Market Overview

Preferred Bank Reports Third Quarter Results

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LOS ANGELES, Oct. 19, 2015 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), an independent commercial bank focusing on the diversified California market, today reported results for the quarter ended September 30, 2015. Preferred Bank ("the Bank") reported net income of $7.9 million or $0.57 per diluted share for the third quarter of 2015.  This compares to net income of $6.4 million or $0.46 per diluted share for the third quarter of 2014 and compares to net income of $7.6 million or $0.55 per diluted share for the second quarter of 2015.

Highlights from the third quarter of 2015:

  • Linked quarter loan growth was $87.3 million, or 5.0%
  • Linked quarter deposit growth was $105.4 million, or 5.6%
  • ROA was 1.42%
  • ROBE was 12.55%
  • Efficiency ratio was 38.8%

Li Yu, Chairman and CEO commented, "We continue to grow as planned. Both loans and deposits grew a little more than five percent on a linked quarter basis. For the third quarter, deposits increased $105.4 and loans increased $87.3 million.

Loan yields continued their downward trend industry-wide, and consequently net interest margin compressed by 1 bp to 4.00% for the quarter. Because of the growth we achieved, net interest income increased by $3.6 million or 19.7% compared to the prior year's third quarter. We are pleased with the results as this is a more important measure to our shareholders.

For this quarter, the bank earned $7.9 million or $0.57 per share as compared to $6.4 million and $0.46 for the same quarter of 2014. This is a 24.2% increase in net income and 23.9% increase in diluted earnings per share. Third quarter's results included $1.0 million in interest recovery and approximately $500,000 in merger expenses related to our proposed acquisition of United International Bank of New York.

Efficiency ratio was 38.8% for the third quarter. We remain conscientious in maintaining an asset sensitive loan portfolio; 90.2% of the loans were fully floating with a change in the prime rate or LIBOR.

We are pleased with the performance of the Bank in all aspects and we look forward to steady performance for the remainder of 2015."

Quarterly Results

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $21.6 million for the third quarter of 2015. This compares favorably to the $18.0 million recorded in the third quarter of 2014 and to the $20.6 million recorded in the second quarter of 2015. The increase over both comparable periods is due primarily to loan growth, and was aided by a $1.0 million interest recovery during the third quarter of 2015. The Bank's taxable equivalent net interest margin was 4.00% for the third quarter of 2015, a 1 basis point decrease from the 4.01% achieved in the second quarter of 2015 and a 22 basis point increase over the 3.78% recorded in the third quarter of 2014. The margin for the second quarter of 2015 was aided by a special dividend from the FHLB of San Francisco and the margin in the third quarter was increased by a $1.0 million interest recovery. Normalized margins for quarters two and three were 3.97% and 3.81%, respectively. The decline in the normalized margin for the third quarter (16 bps) was primarily due to the growth of deposits during the quarter as well as an overall continued slow decline in loan yields.

Noninterest Income. For the third quarter of 2015, noninterest income was $940,000 compared with $928,000 for the same quarter last year and compared to $1,131,000 for the second quarter of 2015.  Service charges on deposits were down $53,000 compared to the same period last year and down $46,000 compared to the second quarter of 2015. Trade finance income was $379,000 for the third quarter of 2015, an increase of $108,000 compared to the same period last year and an decrease of $112,000 compared to the second quarter of 2015. This was primarily due to higher deal volume. Other income was $186,000, a decrease of $42,000 over the third quarter of 2014 and a decrease of $34,000 over the second quarter of 2015.  

Noninterest Expense. Total noninterest expense was $8.7 million for the third quarter of 2015, an increase of $904,000 over the same period last year and up slightly from the $8.5 million recorded in the second quarter of 2015. Salaries and benefits expense totaled $4.9 million for the third quarter of 2015 compared to $4.3 million for the same period last year and compared to $5.5 million for the second quarter of 2015. The increase over the third quarter of 2014 was due mainly to staffing increases and a higher bonus accrual, and the decrease from the prior quarter was mainly due to higher loan production volume, which capitalizes a greater level of salary expense. Occupancy expense was $908,000 compared to the $817,000 recorded in the same period in 2014 and the $899,000 recorded in the second quarter of 2015. The increase over the prior year was due primarily to the new San Fernando Valley branch expenses and normal cost increases. Professional services expense was $1,288,000 for the third quarter of 2015 compared to $1,019,000 for the same quarter of 2014 and $1,176,000 recorded in the second quarter of 2015. Net gain on OREO and other credit items was $(19,000) for the quarter compared to loss of $43,000 in the same period last year and compared to $(552,000) in the second quarter of 2015. There were no sales of OREO during the third quarter of 2015. Other expenses were $1,269,000 in the third quarter of 2015, up slightly from the $1,208,000 recorded in the same period in 2015 and increased from the $1,046,000 recorded in the second quarter of 2015. This was mainly due to merger-related expenses.

Income Taxes

The Bank recorded a provision for income taxes of $5.4 million for the third quarter of 2015. This represents an effective tax rate ("ETR") of 40.6% for the quarter. This is up slightly from the ETR of 40.4% for the second quarter of 2015. This small increase is due to the Bank's growing profitability in 2015 relative to tax exempt income and deductible items.

Balance Sheet Summary

Total gross loans and leases (including loans held for sale) at September 30, 2015 were $1.84 billion, an increase of $232.9 million or 14.5% over the total of $1.60 billion as of December 31, 2014.  The tables below indicate loans by type as of September 30, 2015 as compared to the end of 2014:

Loans by Type – Year over Year (000's)

Loan Type (000's) September 30, 2015 December 31, 2014 $ Change % Change
R/E – Residential/Multifamily $ 328,124 $ 283,958 $ 44,166 15.6%
R/E – Land 16,305 13,621 2,684 19.7%
R/E – Commercial 770,494 653,380 117,114 17.9%
R/E – Construction 127,844 126,485 1,359 1.1%
Commercial & Industrial 594,282 526,705 67,577 12.8%
Total $ 1,837,049 $ 1,604,149 $ 232,900 14.5%

Total deposits as of September 30, 2015 were $1.99 billion, an increase of $211.4 million from the $1.78 billion at December 31, 2014.  As of September 30, 2015 compared to December 31, 2014; noninterest-bearing demand deposits increased by $34.1 million or 7.7%, interest-bearing demand and savings deposits increased by $170.6 million or 31.1% and time deposits increased by $6.7 million or 0.8%.  Total assets were $2.28 billion, a $228.4 million or 11.1% increase from the total of $2.05 billion as of December 31, 2014.

Asset Quality

As of September 30, 2015 nonaccrual loans totaled $7.9 million, down slightly from the $8.1 million total as of December 31, 2014.  Total net charge-offs for the third quarter of 2015 were $203,000 compared to $130,000 for the second quarter of 2015, and consisted mainly of a charge-off of $350,000, partially offset by a recovery of $143,000 on a loan which was previously considered nonaccrual but was fully paid off in July 2015. The Bank recorded a provision for loan losses of $500,000 for the third quarter of 2015. Although nonperforming loan and economic trends continue to be positive, management believes that due to growth and other factors, this provision is appropriate in order to maintain an allowance level deemed sufficient. This remains consistent with a $500,000 provision recorded in the same quarter last year and to the $500,000 provision recorded in the second quarter of 2015.  The allowance for loan loss at September 30, 2015 was $24.1 million or 1.31% of total loans compared to $23.0 million or 1.43% of total loans at December 31, 2014.

OREO

As of September 30, 2015, the Bank holds no OREO properties, and there were no OREO sales during the quarter then ended.

Capitalization

As of September 30, 2015, the Bank's tier 1 leverage ratio was 11.47%, the common equity tier 1 capital ratio was 11.80% and the total capital ratio was 12.93%. As of December 31, 2014, the Bank's tier 1 leverage ratio was 11.73%, the tier 1 risk based capital ratio was 12.72% and the total risk based capital ratio was 13.97%.  

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank's third quarter 2015 financial results will be held tomorrow, October 20, 2015 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 866-652-5200 (domestic) or 412-317-6060 (international) and referencing "Preferred Bank." There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com. Web participants are encouraged to go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

Preferred Bank's Chairman and CEO Li Yu,  President and COO Wellington Chen and Chief Financial Officer Edward J. Czajka 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 November 3, 2015; the passcode is 10074259.

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 eleven full-service branch banking offices in Alhambra, Century City,  City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Anaheim, Pico Rivera, Tarzana and San Francisco, California. 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 2014 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.

The Preferred Bank logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11817

Financial Tables to Follow

       
 PREFERRED BANK 
 Condensed Consolidated Statements of Operations 
 (unaudited) 
 (in thousands, except for net income per share and shares) 
       
       
  For the Three Months Ended
  September 30, June 30, September 30,
  2015 2015 2014
 Interest income:       
 Loans, including fees   $ 22,812  $ 21,276  $ 18,792
 Investment securities   1,531  1,731  1,634
 Fed funds sold   37  46  36
 Total interest income   24,380  23,053  20,462
       
 Interest expense:       
 Interest-bearing demand   794  709  737
 Savings   14  15  20
 Time certificates   1,930  1,727  1,636
 FHLB borrowings   45  35  33
 Total interest expense   2,783  2,486  2,426
 Net interest income   21,597  20,567  18,036
 Provision for loan losses   500  500  500
 Net interest income after provision for loan losses   21,097  20,067  17,536
       
 Noninterest income:       
 Fees & service charges on deposit accounts   290  336  343
 Trade finance income   379  491  271
 BOLI income   85  84  84
 Other income   186  220  230
 Total noninterest income   940  1,131  928
       
 Noninterest expense:       
 Salary and employee benefits   4,893  5,507  4,285
 Net occupancy expense   908  899  817
 Business development and promotion expense   133  124  134
 Professional services   1,289  1,175  1,019
 Office supplies and equipment expense   267  263  330
 Other real estate owned related (income)expense and valuation allowance on LHFS   (19)  (552)  43
 Other   1,269  1,046  1,208
 Total noninterest expense   8,740  8,462  7,836
 Income before provision for income taxes   13,297  12,736  10,628
 Income tax expense   5,396  5,147  4,266
 Net income   $ 7,901  $ 7,589  $ 6,362
       
 Income per share available to common shareholders       
 Basic   $ 0.57  $ 0.55  $ 0.47
 Diluted   $ 0.57  $ 0.55  $ 0.46
       
 Weighted-average common shares outstanding       
 Basic   13,509,986  13,480,609  13,310,334
 Diluted   13,690,190  13,659,167  13,639,874
       
 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 
  2015 2014 %
Interest income:      
Loans, including fees  $ 64,443  $ 53,815 19.7%
Investment securities  4,719  4,588 2.9%
Fed funds sold  117  103 13.1%
Total interest income  69,279  58,506 18.4%
       
Interest expense:      
Interest-bearing demand  2,289  2,010 13.9%
Savings  44  56 -21.0%
Time certificates  5,306  4,740 11.9%
FHLB borrowings  112  96 16.7%
Total interest expense  7,751  6,902 12.3%
Net interest income  61,528  51,604 19.2%
Provision for credit losses  1,500  2,850 -47.4%
Net interest income after provision for loan losses  60,028  48,754 23.1%
       
Noninterest income:      
Fees & service charges on deposit accounts  925  1,198 -22.8%
Trade finance income  1,177  901 30.6%
BOLI income  253  248 2.1%
Net gain (loss) on sale of investment securities  --  2 -100.0%
Other income  584  521 12.2%
Total noninterest income  2,939  2,870 2.4%
       
Noninterest expense:      
Salary and employee benefits  15,712  12,887 21.9%
Net occupancy expense  2,657  2,422 9.7%
Business development and promotion expense  366  342 7.0%
Professional services  3,547  3,127 13.4%
Office supplies and equipment expense  784  953 -17.7%
Other real estate owned related income and valuation allowance on LHFS  (481)  (1,185) -59.4%
Other  3,235  3,745 -13.6%
Total noninterest expense  25,820  22,291 15.8%
Income before provision for income taxes  37,147  29,333 26.6%
Income tax expense  14,967  11,609 28.9%
Net income  $ 22,180  $ 17,724 25.1%
       
Income per share available to common shareholders      
Basic  $ 1.62  $ 1.32 22.6%
Diluted  $ 1.60  $ 1.29 23.8%
       
Weighted-average common shares outstanding      
Basic  13,462,247  13,271,597 1.4%
Diluted  13,648,232  13,593,638 0.4%
     
 PREFERRED BANK 
 Condensed Consolidated Statements of Financial Condition 
 (unaudited) 
 (in thousands) 
     
     
  September 30, December 31,
  2015 2014
Assets    
     
Cash and due from banks  $ 199,707  $ 215,194
Fed funds sold  33,000  25,000
Cash and cash equivalents  232,707  240,194
     
Securities held to maturity, at amortized cost  6,307  7,815
Securities available-for-sale, at fair value  164,378  150,539
Loans and leases  1,837,049  1,604,149
Less allowance for loan and lease losses  (24,055)  (22,974)
Less net deferred loan fees  (2,476)  (2,100)
Net loans and leases  1,810,518  1,579,075
     
Other real estate owned  --  8,811
Customers' liability on acceptances  131  156
Bank furniture and fixtures, net  4,206  4,132
Bank-owned life insurance  8,703  8,525
Accrued interest receivable  7,549  6,497
Investment in affordable housing  16,589  17,999
Federal Home Loan Bank stock  6,677  6,155
Deferred tax assets  21,865  21,357
Income tax receivable  94  --
Other asset  2,822  2,899
Total assets  $ 2,282,546  $ 2,054,154
     
     
Liabilities and Shareholders' Equity    
     
Liabilities:    
Deposits:    
Demand  $ 477,524  $ 443,385
Interest-bearing demand 697,402 525,781
Savings 21,159 22,211
Time certificates of $250,000 or more 263,949 276,197
Other time certificates 527,601 508,685
Total deposits  $ 1,987,635  $ 1,776,259
Acceptances outstanding  131  156
Advances from Federal Home Loan Bank  20,000  20,000
Commitments to fund investment in affordable housing partnership  4,139  8,151
Accrued interest payable  1,365  1,419
Other liabilities  12,094  13,143
Total liabilities  2,025,364  1,819,128
     
Commitments and contingencies    
Shareholders' equity:    
     
Preferred stock. Authorized 25,000,000 shares; no issued and outstanding shares at September 30, 2015 and December 31, 2014 —  — 
Common stock, no par value. Authorized 100,000,000 shares; issued and outstanding 13,774,068 and 13,503,458 shares at September 30, 2015 and December 31, 2014, respectively  165,553  164,023
Treasury stock  (19,115)  (19,115)
Additional paid-in-capital  33,822  29,631
Accumulated income  75,679  58,552
Accumulated other comprehensive income:    
Unrealized gain on securities, available-for-sale, net of tax of $896 and $1,405 at September 30, 2015 and December 31, 2014  1,243  1,935
Total shareholders' equity  257,182  235,026
Total liabilities and shareholders' equity  $ 2,282,546  $ 2,054,154
           
 PREFERRED BANK 
 Selected Consolidated Financial Information 
 (unaudited) 
 (in thousands, except for ratios) 
           
  For the Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
  2015 2015 2015 2014 2014
Unaudited historical quarterly operations data:          
Interest income  $ 24,380  $ 23,053  $ 21,846  $ 21,821  $ 20,462
Interest expense  2,783  2,486  2,482  2,438  2,426
Interest income before provision for credit losses  21,597  20,567  19,364  19,383  18,036
Provision for credit losses  500  500  500  500  500
Noninterest income  940  1,131  868  751  928
Noninterest expense  8,740  8,462  8,618  8,121  7,836
Income tax expense  5,396  5,147  4,424  4,645  4,266
Net income  7,901  7,589  6,690  6,868  6,362
           
Earnings per share          
Basic  $ 0.57  $ 0.55  $ 0.49  $ 0.51  $ 0.47
Diluted  $ 0.57  $ 0.55  $ 0.48  $ 0.50  $ 0.46
           
Ratios for the period:          
Return on average assets 1.42% 1.44% 1.28% 1.37% 1.29%
Return on beginning equity 12.55% 12.49% 11.54% 11.92% 11.34%
Net interest margin (Fully-taxable equivalent) 4.00% 4.01% 3.83% 3.98% 3.78%
Noninterest expense to average assets 1.58% 1.60% 1.65% 1.62% 1.59%
Efficiency ratio 38.78% 39.00% 42.60% 40.33% 41.32%
Net charge-offs (recoveries) to average loans (annualized) 0.05% 0.03% 0.02% 0.05% -1.16%
           
Ratios as of period end:          
Tier 1 leverage capital ratio (1) 11.47% 11.59% 11.26% 11.73% 11.62%
Common equity tier 1 risk-based capital ratio (1) 11.80% 11.91% 12.10% N/A N/A
Tier 1 risk-based capital ratio (1) 11.80% 11.91% 12.10% 12.72% 12.75%
Total risk-based capital ratio (1) 12.93% 13.07% 13.30% 13.97% 14.00%
Allowances for credit losses to loans and leases at end of period (2) 1.31% 1.36% 1.40% 1.43% 1.49%
Allowance for credit losses to non-performing loans and leases 303.27% 299.06% 288.16% 268.19% 210.40%
           
Average balances:          
Total loans and leases (3)  $ 1,741,762  $ 1,673,710  $ 1,612,556  $ 1,555,868  $ 1,464,336
Earning assets  $ 2,160,075  $ 2,070,542  $ 2,064,435  $ 1,943,034  $ 1,908,411
Total assets  $ 2,201,060  $ 2,117,610  $ 2,115,354  $ 1,990,417  $ 1,952,270
Total deposits  $ 1,907,719  $ 1,832,688  $ 1,834,920  $ 1,707,908  $ 1,684,628
 
(1) Risk-based capital ratios were calculated under BASEL III rules, which became effective on January 1, 2015. Ratios for the prior periods were calculated under Basel I rules.
(2) Loans held for sale are excluded
(3) Loans held for sale are included
     
 PREFERRED BANK 
 Selected Consolidated Financial Information 
 (in thousands, except for ratios) 
     
  For the Nine Months Ended
  September 30, September 30,
  2015 2014
Interest income  $ 69,279  $ 58,506
Interest expense  7,751  6,902
Interest income before provision for credit losses  61,528  51,604
Provision for credit losses  1,500  2,850
Noninterest income  2,939  2,870
Noninterest expense  25,820  22,291
Income tax expense  14,967  11,609
Net income  22,180  17,724
     
Earnings per share    
Basic  $ 1.62  $ 1.32
Diluted  $ 1.60  $ 1.29
     
Ratios for the period:    
Return on average assets 1.38% 1.29%
Return on beginning equity 12.62% 11.45%
Net interest margin (Fully-taxable equivalent) 3.95% 3.86%
Noninterest expense to average assets 1.61% 1.60%
Efficiency ratio 40.05% 40.92%
Net charge-offs (recoveries) to average loans 0.03% -0.03%
     
Average balances:    
Total loans and leases*  $ 1,676,320  $ 1,398,430
Earning assets  $ 2,098,549  $ 1,800,384
Total assets  $ 2,144,830  $ 1,842,694
Total deposits  $ 1,858,592  $ 1,589,899
     
* Loans held for sale are included    
** Loans held for sale are excluded    
           
 PREFERRED BANK 
 Selected Consolidated Financial Information 
 (unaudited) 
 (in thousands, except for ratios) 
           
  As of
  September 30, June 30, March 31, December 31, September 30,
  2015 2015 2015 2014 2014
Unaudited quarterly statement of financial position data:          
Assets:          
Cash and cash equivalents  $ 232,707  $ 208,015  $ 242,053  $ 240,194  $ 248,232
Securities held-to-maturity, at amortized cost  6,307  6,806  7,139  7,815  8,188
Securities available-for-sale, at fair value  164,378  161,775  165,330  150,539  164,247
Loans and Leases:          
Real estate - Single and multi-family residential  $ 328,124  $ 290,186  $ 306,284  $ 283,958  $ 229,353
Real estate - Land for housing  14,429  13,102  11,658  12,132  12,156
Real estate - Land for income properties  1,876  1,891  1,906  1,489  1,507
Real estate - Commercial  770,494  712,383  676,034  653,380  678,778
Real estate - For sale housing construction  79,406  71,945  50,458  48,892  44,614
Real estate - Other construction  48,438  49,413  84,065  77,593  80,411
Commercial and industrial  555,680  570,408  502,453  495,827  443,966
Trade finance and other  38,602  40,403  38,234  30,878  33,967
Gross loans  1,837,049  1,749,731  1,671,092  1,604,149  1,524,752
Allowance for loan and lease losses  (24,055)  (23,758)  (23,388)  (22,974)  (22,662)
Net deferred loan fees  (2,476)  (2,179)  (2,216)  (2,100)  (2,368)
Total loans, net  $ 1,810,518  $ 1,723,794  $ 1,645,488  $ 1,579,075  $ 1,499,722
           
Other real estate owned  $ --  $ --  $ 8,811  $ 8,811  $ --
Investment in affordable housing  16,589  17,059  17,529  17,999  18,460
Federal Home Loan Bank stock  6,677  6,677  6,155  6,155  6,155
Other assets  45,370  46,030  45,208  43,566  51,146
Total assets  $ 2,282,546  $ 2,170,156  $ 2,137,713  $ 2,054,154  $ 1,996,150
           
Liabilities:          
Deposits:          
Demand  $ 477,524  $ 519,501  $ 493,440  $ 443,385  $ 403,881
Interest-bearing demand 697,402 568,243 585,286 525,781 554,769
Savings 21,159 23,855 24,056 22,211 22,552
Time certificates of $250,000 or more 263,949 260,205 243,360 276,197 250,087
Other time certificates 527,601 510,394 510,809 508,685 489,765
Total deposits  $ 1,987,635  $ 1,882,198  $ 1,856,950  $ 1,776,259  $ 1,721,054
           
Advances from Federal Home Loan Bank  $ 20,000  $ 20,000  $ 20,000  $ 20,000  $ 20,000
Commitments to fund investment in affordable housing partnership  4,139  4,139  7,726  8,151  9,481
Other liabilities  13,590  13,954  9,299  14,717  16,963
Total liabilities  $ 2,025,364  $ 1,920,291  $ 1,893,974  $ 1,819,127  $ 1,767,498
           
Equity:          
Net common stock, no par value  $ 180,260  $ 179,360  $ 177,978  $ 174,539  $ 173,581
Retained earnings  75,679  69,431  63,545  58,553  53,015
Accumulated other comprehensive income  1,243  1,074  2,216  1,935  2,056
Total shareholders' equity  $ 257,182  $ 249,865  $ 243,739  $ 235,027  $ 228,652
Total liabilities and shareholders' equity  $ 2,282,546  $ 2,170,156  $ 2,137,713  $ 2,054,154  $ 1,996,150
     
Preferred Bank
Loan and Credit Quality Information
     
Allowance For Credit Losses & Loss History
  Nine Months Ended Year Ended
  September 30, 2015 December 31, 2014
  (Dollars in 000's)
Allowance For Credit Losses    
Balance at Beginning of Period  $ 22,974  $ 19,494
Charge-Offs    
Commercial & Industrial  1,475  436
Mini-perm Real Estate  --   4,243
Construction - Residential  --   -- 
Construction - Commercial  --   -- 
Land - Residential  --   -- 
Land - Commercial  --   -- 
Others  --   -- 
Total Charge-Offs  1,475  4,679
     
Recoveries    
Commercial & Industrial  61  3
Mini-perm Real Estate  144  -- 
Construction - Residential  --   -- 
Construction - Commercial  20  134
Land - Residential  100  -- 
Land - Commercial  731  4,672
Total Recoveries  1,056  4,809
Net Loan Charge-Offs  419  (130)
Provision for Credit Losses  1,500  3,350
Balance at End of Period  $ 24,055  $ 22,974
Average Loans and Leases*  $ 1,676,320  $ 1,438,122
Loans and Leases at end of Period*  $ 1,837,049  $ 1,604,149
Net Charge-Offs to Average Loans and Leases 0.03% -0.01%
Allowances for credit losses to loans and leases at end of period ** 1.31% 1.43%
     
 * Loans held for sale are included     
 ** Loans held for sale are excluded     
CONTACT: AT THE COMPANY: Edward J. Czajka Executive Vice President Chief Financial Officer (213) 891-1188 AT FINANCIAL PROFILES: Kristen Papke General Information (310) 663-8007 kpapke@finprofiles.com

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