Exhibit 13
 Five Year Comparison of
Selected Financial Data
 (Dollar amounts in thousands,except per share amounts)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004BALANCE SHEET DATA:Total assets
    
    $
    2,302,675
    
    
    $
    2,231,562
    
    
    $
    2,175,998
    
    
    $
    2,136,918
    
    
    $
    2,183,992Securities
    
    
    596,915
    
    
    
    558,020
    
    
    
    530,400
    
    
    
    503,079
    
    
    
    472,884Loans, net of unearned fees*
    
    
    1,471,327
    
    
    
    1,443,067
    
    
    
    1,392,755
    
    
    
    1,395,741
    
    
    
    1,463,871Deposits
    
    
    1,563,498
    
    
    
    1,529,721
    
    
    
    1,502,682
    
    
    
    1,464,918
    
    
    
    1,443,121Borrowings
    
    
    406,653
    
    
    
    368,616
    
    
    
    358,008
    
    
    
    370,090
    
    
    
    438,013Shareholders equity
    
    
    286,844
    
    
    
    281,692
    
    
    
    271,260
    
    
    
    269,323
    
    
    
    268,335INCOME STATEMENT DATA:Interest income
    
    
    133,954
    
    
    
    137,734
    
    
    
    130,832
    
    
    
    121,647
    
    
    
    116,888Interest expense
    
    
    52,490
    
    
    
    62,961
    
    
    
    57,129
    
    
    
    47,469
    
    
    
    44,686Net interest income
    
    
    81,464
    
    
    
    74,773
    
    
    
    73,703
    
    
    
    74,178
    
    
    
    72,202Provision for loan losses
    
    
    7,855
    
    
    
    6,580
    
    
    
    6,983
    
    
    
    11,698
    
    
    
    8,292Other income
    
    
    25,410
    
    
    
    31,497
    
    
    
    28,826
    
    
    
    32,025
    
    
    
    35,754Other expenses
    
    
    66,447
    
    
    
    64,726
    
    
    
    64,656
    
    
    
    63,538
    
    
    
    63,656Net income
    
    
    24,769
    
    
    
    25,580
    
    
    
    23,539
    
    
    
    23,054
    
    
    
    28,009PER SHARE DATA:Net income
    
    
    1.89
    
    
    
    1.94
    
    
    
    1.77
    
    
    
    1.72
    
    
    
    2.07Cash dividends
    
    
    0.89
    
    
    
    0.87
    
    
    
    0.85
    
    
    
    .82
    
    
    
    .79PERFORMANCE RATIOS:Net income to average assets
    
    
    1.09
    %
    
    
    1.16
    %
    
    
    1.10
    %
    
    
    1.07
    %
    
    
    1.28
    %Net income to average
shareholders equity
    
    
    8.61
    
    
    
    9.20
    
    
    
    8.57
    
    
    
    8.52
    
    
    
    10.45Average total capital
to average assets
    
    
    13.28
    
    
    
    13.35
    
    
    
    13.56
    
    
    
    13.35
    
    
    
    13.24Average shareholders equity
to average assets
    
    
    12.60
    
    
    
    12.64
    
    
    
    12.79
    
    
    
    12.51
    
    
    
    12.23Dividend payout
    
    
    47.10
    
    
    
    44.76
    
    
    
    44.18
    
    
    
    47.57
    
    
    
    38.13
 *
    
    2008 and 2007 include $12,800 and $14,068, respectively, of credit card loans that are
held-for-sale.




---



##### 



Consolidated
Balance Sheets
 December 31,(Dollar amounts in thousands, except per share data)
    
    2008
    
    
    2007ASSETSCash and due from banks
    
    $
    67,298
    
    
    $
    70,082Federal funds sold
    
    
    9,530
    
    
    
    4,201Securities available-for-sale
    
    
    596,915
    
    
    
    558,020Loans, net of allowance of $16,280 in 2008 and $15,351 in 2007
    
    
    1,442,247
    
    
    
    1,413,648Credit card loans held-for-sale
    
    
    12,800
    
    
    
    14,068Restricted stock
    
    
    26,227
    
    
    
    28,613Accrued interest receivable
    
    
    13,081
    
    
    
    13,698Premises and equipment, net
    
    
    32,145
    
    
    
    32,632Bank-owned life insurance
    
    
    62,107
    
    
    
    59,950Goodwill
    
    
    7,102
    
    
    
    7,102Other intangible assets
    
    
    1,512
    
    
    
    1,937Other real estate owned
    
    
    3,200
    
    
    
    1,472Other assets
    
    
    28,511
    
    
    
    26,139Total Assets
    
    $
    2,302,675
    
    
    $
    2,231,562LIABILITIES AND SHAREHOLDERS EQUITYDeposits:Non-interest-bearing
    
    $
    236,249
    
    
    $
    225,549Interest-bearing:Certificates of deposit of $100 or more
    
    
    211,107
    
    
    
    193,901Other interest-bearing deposits
    
    
    1,116,142
    
    
    
    1,110,2711,563,498
    
    
    
    1,529,721Short-term borrowings
    
    
    21,500
    
    
    
    27,331Other borrowings
    
    
    385,153
    
    
    
    341,285Other liabilities
    
    
    45,680
    
    
    
    51,533Total Liabilities
    
    
    2,015,831
    
    
    
    1,949,870Shareholders equityCommon stock, $.125 stated value per share,Authorized shares  40,000,000Issued shares  14,450,966Outstanding shares  13,116,630 in 2008 and 13,136,359 in 2007
    
    
    1,806
    
    
    
    1,806Additional paid-in capital
    
    
    68,654
    
    
    
    68,212Retained earnings
    
    
    263,115
    
    
    
    250,011Accumulated other comprehensive income (loss)
    
    
    (12,946
    )
    
    
    (5,181
    )Less: Treasury shares at cost  1,334,336 in 2008 and 1,314,607 in 2007
    
    
    (33,785
    )
    
    
    (33,156
    )Total Shareholders Equity
    
    
    286,844
    
    
    
    281,692Total Liabilities and Shareholders Equity
    
    $
    2,302,675
    
    
    $
    2,231,562
   10




---



##### 



Consolidated
Statements of Income
 Years Ended December 31,(Dollar amounts in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2006INTEREST AND DIVIDEND INCOME:Loans, including related fees
    
    $
    99,572
    
    
    $
    104,950
    
    
    $
    99,850Securities:Taxable
    
    
    25,303
    
    
    
    23,336
    
    
    
    21,877Tax-exempt
    
    
    6,415
    
    
    
    6,635
    
    
    
    6,243Other
    
    
    2,664
    
    
    
    2,813
    
    
    
    2,862Total Interest and Dividend Income
    
    
    133,954
    
    
    
    137,734
    
    
    
    130,832INTEREST EXPENSE:Deposits
    
    
    32,696
    
    
    
    41,956
    
    
    
    37,285Short-term borrowings
    
    
    1,068
    
    
    
    1,611
    
    
    
    746Other borrowings
    
    
    18,726
    
    
    
    19,394
    
    
    
    19,098Total Interest Expense
    
    
    52,490
    
    
    
    62,961
    
    
    
    57,129Net Interest Income
    
    
    81,464
    
    
    
    74,773
    
    
    
    73,703Provision for loan losses
    
    
    7,855
    
    
    
    6,580
    
    
    
    6,983Net Interest Income After
Provision For Loan Losses
    
    
    73,609
    
    
    
    68,193
    
    
    
    66,720NON-INTEREST INCOME:Trust and financial services
    
    
    3,993
    
    
    
    3,697
    
    
    
    3,766Service charges and fees on deposit accounts
    
    
    11,889
    
    
    
    11,877
    
    
    
    11,639Other service charges and fees
    
    
    6,050
    
    
    
    5,783
    
    
    
    5,279Securities gains (losses)
    
    
    (5,787
    )
    
    
    211
    
    
    
    6Insurance commissions
    
    
    6,688
    
    
    
    6,541
    
    
    
    6,323Gain on sale of mortgage loans
    
    
    817
    
    
    
    816
    
    
    
    191Other
    
    
    1,760
    
    
    
    2,572
    
    
    
    1,622Total Non-Interest Income
    
    
    25,410
    
    
    
    31,497
    
    
    
    28,826NON-INTEREST EXPENSES:Salaries and employee benefits
    
    
    41,287
    
    
    
    39,432
    
    
    
    39,739Occupancy expense
    
    
    4,182
    
    
    
    4,034
    
    
    
    3,994Equipment expense
    
    
    4,560
    
    
    
    4,322
    
    
    
    4,305Other
    
    
    16,418
    
    
    
    16,938
    
    
    
    16,618Total Non-Interest Expense
    
    
    66,447
    
    
    
    64,726
    
    
    
    64,656Income Before Income Taxes
    
    
    32,572
    
    
    
    34,964
    
    
    
    30,890Provision for income taxes
    
    
    7,803
    
    
    
    9,384
    
    
    
    7,351Net Income
    
    $
    24,769
    
    
    $
    25,580
    
    
    $
    23,539EARNINGS PER SHARE:Basic and Diluted
    
    $
    1.89
    
    
    $
    1.94
    
    
    $
    1.77Weighted average number of shares outstanding (in thousands)
    
    
    13,110
    
    
    
    13,178
    
    
    
    13,295
   11




---



##### 



Consolidated
Statements of Changes in Shareholders Equity
 AccumulatedOtherCommon
    
    
    Additional
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury(Dollar amounts in thousands, except per share data)
    
    Stock
    
    
    Paid-In Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    TotalBalance, January 1, 2006
    
    $
    1,806
    
    
    $
    67,670
    
    
    $
    223,710
    
    
    $
    1,903
    
    
    $
    (25,766
    )
    
    $
    269,323Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    23,539
    
    
    
    
    
    
    
    
    
    
    
    23,539Other comprehensive loss, net of tax:Change in net unrealized gains/losses
on securities available-for-sale, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,161
    
    
    
    
    
    
    
    1,161Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,700Adjustment to initially apply
SFAS No. 158, net of tax (Note 1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,558
    )
    
    
    
    
    
    
    (8,558
    )Contribution of 34,000 shares to ESOP
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    
    
    
    
    831
    
    
    
    1,164Treasury stock purchases (137,249 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,087
    )
    
    
    (4,087
    )Cash dividends, $ .85 per share
    
    
    
    
    
    
    
    
    
    
    (11,282
    )
    
    
    
    
    
    
    
    
    
    
    (11,282
    )Balance, December 31, 2006
    
    
    1,806
    
    
    
    68,003
    
    
    
    235,967
    
    
    
    (5,494
    )
    
    
    (29,022
    )
    
    
    271,260Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    25,580
    
    
    
    
    
    
    
    
    
    
    
    25,580Other comprehensive loss, net of tax:Change in net unrealized gains/losses
on securities available-for-sale, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,110
    
    
    
    
    
    
    
    1,110Change in unrealized gains/losses on
post-retirement benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (797
    )
    
    
    
    
    
    
    (797
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,893Adjustment to initially apply
FIN No. 48, net of tax (Note 1)
    
    
    
    
    
    
    
    
    
    
    (86
    )
    
    
    
    
    
    
    
    
    
    
    (86
    )Contribution of 41,000 shares to ESOP
    
    
    
    
    
    
    209
    
    
    
    
    
    
    
    
    
    
    
    1,033
    
    
    
    1,242Treasury stock purchases (174,962 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,167
    )
    
    
    (5,167
    )Cash dividends, $ .87 per share
    
    
    
    
    
    
    
    
    
    
    (11,450
    )
    
    
    
    
    
    
    
    
    
    
    (11,450
    )Balance, December 31, 2007
    
    
    1,806
    
    
    
    68,212
    
    
    
    250,011
    
    
    
    (5,181
    )
    
    
    (33,156
    )
    
    
    281,692Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    24,769
    
    
    
    
    
    
    
    
    
    
    
    24,769Other comprehensive loss, net of tax:Change in net unrealized gains/losses
on securities available-for-sale, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,276
    )
    
    
    
    
    
    
    (8,276
    )Change in unrealized gains/losses on
post-retirement benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    511
    
    
    
    
    
    
    
    511Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,004Contribution of 33,015 shares to ESOP
    
    
    
    
    
    
    442
    
    
    
    
    
    
    
    
    
    
    
    835
    
    
    
    1,277Treasury stock purchases (52,744 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,464
    )
    
    
    (1,464
    )Cash dividends, $ .89 per share
    
    
    
    
    
    
    
    
    
    
    (11,665
    )
    
    
    
    
    
    
    
    
    
    
    (11,665
    )Balance, December 31, 2008
    
    $
    1,806
    
    
    $
    68,654
    
    
    $
    263,115
    
    
    $
    (12,946
    )
    
    $
    (33,785
    )
    
    $
    286,844
   12




---



##### 



Consolidated
Statements of Cash Flows
 Years Ended December 31,(Dollar amounts in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    24,769
    
    
    $
    25,580
    
    
    $
    23,539Adjustments to reconcile net income to net cash
provided by operating activities:Net (accretion) amortization on securities
    
    
    (2,874
    )
    
    
    (2,619
    )
    
    
    (2,540
    )Provision for loan losses
    
    
    7,855
    
    
    
    6,580
    
    
    
    6,983Securities (gains) losses
    
    
    5,787
    
    
    
    (211
    )
    
    
    (6
    )Depreciation and amortization
    
    
    3,535
    
    
    
    3,443
    
    
    
    3,515Provision for deferred income taxes
    
    
    (5,147
    )
    
    
    27
    
    
    
    (3,579
    )Net change in accrued interest receivable
    
    
    617
    
    
    
    274
    
    
    
    (1,435
    )Contribution of shares to ESOP
    
    
    1,277
    
    
    
    1,242
    
    
    
    1,164Gains on sales of other real estate
    
    
    35
    
    
    
    (116
    )
    
    
    Other, net
    
    
    677
    
    
    
    1,302
    
    
    
    9,688Net Cash from Operating Activities
    
    
    36,531
    
    
    
    35,502
    
    
    
    37,329CASH FLOWS FROM INVESTING ACTIVITIES:Sales of securities available-for-sale
    
    
    1,063
    
    
    
    3,140
    
    
    
    Calls, maturities and principal reductions on securities available-for-sale
    
    
    95,198
    
    
    
    94,587
    
    
    
    157,031Purchases of securities available-for-sale
    
    
    (151,863
    )
    
    
    (120,657
    )
    
    
    (180,393
    )Loans made to customers, net of repayments
    
    
    (39,306
    )
    
    
    (60,485
    )
    
    
    (6,510
    )Net change in federal funds sold
    
    
    (5,329
    )
    
    
    17,236
    
    
    
    (18,455
    )Redemption of restricted stock
    
    
    2,386
    
    
    
    30
    
    
    
    5,080Sale of other real estate
    
    
    2,357
    
    
    
    4,322
    
    
    
    Additions to premises and equipment
    
    
    (2,623
    )
    
    
    (2,382
    )
    
    
    (5,015
    )Net Cash from Investing Activities
    
    
    (98,117
    )
    
    
    (64,209
    )
    
    
    (48,262
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net change in deposits
    
    
    33,777
    
    
    
    27,039
    
    
    
    37,764Net change in other short-term borrowings
    
    
    (5,831
    )
    
    
    11,128
    
    
    
    (10,021
    )Dividends paid
    
    
    (11,548
    )
    
    
    (11,373
    )
    
    
    (11,181
    )Purchases of treasury stock
    
    
    (1,464
    )
    
    
    (5,167
    )
    
    
    (4,087
    )Proceeds from other borrowings
    
    
    408,500
    
    
    
    81,750
    
    
    
    Repayments on other borrowings
    
    
    (364,632
    )
    
    
    (82,270
    )
    
    
    (2,061
    )Net Cash from Financing Activities
    
    
    58,802
    
    
    
    21,107
    
    
    
    10,414Net Change in Cash and Cash Equivalents
    
    
    (2,784
    )
    
    
    (7,600
    )
    
    
    (519
    )Cash and Cash Equivalents, Beginning of Year
    
    
    70,082
    
    
    
    77,682
    
    
    
    78,201Cash and Cash Equivalents, End of Year
    
    $
    67,298
    
    
    $
    70,082
    
    
    $
    77,682SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND NONCASH INFORMATION:Cash paid during the year for:Interest
    
    $
    54,168
    
    
    $
    62,080
    
    
    $
    56,150Income taxes
    
    $
    11,657
    
    
    $
    8,494
    
    
    $
    11,202Transfers from loans to loans held-for-sale
    
    $
    
    
    
    $
    14,608
    
    
    $
    
   13




---



##### 



Notes
to Consolidated Financial Statements
 1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
 Business
 Organization:
    Regulatory Agencies:
 Significant
Accounting Policies
 Use of Estimates:
 Cash Flows:
 Securities:
  Loans:
    14




---



##### 



Notes
to Consolidated Financial Statements
 Allowance for Loan Losses:
  Foreclosed Assets:
 Premises and Equipment:
 Restricted Stock:
 Servicing Rights:
   Bank-Owned Life Insurance:
 Goodwill and Other Intangible Assets:
  Long-Term Assets:
 Benefit Plans:
 Employee Stock Ownership Plan:
  15




---



##### 



Notes
to Consolidated Financial Statements
 Deferred Compensation Plan:
 Long-Term Incentive Plan:
 Income Taxes:
 Accounting for Uncertainty in Income Taxes
  Loan Commitments and Related Financial Instruments:
 Earnings Per Share:
 Comprehensive
Income:
 Loss Contingencies:
 Dividend
Restriction:
 Fair Value of Financial Instruments:
 Operating Segment:
 Adoption of New Accounting Standards: Fair Value Measurement Effective Date of FASB
Statement No. 157. Determining the
Fair Value of a Financial Asset When the Market for That Asset Is Not Active.
  16




---



##### 



Notes
to Consolidated Financial Statements
 The Fair Value Option for Financial Assets
and Financial Liabilities.
 Accounting for
Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life
Insurance Arrangements.
 Written Loan Commitments
Recorded at Fair Value through Earnings Application of Accounting
Principles to Loan Commitments,
 Effect of Newly Issued But Not Yet Effective Accounting Standards: Business Combinations
 Disclosures about Derivative Instruments and Hedging
Activities,
 2. FAIR VALUES OF FINANCIAL INSTRUMENTS:
        17




---



##### 



Notes to Consolidated Financial Statements
 December 31, 2008Fair Value Measurements Using(Dollar amounts in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Carrying ValueSecurities available-for-sale (1)
    
    $
    2,827
    
    
    $
    586,094
    
    
    $
    7,994
    
    
    $
    596,915
 (1)
    
    Carried at fair value prior to the adoption of SFAS 157. The fair value of
securities reported using Level 3 inputs include certain investments in bank equities and
collateralized debt obligations for which Level 1 and Level 2 inputs are not available. 
The table
below presents a reconciliation and income statement classification of gains and losses for all
assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
for the twelve months ended December 31, 2008. Fair Value MeasurementsUsing SignificantUnobservable Inputs (Level 3)Beginning balance, January 1, 2008
    
    $
    33,745Total realized/unrealized gains or lossesIncluded in earnings
    
    
    (6,145
    )Included in other comprehensive income
    
    
    (19,318
    )Settlements
    
    
    (288
    )Ending balance, December 31, 2008
    
    $
    7,994
   Disclosures about Fair Value of Financial Instruments (
   December 31,2008
    
    
    2007Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fair(Dollar amounts in thousands)
    
    Value
    
    
    Value
    
    
    Value
    
    
    ValueCash and due from banks
    
    $
    67,298
    
    
    $
    67,298
    
    
    $
    70,082
    
    
    $
    70,082Federal funds sold
    
    
    9,530
    
    
    
    9,530
    
    
    
    4,201
    
    
    
    4,201Securities available-for-sale
    
    
    596,915
    
    
    
    596,915
    
    
    
    558,020
    
    
    
    558,020Loans, net*
    
    
    1,455,047
    
    
    
    1,457,842
    
    
    
    1,427,716
    
    
    
    1,427,272Accrued interest receivable
    
    
    13,081
    
    
    
    13,081
    
    
    
    13,698
    
    
    
    13,698Deposits
    
    
    (1,563,498
    )
    
    
    (1,554,912
    )
    
    
    (1,529,721
    )
    
    
    (1,536,205
    )Short-term borrowings
    
    
    (21,500
    )
    
    
    (21,500
    )
    
    
    (27,331
    )
    
    
    (27,331
    )Federal Home Loan Bank advances
    
    
    (378,553
    )
    
    
    (390,296
    )
    
    
    (334,685
    )
    
    
    (339,300
    )Other borrowings
    
    
    (6,600
    )
    
    
    (6,600
    )
    
    
    (6,600
    )
    
    
    (6,600
    )Accrued interest payable
    
    
    (3,871
    )
    
    
    (3,871
    )
    
    
    (5,549
    )
    
    
    (5,549
    )
 *
    
    Includes credit card loans held for sale.  18




---



##### 



Notes to Consolidated Financial Statements
 3. RESTRICTIONS ON CASH AND DUE FROM BANKS:
  4. SECURITIES:
  December 31, 2008Fair
    
    
    Unrealized(Dollar amounts in thousands)
    
    Value
    
    
    Gains
    
    
    LossesU.S. Government sponsored entities and
entity mortgage-backed securities
    
    $
    365,631
    
    
    $
    11,185
    
    
    $
    (10
    )Collateralized mortgage obligations
    
    
    70,227
    
    
    
    1,389
    
    
    
    State and municipal
    
    
    143,841
    
    
    
    2,439
    
    
    
    (1,822
    )Corporate obligations
    
    
    10,633
    
    
    
    
    
    
    
    (20,953
    )Equities
    
    
    6,583
    
    
    
    2,097
    
    
    
    (1,163
    )Total
    
    $
    596,915
    
    
    $
    17,110
    
    
    $
    (23,948
    )
 December 31, 2007Fair
    
    
    Unrealized(Dollar amounts in thousands)
    
    Value
    
    
    Gains
    
    
    LossesU.S. Government sponsored entities and
entity mortgage-backed securities
    
    $
    289,704
    
    
    $
    2,181
    
    
    $
    (1,219
    )Collateralized mortgage obligations
    
    
    77,174
    
    
    
    587
    
    
    
    (143
    )State and municipal
    
    
    146,515
    
    
    
    3,824
    
    
    
    (171
    )Corporate obligations
    
    
    36,843
    
    
    
    52
    
    
    
    (1,219
    )Equities
    
    
    7,784
    
    
    
    3,063
    
    
    
    Total
    
    $
    558,020
    
    
    $
    9,707
    
    
    $
    (2,752
    )
    (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Proceeds
    
    
    
    
    
    $
    3,170
    
    
    
    Gross gains
    
    
    
    
    
    
    192
    
    
    
    Gross losses
    
    
    
    
    
    
    10
    
    
    
    
   19




---



##### 



Notes to Consolidated Financial Statements
  Available-for-Sale(Dollar amounts in thousands)
    
    Fair ValueDue in one year or less
    
    $
    13,309Due after one but within five years
    
    
    43,528Due after five but within ten years
    
    
    40,523Due after ten years
    
    
    127,495224,855Mortgage-backed securities and equities
    
    
    372,060Total
    
    $
    596,915
  December 31, 2008Less Than 12 Months
    
    
    More Than 12 Months
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized(Dollar amounts in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Government entity
mortgage-backed securities
    
    $
    1,735
    
    
    $
    (7
    )
    
    $
    84
    
    
    $
    (3
    )
    
    $
    1,819
    
    
    $
    (10
    )State and municipal obligations
    
    
    51,011
    
    
    
    (1,797
    )
    
    
    321
    
    
    
    (25
    )
    
    
    51,332
    
    
    
    (1,822
    )Corporate obligations
    
    
    6,394
    
    
    
    (612
    )
    
    
    4,239
    
    
    
    (20,341
    )
    
    
    10,633
    
    
    
    (20,953
    )Equities
    
    
    1,668
    
    
    
    (1,163
    )
    
    
    
    
    
    
    
    
    
    
    1,668
    
    
    
    (1,163
    )Total temporarily impaired securities
    
    $
    60,808
    
    
    $
    (3,579
    )
    
    $
    4,644
    
    
    $
    (20,369
    )
    
    $
    65,452
    
    
    $
    (23,948
    )
 December 31, 2007Less Than 12 Months
    
    
    More Than 12 Months
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized(Dollar amounts in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Government entity
mortgage-backed securities
    
    $
    226
    
    
    $
    (1
    )
    
    $
    110,861
    
    
    $
    (1,218
    )
    
    $
    111,087
    
    
    $
    (1,219
    )Collateralized mortgage obligations
    
    
    21,680
    
    
    
    (104
    )
    
    
    5,377
    
    
    
    (39
    )
    
    
    27,057
    
    
    
    (143
    )State and municipal obligations
    
    
    10,411
    
    
    
    (61
    )
    
    
    9,307
    
    
    
    (110
    )
    
    
    19,718
    
    
    
    (171
    )Corporate obligations
    
    
    29,795
    
    
    
    (1,219
    )
    
    
    
    
    
    
    
    
    
    
    29,795
    
    
    
    (1,219
    )Total temporarily impaired securities
    
    $
    62,112
    
    
    $
    (1,385
    )
    
    $
    125,545
    
    
    $
    (1,367
    )
    
    $
    187,657
    
    
    $
    (2,752
    )
    20




---



##### 



Notes to Consolidated Financial Statements
   Recognition of Interest Income and Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to be Held by a Transferor
in Securitized Financial Assets,
   5. LOANS:
  December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007Commercial, financial and agricultural
    
    $
    499,636
    
    
    $
    461,086Real estate  construction
    
    
    26,137
    
    
    
    29,637Real estate  residential
    
    
    424,529
    
    
    
    437,051Real estate  commercial
    
    
    203,498
    
    
    
    236,304Consumer
    
    
    302,977
    
    
    
    262,858Lease financing
    
    
    1,878
    
    
    
    2,275Total gross loans
    
    
    1,458,655
    
    
    
    1,429,211Less: unearned income
    
    
    (128
    )
    
    
    (212
    )Allowance for loan losses
    
    
    (16,280
    )
    
    
    (15,351
    )Total
    
    $
    1,442,247
    
    
    $
    1,413,648
  21




---



##### 



Notes to Consolidated Financial Statements
     December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Servicing rights:Beginning of year
    
    $
    1,909
    
    
    $
    2,319
    
    
    $
    2,931Additions
    
    
    332
    
    
    
    218
    
    
    
    114Amortized to expense
    
    
    (637
    )
    
    
    (628
    )
    
    
    (726
    )End of year
    
    $
    1,604
    
    
    $
    1,909
    
    
    $
    2,319
   6. ALLOWANCE FOR LOAN LOSSES:
  December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Balance at beginning of year
    
    $
    15,351
    
    
    $
    16,169
    
    
    $
    16,042Provision for loan losses
    
    
    7,855
    
    
    
    6,580
    
    
    
    6,983Recoveries of loans previously charged off
    
    
    2,668
    
    
    
    2,778
    
    
    
    3,653Loans charged off
    
    
    (9,594
    )
    
    
    (10,176
    )
    
    
    (10,509
    )Balance at End of Year
    
    $
    16,280
    
    
    $
    15,351
    
    
    $
    16,169
  December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007Year-end loans with no allocated allowance for loan
losses
    
    $
    
    
    
    $
    Year-end loans with allocated allowance for loan losses
    
    
    16,959
    
    
    
    2,203Total
    
    $
    16,959
    
    
    $
    2,203Amount of the allowance for loan losses allocated
    
    $
    4,735
    
    
    $
    729Nonperforming loans:Loans past due over 90 days still on accrual
    
    
    3,624
    
    
    
    4,462Non-accrual loans
    
    
    12,486
    
    
    
    7,971
  22




---



##### 



Notes to Consolidated Financial Statements
  (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Average of impaired loans during the year
    
    $
    6,531
    
    
    $
    3,505
    
    
    $
    3,336Interest income recognized during impairment
    
    
    3
    
    
    
    11
    
    
    
    13Cash-basis interest income recognized
    
    
    
    
    
    
    1
    
    
    
    
 7. PREMISES AND EQUIPMENT:
  December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007Land
    
    $
    5,629
    
    
    $
    5,653Building and leasehold
improvements
    
    
    38,985
    
    
    
    38,948Furniture and equipment
    
    
    32,239
    
    
    
    30,91676,853
    
    
    
    75,517Less accumulated depreciation
    
    
    (44,708
    )
    
    
    (42,885
    )Total
    
    $
    32,145
    
    
    $
    32,632
  8. GOODWILL AND INTANGIBLE ASSETS:
   2008
    
    
    2007Gross
    
    
    Accumulated
    
    
    Gross
    
    
    Accumulated(Dollar amounts in thousands)
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationCustomer list intangible
    
    $
    3,446
    
    
    $
    2,607
    
    
    $
    3,446
    
    
    $
    2,303Core deposit intangible
    
    
    2,193
    
    
    
    1,520
    
    
    
    2,193
    
    
    
    1,399$
    5,639
    
    
    $
    4,127
    
    
    $
    5,639
    
    
    $
    3,702
   In thousands2009
    
    $
    4252010
    
    
    4252011
    
    
    2452012
    
    
    1542013
    
    
    154
 9. DEPOSITS:
  2009
    
    $
    446,1582010
    
    
    90,2732011
    
    
    48,4782012
    
    
    38,9532013
    
    
    12,377
  23




---



##### 



Notes to Consolidated Financial Statements
 10. SHORT-TERM BORROWINGS:
  (Dollar amounts in thousands)
    
    2008
    
    
    2007Federal funds purchased
    
    $
    1,111
    
    
    $
    3,032Repurchase agreements
    
    
    19,405
    
    
    
    22,656Other short-term borrowings
    
    
    984
    
    
    
    1,643$
    21,500
    
    
    $
    27,331
 (Dollar amounts in thousands)
    
    2008
    
    
    2007Average amount outstanding
    
    $
    37,068
    
    
    $
    32,042Maximum amount outstanding at a month end
    
    
    76,049
    
    
    
    59,364Average interest rate during year
    
    
    2.89
    %
    
    
    5.03
    %Interest rate at year-end
    
    
    3.23
    %
    
    
    4.57
    %
   11. OTHER BORROWINGS:
  (Dollar amounts in thousands)
    
    2008
    
    
    2007FHLB advances
    
    $
    378,553
    
    
    $
    334,685City of Terre Haute, Indiana economic development
revenue bonds
    
    
    6,600
    
    
    
    6,600Total
    
    $
    385,153
    
    
    $
    341,285
  2009
    
    $
    97,4162010
    
    
    202,3442011
    
    
    2,1342012
    
    
    20,0902013
    
    
    56,097Thereafter
    
    
    7,072$
    385,153
   24




---



##### 



Notes to Consolidated Financial Statements
    12. INCOME TAXES:
  (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Federal:Currently payable
    
    $
    12,238
    
    
    $
    8,250
    
    
    $
    10,409Deferred
    
    
    (4,727
    )
    
    
    242
    
    
    
    (3,335
    )7,511
    
    
    
    8,762
    
    
    
    7,074State:Currently payable
    
    $
    712
    
    
    
    837
    
    
    
    521Deferred
    
    
    (420
    )
    
    
    (215
    )
    
    
    (244
    )292
    
    
    
    622
    
    
    
    277Total
    
    $
    7,803
    
    
    $
    9,384
    
    
    $
    7,351
  (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Federal income taxes computed at the
statutory rate
    
    $
    11,400
    
    
    $
    12,238
    
    
    $
    10,812Add (deduct) tax effect of:Tax exempt income
    
    
    (3,505
    )
    
    
    (3,263
    )
    
    
    (3,056
    )State tax, net of federal benefit
    
    
    189
    
    
    
    404
    
    
    
    180Affordable housing credits
    
    
    (30
    )
    
    
    (113
    )
    
    
    (329
    )Other, net
    
    
    (251
    )
    
    
    118
    
    
    
    (256
    )Total
    
    $
    7,803
    
    
    $
    9,384
    
    
    $
    7,351
  25




---



##### 



Notes to Consolidated Financial Statements
  (Dollar amounts in thousands)
    
    2008
    
    
    2007Deferred tax assets:Other than temporary impairment
    
    $
    2,440
    
    
    
    Net unrealized losses on securities
available-for-sale
    
    
    2,735
    
    
    
    Net unrealized losses on retirement plans
    
    
    5,573
    
    
    
    5,913Loan losses provision
    
    
    6,473
    
    
    
    6,146Deferred compensation
    
    
    6,243
    
    
    
    5,476Compensated absences
    
    
    625
    
    
    
    520Post-retirement benefits
    
    
    1,715
    
    
    
    1,172Other
    
    
    1,241
    
    
    
    1,036Gross Deferred Assets
    
    
    27,045
    
    
    
    20,263Deferred tax liabilities:Net unrealized gains on securities
available-for-sale
    
    
    
    
    
    
    (2,782
    )Depreciation
    
    
    (1,533
    )
    
    
    (1,379
    )Federal Home Loan Bank stock dividends
    
    
    (456
    )
    
    
    (751
    )Mortgage servicing rights
    
    
    (637
    )
    
    
    (763
    )Pensions
    
    
    (2,782
    )
    
    
    (2,369
    )Other
    
    
    (1,232
    )
    
    
    (2,138
    )Gross Deferred Liabilities
    
    
    (6,640
    )
    
    
    (10,182
    )Net Deferred Tax Assets (Liabilities)
    
    $
    20,405
    
    
    $
    10,081
 Unrecognized Tax Benefits
 (Dollar amounts in thousands)
    
    2008
    
    
    2007Balance at January 1
    
    $
    803
    
    
    $
    601Additions based on tax positions related to the
current year
    
    
    47
    
    
    
    290Reductions for tax positions of prior years
    
    
    (291
    )
    
    
    Reductions due to the statute of limitations
    
    
    
    
    
    
    (88
    )Settlements
    
    
    (10
    )
    
    
    Balance at December 31
    
    $
    549
    
    
    $
    803
     26




---



##### 



Notes to Consolidated Financial Statements
 13. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK:
   (Dollar amounts in thousands)
    
    2008
    
    
    2007Home equity
    
    $
    44,346
    
    
    $
    38,612Credit card lines
    
    
    47,635
    
    
    
    48,523Commercial operating lines
    
    
    142,781
    
    
    
    134,068Other commitments
    
    
    67,379
    
    
    
    54,453$
    302,141
    
    
    $
    275,656Commercial letters of credit
    
    $
    16,230
    
    
    $
    17,336
  14. RETIREMENT PLANS:
     (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Service cost  benefits earned
    
    $
    3,031
    
    
    $
    3,073
    
    
    $
    2,919Interest cost on projected benefit obligation
    
    
    2,908
    
    
    
    2,773
    
    
    
    2,328Expected return on plan assets
    
    
    (3,292
    )
    
    
    (3,644
    )
    
    
    (2,793
    )Net amortization and deferral
    
    
    711
    
    
    
    444
    
    
    
    744Net periodic pension cost
    
    $
    3,358
    
    
    $
    2,646
    
    
    $
    3,198Net loss (gain) during the period
    
    $
    
    
    
    $
    3,422
    
    
    $
    Amortization of prior service cost
    
    
    18
    
    
    
    18
    
    
    
    Amortization of unrecognized gain (loss)
    
    
    (729
    )
    
    
    (462
    )
    
    
    Total recognized in other comprehensive income (loss)
    
    $
    (711
    )
    
    $
    2,978
    
    
    $
    Total recognized net periodic pension cost and other
comprehensive income
    
    $
    2,647
    
    
    $
    5,624
    
    
    $
    
  27




---



##### 



Notes to Consolidated Financial Statements
   (Dollar amounts in thousands)
    
    2008
    
    
    2007Change in benefit obligation:Benefit obligation at January 1
    
    $
    49,444
    
    
    $
    49,920Service cost
    
    
    3,031
    
    
    
    3,073Interest cost
    
    
    2,908
    
    
    
    2,773Actuarial (gain) loss
    
    
    6,217
    
    
    
    (4,938
    )Benefits paid
    
    
    (5,124
    )
    
    
    (1,384
    )Benefit obligation at December 31
    
    
    56,476
    
    
    
    49,444Reconciliation of fair value of plan assets:Fair value of plan assets at January 1
    
    
    40,803
    
    
    
    45,056Actual return on plan assets
    
    
    9,208
    
    
    
    (5,136
    )Employer contributions
    
    
    3,005
    
    
    
    2,267Benefits paid
    
    
    (5,124
    )
    
    
    (1,384
    )Fair value of plan assets at December 31
    
    
    47,892
    
    
    
    40,803Funded status at December 31 (plan assets less benefit obligations)
    
    $
    (8,584
    )
    
    $
    (8,641
    )
  (Dollar amounts in thousands)
    
    2008
    
    
    2007Net loss (gain)
    
    $
    13,585
    
    
    $
    14,314Prior service cost (credit)
    
    
    (103
    )
    
    
    (121
    )$
    13,482
    
    
    $
    14,193
  2008
    
    
    2007Principal assumptions used:Discount rate
    
    
    5.87
    %
    
    
    5.91
    %Rate of increase in compensation levels
    
    
    3.75
    
    
    
    3.75Expected long-term rate of return on plan assets
    
    
    8.00
    
    
    
    8.00
  Plan Assets
 Pension Plan
    
    
    ESOPPension Plan
    
    
    ESOP
    
    
    Percentage of Plan
    
    
    Percentage of PlanTarget Allocation
    
    
    Target Allocation
    
    
    Assets at December 31,
    
    
    Assets at December 31,Asset Category
    
    2009
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Equity securities
    
    
    50-60
    %
    
    
    100-100
    %
    
    
    54
    %
    
    
    60
    %
    
    
    100
    %
    
    
    100
    %Debt securities
    
    
    30-40
    
    
    
    0-0
    
    
    
    40
    
    
    
    39
    
    
    
    0
    
    
    
    0Other
    
    
    1-5
    
    
    
    0-0
    
    
    
    6
    
    
    
    1
    
    
    
    0
    
    
    
    0Total
    
    
    
    
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  28




---



##### 



Notes to Consolidated Financial Statements
   Contributions
 Estimated Future Payments
 Pension Benefits(Dollar amounts in thousands)2009
    
    $
    7362010
    
    
    8272011
    
    
    9232012
    
    
    1,1032013
    
    
    1,1452014-2018
    
    
    9,265
 Supplemental Executive Retirement Plan
 (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Net loss (gain) during the period
    
    $
    
    
    
    $
    (179
    )
    
    $
    Amortization of prior service cost
    
    
    (74
    )
    
    
    (74
    )
    
    
    Amortization of unrecognized gain (loss)
    
    
    5
    
    
    
    17
    
    
    
    Total recognized in other comprehensive
income (loss)
    
    $
    (69
    )
    
    $
    (236
    )
    
    $
    
  Estimated Future Payments
 SERP Benefits(Dollar amounts in thousands)2009
    
    $
    2010
    
    
    2011
    
    
    2012
    
    
    1342013
    
    
    1322014-2018
    
    
    633
  29




---



##### 



Notes to Consolidated Financial Statements
  December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007Change in benefit obligation:Benefit obligation at January 1
    
    $
    4,058
    
    
    $
    5,592Service cost
    
    
    125
    
    
    
    118Interest cost
    
    
    238
    
    
    
    310Plan participants contributions
    
    
    19
    
    
    
    15Actuarial (gain) loss
    
    
    
    
    
    
    (1,786
    )Benefits paid
    
    
    (192
    )
    
    
    (191
    )Benefit obligation at December 31
    
    $
    4,248
    
    
    $
    4,058Funded status at December 31
    
    $
    4,248
    
    
    $
    4,058
    December 31,2008
    
    
    2007Discount rate
    
    
    6.00
    %
    
    
    6.00
    %Initial weighted health care cost trend rate
    
    
    8.50
    
    
    
    9.00Ultimate health care cost trend rate
    
    
    5.00
    
    
    
    5.00Year in which the rate is assumed to stabilize and remain unchanged
    
    
    2016
    
    
    
    2016
  Years Ended December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Service cost
    
    $
    125
    
    
    $
    118
    
    
    $
    116Interest cost
    
    
    238
    
    
    
    310
    
    
    
    302Amortization of transition obligation
    
    
    60
    
    
    
    60
    
    
    
    60Recognized actuarial loss
    
    
    11
    
    
    
    172
    
    
    
    240Net periodic benefit cost
    
    $
    434
    
    
    $
    660
    
    
    $
    718Net loss (gain) during the period
    
    $
    0
    
    
    $
    (1,506
    )
    
    $
    Amortization of prior service cost
    
    
    (60
    )
    
    
    (60
    )
    
    
    Amortization of unrecognized gain (loss)
    
    
    (11
    )
    
    
    (172
    )
    
    
    Total recognized in other comprehensive income (loss)
    
    $
    (71
    )
    
    $
    (1,738
    )
    
    $
    Total recognized net periodic benefit cost and other
comprehensive income
    
    $
    363
    
    
    $
    (1,078
    )
    
    $
    
  30




---



##### 



Notes to Consolidated Financial Statements
  1% Point
    
    
    1% Point(Dollar amounts in thousands)
    
    Increase
    
    
    DecreaseEffect on total of service and interest cost
components
    
    $
    9
    
    
    $
    (7
    )Effect on post-retirement benefit obligation
    
    
    159
    
    
    
    (135
    )
 Contributions
 Estimated Future Payments
 Post-Retirement Medical Benefits(Dollar amounts in thousands)2009
    
    $
    1752010
    
    
    1802011
    
    
    1852012
    
    
    1902013
    
    
    1952014-2018
    
    
    1,005
 15. OTHER COMPREHENSIVE INCOME (LOSS):
  December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Unrealized holding gains and (losses) on securities
available-for-sale
    
    $
    (19,580
    )
    
    $
    2,063
    
    
    $
    (1,938
    )Reclassification adjustments for (gains) and losses later
recognized in income
    
    
    5,787
    
    
    
    (211
    )
    
    
    (6
    )Net unrealized gains and losses
    
    
    (13,793
    )
    
    
    1,852
    
    
    
    (1,932
    )Tax effect
    
    
    5,517
    
    
    
    (742
    )
    
    
    (771
    )Other comprehensive income (loss)
    
    $
    (8,276
    )
    
    $
    1,110
    
    
    $
    1,161Unrecognized gains and (losses) on benefit plans
    
    $
    
    
    
    $
    (1,737
    )
    
    $
    Amortization of prior service cost included in net
periodic pension cost
    
    
    116
    
    
    
    116
    
    
    
    Amortization of unrecognized gains (losses) included in net
periodic pension cost
    
    
    735
    
    
    
    617
    
    
    
    Benefit plans, net
    
    
    851
    
    
    
    (1,004
    )
    
    
    Tax effect
    
    
    (340
    )
    
    
    207
    
    
    
    Other comprehensive income (loss)
    
    $
    511
    
    
    $
    (797
    )
    
    $
    
  Balance
    
    
    Current
    
    
    Balanceat
    
    
    Period
    
    
    at(Dollar amounts in thousands)
    
    12/31/07
    
    
    Change
    
    
    12/31/08Unrealized gains (losses) on
securities available-for-sale
    
    $
    4,174
    
    
    $
    (8,276
    )
    
    $
    (4,102
    )Unrealized loss on benefit plans
    
    
    (9,355
    )
    
    
    511
    
    
    
    (8,844
    )Total
    
    $
    (5,181
    )
    
    $
    (7,765
    )
    
    $
    (12,946
    )
  31




---



##### 



Notes to Consolidated Financial Statements
 16. REGULATORY MATTERS:
       To Be Well CapitalizedFor Capital
    
    
    Under Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action Provisions(Dollar amounts in thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTotal risk-based capitalCorporation  2008
    
    $
    307,297
    
    
    
    17.32
    %
    
    $
    141,978
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/ACorporation  2007
    
    
    292,995
    
    
    
    18.18
    %
    
    
    128,965
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AFirst Financial Bank  2008
    
    
    293,165
    
    
    
    17.11
    %
    
    
    137,067
    
    
    
    8.00
    %
    
    
    171,334
    
    
    
    10.00
    %First Financial Bank  2007
    
    
    281,819
    
    
    
    18.13
    %
    
    
    124,355
    
    
    
    8.00
    %
    
    
    155,443
    
    
    
    10.00
    %Tier I risk-based capitalCorporation  2008
    
    $
    291,017
    
    
    
    16.40
    %
    
    $
    70,989
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/ACorporation  2007
    
    
    277,644
    
    
    
    17.22
    %
    
    
    64,483
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AFirst Financial Bank  2008
    
    
    280,015
    
    
    
    16.34
    %
    
    
    68,534
    
    
    
    4.00
    %
    
    
    102,801
    
    
    
    6.00
    %First Financial Bank  2007
    
    
    269,412
    
    
    
    17.33
    %
    
    
    62,177
    
    
    
    4.00
    %
    
    
    93,266
    
    
    
    6.00
    %Tier I leverage capitalCorporation  2008
    
    $
    291,017
    
    
    
    12.72
    %
    
    $
    91,530
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/ACorporation  2007
    
    
    277,644
    
    
    
    12.44
    %
    
    
    89,273
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AFirst Financial Bank  2008
    
    
    280,015
    
    
    
    12.64
    %
    
    
    88,586
    
    
    
    4.00
    %
    
    
    110,733
    
    
    
    5.00
    %First Financial Bank  2007
    
    
    269,412
    
    
    
    12.60
    %
    
    
    85,499
    
    
    
    4.00
    %
    
    
    106,874
    
    
    
    5.00
    %
  32




---



##### 



Notes
to Consolidated Financial Statements
 17.
PARENT COMPANY CONDENSED FINANCIAL STATEMENTS:
 The parent companys condensed balance sheets as of December 31, 2008 and 2007, and the related
condensed statements of income and cash flows for each of the three years in the period ended
December 31, 2008, are as follows:CONDENSED BALANCE SHEETS
 December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007ASSETSCash deposits in affiliated banks
    
    $
    7,150
    
    
    $
    7,040Investments in subsidiaries
    
    
    286,525
    
    
    
    281,510Land and headquarters building, net
    
    
    5,562
    
    
    
    5,807Other
    
    
    7,180
    
    
    
    9,035Total
Assets
    
    $
    306,417
    
    
    $
    303,392LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesBorrowings (including $1.0 and $3.4 million from subsidiary)
    
    $
    7,636
    
    
    $
    10,036Dividends payable
    
    
    5,902
    
    
    
    5,785Other liabilities
    
    
    6,035
    
    
    
    5,879Total
Liabilities
    
    
    19,573
    
    
    
    21,700Shareholders equity
    
    
    286,844
    
    
    
    281,692Total
Liabilities and Shareholders Equity
    
    $
    306,417
    
    
    $
    303,392
 CONDENSED STATEMENTS OF INCOME
 Years Ended December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Dividends from subsidiaries
    
    $
    14,836
    
    
    $
    16,500
    
    
    $
    14,192Other income
    
    
    1,010
    
    
    
    1,026
    
    
    
    984Interest on borrowings
    
    
    (362
    )
    
    
    (655
    )
    
    
    (615
    )Other operating expenses
    
    
    (3,342
    )
    
    
    (3,343
    )
    
    
    (3,074
    )Income before income taxes and equity
in undistributed earnings of subsidiaries
    
    
    12,142
    
    
    
    13,528
    
    
    
    11,487Income tax benefit
    
    
    1,124
    
    
    
    1,230
    
    
    
    1,121Income before equity in undistributed
earnings of subsidiaries
    
    
    13,266
    
    
    
    14,758
    
    
    
    12,608Equity in undistributed earnings of subsidiaries
    
    
    11,503
    
    
    
    10,822
    
    
    
    10,931Net income
    
    $
    24,769
    
    
    $
    25,580
    
    
    $
    23,539
  33




---



##### 



Notes
to Consolidated Financial Statements
 CONDENSED STATEMENTS OF CASH FLOWS
 Years Ended December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    24,769
    
    
    $
    25,580
    
    
    $
    23,539Adjustments to reconcile net income to net cash
provided by operating activities:Provision for depreciation and amortization
    
    
    263
    
    
    
    260
    
    
    
    260Equity in undistributed earnings
    
    
    (11,503
    )
    
    
    (10,822
    )
    
    
    (10,931
    )Contribution of shares to ESOP
    
    
    1,277
    
    
    
    1,242
    
    
    
    1,164Increase (decrease) in other liabilities
    
    
    638
    
    
    
    239
    
    
    
    872(Increase) decrease in other assets
    
    
    1,010
    
    
    
    (41
    )
    
    
    (227
    )Net Cash
from Operating Activities
    
    
    16,454
    
    
    
    16,458
    
    
    
    14,677CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of investment securities
    
    
    (928
    )
    
    
    
    
    
    
    Purchase of furniture and fixtures
    
    
    (4
    )
    
    
    (8
    )
    
    
    (43
    )Net
Cash from Investing Activities
    
    
    (932
    )
    
    
    (8
    )
    
    
    (43
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on borrowings
    
    
    (2,400
    )
    
    
    (600
    )
    
    
    Purchase of treasury stock
    
    
    (1,464
    )
    
    
    (5,167
    )
    
    
    (4,087
    )Dividends paid
    
    
    (11,548
    )
    
    
    (11,373
    )
    
    
    (11,181
    )Net
Cash from Financing Activities
    
    
    (15,412
    )
    
    
    (17,140
    )
    
    
    (15,268
    )Net
(Decrease) Increase in Cash
    
    
    110
    
    
    
    (690
    )
    
    
    (634
    )Cash,
Beginning of Year
    
    
    7,040
    
    
    
    7,730
    
    
    
    8,364Cash,
End of Year
    
    $
    7,150
    
    
    $
    7,040
    
    
    $
    7,730Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    358
    
    
    $
    657
    
    
    $
    612Income taxes
    
    $
    11,657
    
    
    $
    8,494
    
    
    $
    11,202
 18. SELECTED QUARTERLY DATA (UNAUDITED)
 2008Net
    
    
    ProvisionInterest
    
    
    Interest
    
    
    Interest
    
    
    for Loan
    
    
    Net
    
    
    Net Income(Dollar amounts in thousands)
    
    Income
    
    
    Expense
    
    
    Income
    
    
    Losses
    
    
    Income
    
    
    Per ShareMarch 31
    
    $
    34,287
    
    
    $
    15,331
    
    
    $
    18,956
    
    
    $
    1,925
    
    
    $
    6,950
    
    
    $
    .53June 30
    
    $
    33,271
    
    
    $
    13,311
    
    
    $
    19,960
    
    
    $
    1,735
    
    
    $
    7,143
    
    
    $
    .55September 30*
    
    $
    33,374
    
    
    $
    12,270
    
    
    $
    21,104
    
    
    $
    2,215
    
    
    $
    3,502
    
    
    $
    .27December 31
    
    $
    33,022
    
    
    $
    11,578
    
    
    $
    21,444
    
    
    $
    1,980
    
    
    $
    7,174
    
    
    $
    .55
 2007Net
    
    
    ProvisionInterest
    
    
    Interest
    
    
    Interest
    
    
    for Loan
    
    
    Net
    
    
    Net Income(Dollar amounts in thousands)
    
    Income
    
    
    Expense
    
    
    Income
    
    
    Losses
    
    
    Income
    
    
    Per ShareMarch 31
    
    $
    33,622
    
    
    $
    15,165
    
    
    $
    18,457
    
    
    $
    1,690
    
    
    $
    6,423
    
    
    $
    .48June 30
    
    $
    34,204
    
    
    $
    15,639
    
    
    $
    18,565
    
    
    $
    1,240
    
    
    $
    6,413
    
    
    $
    .49September 30
    
    $
    34,915
    
    
    $
    16,166
    
    
    $
    18,749
    
    
    $
    1,575
    
    
    $
    6,362
    
    
    $
    .48December 31
    
    $
    34,993
    
    
    $
    15,991
    
    
    $
    19,002
    
    
    $
    2,075
    
    
    $
    6,382
    
    
    $
    .49
 *
    
    Net income for the quarter ended September 30, 2008 was impacted by other-than-temporary
impairment on securities, as discussed in Note 4.  34




---



##### 



Report
of Independent Registered Public Accounting Firm
  Internal ControlIntegrated Framework
   Internal ControlIntegrated Framework
  
  35




---



##### 



Managements Report on Internal Control
Over Financial Reporting
     MANAGEMENTS DISCUSSION AND ANALYSIS
     36




---



##### 



Managements Discussion and Analysis
     CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Allowance for loan losses.
   Securities valuation.
   37




---



##### 



Results
of Operations  Summary for 2008
 Goodwill.
   NET INTEREST INCOME
    2008 Compared to 2007
    
    
    2007 Compared to 2006Increase (Decrease) Due to
    
    
    Increase (Decrease) Due toVolume/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Volume/(Dollar amounts in thousands)
    
    Volume
    
    
    Rate
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    Rate
    
    
    TotalInterest earned on
interest-earning assets:Loans (1) (2)
    
    $
    3,218
    
    
    $
    (8,261
    )
    
    $
    (251
    )
    
    $
    (5,294
    )
    
    $
    1,808
    
    
    $
    3,459
    
    
    $
    62
    
    
    $
    5,329Taxable investment
securities
    
    
    2,172
    
    
    
    (379
    )
    
    
    (35
    )
    
    
    1,758
    
    
    
    698
    
    
    
    940
    
    
    
    30
    
    
    
    1,668Tax-exempt investment
securities (2)
    
    
    (244
    )
    
    
    79
    
    
    
    (1
    )
    
    
    (166
    )
    
    
    870
    
    
    
    (290
    )
    
    
    (20
    )
    
    
    560Federal funds sold
    
    
    259
    
    
    
    (389
    )
    
    
    (131
    )
    
    
    (261
    )
    
    
    (70
    )
    
    
    54
    
    
    
    (5
    )
    
    
    (21
    )Total interest income
    
    
    5,405
    
    
    
    (8,950
    )
    
    
    (418
    )
    
    
    (3,963
    )
    
    
    3,306
    
    
    
    4,163
    
    
    
    67
    
    
    
    7,536Interest paid on
interest-bearing liabilities:Transaction accounts
    
    
    1,470
    
    
    
    (3,981
    )
    
    
    (463
    )
    
    
    (2,974
    )
    
    
    (55
    )
    
    
    1,853
    
    
    
    (9
    )
    
    
    1,789Time deposits
    
    
    (1,013
    )
    
    
    (5,468
    )
    
    
    189
    
    
    
    (6,292
    )
    
    
    (82
    )
    
    
    2,980
    
    
    
    (9
    )
    
    
    2,889Short-term borrowings
    
    
    261
    
    
    
    (692
    )
    
    
    (112
    )
    
    
    (543
    )
    
    
    775
    
    
    
    44
    
    
    
    46
    
    
    
    865Other borrowings
    
    
    555
    
    
    
    (1,189
    )
    
    
    (34
    )
    
    
    (668
    )
    
    
    42
    
    
    
    254
    
    
    
    1
    
    
    
    297Total interest expense
    
    
    1,273
    
    
    
    (11,330
    )
    
    
    (420
    )
    
    
    (10,477
    )
    
    
    680
    
    
    
    5,131
    
    
    
    29
    
    
    
    5,840Net interest income
    
    $
    4,132
    
    
    $
    2,380
    
    
    $
    2
    
    
    $
    6,514
    
    
    $
    2,626
    
    
    $
    (968
    )
    
    $
    38
    
    
    $
    1,696
 (1)
    
    For purposes of these computations, nonaccruing loans are included in the daily
average loan amounts outstanding.(2)
    
    Interest income includes the effect of tax
equivalent adjustments using a federal tax rate of 35%.  38




---



##### 



Results
of Operations  Summary for 2008
 PROVISION FOR LOAN LOSSES
   NON-INTEREST INCOME
  NON-INTEREST EXPENSES
  INCOME TAXES
  COMPARISON OF 2007 TO 2006
        39




---



##### 



Financial
Condition  Summary
    SECURITIES
   1 Year and Less
    
    
    1 to 5 Years
    
    
    5 to 10 Years
    
    
    Over 10 Years
    
    
    2008(Dollar amounts in thousands)
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    TotalU.S. government sponsored
entity mortgage-backed
securities and agencies(1)
    
    $
    937
    
    
    
    4.34
    %
    
    $
    28,467
    
    
    
    4.32
    %
    
    $
    88,761
    
    
    
    4.69
    %
    
    $
    247,466
    
    
    
    5.54
    %
    
    $
    365,631Collateralized mortgage obligations(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    11.37
    
    
    
    70,219
    
    
    
    6.15
    
    
    
    70,227States and political subdivisions
    
    
    13,154
    
    
    
    6.85
    
    
    
    37,134
    
    
    
    7.51
    
    
    
    40,515
    
    
    
    6.83
    
    
    
    53,038
    
    
    
    6.27
    
    
    
    143,841Corporate obligations
    
    
    
    
    
    
    
    
    
    
    6,394
    
    
    
    5.60
    
    
    
    
    
    
    
    
    
    
    
    4,239
    
    
    
    7.74
    
    
    
    10,633Total
    
    
    14,091
    
    
    
    6.68
    
    
    
    71,995
    
    
    
    7.29
    
    
    
    129,284
    
    
    
    5.77
    
    
    
    374,962
    
    
    
    5.40
    
    
    
    590,332Equities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,583
    
    
    
    
    
    
    
    6,583TOTAL
    
    $
    14,091
    
    
    
    
    
    
    $
    71,995
    
    
    
    
    
    
    $
    129,284
    
    
    
    
    
    
    $
    381,545
    
    
    
    
    
    
    $
    596,915
 (1)
    
    Distribution of maturities is based on the estimated average life of the asset. 1 Year and Less
    
    
    1 to 5 Years
    
    
    5 to 10 Years
    
    
    Over 10 Years
    
    
    2007(Dollar amounts in thousands)
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    TotalU.S. government sponsored
entity mortgage-backed
securities and agencies(1)
    
    $
    212
    
    
    
    5.08
    %
    
    $
    1,366
    
    
    
    4.60
    %
    
    $
    65,393
    
    
    
    4.44
    %
    
    $
    222,732
    
    
    
    5.26
    %
    
    $
    289,703Collateralized mortgage obligations(1)
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    11.50
    
    
    
    27
    
    
    
    6.94
    
    
    
    77,144
    
    
    
    5.27
    
    
    
    77,175States and political subdivisions
    
    
    6,933
    
    
    
    5.49
    
    
    
    43,192
    
    
    
    7.37
    
    
    
    49,290
    
    
    
    7.54
    
    
    
    47,100
    
    
    
    6.19
    
    
    
    146,515Corporate obligations
    
    
    7,048
    
    
    
    6.40
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,795
    
    
    
    5.54
    
    
    
    36,843Total
    
    
    14,193
    
    
    
    5.93
    
    
    
    44,562
    
    
    
    7.29
    
    
    
    114,710
    
    
    
    5.77
    
    
    
    376,771
    
    
    
    5.40
    
    
    
    550,236Equities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,784
    
    
    
    
    
    
    
    7,784TOTAL
    
    $
    14,193
    
    
    
    
    
    
    $
    44,562
    
    
    
    
    
    
    $
    114,710
    
    
    
    
    
    
    $
    384,555
    
    
    
    
    
    
    $
    558,020
 (1)
    
    Distribution of maturities is based on the estimated average life of the asset.  40




---



##### 



Financial
Condition  Summary
 LOAN PORTFOLIO
  (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Loan CategoryCommercial, financial and agricultural
    
    $
    499,636
    
    
    $
    461,086
    
    
    $
    407,995
    
    
    $
    382,214
    
    
    $
    401,724Real estate  construction
    
    
    26,137
    
    
    
    29,637
    
    
    
    33,336
    
    
    
    31,918
    
    
    
    32,810Real estate  mortgage
    
    
    628,027
    
    
    
    673,355
    
    
    
    691,989
    
    
    
    707,008
    
    
    
    753,826Consumer
    
    
    302,977
    
    
    
    262,858
    
    
    
    257,065
    
    
    
    272,062
    
    
    
    272,261Lease financing
    
    
    1,878
    
    
    
    2,275
    
    
    
    2,604
    
    
    
    2,845
    
    
    
    3,658Total
    
    $
    1,458,655
    
    
    $
    1,429,211
    
    
    $
    1,392,989
    
    
    $
    1,396,047
    
    
    $
    1,464,279Credit card loans held-for-sale
    
    $
    12,800
    
    
    $
    14,068
    
    
    
    
    
    
    
    
    
    
    
    
 After OneWithin
    
    
    But Within
    
    
    After Five(Dollar amounts in thousands)
    
    One Year
    
    
    Five Years
    
    
    Years
    
    
    TotalMaturity DistributionCommercial, financial and agricultural
    
    $
    234,037
    
    
    $
    219,900
    
    
    $
    45,699
    
    
    $
    499,636Real estate  construction
    
    
    8,925
    
    
    
    9,471
    
    
    
    7,741
    
    
    
    26,137Total
    
    $
    242,962
    
    
    $
    229,371
    
    
    $
    53,440
    
    
    
    525,773Real estate  mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    628,027Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302,977Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,878Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,458,655Credit card loans held-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,800Loans maturing after one year with:Fixed interest rates
    
    
    
    
    
    $
    80,757
    
    
    $
    38,737Variable interest rates
    
    
    
    
    
    
    148,614
    
    
    
    14,703Total
    
    
    
    
    
    $
    229,371
    
    
    $
    53,440
  41




---



##### 



Financial Condition  Summary
 ALLOWANCE FOR LOAN LOSSES
  (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Amount of loans outstanding
at December 31,
    
    $
    1,458,655
    
    
    $
    1,429,211
    
    
    $
    1,392,989
    
    
    $
    1,396,047
    
    
    $
    1,464,279Average amount of loans by year
    
    $
    1,451,911
    
    
    $
    1,409,051
    
    
    $
    1,384,138
    
    
    $
    1,441,247
    
    
    $
    1,452,572Allowance for loan losses
at beginning of year
    
    $
    15,351
    
    
    $
    16,169
    
    
    $
    16,042
    
    
    $
    19,918
    
    
    $
    21,239Loans charged off:Commercial, financial and agricultural
    
    
    2,406
    
    
    
    3,433
    
    
    
    2,066
    
    
    
    6,093
    
    
    
    4,080Real estate  mortgage
    
    
    1,274
    
    
    
    1,026
    
    
    
    1,617
    
    
    
    2,590
    
    
    
    623Consumer
    
    
    5,914
    
    
    
    5,712
    
    
    
    6,826
    
    
    
    8,809
    
    
    
    6,680Leasing
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    1Total loans charged off
    
    
    9,594
    
    
    
    10,176
    
    
    
    10,509
    
    
    
    17,492
    
    
    
    11,384Recoveries of loans previously charged
off:Commercial, financial and agricultural
    
    
    704
    
    
    
    389
    
    
    
    1,262
    
    
    
    284
    
    
    
    452Real estate  mortgage
    
    
    101
    
    
    
    139
    
    
    
    187
    
    
    
    343
    
    
    
    37Consumer
    
    
    1,863
    
    
    
    2,250
    
    
    
    2,204
    
    
    
    1,291
    
    
    
    1,281Leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Total recoveries
    
    
    2,668
    
    
    
    2,778
    
    
    
    3,653
    
    
    
    1,918
    
    
    
    1,771Net loans charged off
    
    
    6,926
    
    
    
    7,398
    
    
    
    6,856
    
    
    
    15,574
    
    
    
    9,613Provision charged to expense
    
    
    7,855
    
    
    
    6,580
    
    
    
    6,983
    
    
    
    11,698
    
    
    
    8,292Balance at end of year
    
    $
    16,280
    
    
    $
    15,351
    
    
    $
    16,169
    
    
    $
    16,042
    
    
    $
    19,918Ratio of net charge-offs during period
to average loans outstanding
    
    
    .48
    %
    
    
    .53
    %
    
    
    .50
    %
    
    
    1.08
    %
    
    
    .66
    %
    42




---



##### 



Financial Condition  Summary
 Years Ended December 31,(Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Commercial, financial and agricultural
    
    $
    10,181
    
    
    $
    10,090
    
    
    $
    9,043
    
    
    $
    8,148
    
    
    $
    11,840Real estate  mortgage
    
    
    1,517
    
    
    
    1,245
    
    
    
    1,364
    
    
    
    867
    
    
    
    850Consumer
    
    
    4,582
    
    
    
    4,016
    
    
    
    5,762
    
    
    
    7,027
    
    
    
    7,228Total
Allowance for Loan Losses
    
    $
    16,280
    
    
    $
    15,351
    
    
    $
    16,169
    
    
    $
    16,042
    
    
    $
    19,918
 NONPERFORMING LOANS
  (Dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Non-accrual loans
    
    $
    12,486
    
    
    $
    7,971
    
    
    $
    9,893
    
    
    $
    8,464
    
    
    $
    19,862Restructured loans
    
    
    98
    
    
    
    50
    
    
    
    52
    
    
    
    57
    
    
    
    430Accruing loans past due over
90 days
    
    
    3,624
    
    
    
    4,462
    
    
    
    4,691
    
    
    
    6,354
    
    
    
    7,813$
    16,208
    
    
    $
    12,483
    
    
    $
    14,636
    
    
    $
    14,875
    
    
    $
    28,105
  (Dollar amounts in thousands)
    
    2008
    
    
    2007Non-accrual loans:1-4 family residential
    
    $
    1,835
    
    
    
    14
    %
    
    $
    2,574
    
    
    
    32
    %Commercial loans
    
    
    9,210
    
    
    
    74
    
    
    
    3,938
    
    
    
    50Consumer loans
    
    
    1,441
    
    
    
    12
    
    
    
    1,459
    
    
    
    18$
    12,486
    
    
    
    100
    %
    
    $
    7,971
    
    
    
    100
    %Past due 90 days or more:1-4 family residential
    
    $
    1,495
    
    
    
    41
    %
    
    $
    1,230
    
    
    
    28
    %Commercial loans
    
    
    1,582
    
    
    
    44
    
    
    
    2,795
    
    
    
    62Consumer loans
    
    
    547
    
    
    
    15
    
    
    
    437
    
    
    
    10$
    3,624
    
    
    
    100
    %
    
    $
    4,462
    
    
    
    100
    %
  43




---



##### 



Financial Condition  Summary
 DEPOSITS
  2008
    
    
    2007
    
    
    2006(Dollar amounts in thousands)
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateNon-interest-bearing
demand deposits
    
    $
    236,628
    
    
    
    
    
    
    $
    226,822
    
    
    
    
    
    
    $
    206,839Interest-bearing demand
deposits
    
    
    247,017
    
    
    
    1.11
    %
    
    
    198,368
    
    
    
    0.94
    %
    
    
    201,928
    
    
    
    1.14
    %Savings deposits
    
    
    433,179
    
    
    
    1.60
    %
    
    
    410,919
    
    
    
    2.62
    %
    
    
    410,458
    
    
    
    1.87
    %Time deposits:$100,000 or more
    
    
    183,664
    
    
    
    3.67
    %
    
    
    189,501
    
    
    
    4.66
    %
    
    
    188,572
    
    
    
    4.27
    %Other time deposits
    
    
    459,916
    
    
    
    3.54
    %
    
    
    477,114
    
    
    
    4.30
    %
    
    
    480,116
    
    
    
    4.01
    %TOTAL
    
    $
    1,560,404
    
    
    
    
    
    
    $
    1,502,724
    
    
    
    
    
    
    $
    1,487,913
  3 months or less
    
    $
    50,721Over 3 through 6 months
    
    
    56,779Over 6 through 12 months
    
    
    53,173Over 12 months
    
    
    50,434TOTAL
    
    $
    211,107
  44




---



##### 



Financial Condition  Summary
 OTHER BORROWINGS
  CAPITAL RESOURCES
   INTEREST RATE SENSITIVITY AND LIQUIDITY
  Interest Rate Risk:
   45




---



##### 



Financial Condition  Summary
  Basis Point
    
    Percentage Change in Net Interest IncomeInterest Rate Change
    
    12 months
    
    
    24 months
    
    
    36 monthsDown 200
    
    
    3.53
    %
    
    
    3.68
    %
    
    
    3.74
    %Down 100
    
    
    3.53
    
    
    
    3.69
    
    
    
    3.75Up 100
    
    
    .15
    
    
    
    1.79
    
    
    
    3.66Up 200
    
    
    -1.13
    
    
    
    1.99
    
    
    
    5.94
  Liquidity Risk:
 CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS
  Contractual Obligations:
 Payments Due InNote
    
    
    One Year
    
    
    One to
    
    
    Three to
    
    
    Over Five(Dollar amounts in thousands)
    
    Reference
    
    
    or Less
    
    
    Three Years
    
    
    Five Years
    
    
    Years
    
    
    TotalDeposits without a stated
maturity
    
    
    
    
    
    $
    927,151
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    927,151Consumer certificates of deposit
    
    
    
    
    
    
    446,158
    
    
    
    138,751
    
    
    
    51,330
    
    
    
    108
    
    
    
    636,347Short-term borrowings
    
    
    10
    
    
    
    21,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,500Other borrowings
    
    
    11
    
    
    
    97,416
    
    
    
    204,478
    
    
    
    76,187
    
    
    
    7,072
    
    
    
    385,153
 Commitments:
 Total Amount
    
    
    One Year
    
    
    Over One(Dollar amounts in thousands)
    
    Committed
    
    
    or Less
    
    
    YearCommitments to extend credit:Unused loan commitments
    
    $
    302,141
    
    
    $
    194,088
    
    
    $
    108,053Commercial letters of credit
    
    
    16,230
    
    
    
    11,262
    
    
    
    4,968
  OUTLOOK
   46




---



##### 



Consolidated Balance Sheet  Average Balances and Interest Rates
 December 31,2008
    
    
    2007
    
    
    2006Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/(Dollar amounts in thousands)
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateASSETSInterest-earning assets:Loans (1) (2)
    
    $
    1,451,911
    
    
    
    100,510
    
    
    
    6.92
    %
    
    $
    1,409,051
    
    
    
    105,804
    
    
    
    7.51
    %
    
    $
    1,384,138
    
    
    
    100,475
    
    
    
    7.26
    %Taxable investment securities
    
    
    485,194
    
    
    
    25,303
    
    
    
    5.22
    
    
    
    444,220
    
    
    
    23,545
    
    
    
    5.30
    
    
    
    430,492
    
    
    
    21,877
    
    
    
    5.08Tax-exempt investments (2)
    
    
    184,574
    
    
    
    13,188
    
    
    
    7.14
    
    
    
    188,012
    
    
    
    13,354
    
    
    
    7.10
    
    
    
    176,044
    
    
    
    12,794
    
    
    
    7.27Federal funds sold
    
    
    19,729
    
    
    
    507
    
    
    
    2.57
    
    
    
    14,756
    
    
    
    768
    
    
    
    5.20
    
    
    
    16,203
    
    
    
    788
    
    
    
    4.87Total interest-earning assets
    
    
    2,141,408
    
    
    
    139,508
    
    
    
    6.51
    %
    
    
    2,056,039
    
    
    
    143,471
    
    
    
    6.98
    %
    
    
    2,006,877
    
    
    
    135,934
    
    
    
    6.77
    %Non-interest earning assets:Cash and due from banks
    
    
    58,676
    
    
    
    
    
    
    
    
    
    
    
    61,655
    
    
    
    
    
    
    
    
    
    
    
    66,302Premises and equipment, net
    
    
    32,524
    
    
    
    
    
    
    
    
    
    
    
    32,762
    
    
    
    
    
    
    
    
    
    
    
    31,309Other assets
    
    
    64,952
    
    
    
    
    
    
    
    
    
    
    
    64,801
    
    
    
    
    
    
    
    
    
    
    
    59,363Less allowance for loan losses
    
    
    (15,539
    )
    
    
    
    
    
    
    
    
    
    
    (15,665
    )
    
    
    
    
    
    
    
    
    
    
    (16,533
    )Totals
    
    $
    2,282,021
    
    
    
    
    
    
    
    
    
    
    $
    2,199,592
    
    
    
    
    
    
    
    
    
    
    $
    2,147,318LIABILITIES AND
SHAREHOLDERS EQUITYInterest-bearing liabilities:Transaction accounts
    
    $
    680,196
    
    
    
    9,660
    
    
    
    1.42
    %
    
    $
    609,287
    
    
    
    12,634
    
    
    
    2.07
    %
    
    $
    612,387
    
    
    
    10,845
    
    
    
    1.77
    %Time deposits
    
    
    643,580
    
    
    
    23,036
    
    
    
    3.58
    
    
    
    666,615
    
    
    
    29,322
    
    
    
    4.40
    
    
    
    668,687
    
    
    
    26,440
    
    
    
    3.95Short-term borrowings
    
    
    37,352
    
    
    
    1,068
    
    
    
    2.86
    
    
    
    32,140
    
    
    
    1,611
    
    
    
    5.01
    
    
    
    15,759
    
    
    
    746
    
    
    
    4.73Other borrowings
    
    
    353,598
    
    
    
    18,726
    
    
    
    5.30
    
    
    
    343,767
    
    
    
    19,394
    
    
    
    5.64
    
    
    
    343,014
    
    
    
    19,098
    
    
    
    5.57Total interest-bearing
liabilities:
    
    
    1,714,726
    
    
    
    52,490
    
    
    
    3.06
    %
    
    
    1,651,809
    
    
    
    62,961
    
    
    
    3.81
    %
    
    
    1,639,847
    
    
    
    57,129
    
    
    
    3.48
    %Non interest-bearing
liabilities:Demand deposits
    
    
    236,628
    
    
    
    
    
    
    
    
    
    
    
    226,822
    
    
    
    
    
    
    
    
    
    
    
    206,839Other
    
    
    43,045
    
    
    
    
    
    
    
    
    
    
    
    42,974
    
    
    
    
    
    
    
    
    
    
    
    25,9581,994,399
    
    
    
    
    
    
    
    
    
    
    
    1,921,605
    
    
    
    
    
    
    
    
    
    
    
    1,872,644Shareholders equity
    
    
    287,622
    
    
    
    
    
    
    
    
    
    
    
    277,987
    
    
    
    
    
    
    
    
    
    
    
    274,674Totals
    
    $
    2,282,021
    
    
    
    
    
    
    
    
    
    
    $
    2,199,592
    
    
    
    
    
    
    
    
    
    
    $
    2,147,318Net interest earnings
    
    
    
    
    
    $
    87,018
    
    
    
    
    
    
    
    
    
    
    $
    80,510
    
    
    
    
    
    
    
    
    
    
    $
    78,805Net yield on interest-earning assets
    
    
    
    
    
    
    
    
    
    
    4.06
    %
    
    
    
    
    
    
    
    
    
    
    3.92
    %
    
    
    
    
    
    
    
    
    
    
    3.93
    %
 (1)
    
    For purposes of these computations, nonaccruing loans are included in the daily average loan amounts outstanding.(2)
    
    Interest income includes the effect of tax equivalent adjustments using a federal tax rate of 35%.  47




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##### 



MARKET AND DIVIDEND INFORMATION
   2008
    
    
    2007Cash
    
    
    
    
    
    
    
    
    
    
    CashTrade Price
    
    
    Dividends
    
    
    Trade Price
    
    
    DividendsQuarter ended
    
    High
    
    
    Low
    
    
    Declared
    
    
    High
    
    
    Low
    
    
    DeclaredMarch 31
    
    $
    32.06
    
    
    $
    25.30
    
    
    
    
    
    
    $
    35.74
    
    
    $
    28.20June 30
    
    $
    33.31
    
    
    $
    28.16
    
    
    $
    .44
    
    
    $
    32.45
    
    
    $
    27.26
    
    
    $
    .43September 30
    
    $
    49.30
    
    
    $
    30.05
    
    
    
    
    
    
    $
    32.78
    
    
    $
    23.48December 31
    
    $
    47.70
    
    
    $
    31.01
    
    
    $
    .45
    
    
    $
    32.29
    
    
    $
    26.93
    
    
    $
    .44
 TOTAL RETURN PERFORMANCE
 Period EndingIndex
    
    12/31/03
    
    
    12/31/04
    
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08First Financial
Corporation
    
    $
    100.00
    
    
    $
    119.62
    
    
    $
    94.96
    
    
    $
    128.08
    
    
    $
    105.62
    
    
    $
    156.93Russell 2000
    
    
    100.00
    
    
    
    118.33
    
    
    
    123.72
    
    
    
    146.44
    
    
    
    144.15
    
    
    
    95.44SNL $1B-$5B Bank
Index
    
    
    100.00
    
    
    
    123.42
    
    
    
    121.31
    
    
    
    140.38
    
    
    
    102.26
    
    
    
    84.81
  48