What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-07 compared with 2024-11-06 · 130 added, 278 removed, 917 unchanged (31% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands, except per share data)

September 30,

Cash and due from banks

31 unchanged sentences

FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(Dollar amounts in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

INTEREST INCOME:

13 unchanged sentences

Other service charges and fees

Securities gains (losses), net

Interchange income

20 unchanged sentences

Three Months Ended

September 30, 2024, and 2023

(Dollar amounts in thousands, except per share data)

Comprehensive

Income/(Loss)

Balance, July 1, 2023

Other comprehensive income (loss)

Omnibus Equity Incentive Plan

Treasury shares purchased ( 228,457 shares)

Balance, September 30, 2023

Balance, July 1, 2024

Other comprehensive income (loss)

Omnibus Equity Incentive Plan

Cash dividends, $ .45 per share

Balance, September 30, 2024

See accompanying notes.

FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Nine Months Ended

September 30, 2024, and 2023

March 31, 2025, and 2024

(Dollar amounts in thousands, except per share data)

2 unchanged sentences

Balance, January 1, 2024

Cumulative change in accounting principle ASU 2023-02

Other comprehensive income (loss)

2 unchanged sentences

Cash dividends, $ .45 per share

Balance, September 30, 2023

Balance, March 31, 2024

Balance, January 1, 2025

Cumulative change in accounting principle ASU 2023-02

Other comprehensive income (loss)

2 unchanged sentences

Cash dividends, $ .51 per share

Balance, September 30, 2024

Balance, March 31, 2025

See accompanying notes.

FIRST FINANCIAL CORPORATION

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Net amortization (accretion) of premiums and discounts on investments

Net amortization of premiums and discounts on investments

Provision for credit losses

Securities (gains)/losses

Depreciation and amortization

4 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales of securities available-for-sale

Calls, maturities and principal reductions on securities available-for-sale

4 unchanged sentences

Purchase of restricted stock

Cash received (disbursed) from acquisitions, net

Proceeds from sales of other real estate owned

8 unchanged sentences

Maturities of other borrowings

( 1,604,877 )

( 1,355,000 )

NET CASH FROM FINANCING ACTIVITIES

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accompanying September 30, 2024 and 2023 consolidated financial statements are unaudited.

The accompanying March 31, 2025 and 2024 consolidated financial statements are unaudited.

The December 31, 2024 consolidated financial statements are as reported in the First Financial Corporation (the “Corporation”) 2024 annual report.

11 unchanged sentences

These shares vest over 3 years in increments of 33 %, 33 %, and 34 % respectively.

For the nine months ended 2024 and 2023, 27,803 and 22,228 shares were awarded, respectively.

For the three months ended 2025 and 2024, 25,134 and 27,803 shares were awarded, respectively.

These shares had a grant date value of $ 1.2 million and $ 1.0 million for 2025 and 2024, vest over three years , and their grant is not subject to future performance measures.

5 unchanged sentences

Accounting Pronouncements Adopted:

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 adopted ASU 2022-03 January 1, 2024, and it had no impact on its consolidated financial statements and related disclosures.

In March 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards (ASU) No.

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):

2 unchanged sentences

Early adoption is permitted in any interim period.

The Corporation adopted ASU 2023-02 January 1, 2024 on a modified retrospective basis.

As a result of the adoption, other assets was increased $ 19 million, other liabilities was increased $ 21 million, and retained earnings was decreased $ 1.7 million.

Recent Accounting Pronouncements:

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07 “Segment Reporting (Topic 280):

The Corporation adopted ASU 2023-02 on January 1, 2024 on a modified retrospective basis.

As a result of the adoption, other assets increased $ 19 million, other liabilities increased $ 21 million, and retained earnings decreased $ 1.7 million.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208.

1 unchanged sentence

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.

The Corporation adopted ASU 2023-07 on January 1, 2024 for fiscal year activity and will apply ASU 2023-07 in interim periods within fiscal years beginning January 1, 2025.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

1 unchanged sentence

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.

(1) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and (2) the amount of income taxes paid (net of refunds received)

disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received.) This guidance is effective for public business entities for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments should be applied on a prospective basis although retrospective application is permitted.

The Corporation adopted ASU 2023-09 January 1, 2025, and will provide the required disclosures in the Corporation’s 2025 filings .

Recent Accounting Pronouncements:

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” This update is intended to provide investors more detailed disclosures around specific types of expenses.

This ASU requires certain details for expenses presented on the face of the consolidated statements of income as well as selling expenses to be presented in the notes to the financial statements.

This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The disclosure updates are required to be applied prospectively with the option for retrospective application.

The Corporation is assessing ASU 2024-03 and its effect on its consolidated financial statements and related disclosures.

Allowance for Credit Losses

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

Allowance for Credit Losses:

September 30, 2024

(Dollar amounts in thousands)

Beginning balance

PCD ACL on acquired loans

Provision for credit losses

Loans charged-off

Ending Balance

Allowance for Credit Losses:

September 30, 2023

(Dollar amounts in thousands)

Beginning balance

Provision for credit losses

Loans charged-off

Ending Balance

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

The following table presents the activity of the allowance for credit losses by portfolio segment for the three months ended March 31.

Allowance for Credit Losses:

September 30, 2024

March 31, 2025

(Dollar amounts in thousands)

Beginning balance

PCD ACL on acquired loans

Provision for credit losses

2 unchanged sentences

Allowance for Credit Losses:

September 30, 2023

March 31, 2024

(Dollar amounts in thousands)

4 unchanged sentences

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

September 30, 2024

March 31, 2025

90 Days Still

18 unchanged sentences

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

September 30, 2024

March 31, 2025

Collateral Type

16 unchanged sentences

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

September 30, 2024

March 31, 2025

(Dollar amounts in thousands)

18 unchanged sentences

or a permanent reduction of the recorded investment in the loan.

The following table presents the amortized cost of loans and leases at September 30, 2024 that were both experiencing financial difficulty and modified during the twelve months ended September 30, 2024, by class and by type of modification.

The following table presents the amortized cost of loans and leases at March 31, 2025 that were both experiencing financial difficulty and modified during the twelve months ended March 31, 2025, by class and by type of modification.

The percentage of the amortized cost of loans and leases that were modified to borrowers in financial distress as compared to the amortized cost of each class of financial receivable is also presented below.

6 unchanged sentences

The Corporation closely monitors the performance of loans and leases that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

All loans and leases that have been modified during the twelve months ended September 30, 2024 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 September 30, 2024.

The following table presents the performance of such loans that have been modified in the last twelve months:

March 31, 2025

(Dollar amounts in thousands)

Motor Vehicle

The following table presents the financial effect of loan and lease modifications presented above to borrowers experiencing financial difficulty for the twelve months ended March 31, 2025.

Interest Rate

1 unchanged sentence

Motor Vehicle

The following table presents the amortized cost basis of loans that had a payment default during the twelve months ended September 30, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty .

The following table presents the amortized cost basis of loans that had a payment default during the twelve months ended March 31, 2025 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Interest Rate

22 unchanged sentences

These balances do not include accrued interest:

September 30, 2024

March 31, 2025

Term Loans at Amortized Cost Basis by Origination Year

39 unchanged sentences

These balances do not include accrued interest:

September 30, 2024

March 31, 2025

Term Loans at Amortized Cost Basis by Origination Year

37 unchanged sentences

All securities are classified as available-for-sale.

September 30, 2024

March 31, 2025

(Dollar amounts in thousands)

15 unchanged sentences

Collateralized debt obligations

Contractual maturities of debt securities at September 30, 2024 were as follows.

Contractual maturities of debt securities at March 31, 2025 were as follows.

Available-for-Sale

5 unchanged sentences

Mortgage-backed securities and collateralized mortgage obligations

For the three and nine months ended September 30, 2024, there were $ 132 thousand and $ 133 thousand in gross gains and $ 29 thousand in gross losses for both periods.

There were no gross gains and losses from investment sales/calls realized by the Corporation for the three and nine months ended September 30, 2023.

The following tables show the securities’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position, at September 30, 2024 and December 31, 2023.

September 30, 2024

There were no gross gains and losses from investment sales/calls realized by the Corporation for the three months ended March 31, 2025.

Additionally, there were no gross gains and losses from investment sales/calls realized by the Corporation for the three months ended March 31, 2024.

March 31, 2025

Less Than 12 Months

25 unchanged sentences

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.

Gross unrealized losses on investment securities were $ 127.5 million as of September 30, 2024 and $ 157.8 million as of December 31, 2023.

Gross unrealized losses on investment securities were $ 154.6 million as of March 31, 2025 and $ 168.93 million as of December 31, 2024.

Management believes these losses represent negative adjustments to market value relative to the interest rate environment reflecting the increase in market rates and not losses related to the creditworthiness of the issuer.

5 unchanged sentences

Management does not intend to sell these securities and it is not more likely than not that we will be required to sell them before their anticipated recovery.

The table below presents a rollforward of the credit losses recognized in earnings for the three and nine month periods ended September 30, 2024 and 2023:

Three Months Ended September 30,

Nine Months Ended September 30,

The table below presents a rollforward of the credit losses recognized in earnings for the three month period ended March 31, 2025 and 2024:

Three Months Ended March 31,

(Dollar amounts in thousands)

4 unchanged sentences

The Corporation invests in qualified affordable housing projects.

The balance of investment for qualified housing projects was $ 28.0 million at September 30, 2024 and $ 7.8 million at December 31, 2023.

See footnote 2, New accounting standards, for the impact of the adoption of ASU 2023-02.

The balance of investment for qualified housing projects was $ 26.4 million at March 31, 2025 and $ 27.2 million at December 31, 2024.

These balances are reflected in the other assets line on the consolidated balance sheets.

Total unfunded commitments related to the investments in qualified affordable housing projects totaled $ 19.9 million at September 30, 2024.

Total unfunded commitments related to the investments in qualified affordable housing projects totaled $ 15.0 million at March 31, 2025 and $ 17.7 million at December 31, 2024.

The Corporation expects to fulfill these commitments by the end of December 31, 2037.

The Corporation recognized amortization expense of $ 232 thousand during the nine months ended September 30, 2024, and $ 585 thousand during the nine months ended September 30, 2023, which was included within other noninterest expense on the consolidated statements of income.

The Corporation recognized amortization expense of $ 1.7 million during the nine months ended September 30, 2024, which was included within income tax expense on the consolidated statements of income.

Additionally, the Corporation recognized tax credits and other benefits from its investment in affordable housing tax credits of $ 2.4 million during the nine months ended September 30, 2024, and $ 1.4 million during the nine months ended September 30, 2023.

The Corporation recognized amortization expense of $ 16 thousand during the three months ended March 31, 2025, and $ 195 thousand during the three months ended March 31, 2024, which was included within other noninterest expense on the consolidated statements of income.

The Corporation recognized amortization expense of $ 720 thousand during the three months ended March 31, 2025, which was included within income tax expense on the consolidated statements of income.

Additionally, the Corporation recognized tax credits and other benefits from its investment in affordable housing tax credits of $ 914 thousand during the three months ended March 31, 2025, and $ 363 thousand during the three months ended March 31, 2024.

820-10 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

15 unchanged sentences

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

September 30, 2024

March 31, 2025

Fair Value Measurements Using

24 unchanged sentences

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

The tables below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2024 and the year ended December 31, 2023.

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

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Three Months Ended

September 30, 2024

Collateralized

(Dollar amounts in thousands)

debt obligations

Beginning balance, July 1

Total realized/unrealized gains or losses

Included in earnings

Included in other comprehensive income

Ending balance, September 30

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Nine Months Ended

September 30, 2024

March 31, 2025

Collateralized

5 unchanged sentences

Included in other comprehensive income

Ending balance, September 30

Ending balance, March 31

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

9 unchanged sentences

Other real estate owned is valued at Level 3.

Other real estate owned at September 30, 2024 with a value of $ 169 thousand was reduced by $ 45 thousand for fair value adjustment.

At September 30, 2024 other real estate owned was comprised of $ 28 thousand from commercial loans and $ 141 thousand from residential loans.

Other real estate owned at December 31, 2023 with a value of $ 107 thousand was reduced by $ 57 thousand for fair value adjustment.

Other real estate owned at March 31, 2025 with a value of $ 560 thousand was reduced by zero for fair value adjustment.

At March 31, 2025 other real estate owned was comprised of $ 405 thousand from commercial loans and $ 155 thousand from residential loans.

Other real estate owned at December 31, 2024 with a value of $ 523 thousand was reduced by zero for fair value adjustment.

At December 31, 2024 other real estate owned was comprised of $ 433 thousand from commercial loans and $ 90 thousand from residential loans.

15 unchanged sentences

Other real estate and individually evaluated loans carried at fair value are primarily comprised of smaller balance properties.

The following table presents quantitative information about recurring and non-recurring Level 3 fair value measurements at September 30, 2024.

The following table presents quantitative information about recurring and non-recurring Level 3 fair value measurements at March 31, 2025.

(Dollar amounts in thousands)

1 unchanged sentence

Unobservable Input(s)

State and municipal obligations

Discounted cash flow

Discount rate

Collateralized debt obligations

19 unchanged sentences

20.00 %- 100.00

The carrying amounts and estimated fair value of financial instruments at September 30, 2024 and December 31, 2023, are shown below.

The carrying amounts and estimated fair value of financial instruments at March 31, 2025 and December 31, 2024, are shown below.

Carrying amount is the estimated fair value for cash and due from banks, federal funds sold, short-term borrowings, accrued interest receivable and payable, demand deposits, short-term debt and variable-rate loans or deposits that reprice frequently and fully.

7 unchanged sentences

The fair value of off-balance sheet items is not considered material.

September 30, 2024

March 31, 2025

(Dollar amounts in thousands)

26 unchanged sentences

(Dollar amounts in thousands)

September 30, 2024

December 31, 2023

Federal Funds Purchased

7 unchanged sentences

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

September 30, 2024

March 31, 2025

Repurchase Agreements

10 unchanged sentences

Other borrowings:

Other borrowings at September 30, 2024 and December 31, 2023 are summarized as follows:

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

(Dollar amounts in thousands)

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

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

Twelve Months Ended September 30,

At September 30, 2024 and December 31, 2023, other borrowings are summarized as follows:

Twelve Months Ended March 31,

At March 31, 2025 and December 31, 2024, other borrowings are summarized as follows:

The Corporation’s subsidiary bank is a member of the Federal Home Loan Bank (FHLB) and accordingly are permitted to obtain advances.

There are $ 7.5 million of advances from the FHLB at September 30, 2024, and $ 108.6 million of advances at December 31, 2023.

There are $ 106.1 million of advances from the FHLB at March 31, 2025, and $ 7.3 million of advances at December 31, 2024.

FHLB advances are, generally due in full at maturity.

1 unchanged sentence

In addition the Corporation secured a note payable to a commercial bank in the second quarter 2024.

The balance at September 30, 2024 is $ 23 million.

The balance at March 31, 2025 is $ 18.8 million.

Components of Net Periodic Benefit Cost

Three Months Ended September 30,

Nine Months Ended September 30,

Post-Retirement

Three Months Ended March 31,

Post-Retirement

1 unchanged sentence

Health Benefits

Pension Benefits

Health Benefits

(Dollar amounts in thousands)

5 unchanged sentences

Employer Contributions

First Financial Corporation previously disclosed in its financial statements for the year ended December 31, 2023 that it expected to contribute $ 3.9 million and $ 604 thousand respectively to its Pension Plan and ESOP and $ 249 thousand to the Post Retirement Health Benefits Plan in 2024.

Contributions of $ 3.0 million have been made to the Pension Plan thus far in 2024.

Contributions of $ 161 thousand have been made through the first nine months of 2024 for the Post Retirement Health Benefits plan.

First Financial Corporation previously disclosed in its financial statements for the year ended December 31, 2024 that it expected to contribute $ 570 thousand and $ 563 thousand respectively to its Pension Plan and ESOP and $ 24 3 thousand to the Post Retirement Health Benefits Plan in 2025.

Contributions of $ 357 thousand have been made to the Pension Plan thus far in 2025.

Contributions of $ 80 thousand have been made through the first three months of 2025 for the Post Retirement Health Benefits plan.

No contributions have been made in 2025 for the ESOP.

The Pension plan was frozen for most employees at the end of 2012 and for those employees there will be discretionary contributions to the ESOP plan and a 401K plan in place of the former Pension benefit.

In the first nine months of 2024 and 2023 there has been $ 2.4 million and $ 1.9 million of expense accrued for potential contributions to these alternative retirement benefit options.

In the first three months of 2025 and 2024 there has been $ 847 thousand and $ 744 thousand of expense accrued for potential contributions to these alternative retirement benefit options.

Revenue from Contracts with Customers

All of the Corporation’s revenue from contracts with customers in the scope of ASC 606 is recognized within Non-Interest Income.

The following table presents the Corporation’s sources of Non-Interest Income for the three and nine months ended September 30, 2024 and 2023.

The following table presents the Corporation’s sources of Non-Interest Income for the three months ended March 31, 2025 and 2024.

Items outside the scope of ASC 606 are noted as such.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollar amounts in thousands)

5 unchanged sentences

Loan servicing fees (a)

Net gains/(losses) on sales of securities (a)

Other service charges and fees (a)

1 unchanged sentence

(a) Not within the scope of ASC 606.

(b) The Other category includes gains/(losses) on the sale of OREO for the three months ended September 30, 2024 and September 30, 2023, totaling $ ( 25 ) thousand and zero , respectively, and for the nine months ended for the same periods, totaling $ 61 thousand and $ ( 31 ) thousand, which is within the scope of ASC 606;

(b) The Other category includes gains/(losses) on the sale of OREO for the three months ended March 31, 2025 and March 31, 2024, totaling zero and $ 7 thousand, respectively, which is within the scope of ASC 606;

the remaining balance is outside the scope of ASC 606.

20 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes, net of tax, within each classification of accumulated other comprehensive income/(loss) for the three and nine months ended September 30, 2024 and 2023.

(Losses) on available-

(Dollar amounts in thousands)

Beginning balance, July 1,

Change in other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive income

Net current period other comprehensive income (loss)

Ending balance, September 30,

The following tables summarize the changes, net of tax, within each classification of accumulated other comprehensive income/(loss) for the three months ended March 31, 2025 and 2024.

(Losses) on available-

4 unchanged sentences

Net current period other comprehensive income (loss)

Ending balance, September 30,

(Losses) on available-

(Dollar amounts in thousands)

Beginning balance, July 1,

Change in other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive income

Net current period other comprehensive income (loss)

Ending balance, September 30,

Ending balance, March 31,

(Losses) on available-

4 unchanged sentences

Net current period other comprehensive income (loss)

Ending balance, September 30,

Current Period

(Dollar amounts in thousands)

Unrealized gains (losses) on securities available-for-sale without other than temporary impairment

Unrealized gains (losses) on securities available-for-sale with other than temporary impairment

Total unrealized loss on securities available-for-sale

Unrealized gain (loss) on retirement plans

Ending balance, March 31,

Current Period

8 unchanged sentences

Unrealized gains (losses) on securities available-for-sale with other than temporary impairment

Total unrealized gain (loss) on securities available-for-sale

Unrealized loss on retirement plans

Current Period

(Dollar amounts in thousands)

Unrealized gains (losses) on securities available-for-sale without other than temporary impairment

Unrealized gains (losses) on securities available-for-sale with other than temporary impairment

Total unrealized income (loss) on securities available-for-sale

Unrealized gain (loss) on retirement plans

Three Months Ended September 30, 2024

Details about accumulated

Amount reclassified from

Affected line item in

other comprehensive

accumulated other

the statement where

income components

comprehensive income

net income is presented

(in thousands)

Unrealized gains and losses

Net securities gains (losses)

on available-for-sale

Income tax expense

Amortization of

Salary and benefits

retirement plan items

Income tax expense

Total reclassifications for the period

(a) Included in the computation of net periodic benefit cost.

(see Footnote 7 for additional details).

Nine Months Ended September 30, 2024

Details about accumulated

Amount reclassified from

Affected line item in

other comprehensive

accumulated other

the statement where

income components

comprehensive income

net income is presented

(in thousands)

Unrealized gains and losses

Net securities gains (losses)

on available-for-sale

Income tax expense

Amortization of

Salary and benefits

retirement plan items

Income tax expense

Total reclassifications for the period

(a) Included in the computation of net periodic benefit cost.

(see Footnote 7 for additional details).

Three Months Ended September 30, 2023

Three Months Ended March 31, 2025

Details about accumulated

19 unchanged sentences

(see Footnote 8 for additional details).

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Details about accumulated

20 unchanged sentences

The Corporation leases certain branches under operating leases.

At September 30, 2024, the Corporation had lease liabilities totaling $ 8,067,000 and right-of-use assets totaling $ 7,978,000 related to these leases.

At March 31, 2025, the Corporation had lease liabilities totaling $7,590,000 and right-of-use assets totaling $ 7,471,000 related to these leases.

At December 31, 2024, the Corporation had lease liabilities totaling $ 7,829,000 and right-of-use assets totaling $ 7,725,000 related to these leases.

Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively.

At September 30, 2024, the weighted average remaining lease term for operating leases was 11.0 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.19 %.

At March 31, 2025, the weighted average remaining lease term for operating leases was 10.8 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.22 %.

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.

6 unchanged sentences

Lease costs were as follows:

Nine Months Ended

Three Months Ended

(Dollar amounts in thousands)

September 30, 2024

March 31, 2025

Operating lease cost

5 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities

The right-of-use assets obtained above includes $ 2.8 million in assets acquired in the SimplyBank acquisition.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2024 were as follows:

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2025 were as follows:

(Dollar amounts in thousands)

September 30, 2024

Twelve Months Ended September 30,

March 31, 2025

Twelve Months Ended March 31,

Total Future Minimum Lease Payments

5 unchanged sentences

The aggregate value of the transaction was approximately $ 73.4 million.

Acquisition-related costs of $ 1.7 million are included in the Corporation’s income statement for the year-to-date period ended September 30, 2024.

Acquisition-related costs of $ 1.7 million were included in the Corporation’s income statement for the year-to-date period ended December 31, 2024.

Goodwill of $ 13.0 million arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies.

29 unchanged sentences

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.

Nine Months Ended September 30,

Year Ended December 31,

(Dollar amounts in thousands, except per share data)

58 unchanged sentences

As such, reversion from forecast rates to historical loss rates is immediate.

The ACL and allowance for unfunded commitments were $46.2 million and $1.8 million, respectively at September 30, 2024, compared to $39.8 million and $2.0 million, respectively at December 31, 2023.

The qualitative amount of the reserve increased $1.6 million to $12.6 million.

The quantitative amount is $33.3 million at September 30, 2024, compared to $28.4 million at December 31, 2023.

There was a decrease of $200 thousand in the allowance for unfunded commitments.

The ACL and allowance for unfunded commitments were $46.8 million and $2.1 million, respectively at March 31, 2025, compared to $46.7 million and $2.1 million, respectively at December 31, 2024.

The qualitative amount of the reserve increased $363 thousand to $13.2 million.

The quantitative amount is $33.6 million at March 31, 2025, compared to $33.6 million at December 31, 2024.

There was no change in the allowance for unfunded commitments.

See additional discussion of ACL in the Allowance for Credit Losses section below.

3 unchanged sentences

Summary of Operating Results

Net income for the three months ended September 30, 2024 was $8.7 million, compared to $16.3 million for the same period in 2023.

Basic earnings per share decreased to $0.74 for the third quarter of 2024 compared to $1.37 for the same period in 2023.

Return on average assets and return on average equity were 0.64% and 6.39% respectively, for the three months ended September 30, 2024 compared to 1.35% and 13.19% for the three months ended September 30, 2023.

Net income for the nine months ended September 30, 2024 was $31.0 million, compared to $48.3 million for the same period in 2023.

Basic earnings per share decreased to $2.63 for the first nine months of 2024 compared to $4.02 for the same period in 2023.

Return on average assets and return on average equity were 0.82% and 7.80% respectively, for the nine months ended September 30, 2024 compared to 1.33% and 12.98% for the nine months ended September 30, 2023.

Net income for the three months ended March 31, 2025 was $18.4 million, compared to $10.9 million for the same period in 2024.

Basic earnings per share increased to $1.55 for the first quarter of 2025 compared to $0.93 for the same period in 2024.

Return on average assets and return on average equity were 1.34% and 13.04% respectively, for the three months ended March 31, 2025 compared to 0.91% and 8.36% for the three months ended March 31, 2024.

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

● Liquidity remains strong, with cash and available for sale securities representing approximately 24.6% of assets at September 30, 2024.

● Liquidity remains strong, with cash and available for sale securities representing approximately 22.9% of assets at March 31, 2025.

The Corporation maintains the ability to access considerable sources of contingent liquidity at the Federal Home Loan Bank and several correspondent banks.

3 unchanged sentences

Refer to the section Capital Adequacy , included elsewhere in this report for additional details.

● Asset quality remains solid, with a non-performing asset ratio of 0.31% of total assets as of September 30, 2024 and net charge-offs of 0.43% to average loans and leases, reflecting the Company's disciplined underwriting and conservative lending philosophy which has supported the Corporation’s strong credit performance during prior financial crises.

● Asset quality remains solid, with a non-performing asset ratio of 0.25% of total assets as of March 31, 2025 and net charge-offs of 0.19% to average loans and leases, reflecting the Company's disciplined underwriting and conservative lending philosophy which has supported the Corporation’s strong credit performance during prior financial crises.

Refer to the section Non-Performing Loan for additional information.

The Corporation will continue its safe and sound banking practices, but the continuing impact of the 2023 crisis and further extent on the Corporation’s operations and financial results for the remainder of 2024 is uncertain and cannot be predicted.

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

1 unchanged sentence

The Corporation’s primary source of earnings is net interest income, which is the difference between the interest earned on loans and other investments and the interest paid for deposits and other sources of funds.

Net interest income increased $6.0 million in the three months ended September 30, 2024 to $47.2 million from $41.2 million in the same period in 2023.

The net interest margin for the three months ended September 30, 2024 is 3.78% compared to 3.74% for the same period in 2023, a 1.16% increase.

Net interest income decreased $2.3 million in the nine months ended September 30, 2024 to $125.4 million from $127.7 million in the same period in 2023.

The net interest margin for the nine months ended September 30, 2024 is 3.63% compared to 3.83% for the same period in 2023.

The increase in yields on net loans and leases of 44 basis points is the primary contributor to the improved yield on average earning assets for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, which was due to market conditions as a result of Federal Reserve interest rate increases.

Comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023, the effective rate paid on average interest-bearing deposits increased 72 basis points, due to rate competition in the market.

For the same period discussed above, interest paid on other borrowings increased 99 basis points due to higher borrowing rates.

Net interest income increased $13.1 million in the three months ended March 31, 2025 to $52.0 million from $38.9 million in the same period in 2024.

The net interest margin for the three months ended March 31, 2025 is 4.11% compared to 3.53% for the same period in 2024, a 16.44% increase.

The increase in yields on net loans and leases of 32 basis points is the primary contributor to the improved yield on average earning assets for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Comparing the three months ended March 31, 2025 to the three months ended March 31, 2024, the effective rate paid on average interest-bearing deposits decreased 23 basis points.

For the same period discussed above, interest paid on other borrowings decreased 20 basis points.

Non-Interest Income

Non-interest income for the three months ended September 30, 2024 was $11.2 million compared to $11.6 million for the same period in 2023.

Non-interest income for the nine months ended September 30, 2024 was $30.6 million compared to $31.5 million for the same period in 2023.

Non-interest income for the three months ended March 31, 2025 was $10.5 million compared to $9.4 million for the same period in 2024.

Non-Interest Expenses

The Corporation’s non-interest expense for the quarter ended September 30, 2024 was $38.6 million compared to $32.3 million for the same period in 2023.

The Corporation’s non-interest expense for the nine months ended September 30, 2024 increased $8.7 million to $104.6 milllion compared to the same period in 2023.

This includes $1.7 million of acquisition related expenses, as well as an overall increase in operating expenses as a result of the acquisition.

The Corporation’s non-interest expense for the quarter ended March 31, 2025 was $36.8 million compared to $33.4 million for the same period in 2023.

This includes an overall increase in operating expenses as a result of the acquisition.

Allowance for Credit Losses

The Corporation’s provision for credit losses for the three months ended September 30, 2024, was $9.4 million, compared to provision of $1.2 million for the same period of 2023.

Net charge-offs for the third quarter of 2024 were $4.6 million compared to net charge-offs of $2.1 million for the same period of 2023.

The provision for credit losses increased $9.4 million to $14.2 million for the nine months ended September 30, 2024, compared to a provision of $4.8 million for the same period in 2023.

Net charge-offs for the first nine months of 2024 increased $5.2 million to $10.8 million compared to the same period in 2023.

The Corporation recorded $5.5 million in Day 2 provision on non-PCD loans acquired from SimplyBank.

Additionally, the increase in provision as well as charge-offs were related to one previously identified credit, reflecting further deterioration in collateral values in the quarter.

No further losses are expected on this credit.

The Corporation’s provision for credit losses for the three months ended March 31, 2025, was $2.0 million, compared to provision of $1.8 million for the same period of 2024.

Net charge-offs for the first quarter of 2025 were $1.8 million compared to net charge-offs of $1.5 million for the same period of 2024.

Based on management’s analysis of the current portfolio, an evaluation that includes consideration of changes in CECL model assumptions of credit quality, economic conditions, and loan composition, management believes the allowance is adequate.

In the first nine months of 2024, no significant changes were made.

In the first three months of 2025, no significant changes were made.

Income Tax Expense

The Corporation’s effective income tax rate for the first nine months of 2024 was 16.44% compared to 17.37% for the same period in 2023.

Pretax income for the first nine months in 2023 was significantly higher than pretax income for first nine months in 2024.

Since our permanent differences remained similar, income was the driving factor for the decrease in effective tax rate.

The Corporation’s effective income tax rate for the first three months of 2025 was 22.59% compared to 16.79% for the same period in 2024.

Pretax income for the first three months in 2025 was significantly higher than pretax income for first three months in 2024.

Since our permanent differences remained similar, income was the driving factor for the increase in effective tax rate.

Non-performing Loans

Non-performing loans consist of (1) non-accrual loans on which the ultimate collectability of the full amount of interest is uncertain, and (2) loans past due ninety days or more as to principal or interest.

Non-performing loans decreased to $14.1 million at September 30, 2024 compared to $24.6 million at December 31, 2023.

Nonperforming loans increased 12.3% compared to $12.6 million as of September 30, 2023.

A summary of non-performing loans at September 30, 2024 and December 31, 2023 follows:

September 30, 2024

Non-performing loans decreased to $10.2 million at March 31, 2025 compared to $13.3 million at December 31, 2024.

Nonperforming loans decreased 58.0% compared to $24.3 million as of March 31, 2024.

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

March 31, 2025

December 31, 2024

3 unchanged sentences

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

September 30, 2024

March 31, 2025

December 31, 2024

20 unchanged sentences

It is important to note that measures of interest rate risk have limitations and are dependent on various assumptions.

These assumptions are

inherently uncertain and, as a result, the model cannot precisely predict the impact of interest rate fluctuations on net interest income.

These assumptions are inherently uncertain and, as a result, the model cannot precisely predict the impact of interest rate fluctuations on net interest income.

Actual results will differ from simulated results due to timing, frequency and amount of interest rate changes as well as overall market conditions.

3 unchanged sentences

Management continuously evaluates the merits of such interest rate risk products but does not anticipate the use of such products to become a major part of the Corporation’s risk management strategy.

The table below shows the Corporation’s estimated sensitivity profile as of September 30, 2024.

The table below shows the Corporation’s estimated sensitivity profile as of March 31, 2025.

The change in interest rates assumes a parallel shift in interest rates of 100, 200, and 300 basis points.

14 unchanged sentences

Financial Condition

Comparing the first nine months of 2024 to year-ended December 31, 2023, loans net of deferred loan costs, have increased $547 million to $3.7 billion.

Deposits increased 15.3% to $4.7 billion at September 30, 2024 compared to December 31, 2023.

Other borrowings decreased $78.1 million to $30.5 million at September 30, 2024 compared to December 31, 2023.

Comparing the first three months of 2025 to year-ended December 31, 2024, loans net of deferred loan costs, have increased $17 million to $3.9 billion.

Deposits decreased 1.7% to $4.6 billion at March 31, 2025 compared to December 31, 2024.

Other borrowings increased $96.8 million to $124.9 million at March 31, 2025 compared to December 31, 2024.

Shareholders’ equity increased 4.17% or $22.9 million.

This financial performance increased book value per share 7.08% to $47.93 at September 30, 2024 from $44.76 at December 31, 2023.

This financial performance increased book value per share 4.10% to $48.26 at March 31, 2025 from $46.36 at December 31, 2024.

Book value per share is calculated by dividing the total shareholders’ equity by the number of shares outstanding.

21 unchanged sentences

Currently the Corporation exceeds all of these minimums.

September 30, 2024

March 31, 2025

December 31, 2024

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements