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Investing.com -- Preferred Bank (NASDAQ:PFBC) reported second-quarter earnings that exceeded analyst expectations, sending shares up 5.4% as investors responded positively to the bank’s improved credit quality and earnings growth.
The California-based bank posted net income of $32.8 million or $2.52 per diluted share for the quarter ended June 30, 2025, beating analyst estimates of $2.43 by $0.09. Revenue came in at $70.65 million, slightly below the consensus estimate of $70.85 million.
Net interest income before provision for credit losses increased to $66.9 million, up $4.2 million from the previous quarter and $767,000 higher than the same period last year. The bank’s net interest margin improved to 3.85% from 3.75% in the prior quarter, though it remained below the 3.96% recorded in the second quarter of 2024.
"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."
The bank’s credit quality showed significant improvement, with non-accrual loans decreasing from $78.9 million as of March 31 to $51.2 million at quarter-end. Total (EPA:TTEF) loans increased by $105.2 million or 1.9% from the previous quarter to $5.74 billion, while deposits rose slightly to $6.08 billion.
The efficiency ratio for the quarter was 31.79%, with return on average assets at 1.85% and return on average equity at 17.55%. The bank maintained strong capital ratios with a tangible capital ratio of 10.26% and a total capital ratio of 14.43%.
Preferred Bank recorded a provision for credit losses of $1.6 million, up from $700,000 in the previous quarter but down from $2.5 million in the same quarter last year.
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