0001381668-26-000024
SEC filingNet income rose 10.6% to $23.2M, driven by higher net interest income and gain on loan sales, partially offset by expense growth.
Net interest income increased due to an increase in average balance and yield of interest-earning assets, partially offset by an increase in the average balance and weighted average rate paid on interest-bearing liabilities. The rise in funding costs resulted from an increase in the average rate paid and balance of borrowed funds and savings accounts, partially offset by a decrease in the average rate paid on CDs and a decrease in CD balances.
Net cash provided by operating activities improved to $76.4 million from $66.8 million in the prior year quarter. Capital expenditures decreased to $5.9 million from $7.6 million, resulting in free cash flow of $70.5 million. The payment of dividends, support of asset growth, and strategic stock repurchases are planned to continue as the focus for future capital deployment activities.
Credit quality remained strong, with net recoveries and no provision for credit losses, reflecting the company's conservative underwriting standards.
Management expects to continue deploying capital through dividends, asset growth, and strategic stock repurchases. The company noted that the easing cycle is less likely to continue in 2026, which could lead to volatility in interest rates and spreads, creating a challenging operating environment. The company remains focused on managing interest rate risk through its adjustable-rate loan portfolio, home equity lines of credit, and selective sales of fixed-rate loans in the secondary market. Expense control remains a priority to support profitable growth amid potential margin compression.