LOS ANGELES, July 22, 2026 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended June 30, 2026. Preferred Bank ("the Bank") reported net income of $33.5 million or $2.78 per diluted share for the second quarter of 2026. This represents an increase in net income of $2.4 million from the prior quarter and an increase of $693,000 over the same quarter last year. The increase compared to the prior quarter was due to an increase in net interest income of $4.7 million partially offset by an $827,000 decrease in noninterest income and a small increase in noninterest expense of $176,000. The difference compared to the same quarter last year was again due to net interest income which increased by $3.1 million partially offset by a small decrease in noninterest income of $279,000 and an increase in noninterest expense of $1.3 million.
Highlights for the Quarter:
- Return on average assets was 1.75%
- Return on average equity was 17.05%
- Total loans increased by $124.8 million or 2.0%, linked quarter
- Total deposits increased by $52.1 million, or 0.8%, linked quarter
- The efficiency ratio for the quarter was 32.3%
- The Bank's net interest margin expanded to 3.73%
Li Yu, Chairman and CEO, commented, "We are pleased to report net income for the quarter ending June 30, 2026, of $33.5 million or $2.78 per share, which increased from the previous quarter of $2.4 million and an increase of $693,000 over the same quarter last year.
"At June 30, 2026, non-performing loans decreased by $70.2 million or 41.5% from March 31, 2026. Similarly, criticized loans also decreased 33.9% from the previous quarter. We were able to sell several loans at book value plus accrued interest, one nonaccrual loan paid off and one was returned to accrual status resulting in aggregate interest recoveries of $2.9 million on these loans. One loan sold below book by $950,000 and was recorded as a loss on sale.
"Because of the sizable reduction in criticized loans, corresponding reserve requirements on these loans were also reduced. The provision for credit losses for the quarter was $1.2 million. However, our allowance for credit loss to total loans was stable at 1.22%.
"Our loan origination activities were very positive. This quarter, our total loans increased $124.8 million or 2.0% on a linked quarter basis. Considering the sizeable loan sales and normal payoffs, the actual origination activities were strong. For deposits, however, we continue to face stiff competition. Interest rates on deposits also trend higher in the quarter-end, reflecting the change of market expectations. Our deposits increased $52.1 million or 0.8% on a linked quarter basis.
"Net interest margin for the quarter was 3.73%. This quarter, the margin was benefited by interest recovery of the previously mentioned $2.9 million. Non-interest expense for the quarter stayed in control with efficiency ratio of 32.3%.
"We are optimistic on our current operating environment."
Results of Operations
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $70.0 million for the second quarter of 2026. This represents a $4.7 million increase from the $65.3 million recorded in the prior quarter and a $3.1 million increase over the same quarter last year. The increase compared to the prior quarter was due mainly to a $2.9 million net interest recovery due to nonaccrual loans sold for par and nonaccrual loans which paid off. The increase in net interest income over the same quarter last year was due to an increase in loan interest and a small decrease in total interest expense. The Bank's net interest margin ("NIM") expanded in the quarter to 3.73% due somewhat to the interest recoveries on loans sold and a nonaccrual loan payoff. In the prior quarter the NIM was 3.57% due to interest reversals on loans placed on nonaccrual status during the first quarter. For the same quarter last year, the NIM was 3.85%.
Noninterest Income. For the second quarter of 2026, noninterest income was $3.5 million compared with $3.8 million for the same quarter last year and compared to $4.3 million for the first quarter of 2026. The decrease from the same quarter last year was mainly due to a loss on the sale of one of the Bank's nonaccrual loans which sold at a discount of $950,000 on a total note balance of $19,950,000. Partially offsetting the variance was an increase in letter of credit ("LC") fees of $556,000. In comparison to the prior quarter, the primary variance was due to the loss on the note sale as most other line items were in line on a quarter-to-quarter basis.
Noninterest Expense: Total noninterest expense was $23.7 million for the second quarter of 2026 compared to $23.5 million for the first quarter of 2026 and compared to $22.4 million recorded in the same period last year. The primary reason for the increase from the prior quarter was mainly due to an increase in other professional services of $502,000 due mainly to legal fees on problem loans. This was partially offset by decreases in personnel expense and OREO expense of $179,000 each. The increase over the same quarter last year was due to an increase in personnel expense of $1.0 million and an increase in other expense of $762,000 partially offset by a decrease in OREO expense of $1.3 million. The Bank's efficiency ratio came in at 32.3% for the quarter, which compares to 33.8% last quarter and to 31.8% in the same quarter last year.
Income Taxes. The Bank recorded a provision for income taxes of $15.0 million for the second quarter of 2026. This represents an effective tax rate ("ETR") of 30.9% which is up from the 29.5% ETR for the same quarter last year and up from 30.1% ETR recorded in the first quarter of 2026. 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, 2026 were $6.25 billion, an increase of $193.4 million from the total of $6.05 billion as of December 31, 2025. Total deposits were $6.47 billion, an increase of $126.8 million from the $6.35 billion as of December 31, 2025. Total assets were $7.73 billion, an increase of $129.5 million over the total of $7.60 billion as of December 31, 2025.
Asset Quality
Non-accrual loans and loans 90 days or more past due and still accruing totaled $98.9 million as of June 30, 2026 as compared to $169.1 million in the prior quarter, a decrease of $70.2 million. This was due to $68.4 million in note sales, two notes totaling $3.8 million note which were upgraded to accrual status and one small addition to nonaccrual loans. Total net charge-offs (recoveries) on loans for the quarter were $(40,000) compared to $5.5 million in the first quarter of 2026 and compared to net recoveries of ($96,000) in the second quarter of 2025. Total classified assets decreased to $103.8 million as of June 30, 2026 compared to $174.7 million as of March 31, 2026.
Allowance for Credit Losses
The provision for credit losses for the second quarter of 2026 was $1.2 million compared to $1.5 million in the prior quarter and compared to $1.6 million in the same quarter last year. The Bank's allowance coverage ratio was 1.22% of total loans held for investment compared to 1.24% last quarter and compared to 1.30% as of the end of 2025.
Capitalization
As of June 30, 2026, the Bank's tangible common equity ratio was 10.26%, the leverage ratio was 10.55%, the common equity tier 1 capital ratio was 11.06% and the total capital ratio stood at 13.74%. As of December 31, 2025, the Bank's tangible common equity ratio was 10.38%, the Bank's leverage ratio was 10.54%, the common equity tier 1 ratio was 11.26% and the total capital ratio was 14.47%.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank's second quarter 2026 financial results will be held this afternoon, July 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 Risk 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 August 5, 2026; the passcode is 6264757.
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 2025 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 | ||||||||||
| June 30, 2026 | March 31, 2026 | June 30, 2025 | ||||||||
| Interest income: | ||||||||||
| Loans, including fees | - | 108,358 | - | 103,382 | - | 105,884 | ||||
| Investment securities | 13,883 | 13,301 | 14,326 | |||||||
| Fed funds sold | 205 | 192 | 233 | |||||||
| Total interest income | 122,446 | 116,875 | 120,443 | |||||||
| Interest expense: | ||||||||||
| Interest-bearing demand | 15,624 | 15,120 | 16,171 | |||||||
| Savings | 75 | 54 | 71 | |||||||
| Time certificates | 33,497 | 33,373 | 34,932 | |||||||
| FHLB borrowings | 1,743 | 1,690 | 1,070 | |||||||
| Subordinated debt | 1,517 | 1,325 | 1,325 | |||||||
| Total interest expense | 52,456 | 51,562 | 53,569 | |||||||
| Net interest income | 69,990 | 65,313 | 66,874 | |||||||
| Provision for credit losses | 1,200 | 1,500 | 1,600 | |||||||
| Net interest income after provision for credit losses | 68,790 | 63,813 | 65,274 | |||||||
| Noninterest income: | ||||||||||
| Fees & service charges on deposit accounts | 570 | 516 | 635 | |||||||
| Letters of credit fee income | 2,890 | 2,737 | 2,333 | |||||||
| BOLI income | 107 | 105 | 104 | |||||||
| Net gain on called and sale of investment securities | 35 | 59 | - | |||||||
| Net (loss) gain on sale of loans | (874 | - | 24 | 172 | ||||||
| Other income | 755 | 869 | 518 | |||||||
| Total noninterest income | 3,483 | 4,310 | 3,762 | |||||||
| Noninterest expense: | ||||||||||
| Salary and employee benefits | 15,281 | 15,460 | 14,247 | |||||||
| Net occupancy expense | 2,395 | 2,426 | 2,271 | |||||||
| Business development and promotion expense | 322 | 203 | 240 | |||||||
| Professional services | 2,149 | 1,647 | 1,507 | |||||||
| Office supplies and equipment expense | 340 | 358 | 419 | |||||||
| OREO valuation allowance and related expense | 184 | 363 | 1,479 | |||||||
| Other | 3,044 | 3,082 | 2,282 | |||||||
| Total noninterest expense | 23,715 | 23,539 | 22,445 | |||||||
| Income before provision for income taxes | 48,558 | 44,584 | 46,591 | |||||||
| Income tax expense | 15,018 | 13,440 | 13,744 | |||||||
| Net income | - | 33,540 | - | 31,144 | - | 32,847 | ||||
| Income per share available to common shareholders | ||||||||||
| Basic | - | 2.83 | - | 2.57 | - | 2.61 | ||||
| Diluted | - | 2.78 | - | 2.53 | - | 2.57 | ||||
| Weighted-average common shares outstanding | ||||||||||
| Basic | 11,843,821 | 12,105,359 | 12,569,107 | |||||||
| Diluted | 12,049,162 | 12,292,237 | 12,774,591 | |||||||
| Cash dividends per common share | - | 0.80 | - | 0.80 | - | 0.75 | ||||
| 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, 2026 | June 30, 2025 | Change - | ||||||||
| Interest income: | ||||||||||
| Loans, including fees | - | 211,740 | - | 207,375 | 2.1 | - | ||||
| Investment securities | 27,184 | 27,136 | 0.2 | - | ||||||
| Fed funds sold | 397 | 461 | -13.9 | - | ||||||
| Total interest income | 239,321 | 234,972 | 1.9 | - | ||||||
| Interest expense: | ||||||||||
| Interest-bearing demand | 30,744 | 32,761 | -6.2 | - | ||||||
| Savings | 129 | 140 | -7.9 | - | ||||||
| Time certificates | 66,870 | 68,819 | -2.8 | - | ||||||
| FHLB borrowings | 3,433 | 1,070 | 221.0 | - | ||||||
| Subordinated debt | 2,842 | 2,650 | 7.2 | - | ||||||
| Total interest expense | 104,018 | 105,440 | -1.3 | - | ||||||
| Net interest income | 135,303 | 129,532 | 4.5 | - | ||||||
| Provision for credit losses | 2,700 | 2,300 | 17.4 | - | ||||||
| Net interest income after provision for credit losses | 132,603 | 127,232 | 4.2 | - | ||||||
| Noninterest income: | ||||||||||
| Fees & service charges on deposit accounts | 1,086 | 1,351 | -19.6 | - | ||||||
| Letters of credit fee income | 5,627 | 4,578 | 22.9 | - | ||||||
| BOLI income | 212 | 207 | 2.7 | - | ||||||
| Net gain on called and sale of investment securities | 94 | - | 100.0 | - | ||||||
| Net (loss) gain on sale of loans | (850 | - | 447 | -290.0 | - | |||||
| Other income | 1,624 | 1,177 | 37.9 | - | ||||||
| Total noninterest income | 7,793 | 7,760 | 0.4 | - | ||||||
| Noninterest expense: | ||||||||||
| Salary and employee benefits | 30,741 | 29,086 | 5.7 | - | ||||||
| Net occupancy expense | 4,821 | 4,565 | 5.6 | - | ||||||
| Business development and promotion expense | 525 | 702 | -25.2 | - | ||||||
| Professional services | 3,796 | 3,158 | 20.2 | - | ||||||
| Office supplies and equipment expense | 698 | 805 | -13.3 | - | ||||||
| OREO valuation allowance and related expense | 547 | 3,010 | -81.8 | - | ||||||
| Other | 6,126 | 4,488 | 36.5 | - | ||||||
| Total noninterest expense | 47,254 | 45,814 | 3.1 | - | ||||||
| Income before provision for income taxes | 93,142 | 89,178 | 4.4 | - | ||||||
| Income tax expense | 28,458 | 26,307 | 8.2 | - | ||||||
| Net income | - | 64,684 | - | 62,871 | 2.9 | - | ||||
| Income per share available to common shareholders | ||||||||||
| Basic | - | 5.40 | - | 4.88 | 10.8 | - | ||||
| Diluted | - | 5.32 | - | 4.80 | 10.8 | - | ||||
| Weighted-average common shares outstanding | ||||||||||
| Basic | 11,973,867 | 12,896,028 | -7.2 | - | ||||||
| Diluted | 12,163,976 | 13,100,242 | -7.1 | - | ||||||
| Dividends per share | - | 1.60 | - | 1.50 | 6.7 | - | ||||
| PREFERRED BANK Condensed Consolidated Statements of Financial Condition (unaudited) (in thousands) | ||||||||
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Cash and due from banks | - | 749,820 | - | 807,098 | ||||
| Fed funds sold | 40,000 | 20,000 | ||||||
| Cash and cash equivalents | 789,820 | 827,098 | ||||||
| Securities held-to-maturity, at amortized cost | 18,154 | 18,749 | ||||||
| Securities available-for-sale, at fair value | 525,956 | 566,186 | ||||||
| Loans held for sale, at lower of cost or fair value | 8,348 | - | ||||||
| Loans | 6,239,281 | 6,054,264 | ||||||
| Less allowance for credit losses | (76,276 | - | (78,992 | - | ||||
| Less amortized deferred loan fees, net | (8,288 | - | (9,030 | - | ||||
| Loans, net | 6,154,717 | 5,966,242 | ||||||
| Other real estate owned and repossessed assets | 3,010 | 3,510 | ||||||
| Bank furniture and fixtures, net | 10,463 | 8,064 | ||||||
| Bank-owned life insurance | 10,853 | 10,712 | ||||||
| Accrued interest receivable | 32,818 | 34,233 | ||||||
| Investment in affordable housing partnerships | 77,729 | 69,978 | ||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | ||||||
| Deferred tax assets | 44,230 | 41,976 | ||||||
| Income tax receivable | 7,390 | 3,884 | ||||||
| Operating lease right-of-use assets | 28,643 | 30,531 | ||||||
| Other assets | 3,490 | 5,002 | ||||||
| Total assets | - | 7,730,621 | - | 7,601,165 | ||||
| Liabilities and shareholders' Equity | ||||||||
| Deposits: | ||||||||
| Noninterest bearing demand deposits | - | 754,670 | - | 699,160 | ||||
| Interest bearing deposits: | 2,209,390 | 2,205,914 | ||||||
| Savings | 31,617 | 30,376 | ||||||
| Time certificates of $250,000 or more | 1,822,765 | 1,754,273 | ||||||
| Other time certificates | 1,653,766 | 1,655,723 | ||||||
| Total deposits | 6,472,208 | 6,345,446 | ||||||
| Advances from Federal Home Loan Bank | 200,000 | 200,000 | ||||||
| Subordinated debt issuance, net | 148,825 | 148,706 | ||||||
| Commitments to fund investment in affordable housing partnerships | 29,949 | 23,327 | ||||||
| Operating lease liabilities | 33,295 | 35,107 | ||||||
| Accrued interest payable | 15,311 | 16,513 | ||||||
| Other liabilities | 37,506 | 42,589 | ||||||
| Total liabilities | 6,937,094 | 6,811,688 | ||||||
| Shareholders' equity | 793,527 | 789,477 | ||||||
| Total liabilities and shareholders' equity | - | 7,730,621 | - | 7,601,165 | ||||
| Book value per common share | - | 66.95 | - | 64.83 | ||||
| Number of common shares outstanding | 11,853,101 | 12,177,588 | ||||||
| PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 | ||||||||||||||||
| Unaudited historical quarterly operations data: | ||||||||||||||||||||
| Interest income | - | 122,446 | - | 116,875 | - | 124,633 | - | 126,850 | - | 120,443 | ||||||||||
| Interest expense | 52,456 | 51,562 | 54,658 | 55,540 | 53,569 | |||||||||||||||
| Interest income before provision for credit losses | 69,990 | 65,313 | 69,975 | 71,310 | 66,874 | |||||||||||||||
| Provision for credit losses | 1,200 | 1,500 | 4,300 | 2,500 | 1,600 | |||||||||||||||
| Noninterest income | 3,483 | 4,310 | 8,094 | 3,665 | 3,762 | |||||||||||||||
| Noninterest expense | 23,715 | 23,539 | 24,377 | 21,498 | 22,445 | |||||||||||||||
| Income tax expense | 15,018 | 13,440 | 14,570 | 15,038 | 13,744 | |||||||||||||||
| Net income | - | 33,540 | - | 31,144 | - | 34,822 | - | 35,939 | - | 32,847 | ||||||||||
| Earnings per share | ||||||||||||||||||||
| Basic | - | 2.83 | - | 2.57 | - | 2.85 | - | 2.90 | - | 2.61 | ||||||||||
| Diluted | - | 2.78 | - | 2.53 | - | 2.79 | - | 2.84 | - | 2.57 | ||||||||||
| Ratios for the period: | ||||||||||||||||||||
| Return on average assets | 1.75 | - | 1.67 | - | 1.82 | - | 1.93 | - | 1.85 | - | ||||||||||
| Return on average equity | 17.05 | - | 15.89 | - | 17.59 | - | 18.64 | - | 17.55 | - | ||||||||||
| Net interest margin (fully-taxable equivalent) | 3.73 | - | 3.57 | - | 3.74 | - | 3.92 | - | 3.85 | - | ||||||||||
| Noninterest expense to average assets | 1.24 | - | 1.26 | - | 1.27 | - | 1.16 | - | 1.26 | - | ||||||||||
| Efficiency ratio | 32.28 | - | 33.81 | - | 31.22 | - | 28.67 | - | 31.78 | - | ||||||||||
| Net charge-offs (recoveries) to average loans (annualized) | -0.00 | - | 0.37 | - | 0.00 | - | 0.11 | - | 0.00 | - | ||||||||||
| Ratios as of period end: | ||||||||||||||||||||
| Tangible common equity ratio | 10.26 | - | 10.05 | - | 10.38 | - | 10.38 | - | 10.26 | - | ||||||||||
| Tier 1 leverage capital ratio | 10.55 | - | 10.37 | - | 10.54 | - | 10.66 | - | 10.73 | - | ||||||||||
| Common equity tier 1 risk-based capital ratio | 11.06 | - | 10.87 | - | 11.26 | - | 11.34 | - | 11.18 | - | ||||||||||
| Tier 1 risk-based capital ratio | 11.06 | - | 10.87 | - | 11.26 | - | 11.34 | - | 11.18 | - | ||||||||||
| Total risk-based capital ratio | 13.74 | - | 13.98 | - | 14.47 | - | 14.56 | - | 14.43 | - | ||||||||||
| Allowances for credit losses to loans at end of period | 1.22 | - | 1.24 | - | 1.30 | - | 1.27 | - | 1.29 | - | ||||||||||
| Allowance for credit losses to non-performing loans | 0.84 | x | 0.8 | x | 1.54 | x | 4.24 | x | 1.41 | x | ||||||||||
| Average balances: | ||||||||||||||||||||
| Total securities | - | 558,696 | - | 580,248 | - | 586,950 | - | 583,302 | - | 503,861 | ||||||||||
| Total loans | 6,021,420 | 6,037,241 | 5,947,814 | 5,753,801 | 5,623,010 | |||||||||||||||
| Total earning assets | 7,532,781 | 7,437,232 | 7,439,767 | 7,234,568 | 6,984,272 | |||||||||||||||
| Total assets | 7,668,719 | 7,563,705 | 7,585,940 | 7,382,265 | 7,121,047 | |||||||||||||||
| Total time certificate of deposits | 3,500,857 | 3,451,924 | 3,402,304 | 3,330,241 | 3,321,327 | |||||||||||||||
| Total interest bearing deposits | 5,712,097 | 5,644,722 | 5,651,369 | 5,501,767 | 5,345,308 | |||||||||||||||
| Total deposits | 6,420,198 | 6,311,446 | 6,336,242 | 6,169,728 | 6,005,486 | |||||||||||||||
| Total interest bearing liabilities | 6,060,886 | 5,993,452 | 6,000,042 | 5,850,376 | 5,614,737 | |||||||||||||||
| Total equity | 789,114 | 794,931 | 785,581 | 764,766 | 750,535 | |||||||||||||||
| PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) | ||||||||
| For the Six Months Ended | ||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Interest income | - | 239,321 | - | 234,972 | ||||
| Interest expense | 104,018 | 105,440 | ||||||
| Interest income before provision for credit losses | 135,303 | 129,532 | ||||||
| Provision for credit losses | 2,700 | 2,300 | ||||||
| Noninterest income | 7,793 | 7,760 | ||||||
| Noninterest expense | 47,254 | 45,814 | ||||||
| Income tax expense | 28,458 | 26,307 | ||||||
| Net income | - | 64,684 | - | 62,871 | ||||
| Earnings per share | ||||||||
| Basic | - | 5.40 | - | 4.88 | ||||
| Diluted | - | 5.32 | - | 4.80 | ||||
| Ratios for the period: | ||||||||
| Return on average assets | 1.71 | - | 1.81 | - | ||||
| Return on average equity | 16.47 | - | 16.58 | - | ||||
| Net interest margin (fully-taxable equivalent) | 3.65 | - | 3.80 | - | ||||
| Noninterest expense to average assets | 1.25 | - | 1.32 | - | ||||
| Efficiency ratio | 33.02 | - | 33.37 | - | ||||
| Net charge-off to average loans | 0.18 | - | 0.00 | - | ||||
| Average balances: | ||||||||
| Total securities | - | 569,413 | - | 453,588 | ||||
| Total loans | 6,029,287 | 5,597,386 | ||||||
| Total earning assets | 7,485,270 | 6,882,920 | ||||||
| Total assets | 7,616,502 | 7,013,744 | ||||||
| Total time certificate of deposits | 3,476,526 | 3,243,479 | ||||||
| Total interest bearing deposits | 5,678,597 | 5,295,055 | ||||||
| Total deposits | 6,366,123 | 5,946,154 | ||||||
| Total interest bearing liabilities | 6,027,357 | 5,504,349 | ||||||
| Total equity | 792,006 | 764,857 | ||||||
| PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 | ||||||||||||||||
| Unaudited quarterly statement of financial position data: | ||||||||||||||||||||
| Assets: | ||||||||||||||||||||
| Cash and cash equivalents | - | 789,820 | - | 825,161 | - | 827,098 | - | 815,459 | - | 796,257 | ||||||||||
| Securities held-to-maturity, at amortized cost | 18,154 | 18,458 | 18,749 | 19,034 | 19,456 | |||||||||||||||
| Securities available-for-sale, at fair value | 525,956 | 553,184 | 566,186 | 569,115 | 577,040 | |||||||||||||||
| Loans: | ||||||||||||||||||||
| Real estate - mortgage: | ||||||||||||||||||||
| Real estate-residential | - | 737,321 | - | 738,508 | - | 783,136 | - | 793,217 | - | 767,620 | ||||||||||
| Real estate-commercial | 3,169,037 | 3,105,331 | 3,028,762 | 2,890,990 | 2,868,308 | |||||||||||||||
| Total Real estate - mortgage | 3,906,358 | 3,843,839 | 3,811,898 | 3,684,207 | 3,635,928 | |||||||||||||||
| Real estate - construction: | ||||||||||||||||||||
| R/E construction - residential | 284,219 | 265,748 | 282,808 | 285,623 | 291,343 | |||||||||||||||
| R/E construction - commercial | 364,807 | 343,598 | 387,759 | 323,897 | 303,354 | |||||||||||||||
| Total real estate construction loans | 649,026 | 609,346 | 670,567 | 609,520 | 594,697 | |||||||||||||||
| Commercial and industrial | 1,675,300 | 1,584,984 | 1,563,504 | 1,570,423 | 1,501,188 | |||||||||||||||
| SBA | 8,444 | 8,087 | 8,053 | 7,630 | 7,741 | |||||||||||||||
| Consumer and others | 153 | 288 | 242 | 231 | 56 | |||||||||||||||
| Gross loans | 6,239,281 | 6,046,544 | 6,054,264 | 5,872,011 | 5,739,610 | |||||||||||||||
| Allowance for credit losses on loans | (76,276 | - | (75,036 | - | (78,992 | - | (74,692 | - | (73,830 | - | ||||||||||
| Net deferred loan fees | (8,288 | - | (7,923 | - | (9,030 | - | (9,956 | - | (11,940 | - | ||||||||||
| Net loans, excluding loans held for sale | - | 6,154,717 | - | 5,963,585 | - | 5,966,242 | - | 5,787,363 | - | 5,653,840 | ||||||||||
| Loans held for sale | - | 8,348 | - | 76,324 | - | - | - | - | - | - | ||||||||||
| Net loans | - | 6,163,065 | - | 6,039,909 | - | 5,966,242 | - | 5,787,363 | - | 5,653,840 | ||||||||||
| Other real estate owned and repossessed assets | - | 3,010 | - | 3,010 | - | 3,510 | - | 52,609 | - | 13,755 | ||||||||||
| Investment in affordable housing partnerships | 77,729 | 66,394 | 69,978 | 73,874 | 74,783 | |||||||||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | |||||||||||||||
| Other assets | 137,887 | 133,521 | 134,402 | 135,340 | 128,629 | |||||||||||||||
| Total assets | - | 7,730,621 | - | 7,654,637 | - | 7,601,165 | - | 7,467,794 | - | 7,278,760 | ||||||||||
| Liabilities: | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Demand | - | 754,670 | - | 716,777 | - | 699,160 | - | 654,302 | - | 675,102 | ||||||||||
| Interest bearing demand | 2,209,390 | 2,200,374 | 2,205,914 | 2,205,865 | 2,004,135 | |||||||||||||||
| Savings | 31,617 | 26,822 | 30,376 | 31,087 | 34,333 | |||||||||||||||
| Time certificates of $250,000 or more | 1,822,765 | 1,795,883 | 1,754,273 | 1,699,757 | 1,681,026 | |||||||||||||||
| Other time certificates | 1,653,766 | 1,680,291 | 1,655,723 | 1,638,662 | 1,683,737 | |||||||||||||||
| Total deposits | - | 6,472,208 | - | 6,420,147 | - | 6,345,446 | - | 6,229,673 | - | 6,078,333 | ||||||||||
| Advance from Federal Home Loan Bank | 200,000 | 200,000 | 200,000 | 200,000 | 200,000 | |||||||||||||||
| Subordinated debt issuance, net | 148,825 | 148,766 | 148,706 | 148,647 | 148,588 | |||||||||||||||
| Commitments to fund investment in affordable housing partnerships | 29,949 | 18,873 | 23,327 | 24,874 | 30,645 | |||||||||||||||
| Other liabilities | 86,112 | 96,652 | 94,209 | 88,958 | 73,534 | |||||||||||||||
| Total liabilities | - | 6,937,094 | - | 6,884,438 | - | 6,811,688 | - | 6,692,152 | - | 6,531,100 | ||||||||||
| Equity: | ||||||||||||||||||||
| Common stock, no par value | - | 210,882 | - | 210,882 | - | 210,882 | - | 210,882 | - | 210,882 | ||||||||||
| Additional paid-in capital | 110,913 | 108,853 | 105,105 | 103,235 | 101,088 | |||||||||||||||
| Treasury stock | (334,591 | - | (334,490 | - | (293,406 | - | (277,351 | - | (271,005 | - | ||||||||||
| Retained earnings | 826,365 | 802,308 | 780,637 | 755,587 | 728,891 | |||||||||||||||
| Accumulated other comprehensive income | (20,042 | - | (17,354 | - | (13,741 | - | (16,711 | - | (22,196 | - | ||||||||||
| Total shareholders' equity | - | 793,527 | - | 770,199 | - | 789,477 | - | 775,642 | - | 747,660 | ||||||||||
| Total liabilities and shareholders' equity | - | 7,730,621 | - | 7,654,637 | - | 7,601,165 | - | 7,467,794 | - | 7,278,760 | ||||||||||
| 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, | |||||||||||||||||||||||||||||
| 2026 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Average Balance | Interest Income or Expense | Average Yield/ Rate | Average Balance | Interest Income or Expense | Average Yield/ Rate | Average Balance | Interest Income or Expense | Average Yield/ Rate | |||||||||||||||||||||||
| Assets | (Dollars in thousands) | ||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||
| Loans (1,2) | - | 6,038,330 | - | 108,358 | 7.20 | - | - | 6,051,465 | - | 103,382 | 6.93 | - | - | 5,632,204 | - | 105,884 | 7.54 | - | |||||||||||||
| Investment securities (3) | 558,696 | 5,611 | 4.03 | - | 580,248 | 5,712 | 3.99 | - | 503,861 | 5,195 | 4.14 | - | |||||||||||||||||||
| Federal funds sold | 21,538 | 205 | 3.82 | - | 20,507 | 192 | 3.80 | - | 20,511 | 233 | 4.56 | - | |||||||||||||||||||
| Other earning assets | 914,217 | 8,364 | 3.67 | - | 785,012 | 7,681 | 3.97 | - | 827,696 | 9,230 | 4.47 | - | |||||||||||||||||||
| Total interest earning assets | 7,532,781 | 122,538 | 6.52 | - | 7,437,232 | 116,967 | 6.38 | - | 6,984,272 | 120,542 | 6.92 | - | |||||||||||||||||||
| Deferred loan fees, net | (8,139 | - | (8,334 | - | (10,005 | - | |||||||||||||||||||||||||
| Allowance for credit losses on loans | (75,675 | - | (78,986 | - | (72,328 | - | |||||||||||||||||||||||||
| Noninterest earning assets: | |||||||||||||||||||||||||||||||
| Cash and due from banks | 11,141 | 10,685 | 12,590 | ||||||||||||||||||||||||||||
| Bank furniture and fixtures | 9,694 | 8,509 | 8,215 | ||||||||||||||||||||||||||||
| Right of use assets | 29,211 | 30,195 | 19,917 | ||||||||||||||||||||||||||||
| Other assets | 169,706 | 164,404 | 178,386 | ||||||||||||||||||||||||||||
| Total assets | - | 7,668,719 | - | 7,563,705 | - | 7,121,047 | |||||||||||||||||||||||||
| Liabilities and shareholders' equity | |||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||
| Interest bearing demand and savings | - | 2,211,240 | - | 15,699 | 2.85 | - | - | 2,192,798 | - | 15,174 | 2.81 | - | - | 2,023,981 | - | 16,242 | 3.22 | - | |||||||||||||
| TCD $250K or more | 1,812,356 | 17,065 | 3.78 | - | 1,773,086 | 16,886 | 3.86 | - | 1,644,322 | 17,092 | 4.17 | - | |||||||||||||||||||
| Other time certificates | 1,688,501 | 16,432 | 3.90 | - | 1,678,838 | 16,487 | 3.98 | - | 1,677,005 | 17,840 | 4.27 | - | |||||||||||||||||||
| Total interest bearing deposits | 5,712,097 | 49,196 | 3.45 | - | 5,644,722 | 48,547 | 3.49 | - | 5,345,308 | 51,174 | 3.84 | - | |||||||||||||||||||
| Short-term borrowings | - | - | 0.00 | - | 2 | 0 | 4.20 | - | - | - | 0.00 | - | |||||||||||||||||||
| Advance from Federal Home Loan Bank | 200,000 | 1,743 | 3.50 | - | 200,000 | 1,690 | 3.43 | - | 120,879 | 1,070 | 3.55 | - | |||||||||||||||||||
| Subordinated debt, net | 148,789 | 1,517 | 4.09 | - | 148,728 | 1,325 | 3.61 | - | 148,550 | 1,325 | 3.58 | - | |||||||||||||||||||
| Total interest bearing liabilities | 6,060,886 | 52,456 | 3.47 | - | 5,993,452 | 51,562 | 3.49 | - | 5,614,737 | 53,569 | 3.83 | - | |||||||||||||||||||
| Noninterest bearing liabilities: | |||||||||||||||||||||||||||||||
| Demand deposits | 708,101 | 666,724 | 660,178 | ||||||||||||||||||||||||||||
| Lease liability | 33,946 | 34,885 | 23,657 | ||||||||||||||||||||||||||||
| Other liabilities | 76,672 | 73,713 | 71,940 | ||||||||||||||||||||||||||||
| Total liabilities | 6,879,605 | 6,768,774 | 6,370,512 | ||||||||||||||||||||||||||||
| Shareholders' equity | 789,114 | 794,931 | 750,535 | ||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | - | 7,668,719 | - | 7,563,705 | - | 7,121,047 | |||||||||||||||||||||||||
| Net interest income | - | 70,082 | - | 65,405 | - | 66,973 | |||||||||||||||||||||||||
| Net interest spread | 3.05 | - | 2.89 | - | 3.10 | - | |||||||||||||||||||||||||
| Net interest margin | 3.73 | - | 3.57 | - | 3.85 | - | |||||||||||||||||||||||||
| Cost of Deposits: | |||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | - | 708,101 | - | 666,724 | - | 660,178 | |||||||||||||||||||||||||
| Interest bearing deposits | 5,712,097 | 49,196 | 3.45 | - | 5,644,722 | 48,547 | 3.49 | - | 5,345,308 | 51,174 | 3.84 | - | |||||||||||||||||||
| Total Deposits | - | 6,420,198 | - | 49,196 | 3.07 | - | - | 6,311,446 | - | 48,547 | 3.12 | - | - | 6,005,486 | - | 51,174 | 3.42 | - | |||||||||||||
| (1) | Includes non-accrual loans and loans held for sale | ||||||||||||||||||||||||||||||
| (2) | Net loan fee income of $1.2 million, $1.2 million and $1.1 million for the quarter ended June 30, 2026, March 31, 2026 and June 30, 2025, 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, | ||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||
| Average Balance | Interest Income or Expense | Average Yield/ Rate | Average Balance | Interest Income or Expense | Average Yield/ Rate | |||||||||||||||||
| Assets | (Dollars in thousands) | |||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||
| Loans(1,2) | - | 6,044,861 | - | 211,740 | 7.06 | - | - | 5,594,572 | - | 207,375 | 7.47 | - | ||||||||||
| Investment securities(3) | 569,413 | 11,324 | 4.01 | - | 453,588 | 9,289 | 4.13 | - | ||||||||||||||
| Federal funds sold | 21,025 | 397 | 3.81 | - | 20,367 | 461 | 4.56 | - | ||||||||||||||
| Other earning assets | 849,971 | 16,045 | 3.81 | - | 814,393 | 18,045 | 4.47 | - | ||||||||||||||
| Total interest earning assets | 7,485,270 | 239,505 | 6.45 | - | 6,882,920 | 235,170 | 6.89 | - | ||||||||||||||
| Deferred loan fees, net | (8,236 | - | (9,599 | - | ||||||||||||||||||
| Allowance for credit losses on loans | (77,321 | - | (71,941 | - | ||||||||||||||||||
| Noninterest earning assets: | ||||||||||||||||||||||
| Cash and due from banks | 10,704 | 11,846 | ||||||||||||||||||||
| Bank furniture and fixtures | 9,105 | 8,326 | ||||||||||||||||||||
| Right of use assets | 29,700 | 17,572 | ||||||||||||||||||||
| Other assets | 167,280 | 174,620 | ||||||||||||||||||||
| Total assets | - | 7,616,502 | - | 7,013,744 | ||||||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||
| Interest bearing demand/ savings | - | 2,202,071 | - | 30,873 | 2.83 | - | - | 2,051,576 | - | 32,901 | 3.23 | - | ||||||||||
| TCD $250K or more | 1,792,830 | 33,951 | 3.82 | - | 1,563,771 | 32,732 | 4.22 | - | ||||||||||||||
| Other time certificates | 1,683,696 | 32,919 | 3.94 | - | 1,679,708 | 36,087 | 4.33 | - | ||||||||||||||
| Total interest \bearing deposits | 5,678,597 | 97,743 | 3.47 | - | 5,295,055 | 101,720 | 3.87 | - | ||||||||||||||
| Short-term borrowings | 1 | 0 | 4.17 | - | - | - | 0.00 | - | ||||||||||||||
| Advance from Federal Home Loan Bank | 200,000 | 3,433 | 3.46 | - | 60,773 | 1,070 | 3.55 | - | ||||||||||||||
| Subordinated debt, net | 148,759 | 2,842 | 3.85 | - | 148,521 | 2,650 | 3.60 | - | ||||||||||||||
| Total interest bearing liabilities | 6,027,357 | 104,018 | 3.48 | - | 5,504,349 | 105,440 | 3.86 | - | ||||||||||||||
| Noninterest bearing liabilities: | ||||||||||||||||||||||
| Demand deposits | 687,526 | 651,099 | ||||||||||||||||||||
| Lease liability | 34,413 | 21,323 | ||||||||||||||||||||
| Other liabilities | 75,200 | 72,116 | ||||||||||||||||||||
| Total liabilities | 6,824,496 | 6,248,887 | ||||||||||||||||||||
| Shareholders' equity | 792,006 | 764,857 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | - | 7,616,502 | - | 7,013,744 | ||||||||||||||||||
| Net interest income | - | 135,487 | - | 129,730 | ||||||||||||||||||
| Net interest spread | 2.97 | - | 3.03 | - | ||||||||||||||||||
| Net interest margin | 3.65 | - | 3.80 | - | ||||||||||||||||||
| Cost of Deposits: | ||||||||||||||||||||||
| Noninterest bearing demand deposits | - | 687,526 | - | 651,099 | ||||||||||||||||||
| Interest bearing deposits | 5,678,597 | 97,743 | 3.47 | - | 5,295,055 | 101,720 | 3.87 | - | ||||||||||||||
| Total Deposits | - | 6,366,123 | - | 97,743 | 3.10 | - | - | 5,946,154 | - | 101,720 | 3.45 | - | ||||||||||
| (1) | Includes non-accrual loans and loans held for sale | |||||||||||||||||||||
| (2) | Net loan fee income of $2.4 million and $1.9 million for the six months ended June 30, 2026 and 2025, 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 June 30, 2026 | Year Ended December 31, 2025 | |||||||
| (Dollars in 000's) | ||||||||
| Allowance for credit losses | ||||||||
| Balance at beginning of period | - | 78,992 | - | 71,477 | ||||
| Charge-Offs | ||||||||
| Commercial & Industrial | 2,545 | 8 | ||||||
| Mini-perm real estate | 3,833 | 1,749 | ||||||
| Total charge-offs | 6,378 | 1,757 | ||||||
| Recoveries | ||||||||
| Commercial & Industrial | 109 | 172 | ||||||
| Mini-perm real estate | 853 | - | ||||||
| Total recoveries | 962 | 172 | ||||||
| Net charge-offs | 5,416 | 1,585 | ||||||
| Provision for credit losses: | 2,700 | 9,100 | ||||||
| Balance at end of period | - | 76,276 | - | 78,992 | ||||
| Average loans held for investment | - | 6,029,287 | - | 5,721,077 | ||||
| Loans held for investment at end of period | - | 6,239,281 | - | 6,054,264 | ||||
| Net charge-offs to average loans | 0.18 | - | 0.03 | - | ||||
| Allowances for credit losses to loans at end of period | 1.22 | - | 1.30 | - | ||||
