Key Highlights

  • National Bank Holdings booked a $40.6 million provision against $1.5 million in the second quarter, with net charge-offs at 1.88% of average loans.
  • First Busey took a $9.6 million provision, driven mainly by one $37.6 million commercial relationship.
  • Hanmi's criticized loans rose to 2.05% of loans from 1.74%, and First Commonwealth's nonperforming loans reached 0.99% of loans.
  • Eagle Bancorp Montana's nonperforming loans rose to $8.7 million from $4.2 million in the second quarter.
  • Allowance ratios across the eight banks span 0.89% to 1.40%, a spread of 51 basis points (calculated).

How Is Credit Quality Holding Up at the Banks That Reported on October 27?

Provisions and problem-loan ratios rose at most of the eight banks, though the scale varied widely. National Bank Holdings (NYSE:NBHC) booked a $40.6 million provision and a net loss of $0.20 per share, while First Commonwealth Financial (NYSE:FCF) lifted its provision to $14.2 million and nonperforming loans to 0.99% of loans. Hanmi Financial (NASDAQ:HAFC) reported criticized loans of 2.05% of loans, and Eagle Bancorp Montana (NASDAQ:EBMT) saw nonperforming loans reach 0.51%. Franklin Financial (NASDAQ:FRAF) reported nonperforming loans of 1.11% of gross loans, Western New England Bancorp (NASDAQ:WNEB) criticized loans of $57.7 million, First Financial Bancorp (NASDAQ:FFBC) classified assets of 1.26% of assets, and First Busey (NASDAQ:BUSE) a $9.6 million provision tied to one relationship.

All eight reported on Tuesday, October 27. The sections below condense each bank's provision, problem-loan and capital figures, followed by calculated comparisons and the dated events to watch.

National Bank Holdings: How Big Was the $40.6 Million Provision?

National Bank Holdings, a Denver-based bank holding company, reported a GAAP net loss of $8.8 million, or $0.20 per diluted share, after a $40.6 million provision tied to a handful of commercial credits, mainly in franchise and healthcare lending. Net charge-offs were 1.88% of average loans against 0.27% in the second quarter, and non-accrual loans rose to $43.9 million. The net interest margin held at 4.00%. Adjusted EPS of $0.06 compared with a $0.28 estimate, a negative 78.57% surprise as screened, and management targeted fourth-quarter earnings of a dollar or more per share.

First Commonwealth Financial: Why Did Nonperforming Loans Reach 0.99%?

First Commonwealth Financial reported core EPS of $0.45, one cent below a $0.46 estimate (negative 1.56% as screened), with the net interest margin at 4.11%. The provision rose to $14.2 million from $8.9 million, including $6.7 million for three individually analyzed commercial credits. Two credits totaling $21.0 million moved to nonaccrual, lifting nonperforming loans to $95.2 million, though net charge-offs eased to 0.19% of average loans. Common equity tier 1 capital slipped to 11.9% after about $88.0 million of buybacks (calculated), and the board authorized a further $25 million.

Hanmi Financial: Can Margin Gains Offset Criticized Loans at 2.05%?

Hanmi Financial reported diluted EPS of $0.80 with the net interest margin at 3.44%. Credit loss expense rose to $4.5 million from $1.2 million, and net charge-offs were 0.27% annualized, including $3.2 million on a commercial real estate loan moved to held for sale. Criticized loans rose to $134.4 million, with classified loans up $32.4 million to $78.2 million, mainly two New York City rent-controlled multifamily loans totaling $51.4 million. Nonperforming loans stayed low at 0.14% of loans, and the allowance was 1.08%.

Eagle Bancorp Montana: Did Record Loan Growth Double Nonperforming Loans?

Eagle Bancorp Montana, the holding company for a Montana community bank, earned $0.38 per diluted share against $0.47 in the second quarter. The provision rose to $1.859 million from $343,000 as loans grew a record $159.0 million. Nonperforming loans reached $8.7 million, or 0.51% of loans, from $4.2 million, which management tied mainly to well-collateralized agricultural loans. Net charge-offs were only $29,000 and the allowance was 1.13% of loans. The earnings screen showed a $0.54 estimate, a negative 29.19% surprise as screened.

Franklin Financial: Did a Beat Hide Nonperforming Loans of $17.8 Million?

Franklin Financial earned $1.89 per diluted share against a $1.45 estimate, a 30.34% surprise as screened. Nonperforming loans reached $17.8 million, or 1.11% of gross loans, versus 0.55% at year-end 2025. The total includes three commercial real estate loans of $17.5 million to two unrelated borrowers, plus an $8.9 million mixed-use construction exposure. The provision was $579,000, net recoveries were 0.10% of average loans annualized, and the allowance was 1.32% of loans. Non-owner-occupied commercial real estate stood at 327.3% of risk-based capital.

Western New England Bancorp: Did a Reserve Release Mask Criticized Loans of $57.7 Million?

Western New England Bancorp earned $0.32 per diluted share, helped by a $971,000 provision reversal, net recoveries of $274,000 and a $712,000 gain on selling two buildings. Criticized loans rose to $57.7 million, or 2.6% of loans, from $39.7 million, and delinquent loans were $9.1 million, or 0.41% of loans. The allowance was 0.89% of loans and covered 248.4% of nonaccrual loans, down from 393.2% at year-end. Management said asset quality remained strong.

First Financial Bancorp: Why Did Classified Assets Rise to 1.26% of Assets?

First Financial Bancorp reported adjusted EPS of $0.84 on record revenue of $273.9 million. Classified assets rose to $281.4 million, or 1.26% of assets, from 1.01%, mainly on the downgrade of one investor commercial real estate relationship that management expects to resolve over the next few quarters. The provision fell to $9.0 million from $12.9 million, net charge-offs were 0.21% annualized and the allowance was 1.38% of loans. The pending acquisition of Finward Bancorp (NASDAQ:FNWD) is targeted to close on January 1, 2027.

First Busey: How Large Is the One Problem Relationship?

First Busey reported adjusted EPS of $0.63 against a $0.67 estimate (negative 6.17% as screened) after a $9.6 million provision and net charge-offs of $11.4 million, or 0.35% of loans. One relationship of $37.6 million took a $10.0 million partial charge-off and a $17.8 million individual reserve against the remaining $27.6 million. Non-performing loans rose to $81.6 million, or 0.64% of loans, and the allowance covered them 2.01 times against 2.44 times in the second quarter. The bank still repurchased $59.6 million of shares.

Bank Credit Quality Compared: Which Provisions and Problem-Loan Ratios Moved Most?

Measured against the second quarter, provisions rose by $39.1 million at National Bank Holdings, $7.4 million at First Busey, $5.3 million at First Commonwealth Financial and $3.3 million at Hanmi Financial (all calculated). National Bank Holdings' net charge-off rate of 1.88% was about 9.9 times First Commonwealth Financial's 0.19% (calculated).

On problem-loan ratios, Hanmi's criticized loans rose 31 basis points, Eagle Bancorp Montana's nonperforming loans 24 basis points, and First Commonwealth Financial's and First Busey's 13 basis points each; First Financial Bancorp's classified assets rose 25 basis points (all calculated). Western New England Bancorp's criticized loans grew by $18.0 million (calculated). Allowance ratios run from 0.89% at Western New England Bancorp to 1.40% at First Commonwealth Financial, a 51 basis point spread (calculated).

What to Watch Next: Conference Calls, the Fourth-Quarter Target and the January 1 Finward Close

National Bank Holdings' conference call is set for Wednesday, October 28, with detail on the affected credits and the fourth-quarter target, and First Commonwealth Financial and First Financial Bancorp are also scheduled to discuss results that day. Dividends follow from First Commonwealth Financial on November 20, Franklin Financial on November 25, Eagle Bancorp Montana on December 4 and First Financial Bancorp on December 15. Hanmi will be judged on whether the New York multifamily downgrades turn into charge-offs, and First Busey on updates to its problem relationship. First Financial Bancorp targets closing the Finward deal on January 1, 2027.