NorthEast Community Bancorp, Inc. Reports Q2 & H1 2026 Financial Results: Strong Asset Quality, Robust Construction Lending Growth, and Strategic Balance Sheet Actions

Key Highlights and Shareholder-Relevant Insights

• Net Income Decline: NECB reported net income of \$9.8 million (\$0.75 per basic share, \$0.72 per diluted share) for Q2 2026, down from \$11.2 million (\$0.85 per basic share, \$0.82 per diluted share) in Q2 2025. For H1 2026, net income was \$19.7 million (\$1.50 per basic share, \$1.46 per diluted share), compared to \$21.7 million (\$1.65 per basic share, \$1.60 per diluted share) in H1 2025. This represents a year-over-year decline, which may be price-sensitive as it indicates lower profitability despite strong operational growth.
• Return and Efficiency Metrics: For Q2 2026, return on average assets was 1.95% (down from 2.27%), return on average equity was 10.81% (down from 13.37%), and efficiency ratio was 41.99% (up from 40.52%). For H1 2026, return on assets was 1.96%, return on equity was 10.97%, and efficiency ratio was 42.81%. This decline in profitability ratios could impact investor sentiment.
• Exceptional Asset Quality: NECB maintained zero non-performing loans and non-performing assets at June 30, 2026 and December 31, 2025. The allowance for credit losses related to loans totaled \$4.8 million (0.25% of total loans), unchanged from December 2025. Asset quality metrics are very strong, reducing credit risk concerns.
• Construction Lending Expansion: Construction loan commitments and loans-in-process outstanding surged by 38.9% year-over-year, reaching over \$883 million in unfunded commitments—a 30.0% increase since year-end 2025. The demand for construction loans in high absorption submarkets (Bronx, Rockland, Orange, Sullivan Counties) is robust, potentially positioning NECB for future growth and higher interest income.
• Balance Sheet Trends:
  • Total assets increased \$51.7 million (2.5%) to \$2.1 billion, driven by a \$59.4 million increase in net loans.
  • Cash and cash equivalents decreased \$7.8 million (9.6%) to \$73.4 million, reflecting deployment of funds into loans.
  • Total stockholders’ equity rose by \$10.9 million (3.1%) to \$362.6 million, now 17.14% of total assets, up from 17.04%.
  • Borrowings increased sharply by \$120 million (171.4%) to \$190 million, as management reduced reliance on brokered deposits.
  • Total deposits declined by \$80.4 million (5.0%) to \$1.54 billion, due to decreases in certificates of deposit and savings accounts, partly offset by increases in money market and non-interest bearing deposits.
  • Advance payments by borrowers for taxes and insurance rose 8.9% to \$2.6 million.
• Loan Origination and Portfolio Composition:
  • Loans originated during H1 2026 totaled \$653.2 million, with \$606.7 million in construction loans (43.3% disbursed at closing), \$25.1 million in commercial and industrial loans, \$20.8 million in multi-family loans, and \$675,000 in mixed-use loans.
  • Construction loans are now \$1.4 billion (up from \$1.33 billion), making them the largest portfolio segment, followed by multi-family and commercial/industrial loans.
  • Allowance for credit losses for off-balance sheet commitments increased 32.3% to \$1.2 million, reflecting higher unfunded commitments.
• Net Interest Income and Margin:
  • Q2 net interest income was \$24.7 million (down 1.7% y/y), and H1 was \$48.8 million (down 1.1% y/y).
  • Net interest margin for Q2 was 5.14% (down from 5.35%), and for H1 was 5.06% (down from 5.23%). The decline was attributed to a 75bps decrease in the Federal Funds rate, reducing asset yields more than liability costs.
• Credit Loss Expense:
  • Q2 credit loss expense was \$860,000 (none in Q2 2025); H1 was \$860,000 (up from \$237,000 in H1 2025). This increase is primarily due to loan portfolio growth and higher off-balance sheet commitments.
  • Charge-offs in Q2 were \$520,000 (mostly against a commercial/industrial loan), with no recoveries. H1 charge-offs totaled \$547,000, down from \$602,000 in H1 2025.
• Non-Interest Income:
  • Q2 non-interest income fell 25.2% to \$642,000. H1 was down 31.3% to \$1.4 million. The decline was mainly due to unrealized losses on equity securities amid market volatility.
  • Other loan fees and service charges also decreased.
• Non-Interest Expense:
  • Q2 non-interest expense increased 1% to \$10.6 million; H1 increased 1.8% to \$21.5 million.
  • Higher salaries, occupancy, and other expenses were partially offset by declines in real estate owned and advertising expenses.
• Capital and Shareholder Activity:
  • Capital ratios remain robust: tier 1 leverage ratio of 17.32%, total risk-based capital ratio of 15.31% (well above regulatory requirements).
  • The company launched its third stock repurchase program in December 2025, targeting 10% of shares outstanding. As of June 30, 2026, 239,894 shares had been repurchased for \$5.6 million, including taxes and commissions. This ongoing buyback could be price-supportive.
  • Dividends declared totaled \$6.0 million and repurchases/excise taxes \$4.7 million for H1 2026.
  • NECB retains significant borrowing capacity (\$633 million from Federal Reserve Bank of New York, \$8 million from Atlantic Community Bankers Bank).
• Forward-Looking Statements and Risks:
  • Management highlights robust demand for construction lending in key NY submarkets.
  • Risks include interest rate volatility, regional economic conditions (including inflation/recession), legislative changes, competition, deposit trends, and real estate market values.
  • Recently enacted New York City rent regulations may impact certain property values and loan portfolios.
  • Cybersecurity and operational risks also flagged, along with changes in accounting principles.

Detailed Financial Tables (Selected)

Implications for Shareholders and Potential Share Price Drivers

• Net income and EPS declines may pressure share price, but exceptional asset quality and robust loan growth could offset concerns.
• Extensive construction lending growth positions NECB for higher future interest income, especially in high-demand NY submarkets, potentially appealing to growth investors.
• Strategic shift in funding (reducing brokered deposits, increasing borrowings) may lower funding costs and improve margins over time.
• Ongoing share repurchase program is price-supportive and signals management confidence in NECB’s value.
• Very strong capital ratios reduce regulatory and solvency risk, supporting dividend stability and future growth.
• Market volatility and regulatory risks (NYC rent freeze, interest rate changes, cybersecurity) could impact future earnings and asset values.

About NorthEast Community Bancorp

NorthEast Community Bancorp, Inc. (Nasdaq: NECB), headquartered in White Plains, NY, is the holding company for NorthEast Community Bank, with branches in New York and Massachusetts. More info at www.necb.com.

Contact

Kenneth A. Martinek
Chairman and Chief Executive Officer
Phone: (914) 684-2500

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The information is based on unaudited financial statements and management’s statements, which may contain forward-looking statements subject to risks and uncertainties. Investors should review NECB’s filings with the SEC and consult their own advisors before making any investment decisions.

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