Q2 2026 Preferred Bank Earnings Call Transcript
Key Points
- Preferred Bank (PFBC) reported a net income of $33.5 million or $2.78 per share for the second quarter of 2026, exceeding both the previous quarter and the same quarter of the previous year.
- Non-performing loans were reduced by $70 million or 41.5%, and criticized loans were reduced by $90 million, leading to a decrease in reserve requirements and provision expenses.
- Loan origination efforts were strong, with an increase of $125 million in loans, despite selling $70 million in loans.
- The net interest margin was favorably affected, standing at 3.73%, and the efficiency ratio remained steady at 32%.
- The bank experienced growth in demand deposit accounts (DDA), which helped keep deposit costs down.
- Deposit growth was modest, increasing by only $52 million or 0.8% for the quarter, amidst stiff competition in the banking industry.
- The cost of deposits increased, with total deposits costing 3.06% and interest-bearing deposits at 3.44% as of June.
- Non-interest expenses were elevated due to increased legal fees related to large relationships being worked through.
- Loan competition remains intense, with pressure on loan yields and pricing due to competitors offering lower rates.
- The bank faces challenges in driving core deposit growth due to competition from the stock market, particularly AI stocks, attracting customer investments.
Good day, everyone, and welcome to the Preferred Bank second quarter 2026 earnings conference call. (Operator Instructions) 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.
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 Czajka; Chief Risk Officer, Nick Pi; 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
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