First Bank's Q2 2026: The Growth Engine Fires Again
After a year of credit cleanup, First Bank reports strong loan and deposit growth, a stable margin, and a strategic shift toward C&I lending.
FRBA · Earnings Call · 2026-07-24
A Return to Growth
First Bank's second-quarter report marks a decisive break from the recent past. After two consecutive quarters of elevated credit costs and modest balance-sheet expansion, the New Jersey-based regional bank posted the "much better quarter" that CEO Patrick Ryan promised. Loans grew $68 million and deposits jumped $96 million, pushing the bank "close to being back on pace" for its annual $200 million loan growth goal.The growth is not just numerical; it signals a strategic re-acceleration. As Ryan put it, “The return of stronger asset growth feels sustainable.” — Patrick L. Ryan, Chief Executive Officer · 2026-07-24 That confidence is underpinned by a "strong pipeline" and a "busy production engine," with new loan fundings totaling $174 million in Q2, up 64% from the previous quarter.
The balance sheet growth is broad-based. Deposits, particularly noninterest-bearing balances, surged. CFO Andrew Hibshman noted, “Our deposits grew $96 million during the quarter... with noninterest bearing balances increasing $45.1 million.” — Andrew L. Hibshman, Chief Financial Officer · 2026-07-24 This is a welcome reversal from the earlier funding crunch, when deposit competition was forcing the bank to pay up for brokered money.
Credit Normalizes and the Mix Shifts
Perhaps the most significant structural change is the quiet improvement in credit quality. The small business portfolio, which dominated management commentary throughout 2025 and early 2026, is showing signs of stabilization. CFO Andrew Hibshman stated, “We expect to see continued improvement in credit costs in the small business portfolio.” — Andrew L. Hibshman, Chief Financial Officer · 2026-07-24 Charge-offs dropped sharply, and the provision for credit losses fell $3.3 million sequentially.The bank is also deliberately reshaping its loan book away from investor real estate. Chief Lending Officer Peter Cahill highlighted that “C&I and owner occupied real estate made up 61.0% of our new loans during the first half of the year.” — Peter J. Cahill, Chief Lending Officer · 2026-07-24 This is part of a multi-year effort to diversify into relationship-based commercial lending. The keyword trajectory confirms the shift, with C&I lending rising in prominence.
Notably, the bank avoided a credit scare on the one new nonaccrual CRE loan. Patrick Ryan noted it is "comfortable" given "collateral and guarantor support," and the expectation is full recovery. This is a stark contrast to the prior quarter when the bank was actively managing downgrades in its small business book; as Ryan said in April, “small businesses have been feeling some stress given the volatility in the overall economy.” — Patrick Ryan, CEO · 2026-04-28 The shift in tone could not be more different.
Margin Stability and Expense Discipline
The margin held at 3.68%, down only 1 basis point sequentially, reflecting the bank's ability to offset deposit pricing pressure with higher-yielding new loans. Management guides to "flat to down slightly" on the margin going forward. Meanwhile, noninterest expense fell to $20.1 million, producing a 54.5% efficiency ratio—the 28th consecutive quarter below 60%. The bank continues to demonstrate that growth can be funded without a proportionate rise in costs.In a market where many regional banks are still digesting credit stress, First Bank's re-acceleration is a distinctive signal. The asset growth narrative, combined with a disciplined balance sheet, positions the company for a stronger back half of 2026.
We continue to manage a well balanced asset and liability position and we anticipate continued loan and deposit growth will drive increased net interest income regardless of what happens with rates.