Preferred Bank (NASDAQ:PFBC), an independent commercial bank headquartered in Los Angeles, reported net income of $31.1 million, or $2.53 per diluted share, for the first quarter ended March 31, 2026.
While the bank maintained double-digit profitability metrics, including a return on average equity (ROAE) of 16% and a return on average assets (ROAA) of 1.67%, the period was marked by a notable shift in asset quality.
The bank’s net interest margin (NIM) contracted to 3.57%, primarily driven by interest reversals associated with a single large credit relationship that was placed on nonaccrual status during the quarter.
This development contributed to a material increase in nonperforming assets (NPAs), which rose to $172.1 million.
In a proactive move to address these credit headwinds, Preferred Bank executed sales of commercial real estate (CRE) loans totaling $48.5 million on April 1, 2026, shortly after the quarter's close.
Despite the credit adjustments, the bank continued to see healthy balance sheet activity.
Total loans increased to $6.12 billion, while total deposits rose to $6.42 billion.
The bank remains well-capitalized, allowing it to continue its capital return program.
During the first quarter, Preferred Bank repurchased 402,299 shares of its common stock for approximately $35.8 million.