Preferred Bank's stock plummeted 7.20% during intraday trading on Thursday, as investors reacted to concerning details within the bank's fourth-quarter earnings report.

While the bank reported earnings per share of $2.79, beating analyst estimates, several key metrics showed deterioration. Net income decreased by $1.1 million compared to the prior quarter, primarily due to a significant increase in the provision for credit losses to $4.3 million from $2.5 million in the third quarter. Additionally, net interest income declined by $1.3 million quarter-over-quarter as market interest rates fell.

The bank's asset quality raised particular concerns, with non-accrual loans surging to $51.3 million from $17.6 million in the previous quarter. Criticized assets also increased substantially by $97.5 million during the period. The net interest margin contracted to 3.74% from 3.92% last quarter, reflecting pressure from Federal Reserve interest rate cuts implemented in September and December.