Preferred Bank Reports Record Third Quarter Results

Rhea-AI Summary

Preferred Bank (NASDAQ: PFBC) reported record third-quarter 2025 results with net income of $35.9M and diluted EPS of $2.84. Return on average assets was 1.93% and return on average equity was 18.64%. Total loans rose $132.4M (2.3%) and total deposits rose $151.3M (2.5%) sequentially. Net interest income was $71.3M and net interest margin expanded to 3.92% from 3.85% last quarter but remained below last year’s 4.10%.

Noninterest income was $3.7M and noninterest expense was $21.5M, producing an efficiency ratio of 28.7%. Nonperforming loans fell to $17.6M after a foreclosure with the related OREO subsequently sold, and allowance coverage was 1.27% of loans. Tangible capital ratio was 10.38%.

Positive

• Record diluted EPS of $2.84 for Q3 2025
• Net income of $35.9M in Q3 2025
• Total loans increased by $132.4M (2.3%) sequentially
• Total deposits increased by $151.3M (2.5%) sequentially
• Efficiency ratio improved to 28.7% from 31.8% last quarter

Negative

• Net interest margin 3.92% in Q3 2025, down from 4.10% year-over-year
• Allowance for credit losses coverage decreased to 1.27% of loans
• Tangible capital ratio declined to 10.38% from 11.02% at year-end 2024
• Net charge-offs rose to $1.6M in Q3 2025 from $44,000 in Q2 2025

Insights

Banking Analyst

Preferred Bank delivered a record quarterly EPS and solid loan/deposit growth, with improving asset quality after a large foreclosure and subsequent sale.

The business shows clear earnings leverage: net income of $35.9 million and diluted EPS of $2.84 set quarterly records, driven by higher net interest income (net interest margin of 3.92%) and linked-quarter loan growth of $132.4 million. Deposits rose $151.3 million, supporting both balance-sheet expansion and higher interest expense from deposit and borrowing growth.

Dependencies and risks remain concentrated: the sharp drop in nonperforming loans from $52.3 million to $17.6 million resulted from foreclosing one large multifamily loan and moving it to OREO, then selling that OREO (pre-tax gain to be reported later), which materially altered quarter-end credit metrics. Capital ratios dipped modestly (tangible capital 10.38%, CET1 11.34%), so monitor capital and allowance trends as normalization follows the one-off sale.

Watch the fourth-quarter reporting for the disclosed pre-tax gain on the OREO sale and its effect on reported earnings and tax items, the allowance for credit losses versus loan growth (allowance coverage 1.27% of loans), and regulatory capital movement over the next few quarters (Q4 2025 horizon).

LOS ANGELES, Oct. 20, 2025 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended September 30, 2025. Preferred Bank (“the Bank”) reported net income of $35.9 million or $2.84 per diluted share for the third quarter of 2025. This represents an increase in net income of $3.1 million from the prior quarter and an increase of $2.6 million over the same quarter last year. The increase compared to both periods was primarily due to an increase in net interest income. The primary reason that net interest income increased over the same quarter last year was due to a large $5.0 million decrease in interest expense. In comparison to the prior quarter, gross interest income increased by $6.4 million due to an increase in loans and investment securities.

Highlights for the Quarter:

• Return on average assets was 1.93%
• Return on average equity was 18.64%
• Total loans increased by $132.4 million or 2.3%, linked quarter
• Total deposits increased by $151.3 million, or 2.5%, linked quarter
• The efficiency ratio for the quarter was 28.7%
  
  

Li Yu, Chairman and CEO, commented, “We are pleased to report a quarterly record for diluted earnings per share of $2.84 for the third quarter of 2025. Net income for the quarter was $35.9 million.

“For the quarter, nonperforming loans decreased significantly from $52.3 million at June 30, 2025 to $17.6 million as of September 30, 2025. The primary reason for the decrease is the foreclosure of a loan with the balance transferred to OREO. We are happy to report that the OREO asset has already been sold as of this writing, and a large pre-tax gain was also recorded on the sale which will be reported in our fourth quarter results. Net charge-offs were $1.6 million on a year-to-date (“YTD”) basis.

“This quarter we have also recorded reasonable growth in both loans and deposits. Total loans increased by $132.4 million or 2.3% on a linked quarter basis. Deposits also increased by $151.3 million or 2.5% on a linked quarter basis. Our customers appear to be slightly more optimistic but still cautious as there are a lot of uncertainties remaining in our economy. Worth noting is that without the aforementioned loan transferred to OREO, loan growth would have been near $170 million for the quarter.

“Net interest income and the net interest margin both increased from the previous quarter while noninterest expense was relatively unchanged from previous quarters. In late June, regulators approved our stock repurchase program but for most of the time since then, the market price was above what we were willing to pay to buy it back. During the third quarter, we repurchased a total of 70,842 shares for total consideration of $6.3 million.”

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $71.3 million for the third quarter of 2025. This represents a $4.4 million increase over the $66.9 million recorded in the prior quarter and a $2.5 million increase over the same quarter last year. The increase compared to the prior quarter was due to loan growth as well as an increase in the Bank’s investment securities. This was partially offset by an increase in interest expense which was due to deposit growth and an increase in borrowings. The increase over the same period last year was due to a $5.0 million decrease in interest expense partially offset by a smaller decrease in interest income. The Bank has made significant efforts to decrease rates on deposits and the results in this quarter are indicative of that effort. The Bank’s net interest margin expanded in the quarter to 3.92% from 3.85% last quarter but was lower than the net interest margin of 4.10% recorded in the third quarter of last year.

Noninterest Income. For the third quarter of 2025, noninterest income was $3.7 million compared with $3.5 million for the same quarter last year and compared to $3.8 million for the second quarter of 2025. The increase over the same quarter last year was due to letter of credit (LC) fee income which was up by $461,000. In comparison to the prior quarter, gains on sales of loans was down by $116,000.

Noninterest Expense. Total noninterest expense was $21.5 million for the third quarter of 2025 compared to $22.4 million for the second quarter of 2025 and compared to the $22.1 million recorded in the same period last year. The primary reason for the decrease from the prior quarter was mainly due to a $1.3 million write-down of the Bank’s OREO property which occurred in the second quarter of 2025 as compared to a $300,000 charge on OREO holdings this quarter. The decrease from the same quarter last year was due again to a $1.7 million write-down of the same property in the third quarter of 2024. Personnel expense was $14.2 million this quarter which was a $715,000 increase over the same period last year but was nearly flat compared to the second quarter of 2025. Occupancy expense was up by $414,000 over the same period last year due to the Bank’s branch expansions and the change in accounting for leases which was adopted in the fourth quarter of 2024. The Bank’s efficiency ratio came in at 28.7% for the quarter which compares to 31.8% last quarter and to 30.6% in the same quarter last year.

Income Taxes. The Bank recorded a provision for income taxes of $15.0 million for the third 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 second 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 nine months ended September 30, 2025 was $98.8 million or $7.63 per diluted share compared to $100.4 million or $7.39 million last year. The reason that diluted earnings per share (“EPS”) increased over 2024 was due to the stock repurchases that occurred in late 2024 and early 2025 which decreased the outstanding share count, leading to increased diluted earnings per share. The primary reason for the decrease in net income was a decrease in net interest income of $2.6 million and a $5.5 million increase in noninterest expense partially offset by a $5.3 million decrease in the provision for credit losses.

Balance Sheet Summary

Total gross loans at September 30, 2025 were $5.87 billion, an increase of $231.4 million from the total of $5.64 billion as of December 31, 2024. Total deposits were $6.23 billion, an increase of $312.8 million from the $5.92 billion as of December 31, 2024. Total assets were $7.47 billion, an increase of $544.4 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 $17.6 million as of September 30, 2025. This represents a decrease from the prior quarter of $52.3 million as the Bank foreclosed on one of its large nonaccrual loans reported as of June 30, 2025. The $37 million multifamily nonaccrual loan was foreclosed on in the third quarter however the Bank has sold this property subsequent to September 30, 2025 and recorded a pre-tax gain on sale. Total OREO as of September 30, 2025 was $52.6 million as of September 30, 2025 however, as of this writing, OREO totals $14.7 million due to the aforementioned OREO sale. Total net charge-offs (recoveries) for the quarter were $1.6 million compared to net charge-offs of $44,000 in the prior quarter and compared to $(3,000) in the same quarter last year.

Allowance for Credit Losses

The provision for credit losses for the third quarter of 2025 was $2.5 million compared to $1.6 million last quarter and compared to $3.2 million in the same quarter last year.   The Bank’s allowance coverage ratio decreased to 1.27% of loans as compared to 1.29% in the prior quarter.

Capitalization

As of September 30, 2025, the Bank’s tangible capital ratio was 10.38%, the leverage ratio was 10.66%, the common equity tier 1 capital ratio was 11.34% and the total capital ratio stood at 14.56%. 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 third quarter 2025 financial results will be held tomorrow October 21, 2025 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 888-243-4451 (domestic) or 412-542-4135 (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 877-344-7529 (domestic) or 412-317-0088 (international) through November 4, 2025; the passcode is 7582330.

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:	AT FINANCIAL PROFILES:
Edward J. Czajka	Jeffrey Haas
Executive Vice President	General Information
Chief Financial Officer	(310) 622-8240
(213) 891-1188	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
					September 30,			June 30,			September 30,
					2025			2025			2024
Interest income:
	Loans, including fees				$	110,645		$	105,884		$	114,112
	Investment securities					15,977			14,326			15,032
	Fed funds sold					228			233			280
		Total interest income				126,850			120,443			129,424
Interest expense:
	Interest-bearing demand					17,562			16,171			23,211
	Savings					67			71			84
	Time certificates					34,792			34,932			35,956
	FHLB borrowings					1,794			1,070			-
	Subordinated debt					1,325			1,325			1,325
		Total interest expense				55,540			53,569			60,576
		Net interest income				71,310			66,874			68,848
Provision for credit losses						2,500			1,600			3,200
		Net interest income after provision for credit losses				68,810			65,274			65,648
Noninterest income:
	Fees & service charges on deposit accounts					625			635			747
	Letters of credit fee income					2,421			2,333			1,959
	BOLI income					105			104			108
	Net gain on sale of loans					56			172			91
	Other income					458			518			554
		Total noninterest income				3,665			3,762			3,459
Noninterest expense:
	Salary and employee benefits					14,240			14,247			13,525
	Net occupancy expense					2,297			2,271			1,883
	Business development and promotion expense					238			240			241
	Professional services					1,494			1,507			1,816
	Office supplies and equipment expense					361			419			435
	OREO valuation allowance and related expense					463			1,479			1,915
	Other					2,405			2,282			2,274
		Total noninterest expense				21,498			22,445			22,089
		Income before provision for income taxes				50,977			46,591			47,018
Income tax expense						15,038			13,744			13,635
		Net income			$	35,939		$	32,847		$	33,383
Income per share available to common shareholders
		Basic			$	2.90		$	2.61		$	2.50
		Diluted			$	2.84		$	2.57		$	2.46
Weighted-average common shares outstanding
		Basic				12,384,924			12,570,755			13,327,848
		Diluted				12,634,174			12,776,240			13,544,273
Cash dividends per common share					$	0.75		$	0.75		$	0.70

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
					For the Nine Months Ended
					September 30,			September 30,			Change
					2025			2024			%
Interest income:
	Loans, including fees				$	318,020			333,543		-4.7	%
	Investment securities					43,113			48,841		-11.7	%
	Fed funds sold					689			854		-19.3	%
		Total interest income				361,822			383,238		-5.6	%
Interest expense:
	Interest-bearing demand					50,323			69,706		-27.8	%
	Savings					207			238		-13.1	%
	Time certificates					103,611			105,864		-2.1	%
	FHLB borrowings					2,864			-		100.0	%
	Subordinated debt					3,975			3,975		0.0	%
		Total interest expense				160,980			179,783		-10.5	%
		Net interest income				200,842			203,455		-1.3	%
Provision for credit losses						4,800			10,100		-52.5	%
		Net interest income after provision for credit losses				196,042			193,355		1.4	%
Noninterest income:
	Fees & service charges on deposit accounts					1,976			2,411		-18.0	%
	Letters of credit fee income					6,998			5,211		34.3	%
	BOLI income					312			318		-1.8	%
	Net gain on sale of loans					503			547		-8.0	%
	Other income					1,636			1,441		13.5	%
		Total noninterest income				11,425			9,928		15.1	%
Noninterest expense:
	Salary and employee benefits					43,326			40,369		7.3	%
	Net occupancy expense					6,862			5,310		29.2	%
	Business development and promotion expense					940			910		3.3	%
	Professional services					4,652			5,105		-8.9	%
	Office supplies and equipment expense					1,166			1,385		-15.8	%
	OREO valuation allowance and related expense					3,473			2,079		67.1	%
	Other					6,893			6,656		3.6	%
		Total noninterest expense				67,312			61,814		8.9	%
		Income before provision for income taxes				140,155			141,469		-0.9	%
Income tax expense						41,345			41,028		0.8	%
		Net income			$	98,810		$	100,441		-1.6	%
Income per share available to common shareholders
		Basic			$	7.77		$	7.50		3.6	%
		Diluted			$	7.63		$	7.39		3.2	%
Weighted-average common shares outstanding
		Basic				12,723,788			13,399,487		-5.0	%
		Diluted				12,949,445			13,587,820		-4.7	%
Dividends per share					$	2.25		$	2.10		7.1	%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
				September 30,				December 31,
					2025				2024
				(Unaudited)				(Audited)
Assets
Cash and due from banks				$	795,459			$	765,515
Fed funds sold					20,000				20,000
	Cash and cash equivalents				815,459				785,515
Securities held-to-maturity, at amortized cost					19,034				20,021
Securities available-for-sale, at fair value					569,115				348,706
Loans held for sale, at lower of cost or fair value					-				2,214
Loans					5,872,011				5,640,615
	Less allowance for credit losses				(74,692	)			(71,477	)
	Less amortized deferred loan fees, net				(9,956	)			(9,234	)
	Loans, net				5,787,363				5,559,904
Other real estate owned and repossessed assets					52,609				14,991
Bank furniture and fixtures, net					7,771				8,462
Bank-owned life insurance					10,641				10,433
Accrued interest receivable					36,449				33,561
Investment in affordable housing partnerships					73,874				58,346
Federal Home Loan Bank stock, at cost					15,000				15,000
Deferred tax assets					43,711				47,402
Income tax receivable					5,190				2,195
Operating lease right-of-use assets					27,063				13,182
Other assets					4,515				3,497
	Total assets			$	7,467,794			$	6,923,429
Liabilities and Shareholders' Equity
Deposits:
	Noninterest bearing demand deposits			$	654,302			$	704,859
	Interest bearing deposits:				2,205,865				2,026,965
		Savings			31,087				30,150
		Time certificates of $250,000 or more			1,699,757				1,477,931
		Other time certificates			1,638,662				1,676,943
		Total deposits			6,229,673				5,916,848
Advances from Federal Home Loan Bank					200,000				-
Subordinated debt issuance, net					148,647				148,469
Commitments to fund investment in affordable housing partnerships					24,874				21,623
Operating lease liabilities					31,073				16,990
Accrued interest payable					15,655				16,517
Other liabilities					42,230				39,830
	Total liabilities				6,692,152				6,160,277
Shareholders' equity					775,642				763,152
	Total liabilities and shareholders' equity			$	7,467,794			$	6,923,429
Book value per common share				$	62.81			$	57.86
Number of common shares outstanding					12,349,889				13,188,776

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				For the Quarter Ended
				September 30,			June 30,			March 31,			December 31,			September 30,
					2025			2025			2025			2024			2024
Unaudited historical quarterly operations data:
	Interest income			$	126,850		$	120,443		$	114,529		$	125,858		$	129,424
	Interest expense				55,540			53,569			51,871			56,685			60,576
		Interest income before provision for credit losses			71,310			66,874			62,658			69,173			68,848
	Provision for credit losses				2,500			1,600			700			2,000			3,200
	Noninterest income				3,665			3,762			3,998			3,637			3,459
	Noninterest expense				21,498			22,445			23,369			28,246			22,089
	Income tax expense				15,038			13,744			12,563			12,343			13,635
		Net income		$	35,939		$	32,847		$	30,024		$	30,221		$	33,383
	Earnings per share
		Basic		$	2.90		$	2.61		$	2.27		$	2.29		$	2.50
		Diluted		$	2.84		$	2.57		$	2.23		$	2.25		$	2.46
Ratios for the period:
	Return on average assets				1.93	%		1.85	%		1.76	%		1.74	%		1.95	%
	Return on average equity				18.64	%		17.55	%		15.62	%		15.81	%		17.77	%
	Net interest margin (Fully-taxable equivalent)				3.92	%		3.85	%		3.75	%		4.06	%		4.10	%
	Noninterest expense to average assets				1.16	%		1.26	%		1.37	%		1.62	%		1.29	%
	Efficiency ratio				28.67	%		31.78	%		35.06	%		38.79	%		30.55	%
	Net (recoveries) charge-offs to average loans (annualized)				0.11	%		0.00	%		-0.01	%		0.47	%		-0.00	%
Ratios as of period end:
	Tangible common equity ratio				10.38	%		10.26	%		10.96	%		11.02	%		10.92	%
	Tier 1 leverage capital ratio				10.66	%		10.73	%		11.52	%		11.33	%		11.28	%
	Common equity tier 1 risk-based capital ratio				11.34	%		11.18	%		11.86	%		11.80	%		11.66	%
	Tier 1 risk-based capital ratio				11.34	%		11.18	%		11.86	%		11.80	%		11.66	%
	Total risk-based capital ratio				14.56	%		14.43	%		15.15	%		15.11	%		15.06	%
	Allowances for credit losses to loans at end of period				1.27	%		1.29	%		1.28	%		1.27	%		1.36	%
	Allowance for credit losses to non-performing loans			4.24x			1.41x			0.91x			1.89x			3.92x
Average balances:
	Total securities			$	583,302		$	503,861		$	402,754		$	350,732		$	356,590
	Total loans				5,753,801			5,623,010			5,555,010			5,542,558			5,458,613
	Total earning assets				7,234,568			6,984,272			6,780,438			6,788,487			6,684,766
	Total assets				7,382,265			7,121,047			6,905,249			6,920,325			6,817,979
	Total time certificate of deposits				3,330,241			3,321,327			3,164,766			3,144,523			2,874,985
	Total interest bearing deposits				5,501,767			5,345,308			5,244,243			5,220,655			5,124,245
	Total deposits				6,169,728			6,005,486			5,886,163			5,905,127			5,828,227
	Total interest bearing liabilities				5,850,376			5,614,737			5,392,735			5,369,092			5,272,617
	Total equity				764,766			750,535			779,339			760,345			747,222

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
			For the Nine Months Ended
			September 30,				September 30,
				2025				2024
	Interest income		$	361,822			$	383,238
	Interest expense			160,980				179,783
		Interest income before provision for credit losses		200,842				203,455
	Provision for credit losses			4,800				10,100
	Noninterest income			11,425				9,928
	Noninterest expense			67,312				61,814
	Income tax expense			41,345				41,028
		Net income	$	98,810			$	100,441
	Earnings per share
		Basic	$	7.77			$	7.50
		Diluted	$	7.63			$	7.39
Ratios for the period:
	Return on average assets			1.85	%			1.97	%
	Return on average equity			17.27	%			18.57	%
	Net interest margin (Fully-taxable equivalent)			3.84	%			4.08	%
	Noninterest expense to average assets			1.26	%			1.21	%
	Efficiency ratio			31.71	%			28.97	%
	Net charge-off to average loans			0.04	%			0.31	%
Average balances:
	Total securities		$	497,301			$	352,982
	Total loans			5,644,668				5,347,918
	Total earning assets			7,001,424				6,666,439
	Total assets			7,137,935				6,800,008
	Total time certificate of deposits			3,272,717				2,870,717
	Total interest bearing deposits			5,364,715				5,110,755
	Total deposits			6,021,497				5,830,555
	Total interest bearing liabilities			5,620,958				5,259,068
	Total equity			764,826				722,560

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				As of
				September 30,				June 30,				March 31,				December 31,				September 30,
					2025				2025				2025				2024				2024
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	815,459			$	796,257			$	925,183			$	785,515			$	804,994
	Securities held-to-maturity, at amortized cost				19,034				19,456				19,745				20,021				20,311
	Securities available-for-sale, at fair value				569,115				577,040				390,096				348,706				337,363
	Loans:
		Real estate – Mortgage:
			Real estate—Residential	$	793,217			$	767,620			$	779,462			$	790,069			$	753,453
			Real estate—Commercial		2,890,990				2,868,308				2,897,956				2,840,771				2,882,506
			Total Real Estate – Mortgage		3,684,207				3,635,928				3,677,418				3,630,840				3,635,959
		Real estate – Construction:
			R/E Construction — Residential		285,623				291,343				306,283				296,580				274,214
			R/E Construction — Commercial		323,897				303,354				269,065				287,185				290,308
			Total real estate construction loans		609,520				594,697				575,348				583,765				564,522
		Commercial and industrial			1,570,423				1,501,188				1,374,379				1,418,930				1,365,550
		SBA			7,630				7,741				7,104				6,833				5,424
		Consumer and others			231				56				164				247				124
			Gross loans		5,872,011				5,739,610				5,634,413				5,640,615				5,571,579
	Allowance for credit losses on loans				(74,692	)			(73,830	)			(72,274	)			(71,477	)			(76,051	)
	Net deferred loan fees				(9,956	)			(11,940	)			(9,652	)			(9,234	)			(10,414	)
		Net loans, excluding loans held for sale		$	5,787,363			$	5,653,840			$	5,552,487			$	5,559,904			$	5,485,114
	Loans held for sale			$	-			$	-			$	-			$	2,214			$	225
		Net loans		$	5,787,363			$	5,653,840			$	5,552,487			$	5,562,118			$	5,485,339
	Other real estate owned and repossessed assets			$	52,609			$	13,755			$	13,650			$	14,991			$	15,082
	Investment in affordable housing partnerships				73,874				74,783				63,612				58,346				58,009
	Federal Home Loan Bank stock, at cost				15,000				15,000				15,000				15,000				15,000
	Other assets				135,340				128,629				120,319				118,732				136,246
		Total assets		$	7,467,794			$	7,278,760			$	7,100,092			$	6,923,429			$	6,872,344
Liabilities:
	Deposits:
		Demand		$	654,302			$	675,102			$	730,270			$	704,859			$	682,859
		Interest bearing demand			2,205,865				2,004,135				2,099,987				2,026,965				1,994,288
		Savings			31,087				34,333				32,631				30,150				29,793
		Time certificates of $250,000 or more			1,699,757				1,681,026				1,531,715				1,477,931				1,478,500
		Other time certificates			1,638,662				1,683,737				1,678,132				1,676,943				1,682,324
		Total deposits		$	6,229,673			$	6,078,333			$	6,072,735			$	5,916,848			$	5,867,764
	Advance from Federal Home Loan Bank				200,000				200,000				-				-				-
	Subordinated debt issuance, net				148,647				148,588				148,529				148,469				148,410
	Commitments to fund investment in affordable housing partnerships				24,874				30,645				20,956				21,623				23,617
	Other liabilities				88,958				73,534				79,268				73,337				82,436
		Total liabilities		$	6,692,152			$	6,531,100			$	6,321,488			$	6,160,277			$	6,122,227
Equity:
	Common stock, no par value			$	210,882			$	210,882			$	210,882			$	210,882			$	210,882
	Additional paid-in capital				103,235				101,088				99,603				95,791				93,631
	Treasury stock				(277,351	)			(271,005	)			(214,406	)			(201,172	)			(194,585	)
	Retained earnings				755,587				728,891				705,360				685,108				664,808
	Accumulated other comprehensive income				(16,711	)			(22,196	)			(22,835	)			(27,457	)			(24,619	)
		Total shareholders' equity		$	775,642			$	747,660			$	778,604			$	763,152			$	750,117
		Total liabilities and shareholders' equity		$	7,467,794			$	7,278,760			$	7,100,092			$	6,923,429			$	6,872,344

PREFERRED BANK
Quarter-to-Date Average Balances, Yield and Rates
(unaudited)
			Three months ended September 30,								Three months ended March 31,								Three months ended September 30,
				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)		$	5,754,073		$	110,645	7.63	%		$	5,632,204		$	105,884	7.54	%		$	5,459,842		$	114,112	8.31	%
	Investment securities(3)			583,302			6,257	4.26	%			503,861			5,195	4.14	%			356,590			3,610	4.03	%
	Federal funds sold			20,000			228	4.52	%			20,511			233	4.56	%			20,164			280	5.52	%
	Other earning assets			877,193			9,811	4.44	%			827,696			9,230	4.47	%			848,170			11,521	5.40	%
		Total interest earning assets		7,234,568			126,941	6.96	%			6,984,272			120,542	6.92	%			6,684,766			129,523	7.71	%
	Deferred loan fees, net			(10,686	)							(10,005	)							(10,248	)
	Allowance for credit losses on loans			(72,784	)							(72,328	)							(72,899	)
Noninterest earning assets:
	Cash and due from banks			10,071								12,590								10,826
	Bank furniture and fixtures			7,945								8,215								9,419
	Right of use assets			19,153								19,917								22,496
	Other assets			193,998								178,386								173,619
		Total assets	$	7,382,265							$	7,121,047							$	6,817,979
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand and savings	$	2,171,526		$	17,629	3.22	%		$	2,023,981		$	16,242	3.22	%		$	2,249,260		$	23,295	4.12	%
		TCD $250K or more		1,686,710			17,406	4.09	%			1,644,322			17,092	4.17	%			1,412,073			17,866	5.03	%
		Other time certificates		1,643,531			17,386	4.20	%			1,677,005			17,840	4.27	%			1,462,912			18,090	4.92	%
		Total interest bearing deposits		5,501,767			52,421	3.78	%			5,345,308			51,174	3.84	%			5,124,245			59,251	4.60	%
Advance from Federal Home Loan Bank				200,000			1,794	3.56	%			120,879			1,070	3.55	%			-			-	0.00	%
Subordinated debt, net				148,609			1,325	3.54	%			148,550			1,325	3.58	%			148,372			1,325	3.55	%
		Total interest bearing liabilities		5,850,376			55,540	3.77	%			5,614,737			53,569	3.83	%			5,272,617			60,576	4.57	%
Noninterest bearing liabilities:
	Demand deposits			667,961								660,178								703,982
	Lease liability			22,908								23,657								18,882
	Other liabilities			76,255								71,940								75,276
		Total liabilities		6,617,500								6,370,512								6,070,757
Shareholders’ equity				764,766								750,535								747,222
		Total liabilities and shareholders’ equity	$	7,382,266							$	7,121,047							$	6,817,979
Net interest income						$	71,401							$	66,973							$	68,947
Net interest spread								3.19	%							3.10	%							3.14	%
Net interest margin								3.92	%							3.85	%							4.10	%
Cost of Deposits:
	Noninterest bearing demand deposits		$	667,961							$	660,178							$	703,982
	Interest bearing deposits			5,501,767			52,421	3.78	%			5,345,308			51,174	3.84	%			5,124,245			59,251	4.60	%
		Total Deposits	$	6,169,728		$	52,421	3.37	%		$	6,005,486		$	51,174	3.42	%		$	5,828,227		$	59,251	4.04	%
(1)	Includes non-accrual loans and loans held for sale
(2)	Net loan fee income of $1.1 million, $1.7 million and $991,000 for the quarter ended September 30, 2025, June 30, 2025 and September 30, 2024, respectively, are included in the yield computations
(3)	Yields on securities have been adjusted to a tax-equivalent basis

PREFERRED BANK
Year-to-Date Average Balances, Yield and Rates
(unaudited)
			Nine Months ended September 30,
				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)		$	5,648,323		$	318,020	7.53	%		$	5,350,465		$	333,543	8.33	%
	Investment securities(3)			497,301			15,546	4.18	%			352,982			10,691	4.05	%
	Federal funds sold			20,244			689	4.55	%			20,472			854	5.57	%
	Other earning assets			835,556			27,857	4.46	%			942,520			38,448	5.45	%
		Total interest earning assets		7,001,424			362,112	6.91	%			6,666,439			383,536	7.68	%
	Deferred loan fees, net			(9,965	)							(10,466	)
	Allowance for credit losses on loans			(72,225	)							(76,775	)
Noninterest earning assets:
	Cash and due from banks			11,178								10,693
	Bank furniture and fixtures			8,198								9,762
	Right of use assets			18,105								22,462
	Other assets			181,220								177,893
		Total assets	$	7,137,935							$	6,800,008
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand/ savings	$	2,091,998		$	50,530	3.23	%		$	2,240,038		$	69,944	4.17	%
		TCD $250K or more		1,605,201			50,138	4.18	%			1,377,621			51,662	5.01	%
		Other time certificates		1,667,516			53,473	4.29	%			1,493,096			54,202	4.85	%
		Total interest \bearing deposits		5,364,715			154,141	3.84	%			5,110,755			175,808	4.59	%
Advance from Federal Home Loan Bank				107,692			2,864	3.56	%			-			-	0.00	%
Subordinated debt, net				148,551			3,975	3.58	%			148,313			3,975	3.58	%
		Total interest bearing liabilities		5,620,958			160,980	3.83	%			5,259,068			179,783	4.57	%
Noninterest bearing liabilities:
	Demand deposits			656,782								719,800
	Lease liability			21,857								19,401
	Other liabilities			73,511								79,179
		Total liabilities		6,373,108								6,077,448
Shareholders’ equity				764,826								722,560
		Total liabilities and shareholders’ equity	$	7,137,934							$	6,800,008
Net interest income						$	201,132							$	203,753
Net interest spread								3.09	%							3.12	%
Net interest margin								3.84	%							4.08	%
Cost of Deposits:
	Noninterest bearing demand deposits		$	656,782							$	719,800
	Interest bearing deposits			5,364,715			154,141	3.84	%			5,110,755			175,808	4.59	%
		Total Deposits	$	6,021,497		$	154,141	3.42	%		$	5,830,555		$	175,808	4.03	%
(1)	Includes non-accrual loans and loans held for sale
(2)	Net loan fee income of $3.6 million and $3.4 million for the nine months ended September 30, 2025 and 2024, respectively, are included in the yield computations
(3)	Yields on securities have been adjusted to a tax-equivalent basis

PREFERRED BANK
Loan and Credit Quality Information
Allowance For Credit Losses History
					Nine Months Ended				Year Ended
					September 30, 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 (Recoveries) Charge-Offs					1,585				18,978
	Provision for Credit Losses:					4,800				12,100
Balance at End of Period					$	74,692			$	71,477
Average Loans Held for Investment					$	5,644,668			$	5,396,844
Loans Held for Investment at End of Period					$	5,872,011			$	5,640,615
Net (Recoveries) Charge-Offs to Average Loans						0.04	%			0.35	%
Allowances for Credit Losses to Loans at End of Period						1.27	%			1.27	%

FAQ

What were Preferred Bank's net income and diluted EPS for Q3 2025 (PFBC)?

Preferred Bank reported net income of $35.9M and diluted EPS of $2.84 for Q3 2025.

How did Preferred Bank's loans and deposits change in Q3 2025 (PFBC)?

Total loans rose by $132.4M (2.3%) and total deposits rose by $151.3M (2.5%) sequentially in Q3 2025.

What happened to Preferred Bank's nonperforming loans and OREO in Q3 2025 (PFBC)?

Nonperforming loans decreased to $17.6M after foreclosure of a large loan; the related OREO was subsequently sold and a pre-tax gain was recorded.

Did Preferred Bank's net interest margin improve in Q3 2025 (PFBC)?

Net interest margin expanded to 3.92% from 3.85% last quarter but remained below 4.10% in Q3 2024.

How did Preferred Bank's capital ratios change as of September 30, 2025 (PFBC)?

As of September 30, 2025 tangible capital ratio was 10.38%, leverage ratio 10.66%, CET1 11.34%, and total capital 14.56%.

When is Preferred Bank's Q3 2025 earnings call and how can investors access it (PFBC)?

The conference call and webcast is scheduled for Oct 21, 2025 at 2:00 p.m. ET / 11:00 a.m. PT; the webcast is available on the company's Investor Relations website.