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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2005
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 [ ].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ].
As of April 30, 2005 were outstanding 13,491,938 shares without par value, of
the registrant.
FIRST FINANCIAL CORPORATION
FORM 10-Q
INDEX
Page No.
--------
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets.................................................................... 3
Consolidated Statements of Income.............................................................. 4
Consolidated Statements of Shareholders' Equity................................................ 5
Consolidated Statements of Cash Flows.......................................................... 6
Notes to Consolidated Financial Statements..................................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk............................... 10
Item 4. Controls and Procedures.................................................................. 11
PART II. Other Information:
Item 2. Changes in Securities and Use of Proceeds................................................ 12
Item 5. Other Information........................................................................ 12
Item 6. Exhibits................................................................................ 13
Signatures....................................................................................... 14
2
Part I - Financial Information
Item 1. Financial Statements
FIRST FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
March 31, December 31,
2005 2004
------------ ------------
(Unaudited)
ASSETS
Cash and due from banks $ 76,266 $ 94,928
Federal funds sold and short-term investments 1,150 5,400
Securities available-for-sale 511,040 507,990
Loans:
Commercial, financial and agricultural 393,012 401,724
Real estate - construction 33,544 32,810
Real estate - mortgage 748,622 753,826
Installment 270,173 272,261
Lease financing 3,213 3,658
------------ ------------
1,448,564 1,464,279
Less:
Unearned income (379) (408)
Allowance for loan losses (20,074) (19,918)
------------ ------------
1,428,111 1,443,953
------------
Accrued interest receivable 11,039 12,016
Premises and equipment, net 31,197 31,154
Bank-owned life insurance 49,795 49,177
Goodwill 7,102 7,102
Other intangible assets 2,953 3,093
Other real estate owned 3,686 3,262
Other assets 25,112 25,917
------------ ------------
TOTAL ASSETS $ 2,147,451 $ 2,183,992
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 176,223 $ 145,852
Interest-bearing:
Certificates of deposit of $100 or more 190,371 184,604
Other interest-bearing deposits 1,099,763 1,112,665
------------ ------------
1,466,457 1,443,121
Short-term borrowings 20,834 75,527
Other borrowings 362,476 362,486
Other liabilities 27,510 34,523
------------ ------------
TOTAL LIABILITIES 1,877,277 1,915,657
------------ ------------
Shareholders' equity
Common stock, $.125 stated value per share;
Authorized shares -- 40,000,000
Issued shares-14,450,966
Outstanding shares -- 13,491,938 in 2005 and 13,535,770 in 2004 1,806 1,806
Additional paid-in capital 67,519 67,519
Retained earnings 217,934 211,623
Accumulated other comprehensive income 5,252 8,357
Treasury shares at cost 959,028 in 2005 and 915,196 in 2004 (22,337) (20,970)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 270,174 268,335
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,147,451 $ 2,183,992
============ ============
See accompanying notes.
3
FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share data)
Three Months Ended
March 31,
2005 2004
----------- -----------
(Unaudited) (Unaudited)
INTEREST INCOME:
Loans, including related fees $ 23,294 $ 22,922
Securities:
Taxable 3,757 3,909
Tax-exempt 1,652 1,841
Other 662 604
--------- ---------
TOTAL INTEREST INCOME 29,365 29,276
--------- ---------
INTEREST EXPENSE:
Deposits 5,953 6,073
Short-term borrowings 198 224
Other borrowings 4,871 5,046
--------- ---------
TOTAL INTEREST EXPENSE 11,022 11,343
--------- ---------
NET INTEREST INCOME 18,343 17,933
Provision for loan losses 2,223 1,923
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 16,120 16,010
--------- ---------
NON-INTEREST INCOME:
Trust and financial services 975 1,013
Service charges and fees on deposit accounts 2,605 2,656
Other service charges and fees 1,617 1,530
Securities gains 6 13
Insurance commissions 1,339 1,388
Sales of mortgage loans 187 411
Gain on life insurance benefit -- 4,113
Other 1,003 1,453
--------- ---------
TOTAL NON-INTEREST INCOME 7,732 12,577
--------- ---------
NON-INTEREST EXPENSE:
Salaries and employee benefits 9,264 9,353
Occupancy expense 989 970
Equipment expense 918 834
Other 4,170 4,375
--------- ---------
TOTAL NON-INTEREST EXPENSE 15,341 15,532
--------- ---------
INCOME BEFORE INCOME TAXES 8,511 13,055
Provision for income taxes 2,200 2,370
--------- ---------
NET INCOME $ 6,311 $ 10,685
========= =========
EARNINGS PER SHARE:
Basic and Diluted $ .48 $ .79
========= =========
Weighted average number of shares outstanding (in thousands) 13,221 13,557
========= =========
See accompanying notes.
4
FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Months Ended
March 31, 2005, and 2004
(Dollar amounts in thousands, except per share data)
(Unaudited)
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Income/(Loss) Stock Total
Balance, January 1, 2004 $1,806 $67,181 $194,294 $11,463 $(19,465) $255,279
Comprehensive income:
Net income 10,685 10,685
Change in net unrealized
gains/(losses) on available
for-sale securities 1,543 1,543
--------
Total comprehensive income 12,228
Treasury stock purchase (1,374) (1,374)
------ ------- -------- ------- --------- --------
Balance, March 31, 2004 $1,806 $67,181 $204,979 $13,006 $(20,839) $266,133
====== ======= ======== ======= ========= ========
Balance, January 1, 2005 $1,806 $67,519 $211,623 $ 8,357 $(20,970) $268,335
Comprehensive income:
Net income 6,311 6,311
Change in net unrealized
gains/(losses) on available
for-sale securities (3,105) (3,105)
--------
Total comprehensive income 3,206
Treasury stock purchase (1,367) (1,367)
------ ------- -------- ------- --------- --------
Balance, March 31, 2005 $1,806 $67,519 $217,934 $ 5,252 $ (22,337) $270,174
====== ======= ======== ======= ========= ========
See accompanying notes.
5
FIRST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands, except per share data)
Three Months Ended
March 31,
2005 2004
---------- ----------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 6,311 $ 10,685
Adjustments to reconcile net income to net cash
provided by operating activities:
Net accretion of discounts on investments (141) (520)
Provision for loan losses 2,223 1,923
Securities gains (losses) (6) (13)
Depreciation and amortization 832 734
Gain on life insurance benefit -- (4,113)
Other, net 2,023 (3,792)
---------- ----------
NET CASH FROM OPERATING ACTIVITIES 11,242 4,904
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of securities available-for-sale 1,629 12,636
Maturities and principal reductions on securities available-for-sale 32,141 17,432
Purchases of securities available-for-sale (41,854) (20,211)
Loans made to customers, net of repayments 12,813 (4,970)
Net change in federal funds sold 4,250 (7,766)
Proceeds from life insurance benefit -- 7,267
Additions to premises and equipment (735) (1,324)
---------- ----------
NET CASH FROM INVESTING ACTIVITIES 8,244 3,064
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits 23,336 (46,852)
Net change in short-term borrowings (54,693) (16,471)
Dividends paid (5,414) (4,889)
Purchase of treasury stock (1,367) (1,374)
Proceeds from other borrowings -- 2,005
Repayments on other borrowings (10) (4,575)
---------- ----------
NET CASH FROM FINANCING ACTIVITIES (38,148) (39,214)
---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (18,662) (31,246)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 94,928 94,198
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 76,266 $ 62,952
========== ==========
See accompanying notes.
6
FIRST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying March 31, 2005 and 2004 consolidated financial statements
are unaudited. The December 31, 2004 consolidated financial statements are as
reported in the First Financial Corporation (the "Corporation") 2004 annual
report. The following notes should be read together with notes to the
consolidated financial statements included in the 2004 annual report filed with
the Securities and Exchange Commission as an exhibit to Form 10-K.
1. The significant accounting policies followed by the Corporation and its
subsidiaries for interim financial reporting are consistent with the accounting
policies followed for annual financial reporting. All adjustments which are, in
the opinion of management, necessary for a fair statement of the results for the
periods reported have been included in the accompanying consolidated financial
statements and are of a normal recurring nature. The Corporation reports
financial information for only one segment, banking.
2. A loan is considered to be impaired when, based upon current information and
events, it is probable that the Corporation will be unable to collect all
amounts due according to the contractual terms of the loan. Impairment is
primarily measured based on the fair value of the loan's collateral. The
following table summarizes impaired loan information:
(000's)
March 31, December 31,
2005 2004
--------- ------------
Impaired loans with related allowance for loan
losses calculated under SFAS No. 114............ $ 18,130 $ 18,822
Interest payments on impaired loans are typically applied to principal
unless collection of the principal amount is deemed to be fully assured, in
which case interest is recognized on a cash basis.
3. Securities
The amortized cost and fair value of the Corporation's investments at
March 31, 2005 and December 31, 2004 are shown below. All securities are
classified as available-for-sale.
(000's) (000's)
March 31, 2005 December 31, 2004
Amortized Cost Fair Value Amortized Cost Fair Value
-------------- ------------ -------------- ------------
United States Government entity
mortgage-backed securities $ 247,797 $ 245,562 $ 227,927 $ 229,028
Collateralized Mortgage Obligations 15,957 15,926 19,895 19,866
State and Municipal Obligations 132,207 138,153 137,206 144,294
Corporate Obligations 102,014 103,101 104,754 106,077
Equity Securities 4,312 8,298 4,280 8,725
------------ ------------ ------------ ------------
$ 502,287 $ 511,040 $ 494,062 $ 507,990
============ ============ ============ ============
4. Short-Term Borrowings
Period - end short-term borrowings were comprised of the following:
(000's)
March 31, December 31,
2005 2004
--------- ------------
Federal Funds Purchased $ 14,636 $ 69,002
Repurchase Agreements 5,571 5,597
Note Payable - U.S. Government 627 928
--------- ---------
$ 20,834 $ 75,527
========= =========
7
5. Other Borrowings
Other borrowings at period-end are summarized as follows:
(000's)
March 31, December 31,
2005 2004
--------- ------------
FHLB advances $ 337,876 $ 337,886
Note payable to a financial institution 18,000 18,000
City of Terre Haute, Indiana economic development revenue bonds 6,600 6,600
--------- ----------
$ 362,476 $ 362,486
========= ==========
6. Components of Net Periodic Benefit Cost
(000's)
Post-Retirement
Pension Benefits Health Benefits
Three Months ended March 31, 2005 2004 2005 2004
------- ------- ------- -------
Service cost $ 701 $ 646 $ 35 $ 21
Interest cost 622 551 80 61
Expected return on plan assets (821) (700) -- --
Amortization of transition obligation -- -- 15 15
Amortization of prior service cost 14 14 --
Amortization of net (gain) loss 62 62 63 34
------- ------- -------
Net Periodic Benefit Cost $ 578 $ 573 $ 193 $ 131
======= ======= ======= =======
Employer Contributions
First Financial Corporation previously disclosed in its financial
statements for the year ended December 31, 2004 that it expected to contribute
$1.5 and $1.2 million respectively to its Pension Plan and ESOP and $300,000 to
the Post Retirement Health Benefits Plan in 2005. A contribution to the Pension
Plan of $350,000 for the quarter ended March 31, 2005 was made on April 11,
2005. First Financial Corporation anticipates contributing an additional $1.1
and $1.2 million respectively to its Pension Plan and ESOP in 2005.
Contributions of $75,000 have been made through the first quarter of 2005 for
the Post Retirement Health Benefits plan. First Financial Corporation
anticipates contributing an additional $225,000 to the Post Retirement Health
Benefits plan in 2005.
ITEMS 2. and 3. Management's Discussion and Analysis of Financial Condition and
Results of Operations and Quantitative and Qualitative Disclosures About Market
Risk
The purpose of this discussion is to point out key factors in the
Corporation's recent performance compared with earlier periods. The discussion
should be read in conjunction with the financial statements beginning on page
three of this report. All figures are for the consolidated entities. It is
presumed the readers of these financial statements and of the following
narrative have previously read the Corporation's annual report for 2004.
Forward-looking statements contained in the following discussion are based
on estimates and assumptions that are subject to significant business, economic
and competitive uncertainties, many of which are beyond the Corporation's
control and are subject to change. These uncertainties can affect actual results
and could cause actual results to differ materially from those expressed in any
forward-looking statements in this discussion.
Summary of Operating Results
Net income for the three months ended March 31, 2005 was $6.3 million
compared to $10.7 million in the same period in 2004. The three months ended
March 31, 2004 net income included $4.1 million non taxable gain on life
insurance benefit. There was no gain on life insurance benefit in 2005. Basic
earnings per share decreased to $0.48 for the first quarter of 2005 compared to
$0.79 for 2004, a 39.2% decrease.
The primary components of income and expense affecting net income are
discussed in the following analysis.
8
Net Interest Income
The Corporation's primary source of earnings is net interest income, which
is the difference between the interest earned on loans and other investments and
the interest paid for deposits and other sources of funds. Net interest income
increased to $18.3 million in the first three months of 2005 from $17.9 million
in the same period in 2004, a 2.3% increase. The net interest margin increased
to 3.92% in 2005 from 3.78% in 2004, a 3.7% increase, driven by a greater
increase in the yield on earning assets than in the average cost of funds.
Interest rate increases in 2005 are a factor in the margin increase.
Non-Interest Income
The Non-interest income for the quarter was $7.7 million. The gain on life
insurance benefit of $4.1 million that was realized during the first three
months of 2004 was the major difference between these results and the $12.6
million of non-interest income for the same period in 2004. The gain on sale of
mortgage loans was less in the first quarter of 2005 by $224,000 than the same
period of 2004 due to a decrease in the volume of loans being sold. Increased
interest rates in the last half of 2004 caused less fixed rate loans to be made
which leads to fewer loans being sold.
Non-Interest Expenses
The Corporation reduced the amount of non-interest expense for the quarter
ended March 31, 2005 compared to the same period in 2004 by $191 thousand or
1.2% Expenses related to the sale of loans were less during the first quarter of
2005 for the same reason discussed in non-interest income. The Corporation has
also realized some cost savings through efficiencies gained from the
consolidation of several of its affiliate banks into the lead bank, First
Financial Bank. Cost increases included merit increases in salaries and higher
benefit costs. Income tax expense remained relatively level, despite higher
pre-tax income in the same period in 2004. The gain from life insurance benefits
is non-taxable. The effective tax rate for both periods was 26%, after adjusting
for the gain on life insurance benefits.
Allowance for Loan Losses
The Corporation's provision for loan losses increased to $2.2 million for
the first three months of 2005 compared to $1.9 million in the same period of
2004. Net charge-offs for the first three months of 2005 were $2.1 million
compared to $1.8 million for the same period in 2004. The allowance for loan
losses has decreased from 1.49% of gross loans, or $21.4 million at March 31,
2004 to 1.38% of gross loans, or $20.1 million at March 31, 2005. Based on
management's analysis of the current portfolio, an evaluation that includes
consideration of historical loss experience and probable incurred losses on
identified problem loans, management believes the allowance is adequate.
Non-performing Loans
Non-performing loans consist of (A) non-accrual loans on which the
ultimate collectability of the full amount of interest is uncertain, (B) loans
which have been renegotiated to provide for a reduction or deferral of interest
or principal because of a deterioration in the financial position of the
borrower, and (C) loans past due ninety days or more as to principal or
interest. A summary of non-performing loans at March 31, 2005 and December 31,
2004 follows:
(000's)
March 31, December 31,
2005 2004
--------- ------------
Non-accrual loans $ 19,827 $ 19,862
Restructured loans 370 430
--------- ---------
20,197 20,292
Accruing loans past due over 90 days 6,585 7,813
--------- ---------
$ 26,782 $ 28,105
========= =========
Ratio of the allowance for loan losses
as a percentage of non-performing loans 75% 71%
9
The following loan categories comprise significant components of the
nonperforming loans:
(000's)
March 31, 2005 December 31, 2004
-------------- -----------------
Non-Accrual Loans:
1-4 family residential $ 978 $ 608
Commercial loans 17,298 17,635
Installment loans 1,551 1,619
----------- -----------
$ 19,827 $ 19,862
=========== ===========
Past due 90 days or more:
1-4 family residential $ 3,633 $ 3,723
Commercial loans 1,500 2,159
Installment loans 1,452 1,931
----------- -----------
$ 6,585 $ 7,813
=========== ===========
Interest Rate Sensitivity and Liquidity
First Financial Corporation has established risk measures, limits and
policy guidelines for managing interest rate risk and liquidity. Responsibility
for management of these functions resides with the Asset Liability Committee.
The primary goal of the Asset Liability Committee is to maximize net interest
income within the interest rate risk limits approved by the Board of Directors.
Interest Rate Risk
Management considers interest rate risk to be the Corporation's most
significant market risk. Interest rate risk is the exposure to changes in net
interest income as a result of changes in interest rates. Consistency in the
Corporation's net interest income is largely dependent on the effective
management of this risk.
The Asset Liability position is measured using sophisticated risk
management tools, including earning simulation and market value of equity
sensitivity analysis. These tools allow management to quantify and monitor both
short-term and long-term exposure to interest rate risk. Simulation modeling
measures the effects of changes in interest rates, changes in the shape of the
yield curve and the effects of embedded options on net interest income. This
measure projects earnings in the various environments over the next three years.
It is important to note that measures of interest rate risk have limitations and
are dependent on various assumptions. These assumptions are inherently uncertain
and, as a result, the model cannot precisely predict the impact of interest rate
fluctuations on net interest income. Actual results will differ from simulated
results due to timing, frequency and amount of interest rate changes as well as
overall market conditions. The Committee has performed a thorough analysis of
these assumptions and believes them to be valid and theoretically sound. These
assumptions are continuously monitored for behavioral changes.
The Corporation from time to time utilizes derivatives to manage interest
rate risk. Management continuously evaluates the merits of such interest rate
risk products but does not anticipate the use of such products to become a major
part of the Corporation's risk management strategy.
The table below shows the Corporation's estimated sensitivity profile as
of March 31, 2005. The change in interest rates assumes a parallel shift in
interest rates of 100 and 200 basis points. Given a 100 basis point increase in
rates, net interest income would increase 4.05% over the next 12 months and
increase 7.53% over the following 12 months. Given a 100 basis point decrease in
rates, net interest income would decrease 2.49% over the next 12 months and
decrease 5.90% over the following 12 months. These estimates assume all rate
changes occur overnight and management takes no action as a result of this
change.
Percentage Change in Net Interest Income
Basis Point ----------------------------------------
Interest Rate Change 12 months 24 months 36 months
- -------------------- ---------- --------- ------------
Down 200 -6.96 -13.87 -18.97
Down 100 -2.49 -5.90 -8.56
Up 100 4.05 7.53 10.97
Up 200 4.65 10.89 16.52
Typical rate shock analysis does not reflect management's ability to react
and thereby reduce the effect of rate changes, and represents a worst-case
scenario.
10
Liquidity Risk
Liquidity is measured by each bank's ability to raise funds to meet the
obligations of its customers, including deposit withdrawals and credit needs.
This is accomplished primarily by maintaining sufficient liquid assets in the
form of investment securities and core deposits. The Corporation has $32.7
million of investments that mature throughout the coming 12 months. The
Corporation also anticipates $82.7 million of principal payments from
mortgage-backed securities. Given the current rate environment, the Corporation
anticipates $16.2 million in securities to be called within the next 12 months.
With these sources of funds, the Corporation currently anticipates adequate
liquidity to meet the expected obligations of its customers.
Financial Condition
Comparing the first quarter of 2005 to the same period in 2004, average
loans were up $16.9 million. Average deposits were up $5.1 million. The
investment portfolio decreased by an average of $64.6 million. Reductions in the
average cash and due from banks balances of $3.3 million combined with the
reduction of investments also allowed the Corporation to reduce borrowings $60.0
million. Average shareholders' equity increased $11.3 million, or 4.3%. This
financial performance increased book value per share 1.8% to $20.02 at March 31,
2005 from $19.67 at March 31, 2004. Book value per share is calculated by
dividing the total shareholders' equity by the number of shares outstanding.
Capital Adequacy
As of March 31, 2005, the most recent notification from the respective
regulatory agencies categorized the Corporation and subsidiary banks as well
capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized the Corporation must maintain minimum total
risk-based, Tier I risk-based and Tier I leverage ratios as forth in the table.
There are no conditions or events since that notification that management
believes have changed the Corporation's category.
To Be Well
March 31, 2005 December 31, 2004 Capitalized
-------------- ----------------- -------------
Total risk-based capital ratio 17.13% 16.55% > or =10.0%
Tier I risk-based capital ratio 15.88% 15.32% > or = 6.0%
Tier I leverage capital ratio 11.87% 11.42% > or = 5.0%
ITEM 4. Controls and Procedures
First Financial Corporation's management is responsible for establishing
and maintaining effective disclosure controls and procedures, as defined under
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. As of
March 31, 2005, an evaluation was performed under the supervision and with the
participation of management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Corporation's disclosure controls and procedures. Based on that evaluation,
management concluded that disclosure controls and procedures as of March 31,
2005 were effective in ensuring material information required to be disclosed in
this Quarterly Report on Form 10-Q was recorded, processed, summarized, and
reported on a timely basis. Additionally, there were no changes in the
Corporation's internal control over financial reporting that occurred during the
quarter ended March 31, 2005 that have materially affected, or are reasonably
likely to materially affect, the Corporation's internal control over financial
reporting.
11
PART II - Other Information
Item 2. Changes in Securities and Use of Proceeds.
(e) Purchases of Equity Securities
The Corporation periodically acquires shares of its common stock
directly from shareholders in individually negotiated transactions. The
Corporation has not adopted a formal policy or adopted a formal program for
repurchases of shares of its common stock. Following is certain information
regarding shares of common stock purchased by the Corporation during the quarter
covered by this report.
(c)
Total Number Of
Shares Purchased As (d)
(a) (b) Part Of Publicly Maximum Number
Total Number Of Average Price Announced Plans Or Of Shares That May
Shares Purchased Paid Per Share Programs * Yet Be Purchased *
---------------- -------------- ------------------- ------------------
January 1 - 31, 2005 0 N/A N/A N/A
February 1 - 28, 2005 24,832 31.54 N/A N/A
March 1 - 31, 2005 19,000 30.76 N/A N/A
Total 43,832 31.20 N/A N/A
* The Corporation has not adopted a formal policy or program regarding
repurchases of its shares of stock.
ITEM 5. Other Information.
On March 8, 2005 First Financial Bank, the wholly-owned subsidiary of
First Financial Corporation, extended the term of the Employment Agreement with
Norman L. Lowery, its President and Chief Executive Officer, effective January
1, 2005. The Employment Agreement is a five-year agreement which may be extended
each year by the Board of Directors for an additional one-year term. Under the
Employment Agreement, Mr. Lowery receives an annual salary equal to his current
salary, which is $417,219 for 2005, subject to increases approved by the Board
of Directors, and is entitled to participate in other bonus and fringe benefit
plans available to the Corporation's and FFB's employees. A copy of the
agreement is attached hereto as Exhibit 10.1.
If Mr. Lowery is terminated for other than "just cause" or is
"constructively discharged," and such termination does not occur within 12
months after a "change in control" (as such terms are defined in the Employment
Agreement), he would receive an amount equal to the sum of his base salary
through the end of the then-current term of the Employment Agreement. He also
would be entitled to elect to receive, at his sole discretion, either (i) cash
in an amount equal to his cost of obtaining all benefits which he would have
been eligible to participate in or receive through the term of the Employment
Agreement, or (ii) continued participation under such benefit plans through the
term of the Employment Agreement, if he continued to qualify for participation
in such benefit plans.
If Mr. Lowery is terminated for other than just cause or is constructively
discharged, and this occurs within 12 months following a change in control, he
would be entitled to an amount equal to or the greater of the compensation and
benefits described above if the termination did not occur within 12 months
following a change in control; or, the product of 2.99 times the sum of his base
salary in effect as of the date of the change in control and an amount equal to
the bonuses received by or payable to him in or for the calendar year prior to
the year in which the change in control occurs; and, at his sole discretion,
either cash in an amount equal to his cost of obtaining for a period of three
years, beginning on the date of termination, all benefits which he was eligible
to participate in or receive, or continued participation under such benefit
plans for a period of three years, beginning on the date of termination, if he
continued to qualify for participation in such benefit plan.
12
ITEM 6. Exhibits.
Exhibit No: Description of Exhibit:
- ----------- -----------------------
3.1 Amended and Restated Articles of Incorporation of First Financial
Corporation, incorporated by reference to the Corporation's Form
10-Q filed for the quarter ended September 30, 2004.
3.2 Code of By-Laws of First Financial Corporation, incorporated by
reference to the Corporation's Form 10-Q filed for the quarter
ended September 30, 2004.
10.1 Employment Agreement for Norman L. Lowery, dated January 1, 2005.
10.2 2001 Long-Term Incentive Plan of First Financial Corporation,
incorporated by reference to the Corporation's Form 10-Q filed
for the quarter ended September 30, 2004.
10.3 2005 Schedule of Director Compensation, incorporated by reference
to the Corporation Form 10-K filed for the fiscal year ended
December 31, 2004.
10.4 2005 Schedule of Named Executive Officer Compensation,
incorporated by reference to the Corporation Form 10-K filed for
the fiscal year ended December 31, 2004.
31.1 Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form
10-Q for the quarter ended March 31, 2005 by Principal Executive
Officer, dated May 10, 2005.
31.2 Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form
10-Q for the quarter ended March 31, 2005 by Principal Financial
Officer, dated May 10, 2005.
32.1 Certification, dated May 10, 2005, of Principal Executive Officer
and Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2004 on Form 10-Q for the quarter ended
March 31, 2005.
13
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, 2005 By /s/ Donald E. Smith
---------------------------------
Donald E. Smith, Chairman
Date: May 10, 2005 By /s/ Norman L. Lowery
---------------------------------
Norman L. Lowery, Vice Chairman
Date: May 10, 2005 By /s/ Michael A. Carty
---------------------------------
Michael A. Carty, Treasurer
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Exhibit Index
Exhibit No: Description of Exhibit:
- ----------- -----------------------
3.1 Amended and Restated Articles of Incorporation of First Financial
Corporation, incorporated by reference to the Corporation's Form
10-Q filed for the quarter ended September 30, 2004.
3.2 Code of By-Laws of First Financial Corporation, incorporated by
reference to the Corporation's Form 10-Q filed for the quarter
ended September 30, 2004.
10.1 Employment Agreement for Norman L. Lowery, dated January 1, 2005.
10.2 2001 Long-Term Incentive Plan of First Financial Corporation,
incorporated by reference to the Corporation's Form 10-Q filed
for the quarter ended September 30, 2004.
10.3 2005 Schedule of Director Compensation, incorporated by reference
to the Corporation Form 10-K filed for the fiscal year ended
December 31, 2004.
10.4 2005 Schedule of Named Executive Officer Compensation,
incorporated by reference to the Corporation Form 10-K filed for
the fiscal year ended December 31, 2004.
31.1 Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form
10-Q for the quarter ended March 31, 2005 by Principal Executive
Officer, dated May 10, 2005.
31.2 Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form
10-Q for the quarter ended March 31, 2005 by Principal Financial
Officer, dated May 10, 2005.
32.1 Certification, dated May 10, 2005, of Principal Executive Officer
and Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2004 on Form 10-Q for the quarter ended
March 31, 2005.
15