Preferred Bank Reports Fourth Quarter Results

About this update from Preferred Bank

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 PresidentChief Financial Officer(213) 891-1188 AT FINANCIAL PROFILES: Jeffrey Haas General Information(310) 622-8240 [email protected] 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 % Source: Preferred Bank

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