First Financial Corp is no longer just a Terre Haute compounder. In March the holding company closed a cash purchase of CedarStone in the Nashville orbit, and in late August it signed a stock-and-cash agreement for First Illinois and Hickory Point Bank across Decatur, Springfield, and Champaign. The investment debate is whether a fifth-oldest national bank can keep a mid-four-percent net interest margin while stitching two new books onto a franchise that already spans five states. That is a different equity than the quiet margin-recovery story that carried the shares through last year.
The second-quarter print showed the operating engine still working. Net interest income set a record near $61 million. Diluted earnings reached $1.91 a share. The print also showed an eleventh straight quarter of loan growth. Net interest margin printed 4.33 percent. The offset sits in credit rather than in the rate book. Nonperforming loans more than doubled from a year earlier, net charge-offs rose, and the allowance as a share of loans slipped. Bargain-purchase accounting on CedarStone was also revised almost to zero, so the quarter's earnings quality is cleaner than the first-quarter headline implied.
The shares recently changed hands near $76. That is about one and six-tenths times tangible book and roughly eleven times trailing earnings. The open question is whether the Hickory Point close, scheduled for the fourth quarter, adds cheap core deposits or simply layers integration risk onto a credit book that is already drifting. A durable margin plus a clean close would justify paying up for a scarce Midwest deposit franchise. A slipped close or another step-up in problem loans would argue that the multiple already discounts a smoother path than the filings support.