Preferred Bank Reports Quarterly Earnings

LOS ANGELES, Oct. 16, 2019 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), an independent commercial bank, today reported results for the quarter ended September 30, 2019. Preferred Bank (“the Bank”) reported net income of $20.0 million or $1.32 per diluted share for the third quarter of 2019. This is slightly better than last quarter’s $1.31 per diluted share but compares quite favorably to net income of $18.3 million or $1.20 per diluted share posted in the third quarter of 2018.

Highlights from the third quarter of 2019:

Linked-quarter Deposit Growth	5.22%
Linked-quarter Loan Growth	2.48%
Return on Assets	1.81%
Return on Beginning Equity	17.61%
Efficiency Ratio	32.16%

Li Yu, Chairman and CEO, commented, “We are pleased to report third quarter net income of $20.0 million or $1.32 per share. A slight increase from second quarter in the face of two Fed interest rate reductions, which took place in the third quarter.

We had vibrant loan origination activity in the quarter, but actual growth was a net loan increase of $89 million or 2.48%, sequentially. This was partially due to client activity in the late second quarter, which we reported on in our second quarter earnings release. Heavy drawdowns of commercial and industrial credit lines by many of our customers at the end of the second quarter were largely repaid in early July.

Deposit activity in the third quarter was very strong, as we grew deposits by $192 million or 5.22% sequentially (20.88% annualized). Core deposit growth accounted for all of the growth during the quarter.

For the nine months ended September 30, 2019, our total loans increased $341 million or 13.6% on an annualized basis and total deposits increased by $229 million or 8.4% annualized.

Net interest margin for the quarter was 3.84%, 23 basis points less than the previous quarter due to the two rate cuts during the quarter. We have been and will continue to focus on managing our interest costs.

Credit quality remained stable. Non-performing loans now stand at $6.8 million. Expenses continues to be under control with our efficiency ratio at 32.16%. As of September 30, 2019, we have bought back nearly 209,000 shares of common stock. Total outstanding shares are now 15,091,657."

Income Statement Summary

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $41.5 million for the third quarter of 2019. This is up 5.7% over the $39.2 million recorded in the third quarter of 2018 but slightly down from the second quarter of 2019 total of $41.8 million. The increase over the same period last year is due primarily to loan and overall asset growth. In comparing to the second quarter of 2019, the decision by the Federal Open Market Committee (“FOMC”) electing to cut the fed funds rate twice during the quarter led to a reduction in the Bank’s loan yields. The Bank’s taxable equivalent net interest margin was 3.84%, down from both the 4.07% recorded for the second quarter of 2019 and the 4.04% posted for the same period last year. The decline in the margin was due to the decline in loan yields mentioned above as well as higher deposit costs than in 2018, although total deposit yield declined in the third quarter of 2019 from the second quarter.

Noninterest Income. For the third quarter of 2019, noninterest income was $1,737,000 compared with $1,676,000 for the same quarter last year and compared to $1,985,000 for the second quarter of 2019. The small increase over last year is primarily due to service charges on deposits and other income. The decrease from the prior quarter is mainly due to a decrease in letters of credit fees this quarter.

Noninterest Expense. Total noninterest expense was $13.9 million for the third quarter of 2019, an increase of $314,000 over the same period last year and flat compared to the $13.9 million posted for the second quarter of 2019. The increase over last year is mainly due to salary and benefits expense as it increased by $1.1 million or 13.1%. Partially offsetting this increase were declines in professional services expense, OREO expense and other expense. When comparing to last quarter, salary expense was up slightly but other expense was lower primarily due to a decrease in FDIC premium expense. On September 30 of last year, the Deposit Insurance Fund Reserve Ratio reached 1.36% of all insured deposits, exceeding its target of 1.35%. Therefore, the FDIC is granting credits for prior premium assessments to smaller institutions. This had the effect of reducing FDIC premiums this quarter by $400,000 when compared to the second quarter of 2019 and by $360,000 when compared to the same period last year.

Balance Sheet Summary

Total gross loans and leases (including loans held for sale) at September 30, 2019 were $3.67 billion, an increase of $341.1 million or 10.2% over the total of $3.33 billion as of December 31, 2018. On a linked-quarter basis, total loans grew by $88.8 million or 2.5%. Total deposits increased by $229.3 million or 6.3% over the $3.64 billion as of December 31, 2018. Total deposits for the third quarter increased by $192.0 million or 5.2% on a linked quarter basis. Total assets reached $4.50 billion as of September 30, 2019, an increase of $279.0 million or 6.6% over the total of $4.22 billion as of December 31, 2018.

Income Taxes

The Bank recorded a provision for income taxes of $8.4 million for the third quarter of 2019. This represents an effective tax rate (“ETR”) of 29.5% and consistent with the ETR of 29.5% for the second quarter of 2019. This is up slightly from the 28.0% ETR recorded in the third quarter of 2018. The Bank’s ETR may fluctuate slightly from quarter to quarter within a limited range due to the timing of taxable events throughout the year.

Asset Quality
As of September 30, 2019, nonaccrual loans totaled $3.8 million, a slight increase from the $3.4 million as of June 30, 2019 and down significantly from the total of $44.8 million as of December 31, 2018 due to the sale of two large NPA’s in New York in the second quarter of 2019. In addition, the Bank had two loans totaling $3.0 million which were 90 days past due and still accruing interest. Both loans are well secured and were in the process of being renewed as of September 30, 2019. Both loans have since been renewed and are no longer 90 days past due. As of September 30, 2019, total classified loans stood at $8.2 million compared to $46.2 million as of December 31, 2018.

Total net charge-offs were $430,000 for the third quarter of 2019 compared to net recoveries of $315,000 for the second quarter of 2019 and compared to net recoveries of $314,000 for the third quarter of 2018. The Bank recorded a provision for loan loss of $900,000 for the third quarter of 2019, compared to $1.88 million in the third quarter of 2018 and compared to $1.6 million recorded in the second quarter of 2019. The allowance for loan loss at September 30, 2019 was $34.3 million or 0.93% of total loans compared to $31.1million or 0.93% of total loans at December 31, 2018.

Capitalization
As of September 30, 2019, the Bank’s tier 1 leverage ratio was 10.27%, the common equity tier 1 capital ratio was 10.40% and the total capital ratio was 13.53%. As of December 31, 2018, the Bank’s leverage ratio was 10.16%, the common equity tier 1 ratio was 10.43% and the total risk-based capital ratio was 13.72%.

Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s third quarter 2019 financial results will be held later today 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 October 30, 2019; the passcode is 10135958.

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 eleven full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)) and one branch 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 2018 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can also 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.



PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)


				For the Quarter Ended
				September 30,			June 30,			September 30,
					2019			2019			2018
Interest income:
	Loans, including fees			$	52,862		$	52,844		$	46,130
	Investment securities				4,875			4,707			3,734
	Fed funds sold				222			271			528
		Total interest income			57,959			57,822			50,392

Interest expense:
	Interest-bearing demand				4,904			4,819			3,911
	Savings				13			13			15
	Time certificates				10,034			9,612			5,684
	FHLB borrowings				-			7			14
	Subordinated debit				1,531			1,530			1,531
		Total interest expense			16,482			15,981			11,155
		Net interest income			41,477			41,841			39,237
Provision for loan losses					900			1,600			1,880
		Net interest income after provision for
			loan losses		40,577			40,241			37,357

Noninterest income:
	Fees & service charges on deposit accounts				401			418			240
	Letters of credit fee income				874			1,071			1,091
	BOLI income				94			92			91
	Other income				368			404			254
		Total noninterest income			1,737			1,985			1,676

Noninterest expense:
	Salary and employee benefits				9,801			9,479			8,666
	Net occupancy expense				1,329			1,270			1,340
	Business development and promotion expense				109			187			203
	Professional services				1,149			1,090			1,337
	Office supplies and equipment expense				483			497			349
	Net (gain) loss on sale of other real estate owned and expense				(129	)		(45	)		221
	Other				1,156			1,407			1,468
		Total noninterest expense			13,898			13,885			13,584
		Income before provision for income taxes			28,416			28,341			25,449
Income tax expense					8,383			8,362			7,126
		Net income		$	20,033		$	19,979		$	18,323

Dividend and earnings allocated to participating securities					(168	)		(158	)		(312	)
Net income available to common shareholders				$	19,865		$	19,821		$	18,011

Income per share available to common shareholders
		Basic		$	1.32		$	1.31		$	1.20
		Diluted		$	1.32		$	1.31		$	1.20

Weighted-average common shares outstanding
		Basic			15,091,270			15,171,399			15,063,685
		Diluted			15,091,270			15,171,399			15,063,685

Dividends per share				$	0.30		$	0.30		$	0.25


PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)


				For the Nine Months Ended
				September 30,			September 30,			Change
				2019			2018			%
Interest income:
	Loans, including fees			$	156,166		$	129,392		20.7	%
	Investment securities				14,273			9,985		42.9	%
	Fed funds sold				799			1,415		-43.5	%
		Total interest income			171,238			140,792		21.6	%

Interest expense:
	Interest-bearing demand				14,466			9,676		49.5	%
	Savings				38			47		-17.7	%
	Time certificates				27,894			13,636		104.6	%
	FHLB borrowings				19			53		-63.6	%
	Subordinated debit				4,593			4,593		100.0	%
		Total interest expense			47,010			28,005		67.9	%
		Net interest income			124,228			112,787		10.1	%
Provision for loan losses					3,000			4,580		-34.5	%
		Net interest income after provision for
			loan losses		121,228			108,207		12.0	%

Noninterest income:
	Fees & service charges on deposit accounts				1,187			911		30.3	%
	Letters of credit fee income				3,015			2,971		1.5	%
	BOLI income				277			270		2.6	%
	Net gain on called and sale of investment securities				-			112		100.0	%
	Other income				1,104			732		50.9	%
		Total noninterest income			5,583			4,996		11.7	%

Noninterest expense:
	Salary and employee benefits				29,061			26,100		11.3	%
	Net occupancy expense				3,747			3,974		-5.7	%
	Business development and promotion expense				582			534		9.0	%
	Professional services				3,583			4,504		-20.4	%
	Office supplies and equipment expense				1,405			1,091		28.8	%
	Net loss on sale of other real estate owned and expense				1,217			434		180.3	%
	Other				3,882			4,482		-13.4	%
		Total noninterest expense			43,477			41,119		5.7	%
		Income before provision for income taxes			83,334			72,084		15.6	%
Income tax expense					24,579			19,745		24.5	%
		Net income		$	58,755		$	52,339		12.3	%

Dividend and earnings allocated to participating securities					(501	)		(862	)	-41.8	%
Net income available to common shareholders				$	58,254		$	51,477		13.2	%

Income per share available to common shareholders
		Basic		$	3.85		$	3.42		12.6	%
		Diluted		$	3.85		$	3.42		12.6	%

Weighted-average common shares outstanding
		Basic			15,135,997			15,054,237		0.5	%
		Diluted			15,135,997			15,057,164		0.5	%

Dividends per share				$	0.90		$	0.72		25.0	%


PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)


			September 30,			December 31,
			2019			2018
			(Unaudited)			(Audited)
Assets

Cash and due from banks			$	409,189		$	526,759
Fed funds sold				56,000			76,000
	Cash and cash equivalents			465,189			602,759

Securities held to maturity, at amortized cost				7,545			8,007
Securities available-for-sale, at fair value				242,655			182,413
Loans and leases				3,671,450			3,333,377
Less allowance for loan and lease losses				(34,281	)		(31,065	)
Less net deferred loan fees				(2,518	)		(2,323	)
	Net loans and leases			3,634,651			3,299,989

Loans held for sale, at lower of cost or fair value				2,999			-

Other real estate owned				-			-
Customers' liability on acceptances				7,333			10,074
Bank furniture and fixtures, net				12,438			7,497
Bank-owned life insurance				9,507			9,317
Accrued interest receivable				14,505			14,266
Investment in affordable housing				39,780			43,848
Federal Home Loan Bank stock				13,101			11,933
Deferred tax assets				17,338			19,640
Income tax receivable				3,849			-
Operating lease right-of-use assets				17,362			-
Other assets				7,232			6,692
	Total assets		$	4,495,484		$	4,216,435


Liabilities and Shareholders' Equity

Liabilities:
Deposits:
	Demand		$	774,869		$	730,096
	Interest-bearing demand			1,435,144			1,397,006
	Savings			21,985			20,369
	Time certificates of $250,000 or more			849,574			738,626
	Other time certificates			787,392			753,588
		Total deposits		3,868,964			3,639,685
	Acceptances outstanding			7,333			10,074
	Advances from Federal Home Loan Bank			-			1,307
	Subordinated debt issuance			99,180			99,087
	Commitments to fund investment in affordable housing partnership			12,904			19,530
	Operating lease liabilities			20,958			-
	Accrued interest payable			6,117			6,839
	Other liabilities			20,948			23,262
		Total liabilities		4,036,404			3,799,784

Commitments and contingencies
Shareholders' equity:
	Common stock, no par value. Authorized 100,000,000 shares; issued and outstanding 15,091,657 at September 30, 2019 and 15,308,688 at December 31, 2018, respectively.			210,882			210,882
	Treasury stock			(46,835	)		(34,529	)
	Additional paid-in-capital			51,076			47,425
	Retained earnings			239,914			194,855
	Accumulated other comprehensive income (loss):
		Unrealized gain (loss) on securities, available-for-sale, net of tax of $1,576 and $(725) at September 30, 2019 and December 31, 2018, respectively		4,043			(1,982	)
		Total shareholders' equity		459,080			416,651
	Total liabilities and shareholders' equity		$	4,495,484		$	4,216,435

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)



			For the Quarter Ended

			September 30,			June 30,			March 31,			December 31,			September 30,
			2019			2019			2019			2018			2018
Unaudited historical quarterly operations data:
	Interest income		$	57,959		$	57,822		$	55,457		$	54,373		$	50,392
	Interest expense			16,482			15,981			14,547			12,931			11,155
		Interest income before provision for credit losses		41,477			41,841			40,910			41,442			39,237
	Provision for credit losses			900			1,600			500			5,550			1,880
	Noninterest income			1,737			1,985			1,861			4,405			1,676
	Noninterest expense			13,898			13,885			15,694			13,683			13,584
	Income tax expense			8,383			8,362			7,834			7,960			7,126
		Net income	$	20,033		$	19,979		$	18,743		$	18,654		$	18,323

	Earnings per share
		Basic	$	1.32		$	1.31		$	1.23		$	1.22		$	1.20
		Diluted	$	1.32		$	1.31		$	1.23		$	1.22		$	1.20

Ratios for the period:
	Return on average assets			1.81	%		1.89	%		1.83	%		1.82	%		1.84	%
	Return on beginning equity			17.61	%		18.54	%		18.24	%		18.50	%		18.87	%
	Net interest margin (Fully-taxable equivalent)			3.84	%		4.07	%		4.12	%		4.13	%		4.04	%
	Noninterest expense to average assets			1.25	%		1.31	%		1.54	%		1.33	%		1.37	%
	Efficiency ratio			32.16	%		31.68	%		36.69	%		29.84	%		33.20	%
	Net charge-offs (recoveries) to average loans (annualized)			0.05	%		-0.04	%		-0.04	%		0.80	%		-0.04	%

Ratios as of period end:
	Tier 1 leverage capital ratio			10.27	%		10.50	%		10.32	%		10.16	%		10.07	%
	Common equity tier 1 risk-based capital ratio			10.40	%		10.53	%		10.54	%		10.43	%		10.23	%
	Tier 1 risk-based capital ratio			10.40	%		10.53	%		10.54	%		10.43	%		10.23	%
	Total risk-based capital ratio			13.53	%		13.74	%		13.82	%		13.77	%		13.65	%
	Allowances for credit losses to loans and leases at end of period			0.93	%		0.94	%		0.94	%		0.93	%		0.98	%
	Allowance for credit losses to non-performing loans and leases			895.30	%		981.65	%		887.75	%		69.29	%		63.42	%

Average balances:
	Total securities		$	249,060		$	241,664		$	189,684		$	184,168		$	184,283
	Total loans and leases *		$	3,534,283		$	3,450,583		$	3,327,005		$	3,217,850		$	3,184,527
	Total earning assets		$	4,298,523		$	4,134,320		$	4,034,284		$	3,988,970		$	3,861,346
	Total assets		$	4,395,357		$	4,235,612		$	4,142,906		$	4,068,592		$	3,946,924
	Total time certificate of deposits		$	1,650,965		$	1,627,953		$	1,521,209		$	1,446,661		$	1,324,724
	Total interest bearing deposits		$	3,051,007		$	2,924,526		$	2,874,045		$	2,787,788		$	2,697,807
	Total deposits		$	3,772,097		$	3,625,021		$	3,555,981		$	3,498,226		$	3,392,878
	Total interest bearing liabilities		$	3,150,167		$	3,024,452		$	2,974,442		$	2,888,171		$	2,800,486
	Total equity		$	460,452		$	445,101		$	428,136		$	411,249		$	396,942

*Incudes loans held for sale


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)



			For the Nine Months Ended
			September 30,			September 30,
			2019			2018
	Interest income		$	171,238		$	140,792
	Interest expense			47,010			28,005
		Interest income before provision for credit losses		124,228			112,787
	Provision for credit losses			3,000			4,580
	Noninterest income			5,583			4,996
	Noninterest expense			43,477			41,119
	Income tax expense			24,579			19,745
		Net income	$	58,755		$	52,339

	Earnings per share
		Basic	$	3.85		$	3.42
		Diluted	$	3.85		$	3.42

Ratios for the period:
	Return on average assets			1.88	%		1.84	%
	Return on beginning equity			18.85	%		19.71	%
	Net interest margin (Fully-taxable equivalent)			4.08	%		4.06	%
	Noninterest expense to average assets			1.39	%		1.45	%
	Efficiency ratio			33.49	%		34.91	%
	Net charge-offs (recoveries) to average loans			-0.01	%		0.11	%

Average balances:
	Total loans and leases *		$	3,389,136		$	3,079,179
	Earning assets		$	4,084,580		$	3,723,961
	Total assets		$	4,189,515		$	3,801,176
	Total deposits		$	3,590,692		$	3,264,343

*Includes loans held for sale

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)



				As of

				September 30,			June 30,			March 31,			December 31,			September 30,
				2019			2019			2019			2018			2018
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	465,189		$	351,121		$	623,002		$	602,759		$	531,240
	Securities held-to-maturity, at amortized cost				7,545			7,702			7,861			8,007			8,203
	Securities available-for-sale, at fair value				242,655			238,589			182,280			182,413			173,953
	Loans and Leases:
		Real estate - Single and multi-family residential			642,824			646,830			625,416			587,562			559,050
		Real estate - Land			7,950			9,330			9,352			10,646			10,725
		Real estate - Commercial			1,533,566			1,419,224			1,395,074			1,358,821			1,337,794
		Real estate - For sale housing construction			179,651			171,584			152,418			138,815			122,225
		Real estate - Other construction			216,812			212,988			228,174			207,849			246,815
		Commercial and industrial, trade finance and other			1,090,647			1,125,730			994,571			1,029,684			998,781
			Gross loans		3,671,450			3,585,686			3,405,005			3,333,377			3,275,390
	Allowance for loan and lease losses				(34,281	)		(33,811	)		(31,896	)		(31,065	)		(31,966	)
	Net deferred loan fees				(2,518	)		(1,401	)		(1,501	)		(2,323	)		(2,571	)
		Net loans, excluding loans held for sale		$	3,634,651		$	3,550,474		$	3,371,608		$	3,299,989		$	3,240,853
	Loans held for sale			$	2,999		$	-		$	-		$	-		$	-
		Net loans and leases		$	3,637,650		$	3,550,474		$	3,371,608		$	3,299,989		$	3,240,853

	Other real estate owned			$	-		$	-		$	-		$	-		$	4,112
	Investment in affordable housing				39,780			41,136			42,492			43,849			45,555
	Federal Home Loan Bank stock				13,101			13,101			11,932			11,933			11,933
	Other assets				89,564			92,302			89,095			67,485			60,339
		Total assets		$	4,495,484		$	4,294,425		$	4,328,270		$	4,216,435		$	4,076,188

Liabilities:
	Deposits:
		Demand		$	774,869		$	718,611		$	731,795		$	730,096		$	745,861
		Interest-bearing demand			1,435,144			1,279,104			1,372,760			1,397,006			1,360,237
		Savings			21,985			20,927			20,550			20,369			21,490
		Time certificates of $250,000 or more			849,574			839,203			778,020			738,626			737,465
		Other time certificates			787,392			819,163			816,678			753,588			653,697
		Total deposits		$	3,868,964		$	3,677,008		$	3,719,803		$	3,639,685		$	3,518,750

	Advances from Federal Home Loan Bank			$	7,333		$	8,074		$	8,417		$	10,074		$	6,256
	Subordinated debt issuance				99,180			99,149			99,118			99,087			99,056
	Commitments to fund investment in affordable housing partnership				12,904			15,186			17,340			19,530			21,514
	Other liabilities				48,023			43,566			51,460			31,408			30,643
		Total liabilities		$	4,036,404		$	3,842,983		$	3,896,138		$	3,799,784		$	3,676,219

Equity:
	Net common stock, no par value			$	215,123		$	224,314		$	222,782		$	223,778		$	221,518
	Retained earnings				239,914			224,401			209,012			194,855			180,793
	Accumulated other comprehensive income				4,043			2,727			338			(1,982	)		(2,342	)
		Total shareholders' equity		$	459,080		$	451,442		$	432,132		$	416,651		$	399,969
		Total liabilities and shareholders' equity		$	4,495,484		$	4,294,425		$	4,328,270		$	4,216,435		$	4,076,188


Preferred Bank
Loan and Credit Quality Information

Allowance For Credit Losses & Loss History
			Nine Months Ended			Year ended
			September 30, 2019			December 31, 2018

			(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period			$	31,065		$	29,921
	Charge-Offs
		Commercial & Industrial		525			4,040
		Mini-perm Real Estate		101			5,742
		Total Charge-Offs		626			9,782

	Recoveries
		Commercial & Industrial		427			796
		Mini-perm Real Estate		415			-
		Total Recoveries		842			796

	Net Loan Charge-Offs			(216	)		8,986
	Provision for Credit Losses			3,000			10,130
Balance at End of Period			$	34,281		$	31,065
Average Loans and Leases Held for Investment			$	3,389,122		$	3,102,428
Loans and Leases Held for Investment at end of Period			$	3,671,450		$	3,333,337
Net Charge-Offs to Average Loans and Leases				-0.01	%		0.29	%
Allowances for credit losses to loans and leases at end of period				0.93	%		0.93	%

AT THE COMPANY:	AT FINANCIAL PROFILES:
Edward J. Czajka	Tony Rossi
Executive Vice President	General Information
Chief Financial Officer	(310) 622-8221
(213) 891-1188	PFBC@finprofiles.com

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