Core Insights - First Financial Corporation (THFF) has shown strong performance over the past year, with a nearly 30% increase in share value [1] - The acquisition of SimplyBank has positively impacted the company's financial results, as demonstrated by solid Q3 performance [1] Company Performance - The company's shares have gained nearly 30% over the past year, indicating strong market performance [1] - Q3 results reflect the successful integration and performance of SimplyBank, contributing to shareholder value [1] Analyst Perspective - The analysis is based on over fifteen years of experience in making contrarian investment decisions and identifying turnaround stories [1]

Group 1 - First Financial Corporation (THFF) shares have increased nearly 30% over the past year, indicating strong performance [1] - The acquisition of SimplyBank has positively impacted shareholders, reflected in solid Q3 results [1] - The article emphasizes a contrarian investment approach based on macro views and stock-specific turnaround stories [1]

Core Insights - First Financial Corp. reported quarterly earnings of $1.75 per share, exceeding the Zacks Consensus Estimate of $1.61 per share, and showing a significant increase from $0.74 per share a year ago, resulting in an earnings surprise of +8.70% [1] - The company achieved revenues of $65.75 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.42% and up from $58.39 million year-over-year [2] - First Financial Corp. has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.61, with expected revenues of $65.4 million, and for the current fiscal year, the EPS estimate is $6.34 on revenues of $255 million [7] Industry Context - The Banks - Midwest industry, to which First Financial Corp. belongs, is currently ranked in the top 35% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Loan Performance - Average total loans for Q3 2025 were $3.93 billion, an increase of $223 million or 6.02% from Q3 2024[5] - Total loans outstanding as of September 30, 2025, were $3.97 billion, up $252 million or 6.79% year-over-year[6] - Nonperforming loans as of September 30, 2025, were $19.3 million, with a ratio of 0.49% to total loans[16] - Nonperforming loans and other real estate owned totaled $19,400 thousand in Q3 2025, compared to $14,303 thousand in Q3 2024, indicating a rise in asset quality concerns[29] - The net charge-offs to average loans and leases ratio improved to 0.17% in Q3 2025 from 0.49% in Q3 2024, suggesting better credit performance[28] Financial Performance - Net income for Q3 2025 was $20.8 million, compared to $8.7 million for the same period in 2024, representing a 138.5% increase[8] - Net interest income for Q3 2025 reached a record $54.6 million, an increase of $7.4 million or 15.8% from Q3 2024[14] - Basic and diluted earnings per share increased to $1.75 in Q3 2025, compared to $0.74 in Q3 2024, highlighting strong profitability growth[32] - Total non-interest income for Q3 2025 was $11,149 thousand, slightly down from $11,223 thousand in Q3 2024, indicating stable revenue streams[32] Asset and Equity Growth - Shareholders' equity at September 30, 2025, was $622.2 million, an increase from $566.0 million a year earlier[11] - Book value per share increased to $52.50 as of September 30, 2025, up 9.55% from $47.93 a year ago[12] - Total assets reached $5,669,686 thousand as of September 30, 2025, up from $5,560,348 thousand at the end of 2024, indicating growth in the balance sheet[31] Credit Quality and Provisioning - The provision for credit losses for Q3 2025 was $2.0 million, significantly lower than the $9.4 million recorded in Q3 2024[17] - Provision for credit losses decreased to $1,950 thousand in Q3 2025 from $9,400 thousand in Q3 2024, reflecting improved credit quality[32] Operational Efficiency - The efficiency ratio improved to 56.63% in Q3 2025 from 59.37% in Q2 2025 and 64.43% in Q3 2024, demonstrating better operational efficiency[28] - The net interest margin for Q3 2025 was 4.25%, up from 3.78% in Q3 2024[15] Deposits and Capital Position - Average total deposits for Q3 2025 were $4.59 billion, a decrease of $114 million or 2.42% from Q3 2024[9] - Tier 1 leverage ratio increased to 11.05% in Q3 2025 from 10.91% in Q2 2025, indicating a stronger capital position[28]

Company Overview - First Financial Corp. (THFF) shares increased by 5.1% to close at $54.18, following a period of 11.8% loss over the past four weeks, indicating a significant recovery in stock performance [1][2] - The stock's rise was supported by a notable insider purchase by Director James McDonald, which enhanced investor confidence [2] Earnings Expectations - First Financial is projected to report quarterly earnings of $1.61 per share, reflecting a year-over-year increase of 117.6% [3] - Expected revenues for the upcoming report are $64.2 million, representing a 10% increase from the same quarter last year [3] Market Sentiment - The consensus EPS estimate for First Financial has remained unchanged over the last 30 days, suggesting stability in earnings expectations [4] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [4] Industry Context - First Financial Corp. operates within the Zacks Banks - Midwest industry, which is experiencing improved sentiment towards smaller financial institutions following strong results from larger peers [2][4] - Lakeland Financial, another company in the same industry, has also maintained a Zacks Rank of 3 (Hold) and is expected to report an EPS of $1.02, a 12.1% increase year-over-year [5]

Core Viewpoint - First Financial Corporation Indiana (THFF) has agreed to acquire BankFinancial Corporation (BFIN) in an all-stock transaction valued at approximately $142 million, aiming to strengthen its presence in the Chicagoland market and enhance service offerings [1][7]. Financial Details - BankFinancial shareholders will receive 0.48 shares of First Financial for each share they hold, with the transaction unanimously approved by both companies' boards. The deal is expected to close in the fourth quarter of 2025, pending regulatory approvals and shareholder consent [2]. Integration Plans - Upon completion, BankFinancial's consumer and wealth management services, along with selected commercial credit lines, will be integrated into First Financial's existing operations. All BankFinancial employees will transition to First Financial to maintain client relationships and community engagement [3]. Strategic Rationale - The acquisition will add 18 BankFinancial centers to First Financial's network, expanding its presence in the Chicagoland area and complementing its existing branch network across Ohio, Indiana, Kentucky, and Illinois [4][7]. Growth Strategy - This transaction aligns with THFF's broader Midwest growth strategy, which includes a prior agreement to acquire Westfield Bank in Northeast Ohio, and ongoing expansion efforts into Chicago, Cleveland, and Grand Rapids [5]. Leadership Statement - Archie Brown, president and CEO of First Financial, emphasized that the addition of BankFinancial's retail financial centers supports the Midwest growth strategy and provides Chicago clients with a broader range of banking and specialty solutions [6]. Market Performance - Over the past year, First Financial shares have increased by 39.4%, outperforming the industry's rise of 20.5% [6].

PART I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements detail the Corporation's financial position and performance [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Key Financial Metrics | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets (in thousands):** | | | | Cash and due from banks | $97,265 | $93,526 | | Securities available-for-sale | $1,169,956 | $1,195,990 | | Total Loans, net | $3,849,476 | $3,790,409 | | Total Assets | $5,602,969 | $5,560,348 | | **Liabilities (in thousands):** | | | | Total Deposits | $4,662,889 | $4,718,914 | | Short-term borrowings | $149,512 | $187,057 | | Other borrowings | $122,677 | $28,120 | | Total Liabilities | $5,015,301 | $5,011,307 | | **Shareholders' Equity (in thousands):** | | | | Total Shareholders' Equity | $587,668 | $549,041 | [Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Income Statement Summary | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $74,177 | $60,771 | $147,209 | $120,174 | | Total Interest Expense| $21,506 | $21,477 | $42,563 | $41,960 | | Net Interest Income | $52,671 | $39,294 | $104,646 | $78,214 | | Provision for Credit Losses | $1,950 | $2,966 | $3,900 | $4,766 | | Total Non-Interest Income | $10,381 | $9,905 | $20,892 | $19,336 | | Total Non-Interest Expense| $38,276 | $32,651 | $75,035 | $66,073 | | Income Before Income Taxes | $22,826 | $13,582 | $46,603 | $26,711 | | Net Income | $18,586 | $11,369 | $36,992 | $22,293 | | Basic and Diluted EPS | $1.57 | $0.96 | $3.12 | $1.89 | [Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Changes in Shareholders' Equity (Three Months Ended June 30, 2025) | Metric (in thousands) | Balance, April 1, 2025 | Net Income | Other Comprehensive Income | Omnibus Equity Incentive Plan | Cash Dividends | Balance, June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock | $2,019 | — | — | $1 | — | $2,020 | | Additional Capital | $146,159 | — | — | $232 | — | $146,391 | | Retained Earnings | $699,729 | $18,586 | — | — | $(6,044) | $712,271 | | AOCI | $(121,182) | — | $2,948 | — | — | $(118,234) | | Treasury Stock | $(154,780) | — | — | — | — | $(154,780) | | Total | $571,945 | $18,586 | $2,948 | $233 | $(6,044) | $587,668 | Changes in Shareholders' Equity (Six Months Ended June 30, 2025) | Metric (in thousands) | Balance, January 1, 2025 | Net Income | Other Comprehensive Income | Omnibus Equity Incentive Plan | Treasury Shares Purchased | Cash Dividends | Balance, June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock | $2,018 | — | — | $2 | — | — | $2,020 | | Additional Capital | $145,927 | — | — | $464 | — | — | $146,391 | | Retained Earnings | $687,366 | $36,992 | — | — | — | $(12,087) | $712,271 | | AOCI | $(132,285) | — | $14,051 | — | — | — | $(118,234) | | Treasury Stock | $(153,985) | — | — | — | $(795) | — | $(154,780) | | Total | $549,041 | $36,992 | $14,051 | $466 | $(795) | $(12,087) | $587,668 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities| $33,777 | $21,213 | | Net Cash from Investing Activities| $(18,110) | $(25,201) | | Net Cash from Financing Activities| $(11,928) | $2,302 | | Net Change in Cash and Equivalents| $3,739 | $(1,686) | | Cash and Due from Banks, End of Period | $97,265 | $75,073 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes offer detailed context for the financial statements, covering accounting policies and specific accounts [1. Significant Accounting Policies](index=11&type=section&id=1.%20Significant%20Accounting%20Policies) - The Corporation follows consistent accounting policies for interim and annual financial reporting, operating as a single banking segment[19](index=19&type=chunk) - The Omnibus Equity Incentive Plan awarded **25,134 shares in 2025** and **27,803 shares in 2024**, with grant date values of **$1.2 million** and **$1.0 million** respectively, vesting over three years[20](index=20&type=chunk) - The acquisition of SimplyBank was completed on July 1, 2024, with its results included in operations from that date[21](index=21&type=chunk) - The Corporation is evaluating the income tax implications of the 'One Big Beautiful Bill' (signed July 4, 2025) but does not expect a material impact on its financial statements[22](index=22&type=chunk) [2. New accounting standards](index=11&type=section&id=2.%20New%20accounting%20standards) - Adopted ASU 2023-02 (Investments Equity Method and Joint Ventures) on January 1, 2024, resulting in a **$19 million increase in other assets**, a **$21 million increase in other liabilities**, and a **$1.7 million decrease in retained earnings**[23](index=23&type=chunk) - Adopted ASU 2023-07 (Segment Reporting) on January 1, 2024, for fiscal year activity, with interim period application beginning January 1, 2025[24](index=24&type=chunk) - Adopted ASU 2023-09 (Income Taxes) on January 1, 2025, requiring new income tax disclosures in 2025 annual filings[26](index=26&type=chunk) - Currently assessing ASU 2024-03 (Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2026, for its effect on consolidated financial statements[27](index=27&type=chunk) [3. Allowance for Credit Losses](index=14&type=section&id=3.%20Allowance%20for%20Credit%20Losses) Allowance for Credit Losses Activity | Allowance for Credit Losses (in thousands) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Beginning balance (3 months) | $46,835 | $40,045 | | Provision for credit losses (3 months) | $1,950 | $2,966 | | Loans charged-off (3 months) | $(2,928) | $(6,091) | | Recoveries (3 months) | $1,230 | $1,414 | | Ending Balance (3 months) | $47,087 | $38,334 | | Beginning balance (6 months) | $46,732 | $39,767 | | Provision for credit losses (6 months) | $3,900 | $4,766 | | Loans charged-off (6 months) | $(6,169) | $(9,283) | | Recoveries (6 months) | $2,624 | $3,084 | | Ending Balance (6 months) | $47,087 | $38,334 | Non-Performing Loans | Non-Performing Loans (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans Past Due Over 90 Days Still Accruing | $1,969 | $1,888 | | Nonaccrual | $7,930 | $11,479 | | Nonaccrual With No Allowance For Credit Loss | $1,904 | $4,434 | | TOTAL | $11,803 | $17,801 | - Loan modifications for borrowers experiencing financial difficulty primarily involved interest rate reductions and term extensions, with **no payment defaults on modified loans** during the twelve months ended June 30, 2025[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - Credit quality indicators categorize loans into 'Special Mention', 'Substandard', and 'Doubtful' based on borrower's ability to service debt, collateral, and repayment prospects[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) [4. Securities](index=24&type=section&id=4.%20Securities) Securities Available-for-Sale | Securities Available-for-Sale (in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | U.S. Government agencies | $86,126 | $76,555 | $90,649 | $78,982 | | Mortgage Backed Securities - residential | $604,479 | $532,014 | $630,556 | $541,320 | | Collateralized mortgage obligations | $181,868 | $157,319 | $190,552 | $163,026 | | State and municipal obligations | $390,947 | $352,099 | $394,696 | $360,328 | | TOTAL | $1,317,255 | $1,169,956 | $1,361,797 | $1,195,990 | Contractual Maturities | Contractual Maturities (in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | | :--- | :--- | :--- | | Due in one year or less | $11,882 | $11,793 | | Due after one but within five years | $45,341 | $44,025 | | Due after five but within ten years | $119,992 | $116,682 | | Due after ten years | $340,767 | $295,589 | | Mortgage-backed securities and CMOs | $799,273 | $701,867 | | TOTAL | $1,317,255 | $1,169,956 | - Gross unrealized losses on investment securities **decreased to $150.65 million** at June 30, 2025, from $168.93 million at December 31, 2024, primarily due to market value adjustments reflecting interest rate changes, not creditworthiness[57](index=57&type=chunk) [5. Qualified Affordable Housing Project Investments](index=27&type=section&id=5.%20Qualified%20Affordable%20Housing%20Project%20Investments) Investment Summary | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investment balance | $40,000 | $27,200 | | Unfunded commitments | $24,900 | $17,700 | Expense/Benefit Summary | Expense/Benefit (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Amortization expense (noninterest) | $31 | $211 | | Amortization expense (income tax) | $1,400 | $847 | | Tax credits and other benefits | $1,800 | $1,600 | [6. Fair Value](index=28&type=section&id=6.%20Fair%20Value) - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1 prices), and **Level 3** (significant unobservable inputs)[61](index=61&type=chunk)[62](index=62&type=chunk) - Other real estate owned (OREO) is valued at Level 3, with a fair value of **$383 thousand** at June 30, 2025, reduced by $142 thousand for fair value adjustment[71](index=71&type=chunk)[72](index=72&type=chunk) Fair Value Measurements | Fair Value Measurements (in thousands) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | | U.S. Government agencies | $— | $76,555 | $— | $76,555 | | Mortgage Backed Securities-residential | $— | $532,014 | $— | $532,014 | | Collateralized debt obligations | $— | $— | $2,909 | $2,909 | | TOTAL | $— | $1,167,047 | $2,909 | $1,169,956 | Level 3 Fair Value Measurements | Level 3 Fair Value Measurements (in thousands) | Fair Value (June 30, 2025) | Valuation Technique | Unobservable Input | Range | | :--- | :--- | :--- | :--- | :--- | | Collateralized debt obligations | $2,909 | Discounted cash flow| Discount rate | 6.26 %| | Collateral dependent loans | $2,918 | Discounted cash flow| Discount rate for age of appraisal and market conditions | 30.00%-100.00 %| [7. Borrowings](index=33&type=section&id=7.%20Borrowings) - FHLB advances, totaling **$106.0 million** at June 30, 2025, are secured by eligible securities and a blanket pledge on real estate loan collateral[79](index=79&type=chunk) Short-term Borrowings | Short-term Borrowings (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Federal Funds Purchased | $118,500 | $154,250 | | Repurchase Agreements | $31,012 | $32,807 | | TOTAL | $149,512 | $187,057 | Other Borrowings | Other Borrowings (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | FHLB advances | $106,010 | $7,287 | | Notes payable | $16,667 | $20,833 | | TOTAL | $122,677 | $28,120 | Aggregate Minimum Annual Retirements of Other Borrowings | Aggregate Minimum Annual Retirements of Other Borrowings (in thousands) | | :--- | | Twelve Months Ended June 30, 2026 | $105,053 | | Twelve Months Ended June 30, 2027 | $16,667 | | Twelve Months Ended June 30, 2028 | $957 | | TOTAL | $122,677 | [8. Components of Net Periodic Benefit Cost](index=35&type=section&id=8.%20Components%20of%20Net%20Periodic%20Benefit%20Cost) - Employer contributions of **$357 thousand** have been made to the Pension Plan and **$134 thousand** to the Post Retirement Health Benefits plan in the first six months of 2025[81](index=81&type=chunk) Net Periodic Benefit Cost | Net Periodic Benefit Cost (in thousands) | Pension Benefits (3M 2025) | Post-Retirement Health Benefits (3M 2025) | Pension Benefits (6M 2025) | Post-Retirement Health Benefits (6M 2025) | | :--- | :--- | :--- | :--- | :--- | | Service cost | $107 | $3 | $215 | $6 | | Interest cost | $1,017 | $32 | $2,033 | $64 | | Expected return on plan assets | $(1,093) | — | $(2,187) | — | | Net amortization of net (gain) loss | — | $(39) | — | $(78) | | Net Periodic Benefit Cost | $31 | $(4) | $61 | $(8) | [9. Revenue from Contracts with Customers](index=36&type=section&id=9.%20Revenue%20from%20Contracts%20with%20Customers) - Revenue recognition for service charges on deposits, trust and financial services, and interchange income is detailed, with transaction-based fees recognized at execution and maintenance fees over time[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) Non-Interest Income | Non-Interest Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Service charges on deposits and debit card fee income | $7,554 | $6,730 | $15,139 | $13,437 | | Trust and financial services | $1,490 | $1,318 | $2,883 | $2,652 | | Interchange income | $180 | $135 | $394 | $314 | | Net gains on sales of loans | $430 | $299 | $655 | $475 | | Total non-interest income | $10,381 | $9,905 | $20,892 | $19,336 | [10. Accumulated Other Comprehensive Income (Loss)](index=37&type=section&id=10.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) - Reclassifications from AOCI for the six months ended June 30, 2025, included **$(3) thousand** for net securities gains (losses) and **$(7) thousand** for amortization of retirement plan items, net of tax[91](index=91&type=chunk) AOCI Components (Three Months Ended June 30, 2025) | AOCI Components (in thousands) | Beginning Balance (April 1, 2025) | Net Current Period OCI (Loss) | Ending Balance (June 30, 2025) | | :--- | :--- | :--- | :--- | | Unrealized gains and (Losses) on available-for-sale Securities | $(116,707) | $2,946 | $(113,761) | | Retirement plans | $(4,475) | $2 | $(4,473) | | TOTAL | $(121,182) | $2,948 | $(118,234) | AOCI Components (Six Months Ended June 30, 2025) | AOCI Components (in thousands) | Beginning Balance (January 1, 2025) | Net Current Period OCI (Loss) | Ending Balance (June 30, 2025) | | :--- | :--- | :--- | :--- | | Unrealized gains and (Losses) on available-for-sale Securities | $(127,807) | $14,046 | $(113,761) | | Retirement plans | $(4,478) | $5 | $(4,473) | | TOTAL | $(132,285) | $14,051 | $(118,234) | [11. Leases](index=40&type=section&id=11.%20Leases) - At June 30, 2025, the weighted average remaining lease term for operating leases was **10.8 years**, and the weighted average discount rate was **3.23%**[94](index=94&type=chunk) Lease Information | Lease Information (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Lease liabilities | $7,347 | $7,829 | | Right-of-use assets | $7,215 | $7,725 | Lease Costs | Lease Costs (in thousands) | Six Months Ended June 30, 2025 | | :--- | :--- | | Operating lease cost | $711 | | Short-term lease cost | $35 | | Variable lease cost | $3 | | Total lease cost | $749 | [12. Acquisitions](index=41&type=section&id=12.%20Acquisitions) - The Corporation completed the acquisition of SimplyBank on July 1, 2024, for approximately **$73.4 million in cash**, resulting in **$11.2 million in goodwill**[98](index=98&type=chunk)[99](index=99&type=chunk) SimplyBank Acquisition | SimplyBank Acquisition (in thousands) | As Adjusted | | :--- | :--- | | Cash consideration | $73,400 | | Total assets acquired | $697,914 | | Total liabilities assumed | $635,758 | | Net identifiable assets | $62,156 | | Goodwill | $11,244 | Pro Forma Financial Information | Pro Forma Financial Information (in thousands, except per share data) | Year Ended December 31, 2024 | Year Ended December 31, 2023 | | :--- | :--- | :--- | | Net interest income | $188,441 | $196,646 | | Net income | $36,425 | $70,586 | | Basic and diluted earnings per share | $3.08 | $5.91 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20and%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Management analyzes the Corporation's financial performance, condition, and market risk exposure [Critical Accounting Policies](index=44&type=section&id=Critical%20Accounting%20Policies) - Critical accounting policies include determining the **allowance for credit losses (ACL)** and the valuation of goodwill and investment securities, which involve significant management judgment and estimates[108](index=108&type=chunk) - The ACL is estimated using a cohort methodology that tracks historical loss experience since 2008, with annual recalibration of delay periods and portfolio segmentation[109](index=109&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk) - Qualitative adjustments are made to ACL estimates for factors not captured in the model, such as changes in lending policies, asset-specific risks, and economic uncertainty, using a two-year reasonable and supportable forecast period[114](index=114&type=chunk)[115](index=115&type=chunk) [Summary of Operating Results](index=46&type=section&id=Summary%20of%20Operating%20Results) - Liquidity remains strong, with cash and available-for-sale securities representing approximately **22.6% of assets** at June 30, 2025, and access to considerable contingent liquidity sources[120](index=120&type=chunk) - Capital ratios are **well above regulatory 'well-capitalized' standards**, and asset quality remains solid with a non-performing asset ratio of **0.23%** of total assets and net charge-offs of **0.18%** to average loans and leases at June 30, 2025[120](index=120&type=chunk) Key Performance Metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $18.6 million | $11.4 million | $37.0 million | $22.3 million | | Basic EPS | $1.57 | $0.96 | $3.12 | $1.89 | | Return on Average Assets | 1.34% | 0.94% | 1.34% | 0.93% | | Return on Average Equity | 12.90% | 8.78% | 12.97% | 8.57% | [Net Interest Income](index=48&type=section&id=Net%20Interest%20Income) - The increase in net interest income and margin was primarily driven by a **28 basis point increase** in yields on net loans and leases for the six months ended June 30, 2025, compared to the same period in 2024[124](index=124&type=chunk) Net Interest Income and Margin | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $52.7 million | $39.3 million | $104.6 million | $78.2 million | | Net Interest Margin | 4.15% | 3.57% | 4.13% | 3.55% | [Non-Interest Income](index=48&type=section&id=Non-Interest%20Income) Non-Interest Income Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-Interest Income | $10.4 million | $9.9 million | $20.9 million | $19.3 million | [Non-Interest Expenses](index=48&type=section&id=Non-Interest%20Expenses) - The increase in non-interest expense for both the three and six months ended June 30, 2025, was primarily due to an overall increase in operating expenses resulting from the **SimplyBank acquisition**[126](index=126&type=chunk) Non-Interest Expense Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-Interest Expense | $38.3 million | $32.7 million | $75.0 million | $66.1 million | [Allowance for Credit Losses](index=48&type=section&id=Allowance%20for%20Credit%20Losses%20(MD&A%20section)) - Management believes the allowance for credit losses is adequate based on analysis of the current portfolio, including changes in CECL model assumptions, credit quality, economic conditions, and loan composition[127](index=127&type=chunk) Credit Loss Metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $2.0 million | $3.0 million | $3.9 million | $4.8 million | | Net Charge-offs | $1.7 million | $4.7 million | $3.5 million | $6.2 million | Allowance Balances | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ACL | $47,100 | $46,700 | | Allowance for unfunded commitments | $2,200 | $2,100 | [Income Tax Expense](index=48&type=section&id=Income%20Tax%20Expense%20(MD&A%20section)) - The increase in the effective income tax rate for the first six months of 2025 was primarily driven by **significantly higher pretax income** compared to the same period in 2024, while permanent differences remained similar[128](index=128&type=chunk) Effective Tax Rate | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Effective Income Tax Rate | 20.62% | 16.54% | [Non-performing Loans](index=48&type=section&id=Non-performing%20Loans%20(MD&A%20section)) - Non-performing loans **decreased by 26.3% to $9.8 million** at June 30, 2025, from $13.3 million at December 31, 2024, and decreased by 38.5% compared to $15.9 million as of June 30, 2024[129](index=129&type=chunk)[130](index=130&type=chunk) Non-performing Loan Summary | Non-performing Loans (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-accrual loans | $7,878 | $11,479 | | Accruing loans past due over 90 days| $1,917 | $1,821 | | Total Non-performing Loans | $9,795 | $13,300 | | Ratio of ACL to Non-performing Loans| 480.7% | 351.4% | [Interest Rate Sensitivity and Liquidity](index=50&type=section&id=Interest%20Rate%20Sensitivity%20and%20Liquidity) - Interest rate risk is considered the Corporation's most significant market risk, managed by the Asset Liability Committee using earning simulation and market value of equity sensitivity analysis[133](index=133&type=chunk)[134](index=134&type=chunk) - The Corporation maintains strong liquidity with **$11.9 million** in investments maturing in the next 12 months, anticipated principal payments of **$106.8 million** from mortgage-backed securities, and available borrowing capacity of **$227.4 million** with FHLB, **$1.1 billion** with the Federal Reserve, and **$90 million** with correspondent banks[138](index=138&type=chunk) Net Interest Income Sensitivity | Interest Rate Change (Basis Points) | Percentage Change in Net Interest Income (12 months) | Percentage Change in Net Interest Income (24 months) | | :--- | :--- | :--- | | Down 300 | 4.50% | (6.27)% | | Down 200 | 5.35% | (1.17)% | | Down 100 | 3.42% | 0.39% | | Up 100 | (1.60)% | 0.99% | | Up 200 | (6.12)% | (0.93)% | | Up 300 | (9.10)% | (1.37)% | [Financial Condition](index=52&type=section&id=Financial%20Condition) Balance Sheet Summary | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Loans, net (in millions) | $3,900 | $3,841 | +$59M | | Deposits (in millions) | $4,700 | $4,719 | -1.2% | | Other borrowings (in millions) | $122.7 | $28.1 | +$94.6M| | Shareholders' equity (in millions) | $587.7 | $549.0 | +7.04% | | Book value per share | $49.59 | $46.36 | +6.97% | | Accumulated other comprehensive loss (in millions) | $(118.2) | $(132.3) | +$14.1M| [Capital Adequacy](index=53&type=section&id=Capital%20Adequacy) - The Corporation and its subsidiary bank maintain capital ratios **well above the standards required** to be considered 'well-capitalized' under Basel 3 regulatory guidelines[143](index=143&type=chunk)[144](index=144&type=chunk) Capital Ratios | Capital Ratio | Corporation (June 30, 2025) | First Financial Bank (June 30, 2025) | To Be Well Capitalized | | :--- | :--- | :--- | :--- | | Common equity tier 1 capital | 12.86% | 12.80% | 6.50% | | Total risk-based capital | 13.89% | 13.84% | 10.00% | | Tier I risk-based capital | 12.86% | 12.80% | 8.00% | | Tier I leverage capital | 10.91% | 10.40% | 5.00% | [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Corporation's disclosure controls and procedures were effective as of June 30, 2025 - Management, including the principal executive officer and principal financial officer, concluded that the Corporation's disclosure controls and procedures were **effective** as of June 30, 2025[146](index=146&type=chunk) - **No material changes** in the Corporation's internal control over financial reporting occurred during the quarter ended June 30, 2025[146](index=146&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The Corporation reports no material pending legal proceedings outside of routine business litigation - There are **no material pending legal proceedings**, other than routine litigation incidental to the business[148](index=148&type=chunk) - No material legal proceedings involve any director, officer, principal shareholder, or affiliate with adverse interests to the Corporation[148](index=148&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Corporation's 2024 Form 10-K - **No material changes** in risk factors from those disclosed in the Corporation's 2024 Form 10-K[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation has an authorized stock repurchase program with 518,860 shares available for future repurchase - A stock repurchase program authorizes the repurchase of up to **10% of outstanding common stock**, or approximately 1,243,531 shares[151](index=151&type=chunk) - **No shares were purchased** under the program during the quarter ended June 30, 2025[153](index=153&type=chunk) - As of June 30, 2025, **518,860 shares remain available** for purchase under the program[153](index=153&type=chunk) [Item 3. Defaults upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This item is not applicable to the Corporation for the reporting period - Not applicable[154](index=154&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Corporation for the reporting period - Not applicable[155](index=155&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 plans were adopted, modified, or terminated by any director or officer during the quarter - No Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during the three months ended June 30, 2025[156](index=156&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational and governance documents - Includes Amended and Restated Articles of Incorporation and Code of By-Laws[158](index=158&type=chunk) - Lists several Long-Term and Short-Term Incentive Plans, including the 2011 Omnibus Equity Incentive Plan[158](index=158&type=chunk) - Contains employment agreements for Norman D. Lowery, Rodger A. McHargue, Stephen P. Panagouleas, and Mark A. Franklin, effective July 1, 2025[158](index=158&type=chunk) - Includes Sarbanes-Oxley Act 302 and 906 Certifications by the Principal Executive Officer and Principal Financial Officer[158](index=158&type=chunk) [Signatures](index=58&type=section&id=Signatures) The report was officially signed on August 7, 2025, by the President, CEO & Director, and the Treasurer & CFO - The report was signed on **August 7, 2025**[162](index=162&type=chunk) - Signed by **Norman D. Lowery**, President, CEO & Director (Principal Executive Officer)[162](index=162&type=chunk) - Signed by **Rodger A. McHargue**, Treasurer and CFO (Principal Financial Officer)[162](index=162&type=chunk)

Core Insights - First Financial's shares have increased approximately 19% over the past year, reaching a new 52-week high due to significant improvements in operating returns [1] Group 1 - The company has demonstrated solid performance in the stock market, attributed to its effective operational strategies [1] - The positive trend in operating returns has been consistently highlighted, indicating a favorable outlook for the company's financial health [1]

Core Insights - First Financial Corp. reported a revenue of $63.05 million for the quarter ended June 2025, reflecting a year-over-year increase of 28.2% [1] - The earnings per share (EPS) for the quarter was $1.57, up from $0.96 in the same quarter last year, resulting in an EPS surprise of +9.79% against the consensus estimate of $1.43 [1] - The reported revenue exceeded the Zacks Consensus Estimate of $62.3 million by +1.21% [1] Financial Metrics - The net interest margin for First Financial Corp. was 4.2%, slightly above the average estimate of 4.1% from two analysts [4] - The efficiency ratio was reported at 59.4%, better than the average estimate of 60.2% from two analysts [4] - Total non-interest income was $10.38 million, which fell short of the estimated $10.65 million by two analysts [4] - The gain on the sale of mortgage loans was $0.43 million, exceeding the average estimate of $0.35 million from two analysts [4] Stock Performance - Over the past month, shares of First Financial Corp. have returned +6%, compared to a +5.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - First Financial Corp. reported quarterly earnings of $1.57 per share, exceeding the Zacks Consensus Estimate of $1.43 per share, and showing a significant increase from $0.96 per share a year ago, indicating strong financial performance [1][2]. Financial Performance - The company achieved revenues of $63.05 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.21% and up from $49.2 million year-over-year [2]. - Over the last four quarters, First Financial Corp. has exceeded consensus EPS estimates three times and topped revenue estimates four times [2]. Stock Performance - First Financial Corp. shares have increased approximately 20.8% since the beginning of the year, outperforming the S&P 500's gain of 7.2% [3]. - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.51 on revenues of $63.5 million, and for the current fiscal year, it is $6.02 on revenues of $252.8 million [7]. - The trend of estimate revisions for First Financial Corp. was mixed prior to the earnings release, which may change following the recent results [6]. Industry Context - The Banks - Midwest industry, to which First Financial Corp. belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8].