##### 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 March 31, 2010
 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)
 (812)238-6000
 þ o
 o 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:Consolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    14Item 4. Controls and Procedures
    
    
    18PART II. Other Information:Item 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults upon Senior Securities
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    18Item 5. Other Information
    
    
    18Item 6. Exhibits
    
    
    19Signatures
    
    
    20Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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##### Table of Contents



Part I  Financial Information
 
   
 
 March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)ASSETSCash and due from banks
    
    $
    65,202
    
    
    $
    84,371Federal funds sold and short-term investments
    
    
    12,645
    
    
    
    21,576Securities available-for-sale
    
    
    578,364
    
    
    
    587,246Loans:Commercial, financial and agricultural
    
    
    556,995
    
    
    
    558,211Real estate  construction
    
    
    27,078
    
    
    
    27,231Real estate  mortgage
    
    
    726,750
    
    
    
    729,668Installment
    
    
    307,692
    
    
    
    314,417Lease financing
    
    
    2,245
    
    
    
    2,3131,620,760
    
    
    
    1,631,840Less:Unearned Income
    
    
    (70
    )
    
    
    (76
    )Allowance for loan losses
    
    
    (19,378
    )
    
    
    (19,437
    )1,601,312
    
    
    
    1,612,327Restricted Stock
    
    
    27,835
    
    
    
    27,835Accrued interest receivable
    
    
    10,933
    
    
    
    12,005Premises and equipment, net
    
    
    35,430
    
    
    
    35,551Bank-owned life insurance
    
    
    64,589
    
    
    
    64,057Goodwill
    
    
    7,102
    
    
    
    7,102Other intangible assets
    
    
    4,546
    
    
    
    4,916Other real estate owned
    
    
    5,439
    
    
    
    5,885FDIC Indimnification Asset
    
    
    13,500
    
    
    
    12,124Other assets
    
    
    46,159
    
    
    
    43,727TOTAL ASSETS
    
    $
    2,473,056
    
    
    $
    2,518,722LIABILITIES AND SHAREHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    283,083
    
    
    $
    312,990Interest-bearing:Certificates of deposit of $100 or more
    
    
    253,620
    
    
    
    238,830Other interest-bearing deposits
    
    
    1,269,839
    
    
    
    1,237,8811,806,542
    
    
    
    1,789,701Short-term borrowings
    
    
    38,686
    
    
    
    30,436Other borrowings
    
    
    252,737
    
    
    
    332,737Other liabilities
    
    
    58,995
    
    
    
    59,365TOTAL LIABILITIES
    
    
    2,156,960
    
    
    
    2,212,239Shareholders equityCommon stock, $.125 stated value per share; 
Authorized shares-40,000,000
Issued shares-14,450,966
Outstanding shares-13,112,630 in 2010 and 13,116,630 in 2009
    
    
    1,806
    
    
    
    1,806Additional paid-in capital
    
    
    68,739
    
    
    
    68,739Retained earnings
    
    
    283,043
    
    
    
    277,357Accumulated other comprehensive income (loss)
    
    
    (3,526
    )
    
    
    (7,904
    )Treasury shares at cost-1,338,336 in 2010 and 1,334,336 in 2009
    
    
    (33,966
    )
    
    
    (33,515
    )TOTAL SHAREHOLDERS EQUITY
    
    
    316,096
    
    
    
    306,483TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,473,056
    
    
    $
    2,518,722
   3




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##### Table of Contents



Three Months EndedMarch 31,2010
    
    
    2009(unaudited)
    
    
    (unaudited)INTEREST INCOME:Loans, including related fees
    
    $
    24,021
    
    
    $
    22,907Securities:Taxable
    
    
    5,008
    
    
    
    6,168Tax-exempt
    
    
    1,627
    
    
    
    1,641Other
    
    
    536
    
    
    
    470TOTAL INTEREST INCOME
    
    
    31,192
    
    
    
    31,186INTEREST EXPENSE:Deposits
    
    
    4,398
    
    
    
    6,204Short-term borrowings
    
    
    90
    
    
    
    143Other borrowings
    
    
    3,423
    
    
    
    4,376TOTAL INTEREST EXPENSE
    
    
    7,911
    
    
    
    10,723NET INTEREST INCOME
    
    
    23,281
    
    
    
    20,463Provision for loan losses
    
    
    2,430
    
    
    
    2,830NET INTEREST INCOME AFTER PROVISIONFOR LOAN LOSSES
    
    
    20,851
    
    
    
    17,633NON-INTEREST INCOME:Trust and financial services
    
    
    1,259
    
    
    
    1,014Service charges and fees on deposit accounts
    
    
    2,402
    
    
    
    2,497Other service charges and fees
    
    
    1,821
    
    
    
    1,532Securities gains/(losses), net
    
    
    245
    
    
    
    Total impairment loss
    
    
    (6,295
    )
    
    
    (2,979
    )Loss recognized in other comprehensive income
    
    
    3,196
    
    
    
    Net impairment loss recognized in earnings
    
    
    (3,099
    )
    
    
    (2,979
    )Insurance commissions
    
    
    1,670
    
    
    
    1,439Gain on sales of mortgage loans
    
    
    272
    
    
    
    576Other
    
    
    444
    
    
    
    667TOTAL NON-INTEREST INCOME
    
    
    5,014
    
    
    
    4,746NON-INTEREST EXPENSE:Salaries and employee benefits
    
    
    10,830
    
    
    
    10,180Occupancy expense
    
    
    1,251
    
    
    
    1,092Equipment expense
    
    
    1,216
    
    
    
    1,121Other
    
    
    4,984
    
    
    
    4,304TOTAL NON-INTEREST EXPENSE
    
    
    18,281
    
    
    
    16,697INCOME BEFORE INCOME TAXES
    
    
    7,584
    
    
    
    5,682Provision for income taxes
    
    
    1,898
    
    
    
    1,152NET INCOME
    
    $
    5,686
    
    
    $
    4,530PER SHARE DATABasic and Diluted Earnings per Share
    
    $
    0.43
    
    
    $
    0.35Weighted average number of shares outstanding (in thousands)
    
    
    13,120
    
    
    
    13,117
  4




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##### Table of Contents



AccoumulatedOtherCommon
    
    
    Additional
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Capital
    
    
    Earnings
    
    
    Income/(Loss)
    
    
    Stock
    
    
    TotalBalance, January 1, 2009
    
    $
    1,806
    
    
    $
    68,654
    
    
    $
    263,115
    
    
    $
    (12,946
    )
    
    $
    (33,785
    )
    
    $
    286,844Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    4,530
    
    
    
    
    
    
    
    
    
    
    
    4,530Change in net unrealized gains/(losses) on securities available for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,452
    
    
    
    
    
    
    
    4,452Change in net unrealized gains/
(losses) on retirement plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    91Total comprehensive income/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,073Treasury stock purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, March 31, 2009
    
    $
    1,806
    
    
    $
    68,654
    
    
    $
    267,645
    
    
    $
    (8,403
    )
    
    $
    (33,785
    )
    
    $
    295,917Balance, January 1, 2010
    
    $
    1,806
    
    
    $
    68,739
    
    
    $
    277,357
    
    
    $
    (7,904
    )
    
    $
    (33,515
    )
    
    $
    306,483Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    5,686
    
    
    
    
    
    
    
    
    
    
    
    5,686Change in net unrealized gains/(losses) on securities
available for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200
    
    
    
    
    
    
    
    4,200Change in net unrealized gains/
(losses) on retirement plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178
    
    
    
    
    
    
    
    178Total comprehensive income/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,064Treasury stock purchase (17,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (451
    )
    
    
    (451
    )Balance, March 31, 2010
    
    $
    1,806
    
    
    $
    68,739
    
    
    $
    283,043
    
    
    $
    (3,526
    )
    
    $
    (33,966
    )
    
    $
    316,096
   5




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##### Table of Contents



Three Months EndedMarch 31,2010
    
    
    2009(Unaudited)
    
    
    (Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    5,686
    
    
    $
    4,530Adjustments to reconcile net income to net cash
provided by operating activities:Net amortization (accretion) of premiums and discounts on investments
    
    
    (325
    )
    
    
    (788
    )Provision for loan losses
    
    
    2,430
    
    
    
    2,830Securities (gains) losses
    
    
    (245
    )
    
    
    Securities impairment loss
    
    
    3,099
    
    
    
    2,979Gain on sale of other real estate
    
    
    (16
    )
    
    
    (63
    )Depreciation and amortization
    
    
    1,187
    
    
    
    910Other, net
    
    
    (347
    )
    
    
    1,952NET CASH FROM OPERATING ACTIVITIES
    
    
    11,469
    
    
    
    12,350CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales of securities available-for-sale
    
    
    7,250
    
    
    
    Calls, maturities and principal reductions on securities available-for-sale
    
    
    39,281
    
    
    
    25,848Purchases of securities available-for-sale
    
    
    (33,179
    )
    
    
    (24,481
    )Loans made to customers, net of repayment
    
    
    8,359
    
    
    
    (16,182
    )Proceeds from sales of other real estate owned
    
    
    729
    
    
    
    490Net change in federal funds sold
    
    
    8,931
    
    
    
    9,530Additions to premises and equipment
    
    
    (696
    )
    
    
    (825
    )NET CASH FROM INVESTING ACTIVITIES
    
    
    30,675
    
    
    
    (5,620
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net change in deposits
    
    
    16,796
    
    
    
    17,825Net change in short-term borrowings
    
    
    8,250
    
    
    
    17,316Dividends paid
    
    
    (5,908
    )
    
    
    (5,902
    )Purchase of treasury stock
    
    
    (451
    )
    
    
    Proceeds from other borrowings
    
    
    
    
    
    
    20,000Repayments on other borrowings
    
    
    (80,000
    )
    
    
    (72,000
    )NET CASH FROM FINANCING ACTIVITIES
    
    
    (61,313
    )
    
    
    (22,761
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (19,169
    )
    
    
    (16,031
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    84,371
    
    
    
    67,298CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    65,202
    
    
    $
    51,267
   6




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##### Table of Contents



Significant Accounting Policies
  Allowance for Loan Losses
  March 31,2010
    
    
    2009Balance at beginning of quarter
    
    $
    19,437
    
    
    $
    16,280Provision for loan losses
    
    
    2,430
    
    
    
    2,830Recoveries of loans previously charged off
    
    
    851
    
    
    
    608Loans charged off
    
    
    (3,340
    )
    
    
    (2,689
    )Balance at end of quarter
    
    $
    19,378
    
    
    $
    17,029
  March 31,
    
    
    December 31,2010
    
    
    2009Impaired Loans with allocated allowance for loan losses
    
    $
    18,119
    
    
    $
    18,620Impaired Loans with no allocated allowance for loan losses
    
    
    8,346
    
    
    
    6,054$
    26,465
    
    
    $
    24,674
  Securities
  (000s)March 31, 2010Amortized
    
    
    Unrealized(Dollar amounts in thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government sponcored entities
and entity mortgage-backed securities
    
    $
    4,076
    
    
    $
    42
    
    
    $
    0
    
    
    $
    4,118Mortgage Backed Securities-residential
    
    
    283,472
    
    
    
    15,087
    
    
    
    (25
    )
    
    
    298,534Mortgage Backed Securities-commercial
    
    
    156
    
    
    
    5
    
    
    
    0
    
    
    
    161Collateralized mortgage obligations
    
    
    109,429
    
    
    
    2,933
    
    
    
    (40
    )
    
    
    112,322State and municipal
    
    
    146,819
    
    
    
    8,043
    
    
    
    (135
    )
    
    
    154,727Collateralized debt obligations
    
    
    16,017
    
    
    
    
    
    
    
    (13,887
    )
    
    
    2,130Equities
    
    
    5,672
    
    
    
    1,446
    
    
    
    (746
    )
    
    
    6,372TOTAL
    
    $
    565,641
    
    
    $
    27,556
    
    
    $
    (14,833
    )
    
    $
    578,364
  7




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##### Table of Contents



December 31, 2009Amortized
    
    
    Unrealized(Dollar amounts in thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government sponcored entities
and entity mortgage-backed securities
    
    $
    4,103
    
    
    $
    45
    
    
    $
    0
    
    
    $
    4,148Mortgage Backed Securities-residential
    
    
    285,964
    
    
    
    14,260
    
    
    
    (40
    )
    
    
    300,184Mortgage Backed Securities-commercial
    
    
    162
    
    
    
    6
    
    
    
    0
    
    
    
    168Collateralized mortgage obligations
    
    
    116,330
    
    
    
    3,334
    
    
    
    (100
    )
    
    
    119,564State and municipal
    
    
    143,039
    
    
    
    5,926
    
    
    
    (232
    )
    
    
    148,733Collateralized debt obligations
    
    
    19,253
    
    
    
    
    
    
    
    (17,837
    )
    
    
    1,416Other Securities
    
    
    7,004
    
    
    
    257
    
    
    
    (189
    )
    
    
    7,072Equities
    
    
    5,668
    
    
    
    1,462
    
    
    
    (1,169
    )
    
    
    5,961TOTAL
    
    $
    581,523
    
    
    $
    25,290
    
    
    $
    (19,567
    )
    
    $
    587,246
  Amortized
    
    
    Fair(Dollar amounts in thousands)
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    8,510
    
    
    $
    8,620Due after one but within five years
    
    
    38,440
    
    
    
    40,680Due after five but within ten years
    
    
    40,309
    
    
    
    42,898Due after ten years
    
    
    189,082
    
    
    
    181,099276,341
    
    
    
    273,297Mortgage-backed securities and equities
    
    
    289,300
    
    
    
    305,067TOTAL
    
    $
    565,641
    
    
    $
    578,364
   March 31, 2010Less Than 12 Months
    
    
    More Than 12 Months
    
    
    
    
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized(Dollar amounts in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesMortgage Backed Securities  Residential
    
    $
    5,028
    
    
    $
    (24
    )
    
    $
    46
    
    
    $
    (1
    )
    
    $
    5,074
    
    
    $
    (25
    )Mortgage Backed Securities  Commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Collateralized mortgage obligations
    
    
    12,154
    
    
    
    (40
    )
    
    
    
    
    
    
    
    
    
    
    12,154
    
    
    
    (40
    )State and municipal obligations
    
    
    1,508
    
    
    
    (66
    )
    
    
    2,905
    
    
    
    (69
    )
    
    
    4,413
    
    
    
    (135
    )Collateralized Debt Obligations
    
    
    
    
    
    
    
    
    
    
    2,130
    
    
    
    (13,887
    )
    
    
    2,130
    
    
    
    (13,887
    )Equities
    
    
    574
    
    
    
    (222
    )
    
    
    1,543
    
    
    
    (524
    )
    
    
    2,117
    
    
    
    (746
    )Total temporarily impaired securities
    
    $
    19,264
    
    
    $
    (352
    )
    
    $
    6,624
    
    
    $
    (14,481
    )
    
    $
    25,888
    
    
    $
    (14,833
    )
 December 31, 2009Less Than 12 Months
    
    
    More Than 12 Months
    
    
    
    
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized(Dollar amounts in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesMortgage Backed Securities  Residential
    
    $
    6,985
    
    
    $
    (38
    )
    
    $
    47
    
    
    $
    (2
    )
    
    $
    7,032
    
    
    $
    (40
    )Mortgage Backed Securities  Commercial
    
    
    6,094
    
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    6,094
    
    
    
    (100
    )State and municipal obligations
    
    
    6,594
    
    
    
    (45
    )
    
    
    4,841
    
    
    
    (187
    )
    
    
    11,435
    
    
    
    (232
    )Collateralized Debt Obligations
    
    
    
    
    
    
    
    
    
    
    1,416
    
    
    
    (17,837
    )
    
    
    1,416
    
    
    
    (17,837
    )Other Securities
    
    
    
    
    
    
    
    
    
    
    811
    
    
    
    (189
    )
    
    
    811
    
    
    
    (189
    )Equities
    
    
    543
    
    
    
    (280
    )
    
    
    1,150
    
    
    
    (889
    )
    
    
    1,693
    
    
    
    (1,169
    )Total temporarily impaired securities
    
    $
    20,216
    
    
    $
    (463
    )
    
    $
    8,265
    
    
    $
    (19,104
    )
    
    $
    28,481
    
    
    $
    (19,567
    )
  8




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##### Table of Contents



Investments  Debt and Equity Securities Beneficial Interests in Securitized Financial Assets.
         9




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##### Table of Contents



Three Months Ended March 31,2010
    
    
    2009Beginning balance
    
    $
    11,359
    
    
    $
    6,145Increases to the amount related to the credit
loss for which other-than-temporary was
previously recognized
    
    
    3,099
    
    
    
    2,979Ending balance
    
    $
    14,458
    
    
    $
    9,124
 Fair Value
  Level 1:
    
    Quoted prices (unadjusted) of identical assets or liabilities in active markets that
the entity has the ability to access
as of the measurement date.Level 2:
    
    Significant other observable inputs other than Level I prices such as quoted prices
for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by
observable market data.Level 3:
    
    Significant unobservable inputs that reflect a reporting entitys own assumptions
about the assumptions that market
participants would use in pricing an asset or liability.
    March 31, 2010Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)(Dollar amounts in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Carrying ValueU.S. Government sponcored entities
and entity mortgage-backed securities
    
    $
    0
    
    
    $
    4,118
    
    
    $
    0
    
    
    $
    4,118Mortgage Backed Securities-residential
    
    
    
    
    
    
    298,534
    
    
    
    
    
    
    
    298,534Mortgage Backed Securities-commercial
    
    
    
    
    
    $
    161
    
    
    
    
    
    
    
    161Collateralized mortgage obligations
    
    
    
    
    
    
    112,322
    
    
    
    
    
    
    
    112,322State and municipal
    
    
    
    
    
    
    154,727
    
    
    
    
    
    
    
    154,727Collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    2,130
    
    
    
    2,130Equities
    
    
    3,018
    
    
    
    
    
    
    
    3,354
    
    
    
    6,372TOTAL
    
    $
    3,018
    
    
    $
    569,862
    
    
    $
    5,484
    
    
    $
    578,364Derivitive Assets
    
    
    
    
    
    
    772Derivitive Liabilities
    
    
    
    
    
    
    (772
    )
  10




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##### Table of Contents



December 31, 2009Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)(Dollar amounts in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Carrying ValueU.S. Government sponcored entities
and entity mortgage-backed securities
    
    $
    0
    
    
    $
    4,148
    
    
    $
    0
    
    
    $
    4,148Mortgage Backed Securities-residential
    
    
    
    
    
    
    300,184
    
    
    
    
    
    
    
    300,184Mortgage Backed Securities-commercial
    
    
    
    
    
    $
    168
    
    
    
    
    
    
    
    168Collateralized mortgage obligations
    
    
    
    
    
    
    119,564
    
    
    
    
    
    
    
    119,564State and municipal
    
    
    
    
    
    
    148,733
    
    
    
    
    
    
    
    148,733Collateralized debt obligations
    
    
    
    
    
    
    0
    
    
    
    1,416
    
    
    
    1,416Other Securities
    
    
    
    
    
    
    7,072
    
    
    
    
    
    
    
    7,072Equities
    
    
    2,600
    
    
    
    0
    
    
    
    3,361
    
    
    
    5,961TOTAL
    
    $
    2,600
    
    
    $
    579,869
    
    
    $
    4,777
    
    
    $
    587,246Derivitive Assets
    
    
    
    
    
    
    889Derivitive Liabilities
    
    
    
    
    
    
    (889
    )
  Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)March 31,
    
    
    March 312010
    
    
    2009Beginning Balance
    
    $
    4,777
    
    
    $
    7,994Total realized/unrealized gains or lossesIncluded in earnings
    
    
    (3,099
    )
    
    
    (2,979
    )Included in other comprehensive income
    
    
    3,908
    
    
    
    2,198Settlements
    
    
    (102
    )
    
    
    (52
    )Transfers into Level 3
    
    
    
    
    
    
    Ending Balance
    
    $
    5,484
    
    
    $
    7,161
     11




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##### Table of Contents



March 31, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fair(Dollar amounts in thousands)
    
    Value
    
    
    Value
    
    
    Value
    
    
    ValueCash and due from banks
    
    
    65,202
    
    
    
    65,202
    
    
    
    84,371
    
    
    
    84,371Federal funds sold
    
    
    12,645
    
    
    
    12,645
    
    
    
    21,576
    
    
    
    21,576Securities availableforsale
    
    
    578,364
    
    
    
    578,364
    
    
    
    587,246
    
    
    
    587,246Federal Home Loan Bank Stock
    
    
    26,181
    
    
    
    n/a
    
    
    
    26,181
    
    
    
    n/aLoans, net *
    
    
    1,601,312
    
    
    
    1,594,547
    
    
    
    1,612,327
    
    
    
    1,604,412Accrued interest receivable
    
    
    10,933
    
    
    
    10,933
    
    
    
    12,005
    
    
    
    12,005Deposits
    
    
    (1,806,542
    )
    
    
    (1,814,212
    )
    
    
    (1,789,701
    )
    
    
    (1,798,059
    )Shortterm borrowings
    
    
    (38,636
    )
    
    
    (38,636
    )
    
    
    (30,436
    )
    
    
    (30,436
    )Federal Home Loan Bank advances
    
    
    (246,137
    )
    
    
    (254,140
    )
    
    
    (326,137
    )
    
    
    (337,847
    )Other borrowings
    
    
    (6,600
    )
    
    
    (6,600
    )
    
    
    (6,600
    )
    
    
    (6,600
    )Accrued interest payable
    
    
    (2,609
    )
    
    
    (2,609
    )
    
    
    (3,127
    )
    
    
    (3,127
    )
 *
    
    includes credit card loans held for sale Short-Term Borrowings
  (000s)March 31,
    
    
    December 31,2010
    
    
    2009Federal Funds Purchased
    
    $
    11,066
    
    
    $
    5,754Repurchase Agreements
    
    
    25,030
    
    
    
    22,578Note Payable  U.S. Government
    
    
    2,590
    
    
    
    2,104$
    38,686
    
    
    $
    30,436
 Other Borrowings
  (000s)March 31,
    
    
    December 31,2010
    
    
    2009FHLB Advances
    
    $
    246,137
    
    
    $
    326,137City of Terre Haute, Indiana economic development revenue bonds
    
    
    6,600
    
    
    
    6,600$
    252,737
    
    
    $
    332,737
 Components of Net Periodic Benefit Cost
 Three Months ended March 31,(000s)Post-RetirementPension Benefits
    
    
    Health Benefits2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    773
    
    
    $
    768
    
    
    $
    16
    
    
    $
    27Interest cost
    
    
    828
    
    
    
    693
    
    
    
    55
    
    
    
    60Expected return on plan assets
    
    
    (850
    )
    
    
    (910
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    15Net amortization of prior service cost
    
    
    (4
    )
    
    
    (5
    )
    
    
    
    
    
    
    Net amortization of net (gain) loss
    
    
    245
    
    
    
    116
    
    
    
    3
    
    
    
    Net Periodic Benefit Cost
    
    $
    992
    
    
    $
    662
    
    
    $
    89
    
    
    $
    102
  12




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##### Table of Contents



Employer Contributions
  8. New accounting standards
    9. Acquisitions
   13




---



##### Table of Contents



March 31, 2010ASC 310-30
    
    
    Non ASC 310-30Loans
    
    
    Loans
    
    
    Other
    
    
    TotalLoans
    
    $
    15,737
    
    
    $
    41,363
    
    
    $
    
    
    
    $
    57,100Foreclosed Assets
    
    
    
    
    
    
    
    
    
    
    1,163
    
    
    
    1,163Total Covered Assets
    
    $
    15,737
    
    
    $
    41,363
    
    
    $
    1,163
    
    
    $
    58,263
 December 31, 2009ASC 310-30
    
    
    Non ASC 310-30Loans
    
    
    Loans
    
    
    Other
    
    
    TotalLoans
    
    $
    16,849
    
    
    $
    55,025
    
    
    $
    
    
    
    $
    71,874Foreclosed Assets
    
    
    
    
    
    
    
    
    
    
    1,256
    
    
    
    1,256Total Covered Assets
    
    $
    16,849
    
    
    $
    55,025
    
    
    $
    1,256
    
    
    $
    73,130
   
 Managements Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk
    14




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##### Table of Contents



Critical Accounting Policies
 Form 10-K.
 Summary of Operating Results
   Net Interest Income
  Non-Interest Income
  Non-Interest Expenses
  Allowance for Loan Losses
 
  15




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##### Table of Contents



Non-performing Loans
  (000s)March 31,
    
    
    December 31,2010
    
    
    2009Non-accrual loans
    
    $
    38,584
    
    
    $
    35,953Restructured loans
    
    
    89
    
    
    
    90Accruing loans past due over 90 days
    
    
    6,444
    
    
    
    8,218$
    45,117
    
    
    $
    44,261Ratio of the allowance for loan losses as a percentage of non-performing loans
    
    
    43
    %
    
    
    44
    %
  (000s)March 31,
    
    
    December 31,Non-accrual loans
    
    2010
    
    
    20091-4 family residential
    
    $
    4,160
    
    
    $
    2,917Commercial loans
    
    
    32,431
    
    
    
    30,961Installment loans
    
    
    1,993
    
    
    
    2,075$
    38,584
    
    
    $
    35,953Past due 90 days or more1-4 family residential
    
    $
    660
    
    
    $
    1,837Commercial loans
    
    
    5,333
    
    
    
    5,937Installment loans
    
    
    451
    
    
    
    444$
    6,444
    
    
    $
    8,218
  (000s)
    
    
    (000s)March 31,
    
    
    December 31,Non-accrual loans
    
    2010
    
    
    20091-4 family residential
    
    $
    318
    
    
    $
    168Commercial loans
    
    
    7,968
    
    
    
    7,396Installment loans
    
    
    
    
    
    
    $
    8,286
    
    
    $
    7,564
 Interest Rate Sensitivity and Liquidity
  Interest Rate Risk
   16




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##### Table of Contents



Basis Point
    
    Percentage Change in Net Interest IncomeInterest Rate Change
    
    12 months
    
    
    24 months
    
    
    36 monthsDown 200
    
    
    0.38
    %
    
    
    0.23
    %
    
    
    0.26
    %Down 100
    
    
    0.05
    
    
    
    -0.06
    
    
    
    -0.09Up 100
    
    
    0.66
    
    
    
    2.36
    
    
    
    4.17Up 200
    
    
    -0.55
    
    
    
    2.49
    
    
    
    6.06
  Liquidity Risk
  Financial Condition
  Capital Adequacy
  March 31, 2010
    
    
    December 31, 2009
    
    
    To Be Well CapitalizedTotal risk-based capitalCorporation
    
    
    17.08
    %
    
    
    16.44
    %
    
    
    N/AFirst Financial Bank
    
    
    16.75
    %
    
    
    16.09
    %
    
    
    10.00
    %Tier I risk-based capitalCorporation
    
    
    16.07
    %
    
    
    15.45
    %
    
    
    N/AFirst Financial Bank
    
    
    15.88
    %
    
    
    15.23
    %
    
    
    6.00
    %Tier I leverage capitalCorporation
    
    
    12.46
    %
    
    
    12.01
    %
    
    
    N/AFirst Financial Bank
    
    
    12.33
    %
    
    
    11.86
    %
    
    
    5.00
    %
  17




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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.
     (c)Total Number Of Shares
    
    
    (d)(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 PurchasedJanuary 1 - 31, 2010
    
    
    3,000
    
    
    
    28.55
    
    
    
    N/A
    
    
    
    N/AFebruary 1 - 28, 2010
    
    
    14,000
    
    
    
    26.08
    
    
    
    N/A
    
    
    
    N/AMarch 1 - 31, 2010
    
    
    0
    
    
    
    0.00
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    17,000
    
    
    
    26.51
    
    
    
    N/A
    
    
    
    N/A
 
 Defaults upon Senior Securities.
  
 ITEM 4. (Removed and Reserved)
 
 Other Information.
   18




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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 8-K filed on July 27, 2009.10.1
    
    
    Employment Agreement for Norman L. Lowery, dated March 26, 2010 and effective
January 1, 2010 included as exhibit 10.1 of the Corporations Form 10-Q.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
    
    
    2010 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, 2009.10.4
    
    
    2010 Schedule of Named Executive Officer Compensation, incorporated by
reference to the Corporations Form 10-K filed for the fiscal year ended December 31,
2009.10.5
    
    
    2005 Long-Term Incentive Plan of First Financial Corporation, incorporated by
reference to Exhibit 10.7 of the Corporations Form 8-K filed September 4, 2007.31.1
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010 by Principal Executive Officer, dated May 7, 201031.2
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010 by Principal Financial Officer, dated May 7, 2010.32.1
    
    
    Certification, dated May 7, 2010, 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 March 31, 2010.
  19




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##### Table of Contents



FIRST FINANCIAL CORPORATION
(Registrant)Date: May 7, 2010
    By
    /s/ Donald E. SmithDonald E. Smith, ChairmanDate: May 7, 2010
    By
    /s/ Norman L. LoweryNorman L. Lowery, Vice Chairman and CEO(Principal Executive Officer)Date: May 7, 2010
    By
    /s/ Rodger A. McHargueRodger A. McHargue, Treasurer and CFO(Principal Financial Officer)  20




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##### Table of Contents



Exhibit No.: Description of Exhibit:
 
 Exhibit Index
 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 8-K filed on July 27, 2009.10.1
    
    
    Employment Agreement for Norman L. Lowery, dated March 26, 2010 and effective
January 1, 2010 included as exhibit 10.1 of the Corporations Form 10-Q.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
    
    
    2010 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, 2009.10.4
    
    
    2010 Schedule of Named Executive Officer Compensation, incorporated by
reference to the Corporations Form 10-K filed for the fiscal year ended December 31,
2009.10.5
    
    
    2005 Long-Term Incentive Plan of First Financial Corporation, incorporated by
reference to Exhibit 10.7 of the Corporations Form 8-K filed September 4, 2007.31.1
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010 by Principal Executive Officer, dated May 7, 201031.2
    
    
    Sarbanes-Oxley Act 302 Certification for Quarterly Report on Form 10-Q for the
quarter ended March 31, 2010 by Principal Financial Officer, dated May 7, 2010.32.1
    
    
    Certification, dated May 7, 2010, 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 March 31, 2010.
  21