0001193125-26-213949
SEC filingStrong quarter driven by margin expansion and lower-cost deposit growth, though elevated credit costs and charge-offs tempered earnings quality.
Net income for the first quarter of 2026 was $14.2 million, compared to $7.6 million in the same period last year, an increase of 86.3%. Diluted earnings per share rose to $0.80 from $0.43, reflecting the same growth trajectory. The improvement was driven by a lower interest rate environment and increasing loan demand, as well as the company's continued expansion into the New York City market, which has attracted lower-cost core deposits through a reciprocal deposit program. Management noted that the implementation of this strategy continues to deliver lower-cost core deposit relationships, resulting in consistent improvement in cost of funds and net interest margin.
Operating expenses increased as a result of the addition of new employees related to the company's expansion into New York City and Long Island, including the opening of two new Long Island offices during the latter half of 2025, and the expansion of the equipment financing team. Increased health insurance costs and annual merit increases also contributed. Letter of credit fee income increased due to higher utilization of trade finance products among a growing commercial client base in the metro New York area.
Net cash provided by operating activities was $24.6 million in the first quarter of 2026, compared to negative $7.9 million in the prior year period. Capital expenditures were $1.3 million, down from $3.6 million. Free cash flow, calculated as operating cash flow minus capital expenditures, was $23.3 million. Management believes the company's liquidity position and sources were adequate at March 31, 2026, and that the bank generates adequate liquidity to support the expenses of the Wealth Management Division if necessary.
Management expressed confidence in the company's capital position and liquidity to support planned growth, noting sufficient equity for the immediate future. The metro New York City expansion continues to deliver lower-cost core deposits, with management expecting further improvement in cost of funds and net interest margin. Key risks include elevated credit costs from the multifamily portfolio, integration of new hires and offices, and the ability to sustain loan growth in a competitive environment. The company did not provide quantitative guidance but emphasized its capital strength and strategic focus on relationship-based banking in the New York metro area.