FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FIRST FINANCIAL CORPORATION
September 30 , 1998 <PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1998
Commission File Number 0-16759
FIRST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-1546989
(State or other jurisdiction (I.R.S. Employer
Incorporation or organization) Identification No.)
One First Financial Plaza, Terre Haute, IN 47807
(Address of principal executive office) (Zip Code)
(812) -238-6000
(Registrant s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __x___ No _____.
As of September 30, 1998 were outstanding 7,199,764 shares without par
value, of the registrant.
1 <PAGE>
FIRST FINANCIAL CORPORATION
FORM 10-Q
INDEX
PART I. Financial Information Page No.
Item 1. Financial Statements:
Consolidated Statements of Condition.................................3
Consolidated Statements of Income....................................4
Consolidated Statements of Comprehensive Income......................5
Consolidated Statements of Cash Flows................................6
Notes to Consolidated Financial Statements...........................7
Item 2. Management s Discussion and Analysis of
Financial Condition and Results of Operations.................9
PART II. Other Information:
Item 4. Submission of Matters to a Vote of
Security Holders............................................13
Signatures...............................................................14
2 <PAGE>
<TABLE>
FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
<CAPTION>
September 30, December 31.
1998 1997
(Unaudited)
ASSETS (Amounts in thousands)
<S> <C> <C>
Cash and due from banks $47,227 $53,815
Federal funds sold and securities purchased under agreement to resell 2,630 280
Investments, available-for-sale 569,687 527,993
Loans:
Commercial, financial and agricultural 220,327 229,855
Real estate - construction 29,617 23,734
Real estate - mortgage 632,075 561,466
Installment 203,720 188,552
Lease financing 5,824 3,271
1,091,563 1,006,878
Less:
Unearned income 1,951 1,079
Allowance for loan losses 16,348 13,503
1,073,264 992,296
Accrued interest receivable 13,998 14,086
Premises and equipment, net 24,466 24,925
Other assets 30,526 21,541
TOTAL ASSETS $1,761,798 $1,634,936
LIABILITIES AND SHAREHOLDERS EQUITY
Deposits:
Noninterest-bearing $142,446 $162,880
Interest-bearing:
Certificates of deposit of $100,000 or more 217,523 195,487
Other interest-bearing deposits 895,610 836,157
1,255,579 1,194,524
Short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 39,039 47,015
Treasury tax and loan open-end note 4,801 4,282
Advances from Federal Home Loan Bank 177,932 167,680
221,772 218,977
Other liabilities 18,963 18,718
Long-term debt 6,624 6,641
Long-term advances from Federal Home Loan Bank 71,177 30,596
TOTAL LIABILITIES 1,574,115 1,469,456
Shareholders equity:
Common stock, $.125 stated value per share;
authorized 10,000,000 shares; issued and outstanding 903 877
7,015,504 shares for 1997 and 7,225,483 shares for 1998
including treasury shares of 25,719
Additional capital 66,798 59,787
Retained earnings 112,626 98,046
Accumulated other comprehensive income:
Unrealized gains on investments, net of tax 8,580 6,770
Less: Treasury shares at cost -1,224 0
TOTAL SHAREHOLDERS EQUITY 187,683 165,480
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $1,761,798 $1,634,936
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
3 <PAGE>
<TABLE>
FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(Unaudited)
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $23,822 $21,322 $69,577 $61,764
Investment securities:
Taxable 6,807 7,963 20,079 24,168
Tax-exempt 1,932 1,857 5,968 5,504
8,739 9,820 26,047 29,672
Other interest income 28 23 550 100
TOTAL INTEREST INCOME 32,589 31,165 96,174 91,536
INTEREST EXPENSE:
Deposits 12,779 11,662 37,855 34,551
Other 3,989 3,992 11,572 11,803
TOTAL INTEREST EXPENSE 16,768 15,654 49,427 46,354
NET INTEREST INCOME 15,821 15,511 46,747 45,182
Provision for loan losses 1,345 1,251 4,301 3,988
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 14,476 14,260 42,446 41,194
OTHER INCOME
Trust department income 509 485 1,594 1,470
Service charges on deposit accounts 347 334 992 1,010
Other service charges and fees 1,204 1,000 3,468 2,690
Investment securities gains 382 60 773 402
Other 487 318 1,043 903
2,929 2,197 7,870 6,475
OTHER EXPENSES
Salaries and employee benefits 5,712 5,560 17,689 16,161
Occupancy expense 717 768 2,105 2,164
Equipment expense 836 752 2,484 2,283
Other 3,156 2,973 9,346 8,653
10,421 10,053 31,624 29,261
INCOME BEFORE INCOME TAX
EXPENSE 6,984 6,404 18,692 18,408
Income Tax Expense 2,124 1,785 5,162 4,984
NET INCOME $4,860 $4,619 $13,530 $13,424
BASIC EARNINGS PER SHARE $0.67 $0.66 $1.87 $1.91
Weighted average number of
shares outstanding 7,209 7,016 7,217 7,016
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
4 <PAGE>
<TABLE>
FIRST FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(Unaudited)
(Amounts in thousands)
<S> <C> <C> <C> <C>
Net Income $4,860 $4,619 $13,530 $13,424
Other comprehensive income, net of tax:
Unrealized gains on investments:
Unrealized holding gains arising during period 1,800 3,080 2,316 1,249
Less: reclassification adjustment for gains
included in net income -248 - 42 - 506 - 270
Other comprehensive income 1,552 3,038 1,810 979
Comprehensive income $6,412 $7,657 $15,340 $14,403
</TABLE>
5 <PAGE>
<TABLE>
FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
September 30,
1998 1997
(Unaudited)
(Amounts in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $13,530 $13,424
Adjustment to reconcile net income to net cash
provided by operating activities:
Net amortization of discounts on investments -722 -1,462
Provision for loan losses 4,301 3,988
Investment gains -773 -402
Provision for depreciation and amortization 1,839 1,767
Provision for deferred income taxes -604 0
Net decrease (increase) in accrued interest receivable 88 -416
Other, net 680 -879
NET CASH PROVIDED BY OPERATING ACTIVITIES 18,339 16,020
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease from purchase and maturities of interest-bearing
deposits with financial institutions 0 796
Sales and maturities of available-for-sale securities 179,224 149,156
Purchases of available-for-sale securities -211,551 -129,281
Loans made to customers, net of repayments -54,753 -63,422
Net (increase) decrease in federal funds sold -1,950 2,000
Additions to premises and equipment -1,660 -1,092
NET CASH USED BY INVESTING ACTIVITIES -90,690 -41,843
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase from sales and
redemptions of certificates of deposit 65,752 3,397
Net (decrease) increase in other deposits -36,970 13,549
Net increase in short-term borrowings 2,795 30,383
Cash dividends -5,624 -4,677
Purchase of treasury stock -1,224 0
Net increase (decrease) in long-term debt and advances 40,564 -18,158
NET CASH PROVIDED BY FINANCING ACTIVITIES 65,293 24,494
NET DECREASE IN CASH AND CASH EQUIVALENTS -7,058 -1,329
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 54,285 66,658
CASH AND CASH EQUIVALENTS, END OF PERIOD $47,227 $65,329
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $48,869 $47,676
Income taxes paid $5,345 $5,153
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
6<PAGE>
FIRST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying September 30, 1998 and 1997 consolidated financial
statements are unaudited. The December 31, 1997 consolidated financial
statements are as reported in the First Financial Corporation (the
Corporation) 1997 annual report.
The significant accounting policies followed by the Corporation and its
subsidiaries for interim financial reporting are consistent with the
accounting policies followed for annual financial reporting. All adjustments
which are, in the opinion of management, necessary for a fair statement of
the results for the periods reported have been included in the accompanying
consolidated financial statements and are of a normal recurring nature.
On March 16, 1998, the Corporation completed its previously announced
acquisition of Morris Plan Company of Terre Haute, Inc., (Morris Plan). In
exchange for all of the outstanding common shares of Morris Plan, the
Corporation issued 210,000 shares of its common stock. The acquisition was
originally accounted for as a pooling of interests. Due to a common stock
repurchase program announced September 16, 1998, the acquisition will be
accounted for as a purchase and the resulting goodwill of $6.5 million will
be amortized over approximately 15 years. Prior periods have not been
restated because the impact is immaterial.
Effective January 1, 1998 the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income . SFAS
No. 130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
The Corporation s comprehensive income, determined in accordance with SFAS
No. 130 was $15.3 million and $14.4 million for the nine months ended
September 30, 1998 and 1997, respectively. Accumulated other comprehensive
income, resulting from unrealized gains or losses on available for sale
investments at December 31, 1997, and September 30, 1998, was $6.8 and $8.6
million, respectively.
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information and SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities have been issued by the Financial Accounting Standards
Board. The Corporation is currently reviewing these two pronouncements and
does not anticipate the adoption of SFAS No. 131 and SFAS No. 133 to have a
material effect on the Corporation's financial position or results of
operation.
2. A loan is considered to be impaired when, based upon current information
and events, it is probable that the Corporation will be unable to collect all
amounts due according to the contractual terms of the loan. Impairment is
primarily measured based on the fair value of the loan's collateral.
The following table summarizes impaired loan information.
(000's)
September 30,
1998 1997
Impaired loans with related allowance for loan losses
calculated under SFAS No. 114......................... $1,874 $1,782
Interest payments on impaired loans are typically applied to principal
unless collectibility of the principal amount is deemed to be fully assured,
in which case interest is recognized on a cash basis.
Interest income on commercial loans and residential real estate loans is no
longer accrued at the time the loan is 90 days delinquent unless the credit
is well secured and in the process of collection. Commercial loans are
charged off at the time the loan becomes 180 days delinquent unless the loan
is well secured and in process of collection, or other circumstances support
collection. Credit card loans and other unsecured personal credit lines are
typically charged off no later than 180 days delinquent. Other consumer
loans are typically charged off when they become 150 days delinquent. In all
cases, loans must be placed on nonaccrual status or charged off at an earlier
date if collection of principal or interest is considered doubtful.
7 <PAGE>
The interest on these loans is accounted for on the cash basis or cost
recovery method, until qualifying for return to accrual status. Loans may
be returned to accrual status when all the principal and interest amounts
contractually due are paid.
3. Investments
The cost and fair value of the Corporation's investments at September 30,
1998 are shown below. All investments are classified as available-for-sale.
(000's)
September 30, 1998
Amortized Cost Fair Value
Available-For-Sale:
United States Government $139,077 $141,446
United States Government Agencies 227,482 230,288
State and Municipal 151,184 157,238
Other 40,535 40,715
$558,278 $569,687
8 <page)
FIRST FINANCIAL CORPORATION
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The purpose of this discussion is to point out key factors in the
Corporation's recent performance compared with earlier periods. The
discussion should be read in conjunction with the financial statements
beginning on page three of this report. All figures are for the consolidated
entities. It is presumed the readers of these financial statements and of the
following narrative have previously read the Corporation's annual report for
1997.
Forward-looking statements contained in the following discussion are
based on estimates and assumptions that are subject to significant business,
economic and competitive uncertainties, many of which are beyond the
Corporation's control and are subject to change. These uncertainties can affect
actual results and could cause actual results to differ materially from those
expressed in any forward-looking statements in this discussion.
Summary of Operating Results
Net income for the nine and three month periods ended September 30, 1998
was $13.53 million and $4.86 million, respectively. Both the nine month and
current quarter results reflect slight increases from 1997 levels due in part
to a higher level of earning assets, particularly residential real estate
mortgages. Earnings per share for the nine month period ended September 30,
1998 reflects a 2% or $.04 per share decrease over the third quarter of 1997.
This is the result of the acquisition of Morris Plan in the first quarter,
which had a dilutive affect on the earnings per share. Earnings per share
for the third quarter increased by $.01 to $.67 over the same period in 1997.
Net Interest Income
The Corporation's primary source of earnings is net interest income, which
is the difference between the interest earned on loans and other investments
and the interest incurred for deposits and other sources of funds. Net
interest income increased to $46.7 million in the first nine months of 1998 from
$45.2 million in the same period of 1997 due to an increase in earning asset
volume while the net interest margin decreased to 4.14% in 1998 from 4.24%
in the same period of 1997. This decrease resulted from a shift in the
deposit mix to higher cost deposit vehicles. This also affected third
quarter net interest income which increased to $15.8 million from $15.5
million for the same quarter of 1997 while net interest margin decreased to
4.10% for the third quarter of 1998 from 4.32% in the same quarter of 1997.
Other Income
Other income for the nine months of 1998, as compared to the same period
of 1997, increased $1.4 million or 21.5%. Trust income and other service fee
income increased to $1.6 million and $3.5 million or 8.4% and 28.9%,
respectively, compared to the same period of 1997 as a result of increased
service volume and increased service charges. Third quarter other income
increased to $2.9 million from $2.2 million compared to the same quarter of
1997. These increases are the result of a focused effort to increase fee
based income, as well as the result of realized gains from investments sales.
Other Expenses
Other expenses for the first nine months of 1998, as compared to the
same period of 1997, increased to $31.6 million from $29.3 million. This
represents an increase of $2.3 million or 7.8%. Most of the components of
other expenses increased slightly while salaries and related benefits, the
largest component of this group, increased from $16.2 million to almost $17.7
million or 9.3%. The primary reason for this increase were higher average
salaries and higher health insurance costs. This also affected third quarter
other expenses which increased to $10.4 million from $10.1 million for the
same quarter of 1997. Expenses were also increased by the acquisition of
Morris Plan during the first quarter of 1998. There were no other significant
changes.
9 <PAGE>
Allowance for Loan Losses
The Corporation's provision for loan losses increased to $4.3 million from
$4.0 million for the first nine months of 1998 compared to the same period a
year earlier.
At September 30, 1998, the allowance for loan losses was 1.50% of net
loans. This compares with an allowance of 1.34% at December 31, 1997. Net
chargeoffs for the first nine months of 1998 were $2.4 million compared to
$1.6 million for the same period of 1997. This increase was primarily due to the
higher volume of charge offs relating to problem consumer loans. The ratio of
net chargeoffs to average loans outstanding for the last five years ended
December 31, 1997, was .35%. With this experience and based on management's
review of the portfolio, management believes the allowance of $16.3 million at
September 30, 1998 is adequate.
Underperforming Assets
Underperforming assets consist primarily of (1) nonaccrual loans and
leases on which the ultimate collectability of the full amount of interest
is uncertain, (2) loans and leases which have been renegotiated to provide
for a reduction or deferral of interest or principal because of a
deterioration in the financial position of the borrower, (3) loans and leases
past due ninety days or more as to principal or interest and (4) land sold on
contract. A summary of underperforming assets at September 30, 1998 and
December 31, 1997 follows:
(000') (000')
September 30, 1998 December 31, 1997
Nonaccrual loans and leases $ 4,083 $ 3,866
Renegotiated loans and leases 16 17
Land sold on contract and others 1,951 2,236
Total non-performing assets $ 6,050 $ 6,119
Ninety days past due loans and leases 5,599 4,384
Total underperforming assets $11,649 $ 10,503
Ratio of the allowance for loan losses
as a percentage of non-performing assets 270% 221%
Ratio of the allowance for loan losses
as a percentage of underperforming assets 140% 129%
The following loan categories comprise significant components of the
non-performing loans at September 30, 1998
Non-Accrual Loans:
(000') (000's)
September 30, 1998 December 31, 1997
1-4 family residential $1,731 42% $ 728 19%
Commercial loans 1,112 27 1,622 42
Installment loans 969 24 872 23
Other, various 271 7 644 16
$4,083 100% $3,866 100%
Past due 90 days or more:
1-4 family residential $3,262 58% $2,785 64%
Commercial loans 1,230 22 112 3
Installment loans 736 13 851 19
Other, various 371 7 636 14
$5,599 100% $4,384 100%
10 <PAGE>
There are no material industry concentrations within the underperforming
loans.
In addition to the above underperforming loans, certain loans are felt by
management to be impaired for reasons other than the current repayment status.
Such reasons may include but not be limited to previous payment history,
bankruptcy proceedings, industry concerns, or information related to a
specific borrower that may result in a negative future event to that borrower.
At September 30, 1998 the Corporation had $513,000 of such loans which are
still in accrual status.
Interest Rate Sensitivity and Liquidity
The Corporation charges the nine subsidiary banks with monitoring and
managing their individual sensitivity to fluctuations in interest rates and
assuring that they have adequate liquidity to meet loan demand or any
potential unexpected deposit withdrawals. This function is facilitated by
the Asset/Liability Committee. The primary goal of the committee is to
maximize net interest income within the interest rate risk limits approved by
the Board of Directors. This goal is accomplished through management of the
subsidiary bank's balance sheet liquidity and interest rate risk exposures
due to the changes in economic conditions and interest rate levels.
Interest Rate Risk
Management considers interest rate risk to be the Corporation's most
significant market risk. Interest rate risk is the exposure to changes in net
interest income as a result of changes in interest rates. Consistency in the
Corporation's net income is largely dependent on the effective management of
this risk.
The Committee reviews a series of monthly reports to ensure that
performance objectives are being met. The Committee monitors and controls
interest rate risk through earnings simulation. Simulation modeling measures
the effects of changes in interest rates, changes in the shape of the yield
curve, and changes in prepayment speeds on net interest income. The primary
measure of Interest Rate Risk is "Earnings at Risk." This measure projects
the earnings effect of various rate movements over the next three years on
net interest income. It is important to note that measures of interest rate
risk have limitations and are dependent upon certain assumptions. These
assumptions are inherently uncertain and, as a result, the model cannot
precisely predict the impact of interest rate fluctuations on net interest
income. Actual results will differ from simulated results due to timing,
frequency and amount of interest rate changes as well as overall market
conditions. The Committee has performed a thorough analysis and believes the
assumptions to be valid and theoretically sound. The relationships are
continuously monitored for behavioral changes.
In its interest rate risk management, the Corporation currently does not
utilize any derivative products and is not engaged in securities trading
activity. The Corporation instead invests in assets whose value is derived
from an underlying asset. These assets include government agency issued
mortgage-backed securities. The performance of these assets in changing rate
environments is included in the following table.
The table below shows the Corporation's estimated earnings sensitivity
profile as of September 30, 1998. Given a 100 basis point increase in rates,
net interest income would increase 2.18% over the next 12 months and
decrease 1.97% over the next 24 months. A 100 basis point decrease would
result in a 4.07% decrease in net interest income over the next 12 months and
a 1.40% decrease over the next 24 month periods. These estimates assume all
rates changed overnight and management took no action as a result of this
change.
Basis Point Percentage Change in Net Interest Income
Interest Rate Change 12 months 24 months 36 months
Down 300 -15.29% -6.72% -17.21%
Down 200 -8.84 -3.33 -10.39
Down 100 -4.07 -1.40 - 4.97
Up 100 2.18 -1.97 1.10
Up 200 4.75 -2.88 3.68
Up 300 6.95 -4.26 6.08
11 <PAGE>
Liquidity Risk
Liquidity is measured by each bank's ability to raise funds to meet the
obligations from its customers, including deposit withdrawals and credit
needs. This is accomplished primarily by maintaining sufficient liquid assets
in the form of investment securities and core deposits. The Corporation has
$14.0 million of investments that mature throughout the coming 12 months. The
Corporation also anticipates $95.5 million of principal payments from
mortgage-backed securities. Given the current interest rate environment, the
Corporation anticipates $70.8 million of federal agency securities to be
called within the next 12 months. With these sources of funds, the
Corporation currently anticipates adequate liquidity to meet the expected
obligations of its customers.
Capital Adequacy
As of September 30, 1998 the Corporation's leverage ratio was 9.86% compared
to 9.68% at December 31, 1997.
At September 30, 1998 the Corporation's total capital, which includes Tier II
capital, was 17.26% compared to 17.10% at December 31, 1997. These amounts
exceed minimum regulatory capital requirements.
Year 2000
The Year 2000 problem concerns the inability of information systems to
properly recognize and process date sensitive information beginning on
December 31, 1999. The Corporation has developed a Year 2000 team responsible
for ensuring that its IT-systems, software, and non-IT systems are Year 2000
compliant in time to minimize any significant detrimental effects on operations
and service to its customers.
The Corporation is currently in the validation stage of a five step Year 2000
program. The awareness, assessment, and renovation steps have been completed
for all mission critical applications. The validation stage includes the
necessary software and hardware testing that is required as well as ongoing
discussions with vendors and customers on the success of their validation
efforts. The testing of the mission critical hardware and software began on
September 1, 1998 and will be completed by the end of 1998. The Corporation
utilizes Fiserv-CBS software for processing all of its core applications.
Testing is underway to ensure these applications will be year 2000 compliant.
The Corporation is in the process of corresponding with its major commercial
loan customers and major suppliers and vendors to assess the credit risk related
to the Year 2000 problem as well as the risk of business interruption. The
majority of the Corporation's non-IT related systems have been assessed as
Year 2000 compliant or are in the final testing phase which will be completed
by June 30, 1999.
The total estimated cost related to the Year 2000 issue, including the cost of
replacing equipment is $760,000. Total incremental cost incurred through
September 30, 1998 is approximately $100,000. The Corporation does not expect
that the cost relating to the Year 2000 project will have a material effect on
the results of its operations or financial condition.
The above expectations are subject to inherent uncertainties of the Year 2000
problem including the readiness of third-party suppliers and regulatory agencies
that the Corporation depends upon to meet customers needs. The failure to
correct a material problem could result in an interruption or failure of
normal business activities or operations. Such failures could materially
affect the Corporation's ability to meet customers needs and ultimately affect
its results of operations and financial condition. The Corporation believes that
with the successful completion of its Year 2000 program, the possibility of
significant interruptions will be reduced.
Concurrently with the Year 2000 program described above, the Corporation is
developing contingency plans intended to mitigate the possible disruption in
business operations that may result from the year 2000 problem and is
estimating the costs for such plans. Contingency plans may include increasing
cash in vault, ordering extra forms/supplies, increasing the allowance for
loan loss allocation for year 2000 credit risk, establishing trigger dates for
activating alternative solutions/vendors, identifying possible alternative
vendors, preparing for some manual preparation of checks, forms, etc. , and
other appropriate measures. Once developed, contingency plans and related cost
estimates will be continually refined as additional information becomes
available.
12<PAGE>
FIRST FINANCIAL CORPORATION
PART II OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The Annual meeting of the shareholders of the Corporation was held on
April 15, 1998.
(b) The following were elected Directors of the Corporation for a three
year term:
Walter A. Bledsoe, Max Gibson, William Niemeyer and Donald E. Smith.
(c) The shareholders unanimously approved the annual report of the
Corporation and unanimously approved the actions of the Directors
and Officers of the Corporation for the fiscal year ended
December 31, 1997.
No other information is required to be filed under Part II of this form.
13<PAGE>
FIRST FINANCIAL CORPORATION
PART II OTHER INFORMATION
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST FINANCIAL CORPORATION
(Registrant)
Date: November 13, 1998 By (Signature)
Donald E. Smith, President
Date: November 13, 1998 By (Signature)
John W. Perry, Secretary
Date: November 13, 1998 By (Signature)
Michael A. Carty, Treasurer
14<PAGE>
19<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 47,227
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,630
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 569,687
<INVESTMENTS-MARKET> 569,687
<LOANS> 1,089,612
<ALLOWANCE> 16,348
<TOTAL-ASSETS> 1,761,798
<DEPOSITS> 1,255,579
<SHORT-TERM> 221,772
<LIABILITIES-OTHER> 18,963
<LONG-TERM> 77,801
0
0
<COMMON> 903
<OTHER-SE> 186,780
<TOTAL-LIABILITIES-AND-EQUITY> 1,761,798
<INTEREST-LOAN> 69,577
<INTEREST-INVEST> 26,047
<INTEREST-OTHER> 550
<INTEREST-TOTAL> 96,174
<INTEREST-DEPOSIT> 37,855
<INTEREST-EXPENSE> 49,427
<INTEREST-INCOME-NET> 46,747
<LOAN-LOSSES> 4,301
<SECURITIES-GAINS> 773
<EXPENSE-OTHER> 31,624
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</TABLE>
