$75.02
$156.36
bear $75.02
base $108.36
bull $156.36
margin of safety $38.00
market price* $74.15
First Financial Corporation is the Terre Haute, Indiana holding company for First Financial Bank, a community bank with about $5.8 billion of assets, $4.0 billion of net loans and $4.55 billion of deposits. It operates more than 70 banking offices across Indiana, Illinois, Kentucky, Tennessee and Georgia. Its earnings come mainly from the spread between what it earns on loans and securities and what it pays on deposits and borrowings, plus about $42 million a year of fee income. For a bank, deposits and borrowings are the raw material of the business, so we value its earnings after interest and do not subtract debt separately. Our September 1, 2026 estimates (bear $49.08, base $105.72, bull $148.40) were built on a different basis and are not comparable with the figures below. What we measured. We measure cash earnings per share after the real costs of staying in business: operating cash flow, less timing swings in working capital, less stock-based pay (including the ESOP share contributions), less the maintenance share of capital spending, and with the provision for loan losses treated as a recurring cost of lending rather than added back. On that basis earnings were $4.33 per share in 2021, $6.37 in 2022, $5.39 in 2023, $4.89 in 2024 and $7.97 in 2025. Reported net income per share was $4.02, $5.82, $5.08, $4.00 and $6.68. The cash-based figures run 6% to 22% higher because depreciation and amortization ($12.2 million in 2025, of which $5.3 million was amortization of acquired intangibles) is non-cash while capital spending is only about $4 million a year, because a $4.6 million securities loss in 2025 is non-cash, and because we treat a large catch-all line in the cash flow statement ("Other, net", an outflow of $18.3 million in 2025 and $21.5 million in 2024) as working capital, since the filings do not break it down. If that line were instead a true recurring cost, 2024 and 2025 would be about $3.08 and $6.42; this is the main thing we could not fully reconcile. The amortization of acquired intangibles is a sunk acquisition cost and is added back; its fade is reflected by crediting only modest growth. Normal earning level. We use the four years since interest rates moved up and the share count settled near 12 million (2022 to 2025), with 2024 adjusted for a one-time $5.5 million provision booked on loans acquired with SimplyBank in July 2024 (about $0.37 per share). The middle of those four years is about $5.88 per share. That is well below 2025's $7.97 and below the pace of the first half of 2026 (net income of $42.5 million, up 15% from $37.0 million, on net interest income up 13%), because the net interest margin only reached 4.29% in 2025 from 3.71% in 2024, and a margin that high has not been tested through a full rate cycle. We do not extrapolate recent growth: owner earnings grew about 63% in 2025, largely because 2024 was depressed by the acquisition provision and the margin widened; the base case assumes 3% in year one. What growth we credited. We credit modest growth only from a process the bank has repeated: retaining roughly two-thirds of earnings (2025 dividends were about $24.2 million, roughly $2.04 a share, against net income of $79.2 million) to support steady loan growth (net loans grew 5.7% in 2025) while the share count has stayed near 12 million. Owner earnings per share rose roughly 6% a year from 2018 to 2023. We assume 3% a year for five years, 2% for five more, and none after that, and we deduct the capital that growth ties up (tangible book value of $45.15 per share). We gave no credit for further margin expansion, for the $87 million of accumulated comprehensive losses carried in equity reversing, for new markets, or for the small all-cash CedarStone Financial acquisition completed March 1, 2026 ($25.0 million). Base case: about $108.36 per share. Starting at $5.88 and growing as above, with a mild credit downturn in years five and six (about $40 million of extra loan-loss provisions before tax, several times the bank's 2020 episode, when provisions rose to $10.5 million from $4.7 million), then flat earnings after year ten, since we cannot name what would grow them further. Bear case: about $75.02 per share. The net interest margin falls back to roughly its 2024 level and earnings run at $5.00 per share (for comparison, reported earnings per share were $2.55, $2.35 and $3.12 in the low-rate years 2014 to 2016). On top of that we run one full credit cycle modeled on 2008 to 2010 for community banks: we assume annual loan losses of about 0.5%, 1.3%, 1.3% and 0.7% of loans over four years (provisions were about 0.2% of loans in 2025), plus reserve builds that are later released. That is about $138 million of extra pre-tax provisions, or about $9.20 per share after tax, spread over five years, taking earnings down to roughly $0.05 per share in the worst year. Tangible equity would still be about 7% of assets, so we do not assume a dilutive raise, but dividends would likely be cut. There is no growth in this case. The bear value sits above book value ($54.78) and tangible book ($45.15) because the deposit franchise ($4.55 billion, including $916 million that pays no interest) continues to earn about $5 per share, or 9% on book, once the cycle passes. Current warning signs behind this case: problem loans more than doubled to $28.6 million at the end of 2025 from $13.3 million (reserves cover them 1.7 times and equal about 1.2% of loans), and deposits fell 3.6% in 2025 while borrowings rose by about $265 million. A loss cycle roughly 80% worse than the one we modeled would still leave about $68 per share, but would cut book value by roughly 30% and might require raising capital, which we do not model. Bull case: about $156.36 per share. Earnings start at $7.50, a little below 2025's $7.97; net income has averaged about $21 million a quarter over the last four quarters. They grow 5% a year for five years (net loans grew 5.7% in 2025) and 3% for five more, with no credit downturn, and are flat after year ten. Debt. As a bank, the company's deposits and borrowings fund its loans and are already charged in earnings, so no debt is subtracted in any case. The holding company also has a note taken in June 2024 for the SimplyBank deal ($12.5 million left at the end of 2025). Margin-of-safety price. We are fairly but not fully sure of the earnings level: the median of the last four years is $5.88, but that depends on how we treat the $18 to $21 million "Other, net" outflow and on the new, higher margin holding. The worst plausible outcome is a regional loan-loss cycle with deposit outflows replaced by more expensive borrowings; the bank's capital is adequate for the cycle we modeled but not for one much worse. If our normal level is $1 per share too high, the base case would be about $88. The price assumes a five-year holding period, during which the bank pays about $2.04 a share a year. The margin-of-safety price is $38.00: from that price, even the bear path (dividends of about $2, $1, $1, $2 and $2 over five years, with the remaining flat $5.00 bear earnings stream worth about $83 per share at the end of year five) implies about 20% a year. The base case implies a materially higher return.