LOS ANGELES, July 21, 2025 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), one of the larger independent California banks, today reported results for the quarter ended June 30, 2025. Preferred Bank ("the Bank") reported net income of $32.8 million or $2.52 per diluted share for the second quarter of 2025. This represents an increase in net income of $2.8 million from the prior quarter and a small decrease of $745,000 from the same quarter last year. The increase compared to the prior quarter was mainly due to an increase in net interest income as there was a $2.8 million reversal of interest income which occurred in the first quarter of 2025. The decrease from the same quarter last year was due mainly to an increase in noninterest expense, which was up by $2.8 million, which was due to a $1.3 million write down of the Bank's Santa Barbara OREO property.
Highlights for the Quarter:
- Return on average assets was 1.85%
- Return on average equity was 17.55%
- Total loans increased by $105.2 million or 1.9%, linked quarter
- The efficiency ratio was 31.79%
Li Yu, Chairman and CEO, commented, "We are pleased to report our results for the second quarter of 2025. We recorded net income of $32.8 million or $2.52 per fully diluted share. This quarter we had an increase in our loan portfolio of 1.8% (linked quarter), however, deposits only increased slightly. The Bank's net interest margin improved to 3.85%. Last quarter we reported a net interest margin of 3.75% which was negatively impacted by an outsized interest reversal.
Our credit quality is trending positively, non-accrual loans decreased from $78.9 million as of March 31, 2025 to $51.2 million at June 30, 2025. Total criticized loans also decreased by a similar amount. Likewise, 30 – 89 days past due loans are trending positively, too.
The uncertainty caused by the tariffs is beginning to clear up, and together with a new budget we now have a better picture of our operating environment. We look forward to be able to plan for the Bank's future."
Results of Operations
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $66.9 million for the second quarter of 2025. This represents a $4.2 million increase over the $62.7 million recorded in the prior quarter and a $767,000 increase over the same quarter last year. The increase compared to the prior quarter was due to a $2.8 million reversal of interest income in the prior quarter due to the recognition of two non-accrual loans. The increase over the same period last year was due primarily to loan growth and growth in the investment portfolio, partially offset by growth in deposits. Interest expense decreased by $7.6 million from the second quarter of 2024 due to lower deposit rates but increased over the prior quarter due to deposit growth and FHLB borrowings expense. During the second quarter of 2025, the Bank borrowed $200 million in term borrowings from the FHLB and invested the funds in U.S. Treasuries to lock in an interest spread. Because the spread on the borrowings and the U.S. Treasuries was less than the Bank's net interest margin, it has the effect of compressing the margin but does increase net interest income. The Bank's net interest margin came in at 3.85% for the quarter, this is up from the 3.75% posted last quarter but down from the 3.96% margin achieved in the second quarter of the prior year.
Noninterest Income. For the second quarter of 2025, noninterest income was $3.8 million compared with $3.4 million for the same quarter last year and compared to $4.0 million for the first quarter of 2025. The increase over the same quarter last year was due to letter of credit (LC) fee income which was up by $584,000. In comparison to the prior quarter, other income was down by $142,000 and gains on SBA loan sales were down by $103,000.
Noninterest Expense. Total noninterest expense was $22.5 million for the second quarter of 2025 compared to $23.4 million for the first quarter of 2025 and compared to the $19.7 million recorded in the same period last year. The primary reason for the decrease from the prior quarter was mainly due to personnel expense which decreased by $592,000. The decrease was due to payroll taxes which spike in the first quarter due to the payout of incentive compensation. In comparing to the same quarter last year, personnel expense was up by $1.3 million, occupancy expense was up by $555,000 and OREO expense was up by $1.5 million due to a valuation charge of $1.3 million related to the OREO property in Santa Barbara. Salary expenses increased over the same quarter last year due mainly to an increase in personnel and merit increases as well as a decrease in loan origination cost deferrals.
Income Taxes. The Bank recorded a provision for income taxes of $13.7 million for the second 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 prior quarter. 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.
Balance Sheet Summary
Total gross loans at June 30, 2025 were $5.74 billion, an increase of $99.0 million from the total of $5.64 billion as of December 31, 2024. Total deposits were $6.08 billion, an increase of $161.5 million from the $5.92 billion as of December 31, 2024. Total assets were $7.28 billion, an increase of $355.3 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 $52.3 million as of June 30, 2025. This represents a decrease from the prior quarter of $26.6 million as the Bank sold one of the two larger non-accrual loans during the quarter, at par. The other significant non-accrual loan of $37.1 million is in bankruptcy and as previously mentioned, the Bank does not expect any loss content on the resolution of this loan. Total net charge-offs (recoveries) for the quarter were $44,000 compared to net recoveries of ($97,000) in the prior quarter. In addition to that, the Bank wrote down the value of its OREO property in Santa Barbara by $1.3 million, reflecting the proposed net proceeds of the most recent sales contract that the Bank was involved in, which sale did not materialize. Total criticized loans decreased to $104.5 million from $129.2 million reported in the prior quarter.
Allowance for Credit Losses
The provision for credit losses for the second quarter of 2025 was $1.6 million compared to $700,000 last quarter and compared to $2.5 million in the same quarter last year. The Bank's allowance coverage ratio increased to 1.29% of loans as compared to 1.28% in the prior quarter.
Capitalization
As of June 30, 2025, the Bank's tangible capital ratio was 10.26%, the leverage ratio was 10.73%, the common equity tier 1 capital ratio was 11.18% and the total capital ratio stood at 14.43%. 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 second quarter 2025 financial results will be held this afternoon July 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 July 28, 2025; the passcode is 9171084.
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 Executive Vice President Chief Financial Officer (213) 891-1188 | Jeffrey Haas General Information (310) 622-8240 [email protected] |
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 | |||||||||||||
| June 30, | March 31, | June 30, | |||||||||||
| 2025 | 2025 | 2024 | |||||||||||
| Interest income: | |||||||||||||
| Loans, including fees | $ | 105,884 | $ | 101,491 | $ | 109,451 | |||||||
| Investment securities | 14,326 | 12,810 | 17,552 | ||||||||||
| Fed funds sold | 233 | 228 | 291 | ||||||||||
| Total interest income | 120,443 | 114,529 | 127,294 | ||||||||||
| Interest expense: | |||||||||||||
| Interest-bearing demand | 16,171 | 16,590 | 24,205 | ||||||||||
| Savings | 71 | 69 | 79 | ||||||||||
| Time certificates | 34,932 | 33,887 | 35,578 | ||||||||||
| FHLB borrowings | 1,070 | - | - | ||||||||||
| Subordinated debt | 1,325 | 1,325 | 1,325 | ||||||||||
| Total interest expense | 53,569 | 51,871 | 61,187 | ||||||||||
| Net interest income | 66,874 | 62,658 | 66,107 | ||||||||||
| Provision for credit losses | 1,600 | 700 | 2,500 | ||||||||||
| Net interest income after provision for credit losses | 65,274 | 61,958 | 63,607 | ||||||||||
| Noninterest income: | |||||||||||||
| Fees & service charges on deposit accounts | 635 | 716 | 819 | ||||||||||
| Letters of credit fee income | 2,333 | 2,244 | 1,749 | ||||||||||
| BOLI income | 104 | 103 | 105 | ||||||||||
| Net gain on sale of other real estate owned | 12 | - | - | ||||||||||
| Net gain on sale of loans | 172 | 275 | 353 | ||||||||||
| Other income | 518 | 660 | 378 | ||||||||||
| Total noninterest income | 3,774 | 3,998 | 3,404 | ||||||||||
| Noninterest expense: | |||||||||||||
| Salary and employee benefits | 14,247 | 14,839 | 12,944 | ||||||||||
| Net occupancy expense | 2,271 | 2,294 | 1,716 | ||||||||||
| Business development and promotion expense | 240 | 462 | 403 | ||||||||||
| Professional services | 1,507 | 1,651 | 1,832 | ||||||||||
| Office supplies and equipment expense | 419 | 386 | 477 | ||||||||||
| OREO valuation allowance and related expense | 1,491 | 1,531 | 29 | ||||||||||
| Other | 2,282 | 2,206 | 2,296 | ||||||||||
| Total noninterest expense | 22,457 | 23,369 | 19,697 | ||||||||||
| Income before provision for income taxes | 46,591 | 42,587 | 47,314 | ||||||||||
| Income tax expense | 13,744 | 12,563 | 13,722 | ||||||||||
| Net income | $ | 32,847 | $ | 30,024 | $ | 33,592 | |||||||
| Income per share available to common shareholders | |||||||||||||
| Basic | $ | 2.56 | $ | 2.27 | $ | 2.51 | |||||||
| Diluted | $ | 2.52 | $ | 2.23 | $ | 2.48 | |||||||
| Weighted-average common shares outstanding | |||||||||||||
| Basic | 12,833,453 | 13,226,582 | 13,362,522 | ||||||||||
| Diluted | 13,038,937 | 13,453,176 | 13,548,400 | ||||||||||
| 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 Six Months Ended | |||||||||||||
| June 30, | June 30, | Change | |||||||||||
| 2025 | 2024 | % | |||||||||||
| Interest income: | |||||||||||||
| Loans, including fees | $ | 207,375 | 219,431 | -5.5 | % | ||||||||
| Investment securities | 27,136 | 33,809 | -19.7 | % | |||||||||
| Fed funds sold | 461 | 574 | -19.7 | % | |||||||||
| Total interest income | 234,972 | 253,814 | -7.4 | % | |||||||||
| Interest expense: | |||||||||||||
| Interest-bearing demand | 32,761 | 46,495 | -29.5 | % | |||||||||
| Savings | 140 | 154 | -8.8 | % | |||||||||
| Time certificates | 68,819 | 69,908 | -1.6 | % | |||||||||
| FHLB borrowings | 1,070 | - | 100.0 | % | |||||||||
| Subordinated debt | 2,650 | 2,650 | 0.0 | % | |||||||||
| Total interest expense | 105,440 | 119,207 | -11.5 | % | |||||||||
| Net interest income | 129,532 | 134,607 | -3.8 | % | |||||||||
| Provision for credit losses | 2,300 | 6,900 | -66.7 | % | |||||||||
| Net interest income after provision for credit losses | 127,232 | 127,707 | -0.4 | % | |||||||||
| Noninterest income: | |||||||||||||
| Fees & service charges on deposit accounts | 1,351 | 1,664 | -18.8 | % | |||||||||
| Letters of credit fee income | 4,578 | 3,252 | 40.8 | % | |||||||||
| BOLI income | 207 | 210 | -1.7 | % | |||||||||
| Net gain on sale of other real estate owned | 12 | - | 100.0 | % | |||||||||
| Net gain on sale of loans | 447 | 456 | -1.9 | % | |||||||||
| Other income | 1,177 | 887 | 32.8 | % | |||||||||
| Total noninterest income | 7,772 | 6,469 | 20.1 | % | |||||||||
| Noninterest expense: | |||||||||||||
| Salary and employee benefits | 29,086 | 26,844 | 8.4 | % | |||||||||
| Net occupancy expense | 4,565 | 3,427 | 33.2 | % | |||||||||
| Business development and promotion expense | 702 | 669 | 4.9 | % | |||||||||
| Professional services | 3,158 | 3,289 | -4.0 | % | |||||||||
| Office supplies and equipment expense | 805 | 950 | -15.3 | % | |||||||||
| OREO valuation allowance and related expense | 3,022 | 164 | 1742.7 | % | |||||||||
| Other | 4,488 | 4,382 | 2.4 | % | |||||||||
| Total noninterest expense | 45,826 | 39,725 | 15.4 | % | |||||||||
| Income before provision for income taxes | 89,178 | 94,451 | -5.6 | % | |||||||||
| Income tax expense | 26,307 | 27,393 | -4.0 | % | |||||||||
| Net income | $ | 62,871 | $ | 67,058 | -6.2 | % | |||||||
| Income per share available to common shareholders | |||||||||||||
| Basic | $ | 4.84 | $ | 4.99 | -3.0 | % | |||||||
| Diluted | $ | 4.77 | $ | 4.93 | -3.3 | % | |||||||
| Weighted-average common shares outstanding | |||||||||||||
| Basic | 12,989,636 | 13,435,700 | -3.3 | % | |||||||||
| Diluted | 13,193,850 | 13,608,783 | -3.0 | % | |||||||||
| Dividends per share | $ | 1.50 | $ | 1.40 | 7.1 | % | |||||||
| PREFERRED BANK | |||||||||||
| Condensed Consolidated Statements of Financial Condition | |||||||||||
| (unaudited) | |||||||||||
| (in thousands) | |||||||||||
| June 30, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| (Unaudited) | (Audited) | ||||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | 776,257 | $ | 765,515 | |||||||
| Fed funds sold | 20,000 | 20,000 | |||||||||
| Cash and cash equivalents | 796,257 | 785,515 | |||||||||
| Securities held-to-maturity, at amortized cost | 19,456 | 20,021 | |||||||||
| Securities available-for-sale, at fair value | 577,040 | 348,706 | |||||||||
| Loans held for sale, at lower of cost or fair value | - | 2,214 | |||||||||
| Loans | 5,739,610 | 5,640,615 | |||||||||
| Less allowance for credit losses | (73,830 | ) | (71,477 | ) | |||||||
| Less amortized deferred loan fees, net | (11,940 | ) | (9,234 | ) | |||||||
| Loans, net | 5,653,840 | 5,559,904 | |||||||||
| Other real estate owned and repossessed assets | 13,755 | 14,991 | |||||||||
| Customers' liability on acceptances | - | - | |||||||||
| Bank furniture and fixtures, net | 8,021 | 8,462 | |||||||||
| Bank-owned life insurance | 10,571 | 10,433 | |||||||||
| Accrued interest receivable | 31,757 | 33,561 | |||||||||
| Investment in affordable housing partnerships | 74,783 | 58,346 | |||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | |||||||||
| Deferred tax assets | 46,012 | 47,402 | |||||||||
| Income tax receivable | 9,744 | 2,195 | |||||||||
| Operating lease right-of-use assets | 19,346 | 13,182 | |||||||||
| Other assets | 3,178 | 3,497 | |||||||||
| Total assets | $ | 7,278,760 | $ | 6,923,429 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Deposits: | |||||||||||
| Noninterest bearing demand deposits | $ | 675,102 | $ | 704,859 | |||||||
| Interest bearing deposits: | 2,004,135 | 2,026,965 | |||||||||
| Savings | 34,333 | 30,150 | |||||||||
| Time certificates of $250,000 or more | 1,681,026 | 1,477,931 | |||||||||
| Other time certificates | 1,683,737 | 1,676,943 | |||||||||
| Total deposits | 6,078,333 | 5,916,848 | |||||||||
| Advances from Federal Home Loan Bank | 200,000 | - | |||||||||
| Subordinated debt issuance, net | 148,588 | 148,469 | |||||||||
| Commitments to fund investment in affordable housing partnerships | 30,645 | 21,623 | |||||||||
| Operating lease liabilities | 23,096 | 16,990 | |||||||||
| Accrued interest payable | 15,549 | 16,517 | |||||||||
| Other liabilities | 34,889 | 39,830 | |||||||||
| Total liabilities | 6,531,100 | 6,160,277 | |||||||||
| Shareholders' equity | 747,660 | 763,152 | |||||||||
| Total liabilities and shareholders' equity | $ | 7,278,760 | $ | 6,923,429 | |||||||
| Book value per common share | $ | 60.19 | $ | 57.86 | |||||||
| Number of common shares outstanding | 12,420,731 | 13,188,776 | |||||||||
| PREFERRED BANK | ||||||||||||||||||
| Selected Consolidated Financial Information | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| (in thousands, except for ratios) | ||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||
| 2025 | 2025 | 2024 | 2024 | 2024 | ||||||||||||||
| Unaudited historical quarterly operations data: | ||||||||||||||||||
| Interest income | $ | 120,443 | $ | 114,529 | $ | 125,858 | $ | 129,424 | $ | 127,294 | ||||||||
| Interest expense | 53,569 | 51,871 | 56,685 | 60,576 | 61,187 | |||||||||||||
| Interest income before provision for credit losses | 66,874 | 62,658 | 69,173 | 68,848 | 66,107 | |||||||||||||
| Provision for credit losses | 1,600 | 700 | 2,000 | 3,200 | 2,500 | |||||||||||||
| Noninterest income | 3,774 | 3,998 | 3,637 | 3,459 | 3,404 | |||||||||||||
| Noninterest expense | 22,457 | 23,369 | 28,246 | 22,089 | 19,697 | |||||||||||||
| Income tax expense | 13,744 | 12,563 | 12,343 | 13,635 | 13,722 | |||||||||||||
| Net income | $ | 32,847 | $ | 30,024 | $ | 30,221 | $ | 33,383 | $ | 33,592 | ||||||||
| Earnings per share | ||||||||||||||||||
| Basic | $ | 2.56 | $ | 2.27 | $ | 2.29 | $ | 2.50 | $ | 2.51 | ||||||||
| Diluted | $ | 2.52 | $ | 2.23 | $ | 2.25 | $ | 2.46 | $ | 2.48 | ||||||||
| Ratios for the period: | ||||||||||||||||||
| Return on average assets | 1.85 | % | 1.76 | % | 1.74 | % | 1.95 | % | 1.97 | % | ||||||||
| Return on average equity | 17.55 | % | 15.62 | % | 15.81 | % | 17.77 | % | 18.89 | % | ||||||||
| Net interest margin (Fully-taxable equivalent) | 3.85 | % | 3.75 | % | 4.06 | % | 4.10 | % | 3.96 | % | ||||||||
| Noninterest expense to average assets | 1.26 | % | 1.37 | % | 1.62 | % | 1.29 | % | 1.15 | % | ||||||||
| Efficiency ratio | 31.79 | % | 35.06 | % | 38.79 | % | 30.55 | % | 28.34 | % | ||||||||
| Net (recoveries) charge-offs to average loans (annualized) | 0.00 | % | -0.01 | % | 0.47 | % | -0.00 | % | 0.68 | % | ||||||||
| Ratios as of period end: | ||||||||||||||||||
| Tangible common equity ratio | 10.26 | % | 10.96 | % | 11.02 | % | 10.92 | % | 10.55 | % | ||||||||
| Tier 1 leverage capital ratio | 10.73 | % | 11.52 | % | 11.33 | % | 11.28 | % | 10.89 | % | ||||||||
| Common equity tier 1 risk-based capital ratio | 11.18 | % | 11.86 | % | 11.80 | % | 11.66 | % | 11.52 | % | ||||||||
| Tier 1 risk-based capital ratio | 11.18 | % | 11.86 | % | 11.80 | % | 11.66 | % | 11.52 | % | ||||||||
| Total risk-based capital ratio | 14.43 | % | 15.15 | % | 15.11 | % | 15.06 | % | 14.93 | % | ||||||||
| Allowances for credit losses to loans at end of period | 1.29 | % | 1.28 | % | 1.27 | % | 1.36 | % | 1.34 | % | ||||||||
| Allowance for credit losses to non-performing loans | 1.41x | 0.91x | 1.89x | 3.92x | 1.79x | |||||||||||||
| Average balances: | ||||||||||||||||||
| Total securities | $ | 503,861 | $ | 402,754 | $ | 350,732 | $ | 356,590 | $ | 353,357 | ||||||||
| Total loans | 5,623,010 | 5,555,010 | 5,542,558 | 5,458,613 | 5,320,360 | |||||||||||||
| Total earning assets | 6,984,272 | 6,780,438 | 6,788,487 | 6,684,766 | 6,728,498 | |||||||||||||
| Total assets | 7,121,047 | 6,905,249 | 6,920,325 | 6,817,979 | 6,863,829 | |||||||||||||
| Total time certificate of deposits | 3,321,327 | 3,164,766 | 3,144,523 | 2,874,985 | 2,884,259 | |||||||||||||
| Total interest bearing deposits | 5,345,308 | 5,244,243 | 5,220,655 | 5,124,245 | 5,203,034 | |||||||||||||
| Total deposits | 6,005,486 | 5,886,163 | 5,905,127 | 5,828,227 | 5,901,976 | |||||||||||||
| Total interest bearing liabilities | 5,614,737 | 5,392,735 | 5,369,092 | 5,272,617 | 5,351,347 | |||||||||||||
| Total equity | 750,535 | 779,339 | 760,345 | 747,222 | 715,190 | |||||||||||||
| PREFERRED BANK | |||||||||||
| Selected Consolidated Financial Information | |||||||||||
| (unaudited) | |||||||||||
| (in thousands, except for ratios) | |||||||||||
| For the Six Months Ended | |||||||||||
| June 30, | June 30, | ||||||||||
| 2025 | 2024 | ||||||||||
| Interest income | $ | 234,972 | $ | 253,814 | |||||||
| Interest expense | 105,440 | 119,207 | |||||||||
| Interest income before provision for credit losses | 129,532 | 134,607 | |||||||||
| Provision for credit losses | 2,300 | 6,900 | |||||||||
| Noninterest income | 7,772 | 6,469 | |||||||||
| Noninterest expense | 45,826 | 39,725 | |||||||||
| Income tax expense | 26,307 | 27,393 | |||||||||
| Net income | $ | 62,871 | $ | 67,058 | |||||||
| Earnings per share | |||||||||||
| Basic | $ | 4.84 | $ | 4.99 | |||||||
| Diluted | $ | 4.77 | $ | 4.93 | |||||||
| Ratios for the period: | |||||||||||
| Return on average assets | 1.81 | % | 1.99 | % | |||||||
| Return on average equity | 16.58 | % | 18.99 | % | |||||||
| Net interest margin (Fully-taxable equivalent) | 3.80 | % | 4.07 | % | |||||||
| Noninterest expense to average assets | 1.32 | % | 1.18 | % | |||||||
| Efficiency ratio | 33.38 | % | 28.16 | % | |||||||
| Net charge-off to average loans | -0.00 | % | 0.47 | % | |||||||
| Average balances: | |||||||||||
| Total securities | $ | 453,588 | $ | 351,159 | |||||||
| Total loans | 5,589,198 | 5,291,961 | |||||||||
| Total earning assets | 6,882,920 | 6,657,176 | |||||||||
| Total assets | 7,013,744 | 6,790,924 | |||||||||
| Total time certificate of deposits | 3,243,479 | 2,868,560 | |||||||||
| Total interest bearing deposits | 5,295,055 | 5,103,935 | |||||||||
| Total deposits | 5,946,154 | 5,831,732 | |||||||||
| Total interest bearing liabilities | 5,504,349 | 5,252,219 | |||||||||
| Total equity | 764,857 | 710,093 | |||||||||
| PREFERRED BANK | |||||||||||||||||||||||
| Selected Consolidated Financial Information | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| (in thousands, except for ratios) | |||||||||||||||||||||||
| As of | |||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||
| 2025 | 2025 | 2024 | 2024 | 2024 | |||||||||||||||||||
| Unaudited quarterly statement of financial position data: | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 796,257 | $ | 925,183 | $ | 785,515 | $ | 804,994 | $ | 917,677 | |||||||||||||
| Securities held-to-maturity, at amortized cost | 19,456 | 19,745 | 20,021 | 20,311 | 20,605 | ||||||||||||||||||
| Securities available-for-sale, at fair value | 577,040 | 390,096 | 348,706 | 337,363 | 331,909 | ||||||||||||||||||
| Loans: | |||||||||||||||||||||||
| Real estate – Mortgage: | |||||||||||||||||||||||
| Real estate—Residential | $ | 767,621 | $ | 779,462 | $ | 790,069 | $ | 753,453 | $ | 732,251 | |||||||||||||
| Real estate—Commercial | 2,868,307 | 2,897,956 | 2,840,771 | 2,882,506 | 2,833,430 | ||||||||||||||||||
| Total Real Estate – Mortgage | 3,635,928 | 3,677,418 | 3,630,840 | 3,635,959 | 3,565,681 | ||||||||||||||||||
| Real estate – Construction: | |||||||||||||||||||||||
| R/E Construction — Residential | 291,343 | 306,283 | 296,580 | 274,214 | 238,062 | ||||||||||||||||||
| R/E Construction — Commercial | 303,354 | 269,065 | 287,185 | 290,308 | 247,582 | ||||||||||||||||||
| Total real estate construction loans | 594,697 | 575,348 | 583,765 | 564,522 | 485,644 | ||||||||||||||||||
| Commercial and industrial | 1,501,188 | 1,374,379 | 1,418,930 | 1,365,550 | 1,371,694 | ||||||||||||||||||
| SBA | 7,741 | 7,104 | 6,833 | 5,424 | 5,463 | ||||||||||||||||||
| Consumer and others | 56 | 164 | 247 | 124 | 118 | ||||||||||||||||||
| Gross loans | 5,739,610 | 5,634,413 | 5,640,615 | 5,571,579 | 5,428,600 | ||||||||||||||||||
| Allowance for credit losses on loans | (73,830 | ) | (72,274 | ) | (71,477 | ) | (76,051 | ) | (72,848 | ) | |||||||||||||
| Net deferred loan fees | (11,940 | ) | (9,652 | ) | (9,234 | ) | (10,414 | ) | (10,502 | ) | |||||||||||||
| Net loans, excluding loans held for sale | $ | 5,653,840 | $ | 5,552,487 | $ | 5,559,904 | $ | 5,485,114 | $ | 5,345,250 | |||||||||||||
| Loans held for sale | $ | - | $ | - | $ | 2,214 | $ | 225 | $ | 955 | |||||||||||||
| Net loans | $ | 5,653,840 | $ | 5,552,487 | $ | 5,562,118 | $ | 5,485,339 | $ | 5,346,205 | |||||||||||||
| Other real estate owned and repossessed assets | $ | 13,755 | $ | 13,650 | $ | 14,991 | $ | 15,082 | $ | 16,716 | |||||||||||||
| Investment in affordable housing partnerships | 74,783 | 63,612 | 58,346 | 58,009 | 60,432 | ||||||||||||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | ||||||||||||||||||
| Other assets | 128,629 | 120,319 | 118,732 | 136,246 | 138,036 | ||||||||||||||||||
| Total assets | $ | 7,278,760 | $ | 7,100,092 | $ | 6,923,429 | $ | 6,872,344 | $ | 6,846,580 | |||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||
| Demand | $ | 675,102 | $ | 730,270 | $ | 704,859 | $ | 682,859 | $ | 675,767 | |||||||||||||
| Interest bearing demand | 2,004,135 | 2,099,987 | 2,026,965 | 1,994,288 | 2,326,214 | ||||||||||||||||||
| Savings | 34,333 | 32,631 | 30,150 | 29,793 | 28,251 | ||||||||||||||||||
| Time certificates of $250,000 or more | 1,681,026 | 1,531,715 | 1,477,931 | 1,478,500 | 1,406,149 | ||||||||||||||||||
| Other time certificates | 1,683,737 | 1,678,132 | 1,676,943 | 1,682,324 | 1,442,381 | ||||||||||||||||||
| Total deposits | $ | 6,078,333 | $ | 6,072,735 | $ | 5,916,848 | $ | 5,867,764 | $ | 5,878,762 | |||||||||||||
| Subordinated debt issuance, net | 148,588 | 148,529 | 148,469 | 148,410 | 148,351 | ||||||||||||||||||
| Commitments to fund investment in affordable housing partnerships | 30,645 | 20,956 | 21,623 | 23,617 | 27,946 | ||||||||||||||||||
| Other liabilities | 73,534 | 79,268 | 73,337 | 82,436 | 68,394 | ||||||||||||||||||
| Total liabilities | $ | 6,531,100 | $ | 6,321,488 | $ | 6,160,277 | $ | 6,122,227 | $ | 6,123,453 | |||||||||||||
| Equity: | |||||||||||||||||||||||
| Net common stock, no par value | $ | 40,965 | $ | 96,079 | $ | 105,501 | $ | 109,928 | $ | 113,509 | |||||||||||||
| Retained earnings | 728,891 | 705,360 | 685,108 | 664,808 | 640,675 | ||||||||||||||||||
| Accumulated other comprehensive income | (22,196 | ) | (22,835 | ) | (27,457 | ) | (24,619 | ) | (31,057 | ) | |||||||||||||
| Total shareholders' equity | $ | 747,660 | $ | 778,604 | $ | 763,152 | $ | 750,117 | $ | 723,127 | |||||||||||||
| Total liabilities and shareholders' equity | $ | 7,278,760 | $ | 7,100,092 | $ | 6,923,429 | $ | 6,872,344 | $ | 6,846,580 | |||||||||||||
| PREFERRED BANK | ||||||||||||||||||||||||||
| Quarter-to-Date Average Balances, Yield and Rates | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Three months ended June 30, | Three months ended March 31, | Three months ended June 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) | $ | 5,632,204 | $ | 105,884 | 7.54 | % | $ | 5,556,521 | $ | 101,491 | 7.41 | % | $ | 5,324,410 | $ | 109,451 | 8.27 | % | ||||||||
| Investment securities (3) | 503,861 | 5,195 | 4.14 | % | 402,754 | 4,093 | 4.12 | % | 353,357 | 3,652 | 4.16 | % | ||||||||||||||
| Federal funds sold | 20,511 | 233 | 4.56 | % | 20,222 | 228 | 4.57 | % | 20,866 | 291 | 5.61 | % | ||||||||||||||
| Other earning assets | 827,696 | 9,230 | 4.47 | % | 800,941 | 8,816 | 4.46 | % | 1,029,865 | 13,999 | 5.47 | % | ||||||||||||||
| Total interest earning assets | 6,984,272 | 120,542 | 6.92 | % | 6,780,438 | 114,628 | 6.86 | % | 6,728,498 | 127,393 | 7.61 | % | ||||||||||||||
| Deferred loan fees, net | (10,005 | ) | (9,189 | ) | (10,459 | ) | ||||||||||||||||||||
| Allowance for credit losses on loans | (72,328 | ) | (71,550 | ) | (79,119 | ) | ||||||||||||||||||||
| Noninterest earning assets: | ||||||||||||||||||||||||||
| Cash and due from banks | 12,590 | 11,513 | 10,626 | |||||||||||||||||||||||
| Bank furniture and fixtures | 8,215 | 8,439 | 9,787 | |||||||||||||||||||||||
| Right of use assets | 19,917 | 15,201 | 22,886 | |||||||||||||||||||||||
| Other assets | 178,386 | 170,397 | 181,610 | |||||||||||||||||||||||
| Total assets | $ | 7,121,047 | $ | 6,905,249 | $ | 6,863,829 | ||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||
| Interest bearing demand and savings | $ | 2,023,981 | $ | 16,242 | 3.22 | % | $ | 2,079,477 | $ | 16,659 | 3.25 | % | $ | 2,318,775 | $ | 24,284 | 4.21 | % | ||||||||
| TCD $250K or more | 1,644,322 | 17,092 | 4.17 | % | 1,482,324 | 15,640 | 4.28 | % | 1,379,116 | 17,295 | 5.04 | % | ||||||||||||||
| Other time certificates | 1,677,005 | 17,840 | 4.27 | % | 1,682,442 | 18,247 | 4.40 | % | 1,505,143 | 18,283 | 4.89 | % | ||||||||||||||
| Total interest bearing deposits | 5,345,308 | 51,174 | 3.84 | % | 5,244,243 | 50,546 | 3.91 | % | 5,203,034 | 59,862 | 4.63 | % | ||||||||||||||
| Advance from Federal Home Loan Bank | 120,879 | 1,070 | 3.55 | % | - | - | 0.00 | % | - | - | 0.00 | % | ||||||||||||||
| Subordinated debt, net | 148,550 | 1,325 | 3.58 | % | 148,492 | 1,325 | 3.62 | % | 148,313 | 1,325 | 3.59 | % | ||||||||||||||
| Total interest bearing liabilities | 5,614,737 | 53,569 | 3.83 | % | 5,392,735 | 51,871 | 3.90 | % | 5,351,347 | 61,187 | 4.60 | % | ||||||||||||||
| Noninterest bearing liabilities: | ||||||||||||||||||||||||||
| Demand deposits | 660,178 | 641,920 | 698,942 | |||||||||||||||||||||||
| Lease liability | 23,657 | 18,963 | 19,828 | |||||||||||||||||||||||
| Other liabilities | 71,940 | 72,292 | 78,522 | |||||||||||||||||||||||
| Total liabilities | 6,370,512 | 6,125,910 | 6,148,639 | |||||||||||||||||||||||
| Shareholders' equity | 750,535 | 779,339 | 715,190 | |||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,121,047 | $ | 6,905,249 | $ | 6,863,829 | ||||||||||||||||||||
| Net interest income | $ | 66,973 | $ | 62,757 | $ | 66,206 | ||||||||||||||||||||
| Net interest spread | 3.10 | % | 2.96 | % | 3.02 | % | ||||||||||||||||||||
| Net interest margin | 3.85 | % | 3.75 | % | 3.96 | % | ||||||||||||||||||||
| Cost of Deposits: | ||||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 660,178 | $ | 641,920 | $ | 698,942 | ||||||||||||||||||||
| Interest bearing deposits | 5,345,308 | 51,174 | 3.84 | % | 5,244,243 | 50,546 | 3.91 | % | 5,203,034 | 59,862 | 4.63 | % | ||||||||||||||
| Total Deposits | $ | 6,005,486 | $ | 51,174 | 3.42 | % | $ | 5,886,163 | $ | 50,546 | 3.48 | % | $ | 5,901,976 | $ | 59,862 | 4.08 | % | ||||||||
| (1) | Includes non-accrual loans and loans held for sale | |||||||||||||||||||||||||
| (2) | Net loan fee income of $1.1 million, $0.9 million and $1.3 million for the quarter ended June 30, 2025, March 31, 2025 and June 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) | ||||||||||||||||||
| Six Months ended June 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) | $ | 5,594,572 | $ | 207,375 | 7.47 | % | $ | 5,295,175 | $ | 219,431 | 8.33 | % | ||||||
| Investment securities (3) | 453,588 | 9,289 | 4.13 | % | 351,159 | 7,082 | 4.06 | % | ||||||||||
| Federal funds sold | 20,367 | 461 | 4.56 | % | 20,628 | 574 | 5.60 | % | ||||||||||
| Other earning assets | 814,393 | 18,045 | 4.47 | % | 990,214 | 26,927 | 5.47 | % | ||||||||||
| Total interest earning assets | 6,882,920 | 235,170 | 6.89 | % | 6,657,176 | 254,014 | 7.67 | % | ||||||||||
| Deferred loan fees, net | (9,599 | ) | (10,576 | ) | ||||||||||||||
| Allowance for credit losses on loans | (71,941 | ) | (78,734 | ) | ||||||||||||||
| Noninterest earning assets: | ||||||||||||||||||
| Cash and due from banks | 11,846 | 10,729 | ||||||||||||||||
| Bank furniture and fixtures | 8,326 | 9,936 | ||||||||||||||||
| Right of use assets | 17,572 | 22,444 | ||||||||||||||||
| Other assets | 174,620 | 179,949 | ||||||||||||||||
| Total assets | $ | 7,013,744 | $ | 6,790,924 | ||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Interest bearing demand/ savings | $ | 2,051,576 | $ | 32,901 | 3.23 | % | $ | 2,235,375 | $ | 46,649 | 4.20 | % | ||||||
| TCD $250K or more | 1,563,771 | 32,732 | 4.22 | % | 1,360,207 | 33,796 | 5.00 | % | ||||||||||
| Other time certificates | 1,679,708 | 36,087 | 4.33 | % | 1,508,353 | 36,112 | 4.81 | % | ||||||||||
| Total interest bearing deposits | 5,295,055 | 101,720 | 3.87 | % | 5,103,935 | 116,557 | 4.59 | % | ||||||||||
| Short-term borrowings | - | - | 0.00 | % | - | - | 0.00 | % | ||||||||||
| Advance from Federal Home Loan Bank | 60,773 | 1,070 | 3.55 | % | - | - | 0.00 | % | ||||||||||
| Subordinated debt, net | 148,521 | 2,650 | 3.60 | % | 148,284 | 2,650 | 3.59 | % | ||||||||||
| Total interest bearing liabilities | 5,504,349 | 105,440 | 3.86 | % | 5,252,219 | 119,207 | 4.56 | % | ||||||||||
| Noninterest bearing liabilities: | ||||||||||||||||||
| Demand deposits | 651,099 | 727,797 | ||||||||||||||||
| Lease liability | 21,323 | 19,664 | ||||||||||||||||
| Other liabilities | 72,116 | 81,151 | ||||||||||||||||
| Total liabilities | 6,248,887 | 6,080,831 | ||||||||||||||||
| Shareholders' equity | 764,857 | 710,093 | ||||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,013,744 | $ | 6,790,924 | ||||||||||||||
| Net interest income | $ | 129,730 | $ | 134,807 | ||||||||||||||
| Net interest spread | 3.03 | % | 3.11 | % | ||||||||||||||
| Net interest margin | 3.80 | % | 4.07 | % | ||||||||||||||
| Cost of Deposits: | ||||||||||||||||||
| Noninterest bearing demand deposits | $ | 651,099 | $ | 727,797 | ||||||||||||||
| Interest bearing deposits | 5,295,055 | 101,720 | 3.87 | % | 5,103,935 | 116,557 | 4.59 | % | ||||||||||
| Total Deposits | $ | 5,946,154 | $ | 101,720 | 3.45 | % | $ | 5,831,732 | $ | 116,557 | 4.02 | % | ||||||
| (1) | Includes non-accrual loans and loans held for sale | |||||||||||||||||
| (2) | Net loan fee income of $1.9 million and $2.4 million for the six months ended June 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 | ||||||||||||
| Six Months Ended | Year Ended | |||||||||||
| June 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 | 132 | - | ||||||||||
| Total Charge-Offs | 140 | 19,028 | ||||||||||
| Recoveries | ||||||||||||
| Commercial & Industrial | 193 | 50 | ||||||||||
| Total Recoveries | 193 | 50 | ||||||||||
| Net (Recoveries) Charge-Offs | (53 | ) | 18,978 | |||||||||
| Provision for Credit Losses: | 2,300 | 12,100 | ||||||||||
| Balance at End of Period | $ | 73,830 | $ | 71,477 | ||||||||
| Average Loans Held for Investment | $ | 5,589,198 | $ | 5,396,844 | ||||||||
| Loans Held for Investment at End of Period | $ | 5,739,610 | $ | 5,640,615 | ||||||||
| Net (Recoveries) Charge-Offs to Average Loans | 0.00 | % | 0.35 | % | ||||||||
| Allowances for Credit Losses to Loans at End of Period | 1.29 | % | 1.27 | % | ||||||||
