Shares of Preferred Bank (NASDAQ:PFBC) climbed 5.4% after the regional lender posted stronger-than-expected second-quarter earnings, buoyed by better credit quality and improved margins.
For the quarter ending June 30, 2025, the Los Angeles-based bank reported net income of $32.8 million, or $2.52 per diluted share—topping analyst projections by $0.09. While total revenue of $70.65 million came in just shy of the $70.85 million consensus estimate, investors appeared encouraged by the underlying financial performance.
Net interest income before provisions for credit losses rose to $66.9 million, up $4.2 million from the previous quarter and $767,000 higher year-over-year. The bank’s net interest margin widened to 3.85%, up from 3.75% in Q1, though still trailing the 3.96% posted a year earlier.
“We are pleased to report our results for the second quarter of 2025,” said Li Yu, Chairman and CEO. “The uncertainty caused by the tariffs is beginning to clear up, and together with a new budget we now have a better picture of our operating environment.”
Loan quality continued to improve, with non-accrual loans falling sharply to $51.2 million from $78.9 million three months earlier. The bank’s total loan portfolio grew by $105.2 million, reaching $5.74 billion, while deposits ticked up modestly to $6.08 billion.
Operational efficiency remained strong, with a 31.79% efficiency ratio. The return on average assets stood at 1.85%, while return on average equity came in at a robust 17.55%. Preferred Bank’s capital position also remained solid, with a tangible capital ratio of 10.26% and a total capital ratio of 14.43%.
The bank set aside $1.6 million for credit losses in the quarter—higher than the $700,000 reserved in Q1 but lower than the $2.5 million provision from the same period last year.
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