PFBC Preferred Bank

Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended March 31, 2024. Preferred Bank (“the Bank”) reported net income of $33.5 million or $2.44 per diluted share for the first quarter of 2024. This represents a decrease in net income of $2.4 million or 6.6% from the prior quarter and down by $4.6 million from the same quarter last year. Despite the decrease in net income, Preferred Bank continues to deliver top-of-class profitability metrics and long term shareholder returns.

Highlights for the Quarter:

• Return on average assets was 2.00%
• Return on beginning equity of 19.36%
• Net interest margin was 4.19%
• Total deposits increased by $92 million or 1.62% for the quarter
• Total loans increased $52 million or 1.0% for the quarter
• Efficiency ratio was 28.0%

Li Yu, Chairman and CEO, commented, “We are pleased to report first quarter 2024 net income of $33.5 million or $2.44 per diluted share. For the quarter, loans grew $52 million and total deposits increased $92 million from December 31, 2023, which equates to annual growth rates of 4.0% and 6.5%, respectively. The Bank’s net interest margin for the quarter was 4.19% which was better than expected. This compares to a margin of 4.24% for the previous quarter and the slight decrease was primarily the result of higher deposit costs.

“At March 31, 2024 criticized loans were $86.6 million, an increase of $3.7 million from the $83.0 million as of December 31, 2023. Non-accrual loans decreased from $28.7 million at December 31, 2023 to $18.3 million at March 31, 2024. Charge-offs for the quarter were $3.4 million which were on two loans that had been previously identified as having loss content and fully reserved for. The Bank recorded a first quarter provision of $4.4 million. Allowance for loan loss reserve now stands at 1.49% of total loans.

“During the first quarter, we repurchased 256,986 shares of our common stock for a total consideration of $18.2 million.

“Our Bank opened a new Orange County, California Branch in January. This branch provides complete banking services, staffed with a deposit group and a lending group. As of today, we have signed a lease and are in the process of opening up a loan production office in Silicon Valley, California. We also plan to increase relationship staff in several current operating locations in the ensuing months.

“In view of the current moderately declining interest rate environment, we have made some adjustment to our loan portfolio by reducing the level of rate sensitivity to better balance with our deposit composition. We believe such adjustments will bring long term benefits to our Bank.”

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $68.5 million for the first quarter of 2024. This was a decrease from the $73.7 million recorded in the same quarter last year and down slightly from the $69.4 million posted in the fourth quarter of 2023. The Bank’s taxable equivalent net interest margin declined by 5 basis points to 4.19%, from 4.24% last quarter. Although the NIM compressed this quarter, it held up much better than anticipated. Comparing to the same quarter last year, which was the Bank’s peak NIM in this cycle, the margin was down by 58 basis points from the 4.77% NIM posted in the first quarter of 2023.

Noninterest Income. For the first quarter of 2024, noninterest income (loss) was $3.1 million compared with ($1.1) million for the same quarter last year and compared to $2.1 million for the fourth quarter of 2023. The increase over the prior quarter was primarily due to a $929,000 loss on sale of approximately $29 million in investment securities in the fourth quarter of 2023. This was done to reposition a part of the portfolio into higher-yielding instruments. In comparing to the same quarter last year; service charges on deposits and LC fee income were both up over last year and gains in loan sales were down. In addition, the Bank incurred a $4.1 million loss last year on the sale of the Bank’s Signature Bank bond with no such loss this year.

Noninterest Expense. Total noninterest expense was $20.0 million for the first quarter of 2024 compared to $17.9 million for the fourth quarter of 2023 and compared to the $18.9 million recorded in the same period last year. Comparing this quarter to the first quarter of last year, the major variances were: professional services was up by $308,000 due to increased legal fees, occupancy expense was up by $237,000 due to our new location and personnel expense increased by $172,000. In comparing the first quarter of 2024 to the prior quarter; personnel expense increased by $1.8 million, occupancy expense was up by $175,000 and OREO expense declined by $159,000. For the quarter ended March 31, 2024, the Bank’s efficiency ratio was 28.0%, off from the 25.0% posted last quarter and off from the 26.0% posted this quarter last year.

Income Taxes. The Bank recorded a provision for income taxes of $13.7 million for the first quarter of 2024. This represents an effective tax rate (“ETR”) of 29.0%, up from the ETR of 28.5% recorded in both comparable periods. The Bank’s ETR will fluctuate slightly from quarter to quarter within a fairly small range due to the timing of taxable events throughout the year.

Balance Sheet Summary

Total gross loans at March 31, 2024 were $5.33 billion, an increase of $52.4 million from the total of $5.27 billion as of December 31, 2023. Total deposits increased to $5.80 billion from the $5.71 billion as of December 31, 2023, an increase of $92.4 million. Total assets were $6.76 billion, an increase of $96.9 million over the total of $6.66 billion as of December 31, 2023.

Asset Quality

As of March 31, 2024, nonaccrual loans declined to $18.3 million, down from the $28.7 million as of December 31, 2023. The decrease was primarily due to the sale of notes of a certain borrower relationship for which the Bank received principal at par. OREO and repossessed assets totaled $16.7 million as of March 31, 2024, no change from December 31, 2023. Criticized loans increased slightly from $83.0 million as of December 31, 2023 to $86.6 million as of March 31, 2024. Total net charge-offs (recoveries) were $3.4 million for the first quarter of 2024 as compared to net recoveries of ($6,000) last quarter and compared to $43,000 for the first quarter last year. Management is acutely aware that commercial real estate is under some pressure given the rise in interest rates over the past year and the work from home dynamic that has impacted office property values. However in reviewing the portfolio, this weakness has yet to appear. We will be vigilant going forward.

Allowance for Credit Losses

The provision for credit losses for the first quarter of 2024 was $4.4 million compared to $3.5 million last quarter and compared to $500,000 in the same quarter last year. The aforementioned charge-offs recorded during the quarter as well as loan growth were the primary drivers of the provision for the quarter. The Bank’s allowance coverage ratio remains unchanged at 1.49% of total loans.

Capitalization

As of March 31, 2024, the Bank’s leverage ratio was 10.80%, the common equity tier 1 capital ratio was 11.50% and the total capital ratio stood at 15.08%. As of December 31, 2023, the Bank’s leverage ratio was 10.85%, the common equity tier 1 ratio was 11.57% and the total capital ratio was 15.18%.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank’s first quarter 2024 financial results will be held tomorrow, April 23, 2024 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.

Preferred Bank's Chairman and CEO Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi and Deputy Chief Operating Officer Johnny Hsu will discuss Preferred Bank's financial results, business highlights and outlook. After the live webcast, a replay will be available at 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 7, 2024; the passcode is 9065569.

About Preferred Bank

Preferred Bank is one of the larger independent commercial banks headquartered 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 Bank conducts its banking business from its main office in Los Angeles, California, and through twelve full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)), one branch in Flushing, New York and a branch office in the Houston, Texas suburb of Sugar Land. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank's results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2023 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at www.preferredbank.com.

AT THE COMPANY:	AT FINANCIAL PROFILES:
Edward J. Czajka	Jeffrey Haas
Executive Vice President	General Information
Chief Financial Officer	(310) 622-8240
(213) 891-1188	PFBC@finprofiles.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,
						2024				2023				2023
Interest income:
	Loans, including fees				$	109,980			$	107,709			$	95,881
	Investment securities					16,257				16,973				12,979
	Fed funds sold					283				282				224
		Total interest income				126,520				124,964				109,084
Interest expense:
	Interest-bearing demand					22,290				21,716				17,038
	Savings					75				72				39
	Time certificates					34,330				32,455				16,593
	FHLB borrowings					-				-				374
	Subordinated debt					1,325				1,325				1,325
		Total interest expense				58,020				55,568				35,369
		Net interest income				68,500				69,396				73,715
Provision for credit losses						4,400				3,500				500
		Net interest income after provision for
			credit losses			64,100				65,896				73,215
Noninterest income:
	Fees & service charges on deposit accounts					845				857				694
	Letters of credit fee income					1,503				1,486				1,324
	BOLI income					105				105				101
	Net loss on called and sale of investment securities					-				(929	)			(4,117	)
	Net gain on sale of loans					103				205				340
	Other income					509				382				592
		Total noninterest income				3,065				2,106				(1,066	)
Noninterest expense:
	Salary and employee benefits					13,900				12,058				13,728
	Net occupancy expense					1,711				1,536				1,474
	Business development and promotion expense					266				239				105
	Professional services					1,457				1,355				1,149
	Office supplies and equipment expense					473				391				404
	Loss on sale of OREO, valuation allowance and related expense					135				294				72
	Other					2,086				2,000				1,968
		Total noninterest expense				20,028				17,873				18,900
		Income before provision for income taxes				47,137				50,129				53,249
Income tax expense						13,671				14,290				15,176
		Net income			$	33,466			$	35,839			$	38,073
Income per share available to common shareholders
		Basic			$	2.48			$	2.63			$	2.64
		Diluted			$	2.44			$	2.60			$	2.61
Weighted-average common shares outstanding
		Basic				13,508,878				13,617,225				14,430,606
		Diluted				13,736,986				13,804,315				14,602,149
Cash dividends per common share					$	0.70			$	0.70			$	0.55

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
				March 31,				December 31,
					2024				2023
				(Unaudited)				(Audited)
Assets
Cash and due from banks				$	916,600			$	890,852
Fed funds sold					20,000				20,000
	Cash and cash equivalents				936,600				910,852
Securities held-to-maturity, at amortized cost					20,904				21,171
Securities available-for-sale, at fair value					333,411				313,842
Loans					5,325,854				5,273,498
	Less allowance for credit losses				(79,311	)			(78,355	)
	Less amortized deferred loan fees, net				(10,460	)			(11,079	)
	Loans, net				5,236,083				5,184,064
Loans held for sale, at lower of cost or fair value					605				360
Other real estate owned and repossessed assets					16,716				16,716
Customers' liability on acceptances					-				315
Bank furniture and fixtures, net					9,962				9,694
Bank-owned life insurance					10,702				10,632
Accrued interest receivable					35,592				33,892
Investment in affordable housing partnerships					62,854				65,276
Federal Home Loan Bank stock, at cost					15,000				15,000
Deferred tax assets					49,389				48,991
Income tax receivable					-				2,391
Operating lease right-of-use assets					23,068				22,050
Other assets					5,327				4,030
	Total assets			$	6,756,213			$	6,659,276
Liabilities and Shareholders' Equity
Deposits:
	Noninterest bearing demand deposits			$	709,767			$	786,995
	Interest bearing deposits:				2,159,948				2,075,156
		Savings			29,261				29,167
		Time certificates of $250,000 or more			1,349,927				1,317,862
		Other time certificates			1,552,805				1,500,162
		Total deposits			5,801,708				5,709,342
Acceptances outstanding					-				315
Subordinated debt issuance, net					148,292				148,232
Commitments to fund investment in affordable housing partnerships					29,647				30,824
Operating lease liabilities					20,215				19,766
Accrued interest payable					15,718				16,124
Other liabilities					41,075				39,568
	Total liabilities				6,056,655				5,964,171
Shareholders' equity					699,558				695,105
	Total liabilities and shareholders' equity			$	6,756,213			$	6,659,276
Book value per common share				$	52.23			$	50.54
Number of common shares outstanding					13,392,737				13,753,246

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,
				2024				2023				2023				2023				2023
Unaudited historical quarterly operations data:
	Interest income			$	126,520			$	124,964			$	125,529			$	118,411			$	109,084
	Interest expense				58,020				55,568				52,575				45,102				35,369
		Interest income before provision for credit losses			68,500				69,396				72,954				73,309				73,715
	Provision for credit losses				4,400				3,500				3,500				2,500				500
	Noninterest income				3,065				2,106				2,972				3,101				(1,066	)
	Noninterest expense				20,028				17,873				19,009				20,852				18,900
	Income tax expense				13,671				14,290				15,225				15,122				15,176
		Net income		$	33,466			$	35,839			$	38,192			$	37,936			$	38,073
	Earnings per share
		Basic		$	2.48			$	2.63			$	2.74			$	2.63			$	2.64
		Diluted		$	2.44			$	2.60			$	2.71			$	2.61			$	2.61
Ratios for the period:
	Return on average assets				2.00	%			2.15	%			2.25	%			2.32	%			2.41	%
	Return on beginning equity				19.36	%			21.21	%			22.66	%			23.18	%			24.49	%
	Net interest margin (Fully-taxable equivalent)				4.19	%			4.24	%			4.39	%			4.58	%			4.77	%
	Noninterest expense to average assets				1.20	%			1.07	%			1.12	%			1.28	%			1.20	%
	Efficiency ratio				27.99	%			25.00	%			25.04	%			27.29	%			26.02	%
	Net charge-offs (recoveries) to average loans (annualized)				0.26	%			0.00	%			0.01	%			0.00	%			0.00	%
Ratios as of period end:
	Tier 1 leverage capital ratio				10.80	%			10.85	%			10.46	%			10.61	%			10.63	%
	Common equity tier 1 risk-based capital ratio				11.50	%			11.57	%			11.63	%			11.51	%			11.30	%
	Tier 1 risk-based capital ratio				11.50	%			11.57	%			11.63	%			11.51	%			11.30	%
	Total risk-based capital ratio				15.08	%			15.18	%			15.32	%			15.14	%			14.91	%
	Allowances for credit losses to loans at end of period				1.49	%			1.49	%			1.46	%			1.40	%			1.36	%
	Allowance for credit losses to non-performing loans			4.33x				2.73x				3.86x				13.86x				254.56x
Average balances:
	Total securities			$	348,961			$	349,863			$	368,968			$	397,905			$	442,852
	Total loans				5,263,562				5,126,918				5,086,241				5,044,004				5,012,862
	Total earning assets				6,585,853				6,499,469				6,597,557				6,432,950				6,276,630
	Total assets				6,718,018				6,627,349				6,719,859				6,558,651				6,400,849
	Total time certificate of deposits				2,852,860				2,767,385				2,680,854				2,617,872				2,209,370
	Total interest bearing deposits				5,004,834				4,906,947				4,800,227				4,549,519				4,451,299
	Total deposits				5,761,488				5,689,713				5,654,350				5,481,457				5,479,945
	Total interest bearing liabilities				5,153,089				5,055,143				5,069,014				4,847,596				4,630,982
	Total equity				704,996				683,141				678,020				677,306				650,963

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
				As of
				March 31,				December 31,				September 30,				June 30,				March 31,
					2024				2023				2023				2023				2023
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	936,600			$	910,852			$	1,021,108			$	1,049,745			$	885,691
	Securities held-to-maturity, at amortized cost				20,904				21,171				21,474				21,818				22,155
	Securities available-for-sale, at fair value				333,411				313,842				335,608				352,548				367,492
	Loans:
		Real estate – Mortgage:
			Real estate—Residential	$	724,101			$	688,058			$	663,021			$	631,795			$	612,907
			Real estate—Commercial		2,777,608				2,760,761				2,688,148				2,744,074				2,813,681
			Total Real Estate – Mortgage		3,501,709				3,448,819				3,351,169				3,375,879				3,426,588
		Real estate – Construction:
			R/E Construction — Residential		236,596				246,201				226,482				186,239				175,286
			R/E Construction — Commercial		213,727				179,775				164,666				153,418				142,319
			Total real estate construction loans		450,323				425,976				391,148				339,657				317,605
		Commercial and industrial			1,368,353				1,393,830				1,377,675				1,388,865				1,299,325
		SBA			3,914				3,469				2,424				4,427				7,306
		Trade finance			1,176				1,041				5,541				9,348				6,885
		Consumer and others			379				363				285				345				19
			Gross loans		5,325,854				5,273,498				5,128,242				5,118,511				5,057,728
	Allowance for credit losses on loans				(79,311	)			(78,355	)			(74,849	)			(71,429	)			(68,929	)
	Net deferred loan fees				(10,460	)			(11,079	)			(10,240	)			(10,464	)			(10,286	)
		Net loans, excluding loans held for sale		$	5,236,083			$	5,184,064			$	5,043,153			$	5,036,618			$	4,978,513
	Loans held for sale			$	605			$	360			$	-			$	176			$	-
		Net loans		$	5,236,688			$	5,184,424			$	5,043,153			$	5,036,794			$	4,978,513
	Other real estate owned and repossessed assets			$	16,716			$	16,716			$	16,716			$	16,728			$	18,628
	Investment in affordable housing partnerships				62,854				65,276				54,679				56,844				59,009
	Federal Home Loan Bank stock, at cost				15,000				15,000				15,000				15,000				15,000
	Other assets				134,040				131,995				124,793				118,465				115,049
		Total assets		$	6,756,213			$	6,659,276			$	6,632,530			$	6,667,942			$	6,461,537
Liabilities:
	Deposits:
		Demand		$	709,767			$	786,995			$	838,300			$	870,282			$	1,050,992
		Interest bearing demand			2,159,948				2,075,156				2,091,384				2,005,298				1,751,439
		Savings			29,261				29,167				30,427				32,089				33,861
		Time certificates of $250,000 or more			1,349,927				1,317,862				1,283,461				1,244,128				1,329,720
		Other time certificates			1,552,805				1,500,162				1,439,699				1,437,194				1,241,754
			Total deposits	$	5,801,708			$	5,709,342			$	5,683,271			$	5,588,991			$	5,407,766
	Acceptances outstanding			$	-			$	315			$	103			$	448			$	107
	Advance from Federal Home Loan Bank				-				-				-				150,000				150,000
	Subordinated debt issuance, net				148,292				148,232				148,173				148,114				148,055
	Commitments to fund investment in affordable housing partnerships				29,647				30,824				20,824				20,930				26,709
	Other liabilities				77,008				75,458				109,651				90,692				72,359
		Total liabilities		$	6,056,655			$	5,964,171			$	5,962,022			$	5,999,175			$	5,804,996
Equity:
	Net common stock, no par value			$	115,915			$	134,534			$	143,584			$	167,404			$	181,208
	Retained earnings				616,417				592,325				566,027				535,373				505,207
	Accumulated other comprehensive income				(32,774	)			(31,754	)			(39,103	)			(34,010	)			(29,874	)
		Total shareholders' equity		$	699,558			$	695,105			$	670,508			$	668,767			$	656,541
		Total liabilities and shareholders' equity		$	6,756,213			$	6,659,276			$	6,632,530			$	6,667,942			$	6,461,537

PREFERRED BANK
Quarter-to-Date Average Balances, Yields and Rates
(Unaudited)
			Three months ended March 31,								Three months ended December 31,								Three months ended March 31,
				2024								2023								2023
						Interest		Average						Interest		Average						Interest		Average
			Average			Income or		Yield/			Average			Income or		Yield/			Average			Income or		Yield/
			Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate
ASSETS			(Dollars in thousands)
Interest earning assets:
	Loans(1,2)		$	5,265,940		$	109,980	8.40	%		$	5,127,935		$	107,709	8.33	%		$	5,013,740		$	95,881	7.76	%
	Investment securities(3)			348,961			3,430	3.95	%			349,863			3,335	3.78	%			442,852			3,994	3.66	%
	Federal funds sold			20,390			283	5.58	%			20,028			282	5.58	%			20,222			224	4.50	%
	Other earning assets			950,562			12,928	5.47	%			1,001,643			13,739	5.44	%			799,816			9,087	4.61	%
		Total interest earning assets		6,585,853			126,621	7.73	%			6,499,469			125,065	7.63	%			6,276,630			109,186	7.05	%
	Deferred loan fees, net			(10,694	)							(10,421	)							(9,937	)
	Allowance for credit losses on loans			(78,349	)							(74,965	)							(68,466	)
Noninterest earning assets:
	Cash and due from banks			11,244								12,376								11,527
	Bank furniture and fixtures			10,084								9,243								8,977
	Right of use assets			22,003								20,338								21,867
	Other assets			177,877								171,309								160,251
		Total assets	$	6,718,018							$	6,627,349							$	6,400,849
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
	Deposits:
		Interest bearing demand and savings	$	2,151,974		$	22,365	4.18	%		$	2,139,562		$	21,788	4.04	%		$	2,241,929		$	17,077	3.09	%
		TCD $250K or more		1,341,298			16,501	4.95	%			1,294,531			15,600	4.78	%			1,266,072			10,743	3.44	%
		Other time certificates		1,511,562			17,829	4.74	%			1,472,854			16,855	4.54	%			943,298			5,850	2.52	%
		Total interest bearing deposits		5,004,834			56,695	4.56	%			4,906,947			54,243	4.39	%			4,451,299			33,670	3.07	%
Short-term borrowings				-			-	0.00	%			2			0	6.08	%			-			-	0.00	%
Advance from Federal home loan bank				-			-	0.00	%			-			-	0.00	%			31,667			374	4.78	%
Subordinated debt, net				148,255			1,325	3.59	%			148,194			1,325	3.55	%			148,016			1,325	3.63	%
		Total interest bearing liabilities		5,153,089			58,020	4.53	%			5,055,143			55,568	4.36	%			4,630,982			35,369	3.10	%
Noninterest bearing liabilities:
	Demand deposits			756,654								782,766								1,028,646
	Lease Liability			19,500								18,179								20,993
	Other liabilities			83,779								88,120								69,265
		Total liabilities		6,013,022								5,944,208								5,749,886
Shareholders’ equity				704,996								683,141								650,963
		Total liabilities and shareholders’ equity	$	6,718,018							$	6,627,349							$	6,400,849
Net interest income						$	68,601							$	69,497							$	73,817
Net interest spread								3.20	%							3.27	%							3.96	%
Net interest margin								4.19	%							4.24	%							4.77	%
Cost of Deposits:
	Noninterest bearing demand deposits		$	756,654							$	782,766							$	1,028,646
	Interest bearing deposits			5,004,834			56,695	4.56	%			4,906,947			54,243	4.39	%			4,451,299			33,670	3.07	%
		Total Deposits	$	5,761,488		$	56,695	3.96	%		$	5,689,713		$	54,243	3.78	%		$	5,479,945		$	33,670	2.49	%
(1)	Includes non-accrual loans and loans held for sale
(2)	Net loan fee income of $1.1 million, $1.0 million and $1.2 million for the quarter ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively, are included in the yield computations
(3)	Yields on securities have been adjusted to a tax-equivalent basis

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses History
					Quarter Ended				Year Ended
					March 31, 2024				December 31, 2023
					(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period					$	78,355			$	68,472
	Charge-Offs
		Commercial & Industrial				3,445				124
		Mini-perm Real Estate				-				-
			Total Charge-Offs			3,445				124
	Recoveries
		Commercial & Industrial				1				7
		Mini-perm Real Estate				-				-
			Total Recoveries			1				7
	Net Charge-Offs (recoveries)					3,444				117
	Provision for Credit Losses:					4,400				10,000
Balance at End of Period					$	79,311			$	78,355
Average Loans Held for Investment					$	5,263,562			$	5,067,870
Loans Held for Investment at End of Period					$	5,325,854			$	5,273,498
Net Charge-Offs (recoveries) to Average Loans						0.26	%			0.00	%
Allowances for Credit Losses to Loans at End of Period						1.49	%			1.49	%