Highlights for the third quarter of fiscal 2026:
Earnings per common share (diluted) were $1.60, up $0.21, or 15.1%, as compared to the same quarter a year ago, and down $0.02, or 1.2%, from the second quarter of fiscal 2026, the linked quarter.
Annualized return on average assets (ROA) was 1.41%, while annualized return on average common equity (ROE) was 12.6%, as compared to 1.29% and 12.2%, respectively, in the same quarter a year ago, and 1.42% and 12.8%, respectively, in the second quarter of fiscal 2026, the linked quarter.
Net interest margin for the quarter was 3.67%, as compared to 3.44% reported for the same quarter a year ago, and up from 3.57% reported for the second quarter of fiscal 2026, the linked quarter. Net interest income increased $3.7 million, or 9.3%, compared to the same quarter a year ago, and increased $285,000, or 0.7%, compared to the second quarter of fiscal 2026, the linked quarter.
PCL was $2.1 million during the third quarter of fiscal 2026, an increase of $1.1 million from the year ago period, and an increase of $400,000 from the second quarter of fiscal 2026, the linked quarter. The increase compared to both periods was primarily attributable to higher reserves required for pooled loans, driven largely by increased reserves on agriculture loans reflecting ongoing pressure in the agricultural sector.
Gross loan balances as of March 31, 2026, increased by $95.8 million, or 2.3%, as compared to December 31, 2025, and increased by $298.9 million, or 7.4%, as compared to March 31, 2025.
Deposit balances as of March 31, 2026, increased by $32.6 million, or 0.8%, as compared to December 31, 2025, and by $79.5, million, or 1.9%, as compared to March 31, 2025.
Cash equivalent balances and time deposits as of March 31, 2026, decreased by $41.0 million, or 30.5%, as compared to December 31, 2025, and decreased by $133.9 million, or 58.9% as compared to March 31, 2025.
The Company repurchased 156,000 shares of its common stock in the third quarter of fiscal 2026 at an average price of $61.97 per share, for a total of $9.7 million. The average purchase price was 135% of our tangible book value as of March 31, 2026.
Tangible book value per share was $45.80, having increased by $5.43, or 13.5%, as compared to March 31, 2025.
Dividend Declared:
The Board of Directors, on April 21, 2026, declared a quarterly cash dividend on common stock of $0.25, payable May 29, 2026, to stockholders of record at the close of business on May 15, 2026, marking the 128th consecutive quarterly dividend since the inception of the Company. The Board of Directors and management believe the payment of a quarterly cash dividend enhances stockholder value and demonstrates our commitment to and confidence in our future prospects.
Conference Call:
The Company will host a conference call to review the information provided in this press release on Thursday, April 23, 2026, at 9:30 a.m., central time. The call will be available live to interested parties by calling 1-800-715-9871 in the United States and from all other locations by calling 1-646-307-1963. Participants should use participant access code 3159664. Telephone playback will be available beginning one hour following the conclusion of the call through April 28, 2026. The playback may be accessed by dialing 1-800-770-2030 in the United States and Canada, and using the conference passcode 3159664.
Balance Sheet Summary:
The Company experienced balance sheet growth in the first nine months of fiscal 2026, with total assets of $5.1 billion at March 31, 2026, reflecting an increase of $121.9 million, or 2.4%, as compared to June 30, 2025. Growth primarily reflected increases in net loans receivable and investments in tax credits in the other assets category, partially offset by decreases in cash equivalents and time deposits and available for sale (AFS) securities.
Cash equivalents and time deposits were a combined $93.3 million at March 31, 2026, a decrease of $99.8 million, or 51.7%, as compared to June 30, 2025. The decrease was primarily the result of loan generation that outpaced deposit growth during the period. AFS securities were $439.1 million at March 31, 2026, down $21.7 million, or 4.7%, as compared to June 30, 2025.
Loans, net of the allowance for credit losses (ACL), were $4.3 billion at March 31, 2026, an increase of $217.5 million, or 5.4%, as compared to June 30, 2025. Gross loans increased by $221.8 million, while the ACL attributable to outstanding loan balances increased $4.3 million, as compared to June 30, 2025. The Company noted growth primarily in 1-4 family residential real estate, non-owner occupied commercial real estate, multi-family real estate, commercial and industrial, owner occupied commercial real estate, and agriculture real estate loan balances. This was partially offset by decreases in construction and land development, consumer, and agricultural production loan balances. The table below illustrates changes in loan balances by type over recent periods:
Summary Loan Data as of:
Mar. 31,
Dec. 31,
Sep. 30,
June 30,
Mar. 31,
(dollars in thousands)
2026
2025
2025
2025
2025
1-4 Family residential real estate
$
1,063,006
$
1,043,090
$
1,021,300
$
992,445
$
978,908
Non-owner occupied commercial real estate
945,274
912,611
918,275
888,317
897,125
Owner occupied commercial real estate
476,994
460,064
454,265
442,984
440,282
Multi-family real estate
467,936
452,733
445,953
422,758
405,445
Construction and land development
279,943
298,412
283,912
332,405
323,499
Agriculture real estate
278,541
261,118
255,610
244,983
247,027
Total loans secured by real estate
3,511,694
3,428,028
3,379,315
3,323,892
3,292,286
Commercial and industrial
546,002
537,276
521,945
510,259
488,116
Agriculture production
204,447
202,892
229,338
206,128
186,058
Consumer
51,869
52,182
56,051
55,387
54,022
All other loans
8,348
6,178
5,094
5,102
3,216
Total loans
4,322,360
4,226,556
4,191,743
4,100,768
4,023,698
Deferred loan fees, net
—
—
—
(178)
(189)
Gross loans
4,322,360
4,226,556
4,191,743
4,100,590
4,023,509
Allowance for credit losses
(55,937)
(54,465)
(52,081)
(51,629)
(54,940)
Net loans
$
4,266,423
$
4,172,091
$
4,139,662
$
4,048,961
$
3,968,569
Loans anticipated to fund in the next 90 days totaled $177.7 million at March 31, 2026, as compared to $159.1 million at December 31, 2025, and $163.3 million at March 31, 2025.
The Bank's concentration in non-owner occupied commercial real estate loans is estimated at 291.2% of Tier 1 capital and ACL on March 31, 2026, as compared to 301.9% as of June 30, 2025, with these loans representing 39.2% of total loans at March 31, 2026. Multi-family real estate, hospitality (hotels/restaurants), care facilities, strip centers, retail stand-alone, and storage units are the most common collateral types within the non-owner occupied commercial real estate loan portfolio. The Bank's multi-family real estate loan portfolio commonly includes loans collateralized by properties currently in the low-income housing tax credit (LIHTC) program or that have exited the program. The hospitality and retail stand-alone segments include primarily franchised businesses; care facilities consist mainly of skilled nursing and assisted living centers; and strip centers can be defined as non-mall shopping centers with a variety of tenants. Non-owner occupied office property types included 35 loans totaling $14.6 million, or 0.34% of gross loans at March 31, 2026, none of which were adversely classified, and are generally comprised of smaller spaces with diverse tenants. The Company continues to monitor its commercial real estate concentration and the individual segments closely.
Nonperforming loans (NPLs) were $30.1 million, or 0.70% of gross loans, at March 31, 2026, as compared to $23.0 million, or 0.56% of gross loans at June 30, 2025. Nonperforming assets (NPAs) were $32.0 million, or 0.62% of total assets, at March 31, 2026, as compared to $23.7 million, or 0.47% of total assets, at June 30, 2025. The rise in NPAs was primarily attributable to the increase in NPLs. The increase in NPLs was primarily attributable to three borrower relationships: one commercial relationship consisting of two related loans collateralized by commercial real estate; one consisting of multiple loans collateralized by commercial real estate and equipment; and the other, consisting of two related agricultural production loans secured by crops and equipment, partially offset by improvement in previously nonperforming loans and net charge-offs. All relationships noted were placed on nonaccrual status prior to the third quarter of fiscal 2026.
Our ACL at March 31, 2026, totaled $55.9 million, representing 1.29% of gross loans and 186% of nonperforming loans, as compared to an ACL of $51.6 million, representing 1.26% of gross loans and 224% of nonperforming loans at June 30, 2025. The Company has estimated its expected credit losses as of March 31, 2026, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. There remains, however, significant economic uncertainty despite recent reductions in short-term interest rates as labor market conditions soften, and inflation remains above target. The increase in the ACL was primarily attributable to higher reserves required for pooled loans, driven largely by increased reserves on agriculture loans reflecting ongoing pressure in the agricultural sector, and loan growth. This was partially offset by net charge-offs. As a percentage of average loans outstanding, the Company recorded net charge-offs of 0.04% (annualized) during the current quarter, as compared to net charge-offs of 0.11% for the same quarter of the prior fiscal year. For the nine-month period ended March 31, 2026, year-to-date net charge-offs were 0.11% (annualized).
Total liabilities were $4.6 billion at March 31, 2026, an increase of $93.0 million, or 2.1%, as compared to June 30, 2025. Growth primarily reflected an increase in total deposits; other liabilities, attributable to recognition of future capital contributions related to tax credit investments; and securities sold under agreements to repurchase.
Deposits were $4.3 billion at March 31, 2026, an increase of $59.5 million, or 1.4%, as compared to June 30, 2025. The deposit portfolio saw year-to-date increases in nonmaturity deposit accounts, which was partially offset by a decrease in certificates of deposit. Nonmaturity deposit growth was primarily driven by savings, NOW, non-interest bearing, and brokered money market deposit accounts. The decrease in certificates of deposit was largely driven by a $28.3 million reduction in brokered certificates compared to June 30, 2025. Brokered deposits totaled $226.4 million at March 31, 2026, a decrease of $8.7 million as compared to June 30, 2025. Public unit balances totaled $564.7 million at March 31, 2026, an increase of $13.9 million compared to June 30, 2025, primarily due to seasonal inflows. The average loan-to-deposit ratio for the third quarter of fiscal 2026 was 98.0%, as compared to 94.5% for the quarter ended June 30, 2025, and 94.2% for the same period of the prior fiscal year. The table below illustrates changes in deposit balances by type over recent periods:
Summary Deposit Data as of:
Mar. 31,
Dec. 31,
Sep. 30,
June 30,
Mar. 31,
(dollars in thousands)
2026
2025
2025
2025
2025
Non-interest bearing deposits
$
528,601
$
526,569
$
501,885
$
508,110
$
513,418
NOW accounts
1,153,078
1,167,626
1,098,921
1,132,298
1,167,296
MMDAs - non-brokered
305,903
309,806
326,387
329,837
345,810
Brokered MMDAs
21,073
10,817
28,129
1,414
2,013
Savings accounts
718,199
701,553
715,406
661,115
626,175
Total nonmaturity deposits
2,726,854
2,716,371
2,670,728
2,632,774
2,654,712
Certificates of deposit - non-brokered
1,408,723
1,412,394
1,409,332
1,414,945
1,373,109
Brokered certificates of deposit
205,338
179,569
200,430
233,649
233,561
Total certificates of deposit
1,614,061
1,591,963
1,609,762
1,648,594
1,606,670
Total deposits
$
4,340,915
$
4,308,334
$
4,280,490
$
4,281,368
$
4,261,382
Public unit nonmaturity accounts
$
471,659
$
490,060
$
424,391
$
435,632
$
472,010
Public unit certificates of deposit
93,061
94,039
112,963
115,204
103,741
Total public unit deposits
$
564,720
$
584,099
$
537,354
$
550,836
$
575,751
FHLB advances were $105.0 million at March 31, 2026, an increase of $981,000, or 0.94%, as compared to June 30, 2025. Outstanding FHLB overnight borrowings were $3.0 million as of March 31, 2026, as compared to no FHLB overnight borrowings as of June 30, 2025.
The Company's stockholders' equity was $573.5 million at March 31, 2026, an increase of $28.8 million, or 5.3%, as compared to June 30, 2025. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a $2.3 million reduction in accumulated other comprehensive losses (AOCL) as the market value of the Company's investments appreciated due to the decrease in market interest rates. The AOCL totaled $9.1 million at March 31, 2026 compared to $11.4 million at June 30, 2025. The Company does not hold any securities classified as held-to-maturity. The increase in stockholders' equity was partially offset by $18.1 million utilized to repurchase 313,000 shares of the Company's common stock year-to-date at an average price of $57.86 per share.
Quarterly Income Statement Summary:
The Company's net interest income for the three-month period ended March 31, 2026, was $43.2 million, an increase of $3.7 million, or 9.3%, as compared to the same period of the prior fiscal year. The increase, as compared to the same period a year ago, was attributable to an increase of 23 basis points in the net interest margin, from 3.44% to 3.67%, coupled with a 2.5% increase in the average balance of interest-earning assets. The primary driver of the net interest margin expansion, compared to the year ago period, was a decrease in the cost of interest-bearing liabilities of 32 basis points, partially offset by a decrease of six basis points in the yield on interest-earning assets.
Loan discount accretion and liability premium amortization related to the November 2018 acquisition of First Commercial Bank, the May 2020 acquisition of Central Federal Savings & Loan Association, the February 2022 merger of FortuneBank, and the January 2024 acquisition of Citizens Bank & Trust resulted in $352,000 in net interest income for the three-month period ended March 31, 2026, as compared to $1.5 million in net interest income for the same period a year ago. Combined, this component of net interest income contributed three basis points to net interest margin in the three-month period ended March 31, 2026, as compared to a 13-basis point contribution for the same period of the prior fiscal year, and as compared to a five-basis point contribution in the linked quarter, ended December 31, 2025, when net interest margin was 3.57%.
The Company recorded a PCL of $2.1 million in the three-month period ended March 31, 2026, as compared to a PCL of $932,000 in the same period of the prior fiscal year. The current period PCL was the result of a $1.8 million provision attributable to the ACL for loan balances outstanding and a $234,000 provision attributable to the allowance for off-balance sheet credit exposures. The factors considered when estimating a required ACL and PCL for loan balances outstanding is detailed above in the "Balance Sheet Summary".
The Company's noninterest income for the three-month period ended March 31, 2026, was $7.1 million, an increase of $424,000, or 6.4%, as compared to the same period of the prior fiscal year. The increase was primarily attributable to an increase in other noninterest income, deposit account charges and related fees, bank card interchange income, earnings on bank owned life insurance (BOLI), and net realized gains on sale of loans driven by residential mortgage banking. The increase in other non-interest income was primarily attributable to the gain on sale of membership interest in a tax credit investment. Deposit account charges and related fees benefited from increased frequency of charges for non-sufficient funds and increased wire fee income from an increase of our wire fee rates and elevated wire activity. Bank card interchange income benefited from a previously noted new contract with our card processor. Lastly, the increase in earnings on BOLI was mainly due to a mortality benefit recognized in the third quarter of 2026. These increases were partially offset by the decrease in other loan fees, reflecting a refinement of our fee recognition under ASC 310-20, Receivables, Nonrefundable Fees and Other Costs, with a greater portion now recognized in interest income over the life of the loan.
Noninterest expense for the three-month period ended March 31, 2026, was $26.2 million, an increase of $832,000, or 3.3%, as compared to the same period of the prior fiscal year. The increase as compared to the year-ago period was primarily attributable to increases in data processing, other noninterest expense, compensation and benefits, and occupancy and equipment expenses. Data processing costs increased due to higher transaction volumes and increased software licensing costs. Other noninterest expense increased largely due to loan product expense associated with expenses for lending activities, loan collection, and management of foreclosed real estate. The increase in compensation and benefits expense was primarily due to annual merit increases, as well as a trend increase in employee headcount. The majority of the merit increases took effect during the current quarter. This was partially offset by a decrease in compensation expense recognized in current periods as a result of our refined accounting for loan origination expenses under ASC 310-20. Occupancy and equipment expense growth was primarily driven by elevated maintenance and repair costs, remodel projects, and equipment purchases. Partially offsetting these increases from the prior year ...
