NB Bancorp Inc. (Nasdaq: NBBK) reported a drop in third-quarter profit Thursday, despite strong growth in its cannabis banking business.
Massachusetts-based bank holding company said its commercial real estate loans secured by cannabis facilities jumped by $49.1 million, or 18.3%, during the quarter to reach $317.3 million as of Sept. 30. Cannabis loans now make up 20% of NB Bancorp’s $1.55 billion commercial real estate portfolio, the largest exposure of any segment, according to the company’s earnings release.
Total loans increased 3.7% from the previous quarter to $4.25 billion, while deposits grew 3.2% to $4.04 billion, earnings showed. Operating profit came in at $13.1 million.
However, total net income fell 11% to $8.4 million from $9.5 million in the prior quarter. The company cited a $1.9 million loss on securities sales and a $2.5 million tax hit tied to solar investments.
“We continued with another strong quarter, with loan growth primarily funded by deposits, which grew 3.2% during the quarter,” Chairman and CEO Joseph Campanelli said in a statement. “Operating net income was $0.33 per share for the quarter, excluding the one-time charges taken during the quarter, which is expected to help our earnings run rate going forward.”
On the cannabis front, NB Bancorp said all of its borrowers in the sector were current on their loans and in good regulatory standing at the end of the quarter. The company noted its cannabis loans are secured entirely by real estate, with the “vast majority” having a loan-to-value ratio of 65% or less.
Outside of cannabis, NB Bancorp’s commercial real estate portfolio saw growth in multifamily, industrial and hospitality loans. But the company charged off $4 million on a non-owner-occupied office property loan purchased as a participation from another lender.
Total nonperforming loans fell to $16 million, or 0.38% of loans, from $20.7 million, or 0.51%, at the end of June.
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