Preferred Bank (PFBC) investor relations material

Executive summary

• Q3 net income was $32.9 million, or $2.73 per diluted share, down $3.0 million YoY and $592,000 QoQ; $2.1 million of interest reversals on loans placed on nonaccrual were the primary drag.

• Deposits increased $77.7 million, or 1.2%, QoQ; gross loans were essentially flat, while loans excluding held-for-sale balances declined $41.0 million.

Financial highlights

• Net interest income before provision was $66.7 million, down $4.6 million YoY and $3.3 million QoQ; NIM was 3.49% versus 3.92% and 3.73%, respectively. Excluding the $2.1 million adjustment, NIM was 3.60%.

• Noninterest income was $5.0 million, including a $431,000 gain on a called investment security; noninterest expense was $22.2 million, down from $23.7 million in Q2.

• Nine-month net income was $97.6 million, down 1.2% YoY; diluted EPS was $8.03, up 5.3%.

Outlook and guidance

• A stronger loan pipeline and delayed funding from loans in process are expected to support solid Q4 loan growth.

• Q4 operating expenses are expected to be $23 million–$24 million.

• Management expects a strong 2027 economy, relatively stable rates and gradually easing inflationary pressure; deposit competition and market pressures may persist into 2027.

• Asset sensitivity means higher Fed Funds rates could benefit NIM, subject to loan and deposit market conditions.