Preferred Bank Reports Second Quarter Results

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 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,		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	%

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