Preferred Bank (PFBC) Q4 2025 earnings summary

Executive summary

• Net income for Q4 2025 was $34.8 million ($2.79 per share), with full-year net income reported as $434 million ($10.41 per share) in one source and $133.6 million ($10.41 per share) in another, reflecting strong profitability metrics.

• Loan and deposit growth remained robust, with Q4 loans up $182.3 million (over 12%/3.1% linked quarter) and deposits up $115.8 million (7.4%/1.9% linked quarter); full-year loan and deposit growth were $413.6 million and $428.6 million, respectively.

• Net interest margin declined in Q4 due to federal rate cuts and high deposit costs, with a 70% floating-rate loan portfolio impacted.

• Asset quality saw an increase in non-accrual and criticized assets, mainly due to downgrades of a large relationship, but OREO sales reduced nonperforming assets.

• Loan loss provision for the quarter was $4.3 million.

Financial highlights

• Net interest margin for December was 3.66%, with deposit costs at 3.17%, both trending down by 5-7 basis points per month.

• Net interest income for Q4 was $70.0 million, down $1.3 million sequentially but up $802,000 year-over-year; net interest margin contracted to 3.74% from 3.92% last quarter and 4.06% a year ago.

• Noninterest income rose to $8.1 million, driven by a $3.6 million gain on OREO sales and higher letter of credit fees.

• Noninterest expense increased to $24.4 million, mainly due to OREO-related write-downs and expenses.

• Efficiency ratio for Q4 was 31.2%, up from 28.7% last quarter but improved from 38.8% a year ago.

Outlook and guidance

• Management expects 2026 to be a year of growth and stability, with customers and economists expressing optimism.

• Loan and deposit growth are expected to continue at a similar or higher pace than 2025, with internal budgets set higher.

• Non-interest expense is forecasted at $21.5–$22.5 million for Q1 2026, with mid- to high-single-digit growth for the full year.

• Fee income for 2026 is expected to be in line with Q4 2025, excluding one-time OREO gains.