LOS ANGELES, Oct. 24, 2017 (GLOBE NEWSWIRE) — Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended September 30, 2017. Preferred Bank (“the Bank”) reported net income of $13.7 million or $0.94 per diluted share for the third quarter of 2017. This compares to net income of $9.9 million or $0.69 per diluted share for the third quarter of 2016 and compares to net income of $11.7 million or $0.80 per diluted share for the second quarter of 2017. The increase over the same period last year was primarily due to an increase in net interest income of $8.9 million and the increase over the prior quarter was due to an increase in net interest income as well as a decrease in noninterest expense. Interest income this quarter was aided by net interest recoveries of $1.4 million primarily from a recession-era loan charge-off. On a pre-tax basis, operating income rose by 22.4% over the prior quarter and rose by 45.3% over the same quarter last year.

Highlights from the third quarter of 2017:

  • Return on average assets
  1.48 %
  • Return on beginning equity
  17.77 %
  • Efficiency ratio
  33.2 %
  • Net interest margin
  3.95 %
  • Linked quarter deposit growth 
  $73.2 million or 2.3%
  • Linked quarter loan growth
  $88.6 million or 3.2%

Li Yu, Chairman and CEO commented, “We achieved another record high for quarterly earnings for the third quarter of 2017.  Net income was $13.7 million or $0.94 per diluted share compared to $9.9 million or $0.69 per diluted share for the same quarter last year. This represents an increase of $3.8 million or 38.4%.

“During the third quarter we had a recoveries of interest income of $1.4 million as we collected in full on a loan written off several years ago.  Without this recovery diluted EPS would have been approximately $.058 lower, the net interest margin would have been approximately 16 basis points lower and the efficiency ratio would have been approximately 1.6 percentage points higher than what was reported.

“Our growth rate has moderated this quarter.  Loans increased $89 million or 3.2% on a linked quarter basis as we have seen a higher level of pay-offs.  Deposits increased $73 million or 2.3% on a linked quarter basis which is slightly below our more recent growth rate and this is partially because we chose not to renew some brokered deposits which matured during the quarter. The Bank’s loan pipeline, however, remains consistent with prior quarters.

“On October 4, we began the process of issuing common stock through an “At the Market” issuance mechanism.   As of October 20, a total of 168,686 shares had been issued.  We expect our goal of $50 million in new capital will be completed either in the fourth quarter of 2017 or the first quarter of 2018.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $35.4 million for the third quarter of 2017. This compares favorably to the $26.5 million recorded in the third quarter of 2016 and to the $31.3 million recorded in the second quarter of 2017. The increase over both comparable periods is due to loan growth, increases in both the fed funds and Prime interest rates as well as an interest recovery of $1.4 million recorded this quarter related to a recession-era charge-off. The Bank’s taxable equivalent net interest margin was 3.95% for the third quarter of 2017, a 20 basis point increase over the 3.75% achieved in the second quarter of 2017 and a 36 basis point increase from the 3.59% achieved in the third quarter of 2016. The increase in the net interest margin was impacted by the $1.4 million interest recovery, and the margin for the quarter, excluding this item, would have been 16 basis points less.

Noninterest Income. For the third quarter of 2017, noninterest income was $1,243,000 compared with $1,350,000 for the same quarter last year and compared to $1,275,000 for the second quarter of 2017. Service charges on deposits were $299,000, basically flat compared to the $304,000 recorded in the second quarter of 2017 and down slightly from the $322,000 posted in the third quarter of 2016. Letter of Credit fee income was $632,000 for the third quarter of 2017, a decrease of $54,000 compared to the same period last year and an increase of $51,000 compared to the second quarter of 2017 as Letters of Credit activity stabilized. Other income was $224,000, a decrease from the $257,000 recorded in the same period last year and from the $303,000 recorded in the second quarter of 2017.

Noninterest Expense. Total noninterest expense was $12.2 million for the third quarter of 2017, an increase of $1.7 million over the same period last year and a decrease of $234,000 from the second quarter of 2017. Salaries and benefits expense totaled $7.9 million for the third quarter of 2017 compared to $6.1 million recorded for the same period last year and compared to the $7.7 million recorded in the second quarter of 2017. The increase over the same period last year was due primarily to staffing/merit increases, a larger bonus accrual and a reduction in capitalized loan origination costs while the increase over the prior quarter was due mainly to an increase in the bonus accrual. Occupancy expense totaled $1.3 million for the third quarter of 2017 and was up slightly over the $1.2 million recorded in both the same period last year and the second quarter of 2017. Professional services expense was $963,000 for the third quarter of 2017 compared to $1.4 million in the third quarter of 2016 and also down from the $1.0 million recorded in the second quarter of 2017. The decrease compared to the same period last year was due to a reduction in legal expenses. The Bank incurred $168,000 in costs related to its one OREO property and this compares to OREO expense of $196,000 in the third quarter of 2016 and $118,000 in the second quarter of 2017. Other expenses were $1.3 million for the third quarter of 2017, up from the $1.1 million posted in the third quarter of 2016 but a decrease of $544,000 from the $1.9 million recorded in the second quarter of 2017. The Bank’s efficiency ratio came in at 33.2% for the quarter.

Income Taxes

The Bank recorded a provision for income taxes of $9.5 million for the third quarter of 2017. This represents an effective tax rate (“ETR”) of 41.04% for the quarter. This is up from the ETR of 38.1% recorded for both the third quarter of 2016 and the second quarter of 2017. The relatively low ETR in the first quarter of 2017 was due the adoption of Accounting Standards Update (ASU) 2016-09 which resulted in an excess tax benefit from share-based compensation and a $768,000 net tax benefit on the income statement. The ETR increased this quarter due mainly to last quarter’s $154,000 reversal of ASC 740-10 expense recognized in earlier years for tax positions related to its California Net Interest deduction for Lenders as well as an excess tax benefit recognized from share based compensation of $398,000.

Balance Sheet Summary

Total gross loans and leases at September 30, 2017 were $2.88 billion, an increase of $335.1 million or 13.2% over the total of $2.54 billion as of December 31, 2016. Total deposits as of September 30, 2017 were $3.19 billion, an increase of $430.8 million or 15.6% over the $2.76 billion at December 31, 2016. Total assets as of  September 30, 2017 were $3.67 billion, an increase of $443.9 million or 13.8% over the $3.22 billion as of December 31, 2016.

Asset Quality

Loans
As of September 30, 2017 nonaccrual loans totaled $6.9 million, up slightly from the $6.5 million reported as of June 30, 2017 but down from the $7.6 million total as of December 31, 2016. Total net charge-offs for the third quarter of 2017 were $408,000 as compared to $1.2 million in the second quarter of 2017 and compared to $827,000 in the third quarter of 2016. The Bank recorded a provision for loan losses of $1.3 million for the third quarter of 2017, down slightly from the $1.4 million provision recorded in the same quarter last year but up from the $1.2 million provision recorded in the second quarter of 2017. The allowance for loan loss at September 30, 2017 was $28.8 million or 1.00% of total loans compared to $26.5 million or 1.04% of total loans at December 31, 2016.

OREO

As of September 30, 2017 and December 31, 2016, the Bank held one OREO property, a $4.1 million multi-family property located outside of California.

Capitalization
As of September 30, 2017, the Bank’s leverage ratio was 8.54%, the common equity tier 1 capital ratio was 9.24% and the total capital ratio was 13.08%. As of December 31, 2016, the Bank’s leverage ratio was 9.43%, the common equity tier 1 ratio was 9.83% and the total risk based capital ratio was 14.09%.

Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s third quarter 2017 financial results will be held tomorrow, October 25th at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (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 8, 2017; the passcode is 10113085.

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 ten 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 2016 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.

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
[email protected]

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,
            2017       2017       2016  
 Interest income:             
   Loans, including fees    $   39,362     $   34,941     $   29,548  
   Investment securities        3,172         2,940         2,216  
   Fed funds sold        320         232         125  
     Total interest income        42,854         38,113         31,889  
                   
 Interest expense:             
     Interest-bearing demand        2,263         1,944         1,309  
     Savings        17         17         19  
     Time certificates        3,601         3,283         2,898  
     FHLB borrowings        21         60         66  
     Subordinated debit        1,530         1,531         1,102  
           Total interest expense        7,432         6,835         5,394  
           Net interest income        35,422         31,278         26,495  
 Provision for loan losses        1,300         1,200         1,400  
           Net interest  income after provision for             
       loan losses        34,122         30,078         25,095  
                   
 Noninterest income:             
      Fees & service charges on deposit accounts        299         304         322  
      Letters of credit fee income        632         581         686  
      BOLI income        88         87         85  
      Net gain on sale of investment securities        –         0         –  
      Other income        224         303         257  
           Total noninterest income        1,243         1,275         1,350  
                   
 Noninterest expense:             
      Salary and employee benefits        7,878         7,673         6,067  
      Net occupancy expense        1,257         1,214         1,161  
      Business development and promotion expense        251         188         230  
      Professional services        963         1,038         1,434  
      Office supplies and equipment expense        334         310         345  
      Other real estate owned related expense        168         118         196  
      Other          1,328         1,873         1,053  
     Total noninterest expense        12,179         12,414         10,486  
     Income before provision for income taxes        23,186         18,939         15,959  
 Income tax expense        9,516         7,222         6,080  
     Net income    $   13,670     $   11,717     $   9,879  
                   
 Dividend and earnings allocated to participating securities        (161 )       (135 )       (157 )
 Net income available to common shareholders    $   13,509     $   11,582     $   9,722  
                   
 Income per share available to common shareholders             
    Basic    $   0.94     $   0.81     $   0.70  
     Diluted    $   0.94     $   0.80     $   0.69  
                   
 Weighted-average common shares outstanding             
     Basic        14,378,552         14,348,310         13,899,966  
     Diluted        14,426,522         14,407,317         13,997,343  
                   
 Dividends per share    $   0.20     $   0.20     $   0.15  
                   

 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 
            2017       2016     %
 Interest income:             
   Loans, including fees    $   106,222     $   82,900     28.1 %
   Investment securities        8,594         5,722     50.2 %
   Fed funds sold        783         311     151.6 %
     Total interest income        115,599         88,933     30.0 %
                   
 Interest expense:             
   Interest-bearing demand        5,672         3,410     66.3 %
   Savings        55         55     -0.2 %
   Time certificates        9,992         7,873     26.9 %
   FHLB borrowings        146         192     -23.9 %
   Subordinated debit issuance        4,592         1,288     100.0 %
     Total interest expense        20,457         12,818     59.6 %
     Net interest income        95,142         76,115     25.0 %
 Provision for credit losses        4,000         4,500     -11.1 %
     Net interest  income after provision for             
        loan losses        91,142         71,615     27.3 %
                   
 Noninterest income:             
   Fees & service charges on deposit accounts        956         954     0.2 %
   Letters of credit fee income        2,008         1,771     13.4 %
   BOLI income        262         259     1.2 %
   Net gain on sale of investment securities        0         36     100.0 %
   Other income        1,382         1,153     19.9 %
     Total noninterest income        4,608         4,173     10.4 %
                   
 Noninterest expense:             
   Salary and employee benefits        23,060         19,153     20.4 %
   Net occupancy expense        3,653         3,631     0.6 %
   Business development and promotion expense        679         604     12.4 %
   Professional services        3,163         3,805     -16.9 %
   Office supplies and equipment expense        997         1,072     -7.0 %
   Other real estate owned related expense        394         638     -38.3 %
   Other          5,825         3,412     70.7 %
     Total noninterest expense        37,771         32,315     16.9 %
     Income before provision for income taxes        57,979         43,473     33.4 %
 Income tax expense        22,311         17,165     30.0 %
     Net income    $   35,668     $   26,308     35.6 %
                   
 Dividend and earnings allocated to participating securities        (409 )       (415 )   -1.4 %
 Net income available to common shareholders    $   35,259     $   25,893     36.2 %
                   
 Income per share available to common shareholders             
     Basic    $   2.46     $   1.87     31.5 %
     Diluted    $   2.45     $   1.86     31.9 %
                   
 Weighted-average common shares outstanding             
     Basic        14,347,396         13,849,504     3.6 %
     Diluted        14,405,770         13,956,298     3.2 %
                   
 Dividends per share    $   0.58     $   0.45     28.9 %
                   

 PREFERRED BANK 
 Condensed Consolidated Statements of Financial Condition 
 (unaudited) 
 (in thousands) 
               
               
         September 30,   December 31,  
          2017       2016    
        (Unaudited)   (Audited)  
 Assets           
               
 Cash and due from banks  $   413,040     $   306,330    
 Fed funds sold      90,200         97,500    
 Cash and cash equivalents        503,240         403,830    
               
 Securities held to maturity, at amortized cost      9,076         10,337    
 Securities available-for-sale, at fair value      193,890         199,833    
 Loans and leases      2,878,599         2,543,549    
 Less allowance for loan and lease losses      (28,756 )       (26,478 )  
 Less net deferred loan fees      (3,376 )       (1,682 )  
 Net loans and leases      2,846,467         2,515,389    
               
 Other real estate owned      4,112         4,112    
 Customers’ liability on acceptances      5,394         772    
 Bank furniture and fixtures, net      5,574         5,313    
 Bank-owned life insurance      9,004         8,825    
 Accrued interest receivable      10,477         9,550    
 Investment in affordable housing      35,939         23,670    
 Federal Home Loan Bank stock      11,077         9,331    
 Deferred tax assets      25,372         26,605    
 Other asset      5,850         4,031    
 Total assets  $   3,665,472     $   3,221,598    
               
               
 Liabilities and Shareholders’ Equity         
               
 Liabilities:         
 Deposits:           
 Demand  $   599,722     $   586,272    
 Interest-bearing demand    1,298,895       1,019,058    
 Savings    27,132       34,067    
 Time certificates of $250,000 or more    617,231       427,172    
 Other time certificates    651,502       697,155    
 Total deposits  $   3,194,482     $   2,763,724    
 Acceptances outstanding      5,394         772    
 Advances from Federal Home Loan Bank      6,431         26,516    
 Subordinated debt issuance      98,932         98,839    
 Commitments to fund investment in affordable housing partnership          20,684         10,632    
 Accrued interest payable      4,542         3,199    
Other liabilities      17,982         19,851    
 Total liabilities      3,348,447         2,923,533    
               
 Commitments and contingencies               
 Shareholders’ equity:               
 Preferred stock. Authorized 25,000,000 shares; issued and no outstanding
shares at September 30, 2017 and December 31, 2016 
  —        —     
 Common stock, no par value. Authorized 100,000,000 shares; issued and
 outstanding 14,561,088 at September 30, 2017 and 14,232,907 at December 31, 2016, respectively. 
    174,171         169,861    
 Treasury stock      (33,233 )       (19,115 )  
 Additional paid-in-capital      39,762         39,929    
 Accumulated income      135,497         108,261    
 Accumulated other comprehensive income (loss):             
 Unrealized gain (loss) on securities, available-for-sale, net of tax of $601
 and $(632) at September 30, 2017 and December 31, 2016, respectively
    828         (871 )  
 Total shareholders’ equity      317,025         298,065    
 Total liabilities and shareholders’ equity  $   3,665,472     $   3,221,598    
               

 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,  
          2017     2017     2017     2016     2016    
 Unaudited historical quarterly operations data:             
   Interest income  $   42,854   $   38,113   $   34,632   $   33,980   $   31,889    
   Interest expense      7,432       6,835       6,190       5,916       5,394    
     Interest income before provision for credit losses      35,422       31,278       28,442       28,064       26,495    
   Provision for credit losses      1,300       1,200       1,500       1,900       1,400    
   Noninterest income      1,243       1,275       2,090       1,286       1,350    
   Noninterest expense      12,179       12,414       13,178       11,223       10,486    
   Income tax expense      9,516       7,222       5,573       6,166       6,080    
     Net income      13,670       11,717       10,281       10,061       9,879    
                   
   Earnings per share             
     Basic  $   0.94   $   0.81   $   0.71   $   0.71   $   0.70    
     Diluted  $   0.94   $   0.80   $   0.71   $   0.71   $   0.69    
                   
 Ratios for the period:             
   Return on average assets    1.48 %   1.36 %   1.29 %   1.28 %   1.31 %  
   Return on beginning equity    17.77 %   15.96 %   13.99 %   13.74 %   13.92 %  
   Net interest margin (Fully-taxable equivalent)    3.95 %   3.75 %   3.67 %   3.67 %   3.59 %  
   Noninterest expense to average assets    1.32 %   1.44 %   1.66 %   1.43 %   1.39 %  
   Efficiency ratio    33.22 %   38.13 %   43.16 %   38.24 %   37.66 %  
   Net charge-offs (recoveries) to average loans (annualized)    0.06 %   0.18 %   0.02 %   0.00 %   0.14 %  
                   
 Ratios as of period end:             
   Tier 1 leverage capital ratio    8.54 %   8.69 %   9.01 %   9.43 %   9.47 %  
   Common equity tier 1 risk-based capital ratio    9.24 %   9.13 %   9.15 %   9.83 %   9.96 %  
   Tier 1 risk-based capital ratio    9.24 %   9.13 %   9.15 %   9.83 %   9.96 %  
   Total risk-based capital ratio    13.08 %   13.04 %   13.21 %   14.09 %   14.36 %  
   Allowances for credit losses to loans and leases at end of period    1.00 %   1.00 %   1.04 %   1.04 %   1.01 %  
   Allowance for credit losses to non-performing             
           loans and leases    415.32 %   426.43 %   357.09 %   346.22 %   1460.49 %  
                   
 Average balances:             
   Total loans and leases  $   2,817,271   $   2,695,208   $   2,563,473   $   2,465,492   $   2,344,102    
   Earning assets  $   3,579,578   $   3,401,193   $   3,167,031   $   3,066,189   $   2,953,325    
   Total assets  $   3,658,835   $   3,466,094   $   3,228,142   $   3,124,984   $   3,009,457    
   Total deposits  $   3,190,344   $   3,002,583   $   2,775,830   $   2,666,878   $   2,590,702    
                   

 

 PREFERRED BANK   
 Selected Consolidated Financial Information   
 (in thousands, except for ratios)   
               
               
               
        For the Nine Months Ended  
        September 30,   September 30,  
          2017       2016    
   Interest income  $   115,599     $   88,933    
   Interest expense      20,457         12,818    
     Interest income before provision for credit losses      95,142         76,115    
   Provision for credit losses      4,000         4,500    
   Noninterest income      4,608         4,173    
   Noninterest expense      37,771         32,315    
   Income tax expense      22,311         17,165    
     Net income      35,668         26,308    
               
   Earnings per share         
     Basic  $   2.46     $   1.87    
     Diluted  $   2.45     $   1.86    
               
 Ratios for the period:         
   Return on average assets    1.38 %     1.26 %  
   Return on beginning equity    16.00 %     13.30 %  
   Net interest margin (Fully-taxable equivalent)    3.78 %     3.74 %  
   Noninterest expense to average assets    1.46 %     1.55 %  
   Efficiency ratio    37.87 %     40.25 %  
   Net charge-offs (recoveries) to average loans    0.09 %     0.16 %  
               
 Average balances:         
   Total loans and leases  $   2,692,928     $   2,220,438    
   Earning assets  $   3,384,472     $   2,731,363    
   Total assets  $   3,452,952     $   2,787,977    
   Total deposits  $   2,991,411     $   2,428,402    
               

 PREFERRED BANK 
 Selected Consolidated Financial Information 
 (unaudited) 
 (in thousands, except for ratios) 
                           
                           
                           
        As of 
                           
        September 30,   June 30,   March 31,   December 31,   September 30,  
          2017       2017       2017       2016       2016    
 Unaudited quarterly statement of financial position data:                     
 Assets:                       
   Cash and cash equivalents  $   503,240     $   502,534     $   450,355     $   403,830     $   405,522    
   Securities held-to-maturity, at amortized cost      9,076         9,611         9,912         10,337         4,812    
   Securities available-for-sale, at fair value      193,890         192,474         197,455         199,833         203,272    
   Loans and Leases:                     
   Real estate – Single and multi-family residential      507,738     $   494,725     $   479,279     $   490,683     $   493,489    
   Real estate – Land      15,723         16,512         16,546         16,575         16,605    
   Real estate – Commercial      1,279,981         1,217,254         1,160,077         1,047,321         1,037,687    
   Real estate – For sale housing construction      94,033         95,462         109,703         104,960         104,973    
   Real estate – Other construction      165,244         148,580         150,322         128,434         96,147    
   Commercial and industrial, trade finance and other      815,880         817,481         771,676         755,576         683,766    
        Gross loans      2,878,599         2,790,014         2,687,603         2,543,549         2,432,667    
   Allowance for loan and lease losses      (28,756 )       (27,863 )       (27,857 )       (26,478 )       (24,556 )  
   Net deferred loan fees      (3,376 )       (3,245 )       (2,572 )       (1,682 )       (1,913 )  
   Total loans, net  $   2,846,467     $   2,758,906     $   2,657,174     $   2,515,389     $   2,406,198    
                           
   Other real estate owned      $   4,112     $   4,112     $   4,112     $   4,112     $   4,112    
   Investment in affordable housing          35,939         37,029         22,904         23,670         24,278    
   Federal Home Loan Bank stock          11,077         11,078         9,330         9,331         9,331    
   Other assets          61,671         63,651         61,687         55,096         52,899    
   Total assets    $   3,665,472     $   3,579,395     $   3,412,929     $   3,221,598     $   3,110,424    
                           
 Liabilities:                       
   Deposits:                     
   Demand  $   599,722     $   641,153     $   576,060     $   586,272     $   575,388    
   Interest-bearing demand    1,298,895       1,231,595       1,137,145       1,019,058       945,358    
   Savings    27,132       27,870       34,434       34,067       31,344    
   Time certificates of $250,000 or more    617,231       535,211       495,177       427,172       416,807    
   Other time certificates    651,502       685,445       707,830       697,155       691,099    
     Total deposits  $   3,194,482     $   3,121,274     $   2,950,646     $   2,763,724     $   2,659,996    
                           
   Advances from Federal Home Loan Bank      $   6,431     $   6,459     $   26,487     $   26,516     $   26,544    
   Subordinated debt issuance      98,932         98,901         98,870         98,839         98,851    
   Commitments to fund investment in affordable housing partnership      20,684         20,966         10,354         10,632         11,015    
   Other liabilities          27,918         26,570         32,189         23,822         22,760    
  Total liabilities  $   3,348,447     $   3,274,170     $   3,118,546     $   2,923,533     $   2,819,166    
                           
 Equity:                         
   Net common stock, no par value  $   180,700     $   180,110     $   178,884     $   190,675     $   188,430    
   Retained earnings      135,497         124,740         115,931         108,261         100,804    
   Accumulated other comprehensive income      828         375         (432 )       (871 )       2,024    
  Total shareholders’ equity  $   317,025     $   305,225     $   294,383     $   298,065     $   291,258    
  Total liabilities and shareholders’ equity  $   3,665,472     $   3,579,395     $   3,412,929     $   3,221,598     $   3,110,424    
 

Preferred Bank    
Loan and Credit Quality Information    
                   
Allowance For Credit Losses & Loss History    
          Nine Months Ended   Year Ended    
          September 30, 2017   December 31, 2016    
           (Dollars in 000’s)    
Allowance For Credit Losses            
Balance at Beginning of Period   $   26,478     $   22,658      
  Charge-Offs            
    Commercial & Industrial       1,940         4,323      
    Mini-perm Real Estate       –          –       
    Construction – Residential       –          –       
    Construction – Commercial       –          –       
    Land – Residential       –          –       
    Land – Commercial       –          –       
    Others       –          –       
      Total Charge-Offs       1,940         4,323      
                   
  Recoveries            
    Commercial & Industrial       55         985      
    Mini-perm Real Estate       –          –       
    Construction – Residential       –          –       
    Construction – Commercial       17         26      
    Land – Residential       –          –       
    Land – Commercial       146         732      
      Total Recoveries       218         1,743      
                   
  Net Loan Charge-Offs       1,722         2,580      
  Provision for Credit Losses       4,000         6,400      
Balance at End of Period   $   28,756     $   26,478      
Average Loans and Leases   $   2,692,928     $   2,282,074      
Loans and Leases at end of Period   $   2,878,599         2,543,549      
Net Charge-Offs to Average Loans and Leases     0.09 %     0.11 %    
Allowances for credit losses to loans and leases at end of period     1.00 %     1.04 %