<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, 1997
[ ] 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: 930,988 .
----------------
Transitional Small Business Disclosure Format (check one)
YES NO X
------ ------
This filing contains 16 pages.
------
The Exhibit Index appears at sequential page number 15
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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, 1997 and December 31, 1996.
Consolidated Statements of Earnings - For the three months ended March
31, 1997 and 1996.
Consolidated Statements of Cash Flows - For the three months ended
March31, 1997 and 1996.
2
<PAGE> 3
FIRST FINANCIAL CORPORATION
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------------- ---------------
Assets (In Thousands)
<S> <C> <C>
Loans $ 130,685 124,312
Less: Allowance for loan losses (1,585) (1,541)
--------------- ---------------
Net loans 129,100 122,771
Securities:
Securities available-for-sale, at market
(amortized cost $42,737,000 and
$42,427,000, respectively) 42,522 42,473
Loans held for sale 1,211 1,723
Federal funds sold 4,025 3,725
--------------- ---------------
Total earning assets 176,858 170,692
Cash and due from banks 6,162 5,412
Bank premises and equipment, net of
accumulated depreciation 5,467 5,457
Accrued interest receivable 1,718 1,638
Other real estate 2 2
Other assets 1,035 772
--------------- ---------------
$ 191,242 183,973
=============== ===============
Liabilities and Stockholders' Equity
Deposits $ 174,082 167,445
Short-term borrowings 800 800
Accrued interest payable 886 882
Other liabilities 518 289
Advances from Federal Home Loan Bank 980 993
Long-term debt 390 391
--------------- ---------------
Total liabilities 177,656 170,800
--------------- ---------------
Stockholders' equity:
Preferred stock, no par value, authorized
5,000,000 shares, no shares issued - -
Common stock, $2.50 par value; authorized
5,000,000 shares, issued 1,068,914 shares
at March 31, 1997 and December 31, 1996 2,672 2,672
Additional paid-in capital 3,850 3,850
Retained earnings 8,454 7,879
Net unrealized gains (losses) on
available-for-sale securities, net of
applicable income taxes (133) 29
Less cost of 137,926 shares of treasury stock (1,257) (1,257)
--------------- ---------------
Total stockholders' equity 13,586 13,173
--------------- ---------------
$ 191,242 183,973
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
3
<PAGE> 4
FIRST FINANCIAL CORPORATION
Consolidated Statements of Earnings
Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
---- ----
(Dollars In Thousands
Except Per Share Amount)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 3,127 2,782
Interest and dividends on securities:
Taxable securites 505 524
Exempt from Federal income taxes 132 103
Interest on loans held for sale 32 27
Interest on federal funds sold 69 11
Interest on interest-bearing deposits
in other banks and other interest - 3
--------- ---------
Total interest income 3,865 3,450
--------- ---------
Interest expense:
Interest on deposits 1,758 1,512
Interest on short term borrowings 15 19
Interest on advances from Federal Home
Loan Bank 18 24
Interest on long-term debt 7 7
Interest on Federal funds purchased - 3
--------- ---------
Total interest expense 1,798 1,565
--------- ---------
Net interest income 2,067 1,885
Provision for loan losses 60 80
--------- ---------
Net interest income after
provision for loan losses 2,007 1,805
--------- ---------
Non-interest income:
Service charges on deposit accounts 229 187
Other fees and commissions 60 50
Other income 170 162
Gain on sale of securities - 6
--------- ---------
459 405
--------- ---------
Non interest expenses:
Salaries and employee benefits 905 768
Occupancy expenses, net 77 75
Furnitire and equipment expense 126 120
Other operating expenses 435 372
Loss on sale of securities 5 -
Data processing fees 52 48
--------- ---------
1,600 1,383
--------- ---------
Earnings before income taxes 866 827
Income taxes 291 284
--------- ---------
Net earnings $ 575 543
--------- ---------
Weighted average number of common and
common equivalents shares outstanding 949,496 936,590
Net earnings per common and common ========= =========
equivalent share $ .61 .58
========= =========
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, 1997 and 1996
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 3,773 3,320
Fees and commissions received 289 242
Interest paid (1,794) (1,582)
Originations of loans held for sale (7,056) (7,819)
Proceeds from loan sales 7,738 8,128
Cash paid to suppliers and employees (1,695) (1,375)
Income taxes paid (55) (41)
Net cash provided by operating ------------ ------------
activities 1,200 873
------------ ------------
Cash flows from investing activities:
Loans made to customers, net of repayments (6,389) (6,768)
Proceeds from sales of available-for-sale
securities 1,246 3,800
Proceeds from maturities of available-for-
sale securities 1,528 2,246
Purchase of available-for-sale securities (3,043) (3,731)
Decrease in interest bearing deposits in
other banks - 98
Purchase of premise and equipment (115) (22)
Increase in other real estate - (4)
Proceeds from sale of other real estate - 82
------------ ------------
Net cash used in investing activities (6,773) (4,299)
------------ ------------
Cash flows from financing activities:
Net increase in time deposits 1,703 1,220
Net increase in non-interest bearing,
savings, and NOW deposit accounts 4,934 4,069
Repayment of long-term debt (1) (1)
Repayment of Federal Home Loan Bank advances (13) (79)
Issuance of common stock - 11
Net cash provided by financing ------------ ------------
activities 6,623 5,220
------------ ------------
Net increase in cash and cash equivalents 1,050 1,794
Cash and cash equivalents at beginning of period 9,137 5,633
------------ ------------
Cash and cash equivalents at end of period $ 10,187 7,427
============ ============
</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, 1997 and 1996
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- (In Thousands) ----
<S> <C> <C>
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 575 543
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 93 89
Provision for loan losses 60 80
Loss (gain) on sale of available-for-
sale securities 5 (6)
Decrease in loans held for sale 512 152
Increase in other assets, net (198) (80)
Increase in interest receivable (80) (138)
Increase (decrease) in interest payable 4 (17)
Increase in other liabilities 229 250
----------- -----------
Total adjustments 625 330
----------- -----------
Net cash provided by operating
activities $ 1,200 873
=========== ===========
Supplemental Schedule of Noncash Activities:
Unrealized gain (loss) in values of
securities available-for-sale, net
of income tax benefits of $99,000
and $181,000, respectively for the
quarters ended March 31, 1997 and
1996, respectively. $ (162) (296)
=========== ===========
</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, 1997 and December 31, 1996, and the results of operations for
the three months ended March 31, 1997 and 1996 and cash flows for the three
months ended March 31, 1997 and 1996. 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 1996 Annual Report to
stockholders. The results for interim periods are not necessarily indicative
of results to be expected for the complete fiscal year.
Certain reclassifications have been made to the 1996 amounts to conform to the
March 31, 1997 presentation.
Allowance for Loan Losses
Transactions in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Balance, January 1, 1997 and 1996,
respectively $ 1,541 1,246
Add (deduct):
Losses charged to allowance (26) (25)
Recoveries credited to allowance 10 9
Provision for loan losses 60 80
-------------- --------------
Balance, March 31, 1997 and 1996,
respectively $ 1,585 1,310
============== ==============
</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. On
April 18, 1996 the stockholders approved a two-for-one stock split effective
for shareholders of record on May 1, 1996. The weighted average number of
shares outstanding used in the computation of earnings per share has been
retroactively adjusted to reflect the stock split.
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 1996 Annual Report to stockholders for a complete discussion of
factors that impact liquidity, capital and the results of operations.
Management's discussion and analysis may include forward-looking
statements. Many factors affect First Financial Corporation's (the "Company")
financial condition and profitability, including changes in economic
conditions, the volatility of interest rates, political events and competition
from other providers of financial services. Because these factors are
unpredictable and beyond the Company's control, earnings may fluctuate from
period to period. The purpose of this discussion and analysis is to provide
Form 10-QSB readers with information relevant to understanding and assessing
the financial condition and results of operations of the Company.
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. 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 $7,297,000 of securities scheduled to mature
or reprice in the next twelve months.
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
A secondary source of liquidity is the Bank's loan portfolio. At
March 31, 1997 commercial loans of approximately $28 million and other loans
(mortgage and consumer) of approximately $56 million either will become due or
will be subject to rate adjustments within twelve months from the respective
date. Continued emphasis is placed on structuring adjustable rate loans.
As for liabilities, certificates of deposit of $100,000 or greater of
approximately $26 million will become due during the next twelve months. The
Bank's deposit base increased approximately $6.6 million during the quarter
ended March 31, 1997.
The Company also has the ability to meet its liquidity needs through
advances from the Federal Home Loan Bank. At March 31, 1997, the Bank had
$980,000 of these advances.
As of March 31, 1997, the Bank's asset sensitivity was 5.6% (the
excess of earning assets over interest sensitive liabilities 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 22.4% at March 31, 1997 and 22.9% at December 31, 1996.
Capital Resources
A primary source of capital is internal growth through retained
earnings. The ratio of stockholders' equity to total assets was 7.1% at
March 31, 1997 and 7.2% at December 31, 1996. Total assets increased 4.0%
during the three months ended March 31, 1997. Cash dividends of $.20 per share
were declared during the year ended December 31, 1996. Cash dividends will be
declared in 1997 only in the discretion of the Board of Directors to the extent
of available profits. 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 branch described below.
The FDIC, which is the subsidiary's primary federal regulator, has
specific 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 of Plan of Operation
The following schedule details the Company's risk-based capital at
March 31, 1997 (excluding the effect of the adoption of SFAS No. 115):
<TABLE>
<CAPTION>
In Thousands
(except percentages)
<S> <C>
Tier I capital:
Stockholders' equity $ 13,719
Tier II capital:
Allowable allowance for loan losses
(limited to 1.25% of risk-weighted
assets) 1,585
--------------
Total capital $ 15,304
==============
Risk-weighted assets $ 133,012
==============
Risk-based capital ratios:
Tier I capital ratio 10.31%
==============
Tier II capital ratio 11.51%
==============
</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
March 31, 1997 and December 31, 1996, 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, 1997 was 7.21%.
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 have 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 believes various combinations
of retained earnings, possible additional capital stock issues, possible
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
enhances flexibility in the expansion of First Bank's business and enables the
Bank to be more responsive to its customers' broadening and changing financial
needs. In particular, the holding company structure provides greater
flexibility in raising additional capital for First Bank. Greater flexibility
in raising capital is important in seeking 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
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 some
liquidity in the shares. During the quarter ended March 31, 1997, the Company
did not issue or redeem any shares of its common voting stock. No shares of
the Company's common voting stock were redeemed for the year ending December
31, 1996. Privately negotiated trades may involve the Company, its directors
and officers and, accordingly, may not be reliable indicators of value. All
shares of common stock have been retroactively adjusted for a two-for-one stock
split approved on April 18, 1996.
In April, 1993, the stockholders approved a stock option plan whereby
159,000 shares of the Company's stock is available for issuance to directors,
officers and employees of the Company. At December 31, 1996, 79,400 shares of
the options had been granted at $10 per share (1,320 shares have been exercised
at March 31, 1997); 2,000 shares had been granted at $12 per share (200 shares
have been exercised at March 31, 1997), 4,000 shares had been granted at $13
per share (no shares have been exercised in 1997 as of March 31, 1997), 29,792
shares were granted at $15 per share (170 shares have been exercised in 1997 as
of March 31, 1997) and 528 shares were granted at $19 per share (no shares have
been exercised in 1997 as of March 31, 1997). The options are granted at the
estimated market price of the stock at the date the option was granted. At
March 31, 1997 there were 114,030 shares granted but not exercised. The
options are generally exercisable ratably over a ten year period from the date
granted. At March 31, 1997 options to purchase 43,280 common shares were
available for grant in future years.
At present, the net book value of premises and equipment is 40.2% of
the Company's capital. The subsidiary bank now has a significant presence in
the Wilson County market with offices in Mt. Juliet, Tennessee, Hermitage,
Tennessee and Lebanon, Tennessee. The bank also has a new branch bank facility
in Smyrna, Rutherford County, Tennessee which opened in the fourth quarter of
1996. The Company is also in the process of constructing a new branch bank
facility in Donelson, Tennessee. Management believes that expansion into these
different markets diversifies its risk and provides increased opportunity for
generating growth and profits. At present the ratio of fixed assets to capital
at the subsidiary bank level is 38.2%. 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 $575,000 for the three months ended March 31, 1997
as compared to $543,000 for the same period in 1996. Earnings per share
increased from $.58 in 1996 to $.61 for the same period in 1997.
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 $415,000 or 12.0% during the three months ended March 31, 1997 and
increased $783,000 or 29.4% for the same period in 1996. The increases were
primarily attributable to higher volumes of earning assets. The ratio of
average earning assets to total average assets was 90.4% for the quarter ended
March 31, 1997 and 93.2% for the year ended December 31, 1996.
Interest expense increased by $233,000 for the three months ended
March 31, 1997 or 14.9% compared to $306,000 or 24.3% for the same period in
1996. The increases in 1997 and 1996 can be attributable largely to an
increase in volume and an increase in weighted average interest rates.
The foregoing increases in interest income and interest expenses
resulted in an increase in net interest income of $182,000 or 9.7% during the
first three months of 1997 and $477,000 or 33.9% in the comparable period of
1996.
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 can be expected to decline.
The provision for loan losses was $60,000 for the first three months
of 1997 compared to $80,000 for the same period in 1996. 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, 1997:
<TABLE>
<CAPTION>
Past Due
90 Days Non-Accrual
(In Thousands)
<S> <C> <C>
Real estate loans $ 39 88
Installment loans 52 -
Commercial 132 -
---------- ----------
$ 223 88
========== ==========
Renegotiated loans $ 322 -
========== ==========
</TABLE>
At March 31, 1997, loans, which include the above, totaling $1,169,167
were included in the Company's internal classified loan list. Of these loans
$391,819 are consumer and $777,348 are commercial loans. The collateral values
securing these loans total approximately $2,715,000 ($1,471,000 related to
consumer loans and $1,244,000 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, 1997 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 $60,000 or 15.0% exclusive of any
securities gains during the three months ended March 31, 1997 and decreased
$79,000 or 24.7% for the same period in 1996. The primary increase in
non-interest income resulted from increased service charges on deposit accounts
and 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, 1997 was $170,000 as compared to $157,000 for the period ending March 31,
1996. The increase of $13,000 or 8.2% has been caused by the increase in the
refinancing of mortgage loans as compared to the same period in last year and
the increase in housing development in the subsidiary bank's service area.
Additionally, other fees and commissions increased $10,000 or 20.0%.
Non-interest expense excluding securities transactions increased
$212,000 or 15.3% during the first three months of 1997 and $164,000 or 13.5%
during the same period in 1996. The increases in 1997 and 1996 were primarily
attributable to increases in salaries and employee benefits which is due
toincreased number of employees and increases in annual compensation.
There was a $5,000 security loss in the available-for-sale category
for the three months ended March 31, 1997 as compared to a $6,000 security gain
during the three months ended March 31, 1996.
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 investments, 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) Exhibit 27 Financial Data Schedule (for SEC use only) - This schedule
contains summary financial information extracted from the financial
statements of the Company at March 31, 1997 (unaudited) and is qualified
in its entirety by reference to such financial statements as set forth in
the Company's quarterly report on Form 10-QSB for the period ending
March 31, 1997.
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
15
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Securities Exchange Act,
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 13, 1997 /s/ David Major
-------------------- ---------------------------
David Major
Chairman, President and
Chief Executive Officer
DATE: May 13, 1997 /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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,162
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,025
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,522
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 130,685
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0
0
<COMMON> 2,672
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<SECURITIES-GAINS> (5)
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<EPS-PRIMARY> .61
<EPS-DILUTED> .61
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<ALLOWANCE-DOMESTIC> 1,585
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
