Company Overview - Preferred Bank is one of the largest independent commercial banks in California, chartered by the State of California, with deposits insured by the FDIC [3] - The bank operates from its main office in Los Angeles and has twelve full-service branches in California, two branches in New York, and one in Texas [3] - Preferred Bank offers a wide range of deposit and loan products to commercial and consumer customers, focusing on small and mid-sized businesses, entrepreneurs, and high net worth individuals [3] Leadership Change - The Board of Directors has appointed Nick Pi as Executive Vice President and Chief Risk Officer, who has been with the bank since 2015 as Chief Credit Officer [1] - Nick Pi will continue to oversee the credit function while also taking charge of the BSA and Compliance Departments [1] - Li Yu, Chairman and CEO, expressed confidence in Nick's leadership and experience, highlighting the importance of this appointment for enterprise risk oversight [2]

Financial Data and Key Metrics Changes - Preferred Bank reported a net income of $30 million or $2.23 per share for the first quarter of 2025, impacted by a significant reversal of interest income due to elevated non-performing loans [5] - The net interest margin for the quarter was reported at 3.75%, down from 4.06% in the previous quarter, with an internal estimate suggesting it would have been around 4.06% without the reversal effect [7] - Total classified loans decreased by $30 million or approximately 20% from the previous quarter [6] Business Line Data and Key Metrics Changes - Non-performing loans totaled $71 million at quarter end, with $66 million related to two specific credits [5] - The bank experienced a negative loan growth of $6 million, approximately 0.1% of the total loan portfolio, while deposits increased by 2.6% on a linked quarter basis [7] Market Data and Key Metrics Changes - The bank is closely monitoring its trade finance segment, which comprises over $200 million of its loan portfolio, due to uncertainties arising from the ongoing tariff situation [8] - Management noted that loan demand is not expected to improve significantly due to the unpredictability of the tariff war, which is affecting supply chains and costs [7] Company Strategy and Development Direction - The bank is focusing on understanding the implications of the tariff situation on its customers and is adjusting its loan underwriting practices accordingly [45][49] - Management emphasized the importance of being cautious and diligent in monitoring the loan portfolio, especially in light of potential economic impacts from tariffs [28][58] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the potential impact of tariffs on property values and customer operations, indicating a "wait and see" approach from many clients [29] - The bank is prepared to continue growing its loan portfolio but acknowledges the challenges posed by the current economic environment [28] Other Important Information - The bank has a buyback program with $65 million available, having repurchased 532,000 shares in the first 24 days of April [23] - Management indicated that the normalized expense run rate for the next couple of quarters is expected to be between $21.5 million and $22 million [22] Q&A Session Summary Question: Margin outlook excluding reversals - Management indicated that the margin for the quarter, excluding nonaccrual reversals, would have been 3.94%, which is better than anticipated [13] Question: Details on non-performing loans - One of the non-performing loans is expected to close soon at par, while the other is in bankruptcy court with a good appraisal value supporting the credit [20][21] Question: Expense run rate for Q2 - The normalized expense run rate is expected to be around $21.5 million to $22 million for the next couple of quarters [22] Question: Loan interest revenue decline - The decline in loan interest revenue was attributed to interest reversals and the impact of rate cuts from the previous year [38][40] Question: Positioning the bank amid economic uncertainty - Management is focusing on understanding customer reactions to the tariff situation and adjusting lending practices accordingly [45][49]

Financial Data and Key Metrics Changes - Preferred Bank reported a net income of $30 million or $2.23 per share for the first quarter of 2025, negatively impacted by a significant reversal of interest income due to elevated non-performing loans [6][8] - The net interest margin for the quarter was reported at 3.75%, down from an estimated 4.06% in the previous quarter, primarily due to the interest reversal [8][13] - Total classified loans decreased by $30 million or approximately 20% from the previous quarter [7] Business Line Data and Key Metrics Changes - The bank experienced a negative loan growth of $6 million, approximately 0.1% of the total loan portfolio, while deposits increased by 2.6% on a linked quarter basis [8] - Non-performing loans totaled $71 million at quarter end, with $66 million related to two specific credits [6][7] Market Data and Key Metrics Changes - The bank is closely monitoring its trade finance segment, which constitutes over $200 million of its loan portfolio, due to uncertainties arising from the ongoing tariff situation [8][9] - Management indicated that loan demand is not expected to improve significantly in the near term due to the unpredictability of the tariff war and its impact on supply chains and inflation [8][30] Company Strategy and Development Direction - The bank is taking a cautious approach to underwriting loans, particularly in the industrial property sector, which has seen increased pressure on cap rates [51][52] - Management is actively engaging with trade finance customers to assess their responses to the tariff situation and to mitigate potential risks [48][50] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the potential impact of tariffs on property values and overall loan demand, indicating a "wait and see" approach from many customers [30][46] - The bank is prepared to adapt its strategies based on customer feedback and market conditions, emphasizing the importance of understanding each customer's situation [50] Other Important Information - The bank has a buyback program with $65 million available, having repurchased 532,000 shares in early April [24] - The normalized expense run rate for the next couple of quarters is estimated to be between $21.5 million and $22 million [23] Q&A Session Summary Question: Margin outlook excluding reversals - Management indicated that the margin for the quarter, excluding nonaccrual reversals, would have been 3.94%, which is better than anticipated [13][14] Question: Details on non-performing loans - One of the non-performing loans is expected to be sold at par, with a collateral value supporting the loan amount [20][21] Question: Loan interest revenue decline - The decline in loan interest revenue was attributed to interest reversals and the impact of rate cuts from the previous year [40][42] Question: Trade finance portfolio risks - Management noted that the trade finance segment is being monitored closely due to varying impacts on customers based on their supply chains [37][38] Question: Positioning in the current economic cycle - Management is taking a cautious approach, focusing on understanding customer reactions to the tariff situation and adjusting lending practices accordingly [50][51]

Group 1 - Preferred Bank (NASDAQ: PFBC) has experienced a decline in performance since it was last reaffirmed as a 'buy' candidate [1] - Crude Value Insights focuses on cash flow and companies in the oil and natural gas sector, highlighting their value and growth prospects [1] - The service offers a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2] Group 2 - Subscribers can engage in live chat discussions about the oil and gas sector [2] - A two-week free trial is available for new subscribers to explore the offerings of Crude Value Insights [3]

Core Insights - Preferred Bank reported revenue of $66.66 million for Q1 2025, a year-over-year decline of 6.9% and below the Zacks Consensus Estimate of $70.45 million, resulting in a surprise of -5.39% [1] - The EPS for the same quarter was $2.23, down from $2.44 a year ago, with an EPS surprise of -4.29% compared to the consensus estimate of $2.33 [1] Financial Performance Metrics - Efficiency Ratio stood at 35.1%, higher than the average estimate of 31.8% based on three analysts [4] - Net Interest Margin was reported at 3.8%, below the average estimate of 4.3% from three analysts [4] - Net charge-offs to average loans were 0%, better than the average estimate of 0.2% from two analysts [4] - Average Interest-Earning Assets totaled $6.78 billion, slightly below the average estimate of $6.86 billion from two analysts [4] - Net interest income before provision for credit losses was $62.66 million, compared to the average estimate of $66.64 million from three analysts [4] - Total noninterest income was $4 million, exceeding the average estimate of $3.28 million from three analysts [4] Stock Performance - Preferred Bank's shares returned +0.6% over the past month, outperforming the Zacks S&P 500 composite, which declined by -4.8% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Performance - Preferred Bank reported quarterly earnings of $2.23 per share, missing the Zacks Consensus Estimate of $2.33 per share, and down from $2.44 per share a year ago, representing an earnings surprise of -4.29% [1] - The bank's revenues for the quarter ended March 2025 were $66.66 million, missing the Zacks Consensus Estimate by 5.39%, and down from $71.57 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance and Outlook - Preferred Bank shares have lost about 0.5% since the beginning of the year, while the S&P 500 has declined by -6.8% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $2.41 for the coming quarter and $9.69 for the current fiscal year [4][7] - The estimate revisions trend for Preferred Bank is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Zacks Industry Rank for Banks - West is in the bottom 36% of over 250 Zacks industries, suggesting that the industry outlook may negatively impact stock performance [8] - Another company in the same industry, Sierra Bancorp, is expected to report quarterly earnings of $0.66 per share, reflecting a year-over-year change of +3.1% [9]

Core Insights - Preferred Bank reported a net income of $30.0 million or $2.23 per diluted share for Q1 2025, reflecting a slight decrease from the previous quarter and a larger decrease compared to the same quarter last year, primarily due to reduced net interest income [1][3][7] Financial Performance - Net interest income was $62.7 million, down $6.5 million from the previous quarter and $5.8 million from the same quarter last year, largely due to a $2.8 million reversal of interest income from nonaccrual loans [2][7] - Noninterest income increased to $4.0 million, up $361,000 from the prior quarter and $933,000 from the same quarter last year, driven by higher letter of credit fee income and gains on sales of SBA loans [2][8] - Noninterest expense totaled $23.4 million, a decrease of $4.9 million from the previous quarter but an increase of $3.3 million compared to the same quarter last year, influenced by higher personnel and OREO expenses [2][9] Asset Quality - Non-accrual loans amounted to $78.9 million, primarily consisting of two well-secured loans totaling $65.6 million, with no anticipated losses [4][13] - Total criticized loans decreased to $129.2 million from $158.2 million at year-end, indicating improved asset quality [4][14] - The provision for credit losses was $700,000, significantly lower than the $2.0 million in the previous quarter and $4.4 million in the same quarter last year [15] Capitalization and Ratios - As of March 31, 2025, the Bank's tangible capital ratio was 10.96%, leverage ratio was 11.52%, and total capital ratio stood at 15.15%, showing stable capitalization [16][28] - Return on average assets was 1.76% and return on beginning equity was 15.96%, reflecting solid profitability metrics [9][27] Balance Sheet Summary - Total gross loans were $5.63 billion, a slight decrease from the previous quarter, while total deposits increased by $155.9 million to $6.07 billion [12][28] - Total assets rose to $7.1 billion, an increase of $176.7 million from the previous quarter, indicating growth in the Bank's overall financial position [12][28]

Core Viewpoint - Preferred Bank is set to release its financial results for the fourth quarter ended March 31, 2025, on April 25, 2025, before market opening, followed by a conference call to discuss the results and outlook [1][3]. Company Overview - Preferred Bank is one of the larger independent commercial banks in California, chartered by the State of California, with deposits insured by the FDIC [4]. - The bank operates from its main office in Los Angeles and has twelve full-service branches in California, two branches in New York, and one in Texas, along with a Loan Production Office in Sunnyvale, California [4]. - Preferred Bank offers a wide range of deposit and loan products to commercial and consumer customers, focusing on personalized services for small and mid-sized businesses, entrepreneurs, and high net worth individuals [4]. - Originally founded as a Chinese-American bank, it now serves a diversified mainstream market while still benefiting from the migration of ethnic Chinese to California [4]. Conference Call Details - The conference call will be hosted by key executives including Chairman and CEO Li Yu, President Wellington Chen, and CFO Edward J. Czajka, discussing financial results, business highlights, and future outlook [3]. - Participants can access the call via domestic and international phone numbers or through a live webcast on the bank's Investor Relations website [2][3]. - A replay of the call will be available for a limited time after the event [3].

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LOS ANGELES, Jan. 30, 2025 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), (the “Bank”) one of the larger independent California banks, today reported that the Board of Directors had approved a significant donation to benefit fire relief efforts on the Los Angeles area. Li Yu, Chairman and CEO, commented, “The recent wildfires in Southern California have been devastating and one of the worst disasters in the history of Southern California. As a company headquartered in the heart of Los Angeles, the fires ...