<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
MARK ONE
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
--------------- ---------------
Commission File Number 33-426222
---------
FIRST FINANCIAL CORPORATION
------------------------------------------------------
(Exact Name of Small Business Issuer As Specified in its Charter)
Tennessee 62-1474162
------------------------------- ----------------------------
(State or Other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
1691 N. Mt. Juliet Road, Mount Juliet, TN 37122
------------------------------------------------
(Address of Principal Executive Offices)
(615) 754-2265
-----------------------------------
(Issuer's Telephone Number)
Not Applicable
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
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
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: 461,882 .
-------------
Transitional Small Business Disclosure Format (check one)
YES NO X
----- -----
This filing contains 17 pages.
---
The Exhibit Index appears at sequential page number 16
----
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited consolidated financial statements of the small business issuer
and its wholly-owned subsidiary are as follows:
Consolidated Balance Sheets - March 31, 1996 and December 31, 1995.
Consolidated Statements of Earnings - For the three months ended March 31,
1996 and 1995.
Consolidated Statements of Cash Flows - For the three months ended March
31, 1996 and 1995.
2
<PAGE> 3
FIRST FINANCIAL CORPORATION
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------- ---------------
(In Thousands)
Assets
------
<S> <C> <C>
Loans $ 107,734 100,982
Less: Allowance for loan losses 1,310 1,246
-------- -------
Net loans 106,424 99,736
Securities:
Securities available-for-sale, at market
(amortized cost $41,028,000 and
$43,345,000, respectively) 40,869 43,663
--------- -------
Total securities 40,869 43,663
Loans held for sale 1,660 1,812
Interest-bearing deposits in other banks 105 203
Federal funds sold 2,875 1,365
--------- -------
Total earning assets 151,933 146,779
Cash and due from banks 4,552 4,268
Bank premises and equipment, net of
accumulated depreciation 4,414 4,471
Accrued interest receivable 1,601 1,463
Other real estate 227 305
Other assets 728 469
--------- -------
$ 163,455 157,755
========= =======
Liabilities and Stockholders' Equity
------------------------------------
Deposits $ 148,211 142,922
Short-term borrowings 996 996
Other liabilities 1,297 1,064
Advances from Federal Home Loan Bank 1,252 1,331
Long-term debt 394 395
--------- -------
Total liabilities 152,150 146,708
--------- -------
Stockholders' equity:
Preferred stock, no par value, authorized
5,000,000 shares, no shares issued - -
Common stock, $5.00 par value; authorized
5,000,000 shares, issued 530,845 shares
at March 31, 1996 and 530,364 shares at
December 31, 1995 2,668 2,657
Additional paid-in capital 3,735 3,735
Retained earnings 6,258 5,715
Net unrealized gains (losses) on
available-for-sale securities, net of
applicable income taxes (99) 197
--------- -------
12,562 12,304
Less cost of 68,963 shares of treasury stock (1,257) (1,257)
--------- -------
Total stockholders' equity 11,305 11,047
--------- -------
$ 163,455 157,755
========= =======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
3
<PAGE> 4
FIRST FINANCIAL CORPORATION
Consolidated Statements of Earnings
Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------ ------
(Dollars In Thousands
Except Per Share Amount)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 2,782 2,065
Interest and dividends on securities:
Taxable securities 524 447
Exempt from Federal income taxes 103 88
Interest on loans held for sale 27 13
Interest on federal funds sold 11 51
Interest on interest-bearing deposits
in other banks and other interest 3 3
------- -------
Total interest income 3,450 2,667
------- -------
Interest expense:
Interest on deposits 1,512 1,200
Interest on short term borrowings 19 23
Interest on advances from Federal Home
Loan Bank 24 29
Interest on long-term debt 7 7
Interest on Federal funds purchased 3 -
------- -------
Total interest expense 1,565 1,259
------- -------
Net interest income 1,885 1,408
Provision for loan losses 80 75
------- -------
Net interest income after
provision for loan losses 1,805 1,333
------- -------
Non-interest income:
Service charges on deposit accounts 187 179
Other fees and commissions 50 26
Other income 162 115
Gain on sale of securities 6 -
------- -------
405 320
------- -------
Non-interest expenses:
Salaries and employee benefits 768 651
Occupancy expenses, net 75 54
Furniture and equipment expense 120 112
Other operating expenses 420 402
Loss on sale of securities - 27
------- -------
1,383 1,246
------- -------
Earnings before income taxes 827 407
Income taxes 284 130
------- -------
Net earnings $ 543 277
======= =======
Weighted average number of common and
common equivalents shares outstanding 468,295 469,516
======= =======
Net earnings per common and common
equivalent share $ 1.16 .59
======= =======
Dividends per share $ - -
======= =======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
4
<PAGE> 5
FIRST FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------
<S> <C> <C>
(In Thousands)
Cash flows from operating activities:
Interest received $ 3,320 2,529
Fees and commissions received 242 214
Interest paid (1,582) (1,229)
Originations of loans held for sale (7,819) (4,123)
Proceeds from loan sales 8,128 4,449
Cash paid to suppliers and employees (1,375) (1,232)
Income taxes paid (41) (76)
------------ ------
Net cash provided by operating
activities 873 532
------------ ------
Cash flows from investing activities:
Loans made to customers, net of repayments (6,768) (4,521)
Proceeds from sales of available-for-sale
securities 3,800 1,481
Proceeds from maturities of available-for-
sale securities 2,246 264
Purchase of available-for-sale securities (3,731) (3,233)
Purchase of held-to-maturity securities - (971)
Proceeds from maturities of held-to-maturity
securities - 247
Decrease in interest bearing deposits in
other banks 98 100
Purchase of premise and equipment (22) (91)
Increase in other real estate (4) (2)
Proceeds from sale of other real estate 82 -
------------ ------
Net cash used in investing activities (4,299) (6,726)
------------ ------
Cash flows from financing activities:
Net increase in time deposits 1,220 4,126
Net increase in non-interest bearing,
savings, and NOW deposit accounts 4,069 3,482
Increase in short-term borrowings - 11
Repayment of long-term debt (1) (2)
Repayment of Federal Home Loan Bank advances (79) (15)
Issuance of common stock 11 -
------------ ------
Net cash provided by financing
activities 5,220 7,602
------------ ------
Net increase in cash and cash equivalents 1,794 1,408
Cash and cash equivalents at beginning of period 5,633 5,375
------------ ------
Cash and cash equivalents at end of period $ 7,427 6,783
============ ======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
5
<PAGE> 6
FIRST FINANCIAL CORPORATION
Consolidated Statements of Cash Flows, Continued
Three Months Ended March 31, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------ ------
(In Thousands)
<S> <C> <C>
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 543 277
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 89 77
Provision for loan losses 80 75
Loss (gain) on sale of available-for-
sale securities (6) 27
Loss on sale - other real estate - 2
Decrease in loans held for sale 152 220
Increase in other assets, net (80) (145)
Increase in interest receivable (138) (143)
Increase (decrease) in interest payable (17) 30
Increase in other liabilities 250 112
----- ----
Total adjustments 330 255
----- ----
Net cash provided by operating
activities $ 873 532
===== ====
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
6
<PAGE> 7
FIRST FINANCIAL CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
Basis of Presentation
The unaudited consolidated financial statements include the accounts of First
Financial Corporation and its wholly-owned subsidiary, First Bank and Trust
(First Bank).
The accompanying consolidated financial statements have been prepared, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of management, the statements contain all adjustments and
disclosures necessary to summarize fairly the financial position of the Company
as of March 31, 1996 and December 31, 1995, and the results of operations for
the three months ended March 31, 1996 and 1995 and changes in cash flows for
the three months ended March 31, 1996 and 1995. All significant intercompany
transactions have been eliminated. The interim consolidated financial
statements should be read in conjunction with the notes to the consolidated
financial statements presented in the Company's 1995 Annual Report to
stockholders. The results for interim periods are not necessarily indicative
of results to be expected for the complete fiscal year.
Allowance for Loan Losses
Transactions in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1996 1995
------ ------
(In Thousands)
<S> <C> <C>
Balance, January 1, 1996 and 1995,
respectively $1,246 932
Add (deduct):
Losses charged to allowance (25) (10)
Recoveries credited to allowance 9 5
Provision for loan losses 80 75
------ -----
Balance, March 31, 1996 and 1995,
respectively $1,310 1,002
====== =====
</TABLE>
Earnings Per Share
The computation of earnings per common and common equivalent share is based
upon the weighted average number of common shares outstanding during the period
plus the effect of common shares contingently issuable from stock options.
7
<PAGE> 8
FIRST FINANCIAL CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operation
The purpose of this discussion is to provide insight into the financial
condition and results of operations of the Registrant and its subsidiary. This
discussion should be read in conjunction with the consolidated financial
statements. Reference should also be made to the Company's 1995 Annual Report
to stockholders for a complete discussion of factors that impact liquidity,
capital and the results of operations.
Liquidity and Interest Rate Sensitivity Management
The concept of liquidity involves the ability of the Registrant and its
subsidiary to meet future cash flow requirements, particularly those of
customers who are either withdrawing funds from their accounts or borrowing to
meet their credit needs.
Proper asset/liability management is necessary to maintain stability in
the balance of interest-sensitive assets to interest-sensitive liabilities in
order to provide a stable growth in net interest margins. Earnings on
interest-sensitive assets such as loans tied to the prime rate of interest and
federal funds sold, may vary considerably from fixed rate assets such as
long-term investment securities and fixed rate loans. Interest-sensitive
liabilities such as large certificates of deposit and money market
certificates, generally require higher costs than fixed rate instruments such
as passbook savings.
Banks, in general, must maintain large cash balances to meet day-to-day
cash flow requirements as well as maintaining required reserves for regulatory
agencies. The cash balances maintained are the primary source of liquidity.
Federal funds sold, which are basically overnight or short-term loans to other
banks that increase the other bank's required reserves, are also a major source
of liquidity.
The Company's investment portfolio consists of earning assets that provide
interest income. For those securities classified as held-to-maturity, the
Company has the ability and intent to hold these securities to maturity or on a
long-term basis. Securities classified as available-for-sale include
securities intended to be used as a part of the Company's asset/liability
strategy and/or securities that may be sold in response to changes in interest
rate, prepayment risk, the need or desire to increase capital and similar
economic factors. The Company has $8,062,000 of securities scheduled to mature
or reprice in the next twelve months.
A secondary source of liquidity is the Bank's loan portfolio. At March
31, 1996 commercial loans of approximately $23 million and other loans
(mortgage and consumer) of approximately $49 million either will become due or
will be subject to rate adjustments within twelve months from the respective
date. Continued emphasis will be placed on structuring adjustable rate loans.
8
<PAGE> 9
FIRST FINANCIAL CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operation
Liquidity and Interest Rate Sensitivity Management, Continued
As for liabilities, certificates of deposit of $100,000 or greater of
approximately $20 million will become due during the next twelve months. The
Bank's deposit base increased approximately $5.3 million during the quarter
ended March 31, 1996.
The Company also has the ability to meet its liquidity needs through
advances from the Federal Home Loan Bank. At March 31, 1996, the Bank had
$1,252,000 of these advances.
As of March 31, 1996, the Bank's liability sensitivity was 12% (the excess
of interest sensitive liabilities over earning assets divided by total assets
at the one year threshold). Management estimates an increase or decrease in
interest rates of 1% would have an immaterial impact on earnings.
It is anticipated that with present maturities, the anticipated growth in
deposit base, and the efforts of management in its asset/liability management
program, liquidity will not pose a problem in the foreseeable future. At the
present time, there are no known trends or any known commitments, demands,
events or uncertainties that will result in or that are reasonably likely to
result in the Company's liquidity changing in any material way. Liquidity was
26.5% at March 31, 1996 and 28.5% at December 31, 1995.
Capital Resources
A primary source of capital is internal growth through retained earnings.
The ratio of stockholders' equity to total assets was 6.9% at March 31, 1996
and 7.0% at December 31, 1995. Total assets increased 3.6% during the three
months ended March 31, 1996. Cash dividends of $.35 per share were declared
during the year ended December 31, 1995. Cash dividends will be declared in
1996 over 1995 only in the discretion of the Board of Directors to the extent
profits increase. No material change in the mix or cost of capital is
anticipated in the foreseeable future.
At the present time there are no material commitments for capital
expenditures other than the branches described below.
The FDIC, which is the subsidiary's primary federal regulatory, has
specified guidelines for purposes of evaluating a bank's capital adequacy.
Under these guidelines, a credit risk is assigned to various categories of
assets and commitments ranging from 0% to 100% based on the risk associated
with the asset or commitment.
9
<PAGE> 10
FIRST FINANCIAL CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operation
The following schedule details the Company's risk-based capital at March
31, 1996 (excluding the effect of the adoption of SFAS No. 115):
<TABLE>
<CAPTION>
In Thousands
(except percentages)
<S> <C> <C>
Tier I capital:
Stockholders' equity $ 11,404
Tier II capital:
Allowable allowance for loan losses 1,310
------------
Total capital $ 12,714
============
Risk-weighted assets $ 122,358
============
Risk-based capital ratios:
Tier I capital ratio 9.32%
============
Tier II capital ratio 10.39%
============
</TABLE>
The Company is required to maintain a Tier II capital to risk weighted
asset ratio of 8% and a Tier I capital to risk weighted asset ratio of 4%. At
December 31, 1995, the Company and its subsidiary bank were in compliance with
these requirements.
In addition, the Company and its subsidiary are required to maintain a
leverage ratio (defined as equity divided by the most recent quarter average
total assets) of 4%. The leverage ratio at March 31, 1996 was 7.19%.
Management intends to maximize the leverage position of the company
consistent with safe and sound business practices and the current regulatory
environment. Past decisions by management has committed the Company to a path
of growth to achieve the strategic goals of maximum leverage. Management is
cognizant of the pressures of this philosophy but believe various combinations
of retained earnings, additional capital stock issues, preferred stock
offerings, and other avenues will maintain a capital position consistent with
sound banking principles and at the same time reward stockholders with
significant profits.
Effective January 1, 1992, the Company acquired 100% of the common stock
of First Bank; and accordingly, became a one bank holding company. The Board
of Directors and management believe that the holding company structure will
permit greater flexibility in the expansion of First Bank's present business
and will allow the Bank to be more responsive to its customers' broadening and
changing financial needs. In particular, the holding company structure will
provide greater flexibility in raising additional capital for First Bank.
Greater flexibility in raising capital is necessary in order to insure that the
growth of the Bank's capital will keep pace with its asset growth.
10
<PAGE> 11
FIRST FINANCIAL CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operation
There is no established trading market for the Company's stock. From time
to time the Company may acquire shares of its stock to provide liquidity in the
shares. During the quarter ended March 31, 1996, the Company issued 481 shares
of its common voting stock in connection with the exercise of stock options.
During the year ended December 31, 1995, the Company redeemed 234 shares of its
common voting stock at $26.00 per share, in an aggregate amount totaling
approximately $5,000. These trades may involve the Company, its directors and
officers and, accordingly, may not be reliable indicators of value.
In April, 1993, the stockholders approved a stock option whereby 79,500
shares of the Company's stock is available for issuance to directors, officers
and employees of the Company. At December 31, 1994, 40,700 shares of the
options had been granted; 39,700 shares had been granted at $20.00 per share
(660 shares have been exercised at March 31, 1996), 1,000 shares had been
granted at $24.00 per share (100 shares have been exercised at March 31, 1996).
During 1995 an additional 2,000 shares were granted at $26.00 per share,
14,896 shares were granted at $30.00 per share (85 shares have been exercised
at March 31, 1996). The options are granted at the estimated market price of
the stock at the date the option was granted. At March 31, 1996 there were
56,751 shares granted but not exercised. The options are generally exercisable
ratably over a ten year period from the date granted. At March 31, 1996
options to purchase 21,904 common shares were available for grant in future
years.
At present, the net book value of premises and equipment is 39.0% of the
Company's capital. The Company is in the process of applying to the
appropriate regulators to relocate to a permanent facility in Smyrna,
Tennessee. (Construction is anticipated to begin in 1996 for permanent
quarters in Smyrna). Management believes that this facility will help
diversify the risk associated with being established in only one market while
generating growth and profits for the Company. At present the ratio of fixed
assets to capital at the subsidiary bank level is 36.2%. Additionally, the
Bank has opened an additional branch in Hermitage, Tennessee. These premises
are being leased for $350 per month ($4,200 annually). Investment in fixed
assets can have a detrimental impact on profits particularly in the short term.
11
<PAGE> 12
FIRST FINANCIAL CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Net earnings were $543,000 for the three months ended March 31, 1996 as
compared to $277,000 for the same period in 1995. Earnings per share increased
from $.59 in 1995 to $1.16 for the same period in 1996.
As in most financial institutions, a major element in analyzing the
statement of earnings is net interest income, i.e., the excess of interest
earned over interest paid. This is particularly true with the volatility in
interest rates encountered in recent years.
The Company's interest income, excluding tax equivalent adjustments,
increased by $783,000 or 29.4% during the three months ended March 31, 1996 and
increased $713,000 or 36.5% for the same period in 1995. The increases were
primarily attributable to higher volumes of earning assets offset by the
declines in interest rates. The ratio of average earning assets to total
average assets was 90.8% for the quarter ended March 31, 1996 and 93.1% for the
year ended December 31, 1995.
Interest expense increased by $306,000 for the three months ended March
31, 1996 or 24.3% compared to $479,000 or 61.4% for the same period in 1995.
The increases in 1996 and 1995 can be attributable largely to an increase in
volume, increase in weighted average interest rates as well as increases in the
outstanding balance on the line of credit, advances from the Federal Home Loan
Bank and long-term debt.
The foregoing resulted in an increase in net interest income of $477,000
or 33.9% during the first three months of 1996 and $234,000 or 20.0% in the
comparable period of 1995.
Since assets are more sensitive to movements in rates this should favor
the income statement. Should loan demand not increase, and competition, intent
on increasing market share, drive interest expenses up, the net interest margin
will decline.
The provision for loan losses was $80,000 for the first three months of
1996 compared to $75,000 for the same period in 1995. The provision for loan
losses is based on past loan experience and other factors which, in
management's judgment, deserve current recognition in estimating possible loan
losses. Such other factors considered by management include growth and
composition of the loan portfolio, review of specific loan problems, the
relationship of the allowance for loan losses to outstanding loans, adverse
situations that may affect the borrowers ability to repay, the estimated value
of any underlying collateral and current economic conditions that may affect
the borrower's ability to repay. Management has in place a system designed to
identify and monitor problems on a timely basis.
12
<PAGE> 13
FIRST FINANCIAL CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operation
The following schedule details selected information as to non-performing
loans of the Company at March 31, 1996:
<TABLE>
<CAPTION>
Past Due
90 Days Non-Accrual
------------ -----------
(In Thousands)
<S> <C> <C>
Real estate loans $ 69 -
Installment loans 21 -
Commercial 8 -
------------ -----------
$ 98 -
============ ===========
Renegotiated loans $ 507 -
============ ===========
</TABLE>
At March 31, 1996, loans which include the above, totaling $1,337,218 were
included in the Company's internal classified loan list. Of these loans
$634,607 are consumer and $702,611 are commercial loans. The collateral values
securing these loans total approximately $3,033,600 ($1,040,300 related to
consumer loans and $1,993,300 related to commercial loans). Such loans are
listed as classified when information obtained about possible credit problems
of the borrower has prompted management to question the ability of the borrower
to comply with the repayment terms of the loan agreement. The loan
classifications do not represent or result from trends or uncertainties which
management expects will materially impact future operating results, liquidity
or capital resources.
There were no material amounts of other interest-bearing assets
(interest-bearing deposits with other banks, municipal bonds, etc.) at March
31, 1996 which would be required to be disclosed as past due, non-accrual,
restructured or potential problem loans, if such interest-bearing assets were
loans.
Non-interest income increased $79,000 or 24.7% exclusive of any securities
gains during the three months ended March 31, 1996 and decreased $147,000 or
31.5% for the same period in 1995. The primary increase in non-interest income
consists of an increase in income generated from sales of mortgage loans.
Mortgage loan income (included in other income) for the three month period
ended March 31, 1996 was $157,000 as compared to $106,000 for the period ending
March 31, 1995. The increase of $51,000 or 48.1% has been caused by the
increase in the refinancing of mortgage loans as compared to the same period in
last year. Additionally, other fees and commissions increased $24,000 or
92.3%.
There was a $6,000 security gain in the available-for-sale category for
the three months ended March 31, 1996 as compared to a $27,000 security loss
during the three months ended March 31, 1995.
Non-interest expense excluding securities transactions increased $164,000
or 13.5% during the first three months of 1996 and $187,000 or 17.7% during the
same period in 1995. The increases in 1996 and 1995 were primarily attributable
to increases in salaries and employee benefits which is due to increased number
of employees and increases in annual compensation.
13
<PAGE> 14
FIRST FINANCIAL CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operation
Management is not aware of any known trends, events or uncertainties that
will have or are reasonably likely to have a material effect on the Company's
liquidity, capital resources or operations of the Company. The Company is not
aware of any current recommendations, which, if they were to be implemented,
would have a material effect on liquidity, capital resources or operations
other than as discussed in the capital resources section of this plan.
Impact of Inflation
The primary impact which inflation has on the results of the Company's
operations is evidenced by its effects on interest rates. Interest rates tend
to reflect, in part, the financial market's expectations of the level of
inflation and, therefore, will generally rise or fall as the level of expected
inflation fluctuates. To the extent interest rates paid on deposits and other
sources of funds rise or fall at a faster rate than the interest income earned
on funds, loans or invested, net interest income will vary. Inflation also
impacts on non-interest expenses as goods and services are purchased, although
this has not had a significant effect on net earnings. If the inflation rate
stays flat or increase slightly, the effect on profits will not be significant.
14
<PAGE> 15
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits 27 Financial Data Schedule (for SEC use only)
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
15
<PAGE> 16
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: May 9, 1996 /s/ David Major
----------------- ----------------------------------
David Major
Chairman, President and
Chief Executive Officer
DATE: May 9, 1996 /s/ Sally P. Kimble
------------------ -----------------------------------
Sally P. Kimble
Treasurer, Chief Financial Officer
and Chief Accounting Officer
16
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,552
<INT-BEARING-DEPOSITS> 105
<FED-FUNDS-SOLD> 2,875
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40,869
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 107,734
<ALLOWANCE> 1,310
<TOTAL-ASSETS> 163,455
<DEPOSITS> 148,211
<SHORT-TERM> 996
<LIABILITIES-OTHER> 1,297
<LONG-TERM> 1,646
0
0
<COMMON> 2,668
<OTHER-SE> 8,637
<TOTAL-LIABILITIES-AND-EQUITY> 163,455
<INTEREST-LOAN> 2,782
<INTEREST-INVEST> 627
<INTEREST-OTHER> 41
<INTEREST-TOTAL> 3,450
<INTEREST-DEPOSIT> 1,512
<INTEREST-EXPENSE> 1,565
<INTEREST-INCOME-NET> 1,885
<LOAN-LOSSES> 80
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 1,383
<INCOME-PRETAX> 827
<INCOME-PRE-EXTRAORDINARY> 827
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 543
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<ALLOWANCE-DOMESTIC> 1,310
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</TABLE>
