PFBC Preferred Bank

Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter and year ended December 31, 2016. Preferred Bank (“the Bank”) reported net income of $10.1 million or $0.71 per diluted share for the fourth quarter of 2016. This compares to net income of $7.6 million or $0.54 per diluted share for the fourth quarter of 2015 and compares to net income of $9.9 million or $0.69 per diluted share for the third quarter of 2016. Net income for the full year 2016 was $36.4 million, or $2.56 per diluted share, an increase in net income of $6.6 million or 22.3% over 2015.

Highlights from the fourth quarter of 2016:

Total assets		$3.22 billion
Linked quarter loan growth		$110.9 million or 4.6%
Linked quarter deposit growth		$103.7 million or 3.9%
Return on average assets		1.28	%
Return on beginning equity		13.74	%
Efficiency ratio		38.2	%
Net interest margin		3.67	%

Highlights from the year 2016:

Diluted EPS Growth		19.9	%
Loan growth		$484.2 million or 23.5%
Deposit growth		$477.2 million or 20.9%
Return on average assets		1.27	%
Return on beginning equity		13.77	%
Efficiency ratio		39.7	%
Net interest margin		3.72	%

Li Yu, Chairman and CEO commented, “2016 was one of the most successful years in Preferred Bank’s 25 year history. First and foremost, total shareholder return exceeded 60% for the year. Other financial highlights include year over year increases in total assets of 24.0%, total loans of 23.5% and total deposits of 20.9%. Of most importance was the 19.9% increase in diluted earnings per share. The Bank’s efficiency ratio also improved from 40.7% in 2015 to 39.7% in 2016. However, the net interest margin decreased to 3.72% in 2016 from 3.92% in 2015, the result of continuous loan pricing competition and the Bank’s issuance of $100 million in subordinated debt. For years now, we have been diligent in maintaining an asset sensitive balance sheet and as of 12/31/16, 80.3% of our loan portfolio is floating with the Prime rate and a further 13% is adjustable rate with LIBOR or other indices. We now sit in a most favorable position under a rising interest rate environment.

“For the fourth quarter of 2016, total loans increased $111 million or 4.6%, and total deposits increased $104 million or 3.9% on a linked quarter basis.

“End of the year loan funding and payoff activities seemed to be within our range of expectations. The loan pipeline appears to be consistent with prior quarters.

“The net interest margin improved from 3.59% for the third quarter to 3.67% for the fourth quarter, and is largely the result of change in leverage, or loan and deposit mix. The efficiency ratio, already among the industry’s best, ticked up slightly from 37.7% in the third quarter but still remains under 40%.

“Net income for the fourth quarter was $10.1 million or $0.71 per diluted share which was slightly higher than our expectations.

“2016 was a year in which we executed well but we also set in motion plans to prepare the Bank for the challenges ahead. We formed a new mortgage lending group which will enable us to diversify the loan portfolio and we expect this unit to be fully operational by the end of the first quarter of 2017. We also added $100 million of tier 2 capital in the form of subordinated debt which will allow the Bank to continue to grow the CRE portfolio.

“We were encouraged by the December FOMC rate increase. Entering the new year, we expect further growth and profitability, but remain always mindful of the many challenges that our industry faces.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $28.1 million for the fourth quarter of 2016. This compares favorably to the $22.3 million recorded in the fourth quarter of 2015 and to the $26.5 million recorded in the third 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 3.67% for the fourth quarter of 2016, a 21 basis point decrease from the 3.88% achieved in the fourth quarter of 2015 and  an 8 basis point increase from the 3.59% recorded in the third quarter of 2016. The decrease compared to the fourth quarter of 2015 is primarily due to the $100 million in subordinated debt issued in 2016 and the increase over the third quarter of 2016 was mainly due to loan growth and generally lower cash balances in the fourth quarter of 2016.

Noninterest Income. For the fourth quarter of 2016, noninterest income was $1,286,000 compared with $954,000 for the same quarter last year and compared to $1,350,000 for the third quarter of 2016. The increase over the fourth quarter of 2015 is primarily due to a gain on a called security of $133,000 in the fourth quarter of 2016. In addition, trade finance income, service charges on deposits and other income all posted modest increases over the third quarter of 2016.  The decrease from the third quarter of 2016 was due to lower service charges and trade finance income in the fourth quarter.

Noninterest Expense. Total noninterest expense was $11.2 million for the fourth quarter of 2016, an increase of $1.3 million over the same period last year and an increase of $737,000 over the $10.5 million recorded in the third quarter of 2016. Salaries and benefits expense totaled $6.7 million for the fourth quarter of 2016, an increase of $1.4 million over the $5.2 million recorded for the same period last year and $593,000 over the $6.1 million recorded in the third quarter of 2016. The increase over the same period last year is partly due to the mid-Q4 2015 acquisition of United International Bank (“UIB”),  growth of the Bank, as well as regular merit increases. In addition, the Bank recorded a one-time $350,000 charge for payroll taxes related to the termination and payout of the Bank’s Deferred Compensation Plan. Occupancy expense totaled $1.2 million for the quarter, an increase of $175,000 over the $1.0 million recorded in the same period in 2015 and flat compared to the third 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 $1.5 million for the fourth quarter of 2016 compared to $1.4 million for the same quarter of 2015 and $1.4 million recorded in the third quarter of 2016. The Bank incurred $187,000 in costs related to its one OREO property. This compares to $1,000 in the fourth quarter of 2015 and $196,000 in the third quarter of 2016. Other expenses were $1.1 million for the fourth quarter of 2016 compared to $1.7 million for the same period last year and $1.1 million for the third quarter of 2016. The decrease from last year was mainly due to the recording of $415,000 in acquisition related costs in the fourth quarter of 2015.

Income Taxes

The Bank recorded a provision for income taxes of $6.2 million for the fourth quarter of 2016. This represents an effective tax rate (“ETR”) of 38.0% for the quarter. This is down from the ETR of 42.2% for the fourth quarter of 2015 and the same as the 38.1% ETR recorded in the third 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 the ETR will be slightly higher heading into 2017, closer to the Bank’s long-term historical average of just under 40%. Typically, 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 December 31, 2016 were $2.54 billion, an increase of $484.2 million or 23.5% over the total of $2.06 billion as of December 31, 2015. Total deposits reached $2.76 billion, an increase of $477.2 million or 20.9% over the total of $2.29 billion as of December 31, 2015. Total assets reached $3.22 billion as of December 31, 2016, an increase of $622.8 million or 24.0% over the total of $2.60 billion as of December 31, 2015.

Asset Quality

As of December 31, 2016 nonaccrual loans totaled $7.6 million, an increase of $5.7 million over the $2.0 million total as of December 31, 2015. In October, it was determined that a C&I loan relationship of approximately $10 million be downgraded and placed on nonaccrual status. Accordingly, nonperforming loans have increased as of December 31, 2016 from the prior quarter. This relationship has been with the Bank for 8 years and has consistently paid as agreed. After the downgrade, the borrower has made approximately $2 million in scheduled paydowns and another $1.5 million in repayments just prior to year end. As the borrowing entity is operating with sufficient profitability, we anticipate the ultimate collection of all principal and interest.

Total net recoveries for the fourth quarter of 2016 were $22,000 compared to net charge-offs of $827,000 in the third quarter of 2016 and compared to net charge-offs of $1.7 million for the fourth quarter of 2015. The Bank recorded a provision for loan loss of $1.9 million for the fourth quarter of 2016, compared to a provision of $300,000 recorded in the same quarter last year and compared to the $1.4 million provision recorded in the third quarter of 2016. The allowance for loan loss at December 31, 2016 was $26.5 million or 1.04% of total loans compared to $22.7 million or 1.10% of total loans at December 31, 2015.

OREO

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

CapitalizationAs of December 31, 2016, the Bank’s leverage ratio was 9.43%, the common equity tier 1 capital ratio was 9.83% and the total capital ratio was 14.09%. 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 WebcastA conference call with simultaneous webcast to discuss Preferred Bank’s fourth quarter 2016 financial results will be held tomorrow, January 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 February 3, 2017; the passcode is 10099649.

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 StatementsThis 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
					December 31,				September 30,				December 31,
						2016				2016				2015
Interest income:
	Loans, including fees				$	31,248			$	29,548			$	23,792
	Investment securities					2,570				2,216				1,585
	Fed funds sold					162				125				46
		Total interest income				33,980				31,889				25,423
Interest expense:
	Interest-bearing demand					1,320				1,309				871
	Savings					21				19				14
	Time certificates					2,982				2,897				2,150
	FHLB borrowings					67				66				70
	Subordinated debit issuance					1,526				1,102				-
		Total interest expense				5,916				5,394				3,105
		Net interest income				28,064				26,495				22,318
Provision for loan losses						1,900				1,400				300
		Net interest  income after provision for
			loan losses			26,164				25,095				22,018
Noninterest income:
	Fees & service charges on deposit accounts					258				322				254
	Trade finance income					599				686				453
	BOLI income					87				85				86
	Net gain on sale of investment securities					133				-				-
	Other income					209				257				161
		Total noninterest income				1,286				1,350				954
Noninterest expense:
	Salary and employee benefits					6,660				6,067				5,248
	Net occupancy expense					1,199				1,161				1,024
	Business development and promotion expense					242				230				227
	Professional services					1,492				1,434				1,359
	Office supplies and equipment expense					350				345				336
	Other real estate owned related expense and valuation allowance on LHFS					187				196				1
	Other					1,093				1,053				1,696
		Total noninterest expense				11,223				10,486				9,890
		Income before provision for income taxes				16,227				15,959				13,081
Income tax expense						6,166				6,080				5,518
		Net income			$	10,061			$	9,879			$	7,563
Dividend and earnings allocated to participating securities						(131	)			(155	)			(139	)
Net income available to common shareholders					$	9,930			$	9,724			$	7,424
Income per share available to common shareholders
		Basic			$	0.71			$	0.70			$	0.55
		Diluted			$	0.71			$	0.69			$	0.54
Weighted-average common shares outstanding
		Basic				13,984,346				13,899,966				13,547,197
		Diluted				14,066,596				13,997,343				13,743,157
Dividends per share					$	0.18			$	0.15			$	0.15

 

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
					For the Year Ended
					December 31,				December 31,				Change
						2016				2015			%
Interest income:
	Loans, including fees				$	114,148			$	88,236			29.4	%
	Investment securities					8,292				6,304			31.5	%
	Fed funds sold					473				163			189.4	%
		Total interest income				122,913				94,702			29.8	%
Interest expense:
	Interest-bearing demand					4,730				3,160			49.7	%
	Savings					76				58			30.0	%
	Time certificates					10,855				7,455			45.6	%
	FHLB borrowings					259				182			42.1	%
	Subordinated debit issuance					2,814				-			100.0	%
		Total interest expense				18,734				10,856			72.6	%
		Net interest income				104,179				83,846			24.3	%
Provision for credit losses						6,400				1,800			255.6	%
		Net interest  income after provision for
		loan losses				97,779				82,046			19.2	%
Noninterest income:
	Fees & service charges on deposit accounts					1,212				1,178			2.8	%
	Trade finance income					2,371				1,630			45.4	%
	BOLI income					346				339			2.0	%
	Net gain on sale of investment securities					169				-			100.0	%
	Other income					1,361				745			82.7	%
		Total noninterest income				5,459				3,892			40.2	%
Noninterest expense:
	Salary and employee benefits					25,813				20,960			23.2	%
	Net occupancy expense					4,830				3,681			31.2	%
	Business development and promotion expense					845				593			42.4	%
	Professional services					5,297				4,906			8.0	%
	Office supplies and equipment expense					1,422				1,119			27.1	%
	Other real estate owned related expense(income) and valuation allowance on LHFS					825				(480	)		-271.8	%
	Other					4,506				4,931			-8.6	%
		Total noninterest expense				43,538				35,710			21.9	%
		Income before provision for income taxes				59,700				50,228			18.9	%
Income tax expense						23,331				20,485			13.9	%
		Net income			$	36,369			$	29,743			22.3	%
Dividend and earnings allocated to participating securities						(543	)			(536	)		1.3	%
Net income available to common shareholders					$	35,826			$	29,207			22.7	%
Income per share available to common shareholders
		Basic			$	2.58			$	2.17			19.1	%
		Diluted			$	2.56			$	2.14			19.9	%
Weighted-average common shares outstanding
		Basic				13,883,497				13,484,216			3.0	%
		Diluted				13,987,257				13,677,892			2.3	%
Dividends per share					$	0.63			$	0.51			23.5	%

 

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
				December 31,				December 31,
					2016				2015
				(Unaudited)				(Audited)
Assets
Cash and due from banks				$	306,330			$	296,175
Fed funds sold					97,500				13,000
Cash and cash equivalents					403,830				309,175
Securities held to maturity, at amortized cost					10,337				5,830
Securities available-for-sale, at fair value					199,833				169,502
Loans and leases					2,543,549				2,059,392
Less allowance for loan and lease losses					(26,478	)			(22,658	)
Less net deferred loan fees					(1,682	)			(3,012	)
Net loans and leases					2,515,389				2,033,722
Other real estate owned					4,112				4,112
Customers' liability on acceptances					772				897
Bank furniture and fixtures, net					5,313				5,601
Bank-owned life insurance					8,825				8,763
Accrued interest receivable					9,550				8,128
Investment in affordable housing					23,670				16,052
Federal Home Loan Bank stock					9,331				7,162
Deferred tax assets					26,605				23,802
Income tax receivable					-				299
Other asset					4,031				5,801
Total assets				$	3,221,598			$	2,598,846
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand				$	586,272			$	558,906
Interest-bearing demand					1,019,058				748,918
Savings					34,067				30,703
Time certificates of $250,000 or more					427,172				321,537
Other time certificates					697,155				626,495
Total deposits				$	2,763,724			$	2,286,559
Acceptances outstanding					772				897
Advances from Federal Home Loan Bank					26,516				26,635
Subordinated debt issuance					98,839				-
Commitments to fund investment in affordable housing partnership					10,632				3,958
Accrued interest payable					3,199				1,919
Other liabilities					19,851				14,733
Total liabilities					2,923,533				2,334,701
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; no issued and outstanding
shares at December 31, 2016 and December 31, 2015					—				—
Common stock, no par value. Authorized 100,000,000 shares; issued
and outstanding 14,232,907 and 13,884,942 shares at December 31, 2016  and December 31, 2015 , respectively					169,861				166,560
Treasury stock					(19,115	)			(19,115	)
Additional paid-in-capital					39,929				34,672
Accumulated income					108,261				81,046
Accumulated other comprehensive income:
Unrealized gain on securities, available-for-sale, net of tax benefit of $632 and net of tax of $713 at December 31, 2016 and December 31, 2015, respectively					(871	)			982
Total shareholders' equity					298,065				264,145
Total liabilities and shareholders' equity				$	3,221,598			$	2,598,846

 

 

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				For the Quarter Ended
				December 31,				September 30,				June 30,				March 31,				December 31,
					2016				2016				2016				2016				2015
Unaudited historical quarterly operations data:
	Interest income			$	33,980			$	31,889			$	29,723			$	27,321			$	25,423
	Interest expense				5,916				5,394				3,982				3,442				3,105
		Interest income before provision for credit losses			28,064				26,495				25,741				23,879				22,318
	Provision for credit losses				1,900				1,400				2,300				800				300
	Noninterest income				1,286				1,350				1,660				1,163				954
	Noninterest expense				11,223				10,486				10,791				11,038				9,890
	Income tax expense				6,166				6,080				5,724				5,361				5,518
		Net income			10,061				9,879				8,586				7,843				7,563
	Earnings per share
		Basic		$	0.71			$	0.70			$	0.61			$	0.56			$	0.55
		Diluted		$	0.71			$	0.69			$	0.61			$	0.56			$	0.54
Ratios for the period:
	Return on average assets				1.28	%			1.31	%			1.26	%			1.21	%			1.28	%
	Return on beginning equity				13.74	%			13.92	%			12.49	%			11.94	%			11.67	%
	Net interest margin (Fully-taxable equivalent)				3.67	%			3.59	%			3.87	%			3.79	%			3.88	%
	Noninterest expense to average assets				1.43	%			1.39	%			1.58	%			1.70	%			1.67	%
	Efficiency ratio				38.24	%			37.66	%			39.38	%			44.08	%			42.50	%
	Net charge-offs (recoveries) to average loans (annualized)				0.00	%			0.14	%			0.36	%			-0.04	%			0.36	%
Ratios as of period end:
	Tier 1 leverage capital ratio				9.43	%			9.47	%			10.05	%			10.29	%			10.46	%
	Common equity tier 1 risk-based capital ratio				9.83	%			9.96	%			10.41	%			10.74	%			11.03	%
	Tier 1 risk-based capital ratio				9.83	%			9.96	%			10.41	%			10.74	%			11.03	%
	Total risk-based capital ratio				14.09	%			14.36	%			13.65	%			11.70	%			12.00	%
	Allowances for credit losses to loans and leases at end of period				1.04	%			1.01	%			1.06	%			1.10	%			1.10	%
	Allowance for credit losses to non-performing
		loans and leases			346.22	%			1460.49	%			722.47	%			2346.18	%			1140.29	%
Average balances:
	Total loans and leases			$	2,465,492			$	2,344,102			$	2,248,652			$	2,067,047			$	1,876,544
	Earning assets			$	3,066,189			$	2,953,325			$	2,687,435			$	2,550,821			$	2,297,154
	Total assets			$	3,124,984			$	3,009,457			$	2,746,031			$	2,605,917			$	2,345,319
	Total deposits			$	2,666,878			$	2,590,702			$	2,400,756			$	2,291,764			$	2,039,567

 

 

 

PREFERRED BANK
Selected Consolidated Financial Information
(in thousands, except for ratios)
				For the Year Ended
				December 31,				December 31,
					2016				2015
	Interest income			$	122,913			$	94,702
	Interest expense				18,734				10,856
		Interest income before provision for credit losses			104,179				83,846
	Provision for credit losses				6,400				1,800
	Noninterest income				5,459				3,892
	Noninterest expense				43,538				35,710
	Income tax expense				23,331				20,485
		Net income			36,369				29,743
	Earnings per share
		Basic		$	2.58			$	2.17
		Diluted		$	2.56			$	2.14
Ratios for the period:
	Return on average assets				1.27	%			1.35	%
	Return on beginning equity				13.77	%			12.66	%
	Net interest margin (Fully-taxable equivalent)				3.72	%			3.92	%
	Noninterest expense to average assets				1.52	%			1.62	%
	Efficiency ratio				39.71	%			40.70	%
	Net charge-offs (recoveries) to average loans				0.11	%			0.12	%
Average balances:
	Total loans and leases			$	2,282,074			$	1,731,871
	Earning assets			$	2,815,543			$	2,154,355
	Total assets			$	2,872,707			$	2,200,557
	Total deposits			$	2,488,368			$	1,909,721

 

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				As of
				December 31,				September 30,				June 30,				March 31,				December 31,
					2016				2016				2016				2016				2015
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	403,830			$	405,522			$	376,485			$	293,547			$	309,175
	Securities held-to-maturity, at amortized cost				10,337				4,812				5,143				5,550				5,830
	Securities available-for-sale, at fair value				199,833				203,272				201,256				162,654				169,502
	Loans and Leases:
	Real estate - Single and multi-family residential			$	490,683			$	493,489			$	393,076			$	401,708			$	415,003
	Real estate - Land for housing				14,774				14,796				14,817				14,838				14,408
	Real estate - Land for income properties				1,801				1,809				6,316				1,816				1,795
	Real estate - Commercial				1,047,321				1,037,687				995,213				924,913				861,317
	Real estate - For sale housing construction				104,960				104,973				95,519				82,153				73,858
	Real estate - Other construction				128,434				96,147				72,963				66,636				57,546
	Commercial and industrial				733,709				659,306				659,701				626,599				596,887
	Trade finance and other				21,867				24,460				34,625				39,323				38,578
	Gross loans				2,543,549				2,432,667				2,272,230				2,157,986				2,059,392
	Allowance for loan and lease losses				(26,478	)			(24,556	)			(23,983	)			(23,681	)			(22,658	)
	Net deferred loan fees				(1,682	)			(1,913	)			(3,682	)			(3,065	)			(3,012	)
	Total loans, net			$	2,515,389			$	2,406,198			$	2,244,565			$	2,131,240			$	2,033,722
	Other real estate owned			$	4,112			$	4,112			$	4,112			$	4,112			$	4,112
	Investment in affordable housing				23,670				24,278				24,886				25,499				16,052
	Federal Home Loan Bank stock				9,331				9,331				9,332				6,965				7,162
	Other assets				55,096				52,899				49,862				53,783				53,291
	Total assets			$	3,221,598			$	3,110,424			$	2,915,641			$	2,683,350			$	2,598,846
Liabilities:
	Deposits:
	Demand			$	586,272			$	575,388			$	540,374			$	528,126			$	558,906
	Interest-bearing demand				1,019,058				945,358				855,661				803,374				748,918
	Savings				34,067				31,344				29,031				30,002				30,703
	Time certificates of $250,000 or more				427,172				416,807				398,736				339,971				321,537
	Other time certificates				697,155				691,099				692,063				656,386				626,495
	Total deposits			$	2,763,724			$	2,659,996			$	2,515,865			$	2,357,859			$	2,286,559
	Advances from Federal Home Loan Bank			$	26,516			$	26,544			$	26,573			$	26,601			$	26,635
	Subordinated debt issuance				98,839				98,851				61,475				-				-
	Commitments to fund investment in affordable housing partnership				10,632				11,015				11,454				11,454				3,958
	Other liabilities				23,822				22,760				17,922				13,862				17,549
	Total liabilities			$	2,923,533			$	2,819,166			$	2,633,289			$	2,409,776			$	2,334,701
Equity:
	Net common stock, no par value			$	190,675			$	188,430			$	187,212			$	185,780			$	182,118
	Retained earnings				108,261				100,804				93,119				86,716				81,046
	Accumulated other comprehensive income				(871	)			2,024				2,021				1,079				982
	Total shareholders' equity			$	298,065			$	291,258			$	282,352			$	273,574			$	264,145
	Total liabilities and shareholders' equity			$	3,221,598			$	3,110,424			$	2,915,641			$	2,683,350			$	2,598,846

 

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
					Year Ended				Year Ended
					December 31, 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				4,323				1,475
		Mini-perm Real Estate				-				1,793
		Construction - Residential				-				-
		Construction - Commercial				-				-
		Land - Residential				-				-
		Land - Commercial				-				-
		Others				-				-
		Total Charge-Offs				4,323				3,268
	Recoveries
		Commercial & Industrial				985				131
		Mini-perm Real Estate				-				144
		Construction - Residential				-				-
		Construction - Commercial				26				20
		Land - Residential				-				100
		Land - Commercial				732				757
		Total Recoveries				1,743				1,152
	Net Loan Charge-Offs					2,580				2,116
	Provision for Credit Losses					6,400				1,800
Balance at End of Period					$	26,478			$	22,658
Average Loans and Leases					$	2,282,074			$	1,731,871
Loans and Leases at end of Period					$	2,543,549			$	2,059,392
Net Charge-Offs to Average Loans and Leases						0.11	%			0.12	%
Allowances for credit losses to loans and leases at end of period						1.04	%			1.10	%

 

 

 

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