Financial Performance - Net income for the second quarter ended June 30, 2025, was $32.8 million, translating to earnings per share of $2.52 [2][3][15] - The net interest margin (NIM) improved to 3.85% from 3.75% in the previous quarter [4][15] - Total operating expenses were $22.5 million, with guidance for the next couple of quarters ranging from $21.8 million to $22.6 million [5][22] Loan and Deposit Activity - The company experienced approximately 7% annualized loan growth, driven by commercial and industrial (C&I) line usage and construction commitments [3][7][15] - Deposit balances remained flat compared to the first quarter, as the company managed deposit costs deliberately [3][8][31] - $1.4 billion in certificates of deposit (CDs) are set to mature in Q3 2025 at an average rate of 4.21%, with current renewal rates slightly under 4% [5][21] Shareholder Returns and Capital Management - The company repurchased $56 million of common shares at an average price of $80.81 per share [4][24] - New share repurchase authorization of $125 million remains untapped due to valuation considerations [7][24] Asset Quality and Risk Management - There were decreases in nonaccrual, criticized, and past due loans compared to the previous quarter, with management stating that reserves are sufficient [4][16] - The company continues to monitor external uncertainties, including tariffs and inflation, which may impact borrowers [8][37] Branch Expansion and Future Outlook - A new branch in Manhattan is performing well in loan origination, with plans for a Silicon Valley branch in the second half of the year [6][35] - Management noted tentative signs of sustained loan demand entering July, although uncertainties remain regarding the economic environment [7][15][36]

Core Insights - Preferred Bank (PFBC) reported revenue of $70.65 million for the quarter ended June 2025, marking a year-over-year increase of 1.6% and exceeding the Zacks Consensus Estimate of $70.15 million by +0.71% [1] - The earnings per share (EPS) for the same period was $2.52, compared to $2.48 a year ago, with an EPS surprise of +3.7% against the consensus estimate of $2.43 [1] Financial Performance Metrics - Efficiency Ratio was reported at 31.8%, slightly higher than the estimated 31.3% by analysts [4] - Net Interest Margin stood at 3.9%, surpassing the average estimate of 3.8% [4] - Net charge-offs to average loans were 0%, significantly better than the estimated 0.3% [4] - Average Interest-Earning Assets were reported at $6.98 billion, matching the estimate [4] - Total noninterest income was $3.77 million, slightly above the estimated $3.73 million [4] - Net interest income before provision for credit losses was $66.87 million, exceeding the average estimate of $66.39 million [4] Stock Performance - Shares of Preferred Bank have returned +13.8% over the past month, outperforming the Zacks S&P 500 composite's +5.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1 - Preferred Bank reported quarterly earnings of $2.52 per share, exceeding the Zacks Consensus Estimate of $2.43 per share, and showing an increase from $2.48 per share a year ago, resulting in an earnings surprise of +3.70% [1] - The bank's revenues for the quarter ended June 2025 were $70.65 million, surpassing the Zacks Consensus Estimate by 0.71%, and up from $69.51 million year-over-year [2] - Preferred Bank has outperformed the S&P 500 with a share price increase of about 7.2% since the beginning of the year, compared to the S&P 500's gain of 7.1% [3] Group 2 - The earnings outlook for Preferred Bank is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes in these expectations [4] - The estimate revisions trend for Preferred Bank was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The current consensus EPS estimate for the upcoming quarter is $2.47 on revenues of $70.8 million, and for the current fiscal year, it is $9.61 on revenues of $279.6 million [7] Group 3 - The Zacks Industry Rank indicates that the Banks - West industry is currently in the top 29% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [8]

Core Viewpoint - Preferred Bank reported a net income of $32.8 million or $2.52 per diluted share for Q2 2025, reflecting a $2.8 million increase from the previous quarter but a slight decrease of $745,000 compared to the same quarter last year [1][2]. Financial Performance - Net interest income for Q2 2025 was $66.9 million, an increase of $4.2 million from the prior quarter and $767,000 from the same quarter last year [4]. - The net interest margin improved to 3.85%, up from 3.75% in the previous quarter but down from 3.96% in the same quarter last year [2][4]. - Noninterest income was $3.8 million, compared to $3.4 million in the same quarter last year and $4.0 million in the previous quarter [5]. Loan and Deposit Growth - The loan portfolio increased by 1.8% linked quarter, while deposits saw only a slight increase [2]. - Total loans reached $5.74 billion, an increase of $99.0 million from December 31, 2024 [9]. - Total deposits were $6.08 billion, up by $161.5 million from $5.92 billion as of December 31, 2024 [9]. Asset Quality - Non-accrual loans decreased from $78.9 million as of March 31, 2025, to $51.2 million at June 30, 2025 [3]. - Total criticized loans decreased to $104.5 million from $129.2 million in the prior quarter [10]. Noninterest Expense - Total noninterest expense was $22.5 million for Q2 2025, down from $23.4 million in the previous quarter but up from $19.7 million in the same period last year [6]. - The decrease from the prior quarter was primarily due to a reduction in personnel expenses [6]. Tax and Capitalization - The provision for income taxes was $13.7 million, resulting in an effective tax rate of 29.5% [7]. - As of June 30, 2025, the Bank's tangible capital ratio was 10.26%, and the total capital ratio stood at 14.43% [12].

Core Viewpoint - Preferred Bank plans to release its financial results for the second quarter of 2025 on July 21, 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 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 and business highlights [3]. - Participants can access the call via a domestic number (888-243-4451) or an international number (412-542-4135), with a live webcast available on the bank's website [2][3]. - A replay of the call will be available until July 28, 2025, with specific access numbers provided for domestic and international listeners [3].

Core Viewpoint - Preferred Bank has received regulatory approval for a $125 million stock repurchase plan, with an initial tranche of $50 million buybacks, and has declared a quarterly cash dividend of $0.75 per share [1][2]. Company Overview - Preferred Bank is one of the largest independent commercial banks in California, chartered by the State of California, and its deposits are insured by the FDIC [2]. - The bank operates from its main office in Los Angeles and has twelve full-service branches in California, as well as branches in New York and Texas [2]. - 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 [2]. Financial Performance - The bank's strong balance sheet and superior profitability metrics enable it to repurchase its own stock, reflecting its commitment to providing value to shareholders [2].

Core Points - Preferred Bank has announced a new $125 million stock repurchase plan, which has been approved by shareholders [1] - The bank completed its previous $150 million stock repurchase plan, repurchasing a total of 2,146,252 shares at an average price of $70.13 per share [1] - The final tranche of the previous repurchase involved buying back 818,059 shares for $65.7 million [1] Company Overview - Preferred Bank is one of the largest independent commercial banks in California, chartered by the State of California and insured by the FDIC [3] - The bank operates from its main office in Los Angeles and has twelve full-service branches in California, as well as branches in New York and 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]

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]