purchased financial assets with credit deterioration was $ 18.3 million. The Corporation estimates, on 71 Table of Contents the date of acquisition, that $ 4.4 million of the contractual cash flows specific to the purchased financial assets with credit deterioration will not be collected. 7. ALLOWANCE FOR CREDIT LOSSES: The following table presents the activity of the allowance for credit losses by portfolio segment for the years ended December 31, 2023, 2022 and 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for Credit Losses: ​ ​ ​ December 31, 2023 ​ ​ ​ (Dollar amounts in thousands) ​ Commercial ​ Residential ​ Consumer ​ Unallocated ​ Total Beginning balance ​ $ 12,949 ​ $ 14,568 ​ $ 12,104 ​ $ 158 ​ $ 39,779 Provision for credit losses ​ 198 ​ ( 317 ) ​ 7,193 ​ 221 ​ 7,295 Loans charged -off ​ ( 966 ) ​ ( 216 ) ​ ( 14,314 ) ​ — ​ ( 15,496 ) Recoveries ​ 1,083 ​ 292 ​ 6,814 ​ — ​ 8,189 Ending Balance ​ $ 13,264 ​ $ 14,327 ​ $ 11,797 ​ $ 379 ​ $ 39,767 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for Credit Losses: ​ ​ December 31, 2022 ​ (Dollar amounts in thousands) ​ Commercial ​ Residential ​ Consumer ​ Unallocated ​ Total Beginning balance ​ $ 18,883 ​ $ 18,316 ​ $ 10,721 ​ $ 385 ​ $ 48,305 Provision for credit losses ​ ( 4,079 ) ​ ( 3,850 ) ​ 6,131 ​ ( 227 ) ​ ( 2,025 ) Loans charged -off ​ ( 3,917 ) ​ ( 657 ) ​ ( 11,132 ) ​ — ​ ( 15,706 ) Recoveries ​ 2,062 ​ 759 ​ 6,384 ​ — ​ 9,205 Ending Balance ​ $ 12,949 ​ $ 14,568 ​ $ 12,104 ​ $ 158 ​ $ 39,779 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for Credit Losses: ​ ​ December 31, 2021 ​ (Dollar amounts in thousands) ​ Commercial ​ Residential ​ Consumer ​ Unallocated ​ Total Beginning balance ​ $ 13,925 ​ $ 19,142 ​ $ 11,009 ​ $ — ​ $ 44,076 PCD ACL on acquired loans ​ ​ 4,410 ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,410 Provision for credit losses ​ 1,637 ​ ( 630 ) ​ 1,074 ​ 385 ​ 2,466 Loans charged off ​ ( 2,158 ) ​ ( 812 ) ​ ( 5,246 ) ​ — ​ ( 8,216 ) Recoveries ​ 1,069 ​ 616 ​ 3,884 ​ — ​ 5,569 Ending Balance ​ $ 18,883 ​ $ 18,316 ​ $ 10,721 ​ $ 385 ​ $ 48,305 ​ ​ 72 Table of Contents The following tables present the recorded investment in nonperforming loans by class of loans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Loans Past ​ ​ ​ ​ Nonaccrual ​ ​ Due Over ​ ​ ​ ​ With No ​ ​ 90 Days Still ​ ​ ​ ​ Allowance (Dollar amounts in thousands) ​ Accruing ​ Nonaccrual ​ For Credit Loss Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & Industrial ​ $ 5 ​ $ 13,971 ​ $ 860 Farmland ​ — ​ 1,221 ​ 1,201 Non Farm, Non Residential ​ — ​ 995 ​ 1,011 Agriculture ​ — ​ 1,147 ​ 1,103 All Other Commercial ​ — ​ 1,046 ​ 1,027 Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ First Liens ​ 620 ​ 960 ​ — Home Equity ​ 32 ​ 68 ​ — Junior Liens ​ 239 ​ 67 ​ — Multifamily ​ 47 ​ 543 ​ 373 All Other Residential ​ — ​ 427 ​ — Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ Motor Vehicle ​ 45 ​ 2,933 ​ — All Other Consumer ​ — ​ 218 ​ — TOTAL ​ $ 988 ​ $ 23,596 ​ $ 5,575 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Loans Past ​ ​ ​ ​ Nonaccrual ​ ​ Due Over ​ ​ ​ ​ With No ​ ​ 90 Days Still ​ ​ ​ ​ Allowance (Dollar amounts in thousands) ​ Accruing ​ Nonaccrual ​ For Credit Loss Commercial ​ ​ ​ Commercial & Industrial ​ $ 114 ​ $ 2,137 ​ $ 254 Farmland ​ — ​ 461 ​ — Non Farm, Non Residential ​ — ​ 2,064 ​ 2,052 Agriculture ​ — ​ 186 ​ 155 All Other Commercial ​ — ​ 26 ​ — Residential ​ ​ ​ First Liens ​ 666 ​ 1,380 ​ — Home Equity ​ 180 ​ 133 ​ — Junior Liens ​ 197 ​ 256 ​ — Multifamily ​ — ​ 1,468 ​ — All Other Residential ​ — ​ 478 ​ — Consumer ​ ​ ​ Motor Vehicle ​ — ​ 2,549 ​ — All Other Consumer ​ — ​ 416 ​ — TOTAL ​ $ 1,157 ​ $ 11,554 ​ $ 2,461 ​ ​ 73 Table of Contents Loan Modifications Made to Borrowers Experiencing Financial Difficulty: ​ Modification of the terms of such loans typically include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. ​ The following table presents the amortized cost of loans and leases at December 31, 2023 that were both experiencing financial difficulty and modified during the twelve months ended December 31, 2023, by class and by type of modification. The percentage of the amortized cost of loans and leases that were modified to borrowers in financial distress as compared to the amortized cost of each class of financial receivable is also presented below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Combination ​ ​ Combination ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Term ​ ​ Term ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Extension and ​ ​ Extension ​ ​ Class of ​ ​ ​ Principal ​ Payment ​ Term ​ Interest Rate ​ Principal ​ Interest Rate ​ Financing ​ (Dollar amounts in thousands) Forgiveness Delay Extension Reduction Forgiveness ​ Reduction Receivable Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Liens ​ $ — ​ $ — ​ $ — ​ $ 138 ​ $ — ​ $ 25 ​ 0.05 % Junior Liens ​ — ​ — ​ 29 ​ — ​ — ​ — ​ 0.05 % Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Motor Vehicle ​ 5 ​ — ​ 205 ​ — ​ 129 ​ 107 ​ 0.07 % TOTAL ​ $ 5 ​ $ — ​ $ 234 ​ $ 138 ​ $ 129 ​ $ 132 ​ ​ 0.00 % ​ The Company closely monitors the performance of loans and leases that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. All loans and leases that have been modified during the twelve months ended December 31, 2023 are in a current status of repayment. ​ The following table presents the financial effect of loan and lease modifications presented above to borrowers experiencing financial difficulty for the twelve months ended Decemer 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ ​ Average ​ Average ​ ​ Principal ​ Interest Rate ​ Term (Dollar amounts in thousands) Forgiveness Reduction Extension Residential ​ ​ ​ ​ ​ ​ First Liens ​ $ — ​ 2.12 % 24 Junior Liens ​ — ​ — ​ 36 Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ Motor Vehicle ​ 45 ​ 2.20 % 24 TOTAL ​ $ 45 ​ ​ 2.15 % ​ 24 ​ There were no modified loans that had a payment default during the twelve months ended December 31, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. ​ Upon the Corporation’s determination that a modified loan has subsequently been deemed uncollectible, the loan is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. ​ 74 Table of Contents The following table presents the amortized cost basis of collateral dependent loans by class of loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Collateral Type (Dollar amounts in thousands) ​ Real Estate ​ Other Commercial ​ ​ Commercial & Industrial ​ $ 1,454 ​ $ 12,056 Farmland ​ 1,633 ​ — Non Farm, Non Residential ​ 3,919 ​ — Agriculture ​ 49 ​ 1,054 All Other Commercial ​ 1,027 ​ — Residential ​ ​ First Liens ​ 32 ​ — Home Equity ​ — ​ — Junior Liens ​ — ​ — Multifamily ​ 373 ​ — All Other Residential ​ 349 ​ — Consumer ​ ​ Motor Vehicle ​ — ​ — All Other Consumer ​ — ​ — Total ​ $ 8,836 ​ $ 13,110 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Collateral Type (Dollar amounts in thousands) Real Estate Other Commercial ​ ​ Commercial & Industrial ​ $ 4,613 ​ $ 1 Farmland ​ 3,289 ​ — Non Farm, Non Residential ​ 5,123 ​ — Agriculture ​ — ​ 155 All Other Commercial ​ — ​ — Residential ​ ​ First Liens ​ — ​ — Home Equity ​ — ​ — Junior Liens ​ — ​ — Multifamily ​ 895 ​ — All Other Residential ​ — ​ — Consumer ​ ​ ​ Motor Vehicle ​ — ​ — All Other Consumer ​ — ​ — Total ​ $ 13,920 ​ $ 156 ​ ​ 75 Table of Contents The following tables present the aging of the recorded investment in loans by past due category and class of loans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30-59 Days ​ 60-89 Days ​ and Greater ​ Total ​ ​ ​ ​ (Dollar amounts in thousands) Past Due Past Due Past Due Past Due Current Total Commercial ​ ​ ​ ​ ​ ​ Commercial & Industrial ​ $ 668 ​ $ 488 ​ $ 1,136 ​ $ 2,292 ​ $ 649,801 ​ $ 652,093 Farmland ​ 58 ​ — ​ 1,201 ​ 1,259 ​ 132,147 ​ 133,406 Non Farm, Non Residential ​ — ​ — ​ — ​ — ​ 439,009 ​ 439,009 Agriculture ​ — ​ — ​ 1,141 ​ 1,141 ​ 139,900 ​ 141,041 All Other Commercial ​ — ​ — ​ — ​ — ​ 464,776 ​ 464,776 Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Liens ​ 2,841 ​ 816 ​ 924 ​ 4,581 ​ 354,711 ​ 359,292 Home Equity ​ 360 ​ 188 ​ 71 ​ 619 ​ 65,191 ​ 65,810 Junior Liens ​ 462 ​ 124 ​ 262 ​ 848 ​ 57,985 ​ 58,833 Multifamily ​ 117 ​ 140 ​ 373 ​ 630 ​ 191,104 ​ 191,734 All Other Residential ​ 554 ​ — ​ 47 ​ 601 ​ 21,961 ​ 22,562 Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Motor Vehicle ​ 12,491 ​ 1,754 ​ 761 ​ 15,006 ​ 602,442 ​ 617,448 All Other Consumer ​ 397 ​ 102 ​ 13 ​ 512 ​ 31,857 ​ 32,369 TOTAL ​ $ 17,948 ​ $ 3,612 ​ $ 5,929 ​ $ 27,489 ​ $ 3,150,884 ​ $ 3,178,373 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30-59 Days ​ 60-89 Days ​ and Greater ​ Total ​ ​ ​ ​ (Dollar amounts in thousands) Past Due Past Due Past Due Past Due Current Total Commercial ​ ​ ​ ​ ​ ​ Commercial & Industrial ​ $ 1,698 ​ $ 529 ​ $ 726 ​ $ 2,953 ​ $ 674,569 ​ $ 677,522 Farmland ​ 112 ​ — ​ — ​ 112 ​ 127,498 ​ 127,610 Non Farm, Non Residential ​ 274 ​ 34 ​ — ​ 308 ​ 387,108 ​ 387,416 Agriculture ​ — ​ 1,231 ​ — ​ 1,231 ​ 136,451 ​ 137,682 All Other Commercial ​ 333 ​ — ​ 14 ​ 347 ​ 478,095 ​ 478,442 Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Liens ​ 4,528 ​ 1,203 ​ 1,054 ​ 6,785 ​ 341,131 ​ 347,916 Home Equity ​ 305 ​ 144 ​ 276 ​ 725 ​ 63,615 ​ 64,340 Junior Liens ​ 213 ​ 69 ​ 327 ​ 609 ​ 56,367 ​ 56,976 Multifamily ​ 317 ​ 83 ​ — ​ 400 ​ 180,305 ​ 180,705 All Other Residential ​ 1,115 ​ 350 ​ — ​ 1,465 ​ 24,058 ​ 25,523 Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Motor Vehicle ​ 15,151 ​ 1,930 ​ 985 ​ 18,066 ​ 539,651 ​ 557,717 All Other Consumer ​ 341 ​ 56 ​ 15 ​ 412 ​ 32,967 ​ 33,379 TOTAL ​ $ 24,387 ​ $ 5,629 ​ $ 3,397 ​ $ 33,413 ​ $ 3,041,815 ​ $ 3,075,228 ​ ​ 76 Table of Contents Credit Quality Indicators: The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial loans, with an outstanding balance greater than $ 100 thousand. Any consumer loans outstanding to a borrower who had commercial loans analyzed will be similarly risk rated. This analysis is performed on a quarterly basis. The Corporation uses the following definitions for risk ratings: Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard: Loans classified as substandard are inadequately protected by the current net worth and debt service capacity of the borrower or of any pledged collateral. These loans have a well-defined weakness or weaknesses which have clearly jeopardized repayment of principal and interest as originally intended. They are characterized by the distinct possibility that the institution will sustain some future loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those graded substandard, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Furthermore, non-homogeneous loans which were not individually analyzed, but are 90+ days past due or on non-accrual are classified as substandard. Loans included in homogeneous pools, such as residential or consumer, may be classified as substandard due to 90+ days delinquency, non-accrual status, bankruptcy, or loan restructuring. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either less than $ 100 thousand or are included in groups of homogeneous loans. ​ 77 Table of Contents The following tables present the commercial loan portfolio by risk category. These balances do not include accrued interest: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ Term Loans at Amortized Cost Basis by Origination Year ​ Revolving ​ ​ ​ ​ ​ 2023 2022 2021 2020 2019 Prior Loans Total Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and Industrial Pass ​ $ 80,873 ​ $ 131,522 ​ $ 112,811 ​ $ 47,445 ​ $ 44,257 ​ $ 100,872 ​ $ 81,551 ​ $ 599,331 ​ Special Mention ​ 6 ​ 221 ​ 10,025 ​ 3,442 ​ 323 ​ 866 ​ 2,715 ​ $ 17,598 ​ Substandard ​ 3,620 ​ 4,734 ​ 1,842 ​ 981 ​ 1,789 ​ 5,354 ​ 7,932 ​ $ 26,252 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ 3,476 ​ 1,352 ​ 847 ​ 431 ​ 144 ​ 93 ​ — ​ $ 6,343 ​ Subtotal ​ $ 87,975 ​ $ 137,829 ​ $ 125,525 ​ $ 52,299 ​ $ 46,513 ​ $ 107,185 ​ $ 92,198 ​ $ 649,524 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ 8 ​ $ 72 ​ $ 40 ​ $ 78 ​ $ 24 ​ $ 49 ​ $ - ​ $ 271 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Farmland Pass ​ $ 21,232 ​ $ 16,025 ​ $ 20,794 ​ $ 8,310 ​ $ 8,790 ​ $ 52,357 ​ $ 287 ​ $ 127,795 ​ Special Mention ​ — ​ — ​ 4 ​ — ​ 363 ​ 710 ​ — ​ $ 1,077 ​ Substandard ​ — ​ — ​ — ​ 41 ​ 309 ​ 1,370 ​ — ​ $ 1,720 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ — ​ — ​ — ​ — ​ 14 ​ — ​ $ 14 ​ Subtotal ​ $ 21,232 ​ $ 16,025 ​ $ 20,798 ​ $ 8,351 ​ $ 9,462 ​ $ 54,451 ​ $ 287 ​ $ 130,606 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non Farm, Non Residential Pass ​ $ 73,740 ​ $ 123,319 ​ $ 69,477 ​ $ 23,965 ​ $ 22,550 ​ $ 106,752 ​ $ 7,606 ​ $ 427,409 ​ Special Mention ​ — ​ 732 ​ 995 ​ — ​ 845 ​ — ​ — ​ $ 2,572 ​ Substandard ​ 102 ​ — ​ — ​ — ​ 479 ​ 6,356 ​ — ​ $ 6,937 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ — ​ — ​ 678 ​ — ​ 65 ​ — ​ $ 743 ​ Subtotal ​ $ 73,842 ​ $ 124,051 ​ $ 70,472 ​ $ 24,643 ​ $ 23,874 ​ $ 113,173 ​ $ 7,606 ​ $ 437,661 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agriculture Pass ​ $ 10,764 ​ $ 11,299 ​ $ 6,614 ​ $ 6,118 ​ $ 7,443 ​ $ 25,678 ​ $ 64,476 ​ $ 132,392 ​ Special Mention ​ — ​ 86 ​ — ​ 8 ​ — ​ 605 ​ 3,618 ​ $ 4,317 ​ Substandard ​ — ​ 55 ​ — ​ — ​ 50 ​ 1,067 ​ — ​ $ 1,172 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ 51 ​ 31 ​ 35 ​ 24 ​ — ​ — ​ $ 141 ​ Subtotal ​ $ 10,764 ​ $ 11,491 ​ $ 6,645 ​ $ 6,161 ​ $ 7,517 ​ $ 27,350 ​ $ 68,094 ​ $ 138,022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Commercial Pass ​ $ 27,401 ​ $ 105,046 ​ $ 104,307 ​ $ 94,029 ​ $ 4,774 ​ $ 112,159 ​ $ 9,177 ​ $ 456,893 ​ Special Mention ​ — ​ — ​ — ​ 2,478 ​ — ​ 830 ​ — ​ $ 3,308 ​ Substandard ​ — ​ 1,027 ​ 16 ​ — ​ — ​ — ​ — ​ $ 1,043 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ 12 ​ — ​ — ​ — ​ 457 ​ — ​ $ 469 ​ Subtotal ​ $ 27,401 ​ $ 106,085 ​ $ 104,323 ​ $ 96,507 ​ $ 4,774 ​ $ 113,446 ​ $ 9,177 ​ $ 461,713 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ 675 ​ $ - ​ $ - ​ $ - ​ $ 20 ​ $ - ​ $ - ​ $ 695 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ Multifamily >5 Residential Pass ​ $ 34,551 ​ $ 62,845 ​ $ 32,273 ​ $ 22,590 ​ $ 6,397 ​ $ 23,215 ​ $ 382 ​ $ 182,253 ​ Special Mention ​ — ​ — ​ — ​ 357 ​ — ​ 6,571 ​ — ​ $ 6,928 ​ Substandard ​ — ​ — ​ — ​ — ​ — ​ 373 ​ — ​ $ 373 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ — ​ 1,102 ​ — ​ — ​ 251 ​ — ​ $ 1,353 ​ Subtotal ​ $ 34,551 ​ $ 62,845 ​ $ 33,375 ​ $ 22,947 ​ $ 6,397 ​ $ 30,410 ​ $ 382 ​ $ 190,907 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Pass ​ $ 248,561 ​ $ 450,056 ​ $ 346,276 ​ $ 202,457 ​ $ 94,211 ​ $ 421,033 ​ $ 163,479 ​ $ 1,926,073 ​ Special Mention ​ 6 ​ 1,039 ​ 11,024 ​ 6,285 ​ 1,531 ​ 9,582 ​ 6,333 ​ $ 35,800 ​ Substandard ​ 3,722 ​ 5,816 ​ 1,858 ​ 1,022 ​ 2,627 ​ 14,520 ​ 7,932 ​ $ 37,497 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ 3,476 ​ 1,415 ​ 1,980 ​ 1,144 ​ 168 ​ 880 ​ — ​ $ 9,063 ​ ​ ​ $ 255,765 ​ $ 458,326 ​ $ 361,138 ​ $ 210,908 ​ $ 98,537 ​ $ 446,015 ​ $ 177,744 ​ $ 2,008,433 ​ 78 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ Term Loans at Amortized Cost Basis by Origination Year ​ Revolving ​ ​ ​ ​ ​ 2022 2021 2020 2019 2018 Prior Loans Total Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and Industrial Pass ​ $ 163,479 ​ $ 128,012 ​ $ 56,830 ​ $ 54,208 ​ $ 26,514 ​ $ 99,522 ​ $ 92,110 ​ $ 620,675 ​ Special Mention ​ 2,071 ​ 9,738 ​ 3,434 ​ 2,572 ​ 2,061 ​ 1,848 ​ 453 ​ $ 22,177 ​ Substandard ​ 423 ​ 723 ​ 1,861 ​ 954 ​ 3,169 ​ 6,264 ​ 9,103 ​ $ 22,497 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ 7,041 ​ 1,408 ​ 822 ​ 469 ​ 149 ​ 85 ​ — ​ $ 9,974 ​ Subtotal ​ $ 173,014 ​ $ 139,881 ​ $ 62,947 ​ $ 58,203 ​ $ 31,893 ​ $ 107,719 ​ $ 101,666 ​ $ 675,323 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Farmland Pass ​ $ 16,261 ​ $ 22,530 ​ $ 9,244 ​ $ 9,438 ​ $ 10,352 ​ $ 48,847 ​ $ 340 ​ $ 117,012 ​ Special Mention ​ — ​ — ​ 1,164 ​ 882 ​ — ​ 2,930 ​ — ​ $ 4,976 ​ Substandard ​ — ​ — ​ 456 ​ 608 ​ 337 ​ 1,969 ​ — ​ $ 3,370 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ — ​ — ​ — ​ — ​ 17 ​ — ​ $ 17 ​ Subtotal ​ $ 16,261 ​ $ 22,530 ​ $ 10,864 ​ $ 10,928 ​ $ 10,689 ​ $ 53,763 ​ $ 340 ​ $ 125,375 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non Farm, Non Residential Pass ​ $ 102,629 ​ $ 75,011 ​ $ 33,214 ​ $ 19,596 ​ $ 31,438 ​ $ 111,586 ​ $ 2,975 ​ $ 376,449 ​ Special Mention ​ 99 ​ 1,035 ​ — ​ 921 ​ — ​ 279 ​ — ​ $ 2,334 ​ Substandard ​ — ​ — ​ — ​ 513 ​ — ​ 6,281 ​ — ​ $ 6,794 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ — ​ 696 ​ — ​ — ​ 269 ​ — ​ $ 965 ​ Subtotal ​ $ 102,728 ​ $ 76,046 ​ $ 33,910 ​ $ 21,030 ​ $ 31,438 ​ $ 118,415 ​ $ 2,975 ​ $ 386,542 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agriculture Pass ​ $ 13,085 ​ $ 9,028 ​ $ 8,015 ​ $ 8,422 ​ $ 1,987 ​ $ 26,729 ​ $ 62,397 ​ $ 129,663 ​ Special Mention ​ 89 ​ — ​ 10 ​ 3 ​ — ​ 709 ​ 2,519 ​ $ 3,330 ​ Substandard ​ — ​ — ​ — ​ 224 ​ 1,201 ​ 56 ​ 762 ​ $ 2,243 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ 71 ​ 39 ​ 68 ​ 61 ​ 25 ​ — ​ — ​ $ 264 ​ Subtotal ​ $ 13,245 ​ $ 9,067 ​ $ 8,093 ​ $ 8,710 ​ $ 3,213 ​ $ 27,494 ​ $ 65,678 ​ $ 135,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Commercial Pass ​ $ 143,941 ​ $ 91,615 ​ $ 90,845 ​ $ 19,259 ​ $ 29,143 ​ $ 82,535 ​ $ 5,602 ​ $ 462,940 ​ Special Mention ​ 23 ​ — ​ — ​ 10 ​ — ​ 11,911 ​ — ​ $ 11,944 ​ Substandard ​ — ​ 23 ​ — ​ — ​ — ​ 6 ​ — ​ $ 29 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ 16 ​ 82 ​ — ​ — ​ 29 ​ 480 ​ — ​ $ 607 ​ Subtotal ​ $ 143,980 ​ $ 91,720 ​ $ 90,845 ​ $ 19,269 ​ $ 29,172 ​ $ 94,932 ​ $ 5,602 ​ $ 475,520 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ Multifamily >5 Residential Pass ​ $ 50,424 ​ $ 33,415 ​ $ 46,740 ​ $ 6,734 ​ $ 4,969 ​ $ 27,353 ​ $ 96 ​ $ 169,731 ​ Special Mention ​ — ​ 533 ​ 372 ​ — ​ — ​ 6,795 ​ — ​ $ 7,700 ​ Substandard ​ — ​ — ​ — ​ — ​ — ​ 1,280 ​ — ​ $ 1,280 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ — ​ 1,124 ​ — ​ — ​ — ​ 263 ​ — ​ $ 1,387 ​ Subtotal ​ $ 50,424 ​ $ 35,072 ​ $ 47,112 ​ $ 6,734 ​ $ 4,969 ​ $ 35,691 ​ $ 96 ​ $ 180,098 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Pass ​ $ 489,819 ​ $ 359,611 ​ $ 244,888 ​ $ 117,657 ​ $ 104,403 ​ $ 396,572 ​ $ 163,520 ​ $ 1,876,470 ​ Special Mention ​ 2,282 ​ 11,306 ​ 4,980 ​ 4,388 ​ 2,061 ​ 24,472 ​ 2,972 ​ $ 52,461 ​ Substandard ​ 423 ​ 746 ​ 2,317 ​ 2,299 ​ 4,707 ​ 15,856 ​ 9,865 ​ $ 36,213 ​ Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ $ — ​ Not Rated ​ 7,128 ​ 2,653 ​ 1,586 ​ 530 ​ 203 ​ 1,114 ​ — ​ $ 13,214 ​ ​ ​ $ 499,652 ​ $ 374,316 ​ $ 253,771 ​ $ 124,874 ​ $ 111,374 ​ $ 438,014 ​ $ 176,357 ​ $ 1,978,358 ​ ​ 79 Table of Contents The Corporation evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and lease financing loans, based primarily on the aging status of the loan and payment activity. Accordingly, loans on non-accrual status, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be nonperforming for purposes of credit quality evaluation. The following table presents the other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming. These balances do not include accrued interest: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ Term Loans at Amortized Cost Basis by Origination Year ​ Revolving ​ ​ ​ ​ ​ 2023 2022 2021 2020 2019 Prior Loans Total Residential ​ ​ ​ ​ ​ ​ ​ ​ First Liens Performing ​ $ 49,146 ​ $ 70,952 ​ $ 65,232 ​ $ 36,751 ​ $ 15,185 ​ $ 118,087 ​ $ 1,066 ​ $ 356,419 ​ Non-performing ​ — ​ 121 ​ — ​ 65 ​ 57 ​ 1,504 ​ — ​ $ 1,747 ​ Subtotal ​ $ 49,146 ​ $ 71,073 ​ $ 65,232 ​ $ 36,816 ​ $ 15,242 ​ $ 119,591 ​ $ 1,066 ​ $ 358,166 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ 167 ​ $ - ​ $ 167 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Home Equity Performing ​ $ 61 ​ $ 68 ​ $ — ​ $ 7 ​ $ 378 ​ $ 866 ​ $ 64,102 ​ $ 65,482 ​ Non-performing ​ — ​ 22 ​ — ​ 17 ​ — ​ 60 ​ — ​ $ 99 ​ Subtotal ​ $ 61 ​ $ 90 ​ $ — ​ $ 24 ​ $ 378 ​ $ 926 ​ $ 64,102 ​ $ 65,581 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Junior Liens Performing ​ $ 15,050 ​ $ 15,431 ​ $ 8,248 ​ $ 5,557 ​ $ 4,280 ​ $ 8,094 ​ $ 1,698 ​ $ 58,358 ​ Non-performing ​ — ​ 53 ​ 45 ​ 104 ​ — ​ 103 ​ — ​ $ 305 ​ Subtotal ​ $ 15,050 ​ $ 15,484 ​ $ 8,293 ​ $ 5,661 ​ $ 4,280 ​ $ 8,197 ​ $ 1,698 ​ $ 58,663 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ 24 ​ $ 24 ​ $ - ​ $ 48 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Residential Performing ​ $ 6,432 ​ $ 9,477 ​ $ 3,100 ​ $ 421 ​ $ 641 ​ $ 1,511 ​ $ 415 ​ $ 21,997 ​ Non-performing ​ — ​ — ​ 46 ​ — ​ 390 ​ 38 ​ — ​ $ 474 ​ Subtotal ​ $ 6,432 ​ $ 9,477 ​ $ 3,146 ​ $ 421 ​ $ 1,031 ​ $ 1,549 ​ $ 415 ​ $ 22,471 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ 1 ​ $ - ​ $ 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ​ ​ ​ ​ ​ ​ Motor Vehicle Performing ​ $ 264,933 ​ $ 215,125 ​ $ 70,926 ​ $ 46,939 ​ $ 12,038 ​ $ 2,177 ​ $ — ​ $ 612,138 ​ Non-performing ​ 232 ​ 973 ​ 520 ​ 532 ​ 134 ​ 30 ​ — ​ $ 2,421 ​ Subtotal ​ $ 265,165 ​ $ 216,098 ​ $ 71,446 ​ $ 47,471 ​ $ 12,172 ​ $ 2,207 ​ $ — ​ $ 614,559 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ 841 ​ $ 7,722 ​ $ 3,101 ​ $ 1,448 ​ $ 499 ​ $ 174 ​ $ - ​ $ 13,785 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Consumer Performing ​ $ 12,561 ​ $ 6,895 ​ $ 3,778 ​ $ 2,189 ​ $ 659 ​ $ 692 ​ $ 5,203 ​ $ 31,977 ​ Non-performing ​ — ​ 20 ​ 145 ​ 39 ​ 17 ​ — ​ 1 ​ $ 222 ​ Subtotal ​ $ 12,561 ​ $ 6,915 ​ $ 3,923 ​ $ 2,228 ​ $ 676 ​ $ 692 ​ $ 5,204 ​ $ 32,199 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ 61 ​ $ 213 ​ $ 61 ​ $ 37 ​ $ 3 ​ $ 5 ​ $ 149 ​ $ 529 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Performing ​ $ 348,183 ​ $ 317,948 ​ $ 151,284 ​ $ 91,864 ​ $ 33,181 ​ $ 131,427 ​ $ 72,484 ​ $ 1,146,371 ​ Non-performing ​ 232 ​ 1,189 ​ 756 ​ 757 ​ 598 ​ 1,735 ​ 1 ​ $ 5,268 Total other loans ​ ​ $ 348,415 ​ $ 319,137 ​ $ 152,040 ​ $ 92,621 ​ $ 33,779 ​ $ 133,162 ​ $ 72,485 ​ $ 1,151,639 ​ 80 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ Term Loans at Amortized Cost Basis by Origination Year ​ Revolving ​ ​ ​ ​ ​ 2022 2021 2020 2019 2018 Prior Loans Total Residential ​ ​ ​ ​ ​ ​ ​ ​ First Liens Performing ​ $ 71,607 ​ $ 70,197 ​ $ 45,080 ​ $ 16,968 ​ $ 20,258 ​ $ 117,488 ​ $ 3,245 ​ $ 344,843 ​ Non-performing ​ 106 ​ — ​ — ​ 141 ​ 100 ​ 1,782 ​ — ​ $ 2,129 ​ Subtotal ​ $ 71,713 ​ $ 70,197 ​ $ 45,080 ​ $ 17,109 ​ $ 20,358 ​ $ 119,270 ​ $ 3,245 ​ $ 346,972 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Home Equity Performing ​ $ 1,995 ​ $ 943 ​ $ 8 ​ $ 115 ​ $ 55 ​ $ 820 ​ $ 59,875 ​ $ 63,811 ​ Non-performing ​ — ​ — ​ 78 ​ — ​ 14 ​ 40 ​ 176 ​ $ 308 ​ Subtotal ​ $ 1,995 ​ $ 943 ​ $ 86 ​ $ 115 ​ $ 69 ​ $ 860 ​ $ 60,051 ​ $ 64,119 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Junior Liens Performing ​ $ 19,074 ​ $ 10,485 ​ $ 7,507 ​ $ 5,830 ​ $ 5,366 ​ $ 6,195 ​ $ 1,928 ​ $ 56,385 ​ Non-performing ​ — ​ 4 ​ 77 ​ 90 ​ 139 ​ 141 ​ — ​ $ 451 ​ Subtotal ​ $ 19,074 ​ $ 10,489 ​ $ 7,584 ​ $ 5,920 ​ $ 5,505 ​ $ 6,336 ​ $ 1,928 ​ $ 56,836 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Residential Performing ​ $ 11,542 ​ $ 9,923 ​ $ 501 ​ $ 915 ​ $ 498 ​ $ 1,582 ​ $ — ​ $ 24,961 ​ Non-performing ​ — ​ — ​ — ​ 425 ​ 35 ​ 18 ​ — ​ $ 478 ​ Subtotal ​ $ 11,542 ​ $ 9,923 ​ $ 501 ​ $ 1,340 ​ $ 533 ​ $ 1,600 ​ $ — ​ $ 25,439 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ Motor Vehicle Performing ​ $ 306,565 ​ $ 118,362 ​ $ 88,144 ​ $ 29,004 ​ $ 8,652 ​ $ 2,230 ​ $ 6 ​ $ 552,963 ​ Non-performing ​ 813 ​ 739 ​ 437 ​ 237 ​ 66 ​ 47 ​ — ​ $ 2,339 ​ Subtotal ​ $ 307,378 ​ $ 119,101 ​ $ 88,581 ​ $ 29,241 ​ $ 8,718 ​ $ 2,277 ​ $ 6 ​ $ 555,302 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Consumer Performing ​ $ 13,426 ​ $ 7,914 ​ $ 4,109 ​ $ 1,302 ​ $ 429 ​ $ 819 ​ $ 4,819 ​ $ 32,818 ​ Non-performing ​ 18 ​ 247 ​ 89 ​ 39 ​ 12 ​ 12 ​ 2 ​ $ 419 ​ Subtotal ​ $ 13,444 ​ $ 8,161 ​ $ 4,198 ​ $ 1,341 ​ $ 441 ​ $ 831 ​ $ 4,821 ​ $ 33,237 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Performing ​ $ 424,209 ​ $ 217,824 ​ $ 145,349 ​ $ 54,134 ​ $ 35,258 ​ $ 129,134 ​ $ 69,873 ​ $ 1,075,781 ​ Non-performing ​ 937 ​ 990 ​ 681 ​ 932 ​ 366 ​ 2,040 ​ 178 ​ $ 6,124 Total other loans ​ ​ $ 425,146 ​ $ 218,814 ​ $ 146,030 ​ $ 55,066 ​ $ 35,624 ​ $ 131,174 ​ $ 70,051 ​ $ 1,081,905 ​ ​ 8. PREMISES AND EQUIPMENT: Premises and equipment are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollar amounts in thousands) 2023 2022 Land ​ $ 17,379 ​ $ 17,888 Building and leasehold improvements ​ 68,166 ​ 70,310 Furniture and equipment ​ 52,201 ​ 46,669 ​ ​ 137,746 ​ 134,867 Less accumulated depreciation ​ ( 70,460 ) ​ ( 68,720 ) TOTAL ​ $ 67,286 ​ $ 66,147 ​ Aggregate depreciation expense was $ 5.4 million, $ 4.8 million and $ 4.6 million for 2023, 2022 and 2021, respectively. On October 31, 2022, First Financial Corporation issued a press release announcing plans to optimize its banking center network as part of a plan to improve operating efficiencies and accommodate changing customer preferences. On January 31, 2023, the Corporation closed and consolidated seven of its seventy-two branches. These consolidations are projected to save the Corporation approximately $ 1.5 million per year in operating expenses, commencing in the first quarter of 2023. The Corporation recognized an impairment of $ 1.3 million on the value of the land and buildings on the owned buildings at these branches. One branch was leased, and no loss was recognized on the terminated lease. 81 Table of Contents The Company leases certain branch properties and equipment under operating leases. Rent expense was $ 1.2 million, $ 1.2 million, and $ 1.4 million for 2023, 2022, and 2021. Rent commitments, before considering renewal options that generally are present, were as follows: ​ ​ ​ ​ ​ 2024 $ 890 2025 ​ 865 2026 ​ 798 2027 ​ 773 2028 ​ 663 Thereafter ​ 2,205 ​ ​ $ 6,194 ​ See Note 19 for additional discussion on leases. ​ 9. GOODWILL AND INTANGIBLE ASSETS: The Corporation completed its annual impairment testing of goodwill during the fourth quarter of 2023 and 2022. Management does not believe any amount of goodwill is impaired. Goodwill was as follows at year-end: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Beginning of year ​ $ 86,985 ​ $ 86,135 ​ $ 78,592 Acquired goodwill ​ — ​ 850 ​ 7,543 Impairment ​ — ​ — ​ — End of year ​ $ 86,985 ​ $ 86,985 ​ $ 86,135 ​ Goodwill related to the acquisition of Hancock Bancorp, Inc. was increased by $ 850 thousand in 2022 due to adjustments to deferred tax assets related to the filing of the final Hancock Bancorp, Inc. tax return. ​ Intangible assets subject to amortization at December 31, 2023 and 2022 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ Gross ​ Accumulated ​ Gross ​ Accumulated (Dollar amounts in thousands) ​ Amount ​ Amortization ​ Amount ​ Amortization Core deposit intangible ​ $ 21,857 ​ $ 16,271 ​ $ 21,857 ​ $ 15,143 ​ ​ $ 21,857 ​ $ 16,271 ​ $ 21,857 ​ $ 15,143 ​ Aggregate amortization expense was $ 1.1 million, $ 1.3 million and $ 1.6 million for 2023, 2022 and 2021, respectively. Estimated amortization expense for the next five years is as follows: ​ ​ ​ ​ ​ ​ In thousands 2024 ​ $ 888 2025 ​ 786 2026 ​ 679 2027 ​ 590 2028 ​ 1,139 ​ ​ 82 Table of Contents 10. DEPOSITS: Time deposits that meet or exceed the FDIC Insurance limit of $250,000 at year-end 2023 and 2022 were $ 92.9 million and $ 50.6 million. ​ Scheduled maturities of time deposits for the next five years are as follows: ​ ​ ​ ​ ​ ​ (dollar amounts in thousands) 2024 ​ $ 452,606 2025 ​ ​ 28,776 2026 ​ 17,226 2027 ​ 11,196 2028 ​ 6,070 ​ ​ 11. SHORT-TERM BORROWINGS: A summary of the carrying value of the Corporation’s short-term borrowings at December 31, 2023 and 2022 is presented below: ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) ​ 2023 2022 Federal Funds Purchased ​ $ 27,300 ​ $ 3,000 Repurchase Agreements ​ 39,921 ​ 67,875 ​ ​ $ 67,221 ​ $ 70,875 ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 Average amount outstanding ​ $ 116,993 ​ $ 84,004 ​ Maximum amount outstanding at a month end ​ 169,816 ​ 96,728 ​ Average interest rate during year ​ 4.59 % 1.48 % Interest rate at year-end ​ 2.76 % 0.27 % ​ Federal funds purchased are generally due in one day and bear interest at market rates. The Corporation enters into sales of securities under agreements to repurchase. The amounts received under these agreements represent short-term borrowings and are reflected as a liability in the consolidated balance sheets. The securities underlying these agreements are included in investment securities in the consolidated balance sheets. The Corporation has no control over the market value of the securities, which fluctuates due to market conditions. However, the Corporation is obligated to promptly transfer additional securities if the market value of the securities falls below the repurchase agreement price. The Corporation manages this risk by maintaining an unpledged securities portfolio that it believes is sufficient to cover a decline in the market value of the securities sold under agreements to repurchase. Securities are pledged to cover these liabilities, which are not covered by federal deposit insurance. The Corporation maintains possession of and control over these securities. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 Repurchase Agreements Remaining Contractual Maturity of the Agreements ​ ​ Overnight ​ ​ ​ ​ ​ ​ ​ Greater ​ ​ ​ ​ and Up to 30 30 - 90 than 90 ​ ​ (Dollar amounts in thousands) continuous days days days Total Mortgage Backed Securities - Residential and Collateralized Mortgage Obligations ​ $ 32,319 ​ $ 300 ​ $ 3,637 ​ $ 3,665 ​ $ 39,921 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Repurchase Agreements ​ Remaining Contractual Maturity of the Agreements ​ ​ Overnight ​ ​ ​ ​ ​ ​ ​ Greater ​ ​ ​ ​ ​ and ​ Up to 30 ​ 30 - 90 ​ than 90 ​ ​ ​ (Dollar amounts in thousands) continuous days days days Total Mortgage Backed Securities - Residential and Collateralized Mortgage Obligations ​ $ 63,335 ​ $ — ​ $ 4,175 ​ $ 365 ​ $ 67,875 ​ 83 Table of Contents ​ 12. OTHER BORROWINGS: Other borrowings at December 31, 2023 and 2022 are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 FHLB advances ​ $ 108,577 ​ $ 9,589 TOTAL ​ $ 108,577 ​ $ 9,589 ​ The aggregate minimum annual retirements of other borrowings are as follows: ​ ​ ​ ​ ​ 2024 $ 102,613 2025 ​ 5,964 2026 ​ — 2027 ​ — 2028 ​ — Thereafter ​ — ​ ​ $ 108,577 ​ At December 31, 2023 and 2022, other borrowings are summarized as follows: The Corporation’s subsidiary bank is a member of the Federal Home Loan Bank (FHLB) and accordingly is permitted to obtain advances. There are $ 108.6 million of advances from the FHLB at December 31, 2023, and $ 9.6 million of advances at December 31, 2022, which accrue interest, payable monthly, at annual rates, primarily fixed, varying from 0.68 % to 5.56 % in 2023 and 0.68 % to 1.70 % during the year in 2022. FHLB advances are, generally, due in full at maturity. They are secured by eligible securities totaling $ 64.1 million at December 31, 2023, and $ 40.3 million at December 31, 2022, and a blanket pledge on real estate loan collateral. Based on this collateral and the Corporation’s holdings of FHLB stock, the Corporation is eligible to borrow up to $ 297.7 million at year end 2023. Certain advances may be prepaid, without penalty, prior to maturity. The FHLB can adjust the interest rate from fixed to variable on certain advances, but those advances may then be prepaid, without penalty. 13. REVENUE FROM CONTRACTS WITH CUSTOMERS: All of the Corporation’s revenue from contracts with customers in the scope of ASC 606 is recognized within Non-Interest Income. The following table presents the Corporation’s sources of Non-Interest Income for the years ended December 31, 2023 and 2022. Items outside the scope of ASC 606 are noted as such. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, (Dollar amounts in thousands) ​ 2023 2022 Non-interest income ​ ​ ​ Service charges on deposits and debit card fee income ​ $ 28,079 ​ $ 27,540 Asset management fees ​ 5,155 ​ 5,155 Interchange income ​ 676 ​ 559 Net gains on sales of loans (a) ​ 966 ​ 1,994 Loan servicing fees (a) ​ 1,176 ​ 1,554 Net gains/(losses) on sales of securities (a) ​ ( 1 ) ​ 3 Other service charges and fees (a) ​ 801 ​ 665 Other (b) (c) 5,850 ​ 9,246 Total non-interest income ​ $ 42,702 ​ $ 46,716 (a) Not within the scope of ASC 606. (b) The Other category includes gains/(losses) on the sale of OREO for the years ended December 31, 2023 and December 31, 2022, totaling $( 63 ) thousand and $ 60 thousand, respectively, which is within the scope of ASC 606; the remaining balance is outside the scope of ASC 606. (c) Legal settlement totaling $ 4 million received in first quarter 2022. 84 Table of Contents Service charges on deposits and debit card fee income : The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Asset management fees : The Corporation earns asset management fees from its contracts with trust customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Corporation provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management at month-end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Other related services provided and the fees the Corporation earns, which are based on a fixed fee schedule, are recognized when the services are rendered. Interchange income : The Corporation earns interchange fees from debit and credit cardholder transactions conducted through the payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Gains/Losses on sales of OREO : The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Corporation finances the sale of OREO to the buyer, the Corporation assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Corporation adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. 14. INCOME TAXES: Income tax expense is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 2021 Federal: ​ ​ ​ Currently payable ​ $ 9,047 ​ $ 11,016 ​ $ 7,978 Deferred ​ 263 ​ 2,277 ​ 1,488 ​ ​ 9,310 ​ 13,293 ​ 9,466 State: ​ ​ ​ Currently payable ​ 2,302 ​ 2,485 ​ 3,080 Deferred ​ 209 ​ 873 ​ 80 ​ ​ 2,511 ​ 3,358 ​ 3,160 TOTAL ​ $ 11,821 ​ $ 16,651 ​ $ 12,626 ​ The reconciliation of income tax expense with the amount computed by applying the statutory federal income tax rate of 21 % to income before income taxes is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 2021 Federal income taxes computed at the statutory rate ​ $ 15,223 ​ $ 18,430 ​ $ 13,779 Add (deduct) tax effect of: ​ ​ ​ Tax exempt income ​ ( 3,548 ) ​ ( 3,439 ) ​ ( 2,745 ) ESOP dividend deduction ​ ( 107 ) ​ ( 103 ) ​ ( 101 ) State tax, net of federal benefit ​ 1,984 ​ 2,653 ​ 2,496 General business tax credits ​ ( 1,720 ) ​ ( 674 ) ​ ( 716 ) Other, net ​ ( 11 ) ​ ( 216 ) ​ ( 87 ) TOTAL ​ $ 11,821 ​ $ 16,651 ​ $ 12,626 ​ ​ 85 Table of Contents The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2023 and 2022, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 Deferred tax assets: ​ ​ Other than temporary impairment ​ $ 739 ​ $ 752 Net unrealized losses on retirement plans ​ 3,497 ​ 5,614 Net unrealized loss on available for sale securities ​ 35,358 ​ 39,242 Loan loss provisions ​ 9,772 ​ 10,054 Unfunded commitments ​ 528 ​ 537 Deferred compensation ​ 1,711 ​ 1,957 Compensated absences ​ 783 ​ 709 Post-retirement benefits ​ 1,218 ​ 1,051 Lease liability ​ 1,463 ​ 1,572 Purchase accounting ​ — ​ 114 Other ​ 3,808 ​ 3,018 GROSS DEFERRED ASSETS ​ 58,877 ​ 64,620 Deferred tax liabilities: ​ ​ Depreciation ​ ( 350 ) ​ ( 660 ) Mortgage servicing rights ​ ( 310 ) ​ ( 458 ) Pensions ​ ( 1,458 ) ​ ( 1,120 ) Right-of-use asset ​ ( 1,452 ) ​ ( 1,566 ) Intangibles ​ ( 6,318 ) ​ ( 6,093 ) FHLB stock dividends ​ — ​ ( 32 ) Purchase accounting ​ ( 157 ) ​ — Other ​ ( 4,732 ) ​ ( 4,118 ) GROSS DEFERRED LIABILITIES ​ ( 14,777 ) ​ ( 14,047 ) NET DEFERRED TAX ASSETS ​ $ 44,100 ​ $ 50,573 ​ Unrecognized Tax Benefits — A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 2021 Balance at January 1 ​ $ 858 ​ $ 808 ​ $ 867 Additions based on tax positions related to the current year ​ 74 ​ 59 ​ 9 Additions based on tax positions related to prior years ​ — ​ — ​ — Reductions due to the statute of limitations ​ ( 106 ) ​ ( 9 ) ​ ( 68 ) Balance at December 31 ​ $ 826 ​ $ 858 ​ $ 808 ​ Of this total, $ 826 thousand represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next 12 months. The total amount of interest and penalties recorded in the income statement for the years ended December 31, 2023, 2022 and 2021 was an expense increase of $ 18 thousand, an increase of $ 18 thousand, and an increase of $ 21 thousand, respectively. The amount accrued for interest and penalties at December 31, 2023, 2022 and 2021 was $ 121 thousand, $ 103 thousand and $ 85 thousand, respectively. The Corporation and its subsidiaries are subject to U.S. federal income tax as well as income tax of the states of Indiana, Illinois, Kentucky, Tennessee, and other states. The Corporation is no longer subject to examination by taxing authorities for years before 2020. 15. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Corporation is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include conditional commitments and commercial letters of credit. The financial instruments involve to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the financial 86 Table of Contents statements. The Corporation’s maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to make loans is limited generally by the contractual amount of those instruments. The Corporation follows the same credit policy to make such commitments as is followed for those loans recorded in the consolidated financial statements. Commitment and contingent liabilities are summarized as follows at December 31: ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 Home Equity ​ $ 88,198 ​ $ 91,218 Commercial Operating Lines ​ 538,945 ​ 616,399 Other Commitments ​ 102,352 ​ 112,410 TOTAL ​ $ 729,495 ​ $ 820,027 Commercial letters of credit ​ $ 7,456 ​ $ 7,834 ​ The majority of commercial operating lines and home equity lines are variable rate, while the majority of other commitments to fund loans are fixed rate. Fixed rate commitments had a range of interest rates from 6.50 % to 9.75 % in 2023. In 2022 this range of rates was from 5.45 % to 9.00 %. Since many commitments to make loans expire without being used, these amounts do not necessarily represent future cash commitments. Collateral obtained upon exercise of the commitment is determined using management’s credit evaluation of the borrower, and may include accounts receivable, inventory, property, land and other items. The approximate duration of these commitments is generally one year or less. Derivatives: The Corporation enters into derivative instruments for the benefit of its customers. At the inception of a derivative contract, the Corporation designates the derivative as an instrument with no hedging designation (“standalone derivative”). Changes in the fair value of derivatives are reported currently in earnings as non-interest income. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. First Financial Bank offers clients the ability on certain transactions to enter into interest rate swaps. Typically, these are pay fixed, receive floating swaps used in conjunction with commercial loans. These derivative contracts do not qualify for hedge accounting. The Bank hedges the exposure to these contracts by entering into offsetting contracts with substantially matching terms. The notional amount of these interest rate swaps was $ 60.1 million and $ 39.9 million at December 31, 2023 and 2022. The fair value of these contracts combined was zero, as gains offset losses. The gross losses associated with these interest rate swaps was $ 2.9 million and $ 2.8 million at December 31, 2023 and 2022. These balances are included in other assets and other liabilities. 16. RETIREMENT PLANS: Employees of the Corporation are covered by a retirement program that consists of a defined benefit plan and an employee stock ownership plan (ESOP). Plan assets consist primarily of the Corporation’s stock and obligations of U.S. Government agencies. Benefits under the defined benefit plan are actuarially determined based on an employee’s service and compensation, as defined, and funded as necessary. This plan was frozen for the majority of employees as of December 31, 2012.Those employees will be eligible to participate in a 401K plan that the Corporation can contribute a discretionary match of the pay contributed by the employee. In addition the ESOP plan will continue in place for all employees. Assets in the ESOP are considered in calculating the funding to the defined benefit plan required to provide such benefits. Any shortfall of benefits under the ESOP are to be provided by the defined benefit plan. The ESOP may provide benefits beyond those determined under the defined benefit plan. Contributions to the ESOP are determined by the Corporation’s Board of Directors. The Corporation made contributions to the defined benefit plan of zero, $ 126 thousand and $ 2.05 million in 2023, 2022 and 2021. The Corporation contributed $ 1.52 million, $ 1.45 million and $ 1.40 million to the ESOP in 2023, 2022 and 2021. There were contributions of $ 1.3 million, $ 1.1 million and $ 1.1 million to the ESOP for employees no longer participating in the defined benefit plan in 2023, 2022 and 2021 respectively. The Corporation uses a measurement date of December 31. 87 Table of Contents Net periodic benefit cost and other amounts recognized in other comprehensive income included the following components: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 2021 Service cost - benefits earned ​ $ 628 ​ $ 1,190 ​ $ 1,355 Interest cost on projected benefit obligation ​ 3,824 ​ 2,826 ​ 2,632 Expected return on plan assets ​ ( 3,879 ) ​ ( 4,910 ) ​ ( 4,713 ) Net amortization and deferral ​ 752 ​ 1,259 ​ 2,072 Net periodic pension cost ​ 1,325 ​ 365 ​ 1,346 Net loss (gain) during the period ​ ( 1,761 ) ​ ( 5,323 ) ​ ( 5,883 ) Amortization of prior service cost ​ — ​ — ​ ( 1 ) Amortization of unrecognized (gain) loss ​ ( 752 ) ​ ( 1,259 ) ​ ( 2,072 ) Total recognized in other comprehensive (income) loss ​ ( 2,513 ) ​ ( 6,582 ) ​ ( 7,956 ) Total recognized net periodic pension cost and other comprehensive income ​ $ ( 1,188 ) ​ $ ( 6,217 ) ​ $ ( 6,610 ) ​ The information below sets forth the change in projected benefit obligation, reconciliation of plan assets, and the funded status of the Corporation’s retirement program. Actuarial present value of benefits is based on service to date and present pay levels. ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 Change in benefit obligation: ​ ​ Benefit obligation at January 1 ​ $ 83,578 ​ $ 106,496 Service cost ​ 628 ​ 1,190 Interest cost ​ 3,824 ​ 2,826 Actuarial (gain) loss ​ 788 ​ ( 21,350 ) Benefits paid ​ ( 4,295 ) ​ ( 5,584 ) Benefit obligation at December 31 ​ 84,523 ​ 83,578 Reconciliation of fair value of plan assets: ​ ​ Fair value of plan assets at January 1 ​ 71,734 ​ 87,979 Actual return on plan assets ​ 6,429 ​ ( 11,117 ) Employer contributions ​ 249 ​ 456 Benefits paid ​ ( 4,295 ) ​ ( 5,584 ) Fair value of plan assets at December 31 ​ 74,117 ​ 71,734 Funded status at December 31 (plan assets less benefit obligation) ​ $ ( 10,406 ) ​ $ ( 11,844 ) ​ Amounts recognized in accumulated other comprehensive income at December 31, 2023 and 2022 consist of: ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 Net loss (gain) ​ $ 11,956 ​ $ 14,469 Prior service cost (credit) ​ — ​ — ​ ​ $ 11,956 ​ $ 14,469 ​ The accumulated benefit obligation for the defined benefit pension plan was $ 81.8 million and $ 81.5 million at year-end 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ Principal assumptions used to determine pension benefit obligation at year end: 2023 2022 Discount rate 4.83 % 5.02 % Rate of increase in compensation levels 3.00 3.00 ​ ​ ​ ​ ​ ​ ​ ​ Principal assumptions used to determine net periodic pension cost: 2023 2022 Discount rate 5.02 % 2.83 % Rate of increase in compensation levels 3.00 3.00 ​ Expected long-term rate of return on plan assets 6.00 6.00 ​ ​ The expected long-term rate of return was estimated using market benchmarks for equities and bonds applied to the plan’s target asset allocation. Management estimated the rate by which plan assets would perform based on historical experience as adjusted for changes in asset allocations and expectations for future return on equities as compared to past periods. 88 Table of Contents Plan Assets — The Corporation’s pension plan weighted-average asset allocation for the years 2023 and 2022 by asset category are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension Plan ESOP Pension ​ ESOP ​ ​ Target ​ Target ​ Percentage of Plan ​ Percentage of Plan ​ ​ Allocation ​ Allocation ​ Assets at December 31, ​ Assets at December 31, ASSET CATEGORY 2023 2023 2023 2022 2023 2022 Equity securities 25 - 75 % 95 - 99 % 64 % 63 % 99 % 99 % Debt securities 0 - 50 % 0 - 0 % 34 % 34 % — % — % Other 0 - 20 % 0 - 5 % 2 % 3 % 1 % 1 % TOTAL ​ ​ ​ ​ 100 % 100 % 100 % 100 % ​ Fair Value of Plan Assets — Fair value is the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Corporation used the following methods and significant assumptions to estimate the fair value of each type of financial instrument: Equity, Debt, Investment Funds and Other Securities — The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The fair value of the plan assets at December 31, 2023 and 2022, by asset category, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at ​ ​ ​ ​ ​ December 31, 2023 Using: ​ ​ ​ ​ ​ Quoted Prices ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ in Active ​ Other ​ Significant ​ ​ ​ Markets for Observable Observable ​ ​ ​ ​ ​ Identical Assets ​ Inputs ​ Inputs (Dollar amounts in thousands) Total (Level 1) (Level 2) (Level 3) Plan assets ​ ​ ​ ​ ​ ​ ​ ​ Equity securities ​ $ 52,088 ​ $ 52,088 ​ $ — ​ $ — Debt securities ​ ​ 11,192 ​ ​ — ​ ​ 11,192 ​ ​ — Investment Funds ​ ​ 10,837 ​ ​ 10,837 ​ ​ — ​ ​ — Total plan assets ​ $ 74,117 ​ $ 62,925 ​ $ 11,192 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at ​ ​ ​ ​ ​ December 31, 2022 Using: ​ ​ ​ ​ ​ Quoted Prices ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ in Active ​ Other ​ Significant ​ ​ Markets for Observable Observable ​ ​ ​ ​ ​ Identical Assets ​ Inputs ​ Inputs (Dollar amounts in thousands) Total (Level 1) (Level 2) (Level 3) Plan assets ​ ​ ​ ​ ​ ​ ​ ​ Equity securities ​ $ 52,319 ​ $ 52,319 ​ $ — ​ $ — Debt securities ​ ​ 10,409 ​ ​ — ​ ​ 10,409 ​ ​ — Investment Funds ​ ​ 9,006 ​ ​ 9,006 ​ ​ — ​ ​ — Total plan assets ​ $ 71,734 ​ $ 61,325 ​ $ 10,409 ​ $ — ​ The investment objective for the retirement program is to maximize total return without exposure to undue risk. Asset allocation favors equities. This target includes the Corporation’s ESOP, which is fully invested in corporate stock. Other investment allocations include fixed income securities and cash. 89 Table of Contents The plan is prohibited from investing in the following: private placement equity and debt transactions; letter stock and uncovered options; short-sale margin transactions and other specialized investment activity; and fixed income or interest rate futures. All other investments not prohibited by the plan are permitted. Equity securities in the defined benefit plan include First Financial Corporation common stock in the amount of $ 16.3 million ( 22 percent of total plan assets) and $ 17.2 million ( 24 percent of total plan assets) at December 31, 2023 and 2022, respectively. In addition the ESOP for non plan participants holds an estimated $ 8.3 million and $ 7.8 million of First Financial Corporation stock at December 31, 2023 and December 31, 2022 respectively. Other equity securities are predominantly stocks in large cap U.S. companies. Contributions — The Corporation expects to contribute $ 3.9 million to its pension plan and $ 604 thousand to its ESOP in 2024. Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected: ​ ​ ​ ​ ​ PENSION BENEFITS (Dollar amounts in thousands) 2024 ​ $ 4,766 2025 ​ 4,917 2026 ​ 5,077 2027 ​ 5,201 2028 ​ 5,308 2029-2033 ​ 27,124 ​ Supplemental Executive Retirement Plan — The Corporation has established a Supplemental Executive Retirement Plan (SERP) for certain executive officers. The provisions of the SERP allow the Plan’s participants who are also participants in the Corporation’s defined benefit pension plan to receive supplemental retirement benefits to help recompense for benefits lost due to the imposition of IRS limitations on benefits under the Corporation’s tax qualified defined benefit pension plan. Expenses related to the plan were $ 517 thousand in 2023 and $ 751 thousand in 2022 and $ 748 thousand in 2021.The plan is unfunded and has a measurement date of December 31. The amounts recognized in other comprehensive income in the current year are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2023 2022 2021 Net loss (gain) during the period ​ $ ( 144 ) ​ $ ( 1,604 ) ​ $ 54 Amortization of prior service cost ​ — ​ — ​ — Amortization of unrecognized (gain) loss ​ ( 84 ) ​ ( 418 ) ​ ( 441 ) Total recognized in other comprehensive (income) loss ​ $ ( 228 ) ​ $ ( 2,022 ) ​ $ ( 387 ) ​ The Corporation has $ 7.8 million and $ 7.5 million recognized in the balance sheet as a liability at December 31, 2023 and 2022. Amounts n accumulated other comprehensive income consist of $ 926 thousand net loss at December 31, 2023 and $ 1.2 million net loss at December 31, 2022. Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected: ​ ​ ​ ​ ​ (Dollar amounts on thousands) 2024 $ — 2025 ​ 731 2026 ​ 763 2027 ​ 777 2028 ​ 750 2029-2033 ​ 3,426 ​ ​ 90 Table of Contents Post-retirement medical benefits — The Corporation also provides medical benefits to certain employees subsequent to their retirement. The Corporation uses a measurement date of December 31. Accrued post-retirement benefits as of December 31, 2023 and 2022 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollar amounts in thousands) 2023 2022 Change in benefit obligation: ​ ​ Benefit obligation at January 1 ​ $ 3,175 ​ $ 4,015 Service cost ​ 21 ​ 34 Interest cost ​ 153 ​ 111 Plan participants' contributions ​ 84 ​ 74 Actuarial (gain) ​ 34 ​ ( 758 ) Benefits paid ​ ( 277 ) ​ ( 301 ) Benefit obligation at December 31 ​ $ 3,190 ​ $ 3,175 Funded status at December 31 ​ $ 3,190 ​ $ 3,175 ​ Amounts recognized in accumulated other comprehensive income consist of a net gain of $ 459 thousand at December 31, 2023 and $ 546 thousand net gain at December 31, 2022. The post-retirement benefits paid in 2023 and 2022 of $ 277 thousand and $ 300 thousand, respectively, were fully funded by company and participant contributions. There is no estimated transition obligation for the post-retirement benefit plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year. Weighted average assumptions at December 31: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ 2022 Discount rate 4.83 % 5.02 % Initial weighted health care cost trend rate 5.00 % 5.00 % Ultimate health care cost trend rate 5.00 5.00 ​ Year that the rate is assumed to stabilize and remain unchanged 2024 2023 ​ ​ Post-retirement health benefit expense included the following components: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, (Dollar amounts in thousands) 2023 2022 2021 Service cost ​ $ 21 ​ $ 34 ​ $ 43 Interest cost ​ 153 ​ 111 ​ 103 Amortization of net actuarial loss (gain) ​ ( 53 ) ​ — ​ — Net periodic benefit cost ​ 121 ​ 145 ​ 146 Net loss (gain) during the period ​ 34 ​ ( 758 ) ​ ( 53 ) Amortization of prior service cost ​ 53 ​ — ​ — Total recognized in other comprehensive income (loss) ​ 87 ​ ( 758 ) ​ ( 53 ) Total recognized net periodic benefit cost and other comprehensive income ​ $ 208 ​ $ ( 613 ) ​ $ 93 ​ Contributions — The Corporation expects to contribute $ 249 thousand to its other post-retirement benefit plan in 2024. 91 Table of Contents Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected: ​ ​ ​ ​ ​ (Dollar amounts in thousands) 2024 ​ $ 249 2025 ​ 250 2026 ​ 247 2027 ​ 249 2028 ​ 250 2029-2033 ​ 1,205 ​ ​ 17. STOCK BASED COMPENSATION: On February 5, 2011, the Corporation’s Board of Directors adopted and approved the First Financial Corporation 2011 Omnibus Equity Incentive Plan (the “2011 Stock Incentive Plan”) effective upon the approval of the Plan by the Corporation’s shareholders, which occurred on April 20, 2011 at the Corporation’s annual meeting of shareholders. The 2011 Stock Incentive Plan provides for the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and incentive awards. An aggregate of 700,000 shares of common stock were reserved for issuance under the 2011 Stock Incentive Plan. A total of 267,826 shares of restricted common stock of the Corporation were granted under the 2011 Stock Incentive Plan. On April 21, 2021 at the Corporation’s annual meeting of shareholders, the shareholders approved the First Financial Corporation Amended and Restated 2011 Omnibus Equity Incentive Plan (“2011 Amended Plan”). An aggregate of 400,000 shares of common stock are reserved for issuance under the 2011 Amended Plan. Shares issuable under the 2011 Amended Plan may be authorized and unissued shares of common stock or treasury shares. During the first quarter of 2023 and 2022, the Compensation Committee of the Board of Directors of the Company granted restricted stock awards to certain executive officers pursuant to the Corporation’s annual performance-based stock incentive bonus plan. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at the grant date. The value of the awards was determined by dividing the award amount by the median price of a share of Company common stock on the grant dates. The restricted stock awards vest as follows — 33 % on the first anniversary, 33 % on the second anniversary and the remaining 34 % on the third anniversary of the earned date. The Corporation has the right to retain shares to satisfy any withholding tax obligation. A total of 22,228 shares and 18,679 shares of restricted common stock of the Corporation were granted under the 2011 Amended Plan in 2023 and 2022, respectively. A total of 337,934 remain to be granted under this plan. Restricted Stock Restricted stock awards require certain service-based or performance requirements and have a vesting period of 3 years . Compensation expense is recognized over the vesting period of the award based on the fair value of the stock at the date of issue. Compensation related to the plan was $ 895 thousand, $ 825 thousand, and $ 807 thousand in 2023, 2022 and 2021, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ 2022 ​ ​ ​ ​ Weighted Average ​ ​ ​ Weighted Average ​ ​ Number ​ Grant Date ​ Number ​ Grant Date (shares in thousands) Outstanding Fair Value Outstanding Fair Value Nonvested balance at January 1, 19,127 44.11 19,546 42.03 Granted during the year 22,228 45.07 18,679 45.35 Vested during the year ( 20,308 ) 44.08 ( 19,098 ) 43.19 Forfeited during the year — — — — Nonvested balance at December 31, 21,047 45.15 19,127 44.11 ​ As of December 31, 2023 and 2022, there was $ 950 thousand and $ 844 thousand, respectively of total unrecognized compensation cost related to non-vested shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of 1.5 years. The total fair value of the shares vested during the years ended December 31, 2023 and 2022 was $ 874 thousand and $ 880 thousand, respectively. 92 Table of Contents 18. OTHER COMPREHENSIVE INCOME (LOSS): The following table summarizes the changes, net of tax within each classification of accumulated other comprehensive income for the years ended December 31, 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ ​ ​ ​ ​ gains and ​ ​ ​ ​ ​ ​ ​ ​ (Losses) on available- ​ 2023 ​ ​ for-sale ​ Retirement ​ ​ ​ (Dollar amounts in thousands) Securities plans Total Beginning balance, January 1, ​ $ ( 128,896 ) ​ $ ( 11,078 ) ​ $ ( 139,974 ) Change in other comprehensive income (loss) before reclassification ​ 10,895 ​ 1,427 ​ 12,322 Amounts reclassified from accumulated other comprehensive income ​ 1 ​ 564 ​ 565 Net current period other comprehensive income (loss) ​ 10,896 ​ 1,991 ​ 12,887 Ending balance, December 31, ​ $ ( 118,000 ) ​ $ ( 9,087 ) ​ $ ( 127,087 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ ​ ​ ​ ​ gains and ​ ​ ​ ​ ​ ​ ​ ​ (Losses) on available- ​ 2022 ​ ​ for-sale ​ Retirement ​ ​ (Dollar amounts in thousands) Securities plans Total Beginning balance, January 1, ​ $ 15,674 ​ $ ( 18,100 ) ​ $ ( 2,426 ) Change in other comprehensive income (loss) before reclassification ​ ( 144,568 ) ​ 6,078 ​ ( 138,490 ) Amounts reclassified from accumulated other comprehensive income ​ ( 2 ) ​ 944 ​ 942 Net current period other comprehensive income (loss) ​ ( 144,570 ) ​ 7,022 ​ ( 137,548 ) Ending balance, December 31, ​ $ ( 128,896 ) ​ $ ( 11,078 ) ​ $ ( 139,974 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ Current Period ​ Balance at (Dollar amounts in thousands) 1/1/2023 Change 12/31/2023 Unrealized gains (losses) on securities available-for-sale without other than temporary impairment ​ $ ( 131,135 ) ​ $ 10,883 ​ $ ( 120,252 ) Unrealized gains (losses) on securities available-for-sale with other than temporary impairment ​ 2,239 ​ 13 ​ 2,252 Total unrealized gain (loss) on securities available-for-sale ​ $ ( 128,896 ) ​ $ 10,896 ​ $ ( 118,000 ) Unrealized gain (loss) on retirement plans ​ ( 11,078 ) ​ 1,991 ​ ( 9,087 ) TOTAL ​ $ ( 139,974 ) ​ $ 12,887 ​ $ ( 127,087 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ Current Period ​ Balance at (Dollar amounts in thousands) 1/1/2022 Change 12/31/2022 Unrealized gains (losses) on securities available-for-sale without other than temporary impairment ​ $ 13,155 ​ $ ( 144,290 ) ​ $ ( 131,135 ) Unrealized gains (losses) on securities available-for-sale with other than temporary impairment ​ 2,519 ​ ( 280 ) ​ 2,239 Total unrealized income (loss) on securities available-for-sale ​ $ 15,674 ​ $ ( 144,570 ) ​ $ ( 128,896 ) Unrealized gain (loss) on retirement plans ​ ( 18,100 ) ​ 7,022 ​ ( 11,078 ) TOTAL ​ $ ( 2,426 ) ​ $ ( 137,548 ) ​ $ ( 139,974 ) ​ 93 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 Details about accumulated ​ Amount reclassified from ​ Affected line item in other comprehensive ​ accumulated other ​ the statement where income components ​ comprehensive income net income is presented ​ ​ (in thousands) ​ ​ Unrealized gains and losses ​ $ ( 1 ) Net securities gains (losses) on available-for-sale ​ — Income tax expense securities ​ $ ( 1 ) Net of tax ​ ​ ​ ​ ​ ​ Amortization of ​ $ ( 752 ) (a) Salary and benefits retirement plan items ​ 188 Income tax expense ​ ​ $ ( 564 ) Net of tax Total reclassifications for the period ​ $ ( 565 ) Net of tax (a) Included in the computation of net periodic benefit cost which is included in salaries and benefits. (see Footnote 16 for additional details). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 ​ ​ Details about accumulated ​ Amount reclassified from ​ Affected line item in other comprehensive ​ accumulated other ​ the statement where income components ​ comprehensive income net income is presented ​ ​ (in thousands) ​ Unrealized gains and losses ​ $ 3 Net securities gains (losses) on available-for-sale ​ ( 1 ) Income tax expense securities ​ $ 2 Net of tax ​ ​ ​ ​ ​ ​ Amortization of ​ $ ( 1,259 ) (a) Salary and benefits retirement plan items ​ 315 Income tax expense ​ ​ $ ( 944 ) Net of tax Total reclassifications for the period ​ $ ( 942 ) Net of tax (a) Included in the computation of net periodic benefit cost which is included in salaries and benefits. (see Footnote 16 for additional details). ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2021 ​ ​ Details about accumulated ​ Amount reclassified from ​ Affected line item in other comprehensive ​ accumulated other ​ the statement where income components comprehensive income net income is presented ​ ​ (in thousands) ​ ​ Unrealized gains and losses ​ $ 114 Net securities gains (losses) on available-for-sale ​ ( 29 ) Income tax expense securities ​ $ 85 Net of tax ​ ​ ​ ​ ​ ​ Amortization of ​ $ ( 2,072 ) (a) ​ retirement plan items ​ 518 Income tax expense ​ ​ $ ( 1,554 ) Net of tax Total reclassifications for the period ​ $ ( 1,469 ) Net of tax (a) Included in the computation of net periodic benefit cost which is included in salaries and benefits. (see Footnote 16 for additional details) . 94 Table of Contents 19. LEASES: The Corporation leases certain branches under operating leases. At December 31, 2023, the Corporation had lease liabilities totaling $ 5,456,000 and right-of-use assets totaling $ 5,392,000 related to these leases. Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively. For the year ended December 31, 2023, the weighted average remaining lease term for operating leases was 9.1 years and the weighted average discount rate used in the measurement of operating lease liabilities was 2.15 %. The calculated amount of the lease liabilities and right-of-use assets are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Corporation’s lease agreements often include one or more options to renew at the Corporation’s discretion. If at lease inception, the Corporation considers the exercising of a renewal option to be reasonably certain, the Corporation will include the extended term in the calculation of the lease liability and right-of-use asset. Regarding the discount rate, the new standard requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Corporation utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used. The following table represents lease costs and other lease information. As the Corporation elected, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Lease costs were as follows: ​ ​ ​ ​ ​ ​ ​ Year Ended (Dollar amounts in thousands) December 31, 2023 Operating lease cost ​ $ 1,006 Short-term lease cost ​ 137 Variable lease cost ​ 12 Total lease cost ​ $ 1,155 ​ ​ ​ ​ Other information: ​ Cash paid for amounts included in the measurement of operating lease liabilities ​ 967 Right-of-use assets obtained in exchange for new operating lease liabilities ​ 854 ​ Future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2023 were as follows: ​ ​ ​ ​ ​ (Dollar amounts in thousands) December 31, 2023 Twelve Months Ended December 31, ​ 2024 ​ $ 890 2025 ​ ​ 865 2026 ​ 798 2027 ​ 773 2028 ​ 663 Thereafter ​ 2,205 Total Future Minimum Lease Payments ​ 6,194 Amounts Representing Interest ​ ( 738 ) Present Value of Net Future Minimum Lease Payments ​ $ 5,456 ​ ​ 95 Table of Contents 20. REGULATORY MATTERS: The Corporation and its bank affiliate are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. Further, the Corporation’s primary source of funds to pay dividends to shareholders is dividends from its subsidiary bank and compliance with these capital requirements can affect the ability of the Corporation and its banking affiliate to pay dividends. At December 31, 2023, $ 38.9 million of undistributed earnings of the subsidiary bank, included in consolidated retained earnings, were available for distribution to the Corporation with regulatory approval. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and Bank must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Corporation’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Corporation and Bank to maintain minimum amounts and ratios of Total, Common equity tier I capital and Tier I Capital to risk-weighted assets, and of Tier I Capital to average assets. Under the Basel III rules, the Corporation must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes, as of December 31, 2023 and 2022, that the Corporation meets all capital adequacy requirements to which it is subject. As of December 31, 2023, the most recent notification from the respective regulatory agencies categorized the subsidiary bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the bank must maintain minimum total risk-based, Common equity tier I capital, Tier I risk-based and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the bank’s category. ​ 96 Table of Contents The following table presents the actual and required capital amounts and related ratios for the Corporation and First Financial Bank, N.A., at year-end 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ To Be Well Capitalized ​ ​ ​ ​ ​ ​ ​ For Capital Under Prompt Corrective ​ ​ Actual Adequacy Purposes Action Provisions ​ (Dollar amounts in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Total risk-based capital ​ ​ ​ Corporation – 2023 ​ $ 602,258 15.80 % $ 400,201 10.500 % N/A N/A ​ Corporation – 2022 ​ ​ 561,347 14.61 % ​ 403,400 10.500 % N/A N/A ​ First Financial Bank – 2023 ​ 560,975 14.89 % 395,567 10.500 % 376,731 10.00 % First Financial Bank – 2022 ​ 498,246 13.14 % 398,179 10.500 % 379,219 10.00 % Common equity tier I capital ​ ​ ​ Corporation – 2023 ​ $ 562,492 14.76 % $ 266,800 7.000 % N/A N/A ​ Corporation – 2022 ​ ​ 521,568 13.58 % ​ 268,933 7.000 % N/A N/A ​ First Financial Bank – 2023 ​ 521,209 13.84 % 263,712 7.000 % 244,875 6.50 % First Financial Bank – 2022 ​ 458,467 12.09 % 265,453 7.000 % 246,492 6.50 % Tier I risk-based capital ​ ​ ​ ​ Corporation – 2023 ​ $ 562,492 14.76 % $ 323,972 8.500 % N/A N/A ​ Corporation – 2022 ​ ​ 521,568 13.58 % ​ 326,562 8.500 % N/A N/A ​ First Financial Bank – 2023 ​ 521,209 13.84 % 320,221 8.500 % 301,385 8.00 % First Financial Bank – 2022 ​ 458,467 12.09 % 322,336 8.500 % 303,375 8.00 % Tier I leverage capital ​ ​ ​ Corporation – 2023 ​ $ 562,492 12.14 % $ 185,309 4.00 % N/A N/A ​ Corporation – 2022 ​ ​ 521,568 10.78 % ​ 193,476 4.00 % N/A N/A ​ First Financial Bank – 2023 ​ 521,209 10.73 % 194,384 4.00 % 242,981 5.00 % First Financial Bank – 2022 ​ 458,467 9.50 % 193,073 4.00 % 241,341 5.00 % ​ In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL. The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard. In March 2020, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC published an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The interim final rule maintains the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Corporation did not adopt the capital transition relief. ​ 97 Table of Contents 21. PARENT COMPANY CONDENSED FINANCIAL STATEMENTS: The parent company’s condensed balance sheets as of December 31, 2023 and 2022, and the related condensed statements of income and comprehensive income and cash flows for each of the three years in the period ended December 31, 2023, are as follows: CONDENSED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollar amounts in thousands) 2023 2022 ASSETS ​ ​ Cash deposits in affiliated banks ​ $ 37,907 ​ $ 60,692 Investments in subsidiaries ​ 484,868 ​ 412,570 Securities available-for-sale ​ ​ 1,401 ​ ​ — Land and headquarters building, net ​ 8,822 ​ 9,116 Other ​ 36,985 ​ 42,120 Total Assets ​ $ 569,983 ​ $ 524,498 LIABILITIES AND SHAREHOLDERS' EQUITY ​ ​ Liabilities ​ ​ Dividends payable ​ 5,304 ​ 8,912 Other liabilities ​ 36,703 ​ 40,293 TOTAL LIABILITIES ​ 42,007 ​ 49,205 Shareholders' Equity ​ 527,976 ​ 475,293 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ​ $ 569,983 ​ $ 524,498 ​ CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, (Dollar amounts in thousands) 2023 2022 2021 Dividends from subsidiaries ​ $ 2,818 ​ $ 94,048 ​ $ 99,231 Securities interest income ​ ​ 7 ​ ​ — ​ ​ — Other income ​ 1,476 ​ 1,254 ​ 746 Other operating expenses ​ ( 3,719 ) ​ ( 3,435 ) ​ ( 2,611 ) Income before income taxes and equity in undistributed earnings of subsidiaries ​ 582 ​ 91,867 ​ 97,366 Income tax benefit ​ 684 ​ 1,110 ​ 681 Income before equity in undistributed earnings of subsidiaries ​ 1,266 ​ 92,977 ​ 98,047 Equity in undistributed earnings of subsidiaries ​ 59,406 ​ ( 21,868 ) ​ ( 45,060 ) Net income ​ $ 60,672 ​ $ 71,109 ​ $ 52,987 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income (loss) ​ $ 73,559 ​ $ ( 66,439 ) ​ $ 40,797 98 Table of Contents ​ CONDENSED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, (Dollar amounts in thousands) 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ Net Income ​ $ 60,672 ​ $ 71,109 ​ $ 52,987 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ Depreciation and amortization ​ 307 ​ 297 ​ 191 Equity in undistributed earnings ​ ( 59,406 ) ​ 21,868 ​ 45,060 Contribution of shares to ESOP ​ 1,518 ​ 1,451 ​ 1,402 Restricted stock compensation ​ 895 ​ 825 ​ 807 Increase (decrease) in other liabilities ​ ( 3,590 ) ​ 33,050 ​ 435 (Increase) decrease in other assets ​ 5,136 ​ ( 34,602 ) ​ ( 1,518 ) NET CASH FROM OPERATING ACTIVITIES ​ 5,532 ​ 93,998 ​ 99,364 CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ Securities available-for-sale acquired from dissolution of FFBRM ​ ​ ( 1,407 ) ​ ​ — ​ ​ — (Increase) decrease in premises and equipment ​ ​ ( 13 ) ​ ​ ( 4,990 ) ​ ​ — Cash received (disbursed) from acquisitions ​ — ​ — ​ ( 31,348 ) NET CASH FROM INVESTING ACTIVITIES ​ ( 1,420 ) ​ ( 4,990 ) ​ ( 31,348 ) CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ Principal payments on borrowings ​ — ​ — ​ — Purchase of treasury stock ​ ( 11,514 ) ​ ( 27,701 ) ​ ( 42,471 ) Dividends paid ​ ( 15,383 ) ​ ( 14,459 ) ​ ( 14,181 ) NET CASH FROM FINANCING ACTIVITES ​ ( 26,897 ) ​ ( 42,160 ) ​ ( 56,652 ) NET (DECREASE) INCREASE IN CASH ​ ( 22,785 ) ​ 46,848 ​ 11,364 CASH, BEGINNING OF YEAR ​ 60,692 ​ 13,844 ​ 2,480 CASH, END OF YEAR ​ $ 37,907 ​ $ 60,692 ​ $ 13,844 Supplemental disclosures of cash flow information: ​ ​ ​ Cash paid during the year for: ​ ​ ​ Interest ​ $ — ​ $ — ​ $ — Income taxes ​ $ 11,350 ​ $ 13,525 ​ $ 15,025 ​ ​ ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None