LOS ANGELES, Oct. 16, 2014 (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, 2014. Preferred Bank ("the Bank") reported net income of $6.4 million or $0.46 per diluted share for the third quarter of 2014. This compares to net income of $5.0 million or $0.37 per diluted share for the third quarter of 2013 and compares to net income of $6.2 million or $0.45 per diluted share for the second quarter of 2014. Net income for the nine months ended September 30, 2014 totaled $17.7 million or $1.29 per diluted share compared to $13.3 million or $0.99 per diluted share for the same period last year. This represents an increase of $4.4 million or 33.0% over 2013 year to date earnings.
Highlights from the third quarter of 2014:
- Total assets approaching $2 billion
- Termination of the Bank's Memorandum of Understanding ("MOU")
- Reinstatement of the Bank's quarterly cash dividend
- Recovered $4.6 million on previously charged off loan
- Diluted EPS of $0.46 per diluted share, a 24% increase from prior year
- Strong linked quarter loan growth of $81 million and deposit growth of $71 million
- ROA was 1.29%
- ROBE was 11.3%
- Efficiency ratio was 41.3%
Li Yu, Chairman and CEO commented, "The third quarter of 2014 was a quarter of good news for our Bank. In July, we had a significant loan recovery of $4.6 million and in September the MOU that we entered into in October of 2013 was terminated. In late September, our Board declared a cash dividend of $0.10 per share payable on October 20, 2014 and now we are reporting third quarter net income of $6.4 million or $0.46 per share as compared to $5.0 million or $0.37 per share for the same period last year, a vast improvement.
"During the quarter, Preferred Bank continued to grow. Total assets now stand at $1.996 billion or a shade away from the $2 billion mark. Loans grew $81 million or 5.7% and deposits grew $71 million, or 4.3% on a linked quarter basis. Furthermore, the deposit growth was mostly in core accounts.
"Non-performing assets continue to decline. This quarter, the net reduction was $4.0 million but more importantly, non-performing loans as of September 30, 2014 now total $10.8 million or 0.71% of total loans and we sold our remaining OREO property.
"For the nine months ended September 30, 2014, the Bank earned $17.7 million or $1.29 per share as compared to $13.3 million or $0.99 per share for the same period last year. This is a 33% year over year increase in net income.
"Our Bank continues to operate efficiently with a 41.3% efficiency ratio for the quarter and a 40.9% for the nine months of 2014. We are very pleased to make this report to our shareholders."
Operating Results
Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses increased to $18.0 million compared to $16.5 million recorded in the third quarter of 2013 and an increase from the $17.1 million recorded in the second quarter of 2014. The increase over the third quarter of 2013 and over the prior quarter is due primarily to loan growth. The Bank's taxable equivalent net interest margin was 3.78% for the third quarter of 2014, a 15 basis point decrease from the 3.93% achieved in the second quarter of 2014 and a 32 basis point decrease from the 4.10% recorded in the third quarter of 2013. The decrease in the margin from the third quarter of 2014 was primarily due to an increase in total average cash and fed funds of $78.7 million while total average loans increased by $85.9 million. Even though total average loans outpaced the growth in cash balances, the low rates received on the cash balances diluted overall asset yields.
Noninterest Income. For the third quarter of 2014, noninterest income was $928,000 compared with $213,000 for the same quarter last year and compared to $914,000 for the second quarter of 2014. During the third quarter of 2013, the Bank recorded a loss on sale of investment securities of $497,000. Service charges on deposits were down by $133,000 compared to the same period last year, but Trade Finance income increased by $139,000 over last year due to an increase in LC fees and other income increased by $211,000. Other income increased due to fee income generated on loan servicing activity. In comparing to the second quarter of 2014; service charges were down $55,000 and Trade Finance income was down by $60,000 while other income was up by $126,000.
Noninterest Expense.Total noninterest expense was $7.8 million for the third quarter of 2014, up slightly from the $7.6 million recorded in the same quarter last year and up over the $6.6 million posted in the second quarter of 2014. Salaries and benefits expense totaled $4.3 million for the third quarter of 2014 compared to $4.0 million for the same period last year and compared to $3.9 million for the second quarter of 2014. The increase over the second quarter of 2014 is due primarily to an increase in bonus expense. Occupancy expense was down slightly compared to last year as a significant amount of leasehold improvements reached the end of their depreciation. Professional services expense was $1.0 million for the third quarter of 2014, flat when compared to the $1.0 million recorded in the same period last year and down from the $1.3 million recorded in the second quarter of 2014. The linked quarter decrease was due to the abatement of the costs associated with the enhancement of the Bank's BSA and Compliance programs. OREO related expenses totaled $43,000 for the third quarter of 2014 compared to $73,000 for the same period last year and compared to a net gain of $1.2 million on OREO activity for the second quarter of 2014. Other expenses were $1.2 million in the third quarter of 2014, a slight decrease from the $1.3 million recorded in the same period in 2013 and a decrease from the $1.3 million recorded in the second quarter of 2014.
Income Taxes
The Bank recorded a provision for income taxes of $4.3 million for the third quarter of 2014. This represents an effective tax rate ("ETR") of 40.1% for the quarter. This is up slightly from the ETR of 39.5% for the second quarter of 2014. This small increase is due to the Bank's accelerating profitability during 2014 relative to tax exempt income and deductible items.
Balance Sheet Summary
Total gross loans and leases (including loans held for sale) at September 30, 2014 were $1.52 billion, an increase of $195.1 million or 14.7% over the total of $1.33 billion as of December 31, 2013. The tables below indicate loans by type as of September 30, 2014 as compared to the end of 2013:
Loans by Type – Year over Year (ooo's)
| Loan Type (000's) | September 30, 2014 | December 31, 2013 | $ Change | % Change |
| R/E – Residential/Multifamily | $ 229,353 | $ 228,490 | $ 863 | -0.4% |
| R/E – Land | 13,663 | 15,161 | (1,498) | -9.9% |
| R/E – Commercial | 678,778 | 627,888 | 50,890 | 8.1% |
| R/E – Construction | 125,025 | 73,285 | 51,740 | 70.6% |
| Commercial & Industrial | 477,933 | 378,607 | 99,326 | 26.2% |
| Loans Held for Sale | -- | 6,207 | (6,207) | -100.0% |
| Total | $ 1,524,752 | $ 1,329,638 | $ 195,114 | 14.7% |
Total deposits as of September 30, 2014 were $1.72 billion, an increase of $191.7 million or 12.5% over the $1.53 billion at December 31, 2013. As of September 30, 2014 compared to December 31, 2013; noninterest-bearing demand deposits increased by $65.4 million or 19.3%, interest-bearing demand and savings deposits increased by $84.4 million or 17.1% and time deposits increased by $42.0 million or 6.0%. Total assets were $2.0 billion, a $227.2 million or 12.8% increase over the total of $1.77 billion as of December 31, 2013.
Asset Quality
As of September 30, 2014 nonaccrual loans totaled $10.8 million or 0.71% of total loans while performing TDR's totaled $398,000 as of September 30, 2014. Total net charge-offs (recoveries) for the third quarter of 2014 were ($4.3 million) compared to $2.3 million for the second quarter of 2014. During the third quarter, the Bank received a payoff of a long-time nonaccrual loan and with it, a recovery to the ALLL of $4.6 million. During the third quarter of 2014, the Bank recorded a provision for loan losses of $500,000. This compares to a provision of $1.2 million recorded in the same quarter last year and compares to a $1.1 million provision recorded in the second quarter of 2014. The allowance for loan loss at September 30, 2014 was $22.7 million or 1.49% of total loans compared to $19.5 million or 1.47% of total loans at December 31, 2013.
Capitalization
As of September 30, 2014, the Bank's tier 1 leverage ratio was 11.62%, the tier 1 risk based capital ratio was 12.73% and the total risk-based capital ratio was 13.98%. This compares to 11.80%, 13.78% and 15.03% as of December 31, 2013, respectively.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank's third quarter 2014 financial results will be held today, October 16, 2014 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 866-524-3160 (domestic) or 412-317-6760 (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, 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 877-344-7529 (domestic) or 412-317-0088 (international) through November 7, 2014; the passcode is 10054279.
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 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. 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.
The Preferred Bank logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11817
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 2013 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 Three Months Ended | |||
| September 30, | June 30, | September 30, | |
| 2014 | 2014 | 2013 | |
| Interest income: | |||
| Loans, including fees | $ 18,792 | $ 17,681 | $ 16,982 |
| Investment securities | 1,634 | 1,565 | 1,471 |
| Fed funds sold | 36 | 48 | 27 |
| Total interest income | 20,462 | 19,294 | 18,480 |
| Interest expense: | |||
| Interest-bearing demand | 737 | 627 | 542 |
| Savings | 20 | 17 | 22 |
| Time certificates | 1,636 | 1,554 | 1,371 |
| FHLB borrowings | 33 | 31 | 32 |
| Total interest expense | 2,426 | 2,229 | 1,967 |
| Net interest income | 18,036 | 17,065 | 16,513 |
| Provision for loan losses | 500 | 1,100 | 1,200 |
| Net interest income after provision for loan losses | 17,536 | 15,965 | 15,313 |
| Noninterest income: | |||
| Fees & service charges on deposit accounts | 343 | 399 | 477 |
| Trade finance income | 271 | 331 | 133 |
| BOLI income | 84 | 82 | 83 |
| Net income (loss) on sale of investment securities | 2 | -- | (497) |
| Other income | 228 | 102 | 17 |
| Total noninterest income | 928 | 914 | 213 |
| Noninterest expense: | |||
| Salary and employee benefits | 4,285 | 3,867 | 4,017 |
| Net occupancy expense | 817 | 804 | 833 |
| Business development and promotion expense | 134 | 122 | 89 |
| Professional services | 1,019 | 1,347 | 1,015 |
| Office supplies and equipment expense | 330 | 285 | 301 |
| Other real estate owned related expense (income) and valuation allowance on LHFS | 43 | (1,150) | 73 |
| Other | 1,208 | 1,348 | 1,273 |
| Total noninterest expense | 7,836 | 6,623 | 7,601 |
| Income before provision for income taxes | 10,628 | 10,256 | 7,925 |
| Income tax expense | 4,266 | 4,047 | 2,893 |
| Net income | $ 6,362 | $ 6,209 | $ 5,032 |
| Income allocated to participating securities | (69) | (80) | (55) |
| Dividends Allocated to Participating Securities | (15) | -- | -- |
| Net income available to common shareholders | $ 6,278 | $ 6,129 | $ 4,977 |
| Income per share available to common shareholders | |||
| Basic | $ 0.47 | $ 0.46 | $ 0.38 |
| Diluted | $ 0.46 | $ 0.45 | $ 0.37 |
| Weighted-average common shares outstanding | |||
| Basic | 13,310,334 | 13,261,820 | 13,112,835 |
| Diluted | 13,639,874 | 13,612,772 | 13,370,223 |
| 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 | |
| 2014 | 2013 | % | |
| Interest income: | |||
| Loans, including fees | $ 53,815 | $ 46,607 | 15.5% |
| Investment securities | 4,588 | 4,573 | 0.3% |
| Fed funds sold | 103 | 32 | 218.1% |
| Total interest income | 58,506 | 51,212 | 14.2% |
| Interest expense: | |||
| Interest-bearing demand | 2,010 | 1,581 | 27.1% |
| Savings | 56 | 65 | -13.8% |
| Time certificates | 4,740 | 3,935 | 20.5% |
| FHLB borrowings | 96 | 35 | 170.3% |
| Total interest expense | 6,902 | 5,616 | 22.9% |
| Net interest income | 51,604 | 45,596 | 13.2% |
| Provision for credit losses | 2,850 | 1,450 | 96.6% |
| Net interest income after provision for loan losses | 48,754 | 44,146 | 10.4% |
| Noninterest income: | |||
| Fees & service charges on deposit accounts | 1,198 | 1,594 | -24.8% |
| Trade finance income | 901 | 484 | 86.2% |
| BOLI income | 248 | 247 | 0.1% |
| Net income (loss) on sale of investment securities | 2 | (854) | -100.2% |
| Other income | 521 | 318 | 63.8% |
| Total noninterest income | 2,870 | 1,789 | 60.4% |
| Noninterest expense: | |||
| Salary and employee benefits | 12,887 | 12,265 | 5.1% |
| Net occupancy expense | 2,422 | 2,406 | 0.7% |
| Business development and promotion expense | 342 | 267 | 28.1% |
| Professional services | 3,127 | 2,698 | 15.9% |
| Office supplies and equipment expense | 953 | 909 | 4.9% |
| Total other-than-temporary impairment losses | -- | 7 | -100.0% |
| Portion of loss recognized in other comprehensive income | -- | -- | 0.0% |
| Other real estate owned related (income) expense and valuation allowance on LHFS | (1,185) | 1,643 | -172.2% |
| Other | 3,745 | 3,466 | 8.0% |
| Total noninterest expense | 22,291 | 23,661 | -5.8% |
| Income before provision for income taxes | 29,333 | 22,274 | 31.7% |
| Income tax expense | 11,609 | 8,943 | 29.8% |
| Net income | $ 17,724 | $ 13,331 | 33.0% |
| Income allocated to participating securities | (196) | (161) | 21.6% |
| Dividends Allocated to Participating Securities | (15) | -- | -100.0% |
| Net income available to common shareholders | $ 17,513 | $ 13,170 | 33.0% |
| Income per share available to common shareholders | |||
| Basic | $ 1.32 | $ 1.00 | 32.0% |
| Diluted | $ 1.29 | $ 0.99 | 30.6% |
| Weighted-average common shares outstanding | |||
| Basic | 13,271,597 | 13,089,970 | 1.4% |
| Diluted | 13,593,638 | 13,355,157 | 1.8% |
| PREFERRED BANK | ||
| Condensed Consolidated Statements of Financial Condition | ||
| (unaudited) | ||
| (in thousands) | ||
| September 30, | December 31, | |
| 2014 | 2013 | |
| Assets | ||
| Cash and due from banks | $ 238,232 | $ 226,615 |
| Fed funds sold | 10,000 | 20,000 |
| Cash and cash equivalents | 248,232 | 246,615 |
| Securities held to maturity, at amortized cost | 8,188 | -- |
| Securities available-for-sale, at fair value | 164,247 | 142,670 |
| Loans and leases | 1,524,752 | 1,323,431 |
| Less allowance for loan and lease losses | (22,662) | (19,494) |
| Less net deferred loan fees | (2,368) | (2,562) |
| Net loans and leases | 1,499,722 | 1,301,375 |
| Loans held for sale, at lower of cost or fair value | -- | 6,207 |
| Other real estate owned | -- | 5,602 |
| Customers' liability on acceptances | 1,020 | 2,061 |
| Bank furniture and fixtures, net | 4,007 | 4,205 |
| Bank-owned life insurance | 8,466 | 8,290 |
| Accrued interest receivable | 6,052 | 5,378 |
| Investment in affordable housing | 18,460 | 6,411 |
| Federal Home Loan Bank stock | 6,155 | 5,296 |
| Deferred tax assets | 21,941 | 23,331 |
| Income tax receivable | -- | 1,783 |
| Other asset | 9,660 | 9,734 |
| Total assets | $ 1,996,150 | $ 1,768,959 |
| Liabilities and Shareholders' Equity | ||
| Liabilities: | ||
| Deposits: | ||
| Demand | $ 403,881 | $ 338,530 |
| Interest-bearing demand | 554,769 | 469,976 |
| Savings | 22,552 | 22,984 |
| Time certificates of $250,000 or more | 250,087 | 213,362 |
| Other time certificates | 489,766 | 484,462 |
| Total deposits | $ 1,721,054 | $ 1,529,314 |
| Acceptances outstanding | 1,020 | 2,061 |
| Advances from Federal Home Loan Bank | 20,000 | 20,000 |
| Commitments to fund investment in affordable housing partnership | 9,481 | -- |
| Accrued interest payable | 1,386 | 983 |
| Other liabilities | 14,557 | 9,685 |
| Total liabilities | 1,767,498 | 1,562,043 |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Preferred stock. Authorized 25,000,000 shares; no issued and outstanding | — | — |
| Common stock, no par value. Authorized 20,000,000 shares; issued and outstanding 13,474,766 and 13,280,653 shares at September 30, 2014 and December 31, 2013, respectively | 163,781 | 163,237 |
| Treasury stock | (19,115) | (19,115) |
| Additional paid-in-capital | 28,873 | 25,974 |
| Accumulated income | 53,057 | 36,680 |
| Accumulated other comprehensive income: | ||
| Unrealized loss on securities, available-for-sale, net of tax of $1,493 and $102 at September 30, 2014 and December 31, 2013, respectively | 2,056 | 140 |
| Total shareholders' equity | 228,652 | 206,916 |
| Total liabilities and shareholders' equity | $ 1,996,150 | $ 1,768,959 |
| PREFERRED BANK | |||||
| Selected Consolidated Financial Information | |||||
| (unaudited) | |||||
| (in thousands, except for ratios) | |||||
| As of or for the Three Months Ended | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2014 | 2014 | 2014 | 2013 | 2013 | |
| Unaudited historical quarterly operations data: | |||||
| Interest income | $ 20,462 | $ 19,294 | $ 18,750 | $ 18,513 | $ 18,480 |
| Interest expense | 2,426 | 2,229 | 2,247 | 2,112 | 1,967 |
| Interest income before provision for credit losses | 18,036 | 17,065 | 16,503 | 16,401 | 16,513 |
| Provision for credit losses | 500 | 1,100 | 1,250 | 1,800 | 1,200 |
| Noninterest income | 928 | 914 | 1,028 | 214 | 213 |
| Noninterest expense | 7,836 | 6,623 | 7,832 | 5,224 | 7,601 |
| Income tax expense | 4,266 | 4,047 | 3,296 | 3,723 | 2,893 |
| Net income | 6,362 | 6,209 | 5,153 | 5,868 | 5,032 |
| Earnings per share | |||||
| Basic | $ 0.47 | $ 0.46 | $ 0.39 | $ 0.45 | $ 0.38 |
| Diluted | $ 0.46 | $ 0.45 | $ 0.38 | $ 0.43 | $ 0.37 |
| Ratios for the period: | |||||
| Return on average assets | 1.29% | 1.39% | 1.17% | 1.33% | 1.20% |
| Return on beginning equity | 11.34% | 11.61% | 10.10% | 11.62% | 10.27% |
| Net interest margin (Fully-taxable equivalent) | 3.78% | 3.93% | 3.87% | 3.85% | 4.10% |
| Noninterest expense to average assets | 1.59% | 1.48% | 1.78% | 1.18% | 1.83% |
| Efficiency ratio | 41.32% | 36.84% | 44.68% | 31.44% | 45.87% |
| Net charge-offs (recoveries) to average loans (annualized) | -1.16% | 0.87% | 0.29% | 0.20% | 0.28% |
| Unaudited quarterly statement of financial position data: | |||||
| Assets: | |||||
| Cash and cash equivalents | 248,232 | 232,585 | 214,430 | $ 246,615 | $ 190,405 |
| Securities held-to-maturity, at amortized cost | 8,188 | 8,709 | -- | -- | -- |
| Securities available-for-sale, at fair value | 164,247 | 176,579 | 169,845 | 142,670 | 166,821 |
| Loans and Leases: | |||||
| Real estate - Single and multi-family residential | $ 229,353 | $ 208,080 | $ 220,193 | $ 228,490 | $ 197,119 |
| Real estate - Land for housing | 12,156 | 13,536 | 13,574 | 13,611 | 9,149 |
| Real estate - Land for income properties | 1,507 | 1,529 | 1,539 | 1,550 | 1,560 |
| Real estate - Commercial | 678,778 | 700,023 | 653,146 | 627,888 | 610,764 |
| Real estate - For sale housing construction | 44,614 | 36,069 | 29,303 | 24,680 | 22,631 |
| Real estate - Other construction | 80,411 | 63,708 | 52,014 | 48,605 | 43,413 |
| Commercial and industrial | 443,966 | 374,128 | 353,017 | 338,681 | 346,261 |
| Trade finance and other | 33,967 | 40,756 | 47,402 | 39,926 | 48,067 |
| Gross loans | 1,524,752 | 1,437,829 | 1,370,188 | 1,323,431 | 1,278,964 |
| Allowance for loan and lease losses | (22,662) | (17,897) | (19,777) | (19,494) | (18,344) |
| Net deferred loan fees | (2,368) | (2,159) | (2,014) | (2,562) | (2,429) |
| Loans excluding loans held for sale | 1,499,722 | 1,417,773 | 1,348,397 | 1,301,375 | 1,258,191 |
| Loans held for sale | -- | 5,632 | 5,977 | 6,207 | 11,329 |
| Total loans, net | $ 1,499,722 | $ 1,423,405 | $ 1,354,374 | $ 1,307,582 | $ 1,269,520 |
| Other real estate owned | $ -- | $ 2,755 | $ 8,902 | 5,602 | 11,936 |
| Investment in affordable housing | 18,460 | 8,706 | 8,964 | 6,411 | 4,752 |
| Federal Home Loan Bank stock | 6,155 | 6,155 | 5,296 | 5,296 | 5,296 |
| Other assets | 51,146 | 45,124 | 43,327 | 54,783 | 52,439 |
| Total assets | $ 1,996,150 | $ 1,904,018 | $ 1,805,138 | 1,768,959 | 1,701,169 |
| Liabilities: | |||||
| Deposits: | |||||
| Demand | $ 403,881 | $ 388,497 | $ 327,036 | $ 338,530 | $ 338,579 |
| Interest-bearing demand | 554,769 | 489,313 | 477,965 | 469,976 | 409,319 |
| Savings | 22,552 | 24,712 | 23,824 | 22,984 | 23,223 |
| Time certificates of $250,000 or more | 250,087 | 250,276 | 261,984 | 213,362 | 203,579 |
| Other time certificates | 489,766 | 497,021 | 471,250 | 484,462 | 495,437 |
| Total deposits | $ 1,721,054 | $ 1,649,819 | $ 1,562,059 | $ 1,529,314 | $ 1,470,137 |
| Advances from Federal Home Loan Bank | $ 20,000 | $ 20,000 | $ 20,000 | 20,000 | 20,000 |
| Commitments to fund investment in affordable housing partnership | 9,481 | -- | -- | -- | -- |
| Other liabilities | 16,963 | 11,542 | 8,536 | 12,729 | 10,743 |
| Total liabilities | $ 1,767,498 | $ 1,681,361 | $ 1,590,594 | 1,562,043 | 1,500,880 |
| Equity: | |||||
| Net common stock, no par value | $ 173,539 | $ 172,642 | $ 171,722 | $ 170,096 | $ 169,925 |
| Retained earnings | 53,057 | 48,042 | 41,833 | 36,680 | 30,812 |
| Accumulated other comprehensive income | 2,056 | 1,973 | 989 | 140 | (448) |
| Total shareholders' equity | $ 228,652 | $ 222,657 | $ 214,544 | 206,916 | 200,289 |
| Total liabilities and shareholders' equity | $ 1,996,150 | $ 1,904,018 | $ 1,805,138 | 1,768,959 | 1,701,169 |
| Ratios as of period end: | |||||
| Tier 1 leverage capital ratio | 11.62% | 12.31% | 11.97% | 11.80% | 11.84% |
| Tier 1 risk-based capital ratio | 12.73% | 13.16% | 13.65% | 13.78% | 13.34% |
| Total risk-based capital ratio | 13.98% | 14.28% | 14.90% | 15.03% | 14.58% |
| Allowances for credit losses to loans and leases at end of period ** | 1.49% | 1.24% | 1.44% | 1.47% | 1.43% |
| Allowance for credit losses to non-performing loans and leases | 210.40% | 97.68% | 171.94% | 138.80% | 103.47% |
| Average balances: | |||||
| Total loans and leases* | $ 1,464,336 | $ 1,378,444 | $ 1,351,555 | $ 1,283,583 | $ 1,245,753 |
| Earning assets | $ 1,908,411 | $ 1,752,032 | $ 1,739,768 | $ 1,695,758 | $ 1,608,366 |
| Total assets | $ 1,952,270 | $ 1,792,317 | $ 1,783,384 | $ 1,749,140 | $ 1,665,591 |
| Total deposits | $ 1,684,628 | $ 1,543,739 | $ 1,540,369 | $ 1,512,318 | $ 1,436,385 |
| * 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 | ||
| Nine Months Ended | Year Ended | |
| September 30, 2014 | December 31, 2013 | |
| (Dollars in 000's) | ||
| Allowance For Credit Losses | ||
| Balance at Beginning of Period | $ 19,494 | $ 20,607 |
| Charge-Offs | ||
| Commercial & Industrial | 187 | 4,158 |
| Mini-perm Real Estate | 4,243 | 1,668 |
| Construction - Residential | -- | 2,438 |
| Construction - Commercial | -- | -- |
| Land - Residential | -- | -- |
| Land - Commercial | -- | -- |
| Others | -- | -- |
| Total Charge-Offs | 4,430 | 8,264 |
| Recoveries | ||
| Commercial & Industrial | 3 | 366 |
| Mini-perm Real Estate | -- | 1,379 |
| Construction - Residential | -- | 1,951 |
| Construction - Commercial | 134 | 163 |
| Land - Residential | -- | 38 |
| Land - Commercial | 4,611 | 4 |
| Total Recoveries | 4,748 | 3,901 |
| Net Loan Charge-Offs | (318) | 4,363 |
| Provision for Credit Losses | 2,850 | 3,250 |
| Balance at End of Period | $ 22,662 | $ 19,494 |
| Average Loans and Leases* | $ 1,398,430 | $ 1,217,383 |
| Loans and Leases at end of Period* | $ 1,524,752 | $ 1,329,638 |
| Net Charge-Offs to Average Loans and Leases | -0.03% | 0.36% |
| Allowances for credit losses to loans and leases at end of period ** | 1.49% | 1.47% |
| * Loans held for sale are included | ||
| ** Loans held for sale are excluded | ||