Preferred Bank Reports Fourth Quarter and Full Year 2014 Results

LOS ANGELES, Jan. 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 December 31, 2014. Preferred Bank ("the Bank") reported net income of $6.9 million or $0.50 per diluted share for the fourth quarter of 2014. This represents an increase of $1.0 million over the $5.9 million or $0.43 per diluted share recorded for the same period last year. This also compares favorably to the $6.4 million or $0.46 per diluted share posted in the third quarter of 2014. Net income for the year ended December 31, 2014 totaled $24.6 million or $1.78 per diluted share compared to $19.2 million or $1.42 per diluted share for 2013, representing an increase of $5.4 million or 28.1% over 2013.

Highlights from the fourth quarter of 2014:

• Diluted EPS of $0.50 per diluted share, a 16.3% increase from prior year
• Strong linked quarter loan growth of $79 million and deposit growth of $55 million
• ROA was 1.37%
• ROBE was 11.92%
• Efficiency ratio was 40.3%
• Total assets now exceed $2 billion

Li Yu, Chairman and CEO commented, "Since 2011, we have dedicated ourselves to improving asset quality, loan and deposit growth, diversifying the loan portfolio, optimizing our deposit mix, increasing operating profit, controlling overhead, building up management talent for future growth and most importantly, positioning ourselves to take advantage of any upward movement in interest rates. As of December 31, 2014, we had substantially accomplished all these goals.

"Preferred Bank now has reached an all-time high in assets of $2.05 billion. During the year, we grew loans by $275 million or 20.7% and we grew deposits by $247 million or 16.2% while improving the deposit mix. Fully diluted net income per share grew from $1.42 to $1.78 for the year, a 25.4% improvement.

"We have also been able to effectively control overhead costs. Despite the asset and earnings growth, noninterest expense in 2014 increased only 5.3% from 2013 levels. Our efficiency ratio for the entire year was 40.8%.

"While growing the Bank, we are always mindful of potential interest rate changes. Although elusive to predict, we believe that the FOMC will raise short term rates sometime this year and we are well-positioned to take advantage of this probable event. At December 31, 2014, our loan portfolio is highly rate sensitive; 89% of the portfolio is in floating rate product, and nearly all of that is tied to Prime rate.

"Our fourth quarter 2014 operating results reflect the favorable trends we had for the whole year. Return on assets was 1.37% which compares favorably with our peer group. Net income reached a five-year high of $0.50 per diluted share. Loan growth was significant in the quarter. Total loans increased nearly $79 million or 5.2% while deposit growth came in at $55 million or 3.2% on linked-quarter basis.

"The Bank's net interest margin bounced back from the previous quarters, coming in at 3.98% for the fourth quarter. Our continued loan growth and slightly lower cash balances during the quarter both contributed to the expansion.

"Looking ahead, we believe the U.S. economy is quite strong. With sufficient capital and an asset sensitive balance sheet, Preferred Bank is well positioned to take advantage of the opportunities presented to us."

Quarterly Results

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses increased to $19.4 million compared to $16.4 million recorded in the fourth quarter of 2013 and an increase from the $18.0 million recorded in the third quarter of 2014. The increase over the fourth quarter of 2013 and over the prior quarter is due primarily to growth in the loan portfolio. The Bank's taxable equivalent net interest margin was 3.98% for the fourth quarter of 2014, a 20 basis point increase from the 3.78% achieved in the third quarter of 2014 and a 13 basis point increase over the 3.85% recorded in the fourth quarter of 2013. The increase in the margin from the third quarter of 2014 was primarily due to an increase in total average loans which increased by $91.5 million. The Bank's cost of funds has continually declined, now standing at 0.56%, which has also aided net interest margin stability.

Noninterest Income. For the fourth quarter of 2014, noninterest income was $751,000 compared with $214,000 for the same quarter last year and compared to $928,000 for the third quarter of 2014. During the fourth quarter of 2013, the Bank recorded a loss on sale of investment securities of $1.1 million. Service charges on deposits were down by $172,000 compared to the same period last year. This was due to the loss of a few customers who were heavy cash management users. It should be noted that these customers also required a certain level of costs to service so the net earnings loss from these customers was negligible. Trade Finance income increased by $74,000 over last year due to an increase in letter of credit (LC) fees. Other income decreased from $598,000 in the fourth quarter of 2013 to $131,000 in the fourth quarter of 2014. This was due to the recording of $514,000 in gains on note sales in the fourth quarter of 2013.

Noninterest Expense.Total noninterest expense was $8.1 million for the fourth quarter of 2014, up from the $5.4 million recorded in the same quarter last year and up over the $7.8 million posted in the third quarter of 2014. Noninterest expense was very low in the fourth quarter of 2013 due to the recording of $2.1 million in net OREO gains. Salaries and benefits expense totaled $5.1 million for the fourth quarter of 2014 compared to $4.0 million for the same period last year and compared to $4.3 million for the third quarter of 2014. The increase over the third quarter of 2014 is due primarily to an increase in bonus expense as well as staffing increases. Occupancy expense was down slightly compared to last year as a significant amount of leasehold improvements reached the end of their depreciation. Professional services expense was $966,000 for the fourth quarter of 2014, compared to the $899,000 recorded in the same period last year and down from the $1.0 million recorded in the third quarter of 2014. Other expenses were $867,000 in the fourth quarter of 2014, down from the $1.3 million recorded in the same period in 2013 and down from the $1.2 million recorded in the third quarter of 2014. The decrease was primarily due to a decrease in FDIC insurance premiums which were due to the results of the Bank's regulatory examination which took place earlier in 2014.

Income Taxes. The Bank recorded a provision for income taxes of $4.6 million for the fourth quarter of 2014. This represents an effective tax rate ("ETR") of 40.3% for the quarter. This is relatively flat from the ETR of 40.1% for the third quarter of 2014. The difference between the Bank's statutory blended tax rate of 42.05% and the effective ETR is due to the Bank's investments in municipal bonds and low income housing tax credits.

Annual Results

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses increased to $71.0 million compared to $62.0 million for 2013. This is primarily due to growth in the loan portfolio over the course of 2014. Although interest expense increased over 2013 levels as deposits grew, the growth in the loan portfolio helped to drive an increase in net interest income of 14.5%. The Bank's taxable equivalent net interest margin was 3.89% for 2014, a 6 basis point decrease from the 3.95% level achieved in 2013. Although the margin contracted slightly, it was against a backdrop of declining asset yields for the industry overall.

Noninterest Income. Noninterest income reached $3.6 million in 2014, a significant increase over the $2.0 million recorded in 2013. This was due to losses on sales of investment securities in 2013 of $2.0 million. The Bank's largest component of noninterest income, service charges, were down $569,000 from 2013 due to the loss of a few customers who were heavy cash management users. It should be noted that the Bank incurred a significant level of costs to service these customers so the net earnings loss from this group was negligible. Trade finance income was up sharply over 2013 levels due to an increase in LC activity for many of our import and export customers. Other income decreased from $916,000 in 2013 to $652,000 in 2014. This was mostly due to gains on note sales recorded in 2013.

Noninterest Expense.Total noninterest expense was $30.4 million in 2014, up slightly from the $28.9 million posted in 2013. Salaries and benefits expense totaled $17.9 million for 2014, up by 10.6% over the $16.2 million recorded in 2013. This was due to the hiring of business development and relationship officers as well as staffing increases in the administrative areas. Professional services expense totaled $4.1 million for 2014 compared to $3.6 million in 2013. This increase was mainly due to consulting fees associated with the remediation of the deficiencies in the Bank's BSA program. Other expenses were $4.6 million in 2014, down from the $4.7 million recorded in 2013. The decrease was primarily due to a decrease in FDIC insurance premiums which were due to the results of the Bank's regulatory examination which took place earlier in 2014.

Balance Sheet Summary

Total gross loans and leases (including loans held for sale) at December 31, 2014 were $1.6 billion, an increase of $274.5 million or 20.6% over the total of $1.33 billion as of December 31, 2013. The tables below indicate loans by type as of December 31, 2014 as compared to the end of 2013:

Loans by Type – Year over Year (ooo's)

Loan Type (000's)	December 31, 2014	December 31, 2013	$ Change	% Change
R/E – Residential/Multifamily	$ 283,958	$ 228,490	$ 55,468	24.3
R/E – Land	13,621	15,161	(1,540)	-10.2%
R/E – Commercial	653,380	627,888	25,492	4.1%
R/E – Construction	126,485	73,285	53,200	72.6%
Commercial & Industrial	526,705	378,607	148,098	39.1%
Loans Held for Sale	--	6,207	(6,207)	-100.0%
Total	$ 1,604,149	$ 1,329,638	$ 274,511	20.6%

Total deposits as of December 31, 2014 were $1.78 billion, an increase of $246.9 million or 16.2% over the $1.53 billion at December 31, 2013. As of December 31, 2014 compared to December 31, 2013; noninterest-bearing demand deposits increased by $104.9 million or 31.0%, interest-bearing demand and savings deposits increased by $55.0 million or 11.2% and time deposits increased by $87.1 million or 12.5%. Total assets were $2.1 billion, a $285.2 million or 16.1% increase over the total of $1.77 billion as of December 31, 2013.

Asset Quality

As of December 31, 2014 nonaccrual loans totaled $8.1 million or 0.51% of total loans while performing TDR's totaled $397,000 as of December 31, 2014. Total net charge-offs (recoveries) for the fourth quarter of 2014 were 188,000 compared to ($4.3 million) for the third quarter of 2014. During the fourth quarter of 2014, the Bank recorded a provision for loan losses of $500,000. This compares to a provision of $1.8 million recorded in the same quarter last year and compares to a $500,000 provision recorded in the third quarter of 2014. The allowance for loan loss at December 31, 2014 was $23.0 million or 1.43% of total loans compared to $19.5 million or 1.47% of total loans at December 31, 2013.

Capitalization

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%. This compares to 11.80%, 13.78% and 15.03% as of December 31, 2013, respectively.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank's fourth quarter 2014 financial results will be held tomorrow, January 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, Chief Financial Officer Edward J. Czajka and Chief Credit Officer Louie Couto will be present to discuss Preferred Bank's financial results, business highlights and outlook. After the live webcast, a replay will remain available in the Investor Relations section of Preferred Bank's website. A replay of the call will also be available at 877-344-7529 (domestic) or 412-317-0088 (international) through February 11, 2015; the passcode is 10058834.

About Preferred Bank

Preferred Bank is one of the larger independent commercial banks in California. The bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Company conducts its banking business from its main office in Los Angeles, California, and through ten full-service branch banking offices in Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Anaheim, Pico Rivera and San Francisco, California. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers.  The bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals.  Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia. 

The Preferred Bank logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11817

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank's future financial and operating results, the Bank's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government's monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank's results to differ materially from those described in the forward-looking statements can be found in the Bank's 2013 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank's website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank's website at www.preferredbank.com.

Financial Tables to Follow

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
	For the Three Months Ended
	December 31, 2014	September 30, 2014	December 31, 2013
Interest income:
Loans, including fees	$ 20,265	$ 18,792	$ 17,111
Investment securities	1,519	1,634	1,380
Fed funds sold	37	36	22
Total interest income	21,821	20,462	18,513
Interest expense:
Interest-bearing demand	763	737	618
Savings	16	20	24
Time certificates	1,627	1,636	1,437
FHLB borrowings	32	33	33
Total interest expense	2,438	2,426	2,112
Net interest income	19,383	18,036	16,401
Provision for loan losses	500	500	1,800
Net interest income after provision for loan losses	18,883	17,536	14,601
Noninterest income:
Fees & service charges on deposit accounts	335	343	507
Trade finance income	202	271	128
BOLI income	83	84	84
Net gain (loss) on sale of investment securities	(0)	2	(1,103)
Other income	131	228	598
Total noninterest income	751	928	214
Noninterest expense:
Salary and employee benefits	5,059	4,285	3,960
Net occupancy expense	773	817	801
Business development and promotion expense	77	134	99
Professional services	966	1,019	899
Office supplies and equipment expense	314	330	278
Other real estate owned related expense (income) and valuation allowance on LHFS	65	43	(2,092)
Other	867	1,208	1,279
Total noninterest expense	8,121	7,836	5,224
Income before provision for income taxes	11,513	10,628	9,591
Income tax expense	4,645	4,266	3,723
Net income	$ 6,868	$ 6,362	$ 5,868
Income allocated to participating securities	(74)	(69)	(34)
Dividends Allocated to Participating Securities	(15)	(15)	--
Net income available to common shareholders	$ 6,779	$ 6,278	$ 5,834
Income per share available to common shareholders
Basic	$ 0.51	$ 0.47	$ 0.45
Diluted	$ 0.50	$ 0.46	$ 0.43
Weighted-average common shares outstanding
Basic	13,345,631	13,310,334	13,196,071
Diluted	13,689,342	13,639,874	13,394,535

PREFERRED BANK
Condensed Consolidated Statements of Operations
(in thousands, except for net income per share and shares)
	For the Twelve Months Ended
	December 31, 2014	December 31, 2013	Change %
	(unaudited)	(audited)
Interest income:
Loans, including fees	$ 74,080	$ 63,718	16.3%
Investment securities	6,107	5,953	2.6%
Fed funds sold	140	55	156.3%
Total interest income	80,327	69,726	15.2%
Interest expense:
Interest-bearing demand	2,773	2,199	26.1%
Savings	72	89	-19.1%
Time certificates	6,367	5,373	18.5%
FHLB borrowings	128	68	89.1%
Total interest expense	9,340	7,729	20.8%
Net interest income	70,987	61,997	14.5%
Provision for credit losses	3,350	3,250	3.1%
Net interest income after provision for loan losses	67,637	58,747	15.1%
Noninterest income:
Fees & service charges on deposit accounts	1,532	2,101	-27.1%
Trade finance income	1,104	612	80.4%
BOLI income	331	331	0.2%
Net gain (loss) on sale of investment securities	2	(1,957)	-100.1%
Other income	652	916	-28.9%
Total noninterest income	3,621	2,003	80.8%
Noninterest expense:
Salary and employee benefits	17,945	16,226	10.6%
Net occupancy expense	3,195	3,206	-0.4%
Business development and promotion expense	420	366	14.6%
Professional services	4,092	3,597	13.8%
Office supplies and equipment expense	1,267	1,186	6.8%
Total other-than-temporary impairment losses	--	99	-100.0%
Portion of loss recognized in other comprehensive income	--	(92)	-100.0%
Other real estate owned related (income) expense and valuation allowance on LHFS	(1,120)	(449)	149.4%
Other	4,612	4,746	-2.8%
Total noninterest expense	30,411	28,885	5.3%
Income before provision for income taxes	40,847	31,865	28.2%
Income tax expense	16,255	12,666	28.3%
Net income	$ 24,592	$ 19,199	28.1%
Income allocated to participating securities	(270)	(201)	34.3%
Dividends Allocated to Participating Securities	(30)	--	-100.0%
Net income available to common shareholders	$ 24,292	$ 18,998	27.9%
Income per share available to common shareholders
Basic	$ 1.83	$ 1.45	26.2%
Diluted	$ 1.78	$ 1.42	25.5%
Weighted-average common shares outstanding
Basic	13,290,258	13,116,713	1.3%
Diluted	13,620,027	13,364,320	1.9%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(in thousands)
	December 31, 2014	December 31, 2013
Assets	(unaudited)	(audited)
Cash and due from banks	$ 215,194	$ 226,615
Fed funds sold	25,000	20,000
Cash and cash equivalents	240,194	246,615
Securities held to maturity, at amortized cost	7,815	--
Securities available-for-sale, at fair value	150,539	142,670
Loans and leases	1,604,149	1,323,431
Less allowance for loan and lease losses	(22,974)	(19,494)
Less net deferred loan fees	(2,100)	(2,562)
Net loans and leases	1,579,075	1,301,375
Loans held for sale, at lower of cost or fair value	--	6,207
Other real estate owned	8,811	5,602
Customers' liability on acceptances	156	2,061
Bank furniture and fixtures, net	4,132	4,205
Bank-owned life insurance	8,525	8,290
Accrued interest receivable	6,497	5,378
Investment in affordable housing	17,999	6,411
Federal Home Loan Bank stock	6,155	5,296
Deferred tax assets	21,357	23,331
Income tax receivable	--	1,784
Other asset	2,899	9,734
Total assets	$ 2,054,154	$ 1,768,959
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand	$ 443,385	$ 338,530
Interest-bearing demand	525,781	469,976
Savings	22,211	22,984
Time certificates of $250,000 or more	276,197	213,362
Other time certificates	508,685	484,462
Total deposits	$ 1,776,259	$ 1,529,314
Acceptances outstanding	156	2,061
Advances from Federal Home Loan Bank	20,000	20,000
Commitments to fund investment in affordable housing partnership	8,151	--
Accrued interest payable	1,419	983
Other liabilities	13,142	9,685
Total liabilities	1,819,127	1,562,043
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; no issued and outstanding shares at December 31, 2014 and December 31, 2013	—	—
Common stock, no par value. Authorized 20,000,000 shares; issued and outstanding 13,503,458 and 13,280,653 shares at December 31, 2014 and December 31, 2013, respectively	164,023	163,237
Treasury stock	(19,115)	(19,115)
Additional paid-in-capital	29,631	25,974
Accumulated income	58,553	36,680
Accumulated other comprehensive income:
Unrealized gain on securities, available-for-sale, net of tax of $1,405 and $102 at December 31, 2014 and December 31, 2013, respectively	1,935	140
Total shareholders' equity	235,027	206,916
Total liabilities and shareholders' equity	$ 2,054,154	$ 1,768,959

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
	For the Three Months Ended
	December 31, 2014	September 30, 2014	June 30, 2014	March 31, 2014	December 31, 2013
Unaudited historical quarterly operations data:
Interest income	$ 21,821	$ 20,462	$ 19,294	$ 18,750	$ 18,513
Interest expense	2,438	2,426	2,229	2,247	2,112
Interest income before provision for credit losses	19,383	18,036	17,065	16,503	16,401
Provision for credit losses	500	500	1,100	1,250	1,800
Noninterest income	751	928	914	1,028	214
Noninterest expense	8,121	7,836	6,623	7,832	5,224
Income tax expense	4,645	4,266	4,047	3,296	3,723
Net income	6,868	6,362	6,209	5,153	5,868
Earnings per share
Basic	$ 0.51	$ 0.47	$ 0.46	$ 0.39	$ 0.45
Diluted	$ 0.50	$ 0.46	$ 0.45	$ 0.38	$ 0.43
Ratios for the period:
Return on average assets	1.37%	1.29%	1.39%	1.17%	1.33%
Return on beginning equity	11.92%	11.34%	11.61%	10.10%	11.62%
Net interest margin (Fully-taxable equivalent)	3.98%	3.78%	3.93%	3.87%	3.85%
Noninterest expense to average assets	1.62%	1.59%	1.48%	1.78%	1.18%
Efficiency ratio	40.33%	41.32%	36.84%	44.68%	31.44%
Net charge-offs (recoveries) to average loans (annualized)	0.05%	-1.16%	0.87%	0.29%	0.20%
Ratios as of period end:
Tier 1 leverage capital ratio	11.73%	11.62%	12.31%	11.97%	11.80%
Tier 1 risk-based capital ratio	12.72%	12.75%	13.16%	13.65%	13.78%
Total risk-based capital ratio	13.97%	14.00%	14.28%	14.90%	15.03%
Allowances for credit losses to loans and leases at end of period **	1.43%	1.49%	1.24%	1.44%	1.47%
Allowance for credit losses to non-performing loans and leases	268.19%	210.40%	97.68%	171.94%	138.80%
Average balances:
Total loans and leases*	$ 1,555,868	$ 1,464,336	$ 1,378,444	$ 1,351,555	$ 1,283,583
Earning assets	$ 1,943,034	$ 1,908,411	$ 1,752,032	$ 1,739,768	$ 1,695,758
Total assets	$ 1,990,417	$ 1,952,270	$ 1,792,317	$ 1,783,384	$ 1,749,140
Total deposits	$ 1,707,908	$ 1,684,628	$ 1,543,739	$ 1,540,369	$ 1,512,318
* Loans held for sale are included
** Loans held for sale are excluded

PREFERRED BANK
Selected Consolidated Financial Information
(in thousands, except for ratios)
	For the Year Ended
	December 31, 2014	December 31, 2013
	(unaudited)	(audited)
Interest income	$ 80,327	$ 69,726
Interest expense	9,340	7,729
Interest income before provision for credit losses	70,987	61,997
Provision for credit losses	3,350	3,250
Noninterest income	3,621	2,003
Noninterest expense	30,411	28,885
Income tax expense	16,255	12,666
Net income	24,592	19,199
Earnings per share
Basic	$ 1.83	$ 1.45
Diluted	$ 1.78	$ 1.42
Ratios for the period:
Return on average assets	1.31%	1.18%
Return on beginning equity	11.88%	10.22%
Net interest margin (Fully-taxable equivalent)	3.89%	3.93%
Noninterest expense to average assets	1.62%	1.79%
Efficiency ratio	40.76%	45.72%
Net charge-offs (recoveries) to average loans	-0.01%	0.36%
Average balances:
Total loans and leases*	$ 1,438,122	$ 1,217,383
Earning assets	$ 1,836,375	$ 1,578,570
Total assets	$ 1,880,019	$ 1,633,710
Total deposits	$ 1,620,709	$ 1,414,420
* Loans held for sale are included

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
	As of
	December 31, 2014	September 30, 2014	June 30, 2014	March 31, 2014	December 31, 2013
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents	240,194	248,232	232,585	214,430	$ 246,615
Securities held-to-maturity, at amortized cost	7,815	8,188	8,709	--	--
Securities available-for-sale, at fair value	150,539	164,247	176,579	169,845	142,670
Loans and Leases:
Real estate - Single and multi-family residential	$ 283,958	$ 229,353	$ 208,080	$ 220,193	$ 228,490
Real estate - Land for housing	12,132	12,156	13,536	13,574	13,611
Real estate - Land for income properties	1,489	1,507	1,529	1,539	1,550
Real estate - Commercial	653,380	678,778	700,023	653,146	627,888
Real estate - For sale housing construction	48,892	44,614	36,069	29,303	24,680
Real estate - Other construction	77,593	80,411	63,708	52,014	48,605
Commercial and industrial	495,827	443,966	374,128	353,017	338,681
Trade finance and other	30,878	33,967	40,756	47,402	39,926
Gross loans	1,604,149	1,524,752	1,437,829	1,370,188	1,323,431
Allowance for loan and lease losses	(22,974)	(22,662)	(17,897)	(19,777)	(19,494)
Net deferred loan fees	(2,100)	(2,368)	(2,159)	(2,014)	(2,562)
Loans excluding loans held for sale	1,579,075	1,499,722	1,417,773	1,348,397	1,301,375
Loans held for sale	--	--	5,632	5,977	6,207
Total loans, net	$ 1,579,075	$ 1,499,722	$ 1,423,405	$ 1,354,374	$ 1,307,582
Other real estate owned	$ 8,811	$ --	$ 2,755	$ 8,902	$ 5,602
Investment in affordable housing	17,999	18,460	8,706	8,964	6,411
Federal Home Loan Bank stock	6,155	6,155	6,155	5,296	5,296
Other assets	43,566	51,146	45,124	43,327	54,783
Total assets	$ 2,054,154	$ 1,996,150	$ 1,904,018	$ 1,805,138	$ 1,768,959
Liabilities:
Deposits:
Demand	$ 443,385	$ 403,881	$ 388,497	$ 327,036	$ 338,530
Interest-bearing demand	525,781	554,769	489,313	477,965	469,976
Savings	22,211	22,552	24,712	23,824	22,984
Time certificates of $250,000 or more	276,197	250,087	250,276	261,984	213,362
Other time certificates	508,685	489,765	497,021	471,250	484,462
Total deposits	$ 1,776,259	$ 1,721,054	$ 1,649,819	$ 1,562,059	$ 1,529,314
Advances from Federal Home Loan Bank	$ 20,000	$ 20,000	$ 20,000	$ 20,000	$ 20,000
Commitments to fund investment in affordable housing partnership	8,151	9,481	--	--	--
Other liabilities	14,717	16,963	11,542	8,535	12,729
Total liabilities	$ 1,819,127	$ 1,767,498	$ 1,681,361	$ 1,590,594	$ 1,562,043
Equity:
Net common stock, no par value	$ 174,539	$ 173,581	$ 172,642	$ 171,722	$ 170,096
Retained earnings	58,553	53,015	48,042	41,833	36,680
Accumulated other comprehensive income	1,935	2,056	1,973	989	140
Total shareholders' equity	$ 235,027	$ 228,652	$ 222,657	$ 214,544	$ 206,916
Total liabilities and shareholders' equity	$ 2,054,154	$ 1,996,150	$ 1,904,018	$ 1,805,138	$ 1,768,959

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
	Year Ended December 31, 2014	Year Ended December 31, 2013
	(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period	$ 19,494	$ 20,607
Charge-Offs
Commercial & Industrial	436	4,158
Mini-perm Real Estate	4,243	1,668
Construction - Residential	--	2,438
Construction - Commercial	--	--
Land - Residential	--	--
Land - Commercial	--	--
Others	--	--
Total Charge-Offs	4,679	8,264
Recoveries
Commercial & Industrial	3	366
Mini-perm Real Estate	--	1,379
Construction - Residential	--	1,951
Construction - Commercial	134	163
Land - Residential	--	38
Land - Commercial	4,672	4
Total Recoveries	4,809	3,901
Net Loan Charge-Offs	(130)	4,363
Provision for Credit Losses	3,350	3,250
Balance at End of Period	$ 22,974	$ 19,494
Average Loans and Leases*	$ 1,438,122	$ 1,217,383
Loans and Leases at end of Period*	$ 1,604,149	$ 1,329,638
Net Charge-Offs to Average Loans and Leases	-0.01%	0.36%
Allowances for credit losses to loans and leases at end of period **	1.43%	1.47%
* Loans held for sale are included
** Loans held for sale are excluded

CONTACT: AT THE COMPANY:
         Edward J. Czajka
         Executive Vice President
         Chief Financial Officer
         (213) 891-1188

         AT FINANCIAL PROFILES:
         Kristen Papke
         General Information
         (310) 663-8007
         [email protected]

Source: Preferred Bank

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