PFBC

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Preferred Bank (PFBC) stock is in focus after the company reported second quarter and first half 2026 results, highlighting year over year gains in net interest income, net income, and earnings per share. See our latest analysis for Preferred Bank. The latest earnings release has put Preferred Bank back on investors’ radar, with a 1-day share price return of 1.56% lifting the stock to US$102.96. The 7-day share price return of 4.13% and 30-day share price return of 1.77% suggest some near term momentum has cooled compared with its 8.30% 90-day share price return and longer run total shareholder returns of 13.29% over 1 year, 73.73% over 3 years and 105.58% over 5 years. If this kind of performance has you thinking about where else you might find long term compounders, now could be a good time to broaden your search and check out 18 top founder-led companies The latest Preferred Bank results and share move put the spotlight squarely on valuation and whether the recent gains still leave enough upside to compensate for the risks. Preferred Bank's most followed valuation narrative points to a fair value of $111.50 versus the latest close at $102.96, framing the stock as modestly undervalued and putting fresh attention on the assumptions behind that gap. Read the complete narrative. Curious what kind of revenue path, margin profile, and future earnings multiple are baked into that $111.50 figure? The underlying model uses measured growth, slightly thinner profitability, and a richer valuation multiple that still sits below the wider US banks sector. These are combined with a single discount rate that does most of the analytical work. Result: Fair Value of $111.50 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the Preferred Bank narrative still depends on concentrated exposure to California commercial lending and on keeping deposit costs in check, which could pressure earnings if conditions change. Find out about the key risks to this Preferred Bank narrative. If the mixed sentiment around Preferred Bank has you on the fence, use the full set of risks and rewards as your guide and move quickly enough that fresh information does not go stale. Start with a closer look at the 4 key rewards and 3 important warning signs. If Preferred Bank has sharpened your focus, do not stop here. Use the Simply Wall St Screener to surface fresh ideas that match the kind of portfolio you want to build. Target potential underpriced opportunities by scanning 50 high quality undervalued stocks that pair solid fundamentals with room for a stronger market view. Lock in income potential by reviewing 9 dividend fortresses offering yields from companies that consistently return cash to shareholders. Prioritise resilience by checking 80 resilient stocks with low risk scores where balance sheet strength and lower risk scores sit at the center of the selection. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PFBC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Preferred Bank stock has more than doubled over the past five years, yet on Simply Wall St’s checks it still screens as undervalued. This raises the question of whether the recent share price is fully reflecting the company’s fundamentals. A 105.6% return over five years suggests Preferred Bank has already rewarded long term shareholders, so any further upside depends on how much is already priced in. Recent earnings strength and improved asset quality can support confidence in future cash flows, but tighter competition for loans and deposits may pressure margins and limit how much investors are willing to pay. Preferred Bank currently passes 5 of 6 valuation checks on Simply Wall St, indicating that on broad measures the stock still leans cheap rather than expensive, as shown by its value score of 5. The stock’s next move may depend on whether that high value score and solid track record are enough to justify paying around US$102.96 today. Find out why Preferred Bank's 13.3% return over the last year is lagging behind its peers. The P/E ratio is a straightforward way to see what investors are paying today for each dollar of Preferred Bank’s earnings. At around 9.0x, Preferred Bank’s P/E sits below both the US banks industry average of about 11.9x and a peer group average of roughly 14.5x. This indicates the stock is priced at a discount to many comparable banks based on current earnings. Simply Wall St’s tailored fair P/E of about 10.4x, which factors in Preferred Bank’s profitability profile, size and risk, is also above the current multiple. This suggests the stock trades under that model’s implied range. Despite the recent Q2 2026 earnings beat and improved asset quality, the market price still appears to assign a relatively cautious earnings multiple. On this earnings multiple, Preferred Bank stock appears undervalued compared with both its tailored fair P/E and broader banking peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Preferred Bank pick up where the valuation puzzle stops by spelling out which future outcomes for Preferred Bank's earnings, margins and growth would need to play out for the stock to be worth materially more or less than today, and they sit on the company's Community page. Instead of a single output from a ratio or model, these narratives unpack the assumptions behind that figure so you can monitor whether the real world continues to line up with them. Want to add your own angle on whether Preferred Bank's recent earnings beat and asset quality improvements really support today's valuation, or leave the stock looking mispriced? Share a Narrative on Preferred Bank to put your number driven view on record and see how it stacks up as new results and market reactions come through. Do you think there's more to the story for Preferred Bank? Head over to our Community to see what others are saying! Preferred Bank still appears undervalued on earnings, with a P/E below both industry and peer averages, even after factoring in recent results. The high value score suggests the broader checks currently lean supportive rather than stretched, so the market is not treating the stock as expensive on standard metrics. From here, the key question is whether Preferred Bank can sustain the earnings profile and asset quality implied by those checks in the face of tighter loan and deposit competition. The crux of the bull versus bear debate is whether that discount reflects an opportunity for re rating or fair compensation for the risk that margins stay under pressure. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PFBC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Preferred Bank has released its results for the second quarter and first half of 2026, reporting net interest income of US$69.99 million and net income of US$33.54 million for the quarter, with both metrics higher than the same period last year. The bank also posted higher basic and diluted earnings per share from continuing operations for both the quarter and six‑month period, highlighting consistent earnings growth on a per‑share basis. We’ll now examine how this rise in quarterly net interest income might reshape Preferred Bank’s investment narrative and outlook. Capitalize on the AI infrastructure supercycle with our selection of the 55 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. To own Preferred Bank, you need to be comfortable with a focused, relationship‑driven lender whose earnings are closely tied to net interest income and disciplined deposit pricing. The latest quarterly results, with higher net interest income and per‑share earnings, support the near term catalyst of consistent earnings per share growth, but do not remove the key risk that deposit costs or local economic pressure in core markets could still squeeze margins. Among recent announcements, the ongoing share repurchase activity, with 402,299 shares bought back in the first quarter of 2026, stands out alongside the Q2 earnings release. Together, higher net interest income and a smaller share count reinforce the role of buybacks as a practical lever for sustaining earnings per share, even if loan growth or deposit competition become more challenging catalysts to rely on. Yet behind the rising earnings per share, investors should still be aware of how concentrated California lending and deposit competition could... Read the full narrative on Preferred Bank (it's free!) Preferred Bank's narrative projects $321.9 million revenue and $127.7 million earnings by 2029. Uncover how Preferred Bank's forecasts yield a $111.50 fair value, a 8% upside to its current price. Two Simply Wall St Community fair value estimates for Preferred Bank span from US$111.50 to US$251.06, showing how far apart individual views can be. As you weigh those opinions against the bank’s reliance on controlling deposit costs to protect net interest income, it is worth exploring several interpretations of what that could mean for future performance. Explore 2 other fair value estimates on Preferred Bank - why the stock might be worth just $111.50! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Preferred Bank research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision. Our free Preferred Bank research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Preferred Bank's overall financial health at a glance. Early movers are already taking notice. See the stocks they're targeting before they've flown the coop: We've uncovered the 9 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. This technology could replace computers: discover 26 stocks that are working to make quantum computing a reality. Uncover the next big thing with 20 elite penny stocks that balance risk and reward. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PFBC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management focused heavily on resolving troubled assets, successfully reducing non-performing loans by $70 million (41.5%) and criticized loans by $90 million (34%) during the quarter. Loan production remained healthy with $125 million in growth, though actual origination efforts were stronger than the net figure due to the sale of $70 million in notes. Net interest margin of 3.73% was bolstered by interest recoveries, though management notes the core margin is closer to 3.60% when stripping out these non-recurring items. The bank is maintaining a disciplined approach to loan pricing, choosing to forgo some volume to ensure quality and yield requirements are met in a highly competitive market. Deposit growth of 0.8% reflects industry-wide 'stiff competition' and a shift in consumer behavior, with management noting that excess cash is increasingly flowing into the stock market rather than bank savings. Efficiency remains a core strength at 32%, even as the bank navigates an inflationary environment where the cost of services and professional fees is rising. Management expects to resolve three additional non-performing loans totaling $60 million in the second half of 2026, though exact timing depends on bankruptcy court proceedings. Net interest margin is projected to compress to the mid-3.50s range for Q3 as interest recoveries normalize and deposit costs face upward pressure. The bank anticipates approximately $1.5 billion in CDs maturing in Q3 at an average rate of 3.80%, which are expected to renew at slightly higher rates. Loan growth expectations for the second half of the year are cautious due to customer hesitation following shifts in interest rate expectations and increased competition from non-bank lenders. Management intends to maintain a loan-to-deposit ratio around the current 95% level, prioritizing liquidity while remaining open to opportunistic growth. Provision expense was limited to $1.2 million this quarter, primarily because the significant reduction in classified assets lowered overall reserve requirements. Non-interest expenses were impacted by elevated legal fees associated with the resolution of a large troubled loan relationship. Management highlighted the 'AI stock' trend as a novel competitive threat to deposit growth, as retail customers divert liquidity into equity markets. The allowance for credit losses (ALLL) stands at 1.22%, which management believes is sufficient given the improving credit quality trend and existing qualitative reserves for inflation and unemployment. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management aims to be disciplined, seeking an extra 10 to 25 basis points per transaction rather than competing on low rates that 'don't make sense.' CEO Li Yu noted that the bank historically turns over more stones to find better yields than peers, despite standard industry complaints about competition. CFO Edward Czajka clarified that the bank focuses on NII growth as the primary goal, viewing the margin as a 'mathematical output' of execution rather than a target to be managed directly. The bank is willing to be selective and sacrifice some volume to avoid loading the balance sheet with low-rate loans that could create long-term risk. If loan growth does not meet expectations, management confirmed that share buybacks remain an active option under continuous evaluation for capital utilization.

This article first appeared on GuruFocus. Net Income: $33.5 million or $2.78 per share for Q2 2026. Non-Performing Loans: Reduced by $70 million or 41.5% during the quarter. Criticized Loans: Reduced by $90 million. Provision Expense: $1.2 million for the quarter. Loan Growth: Increased by $125 million, excluding a $70 million loan sale. Deposit Growth: Increased by $52 million or 0.8% quarter-over-quarter. Net Interest Margin: 3.73%. Efficiency Ratio: Steady at 32%. Warning! GuruFocus has detected 5 Warning Sign with PFBC. Is PFBC fairly valued? Test your thesis with our free DCF calculator. Release Date: July 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Preferred Bank (NASDAQ:PFBC) reported a net income of $33.5 million or $2.78 per share for the second quarter of 2026, exceeding both the previous quarter and the same quarter of the previous year. Non-performing loans were reduced by $70 million or 41.5%, and criticized loans were reduced by $90 million, leading to a decrease in reserve requirements and provision expenses. Loan origination efforts were strong, with an increase of $125 million in loans, despite selling $70 million in loans. The net interest margin was favorably affected, standing at 3.73%, and the efficiency ratio remained steady at 32%. The bank experienced growth in demand deposit accounts (DDA), which helped keep deposit costs down. Deposit growth was modest, increasing by only $52 million or 0.8% for the quarter, amidst stiff competition in the banking industry. The cost of deposits increased, with total deposits costing 3.06% and interest-bearing deposits at 3.44% as of June. Non-interest expenses were elevated due to increased legal fees related to large relationships being worked through. Loan competition remains intense, with pressure on loan yields and pricing due to competitors offering lower rates. The bank faces challenges in driving core deposit growth due to competition from the stock market, particularly AI stocks, attracting customer investments. Q: Can you comment on the loan yields and whether you can maintain them if the Fed stays on hold? A: Wellington Chen, President and COO: The market is very competitive, and we try to maximize yields on each transaction. Despite competition, we have been able to achieve better yields than our peers by being disciplined and selective with quality loans. Li Yu, CEO: We are fortunate to achieve better yields by turning over more stones than our peers. Q: What was the cost of deposits in June, and what are the expectations for CDs maturing in the next two quarters? A: The cost of total deposits was 3.06% in June, with interest-bearing deposits at 3.44%. We have $1.5 billion in CDs maturing in Q3 at an average rate of 3.80%, which will likely renew at slightly higher rates. We expect the net interest margin to reset to the mid-3.50s in Q3. Q: What is the outlook for loan growth in the second half of the year? A: Li Yu, CEO: Q2 was strong, with net growth close to $180 million. However, interest rate movements and increased competition from non-bank lenders may make Q3 tougher. We remain flexible and will seize opportunities as they arise. Q: How do you view your ability to drive core deposit growth given the competitive backdrop? A: Li Yu, CEO: Core deposit growth is a focus, but competition is intense, especially with customers investing in the stock market. We aim to improve our deposit mix and manage costs effectively. Q: Would you consider buying back shares if loan growth doesn't meet expectations? A: Li Yu, CEO: Yes, share buybacks are a potential use of capital and will be continuously evaluated based on market conditions and growth opportunities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Preferred Bank (PFBC) came out with quarterly earnings of $2.78 per share, beating the Zacks Consensus Estimate of $2.65 per share. This compares to earnings of $2.52 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +4.91%. A quarter ago, it was expected that this independent commercial bank would post earnings of $2.48 per share when it actually produced earnings of $2.53, delivering a surprise of +2.02%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Preferred Bank, which belongs to the Zacks Banks - West industry, posted revenues of $73.47 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.35%. This compares to year-ago revenues of $70.65 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Preferred Bank shares have added about 12.3% since the beginning of the year versus the S&P 500's gain of 9.7%. While Preferred Bank has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Preferred Bank was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.70 on $75.77 million in revenues for the coming quarter and $10.68 on $295.4 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - West is currently in the top 19% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, First Northwest Bancorp (FNWB), is yet to report results for the quarter ended June 2026. This company is expected to post quarterly earnings of $0.01 per share in its upcoming report, which represents a year-over-year change of -97.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. First Northwest Bancorp's revenues are expected to be $17.1 million, up 4.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Preferred Bank (PFBC) : Free Stock Analysis Report First Northwest Bancorp (FNWB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Preferred Bank? Here are five stocks we like better. Preferred Bank beat expectations in Q2 2026, reporting net income of $33.5 million, or $2.78 per share. Management said results were better than both the prior quarter and a year earlier, helped by lower provision expense as troubled assets were reduced. Credit quality improved sharply, with nonperforming loans down $70 million and criticized loans down $90 million. The bank said it still has three nonperforming loans totaling $60 million slated for possible resolution in the second half of 2026, though timing is uncertain due to bankruptcy proceedings. Loan and deposit growth remained solid, but competition is intense. Loans rose $125 million quarter over quarter and deposits increased $52 million, while management warned that pricing pressure in both lending and deposits is likely to compress margins into the mid-3.50% range and potentially into next year. Preferred Bank (NASDAQ:PFBC) reported second-quarter 2026 net income of $33.5 million, or $2.78 per share, with Chairman and CEO Li Yu saying the results compared favorably with the prior quarter and year-earlier period and exceeded the bank’s internal budget. Management used the company’s earnings call to highlight progress on credit resolution, continued loan production and a competitive environment for deposits and loan pricing. Yu said the bank was “quite focused on the resolution of troubled assets” during the quarter, which helped lower its provision expense. → Buyback Boom: These 3 Companies Are Betting Billions on Their Own Stocks Yu said nonperforming loans declined by $70 million, or 41.5%, during the quarter. Criticized loans fell by $90 million, or 34%. With that reduction in classified assets, the bank’s reserve requirement on those items decreased, contributing to a provision expense of $1.2 million for the quarter. Looking ahead, Yu said Preferred Bank still has three nonperforming loans totaling $60 million that are scheduled to be resolved in the second half of 2026. However, he cautioned that each loan is tied to its own bankruptcy proceeding, making the timing uncertain. → 3 Photonics Companies Making Quantum Tech Possible Chief Risk Officer Nick Pi said the allowance for loan losses stood at 1.22% of total loans at the end of the quarter. Based on current credit quality trends, including second-quarter resolutions, Pi said management expects the reserve ratio to remain at approximately a similar level in upcoming quarters, barring changes in assumptions or conditions. Preferred Bank reported loan growth of $125 million, or 2%, on a quarterly basis. Yu said loan production activity was “satisfactory or good” and noted that underlying origination effort was stronger when accounting for $70 million of loans sold during the quarter and large payoff activity. → AI Data Centers Need Power, and These 2 Industrials Are Cashing In Analysts asked whether the second-quarter trend reflected stronger borrower demand or improved internal productivity. Yu said demand increased during the second quarter, especially earlier in the period when customers were more optimistic about potential interest rate cuts. But he said sentiment shifted later in the quarter as rate expectations changed, causing some customers to delay deals or move more slowly. President and Chief Operating Officer Wellington Chen said the pipeline remains “pretty good” and “vibrant,” but he emphasized that not all opportunities make sense from a pricing or risk standpoint. Deputy Chief Operating Officer Johnny Hsu said loan demand is high, but the bank is focused on “quality loan demand,” where competition from banks and other lenders is strongest. Management said pricing pressure is persistent. Chen said the bank is trying to “squeeze every 10 basis points, 25 basis points out of each transaction,” while remaining disciplined on credit quality and return requirements. Yu said Preferred Bank has traditionally passed on opportunities that do not meet its rate requirements, adding that competing primarily on low pricing is “never our answer to all situation.” The bank’s net interest margin was 3.73% in the quarter, which Yu said was favorably affected by interest recovery. Chief Financial Officer Edward Czajka said that excluding the effect of interest recoveries, the adjusted margin was 3.60% for the second quarter. Czajka said management expects the margin to move to the mid-3.50% range in the third quarter. He also said tighter loan pricing and difficult deposit pricing point to some margin compression going forward and “probably on into next year.” When asked whether the bank focuses more on margin or net interest income growth, Czajka said Preferred Bank focuses more on net interest income growth, describing the margin as “simply a mathematical output of how well we executed.” Deposit growth remained a key focus for management. Yu said deposits increased by $52 million, or 4.8%, on a quarterly basis, but he acknowledged stiff competition for deposits across the banking industry. Czajka said the cost of total deposits was 3.06% in June, while the cost of interest-bearing deposits was 3.44%. He said total deposit costs have been held in check partly because of a slight shift in the deposit mix, including “decent growth” in demand deposits. Preferred Bank has $1.5 billion of certificates of deposit maturing in the third quarter at an average rate of 3.80%, Czajka said. He added that those CDs will likely renew at a slightly higher rate. Yu said the bank faces another form of competition for customer cash: the stock market, particularly opportunities tied to artificial intelligence stocks. He said some customers are investing excess cash in equities rather than keeping it in bank deposits. Asked about the bank’s loan-to-deposit ratio, Yu said it was running around 95%. He said management is comfortable with that level and could allow it to rise somewhat in the short term, but over the long term the bank wants to maintain liquidity. Preferred Bank’s efficiency ratio was steady at 32%, which Yu noted came despite an inflationary environment. Czajka said noninterest expense was somewhat disappointing in the quarter, with professional services costs, mainly legal fees, elevated due to work on a large relationship. He said third-quarter expenses are expected to be fairly flat with the second quarter, though they “might be a little better.” On capital deployment, Yu said share repurchases remain one possible use of capital and are under continued evaluation, particularly if loan growth does not develop as anticipated. Yu said management feels “pretty comfortable” about operations and is optimistic about the remainder of the year, though executives repeatedly pointed to uncertainty around interest rates, borrower behavior, deposit competition and the timing of credit resolutions tied to bankruptcy proceedings. Preferred Bank (NASDAQ: PFBC) is a California-chartered commercial bank headquartered in Los Angeles. The institution offers a full range of banking products and services to businesses and individuals, with a particular emphasis on commercial real estate lending, business banking, treasury management and deposit accounts. Preferred Bank operates through branch offices across Southern California and national loan production offices in major U.S. markets. The bank's core lending portfolio focuses on commercial real estate acquisition, development and investment properties. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Preferred Bank Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

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. Financial Tables to Follow