Preferred Bank Reports Second Quarter Results

LOS ANGELES, July 22, 2026 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), one of the larger independent California banks, today reported results for the quarter ended June 30, 2026. Preferred Bank ("the Bank") reported net income of $33.5 million or $2.78 per diluted share for the second quarter of 2026. This represents an increase in net income of $2.4 million from the prior quarter and an increase of $693,000 over the same quarter last year. The increase compared to the prior quarter was due to an increase in net interest income of $4.7 million partially offset by an $827,000 decrease in noninterest income and a small increase in noninterest expense of $176,000. The difference compared to the same quarter last year was again due to net interest income which increased by $3.1 million partially offset by a small decrease in noninterest income of $279,000 and an increase in noninterest expense of $1.3 million.

Highlights for the Quarter:

• Return on average assets was 1.75%
• Return on average equity was 17.05%
• Total loans increased by $124.8 million or 2.0%, linked quarter
• Total deposits increased by $52.1 million, or 0.8%, linked quarter
• The efficiency ratio for the quarter was 32.3%
• The Bank’s net interest margin expanded to 3.73%

Li Yu, Chairman and CEO, commented, "We are pleased to report net income for the quarter ending June 30, 2026, of $33.5 million or $2.78 per share, which increased from the previous quarter of $2.4 million and an increase of $693,000 over the same quarter last year.

"At June 30, 2026, non-performing loans decreased by $70.2 million or 41.5% from March 31, 2026. Similarly, criticized loans also decreased 33.9% from the previous quarter. We were able to sell several loans at book value plus accrued interest, one nonaccrual loan paid off and one was returned to accrual status resulting in aggregate interest recoveries of $2.9 million on these loans. One loan sold below book by $950,000 and was recorded as a loss on sale.

"Because of the sizable reduction in criticized loans, corresponding reserve requirements on these loans were also reduced. The provision for credit losses for the quarter was $1.2 million. However, our allowance for credit loss to total loans was stable at 1.22%.

"Our loan origination activities were very positive. This quarter, our total loans increased $124.8 million or 2.0% on a linked quarter basis. Considering the sizeable loan sales and normal payoffs, the actual origination activities were strong. For deposits, however, we continue to face stiff competition. Interest rates on deposits also trend higher in the quarter-end, reflecting the change of market expectations. Our deposits increased $52.1 million or 0.8% on a linked quarter basis.

"Net interest margin for the quarter was 3.73%. This quarter, the margin was benefited by interest recovery of the previously mentioned $2.9 million. Non-interest expense for the quarter stayed in control with efficiency ratio of 32.3%.

"We are optimistic on our current operating environment."

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $70.0 million for the second quarter of 2026. This represents a $4.7 million increase from the $65.3 million recorded in the prior quarter and a $3.1 million increase over the same quarter last year. The increase compared to the prior quarter was due mainly to a $2.9 million net interest recovery due to nonaccrual loans sold for par and nonaccrual loans which paid off. The increase in net interest income over the same quarter last year was due to an increase in loan interest and a small decrease in total interest expense. The Bank’s net interest margin ("NIM") expanded in the quarter to 3.73% due somewhat to the interest recoveries on loans sold and a nonaccrual loan payoff. In the prior quarter the NIM was 3.57% due to interest reversals on loans placed on nonaccrual status during the first quarter. For the same quarter last year, the NIM was 3.85%.

Noninterest Income. For the second quarter of 2026, noninterest income was $3.5 million compared with $3.8 million for the same quarter last year and compared to $4.3 million for the first quarter of 2026. The decrease from the same quarter last year was mainly due to a loss on the sale of one of the Bank’s nonaccrual loans which sold at a discount of $950,000 on a total note balance of $19,950,000. Partially offsetting the variance was an increase in letter of credit ("LC") fees of $556,000. In comparison to the prior quarter, the primary variance was due to the loss on the note sale as most other line items were in line on a quarter-to-quarter basis.

Noninterest Expense. Total noninterest expense was $23.7 million for the second quarter of 2026 compared to $23.5 million for the first quarter of 2026 and compared to $22.4 million recorded in the same period last year. The primary reason for the increase from the prior quarter was mainly due to an increase in other professional services of $502,000 due mainly to legal fees on problem loans. This was partially offset by decreases in personnel expense and OREO expense of $179,000 each. The increase over the same quarter last year was due to an increase in personnel expense of $1.0 million and an increase in other expense of $762,000 partially offset by a decrease in OREO expense of $1.3 million. The Bank’s efficiency ratio came in at 32.3% for the quarter, which compares to 33.8% last quarter and to 31.8% in the same quarter last year.

Income Taxes. The Bank recorded a provision for income taxes of $15.0 million for the second quarter of 2026. This represents an effective tax rate ("ETR") of 30.9% which is up from the 29.5% ETR for the same quarter last year and up from 30.1% ETR recorded in the first 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 June 30, 2026 were $6.25 billion, an increase of $193.4 million from the total of $6.05 billion as of December 31, 2025. Total deposits were $6.47 billion, an increase of $126.8 million from the $6.35 billion as of December 31, 2025. Total assets were $7.73 billion, an increase of $129.5 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 $98.9 million as of June 30, 2026 as compared to $169.1 million in the prior quarter, a decrease of $70.2 million. This was due to $68.4 million in note sales, two notes totaling $3.8 million note which were upgraded to accrual status and one small addition to nonaccrual loans. Total net charge-offs (recoveries) on loans for the quarter were $(40,000) compared to $5.5 million in the first quarter of 2026 and compared to net recoveries of ($96,000) in the second quarter of 2025. Total classified assets decreased to $103.8 million as of June 30, 2026 compared to $174.7 million as of March 31, 2026.

Allowance for Credit Losses

The provision for credit losses for the second quarter of 2026 was $1.2 million compared to $1.5 million in the prior quarter and compared to $1.6 million in the same quarter last year.   The Bank’s allowance coverage ratio was 1.22% of total loans held for investment compared to 1.24% last quarter and compared to 1.30% as of the end of 2025.

Capitalization

As of June 30, 2026, the Bank’s tangible common equity ratio was 10.26%, the leverage ratio was 10.55%, the common equity tier 1 capital ratio was 11.06% and the total capital ratio stood at 13.74%. 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 second quarter 2026 financial results will be held this afternoon, July 22, 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 August 5, 2026; the passcode is 6264757.

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 twelve full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana 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. In addition, the Bank also operates a loan production office in Sunnyvale, California. 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.

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

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
	June 30, 2026				March 31, 2026			June 30, 2025
Interest income:
Loans, including fees	$	108,358			$	103,382		$	105,884
Investment securities		13,883				13,301			14,326
Fed funds sold		205				192			233
Total interest income		122,446				116,875			120,443
Interest expense:
Interest-bearing demand		15,624				15,120			16,171
Savings		75				54			71
Time certificates		33,497				33,373			34,932
FHLB borrowings		1,743				1,690			1,070
Subordinated debt		1,517				1,325			1,325
Total interest expense		52,456				51,562			53,569
Net interest income		69,990				65,313			66,874
Provision for credit losses		1,200				1,500			1,600
Net interest income after provision for credit losses		68,790				63,813			65,274
Noninterest income:
Fees & service charges on deposit accounts		570				516			635
Letters of credit fee income		2,890				2,737			2,333
BOLI income		107				105			104
Net gain on called and sale of investment securities		35				59			-
Net (loss) gain on sale of loans		(874	)			24			172
Other income		755				869			518
Total noninterest income		3,483				4,310			3,762
Noninterest expense:
Salary and employee benefits		15,281				15,460			14,247
Net occupancy expense		2,395				2,426			2,271
Business development and promotion expense		322				203			240
Professional services		2,149				1,647			1,507
Office supplies and equipment expense		340				358			419
OREO valuation allowance and related expense		184				363			1,479
Other		3,044				3,082			2,282
Total noninterest expense		23,715				23,539			22,445
Income before provision for income taxes		48,558				44,584			46,591
Income tax expense		15,018				13,440			13,744
Net income	$	33,540			$	31,144		$	32,847
Income per share available to common shareholders
Basic	$	2.83			$	2.57		$	2.61
Diluted	$	2.78			$	2.53		$	2.57
Weighted-average common shares outstanding
Basic		11,843,821				12,105,359			12,569,107
Diluted		12,049,162				12,292,237			12,774,591
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 Six Months Ended
	June 30, 2026				June 30, 2025			Change %
Interest income:
Loans, including fees	$	211,740			$	207,375		2.1	%
Investment securities		27,184				27,136		0.2	%
Fed funds sold		397				461		-13.9	%
Total interest income		239,321				234,972		1.9	%
Interest expense:
Interest-bearing demand		30,744				32,761		-6.2	%
Savings		129				140		-7.9	%
Time certificates		66,870				68,819		-2.8	%
FHLB borrowings		3,433				1,070		221.0	%
Subordinated debt		2,842				2,650		7.2	%
Total interest expense		104,018				105,440		-1.3	%
Net interest income		135,303				129,532		4.5	%
Provision for credit losses		2,700				2,300		17.4	%
Net interest income after provision for credit losses		132,603				127,232		4.2	%
Noninterest income:
Fees & service charges on deposit accounts		1,086				1,351		-19.6	%
Letters of credit fee income		5,627				4,578		22.9	%
BOLI income		212				207		2.7	%
Net gain on called and sale of investment securities		94				-		100.0	%
Net (loss) gain on sale of loans		(850	)			447		-290.0	%
Other income		1,624				1,177		37.9	%
Total noninterest income		7,793				7,760		0.4	%
Noninterest expense:
Salary and employee benefits		30,741				29,086		5.7	%
Net occupancy expense		4,821				4,565		5.6	%
Business development and promotion expense		525				702		-25.2	%
Professional services		3,796				3,158		20.2	%
Office supplies and equipment expense		698				805		-13.3	%
OREO valuation allowance and related expense		547				3,010		-81.8	%
Other		6,126				4,488		36.5	%
Total noninterest expense		47,254				45,814		3.1	%
Income before provision for income taxes		93,142				89,178		4.4	%
Income tax expense		28,458				26,307		8.2	%
Net income	$	64,684			$	62,871		2.9	%
Income per share available to common shareholders
Basic	$	5.40			$	4.88		10.8	%
Diluted	$	5.32			$	4.80		10.8	%
Weighted-average common shares outstanding
Basic		11,973,867				12,896,028		-7.2	%
Diluted		12,163,976				13,100,242		-7.1	%
Dividends per share	$	1.60			$	1.50		6.7	%

PREFERRED BANK Condensed Consolidated Statements of Financial Condition (unaudited) (in thousands)
	June 30, 2026				December 31, 2025
	(Unaudited)				(Audited)
Assets
Cash and due from banks	$	749,820			$	807,098
Fed funds sold		40,000				20,000
Cash and cash equivalents		789,820				827,098
Securities held-to-maturity, at amortized cost		18,154				18,749
Securities available-for-sale, at fair value		525,956				566,186
Loans held for sale, at lower of cost or fair value		8,348				-
Loans		6,239,281				6,054,264
Less allowance for credit losses		(76,276	)			(78,992	)
Less amortized deferred loan fees, net		(8,288	)			(9,030	)
Loans, net		6,154,717				5,966,242
Other real estate owned and repossessed assets		3,010				3,510
Bank furniture and fixtures, net		10,463				8,064
Bank-owned life insurance		10,853				10,712
Accrued interest receivable		32,818				34,233
Investment in affordable housing partnerships		77,729				69,978
Federal Home Loan Bank stock, at cost		15,000				15,000
Deferred tax assets		44,230				41,976
Income tax receivable		7,390				3,884
Operating lease right-of-use assets		28,643				30,531
Other assets		3,490				5,002
Total assets	$	7,730,621			$	7,601,165
Liabilities and shareholders' Equity
Deposits:
Noninterest bearing demand deposits	$	754,670			$	699,160
Interest bearing deposits:		2,209,390				2,205,914
Savings		31,617				30,376
Time certificates of $250,000 or more		1,822,765				1,754,273
Other time certificates		1,653,766				1,655,723
Total deposits		6,472,208				6,345,446
Advances from Federal Home Loan Bank		200,000				200,000
Subordinated debt issuance, net		148,825				148,706
Commitments to fund investment in affordable housing partnerships		29,949				23,327
Operating lease liabilities		33,295				35,107
Accrued interest payable		15,311				16,513
Other liabilities		37,506				42,589
Total liabilities		6,937,094				6,811,688
Shareholders' equity		793,527				789,477
Total liabilities and shareholders' equity	$	7,730,621			$	7,601,165
Book value per common share	$	66.95			$	64.83
Number of common shares outstanding		11,853,101				12,177,588

PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios)
	For the Quarter Ended
	June 30, 2026				March 31, 2026				December 31, 2025				September 30, 2025				June 30, 2025
Unaudited historical quarterly operations data:
Interest income	$	122,446			$	116,875			$	124,633			$	126,850			$	120,443
Interest expense		52,456				51,562				54,658				55,540				53,569
Interest income before provision for credit losses		69,990				65,313				69,975				71,310				66,874
Provision for credit losses		1,200				1,500				4,300				2,500				1,600
Noninterest income		3,483				4,310				8,094				3,665				3,762
Noninterest expense		23,715				23,539				24,377				21,498				22,445
Income tax expense		15,018				13,440				14,570				15,038				13,744
Net income	$	33,540			$	31,144			$	34,822			$	35,939			$	32,847
Earnings per share
Basic	$	2.83			$	2.57			$	2.85			$	2.90			$	2.61
Diluted	$	2.78			$	2.53			$	2.79			$	2.84			$	2.57
Ratios for the period:
Return on average assets		1.75	%			1.67	%			1.82	%			1.93	%			1.85	%
Return on average equity		17.05	%			15.89	%			17.59	%			18.64	%			17.55	%
Net interest margin (fully-taxable equivalent)		3.73	%			3.57	%			3.74	%			3.92	%			3.85	%
Noninterest expense to average assets		1.24	%			1.26	%			1.27	%			1.16	%			1.26	%
Efficiency ratio		32.28	%			33.81	%			31.22	%			28.67	%			31.78	%
Net charge-offs (recoveries) to average loans (annualized)		-0.00	%			0.37	%			0.00	%			0.11	%			0.00	%
Ratios as of period end:
Tangible common equity ratio		10.26	%			10.05	%			10.38	%			10.38	%			10.26	%
Tier 1 leverage capital ratio		10.55	%			10.37	%			10.54	%			10.66	%			10.73	%
Common equity tier 1 risk-based capital ratio		11.06	%			10.87	%			11.26	%			11.34	%			11.18	%
Tier 1 risk-based capital ratio		11.06	%			10.87	%			11.26	%			11.34	%			11.18	%
Total risk-based capital ratio		13.74	%			13.98	%			14.47	%			14.56	%			14.43	%
Allowances for credit losses to loans at end of period		1.22	%			1.24	%			1.30	%			1.27	%			1.29	%
Allowance for credit losses to non-performing loans		0.84	x			0.8	x			1.54	x			4.24	x			1.41	x
Average balances:
Total securities	$	558,696			$	580,248			$	586,950			$	583,302			$	503,861
Total loans		6,021,420				6,037,241				5,947,814				5,753,801				5,623,010
Total earning assets		7,532,781				7,437,232				7,439,767				7,234,568				6,984,272
Total assets		7,668,719				7,563,705				7,585,940				7,382,265				7,121,047
Total time certificate of deposits		3,500,857				3,451,924				3,402,304				3,330,241				3,321,327
Total interest bearing deposits		5,712,097				5,644,722				5,651,369				5,501,767				5,345,308
Total deposits		6,420,198				6,311,446				6,336,242				6,169,728				6,005,486
Total interest bearing liabilities		6,060,886				5,993,452				6,000,042				5,850,376				5,614,737
Total equity		789,114				794,931				785,581				764,766				750,535

PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios)
	For the Six Months Ended
	June 30, 2026				June 30, 2025
Interest income	$	239,321			$	234,972
Interest expense		104,018				105,440
Interest income before provision for credit losses		135,303				129,532
Provision for credit losses		2,700				2,300
Noninterest income		7,793				7,760
Noninterest expense		47,254				45,814
Income tax expense		28,458				26,307
Net income	$	64,684			$	62,871
Earnings per share
Basic	$	5.40			$	4.88
Diluted	$	5.32			$	4.80
Ratios for the period:
Return on average assets		1.71	%			1.81	%
Return on average equity		16.47	%			16.58	%
Net interest margin (fully-taxable equivalent)		3.65	%			3.80	%
Noninterest expense to average assets		1.25	%			1.32	%
Efficiency ratio		33.02	%			33.37	%
Net charge-off to average loans		0.18	%			0.00	%
Average balances:
Total securities	$	569,413			$	453,588
Total loans		6,029,287				5,597,386
Total earning assets		7,485,270				6,882,920
Total assets		7,616,502				7,013,744
Total time certificate of deposits		3,476,526				3,243,479
Total interest bearing deposits		5,678,597				5,295,055
Total deposits		6,366,123				5,946,154
Total interest bearing liabilities		6,027,357				5,504,349
Total equity		792,006				764,857

PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios)
	As of
	June 30, 2026				March 31, 2026				December 31, 2025				September 30, 2025				June 30, 2025
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents	$	789,820			$	825,161			$	827,098			$	815,459			$	796,257
Securities held-to-maturity, at amortized cost		18,154				18,458				18,749				19,034				19,456
Securities available-for-sale, at fair value		525,956				553,184				566,186				569,115				577,040
Loans:
Real estate – mortgage:
Real estate—residential	$	737,321			$	738,508			$	783,136			$	793,217			$	767,620
Real estate—commercial		3,169,037				3,105,331				3,028,762				2,890,990				2,868,308
Total Real estate – mortgage		3,906,358				3,843,839				3,811,898				3,684,207				3,635,928
Real estate – construction:
R/E construction — residential		284,219				265,748				282,808				285,623				291,343
R/E construction — commercial		364,807				343,598				387,759				323,897				303,354
Total real estate construction loans		649,026				609,346				670,567				609,520				594,697
Commercial and industrial		1,675,300				1,584,984				1,563,504				1,570,423				1,501,188
SBA		8,444				8,087				8,053				7,630				7,741
Consumer and others		153				288				242				231				56
Gross loans		6,239,281				6,046,544				6,054,264				5,872,011				5,739,610
Allowance for credit losses on loans		(76,276	)			(75,036	)			(78,992	)			(74,692	)			(73,830	)
Net deferred loan fees		(8,288	)			(7,923	)			(9,030	)			(9,956	)			(11,940	)
Net loans, excluding loans held for sale	$	6,154,717			$	5,963,585			$	5,966,242			$	5,787,363			$	5,653,840
Loans held for sale	$	8,348			$	76,324			$	-			$	-			$	-
Net loans	$	6,163,065			$	6,039,909			$	5,966,242			$	5,787,363			$	5,653,840
Other real estate owned and repossessed assets	$	3,010			$	3,010			$	3,510			$	52,609			$	13,755
Investment in affordable housing partnerships		77,729				66,394				69,978				73,874				74,783
Federal Home Loan Bank stock, at cost		15,000				15,000				15,000				15,000				15,000
Other assets		137,887				133,521				134,402				135,340				128,629
Total assets	$	7,730,621			$	7,654,637			$	7,601,165			$	7,467,794			$	7,278,760
Liabilities:
Deposits:
Demand	$	754,670			$	716,777			$	699,160			$	654,302			$	675,102
Interest bearing demand		2,209,390				2,200,374				2,205,914				2,205,865				2,004,135
Savings		31,617				26,822				30,376				31,087				34,333
Time certificates of $250,000 or more		1,822,765				1,795,883				1,754,273				1,699,757				1,681,026
Other time certificates		1,653,766				1,680,291				1,655,723				1,638,662				1,683,737
Total deposits	$	6,472,208			$	6,420,147			$	6,345,446			$	6,229,673			$	6,078,333
Advance from Federal Home Loan Bank		200,000				200,000				200,000				200,000				200,000
Subordinated debt issuance, net		148,825				148,766				148,706				148,647				148,588
Commitments to fund investment in affordable housing partnerships		29,949				18,873				23,327				24,874				30,645
Other liabilities		86,112				96,652				94,209				88,958				73,534
Total liabilities	$	6,937,094			$	6,884,438			$	6,811,688			$	6,692,152			$	6,531,100
Equity:
Common stock, no par value	$	210,882			$	210,882			$	210,882			$	210,882			$	210,882
Additional paid-in capital		110,913				108,853				105,105				103,235				101,088
Treasury stock		(334,591	)			(334,490	)			(293,406	)			(277,351	)			(271,005	)
Retained earnings		826,365				802,308				780,637				755,587				728,891
Accumulated other comprehensive income		(20,042	)			(17,354	)			(13,741	)			(16,711	)			(22,196	)
Total shareholders' equity	$	793,527			$	770,199			$	789,477			$	775,642			$	747,660
Total liabilities and shareholders' equity	$	7,730,621			$	7,654,637			$	7,601,165			$	7,467,794			$	7,278,760

PREFERRED BANK Quarter-to-Date Average Balances, Yield and Rates (unaudited)
			Three months ended June 30,										Three months ended March 31,										Three months ended June 30,
			2026										2026										2025
			Average Balance				Interest Income or Expense			Average Yield/ Rate			Average Balance				Interest Income or Expense			Average Yield/ Rate			Average Balance				Interest Income or Expense			Average Yield/ Rate
Assets			(Dollars in thousands)
Interest earning assets:
	Loans (1,2)		$	6,038,330			$	108,358		7.20	%		$	6,051,465			$	103,382		6.93	%		$	5,632,204			$	105,884		7.54	%
	Investment securities (3)			558,696				5,611		4.03	%			580,248				5,712		3.99	%			503,861				5,195		4.14	%
	Federal funds sold			21,538				205		3.82	%			20,507				192		3.80	%			20,511				233		4.56	%
	Other earning assets			914,217				8,364		3.67	%			785,012				7,681		3.97	%			827,696				9,230		4.47	%
		Total interest earning assets		7,532,781				122,538		6.52	%			7,437,232				116,967		6.38	%			6,984,272				120,542		6.92	%
	Deferred loan fees, net			(8,139	)									(8,334	)									(10,005	)
	Allowance for credit losses on loans			(75,675	)									(78,986	)									(72,328	)
Noninterest earning assets:
	Cash and due from banks			11,141										10,685										12,590
	Bank furniture and fixtures			9,694										8,509										8,215
	Right of use assets			29,211										30,195										19,917
	Other assets			169,706										164,404										178,386
		Total assets	$	7,668,719									$	7,563,705									$	7,121,047
Liabilities and shareholders' equity
Interest bearing liabilities:
	Deposits:
		Interest bearing demand and savings	$	2,211,240			$	15,699		2.85	%		$	2,192,798			$	15,174		2.81	%		$	2,023,981			$	16,242		3.22	%
		TCD $250K or more		1,812,356				17,065		3.78	%			1,773,086				16,886		3.86	%			1,644,322				17,092		4.17	%
		Other time certificates		1,688,501				16,432		3.90	%			1,678,838				16,487		3.98	%			1,677,005				17,840		4.27	%
		Total interest bearing deposits		5,712,097				49,196		3.45	%			5,644,722				48,547		3.49	%			5,345,308				51,174		3.84	%
Short-term borrowings				-				-		0.00	%			2				0		4.20	%			-				-		0.00	%
Advance from Federal Home Loan Bank				200,000				1,743		3.50	%			200,000				1,690		3.43	%			120,879				1,070		3.55	%
Subordinated debt, net				148,789				1,517		4.09	%			148,728				1,325		3.61	%			148,550				1,325		3.58	%
		Total interest bearing liabilities		6,060,886				52,456		3.47	%			5,993,452				51,562		3.49	%			5,614,737				53,569		3.83	%
Noninterest bearing liabilities:
	Demand deposits			708,101										666,724										660,178
	Lease liability			33,946										34,885										23,657
	Other liabilities			76,672										73,713										71,940
		Total liabilities		6,879,605										6,768,774										6,370,512
Shareholders’ equity				789,114										794,931										750,535
		Total liabilities and shareholders’ equity	$	7,668,719									$	7,563,705									$	7,121,047
Net interest income							$	70,082									$	65,405									$	66,973
Net interest spread										3.05	%									2.89	%									3.10	%
Net interest margin										3.73	%									3.57	%									3.85	%
Cost of Deposits:
	Noninterest bearing demand deposits		$	708,101									$	666,724									$	660,178
	Interest bearing deposits			5,712,097				49,196		3.45	%			5,644,722				48,547		3.49	%			5,345,308				51,174		3.84	%
		Total Deposits	$	6,420,198			$	49,196		3.07	%		$	6,311,446			$	48,547		3.12	%		$	6,005,486			$	51,174		3.42	%
(1)	Includes non-accrual loans and loans held for sale
(2)	Net loan fee income of $1.2 million, $1.2 million and $1.1 million for the quarter ended June 30, 2026, March 31, 2026 and June 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)
			Six Months ended June 30,
			2026										2025
			Average Balance				Interest Income or Expense			Average Yield/ Rate			Average Balance				Interest Income or Expense			Average Yield/ Rate
Assets			(Dollars in thousands)
Interest earning assets:
	Loans(1,2)		$	6,044,861			$	211,740		7.06	%		$	5,594,572			$	207,375		7.47	%
	Investment securities(3)			569,413				11,324		4.01	%			453,588				9,289		4.13	%
	Federal funds sold			21,025				397		3.81	%			20,367				461		4.56	%
	Other earning assets			849,971				16,045		3.81	%			814,393				18,045		4.47	%
		Total interest earning assets		7,485,270				239,505		6.45	%			6,882,920				235,170		6.89	%
	Deferred loan fees, net			(8,236	)									(9,599	)
	Allowance for credit losses on loans			(77,321	)									(71,941	)
Noninterest earning assets:
	Cash and due from banks			10,704										11,846
	Bank furniture and fixtures			9,105										8,326
	Right of use assets			29,700										17,572
	Other assets			167,280										174,620
		Total assets	$	7,616,502									$	7,013,744
Liabilities and shareholders' equity
Interest bearing liabilities:
	Deposits:
		Interest bearing demand/ savings	$	2,202,071			$	30,873		2.83	%		$	2,051,576			$	32,901		3.23	%
		TCD $250K or more		1,792,830				33,951		3.82	%			1,563,771				32,732		4.22	%
		Other time certificates		1,683,696				32,919		3.94	%			1,679,708				36,087		4.33	%
		Total interest \bearing deposits		5,678,597				97,743		3.47	%			5,295,055				101,720		3.87	%
Short-term borrowings				1				0		4.17	%			-				-		0.00	%
Advance from Federal Home Loan Bank				200,000				3,433		3.46	%			60,773				1,070		3.55	%
Subordinated debt, net				148,759				2,842		3.85	%			148,521				2,650		3.60	%
		Total interest bearing liabilities		6,027,357				104,018		3.48	%			5,504,349				105,440		3.86	%
Noninterest bearing liabilities:
	Demand deposits			687,526										651,099
	Lease liability			34,413										21,323
	Other liabilities			75,200										72,116
		Total liabilities		6,824,496										6,248,887
Shareholders’ equity				792,006										764,857
		Total liabilities and shareholders’ equity	$	7,616,502									$	7,013,744
Net interest income							$	135,487									$	129,730
Net interest spread										2.97	%									3.03	%
Net interest margin										3.65	%									3.80	%
Cost of Deposits:
	Noninterest bearing demand deposits		$	687,526									$	651,099
	Interest bearing deposits			5,678,597				97,743		3.47	%			5,295,055				101,720		3.87	%
		Total Deposits	$	6,366,123			$	97,743		3.10	%		$	5,946,154			$	101,720		3.45	%
(1)	Includes non-accrual loans and loans held for sale
(2)	Net loan fee income of $2.4 million and $1.9 million for the six months ended June 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
	Six Months Ended June 30, 2026				Year Ended December 31, 2025
	(Dollars in 000's)
Allowance for credit losses
Balance at beginning of period	$	78,992			$	71,477
Charge-Offs
Commercial & Industrial		2,545				8
Mini-perm real estate		3,833				1,749
Total charge-offs		6,378				1,757
Recoveries
Commercial & Industrial		109				172
Mini-perm real estate		853				-
Total recoveries		962				172
Net charge-offs		5,416				1,585
Provision for credit losses:		2,700				9,100
Balance at end of period	$	76,276			$	78,992
Average loans held for investment	$	6,029,287			$	5,721,077
Loans held for investment at end of period	$	6,239,281			$	6,054,264
Net charge-offs to average loans		0.18	%			0.03	%
Allowances for credit losses to loans at end of period		1.22	%			1.30	%