Weekly Real Estate News
Summary
First Financial reported federal regulatory approval for its proposed Finward Bancorp acquisition, targeting January 1, 2027 closing subject to state and shareholder approvals. Q3 net income was $81.2 million, loans grew $170.2 million, and classified assets rose largely due to one income-producing CRE credit relationship.
First Financial Bancorp has obtained federal regulatory approval for its planned acquisition of Finward Bancorp, but the bank combination still needs state regulatory and Finward shareholder approvals before it can close. The Cincinnati-based company disclosed the milestone Tuesday, October 27, alongside third-quarter earnings that showed stronger interest income and a rise in classified commercial real estate credit exposure.
Management expects the transaction to close January 1, 2027, subject to the remaining approvals. That is a target date, and federal approval does not make the acquisition final. The company said its registration statement covering shares to be issued in the deal became effective September 28; shareholders still must consider the transaction documents and vote as required.
First Financial earned $81.2 million, or 77 cents per diluted share, in the third quarter, compared with $76.5 million, or 73 cents, in the preceding quarter. Adjusted earnings were $87.8 million, or 84 cents per share, according to the company’s non-GAAP reconciliation. The adjusted figure excludes items including acquisition-related costs and should not be substituted for reported net income.
The bank reported a 4.05% net interest margin, or 4.07% on a fully tax-equivalent basis, up nine basis points from the second quarter on that adjusted basis. Asset yields increased more quickly than funding costs, helping to support net interest income. First Financial also reported $77.7 million in noninterest income, including stronger foreign exchange and fee businesses.
| Third-quarter measure | Reported result |
|---|---|
| Net income | $81.2 million |
| Diluted earnings per share | $0.77 |
| Adjusted earnings per share | $0.84 (non-GAAP) |
| Net interest margin | 4.05% |
| Quarterly loan-balance growth | $170.2 million |
| Nonperforming assets / total assets | 0.45% |
| Federal approval of Finward acquisition | Received; other approvals pending |
Source: First Financial’s October 27 earnings release. Adjusted measures are defined by the company.
Loans and leases increased $170.2 million during the quarter, an annualized 4.9% rate. Management attributed the expansion principally to commercial and industrial lending, consumer loans and its Summit business. That rate annualizes one quarter’s change and is not a forecast that lending will increase 4.9% over a full year.
Average deposits increased $52.4 million, a 1.2% annualized pace, while average deposits excluding brokered certificates of deposit increased $144 million. The different measures matter because the composition and cost of deposits can have a direct effect on bank margins as rates change.
The credit picture was less uniformly positive. Classified assets rose to 1.26% of total assets, with the company attributing much of the increase to the downgrade of one income-producing commercial real estate relationship involving multiple loans. First Financial said it expects to work through that exposure over the coming quarters, but that expectation is not a completed resolution.
Nonperforming assets increased two basis points to 0.45% of total assets. The allowance for credit losses on loans and leases was $191.7 million, equivalent to 1.38% of total loans, while total quarterly provision expense was $8.9 million. Those figures offer more context than the earnings headline alone: profitability improved even as one commercial property borrower relationship moved into a weaker risk category.
The bank reported a common-equity Tier 1 ratio of 12.54% and a total capital ratio of 15.83%. Tangible common equity was 7.81% of tangible assets, according to the company’s non-GAAP calculation, and management said the sharp increase in interest rates late in the quarter weighed on tangible book value through changes in accumulated other comprehensive income.
Bank mergers can reshape local commercial and residential credit markets, but First Financial has not announced any branch closures or mortgage-product changes in the October 27 earnings release as a consequence of this transaction. Any such operating decisions would require separate reporting rather than inference from the approval milestone.
The company is scheduled to discuss results on an October 28 conference call. Investors and customers will be watching for details on remaining approvals, integration plans and the classified commercial real estate exposure. The acquisition’s next legally significant step is completion of the outstanding approval process, followed by closing if the conditions are met.
Featured photograph: Scott Greer/Unsplash; illustrative financial-district architecture, not a First Financial or Finward property.
