LOS ANGELES, April 20, 2021 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended March 31, 2021. Preferred Bank (“the Bank”) reported net income of $21.2 million or $1.42 per diluted share for the first quarter of 2021. This is up from net income of $20.9 million or $1.40 per diluted share for the fourth quarter of 2020 and easily tops recorded net income of $16.2 million or $1.08 per diluted share for the first quarter of 2020. The primary reasons for the increase compared to the prior year is a $3.9 million decrease in the provision for credit losses this quarter, an increase in net interest income of $3.6 million, partially offset by a decrease in noninterest income of $325,000 as well as an increase in non-interest expense of $468,000. When compared to the prior quarter, the provision for credit losses decreased by $2.8 million but that was partially offset by a decrease in net interest income as well as an increase in noninterest expense.
First Quarter 2021 Highlights:
- Net income of $21.2 million, or $1.42 per diluted share
- Linked quarter loan growth (non - PPP) of 2.6%
- Linked quarter deposit growth of 6.3%
- NIM held fairly steady at 3.61%
- Return on average assets (“ROA”) of 1.65%
- Return on beginning equity (“ROE”) of 16.36%
Li Yu, Chairman and CEO, commented, “We are pleased to report another record quarter of earnings for our Bank. For the first quarter of 2021, our net income was $21.2 million or $1.42 per share.
“The quarter features significant growth in total assets of 5.9%, resulting from deposit growth of $280 million or 6.30% from year-end totals. This outsized growth in deposits increased the Bank’s excess cash on hand but moderately compressed capital ratios, ROA, net interest income and net interest margin. It does, however, provide the Bank with more opportunities to grow.
“First quarter loan growth was $104 million excluding PPP or 2.6% from year end. We can’t help but take note of how our customers have become more optimistic about the nation’s economy and thus are increasing their business or expansion activities. Likewise, we are also planning for increased efforts to serve our customers. During the quarter, we opened a loan production office in Houston, Texas and will continue to look for opportunities in new markets. In California, we have also added several relationship officers.
“You may recall that beginning in the fourth quarter of 2020, we started discussing potential inflation and its potential impact on the yield curve. We are convinced, going forward that interest rates overall will be trending upward. Therefore, we have been preparing and will continue to work to generate more asset sensitivity in our balance sheet.
“At March 31, 2021, credit metrics are stable. Total loans on payment deferral from COVID is down to $25.8 million. Operation expenses were elevated this quarter but for very specific reasons. We are now preparing ourselves for post-pandemic normalized operations to begin in the summer.”
Results of Operations
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $45.3 million for the first quarter of 2021. This was down slightly from the $46.1 million recorded in the fourth quarter of 2020 but was well ahead of the $41.8 million recorded in the first quarter of 2020. The decrease from last quarter was due primarily to two items that increased fourth quarter 2020 loan interest. One was a non-recurring fee collected in the Main Street Lending Program and the second was interest we had collected on a purchased credit deteriorated loan. These two items added $972,000 to fourth quarter loan interest. The increase over first quarter of 2020 was due to a substantial decrease in interest expense ($7.1 million) partially offset by a decrease in interest income of $3.5 million. The Bank’s taxable equivalent net interest margin was 3.61% for the first quarter of 2021, down slightly from the 3.66% achieved in the fourth quarter of 2020 and a 9 basis point decrease from the 3.70% posted in the first quarter of 2020.
Noninterest Income. For the first quarter of 2021, noninterest income was $1,347,000 compared with $1,672,000 for the same quarter last year and compared to $1,356,000 for the fourth quarter of 2020. The decrease compared to last year was due to loss on sales of loans of $379,000 this quarter. Although total noninterest income was relatively flat compared to last quarter, there were variances; letter of credit (“LC”) fee income was down by $197,000 this quarter and last quarter the Bank recorded a $663,000 loss on sale of investment securities.
Noninterest Expense. Total noninterest expense was $15.7 million for the first quarter of 2021. This is up compared to the $15.2 million recorded in the same quarter last year and is also up from the $14.2 million posted in the fourth quarter of 2020. Salaries and benefits expense totaled $11.1 million for the first quarter of 2021, an increase of $221,000 from the first quarter of 2020 and an increase of $1.7 million from the fourth quarter of 2020. The increase over the prior quarter was due mainly to higher incentive compensation expense and the increase over the prior year was due to increased payroll tax expense, increased vacation accrual and lowered capitalized loan origination costs versus the fourth quarter of 2020. Occupancy expense totaled $1.4 million for the quarter which was relatively flat compared to both comparable periods. Business development and promotion expense was $73,000 for the quarter, a decrease from both comparable periods. The decrease from the fourth quarter of 2020 was due to the fact that our annual donations typically are paid out in the fourth quarter each year. The decrease from the first quarter of last year was due primarily to fewer opportunities to engage in person with clients for events such as lunches and entertainment. Professional services expense was $981,000 for the first quarter of 2021, a slight decrease from the $1.0 million posted in the same period last year and a $103,000 decrease from the previous quarter. The decrease from the fourth quarter of 2020 was due to lower legal fees. Other expenses were $1.6 million for the first quarter of 2021, an increase of $405,000 over the same period last year and essentially flat compared to the fourth quarter of 2020. The increase over the prior year was due to FDIC insurance premiums which were significantly lower in the first quarter of 2020. For the quarter ended March 31, 2021, the Bank’s efficiency ratio was 33.5%, a small increase from the two comparable periods.
Income Taxes. The Bank recorded a provision for income taxes of $8.4 million for the first quarter of 2021. This represents an effective tax rate (“ETR”) of 28.5% and a slight increase from the ETR of 28.1% for the prior quarter but a decrease from the ETR of 29.7% in the same period last year. The Bank’s ETR will fluctuate slightly from quarter to quarter within a fairly small range due to the timing of taxable events throughout the year.
Balance Sheet Summary
Total gross loans at March 31, 2021 were $4.16 billion, an increase of $128.8 million or 3.2% over the total of $4.04 billion as of December 31, 2020. Total deposits increased to $4.72 billion, an increase of $280.0 million or 6.3% over the $4.44 billion as of December 31, 2020. Total assets ended the quarter at $5.45 billion, an increase of $304.4 million or 5.9% over the total of $5.14 billion as of December 31, 2020.
Asset Quality
As of March 31, 2021, nonaccrual loans totaled $22.0 million, up slightly from the $20.5 million reported as of December 31, 2020. A $2.3 million CRE loan on nonaccrual status was paid off, however a C&I loan of $3.8 million, related to the C&I loan already on nonaccrual status, was placed on nonaccrual status. Total net charge-offs (recoveries) for the first quarter of 2021 were ($57,000) compared to $0 in the first quarter of 2020 and compared $2.0 million in the fourth quarter of 2020.
At March 31, 2021, total dollar amount of loans that were in COVID-19 deferral status were equal to 0.6% of the Bank’s loan portfolio. Of the total modifications at present, approximately 62% are for the deferral of principal only and 38% are for principal and interest deferral.
Allowance for Credit Losses
The provision for credit losses for the first quarter of 2021 was $1.4 million compared to $5.3 million for the same period last year and to $4.2 million for the fourth quarter of 2020. In the first quarter of 2020, the Bank implemented the current expected credit losses (“CECL”) methodology under Accounting Standards Codification ("ASC") 326, in which the allowance for credit losses now reflects expected credit losses over the life of loans and held-to-maturity debt securities, and incorporates macroeconomic forecasts as well as historical loss rates. Between the adoption of CECL in the first quarter of last year, and the heightened provisions for credit losses in 2020, the Bank’s allowance coverage ratio has increased to 1.59% of total non-PPP loans as of March 31, 2021 from a total coverage level of 0.94% as of December 31, 2019.
Capitalization
As of March 31, 2021, the Bank’s leverage ratio was 10.26% the common equity tier 1 capital ratio was 11.34% and the total capital ratio was 14.73%. As of December 31, 2020, the Bank’s leverage ratio was 10.08%, the common equity tier 1 ratio was 11.21% and the total risk based capital ratio was 14.64%.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s first quarter 2021 financial results will be held tomorrow, April 21, 2021 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com. Web participants are encouraged to go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
Preferred Bank's Chairman and Chief Executive Officer Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi and Deputy Chief Operating Officer Johnny Hsu 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 May 5, 2021; the passcode is 10155105.
About Preferred Bank
Preferred Bank is one of the larger independent commercial banks headquartered in California. The Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Bank conducts its banking business from its main office in Los Angeles, California, and through eleven full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)) and one branch in Flushing, New York. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank's results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2020 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.
| PREFERRED BANK | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except for net income per share and shares) | ||||||||||||||||
| For the Quarter Ended | ||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||
| 2021 | 2020 | 2020 | ||||||||||||||
| Interest income: | ||||||||||||||||
| Loans, including fees | $ | 49,859 | $ | 51,299 | $ | 51,564 | ||||||||||
| Investment securities | 2,277 | 2,320 | 3,979 | |||||||||||||
| Fed funds sold | 24 | 30 | 124 | |||||||||||||
| Total interest income | 52,160 | 53,649 | 55,667 | |||||||||||||
| Interest expense: | ||||||||||||||||
| Interest-bearing demand | 1,437 | 1,499 | 3,368 | |||||||||||||
| Savings | 19 | 21 | 14 | |||||||||||||
| Time certificates | 3,827 | 4,534 | 8,962 | |||||||||||||
| Subordinated debit | 1,531 | 1,532 | 1,531 | |||||||||||||
| Total interest expense | 6,814 | 7,586 | 13,876 | |||||||||||||
| Net interest income | 45,346 | 46,063 | 41,791 | |||||||||||||
| Provision for credit losses | 1,400 | 4,200 | 5,300 | |||||||||||||
| Net interest income after provision for | ||||||||||||||||
| credit losses | 43,946 | 41,863 | 36,491 | |||||||||||||
| Noninterest income: | ||||||||||||||||
| Fees & service charges on deposit accounts | 426 | 456 | 405 | |||||||||||||
| Letters of credit fee income | 808 | 1,004 | 848 | |||||||||||||
| BOLI income | 96 | 96 | 94 | |||||||||||||
| Net gain (loss) on called and sale of investment securities | - | (663 | ) | - | ||||||||||||
| Net gain (loss) on sale of loans | (379 | ) | - | - | ||||||||||||
| Other income | 396 | 463 | 325 | |||||||||||||
| Total noninterest income | 1,347 | 1,356 | 1,672 | |||||||||||||
| Noninterest expense: | ||||||||||||||||
| Salary and employee benefits | 11,123 | 9,440 | 10,902 | |||||||||||||
| Net occupancy expense | 1,401 | 1,378 | 1,396 | |||||||||||||
| Business development and promotion expense | 73 | 204 | 151 | |||||||||||||
| Professional services | 981 | 1,084 | 1,014 | |||||||||||||
| Office supplies and equipment expense | 438 | 454 | 489 | |||||||||||||
| Other real estate owned expense | - | - | 1 | |||||||||||||
| Other | 1,636 | 1,617 | 1,231 | |||||||||||||
| Total noninterest expense | 15,652 | 14,177 | 15,184 | |||||||||||||
| Income before provision for income taxes | 29,641 | 29,042 | 22,979 | |||||||||||||
| Income tax expense | 8,447 | 8,162 | 6,825 | |||||||||||||
| Net income | $ | 21,194 | $ | 20,880 | $ | 16,154 | ||||||||||
| Dividend and earnings allocated to participating securities | (3 | ) | (42 | ) | (51 | ) | ||||||||||
| Net income available to common shareholders | $ | 21,191 | $ | 20,838 | $ | 16,103 | ||||||||||
| Income per share available to common shareholders | ||||||||||||||||
| Basic | $ | 1.42 | $ | 1.40 | $ | 1.08 | ||||||||||
| Diluted | $ | 1.42 | $ | 1.40 | $ | 1.08 | ||||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 14,950,019 | 14,895,925 | 14,870,715 | |||||||||||||
| Diluted | 14,950,019 | 14,895,925 | 14,870,715 | |||||||||||||
| Cash dividends per common share | $ | 0.38 | $ | 0.30 | $ | 0.30 | ||||||||||
| PREFERRED BANK | ||||||||||||
| Condensed Consolidated Statements of Financial Condition | ||||||||||||
| (unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2021 | 2020 | |||||||||||
| (Unaudited) | (Audited) | |||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 921,626 | $ | 739,465 | ||||||||
| Fed funds sold | 21,500 | 20,000 | ||||||||||
| Cash and cash equivalents | 943,126 | 759,465 | ||||||||||
| Securities held to maturity, at amortized cost | 6,039 | 6,568 | ||||||||||
| Securities available-for-sale, at fair value | 228,635 | 239,682 | ||||||||||
| Loans | 4,164,241 | 4,035,394 | ||||||||||
| Less allowance for credit losses | (64,883 | ) | (63,426 | ) | ||||||||
| Less amortized deferred loan fees, net | (4,872 | ) | (4,574 | ) | ||||||||
| Loans, net | 4,094,486 | 3,967,394 | ||||||||||
| Customers' liability on acceptances | 9,670 | 3,596 | ||||||||||
| Bank furniture and fixtures, net | 11,571 | 11,825 | ||||||||||
| Bank-owned life insurance | 9,893 | 9,828 | ||||||||||
| Accrued interest receivable | 23,095 | 23,692 | ||||||||||
| Investment in affordable housing partnerships | 59,824 | 62,521 | ||||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | ||||||||||
| Deferred tax assets | 25,573 | 24,466 | ||||||||||
| Operating lease right-of-use assets | 17,141 | 16,106 | ||||||||||
| Other assets | 3,951 | 3,498 | ||||||||||
| Total assets | $ | 5,448,004 | $ | 5,143,641 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Deposits: | ||||||||||||
| Non-interest bearing demand deposits | $ | 1,026,260 | $ | 938,911 | ||||||||
| Interest-bearing deposits: | 1,751,951 | 1,700,818 | ||||||||||
| Savings | 37,551 | 34,702 | ||||||||||
| Time certificates of $250,000 or more | 927,043 | 912,546 | ||||||||||
| Other time certificates | 979,694 | 855,503 | ||||||||||
| Total deposits | 4,722,499 | 4,442,480 | ||||||||||
| Acceptances outstanding | 9,670 | 3,596 | ||||||||||
| Subordinated debt issuance, net | 99,365 | 99,334 | ||||||||||
| Commitments to fund investment in affordable housing partnerships | 27,918 | 30,715 | ||||||||||
| Operating lease liabilities | 19,331 | 18,682 | ||||||||||
| Accrued interest payable | 2,619 | 1,245 | ||||||||||
| Other liabilities | 27,333 | 22,142 | ||||||||||
| Total liabilities | 4,908,735 | 4,618,194 | ||||||||||
| Shareholders' equity | 539,269 | 525,447 | ||||||||||
| Total liabilities and shareholders' equity | $ | 5,448,004 | $ | 5,143,641 | ||||||||
| Book value per common share | $ | 36.07 | $ | 31.47 | ||||||||
| Number of common shares outstanding | 14,951,838 | 14,931,861 | ||||||||||
| PREFERRED BANK | |||||||||||||||||||
| Selected Consolidated Financial Information | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| (in thousands, except for ratios) | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
| Unaudited historical quarterly operations data: | |||||||||||||||||||
| Interest income | $ | 52,160 | $ | 53,649 | $ | 52,782 | $ | 52,164 | $ | 55,667 | |||||||||
| Interest expense | 6,814 | 7,586 | 8,663 | 9,983 | 13,876 | ||||||||||||||
| Interest income before provision for credit losses | 45,346 | 46,063 | 44,119 | 42,181 | 41,791 | ||||||||||||||
| Provision for credit losses | 1,400 | 4,200 | 9,000 | 7,500 | 5,300 | ||||||||||||||
| Noninterest income | 1,347 | 1,356 | 1,605 | 1,430 | 1,672 | ||||||||||||||
| Noninterest expense | 15,652 | 14,177 | 13,663 | 14,334 | 15,184 | ||||||||||||||
| Income tax expense | 8,447 | 8,162 | 5,936 | 6,468 | 6,825 | ||||||||||||||
| Net income | $ | 21,194 | $ | 20,880 | $ | 17,125 | $ | 15,309 | $ | 16,154 | |||||||||
| Earnings per share | |||||||||||||||||||
| Basic | $ | 1.42 | $ | 1.40 | $ | 1.15 | $ | 1.03 | $ | 1.08 | |||||||||
| Diluted | $ | 1.42 | $ | 1.40 | $ | 1.15 | $ | 1.03 | $ | 1.08 | |||||||||
| Ratios for the period: | |||||||||||||||||||
| Return on average assets | 1.65 | % | 1.63 | % | 1.34 | % | 1.26 | % | 1.40 | % | |||||||||
| Return on beginning equity | 16.36 | % | 16.49 | % | 13.94 | % | 13.00 | % | 13.82 | % | |||||||||
| Net interest margin (Fully-taxable equivalent) | 3.61 | % | 3.66 | % | 3.54 | % | 3.57 | % | 3.70 | % | |||||||||
| Noninterest expense to average assets | 1.22 | % | 1.10 | % | 1.07 | % | 1.18 | % | 1.31 | % | |||||||||
| Efficiency ratio | 33.52 | % | 29.90 | % | 29.88 | % | 32.87 | % | 34.93 | % | |||||||||
| Net charge-offs (recoveries) to average loans (annualized) | -0.01 | % | 0.20 | % | 0.35 | % | -0.01 | % | 0.00 | % | |||||||||
| Ratios as of period end: | |||||||||||||||||||
| Tier 1 leverage capital ratio | 10.26 | % | 10.08 | % | 9.75 | % | 9.87 | % | 10.05 | % | |||||||||
| Common equity tier 1 risk-based capital ratio | 11.34 | % | 11.21 | % | 11.02 | % | 10.39 | % | 10.80 | % | |||||||||
| Tier 1 risk-based capital ratio | 11.34 | % | 11.21 | % | 11.02 | % | 10.39 | % | 10.80 | % | |||||||||
| Total risk-based capital ratio | 14.73 | % | 14.64 | % | 14.51 | % | 13.80 | % | 14.26 | % | |||||||||
| Allowances for credit losses to loans at end of period | 1.56 | % | 1.57 | % | 1.55 | % | 1.41 | % | 1.24 | % | |||||||||
| Allowance for credit losses to non-performing loans | 294.74 | % | 308.96 | % | 243.56 | % | 211.08 | % | 2263.66 | % | |||||||||
| Average balances: | |||||||||||||||||||
| Total securities | $ | 242,200 | $ | 251,284 | $ | 237,801 | $ | 250,134 | $ | 247,689 | |||||||||
| Total loans | $ | 4,044,800 | $ | 3,971,537 | $ | 3,956,145 | $ | 3,919,674 | $ | 3,717,175 | |||||||||
| Total earning assets | $ | 5,102,291 | $ | 5,018,031 | $ | 4,975,005 | $ | 4,768,537 | $ | 4,548,512 | |||||||||
| Total assets | $ | 5,200,079 | $ | 5,110,065 | $ | 5,073,548 | $ | 4,868,356 | $ | 4,651,956 | |||||||||
| Total time certificate of deposits | $ | 1,820,461 | $ | 1,764,528 | $ | 1,841,901 | $ | 1,757,531 | $ | 1,765,816 | |||||||||
| Total interest bearing deposits | $ | 3,531,358 | $ | 3,508,276 | $ | 3,501,275 | $ | 3,399,924 | $ | 3,244,711 | |||||||||
| Total deposits | $ | 4,486,399 | $ | 4,426,326 | $ | 4,408,882 | $ | 4,220,197 | $ | 4,010,629 | |||||||||
| Total interest bearing liabilities | $ | 3,630,705 | $ | 3,607,592 | $ | 3,600,560 | $ | 3,499,178 | $ | 3,343,933 | |||||||||
| Total equity | $ | 538,282 | $ | 518,567 | $ | 503,421 | $ | 486,931 | $ | 475,409 | |||||||||
| PREFERRED BANK | ||||||||||||||||||||||
| Selected Consolidated Financial Information | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| (in thousands, except for ratios) | ||||||||||||||||||||||
| As of | ||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||
| 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||
| Unaudited quarterly statement of financial position data: | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 943,126 | $ | 759,465 | $ | 807,791 | $ | 656,183 | $ | 484,869 | ||||||||||||
| Securities held-to-maturity, at amortized cost | 6,039 | 6,568 | 6,727 | 6,922 | 7,077 | |||||||||||||||||
| Securities available-for-sale, at fair value | 228,635 | 239,682 | 219,778 | 270,667 | 235,097 | |||||||||||||||||
| Loans: | ||||||||||||||||||||||
| Real estate – Mortgage: | ||||||||||||||||||||||
| Real estate—Residential | $ | 541,313 | $ | 523,789 | $ | 528,371 | $ | 511,354 | $ | 493,226 | ||||||||||||
| Real estate—Commercial | 1,925,554 | 1,911,485 | 1,808,200 | 1,781,660 | 1,730,017 | |||||||||||||||||
| Total Real Estate – Mortgage | 2,466,867 | 2,435,274 | 2,336,571 | 2,293,014 | 2,223,243 | |||||||||||||||||
| Real estate – Construction: | ||||||||||||||||||||||
| R/E Construction — Residential | 123,302 | 148,825 | 170,773 | 187,083 | 177,364 | |||||||||||||||||
| R/E Construction — Commercial | 229,933 | 215,032 | 223,706 | 217,729 | 223,385 | |||||||||||||||||
| Total real estate construction loans | 353,235 | 363,857 | 394,480 | 404,812 | 400,749 | |||||||||||||||||
| Commercial and industrial | 1,248,550 | 1,165,990 | 1,144,051 | 1,192,056 | 1,269,242 | |||||||||||||||||
| PPP | 95,434 | 70,234 | 74,551 | 73,524 | - | |||||||||||||||||
| Consumer and others | 155 | 39 | 68 | 241 | 91 | |||||||||||||||||
| Gross loans | 4,164,241 | 4,035,394 | 3,949,721 | 3,963,647 | 3,893,325 | |||||||||||||||||
| Allowance for credit losses on loans | (64,883 | ) | (63,426 | ) | (61,262 | ) | (55,762 | ) | (48,130 | ) | ||||||||||||
| Net deferred loan fees | (4,872 | ) | (4,574 | ) | (4,411 | ) | (5,097 | ) | (3,084 | ) | ||||||||||||
| Net loans, excluding loans held for sale | $ | 4,094,486 | $ | 3,967,394 | $ | 3,884,048 | $ | 3,902,788 | $ | 3,842,111 | ||||||||||||
| Loans held for sale | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
| Net loans | $ | 4,094,486 | $ | 3,967,394 | $ | 3,884,048 | $ | 3,902,788 | $ | 3,842,111 | ||||||||||||
| Investment in affordable housing partnerships | 59,824 | 62,521 | 47,917 | 49,658 | 51,400 | |||||||||||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | 15,000 | 15,000 | 13,101 | |||||||||||||||||
| Other assets | 100,894 | 93,011 | 104,313 | 103,239 | 93,979 | |||||||||||||||||
| Total assets | $ | 5,448,004 | $ | 5,143,641 | $ | 5,085,574 | $ | 5,004,457 | $ | 4,727,634 | ||||||||||||
| Liabilities: | ||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||
| Demand | $ | 1,026,260 | $ | 938,911 | $ | 926,166 | $ | 934,764 | $ | 753,750 | ||||||||||||
| Interest-bearing demand | 1,751,951 | 1,700,818 | 1,620,495 | 1,594,682 | 1,503,618 | |||||||||||||||||
| Savings | 37,551 | 34,702 | 32,830 | 27,737 | 23,035 | |||||||||||||||||
| Time certificates of $250,000 or more | 927,043 | 912,546 | 977,821 | 970,649 | 1,030,282 | |||||||||||||||||
| Other time certificates | 979,694 | 855,503 | 857,113 | 822,404 | 775,792 | |||||||||||||||||
| Total deposits | $ | 4,722,499 | $ | 4,442,480 | $ | 4,414,425 | $ | 4,350,236 | $ | 4,086,477 | ||||||||||||
| Acceptances outstanding | $ | 9,670 | $ | 3,596 | $ | 7,463 | $ | 6,112 | $ | 6,507 | ||||||||||||
| Subordinated debt issuance, net | 99,365 | 99,334 | 99,304 | 99,273 | 99,242 | |||||||||||||||||
| Commitments to fund investment in affordable housing partnerships | 2,619 | 30,715 | 16,689 | 17,536 | 21,195 | |||||||||||||||||
| Other liabilities | 74,582 | 42,069 | 43,826 | 42,571 | 40,428 | |||||||||||||||||
| Total liabilities | $ | 4,908,735 | $ | 4,618,194 | $ | 4,581,707 | $ | 4,515,728 | $ | 4,253,849 | ||||||||||||
| Equity: | ||||||||||||||||||||||
| Net common stock, no par value | $ | 218,593 | $ | 217,444 | $ | 213,519 | $ | 212,187 | $ | 210,091 | ||||||||||||
| Retained earnings | 316,481 | 300,969 | 284,568 | 271,923 | 261,095 | |||||||||||||||||
| Accumulated other comprehensive income | 4,195 | 7,034 | 5,780 | 4,619 | 2,599 | |||||||||||||||||
| Total shareholders' equity | $ | 539,269 | $ | 525,447 | $ | 503,867 | $ | 488,729 | $ | 473,785 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 5,448,004 | $ | 5,143,641 | $ | 5,085,574 | $ | 5,004,457 | $ | 4,727,634 | ||||||||||||
| PREFERRED BANK | ||||||||||||||||||||||||||
| Quarter-To-Date Average Balances, Yield And Rates | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Three months ended March 31, | Three months ended December 31, | Three months ended March 31, | ||||||||||||||||||||||||
| 2021 | 2020 | 2020 | ||||||||||||||||||||||||
| Interest | Average | Interest | Average | Interest | Average | |||||||||||||||||||||
| Average | Income or | Yield/ | Average | Income or | Yield/ | Average | Income or | Yield/ | ||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||
| ASSETS | (Dollars in thousands) | |||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||
| Loans (1,2) | $ | 4,044,823 | 49,859 | 5.00 | % | $ | 3,974,599 | $ | 51,299 | 5.13 | % | $ | 3,717,212 | $ | 51,564 | 5.58 | % | |||||||||
| Investment securities (3) | 242,200 | 1,884 | 3.16 | % | 251,284 | 1,936 | 3.07 | % | 247,689 | 2,127 | 3.45 | % | ||||||||||||||
| Federal funds sold | 21,474 | 24 | 0.45 | % | 22,939 | 30 | 0.51 | % | 30,153 | 124 | 1.66 | % | ||||||||||||||
| Other earning assets | 793,794 | 493 | 0.25 | % | 769,209 | 487 | 0.25 | % | 553,458 | 1,946 | 1.41 | % | ||||||||||||||
| Total interest-earning assets | 5,102,291 | 52,260 | 4.15 | % | 5,018,031 | 53,752 | 4.26 | % | 4,548,512 | 55,761 | 4.93 | % | ||||||||||||||
| Deferred loan fees, net | (4,344 | ) | (4,162 | ) | (3,079 | ) | ||||||||||||||||||||
| Allowance for credit losses on loans | (63,450 | ) | (60,875 | ) | (42,800 | ) | ||||||||||||||||||||
| Noninterest earning assets: | ||||||||||||||||||||||||||
| Cash and due from banks | 9,923 | 8,214 | 6,334 | |||||||||||||||||||||||
| Bank furniture and fixtures | 11,772 | 11,892 | 12,269 | |||||||||||||||||||||||
| Right of use assets | 16,847 | 16,272 | 17,006 | |||||||||||||||||||||||
| Other assets | 127,040 | 120,693 | 113,714 | |||||||||||||||||||||||
| Total assets | $ | 5,200,079 | $ | 5,110,065 | $ | 4,651,956 | ||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||
| Interest-bearing demand and savings | 1,710,897 | $ | 1,456 | 0.35 | % | 1,743,748 | $ | 1,520 | 0.35 | % | $ | 1,478,895 | $ | 3,382 | 0.92 | % | ||||||||||
| TCD $250K or more | 919,155 | 1,918 | 0.85 | % | 923,079 | 2,298 | 0.99 | % | 969,343 | 4,852 | 2.01 | % | ||||||||||||||
| Other time certificates | 901,306 | 1,909 | 0.86 | % | 841,449 | 2,236 | 1.06 | % | 796,473 | 4,111 | 2.08 | % | ||||||||||||||
| Total interest-bearing deposits | 3,531,358 | 5,283 | 0.61 | % | 3,508,276 | 6,054 | 0.69 | % | 3,244,711 | 12,345 | 1.53 | % | ||||||||||||||
| Short-term borrowings | - | - | 0.00 | % | 3 | 0 | 0.20 | % | - | - | 0.00 | % | ||||||||||||||
| Subordinated debt, net | 99,347 | 1,531 | 6.25 | % | 99,316 | 1,532 | 6.14 | % | 99,222 | 1,531 | 6.21 | % | ||||||||||||||
| Total interest-bearing liabilities | 3,630,705 | 6,814 | 0.76 | % | 3,607,595 | 7,586 | 0.84 | % | 3,343,933 | 13,876 | 1.67 | % | ||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||||
| Demand deposits | 955,041 | 918,050 | 765,918 | |||||||||||||||||||||||
| Lease Liability | 19,289 | 18,936 | 20,314 | |||||||||||||||||||||||
| Other liabilities | 56,762 | 46,917 | 463,382 | |||||||||||||||||||||||
| Total liabilities | 4,661,797 | 4,591,498 | 4,176,547 | |||||||||||||||||||||||
| Shareholders’ equity | 538,282 | 518,567 | 475,409 | |||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 5,200,079 | $ | 5,110,065 | $ | 4,651,956 | ||||||||||||||||||||
| Net interest income | $ | 45,446 | $ | 46,166 | $ | 41,885 | ||||||||||||||||||||
| Net interest spread | 3.39 | % | 3.42 | % | 3.26 | % | ||||||||||||||||||||
| Net interest margin | 3.61 | % | 3.66 | % | 3.70 | % | ||||||||||||||||||||
| Cost of Deposits: | ||||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 955,041 | $ | 918,050 | $ | 765,918 | ||||||||||||||||||||
| Interest bearing deposits | 3,531,358 | 5,283 | 0.61 | % | 3,508,276 | 6,054 | 0.69 | % | 3,244,711 | 12,345 | 1.53 | % | ||||||||||||||
| Total Deposits | $ | 4,486,399 | $ | 5,283 | 0.48 | % | $ | 4,426,326 | $ | 6,054 | 0.54 | % | $ | 4,010,629 | $ | 12,345 | 1.24 | % | ||||||||
| (1) | Includes non-accrual loans and loans held for sale | |||||||||||||||||||||||||
| (2) | Net loan fee income of $539,000, $1.1 million and $670,000 for the quarter ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively, are included in the yield computations | |||||||||||||||||||||||||
| (3) | Yields on securities have been adjusted to a tax-equivalent basis | |||||||||||||||||||||||||
| Preferred Bank | |||||||||||||
| Loan and Credit Quality Information | |||||||||||||
| Allowance For Credit Losses History | |||||||||||||
| Three Months Ended | Year ended | ||||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||||
| (Dollars in 000's) | |||||||||||||
| Allowance For Credit Losses | |||||||||||||
| Balance at Beginning of Period | $ | 63,426 | $ | 34,830 | |||||||||
| Charge-Offs | |||||||||||||
| Commercial & Industrial | - | 3,700 | |||||||||||
| Mini-perm Real Estate | - | 1,900 | |||||||||||
| Others | - | 7 | |||||||||||
| Total Charge-Offs | - | 5,607 | |||||||||||
| Recoveries | |||||||||||||
| Commercial & Industrial | 57 | - | |||||||||||
| Mini-perm Real Estate | - | - | |||||||||||
| Construction - Commercial | - | 194 | |||||||||||
| Land - Commercial | - | 9 | |||||||||||
| Total Recoveries | 57 | 203 | |||||||||||
| Net Charge-Offs (Recoveries) | (57 | ) | 5,404 | ||||||||||
| Provision for Credit Losses: | |||||||||||||
| CECL Cumulative Effect Adjustment | - | 8,000 | |||||||||||
| Current Provision | 1,400 | 26,000 | |||||||||||
| Balance at End of Period | $ | 64,883 | $ | 63,426 | |||||||||
| Average Loans Held for Investment | $ | 4,044,823 | $ | 3,892,811 | |||||||||
| Loans Held for Investment at End of Period | $ | 4,164,241 | $ | 4,035,394 | |||||||||
| Net Charge-Offs (Recoveries) to Average Loans | -0.01 | % | 0.14 | % | |||||||||
| Allowances for Credit Losses to Loans at End of Period | 1.56 | % | 1.57 | % | |||||||||
| AT THE COMPANY: | AT FINANCIAL PROFILES: |
| Edward J. Czajka | Jeffrey Haas |
| Executive Vice President | General Information |
| Chief Financial Officer | (310) 622-8240 |
| (213) 891-1188 | PFBC@finprofiles.com |