Preferred Bank Stock Earnings Reports

Preferred Bank reported Q1 2026 net income of $31.3 million ($2.53/share), which was negatively impacted by placing a large nine-loan relationship on nonaccrual (totaling ~$177 million, primarily commercial real estate). Management sold three loans (one earlier and two on April 1) at par totaling ~$57.9 million, reducing the troubled relationship by roughly 50% and expects substantial resolution by Q3, with note sales and bankruptcy/foreclosure processes as potential avenues. Loan and deposit balances grew modestly sequentially (loans +1.1%, deposits +1.2%). Net interest margin was 3.57% for the quarter (down from 3.74% Q4) driven primarily by a nonrecurring reversal of interest income; management expects NIM to normalize in Q2 around ~3.70% as reversed interest is recouped. Deposit costs are declining but at a slower pace; March deposit cost was 3.10%, with approximately $1.35 billion of CDs maturing in the quarter at a blended rate of 3.89% (likely to reprice at similar or slightly lower rates). Noninterest expense was stable at roughly $23.5 million in Q1; excluding one-time payroll tax items tied to bonuses and stock vesting, management expects Q2 noninterest expense in the high $22M–low $23M range. The bank repurchased ~400,000 shares at a total average of ~$89.90/share and is prioritizing capital conservatively, favoring balance-sheet flexibility given macro and geopolitical uncertainty. Management describes loan pricing competition as severe for long-term fixed-rate CRE, is keeping underwriting discipline, and views the balance sheet as near neutral on rate sensitivity with a preference to stay flexible.