퍼스트 파이낸셜 반코프(FFBC) 2026년 3분기 실적 발표회: 사상 최고 EPS 및 4.07% NIM

핵심 요약

• 퍼스트 파이낸셜 반코프(First Financial Bancorp)는 조정 순이익 8,780만 달러, 조정 주당순이익(EPS) 0.84달러를 기록했다고 발표했으며, 이는 2025년 3분기 대비 11% 증가한 수치이자 사상 최고치입니다.
• 사상 최대 3분기 매출은 2억 7,390만 달러에 달했습니다. 순이자마진(NIM)은 전분기 대비 9bp 상승한 4.07%를 기록했으며, 조정 수수료 이익은 7,760만 달러로 회사 사상 최고치를 경신했습니다.
• 기말 대출금은 C&I(상업 및 공업 대출), 소비자 대출 및 서밋(Summit) 부문의 성장에 힘입어 연환산 5%에 해당하는 1억 7,000만 달러 증가했습니다. 경영진은 2026년 4분기 대출 성장률이 연환산 기준 한 자릿수 중하위권(low- to mid-single-digit)을 기록할 것으로 전망했습니다.
• 신용 지표는 전반적으로 안정적인 수준을 유지했으나, 등급이 하향 조정된 상업용 부동산(CRE) 익스포저 1건으로 인해 고정이하여신 비중이 총자산의 1.26%로 상승했습니다.
• 장기 금리 상승으로 투자 포트폴리오 가치가 감소했습니다. 주당 유형자산장부가치(TBVPS)는 전분기 대비 6% 하락한 15.65달러를 기록했으며, 유형보통주자본(TCE) 비율은 43bp 하락한 7.81%를 기록했습니다.
• 경영진은 4분기 순이자마진을 4.08%~4.12%, 수수료 이익을 7,500만~7,800만 달러, 비이자비용을 1억 5,000만~1억 5,300만 달러로 전망하고 있습니다.

주요 재무 데이터

사업 및 영업 실적

대출 성장은 C&I, 소비자 대출 및 서밋이 견인했으나, 조기 상환 및 완납으로 인한 ICRE, 주택담보대출 및 오크 스트리트(Oak Street) 부문의 감소로 일부 상쇄되었습니다. 경영진은 C&I 성장이 한도 소진율 상승보다는 시카고, 오하이오 북동부, 오하이오 남서부 등 주요 시장 전반에 걸친 광범위한 성장에 기반한 것이라고 설명했습니다.

평균 예금은 5,200만 달러 증가했습니다. 이자부 수시입출금예금, 개인 CD 및 머니마켓계좌의 증가세는 브로커 CD, 저축예금 잔액 및 무이자 예금의 감소로 일부 상쇄되었습니다. 브로커 CD를 제외하면 평균 예금은 2분기 대비 1억 4,400만 달러 증가했습니다.

수수료 이익은 자산관리, 은행카드, 고객 파생상품 및 외환 부문의 호조에 힘입었습니다. 배녹번(Bannockburn)과 서밋 역시 견조한 분기 실적을 기록했습니다. 경영진은 배녹번의 장기 성장이 일반적으로 계단식 양상을 보여왔으며, 리스 매출은 포트폴리오 상각이 신규 실행액을 따라잡음에 따라 성장세가 둔화될 수 있다고 밝혔습니다. 또한 정기적인 리스 매각과 만기 시 수익으로 인해 분기 실적이 불균등하게 나타날 수 있다고 덧붙였습니다.

핵심 비용은 전분기 대비 780만 달러 증가했습니다. 주요 원인은 성과 및 수수료 연동 보상, 의료비 청구액, 신용 및 채권추심 비용 증가였습니다. 경영진은 4분기에 이러한 비용 압박이 완화될 것으로 전망하고 있습니다.

경영진 가이던스

경영진은 C&I 및 서밋의 견조한 성장이 ICRE 상환으로 인해 일부 상쇄될 것으로 예상하고 있습니다. 마진 전망에는 금리 상승으로 인한 대출 조기 상환 감소로 상각수익이 줄어들 것이라는 점도 반영되어 있습니다.

대출 포트폴리오의 약 60%가 단기 SOFR 금리에 연동되어 재조정됩니다. 경영진은 금리 인상 시 초기에는 마진이 7~8bp 개선될 수 있으나, 1~2분기에 걸쳐 예금 비용이 따라 올라오면 혜택이 3~4bp 수준으로 완화될 것으로 추정했습니다.

퍼스트 파이낸셜 반코프는 주 정부 규제 당국 및 핀워드(Finward) 주주의 최종 승인을 전제로 2027년 1월 1일 핀워드 인수 절차를 완료할 것으로 예상하고 있습니다.

리스크 및 주요 관찰 항목

고정이하여신은 다중 자산 상업용 부동산 익스포저 1건으로 인해 급증했습니다. 이번 등급 하향은 차주가 소유한 다른 사업체의 문제 발생에 따른 것입니다. 경영진은 해당 대출의 부채상환능력이 우수하고 담보인정비율(LTV)이 낮으며 교차 담보가 설정되어 있어 향후 수 분기에 걸쳐 해결될 것으로 보인다고 밝혔습니다.

장기 금리 상승으로 투자 포트폴리오의 미실현 손실이 증가하여 기타포괄손익누계액(AOCI), 유형자산장부가치 및 유형보통주자본 비율이 감소했습니다.

경영진은 다가구 주택 대출 공급 감소, 산업용 부동산 대출 경쟁 심화, 스프레드 축소 및 인수 구조 완화 기조를 확인하고 있습니다. 회사는 인수 구조를 약화시키는 방식의 경쟁은 하지 않을 것이라고 밝혔습니다.

오크 스트리트 역시 일부 보험 대리점 및 독립투자자문사(RIA) 차주들이 사업을 매각하거나 은행이 선호하는 자금 조달 한도를 넘어 성장함에 따라 상환 압박에 직면했습니다. 경영진은 이러한 압박이 2027년 중 일부 완화될 것으로 예상하고 있습니다.

애널리스트 Q&A 주요 내용

• 핀워드 인수 거래 조건: 투자 미실현 손실 증가로 인해 초기 주당 유형자산장부가치 희석 규모가 약간 커질 것으로 예상되나, 상각수익 또한 늘어날 것으로 보입니다. 경영진은 발표 당시 0.6년이었던 주당 유형자산장부가치 회복 기간이 약 0.9년으로 늘어날 것으로 추정했습니다.
• 조달 유연성: 경영진은 4분기에 약 10억 달러의 차입금을 가정하는 것이 합리적이라고 밝혔습니다. 은행은 상대적인 조달 비용을 고려해 일부 브로커 CD를 차입금으로 대체했습니다.
• 예금 경쟁: 예대율은 약 78%로 경영진의 과거 적정 범주인 83%~85%를 하회했습니다. 경영진은 이에 따라 유가증권 포트폴리오의 유동성을 활용하거나 필요 시 예금 유치 경쟁에 보다 적극적으로 나설 수 있는 유연성을 확보했다고 판단하고 있습니다.
• 효율성 비율: 리스 회계 처리가 공시 효율성 비율에 약 200bp의 상승 요인으로 작용합니다. 경영진은 발표된 인수 거래가 통합되고 비용 절감이 실현되면 현재 약 57% 수준인 효율성 비율이 약 50~100bp 개선되어 약 56% 수준에 도달할 것으로 예상하고 있습니다.
• 전략적 우선순위: 당면 과제는 핀워드 인수 완료 및 통합입니다. 경영진은 은행 M&A 논의가 계속되고 있으나, 단기적으로 추가적인 거래는 현재 계획되어 있지 않다고 밝혔습니다.

실적 발표 전화회의 녹취록 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to the First Financial Bancorp Third Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] I will now hand the conference over to Scott Crawley, Corporate Controller. Scott, please go ahead.

Scott Crawley

Thanks, Leah. Good morning, everyone, and thank you for joining us on today's conference call to discuss First Financial Bancorp's third quarter financial results. Participating on today's call will be Archie Brown, Chief Executive Officer; James Anderson, President and Chief Financial Officer; and Bill Harrod, Chief Credit Officer. Both the press release we issued yesterday and the accompanying slide presentation are available on our website at www.bankatfirst.com under the Investor Relations section. We'll make reference to the slides contained in the accompanying presentation during today's call.

Additionally, please refer to the forward-looking statement disclosure contained in the third quarter 2026 earnings release as well as our SEC filings for a full discussion of the company's risk factors. The information we will provide today is accurate as of September 30, 2026, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I'll now turn it over to Archie Brown.

Archie Brown

Thanks, Scott. Good morning, everyone, and thank you for joining us on today's call. I'm very pleased to discuss our third quarter results. We had a great quarter with adjusted net income of $87.8 million and adjusted earnings per share of $0.84, which resulted in an adjusted return on assets of 1.56% and an adjusted return on tangible common equity of 20.2%. Earnings per share increased 11% from the third quarter of 2025 and were the highest in the company's history. We delivered record third quarter revenue of $273.9 million, driven by a strong net interest margin of 4.07% and record adjusted fee revenue of $77.6 million.

Loan balances increased moderately during the quarter, consistent with our prior outlook, we're particularly proud of the strong growth in our C&I portfolio for the quarter. Loan pipelines remain healthy as we enter the fourth quarter, and we expect low to mid-single-digit loan growth as we close out 2026.

We're very encouraged by the strength and diversification of our fee income, as adjusted noninterest income was a record $77.6 million and 28% of total revenue. Growth from the linked quarter was driven by strong performances from foreign exchange, wealth management, client derivatives and bankcard income. As a result of our strong fee income and overall operating performance, expenses were elevated during the quarter, driven primarily by incentive costs associated with our record revenues, as well as higher healthcare claims and increased credit and collection costs. We do expect expenses to moderate in the fourth quarter.

Asset quality trends were stable during the third quarter. Net charge-offs and nonperforming assets were comparable to second quarter levels, while classified assets increased significantly. The increase in classified assets was primarily driven by the downgrade of a single ICRE relationship with multiple loans. The downgrade was driven by problems that developed in another business owned by our borrowers. The underlying loans exhibit strong debt service coverage and low loan to values and are cross-collateralized. We expect to resolve the workout of this relationship over the next few quarters.

Finally, with respect to capital, all regulatory capital ratios increased from the second quarter. However, tangible book value per share and tangible common equity declined as a result of the sharp increase in interest rates during the second half of the quarter. Tangible book value per share decreased 6% from the linked quarter to $15.65, while the tangible common equity ratio declined 43 basis points from June 30 to 7.81% at the end of September.

Now, I'll turn the call over to Jamie to discuss our second (sic) [ third ] quarter results in greater detail. Jamie?

James Anderson

Thank you, Archie, and good morning, everyone. Slides 5, 6 and 7 provide a summary of our most recent financial results. The third quarter results were excellent and included strong earnings, a robust net interest margin, record adjusted fee income and solid loan growth. Our net interest margin remains very strong at 4.07%, increasing 9 basis points during the quarter.

Asset yields increased 13 basis points and were partially offset by a 4 basis point increase in our cost of funds. End-of-period loan balances increased $170 million or 5% on an annualized basis with C&I, Summit and Consumer, all having strong quarters. Average deposit balances increased $52 million or 1.2% on an annualized basis and included growth in interest-bearing demand accounts, money market accounts and retail CDs. This growth was offset by a decline in brokered CDs, savings and noninterest-bearing accounts.

Turning to the income statement. Third quarter adjusted fee income was the highest in the company's history, led by double-digit percentage growth in wealth management income, bankcard income and client derivative fees. Additionally, our leasing and foreign exchange businesses had solid quarters. Noninterest expenses increased from the linked quarter due to higher credit and collection expenses, healthcare costs and compensation costs tied to fee income and the overall strong performance of the company. Our ACL coverage was unchanged during the quarter at 1.38% of total loans. We recorded $8.9 million of provision expense during the period, which was driven primarily by net charge-offs and loan growth.

On asset quality, net charge-offs were 21 basis points on an annualized basis, while NPAs as a percentage of assets were 45 basis points. Classified assets as a percentage of total assets increased to 1.26%, primarily due to the downgrade of a single ICRE relationship. From a capital standpoint, our ratios are in excess of both internal and regulatory targets. Tangible book value was $15.65, while our TCE ratio declined to 7.8% due to unrealized losses on the investment portfolio.

Slide 8 reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $87.8 million or $0.84 per share for the quarter. Noninterest expense adjustments exclude the impact of acquisition costs, tax credit investment amortization and expenses not expected to recur.

As depicted on Slide 9, these adjusted earnings equate to a return on average assets of 1.56%, a return on average tangible common equity of 20% and a pre-tax, pre-provision ROA of 2.08%.

Turning to Slides 10 and 11. Net interest margin increased 9 basis points from the linked quarter to 4.07%. Asset yields increased 13 basis points compared to the prior quarter. Total deposit cost increased 4 basis points from the linked quarter, partially offsetting the impact of higher asset yields. There was minimal impact from the September rate hike on third quarter net interest margin. We expect the long-term impact from this increase in rates to be approximately 3 to 4 basis points. However, we anticipate a slightly higher impact in the near term as deposit costs are expected to increase over a more extended time line.

Slide 13 illustrates our current loan mix and balance changes compared to the linked quarter. Loan balances increased 5% on an annualized basis. As you can see on the right, growth was driven by C&I, Consumer and Summit, which offset a decline in ICRE, Mortgage and Oak Street due to prepayments and payoffs.

Slide 16 depicts our average deposit mix as well as the progression of average deposits from the linked quarter. In total, average deposit balances increased $52 million during the quarter or 1% on an annualized basis. The increase was driven by interest-bearing demand accounts, retail CDs and money market accounts. These increases were offset by declines in brokered CDs, savings accounts and noninterest-bearing accounts. Excluding brokered CDs, average deposits increased $144 million from the second quarter.

Slide 18 highlights our noninterest income. Total adjusted fee income was $77.6 million during the quarter, which was the highest quarter in the history of the company. Bannockburn and Summit both had solid quarters. Additionally, wealth management and bankcard income increased from second quarter levels.

Noninterest expense for the quarter is highlighted on Slide 19. Core expenses increased $7.8 million during the period, driven primarily by higher compensation costs tied to an increase in fee income and the overall strong performance of the company. In addition, credit collection costs increased compared to second quarter.

Turning now to Slides 20 and 21. Our ACL model resulted in a total allowance, which includes both funded and unfunded reserves of $210 million and $8.9 million of total provision expense during the period. This resulted in an ACL that was 1.38% of total loans, which was unchanged from the second quarter. Provision expense was primarily driven by loan growth and net charge-offs, which were 21 basis points for the period. In other credit trends, classified asset balances increased to 1.26% of total assets, primarily due to the downgrade of a single CRE relationship, while both net charge-offs and nonperforming assets were relatively stable compared to the linked quarter.

Finally, as shown on Slides 22 and 23, capital ratios remain in excess of regulatory minimum and internal targets. The increase in longer-term interest rates negatively impacted the market value of our investment portfolio, which resulted in a significant decline in AOCI during the period. Our TCE was 7.81%. Absent the impact from AOCI, the TCE ratio would have been 9.65%. Tangible book value was $15.65 at the end of the period. Our total shareholder return remains strong with 34% of our third quarter earnings returned to our shareholders during the period through the common dividend. We maintain our commitment to providing an attractive return to our shareholders, and we'll evaluate capital actions that support that commitment.

I'll now turn it back over to Archie for some comments on our outlook. Archie?

Archie Brown

Yes. Thank you, Jamie. Before we conclude our prepared remarks, I want to comment on the fourth quarter outlook, which can be found on Slide 24. Regarding our balance sheet, we expect low to mid-single-digit loan growth on an annualized basis. Expected strong growth in C&I and Summit will be partially offset with payoffs in the ICRE book. For deposits, we expect low single-digit core deposit balance growth.

We expect our net interest margin to increase to a range of 4.08% to 4.12% over the next quarter, assuming a December rate hike. This range contemplates a decline in accretion income resulting from a forecasted decline in loan prepayments given the expected interest rate environment. We expect fourth quarter credit costs to approximate third quarter levels and ACL coverage to remain relatively stable as a percentage of loans.

To close out my commentary on the outlook, we expect fee income to be between $75 million and $78 million in the fourth quarter, which includes $18 million to $20 million of foreign exchange income and $21 million to $23 million of leasing business revenue. Noninterest expenses are expected to be between $150 million and $153 million.

To conclude, we delivered another strong quarter and have had an excellent year-to-date. We're very pleased to have received regulatory approval for our acquisition of Finward and expect to close on January 1, 2027, subject to state regulatory and Finward shareholder approvals. Looking ahead, we remain focused on closing the year on a strong note, completing the Finward acquisition and carrying our momentum into 2027.

Finally, I want to acknowledge the recently announced changes to our senior leadership structure. These changes were designed to promote continuity, reinforce our commitment to our strong financial performance and maintain our engagement-centric culture. I have tremendous confidence in Jamie and the rest of our leadership team, and the positive impact we're already seeing from these organizational changes underscores the strength of our people, our culture, and our continued commitment to serving our clients and our communities.

We'll now open up the call for questions. Leah?

Operator

[Operator Instructions] Your first question comes from the line of Brendan Nosal with Hovde Group.

질의응답

Brendan Nosal

Maybe starting off on the margin. You've kind of spoken about the margin in the context of rate hikes with this larger initial increase and then that kind of measure that over time as funding costs catch up. What's the right way to think about the time line from that initial 7 to 8 basis point pop to the longer-term 3 to 4 basis point benefit?

James Anderson

Yes. Brendan, this is Jamie. Good question. So yes, we think about that, obviously, the loan side with a rate hike, we get that contractually. So about 60% of our loan book moves with the short end of SOFR. And so that's going to move right away or within 15 to 30 days as things reprice. And then the way we look at it then obviously, the deposit side is more managed, more market-driven, and that's going to play out over another quarter or 2 until that kind of -- until that catches up. And so again, we think about that as an initial 7 to 8 basis point of improvement right away. And then as the deposit side catches up and really probably at between a quarter and 2 quarters, that's going to be in that 3 to 4 basis point range.

Brendan Nosal

Yes. Okay. That's helpful way to think about it. Maybe one more for me, just kind of pivoting to the Finward deal. Just kind of looking at their release from last night, their book value is down like 11%, and they lost like 90 bps on their capital -- their TCE ratio, just given AOCI marks. Just kind of wondering how the deal math changes given the shift in the rate environment and the marks on their balance sheet. Just I'm guessing book is more dilutive, but there's probably more fair value accretion versus that announcement.

James Anderson

Yes, Brendan, it's Jamie again. You're exactly right. It does -- we have a slightly more tangible book value dilution upfront. We'll get some more accretion income based on that hit that they took and everybody took, obviously, to their investment portfolio. The difference, though, if you look at the earn back. So at announcement date, we looked at that earn back at around half a year. So I think it was 0.6 years. That extends out not a lot, but extends out to about a year, it's 0.9 years. And mainly due to that, obviously, you take that book value dilution upfront, we get a little bit more accretion, but the accretion income will come in over a longer period of time than the initial earn back. So it just extends that earn back out a little bit, but it's not material.

Operator

Your next question comes from the line of Brandon Rud with Stephens.

Brandon Rud

If I could start on Page 13, just with the strong growth in commercial and small business. I'm just kind of curious maybe some of the subcategories within that. Is that an increase in line utilization? Is that CapEx spend? Maybe just kind of flesh out what was behind that growth here in the third quarter?

Archie Brown

Yes, Brandon, it's kind of broad-based, both in terms of our markets and in terms of the different product categories. So it's really not line -- it's not line utilization. If you look at our markets like Chicago, I mean, any of our major metros are seeing some pretty good growth here. Northeast Ohio is doing well. Of course, Southwest Ohio is doing well. So it's C&I oriented for the most part, and it's just coming from all the markets.

Brandon Rud

Okay. Perfect. And then maybe one more modeling question. I noticed on a period-end basis, the borrowings were a few hundred million dollars higher than on an average basis. So I'm just curious, is that more of an anomaly of a point in time and that comes back down closer to the average balance? Or is this $1 billion or so of borrowings a good number to use for the fourth quarter?

James Anderson

Yes. I think the $1 billion of borrowings is a good number to use for the fourth quarter. It's going to bounce around a little bit during any one period, and we kind of replaced some of the brokered -- swapped out of some of the brokered CDs into borrowing. So depending on the way the market looks, we'll just -- we'll do that on occasion, just depending on where the -- where we can -- the most efficient way to borrow.

Operator

Your next question comes from the line of Daniel Tamayo with Raymond James.

Daniel Tamayo

Maybe starting on the fee income side. Just particularly on the FX and leasing businesses. So FX has been kind of stable this year and leasing growth has been a little bit slower from prior years, sorry. Can you just remind us kind of from an annual perspective, the type of growth rates you might be looking at going forward with those businesses?

Archie Brown

Yes. Sorry, Dan, the last part of that, I just want to kind of get a feel for how we see the rest of the year, full year playing out or growth year-over-year. Okay.

Yes. So I think we've talked about this before. Bannockburn, look, it's got a really good growth curve over a long window. It tends to come kind of in a more stair-step fashion. So if you said it's going to grow kind of in a high single-digit to 10% kind of range kind of yearly, that's kind of what it's been doing. We expect it to close out the year pretty strong here, and it will be still, again, decent year-over-year. The leasing business income is primarily tied to operating leases. And so it's somewhat dependent upon how much of that -- of their production is the operating lease mix.

So if you think about where they are, they're just -- they are getting to the place where their amortizations are starting to catch up with their kind of production. So the growth rates are just slowing generally. So that's going to be a little more of a slow grower as you go forward, just given the size of the portfolio and more amortization.

James Anderson

Yes. And Dan, it's Jamie. Just to add in on that. We will have as well like periodic sales of leases. We still are selling, call it, around 10% to 15% of their production, and that can -- depending on any one quarter that can hit, that will pop that income. So it can be a little bit lumpy. They also get some occasional end-of-term revenue as well that comes in. And so that can just move around. But we look at it, like Archie mentioned, kind of in a little bigger window than from quarter-to-quarter, and we look at that in that, call it, 5% to 10% type growth rate.

Daniel Tamayo

Okay. Just a point of clarification. I was just looking at kind of the midpoint of the guidance on the FX of around $19 million, and that takes me to about $66 million for the year, which is pretty close to what you guys did last year. That's what I was basing that off of, but it sounds like you're continuing to expect growth of the overall number.

Archie Brown

I'm trying to think -- they had one quarter that was sort of an anomaly, Danny. So yes, I see you say when you look at that together, I see how the math works, but that was a very unusual kind of quarter they had. And I guess I'm not thinking about that in terms of because it's more of an outlier.

Daniel Tamayo

Understood.

James Anderson

Yes, Q4 of '25 is really high, Dan.

Daniel Tamayo

Got it. Okay. And then maybe kind of walk us through how you're thinking about the impact of higher rates, be it kind of what we've seen so far from the back half of this year and then maybe the potential for more in terms of how that could impact your loan demand. I'm curious, obviously, from a CRE perspective, but also leasing or any of the specialty businesses, how you think that might track?

Archie Brown

Danny, this is Archie. It's not affecting -- on the C&I side, it's not affecting it yet. So those numbers and those pipeline -- the pipeline is really good. Actually, the CRE production was strong in the quarter. It will be a good strong Q4. But it's less than probably Q4 of last year when you look at it and you start going back and looking. And part of this is multifamily has softened in terms of production. We're seeing that for sure already.

The only thing we're seeing, we're seeing a lot more competition, especially in the industrial space. So we're seeing a lot of competition come in. Spreads are thinning, structures are loosening. And I think we talked about this before, we're not going to play in kind of loosening structures. We'll play to some point on certainly price competition, but it is getting thinner. So a combination of softer multifamily, a little bit more competitive on industrial, I think, is bringing down a little bit of the growth rate on CRE. We're seeing some payoffs of sales of properties being sold, underlying properties being sold and so balance pressure there still as well.

So more on the CRE side, I'm seeing it now. I think that will play out more as we go forward. But if you look at our near-term pipeline view, we look at this regularly. It's still a really strong pipeline, kind of on par with where we've been in the last couple of quarters.

Operator

Your next question comes from the line of Brian Foran with Truist.

Brian Foran

Maybe just a follow on. As you think about growth potentially getting to the low to mid-single digit and like what would change that would get it back to mid to high single digits? I guess just following on that last question, is it the CRE that is mainly you'd point to? Or is there anything else that would have to change in the environment or kind of what you're seeing in the markets to maybe get back to mid to high?

Archie Brown

Yes, Brian, this is Archie. Our C&I business has strengthened throughout the course of the year. And right now, in the near to intermediate term, it looks like it's going to continue to be really strong. So if you start looking at the other businesses we have, the 2 places we've seen some pressure have been, as we just mentioned ICRE. So ICRE in our near-term forecast has got some payoffs that are more credit related as well. We talked about our classified jumping up. We expect some of that to be resolved in Q4. So that's probably putting a little more pressure on payoffs in Q4. So maybe that it starts to get a little bit better after that. But still, the competition there, as I mentioned, industrial and then the softening in multifamily, I think, are driving maybe sort of more of a near immediate-term softness there. So that's a piece that would have to, I think get better.

Oak Street has seen a little more payoff pressure. This is the unit that lends to our group that lends to insurance agencies and RIAs. They've had a little more payoff pressure. And it's a little bit of the same thing, business is selling. And in a couple of cases, we have grown relationships over a long window -- and then as they continue to get larger, they get to the place where it's just too big for us to continue to finance. So we've seen a payoff or 2 that's happened. I think we'll have a couple more in Q4 where they've just gotten large enough that we can't continue to take care of them anymore. So that's a little bit of the pressure there.

That's more, I think, call it onetime or related to kind of what's happening near term, I think that will abate and they have good production. So I think their growth rates will pick up as we get into 2027. So mainly, I think, for us to get better, Oak Street will have higher production with less payoff pressure next year. And CRE, that's probably the wildcard. Just how much does multifamily come back, how competitive does it get there? Do higher rates put more pressure on bringing production down? That would be the question.

Brian Foran

And maybe a follow-up. I feel like not just for you, but for really across the industry, there's this fear that deposit competition is going to intensify and kind of steal the asset sensitivity away from the sector as margins roll over. I mean, everything looks pretty muted and sanguine in this release, but any thoughts on what you're seeing in the market? Is that a valid concern? Or do you think maybe the investor focus on that is a little too high?

Archie Brown

Yes. Brian, I'll start, Jamie maybe chime in as well. Look, I think we feel pretty good for the near to intermediate term on your question. I think our growth in Q4 is maybe a little muted, but that's more we're seeing some public fund dollars not the operating accounts, but more the extra money they keep in the bank. They're moving that money around to higher rate options in some cases to take advantage of the current rate environment. So some of that money is moving out, but kind of core relationships and commercial deposits and all that will be growing, I think at a fairly decent clip here in Q4.

So near term, we're not concerned. Intermediate term, I don't think I'm too concerned. We're watching the same dynamics you're talking about. I think for us, the one advantage we have, at least going into the current cycle is we have a pretty low loan-to-deposit ratio. I think we're in the high 70s. So we do have more flexibility. I think we've got some levers to pull here depending on what loan growth looks like. We could be more aggressive if we need to, we can pull back if we want to in order to kind of manage this over, I think, the course of the next few quarters.

I don't know, Jamie, if you have any other thoughts?

James Anderson

No, I think that's the biggest thing that Archie mentioned, Brian, was that the -- our loan-to-deposit ratio coming off of the acquisitions that we had, especially the BankFinancial deal where we picked up a good chunk of liquidity, our loan-to-deposit ratio is about 78%. So over time, we want to optimize the balance sheet a little bit more, get back more towards a 83% to 85% loan-to-deposit ratio, which is where we've historically run kind of where we feel comfortable.

And so while we're still competitive, obviously, on the deposit pricing landscape, we're kind of right in the middle, and we're doing fine in terms of gathering deposits. We see that become a little bit more competitive. We can either pull down some of the balances from the securities portfolio or we can just elect to get more aggressive in the deposit market. So I think we have some options based on the way our balance sheet is right now and the way our loan-to-deposit ratio. So I think it provides us a lot of flexibility.

Operator

[Operator Instructions] Your next question comes from the line of Jon Arfstrom with RBC Capital Markets.

Jon Arfstrom

I guess we're kind of ticking through all the questions. And Jamie, maybe expenses is -- it's an area we haven't talked about yet. But the new guide that you've talked about, does that basically strip out the impacts of what you mentioned impacted the Q3 numbers, so that takes out incentives, healthcare and some of the credit costs that are in expenses? Is that the right way to think about it?

James Anderson

Yes, that's right. So we see those moderating. I mean the wildcard there is where fee income where it comes in. So we have that expense guide kind of based on that midpoint of the fee income and the associated commissions and incentives related to that. The other thing that we had -- the other thing we had in the third quarter, we had a true-up to our -- to some incentives that were more broad-based company-wide incentive based just based on the year that we've had the strong performance.

So we think at this point that, that was more of a kind of a year-to-date adjustment that won't necessarily happen to -- that we won't have in the fourth quarter. So that will help moderate expenses. The credit collections should come down in the -- we typically see a little bit of a bump in healthcare in the third quarter just based on our program. So yes, and then some just overall moderation in a few other line items, small stuff. But yes, see that coming down based on those reasons in the fourth quarter. Yes.

Jon Arfstrom

Bill or Archie, I mean, credit looks clean. Bill, you probably didn't think you're going to get a question, but anything more on the classified increase? It sounds like it's pretty specific to one credit. And then anything else from a credit or economic point of view, you guys are watching a little closer?

William Harrod

Yes. The one credit that we're talking about, it's a multi-asset real estate investor that also had C&I businesses. And the C&I business elsewhere is what fueled the bankruptcy. And so we do think it's not systemic, it's isolated. And now we're just working through the sale of the underlying real estate assets. It's a mix of multifamily, retail and some office. Market interest has been encouraging. And while there's still execution ahead, we remain cautiously optimistic about the outcome. And overall, credit, our watch and worst buckets have remained very steady. No big increases, and our charge-offs are in line with last quarter. So we don't see anything systemic coming down the pike.

Jon Arfstrom

Okay. Good. And then, Archie, maybe just one for you. I think I'm probably last here. But anything you're thinking about strategically? You guys have had some, call it unique but also successful deals over the last year or 2. Are you guys still active and still interested? Or is it just getting the current deal closed and integrating that as the near-term focus?

Archie Brown

Yes, Jon, we really are focused on Finward and getting that closed. There continue to be bank M&A conversations. But I could tell you, in the near term, we don't have anything else on our slate. Continued conversations, maybe other opportunities will pop up that make sense to us in 2027.

Regarding nonbank, we've always been sort of opportunistic about that. So there are spots we wouldn't mind adding to drive some more fees, but they kind of come up when they come up. So we don't have anything right now that we're working on, but we're open to the ideas if the right things make sense. It's just -- they kind of come when they come.

Operator

Your next question comes from the line of David Konrad with KBW.

David Konrad

Just one quick follow-up question on expenses. I know leasing kind of weighs a little bit on the efficiency ratio, but just some thoughts as you integrate and get all the cost saves out of the announced deals. What do you think the efficiency ratio could trend over the next couple of years?

James Anderson

Yes. David, this is Jamie. So little disappointed you didn't have a rush question for me. I know you're in a big rush, man. So...

David Konrad

That's my one follow-up.

James Anderson

Yes. So I mean for us, the efficiency ratio, it's a good point. The leasing business impacts our efficiency ratio by about 200 basis points, just that we got, obviously, the fee income related to the rental payments, a pop and then the depreciation related to the assets down in the expenses. That adds about 200 basis points relatively to our efficiency ratio. We've been running in that -- around that 57% range. When we get kind of -- when everything is said and done, we get everything through. We think that comes down about 50 to 100 basis points.

David Konrad

So kind of 56 to 56.5?

James Anderson

Yes, 56. Yes, around that range, yes.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Archie Brown for closing remarks.

Archie Brown

Thank you, Leah. I want to thank everybody for joining us on today's call. We're proud of our results, and we thank you for your interest and look forward to talking to you again next quarter. Have a great day. Bye now.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.