Preferred Bank (PFBC) Q2 2025 earnings summary

Executive summary

• Net income for Q2 2025 was $32.8 million ($2.52 per share), up sequentially but down year-over-year due to higher noninterest expense, including a $1.3 million OREO write-down.

• Total assets reached $7.28 billion, up 5.1% from year-end 2024; loan portfolio grew by $99 million to $5.74 billion.

• Deposits increased 2.7% to $6.08 billion since year-end 2024, remaining flat sequentially as cost control was prioritized.

• Asset quality improved with decreases in non-accrual, criticized, and past-due loans, including a reduction in non-accruals from $78.9 million to $51.2 million.

• Loan growth was approximately 7% annualized in Q2, with early July indicating increased demand.

Financial highlights

• Net interest margin for Q2 2025 was 3.85%, up from 3.75% last quarter but down from 3.96% year-over-year.

• Net interest income before provision for credit losses was $66.9 million, up $4.2 million sequentially and $767,000 year-over-year.

• Noninterest income for Q2 2025 was $3.8 million, up from $3.4 million year-over-year.

• Noninterest expense was $22.5 million, up year-over-year mainly due to OREO write-down and higher personnel costs.

• Provision for credit losses was $1.6 million, down from $2.5 million year-over-year.

Outlook and guidance

• Management expects continued focus on credit quality and borrower health amid economic volatility and potential recession risk.

• The bank is adjusting its loan and deposit mix to mitigate the impact of declining interest rates.

• Positive credit trends and stable loan growth are expected to support future performance.

• Deposit growth will be pursued as needed, with continued focus on cost control.

• No expectation of further OREO write-downs in upcoming quarters.