Preferred Bank Reports Third Quarter Results
Key Highlights
- ➤Net income $32.9 million, or $2.73 diluted EPS, down $3.0 million year over year
- ➤Net interest margin 3.49%, down from 3.73% in the prior quarter
- ➤Nonaccrual loans and 90-plus-day past-due loans rose to $109.4 million
- ➤$56.7 million mixed-use loan placed on nonaccrual status during the quarter
- ➤Total deposits increased $77.7 million, or 1.2%, linked quarter
Expert Statements
Li Yu, Chairman and CEO of Preferred Bank
“Net income for the third quarter ended September 30, 2026, was $32.9 million or $2.73 per diluted share. Both are lower than the second quarter due primarily to the interest recoveries last quarter and interest reversals this quarter. Deposits increased by $77.7 million or 1.2% for the quarter. It is highly likely that the competition for deposits and market conditions will continue into 2027. Loans (excluding loans held for sale) decreased $41.0 million after we placed a $56.7 million loan into held for sale status. Presently, we are seeing a stronger pipeline that hopefully will result in solid loan growth in the fourth quarter. The net interest margin for the third quarter was 3.49% compared to 3.73% in the second quarter. The variance is largely caused by a $2.1 million interest income reversal in the third quarter and $2.9 million of interest income recoveries in the second quarter. The recent fed rate increase should bring beneficial results to our net interest margin as our balance sheet is asset sensitive. Resolution of non-accrual loans is progressing although slower than we had hoped for. Several loans that were scheduled to be resolved in the quarter are now delayed to the fourth quarter or the first quarter 2027 because these assets are subject to bankruptcy courts’ decisions. This quarter we have outperformed our own expectations in non-interest income and non-interest expense. Our cost control remains effective under this inflationary environment. We believe the country’s economy will remain strong in 2027, and inflationary pressure will gradually subside. We are optimistic that Preferred Bank will continue to grow.”
LOS ANGELES, Oct. 23, 2026 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended September 30, 2026. Preferred Bank (“the Bank”) reported net income of $32.9 million or $2.73 per diluted share for the third quarter of 2026. This represents a decrease in net income of $3.0 million from the same quarter last year and a decrease of $592,000 from the previous quarter. The decrease compared to the prior year was due to a decrease in net interest income of $4.6 million partially offset by a $1.3 million increase in noninterest income and a small increase in noninterest expense of $661,000. The difference compared to the prior quarter was again due to net interest income which decreased by $3.3 million partially offset by an increase in noninterest income of $1.5 million and a decrease in noninterest expense of $1.6 million. During the quarter, the Bank placed a $56.7 million loan on nonaccrual status and four others totaling $13.5 million and the resulting reversal of interest income was $2.1 million which was the primary driver behind the decrease in net interest income.
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