Preferred Bank

Good day and welcome to the Preferred Bank second quarter 2025 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 presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jeffrey Haas of Financial Profiles. Please go ahead.

Thank you, Betsy. Hello, everyone, and thank you for joining us to discuss Preferred Bank's financial results for the second quarter ended June 30, 2025. With me today from management are Chairman and CEO Lee Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward Chayka, Chief Credit Officer Nick Pye, 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 Security 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 banks operations and business environment all of which are difficult to predict and many of which are beyond the control of preferred banks 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 uncertainties 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. Lee Yu. Please go ahead.

Thank you. I'm very pleased to report that Preferred Bank's second quarter net income was $32.8 million, or $2.52 a share. which is a reasonable improvement from the previous quarter. This quarter, we have a loan growth of roughly 7 percent on annualized basis. Early indication in July is that the loan demand seems to have increased, however, to the extent of which is still too early to tell. Our deposits remain flat. Perhaps one of the reasons is that we try to control our cost of the deposits. Net interest margin this quarter was 3.85% as compared to the 3.75% reported last quarter. During the quarter, we have continued to buy back our stock in accordance with our policy of returning access capital to our shareholders. However, this quarter's purchase is relatively large in the amount of $56 million, which may have affected net interest income, PPNR, and net interest margin a little bit. Second quarter will show good improvement in assets quality. Non-accrued loans, criticized loans, and past due loans all decreased reasonably from the previous quarter, and we believe the trend should continue into the second half of this year. At this time, we have not identified any additional lost contents on these loans. We believe our loan loss reserve is sufficient to cover any exposure. There's still a lot of uncertainty in our economy. The tariff, the interest rate, and the inflation. I just hope these matters will clear up very soon so we can have a clearer and better operating environment to work under. Thank you very much, and I'm ready for your questions.