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	%

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