Key Highlights

  • Net income was $7.9 million, or $0.26 per diluted share, against a loss of $0.08 per share a year earlier.
  • Net interest income rose 10.0% from a year ago to $28.1 million, and the margin widened to 3.38% from 3.06%.
  • Gross loans held for investment reached $2.90 billion, up 22.3% annualised from the second quarter.
  • The efficiency ratio improved to 74.20% from 87.44% a year earlier.
  • Total deposits rose $332.3 million from the second quarter to $3.16 billion.

First Carolina Financial Services Earnings: Is the Swing to a $7.9M Profit Built to Last?

First Carolina Financial Services (NYSE:FCBM) reported third-quarter results on Tuesday, October 27, with net income of $7.9 million, or $0.26 per diluted share. That compares with $5.1 million, or $0.20, in the second quarter and a loss of $2.0 million, or $0.08, a year earlier. Per-share figures reflect the two-for-one stock split completed on June 17, 2026.

Net interest income grew, expenses fell, and the bank released $1.0 million of reserves rather than adding to them. The release gave no quantitative guidance, and the chief executive referred only to durable earnings power for the rest of the year.

The screen showed an EPS estimate of $0.22, and the as-screened surprise was 16.42%. Pre-tax income was $10.0 million.

Margin and Deposits: What Moved the Net Interest Margin to 3.38%?

Net interest income was $28.1 million, up 9.7% from $25.6 million in the second quarter and 10.0% from $25.5 million a year ago. The margin was 3.38%, up 15 basis points sequentially and 32 basis points year over year. Management cited loan repricing, higher new-origination yields and treasury management deposit growth, plus seasonal payments deposit inflows tied to the academic year.

The cost of total deposits was 2.71% versus 3.04% a year ago. Brokered deposits fell to 14.3% of deposits from 31.0%.

Total deposits were $3.16 billion, up $332.3 million, or 11.7%, from June.

Loan Growth and Credit: Did a Reserve Release Flatter the Quarter?

Gross loans held for investment reached $2.90 billion, up $154.1 million, or 5.6%, from the second quarter and 7.5% from a year earlier. Other commercial real estate loans rose to $1.64 billion, 56.6% of the book.

The provision was a $1.0 million release, compared with a $9.4 million provision a year ago. Net charge-offs were 0.01% of average loans annualised. The allowance was $21.3 million, or 0.73% of loans, down from 0.87% a year ago.

Nonperforming assets were $21.9 million, or 0.60% of total assets.

Payments Business and Cost Cuts: Why Did Expenses Fall $6.3M?

Non-interest income was $6.7 million, down 48.0% from $12.9 million. The prior-year quarter included $1.7 million of securities gains, and a banking-as-a-service partnership inherited with the BM Technologies acquisition was discontinued, which accounted for $3.6 million of the decline.

Non-interest expense fell 19.6% to $25.8 million from $32.1 million. Other professional fees dropped to $3.3 million from $6.0 million, and salaries and benefits were $12.4 million versus $14.5 million. The efficiency ratio improved to 74.20% from 87.44%.

Prepaid cards were introduced at the end of the quarter to pilot universities, extending higher-education disbursements.

Capital and What to Watch Next: Can Returns Keep Rising?

Total assets were $3.67 billion, and equity was $432.7 million, or 11.79% of assets. Return on average assets was 0.89% versus 0.60% in the second quarter. The 2019 subordinated debt was redeemed in early September. Watch whether the margin holds once seasonal deposits fade. No dividend was mentioned.