Overview

• US commercial bank's Q2 net income and EPS rose from prior quarter and yr-ago period

• Net interest income increased, aided by loan growth and interest recoveries on nonaccrual loans

• Non-performing and criticized loans declined sharply, with stable credit loss reserves

Outlook

• Preferred Bank says it is optimistic about its current operating environment

Result Drivers

• INTEREST RECOVERIES - Net interest income rose due to $2.9 mln in interest recoveries from loan sales and payoffs

• LOAN QUALITY IMPROVEMENT - Non-performing and criticized loans decreased sharply, reducing reserve requirements

• STRONG LOAN ORIGINATIONS - Loan origination activity was strong, supporting a $124.8 mln increase in total loans

Company press release: ID:nGNX9wyGWk

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q2 EPS		$2.78
Q2 Net Income		$33.54 mln
Q2 Net Interest Income		$69.99 mln
Q2 Net Interest Margin		3.73%

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "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 $102.00, about 3.8% below its July 21 closing price of $106.04

• The stock recently traded at 10 times the next 12-month earnings vs. a P/E of 9 three months ago

Reuters Recommended Reads

• July 21 - Western Alliance Bancorp Q2 net income rises on loan growth

• July 22 - City Holding Q2 net interest income rises as loan yields improve

• July 21 - First Financial Bancorp Q2 adjusted EPS hits record on loan growth

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