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RETIREMENT PLANS:
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
RETIREMENT PLANS 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 $2.05 million, $4.44 million and $1.77 million in 2021, 2020 and 2019. The Corporation contributed $1.40 million, $1.47 million and $1.25 million to the ESOP in 2021, 2020 and 2019. There were contributions of $1.1 million, $1.2 million and $926 thousand to the ESOP for employees no longer participating in the defined benefit plan in 2021, 2020 and 2019 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)202120202019
Service cost - benefits earned$1,355 $1,300 $1,218 
Interest cost on projected benefit obligation2,632 3,116 3,465 
Expected return on plan assets(4,713)(4,198)(3,585)
Net amortization and deferral2,072 1,968 1,558 
Net periodic pension cost1,346 2,186 2,656 
Net loss (gain) during the period(5,883)3,188 6,362 
Amortization of prior service cost(1)(1)(1)
Amortization of unrecognized gain (loss)(2,072)(1,967)(1,558)
Total recognized in other comprehensive (income) loss(7,956)1,220 4,803 
Total recognized net periodic pension cost and other comprehensive income$(6,610)$3,406 $7,459 
 
 
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)20212020
Change in benefit obligation:  
Benefit obligation at January 1$109,922 $102,791 
Service cost1,355 1,300 
Interest cost2,632 3,116 
Actuarial (gain) loss(2,943)6,845 
Benefits paid(4,470)(4,130)
Benefit obligation at December 31106,496 109,922 
Reconciliation of fair value of plan assets:  
Fair value of plan assets at January 182,437 73,962 
Actual return on plan assets7,654 7,856 
Employer contributions2,358 4,749 
Benefits paid(4,470)(4,130)
Fair value of plan assets at December 3187,979 82,437 
Funded status at December 31 (plan assets less benefit obligation)$(18,517)$(27,485)

Amounts recognized in accumulated other comprehensive income at December 31, 2021 and 2020 consist of:
(Dollar amounts in thousands)20212020
Net loss (gain)$21,051 $29,006 
Prior service cost (credit)— 1 
 $21,051 $29,007 

The accumulated benefit obligation for the defined benefit pension plan was $102.4 million and $105.2 million at year-end
2021 and 2020.

Principal assumptions used to determine pension benefit obligation at year end:20212020
Discount rate2.83 %2.52 %
Rate of increase in compensation levels3.00 3.00 
Principal assumptions used to determine net periodic pension cost:20212020
Discount rate2.52 %3.22 %
Rate of increase in compensation levels3.00 3.00 
Expected long-term rate of return on plan assets6.00 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 2021 and 2020 by asset category are as follows:
Pension Plan
Target Allocation		ESOP
Target Allocation		Pension
Percentage of Plan
Assets at December 31,		ESOP
Percentage of Plan
Assets at December 31,
ASSET CATEGORY202120212021202020212020
Equity securities
25-75%
95-99%
63 %63 %98 %99 %
Debt securities
0-50%
0-0%
32 %31 %— %— %
Other
0-20%
0-5%
5 %6 %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, 2021 and 2020, by asset category, is as follows:
Fair Value Measurements at
December 31, 2021 Using:
Quoted Prices
in Active
Markets for
Identical Assets		Significant
Other
Observable
Inputs		Significant
Observable
Inputs
(Dollar amounts in thousands)Total(Level 1)(Level 2)(Level 3)
Plan assets    
Equity securities$62,382 $62,382 $— $— 
Debt securities10,102 — 10,102 — 
Investment Funds15,495 15,495 — — 
Total plan assets$87,979 $77,877 $10,102 $— 
Fair Value Measurements at
December 31, 2020 Using:
Quoted Prices
in Active
Markets for
Identical Assets		Significant
Other
Observable
Inputs		Significant
Observable
Inputs
(Dollar amounts in thousands)Total(Level 1)(Level 2)(Level 3)
Plan assets    
Equity securities$55,235 $55,235 $— $— 
Debt securities12,673 — 12,673 — 
Investment Funds14,529 14,529 — — 
Total plan assets$82,437 $69,764 $12,673 $— 
 
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 $18.1 million (21 percent of total plan assets) and $16.5 million (20 percent of total plan assets) at December 31, 2021 and 2020, respectively. In addition the ESOP for non plan participants holds an estimated $7.2 million and $5.5 million of First Financial Corporation stock at December 31, 2021 and December 31, 2020 respectively. Other equity securities are predominantly stocks in large cap U.S. companies.
 
Contributions — The Corporation expects to contribute $250 thousand to its pension plan and $703 thousand to its ESOP in 2022.
 
Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected:
PENSION BENEFITS
(Dollar amounts in thousands)
2022$5,889 
20236,107 
20246,293 
20256,430 
20266,663 
2027-203134,497 
 
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 $748 thousand in 2021 and $539 thousand in 2020 and $339 thousand in 2019.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)202120202019
Net loss (gain) during the period$54 $1,459 $1,357 
Amortization of prior service cost— — — 
Amortization of unrecognized (gain) loss(441)(246)(75)
Total recognized in other comprehensive (income) loss$(387)$1,213 $1,282 
 
The Corporation has $8.8 million and $8.4 million recognized in the balance sheet as a liability at December 31, 2021 and 2020. Amounts in accumulated other comprehensive income consist of $3.2 million net loss at December 31, 2021 and $3.6 million net loss at December 31, 2020.

Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected:
(Dollar amounts on thousands)
2022$— 
2023203 
2024399 
2025390 
2026380 
2027-20313,104 

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, 2021 and 2020 are as follows:
 December 31,
(Dollar amounts in thousands)20212020
Change in benefit obligation:  
Benefit obligation at January 1$4,147 $3,975 
Service cost43 38 
Interest cost103 125 
Plan participants' contributions34 75 
Actuarial (gain) loss(53)238 
Benefits paid(259)(304)
Benefit obligation at December 31$4,015 $4,147 
Funded status at December 31$4,015 $4,147 
 
Amounts recognized in accumulated other comprehensive income consist of a net loss of $212 thousand at December 31, 2021 and $266 thousand net loss at December 31, 2020. The post-retirement benefits paid in 2021 and 2020 of $259 thousand and $305 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,
 20212020
Discount rate2.83 %2.52 %
Initial weighted health care cost trend rate5.00 %5.00 %
Ultimate health care cost trend rate5.00 5.00 
Year that the rate is assumed to stabilize and remain unchanged20222021
 
Post-retirement health benefit expense included the following components:
 Years Ended December 31,
(Dollar amounts in thousands)202120202019
Service cost$43 $38 $34 
Interest cost103 125 146 
Amortization of net actuarial loss (gain)— — (16)
Net periodic benefit cost146 163 164 
Net loss (gain) during the period(53)238 626 
Amortization of prior service cost— — 16 
Total recognized in other comprehensive income (loss)(53)238 642 
Total recognized net periodic benefit cost and other comprehensive income$93 $401 $806 

 
Contributions — The Corporation expects to contribute $248 thousand to its other post-retirement benefit plan in 2022.
 
Estimated Future Payments — The following benefit payments, which reflect expected future service, are expected:
(Dollar amounts in thousands)
2022$248 
2023253 
2024258 
2025253 
2026250 
2027-20311,242