Preferred Bank Reports Third Quarter Results

LOS ANGELES, Oct. 23, 2026 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended September 30, 2026. Preferred Bank (“the Bank”) reported net income of $32.9 million or $2.73 per diluted share for the third quarter of 2026. This represents a decrease in net income of $3.0 million from the same quarter last year and a decrease of $592,000 from the previous quarter. The decrease compared to the prior year was due to a decrease in net interest income of $4.6 million partially offset by a $1.3 million increase in noninterest income and a small increase in noninterest expense of $661,000. The difference compared to the prior quarter was again due to net interest income which decreased by $3.3 million partially offset by an increase in noninterest income of $1.5 million and a decrease in noninterest expense of $1.6 million. During the quarter, the Bank placed a $56.7 million loan on nonaccrual status and four others totaling $13.5 million and the resulting reversal of interest income was $2.1 million which was the primary driver behind the decrease in net interest income. Highlights for the Quarter: Return on average assets was 1.69% Return on average equity was 16.18% Total deposits increased by $77.7 million, or 1.2%, linked quarter The efficiency ratio for the quarter was 30.9% Li Yu, Chairman and CEO, commented, “Net income for the third quarter ended September 30, 2026, was $32.9 million or $2.73 per diluted share. Both are lower than the second quarter due primarily to the interest recoveries last quarter and interest reversals this quarter. “Deposits increased by $77.7 million or 1.2% for the quarter. It is highly likely that the competition for deposits and market conditions will continue into 2027. “Loans (excluding loans held for sale) decreased $41.0 million after we placed a $56.7 million loan into held for sale status. Presently, we are seeing a stronger pipeline that hopefully will result in solid loan growth in the fourth quarter. “The net interest margin for the third quarter was 3.49% compared to 3.73% in the second quarter. The variance is largely caused by a $2.1 million interest income reversal in the third quarter and $2.9 million of interest income recoveries in the second quarter. The recent fed rate increase should bring beneficial results to our net interest margin as our balance sheet is asset sensitive. “Resolution of non-accrual loans is progressing although slower than we had hoped for. Several loans that were scheduled to be resolved in the quarter are now delayed to the fourth quarter or the first quarter 2027 because these assets are subject to bankruptcy courts’ decisions. This quarter we have outperformed our own expectations in non-interest income and non-interest expense. Our cost control remains effective under this inflationary environment. We believe the country’s economy will remain strong in 2027, and inflationary pressure will gradually subside. We are optimistic that Preferred Bank will continue to grow.” Results of Operations Net Interest Income Compared to Prior Quarter. Net interest income before provision for credit losses was $66.7 million for the third quarter of 2026. This represents a $3.3 million decrease from the previous quarter. The decrease in net interest income from the prior quarter was due primarily to an interest recovery of $2.9 million recorded in the second quarter of 2026. Secondarily, the Bank reversed $2.1 million in the third quarter as a result of placing loans on nonaccrual status. Finally, interest expense also increased this quarter over the prior quarter driven by an increase in the interest rate on the Bank’s subordinated debt. On June 16, 2026, the Bank’s subordinated debt went from fixed rate to a floating rate of the 3 month SOFR rate plus 278 basis points resulting in an increase in the coupon rate from 3.375% to 6.44% for the third quarter of 2026. The Bank’s net interest margin (“NIM”) contracted in the quarter to 3.49% due to the interest reversals previously mentioned and to a lesser extent, the increase in the sub debt coupon. This compares to a NIM of 3.73% in the prior quarter which was aided by interest recoveries and to a NIM of 3.92% for the same quarter last year. Net Interest Income Compared to Prior Year Quarter. Net interest income before provision for credit losses was $66.7 million for the third quarter of 2026. This represents a $4.6 million decrease from the $71.3 million recorded in the same quarter last year. The decrease compared to the same quarter last year was due mainly to the $2.1 million in interest reversals previously mentioned as well as lower interest on overnight funds due to lower balances partially offset by a decrease in interest expense. Noninterest Income. For the third quarter of 2026, noninterest income was $5.0 million compared with $3.7 million for the same quarter last year and compared to $3.5 million for the second quarter of 2026. The increase from the same quarter last year was mainly due to a gain on the call of one of the Bank’s investment securities of $431,000 as well as an increase in letters of credit fee income of $748,000. The increase over the prior quarter was due to a loss on the sale of a loan of $874,000 which occurred last quarter as well as an increase in letters of credit income and the gain on the call of an investment security this quarter. Noninterest Expense. Total noninterest expense was $22.2 million for the third quarter of 2026 compared to $21.5 million for the same period last year and compared to $23.7 million recorded in the prior quarter. The primary reason for the increase from the prior year was mainly due to an increase in FDIC assessments of $560,000 and an increase in other professional services of $289,000 due mainly to legal fees on problem loans. This was partially offset by a decrease in OREO expense of $388,000. The decrease from the prior quarter was due primarily to a decrease in personnel expense of $1.1 million, $366,000 in other professional expense and a $109,000 in OREO expense. The Bank’s efficiency ratio came in at 30.9% for the quarter, which compares to 32.3% last quarter and to 28.7% in the same quarter last year. Income Taxes. The Bank recorded a provision for income taxes of $14.6 million for the third quarter of 2026. This represents an effective tax rate (“ETR”) of 30.7% which is up from the 29.5% ETR for the same quarter last year and down slightly from 30.9% ETR recorded in the second quarter of 2026. 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. Balance Sheet Summary Total gross loans at September 30, 2026 were $6.25 billion, essentially flat from the $6.25 billion reported as of June 30, 2026. And an increase of $200.6 million from the total of $6.05 billion as of December 31, 2025. Total deposits were $6.55 billion as of September 30, 2026, an increase of $77.7 million from the $6.47 billion as of June 30, 2026 and an increase of $204.4 million from December 31, 2025. Total assets were $7.82 billion, an increase of $214.9 million over the total of $7.60 billion as of December 31, 2025. Asset Quality Non-accrual loans and loans 90 days or more past due and still accruing totaled $109.4 million excluding loans held for sale compared to $98.9 million at June 30, 2026 as compared to $51.3 million as of December 31, 2025. During the quarter, the Bank placed a $56.7 million mixed use property onto nonaccrual status due to late payments. This loan is currently under contract to be sold at par with closing anticipated in late October 2026. The Bank is continuously reviewing all nonaccrual loans to ensure timely resolution. At present, there is no significant loss content identified and the average LTV for this commercial real estate cohort stands at 60.8%. Total net charge-offs (recoveries) on loans for the quarter were $(8,000) compared to $(41,000) in the second quarter of 2026 and compared to net charge-offs of $1.6 million in the third quarter of 2025. Allowance for Credit Losses The provision for credit losses for the third quarter of 2026 was 2.1 million compared to the $1.2 million recorded in the second quarter of 2026 and compared to $2.5 million in the same quarter last year. The Bank’s allowance coverage ratio was 1.26% of total loans held for investment compared to 1.22% last quarter and compared to 1.30% as of December 31, 2025. Capitalization As of September 30, 2026, the Bank’s tangible common equity ratio was 10.13%, the leverage ratio was 10.78%, the common equity tier 1 capital ratio was 11.26% and the total capital ratio stood at 13.93%. As of December 31, 2025, the Bank’s tangible common equity ratio was 10.38%, the Bank’s leverage ratio was 10.54%, the common equity tier 1 ratio was 11.26% and the total capital ratio was 14.47%. Conference Call and Webcast A conference call with simultaneous webcast to discuss Preferred Bank’s third quarter 2026 financial results will be held this afternoon, October 23, 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 Risk 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 November 6, 2026; the passcode is 9134266. 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 thirteen full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana, Cupertino 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. 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 2025 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. 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 September 30, June 30, September 30, 2026 2026 2025 Interest income: Loans, including fees $ 106,517 $ 108,358 $ 110,645 Investment securities 13,966 13,883 15,977 Fed funds sold 199 205 228 Total interest income 120,682 122,446 126,850 Interest expense: Interest-bearing demand 16,003 15,624 17,562 Savings 79 75 67 Time certificates 33,441 33,497 34,792 FHLB borrowings 1,877 1,743 1,794 Subordinated debt 2,571 1,517 1,325 Total interest expense 53,971 52,456 55,540 Net interest income 66,711 69,990 71,310 Provision for credit losses 2,000 1,200 2,500 Net interest income after provision for credit losses 64,711 68,790 68,810 Noninterest income: Fees & service charges on deposit accounts 556 570 625 Letters of credit fee income 3,169 2,890 2,421 BOLI income 108 107 105 Net gain on called and sale of investment securities 431 35 - Net gain (loss) on sale of loans 112 (874 ) 56 Other income 616 755 458 Total noninterest income 4,992 3,483 3,665 Noninterest expense: Salary and employee benefits 14,205 15,281 14,240 Net occupancy expense 2,360 2,395 2,297 Business development and promotion expense 240 322 238 Professional services 1,783 2,149 1,494 Office supplies and equipment expense 385 340 361 OREO valuation allowance and related expense 75 184 463 Other 3,111 3,044 2,405 Total noninterest expense 22,159 23,715 21,498 Income before provision for income taxes 47,544 48,558 50,977 Income tax expense 14,596 15,018 15,038 Net income $ 32,948 $ 33,540 $ 35,939 Income per share available to common shareholders Basic $ 2.78 $ 2.83 $ 2.90 Diluted $ 2.73 $ 2.78 $ 2.84 Weighted-average common shares outstanding Basic 11,853,279 11,843,821 12,384,924 Diluted 12,078,448 12,049,162 12,634,174 Cash dividends per common share $ 0.80 $ 0.80 $ 0.75 PREFERRED BANK Condensed Consolidated Statements of Operations (unaudited) (in thousands, except for net income per share and shares) For the Nine Months Ended September 30, September 30, Change 2026 2025 % Interest income: Loans, including fees $ 318,257 $ 318,020 0.1 % Investment securities 41,150 43,113 -4.6 % Fed funds sold 596 689 -13.5 % Total interest income 360,003 361,822 -0.5 % Interest expense: Interest-bearing demand 46,747 50,323 -7.1 % Savings 208 207 0.3 % Time certificates 100,311 103,611 -3.2 % FHLB borrowings 5,310 2,864 85.4 % Subordinated debt 5,413 3,975 36.2 % Total interest expense 157,989 160,980 -1.9 % Net interest income 202,014 200,842 0.6 % Provision for credit losses 4,700 4,800 -2.1 % Net interest income after provision for credit losses 197,314 196,042 0.6 % Noninterest income: Fees & service charges on deposit accounts 1,642 1,976 -16.9 % Letters of credit fee income 8,796 6,998 25.7 % BOLI income 320 312 2.5 % Net gain on called and sale of investment securities 525 - 100.0 % Net (loss) gain on sale of loans (738 ) 503 -246.5 % Other income 2,240 1,636 36.9 % Total noninterest income 12,785 11,425 11.9 % Noninterest expense: Salary and employee benefits 44,946 43,326 3.7 % Net occupancy expense 7,181 6,862 4.6 % Business development and promotion expense 765 940 -18.6 % Professional services 5,579 4,652 19.9 % Office supplies and equipment expense 1,083 1,166 -7.1 % OREO valuation allowance and related expense 622 3,473 -82.1 % Other 9,237 6,893 34.0 % Total noninterest expense 69,413 67,312 3.1 % Income before provision for income taxes 140,686 140,155 0.4 % Income tax expense 43,054 41,345 4.1 % Net income $ 97,632 $ 98,810 -1.2 % Income per share available to common shareholders Basic $ 8.18 $ 7.77 5.4 % Diluted $ 8.03 $ 7.63 5.3 % Weighted-average common shares outstanding Basic 11,933,229 12,723,788 -6.2 % Diluted 12,153,212 12,949,445 -6.1 % Dividends per share $ 2.40 $ 2.25 6.7 % PREFERRED BANK Condensed Consolidated Statements of Financial Condition (unaudited) (in thousands) September 30, December 31, 2026 2025 (Unaudited) (Audited) Assets Cash and due from banks $ 681,029 $ 807,098 Fed funds sold 20,000 20,000 Cash and cash equivalents 701,029 827,098 Securities held-to-maturity, at amortized cost 17,834 18,749 Securities available-for-sale, at fair value 672,082 566,186 Loans held for sale, at lower of cost or fair value 56,557 - Loans 6,198,293 6,054,264 Less allowance for credit losses (78,284 ) (78,992 ) Less amortized deferred loan fees, net (7,611 ) (9,030 ) Loans, net 6,112,398 5,966,242 Other real estate owned and repossessed assets 11,534 3,510 Bank furniture and fixtures, net 10,888 8,064 Bank-owned life insurance 10,924 10,712 Accrued interest receivable 38,349 34,233 Investment in affordable housing partnerships 79,047 69,978 Federal Home Loan Bank stock, at cost 15,000 15,000 Deferred tax assets 55,015 41,976 Income tax receivable 3,513 3,884 Operating lease right-of-use assets 27,679 30,531 Other assets 4,172 5,002 Total assets $ 7,816,021 $ 7,601,165 Liabilities and shareholders' Equity Deposits: Noninterest bearing demand deposits $ 745,763 $ 699,160 Interest bearing deposits: 2,321,924 2,205,914 Savings 29,840 30,376 Time certificates of $250,000 or more 1,830,163 1,754,273 Other time certificates 1,622,184 1,655,723 Total deposits 6,549,874 6,345,446 Advances from Federal Home Loan Bank 200,000 200,000 Subordinated debt issuance, net 148,884 148,706 Commitments to fund investment in affordable housing partnerships 32,040 23,327 Operating lease liabilities 32,184 35,107 Accrued interest payable 16,779 16,513 Other liabilities 43,827 42,589 Total liabilities 7,023,588 6,811,688 Shareholders' equity 792,433 789,477 Total liabilities and shareholders' equity $ 7,816,021 $ 7,601,165 Book value per common share $ 66.85 $ 64.83 Number of common shares outstanding 11,853,571 12,177,588 PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) For the Quarter Ended September 30, June 30, March 31, December 31, September 30, 2026 2026 2026 2025 2025 Unaudited historical quarterly operations data: Interest income $ 120,682 $ 122,446 $ 116,875 $ 124,633 $ 126,850 Interest expense 53,971 52,456 51,562 54,658 55,540 Interest income before provision for credit losses 66,711 69,990 65,313 69,975 71,310 Provision for credit losses 2,000 1,200 1,500 4,300 2,500 Noninterest income 4,992 3,483 4,310 8,094 3,665 Noninterest expense 22,159 23,715 23,539 24,377 21,498 Income tax expense 14,596 15,018 13,440 14,570 15,038 Net income $ 32,948 $ 33,540 $ 31,144 $ 34,822 $ 35,939 Earnings per share Basic $ 2.78 $ 2.83 $ 2.57 $ 2.85 $ 2.90 Diluted $ 2.73 $ 2.78 $ 2.53 $ 2.79 $ 2.84 Ratios for the period: Return on average assets 1.69 % 1.75 % 1.67 % 1.82 % 1.93 % Return on average equity 16.18 % 17.05 % 15.89 % 17.59 % 18.64 % Net interest margin (fully-taxable equivalent) 3.49 % 3.73 % 3.57 % 3.74 % 3.92 % Noninterest expense to average assets 1.14 % 1.24 % 1.26 % 1.27 % 1.16 % Efficiency ratio 30.90 % 32.28 % 33.81 % 31.22 % 28.67 % Net charge-offs (recoveries) to average loans (annualized) -0.00 % -0.00 % 0.37 % 0.00 % 0.11 % Ratios as of period end: Tangible common equity ratio 10.13 % 10.26 % 10.05 % 10.38 % 10.38 % Tier 1 leverage capital ratio 10.78 % 10.55 % 10.37 % 10.54 % 10.66 % Common equity tier 1 risk-based capital ratio 11.26 % 11.06 % 10.87 % 11.26 % 11.34 % Tier 1 risk-based capital ratio 11.26 % 11.06 % 10.87 % 11.26 % 11.34 % Total risk-based capital ratio 13.93 % 13.74 % 13.98 % 14.47 % 14.56 % Allowances for credit losses to loans at end of period 1.26 % 1.22 % 1.24 % 1.30 % 1.27 % Allowance for credit losses to non-performing loans 0.75 x 0.84 x 0.8 x 1.54 x 4.24 x Average balances: Total securities $ 610,837 $ 558,696 $ 580,248 $ 586,950 $ 583,302 Total loans held for investment 6,191,538 6,021,420 6,037,241 5,947,814 5,753,801 Total loans held for investment and held for sale 6,200,211 6,038,330 6,051,465 5,947,986 5,754,073 Total earning assets 7,587,420 7,532,781 7,437,232 7,439,767 7,234,568 Total assets 7,733,141 7,668,719 7,563,705 7,585,940 7,382,265 Total time certificate of deposits 3,468,041 3,500,857 3,451,924 3,402,304 3,330,241 Total interest bearing deposits 5,714,126 5,712,097 5,644,722 5,651,369 5,501,767 Total deposits 6,456,558 6,420,198 6,311,446 6,336,242 6,169,728 Total interest bearing liabilities 6,062,973 6,060,886 5,993,452 6,000,042 5,850,376 Total equity 807,742 789,114 794,931 785,581 764,766 PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) For the Nine Months Ended September 30 September 30 2026 2025 Interest income $ 360,003 $ 361,822 Interest expense 157,989 160,980 Interest income before provision for credit losses 202,014 200,842 Provision for credit losses 4,700 4,800 Noninterest income 12,785 11,425 Noninterest expense 69,413 67,312 Income tax expense 43,054 41,345 Net income $ 97,632 $ 98,810 Earnings per share Basic $ 8.18 $ 7.77 Diluted $ 8.03 $ 7.63 Ratios for the period: Return on average assets 1.71 % 1.85 % Return on average equity 16.37 % 17.27 % Net interest margin (fully-taxable equivalent) 3.60 % 3.84 % Noninterest expense to average assets 1.21 % 1.26 % Efficiency ratio 32.32 % 31.71 % Net charge-off to average loans 0.12 % 0.04 % Average balances: Total securities $ 583,373 $ 497,301 Total loans held for investment 6,083,964 5,644,668 Total loans held for investment and held for sale 6,097,213 5,648,323 Total earning assets 7,519,694 7,001,424 Total assets 7,655,809 7,137,935 Total time certificate of deposits 3,473,667 3,272,717 Total interest bearing deposits 5,690,570 5,364,715 Total deposits 6,396,600 6,021,497 Total interest bearing liabilities 6,039,359 5,620,958 Total equity 797,309 764,826 PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) As of September 30, June 30, March 31, December 31, September 30, 2026 2026 2026 2025 2025 Unaudited quarterly statement of financial position data: Assets: Cash and cash equivalents $ 701,029 $ 789,820 $ 825,161 $ 827,098 $ 815,459 Securities held-to-maturity, at amortized cost 17,834 18,154 18,458 18,749 19,034 Securities available-for-sale, at fair value 672,082 525,956 553,184 566,186 569,115 Loans: Real estate – mortgage: Real estate—residential $ 745,775 $ 737,321 $ 738,508 $ 783,136 $ 793,217 Real estate—commercial 3,127,696 3,169,037 3,105,331 3,028,762 2,890,990 Total Real estate – mortgage 3,873,471 3,906,358 3,843,839 3,811,898 3,684,207 Real estate – construction: R/E construction — residential 282,750 284,219 265,748 282,808 285,623 R/E construction — commercial 356,582 364,807 343,598 387,759 323,897 Total real estate construction loans 639,332 649,026 609,346 670,567 609,520 Commercial and industrial 1,676,780 1,675,300 1,584,984 1,563,504 1,570,423 SBA 8,598 8,444 8,087 8,053 7,630 Consumer and others 112 153 288 242 231 Gross loans 6,198,293 6,239,281 6,046,544 6,054,264 5,872,011 Allowance for credit losses on loans (78,284 ) (76,276 ) (75,036 ) (78,992 ) (74,692 ) Net deferred loan fees (7,611 ) (8,288 ) (7,923 ) (9,030 ) (9,956 ) Net loans, excluding loans held for sale $ 6,112,398 $ 6,154,717 $ 5,963,585 $ 5,966,242 $ 5,787,363 Loans held for sale $ 56,557 $ 8,348 $ 76,324 $ - $ - Net loans $ 6,168,955 $ 6,163,065 $ 6,039,909 $ 5,966,242 $ 5,787,363 Other real estate owned and repossessed assets $ 11,534 $ 3,010 $ 3,010 $ 3,510 $ 52,609 Investment in affordable housing partnerships 79,047 77,729 66,394 69,978 73,874 Federal Home Loan Bank stock, at cost 15,000 15,000 15,000 15,000 15,000 Other assets 150,540 137,887 133,521 134,402 135,340 Total assets $ 7,816,021 $ 7,730,621 $ 7,654,637 $ 7,601,165 $ 7,467,794 Liabilities: Deposits: Demand $ 745,763 $ 754,670 $ 716,777 $ 699,160 $ 654,302 Interest bearing demand 2,321,924 2,209,390 2,200,374 2,205,914 2,205,865 Savings 29,840 31,617 26,822 30,376 31,087 Time certificates of $250,000 or more 1,830,163 1,822,765 1,795,883 1,754,273 1,699,757 Other time certificates 1,622,184 1,653,766 1,680,291 1,655,723 1,638,662 Total deposits $ 6,549,874 $ 6,472,208 $ 6,420,147 $ 6,345,446 $ 6,229,673 Advance from Federal Home Loan Bank 200,000 200,000 200,000 200,000 200,000 Subordinated debt issuance, net 148,884 148,825 148,766 148,706 148,647 Commitments to fund investment in affordable housing partnerships 32,040 29,949 18,873 23,327 24,874 Other liabilities 92,790 86,112 96,652 94,209 88,958 Total liabilities $ 7,023,588 $ 6,937,094 $ 6,884,438 $ 6,811,688 $ 6,692,152 Equity: Common stock, no par value $ 210,882 $ 210,882 $ 210,882 $ 210,882 $ 210,882 Additional paid-in capital 113,018 110,913 108,853 105,105 103,235 Treasury stock (334,626 ) (334,591 ) (334,490 ) (293,406 ) (277,351 ) Retained earnings 849,830 826,365 802,308 780,637 755,587 Accumulated other comprehensive income (46,671 ) (20,042 ) (17,354 ) (13,741 ) (16,711 ) Total shareholders' equity $ 792,433 $ 793,527 $ 770,199 $ 789,477 $ 775,642 Total liabilities and shareholders' equity $ 7,816,021 $ 7,730,621 $ 7,654,637 $ 7,601,165 $ 7,467,794 PREFERRED BANK Quarter-to-Date Average Balances, Yield and Rates (Unaudited) Three months ended September 30, Three months ended June 30, Three months ended September 30, 2026 2026 2025 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) $ 6,200,211 $ 106,517 6.82 % $ 6,038,330 $ 108,358 7.20 % $ 5,754,073 $ 110,645 7.63 % Investment securities (3) 610,837 6,499 4.22 % 558,696 5,611 4.03 % 583,302 6,257 4.26 % Federal funds sold 20,648 199 3.82 % 21,538 205 3.82 % 20,000 228 4.52 % Other earning assets 755,724 7,561 3.97 % 914,217 8,364 3.67 % 877,193 9,811 4.44 % Total interest earning assets 7,587,420 120,776 6.32 % 7,532,781 122,538 6.52 % 7,234,568 126,941 6.96 % Deferred loan fees, net (8,072 ) (8,139 ) (10,686 ) Allowance for credit losses on loans (76,309 ) (75,675 ) (72,784 ) Noninterest earning assets: Cash and due from banks 11,412 11,141 10,071 Bank furniture and fixtures 10,803 9,694 7,945 Right of use assets 28,288 29,211 19,153 Other assets 179,599 169,706 193,998 Total assets $ 7,733,141 $ 7,668,719 $ 7,382,265 Liabilities and shareholders' equity Interest bearing liabilities: Deposits: Interest bearing demand and savings $ 2,246,085 $ 16,082 2.84 % $ 2,211,240 $ 15,699 2.85 % $ 2,171,526 $ 17,629 3.22 % TCD $250K or more 1,817,686 17,296 3.78 % 1,812,356 17,065 3.78 % 1,686,710 17,406 4.09 % Other time certificates 1,650,355 16,145 3.88 % 1,688,501 16,432 3.90 % 1,643,531 17,386 4.20 % Total interest bearing deposits 5,714,126 49,523 3.44 % 5,712,097 49,196 3.45 % 5,501,767 52,421 3.78 % Advance from Federal Home Loan Bank 200,000 1,877 3.72 % 200,000 1,743 3.50 % 200,000 1,794 3.56 % Subordinated debt, net 148,847 2,571 6.85 % 148,789 1,517 4.09 % 148,609 1,325 3.54 % Total interest bearing liabilities 6,062,973 53,971 3.53 % 6,060,886 52,456 3.47 % 5,850,376 55,540 3.77 % Noninterest bearing liabilities: Demand deposits 742,432 708,101 667,961 Lease liability 32,888 33,946 22,908 Other liabilities 87,106 76,672 76,254 Total liabilities 6,925,399 6,879,605 6,617,499 Shareholders’ equity 807,742 789,114 764,766 Total liabilities and shareholders’ equity $ 7,733,141 $ 7,668,719 $ 7,382,265 Net interest income $ 66,805 $ 70,082 $ 71,401 Net interest spread 2.78 % 3.05 % 3.19 % Net interest margin 3.49 % 3.73 % 3.92 % Cost of Deposits: Noninterest bearing demand deposits $ 742,432 $ 708,101 $ 667,961 Interest bearing deposits 5,714,126 49,523 3.44 % 5,712,097 49,196 3.45 % 5,501,767 52,421 3.78 % Total Deposits $ 6,456,558 $ 49,523 3.04 % $ 6,420,198 $ 49,196 3.07 % $ 6,169,728 $ 52,421 3.37 % (1) Includes non-accrual loans and loans held for sale (2) Net loan fee income of $0.8 million, $1.2 million and $1.7 million for the quarter ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively, are included in the yield computations (3) Yields on securities have been adjusted to a tax-equivalent basis PREFERRED BANK Year-to-Date Average Balances, Yield, and Rates (Unaudited) Nine Months ended September 30, 2026 2025 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) $ 6,097,213 $ 318,257 6.98 % $ 5,648,323 $ 318,020 7.53 % Investment securities (3) 583,373 17,822 4.08 % 497,301 15,546 4.18 % Federal funds sold 20,898 596 3.81 % 20,244 689 4.55 % Other earning assets 818,210 23,606 3.86 % 835,556 27,857 4.46 % Total interest earning assets 7,519,694 360,281 6.41 % 7,001,424 362,112 6.91 % Deferred loan fees, net (8,181 ) (9,965 ) Allowance for credit losses on loans (76,980 ) (72,225 ) Noninterest earning assets: Cash and due from banks 10,872 11,178 Bank furniture and fixtures 9,677 8,198 Right of use assets 29,224 18,105 Other assets 171,503 181,220 Total assets $ 7,655,809 $ 7,137,935 Liabilities and shareholders' equity Interest bearing liabilities: Deposits: Interest bearing demand/ savings $ 2,216,903 $ 46,955 2.83 % $ 2,091,998 $ 50,530 3.23 % TCD $250K or more 1,801,206 51,247 3.80 % 1,605,201 50,138 4.18 % Other time certificates 1,672,461 49,064 3.92 % 1,667,516 53,473 4.29 % Total interest \bearing deposits 5,690,570 147,266 3.46 % 5,364,715 154,141 3.84 % Short-term borrowings 1 0 2.77 % - - 0.00 % Advance from Federal Home Loan Bank 200,000 5,310 3.55 % 107,692 2,864 3.56 % Subordinated debt, net 148,788 5,413 4.86 % 148,551 3,975 3.58 % Total interest bearing liabilities 6,039,359 157,989 3.50 % 5,620,958 160,980 3.83 % Noninterest bearing liabilities: Demand deposits 706,030 656,782 Lease liability 33,899 21,857 Other liabilities 79,212 73,512 Total liabilities 6,858,500 6,373,109 Shareholders’ equity 797,309 764,826 Total liabilities and shareholders’ equity $ 7,655,809 $ 7,137,935 Net interest income $ 202,292 $ 201,132 Net interest spread 2.91 % 3.09 % Net interest margin 3.60 % 3.84 % Cost of Deposits: Noninterest bearing demand deposits $ 706,030 $ 656,782 Interest bearing deposits 5,690,570 147,266 3.46 % 5,364,715 154,141 3.84 % Total Deposits $ 6,396,600 $ 147,266 3.08 % $ 6,021,497 $ 154,141 3.42 % (1) Includes non-accrual loans and loans held for sale (2) Net loan fee income of $3.2 million and $3.6 million for the nine months ended September 30, 2026 and 2025, respectively, are included in the yield computations (3) Yields on securities have been adjusted to a tax-equivalent basis Preferred Bank Loan and Credit Quality Information Allowance For Credit Losses History Nine Months Ended Year Ended September 30, 2026 December 31, 2025 (Dollars in 000's) Allowance for credit losses Balance at beginning of period $ 78,992 $ 71,477 Charge-Offs Commercial & Industrial 2,555 8 Mini-perm real estate 3,833 1,749 Total charge-offs 6,388 1,757 Recoveries Commercial & Industrial 112 172 Mini-perm real estate 868 - Total recoveries 980 172 Net charge-offs 5,408 1,585 Provision for dredit losses 4,700 9,100 Balance at dnd of period $ 78,284 $ 78,992 Average loans held for investment $ 6,083,964 $ 5,721,077 Loans held for investment at end of period $ 6,198,293 $ 6,054,264 Net charge-offs to average loans 0.12 % 0.03 % Allowances for credit losses to loans at end of period 1.26 % 1.30 % AT THE COMPANY: AT FINANCIAL PROFILES: Edward J. Czajka Jeffrey Haas Executive Vice President General Information Chief Financial Officer (310) 622-8240 (213) 891-1188 PFBC@finprofiles.com Source: Preferred Bank