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