Core Insights - The company is enhancing its fee income through the introduction of SBA loans and first lien HELOCs, with $8 million in SBA originations in 2025 and over $100 million by First Savings [1][3] - The acquisition of First Savings Financial Group, announced on September 25, adds approximately $2.4 billion in assets and expands the company's presence in Southern Indiana [3][5] - The company reported a 9% loan growth for the quarter, with earnings per share at $0.98 and a return on assets (ROA) of 1.22% [3][4] Financial Performance - Year-to-date net income reached $167.5 million, a 23.5% increase from the previous year, with earnings per share up 25.5% to $2.90 [5] - The efficiency ratio was reported at 55%, indicating strong operational performance [3] - Total revenues in Q3 showed growth in both net interest income and noninterest income, leading to pretax pre-provision earnings of $70.5 million [15] Loan and Deposit Growth - The company achieved $268 million in commercial loan growth for the quarter, with a year-to-date total of $699 million [8] - Consumer segment deposits increased by $96 million, with non-maturity categories growing at nearly 5% annualized [10][11] - The total loan portfolio yield increased to 6.4%, driven by loan originations and refinances [17] Asset Quality - Nonperforming assets (NPA) plus loans 90 days past due totaled 0.51%, down from 0.62% a year ago [6] - The allowance for credit losses (ACL) was robust, with a coverage ratio of 1.43% [17][24] - The company reported net charge-offs of $5.1 million for the quarter, maintaining strong credit quality across its portfolios [17][24] Strategic Outlook - The company is focused on building a community bank model in Southern Indiana, leveraging past successful acquisitions [2] - There is confidence in maintaining loan growth and increasing market share, with stable pipelines for the fourth quarter [9][40] - The company plans to continue optimizing its balance sheet and exploring opportunities for higher-yielding assets [35][67]

Financial Data and Key Metrics Changes - Year-to-date net income totaled $167.5 million, an increase of $31.9 million or 23.5% from the nine months ended 2024, while earnings per share totaled $2.90, an increase of $0.59 or 25.5% during the same period [5][12] - Return on assets (ROA) was 1.22%, with an efficiency ratio of 55% [3][12] - Tangible common equity increased to 9.18%, providing meaningful capital flexibility [5][16] Business Line Data and Key Metrics Changes - Commercial loan growth for the quarter was $268 million, over 10% annualized, with year-to-date growth of $699 million, over 9% annualized [8][12] - The consumer segment contributed $21 million of loan growth for the quarter, driven by residential mortgage, HELOC, and private banking relationships [9] - Non-interest income totaled $32.5 million, with customer-related fees of $29.3 million reflecting continued momentum [16] Market Data and Key Metrics Changes - Total deposits declined by $23 million in aggregate, but core relationship or operating account balances grew by 4.9% or $56 million [10] - Non-maturity deposit balances increased by $178 million, while maturity deposit balances decreased by $198 million year to date [9][10] Company Strategy and Development Direction - The company announced the acquisition of First Savings Financial Group, adding approximately $2.4 billion in assets and expanding its presence into Southern Indiana [3][4] - The strategy remains commercially focused across all business segments and primary markets of Indiana, Michigan, and Ohio [7] - The company aims to enhance fee income through new product offerings and a more robust SBA lending capability [4][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining loan growth and increasing market share activities into the fourth quarter [8] - The company anticipates a disciplined finish to the year with core expenses expected to remain in line with Q3 [26] - Management is optimistic about the impact of the First Savings acquisition on future growth and market presence [4][11] Other Important Information - The company repurchased 162,474 shares totaling $6.5 million during the quarter, bringing total share repurchases year to date to 939,271 shares, totaling $36.5 million [16] - The allowance for credit losses at quarter end was $194.5 million, with a coverage ratio of 1.43% [15] Q&A Session Summary Question: Expense outlook for Q4 and 2026 - Management expects Q4 core expenses to be relatively in line with Q3, with no meaningful increase anticipated [26] Question: Impact of potential rate cuts on margin - Management predicts a few basis points of margin compression in Q4 if rate cuts occur, with a historical model indicating a decline of about two basis points for each 25 basis point cut [27] Question: Deposit pricing and competition - Management noted that deposit costs increased due to competitive pressures, but they are hopeful for more rational pricing following recent rate cuts [35][36] Question: Future M&A ambitions - Management indicated that while they are busy with the current acquisition, they are not prioritizing additional M&A at this time, focusing instead on organic growth [40] Question: Sustainability of loan growth - Management believes the current loan growth is sustainable, driven by normal business activity and a strong economic outlook in the Midwest [45][46] Question: Capital generation and uses of excess capital - Management plans to continue using capital for asset generation, dividends, and share buybacks, while optimizing the balance sheet [88][90]