Preferred Bank (PFBC) Q3 2025 earnings summary

Executive summary

• Achieved record Q3 2025 net income of $35.9 million ($2.84 per share), with strong EPS and sequential/year-over-year growth, driven by higher net interest income and lower interest expense.

• Credit quality improved significantly; nonperforming loans dropped from $52.3 million to $17.6 million, aided by the foreclosure and sale of a large loan.

• Commercial bank with $7.5 billion in assets, focused on small/medium businesses and high net worth individuals, especially in ethnic Chinese and East Asian markets.

• Operates 16 branches across California, New York, and Texas, with a new Manhattan branch opened in April 2025 and further expansion planned.

• Management team averages 36 years of industry experience and 24 years with the bank, emphasizing efficiency and high-touch service.

Financial highlights

• EPS reached $2.84; net income was $35.9 million for Q3 2025.

• Loan growth of 2.3% ($132.4 million) and deposit growth of 2.5% ($151.3 million) quarter-over-quarter; total loans at $5.87 billion and deposits at $6.23 billion as of Q3 2025.

• Net interest margin for Q3 2025 was 3.92%; cost of deposits was 3.36%.

• Efficiency ratio improved to 28.7% in Q3 2025, ranking among the top nationally.

• Tangible book value per share reached $60.19 as of June 30, 2025; book value per share was $62.81 as of Q3 2025.

Outlook and guidance

• Expecting continued loan growth in Q4 2025, potentially matching Q3 levels, with optimism for further growth in Q1 2026 if rate cuts continue.

• Certificates of deposit maturing in Q4 ($1.27 billion at 4.10%) are expected to reprice lower, benefiting margin.

• OREO gain of $3–$4 million anticipated in Q4.

• Non-interest expense projected to increase by $250,000–$500,000 per quarter in 2026.

• Balance sheet has shifted to a more matched asset-liability profile to navigate a declining or sideways rate environment.