$NARA · Narragansett Bancorp, Inc.
Narragansett Financial Corporation filed its Q2 2026 10-Q, reporting net income of $3.47M, up 54% from $2.25M in Q2 2025. Net interest income rose 14.3% to $21.4M as interest expense on deposits fell to $11.2M from $12.9M. The provision for credit losses declined to $800K from $2.0M. However, credit quality metrics deteriorated sharply: loans past due 30+ days nearly doubled to $10.3M, and the allowance for credit losses covered just 70.78% of nonperforming loans versus 456.06% a year ago. The filing also details a pending holding company reorganization into a two-tier structure with Narragans
- Net income rose 54% YoY to $3.47M in Q2 2026 from $2.25M in Q2 2025.
- Net interest income jumped 14.3% to $21.4M as deposit costs fell faster than loan yields.
- Provision for credit losses dropped 60% to $800K in Q2 2026 from $2.0M a year earlier.
- Nonperforming loan coverage ratio collapsed to 70.78% from 456.06% a year ago.
- Total loans past due 30+ days nearly doubled to $10.3M from $5.3M at June 30, 2025.
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A 54% earnings surge masks a sharp credit-quality deterioration: past-due loans doubled and NPL coverage fell to dangerously thin levels, signaling potential provisioning pain ahead.
Community banks are benefiting from easing deposit cost pressure, but credit quality divergence is emerging — Narragansett's past-due loan spike and collapsing NPL coverage ratio stand out negatively versus peers still reporting stable asset quality.
The allowance for credit losses as a percentage of nonperforming loans plunged to 70.78% from 456.06% YoY, while past-due loans doubled to $10.3M. Management warns that actual future provisions may exceed past provisions, which would adversely impact financial condition.
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