Preferred Bank Reports Quarterly Earnings

April 20, 2021 4:30 PM EDT

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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 
    InterestAverage  InterestAverage  InterestAverage 
   AverageIncome orYield/ AverageIncome orYield/ AverageIncome orYield/ 
   BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate 
               
ASSETS(Dollars in thousands) 
Interest-earning assets:            
 Loans (1,2)$4,044,823  49,8595.00% $3,974,599 $51,2995.13% $3,717,212 $51,5645.58% 
 Investment securities (3) 242,200  1,8843.16%  251,284  1,9363.07%  247,689  2,1273.45% 
 Federal funds sold 21,474  240.45%  22,939  300.51%  30,153  1241.66% 
 Other earning assets 793,794  4930.25%  769,209  4870.25%  553,458  1,9461.41% 
  Total interest-earning assets 5,102,291  52,2604.15%  5,018,031  53,7524.26%  4,548,512  55,7614.93% 
 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 $1,4560.35%  1,743,748 $1,5200.35% $1,478,895 $3,3820.92% 
  TCD $250K or more 919,155  1,9180.85%  923,079  2,2980.99%  969,343  4,8522.01% 
  Other time certificates 901,306  1,9090.86%  841,449  2,2361.06%  796,473  4,1112.08% 
  Total interest-bearing deposits 3,531,358  5,2830.61%  3,508,276  6,0540.69%  3,244,711  12,3451.53% 
Short-term borrowings -  -0.00%  3  00.20%  -  -0.00% 
Subordinated debt, net 99,347  1,5316.25%  99,316  1,5326.14%  99,222  1,5316.21% 
  Total interest-bearing liabilities 3,630,705  6,8140.76%  3,607,595  7,5860.84%  3,343,933  13,8761.67% 
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  5,2830.61%  3,508,276  6,0540.69%  3,244,711  12,3451.53% 
  Total Deposits$4,486,399 $5,2830.48% $4,426,326 $6,0540.54% $4,010,629 $12,3451.24% 
               
(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 EndedYear 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. CzajkaJeffrey Haas
Executive Vice PresidentGeneral Information
Chief Financial Officer(310) 622-8240
(213) 891-1188PFBC@finprofiles.com

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Source: Preferred Bank


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