Preferred Bank's Q3 net interest income falls due to nonaccrual loans
PFBC•Preferred Bank reported Q3 net interest income of $66.71 million and net income of $32.95 million, with EPS of $2.73. A $2.1 million reversal tied to loans placed on nonaccrual status weighed on net interest income; deposits rose 1.2% sequentially.
1. Q3 results
Preferred Bank's Q3 net income and EPS declined year over year and sequentially. Net interest income was $66.71 million, net interest margin was 3.49%, net income was $32.95 million and EPS was $2.73.
2. Interest income drivers
The bank said net interest income fell due to a $2.1 million reversal after loans were placed on nonaccrual status. Higher coupon costs on subordinated debt also affected net interest margin, while higher gains on investment securities and letters of credit fee income lifted noninterest income.
3. Outlook and deposits
Total deposits rose 1.2% from the previous quarter. Preferred Bank expects deposit competition and current market conditions to persist into 2027, sees a stronger loan pipeline and anticipates solid loan growth in Q4; it expects the recent Fed rate increase to benefit net interest margin.
