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Preferred Bank Reports Quarterly Earnings

LOS ANGELES, July 18, 2018 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended June 30, 2018. Preferred Bank (“the Bank”) reported net income of $17.4 million or $1.14 per diluted share for the second quarter of 2018. This compares favorably to net income of $11.7 million or $0.80 per diluted share for the second quarter of 2017 and to net income of $16.6 million or $1.09 per diluted share for the first quarter of 2018. Net income for the six months ended June 30, 2018 was $34.0 million or $2.22 per diluted share compared to net income of $22.0 million or $1.51 per diluted share for the same period last year. This represents a YTD increase in net income of $12.0 million or 54.6%, part of which is due to the federal tax rate decrease as a result of the Tax Cuts and Jobs Act. However, pre-tax income increased on a YTD basis by $11.8 million or 34.0%.

Highlights from the second quarter of 2018:

  •   Return on Assets 1.83%
  •   Return on Beginning Equity 18.82%
  •   Linked quarter deposit growth 4.55%
  •   Linked quarter loan growth 2.90%
  •   Efficiency ratio 35.30%
  •   Net interest margin 4.07%
     

Li Yu, Chairman and CEO, commented, “For the quarter ended June 30, 2018, Preferred Bank’s net income was $17.4 million or $1.14 per share.  This represents a 48.5% and 41.3% increase, respectively, compared to the same quarter of 2017, and on a pre-tax basis, earnings increased by 27.6%.

“The quarter’s net income was negatively impacted by the reversal of approximately $811,000 of accrued interest related to the 'New York loans' which were placed on non-accrual status during the quarter.

“Deposits have resumed their more traditional growth pattern.  During the quarter, we updated our offered deposit rates to remain competitive in our markets.  Total deposits increased $148.6 million or 4.6% on a linked quarter basis.

“Loans increased $89.6 million or 2.9% on a linked quarter basis.  This is before our moving $47.3 million of the above mentioned 'New York loans' to held-for-sale status.

“During the past several months our Bank has been actively working on up-grading our core operating systems which are scheduled to be converted this quarter.  The new system will allow us to be more efficient and to significantly expand our customers’ capabilities within the system and offer new products as well.  Costs related to this conversion have caused our overhead to increase somewhat but our overall cost control remains effective.  The efficiency ratio for the quarter was quite strong at 35.3%.

“The net interest margin for the quarter was 4.07%, a slight compression from the first quarter’s 4.14% margin. This was anticipated as the Bank moved in late March to increase offered deposit rates.  In addition to that, recall that we benefitted in the first quarter from the ‘leveraging’ of the balance sheet. Overall cost of funds did increase during the quarter as anticipated but we are pleased at the overall level being above 4% as this is very strong relative to our recent history and to our peer banks.

“Our Bank has been delivering top tier returns among our peer group and management remains dedicated to continue this effort.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $37.4 million for the second quarter of 2018. This compares favorably to the $31.3 million recorded in the second quarter of 2017 and to the $36.1 million recorded in the first quarter of 2018. The comparisons to both prior periods is favorable due primarily to loan growth partially offset by an increase in interest expense on deposits. The Bank’s taxable equivalent net interest margin was 4.07% for the second quarter of 2018, a 32 basis point increase over the 3.75% achieved in the second quarter of 2017 and a 7 basis point decrease from the 4.14% posted in the first quarter of 2018. The margin compressed slightly this quarter compared to the first quarter of 2018 mainly due to deposit growth, which was fairly steady during the quarter coupled with slightly slower loan growth during the quarter. In addition, the Bank recorded a reversal of loan interest income of $811,000 when the New York loans were placed on nonaccrual status. Partially offsetting these items is a full quarter’s benefit of the March FOMC rate hike as well as a small benefit from the June rate hike which moved yields on loans higher.

Noninterest Income. For the second quarter of 2018, noninterest income was $1,756,000 compared with $1,275,000 for the same quarter last year and compared to $1,564,000 for the first quarter of 2018. The increase from the second quarter of 2017 is primarily due to an increase in letter of credit (“LC”) fees as well as net gains on the sale/call of investment securities of $112,000. The increase over the first quarter of 2018 was mainly due to the gain on investment securities as well as other income which was up by $152,000.

Noninterest Expense. Total noninterest expense was $13.8 million for the second quarter of 2018, an increase of $1.4 million over the second quarter of 2017 and an increase of just $75,000 from the $13.7 million recorded in the first quarter of 2018. Salaries and benefits expense totaled $8.8 million for the second quarter of 2018, an increase of $180,000 over the $8.6 million recorded for the first quarter of 2018 and an increase of $1.1 million over the $7.7 million recorded in the second quarter of 2017. The increase over both periods is primarily due to staffing increases. Occupancy expense totaled $1.3 million for the quarter, an increase of $82,000 over the $1.2 million recorded in the same period in 2017 and relatively flat from the $1.3 million posted in the first quarter of 2018. The increase over the same period last year is due mainly to increased lease rates at most offices. Professional services expense was $1.7 million for the second quarter of 2018 compared to $1.0 million for the same quarter of 2017 and $1.4 million recorded in the first quarter of 2018. The increase over both periods is for the partial cost ($480,000) for de-conversion files from the Bank’s current core processor as the Bank prepares to convert its core processing systems in July of 2018 to a new core processor. In addition, the Bank incurred consulting expenses in association with this conversion project. The Bank expects to incur further costs for de-conversion files in the third quarter of 2018, albeit not to this level. Other expenses were $1.3 million for the second quarter of 2018 compared to $1.9 million for the second quarter of 2017 and $1.7 million for the first quarter of 2018. The decrease from the first quarter of 2018 was mainly due to the $300,000 off balance sheet reserve posted in that quarter and the decrease from the second quarter of 2017 was due mainly to a reduction in  FDIC premiums and to lower legal costs.

Income Taxes

The Bank recorded a provision for income taxes of $6.8 million for the second quarter of 2018. This represents an effective tax rate (“ETR”) of 28.0% and is up slightly from the ETR of 26.1% for the first quarter of 2018 but down significantly from the 38.1% recorded in the second quarter of 2017. The large decrease from last year was due to the passage of the Tax Cuts and Jobs Act in December 2017.

Balance Sheet Summary

Total gross loans and leases (both held for sale and held for investment) at June 30, 2018 were $3.19 billion, an increase of $89.6 million or 2.9% over the total of $3.10 billion as of March 31, 2018. Total deposits increased by $148.6 over the $3.26 billion as of March 31, 2018. Total assets reached $3.96 billion as of June 30, 2018, an increase of $176.9 million or 4.68% over the total of $3.78 billion as of March 31, 2018.

Asset Quality

Loans
During the second quarter, the Bank disclosed the existence of four problem loans secured by real estate properties in New York totaling $47.3 million. During the quarter, the Bank has been working to resolve these but due to circumstances associated with the borrowing entities, the Bank has decided to sell the notes and therefore they have been moved into the “held for sale” category. In accordance with the change in classification and based upon the most recent information, the Bank determined that no writedown was required.

As of June 30, 2018, nonaccrual loans totaled $50.5 million, up from the total of $6.5 million as of December 31, 2017. The increase is primarily due to the addition of the four aforementioned New York loans, which total $47.3 million. Total net recoveries for the second quarter of 2018 were $2,000 compared to net charge-offs of $2.9 million in the first quarter of 2018 and compared to net charge-offs of $1.2 million for the second quarter of 2017. The Bank recorded a provision for loan loss of $1.2 million for the second quarter of 2018, compared to the same amount in the second quarter of 2017 and compared to $1.5 million recorded in the first quarter of 2018. The allowance for loan loss at June 30, 2018 was $29.7 million or 0.95% of loans held for investment compared to $29.9 million or 1.02% of total loans at December 31, 2017.

OREO

As of June 30, 2018 and December 31, 2017, the Bank held one OREO property, a $4.1 million multi-family property located outside of California.

Capitalization
As of June 30, 2018, the Bank’s leverage ratio was 10.04%, the common equity tier 1 capital ratio was 10.03% and the total capital ratio was 13.48%. As of December 31, 2017, the Bank’s leverage ratio was 9.52%, the common equity tier 1 ratio was 10.07% and the total risk based capital ratio was 13.83%.

Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s second quarter 2018 financial results will be held tomorrow, July 19, 2018 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 Chief Executive Officer Li Yu,  President and Chief Operating Officer 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, 2018; the passcode is 10122332.

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 twelve 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 (2), and one office in Flushing New York. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank's results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2017 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,
          2018       2018       2017  
 Interest income:             
   Loans, including fees    $   42,970     $   40,293     $   34,941  
   Investment securities        3,301         2,950         2,940  
   Fed funds sold        477         409         232  
     Total interest income        46,748         43,652         38,113  
                 
 Interest expense:             
   Interest-bearing demand        3,343         2,422         1,944  
   Savings        16         16         17  
   Time certificates        4,432         3,520         3,283  
   FHLB borrowings        20         19         60  
   Subordinated debit        1,531         1,531         1,531  
     Total interest expense        9,342         7,508         6,835  
     Net interest income        37,406         36,144         31,278  
 Provision for loan losses        1,200         1,500         1,200  
     Net interest  income after provision for loan losses        36,206         34,644         30,078  
                 
 Noninterest income:             
   Fees & service charges on deposit accounts        350         321         304  
   Letters of credit fee income        889         991         581  
   BOLI income        90         89         87  
   Net gain on sale/call of investment securities        112         -         0  
   Other income        315         163         303  
     Total noninterest income        1,756         1,564         1,275  
                 
 Noninterest expense:             
   Salary and employee benefits        8,807         8,627         7,673  
   Net occupancy expense        1,296         1,338         1,214  
   Business development and promotion expense        181         150         188  
   Professional services        1,736         1,431         1,038  
   Office supplies and equipment expense        367         375         310  
   Other real estate owned related expense        107         106         118  
   Other        1,311         1,703         1,873  
     Total noninterest expense        13,805         13,730         12,414  
     Income before provision for income taxes        24,157         22,478         18,939  
 Income tax expense        6,752         5,867         7,222  
     Net income    $   17,405     $   16,611     $   11,717  
                 
 Dividend and earnings allocated to participating securities        (297 )       (253 )       (136 )
 Net income available to common shareholders    $   17,108     $   16,358     $   11,581  
                 
 Income per share available to common shareholders             
     Basic    $   1.14     $   1.09     $   0.81  
     Diluted    $   1.14     $   1.09     $   0.80  
                 
 Weighted-average common shares outstanding             
     Basic        15,063,450         15,035,265         14,348,310  
     Diluted        15,063,450         15,044,180         14,407,317  
                 
 Dividends per share    $   0.25     $   0.22     $   0.20  
                 

 

 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 
            2018       2017     %
 Interest income:             
   Loans, including fees    $   83,263     $   66,860     24.5 %
   Investment securities        6,251         5,422     15.3 %
   Fed funds sold        886         463     91.3 %
     Total interest income        90,400         72,745     24.3 %
                   
 Interest expense:             
   Interest-bearing demand        5,765         3,409     69.1 %
   Savings        32         38     -14.7 %
   Time certificates        7,952         6,392     24.4 %
   FHLB borrowings        39         125     -69.1 %
   Subordinated debit issuance        3,062         3,062     100.0 %
     Total interest expense        16,850         13,025     29.4 %
     Net interest income        73,550         59,720     23.2 %
 Provision for credit losses        2,700         2,700     0.0 %
     Net interest income after provision for loan losses        70,850         57,020     24.3 %
                   
 Noninterest income:             
   Fees & service charges on deposit accounts        671         657     2.2 %
   Letters of credit fee income        1,880         1,375     36.7 %
   BOLI income        179         174     2.8 %
   Net gain on sale/call of investment securities        112         0     100.0 %
   Other income        478         1,159     -58.7 %
     Total noninterest income        3,320         3,365     -1.3 %
                   
 Noninterest expense:             
   Salary and employee benefits        17,433         15,182     14.8 %
   Net occupancy expense        2,634         2,396     9.9 %
   Business development and promotion expense        331         428     -22.8 %
   Professional services        3,167         2,200     43.9 %
   Office supplies and equipment expense        742         663     12.0 %
   Other real estate owned related expense        213         226     -5.9 %
   Other          3,015         4,497     -33.0 %
     Total noninterest expense        27,535         25,592     7.6 %
     Income before provision for income taxes        46,635         34,793     34.0 %
 Income tax expense        12,619         12,795     -1.4 %
     Net income    $   34,016     $   21,998     54.6 %
                   
 Dividend and earnings allocated to participating securities        (550 )       (248 )   121.4 %
 Net income available to common shareholders    $   33,466     $   21,749     53.9 %
                   
 Income per share available to common shareholders             
     Basic    $   2.22     $   1.52     46.5 %
     Diluted    $   2.22     $   1.51     47.1 %
                   
 Weighted-average common shares outstanding             
     Basic        15,049,435         14,331,560     5.0 %
     Diluted        15,053,885         14,396,988     4.6 %
                   
 Dividends per share    $   0.47     $   0.38     23.7 %
                   

 

 PREFERRED BANK 
 Condensed Consolidated Statements of Financial Condition 
 (unaudited) 
 (in thousands) 
               
               
        June 30,   December 31,  
          2018       2017    
        (Unaudited)   (Audited)  
 Assets           
               
 Cash and due from banks  $   373,021     $   446,822    
 Fed funds sold      120,500         108,500    
   Cash and cash equivalents         493,521         555,322    
               
 Securities held to maturity, at amortized cost            8,370         8,780    
 Securities available-for-sale, at fair value            176,930         188,203    
 Loans and leases            3,138,442         2,941,093    
 Less allowance for loan and lease losses            (29,772 )       (29,921 )  
 Less net deferred loan fees            (2,287 )       (3,099 )  
   Net loans and leases      3,106,383         2,908,073    
               
 Loans held for sale, at lower of cost or fair value      47,337         440    
               
 Other real estate owned      4,112         4,112    
 Customers' liability on acceptances      8,313         7,272    
 Bank furniture and fixtures, net      5,649         5,684    
 Bank-owned life insurance      9,191         9,066    
 Accrued interest receivable      12,879         11,291    
 Investment in affordable housing      47,201         34,708    
 Federal Home Loan Bank stock      12,158         11,077    
 Deferred tax assets      18,691         17,476    
 Income tax receivable      3,142         2,713    
 Other assets      4,927         5,642    
   Total assets  $   3,958,804     $   3,769,859    
               
               
 Liabilities and Shareholders' Equity         
               
 Liabilities:         
 Deposits:           
   Demand  $   713,492     $   659,487    
   Interest-bearing demand    1,372,771       1,353,974    
   Savings    21,918       24,429    
   Time certificates of $250,000 or more    683,561       621,648    
   Other time certificates    618,493       603,152    
    Total deposits  $   3,410,235     $   3,262,689    
   Acceptances outstanding      8,313         7,272    
   Advances from Federal Home Loan Bank      6,344         6,401    
   Subordinated debt issuance      99,025         98,963   #
   Commitments to fund investment in affordable housing partnership          29,116         18,523    
   Accrued interest payable      3,943         3,833    
   Other liabilities      16,602         17,143    
     Total liabilities      3,573,578         3,414,824    
               
 Commitments and contingencies               
 Shareholders' equity:               
   Preferred stock. Authorized 25,000,000 shares; issued and no outstanding shares at June 30, 2018 and December 31, 2017    —        —     
   Common stock, no par value. Authorized 100,000,000 shares; issued and outstanding 15,325,319 at June 30, 2018 and 15,122,313 at December 31, 2017, respectively.      211,338         207,948    
   Treasury stock      (33,789 )       (33,233 )  
   Additional paid-in-capital      43,120         39,462    
   Accumulated income      166,302         139,684    
   Accumulated other comprehensive income (loss):             
    Unrealized gain (loss) on securities, available-for-sale, net of tax of $(710) and $504 at June 30, 2018 and December 31, 2017, respectively     (1,745 )       1,173    
     Total shareholders' equity      385,226         355,034    
   Total liabilities and shareholders' equity  $   3,958,804     $   3,769,859    
               



 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,
         2018   2018   2017   2017   2017 
 Unaudited historical quarterly operations data:           
   Interest income  $   46,748   $   43,652   $   42,001   $   42,854   $   38,113  
   Interest expense      9,342       7,508       7,439       7,432       6,835  
     Interest income before provision for credit losses      37,406       36,144       34,562       35,422       31,278  
   Provision for credit losses      1,200       1,500       1,500       1,300       1,200  
   Noninterest income      1,756       1,564       1,215       1,243       1,275  
   Noninterest expense      13,805       13,730       11,776       12,179       12,414  
   Income tax expense      6,752       5,867       14,775       9,516       7,222  
     Net income      17,405       16,611       7,726       13,670       11,717  
                 
   Earnings per share           
     Basic  $   1.14   $   1.09   $   0.52   $   0.94   $   0.81  
     Diluted  $   1.14   $   1.09   $   0.52   $   0.94   $   0.80  
                 
 Ratios for the period:           
   Return on average assets    1.83 %   1.85 %   0.83 %   1.48 %   1.36 %
   Return on beginning equity    18.82 %   18.97 %   9.67 %   17.77 %   15.96 %
   Net interest margin (Fully-taxable equivalent)    4.07 %   4.14 %   3.86 %   3.95 %   3.75 %
   Noninterest expense to average assets    1.46 %   1.53 %   1.27 %   1.32 %   1.44 %
   Efficiency ratio    35.25 %   36.41 %   32.92 %   33.22 %   38.13 %
   Net charge-offs (recoveries) to average loans (annualized)    0.00 %   0.39 %   0.05 %   0.06 %   0.18 %
                 
 Ratios as of period end:           
   Tier 1 leverage capital ratio    10.04 %   10.07 %   9.52 %   8.54 %   8.69 %
   Common equity tier 1 risk-based capital ratio    10.03 %   10.03 %   10.07 %   9.24 %   9.13 %
   Tier 1 risk-based capital ratio    10.03 %   10.03 %   10.07 %   9.24 %   9.13 %
   Total risk-based capital ratio    13.48 %   13.58 %   13.83 %   13.08 %   13.04 %
   Allowances for credit losses to loans and leases at end of period    0.95 %   0.92 %   1.02 %   1.00 %   1.00 %
   Allowance for credit losses to non-performing           
     loans and leases    58.92 %   861.44 %   461.28 %   415.32 %   426.43 %
                 
 Average balances:           
   Total loans and leases  $   3,092,571   $   2,958,382   $   2,853,134   $   2,817,271   $   2,695,208  
   Earning assets  $   3,696,854   $   3,550,333   $   3,572,826   $   3,579,578   $   3,401,193  
   Total assets  $   3,804,557   $   3,648,857   $   3,678,237   $   3,658,833   $   3,466,094  
   Total deposits  $   3,268,490   $   3,131,660   $   3,179,679   $   3,190,344   $   3,002,583  
                 

 

 PREFERRED BANK   
 Selected Consolidated Financial Information   
 (unaudited)   
 (in thousands, except for ratios)   
               
               
               
        For the Six Months Ended  
        June 30,   June 30,  
         2018     2017   
   Interest income  $   90,400     $   72,745    
   Interest expense      16,850         13,025    
     Interest income before provision for credit losses      73,550         59,720    
   Provision for credit losses      2,700         2,700    
   Noninterest income      3,320         3,365    
   Noninterest expense      27,535         25,592    
   Income tax expense      12,619         12,795    
     Net income      34,016         21,998    
               
   Earnings per share         
     Basic  $   2.22     $   1.52    
     Diluted  $   2.22     $   1.51    
               
 Ratios for the period:         
   Return on average assets    1.84 %     1.32 %  
   Return on beginning equity    19.32 %     14.88 %  
   Net interest margin (Fully-taxable equivalent)    4.10 %     3.69 %  
   Noninterest expense to average assets    1.49 %     1.54 %  
   Efficiency ratio    35.82 %     40.57 %  
   Net charge-offs (recoveries) to average loans    0.19 %     0.10 %  
               
 Average balances:         
   Total loans and leases  $   3,025,759     $   2,629,947    
   Earning assets  $   3,623,961     $   3,285,422    
   Total assets  $   3,727,117     $   3,348,450    
   Total deposits  $   3,200,419     $   2,890,418    
               

 

 PREFERRED BANK   
 Selected Consolidated Financial Information   
 (unaudited)   
 (in thousands, except for ratios)   
                           
                           
                           
        As of   
                           
        June 30,   March 31,   December 31,   September 30,   June 30,  
         2018     2018     2017     2017     2017   
 Unaudited quarterly statement of financial position data:                     
 Assets:                       
   Cash and cash equivalents  $   493,521     $   421,024     $   555,322     $   503,240     $   502,534    
   Securities held-to-maturity, at amortized cost      8,370         8,556         8,780         9,076         9,611    
   Securities available-for-sale, at fair value      176,930         177,823         188,203         193,890         192,474    
   Securities equity, at fair value      -         4,667         -         -         -    
   Loans and Leases:                     
     Real estate - Single and multi-family residential      508,470         552,828         513,953         507,738     $   494,725    
     Real estate - Land      11,133         10,766         10,863         15,723         16,512    
     Real estate - Commercial      1,319,664         1,315,296         1,244,486         1,279,981         1,217,254    
     Real estate - For sale housing construction      112,236         95,884         85,199         94,033         95,462    
     Real estate - Other construction      231,276         216,571         198,602         165,244         148,580    
     Commercial and industrial, trade finance and other      955,663         904,798         887,990         815,880         817,481    
       Gross loans      3,138,442         3,096,143         2,941,093         2,878,599         2,790,014    
   Allowance for loan and lease losses      (29,772 )       (28,570 )       (29,921 )       (28,756 )       (27,863 )  
   Net deferred loan fees      (2,287 )       (1,935 )       (3,099 )       (3,376 )       (3,245 )  
     Net loans, excluding loans held for sale  $   3,106,383     $   3,065,638     $   2,908,073     $   2,846,467     $   2,758,906    
   Loans held for sale  $   47,337     $   -     $   440         -          -     
     Net loans and leases  $   3,153,720     $   3,065,638     $   2,908,513     $   2,846,467     $   2,758,906    
                           
   Other real estate owned      $   4,112     $   4,112     $   4,112     $   4,112     $   4,112    
   Investment in affordable housing          47,201         33,650         34,708         35,939         37,029    
   Federal Home Loan Bank stock          12,158         11,076         11,077         11,077         11,078    
   Other assets          62,792         55,378         59,144         61,671         63,651    
     Total assets    $   3,958,804     $   3,781,924     $   3,769,859     $   3,665,472     $   3,579,395    
                           
 Liabilities:                       
   Deposits:                     
     Demand  $   713,492     $   677,629     $   659,487     $   599,722     $   641,153    
     Interest-bearing demand    1,372,771       1,346,479       1,353,974       1,298,895       1,231,595    
     Savings    21,918       25,373       24,429       27,132       27,870    
     Time certificates of $250,000 or more    683,561       627,031       621,648       617,231       535,211    
     Other time certificates    618,493       585,165       603,152       651,502       685,445    
      Total deposits  $   3,410,235     $   3,261,677     $   3,262,690     $   3,194,482     $   3,121,274    
                           
   Advances from Federal Home Loan Bank      $   8,313     $   4,272     $   7,272     $   6,431     $   6,459    
   Subordinated debt issuance      99,025         98,994         98,963         98,932         98,901    
   Commitments to fund investment in affordable housing partnership      29,116         17,861         18,523         20,684         20,966    
   Other liabilities          26,889         28,092         27,377         27,918         26,570    
     Total liabilities  $   3,573,578     $   3,410,896     $   3,414,825     $   3,348,447     $   3,274,170    
                           
 Equity:                         
   Net common stock, no par value  $   220,669     $   219,423     $   214,177     $   180,700   # $   180,110    
   Retained earnings      166,302         152,728         139,684         135,497         124,740    
   Accumulated other comprehensive income      (1,745 )       (1,123 )       1,173         828         375    
     Total shareholders' equity  $   385,226     $   371,028     $   355,034     $   317,025     $   305,225    
     Total liabilities and shareholders' equity  $   3,958,804     $   3,781,924     $   3,769,859     $   3,665,472     $   3,579,395    
     

 

Preferred Bank    
Loan and Credit Quality Information    
                   
Allowance For Credit Losses & Loss History    
          Six Months Ended   Year ended    
          June 30, 2018   December 31, 2017    
                           
     (Dollars in 000's)    
Allowance For Credit Losses            
Balance at Beginning of Period   $   29,921     $   26,478      
  Charge-Offs            
    Commercial & Industrial       2,875         2,274      
    Mini-perm Real Estate       -          -       
    Construction - Residential       -          -       
    Construction - Commercial       -          -       
    Land - Residential       -          -       
    Land - Commercial       -          -       
    Others       -          -       
    Total Charge-Offs       2,875         2,274      
                   
  Recoveries            
    Commercial & Industrial       26         55      
    Mini-perm Real Estate       -          -       
    Construction - Residential       -          -       
    Construction - Commercial       -          17      
    Land - Residential       -          -       
    Land - Commercial       -          145      
    Total Recoveries       26         217      
                   
  Net Loan Charge-Offs       2,849         2,057      
  Provision for Credit Losses       2,700         5,500      
Balance at End of Period   $   29,772     $   29,921      
Average Loans and Leases   $   3,623,961     $   3,431,985      
Loans and Leases at end of Period   $   3,138,442         2,941,533      
Net Charge-Offs to Average Loans and Leases     0.19 %     0.08 %    
Allowances for credit losses to loans and leases at end of period     0.95 %     1.02 %    
                   
                   

   

AT THE COMPANY: AT FINANCIAL PROFILES:
Edward J. Czajka Kristen Papke
Executive Vice President General Information
Chief Financial Officer (425) 615-0051
(213) 891-1188 kpapke@finprofiles.com
   


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