First Financial Corporation is a financial holding company. The Corporation
was originally organized as an Indiana corporation in 1984 to operate as a bank
holding company.
The Corporation, which is headquartered in Terre Haute, Indiana, offers a wide
variety of financial services including commercial, mortgage and consumer lending,
lease financing, trust account services, depositor services and insurance services
through its four subsidiaries.
First Financial Bank, N.A. is the largest bank in Vigo County, Ind. It operates
11 full-service banking branches within the county; three in Clay County, Ind.;
one in Daviess County, Ind.; one in Gibson County, Ind.; one in Greene County,
Ind.; three in Knox County, Ind.; four in Parke County, Ind.; one in Putnam
County, Ind., four in Sullivan County, Ind.; one in Vanderburgh, County.; four
in Vermillion County, Ind.; five in Champaign County, Illinois; one in Clark
County, Ill.; three in Coles County, Ill.; two in Crawford County, Ill.; two
in Franklin County, Ill.; one in Jasper County, Ill.; two in Jefferson County,
Ill.; one in Lawrence County, Ill.; two in Livingston County, Illinois; two
in Marion County, Ill.; one in Montgomery County, Ill.; three in McLean County,
Illinois; two in Richland County, Ill.; six in Vermilion County, Ill.; and one
in Wayne County, Ill. In addition to its branches, it has a main office in downtown
Terre Haute and a 50,000-square-foot commercial building on South Third Street
in Terre Haute, which serves as the Corporations operations center and provides
additional office space. The Morris Plan Company of Terre Haute, Inc. (“Morris
Plan”) has one office and is located in Vigo County. Forrest Sherer Inc.
is a regional supplier of insurance, surety and other financial products. Forrest
Sherer has more than 58 professionals and over 91 years of service to both businesses
and households in their market area. The agency has representation agreements
with more than 40 regional and national insurers to market their products of
property and casualty insurance, surety bonds, employee benefit plans, life
insurance and annuities. FFB Risk Management Co., Inc. located in Las Vegas,
Nevada is a captive insurance subsidiary which insures various liability and
property damage policies for First Financial Corporation subsidiaries.
Commercial
Commercial loans are predominately loans to expand a business or finance asset
purchases. The underlying risk in the Commercial loan segment is primarily a
function of the reliability and sustainability of the cash flows of the borrower
and secondarily on the underlying collateral securing the transaction. From
time to time, the cash flows of borrowers may be less than historical or as
planned. In addition, the underlying collateral securing these loans may fluctuate
in value. Most commercial loans are secured by the assets financed or other
business assets and most commercial loans are further supported by a personal
guarantee. However, in some instances, short term loans are made on an unsecured
basis. Agriculture production loans are typically secured by growing crops and
generally secured by other assets such as farm equipment. Production loans are
subject to weather and market pricing risks. The Corporation has established
underwriting standards and guidelines for all commercial loan types.
The Corporation strives to maintain a geographically diverse commercial real
estate portfolio. Commercial real estate loans are primarily underwritten based
upon the cash flows of the underlying real estate or from the cash flows of
the business conducted at the real estate. Generally, these types of loans will
be fully guaranteed by the principal owners of the real estate and loan amounts
must be supported by adequate collateral value. Commercial real estate loans
may be adversely affected by factors in the local market, the regional economy,
or industry specific factors. In addition, Commercial Construction loans are
a specific type of commercial real estate loan which inherently carry more risk
than loans for completed projects. Since these types of loans are underwritten
utilizing estimated costs, feasibility studies, and estimated absorption rates,
the underlying value of the project may change based upon the inaccuracy of
these projections. Commercial construction loans are closely monitored, subject
to industry standards, and disbursements are controlled during the construction
process.
Residential
Retail real estate mortgages that are secured by 1-4 family residences are generally
owner occupied and include residential real estate and residential real estate
construction loans. The Corporation typically establishes a maximum loan-to-value
ratio and generally requires private mortgage insurance if the ratio is exceeded.
The Corporation sells substantially all of its long-term fixed mortgages to
secondary market purchasers. Mortgages sold to secondary market purchasers are
underwritten to specific guidelines. The Corporation originates some mortgages
that are maintained in the bank’s loan portfolio. Portfolio loans are
generally adjustable rate mortgages and are underwritten to conform to Qualified
Mortgage standards. Several factors are considered in underwriting all Mortgages
including the value of the underlying real estate, debt-to-income ratio and
credit history of the borrower. Repayment is primarily dependent upon the personal
income of the borrower and can be impacted by changes in borrower’s circumstances
such as changes in employment status and changes in real estate property values.
Risk is mitigated by the sale of substantially all long-term fixed rate mortgages,
the underwriting of portfolio loans to Qualified Mortgage standards and the
fact that mortgages are generally smaller individual amounts spread over a large
number of borrowers.
Consumer
The consumer portfolio primarily consists of home equity loans and lines (typically
secured by a subordinate lien on a 1-4 family residence), secured loans (typically
secured by automobiles, boats, recreational vehicles, or motorcycles), cash/CD
secured, and unsecured loans. Pricing, loan terms, and loan to value guidelines
vary by product line. The underlying value of collateral dependent loans may
vary based on a number of economic conditions, including fluctuations in home
prices and unemployment levels. Underwriting of consumer loans is based on the
individual credit profile and analysis of the debt repayment capacity for each
borrower. Payments for consumer loans is typically set-up on equal monthly installments,
however, future repayment may be impacted by a change in economic conditions
or a change in the personal income levels of individual customers. Overall risks
within the consumer portfolio are mitigated by the mix of various loan products,
lending in various markets and the overall make-up of the portfolio (small loan
sizes and a large number of individual borrowers).
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