Preferred Bank

Good afternoon, everyone, and welcome to the Preferred Bank Q4 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 and then one on a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. I would now like to turn the conference call over to Jeffrey Haas with Financial Profiles. Sir, please go ahead. Thank you, Jamie.

Hello, everyone, and thank you for joining us to discuss preferred bank financial results for the fourth quarter ended December 31st, 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 Risk 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 Securities 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. Li Yu. Please go ahead.

Thank you. Thank you, ladies and gentlemen. Thank you for joining the earnings conference. I'm very pleased to report that for the first quarter of 2025, we have The company, the bank's net income was $34.8 million, or $2.79 a share. For the full year, the bank earned $134 million, or $10.41 a share. Our profitability for the year is believed to be among the top tier of the banking industry. Our net interest margin for the fourth quarter declined from the third quarter. Principal reason for the decline was federal rate cuts. With a 70% floating rate loan portfolio, the rate cut did reduce our loan interest income. However, cost of deposits remained stubbornly In fact, many analysts have reported that between quarters, the banking industry, the entire banking industry, cost of deposits may have increased greatly. Looking forward, we're seeing that our loan demand is getting stronger for the quarter. our total loan growth is $182 million or over 12%. Deposit growth was $115 million or 7.4%. The round of the year for loan and deposit growth in 7.3% or 7.2% respectively. During the quarter, we have sold two large pieces of OREO, resulting in a net gain of $1.8 million between the two. The income was reported in the section of non-interest income. The loss, the sale that resulted in loss was reported in the a non-interest expense section. Why? This is based on the current principle of generally accepted accounting principles. Quarter to quarter, non-performing assets declined slightly. However, put aside assets that increase, $97 million. Principally, this is due to that we placed a large nine loans loan relationship into the classified status. For the quarter, loan loss provision was $4.3 million. analysts, economists, most economists is forecasting 2026 to be a year of relatively gross instability. Our customers feeling also indicating they have improved outlook for 2026. Barring any sudden changes in government policy or directions, which we just had one. We're hoping 2026 to be more of a growth year for preferred banks. Thank you very much. I will answer your questions.