Preferred Bank Reports Record Quarterly Earnings

LOS ANGELES, Oct. 19, 2016 (GLOBE NEWSWIRE) — Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended September 30, 2016. Preferred Bank (“the Bank”) reported net income of $9.9 million or $0.69 per diluted share for the third quarter of 2016. This compares to net income of $7.9 million or $0.57 per diluted share for the third quarter of 2015 and compares to net income of $8.6 million or $0.61 per diluted share for the second quarter of 2016.

Highlights from the third quarter of 2016:

Total assets   $3.11 billion
Linked quarter loan growth    $160.4 million or 7.1%
Linked quarter deposit growth   $144.1 million or 5.7%
Return on average assets     1.31 %
Return on beginning equity     13.92 %
Efficiency ratio     37.7 %
Net interest margin     3.59 %

Li Yu, Chairman and CEO commented, “I am very pleased to report that net income for the third quarter reached $9.9 million, or $0.69 per diluted share. This represents a quarterly earnings record for the Bank. 

“During the quarter, the Bank issued an additional $37.5 million in subordinated notes. That, along with the original second quarter issuance of $62.5 million brings the total size of the debt issuance to $100 million. With this new source of funding, we purchased a total of $70.4 million in home mortgages in the quarter as we continue to diversify our loan portfolio as well. The additional issuance of subordinated debt, although somewhat offset by the home mortgage pools purchased, has greatly affected our net interest margin for the quarter. The cost of the debt is 6% and the yield on the pools of loans purchased was approximately 4.2%. That, together with the organic deposit and loan growth put the NIM at 3.59% for the third quarter. Without those items, the NIM level would have been closer to that of prior quarters. However the additional issuance of subordinated debt does allow us to continue to originate commercial real estate loans at our current pace.

“Total loan growth for the quarter was $160.4 million. Excluding the $70.4 million in home mortgages purchased, organic loan growth amounted to $90.0 million, or 4.0% on a linked quarter. Total deposit growth again outpaced organic loan growth as the increase for the quarter was $144.1 million or 5.7% from June 30, 2016 totals. We are extremely pleased with the deposit growth as that allows us to continue to grow the loan portfolio.

“The efficiency ratio for the quarter was 37.7% which was the result of strong growth in net interest income coupled with a legal cost recovery of $415,000 due to a favorable legal settlement.

“The Bank’s total assets grew to $3.1 billion. To further the growth of the Bank, we will continue to make investments in both systems and human resources both on the front line and in the support areas. Also on the drawing board is the ongoing development of a home mortgage origination platform and new potential branch locations.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $26.5 million for the third quarter of 2016. This compares favorably to the $21.6 million recorded in the third quarter of 2015 and to the $25.7 million recorded in the second quarter of 2016. The increase over both comparable periods is due primarily to growth in interest income on loans partially offset by an increase in interest expense on deposits and borrowings. The Bank’s taxable equivalent net interest margin was 3.59% for the third quarter of 2016, a 41 basis point decrease from the 4.00% achieved in the third quarter of 2015 and  a 28 basis point decrease from the 3.87% recorded in the second quarter of 2016. The decrease compared to both periods was almost exclusively due to the issuance of $100 million in subordinated debt; $62.5 million of which was issued in late June 2016, then another $10.0 million in early July and then the final $27.5 million on September 30. So for the majority of the quarter, the Bank had interest expenses related to $72.5 million of subordinated debt at a rate of 6.0% per annum.

Noninterest Income. For the third quarter of 2016, noninterest income was $1,350,000 compared with $940,000 for the same quarter last year and compared to $1,660,000 for the second quarter of 2016. The increase over the third quarter of 2015 is due to letter of credit fee income as that activity has increased year over year. The decrease from the second quarter of 2016 is due to a decrease in other income of $306,000 as unutilized line fees on loans decreased from that period. Service charges on deposits were fairly consistent  but were up by $32,000 compared to this quarter last year but down by $16,000 compared to the second quarter of 2016.

Noninterest Expense. Total noninterest expense was $10.5 million for the third quarter of 2016, an increase of $1.7 million over the same period last year and down from the $10.8 million recorded in the second quarter of 2016. Salaries and benefits expense totaled $6.1 million for the third quarter of 2016, an increase over the $4.9 million recorded for the same period last year and flat when compared to the second quarter of 2016. The increase over the same period last year is primarily due to the acquisition of United International Bank (“UIB”),  as well as regular staffing and merit increases. Occupancy expense totaled $1.2 million for the quarter, an increase of $253,000 over the $908,000 recorded in the same period in 2015 but down slightly from the $1.3 million recorded in the second quarter of 2016. The increase over the prior year was due mainly to the addition of the New York office with the UIB acquisition as well as a new administrative office which the Bank opened in November 2015 in El Monte, California. Professional services expense was $1.4 million for the third quarter of 2016 compared to $1.3 million for the same quarter of 2015 and $1.4 million recorded in the second quarter of 2016. The Bank incurred $196,000 in costs related to its one OREO property. This compares to a gain of $19,000 in the third quarter of 2015 and expense of $243,000 in the second quarter of 2016. Other expenses were $1.1 million for the third quarter of 2016 compared to $1.3 million for the same period last year and $1.3 million for the second quarter of 2016. The decrease from last year was mainly due to the recording of $415,000 in acquisition related costs in the third quarter of 2015.

Income Taxes

The Bank recorded a provision for income taxes of $6.1 million for the third quarter of 2016. This represents an effective tax rate (“ETR”) of 38.1% for the quarter. This is down from the ETR of 40.0% for the third quarter of 2015 and down from the 40.6% ETR recorded in the second quarter of 2016. The decrease from both periods is due to adjustments made to the provision calculation as a result of the finalization and filing of the Bank’s 2015 tax returns. The Bank expects that in the fourth quarter of 2016, the ETR will be similar to that of the third quarter but will likely return to historical levels in 2017. The difference between the statutory rate (Federal and State combined) of 42.05% and the ETR is due to tax deductible items as well as the Bank’s investments in municipal bonds and various Low Income Housing Income Tax Credit (“LIHTC”) funds.

Balance Sheet Summary

Total gross loans and leases at September 30, 2016 were $2.43 billion, an increase of $373.3 million or 18.1% over the total of $2.06 billion as of December 31, 2015. Total deposits reached $2.66 billion, an increase of $373.4 million or 16.3% over the total of $2.29 billion as of December 31, 2015. Total assets reached $3.11 billion as of September 30, 2016, an increase of $511.6 million or 19.7% over the total of $2.60 billion as of December 31, 2015.

Asset Quality

As of September 30, 2016 nonaccrual loans totaled $1.7 million, a decrease of $306,000 from the $2.0 million total as of December 31, 2015. Total net charge-offs for the third quarter of 2016 were $827,000 compared to $2.0 million in the second quarter of 2016 and compared to a net charge off of $203,000 for the third quarter of 2015. The Bank recorded a provision for loan loss of $1.4 million for the third quarter of 2016, compared to a provision of $500,000 recorded in the same quarter last year and compared to the $2.3 million provision recorded in the second quarter of 2016. The allowance for loan loss at September 30, 2016 was $24.6 million or 1.01% of total loans compared to $22.7 million or 1.10% of total loans at December 31, 2015.

OREO

As of September 30, 2016 and December 31, 2015, the Bank held one OREO property, a $4.1 million multi-family property located outside of California.

Capitalization
As of September 30, 2016, the Bank’s leverage ratio was 9.47%, the common equity tier 1 capital ratio was 10.05% and the total capital ratio was 14.48%. As of December 31, 2015, the Bank’s leverage ratio was 10.46%, the common equity tier 1 ratio was 11.03% and the total risk based capital ratio was 12.00%.

Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s third quarter 2016 financial results will be held tomorrow, October 20th  at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 866-652-5200 (domestic) or 412-317-6060 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank’s website at www.preferredbank.com. Web participants are encouraged to go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

Preferred Bank’s Chairman and CEO Li Yu,  President and COO Wellington Chen, Chief Financial Officer Edward J. Czajka, and Chief Credit Officer Nick Pi will be present to discuss Preferred Bank’s financial results, business highlights and outlook. After the live webcast, a replay will remain available in the Investor Relations section of Preferred Bank’s website. A replay of the call will also be available at 877-344-7529 (domestic) or 412-317-0088 (international) through November 4, 2016; the passcode is 10094338.

About Preferred Bank

Preferred Bank is one of the larger independent commercial banks in California. The bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Company conducts its banking business from its main office in Los Angeles, California, and through eleven full-service branch banking offices in the California cities of Alhambra, Century City,  City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera, Tarzana and San Francisco, and one office in Flushing New York. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank’s results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2015 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at www.preferredbank.com.

Financial Tables to Follow

 PREFERRED BANK 
 Condensed Consolidated Statements of Operations 
 (unaudited) 
 (in thousands, except for net income per share and shares) 
                   
                   
           For the Quarter Ended 
          September 30,   June 30,   September 30,
            2016       2016       2015  
Interest income:             
   Loans, including fees    $   29,547     $   27,892     $   22,812  
   Investment securities        2,216         1,722         1,531  
   Fed funds sold        125         109         37  
     Total interest income        31,889         29,723         24,380  
                   
Interest expense:             
   Interest-bearing demand        1,309         1,051         794  
   Savings        19         18         14  
   Time certificates        2,897         2,661         1,929  
   FHLB borrowings        66         67         46  
   Subordinated debit issuance        1,102         186         –  
     Total interest expense        5,394         3,982         2,783  
     Net interest income        26,495         25,741         21,597  
Provision for loan losses        1,400         2,300         500  
     Net interest income after provision for             
       loan losses        25,095         23,441         21,097  
                   
Noninterest income:             
   Fees & service charges on deposit accounts        322         338         290  
   Trade finance income        686         669         380  
   BOLI income        86         89         85  
   Net gain on sale of investment securities        –         –         –  
   Other income        257         564         185  
     Total noninterest income        1,350         1,660         940  
                   
Noninterest expense:             
   Salary and employee benefits        6,066         6,065         4,893  
   Net occupancy expense        1,161         1,267         908  
   Business development and promotion expense        231         152         133  
   Professional services        1,434         1,409         1,289  
   Office supplies and equipment expense        345         376         267  
   Other real estate owned related (income)expense  and valuation allowance on LHFS        196         243         (19 )
   Other        1,054         1,279         1,269  
     Total noninterest expense        10,486         10,791         8,740  
     Income before provision for income taxes        15,959         14,310         13,297  
Income tax expense        6,080         5,724         5,396  
     Net income    $   9,879     $   8,586     $   7,901  
                   
Dividend and earnings allocated to participating securities        (155 )       (137 )       (146 )
Net income available to common shareholders    $   9,724     $   8,449     $   7,755  
                   
Income per share available to common shareholders             
     Basic    $   0.70     $   0.61     $   0.57  
     Diluted    $   0.69     $   0.61     $   0.57  
                   
Weighted-average common shares outstanding             
     Basic        13,899,986         13,851,081         13,509,986  
     Diluted        13,997,343         13,957,117         13,690,228  
                   
Dividends per share    $   0.15     $   0.15     $   0.12  

 

 PREFERRED BANK 
 Condensed Consolidated Statements of Operations 
 (unaudited) 
 (in thousands, except for net income per share and shares) 
                   
                   
          For the Nine Months Ended    
          September 30,   September 30,    Change 
            2016       2015     %
 Interest income:             
   Loans, including fees    $   82,900     $   64,443       28.6 %
   Investment securities        5,722         4,719       21.3 %
   Fed funds sold        311         117       166.2 %
     Total interest income        88,933         69,279       28.4 %
                   
 Interest expense:             
   Interest-bearing demand        3,410         2,289       49.0 %
   Savings        55         44       26.0 %
   Time certificates        7,872         5,305       48.4 %
   FHLB borrowings        192         112       71.0 %
   Subordinated debit issuance        1,288         –       100.0 %
     Total interest expense        12,818         7,751       65.4 %
     Net interest income        76,115         61,527       23.7 %
 Provision for credit losses        4,500         1,500       200.0 %
     Net interest  income after provision for             
      loan losses        71,615         60,028       19.3 %
                   
 Noninterest income:             
   Fees & service charges on deposit accounts        954         925       3.2 %
   Trade finance income        1,771         1,177       50.4 %
   BOLI income        259         253       2.4 %
   Net gain on sale of investment securities        36         –       100.0 %
   Other income        1,152         584       97.2 %
     Total noninterest income        4,173         2,939       42.0 %
                   
 Noninterest expense:             
   Salary and employee benefits        19,153         15,712       21.9 %
   Net occupancy expense        3,631         2,657       36.7 %
   Business development and promotion expense        604         366       65.0 %
   Professional services        3,805         3,547       7.3 %
   Office supplies and equipment expense        1,072         784       36.7 %
   Other real estate owned related expense(income) and valuation allowance on LHFS        638         (481 )     -232.6 %
   Other          3,413         3,235       5.5 %
     Total noninterest expense        32,315         25,820       25.2 %
     Income before provision for income taxes        43,473         37,147       17.0 %
 Income tax expense        17,165         14,967       14.7 %
     Net income    $   26,308     $   22,180       18.6 %
                   
 Dividend and earnings allocated to participating securities        (413 )       (391 )     5.5 %
 Net income available to common shareholders    $   25,895     $   21,789       18.8 %
                   
 Income per share available to common shareholders             
     Basic    $   1.87     $   1.62       15.7 %
     Diluted    $   1.86     $   1.60       16.2 %
                   
 Weighted-average common shares outstanding             
     Basic        13,849,504         13,462,247       2.9 %
     Diluted        13,956,298         13,648,442       2.3 %
                   
 Dividends per share    $   0.45     $   0.36       25.0 %

 

 PREFERRED BANK 
 Condensed Consolidated Statements of Financial Condition 
 (unaudited) 
 (in thousands) 
             
             
        September 30,   December 31,
          2016       2015  
        (Unaudited)   (Audited)
Assets         
             
 Cash and due from banks  $   325,522     $   296,175  
 Fed funds sold      80,000         13,000  
   Cash and cash equivalents      405,522         309,175  
             
 Securities held to maturity, at amortized cost      4,812         5,830  
 Securities available-for-sale, at fair value      203,272         169,502  
 Loans and leases      2,432,667         2,059,392  
 Less allowance for loan and lease losses      (24,556 )       (22,658 )
 Less net deferred loan fees      (1,913 )       (3,012 )
   Net loans and leases      2,406,198         2,033,722  
             
 Other real estate owned      4,112         4,112  
 Customers’ liability on acceptances      1,494         897  
 Bank furniture and fixtures, net      5,424         5,601  
 Bank-owned life insurance      8,767         8,763  
 Accrued interest receivable      8,859         8,128  
 Investment in affordable housing      24,278         16,052  
 Federal Home Loan Bank stock      9,331         7,162  
 Deferred tax assets      22,944         23,802  
 Income tax receivable      –         299  
 Other asset      5,411         5,801  
   Total assets  $   3,110,424     $   2,598,846  
             
             
Liabilities and Shareholders’ Equity       
             
 Liabilities:         
 Deposits:         
   Demand  $   575,388     $   558,906  
   Interest-bearing demand    945,358       748,918  
   Savings    31,344       30,703  
   Time certificates of $250,000 or more    416,807       321,537  
   Other time certificates    691,099       626,495  
  Total deposits  $   2,659,996     $   2,286,559  
   Acceptances outstanding      1,494         897  
   Advances from Federal Home Loan Bank      26,544         26,635  
   Subordinated debt issuance      98,851         –  
   Commitments to fund investment in affordable housing partnership      11,015         3,958  
   Accrued interest payable      4,193         1,919  
   Other liabilities      17,064         14,733  
    Total liabilities      2,819,157         2,334,701  
             
 Commitments and contingencies       
 Shareholders’ equity:       
   Preferred stock. Authorized 25,000,000 shares; no issued and outstanding       
     shares at September 30, 2016 and December 31, 2015           
   Common stock, no par value. Authorized 100,000,000 shares; issued       
     and outstanding 14,135,907 and 13,884,942 shares at September 30, 2016
and December 31, 2015 , respectively 
    168,331         166,560  
   Treasury stock      (19,115 )       (19,115 )
   Additional paid-in-capital      39,214         34,672  
   Accumulated income      100,813         81,046  
   Accumulated other comprehensive income:       
    Unrealized gain on securities, available-for-sale, net of tax of $1,469 and
$713 at September 30, 2016 and December 31, 2015, respectively
    2,024         982  
     Total shareholders’ equity      291,267         264,145  
   Total liabilities and shareholders’ equity  $   3,110,424     $   2,598,846  

 

 PREFERRED BANK 
 Selected Consolidated Financial Information 
 (unaudited) 
 (in thousands, except for ratios) 
                         
                         
                         
        For the Quarter Ended
        September 30,   June 30,   March 31,   December 31,   September 30,
          2016       2016       2016       2015       2015  
 Unaudited historical quarterly operations data:                   
   Interest income  $   31,889     $   29,723     $   27,321     $   25,423     $   24,380  
   Interest expense      5,394         3,982         3,442         3,105         2,783  
     Interest income before provision for credit losses      26,495         25,741         23,879         22,318         21,597  
   Provision for credit losses      1,400         2,300         800         300         500  
   Noninterest income      1,350         1,660         1,163         954         940  
   Noninterest expense      10,486         10,791         11,038         9,890         8,740  
   Income tax expense      6,080         5,724         5,361         5,518         5,396  
     Net income      9,879         8,586         7,843         7,563         7,901  
                         
   Earnings per share                   
     Basic  $   0.70     $   0.61     $   0.56     $   0.55     $   0.57  
     Diluted  $   0.69     $   0.61     $   0.56     $   0.54     $   0.57  
                         
 Ratios for the period:                   
   Return on average assets    1.31 %     1.26 %     1.21 %     1.28 %     1.42 %
   Return on beginning equity    13.92 %     12.62 %     11.94 %     11.67 %     12.55 %
   Net interest margin (Fully-taxable equivalent)    3.59 %     3.87 %     3.79 %     3.88 %     4.00 %
   Noninterest expense to average assets    1.39 %     1.58 %     1.70 %     1.67 %     1.58 %
   Efficiency ratio    37.66 %     39.38 %     44.08 %     42.50 %     38.78 %
   Net charge-offs (recoveries) to average loans (annualized)    0.14 %     0.36 %     -0.04 %     0.36 %     0.05 %
                         
 Ratios as of period end:                   
   Tier 1 leverage capital ratio    9.47 %     10.05 %     10.29 %     10.46 %     11.47 %
   Common equity tier 1 risk-based capital ratio    10.05 %     10.41 %     10.74 %     11.03 %     11.80 %
   Tier 1 risk-based capital ratio    10.05 %     10.41 %     10.74 %     11.03 %     11.80 %
   Total risk-based capital ratio    14.48 %     13.65 %     11.70 %     12.00 %     12.93 %
   Allowances for credit losses to loans and leases at end of period    1.01 %     1.06 %     1.10 %     1.10 %     1.31 %
   Allowance for credit losses to non-performing                   
     loans and leases    1460.49 %     722.47 %     2346.18 %     1140.29 %     303.27 %
                         
 Average balances:                   
   Total loans and leases  $   2,344,102     $   2,248,652     $   2,067,047     $   1,876,544     $   1,741,762  
   Earning assets  $   2,953,325     $   2,687,435     $   2,550,821     $   2,297,154     $   2,160,075  
   Total assets  $   3,009,457     $   2,746,031     $   2,605,907     $   2,345,319     $   2,201,060  
   Total deposits  $   2,590,701     $   2,400,756     $   2,291,764     $   2,039,567     $   1,907,719  
                                         
(1) Risk-based capital ratios were calculated under BASEL III rules, which became effective on January 1, 2015.  Ratios for the prior periods were calculated under Basel I rules. 

 PREFERRED BANK 
 Selected Consolidated Financial Information 
 (in thousands, except for ratios) 
             
             
             
        For the Nine Months Ended
        September 30,   September 30,
          2016       2015  
   Interest income  $   88,933     $   69,279  
   Interest expense      12,818         7,751  
     Interest income before provision for credit losses      76,115         61,527  
   Provision for credit losses      4,500         1,500  
   Noninterest income      4,173         2,939  
   Noninterest expense      32,315         25,820  
   Income tax expense      17,165         14,967  
     Net income      26,308         22,180  
             
   Earnings per share       
     Basic  $   1.87     $   1.62  
     Diluted  $   1.86     $   1.60  
             
 Ratios for the period:       
   Return on average assets    1.26 %     1.38 %
   Return on beginning equity    13.30 %     12.62 %
   Net interest margin (Fully-taxable equivalent)    3.74 %     3.95 %
   Noninterest expense to average assets    1.55 %     1.61 %
   Efficiency ratio    40.25 %     40.05 %
   Net charge-offs (recoveries) to average loans    0.16 %     0.03 %
             
 Average balances:       
   Total loans and leases  $   2,220,438     $   1,676,320  
   Earning assets  $   2,731,362     $   2,098,549  
   Total assets  $   2,787,977     $   2,144,830  
   Total deposits  $   2,428,402     $   1,858,592  

 

 PREFERRED BANK 
 Selected Consolidated Financial Information 
 (unaudited) 
 (in thousands, except for ratios) 
                         
                         
                         
        As of 
                         
        September 30,   June 30,   March 31,   December 31,   September 30,
          2016       2016       2016       2015       2015  
 Unaudited quarterly statement of financial position data:                   
 Assets:                   
   Cash and cash equivalents  $   405,522     $   376,485     $   293,547     $   309,175     $   232,707  
   Securities held-to-maturity, at amortized cost      4,812         5,143         5,550         5,830         6,307  
   Securities available-for-sale, at fair value      203,272         201,256         162,654         169,502         164,378  
   Loans and Leases:                   
     Real estate – Single and multi-family residential  $   493,489     $   393,076     $   401,708     $   415,003     $   328,124  
     Real estate – Land for housing      14,796         14,817         14,838         14,408         14,429  
     Real estate – Land for income properties      1,809         6,316         1,816         1,795         1,876  
     Real estate – Commercial      1,037,687         995,213         924,913         861,317         770,494  
     Real estate – For sale housing construction      104,973         95,519         82,153         73,858         79,406  
     Real estate – Other construction      96,147         72,963         66,636         57,546         48,438  
     Commercial and industrial      659,306         659,701         626,599         596,887         555,680  
     Trade finance and other      24,460         34,625         39,323         38,578         38,602  
       Gross loans      2,432,667         2,272,230         2,157,986         2,059,392         1,837,049  
   Allowance for loan and lease losses      (24,556 )       (23,983 )       (23,681 )       (22,658 )       (24,055 )
   Net deferred loan fees      (1,913 )       (3,682 )       (3,065 )       (3,012 )       (2,476 )
     Total loans, net  $   2,406,198     $   2,244,565     $   2,131,240     $   2,033,722     $   1,810,518  
                       
   Other real estate owned  $   4,112     $   4,112     $   4,112     $   4,112     $   –  
   Investment in affordable housing      24,278         24,886         25,499         16,052         16,589  
   Federal Home Loan Bank stock      9,331         9,332         6,965         7,162         6,677  
   Other assets      52,899         49,862         53,783         53,291         45,370  
     Total assets  $   3,110,424     $   2,915,641     $   2,683,350     $   2,598,846     $   2,282,546  
                   
 Liabilities:                   
   Deposits:                   
     Demand  $   575,388     $   540,374     $   528,126     $   558,906     $   477,523  
     Interest-bearing demand    945,358       855,661       803,374       748,918       697,402  
     Savings    31,344       29,031       30,002       30,703       21,159  
     Time certificates of $250,000 or more    416,807       398,736       339,971       321,537       263,949  
     Other time certificates    691,099       692,063       656,386       626,495       527,602  
      Total deposits  $   2,659,996     $   2,515,865     $   2,357,859     $   2,286,559     $   1,987,635  
                     
   Advances from Federal Home Loan Bank  $   26,544     $   26,573     $   26,601     $   26,635     $   20,000  
   Subordinated debt issuance      98,851         61,475         –          –          –   
   Commitments to fund investment in affordable housing partnership      11,015         11,454         11,454         3,958         4,139  
   Other liabilities      22,751         17,922         13,862         17,549         13,590  
     Total liabilities  $   2,819,157     $   2,633,289     $   2,409,776     $   2,334,701     $   2,025,364  
                   
 Equity:                   
   Net common stock, no par value  $   188,430     $   187,212     $   185,780     $   182,118     $   180,310  
   Retained earnings      100,813         93,119         86,716         81,046         75,629  
   Accumulated other comprehensive income      2,024         2,021         1,079         982         1,243  
     Total shareholders’ equity  $   291,267     $   282,352     $   273,574     $   264,145     $   257,182  
     Total liabilities and shareholders’ equity  $   3,110,424     $   2,915,641     $   2,683,350     $   2,598,846     $   2,282,546  

 

Preferred Bank
Loan and Credit Quality Information
               
Allowance For Credit Losses & Loss History
          Nine Months Ended   Year Ended
          September 30, 2016   December 31, 2015
           (Dollars in 000’s)
Allowance For Credit Losses        
Balance at Beginning of Period   $   22,658     $   22,974  
  Charge-Offs        
    Commercial & Industrial       4,322         1,475  
    Mini-perm Real Estate       –          1,793  
    Construction – Residential       –          –   
    Construction – Commercial       –          –   
    Land – Residential       –          –   
    Land – Commercial       –          –   
    Others       –          –   
      Total Charge-Offs       4,322         3,268  
               
  Recoveries        
    Commercial & Industrial       983         131  
    Mini-perm Real Estate       –          144  
    Construction – Residential       –          –   
    Construction – Commercial       26         20  
    Land – Residential       –          100  
    Land – Commercial       711         757  
      Total Recoveries       1,720         1,152  
               
  Net Loan Charge-Offs       2,602         2,116  
  Provision for Credit Losses       4,500         1,800  
Balance at End of Period   $   24,556     $   22,658  
Average Loans and Leases   $   2,220,438     $   1,731,871  
Loans and Leases at end of Period   $   2,432,667     $   2,059,392  
Net Charge-Offs to Average Loans and Leases     0.16 %     0.12 %
Allowances for credit losses to loans and leases at end of period     1.01 %     1.10
CONTACT: AT THE COMPANY:
Edward J. Czajka	
Executive Vice President
Chief Financial Officer
(213) 891-1188	

AT FINANCIAL PROFILES:
Kristen Papke
General Information
(310) 663-8007
kpapke@finprofiles.com
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