Preferred Bank's Q3 net interest income falls due to nonaccrual loans

Preferred Bank

Yesterday 13:09

Overview
US commercial bank's Q3 net income and EPS declined yr/yr and sequentially
Lower net interest income, driven by interest reversals on nonaccrual loans, weighed on results
Company's total deposits rose 1.2% from the previous quarter

Outlook
Company expects competition for deposits and current market conditions to persist into 2027
Preferred Bank sees stronger loan pipeline, anticipates solid loan growth in Q4
Company expects recent Fed rate increase to benefit net interest margin

Result Drivers
INTEREST REVERSALS - Co said net interest income fell due to $2.1 mln reversal after placing loans on nonaccrual status
HIGHER DEBT COSTS - Co said net interest margin was also affected by higher coupon rate on subordinated debt
NONINTEREST INCOME - Co said higher noninterest income was driven by gains on investment securities and increased letters of credit fee income

Company press release: ID:nGNXF4Rgf

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q3 EPS
 
$2.73
 
Q3 Net Income
 
$32.95 mln
 
Q3 Net Interest Income
 
$66.71 mln
 
Q3 Net Interest Margin
 
3.49%
 

Analyst Coverage
The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 4 "hold" and no "sell" or "strong sell"
The average consensus recommendation for the banks peer group is "buy."
Wall Street's median 12-month price target for Preferred Bank is $111.00, about 2.2% above its October 22 closing price of $108.62
The stock recently traded at 10 times the next 12-month earnings vs. a P/E of 10 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)