LOS ANGELES, July 20, 2015 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank focusing on the diversified California market, today reported results for the quarter ended June 30, 2015. Preferred Bank ("the Bank") reported net income of $7.6 million or $0.55 per diluted share for the second quarter of 2015. This compares to net income of $6.2 million or $0.45 per diluted share for the second quarter of 2014 and compares to net income of $6.7 million or $0.48 per diluted share for the first quarter of 2015. Earnings for the second quarter were aided by a special FHLB stock dividend of $227,000 as well as a gain on sale of OREO of $325,000.
Highlights from the second quarter of 2015:
- Linked quarter loan growth was $78.6 million
- Net interest margin expanded to 4.01%
- ROA was 1.44%
- ROBE was 12.49%
- Efficiency ratio was 39.0%
Li Yu, Chairman and CEO commented, "The quarter ended June 30, 2015 was a very successful one for the Bank. Net income was $7.6 million compared to $6.2 million in the same quarter of 2014. On a diluted per share basis, we earned $0.55; a 22% increase from the $0.45 one year ago. This quarter's earnings were aided by a $325,000 gain on sale of OREO and a special FHLB cash dividend of $227,000.
During the quarter, we sold the last piece of OREO at a gain as earlier discussed. Non-performing assets now total $7.9 million at June 30, 2015, which represents the lowest level of NPA's in the last seven years.
Loan growth is another highlight of the quarter. Despite the historically high payoffs in the quarter, our successful new loan origination efforts have resulted in total loan growth of $78.6 million, a 4.7% increase on a linked quarter basis.
Deposit growth during the second quarter lagged behind loan growth. In the quarter, deposit growth was $25.2 million or a 1.4% on a linked quarter basis. This variance in the pace of loan growth versus deposit growth as well as the special FHLB dividend, are the main reasons for the improved net interest margin for the quarter.
Our Bank has an incentive bonus program directly linking quarterly bonus accruals with the level of profitability of the Bank. With a successful second quarter operation, salaries and benefits expense also increased. However, the efficiency ratio was a stellar 39.0% as other noninterest expense remained under control.
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 $20.6 million for the second quarter of 2015. This compares favorably to the $17.1 million recorded in the second quarter of 2014 and to the $19.4 million recorded in the first quarter of 2015. The increase over both comparable periods is due primarily to loan growth. The Bank's taxable equivalent net interest margin was 4.01% for the second quarter of 2015, an 18 basis point increase over the 3.83% achieved in the first quarter of 2015 and an 8 basis point increase over the 3.93% recorded in the second quarter of 2014. The increase in the margin over the first quarter of 2015 was primarily due to lower average cash balances as well as a special FHLB cash dividend of $227,000 which was recorded in the second quarter of 2015. The variance over the second quarter of 2014 was due to loan growth as well as the special FHLB cash dividend. The special FHLB dividend contributed approximately 4 basis points to the net interest margin for the second quarter of 2015.
Noninterest Income. For the second quarter of 2015, noninterest income was $1,131,000 compared with $914,000 for the same quarter last year and compared to $868,000 for the first quarter of 2015. Service charges on deposits were down $63,000 compared to the same period last year but up $37,000 compared to the first quarter of 2015. Trade finance income was $491,000 for the second quarter of 2015, an increase of $160,000 compared to the same period last year and an increase of $184,000 over the first quarter of 2015. This was primarily due to higher deal volume. Other income was $220,000, an increase of $118,000 over the second quarter of 2014 and an increase of $41,000 over the first quarter of 2015.
Noninterest Expense. Total noninterest expense was $8.5 million for the second quarter of 2015, an increase of $1.8 million over the same period last year and down slightly from the $8.6 million recorded in the first quarter of 2015. Salaries and benefits expense totaled $5.5 million for the second quarter of 2015 compared to $3.9 million for the same period last year and compared to $5.3 million for the first quarter of 2015. The increase over the second quarter of 2014 was due mainly to staffing increases and a higher bonus accrual and the increase over the prior quarter was mainly due to a higher bonus accrual, which is commensurate with earnings. Occupancy expense was $899,000 compared to the $804,000 recorded in the same period in 2014 and the $851,000 recorded in the first quarter of 2015. The increase over both periods was due primarily to the new San Fernando Valley branch expenses and normal cost increases. Professional services expense was $1,175,000 for the second quarter of 2015 compared to $1,347,000 for the same quarter of 2014 and $1,083,000 recorded in the first quarter of 2015. The decrease from the prior year was due to consulting expense which ran high in 2014 due to BSA remediation efforts. Net gain on OREO and other credit items was $(552,000) for the quarter compared to $(1,150,000) in the same period last year and compared to $89,000 in the first quarter of 2015. During the second quarter of 2015, a gain on sale of OREO property was recorded for $325,000 and the Bank also received rental income on the same property of $211,000. Other expenses were $1,046,000 in the second quarter of 2015, down from the $1,348,000 recorded in the same period in 2014 but up slightly over the $920,000 recorded in the first quarter of 2015.
Income Taxes
The Bank recorded a provision for income taxes of $5.1 million for the second quarter of 2015. This represents an effective tax rate ("ETR") of 40.4% for the quarter. This is up slightly from the ETR of 39.8% for the first 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 June 30, 2015 were $1.75 billion, an increase of $145.6 million or 9.1% over the total of $1.60 billion as of December 31, 2014. The tables below indicate loans by type as of June 30, 2015 as compared to the end of 2014:
| Loans by Type – Year over Year (ooo's) | ||||
| Loan Type (000's) | June 30, 2015 | December 31, 2014 | $ Change | % Change |
| R/E – Residential/Multifamily | $ 290,186 | $ 283,958 | $ 6,228 | 2.2% |
| R/E – Land | 14,993 | 13,621 | 1,372 | 10.1% |
| R/E – Commercial | 712,383 | 653,380 | 59,003 | 9.0% |
| R/E – Construction | 121,358 | 126,485 | (5,127) | -4.1% |
| Commercial & Industrial | 610,811 | 526,705 | 84,106 | 16.0% |
| Total | $ 1,749,731 | $ 1,604,149 | $ 145,582 | 9.1% |
Total deposits as of June 30, 2015 were $1.88 billion, an increase of $105.9 million from the $1.78 billion at December 31, 2014. As of June 30, 2015 compared to December 31, 2014; noninterest-bearing demand deposits increased by $76.1 million or 17.2%, interest-bearing demand and savings deposits increased by $44.1 million or 8.0% and time deposits decreased by $14.3 million or 1.8%. Total assets were $2.17 billion, a $116.0 million or 5.6% increase from the total of $2.05 billion as of December 31, 2014.
Asset Quality
As of June 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 second quarter of 2015 were $130,000 compared to $86,000 for the first quarter of 2015, and consisted mainly of a charge-off of $797,000 on a loan for which the reserve had been previously established, partially offset by a recovery of $655,000 on a loan for which there is an ongoing repayment plan. The Bank recorded a provision for loan losses of $500,000 for the second 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 compares to a $1.1 million provision recorded in the same quarter last year and to the $500,000 provision recorded in the first quarter of 2015. The allowance for loan loss at June 30, 2015 was $23.8 million or 1.36% of total loans compared to $23.0 million or 1.43% of total loans at December 31, 2014.
OREO
As of June 30, 2015, the Bank holds no OREO properties. During the quarter, the Bank sold its remaining OREO property. Proceeds from the sale were approximately $9.1 million against the Bank's book value of $8.8 million which resulted in a gain of $325,000.
Capitalization
As of June 30, 2015, the Bank's tier 1 leverage ratio was 11.59%, the common equity tier 1 capital ratio was 11.91% and the total capital ratio was 13.07%. 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 second quarter 2015 financial results will be held tomorrow, July 21, 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 August 6, 2015; the passcode is 10069030.
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.
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 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.
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 | |||
| June 30, | March 31, | June 30, | |
| 2015 | 2015 | 2014 | |
| Interest income: | |||
| Loans, including fees | $ 21,276 | $ 20,355 | $ 17,681 |
| Investment securities | 1,731 | 1,457 | 1,565 |
| Fed funds sold | 46 | 34 | 48 |
| Total interest income | 23,053 | 21,847 | 19,294 |
| Interest expense: | |||
| Interest-bearing demand | 709 | 786 | 627 |
| Savings | 15 | 15 | 17 |
| Time certificates | 1,727 | 1,649 | 1,554 |
| FHLB borrowings | 35 | 32 | 31 |
| Total interest expense | 2,486 | 2,482 | 2,229 |
| Net interest income | 20,567 | 19,365 | 17,065 |
| Provision for loan losses | 500 | 500 | 1,100 |
| Net interest income after provision for loan losses | 20,067 | 18,865 | 15,965 |
| Noninterest income: | |||
| Fees & service charges on deposit accounts | 336 | 299 | 399 |
| Trade finance income | 491 | 307 | 331 |
| BOLI income | 84 | 83 | 82 |
| Other income | 220 | 178 | 102 |
| Total noninterest income | 1,131 | 868 | 914 |
| Noninterest expense: | |||
| Salary and employee benefits | 5,507 | 5,312 | 3,867 |
| Net occupancy expense | 899 | 851 | 804 |
| Business development and promotion expense | 124 | 109 | 122 |
| Professional services | 1,175 | 1,083 | 1,347 |
| Office supplies and equipment expense | 263 | 254 | 285 |
| Other real estate owned related (income) expense and valuation allowance on LHFS | (552) | 89 | (1,150) |
| Other | 1,046 | 920 | 1,348 |
| Total noninterest expense | 8,462 | 8,618 | 6,623 |
| Income before provision for income taxes | 12,736 | 11,114 | 10,256 |
| Income tax expense | 5,147 | 4,424 | 4,047 |
| Net income | $ 7,589 | $ 6,690 | $ 6,209 |
| Income and dividend allocated to participating securities | (144) | (128) | (80) |
| Net income available to common shareholders | $ 7,445 | $ 6,562 | $ 6,129 |
| Income per share available to common shareholders | |||
| Basic | $ 0.55 | $ 0.49 | $ 0.46 |
| Diluted | $ 0.55 | $ 0.48 | $ 0.45 |
| Weighted-average common shares outstanding | |||
| Basic | 13,480,609 | 13,397,081 | 13,261,820 |
| Diluted | 13,659,167 | 13,805,565 | 13,612,772 |
| PREFERRED BANK | |||
| Condensed Consolidated Statements of Operations | |||
| (unaudited) | |||
| (in thousands, except for net income per share and shares) | |||
| For the Six Months Ended | |||
| June 30, | June 30, | Change | |
| 2015 | 2014 | % | |
| Interest income: | |||
| Loans, including fees | $ 41,631 | $ 35,023 | 18.9% |
| Investment securities | 3,188 | 2,954 | 7.9% |
| Fed funds sold | 80 | 67 | 19.6% |
| Total interest income | 44,899 | 38,044 | 18.0% |
| Interest expense: | |||
| Interest-bearing demand | 1,495 | 1,273 | 17.4% |
| Savings | 30 | 36 | -17.8% |
| Time certificates | 3,377 | 3,104 | 8.8% |
| FHLB borrowings | 66 | 63 | 4.2% |
| Total interest expense | 4,968 | 4,476 | 11.0% |
| Net interest income | 39,931 | 33,568 | 19.0% |
| Provision for credit losses | 1,000 | 2,350 | -57.4% |
| Net interest income after provision for loan losses | 38,931 | 31,218 | 24.7% |
| Noninterest income: | |||
| Fees & service charges on deposit accounts | 635 | 855 | -25.7% |
| Trade finance income | 797 | 630 | 26.7% |
| BOLI income | 168 | 164 | 2.2% |
| Other income | 399 | 293 | 36.0% |
| Total noninterest income | 1,999 | 1,942 | 3.0% |
| Noninterest expense: | |||
| Salary and employee benefits | 10,819 | 8,602 | 25.8% |
| Net occupancy expense | 1,749 | 1,605 | 9.0% |
| Business development and promotion expense | 233 | 208 | 12.1% |
| Professional services | 2,259 | 2,108 | 7.2% |
| Office supplies and equipment expense | 517 | 623 | -16.9% |
| Other real estate owned related income and valuation allowance on LHFS | (463) | (1,228) | -62.3% |
| Other | 1,966 | 2,537 | -22.5% |
| Total noninterest expense | 17,080 | 14,455 | 18.2% |
| Income before provision for income taxes | 23,850 | 18,705 | 27.5% |
| Income tax expense | 9,571 | 7,343 | 30.3% |
| Net income | $ 14,279 | $ 11,362 | 25.7% |
| Income and dividend allocated to participating securities | (245) | (126) | 94.6% |
| Net income available to common shareholders | $ 14,034 | $ 11,236 | 24.9% |
| Income per share available to common shareholders | |||
| Basic | $ 1.04 | $ 0.85 | 23.1% |
| Diluted | $ 1.03 | $ 0.83 | 24.4% |
| Weighted-average common shares outstanding | |||
| Basic | 13,439,105 | 13,251,908 | 1.4% |
| Diluted | 13,626,991 | 13,570,967 | 0.4% |
| PREFERRED BANK | ||
| Condensed Consolidated Statements of Financial Condition | ||
| (unaudited) | ||
| (in thousands) | ||
| June 30, | December 31, | |
| 2015 | 2014 | |
| Assets | ||
| Cash and due from banks | $ 163,015 | $ 215,194 |
| Fed funds sold | 45,000 | 25,000 |
| Cash and cash equivalents | 208,015 | 240,194 |
| Securities held to maturity, at amortized cost | 6,806 | 7,815 |
| Securities available-for-sale, at fair value | 161,775 | 150,539 |
| Loans and leases | 1,749,731 | 1,604,149 |
| Less allowance for loan and lease losses | (23,758) | (22,974) |
| Less net deferred loan fees | (2,179) | (2,100) |
| Net loans and leases | 1,723,794 | 1,579,075 |
| Loans held for sale, at lower of cost or fair value | -- | -- |
| Other real estate owned | -- | 8,811 |
| Customers' liability on acceptances | 1,365 | 156 |
| Bank furniture and fixtures, net | 4,281 | 4,132 |
| Bank-owned life insurance | 8,643 | 8,525 |
| Accrued interest receivable | 6,860 | 6,497 |
| Investment in affordable housing | 17,059 | 17,999 |
| Federal Home Loan Bank stock | 6,677 | 6,155 |
| Deferred tax assets | 21,982 | 21,357 |
| Income tax receivable | 197 | -- |
| Other asset | 2,702 | 2,899 |
| Total assets | $ 2,170,156 | $ 2,054,154 |
| Liabilities and Shareholders' Equity | ||
| Liabilities: | ||
| Deposits: | ||
| Demand | $ 519,501 | $ 443,385 |
| Interest-bearing demand | 568,243 | 525,781 |
| Savings | 23,855 | 22,211 |
| Time certificates of $250,000 or more | 260,205 | 276,197 |
| Other time certificates | 510,394 | 508,685 |
| Total deposits | $ 1,882,198 | $ 1,776,259 |
| Acceptances outstanding | 1,365 | 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 | 1,426 | 1,419 |
| Other liabilities | 11,163 | 13,143 |
| Total liabilities | 1,920,291 | 1,819,128 |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Preferred stock. Authorized 25,000,000 shares; no issued and outstanding shares at June 30, 2015 and December 31, 2014 | -- | -- |
| Common stock, no par value. Authorized 20,000,000 shares; issued and outstanding 13,759,939 and 13,503,458 shares at June 30, 2015 and December 31, 2014, respectively | 165,383 | 164,023 |
| Treasury stock | (19,115) | (19,115) |
| Additional paid-in-capital | 33,092 | 29,631 |
| Accumulated income | 69,431 | 58,552 |
| Accumulated other comprehensive income: | ||
| Unrealized gain on securities, available-for-sale, net of tax of $779 and $1,405 at June 30, 2015 and December 31, 2014 | 1,074 | 1,935 |
| Total shareholders' equity | 249,865 | 235,026 |
| Total liabilities and shareholders' equity | $ 2,170,156 | $ 2,054,154 |
| PREFERRED BANK | |||||
| Selected Consolidated Financial Information | |||||
| (unaudited) | |||||
| (in thousands, except for ratios) | |||||
| For the Three Months Ended | |||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |
| 2015 | 2015 | 2014 | 2014 | 2014 | |
| Unaudited historical quarterly operations data: | |||||
| Interest income | $ 23,053 | $ 21,846 | $ 21,821 | $ 20,462 | $ 19,294 |
| Interest expense | 2,486 | 2,482 | 2,438 | 2,426 | 2,229 |
| Interest income before provision for credit losses | 20,567 | 19,364 | 19,383 | 18,036 | 17,065 |
| Provision for credit losses | 500 | 500 | 500 | 500 | 1,100 |
| Noninterest income | 1,131 | 868 | 751 | 928 | 914 |
| Noninterest expense | 8,462 | 8,618 | 8,121 | 7,836 | 6,623 |
| Income tax expense | 5,147 | 4,424 | 4,645 | 4,266 | 4,047 |
| Net income | 7,589 | 6,690 | 6,868 | 6,362 | 6,209 |
| Earnings per share | |||||
| Basic | $ 0.55 | $ 0.49 | $ 0.51 | $ 0.47 | $ 0.46 |
| Diluted | $ 0.55 | $ 0.48 | $ 0.50 | $ 0.46 | $ 0.45 |
| Ratios for the period: | |||||
| Return on average assets | 1.44% | 1.28% | 1.37% | 1.29% | 1.39% |
| Return on beginning equity | 12.49% | 11.54% | 11.92% | 11.34% | 11.61% |
| Net interest margin (Fully-taxable equivalent) | 4.01% | 3.83% | 3.98% | 3.78% | 3.93% |
| Noninterest expense to average assets | 1.60% | 1.65% | 1.62% | 1.59% | 1.48% |
| Efficiency ratio | 39.00% | 42.60% | 40.33% | 41.32% | 36.84% |
| Net charge-offs (recoveries) to average loans (annualized) | 0.03% | 0.02% | 0.05% | -1.16% | 0.87% |
| Ratios as of period end: | |||||
| Tier 1 leverage capital ratio(1) | 11.59% | 11.26% | 11.73% | 11.62% | 12.31% |
| Common equity tier 1 risk-based capital ratio(1) | 11.91% | 12.10% | N/A | N/A | N/A |
| Tier 1 risk-based capital ratio(1) | 11.91% | 12.10% | 12.72% | 12.75% | 13.16% |
| Total risk-based capital ratio(1) | 13.07% | 13.30% | 13.97% | 14.00% | 14.28% |
| Allowances for credit losses to loans and leases at end of period(2) | 1.36% | 1.40% | 1.43% | 1.49% | 1.24% |
| Allowance for credit losses to non-performing loans and leases | 299.06% | 288.16% | 268.19% | 210.40% | 101.58% |
| Average balances: | |||||
| Total loans and leases(3) | $ 1,673,710 | $ 1,612,556 | $ 1,555,868 | $ 1,464,336 | $ 1,378,444 |
| Earning assets | $ 2,070,542 | $ 2,064,435 | $ 1,943,034 | $ 1,908,411 | $ 1,752,032 |
| Total assets | $ 2,117,610 | $ 2,115,354 | $ 1,990,417 | $ 1,952,270 | $ 1,792,317 |
| Total deposits | $ 1,832,688 | $ 1,834,920 | $ 1,707,908 | $ 1,684,628 | $ 1,543,739 |
| (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 Six Months Ended | ||
| June 30, | June 30, | |
| 2015 | 2014 | |
| Interest income | $ 44,899 | $ 38,044 |
| Interest expense | 4,968 | 4,476 |
| Interest income before provision for credit losses | 39,931 | 33,568 |
| Provision for credit losses | 1,000 | 2,350 |
| Noninterest income | 1,999 | 1,942 |
| Noninterest expense | 17,080 | 14,455 |
| Income tax expense | 9,571 | 7,343 |
| Net income | 14,279 | 11,362 |
| Earnings per share | ||
| Basic | $ 1.04 | $ 0.85 |
| Diluted | $ 1.03 | $ 0.83 |
| Ratios for the period: | ||
| Return on average assets | 1.36% | 1.29% |
| Return on beginning equity | 12.25% | 11.07% |
| Net interest margin (Fully-taxable equivalent) | 3.92% | 3.89% |
| Noninterest expense to average assets | 1.63% | 1.64% |
| Efficiency ratio | 40.73% | 40.71% |
| Net charge-offs (recoveries) to average loans | 0.03% | 0.59% |
| Average balances: | ||
| Total loans and leases* | $ 1,643,293 | $ 1,358,911 |
| Earning assets | $ 2,067,503 | $ 1,736,091 |
| Total assets | $ 2,116,464 | $ 1,778,591 |
| Total deposits | $ 1,833,779 | $ 1,534,290 |
| * 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 | |||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |
| 2015 | 2015 | 2014 | 2014 | 2014 | |
| Unaudited quarterly statement of financial position data: | |||||
| Assets: | |||||
| Cash and cash equivalents | $ 208,015 | $ 242,053 | $ 240,194 | $ 248,232 | $ 232,585 |
| Securities held-to-maturity, at amortized cost | 6,806 | 7,139 | 7,815 | 8,188 | 8,709 |
| Securities available-for-sale, at fair value | 161,775 | 165,330 | 150,539 | 164,247 | 176,579 |
| Loans and Leases: | |||||
| Real estate - Single and multi-family residential | $ 290,186 | $ 306,284 | $ 283,958 | $ 229,353 | $ 208,080 |
| Real estate - Land for housing | 13,102 | 11,658 | 12,132 | 12,156 | 13,536 |
| Real estate - Land for income properties | 1,891 | 1,906 | 1,489 | 1,507 | 1,529 |
| Real estate - Commercial | 712,383 | 676,034 | 653,380 | 678,778 | 700,023 |
| Real estate - For sale housing construction | 71,945 | 50,458 | 48,892 | 44,614 | 36,069 |
| Real estate - Other construction | 49,413 | 84,065 | 77,593 | 80,411 | 63,708 |
| Commercial and industrial | 570,408 | 502,453 | 495,827 | 443,966 | 374,128 |
| Trade finance and other | 40,403 | 38,234 | 30,878 | 33,967 | 40,756 |
| Gross loans | 1,749,731 | 1,671,092 | 1,604,149 | 1,524,752 | 1,437,829 |
| Allowance for loan and lease losses | (23,758) | (23,388) | (22,974) | (22,662) | (17,897) |
| Net deferred loan fees | (2,179) | (2,216) | (2,100) | (2,368) | (2,159) |
| Loans excluding loans held for sale | 1,723,794 | 1,645,488 | 1,579,075 | 1,499,722 | 1,417,773 |
| Loans held for sale | -- | -- | -- | -- | 5,632 |
| Total loans, net | $ 1,723,794 | $ 1,645,488 | $ 1,579,075 | $ 1,499,722 | $ 1,423,405 |
| Other real estate owned | $ -- | $ 8,811 | $ 8,811 | $ -- | $ 2,755 |
| Investment in affordable housing | 17,059 | 17,529 | 17,999 | 18,460 | 8,706 |
| Federal Home Loan Bank stock | 6,677 | 6,155 | 6,155 | 6,155 | 6,155 |
| Other assets | 46,030 | 45,208 | 43,566 | 51,146 | 45,124 |
| Total assets | $ 2,170,156 | $ 2,137,713 | $ 2,054,154 | $ 1,996,150 | $ 1,904,018 |
| Liabilities: | |||||
| Deposits: | |||||
| Demand | $ 519,501 | $ 493,440 | $ 443,385 | $ 403,881 | $ 388,497 |
| Interest-bearing demand | 568,243 | 585,286 | 525,781 | 554,769 | 489,313 |
| Savings | 23,855 | 24,056 | 22,211 | 22,552 | 24,712 |
| Time certificates of $250,000 or more | 260,205 | 243,360 | 276,197 | 250,087 | 250,276 |
| Other time certificates | 510,394 | 510,809 | 508,685 | 489,765 | 497,021 |
| Total deposits | $ 1,882,198 | $ 1,856,950 | $ 1,776,259 | $ 1,721,054 | $ 1,649,819 |
| 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 | 7,726 | 8,151 | 9,481 | -- |
| Other liabilities | 13,954 | 9,299 | 14,717 | 16,963 | 11,542 |
| Total liabilities | $ 1,920,291 | $ 1,893,974 | $ 1,819,127 | $ 1,767,498 | $ 1,681,361 |
| Equity: | |||||
| Net common stock, no par value | $ 179,360 | $ 177,978 | $ 174,539 | $ 173,581 | $ 172,642 |
| Retained earnings | 69,431 | 63,545 | 58,553 | 53,015 | 48,042 |
| Accumulated other comprehensive income | 1,074 | 2,216 | 1,935 | 2,056 | 1,973 |
| Total shareholders' equity | $ 249,865 | $ 243,739 | $ 235,027 | $ 228,652 | $ 222,657 |
| Total liabilities and shareholders' equity | $ 2,170,156 | $ 2,137,713 | $ 2,054,154 | $ 1,996,150 | $ 1,904,018 |
| Preferred Bank | ||
| Loan and Credit Quality Information | ||
| Allowance For Credit Losses & Loss History | ||
| Six Months Ended | Year Ended | |
| June 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 | 1,096 | 436 |
| Mini-perm Real Estate | -- | 4,243 |
| Construction - Residential | -- | -- |
| Construction - Commercial | -- | -- |
| Land - Residential | -- | -- |
| Land - Commercial | -- | -- |
| Others | -- | -- |
| Total Charge-Offs | 1,096 | 4,679 |
| Recoveries | ||
| Commercial & Industrial | 53 | 3 |
| Mini-perm Real Estate | 1 | -- |
| Construction - Residential | -- | -- |
| Construction - Commercial | 20 | 134 |
| Land - Residential | 100 | -- |
| Land - Commercial | 706 | 4,672 |
| Total Recoveries | 880 | 4,809 |
| Net Loan Charge-Offs | 216 | (130) |
| Provision for Credit Losses | 1,000 | 3,350 |
| Balance at End of Period | $ 23,758 | $ 22,974 |
| Average Loans and Leases* | $ 1,643,293 | $ 1,438,122 |
| Loans and Leases at end of Period* | $ 1,749,731 | $ 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 ** | 1.36% | 1.43% |
| * Loans held for sale are included | ||
| ** Loans held for sale are excluded | ||