Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $0.41 and core earnings per share of $0.32, representing an increase of 12878% year over year [5] - GAAP net interest margin expanded by three basis points quarter over quarter to 2.54%, while core net interest margin also increased by three basis points to 2.52% [6] - Average total deposits increased by 6% year over year and 1% quarter over quarter to $7.6 billion [6] - Pre-provision pre-tax net revenue reached $23.1 million, the highest level since 2022 [6] - Tangible common equity grew by 25 basis points to 8.04% [8] Business Line Data and Key Metrics Changes - Core net interest income increased by $10.5 million year over year, driven by loan yields increasing by seven basis points [10] - Non-interest bearing deposits grew by 6% year over year and 2% quarter over quarter [12] - New checking account openings increased by 21% year over year and 8% quarter over quarter, indicating strong customer acquisition [12] Market Data and Key Metrics Changes - The bank's commercial real estate concentration decreased to under 500% for the first time since Q3 2023 [7] - Non-performing loans in the multifamily portfolio halved to 50 basis points, down from 101 basis points in the previous quarter [19] - Criticized and classified loans in the multifamily segment improved to 73 basis points from 116 basis points [19] Company Strategy and Development Direction - The company focuses on improving profitability, maintaining credit discipline, and preserving strong liquidity and capital [8] - The asset repricing strategy is expected to drive net interest margin expansion, with real estate loans projected to reprice approximately 160 basis points higher through 2027 [9] - The company is committed to serving the Asian American communities, with deposits in this market growing to $1.4 billion, reflecting a 12.4% compound annual growth rate since Q2 2022 [26] Management's Comments on Operating Environment and Future Outlook - Management expects total assets to remain stable, with loan growth being market-dependent [27] - The company anticipates some seasonal deposit outflows in Q3 but expects recovery in Q4 [27] - The effective tax rate is expected to be lowered to a range of 24.5% to 26.5% for the remainder of 2025 [28] Other Important Information - The company maintains a strong liquidity position with approximately $4 billion of undrawn lines and resources at quarter end [25] - The reliance on wholesale funding is limited, with uninsured and uncollateralized deposits representing only 17% of total deposits [25] Q&A Session Summary Question: What caused the $400 million decline in deposits? - Management indicated that the decline was mostly seasonal, related to government deposits moving out, and expected a recovery later in the year [34][35] Question: What would happen to margins if the Fed cuts rates? - A return to a more normal yield curve would be positive for the company, potentially leading to a couple of basis points improvement in margins [38][39] Question: Will there be buybacks in the second half of the year? - Management stated that they are focused on building capital stronger before considering buybacks, prioritizing profitable growth and dividends [44] Question: What drove the decrease in expense outlook? - The decrease was attributed to managing expenses tightly and some accruals related to incentive compensation [50] Question: What is the outlook for non-CD deposit repricing? - Management noted limited opportunities to reduce funding costs until the Fed makes a move, with most support for net interest margin expected from asset-side loan repricing [56]

Core Insights - Preferred Bank reported a GAAP net income of $32.8 million, or $2.52 per share, in Q2 2025, reflecting a sequential increase driven by approximately 7% annualized loan growth and an expanded net interest margin (NIM) of 3.85% [1] Capital Management - The company executed a $56 million share buyback at an average price of $80.81 per share, significantly below the current market price of $97.03, and has secured authorization for an additional $125 million buyback program, which has not yet commenced due to valuation sensitivity [2][3] - Management's disciplined approach to capital return indicates a willingness to deploy excess capital opportunistically while adhering to valuation thresholds that enhance per-share value creation [3] Funding and Deposit Stability - Despite competitive pressures, the cost of deposits remained stable at around 3.41%, with maturing certificates of deposit (CDs) totaling $1.4 billion being renewed at or just under 4% in Q3, supporting stable NIM performance and deposit retention [4] - The company has maintained flat deposit balances through active cost controls, balancing competitive rate offers with funding needs [5] Loan Growth and Asset Quality - The commercial and industrial (C&I) and commercial construction portfolios drove approximately 7% annualized loan growth, with a decline in nonaccrual, criticized, and past-due loans quarter over quarter, indicating improved asset quality [6][7] - Management asserts that loan loss reserves remain adequate, and further signs of increasing loan demand have appeared, although caution is maintained due to macroeconomic uncertainties [6] Future Outlook - Management provided guidance that noninterest expense will be in the range of $21.8 million to $22.6 million in Q3 and Q4, excluding expectations of further other real estate owned write-downs [8] - A new Silicon Valley branch is scheduled to open in the second half of 2025, expanding the bank's geographic reach, although no explicit quantitative forward guidance was provided for net interest income, loan growth, or NIM [8]

Core Insights - The introduction of new tariffs, including a baseline 10% tariff on all imports, is expected to significantly impact consumer prices across various sectors, including electronics and groceries [3] - Experts recommend proactive financial planning to mitigate the effects of potential price hikes due to tariffs, emphasizing the importance of emergency funds and debt management [2][8] Financial Strategies - **Emergency Fund**: It is advised to bolster emergency savings to cover three to six months of expenses, especially in light of potential inflation from tariffs [1] - **Debt Management**: Paying off high-interest debt is crucial, as rising costs may lead the Federal Reserve to increase interest rates, making variable-rate debts more expensive [4] - **Investment Diversification**: Investors are encouraged to diversify their portfolios with index funds and ETFs to manage market volatility caused by trade wars and tariffs [5] - **Certificates of Deposit (CDs)**: CDs currently offer rates above 4.00%, which may become more attractive if interest rates rise due to tariffs [6] - **Timing Major Purchases**: Consumers are advised to consider making significant purchases sooner rather than later to avoid potential price increases on imported goods [7]