First Financial earnings rose in the third quarter of 2026, with net income reaching $27.4 million from $20.8 million a year earlier. The Indiana-based bank holding company reported record net interest income and a benefit from credit losses.

Key Takeaways

  • Diluted earnings per share rose to $2.31 from $1.75 in the third quarter of 2025.
  • Net interest income reached $63.5 million, while the quarterly net interest margin widened to 4.51%.
  • The planned merger with First Illinois Corporation is expected to close in the first quarter of 2027.

First Financial earnings and interest income

Net interest income increased from $54.6 million in the third quarter of 2025. Interest income rose $10.3 million year over year, while interest expense increased $1.4 million. The net interest margin widened from 4.25% a year earlier.

Non-interest expense rose to $41.3 million from $38.0 million. Return on average assets increased to 1.79% from 1.48%.

For the nine months ended September 30, 2026, net income was $70.0 million, compared with $57.8 million in the same period of 2025. Diluted earnings per share rose to $5.89 from $4.87.

Credit losses and lending

First Financial recorded a $750,000 benefit from credit losses in the third quarter, compared with a $2.0 million provision expense a year earlier. The company said the benefit was primarily due to the full recovery of an individually evaluated loan from a prior acquisition.

Loans outstanding were $4.41 billion at September 30, up from $3.97 billion a year earlier but down from $4.47 billion at June 30. Nonperforming loans were $21.1 million, or 0.48% of total loans and leases, compared with $19.3 million, or 0.49%, a year earlier.

Acquisitions and planned merger

First Financial completed its acquisition of CedarStone Financial on March 1, 2026, acquiring $292 million in loans and $313 million in deposits.

Under a separate agreement announced in August, First Illinois shareholders will receive either 0.5727 First Financial shares or $44.35 in cash for each share, subject to the agreement’s allocation and election procedures. The transaction is structured so that 70% of First Illinois stock will be exchanged for shares and 30% for cash. Closing is expected in the first quarter of 2027.

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