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Narragansett Bancorp, Inc. Announces Results for the Quarter Ended September 30, 2026

PR Newswire·10/27/2026 17:10:00

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SWANSEA, Mass., Oct. 27, 2026 /PRNewswire/ -- Narragansett Financial Corporation (the "Company"), the parent company of BayCoast Bank, today announced its third quarter financial results. Following completion of the pending reorganization and related stock offering, Narragansett Bancorp, Inc. will become the consolidated reporting entity. The Company reported net income of $4.4 million, compared to net income of $3.5 million for the prior quarter, an increase of $954,000. The increase is attributed to a $1.4 million increase in net interest income, a $1.1 million decrease in provision for credit losses and a $562,000 decrease in operating expenses, partially offset by a $1.2 million decrease in non-interest income and a $929,000 increase in provision for income taxes.

BALANCE SHEET

Total assets were $2.96 billion at September 30, 2026, representing an increase of $87.9 million, or 3.1%, from the prior quarter.
Total cash and cash equivalents were $98.0 million on September 30, 2026, representing an increase of $45.2 million, or 85.8%, from the prior quarter. The increase was due to proceeds from our minority stock offering that were being held in escrow pending the completion of the offering.
Investment securities totaled $390.2 million at September 30, 2026, representing an increase of $30.4 million, or 8.4%.
Gross loans were $2.3 billion on September 30, 2026, representing an increase of $21.6 million or 1.0% from the prior quarter as demand for new originations continued. The main driver of the new growth was in home equity loans and lines of credit and residential real estate loans, which increased $39.6 million and $7.0 million, respectively. This increase was partially offset by a $14.6 million decrease in consumer loans and an $11.3 million decrease in commercial and multi-family loans.
Deposits totaled $2.6 billion on September 30, 2026, representing an increase of $125.6 million, or 5.1% from the prior quarter. Demand deposits increased $105.7 million from the prior quarter due to proceeds from the minority stock offering being held in escrow. Money market accounts increased $32.7 million and interest-bearing accounts increased $9.7 million, partially offset by a $22.2 million decrease in certificates of deposit.
FHLB borrowings totaled $45.5 million on September 30, 2026, representing a decrease of $40.0 million, or 46.8% from the prior quarter, due to our improved liquidity position.
Subordinated debt was $94.8 million at September 30, 2026, representing an increase of $206,000, or 0.22%, from the prior quarter.
Retained earnings were $187.4 million on September 30, 2026, which represents a decrease of $1.8 million from the prior quarter. Net income of $4.4 million was offset by a $6.2 million increase in accumulated other comprehensive losses, primarily driven by unrealized losses in the U.S. Treasury portfolio resulting from higher market interest rates during the quarter.

NET INTEREST INCOME

Net interest income was $22.8 million for the three months ended September 30, 2026, compared to $21.4 million for the prior quarter, representing an increase of $1.4 million, or 6.7%. Net interest income was $19.5 million for the same period last year, representing an increase of $3.3 million, or 16.8%.
Net interest margin was 3.42% for the three months ended September 30, 2026, which represents a 21 basis point improvement from the prior quarter. Compared to the same quarter last year, net interest margin has expanded by 55 basis points.
The increase in interest income during the three months ended September 30, 2026, was primarily attributable to increases in loan and investment securities yields, partially offset by decreases in the average balance of loans and investment securities.
Interest expense for the three months ended September 30, 2026, was consistent with the prior quarter. Total average deposits increased, as well as the yield on subordinated debt; however, this was partially offset by a decrease in the average balance of other borrowings.

PROVISION FOR CREDIT LOSS & ASSET QUALITY

Provision for credit loss decreased by $1.1 million from the prior quarter due to an improvement in asset quality. A benefit of $250,000 was recorded during the third quarter of 2026 due to a decrease in the allowance on individually evaluated loans.
The allowance for credit losses to total loans was 1.31% as of September 30, 2026, compared to 1.34% as of June 30, 2026 and 1.36% as of September 30, 2025.
Non-performing loans as a percentage of total loans was 1.55% as of September 30, 2026, compared to 1.90% as of June 30, 2026. The decrease was due to a commercial real estate loan and a commercial loan in the amounts of $6.0 million and $1.1 million, respectively, that paid off during the third quarter.

Non-performing loans as a percentage of total loans was 0.28% as of September 30, 2025. The increase in non-performing loans when compared to September 30, 2025, was due to four commercial real estate loans and one commercial loan, with total balances of $35.8 million, being placed on non-accrual status. All four loans were performing as of September 30, 2026.

NON-INTEREST INCOME

Non-interest income was $12.8 million for the quarter ended September 30, 2026, a decrease of $1.2 million from the prior quarter.
Bank owned life insurance income decreased $1.4 million during the quarter due to market-related changes in the value of assets associated with the non-qualified deferred compensation plan.
Mortgage banking income decreased $328,000 during the quarter due to a decrease in loan sale volume.
These decreases were partially offset by a $436,000 increase in gain (loss) on portfolio loans due to more favorable pricing on private investor sales and a $249,000 increase in net loan servicing fee (expense) income due to a decrease in mortgage servicing rights amortization.

NON-INTEREST EXPENSE

Non-interest expense was $30.0 million for the quarter ended September 30, 2026, a $562,000 decrease from the prior quarter.
Salaries and employee benefits decreased $1.2 million during the quarter due to lower deferred compensation attributed to market fluctuations in the non-qualified deferred compensation plan, partially offset by an increase in bonus expense.
Other general and administrative expenses increased $665,000 during the quarter due primarily to a significant one-time charitable donation.

PROVISION FOR INCOME TAX

Income tax expense increased by $929,000 for the quarter ended September 30, 2026, due to a decrease in tax- exempt income. The effective tax rates were 24.4% and 12.6% for the quarter ended September 30, 2026 and June 30, 2026, respectively. The effective tax rate for each period was below the statutory rate due to tax-exempt income.

ABOUT BAYCOAST BANK.

Originally chartered in 1851, BayCoast Bank is a Massachusetts-chartered stock savings bank that operates from its main office and 26 full-service branch banking offices in the South Coast of Massachusetts and the State of Rhode Island, as well as two loan production offices in Massachusetts and Rhode Island. BayCoast Bank's deposits are insured in full beyond federal deposit insurance coverage limits by the Depositors Insurance Fund.

Selected Financial Data (unaudited)

	At or For the Three Months Ended									At or For the Nine Months Ended
	September 30, 2026			June 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
Financial Condition Data:	(Dollars in Thousands)
Loans, net of allowance for credit losses	$	2,242,028		$	2,219,766		$	2,252,679		$	2,242,028		$	2,252,679
Total assets		2,962,416			2,874,485			2,874,964			2,962,416			2,874,964
Deposits		2,574,083			2,448,460			2,435,202			2,574,083			2,435,202
Total retained earnings		187,391			189,196			179,075			187,391			179,075
Performance Ratios:
Return on average assets ⁽¹⁾		0.60	%		0.48	%		0.41	%		0.42	%		0.14	%
Return on average equity ⁽¹⁾		9.32	%		7.41	%		2.35	%		6.52	%		2.44	%
Interest rate spread ⁽²⁾		3.03	%		2.80	%		2.44	%		2.79	%		2.29	%
Net interest margin ⁽¹⁾⁽³⁾		3.42	%		3.21	%		2.87	%		3.20	%		2.72	%
Noninterest expense to average assets ⁽¹⁾		4.08	%		4.25	%		4.01	%		4.14	%		3.88	%
Efficiency ratio ⁽⁴⁾		84.25	%		86.49	%		90.70	%		86.85	%		89.99	%
Average interest-earning assets to average interest- bearing liabilities		121.57	%		121.07	%		120.02	%		121.13	%		118.47	%
Loans to deposits ratio		88.40	%		92.05	%		93.94	%		88.40	%		93.94	%
Capital Ratios:
Average equity to average assets		6.58	%		6.56	%		6.10	%		6.55	%		5.96	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.31	%		1.34	%		1.36	%		1.31	%		1.36	%
Allowance for credit losses on loans as a percentage of non-performing loans		84.85	%		70.78	%		480.80	%		84.85	%		480.80	%
Net (charge-offs) recoveries to average outstanding loans during the period ⁽¹⁾		(0.03)	%		(0.16)	%		(0.09)	%		(0.09)	%		(0.08)	%
Non-performing loans as a percentage of total loans		1.55	%		1.90	%		0.28	%		1.55	%		0.28	%
Non-performing loans as a percentage of total assets		1.19	%		1.49	%		0.23	%		1.19	%		0.23	%
Total non-performing assets as a percentage of total assets		1.19	%		1.49	%		0.23	%		1.19	%		0.23	%

(1)	Annualized for the three-month and nine-month periods.
(2)	Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3)	Represents net interest income as a percentage of average interest-earning assets.
(4)	Represents operating expenses divided by the sum of net interest income and other income.

Consolidated Balance Sheets (Unaudited)

	September 30, 2026		June 30, 2026		December 31, 2025		September 30, 2025
	(In thousands)
Assets
Cash and cash equivalents	$	97,987	$	52,748	$	38,519	$	55,776
Securities available for sale, at fair value		390,202		359,819		342,292		334,465
Marketable equity securities, at fair value		2,427		2,378		2,188		2,107
Federal Home Loan Bank stock, at cost		3,389		5,082		5,787		5,441
Loans held for sale, at fair value		10,559		20,036		21,262		18,210
Loans, net of allowance for credit losses of $29,843 at September 30, 2026, $30,254 at June 30, 2026, $29,078 at December 31, 2025 and $31,116 at September 30, 2025		2,242,028		2,219,766		2,236,274		2,252,679
Mortgage servicing rights, net		14,662		14,644		13,991		14,614
Bank-owned life insurance		43,402		43,346		40,962		40,583
Premises and equipment, net		40,598		40,869		40,701		40,942
Accrued interest receivable		10,266		9,929		10,034		9,839
Net deferred tax asset		9,576		7,460		5,841		8,653
Goodwill and other intangible assets		27,699		27,861		28,186		28,444
Equity method investments		14,447		14,439		14,196		13,853
Right of use lease asset		9,331		9,603		10,041		10,332
Other assets		45,843		46,505		48,302		39,026
Total assets	$	2,962,416	$	2,874,485	$	2,858,576	$	2,874,964
Liabilities and Retained Earnings
Non-interest bearing deposits	$	541,193	$	435,538	$	394,297	$	412,970
Interest bearing deposits		2,032,890		2,012,922		2,029,009		2,022,232
Short-term borrowings		45,157		85,000		97,533		95,000
Long-term borrowings		313		490		530		550
Subordinated debt		94,784		94,737		94,578		109,482
Lease liability		9,566		9,830		10,257		10,536
Other liabilities		51,122		46,772		45,526		45,119
Total liabilities		2,775,025		2,685,289		2,671,730		2,695,889
Retained earnings		198,538		194,113		189,395		186,582
Accumulated other comprehensive loss		(11,147)		(4,917)		(2,549)		(7,507)
Total retained earnings		187,391		189,196		186,846		179,075
Total liabilities and retained earnings	$	2,962,416	$	2,874,485	$	2,858,576	$	2,874,964

Consolidated Statements of Net Income (Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2026		June 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
	(In thousands)
Interest and dividend income:
Interest and fees on loans	$	33,061	$	31,880	$	33,057	$	96,423	$	98,686
Interest on debt securities		3,421		3,005		2,484		9,209		6,790
Dividend income		99		118		210		331		703
Interest on cash and cash equivalents		183		141		586		365		1,397
Total interest and dividend income		36,764		35,144		36,337		106,328		107,576
Interest expense:
Interest on deposits		11,480		11,175		12,852		34,057		38,773
Interest on borrowings		601		873		2,053		2,750		7,322
Interest on subordinated debt		1,886		1,722		1,917		5,185		5,738
Total interest expense		13,967		13,770		16,822		41,992		51,833
Net interest income		22,797		21,374		19,515		64,336		55,743
(Benefit) provision for credit losses		(250)		800		1,860		2,250		5,760
Net interest income, after (benefit) provision for credit losses		23,047		20,574		17,655		62,086		49,983
Other income:
Customer service fees		2,790		2,781		2,736		8,309		7,850
Net loan servicing (expense) fee income		101		(148)		(419)		(999)		(262)
Trust department fees		1,693		1,620		1,550		4,948		4,512
Insurance and brokerage commissions		3,617		3,703		3,205		11,390		11,079
Gain (loss) on securities available for sale, net		3		—		—		206		(20)
Gain on marketable equity securities		49		130		118		238		68
Gain (loss) on sales of portfolio loans		113		(323)		(1,038)		(663)		(1,865)
Mortgage banking income		4,128		4,456		5,741		13,302		13,868
Bank-owned life insurance income		55		1,440		737		1,375		1,743
Miscellaneous		238		280		499		924		2,088
Total other income		12,787		13,939		13,129		39,030		39,061
Operating expenses:
Salaries and employee benefits		19,604		20,797		18,830		59,465		54,930
Occupancy and equipment		3,659		3,562		3,504		11,338		10,616
Professional fees		810		839		814		2,478		2,365
Data processing		1,243		1,270		1,148		3,701		3,436
Advertising costs		560		609		532		1,777		1,711
Deposit insurance		677		703		671		2,077		2,056
Amortization of intangible assets		162		162		258		487		763
Other general and administrative		3,266		2,601		3,852		8,456		9,442
Total operating expenses		29,981		30,543		29,609		89,779		85,319
Income before income taxes		5,853		3,970		1,175		11,337		3,725
Provision for income taxes		1,429		500		112		2,195		539
Net income	$	4,424	$	3,470	$	1,063	$	9,142	$	3,186

Average Balances and Yields (unaudited)

	Average Balances						Average Yield/Rate⁽¹⁾
	For the Three Months Ended						For the Three Months Ended
	September 30, 2026		June 30, 2026		September 30, 2025		September 30, 2026			June 30, 2026			September 30, 2025
	(Dollars in thousands)
Interest-earning assets:
Loans	$	2,266,552	$	2,278,673	$	2,316,795		5.83	%		5.60	%		5.71	%
Debt securities		351,187		354,823		328,664		3.90	%		3.39	%		3.02	%
Equity securities and mutual funds		5,488		6,669		10,564		7.21	%		7.09	%		7.99	%
Cash equivalents		40,823		26,880		64,543		1.76	%		2.08	%		3.55	%
Total interest-earning assets		2,664,050		2,667,045		2,720,566		5.52	%		5.27	%		5.34	%
Noninterest-earning assets		236,643		201,110		198,982
Total assets	$	2,900,693	$	2,868,155	$	2,919,548
Interest-bearing liabilities:
NOW accounts	$	378,600	$	389,967	$	369,531		1.16	%		1.22	%		1.33	%
Savings accounts		286,841		290,338		291,606		0.19	%		0.20	%		0.22	%
Money market accounts		900,355		853,484		781,411		2.93	%		2.91	%		3.36	%
Certificates of deposit		470,449		485,383		532,464		3.02	%		3.03	%		3.61	%
Total interest-bearing deposits		2,036,245		2,019,172		1,975,012		2.24	%		2.22	%		2.58	%
Borrowings:
Other Borrowings		60,423		89,024		182,368		3.89	%		3.88	%		4.41	%
Subordinated debt		94,753		94,701		109,418		7.79	%		7.19	%		6.85	%
Total interest-bearing liabilities		2,191,421		2,202,897		2,266,798		2.49	%		2.47	%		2.90	%
Noninterest-bearing liabilities:
Demand deposits		468,751		430,745		427,145
Other		49,675		46,336		47,437
Total liabilities		2,709,847		2,679,978		2,741,380
Retained earnings		190,846		188,177		178,168
Total liabilities and retained earnings	$	2,900,693	$	2,868,155	$	2,919,548
Net interest rate spread ⁽²⁾								3.03	%		2.80	%		2.44	%
Net interest-earning assets ⁽³⁾	$	472,629	$	464,148	$	453,768
Net interest margin ⁽⁴⁾								3.42	%		3.21	%		2.87	%

(1)	Annualized.
(2)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4)	Net interest margin represents net interest income divided by average total interest-earning assets.

Average Balances and Yields (unaudited)

	Average Balances				Average Yield/Rate⁽¹⁾
	For the Nine Months Ended				For the Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026			September 30, 2025
	(Dollars in thousands)
Interest-earning assets:
Loans	$	2,284,919	$	2,349,954		5.63	%		5.60	%
Debt securities		360,481		316,518		3.41	%		2.86	%
Equity securities and mutual funds		6,677		12,104		6.61	%		7.75	%
Cash equivalents		28,934		54,347		1.67	%		3.39	%
Total interest-earning assets		2,681,011		2,732,923		5.29	%		5.25	%
Noninterest-earning assets		204,028		201,378
Total assets	$	2,885,039	$	2,934,301
Interest-bearing liabilities:
NOW accounts	$	387,548	$	381,692		1.20	%		1.36	%
Savings accounts		288,539		293,051		0.20	%		0.22	%
Money market accounts		863,962		757,147		2.91	%		3.40	%
Certificates of deposit		488,426		542,397		3.10	%		3.74	%
Total interest-bearing deposits		2,028,475		1,974,287		2.24	%		2.63	%
Borrowings:
Other Borrowings		90,190		223,249		4.02	%		4.32	%
Subordinated debt		94,689		109,323		7.22	%		6.92	%
Total interest-bearing liabilities		2,213,354		2,306,859		2.50	%		2.96	%
Noninterest-bearing liabilities
Demand deposits		435,310		406,664
Other		47,407		45,963
Total liabilities		2,696,071		2,759,486
Retained earnings		188,968		174,815
Total liabilities and retained earnings	$	2,885,039	$	2,934,301
Net interest rate spread ⁽²⁾						2.79	%		2.29	%
Net interest-earning assets ⁽³⁾	$	467,657	$	426,064
Net interest margin ⁽⁴⁾						3.20	%		2.72	%

(1)	Annualized.
(2)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4)	Net interest margin represents net interest income divided by average total interest-earning assets.

Investor Contact

Marie Pellegrino

President

IR@baycoastbank.com

888-806-2872

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SOURCE Narragansett Bancorp Inc.