LOS ANGELES, Oct. 24, 2017 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended September 30, 2017. Preferred Bank (“the Bank”) reported net income of $13.7 million or $0.94 per diluted share for the third quarter of 2017. This compares to net income of $9.9 million or $0.69 per diluted share for the third quarter of 2016 and compares to net income of $11.7 million or $0.80 per diluted share for the second quarter of 2017. The increase over the same period last year was primarily due to an increase in net interest income of $8.9 million and the increase over the prior quarter was due to an increase in net interest income as well as a decrease in noninterest expense. Interest income this quarter was aided by net interest recoveries of $1.4 million primarily from a recession-era loan charge-off. On a pre-tax basis, operating income rose by 22.4% over the prior quarter and rose by 45.3% over the same quarter last year.
Highlights from the third quarter of 2017:
| 1.48 | % | |
| 17.77 | % | |
| 33.2 | % | |
| 3.95 | % | |
| $73.2 million or 2.3% | ||
| $88.6 million or 3.2% | ||
Li Yu, Chairman and CEO commented, “We achieved another record high for quarterly earnings for the third quarter of 2017. Net income was $13.7 million or $0.94 per diluted share compared to $9.9 million or $0.69 per diluted share for the same quarter last year. This represents an increase of $3.8 million or 38.4%.
“During the third quarter we had a recoveries of interest income of $1.4 million as we collected in full on a loan written off several years ago. Without this recovery diluted EPS would have been approximately $.058 lower, the net interest margin would have been approximately 16 basis points lower and the efficiency ratio would have been approximately 1.6 percentage points higher than what was reported.
“Our growth rate has moderated this quarter. Loans increased $89 million or 3.2% on a linked quarter basis as we have seen a higher level of pay-offs. Deposits increased $73 million or 2.3% on a linked quarter basis which is slightly below our more recent growth rate and this is partially because we chose not to renew some brokered deposits which matured during the quarter. The Bank’s loan pipeline, however, remains consistent with prior quarters.
“On October 4, we began the process of issuing common stock through an “At the Market” issuance mechanism. As of October 20, a total of 168,686 shares had been issued. We expect our goal of $50 million in new capital will be completed either in the fourth quarter of 2017 or the first quarter of 2018.”
Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $35.4 million for the third quarter of 2017. This compares favorably to the $26.5 million recorded in the third quarter of 2016 and to the $31.3 million recorded in the second quarter of 2017. The increase over both comparable periods is due to loan growth, increases in both the fed funds and Prime interest rates as well as an interest recovery of $1.4 million recorded this quarter related to a recession-era charge-off. The Bank’s taxable equivalent net interest margin was 3.95% for the third quarter of 2017, a 20 basis point increase over the 3.75% achieved in the second quarter of 2017 and a 36 basis point increase from the 3.59% achieved in the third quarter of 2016. The increase in the net interest margin was impacted by the $1.4 million interest recovery, and the margin for the quarter, excluding this item, would have been 16 basis points less.
Noninterest Income. For the third quarter of 2017, noninterest income was $1,243,000 compared with $1,350,000 for the same quarter last year and compared to $1,275,000 for the second quarter of 2017. Service charges on deposits were $299,000, basically flat compared to the $304,000 recorded in the second quarter of 2017 and down slightly from the $322,000 posted in the third quarter of 2016. Letter of Credit fee income was $632,000 for the third quarter of 2017, a decrease of $54,000 compared to the same period last year and an increase of $51,000 compared to the second quarter of 2017 as Letters of Credit activity stabilized. Other income was $224,000, a decrease from the $257,000 recorded in the same period last year and from the $303,000 recorded in the second quarter of 2017.
Noninterest Expense. Total noninterest expense was $12.2 million for the third quarter of 2017, an increase of $1.7 million over the same period last year and a decrease of $234,000 from the second quarter of 2017. Salaries and benefits expense totaled $7.9 million for the third quarter of 2017 compared to $6.1 million recorded for the same period last year and compared to the $7.7 million recorded in the second quarter of 2017. The increase over the same period last year was due primarily to staffing/merit increases, a larger bonus accrual and a reduction in capitalized loan origination costs while the increase over the prior quarter was due mainly to an increase in the bonus accrual. Occupancy expense totaled $1.3 million for the third quarter of 2017 and was up slightly over the $1.2 million recorded in both the same period last year and the second quarter of 2017. Professional services expense was $963,000 for the third quarter of 2017 compared to $1.4 million in the third quarter of 2016 and also down from the $1.0 million recorded in the second quarter of 2017. The decrease compared to the same period last year was due to a reduction in legal expenses. The Bank incurred $168,000 in costs related to its one OREO property and this compares to OREO expense of $196,000 in the third quarter of 2016 and $118,000 in the second quarter of 2017. Other expenses were $1.3 million for the third quarter of 2017, up from the $1.1 million posted in the third quarter of 2016 but a decrease of $544,000 from the $1.9 million recorded in the second quarter of 2017. The Bank’s efficiency ratio came in at 33.2% for the quarter.
Income Taxes
The Bank recorded a provision for income taxes of $9.5 million for the third quarter of 2017. This represents an effective tax rate (“ETR”) of 41.04% for the quarter. This is up from the ETR of 38.1% recorded for both the third quarter of 2016 and the second quarter of 2017. The relatively low ETR in the first quarter of 2017 was due the adoption of Accounting Standards Update (ASU) 2016-09 which resulted in an excess tax benefit from share-based compensation and a $768,000 net tax benefit on the income statement. The ETR increased this quarter due mainly to last quarter’s $154,000 reversal of ASC 740-10 expense recognized in earlier years for tax positions related to its California Net Interest deduction for Lenders as well as an excess tax benefit recognized from share based compensation of $398,000.
Balance Sheet Summary
Total gross loans and leases at September 30, 2017 were $2.88 billion, an increase of $335.1 million or 13.2% over the total of $2.54 billion as of December 31, 2016. Total deposits as of September 30, 2017 were $3.19 billion, an increase of $430.8 million or 15.6% over the $2.76 billion at December 31, 2016. Total assets as of September 30, 2017 were $3.67 billion, an increase of $443.9 million or 13.8% over the $3.22 billion as of December 31, 2016.
Asset Quality
Loans
As of September 30, 2017 nonaccrual loans totaled $6.9 million, up slightly from the $6.5 million reported as of June 30, 2017 but down from the $7.6 million total as of December 31, 2016. Total net charge-offs for the third quarter of 2017 were $408,000 as compared to $1.2 million in the second quarter of 2017 and compared to $827,000 in the third quarter of 2016. The Bank recorded a provision for loan losses of $1.3 million for the third quarter of 2017, down slightly from the $1.4 million provision recorded in the same quarter last year but up from the $1.2 million provision recorded in the second quarter of 2017. The allowance for loan loss at September 30, 2017 was $28.8 million or 1.00% of total loans compared to $26.5 million or 1.04% of total loans at December 31, 2016.
OREO
As of September 30, 2017 and December 31, 2016, the Bank held one OREO property, a $4.1 million multi-family property located outside of California.
Capitalization
As of September 30, 2017, the Bank’s leverage ratio was 8.54%, the common equity tier 1 capital ratio was 9.24% and the total capital ratio was 13.08%. As of December 31, 2016, the Bank’s leverage ratio was 9.43%, the common equity tier 1 ratio was 9.83% and the total risk based capital ratio was 14.09%.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s third quarter 2017 financial results will be held tomorrow, October 25th 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 CEO Li Yu, President and COO Wellington Chen, Chief Financial Officer Edward J. Czajka, and Chief Credit Officer Nick Pi 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 November 8, 2017; the passcode is 10113085.
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 the California cities of Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera, Tarzana and San Francisco, and one office 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 2016 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:
Edward J. Czajka
Executive Vice President
Chief Financial Officer
(213) 891-1188
AT FINANCIAL PROFILES:
Kristen Papke
General Information
(310) 663-8007
kpapke@finprofiles.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 Quarter Ended | |||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||
| 2017 | 2017 | 2016 | |||||||||||||
| Interest income: | |||||||||||||||
| Loans, including fees | $ | 39,362 | $ | 34,941 | $ | 29,548 | |||||||||
| Investment securities | 3,172 | 2,940 | 2,216 | ||||||||||||
| Fed funds sold | 320 | 232 | 125 | ||||||||||||
| Total interest income | 42,854 | 38,113 | 31,889 | ||||||||||||
| Interest expense: | |||||||||||||||
| Interest-bearing demand | 2,263 | 1,944 | 1,309 | ||||||||||||
| Savings | 17 | 17 | 19 | ||||||||||||
| Time certificates | 3,601 | 3,283 | 2,898 | ||||||||||||
| FHLB borrowings | 21 | 60 | 66 | ||||||||||||
| Subordinated debit | 1,530 | 1,531 | 1,102 | ||||||||||||
| Total interest expense | 7,432 | 6,835 | 5,394 | ||||||||||||
| Net interest income | 35,422 | 31,278 | 26,495 | ||||||||||||
| Provision for loan losses | 1,300 | 1,200 | 1,400 | ||||||||||||
| Net interest income after provision for | |||||||||||||||
| loan losses | 34,122 | 30,078 | 25,095 | ||||||||||||
| Noninterest income: | |||||||||||||||
| Fees & service charges on deposit accounts | 299 | 304 | 322 | ||||||||||||
| Letters of credit fee income | 632 | 581 | 686 | ||||||||||||
| BOLI income | 88 | 87 | 85 | ||||||||||||
| Net gain on sale of investment securities | - | 0 | - | ||||||||||||
| Other income | 224 | 303 | 257 | ||||||||||||
| Total noninterest income | 1,243 | 1,275 | 1,350 | ||||||||||||
| Noninterest expense: | |||||||||||||||
| Salary and employee benefits | 7,878 | 7,673 | 6,067 | ||||||||||||
| Net occupancy expense | 1,257 | 1,214 | 1,161 | ||||||||||||
| Business development and promotion expense | 251 | 188 | 230 | ||||||||||||
| Professional services | 963 | 1,038 | 1,434 | ||||||||||||
| Office supplies and equipment expense | 334 | 310 | 345 | ||||||||||||
| Other real estate owned related expense | 168 | 118 | 196 | ||||||||||||
| Other | 1,328 | 1,873 | 1,053 | ||||||||||||
| Total noninterest expense | 12,179 | 12,414 | 10,486 | ||||||||||||
| Income before provision for income taxes | 23,186 | 18,939 | 15,959 | ||||||||||||
| Income tax expense | 9,516 | 7,222 | 6,080 | ||||||||||||
| Net income | $ | 13,670 | $ | 11,717 | $ | 9,879 | |||||||||
| Dividend and earnings allocated to participating securities | (161 | ) | (135 | ) | (157 | ) | |||||||||
| Net income available to common shareholders | $ | 13,509 | $ | 11,582 | $ | 9,722 | |||||||||
| Income per share available to common shareholders | |||||||||||||||
| Basic | $ | 0.94 | $ | 0.81 | $ | 0.70 | |||||||||
| Diluted | $ | 0.94 | $ | 0.80 | $ | 0.69 | |||||||||
| Weighted-average common shares outstanding | |||||||||||||||
| Basic | 14,378,552 | 14,348,310 | 13,899,966 | ||||||||||||
| Diluted | 14,426,522 | 14,407,317 | 13,997,343 | ||||||||||||
| Dividends per share | $ | 0.20 | $ | 0.20 | $ | 0.15 | |||||||||
| PREFERRED BANK | ||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||
| (unaudited) | ||||||||||||||
| (in thousands, except for net income per share and shares) | ||||||||||||||
| For the Nine Months Ended | ||||||||||||||
| September 30, | September 30, | Change | ||||||||||||
| 2017 | 2016 | % | ||||||||||||
| Interest income: | ||||||||||||||
| Loans, including fees | $ | 106,222 | $ | 82,900 | 28.1 | % | ||||||||
| Investment securities | 8,594 | 5,722 | 50.2 | % | ||||||||||
| Fed funds sold | 783 | 311 | 151.6 | % | ||||||||||
| Total interest income | 115,599 | 88,933 | 30.0 | % | ||||||||||
| Interest expense: | ||||||||||||||
| Interest-bearing demand | 5,672 | 3,410 | 66.3 | % | ||||||||||
| Savings | 55 | 55 | -0.2 | % | ||||||||||
| Time certificates | 9,992 | 7,873 | 26.9 | % | ||||||||||
| FHLB borrowings | 146 | 192 | -23.9 | % | ||||||||||
| Subordinated debit issuance | 4,592 | 1,288 | 100.0 | % | ||||||||||
| Total interest expense | 20,457 | 12,818 | 59.6 | % | ||||||||||
| Net interest income | 95,142 | 76,115 | 25.0 | % | ||||||||||
| Provision for credit losses | 4,000 | 4,500 | -11.1 | % | ||||||||||
| Net interest income after provision for | ||||||||||||||
| loan losses | 91,142 | 71,615 | 27.3 | % | ||||||||||
| Noninterest income: | ||||||||||||||
| Fees & service charges on deposit accounts | 956 | 954 | 0.2 | % | ||||||||||
| Letters of credit fee income | 2,008 | 1,771 | 13.4 | % | ||||||||||
| BOLI income | 262 | 259 | 1.2 | % | ||||||||||
| Net gain on sale of investment securities | 0 | 36 | 100.0 | % | ||||||||||
| Other income | 1,382 | 1,153 | 19.9 | % | ||||||||||
| Total noninterest income | 4,608 | 4,173 | 10.4 | % | ||||||||||
| Noninterest expense: | ||||||||||||||
| Salary and employee benefits | 23,060 | 19,153 | 20.4 | % | ||||||||||
| Net occupancy expense | 3,653 | 3,631 | 0.6 | % | ||||||||||
| Business development and promotion expense | 679 | 604 | 12.4 | % | ||||||||||
| Professional services | 3,163 | 3,805 | -16.9 | % | ||||||||||
| Office supplies and equipment expense | 997 | 1,072 | -7.0 | % | ||||||||||
| Other real estate owned related expense | 394 | 638 | -38.3 | % | ||||||||||
| Other | 5,825 | 3,412 | 70.7 | % | ||||||||||
| Total noninterest expense | 37,771 | 32,315 | 16.9 | % | ||||||||||
| Income before provision for income taxes | 57,979 | 43,473 | 33.4 | % | ||||||||||
| Income tax expense | 22,311 | 17,165 | 30.0 | % | ||||||||||
| Net income | $ | 35,668 | $ | 26,308 | 35.6 | % | ||||||||
| Dividend and earnings allocated to participating securities | (409 | ) | (415 | ) | -1.4 | % | ||||||||
| Net income available to common shareholders | $ | 35,259 | $ | 25,893 | 36.2 | % | ||||||||
| Income per share available to common shareholders | ||||||||||||||
| Basic | $ | 2.46 | $ | 1.87 | 31.5 | % | ||||||||
| Diluted | $ | 2.45 | $ | 1.86 | 31.9 | % | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||
| Basic | 14,347,396 | 13,849,504 | 3.6 | % | ||||||||||
| Diluted | 14,405,770 | 13,956,298 | 3.2 | % | ||||||||||
| Dividends per share | $ | 0.58 | $ | 0.45 | 28.9 | % | ||||||||
| PREFERRED BANK | |||||||||||
| Condensed Consolidated Statements of Financial Condition | |||||||||||
| (unaudited) | |||||||||||
| (in thousands) | |||||||||||
| September 30, | December 31, | ||||||||||
| 2017 | 2016 | ||||||||||
| (Unaudited) | (Audited) | ||||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | 413,040 | $ | 306,330 | |||||||
| Fed funds sold | 90,200 | 97,500 | |||||||||
| Cash and cash equivalents | 503,240 | 403,830 | |||||||||
| Securities held to maturity, at amortized cost | 9,076 | 10,337 | |||||||||
| Securities available-for-sale, at fair value | 193,890 | 199,833 | |||||||||
| Loans and leases | 2,878,599 | 2,543,549 | |||||||||
| Less allowance for loan and lease losses | (28,756 | ) | (26,478 | ) | |||||||
| Less net deferred loan fees | (3,376 | ) | (1,682 | ) | |||||||
| Net loans and leases | 2,846,467 | 2,515,389 | |||||||||
| Other real estate owned | 4,112 | 4,112 | |||||||||
| Customers' liability on acceptances | 5,394 | 772 | |||||||||
| Bank furniture and fixtures, net | 5,574 | 5,313 | |||||||||
| Bank-owned life insurance | 9,004 | 8,825 | |||||||||
| Accrued interest receivable | 10,477 | 9,550 | |||||||||
| Investment in affordable housing | 35,939 | 23,670 | |||||||||
| Federal Home Loan Bank stock | 11,077 | 9,331 | |||||||||
| Deferred tax assets | 25,372 | 26,605 | |||||||||
| Other asset | 5,850 | 4,031 | |||||||||
| Total assets | $ | 3,665,472 | $ | 3,221,598 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Liabilities: | |||||||||||
| Deposits: | |||||||||||
| Demand | $ | 599,722 | $ | 586,272 | |||||||
| Interest-bearing demand | 1,298,895 | 1,019,058 | |||||||||
| Savings | 27,132 | 34,067 | |||||||||
| Time certificates of $250,000 or more | 617,231 | 427,172 | |||||||||
| Other time certificates | 651,502 | 697,155 | |||||||||
| Total deposits | $ | 3,194,482 | $ | 2,763,724 | |||||||
| Acceptances outstanding | 5,394 | 772 | |||||||||
| Advances from Federal Home Loan Bank | 6,431 | 26,516 | |||||||||
| Subordinated debt issuance | 98,932 | 98,839 | |||||||||
| Commitments to fund investment in affordable housing partnership | 20,684 | 10,632 | |||||||||
| Accrued interest payable | 4,542 | 3,199 | |||||||||
| Other liabilities | 17,982 | 19,851 | |||||||||
| Total liabilities | 3,348,447 | 2,923,533 | |||||||||
| Commitments and contingencies | |||||||||||
| Shareholders' equity: | |||||||||||
| Preferred stock. Authorized 25,000,000 shares; issued and no outstanding shares at September 30, 2017 and December 31, 2016 | — | — | |||||||||
| Common stock, no par value. Authorized 100,000,000 shares; issued and outstanding 14,561,088 at September 30, 2017 and 14,232,907 at December 31, 2016, respectively. | 174,171 | 169,861 | |||||||||
| Treasury stock | (33,233 | ) | (19,115 | ) | |||||||
| Additional paid-in-capital | 39,762 | 39,929 | |||||||||
| Accumulated income | 135,497 | 108,261 | |||||||||
| Accumulated other comprehensive income (loss): | |||||||||||
| Unrealized gain (loss) on securities, available-for-sale, net of tax of $601 and $(632) at September 30, 2017 and December 31, 2016, respectively | 828 | (871 | ) | ||||||||
| Total shareholders' equity | 317,025 | 298,065 | |||||||||
| Total liabilities and shareholders' equity | $ | 3,665,472 | $ | 3,221,598 | |||||||
| PREFERRED BANK | |||||||||||||||||||
| Selected Consolidated Financial Information | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| (in thousands, except for ratios) | |||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Unaudited historical quarterly operations data: | |||||||||||||||||||
| Interest income | $ | 42,854 | $ | 38,113 | $ | 34,632 | $ | 33,980 | $ | 31,889 | |||||||||
| Interest expense | 7,432 | 6,835 | 6,190 | 5,916 | 5,394 | ||||||||||||||
| Interest income before provision for credit losses | 35,422 | 31,278 | 28,442 | 28,064 | 26,495 | ||||||||||||||
| Provision for credit losses | 1,300 | 1,200 | 1,500 | 1,900 | 1,400 | ||||||||||||||
| Noninterest income | 1,243 | 1,275 | 2,090 | 1,286 | 1,350 | ||||||||||||||
| Noninterest expense | 12,179 | 12,414 | 13,178 | 11,223 | 10,486 | ||||||||||||||
| Income tax expense | 9,516 | 7,222 | 5,573 | 6,166 | 6,080 | ||||||||||||||
| Net income | 13,670 | 11,717 | 10,281 | 10,061 | 9,879 | ||||||||||||||
| Earnings per share | |||||||||||||||||||
| Basic | $ | 0.94 | $ | 0.81 | $ | 0.71 | $ | 0.71 | $ | 0.70 | |||||||||
| Diluted | $ | 0.94 | $ | 0.80 | $ | 0.71 | $ | 0.71 | $ | 0.69 | |||||||||
| Ratios for the period: | |||||||||||||||||||
| Return on average assets | 1.48 | % | 1.36 | % | 1.29 | % | 1.28 | % | 1.31 | % | |||||||||
| Return on beginning equity | 17.77 | % | 15.96 | % | 13.99 | % | 13.74 | % | 13.92 | % | |||||||||
| Net interest margin (Fully-taxable equivalent) | 3.95 | % | 3.75 | % | 3.67 | % | 3.67 | % | 3.59 | % | |||||||||
| Noninterest expense to average assets | 1.32 | % | 1.44 | % | 1.66 | % | 1.43 | % | 1.39 | % | |||||||||
| Efficiency ratio | 33.22 | % | 38.13 | % | 43.16 | % | 38.24 | % | 37.66 | % | |||||||||
| Net charge-offs (recoveries) to average loans (annualized) | 0.06 | % | 0.18 | % | 0.02 | % | 0.00 | % | 0.14 | % | |||||||||
| Ratios as of period end: | |||||||||||||||||||
| Tier 1 leverage capital ratio | 8.54 | % | 8.69 | % | 9.01 | % | 9.43 | % | 9.47 | % | |||||||||
| Common equity tier 1 risk-based capital ratio | 9.24 | % | 9.13 | % | 9.15 | % | 9.83 | % | 9.96 | % | |||||||||
| Tier 1 risk-based capital ratio | 9.24 | % | 9.13 | % | 9.15 | % | 9.83 | % | 9.96 | % | |||||||||
| Total risk-based capital ratio | 13.08 | % | 13.04 | % | 13.21 | % | 14.09 | % | 14.36 | % | |||||||||
| Allowances for credit losses to loans and leases at end of period | 1.00 | % | 1.00 | % | 1.04 | % | 1.04 | % | 1.01 | % | |||||||||
| Allowance for credit losses to non-performing | |||||||||||||||||||
| loans and leases | 415.32 | % | 426.43 | % | 357.09 | % | 346.22 | % | 1460.49 | % | |||||||||
| Average balances: | |||||||||||||||||||
| Total loans and leases | $ | 2,817,271 | $ | 2,695,208 | $ | 2,563,473 | $ | 2,465,492 | $ | 2,344,102 | |||||||||
| Earning assets | $ | 3,579,578 | $ | 3,401,193 | $ | 3,167,031 | $ | 3,066,189 | $ | 2,953,325 | |||||||||
| Total assets | $ | 3,658,835 | $ | 3,466,094 | $ | 3,228,142 | $ | 3,124,984 | $ | 3,009,457 | |||||||||
| Total deposits | $ | 3,190,344 | $ | 3,002,583 | $ | 2,775,830 | $ | 2,666,878 | $ | 2,590,702 | |||||||||
| PREFERRED BANK | |||||||||||
| Selected Consolidated Financial Information | |||||||||||
| (in thousands, except for ratios) | |||||||||||
| For the Nine Months Ended | |||||||||||
| September 30, | September 30, | ||||||||||
| 2017 | 2016 | ||||||||||
| Interest income | $ | 115,599 | $ | 88,933 | |||||||
| Interest expense | 20,457 | 12,818 | |||||||||
| Interest income before provision for credit losses | 95,142 | 76,115 | |||||||||
| Provision for credit losses | 4,000 | 4,500 | |||||||||
| Noninterest income | 4,608 | 4,173 | |||||||||
| Noninterest expense | 37,771 | 32,315 | |||||||||
| Income tax expense | 22,311 | 17,165 | |||||||||
| Net income | 35,668 | 26,308 | |||||||||
| Earnings per share | |||||||||||
| Basic | $ | 2.46 | $ | 1.87 | |||||||
| Diluted | $ | 2.45 | $ | 1.86 | |||||||
| Ratios for the period: | |||||||||||
| Return on average assets | 1.38 | % | 1.26 | % | |||||||
| Return on beginning equity | 16.00 | % | 13.30 | % | |||||||
| Net interest margin (Fully-taxable equivalent) | 3.78 | % | 3.74 | % | |||||||
| Noninterest expense to average assets | 1.46 | % | 1.55 | % | |||||||
| Efficiency ratio | 37.87 | % | 40.25 | % | |||||||
| Net charge-offs (recoveries) to average loans | 0.09 | % | 0.16 | % | |||||||
| Average balances: | |||||||||||
| Total loans and leases | $ | 2,692,928 | $ | 2,220,438 | |||||||
| Earning assets | $ | 3,384,472 | $ | 2,731,363 | |||||||
| Total assets | $ | 3,452,952 | $ | 2,787,977 | |||||||
| Total deposits | $ | 2,991,411 | $ | 2,428,402 | |||||||
| PREFERRED BANK | |||||||||||||||||||||||
| Selected Consolidated Financial Information | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| (in thousands, except for ratios) | |||||||||||||||||||||||
| As of | |||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||||
| Unaudited quarterly statement of financial position data: | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 503,240 | $ | 502,534 | $ | 450,355 | $ | 403,830 | $ | 405,522 | |||||||||||||
| Securities held-to-maturity, at amortized cost | 9,076 | 9,611 | 9,912 | 10,337 | 4,812 | ||||||||||||||||||
| Securities available-for-sale, at fair value | 193,890 | 192,474 | 197,455 | 199,833 | 203,272 | ||||||||||||||||||
| Loans and Leases: | |||||||||||||||||||||||
| Real estate - Single and multi-family residential | 507,738 | $ | 494,725 | $ | 479,279 | $ | 490,683 | $ | 493,489 | ||||||||||||||
| Real estate - Land | 15,723 | 16,512 | 16,546 | 16,575 | 16,605 | ||||||||||||||||||
| Real estate - Commercial | 1,279,981 | 1,217,254 | 1,160,077 | 1,047,321 | 1,037,687 | ||||||||||||||||||
| Real estate - For sale housing construction | 94,033 | 95,462 | 109,703 | 104,960 | 104,973 | ||||||||||||||||||
| Real estate - Other construction | 165,244 | 148,580 | 150,322 | 128,434 | 96,147 | ||||||||||||||||||
| Commercial and industrial, trade finance and other | 815,880 | 817,481 | 771,676 | 755,576 | 683,766 | ||||||||||||||||||
| Gross loans | 2,878,599 | 2,790,014 | 2,687,603 | 2,543,549 | 2,432,667 | ||||||||||||||||||
| Allowance for loan and lease losses | (28,756 | ) | (27,863 | ) | (27,857 | ) | (26,478 | ) | (24,556 | ) | |||||||||||||
| Net deferred loan fees | (3,376 | ) | (3,245 | ) | (2,572 | ) | (1,682 | ) | (1,913 | ) | |||||||||||||
| Total loans, net | $ | 2,846,467 | $ | 2,758,906 | $ | 2,657,174 | $ | 2,515,389 | $ | 2,406,198 | |||||||||||||
| Other real estate owned | $ | 4,112 | $ | 4,112 | $ | 4,112 | $ | 4,112 | $ | 4,112 | |||||||||||||
| Investment in affordable housing | 35,939 | 37,029 | 22,904 | 23,670 | 24,278 | ||||||||||||||||||
| Federal Home Loan Bank stock | 11,077 | 11,078 | 9,330 | 9,331 | 9,331 | ||||||||||||||||||
| Other assets | 61,671 | 63,651 | 61,687 | 55,096 | 52,899 | ||||||||||||||||||
| Total assets | $ | 3,665,472 | $ | 3,579,395 | $ | 3,412,929 | $ | 3,221,598 | $ | 3,110,424 | |||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||
| Demand | $ | 599,722 | $ | 641,153 | $ | 576,060 | $ | 586,272 | $ | 575,388 | |||||||||||||
| Interest-bearing demand | 1,298,895 | 1,231,595 | 1,137,145 | 1,019,058 | 945,358 | ||||||||||||||||||
| Savings | 27,132 | 27,870 | 34,434 | 34,067 | 31,344 | ||||||||||||||||||
| Time certificates of $250,000 or more | 617,231 | 535,211 | 495,177 | 427,172 | 416,807 | ||||||||||||||||||
| Other time certificates | 651,502 | 685,445 | 707,830 | 697,155 | 691,099 | ||||||||||||||||||
| Total deposits | $ | 3,194,482 | $ | 3,121,274 | $ | 2,950,646 | $ | 2,763,724 | $ | 2,659,996 | |||||||||||||
| Advances from Federal Home Loan Bank | $ | 6,431 | $ | 6,459 | $ | 26,487 | $ | 26,516 | $ | 26,544 | |||||||||||||
| Subordinated debt issuance | 98,932 | 98,901 | 98,870 | 98,839 | 98,851 | ||||||||||||||||||
| Commitments to fund investment in affordable housing partnership | 20,684 | 20,966 | 10,354 | 10,632 | 11,015 | ||||||||||||||||||
| Other liabilities | 27,918 | 26,570 | 32,189 | 23,822 | 22,760 | ||||||||||||||||||
| Total liabilities | $ | 3,348,447 | $ | 3,274,170 | $ | 3,118,546 | $ | 2,923,533 | $ | 2,819,166 | |||||||||||||
| Equity: | |||||||||||||||||||||||
| Net common stock, no par value | $ | 180,700 | $ | 180,110 | $ | 178,884 | $ | 190,675 | $ | 188,430 | |||||||||||||
| Retained earnings | 135,497 | 124,740 | 115,931 | 108,261 | 100,804 | ||||||||||||||||||
| Accumulated other comprehensive income | 828 | 375 | (432 | ) | (871 | ) | 2,024 | ||||||||||||||||
| Total shareholders' equity | $ | 317,025 | $ | 305,225 | $ | 294,383 | $ | 298,065 | $ | 291,258 | |||||||||||||
| Total liabilities and shareholders' equity | $ | 3,665,472 | $ | 3,579,395 | $ | 3,412,929 | $ | 3,221,598 | $ | 3,110,424 | |||||||||||||
| Preferred Bank | |||||||||||||
| Loan and Credit Quality Information | |||||||||||||
| Allowance For Credit Losses & Loss History | |||||||||||||
| Nine Months Ended | Year Ended | ||||||||||||
| September 30, 2017 | December 31, 2016 | ||||||||||||
| (Dollars in 000's) | |||||||||||||
| Allowance For Credit Losses | |||||||||||||
| Balance at Beginning of Period | $ | 26,478 | $ | 22,658 | |||||||||
| Charge-Offs | |||||||||||||
| Commercial & Industrial | 1,940 | 4,323 | |||||||||||
| Mini-perm Real Estate | - | - | |||||||||||
| Construction - Residential | - | - | |||||||||||
| Construction - Commercial | - | - | |||||||||||
| Land - Residential | - | - | |||||||||||
| Land - Commercial | - | - | |||||||||||
| Others | - | - | |||||||||||
| Total Charge-Offs | 1,940 | 4,323 | |||||||||||
| Recoveries | |||||||||||||
| Commercial & Industrial | 55 | 985 | |||||||||||
| Mini-perm Real Estate | - | - | |||||||||||
| Construction - Residential | - | - | |||||||||||
| Construction - Commercial | 17 | 26 | |||||||||||
| Land - Residential | - | - | |||||||||||
| Land - Commercial | 146 | 732 | |||||||||||
| Total Recoveries | 218 | 1,743 | |||||||||||
| Net Loan Charge-Offs | 1,722 | 2,580 | |||||||||||
| Provision for Credit Losses | 4,000 | 6,400 | |||||||||||
| Balance at End of Period | $ | 28,756 | $ | 26,478 | |||||||||
| Average Loans and Leases | $ | 2,692,928 | $ | 2,282,074 | |||||||||
| Loans and Leases at end of Period | $ | 2,878,599 | 2,543,549 | ||||||||||
| Net Charge-Offs to Average Loans and Leases | 0.09 | % | 0.11 | % | |||||||||
| Allowances for credit losses to loans and leases at end of period | 1.00 | % | 1.04 | % | |||||||||