UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition report from ____________to ____________
Commission File Number 0-11889
FIRST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1471963
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1305 MAIN STREET
STEVENS POINT, WISCONSIN 54481
(Address of principal executive office)
Registrant's telephone number, including area code (715) 341-0400
Securities registered pursuant to Section 12(b) of the Act Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class)
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 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
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 or Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
Based upon the closing price of the registrant's common stock as of
February 19, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant is: $826,809,294.
As of February 19, 1997, 36,785,101 shares of the registrant's common
stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE.
Part II:
Portions of First Financial Corporation's 1996 Annual Report to
Shareholders.
Part III:
Portions of definitive proxy statement for the 1997 Annual Meeting of
Shareholders.
PART I
ITEM 1. BUSINESS
First Financial Corporation
First Financial Corporation ("FFC"), which was formed in 1984, conducts
business as a unitary savings and loan holding company. As a Wisconsin
corporation, FFC is authorized to engage in any activity permitted by the
Wisconsin Business Corporation Law.
The principal asset of FFC is all of the outstanding stock of First
Financial Bank ("FF Bank" or the "Bank"). The business of FFC is the business of
the Bank. Other activities of FFC could be funded by dividends paid by the Bank,
borrowings or the issuance of additional shares of capital stock. FFC is
headquartered at 1305 Main Street, Stevens Point, Wisconsin, 54481, and its
telephone number is (715) 341-0400.
First Financial Bank
FF Bank is a federally-chartered, stock savings institution whose
deposits are insured by the Savings Association Insurance Fund ("SAIF"), as
administered by the Federal Deposit Insurance Corporation ("FDIC"). Business is
conducted in both Wisconsin and Illinois through 128 full-service branch offices
and one limited loan origination office. Based on total assets of $5.7 billion
at December 31, 1996, FF Bank is the largest thrift institution headquartered in
Wisconsin. The principal mortgage lending area of FF Bank is Wisconsin and
Illinois. In addition to real estate loans, FF Bank originates significant
volumes of consumer loans, credit card loans and student loans. FF Bank has a
limited volume of commercial business loans arising from a 1994 business
combination. Consumer, home equity and student lending activities are
principally conducted in Wisconsin and Illinois, while the credit card base and
resulting loans are principally centered in the Midwest. Nearly all long-term
fixed-rate real estate mortgage loans generated are sold in the secondary market
and to other financial institutions, with FF Bank retaining the servicing of
those loans. FF Bank offers brokerage services and also operates a full-line
independent insurance agency and a real estate appraisal company.
FF Bank has grown significantly through mergers and acquisitions since
its stock conversion in 1980, when FF Bank had total assets of $244 million and
14 branch offices in central Wisconsin. In 1984, FF Bank and First State Savings
of Wisconsin, concurrently with First State's stock conversion, combined to form
FFC, which operated as a multiple savings and loan holding company from 1984
until late 1985 when FFC acquired First Savings Association of Wisconsin. At
that time, all three institutions were merged together. In 1988, FF Bank
acquired National Savings and Loan Association of Milwaukee, Wisconsin through a
merger conversion. By the end of 1988, FF Bank's total assets had grown to $2.3
billion and FF Bank operated 63 full-service banking offices throughout
Wisconsin.
Beginning in 1990, FF Bank expanded into the southern Illinois
(suburban St. Louis) and Peoria, Illinois markets by acquiring Illini Federal
Savings and Loan Association, Fairview Heights in a voluntary supervisory merger
conversion and by purchasing the deposits and nine branch banking offices of two
former Peoria thrifts from the Resolution Trust Corporation ("RTC"). Also during
1990, FF Bank acquired two western-Wisconsin area branch banking offices from
the RTC. During 1992, FF Bank acquired ten additional branch banking offices in
the Peoria market, including eight from LaSalle Talman Bank, FSB
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and two from the RTC. In 1993, FF Bank acquired Westinghouse Federal Bank, FSB
d/b/a United Federal Bank of Galesburg, Illinois and also purchased the deposits
and the four Quincy, Illinois-area branch banking offices of Citizens Federal
Bank, a FSB.
In 1994, FFC and FF Bank acquired NorthLand Bank of Wisconsin, SSB of
Ashland, Wisconsin through an exchange of stock. Also in 1994, FFC merged First
Financial - Port Savings Bank, FSB of Port Washington, Wisconsin, which had been
acquired by FFC in 1989 and had operated under a separate charter since that
time, into FF Bank.
In 1995, FFC and FF Bank acquired FirstRock Bancorp, Inc. ("FirstRock")
of Rockford, Illinois through an exchange of stock. The five banking offices of
FirstRock's subsidiary, First Federal Savings Bank of Rockford, Illinois were
merged into FF Bank. At the end of 1995, FFC's assets had grown to $5.5 billion.
While pursuing its strategy of expansion by acquisition in Wisconsin
and Illinois, management of FF Bank has also curtailed certain lending
activities outside of the Midwest in recent years. In 1988, FF Bank liquidated
the West Coast mortgage banking operation which FF Bank had acquired as part of
the acquisition of First Savings. This operation had incurred continuing
operating losses. Also, in 1988, 1994 and 1996, FF Bank sold segments of its
credit card loan portfolio, consisting of loans concentrated in California,
Texas, and the Northeastern states. FF Bank's current credit card lending
activities are now focused primarily on Wisconsin, Illinois and other Midwestern
states. During 1989, FF Bank also curtailed manufactured housing lending outside
of the Midwest. Subsequently, in 1994, FF Bank exited the retail manufactured
housing lending business altogether due to competitive practices in the
marketplace.
FF Bank is a member of the Federal Home Loan ("FHL") Bank System. FF
Bank is subject to comprehensive examination, supervision and regulation by the
Office of Thrift Supervision (the "OTS") and the FDIC, and is also regulated by
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") as to reserves required to be maintained against deposits and certain
other matters. FF Bank's limited purpose credit card subsidiary, First Financial
Card Services Bank, N.A. ("FFCSB") is regulated by the Office of the Comptroller
of the Currency ("OCC"). See "Regulation, Legislation and Taxation."
Market Area and Competition
At December 31, 1996, FF Bank conducted business from 128 full-service
branch banking offices located in 60 Wisconsin and 35 Illinois communities. The
offices are located throughout most of Wisconsin and much of Illinois, including
the Peoria, Rockford and suburban St. Louis areas. These offices include 27
locations in the Milwaukee Metropolitan Statistical Area ("MSA"), the largest in
Wisconsin, and 33 locations in the Peoria, Rockford and St. Louis MSAs,
Illinois' largest outside of Chicago.
The counties in Wisconsin and Illinois in which FF Bank has offices had
a total population of 5.3 million in 1990. Between 1980 and 1990, the population
of this area increased 1.3%, compared to 1.2% for the two-state area. The median
household income in these counties was $30,497 according to the 1990 Census,
compared to $31,402 for the two- state area. It increased 62.7% between 1980 and
1990. This area, in both states, contains a diversity of major urban and
suburban areas, smaller less-urbanized communities and predominantly rural
areas. Some of the larger companies headquartered in FF Bank's market
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include A.O. Smith, General Electric Medical Systems, Allen Bradley, Miller
Brewing, Johnson Controls, Caterpillar and Sundstrand.
FF Bank also does business outside of Wisconsin and Illinois. At
December 31, 1996, outstanding credit card accounts of FF Bank were distributed
approximately 52% to Wisconsin residents, 13% to Illinois, 4% to Michigan, 3% to
Texas, 3% to California, 3% to Ohio, 2% to Minnesota, 2% to Missouri, 2% to
Florida, 2% to Indiana and 14% to other states. Consumer and student loans are
made principally to Wisconsin, Illinois and other Midwestern residents.
FF Bank is subject to competition from other savings institutions as
well as commercial banks and credit unions in both attracting and retaining
deposits and in real estate and other lending activities. Competition for
deposits also comes from mutual funds, the stock market, corporate debt and
government securities. Competition for the origination of real estate loans
comes principally from other savings institutions, commercial banks, credit
unions and mortgage banking companies. Consumer loan competition comes
principally from other savings institutions, commercial banks, automobile
manufacturers and their financing subsidiaries, consumer finance companies and
credit unions.
The methods used by competing financial institutions to attract deposit
accounts include rates of return, types of accounts, convenience of office
locations, and other services. Major factors in competing for loans are interest
rates, loan fee charges, and timing and quality of service to the borrower.
Lending Activities, Including Mortgage-Related Securities
General. FF Bank has traditionally concentrated on origination of
conventional mortgage loans secured by first liens on one- to four-family
residences. FF Bank also makes loans which are insured by the Federal Housing
Authority and the Rural Development program, or partially guaranteed by the
Veterans Administration as well as home loans on behalf of or for immediate sale
to the Wisconsin Department of Veterans Affairs, the Wisconsin Housing and
Economic Development Authority and the Illinois Housing and Development
Authority. At December 31, 1996, FFC's total loan portfolio, including
mortgage-related securities, amounted to $5.23 billion, including mortgage loans
totaling $2.30 billion of which $1.88 billion, or 36.0% of the total loan
portfolio, before net items, were loans secured by one- to four-family
residences. In addition, FF Bank makes long-term, first mortgage real estate
loans on multiple dwelling units and commercial properties, second mortgages and
short-term construction loans. As a means of better matching maturities of its
asset and liability products, FF Bank has also originated other types of
high-yielding loan products which have either a short term to maturity or
contain adjustable-rate features. These products include education loans, credit
card loans, home equity loans and consumer loans. At December 31, 1996, these
loans amounted to $1.28 billion, or 24.4%, before net items, of the total loan
portfolio. FFCSB, which is a wholly-owned operating subsidiary of FF Bank, was
chartered as a limited-purpose national credit card bank by the OCC on July 19,
1996. FFCSB administers FFC's nationwide credit card operations under uniform
rates and fees as established by the State of Wisconsin.
Fixed-rate mortgage loans with terms up to 15 years, mortgage loans with
adjustable interest rates, and consumer and other loans are originated for FF
Bank's own portfolio, while longer-term fixed-rate mortgage loans are originated
for sale in the secondary market. The
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Federal Reserve Board is authorized to promulgate regulations limiting the
maximum interest rate that may apply during the term of adjustable-rate mortgage
loans originated by savings institutions such as FF Bank. Under the regulation
adopted by the Federal Reserve Board, no specific interest rate limit is set,
but lenders are required to impose interest rate caps on all adjustable-rate
mortgage loans and all dwelling-secured consumer loans, including home equity
loans, which provide for interest rate adjustments. The regulation is applicable
to loans made after December 8, 1987.
FF Bank also purchases mortgage-related securities as a lending alternative when
excess liquidity is available. At December 31, 1996, these securities amounted
to $1.65 billion, or 31.6% of the total loan portfolio, before net items. For
further discussion of the mortgage-related securities portfolio, see Notes A and
D to FFC's consolidated financial statements, filed as an exhibit hereto.
-4-
Loan Portfolio Composition. The following table sets forth information
concerning the composition of FFC's total loan portfolio including loans held
for sale and mortgage-related securities, on a consolidated basis, before net
items, by type of loan. Total loans receivable, including net items but
excluding loans held for sale and mortgage-related securities are set forth in
Note E to FFC's consolidated financial statements. The data presented in this
table include the accounts of FFC and FF Bank for all periods, and the balances
of interest-sensitive assets and liabilities arising from the 1992, 1993 and
1994 acquisitions are included from the respective dates of the related
transactions.
December 31,
1996 1995 1994
--------------------- ---------------------- ----------------------
Amount Percent Amount Percent Amount Percent
---------- ------- ---------- ------- ---------- -------
(Dollars in thousands)
Real estate mortgage loans:
Conventional loans:
One- to four-family................. $1,859,815 35.6% $2,006,575 40.6% $2,034,320 40.4%
Multi-family........................ 235,437 4.5 217,288 4.4 212,071 4.2
FHA and VA............................ 28,566 .5 36,093 .7 34,672 .7
Commercial and other real estate...... 175,877 3.4 152,092 3.1 142,634 2.8
---------- ----- ---------- ----- ---------- -----
Total real estate mortgage loans....... 2,299,695 44.0 2,412,048 48.8 2,423,697 48.1
---------- ----- ---------- ----- ---------- -----
Other loans:
Consumer loans........................ 415,155 7.9 362,659 7.3 304,771 6.1
Home equity loans..................... 296,749 5.7 284,700 5.8 240,915 4.8
Education loans....................... 269,633 5.2 240,650 4.9 192,542 3.8
Credit card loans..................... 179,352 3.4 214,107 4.3 200,747 4.0
Manufactured housing loans............ 104,783 2.0 139,385 2.8 152,674 3.0
Other loans........................... 11,728 .2 17,198 .4 19,023 .4
---------- ----- ---------- ----- ---------- -----
Total other loans...................... 1,277,400 24.4 1,258,699 25.5 1,110,672 22.1
---------- ----- ---------- ----- ---------- -----
Total loans receivable before
net items........................... 3,577,095 68.4 3,670,747 74.3 3,534,369 70.2
Mortgage-related securities............ 1,650,437 31.6 1,270,761 25.7 1,502,491 29.8
---------- ----- ---------- ----- ---------- -----
Total loans receivable before
net items and mortgage-
related securities.................... $5,227,532 100.0% $4,941,508 100.0% $5,036,860 100.0%
========== ===== ========== ===== ========== =====
December 31,
1993 1992
---------------------- ----------------------
Amount Percent Amount Percent
---------- ------- ---------- -------
Real estate mortgage loans:
Conventional loans:
One- to four-family................. $$1,915,516 41.7% $1,379,522 35.8%
Multi-family........................ 208,658 4.6 175,511 4.6
FHA and VA............................ 40,133 .9 52,214 1.3
Commercial and other real estate...... 114,431 2.5 123,062 3.2
----------- ----- ---------- -----
Total real estate mortgage loans....... 2,278,738 49.7 1,730,309 44.9
----------- ----- ---------- -----
Other loans:
Consumer loans........................ 180,776 3.9 115,205 3.0
Home equity loans..................... 199,463 4.3 168,434 4.4
Education loans....................... 168,980 3.7 164,149 4.3
Credit card loans..................... 209,414 4.6 178,436 4.6
Manufactured housing loans............ 165,017 3.6 133,195 3.4
Other loans........................... 111 3,298 .1
----------- ----- ---------- -----
Total other loans...................... 923,761 20.1 762,717 19.8
----------- ----- ---------- -----
Total loans receivable before
net items........................... 3,202,499 69.8 2,493,026 64.7
Mortgage-related securities............ 1,387,259 30.2 1,361,068 35.3
----------- ----- ---------- -----
Total loans receivable before
net items and mortgage-
related securities.................... $$4,589,758 100.0% $3,854,094 100.0%
=========== ===== ========== =====
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A summary of FFC's loan portfolio, before net items, including loans held
for sale and mortgage-related securities is set forth below by adjustable-rate
loans, short-term loans and fixed-rate loans.
December 31, 1996 December 31, 1995 December 31, 1994
---------------------- ---------------------- -------------------
Percent Percent Percent
Balance Of Total Balance Of Total Balance Of Total
------- -------- ------- -------- ------- --------
(Dollars in thousands)
Adjustable-rate $ 3,039,868 58.2% $ 2,703,907 54.7% $ 2,709,597 53.8%
Short-term* 373,612 7.1 452,244 9.2 375,681 7.5
Fixed-rate with maturities
greater than three years 1,814,052 34.7 1,785,357 36.1 1,951,582 38.7
----------- ----- ----------- ----- ----------- -----
Total loan portfolio $ 5,227,532 100.0% $ 4,941,508 100.0% $ 5,036,860 100.0%
=========== ===== =========== ===== =========== =====
* Loans or mortgage-related securities with remaining contractual life of three
years or less.
At December 31, 1996, the aggregate balance of loans held by FF Bank
repricing or maturing after December 31, 1997 was $2.44 billion. Of these loans,
$1.85 billion have fixed rates of interest and $587.5 million have terms of
three years or less or adjustable interest rates.
The following table sets forth, at December 31, 1996, the dollar amount
of loans maturing in FF Bank's loan portfolios, before net items, plus loans
held for sale and mortgage-related securities, based on either their contractual
terms to maturity or the remaining time before the loans can be repriced during
the periods indicated.
1998 - 2000 - 2002 - 2007 - After
1997 1999 2001 2006 2016 2016 Total
---------- --------- --------- --------- --------- --------- ----------
(In thousands)
Real estate mortgage loans.................... $ 679,042 $ 416,651 $ 84,218 $ 396,854 $ 551,959 $ 94,611 $2,223,335
Construction mortgage loans................... 23,525 43,892 4,0772 3,414 1,452 -- 76,360
Mortgage-related securities................... 1,305,667 4,766 46,832 29,018 237,712 26,442 1,650,437
Credit card and home equity
loans...................................... 457,548 18,553 -- -- -- -- 476,101
Other loans*.................................. 322,350 95,177 124,725 182,602 76,445 -- 801,299
---------- --------- --------- --------- --------- --------- ----------
Total.................................. $2,788,132 $ 579,039 $ 259,852 $ 611,888 $ 867,568 $ 121,053 $5,227,532
========== ========= ========= ========= ========= ========= ==========
* Includes consumer, manufactured housing, education and small business loans.
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Loan Originations and Purchases. The following table shows loan and
mortgage-related securities originations and purchases for FF Bank on a
consolidated basis for 1996, 1995 and 1994.
Year Ended December 31,
1996 1995 1994
---------- ---------- -------
(In thousands)
Loans originated:
Mortgage loans:
One- to four-family......................................... $ 599,913 $ 476,783 $ 756,589
Multi-family................................................ 43,540 34,350 55,658
Commercial real estate...................................... 67,891 31,087 63,002
Refinanced residential mortgage loans
previously sold and serviced for others.................... -- -- 24,643
---------- ---------- ----------
711,344 542,220 899,892
Consumer loans................................................. 261,769 229,697 237,651
Education loans................................................ 64,979 76,299 53,692
Home equity loans - net increase............................... 12,047 43,785 58,791
Credit card loans - net increase............................... 13,189 13,361 5,124
Manufactured housing loans..................................... -- 18,288 17,144
Other loans.................................................... 1,478 5,560 10,074
Decrease (increase) in undisbursed
loan proceeds................................................. (13,717) 7,817 (10,829)
---------- ---------- ----------
Total loans originated................................ 1,051,089 937,027 1,271,539
Mortgage-related securities purchased............................ 803,280 -- 594,952
---------- ---------- ----------
Total originations and purchases...................... $1,854,369 $ 937,027 $1,866,491
========== ========== ==========
Loan Delinquencies. FF Bank monitors the delinquency status of its loan
portfolio on a regular basis and initiates borrower contact and additional
collection procedures as necessary at an early date. Delinquencies and past due
loans are, however, a normal part of the lending function. When the delinquency
reaches the status of greater than 90 days, the loan is placed on a non-accrual
status until such time as the delinquency is reduced again to 90 days or less.
Non-accrual loans at December 31, 1996 have been presented separately as a part
of the discussion of Non-Performing Assets in Management's Discussion and
Analysis, filed as an exhibit hereto.
Delinquencies of 30 to 90 days are summarized as follows:
Balance At December 31,
1996 1995
------ -----
(In thousands)
Total 30 to 90 Day Delinquent Loans
Residential real estate loans $ 7,241 $ 9,138
Manufactured housing loans 2,314 3,654
Credit card loans 2,863 3,870
Commercial real estate loans 125 909
Consumer and other loans 1,658 815
Student loans 23,034 18,438
------- -------
$37,235 $36,824
======= =======
At December 31, 1996, the 30 to 90 day delinquencies increased
approximately $400,000 to $37.2 million from $36.8 million at year end 1995. As
a percent of total loans receivable, loan delinquencies increased from 1.02% at
the end of 1995 to 1.06% at December 31, 1996.
The most significant factor in the overall increase was the increase of
$4.6 million in student loan delinquencies of 30 to 90 days from year end 1995
to December 31, 1996.
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These loans are government guaranteed and the servicing of this portfolio is
performed by a third party under contract. Excluding student loans, FF Bank's 30
to 90 day delinquencies decreased during 1996 from $18.4 million to $14.2
million.
Decreases in 30 to 90 day delinquencies were experienced in most loan
categories from year end 1995 to December 31, 1996. The more significant
decreases were i) a $1.9 million decrease for residential mortgage loans, ii) a
$1.4 million decrease for manufactured housing loans and iii) a $1.0 million
decrease for credit card loans.
The above changes in 30 to 90 day delinquencies should be considered in
conjunction with the information and review in the Non-Performing Assets section
of Management's Discussion and Analysis, as referred to above.
All of these delinquent loans have been considered by management in its
evaluation of the adequacy of the allowances for loan losses.
Classified Assets. For regulatory purposes, FF Bank utilizes a
comprehensive classification system for thrift institution problem assets. In
general, classified assets include non-performing assets plus other loans and
assets, including contingent liabilities, meeting the criteria for
classification. Non-performing assets include loans or assets which were
previously loans i) which are not performing to a serious degree under the
contractual terms of the original notes or ii) for which known information about
possible credit problems of borrowers causes management to have serious doubts
as to the ability of such borrowers to comply with current contractual terms.
These non-performance characteristics impact directly upon the interest income
normally expected from such assets. Specifically included are the loans held on
a non-accrual basis, real estate judgments subject to redemption, and foreclosed
properties for which FF Bank has obtained title.
Classified assets, including non-performing assets, for FF Bank and FFC,
are set forth in the following table, as of December 31, 1996 and 1995,
respectively.
December 31,
1996 1995
-------- ------
(In thousands)
Classified assets:
Non-performing assets:
Non-accrual loans $ 11,988 $ 12,246
Non-performing mortgage-related securities 12,858
Real estate held for sale by FFC 1,309
Foreclosed properties and other
repossessed assets 3,997 3,379
-------- --------
Total Non-Performing Assets 15,985 29,792
Additional classified performing loans:
Residential real estate 545 1,013
Commercial real estate 6,105 5,890
Consumer (including manufactured housing
and credit cards) 159 280
Commercial business 421 418
Other assets 2,491
Other adjustments - net (1,638) (900)
-------- --------
Total Classified Assets $ 24,068 $ 36,493
======== ========
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During the year ended December 31, 1996, classified assets decreased
$12.4 million to $24.1 million from the December 31, 1995 total of $36.5 million
as the net result of various 1996 events. As a percentage of total assets,
classified assets decreased from 0.67% at December 31, 1995 to 0.42% at December
31, 1996.
The non-performing asset segment of classified assets similarly
decreased $13.8 million during 1996. For further discussions of such
non-performing assets, see Management's Discussion and Analysis, filed as an
exhibit hereto. Other significant changes in classified assets are discussed
below.
Performing commercial real estate loans which had been classified due
to the possible adverse effects of identifiable future events increased $200,000
in 1996. This nominal increase is due to the net effect of i) the inclusion in
this category of two loans of $300,000 each and ii) principal payments received
on other classified performing loans.
Classified performing residential real estate mortgage loans decreased
from 1995 year end from $1.0 million to $500,000 at December 31, 1996. The
$500,000 reduction was primarily the result of continued efforts involving
certain borrowers with groups of loans requiring intensive monitoring and some
charge-offs.
The other asset category relates to a $2.5 million mortgage-related
security which is continuing to perform but for which certain losses have been
absorbed during 1996.
All adversely classified assets at December 31, 1996 have been
considered by management in its evaluation of the adequacy of allowances for
losses.
Investment Activities
In addition to lending activities, FF Bank conducts other investment
activities on an ongoing basis in order to diversify assets, obtain maximum
yield and meet levels of liquid assets required by regulatory authorities.
Investment decisions are made by authorized officers in accordance with policies
established by the Board of Directors. In addition to satisfying regulatory
liquidity requirements, investments are used as part of FF Bank's asset and
liability program to minimize FF Bank's vulnerability to changing interest
rates. At December 31, 1996, 41.1% of FF Bank's investments mature or reprice in
one year or less, and 80.6% mature or reprice in five years or less.
For a breakdown of investment securities held by FF Bank at certain
dates, see Note C to FFC's consolidated financial statements, filed as an
exhibit hereto.
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The following table sets forth the maturity/repricing characteristics
of FF Bank's investment securities at December 31, 1996 and the weighted average
yields of such securities.
After One, But After Five, But
Within One Year Within Five Years Within 10 Years After 10 Years
----------------- ----------------- ----------------- ---------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in thousands)
U.S. Government and agency
obligations.................. $ 22,056 5.19% $ 84,705 6.07% $ 140 7.00% $ 41,440 6.94%
Interest-earning deposits
in banks..................... 18,043 5.16
Federal funds sold............... 2,513 6.50
Corporate and bank notes
receivable................... 583 4.80
State and municipal..............
obligations................. 450 5.00 337 7.45 262 8.00
Adjustable-rate mortgage
mutual fund.................. 44,938 6.11
--------
Total........................ $ 88,583 5.68% $ 85,042 6.08% $ 402 7.65% $ 41,440 6.94%
======== ======== ======== ========
Sources of Funds
Deposit accounts, sales of loans in the secondary market and loan
repayments are the primary sources of funds for use in lending and for other
general business purposes. In addition, FF Bank derives funds from maturity of
investments, advances from the FHL Bank and other borrowings. Repayments of
loans and mortgage-related securities are a relatively stable source of funds,
while deposit inflows and outflows are significantly influenced by general
interest rates and money market and economic conditions. Borrowings may be used
on a short-term basis to compensate for reductions in normal sources of funds,
such as deposit inflows at less than projected levels. They may also be used on
a longer-term basis to support expanded lending and investment activities. FF
Bank has not generally solicited deposits outside the market area served by its
offices and has no brokered deposits at December 31, 1996.
The following table sets forth certain information as to FFC's advances
and other borrowings at the dates and for the periods indicated. See Note J to
FFC's consolidated financial statements, incorporated herein by reference.
December 31,
1996 1995 1994
-------- -------- ------
(In thousands)
Short-term borrowings.......................................... $ 54,090 $ 25,972 $ 13,127
FHL Bank advances.............................................. 703,700 475,368 622,209
Subordinated notes............................................. -- 54,925 54,977
Industrial development revenue bonds........................... 6,120 6,219 6,315
Collateralized mortgage obligations............................ 5,616 8,024 11,818
-------- -------- --------
Total borrowings........................................ $769,526 $570,508 $708,446
======== ======== ========
Weighted average interest cost of total
borrowings during the year................................. 5.69% 6.45% 5.58%
Average month-end balance of short-term
borrowings................................................. $ 92,984 $ 59,092 $ 14,006
Weighted average interest rate of short-term
borrowings during the year................................. 5.48% 5.91% 6.02%
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Weighted average interest rate of short-term
borrowings at end of year.................................. 5.42% 5.89% 5.76%
Service Corporations and Operating/Finance Subsidiaries
FF Bank has i) five wholly-owned service corporations, ii) two operating
subsidiaries, and iii) two limited-purpose finance subsidiaries.
Appraisal Services, Inc.
First Financial Card Services Bank, N.A. (operating subsidiary)
First Financial Investments, Inc. (operating subsidiary)
First Service Corporation of Wisconsin
Illini Service Corporation
Mortgage Finance Corporation
UFS Capital Corporation and FFS Funding Corp., Inc. (finance subsidiaries)
Wisconsin Insurance Management, Inc.
Employees of FFC
At December 31, 1996, FFC and its subsidiaries employed 1,376 full-time
employees and 402 part-time employees. FFC promotes equal employment opportunity
and considers its employee relations to be good. FFC's employees are not
represented by any collective bargaining group.
-11-
Executive Officers
The following table sets forth information regarding each of the
executive officers of FFC and FF Bank:
Age At
Executive December 31, Business Experience
Officer 1996 During Past Five Years
John C. Seramur 54 Mr. Seramur joined FF Bank in 1966 and serves as
Director, President, Chief Executive Officer and
Chief Operating Officer of FFC and FF Bank.
Robert M. Salinger 46 Mr. Salinger joined FFC as Corporate Secretary and
General Counsel in 1985. He also serves as an
Executive Vice President of FF Bank. In 1984, he
had served as General Counsel and Corporate
Secretary for an institution acquired by FFC. Prior
to 1984, he was a partner in the law firm of Petrie
& Stocking, S.C., and associated with the law firm
of Whyte, Hirschboeck & Dudek, S.C.
Thomas H. Neuschaefer 50 Mr. Neuschaefer joined FF Bank in 1988 and serves
as Vice President, Treasurer and Chief Financial
Officer of FFC. He also serves as Executive Vice
President-Finance of FF Bank. From 1978 to 1988, he
served as Chief Financial Officer of another
institution acquired by FFC. Prior to 1978, he was
associated with the national accounting firm of
Ernst & Young LLP.
Donald E. Peters 47 Mr. Peters joined FF Bank in 1982 and serves as
Executive Vice President - Retail Banking of FF
Bank. Prior to 1982, he was an officer of another
thrift institution.
Harry K. Hammerling 46 Mr. Hammerling joined FF Bank in 1984 and serves as
Executive Vice President - Administration and
Servicing for FF Bank. From 1972 to 1984, he served
as an officer of a predecessor of FF Bank.
Kenneth F. Csinicsek 57 Mr. Csinicsek joined FF Bank in 1987 and serves as
Senior Vice President of Marketing and Investor
Relations. Prior to joining FF Bank, he served as
president of another thrift institution for two
years and operated two financial institution
consulting firms over a thirteen year period.
-12-
Regulation, Legislation and Taxation
FFC, as a savings and loan holding company, and FF Bank, as a federally
chartered savings bank, are subject to extensive regulation, supervision and
examination by the OTS as their primary federal regulator. FF Bank also is
subject to regulation, supervision and examination by the FDIC and as to certain
matters by the Federal Reserve Board. FF Bank's wholly owned operating
subsidiary, FFCSB, is a limited purpose national credit card bank which is
regulated by the OCC. See "Management's Discussion and Analysis" and "Notes to
Consolidated Financial Statements" as to the impact of certain laws, rules and
regulations on the operations of FFC and FF Bank. Set forth below is a
description of certain recent regulatory developments.
In September 1996, legislation (the "1996 Legislation") was enacted to
address the undercapitalization of the SAIF, of which FF Bank is a member. As a
result of the 1996 Legislation, the FDIC imposed a one-time special assessment
of .657% on deposits insured by the SAIF as of March 31, 1995. FF Bank incurred
a one-time charge of $28.8 million (before taxes) to pay for the assessment
based on its level of SAIF deposits as of March 31, 1995. After the SAIF was
deemed to be recapitalized, FF Bank's deposit insurance premiums to the SAIF
were reduced as of September 30, 1996. FF Bank expects that its future deposit
insurance premiums will continue to be lower than the premiums it paid prior to
the recapitalization.
The 1996 Legislation also contemplates the merger of the SAIF with the
Bank Insurance Fund (the "BIF"), which generally insures deposits in national
and state-chartered banks. The combined deposit insurance fund, which will be
formed no earlier than January 1, 1999, will insure deposits at all FDIC insured
depository institutions. As a condition to the combined insurance fund, however,
no insured depository institution can be chartered as a federal savings
association. The Secretary of the Treasury is required to report to the Congress
no later than March 31, 1997 with respect to the development of a common charter
for all federally chartered depository institutions. If legislation with respect
to the development of a common charter is enacted, FF Bank may be required to
convert its federal charter to either a new federal type of bank charter or to a
state depository institution charter. Future legislation also may result in FFC
becoming regulated as a bank holding company by the Federal Reserve Board rather
than a savings and loan holding company regulated by the OTS. Regulation by the
Federal Reserve Board could subject FFC to capital requirements that are not
currently applicable to FFC as a holding company under OTS regulations and may
result in additional statutory limitations on the type of business activities in
which FFC may engage at the holding company level. FFC and FF Bank are unable to
predict whether such legislation will be enacted.
The 1996 Legislation also contained several provisions that could
impact operations of FF Bank, including regulatory burden relief, environmental
lender liability relief, and less restrictive limitations on investments in
student loans, credit card loans and commercial loans. Furthermore, the
qualified thrift lender ("QTL") test that FF Bank must comply with was
liberalized to provide that small business, credit card and student loans can be
included in the QTL calculation without any limit, and that FF Bank can qualify
as a QTL by meeting either the QTL test set forth in the Home Owners' Loan Act
or under the definition of a domestic building and loan association as defined
in the Internal Revenue Code of 1986, as amended (the "IRC").
-13-
On August 20, 1996, the President of the United States signed the Small
Business Job Protection Act of 1996 ("the Act"). The Act repealed the "reserve
method" of accounting for bad debts by most thrift institutions, effective for
taxable years beginning after 1995. Most thrift institutions such as FF Bank are
now required to use the "specific charge-off method". The Act also grants
partial relief from reserve recapture provisions which are triggered by the
change in method. This legislation is not expected to have a material impact on
FF Bank's financial condition or results of operations.
During 1996, the OTS continued its comprehensive review of its
regulations to eliminate duplicative, unduly burdensome and unnecessary
regulations concerning lending and investments, corporate governance,
subsidiaries and equity investments, conflicts of interest and usurpation of
corporate opportunity.
The OTS's revised subsidiaries and equity investments regulation
consolidated all OTS regulations that apply to various types of subsidiaries of
federal associations and updates the list of pre-approved service corporation
activities with additional activities that the OTS has deemed to be reasonably
related to the activities of federal savings institutions. The revised corporate
governance regulation is intended to provide greater flexibility with respect to
corporate governance of federal savings institutions, such as FF Bank.
The OTS also converted its policy statement on conflicts of interest to
a regulation that is intended to be based upon common law principles of "duty of
loyalty" and "duty of care." The OTS corporate opportunity regulations and
policy statements also were eliminated and replaced with a standard similar to
common law standards governing usurpation of corporate opportunity, provided
that such activities are in compliance with Sections 23A or 23B of the Federal
Reserve Act.
-14-
ITEM 2. PROPERTIES
At December 31, 1996, FF Bank operated through 128 full-service savings
bank branch offices, one loan origination limited office and one insurance
agency office, with 76 offices located in Wisconsin and 54 in Illinois. The
aggregate net book value at December 31, 1996 of the properties owned or leased,
including headquarters, properties and leasehold improvements at the leased
offices, was $42.4 million. Thirty-six of the office properties are leased and
the leases expire between 1997 and 2056. See Note H to FFC's consolidated
financial statements, filed as an exhibit hereto, for information regarding FF
Bank's premises and equipment. Management believes that all of these properties
are in good condition.
ITEM 3. LEGAL PROCEEDINGS
FFC and FF Bank are involved as plaintiff or defendant in various legal
actions incidental to their business, all of which in the aggregate are believed
by management of FFC not to represent an adverse risk of loss which would be
material to the financial condition or operations of FFC or FF Bank.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference
from Management's Discussion and Analysis filed at Exhibit 13(b) hereto. FFC's
Board of Directors has discretion to declare and pay dividends on FFC's common
stock from time to time under Wisconsin law, unless such payment would render
FFC insolvent.
Also, relative to OTS restrictions on the payment of dividends by FF Bank
to FFC, see Note L to FFC's consolidated financial statements filed at Exhibit
13(a) hereto.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data required by this item is incorporated herein
by reference from "Management's Discussion and Analysis" filed at Exhibit 13(b)
hereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" is filed at Exhibit 13(b) hereto.
-15-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FFC's consolidated financial statements are filed at Exhibit 13(a)
hereto. Quarterly financial information is included as a part of "Management's
Discussion and Analysis of Financial Condition and Results of Operations" filed
at Exhibit 13(b) hereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item regarding directors is incorporated by
reference from pages 5 to 9 and 16 of the proxy statement for FFC's 1997 annual
meeting of shareholders, filed with the Securities and Exchange Commission on
March 10, 1997. Information required by this item regarding executive officers
is included herein at page 12 and regarding directors at pages 5 - 7 of the
proxy statement.
ITEM 11. EXECUTIVE COMPENSATION
The information regarding executive compensation required by this item is
incorporated herein by reference from pages 9 - 15 of the proxy statement for
FFC's 1997 annual meeting of shareholders, filed with the Securities and
Exchange Commission on March 10, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference
from pages 3 - 4 of the proxy statement for FFC's 1997 annual meeting of
shareholders, filed with the Securities and Exchange Commission on March 10,
1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference
from page 16 of the proxy statement for FFC's 1997 annual meeting of
shareholders, filed with the Securities and Exchange Commission on March 10,
1997.
-16-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements of the Registrant
and its subsidiaries, including the related notes and the report of the
independent auditors are incorporated herein by reference from Exhibit 13(a) of
this Report.
Report of Independent Auditors
Consolidated Balance Sheets at December 31, 1996 and 1995.
Consolidated Statements of Income for Each Year in the Three Year Period
Ended December 31, 1996.
Consolidated Statements of Stockholders' Equity for Each Year in the
Three Year Period Ended December 31, 1996.
Consolidated Statements of Cash Flows for Each Year in the Three Year
Period Ended December 31, 1996.
Notes to Consolidated Financial Statements.
(a)(2) All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore, have
been omitted.
(a)(3) The following exhibits are either filed as part of this Report on
Form 10-K or are incorporated herein by reference.
3(a) Articles of Incorporation of Registrant dated February 21,
1984, as amended, and restated on January 18, 1995.
(Incorporated herein by reference to Exhibit 3.1 to
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form S-4 [Registration No. 33-56823] filed on
January 26, 1995).
3(b) Bylaws of the Registrant, as amended on April 17, 1996
(incorporated herein by reference to the Registrant's
Quarterly Report on Form 10-Q filed on August 8, 1996).
4 Form of Certificate of Common Stock (incorporated herein
by reference to Exhibit 4.3 of the Registrant's
Registration Statement on Form S-1 [Registration No.
2-88289] filed on December 7, 1983).
10(a) Employment Contract of Registrant with John C. Seramur
dated January 1, 1989, (incorporated by reference from
Annual Report on Form 10-K for 1989 filed on March 26,
1990).
-17-
10(b) Employment Agreement between Registrant and Robert M.
Salinger dated August 16, 1989,(incorporated by reference
from Annual Report on Form 10-K for 1989 filed on March
26, 1990).
10(c) Stock Option Plan of Registrant (incorporated herein by
reference to Exhibit 10.4 to Amendment No. 2 to
Registrant's Registration Statement on Form S-1
[Registration No. 2-88289] filed on February 14, 1984).
10(d) Supplemental Executive Profit Sharing Plan dated December
21, 1987 (incorporated herein by reference to Exhibit
10(q) to Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form S-1 [Registration No.
33-16948] filed on February 29, 1988).
10(e) Executive Supplemental Life Insurance Plan dated April 10,
1989 (incorporated herein by reference from Annual Report
on Form 10-K for 1989 filed on March 26, 1990).
10(f) Employment Agreement between Registrant and Donald E.
Peters dated August 16, 1989 and amended August 19, 1992.
(Incorporated herein by reference from Annual Report on
Form 10-K for 1992 filed on March 26, 1993.)
10(g) Employment Agreement between Registrant and Harry K.
Hammerling dated August 16, 1989 and amended August 19,
1992. (Incorporated herein by reference from Annual Report
on Form 10-K for 1992 filed on March 26, 1993.)
10(h) Directors' Retirement Plan dated November 18, 1992.
(Incorporated herein by reference from Annual Report on
Form 10-K for 1992 filed on March 26, 1993.)
10(i) Consulting Agreement between Registrant and Robert S.
Gaiswinkler dated January 1, 1993. (Incorporated herein by
reference from Annual Report on Form 10-K for 1992 filed
on March 26, 1993.)
10(j) Deferred Compensation Plan and Trust, dated January 1,
1988 and amended January 1, 1993. (Incorporated herein by
reference from Annual Report on Form 10-K for 1993 filed
on March 29, 1994.)
10(k) Employment Agreement between Registrant and Thomas H.
Neuschaefer dated June 14, 1994. (Incorporated herein by
reference from Annual Report on Form 10-K for 1994 filed
on March 28, 1995.)
10(l) Employment Agreement between Registrant and Kenneth F.
Csinicsek dated June 14, 1994. (Incorporated herein by
reference from Annual Report on Form 10-K for 1994 filed
on March 28, 1995.)
10(m) First Financial Corporation Stock Option Plan III dated
April 24, 1991 and restated August 16, 1995. (Incorporated
herein by reference from annual report on Form 10-K for
1995 filed on March 20, 1996.)
-18-
10(n) First Federal Savings Bank of Rockford, Illinois Employee
Stock Ownership Plan and Trust, amended February 28, 1995
to reflect a) adoption by FF Bank as successor plan
sponsor and b) related amendments thereto. (Incorporated
herein byreference from annual report on Form 10-K for
1995 filed on March 20, 1996.)
10(o) Supplemental Executive Retirement Plan dated August 1,
1989, and amended and restated February 22, 1996.
11 Computation of Earnings Per Share
13(a) Consolidated Financial Statements
13(b) Management's Discussion and Analysis of Financial
Condition and Results of Operations
21 Subsidiaries of the Registrant - as of the date of this
report, the only subsidiary of the Registrant is FF Bank.
23 Consent of Ernst & Young LLP for Registration Statement
No. 2-90005 as filed with the Securities and Exchange
Commission ("SEC") on March 16, 1984, Registration
Statement No. 33-17304 as filed with the SEC on September
17, 1987, Post-Effective Amendment No. 5 to Form S-1 on
Form S-8 [Registration No. 33-16948] as filed with the SEC
on May 12, 1988, Registration Statement No. 33-36295 as
filed with the SEC on August 9, 1990, Registration
Statement No. 33-69856 as filed with the SEC on October 1,
1993, Registration Statement No. 33-51487 filed with the
SEC on January 13, 1994 and Registration Statement No.
33-55823 filed with the SEC on January 27, 1995.
27 Financial Data Schedule
(b) Reports on Form 8-K.
On October 17, 1996, the Registrant filed a Current Report on
Form 8-K with the SEC reporting that FFC had announced a
six-month 5% stock repurchase program.
On November 20, 1996, the Registrant filed a Current Report on
Form 8-K with the SEC reporting that FFC had announced a 5-for-4
stock split.
(c) Exhibits to this Report on Form 10-K required by Item 601 of
Regulation S-K are attached or incorporated herein by reference as stated in the
Index to Exhibits.
(d) The report of independent auditors and the financial statement
schedules listed in subsections (a)(1) and (2) above are filed at Exhibits 13(a)
to this Report on Form 10-K in response to the requirements of Items 8 and 14(d)
of this Report on Form 10-K.
-19-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ John C. Seramur
-----------------------------
John C. Seramur
President
Chief Executive Officer
Date: March 25, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By: /s/ John C. Seramur By: /s/ Thomas H. Neuschaefer
------------------------------------ ----------------------------
John C. Seramur Thomas H. Neuschaefer
President Vice President, Treasurer and
Chief Executive Officer Chief Financial Officer
Director Date: March 25, 1997
Date: March 25, 1997
By: /s/ Robert S. Gaiswinkler
Robert S. Gaiswinkler
Chairman of the Board
Director
Date: March 25, 1997
By: /s/ Gordon M. Haferbecker By: /s/ James O. Heinecke
----------------------------------- ------------------------
Gordon M. Haferbecker James O. Heinecke
Director Director
Date: March 25, 1997 Date: March 25, 1997
-20-
By: /s/ Robert T. Kehr By: /s/ Robert P. Konopacky
------------------------------------- --------------------------
Robert T. Kehr Robert P. Konopacky
Director Director
Date: March 25, 1997 Date: March 25, 1997
By: /s/ Dr. George R. Leach By: /s/ Ignatius H. Robers
------------------------------------ -------------------------
Dr. George R. Leach Ignatius H. Robers
Director Director
Date: March 25, 1997 Date: March 25, 1997
By: /s/ John H. Sproule By: /s/ Ralph R. Staven
-------------------------------------- ----------------------
John H. Sproule Ralph R. Staven
Director Director
Date: March 25, 1997 Date: March 25, 1997
By: /s/ Norman L. Wanta By: /s/ Arlyn G. West
------------------------------------ --------------------
Norman L. Wanta Arlyn G. West
Director Director
Date: March 25, 1997 Date: March 25, 1997
-21-
EXHIBIT INDEX
3(a) Articles of Incorporation of Registrant dated February 21, 1984,
as amended, and restated on January 18, 1995. (Incorporated
herein by reference to Exhibit 3.1 to Pre-Effective Amendment
No. 1 to Registrant's Registration Statement on Form S-4
[Registration No. 33-56823] filed on January 26, 1995).
3(b) Bylaws of the Registrant, as amended on April 17, 1996
(incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on August 8, 1996).
4 Form of Certificate of Common Stock (incorporated herein by
reference to Exhibit 4.3 of the Registrant's Registration
Statement on Form S-1 [Registration No. 2-88289] filed on
December 7, 1983).
10(a) Employment Contract of Registrant with John C. Seramur dated
January 1, 1989, (incorporated by reference from Annual Report
on Form 10-K for 1989 filed on March 26, 1990).
10(b) Employment Agreement between Registrant and Robert M. Salinger
dated August 16, 1989, (incorporated by reference from Annual
Report on Form 10-K for 1989 filed on March 26, 1990).
10(c) Stock Option Plan of Registrant (incorporated herein by
reference to Exhibit 10.4 to Amendment No. 2 to Registrant's
Registration Statement on Form S-1 [Registration No. 2-88289]
filed on February 14, 1984).
10(d) Supplemental Executive Profit Sharing Plan dated December 21,
1987 (incorporated herein by reference to Exhibit 10(q) to
Post-Effective Amendment No. 2 to Registrant's Registration
Statement on Form S-1 [Registration No. 33- 16948] filed on
February 29, 1988).
10(e) Executive Supplemental Life Insurance Plan dated April 10, 1989
(incorporated herein by reference from Annual Report on Form
10-K for 1989 filed on March 26, 1990).
10(f) Employment Agreement between Registrant and Donald E. Peters
dated August 16, 1989 and amended August 19, 1992. (Incorporated
herein by reference from Annual Report on Form 10-K for 1992
filed on March 26, 1993.)
10(g) Employment Agreement between Registrant and Harry K. Hammerling
dated August 16, 1989 and amended August 19, 1992. (Incorporated
herein by reference from Annual Report on Form 10-K for 1992
filed on March 26, 1993.)
10(h) Directors' Retirement Plan dated November 18, 1992.
(Incorporated herein by reference from Annual Report on Form
10-K for 1992 filed on March 26, 1993.)
10(i) Consulting Agreement between Registrant and Robert S.
Gaiswinkler dated January 1, 1993. (Incorporated herein by
reference from Annual Report on Form 10-K for 1992 filed on
March 26, 1993.)
10(j) Deferred Compensation Plan and Trust, dated January 1, 1988 and
amended January 1, 1993. (Incorporated herein by reference from
Annual Report on Form 10-K for 1993 filed on March 29, 1994.)
10(k) Employment Agreement between Registrant and Thomas H.
Neuschaefer dated June 14, 1994. (Incorporated herein by
reference from Annual Report on Form 10-K for 1994 filed on
March 28, 1995.)
10(l) Employment Agreement between Registrant and Kenneth F. Csinicsek
dated June 14, 1994. (Incorporated herein by reference from
Annual Report on Form 10-K for 1994 filed on March 28, 1995.)
10(m) First Financial Corporation Stock Option Plan III dated April
24, 1991 and restated August 16, 1995. (Incorporated herein by
reference from annual report on Form 10-K for 1995 filed on
March 20, 1996.)
10(n) First Federal Savings Bank of Rockford, Illinois Employee Stock
Ownership Plan and Trust, amended February 28, 1995 to reflect
a) adoption by FF Bank as successor plan sponsor and b) related
amendments thereto. (Incorporated herein by reference from
annual report on Form 10-K for 1995 filed on March 20, 1996.)
10(o) Supplemental Executive Retirement Plan dated August 1, 1989, and
amended and restated February 22, 1996.
11 Computation of Earnings Per Share
13(a) Consolidated Financial Statements
13(b) Management's Discussion and Analysis of Financial Condition and
Results of Operations
21 Subsidiaries of the Registrant - as of the date of this report,
the only subsidiary of the Registrant is FF Bank.
23 Consent of Ernst & Young LLP for Registration Statement No.
2-90005 as filed with the Securities and Exchange Commission
("SEC") on March 16, 1984, Registration Statement No. 33-17304
as filed with the SEC on September 17, 1987, Post-Effective
Amendment No. 5 to Form S-1 on Form S-8 [Registration No.
33-16948] as filed with the SEC on May 12, 1988, Registration
Statement No. 33-36295 as filed with the SEC on August 9, 1990,
Registration Statement No. 33-69856 as filed with the SEC on
October 1, 1993, Registration Statement No. 33-51487 filed with
the SEC on January 13, 1994 and Registration Statement No.
33-55823 filed with the SEC on January 27, 1995.
27 Financial Data Schedule