First Bank (NASDAQ: FRBA) announced its Q3 2026 earnings, revealing quarterly net income of $12.2 million and basic earnings per share of $0.49. Despite a 4.5% increase in share price, closing at $19.39, market excitement seems to be more focused on capital returns than profits alone. The bank has increased its dividend by one-third and received approval for a $24 million share buyback program.
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In comparing Q3 2026 to Q3 2025, First Bank reported revenue of $36.51 million, marking a 4.4% increase from $34.97 million the previous year. Net income rose by 3.8%, from $11.72 million to $12.17 million, while basic EPS climbed 4.2%, from $0.47 to $0.49. However, the cost-to-income ratio also slightly increased, from 51.8% to 52.4%, indicating marginally higher cost intensity.
According to recent cash flow assessments, the stock could be undervalued by 44%. The optimistic outlook for First Bank highlights its potential for growing higher-quality earning assets while maintaining funding stability. In the first half of 2026, 61% of loan originations were in commercial and industrial (C&I) and owner-occupied real estate sectors, with these categories contributing to 65% of new originations in Q3.
On the other hand, there are concerns regarding credit risk and funding costs. The bank's small business portfolio has experienced higher net charge-offs, totaling approximately $5 million for the quarter and $9 million over the past twelve months. Should efforts to tighten underwriting and implement staff changes fail to mitigate these losses, First Bank's earnings and returns could be adversely affected.