2011 Annual Report
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First Financial
Corporation
FIRST FINANCIAL CORPORATION
The mission of First Financial
FIRST choice for all your
financial needs.
Table of Contents
Financial Highlights
Letter to Shareholders
The Year in Review
Form 10-K
1
2
4
9
Corporate Leadership
inside
Back Cover
1
2011 ANNUAL REPORT
TOTAL ASSETS
S in thousands
$2,954,061
$2,518,722
$2,302,675
$2,451,095
(Dollar amounts in thousands, except per sl,are data)
2011
December 31
2010
2009
'08
'09
'10
'11
Net income
$
37,195
$
28,044
$
27,720
Net income per share
Book value per share
Cash dividends per share
2.83
26.38
0.94
2.14
24.46
0.92
1.73
23.34
0.90
Assets
Deposits
Loans, net
Securities
Shareholders' equity
$2,954,061
$2,451,095
$2,518,722
2,274,499
1,893,679
666,287
346,961
1,903,043
1,640,146
560,846
321,717
1,789,701
1,631,764
587,246
306,717
The common stock of First Financial Corporation is traded on the NASDAQ Global
under the symbol THFF. A copy of form 10-K, as filed with the Securities and Exchange
Commission, is available upon written request to: Rodger A. McHargue, First Financial
Corporation, P.O. Box 540, Terre Haute, IN 47808.
EARNINGS
PER SHARE
$2.83
$2.14
$1.89
$1.73
08
'09
'10
'11
2
FIRST FINANCIAL CORPORATION
Letter to Shareholders
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In years past, we have had the pleasure
of reporting many outstanding accom
plishments and financial results to our
shareholders. We have always done so
with pride and enthusiasm. This year
is no exception, except saying we are
proud of what we accomplished in 2011
simply will not do. This year we start by
saying WOW. We think you will agree!
While there were many noteworthy
accomplishments in 2011, two are par
ticularly significant. First, we enjoyed
our most profitable year since the
Corporation was founded and secondly,
we closed the largest acquisition in our
company's history. By themselves, either
make for an outstanding year. Together,
they are worthy of celebration.
Despite slow economic growth, a
weak housing market, continued high
unemployment and new federal regula
tions that placed a greater financial
burden on the banking industry, the
Corporation delivered record earnings
in 2011 as net income rose 32.6% to
$37.2 million compared to the $28
million reported in 2010. This perfor
mance was driven in part by a 3.4%
increase in our net interest margin to
4.50% and an 11.89% increase in non-
interest income. During the year, we
continued our spending discipline as
non-interest expense decreased $2.4
million, which allows us to report an
earnings per share increase of 32.2%
or $2.83 per share compared to $2.14
per share in 2010.
These outstanding results were not
produced by taking undue risks or pur
suing short-term gain at the expense
of long-term stability. Our success
came from maintaining our focus on
sound business fundamentals. Our
focus, coupled with strong leadership
and dedicated, hard-working employees,
are the source of our strength and con
sistent performance, which has allowed
us to increase dividends to shareholders
in each of the past 23 years.
We are constantly looking for op
portunities that will provide a solid
return and enhance the value of your
investment in First Financial In the
third quarter of 2011, we agreed to
acquire the assets and assume the li
abilities of Freestar Bank, N.A. as well
as certain liabilities of PNB Holding
2011 ANNUAL REPORT
Company. Freestar, with approximately
$400 million in assets, provided a
strategic entry into the Champaign-
Urbana, Bloomington-Normal and
Pontiac, Illinois markets, all areas we
previously targeted for expansion. Be
cause of our capital reserves, we were
able to acquire Freestar in an all-cash
transaction.
The accomplishments of our
associates in 2011 did not go unno
ticed. We would like to share a few of
them with you. BauerFinancial Inc.,
the nation's largest independent bank
rating and research firm, presented
both First Financial Bank and The
Morris Plan Company of Terre Haute
with its prestigious 5-Star Award,
a recognition of overall financial
strength, safety and soundness. For
the fifth consecutive year. The Banker,
a London-based investment and
commercial banking journal, named
I First Financial Bank as one of its top
' 1,000 banks in the world and 200 in
I the U.S. based on assets, real profits
i growth and other performance factors.
During the year First Financial Bank
was ranked as one ofthe nation's top
100 mid-tier banks based on return on
equity by American Banl in 2011
with the opportunity to acquire their
compared to 1.11% in 2010. Return
primary asset, Freestar Bank, N.A.,
on equity increased to 10.9%, a 24.9%
a profitable, well-run bank with a
improvement over the previous year.
philosophy of community-focused
5
2011 ANNUAL REPORT
ABOVE: Following a renovation project that
maintained its unique architecture, our drive-up
banking facility in dow/ntown Danville re-opened.
RIGHT: In late 2011, First Financial welcomed the
employees of Freestar Bank to the First family.
banking similar to ours. The 12 acquired branches
are located in economically vibrant areas, among
them Champaign-Urbana, home to the University
of Illinois; Bloomington-Normal, known for its
diverse economy and low unemployment rate; and
Pontiac, which Time magazine called one of the
best small towns in America. The transaction was
finalized on December 30, 2011.
This acquisition is part of our plan to grow the
Corporation prudently, without a dramatically
increased level of risk. We will continue to look
at acquisition opportunities as they present
themselves while still focusing on our core
operations—primarily commercial and residential
loan growth—as well as maintaining our net
interest margin.
First Financial Bank has 64 banking centers
serving 41 communities in western Indiana
and eastern Illinois.
FIRST FINANCIAL CORPORATION
commii
Community service as a key value
The Corporation has long viewed its standing
in the communities it serves as essential to
its success. Education is at the heart: of that.
More specifically, providing an atmosphere
where children thrive in a learning
environment is what we set out to do by
partnering with the Vigo County School
Corporation to launch the H.E.R.O. (Helping
Everyone Respect Others) campaign. First
Financial sponsored a series of billboards
and radio announcements highlighting the
dangers of bullying.
We also completed our involvement in the
Food for Friends program, which was an
ongoing effort in partnership with Catholic
Charities in Terre Haute to benefit food
banks and soup kitchens throughout the
First Financial service area. At the close of
2011, Food for Friends had collected a total
of 119,201 pounds of food.
Even though we acquired Freestar Bank at
the close of 2011, we have already been
able to provide support to the Pontiac High
School FFA Chapter, the Boys Track and Field
Team and the Sports Boosters Club, as well
as the Pontiac Chamber of Commerce, the
Pontiac Junior Baseball Association and the
ABOVE: With a deposit of as little
as one dollar, children, their
parents or grandparents can open
a savings account that allows
youngsters to learn the importance
of saving for their future.
We believe in supporting
organizations, events and
activities in our service area
that i y i ii connmunities, lyo^sir
education, cultifate the arts
and care for the environment.
7
2011 ANNUAL REPORT
a
R e p o rt
B w l l y i n g-mm be
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tFlnancUd
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Helping
Everyone
Respect Otheis
W W W. VI j_go s c h o o i s . o rg
LEFT: Our "First Road Show"
takes bank employees into
elementary school classrooms
in the area to teach financial
literacy RIGHT: To forestall
bullying in our schools. First
Financial produced billboards
and radio announcements to
alert students and their parents
to the dangers of bullying.
RIGHT: First Fmancial Bank's Food
for Friends program was created in
partnership with Catholic Charities
to help feed the less fortunate
in our service area. The forma
program ended last year after
collecting and distributing more
than 119,000 pounds of food
through community food banks.
BELOW: First Financial supports
area schools and colleges by
underwriting the cost of equipment
and programs that help students
excel in both the classroom and in
extracurricular activities.
LEFT, TOP: Recognizing that
the arts add both cultural and
economic vitality to the life of a
community, First Financial is
proud to support the symphony
orchestras in Champaign, Danville
and Terre Haute.
LEFT, BELOW: In June thousands
of athletes from all over Indiana
gather on the campus of Indiana
State University for the Special
Olympic Summer Games. First
Financial has sponsored the
opening ceremonies of the games
for 25 years.
FIRST FINANCIAL CORPORATION
RIGHT: Upgrading our
ATM network will not
only accommodate new
regulations, but will
add new dimensions
to the remote banking
experience. BELOW,
RIGHT: New teller
systems will enhance
the interaction between
customers and tellers,
making the experience
more productive and
efficient. FAR RIGHT: In
2 0 1 1, we replaced our
Dugger banking center
with a state-of-the-art
facility. Pictured at
the ribbon-cutting are
Norman L. Lowery,
vice chairman and
CEO; Donald E. Smith,
president and chairman
of the board; and
Norman D. Lowery, COO.
Greater Livingston County Economic
Last year we built a new banking center in Dugger, Indiana, to replace an
Development Group. All this was in
existing building that was no longer repairable. Construction on the facility was
addition to the thousands of hours
completed in December. It was greeted with enthusiasm by members ofthis small
of volunteer service our employees
community, who appreciate First Financial's commitment to serving rural areas.
contributed to countess different
programs, events and organizations
At First Financial, we've always been proud of our effort:s to personalize the
throughout our service area.
customer service experience. In 2012, we will replace our current bank teller
system with one designed to make that experience even better. Aided by
Investing in our future
the latest tools and technology, our tellers will not only be able to serve
In January 2011, following a major
customers more efficiently, but also anticipate each customer's needs in order to
remodeling project, we re-opened
recommend products and services that are timely and relevant.
the drive-up facility at our downtown
banking center in Danville, Illinois.
Our plans for 2012 additionally include enhancing the online banking experience
This architecturally significant structure
of every customer and upgrading our ATMs to accommodate new banking
known for its unusual circular-shaped
requirements. Further, First Financial will add electronic deposit image capture
canopies was completely renovated.
for consumers and streamlined image capture for our commercial clients. We
It provides convenience and ease of
plan to offer e-returns to all business customers in the near future.
service to drive-up customers while
preserving a local landmark.
First Finandal Corporation Locations
Robinson Motor Bank*
(Drive-Through Only)
602 West Walnut St.
618-544-3355
Vermilion County
Danville*
One Towne Center
217-442-0362
Oblong*
301 East Main St
618-592-4252
Jasper County
Newton*
601 West Jourdan St.
618-783-2022
Lawrence County
Lawrenceville*
1601 State St.
618-943-3323
FIRST FINANCIAL
BANKING CENTERS
I n d i a na
Vigo County
Terre Haute Main Office*
One First Financial Plaza
Sixth & Wabash
812-238-6000
Honey Creek Mali*
U.S. 41 South
812-238-6000
Industrial Park*
1749 East Industrial Dr.
812-238-6000
Maple Avenue*
4065 Maple Ave.
812-238-6000
Meadows*
350 South 25th St.
812-238-6000
Plaza North*
Ft. Harrison & Lafayette
812-238-6000
Seelyville*
9520 East U.S. 40
812-238-6000
Southland*
3005 South Seventh St.
812-238-6000
Springhill*
4500 U.S. 41 South
812-238-6000
Sycamore Terrace*
2425 South State Road 46
812-238-6000
West Terre Haute*
309 National Ave.
812-238-6000
Clay County
Brazil*
7995 North State Road 59
812-443-4481
Brazil Downtown*
18 North Walnut
812-448-3357
Brazil Eastside*
2180 East National Ave.
812-448-8110
Clay City*
502-504 Main St.
812-939-2145
Farmersburg*
819 West Main St.
812-696-2106
Poland*
8490 East State Road 42
812-986-2115
Hymera
102 South Main St.
812-383-4933
Greene County
Worthington*
9 North Commercial St.
812-875-3021
Vermillion County
Newport*
100 West Market St.
765-492-3321
Cayuga
211 Curtis St.
765-492-3391
Clinton*
221 South Main St.
765-832-3504
Knox County
Monroe City*
201 West First St.
812-743-5151
Sandborn
102 North Anderson St.
812-694-8462
Vincennes*
2707 North Sixth St.
812-882-4800
Clinton Crown Hill*
1775 East State Road 163
765-832-5546
Livingston County
Pontiac*
521 West Madison St.
815-844-3171
Illinois
Parke County
Rockville*
1311 North Lincoln Road
765-569-3171
Champaign County
Champaign*
1205 South Neil St.
217-352-6700
Rockville Downtown*
120 East Ohio St.
765-569-3442
Champaign*
1611 South Prospect Ave.
217-351-6620
Marshall
10 South Main St.
765-597-2261
Mahomet*
Eastwood Center IGA
217-586-5322
Montezuma*
232 East Crawford St.
765-245-2706
Urbana*
410 North Broadway
217-351-2701
Rosedale
62 East Central St.
765-548-2266
Urbana*
2510 South Philo Road
217-344-1300
Putnam County
Greencastle*
101 South Warren Dr.
765-653-4444
Clark County
Marshall*
215 Nort:h Michigan
217-826-6311
Sullivan County
Sullivan*
15 South Main St.
812-268-3331
Coles County
Charleston*
820 West Lincoln Ave.
217-345-4824
Carlisle*
8571 Old U.S. 41 South
812-398-4100
Dugger*
879 South 3rd St.
812-648-2251
Crawford County
Robinson*
108 West Main St.
618-544-8666
Pontiac Main*
223 Nortih Mill St
815-844-3171
Pontiac West*
Route 116 & Route 66
815-844-3171
McLean County
Brickyard Drive -
Bloomington*
#1 Brickyard Dr. Suite 301
309-661-9993
Downs*
Downs Crossing #1
Mike's Way
309-662-1800
Gridley
325 Center St.
309-747-2100
Towanda Plaza -
Bloomington*
1218 Towanda Ave.
888-876-2638
Richland County
Olney*
240 East Chestnut St.
618-395-8676
Olney*
1110 South West St
618-395-2112
Danville Motor Bank*
(Drive-Through Only)
101 West Main St
217-443-3519
Danville*
2750 North Vermilion St
217-431-8750
Danville*
901 North Gilbert St
217-431-3486
Danville*
421 South Gilbert St
217-477-4512
Ridge Farm*
11 South State St.
217-247-2126
Westville*
101 East Main St
217-267-2147
Wayne County
Fairfield*
303 West Delaware
618-842-2145
* FirstPlus 24-hour ATM available at
these locations.
INSURANCE
Forrest Sherer Insurance
of Terre Haute
24 North Ohio St
812-232-0441
1219 Ohio St
812-232-0441
Forrest Sherer Insurance
of Evansville
123 N.W. 4th St, Suite 303
812-232-0441
MORRIS PLAN
BANKING CENTER
The Morris Plan Company
of Terre Haute, Inc.
817 Wabash Ave.
812-238-6063
Corporate Leadership
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Board of Directors of First Financial Corporation and First Finandal Bank: seated, (left to right): William R. Krieble, Norman L. Lowery, Donald E. Smith,
Thomas T. Dinkel and Anton H. George. Standing, (left to right): B. Guille Cox, 3r., Virginia L Smith, William J. Voges, Gregory L. Gibson, W. Curtis
Brighton and Ronald K. Rich.
DIRECTORS
First Finandal Corporation
and First Financial Bank
W. Curtis Brighton
B. Guille Cox, Jr.
Thomas T. Dinkel
Anton Hulman George
Gregory L. Gibson
William R. Krieble
Norman L. Lowery
Ronald K. Rich
Donald E. Smith
Virginia L. Smith
William J. Voges
The Morris Plan Company
of Terre Haute Inc.
David L. Bailey
Jeffrey G. Belskus
Thomas S. Clary
Mark J. Fuson
Norman D. Lowery
James F. Nasser
Jeffrey B. Smith
Forrest Sherer Inc.
John W. Dinkel
J. Barton Douglas
Norman L. Lowery
John S. Lukens
David W. Marietta
Dennis S. Michael
Jerry R. Mueller
Robert F. Prox I II
COMMUNITY DIRECTORS
First Financial Bank,
Clay Region
David L. Barr
Sam J. Emmert
Max Gibson
Rodger A. McHargue
John P. Stelle
First Finaneiai Bank,
Citizens Region
Henry J. Antonini
Michael A. Carty
Robert DeVerter
Danny F. Wesch
Terri M. Williamson
First Financial Bank,
Community Region
Norman D. Lowery
Avery J. McKinney
V. Bruce Walkup
Jeffery L. Wilson
First Finandal Bank,
Crawford Region
Jerry L. Bailey
W.J. Chamblin
Norman D. Lowery
Steven A. McGahey
V. Bruce Walkup
2012 First Financial Corporation
First Finandal Bank,
Marshall Region
Fred S. Barth
William F. Meehling
Norman P. Yeley
First Financial Bank,
Parke Region
James R. Bosley
Thomas S. Clary
Charles A. Cooper
First Finandal Bank,
Sullivan Region
Thomas S. Clary
Robert F. Dukes
Henry T. Smith
Robert E. Springer
V. Bruce Walkup
^ ^^ First Financial
^^ Corporation
One First Financial Plaza
Terre Haute, IN 47807 • 812/238/6000 • 800/511/0045
www.first-online.com