EXHIBIT 13(a)
                        CONSOLIDATED FINANCIAL STATEMENTS






<PAGE>




REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


Board of Directors and Stockholders
First Financial Corporation




We have audited the accompanying  consolidated balance sheets of First Financial
Corporation  as of  December  31, 1995 and 1994,  and the  related  consolidated
statements of income,  changes in stockholders'  equity, and cash flows for each
of the three  years in the period  ended  December  31,  1995.  These  financial
statements  are  the  responsibility  of  the  Corporation's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of First Financial
Corporation at December 31, 1995 and 1994, and the  consolidated  results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1995 in conformity with generally accepted accounting principles.




January 15, 1996
Milwaukee, Wisconsin


                                       -1-


<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED BALANCE SHEETS

FIRST FINANCIAL CORPORATION



                                                                                           December 31,
                                                                                    1995                  1994
                                                                                -----------            ----------
                                                                                      (Dollars in thousands)
<S>                                                                             <C>                    <C>       
ASSETS

Cash                                                                            $  123,379             $   94,064
Federal funds sold                                                                  34,929                 23,890
Interest-earning deposits                                                           13,801                  1,024
                                                                                ----------             ----------
                                               CASH AND CASH EQUIVALENTS           172,109                118,978

Securities available for sale (at fair value):
    Investment securities                                                           80,999                 68,959
    Mortgage-related securities                                                    571,293                201,373
Securities held to maturity:
    Investment securities (fair value of
      $119,063,000--1995 and $124,434,000
       --1994)                                                                     119,426                129,301
    Mortgage-related securities (fair value of
      $691,060,000--1995 and $1,263,489,000
      --1994)                                                                      699,468              1,301,118
Loans receivable:
    Held for sale                                                                   26,651                 11,736
    Held for investment                                                          3,590,149              3,458,711
Foreclosed properties and repossessed
    assets                                                                           3,379                  5,216
Real estate held for investment or sale                                              8,289                  7,706
Office properties and equipment, at cost                                            51,124                 53,927
Intangible assets, less accumulated
    amortization                                                                    21,481                 26,726
Other assets                                                                       126,740                118,073
                                                                                ----------             ----------

                                                                                $5,471,108             $5,501,824
                                                                                ==========             ==========
</TABLE>



                                                           -2-


<PAGE>
<TABLE>
<CAPTION>



                                                                                          December 31,
                                                                                1995                      1994
                                                                             ----------                ----------
                                                                                     (Dollars in thousands)
<S>                                                                          <C>                       <C>       
LIABILITIES

Deposits                                                                     $4,424,525                $4,381,455
Short-term borrowings                                                            25,972                    13,127
Federal Home Loan Bank and
    other borrowings                                                            544,536                   695,319
Advance payments by borrowers for
    taxes and insurance                                                          13,206                    15,986
Other liabilities                                                                77,952                    68,629
                                                                             ----------                ----------
                                                        TOTAL LIABILITIES     5,086,191                 5,174,516


STOCKHOLDERS' EQUITY

Serial preferred stock, $1 par value,
    3,000,000 shares authorized; none
    outstanding
Common stock, $1 par value, 75,000,000
    shares authorized; shares issued and
    outstanding: 29,676,365--1995;
    29,125,858--1994                                                             29,676                    29,126
Additional paid-in capital                                                       49,756                    50,129
Net unrealized loss on securities
    available for sale                                                           (6,021)                  (8,619)
Treasury stock                                                                                            (3,669)
Common stock purchased by employee
 benefit plans                                                                     (271)                  (1,608)
Retained earnings (substantially
    restricted)                                                                 311,777                   261,949
                                                                             ----------                ----------
                                               TOTAL STOCKHOLDERS' EQUITY       384,917                   327,308

                                                                             $5,471,108                $5,501,824
                                                                             ==========                ==========
</TABLE>


See notes to consolidated financial statements.



                                                           -3-

<PAGE>


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME
     
FIRST FINANCIAL CORPORATION                                                   Year Ended December 31,
                                                                     1995              1994              1993
                                                                    ------           --------           ------
                                                                              (Dollars in thousands,
                                                                             except per share amounts)
<S>                                                                <C>               <C>               <C>     
Interest income:
    Mortgage loans                                                 $183,434          $176,914          $175,998
    Other loans                                                     120,256           100,755            84,595
    Mortgage-related securities                                      98,821            89,379            89,965
    Investments                                                      14,797            14,816            16,153
                                                                   --------          --------          --------
                                           TOTAL INTEREST INCOME    417,308           381,864           366,711
Interest expense:
    Deposits                                                        196,823           174,819           179,766
    Short-term borrowings                                             3,895               666
    Federal Home Loan Bank and
     other borrowings                                                33,453            28,737            22,727
                                                                   --------          --------          --------
                                          TOTAL INTEREST EXPENSE    234,171           204,222           202,493
                                                                   --------          --------          --------
                                             NET INTEREST INCOME    183,137           177,642           164,218
Provision for losses on loans                                         9,738             6,824            10,570
                                                                   --------          --------          --------
                            NET INTEREST INCOME AFTER PROVISIONS
                                             FOR LOSSES ON LOANS    173,399           170,818           153,648
Non-interest income:
    Deposit account service fees                                     12,101            10,582            10,022
    Loan fees and service charges                                    11,109             9,814            10,579
    Service fees on loans sold                                        7,125             7,737             6,587
    Insurance and brokerage sales commis-
       sions                                                          6,849             7,269             6,848
    Net gain on sales of loans held for sale                          2,703             2,732             8,324
    Net gain (loss) on sales of securities
      available for sale                                              1,182             1,104              (385)
    Unrealized loss on impairment of
       mortgage-related securities                                                     (9,000)
    Other                                                             3,222             3,056             2,783
                                                                   --------          --------          --------
                                       TOTAL NON-INTEREST INCOME     44,291            33,294            44,758
                                                                   --------          --------          --------
                                                                    217,690           204,112           198,406
Non-interest expense:
    Compensation, payroll taxes and other
       employee benefits                                             45,263            51,496            50,122
    Federal deposit insurance premiums                               10,169            10,291             7,953
    Occupancy                                                         9,006             9,157             8,497
    Data processing                                                   7,159             7,360             7,462
    Acquisition-related costs                                         6,458
    Telephone and postage                                             6,434             6,083             5,689
    Loan expense                                                      6,257             6,669             6,353
    Marketing                                                         5,941             5,004             4,210
    Furniture and equipment                                           5,303             6,071             6,355
    Amortization of intangible assets                                 5,245             5,365             6,427
    Net cost of (income from) operations
       of foreclosed properties                                        (164)            1,123             3,293
    Other                                                            11,531            11,748            12,603
                                                                   --------          --------          --------
                                      TOTAL NON-INTEREST EXPENSE    118,602           120,367           118,964
                                                                   --------          --------          --------
                                      INCOME BEFORE INCOME TAXES     99,088            83,745            79,442

Income taxes                                                         35,104            30,716            29,691
                                                                   --------          --------          --------

                                                      NET INCOME   $ 63,984          $ 53,029           $49,751
                                                                   ========          ========          ========



Earnings per share:
    Primary                                                        $   2.12          $   1.78          $   1.72
    Fully diluted                                                      2.11              1.77              1.71

Cash dividends paid per share                                      $    .48          $    .40          $    .35
</TABLE>

See notes to consolidated financial statements.

                                                         -4-


<PAGE>


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FIRST FINANCIAL CORPORATION                                     Net
                                                            Unrealized                  Common
                                                               Gain                      Stock
                                                            (Loss) On                  Purchased
                                                Additional  Securities                by Employee                         Total
                                        Common   Paid-In     Available   Treasury       Benefit         Retained      Stockholders'
                                        Stock    Capital     For Sale      Stock         Plans          Earnings          Equity
                                        ------  ---------   ----------   --------      ---------        --------        ---------
                                                                    (Dollars in thousands)

<S>                                    <C>       <C>        <C>          <C>          <C>              <C>               <C>     
Balances at January 1, 1993            $27,999   $43,811    $  (87)      $    0       $(2,488)         $170,744          $239,979
Net Income (including pooled
  company)                                                                                               49,751            49,751
Cash dividends ($.35 per share)                                                                          (8,238)           (8,238)
Exercise of stock options                  321       591                                                                      912
Change in net unrealized gain
  (loss) on securities available
  for sale, net of tax (including
  pooled company)                                            1,834                                                          1,834
Other pre-merger transactions
  of pooled company                       (462)      530                 (4,126)          463                              (3,595)
                                        ------    ------     -----        ------        ------          ---------           ------
BALANCES AT DECEMBER 31, 1993           27,858    44,932     1,747       (4,126)       (2,025)          212,257           280,643

Net income (including pooled
  company)                                                                                               53,029            53,029
Cash dividends ($.40 per share)                                                                          (9,950)           (9,950)
Exercise of stock options                  279     1,316                                                                    1,595

Issuance of common stock in
  conjunction with acquisition             938     3,850                                                  6,613            11,401
Change in net unrealized gain
  (loss) on securities available
  for sale, net of tax (including
  pooled company)                                          (10,366)                                                       (10,366)
Other pre-merger transactions
  of pooled company                         51        31                    457           417                                 956
                                        ------    ------   -------       ------        ------          ---------          -------
BALANCES AT DECEMBER 31, 1994           29,126    50,129    (8,619)      (3,669)       (1,608)          261,949           327,308

Net income                                                                                               63,984            63,984
Cash dividends ($.48 per share)                                                                         (14,156)          (14,156)
Exercise of stock options                  504     2,520                                                                    3,024
Payment on ESOP loan                                                                      790                                 790
Change in net unrealized gain
  (loss) on securities available
  for sale, net of tax (including
  pooled company)                                            2,598                                                          2,598
Other pre-merger transactions
  of pooled company                         46    (2,893)                 3,669           547                               1,369
                                       -------   --------   -------      -------       -------          --------          --------
BALANCES AT DECEMBER 31, 1995          $29,676   $49,756   $(6,021)     $     0       $  (271)         $311,777          $384,917
                                       =======  ========   =======      =======       =======          ========          ========
</TABLE>

See notes to consolidated financial statements.

                                                                -5-


<PAGE>



<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF CASH FLOWS

FIRST FINANCIAL CORPORATION

                                                                             Year Ended December 31,
                                                                     1995              1994              1993
                                                                   --------          --------          ------
                                                                              (Dollars in thousands)
<S>                                                                <C>               <C>               <C>       
OPERATING ACTIVITIES

    Net income                                                     $   63,984        $   53,029        $   49,751
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
        Decrease (increase) in accrued
           interest on loans                                           (4,657)           (2,563)            3,711
        (Decrease) increase in accrued
           interest on deposits                                         4,123               148            (1,928)
        Loans originated for sale                                    (210,150)         (298,813)       (1,005,655)
        Proceeds from sales of loans held
           for sale                                                   211,658           443,931         1,051,358
        Provision for depreciation                                      5,746             6,513             6,307
        Provision for losses on loans                                   9,738             6,824            10,570
        Provision for losses on real
           estate and other assets                                        502             1,125             3,564
        Unrealized loss on impairment of
           mortgage-related securities                                                    9,000
        Amortization of cost in excess of
           acquired businesses                                            832               873               554
        Amortization of core deposit
           intangibles                                                  4,413             4,492             5,873
        Amortization of mortgage
           servicing rights                                             1,197               890             2,379
        Net gain on sales of loans and other
           assets                                                      (3,911)           (4,076)           (8,310)
        Other                                                          38,592            (1,971)           12,320
                                                                   ----------        -----------       ----------
                       NET CASH PROVIDED BY OPERATING ACTIVITIES      122,067           219,402           130,494

INVESTING ACTIVITIES

    Proceeds from sales of investment
        securities available for sale                                  18,759            65,088            45,000
    Proceeds from sales of investment
        securities held to maturity                                                                         6,235
    Proceeds from maturities of investment
        securities held to maturity                                    51,126            24,393            68,486
    Proceeds from maturities of available
        for sale investment securities                                  9,615            16,649
    Purchases of available for sale
      investment securities                                           (15,770)           (2,627)          (80,000)
    Purchases of investment securities held
        to maturity                                                   (62,710)           (7,610)         (159,188)
    Proceeds from sales of mortgage-related
        securities available for sale                                                   182,563            81,287
    Principal payments received on
        mortgage-related securities                                   233,949           292,219           392,557
    Purchases of mortgage-related securities                         (594,952)         (271,719)
    Principal collected on loans
        receivable                                                    564,076           586,875           655,712
    Loans originated for portfolio                                   (726,877)         (972,726)       (1,114,424)
    Additions to office properties and
        equipment                                                      (3,473)           (3,397)           (6,864)
    Proceeds from sales of foreclosed
        properties and repossessed assets                               8,048             8,745            18,605
    Proceeds from sales of real estate
        held for investment                                                18            14,042               293
</TABLE>


                                                           -6-


<PAGE>


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS--Continued

FIRST FINANCIAL CORPORATION                                                    Year Ended December 31,
                                                                     1995              1994              1993
                                                                   --------          --------          ------
                                                                               (Dollars in thousands)
<S>                                                                <C>                 <C>               <C>      
INVESTING ACTIVITIES--Continued
    Business acquisitions, net of cash and
        cash equivalents acquired of $4,593,000
        --1994 and $443,795,000--1993
           Loans receivable                                                             (96,748)         (316,305)
           Investment securities held to
             maturity                                                                    (4,785)          (22,775)
           Mortgage-related securities available
             for sale                                                                                     (81,287)
           Mortgage-related securities held to
             maturity                                                                   (16,742)         (145,098)
           Office properties and equipment                                               (2,387)           (8,445)
           Intangible assets                                                               (699)          (14,541)
           Deposits and related accrued
             interest                                                                   114,297           970,162
           Borrowings                                                                       750            71,897
           Stockholders' equity                                                          11,401
           Other--net                                                                      (494)           (9,813)
                                                                   ----------        ----------        ----------
                                  NET CASH PROVIDED BY (USED IN)
                                            INVESTING ACTIVITIES       76,761          (386,145)           79,775

FINANCING ACTIVITIES
    Net increase (decrease) in deposits                                38,947          ( 96,257)         (119,863)
    Increase (decrease) in advance payments by
        borrowers for taxes and insurance                              (2,780)              337               897
    Funding of official checks for borrower
        tax escrows                                                   (34,953)
    Net increase in short-term borrowings                              12,845            13,127
    Proceeds of borrowings                                          1,094,623         1,119,527           836,807
    Repayments of borrowings                                       (1,245,406)         (881,342)         (940,783)
    Proceeds from exercise of stock options                             3,254             1,845               912
    Proceeds from vesting of employee
        benefit plans                                                   1,929               416               463
    Purchase of treasury stock                                                                             (4,126)
    Payments of cash dividends to
         stockholders                                                 (14,156)           (9,950)           (8,238)
                                                                   ----------        ----------        ----------
                                  NET CASH PROVIDED BY (USED IN)
                                            FINANCING ACTIVITIES     (145,697)          147,703          (233,931)
                                                                   ----------        ----------        ----------
                            INCREASE (DECREASE) IN CASH AND CASH
                                                     EQUIVALENTS       53,131           (19,040)          (23,662)
Cash and cash equivalents at beginning of
     year                                                             118,978           138,018           161,680
                                                                   ----------        ----------        ----------
                        CASH AND CASH EQUIVALENTS AT END OF YEAR   $  172,109        $  118,978        $  138,018
                                                                   ==========        ==========        ==========


Supplemental  disclosure  of cash flow  information:  Cash paid or  credited  to
    accounts for:
        Interest on deposits and borrowings                        $  230,501        $  202,520        $  203,506
        Income taxes                                                   35,138            34,111            31,511
    Non-cash investing activities:
        Investment securities transferred to
          available-for-sale portfolio at
          amortized cost                                               20,734            67,337            48,338
        Mortgage-related securities transferred
          to available-for-sale portfolio at
          amortized cost                                              391,537            64,153           345,468
        Mortgage loans transferred to loans
           held for sale portfolio                                     15,467            26,028            60,238
        Loans receivable transferred to
           foreclosed properties                                        6,158             7,169             7,439
</TABLE>

See notes to consolidated financial statements.

                                                           -7-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FIRST FINANCIAL CORPORATION

December 31, 1995

NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business: First Financial Corporation ("FFC") provides a full range of financial
services  to  individual   customers  in  Wisconsin  and  Illinois  through  its
wholly-owned  insured banking  subsidiary,  First Financial Bank ("FF Bank") and
its  subsidiaries,  all of which are  wholly-owned.  FFC and its  subsidiary are
subject to competition from other financial institutions. FFC and its subsidiary
also are subject to the  regulations  of certain  federal  agencies  and undergo
periodic examinations by those regulatory authorities.

Basis Of Financial Statement Presentation: The consolidated financial statements
have been prepared in accordance with generally accepted  accounting  principles
and include the accounts of FFC and FF Bank.  Significant  intercompany accounts
and transactions have been eliminated.  Investments in joint ventures, which are
not material, are accounted for on the equity method.

The  accompanying  consolidated  financial  statements have been restated for an
acquisition,   discussed  in  Note  B,  which  has  been   accounted  for  as  a
pooling-of-interests.

In preparing the consolidated  financial statements in conformity with generally
accepted  accounting  principles,  management is required to make  estimates and
assumptions  that affect the  amounts  reported  in the  consolidated  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates. Material estimates that are particularly susceptible to change in the
near-term  relate to the  determination  of the allowance  for loan losses,  the
valuation  of  real  estate  acquired  in  connection  with  foreclosures  or in
satisfaction   of  loans  as  well  as  the  valuation  of  intangible   assets,
investments,  mortgage-related  securities,  and mortgage  servicing  rights. In
connection  with the  determination  of the  allowance  for loan losses and real
estate  owned,   management  obtains  independent   appraisals  for  significant
properties.

Cash and Cash  Equivalents:  FFC  considers  its  interest-earning  deposits and
federal funds sold which have original  maturities of three months or less to be
cash equivalents.

Investment    And    Mortgage     Related-Securities     Held-To-Maturity    And
Available-For-Sale: Debt securities are classified as held-to- maturity when FFC
has the intent and ability to hold the securities to maturity.  Held-to-maturity
securities are stated at amortized cost.

Debt   securities   not  classified  as   held-to-maturity   are  classified  as
available-for-sale. Available-for-sale securities are stated at fair value, with
the unrealized gains and losses, net of tax, reported as a separate component of
stockholders' equity. At

                                       -8-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued

December 31, 1995 and 1994 the balances of  stockholders'  equity were decreased
by  $6,021,000  and  $8,619,000,  net of $3,104,000  and  $4,861,000 in deferred
income  taxes.  See  Notes C and D. No  securities  are held by FFC in a trading
account.

In October 1995, the Financial  Accounting  Standards Board ("FASB")  approved a
modification of Statement of Financial  Accounting  Standards  ("SFAS") No. 115,
wherein  from  November  15,  1995  through  December  31,  1995 FF Bank had the
opportunity to reconsider its classification of investment and  mortgage-related
securities as held-to-maturity, trading, or available-for-sale.  Accordingly, on
December  21,  1995,   FFC  chose  to   reclassify   certain   investments   and
mortgage-related securities from held-to- maturity to available-for-sale. At the
date of transfer,  the amortized  cost of the  investment  and  mortgage-related
securities was $20,734,000 and  $391,537,000,  respectively.  The net unrealized
gain on those  securities  was  $895,000  and  $410,000,  which is  included  in
stockholders'  equity  net of  income  tax  effect  of  $322,000  and  $148,000,
respectively.

The  amortized  cost of debt  securities  classified  as  held-to-  maturity  or
available-for-sale  is adjusted for  amortization  of premiums and  accretion of
discounts to maturity, or in the case of mortgage-related  securities,  over the
estimated life of the security. Such amortization is included in interest income
from the related security.

Interest  and  dividends  are  included  in  interest  income  from the  related
securities.  Realized  gains and losses and declines in value judged to be other
than  temporary  are  included in net  securities  gains  (losses).  The cost of
securities sold is based on the specific identification method.

In connection with the amortization of premiums and discounts and in determining
if declines in value are other than temporary,  management estimates future cash
flows  to be  generated  by  pools  of  loans  underlying  the  mortgage-related
securities.  Included in this  evaluation  are such factors as i) estimated loan
prepayment rates, ii) a review of delinquencies, foreclosures, repossessions and
recovery rates relative to the underlying  mortgage loans  collateralizing  each
security,   iii)  the  level  of   available   subordination   or  other  credit
enhancements,  iv) an  assessment  of the  servicer of the  underlying  mortgage
portfolio and v) the rating  assigned to each security by  independent  national
rating agencies.

Interest,  Fees, And Discounts On Loans: Interest on loans is recorded using the
accrual method. Allowances ($914,000--1995;  $719,000--1994) are established for
uncollected  interest on non-accrual loans.  Generally,  a loan is classified as
non-accrual  and the accrual of interest on such loan is  discontinued  when the
contractual  payment of  principal or interest has become more than 90 days past
due or management has serious doubts about further

                                       -9-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued

collectibility  of  principal  or  interest,  even though the loan  currently is
performing.  When a loan is placed on  non-accrual  status,  accrued  but unpaid
interest is reversed.  Generally,  loans are restored to accrual status when the
obligation is brought current,  has performed in accordance with the contractual
terms for a  reasonable  period of time and the ultimate  collectibility  of the
total contractual principal and interest is no longer in doubt.

Loan origination and commitment fees and certain direct loan  origination  costs
are being deferred and the net amounts amortized as an adjustment to the related
loan's yield.  FFC is amortizing  these  amounts,  using the level yield method,
over the contractual life of the related loans.  Such deferred fees are recorded
as income upon prepayment of the related loans.

Unearned discounts on consumer,  home improvement and manufactured housing loans
are amortized over the term of the loans using a method which  approximates  the
level yield method.

The  discounts on loans of acquired  businesses  are being  amortized  using the
level yield method, adjusted for prepayments.

Loans Held For Sale:  Loans held for sale are recorded at the lower of aggregate
cost or market  value and  generally  consist of current  production  of certain
fixed-rate  first mortgage  loans.  Fees received from the borrower are deferred
and recorded as an adjustment of the sales price.

Fees For Loans Serviced For Others:  Effective January 1, 1995, FFC adopted SFAS
or the ("Statement") No. 122, ("Accounting for Mortgage Servicing Rights"). SFAS
No. 122  requires  that a mortgage  banking  enterprise  recognize as a separate
asset the rights to service mortgage loans for others,  whether those rights are
purchased or originated.  In accordance  with the Statement,  an enterprise that
acquires mortgage servicing rights through either the origination or purchase of
mortgage  loans and sells or  securitizes  those  loans  with  servicing  rights
retained  should  allocate the total cost of the mortgage  loans to the mortgage
servicing rights and to the loans (without the mortgage  servicing rights) based
on their  relative  fair values.  As a result of the adoption of SFAS No. 122 in
1995,  FFC realized a pre-tax gain of $1.7 million  ($1.1  million after tax, or
$0.04 per  share)  upon the  capitalization  of  originated  mortgage  servicing
rights.

Originated  servicing  rights resulting from the above adoption of SFAS No. 122,
purchased  servicing  rights  resulting  from the  valuation  of loan  servicing
acquired in business  acquisitions  or in the purchase of loan servicing  rights
from other financial institutions and excess servicing rights generated prior to
the 1995  adoption  of SFAS No.  122,  for  servicing  income  above the  normal
servicing spread,  are amortized over the estimated lives of the loans using the
level yield method, adjusted for

                                      -10-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued

prepayments, and are shown as a reduction of "Service Fees on Loans Sold" in the
consolidated statements of income.

Foreclosed Properties And Repossessed Assets: Real estate and manufactured homes
which were acquired by foreclosure  or by deed in lieu of foreclosure  and other
repossessed  assets  are  carried  at the  lower  of cost or fair  value.  Costs
relating to the development and improvement of property are capitalized; holding
costs are charged to expense.

Allowances For Losses: Allowances for losses on loans, foreclosed properties and
repossessed assets are established when a loss is probable and can be reasonably
estimated.  These  allowances  are  provided  based  on past  experience  and on
prevailing market conditions.  Management's evaluation of loss considers various
factors  including,  but not  limited  to,  general  economic  conditions,  loan
portfolio composition, prior loss experience and estimated collateral value.

A substantial  portion of FF Bank's loans are  collateralized  by real estate in
Wisconsin  and  Illinois.   Accordingly,   the  ultimate   collectibility  of  a
substantial  portion  of  FF  Bank's  loan  portfolio  and  the  recovery  of  a
substantial  portion of the carrying amount of real estate owned are susceptible
to changes in market conditions in Wisconsin and Illinois.

Management  believes  that  the  allowances  for  losses  on  loans,  foreclosed
properties and repossessed assets are adequate.  While management uses available
information  to recognize  losses,  future  additions to the  allowances  may be
necessary based on changes in economic conditions.

Effective  January 1, 1995, FFC adopted SFAS No. 114,  ("Accounting by Creditors
for  Impairment of a Loan").  Statement No. 114,  which was amended by Statement
No. 118,  requires  that  impaired  loans be  measured  at the present  value of
expected future cash flows discounted at the loan's effective interest rate, or,
as a practical  expedient,  at the loan's  observable  market  price or the fair
value of the  collateral  if the loan is collateral  dependent.  The adoption of
Statements No. 114 and 118 had no effect on FFC's financial condition or results
of operations.

Real Estate Held For Investment Or Sale: Real estate held for investment or sale
includes land,  buildings and equipment.  These  investments  are carried at the
lower of initial  cost plus  capitalized  development  period  interest and real
estate taxes, less accumulated depreciation, or estimated fair value.

Depreciation And  Amortization:  The cost of office properties and equipment and
real estate held for investment or sale is being depreciated  principally by the
straight-line  method over the estimated useful lives of the assets. The cost of
leasehold


                                      -11-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued

improvements is being amortized on the  straight-line  method over the lesser of
the term of the respective lease or estimated economic life.

Intangible  Assets:  The cost in excess of net assets of acquired  businesses is
being amortized over ten to twenty years using the straight-line and accelerated
methods.  The cost in excess of net assets of acquired  businesses,  aggregating
$4,164,000 and $4,996,000 at December 31, 1995 and 1994, respectively, is net of
accumulated amortization.

The premiums  resulting from the valuation of core deposits acquired in business
combinations  or in the  purchase  of  branch  offices  are  amortized  over the
estimated  useful life of seven to ten years using the level yield method.  Core
deposit  intangibles,  aggregating  $17,317,000  and $21,730,000 at December 31,
1995 and 1994, respectively, are net of accumulated amortization.

Income Taxes:  FFC and its  subsidiary  file a  consolidated  federal income tax
return and separate state income tax returns. Financial statement provisions are
made in the income tax expense  accounts for deferred taxes applicable to income
and expense items reported in different periods than for income tax purposes.

FFC accounts for income taxes using the liability  method.  Deferred  income tax
assets  and  liabilities  are  adjusted  regularly  to amounts  estimated  to be
receivable   or  payable  based  on  current  tax  law  and  FFC's  tax  status.
Consequently,  tax  expense in future  years may be  impacted  by changes in tax
rates and tax return limitations.

Per Share Amounts: Primary and fully diluted earnings per share are based on the
weighted  average  number of common  shares  outstanding  during each period and
common  equivalent  shares (using the treasury share method)  outstanding at the
end of each period.  FFC's common  equivalent  shares consist  entirely of stock
options.  The resulting number of shares used in computing  primary earnings per
share  in  1995,  1994  and  1993  is  30,185,000,  29,855,000  and  28,851,000,
respectively.  The  resulting  number of shares used in computing  fully diluted
earnings  per  share  in  1995,  1994 and  1993 is  30,334,000,  29,887,000  and
29,118,000, respectively.

Pending  Accounting  Changes:  The FASB  issued  SFAS No. 123  ("Accounting  for
Stock-Based  Compensation") in October 1995 relative to financial accounting and
reporting standards for stock-based employee compensation plans. SFAS No. 123 is
effective  for fiscal years  beginning  after  December 15, 1995.  The Statement
defines a fair value based method of  accounting  for employee  stock options or
similar equity  instruments  and encourages all entities to adopt that method of
accounting for all employee stock compensation plans. However, the Statement

                                      -12-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued

also allows an entity to continue to measure  compensation  cost for these plans
using an intrinsic  value based method of  accounting  prescribed  by Accounting
Principles Board Opinion No. 25 ("APB No. 25").  Entities electing to retain the
accounting  treatment under APB No. 25 must make pro forma footnote  disclosures
of net  income  and  earnings  per share as if the fair  value  based  method of
accounting  defined  in this  statement  has been  applied.  Management  has not
decided which method it will elect.

Reclassifications:  Certain 1994 and 1993  accounts  have been  reclassified  to
conform to the 1995 presentations.

NOTE B--BUSINESS COMBINATIONS

On February 28, 1995, FFC acquired  FirstRock  Bancorp,  Inc.  ("FirstRock")  of
Rockford,  Illinois.  In the  acquisition,  4,366,412 shares of FFC common stock
were issued to  FirstRock  shareholders  based upon an exchange  ratio of 1.7893
shares of FFC common stock for each outstanding share of FirstRock common stock.
Upon closing,  FirstRock's  subsidiary,  First Federal Savings Bank, FSB ("First
Federal") was merged into FF Bank with First Federal's six offices now operating
as branch  banking  offices  of FF Bank.  FirstRock  was  merged  into FFC.  The
transaction  was  accounted  for  as a  pooling-of-interests  and,  accordingly,
financial  statements,  the number of  shares,  and  earnings  per share for all
periods presented have been restated to include the results of FirstRock.

On February  28, 1995  FirstRock  had assets  (unaudited)  of  $376,473,000  and
shareholder's equity (unaudited) of $48,430,000. The total income and net income
(loss) for the  two-month  period  ended  February 28, 1995  (unaudited),  which
reflects the pre- merger  results of FFC and FirstRock  that are included in the
1995 results of operations, are as follows:
                                                          Net
                                       Total            Income
                                      Income            (Loss)
                                      ------            ------
                                       (Dollars in thousands)

FFC                                  $69,579           $ 9,348
FirstRock                              5,383            (3,091)
                                     -------           -------

                                     $74,962           $ 6,257
                                     =======           =======






                                      -13-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE B--BUSINESS COMBINATIONS--Continued

A reconciliation of total income, net income and earnings per share (unaudited),
as previously  reported,  with restated amounts for the years ended December 31,
1994 and 1993 follows:
<TABLE>
<CAPTION>

                                          Year Ended                               Year Ended
                                       December 31, 1994                        December 31, 1993
                                       -----------------                        -----------------
                                       Total               Net                  Total        Net
                                       Income             Income                Income     Income
                                       ------             ------                ------     ------
                                            (Dollars in thousands, except per share amounts)

<S>                                    <C>              <C>                     <C>        <C>     
    Operations:
        Previously reported            $381,944         $ 48,325                $377,844   $ 45,215
        FirstRock                        33,214            4,704                  33,625      4,536
                                       --------         --------                --------   --------

        As restated                    $415,158         $ 53,029                $411,469   $ 49,751
                                       ========         ========                ========   ========

    Earnings per share:
        Primary:
           Previously reported         $   1.91                                            $   1.88
          As restated                      1.78                                                1.72

        Fully diluted:
           Previously reported         $   1.91                                            $   1.86
           As restated                     1.77                                                1.71

</TABLE>

As a result of the FirstRock acquisition, FFC and FirstRock incurred expenses i)
in   conjunction   with  the   acquisition   itself  and  ii)  relative  to  the
reorganization  of  FirstRock's   operations  following  the  acquisition.   The
acquisition/transaction  costs and charges  aggregated $6.5 million on a pre-tax
basis and $4.0  million on an  after-tax  basis,  or $0.14 per share  during the
first quarter of 1995.

On February  26, 1994,  FFC  completed  the  acquisition  of  NorthLand  Bank of
Wisconsin,  SSB ("NorthLand") of Ashland,  Wisconsin.  FFC issued  approximately
938,000 shares of common stock,  valued in the aggregate at $14.2 million at the
time of the acquisition.  The acquisition of NorthLand has been accounted for as
a  pooling-of-interests.  NorthLand  was not material to the  operations of FFC;
therefore,  balances  for prior  years  have not been  restated.  However,  1994
amounts have been adjusted to reflect the  transaction  as if it had occurred on
January 1, 1994. NorthLand,  which was merged into FF Bank, had total assets and
stockholders'   equity  of  $125.6   million   (unaudited)   and  $11.4  million
(unaudited), respectively, at December 31, 1993.



                                      -14-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE B--BUSINESS COMBINATIONS--Continued

Condensed 1993 operating results for NorthLand were as follows:


(Dollars in thousands)
                                                                       1993
                                                                      ------
Net interest income                                                   $5,917
Provision for losses on loans                                           (482)
Non-interest income                                                    1,460
Non-interest expense                                                  (4,962)
Income taxes                                                            (858)
                                                                      ------
Net income                                                            $1,075
                                                                      ======



                                      -15-

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE C--INVESTMENT SECURITIES

The  following  is a summary of  available-for-sale  investment  securities  and
held-to-maturity investment securities.
<TABLE>
<CAPTION>
                                                                  Gross Unrealized
                                              Amortized        -----------------------
                                                 Cost           Gains           Losses        Fair Value
                                              ---------        -------         -------        ----------
                                                                (Dollars in thousands)
<S>                                           <C>                  <C>             <C>           <C>     
December 31, 1995:

   Available-for-sale:

     U.S. Government and
        federal agency
        obligations                           $ 31,812             $  916          $   51        $ 32,677
     Adjustable-rate mortgage
        mutual fund                             47,905                 17             659          47,263
     Corporate and bank notes
        receivable (investment
        grade)                                     997                 62                           1,059
                                              --------             ------          ------        --------

                                              $ 80,714             $  995          $  710        $ 80,999
                                              ========             ======          ======        ========

   Held-to-maturity:

      U.S. Government and
        federal agency
        obligations                           $113,519             $  417          $  777        $113,159
     Corporate and bank notes
       receivable (investment
       grade)                                    4,859                  2              11           4,850
     State and municipal
        obligations                              1,048                  8               2           1,054
                                              --------             ------          ------        --------

                                              $119,426             $  427          $  790        $119,063
                                              ========             ======          ======        ========

December 31, 1994:

   Available-for-sale:

     U.S. Government and
        federal agency
        obligations                           $ 21,088             $    8          $  505        $ 20,591
     Adjustable-rate mortgage
        mutual fund                             47,227                              2,147          45,080
      Real estate investment
        trust                                    2,371                172                           2,543
      Corporate and bank notes
        receivable (investment
        grade)                                     750                                  5             745
                                              --------             ------          ------        --------

                                              $ 71,436             $  180          $2,657        $ 68,959
                                              ========             ======          ======        ========

   Held-to-maturity:

      U.S. Government and
        federal agency
        obligations                           $ 86,162             $    1          $4,339        $ 81,824
     Corporate and bank notes
       receivable (investment
       grade)                                   38,202                  1             501          37,702
     State and municipal
        obligations                              4,433                  1              26           4,408
      Certificates of deposit                      504                                  4             500
                                              --------             ------          ------        --------

                                              $129,301             $    3          $4,870        $124,434
                                              ========             ======          ======        ========
</TABLE>
                                                       -16-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE C--INVESTMENT SECURITIES--Continued

The amortized cost and fair value of investment securities at December 31, 1995,
by contractual maturity or repricing date, are shown below.

<TABLE>
<CAPTION>

                                               Available-For-Sale             Held-To-Maturity
                                             ---------------------          ----------------------
                                             Amortized        Fair          Amortized        Fair
                                               Cost           Value           Cost           Value
                                             ---------      -------         ----------      ------
                                                             (Dollars in thousands)

<S>                                          <C>            <C>             <C>            <C>     
  Due in one year or less                    $ 56,973       $ 56,335        $ 73,352       $ 72,660
  Due after one year through
    five years                                 23,741         24,664          45,502         45,816
  Due after five years through
    ten years                                                                    572            587
                                             --------       --------        --------       --------

                                             $ 80,714       $ 80,999        $119,426       $119,063
                                             ========       ========        ========       ========
</TABLE>


During the years ended December 31, 1995, 1994 and 1993,  investment  securities
available  for  sale  with a fair  value  at the  date of  sale of  $18,759,000,
$65,088,000, and $45,000,000,  respectively, were sold. The gross realized gains
on such sales totaled  $1,182,000,  $1,319,000,  and $162,000 in 1995, 1994, and
1993,  respectively.  Gross realized  losses on such sales totaled  $544,000 and
$540,000 in 1994 and 1993, respectively.

Accrued interest on investment securities, including those securities classified
as federal funds sold,  interest-earning deposits and short-term securities, was
$3,470,000 and $3,351,000 at December 31, 1995 and 1994, respectively.


                                      -17-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE D--MORTGAGE-RELATED SECURITIES

The  following  is  a  summary  of  available-for-sale   and  held-to-  maturity
mortgage-related securities.
<TABLE>
<CAPTION>

                                                                  Gross Unrealized
                                              Amortized       ------------------------
                                                 Cost           Gains           Losses          Fair Value
                                              ---------       --------         -------         ------------
                                                                (Dollars in thousands)
<S>                                           <C>               <C>              <C>             <C>       
December 31, 1995:

  Available-for-sale:

      Mortgage-backed securities:
        Adjustable-rate                       $  475,609        $ 4,462          $14,041         $  466,030
        Fixed-rate                                38,580             88              587            38,081

      Collateralized mortgage
        obligations:
         Adjustable-rate                          55,331            843               65            56,109
         Fixed-rate                               11,182             23              132            11,073
                                              ----------        -------          -------        ----------

                                              $  580,702        $ 5,416          $14,825        $  571,293
                                              ==========        =======          =======        ==========


  Held-to-maturity:

    Mortgage-backed securities:
         Adjustable-rate                      $  333,410        $2,255           $ 2,784        $  332,881
         Fixed-rate                               90,439         2,553                32            92,960

    Collateralized mortgage
      obligations:
         Adjustable-rate                         275,008           666            11,092           264,582
         Fixed-rate                                  611            26                                 637
                                              ----------        -------          -------        ----------

                                              $  699,468        $ 5,500          $13,908        $  691,060
                                              ==========        =======          =======        ==========


December 31, 1994:

   Available-for-sale:

    Mortgage-backed securities:
         Adjustable-rate                      $  173,821        $    29          $ 8,661        $  165,189
         Fixed-rate                               16,043              1              922            15,122

    Collateralized mortgage
       obligations:
         Adjustable-rate                           9,982                             494             9,488
         Fixed-rate                               12,529                             955            11,574
                                              ----------        -------          -------        ----------

                                              $  212,375        $    30          $11,032        $  201,373
                                              ==========        =======          =======        ==========

  Held-to-maturity:

    Mortgage-backed securities:
         Adjustable-rate                      $  830,916                         $22,138        $  808,778
         Fixed-rate                              141,331        $   688            4,634           137,385

    Collateralized mortgage
       obligations:
         Adjustable-rate                         326,756             35           11,525           315,266
         Fixed-rate                                2,115              1               56             2,060
                                              ----------        -------          -------        ----------

                                              $1,301,118        $   724          $38,353        $1,263,489
                                              ==========        =======          =======        ==========
</TABLE>

                                      -18-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE D--MORTGAGE-RELATED SECURITIES--Continued

The following tables summarize aggregate mortgage-related securities by security
type and issuer.
<TABLE>
<CAPTION>

                                         December 31, 1995                     December 31, 1994
                               ----------------------------------      ------------------------------------
                               Amortized      Fair        Carrying     Amortized      Fair        Carrying
Issuer/Security Type              Cost        Value        Value          Cost        Value        Value
--------------------           ----------   ---------     --------     ----------   ---------     ---------
                                                          (Dollars in thousands)
<S>                            <C>          <C>           <C>          <C>          <C>           <C>       
U.S. Government agencies:
 Mortgage-backed certi-
  ficates                      $  347,177   $  353,712    $  349,216   $  397,325   $  383,830    $  395,544
 Collateralized mortgage
  obligations                     341,521      331,764       342,190      349,267      336,328       347,817
                               ----------   ----------    ----------   ----------   ----------    ----------
    Total agencies                688,698      685,476       691,406      746,592      720,158       743,361
                               ----------   ----------    ----------   ----------   ----------    ----------

Private issuers:
 Mortgage-backed certi-
  ficates
    Senior position               492,401      485,411       487,914      660,922      644,136       658,508
    Mezzanine position             98,459       90,829        90,829      103,864       98,507        98,507
 Collateralized mort-
  gage obligations                    612          637           612        2,115        2,061         2,115
                               ----------   ----------    ----------   ----------   ----------    ----------
    Total private issuers         591,472      576,877       579,355      766,901      744,704       759,130
                               ----------   ----------    ----------   ----------   ----------    ----------

        Totals                 $1,280,170   $1,262,353    $1,270,761   $1,513,493   $1,464,862    $1,502,491
                               ==========   ==========    ==========   ==========   ==========    ==========

Total carrying value per consolidated 
 financial statements, by classification:
    Available-for-sale portfolio                          $  571,293                              $  201,373
    Held-to-maturity portfolio                               699,468                               1,301,118
                                                          ----------                              ----------
        Total carrying value                              $1,270,761                              $1,502,491
                                                          ==========                              ==========
</TABLE>


                                                       -19-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE D--MORTGAGE-RELATED SECURITIES--Continued

The  mortgage-related  securities  portfolio at the end of 1995,  excluding  six
private-issuer  securities  downgraded  to below  investment  grade  (having  an
aggregate carrying value of approximately  $28,900,000),  consisted of either i)
U.S. Government agency-backed securities or ii) securities rated at a minimum of
investment  grade  quality  by at least one  nationally  recognized  independent
rating agency as follows:
<TABLE>
<CAPTION>

(Dollars in thousands)

                                                 Amortized                      Fair                    Carrying
Issuer                                              Cost                        Value                     Value
-------------------------                       -----------                  ----------                ----------

<S>                                              <C>                         <C>                       <C>       
U.S. Government Agencies                         $  688,698                  $  685,476                $  691,406
Private issuers:
  Securities rated AA or
   above                                            503,325                     498,101                   500,403
  Other securities of
    investment grade                                 54,642                      49,897                    50,073
  Securities rated below
    investment grade                                 33,505                      28,879                    28,879
                                                 ----------                  ----------                ----------
                                                 $1,280,170                  $1,262,353                $1,270,761
                                                 ==========                  ==========                ==========
</TABLE>


In 1994,  FFC recorded a $9.0 million  permanent  impairment  loss on two of the
securities  rated  below  investment  grade.  The other  securities  rated below
investment grade continue to be performing.

With the exception of collateralized  mortgage obligations,  noted in the tables
above,  FFC  does  not  invest  in,  nor is a party  to,  derivative  investment
instruments.

No mortgage-related securities classified as available for sale were sold during
the year ended  December 31, 1995.  During the years ended December 31, 1994 and
1993,  mortgage-related  securities  available for sale with a fair value at the
date of sale of $182,563,000 and $81,287,000, respectively, were sold. The gross
realized  gains on such sales  totaled  $461,000  and  $14,000 in 1994 and 1993,
respectively.  The gross  realized  losses on such sales  totaled  $132,000  and
$21,000 in 1994 and 1993, respectively.  The 1994 sales were related to sales of
mortgage-related  securities  previously  classified as available for sale.  The
1993 sales related to the  mortgage-related  securities  portfolio acquired in a
prior acquisition which did not meet FFC's investment guidelines.

Accrued interest  receivable on  mortgage-related  securities was $8,475,000 and
$8,394,000 at December 31, 1995 and 1994, respectively.



                                      -20-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE E--LOANS RECEIVABLE

Loans receivable held for investment consist of the following:
<TABLE>
<CAPTION>

                                                                              December 31,
                                                                     1995                        1994
                                                                  ----------                  ----------
                                                                          (Dollars in thousands)
<S>                                                               <C>                         <C>       
Real estate mortgage loans:
   Residential (including multi-family)                           $2,176,659                  $2,204,032
   Commercial and other                                              136,714                     134,715
   Construction - residential (including
        multi-family)                                                 56,314                      64,944
   Construction - commercial                                          15,710                       8,270
                                                                  ----------                  ----------
        Total real estate mortgage loans                           2,385,397                   2,411,961

Consumer and other loans:
   Consumer                                                          362,659                     304,771
   Home equity                                                       284,700                     240,915
   Education                                                         240,650                     192,542
   Credit card                                                       214,107                     200,747
   Manufactured housing                                              139,385                     152,674
   Business                                                           17,198                      19,023
                                                                  ----------                  ----------
        Total consumer and other loans                             1,258,699                   1,110,672
                                                                  ----------                  ----------

Total loans before net items                                       3,644,096                   3,522,633

Less:
   Allowances for losses                                              25,235                      25,180
   Undisbursed loan proceeds                                          28,992                      36,809
   Deferred net loan fees (costs)                                       (977)                        555
   Discount on loans of acquired businesses                              769                         894
   Unearned discounts (premiums)                                         (72)                        484
                                                                  ----------                  ----------
                                                                      53,947                      63,922
                                                                  ----------                  ----------

                                                                  $3,590,149                  $3,458,711
                                                                  ==========                  ==========
</TABLE>
Accrued interest on loans receivable was $25,777,000 and $21,202,000 at December
31, 1995 and 1994, respectively.

The  following  table sets forth the  composition  of the  non-residential  real
estate loan  portfolio,  including both  permanent and  construction  loans,  by
geographic location of the related collateral properties.

<TABLE>
<CAPTION>
                                                                 December 31,
                                                   1995                               1994
                                         -----------------------             -------------------------
                                                           Percent                            Percent
                                                             Of                                 Of
        Property Location                 Amount            Total            Amount            Total
        -----------------                --------          -------           -------          --------
                                                     (Dollars in thousands)

<S>                                      <C>                  <C>            <C>                <C>  
        Wisconsin                        $ 96,196             63.1%          $ 93,530           65.4%
        Illinois                           30,734             20.2             23,401           16.4
        Minnesota                           7,343              4.8              7,525            5.3
        Georgia                             4,021              2.6              4,106            2.9
        Iowa                                2,547              1.7              2,588            1.8
        Arizona                             2,492              1.6              2,503            1.7
        Tennessee                           2,399              1.6              2,829            2.0
        Other                               6,692              4.4              6,503            4.5
                                         --------            -----           --------          -----

                                         $152,424            100.0%          $142,985          100.0%
                                         ========            =====           ========          =====

</TABLE>


                                      -21-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE F--FORECLOSED PROPERTIES AND REPOSSESSED ASSETS

Foreclosed properties and repossessed assets are summarized as follows:

<TABLE>
<CAPTION>

                                                                                       December 31,
                                                                                1995                 1994
                                                                               ------               ------
                                                                                  (Dollars in thousands)

<S>                                                                            <C>                  <C>    
Real estate owned                                                              $ 2,531              $ 3,592

Real estate judgments subject to redemption                                      1,436                2,503
Manufactured housing owned                                                         303                  171
Repossessed collateral assets                                                      102                   96
                                                                               -------              -------
                                                                                 4,372                6,362
Less allowance for losses                                                          993                1,146
                                                                               -------              -------

                                                                               $ 3,379              $ 5,216
                                                                               =======              =======
</TABLE>


NOTE G--ALLOWANCES FOR LOSSES

A summary of the activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>


                                                                           Year Ended December 31,
                                                                 1995              1994               1993
                                                                ------            ------             ------
                                                                           (Dollars in thousands)

<S>                                                             <C>               <C>                <C>    
Balance at beginning of year                                    $25,180           $25,905            $19,540
Acquired banks' allowance                                                             816              4,885
Provisions                                                        9,738             6,824             10,570
Charge-offs                                                     (11,087)           (9,872)           (10,486)
Recoveries                                                        1,404             1,507              1,396
                                                                -------           -------            -------

                                      BALANCE AT END OF YEAR    $25,235           $25,180            $25,905
                                                                =======           =======            =======
</TABLE>

A summary of the activity in the allowance  for losses on foreclosed  properties
and repossessed  assets  follows.  The provisions for losses are included in the
Consolidated  Statements of Income in "Net Cost of (Income  From)  Operations of
Foreclosed Properties."

<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                                1995               1994               1993
                                                               ------             ------             ------
                                                                           (Dollars in thousands)

<S>                                                            <C>                <C>                <C>   
Balance at beginning of year                                   $1,146             $3,561             $3,377
Provisions                                                         60              1,000              3,519
Charge-offs                                                      (213)            (3,415)            (3,335)
                                                               ------             ------             ------

                                      BALANCE AT END OF YEAR   $  993             $1,146             $3,561
                                                               ======             ======             ======
</TABLE>

                                                       -22-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE H--OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment are summarized as follows:
<TABLE>
<CAPTION>

                                                                                     December 31,
                                                                          1995                         1994
                                                                        --------                     ------
                                                                                 (Dollars in thousands)

<S>                                                                     <C>                         <C>    
Land and parking lot improvements                                       $12,160                     $12,143
Office buildings and improvements                                        52,083                      51,708
Furniture and equipment                                                  36,814                      38,437
Leasehold improvements                                                    2,850                       2,602
                                                                        -------                     -------
                                                                        103,907                     104,890
Less allowances for depreciation and
   amortization                                                          52,783                      50,963
                                                                        -------                     -------

                                                                        $51,124                     $53,927
                                                                        =======                     =======
</TABLE>

NOTE I--DEPOSITS

Deposits are summarized as follows:
<TABLE>
<CAPTION>

                                              December 31, 1995                     December 31, 1994
                                                            Weighted                                  Weighted
                                                            Average                                    Average
                                         Amount               Rate                Amount                 Rate
                                        ---------           --------            ----------            --------
                                                               (Dollars in thousands)

Checking accounts:
<S>                                    <C>                     <C>              <C>                     <C>  
   Interest-bearing                    $  321,929              1.17%            $  333,144              1.46%
   Non-interest-bearing                   151,274                                  143,210
                                       ----------                               ----------
    Total checking
     accounts                             473,203              0.78                476,354              1.01

Passbook accounts                         687,960              2.67                780,883              2.92

Variable-rate insured
   money market accounts                  310,545              3.45                321,421              3.51

Certificate accounts (by original maturity):
   Less than one year                     698,031              5.62                349,650              4.42
   One to two years                     1,022,663              5.91                842,256              4.54
   Two to three years                     500,308              5.31                780,653              4.97
   Three to four years                    260,684              5.27                284,651              5.23
   Four years or more                     462,914              6.16                541,493              6.48
                                       ----------                               ----------
    Total certificates                  2,944,600              5.72              2,798,703              5.09
                                       ----------                               ----------

                                        4,416,308              4.56%             4,377,361              4.15%
                                                               ====                                     ====
Accrued interest                            8,217                                    4,094
                                       ----------                               ----------
                                       $4,424,525                               $4,381,455
                                       ==========                               ==========
</TABLE>


                                                       -23-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE I--DEPOSITS--Continued

Aggregate annual maturities of certificate  accounts at December 31, 1995 are as
follows:

   (Dollars in thousands)

              Matures During
                Year Ended
               December 31,
              --------------

                    1996                                           $1,916,572
                    1997                                              646,650
                    1998                                              201,264
                    1999                                               92,456
                    2000                                               83,975
                    Thereafter                                          3,683
                                                                   ----------
                                                                   $2,944,600
                                                                   ==========

Interest expense on deposits consists of the following:
<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                         1995               1994                1993
                                                       --------           --------            ------
                                                                  (Dollars in thousands)

<S>                                                    <C>                <C>                 <C>     
Passbook                                               $ 21,017           $ 25,159            $ 26,932
Checking                                                  4,202              6,426               7,302
Variable-rate insured
  money market                                           10,450              8,943               9,266
Certificates                                            161,154            134,291             136,266
                                                       --------           --------            --------
                                                       $196,823           $174,819            $179,766
                                                       ========           ========            ========
</TABLE>

NOTE J--BORROWINGS

Short term  borrowings of $25,972,000  and  $13,127,000 at December 31, 1995 and
1994,  respectively,  consisted  of  sales of  securities  under  agreements  to
repurchase the identical securities (reverse repurchase agreements). The reverse
repurchase agreements had a weighted average rate of 5.89% and 5.76% at December
31, 1995 and 1994,  respectively.  All agreements outstanding at the end of 1995
had  maturity  dates  within  ninety  days.  These  agreements  are  treated  as
financings  with  the  obligations  to  repurchase  securities  reflected  as  a
liability  and the dollar amount of the  securities  underlying  the  agreements
remaining in the asset  accounts.  The securities  underlying the agreements are
held by the  counter-party  brokers in FF Bank's  account.  The agreements  were
collateralized by mortgage-related securities having a fair value of $27,786,000
and  $13,395,000  at  December  31,  1995 and  1994,  respectively.  Based  upon
month-end  balances,  securities  sold under  agreements to repurchase  averaged
$59,092,000  and  $14,006,000  during 1995 and 1994,  respectively.  The maximum
amount outstanding at any month-end was $100,454,000 and $45,742,000 during 1995
and 1994, respectively.



                                      -24-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE J--BORROWINGS-Continued

At  December  31,  1995,  FFC has an  unused  line-of-credit  in the  amount  of
$18,000,000. The line-of-credit is available to FFC for working-capital purposes
or for potential  future  acquisitions.  Under the terms of the  line-of-credit,
which is available through April,  1996,  interest on outstanding notes would be
payable at the lender's then prevailing prime rate. The line-of-credit agreement
contains  various  covenants  relative  to the  operations  of FFC and FF  Bank.
Included among the covenants are  restrictions on levels of total borrowings and
the interest-bearing asset/liability ratio for FFC, on a consolidated basis, and
a requirement that FF Bank maintain a minimum  risk-based  regulatory capital of
8.0%. All of such covenants are met at December 31, 1995. In addition, FFC would
pledge its stock in FF Bank as  collateral  should the  line-of-credit  be drawn
upon.

Federal Home Loan Bank ("FHL Bank") advances and other  borrowings are comprised
of the following:
<TABLE>
<CAPTION>

                                                                         December 31,
                                                            1995                          1994
                                                     -----------------------       -----------------------
                                                                    Weighted                      Weighted
                                                                    Average                       Average
                                     Maturity         Amount          Rate          Amount          Rate
                                     --------        -------        --------       -------        --------
                                                                    (Dollars in thousands)

<S>                                  <C>             <C>              <C>          <C>              <C>  
Federal Home Loan Bank:              On Demand       $154,401         5.95%        $450,050         6.01%
                                     1995                                           150,250         4.61
                                     1996             320,367         5.81           21,309         6.20
                                     1997                  31         7.00               31         7.00
                                     2000                 162         7.00              162         7.00
                                     2001                 100         5.50              100         5.50
                                     2003                 307         2.50              307         2.50

Subordinated notes                   1996              54,925         8.51           54,977         8.51

Collateralized mortgage
  obligations                        Various            8,024        18.65           11,818        15.35

Industrial development
  revenue bonds                      Various            6,219         7.10            6,315         7.07
                                                     --------                      --------

                                                     $544,536         6.33%        $695,319         6.08%
                                                     ========        =====         ========        =====
</TABLE>



                                                       -25-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE J--BORROWINGS--Continued

Aggregate maturities on borrowings, including short-term borrowings, at December
31, 1995 are as follows.  Payments on  collateralized  mortgage  obligations are
included based upon estimated prepayments on the underlying mortgage portfolios.

         (Dollars in thousands)

         Matures During
           Year Ended
          December 31,
         --------------

               1996                                                  $555,665
               1997                                                     3,277
               1998                                                     2,707
               1999                                                     1,914
               2000                                                       883
               Thereafter through 2021                                  6,062
                                                                     --------
                                                                     $570,508
                                                                     ========

FF Bank is  required  to  maintain  unencumbered  first  mortgage  loans  in its
portfolio  aggregating at least 167% of the amount of outstanding  advances from
the FHL Bank as collateral.  In addition, these borrowings are collateralized by
FHL Bank stock of $35,456,000 at December 31, 1995,  which is included in "Other
Assets" in the consolidated balance sheets.

Subordinated  notes  ("the  Notes") are payable at maturity on November 1, 1999.
Interest at the rate of 8% per annum is payable monthly.  Under the terms of the
indenture  relating  to the  Notes,  the  ability  of FFC  to  incur  additional
indebtedness,  pay cash dividends or make other capital distributions is limited
under certain  circumstances.  The indenture does not limit the ability of FFC's
subsidiary to incur indebtedness (except for indebtedness that is guaranteed by,
or secured by,  property of FFC).  Unamortized  issuance  costs  relating to the
Notes  totaled  $1,068,000  and  $1,346,000  at  December  31,  1995,  and 1994,
respectively,  and are being amortized using the interest method. The Notes were
redeemed by FFC at par plus accrued interest on January 15, 1996.

UFS Capital  Corporation  and FFS Funding  Corporation,  FF Bank's  wholly-owned
finance  subsidiaries,  have  issued the  collateralized  mortgage  obligations.
Principal repayments are scheduled in varying amounts through January, 2003. The
obligations are  collateralized  by  mortgage-backed  securities with a carrying
value of $11,443,000 and a fair value of $11,809,000 at December 31, 1995.

Industrial  Development  Revenue  Bonds are  payable in ten annual  installments
ranging from $100,000 to $150,000  with  additional  payments of $1,910,000  and
$3,320,000  due  October  1, 2012 and 2021,  respectively.  Interest  is payable
semi-annually. The

                                      -26-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE J--BORROWINGS--Continued

bonds were issued to refinance an apartment  project which was previously  sold.
The bonds are collateralized by mortgage-backed securities with a carrying value
of $8,360,000 at December 31, 1995. FF Bank has a loan receivable from the buyer
of $5,818,000 at December 31, 1995,  which is secured by a first mortgage on the
apartment project.

NOTE K--INCOME TAXES

The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                       1995                 1994               1993
                                                    -----------          ----------         -------
                                                                   (Dollars in thousands)
<S>                                                   <C>                   <C>                <C>    
Current:
  Federal                                             $31,425               $30,743            $28,596
  State                                                 2,435                 1,903              3,475
                                                      -------               -------            -------
                                                       33,860                32,646             32,071

Deferred (credit):
  Federal                                               1,091                (2,080)            (2,075)
  State                                                   153                   150               (305)
                                                      -------               -------            -------
                                                        1,244                (1,930)            (2,380)
                                                      -------               -------            -------
                                                      $35,104               $30,716            $29,691
                                                      =======               =======            =======

</TABLE>

The  provision  for income  taxes  differs  from that  computed  at the  federal
statutory corporate tax rate as follows:
<TABLE>
<CAPTION>

                                                                     Year Ended December 31,
                                                          1995                 1994               1993
                                                       -----------          ----------         -------
                                                                     (Dollars in thousands)

<S>                                                      <C>                   <C>                <C>    
Income before income taxes                               $99,088               $83,745            $79,442
                                                         =======               =======            =======

Tax at federal statutory rate (35%)                      $34,681               $29,311            $27,805
Add (deduct) effect of:
  State income taxes (net of
    federal income taxes)                                  1,682                 2,019              2,363
  Other                                                   (1,259)                 (614)              (477)
                                                         -------               -------            -------

                                 INCOME TAX PROVISION    $35,104               $30,716            $29,691
                                                         =======               =======            =======
</TABLE>



                                                       -27-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE K--INCOME TAXES--Continued

The  significant  components  of the net deferred tax asset  (liability)  are as
follows:
<TABLE>
<CAPTION>
                                                                    Deferred Tax
                                                                  Asset (Liability)
                                                               ---------------------
                                                                    At December 31,
                                                                 1995            1994
                                                               -------         ------
                                                                (Dollars in thousands)
<S>                                                            <C>              <C>    
Deferred loan fees and other
  loan yield adjustments                                       $  1,088         $ 1,930
Excess tax depreciation                                          (2,262)         (2,379)
Loan loss allowances                                             11,648          12,367
Deferred compensation                                             2,185           1,849
Excess book deposit base
  intangible amortization                                         2,636           2,471
FHL Bank stock dividend                                          (1,084)           (868)
Market valuation adjustments                                      3,029           4,648
Tax net operating loss
  carryforwards                                                   1,804           1,641
Other                                                              (847)           (549)
                                                               --------         -------
                                                                 18,197          21,110
Valuation allowance for
  deferred tax assets                                            (2,499)         (3,797)
                                                               --------         -------
                                                               $ 15,698         $17,313
                                                               ========         =======
</TABLE>


Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes.

For financial reporting  purposes,  a valuation allowance has been recognized to
offset deferred tax assets related to state net operating loss  carryforwards of
subsidiary,   deposit  base  intangibles  and  other  timing  differences.  When
realized,  the tax benefit  for these  items will be used to reduce  current tax
expense for that period.

FF Bank qualifies  under  provisions of the Internal  Revenue Code ("IRC") which
permit as a deduction from taxable income  allowable bad debt deductions  which,
particularly  in prior  years,  significantly  exceeded  actual  losses  and the
financial  statement  loan loss  provisions.  A deferred  tax  liability  is not
required for these excess tax deductions  accumulated prior to the base year (as
defined  by the IRC)  because  they meet the  indefinite  reversal  criteria  of
Accounting  Principal  Board  Opinion  No. 23,  "Accounting  for Income  Taxes -
Special Areas". If these excess base year accumulations totaling $79,243,000 are
used for any  purpose  other than to absorb  bad debt  losses,  income  taxes of
approximately  $31,804,000  would  be  imposed  at  the  then-applicable  rates,
resulting in a charge to operations since no provision for income taxes has been
made.


                                      -28-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE L--STOCKHOLDERS' EQUITY

The Board of Directors of FFC is authorized to issue  preferred  stock in series
and to establish the voting  powers,  other special rights of the shares of each
such series and the qualifications and restrictions thereof. Preferred stock may
rank prior to the common stock as to dividend rights, liquidation preferences or
both, and may have full or limited voting rights.

Under Wisconsin state law, preferred stockholders would be entitled to vote as a
separate class or series in certain circumstances, including any amendment which
would adversely change the specific terms of such series of stock or which would
create or  enlarge  any class or series  ranking  prior  thereto  in rights  and
preferences. No preferred stock has been issued.

Deposits in FF Bank are insured to the maximum  allowable amounts by the Savings
Association  Insurance  Fund  ("SAIF") as  administered  by the Federal  Deposit
Insurance  Corporation  ("FDIC").  As a  SAIF-insured  institution,  FF  Bank is
required to meet tangible,  core and risk-based  regulatory capital requirements
as determined by the Office of Thrift Supervision ("OTS").


FF Bank's various OTS regulatory  capital  measurements at December 31, 1995 are
set forth below:
<TABLE>
<CAPTION>

(Dollars in thousands)

<S>                                                                                      <C>     
Stockholder's equity                                                                     $417,830
Add: Net unrealized loss on securities
   available for sale                                                                       5,944
Less:
   Core deposit intangibles                                                               (17,317)
   Goodwill                                                                                (4,380)
   Non-qualifying investment in subsidiary                                                 (1,163)
   Other                                                                                     (715)
                                                                                         --------
                                                          TANGIBLE CAPITAL                400,199
Add: Qualifying intangibles                                                                17,317
                                                                                         --------
                                                              CORE CAPITAL                417,516
Add: Qualifying general allowances for
        loan losses                                                                        25,235
Less: Other                                                                                  (207)
                                                        RISK-BASED CAPITAL               $442,544
                                                                                         ========
</TABLE>


                                                       -29-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE L--STOCKHOLDERS' EQUITY--Continued

The  following  table  compares FF Bank's  regulatory  capital  with OTS capital
requirements at December 31, 1995:
<TABLE>
<CAPTION>

                                Actual      Required                      Actual      Required
                                Amount       Amount         Excess        Ratio        Ratio         Excess
                               -------      --------        ------        ------      ---------      ------
                                         (Dollars in thousands)
     
<S>                            <C>            <C>          <C>             <C>          <C>           <C>  
   Tangible capital            $400,199       $ 82,251     $317,948        7.30%        1.50%         5.80%
   Core capital                 417,516        165,021      252,495        7.59         3.00          4.59
   Risk-based
     capital                    442,544        223,850      218,694       15.82         8.00          7.82

</TABLE>

The OTS has adopted a final rule,  which was effective in 1994,  disallowing any
new core deposit  intangibles,  acquired after the rule's  effective  date, from
counting as regulatory capital.  Core deposit intangibles  acquired prior to the
effective date have been  grandfathered  for purposes of this rule. The OTS also
has  proposed  to increase  the minimum  required  core  capital  ratio from the
current  3.00%  to a range  of  4.00%  to  5.00%  for all but the  most  healthy
financial institutions. The OTS has also added an interest-rate risk calculation
such  that an  institution  with a  measured  interest-rate  risk  exposure,  as
defined,  greater  than  specified  levels  must  deduct an  interest  rate risk
component  when  calculating  the  OTS  risk-based  capital  requirement.  Final
implementation  of this rule was pending at the end of 1995.  Management  of FFC
and FF Bank do not  believe  these rules will  significantly  impact the capital
requirements  of FF Bank or  cause  it to fail to meet  its  regulatory  capital
requirements.

Under the terms of the Federal Deposit Insurance Corporation  Improvement Act of
1991  ("FDICIA"),  FF Bank is further  subject to the prompt  corrective  action
("PCA") provisions of FDICIA.  Under FDICIA,  thrift  institutions are assigned,
based upon regulatory capital ratios and other subjective  supervisory criteria,
to one of five PCA  categories,  ranging from "well  capitalized" to "critically
undercapitalized".  Institutions  assigned to the three  lowest  categories  are
subject to PCA sanctions by the OTS. PCA sanctions  include,  among other items,
additional  restrictions on dividends and capital distributions.  As of December
31,  1995,  management  believes  that FF Bank  had  capital  in  excess  of the
requirements to be a "well capitalized"  institution under the PCA provisions of
FDICIA.

Applicable  rules and regulations of the OTS impose  limitations on dividends by
FF  Bank.  Within  those  limitations,   certain  "safe  harbor"  dividends  are
permitted,  subject to providing  the OTS at least 30 days advance  notice.  The
safe harbor  amount is based upon an  institution's  regulatory  capital  level.
Thrift  institutions  which have  capital in excess of all capital  requirements
before  and  after  the  proposed   dividend  are   permitted  to  make  capital
distributions  during  any  calendar  year up to the  greater of (i) 100% of net
income to date during the calendar year, plus one-half of the surplus over such


                                      -30-


<PAGE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE L--STOCKHOLDERS' EQUITY--Continued

institution's  capital  requirements  at the beginning of the calendar  year, or
(ii) 75% of net income  over the most  recent  four-quarter  period.  Additional
restrictions  would  apply to an  institution  which  does not meet its  capital
requirement before or after a proposed dividend. In addition, as a result of the
PCA  provisions  of  FDICIA,  the OTS has  indicated  that it  intends to review
existing  regulations on dividends to determine whether amendments are necessary
based on such provisions.  In the interim, the OTS has indicated that it intends
to determine the permissibility of dividends  consistent with the PCA provisions
of FDICIA.

NOTE M--EMPLOYEE BENEFIT PLANS

FFC has a stock  option plan under which shares of common stock are reserved for
the grant of both  incentive  and  non-incentive  stock  options  to  directors,
officers and  employees.  FFC follows the intrinsic  value method of accounting.
Therefore,  because the plan  provides  that option prices will not be less than
the fair market value of the stock at the grant date, no compensation expense is
recorded as a result of these  options.  The date on which the options are first
exercisable,  generally  two or more years from the grant date, is determined by
the Stock Option  Committee  of the Board of  Directors.  The options  expire no
later than ten years from the grant date.

A summary of stock option activity follows:
<TABLE>
<CAPTION>

                                                            Number Of           Option Price
                                                             Shares               Per Share
                                                            ---------           -------------

<S>                                                        <C>                 <C>         
Balance January 1, 1993                                    2,468,941           $ 1.68 - $ 9.44
   Granted                                                    40,500            13.63 -  15.00
   Exercised                                                (348,741)            1.70 -   9.44
   Cancelled                                                  (8,000)            4.90 -   9.44
                                                           ---------           ---------------
Balance December 31, 1993                                  2,152,700             1.68 -  15.00
   Granted                                                   175,250            14.75 -  16.75
   Exercised                                                (333,254)            1.68 -   9.44
   Cancelled                                                 (27,784)            4.90 -  16.75
                                                           ---------           ---------------
Balance December 31, 1994                                  1,966,912             3.09 -  16.75
   Granted                                                    28,000            15.75 -  21.38
   Exercised                                                (566,218)            3.09 -  15.00
   Cancelled                                                 ( 5,750)           14.75 -  16.75
                                                           ---------           ---------------

         BALANCE DECEMBER 31, 1995                         1,422,944           $ 3.09 - $21.38
                                                           =========           ===============
</TABLE>


Options for 1,035,994  shares and 1,271,238  shares were exercisable at December
31, 1995 and 1994,  respectively.  At  December  31,  1995,  options for 611,000
shares were available for future grant.

FFC sponsors a  defined-contribution  profit  sharing plan which covers all full
time  employees  who  have  completed  one  year of  service  and  are at  least
twenty-one years old.  Corporate  contributions are  discretionary.  Expense for
this plan

                                      -31-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE M--EMPLOYEE BENEFIT PLANS--Continued

for 1994 and 1993 was  $3,353,000  and  $3,666,000,  respectively.  There was no
expense related to this plan for 1995.

FFC sponsors a  supplemental  executive  retirement  plan for certain  executive
officers,  which is  funded  through  life  insurance  and  provides  additional
benefits at retirement.  At December 31, 1995, the projected  future  obligation
under  this  plan  amounted  to  $1,792,000,  which is being  accrued  through a
combination  of annual  amortization  of prior service costs plus current annual
provisions for additional service costs and interest.  Expense for this plan was
$215,000, $227,000, and $434,000 for 1995, 1994 and 1993, respectively.

FFC  sponsors  an  unfunded  defined-benefit  retirement  plan  for all  outside
directors. At December 31, 1995, the projected future obligation under this plan
totaled  $1,325,000,  which is being  accrued  through a  combination  of annual
amortization  of  prior  service  costs  plus  current  annual   provisions  for
additional  service  costs and  interest.  Expense  for this plan was  $126,000,
$183,000 and $122,000 in 1995, 1994 and 1993, respectively.

During 1995,  as part of the  acquisition  of  FirstRock,  FF Bank  acquired the
existing Employee Stock Ownership Plan ("ESOP"), originally established in 1992.
The plan covers  substantially  all employees with more than one year of service
who have  attained  the age of  twenty-one.  The ESOP  owes  $271,000  to FFC at
December 31, 1995 relating to the cost of the  remaining  55,450 FFC shares held
by the ESOP at that date.  During  1995,  the ESOP was utilized in lieu of FFC's
profit sharing plan, resulting in the distribution of approximately  161,000 FFC
shares  to  employees.  The ESOP  shares,  which  were  purchased  in 1992,  are
grandfathered from Statement of Position ("SOP") No. 93-6 issued by the American
Institute  of Certified  Public  Accountants.  As such,  expense for ESOP shares
allocated  to FFC  employees  was recorded at cost as opposed to market value as
required by SOP No. 93-6 for shares  acquired after 1992. The expense related to
ESOP distributions for 1995, 1994 and 1993 was $828,000,  $231,000 and $231,000,
respectively.

FFC also sponsors a defined-benefit  pension plan covering  substantially all of
its Illinois-based  employees (the "Retirement Plan"). Benefits are based upon a
formula  using years of service and the  participant's  compensation  during the
term of employment.



                                      -32-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE M--EMPLOYEE BENEFIT PLANS--Continued

The following  tables set forth the Retirement  Plan's funded status and amounts
recognized in the consolidated financial statements:
<TABLE>
<CAPTION>

                                                                                     December 31,
                                                                                 1995            1994
                                                                               --------        ------
                                                                                (Dollars in thousands)
<S>                                                                            <C>             <C>    
Actuarial present value of benefit obligations:
   Accumulated benefit obligation, including
   vested benefits of $2,971,000--1995 and
   $2,621,000--1994                                                            $  3,126        $ 2,677
                                                                               ========        =======

Plan assets at fair value, primarily fixed
   income securities                                                           $  4,143        $ 3,704
Projected benefit obligation                                                      3,238          2,770
                                                                               --------        -------
Plan assets in excess of projected
   benefit obligation                                                               905            934
Unrecognized prior service cost                                                     201            194
Unrecognized net loss from past experience
   different from that assumed and effects
   of changes in assumptions                                                        500            729
Unrecognized net transition asset                                                (1,175)        (1,303)
                                                                               --------        -------
Prepaid pension cost included in other assets                                  $    431        $   554
                                                                               ========        =======
</TABLE>



Net  periodic  expense for the  Retirement  Plan,  as  determined  by  actuarial
consultants,  was  $238,000,  $504,000  and  $432,000  in 1995,  1994 and  1993,
respectively.

The principal actuarial  assumptions used to develop the net pension benefit for
the Retirement Plan were as follows:

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                                1995        1994         1993
                                                                              --------    --------     ------

<S>                                                                            <C>          <C>           <C>  
Weighted average discount rate                                                 7.25%        8.25%         7.25%
Rate of increase in future compensation                                        5.00         5.00          5.00
Expected long-term rate of return on plan
  assets                                                                       8.50         8.50          7.75
</TABLE>



FFC does not,  as a policy,  offer  post-retirement  benefits  other than profit
sharing,  ESOP,  pensions and certain  supplemental  retirement  benefits  noted
above.

NOTE N--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

FFC is a party  to  financial  instruments  with  off-balance-sheet  risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments  include  commitments  to  extend  credit  and  financial
guarantees and involve, to varying degrees, elements of credit and interest-rate
risk in excess of the amount recognized in the consolidated

                                      -33-

<PAGE>



CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE N--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--
Continued

balance sheets. The contract amounts of those instruments  reflect the extent of
involvement FFC has in particular classes of financial instruments.

FFC's exposure to credit loss in the event of  nonperformance by the other party
to the  financial  instrument  for  commitments  to extend  credit and financial
guarantees   written  is  represented  by  the   contractual   amount  of  those
instruments.  FFC  uses the same  credit  policies  in  making  commitments  and
conditional obligations as it does for on-balance-sheet instruments.

Financial  instruments  whose  contract  amounts  represent  credit  risk are as
follows:

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                         1995                  1994
                                                                       --------              --------
                                                                            (Dollars in thousands)
<S>                                                                    <C>                   <C>     
Commitments to extend credit:
     Fixed rate (6.55% to 9.75% at
       December 31, 1995)                                              $ 19,398              $  8,279
     Adjustable rate                                                     20,778                23,394
Unused lines of credit:
     Credit cards                                                       837,341               764,953
     Home equity                                                        360,189               308,347
     Business lines                                                       1,158                   858
     Other                                                                8,800                 8,800
Loans sold with recourse                                                 37,000                44,000
Financial guarantees written                                             10,995                11,215
</TABLE>


Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. As some such  commitments  expire without being drawn
upon, the total  commitment  amounts do not  necessarily  represent  future cash
requirements.  FFC evaluates each customer's  creditworthiness on a case-by-case
basis. With the exception of credit card lines-of-credit,  FFC generally extends
credit  only  on a  secured  basis.  Collateral  obtained  varies  but  consists
primarily  of one-to  four-family  residences  and  income-producing  commercial
properties.

Commitments  to extend  credit on a  fixed-rate  basis  expose  FFC to a certain
amount of interest-rate risk if market rates of interest increase  substantially
during the commitment  period.  Similar risks exist relative to loans classified
as held for sale, which totaled $26,651,000 at December 31, 1995. This exposure,
however,  is mitigated by the hedge of firm commitments to sell certain of these
loans.  Commitments  outstanding  to sell  mortgage  loans at December  31, 1995
amount to $43,300,000.


                                      -34-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE N--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--
Continued

All loans  currently  sold to others are sold on a  non-recourse  basis with the
servicing of these loans being  retained by FF Bank. At December 31, 1995,  1994
and  1993,  $37,000,000,  $44,000,000  and  $59,000,000,  respectively,  of  the
serviced  loans were  previously  sold with recourse.  Of these recourse  loans,
approximately $27,000,000, $36,000,000 and $47,000,000 were federally-insured or
federally-guaranteed  at December  31,  1995,  1994 and 1993,  respectively.  In
addition,  management has considered the remaining  uninsured or  non-guaranteed
balance in the determination of the adequacy of the allowance for losses.

Financial guarantees represent agreements whereby, for an annual fee, certain of
FF Bank's mortgage loans, investments and mortgage-backed securities are pledged
as  collateral  for  industrial  development  revenue bonds which were issued by
municipalities to finance  commercial or multi-family real estate owned by third
parties. In the event the third party borrowers default on principal or interest
payments  on the bonds,  FF Bank is required to either pay the amount in default
or acquire the then  outstanding  bonds. FF Bank may foreclose on the underlying
real  estate to recover  amounts in default.  Management  has  considered  these
agreements  in its  review of the  adequacy  of the  allowance  for  losses.  At
December 31, 1995, certain mortgage-related securities and investment securities
with a carrying value of approximately $6,280,000 were pledged as collateral for
bonds in the aggregate  principal  amount of $3,890,000.  Additional bond issues
totaling  $7,105,000  are  supported by letters of credit  issued by FF Bank, in
lieu of specific  collateral.  The bond agreements have expiration dates through
2008.

Except for the above-noted  commitments to originate  and/or sell mortgage loans
in the normal course of business, FFC and FF Bank have not undertaken the use of
off-balance sheet derivative financial instruments for any purpose.


                                      -35-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS

Statement No. 107,  ("Disclosures  about Fair Value of Financial  Instruments"),
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly  affected by the assumptions used,  including
the  discount  rate and  estimates  of future cash flows.  In that  regard,  the
derived  fair  value  estimates   cannot  be   substantiated  by  comparison  to
independent  markets  and,  in many cases,  could not be  realized in  immediate
settlement  of the  instrument.  Statement  No. 107 excludes  certain  financial
instruments and all nonfinancial  instruments from its disclosure  requirements.
Accordingly,  the  aggregate  fair value  amounts  presented do not  necessarily
represent the underlying value of FFC. FFC does not routinely measure the market
value of financial instruments because such measurements represent point-in-time
estimates  of value.  It is  generally  not the intent of FFC to  liquidate  and
therefore  realize the  difference  between  market value and carrying value and
even if it were, there is no assurance that the estimated market values could be
realized.  Thus,  the  information  presented  is not  particularly  relevant to
predicting FFC's future earnings or cash flows.

The following  methods and  assumptions  were used by FFC in estimating its fair
value disclosures for financial instruments:

     Cash and cash  equivalents:  The carrying  amounts  reported in the balance
     sheet for cash and short-term  instruments  approximate  those assets' fair
     values.

     Accrued  interest  income and expense:  The fair value of accrued  interest
     income and expense approximates the respective book value.

     Investment and mortgage-related  securities: Fair values for investment and
     mortgage-related  securities  are  based on  quoted  market  prices,  where
     available. If quoted market prices are not available, fair values are based
     on quoted market prices of comparable instruments.

     Loans receivable:  For variable-rate mortgage loans that reprice frequently
     and with no  significant  change in credit  risk,  fair values are based on
     carrying values. The fair values for fixed-rate  residential mortgage loans
     are based on quoted market prices of similar loans sold in conjunction with
     securitization    transactions,    adjusted   for   differences   in   loan
     characteristics.  The fair values for commercial real estate loans,  rental
     property mortgage loans and consumer and other


                                      -36-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS--Continued

     loans are estimated using  discounted cash flow analyses and interest rates
     currently  being  offered  for loans with  similar  terms to  borrowers  of
     similar credit quality.

     Mortgage servicing rights: Mortgage loan servicing rights, which consist of
     FFC's contractual  right to service loans for others,  represent a distinct
     income  producing  intangible asset that could be realized by selling those
     rights to another institution. Due to lack of practicability,  the value of
     those  rights,  except to the extent that  purchased or  originated  (after
     January 1, 1995) mortgage servicing rights exist, is not reflected in FFC's
     consolidated balance sheets.

     Federal  Home Loan Bank  stock:  FHL Bank stock is carried at cost which is
     its redeemable value since the market for this stock is restricted.

     Deposits:    The   fair   values   disclosed   for   interest-bearing   and
     non-interest-bearing  checking accounts, passbook accounts and money market
     accounts are, by  definition,  equal to the amount payable on demand at the
     reporting  date  (i.e.,  their  carrying  amounts).   The  fair  values  of
     fixed-rate  certificates  of deposit are estimated  using a discounted cash
     flow  calculation  that applies  interest rates  currently being offered on
     certificates to a schedule of aggregated expected monthly maturities of the
     outstanding certificates of deposit.

     Borrowings:  The fair values of FFC's  long-term  borrowings  are estimated
     using  discounted  cash flow analyses,  based on FFC's current  incremental
     borrowing rates for similar types of borrowing arrangements.

     Off-balance-sheet  instruments:  Fair  values for FFC's off-  balance-sheet
     instruments  (lending  commitments and unused lines of credit) are based on
     fees  currently  charged  to enter into  similar  agreements,  taking  into
     account the remaining terms of the agreements,  the counterparties'  credit
     standing  and  discounted  cash  flow  analyses.  The  fair  value of these
     off-balance-sheet  items  approximates  the recorded amounts of the related
     fees and is not material at December 31, 1995 and 1994.


                                      -37-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS--Continued

The carrying amounts and fair values of FFC's financial  instruments  consist of
the following:
<TABLE>
<CAPTION>

                                                                       December 31,
                                                          1995                               1994
                                                 --------------------------        --------------------------
                                                  Carrying           Fair           Carrying           Fair
                                                   Amount            Value           Amount            Value
                                                 ----------        ---------       ----------       ---------
                                                                   (Dollars in thousands)
<S>                                              <C>             <C>               <C>             <C>       
Cash equivalents                                 $   48,730      $   48,730        $   24,914      $   24,914

Investment securities avail-
  able for sale                                  $   80,999      $   80,999        $   68,959      $   68,959

Investment securities held
  to maturity                                    $  119,426      $  119,063        $  129,301      $  124,434

Federal Home Loan Bank stock                     $   35,456      $   35,456        $   34,918      $   34,918

Mortgage-related securities
  available for sale                             $  571,293      $  571,293        $  201,373      $  201,373

Mortgage-related securities
  held to maturity                               $  699,468      $  691,060        $1,301,118      $1,263,489

Loans held for sale                              $   26,651      $   27,001        $   11,736      $   11,797

Loans receivable:
  Real estate                                    $2,341,370      $2,365,415        $2,360,878      $2,297,848
  Credit cards                                      208,213         208,213           194,538         194,538
  Home equity                                       286,500         286,500           242,298         242,298
  Education                                         241,022         241,022           192,697         192,697
  Manufactured housing                              136,759         140,536           148,499         151,823
  Consumer and other                                376,285         378,506           319,801         311,075
                                                 ----------      ----------        ----------      ----------
                                                 $3,590,149      $3,620,192        $3,458,711      $3,390,279
                                                 ==========      ==========        ==========      ==========

Accrued interest receivable                      $   37,722      $   37,722        $   32,947      $   32,947

Deposits:
  Checking                                       $  473,203      $  473,203        $  476,354      $  476,354
  Passbooks                                         687,960         687,960           780,883         780,883
  Money market                                      310,545         310,545           321,421         321,421
  Certificates                                    2,944,600       2,951,564         2,798,703       2,738,147
                                                 ----------      ----------        ----------      ----------
                                                 $4,416,308      $4,423,272        $4,377,361      $4,316,805
                                                 ==========      ==========        ==========      ==========


Short-term borrowings                            $   25,972      $   27,786        $   13,127      $   13,395
Federal Home Loan Bank
  and other borrowings:
  Federal Home Loan Bank
      advances                                   $  475,367      $  475,457        $  622,209      $  621,590
  Collateralized mortgage
      obligations                                     8,024           9,309            11,818          13,049
  Subordinated notes                                 54,925          54,925            54,977          53,103
  Industrial development
      revenue bonds                                   6,220           6,605             6,315           5,058
                                                 ----------      ----------        ----------      ----------
                                                 $  544,536      $  546,296        $  695,319      $  692,800
                                                 ==========      ==========        ==========      ==========

Accrued interest payable                         $   10,585      $   10,585        $    7,160      $    7,160
</TABLE>


                                                         -38-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE P--MORTGAGE BANKING ACTIVITIES

Loans  serviced for investors  amounted to  $2,326,000,000,  $2,424,000,000  and
$2,068,000,000  at December 31, 1995, 1994 and 1993,  respectively.  These loans
are not reflected in the consolidated  financial statements.  FF Bank originates
mortgage  loans  which,  depending  whether the loans meet FF Bank's  investment
objectives,  may be sold in the  secondary  mortgage  market or to other private
investors.

Direct origination and servicing costs for mortgage banking activities cannot be
presented as these  operations  are  integrated  with and not separable from the
origination  and  servicing  of  portfolio  loans,  and, as a result,  cannot be
accurately estimated.

Mortgage banking activities are summarized as follows:
<TABLE>
<CAPTION>

                                                                 At Or For The Year Ended
                                                                       December 31,
                                                         1995               1994               1993
                                                       --------           --------           ------
                                                                   (Dollars in thousands)
<S>                                                    <C>                <C>                <C>       
Consolidated balance sheet information:
     Mortgage loans held for sale                      $ 26,651           $ 11,736           $  104,653
     Unamortized mortgage servicing
       rights and capitalized
       excess servicing (included in
       "Other Assets")                                    8,395              7,880                4,441

Consolidated statement of income information:
    Service fees on loans
       sold (gross)                                    $  8,383           $  8,806           $    9,822
    Amortization of mortgage
       servicing rights and
       capitalized excess
      servicing                                          (1,258)            (1,069)              (3,235)
                                                       --------           --------           ----------
     Service fees on loans
       sold (net)                                      $  7,125           $  7,737           $    6,587
                                                       ========           ========           ==========

     Gain on sales of mortgage  loans held for sale  (included  $1.7  million in
       1995 as a result of change in accounting method)
       (See Note A)                                    $  2,703           $  1,455           $    8,324

Consolidated statement of cash flow information:
     Mortgage loans originated for
       sale                                            $210,150           $298,813           $1,005,655
     Mortgage loans transferred to
       held for sale portfolio                           15,467             26,028              60,238
     Sales of mortgage loans held for
       sale                                             211,658            418,895           1,051,358
</TABLE>

NOTE Q--LITIGATION

FF Bank is  involved in certain  lawsuits  in the course of its general  lending
business and other operations. FFC believes there are sound defenses against the
claims asserted therein and is vigorously  defending these actions.  Management,
after review with its legal counsel, is of the opinion that the ultimate

                                      -39-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE Q--LITIGATION--Continued

disposition of its litigation will not have a material effect on FFC's financial
condition.

NOTE R--REGULATORY ISSUES

FF  Bank's  deposits  are  insured  by the SAIF of the FDIC.  Deposit  insurance
premiums to both the SAIF and the Bank  Insurance  Fund ("BIF") of the FDIC were
identical when both funds were created in 1989, with an eight cent  differential
between the premiums paid by well-capitalized institutions and the premiums paid
by  under-capitalized  institutions (23 cents to 31 cents per $100 of assessable
deposits).  Deposit  insurance  premiums for the SAIF and the BIF, which insures
deposits in national and state-chartered  banks, are set to facilitate each fund
achieving its designated reserve ratio. In August 1995, the FDIC determined that
the BIF had  achieved  its  designated  reserve  ratio and  lowered  BIF deposit
insurance premium rates for all but the riskiest institutions. Effective January
1, 1996, BIF deposit insurance premiums for well-capitalized  banks were further
reduced to the statutory minimum of $2,000 per institution per year. Because the
SAIF remains  significantly  below its designated  reserve  ratio,  SAIF deposit
insurance  premiums  were not reduced and remain at 0.23% to 0.31% of  deposits,
based upon an  institution's  supervisory  evaluations and capital  levels.  The
current  discrepancy in deposit insurance  premiums between the BIF and the SAIF
could place FF Bank at a competitive disadvantage to BIF insured institutions.

The current financial condition of the SAIF has resulted in proposed legislation
to recapitalize the SAIF through a one-time special assessment (of approximately
80 cents to 85 cents per $100 of assessable  SAIF deposits as of March 31, 1995)
and in  legislation  to then  merge  the  SAIF  into  the  BIF.  If the  special
assessment is enacted,  a special  one-time  assessment of  approximately  $24.0
million,  net of tax  effect,  would be  imposed on FF Bank.  After the  special
assessment,  it is expected that the SAIF would achieve its  designated  reserve
ratio and that SAIF premium rates would then become comparable to BIF rates. The
proposed  legislation also contemplates a merger of the SAIF into the BIF, which
would  require  separate  legislation.  FFC is unable to  predict  whether  this
legislation will be enacted or the amount or applicable  retroactive date of any
one-time  assessment  or the rates  that would  then  apply to  assessable  SAIF
deposits.

Legislation  also has been  proposed that could  eliminate  the federal  savings
association  charter.  If such legislation is enacted, FF Bank would be required
to convert its federal savings bank charter to either a national bank charter or
to a state  depository  institution  charter.  Pending  legislation  may provide
relief as to recapture of the bad debt  deduction  for federal tax purposes that
otherwise would be applicable if FF Bank converted its charter, provided that FF
Bank  meets  a  proposed  residential  loan  origination  requirement.   Pending
legislation also may

                                      -40-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL COPORATION

NOTE R--REGULATORY ISSUES--Continued

result in FFC  becoming  regulated at the holding  company  level by the Federal
Reserve Board rather than by the OTS.  Regulation  by the Federal  Reserve Board
could subject FFC to capital  requirements that are not currently  applicable to
FFC as a  holding  company  under OTS  regulation  and may  result in  statutory
limitations  on the type of business  activities  in which FFC may engage at the
holding company level, which business  activities  currently are not restricted.
FFC is unable  to  predict  whether  such  legislation  will be  enacted  or, if
enacted,  whether  it  will  contain  relief  as to the  recapture  of bad  debt
deductions previously taken.



                                      -41-

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE S--FIRST FINANCIAL CORPORATION PARENT COMPANY ONLY
     FINANCIAL INFORMATION

<TABLE>
<CAPTION>


BALANCE SHEETS
                                                                                      December 31,
                                                                                 1995               1994
                                                                               --------          -------
                                                                                 (Dollars in thousands)
<S>                                                                            <C>                <C>     
ASSETS
Cash and cash equivalents                                                      $ 13,613           $ 10,195
Investment securities available for sale                                          4,668              4,492
Investment in subsidiary                                                        417,830            364,116
Prepaid expenses and other assets                                                 5,068              5,965
                                                                               --------           --------
                                                                               $441,179           $384,768
                                                                               ========           ========

LIABILITIES
Subordinated notes                                                             $ 54,925           $ 54,977
Other liabilities                                                                 1,066                875
                                                                               --------           --------
                                                        TOTAL LIABILITIES        55,991             55,852


STOCKHOLDERS' EQUITY
Common stock                                                                     29,676             29,126
Additional paid-in capital                                                       49,756             50,129
Retained earnings                                                               311,777            261,949
Net unrealized loss on
 securities available for sale                                                   (6,021)            (8,619)
Treasury stock                                                                                      (3,669)
                                                                               --------           --------
                                               TOTAL STOCKHOLDERS' EQUITY       385,188            328,916
                                                                               --------           --------
                                                                               $441,179           $384,768
                                                                               ========           ========
</TABLE>

<TABLE>
<CAPTION>

STATEMENTS OF INCOME

                                                                              Year Ended December 31,
                                                                      1995             1994            1993
                                                                    --------         --------        ------
                                                                             (Dollars in thousands)

<S>                                                                 <C>               <C>            <C>    
Interest income                                                     $   920           $   644        $   732
Interest expense on borrowings                                        4,675             4,686          4,736
                                                                    -------           -------        -------
                                            NET INTEREST EXPENSE     (3,755)           (4,042)        (4,004)
Equity in net income from subsidiary                                 68,028            56,903         53,359
                                                                    -------           -------        -------
                                                                     64,273            52,861         49,355
Management fees paid to subsidiary                                      660               628            735
Other expenses                                                        1,807             1,080            628
                                                                    -------           -------        -------
                                INCOME BEFORE INCOME TAX CREDITS     61,806            51,153         47,992
Income tax credits                                                   (2,178)           (1,876)        (1,759)
                                                                    -------           -------        -------

                                                      NET INCOME    $63,984           $53,029        $49,751
                                                                    =======           =======        =======
</TABLE>


                                                       -42-


<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued

FIRST FINANCIAL CORPORATION

NOTE S--FIRST FINANCIAL CORPORATION PARENT COMPANY ONLY
   FINANCIAL INFORMATION--Continued
<TABLE>
<CAPTION>

STATEMENTS OF CASH FLOWS


                                                                              Year Ended December 31,
                                                                      1995             1994            1993
                                                                    --------         --------        ------
                                                                              (Dollars in thousands)
<S>                                                                <C>                <C>             <C>    
OPERATING ACTIVITIES
   Net income                                                      $63,984            $53,029         $49,751
   Adjustments to reconcile net income
     to net cash used in operating
     activities:
      Equity in net income of subsidiary                           (68,028)           (56,903)        (53,359)
      Other                                                          1,649                218            (723)
                                                                   -------            -------         -------
                                     NET CASH USED IN OPERATING
                                                     ACTIVITIES     (2,395)            (3,656)         (4,331)

INVESTING ACTIVITIES
   Cash dividends from subsidiary                                   16,945             16,200           5,500
   Investment in subsidiary                                                                           (24,000)
   Purchase of investments                                                                             (1,500)
   Proceeds from maturity and sale
    of investments                                                                                      5,237
                                                                    ------            -------         -------
                                 NET CASH PROVIDED BY (USED IN)
                                           INVESTING ACTIVITIES     16,945             16,200         (14,763)

FINANCING ACTIVITIES
   Purchase of treasury stock                                                                          (4,126)
   Exercise of stock options                                         3,024              1,595             912
   Cash dividends paid                                             (14,156)            (9,950)         (8,238)
                                                                   -------            -------         -------
                                               NET CASH USED IN
                                           FINANCING ACTIVITIES    (11,132)            (8,355)        (11,452)
                                                                   -------            -------         -------

Increase (decrease) in cash and cash
    equivalents                                                      3,418              4,189         (30,546)
Cash and cash equivalents at beginning
   of year                                                          10,195              6,006          36,552
                                                                   -------            -------         -------

                       CASH AND CASH EQUIVALENTS AT END OF YEAR    $13,613            $10,195         $ 6,006
                                                                   =======            =======         =======
</TABLE>



                                                       -43-


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