Preferred Bank Reports Fourth Quarter Results

LOS ANGELES, Jan. 22, 2026 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended December 31, 2025. Preferred Bank (“the Bank”) reported net income of $34.8 million or $2.79 per diluted share for the fourth quarter of 2025. This represents a decrease in net income of $1.1 million from the prior quarter and an increase of $4.6 million over the same quarter last year. The increase compared to last year was primarily due to an occupancy charge of $8.1 million recorded in the fourth quarter of 2024 related to a correction in the adoption of ASC 842, Lease Accounting. The decrease in net income from the prior quarter was due to an increase in the provision for credit losses of $1.8 million and a decrease in net interest income of $1.3 million. The primary reason for the decrease in net interest income was due to the decline in market interest rates. The Bank sold two large OREO properties during the quarter resulting in a gain of $3.6 million, recorded in noninterest income and total OREO expense was $3.5 million for the fourth quarter of 2025.

Highlights for the Quarter:

Return on average assets was 1.82%
Return on average equity was 17.59%
Total loans increased by $182.3 million or 3.1%, linked quarter
Total deposits increased by $115.8 million, or 1.9%, linked quarter
The efficiency ratio for the quarter was 31.2%

Li Yu, Chairman and CEO, commented, “I am pleased to report fourth quarter net income of $34.8 million or $2.79 per share and for the full year 2025, net income of $133.6 million or $10.41 per share, which makes our profitability among the top echelon of the banking industry.

“The Bank’s net interest margin for the fourth quarter was 3.74%, a decrease from third quarter, due mainly to the interest rate cuts implemented by the Federal Reserve in September and December. However, market rates on deposits have not kept pace with the rate cuts as competition for deposits remains elevated.

“Our loan growth for the quarter was $182.3 million or 12.4% on an annualized basis as we have seen an increase in loan demand. Deposit growth for the quarter was $115.8 million or 7.4% on an annualized basis. For the full year, loan and deposit growth was $413.6 million and $428.6 million, respectively.

“During the quarter, we sold two large OREO properties for a gain between the two. Therefore, total nonperforming assets decreased from the prior quarter. However, total criticized assets increased by $97.5 million due to the placing of a large relationship into classified status during the quarter. The provision for credit loss was $4.3 million for the quarter.

“It seems that most economists in the country have a positive economic outlook for 2026. We are also seeing our customers have an improved outlook. Barring any sudden and significant changes in government policy, we are hopeful to increase our growth rate in the new year.”

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $70.0 million for the fourth quarter of 2025. This represents a $1.3 million decrease from the $71.3 million recorded in the prior quarter and a $802,000 increase over the same quarter last year. The decrease compared to the prior quarter was due to a decrease in the loan and overnight fed funds rate from the Federal Reserve interest rate ease that occurred in September as this quarter saw the full effect of that rate ease. Since a majority of the Bank’s loans are tied to the Prime rate, interest on loans was down from the prior quarter which was partially offset by a decrease in deposit rates. The increase in net interest income over the same quarter last year was due to a larger decrease in interest expense than the decrease in interest income. The Bank has made significant efforts to decrease rates on deposits and the results this quarter are indicative of that effort. The Bank’s net interest margin contracted in the quarter to 3.74% from 3.92% last quarter and down from the 4.06% net interest margin recorded in the fourth quarter of 2024.

Noninterest Income. For the fourth quarter of 2025, noninterest income was $8.1 million compared with $3.6 million for the same quarter last year and compared to $3.7 million for the third quarter of 2025. The increase over the same quarter last year was mainly due to a $3.6 million gain on sale of OREOs and increase in letter of credit (LC) fee income of $431,000, an increase in other income of $517,000 partially offset by a decrease in service charges of $216,000. In comparison to the prior quarter, the gain on sale of OREOs drove the increase as did an increase in other income of $744,000.

Noninterest Expense. Total noninterest expense was $24.4 million for the fourth quarter of 2025 compared to $21.5 million for the third quarter of 2025 and compared to $28.2 million recorded in the same period last year. The primary reason for the increase over the prior quarter was mainly due to a $1.8 million write-down of the Bank’s OREO property which was subsequently sold as well as other OREO expenses of $1.6 million. This was partially offset by a decrease in personnel expense of $1.1 million which was due to a decrease in incentive compensation. The decrease from the same quarter last year was due again to the $8.1 million charge to occupancy expense in the fourth quarter of last year which was previously mentioned. This was partially offset by an increase in OREO expense of $3.5 million. The Bank’s efficiency ratio came in at 31.2% for the quarter which compares to 28.7% last quarter and to 38.8% in the same quarter last year.

Income Taxes. The Bank recorded a provision for income taxes of $14.5 million for the fourth 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 third quarter of 2025. 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.

Year-to-Date Results

Net income for the year ended December 31, 2025 was $133.6 million or $10.41 per diluted share compared to $130.7 million or $9.64 per diluted share last year. Net interest income declined from 2024 to 2025 however the provision for credit losses declined from $12.1 million in 2024 to $9.1 million in 2025. Additionally, noninterest income increased by $6.0 million over 2024 levels partially offset by noninterest expense which increased by $1.6 million in 2025. On a percentage basis, the increase in diluted earnings per share (“EPS”) was higher than the increase in net income due to common stock repurchases which occurred in late 2024 and throughout 2025.

Balance Sheet Summary

Total gross loans at December 31, 2025 were $6.05 billion, an increase of $413.6 million from the total of $5.64 billion as of December 31, 2024. Total deposits were $6.35 billion, an increase of $428.6 million from the $5.92 billion as of December 31, 2024. Total assets were $7.60 billion, an increase of $677.7 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 $51.3 million, up from the $17.6 million as of September 30, 2025. This represents an increase from the prior quarter of $33.7 million. The main reason for the increase was due to placing a $19.5 million well-secured multi-family loan into nonaccrual status during the quarter. As previously mentioned, total criticized assets increased during the quarter from $151.0 million as of September 30, 2025 to $248.5 million at year-end. The increase is mainly due to a $123.1 million relationship consisting of nine loans; seven commercial real estate loans totaling $121.0 million and two unsecured credits totaling $2.0 million which were downgraded during the quarter. This was partially offset by the sale of $49.1 million of OREO during the quarter. Four of the loans which were downgraded are the subject of lawsuit which was previously disclosed by another financial institution. The weighted average LTV and DCR of the real estate loans that were downgraded was 65.7% and 1.14x respectively, so it is not expected that there will be any significant loss content in these loans. During the fourth quarter, the Bank disposed of one OREO property with a book value of $37.1 million at a price which yielded a net gain on sale of $3.6 million. (This sale was reported in the third quarter press release however it was recorded in the fourth quarter of 2025). In addition, the Bank also disposed of its long held OREO in Santa Barbara, however, it was sold at a small gain after a valuation charge of $1.8 million. Total net charge-offs (recoveries) on loans for the quarter were $0 compared to net charge-offs of $1.6 million in the prior quarter and compared to $6.6 million in the fourth quarter of 2024.

Allowance for Credit Losses

The provision for credit losses for the fourth quarter of 2025 was $4.3 million compared to $2.5 million last quarter and compared to $2.0 million in the same quarter last year. The Bank’s allowance coverage ratio increased to 1.30% of loans as compared to 1.27% in the prior quarter and 1.27% at the end of 2024.

Capitalization

As of December 31, 2025, the Bank’s tangible capital ratio was 10.38%, the leverage ratio was 10.54%, the common equity tier 1 capital ratio was 11.26% and the total capital ratio stood at 14.47%. 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 fourth quarter 2025 financial results will be held this afternoon, January 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 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 855-669-9658 (domestic) or 412-317-0088 (international) through February 5, 2026; the passcode is 4064016.

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: Edward J. Czajka Executive Vice President Chief Financial Officer (213) 891-1188	AT FINANCIAL PROFILES: 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
			December 31,		September 30,		December 31,
				2025		2025		2024
Interest income:
	Loans, including fees		$	109,747	$	110,645	$	111,596
	Investment securities			14,677		15,977		14,013
	Fed funds sold			209		228		249
		Total interest income		124,633		126,850		125,858

Interest expense:
	Interest-bearing demand			16,952		17,562		18,245
	Savings			55		67		85
	Time certificates			34,543		34,792		37,030
	FHLB borrowings			1,783		1,794		0
	Subordinated debt			1,325		1,325		1,325
		Total interest expense		54,658		55,540		56,685
		Net interest income		69,975		71,310		69,173
Provision for credit losses				4,300		2,500		2,000
		Net interest income after provision for credit losses		65,675		68,810		67,173

Noninterest income:
	Fees & service charges on deposit accounts			545		625		761
	Letters of credit fee income			2,408		2,421		1,977
	BOLI income			105		105		102
	Net gain on sale of other real estate owned			3,609		-		-
	Net gain on called and sale of investment securities			132		-		-
	Net gain on sale of loans			93		56		112
	Other income			1,202		458		685
		Total noninterest income		8,094		3,665		3,637

Noninterest expense:
	Salary and employee benefits			13,101		14,240		13,279
	Net occupancy expense			2,430		2,297		10,110
	Business development and promotion expense			163		238		340
	Professional services			2,091		1,494		1,606
	Office supplies and equipment expense			375		361		396
	OREO valuation allowance and related expense			3,465		463		155
	Other			2,752		2,405		2,360
		Total noninterest expense		24,377		21,498		28,246
		Income before provision for income taxes		49,392		50,977		42,564
Income tax expense				14,570		15,038		12,343
		Net income	$	34,822	$	35,939	$	30,221

Income per share available to common shareholders
		Basic	$	2.85	$	2.90	$	2.29
		Diluted	$	2.79	$	2.84	$	2.25

Weighted-average common shares outstanding
		Basic		12,210,077		12,384,924		13,190,696
		Diluted		12,479,124		12,634,174		13,442,294

Cash dividends per common share			$	0.80	$	0.75	$	0.75

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)


			For the Twelve Months Ended
			December 31,		December 31,		Change
				2025		2024	%
Interest income:
	Loans, including fees		$	427,767		445,139	-3.9	%
	Investment securities			57,790		62,854	-8.1	%
	Fed funds sold			898		1,103	-18.6	%
		Total interest income		486,455		509,096	-4.4	%

Interest expense:
	Interest-bearing demand			67,275		87,951	-23.5	%
	Savings			262		323	-18.9	%
	Time certificates			138,154		142,894	-3.3	%
	FHLB borrowings			4,647		0	100.0	%
	Subordinated debt			5,300		5,300	0.0	%
		Total interest expense		215,638		236,468	-8.8	%
		Net interest income		270,817		272,628	-0.7	%
Provision for credit losses				9,100		12,100	-24.8	%
		Net interest income after provision for credit losses		261,717		260,528	0.5	%

Noninterest income:
	Fees & service charges on deposit accounts			2,521		3,172	-20.5	%
	Letters of credit fee income			9,406		7,188	30.9	%
	BOLI income			417		420	-0.8	%
	Net gain on sale of other real estate owned			3,609		-	100.0	%
	Net gain on called and sale of investment securities			132		-	100.0	%
	Net gain on sale of loans			596		659	-9.5	%
	Other income			2,838		2,126	33.5	%
		Total noninterest income		19,519		13,565	43.9	%

Noninterest expense:
	Salary and employee benefits			56,427		53,648	5.2	%
	Net occupancy expense			9,292		15,420	-39.7	%
	Business development and promotion expense			1,103		1,250	-11.8	%
	Professional services			6,743		6,711	0.5	%
	Office supplies and equipment expense			1,541		1,781	-13.5	%
	OREO valuation allowance and related expense			6,938		2,234	210.6	%
	Other			9,645		9,016	7.0	%
		Total noninterest expense		91,689		90,060	1.8	%
		Income before provision for income taxes		189,547		184,033	3.0	%
Income tax expense				55,915		53,371	4.8	%
		Net income	$	133,632	$	130,662	2.3	%

Income per share available to common shareholders
		Basic	$	10.61	$	9.79	8.4	%
		Diluted	$	10.41	$	9.64	8.0	%

Weighted-average common shares outstanding
		Basic		12,594,305		13,347,004	-5.6	%
		Diluted		12,837,442		13,554,266	-5.3	%

Dividends per share			$	3.05	$	2.85	7.0	%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)


			December 31,			December 31,
				2025			2024
			(Unaudited)			(Audited)
Assets
Cash and due from banks			$	807,098		$	765,515
Fed funds sold				20,000			20,000
	Cash and cash equivalents			827,098			785,515

Securities held-to-maturity, at amortized cost				18,749			20,021
Securities available-for-sale, at fair value				566,186			348,706

Loans held for sale, at lower of cost or fair value				-			2,214

Loans				6,054,264			5,640,615
	Less allowance for credit losses			(78,992	)		(71,477	)
	Less amortized deferred loan fees, net			(9,030	)		(9,234	)
	Loans, net			5,966,242			5,559,904

Other real estate owned and repossessed assets				3,510			14,991
Bank furniture and fixtures, net				8,064			8,462
Bank-owned life insurance				10,712			10,433
Accrued interest receivable				34,154			33,561
Investment in affordable housing partnerships				69,978			58,346
Federal Home Loan Bank stock, at cost				15,000			15,000
Deferred tax assets				42,464			47,402
Income tax receivable				3,396			2,195
Operating lease right-of-use assets				30,531			13,182
Other assets				5,081			3,497
	Total assets		$	7,601,165		$	6,923,429

Liabilities and Shareholders' Equity
Deposits:
	Noninterest bearing demand deposits		$	699,160		$	704,859
	Interest bearing deposits:			2,205,914			2,026,965
		Savings		30,376			30,150
		Time certificates of $250,000 or more		1,754,273			1,477,931
		Other time certificates		1,655,723			1,676,943
		Total deposits		6,345,446			5,916,848

Advances from Federal Home Loan Bank				200,000			-
Subordinated debt issuance, net				148,706			148,469
Commitments to fund investment in affordable housing partnerships				23,327			21,623
Operating lease liabilities				35,107			16,990
Accrued interest payable				16,513			16,517
Other liabilities				42,589			39,830
	Total liabilities			6,811,688			6,160,277

Shareholders' equity				789,477			763,152
	Total liabilities and shareholders' equity		$	7,601,165		$	6,923,429

Book value per common share			$	64.83		$	57.86
Number of common shares outstanding				12,177,588			13,188,776

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)

			For the Quarter Ended
			December 31,			September 30,			June 30,			March 31,			December 31,
			2025			2025			2025			2025			2024
Unaudited historical quarterly operations data:
	Interest income		$	124,633		$	126,850		$	120,443		$	114,529		$	125,858
	Interest expense			54,658			55,540			53,569			51,871			56,685
		Interest income before provision for credit losses		69,975			71,310			66,874			62,658			69,173
	Provision for credit losses			4,300			2,500			1,600			700			2,000
	Noninterest income			8,094			3,665			3,762			3,998			3,637
	Noninterest expense			24,377			21,498			22,445			23,369			28,246
	Income tax expense			14,570			15,038			13,744			12,563			12,343
		Net income	$	34,822		$	35,939		$	32,847		$	30,024		$	30,221

	Earnings per share
		Basic	$	2.85		$	2.90		$	2.61		$	2.27		$	2.29
		Diluted	$	2.79		$	2.84		$	2.57		$	2.23		$	2.25

Ratios for the period:
	Return on average assets			1.82	%		1.93	%		1.85	%		1.76	%		1.74	%
	Return on average equity			17.59	%		18.64	%		17.55	%		15.62	%		15.81	%
	Net interest margin (Fully-taxable equivalent)			3.74	%		3.92	%		3.85	%		3.75	%		4.06	%
	Noninterest expense to average assets			1.27	%		1.16	%		1.26	%		1.37	%		1.62	%
	Efficiency ratio			31.22	%		28.67	%		31.78	%		35.06	%		38.79	%
	Net charge-offs (recoveries) to average loans (annualized)			0.00	%		0.11	%		0.00	%		-0.01	%		0.47	%

Ratios as of period end:
	Tangible common equity ratio			10.38	%		10.38	%		10.26	%		10.96	%		11.02	%
	Tier 1 leverage capital ratio			10.54	%		10.66	%		10.73	%		11.52	%		11.33	%
	Common equity tier 1 risk-based capital ratio			11.26	%		11.34	%		11.18	%		11.86	%		11.80	%
	Tier 1 risk-based capital ratio			11.26	%		11.34	%		11.18	%		11.86	%		11.80	%
	Total risk-based capital ratio			14.47	%		14.56	%		14.43	%		15.15	%		15.11	%
	Allowances for credit losses to loans at end of period			1.30	%		1.27	%		1.29	%		1.28	%		1.27	%
	Allowance for credit losses to non-performing loans		1.54x			4.24x			1.41x			0.91x			1.89x

Average balances:
	Total securities		$	586,950		$	583,302		$	503,861		$	402,754		$	350,732
	Total loans			5,947,814			5,753,801			5,623,010			5,555,010			5,542,558
	Total earning assets			7,439,767			7,234,568			6,984,272			6,780,438			6,788,487
	Total assets			7,585,940			7,382,265			7,121,047			6,905,249			6,920,325
	Total time certificate of deposits			3,402,304			3,330,241			3,321,327			3,164,766			3,144,523
	Total interest bearing deposits			5,651,369			5,501,767			5,345,308			5,244,243			5,220,655
	Total deposits			6,336,242			6,169,728			6,005,486			5,886,163			5,905,127
	Total interest bearing liabilities			6,000,042			5,850,376			5,614,737			5,392,735			5,369,092
	Total equity			785,581			764,766			750,535			779,339			760,345

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)

			For the Twelve Months Ended
			December 31,			December 31,
			2025			2024

	Interest income		$	486,455		$	509,096
	Interest expense			215,638			236,468
		Interest income before provision for credit losses		270,817			272,628
	Provision for credit losses			9,100			12,100
	Noninterest income			19,519			13,565
	Noninterest expense			91,689			90,060
	Income tax expense			55,915			53,371
		Net income	$	133,632		$	130,662

	Earnings per share
		Basic	$	10.61		$	9.79
		Diluted	$	10.41		$	9.64

Ratios for the period:
	Return on average assets			1.84	%		1.91	%
	Return on average equity			17.35	%		17.85	%
	Net interest margin (Fully-taxable equivalent)			3.81	%		4.08	%
	Noninterest expense to average assets			1.26	%		1.32	%
	Efficiency ratio			31.58	%		31.47	%
	Net charge-off to average loans			0.03	%		0.35	%

Average balances:
	Total securities		$	519,898		$	352,416
	Total loans			5,721,077			5,396,844
	Total earning assets			7,111,910			6,697,118
	Total assets			7,250,857			6,830,252
	Total time certificate of deposits			3,305,380			2,939,543
	Total interest bearing deposits			5,436,967			5,138,380
	Total deposits			6,100,829			5,849,300
	Total interest bearing liabilities			5,716,508			5,286,725
	Total equity			770,058			732,058

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)

				As of
				December 31,			September 30,			June 30,			March 31,			December 31,
					2025			2025			2025			2025			2024
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	827,098		$	815,459		$	796,257		$	925,183		$	785,515
	Securities held-to-maturity, at amortized cost				18,749			19,034			19,456			19,745			20,021
	Securities available-for-sale, at fair value				566,186			569,115			577,040			390,096			348,706
	Loans:
		Real estate – Mortgage:
			Real estate—Residential	$	783,136		$	793,217		$	767,620		$	779,462		$	790,069
			Real estate—Commercial		3,028,762			2,890,990			2,868,308			2,897,956			2,840,771
			Total Real Estate – Mortgage		3,811,898			3,684,207			3,635,928			3,677,418			3,630,840
		Real estate – Construction:
			R/E Construction — Residential		282,808			285,623			291,343			306,283			296,580
			R/E Construction — Commercial		387,759			323,897			303,354			269,065			287,185
			Total real estate construction loans		670,567			609,520			594,697			575,348			583,765
		Commercial and industrial			1,563,504			1,570,423			1,501,188			1,374,379			1,418,930
		SBA			8,053			7,630			7,741			7,104			6,833
		Consumer and others			242			231			56			164			247
			Gross loans		6,054,264			5,872,011			5,739,610			5,634,413			5,640,615
	Allowance for credit losses on loans				(78,992	)		(74,692	)		(73,830	)		(72,274	)		(71,477	)
	Net deferred loan fees				(9,030	)		(9,956	)		(11,940	)		(9,652	)		(9,234	)
		Net loans, excluding loans held for sale		$	5,966,242		$	5,787,363		$	5,653,840		$	5,552,487		$	5,559,904
	Loans held for sale			$	-		$	-		$	-		$	-		$	2,214
		Net loans		$	5,966,242		$	5,787,363		$	5,653,840		$	5,552,487		$	5,562,118

	Other real estate owned and repossessed assets			$	3,510		$	52,609		$	13,755		$	13,650		$	14,991
	Investment in affordable housing partnerships				69,978			73,874			74,783			63,612			58,346
	Federal Home Loan Bank stock, at cost				15,000			15,000			15,000			15,000			15,000
	Other assets				134,402			135,340			128,629			120,319			118,732
		Total assets		$	7,601,165		$	7,467,794		$	7,278,760		$	7,100,092		$	6,923,429

Liabilities:
	Deposits:
		Demand		$	699,160		$	654,302		$	675,102		$	730,270		$	704,859
		Interest bearing demand			2,205,914			2,205,865			2,004,135			2,099,987			2,026,965
		Savings			30,376			31,087			34,333			32,631			30,150
		Time certificates of $250,000 or more			1,754,273			1,699,757			1,681,026			1,531,715			1,477,931
		Other time certificates			1,655,723			1,638,662			1,683,737			1,678,132			1,676,943
		Total deposits		$	6,345,446		$	6,229,673		$	6,078,333		$	6,072,735		$	5,916,848

	Advance from Federal Home Loan Bank				200,000			200,000			200,000			-			-
	Subordinated debt issuance, net				148,706			148,647			148,588			148,529			148,469
	Commitments to fund investment in affordable housing partnerships				23,327			24,874			30,645			20,956			21,623
	Other liabilities				94,209			88,958			73,534			79,268			73,337
		Total liabilities		$	6,811,688		$	6,692,152		$	6,531,100		$	6,321,488		$	6,160,277

Equity:
	Common stock, no par value			$	210,882		$	210,882		$	210,882		$	210,882		$	210,882
	Additional paid-in capital				105,105			103,235			101,088			99,603			95,791
	Treasury stock				(293,406	)		(277,351	)		(271,005	)		(214,406	)		(201,172	)
	Retained earnings				780,637			755,587			728,891			705,360			685,108
	Accumulated other comprehensive income				(13,741	)		(16,711	)		(22,196	)		(22,835	)		(27,457	)
		Total shareholders' equity		$	789,477		$	775,642		$	747,660		$	778,604		$	763,152
		Total liabilities and shareholders' equity		$	7,601,165		$	7,467,794		$	7,278,760		$	7,100,092		$	6,923,429

PREFERRED BANK
Quarter-to-Date Average Balances, Yield and Rates
(Unaudited)

			Three months ended December 31,							Three months ended September 30,							Three months ended December 31,
				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)		$	5,947,986		$	109,747	7.32	%	$	5,754,073		$	110,645	7.63	%	$	5,543,215		$	111,596	8.01	%
	Investment securities⁽³⁾			586,950			5,883	3.98	%		583,302			6,257	4.26	%		350,732			3,566	4.04	%
	Federal funds sold			20,337			209	4.08	%		20,000			228	4.52	%		20,172			249	4.91	%
	Other earning assets			884,494			8,886	3.99	%		877,193			9,811	4.44	%		874,368			10,546	4.80	%
		Total interest earning assets		7,439,767			124,725	6.65	%		7,234,568			126,941	6.96	%		6,788,487			125,957	7.38	%
	Deferred loan fees, net			(9,739	)						(10,686	)						(9,808	)
	Allowance for credit losses on loans			(74,738	)						(72,784	)						(75,474	)
Noninterest earning assets:
	Cash and due from banks			11,055							10,071							10,626
	Bank furniture and fixtures			7,887							7,945							8,866
	Right of use assets			28,344							19,153							28,570
	Other assets			183,364							193,998							169,058
		Total assets	$	7,585,940						$	7,382,265						$	6,920,325

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand and savings	$	2,249,065		$	17,007	3.00	%	$	2,171,526		$	17,629	3.22	%	$	2,076,132		$	18,330	3.51	%
		TCD $250K or more		1,725,674			17,220	3.96	%		1,686,710			17,406	4.09	%		1,481,219			17,514	4.70	%
		Other time certificates		1,676,630			17,323	4.10	%		1,643,531			17,386	4.20	%		1,663,304			19,516	4.67	%
		Total interest bearing deposits		5,651,369			51,551	3.62	%		5,501,767			52,421	3.78	%		5,220,655			55,360	4.22	%
Advance from Federal Home Loan Bank				200,000			1,783	3.54	%		200,000			1,794	3.56	%		-			0	0.00	%
Subordinated debt, net				148,673			1,325	3.54	%		148,609			1,325	3.54	%		148,434			1,325	3.55	%
		Total interest bearing liabilities		6,000,042			54,658	3.61	%		5,850,376			55,540	3.77	%		5,369,092			56,685	4.20	%
Noninterest bearing liabilities:
	Demand deposits			684,873							667,961							684,472
	Lease liability			32,626							22,908							25,486
	Other liabilities			82,818							76,255							80,930
		Total liabilities		6,800,359							6,617,500							6,159,980
Shareholders’ equity				785,581							764,766							760,345
		Total liabilities and shareholders’ equity	$	7,585,940						$	7,382,266						$	6,920,325
Net interest income						$	70,067						$	71,401						$	69,272
Net interest spread								3.04	%						3.19	%						3.18	%
Net interest margin								3.74	%						3.92	%						4.06	%

Cost of Deposits:
	Noninterest bearing demand deposits		$	684,873						$	667,961						$	684,472
	Interest bearing deposits			5,651,369			51,551	3.62	%		5,501,767			52,421	3.78	%		5,220,655			55,360	4.22	%
		Total Deposits	$	6,336,242		$	51,551	3.23	%	$	6,169,728		$	52,421	3.37	%	$	5,905,127		$	55,360	3.73	%

⁽¹⁾	Includes non-accrual loans and loans held for sale
	Net loan fee income of $1.4 million, $1.7 million and $1.2 million for the quarter ended December 31, 2025, September 30, 2025 and December 31, 2024, respectively, are included in the yield computations
	Yields on securities have been adjusted to a tax-equivalent basis

PREFERRED BANK
Year-to-Date Average Balances, Yield and Rates
(Unaudited)

			Twelve Months ended December 31,
				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)		$	5,723,854		$	427,767	7.47	%	$	5,398,916		$	445,139	8.24	%
	Investment securities⁽³⁾			519,898			21,429	4.12	%		352,416			14,257	4.05	%
	Federal funds sold			20,267			898	4.43	%		20,397			1,103	5.41	%
	Other earning assets			847,891			36,743	4.33	%		925,389			48,994	5.29	%
		Total interest earning assets		7,111,910			486,837	6.85	%		6,697,118			509,493	7.61	%
	Deferred loan fees, net			(9,908	)						(10,301	)
	Allowance for credit losses on loans			(72,859	)						(76,448	)
Noninterest earning assets:
	Cash and due from banks			11,094							10,624
	Bank furniture and fixtures			8,120							9,537
	Right of use assets			20,686							23,997
	Other assets			181,814							175,725
		Total assets	$	7,250,857						$	6,830,252

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand/ savings	$	2,131,587		$	67,537	3.17	%	$	2,198,837		$	88,274	4.01	%
		TCD $250K or more		1,635,567			67,358	4.12	%		1,403,663			69,176	4.93	%
		Other time certificates		1,669,813			70,796	4.24	%		1,535,880			73,718	4.80	%
		Total interest \bearing deposits		5,436,967			205,691	3.78	%		5,138,380			231,168	4.50	%
Advance from Federal Home Loan Bank				130,959			4,647	3.55	%		-			0	0.00	%
Subordinated debt, net				148,582			5,300	3.57	%		148,344			5,300	3.57	%
		Total interest bearing liabilities		5,716,508			215,638	3.77	%		5,286,725			236,468	4.47	%
Noninterest bearing liabilities:
	Demand deposits			663,862							710,920
	Lease liability			24,572							20,931
	Other liabilities			75,857							79,618
		Total liabilities		6,480,799							6,098,194
Shareholders’ equity				770,058							732,058
		Total liabilities and shareholders’ equity	$	7,250,857						$	6,830,252
Net interest income						$	271,199						$	273,025
Net interest spread								3.07	%						3.13	%
Net interest margin								3.81	%						4.08	%

Cost of Deposits:
	Noninterest bearing demand deposits		$	663,862						$	710,920
	Interest bearing deposits			5,436,967			205,691	3.78	%		5,138,380			231,168	4.50	%
		Total Deposits	$	6,100,829		$	205,691	3.37	%	$	5,849,300		$	231,168	3.95	%

⁽¹⁾	Includes non-accrual loans and loans held for sale
	Net loan fee income of $5.0 million and $4.6 million for the twelve months ended December 31, 2025 and 2024, respectively, are included in the yield computations
	Yields on securities have been adjusted to a tax-equivalent basis

Preferred Bank
Loan and Credit Quality Information

Allowance For Credit Losses History
			Year Ended
			December 31, 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		1,749			-
		Total Charge-Offs		1,757			19,028

	Recoveries
		Commercial & Industrial		172			50
		Total Recoveries		172			50

	Net Charge-Offs			1,585			18,978
	Provision for Credit Losses:			9,100			12,100
Balance at End of Period			$	78,992		$	71,477

Average Loans Held for Investment			$	5,721,077		$	5,396,844
Loans Held for Investment at End of Period			$	6,054,264		$	5,640,615
Net Charge-Offs to Average Loans				0.03	%		0.35	%
Allowances for Credit Losses to Loans at End of Period				1.30	%		1.27	%

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