. 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
MARCH 31, 1995
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 March 31, 1995
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 March 31, 1995 were outstanding 5,496,593 shares without par value, of
the registrant.
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FIRST FINANCIAL CORPORATION
FORM 10-Q
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Statements of Condition............................3
Consolidated Statements of Income...............................4
Consolidated Statements of Cash Flows...........................5
Notes to Consolidated Financial Statements......................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............7
PART II. Other Information:
Item 4. Submission of Matters to a Vote of
Security Holders..........................................9
Signatures...........................................................10
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FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
March 31, December 31,
1995 1994
(Dollar amounts in thousands)
Cash and due from banks $48,473 $51,947
Federal funds sold and securities purchased under
agreements to resell 2,000 23,725
Investments:
Held to Maturity ( market value of $179,496 and
$168,879, respectively) 180,933 174,646
Available-For-Sale 221,428 178,272
Loans:
Commercial, financial and agricultural 163,334 163,268
Real estate - construction 20,525 20,446
Real estate - mortgage 430,460 424,427
Installment 189,409 185,533
Lease financing 4,914 5,259
808,642 798,933
Less:
Unearned income 1,600 1,882
Allowance for possible loan losses 9,875 9,649
797,167 787,402
Accrued interest receivable 9,492 9,704
Premises and equipment 20,166 20,011
Other assets 12,755 14,132
TOTAL ASSETS $1,292,414 $1,259,839
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposit:
Noninterest-bearing $122,986 $125,106
Interest-bearing:
Certificates of deposit of $100,000 or more 112,446 109,306
Other interest-bearing deposits 789,267 758,954
1,024,699 993,366
Short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 62,901 66,685
Treasury tax and loan open-end note 2,739 5,406
Advances from Federal Home Loan Bank 51,127 46,272
116,767 118,363
Other liabilities 10,342 9,919
Long-term debt 6,662 7,470
Long-term advances from Federal Home Loan Bank 17,075 18,168
TOTAL LIABILITIES 1,175,545 1,147,286
Shareholders' equity:
Common stock, $.125 stated value per share;
authorized 10,000,000 shares; issued
5,541,354 shares for 1995 and 1994, including 693 693
treasury shares of 44,766 for 1995 and 19,600 for 1994
Additional capital 25,498 25,498
Retained earnings 92,119 89,399
Unrealized gains(losses) on AFS securities, net of tax -36 -2,429
Less treasury shares, at cost -1,405 -608
TOTAL SHAREHOLDERS' EQUITY 116,869 112,553
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,292,414 $1,259,839
The accompanying notes are an integral part of the
consolidated financial statements.
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FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
1995 1994
(Amounts in thousands,
except per share data)
INTEREST INCOME:
Loans $17,010 $14,754
Investment securities:
Taxable 4,466 3,838
Tax-exempt 1,760 1,591
6,226 5,429
Other interest income 191 84
TOTAL INTEREST INCOME 23,427 20,267
INTEREST EXPENSE
Deposits 9,932 7,723
Other 1,900 1,192
TOTAL INTEREST EXPENSE 11,832 8,915
NET INTEREST INCOME 11,595 11,352
Provision for possible loan losses 540 963
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 11,055 10,389
OTHER INCOME
Trust department income 315 271
Service charges on deposit accounts 289 300
Other service charges and fees 778 636
Investment securities gains (losses) 6 71
Other 291 318
1,679 1,596
OTHER EXPENSES
Salaries and employee benefits 4,328 4,319
Occupancy expense 633 469
Equipment expense 496 496
Data processing expense 535 486
FDIC insurance expense 543 546
Other 2,453 2,267
8,988 8,583
INCOME BEFORE INCOME TAXES 3,746 3,402
Income Tax Expense 1,026 892
NET INCOME 2,720 2,510
EARNINGS PER SHARE $0.49 $0.45
Weighted average number of shares outstanding 5,512 5,541
The accompanying notes are an integral part of the consolidated financial statements.
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FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,720 $2,510
Adjustment to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 540 963
Provision for depreciation and amortization 595 949
Net decrease in accrued interest receivable 212 957
Other, net 1,351 1,314
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,418 6,693
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase (decrease) from purchases and maturities of
interest-bearing deposits with financial institutions 0 577
Sales and maturities of investment securities 0 95,611
Maturities of held-to-maturity securities 13,345 0
Sales and maturities of available-for-sale securities 2,976 0
Purchases of investment securities 0 -80,083
Purchases of investment securities:
Held-to-maturity security -10,632 0
Available-for-sale security -50,766 0
Loans made to customers, net of repayments -10,414 4,553
Net decrease in federal funds sold 21,725 1,739
Additions to premises and equipment -619 -529
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES -34,385 21,868
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase from sales and
redemptions of certificates of deposit 73,572 16,821
Net decrease in other deposits -42,239 -20,074
Net decrease in short-term borrowings - 1,597 -12,730
Cash dividends -1,546 -1,469
Purchase of treasury stock -797 0
Net decrease from long-term debt -1,897 -5,315
Repayments of long-term debt -3 -43
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 25,493 -22,810
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -3,474 5,751
CASH AND CASH EQUIVALENTS, BEGINNING OF QUARTER 51,947 43,460
CASH AND CASH EQUIVALENTS, END OF QUARTER $48,473 $49,211
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the quarter for interest $ 9,810 $8,454
Income taxes paid $900 $70
The accompanying notes are an integral part of the consolidated financial statements.
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FIRST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Accounting Policies
The accompanying March 31, 1995 and 1994 consolidated financial
statements are unaudited. The December 31, 1994, consolidated statement of
condition amounts are as reported in the Corporation's 1994 annual report.
The significant accounting policies followed by First Financial
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.
Effective January 1, 1995, the Corporation adopted Statement of
Financial Accounting Standard (SFAS) No. 114, "Accounting by creditors for
Impairment of a Loan" which had no material effect on the Corporation's
consolidated financial statements.
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FIRST FINANCIAL CORPORATION
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The purpose of the review is to point out key factors in First
Financial's recent performance, compared with earlier periods. The review
should be read in conjunction with the financial statements beginning on Page
3 of this report. All figures are for the consolidated entities. It is
presumed the readers of these financial statements and the following narrative
have previously read the Corporation's annual report for 1994.
Earnings Analysis
Summary of Operating Results
Net income for current quarter of $2,720,000 represents a $210,000
increase or 8.4% from the $2,510,000 reported for the same quarter of 1994.
Earnings per share increased to $.49 from $.45 for the same period of 1994.
Net Interest Income
First Financial 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.
Although net interest income increased $243,000 or 2.1% as compared to the
same period of 1994, the spread in interest rates decreased from 4.26% in 1994
to 4.17% in 1995. This decrease was caused by a higher cost paid for interest
bearing-liabilities as the result of more competition for funds.
Other Income
Other income for the three month period ending March 31, 1995, as
compared to the same period of 1994 increased $83,000 or 5%. Contributing to
the increase were the moderate increase of trust department income of $44,000
or 16.2% and other service charges and fees of $142,000 or 22.3%. These
increases were offset by lower security gains of $6,000 for the first quarter of
1995 as compared to the gains of $71,000 for the same period of 1994.
Other Expenses
For the first three months of 1995, other expenses increased 4.7% or
$405,000. Most of the components of other expenses increased moderately for
the first quarter as compared to the same period of 1994 due primarily to the
Corporation's overall growth.
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Analysis of Financial Condition
The Corporation's provision for possible loan losses totaled $540,000 in
the first three months of 1995 compared to $963,000 in the same period a year
earlier. The current quarter's provision reflects a general improvement in
the quality of the loan portfolio.
At March 31, 1995, the allowance for possible loan losses was 1.22% of
total loans, net of unearned income. This compares to an allowance of 1.21%
at December 31, 1994. Net chargeoffs for the first three months of 1995 were
$311,000 compared to $1,023,000 for 1994. The ratio of net chargeoffs to
average loans outstanding for the last five years ended December 31, 1994, is
.26%. With this experience and based on management's review of the portfolio,
management believes the allowance of $9,875,000 is adequate.
Liquidity and Interest Rate Sensitivity
The Corporation's objective in liquidity management is to manage the
assets and liabilities to meet the needs of borrowers while allowing for the
possibility of deposit withdrawals.
Part of the strategy in maintaining a satisfactory level of liquidity is
to structure a maturity schedule for the investment and loan portfolios that
will allow for fluctuations in the availability of funds. Within the next
twelve months $107,417,000 of investments will mature, which represents 26.5%
of the investment portfolio. Investments with maturities of one to five years
comprise an additional 50.2% of the investment portfolio.
The investment maturities along with the normal run-off of loans coupled
with a large supply of unpledged securities for repurchase agreements, federal
funds purchased, additional negotiable certificates of deposits, and other
available borrowings affords the Corporation flexibility in funding loan
growth and meeting other market opportunities as they present themselves.
During the next twelve months the Corporation will either reprice or
mature a total of $420,971,000 of assets. In this same period a total of
$513,361,000 of liabilities will either be repriced or mature. Thus, the
ratio of rate sensitive assets to rate sensitive liabilities as measured on a
static basis, is 0.82% as March 31, 1995. The Corporation will continue to
monitor this relationship to determine if it is appropriate in maintaining a
satisfactory level of net interest margin, while also considering interest
rate sensitivity.
Capital Adequacy
As of March 31, 1995, the Corporation's leverage ratio was 9.10% which
compared 9.30% at December 31, 1994.
At March 31, 1995, the Corporation's tier II capital ratio was 15.29%
compared to 15.30% at December 31, 1994.
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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 19, 1995.
(b) The following were elected Directors of the Corporation:
Walter A. Bledsoe, B. Guille Cox, Jr., Thomas T. Dinkel,
Welby M. Frantz, Anton Hulman George, Mari Hulman George,
Gregory L. Gibson, Max Gibson, Norman L. Lowery,
William Niemeyer, Patrick O'Leary, John W. Ragle,
Chapman J. Root II, Donald E. Smith, and Virginia 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, 1994.
No other information is required to be filed under Part II of this
form.
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FIRST FINANCIAL CORPORATION
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: May 10, 1995 By (Signature)
Donald E. Smith, President
Date: May 10, 1995 By (Signature)
John W. Perry, Secretary
Date: May 10, 1995 By (Signature)
Michael A. Carty, Treasurer
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