Preferred Bank Reports Third Quarter Results


LOS ANGELES, Oct. 23, 2026 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended September 30, 2026. Preferred Bank (“the Bank”) reported net income of $32.9 million or $2.73 per diluted share for the third quarter of 2026. This represents a decrease in net income of $3.0 million from the same quarter last year and a decrease of $592,000 from the previous quarter. The decrease compared to the prior year was due to a decrease in net interest income of $4.6 million partially offset by a $1.3 million increase in noninterest income and a small increase in noninterest expense of $661,000. The difference compared to the prior quarter was again due to net interest income which decreased by $3.3 million partially offset by an increase in noninterest income of $1.5 million and a decrease in noninterest expense of $1.6 million. During the quarter, the Bank placed a $56.7 million loan on nonaccrual status and four others totaling $13.5 million and the resulting reversal of interest income was $2.1 million which was the primary driver behind the decrease in net interest income.

Highlights for the Quarter:

  • Return on average assets was 1.69%
  • Return on average equity was 16.18%
  • Total deposits increased by $77.7 million, or 1.2%, linked quarter
  • The efficiency ratio for the quarter was 30.9%

Li Yu, Chairman and CEO, commented, “Net income for the third quarter ended September 30, 2026, was $32.9 million or $2.73 per diluted share. Both are lower than the second quarter due primarily to the interest recoveries last quarter and interest reversals this quarter.

“Deposits increased by $77.7 million or 1.2% for the quarter. It is highly likely that the competition for deposits and market conditions will continue into 2027.

“Loans (excluding loans held for sale) decreased $41.0 million after we placed a $56.7 million loan into held for sale status. Presently, we are seeing a stronger pipeline that hopefully will result in solid loan growth in the fourth quarter.

“The net interest margin for the third quarter was 3.49% compared to 3.73% in the second quarter. The variance is largely caused by a $2.1 million interest income reversal in the third quarter and $2.9 million of interest income recoveries in the second quarter. The recent fed rate increase should bring beneficial results to our net interest margin as our balance sheet is asset sensitive.

“Resolution of non-accrual loans is progressing although slower than we had hoped for. Several loans that were scheduled to be resolved in the quarter are now delayed to the fourth quarter or the first quarter 2027 because these assets are subject to bankruptcy courts’ decisions.

This quarter we have outperformed our own expectations in non-interest income and non-interest expense. Our cost control remains effective under this inflationary environment.

We believe the country’s economy will remain strong in 2027, and inflationary pressure will gradually subside. We are optimistic that Preferred Bank will continue to grow.”

Results of Operations

Net Interest Income Compared to Prior Quarter. Net interest income before provision for credit losses was $66.7 million for the third quarter of 2026. This represents a $3.3 million decrease from the previous quarter. The decrease in net interest income from the prior quarter was due primarily to an interest recovery of $2.9 million recorded in the second quarter of 2026. Secondarily, the Bank reversed $2.1 million in the third quarter as a result of placing loans on nonaccrual status. Finally, interest expense also increased this quarter over the prior quarter driven by an increase in the interest rate on the Bank’s subordinated debt. On June 16, 2026, the Bank’s subordinated debt went from fixed rate to a floating rate of the 3 month SOFR rate plus 278 basis points resulting in an increase in the coupon rate from 3.375% to 6.44% for the third quarter of 2026. The Bank’s net interest margin (“NIM”) contracted in the quarter to 3.49% due to the interest reversals previously mentioned and to a lesser extent, the increase in the sub debt coupon. This compares to a NIM of 3.73% in the prior quarter which was aided by interest recoveries and to a NIM of 3.92% for the same quarter last year.

Net Interest Income Compared to Prior Year Quarter. Net interest income before provision for credit losses was $66.7 million for the third quarter of 2026. This represents a $4.6 million decrease from the $71.3 million recorded in the same quarter last year. The decrease compared to the same quarter last year was due mainly to the $2.1 million in interest reversals previously mentioned as well as lower interest on overnight funds due to lower balances partially offset by a decrease in interest expense.

Noninterest Income. For the third quarter of 2026, noninterest income was $5.0 million compared with $3.7 million for the same quarter last year and compared to $3.5 million for the second quarter of 2026. The increase from the same quarter last year was mainly due to a gain on the call of one of the Bank’s investment securities of $431,000 as well as an increase in letters of credit fee income of $748,000. The increase over the prior quarter was due to a loss on the sale of a loan of $874,000 which occurred last quarter as well as an increase in letters of credit income and the gain on the call of an investment security this quarter.

Noninterest Expense. Total noninterest expense was $22.2 million for the third quarter of 2026 compared to $21.5 million for the same period last year and compared to $23.7 million recorded in the prior quarter. The primary reason for the increase from the prior year was mainly due to an increase in FDIC assessments of $560,000 and an increase in other professional services of $289,000 due mainly to legal fees on problem loans. This was partially offset by a decrease in OREO expense of $388,000. The decrease from the prior quarter was due primarily to a decrease in personnel expense of $1.1 million, $366,000 in other professional expense and a $109,000 in OREO expense. The Bank’s efficiency ratio came in at 30.9% for the quarter, which compares to 32.3% last quarter and to 28.7% in the same quarter last year.

Income Taxes. The Bank recorded a provision for income taxes of $14.6 million for the third quarter of 2026. This represents an effective tax rate (“ETR”) of 30.7% which is up from the 29.5% ETR for the same quarter last year and down slightly from 30.9% ETR recorded in the second 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 September 30, 2026 were $6.25 billion, essentially flat from the $6.25 billion reported as of June 30, 2026. And an increase of $200.6 million from the total of $6.05 billion as of December 31, 2025. Total deposits were $6.55 billion as of September 30, 2026, an increase of $77.7 million from the $6.47 billion as of June 30, 2026 and an increase of $204.4 million from December 31, 2025. Total assets were $7.82 billion, an increase of $214.9 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 $109.4 million excluding loans held for sale compared to $98.9 million at June 30, 2026 as compared to $51.3 million as of December 31, 2025. During the quarter, the Bank placed a $56.7 million mixed use property onto nonaccrual status due to late payments. This loan is currently under contract to be sold at par with closing anticipated in late October 2026. The Bank is continuously reviewing all nonaccrual loans to ensure timely resolution. At present, there is no significant loss content identified and the average LTV for this commercial real estate cohort stands at 60.8%. Total net charge-offs (recoveries) on loans for the quarter were $(8,000) compared to $(41,000) in the second quarter of 2026 and compared to net charge-offs of $1.6 million in the third quarter of 2025.

Allowance for Credit Losses

The provision for credit losses for the third quarter of 2026 was 2.1 million compared to the $1.2 million recorded in the second quarter of 2026 and compared to $2.5 million in the same quarter last year.   The Bank’s allowance coverage ratio was 1.26% of total loans held for investment compared to 1.22% last quarter and compared to 1.30% as of December 31, 2025.

Capitalization

As of September 30, 2026, the Bank’s tangible common equity ratio was 10.13%, the leverage ratio was 10.78%, the common equity tier 1 capital ratio was 11.26% and the total capital ratio stood at 13.93%. 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 third quarter 2026 financial results will be held this afternoon, October 23, 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 November 6, 2026; the passcode is 9134266.

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 thirteen full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana, Cupertino 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. 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

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
            
            
     For the Quarter Ended
     September 30, June 30, September 30,
      2026   2026   2025 
Interest income:        
 Loans, including fees $106,517  $108,358  $110,645 
 Investment securities  13,966   13,883   15,977 
 Fed funds sold  199   205   228 
  Total interest income  120,682   122,446   126,850 
            
Interest expense:        
 Interest-bearing demand  16,003   15,624   17,562 
 Savings  79   75   67 
 Time certificates  33,441   33,497   34,792 
 FHLB borrowings  1,877   1,743   1,794 
 Subordinated debt  2,571   1,517   1,325 
  Total interest expense  53,971   52,456   55,540 
  Net interest income  66,711   69,990   71,310 
Provision for credit losses  2,000   1,200   2,500 
  Net interest income after provision for credit losses  64,711   68,790   68,810 
            
Noninterest income:        
 Fees & service charges on deposit accounts  556   570   625 
 Letters of credit fee income  3,169   2,890   2,421 
 BOLI income  108   107   105 
 Net gain on called and sale of investment securities  431   35   - 
 Net gain (loss) on sale of loans  112   (874)  56 
 Other income  616   755   458 
  Total noninterest income  4,992   3,483   3,665 
            
Noninterest expense:        
 Salary and employee benefits  14,205   15,281   14,240 
 Net occupancy expense  2,360   2,395   2,297 
 Business development and promotion expense  240   322   238 
 Professional services  1,783   2,149   1,494 
 Office supplies and equipment expense  385   340   361 
 OREO valuation allowance and related expense  75   184   463 
 Other   3,111   3,044   2,405 
  Total noninterest expense  22,159   23,715   21,498 
  Income before provision for income taxes  47,544   48,558   50,977 
Income tax expense  14,596   15,018   15,038 
  Net income $32,948  $33,540  $35,939 
            
Income per share available to common shareholders        
  Basic $2.78  $2.83  $2.90 
  Diluted $2.73  $2.78  $2.84 
            
Weighted-average common shares outstanding        
  Basic  11,853,279   11,843,821   12,384,924 
  Diluted  12,078,448   12,049,162   12,634,174 
            
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 Nine Months Ended     
     September 30, September 30,  Change 
      2026   2025   % 
Interest income:         
 Loans, including fees $318,257  $318,020   0.1% 
 Investment securities  41,150   43,113   -4.6% 
 Fed funds sold  596   689   -13.5% 
  Total interest income  360,003   361,822   -0.5% 
             
Interest expense:         
 Interest-bearing demand  46,747   50,323   -7.1% 
 Savings  208   207   0.3% 
 Time certificates  100,311   103,611   -3.2% 
 FHLB borrowings  5,310   2,864   85.4% 
 Subordinated debt  5,413   3,975   36.2% 
  Total interest expense  157,989   160,980   -1.9% 
  Net interest income  202,014   200,842   0.6% 
Provision for credit losses  4,700   4,800   -2.1% 
  Net interest income after provision for credit losses  197,314   196,042   0.6% 
             
Noninterest income:         
 Fees & service charges on deposit accounts  1,642   1,976   -16.9% 
 Letters of credit fee income  8,796   6,998   25.7% 
 BOLI income  320   312   2.5% 
 Net gain on called and sale of investment securities  525   -   100.0% 
 Net (loss) gain on sale of loans  (738)  503   -246.5% 
 Other income  2,240   1,636   36.9% 
  Total noninterest income  12,785   11,425   11.9% 
             
Noninterest expense:         
 Salary and employee benefits  44,946   43,326   3.7% 
 Net occupancy expense  7,181   6,862   4.6% 
 Business development and promotion expense  765   940   -18.6% 
 Professional services  5,579   4,652   19.9% 
 Office supplies and equipment expense  1,083   1,166   -7.1% 
 OREO valuation allowance and related expense  622   3,473   -82.1% 
 Other   9,237   6,893   34.0% 
  Total noninterest expense  69,413   67,312   3.1% 
  Income before provision for income taxes  140,686   140,155   0.4% 
Income tax expense  43,054   41,345   4.1% 
  Net income $97,632  $98,810   -1.2% 
             
Income per share available to common shareholders         
  Basic $8.18  $7.77   5.4% 
  Diluted $8.03  $7.63   5.3% 
             
Weighted-average common shares outstanding         
  Basic  11,933,229   12,723,788   -6.2% 
  Diluted  12,153,212   12,949,445   -6.1% 
             
Dividends per share $2.40  $2.25   6.7% 
             


PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
       
       
    September 30, December 31,
     2026   2025 
    (Unaudited) (Audited)
Assets   
Cash and due from banks$681,029  $807,098 
Fed funds sold 20,000   20,000 
 Cash and cash equivalents 701,029   827,098 
       
Securities held-to-maturity, at amortized cost 17,834   18,749 
Securities available-for-sale, at fair value 672,082   566,186 
       
Loans held for sale, at lower of cost or fair value 56,557   - 
       
Loans 6,198,293   6,054,264 
 Less allowance for credit losses (78,284)  (78,992)
 Less amortized deferred loan fees, net (7,611)  (9,030)
 Loans, net 6,112,398   5,966,242 
       
Other real estate owned and repossessed assets 11,534   3,510 
Bank furniture and fixtures, net 10,888   8,064 
Bank-owned life insurance 10,924   10,712 
Accrued interest receivable 38,349   34,233 
Investment in affordable housing partnerships 79,047   69,978 
Federal Home Loan Bank stock, at cost 15,000   15,000 
Deferred tax assets 55,015   41,976 
Income tax receivable 3,513   3,884 
Operating lease right-of-use assets 27,679   30,531 
Other assets 4,172   5,002 
 Total assets$7,816,021  $7,601,165 
       
Liabilities and shareholders' Equity   
Deposits:   
 Noninterest bearing demand deposits$745,763  $699,160 
 Interest bearing deposits: 2,321,924   2,205,914 
  Savings 29,840   30,376 
  Time certificates of $250,000 or more 1,830,163   1,754,273 
  Other time certificates 1,622,184   1,655,723 
  Total deposits 6,549,874   6,345,446 
       
Advances from Federal Home Loan Bank 200,000   200,000 
Subordinated debt issuance, net 148,884   148,706 
Commitments to fund investment in affordable housing partnerships 32,040   23,327 
Operating lease liabilities 32,184   35,107 
Accrued interest payable 16,779   16,513 
Other liabilities 43,827   42,589 
 Total liabilities 7,023,588   6,811,688 
       
Shareholders' equity 792,433   789,477 
 Total liabilities and shareholders' equity$7,816,021  $7,601,165 
       
Book value per common share$66.85  $64.83 
Number of common shares outstanding 11,853,571   12,177,588 


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
             
             
             
    For the Quarter Ended
             
    September 30, June 30, March 31, December 31, September 30,
     2026   2026   2026   2025   2025 
Unaudited historical quarterly operations data:         
 Interest income$120,682  $122,446  $116,875  $124,633  $126,850 
 Interest expense 53,971   52,456   51,562   54,658   55,540 
  Interest income before provision for credit losses 66,711   69,990   65,313   69,975   71,310 
 Provision for credit losses 2,000   1,200   1,500   4,300   2,500 
 Noninterest income 4,992   3,483   4,310   8,094   3,665 
 Noninterest expense 22,159   23,715   23,539   24,377   21,498 
 Income tax expense 14,596   15,018   13,440   14,570   15,038 
  Net income$32,948  $33,540  $31,144  $34,822  $35,939 
             
 Earnings per share         
  Basic$2.78  $2.83  $2.57  $2.85  $2.90 
  Diluted$2.73  $2.78  $2.53  $2.79  $2.84 
             
Ratios for the period:         
 Return on average assets 1.69%  1.75%  1.67%  1.82%  1.93%
 Return on average equity 16.18%  17.05%  15.89%  17.59%  18.64%
 Net interest margin (fully-taxable equivalent) 3.49%  3.73%  3.57%  3.74%  3.92%
 Noninterest expense to average assets 1.14%  1.24%  1.26%  1.27%  1.16%
 Efficiency ratio 30.90%  32.28%  33.81%  31.22%  28.67%
 Net charge-offs (recoveries) to average loans (annualized) -0.00%  -0.00%  0.37%  0.00%  0.11%
             
Ratios as of period end:         
 Tangible common equity ratio 10.13%  10.26%  10.05%  10.38%  10.38%
 Tier 1 leverage capital ratio 10.78%  10.55%  10.37%  10.54%  10.66%
 Common equity tier 1 risk-based capital ratio 11.26%  11.06%  10.87%  11.26%  11.34%
 Tier 1 risk-based capital ratio 11.26%  11.06%  10.87%  11.26%  11.34%
 Total risk-based capital ratio 13.93%  13.74%  13.98%  14.47%  14.56%
 Allowances for credit losses to loans at end of period 1.26%  1.22%  1.24%  1.30%  1.27%
 Allowance for credit losses to non-performing loans 0.75x   0.84x   0.8x   1.54x   4.24x
             
Average balances:         
 Total securities$610,837  $558,696  $580,248  $586,950  $583,302 
 Total loans held for investment 6,191,538   6,021,420   6,037,241   5,947,814   5,753,801 
 Total loans held for investment and held for sale 6,200,211   6,038,330   6,051,465   5,947,986   5,754,073 
 Total earning assets 7,587,420   7,532,781   7,437,232   7,439,767   7,234,568 
 Total assets 7,733,141   7,668,719   7,563,705   7,585,940   7,382,265 
 Total time certificate of deposits 3,468,041   3,500,857   3,451,924   3,402,304   3,330,241 
 Total interest bearing deposits 5,714,126   5,712,097   5,644,722   5,651,369   5,501,767 
 Total deposits 6,456,558   6,420,198   6,311,446   6,336,242   6,169,728 
 Total interest bearing liabilities 6,062,973   6,060,886   5,993,452   6,000,042   5,850,376 
 Total equity 807,742   789,114   794,931   785,581   764,766 
             


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
       
       
       
    For the Nine Months Ended
    September 30 September 30
     2026   2025 
       
 Interest income$360,003  $361,822 
 Interest expense 157,989   160,980 
  Interest income before provision for credit losses  202,014   200,842 
 Provision for credit losses 4,700   4,800 
 Noninterest income 12,785   11,425 
 Noninterest expense 69,413   67,312 
 Income tax expense 43,054   41,345 
  Net income$97,632  $98,810 
       
 Earnings per share   
  Basic$8.18  $7.77 
  Diluted$8.03  $7.63 
       
Ratios for the period:   
 Return on average assets 1.71%  1.85%
 Return on average equity 16.37%  17.27%
 Net interest margin (fully-taxable equivalent) 3.60%  3.84%
 Noninterest expense to average assets 1.21%  1.26%
 Efficiency ratio 32.32%  31.71%
 Net charge-off to average loans 0.12%  0.04%
       
Average balances:   
 Total securities$583,373  $497,301 
 Total loans held for investment 6,083,964   5,644,668 
 Total loans held for investment and held for sale 6,097,213   5,648,323 
 Total earning assets 7,519,694   7,001,424 
 Total assets 7,655,809   7,137,935 
 Total time certificate of deposits 3,473,667   3,272,717 
 Total interest bearing deposits 5,690,570   5,364,715 
 Total deposits 6,396,600   6,021,497 
 Total interest bearing liabilities 6,039,359   5,620,958 
 Total equity 797,309   764,826 
       


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
             
             
             
    As of
             
    September 30, June 30, March 31, December 31, September 30,
     2026   2026   2026   2025   2025 
Unaudited quarterly statement of financial position data:         
Assets:         
 Cash and cash equivalents$701,029  $789,820  $825,161  $827,098  $815,459 
 Securities held-to-maturity, at amortized cost 17,834   18,154   18,458   18,749   19,034 
 Securities available-for-sale, at fair value 672,082   525,956   553,184   566,186   569,115 
 Loans:         
  Real estate – mortgage:         
   Real estate—residential$745,775  $737,321  $738,508  $783,136  $793,217 
   Real estate—commercial 3,127,696   3,169,037   3,105,331   3,028,762   2,890,990 
   Total Real estate – mortgage 3,873,471   3,906,358   3,843,839   3,811,898   3,684,207 
  Real estate – construction:         
   R/E construction — residential 282,750   284,219   265,748   282,808   285,623 
   R/E construction — commercial 356,582   364,807   343,598   387,759   323,897 
   Total real estate construction loans 639,332   649,026   609,346   670,567   609,520 
  Commercial and industrial 1,676,780   1,675,300   1,584,984   1,563,504   1,570,423 
  SBA 8,598   8,444   8,087   8,053   7,630 
  Consumer and others 112   153   288   242   231 
   Gross loans 6,198,293   6,239,281   6,046,544   6,054,264   5,872,011 
 Allowance for credit losses on loans
 (78,284)  (76,276)  (75,036)  (78,992)  (74,692)
 Net deferred loan fees
 (7,611)  (8,288)  (7,923)  (9,030)  (9,956)
  Net loans, excluding loans held for sale$6,112,398  $6,154,717  $5,963,585  $5,966,242  $5,787,363 
 Loans held for sale$56,557  $8,348  $76,324  $-  $- 
  Net loans$6,168,955  $6,163,065  $6,039,909  $5,966,242  $5,787,363 
             
 Other real estate owned and repossessed assets$11,534  $3,010  $3,010  $3,510  $52,609 
 Investment in affordable housing partnerships 79,047   77,729   66,394   69,978   73,874 
 Federal Home Loan Bank stock, at cost 15,000   15,000   15,000   15,000   15,000 
 Other assets 150,540   137,887   133,521   134,402   135,340 
  Total assets$7,816,021  $7,730,621  $7,654,637  $7,601,165  $7,467,794 
             
Liabilities:         
 Deposits:         
  Demand$745,763  $754,670  $716,777  $699,160  $654,302 
  Interest bearing demand 2,321,924   2,209,390   2,200,374   2,205,914   2,205,865 
  Savings 29,840   31,617   26,822   30,376   31,087 
  Time certificates of $250,000 or more 1,830,163   1,822,765   1,795,883   1,754,273   1,699,757 
  Other time certificates 1,622,184   1,653,766   1,680,291   1,655,723   1,638,662 
  Total deposits$6,549,874  $6,472,208  $6,420,147  $6,345,446  $6,229,673 
             
 Advance from Federal Home Loan Bank 200,000   200,000   200,000   200,000   200,000 
 Subordinated debt issuance, net 148,884   148,825   148,766   148,706   148,647 
 Commitments to fund investment in affordable housing partnerships
 32,040   29,949   18,873   23,327   24,874 
 Other liabilities 92,790   86,112   96,652   94,209   88,958 
  Total liabilities$7,023,588  $6,937,094  $6,884,438  $6,811,688  $6,692,152 
             
Equity:          
 Common stock, no par value$210,882  $210,882  $210,882  $210,882  $210,882 
 Additional paid-in capital 113,018   110,913   108,853   105,105   103,235 
 Treasury stock (334,626)  (334,591)  (334,490)  (293,406)  (277,351)
 Retained earnings 849,830   826,365   802,308   780,637   755,587 
 Accumulated other comprehensive income (46,671)  (20,042)  (17,354)  (13,741)  (16,711)
  Total shareholders' equity$792,433  $793,527  $770,199  $789,477  $775,642 
  Total liabilities and shareholders' equity$7,816,021  $7,730,621  $7,654,637  $7,601,165  $7,467,794 
             


PREFERRED BANK
Quarter-to-Date Average Balances, Yield and Rates
(Unaudited)
                       
                  
   Three months ended September 30, Three months ended June 30, Three months ended September 30,
    2026   2026   2025 
     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)$6,200,211  $106,517  6.82% $6,038,330  $108,358  7.20% $5,754,073  $110,645  7.63%
 Investment securities(3) 610,837   6,499  4.22%  558,696   5,611  4.03%  583,302   6,257  4.26%
 Federal funds sold 20,648   199  3.82%  21,538   205  3.82%  20,000   228  4.52%
 Other earning assets 755,724   7,561  3.97%  914,217   8,364  3.67%  877,193   9,811  4.44%
  Total interest earning assets 7,587,420   120,776  6.32%  7,532,781   122,538  6.52%  7,234,568   126,941  6.96%
 Deferred loan fees, net (8,072)       (8,139)       (10,686)     
 Allowance for credit losses on loans (76,309)       (75,675)       (72,784)     
Noninterest earning assets:                    
 Cash and due from banks 11,412        11,141        10,071      
 Bank furniture and fixtures 10,803        9,694        7,945      
 Right of use assets 28,288        29,211        19,153      
 Other assets 179,599        169,706        193,998      
  Total assets$7,733,141       $7,668,719       $7,382,265      
                       
Liabilities and shareholders' equity                    
Interest bearing liabilities:                    
 Deposits:                    
  Interest bearing demand and savings$2,246,085  $16,082  2.84% $2,211,240  $15,699  2.85% $2,171,526  $17,629  3.22%
  TCD $250K or more 1,817,686   17,296  3.78%  1,812,356   17,065  3.78%  1,686,710   17,406  4.09%
  Other time certificates 1,650,355   16,145  3.88%  1,688,501   16,432  3.90%  1,643,531   17,386  4.20%
  Total interest bearing deposits 5,714,126   49,523  3.44%  5,712,097   49,196  3.45%  5,501,767   52,421  3.78%
Advance from Federal Home Loan Bank 200,000   1,877  3.72%  200,000   1,743  3.50%  200,000   1,794  3.56%
Subordinated debt, net 148,847   2,571  6.85%  148,789   1,517  4.09%  148,609   1,325  3.54%
  Total interest bearing liabilities 6,062,973   53,971  3.53%  6,060,886   52,456  3.47%  5,850,376   55,540  3.77%
Noninterest bearing liabilities:                    
 Demand deposits 742,432        708,101        667,961      
 Lease liability 32,888        33,946        22,908      
 Other liabilities 87,106        76,672        76,254      
  Total liabilities 6,925,399        6,879,605        6,617,499      
Shareholders’ equity 807,742        789,114        764,766      
  Total liabilities and shareholders’ equity$7,733,141       $7,668,719       $7,382,265      
Net interest income  $66,805      $70,082      $71,401   
Net interest spread     2.78%      3.05%      3.19%
Net interest margin     3.49%      3.73%      3.92%
                       
Cost of Deposits:                    
 Noninterest bearing demand deposits$742,432       $708,101       $667,961      
 Interest bearing deposits 5,714,126   49,523  3.44%  5,712,097   49,196  3.45%  5,501,767   52,421  3.78%
  Total Deposits$6,456,558  $49,523  3.04% $6,420,198  $49,196  3.07% $6,169,728  $52,421  3.37%
                       
(1)Includes non-accrual loans and loans held for sale                   
(2)Net loan fee income of $0.8 million, $1.2 million and $1.7 million for the quarter ended September 30, 2026, June 30, 2026 and September 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)
              
              
   Nine Months ended September 30,
   2026
 2025
     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)$6,097,213  $318,257 6.98% $5,648,323  $318,020 7.53%
 Investment securities(3) 583,373   17,822 4.08%  497,301   15,546 4.18%
 Federal funds sold 20,898   596 3.81%  20,244   689 4.55%
 Other earning assets 818,210   23,606 3.86%  835,556   27,857 4.46%
  Total interest earning assets 7,519,694   360,281 6.41%  7,001,424   362,112 6.91%
 Deferred loan fees, net (8,181)      (9,965)    
 Allowance for credit losses on loans (76,980)      (72,225)    
Noninterest earning assets:           
 Cash and due from banks 10,872       11,178     
 Bank furniture and fixtures 9,677       8,198     
 Right of use assets 29,224       18,105     
 Other assets 171,503       181,220     
  Total assets$7,655,809      $7,137,935     
              
Liabilities and shareholders' equity           
Interest bearing liabilities:           
 Deposits:           
  Interest bearing demand/ savings$2,216,903  $46,955 2.83% $2,091,998  $50,530 3.23%
  TCD $250K or more 1,801,206   51,247 3.80%  1,605,201   50,138 4.18%
  Other time certificates 1,672,461   49,064 3.92%  1,667,516   53,473 4.29%
  Total interest \bearing deposits 5,690,570   147,266 3.46%  5,364,715   154,141 3.84%
Short-term borrowings 1   0 2.77%  -   - 0.00%
Advance from Federal Home Loan Bank 200,000   5,310 3.55%  107,692   2,864 3.56%
Subordinated debt, net 148,788   5,413 4.86%  148,551   3,975 3.58%
  Total interest bearing liabilities 6,039,359   157,989 3.50%  5,620,958   160,980 3.83%
Noninterest bearing liabilities:           
 Demand deposits 706,030       656,782     
 Lease liability 33,899       21,857     
 Other liabilities 79,212       73,512     
  Total liabilities 6,858,500       6,373,109     
Shareholders’ equity 797,309       764,826     
  Total liabilities and shareholders’ equity$7,655,809      $7,137,935     
Net interest income  $202,292     $201,132  
Net interest spread    2.91%     3.09%
Net interest margin    3.60%     3.84%
              
Cost of Deposits:           
 Noninterest bearing demand deposits$706,030      $656,782     
 Interest bearing deposits 5,690,570   147,266 3.46%  5,364,715   154,141 3.84%
  Total Deposits$6,396,600  $147,266 3.08% $6,021,497  $154,141 3.42%
              
(1)Includes non-accrual loans and loans held for sale           
(2)Net loan fee income of $3.2 million and $3.6 million for the nine months ended September 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
     Nine Months EndedYear Ended
     September 30, 2026
 December 31, 2025
      (Dollars in 000's)
Allowance for credit losses    
Balance at beginning of period $78,992  $71,477 
 Charge-Offs    
  Commercial & Industrial  2,555   8 
  Mini-perm real estate  3,833   1,749 
     Total charge-offs  6,388   1,757 
        
 Recoveries    
  Commercial & Industrial  112   172 
  Mini-perm real estate  868   - 
     Total recoveries  980   172 
        
 Net charge-offs  5,408   1,585 
 Provision for dredit losses  4,700   9,100 
Balance at dnd of period $78,284  $78,992 
        
Average loans held for investment $6,083,964  $5,721,077 
Loans held for investment at end of period $6,198,293  $6,054,264 
Net charge-offs to average loans  0.12%  0.03%
Allowances for credit losses to loans at end of period  1.26%  1.30%
        


AT THE COMPANY:AT FINANCIAL PROFILES:
Edward J. CzajkaJeffrey Haas
Executive Vice PresidentGeneral Information
Chief Financial Officer(310) 622-8240
(213) 891-1188PFBC@finprofiles.com

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