PFBC Preferred Bank

Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended June 30, 2017. Preferred Bank (“the Bank”) reported net income of $11.7 million or $0.80 per diluted share for the second quarter of 2017. This compares to net income of $8.6 million or $0.61 per diluted share for the second quarter of 2016 and compares to net income of $10.3 million or $0.71 per diluted share for the first quarter of 2017. The increase over the same period last year was primarily due to an increase in net interest income of $5.5 million and the increase over the first quarter was due to an increase in net interest income as well as a decrease in non-interest expense.

Highlights from the second quarter of 2017:

• Linked quarter deposit growth		$171 million or 5.8%
• Linked quarter loan growth		$102 million or 3.8%
• Return on average assets		1.36%
• Return on beginning equity		15.96%
• Efficiency ratio		38.1%
• Net interest margin		3.75%

Li Yu, Chairman and CEO commented, “I am pleased to report second quarter 2017 net income of $11.7 million or $0.80 per diluted share which is 37% and 33% higher than the same quarter last year, respectively.

“Loans and deposits continued to grow this quarter.  On a linked-quarter basis, loans increased $102 million or 3.8% and deposits increased $171 million or 5.8%.  Compared to the balances at the end of 2016, loans have  increased  by $246 million or 9.7% and deposits have grown by $358 million or 12.9%.  We are delighted with the strong deposit growth which enhances our liquidity and long term franchise value, although in the short term, it can have the effect of reducing capital ratios, return on average assets and net interest margin (“NIM”).

“Net interest margin for the second quarter was 3.75%, an 8 basis point increase from the first quarter 2017.  Given the rate increases in March and June of 2017, the margin increase was less than expected largely due to the significant deposit growth which reduced the Bank’s leverage during the quarter.  Asset pricing competition also had the effect of dampening NIM growth.  The deposit growth, however, has little impact on the net income and earnings per share of the Bank.

“Since mid-2016, we have been continuously reviewing the loan portfolio, paying particular attention to those borrowers who may be affected by e-commerce disruption or by an increasing minimum wage in California and New York.  We have also been closely monitoring our non-owner occupied commercial real estate (“CRE”) concentration ratio which currently stands at 331% of total capital as of June 30, 2017, unchanged from the ratio as of March 31, 2017.  Included in this reported non-owner occupied CRE was approximately $93 million (22% of total capital) of revolving commercial lines of credit secured by real estate.  In some cases, the real estate collateral was discretionary and taken as additional collateral.

“With the strong deposit growth in the latest twelve months, our tangible common capital ratio dropped below 9% for the first time since 2009.  In our capital planning process, we must assume our asset growth will continue and therefore we must be proactive.  In this regard, we have obtained a negotiating permit from the State of California which allows us to offer to sell our common stock. We plan to increase our capital by $50 million in this transaction and plan to use an At The Market (“ATM”) transaction to raise the capital in installments, which will more accurately match with the Bank’s growth.

“In June, our Board declared a dividend of $0.20 per share which is an increase of 11% from the $0.18 per share previously declared.  The increase reflects our strong earnings performance and our confidence in the future.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $31.3 million for the second quarter of 2017. This compares favorably to the $25.7 million recorded in the second quarter of 2016 and to the $28.4 million recorded in the first quarter of 2017. 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 3.75% for the second quarter of 2017, an 8 basis point increase over the 3.67% achieved in the first quarter of 2017 but a 20 basis point decrease from the 3.87% achieved in the second quarter of 2016. The increase over the first quarter of 2017 would have been higher; however the Bank’s average loan to deposit ratio dropped to 89.7% for the second quarter as compared to the 92.3% average loan to deposit ratio posted in the first quarter of 2017. This ‘de-leveraging’ of the balance sheet during the second quarter had the effect of muting the increase in average asset yields.

Noninterest Income. For the second quarter of 2017, noninterest income was $1,275,000 compared with $1,660,000 for the same quarter last year and compared to $2,090,000 for the first quarter of 2017. Service charges on deposits decreased by $34,000 this quarter when compared to the same quarter last year and by $49,000 when compared to the first quarter of 2017. Letter of Credit fee income was $581,000 for the second quarter of 2017, a decrease of $254,000 compared to the same period last year and a decrease of $214,000 compared to the first quarter of 2017 as LC activity declined. Other income was $303,000, a decrease from the $398,000 recorded in the same period last year and from the $856,000 recorded in the first quarter of 2017. In the first quarter of 2017, Other income was bolstered by $345,000 of OREO income.

Noninterest Expense. Total noninterest expense was $12.4 million for the second quarter of 2017, an increase of $1.6 million over the same period last year and a decrease of $764,000 from the first quarter of 2017. Salaries and benefits expense totaled $7.7 million for the second quarter of 2017 compared to $6.1 million recorded for the same period last year and compared to the $7.5 million recorded in the first quarter of 2017. The increase over the same period last year and the prior quarter was due primarily to staffing/merit increases, a larger bonus accrual and a reduction in capitalized loan origination costs. Occupancy expense totaled $1.2 million for the second quarter of 2017 and was down slightly from the $1.3 million recorded in the same period last year but was flat when compared to the first quarter of 2017. Professional services expense was $1.0 million for the second quarter of 2017 compared to $1.4 million for the same quarter of 2016 and also down from the $1.2 million recorded in the first quarter of 2017. The decrease compared to both was due to a reduction in legal fees. The Bank incurred $118,000 in costs related to its one OREO property and this compares to OREO expense of $243,000 in the second quarter of 2016 and $108,000 in the first quarter of 2017. Other expenses were $1.8 million for the second quarter of 2017, an increase of $594,000 over the second quarter of 2016 but a decrease of $751,000 from the $2.6 million recorded in the first quarter of 2017. The decrease from the first quarter was mainly due to the legal settlement reserve of $1.6 million recorded in the first quarter of 2017. The Bank’s efficiency ratio came in at 38.1% for the quarter.

Income Taxes

The Bank recorded a provision for income taxes of $7.2 million for the second quarter of 2017. This represents an effective tax rate (“ETR”) of 38.1% for the quarter. This is down from the ETR of 40.0% for the second quarter of 2016 and up from the 35.2% ETR recorded in the first quarter of 2017. The relatively low ETR in the first quarter of 2017 was due to 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 recorded this quarter was lower than the Bank’s statutory rate due mainly to a $154,000 reversal of ASC 740-10 expense recognized in earlier years for uncertain 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 June 30, 2017 were $2.79 billion, an increase of $246.5 million or 9.7% over the total of $2.54 billion as of December 31, 2016. Total deposits as of June 30, 2017 were $3.12 billion, an increase of $357.6 million or 12.9% over the $2.76 billion at December 31, 2016. Total assets as of  June 30, 2017 were $3.58 billion, an increase of $357.8 million or 11.1% over the $3.22 billion as of December 31, 2016.

Asset QualityAs of June 30, 2017 nonaccrual loans totaled $6.5 million, down slightly from the $7.8 million as of March 31, 2017 and also down from the $7.6 million total as of December 31, 2016. Total net charge-offs for the second quarter of 2017 were $1.2 million as compared to $121,000 in the first quarter of 2017 and compared to $2.0 million in the second quarter of 2016. The Bank recorded a provision for loan losses of $1.2 million for the second quarter of 2017, down from the $2.3 million provision recorded in the same quarter and down from the $1.5 million provision recorded in the first quarter of 2017. The allowance for loan loss at June 30, 2017 was $27.9 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 June 30, 2017 and December 31, 2016, the Bank held one OREO property, a $4.1 million multi-family property located outside of California.

CapitalizationAs of June 30, 2017, the Bank’s leverage ratio was 8.69%, the common equity tier 1 capital ratio was 9.13% and the total capital ratio was 13.04%. 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 second quarter 2017 financial results will be held tomorrow, July 19th 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 August 2, 2017; the passcode is 10110443.

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
					June 30,				March 31,				June 30,
					2017				2017				2016
Interest income:
	Loans, including fees				$	34,941			$	31,919			$	27,892
	Investment securities					2,940				2,482				1,722
	Fed funds sold					232				231				109
		Total interest income				38,113				34,632				29,723
Interest expense:
	Interest-bearing demand					1,944				1,465				1,051
	Savings					17				21				18
	Time certificates					3,283				1,160				2,661
	FHLB borrowings					60				65				67
	Subordinated debit					1,531				1,531				186
		Total interest expense				6,835				6,190				3,982
		Net interest income				31,278				28,442				25,741
Provision for loan losses						1,200				1,500				2,300
		Net interest  income after provision for loan losses				30,078				26,942				23,441
Noninterest income:
	Fees & service charges on deposit accounts					304				353				338
	Letters of credit fee income					581				795				835
	BOLI income					87				86				89
	Net gain on sale of investment securities					0				-				-
	Other income					303				856				398
		Total noninterest income				1,275				2,090				1,660
Noninterest expense:
	Salary and employee benefits					7,673				7,509				6,065
	Net occupancy expense					1,214				1,182				1,267
	Business development and promotion expense					188				240				152
	Professional services					1,038				1,162				1,409
	Office supplies and equipment expense					310				353				376
	Other real estate owned related expense and valuation allowance on LHFS					118				108				243
	Other					1,873				2,624				1,279
		Total noninterest expense				12,414				13,178				10,791
		Income before provision for income taxes				18,939				15,854				14,310
Income tax expense						7,222				5,573				5,724
		Net income			$	11,717			$	10,281			$	8,586
Dividend and earnings allocated to participating securities						(135	)			(110	)			(137	)
Net income available to common shareholders					$	11,582			$	10,171			$	8,449
Income per share available to common shareholders
		Basic			$	0.81			$	0.71			$	0.61
		Diluted			$	0.80			$	0.71			$	0.61
Weighted-average common shares outstanding
		Basic				14,348,310				14,314,624				13,851,081
		Diluted				14,407,317				14,386,402				13,957,117
Dividends per share					$	0.20			$	0.18			$	0.15

 

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
					For the Six Months Ended
					June 30,				June 30,				Change
					2017				2016				%
Interest income:
	Loans, including fees				$	66,860			$	53,352			25.3	%
	Investment securities					5,422				3,506			54.7	%
	Fed funds sold					463				186			148.9	%
		Total interest income				72,745				57,044			27.5	%
Interest expense:
	Interest-bearing demand					3,409				2,101			62.3	%
	Savings					38				36			4.5	%
	Time certificates					6,391				4,975			28.5	%
	FHLB borrowings					125				126			-0.5	%
	Subordinated debit issuance					3,062				186			100.0	%
		Total interest expense				13,025				7,424			75.4	%
		Net interest income				59,720				49,620			20.4	%
Provision for credit losses						2,700				3,100			-12.9	%
		Net interest income after provision for loan losses				57,020				46,520			22.6	%
Noninterest income:
	Fees & service charges on deposit accounts					657				632			3.9	%
	Letters of credit fee income					1,375				1,252			9.9	%
	BOLI income					174				174			-0.2	%
	Net gain on sale of investment securities					0				36			100.0	%
	Other income					1,159				729			59.0	%
		Total noninterest income				3,365				2,823			19.2	%
Noninterest expense:
	Salary and employee benefits					15,182				13,086			16.0	%
	Net occupancy expense					2,396				2,470			-3.0	%
	Business development and promotion expense					428				374			14.6	%
	Professional services					2,200				2,371			-7.2	%
	Office supplies and equipment expense					663				727			-8.9	%
	Other real estate owned related expense and valuation allowance on LHFS					226				442			-48.8	%
	Other					4,497				2,359			90.6	%
		Total noninterest expense				25,592				21,829			17.2	%
		Income before provision for income taxes				34,793				27,514			26.5	%
Income tax expense						12,795				11,085			15.4	%
		Net income			$	21,998			$	16,429			33.9	%
Dividend and earnings allocated to participating securities						(248	)			(258	)		-4.1	%
Net income available to common shareholders					$	21,750			$	16,171			34.5	%
Income per share available to common shareholders
		Basic			$	1.52			$	1.17			29.7	%
		Diluted			$	1.51			$	1.16			30.2	%
Weighted-average common shares outstanding
		Basic				14,331,560				13,823,986			3.7	%
		Diluted				14,396,988				13,933,721			3.3	%
Dividends per share					$	0.38			$	0.30			26.7	%

 

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
				June 30,				December 31,
				2017				2016
				(Unaudited)				(Audited)
Assets
Cash and due from banks				$	395,034			$	306,330
Fed funds sold					107,500				97,500
	Cash and cash equivalents				502,534				403,830
Securities held to maturity, at amortized cost					9,610				10,337
Securities available-for-sale, at fair value					192,475				199,833
Loans and leases					2,790,014				2,543,549
Less allowance for loan and lease losses					(27,863	)			(26,478	)
Less net deferred loan fees					(3,245	)			(1,682	)
	Net loans and leases				2,758,906				2,515,389
Other real estate owned					4,112				4,112
Customers' liability on acceptances					7,018				772
Bank furniture and fixtures, net					5,232				5,313
Bank-owned life insurance					8,941				8,825
Accrued interest receivable					10,684				9,550
Investment in affordable housing					37,029				23,670
Federal Home Loan Bank stock					11,078				9,331
Deferred tax assets					25,701				26,605
Other asset					6,075				4,031
	Total assets			$	3,579,395			$	3,221,598
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
	Demand			$	641,153			$	586,272
	Interest-bearing demand				1,231,595				1,019,058
	Savings				27,870				34,067
	Time certificates of $250,000 or more				535,211				427,172
	Other time certificates				685,445				697,155
		Total deposits		$	3,121,274			$	2,763,724
	Acceptances outstanding				7,018				772
	Advances from Federal Home Loan Bank				6,459				26,516
	Subordinated debt issuance				98,901				98,839
	Commitments to fund investment in affordable housing partnership				20,966				10,632
	Accrued interest payable				3,182				3,199
	Other liabilities				16,370				19,851
		Total liabilities			3,274,170				2,923,533
Commitments and contingencies
Shareholders' equity:
	Preferred stock. Authorized 25,000,000 shares; issued and no outstanding shares at June 30, 2017 and December 31, 2016				—				—
	Common stock, no par value. Authorized 20,000,000 shares; issued and outstanding 14,540,588 at June 30, 2017 and 14,232,907 at December 31, 2016, respectively.				173,863				169,861
	Treasury stock				(33,233	)			(19,115	)
	Additional paid-in-capital				39,480				39,929
	Accumulated income				124,740				108,261
	Accumulated other comprehensive income (loss):
		Unrealized gain (loss) on securities, available-for-sale, net of tax of $272 and $(632) at June 30, 2017 and December 31, 2016, respectively			375				(871	)
		Total shareholders' equity			305,225				298,065
	Total liabilities and shareholders' equity			$	3,579,395			$	3,221,598

 

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				For the Quarter Ended
				June 30,			March 31,			December 31,			September 30,			June 30,
				2017			2017			2016			2016			2016
Unaudited historical quarterly operations data:
	Interest income			$	38,113		$	34,632		$	33,980		$	31,889		$	29,723
	Interest expense				6,835			6,190			5,916			5,394			3,982
		Interest income before provision for credit losses			31,278			28,442			28,064			26,495			25,741
	Provision for credit losses				1,200			1,500			1,900			1,400			2,300
	Noninterest income				1,275			2,090			1,286			1,350			1,660
	Noninterest expense				12,414			13,178			11,223			10,486			10,791
	Income tax expense				7,222			5,573			6,166			6,080			5,724
		Net income			11,717			10,281			10,061			9,879			8,586
	Earnings per share
		Basic		$	0.81		$	0.71		$	0.71		$	0.70		$	0.61
		Diluted		$	0.80		$	0.71		$	0.71		$	0.69		$	0.61
Ratios for the period:
	Return on average assets				1.36	%		1.29	%		1.28	%		1.31	%		1.26	%
	Return on beginning equity				15.96	%		13.99	%		13.74	%		13.92	%		12.62	%
	Net interest margin (Fully-taxable equivalent)				3.75	%		3.67	%		3.67	%		3.59	%		3.87	%
	Noninterest expense to average assets				1.44	%		1.66	%		1.43	%		1.39	%		1.58	%
	Efficiency ratio				38.13	%		43.16	%		38.24	%		37.66	%		39.38	%
	Net charge-offs (recoveries) to average loans (annualized)				0.18	%		0.02	%		0.00	%		0.14	%		0.36	%
Ratios as of period end:
	Tier 1 leverage capital ratio				8.69	%		9.01	%		9.43	%		9.47	%		10.05	%
	Common equity tier 1 risk-based capital ratio				9.13	%		9.15	%		9.83	%		9.96	%		10.40	%
	Tier 1 risk-based capital ratio				9.13	%		9.15	%		9.83	%		9.96	%		10.40	%
	Total risk-based capital ratio				13.04	%		13.21	%		14.09	%		14.36	%		13.68	%
	Allowances for credit losses to loans and leases at end of period				1.00	%		1.04	%		1.04	%		1.01	%		1.06	%
	Allowance for credit losses to non-performing loans and leases				426.43	%		357.09	%		346.22	%		1460.49	%		722.47	%
Average balances:
	Total loans and leases			$	2,695,208		$	2,563,473		$	2,465,492		$	2,344,102		$	2,248,652
	Earning assets			$	3,401,193		$	3,167,031		$	3,066,189		$	2,953,325		$	2,687,435
	Total assets			$	3,466,094		$	3,228,142		$	3,124,984		$	3,009,457		$	2,746,031
	Total deposits			$	3,002,583		$	2,775,830		$	2,666,878		$	2,590,702		$	2,400,756

 

 

PREFERRED BANK
Selected Consolidated Financial Information
(in thousands, except for ratios)
				For the Six Months Ended
				June 30,				June 30,
				2017				2016
	Interest income			$	72,745			$	57,044
	Interest expense				13,025				7,424
		Interest income before provision for credit losses			59,720				49,620
	Provision for credit losses				2,700				3,100
	Noninterest income				3,365				2,823
	Noninterest expense				25,592				21,829
	Income tax expense				12,795				11,085
		Net income			21,998				16,429
	Earnings per share
		Basic		$	1.52			$	1.17
		Diluted		$	1.51			$	1.16
Ratios for the period:
	Return on average assets				1.32	%			1.23	%
	Return on beginning equity				14.88	%			12.51	%
	Net interest margin (Fully-taxable equivalent)				3.69	%			3.83	%
	Noninterest expense to average assets				1.54	%			1.59	%
	Efficiency ratio				40.57	%			41.63	%
	Net charge-offs (recoveries) to average loans				0.10	%			0.16	%
Average balances:
	Total loans and leases			$	2,629,947			$	2,158,158
	Earning assets			$	3,285,422			$	2,619,290
	Total assets			$	3,348,450			$	2,676,157
	Total deposits			$	2,890,418			$	2,346,462

 

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				As of
				June 30,				March 31,				December 31,				September 30,				June 30,
				2017				2017				2016				2016				2016
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	502,534			$	450,355			$	403,830			$	405,522			$	376,485
	Securities held-to-maturity, at amortized cost				9,610				9,912				10,337				4,812				5,143
	Securities available-for-sale, at fair value				192,475				197,455				199,833				203,272				201,256
	Loans and Leases:
		Real estate - Single and multi-family residential		$	494,725			$	479,279			$	490,683			$	493,489			$	393,076
		Real estate - Land for housing			14,728				14,754				14,774				14,796				14,817
		Real estate - Land for income properties			1,784				1,792				1,801				1,809				6,316
		Real estate - Commercial			1,217,254				1,160,077				1,047,321				1,037,687				995,213
		Real estate - For sale housing construction			95,462				109,703				104,960				104,973				95,519
		Real estate - Other construction			148,580				150,322				128,434				96,147				72,963
		Commercial and industrial			791,362				741,339				733,709				659,306				659,701
		Trade finance and other			26,119				30,337				21,867				24,460				34,625
			Gross loans		2,790,014				2,687,603				2,543,549				2,432,667				2,272,230
	Allowance for loan and lease losses				(27,863	)			(27,857	)			(26,478	)			(24,556	)			(23,983	)
	Net deferred loan fees				(3,245	)			(2,572	)			(1,682	)			(1,913	)			(3,682	)
		Total loans, net		$	2,758,906			$	2,657,174			$	2,515,389			$	2,406,198			$	2,244,565
	Other real estate owned			$	4,112			$	4,112			$	4,112			$	4,112			$	4,112
	Investment in affordable housing				37,029				22,904				23,670				24,278				24,886
	Federal Home Loan Bank stock				11,078				9,330				9,331				9,331				9,332
	Other assets				63,651				61,687				55,096				52,899				49,862
		Total assets		$	3,579,395			$	3,412,929			$	3,221,598			$	3,110,424			$	2,915,641
Liabilities:
	Deposits:
		Demand		$	641,153			$	576,060			$	586,272			$	575,388			$	540,374
		Interest-bearing demand			1,231,595				1,137,145				1,019,058				945,358				855,661
		Savings			27,870				34,434				34,067				31,344				29,031
		Time certificates of $250,000 or more			535,211				495,177				427,172				416,807				398,736
		Other time certificates			685,445				707,830				697,155				691,099				692,063
			Total deposits	$	3,121,274			$	2,950,646			$	2,763,724			$	2,659,996			$	2,515,865
	Advances from Federal Home Loan Bank			$	6,459			$	26,487			$	26,516			$	26,544			$	26,573
	Subordinated debt issuance				98,901				98,870				98,839				98,851				61,475
	Commitments to fund investment in affordable housing partnership				20,966				10,354				10,632				11,015				11,454
	Other liabilities				26,570				32,189				23,822				22,760				17,922
		Total liabilities		$	3,274,170			$	3,118,546			$	2,923,533			$	2,819,166			$	2,633,289
Equity:
	Net common stock, no par value			$	180,110			$	178,884			$	190,675			$	188,430			$	187,212
	Retained earnings				124,740				115,931				108,261				100,804				93,119
	Accumulated other comprehensive income				375				(432	)			(871	)			2,024				2,021
		Total shareholders' equity		$	305,225			$	294,383			$	298,065			$	291,258			$	282,352
		Total liabilities and shareholders' equity		$	3,579,395			$	3,412,929			$	3,221,598			$	3,110,424			$	2,915,641

 

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
					Six Months Ended				Year Ended
					June 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				1,451				4,323
		Mini-perm Real Estate				-				-
		Construction - Residential				-				-
		Construction - Commercial				-				-
		Land - Residential				-				-
		Land - Commercial				-				-
		Others				-				-
			Total Charge-Offs			1,451				4,323
	Recoveries
		Commercial & Industrial				53				985
		Mini-perm Real Estate				-				-
		Construction - Residential				-				-
		Construction - Commercial				17				26
		Land - Residential				-				-
		Land - Commercial				61				732
			Total Recoveries			131				1,743
	Net Loan Charge-Offs					1,320				2,580
	Provision for Credit Losses					2,700				6,400
Balance at End of Period					$	27,858			$	26,478
Average Loans and Leases					$	2,629,947			$	2,282,074
Loans and Leases at end of Period					$	2,790,014			$	2,687,603
Net Charge-Offs to Average Loans and Leases						0.10	%			0.11	%
Allowances for credit losses to loans and leases at end of period						1.00	%			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