Private Bancorp of America's Q3 2025 Earnings: Navigating Rising Rates with Resilient Deposits and Prudent Strategy

Private Bancorp of America (PBAM) reported its Q3 2025 earnings on October 17, 2025, delivering mixed results in a challenging interest rate environment. While net income of $9.7 million and earnings per share (EPS) of $1.65 fell short of expectations, the company demonstrated resilience in core deposit growth and disciplined balance sheet management. These strengths, combined with strategic adaptations to rising rates, position PBAM as a compelling case study for investors assessing regional banks in a high-rate world.

Profitability: Margin Pressure and Strategic Adjustments

PBAM's Q3 net income of $9.7 million reflected a 2.6% year-over-year increase but a slight decline from $10.4 million in the prior quarter, according to the company's press release. The net interest margin (NIM) narrowed to 4.65%, down from 4.94% in Q2 2025, primarily due to a $1.3 million reversal of interest income and a $1.0 million increase in reserves for nonaccrual loans, per the MarketBeat earnings page. However, the NIM still outperformed the 4.44% recorded in Q3 2024, underscoring the company's ability to adapt to rate hikes.

The cost of total deposits declined to 2.02% in Q3 2025, a 3.0% reduction from the prior quarter and a 22.9% drop year-over-year, per the press release. This improvement, driven by a 65.7% reduction in brokered deposits, was highlighted in an Investing.com report, and has cushioned the impact of margin compression. CEO Rick Sowers emphasized that disciplined balance sheet management and a focus on "quality relationships" have enabled PBAM to maintain a 15.28% return on average tangible common equity—a robust metric in a sector grappling with margin erosion, per an RMA survey.

Revenue and Deposit Growth: A Pillar of Stability

Core deposits surged by $121.1 million (5.8%) quarter-over-quarter to $2.19 billion, with year-over-year growth of 17.0%, as the company's press release noted. This expansion, coupled with lower deposit costs, has provided a buffer against the stagnation in loan growth. Loans held-for-investment (HFI) remained flat at $2.08 billion in Q3 2025, as suppressed demand and "unreasonable market pricing" constrained origination, according to an S&P Global article. Yet, management noted strong loan pipelines entering Q4, suggesting potential for recovery.

The deposit growth story is particularly noteworthy in a rising rate environment. As the 2025 RMA CRO Outlook Survey highlights, banks are increasingly prioritizing deposit stability to mitigate risks such as liquidity shocks, a trend also noted in an Oliver Wyman report. PBAM's focus on organic deposit growth—rather than relying on volatile brokered funding—aligns with this industry shift and enhances its resilience.

Strategic and Risk Management: Adapting to a High-Rate World

PBAM's management has adopted a dual strategy of relationship-driven banking and risk mitigation. Sowers emphasized that the company's "expanding quality relationships" in served communities have fueled deposit growth while reducing reliance on non-bank competitors, as noted in the press release. This approach contrasts with peers who have struggled to retain customers amid aggressive pricing from fintechs and big banks.

On the risk front, PBAM has proactively adjusted to faster-moving threats. The 2025 RMA survey notes that 93% of banks now prioritize rapid response to risks like deposit runs, and PBAM's reduced brokered deposit exposure (from 65.7% of total deposits in Q2 to 23.3% in Q3) reflects this focus. Additionally, the company's provision for credit losses increased to $1.8 million in Q3, up from $1.3 million in Q2, signaling caution in a tightening credit environment (MarketBeat).

Analyst Outlook: Caution Amid Optimism

While loan growth remains a headwind—analysts have cut 2025 estimates due to macroeconomic uncertainties—the deposit strength has attracted positive attention. Stephens raised its price target to $61.00, citing the company's "impressive core deposit growth" and balance sheet discipline (Investing.com). The stock's current P/E ratio of 8.30 and trailing EPS of $7.02 suggest undervaluation relative to peers, though investors must weigh the risks of prolonged rate volatility.

Conclusion: A Model for Resilience

Private Bancorp of America's Q3 performance illustrates how regional banks can thrive in a high-rate environment by prioritizing deposit growth, cost control, and relationship banking. While loan stagnation and margin compression persist, the company's strategic focus on core deposits and risk management provides a foundation for long-term stability. For investors, PBAM offers a case study in navigating the dual challenges of rising rates and competitive pressures—a critical skill set in today's banking landscape.