- Preferred Bank (PFBC, Financial) reported Q1 2025 net income of $30.0 million, a $197,000 decrease from Q4 2024.
- Net interest income declined by $6.5 million quarter-over-quarter, influenced by $2.8 million in interest reversals.
- Deposits increased by $155.9 million (2.6%), while net interest margin declined to 3.75%.
Preferred Bank (PFBC), one of the larger independent commercial banks in California, has announced its first-quarter 2025 financial results. The bank recorded a net income of $30.0 million, equivalent to $2.23 per diluted share. This signifies a slight reduction of $197,000 from the previous quarter and a $3.4 million decrease year-over-year.
The decline in earnings was primarily due to a drop in net interest income, which fell to $62.7 million, down $6.5 million from the prior quarter. Key contributing factors included $2.8 million in interest income reversals from nonaccrual loans and a $208,000 reversal related to a property affected by the Palisades fire.
Despite these setbacks, Preferred Bank has shown robust deposit growth, with total deposits rising by $155.9 million, or 2.6%, to reach $6.07 billion. However, the bank's net interest margin has narrowed to 3.75%, from 4.06% in the last quarter, largely due to the interest reversals.
On the asset quality front, nonaccrual loans amounted to $78.9 million, primarily consisting of two well-secured loans totaling $65.6 million. Management does not anticipate losses from these loans. The bank's total criticized loans decreased from $158.1 million to $129.2 million, reflecting an improvement in risk profile.
The bank maintains a strong capital position, with a tangible capital ratio of 10.96% and a total capital ratio of 15.15%. Management remains cautious about the potential impact of import tariffs on their trade finance portfolio and is enhancing monitoring processes to manage the emerging economic uncertainties effectively.
