Prairie Operating Co. (PROP) Income Statement

The negative NII, which has ranged from -$1.1M to -$9.0M over the past year, suggests that interest expenses consistently exceed interest income, a structural challenge for a company classified as a bank. This trend appears to be driven by high funding costs relative to asset yields, and the magnitude has not improved even as total revenue expanded from $7.9M in 2024Q4 to $83.4M in 2026Q1. Investors should monitor whether management can reprice assets or reduce funding costs to reverse this negative spread.

The NIM of -0.8% in 2026Q1, though slightly better than the -1.1% in 2025Q2, remains deeply negative, implying that the cost of funds is significantly higher than the yield on interest-earning assets. This is atypical for a depository institution and suggests that the company may be holding low-yielding assets funded by higher-cost liabilities. The slight improvement may indicate some stabilization, but the absolute level remains a critical concern for profitability.

The efficiency ratio, which measures non-interest expense as a percentage of total revenue, has improved dramatically from 74.0% in 2024Q4 to 20.6% in 2026Q1, driven by a tenfold increase in revenue while expenses grew at a slower pace. This suggests that the company is scaling its operations effectively, but the improvement is partly due to the low base of revenue in earlier quarters. The ratio remains favorable compared to peers, but sustainability depends on continued revenue growth.

The provision expense has grown more than fifteen-fold over the past five quarters, from $2.0M in 2024Q4 to $31.8M in 2026Q1, even as total revenue increased. This suggests that the company is setting aside significant reserves for potential loan losses, which may indicate a deteriorating credit portfolio or a more conservative approach to provisioning. The elevated provision expense has directly impacted net income, which swung to a loss of $152.7M in 2026Q1, underscoring the materiality of credit costs.

With non-interest income comprising nearly all of total revenue, Prairie's earnings are almost entirely dependent on fee income, which is unusual for a bank and introduces concentration risk. This fee income has grown from $7.9M in 2024Q4 to $83.2M in 2026Q1, suggesting a successful pivot to fee-generating activities, but it also means that any disruption in these fee streams could have outsized impact on profitability. The sustainability of this fee income warrants close monitoring, as it may be tied to volatile market conditions or one-time events.