Companies

NorthEast Community Pays Off Borrowings as Construction Mix Grows

The Tip Desk · October 23, 2026 · 4 min read

Net interest income was $26.1 million in the third quarter as the New York construction lender cut its net interest margin 29 bps to 5.09%.

NorthEast Community Bancorp (NECB), the New York construction lender, reported net interest income of $26.1 million for the three months ended September 30, 2026, up $154,000, or 0.6%, from $25.9 million a year earlier.

The increase came from a 39 bps drop in the cost of interest-bearing liabilities to 3.52%, which more than offset a 61 bps drop in the yield on interest-earning assets to 7.54%. Net interest margin compressed 29 bps, or 5.5%, to 5.09% from 5.38% a year earlier. The company attributed the margin decline to a 75 bps Federal Funds cut from September 2025 to December 2025, only partly offset by a 25 bps increase in September 2026, which lowered construction and commercial-and-industrial loan yields more than deposit costs.

Net income was $10.7 million, or $0.81 basic and $0.79 diluted a share, compared with $11.9 million, or $0.90 basic and $0.87 diluted, a year earlier. Return on average total assets was 2.00% and return on average shareholders’ equity was 11.54%, with an efficiency ratio of 41.50%.

The balance sheet expanded around construction. Loans, net of the allowance, increased $160.0 million, or 8.6%, to $2.0 billion at September 30, 2026 from $1.9 billion at December 31, 2025, led by a $207.3 million rise in construction loans that more than offset a $37.0 million decline in commercial and industrial loans. Construction loan commitments and loans-in-process outstanding rose 18.2% versus the third quarter of 2025, with over $763 million in unfunded commitments, a 12.2% increase from December 31, 2025. Chairman and Chief Executive Officer Kenneth A. Martinek said the company is focused on high-demand submarkets in the Bronx, Rockland, Orange, and Sullivan Counties.

During the nine months ended September 30, 2026, the company originated loans totaling $966.4 million, including $914.8 million in construction loans, of which $393.5 million, or 43.0%, was disbursed at closing. Commercial and industrial loans had $19.1 million, or 72.7%, disbursed at closing as of September 30, 2026.

Total deposits increased $202.7 million, or 12.5%, to $1.8 billion at September 30, 2026 from $1.6 billion at December 31, 2025. Certificates of deposit rose $87.8 million, including a $201.8 million increase in brokered CDs, partially offset by a $63.5 million decrease in non-brokered listing-services CDs and a $50.5 million decrease in retail CDs. NOW/money market accounts rose $72.8 million and non-interest-bearing deposits rose $53.7 million. The company said the brokered-CD increase reflected a strategy to reduce short-term borrowings, the listing-services CD decrease reflected a strategy to reduce the cost of funds, and the retail CD decrease reflected a shift into retail high-yield money market accounts.

Borrowings fell $70.0 million to zero at September 30, 2026 from $70.0 million at December 31, 2025, as management reduced short-term borrowings and interest-rate risk. Cash and cash equivalents decreased $8.5 million, or 10.5%, to $72.6 million from $81.2 million at year-end 2025, partially funding the loan increase. Total assets increased $152.5 million, or 7.4%, to $2.2 billion.

Credit costs stayed quiet in the quarter. The company recorded no credit loss expense for the three months ended September 30, 2026, matching the year-ago quarter. Loan charge-offs were $37,000 versus $75,000 a year earlier, and recoveries were $8,000 versus $99,000. The allowance for credit losses related to loans was $4.7 million, or 0.23% of total loans, at September 30, 2026, versus $4.7 million, or 0.25% of total loans, at December 31, 2025, as the mix shifted toward lower-allowance construction loans. The allowance for off-balance-sheet commitments increased $284,000, or 32.3%, to $1.2 million from $879,000 at year-end 2025, primarily on an $83.1 million, or 12.2%, increase in unfunded commitments.

Non-interest income swung to a $185,000 loss for the three months ended September 30, 2026 from $1.0 million of income a year earlier, a $1.2 million, or 118.2%, decline driven by a $1.3 million swing in unrealized equity-securities results to a $1.1 million loss. Non-interest expense rose $402,000, or 3.9%, to $10.7 million from $10.4 million a year earlier, with other operating expenses up $757,000, or 27.0%, including $729,000 more miscellaneous charge-offs from customer fraud involving checks and debit cards.

Stockholders’ equity increased $19.0 million, or 5.4%, to $370.7 million, or 16.73% of total assets, from $351.7 million at December 31, 2025. The increase reflected nine-month net income of $30.4 million, equity-plan amortization, and other comprehensive income, offset by $9.3 million of dividends and $4.8 million of stock repurchases and excise taxes.

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NorthEast Community Bancorp, Inc./MD/ — all coverage and financials