LOS ANGELES, July 17, 2013 (GLOBE NEWSWIRE) -- Preferred Bank (Nasdaq:PFBC), an independent commercial bank focusing on the Chinese-American and diversified California mainstream market, today reported results for the quarter ended June 30, 2013. Preferred Bank ("the Bank") reported net income of $4.3 million or $0.32 per diluted share for the second quarter of 2013. This compares to a net loss of $5.6 million or $0.43 per diluted share for the second quarter of 2012 and compares to net income of $4.0 million or $0.30 per diluted share for the first quarter of 2013. Net income on a year-to-date basis was $8.3 million or $0.61 per diluted share for 2013 compared to net income of $16.1 million or $1.20 per diluted share for the same period last year. Results for 2012 were aided by a $20.2 million reversal of the Bank's valuation allowance on its deferred tax asset.
Li Yu, Chairman and CEO commented, "Reported results as of June 30, 2013 include the placement of certain loans on nonaccrual status and the reversal of interest income based on verbal indications from our regulators of their pending recommendation to place certain loans on nonaccrual possibly as of December 31, 2012. Although we are not in receipt of the Report of Examination and thus have not been able to fully review the possible recommendations, the Board elected to fully reflect the possible financial implications of these items within the June 30, 2013 financial statements, pending the completion of a full review of the Report once received.
"Specifically, the reported June 30, 2013 nonaccrual loan totals include $3.8 million in loans which are paying as agreed but may be subject to a regulatory recommendation to be placed on nonaccrual as of December 31, 2012. During the quarter, the Bank resolved an additional $7.3 million in other loans which may also be subject to placement on nonaccrual status as of December 31, 2012. In addition, there are two loans totalling $5.0 million which were already placed on non-accrual status in the first quarter of 2013 and which may be required to be placed on non-accrual as of December 31, 2012. The June 30, 2013 quarterly reported results also reflect an interest income reversal of $745,000 which consists of a $275,000 interest reversal on the resolution of the $7.3 million in nonaccrual loans mentioned above and a $470,000 interest reversal that the examiners verbally indicated is the remaining interest income on the loans they may recommend for nonaccrual reporting as of December 31, 2012. That figure includes income previously reported in 2012 and to a lesser extent, 2011. Although the possible cumulative financial statement impacts are now fully captured in the June 30, 2013 results, the Bank may need to file an amended December 31, 2012 Call Report in order to report lower interest income for 2012. Should this action be taken, the Bank would also file an amended June 30, 2013 Call Report to reflect a corresponding increase in interest income.
"Including the issues discussed, our second quarter earnings is $4.3 million or $0.32 per diluted share. We are very pleased with the results especially when we consider the following:
- We achieved the highest quarterly pre tax income in over five years (Q4, 2007)
- Linked quarter loan growth of $56.3 million
- NIM was 3.85% but excluding the interest adjustments mentioned above, the net interest margin would have been 4.04%, under this very competitive environment.
- Continued positive results in reduction of non-performing assets (NPA's). Second quarter 2013 reduction was $6.6 million or 18% of total NPA's. More importantly there were negligible net credit costs related to the net NPA reduction.
- Improvement of efficiency ratio to 47.7% largely due to reduced costs related to OREO and NPL's.
I have previously reported to you of our optimistic outlook of the Bank's future in January and April. I would like to again reiterate this optimism in July. This is especially true when we now have a much reduced NPA level valued at conservative prices."
Operating Results
Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses increased to $14.4 million from the $13.2 million recorded in the second quarter of 2012 but a decrease from the $14.7 million recorded in the first quarter of 2013. The increase over 2012 is due primarily to the loan growth achieved during the latter part of 2012 and the first half of 2013 and the decrease from the prior quarter was due to the $745,000 in interest reversals related to the aforementioned loans. The Bank's taxable equivalent net interest margin was 3.85% for the second quarter of 2013, a 14 basis point decrease from the 3.99% achieved in the second quarter of 2012 and an 18 basis point decrease from the 4.03% recorded in the first quarter of 2013.
Net Interest Margin Reconciliation:
| Average Interest Earning Assets – Q2 2013 | $1,515,010 | |
| Q2 Net Interest Income & Net Interest Margin | $15,200 | 3.85% |
| Interest Adjustments | 745 | |
| Pro Forma Net Interest Income & Margin | $15,945 | 4.04% |
Noninterest Income. For the second quarter of 2013, noninterest income was $718,000 compared with $1.5 million for the same quarter last year and compared to $858,000 for the first quarter of 2013. Noninterest income was negatively impacted this quarter by a loss on sale of securities of $358,000 and noninterest income in the same period last year was aided by a gain on sale of securities of $550,000. Service charges on deposits and trade finance income were both up over the same period last year.
Noninterest Expense. Total noninterest expense was $7.2 million for the second quarter of 2013, compared to $8.0 million for the same period last year and $8.8 million for the first quarter of 2013. Salaries and benefits expense increased by $1.5 million over the second quarter of 2012 and decreased by $298,000 over the first quarter of 2013. The increase over the second quarter of 2012 was due to higher bonus expense as well as higher staffing levels and the decrease over the first quarter of 2013 was primarily due to a decrease in bonus expense. Occupancy expense was $805,000 compared to the $742,000 recorded in the same period in 2012 and $768,000 recorded in the first quarter of 2013. The increase over 2012 was due to the new San Francisco branch occupancy costs. Professional services expense was $794,000 for the second quarter of 2013 compared to $630,000 for the same quarter of 2012 and the $889,000 posted in the first quarter of 2013. Other real estate owned ("OREO")-related and loans held for sale ("LHFS") expenses totaled $206,000 for the second quarter of 2013 (consisting of $775,000 in valuation charges on LHFS, operating expenses of $266,000 partially offset by net gains on sale of OREO of $835,000). This represented a decrease from the $2.3 million recorded in the same quarter last year and a decrease from the $1.4 million posted in the first quarter of 2013. Other expenses were $1.1 million in the second quarter of 2013, a decrease of $351,000 from the same period in 2012 and flat compared to the first quarter of 2013. The variance compared to the same period last year was primarily due to a decrease in FDIC premiums of $148,000 and a decrease in appraisal costs of $92,000.
Balance Sheet Summary
Total gross loans and leases (including loans held for sale) at June 30, 2013 were $1.23 billion, an increase of $97.4 million over the total of $1.13 million as of December 31, 2012. This represents an annualized growth rate of 17.4% for 2013. Comparing balances as of June 30, 2013 to December 31, 2012 excluding loans held for sale: Residential real estate loans increased from $152.4 million to $190.0 million; total land loans decreased from $27.2 million to $24.7 million; commercial real estate loans increased from $493.1 million to $549.9 million; for-sale housing construction loans decreased from $36.3 million to $25.2 million; other construction loans increased from $38.1 million to $46.1 million and total commercial loans increased from $372.5 million to $378.6 million.
Total deposits as of June 30, 2013 were $1.43 billion, an increase of $74.7 million from the $1.36 billion at December 31, 2012. In the early part of January, the Bank elected to reduce DDA deposits by approximately $60 million which would have required collateral of government securities to maintain. The process of reducing these deposits continued in the second quarter as evidenced by the $58.6 million decline in DDA deposits in the second quarter. This quarter marks the last of the decline in these collateralized deposits. As of June 30, 2013 compared to December 31, 2012; noninterest-bearing demand deposits decreased by $96.1 million or 21.5%, interest-bearing demand and savings deposits increased by $53.2 million or 15.3% and time deposits increased by $117.6 million or 20.9%. Total assets were $1.66 billion, a $102.5 million or 6.6% increase from the total of $1.55 billion as of December 31, 2012. In June, as Treasury rates were climbing, the Bank elected to take out a two year, $20 million FHLB advance at a rate of 0.64% to enhance liquidity while locking in a very low borrowing rate.
Asset Quality
As of June 30, 2013 total nonaccrual loans (excluding loans held for sale) decreased to $15.4 million compared to $19.0 million as of December 31, 2012 and includes the $3.8 million in performing loans placed on nonaccrual this quarter. Total net charge-offs for the second quarter of 2013 were $2.5 million compared to net charge-offs of $373,000 for the first quarter of 2013. The preponderance of the charge-offs this quarter were taken against previously established specific reserves associated with classified loans that were resolved this quarter. Based on a detailed analysis of all impaired and classified loans, as well as an analysis of other qualitative factors, the Bank recorded a provision for loan losses of $250,000 for the second quarter of 2013. This compares to a provision of $14.5 million in the second quarter of 2012 and no provision in the first quarter of 2013. The allowance for loan loss at June 30, 2013 was $18.0 million or 1.48% of total loans compared to $20.6 million or 1.84% of total loans at December 31, 2012.
NPA Migration
Non-Performing Assets Migration – Q2 2013
|
Non Accrual Loans |
OREO |
|
| Balance, March 31, 2013 | $ 16,608 | $ 19,874 |
| Additions | 3,846 | -- |
| Transfer to OREO | -- | -- |
| Loans Cured | -- | -- |
| Sales/Payoffs | (4,013) | (5,360) |
| Charge-off | (1,074) | (1) |
| Balance, June 30, 2013 | $ 15,367 | $ 14,513 |
The table above excludes loans held for sale and excludes TDR's that are on accrual status. Performing TDR's totaled $406,000 as of June 30, 2013. The $14.7 million in loans held for sale consist of one performing CRE loan for $5.0 million and two nonaccrual loans for $9.7 million. Of the $9.7 million on nonaccrual, $6.6 million is paying as agreed and the remaining $3.2 million loan was sold as of July 17 at carrying value.
OREO
Total OREO decreased to $14.5 million compared to $28.3 million as of December 31, 2012. During the second quarter of 2013, the Bank sold three OREO properties with an aggregate book value of $5.4 million.
Asset Quality Table – June 30, 2013
| ($ in thousands) | 30-89 Days | Nonaccrual | OREO | |||
| # | $ | # | $ | # | $ | |
| Land-Residential | -- | $ -- | -- | $ -- | 8 | $ 12,262 |
| Land Commercial | -- | -- | -- | -- | 1 | 2,251 |
| Construction: | ||||||
| Residential | -- | -- | 1 | 4,873 | -- | -- |
| Commercial | -- | -- | -- | -- | -- | -- |
| RE-Housing for sale | -- | -- | -- | -- | -- | -- |
| CRE-Commercial | -- | -- | 5 | 6,202 | -- | -- |
| C&I/Trade Finance | 1 | 50 | 5 | 4,292 | -- | -- |
| Totals | 1 | $ 50 | 11 | $ 15,367 | 9 | $ 14,513 |
Asset Quality Table – March 31, 2013
| ($ in thousands) | 30-89 Days | Nonaccrual | OREO | |||
| # | $ | # | $ | # | $ | |
| Land-Residential | -- | $ -- | -- | $ -- | 9 | $ 12,419 |
| Land Commercial | -- | -- | -- | -- | 1 | 2,251 |
| Construction: | ||||||
| Residential | -- | -- | 1 | 5,601 | 1 | 3,051 |
| Commercial | -- | -- | -- | -- | -- | -- |
| RE-Housing for sale | -- | -- | -- | -- | -- | -- |
| CRE-Commercial | -- | -- | 2 | 2,379 | 1 | 2,153 |
| C&I/Trade Finance | 1 | 121 | 11 | 8,628 | -- | -- |
| Totals | 1 | $ 121 | 14 | $ 16,608 | 12 | $ 19,874 |
Capitalization
As of June 30, 2013, the Bank's tier 1 leverage ratio was 12.18% and total risk-based capital ratio was 14.76%. This compares to 11.96% and 14.98% as of December 31, 2012, respectively. Pursuant to the Memorandum of Understanding (MOU) entered into on May 25, 2012, the Bank is required to maintain the following capital ratio:
| Ratio | Preferred Bank at 6/30/13 | MOU Requirement |
| Tier 1 Leverage Ratio | 12.18% | 10.0% |
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank's second quarter 2013 financial results will be held tomorrow, July 18, at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 877-941-8609 (domestic) or 480-629-9692 (international). The passcode for the call is 4629862. 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, Chief Financial Officer Edward J. Czajka and Chief Credit Officer Louie Couto 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 800-406-7325 (domestic) or 303-590-3030 (international) through July 25, 2013; the passcode is 4629862.
About Preferred Bank
Preferred Bank is one of the largest independent commercial banks in California focusing on the Chinese-American market. 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 ten full-service branch banking offices in Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Anaheim, Pico Rivera 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. Preferred Bank continues to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia. While its business is not solely dependent on the Chinese-American market, it represents an important element of the Bank's operating strategy, especially for its branch network and deposit products and services. Preferred Bank believes it is well positioned to compete effectively with the smaller Chinese-American community banks, the larger commercial banks and other major banks operating in California by offering a high degree of personal service and responsiveness, experienced multi-lingual staff and substantial lending limits.
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 2012 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 (loss) per share and shares) | |||
| For the Three Months Ended | |||
|
June 30, 2013 |
June 30, 2012 |
March 31, 2013 |
|
| Interest income: | |||
| Loans, including fees | $ 14,686 | $ 13,560 | $ 14,939 |
| Investment securities | 1,552 | 1,585 | 1,550 |
| Fed funds sold | 5 | 2 | -- |
| Total interest income | 16,243 | 15,147 | 16,489 |
| Interest expense: | |||
| Interest-bearing demand | 508 | 408 | 531 |
| Savings | 22 | 18 | 21 |
| Time certificates | 1,287 | 1,496 | 1,277 |
| FHLB borrowings | 3 | -- | -- |
| Total interest expense | 1,820 | 1,922 | 1,829 |
| Net interest income | 14,423 | 13,225 | 14,660 |
| Provision for loan losses | 250 | 14,500 | -- |
| Net interest income (loss) after provision for loan losses | 14,173 | (1,275) | 14,660 |
| Noninterest income: | |||
| Fees & service charges on deposit accounts | 570 | 433 | 548 |
| Trade finance income | 144 | 97 | 207 |
| BOLI income | 83 | 82 | 82 |
| Net (loss) gain on sale of investment securities | (358) | 550 | -- |
| Other income | 279 | 313 | 21 |
| Total noninterest income | 718 | 1,475 | 858 |
| Noninterest expense: | |||
| Salary and employee benefits | 3,975 | 2,516 | 4,273 |
| Net occupancy expense | 805 | 742 | 768 |
| Business development and promotion expense | 83 | 64 | 96 |
| Professional services | 794 | 630 | 889 |
| Office supplies and equipment expense | 301 | 326 | 307 |
| Total other-than-temporary impairment losses | 95 | -- | 4 |
| Portion of loss recognized in other comprehensive income | (92) | -- | -- |
| Other real estate owned related expense and valuation allowance on LHFS | 206 | 2,346 | 1,364 |
| Other | 1,051 | 1,402 | 1,141 |
| Total noninterest expense | 7,218 | 8,026 | 8,841 |
| Income before provision for income taxes | 7,673 | (7,826) | 6,676 |
| Income tax expense (benefit) | 3,404 | (2,217) | 2,646 |
| Net income (loss) | $ 4,269 | $ (5,609) | $ 4,030 |
| Income allocated to participating securities | (54) | -- | (51) |
| Net income (loss) available to common shareholders | $ 4,215 | $ (5,609) | $ 3,979 |
| Income (loss) per share available to common shareholders | |||
| Basic | $ 0.32 | $ (0.43) | $ 0.30 |
| Diluted | $ 0.32 | $ (0.43) | $ 0.30 |
| Weighted-average common shares outstanding | |||
| Basic | 13,085,394 | 13,050,582 | 13,071,223 |
| Diluted | 13,355,058 | 13,050,582 | 13,322,083 |
| 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, 2013 |
June 30, 2012 |
Change % |
|
| Interest income: | |||
| Loans, including fees | $ 29,625 | $ 27,068 | 9.4% |
| Investment securities | 3,102 | 3,268 | -5.1% |
| Fed funds sold | 5 | 2 | 251.9% |
| Total interest income | 32,732 | 30,338 | 7.9% |
| Interest expense: | |||
| Interest-bearing demand | 1,039 | 816 | 27.3% |
| Savings | 43 | 37 | 15.7% |
| Time certificates | 2,565 | 3,172 | -19.1% |
| FHLB borrowings | 3 | -- | 100.0% |
| Senior debt | -- | 94 | -100.0% |
| Total interest expense | 3,650 | 4,119 | -11.4% |
| Net interest income | 29,082 | 26,219 | 10.9% |
| Provision for credit losses | 250 | 16,300 | -98.5% |
| Net interest income after provision for loan losses | 28,832 | 9,919 | 190.7% |
| Noninterest income: | |||
| Fees & service charges on deposit accounts | 1,117 | 868 | 28.8% |
| Trade finance income | 351 | 166 | 111.2% |
| BOLI income | 164 | 164 | 0.1% |
| Net (loss) gain on sale of investment securities | (358) | 554 | -164.5% |
| Other income | 301 | 341 | -11.7% |
| Total noninterest income | 1,575 | 2,093 | -24.7% |
| Noninterest expense: | |||
| Salary and employee benefits | 8,248 | 5,978 | 38.0% |
| Net occupancy expense | 1,573 | 1,494 | 5.3% |
| Business development and promotion expense | 178 | 117 | 52.3% |
| Professional services | 1,683 | 1,220 | 38.0% |
| Office supplies and equipment expense | 608 | 590 | 3.0% |
| Total other-than-temporary impairment losses | 99 | 16 | 518.8% |
| Portion of loss recognized in other comprehensive income | (92) | -- | -100.0% |
| Other real estate owned related expense and valuation allowance on LHFS | 1,570 | 4,649 | -66.2% |
| Other | 2,193 | 2,818 | -22.2% |
| Total noninterest expense | 16,059 | 16,882 | -4.9% |
| Income (loss) before provision for income taxes | 14,348 | (4,870) | -394.6% |
| Income tax expense (benefit) | 6,049 | (21,000) | -128.8% |
| Net income | $ 8,299 | $ 16,130 | -48.5% |
| Income allocated to participating securities | (105) | (229) | -54.3% |
| Net income available to common shareholders | $ 8,194 | $ 15,901 | -48.5% |
| Income per share available to common shareholders | |||
| Basic | $ 0.63 | $ 1.22 | -48.6% |
| Diluted | $ 0.61 | $ 1.20 | -48.9% |
| Weighted-average common shares outstanding | |||
| Basic | 13,078,347 | 13,037,288 | 0.3% |
| Diluted | 13,347,084 | 13,236,707 | 0.8% |
| PREFERRED BANK | ||
| Condensed Consolidated Statements of Financial Condition | ||
| (unaudited) | ||
| (in thousands) | ||
|
June 30, 2013 |
December 31, 2012 |
|
| Assets | ||
| Cash and due from banks | $ 171,100 | $ 151,995 |
| Fed funds sold | 10,000 | -- |
| Cash and cash equivalents | 181,100 | 151,995 |
| Securities held to maturity, at amortized cost | -- | 979 |
| Securities available-for-sale, at fair value | 183,690 | 210,742 |
| Loans and leases | 1,214,425 | 1,119,553 |
| Less allowance for loan and lease losses | (18,011) | (20,607) |
| Less net deferred loan fees | (2,197) | (2,019) |
| Net loans and leases | 1,194,217 | 1,096,927 |
| Loans held for sale, at lower of cost or fair value | 14,685 | 12,150 |
| Other real estate owned | 14,513 | 28,280 |
| Customers' liability on acceptances | 1,837 | 1,961 |
| Bank furniture and fixtures, net | 4,410 | 4,383 |
| Bank-owned life insurance | 8,169 | 8,049 |
| Accrued interest receivable | 5,070 | 5,646 |
| Investment in affordable housing | 4,940 | -- |
| Federal Home Loan Bank stock | 5,296 | 4,282 |
| Deferred tax assets | 28,961 | 26,975 |
| Income tax receivable | -- | 542 |
| Other asset | 10,425 | 1,945 |
| Total assets | $ 1,657,313 | $ 1,554,856 |
| Liabilities and Shareholders' Equity | ||
| Liabilities: | ||
| Deposits: | ||
| Demand | $ 350,641 | $ 446,734 |
| Interest-bearing demand | 378,360 | 325,018 |
| Savings | 21,713 | 21,844 |
| Time certificates of $250,000 or more | 213,494 | 185,001 |
| Other time certificates | 468,035 | 378,930 |
| Total deposits | $ 1,432,243 | $ 1,357,527 |
| Acceptances outstanding | 1,837 | 1,961 |
| Advances from Federal Home Loan Bank | 20,000 | -- |
| Accrued interest payable | 1,002 | 968 |
| Other liabilities | 7,791 | 6,562 |
| Total liabilities | 1,462,873 | 1,367,018 |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Preferred stock. Authorized 25,000,000 shares; no issued and outstanding shares at June 30, 2013 and December 31, 2012 | — | — |
| Common stock, no par value. Authorized 20,000,000 shares; issued and outstanding 13,233,757 and 13,234,608 shares at June 30, 2013 and December 31, 2012, respectively | 163,104 | 162,927 |
| Treasury stock | (19,115) | (19,115) |
| Additional paid-in-capital | 25,375 | 24,544 |
| Accumulated income | 25,780 | 17,481 |
| Accumulated other comprehensive income (loss): | -- | -- |
| Non-credit portion of loss recognized, net of tax of $137 and $133 at June 30, 2013 and December 31, 2012, respectively | (189) | (184) |
| Unrealized gain(loss) on securities, available-for-sale, net of tax of $396 and $1,585 at June 30, 2013 and December 31, 2012 | (515) | 2,185 |
| Total shareholders' equity | 194,440 | 187,838 |
| Total liabilities and shareholders' equity | $ 1,657,313 | $ 1,554,856 |
| PREFERRED BANK | ||||
| Selected Consolidated Financial Information | ||||
| (unaudited) | ||||
| (in thousands, except for ratios) | ||||
| For the Three Months Ended | ||||
|
June 30, 2013 |
March 31, 2013 |
December 31, 2012 |
June 30, 2012 |
|
| For the period: | ||||
| Return on average assets | 1.09% | 1.05% | 1.29% | -1.60% |
| Return on average equity | 8.80% | 8.53% | 10.00% | -12.22% |
| Net interest margin (Fully-taxable equivalent) | 3.85% | 4.01% | 3.91% | 3.99% |
| Noninterest expense to average assets | 1.84% | 2.31% | 2.14% | 2.30% |
| Efficiency ratio | 47.67% | 56.98% | 54.53% | 54.60% |
| Net charge-offs (recoveries) to average loans (annualized) | 0.83% | 0.13% | 1.20% | 6.33% |
| Period end: | ||||
| Tier 1 leverage capital ratio | 12.18% | 12.01% | 11.96% | 12.19% |
| Tier 1 risk-based capital ratio | 13.51% | 13.61% | 13.73% | 14.38% |
| Total risk-based capital ratio | 14.76% | 14.86% | 14.98% | 15.64% |
| Allowances for credit losses to loans and leases at end of period ** | 1.48% | 1.75% | 1.84% | 2.19% |
| Allowance for credit losses to non-performing loans and leases | 71.79% | 74.13% | 78.82% | 64.52% |
| Average balances: | ||||
| Total loans and leases* | $ 1,198,818 | $ 1,139,317 | $ 1,089,719 | $ 990,087 |
| Earning assets | $ 1,515,010 | $ 1,487,826 | $ 1,456,965 | $ 1,343,295 |
| Total assets | $ 1,571,860 | $ 1,545,400 | $ 1,518,085 | $ 1,406,508 |
| Total deposits | $ 1,362,295 | $ 1,344,983 | $ 1,312,027 | $ 1,213,553 |
| Period end: | ||||
| Loans and Leases: | ||||
| Real estate - Single and multi-family residential | $ 190,037 | $ 156,613 | $ 152,388 | $ 132,256 |
| Real estate - Land for housing | 23,079 | 23,091 | 25,560 | 23,180 |
| Real estate - Land for income properties | 1,571 | 1,581 | 1,598 | 1,786 |
| Real estate - Commercial | 549,907 | 502,589 | 493,101 | 452,750 |
| Real estate - For sale housing construction | 25,177 | 31,341 | 36,347 | 41,987 |
| Real estate - Other construction | 46,061 | 39,366 | 38,063 | 24,083 |
| Commercial and industrial | 328,676 | 349,615 | 324,753 | 275,679 |
| Trade finance and other | 49,917 | 52,924 | 47,743 | 46,289 |
| Gross loans | 1,214,425 | 1,157,120 | 1,119,553 | 998,010 |
| Allowance for loan and lease losses | (18,011) | (20,234) | (20,607) | (21,835) |
| Net deferred loan fees | (2,197) | (2,175) | (2,019) | (1,583) |
| Loans excluding loans held for sale | 1,194,217 | 1,134,711 | 1,096,927 | 974,592 |
| Loans held for sale | 14,685 | 15,670 | 12,150 | 10,290 |
| Total loans, net | $ 1,208,902 | $ 1,150,381 | $ 1,109,077 | $ 984,882 |
| Deposits: | ||||
| Noninterest-bearing demand | $ 350,641 | $ 409,253 | $ 446,734 | $ 365,292 |
| Interest-bearing demand and savings | 400,073 | 359,476 | 346,862 | 290,203 |
| Total core deposits | 750,714 | 768,729 | 793,596 | 655,495 |
| Time deposits | 681,529 | 615,270 | 563,931 | 580,387 |
| Total deposits | $ 1,432,243 | $ 1,383,999 | $ 1,357,527 | $ 1,235,882 |
| * Loans held for sale are included | ||||
| ** Loans held for sale are excluded | ||||
| Preferred Bank | ||
| Loan and Credit Quality Information | ||
| Allowance For Credit Losses & Loss History | ||
|
Six Months Ended June 30, 2013 |
Year Ended December 31, 2012 |
|
| (Dollars in 000's) | ||
| Allowance For Credit Losses | ||
| Balance at Beginning of Period | $ 20,607 | $ 23,718 |
| Charge-Offs | ||
| Commercial & Industrial | 3,625 | 10,525 |
| Mini-perm Real Estate | 1,667 | 3,903 |
| Construction - Residential | 754 | -- |
| Construction - Commercial | -- | 2,185 |
| Land - Residential | -- | 592 |
| Land - Commercial | -- | 6,276 |
| Others | -- | -- |
| Total Charge-Offs | 6,046 | 23,481 |
| Recoveries | ||
| Commercial & Industrial | 184 | 63 |
| Mini-perm Real Estate | 870 | 296 |
| Construction - Residential | 1,951 | 2 |
| Construction - Commercial | 163 | 145 |
| Land - Residential | 28 | 57 |
| Land - Commercial | 4 | 7 |
| Total Recoveries | 3,200 | 570 |
| Net Loan Charge-Offs | 2,846 | 22,911 |
| Provision for Credit Losses | 250 | 19,800 |
| Balance at End of Period | $ 18,011 | $ 20,607 |
| Average Loans and Leases* | $ 1,169,237 | $ 1,018,366 |
| Loans and Leases at end of Period* | $ 1,214,425 | $ 1,119,553 |
| Net Charge-Offs to Average Loans and Leases | 0.49% | 2.25% |
| Allowances for credit losses to loans and leases at end of period ** | 1.48% | 1.84% |
| * Loans held for sale are included | ||
| ** Loans held for sale are excluded | ||