Endeavor Bancorp earnings reached a record $2.12 million, or $0.44 per diluted share, in the third quarter of 2026 as net interest income increased and funding costs declined. The Southern California bank holding company announced the unaudited results on October 26, alongside deposit growth, a smaller loan portfolio and mixed credit-quality indicators.
Key Takeaways
- Net income exceeded both the preceding quarter and the third quarter of 2025.
- Net interest margin held at 4.41% as funding costs declined alongside earning-asset yields.
- Loan payoffs outpaced new lending, while net charge-offs rose despite a lower nonperforming-loan ratio.
Endeavor Bancorp earnings rise as interest income strengthens
Third-quarter net income compared with $1.89 million, or $0.40 per diluted share, in the preceding quarter and $1.73 million, or $0.36 per diluted share, a year earlier. Endeavor’s second-quarter earnings announcement established the preceding-quarter profit and a net interest margin of 4.41%.
Net interest income reached $9.1 million, up 5.5% sequentially and 17.9% year over year. The company attributed improved earnings to higher interest income and disciplined funding costs.
Net interest margin remained unchanged from the second quarter and was above the 4.09% recorded a year earlier. The cost of funds fell to 2.04% from 2.12% sequentially, while the yield on earning assets declined to 6.30% from 6.37%. Lower funding costs helped preserve the margin despite weaker asset yields.
Non-interest expense rose to $5.8 million, while non-interest income fell to $298,000. Even so, the efficiency ratio improved to 62.1% from 63.2% in the second quarter, indicating that expenses consumed a smaller share of revenue.
| Item | Details |
|---|---|
| Total assets | $835.0 million at September 30, 2026. |
| Tangible book value per share | $15.46, compared with $15.11 at June 30, 2026. |
| Shareholders’ equity | $68.2 million, compared with $66.6 million at June 30, 2026. |
| Bank total risk-based capital ratio | 13.33%, compared with 13.02% at June 30, 2026. |
Deposit growth strengthens funding as loans contract
Loans outstanding declined $19.9 million during the quarter to $644.9 million at September 30. Payoffs of $47.6 million exceeded new loan production of $28.5 million as clients completed, sold or refinanced projects.
President Steve Sefton said many repaid loans were seasoned, lower-yielding credits. He expects redeployment into new lending at current market rates to benefit net interest margin over time; that remains a management expectation rather than a realized result.
Deposits increased $6.2 million to $731.2 million. Excluding wholesale deposits, core relationship deposits grew approximately $18.4 million, while wholesale funding declined. Combined with the smaller loan book, deposit growth lowered the loan-to-deposit ratio to 88.2% from 91.7%.
Cash balances totaled $147.8 million, representing 17.7% of assets. Available borrowing capacity through the Federal Home Loan Bank and Federal Reserve discount window totaled $231.2 million.
Credit indicators move in different directions
Nonperforming loans declined to 0.36% of total loans from 0.45% at June 30. However, third-quarter net charge-offs totaled $826,000, compared with net recoveries of $52,000 in the second quarter and $8,000 a year earlier.
The credit-loss provision was $525,000, below the preceding quarter’s $651,000 but above the year-earlier $396,000. The allowance for credit losses ended September at $10.6 million, or 1.65% of loans.
The lower nonperforming-loan ratio therefore did not represent an across-the-board improvement in credit performance. Endeavor also reported that all capital ratios remained well above regulatory minimums.
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