EDGAR 10-K Filing

Company CIK: 1435508
Filing Year: 2025
Filename: 1435508_10-K_2025_0001104659-25-120690.json

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ITEM 1. BUSINESS
Item 1. BUSINESS
General
First Savings Financial Group, Inc., an Indiana corporation, was incorporated in May 2008 and serves as the holding company for First Savings Bank (the “Bank” or “First Savings Bank”). First Savings Financial Group’s principal business activity is the ownership of the outstanding common stock of First Savings Bank. First Savings Financial Group does not own or lease any property but instead uses the premises, equipment and other property of First Savings Bank with the payment of appropriate rental fees, as required by applicable law and regulations, under the terms of an expense allocation agreement. Accordingly, the information set forth in this annual report including the consolidated financial statements and related financial data contained herein, relates primarily to the Bank.
First Savings Bank converted from a federally-chartered savings bank to an Indiana-chartered commercial bank and became a member the Federal Reserve System effective December 19, 2014. As a result of the Bank’s charter conversion, First Savings Financial Group converted to a bank holding company and simultaneously elected financial holding company status effective December 19, 2014.
First Savings Bank operates as a community-oriented financial institution offering traditional financial services to consumers and businesses in its primary market area. We attract deposits from the general public and use those funds to originate primarily residential and commercial mortgage loans. We also originate commercial business loans, residential and commercial construction loans, multi-family loans, land and land development loans, and consumer loans. We conduct our lending and deposit activities primarily with individuals and small businesses in our primary market area, except as otherwise discussed herein.
Our website address is www.fsbbank.net. Information on our website is not, and should not be considered a part of, this annual report.
Pending Merger
On September 24, 2025, First Savings Financial Group entered into a definitive merger agreement with First Merchants Corporation, the holding company of First Merchants Bank. Pursuant to the merger agreement and subject to the receipt of requisite regulatory approvals and the approval of our shareholders and the satisfaction of other customary closing conditions, First Savings Financial Group would merge with and into First Merchants Corporation and First Savings Bank would merge with and into First Merchants Bank, with First Merchants Corporation and First Merchants Bank being the surviving institutions. The transaction is expected close during the first calendar quarter of 2026.
Market Area
We are located in South Central Indiana along the axis of Interstate 65 and Interstate 64, directly across the Ohio River from Louisville, Kentucky. We consider Clark, Floyd, Harrison, Crawford, Washington and Daviess counties, Indiana, in which all of our offices are located, and the surrounding areas to be our primary market area. The current top employment sectors in these counties are the private retail, service and manufacturing industries, which are likely to continue to be supported by the projected growth in population and median household income. These counties are well-served by barge transportation, rail service, and commercial and general aviation services, including the United Parcel Service’s major hub, which are located in our primary market area.
Competition
We face significant competition for the attraction of deposits and origination of loans. Our most direct competition for deposits has historically come from the several financial institutions operating in our primary market area and from other financial service companies such as securities and mortgage brokerage firms, credit unions and insurance companies. We also face competition for investors’ funds from money market funds, mutual funds and other corporate and government securities. At June 30, 2025, which is the most recent date for which data is available from the FDIC, we held approximately 22.78%, 22.65%, 4.16%, 25.20%, 100.00% and 40.70% of the FDIC-insured deposits in Clark, Daviess, Floyd, Harrison, Crawford and Washington Counties, Indiana, respectively. This data does not reflect deposits held by credit unions with which we also compete. In addition, banks owned by large national and
regional holding companies and other community-based banks also operate in our primary market area. Some of these institutions are larger than us and, therefore, may have greater resources.
Our competition for loans comes primarily from financial institutions in our primary market area and from other financial service providers, such as mortgage companies, mortgage brokers and credit unions. Competition for loans also comes from non-depository financial service companies entering the mortgage market, such as insurance companies, securities companies, and specialty and captive finance companies.
We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Technological advances, for example, have lowered barriers to entry, allowing banks to expand their geographic reach by providing services over the Internet, and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks. Changes in federal law now permit affiliation among banks, securities firms and insurance companies, which promotes a competitive environment in the financial services industry. Competition for deposits and the origination of loans could limit our growth in the future.
Lending Activities
Consistent with the Bank’s conversion to an Indiana-chartered commercial bank in December 2014, the Bank is continuing the process of transforming the composition of its balance sheet from that of a traditional thrift institution to that of a commercial bank. We intend to continue to emphasize residential lending, primarily secured by owner-occupied properties, but also to continue concentrating on ways to expand our consumer/retail banking capabilities and our commercial banking services with a focus on serving small businesses and emphasizing relationship banking in our primary market area.
The largest segments of our loan portfolio are single tenant net lease and residential real estate mortgage loans, which are primarily one- to four-family residential loans, and, to a lesser extent, commercial real estate and commercial business loans. We also originate residential and commercial construction loans, land and land development loans, and consumer loans. We generally originate loans for investment purposes, although, depending on the interest rate environment and our asset/liability management goals, we may sell into the secondary market the 25-year and 30-year fixed-rate residential mortgage loans that we originate, as well as the portion of loans guaranteed by the U.S. Small Business Administration (“SBA”) that we originate under its 7(a) program. We do not offer, have not offered and have not purchased or acquired Alt-A, sub-prime or no-documentation loans.
One- to Four-Family Residential Loans. Our origination of residential mortgage loans enables borrowers to purchase or refinance existing homes located in Clark, Floyd, Harrison, Crawford, Washington and Daviess Counties, Indiana, and the surrounding areas.
Our residential lending policies and procedures conform to the secondary market guidelines. We generally offer a mix of adjustable-rate mortgage loans and fixed-rate mortgage loans with terms of 10 to 30 years. Borrower demand for adjustable-rate loans compared to fixed-rate loans is a function of the level of interest rates, the expectations of changes in the level of interest rates, and the difference between the interest rates and loan fees offered for fixed-rate mortgage loans as compared to an initially discounted interest rate and loan fees for multi-year adjustable-rate mortgages. The relative amount of fixed-rate mortgage loans and adjustable-rate mortgage loans that can be originated at any time is largely determined by the demand for each in a competitive environment. The loan fees, interest rates and other provisions of mortgage loans are determined by us based on our own pricing criteria and competitive market conditions.
Interest rates and payments on our adjustable-rate mortgage loans generally adjust annually after an initial fixed period that typically ranges from one to five years. Interest rates and payments on our adjustable-rate loans generally are adjusted to a rate typically equal to a margin above the one year U.S. Treasury index. The maximum amount by which the interest rate may be increased or decreased is generally one percentage point per adjustment period and the lifetime interest rate cap is generally six percentage points over the initial interest rate of the loan. However, a portion of the adjustable-rate mortgage loan portfolio has a maximum amount by which the interest rate may be increased or decreased of two percentage points per adjustment period and a lifetime interest rate cap generally of six percentage points over the initial interest rate of the loan.
While one- to four-family residential real estate loans are normally originated with up to 30-year terms, such loans typically remain outstanding for substantially shorter periods because borrowers often prepay their loans in full either upon sale of the property
pledged as security or upon refinancing the original loan. Therefore, average loan maturity is a function of, among other factors, the level of purchase and sale activity in the real estate market, prevailing interest rates and the interest rates payable on outstanding loans on a regular basis. We do not offer loans with negative amortization and generally do not offer interest-only loans.
We generally do not originate conventional loans with loan-to-value ratios exceeding 80%, including that for non-owner occupied residential real estate loans whose loan-to-value ratios generally may not exceed 75%, or 65% where the borrower has more than five non-owner occupied loans outstanding. Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance. However, the total balance of residential mortgage loans secured by one-to-four family residential properties with loan-to-value ratios exceeding 90% amounted to $21.2 million, of which some do not have private mortgage insurance or government guaranty. We generally require all properties securing mortgage loans to be appraised by a board-approved independent appraiser. We also generally require title insurance on all first mortgage loans with principal balances of $250,000 or more. Borrowers must obtain hazard insurance, and flood insurance is required for all loans located in flood hazard areas.
Commercial Real Estate Loans. We offer fixed and adjustable-rate mortgage loans secured by commercial real estate. Our commercial real estate loans are generally secured by small to moderately-sized office, retail and industrial properties located in our primary market area and are typically made to small business owners and professionals such as attorneys and accountants.
We originate fixed-rate commercial real estate loans, generally with terms up to five years and payments based on an amortization schedule of 15 to 20 years, resulting in “balloon” balances at maturity. We also offer adjustable-rate commercial real estate loans, generally with terms up to five years and with interest rates typically equal to a margin above the prime lending rate or the Secured Overnight Financing Rate (SOFR). Loans are secured by first mortgages, generally are originated with a maximum loan-to-value ratio of 80% and often require specified debt service coverage ratios depending on the characteristics of the project. Rates and other terms on such loans generally depend on our assessment of credit risk after considering such factors as the borrower’s financial condition and credit history, loan-to-value ratio, debt service coverage ratio and other factors.
During 2013, we began a commercial real estate lending program that is focused on loans to high net worth individuals that are secured by low loan-to-value, single-tenant commercial properties that are generally leased to investment grade national-brand retailers, the borrowers and collateral properties for which are outside of our primary market area (“NNN Finance Program”). This program is designed to diversify the Company’s geographic and credit risk profile given the geographic dispersion of the loans and collateral, and the investment grade credit of the national-brand lessees. The terms of the loans are generally consistent with the aforementioned terms of in-market commercial real estate loans; however, these cannot exceed 70% loan-to-value and loan maturities cannot exceed the expiration of the underlying leases. In addition, the Company has established guidelines with respect to concentrations by state, lessee and industry of lessees as a percentage of regulatory capital. The average size of these loans originated was $1.7 million and the portfolio balance was $765.4 million at September 30, 2025.
Construction Loans. We originate construction loans for one to four family homes and commercial properties such as small industrial buildings, warehouses, retail shops and office units. Construction loans, including speculative construction loans to builders who have not identified a buyer or lessee for the completed property at the time of origination, are made to a limited group of well-established builders in our primary market area and we limit the number of projects with each builder. Construction loans are typically for a term of 12 months with monthly interest only payments and interest rates on these loans are generally tied to the prime lending rate. Except for speculative construction loans, repayment of construction loans typically comes from the proceeds of a permanent mortgage loan for which a commitment is typically in place when the construction loan is originated. Occasionally, a speculative construction loan may be converted to a permanent loan if the builder has not secured a buyer within a limited period of time after the completion of the home. We also offer construction loans for the financing of pre-sold homes, which convert into permanent loans at the end of the construction period. Such loans generally have a six month construction period with interest only payments due monthly, followed by an automatic conversion to a 15 year to 30 year permanent loan with monthly payments of principal and interest. Construction loans, other than land development loans, generally will not exceed the lesser of 80% of the appraised value or 90% of the direct costs, excluding items such as developer fees, operating deficits or other items that do not relate to the direct development of the project. We require a maximum loan-to-value ratio of 80% for speculative construction loans. Generally, commercial construction loans require the personal guarantee of the owners of the business. We generally disburse funds on a percentage-of-completion basis following an inspection by a third party inspector.
Land and Land Development Loans. On a limited basis, we originate loans to developers for the purpose of developing vacant land in our primary market area, typically for residential subdivisions. Land development loans are generally interest-only loans for a term of 18 to 24 months. We generally require a maximum loan-to-value ratio of 75% of the appraisal market value upon completion of the project. We generally do not require any cash equity from the borrower if there is sufficient indicated equity in the collateral property. Development plats and cost verification documents are required from borrowers before approving and closing the loan. Our loan officers are required to personally visit the proposed development site and the sites of competing developments. We also originate loans to individuals secured by undeveloped land held for investment purposes.
Multi-Family Real Estate Loans. We offer multi-family mortgage loans that are generally secured by properties in our primary market area. Multi-family loans are secured by first mortgages and generally are originated with a maximum loan-to-value ratio of 80% and generally require specified debt service coverage ratios depending on the characteristics of the project. Rates and other terms on such loans generally depend on our assessment of the credit risk after considering such factors as the borrower’s financial condition and credit history, loan-to-value ratio, debt service coverage ratio and other factors.
Consumer Loans. Although we offer a variety of consumer loans, our consumer loan portfolio consists primarily of home equity loans, both fixed rate amortizing term loans with terms up to 15 years and adjustable rate lines of credit with interest rates equal to a margin above the prime lending rate. We also offer auto and truck loans, personal loans and small boat loans. Consumer loans typically have shorter maturities and higher interest rates than traditional one-to four-family lending. We typically do not make home equity loans with loan-to-value ratios exceeding 90%, including any first mortgage loan balance. The procedures for underwriting consumer loans include an assessment of the applicant’s payment history on other debts and ability to meet existing obligations and payments on the proposed loan. Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, to the proposed loan amount.
Commercial Business Loans. We typically offer commercial business loans to small businesses located in our primary market area. Commercial business loans are generally secured by equipment and general business assets. Key loan terms and covenants vary depending on the collateral, the borrower’s financial condition, credit history and other relevant factors, and personal guarantees are typically required as part of the loan commitment.
Loan Underwriting Risks
Adjustable Rate Loans. While we anticipate that adjustable rate loans will better offset the adverse effects of an increase in interest rates as compared to fixed rate mortgages, an increased monthly mortgage payment required of adjustable rate loan borrowers in a rising interest rate environment could cause an increase in delinquencies and defaults. The marketability of the underlying property also may be adversely affected in a high interest rate environment. In addition, although adjustable-rate mortgage loans make our asset base more responsive to changes in interest rates, the extent of this interest sensitivity is limited by the annual and lifetime interest rate adjustment limits.
Non-Owner Occupied Residential Real Estate Loans. Loans secured by rental properties represent a unique credit risk to us and, as a result, we adhere to special underwriting guidelines. Of primary concern in non-owner occupied real estate lending is the consistency of rental income of the property. Payments on loans secured by rental properties often depend on the maintenance of the property and the payment of rent by its tenants. Payments on loans secured by rental properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. To monitor cash flows on rental properties, we require borrowers and loan guarantors, if any, to provide annual financial statements and we consider and review a rental income cash flow analysis of the borrower and consider the net operating income of the property, the borrower’s expertise, credit history and profitability, and the value of the underlying property. We generally require collateral on these loans to be a first mortgage along with an assignment of rents and leases. If the borrower holds loans on more than four rental properties, a loan officer or collection officer is generally required to inspect these properties annually to determine if they are being properly maintained and rented. We have generally limited these loan relationships to an aggregate total of $500,000.
Multi-Family and Commercial Real Estate Loans. Loans secured by multi-family and commercial real estate generally have larger balances and involve a greater degree of risk than one to four family residential mortgage loans. Of primary concern in multi-family and commercial real estate lending is the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. To monitor cash flows on income properties, we require borrowers and loan guarantors, if any, to provide annual financial statements on multi-family and commercial real estate loans. In addition, some loans may contain covenants regarding ongoing cash flow coverage requirements. In reaching a decision on whether to make a multi-family or commercial real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of the property, the borrower’s expertise, credit history and profitability, and the value of the underlying property. An environmental survey or environmental risk insurance is obtained when the possibility exists that hazardous materials may have existed on the site, or the site may have been impacted by adjoining properties that handled hazardous materials.
Construction and Land and Land Development Loans. Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, we may be required to advance funds beyond the amount originally committed to permit completion of the building. If the estimate of value proves to be inaccurate, we may be confronted, at or before the maturity of the loan, with a building having a value which is insufficient to assure full repayment if liquidation is required. If we are forced to foreclose on a building before or at completion due to a default, we may be unable to recover all of the unpaid balance of, and accrued interest on, the loan as well as related foreclosure and holding costs. In addition, speculative construction loans, which are loans made to home builders who, at the time of loan origination, have not yet secured an end buyer for the home under construction, typically carry higher risks than those associated with traditional construction loans. These increased risks arise because of the risk that there will be inadequate demand to ensure the sale of the property within an acceptable time. As a result, in addition to the risks associated with traditional construction loans, speculative construction loans carry the added risk that the builder will have to pay the property taxes and other carrying costs of the property until an end buyer is found. Land and land development loans have substantially similar risks to speculative construction loans.
Consumer Loans. Consumer loans may entail greater risk than do residential mortgage loans, particularly in the case of consumer loans that are secured by assets that depreciate rapidly, such as motor vehicles and boats. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower. In the case of home equity loans, real estate values may be reduced to a level that is insufficient to cover the outstanding loan balance after accounting for the first mortgage loan balance. Consumer loan collections depend on the borrower’s continuing financial stability, and therefore are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.
Commercial Business Loans. Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment income or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial business loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may depend substantially on the success of the business itself. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value.
Loan Originations, Sales and Purchases. Loan originations come from a number of sources. The primary sources of loan originations are existing customers, walk-in traffic, advertising, and referrals from customers and centers of influence, such as real estate agents, attorneys, accountants and other professionals.
We generally do not sell whole loans, other than long-term fixed rate residential mortgage loans that we originate, or participation interests in loans originated by us. We also generally do not purchase whole loans or participation interests in loans originated by other financial institutions. However, in order to manage certain risk factors or supplement our lending portfolio, we may sell or purchase whole loans or participation interests in loans from time to time depending on various factors. At September 30, 2025, loans totaling $150.8 million included sold participation interests of $100.9 million, for a net position of $49.9 million outstanding in our portfolio. At September 30, 2025, acquired participation interests totaled $25.1 million.
Beginning in April 2015, the Bank hired a management team, business development officers (loan officers), underwriters and supporting staff that are seasoned and experienced in SBA lending in order to enhance the Company’s proficiency in SBA 7(a) program loan originations and sales. The Bank continues to hire additional business development officers and appropriate supporting staff in order to grow this lending platform. The primary purpose of this lending platform is to originate SBA 7(a) program loans, the borrowers and collateral for which are outside of our primary market area, and sell the amounts guaranteed by the SBA in the secondary market. This lending platform is also designed to diversify the Company’s geographic and interest rate risk profile with respect to the retained unguaranteed amounts given the geographic dispersion of the loans and collateral, and their floating rate structure. The Company originated SBA loans with a total commitment of $89.5 million during the year ended September 30, 2025. At September 30, 2025, $321.6 million of SBA loans included sold guaranteed portions of $224.2 million, for a net position of $97.4 million outstanding in our portfolio. All SBA loans held for sale were carried at the lower of cost or fair market value at September 30, 2025 and 2024.
Beginning in July 2019, the Bank hired a management team, business development officers (loan officers), underwriters and supporting staff that are seasoned and experienced in producing and managing first lien home equity loans. The primary purpose of this platform is to originate first lien home equity loans for interest income and for sale to the secondary market. This lending platform is also designed to diversify the Company’s geographic and interest rate risk profile given the loans’ floating rate structure. At September 30, 2025, the Company had $386.8 million of first lien home equity loans in the portfolio, which included $36.1 million of loans held for sale. All first lien home equity loans held for sale were carried at the lower of cost or fair market value at September 30, 2025 and 2024.
Mortgage Banking. Beginning in April 2018, the Bank hired a management team, business development officers (loan officers), underwriters and supporting staff that are seasoned and experienced in the origination and sale of one- to four-family residential real estate loans on a nationwide basis. The primary purpose of this lending platform is to originate one- to four-family residential real estate loans, the borrowers and collateral for which are outside of our primary market area, and sell the whole loans in the secondary market. The Company did not originate any one- to four-family residential real estate loans within this lending platform during the year ended September 30, 2025. The were no outstanding one- to four-family residential real estate loans within the lending platform in the Bank’s portfolio at September 30, 2025.
In October 2023, the Company announced the Board of Directors’ decision to wind down the Bank’s residential mortgage banking operations, which was completed during the quarter ended December 31, 2023. The Bank continues to offer residential mortgage lending in its primary market areas.
Loan Approval Procedures and Authority. Our conventional lending activities follow written, non-discriminatory underwriting standards and loan origination procedures established by our Board of Directors and management. Certain of our employees have been granted individual lending limits, which vary depending on the individual, the type of loan and whether the loan is secured or unsecured. Generally, all loan requests for non-SBA 7(a) program lending relationships that exceed the individual officer lending limits, which is generally $300,000 secured or $25,000 unsecured, require committee or Board of Directors approval. Loans resulting in aggregated lending relationships in excess of individual officer lending limits but less than $10.0 million require approval by the Officer Loan Committee and loans resulting in aggregated lending relationships in excess of $10.0 million but less than $14.0 million require approval of the Board Credit Committee. The Board Credit Committee consists of the President and three independent Board members, and the Officer Loan Committee consists of members of senior management and certain other officers designated by the Board of Directors. Loans resulting in aggregated lending relationships in excess of $14.0 million require approval by the Board of Directors.
Our SBA 7(a) program lending activities also follow underwriting standards and loan origination procedures established by our Board of Directors and management. Certain of our employees have been granted individual lending limits, which is $2.0 million for the aggregate loan balance, of which 75% or greater is guaranteed by the SBA. Generally, all SBA 7(a) program loan requests for lending relationships that exceed the individual officer lending limits require approval by the SBA Officer Loan Committee. The SBA Officer Loan Committee consists of the President, Chief Financial Officer, Chief Lending Officer, Chief of Credit Administration, Chief of SBA Lending. The aggregated lending relationships for the SBA 7(a) program may not exceed $5.0 million according to SBA guidelines and therefore no loan requests require approval by the Board of Directors given that the portion of SBA 7(a) program loans that are not guaranteed by the SBA may not exceed $1.25 million.
Loans to One Borrower. The maximum amount that we may lend to one borrower and the borrower’s related entities is limited, by regulation, to generally 15% of our stated capital and reserves. At September 30, 2025, our regulatory limit on loans to one borrower
was $36.7 million. At that date, our largest lending relationship was for a commitment of $29.0 million, of which $20.0 million was outstanding, and was performing according to its original terms at that date.
Loan Commitments. We issue commitments for commercial loans conditioned upon the occurrence of certain events. Commitments to originate loans are legally binding agreements to lend to our customers. Generally, our loan commitments expire after 30 days. See Note 17, “Commitments and Contingencies” of the Notes to Consolidated Financial Statements beginning on page of this annual report for additional information regarding our loan commitments at September 30, 2025.
Investment Activities
We have legal authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various U.S. government agencies and sponsored enterprises, securities of various state and municipal governments, mortgage-backed securities, collateralized mortgage obligations and certificates of deposit of federally insured institutions. Within certain regulatory limits, we also may invest a portion of our assets in other permissible securities. As a member of the Federal Reserve System and Federal Home Loan Bank System, in particular a member of the Federal Home Loan Bank of Indianapolis (“FHLB”), First Savings Bank is also required to acquire and hold shares of capital stock in the Federal Reserve Bank and FHLB.
At September 30, 2025, our investment portfolio consisted primarily of U.S. Treasury notes, government agency and sponsored enterprises securities, mortgage backed securities and collateralized mortgage obligations issued by U.S. government agencies and sponsored enterprises, municipal bonds, privately-issued collateralized mortgage obligations and asset-backed securities, and pass-through asset-backed securities guaranteed by the SBA.
Our investment objectives are to provide and maintain liquidity, to establish an acceptable level of interest rate and credit risk, and to provide an alternate source of low-risk investments at a favorable return when loan demand is weak. Our Board of Directors has the overall responsibility for the investment portfolio, including approval of the investment policy. Messrs. Myers, our President and Chief Executive Officer, and Schoen, our Chief Financial Officer, are responsible for implementation of the investment policy and monitoring our investment performance. Our Board of Directors reviews the status of our investment portfolio on a quarterly basis, or more frequently if warranted.
Deposit Activities and Other Sources of Funds
General. Deposits, borrowings, and loan and investment security repayments are the major sources of our funds for lending and other investment purposes. Scheduled loan repayments are a relatively stable source of funds, while deposit inflows and outflows, loan prepayments and investment security calls are significantly influenced by general interest rates and money market conditions.
Deposit Accounts. Deposits are attracted from within our primary market area through the offering of a broad selection of deposit instruments, including non-interest-bearing demand deposits (such as checking accounts), interest-bearing demand accounts (such as NOW and money market accounts), regular savings accounts and time deposits. Deposit account terms vary according to the minimum balance required, the time periods the funds must remain on deposit and the interest rate, among other factors. In determining the terms of our deposit accounts, we consider the rates offered by our competition, our liquidity needs, profitability to us, matching deposit and loan products and customer preferences and concerns. We generally review our deposit mix and pricing weekly. Our deposit pricing strategy has typically been to offer competitive rates on all types of deposit products, and to periodically offer special rates in order to attract deposits of a specific type or term.
Borrowings. We use advances from the FHLB to supplement our investable funds. First Savings Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank System functions as a central reserve bank providing credit for member financial institutions. First Savings Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB and is authorized to apply for advances on the security of such stock and certain of our mortgage loans and other assets (principally securities which are obligations of the U.S., U.S. government agencies or U.S. government-sponsored enterprises), provided certain standards related to creditworthiness have been met. Advances are made under several different programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s net worth or on the FHLB’s assessment of the institution’s creditworthiness. We have four federal funds purchased line of credit facilities with other financial institutions that are subject to continued borrower eligibility and are intended to support short-term liquidity needs. We also utilize brokered certificates of
deposit and reciprocal time deposits as sources of borrowings and may use broker repurchase agreements and internet certificates of deposit from time to time, depending on our liquidity needs and pricing of these facilities versus other funding alternatives.
Employees and Human Capital Resources
We believe that the success of a business is largely due to the quality of its employees, the development of each employee’s full potential, and the Company’s ability to provide timely and satisfying rewards. We encourage and support the development of our employees and, whenever possible, strive to fill vacancies from within. We invest in learning and development including tuition reimbursement for courses, degree programs and fees paid for certifications. As of September 30, 2025, we had 244 full-time employees and 26 part-time employees, none of whom are represented by a collective bargaining unit.
Subsidiaries
The Company has one wholly-owned subsidiary, First Savings Bank. The Bank has three wholly - owned subsidiaries, Q2 Business Capital, LLC, an Indiana limited liability company specializing in the origination and servicing of SBA loans, First Savings Investments, Inc., a Nevada corporation that manages a securities portfolio, and Southern Indiana Financial Corporation, an independent insurance agency, offering various types of annuities and life insurance policies. Southern Indiana Financial Corporation is currently inactive.
REGULATION AND SUPERVISION
General
First Savings Bank, as an Indiana commercial bank, is subject to extensive regulation, examination and supervision by the Indiana Department of Financial Institutions (“INDFI”). As a member bank of the Federal Reserve System, First Savings Bank’s primary federal regulator is the Federal Reserve Board (“FRB”). First Savings Bank is also a member of the Federal Home Loan Bank System and its deposit accounts are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. First Savings Bank must file reports with its regulatory agencies concerning its activities and financial condition in addition to obtaining regulatory approvals before entering into certain transactions such as mergers with, or acquisitions of, other financial institutions. There are periodic examinations by the INDFI and FRB to evaluate First Savings Bank’s safety and soundness and compliance with various regulatory requirements. This regulatory structure is intended primarily for the protection of the Deposit Insurance Fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for credit losses for regulatory purposes. Any change in such policies, whether by the INDFI, FRB, or Congress, could have a material adverse impact on First Savings Financial Group and First Savings Bank and their operations.
Certain of the regulatory requirements that are or will be applicable to First Savings Bank and First Savings Financial Group are described below. This description of statutes and regulations is not intended to be a complete explanation of such statutes and regulations and their effects on First Savings Bank and First Savings Financial Group.
Regulation of First Savings Bank
Business Activities. The activities of Indiana-chartered banks, such as First Savings Bank, are governed by Indiana and federal laws and regulations. Those laws and regulations delineate the nature and extent of the business activities in which banks may engage.
Federal law generally limits the activities as principal and equity investments of FDIC insured state banks to those permitted for national banks. Activities as principal of state bank subsidiaries are also limited to those permitted for subsidiaries of national banks, absent regulatory approval for a particular subsidiary activity. In addition, federal law limits the authority of Federal Reserve System member banks, such as First Savings Bank, to purchase investment securities. Generally, such authority is limited to investment securities permissible for national banks, which includes investment grade, marketable debt obligations. Certain activities, such as the establishment of new branches and mergers and acquisitions, require the prior approval of both the INDFI and the FRB.
Loans to One Borrower. Indiana law establishes limits on a bank’s loans to one borrower. Generally, subject to certain exceptions, an Indiana bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of its
unimpaired capital and surplus. An additional amount may be lent, equal to 10% of unimpaired capital and surplus, if secured by specified readily-marketable collateral. These limits are similar to those applicable to First Savings Bank under its previous federal savings bank charter.
Capital Requirements. Federal regulations require FDIC insured depository institutions, including state chartered Federal Reserve System member banks, to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8% and a 4% Tier 1 capital to total assets leverage ratio.
As noted, the capital standards require the maintenance of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively, and a leverage ratio of at least 4% Tier 1 capital. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for credit and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four- family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions by the institution and certain discretionary bonus payments to management if an institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement was 2.50% for 2025 and 2024. The Bank met all capital adequacy requirements to which it was subject as of September 30, 2025 and 2024.
The FRB has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances.
As of September 30, 2025, First Savings Bank met all applicable capital adequacy requirements in effect at that date.
Prompt Corrective Regulatory Action. Federal law establishes a system of prompt corrective action to resolve the problems of undercapitalized institutions. The law requires that certain supervisory actions be taken against undercapitalized institutions, the severity of which depends on the degree of undercapitalization. The FRB has adopted regulations to implement the prompt corrective action legislation as to state member banks. The regulations were amended to incorporate the previously mentioned increased regulatory capital standards that were effective January 1, 2015. An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage
ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
Subject to a narrow exception, a receiver or conservator is required to be appointed for an institution that is “critically undercapitalized” within specified time frames. The regulations also provide that a capital restoration plan must be filed with the FRB within 45 days of the date an institution is deemed to have received notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company up to the lesser of 5% of the institution’s total assets when it was deemed to be undercapitalized or the amount necessary to achieve compliance with applicable capital requirements. In addition, numerous mandatory supervisory actions become immediately applicable to an undercapitalized institution including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion. The FRB could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors. Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures.
Insurance of Deposit Accounts. First Savings Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Currently, deposit insurance per account owner is $250,000. Under the FDIC’s existing risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors, with less risky institutions paying lower assessments. An institution’s assessment rate depends upon the category to which it is assigned and certain specified adjustments. The assessment rates (inclusive of adjustments) currently range from two and one half to 45 basis points of total capital less tangible assets, depending upon the particular institution’s risk category. The rate schedules will automatically adjust in the future when the Deposit Insurance Fund reaches certain milestones. No institution may pay a dividend if in default of the federal deposit insurance assessment.
The Dodd-Frank Act increased the minimum target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC adopted a plan to restore the fund to the 1.35% ratio by September 30, 2028.
The FDIC has authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of First Savings Bank. Management cannot predict what insurance assessment rates will be in the future.
Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FRB or FDIC. The management of First Savings Bank does not know of any practice, condition or violation that might lead to termination of deposit insurance.
Limitation on Dividends. Indiana law authorizes a bank’s board of directors to declare dividends out of profits as deemed expedient. However, application to and the prior approval of the INDFI and FRB is required before payment of a dividend if total dividends for the calendar year exceed net income for the year to date plus the amount of retained net income for the preceding two years. Federal law specifies that a bank may not pay a dividend if it fails to satisfy any applicable federal capital requirement after the dividend.
If First Savings Bank’s capital ever fell below its regulatory requirements or the FRB notified it that it was in need of increased supervision, its ability to pay dividends or otherwise make capital distributions could be restricted. In addition, the INDFI and/or FRB could prohibit a proposed capital distribution, which would otherwise be permitted by the regulation, if the regulator determined that such distribution would constitute an unsafe or unsound practice.
Standards for Safety and Soundness. The federal banking agencies have adopted Interagency Guidelines prescribing Standards for Safety and Soundness in various areas such as internal controls and information systems, internal audit, loan documentation and credit underwriting, interest rate exposure, asset growth and quality, earnings and compensation, fees and benefits. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the FRB determines that a state member bank fails to meet any standard prescribed by the guidelines, the FRB may require the institution to submit an acceptable plan to achieve compliance with the standard.
Community Reinvestment Act. All federally-insured banks have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. An institution’s failure to satisfactorily comply with the provisions of the Community Reinvestment Act could result in denials of regulatory applications. First Savings Bank received a “satisfactory” Community Reinvestment Act rating in its most recently completed examination.
Transactions with Related Parties. Federal law limits First Savings Bank’s authority to engage in transactions with “affiliates” (e.g., any entity that controls or is under common control with First Savings Bank, including First Savings Financial Group and its other subsidiaries). The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of a bank. The aggregate amount of covered transactions with all affiliates is limited to 20% of a bank’s capital and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of a type specified by federal law. The purchase of low quality assets from affiliates is generally prohibited. Transactions with affiliates must generally be on terms and under circumstances that are at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies.
The Sarbanes-Oxley Act of 2002 generally prohibits loans by First Savings Financial Group to its executive officers and directors. However, the law contains a specific exception for loans by a depository institution to its executive officers and directors in compliance with federal banking laws. Under such laws, First Savings Bank’s authority to extend credit to executive officers, directors and 10% shareholders (“insiders”), as well as entities such persons control, is limited. The laws limit both the individual and aggregate amount of loans that First Savings Bank may make to insiders based, in part, on First Savings Bank’s capital level and requires that certain board approval procedures be followed. Such loans are required to be made on terms substantially the same as those offered to unaffiliated individuals and not involve more than the normal risk of repayment. There is an exception for loans made pursuant to a benefit or compensation program that is widely available to all employees of the institution and does not give preference to insiders over other employees. Loans to executive officers are subject to additional limitations based on the type of loan involved.
Enforcement. The INDFI maintains enforcement authority over First Savings Bank, including the power to issue cease and desist orders and civil money penalties and remove directors, officers or employees. The INDFI also has the power to appoint a conservator or receiver for a bank upon insolvency, imminent insolvency, unsafe or unsound condition or certain other situations. The FRB has primary federal enforcement responsibility over Federal Reserve System member state banks and has authority to bring actions against the institution and all institution-affiliated parties, including shareholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful actions likely to have an adverse effect on the bank. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors. Civil penalties cover a wide range of violations and can amount to $25,000 per day, or even $1 million per day in especially egregious cases. The FDIC, as deposit insurer, has the authority to recommend to the FRB that enforcement action be taken with respect to a member bank. If action is not taken by the FRB, the FDIC has authority to take such action under certain circumstances. In general, regulatory enforcement actions occur with respect to situations involving unsafe or unsound practices or conditions, violations of law or regulation or breaches of fiduciary duty. Federal and Indiana law also establish criminal penalties for certain violations.
Assessments. Indiana banks are required to pay assessments to the INDFI to fund the agency’s operations. The assessments paid to the INDFI by First Savings Bank for the year ended September 30, 2025 totaled $134,000.
Federal Home Loan Bank System. First Savings Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. First Savings Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. First Savings Bank was in compliance with this requirement with an investment in FHLB capital stock of $23.6 million at September 30, 2025.
Federal Reserve Board System. The FRB regulations require banks to maintain reserves against their transaction accounts (primarily Negotiable Order of Withdrawal (NOW) and regular checking accounts). On March 26, 2020, in response to the COVID-19 pandemic, the FRB reduced the reserve requirement to zero, and the requirement remained at zero at September 30, 2025 and 2024.
Other Regulations
First Savings Bank’s operations are also subject to federal laws applicable to credit transactions, including the:
● Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
● Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
● Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;
● Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and
● Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
The operations of First Savings Bank also are subject to laws such as the:
● Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;
● Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and
● Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check.
Holding Company Regulation
General. As a bank holding company that has elected financial holding company status within the meaning of the Bank Holding Company Act of 1956, as amended, First Savings Financial Group is subject to FRB regulation, examination, supervision and reporting requirements. In addition, the FRB has enforcement authority over First Savings Financial Group and its non-savings institution subsidiaries. Among other things, this authority permits the FRB to restrict or prohibit activities that are determined to be a serious risk to First Savings Bank. The INDFI also has examination and enforcement authority since First Savings Financial Group controls an Indiana bank.
As a bank holding company, First Savings Financial Group is required to obtain the prior approval of the FRB to acquire all, or substantially all, of the assets of any other bank or bank holding company. Prior FRB approval is required for any bank holding company to acquire direct or indirect ownership or control of any voting securities of any bank or bank holding company if, after such acquisition, the acquiring bank holding company would, directly or indirectly, own or control more than 5% of any class of voting shares of the bank or bank holding company. In addition to the approval of the FRB, prior approval may for such acquisitions also be necessary from other agencies including the INDFI and agencies that regulate the target.
A bank holding company is generally prohibited from engaging in nonbanking activities, or acquiring direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities found by the FRB to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the FRB has determined by regulation to be so closely related to banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing personal or real property; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.
The Gramm-Leach-Bliley Act of 1999 authorized a bank holding company that meets specified conditions, including being “well capitalized” and “well managed,” to opt to become a “financial holding company” and thereby engage in a broader array of financial activities than previously permitted. First Savings Financial Group elected to become a financial holding company because of the former activities of the Captive.
Bank holding companies are generally subject to consolidated capital requirements established by the FRB. The Dodd-Frank Act required the FRB to amend its consolidated minimum capital requirements for bank holding companies to make them no less stringent than those applicable to insured depository institutions themselves.
The FRB’s policies also require that a bank holding company serve as a source of financial strength to its subsidiary banks by standing ready to use available resources to provide adequate capital funds to those banks during periods of financial stress or adversity and by maintaining the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks where necessary. The Dodd-Frank Act codified the source of strength doctrine.
A bank holding company is generally required to give the FRB prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth. The FRB may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or violate any law, regulation, FRB order or directive, or any condition imposed by, or written agreement with, the FRB. There is an exception to this approval requirement for well-capitalized bank holding companies that meet certain other conditions.
The FRB has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior regulatory consultation with respect to dividends in certain circumstances such as where the company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a holding company to pay dividends may be limited if a subsidiary bank becomes undercapitalized. The guidance also provides for regulatory consultation prior to a bank holding company redeeming or repurchasing regulatory capital instruments when the holding company is experiencing financial weaknesses or where the redemption or repurchase of common or preferred stock cause a net reduction in the amount of such equity instruments outstanding at the end of a quarter compared to the beginning of the quarter in which the redemption or repurchase occurs. These regulatory policies could affect the ability of First Savings Financial Group to pay dividends, repurchase shares of its stock or otherwise engage in capital distributions.
The status of First Savings Financial Group as a registered bank holding company under the Bank Holding Company Act does not exempt it from certain federal and state laws and regulations applicable to corporations generally including, without limitation, certain provisions of the federal securities laws.
Acquisition of Control. Under the federal Change in Bank Control Act, no person may acquire control of a bank holding company such as First Savings Financial Group unless the FRB has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the company’s directors, or a determination by the regulator that the acquirer has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution. Acquisition of more than 10% of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances including where, is the case with First Savings Financial Group, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934. Indiana law requires INDFI approval for changes in control of companies controlling Indiana banks, with “control” defined to mean power to direct the management or policies of the holding company or power to vote at least 25% of the company’s voting securities.
Federal Securities Laws
First Savings Financial Group’s common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. First Savings Financial Group is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934, as amended.
TAXATION
Federal Income Taxation
General. We report our income on a fiscal year basis using the accrual method of accounting. The federal income tax laws apply to us in the same manner as to other corporations with some exceptions, including particularly our reserve for bad debts discussed below. The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to us.
First Savings Financial Group and First Savings Bank have entered into a tax allocation agreement. Because First Savings Financial Group owns 100% of the issued and outstanding capital stock of First Savings Bank, First Savings Financial Group and First Savings Bank are members of an affiliated group within the meaning of Section 1504(a) of the Internal Revenue Code, of which group First Savings Financial Group is the common parent corporation. As a result of this affiliation, First Savings Bank may be included in the filing of a consolidated federal income tax return with First Savings Financial Group and, if a decision to file a consolidated tax return is made, the parties agree to compensate each other for their individual share of the consolidated tax liability and/or any tax benefits provided by them in the filing of the consolidated federal income tax return.
Our Federal income tax returns have not been audited during the last five years.
Bad Debt Reserves. For fiscal years beginning before June 30, 1996, thrift institutions that qualified under certain definitional tests and other conditions of the Internal Revenue Code, as the Bank did prior to its conversion to a commercial bank in December 2014, were permitted to use certain favorable provisions to calculate their deductions from taxable income for annual additions to their bad debt reserve. A reserve could be established for bad debts on qualifying real property loans, generally secured by interests in real property improved or to be improved, under the percentage of taxable income method or the experience method. The reserve for nonqualifying loans was computed using the experience method. Federal legislation enacted in 1996 repealed the reserve method of accounting for bad debts and the percentage of taxable income method for tax years beginning after 1995 and required savings institutions to recapture or take into income certain portions of their accumulated bad debt reserves. Approximately $4.6 million of our accumulated bad debt reserves would not be recaptured into taxable income unless First Savings Bank makes a “non-dividend distribution” to First Savings Financial Group as described below.
Distributions. If First Savings Bank makes “non-dividend distributions” to First Savings Financial Group, the distributions will be considered to have been made from First Savings Bank’s unrecaptured tax bad debt reserves, including the balance of its reserves as of September 30, 1988, to the extent of the “non-dividend distributions,” and then from First Savings Bank’s supplemental reserve for losses on loans, to the extent of those reserves, and an amount based on the amount distributed, but not more than the amount of those reserves, will be included in First Savings Bank’s taxable income. Non-dividend distributions include distributions in excess of First Savings Bank’s current and accumulated earnings and profits, as calculated for federal income tax purposes, distributions in redemption of stock, and distributions in partial or complete liquidation. Dividends paid out of First Savings Bank’s current or accumulated earnings and profits will not be so included in First Savings Bank’s taxable income.
The amount of additional taxable income triggered by a non-dividend distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Therefore, if First Savings Bank makes a non-dividend distribution to First Savings Financial Group, approximately one and one-quarter times the amount of the distribution not in excess of the amount of the reserves would be includable in income for federal income tax purposes, assuming a 21% federal corporate income tax rate. First Savings Bank does not intend to pay dividends that would result in a recapture of any portion of its bad debt reserves.
State Taxation
Indiana. Effective July 1, 2013, Indiana amended its tax code to provide for reductions in the franchise tax rate. For the Company’s tax year ended September 30, 2023, Indiana imposed a 5.00% franchise tax based on a financial institution’s adjusted gross income as defined by statute. The Indiana franchise tax rate was reduced to 4.90% for the Company’s tax years ending September 30, 2024 and years thereafter. In computing Indiana taxable income, deductions for municipal interest, state and local income taxes and certain accelerated depreciation permitted for federal tax purposes are disallowed.
The Company and its subsidiaries also file income and franchise tax returns in various other states where they are deemed to have tax nexus.
The Company’s Indiana tax returns for the fiscal years ended September 30, 2020 and 2021 were audited by the Indiana Department of Revenue. These audits were closed during the fiscal year ended September 30, 2023. Our other state income tax returns have not been audited during the last five years.

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ITEM 1A. RISK FACTORS
Item 1A. RISK FACTORS
The following discussion sets forth the material risk factors that could affect First Savings Financial Group’s consolidated financial condition and results of operations and an investment in its securities. Readers should not consider any descriptions of these factors to be a complete set of all potential risks that could affect us. Any of the risk factors discussed below could by itself, or combined with other factors, materially and adversely affect our business, results of operations, financial condition, capital position, liquidity, competitive position or reputation, including by materially increasing expenses or decreasing revenues, which could result in a decrease in earnings or material losses.
Risks Related to Our Lending Activities
Our emphasis on commercial real estate lending and commercial business lending may expose us to increased lending risks.
At September 30, 2025, $1.22 billion, or 63.9%, of our loan portfolio consisted of commercial real estate loans and commercial business loans. Subject to market conditions, we intend to increase our origination of these loans. Commercial real estate loans generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the property and the income stream of the borrowers. Commercial real estate loans also typically involve larger loan balances to single borrowers or groups of related borrowers both at origination and at maturity because many of our commercial real estate loans are not fully-amortizing, but result in “balloon” balances at maturity. Commercial business loans expose us to additional risks since they typically are made on the basis of the borrower’s ability to make repayments from the cash flow of the borrower’s business and are secured by non-real estate collateral that may depreciate over time. In addition, some of our commercial borrowers have more than one loan outstanding with us. Consequently, an adverse development with respect to one loan or one credit relationship may expose us to a greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan. At September 30, 2025, nonperforming commercial real estate loans totaled $6.0 million. At September 30, 2025 nonperforming commercial business loans totaled $1.7 million. For more information about the credit risk we face, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management.”
Our construction loan and land and land development loan portfolios may expose us to increased credit risk.
At September 30, 2025, $60.0 million, or 2.9% of our loan portfolio consisted of construction loans, and land and land development loans, and $6.5 million, or 16.2% of the construction loan portfolio (excluding undisbursed commitments and portions participated to other financial institutions), consisted of speculative construction loans at that date. Speculative construction loans are loans made to builders who have not identified a buyer for the completed property at the time of loan origination. Subject to market conditions, we intend to continue to emphasize the origination of construction loans and land and land development loans. These loan types generally expose a lender to greater risk of nonpayment and loss than residential mortgage loans because the repayment of such loans often depends on the successful operation or sale of the property and the income stream of the borrowers and such loans typically involve larger balances to a single borrower or groups of related borrowers. In addition, many borrowers of these types of loans have more than one loan outstanding with us so an adverse development with respect to one loan or credit relationship can expose us to significantly greater risk of non-payment and loss. Furthermore, we may need to increase our allowance for credit losses through future charges to income as the portfolio of these types of loans grows, which would adversely affect our earnings. For more information about the credit risk we face, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management.”
Our concentration in non-owner occupied residential real estate loans may expose us to increased credit risk.
At September 30, 2025, $24.6 million, or 4.1% of our residential mortgage loan portfolio and 1.3% of our total loan portfolio, consisted of loans secured by non-owner occupied residential properties. Loans secured by non-owner occupied properties generally expose a lender to greater risk of non-payment and loss than loans secured by owner occupied properties because repayment of such loans depend primarily on the tenant’s continuing ability to pay rent to the property owner, who is our borrower, or, if the property owner is unable to find a tenant, the property owner’s ability to repay the loan without the benefit of a rental income stream. In addition, the physical condition of non-owner occupied properties is often below that of owner occupied properties due to lax property maintenance standards, which has a negative impact on the value of the collateral properties. Furthermore, some of our non-owner occupied residential loan borrowers have more than one loan outstanding with us. At September 30, 2025, we had five non-owner occupied residential loan relationships, each having an outstanding balance over $500,000, with aggregate outstanding balances of $4.7 million. Consequently, an adverse development with respect to one credit relationship may expose us to a greater risk of loss compared to an adverse development with respect to an owner occupied residential mortgage loan. At September 30, 2025 and 2024, the Bank did not have any non-owner occupied residential properties held as real estate owned. For more information about the credit risk we face, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management.”
We may suffer losses in our loan portfolio despite our underwriting practices.
Our results of operations are significantly affected by the ability of borrowers to repay their loans. Lending money is an essential part of the banking business. However, borrowers do not always repay their loans. The risk of non-payment is historically small, but if nonpayment levels are greater than anticipated, our earnings and overall financial condition, as well as the value of our common stock, could be adversely affected. No assurance can be given that our underwriting practices or monitoring procedures and policies will reduce certain lending risks. Loan losses can cause insolvency and failure of a financial institution and, in such an event, our stockholders could lose their entire investment. In addition, future provisions for loan losses could materially and adversely affect our earnings and financial condition. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on these loans. For more information about the credit risk we face, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management.”
Our allowance for credit losses may not be adequate to cover actual losses.
Like all financial institutions, we maintain an allowance for credit losses for loans to provide for current expected credit losses due to loan defaults, non-performance, and other qualitative factors. Our allowance for credit losses for loans is based on our historical loss experience as well as an evaluation of the risks associated with our loan portfolio, including the size and composition of the loan portfolio, loan portfolio performance, fair value of collateral securing the loans, current and forecasted economic conditions and geographic concentrations within the portfolio. Our allowance for credit losses may not be adequate to cover actual loan losses, and future provisions for credit losses could materially and adversely affect our earnings and financial condition. Similarly, we maintain an allowance for credit losses for securities to provide for current expected credit losses due to payment defaults or significant adverse financial performance of the issuer. Our allowance for credit losses for securities may not be adequate to cover actual credit losses on securities, and future provisions for credit losses could materially and adversely affect our earnings and financial condition. For more information about our analysis and determination of allowance for credit losses, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management.”
Our SBA lending program is dependent upon the federal government and we face specific risks associated with originating SBA loans.
Our SBA lending program is dependent upon the federal government. As an SBA Preferred Lender, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s Preferred Lender status. If we lose our status as a Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders. Also, any changes to the SBA program, including changes to the level of guarantee provided by the federal government on SBA loans, could adversely affect our business and earnings.
We generally sell the guaranteed portion of our SBA 7(a) program loans in the secondary market. These sales have resulted in premium income for us at the time of sale and created a stream of future servicing income. We may not be able to continue originating these loans or selling them in the secondary market. Furthermore, even if we are able to continue originating and selling SBA 7(a) program loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans. When we sell the guaranteed portion of our SBA 7(a) program loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on the non-guaranteed portion of a loan, we share any loss and recovery related to the loan pro-rata with the SBA. If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us, which could adversely affect our business and earnings.
The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in the future. We cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our business and earnings.
We may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances.
When residential mortgage loans are sold, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to purchasers, guarantors and insurers about the mortgage loans and the manner in which they were originated. We may be required to repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach certain representations or warranties in connection with the sale of such loans. If repurchase and indemnity demands increase, are valid claims and are in excess of our provision for potential losses, our liquidity, results of operations or financial condition may be materially and adversely affected.
Recessionary conditions could result in increases in our level of nonperforming loans and/or reduce demand for our products and services, which would lead to lower revenue, higher loan losses and lower earnings.
Recessionary conditions and/or continued negative developments in the domestic and international credit markets may significantly affect the markets in which we do business, the value of our loans and investments, and our ongoing operations, costs and profitability. Declines in real estate values and sales volumes and increased unemployment levels may result in higher than expected loan delinquencies, increases in our levels of nonperforming and classified assets and a decline in demand for our products and services. These negative events may cause us to incur losses and may adversely affect our capital, liquidity, and financial condition.
The value of our residential mortgage loan servicing rights and SBA loan servicing rights is subjective by nature and may be vulnerable to inaccuracies or other events outside our control.
The value of our loan servicing rights can fluctuate. The assets could decrease if prepayment speeds or delinquency rates of the underlying loans increase, or if the costs to service the loans increase. The value of the assets could also decline if there is a lack of liquidity in the loan servicing rights market. Similarly, the value may decrease if interest rates decrease or change in a non-parallel manner or are otherwise volatile. All of these factors are largely out of our control. Estimates must be developed and assumptions and judgments must be made when valuing these assets. An inaccurate valuation, or changes to the valuation due to factors outside of our control, could negatively impact our ability to realize the full value of these assets. As a result, our balance sheet may not precisely represent the fair market value of these and other financial assets. As of September 30, 2025, the Company had no residential loans mortgage loan servicing rights due to the wind down of the national mortgage banking operation and subsequent sale of the residential mortgage loan servicing rights portfolio, which was completed during the year ended September 30, 2024.
Risks Related to Competition
Strong competition within our primary market area could hurt our profits and slow growth.
We face intense competition both in making loans and attracting deposits. This competition has made it more difficult for us to make new loans and attract deposits. Price competition for loans and deposits might result in us earning less on our loans and paying more on our deposits, which would reduce net interest income. Competition also makes it more difficult to grow loans and deposits. At June 30, 2025, which is the most recent date for which data is available from the FDIC, we held approximately 22.78%, 22.65%, 4.16%, 25.20%, 100.00% and 40.70% of the FDIC-insured deposits in Clark, Daviess, Floyd, Harrison, Crawford and Washington Counties, Indiana, respectively. Some of the institutions with which we compete have substantially greater resources and lending limits than we have and may offer services that we do not provide. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability depends upon our continued ability to compete successfully in our primary market area. See “Item 1. Business - Market Area” and “Item 1. Business - Competition” for more information about our primary market area and the competition we face.
Risks Related to Changes in Market Interest Rates
Changing interest rates may hurt our earnings and asset value.
Our net interest income is the interest we earn on loans and investments less the interest we pay on our deposits and borrowings. Our net interest margin is the difference between the yield we earn on our assets and the interest rate we pay for deposits and our other sources of funding. Changes in interest rates-up or down-could adversely affect our net interest margin and, as a result, our net interest income. Although the yield we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, one can rise or fall faster than the other, causing our net interest margin to expand or contract. Our liabilities tend to be shorter in duration than our assets, so they may adjust faster in response to changes in interest rates. As a result, when interest rates rise, our funding costs may rise faster than the yield we earn on our assets, causing our net interest margin to contract until the yield catches up. Changes in the slope of the “yield curve”-or the spread between short-term and long-term interest rates-could also reduce our net interest margin. Normally, the yield curve is upward sloping, meaning short-term rates are lower than long-term rates. Because our liabilities tend to be shorter in duration than our assets, when the yield curve flattens or even inverts, as it has in recent years, we could experience pressure on our net interest margin as our cost of funds increases relative to the yield we can earn on our assets. Also, interest rate decreases can lead to increased prepayments of loans and mortgage-backed securities as borrowers refinance their loans to reduce borrowing costs. Under these circumstances, we are subject to reinvestment risk as we may have to redeploy such repayment proceeds into lower yielding loans or investments, which would likely hurt our income. At September 30, 2025, approximately $943.9 million, or 49.5% of the total loan portfolio, consisted of fixed-rate loans with maturity dates after September 30, 2026. This investment in fixed-rate loans exposes the Company to increased levels of interest rate risk.
Changes in interest rates also affect the value of our interest-earning assets, and in particular our securities portfolio. Generally, the value of fixed-rate securities fluctuates inversely with changes in interest rates. Unrealized gains and losses on securities available for sale are reported as a separate component of equity, net of tax. Decreases in the fair value of securities available for sale resulting from increases in interest rates could have an adverse effect on stockholders’ equity. Conversely, the value of MSRs generally increases when market interest rates increase. For further discussion of how changes in interest rates could impact us, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations -Risk Management - Interest Rate Risk Management.”
Inflation can have an adverse impact on our business and on our customers.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. In recent years, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.
Risks Related to Our Liquidity Position
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a material adverse effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us. Our ability to acquire deposits or borrow could also be impaired by factors that are not specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole.
Risks Related to Our Pending Merger with First Merchants Corporation
If the merger is not completed, we will have incurred substantial expenses without realizing the expected benefits of the merger.
We have incurred substantial expenses in connection with the pending merger with First Merchants Corporation. Although some of these expenses will not be incurred if the merger is not completed, others will and such expenses could have a material adverse impact on the our financial condition and results of operations. The completion of the merger depends on the satisfaction of several conditions. We cannot guarantee that these conditions will be met. There can be no assurance that the merger will be completed.
We will be subject to business uncertainties and contractual restrictions while the merger is pending.
Uncertainty about the effect of the pending merger on our employees and customers may have an adverse effect on us. These uncertainties may impair our ability to attract, retain, and motivate key personnel until the merger is completed, and could cause customers and others that deal with us to seek to change existing business relationships with us. Retention of certain of our employees may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with us or First Merchants Corporation. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us or First Merchants Corporation, our business could be harmed.
Risks Related to Our Investment Portfolio
If additional provisions for credit losses are recorded in connection with our investment portfolio it could have a significant negative impact on our profitability.
Our investment portfolio consists primarily of U.S. government agency and sponsored enterprises securities, mortgage backed securities and collateralized mortgage obligations issued by U.S. government agencies and sponsored enterprises, municipal bonds, and privately-issued collateralized mortgage obligations and asset-backed securities. We must evaluate these securities for credit losses on a periodic basis. The privately-issued collateralized mortgage obligations and asset-backed securities exhibit signs of weakness, which may necessitate a provision for credit loss in the future should the financial condition of the pools deteriorate further. Any future provisions for credit losses on securities could have a significant adverse effect our earnings.
Risks Related to Our Operations
Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks.
Operational risk is the risk of loss resulting from our operations, including, but not limited to, the risk of fraud by employees or persons outside of the Company and Bank, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system and compliance requirements and business continuation and disaster recovery. This risk of loss also includes the potential legal actions that could arise as a result of an operational deficiency or as a result of noncompliance with applicable regulatory standards, adverse business decisions or their implementation, and customer attrition due
to potential negative publicity. In the event of a breakdown in the internal control system, improper operation of systems or improper employee actions, we could suffer financial loss, face regulatory action and suffer damage to our reputation.
A disruption, failure in or breach, including cyber-attacks, of our operational, communications, information or security systems, or those of our third party vendors and other service providers, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
We rely heavily on communications and information systems to conduct our business and face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate our business activities, including exchanges, clearing agents, clearing houses or other financial intermediaries. Any failure or interruption of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure or interruption of these information systems, there can be no assurance that any such failures or interruptions will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures or interruptions of these information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.
We rely on the secure processing, storage and transmission of confidential and other information on our computer systems and networks. Although we take numerous protective measures to maintain the confidentiality, integrity and availability of our and our clients’ information across all geographic and product lines, and endeavor to modify these protective measures as circumstances warrant, the nature of the threats continues to evolve. As a result, our computer systems, software and networks and those of our customers may be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact and result in significant losses by us and/or our customers. Despite the defensive measures we take to manage our internal technological and operational infrastructure, these threats may originate externally from third parties, such as foreign governments, organized crime and other hackers, and outsource or infrastructure-support providers and application developers, or the threats may originate from within our organization. Given the increasingly high volume of our transactions, certain errors may be repeated or compounded before they can be discovered and rectified.
We are inherently exposed to risks caused by the use of computer, internet and telecommunications systems, and susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses to us or our clients, privacy breaches against our clients or damage to our reputation. These risks include fraud by employees, customers and other outside entities targeting us and/or our customers, and such fraudulent activity may take many forms, including internet fraud, check fraud, electronic fraud, wire fraud, phishing, and other dishonest acts. In recent periods, there has been a rise in electronic fraudulent activity within the financial services industry, especially in the commercial banking sector, due to cyber criminals targeting commercial bank accounts. Consistent with industry trends, we have also experienced an increase in attempted electronic fraudulent activity in recent periods. Given such increase in electronic fraudulent activity and the growing level of use of electronic, internet-based and networked systems to conduct business directly or indirectly with our clients, certain fraud losses may not be avoidable regardless of the preventative and detection systems in place.
Although, to date, we have not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the outsourcing of some of our business operations and the continued uncertain global economic environment. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.
We maintain an insurance policy which we believe provides sufficient coverage at a manageable expense for an institution of our size and scope with similar technological systems. However, we cannot assure that this policy will afford coverage for all possible losses or would be sufficient to cover all financial losses, damages, penalties, including lost revenues, should we experience any one or more of our or a third party’s systems failing or experiencing attack.
If the goodwill that we recorded in connection with a business acquisition becomes impaired, it could have a significant negative impact on our profitability.
We have acquired other financial institutions and have recorded goodwill in connection with those transactions. Goodwill represents the amount of consideration exchanged over the fair value of net assets we acquired in the purchase of another financial institution. We review goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying value of the asset might be impaired. At September 30, 2025, our goodwill totaled $9.8 million. While we have recorded no such impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of goodwill will not result in findings of impairment and related write-downs, which may have a material adverse effect on our financial condition and results of operations.
We operate in a highly regulated environment and we may be adversely affected by changes in laws and regulations.
The Bank is subject to extensive regulation, supervision and examination by the INDFI, its chartering authority, the FRB, its primary federal regulator, and the FDIC, as insurer of its deposits. The Company is also subject to regulation and supervision by the Federal Reserve Bank of St. Louis. Such regulation and supervision governs the activities in which an institution and its holding company may engage, and are intended primarily for the protection of the insurance fund and the depositors and borrowers of the Bank rather than for holders of the Company’s common stock. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for credit losses. If our regulators require us to charge-off loans or increase our allowance for credit losses, our earnings would suffer. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.
The Dodd-Frank Act has created a new federal agency to administer consumer protection and fair lending laws, a function that was formerly performed by the depository institution regulators. The Dodd-Frank Act contains various other provisions designed to enhance the regulation of depository institutions including the implementation of more stringent capital adequacy rules. The full impact of the Dodd-Frank Act on our business and operations will not be known for years until regulations implementing the statute are written and adopted. The Dodd-Frank Act may have a material impact on our operations, particularly through increased regulatory burden and compliance costs. Any future legislative changes could have a material impact on our profitability, the value of assets held for investment or collateral for loans. Future legislative changes could require changes to business practices or force us to discontinue businesses and potentially expose us to additional costs, liabilities, enforcement action and reputational risk.
In addition to the enactment of the Dodd-Frank Act, the federal regulatory agencies have taken stronger supervisory actions against financial institutions that have experienced increased loan losses and other weaknesses as a result of the recent economic crisis. The actions include entering into written agreements and cease and desist orders that place certain limitations on operations. Federal bank regulators have also been using with more frequency their ability to impose individual minimum capital requirements on banks, which requirements may be higher than those required under the Dodd-Frank Act or that would otherwise qualify a bank as being “well capitalized” under applicable prompt corrective action regulations. If we were to become subject to a regulatory agreement or higher individual minimum capital requirements, such action may have a negative impact on our ability to execute our business plan, as well as our ability to grow, pay dividends or engage in mergers and acquisitions and may result in restrictions in our operations. For a further discussion, see “Item 1. Business - Regulation and Supervision.”
We rely heavily on our management team and the unexpected loss of any of those personnel could adversely affect our operations, and we depend on our ability to attract and retain key personnel.
We are a customer-focused and relationship-driven organization. We expect our future growth to be driven in a large part by the relationships maintained with our customers by our executive and other senior officers. Although we are party to non-compete and non-solicitation agreements with certain executive, senior and other officers, the unexpected loss of any of our key employees could have an adverse effect on our business, results of operations and financial condition.
The implementation of our business strategy will also require us to continue to attract, hire, motivate and retain skilled personnel to develop new customer relationships as well as new financial products and services. The market for qualified employees in the businesses in which we operate is competitive and we may not be successful in attracting, hiring or retaining key personnel. Our inability to attract, hire or retain key personnel could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to an Investment in Our Common Stock
Our ability to pay dividends is subject to certain limitations and restrictions, and there is no guarantee that we will be able to continue paying the same level of dividends in the future that we paid in 2025 or that we will be able to pay future dividends at all.
Our ability to declare and pay dividends is subject to the guidelines of the FRB regarding capital adequacy and dividends, other regulatory restrictions, and the need to maintain sufficient consolidated capital. The ability of the Bank to pay dividends to the Company is subject to regulation by the INDFI, applicable Indiana law and the FRB, and is limited by the Bank’s obligations to maintain sufficient capital and liquidity. In addition, banking regulators may propose guidelines seeking greater liquidity and regulations requiring greater capital requirements. If such new regulatory requirements were not met, the Bank would not be able to pay dividends to the Company, and consequently we may be unable to pay dividends on our common stock.
The trading volume of our stock varies and you may not be able to resell your shares at or above the price you paid for them.
The price of the common stock purchased may decrease significantly. Although our common stock is quoted on the NASDAQ Capital Market under the symbol “FSFG”, trading activity in the stock historically has been sporadic. A public trading market having the desired characteristics of liquidity and order depends on the presence in the market of willing buyers and sellers at any given time. The presence of willing buyers and sellers depends on the individual decisions of investors and general economic conditions, all of which are beyond our control.
Insiders have substantial control over us, and this control may limit our shareholders’ ability to influence corporate matters and may delay or prevent a third party from acquiring control over us.
As of December 5, 2025, our directors, executive officers, and their related entities and persons currently beneficially own, in the aggregate, approximately 16.53% of our outstanding common stock. The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. In addition, these shareholders will be able to exercise influence over all matters requiring shareholder approval, including the election of directors and approval of corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership could limit your ability to influence corporate matters and may have the effect of delaying or preventing a change in control, including a merger, consolidation or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change in control would benefit our other shareholders. For information regarding the ownership of our outstanding stock by our directors, executive officers, and their related entities and persons, see “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters”.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
Item 2. PROPERTIES
We conduct our business through our main office and branch offices. The following table sets forth certain information relating to these facilities as of September 30, 2025.
Year
Owned/
Location
Opened
Leased
Main Office:
Jeffersonville Main Office
702 North Shore Drive, Suite 300
Jeffersonville, Indiana
Owned
Branch Offices:
Clarksville Office
501 East Lewis & Clark Parkway
Clarksville, Indiana
Owned
Jeffersonville - 10th Street Office
3538 E 10th Street
Jeffersonville, Indiana
Owned
Charlestown Office
1100 Market Street
Charlestown, Indiana
Owned
Georgetown Office
1000 Copperfield Drive
Georgetown, Indiana
Owned
Jeffersonville - Court Avenue Office
202 East Court Avenue
Jeffersonville, Indiana
Owned
Sellersburg Office
125 Hunter Station Way
Sellersburg, Indiana
Owned
Corydon Office
900 Hwy 62 NW
Corydon, Indiana
Owned
Salem Office
1336 S Jackson Street
Salem, Indiana
Owned
English Office
200 Indiana Avenue
English, Indiana
Owned
Marengo Office
165 E State Rd 64
Marengo, Indiana
Owned
Lanesville Office
7340 Main Street NE
Lanesville, Indiana
Owned
Elizabeth Office
8160 Beech Street SE
Elizabeth, Indiana
Owned
New Albany Office
2218 State Street
New Albany, Indiana
Leased
Odon Office
501 West Main Street
Odon, Indiana
Owned
Montgomery Office
478 West Meyers Street
Montgomery, Indiana
Owned
The Company purchased an 8.1 acre parcel of land in Jeffersonville, Indiana, in July 2013 upon which it intended to construct an office building, relocate its corporate headquarters, and subsequently divest of additional unused acreage in future years. However, in October 2018, the Company acquired an office building for $7.5 million in Jeffersonville, Indiana, to which it has relocated its corporate headquarters. In September 2022, the Company sold 4.2 acres of the 8.1 acre parcel of land and sold another 0.9 acres in February 2025. The Company retains ownership of a 3.0 acre parcel upon which intends to construct a branch office.
The Company purchased a 0.5 acre parcel of land in Washington, Indiana, in December 2023 upon which it intends to construct a branch office.
The Company purchased a 1.94 acre parcel of land in Floyds Knobs, Indiana, in July 2021 upon which it intends to construct a branch office.
The Company also rents additional office space and equipment under operating lease agreements that expire at different dates through August 2028. See Note 16 of the Notes to Consolidated Financial Statements beginning on page of this annual report for additional information regarding the Company’s operating leases.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. LEGAL PROCEEDINGS
Periodically, there have been various claims and lawsuits involving the Bank, primarily as plaintiff, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market for Common Equity and Related Stockholder Matters
The Company’s common stock is listed on the NASDAQ Capital Market (“NASDAQ”) under the trading symbol “FSFG.” All share and per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021. As of December 5, 2025, the Company had approximately 227 holders of record and 7,015,080 shares of common stock outstanding. The figure of shareholders of record does not reflect the number of persons whose shares are in nominee or “street” name accounts through brokers. See Item 1, “Business-Regulation and Supervision-Limitation on Capital Distributions” and Note 21 of the Notes to Consolidated Financial Statements beginning on page of this annual report for information regarding dividend restrictions applicable to the Company. The Company currently intends to maintain a policy of paying regular quarterly cash dividends; however, the Company cannot guarantee that it will pay dividends or that if paid, it will not reduce or eliminate dividends in the future.
Purchases of Equity Securities
On August 16, 2021, the Company announced that its Board of Directors authorized a stock repurchase program to acquire up to 356,220 shares, or 5.0% of the Company’s outstanding common stock. This replaces the previously existing stock repurchase program announced by the Company on November 16, 2012, which had 346,776 shares (split-adjusted) remaining for repurchase. There were no shares repurchased under either stock repurchase plan during the quarter ended September 30, 2025.
The following table presents information regarding the Company’s stock repurchase activity during the quarter ended September 30, 2025:
(d)
(c)
Maximum number
Total number
(or appropriate
of shares (or
dollar value) of
(a)
(b)
units) purchased
shares (or units) that
Total number
Average price
as part of publicly
may yet be
of shares (or
paid per share
announced plans
purchased under
Period
units) purchased
(or unit)
or programs (1)
the plans or programs
July 1, 2025 through July 31, 2025
-
$
-
-
8,658
August 1, 2025 through August 31, 2025
-
$
-
-
8,658
September 1, 2025 through September 30, 2025
-
$
-
-
8,658
Total
-
$
-
-
8,658
Equity Compensation Plan Information
The following table sets forth information as of September 30, 2025 about Company common stock that may be issued under the Company’s equity compensation plans. All plans were approved by the Company’s stockholders.
Number of securities
Number of securities remaining
to be issued upon
Weighted-average
available for future issuance under
exercise of outstanding
exercise price of
equity compensation plans
options, warrants and
outstanding options,
(excluding securities reflected in
rights
warrants and rights
column (a))
Plan category
(a)
(b)
(c)
Equity compensation plans approved by security holders
430,405
$
19.47
82,105
Equity compensation plans not approved by security holders
N/A
N/A
N/A
Total
430,405
$
19.47
82,105
In December 2009 the Company adopted the 2010 Equity Incentive Plan (“2010 Plan”), which the Company’s shareholders approved in February 2010. The 2010 Plan provided for the award of stock options and restricted stock. The aggregate number of shares of the Company’s common stock available for issuance under the 2010 Plan may not exceed 1.1 million shares, consisting of 762,612 stock options and 305,043 shares of restricted stock. As of September 30, 2025, grants outstanding under the 2010 Plan included 305,043 restricted shares, 559,521 incentive stock options and 201,591 non-statutory stock options to directors, officers and key employees. The restricted shares and stock options granted vest ratably over five years and, once vested, the stock options are exercisable in whole or in part for a period up to ten years from the date of the award.
In December 2015 the Company adopted the 2016 Equity Incentive Plan (“2016 Plan”), which the Company’s shareholders approved in February 2016. The 2016 Plan provides for the award of stock options and restricted stock. The aggregate number of shares of the Company’s common stock available for issuance under the 2016 Plan may not exceed 264,000 shares, consisting of 198,000 stock options and 66,000 shares of restricted stock. As of September 30, 2025, grants outstanding under the 2016 Plan included 66,000 restricted shares, 147,690 incentive stock options and 44,550 non-statutory stock options to directors, officers and key employees. The restricted shares and stock options granted vest ratably over five years and, once vested, the stock options are exercisable in whole or in part for a period up to ten years from the date of the award.
In December 2020, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”), which the Company’s shareholders approved in February 2021. The 2021 Plan provides for the award of stock options and restricted stock. The aggregate number of shares of the Company’s common stock available for issuance under the 2021 Plan may not exceed 356,058 shares, consisting of 267,043 stock options and 89,015 shares of restricted stock. As of September 30, 2025, grants outstanding under the 2021 Plan included 89,015 shares of restricted stock, 240,913 incentive stock options and 26,130 non-statutory stock options to directors, officers and key employees. The restricted shares and stock options granted vest ratably over one year or five years and, once vested, the stock options are exercisable in whole or in part for a period up to ten years from the date of the award.
In December 2024, the Company adopted the 2025 Equity Incentive Plan (“2025 Plan”), which the Company’s shareholders approved in February 2025. The 2025 Plan provides for the award of restricted stock. The aggregate number of shares of the Company’s common stock available for issuance under the 2025 Plan may not exceed 138,000 shares, consisting entirely of restricted stock. As of September 30, 2025, grants outstanding under the 2025 Plan included 55,895 of restricted stock. The restricted shares vest ratably over one year or five years.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [RESERVED]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Overview
Income. Our primary source of pre-tax income is net interest income. Net interest income is the difference between interest income, which is the income that we earn on our loans and investments, and interest expense, which is the interest that we pay on our deposits and borrowings. Other significant sources of pre-tax income are service charges (mostly from service charges on deposit accounts and loan servicing fees), ATM and interchange fees on debit and credit cards, increases in the cash surrender value of life insurance, income from sales of residential mortgage and SBA loans originated for sale in the secondary market, commissions on sales of securities and insurance products, and real estate lease income. We also recognize income from the sale of investment securities.
Allowance for Credit Losses. On October 1, 2023, the Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaced the previously required incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The allowance for credit losses (ACL) is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. The ACL is increased by provision expense and decreased by charge-offs, net of recoveries of amounts previously charged off. The Company’s policy is to charge off all or a portion of a loan when, in management’s opinion, it is unlikely to collect the principal amount owed in full either through payments from the borrower or a guarantor or from the liquidation of the collateral. See Note 1 of the Notes to Consolidated Financial Statements beginning on page of this annual report for additional information regarding the methodology used to determine the allowance for credit losses.
Expenses. The noninterest expenses we incur in operating our business consist of salaries and employee benefits expenses, occupancy expenses, data processing expenses, professional service fees, federal deposit insurance premiums, advertising, net losses on foreclosed real estate and other miscellaneous expenses. Salaries and employee benefits consist primarily of salaries, wages and incentive compensation paid to our employees; payroll taxes; and expenses for health insurance, retirement plans and other employee benefits. We also recognize annual employee compensation expenses related to our equity incentive plans as the equity incentive awards vest. Occupancy expenses, which are the fixed and variable costs of buildings and equipment, consist primarily of depreciation charges, furniture and equipment expenses, maintenance, real estate taxes, office lease expense and costs of utilities. Depreciation of premises and equipment is computed using the straight-line method based on the useful lives of the related assets, which range from three to 40 years. Data processing expenses are the fees we pay to third parties for processing customer information, deposits and loans. Professional fees expense represents the fees we pay to third parties for legal, accounting, investment advisory and other consulting services. Federal deposit insurance premiums are payments we make to the FDIC to insure of our deposit accounts. Other expenses include expenses for office supplies, postage, telephone, insurance, regulatory assessments and other miscellaneous operating expenses.
Critical Accounting Policies and Critical Accounting Estimates
The accounting and reporting policies of the Company comply with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to general practices within the banking industry. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. The Company’s consolidated financial position and results of operations can be affected by these estimates and assumptions, which are integral to understanding reported results. Critical accounting policies are those policies that require management to make assumptions about matters that are highly uncertain at the time an accounting estimate is made; and different estimates that the Company reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the Company’s financial condition, changes in financial condition or results of operations. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of financial statements. These factors include, among other things, whether the estimates are significant to the financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including third parties or available prices, and sensitivity of the estimates to changes in economic conditions and whether alternative accounting methods may be utilized under generally accepted accounting principles. Significant accounting policies, including the impact of recent accounting pronouncements, are discussed in Note 1 of the Notes to Consolidated Financial Statements. The policies considered to be the critical accounting policies are described below.
Allowance for Credit Losses. Determining the amount of the allowance for credit losses necessarily involves a high degree of judgment. Among the material estimates required to establish the allowance are: loss exposure at default; the amount and timing of future cash flows on impacted loans; value of collateral; and determination of loss factors to be applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. Management reviews the level of the allowance at least quarterly and establishes the provision for credit losses based upon an evaluation of the portfolio, past loss experience, current and forecasted economic conditions and other factors related to the collectability of the loan portfolio. Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance may be necessary if economic or other conditions differ substantially from the assumptions used in making the evaluation. In addition, the banking regulators, as an integral part of their examination process, periodically review our allowance for credit losses and may require us to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings. See Note 1 of the Notes to Consolidated Financial Statements beginning on page of this annual report for additional information regarding the methodology used to determine the allowance for credit losses.
SELECTED FINANCIAL DATA
The following tables contain certain information concerning our consolidated financial position and results of operations, which is derived in part from our audited consolidated financial statements. The following is only a summary and should be read in conjunction with the audited consolidated financial statements and notes thereto beginning on page of this annual report.
At September 30,
(In thousands)
Financial Condition Data:
Total assets
$
2,399,532
$
2,450,368
$
2,288,854
$
2,093,725
$
1,721,394
Cash and cash equivalents
31,851
52,142
30,845
41,665
33,428
Securities available-for-sale
251,842
248,679
227,739
316,517
206,681
Securities held-to-maturity
1,040
1,300
1,558
1,837
Loans held for sale
51,454
25,716
45,855
60,462
214,940
Loans, net
1,886,818
1,963,852
1,770,243
1,474,544
1,075,936
Deposits
1,709,882
1,880,881
1,681,794
1,515,834
1,227,580
Borrowings from FHLB
435,000
301,640
363,183
307,303
250,000
Other borrowings
28,762
48,603
48,444
88,206
19,865
Stockholders’ equity
193,479
177,115
150,981
151,565
180,377
For the Year Ended September 30,
(In thousands)
Operating Data:
Interest income
$
127,527
$
121,988
$
103,229
$
71,194
$
65,259
Interest expense
62,219
63,926
41,655
10,542
8,087
Net interest income
65,308
58,062
61,574
60,652
57,172
Total provision (credit) for credit losses
3,092
2,612
1,908
(1,767)
Net interest income after provision (credit) for loan losses
64,983
54,970
58,962
58,744
58,939
Noninterest income
18,842
12,530
25,342
51,227
120,436
Noninterest expense
56,962
52,890
76,122
92,662
139,409
Income before income taxes
26,863
14,610
8,182
17,309
39,966
Income tax expense
3,702
1,018
1,923
9,997
Net income
23,161
13,592
8,172
15,386
29,969
Less: net income attributable to noncontrolling interests
-
-
-
-
Net income attributable to First Savings Financial Group
23,161
13,592
8,172
15,386
29,567
For the Year Ended September 30,
Per Share Data:
Net income per common share, basic
$
3.37
$
1.99
$
1.19
$
2.18
$
4.16
Net income per common share, diluted
3.32
1.98
1.19
2.15
4.12
Dividends per common share
0.63
0.59
0.55
0.51
0.36
At or For the Year Ended September 30,
Performance Ratios:
Return on average assets
0.96
%
0.58
%
0.37
%
0.83
%
1.69
%
Return on average equity
12.80
8.31
5.04
8.65
17.59
Return on average common stockholders’ equity
12.80
8.31
5.04
8.65
17.37
Interest rate spread (1)
2.55
2.26
2.69
3.55
3.54
Net interest margin (2)
2.94
2.68
3.10
3.72
3.67
Other expenses to average assets
2.37
2.24
3.43
5.01
7.95
Efficiency ratio (3)
67.69
74.92
87.58
82.82
78.49
Efficiency ratio (excluding nonrecurring items) (4)
68.05
74.92
80.61
81.03
78.51
Average interest-earning assets to average interest-bearing liabilities
114.24
114.95
120.17
126.40
125.92
Dividend payout ratio
18.93
29.80
46.41
23.68
8.59
Average equity to average assets
7.53
6.94
7.31
9.61
9.71
Capital Ratios:
Total capital (to risk-weighted assets):
Consolidated
12.77
%
12.53
%
11.47
%
12.33
%
14.28
%
Bank
12.58
12.42
11.27
11.44
13.60
Tier 1 capital (to risk-weighted assets):
Consolidated
10.24
9.20
8.22
8.73
11.76
Bank
11.52
11.38
10.42
10.59
12.54
Common equity Tier 1 capital (to risk-weighted assets):
Consolidated
10.24
9.20
8.22
8.73
11.76
Bank
11.52
11.38
10.42
10.59
12.54
Tier 1 capital (to average adjusted total assets):
Consolidated
8.22
7.42
7.24
7.96
9.73
Bank
9.25
9.18
9.17
9.58
10.07
(1) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost on average interest-bearing liabilities. Tax exempt income is reported on a tax equivalent basis using a federal marginal tax rate of 21% for all years presented.
(2) Represents net interest income as a percent of average interest-earning assets. Tax exempt income is reported on a tax equivalent basis using a federal marginal tax rate of 21% for all years presented.
(3) Represents other expenses divided by the sum of net interest income and other income.
(4) Represents other expenses, excluding nonrecurring items as discussed below, divided by the sum of net interest income and other income, excluding income (loss) from tax credit investments discussed below. The efficiency ratio for 2025 excludes income of $255,000, $487,000, $403,000 and $45,000 related to a gain on life insurance, gain on lease termination, gain on sale of equity securities, and gain on premises and equipment, respectively, and excludes the insured recovery of legal fees previously recognized of $203,000 and merger related professional fees of $707,000. The efficiency ratio for 2024 excludes income of $116,000, $456,000, $777,000 and $113,000 related to a gain on premises and equipment, recording Visa Class C shares, an adjustment to the MSR valuation allowance and a distribution from an equity investment, respectively, and excludes expenses of $656,000 related to the reversal of SBA guaranteed loan contingency, $283,000 related to the reversal of contingent liabilities and $156,000 related to the adjustment of data processing expenses related to contract termination. The efficiency ratio for 2023 excludes expenses of $1.4 million related to the core processing system conversion, $769,000 related to MSR valuation allowance for intended sale, $1.5
million related to SBA guaranteed loan contingency, $1.1 million related to mortgage banking loss contingencies and $1.2 million of professional fees related to the mortgage banking loss contingencies. The efficiency ratio for 2022 excludes the income from tax credit investments of $12,000 and expenses of $2.0 million related to consulting fees paid in connection with the evaluation and negotiation of a new core processing contract. The efficiency ratio for 2021 and 2020 excludes the income from tax credit investments of $32,000, $426,000 and $210,000, respectively. This is a non-GAAP financial measure that management believes is useful to investors in understanding the Company’s performance.
At or For the Year Ended September 30,
Asset Quality Ratios:
Allowance for credit losses as a percent of total loans
1.06
%
1.07
%
0.95
%
1.03
%
1.31
%
Allowance for credit losses as a percent of nonperforming loans
138.73
125.69
121.16
141.49
92.43
Net charge-offs to average outstanding loans during the period
0.04
0.03
0.06
0.06
0.07
Nonperforming loans as a percent of total loans
0.77
0.85
0.78
0.73
1.42
Nonperforming loans as a percent of total assets
0.61
0.69
0.61
0.52
0.90
Nonperforming assets as a percent of total assets
0.66
0.71
0.69
0.65
1.00
Other Data:
Number of full service branch offices
Number of deposit accounts
51,890
51,104
49,226
48,122
46,361
Number of loans
7,693
8,111
7,796
7,401
7,041
Balance Sheet Analysis
Cash and Cash Equivalents. At September 30, 2025 and 2024, cash and cash equivalents totaled $31.9 million and $52.1 million, respectively. The Bank is at times required to maintain reserve balances on hand and with the Federal Reserve Bank, which are unavailable for investment but are interest-bearing.
Loans Held for Sale. Residential mortgage loans held for sale increased by $551,000 in 2025. There were no residential mortgage loans held for sale at September 30, 2024. Home equity line of credit loans held for sale increased by $36.1 million in 2025. There were no home equity line of credit loans held for sale at September 30, 2024. SBA loans held for sale decreased by $10.9 million in 2025, from $25.7 million at September 30, 2024 to $14.8 million at September 30, 2025 due to sales outpacing originations during the year.
Loans. Our primary lending activity is the origination of loans secured by real estate. We originate one to four family mortgage loans, multifamily loans, commercial real estate loans, commercial business loans and construction loans. To a lesser extent, we originate various consumer loans including home equity lines of credit. Net loans decreased $77.0 million, from $1.96 billion at September 30, 2024 to $1.89 billion at September 30, 2025.
At September 30, 2025, residential mortgage loans totaled $605.9 million, or 31.8% of total loans, compared to $670.0 million, or 33.8% of total loans at September 30, 2024. The decrease in residential mortgage loans is primarily due an $87.2 million sale of first-lien home equity line of credit loans. The Company launched a national first-lien home equity line of credit product in fiscal 2021, the balance of which was $351.0 million and $433.0 million at September 30, 2025 and 2024, respectively. We generally originate loans for investment purposes, although, depending on the interest rate environment, we typically sell 15-year and 30-year fixed rate residential mortgage loans that we originate into the secondary market in order to limit exposure to interest rate risk and to earn noninterest income. Management intends to continue offering short-term adjustable rate residential mortgage loans and generally sell long-term fixed rate mortgage loans in the secondary market.
Commercial real estate loans, including in-market commercial real estate loans, single tenant net lease loans, and SBA real commercial real estate loans, totaled $1.02 billion, or 53.8% of total loans at September 30, 2025, compared to $1.01 billion,
or 51.0% of total loans at September 30, 2024. The increase in commercial real estate loans is primarily due to an increase in single tenant net lease loans, which increased $14.8 million during the year ended September 30, 2025.
Multi-family real estate loans totaled $38.9 million, or 2.0% of total loans at September 30, 2025, compared to $37.8 million, or 1.9% of total loans at September 30, 2024. These loans are primarily secured by apartment buildings and other multi-tenant developments in our primary market area.
Residential construction loans totaled $25.3 million, or 1.3% of total loans at September 30, 2025, of which $6.5 million were speculative construction loans. At September 30, 2024, residential construction loans totaled $53.2 million, or 2.7% of total loans, of which $6.4 million were speculative construction loans.
Commercial construction loans totaled $14.6 million, or 0.8% of total loans, at September 30, 2025 compared to $9.2 million, or 0.5% of total loans at September 30, 2024.
Land and land development loans totaled $16.1 million, or 0.9% of total loans at September 30, 2025, compared to $17.7 million, or 0.9% of total loans at September 30, 2024. These loans are primarily secured by vacant lots to be improved for residential and nonresidential development, and farmland.
Commercial business loans, including in-market commercial business loans and SBA commercial business loans, totaled $140.5 million, or 7.4% of total loans, at September 30, 2025 compared to $143.0 million, or 7.2% of total loans, at September 30, 2024. In-market commercial business loans decreased $1.2 million during the year due primarily to decreased commercial business lending opportunities in our primary market area. Management intends to continue to focus on pursuing commercial business loan opportunities, both within our primary market area as well as through various SBA loan programs, to further diversify the loan portfolio.
Consumer loans totaled $40.0 million, or 2.1% of total loans, at September 30, 2025 compared to $42.2 million, or 2.1% of total loans, at September 30, 2024.
The following table sets forth the composition of our loan portfolio at the dates indicated.
At September 30,
(Dollars in thousands)
Amount
Percent
Amount
Percent
Real estate mortgage:
Residential
$
605,928
31.79
%
$
670,011
33.77
%
Commercial
193,863
10.17
204,847
10.32
Single tenant net lease
765,430
40.16
750,642
37.83
SBA commercial real estate
65,528
3.44
55,557
2.80
Multi-family
38,855
2.04
37,763
1.90
Residential construction
25,290
1.33
53,237
2.68
Commercial construction
14,588
0.77
9,172
0.46
Land and land development
16,116
0.85
17,678
0.89
1,725,598
90.53
1,798,907
90.67
Commercial business
123,469
6.48
124,639
6.28
SBA commercial business
17,049
0.89
18,342
0.92
Consumer
40,013
2.10
42,213
2.13
Total loans
1,906,129
100.00
%
1,984,101
100.00
%
Deferred loan origination fees and costs, net
1,045
Allowance for credit losses - loans
(20,289)
(21,294)
Loans, net
$
1,886,818
$
1,963,852
Loan Maturity
The following table sets forth certain information at September 30, 2025 regarding the dollar amount of loan principal repayments becoming due during the period indicated. The table does not include any estimate of prepayments which significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. Demand loans having no stated schedule of repayments and no stated maturity are reported as due in one year or less.
At September 30, 2025
More Than
More Than One
Five Years
More Than
One Year or
Year to Five
to Fifteen
Fifteen
Amounts due in:
Less
Years
Years
Years
Total
(In thousands)
Residential real estate (1)
$
21,991
$
63,363
$
188,901
$
370,528
$
644,783
Commercial real estate (2)
50,607
76,103
74,375
8,894
209,979
Single tenant net lease
124,041
398,955
242,220
765,430
SBA commercial real estate
1,781
8,975
26,441
28,331
65,528
Residential construction (3)
25,290
-
-
-
25,290
Commercial construction (3)
14,588
-
-
-
14,588
Commercial business
63,983
49,857
4,995
4,634
123,469
SBA commercial business
1,887
8,043
7,024
17,049
Consumer
5,736
17,208
15,348
1,721
40,013
Total
$
309,904
$
622,504
$
559,304
$
414,417
$
1,906,129
(1)Includes multifamily loans.
(2)Includes farmland, land and land development loans.
(3)Includes construction loans for which the Bank has committed to provide permanent financing.
Fixed vs. Adjustable Rate Loans
The following table sets forth the dollar amount of all loans at September 30, 2025 that are due after September 30, 2026, and have either fixed interest rates or adjustable interest rates. The amounts shown below exclude unearned loan origination fees.
(In thousands)
Fixed Rates
Adjustable Rates
Total
Residential real estate (1)
$
138,465
$
484,327
$
622,792
Commercial real estate (2)
60,515
98,857
159,372
Single tenant net lease
495,659
145,730
641,389
SBA commercial real estate
63,484
63,747
Commercial business
38,253
21,233
59,486
SBA commercial business
15,129
15,162
Consumer
3,324
30,953
34,277
Total
$
736,512
$
859,713
$
1,596,225
(1)Includes multifamily loans.
(2)Includes farmland, land and land development loans.
Securities Available for Sale. Our available for sale securities portfolio consists primarily of U.S. government agency and sponsored enterprises securities, mortgage backed securities and collateralized mortgage obligations issued by U.S. government agencies and sponsored enterprises, municipal bonds, privately-issued collateralized mortgage obligations and asset-backed securities and pass-through asset-backed securities guaranteed by the SBA. Available for sale securities increased by $3.2 million, from $248.7 million at September 30, 2024 to $251.8 million at September 30, 2025, due primarily to purchases of $19.0 million, partially offset by an increase in net unrealized losses of $4.9 million, maturities and calls of $4.4 million and principal repayments of $6.2 million.
Securities Held to Maturity. Our held to maturity securities portfolio consists of mortgage-backed securities issued by government sponsored enterprises and municipal bonds. Held to maturity securities decreased by $262,000 from $1.0 million at September 30, 2024 to $778,000 at September 30, 2025, due primarily to maturities and principal repayments.
The following table sets forth the amortized costs and fair values of our investment securities at the dates indicated.
At September 30,
Amortized
Fair
Amortized
Fair
Amortized
Fair
(In thousands)
Cost
Value
Cost
Value
Cost
Value
Securities available for sale:
US Treasury notes and bills
$
29,199
$
26,620
$
30,031
$
27,411
$
30,598
$
25,949
Agency mortgage-backed
25,853
23,463
28,425
26,276
28,542
24,268
Agency CMO
27,973
27,345
15,700
14,926
14,064
12,742
Privately-issued CMO
Privately-issued asset-backed
SBA certificates
10,643
10,541
11,993
11,926
11,587
10,745
Municipal
174,878
161,662
174,132
165,687
177,561
151,484
Other
2,000
1,800
2,000
1,880
2,000
1,712
Total
$
270,960
$
251,842
$
262,877
$
248,679
$
265,209
$
227,739
Securities held to maturity:
Agency mortgage-backed
$
$
$
$
$
$
Municipal
1,011
1,023
1,264
1,268
Total
$
$
$
1,040
$
1,052
$
1,300
$
1,303
The following table sets forth the stated maturities and weighted average yields of debt securities at September 30, 2025. Weighted average yields on tax-exempt securities are presented on a tax equivalent basis using a federal marginal tax rate of 21.0%. Certain mortgage-backed securities and collateralized mortgage obligations have adjustable interest rates and will reprice annually within the various maturity ranges. These repricing schedules are not reflected in the table below. Weighted average yield calculations on investments available for sale do not give effect to changes in fair value that are reflected as a component of stockholders’ equity.
More than
More than
One Year
One Year Through
Five Years Through
More than
or Less
Five Years
Ten Years
Ten Years
Total
Weighted
Weighted
Weighted
Weighted
Weighted
Carrying
Average
Carrying
Average
Carrying
Average
Carrying
Average
Carrying
Average
(Dollars in thousands)
Value
Yield
Value
Yield
Value
Yield
Value
Yield
Value
Yield
Securities available for sale:
US Treasury notes
$
-
-
%
$
-
-
%
$
26,620
2.33
%
$
-
-
%
$
26,620
2.33
%
Agency mortgage-backed securities
4.66
2.66
3.31
23,023
3.42
23,463
3.42
Agency CMO
2.11
2,959
3.57
1.47
23,287
4.76
27,345
4.51
Privately-issued CMO
-
-
-
-
7.35
-
-
7.35
Privately-issued ABS
-
-
5.32
10.60
-
-
9.32
SBA certificates
-
-
-
-
10,086
4.28
5.90
10,541
4.35
Municipal
1,046
5.79
9,695
4.42
11,278
3.29
139,644
3.94
161,662
3.94
Other
-
-
-
-
1,800
8.00
-
-
1,800
8.00
Total
$
1,399
4.86
%
$
12,719
4.23
%
$
51,315
3.16
%
$
186,409
3.98
%
$
251,842
3.83
%
Securities held to maturity:
Agency mortgage-backed
$
-
-
%
$
5.18
%
$
-
-
%
$
6.02
%
$
5.79
%
Municipal
5.89
5.52
5.52
-
-
5.60
Total
$
5.89
%
$
5.52
%
$
5.52
%
$
6.02
%
$
5.60
%
Deposits. Deposit accounts, generally obtained from individuals and businesses throughout our primary market area, are our primary source of funds for lending and investments. Our deposit accounts are comprised of noninterest-bearing accounts, interest-bearing savings, checking and money market accounts and time deposits. Deposits decreased $171.0 million from $1.88 billion at September 30, 2024 to $1.71 billion at September 30, 2025. The Bank recognized increases in money market deposit accounts of $138.5 million and interest-bearing checking accounts of $19.9 million, when comparing the two years. Brokered certificates of deposit totaled $219.9 million at September 30, 2025 compared to $509.2 million at September 30, 2024. There were no reciprocal time deposits at September 30, 2025 and 2024. We have continued to promote relationship oriented deposit accounts but at times also utilize brokered certificates of deposit and reciprocal time deposits as an alternative to retail time deposits. In addition, we have continued to develop and promote cash management services including sweep accounts and remote deposit capture in order to increase the level of commercial deposit accounts. We believe that the development and promotion of these products has made us more competitive in attracting commercial deposits during recent periods.
The following table sets forth the balances of our deposit accounts at the dates indicated.
At September 30,
(In thousands)
Non-interest-bearing demand deposits
$
187,564
$
191,528
NOW accounts
352,270
332,388
Money market accounts
531,722
393,214
Savings accounts
145,146
150,913
Retail time deposits
273,240
303,681
Brokered & reciprocal time deposits
219,940
509,157
Total
$
1,709,882
$
1,880,881
The following table indicates the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity as of September 30, 2025.
(In thousands)
Amount
Three months or less
$
37,939
Over three through six months
26,443
Over six through twelve months
16,595
Over twelve months
13,426
Total
$
94,403
Our uninsured deposits, which consist solely of the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000) per insured account, were approximately $717.1 million and $565.7 million at September 30, 2025 and 2024, respectively. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.
Borrowings. We use borrowings from the FHLB consisting of advances and borrowings under a line of credit arrangement to supplement our supply of funds for loans and investments. The outstanding balance of borrowings from the FHLB increased $133.4 million, from $301.6 million at September 30, 2024 to $435.0 million at September 30, 2025. FHLB borrowings are primarily used to fund loan demand and to purchase available for sale securities.
The following table sets forth certain information regarding the Bank’s use of FHLB borrowings.
Year Ended September 30,
(Dollars in thousands)
Maximum amount of FHLB borrowings outstanding at any month-end during period
$
464,971
$
489,168
$
486,886
Average FHLB borrowings outstanding during period
366,843
376,246
368,239
Weighted average interest rate during period
3.56
%
3.35
%
2.92
%
Balance outstanding at end of period
$
435,000
$
301,640
$
363,183
Weighted average interest rate at end of period
3.70
%
3.20
%
2.90
%
Other borrowings were comprised of subordinated debt at September 30, 2025 and 2024. Other borrowings decreased by $19.8 million from $48.6 million at September 30, 2024 to $28.8 million at September 30, 2025 primarily due to the repayment of a $20.0 million subordinated note during 2025.
On September 20, 2018, the Company entered into a subordinated note purchase agreement in the principal amount of $20 million. The subordinated note initially bore a fixed interest rate of 6.02% per year through September 30, 2023, and thereafter a floating rate, reset quarterly, equal to the three-month Secured Overnight Financing Rate (“SOFR”) plus 310 basis points. All interest is payable quarterly and the subordinated note is scheduled to mature on September 30, 2028. The subordinated note is an unsecured subordinated obligation of the Company and may be repaid in whole or in part, without penalty, on or after September 30, 2023. The debt issuance costs were amortized over five years, which represents the period from issuance to the first redemption date of September 30, 2023. The Company elected not to repay the subordinated note on the first optional redemption date of September 30, 2023, but has the right to repay the note without penalty upon providing adequate notice to the investors. The subordinated note is intended to qualify as Tier 2 capital for the Company under regulatory guidelines. However, following September 30, 2023, 20% of the remaining debt outstanding under this subordinated note agreement is disallowed from Tier 2 capital each year until maturity on September 30, 2028. This note was repaid in full during the fiscal year ended September 30, 2025.
On March 18, 2022, the Company entered into subordinated note purchase agreements in the aggregate principal amount of $31.0 million. The subordinated notes initially bear a fixed interest rate of 4.50% per year through March 30, 2027, and thereafter a floating rate, reset quarterly, equal to the three-month SOFR rate plus 276 basis points. All interest is payable semi-annually and the subordinated notes are scheduled to mature on March 30, 2032. The subordinated notes are unsecured subordinated obligations of the Company and may be repaid in whole or in part, without penalty, on or after March 30, 2027. The subordinated notes are intended to qualify as Tier 2 capital for the Company under regulatory guidelines. The subordinated notes are presented net of unamortized debt issuance costs of $238,000 at September 30, 2025, in the accompanying consolidated balance sheet. The debt issuance costs are being amortized over five years, which represents the period from issuance to the first redemption date of March 30, 2027. During the year ended September 30, 2023, the Company repurchased $2.0 million of this subordinated note from an investor and recognized a gain of $660,000 from the transaction. The remaining principal due on this subordinated note was $29.0 million at September 30, 2025.
The Bank has entered into federal funds purchased line of credit facilities with four other financial institutions that established lines of credit not to exceed the lesser of $20 million or 25% of the Bank’s equity capital, excluding reserves, the lesser of $5.0 million or 50% of the Bank’s equity capital, $22 million and $15 million, respectively. At September 30, 2025, the Bank did not have any outstanding federal funds purchased under these lines of credit.
Stockholders’ Equity. Stockholders’ equity increased $16.4 million, from $177.1 million at September 30, 2024 to $193.5 million at September 30, 2025. The increase was due primarily to an $18.8 million increase in retained net income, partially offset by a $3.9 million increase in accumulated other comprehensive loss. The increase in accumulated other comprehensive loss was due primarily to increasing long term market interest rates during the year ended September 30, 2025, which resulted in a decrease in the fair value of securities available for sale.
Results of Operations for the Years Ended September 30, 2025, 2024 and 2023
Overview. The Company reported net income of $23.2 million ($3.32 per common share diluted) for the year ended September 30, 2025, compared to net income of $13.6 million ($1.98 per common share diluted) for the year ended September 30, 2024. The increase in net income for 2025 compared to 2024 was due to an increase in net interest income and noninterest income of $7.2 million and $6.3 million, respectively, and a decrease in total provision for credit losses of $2.8 million, partially offset by an increase in noninterest expense of $4.1 million.
Net income was $13.6 million ($1.98 per common share diluted) for the year ended September 30, 2024, compared to net income of $8.2 million ($1.19 per common share diluted) for the year ended September 30, 2023. The increase in net income for 2024 compared to 2023 was due to a decrease in noninterest expense of $23.2 million, partially offset by a $12.8 million decrease in noninterest income, a $3.5 million decrease in net interest income and a $480,000 increase in total provision for credit losses.
Net Interest Income. For the year ended September 30, 2025, net interest income increased $7.2 million, or 12.5%, as compared to 2024. The interest rate spread, the difference between the average tax-equivalent yield on interest-earning assets and the average cost of interest-bearing liabilities, increased from 2.26% for 2024 to 2.55% for 2025 due primarily to an increase in the average yield of
interest earning assets from 5.55% for 2024 to 5.66% for 2025 and a decrease in the average cost of interest-bearing liabilities from 3.29% for 2024 to 3.11% for 2025.
For the year ended September 30, 2024, net interest income decreased $3.5 million, or 5.7% as compared to 2023. The interest rate spread decreased from 2.69% for 2023 to 2.26% for 2024 due primarily to an increase in the average cost of interest-bearing liabilities from 2.44% for 2023 to 3.29% for 2024. This was partially offset by an increase in the average yield of interest earning assets from 5.13% for 2023 to 5.55% for 2024.
For the year ended September 30, 2025, total interest income increased $5.5 million, or 4.5%, as compared to 2024. The increase in total interest income is due primarily to increases in the average balance of interest earning assets of $55.1 million, from $2.23 billion for 2024 to $2.29 billion for 2025, and an increase in the average tax-equivalent yield on interest-earning assets, from 5.55% for 2024 to 5.66% for 2025. The increase in the average balance of interest-earning assets is due primarily to increases in the average balance of total loans of $55.9 million. For the year ended September 30, 2024, total interest income increased $18.8 million, or 18.2% as compared to 2023. The increase in total interest income is due primarily to increases in the average balance of interest earning assets of $179.0 million, from $2.05 billion for 2023 to $2.23 billion for 2024, and an increase in the average tax-equivalent yield on interest-earning assets, from 5.13% for 2023 to 5.55% for 2024. The increase in the average balance of interest-earning assets is due primarily to increases in the average balance of total loans of $245.8 million.
Interest income on loans increased $5.2 million, or 4.7%, from $110.4 million for 2024 to $115.6 million for 2025, due primarily to an increase in the average balance of loans outstanding of $55.9 million, from $1.93 billion for 2024 to $1.98 billion for 2025, and an increase in the average tax-equivalent yield on loans from 5.76% for 2024 to 5.86% for 2025. In 2024, interest income on loans increased $20.6 million, or 22.9%, from $89.8 million for 2023 to $110.4 million for 2024, due primarily to an increase in the average balance of loans outstanding of $245.8 million, from $1.68 billion for 2023 to $1.93 billion for 2024, and an increase in the average tax-equivalent yield on loans from 5.36% for 2023 to 5.76% for 2024.
Interest income on investment securities increased $246,000, or 2.7%, primarily due to an increase in the average balance of investment securities of $5.2 million, from $260.6 million for 2024 to $265.8 million for 2025 and an increase in the average tax equivalent yield on investments from 3.99% for 2024 to 4.02% for 2025. In 2024, interest income on investment securities decreased $2.1 million, or 19.2%, primarily due to a decrease in the average balance of investment securities of $68.2 million, from $328.8 million for 2023 to $260.6 million for 2024, partially offset by an increase in the average tax equivalent yield on investments from 3.97% for 2023 to 3.99% for 2024.
Total interest expense decreased $1.7 million, or 2.7%, due primarily to a decrease in the average cost of funds from 3.29% for 2024 to 3.11% for 2025, partially offset by an increase in the average balance of interest-bearing liabilities of $60.3 million, from $1.94 billion for 2024 to $2.00 billion for 2025. The average balance of interest-bearing deposits increased $78.0 million, or 5.1%, from $1.52 billion for 2024 to $1.60 billion for 2025, and the average cost of funds for deposits decreased from 3.17% for 2024 to 2.93% for 2025. The average balance of borrowings from the Federal Home Loan Bank decreased $9.4 million, or 2.5%, from $376.2 million for 2024 to $366.8 million for 2025, and the average cost of Federal Home Loan Bank borrowings increased from 3.35% for 2024 to 3.56% for 2025. Average other borrowings, which is comprised of subordinated debt, decreased $8.3 million or 17.1% from $48.5 million for 2024 to $40.2 million for 2025. The average cost of other borrowings decreased from 6.63% for 2024, net of amortization of debt issuance costs, to 5.92% for 2025, net of amortization of debt issuance costs. In 2024, total interest expense increased $22.3 million or 53.4%, due primarily to an increase in the average cost of funds from 2.44% for 2023 to 3.29% for 2024, and an increase in the average balance of interest-bearing liabilities of $233.2 million, from $1.71 billion for 2023 to $1.94 billion for 2024. The average balance of interest-bearing deposits increased $235.9 million, or 18.4%, from $1.28 billion for 2023 to $1.52 billion for 2024, and the average cost of funds for deposits increased from 2.16% for 2023 to 3.17% for 2024. The average balance of borrowings from the Federal Home Loan Bank increased $8.0 million, or 2.2%, from $368.2 million for 2023 to $376.2 million for 2024, and the average cost of Federal Home Loan Bank borrowings increased from 2.92% for 2023 to 3.35% for 2024. Average other borrowings, which are comprised of subordinated debt, decreased $10.6 million or 17.9% from $59.2 million for 2023 to $48.5 million for 2024. The average cost of other borrowings increased from 5.48% for 2023, net of amortization of debt issuance costs, to 6.63% for 2024, net of amortization of debt issuance costs.
Average Balances and Yields.
The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and totaled $1.4 million, $1.1 million and $1.2 million for 2025, 2024 and 2023, respectively. Tax exempt income on loans and investment securities has been adjusted to a tax equivalent basis using a federal marginal tax rate of 21.0%. There were no out-of-period items or adjustments required to be excluded from the following table.
Year Ended September 30,
Interest
Interest
Interest
Average
and
Yield/
Average
and
Yield/
Average
and
Yield/
(Dollars in thousands)
Balance
Dividends
Cost
Balance
Dividends
Cost
Balance
Dividends
Cost
Assets:
Interest-bearing deposits with banks
$
15,828
$
4.41
%
$
21,951
$
1,043
4.75
%
$
22,305
$
3.90
%
Loans
1,982,149
116,092
5.86
1,926,228
110,893
5.76
1,680,418
90,014
5.36
Investment securities - taxable
104,151
3,782
3.63
101,902
3,694
3.63
109,249
3,865
3.54
Investment securities - nontaxable
161,648
6,899
4.27
158,698
6,699
4.22
219,581
9,189
4.18
FRB and FHLB stock
25,067
1,994
7.95
24,982
1,563
6.26
23,196
1,435
6.19
Total interest-earning assets
2,288,843
129,465
5.66
2,233,761
123,892
5.55
2,054,749
105,372
5.13
Non-interest-earning assets
116,603
122,336
161,446
Total assets
$
2,405,446
$
2,356,097
$
2,216,195
Liabilities and equity:
NOW accounts
$
352,652
$
2,913
0.83
$
324,518
$
2,583
0.80
$
313,212
$
1,960
0.63
Money market deposit accounts
443,508
16,158
3.64
335,116
12,534
3.74
259,506
6,295
2.43
Savings accounts
149,380
0.13
159,902
0.13
188,686
0.07
Time deposits
650,857
27,510
4.23
698,864
32,774
4.69
521,094
19,292
3.70
Total interest-bearing deposits
1,596,397
46,780
2.93
1,518,400
48,101
3.17
1,282,498
27,671
2.16
Federal funds purchased
-
-
-
-
-
-
4.76
Borrowings from FHLB
366,843
13,058
3.56
376,246
12,609
3.35
368,239
10,739
2.92
Subordinated debt and other borrowings
40,238
2,381
5.92
48,517
3,216
6.63
59,161
3,244
5.48
Total interest-bearing liabilities
2,003,478
62,219
3.11
1,943,163
63,926
3.29
1,709,919
41,655
2.44
Non-interest-bearing deposits
186,022
204,491
307,356
Other non-interest-bearing liabilities
34,932
44,857
36,867
Total liabilities
2,224,432
2,192,511
2,054,142
Total stockholders’ equity
181,014
163,586
162,053
Total liabilities and equity
$
2,405,446
$
2,356,097
$
2,216,195
Net interest income (taxable equivalent basis)
67,246
59,966
63,717
Less: taxable equivalent adjustment
(1,938)
(1,904)
(2,143)
Net interest income
$
65,308
$
58,062
$
61,574
Interest rate spread (taxable equivalent basis)
2.55
%
2.26
%
2.69
%
Net interest margin (taxable equivalent basis)
2.94
2.68
3.10
Average interest-earning assets to average interest-bearing liabilities
114.24
114.95
120.17
Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. Changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of change in each.
Year Ended September 30, 2025
Year Ended September 30, 2024
Compared to
Compared to
Year Ended September 30, 2024
Year Ended September 30, 2023
Increase (Decrease)
Increase (Decrease)
Due to
Due to
(In thousands)
Volume
Rate
Net
Volume
Rate
Net
Interest income:
Interest-bearing deposits with banks
$
(280)
$
(63)
$
(345)
$
(15)
$
$
Loans
3,249
1,950
5,199
13,667
7,212
20,879
Investment securities - taxable
(263)
(171)
Investment securities - nontaxable
(2,557)
(2,490)
FRB and FHLB stock
-
Total interest-earning assets
3,176
2,397
5,573
10,942
7,577
18,520
Interest expense:
Deposits
2,379
(3,700)
(1,321)
6,287
14,143
20,430
Federal funds purchased
-
-
-
(1)
-
(1)
Borrowings from FHLB
(325)
1,619
1,870
Other borrowings
(519)
(316)
(835)
(644)
(28)
Total interest-bearing liabilities
1,535
(3,242)
(1,707)
5,893
16,378
22,271
Net increase (decrease) in net interest income (taxable equivalent basis)
$
1,641
$
5,639
$
7,280
$
5,050
$
(8,802)
$
(3,751)
Provision for Credit Losses. The Company recognized a provision for unfunded lending commitments of $452,000 for the year ended September 30, 2025, and a reversal of provision for credit losses for loans and securities of $118,000 and $9,000, respectively, compared to a provision for credit losses for loans and securities of $3.5 million and $21,000, respectively, and a reversal of provision for unfunded lending commitments of $421,000 for the year ended September 30, 2024. Provisions for the year ended September 30, 2025 were lower due to lower loan balances and a decrease in qualitative reserves. Net charge-offs in 2025 were $887,000 compared to $527,000 for 2024 and nonperforming loans decreased $2.3 million to $14.6 million at September 30, 2025. In 2024, the Company recognized a provision for credit losses for loans of $3.5 million, a credit for unfunded lending commitments of $421,000, and a provision for credit losses for securities of $21,000 for the year ended September 30, 2024 compared to a provision for loan losses of $2.6 million only for 2023. The provision for credit losses for loans increased primarily due to loan growth and the effects of adopting the Current Expected Credit Loss (CECL) methodology during 2024. Net charge-offs in 2024 were $527,000 compared to $1.1 million for 2023 and nonperforming loans increased $3.0 million to $16.9 million at September 30, 2024. See “Analysis of Nonperforming and Classified Assets” included herein. It is management’s assessment that the allowance for credit losses at September 30, 2025 was adequate and appropriately reflected the current expected losses in the Bank’s loan portfolio at that date.
Noninterest Income. Noninterest income increased $6.3 million, or 50.4%, from $12.5 million for the year ended September 30, 2024 to $18.8 million for the year ended September 30, 2025. The increase was due primarily to a $4.0 million net gain on sale of home equity lines of credit (“HELOC”) in 2025 with no corresponding amount for 2024 and a $1.2 million increase in net gain on sale of SBA loans. In 2024, noninterest income decreased $12.8 million, or 50.6%, from $25.3 million for the year ended September 30, 2023 to $12.5 million for the year ended September 30, 2024. The decrease was due primarily to a $14.1 million decrease in mortgage banking income due to the wind down of the Company’s national mortgage banking operations in 2024. Mortgage loans originated for sale were $60.8 million in the year ended September 30, 2024 as compared to $587.7 million for 2023.
Noninterest Expense. Noninterest expenses increased $4.1 million, or 7.7%, from $52.9 million for the year ended September 30, 2024 to $57.0 million for the year ended September 30, 2025. The increase was due primarily to increases in compensation and benefits and other operating expenses of $2.9 million and $1.2 million, respectively. The increase in compensation and benefits is primarily due to routine salary increases and increases in incentive and bonus compensation in 2025 related to stronger Company performance. The increase in other operating expenses was due primarily to a $395,000 accrued contingent liability associated with employee benefits recognized in the 2025 period with no corresponding amount in 2024 and a $721,000 reversal of accrued loss contingencies for SBA-guaranteed loans in the 2024 period with no corresponding amount for 2025. In 2024, noninterest expenses decreased $23.2 million, or 30.5%, from $76.1 million for the year ended September 30, 2023 to $52.9 million for the year ended September 30, 2024. The decrease was due primarily to decreases in compensation and benefits, data processing expense and other operating expenses of $12.0 million, $2.2 million and $7.8 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the wind down of the Company’s national mortgage banking operations in the quarter ended December 31, 2023. The decrease in data processing expense was due primarily to expenses recognized in the prior year related to the implementation of the new core operating system in August 2023. The decrease in other operating expense was due primarily to a $1.9 million decrease in net loss on captive insurance operations due to the dissolution of the captive insurance company in September 2023; a decrease in loss contingency accrual for SBA-guaranteed loans of $754,000 in 2024 compared to an increase of $1.5 million in 2023; a decrease in the loss contingency accrual for restitution to mortgage borrowers of $283,000 in 2024 compared to an increase of $609,000 in 2023; and a decrease of $853,000 in loan expense for 2024 as compared to 2023 due primarily to lower mortgage loan originations related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.
Income Tax Expense. The Company recognized income tax expense of $3.7 million for the year ended September 30, 2025, compared to $1.0 million for the year ended September 30, 2024 and $10,000 for the year ended September 30, 2023. The effective tax rate was 13.8%, 7.0% and 0.1%, for the years ended September 30, 2025, 2024 and 2023, respectively. The higher effective tax rate for 2025 compared to 2024 was primarily due to higher taxable income in 2025. The higher effective tax rate for 2024 compared to 2023 was primarily due to higher taxable income in the 2024 period.
Risk Management
Overview. Managing risk is essential to successfully managing a financial institution. Our most prominent risk exposures are credit risk, interest rate risk and market risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan or investment when it is due. Interest rate risk is the potential reduction of interest income as a result of changes in interest rates. Market risk arises from fluctuations in interest rates that may result in changes in the values of financial instruments, such as available-for-sale securities that are accounted for on a mark-to-market basis. Other risks that we face are operational risks, liquidity risks and reputation risk. Operational risks include risks related to fraud, regulatory compliance, processing errors, technology and disaster recovery. Liquidity risk is the possible inability to fund obligations to depositors, lenders or borrowers. The Company has implemented an enterprise risk management structure in order to better manage and mitigate these identified and perceived risks.
Credit Risk Management. Our strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans.
When a borrower fails to make a required loan payment, we take a number of steps to have the borrower cure the delinquency and restore the loan to current status. When the loan becomes 15 days past due, a late notice is sent to the borrower and a late fee is assessed. When the loan becomes 30 days past due, a more formal letter is sent. Between 15 and 30 days past due, telephone calls are also made to the borrower. After 30 days, we regard the borrower as in default. The borrower may be sent a letter from our attorney and we may commence collection proceedings. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure sale, the real property securing the loan generally is sold at foreclosure. Generally, when a consumer loan becomes 60 days past due, we institute collection proceedings and attempt to repossess any personal property that secures the loan. Generally, we institute foreclosure proceedings when a loan is 60 days past due. Management obtains the approval of the Board of Directors to proceed with foreclosure of property. Management informs the Board of Directors monthly of all loans in nonaccrual status, all loans in foreclosure and all repossessed property and assets that we own.
Analysis of Nonperforming and Classified Assets. We consider nonaccrual loans, financial difficulty modifications (“FDMs”), repossessed assets and loans that are 90 days or more past due to be nonperforming assets. Loans are generally placed on nonaccrual status when they become 90 days delinquent at which time the accrual of interest ceases and the allowance for any uncollectible accrued
interest is established and charged against operations. Typically, payments received on a nonaccrual loan are first applied to the outstanding principal balance.
Real estate that we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned until it is sold. When property is acquired it is recorded at its fair market value, less estimated costs to sell, at the date of foreclosure. Holding costs and declines in fair value after acquisition of the property result in charges against income. Former bank premises held for sale are also included in other real estate owned, but are not included in the nonperforming asset totals below.
The following table provides information with respect to our nonperforming assets at the dates indicated. Included in nonperforming loans are loans for which the Bank has modified the repayment terms, and therefore are considered to be FDMs. There were no new FDMs made or modifications of existing FDMs during the year ended September 30, 2025.
At September 30,
(Dollars in thousands)
Nonaccrual loans
$
14,625
$
16,942
$
13,948
$
10,856
$
15,000
Accruing loans past due 90 days or more
-
-
-
-
Total nonperforming loans
14,625
16,942
13,948
10,856
15,472
Performing TDRs
-
-
1,266
2,714
1,743
Foreclosed real estate
1,093
-
-
Total nonperforming assets
$
15,718
$
17,386
$
15,688
$
13,570
$
17,215
Nonaccrual loans to total loans
0.77
%
0.85
%
0.78
%
0.73
%
1.38
%
Total nonperforming loans to total loans
0.77
0.85
0.78
0.73
1.42
Total nonperforming loans to total assets
0.61
0.69
0.61
0.52
0.90
Total nonperforming assets to total assets
0.66
0.71
0.69
0.65
1.00
Federal and state banking regulations require us to review and classify our assets on a regular basis. In addition, the Bank’s regulators have the authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified “loss” is considered uncollectible and of such little value that continuance as an asset of the institution, without establishment of a specific allowance or charge-off, is not warranted. The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. When we classify an asset as doubtful we may establish a specific allowance for credit losses. If we classify an asset as loss, we charge off an amount equal to 100% of the portion of the asset classified loss.
Classified assets include loans that are classified due to factors other than payment delinquencies, such as lack of current financial statements and other required documentation, insufficient cash flows or other deficiencies, and, therefore, are not included as nonperforming assets. Other than as disclosed in the above tables, there are no other loans where management has serious doubts about the ability of the borrowers to comply with the present loan repayment terms. Classified assets also include investment securities that have experienced a downgrade of the security’s credit quality rating by various rating agencies.
The Company adopted ASU 2016-13 effective October 1, 2023. See Note 1 of the Notes to Consolidated Financial Statements beginning on page of this annual report for additional information regarding the methodology used to determine the allowance for credit losses. The following table sets forth the breakdown of the allowance for credit losses by loan category at the dates indicated.
At September 30,
% of
% of
% of
Loans in
% of
Loans in
Allowance
Category
Allowance
Category
to Total
to Total
to Total
to Total
(Dollars in thousands)
Amount
Allowance
Loans
Amount
Allowance
Loans
Residential real estate
$
7,003
34.52
%
31.79
%
$
7,485
35.15
%
33.77
%
Commercial real estate
1,717
8.46
10.17
1,744
8.19
10.32
Single tenant net lease
3,344
16.48
40.16
4,038
18.96
37.83
SBA commercial real estate
3,877
19.11
3.44
3,100
14.56
2.80
Multi-family
1.31
2.04
1.60
1.90
Residential construction
1.05
1.33
1.90
2.68
Commercial construction
1.42
0.77
0.77
0.46
Land and land development
0.93
0.85
0.96
0.89
Commercial business
1,268
6.25
6.48
1,657
7.78
6.28
SBA commercial business
1,549
7.63
0.89
1,550
7.28
0.92
Consumer
2.84
2.08
2.85
2.13
Total allowance for credit losses
$
20,289
100.00
%
100.00
%
$
21,294
100.00
%
100.00
%
Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. The banking regulators may assess our allowance for credit losses based on judgments different from ours, and we may determine to increase our allowance for credit losses based on their assessments. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for credit losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for credit losses may adversely affect our financial condition and results of operations.
Analysis of Loan Loss Experience. The following table sets forth an analysis of the allowance for credit losses for the periods indicated.
Year Ended September 30,
(Dollars in thousands)
Allowance for credit losses at beginning of period
$
21,294
$
16,900
$
15,360
ASU 2016 - 13 (CECL) implementation
-
1,429
-
Provision (credit) for credit losses
(118)
3,492
2,612
Charge offs:
Residential real estate
Commercial real estate
-
-
Single tenant net lease
-
-
-
SBA commercial real estate
Multi-family
-
-
-
Residential construction
-
-
-
Commercial construction
-
-
-
Land and land development
-
-
-
Commercial business
-
-
SBA commercial business
Consumer
Total charge-offs
1,447
1,247
Recoveries:
Residential real estate
Commercial real estate
-
-
-
Single tenant net lease
-
-
-
SBA commercial real estate
Multi-family
-
-
-
Residential construction
-
-
-
Commercial construction
-
-
-
Land and land development
-
-
-
Commercial business
-
-
SBA commercial business
Consumer
Total recoveries
Net charge-offs
1,072
Allowance for credit losses at end of period
$
20,289
$
21,294
$
16,900
Allowance for credit losses to nonaccrual loans
138.73
%
125.69
%
121.16
%
Allowance for credit losses to nonperforming loans
138.73
%
125.69
%
121.16
%
Allowance for credit losses to total loans outstanding at the end of the period
1.06
1.07
0.95
Net charge-offs during the period to average loans outstanding during the period
0.04
0.03
0.06
The following table sets forth the ratio of net charge offs (recoveries) to average loans outstanding for the periods indicated.
For the Year Ended September 30,
Loan category
Residential real estate
0.02
%
0.02
%
0.01
%
Commercial real estate
-
-
-
Single tenant net lease
-
-
-
SBA commercial real estate
(0.10)
(0.01)
0.69
Multi-family
-
-
-
Residential construction
-
-
-
Commercial construction
-
-
-
Land and land development
-
-
-
Commercial business
-
0.03
(0.07)
SBA commercial business
2.87
0.61
2.73
Consumer
0.71
0.72
0.55
Total loans
0.04
%
0.03
%
0.06
%
Interest Rate Risk Management. We manage the interest rate sensitivity of our interest-bearing liabilities and interest-earning assets in an effort to minimize the adverse effects of changes in the interest rate environment. Deposit accounts typically react more quickly to changes in market interest rates than mortgage loans because of the shorter maturities of deposits. As a result, sharp increases in interest rates may adversely affect our earnings while decreases in interest rates may beneficially affect our earnings. To reduce the potential volatility of our earnings, we have sought to improve the match between asset and liability maturities and rates, while maintaining an acceptable interest rate spread. Our strategy for managing interest rate risk emphasizes: adjusting the maturities of borrowings; adjusting the investment portfolio mix and duration and generally selling in the secondary market substantially all newly originated, fixed rate one-to four-family residential real estate loans. We currently do not participate in hedging programs, interest rate swaps or other activities involving the use of derivative financial instruments. See Note 18 of the Notes to Consolidated Financial Statements beginning on page of this annual report for additional information regarding derivative financial instruments.
We have an Asset/Liability Management Committee, which includes members of management selected by the Board of Directors, to communicate, coordinate and control all aspects involving asset/liability management. The committee establishes and monitors the volume, maturities, pricing and mix of assets and funding sources with the objective of managing assets and funding sources to provide results that are consistent with liquidity, growth, risk limits and profitability goals.
Our goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income and net income.
Market Risk Analysis. An element in our ongoing interest rate risk management process is to measure and monitor interest rate risk using a Net Interest Income at Risk simulation to model the interest rate sensitivity of the balance sheet and to quantify the impact of changing interest rates on the Company. The model quantifies the effects of various possible interest rate scenarios on projected net interest income over a one-year horizon. The model assumes a semi-static balance sheet and measures the impact on net interest income relative to a base case scenario of hypothetical changes in interest rates over twelve months and provides no effect given to any steps that management might take to counter the effect of the interest rate movements. The scenarios include prepayment assumptions, changes in the level of interest rates, the shape of the yield curve, and spreads between market interest rates in order to capture the impact from re-pricing, yield curve, option, and basis risks.
Results of our simulation modeling, which assumes an immediate and sustained parallel shift in market interest rates, project that the Company’s net interest income could change as follows over a one-year horizon, relative to our base case scenario, based on September 30, 2025 and 2024 financial information. The simulated changes presented in the following table are within policy guidelines approved by the Company’s Board of Directors.
At September 30, 2025
At September 30, 2024
Immediate Change
One Year Horizon
One Year Horizon
in the Level
Dollar
Percent
Dollar
Percent
of Interest Rates
Change
Change
Change
Change
(Dollars in thousands)
300bp
$
(9,027)
(12.40)
%
$
(6,833)
(10.11)
%
200bp
(6,336)
(8.70)
(4,475)
(6.62)
100bp
(3,606)
(4.95)
(2,486)
(3.68)
Static
-
-
-
-
(100)bp
3,809
5.23
3,209
4.75
(200)bp
7,686
10.56
6,339
9.38
At September 30, 2025, our simulated exposure to an increase in interest rates shows that an immediate and sustained increase in rates of 1.00% will decrease our net interest income by $3.6 million or 4.95% over a one year horizon compared to a flat interest rate scenario. Furthermore, rate increases of 2.00% and 3.00% would cause net interest income to decrease by 8.70% and 12.40%, respectively. An immediate and sustained decrease in rates of 1.00% and 2.00% would increase our net interest income by $3.8 million and $7.7 million, or 5.23% and 10.56%, respectively, over a one year horizon compared to a flat interest rate scenario.
The Company also has longer term interest rate risk exposure, which may not be appropriately measured by Net Interest Income at Risk modeling, and therefore uses an Economic Value of Equity (“EVE”) interest rate sensitivity analysis in order to evaluate the impact of its interest rate risk on earnings and capital. This is measured by computing the changes in net EVE for its cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. EVE modeling involves discounting present values of all cash flows for on and off balance sheet items under different interest rate scenarios and provides no effect given to any steps that management might take to counter the effect of the interest rate movements. The discounted present value of all cash flows represents the Company’s EVE and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. The amount of base case EVE and its sensitivity to shifts in interest rates provide a measure of the longer term re-pricing and option risk in the balance sheet.
Results of our simulation modeling, which assumes an immediate and sustained parallel shift in market interest rates, project that the Company’s EVE could change as follows, relative to our base case scenario, based on September 30, 2025 and 2024 financial information. The simulated changes presented in the following table are not within policy guidelines approved by the Company’s Board of Directors due to the strategic decision to attempt to enhance the Company’s profile in the declining rate scenarios.
At September 30, 2025
Immediate Change
Economic Value of Equity
Economic Value of Equity as a
in the Level
Dollar
Dollar
Percent
Percent of Present Value of Assets
of Interest Rates
Amount
Change
Change
EVE Ratio
Change
(Dollars in thousands)
300bp
$
216,383
$
(92,499)
(29.95)
%
10.37
%
(301)
bp
200bp
242,807
(66,075)
(21.39)
11.27
(211)
bp
100bp
272,848
(36,034)
(11.67)
12.23
(115)
bp
Static
308,882
-
-
13.38
-
bp
(100)bp
345,964
37,082
12.01
14.46
bp
(200)bp
386,420
77,538
25.10
15.55
bp
At September 30, 2024
Immediate Change
Economic Value of Equity
Economic Value of Equity as a
in the Level
Dollar
Dollar
Percent
Percent of Present Value of Assets
of Interest Rates
Amount
Change
Change
EVE Ratio
Change
(Dollars in thousands)
300bp
$
171,051
$
(99,851)
(36.86)
%
8.05
%
(345)
bp
200bp
202,962
(67,940)
(25.08)
9.24
(226)
bp
100bp
236,935
(33,967)
(12.54)
10.42
(108)
bp
Static
270,902
-
-
11.50
-
bp
(100)bp
309,128
38,226
14.11
12.66
bp
(200)bp
349,855
78,953
29.14
13.80
bp
The previous table indicates that at September 30, 2025, the Company would expect a decrease in its EVE in the event of a sudden and sustained 100, 200 and 300 basis point increase in prevailing interest rates, and an increase in its EVE in the event of a sudden and sustained 100 and 200 basis point decrease in prevailing interest rates.
The models are driven by expected behavior in various interest rate scenarios and many factors besides market interest rates affect the Company’s net interest income and EVE. For this reason, we model many different combinations of interest rates and balance sheet assumptions to understand its overall sensitivity to market interest rate changes. Therefore, as with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing tables and it is recognized that the model outputs are not guarantees of actual results. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, expected rates of prepayments on loans and early withdrawals from time deposits could deviate significantly from those assumed in calculating the table.
Liquidity Management. Liquidity is the ability to meet current and future short-term financial obligations. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of investment securities and borrowings from the FHLB. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.
The Bank regularly adjusts its investments in liquid assets based upon its assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities and (4) the objectives of our asset/liability management policy.
The Bank’s most liquid assets are cash and cash equivalents and interest-bearing deposits. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At September 30, 2025, cash and cash equivalents totaled $31.9 million. Securities classified as available-for-sale, amounting to $251.8 million, at September 30, 2025, provide additional sources of liquidity. At September 30, 2025, we had the ability to borrow a total of approximately $884.9 million from the FHLB, of which $435.0 million was borrowed and outstanding. In addition, we had the ability to borrow the lesser of $20 million or 25% of the Bank’s equity capital, excluding reserves, using a federal funds purchased line of credit facility with another financial institution at September 30, 2025. We also had three other federal funds line of credit facilities with other financial institutions from which we had the ability to borrow the lesser of $5.0 million or 50% of the Bank’s equity capital, $22 million and $15 million, respectively. The Bank did not have any outstanding federal funds purchased at September 30, 2025.
At September 30, 2025, the Bank had $362.6 million in commitments to extend credit outstanding. Time deposits due within one year of September 30, 2025 totaled $452.6 million, or 91.8% of time deposits. We believe the large percentage of time deposits that mature within one year reflects customers’ hesitancy to invest their funds for long periods due to the volatile interest rate environment and local competitive pressure. The balance also includes $219.9 million in brokered and reciprocal time deposits at September 30, 2025. If these maturing time deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the time deposits due on or before September 30, 2026. We believe, however, based on past experience that a significant portion of our time deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.
The Company is a separate legal entity from the Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations, to pay any dividends and to repurchase any of its outstanding common stock. The Company’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from banking regulators, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. At September 30, 2025, the Company had liquid assets of $3.4 million on a stand-alone, unconsolidated basis.
Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in deposit accounts and FHLB borrowings. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. We generally manage the pricing of our deposits to be competitive. Occasionally, we offer promotional rates on certain deposit products to attract deposits.
Capital Management. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At September 30, 2025, the Bank exceeded all of its regulatory capital requirements. The Bank is considered “well capitalized” under regulatory guidelines. See “Item 1. Business - Regulation and Supervision - Regulation of Federal Savings Associations - Capital Requirement.”
Off-Balance Sheet Arrangements. In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit.
For the year ended September 30, 2025, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.
Effect of Inflation and Changing Prices
The consolidated financial statements and related financial data presented in this annual report have been prepared according to accounting principles generally accepted in the United States, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than do general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference to Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is included herein beginning on page.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. CONTROLS AND PROCEDURES
(a)Disclosure Controls and Procedures
The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this annual report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b)Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
The system of internal control over financial reporting as it relates to the consolidated financial statements is evaluated for effectiveness by management. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed First Savings Financial Group, Inc.’s system of internal control over financial reporting as of September 30, 2025, in relation to criteria for effective internal control over financial reporting as described in the 2013 “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of this assessment, management concluded that, as of September 30, 2025, the Company’s system of internal control over financial reporting was effective and met the criteria of the “Internal Control Integrated Framework.”
(c)Changes to Internal Control over Financial Reporting
The Company did not materially change its internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act during the quarter ended September 30, 2025, and made no changes that it believes are reasonably likely to materially affect, its internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. OTHER INFORMATION
During the three months ended September 30, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement “ (as such term is defined in Item 408 of SEC Regulation S-K).

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
The Company’s Board of Directors currently consists of ten members. The Board of Directors is divided into three classes, each with three-year staggered terms, with approximately one-third of the directors elected each year. All the nominees for director serve as directors of the Company and the Bank. All the directors continuing in office serve as directors of the Company and the Bank, except for Frank N. Czeschin who serves as director of the Company only.
Information regarding the directors in office is provided below. Unless otherwise stated, he or she has held his or her current occupation for at least the last five years. His or her indicated age is as of September 30, 2025.
Directors with Terms Expiring in 2026
Larry W. Myers is the President and Chief Executive Officer of the Company and the Bank. He joined the Bank in 2005 and previously served as Chief Operations Officer of the Bank. Before joining the Bank, he served as Area President of National City Bank in southern Indiana. Age 67. Director since 2008 and a director of the Bank since 2005.
Mr. Myers’ forty-three years of experience in the local banking industry and involvement in business and civic organizations within the region in which the Company conducts its business affords the Board of Directors valuable insight regarding business initiatives and operations of the Company and the Bank. His knowledge of the Company’s and the Bank’s business, combined with his tenure and strategic vision, position him well for continued service as a director, and as President and Chief Executive Officer of the Company and the Bank.
L. Chris Fordyce is a family-farm operator in Washington County, Indiana. He is a former director of Community First Bank. Age 70. Director since 2017 and a director of the Bank since 2009.
Mr. Fordyce's activities in the Washington County communities and experience in agriculture in the region in which the Company conducts its business provides the Board of Directors with insight regarding the local agricultural environment. In addition to service as a director of the Company and the Bank, he served four years as a director of Community First Bank.
Troy D. Hanke is the Chief Financial Officer and a member of Bridgeman Foods, one of the largest restaurant franchisees in the United States, which owns and operates more than 200 national-brand restaurant locations throughout the United States. Before joining the Bridgeman Foods, he was a senior manager in the audit practice of Deloitte. He also serves on the boards of directors of Heartland Coca-Cola Bottling and Coca-Cola Canada. Age 56. Director since 2020 and a director of the Bank since 2020.
Mr. Hanke is a former certified public accountant that has more than twenty years of experience in franchise restaurant and beverage finance and operations. His tenured business experience provides the Board of Directors with unique insights into the national-brand restaurant, beverage bottling and distribution, and commercial retail real estate industries and national economic environment, both in which the Company conducts commercial real estate lending.
Directors with Terms Expiring in 2027
John E. Colin serves as Chair of the Board of Directors and formerly served as Chair of the board of directors of the Bank through August 2024, positions held beginning February 2017. Mr. Colin is a partner in the law firm of Simpson Colin, LLC. Age 55. Director since 2013 and a director of the Bank since 2011.
Mr. Colin’s experience in practicing law within the region in which the Company conducts its business affords the Board of Directors in-depth knowledge and understanding of the issues facing the Bank and the Company and the skills needed to guide the Company, the Bank and their management effectively.
Pamela Bennett-Martin is an independent contractor with Bennett & Bennett, a Shepherd Insurance Partners agency. She is the former President and owner of Bennett & Bennett Insurance, Inc and a former director of Community First Bank. Age 67. Director since 2009 and a director of the Bank since 2009.
Ms. Bennett-Martin’s experience in the ownership and operation of a local insurance company, plus providing insurance and financial-related services in the region in which the Company conducts its business, provides the Board of Directors with valuable insight regarding the local business and consumer environment and valuable strategic positioning for financial services development. In addition to service as a director of the Company and the Bank, she served ten years as a director of Community First Bank.
Martin A. Padgett, CPA, MBA, FACHE serves as Vice-Chair of the Board of Directors and as Vice-Chair of the board of directors of the Bank, positions held beginning February 2020. Mr. Padgett is the Chief Executive Officer of Dr. Black’s Eye Associates and Vision Surgical Center. He previously served for 26 years as the Chief Executive Officer at Clark Memorial Health, a division of LifePoint Health, which is owned by certain funds managed by affiliates of Apollo Global Management, LLC. Age 60. Director since 2017 and a director of the Bank since 2015.
Mr. Padgett is a certified public accountant and a fellow in the American College of Health Executives that has more than thirty years of experience in healthcare finance and administration, most recently with a hospital located within the region in which the Company conducts its business. His significant business experience in healthcare, finance, accounting and executive leadership provides the Board of Directors with unique insights into the healthcare industry and regional economic environment; enhances the Board of Director's expertise in financial analytics; and qualifies him as a financial expert servicing on the Audit Committee.
Directors with Terms Expiring in 2028
Douglas A. York, CPA, serves as Chair of the board of directors of the Bank, a position held beginning August 2024. Mr. York is a retired former Director of DMLO, a public accounting firm. Age 63. Director and a director of the Bank since 2008.
Mr. York is an experienced certified public accountant practicing primarily within the region in which the Company conducts its business and whose financial background qualifies him as a financial expert servicing on the Audit Committee. In addition, he possesses substantial management experience as a former Director of DMLO, a regional CPA firm.
John P. Lawson, Jr. formerly served as Executive Vice President and Chief Operating Officer of the Company and the Bank until his retirement effective December 31, 2019. He joined the Bank in 1988. Age 68. Director since 2008 and a director of the Bank since 2006.
Mr. Lawson’s thirty-three years of experience in the management of the Bank provides the Board of Directors valuable insight regarding the business and operations of the Company and the Bank. Before his affiliation with the Bank, he developed financial expertise as a financial planner. His knowledge of the Company and the Bank’s history and business operations position him well for continued service as a director of the Company and the Bank.
Frank N. Czeschin is President of Indiana Utilities Corporation, a natural gas distributor. He is a former director of Community First Bank. Age 64. Director since 2009.
Mr. Czeschin’s management experience in the ownership of a local utility company that operates in the region in which the Bank conducts its business, provides the Board of Directors with valuable insight regarding the local business and consumer environment. In addition to service as a director of the Company, he served ten years as a director of Community First Bank.
Steven R. Stemler is the President and Chief Executive Officer of The Stemler Corporation, a mechanical contractor. He is a former director of Your Community Bankshares, Inc. and a former member of the Indiana House of Representatives. Age 65. Director and a director of the Bank since 2019.
Mr. Stemler’s combination of private and public financial experience, along with his extensive knowledge of the regional economy, local customer base and the workings of state government, uniquely position him to strengthen the Board of Director’s collective skills and experience.
Executive Officers Who Do Not Serve as Directors
Set forth below is information regarding our executive officers who do not serve as directors of the Company. They have held their current position for at least the last five years, unless otherwise stated. The age presented is as of September 30, 2025.
Tony A. Schoen, CPA, is the Chief Financial Officer of the Company and the Bank. He joined the Bank in 2007 and previously served as Assistant Controller of the Bank. Before joining the Bank, he was a manager with Monroe Shine & Co., Inc., a regional CPA firm. Director of the Bank since 2017. Age 48.
Derrick B. Jackson, CCIM, is the Chief Credit Officer of the Bank. He joined the Bank in 2017. Before joining the Bank, he was the Chief Credit Officer of Commonwealth Bank and Trust, a former community bank in Louisville, Kentucky. Age 49.
Code of Ethics and Business Conduct
The Company has adopted a code of ethics and business conduct which applies to all of the Company’s and the Bank’s directors, officers and employees. A copy of the code of ethics and business conduct is available to stockholders on the Investor Relations portion of the Bank’s website at www.fsbbank.net.
Policy Regarding Insider Trading
The Company has adopted a Policy Regarding Insider Trading governing the purchase, sale and/or other dispositions of the Company’s securities by its directors, officers and employees and by the Company itself. A copy of the Policy Regarding Insider Trading is filed as an exhibit to this annual report.
Section 16(a) Beneficial Ownership Reporting Compliance
General. Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors, and persons who own more than 10% of any registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. These individuals are required by regulation to furnish the Company with copies of all Section 16(a) reports they file.
Delinquent Section 16(a) Reports. Based solely on its review of copies of the reports the Company has received and written representations provided to it from the individuals required to file Section 16(a) reports, the Company believes that each individual who, at any time during the fiscal year ended September 30, 2029, served as an executive officer or director of the Company has complied with applicable reporting requirements for transactions in Company common stock during the fiscal year ended September 30, 2025, except for Steven R. Stemler and Derrick B. Jackson who inadvertently failed to file a timely report with respect to the exercise of Company stock options.
Audit Committee
The Audit Committee assists the Board of Directors in fulfilling its responsibilities in connection with the Company’s (i) independent registered public accountants, (ii) internal auditors, (iii) financial statements, (iv) earnings releases and guidance, (v) financial and capital structure and strategy, and (vi) compliance program, internal controls and risk management. All members of the Audit Committee are considered independent under the Nasdaq Stock Market listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Certain members of the Audit Committee are partners, controlling shareholders or executive officers of an organization that has a lending relationship with the Bank, or individually maintain such relationships. The Board of Directors has determined that such lending relationships do not interfere with the director’s exercise of independent judgment. The Board of Directors has determined that Douglas A. York and Martin A. Padgett, each a licensed Certified Public Accountant, and Troy D. Hanke, a former Certified Public Accountant, are “audit committee financial experts” as defined in Item 407 of SEC Regulation S-K and that they are independent as that term is used in Item 7 of SEC Schedule 14A. The Company has adopted a formal charter for the Audit Committee and the Audit Committee has reviewed and assessed the adequacy of the written charter during the past year.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11. EXECUTIVE COMPENSATION
Director Compensation
Summary Director Compensation Table. The following table provides the compensation received by individuals who served as directors, but who were not also named executive officers, of the Company during the fiscal year ended September 30, 2025.
Nonqualified
Deferred
Fees Earned or
Stock
Option
Compensation
AllOther
Paid in Cash
Awards (1)
Awards (2)
Earnings
Compensation
Total
John E. Colin
$
47,500
$
7,250
$
6,330
$
8,333
$
$
69,533
Frank N. Czeschin
36,500
7,250
6,330
-
50,200
L. Chris Fordyce
29,000
7,250
6,330
15,824
58,524
Troy D. Hanke
30,500
7,250
6,330
-
44,200
John P. Lawson, Jr.
25,500
7,250
6,330
8,807
48,007
Pamela Bennett-Martin
34,000
7,250
6,330
-
47,700
Martin A. Padgett
53,500
7,250
6,330
4,590
71,790
Steven R. Stemler
25,500
7,250
6,330
3,362
42,562
Douglas A. York
34,000
7,250
6,330
-
47,700
(1)
Reflects the aggregate grant date fair value for restricted stock awards granted during the fiscal year, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 - Share Based Payment. The amounts were calculated based on the Company’s stock price as of the grant date, which was $29.00 per share. See footnotes to the directors and executive officers stock ownership table under “Stock Ownership” for the aggregate number of unvested restricted stock award shares held in trust by each director at fiscal year-end. Restricted stock awards fully vest on the first anniversary of the grant date.
(2)
Reflects the aggregate grant date fair value for stock options granted during the fiscal year, computed in accordance with FASB ASC Topic 718 using the binomial option pricing model to estimate the fair value of stock option awards. Stock option awards fully vest on the first anniversary of the grant date. The actual realized value of the stock options, if any, will depend on the extent to which the market value of Company common stock exceeds the exercise price of the stock options on the exercise date. Accordingly, there is no assurance that the realized value will be at or near the estimated value disclosed in the table.
Cash Retainer and Meeting Fees for Non-Employee Directors. The following table sets forth the applicable retainers and fees currently paid to our non-employee Bank directors and our Company directors for their service on the Board of Directors and the board of directors of the Bank.
Board of Directors of the Bank:
Annual Retainer - Directors
$
22,000
Annual Retainer - Chair
32,000
Annual Retainer - Vice-Chair
27,000
Board of Directors of the Company:
Annual Retainer - Directors
$
22,000
Annual Retainer - Chair
32,000
Annual Retainer - Vice-Chair
27,000
Annual Retainer - Committees:
Audit Committee Members (except Chair)
8,500
Audit Committee - Chair
17,000
Compensation Committee Members (except Chair)
6,000
Compensation Committee - Chair
12,000
Nominating/Corporate Governance Committee Members (except Chair)
3,500
Nominating/Corporate Governance Committee - Chair
7,000
Deferred Compensation Plan. The Company and the Bank sponsor a deferred compensation plan for eligible directors and employees. As of September 30, 2024, no employees participated in the plan. The deferred compensation plan is a successor to certain director deferred compensation agreements previously entered into with certain non-employee directors of the Company and the Bank.
Under the deferred compensation plan, eligible directors may elect to defer receipt of a portion their cash remuneration (including retainers and meeting fees). Participants must make their deferral elections and the timing of form of distributions under the plan in accordance with the procedures set forth in the plan. Benefits become payable under the plan upon a participant’s death, separation from service or upon a change in control. Participants may also request distributions in the event of an unforeseeable emergency. Distributions may be in the form of a lump sum or annual payments over a period of up to ten years. The Company or the Bank will credit a participant’s deferral account with interest until it is distributed to the participant. The interest rate under the plan is the prime rate on the last day of the preceding calendar quarter plus 2%. The interest rate adjusts quarterly and may not exceed 8%.
Executive Compensation
As a “smaller reporting company” (as defined in SEC rules and regulations), the Company is entitled to certain exemptions from various reporting requirements that apply to other public companies that are not smaller reporting companies. These include, but are not limited to, reduced disclosure obligations regarding executive compensation, including the requirement to include a specific form of Compensation Discussion and Analysis. We have elected to include expanded discussion and disclosure not required of smaller reporting companies.
Introduction. The objective of our executive compensation program is to attract, retain, and motivate leaders who are committed to executing the Company’s and the Bank’s business strategies, acting in the best interests of our stakeholders, and creating long-term value for our shareholders. To assist in achieving these objectives, the Compensation Committee has designed an executive compensation program that consists of fixed and variable pay elements in the form of base salaries, annual cash incentives and bonuses, and long-term equity incentives. We also provide retirement benefits that aid in the retention of our “named executive officers,” which include the Principal Executive Officer (the “PEO”) (i.e., President and Chief Executive Officer) and the two most highly compensated other executive officers (other than the PEO) of the Company. These individuals are referred to in this annual report as the “named executive officers” or “NEOs.”
The following discussion provides an overview of our Compensation Committee’s philosophy and objectives in designing our compensation programs, as well as the compensation determinations and rationale for those determinations for our NEOs.
Governance Practices and Policies.
·
We have established compensation practices that we believe are consistent with best practices in corporate governance.
·
We base the cash incentive bonus plans on pre-established goals, employ a variety of performance metrics to deter excessive risk taking by eliminating any incentive focus on a single performance goal, and include appropriate levels of discretion to adjust incentive and bonus payments if results are not aligned with asset quality and regulatory compliance.
·
Equity incentive awards for NEOs and other officers include long-term vesting (e.g. graduated five-year period) and double-trigger vesting provisions upon a change in control.
·
Employment agreements include double-trigger provisions for payments upon a change in control.
·
We do not provide significant perquisites.
·
We do not use compensation-related tax gross-ups.
·
The Compensation Committee, consisting solely of independent directors, actively oversees our compensation programs and practices.
·
We engage an independent compensation consultant selected by the Compensation Committee.
Role of Compensation Committee. Each member of the Compensation Committee is an “independent director”, as defined by the applicable rules and regulations of the Nasdaq Stock Market, and meets the applicable standards of independence prescribed for purposes of federal securities, tax and other laws relating to the Compensation Committee’s duties and responsibilities. Additionally, none of these individuals is a former officer or employee of the Company or the Bank.
The Compensation Committee is responsible for establishing and overseeing executive compensation programs, annually reviewing and approving the performance and compensation of the PEO, and reviewing and approving recommendations regarding the compensation of the other executive officers reporting directly to the PEO. As part of that process, the Compensation Committee engages the services of an independent compensation consultant, ChaseCompGroup, to assist in evaluating and designing compensation, annual cash incentive and bonus, and equity-based incentive plans for the Company’s and the Bank’s executive and senior management relative to peers. While the Compensation Committee considers input from ChaseCompGroup, final decisions are based upon many factors and considerations.
Role of Management. The PEO does not play any role in the Compensation Committee’s determination of his compensation. The Compensation Committee does; however, solicit input from the PEO concerning the performance and compensation of the other executive officers. The PEO bases his respective recommendations on an assessment of each executive officer’s performance, peer data, competitive market conditions, retention risk, and our comprehensive compensation practices and philosophy. When appropriate, the Compensation Committee meets in executive session excluding the PEO. All executive officer compensation decisions are determined and approved by the Compensation Committee.
Role of Compensation Consultant. The Compensation Committee has the authority to engage, including approve the terms and fees of engagement, retain and terminate a compensation consultant. ChaseCompGroup reports directly to the Compensation Committee and its services are performed according to the direction, approval and prior knowledge of the Compensation Committee
The Compensation Committee has analyzed whether services performed by ChaseCompGroup have raised any conflict of interest, taking into consideration the following factors, among others: (i) the provision of other services to the Company by ChaseCompGroup; (ii) the amount of fees the Company paid to ChaseCompGroup as a percentage of ChaseCompGroup’s total revenue; (iii) ChaseCompGroup’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship between ChaseCompGroup or its compensation advisors with an executive officer of the Company or the Bank; (v) any business or personal relationship between ChaseCompGroup or its compensation advisors with any member of the Compensation Committee; and (vi) any stock of the Company owned by ChaseCompGroup or its compensation advisors. The Compensation Committee has determined, based on its analysis of the above factors and other considerations, that the engagement of ChaseCompGroup has not created any conflict of interest.
Benchmarking and Peer Groups. ChaseCompGroup, together with the Compensation Committee, developed and recommended an appropriate peer group for assessing competitive compensation practices and comparing the Company’s financial performance. The Compensation Committee selected a regional peer group of 21 publicly traded thrift and banking institutions headquartered in Indiana, Ohio, Illinois, Missouri and Tennessee, and West Virginia with average assets of $3.2 billion for comparing base salary, total compensation and the Company’s performance. Additional consideration was given to the business models and performance of the peer group and the Company. The Compensation Committee evaluates the peer group annually for suitability and may modify peer groups from time to time based on mergers and acquisitions within the industry, changes in business models, or other relevant factors. While the compensation program for executive officers is measured to the peer group, the compensation of each executive officer may vary based on other factors, such as the individual’s performance, experience, responsibilities and competitive market conditions.
Components of the Compensation Program. During fiscal year 2025, our executive officer compensation program included four elements: base salary, annual cash incentive bonuses, equity incentive awards, and benefit plans. Philosophically, the Company establishes a lower base salary for executive officers, generally around the 50th to 75th percentile of the peer group, and provides the opportunity for a higher level of incentive compensation.
Base Salary. Executive officer base salaries are evaluated by the Compensation Committee on an annual basis. Salary ranges are developed by considering results of an independent review of the structure and competitiveness of the total compensation program for the position in comparison to, and in consideration of, market conditions and the peer group, as well as the overall importance of each position within the Company. The Compensation Committee then takes into consideration each executive officer’s performance and contribution to the long-term goals of the Company, leadership, experience in the industry, and operational effectiveness, as well as recent operating results, achievement of performance targets and other relevant factors. Based on the foregoing, there was a 24.2% base salary increase for NEOs during the 2025 fiscal year, representing an increase from the 50th percentile of the peer group in the 2024 fiscal year to the 75th percentile in the 2025 fiscal year.
Cash Incentive Bonus Plans. The Bank maintains a performance-based Management Incentive Bonus (“MIB”) plan for its officers. A significant element of the overall officer compensation program is aligning management’s initiatives and work ethic to the achievement of measurable corporate and individual goals that are established annually by the board of directors of the Bank and the Compensation Committee. These goals include, but are not limited to, net income, return on average equity, return on average assets (“ROAA”), earnings per share, growth in loans and deposits, net interest margin, efficiency, asset quality, liquidity and capital management, and regulatory compliance. The MIB includes a performance trigger to activate the plan, requiring ROAA to be at least 0.60%, and generates an incentive bonus pool using increasing marginal incentive tiers that are correlated to increasing marginal ROAA tiers. Each officer is awarded a portion of the bonus pool annually based on collective and individual performance goals established by the Compensation Committee. The Compensation Committee maintains the discretion to modify or adjust the plan, pool and awards to consider, among other factors, the business environment, market conditions, health and strategic initiatives of the Company, and regulatory considerations. Additionally, the Compensation Committee maintains the discretion to modify, decrease, increase or eliminate individual awards based on positive or negative performance of the Company or individual.
The Bank also maintains a second performance-based All-Employee Bonus (“AEB”) plan for its officers and non-officer employees. A significant element of the overall officer and non-officer compensation program is aligning all employees to the achievement of measurable management, corporate and individual initiatives and goals that are established annually by strategic planning of the board of directors of the Bank and executive management. The AEB includes a discretionary incentive plan and specific non-discretionary sub-plans for select areas, business lines and departments of the Bank, such as a Retail Incentive Plan. The AEB generates an incentive bonus amount using increasing marginal incentive tiers that are correlated to increasing marginal ROAA tiers. From the bonus pool, payments to employees participating in non-discretionary sub-plans is deducted and the remaining bonus pool is allocated semi-annually amongst eligible employees in amounts equal to the pro rata share of each employee’s eligible compensation to total eligible compensation. The Compensation Committee maintains the discretion to modify or adjust the plan, pool and awards. Additionally, the Compensation Committee maintains the discretion to modify, decrease, increase or eliminate individual awards based on positive or negative performance of the Company or individual.
The NEOs participated in the MIB and AEB, earning bonus amounts during the 2025 fiscal year, which are disclosed in total in the Summary Compensation Table (“SCT”) provided below.
Equity Incentive Plan. The Company adopted the 2021 Plan and 2025 Plan, which were approved by the Company’s shareholders in February 2021 and 2025, respectively, in order promote the long-term financial success of the Company by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s shareholders through the ownership of additional common stock of the Company. We believe that equity grants having time-based vesting features awarded under the plan promotes executive retention because this feature incentivizes our executive officers to remain in our employment throughout the vesting period. The NEOs participated in the 2021 Plan and 2025 Plan and received awards in the form of restricted stock and incentive stock options during the 2025 fiscal year, which are disclosed in the SCT provided below.
Benefit Plans. he Company offers supplemental executive benefit plans in addition to qualified retirement and other benefit plans available to all employees. A summary of these programs (Supplement Life Insurance Agreements, 401(k) Plan and ESOP) is provided below.
Supplemental Life Insurance Agreements. The Bank has entered into Supplemental Life Insurance Agreements with certain officers of the Bank. The Bank acquired one or more life insurance policies on the lives of the officers whereby the Bank is the owner of the policies and has entered into an endorsement form with the officers to endorse a portion of the death benefits to the officers’ beneficiaries (such arrangements are referred to as “split dollar benefits”) should the officer die while employed by the Bank. The Supplemental Life Insurance Agreements provide for a split dollar benefit payable to the beneficiaries of executive officers, including NEOs, equal to three-times the base salary of the executive officer. Split dollar benefit amounts payable to the beneficiaries of non-executive officers range from one-times to two-times the base salaries of said officers depending on their officer rank. An officer’s participation in the Supplemental Life Insurance Agreements will cease upon termination of employment for all reasons other than death and disability related to terminal illness. The NEOs participate in Supplemental Life Insurance Agreements and the economic benefit of employer-paid premiums for split-dollar life insurance agreements and group term life insurance are disclosed in the SCT provided below.
401(k) Plan. The Bank maintains the 401(k) Plan, which is a qualified, tax-exempt profit sharing plan with a salary deferral feature under Section 401(k) of the Code. All employees who have attained age 21 and completed 3 months of eligibility service (as defined in the 401(k) Plan) are eligible to participate and are auto-enrolled in the 401(k) Plan for elective salary deferrals equal to 3% of eligible compensation (as defined in the 401(k) Plan). Additionally, participants may make elective salary deferrals during each plan year in an amount not to exceed the lesser of 75% or an annual limit imposed by law. Participants who have attained age 50 before the end of a plan year are also eligible to make catch-up contributions during each plan year in an amount not to exceed an annual limit imposed by law. In addition, participants that complete 1 year of eligibility service are eligible to receive safe harbor employer matching contributions equal to 100% of up to 5% of a participant’s eligible compensation that is deferred into the 401(k) Plan each plan year. Historically, the Bank has not made employer profit sharing contributions in addition to the safe harbor employer matching contributions. All participant elective salary deferrals, catch-up contributions, safe harbor employer matching contributions, and employer profit sharing contributions are immediately and fully vested. Participants are entitled to benefit payments upon termination of employment, once reached age 59 ½ or if have experienced an immediate or heavy financial need (as defined in and subject to various rules and requirements in the 401(k) Plan). Benefits are distributed in the form of lump sum payment. The NEOs participated in the 401(K) plan and received safe harbor employer matching contributions, which are disclosed in the SCT provided below.
Employee Stock Ownership Plan. The Bank adopted the ESOP for eligible employees, effective as of January 1, 2008, in connection with the Company’s initial public offering. All employees who attained age 21 and completed 1 year of eligibility service (as defined in the ESOP) on or before December 31, 2015 were eligible to participate in the ESOP. By resolution of the Board of Directors on December 16, 2015, the ESOP was frozen effective January 1, 2016 and no new participants were accepted thereafter. The ESOP trustee purchased, on behalf of the ESOP, 610,089 shares (split-adjusted for the Company’s three-for-one stock split in the form of a stock dividend effective September 15, 2021) of the Company’s common stock issued in the initial offering with the proceeds of a loan from the Company equal to the aggregate purchase price of the common stock. The loan was repaid principally and in full through the Company’s contribution to the ESOP and dividends payable on common stock held by the ESOP through December 31, 2015 and the trustee allocated all shares in the ESOP to the participants based on each participant’s proportional share of compensation relative to all participants. All participants became fully vested in their benefit after 6 years of eligibility service. Generally, participants will receive distributions from the ESOP after termination of employment. The NEOs are participants in the ESOP and received no allocations during the 2025 fiscal year.
Risk Assessment. The Compensation Committee believes that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. In addition, the Compensation Committee believes that the design and composition of the elements of the Company’s executive compensation program do not encourage management to assume excessive risks. The Compensation Committee assesses risks posed by the compensation plans maintained for the benefit of, and incentive compensation paid to, officers and employees. The risk assessment conducted in fiscal year 2025 concluded that our incentive compensation plans provide incentives that appropriately balance risk and reward, are compatible with effective controls and risk management, and are supportive of strong governance, including active oversight by the Board of Directors.
Tax Deductibility of Executive Compensation. Under Section 162(m) of the Internal Revenue Code, as amended, publicly-held corporations are subject to limits on the deductibility of executive compensation. Deductible compensation is limited to $1 million per year for each covered employee, defined as the publicly-held corporation’s principal executive officer, principal financial officer and three additional highest compensated officers during any taxable year of the corporation beginning after December 31, 2016.
While the Compensation Committee currently does not have a formal policy with respect to the payment of compensation in excess of the deduction limit under Section 162(m) of the Internal Revenue Code, the Compensation Committee’s historical practice has been to structure compensation programs offered to the NEOs with a view to maximizing the tax deductibility of amounts paid. However, in structuring compensation programs and making compensation decisions, the Compensation Committee considers a variety of factors, including the materiality of the payment and tax deductions involved, the need for flexibility to address unforeseen circumstances, and our incentive and retention requirement for management personnel. After considering these factors, the Compensation Committee may decide to authorize payments, all or part of which may be a nondeductible expense for federal tax purposes.
Summary NEO Compensation Table. The following information is furnished for the principal executive officer and the two most highly-compensated executive officers (other than the principal executive officer) of the Company or its subsidiaries whose total compensation earned for the fiscal year ended September 30, 2025 exceeded $100,000.
Stock
Option
All Other
Name and Principal Position
Year
Salary
Bonus
Awards (1)
Awards (2)
Compensation (3)
Total
Larry W. Myers
$
566,478
$
678,060
$
165,705
$
30,595
$
74,426
$
1,515,264
President & Chief Executive Officer
458,597
144,718
60,023
44,102
70,524
777,964
Tony A. Schoen
$
354,550
$
424,325
$
108,964
$
15,614
$
37,637
$
941,090
Chief Financial Officer
281,237
88,770
37,750
28,436
32,481
468,674
Derrick B. Jackson
$
308,317
$
214,920
$
57,133
$
8,102
$
23,227
$
611,699
Chief Operating Officer
(1)
Reflects the aggregate grant date fair value for restricted stock awards granted during the fiscal year, computed in accordance with FASB ASC Topic 718. The amounts were calculated based on the Company’s stock price as of the grant dates, which was $29.00 and $23.40 per share at November 21,2024 and April 14, 2025, respectively. See footnotes to the directors and executive officers stock ownership table under “Stock Ownership” for the aggregate number of unvested restricted stock award shares held in trust by each NEO at fiscal year-end. Restricted stock awards vest in five approximately equal installments, with the first vesting occurring on the first anniversary of the grant date.
(2)
Reflects the aggregate grant date fair value for stock options granted during the fiscal year, computed in accordance with FASB ASC Topic 718 using the binomial option pricing model to estimate the fair value of stock option awards. Stock option awards vest in five approximately equal installments, with the first vesting occurring on the first anniversary of the grant date. The actual realized value of the stock options, if any, will depend on the extent to which the market value of Company common stock exceeds the exercise price of the stock options on the exercise date. Accordingly, there is no assurance that the realized value will be at or near the estimated value disclosed in the table.
(3)
The amounts reported in the “All Other Compensation” column for 2025 are detailed in the table below.
Mr. Myers
Mr. Schoen
Mr. Jackson
Employer 401(k) Plan matching contributions
$
13,079
$
12,962
$
14,484
Economic benefit of employer-paid premiums for split-dollar life insurance agreements and group term life insurance
10,037
1,224
1,258
Dividends on unvested restricted stock award shares
3,276
2,095
1,063
Director fees
35,500
13,500
-
Economic benefit of employer-provided vehicle
12,534
7,856
6,422
Employment Agreements. On October 1, 2024, Messrs. Myers, Schoen and Jackson (each an “executive” and, collectively, the “executives”) entered into employment agreements having three-year terms with the Company and the Bank. As of September 30, 2025, the employment agreements had remaining terms of two years and expire on October 1, 2026. The employment agreements provide that the Company and the Bank may extend the term of the employment agreements, following a review of an executive’s performance, for an additional year so that the remaining term of the agreements is again three years. As of September 30, 2025, the base salaries under the employment agreements are $570,440 for Mr. Myers, $357,266 for Mr. Schoen and $310,908 for Mr. Jackson, respectively. The employment agreements also provide for participation in employee benefit plans and programs we maintain for the benefit of employees and senior management personnel, including incentive compensation, health and welfare benefits, retirement benefits and certain fringe benefits, as described in the agreements. Following termination of employment, except in connection with a change in control, the executives must adhere to a one-year non-competition and non-solicitation covenants. We also agree to pay all reasonable costs and legal fees of the executives in relation to the enforcement of the employment agreements, provided the executives succeed on the merits in a legal judgment, arbitration proceeding or settlement. The employment agreements also provide for indemnification of the executives to the fullest extent legally permissible. See “Potential Post-Termination Benefits” for a discussion of the benefits and payments the executives may receive upon termination of employment.
Payments Made Upon Termination for Cause or Voluntary Termination Without Good Reason. If we terminate the employment of Messrs. Myers, Schoen or Jackson for cause, or if an executive terminates employment without good reason, under the terms of the employment agreements the executive would receive his or her base salary through the date of his termination of employment and retain the rights to any vested benefits, subject to the terms of any applicable plan or agreement under which we provide those benefits.
Payments Made Upon Voluntary Termination with Good Reason and Termination Without Cause. If we terminate an executive for reasons other than cause, or if an executive resigns after the occurrence of specified circumstances that constitute constructive termination (i.e., for “good reason”), the executive will receive his or her base salary for the remaining unexpired term of the employment agreement, paid in a single lump sum within ten days of termination. In addition, we will continue or cause to be continued the executive’s medical benefits until the earlier of: (1) return to employment with the Company, the Bank or another employer; (2) attainment of age 65; (3) death; or (4) the end of the remaining term of the employment agreement.
Payments Made Upon Disability. Under the employment agreements, during any incapacity leading up to the termination of the executive’s employment due to disability, we will continue to pay the executive’s base salary, benefits (other than bonus) and perquisites until the executive becomes eligible for benefits under our disability plan.
Payments Made Upon Death. Under the employment agreements, following an executive’s death, we will pay the executive’s estate the compensation due to the executive through the end of the month in which his death occurs.
Payments Made Upon a Change in Control. Under the employment agreements, if, in connection with or following a change in control (as described in the agreements), we, or our successor, terminate the executive without cause or if the executive terminates employment voluntarily under specified circumstances that constitute good reason, the executive will receive a lump sum payment equal to three times his or her average annual taxable compensation for the five taxable years preceding the change in control. In addition, we will continue or cause to be continued the executive’s medical benefits until the earlier of: (1) the date he or she returns to employment with the Company, the Bank or another employer; (2) attainment of age 65; (3) death; or (4) the end of the remaining term of the employment agreement.
Outstanding Equity Awards at Fiscal Year-End. The following table provides information as of September 30, 2025, concerning unexercised options and unvested stock awards for each named executive officer.
Number of
Number of
Number
Securities
Securities
of Shares
Market Value
Underlying
Underlying
or Units
of Shares or
Unexercised
Unexercised
Option
Option
of Stock
Units of Stock
Options
Options
Exercise
Expiration
That Have
That Have Not
Name
Exercisable
Unexercisable
Price
Date
Not Vested
Vested (1)
Larry W. Myers
33,300
-
$
13.36
11/21/2026
14,925
$
469,093
1,500
-
22.12
11/21/2029
1,235
21.10
11/21/2030
13,500
9,000
26.72
11/21/2031
5,250
6,750
22.49
11/21/2032
3,085
9,338
15.10
11/21/2033
-
3,625
29.00
11/21/2034
Tony A. Schoen
21,150
-
13.36
11/21/2026
10,080
316,814
1,500
-
22.12
11/21/2029
1,200
21.10
11/21/2030
9,000
6,000
26.72
11/21/2031
3,000
4,500
22.49
11/21/2032
1,602
6,408
15.10
11/21/2033
-
1,850
29.00
11/21/2034
Derrick B. Jackson
9,000
-
18.85
11/21/2026
5,115
160,764
4,437
-
22.12
11/21/2029
21.10
11/21/2030
4,500
3,000
26.72
11/21/2031
1,500
2,250
22.49
11/21/2032
3,408
15.10
11/21/2033
-
29.00
11/21/2034
(1)
Based on the $31.43 closing price of the Company’s common stock on September 30, 2025.
Policies and Practices Related to the Grant of Certain Equity Awards. While the Company does not have formal policy or obligation that requires it to grant or award equity-based compensation on specific date, the Compensation Committee and the Board of Directors have a historical practice of not granting stock options or other equity awards to executive officers during closed quarterly trading windows as determined under the Company’s insider trading policy. Consequently, the Company has not granted, and does not expect to grant, any equity awards to any named executive officers within fifteen business days preceding the filing with the SEC of any report on Forms 10-K, 10-Q or 8-K that discloses material non-public information. The Compensation Committee and the Board of Directors do not take material non-public information into account when determining the timing of equity awards and do not time the disclosure of material non-public information in order to impact the value of executive compensation. The Company generally grants equity awards to its executive officers, including the named executive officers, during the open trading window period in the first fiscal quarter for their performance in the prior fiscal year.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
(a) Security Ownership of Certain Beneficial Owners
The following table provides information as of December 5, 2025, about the persons known to the Company to be the beneficial owners of more than 5% of the Company’s outstanding common stock. A person may be considered to beneficially own any shares of common stock over which the person has, directly or indirectly, sole or shared voting or investment power.
Number of Shares
Percent of Company
Beneficially
Common Stock
Name and Address
Owned
Outstanding (1)
Financial Opportunity Fund LLC
FJ Capital Management LLC
Martin Friedman
1313 Dolley Madison Blvd., Suite 306
McLean, VA 22101
498,246
(2)
7.10
%
Larry W. Myers
702 North Shore Drive, Suite 300
Jeffersonville, IN 47130
465,791
(3)
6.58
%
First Savings Bank Profit Sharing/401(k) Plan
702 North Shore Drive, Suite 300
Jeffersonville, IN 47130
436,751
6.23
%
Wedbush Opportunity Capital, LLC
Wedbush Opportunity Partners, LP
1000 Wilshire Blvd
Los Angeles, CA 90017
391,911
(4)
5.59
%
(1)
Based on 7,015,080 shares of Company common stock outstanding as of December 5, 2025.
(2)
Based on a Schedule 13G filed with the SEC on July 16, 2025.
(3)
Includes 84,687 shares held in his spouse’s individual retirement account (“IRA”), 210,475 shares held in the 401(k) Plan, 30,799 shares allocated in the ESOP, 11,866 shares held through unvested stock awards and 68,584 shares held subject to exercisable stock options.
(4)
Based on a Schedule 13G/A filed with the SEC on February 12, 2016.
(b)
Security Ownership of Management
The following table provides information as of December 5, 2025, about the shares of Company common stock that may be considered beneficially owned by each director, each named executive officer appearing in the SCT, and by all directors and executive officers of the Company as a group. A person may be considered to beneficially own any shares of common stock over which he or she has, directly or indirectly, sole or shared voting or investment power. Unless otherwise indicated, each of the named individuals has sole voting and investment power with respect to the shares shown and none of the named individuals has pledged any of his or her shares.
Percent of Company
Number of Shares
Common Stock
Name
Beneficially Owned
Outstanding (1)
Director Nominees and Directors Continuing in Office:
John E. Colin
25,735
(2)
*
Frank N. Czeschin
62,341
(3)
*
L. Chris Fordyce
48,843
(4)
*
Troy D. Hanke
14,500
(5)
*
John P. Lawson, Jr.
66,610
(6)
*
Pamela Bennett-Martin
33,694
(7)
*
Larry W. Myers
465,791
(8)
6.58
%
Martin A. Padgett
16,843
(9)
*
Steven R. Stemler
34,990
(10)
*
Douglas A. York
126,779
(11)
1.81
Executive Officers Who Are Not Company Directors:
Tony A. Schoen
211,521
(12)
3.00
Derrick B. Jackson
40,960
(13)
*
All Directors and Executive Officers as a Group (13 persons)
1,148,607
(14)
16.00
*
Represents less than 1% of outstanding Company common stock.
(1)
Based on 7,015,080 shares of Company common stock outstanding as of December 5, 2025.
(2)
Includes 500 shares held through unvested stock awards and 15,450 shares subject to stock options exercisable as of December 5, 2025 or within 60 days after that date (collectively, “exercisable stock options”).
(3)
Includes 30,876 shares held in an IRA, 6,000 shares held in a trust, 500 shares held through unvested stock awards and 2,550 shares subject to exercisable stock options.
(4)
Includes 500 shares held through unvested stock awards and 1,050 shares subject to exercisable stock options.
(5)
Includes 500 shares held through unvested stock awards and 10,500 shares subject to exercisable stock options.
(6)
Includes 23,259 shares held in an IRA, 500 shares held through unvested stock awards and 6,750 shares subject to exercisable stock options.
(7)
Includes 500 shares held through unvested stock awards and 2,550 shares subject to exercisable stock options.
(8)
Includes 84,687 shares held in his spouse’s individual retirement account (“IRA”), 210,475 shares held in the 401(k) Plan, 30,799 shares allocated in the ESOP, 11,866 shares held through unvested stock awards and 68,584 shares held subject to exercisable stock options.
(9)
Includes 500 shares held through unvested stock awards.
(10)
Includes 500 shares held through unvested stock awards and 1,050 shares held subject to exercisable stock options.
(11)
Includes 60,000 shares with respect to which Mr. York disclaims beneficial ownership which are held by a limited liability company with which Mr. York is affiliated and 500 shares held through unvested stock awards.
(12)
Includes 49,190 shares held in the 401(k) Plan, 17,394 shares allocated under the ESOP, 12,016 shares held through unvested stock awards and 34,924 shares subject to exercisable stock options. 45,363 shares are pledged as collateral for a loan with a financial institution other than the Bank.
(13)
Includes 7,051 shares held through unvested stock awards and 18,105 shares subject to exercisable stock options.
(14)
Includes 35,433 shares held through unvested stock awards and 164,204 shares subject to exercisable stock options.
(c)
Changes in Control
Management of the Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions with Related Persons
Loans and Extensions of Credit. The federal securities laws generally prohibit the Company from extending credit to its executive officers and directors. However, loans made by the Bank to its executive officers and directors in compliance with federal banking regulations are exempted from this prohibition. Federal banking regulations require that all loans or extensions of credit to executive officers and directors of insured institutions must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and must not involve more than the normal risk of repayment or present other unfavorable features. The Bank, therefore, is prohibited from making any new loans or extensions of credit to executive officers and directors at different rates or terms than those offered to the general public. Notwithstanding this rule, federal regulations permit the Bank to make loans to executive officers and directors at reduced interest rates if the loan is made under a benefit program generally available to all other employees and does not give preference to any executive officer or director over any other employee. The Bank does not sponsor such a program.
According to the Audit Committee Charter, the Audit Committee periodically reviews, no less frequently than quarterly, a summary of the Company’s transactions with directors and executive officers of the Company, firms that directors own or control, and firms that employ directors, as well as any other related person transactions, for the purpose of recommending to the disinterested members of the Board of Directors that the transactions are fair, reasonable and within Company policy and should be ratified and approved. Also, in accordance with banking regulations and Company policy, the Board of Directors reviews all loans made to a director or executive officer in an amount that, when aggregated with the amount of all other loans to such person and his or her related interests, exceed the greater of $25,000 or 5% of the Company’s capital and surplus (up to a maximum of $500,000) and such loan must be approved in advance by a majority of the disinterested members of the Board of Directors. Additionally, pursuant to the Company’s Code of Ethics and Business Conduct, all executive officers and directors of the Company must disclose any existing or potential conflicts of interest to the President and Chief Executive Officer of the Company. Potential conflicts of interest include, but are not limited to, the following: (i) the Company conducting business with or competing against an organization in which a family member of an executive officer or director has an ownership or employment interest and (ii) the ownership of more than 1% of the outstanding securities or 5% of total assets of any business entity that does business with or is in competition with the Company.
The aggregate outstanding balance of loans extended by the Bank to its executive officers and directors and their related parties was $2.6 million at September 30, 2025. These loans were performing according to their original terms at September 30, 2025. In addition, these loans were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Bank, and did not involve more than the normal risk of collectibility or present other unfavorable features when made.
Other Transactions. Since October 1, 2024, there have been no transactions and there are no currently proposed transactions in which the Company or the Bank were or are to be a participant and the amount involved exceeds $120,000, and in which any of the Company’s executive officers and directors had or will have a direct or indirect material interest.
Director Independence
The Board of Directors currently consists of ten members, all of whom are considered independent under the listing requirements of the Nasdaq Stock Market except for Larry W. Myers. Mr. Myers is not considered independent because he is employed as an executive officer of both the Company and the Bank. In determining the independence of directors, the Board of Directors considered the various deposit, loan and other relationships that each director and director nominee has with the Bank, including loans and lines of credit outstanding to L. Chris Fordyce and Martin A. Padgett, in addition to the transactions disclosed under “Transactions with Related Persons”, but determined in each case that these relationships did not interfere with their exercise of independent judgment in carrying out their responsibilities as directors.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Principal Accountant Fees and Expenses
The following table provides the fees billed to the Company and the Bank by Forvis Mazars, LLP for the fiscal years ended September 30, 2025 and 2024 are as follows:
Audit fees (1)
$
601,000
$
621,770
Audit-related fees (2)
33,500
-
Tax fees (3)
108,975
112,625
All other fees
-
-
(1)
Includes fees for the audit of the consolidated financial statements, integrated audit of internal controls over financial reporting as required under Section 404 of the Sarbanes-Oxley Act, and review of interim financial information contained in the quarterly reports on Form 10-Q and other regulatory reporting.
(2)
Includes fees for the consents.
(3)
Includes fees for tax compliance services, including preparation of federal and state income tax returns, and tax payment and planning advice.
During the fiscal year ended September 30, 2025, all audit-related fees, tax fees, and all other fees set forth in the table above were approved by the Audit Committee.
Policy Regarding Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm. The Audit Committee has adopted a policy for approval of audit and permitted non-audit services by the Company’s independent registered public accounting firm. The Audit Committee will consider annually and approve the provision of audit services by the independent registered public accounting firm and, if appropriate, approve the provision of certain defined audit and non-audit services. The Audit Committee will also consider on a case-by-case basis and, if appropriate, approve specific engagements.
Any proposed specific engagement may be presented to the Audit Committee for consideration at its next regular meeting or, if earlier consideration is required, to the Audit Committee or one or more of its members. The member(s) to whom such authority is delegated shall report any specific approval of services at its next regular meeting. The Audit Committee will regularly review summary reports detailing all services being provided to the Company by its independent registered public accounting firm.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(1) The financial statements required in response to this item are incorporated by reference from Item 8 of this Annual Report on Form 10-K.
(2) All financial statement schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto.
(3) Exhibits
No.
Description
3.1
Articles of Incorporation of First Savings Financial Group, Inc. (1)
3.2
Articles of Amendment to the Articles of Incorporation for the Series A Preferred Stock (8)
3.3
Bylaws of First Savings Financial Group, Inc. (1)
4.0
Specimen Stock Certificate of First Savings Financial Group, Inc. (1)
10.1
Amended and Restated Employment Agreement by and among First Savings Financial Group, Inc., First Savings Bank and Larry W. Myers, dated October 7, 2009* (3)
10.2
Amended and Restated Employment Agreement by and among First Savings Financial Group, Inc., First Savings Bank and Anthony A. Schoen, dated October 7, 2009* (3)
10.3
Amended and Restated Employment Agreement by and among First Savings Financial Group, Inc., First Savings Bank and Derrick B. Jackson, dated October 1, 2024
10.4
First Savings Bank, F.S.B. Employee Severance Compensation Plan* (4)
10.5
First Savings Bank, F.S.B. Supplemental Executive Retirement Plan* (4)
10.6
Agreement and Plan of Reorganization dated July 21, 2017 (2)
10.7
Amended and Restated Director Deferred Compensation Agreement* (1)
10.8
Subordinated Note Purchase Agreement dated September 20, 2018 (5)
10.9
Subordinated Note Purchase Agreement dated March 18, 2022 (7)
10.10
Agreement and Plan of Merger dated September 24, 2025 (10)
19.1
Policy Regarding Insider Trading (11)
21.0
Subsidiaries of the Registrant
23.0
Consent of Forvis Mazars, LLP (PCAOB ID 686)
31.1
Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer
31.2
Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer
32.0
Section 1350 Certificate of Chief Executive Officer and Chief Financial Officer
97.0
First Savings Financial Group, Inc. Clawback Policy (9)
101.0
The following materials from the Company’s Annual Report on Form 10-K for the year ended September 30, 2025, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statement of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
104.0
Cover Page Interactive Data File (Formatted in Inline XBRL)
*
Management contract or compensatory plan, contract or arrangement
(1)
Incorporated herein by reference to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-151636), as amended, initially filed with the Securities and Exchange Commission on June 13, 2008.
(2)
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 26, 2017.
(3)
Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 8, 2009.
(4)
Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 10, 2008.
(5)
Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24, 2018.
(6)
Incorporated herein by reference to the exhibits to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 17, 2020.
(7)
Incorporated herein by reference to the exhibits to the Company’s Current Report on form 8-K filed with the Securities and Exchange Commission on March 21, 2022.
(8)
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2011.
(9)
Incorporated by reference to the exhibits to the Company’s Annual Report on Form 10-K for the year ended September 30, 2023 filed with the Securities and Exchange Commission on December 20, 2023, as amended by the Amended Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on February 29, 2024.
(10) Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 25, 2025.
(11) Incorporated by reference to the exhibits to the Company’s Annual Report on Form 10-K for the year ended September 30, 2024 filed with the Securities and Exchange Commission on December 13, 2024.