Preferred Bank Reports Fourth Quarter Results

Rhea-AI Summary

Preferred Bank (NASDAQ: PFBC) reported fourth-quarter 2025 net income of $34.8M or $2.79 per diluted share and full-year net income of $133.6M or $10.41 per diluted share. Return on average assets was 1.82% and return on average equity was 17.59%. Net interest margin contracted to 3.74% as market rates declined; net interest income before provision was $70.0M for the quarter. Total loans and deposits rose year-over-year to $6.05B and $6.35B, respectively. Provision for credit losses was $4.3M and allowance coverage was 1.30% of loans. The quarter included a $3.6M gain on sale of OREO and an efficiency ratio of 31.2%. A conference call and webcast were scheduled for January 22, 2026 at 2:00 p.m. ET.

Positive

• Full-year net income of $133.6M
• Total loans up $413.6M YoY to $6.05B
• Total deposits up $428.6M YoY to $6.35B
• Efficiency ratio improved to 31.2% from 38.8% YoY
• OREO sales produced a $3.6M gain in Q4

Negative

• Net interest margin contracted to 3.74% (down 18 bps QoQ, 32 bps YoY)
• Provision for credit losses rose QoQ to $4.3M (from $2.5M)
• Non-accrual loans increased to $51.3M (up $33.7M QoQ)
• Criticized assets increased to $248.5M at year-end due to a large downgraded relationship
• Tangible capital ratio declined to 10.38% from 11.02% YoY

Market Reaction

-5.56% $93.64

15m delay 1 alert

-5.56% Since News

$93.64 Last Price

$89.30 $98.41 Day Range

-$68M Valuation Impact

$1.16B Market Cap

1.5x Rel. Volume

Following this news, PFBC has declined 5.56%, reflecting a notable negative market reaction. The stock is currently trading at $93.64. This price movement has removed approximately $68M from the company's valuation.

Data tracked by StockTitan Argus (15 min delayed). Upgrade to Silver for real-time data.

Key Figures

Q4 2025 net income: $34.8M Q4 2025 diluted EPS: $2.79 Return on avg assets: 1.82% +5 more

8 metrics

Q4 2025 net income $34.8M Quarter ended December 31, 2025

Q4 2025 diluted EPS $2.79 Quarter ended December 31, 2025

Return on avg assets 1.82% Q4 2025

Return on avg equity 17.59% Q4 2025

Loan growth $182.3M (3.1%) Total loans, linked quarter Q4 2025

Deposit growth $115.8M (1.9%) Total deposits, linked quarter Q4 2025

Net interest margin 3.74% Q4 2025

Allowance coverage 1.30% of loans Year-end 2025

Market Reality Check

Price: $99.15 Vol: Volume 78,981 is roughly ...

normal vol

$99.15 Last Close

Volume Volume 78,981 is roughly in line with 20-day average of 80,258 (relative volume 0.98). normal

Technical Price at $99.15 trades above the $90.09 200-day MA and sits 3.78% below the $103.05 52-week high.

Peers on Argus

PFBC gained 2.29% with regional bank peers also positive: BFC +6.12%, OBK +4.86%...

1 Up

PFBC gained 2.29% with regional bank peers also positive: BFC +6.12%, OBK +4.86%, PEBO +3.49%, HOPE +5.46%, WABC +1.73%. Momentum scanner, however, only flagged one peer (DCOM +5.91%), so this move screens as stock-specific rather than a broad momentum event.

Historical Context

5 past events · Latest: Jan 08 (Neutral)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jan 08	Earnings call notice	Neutral	-0.7%	Scheduled Q4 2025 earnings release and conference call logistics.
Dec 11	Dividend increase	Positive	+2.3%	Annual dividend raised to $3.20 per share from $3.00.
Oct 20	Record Q3 earnings	Positive	+1.5%	Record Q3 2025 net income and solid loan and deposit growth.
Oct 06	Earnings call notice	Neutral	-1.3%	Announcement of Q3 2025 results release and conference call.
Sep 17	Cash dividend	Positive	+0.4%	Declared quarterly cash dividend of $0.75 per share.

Pattern Detected

PFBC has tended to react positively to fundamental news like earnings and dividend increases.

Recent Company History

Over the last few months, PFBC announced multiple shareholder-friendly and operational milestones. Q3 2025 results showed record net income with net interest income of $71.3M and an efficiency ratio of 28.7%. Dividend actions in September and December 2025 lifted the payout to an annualized $3.20 per share. Logistics-only announcements for earnings calls in October 2025 and January 2026 had limited impact. Today’s Q4 2025 earnings build on that trajectory with continued strong profitability and growth metrics.

Market Pulse Summary

The stock is down -5.6% following this news. A negative reaction despite strong Q4 2025 profitabilit...

Analysis

The stock is down -5.6% following this news. A negative reaction despite strong Q4 2025 profitability could fit a pattern where investors focus on credit quality and margin trends. Net income of $34.8M and EPS of $2.79 came alongside a net interest margin of 3.74%, down from prior levels, and criticized assets increasing to $248.5M. Such metrics may have raised concerns about future provisions even as capital ratios remained solid.

Key Terms

asc 842, net interest margin, nonperforming assets, provision for credit losses, +3 more

7 terms

asc 842 technical

"related to a correction in the adoption of ASC 842, Lease Accounting."

ASC 842 is the U.S. accounting rule that requires most lease agreements to be recorded on a company’s balance sheet as right-of-use assets and corresponding lease liabilities, rather than being hidden as off‑balance-sheet rent. For investors, this brings clearer visibility into a firm’s true obligations and asset base—like converting a long-term apartment rental into a visible mortgage-like entry—helping compare companies, assess leverage, and judge cash flow risks more accurately.

net interest margin financial

"The Bank’s net interest margin for the fourth quarter was 3.74%"

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

nonperforming assets financial

"Therefore, total nonperforming assets decreased from the prior quarter."

Nonperforming assets are loans or investments that are not generating expected payments or returns because the borrower has fallen behind on payments or the investment has lost value. They matter to investors because a high level of nonperforming assets can indicate financial trouble for a bank or institution, potentially affecting its stability and profitability.

provision for credit losses financial

"The provision for credit loss was $4.3 million for the quarter."

Provision for credit losses is an amount set aside by a financial institution to cover potential future losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution manage risks and stay financially healthy. For investors, it signals how cautious a lender is about potential loan defaults and can impact the company's profitability and financial stability.

allowance for credit losses financial

"The Bank’s allowance coverage ratio increased to 1.30% of loans"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

tangible capital ratio financial

"the Bank’s tangible capital ratio was 10.38%, the leverage ratio was 10.54%"

Tangible capital ratio measures the portion of a company’s financial cushion made up of real, physical and cash resources after removing intangible items like goodwill and patents; it is usually expressed as tangible capital divided by total or risk-weighted assets. Think of it as the hard, spendable padding a business has to absorb losses—investors watch it to gauge resilience to shocks and the likelihood that capital can cover unforeseen write-downs.

common equity tier 1 capital ratio financial

"the common equity tier 1 capital ratio was 11.26% and the total capital ratio"

A bank’s common equity tier 1 (CET1) capital ratio measures the size of its strongest loss-absorbing capital—mainly common shares and retained earnings—relative to the bank’s assets after adjusting those assets for how risky they are (riskier loans count more). Think of it as the safety cushion compared with the weight of risky business; investors use it to judge a bank’s ability to survive losses, meet rules, and sustain dividends or growth.

AI-generated analysis. Not financial advice.

LOS ANGELES, Jan. 22, 2026 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended December 31, 2025. Preferred Bank (“the Bank”) reported net income of $34.8 million or $2.79 per diluted share for the fourth quarter of 2025. This represents a decrease in net income of $1.1 million from the prior quarter and an increase of $4.6 million over the same quarter last year. The increase compared to last year was primarily due to an occupancy charge of $8.1 million recorded in the fourth quarter of 2024 related to a correction in the adoption of ASC 842, Lease Accounting. The decrease in net income from the prior quarter was due to an increase in the provision for credit losses of $1.8 million and a decrease in net interest income of $1.3 million. The primary reason for the decrease in net interest income was due to the decline in market interest rates. The Bank sold two large OREO properties during the quarter resulting in a gain of $3.6 million, recorded in noninterest income and total OREO expense was $3.5 million for the fourth quarter of 2025.

Highlights for the Quarter:

• Return on average assets was 1.82%
• Return on average equity was 17.59%
• Total loans increased by $182.3 million or 3.1%, linked quarter
• Total deposits increased by $115.8 million, or 1.9%, linked quarter
• The efficiency ratio for the quarter was 31.2%
  
  

Li Yu, Chairman and CEO, commented, “I am pleased to report fourth quarter net income of $34.8 million or $2.79 per share and for the full year 2025, net income of $133.6 million or $10.41 per share, which makes our profitability among the top echelon of the banking industry.

“The Bank’s net interest margin for the fourth quarter was 3.74%, a decrease from third quarter, due mainly to the interest rate cuts implemented by the Federal Reserve in September and December. However, market rates on deposits have not kept pace with the rate cuts as competition for deposits remains elevated.

“Our loan growth for the quarter was $182.3 million or 12.4% on an annualized basis as we have seen an increase in loan demand. Deposit growth for the quarter was $115.8 million or 7.4% on an annualized basis. For the full year, loan and deposit growth was $413.6 million and $428.6 million, respectively.

“During the quarter, we sold two large OREO properties for a gain between the two. Therefore, total nonperforming assets decreased from the prior quarter. However, total criticized assets increased by $97.5 million due to the placing of a large relationship into classified status during the quarter. The provision for credit loss was $4.3 million for the quarter.

“It seems that most economists in the country have a positive economic outlook for 2026. We are also seeing our customers have an improved outlook. Barring any sudden and significant changes in government policy, we are hopeful to increase our growth rate in the new year.”

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $70.0 million for the fourth quarter of 2025. This represents a $1.3 million decrease from the $71.3 million recorded in the prior quarter and a $802,000 increase over the same quarter last year. The decrease compared to the prior quarter was due to a decrease in the loan and overnight fed funds rate from the Federal Reserve interest rate ease that occurred in September as this quarter saw the full effect of that rate ease. Since a majority of the Bank’s loans are tied to the Prime rate, interest on loans was down from the prior quarter which was partially offset by a decrease in deposit rates. The increase in net interest income over the same quarter last year was due to a larger decrease in interest expense than the decrease in interest income. The Bank has made significant efforts to decrease rates on deposits and the results this quarter are indicative of that effort. The Bank’s net interest margin contracted in the quarter to 3.74% from 3.92% last quarter and down from the 4.06% net interest margin recorded in the fourth quarter of 2024.

Noninterest Income. For the fourth quarter of 2025, noninterest income was $8.1 million compared with $3.6 million for the same quarter last year and compared to $3.7 million for the third quarter of 2025. The increase over the same quarter last year was mainly due to a $3.6 million gain on sale of OREOs and increase in letter of credit (LC) fee income of $431,000, an increase in other income of $517,000 partially offset by a decrease in service charges of $216,000. In comparison to the prior quarter, the gain on sale of OREOs drove the increase as did an increase in other income of $744,000.

Noninterest Expense. Total noninterest expense was $24.4 million for the fourth quarter of 2025 compared to $21.5 million for the third quarter of 2025 and compared to $28.2 million recorded in the same period last year. The primary reason for the increase over the prior quarter was mainly due to a $1.8 million write-down of the Bank’s OREO property which was subsequently sold as well as other OREO expenses of $1.6 million. This was partially offset by a decrease in personnel expense of $1.1 million which was due to a decrease in incentive compensation. The decrease from the same quarter last year was due again to the $8.1 million charge to occupancy expense in the fourth quarter of last year which was previously mentioned. This was partially offset by an increase in OREO expense of $3.5 million. The Bank’s efficiency ratio came in at 31.2% for the quarter which compares to 28.7% last quarter and to 38.8% in the same quarter last year.

Income Taxes. The Bank recorded a provision for income taxes of $14.5 million for the fourth quarter of 2025. This represents an effective tax rate (“ETR”) of 29.5% which is up from the 29.0% ETR for the same quarter last year and the same as the 29.5% ETR recorded in the third quarter of 2025. The Bank’s ETR will fluctuate slightly from quarter to quarter within a fairly small range due to the timing of taxable events throughout the year.

Year-to-Date Results

Net income for the year ended December 31, 2025 was $133.6 million or $10.41 per diluted share compared to $130.7 million or $9.64 per diluted share last year. Net interest income declined from 2024 to 2025 however the provision for credit losses declined from $12.1 million in 2024 to $9.1 million in 2025. Additionally, noninterest income increased by $6.0 million over 2024 levels partially offset by noninterest expense which increased by $1.6 million in 2025. On a percentage basis, the increase in diluted earnings per share (“EPS”) was higher than the increase in net income due to common stock repurchases which occurred in late 2024 and throughout 2025.

Balance Sheet Summary

Total gross loans at December 31, 2025 were $6.05 billion, an increase of $413.6 million from the total of $5.64 billion as of December 31, 2024. Total deposits were $6.35 billion, an increase of $428.6 million from the $5.92 billion as of December 31, 2024. Total assets were $7.60 billion, an increase of $677.7 million over the total of $6.92 billion as of December 31, 2024.

Asset Quality

Non-accrual loans and loans 90 days or more past due and still accruing totaled $51.3 million, up from the $17.6 million as of September 30, 2025. This represents an increase from the prior quarter of $33.7 million. The main reason for the increase was due to placing a $19.5 million well-secured multi-family loan into nonaccrual status during the quarter. As previously mentioned, total criticized assets increased during the quarter from $151.0 million as of September 30, 2025 to $248.5 million at year-end. The increase is mainly due to a $123.1 million relationship consisting of nine loans; seven commercial real estate loans totaling $121.0 million and two unsecured credits totaling $2.0 million which were downgraded during the quarter. This was partially offset by the sale of $49.1 million of OREO during the quarter. Four of the loans which were downgraded are the subject of lawsuit which was previously disclosed by another financial institution. The weighted average LTV and DCR of the real estate loans that were downgraded was 65.7% and 1.14x respectively, so it is not expected that there will be any significant loss content in these loans. During the fourth quarter, the Bank disposed of one OREO property with a book value of $37.1 million at a price which yielded a net gain on sale of $3.6 million. (This sale was reported in the third quarter press release however it was recorded in the fourth quarter of 2025). In addition, the Bank also disposed of its long held OREO in Santa Barbara, however, it was sold at a small gain after a valuation charge of $1.8 million. Total net charge-offs (recoveries) on loans for the quarter were $0 compared to net charge-offs of $1.6 million in the prior quarter and compared to $6.6 million in the fourth quarter of 2024.

Allowance for Credit Losses

The provision for credit losses for the fourth quarter of 2025 was $4.3 million compared to $2.5 million last quarter and compared to $2.0 million in the same quarter last year.   The Bank’s allowance coverage ratio increased to 1.30% of loans as compared to 1.27% in the prior quarter and 1.27% at the end of 2024.

Capitalization

As of December 31, 2025, the Bank’s tangible capital ratio was 10.38%, the leverage ratio was 10.54%, the common equity tier 1 capital ratio was 11.26% and the total capital ratio stood at 14.47%. As of December 31, 2024, the Bank’s tangible capital ratio was 11.02%, the Bank’s leverage ratio was 11.33%, the common equity tier 1 ratio was 11.80% and the total capital ratio was 15.11%.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank’s fourth quarter 2025 financial results will be held this afternoon, January 22, 2026 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com.

Preferred Bank's Chairman and CEO Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi and Deputy Chief Operating Officer Johnny Hsu will discuss Preferred Bank's financial results, business highlights and outlook. After the live webcast, a replay will be available at the Investor Relations section of Preferred Bank's website. A replay of the call will also be available at 855-669-9658 (domestic) or 412-317-0088 (international) through February 5, 2026; the passcode is 4064016.

About Preferred Bank

Preferred Bank is one of the larger independent commercial banks headquartered in California. The Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Bank conducts its banking business from its main office in Los Angeles, California, and through twelve full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)), two branches in New York (Manhattan and Flushing, Queens) and a branch office in the Houston, Texas suburb of Sugar Land. In addition, the Bank also operates a loan production office in Sunnyvale, California. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank's results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2024 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at www.preferredbank.com.

AT THE COMPANY: Edward J. Czajka Executive Vice President Chief Financial Officer (213) 891-1188	AT FINANCIAL PROFILES: Jeffrey Haas General Information (310) 622-8240 PFBC@finprofiles.com

Financial Tables to Follow

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
				For the Quarter Ended
				December 31,			September 30,			December 31,
					2025			2025			2024
Interest income:
	Loans, including fees			$	109,747		$	110,645		$	111,596
	Investment securities				14,677			15,977			14,013
	Fed funds sold				209			228			249
		Total interest income			124,633			126,850			125,858
Interest expense:
	Interest-bearing demand				16,952			17,562			18,245
	Savings				55			67			85
	Time certificates				34,543			34,792			37,030
	FHLB borrowings				1,783			1,794			0
	Subordinated debt				1,325			1,325			1,325
		Total interest expense			54,658			55,540			56,685
		Net interest income			69,975			71,310			69,173
Provision for credit losses					4,300			2,500			2,000
		Net interest income after provision for credit losses			65,675			68,810			67,173
Noninterest income:
	Fees & service charges on deposit accounts				545			625			761
	Letters of credit fee income				2,408			2,421			1,977
	BOLI income				105			105			102
	Net gain on sale of other real estate owned				3,609			-			-
	Net gain on called and sale of investment securities				132			-			-
	Net gain on sale of loans				93			56			112
	Other income				1,202			458			685
		Total noninterest income			8,094			3,665			3,637
Noninterest expense:
	Salary and employee benefits				13,101			14,240			13,279
	Net occupancy expense				2,430			2,297			10,110
	Business development and promotion expense				163			238			340
	Professional services				2,091			1,494			1,606
	Office supplies and equipment expense				375			361			396
	OREO valuation allowance and related expense				3,465			463			155
	Other				2,752			2,405			2,360
		Total noninterest expense			24,377			21,498			28,246
		Income before provision for income taxes			49,392			50,977			42,564
Income tax expense					14,570			15,038			12,343
		Net income		$	34,822		$	35,939		$	30,221
Income per share available to common shareholders
		Basic		$	2.85		$	2.90		$	2.29
		Diluted		$	2.79		$	2.84		$	2.25
Weighted-average common shares outstanding
		Basic			12,210,077			12,384,924			13,190,696
		Diluted			12,479,124			12,634,174			13,442,294
Cash dividends per common share				$	0.80		$	0.75		$	0.75

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
				For the Twelve Months Ended
				December 31,			December 31,			Change
					2025			2024		%
Interest income:
	Loans, including fees			$	427,767			445,139		-3.9	%
	Investment securities				57,790			62,854		-8.1	%
	Fed funds sold				898			1,103		-18.6	%
		Total interest income			486,455			509,096		-4.4	%
Interest expense:
	Interest-bearing demand				67,275			87,951		-23.5	%
	Savings				262			323		-18.9	%
	Time certificates				138,154			142,894		-3.3	%
	FHLB borrowings				4,647			0		100.0	%
	Subordinated debt				5,300			5,300		0.0	%
		Total interest expense			215,638			236,468		-8.8	%
		Net interest income			270,817			272,628		-0.7	%
Provision for credit losses					9,100			12,100		-24.8	%
		Net interest income after provision for credit losses			261,717			260,528		0.5	%
Noninterest income:
	Fees & service charges on deposit accounts				2,521			3,172		-20.5	%
	Letters of credit fee income				9,406			7,188		30.9	%
	BOLI income				417			420		-0.8	%
	Net gain on sale of other real estate owned				3,609			-		100.0	%
	Net gain on called and sale of investment securities				132			-		100.0	%
	Net gain on sale of loans				596			659		-9.5	%
	Other income				2,838			2,126		33.5	%
		Total noninterest income			19,519			13,565		43.9	%
Noninterest expense:
	Salary and employee benefits				56,427			53,648		5.2	%
	Net occupancy expense				9,292			15,420		-39.7	%
	Business development and promotion expense				1,103			1,250		-11.8	%
	Professional services				6,743			6,711		0.5	%
	Office supplies and equipment expense				1,541			1,781		-13.5	%
	OREO valuation allowance and related expense				6,938			2,234		210.6	%
	Other				9,645			9,016		7.0	%
		Total noninterest expense			91,689			90,060		1.8	%
		Income before provision for income taxes			189,547			184,033		3.0	%
Income tax expense					55,915			53,371		4.8	%
		Net income		$	133,632		$	130,662		2.3	%
Income per share available to common shareholders
		Basic		$	10.61		$	9.79		8.4	%
		Diluted		$	10.41		$	9.64		8.0	%
Weighted-average common shares outstanding
		Basic			12,594,305			13,347,004		-5.6	%
		Diluted			12,837,442			13,554,266		-5.3	%
Dividends per share				$	3.05		$	2.85		7.0	%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
			December 31,				December 31,
				2025				2024
			(Unaudited)				(Audited)
Assets
Cash and due from banks			$	807,098			$	765,515
Fed funds sold				20,000				20,000
	Cash and cash equivalents			827,098				785,515
Securities held-to-maturity, at amortized cost				18,749				20,021
Securities available-for-sale, at fair value				566,186				348,706
Loans held for sale, at lower of cost or fair value				-				2,214
Loans				6,054,264				5,640,615
	Less allowance for credit losses			(78,992	)			(71,477	)
	Less amortized deferred loan fees, net			(9,030	)			(9,234	)
	Loans, net			5,966,242				5,559,904
Other real estate owned and repossessed assets				3,510				14,991
Bank furniture and fixtures, net				8,064				8,462
Bank-owned life insurance				10,712				10,433
Accrued interest receivable				34,154				33,561
Investment in affordable housing partnerships				69,978				58,346
Federal Home Loan Bank stock, at cost				15,000				15,000
Deferred tax assets				42,464				47,402
Income tax receivable				3,396				2,195
Operating lease right-of-use assets				30,531				13,182
Other assets				5,081				3,497
	Total assets		$	7,601,165			$	6,923,429
Liabilities and Shareholders' Equity
Deposits:
	Noninterest bearing demand deposits		$	699,160			$	704,859
	Interest bearing deposits:			2,205,914				2,026,965
		Savings		30,376				30,150
		Time certificates of $250,000 or more		1,754,273				1,477,931
		Other time certificates		1,655,723				1,676,943
		Total deposits		6,345,446				5,916,848
Advances from Federal Home Loan Bank				200,000				-
Subordinated debt issuance, net				148,706				148,469
Commitments to fund investment in affordable housing partnerships				23,327				21,623
Operating lease liabilities				35,107				16,990
Accrued interest payable				16,513				16,517
Other liabilities				42,589				39,830
	Total liabilities			6,811,688				6,160,277
Shareholders' equity				789,477				763,152
	Total liabilities and shareholders' equity		$	7,601,165			$	6,923,429
Book value per common share			$	64.83			$	57.86
Number of common shares outstanding				12,177,588				13,188,776

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
			For the Quarter Ended
			December 31,			September 30,			June 30,			March 31,			December 31,
			2025			2025			2025			2025			2024
Unaudited historical quarterly operations data:
	Interest income		$	124,633		$	126,850		$	120,443		$	114,529		$	125,858
	Interest expense			54,658			55,540			53,569			51,871			56,685
		Interest income before provision for credit losses		69,975			71,310			66,874			62,658			69,173
	Provision for credit losses			4,300			2,500			1,600			700			2,000
	Noninterest income			8,094			3,665			3,762			3,998			3,637
	Noninterest expense			24,377			21,498			22,445			23,369			28,246
	Income tax expense			14,570			15,038			13,744			12,563			12,343
		Net income	$	34,822		$	35,939		$	32,847		$	30,024		$	30,221
	Earnings per share
		Basic	$	2.85		$	2.90		$	2.61		$	2.27		$	2.29
		Diluted	$	2.79		$	2.84		$	2.57		$	2.23		$	2.25
Ratios for the period:
	Return on average assets			1.82	%		1.93	%		1.85	%		1.76	%		1.74	%
	Return on average equity			17.59	%		18.64	%		17.55	%		15.62	%		15.81	%
	Net interest margin (Fully-taxable equivalent)			3.74	%		3.92	%		3.85	%		3.75	%		4.06	%
	Noninterest expense to average assets			1.27	%		1.16	%		1.26	%		1.37	%		1.62	%
	Efficiency ratio			31.22	%		28.67	%		31.78	%		35.06	%		38.79	%
	Net charge-offs (recoveries) to average loans (annualized)			0.00	%		0.11	%		0.00	%		-0.01	%		0.47	%
Ratios as of period end:
	Tangible common equity ratio			10.38	%		10.38	%		10.26	%		10.96	%		11.02	%
	Tier 1 leverage capital ratio			10.54	%		10.66	%		10.73	%		11.52	%		11.33	%
	Common equity tier 1 risk-based capital ratio			11.26	%		11.34	%		11.18	%		11.86	%		11.80	%
	Tier 1 risk-based capital ratio			11.26	%		11.34	%		11.18	%		11.86	%		11.80	%
	Total risk-based capital ratio			14.47	%		14.56	%		14.43	%		15.15	%		15.11	%
	Allowances for credit losses to loans at end of period			1.30	%		1.27	%		1.29	%		1.28	%		1.27	%
	Allowance for credit losses to non-performing loans		1.54x			4.24x			1.41x			0.91x			1.89x
Average balances:
	Total securities		$	586,950		$	583,302		$	503,861		$	402,754		$	350,732
	Total loans			5,947,814			5,753,801			5,623,010			5,555,010			5,542,558
	Total earning assets			7,439,767			7,234,568			6,984,272			6,780,438			6,788,487
	Total assets			7,585,940			7,382,265			7,121,047			6,905,249			6,920,325
	Total time certificate of deposits			3,402,304			3,330,241			3,321,327			3,164,766			3,144,523
	Total interest bearing deposits			5,651,369			5,501,767			5,345,308			5,244,243			5,220,655
	Total deposits			6,336,242			6,169,728			6,005,486			5,886,163			5,905,127
	Total interest bearing liabilities			6,000,042			5,850,376			5,614,737			5,392,735			5,369,092
	Total equity			785,581			764,766			750,535			779,339			760,345

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
			For the Twelve Months Ended
			December 31,				December 31,
			2025				2024
	Interest income		$	486,455			$	509,096
	Interest expense			215,638				236,468
		Interest income before provision for credit losses		270,817				272,628
	Provision for credit losses			9,100				12,100
	Noninterest income			19,519				13,565
	Noninterest expense			91,689				90,060
	Income tax expense			55,915				53,371
		Net income	$	133,632			$	130,662
	Earnings per share
		Basic	$	10.61			$	9.79
		Diluted	$	10.41			$	9.64
Ratios for the period:
	Return on average assets			1.84	%			1.91	%
	Return on average equity			17.35	%			17.85	%
	Net interest margin (Fully-taxable equivalent)			3.81	%			4.08	%
	Noninterest expense to average assets			1.26	%			1.32	%
	Efficiency ratio			31.58	%			31.47	%
	Net charge-off to average loans			0.03	%			0.35	%
Average balances:
	Total securities		$	519,898			$	352,416
	Total loans			5,721,077				5,396,844
	Total earning assets			7,111,910				6,697,118
	Total assets			7,250,857				6,830,252
	Total time certificate of deposits			3,305,380				2,939,543
	Total interest bearing deposits			5,436,967				5,138,380
	Total deposits			6,100,829				5,849,300
	Total interest bearing liabilities			5,716,508				5,286,725
	Total equity			770,058				732,058

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				As of
				December 31,				September 30,				June 30,				March 31,				December 31,
					2025				2025				2025				2025				2024
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	827,098			$	815,459			$	796,257			$	925,183			$	785,515
	Securities held-to-maturity, at amortized cost				18,749				19,034				19,456				19,745				20,021
	Securities available-for-sale, at fair value				566,186				569,115				577,040				390,096				348,706
	Loans:
		Real estate – Mortgage:
			Real estate—Residential	$	783,136			$	793,217			$	767,620			$	779,462			$	790,069
			Real estate—Commercial		3,028,762				2,890,990				2,868,308				2,897,956				2,840,771
			Total Real Estate – Mortgage		3,811,898				3,684,207				3,635,928				3,677,418				3,630,840
		Real estate – Construction:
			R/E Construction — Residential		282,808				285,623				291,343				306,283				296,580
			R/E Construction — Commercial		387,759				323,897				303,354				269,065				287,185
			Total real estate construction loans		670,567				609,520				594,697				575,348				583,765
		Commercial and industrial			1,563,504				1,570,423				1,501,188				1,374,379				1,418,930
		SBA			8,053				7,630				7,741				7,104				6,833
		Consumer and others			242				231				56				164				247
			Gross loans		6,054,264				5,872,011				5,739,610				5,634,413				5,640,615
	Allowance for credit losses on loans				(78,992	)			(74,692	)			(73,830	)			(72,274	)			(71,477	)
	Net deferred loan fees				(9,030	)			(9,956	)			(11,940	)			(9,652	)			(9,234	)
		Net loans, excluding loans held for sale		$	5,966,242			$	5,787,363			$	5,653,840			$	5,552,487			$	5,559,904
	Loans held for sale			$	-			$	-			$	-			$	-			$	2,214
		Net loans		$	5,966,242			$	5,787,363			$	5,653,840			$	5,552,487			$	5,562,118
	Other real estate owned and repossessed assets			$	3,510			$	52,609			$	13,755			$	13,650			$	14,991
	Investment in affordable housing partnerships				69,978				73,874				74,783				63,612				58,346
	Federal Home Loan Bank stock, at cost				15,000				15,000				15,000				15,000				15,000
	Other assets				134,402				135,340				128,629				120,319				118,732
		Total assets		$	7,601,165			$	7,467,794			$	7,278,760			$	7,100,092			$	6,923,429
Liabilities:
	Deposits:
		Demand		$	699,160			$	654,302			$	675,102			$	730,270			$	704,859
		Interest bearing demand			2,205,914				2,205,865				2,004,135				2,099,987				2,026,965
		Savings			30,376				31,087				34,333				32,631				30,150
		Time certificates of $250,000 or more			1,754,273				1,699,757				1,681,026				1,531,715				1,477,931
		Other time certificates			1,655,723				1,638,662				1,683,737				1,678,132				1,676,943
		Total deposits		$	6,345,446			$	6,229,673			$	6,078,333			$	6,072,735			$	5,916,848
	Advance from Federal Home Loan Bank				200,000				200,000				200,000				-				-
	Subordinated debt issuance, net				148,706				148,647				148,588				148,529				148,469
	Commitments to fund investment in affordable housing partnerships				23,327				24,874				30,645				20,956				21,623
	Other liabilities				94,209				88,958				73,534				79,268				73,337
		Total liabilities		$	6,811,688			$	6,692,152			$	6,531,100			$	6,321,488			$	6,160,277
Equity:
	Common stock, no par value			$	210,882			$	210,882			$	210,882			$	210,882			$	210,882
	Additional paid-in capital				105,105				103,235				101,088				99,603				95,791
	Treasury stock				(293,406	)			(277,351	)			(271,005	)			(214,406	)			(201,172	)
	Retained earnings				780,637				755,587				728,891				705,360				685,108
	Accumulated other comprehensive income				(13,741	)			(16,711	)			(22,196	)			(22,835	)			(27,457	)
		Total shareholders' equity		$	789,477			$	775,642			$	747,660			$	778,604			$	763,152
		Total liabilities and shareholders' equity		$	7,601,165			$	7,467,794			$	7,278,760			$	7,100,092			$	6,923,429

PREFERRED BANK
Quarter-to-Date Average Balances, Yield and Rates
(Unaudited)
			Three months ended December 31,								Three months ended September 30,								Three months ended December 31,
				2025								2025								2024
						Interest		Average						Interest		Average						Interest		Average
			Average			Income or		Yield/			Average			Income or		Yield/			Average			Income or		Yield/
			Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate
ASSETS			(Dollars in thousands)
Interest earning assets:
	Loans(1,2)		$	5,947,986		$	109,747	7.32	%		$	5,754,073		$	110,645	7.63	%		$	5,543,215		$	111,596	8.01	%
	Investment securities(3)			586,950			5,883	3.98	%			583,302			6,257	4.26	%			350,732			3,566	4.04	%
	Federal funds sold			20,337			209	4.08	%			20,000			228	4.52	%			20,172			249	4.91	%
	Other earning assets			884,494			8,886	3.99	%			877,193			9,811	4.44	%			874,368			10,546	4.80	%
		Total interest earning assets		7,439,767			124,725	6.65	%			7,234,568			126,941	6.96	%			6,788,487			125,957	7.38	%
	Deferred loan fees, net			(9,739	)							(10,686	)							(9,808	)
	Allowance for credit losses on loans			(74,738	)							(72,784	)							(75,474	)
Noninterest earning assets:
	Cash and due from banks			11,055								10,071								10,626
	Bank furniture and fixtures			7,887								7,945								8,866
	Right of use assets			28,344								19,153								28,570
	Other assets			183,364								193,998								169,058
		Total assets	$	7,585,940							$	7,382,265							$	6,920,325
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand and savings	$	2,249,065		$	17,007	3.00	%		$	2,171,526		$	17,629	3.22	%		$	2,076,132		$	18,330	3.51	%
		TCD $250K or more		1,725,674			17,220	3.96	%			1,686,710			17,406	4.09	%			1,481,219			17,514	4.70	%
		Other time certificates		1,676,630			17,323	4.10	%			1,643,531			17,386	4.20	%			1,663,304			19,516	4.67	%
		Total interest bearing deposits		5,651,369			51,551	3.62	%			5,501,767			52,421	3.78	%			5,220,655			55,360	4.22	%
Advance from Federal Home Loan Bank				200,000			1,783	3.54	%			200,000			1,794	3.56	%			-			0	0.00	%
Subordinated debt, net				148,673			1,325	3.54	%			148,609			1,325	3.54	%			148,434			1,325	3.55	%
		Total interest bearing liabilities		6,000,042			54,658	3.61	%			5,850,376			55,540	3.77	%			5,369,092			56,685	4.20	%
Noninterest bearing liabilities:
	Demand deposits			684,873								667,961								684,472
	Lease liability			32,626								22,908								25,486
	Other liabilities			82,818								76,255								80,930
		Total liabilities		6,800,359								6,617,500								6,159,980
Shareholders’ equity				785,581								764,766								760,345
		Total liabilities and shareholders’ equity	$	7,585,940							$	7,382,266							$	6,920,325
Net interest income						$	70,067							$	71,401							$	69,272
Net interest spread								3.04	%							3.19	%							3.18	%
Net interest margin								3.74	%							3.92	%							4.06	%
Cost of Deposits:
	Noninterest bearing demand deposits		$	684,873							$	667,961							$	684,472
	Interest bearing deposits			5,651,369			51,551	3.62	%			5,501,767			52,421	3.78	%			5,220,655			55,360	4.22	%
		Total Deposits	$	6,336,242		$	51,551	3.23	%		$	6,169,728		$	52,421	3.37	%		$	5,905,127		$	55,360	3.73	%
(1)	Includes non-accrual loans and loans held for sale
	Net loan fee income of $1.4 million, $1.7 million and $1.2 million for the quarter ended December 31, 2025, September 30, 2025 and December 31, 2024, respectively, are included in the yield computations
	Yields on securities have been adjusted to a tax-equivalent basis

PREFERRED BANK
Year-to-Date Average Balances, Yield and Rates
(Unaudited)
			Twelve Months ended December 31,
				2025								2024
						Interest		Average						Interest		Average
			Average			Income or		Yield/			Average			Income or		Yield/
			Balance			Expense		Rate			Balance			Expense		Rate
ASSETS			(Dollars in thousands)
Interest earning assets:
	Loans(1,2)		$	5,723,854		$	427,767	7.47	%		$	5,398,916		$	445,139	8.24	%
	Investment securities(3)			519,898			21,429	4.12	%			352,416			14,257	4.05	%
	Federal funds sold			20,267			898	4.43	%			20,397			1,103	5.41	%
	Other earning assets			847,891			36,743	4.33	%			925,389			48,994	5.29	%
		Total interest earning assets		7,111,910			486,837	6.85	%			6,697,118			509,493	7.61	%
	Deferred loan fees, net			(9,908	)							(10,301	)
	Allowance for credit losses on loans			(72,859	)							(76,448	)
Noninterest earning assets:
	Cash and due from banks			11,094								10,624
	Bank furniture and fixtures			8,120								9,537
	Right of use assets			20,686								23,997
	Other assets			181,814								175,725
		Total assets	$	7,250,857							$	6,830,252
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand/ savings	$	2,131,587		$	67,537	3.17	%		$	2,198,837		$	88,274	4.01	%
		TCD $250K or more		1,635,567			67,358	4.12	%			1,403,663			69,176	4.93	%
		Other time certificates		1,669,813			70,796	4.24	%			1,535,880			73,718	4.80	%
		Total interest \bearing deposits		5,436,967			205,691	3.78	%			5,138,380			231,168	4.50	%
Advance from Federal Home Loan Bank				130,959			4,647	3.55	%			-			0	0.00	%
Subordinated debt, net				148,582			5,300	3.57	%			148,344			5,300	3.57	%
		Total interest bearing liabilities		5,716,508			215,638	3.77	%			5,286,725			236,468	4.47	%
Noninterest bearing liabilities:
	Demand deposits			663,862								710,920
	Lease liability			24,572								20,931
	Other liabilities			75,857								79,618
		Total liabilities		6,480,799								6,098,194
Shareholders’ equity				770,058								732,058
		Total liabilities and shareholders’ equity	$	7,250,857							$	6,830,252
Net interest income						$	271,199							$	273,025
Net interest spread								3.07	%							3.13	%
Net interest margin								3.81	%							4.08	%
Cost of Deposits:
	Noninterest bearing demand deposits		$	663,862							$	710,920
	Interest bearing deposits			5,436,967			205,691	3.78	%			5,138,380			231,168	4.50	%
		Total Deposits	$	6,100,829		$	205,691	3.37	%		$	5,849,300		$	231,168	3.95	%
(1)	Includes non-accrual loans and loans held for sale
	Net loan fee income of $5.0 million and $4.6 million for the twelve months ended December 31, 2025 and 2024, respectively, are included in the yield computations
	Yields on securities have been adjusted to a tax-equivalent basis

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses History
				Year Ended
				December 31, 2025				December 31, 2024
				(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period				$	71,477			$	78,355
	Charge-Offs
		Commercial & Industrial			8				19,028
		Mini-perm Real Estate			1,749				-
		Total Charge-Offs			1,757				19,028
	Recoveries
		Commercial & Industrial			172				50
		Total Recoveries			172				50
	Net Charge-Offs				1,585				18,978
	Provision for Credit Losses:				9,100				12,100
Balance at End of Period				$	78,992			$	71,477
Average Loans Held for Investment				$	5,721,077			$	5,396,844
Loans Held for Investment at End of Period				$	6,054,264			$	5,640,615
Net Charge-Offs to Average Loans					0.03	%			0.35	%
Allowances for Credit Losses to Loans at End of Period					1.30	%			1.27	%

FAQ

What did PFBC report for fourth-quarter 2025 net income and EPS?

Preferred Bank reported $34.8M net income and $2.79 diluted EPS for Q4 2025.

How did PFBC's net interest margin change in Q4 2025?

Net interest margin contracted to 3.74% in Q4 2025, down from 3.92% in Q3 2025.

What were PFBC's loan and deposit balances at December 31, 2025?

Total gross loans were $6.05B and total deposits were $6.35B as of December 31, 2025.

Why did PFBC's provision for credit losses increase in Q4 2025?

The provision rose to $4.3M in Q4 2025, driven in part by a large relationship moving to classified status during the quarter.

What happened with PFBC's OREO in Q4 2025?

The bank sold two large OREO properties, realizing a combined $3.6M gain and recording total OREO expense of $3.5M in the quarter.

When and how can investors access PFBC's Q4 2025 earnings call?

The conference call and webcast were held on January 22, 2026 at 2:00 p.m. ET, with a replay available on the company's investor relations website.