FORM 8-K
CURRENT REPORTPursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 20, 2025
(Exact name of registrant as specified in its charter)
California 33539 95-4340199(State or other jurisdiction
of incorporation or organization)
(FDIC Certificate No.) (I.R.S. Employee Identification No.)
601 S. Figueroa Street, 48th Floor, Los Angeles, California90017
(Address of principal executive offices) (Zip code)
(213) 891-1188(Registrant's telephone number including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
On October 20, 2025, Preferred Bank issued a press release announcing earnings results for the quarter ended September 30, 2025.
Press release dated October 20, 2025, is hereby attached.
SIGNATUREPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Preferred BankDated: October 21, 2025 By: /s/ Edward J. Czajka Edward J. Czajka Executive Vice President Chief Financial Officer
AT THE COMPANY: AT FINANCIAL PROFILES:
Edward J. Czajka Jeffrey Haas Executive Vice President General Information Chief Financial Officer (310) 622-8240
(213) 891-1188 PFBC@finprofiles.com
FOR IMMEDIATE RELEASE October 20, 2025 PREFERRED BANK REPORTS RECORD THIRD QUARTER RESULTS LOS ANGELES, CALIFORNIA, October 20, 2025 - Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended September 30, 2025. Preferred Bank ("the Bank") reported net income of $35.9 million or $2.84 per diluted share for the third quarter of 2025. This represents an increase in net income of $3.1 million from the prior quarter and an increase of $2.6 million over the same quarter last year. The increase compared to both periods was primarily due to an increase in net interest income. The primary reason that net interest income increased over the same quarter last year was due to a large $5.0 million decrease in interest expense. In comparison to the prior quarter, gross interest income increased by $6.4 million due to an increase in loans and investment securities. Highlights for the Quarter:Return on average assets was 1.93%
Return on average equity was 18.64%
Total loans increased by $132.4 million or 2.3%, linked quarter
Total deposits increased by $151.3 million, or 2.5%, linked quarter
The efficiency ratio for the quarter was 28.7%
Li Yu, Chairman and CEO, commented, "We are pleased to report a quarterly record for diluted earnings per share of $2.84 for the third quarter of 2025. Net income for the quarter was $35.9 million.
"For the quarter, nonperforming loans decreased significantly from $52.3 million at June 30, 2025 to $17.6 million as of September 30, 2025. The primary reason for the decrease is the foreclosure of a loan with the balance transferred to OREO. We are happy to report that the OREO asset has already been sold as of this writing, and a large pre-tax gain was also recorded on the sale which will be reported in our fourth quarter results. Net charge-offs were $1.6 million on a year-to-date ("YTD") basis.
"This quarter we have also recorded reasonable growth in both loans and deposits. Total loans increased by
$132.4 million or 2.3% on a linked quarter basis. Deposits also increased by $151.3 million or 2.5% on a linked quarter basis. Our customers appear to be slightly more optimistic but still cautious as there are a lot of uncertainties remaining in our economy. Worth noting is that without the aforementioned loan transferred to OREO, loan growth would have been near $170 million for the quarter.
"Net interest income and the net interest margin both increased from the previous quarter while noninterest expense was relatively unchanged from previous quarters. In late June, regulators approved our stock repurchase program but for most of the time since then, the market price was above what we were willing to pay to buy it back. During the third quarter, we repurchased a total of 70,842 shares for total consideration of
$6.3 million."
Results of OperationsNet Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $71.3 million for the third quarter of 2025. This represents a $4.4 million increase over the $66.9 million recorded in the prior quarter and a $2.5 million increase over the same quarter last year. The increase compared to the prior quarter was due to loan growth as well as an increase in the Bank's investment securities. This was partially offset by an increase in interest expense which was due to deposit growth and an increase in borrowings. The increase over the same period last year was due to a $5.0 million decrease in interest expense partially offset by a smaller decrease in interest income. The Bank has made significant efforts to decrease rates on deposits and the results in this quarter are indicative of that effort. The Bank's net interest margin expanded in the quarter to 3.92% from 3.85% last quarter but was lower than the net interest margin of 4.10% recorded in the third quarter of last year.
Noninterest Income. For the third quarter of 2025, noninterest income was $3.7 million compared with $3.5 million for the same quarter last year and compared to $3.8 million for the second quarter of 2025. The increase
over the same quarter last year was due to letter of credit (LC) fee income which was up by $461,000. In comparison to the prior quarter, gains on sales of loans was down by $116,000.
Noninterest Expense. Total noninterest expense was $21.5 million for the third quarter of 2025 compared to
$22.4 million for the second quarter of 2025 and compared to the $22.1 million recorded in the same period last year. The primary reason for the decrease from the prior quarter was mainly due to a $1.3 million write-down of the Bank's OREO property which occurred in the second quarter of 2025 as compared to a $300,000 charge on OREO holdings this quarter. The decrease from the same quarter last year was due again to a $1.7 million write-down of the same property in the third quarter of 2024. Personnel expense was $14.2 million this quarter which was a $715,000 increase over the same period last year but was nearly flat compared to the second quarter of 2025. Occupancy expense was up by $414,000 over the same period last year due to the Bank's branch expansions and the change in accounting for leases which was adopted in the fourth quarter of 2024. The Bank's efficiency ratio came in at 28.7% for the quarter which compares to 31.8% last quarter and to 30.6% in the same quarter last year.
Income Taxes. The Bank recorded a provision for income taxes of $15.0 million for the third 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 second 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 ResultsNet income for the nine months ended September 30, 2025 was $98.8 million or $7.63 per diluted share compared to $100.4 million or $7.39 million last year. The reason that diluted earnings per share ("EPS") increased over 2024 was due to the stock repurchases that occurred in late 2024 and early 2025 which decreased the outstanding share count, leading to increased diluted earnings per share. The primary reason for the decrease in net income was a decrease in net interest income of $2.6 million and a $5.5 million increase in noninterest expense partially offset by a $5.3 million decrease in the provision for credit losses.
Balance Sheet SummaryTotal gross loans at September 30, 2025 were $5.87 billion, an increase of $231.4 million from the total of
$5.64 billion as of December 31, 2024. Total deposits were $6.23 billion, an increase of $312.8 million from the
$5.92 billion as of December 31, 2024. Total assets were $7.47 billion, an increase of $544.4 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 $17.6 million as of September 30, 2025. This represents a decrease from the prior quarter of $52.3 million as the Bank foreclosed on one of its large nonaccrual loans reported as of June 30, 2025. The $37 million multifamily nonaccrual loan was foreclosed on in the third quarter however the Bank has sold this property subsequent to September 30, 2025 and recorded a pre-tax gain on sale. Total OREO as of September 30, 2025 was $52.6 million as of September 30, 2025 however, as of this writing, OREO totals $14.7 million due to the aforementioned OREO sale. Total net charge-offs (recoveries) for the quarter were $1.6 million compared to net charge-offs of $44,000 in the prior quarter and compared to $(3,000) in the same quarter last year.
Allowance for Credit Losses
The provision for credit losses for the third quarter of 2025 was $2.5 million compared to $1.6 million last quarter and compared to $3.2 million in the same quarter last year. The Bank's allowance coverage ratio decreased to 1.27% of loans as compared to 1.29% in the prior quarter.
Capitalization
As of September 30, 2025, the Bank's tangible capital ratio was 10.38%, the leverage ratio was 10.66%, the common equity tier 1 capital ratio was 11.34% and the total capital ratio stood at 14.56%. 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 third quarter 2025 financial results will be held tomorrow October 21, 2025 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 888-243-4451 (domestic) or 412-542-4135 (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 https://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 877-344-7529 (domestic) or 412-317-0088 (international) through November 4, 2025; the passcode is 7582330.
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 https://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, 2025 | June 30, 2025 | September 30, 2024 | ||||
Interest income: Loans, including fees | $ 110,645 | $ 105,884 | $ 114,112 | |||
Investment securities | 15,977 | 14,326 | 15,032 | |||
Fed funds sold | 228 | 233 | 280 | |||
Total interest income | 126,850 | 120,443 | 129,424 | |||
Interest expense: Interest-bearing demand | 17,562 | 16,171 | 23,211 | |||
Savings | 67 | 71 | 84 | |||
Time certificates | 34,792 | 34,932 | 35,956 | |||
FHLB borrowings | 1,794 | 1,070 | - | |||
Subordinated debt | 1,325 | 1,325 | 1,325 | |||
Total interest expense | 55,540 | 53,569 | 60,576 | |||
Net interest income | 71,310 | 66,874 | 68,848 | |||
Provision for credit losses | 2,500 | 1,600 | 3,200 | |||
Net interest income after provision for credit losses | 68,810 | 65,274 | 65,648 | |||
Noninterest income: Fees & service charges on deposit accounts | 625 | 635 | 747 | |||
Letters of credit fee income | 2,421 | 2,333 | 1,959 | |||
BOLI income | 105 | 104 | 108 | |||
Net gain on sale of loans | 56 | 172 | 91 | |||
Other income | 458 | 518 | 554 | |||
Total noninterest income | 3,665 | 3,762 | 3,459 | |||
Noninterest expense: Salary and employee benefits | 14,240 | 14,247 | 13,525 | |||
Net occupancy expense | 2,297 | 2,271 | 1,883 | |||
Business development and promotion expense | 238 | 240 | 241 | |||
Professional services | 1,494 | 1,507 | 1,816 | |||
Office supplies and equipment expense | 361 | 419 | 435 | |||
OREO valuation allowance and related expense | 463 | 1,479 | 1,915 | |||
Other | 2,405 | 2,282 | 2,274 | |||
Total noninterest expense | 21,498 | 22,445 | 22,089 | |||
Income before provision for income taxes | 50,977 | 46,591 | 47,018 | |||
Income tax expense | 15,038 | 13,744 | 13,635 | |||
Net income | $ 35,939 | $ 32,847 | $ 33,383 | |||
Income per share available to common shareholders | ||||||
Basic | $ 2.90 | $ 2.61 | $ 2.50 | |||
Diluted | $ 2.84 | $ 2.57 | $ 2.46 | |||
Weighted-average common shares outstanding | ||||||
Basic | 12,384,924 | 12,570,755 | 13,327,848 | |||
Diluted | 12,634,174 | 12,776,240 | 13,544,273 | |||
Cash dividends per common share | $ | 0.75 | $ | 0.75 | $ | 0.70 |
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, 2025 | September 30, 2024 | Change % | |||
Interest income: Loans, including fees | $ 318,020 | 333,543 | -4.7% | ||
Investment securities | 43,113 | 48,841 | -11.7% | ||
Fed funds sold | 689 | 854 | -19.3% | ||
Total interest income | 361,822 | 383,238 | -5.6% | ||
Interest expense: Interest-bearing demand | 50,323 | 69,706 | -27.8% | ||
Savings | 207 | 238 | -13.1% | ||
Time certificates | 103,611 | 105,864 | -2.1% | ||
FHLB borrowings | 2,864 | - | 100.0% | ||
Subordinated debt | 3,975 | 3,975 | 0.0% | ||
Total interest expense | 160,980 | 179,783 | -10.5% | ||
Net interest income | 200,842 | 203,455 | -1.3% | ||
Provision for credit losses | 4,800 | 10,100 | -52.5% | ||
Net interest income after provision for credit losses | 196,042 | 193,355 | 1.4% | ||
Noninterest income: Fees & service charges on deposit accounts | 1,976 | 2,411 | -18.0% | ||
Letters of credit fee income | 6,998 | 5,211 | 34.3% | ||
BOLI income | 312 | 318 | -1.8% | ||
Net gain on sale of loans | 503 | 547 | -8.0% | ||
Other income | 1,636 | 1,441 | 13.5% | ||
Total noninterest income | 11,425 | 9,928 | 15.1% | ||
Noninterest expense: Salary and employee benefits | 43,326 | 40,369 | 7.3% | ||
Net occupancy expense | 6,862 | 5,310 | 29.2% | ||
Business development and promotion expense | 940 | 910 | 3.3% | ||
Professional services | 4,652 | 5,105 | -8.9% | ||
Office supplies and equipment expense | 1,166 | 1,385 | -15.8% | ||
OREO valuation allowance and related expense | 3,473 | 2,079 | 67.1% | ||
Other | 6,893 | 6,656 | 3.6% | ||
Total noninterest expense | 67,312 | 61,814 | 8.9% | ||
Income before provision for income taxes | 140,155 | 141,469 | -0.9% | ||
Income tax expense | 41,345 | 41,028 | 0.8% | ||
Net income | $ 98,810 | $ 100,441 | -1.6% | ||
Income per share available to common shareholders | |||||
Basic | $ 7.77 | $ 7.50 | 3.6% | ||
Diluted | $ 7.63 | $ 7.39 | 3.2% | ||
Weighted-average common shares outstanding | |||||
Basic | 12,723,788 | 13,399,487 | -5.0% | ||
Diluted | 12,949,445 | 13,587,820 | -4.7% | ||
Dividends per share | $ | 2.25 | $ | 2.10 | 7.1% |
PREFERRED BANK
Condensed Consolidated Statements of Financial Condition (unaudited)
(in thousands)
September 30, | December 31, | ||
2025 | 2024 | ||
(Unaudited) | (Audited) | ||
Assets | |||
Cash and due from banks | $ 795,459 | $ 765,515 | |
Fed funds sold 20,000 20,000 | |||
Cash and cash equivalents | 815,459 | 785,515 | |
Securities held-to-maturity, at amortized cost | 19,034 | 20,021 | |
Securities available-for-sale, at fair value | 569,115 | 348,706 | |
Loans held for sale, at lower of cost or fair value | - | 2,214 | |
Loans | 5,872,011 | 5,640,615 | |
Less allowance for credit losses | (74,692) | (71,477) | |
Less amortized deferred loan fees, net | (9,956) | (9,234) | |
Loans, net | 5,787,363 | 5,559,904 | |
Other real estate owned and repossessed assets | 52,609 | 14,991 | |
Bank furniture and fixtures, net | 7,771 | 8,462 | |
Bank-owned life insurance | 10,641 | 10,433 | |
Accrued interest receivable | 36,449 | 33,561 | |
Investment in affordable housing partnerships | 73,874 | 58,346 | |
Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | |
Deferred tax assets | 43,711 | 47,402 | |
Income tax receivable | 5,190 | 2,195 | |
Operating lease right-of-use assets | 27,063 | 13,182 | |
Other assets | 4,515 | 3,497 | |
Total assets | $ 7,467,794 | $ 6,923,429 | |
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing demand deposits | $ 654,302 | $ 704,859 | |
Interest bearing deposits: | 2,205,865 | 2,026,965 | |
Savings | 31,087 | 30,150 | |
Time certificates of $250,000 or more | 1,699,757 | 1,477,931 | |
Other time certificates | 1,638,662 | 1,676,943 | |
Total deposits | 6,229,673 | 5,916,848 | |
Advances from Federal Home Loan Bank | 200,000 | - | |
Subordinated debt issuance, net | 148,647 | 148,469 | |
Commitments to fund investment in affordable housing partnerships | 24,874 | 21,623 | |
Operating lease liabilities | 31,073 | 16,990 | |
Accrued interest payable | 15,655 | 16,517 | |
Other liabilities | 42,230 | 39,830 | |
Total liabilities | 6,692,152 | 6,160,277 | |
Shareholders' equity | 775,642 | 763,152 | |
Total liabilities and shareholders' equity | $ 7,467,794 | $ 6,923,429 | |
Book value per common share | $ 62.81 | $ 57.86 | |
Number of common shares outstanding | 12,349,889 | 13,188,776 |
PREFERRED BANK
Selected Consolidated Financial Information (unaudited)
(in thousands, except for ratios)
For the Quarter Ended
September 30, 2025 | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | |
Unaudited historical quarterly operations data: | |||||
Interest income | $ 126,850 | $ 120,443 | $ 114,529 | $ 125,858 | $ 129,424 |
Interest expense | 55,540 | 53,569 | 51,871 | 56,685 | 60,576 |
Interest income before provision for credit losses | 71,310 | 66,874 | 62,658 | 69,173 | 68,848 |
Provision for credit losses | 2,500 | 1,600 | 700 | 2,000 | 3,200 |
Noninterest income | 3,665 | 3,762 | 3,998 | 3,637 | 3,459 |
Noninterest expense | 21,498 | 22,445 | 23,369 | 28,246 | 22,089 |
Income tax expense | 15,038 | 13,744 | 12,563 | 12,343 | 13,635 |
Net income $ 35,939 | $ 32,847 | $ 30,024 | $ 30,221 | $ 33,383 | |
Earnings per share Basic | $ 2.90 | $ 2.61 | $ 2.27 | $ 2.29 | $ 2.50 |
Diluted | $ 2.84 | $ 2.57 | $ 2.23 | $ 2.25 | $ 2.46 |
Ratios for the period: | |||||
Return on average assets | 1.93% | 1.85% | 1.76% | 1.74% | 1.95% |
Return on average equity | 18.64% | 17.55% | 15.62% | 15.81% | 17.77% |
Net interest margin (Fully-taxable equivalent) | 3.92% | 3.85% | 3.75% | 4.06% | 4.10% |
Noninterest expense to average assets | 1.16% | 1.26% | 1.37% | 1.62% | 1.29% |
Efficiency ratio | 28.67% | 31.78% | 35.06% | 38.79% | 30.55% |
Net (recoveries) charge-offs to average loans (annualized) | 0.11% | 0.00% | -0.01% | 0.47% | 0.00% |
Ratios as of period end: | |||||
Tangible common equity ratio | 10.38% | 10.26% | 10.96% | 11.02% | 10.92% |
Tier 1 leverage capital ratio | 10.66% | 10.73% | 11.52% | 11.33% | 11.28% |
Common equity tier 1 risk-based capital ratio | 11.34% | 11.18% | 11.86% | 11.80% | 11.66% |
Tier 1 risk-based capital ratio | 11.34% | 11.18% | 11.86% | 11.80% | 11.66% |
Total risk-based capital ratio | 14.56% | 14.43% | 15.15% | 15.11% | 15.06% |
Allowances for credit losses to loans at end of period | 1.27% | 1.29% | 1.28% | 1.27% | 1.36% |
Allowance for credit losses to non-performing loans | 4.24x | 1.41x | 0.91x | 1.89x | 3.92x |
Average balances: | |||||
Total securities | $ 583,302 | $ 503,861 | $ 402,754 | $ 350,732 | $ 356,590 |
Total loans | 5,753,801 | 5,623,010 | 5,555,010 | 5,542,558 | 5,458,613 |
Total earning assets | 7,234,568 | 6,984,272 | 6,780,438 | 6,788,487 | 6,684,766 |
Total assets | 7,382,265 | 7,121,047 | 6,905,249 | 6,920,325 | 6,817,979 |
Total time certificate of deposits | 3,330,241 | 3,321,327 | 3,164,766 | 3,144,523 | 2,874,985 |
Total interest bearing deposits | 5,501,767 | 5,345,308 | 5,244,243 | 5,220,655 | 5,124,245 |
Total deposits | 6,169,728 | 6,005,486 | 5,886,163 | 5,905,127 | 5,828,227 |
Total interest bearing liabilities | 5,850,376 | 5,614,737 | 5,392,735 | 5,369,092 | 5,272,617 |
Total equity | 764,766 | 750,535 | 779,339 | 760,345 | 747,222 |
PREFERRED BANK
Selected Consolidated Financial Information (unaudited)
(in thousands, except for ratios)
For the Nine Months Ended
September 30, 2025 | September 30, 2024 | |
Interest income | $ 361,822 | $ 383,238 |
Interest expense | 160,980 | 179,783 |
Interest income before provision for credit losses | 200,842 | 203,455 |
Provision for credit losses | 4,800 | 10,100 |
Noninterest income | 11,425 | 9,928 |
Noninterest expense | 67,312 | 61,814 |
Income tax expense | 41,345 | 41,028 |
Net income | $ 98,810 | $ 100,441 |
Earnings per share Basic | $ 7.77 | $ 7.50 |
Diluted | $ 7.63 | $ 7.39 |
Ratios for the period: | ||
Return on average assets | 1.85% | 1.97% |
Return on average equity | 17.27% | 18.57% |
Net interest margin (Fully-taxable equivalent) | 3.84% | 4.08% |
Noninterest expense to average assets | 1.26% | 1.21% |
Efficiency ratio | 31.71% | 28.97% |
Net charge-off to average loans | 0.04% | 0.31% |
Average balances: | ||
Total securities | $ 497,301 | $ 352,982 |
Total loans | 5,644,668 | 5,347,918 |
Total earning assets | 7,001,424 | 6,666,439 |
Total assets | 7,137,935 | 6,800,008 |
Total time certificate of deposits | 3,272,717 | 2,870,717 |
Total interest bearing deposits | 5,364,715 | 5,110,755 |
Total deposits | 6,021,497 | 5,830,555 |
Total interest bearing liabilities | 5,620,958 | 5,259,068 |
Total equity | 764,826 | 722,560 |
PREFERRED BANK
Selected Consolidated Financial Information (unaudited)
(in thousands, except for ratios)
As of | ||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||
2025 | 2025 | 2025 | 2024 | 2024 | ||||
Unaudited quarterly statement of financial position data: | ||||||||
Assets: | ||||||||
Cash and cash equivalents | $ 815,459 | $ 796,257 | $ 925,183 | $ 785,515 | $ 804,994 | |||
Securities held-to-maturity, at amortized cost | 19,034 | 19,456 | 19,745 | 20,021 | 20,311 | |||
Securities available-for-sale, at fair value | 569,115 | 577,040 | 390,096 | 348,706 | 337,363 | |||
Loans: | ||||||||
Real estate - Mortgage: | ||||||||
Real estate-Residential | $ 793,217 | $ 767,620 | $ 779,462 | $ 790,069 | $ 753,453 | |||
Real estate-Commercial | 2,890,990 | 2,868,308 | 2,897,956 | 2,840,771 | 2,882,506 | |||
Total Real Estate - Mortgage | 3,684,207 | 3,635,928 | 3,677,418 | 3,630,840 | 3,635,959 | |||
Real estate - Construction: | ||||||||
R/E Construction - Residential | 285,623 | 291,343 | 306,283 | 296,580 | 274,214 | |||
R/E Construction - Commercial | 323,897 | 303,354 | 269,065 | 287,185 | 290,308 | |||
Total real estate construction loans | 609,520 | 594,697 | 575,348 | 583,765 | 564,522 | |||
Commercial and industrial | 1,570,423 | 1,501,188 | 1,374,379 | 1,418,930 | 1,365,550 | |||
SBA | 7,630 | 7,741 | 7,104 | 6,833 | 5,424 | |||
Consumer and others | 231 | 56 | 164 | 247 | 124 | |||
Gross loans | 5,872,011 | 5,739,610 | 5,634,413 | 5,640,615 | 5,571,579 | |||
Allowance for credit losses on loans | (74,692) | (73,830) | (72,274) | (71,477) | (76,051) | |||
Net deferred loan fees | (9,956) | (11,940) | (9,652) | (9,234) | (10,414) | |||
Net loans, excluding loans held for sale | $ 5,787,363 | $ 5,653,840 | $ 5,552,487 | $ 5,559,904 | $ 5,485,114 | |||
Loans held for sale | $ - | $ - | $ - | $ 2,214 | $ 225 | |||
Net loans | $ 5,787,363 | $ 5,653,840 | $ 5,552,487 | $ 5,562,118 | $ 5,485,339 | |||
Other real estate owned and repossessed assets | $ 52,609 | $ 13,755 | $ 13,650 | $ 14,991 | $ 15,082 | |||
Investment in affordable housing partnerships | 73,874 | 74,783 | 63,612 | 58,346 | 58,009 | |||
Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | |||
Other assets | 135,340 | 128,629 | 120,319 | 118,732 | 136,246 | |||
Total assets | $ 7,467,794 | $ 7,278,760 | $ 7,100,092 | $ 6,923,429 | $ 6,872,344 | |||
Liabilities: Deposits:
Demand | $ 654,302 | $ 675,102 | $ 730,270 | $ 704,859 | $ 682,859 | ||
Interest bearing demand | 2,205,865 | 2,004,135 | 2,099,987 | 2,026,965 | 1,994,288 | ||
Savings | 31,087 | 34,333 | 32,631 | 30,150 | 29,793 | ||
Time certificates of $250,000 or more | 1,699,757 | 1,681,026 | 1,531,715 | 1,477,931 | 1,478,500 | ||
Other time certificates | 1,638,662 | 1,683,737 | 1,678,132 | 1,676,943 | 1,682,324 | ||
Total deposits | $ 6,229,673 | $ 6,078,333 | $ 6,072,735 | $ 5,916,848 | $ 5,867,764 | ||
Advance from Federal Home Loan Bank | 200,000 | 200,000 | - | - | - | ||
Subordinated debt issuance, net | 148,647 | 148,588 | 148,529 | 148,469 | 148,410 | ||
Commitments to fund investment in affordable housing partnerships | 24,874 | 30,645 | 20,956 | 21,623 | 23,617 | ||
Other liabilities | 88,958 | 73,534 | 79,268 | 73,337 | 82,436 | ||
Total liabilities | $ 6,692,152 | $ 6,531,100 | $ 6,321,488 | $ 6,160,277 | $ 6,122,227 |
Equity:
Common stock, no par value | $ 210,882 | $ 210,882 | $ 210,882 | $ 210,882 | $ 210,882 | ||
Additional paid-in capital | 103,235 | 101,088 | 99,603 | 95,791 | 93,631 | ||
Treasury stock | (277,351) | (271,005) | (214,406) | (201,172) | (194,585) | ||
Retained earnings | 755,587 | 728,891 | 705,360 | 685,108 | 664,808 | ||
Accumulated other comprehensive income | (16,711) | (22,196) | (22,835) | (27,457) | (24,619) | ||
Total shareholders' equity | $ 775,642 | $ 747,660 | $ 778,604 | $ 763,152 | $ 750,117 | ||
Total liabilities and shareholders' equity | $ 7,467,794 | $ 7,278,760 | $ 7,100,092 | $ 6,923,429 | $ 6,872,344 |
PREFERRED BANK
Quarter-to-Date Average Balances, Yield and Rates (unaudited)
Three months ended September 30,
Three months ended March 31,
Three months ended September 30,
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) | $ 5,754,073 | $ 110,645 | 7.63% | $ 5,632,204 | $ 105,884 | 7.54% | $ 5,459,842 | $ 114,112 | 8.31% | ||
Investment securities (3) | 583,302 | 6,257 | 4.26% | 503,861 | 5,195 | 4.14% | 356,590 | 3,610 | 4.03% | ||
Federal funds sold | 20,000 | 228 | 4.52% | 20,511 | 233 | 4.56% | 20,164 | 280 | 5.52% | ||
Other earning assets | 877,193 | 9,811 | 4.44% | 827,696 | 9,230 | 4.47% | 848,170 | 11,521 | 5.40% | ||
Total interest earning assets | 7,234,568 | 126,941 | 6.96% | 6,984,272 | 120,542 | 6.92% | 6,684,766 | 129,523 | 7.71% | ||
Deferred loan fees, net | (10,686) | (10,005) | (10,248) | ||||||||
Allowance for credit losses on loans | (72,784) | (72,328) | (72,899) | ||||||||
Noninterest earning assets: | |||||||||||
Cash and due from banks | 10,071 | 12,590 | 10,826 | ||||||||
Bank furniture and fixtures | 7,945 | 8,215 | 9,419 | ||||||||
Right of use assets | 19,153 | 19,917 | 22,496 | ||||||||
Other assets | 193,998 | 178,386 | 173,619 | ||||||||
Total assets | $ 7,382,265 | $ 7,121,047 | $ 6,817,979 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities: Deposits:
Interest bearing demand and savings | $ 2,171,526 | $ 17,629 | 3.22% | $ 2,023,981 | $ 16,242 | 3.22% | $ 2,249,260 | $ 23,295 | 4.12% | ||
TCD $250K or more | 1,686,710 | 17,406 | 4.09% | 1,644,322 | 17,092 | 4.17% | 1,412,073 | 17,866 | 5.03% | ||
Other time certificates | 1,643,531 | 17,386 | 4.20% | 1,677,005 | 17,840 | 4.27% | 1,462,912 | 18,090 | 4.92% | ||
Total interest bearing deposits | 5,501,767 | 52,421 | 3.78% | 5,345,308 | 51,174 | 3.84% | 5,124,245 | 59,251 | 4.60% | ||
Advance from Federal Home Loan Bank | 200,000 | 1,794 | 3.56% | 120,879 | 1,070 | 3.55% | - | - | 0.00% | ||
Subordinated debt, net | 148,609 | 1,325 | 3.54% | 148,550 | 1,325 | 3.58% | 148,372 | 1,325 | 3.55% | ||
Total interest bearing liabilities | 5,850,376 | 55,540 | 3.77% | 5,614,737 | 53,569 | 3.83% | 5,272,617 | 60,576 | 4.57% | ||
Noninterest bearing liabilities: | |||||||||||
Demand deposits | 667,961 | 660,178 | 703,982 | ||||||||
Lease liability | 22,908 | 23,657 | 18,882 | ||||||||
Other liabilities | 76,255 | 71,940 | 75,276 | ||||||||
Total liabilities | 6,617,500 | 6,370,512 | 6,070,757 | ||||||||
Shareholders' equity | 764,766 | 750,535 | 747,222 | ||||||||
Total liabilities and shareholders' equity | $ 7,382,266 | $ 7,121,047 | $ 6,817,979 | ||||||||
Net interest income | $ 71,401 | $ 66,973 | $ 68,947 | ||||||||
Net interest spread | 3.19% | 3.10% | 3.14% | ||||||||
Net interest margin | 3.92% | 3.85% | 4.10% | ||||||||
Cost of Deposits: | |||||||||||
Noninterest bearing demand deposits | $ 667,961 | $ 660,178 | $ 703,982 | ||||||||
Interest bearing deposits | 5,501,767 | 52,421 | 3.78% | 5,345,308 | 51,174 | 3.84% | 5,124,245 | 59,251 | 4.60% | ||
Total Deposits | $ 6,169,728 | $ 52,421 | 3.37% | $ 6,005,486 | $ 51,174 | 3.42% | $ 5,828,227 | $ 59,251 | 4.04% | ||
(1)Includes non-accrual loans and loans held for sale
(2) Net loan fee income of $1.1 million, $1.7 million and $991,000 for the quarter ended September 30, 2025, June 30, 2025 and September 30, 2024, 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)
2025 | 2024 | ||||
Average | Interest Income or | Average Yield/ | Average | Interest Income or | Average Yield/ |
Balance | Expense | Rate | Balance | Expense | Rate |
(Dollars in thousands) | |||||
$ 5,648,323 | $ 318,020 | 7.53% | $ 5,350,465 | $ 333,543 | 8.33% |
Nine Months ended September 30,
ASSETS
Interest earning assets: Loans (1,2)
Investment securities (3) | 497,301 | 15,546 | 4.18% | 352,982 | 10,691 | 4.05% |
Federal funds sold | 20,244 | 689 | 4.55% | 20,472 | 854 | 5.57% |
Other earning assets | 835,556 | 27,857 | 4.46% | 942,520 | 38,448 | 5.45% |
Total interest earning assets | 7,001,424 | 362,112 | 6.91% | 6,666,439 | 383,536 | 7.68% |
Deferred loan fees, net | (9,965) | (10,466) | ||||
Allowance for credit losses on loans | (72,225) | (76,775) | ||||
Noninterest earning assets: | ||||||
Cash and due from banks | 11,178 | 10,693 | ||||
Bank furniture and fixtures | 8,198 | 9,762 | ||||
Right of use assets | 18,105 | 22,462 | ||||
Other assets | 181,220 | 177,893 | ||||
Total assets | $ 7,137,935 | $ 6,800,008 |
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities: Deposits:
Interest bearing demand/ savings | $ 2,091,998 | $ 50,530 | 3.23% | $ 2,240,038 | $ 69,944 | 4.17% |
TCD $250K or more | 1,605,201 | 50,138 | 4.18% | 1,377,621 | 51,662 | 5.01% |
Other time certificates | 1,667,516 | 53,473 | 4.29% | 1,493,096 | 54,202 | 4.85% |
Total interest bearing deposits | 5,364,715 | 154,141 | 3.84% | 5,110,755 | 175,808 | 4.59% |
Advance from Federal Home Loan Bank | 107,692 | 2,864 | 3.56% | - | - | 0.00% |
Subordinated debt, net | 148,551 | 3,975 | 3.58% | 148,313 | 3,975 | 3.58% |
Total interest bearing liabilities | 5,620,958 | 160,980 | 3.83% | 5,259,068 | 179,783 | 4.57% |
Noninterest bearing liabilities: | ||||||
Demand deposits | 656,782 | 719,800 | ||||
Lease liability | 21,857 | 19,401 | ||||
Other liabilities | 73,511 | 79,179 | ||||
Total liabilities | 6,373,108 | 6,077,448 | ||||
Shareholders' equity | 764,826 | 722,560 | ||||
Total liabilities and shareholders' equity | $ 7,137,934 | $ 6,800,008 | ||||
Net interest income | $ 201,132 | $ 203,753 | ||||
Net interest spread | 3.09% | 3.12% | ||||
Net interest margin | 3.84% | 4.08% | ||||
Cost of Deposits: | ||||||
Noninterest bearing demand deposits | $ 656,782 | $ 719,800 | ||||
Interest bearing deposits 5,364,715 154,141 3.84% 5,110,755 175,808 4.59%
Total Deposits
(1)Includes non-accrual loans and loans held for sale
$ 6,021,497 $
154,141
3.42%
$ 5,830,555 $
175,808
4.03%
(2) Net loan fee income of $3.6 million and $3.4 million for the nine months ended September 30, 2025 and 2024, 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 Ended Year Ended September 30, 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 (Recoveries) Charge-Offs | 1,585 | 18,978 | |
Provision for Credit Losses: | 4,800 | 12,100 | |
Balance at End of Period | $ 74,692 | $ 71,477 | |
Average Loans Held for Investment | $ 5,644,668 | $ 5,396,844 | |
Loans Held for Investment at End of Period | $ 5,872,011 | $ 5,640,615 | |
Net (Recoveries) Charge-Offs to Average Loans | 0.04% | 0.35% | |
Allowances for Credit Losses to Loans at End of Period | 1.27% | 1.27% | |