Preferred Bank Q2 2026 Earnings Call Transcript

Preferred Bank (NASDAQ: PFBC ) reported second-quarter financial results on Wednesday.

The transcript from the company's second-quarter earnings call has been provided below.

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For comprehensive financial data and transcripts, visit Access the full call at Summary Preferred Bank reported a net income of $33.5 million, or $2.78 per share, for Q2 2026, exceeding both the prior quarter and the same quarter last year, as well as internal budget expectations.

The company significantly reduced non-performing and criticized loans by $70 million (41.5%) and $90 million (34%), respectively, lowering reserve requirements and reducing provision expenses to $1.2 million.

Loan production was strong with an increase of $125 million, though deposit growth was modest at $52 million (0.8%), amidst stiff industry-wide competition for deposits.

Net interest margin stood at 3.73%, with the efficiency ratio steady at 32% despite inflationary pressures.

Management remains optimistic about the year ahead, though they anticipate increased competition and potential margin compression in loan and deposit pricing.

The bank plans to resolve $60 million in non-performing loans in the second half of 2026, contingent on legal proceedings.

There is a focus on core deposit growth, despite competition from the stock market, particularly AI-related investments, drawing away customer funds.

Strategically, the bank emphasizes quality loan origination over volume, with a preference for maintaining asset sensitivity and selective rate competition.

Full Transcript OPERATOR Good day, everyone, and welcome to the Preferred Bank second quarter 2026 earnings conference call.

All participants will be in a listen-only mode.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

After today's remarks, there will be an opportunity to ask questions.

To ask a question, you may press star then one on your touchtone phone.

To withdraw your question, please press star then two.

Please note that this event is being recorded.

I would now like to turn the conference over to Jeff Haas of Financial Profiles.

Please go ahead, sir.

Jeff Haas, Financial Profiles Thank you, Cole.

Hello everyone and thank you for joining us to discuss Preferred Bank's financial results for the second quarter ended June 30, 2026.

With me today from management are Chairman and CEO Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward Chaeca, Chief Risk Officer Nick Pai, and Deputy Chief Operating Officer Johnny Hsu.

Management will provide a brief summary of the results and then we will open up the call to your questions.

During the course of this conference call, statements made by management may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are based upon specific assumptions that may or may not prove correct.

Forward-looking statements are also subject to known and unknown risks, uncertainties and other factors relating to Preferred Bank's operations and business environment, all of which are difficult to predict and many of which are beyond the control of Preferred Bank.

For a detailed description of these risks and uncertainties, please refer to the SEC-required documents the Bank files with the Federal Deposit Insurance Corporation, or FDIC.

If any of these risks materialize or any of these assumptions prove incorrect, Preferred Bank's results could differ materially from its expectations as set forth in these statements.

Preferred Bank assumes no obligation to update such forward-looking statements.

At this time, I'd like to turn the call over to Mr.

Li Yu.

Please go ahead.

Li Yu, Chairman & CEO Thank you.

Thank you all for joining our conference phone call.

Good morning.