Preferred Bank (NASDAQ:PFBC) Q3 2020 Earnings Conference Call - Final Transcript
Oct 20, 2020 • 02:00 pm ET
Good day and welcome to the Preferred Bank Third Quarter 2020 Conference Call. [Operator Instructions]. I would now like to turn the conference over to Jeff Haas of Financial Profiles. Please go ahead.
Thank you, Jason. Hello everyone, and thank you for joining us to discuss Preferred Bank's financial results for the third quarter ended September 30, 2020. With me today from management are Chairman and CEO. Li Yu; President and Chief Operating Officer, Wellington Chen; Chief Financial Officer, Edward Czajka, and Deputy Chief Operating Officer, Johnny Hsu. Management will provide a brief summary of the results and then we will open up the call to your questions.
During the course of this conference call, statements made by management may include forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon specific assumptions, that may or may not prove correct. Forward-looking statements are also subject to known and unknown risks, uncertainties and other factors relating to Preferred Bank's operations, and business environment, all of which are difficult to predict and many of which, are beyond the control of Preferred Bank. For a detailed description of these risks and uncertainties, please refer to the SEC required documents that the Bank files with the Federal Deposit Insurance Corporation or FDIC. If any of these uncertainties materialize, or any of these assumptions prove incorrect, Preferred Bank's results could differ materially from its expectations, as set forth in these statements. Preferred Bank assumes no obligation to update such forward-looking statements.
At this time, I'd like to turn the call over to Mr. Li Yu, please go ahead.
Thank you very much ladies and gentlemen. Thank you for joining our earnings conference call. I am very pleased to report Preferred Bank's third quarter net income was $17.1 million or $1.15 per share. These numbers compare favorably with the prior two quarters. In fact, on the pre-provision pre-tax basis, third quarter net income and the nine months net income was a record high for our Bank.
The quarter's improvement is largely due to a significant reduction in deposit costs and continued overhead control. Many people have always considered Preferred Bank is an asset sensitive bank. But if you recall, about two quarters ago. I have already reported to you in our press release, and we are reaching a liability sensitive bank. I'm just very pleased, that we have something to show you in this quarter. Deposit costs will continue to decline in the fourth quarter, but not at the same magnitude and the same pace as the third quarter.
For the quarter, our net interest margin was 3.54%, a 3 basis points reduction from previous quarter, mainly due to a larger balance sheet and much increased excess cash on hand. However, on the ex-PPP basis, net interest margin actually improved to 3.61% from 3.59%.
Third quarter deposits continue to grow 1.5% or $64 million. However, our loan has declined $14 million. I guess the prolonged shutdown --