First Berlin Bancorp, Inc., the holding company for Fortifi Bank, reported a net loss of $666,834 for the third quarter of 2026, dropping from a net income of $2.2 million in the second quarter, and Greg Lundberg attributed the downturn to a commercial credit relationship that has since been resolved.
Resolving the Single Credit Event
Fortifi Bank recorded a provision for loan losses totaling $4.8 million during the quarter, with $3.9 million of that sum posted in September alone.
Management noted that a current review of the broader loan portfolio has identified no other credit exposures requiring loss recognition beyond amounts already provided for. Despite the sharp impact on the bottom line, the bank maintained steady underlying performance, anchored by disciplined expense management and a consistent net interest margin.
Balance Sheet Shifts and Asset Quality
Total net loans grew by $14.1 million during the quarter, reaching $564.8 million compared to $550.7 million in the prior period. Commercial real estate loans climbed by $8.9 million to hit $317.4 million, while residential real estate loans increased by $5.5 million to $127.6 million. Conversely, commercial and industrial loans edged down by $1.8 million to $99.3 million.
| Metric | Q3 2026 | Q2 2026 |
|---|---|---|
| Net Income / (Loss) | ($666,834) | $2,200,000 |
| Net Interest Margin | 4.07% | 4.04% |
| Provision for Loan Losses | $4,800,000 | Not Reported |
| Total Net Loans | $564,800,000 | $550,700,000 |
| Non-Performing Loans | $5,400,000 | $13,100,000 |
| Total Deposits | $589,700,000 | $608,300,000 |
Asset quality metrics showed substantial improvement following the resolution of the problematic commercial credit. Non-performing loans dropped sharply by $7.7 million to $5.4 million, accounting for 0.96% of total loans compared to 2.38% in the previous quarter. The allowance for credit losses adjusted to 1.18% of total loans, down from 1.48%.
Deposits and Core Margins
Total deposits decreased by $18.6 million during the quarter to settle at $589.7 million. Bank leadership explained that $6 million of this reduction came from the deliberate paydown of brokered deposits. Federal Home Loan Bank borrowings also decreased by $12.5 million down to $35 million.
Net interest and dividend income ticked up slightly to $7.7 million, yielding a stable net interest margin of 4.07% for the quarter and 4.06% across the first nine months of the year. Noninterest expense, when excluding the loan loss provision, remained tightly controlled at $4.7 million.
Tangible book value per common share decreased by $1.05 during the quarter to finish at $31.93. This reduction was driven primarily by the commercial credit event alongside rising unrealized losses on securities resulting from broader interest rate fluctuations. On a year-to-date basis, however, tangible book value remains higher by $0.84 per share, marking a 2.70% year-over-year increase.
