What First Bank (FRBA) Said on Its Q3 Earnings Call

Key Points

• Profitability improved in Q3 2026: First Bank reported net income of $12.2 million, or $0.49 per diluted share, while net interest margin expanded to 3.74% and return on average assets rose to 1.18%.
• Balance-sheet growth was led by commercial lending: Loans increased $50.2 million and deposits rose $43 million, with commercial and industrial, owner-occupied real estate and construction loans driving growth. Management cited a $363 million funding pipeline and is targeting approximately $300 million of loan growth in 2027.
• Shareholder distributions are increasing: The board raised the quarterly dividend 33% to $0.12 per share and approved a buyback of up to 1.2 million shares, or $24 million, through September 2027. Credit trends were broadly stable, with management expecting losses in the declining Business Express portfolio to moderate.

First Bank NASDAQ: FRBA reported third-quarter 2026 net income of $12.2 million, or $0.49 per diluted share, as higher net interest income, loan growth and operating discipline supported improved profitability.

President and CEO Patrick Ryan said loans increased $50 million during the quarter while deposits rose $43 million, putting the bank ahead of its deposit-growth plan for the year. The bank’s net interest margin expanded to 3.74%, and return on average assets rose to 1.18%.

“In the third quarter, we saw continued improvement,” Ryan said, pointing to progress in balance-sheet growth, margins and expense management. Pre-provision return on average assets increased 8 basis points from the prior quarter to 1.79%.

Net interest income and margin improve

Chief Financial Officer Andrew Hibshman said net interest income rose $2 million, or 5.6%, from the prior quarter and increased $1.2 million, or 3.4%, from the third quarter of 2025. He attributed the linked-quarter increase to average earning-asset growth, higher loan yields, disciplined deposit pricing and balance-sheet optimization.

Loan yields increased 15 basis points from the second quarter to 6.48%, while total deposit costs rose 5 basis points to 2.47%. The resulting tax-equivalent net interest margin expanded 6 basis points to 3.74%.

Management said it expects acquisition-accounting accretion to decline over time and acknowledged that deposit competition remains challenging. However, executives cited opportunities to grow higher-yielding commercial relationships and optimize the bank’s funding mix.

During the quarter, First Bank used excess liquidity to repay $90 million of wholesale borrowings, reduced brokered deposits by $44 million and purchased about $57 million of low-risk investment securities that carried higher yields than cash, Hibshman said.

Ryan said more than 25% of the bank’s assets reprice immediately when the Federal Reserve changes rates, compared with a smaller portion of liabilities. Management described the company as modestly asset sensitive, meaning higher rates could provide a near-term benefit, though increased deposit costs could offset some of that advantage. Hibshman said the bank expects a stable margin with potential for modest upside.

Commercial lending drives loan growth

Loans grew $50.2 million, or about 6% on an annualized basis, led by commercial and industrial lending, owner-occupied commercial real estate and construction lending. The company’s C&I portfolio represented 22.5% of total loans at the end of the quarter, up from 21.9% a year earlier.

Chief Lending Officer Peter Cahill said new loans closed and funded totaled $124 million during the quarter, while loan payoffs were $53 million, below the average level seen in the first half of the year. C&I loans, including owner-occupied real estate, accounted for 65% of new business through Sept. 30. Investor real estate represented roughly 30%, with consumer lending making up the balance.

The bank’s probable-funding pipeline stood at $363 million at quarter-end, compared with $326 million in March and $323 million in June. Cahill said that pipeline could support a solid fourth quarter and a favorable start to 2027.

Looking further ahead, Cahill said the bank is targeting total loan growth closer to $300 million in 2027, above the approximately $200 million annual target it had maintained in recent years. He said the company sees opportunities across regional lending, SBA, private equity, asset-based lending and investor real estate.

Credit trends show signs of improvement

Provision expense was $2.2 million, essentially unchanged from the second quarter. Net charge-offs rose to $1.9 million from $1.6 million in the prior quarter, primarily due to activity in the Business Express portfolio.

Hibshman said the Business Express portfolio continues to run down and that management expects future losses to moderate from recent levels. The bank said it has not seen meaningful stress in other lending categories.

Nonperforming assets increased slightly to $35.7 million during the quarter, although management said they had declined since quarter-end. The allowance for credit losses was 1.37% of total loans and represented about 132% of nonperforming loans.

Cahill also cited post-quarter-end developments involving two larger problem real estate credits. The bank received a $5.5 million paydown on one loan, while management expects a $9.5 million participation loan related to a senior living facility to be paid in full later in the fourth quarter after a court accepted an agreement.

Expense goals, dividends and repurchases

Non-interest expense totaled $20.3 million, modestly above the second quarter, primarily due to salaries and benefits. The increase reflected an additional day in the quarter, summer intern staffing and somewhat higher incentive compensation following stronger third-quarter performance.

Even so, First Bank’s efficiency ratio improved to 52.4% from 54.5% in the prior quarter, marking its 29th consecutive quarter below 60%, according to Hibshman. Its non-interest expense-to-average-assets ratio declined to 1.97%.

Ryan said the company is aiming to reach a 1.90% expense-to-average-assets ratio during 2027 and sees a longer-term possibility of operating between 1.80% and 1.90%, depending on growth and investment opportunities.

The board increased the quarterly dividend 33% to $0.12 per share. First Bank also received final regulatory approval for a share-repurchase program authorizing up to 1.2 million shares, with an aggregate value of up to $24 million, through September 2027.

Tangible book value per share rose to $16.59 at Sept. 30 from $16.27 at June 30. Ryan said the company’s capital position provides flexibility for dividends, opportunistic repurchases and organic growth initiatives as it seeks to improve profitability into 2027.

About First Bank (NASDAQ:FRBA)

First Bank NASDAQ: FRBA is a community-focused commercial bank headquartered in Hamilton, New Jersey. Founded in 2007, the bank provides banking services to businesses, individuals and organizations in New Jersey and eastern Pennsylvania.

Its products and services include commercial and industrial loans, commercial real estate financing, residential mortgage loans, consumer lending, checking and savings accounts, certificates of deposit, cash-management services and online banking. First Bank emphasizes relationship-based banking and serves small and mid-sized businesses, professionals, nonprofit organizations and individual customers.

First Bank operates a network of branches in central and southern New Jersey and the greater Philadelphia region.

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