FIRST NORTHERN COMMUNITY BANCORP (FNRN)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered net income of $6.0M ($0.38 diluted EPS), up 9.6% year over year (YoY), aided by a sharply lower tax expense from purchased investment tax credits; pre-tax income was down YoY, so EPS strength was tax-driven rather than core-operating .
• Net interest margin (NIM) was 3.75% (+10 bps YoY, -10 bps QoQ), reflecting higher securities yields and disciplined deposit pricing; interest-bearing liability costs fell 7 bps YoY to 1.49% (from 1.56%) .
• Operating leverage softened sequentially (efficiency ratio 64.43% vs 58.91% in Q2), as non-interest expense rose QoQ and YoY; no provision for credit losses this quarter (vs a $0.55M reversal in Q3 2024) .
• Book value per share rose $0.70 QoQ to $13.03 (up 5.7%), continuing multi-quarter improvement; balance sheet at 9/30: assets $1.91B, loans $1.06B, deposits $1.69B; the Company remained “well capitalized” (total risk-based capital >10%) .
• Key investor focus: durability of NIM, expense discipline, and the non-recurring nature of the tax credit strategy which materially lowered the effective tax rate in Q3 .

What Went Well and What Went Wrong

• What Went Well

  • NIM expanded YoY to 3.75% on higher securities yields and disciplined deposit pricing; interest-bearing liability costs declined 7 bps YoY to 1.49% .
  • Tax planning strategy (purchase of investment tax credits) significantly reduced the effective tax rate, lifting net income vs both prior quarter and prior year despite softer pre-tax income .
  • Book value per share increased to $13.03 (up $0.70 QoQ), continuing a 2025 trend of capital accretion and AOCI improvement; the Company remained well-capitalized .
  • CEO quote: “We are pleased to report another strong quarter… Our net interest margin expanded to 3.75%… disciplined deposit pricing… We recorded no provision for credit losses in the quarter” .

• What Went Wrong

  • Sequential NIM compression of 10 bps (3.75% vs 3.85% in Q2) and a weaker efficiency ratio (64.43% vs 58.91% in Q2) signaled some operating pressure QoQ .
  • Non-interest expense increased both YoY (+9.05%) and QoQ (+9.46%), weighing on pre-tax income (down 13-14% YoY and QoQ) .
  • No organic credit benefit this quarter (no provision), versus a $0.55M reversal in Q3 2024; pre-tax income also reflects the absence of a positive provision swing YoY .

Financial Results

Income Statement Metrics (Quarterly)

Margins & Profitability

Per Share & Share Count

Balance Sheet Snapshots

Contextual notes:

• As of 9/30/25: assets $1.91B, loans $1.06B, deposits $1.69B; “well capitalized” (total risk-based capital >10%) .
• Average interest-bearing liability rate declined to 1.49% in Q3 2025 vs 1.56% in Q3 2024 (–7 bps) .
• FHLB average balances used in Q2 (avg $6.6M) but none in Q3, aiding funding costs .

Guidance Changes

Note: The Q3 2025 press release and 8-K do not include forward financial guidance ranges .

Earnings Call Themes & Trends

Note: No Q3 2025 earnings call transcript was available in the document set accessed; themes reflect Q1–Q3 press releases and 8-Ks.

Management Commentary

• “Our net interest margin expanded to 3.75%, up 10 basis points from 3.65% for the same quarter last year. This improvement reflected higher yields on our securities portfolio and disciplined deposit pricing that reduced our interest-bearing liability costs by 7 basis points when compared to the same quarter last year.” — Jeremiah Z. Smith, President & CEO .
• “We recorded no provision for credit losses in the quarter” .
• “We executed a tax planning strategy… purchase of investment tax credits… recognized as a reduction to income tax expense in the quarter utilized.” .
• “Book value per share… increased to $13.02… up $0.70, or 5.7%, from $12.32 at the end of the prior quarter.” .

Q&A Highlights

• No earnings call transcript was available in the document set accessed for Q3 2025; therefore, Q&A themes and guidance clarifications are not available. Core commentary above reflects management’s press release statements .

Estimates Context

• Wall Street (S&P Global) consensus estimates for Q3 2025 EPS and revenue were not available for FNRN at the time of this analysis; therefore, no beat/miss comparison vs consensus can be provided. Actual diluted EPS was $0.38 from company-reported results .
• Implication: Street models may need to reflect the one-time nature of Q3’s lower tax expense; underlying pre-tax trends (NIM, opex) drive forward trajectory .

Key Takeaways for Investors

• EPS outperformance vs prior year was tax-driven: pre-tax income fell YoY, but a significantly lower tax expense (from purchased investment tax credits) boosted net income; investors should normalize for a more typical tax rate in forward models .
• Core margin dynamics remain constructive YoY (NIM +10 bps), though sequential pressure emerged in Q3 (–10 bps QoQ); watch asset yield progression vs deposit mix/costs into Q4 .
• Expense control is a swing factor: efficiency ratio deteriorated QoQ to 64.43%; focus on run-rate non-interest expense and operating discipline .
• Funding costs improved YoY (interest-bearing liabilities –7 bps), aided by reduced use of FHLB advances in Q3; stability in non-interest-bearing deposits remains an important support .
• Capital accretion continues: book value per share rose for a third straight quarter to $13.03; the Company remains well-capitalized (>10% total risk-based capital) .
• Loan mix continues shifting toward commercial with CRE/residential runoff; credit costs were neutral this quarter after earlier-year reserve volatility (Q1 specific reserve, Q2 release) .
• Near-term trading focus: sustainability of NIM amid rate path, trajectory of opex/efficiency, and the non-recurring tax credit benefit. Medium-term thesis: disciplined deposit pricing, conservative credit stance, and capital accretion underpin valuation resilience .