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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-16759
 FIRST FINANCIAL CORPORATION
 (Exact name of registrant as specified in its charter)
 INDIANA
    
    35-1546989(State of Incorporation)
    
    (I.R.S. Employer Identification Number)One First Financial PlazaTerre Haute, Indiana
    
    47807(Address of Registrants Principal Executive Offices)
    
    (Zip Code)
 (812) 238-6000
(Registrants Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of Exchange on Which RegisteredCommon Stock, no par value
    
    The NASDAQ Stock Market LLC(NASDAQ Global Select Market)
 Securities registered pursuant to Section 12(g) of the Act:
None
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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Form 10-K Cross-Reference Index
 pagePART IItem 1 Business
    
    
    3Item 1A Risk Factors
    
    
    12Item 1B Unresolved Staff Comments
    
    
    18Item 2 Properties
    
    
    18Item 3 Legal Proceedings
    
    
    19Item 4 (Removed and Reserved)
    
    
    19PART IIItem 5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    19Item 6 Selected Financial Data
    
    
    19Item 7 Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    19Item 7A Quantitative and Qualitative Disclosures about Market Risk
    
    
    19Item 8 Financial Statements and Supplementary Data
    
    
    19Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
    
    
    20Item 9A Controls and Procedures
    
    
    20Item 9B Other Information
    
    
    20PART IIIItem 10 Directors, Executive Officers and Corporate Governance
    
    
    22Item 11 Executive Compensation
    
    
    22Item 12 Security Ownership of Certain Beneficial Owners and Management
and Related Shareholder Matters
    
    
    22Item 13 Certain Relationships and Related Transactions and Director Independence
    
    
    22Item 14 Principal Accountant Fees and Services
    
    
    22PART IVItem 15 Exhibits and Financial Statement Schedules
    
    
    23Signatures
    
    
    24Exhibit 10.1Exhibit 10.3Exhibit 10.4Exhibit 10.8Exhibit 10.9Exhibit 10.10Exhibit 13Exhibit 21Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I
 
 ITEM 1. BUSINESS
  1.
    
    The first 4 paragraphs of Managements Discussion and Analysis on page 45.2.
    
    The first 5 paragraphs of Note 1 to the Consolidated Financial Statements on page 14.
 Regulation and supervision
  Recent Developments
 The Dodd-Frank Act
 
    
    Centralize responsibility for consumer financial protection by creating a new agency,
the Bureau of Consumer Financial Protection, responsible for implementing, examining, and
enforcing compliance with federal consumer financial laws.
 
    
    Create the Financial Stability Oversight Council that will recommend to the Federal
Reserve increasingly strict rules for capital, leverage, liquidity, risk management, and
other requirements as companies grow in size and complexity.
 
    
    Require the OCC to seek to make its capital requirements for national banks, such as the
Bank, countercyclical so that capital requirements increase in times of economic expansion
and decrease in times of economic contraction.
 
    
    Restrict the preemption of state law by federal law and disallow subsidiaries and
affiliates of national banks, such as the Bank, from availing themselves of such
preemption.
 
    
    Provide mortgage reform provisions regarding a customers ability to repay, restricting
variable-rate lending by requiring that the ability to repay variable-rate loans be
determined by using the maximum rate that will apply during the first five years of a
variable-rate loan term, and making more loans subject to provisions for
higher cost loans and new disclosures. In addition, certain compensation for mortgage brokers
based on certain loan terms will be restricted.
  3




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
    
    Require financial institutions to make a reasonable and good faith determination that
borrowers have the ability to repay loans for which they apply. If a financial institution
fails to make such a determination, a borrower can assert this failure as a defense to
foreclosure.
 
    
    Require financial institutions to retain a specified percentage (5% or more) of certain
non-traditional mortgage loans and other assets in the event that they seek to securitize
such assets.
 
    
    Change the assessment base for federal deposit insurance from the amount of insured
deposits to consolidated assets less tangible capital, eliminate the ceiling on the size of
the Deposit Insurance Fund (DIF), and increase the floor on the size of the DIF, which
generally will require an increase in the level of assessments for institutions with assets
in excess of $10 billion.
 
    
    Make permanent the $250,000 limit for federal deposit insurance and provide unlimited
federal deposit insurance until January 1, 2013 for noninterest-bearing demand transaction
accounts at all insured depository institutions.
 
    
    Implement corporate governance revisions, including with regard to executive
compensation, say on pay votes, proxy access by shareholders, and clawback policies which
apply to all public companies, not just financial institutions.
 
    
    Repeal the federal prohibitions on the payment of interest on demand deposits, thereby
permitting depository institutions to pay interest on business transactions and other
accounts.
 
    
    Amend the Electronic Fund Transfer Act (EFTA) to, among other things, give the Federal
Reserve the authority to establish rules regarding interchange fees charged for electronic
debit transactions by payment card issuers having assets over $10 billion and to enforce a
new statutory requirement that such fees be reasonable and proportional to the actual cost
of a transaction to the issuer.
 
    
    Limit the hedging activities and private equity investments that may be made by various
financial institutions.
  S.A.F.E. Act Requirements
  4




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THE CORPORATION
 The Bank Holding Company Act
 Investments, Control, and Activities
   Capital Adequacy Guidelines for Bank Holding Companies
  Tier 1 Capital to Risk-Weighted Assets
    
    
    17.82
    %Total Risk Based Capital to Risk-Weighted Asset
    
    
    16.66
    %Tier 1 Leverage Ratio
    
    
    12.68
    %
 Dividends
  5




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Source of Strength
 THE BANK
 General Regulatory Supervision
  Lending Limits
 Deposit Insurance
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Transactions with Affiliates and Insiders
  
    
    be made on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with third parties; and
 
    
    not involve more than the normal risk of repayment or present other unfavorable
features.
  Dividends
  Community Reinvestment Act
 Capital Regulations
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Tier 1 Capital to Risk-Weighted Assets
    
    
    17.82
    %Total Risk-Based Capital to Risk-Weighted Assets
    
    
    16.66
    %Tier 1 Leverage Ratio
    
    
    12.68
    %
     9




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##### Table of Contents



USA Patriot Act
 Sarbanes-Oxley Act of 2002
 Troubled Asset Relief Program Initiatives to Address Financial and Economic Crises
    10




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##### Table of Contents



Other Regulations
    
    
    Truth-In-Lending Act and state consumer protection laws governing disclosures of
credit terms and prohibiting certain practices with regard to consumer borrowers;
 
    
    Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide
information to enable the public and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the housing needs of the community
it serves;
 
    
    Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination
on the basis of race, creed or other prohibited factors in extending credit;
 
    
    Fair Credit Reporting Act of 1978 and Fair and Accurate Credit Transactions Act of
2003, governing the use and provision of information to credit reporting agencies;
 
    
    Fair Debt Collection Practices Act, governing the manner in which consumer debts may
be collected by collection agencies; and rules and regulations of the various federal
agencies charged with the responsibility of implementing such federal laws.
  
    
    Customer Information Security Guidelines. The federal bank regulatory agencies have
adopted final guidelines (the Guidelines) for safeguarding confidential customer
information. The Guidelines require each financial institution, under the supervision
and ongoing oversight of its Board of Directors, to create a comprehensive written
information security program designed to ensure the security and confidentiality of
customer information, protect against any anticipated threats or hazards to the security
or integrity of such information; protect against unauthorized access to or use of such
information that could result in substantial harm or inconvenience to any customer; and
implement response programs for security breaches.
 
    
    Electronic Funds Transfer Act and Regulation E. The Electronic Funds Transfer Act,
which is implemented by Regulation E, governs automatic deposits to and withdrawals from
deposit accounts and customers rights and liabilities arising from the use of automated
teller machines and other electronic banking service.
 
    
    Gramm-Leach-Bliley Act, Fair and Accurate Credit Transactions Act. The
Gramm-Leach-Bliley Act, the Fair and Accurate Credit Transactions Act, and the
implementing regulations govern consumer financial privacy, provide disclosure
requirements and restrict the sharing of certain consumer financial information with
other parties.
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Enforcement Powers
  Effect of Governmental Monetary Policies
 Available Information
  
 ITEM 1A. RISK FACTORS
 Difficult Conditions In The Capital Markets And The Economy Generally May Materially Adversely
Affect Our Business And Results Of Operations.
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The Soundness Of Other Financial Institutions Could Adversely Affect Us.
  There Can Be No Assurance That Legislation Enacted To Help Stabilize The U.S. Financial System Will
Be Effective In Doing So.
     We May Be Required To Pay Significantly Higher FDIC Premiums Or Special Assessments That Could
Adversely Affect Our Earnings.
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Future Growth Or Operating Results May Require The Corporation To Raise Additional Capital But That
Capital May Not Be Available Or It May Be Dilutive.
  We May Not Be Able To Pay Dividends In The Future In Accordance With Past Practice.
  The Price Of The Corporations Common Stock May Be Volatile, Which May Result In Losses For
Investors.
  
    
    announcements of developments related to the Corporations business;
 
    
    fluctuations in the Corporations results of operations;
 
    
    sales or purchases of substantial amounts of the Corporations securities in the
marketplace;
 
    
    general conditions in the Corporations banking niche or the worldwide economy;
 
    
    a shortfall or excess in revenues or earnings compared to securities analysts
expectations;
 
    
    changes in analysts recommendations or projections; and
 
    
    the Corporations announcement of new acquisitions or other projects.
 The Corporation Is Subject To Interest Rate Risk.
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The Corporation Is Subject To Lending Risk.
  The Corporations Allowance for Possible Loan Losses May Be Insufficient.
  If The Corporations Forecloses On Collateral Property, It May Be Subject To The Increased Costs
Associated With Ownership Of Real Property, Resulting In Reduced Revenues And Earnings.
  The Corporation Operates In a Highly Competitive Industry and Market Area.
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
    
    The ability to develop, maintain and build upon long-term customer relationships based
on top quality service, and safe, sound assets.
    
    The ability to expand the Corporations market position.
    
    The scope, relevance and pricing of products and services offered to meet customer
needs and demands.
    
    The rate at which the Corporation introduces new products and services relative to its
competitors.
    
    Customer satisfaction with the Corporations level of service.
    
    Industry and general economic trends.
  We Operate In A Highly Regulated Industry And May Be Affected Adversely By Increased Regulatory
Supervision And Scrutiny And Changes In Laws, Rules, And Regulations Affecting Financial
Institutions.
     16




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The Corporations Controls and Procedures May Fail or Be Circumvented.
  The Corporation Is Dependent On Certain Key Management and Staff.
  The Corporations Information Systems May Experience an Interruption or Breach in Security.
  The Corporation Continually Encounters Technological Change.
   17




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
                    18




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ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. (REMOVED AND RESERVED)
 
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
   (c)Total Number Of
    
    
    (d)(a)
    
    
    (b)
    
    
    Shares Purchased As Part
    
    
    Maximum Number OfTotal Number Of
    
    
    Average Price
    
    
    Of Publicly Announced
    
    
    Shares That May Yet BeShares Purchased
    
    
    Paid Per Share
    
    
    Plans Or Programs *
    
    
    Purchased *October 1  31, 2010
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ANovember 1  30, 2010
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ADecember 1  31, 2010
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A
 *
    
    The Corporation has not adopted a formal policy or program regarding repurchases of its shares of
stock.  
 ITEM 6. SELECTED FINANCIAL DATA
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  1.
    
    Volume/Rate Analysis, on page 462.
    
    Securities, on page 48.3.
    
    Loan Portfolio, on page 49.4.
    
    Allowance for Loan Losses, on pages 50.5.
    
    Nonperforming Loans, on pages 51.6.
    
    Deposits, on page 52.7.
    
    Consolidated Balance Sheet-Average Balances and Interest Rates, on page 54.
  19




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  Managements Report on Internal Control Over Financial Reporting and Attestation Report of the
Registered Public Accounting Firm
  
 ITEM 9B. OTHER INFORMATION
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PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
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PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a)
    (1)
    
    The following consolidated financial statements of the Registrant and its
subsidiaries are included in the 2010 Annual Report to Shareholders of First Financial
Corporation attached:
      (2)
    
    Schedules to the Consolidated Financial Statements required by Article 9 of
Regulation S-X are not required, inapplicable, or the required information has been
disclosed elsewhere.(3)
    
    Listing of Exhibits:
 Exhibit Number
    
    Description3.1
    
    
    Amended and Restated Articles of Incorporation of First Financial
Corporation, incorporated by reference to Exhibit 3(i) of the
Corporations Form 10-Q filed for the quarter ended September 30,
20023.2
    
    
    Code of By-Laws of First Financial Corporation, incorporated by reference to Exhibit
3(ii) of the Corporations Form 8-K filed July 27, 200910.1
    *
    
    Employment Agreement for Norman L. Lowery, dated and effective December 1, 2010.10.2
    *
    
    2001 Long-Term Incentive Plan of First Financial Corporation, incorporated by
reference to Exhibit 10.3 of the Corporations Form 10-Q filed for the quarter ended
September 30, 200210.3
    *
    
    2011 Schedule of Director Compensation10.4
    *
    
    2011 Schedule of Named Executive Officer Compensation10.5
    *
    
    2005 Long-Term Incentive Plan of First Financial Corporation, incorporated by
reference to Exhibit 10.7 of the Corporations Form 8-K filed September 4, 2007.10.6
    *
    
    2005 Executives Deferred Compensation Plan, incorporated by reference to Exhibit
10.5 of the Corporations Form 8-K filed September 4, 2007.10.7
    *
    
    2005 Executives Supplemental Retirement Plan, incorporated by reference to Exhibit
10.6 of the Corporations Form 8-K filed September 4, 2007.10.8
    *
    
    First Financial Corporation 2010 Short-Term Incentive Compensation Plan.10.9
    *
    
    First Financial Corporation 2010 Long-Term Incentive Compensation Plan.10.10
    *
    
    First Financial Corporation 2011 Short Term Incentive Compensation Plan13
    
    
    Annual Report21
    
    
    Subsidiaries31.1
    
    
    Certification pursuant to Rule 13a-14(a) for Annual Report of Form 10-K by Principal
Executive Officer31.2
    
    
    Certification pursuant to Rule 13a-14(a) for Annual Report of Form 10-K by Principal
Financial Officer32.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350 of Principal Executive Officer32.2
    
    
    Certification pursuant to 18 U.S.C. Section 1350 of Principal Financial Officer
 *
    
    Indicates management contract or compensatory plan or arrangement required to be filed as
an exhibit to this report.(b)
    
    Exhibits-Exhibits to (a) (3) listed above are attached to this report.(c)
    
    Financial Statements Schedules-No schedules are required to be submitted. See response to
ITEM 15(a) (2).  23




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SIGNATURES
  First Financial Corporation/s/ Rodger A. McHargueRodger A. McHargue, Chief Financial Officer(Principal Financial Officer and Principal Accounting Officer)   24




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NAME
    
    DATE/s/ Donald E. Smith

Donald E. Smith, President and Director
    
    March 15, 2011/s/ Rodger a. McHargue

Rodger A. McHargue, Chief Financial Officer
    
    March 15, 2011(Principal Financial Officer and Principal Accounting Officer)/s/ W. Curtis Brighton

W. Curtis Brighton, Director
    
    March 15, 2011/s/ B. Guille Cox, Jr.
    
    March 15, 2011B. Guille Cox, Jr., Director/s/ Thomas T. Dinkel

Thomas T. Dinkel, Director
    
    March 15, 2011/s/ Anton H. George

Anton H. George, Director
    
    March 15, 2011/s/ Gregory L. Gibson

Gregory L. Gibson, Director
    
    March 15, 2011/s/ Norman L. Lowery

Norman L. Lowery, Vice Chairman, CEO & Director
    
    March 15, 2011(Principal Executive Officer)/s/ Ronald K. Rich

Ronald K. Rich, Director
    
    March 15, 2011/s/ Virginia L. Smith

Virginia L. Smith, Director
    
    March 15, 2011/s/ William J. Voges

William J. Voges, Director
    
    March 15, 2011/s/ William R. Krieble

William R. Krieble, Director
    
    March 15, 2011
  25




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EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    
    Employment Agreement for Norman L. Lowery, dated and effective December 1, 201010.3
    
    
    2011 Schedule of Director Compensation10.4
    
    
    2011 Schedule of Named Executive Officers Compensation10.8
    
    
    First Financial Corporation 2010 Short-Term Incentive Compensation Plan.10.9
    
    
    First Financial Corporation 2010 Long-Term Incentive Compensation Plan.10.10
    
    
    First Financial Corporation 2011 Short Term Incentive Compensation Plan13
    
    
    Annual Report21
    
    
    Subsidiaries31.1
    
    
    Certification Pursuant to Rule 13a-14(a) for Annual Report of Form 10-K by Principal Executive Officer31.2
    
    
    Certification Pursuant to Rule 13a-14(a) for Annual Report of Form 10-K by Principal Financial Officer32.1
    
    
    Certification Pursuant to Rule 18 U.S.C. Section 1350 of Principal Executive Officer32.2
    
    
    Certification Pursuant to Rule 18 U.S.C. Section 1350 of Principal Financial Officer
  26