Preferred Bank (NASDAQ:PFBC), an independent
commercial bank, today reported results for the quarter ended March
31, 2017. Preferred Bank (“the Bank”) reported net income of $10.3
million or $0.71 per diluted share for the first quarter of 2017.
This compares to net income of $7.8 million or $0.56 per diluted
share for the first quarter of 2016 and compares to net income of
$10.1 million or $0.71 per diluted share for the fourth quarter of
2016. Net income for this quarter was impacted by a number of
items. First, the Bank recorded a $1.5 million legal reserve for
the potential settlement of a lawsuit which, in the past two years,
had been very costly to defend. Second, the quarter was also
negatively impacted by employer-paid tax expense of $945,000
resulting from the termination and distribution of the Bank’s
deferred compensation plan, the distribution of annual bonuses and
the vesting of restricted stock awards. Third, the adoption of a
new tax-related accounting standard resulted in a decrease of
$768,000 from the normal tax expense given the Bank’s level of
pre-tax income.
Highlights from the first quarter of 2017:
* |
Linked
quarter loan growth |
|
$144 million or 5.7% |
* |
Linked
quarter deposit growth |
|
$188 million or 6.8% |
* |
Return on
average assets |
|
1.29% |
|
* |
Return on
beginning equity |
|
13.99% |
|
* |
Efficiency ratio |
|
43.2% |
|
* |
Net
interest margin |
|
3.67% |
|
Li Yu, Chairman and CEO commented, “We are delighted to report a
very vibrant first quarter of 2017. For the quarter, deposit
growth was $188 million, a record in our corporate history.
Although large deposit growth such as this will negatively affect
return on assets, capital ratios and the net interest margin, it is
still the most important factor in building a banking
franchise. We are excited with these quarterly results.
“Likewise, first quarter loan growth was one of the strongest in
our corporate history. The increase was $144 million or 5.7%
from year-end 2016. Most of the new loan production took
place in March, however, and thus the related incremental interest
income was only a fraction of the incremental provision
requirement. This will of course have a positive effect on
our overall profitability in the ensuing quarters.
“Net interest income improved from $28.1 million in the fourth
quarter of 2016 to $28.4 million in the first quarter of 2017
despite there being two fewer days this quarter than last. The
improvement was largely the result of the Federal Reserve interest
rate increases that occurred last December and in March.
Overhead expense continues to be under control with the efficiency
ratio at 43.2%. We continue to improve our operating
capability and infrastructure by adding staff in BSA, Compliance
and digital banking along with opportunistic hiring of frontline
personnel.
“For the first quarter of 2017, Preferred Bank’s net income was
$10.3 million or $0.71 per diluted share. Our quarterly income was
further enhanced by a tax adjustment of $768,000, or $0.05 per
diluted share. However during the quarter, we also recorded a
reserve of $1.5 million for the potential settlement of a lawsuit
which also had a net earnings effect of $0.05 per diluted share.
This legal reserve will reduce legal costs for the remainder of
2017 and into 2018.
“We have many reasons to feel optimistic for the remainder of
2017. The following are some of them:
- Our customers seem to be mostly bullish on the nation’s
business environment. Although issues such as tax reform and
a potential border tax remain unclear, investment and business
activity seems to have accelerated.
- Market consensus still points to another 2-3 FOMC rate
hikes. Preferred Bank, being one of the most asset sensitive
banks in the nation, will benefit greatly.
- Although the new administration is putting regulatory reform
high on its priorities, we can neither forecast the timing nor
whether its effect will be meaningful to our type of community
bank. However, a deceleration in the growth of compliance
costs could be a possibility.
- A corporate tax cut does not look like an illusion, although
the timing and complexibility is hard to predict and seems to get
pushed back further. If and when it happens, Preferred Bank
as a full rate payer, will certainly benefit.
- Finally, our loan pipeline appears to be consistent and
vibrant. Second quarter loan production should be
respectable. On March 1, 2017, we rolled out our home
mortgage product which should be a source of new loans.”
Net Interest Income and Net Interest Margin. Net interest income
before provision for loan and lease losses was $28.4 million for
the first quarter of 2017. This compares favorably to the $23.9
million recorded in the first quarter of 2016 and to the $28.1
million recorded in the fourth quarter of 2016. The increase over
both comparable periods is due primarily to loan growth as well as
increases in the fed funds and Prime rates. The Bank’s taxable
equivalent net interest margin was 3.67% for the first quarter of
2017, a 12 basis point decrease from the 3.79% achieved in the
first quarter of 2016 and flat compared to the 3.67% recorded in
the fourth quarter of 2016. Based on internal interest rate risk
modeling, the Bank’s net interest margin should, in theory have
expanded after the fed rate increases of December and March.
However due to the special FHLB dividend paid in the fourth quarter
of 2016, and due to a small decrease in loan fees
quarter-over-quarter, the margin remained flat. For the month of
March however, the Bank did see an expansion in the margin compared
to January and February.
Noninterest Income. For the first quarter of 2017, noninterest
income was $2,090,000 compared with $1,163,000 for the same quarter
last year and compared to $1,286,000 for the fourth quarter of
2016. Service charges on deposits increased by $59,000 this quarter
when compared to the same quarter last year and by $95,000 when
compared to the fourth quarter of 2016. Letter of Credit fee income
was $795,000 for the first quarter of 2017, an increase of $378,000
compared to the same period last year and an increase of $196,000
compared to the fourth quarter of 2016 as LC activity has
increased. Other income was $856,000, a significant increase over
both comparable periods. This was primarily due to $345,000 in OREO
income.
Noninterest Expense. Total noninterest expense was $13.2 million
for the first quarter of 2017, an increase of $2.1 million over the
same period last year and an increase of $2.0 million over the
fourth quarter of 2016, and was mainly driven by the $1.5 million
legal reserve recorded this quarter. Salaries and benefits expense
totaled $7.5 million for the first quarter of 2017 compared to $7.0
million recorded for the same period last year and compared to the
$6.7 million recorded in the fourth quarter of 2016. The increase
over the same period last year was due primarily to staffing/merit
increases and the increase over the prior quarter was mainly due to
employer paid taxes on the deferred compensation plan distribution,
the annual bonus payout and the vesting of restricted stock awards.
Occupancy expense totaled $1.2 million for the first quarter of
2017 and was flat when compared to both the same quarter last year
as well as the fourth quarter of 2016. Professional services
expense was $1.4 million for the first quarter of 2017 compared to
$962,000 for the same quarter of 2016 and $1.5 million recorded in
the fourth quarter of 2016. The increase over the same period last
year was due mainly to legal fees which increased by $465,000. The
Bank incurred $109,000 in costs related to its one OREO property
and this compares to OREO expense of $199,000 in the first quarter
of 2016 and $187,000 in the fourth quarter of 2016. Other expenses
were $2.6 million for the first quarter of 2017 and an increase of
approximately $1.5 million over both comparable periods. This was
due to the aforementioned legal settlement reserve. The Bank’s
efficiency ratio came in at 43.2% for the quarter, driven higher by
the legal reserve. Excluding that item, the efficiency ratio would
have been 38.1%.
Income Taxes
The Bank recorded a provision for income taxes of $5.6 million
for the first quarter of 2017. This represents an effective tax
rate (“ETR”) of 35.2% for the quarter. This is down from the ETR of
40.6% for the first quarter of 2016 and down from the 38.0% ETR
recorded in the fourth quarter of 2016. The decrease this quarter
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. It is anticipated that the Bank’s ETR will revert back
closer to its historical norm in the ensuing quarters.
Balance Sheet Summary
Total gross loans and leases at March 31, 2017 were $2.69
billion, an increase of $144.1 million or 5.7% over the total of
$2.54 billion as of December 31, 2016. Total deposits as of March
31, 2017 were $2.95 billion, an increase of $187.8 million or 6.8%
over the $2.76 billion at December 31, 2016. Total assets as of
March 31, 2017 were $3.41 billion, an increase of $188.9
million or 5.9% over the $3.22 billion as of December 31, 2016.
Asset QualityAs of March 31, 2017 nonaccrual
loans totaled $7.8 million, up slightly from the $7.6 million total
as of December 31, 2016. Total net charge-offs for the first
quarter of 2017 were $121,000 compared to a net recovery of $22,000
the fourth quarter of 2016 and compared to a net recovery of
$223,000 for the first quarter of 2016. The Bank recorded a
provision for loan losses of $1.5 million for the first quarter of
2017. This is an increase from the $800,000 provision recorded in
the same quarter last year but a decrease from the $1.9 million
provision recorded in the fourth quarter of 2016. The allowance for
loan loss at March 31, 2017 was $27.9 million or 1.04% of total
loans compared to $26.5 million or 1.04% of total loans at December
31, 2016.
OREO
As of March 31, 2017 and December 31, 2016, the Bank held one
OREO property, a $4.1 million multi-family property located outside
of California.
CapitalizationAs of March 31, 2017, the Bank’s
leverage ratio was 9.01%, the common equity tier 1 capital ratio
was 9.16% and the total capital ratio was 13.22%. 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 WebcastA
conference call with simultaneous webcast to discuss Preferred
Bank’s first quarter 2017 financial results will be held tomorrow,
April 20th 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 May 4, 2017; the passcode is 10105309.
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 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.
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 |
|
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2016 |
|
Interest
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
including fees |
|
$ |
31,919 |
|
|
$ |
31,248 |
|
|
$ |
25,460 |
|
|
Investment
securities |
|
|
2,482 |
|
|
|
2,570 |
|
|
|
1,784 |
|
|
Fed funds
sold |
|
|
231 |
|
|
|
162 |
|
|
|
77 |
|
|
|
Total
interest income |
|
|
34,632 |
|
|
|
33,980 |
|
|
|
27,321 |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense: |
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
1,465 |
|
|
|
1,320 |
|
|
|
1,050 |
|
|
Savings |
|
|
21 |
|
|
|
21 |
|
|
|
18 |
|
|
Time certificates |
|
|
3,108 |
|
|
|
2,982 |
|
|
|
2,315 |
|
|
FHLB
borrowings |
|
|
65 |
|
|
|
67 |
|
|
|
59 |
|
|
Subordinated debit |
|
|
1,531 |
|
|
|
1,526 |
|
|
|
- |
|
|
|
Total
interest expense |
|
|
6,190 |
|
|
|
5,916 |
|
|
|
3,442 |
|
|
|
Net
interest income |
|
|
28,442 |
|
|
|
28,064 |
|
|
|
23,879 |
|
Provision
for loan losses |
|
|
1,500 |
|
|
|
1,900 |
|
|
|
800 |
|
|
|
Net
interest income after provision for |
|
|
|
|
|
|
|
|
loan
losses |
|
|
26,942 |
|
|
|
26,164 |
|
|
|
23,079 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income: |
|
|
|
|
|
|
|
Fees &
service charges on deposit accounts |
|
|
353 |
|
|
|
258 |
|
|
|
294 |
|
|
LC fee
income |
|
|
795 |
|
|
|
599 |
|
|
|
417 |
|
|
BOLI
income |
|
|
86 |
|
|
|
87 |
|
|
|
85 |
|
|
Net gain on
sale of investment securities |
|
|
- |
|
|
|
133 |
|
|
|
36 |
|
|
Other
income |
|
|
856 |
|
|
|
209 |
|
|
|
331 |
|
|
|
Total
noninterest income |
|
|
2,090 |
|
|
|
1,286 |
|
|
|
1,163 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expense: |
|
|
|
|
|
|
|
Salary and
employee benefits |
|
|
7,509 |
|
|
|
6,660 |
|
|
|
7,021 |
|
|
Net
occupancy expense |
|
|
1,182 |
|
|
|
1,199 |
|
|
|
1,203 |
|
|
Business development and promotion expense |
|
|
240 |
|
|
|
242 |
|
|
|
222 |
|
|
Professional services |
|
|
1,162 |
|
|
|
1,492 |
|
|
|
962 |
|
|
Office
supplies and equipment expense |
|
|
353 |
|
|
|
350 |
|
|
|
351 |
|
|
Other real estate owned related expense and valuation allowance
on LHFS |
|
|
108 |
|
|
|
187 |
|
|
|
199 |
|
|
Other |
|
|
|
2,624 |
|
|
|
1,093 |
|
|
|
1,080 |
|
|
|
Total
noninterest expense |
|
|
13,178 |
|
|
|
11,223 |
|
|
|
11,038 |
|
|
|
Income
before provision for income taxes |
|
|
15,854 |
|
|
|
16,227 |
|
|
|
13,204 |
|
Income tax
expense |
|
|
5,573 |
|
|
|
6,166 |
|
|
|
5,361 |
|
|
|
Net
income |
|
$ |
10,281 |
|
|
$ |
10,061 |
|
|
$ |
7,843 |
|
|
|
|
|
|
|
|
|
|
|
Dividend
and earnings allocated to participating securities |
|
|
(110 |
) |
|
|
(131 |
) |
|
|
(119 |
) |
Net income
available to common shareholders |
|
$ |
10,171 |
|
|
$ |
9,930 |
|
|
$ |
7,724 |
|
|
|
|
|
|
|
|
|
|
|
Income per
share available to common shareholders |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.71 |
|
|
$ |
0.71 |
|
|
$ |
0.56 |
|
|
|
Diluted |
|
$ |
0.71 |
|
|
$ |
0.71 |
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
14,314,624 |
|
|
|
13,984,346 |
|
|
|
13,796,892 |
|
|
|
Diluted |
|
|
14,386,402 |
|
|
|
14,066,596 |
|
|
|
13,911,195 |
|
|
|
|
|
|
|
|
|
|
|
Dividends
per share |
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
PREFERRED
BANK |
Condensed Consolidated
Statements of Financial
Condition |
(unaudited) |
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
(Unaudited) |
|
(Audited) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
due from banks |
$ |
329,855 |
|
|
$ |
306,330 |
|
|
Fed funds
sold |
|
120,500 |
|
|
|
97,500 |
|
|
Cash and cash equivalents |
|
450,355 |
|
|
|
403,830 |
|
|
|
|
|
|
|
|
|
|
Securities
held to maturity, at amortized cost |
|
9,912 |
|
|
|
10,337 |
|
|
Securities
available-for-sale, at fair value |
|
197,455 |
|
|
|
199,833 |
|
|
Loans and
leases |
|
2,687,603 |
|
|
|
2,543,549 |
|
|
Less
allowance for loan and lease losses |
|
(27,857 |
) |
|
|
(26,478 |
) |
|
Less net
deferred loan fees |
|
(2,572 |
) |
|
|
(1,682 |
) |
|
Net loans and leases |
|
2,657,174 |
|
|
|
2,515,389 |
|
|
|
|
|
|
|
|
|
|
Other real
estate owned |
|
4,112 |
|
|
|
4,112 |
|
|
Customers'
liability on acceptances |
|
4,595 |
|
|
|
772 |
|
|
Bank
furniture and fixtures, net |
|
5,250 |
|
|
|
5,313 |
|
|
Bank-owned
life insurance |
|
8,883 |
|
|
|
8,825 |
|
|
Accrued
interest receivable |
|
9,651 |
|
|
|
9,550 |
|
|
Investment
in affordable housing |
|
22,904 |
|
|
|
23,670 |
|
|
Federal
Home Loan Bank stock |
|
6,965 |
|
|
|
9,331 |
|
|
Deferred
tax assets |
|
26,286 |
|
|
|
26,605 |
|
|
Other
asset |
|
9,387 |
|
|
|
4,031 |
|
|
Total assets |
$ |
3,412,929 |
|
|
$ |
3,221,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders'
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
Deposits: |
|
|
|
|
|
Demand |
$ |
576,060 |
|
|
$ |
586,272 |
|
|
Interest-bearing demand |
|
|
1,137,145 |
|
|
|
1,019,058 |
|
|
Savings |
|
|
34,434 |
|
|
|
34,067 |
|
|
Time
certificates of $250,000 or more |
|
|
495,177 |
|
|
|
427,172 |
|
|
Other
time certificates |
|
|
707,830 |
|
|
|
697,155 |
|
|
Total
deposits |
|
$ |
2,950,646 |
|
|
$ |
2,763,724 |
|
|
Acceptances outstanding |
|
|
4,595 |
|
|
|
772 |
|
|
Advances
from Federal Home Loan Bank |
|
|
26,487 |
|
|
|
26,516 |
|
|
Subordinated debt issuance |
|
|
98,870 |
|
|
|
98,839 |
|
|
Commitments to fund investment in affordable housing
partnership |
|
|
|
|
10,354 |
|
|
|
10,632 |
|
|
Accrued
interest payable |
|
|
4,647 |
|
|
|
3,199 |
|
|
Other
liabilities |
|
|
22,947 |
|
|
|
19,851 |
|
|
Total
liabilities |
|
|
|
3,118,546 |
|
|
|
2,923,533 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
Preferred
stock. Authorized 25,000,000 shares; issued and no outstanding
shares at March 31, 2017 and December 31, 2016 |
|
|
— |
|
|
|
— |
|
|
Common
stock, no par value. Authorized 20,000,000 shares; issued and
outstanding 14,505,113 at March 31, 2017 and 14,232,907 at December
31, 2016, respectively. |
|
|
173,332 |
|
|
|
169,861 |
|
|
Treasury
stock |
|
|
(33,233 |
) |
|
|
(19,115 |
) |
|
Additional paid-in-capital |
|
|
38,785 |
|
|
|
39,929 |
|
|
Accumulated income |
|
|
115,931 |
|
|
|
108,261 |
|
|
Accumulated other comprehensive income: |
|
|
|
|
|
|
|
Unrealized loss on securities, available-for-sale, net of tax
of $313 and $632 at March 31, 2017 and December 31, 2016 |
|
|
|
(432 |
) |
|
|
(871 |
) |
|
Total
shareholders' equity |
|
|
|
294,383 |
|
|
|
298,065 |
|
|
Total
liabilities and shareholders' equity |
|
$ |
3,412,929 |
|
|
$ |
3,221,598 |
|
|
|
|
|
|
|
|
|
|
PREFERRED BANK |
Selected Consolidated Financial
Information |
(unaudited) |
(in thousands, except for
ratios) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
September 30, |
|
June 30, |
|
March 31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
Unaudited historical quarterly operations
data: |
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
34,632 |
|
|
$ |
33,980 |
|
$ |
31,889 |
|
|
$ |
29,723 |
|
|
$ |
27,321 |
|
|
|
Interest expense |
|
6,190 |
|
|
|
5,916 |
|
|
5,394 |
|
|
|
3,982 |
|
|
|
3,442 |
|
|
|
|
Interest income before provision for credit losses |
|
28,442 |
|
|
|
28,064 |
|
|
26,495 |
|
|
|
25,741 |
|
|
|
23,879 |
|
|
|
Provision for credit losses |
|
1,500 |
|
|
|
1,900 |
|
|
1,400 |
|
|
|
2,300 |
|
|
|
800 |
|
|
|
Noninterest income |
|
2,090 |
|
|
|
1,286 |
|
|
1,350 |
|
|
|
1,660 |
|
|
|
1,163 |
|
|
|
Noninterest expense |
|
13,178 |
|
|
|
11,223 |
|
|
10,486 |
|
|
|
10,791 |
|
|
|
11,038 |
|
|
|
Income tax expense |
|
5,573 |
|
|
|
6,166 |
|
|
6,080 |
|
|
|
5,724 |
|
|
|
5,361 |
|
|
|
|
Net
income |
|
10,281 |
|
|
|
10,061 |
|
|
9,879 |
|
|
|
8,586 |
|
|
|
7,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.71 |
|
|
$ |
0.71 |
|
$ |
0.70 |
|
|
$ |
0.61 |
|
|
$ |
0.56 |
|
|
|
|
Diluted |
$ |
0.71 |
|
|
$ |
0.71 |
|
$ |
0.69 |
|
|
$ |
0.61 |
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios for the period: |
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
1.29% |
|
|
|
1.28% |
|
|
1.31% |
|
|
|
1.26% |
|
|
|
1.21% |
|
|
|
Return on beginning equity |
|
13.99% |
|
|
|
13.74% |
|
|
13.92% |
|
|
|
12.49% |
|
|
|
11.94% |
|
|
|
Net
interest margin (Fully-taxable equivalent) |
|
3.67% |
|
|
|
3.67% |
|
|
3.59% |
|
|
|
3.87% |
|
|
|
3.79% |
|
|
|
Noninterest expense to average assets |
|
1.66% |
|
|
|
1.43% |
|
|
1.39% |
|
|
|
1.58% |
|
|
|
1.70% |
|
|
|
Efficiency ratio |
|
43.16% |
|
|
|
38.24% |
|
|
37.66% |
|
|
|
39.38% |
|
|
|
44.08% |
|
|
|
Net
charge-offs (recoveries) to average loans (annualized) |
|
0.02% |
|
|
|
0.00% |
|
|
0.14% |
|
|
|
0.36% |
|
|
|
-0.04% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios as of period end: |
|
|
|
|
|
|
|
|
|
|
Tier
1 leverage capital ratio |
|
9.01% |
|
|
|
9.43% |
|
|
9.47% |
|
|
|
10.05% |
|
|
|
10.29% |
|
|
|
Common equity tier 1 risk-based capital ratio |
|
9.16% |
|
|
|
9.83% |
|
|
9.96% |
|
|
|
10.41% |
|
|
|
10.74% |
|
|
|
Tier
1 risk-based capital ratio |
|
9.16% |
|
|
|
9.83% |
|
|
9.96% |
|
|
|
10.41% |
|
|
|
10.74% |
|
|
|
Total
risk-based capital ratio |
|
|
13.22% |
|
|
|
14.09% |
|
|
14.36% |
|
|
|
13.65% |
|
|
|
11.70% |
|
|
|
Allowances for credit losses to loans and leases at end of
period |
|
|
1.04% |
|
|
|
1.04% |
|
|
1.01% |
|
|
|
1.06% |
|
|
|
1.10% |
|
|
|
Allowance for credit losses to non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
loans
and leases |
|
357.09% |
|
|
|
346.22% |
|
|
1460.49% |
|
|
|
722.47% |
|
|
|
2346.18% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balances: |
|
|
|
|
|
|
|
|
|
|
Total
loans and leases |
$ |
2,563,473 |
|
|
$ |
2,465,492 |
|
$ |
2,344,102 |
|
|
$ |
2,248,652 |
|
|
$ |
2,067,047 |
|
|
|
Earning assets |
$ |
3,167,031 |
|
|
$ |
3,066,189 |
|
$ |
2,953,325 |
|
|
$ |
2,687,435 |
|
|
$ |
2,550,821 |
|
|
|
Total
assets |
$ |
3,228,152 |
|
|
$ |
3,124,984 |
|
$ |
3,009,457 |
|
|
$ |
2,746,031 |
|
|
$ |
2,605,917 |
|
|
|
Total
deposits |
$ |
2,775,840 |
|
|
$ |
2,666,878 |
|
$ |
2,590,702 |
|
|
$ |
2,400,756 |
|
|
$ |
2,291,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREFERRED
BANK |
Selected Consolidated
Financial Information |
(unaudited) |
(in thousands, except
for ratios) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
Unaudited quarterly statement of
financial position data: |
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
450,355 |
|
|
$ |
403,830 |
|
|
$ |
405,522 |
|
|
$ |
376,485 |
|
|
$ |
293,547 |
|
|
|
Securities held-to-maturity, at amortized cost |
|
9,912 |
|
|
|
10,337 |
|
|
|
4,812 |
|
|
|
5,143 |
|
|
|
5,550 |
|
|
|
Securities available-for-sale, at fair value |
|
197,455 |
|
|
|
199,833 |
|
|
|
203,272 |
|
|
|
201,256 |
|
|
|
162,654 |
|
|
|
Loans and Leases: |
|
|
|
|
|
|
|
|
|
|
|
Real
estate - Single and multi-family residential |
|
$ |
479,279 |
|
|
$ |
490,683 |
|
|
$ |
493,489 |
|
|
$ |
393,076 |
|
|
$ |
401,708 |
|
|
|
Real
estate - Land for housing |
|
|
14,754 |
|
|
|
14,774 |
|
|
|
14,796 |
|
|
|
14,817 |
|
|
|
14,838 |
|
|
|
Real
estate - Land for income properties |
|
|
1,792 |
|
|
|
1,801 |
|
|
|
1,809 |
|
|
|
6,316 |
|
|
|
1,816 |
|
|
|
Real
estate - Commercial |
|
|
1,160,077 |
|
|
|
1,047,321 |
|
|
|
1,037,687 |
|
|
|
995,213 |
|
|
|
924,913 |
|
|
|
Real
estate - For sale housing construction |
|
|
109,703 |
|
|
|
104,960 |
|
|
|
104,973 |
|
|
|
95,519 |
|
|
|
82,153 |
|
|
|
Real
estate - Other construction |
|
|
150,322 |
|
|
|
128,434 |
|
|
|
96,147 |
|
|
|
72,963 |
|
|
|
66,636 |
|
|
|
Commercial and industrial |
|
|
741,339 |
|
|
|
733,709 |
|
|
|
659,306 |
|
|
|
659,701 |
|
|
|
626,599 |
|
|
|
Trade
finance and other |
|
|
30,337 |
|
|
|
21,867 |
|
|
|
24,460 |
|
|
|
34,625 |
|
|
|
39,323 |
|
|
|
Gross
loans |
|
|
|
2,687,603 |
|
|
|
2,543,549 |
|
|
|
2,432,667 |
|
|
|
2,272,230 |
|
|
|
2,157,986 |
|
|
|
Allowance
for loan and lease losses |
|
(27,857 |
) |
|
|
(26,478 |
) |
|
|
(24,556 |
) |
|
|
(23,983 |
) |
|
|
(23,681 |
) |
|
|
Net
deferred loan fees |
|
(2,572 |
) |
|
|
(1,682 |
) |
|
|
(1,913 |
) |
|
|
(3,682 |
) |
|
|
(3,065 |
) |
|
|
Total
loans, net |
|
$ |
2,657,174 |
|
|
$ |
2,515,389 |
|
|
$ |
2,406,198 |
|
|
$ |
2,244,565 |
|
|
$ |
2,131,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate
owned |
|
|
$ |
4,112 |
|
|
$ |
4,112 |
|
|
$ |
4,112 |
|
|
$ |
4,112 |
|
|
$ |
4,112 |
|
|
|
Investment in
affordable housing |
|
|
|
22,904 |
|
|
|
23,670 |
|
|
|
24,278 |
|
|
|
24,886 |
|
|
|
25,499 |
|
|
|
Federal Home Loan Bank
stock |
|
|
|
6,965 |
|
|
|
9,331 |
|
|
|
9,331 |
|
|
|
9,332 |
|
|
|
6,965 |
|
|
|
Other assets |
|
|
|
64,052 |
|
|
|
55,096 |
|
|
|
52,899 |
|
|
|
49,862 |
|
|
|
53,783 |
|
|
|
Total
assets |
|
|
$ |
3,412,929 |
|
|
$ |
3,221,598 |
|
|
$ |
3,110,424 |
|
|
$ |
2,915,641 |
|
|
$ |
2,683,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Demand |
|
$ |
576,060 |
|
|
$ |
586,272 |
|
|
$ |
575,388 |
|
|
$ |
540,374 |
|
|
$ |
528,126 |
|
|
|
Interest-bearing demand |
|
|
1,137,145 |
|
|
|
1,019,058 |
|
|
|
945,358 |
|
|
|
855,661 |
|
|
|
803,374 |
|
|
|
Savings |
|
|
34,434 |
|
|
|
34,067 |
|
|
|
31,344 |
|
|
|
29,031 |
|
|
|
30,002 |
|
|
|
Time
certificates of $250,000 or more |
|
|
495,177 |
|
|
|
427,172 |
|
|
|
416,807 |
|
|
|
398,736 |
|
|
|
339,971 |
|
|
|
Other
time certificates |
|
|
707,830 |
|
|
|
697,155 |
|
|
|
691,099 |
|
|
|
692,063 |
|
|
|
656,386 |
|
|
|
Total
deposits |
|
$ |
2,950,646 |
|
|
$ |
2,763,724 |
|
|
$ |
2,659,996 |
|
|
$ |
2,515,865 |
|
|
$ |
2,357,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances
from Federal Home Loan Bank |
|
|
$ |
26,487 |
|
|
$ |
26,516 |
|
|
$ |
26,544 |
|
|
$ |
26,573 |
|
|
$ |
26,601 |
|
|
|
Subordinated debt issuance |
|
98,870 |
|
|
|
98,839 |
|
|
|
98,851 |
|
|
|
61,475 |
|
|
|
- |
|
|
|
Commitments to fund investment in affordable housing
partnership |
|
10,354 |
|
|
|
10,632 |
|
|
|
11,015 |
|
|
|
11,454 |
|
|
|
11,454 |
|
|
|
Other
liabilities |
|
|
|
32,189 |
|
|
|
23,822 |
|
|
|
22,760 |
|
|
|
17,922 |
|
|
|
13,862 |
|
|
|
Total
liabilities |
|
$ |
3,118,546 |
|
|
$ |
2,923,533 |
|
|
$ |
2,819,166 |
|
|
$ |
2,633,289 |
|
|
$ |
2,409,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net common stock, no par value |
$ |
178,884 |
|
|
$ |
190,675 |
|
|
$ |
188,430 |
|
|
$ |
187,212 |
|
|
$ |
185,780 |
|
|
|
Retained earnings |
|
115,931 |
|
|
|
108,261 |
|
|
|
100,804 |
|
|
|
93,119 |
|
|
|
86,716 |
|
|
|
Accumulated other comprehensive income |
|
(432 |
) |
|
|
(871 |
) |
|
|
2,024 |
|
|
|
2,021 |
|
|
|
1,079 |
|
|
|
Total
shareholders' equity |
|
$ |
294,383 |
|
|
$ |
298,065 |
|
|
$ |
291,258 |
|
|
$ |
282,352 |
|
|
$ |
273,574 |
|
|
|
Total
liabilities and shareholders' equity |
|
$ |
3,412,929 |
|
|
$ |
3,221,598 |
|
|
$ |
3,110,424 |
|
|
$ |
2,915,641 |
|
|
$ |
2,683,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Bank |
|
|
Loan and Credit Quality
Information |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance For Credit Losses & Loss
History |
|
|
|
|
|
|
|
Quarter Ended |
|
Year Ended |
|
|
|
|
|
|
|
March 31, 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 |
|
|
161 |
|
|
|
4,323 |
|
|
|
|
|
Mini-perm
Real Estate |
|
|
- |
|
|
|
- |
|
|
|
|
|
Construction - Residential |
|
|
- |
|
|
|
- |
|
|
|
|
|
Construction - Commercial |
|
|
- |
|
|
|
- |
|
|
|
|
|
Land -
Residential |
|
|
- |
|
|
|
- |
|
|
|
|
|
Land -
Commercial |
|
|
- |
|
|
|
- |
|
|
|
|
|
Others |
|
|
- |
|
|
|
- |
|
|
|
|
|
Total Charge-Offs |
|
|
161 |
|
|
|
4,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries |
|
|
|
|
|
|
|
|
Commercial
& Industrial |
|
|
2 |
|
|
|
985 |
|
|
|
|
|
Mini-perm
Real Estate |
|
|
- |
|
|
|
- |
|
|
|
|
|
Construction - Residential |
|
|
- |
|
|
|
- |
|
|
|
|
|
Construction - Commercial |
|
|
17 |
|
|
|
26 |
|
|
|
|
|
Land -
Residential |
|
|
- |
|
|
|
- |
|
|
|
|
|
Land -
Commercial |
|
|
22 |
|
|
|
732 |
|
|
|
|
|
Total Recoveries |
|
|
40 |
|
|
|
1,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loan
Charge-Offs |
|
|
121 |
|
|
|
2,580 |
|
|
|
|
Provision
for Credit Losses |
|
|
1,500 |
|
|
|
6,400 |
|
|
|
Balance at
End of Period |
|
$ |
27,857 |
|
|
$ |
26,478 |
|
|
|
Average
Loans and Leases |
|
$ |
2,563,473 |
|
|
$ |
2,282,074 |
|
|
|
Loans and
Leases at end of Period |
|
$ |
2,687,603 |
|
|
$ |
2,687,603 |
|
|
|
Net
Charge-Offs to Average Loans and Leases |
|
|
0.02% |
|
|
|
0.11% |
|
|
|
Allowances
for credit losses to loans and leases at end of period |
|
|
1.04% |
|
|
|
1.04% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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
Preferred Bank (NASDAQ:PFBC)
Historical Stock Chart
From Feb 2024 to Mar 2024
Preferred Bank (NASDAQ:PFBC)
Historical Stock Chart
From Mar 2023 to Mar 2024