Key Highlights

  • Net income reached a record USD 27.4 million, or USD 2.31 per diluted share, versus USD 20.8 million.
  • Net interest income rose 16.3% to a record USD 63.5 million, and net interest margin widened to 4.51% from 4.25%.
  • Return on average assets was 1.79%, and a benefit from credit losses of USD 750 thousand replaced a prior-year provision.
  • Total loans grew 11.2% to USD 4.41 billion, and tangible book value per share rose 7.1% to USD 45.79.

Record Earnings and Margin

First Financial Corporation (NASDAQ:THFF) reported third quarter 2026 results on Tuesday. Net income was a record USD 27.4 million, compared with USD 20.8 million a year earlier, and diluted earnings per share were USD 2.31 versus USD 1.75. Return on average assets was 1.79% versus 1.48%. Pre-tax, pre-provision net income rose to USD 33.7 million from USD 27.7 million.

President and Chief Executive Norman D. Lowery said the quarter marked another record for net income and net interest income, with a year-to-date net interest margin of 4.36%, return on assets of 1.54%, strong loan pipelines and stable credit quality.

Net interest income rose USD 8.9 million, or 16.3%, to USD 63.5 million, as interest income increased USD 10.3 million and interest expense increased USD 1.4 million. The net interest margin was 4.51%, compared with 4.25%.

Loans, Deposits and Capital

Average total loans were USD 4.45 billion, up 13.23% from USD 3.93 billion. Period-end loans were USD 4.41 billion, up USD 444 million, or 11.20%, from a year earlier, but down USD 56.1 million from June 30. Organic loan growth of USD 191 million was led by commercial construction and development, commercial real estate and consumer auto loans.

Total deposits were USD 4.87 billion versus USD 4.62 billion, with non-interest bearing deposits of USD 991 million and time deposits of USD 824 million. Shareholders' equity was USD 660.4 million compared with USD 622.2 million. Book value per share was USD 55.54, up 5.79%, and tangible book value per share was USD 45.79, up 7.11%. The tangible common equity to tangible asset ratio was 9.16%.

The company has not repurchased shares in the last twelve months, and 518,860 shares remain available under the authorization. It paid a quarterly dividend of USD 0.56 per share in July and declared a further USD 0.56 dividend, paid on Oct. 15.

Credit Quality

A benefit from credit losses of USD 750 thousand compared with a provision of USD 2.0 million, primarily because an individually evaluated loan from a prior acquisition was fully recovered. Net charge-offs were USD 1.0 million versus USD 1.6 million. Nonperforming loans were USD 21.1 million, or 0.48% of total loans, compared with USD 27.1 million, or 0.61%, at June 30. The allowance for credit losses was USD 49.7 million, or 1.13% of total loans, compared with 1.20% a year earlier.

Nine Months and Acquisitions

For the nine months, net income was USD 70.0 million versus USD 57.8 million, and diluted EPS was USD 5.89 versus USD 4.87. Return on average assets was 1.54% versus 1.39%. Provision expense was USD 3.1 million versus USD 6.0 million, and pre-tax, pre-provision net income was USD 90.3 million versus USD 78.3 million.

On March 1 the company completed the acquisition of CedarStone Financial, adding USD 292 million of loans and USD 313 million of deposits. On Aug. 26 it signed a merger agreement with First Illinois Corporation of Decatur, Illinois, under which each First Illinois share converts into either 0.5727 shares of the company's stock or USD 44.35 in cash, with 70% of shares exchanged for stock and 30% for cash. The agreement targets a close in the first quarter of 2027.

Community Banking Markers to Follow

Tracking points include net interest margin against 4.51%, loan balances after the sequential decline, and credit costs now that the prior-acquisition recovery has passed. Further items are regulatory and closing progress on the First Illinois merger, deposit mix between non-interest bearing and time balances, and capital ratios against the 9.16% tangible equity level.