##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For The Quarterly Period Ended June 30, 2008
 Commission File Number 0-16759
 FIRST FINANCIAL CORPORATION
  INDIANA
    
    35-1546989(State or other jurisdiction 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)One First Financial Plaza, Terre Haute, IN
    
    47807(Address of principal executive office)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



Page No.PART I. Financial InformationItem 1. Financial Statements:
    
    
    3Consolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial
Condition and Results of
Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    10Item 4. Controls and Procedures
    
    
    14PART II. Other Information:Item 1. Legal Proceedings
    
    
    14Item 1A. Risk Factors
    
    
    14Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    14Item 3. Defaults upon Senior Securities
    
    
    14Item 4. Submission of Matters to a Vote of Security Holders
    
    
    15Item 5. Other Information
    
    
    15Item 6. Exhibits
    
    
    16Signatures
    
    
    17Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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##### Table of Contents



June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCash and due from banks
    
    $
    80,809
    
    
    $
    70,082Federal funds sold and short-term investments
    
    
    4,345
    
    
    
    4,201Securities available-for-sale
    
    
    606,543
    
    
    
    558,020Loans:Commercial, financial and agricultural
    
    
    491,604
    
    
    
    461,086Real estate  construction
    
    
    25,649
    
    
    
    29,637Real estate  mortgage
    
    
    646,846
    
    
    
    673,355Installment
    
    
    280,285
    
    
    
    262,858Lease financing
    
    
    2,080
    
    
    
    2,2751,446,464
    
    
    
    1,429,211Less:Unearned Income
    
    
    (197
    )
    
    
    (212
    )Allowance for loan losses
    
    
    (15,553
    )
    
    
    (15,351
    )1,430,714
    
    
    
    1,413,648Credit card loans held-for-sale
    
    
    13,315
    
    
    
    14,068Restricted Stock
    
    
    26,227
    
    
    
    28,613Accrued interest receivable
    
    
    11,866
    
    
    
    13,698Premises and equipment, net
    
    
    32,541
    
    
    
    32,632Bank-owned life insurance
    
    
    61,054
    
    
    
    59,950Goodwill
    
    
    7,102
    
    
    
    7,102Other intangible assets
    
    
    1,724
    
    
    
    1,937Other real estate owned
    
    
    2,269
    
    
    
    1,472Other assets
    
    
    24,916
    
    
    
    26,139TOTAL ASSETS
    
    $
    2,303,425
    
    
    $
    2,231,562LIABILITIES AND SHAREHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    254,621
    
    
    $
    225,549Interest-bearing:Certificates of deposit of $100 or more
    
    
    240,578
    
    
    
    193,901Other interest-bearing deposits
    
    
    1,115,636
    
    
    
    1,110,2711,610,835
    
    
    
    1,529,721Short-term borrowings
    
    
    28,861
    
    
    
    27,331Other borrowings
    
    
    335,833
    
    
    
    341,285Other liabilities
    
    
    46,179
    
    
    
    51,533TOTAL LIABILITIES
    
    
    2,021,708
    
    
    
    1,949,870Shareholders equityCommon stock, $.125 stated value per share;Authorized shares-40,000,000Issued shares-14,450,966Outstanding shares-13,098,615 in 2008 and 13,136,359 in 2007
    
    
    1,806
    
    
    
    1,806Additional paid-in capital
    
    
    68,212
    
    
    
    68,212Retained earnings
    
    
    258,341
    
    
    
    250,011Accumulated other comprehensive income (loss)
    
    
    (12,452
    )
    
    
    (5,181
    )Treasury shares at cost-1,352,351 in 2008 and 1,314,607 in 2007
    
    
    (34,190
    )
    
    
    (33,156
    )TOTAL SHAREHOLDERS EQUITY
    
    
    281,717
    
    
    
    281,692TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,303,425
    
    
    $
    2,231,562
   3




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)INTEREST INCOME:Loans, including related fees
    
    $
    24,681
    
    
    $
    25,950
    
    
    $
    50,457
    
    
    $
    51,602Securities:Taxable
    
    
    6,385
    
    
    
    5,836
    
    
    
    12,382
    
    
    
    11,448Tax-exempt
    
    
    1,581
    
    
    
    1,606
    
    
    
    3,178
    
    
    
    3,182Other
    
    
    624
    
    
    
    812
    
    
    
    1,541
    
    
    
    1594TOTAL INTEREST INCOME
    
    
    33,271
    
    
    
    34,204
    
    
    
    67,558
    
    
    
    67,826INTEREST EXPENSE:Deposits
    
    
    8,376
    
    
    
    10,384
    
    
    
    18,593
    
    
    
    20,589Short-term borrowings
    
    
    200
    
    
    
    449
    
    
    
    567
    
    
    
    681Other borrowings
    
    
    4,735
    
    
    
    4,806
    
    
    
    9,482
    
    
    
    9,534TOTAL INTEREST EXPENSE
    
    
    13,311
    
    
    
    15,639
    
    
    
    28,642
    
    
    
    30,804NET INTEREST INCOME
    
    
    19,960
    
    
    
    18,565
    
    
    
    38,916
    
    
    
    37,022Provision for loan losses
    
    
    1,735
    
    
    
    1,240
    
    
    
    3,660
    
    
    
    2,930NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
    
    
    18,225
    
    
    
    17,325
    
    
    
    35,256
    
    
    
    34,092NON-INTEREST INCOME:Trust and financial services
    
    
    990
    
    
    
    942
    
    
    
    2,109
    
    
    
    1,920Service charges and fees on deposit accounts
    
    
    2,988
    
    
    
    3,020
    
    
    
    5,780
    
    
    
    5,741Other service charges and fees
    
    
    1,477
    
    
    
    1,462
    
    
    
    2,871
    
    
    
    2,767Securities gains/(losses), net
    
    
    1
    
    
    
    0
    
    
    
    355
    
    
    
    20Insurance commissions
    
    
    1,637
    
    
    
    1,546
    
    
    
    3,196
    
    
    
    2,944Gain on sales of mortgage loans
    
    
    185
    
    
    
    220
    
    
    
    410
    
    
    
    404Other
    
    
    363
    
    
    
    339
    
    
    
    1,569
    
    
    
    1,880TOTAL NON-INTEREST INCOME
    
    
    7,641
    
    
    
    7,529
    
    
    
    16,290
    
    
    
    15,676NON-INTEREST EXPENSE:Salaries and employee benefits
    
    
    10,125
    
    
    
    9,615
    
    
    
    20,458
    
    
    
    19,567Occupancy expense
    
    
    988
    
    
    
    1,031
    
    
    
    2,037
    
    
    
    2,071Equipment expense
    
    
    1,126
    
    
    
    1,069
    
    
    
    2,239
    
    
    
    2,167Other
    
    
    3,991
    
    
    
    4,393
    
    
    
    7,920
    
    
    
    8,361TOTAL NON-INTEREST EXPENSE
    
    
    16,230
    
    
    
    16,108
    
    
    
    32,654
    
    
    
    32,166INCOME BEFORE INCOME TAXES
    
    
    9,636
    
    
    
    8,746
    
    
    
    18,892
    
    
    
    17,602Provision for income taxes
    
    
    2,493
    
    
    
    2,333
    
    
    
    4,799
    
    
    
    4,766NET INCOME
    
    $
    7,143
    
    
    $
    6,413
    
    
    $
    14,093
    
    
    $
    12,836PER SHARE DATABasic and Diluted
    
    $
    0.55
    
    
    $
    0.49
    
    
    $
    1.07
    
    
    $
    0.97Dividends Per Share
    
    $
    0.44
    
    
    $
    0.43
    
    
    $
    0.44
    
    
    $
    0.43Weighted average number of shares outstanding (in thousands)
    
    
    13,102
    
    
    
    13,200
    
    
    
    13,112
    
    
    
    13,225
   4




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##### Table of Contents



AccoumulatedOtherCommon
    
    
    Additional
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Capital
    
    
    Earnings
    
    
    Income/(Loss)
    
    
    Stock
    
    
    TotalBalance, April 1, 2007
    
    $
    1,806
    
    
    $
    68,003
    
    
    $
    242,304
    
    
    $
    (4,754
    )
    
    $
    (30,430
    )
    
    $
    276,929Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    6,413
    
    
    
    
    
    
    
    
    
    
    
    6,413Change in net unrealized
gains/(losses) on securities
available for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,080
    )
    
    
    
    
    
    
    (6,080
    )Change in net unrealized gains/
(losses) on retirement plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    
    
    
    
    111Total comprehensive income/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444Cash Dividends, $.43 per share
    
    
    
    
    
    
    
    
    
    
    (5,665
    )
    
    
    
    
    
    
    
    
    
    
    (5,665
    )Treasury stock purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,913
    )
    
    
    (1,913
    )Balance, June 30, 2007
    
    $
    1,806
    
    
    $
    68,003
    
    
    $
    243,052
    
    
    $
    (10,723
    )
    
    $
    (32,343
    )
    
    $
    269,795Balance, April 1, 2008
    
    $
    1,806
    
    
    $
    68,212
    
    
    $
    256,961
    
    
    $
    292
    
    
    $
    (34,043
    )
    
    $
    293,228Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    7,143
    
    
    
    
    
    
    
    
    
    
    
    7,143Change in net unrealized
gains/(losses) on securities
available for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,872
    )
    
    
    
    
    
    
    (12,872
    )Change in net unrealized gains/
(losses) on retirement plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    
    
    
    
    128Total comprehensive income/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,601
    )Cash Dividends, $.44 per share
    
    
    
    
    
    
    
    
    
    
    (5,763
    )
    
    
    
    
    
    
    
    
    
    
    (5,763
    )Treasury stock purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (147
    )
    
    
    (147
    )Balance, June 30, 2008
    
    $
    1,806
    
    
    $
    68,212
    
    
    $
    258,341
    
    
    $
    (12,452
    )
    
    $
    (34,190
    )
    
    $
    281,717
   5




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##### Table of Contents



AccoumulatedOtherCommon
    
    
    Additional
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Capital
    
    
    Earnings
    
    
    Income/(Loss)
    
    
    Stock
    
    
    TotalBalance, January 1, 2007
    
    $
    1,806
    
    
    $
    68,003
    
    
    $
    235,967
    
    
    $
    (5,494
    )
    
    $
    (29,022
    )
    
    $
    271,260Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    12,836
    
    
    
    
    
    
    
    
    
    
    
    12,836Change in net unrealized
gains/(losses) on securities
available for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,659
    )
    
    
    
    
    
    
    (5,659
    )Change in net unrealized gains/
(losses) on retirement plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    430
    
    
    
    
    
    
    
    430Total comprehensive income/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,607Adoption of FIN48
    
    
    
    
    
    
    
    
    
    
    (86
    )
    
    
    
    
    
    
    
    
    
    
    (86
    )Cash Dividends, $.43 per share
    
    
    
    
    
    
    
    
    
    
    (5,665
    )
    
    
    
    
    
    
    
    
    
    
    (5,665
    )Treasury stock purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,321
    )
    
    
    (3,321
    )Balance, June 30, 2007
    
    $
    1,806
    
    
    $
    68,003
    
    
    $
    243,052
    
    
    $
    (10,723
    )
    
    $
    (32,343
    )
    
    $
    269,795Balance, January 1, 2008
    
    $
    1,806
    
    
    $
    68,212
    
    
    $
    250,011
    
    
    $
    (5,181
    )
    
    $
    (33,156
    )
    
    $
    281,692Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    14,093
    
    
    
    
    
    
    
    
    
    
    
    14,093Change in net unrealized
gains/(losses) on securities
available for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,527
    )
    
    
    
    
    
    
    (7,527
    )Change in net unrealized gains/
(losses) on retirement plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256
    
    
    
    
    
    
    
    256Total comprehensive income/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,822Cash Dividends, $.44 per share
    
    
    
    
    
    
    
    
    
    
    (5,763
    )
    
    
    
    
    
    
    
    
    
    
    (5,763
    )Treasury stock purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,034
    )
    
    
    (1,034
    )Balance, June 30, 2008
    
    $
    1,806
    
    
    $
    68,212
    
    
    $
    258,341
    
    
    $
    (12,452
    )
    
    $
    (34,190
    )
    
    $
    281,717
   6




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##### Table of Contents



Six Months EndedJune 30,2008
    
    
    2007(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    14,093
    
    
    $
    12,836Adjustments to reconcile net income to net cash
provided by operating activities:Net amortization (accretion) of premiums and discounts on investments
    
    
    (1,390
    )
    
    
    (1,285
    )Provision for loan losses
    
    
    3,660
    
    
    
    2,930Securities (gains) losses
    
    
    (355
    )
    
    
    (20
    )Gain on sale of other real estate
    
    
    (57
    )
    
    
    (34
    )Depreciation and amortization
    
    
    1,715
    
    
    
    1,767Other, net
    
    
    1,892
    
    
    
    720NET CASH FROM OPERATING ACTIVITIES
    
    
    19,558
    
    
    
    16,914CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales of securities available-for-sale
    
    
    355
    
    
    
    2,939Proceeds from sales of restricted stock
    
    
    2,386
    
    
    
    Calls, maturities and principal reductions on securities available-for-sale
    
    
    48,722
    
    
    
    44,472Purchases of securities available-for-sale
    
    
    (108,399
    )
    
    
    (95,503
    )Loans made to customers, net of repayment
    
    
    (21,722
    )
    
    
    (23,671
    )Proceeds from sales of other real estate owned
    
    
    1,009
    
    
    
    1,510Net change in federal funds sold
    
    
    (144
    )
    
    
    8,668Additions to premises and equipment
    
    
    (1,411
    )
    
    
    (938
    )NET CASH FROM INVESTING ACTIVITIES
    
    
    (79,204
    )
    
    
    (62,523
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net change in deposits
    
    
    81,114
    
    
    
    8,136Net change in short-term borrowings
    
    
    1,530
    
    
    
    15,422Dividends paid
    
    
    (5,785
    )
    
    
    (5,708
    )Purchase of treasury stock
    
    
    (1,034
    )
    
    
    (3,321
    )Proceeds from other borrowings
    
    
    56,000
    
    
    
    81,000Repayments on other borrowings
    
    
    (61,452
    )
    
    
    (56,528
    )NET CASH FROM FINANCING ACTIVITIES
    
    
    70,373
    
    
    
    39,001NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    10,727
    
    
    
    (6,608
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    70,082
    
    
    
    77,682CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    80,809
    
    
    $
    71,074
   7




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##### Table of Contents



Significant Accounting Policies
  Impaired Loans
  (000s)June 30,
    
    
    December 31,2008
    
    
    2007Impaired Loans with related allowance for loan losses calculated under SFAS No. 114
    
    $
    2,415
    
    
    $
    2,203Impaired Loans with no related allowance for loan losses
    
    
    294
    
    
    
    $
    2,709
    
    
    $
    2,203
  Securities
  (000s)June 30, 2008
    
    
    December 31, 2007Amortized Cost
    
    
    Fair Value
    
    
    Amortized Cost
    
    
    Fair ValueUnited States Government entity mortgage-
backed securities
    
    $
    350,418
    
    
    $
    346,092
    
    
    $
    288,742
    
    
    $
    289,704Collateralized Mortgage Obligations
    
    
    71,495
    
    
    
    72,644
    
    
    
    76,730
    
    
    
    77,174State and Municipal Obligations
    
    
    140,611
    
    
    
    143,232
    
    
    
    142,862
    
    
    
    146,515Corporate Obligations
    
    
    44,781
    
    
    
    38,215
    
    
    
    38,010
    
    
    
    36,843Equity Securities
    
    
    4,825
    
    
    
    6,360
    
    
    
    4,721
    
    
    
    7,784$
    612,130
    
    
    $
    606,543
    
    
    $
    551,065
    
    
    $
    558,020
  Fair Value
      8




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##### Table of Contents



(000s)June 30, 2008Fair Value Measurements UsingLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Carrying ValueSecurities available-for-sale
    
    $
    2,301
    
    
    $
    575,836
    
    
    $
    28,406
    
    
    $
    606,543
  (000s)Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Beginning Balance
    
    $
    33,745Total gains or losses (realized/unrealized)
    
    
    (5,101
    )Purchase
    
    
    0Settlements
    
    
    0Paydowns and Maturities
    
    
    (238
    )Transfers into Level 3
    
    
    0Ending Balance
    
    $
    28,406
   Short-Term Borrowings
  (000s)June 30,
    
    
    December 31,2008
    
    
    2007Federal Funds Purchased
    
    $
    9,633
    
    
    $
    3,032Repurchase Agreements
    
    
    18,659
    
    
    
    22,656Note Payable  U.S. Government
    
    
    569
    
    
    
    1,643$
    28,861
    
    
    $
    27,331
 Other Borrowings
  (000s)June 30,
    
    
    December 31,2008
    
    
    2007FHLB Advances
    
    $
    329,233
    
    
    $
    334,685City of Terre Haute, Indiana economic development revenue bonds
    
    
    6,600
    
    
    
    6,600$
    335,833
    
    
    $
    341,285
  9




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##### Table of Contents



Components of Net Periodic Benefit Cost
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,(000s)
    
    
    (000s)Post-Retirement
    
    
    
    
    
    
    
    
    
    
    Post-RetirementPension Benefits
    
    
    Health Benefits
    
    
    Pension Benefits
    
    
    Health Benefits2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    758
    
    
    $
    768
    
    
    $
    31
    
    
    $
    29
    
    
    $
    1,515
    
    
    $
    1,536
    
    
    $
    62
    
    
    $
    59Interest cost
    
    
    727
    
    
    
    693
    
    
    
    60
    
    
    
    77
    
    
    
    1,454
    
    
    
    1,387
    
    
    
    119
    
    
    
    155Expected return on plan assets
    
    
    (823
    )
    
    
    (911
    )
    
    
    
    
    
    
    
    
    
    
    (1,646
    )
    
    
    (1,822
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    30Net amortization of prior service cost
    
    
    (5
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )
    
    
    
    
    
    
    Net amortization of net (gain) loss
    
    
    182
    
    
    
    116
    
    
    
    3
    
    
    
    43
    
    
    
    365
    
    
    
    231
    
    
    
    6
    
    
    
    86Net Periodic Benefit Cost
    
    $
    839
    
    
    $
    661
    
    
    $
    109
    
    
    $
    164
    
    
    $
    1,679
    
    
    $
    1,323
    
    
    $
    217
    
    
    $
    330
 Employer Contributions
  Unrecognized Tax Benefits
  New accounting standards
   
 Managements Discussion and Analysis of Financial Condition and Results of Operations and
 Quantitative and Qualitative Disclosures About Market Risk
   10




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##### Table of Contents



Critical Accounting Policies
  Summary of Operating Results
   Net Interest Income
  Non-Interest Income
  Non-Interest Expenses
  Allowance for Loan Losses
   11




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##### Table of Contents



Non-performing Loans
  (000s)June 30,
    
    
    December 31,2008
    
    
    2007Non-accrual loans
    
    $
    9,345
    
    
    $
    7,971Restructured loans
    
    
    102
    
    
    
    50Accruing loans past due over 90 days
    
    
    2,758
    
    
    
    4,462$
    12,205
    
    
    $
    12,483Ratio of the allowance for loan losses
as a percentage of non-performing loans
    
    
    127
    %
    
    
    123
    %
  (000s)June 30,
    
    
    December 31,2008
    
    
    2007Non-accrual loans1-4 family residential
    
    $
    2,512
    
    
    $
    2,574Commercial loans
    
    
    5,420
    
    
    
    3,938Installment loans
    
    
    1,413
    
    
    
    1,459$
    9,345
    
    
    $
    7,971Past due 90 days or more1-4 family residential
    
    $
    848
    
    
    $
    1,230Commercial loans
    
    
    1,230
    
    
    
    2,795Installment loans
    
    
    680
    
    
    
    437$
    2,758
    
    
    $
    4,462
 Interest Rate Sensitivity and Liquidity
  Interest Rate Risk
     12




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##### Table of Contents



Basis Point
    
    Percentage Change in Net Interest IncomeInterest Rate Change
    
    12 months
    
    
    24 months
    
    
    36 monthsDown 200
    
    
    -0.20
    %
    
    
    -4.21
    %
    
    
    -7.12
    %Down 100
    
    
    0.60
    
    
    
    -1.13
    
    
    
    -2.50Up 100
    
    
    -0.77
    
    
    
    0.74
    
    
    
    2.06Up 200
    
    
    -2.82
    
    
    
    -0.08
    
    
    
    2.50
  Liquidity Risk
  Financial Condition
  Capital Adequacy
  June 30, 2008
    
    
    December 31, 2007Total risk-based capitalCorporation
    
    
    18.13
    %
    
    
    18.18
    %First Financial Bank
    
    
    18.05
    %
    
    
    18.13
    %Tier I risk-based capitalCorporation
    
    
    17.20
    %
    
    
    17.22
    %First Financial Bank
    
    
    17.26
    %
    
    
    17.33
    %Tier I leverage capitalCorporation
    
    
    12.58
    %
    
    
    12.44
    %First Financial Bank
    
    
    12.54
    %
    
    
    12.60
    %
  13




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##### Table of Contents



Controls and Procedures
  
 PART II  Other Information
 
 Legal Proceedings.
  
 Risk Factors.
  
 Unregistered Sales of Equity Securities and Use of Proceeds.
 (a)
    
    None.(b)
    
    Not applicable.(c)
    
    Purchases of Equity Securities
  (c)Total Number Of Shares
    
    
    (c)(a)
    
    
    (b)
    
    
    Purchased As Part Of
    
    
    Maximum Number OfTotal Number Of
    
    
    Average Price
    
    
    Publicly Announced Plans
    
    
    Shares That May YetShares Purchased
    
    
    Paid Per Share
    
    
    Or Programs *
    
    
    Be Purchased *April 1  30, 2008
    
    
    5,000
    
    
    
    29.50
    
    
    
    N/A
    
    
    
    N/AMay 1  31, 2008
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AJune 1  30, 2008
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    5,000
    
    
    
    29.50
    
    
    
    N/A
    
    
    
    N/A
 *
    
    The Corporation has not adopted a formal policy or program regarding repurchases of its shares of
stock. 
 Defaults upon Senior Securities.
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##### Table of Contents



ITEM 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    The Annual Meeting of the shareholders of the Corporation was held on April 16, 2008.(b)
    
    The following were elected Directors of the Corporation for a three year term as
follows:
 Votes for
    
    
    Votes Against
    
    
    AbstentionsB. Guille Cox, Jr.
    
    
    11,072,421
    
    
    
    130,927
    
    
    
    146,113Anton H. George
    
    
    11,063,438
    
    
    
    139,910
    
    
    
    146,113Gregory L. Gibson
    
    
    11,088,198
    
    
    
    115,150
    
    
    
    146,113Virginia L. Smith
    
    
    11,061,218
    
    
    
    142,130
    
    
    
    146,113
  (c)
    
    At the annual meeting, the items for consideration were the election of the four
directors and to ratify the appointment of Crowe Chizek and Company LLC as the independent
registered public accounting firm of the Corporation for the fiscal year ending December
31, 2008. The votes to ratify appointment of Crowe Chizek and Company LLC were 11,103,832
voted for, 13,761 votes against and 231,868 vote abstentions. The vote tabulations for the
election of such Directors is set forth above.(d)
    
    Not applicable.
 
 Other Information.
   15




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##### Table of Contents



Exhibits.
 Exhibit No.:
    
    Description of Exhibit:3.1
    
    
    Amended and Restated Articles of Incorporation of First Financial Corporation,
incorporated by reference to Exhibit 3(i) of the Corporations Form 10-Q filed for the
quarter ended September 30, 2002.3.2
    
    
    Code of By-Laws of First Financial Corporation, incorporated by reference to
Exhibit 3(ii) of the Corporations Form 10-Q filed for the quarter ended September 30,
2002.10.1
    
    
    Employment Agreement for Norman L. Lowery, dated April 14, 2008 and effective
January 1, 2008, incorporated by reference to Exhibit 10.1 of the Corporation Form 10-Q
filed for the quarter ended March 31, 2008.10.2
    
    
    2001 Long-Term Incentive Plan of First Financial Corporation, incorporated by
reference to Exhibit 10.3 of the Corporations Form 10-Q filed for the quarter ended
September 30, 2002.10.3
    
    
    2008 Schedule of Director Compensation, incorporated by reference to Exhibit
10.3 of the Corporations Form 10-K filed for the fiscal year ended December 31, 2007.10.4
    
    
    2008 Schedule of Named Executive Officer Compensation, incorporated by
reference to the Corporations Form 10-K filed for the fiscal year ended December 31,
2007.31.1
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008 by Principal Executive Officer, dated August 1, 200831.2
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008 by Principal Financial Officer, dated August 1, 2008.32.1
    
    
    Certification, dated August 1, 2008, of Principal Executive Officer and
Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2005
on Form 10-Q for the quarter ended June 30, 2008.
  16




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##### Table of Contents



FIRST FINANCIAL CORPORATION(Registrant)Date: August 1, 2008
    By:
    /s/ Donald E. SmithDonald E. Smith, ChairmanDate: August 1, 2008
    By:
    /s/ Norman L. LoweryNorman L. Lowery, Vice Chairman and CEODate: August 1, 2008
    By:
    /s/ Michael A. CartyMichael A. Carty, Treasurer and CFO  17




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##### Table of Contents



Exhibit Index
 Exhibit No.:
    
    Description of Exhibit:3.1
    
    
    Amended and Restated Articles of Incorporation of First Financial Corporation,
incorporated by reference to Exhibit 3(i) of the Corporations Form 10-Q filed for the
quarter ended September 30, 2002.3.2
    
    
    Code of By-Laws of First Financial Corporation, incorporated by reference to
Exhibit 3(ii) of the Corporations Form 10-Q filed for the quarter ended September 30,
2002.10.1
    
    
    Employment Agreement for Norman L. Lowery, dated April 14, 2008 and effective
January 1, 2008, incorporated by reference to Exhibit 10.1 of the Corporation Form 10-Q
filed for the quarter ended March 31, 2008.10.2
    
    
    2001 Long-Term Incentive Plan of First Financial Corporation, incorporated by
reference to Exhibit 10.3 of the Corporations Form 10-Q filed for the quarter ended
September 30, 2002.10.3
    
    
    2008 Schedule of Director Compensation, incorporated by reference to Exhibit
10.3 of the Corporations Form 10-K filed for the fiscal year ended December 31, 2007.10.4
    
    
    2008 Schedule of Named Executive Officer Compensation, incorporated by
reference to the Corporations Form 10-K filed for the fiscal year ended December 31,
2007.31.1
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008 by Principal Executive Officer, dated August 1, 200831.2
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008 by Principal Financial Officer, dated August 1, 2008.32.1
    
    
    Certification, dated August 1, 2008, of Principal Executive Officer and
Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2005
on Form 10-Q for the quarter ended June 30, 2008.
  18