LOS ANGELES, April 19, 2022 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter March 31, 2022. Preferred Bank (“the Bank”) reported net income of $26.0 million or $1.74 per diluted share for the first quarter of 2022. This represents an increase of $4.8 million or 22.8% over the same quarter last year down slightly from the $26.4 million or $1.80 per share posted in the fourth quarter of 2021. The primary reasons for the increase compared to the prior year was an increase in net interest income of $4.7 million primarily driven by loan growth. The decrease from the fourth quarter of 2021 was due mainly to an increase in noninterest expense of $1.4 million which was the result of higher personnel costs.
First quarter 2022 highlights:
- Linked quarter loan growth (Ex-PPP) of 4.0%
- Return on average assets (“ROA”) of 1.75%
- Return on beginning equity (“ROBE”) of 17.99%
- Pre-provision, pre-tax (“PPPT”) ROBE of 24.98% 1
- Efficiency ratio of 30.89%
Li Yu, Chairman and CEO, commented, “We had a strong first quarter to start 2022, compared to all the prior years. Net income was $26.0 or $1.74 per fully diluted share as compared to $21.2 and $1.42 per share respectively, for the first quarter 2021.
Loan growth for the first quarter, excluding PPP was $176 million, or 16.1% annualized and was the highlight of the quarter. The momentum of fourth quarter’s origination activities has been carried over to this quarter and pay-off activities have moderately subsided. Looking forward, we are encouraged by the new applications received for lending opportunities in the following quarters.
Deposit growth was moderate, increasing by $84 million, or 6.44% annualized. As we are facing the Federal Reserve’s tightening of liquidity, this growth rate is well within our expected range and allows us to deploy some of our excess liquidity into more profitable applications.
The Bank’s net interest margin for the quarter was 3.42%, an increase of 14 basis points from the previous quarter partially reflecting the change in leverage on the balance sheet. Looking forward, we expect our margin to expand under the rate rising environment, which seems to be the unanimous consensus of all economists. Following is a breakdown of the Bank’s assets, which will support our margin expansion conviction:
| Total Adj/Floating Rate Loans | $ | 3,824,913 |
| Loans with no Floor | $ | 688,006 |
| Loans Above Floor or at Floor | 753,071 | |
| Cash and Floating Rate Securities | 1,215,162 | |
| Total Interest Earning Assets to Reprice Immediately | $ | 2,656,239 |
| Floating Rate Loans which will Reprice When Rates are Increased by: | ||
| 0 - 25 bps | $ | 196,213 |
| 26 - 50 bps | 393,437 | |
| 51 - 75 bps | 492,037 | |
| 76 - 100 bps | 305,055 | |
| > 100 bps | 997,094 | |
| Total | $ | 2,383,836 |
On the liability side, the Bank’s time certificates of deposit portfolio of $1.86 billion has an average life of 7.3 months. This group of deposits will reprice slower than the interest-bearing transactional accounts.
We are also making progress on resolving our troubled assets. After months of court battles, two main non-accrual loans have finally advanced to the OREO and repossessed-asset stage and expect to be resolved shortly. Our total non-performing loans at March 31, 2022, is now just $2.2 million and total non-performing assets are $17.7 million. Charge-offs for this quarter are primarily related to these legacy loans and places us in a position to offload them.
Under the current inflationary environment, increases in operating expenses will be inevitable. As we have always been disciplined with our operating costs, we expect expense growth to stay at approximately the industry average and be more than fully absorbed by growth in net interest income.”
Results of Operations
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $50.0 million for the first quarter of 2022. This was an increase from the $45.4 million recorded in the same quarter last year and also an increase over the $49.4 million posted in the fourth quarter of 2021. Loan growth was the primary driver of the increase in net interest income as was an increase in investment securities along with a decline in interest expense. The taxable equivalent margin was 3.42% for the first quarter of 2022, as compared to 3.28% in the fourth quarter of 2021 and versus 3.61% for the same period last year.
Noninterest Income. For the first quarter of 2022, noninterest income was $2,266,000 compared with $1,347,000 for the same quarter last year and compared to $1,966,000 for the fourth quarter of 2021. The increase compared to last year was due to a $379,000 loss on sale of loans recorded in the first quarter of last year in addition to service charges increasing this quarter by $245,000 over that period as well. The increase over the fourth quarter of 2021 was mainly due to an increase in letter of credit (“LC”) fees which were up by $214,000 this quarter.
Noninterest Expense. Total noninterest expense was $16.2 million for the first quarter of 2022. This is up compared to the $15.7 million recorded in the same quarter last year and an increase over the $14.8 million posted in the fourth quarter of 2021. In comparing to the same quarter last year, personnel expense and other professional services contributed most to the overall increase. Personnel expense increased over the prior year primarily due to additional staffing and merit increases. The increase in noninterest expense over the prior quarter was due to personnel expense. This increase in personnel expense was due to an increase in payroll taxes of $612,000 which were Bank-incurred payroll taxes on incentive compensation payments, which are distributed each first quarter. Occupancy expense totaled $1.4 million for the quarter which was relatively flat compared to both the prior quarter and when compared to the same quarter last year. Professional services expense was $1.2 million for the first quarter of 2022, an increase of $262,000 over the same period last year and an increase of $168,000 over the fourth quarter of 2021. The increase over both periods was mainly due to legal fees as the Bank continues to wind down and liquidate the two aforementioned non-performing assets. Other expenses were $1.2 million for the first quarter of 2022, down from the $1.6 million recorded in the first quarter of 2021 and down slightly from the $1.3 million posted last quarter. Lower FDIC premiums were the primary reason for the decrease compared to the same period last year. For the quarter ended March 31, 2022, the Bank’s efficiency ratio was 30.9%, up from the 28.8% posted last quarter and down from last year’s 33.5%.
Income Taxes. The Bank recorded a provision for income taxes of $10.4 million for the first quarter of 2022. This represents an effective tax rate (“ETR”) of 28.5% and slightly below the ETR of 29.5% in the prior quarter and flat compared to the ETR of 28.5% 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, 2022 were $4.59 billion, an increase of $167 million or 3.8% over the total of $4.42 billion as of December 31, 2021. Total deposits increased to $5.31 billion, an increase of $84 million or 1.6% over the $5.23 billion as of December 31, 2021. Total assets ended the quarter at $6.14 billion, an increase of $96 million or 1.6% over the total of $6.05 billion as of December 31, 2021.
Asset Quality
As of March 31, 2022, nonaccrual loans totaled $2.2 million, down from $14.8 million as of the end of 2021. In addition, OREO and repossessed assets totaled $15.5 million as of March 31, 2022. Total net charge-offs for the first quarter of 2022 were $1.2 million as compared to $267,000 in the prior quarter and compared to a net recovery of $57,000 in the first quarter of 2021.
Allowance for Credit Losses
The (reversal of) provision for credit losses for the first quarter of 2022 was ($250,000) as compared to a reversal of ($900,000) in the prior quarter and compared to the $1.4 million provision for credit losses posted in the first quarter of 2021. A consistently improving economic outlook, among other factors such as credit quality led to a lower allowance requirement. The Bank’s allowance coverage ratio now stands at 1.28% of total loans (excluding PPP loans).
Capitalization
As of March 31, 2022, the Bank’s leverage ratio was 9.92%, the common equity tier 1 capital ratio was 11.20% and the total capital ratio stood at 15.12%. As of December 31, 2021, the Bank’s leverage ratio was 9.54%, the common equity tier 1 ratio was 11.26% and the total risk-based capital ratio was 15.37%.
| GAAP – Non-GAAP Reconciliation -First quarter 2022 PPPT ROBE | |||
| Net Income | $ | 26,027 | |
| Add: Reversal of provision for credit losses | (250 | ) | |
| Add: Income tax expense | 10,364 | ||
| Pre-provision and pre-tax income | $ | 36,141 | |
| Total equity - 12/31/21 | $ | 586,718 | |
| Pre-provision and pre-tax ROBE | 24.98 | % | |
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s first quarter 2022 financial results will be held tomorrow, April 20, 2022 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 4, 2022; the passcode is 2138387.
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. In addition, the Bank operates a Loan Production Office in the Houston, Texas suburb of Sugar Land. 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 2021 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.
| 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 |
| 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, | |||||||||||||
| 2022 | 2021 | 2021 | |||||||||||||
| Interest income: | |||||||||||||||
| Loans, including fees | $ | 52,119 | $ | 51,906 | $ | 49,859 | |||||||||
| Investment securities | 2,886 | 2,867 | 2,277 | ||||||||||||
| Fed funds sold | 19 | 18 | 24 | ||||||||||||
| Total interest income | 55,024 | 54,791 | 52,160 | ||||||||||||
| Interest expense: | |||||||||||||||
| Interest-bearing demand | 1,431 | 1,511 | 1,437 | ||||||||||||
| Savings | 19 | 17 | 19 | ||||||||||||
| Time certificates | 2,217 | 2,521 | 3,827 | ||||||||||||
| Subordinated debt | 1,325 | 1,325 | 1,531 | ||||||||||||
| Total interest expense | 4,992 | 5,374 | 6,814 | ||||||||||||
| Net interest income | 50,032 | 49,417 | 45,346 | ||||||||||||
| (Reversal of) provision for credit losses | (250 | ) | (900 | ) | 1,400 | ||||||||||
| Net interest income after (reversal of) provision for | |||||||||||||||
| credit losses | 50,282 | 50,317 | 43,946 | ||||||||||||
| Noninterest income: | |||||||||||||||
| Fees & service charges on deposit accounts | 671 | 581 | 426 | ||||||||||||
| Letters of credit fee income | 933 | 719 | 808 | ||||||||||||
| BOLI income | 99 | 99 | 96 | ||||||||||||
| Net loss on sale of loans | - | - | (379 | ) | |||||||||||
| Other income | 563 | 567 | 396 | ||||||||||||
| Total noninterest income | 2,266 | 1,966 | 1,347 | ||||||||||||
| Noninterest expense: | |||||||||||||||
| Salary and employee benefits | 11,640 | 10,278 | 11,123 | ||||||||||||
| Net occupancy expense | 1,422 | 1,396 | 1,401 | ||||||||||||
| Business development and promotion expense | 101 | 280 | 73 | ||||||||||||
| Professional services | 1,243 | 1,075 | 981 | ||||||||||||
| Office supplies and equipment expense | 489 | 498 | 438 | ||||||||||||
| Other real estate owned expense | 16 | - | - | ||||||||||||
| Other | 1,246 | 1,279 | 1,636 | ||||||||||||
| Total noninterest expense | 16,157 | 14,806 | 15,652 | ||||||||||||
| Income before provision for income taxes | 36,391 | 37,477 | 29,641 | ||||||||||||
| Income tax expense | 10,364 | 11,056 | 8,447 | ||||||||||||
| Net income | $ | 26,027 | $ | 26,421 | $ | 21,194 | |||||||||
| Dividend and earnings allocated to participating securities | (1 | ) | (3 | ) | (3 | ) | |||||||||
| Net income available to common shareholders | $ | 26,026 | $ | 26,418 | $ | 21,191 | |||||||||
| Income per share available to common shareholders | |||||||||||||||
| Basic | $ | 1.76 | $ | 1.80 | $ | 1.42 | |||||||||
| Diluted | $ | 1.74 | $ | 1.80 | $ | 1.42 | |||||||||
| Weighted-average common shares outstanding | |||||||||||||||
| Basic | 14,765,337 | 14,677,515 | 14,950,019 | ||||||||||||
| Diluted | 14,978,667 | 14,677,515 | 14,950,019 | ||||||||||||
| Cash dividends per common share | $ | 0.43 | $ | 0.43 | $ | 0.38 | |||||||||
| PREFERRED BANK | ||||||||||
| Condensed Consolidated Statements of Financial Condition | ||||||||||
| (unaudited) | ||||||||||
| (in thousands) | ||||||||||
| March 31, | December 31, | |||||||||
| 2022 | 2021 | |||||||||
| (Unaudited) | (Audited) | |||||||||
| Assets | ||||||||||
| Cash and due from banks | $ | 965,162 | $ | 1,030,610 | ||||||
| Fed funds sold | 20,000 | 20,000 | ||||||||
| Cash and cash equivalents | 985,162 | 1,050,610 | ||||||||
| Securities held to maturity, at amortized cost | 13,496 | 13,962 | ||||||||
| Securities available-for-sale, at fair value | 430,280 | 451,911 | ||||||||
| Loans | 4,591,567 | 4,424,992 | ||||||||
| Less allowance for credit losses | (58,496 | ) | (59,969 | ) | ||||||
| Less amortized deferred loan fees, net | (8,573 | ) | (6,316 | ) | ||||||
| Loans, net | 4,524,498 | 4,358,707 | ||||||||
| Other real estate owned and repossessed assets | 15,547 | - | ||||||||
| Customers' liability on acceptances | 8,222 | 10,188 | ||||||||
| Bank furniture and fixtures, net | 10,189 | 10,533 | ||||||||
| Bank-owned life insurance | 10,154 | 10,088 | ||||||||
| Accrued interest receivable | 15,166 | 14,646 | ||||||||
| Investment in affordable housing partnerships | 56,946 | 59,018 | ||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | ||||||||
| Deferred tax assets | 31,086 | 26,674 | ||||||||
| Operating lease right-of-use assets | 21,451 | 21,969 | ||||||||
| Other assets | 5,159 | 2,997 | ||||||||
| Total assets | $ | 6,142,356 | $ | 6,046,303 | ||||||
| Liabilities and Shareholders' Equity | ||||||||||
| Deposits: | ||||||||||
| Non-interest bearing demand deposits | $ | 1,251,613 | $ | 1,305,692 | ||||||
| Interest-bearing deposits: | 2,159,178 | 2,032,819 | ||||||||
| Savings | 39,946 | 37,839 | ||||||||
| Time certificates of $250,000 or more | 924,317 | 934,444 | ||||||||
| Other time certificates | 934,615 | 914,717 | ||||||||
| Total deposits | 5,309,669 | 5,225,511 | ||||||||
| Acceptances outstanding | 8,222 | 10,188 | ||||||||
| Subordinated debt issuance, net | 147,818 | 147,758 | ||||||||
| Commitments to fund investment in affordable housing partnerships | 22,606 | 22,606 | ||||||||
| Operating lease liabilities | 21,901 | 22,861 | ||||||||
| Accrued interest payable | 1,966 | 715 | ||||||||
| Other liabilities | 34,889 | 29,946 | ||||||||
| Total liabilities | 5,547,071 | 5,459,585 | ||||||||
| Shareholders' equity | 595,285 | 586,718 | ||||||||
| Total liabilities and shareholders' equity | $ | 6,142,356 | $ | 6,046,303 | ||||||
| Book value per common share | $ | 40.19 | $ | 39.97 | ||||||
| Number of common shares outstanding | 14,810,635 | 14,679,769 | ||||||||
| 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, | ||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||
| Unaudited historical quarterly operations data: | ||||||||||||||||||
| Interest income | $ | 55,024 | $ | 54,791 | $ | 53,611 | $ | 50,473 | $ | 52,160 | ||||||||
| Interest expense | 4,992 | 5,374 | 5,858 | 7,112 | 6,814 | |||||||||||||
| Interest income before provision for credit losses | 50,032 | 49,417 | 47,753 | 43,361 | 45,346 | |||||||||||||
| (Reversal of) provision for credit losses | (250 | ) | (900 | ) | (1,500 | ) | - | 1,400 | ||||||||||
| Noninterest income | 2,266 | 1,966 | 2,784 | 1,646 | 1,347 | |||||||||||||
| Noninterest expense | 16,157 | 14,806 | 15,370 | 14,964 | 15,652 | |||||||||||||
| Income tax expense | 10,364 | 11,056 | 10,522 | 8,563 | 8,447 | |||||||||||||
| Net income | $ | 26,027 | $ | 26,421 | $ | 26,145 | $ | 21,480 | $ | 21,194 | ||||||||
| Earnings per share | ||||||||||||||||||
| Basic | $ | 1.76 | $ | 1.80 | $ | 1.76 | $ | 1.44 | $ | 1.42 | ||||||||
| Diluted | $ | 1.74 | $ | 1.80 | $ | 1.76 | $ | 1.44 | $ | 1.42 | ||||||||
| Ratios for the period: | ||||||||||||||||||
| Return on average assets | 1.75 | % | 1.72 | % | 1.80 | % | 1.58 | % | 1.65 | % | ||||||||
| Return on beginning equity | 17.99 | % | 18.65 | % | 18.56 | % | 15.98 | % | 16.36 | % | ||||||||
| Net interest margin (Fully-taxable equivalent) | 3.42 | % | 3.28 | % | 3.36 | % | 3.25 | % | 3.61 | % | ||||||||
| Noninterest expense to average assets | 1.08 | % | 0.97 | % | 1.06 | % | 1.10 | % | 1.22 | % | ||||||||
| Efficiency ratio | 30.89 | % | 28.82 | % | 30.41 | % | 33.25 | % | 33.52 | % | ||||||||
| Net charge-offs (recoveries) to average loans (annualized) | 0.11 | % | 0.03 | % | 0.10 | % | 0.12 | % | -0.01 | % | ||||||||
| Ratios as of period end: | ||||||||||||||||||
| Tier 1 leverage capital ratio | 9.92 | % | 9.54 | % | 9.64 | % | 10.07 | % | 10.26 | % | ||||||||
| Common equity tier 1 risk-based capital ratio | 11.20 | % | 11.26 | % | 11.19 | % | 11.28 | % | 11.34 | % | ||||||||
| Tier 1 risk-based capital ratio | 11.20 | % | 11.26 | % | 11.19 | % | 11.28 | % | 11.34 | % | ||||||||
| Total risk-based capital ratio | 15.12 | % | 15.37 | % | 15.47 | % | 15.61 | % | 14.73 | % | ||||||||
| Allowances for credit losses to loans at end of period | 1.27 | % | 1.36 | % | 1.41 | % | 1.49 | % | 1.56 | % | ||||||||
| Allowance for credit losses to non-performing loans | 27.15x | 4.05x | 2.93x | 2.91x | 2.95x | |||||||||||||
| Average balances: | ||||||||||||||||||
| Total securities | $ | 455,899 | $ | 470,811 | $ | 401,641 | $ | 269,000 | $ | 242,200 | ||||||||
| Total loans | 4,367,095 | 4,218,699 | 4,156,289 | 4,130,190 | 4,044,800 | |||||||||||||
| Total earning assets | 5,938,519 | 5,984,055 | 5,659,678 | 5,364,598 | 5,102,291 | |||||||||||||
| Total assets | 6,044,155 | 6,079,934 | 5,760,056 | 5,467,678 | 5,200,079 | |||||||||||||
| Total time certificate of deposits | 1,869,654 | 1,915,116 | 1,959,514 | 1,893,247 | 1,820,461 | |||||||||||||
| Total interest bearing deposits | 3,947,616 | 3,945,275 | 3,783,704 | 3,704,771 | 3,531,358 | |||||||||||||
| Total deposits | 5,215,810 | 5,277,507 | 4,971,607 | 4,724,104 | 4,486,399 | |||||||||||||
| Total interest bearing liabilities | 4,095,399 | 4,093,002 | 3,931,375 | 3,815,964 | 3,630,705 | |||||||||||||
| Total equity | 597,214 | 576,495 | 569,624 | 553,561 | 538,282 | |||||||||||||
| PREFERRED BANK | ||||||||||||||||||||||
| Selected Consolidated Financial Information | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| (in thousands, except for ratios) | ||||||||||||||||||||||
| As of | ||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||
| Unaudited quarterly statement of financial position data: | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 985,162 | $ | 1,050,610 | $ | 1,082,634 | $ | 896,474 | $ | 943,126 | ||||||||||||
| Securities held-to-maturity, at amortized cost | 13,496 | 13,962 | 15,294 | 15,749 | 6,039 | |||||||||||||||||
| Securities available-for-sale, at fair value | 430,280 | 451,911 | 461,356 | 278,460 | 228,635 | |||||||||||||||||
| Loans: | ||||||||||||||||||||||
| Real estate – Mortgage: | ||||||||||||||||||||||
| Real estate—Residential | $ | 531,957 | $ | 536,286 | $ | 540,725 | $ | 558,147 | $ | 541,313 | ||||||||||||
| Real estate—Commercial | 2,375,519 | 2,267,063 | 2,093,692 | 2,019,995 | 1,925,554 | |||||||||||||||||
| Total Real Estate – Mortgage | 2,907,476 | 2,803,349 | 2,634,417 | 2,578,142 | 2,466,867 | |||||||||||||||||
| Real estate – Construction: | ||||||||||||||||||||||
| R/E Construction — Residential | 141,218 | 130,842 | 122,382 | 120,363 | 123,302 | |||||||||||||||||
| R/E Construction — Commercial | 209,726 | 202,482 | 213,833 | 224,323 | 229,933 | |||||||||||||||||
| Total real estate construction loans | 350,944 | 333,324 | 336,215 | 344,686 | 353,235 | |||||||||||||||||
| Commercial and industrial | 1,300,478 | 1,245,734 | 1,286,995 | 1,259,668 | 1,248,550 | |||||||||||||||||
| PPP | 32,554 | 42,467 | 63,897 | 95,765 | 95,434 | |||||||||||||||||
| Consumer and others | 115 | 118 | 6 | 143 | 155 | |||||||||||||||||
| Gross loans | 4,591,567 | 4,424,992 | 4,321,529 | 4,278,403 | 4,164,241 | |||||||||||||||||
| Allowance for credit losses on loans | (58,496 | ) | (59,969 | ) | (61,135 | ) | (63,635 | ) | (64,883 | ) | ||||||||||||
| Net deferred loan fees | (8,573 | ) | (6,316 | ) | (5,498 | ) | (5,329 | ) | (4,872 | ) | ||||||||||||
| Net loans | $ | 4,524,498 | $ | 4,358,707 | $ | 4,254,896 | $ | 4,209,439 | $ | 4,094,486 | ||||||||||||
| Other real estate owned and repossessed assets | $ | 15,547 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
| Investment in affordable housing partnerships | 56,946 | 59,018 | 53,399 | 55,452 | 59,824 | |||||||||||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | |||||||||||||||||
| Other assets | 101,427 | 97,095 | 97,261 | 105,334 | 100,894 | |||||||||||||||||
| Total assets | $ | 6,142,356 | $ | 6,046,303 | $ | 5,979,840 | $ | 5,575,908 | $ | 5,448,004 | ||||||||||||
| Liabilities: | ||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||
| Demand | $ | 1,251,613 | $ | 1,305,692 | $ | 1,349,114 | $ | 1,063,472 | $ | 1,026,260 | ||||||||||||
| Interest-bearing demand | 2,159,178 | 2,032,819 | 1,861,334 | 1,774,668 | 1,751,951 | |||||||||||||||||
| Savings | 39,946 | 37,839 | 33,417 | 32,560 | 37,551 | |||||||||||||||||
| Time certificates of $250,000 or more | 924,317 | 934,444 | 959,826 | 930,976 | 927,043 | |||||||||||||||||
| Other time certificates | 934,615 | 914,717 | 990,228 | 994,630 | 979,694 | |||||||||||||||||
| Total deposits | $ | 5,309,669 | $ | 5,225,511 | $ | 5,193,919 | $ | 4,796,306 | $ | 4,722,499 | ||||||||||||
| Acceptances outstanding | $ | 8,222 | $ | 10,188 | $ | 7,697 | $ | 7,797 | $ | 9,670 | ||||||||||||
| Subordinated debt issuance, net | 147,818 | 147,758 | 147,699 | 147,787 | 99,365 | |||||||||||||||||
| Commitments to fund investment in affordable housing partnerships | 22,606 | 22,606 | 17,900 | 19,197 | 27,918 | |||||||||||||||||
| Other liabilities | 58,756 | 53,522 | 50,604 | 45,852 | 49,283 | |||||||||||||||||
| Total liabilities | $ | 5,547,071 | $ | 5,459,585 | $ | 5,417,819 | $ | 5,016,939 | $ | 4,908,735 | ||||||||||||
| Equity: | ||||||||||||||||||||||
| Net common stock, no par value | $ | 209,065 | $ | 208,840 | $ | 203,844 | $ | 219,958 | $ | 218,593 | ||||||||||||
| Retained earnings | 392,610 | 372,952 | 352,843 | 332,276 | 316,481 | |||||||||||||||||
| Accumulated other comprehensive income | (6,390 | ) | 4,926 | 5,334 | 6,735 | 4,195 | ||||||||||||||||
| Total shareholders' equity | $ | 595,285 | $ | 586,718 | $ | 562,021 | $ | 558,969 | $ | 539,269 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 6,142,356 | $ | 6,046,303 | $ | 5,979,840 | $ | 5,575,908 | $ | 5,448,004 | ||||||||||||
| 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, | |||||||||||||||||||||||
| 2022 | 2021 | 2021 | |||||||||||||||||||||||
| 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) | $ | 4,367,095 | 52,119 | 4.84 | % | $ | 4,218,699 | $ | 51,906 | 4.88 | % | 4,044,823 | $ | 49,859 | 5.00 | % | |||||||||
| Investment securities (3) | 455,899 | 2,224 | 1.98 | % | 470,811 | 2,228 | 1.88 | % | 242,200 | 1,884 | 3.16 | % | |||||||||||||
| Federal funds sold | 20,122 | 19 | 0.38 | % | 20,380 | 18 | 0.36 | % | 21,474 | 24 | 0.45 | % | |||||||||||||
| Other earning assets | 1,095,403 | 770 | 0.29 | % | 1,274,165 | 752 | 0.23 | % | 793,794 | 493 | 0.25 | % | |||||||||||||
| Total interest-earning assets | 5,938,519 | 55,132 | 3.77 | % | 5,984,055 | 54,904 | 3.64 | % | 5,102,291 | 52,260 | 4.15 | % | |||||||||||||
| Deferred loan fees, net | (6,322 | ) | (5,530 | ) | (4,344 | ) | |||||||||||||||||||
| Allowance for credit losses on loans | (59,951 | ) | (61,123 | ) | (63,450 | ) | |||||||||||||||||||
| Noninterest earning assets: | |||||||||||||||||||||||||
| Cash and due from banks | 11,589 | 11,933 | 9,923 | ||||||||||||||||||||||
| Bank furniture and fixtures | 10,440 | 10,810 | 11,772 | ||||||||||||||||||||||
| Right of use assets | 21,754 | 21,150 | 16,847 | ||||||||||||||||||||||
| Other assets | 128,126 | 118,639 | 127,040 | ||||||||||||||||||||||
| Total assets | $ | 6,044,155 | $ | 6,079,934 | $ | 5,200,079 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||
| Interest-bearing demand and savings | 2,077,962 | $ | 1,450 | 0.28 | % | 2,030,159 | $ | 1,528 | 0.30 | % | $ | 1,710,897 | $ | 1,456 | 0.35 | % | |||||||||
| TCD $250K or more | 929,170 | 1,027 | 0.45 | % | 942,201 | 1,151 | 0.48 | % | 919,155 | 1,918 | 0.85 | % | |||||||||||||
| Other time certificates | 940,484 | 1,190 | 0.51 | % | 972,915 | 1,370 | 0.56 | % | 901,306 | 1,909 | 0.86 | % | |||||||||||||
| Total interest-bearing deposits | 3,947,616 | 3,667 | 0.38 | % | 3,945,275 | 4,049 | 0.41 | % | 3,531,358 | 5,283 | 0.61 | % | |||||||||||||
| Short-term borrowings | - | - | 0.00 | % | 3 | 0 | 0.22 | % | - | - | 0.00 | % | |||||||||||||
| Subordinated debt, net | 147,783 | 1,325 | 3.64 | % | 147,724 | 1,325 | 3.56 | % | 99,347 | 1,531 | 6.25 | % | |||||||||||||
| Total interest-bearing liabilities | 4,095,399 | 4,992 | 0.49 | % | 4,093,002 | 5,374 | 0.52 | % | 3,630,705 | 6,814 | 0.76 | % | |||||||||||||
| Non-interest bearing liabilities: | |||||||||||||||||||||||||
| Demand deposits | 1,268,194 | 1,332,232 | 955,041 | ||||||||||||||||||||||
| Lease Liability | 22,463 | 22,298 | 19,289 | ||||||||||||||||||||||
| Other liabilities | 60,885 | 55,907 | 56,762 | ||||||||||||||||||||||
| Total liabilities | 5,446,941 | 5,503,439 | 4,661,797 | ||||||||||||||||||||||
| Shareholders’ equity | 597,214 | 576,495 | 538,282 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,044,155 | $ | 6,079,934 | $ | 5,200,079 | |||||||||||||||||||
| Net interest income | $ | 50,140 | $ | 49,530 | $ | 45,446 | |||||||||||||||||||
| Net interest spread | 3.27 | % | 3.12 | % | 3.39 | % | |||||||||||||||||||
| Net interest margin | 3.42 | % | 3.28 | % | 3.61 | % | |||||||||||||||||||
| Cost of Deposits: | |||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 1,268,194 | $ | 1,332,232 | $ | 955,041 | |||||||||||||||||||
| Interest bearing deposits | 3,947,616 | 3,667 | 0.38 | % | 3,945,275 | 4,049 | 0.41 | % | 3,531,358 | 5,283 | 0.61 | % | |||||||||||||
| Total Deposits | $ | 5,215,810 | $ | 3,667 | 0.29 | % | $ | 5,277,507 | $ | 4,049 | 0.30 | % | $ | 4,486,399 | $ | 5,283 | 0.48 | % | |||||||
| (1) | Includes non-accrual loans and loans held for sale | ||||||||||||||||||||||||
| (2) | Net loan fee income of $765,000, $1.1 million and $539,000 for the quarter ended March 31, 2022, December 31, 2021 and March 31, 2021, 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 | |||||||||||
| Quarter Ended | Year ended | ||||||||||
| March 31, 2022 | December 31, 2021 | ||||||||||
| (Dollars in 000's) | |||||||||||
| Allowance For Credit Losses | |||||||||||
| Balance at Beginning of Period | $ | 59,969 | $ | 63,426 | |||||||
| Charge-Offs | |||||||||||
| Commercial & Industrial | 1,222 | 1,697 | |||||||||
| Mini-perm Real Estate | 1 | 817 | |||||||||
| Total Charge-Offs | 1,223 | 2,514 | |||||||||
| Recoveries | |||||||||||
| Commercial & Industrial | - | 57 | |||||||||
| Total Recoveries | - | 57 | |||||||||
| Net Charge-Offs | 1,223 | 2,457 | |||||||||
| Reversal of Provision for Credit Losses: | (250 | ) | (1,000 | ) | |||||||
| Balance at End of Period | $ | 58,496 | $ | 59,969 | |||||||
| Average Loans Held for Investment | $ | 4,367,095 | $ | 4,138,023 | |||||||
| Loans Held for Investment at End of Period | $ | 4,591,567 | $ | 4,424,992 | |||||||
| Net Charge-Offs (Recoveries) to Average Loans | 0.11 | % | 0.06 | % | |||||||
| Allowances for Credit Losses to Loans at End of Period | 1.27 | % | 1.36 | % | |||||||
1 This is a non-GAAP measure and linking to the reconciliation on page 5.
