First Financial reports record Q2 EPS of $0.80, raises dividend 4%, acquires Finward for $210M

First Financial reported second quarter 2026 net income of $76.5 million, or $0.73 per diluted share on a GAAP basis. Adjusted net income was $83.9 million, or $0.80 per diluted share, which the company states is the highest adjusted earnings per share in company history. The adjustments exclude $11.6 million of acquisition-related expenses, $0.7 million of tax credit investment writedowns, and other items.

First Financial announced the acquisition of Finward Bancorp for $210 million in an all-stock transaction. Finward shareholders will receive 1.35 shares of First Financial common stock for each Finward share, representing approximately 5.9 million shares issued. The transaction is valued at $48.22 per Finward share based on First Financial's closing price of $35.72 on July 17, 2026. The deal is expected to be 5.0% accretive to earnings per share when fully phased-in, with minimal tangible book value dilution of 0.4% at closing and a 0.6 year earnback period. The transaction is targeted to close by year-end subject to regulatory and shareholder approvals.

The Finward acquisition adds $2.0 billion of assets and a 126-year franchise in Chicago and Northwest Indiana. The transaction increases First Financial's Chicago MSA deposits by 75% to $4.1 billion pro forma, complementing the recently acquired BankFinancial footprint and other Chicago-area operations. Finward brings $1.7 billion of deposits with a 1.62% cost of deposits, $412 million of wealth assets under management, and 24 retail locations. The deal is priced at 1.4x tangible book value with expected cost savings of approximately 40% of Finward's annual noninterest expense.

The net interest margin on a fully tax-equivalent basis was 3.98% in the second quarter, down 1 basis point from the first quarter. Excluding accretion and loan fees, the margin increased 5 basis points. The cost of funds decreased 6 basis points while asset yields declined 7 basis points. Loan accretion diluted the margin by 5 basis points, primarily due to lower-than-expected prepayment rates on acquired mortgage loans.

The Board of Directors approved a $0.01 increase in the quarterly common dividend to $0.26 per share, representing a 4.0% increase. The dividend will be paid in the third quarter of 2026.

First Financial reported second quarter 2026 net income of $76.5 million, or $0.73 per diluted share, up from $0.71 in the prior quarter. On an adjusted basis, earnings were $0.80 per share, which management described as the highest in company history. Return on average assets was 1.37% (1.50% adjusted) and return on average tangible common equity was 18.0% (19.7% adjusted).

First Financial agreed to acquire Finward Bancorp, parent of Peoples Bank, in an all-stock transaction valued at approximately $208 million based on First Financial's July 20, 2026 closing price. Each Finward share will convert to 1.35 shares of First Financial common stock. Finward has approximately $2.0 billion in assets, $1.7 billion in deposits, $1.5 billion in loans and $412 million in assets under management. The transaction is expected to be approximately 5% accretive to earnings per share with only 0.4% tangible book value dilution and a 0.6 year earnback period. The deal is expected to close in the fourth quarter of 2026, subject to regulatory approvals and Finward shareholder approval.

The net interest margin was 3.98% on a fully tax-equivalent basis, down 1 basis point from the first quarter. The decline was driven by a 7 basis point decrease in asset yields, partially offset by a 6 basis point decrease in funding costs. Lower-than-expected prepayment rates on acquired mortgage loans reduced loan accretion income, diluting the margin by 5 basis points. Management expects the margin to remain stable over the near-term assuming no significant interest rate changes.

First Financial Bancorp announced its financial results for the second quarter and first half of 2026 through an earnings press release. The company also provided electronic presentation slides for use in an earnings conference call, which are available on the company's website at www.bankatfirst.com.

First Financial Bancorp. entered into a definitive merger agreement to acquire Finward Bancorp, an Indiana-based bank holding company. Under the agreement, Finward will merge into First Financial, with First Financial as the surviving entity. The transaction has been unanimously approved by both boards of directors and is expected to close in the fourth quarter of 2026, subject to regulatory approvals and Finward shareholder approval.

Finward Bancorp shareholders will receive 1.35 shares of First Financial common stock for each share of Finward common stock they own. This is an all-stock transaction with a fixed exchange ratio, meaning the value to Finward shareholders will fluctuate with First Financial's stock price between signing and closing.

Finward Bancorp would owe First Financial a $9.0 million termination fee if the merger agreement is terminated under certain circumstances, such as if Finward's board withdraws its recommendation or accepts a superior competing offer. This fee is designed to discourage Finward from entertaining competing bids and compensate First Financial for deal-related costs if the transaction fails to close due to Finward's actions.

The merger is subject to standard closing conditions including Finward shareholder approval, Federal Reserve and Ohio banking regulator approvals, NASDAQ listing authorization for the new shares, and SEC effectiveness of the Form S-4 registration statement. The agreement allows either party to walk away if regulators impose conditions that would have a material adverse effect on the combined company. The merger can be terminated by either party if it does not close within one year from July 21, 2026.

As part of the transaction, Finward's banking subsidiary, Peoples Bank, will merge into First Financial's banking subsidiary, First Financial Bank. This bank-level merger will consolidate the two institutions' branch networks, deposits, and loan portfolios under the First Financial Bank charter.