Finance

First Northern's Net Interest Margin Widens to 4.12%

The Tip Desk · October 30, 2026 · 3 min read

Net interest income reached $19.37 million in the third quarter as the margin expanded 37 bps from 3.75% and loan growth accelerated.

First Northern Community Bancorp (FNRN), holding company for First Northern Bank, reported net interest income of $19.37 million for the three months ended September 30, 2026, up 13.88% from $17.01 million in the prior quarter and 14.95% from $16.85 million a year earlier.

The net interest margin expanded 37 bps to 4.12% from 3.75% in the three months ended June 30, 2026, after remaining unchanged at 3.75% versus the year-ago quarter. Average loan yield rose to 6.11% from 5.45%, while cost of funds increased to 0.95% from 0.90%.

Management attributed the $2.5 million year-over-year increase in net interest income primarily to $1.8 million more nonaccrual interest income after resolving a longstanding nonaccrual lending relationship. That resolution reduced nonaccrual loans by $1.2 million, or 25.6%, during the quarter.

Period-end net loans, including loans held-for-sale, rose $41.1 million in the quarter to $1.13 billion, an annualized growth rate of 14.7%, versus a 10.5% annualized rate in the prior quarter. Average loans increased to $1.10 billion from $1.07 billion. The company said the increase was primarily driven by growth in commercial loans, partially offset by net reductions in commercial real estate, agriculture, residential mortgage and consumer loans. Total assets were $1.99 billion.

Total deposits increased $68.6 million during the quarter, an annualized growth rate of 16.1%, versus a 6.5% annualized rate for the nine months ended September 30, 2026. Average non-interest-bearing demand deposits were $631.3 million.

Provision for credit losses was zero in the three months ended September 30, 2026, after a $600 thousand provision in the three months ended June 30, 2026.

Net income was $6.20 million, or $0.38 a share, up 31.18% from $4.73 million in the prior quarter and 3.14% from $6.01 million a year earlier. Return on average assets was 1.24% and return on average equity 11.25%.

Non-interest expense rose to $12.71 million from $11.95 million in the prior quarter as the core-banking system upgrade completed on October 13 added project-related costs. The company said additional costs are expected in the fourth quarter as the upgrade is completed. The efficiency ratio improved to 60.50% from 63.69%. Non-interest income was $1.64 million.

The common equity tier 1 capital ratio declined to 17.3% at September 30, 2026, from 17.7% at June 30, 2026. The leverage ratio rose to 12.5% from 12.0%. The tangible common equity ratio was 10.2%. The company said it remained “well capitalized” under regulatory definitions, exceeding the 10% total risk-based capital ratio threshold.

President and Chief Executive Officer Jeremiah Smith said the bank continued strong momentum, highlighted by accelerating loan growth and solid deposit generation. He said the October 13 core-platform replacement established a modern technology foundation to support future growth, improve operational efficiency and reduce ongoing data processing costs.

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