Preferred Bank (PFBC) Q1 2025 earnings summary

Executive summary

• Q1 2025 net income was $30.0 million ($2.23 per share), down from $33.5 million in Q1 2024, impacted by lower net interest income, interest reversals, and a $1.3 million OREO charge-off.

• Total assets reached $7.10 billion, up 2.6% from year-end; deposits increased 2.6% to $6.07 billion, while loans declined slightly.

• Non-performing loans totaled $71–78.9 million, with most exposure tied to two well-collateralized credits expected to resolve within two quarters.

• Noninterest income rose to $4.0 million, mainly from higher letter of credit fees and SBA loan sales.

• Noninterest expense was $23.4 million, up year-over-year due to higher OREO and personnel costs.

Financial highlights

• Net interest margin was 3.75%, down from 4.06% last quarter and 4.19% a year ago; adjusted for reversals, margin would have been 3.94–4.06%.

• Net interest income fell to $62.7 million, mainly due to $2.8–3 million in nonaccrual loan reversals and lower rates.

• Return on average assets was 1.76%; return on average equity was 15.62–15.96%.

• Allowance for credit losses to loans was 1.28%, with net recoveries of $97,000 and a slight increase from last quarter.

• Efficiency ratio improved to 35.1%.

Outlook and guidance

• Management is cautious on loan growth due to ongoing tariff-related uncertainty and expects continued volatility from interest rate changes.

• Expense run rate projected at $21.5–22 million for the next quarters, with possible acceleration thereafter.

• Deposit costs are reducing as planned, with $1.16 billion in time deposits rolling in Q2 at an average rate of 4.28%.

• Loan growth remains a goal, with opportunities anticipated once tariff impacts stabilize.