RETIREMENT PLANS

12 Months Ended

Dec. 31, 2024

RETIREMENT PLANS

RETIREMENT PLANS

16.RETIREMENT PLANS:

Employees of the Corporation are covered by a retirement program that consists of a defined benefit plan and an employee stock ownership plan (ESOP). Plan assets consist primarily of the Corporation’s stock and obligations of U.S. Government agencies. Benefits under the defined benefit plan are actuarially determined based on an employee’s service and compensation, as defined, and funded as necessary. This plan was frozen for the majority of employees as of December 31, 2012.Those employees will be eligible to participate in a 401K plan that the Corporation can contribute a discretionary match of the pay contributed by the employee. In addition the ESOP plan will continue in place for all employees.

Assets in the ESOP are considered in calculating the funding to the defined benefit plan required to provide such benefits. Any shortfall of benefits under the ESOP are to be provided by the defined benefit plan. The ESOP may provide benefits beyond those determined under the defined benefit plan. Contributions to the ESOP are determined by the Corporation’s Board of Directors. The Corporation made contributions to the defined benefit plan of $3.4 million, zero and $126 thousand in 2024, 2023 and 2022. The Corporation contributed $1.67 million, $1.52 million and $1.45 million to the ESOP in 2024, 2023 and 2022. There were contributions of $1.4 million, $1.3 million and $1.1 million to the ESOP for employees no longer participating in the defined benefit plan in 2024, 2023 and 2022 respectively.

The Corporation uses a measurement date of December 31.

Net periodic benefit cost and other amounts recognized in other comprehensive income included the following components:

(Dollar amounts in thousands)	2024		2023		2022
Service cost - benefits earned	$	565	$	628	$	1,190
Interest cost on projected benefit obligation		3,788		3,824		2,826
Expected return on plan assets		(4,205)		(3,879)		(4,910)
Net amortization and deferral		435		752		1,259
Net periodic pension cost		583		1,325		365
Net loss (gain) during the period		(6,063)		(1,761)		(5,323)
Amortization of prior service cost		—		—		—
Amortization of unrecognized (gain) loss		(435)		(752)		(1,259)
Total recognized in other comprehensive (income) loss		(6,498)		(2,513)		(6,582)
Total recognized net periodic pension cost and other comprehensive income	$	(5,915)	$	(1,188)	$	(6,217)

The information below sets forth the change in projected benefit obligation, reconciliation of plan assets, and the funded status of the Corporation’s retirement program. Actuarial present value of benefits is based on service to date and present pay levels.

(Dollar amounts in thousands)	2024		2023
Change in benefit obligation:
Benefit obligation at January 1	$	84,523	$	83,578
Service cost		565		628
Interest cost		3,788		3,824
Actuarial (gain) loss		(3,355)		788
Benefits paid		(5,130)		(4,295)
Benefit obligation at December 31		80,391		84,523
Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1		74,117		71,734
Actual return on plan assets		6,913		6,429
Employer contributions		3,620		249
Benefits paid		(5,130)		(4,295)
Fair value of plan assets at December 31		79,520		74,117
Funded status at December 31 (plan assets less benefit obligation)	$	(871)	$	(10,406)

Amounts recognized in accumulated other comprehensive income at December 31, 2024 and 2023 consist of:

(Dollar amounts in thousands)	2024		2023
Net loss (gain)	$	5,458	$	11,956
Prior service cost (credit)		—		—
	$	5,458	$	11,956

The accumulated benefit obligation for the defined benefit pension plan was $78.0 million and $81.8 million at year-end 2024 and 2023.

Principal assumptions used to determine pension benefit obligation at year end:	2024		2023
Discount rate	5.54	%	4.83	%
Rate of increase in compensation levels	3.00		3.00

Principal assumptions used to determine net periodic pension cost:	2024		2023
Discount rate	4.83	%	5.02	%
Rate of increase in compensation levels	3.00		3.00
Expected long-term rate of return on plan assets	6.00		6.00

The expected long-term rate of return was estimated using market benchmarks for equities and bonds applied to the plan’s target asset allocation. Management estimated the rate by which plan assets would perform based on historical experience as adjusted for changes in asset allocations and expectations for future return on equities as compared to past periods.

Plan Assets — The Corporation’s pension plan weighted-average asset allocation for the years 2024 and 2023 by asset category are as follows:

	Pension Plan		ESOP		Pension				ESOP
	Target		Target		Percentage of Plan				Percentage of Plan
	Allocation		Allocation		Assets at December 31,				Assets at December 31,
ASSET CATEGORY	2024		2024		2024		2023		2024		2023
Equity securities	25-75	%	95-99	%	65	%	64	%	98	%	99	%
Debt securities	0-50	%	0-0	%	30	%	34	%	—	%	—	%
Other	0-20	%	0-5	%	5	%	2	%	2	%	1	%
TOTAL					100	%	100	%	100	%	100	%

Fair Value of Plan Assets — Fair value is the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Corporation used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Equity, Debt, Investment Funds and Other Securities — The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

The fair value of the plan assets at December 31, 2024 and 2023, by asset category, is as follows:

			Fair Value Measurements at
			December 31, 2024 Using:
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Observable
			Identical Assets		Inputs		Inputs
(Dollar amounts in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Plan assets
Equity securities	$	57,590	$	57,590	$	—	$	—
Debt securities		10,665		—		10,665		—
Investment Funds		11,265		11,265		—		—
Total plan assets	$	79,520	$	68,855	$	10,665	$	—

			Fair Value Measurements at
			December 31, 2023 Using:
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Observable
			Identical Assets		Inputs		Inputs
(Dollar amounts in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Plan assets
Equity securities	$	52,088	$	52,088	$	—	$	—
Debt securities		11,192		—		11,192		—
Investment Funds		10,837		10,837		—		—
Total plan assets	$	74,117	$	62,925	$	11,192	$	—

The investment objective for the retirement program is to maximize total return without exposure to undue risk. Asset allocation favors equities. This target includes the Corporation’s ESOP, which is fully invested in corporate stock. Other investment allocations include fixed income securities and cash.

The plan is prohibited from investing in the following: private placement equity and debt transactions; letter stock and uncovered options; short-sale margin transactions and other specialized investment activity; and fixed income or interest rate futures. All other investments not prohibited by the plan are permitted.

Equity securities in the defined benefit plan include First Financial Corporation common stock in the amount of $16.5 million (21 percent of total plan assets) and $16.3 million (22 percent of total plan assets) at December 31, 2024 and 2023, respectively. In addition the ESOP for non plan participants holds an estimated $9.7 million and $8.3 million of First Financial Corporation stock at December 31, 2024 and December 31, 2023 respectively. Other equity securities are predominantly stocks in large cap U.S. companies.

Contributions — The Corporation expects to contribute $570 thousand to its pension plan and $563 thousand to its ESOP in 2025.

Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected:

PENSION BENEFITS
(Dollar amounts in thousands)
2025	$	4,867
2026		5,040
2027		5,181
2028		5,312
2029		5,399
2030-2034		27,613

Supplemental Executive Retirement Plan — The Corporation has established a Supplemental Executive Retirement Plan (SERP) for certain executive officers. The provisions of the SERP allow the Plan’s participants who are also participants in the Corporation’s defined benefit pension plan to receive supplemental retirement benefits to help recompense for benefits lost due to the imposition of IRS limitations on benefits under the Corporation’s tax qualified defined benefit pension plan. Expenses related to the plan were $481 thousand in 2024 and $517 thousand in 2023 and $751 thousand in 2022. The plan is unfunded and has a measurement date of December 31. The amounts recognized in other comprehensive income in the current year are as follows:

(Dollar amounts in thousands)	2024		2023		2022
Net loss (gain) during the period	$	781	$	(144)	$	(1,604)
Amortization of prior service cost		—		—		—
Amortization of unrecognized (gain) loss		(37)		(84)		(418)
Total recognized in other comprehensive (income) loss	$	744	$	(228)	$	(2,022)

The Corporation has $9.0 million and $7.8 million recognized in the balance sheet as a liability at December 31, 2024 and 2023. Amounts in accumulated other comprehensive income consist of $1.7 million net loss at December 31, 2024 and $926 thousand net loss at December 31, 2023.

Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected:

(Dollar amounts on thousands)
2025	$	539
2026		625
2027		624
2028		624
2029		623
2030-2034		3,686

Post-retirement medical benefits — The Corporation also provides medical benefits to certain employees subsequent to their retirement. The Corporation uses a measurement date of December 31. Accrued post-retirement benefits as of December 31, 2024 and 2023 are as follows:

	December 31,
(Dollar amounts in thousands)	2024		2023
Change in benefit obligation:
Benefit obligation at January 1	$	3,190	$	3,175
Service cost		16		21
Interest cost		137		153
Plan participants' contributions		94		84
Actuarial (gain)		(471)		34
Benefits paid		(305)		(277)
Benefit obligation at December 31	$	2,661	$	3,190
Funded status at December 31	$	2,661	$	3,190

Amounts recognized in accumulated other comprehensive income consist of a net gain of $851 thousand at December 31, 2024 and $459 thousand net gain at December 31, 2023. The post-retirement benefits paid in 2024 and 2023 of $305 thousand and $277 thousand, respectively, were fully funded by company and participant contributions.

There is no estimated transition obligation for the post-retirement benefit plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year.

Weighted average assumptions at December 31:

	December 31,
	2024		2023
Discount rate	5.54	%	4.83	%
Initial weighted health care cost trend rate	5.00	%	5.00	%
Ultimate health care cost trend rate	5.00		5.00
Year that the rate is assumed to stabilize and remain unchanged	2025		2024

Post-retirement health benefit expense included the following components:

	Years Ended December 31,
(Dollar amounts in thousands)	2024		2023		2022
Service cost	$	16	$	21	$	34
Interest cost		137		153		111
Amortization of net actuarial loss (gain)		(79)		(53)		—
Net periodic benefit cost		74		121		145
Net loss (gain) during the period		(471)		34		(758)
Amortization of prior service cost		79		53		—
Total recognized in other comprehensive income (loss)		(392)		87		(758)
Total recognized net periodic benefit cost and other comprehensive income	$	(318)	$	208	$	(613)

Contributions — The Corporation expects to contribute $243 thousand to its other post-retirement benefit plan in 2025.

Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected:

(Dollar amounts in thousands)
2025	$	243
2026		236
2027		230
2028		227
2029		220
2030-2034		1,028