FIRST FINANCIAL CORP /IN/

Previous wording

The ACL and allowance for unfunded commitments were $52.3 million and $2.9 million, respectively at March 31, 2026, compared to $48.0 million and $2.9 million, respectively at December 31, 2025. The qualitative amount of the reserve increased $607 thousand to $14.7 million. The quantitative amount is $34.1 million at March 31, 2026, compared to $33.6 million at December 31, 2025. There was no change in the allowance for unfunded commitments. As a result of the acquisition of CedarStone Financial, Inc., the Corporation recorded an additional allowance for credit loss on loans of $3.3 million. See additional discussion of ACL in the Allowance for Credit Losses section below.

Current wording

The ACL and allowance for unfunded commitments were $50.9 million and $2.9 million, respectively at June 30, 2026, compared to $48.0 million and $2.9 million, respectively at December 31, 2025. The qualitative amount of the reserve increased $1.8 million to $15.9 million. The quantitative amount is $34.4 million at June 30, 2026, compared to $33.6 million at December 31, 2025. There was no change in the allowance for unfunded commitments. As a result of the acquisition of CedarStone Financial, Inc., the Corporation recorded an additional allowance for credit loss on loans of $3.3 million. See additional discussion of ACL in the Allowance for Credit Losses section below.

Previous wording

On March 1, 2026, First Financial Corporation completed the acquisition of CedarStone Financial, Inc. As a result of the acquisition, loans acquired were $292 million, and deposits acquired were $313 million. Additionally, we recorded a bargain purchase gain of $716 thousand. Net income will reflect one month of activity in the first quarter for activity from CedarStone. Included in the variances in the following discussion are the values provided in this paragraph.

Current wording

On March 1, 2026, First Financial Corporation completed the acquisition of CedarStone Financial, Inc. As a result of the acquisition, the book value of loans acquired were $292 million, and the book value of deposits acquired were $313 million. Additionally, we recorded a bargain purchase gain of $33 thousand. Net income reflected one month of activity in the first quarter for activity from CedarStone. Included in the variances in the following discussion are the values provided in this paragraph.

Previous wording

Net income for the three months ended March 31, 2026 was $19.8 million, compared to $18.4 million for the same period in 2025. Basic earnings per share increased to $1.67 for the first quarter of 2026 compared to $1.55 for the same period in 2025. Return on average assets and return on average equity were 1.35% and 11.93% respectively, for the three months ended March 31, 2026 compared to 1.34% and 13.04% for the three months ended March 31, 2025.

Current wording

Net income for the three months ended June 30, 2026 was $22.7 million, compared to $18.6 million for the same period in 2025. Basic earnings per share increased to $1.91 for the second quarter of 2026 compared to $1.57 for the same period in 2025. Return on average assets and return on average equity were 1.48% and 13.71% respectively, for the three months ended June 30, 2026 compared to 1.34% and 12.90% for the three months ended June 30, 2025. Net income for the six months ended June 30, 2026 was $42.5 million, compared to $37.0 million for the same period in 2025. Basic earnings per share increased to $3.58 for the six months of 2026 compared to $3.12 for the same period in 2025. Return on average assets and return on average equity were 1.42% and 12.82% respectively, for the six months ended June 30, 2026 compared to 1.34% and 12.97% for the six months ended June 30, 2025.

Previous wording

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 $4.9 million in the three months ended March 31, 2026 to $56.9 million from $52.0 million in the same period in 2025. The net interest margin for the three months ended March 31, 2026 is 4.23% compared to 4.11% for the same period in 2025, a 2.90% increase.

Current wording

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 $8.5 million in the three months ended June 30, 2026 to $61.2 million from $52.7 million in the same period in 2025. The net interest margin for the three months ended June 30, 2026 is 4.33% compared to 4.15% for the same period in 2025, a 4.32% increase. Net interest income increased $13.5 million in the six months ended June 30, 2026 to $118.2 million from $104.6 million in the same period in 2025. The net interest margin for the six months ended June 30, 2026 is 4.28% compared to 4.13% for the same period in 2025, a 3.61% increase.

Previous wording

The increase in yields on investments of 31 basis points is the primary contributor to the improved yield on average earning assets for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Comparing the three months ended March 31, 2026 to the three months ended March 31, 2025, the effective rate paid on average interest-bearing deposits decreased 11 basis points. For the same period discussed above, interest paid on other borrowings decreased 117 basis points.

Current wording

The increase in yields on investments of 29 basis points is the primary contributor to the improved yield on average earning assets for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. Comparing the six months ended June 30, 2026 to the six months ended June 30, 2025, the effective rate paid on average interest-bearing deposits decreased 13 basis points. For the same period discussed above, interest paid on other borrowings decreased 71 basis points.

Previous wording

Non-interest income for the three months ended March 31, 2026 was $11.2 million compared to $10.5 million for the same period in 2025.

Current wording

Non-interest income for the three months ended June 30, 2026 was $10.6 million compared to $10.4 million for the same period in 2025. Non-interest income for the six months ended June 30, 2026 was $21.9 million compared to $20.9 million for the same period in 2025.

Previous wording

The Corporation’s non-interest expense for the quarter ended March 31, 2026 was $40.9 million compared to $36.8 million for the same period in 2025. This includes an overall increase in operating expenses as a result of the acquisition.

Current wording

The Corporation’s non-interest expense for the quarter ended June 30, 2026 was $42.5 million compared to $38.3 million for the same period in 2025. The Corporation’s non-interest expense for the six months ended June 30, 2026 was $83.4 million compared to $75.0 million for the same period in 2025. This includes an overall increase in operating expenses as a result of the acquisition.

Previous wording

The Corporation’s provision for credit losses for the three months ended March 31, 2026, was $2.6 million, compared to provision of $2.0 million for the same period of 2025. Net charge-offs for the first quarter of 2026 were $1.5 million compared to net charge-offs of $1.8 million for the same period of 2025. 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 three months of 2026, no significant changes were made.

Current wording

The Corporation’s provision for credit losses for the three months ended June 30, 2026, was $1.3 million, compared to $2.0 million for the same period of 2025. Net charge-offs for the second quarter of 2026 were $2.7 million compared to net charge-offs of $1.7 million for the same period of 2025. The Corporation’s provision for credit losses for the six months ended June 30, 2026, was $3.9 million, compared to $3.9 million for the same period of 2025. Net charge-offs for the six months ended June 30, 2026 were $4.2 million compared to net charge-offs of $3.5 million for the same period of 2025. 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 six months of 2026, no significant changes were made.

Previous wording

The Corporation’s effective income tax rate for the first three months of 2026 was 19.89% compared to 22.59% for the same period in 2025.

Current wording

The Corporation’s effective income tax rate for the first six months of 2026 was 19.36% compared to 20.62% for the same period in 2025.

Previous wording

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 $28.5 million at March 31, 2026 compared to $28.6 million at December 31, 2025. Nonperforming loans increased 179.9% compared to $10.2 million as of March 31, 2025.

Current wording

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 $27.1 million at June 30, 2026 compared to $28.6 million at December 31, 2025. Nonperforming loans increased 176.3% compared to $9.8 million as of June 30, 2025.

Previous wording

The table below shows the Corporation’s estimated sensitivity profile as of March 31, 2026. The change in interest rates assumes a parallel shift in interest rates of 100, 200, and 300 basis points. Given a 100 basis point increase in rates, net interest income would decrease 1.75% over the next 12 months and increase 1.29% over the following 12 months. Given a 100 basis point decrease in rates, net interest income would increase 3.79% over the next 12 months and increase 0.21% over the following 12 months. These estimates assume all rate changes occur overnight and management takes no action as a result of this change.

Current wording

The table below shows the Corporation’s estimated sensitivity profile as of June 30, 2026. The change in interest rates assumes a parallel shift in interest rates of 100, 200, and 300 basis points. Given a 100 basis point increase in rates, net interest income would decrease 1.38% over the next 12 months and increase 1.35% over the following 12 months. Given a 100 basis point decrease in rates, net interest income would increase 3.29% over the next 12 months and increase 0.04% over the following 12 months. These estimates assume all rate changes occur overnight and management takes no action as a result of this change.

Previous wording

Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors, borrowers, and other creditors by either converting assets into cash or accessing new or existing sources of incremental funds. Generally the Corporation relies on deposits, loan repayments and repayments of investment securities as its primary sources of funds. The Corporation has $7.9 million of investments that mature throughout the next 12 months. The Corporation also anticipates $119.0 million of principal payments from mortgage-backed and other securities. Given the current rate environment, the Corporation anticipates $62.0 million in securities to be called within the next 12 months. The Corporation also has $162.7 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $891 million available with the Federal Reserve Bank, and $90 million of available fed funds lines with correspondent banks. With these sources of funds, the Corporation currently anticipates adequate liquidity to meet the expected obligations of its customers.

Current wording

Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors, borrowers, and other creditors by either converting assets into cash or accessing new or existing sources of incremental funds. Generally the Corporation relies on deposits, loan repayments and repayments of investment securities as its primary sources of funds. The Corporation has $6.8 million of investments that mature throughout the next 12 months. The Corporation also anticipates $106.1 million of principal payments from mortgage-backed and other securities. Given the current rate environment, the Corporation anticipates $55.7 million in securities to be called within the next 12 months. The Corporation also has $199.5 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $1.0 billion available with the Federal Reserve Bank, and $90 million of available fed funds lines with correspondent banks. With these sources of funds, the Corporation currently anticipates adequate liquidity to meet the expected obligations of its customers.

Previous wording

Comparing the first three months of 2026 to year-ended December 31, 2025, loans net of deferred loan costs, have increased $369 million to $4.4 billion. Deposits increased 6.4% to $4.8 billion at March 31, 2026 compared to December 31, 2025. Other borrowings increased $20.5 million to $208.8 million at March 31, 2026 compared to December 31, 2025. Shareholders’ equity increased 0.68% or $4.4 million. This financial performance increased book value per share 0.58% to $55.10 at March 31, 2026 from $54.78 at December 31, 2025. Book value per share is calculated by dividing the total shareholders’ equity by the number of shares outstanding. Accumulated other comprehensive loss decreased $8.6 million primarily due to the market value of the securities portfolio, which reflected the decrease in securities pricing.

Current wording

Comparing the first six months of 2026 to year-ended December 31, 2025, loans net of deferred loan costs, have increased $413 million to $4.5 billion. Deposits increased 6.2% to $4.8 billion at June 30, 2026 compared to December 31, 2025. Other borrowings increased $103.3 million to $291.5 million at June 30, 2026 compared to December 31, 2025. Shareholders’ equity increased 3.83% or $24.9 million. This financial performance increased book value per share 3.73% to $56.83 at June 30, 2026 from $54.78 at December 31, 2025. Book value per share is calculated by dividing the total shareholders’ equity by the number of shares outstanding. Accumulated other comprehensive loss increased $4.4 million primarily due to the market value of the securities portfolio, which reflected the decrease in securities pricing.