Third Quarter of 2026 Financial Highlights:
- Quarterly net income of $2.0 million, or $0.55 earnings per share compared to $1.8 million, or $0.48 earnings per share, during the second quarter of 2026.
- Loans increased $13.5 million during the third quarter of 2026, or annualized rate of 9.6%. For the nine months ended September 30, 2026, annualized loan growth rate of 11.7%.
- Net interest margin of 4.28% during the third quarter of 2026 compared to 4.29% during the second quarter of 2026 and 4.21% during the third quarter of 2025.
- Total cost of deposits of 1.36% during the third quarter of 2026 compared to 1.37% during the second quarter of 2026 and 1.51% during the third quarter of 2025.
- Capital ratios remained well above regulatory requirements.
TACOMA, WA / ACCESS Newswire / October 29, 2026 / Commencement Bancorp, Inc. (OTCQX:CBWA) (the "Company", "we," or "us"), the parent company of Commencement Bank (the "Bank"), reported net income of $2.0 million, or $0.55 per share, for the third quarter of 2026 compared to $1.8 million, or $0.48 per share, for the second quarter of 2026. Comparable earnings were $1.9 million, or $0.49 per share, for the third quarter of 2025. The Bank recorded return on average assets of 1.11% for the third quarter of 2026, compared to 1.01% for the second quarter of 2026 and 1.06% for the third quarter of 2025. The return on average common equity was 12.67% for the third quarter of 2026 compared to 11.81% for the second quarter of 2026 and 13.10% for the third quarter of 2025.
"I'm pleased with our continued momentum this quarter, marked by sustained growth in loans and stable core deposits while improving profitability on both a linked-quarter and year-over-year basis. Our disciplined approach to managing funding costs has helped us maintain a strong net interest margin over the past several quarters. The third-quarter results underscore the strength of our core business and our long-term focus on sustainable, profitable growth," said John E. Manolides, Chief Executive Officer.
"Our commercial and retail banking teams continue to capture market share by proving that agility, local underwriting autonomy, and simply talking to a real person still matter in an increasingly consolidated, digital-first banking landscape," stated Nigel L. English, President & Chief Operating Officer. "We remain focused on an intentional, long-term vision to scale our regional footprint and deepen our community and market impact. We are uniquely positioned to be the premier community banking partner for growing businesses and capture adjacent commercial lending opportunities. Our highly disciplined approach to relationship banking is directly reflected in our respectable financial results."
Balance Sheet
Total assets decreased $20.5 million to $719.3 million at September 30, 2026 from $739.8 million at June 30, 2026.
Federal funds sold decreased $26.8 million to $10.5 million at September 30, 2026 due to the decrease in deposits during the third quarter of 2026. The Company actively monitors its liquidity for anticipated uses.
Investment securities available for sale decreased $1.9 million, or 2.6%, to $72.1 million at September 30, 2026 from $74.0 million at June 30, 2026. This decrease was due to an increase in the unrealized losses of $1.6 million and principal payments of $2.4 million, offset by the purchase of investment securities of $2.1 million.
Loans receivable increased $13.5 million, or 9.6% annualized, to $570.1 million at September 30, 2026 from $556.6 million at June 30, 2026, due to loan originations, offset by loan payments. The Bank originated commitments of $40.0 million during third quarter of 2026 compared to $60.0 million during the second quarter of 2026 and $43.0 million during the third quarter of 2025.
Total deposits decreased $23.0 million to $636.6 million at September 30, 2026 from $659.6 million at June 30, 2026 due primarily to seasonality. Annualized deposit growth for the nine months ended September 30, 2026 was 5.8%. Noninterest bearing deposits, as a percentage of total deposits was 30.4% at September 30, 2026.
During the third quarter of 2026, the Company raised an additional $750,000 of fixed-to-floating subordinated notes ("Notes"), for a total of $5.8 million as of September 30, 2026. The Notes will support organic growth while maintaining a strong capital position. The Notes are intended to qualify as Tier 2 capital for regulatory purposes.
Credit Quality
The Bank had nonperforming assets of $1.8 million, or 0.25% of total assets at September 30, 2026 compared to $488,000, or 0.07% of total assets at June 30, 2026. The increase was related to classification of two credit relationships as nonaccrual. All non-performing loans are recorded at the lessor of fair market value or book balance. The Bank recorded provision for credit losses of $141,000 during the third quarter of 2026, a decrease of $120,000 from the second quarter of 2026, to provide for its loan growth. The provision total includes the reversal of provision for unfunded credit losses of $16,000 during the third quarter of 2026. The allowance for credit losses to loans receivable remains strong at 1.18% at both September 30, 2026 and June 30, 2026.
The percentage of classified loans (loans rated Substandard or worse) to loans receivable decreased to 0.86% at September 30, 2026 from 0.89% at June 30, 2026. There were no changes to the relationships identified as classified loans during the third quarter of 2026. The Bank proactively downgrades loans if the borrower is experiencing financial difficulties and upgrades loans if the borrower demonstrates sustained financial performance.
Liquidity
The Bank had ample liquidity with both on-and off-balance sheet sources. Total on-balance sheet liquidity of $109.8 million, or 15.3% of total assets, at September 30, 2026, includes unencumbered cash, cash equivalents and investment securities available for sale. The Bank also had access to available Federal Home Loan Bank advances, Federal Reserve's discount window, and federal funds lines with correspondent banks of $237.7 million at September 30, 2026.
Income Statement
Net interest income increased $148,000, or 2.1%, to $7.3 million for the third quarter of 2026 compared to $7.1 million for the second quarter of 2026 due to the increase in interest income of $238,000, offset partially by an increase in interest expense of $90,000. Interest income increased from the increase of average interest earning assets of $8.1 million during the third quarter of 2026 compared to the second quarter of 2026. Net interest income increased $459,000 million, or 6.7%, compared to the third quarter of 2025. Net interest income was impacted by the reduction of the federal funds rate of 75 basis points ("bps") in the latter half of 2025, reducing variable rate loans and new loan origination pricing. While the federal funds rate increased in September 2026, the impact was minimal during third quarter of 2026.
Net interest margin ("NIM") decreased one bps to 4.28% during third quarter of 2026 from 4.29% during the second quarter of 2026 due to the reversal of interest income of a loan classified as nonaccrual during the third quarter of 2026. The reversal negatively impacted NIM by seven bps and negatively impacted loan yield by ten bps. Additionally, the cost of total interest bearing liabilities increased eight bps to 2.02% during the third quarter of 2026 from 1.94% during the second quarter of 2026 based on the issuances of subordinated debentures. NIM increased seven bps compared to 4.21% during the third quarter of 2025 due to the combination of a decrease in total cost of deposits of 15 bps, offset by a decrease in yield on loans of eight bps. Adjusted for the reversal of interest income from the nonaccrual, NIM increased 14 bps from the third quarter of 2025 and loan yield increased one basis point.
Interest income on loans increased $248,000, or 2.9%, during the third quarter of 2026 compared to the second quarter of 2026 due primarily to an increase in average balances of $15.1 million. The yield on net loans decreased six bps to 6.19% for the third quarter of 2026 from 6.25% for the second quarter of 2026 due to the previously mentioned reversal of interest income from a nonaccrual loan. This decrease was offset by higher yields on new loan originations and renewals, and higher repricing rates on the adjustable portfolio. Interest income on loans increased $673,000 compared to the third quarter of 2025 due to an increase in the average balance of loans of $49.7 million.
Interest income on investments decreased $212,000 during the third quarter of 2026 compared to the third quarter of 2025 due to a decrease in average balances of $12.5 million due primarily to principal payments. In addition, the Bank experienced negative interest impacts of its interest rate swap given the lower rate environment during the third quarter of 2026 compared to positive interest impact in the higher rate environment during the third quarter of 2025.
Interest expense on deposits increased $19,000, or 0.9%, during the third quarter of 2026 compared to the second quarter of 2026 due to an increase in average balance of certificate of deposit accounts of $2.7 million. In addition, the cost of certificate of deposits increased 13 bps to 3.23% during the third quarter of 2026 due to competitive pricing. Total cost of deposits decreased one bps to 1.36% for third quarter of 2026 compared to 1.37% for the second quarter of 2026 based on the mix of customer deposits. Total cost of deposits decreased 15 bps compared to 1.51% for the third quarter of 2025. Noninterest bearing demand deposits represent 30.4% of total deposits at September 30, 2026 compared to 30.2% at June 30, 2026 and 29.3% at December 31, 2025.
Interest expense on subordinated debentures increased $71,000 to $84,000 during the third quarter of 2026 compared to $13,000 during the second quarter of 2026 due to the increase in the Notes of $750,000 during the third quarter as well as the additional days outstanding for the original amount.
Total non-interest income increased $103,000, or 23.2%, during the third quarter of 2026 compared to the second quarter of 2026 due to recognition of interest rate swap income of $93,000 during the third quarter. There were no swap fees recognized during the third quarter of 2025.
Total non-interest expense increased $80,000, or 1.6%, during the third quarter of 2026 compared to the second quarter of 2026 due to an increase in total compensation, primarily related to the newly hired teams and incentive awards. Total non-interest expense increased $480,000 compared to the third quarter of 2025 due primarily to an increase in compensation and employee benefits related to the new teams, employee merit increases, additional stock compensation expense from newly granted awards, and payroll taxes and employee benefits.
Income tax expense increased $65,000, or 16.8%, during the third quarter of 2026 compared to the second quarter of 2026 due primarily to an increase in net income. The effective tax rate for the third quarter of 2026 increased to 18.2% compared to 17.6% during the second quarter of 2026 based on the decreased proportion of income on tax-exempt loans to net income. The effective tax rate decreased compared to 20.0% for the third quarter of 2025 based on the increase in tax-exempt loans in 2026.
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About Commencement Bancorp, Inc.
Commencement Bancorp, Inc. is the holding company for Commencement Bank, headquartered in Tacoma, Washington. Commencement Bank was formed in 2006 to provide traditional, reliable, and sustainable banking in Pierce, King, Kitsap, and Thurston counties and the surrounding areas. Their team of experienced banking experts focuses on personal attention, flexible service, and building strong relationships with customers through state-of-the-art technology as well as traditional delivery systems. As a local bank, Commencement Bank is deeply committed to the community. For more information, please visit www.commencementbank.com. For information related to the trading of CBWA, please visit www.otcmarkets.com.
For further discussion, please contact the following:
John E. Manolides, Chief Executive Officer | 253-284-1802
Nigel L. English, President & Chief Operating Officer | 253-284-1801
Brandi Parker, Executive Vice President & Chief Financial Officer | 253-284-1803
Forward-Looking Statement Safe Harbor: This news release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Forward-looking statements describe Commencement Bancorp, Inc.'s projections, estimates, plans and expectations of future results and can be identified by words such as "believe," "intend," "estimate," "likely," "anticipate," "expect," "looking forward," and other similar expressions. They are not guarantees of future performance. Actual results may differ materially from the results expressed in these forward-looking statements, which because of their forward-looking nature, are difficult to predict. Investors should not place undue reliance on any forward-looking statement, and should consider factors that might cause differences including but not limited to the degree of competition by traditional and nontraditional competitors, declines in real estate markets, an increase in unemployment or sustained high levels of unemployment; changes in interest rates; greater than expected costs to integrate acquisitions, adverse changes in local, national and international economies; changes in the Federal Reserve's actions that affect monetary and fiscal policies; changes in legislative or regulatory actions or reform, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act; demand for products and services; changes to the quality of the loan portfolio and our ability to succeed in our problem-asset resolution efforts; the impact of technological advances; changes in tax laws; and other risk factors. Commencement Bancorp, Inc. undertakes no obligation to publicly update or clarify any forward-looking statement to reflect the impact of events or circumstances that may arise after the date of this release.
SOURCE: Commencement Bank
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