Preferred Bank (NASDAQ: PFBC), an independent
commercial bank, today reported results for the quarter ended
December 31, 2020. Preferred Bank (“the Bank”) reported net income
of $20.9 million or $1.40 per diluted share for the fourth quarter
of 2020. This is up from net income of $19.6 million or $1.31 per
diluted share for the fourth quarter of 2019 and easily tops
recorded net income of $17.1 million or $1.15 per diluted share for
the third quarter of 2020. The primary reason for the increase
compared to the prior year is a 14.0% increase in net interest
income partially offset by a larger provision for credit losses in
the current quarter. On a linked quarter basis, net income
increased due to a smaller provision for credit losses in the
current quarter ($4.2 million vs $9.0 million) as well as a $1.9
million increase in net interest income.
Li Yu, Chairman and CEO, commented, “I am pleased
to report that Preferred Bank posted record quarterly earnings per
share of $1.40. On a pre-provision, pre-tax (“PPPT”) basis, 2020
was also a record year for earnings for Preferred Bank. Following
are the highlights for the quarter and the year:
- Net income of $1.40 (Q4) and $4.65 (Year)
- Return on assets (“ROA”) of 1.63% (Q4) and 1.41% (Year)
- Return on beginning equity (“ROE”) of 16.49% (Q4) and 14.78%
(Year)
- PPPT return on beginning equity of 26.25% (Q4) and 24.76%
(Year)
- Loan growth of 2.3% (Q4) and 6.4% (Year) excluding PPP
- Deposit growth of 0.6% (Q4) and 11.5% (Year)
- Net interest margin of 3.66% (Q4) and 3.62% (Year)
- Efficiency ratio of 29.9% (Q4) and 31.8% (Year)
“Fourth quarter net interest income and net
interest margin were enhanced by interest recorded on a purchased
credit deteriorated (“PCD”) loan of $473,000 and by $499,000 in
fees received on loans made through the Main Street Lending Program
(“MSLP”). Both of these items are nonrecurring. The net interest
margin was 3.66% for the quarter and without these two items, the
margin would have been 3.58%. During the quarter, reductions in
overall interest costs outpaced a modest decline in loan yields.
The quarterly results were also negatively impacted by a loss on
sales of securities of $663,000.
“Loan growth in the fourth quarter was $85.7
million or 2.2% and although moderate by our standards, it was very
encouraging under the current economic conditions as our clients
seem to be more optimistic on the future of the nation’s economy.
Deposits grew mildly at $28.1 million or 0.6%. Liquidity of the
Bank remains strong.
“Preferred Bank’s credit posture improved during
the quarter, specifically at December 31, 2020:
- Loans on deferment declined to $28 million from a peak of $610
million
- Total nonaccrual loans declined to $20.5 million
- Loans 30-89 days past due were $4.1 million
- Total classified loans were $54.7 million
“At December 31, 2020, the Bank’s allowance for
credit losses were 1.60% of total loans, excluding PPP loans.
“We remain conscientious of controlling the Bank’s
overhead. Our fourth quarter efficiency ratio came in again at
29.9%, same as the prior quarter. For the year, our profitability
greatly exceeded our internal forecast. With the vaccine becoming
available and with the prospects for more government stimulus to
help those so much in need, our outlook for 2021 is very
positive.”
Results of Operations
Net Interest Income and Net Interest
Margin. Net interest income before provision for credit
losses was $46.1 million for the fourth quarter of 2020. This is an
increase over the $40.4 million recorded in the fourth quarter of
2019 as well as the $44.1 million recorded in the third quarter of
2020. The increase over both periods is due to growth in average
total loans as well as declining deposit costs. The Bank’s taxable
equivalent net interest margin was 3.66% for the fourth quarter of
2020, nearly flat compared to the 3.67% achieved in the fourth
quarter of 2019 and a 12 basis point increase from the 3.54% posted
in the third quarter of 2020. The Bank was the beneficiary during
the fourth quarter of a onetime loan fee on a Main Street Lending
Program (“MSLP”) as well as interest recorded on a PCD loan. These
two items totaled $972,000 and had the effect of increasing the
margin by 8 basis points for the quarter. The Bank also continues
to benefit from lower deposit costs as the Bank’s total cost of
deposits went from 0.64% in the third quarter down to 0.54% in the
fourth quarter. Total deposit interest expense is down by more than
half, or 55% from the same period last year.
Noninterest Income. For the
fourth quarter of 2020, noninterest income was $1,356,000 compared
with $1,883,000 for the same quarter last year and compared to
$1,605,000 for the third quarter of 2020. The decrease compared to
both periods is mainly due to a loss on investment securities in
the current quarter of $663,000. Partially offsetting this loss
when compared to the prior quarter was an increase in LC fee income
of $314,000. Service charges on deposits continue to grow as the
comparison to both prior periods was positive.
Noninterest
Expense. Total noninterest expense was
$14.2 million for the fourth quarter of 2020. This is up compared
to the $13.8 million recorded in the same quarter last year and is
also up from the $13.7 million posted in the third quarter of 2020.
Salaries and benefits expense totaled $9.4 million for the fourth
quarter of 2020, a decrease of $306,000 from the fourth quarter of
2019 but an increase of $314,000 from the third quarter of 2020.
The variances to each of the comparable periods were fairly small
and were centered in various salary categories and capitalized loan
salary costs. Business development and promotion was $204,000 for
the quarter, an increase over the third quarter of 2020 due to
year-end donations. Occupancy expense totaled $1.4 million for the
quarter which represented a small decrease from the $1.5 million
recorded in third quarter of 2020 and flat compared to the same
period last year. Professional services expense was $1.1 million
for the fourth quarter of 2020 which was an increase of $110,000
over the $974,000 recorded in the third quarter of 2020 and was up
by $250,000 over the same quarter of 2019. In both instances, legal
fees were the primary driver of the increase due to the two
nonperforming loans. Other expenses were $1.6 million for the
fourth quarter of 2020, an increase of $510,000 over the same
period last year and flat compared to the third quarter of 2020.
The increase over the prior year was due to FDIC insurance premiums
of which there were none in the fourth quarter of 2019 compared to
$660,000 in the fourth quarter of 2020. For the quarter ended
December 31, 2020, the Bank’s efficiency ratio again was 29.9%,
matching that of the third quarter of 2020.
Income Taxes. The Bank recorded a
provision for income taxes of $8.2 million for the fourth quarter
of 2020. This represents an effective tax rate (“ETR”) of 28.1% and
a decrease from the ETR of 30.1% for the same quarter last year but
up from the 25.7% recorded in the third quarter of 2020. 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 December 31, 2020 were $4.04
billion, an increase of $310.5 million or 8.3% over the total of
$3.72 billion as of December 31, 2019. Total deposits increased to
$4.44 billion, an increase of $459.2 million or 11.5% over the
$3.98 billion as of December 31, 2019. Total assets ended the
quarter at $5.14 billion, an increase of $512.9 million or 11.1%
over the total of $4.63 billion as of December 31, 2019.
Below is a breakdown of the Bank’s loan portfolio
by segment as of December 31, 2020:
Category |
Loan Count |
Total Balance(000's) |
% of Loan Balance |
Average LTV |
Average DCR |
Cash Secured |
75 |
|
26,515 |
|
0.66% |
N/A |
N/A |
Commercial |
1,720 |
|
1,117,444 |
|
27.69% |
N/A |
N/A |
International |
47 |
|
22,071 |
|
0.55% |
N/A |
N/A |
Construction - 1-4 Residential |
46 |
|
148,825 |
|
3.69% |
49.9% |
N/A |
Construction - Commercial |
42 |
|
215,032 |
|
5.33% |
57.3% |
N/A |
Real Estate - 1-4 Residential |
163 |
|
251,436 |
|
6.23% |
57.0% |
1.72 |
Real Estate - Industrial |
110 |
|
285,217 |
|
7.07% |
54.0% |
1.66 |
Real Estate - Multifamily |
72 |
|
303,841 |
|
7.53% |
58.1% |
1.25 |
Real Estate - Office |
69 |
|
319,168 |
|
7.91% |
57.4% |
1.67 |
Real Estate - Retail |
120 |
|
422,989 |
|
10.48% |
58.9% |
1.58 |
Real Estate - Special Purpose |
81 |
|
579,734 |
|
14.37% |
53.2% |
1.55 |
Real Estate - Vacant Land |
3 |
|
7,295 |
|
0.18% |
48.5% |
N/A |
PPP |
193 |
|
70,234 |
|
1.74% |
N/A |
N/A |
HELOC |
5 |
|
1,086 |
|
0.03% |
37.1% |
N/A |
Residential Mortgage |
403 |
|
264,507 |
|
6.55% |
59.5% |
% (DTI) |
Total |
3,149 |
|
4,035,394 |
|
100.00% |
|
|
Asset Quality As of December 31,
2020, nonaccrual loans totaled $20.5 million, down from the $25.2
million reported as of September 30, 2020 and but an increase over
the $2.1 million reported at December 31, 2019. The decrease from
the prior quarter was due to a combination of the payoff/resolution
of approximately $2.6 million of nonaccrual loans and charge-offs
totaling $2.0 million. Total net charge-offs for the fourth quarter
of 2020 were $2.0 million compared to $3.5 million in the third
quarter of 2020 and to net recoveries of $99,000 in the fourth
quarter of 2019.
COVID – 19 Relief Modifications
Below is a breakdown of loans that are in some form of payment
deferment by segment at December 31, 2020:
Loan Type |
Total in Deferral12/31/20 |
% of TotalPortfolio |
WeightedAverage LTV |
Commercial and Industrial |
$ |
1,330 |
|
0.1 |
% |
N/A |
|
|
|
|
|
Office |
|
- |
|
0.0 |
% |
57.4 |
% |
Industrial |
|
11,829 |
|
4.1 |
% |
54.0 |
% |
Retail |
|
2,538 |
|
0.6 |
% |
58.9 |
% |
Multi-Family |
|
- |
|
0.0 |
% |
58.1 |
% |
1-4 Family (Inv) |
|
9,135 |
|
3.6 |
% |
57.0 |
% |
Restaurant |
|
1,453 |
|
6.3 |
% |
47.4 |
% |
Special Purpose / Hotel |
|
- |
|
0.0 |
% |
55.3 |
% |
Special Purpose / Other |
|
342 |
|
0.2 |
% |
49.5 |
% |
Construction / AD |
|
- |
|
0.0 |
% |
|
Residential Mortgage |
|
1,325 |
|
0.5 |
% |
59.5 |
% |
Grand Total |
$ |
27,952 |
|
0.7 |
% |
|
At December 31, 2020, total dollar amount of loans
in deferral were equal to 0.7% of the Bank’s loan portfolio. Of the
total modifications at present, approximately 63% are for the
deferral of principal only and 37% are for principal and interest
deferral.
Allowance for Credit LossesDue
primarily to the ongoing partial economic shutdown and uncertainty
regarding future economic activity, the provision for credit losses
remains elevated over more normal economic times. The provision for
the fourth quarter was $4.2 million compared to $450,000 for the
same period last year and to $9.0 million for the third 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, and the
heightened provisions for credit losses to-date this year, the
Bank’s allowance coverage ratio has increased from 0.94% of total
loans as of December 31, 2019 to a coverage ratio totaling 1.60% of
total non-PPP loans as of December 31, 2020.
Capitalization As of December 31,
2020, the Bank’s leverage ratio was 10.03%, the common equity tier
1 capital ratio was 11.15% and the total capital ratio was 14.59%.
As of December 31, 2019, the Bank’s leverage ratio was 10.32%, the
common equity tier 1 ratio was 10.57% and the total risk based
capital ratio was 13.70%.
Conference Call and Webcast A
conference call with simultaneous webcast to discuss Preferred
Bank’s fourth quarter 2020 financial results will be held tomorrow,
January 26, 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, 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 February 9, 2021; the passcode is
10151566.
About Preferred BankPreferred
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 2019 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 Quarter Ended |
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
|
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
Interest income: |
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
51,299 |
|
|
$ |
50,417 |
|
|
$ |
51,052 |
|
|
Investment securities |
|
|
2,320 |
|
|
|
2,335 |
|
|
|
4,269 |
|
|
Fed funds sold |
|
|
30 |
|
|
|
30 |
|
|
|
162 |
|
|
|
Total interest income |
|
|
53,649 |
|
|
|
52,782 |
|
|
|
55,483 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
Interest-bearing demand |
|
|
1,499 |
|
|
|
1,432 |
|
|
|
3,490 |
|
|
Savings |
|
|
21 |
|
|
|
20 |
|
|
|
16 |
|
|
Time certificates |
|
|
4,534 |
|
|
|
5,681 |
|
|
|
10,038 |
|
|
Subordinated debit |
|
|
1,532 |
|
|
|
1,530 |
|
|
|
1,530 |
|
|
|
Total interest expense |
|
|
7,586 |
|
|
|
8,663 |
|
|
|
15,074 |
|
|
|
Net interest income |
|
|
46,063 |
|
|
|
44,119 |
|
|
|
40,409 |
|
Provision for credit losses |
|
|
4,200 |
|
|
|
9,000 |
|
|
|
450 |
|
|
|
Net interest income after provision for |
|
|
|
|
|
|
|
|
|
credit losses |
|
|
41,863 |
|
|
|
35,119 |
|
|
|
39,959 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
Fees & service charges on deposit accounts |
|
|
456 |
|
|
|
428 |
|
|
|
392 |
|
|
Letters of credit fee income |
|
|
1,004 |
|
|
|
690 |
|
|
|
806 |
|
|
BOLI income |
|
|
96 |
|
|
|
96 |
|
|
|
93 |
|
|
Net gain (loss) on called and sale of investment securities |
|
|
(663 |
) |
|
|
15 |
|
|
|
- |
|
|
Other income |
|
|
463 |
|
|
|
376 |
|
|
|
592 |
|
|
|
Total noninterest income |
|
|
1,356 |
|
|
|
1,605 |
|
|
|
1,883 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
Salary and employee benefits |
|
|
9,440 |
|
|
|
9,126 |
|
|
|
9,746 |
|
|
Net occupancy expense |
|
|
1,378 |
|
|
|
1,455 |
|
|
|
1,374 |
|
|
Business development and promotion expense |
|
|
204 |
|
|
|
95 |
|
|
|
258 |
|
|
Professional services |
|
|
1,084 |
|
|
|
974 |
|
|
|
834 |
|
|
Office supplies and equipment expense |
|
|
454 |
|
|
|
443 |
|
|
|
448 |
|
|
Net loss on sale of other real estate owned and expense |
|
|
- |
|
|
|
3 |
|
|
|
3 |
|
|
Other |
|
|
|
1,617 |
|
|
|
1,567 |
|
|
|
1,107 |
|
|
|
Total noninterest expense |
|
|
14,177 |
|
|
|
13,663 |
|
|
|
13,770 |
|
|
|
Income before provision for income taxes |
|
|
29,042 |
|
|
|
23,061 |
|
|
|
28,072 |
|
Income tax expense |
|
|
8,162 |
|
|
|
5,936 |
|
|
|
8,456 |
|
|
|
Net income |
|
$ |
20,880 |
|
|
$ |
17,125 |
|
|
$ |
19,616 |
|
|
|
|
|
|
|
|
|
|
|
Dividend and earnings allocated to participating securities |
|
|
(42 |
) |
|
|
(53 |
) |
|
|
(164 |
) |
Net income available to common shareholders |
|
$ |
20,838 |
|
|
$ |
17,072 |
|
|
$ |
19,452 |
|
|
|
|
|
|
|
|
|
|
|
Income per share available to common shareholders |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.40 |
|
|
$ |
1.15 |
|
|
$ |
1.31 |
|
|
|
Diluted |
|
$ |
1.40 |
|
|
$ |
1.15 |
|
|
$ |
1.31 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
14,895,925 |
|
|
|
14,893,774 |
|
|
|
14,836,374 |
|
|
|
Diluted |
|
|
14,895,925 |
|
|
|
14,893,774 |
|
|
|
14,836,374 |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per common share |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
|
PREFERRED BANK |
Condensed Consolidated Statements of
Operations |
(unaudited) |
(in thousands, except for net income per share and
shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended |
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
Change |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
% |
Interest income: |
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
203,093 |
|
|
$ |
207,218 |
|
|
-2.0 |
% |
|
Investment securities |
|
|
10,954 |
|
|
|
18,542 |
|
|
-40.9 |
% |
|
Fed funds sold |
|
|
215 |
|
|
|
961 |
|
|
-77.6 |
% |
|
|
Total interest income |
|
|
214,262 |
|
|
|
226,721 |
|
|
-5.5 |
% |
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
Interest-bearing demand |
|
|
7,761 |
|
|
|
17,956 |
|
|
-56.8 |
% |
|
Savings |
|
|
72 |
|
|
|
55 |
|
|
31.7 |
% |
|
Time certificates |
|
|
26,151 |
|
|
|
37,932 |
|
|
-31.1 |
% |
|
FHLB borrowings |
|
|
0 |
|
|
|
19 |
|
|
-100.0 |
% |
|
Subordinated debit |
|
|
6,124 |
|
|
|
6,123 |
|
|
0.0 |
% |
|
|
Total interest expense |
|
|
40,108 |
|
|
|
62,084 |
|
|
-35.4 |
% |
|
|
Net interest income |
|
|
174,154 |
|
|
|
164,637 |
|
|
5.8 |
% |
Provision for credit losses |
|
|
26,000 |
|
|
|
3,450 |
|
|
653.6 |
% |
|
|
Net interest income after provision for |
|
|
|
|
|
|
|
|
|
credit losses |
|
|
148,154 |
|
|
|
161,187 |
|
|
-8.1 |
% |
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
Fees & service charges on deposit accounts |
|
|
1,627 |
|
|
|
1,579 |
|
|
3.1 |
% |
|
Letters of credit fee income |
|
|
3,284 |
|
|
|
3,821 |
|
|
-14.1 |
% |
|
BOLI income |
|
|
381 |
|
|
|
370 |
|
|
3.0 |
% |
|
Net loss on called and sale of investment securities |
|
|
(761 |
) |
|
|
- |
|
|
-100.0 |
% |
|
Other income |
|
|
1,532 |
|
|
|
1,696 |
|
|
-9.7 |
% |
|
|
Total noninterest income |
|
|
6,063 |
|
|
|
7,466 |
|
|
-18.8 |
% |
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
Salary and employee benefits |
|
|
39,563 |
|
|
|
38,807 |
|
|
1.9 |
% |
|
Net occupancy expense |
|
|
5,525 |
|
|
|
5,121 |
|
|
7.9 |
% |
|
Business development and promotion expense |
|
|
564 |
|
|
|
840 |
|
|
-32.9 |
% |
|
Professional services |
|
|
4,078 |
|
|
|
4,417 |
|
|
-7.7 |
% |
|
Office supplies and equipment expense |
|
|
1,845 |
|
|
|
1,853 |
|
|
-0.4 |
% |
|
Net loss on sale of other real estate owned and expense |
|
|
6 |
|
|
|
1,220 |
|
|
-99.5 |
% |
|
Other |
|
|
|
5,777 |
|
|
|
4,989 |
|
|
15.8 |
% |
|
|
Total noninterest expense |
|
|
57,358 |
|
|
|
57,247 |
|
|
0.2 |
% |
|
|
Income before provision for income taxes |
|
|
96,859 |
|
|
|
111,406 |
|
|
-13.1 |
% |
Income tax expense |
|
|
27,391 |
|
|
|
33,035 |
|
|
-17.1 |
% |
|
|
Net income |
|
$ |
69,468 |
|
|
$ |
78,371 |
|
|
-11.4 |
% |
|
|
|
|
|
|
|
|
|
|
Dividend and earnings allocated to participating securities |
|
|
(194 |
) |
|
|
(666 |
) |
|
-70.8 |
% |
Net income available to common shareholders |
|
$ |
69,274 |
|
|
$ |
77,705 |
|
|
-10.9 |
% |
|
|
|
|
|
|
|
|
|
|
Income per share available to common shareholders |
|
|
|
|
|
|
|
|
Basic |
|
$ |
4.65 |
|
|
$ |
5.16 |
|
|
-9.8 |
% |
|
|
Diluted |
|
$ |
4.65 |
|
|
$ |
5.16 |
|
|
-9.8 |
% |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
14,885,230 |
|
|
|
15,060,476 |
|
|
-1.2 |
% |
|
|
Diluted |
|
|
14,885,230 |
|
|
|
15,060,476 |
|
|
-1.2 |
% |
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
1.20 |
|
|
$ |
1.20 |
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
PREFERRED BANK |
Condensed Consolidated Statements of Financial
Condition |
(unaudited) |
(in thousands) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
(Unaudited) |
|
(Audited) |
Assets |
|
|
|
Cash and due from banks |
$ |
739,465 |
|
|
$ |
498,645 |
|
Fed funds sold |
|
20,000 |
|
|
|
37,000 |
|
|
Cash and cash equivalents |
|
759,465 |
|
|
|
535,645 |
|
|
|
|
|
|
|
Securities held to maturity, at amortized cost |
|
6,568 |
|
|
|
7,310 |
|
Securities available-for-sale, at fair value |
|
239,682 |
|
|
|
240,640 |
|
Loans |
|
4,035,394 |
|
|
|
3,724,922 |
|
|
Less allowance for credit losses |
|
(63,426 |
) |
|
|
(34,830 |
) |
|
Amortized deferred loan fees, net |
|
(4,574 |
) |
|
|
(3,028 |
) |
|
Loans, net |
|
3,967,394 |
|
|
|
3,687,064 |
|
|
|
|
|
|
|
Customers' liability on acceptances |
|
3,596 |
|
|
|
7,379 |
|
Bank furniture and fixtures, net |
|
11,825 |
|
|
|
12,236 |
|
Bank-owned life insurance |
|
9,828 |
|
|
|
9,571 |
|
Accrued interest receivable |
|
23,692 |
|
|
|
14,961 |
|
Investment in affordable housing |
|
62,521 |
|
|
|
53,142 |
|
Federal Home Loan Bank stock |
|
15,000 |
|
|
|
13,101 |
|
Deferred tax assets |
|
20,730 |
|
|
|
19,560 |
|
Income tax receivable |
|
1,454 |
|
|
|
3,368 |
|
Operating lease right-of-use assets |
|
16,106 |
|
|
|
17,103 |
|
Other assets |
|
3,499 |
|
|
|
7,401 |
|
|
Total assets |
$ |
5,141,360 |
|
|
$ |
4,628,481 |
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
Deposits: |
|
|
|
|
Non-interest bearing demand deposits |
$ |
938,911 |
|
|
$ |
835,790 |
|
|
Interest-bearing deposits: |
|
1,700,818 |
|
|
|
1,328,863 |
|
|
|
Savings |
|
34,702 |
|
|
|
23,784 |
|
|
|
Time certificates of $250,000 or more |
|
912,546 |
|
|
|
976,727 |
|
|
|
Other time certificates |
|
855,503 |
|
|
|
818,130 |
|
|
|
Total deposits |
|
4,442,480 |
|
|
|
3,983,294 |
|
|
|
|
|
|
|
Acceptances outstanding |
|
3,596 |
|
|
|
7,379 |
|
Subordinated debt issuance |
|
99,334 |
|
|
|
99,211 |
|
Commitments to fund investment in affordable housing
partnership |
|
30,715 |
|
|
|
24,149 |
|
Operating lease liabilities |
|
18,682 |
|
|
|
20,497 |
|
Accrued interest payable |
|
1,245 |
|
|
|
3,324 |
|
Other liabilities |
|
22,556 |
|
|
|
20,612 |
|
|
Total liabilities |
|
4,618,608 |
|
|
|
4,158,466 |
|
|
|
|
|
|
|
Shareholders' equity |
|
522,752 |
|
|
|
470,015 |
|
|
Total liabilities and shareholders' equity |
$ |
5,141,360 |
|
|
$ |
4,628,481 |
|
|
|
|
|
|
|
Book value per common share |
$ |
35.01 |
|
|
$ |
31.47 |
|
Number of common shares outstanding |
|
14,931,861 |
|
|
|
14,933,768 |
|
|
|
|
|
|
|
|
|
PREFERRED BANK |
Selected Consolidated Financial Information |
(unaudited) |
(in thousands, except for ratios) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
|
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|
|
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
Unaudited historical quarterly operations
data: |
|
|
|
|
|
|
Interest income |
$ |
53,649 |
|
$ |
52,782 |
|
$ |
52,164 |
|
$ |
55,667 |
|
$ |
55,483 |
|
|
Interest expense |
|
7,586 |
|
|
8,663 |
|
|
9,983 |
|
|
13,876 |
|
|
15,074 |
|
|
|
Interest income before provision for credit losses |
|
46,063 |
|
|
44,119 |
|
|
42,181 |
|
|
41,791 |
|
|
40,409 |
|
|
Provision for credit losses |
|
4,200 |
|
|
9,000 |
|
|
7,500 |
|
|
5,300 |
|
|
450 |
|
|
Noninterest income |
|
1,356 |
|
|
1,605 |
|
|
1,430 |
|
|
1,672 |
|
|
1,883 |
|
|
Noninterest expense |
|
14,177 |
|
|
13,663 |
|
|
14,334 |
|
|
15,184 |
|
|
13,770 |
|
|
Income tax expense |
|
8,162 |
|
|
5,936 |
|
|
6,468 |
|
|
6,825 |
|
|
8,456 |
|
|
|
Net income |
$ |
20,880 |
|
$ |
17,125 |
|
$ |
15,309 |
|
$ |
16,154 |
|
$ |
19,616 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
Basic |
$ |
1.40 |
|
$ |
1.15 |
|
$ |
1.03 |
|
$ |
1.08 |
|
$ |
1.31 |
|
|
|
Diluted |
$ |
1.40 |
|
$ |
1.15 |
|
$ |
1.03 |
|
$ |
1.08 |
|
$ |
1.31 |
|
|
|
|
|
|
|
|
|
|
Ratios for the period: |
|
|
|
|
|
|
Return on average assets |
|
1.63 |
% |
|
1.34 |
% |
|
1.26 |
% |
|
1.40 |
% |
|
1.74 |
% |
|
Return on beginning equity |
|
16.49 |
% |
|
13.94 |
% |
|
13.00 |
% |
|
13.82 |
% |
|
16.95 |
% |
|
Pre-provision and pre-tax return on beginning equity |
|
26.25 |
% |
|
26.10 |
% |
|
24.85 |
% |
|
24.20 |
% |
|
24.65 |
% |
|
Net interest margin (Fully-taxable equivalent) |
|
3.66 |
% |
|
3.54 |
% |
|
3.57 |
% |
|
3.70 |
% |
|
3.67 |
% |
|
Noninterest expense to average assets |
|
1.10 |
% |
|
1.07 |
% |
|
1.18 |
% |
|
1.31 |
% |
|
1.22 |
% |
|
Efficiency ratio |
|
29.90 |
% |
|
29.88 |
% |
|
32.87 |
% |
|
34.93 |
% |
|
32.56 |
% |
|
Net charge-offs (recoveries) to average loans (annualized) |
|
0.20 |
% |
|
0.35 |
% |
|
-0.01 |
% |
|
0.00 |
% |
|
-0.01 |
% |
|
|
|
|
|
|
|
|
|
Ratios as of period end: |
|
|
|
|
|
|
Tier 1 leverage capital ratio |
|
10.03 |
% |
|
9.75 |
% |
|
9.87 |
% |
|
10.05 |
% |
|
10.32 |
% |
|
Common equity tier 1 risk-based capital ratio |
|
11.15 |
% |
|
11.02 |
% |
|
10.39 |
% |
|
10.80 |
% |
|
10.57 |
% |
|
Tier 1 risk-based capital ratio |
|
11.15 |
% |
|
11.02 |
% |
|
10.39 |
% |
|
10.80 |
% |
|
10.57 |
% |
|
Total risk-based capital ratio |
|
14.59 |
% |
|
14.51 |
% |
|
13.80 |
% |
|
14.26 |
% |
|
13.70 |
% |
|
Allowances for credit losses to loans and leases at end of
period |
|
1.57 |
% |
|
1.55 |
% |
|
1.41 |
% |
|
1.24 |
% |
|
0.94 |
% |
|
Allowance for credit losses to non-performing loans and leases |
|
308.96 |
% |
|
243.56 |
% |
|
211.08 |
% |
|
2263.66 |
% |
|
1631.42 |
% |
|
|
|
|
|
|
|
|
|
Average balances: |
|
|
|
|
|
|
Total securities |
$ |
251,284 |
|
$ |
237,801 |
|
$ |
250,134 |
|
$ |
247,689 |
|
$ |
248,904 |
|
|
Total loans |
$ |
3,971,537 |
|
$ |
3,956,145 |
|
$ |
3,919,674 |
|
$ |
3,717,175 |
|
$ |
3,613,400 |
|
|
Total earning assets |
$ |
5,018,031 |
|
$ |
4,975,005 |
|
$ |
4,768,537 |
|
$ |
4,548,512 |
|
$ |
4,381,206 |
|
|
Total assets |
$ |
5,110,041 |
|
$ |
5,073,548 |
|
$ |
4,868,356 |
|
$ |
4,651,956 |
|
$ |
4,482,210 |
|
|
Total time certificate of deposits |
$ |
1,764,528 |
|
$ |
1,841,901 |
|
$ |
1,757,531 |
|
$ |
1,765,816 |
|
$ |
1,756,480 |
|
|
Total interest bearing deposits |
$ |
3,508,276 |
|
$ |
3,501,275 |
|
$ |
3,399,924 |
|
$ |
3,244,711 |
|
$ |
3,050,318 |
|
|
Total deposits |
$ |
4,426,326 |
|
$ |
4,408,882 |
|
$ |
4,220,197 |
|
$ |
4,010,629 |
|
$ |
3,849,825 |
|
|
Total interest bearing liabilities |
$ |
3,607,592 |
|
$ |
3,600,560 |
|
$ |
3,499,178 |
|
$ |
3,343,933 |
|
$ |
3,149,511 |
|
|
Total equity |
$ |
518,538 |
|
$ |
503,421 |
|
$ |
486,931 |
|
$ |
475,409 |
|
$ |
463,880 |
|
|
|
|
|
|
|
|
|
|
PREFERRED BANK |
Selected Consolidated Financial Information |
(unaudited) |
(in thousands, except for ratios) |
|
|
|
|
|
|
|
|
|
For the Year Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
Interest income |
$ |
214,262 |
|
|
$ |
226,721 |
|
|
Interest expense |
|
40,108 |
|
|
|
62,084 |
|
|
|
Interest income before provision for credit losses |
|
174,154 |
|
|
|
164,637 |
|
|
Provision for credit losses |
|
26,000 |
|
|
|
3,450 |
|
|
Noninterest income |
|
6,063 |
|
|
|
7,466 |
|
|
Noninterest expense |
|
57,358 |
|
|
|
57,247 |
|
|
Income tax expense |
|
27,391 |
|
|
|
33,035 |
|
|
|
Net income |
$ |
69,468 |
|
|
$ |
78,371 |
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
Basic |
$ |
4.65 |
|
|
$ |
5.16 |
|
|
|
Diluted |
$ |
4.65 |
|
|
$ |
5.16 |
|
|
|
|
|
|
|
Ratios for the period: |
|
|
|
|
Return on average assets |
|
1.41 |
% |
|
|
1.82 |
% |
|
Return on beginning equity |
|
14.78 |
% |
|
|
18.81 |
% |
|
Pre-provision and pre-tax return on beginning equity |
|
24.76 |
% |
|
|
27.57 |
% |
|
Net interest margin (Fully-taxable equivalent) |
|
3.62 |
% |
|
|
3.92 |
% |
|
Noninterest expense to average assets |
|
1.16 |
% |
|
|
1.33 |
% |
|
Efficiency ratio |
|
31.83 |
% |
|
|
33.26 |
% |
|
Net recoverie to average loans |
|
0.14 |
% |
|
|
-0.01 |
% |
|
|
|
|
|
|
Average balances: |
|
|
|
|
Total securities |
$ |
246,715 |
|
|
$ |
232,537 |
|
|
Total loans |
$ |
3,891,530 |
|
|
$ |
3,482,218 |
|
|
Total earning assets |
$ |
4,828,445 |
|
|
$ |
4,213,271 |
|
|
Total assets |
$ |
4,926,881 |
|
|
$ |
4,315,174 |
|
|
Total time certificate of deposits |
$ |
1,782,558 |
|
|
$ |
1,639,829 |
|
|
Total interest bearing deposits |
$ |
3,414,045 |
|
|
$ |
2,975,666 |
|
|
Total deposits |
$ |
4,267,334 |
|
|
$ |
3,701,732 |
|
|
Total interest bearing liabilities |
$ |
3,513,315 |
|
|
$ |
3,075,331 |
|
|
Total equity |
$ |
496,156 |
|
|
$ |
449,520 |
|
|
|
|
|
|
|
PREFERRED BANK |
Selected Consolidated Financial Information |
(unaudited) |
(in thousands, except for ratios) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
December 31, |
|
September 30, |
June 30, |
|
March 31, |
|
December 31, |
|
|
|
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
Unaudited quarterly statement of financial position
data: |
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
759,465 |
|
|
$ |
807,791 |
|
|
$ |
656,183 |
|
|
$ |
484,869 |
|
|
$ |
535,645 |
|
|
Securities held-to-maturity, at amortized cost |
|
6,568 |
|
|
|
6,727 |
|
|
|
6,922 |
|
|
|
7,077 |
|
|
|
7,310 |
|
|
Securities available-for-sale, at fair value |
|
239,682 |
|
|
|
219,778 |
|
|
|
270,667 |
|
|
|
235,097 |
|
|
|
240,640 |
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
Real estate – Mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate—Residential |
$ |
523,789 |
|
|
$ |
528,371 |
|
|
$ |
511,354 |
|
|
$ |
493,226 |
|
|
$ |
468,321 |
|
|
|
|
Real estate—Commercial |
|
1,911,485 |
|
|
|
1,808,200 |
|
|
|
1,781,660 |
|
|
|
1,730,017 |
|
|
|
1,731,017 |
|
|
|
|
|
Total Real Estate – Mortgage |
|
2,435,274 |
|
|
|
2,336,571 |
|
|
|
2,293,014 |
|
|
|
2,223,243 |
|
|
|
2,199,338 |
|
|
|
Real estate – Construction: |
|
|
|
|
|
|
|
|
|
|
|
|
R/E Construction — Residential |
|
148,825 |
|
|
|
170,773 |
|
|
|
187,083 |
|
|
|
177,364 |
|
|
|
173,951 |
|
|
|
|
R/E Construction — Commercial |
|
215,032 |
|
|
|
223,706 |
|
|
|
217,729 |
|
|
|
223,385 |
|
|
|
218,562 |
|
|
|
|
|
Total real estate construction loans |
|
363,857 |
|
|
|
394,480 |
|
|
|
404,812 |
|
|
|
400,749 |
|
|
|
392,513 |
|
|
|
Commercial and industrial |
|
1,165,990 |
|
|
|
1,144,051 |
|
|
|
1,192,056 |
|
|
|
1,269,242 |
|
|
|
1,132,629 |
|
|
|
PPP |
|
70,234 |
|
|
|
74,551 |
|
|
|
73,524 |
|
|
|
- |
|
|
|
- |
|
|
|
Consumer and others |
|
39 |
|
|
|
68 |
|
|
|
241 |
|
|
|
91 |
|
|
|
442 |
|
|
|
|
Gross loans |
|
4,035,394 |
|
|
|
3,949,721 |
|
|
|
3,963,647 |
|
|
|
3,893,325 |
|
|
|
3,724,922 |
|
|
Allowance for credit losses on loans |
|
(63,426 |
) |
|
|
(61,262 |
) |
|
|
(55,762 |
) |
|
|
(48,130 |
) |
|
|
(34,830 |
) |
|
Net deferred loan fees |
|
(4,574 |
) |
|
|
(4,411 |
) |
|
|
(5,097 |
) |
|
|
(3,084 |
) |
|
|
(3,028 |
) |
|
|
Net loans, excluding loans held for sale |
$ |
3,967,394 |
|
|
$ |
3,884,048 |
|
|
$ |
3,902,788 |
|
|
$ |
3,842,111 |
|
|
$ |
3,687,064 |
|
|
Loans held for sale |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
Net loans |
$ |
3,967,394 |
|
|
$ |
3,884,048 |
|
|
$ |
3,902,788 |
|
|
$ |
3,842,111 |
|
|
$ |
3,687,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in affordable housing |
|
62,521 |
|
|
|
47,917 |
|
|
|
49,658 |
|
|
|
51,400 |
|
|
|
53,142 |
|
|
Federal Home Loan Bank stock |
|
15,000 |
|
|
|
15,000 |
|
|
|
15,000 |
|
|
|
13,101 |
|
|
|
13,101 |
|
|
Other assets |
|
90,730 |
|
|
|
104,313 |
|
|
|
103,239 |
|
|
|
93,979 |
|
|
|
91,579 |
|
|
|
Total assets |
$ |
5,141,360 |
|
|
$ |
5,085,574 |
|
|
$ |
5,004,457 |
|
|
$ |
4,727,634 |
|
|
$ |
4,628,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Demand |
$ |
938,911 |
|
|
$ |
926,166 |
|
|
$ |
934,764 |
|
|
$ |
753,750 |
|
|
$ |
835,790 |
|
|
|
Interest-bearing demand |
|
1,700,818 |
|
|
|
1,620,495 |
|
|
|
1,594,682 |
|
|
|
1,503,618 |
|
|
|
1,328,863 |
|
|
|
Savings |
|
34,702 |
|
|
|
32,830 |
|
|
|
27,737 |
|
|
|
23,035 |
|
|
|
23,784 |
|
|
|
Time certificates of $250,000 or more |
|
912,546 |
|
|
|
977,821 |
|
|
|
970,649 |
|
|
|
1,030,282 |
|
|
|
976,727 |
|
|
|
Other time certificates |
|
855,503 |
|
|
|
857,113 |
|
|
|
822,404 |
|
|
|
775,792 |
|
|
|
818,130 |
|
|
|
|
Total deposits |
$ |
4,442,480 |
|
|
$ |
4,414,425 |
|
|
$ |
4,350,236 |
|
|
$ |
4,086,477 |
|
|
$ |
3,983,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceptances outstanding |
$ |
3,596 |
|
|
$ |
7,463 |
|
|
$ |
6,112 |
|
|
$ |
6,507 |
|
|
$ |
7,379 |
|
|
Subordinated debt issuance |
|
99,334 |
|
|
|
99,304 |
|
|
|
99,273 |
|
|
|
99,242 |
|
|
|
99,211 |
|
|
Commitments to fund investment in affordable housing
partnership |
|
30,715 |
|
|
|
16,689 |
|
|
|
17,536 |
|
|
|
21,195 |
|
|
|
24,149 |
|
|
Other liabilities |
|
42,483 |
|
|
|
43,826 |
|
|
|
42,571 |
|
|
|
40,428 |
|
|
|
44,433 |
|
|
|
Total liabilities |
$ |
4,618,608 |
|
|
$ |
4,581,707 |
|
|
$ |
4,515,728 |
|
|
$ |
4,253,849 |
|
|
$ |
4,158,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Net common stock, no par value |
$ |
214,749 |
|
|
$ |
213,519 |
|
|
$ |
212,187 |
|
|
$ |
210,091 |
|
|
$ |
210,998 |
|
|
Retained earnings |
|
300,969 |
|
|
|
284,568 |
|
|
|
271,923 |
|
|
|
261,095 |
|
|
|
255,050 |
|
|
Accumulated other comprehensive income |
|
7,034 |
|
|
|
5,780 |
|
|
|
4,619 |
|
|
|
2,599 |
|
|
|
3,967 |
|
|
|
Total shareholders' equity |
$ |
522,752 |
|
|
$ |
503,867 |
|
|
$ |
488,729 |
|
|
$ |
473,785 |
|
|
$ |
470,015 |
|
|
|
Total liabilities and shareholders' equity |
$ |
5,141,360 |
|
|
$ |
5,085,574 |
|
|
$ |
5,004,457 |
|
|
$ |
4,727,634 |
|
|
$ |
4,628,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREFERRED BANK |
|
|
|
QUARTER-TO-DATE AVERAGE BALANCES, YIELD AND
RATES |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months endedDecember 31, |
|
Three months endedSeptember 30, |
|
Three months endedDecember 31, |
|
|
|
2020 |
|
2020 |
|
2019 |
|
|
|
Average |
InterestIncome or |
AverageYield/ |
|
Average |
InterestIncome or |
AverageYield/ |
|
Average |
InterestIncome or |
AverageYield/ |
|
|
|
Balance |
Expense |
Rate |
|
Balance |
Expense |
Rate |
|
Balance |
Expense |
Rate |
ASSETS |
(Dollars in thousands) |
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1,2) |
$ |
3,974,599 |
|
|
51,299 |
5.13 |
% |
|
$ |
3,956,145 |
|
$ |
50,417 |
5.07 |
% |
|
$ |
3,614,621 |
|
$ |
51,052 |
5.60 |
% |
|
Investment securities (3) |
|
251,284 |
|
|
1,936 |
3.07 |
% |
|
|
237,801 |
|
|
1,967 |
3.29 |
% |
|
|
248,904 |
|
|
2,202 |
3.51 |
% |
|
Federal funds sold |
|
22,939 |
|
|
30 |
0.51 |
% |
|
|
23,828 |
|
|
30 |
0.50 |
% |
|
|
31,647 |
|
|
162 |
2.03 |
% |
|
Other earning assets |
|
769,209 |
|
|
487 |
0.25 |
% |
|
|
757,231 |
|
|
474 |
0.25 |
% |
|
|
486,034 |
|
|
2,182 |
1.78 |
% |
|
|
Total interest-earning assets |
|
5,018,031 |
|
|
53,752 |
4.26 |
% |
|
|
4,975,005 |
|
|
52,888 |
4.23 |
% |
|
|
4,381,206 |
|
|
55,598 |
5.03 |
% |
|
Deferred loan fees, net |
|
(4,162 |
) |
|
|
|
|
(4,713 |
) |
|
|
|
|
(2,450 |
) |
|
|
|
Allowance for credit losses on loans |
|
(60,875 |
) |
|
|
|
|
(55,822 |
) |
|
|
|
|
(34,306 |
) |
|
|
Noninterest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
8,214 |
|
|
|
|
|
7,355 |
|
|
|
|
|
5,615 |
|
|
|
|
Bank furniture and fixtures |
|
11,892 |
|
|
|
|
|
11,856 |
|
|
|
|
|
12,419 |
|
|
|
|
Right of use assets |
|
16,272 |
|
|
|
|
|
16,550 |
|
|
|
|
|
17,255 |
|
|
|
|
Other assets |
|
120,669 |
|
|
|
|
|
123,317 |
|
|
|
|
|
102,471 |
|
|
|
|
|
Total assets |
$ |
5,110,041 |
|
|
|
|
$ |
5,073,548 |
|
|
|
|
$ |
4,482,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
|
1,743,748 |
|
$ |
1,520 |
0.35 |
% |
|
|
1,659,374 |
|
$ |
1,452 |
0.35 |
% |
|
$ |
1,293,838 |
|
$ |
3,506 |
1.08 |
% |
|
|
TCD $250K or more |
|
923,079 |
|
|
2,298 |
0.99 |
% |
|
|
987,631 |
|
|
2,993 |
1.21 |
% |
|
|
978,717 |
|
|
5,513 |
2.23 |
% |
|
|
Other time certificates |
|
841,449 |
|
|
2,236 |
1.06 |
% |
|
|
854,270 |
|
|
2,688 |
1.25 |
% |
|
|
777,763 |
|
|
4,525 |
2.31 |
% |
|
|
Total interest-bearing deposits |
|
3,508,276 |
|
|
6,054 |
0.69 |
% |
|
|
3,501,275 |
|
|
7,133 |
0.81 |
% |
|
|
3,050,318 |
|
|
13,544 |
1.76 |
% |
Short-term borrowings |
|
3 |
|
|
0 |
0.20 |
% |
|
|
- |
|
|
- |
0.00 |
% |
|
|
3 |
|
|
0 |
2.08 |
% |
Subordinated debt |
|
99,316 |
|
|
1,532 |
6.14 |
% |
|
|
99,285 |
|
|
1,530 |
6.13 |
% |
|
|
99,193 |
|
|
1,530 |
6.12 |
% |
|
|
Total interest-bearing liabilities |
|
3,607,595 |
|
|
7,586 |
0.84 |
% |
|
|
3,600,560 |
|
|
8,663 |
0.96 |
% |
|
|
3,149,514 |
|
|
15,074 |
1.90 |
% |
Non-interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
918,050 |
|
|
|
|
|
907,607 |
|
|
|
|
|
799,507 |
|
|
|
|
Lease Liability |
|
18,936 |
|
|
|
|
|
19,400 |
|
|
|
|
|
20,768 |
|
|
|
|
Other liabilities |
|
46,922 |
|
|
|
|
|
42,560 |
|
|
|
|
|
48,541 |
|
|
|
|
|
Total liabilities |
|
4,591,503 |
|
|
|
|
|
4,570,127 |
|
|
|
|
|
4,018,330 |
|
|
|
Shareholders’ equity |
|
518,538 |
|
|
|
|
|
503,421 |
|
|
|
|
|
463,880 |
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
5,110,041 |
|
|
|
|
$ |
5,073,548 |
|
|
|
|
$ |
4,482,210 |
|
|
|
Net interest income |
|
$ |
46,166 |
|
|
|
$ |
44,225 |
|
|
|
$ |
40,524 |
|
Net interest spread |
|
|
3.42 |
% |
|
|
|
3.27 |
% |
|
|
|
3.14 |
% |
Net interest margin |
|
|
3.66 |
% |
|
|
|
3.54 |
% |
|
|
|
3.67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing demand deposits |
$ |
918,050 |
|
|
|
|
$ |
907,607 |
|
|
|
|
$ |
799,507 |
|
|
|
|
Interest bearing deposits |
|
3,508,276 |
|
|
6,054 |
0.69 |
% |
|
|
3,501,275 |
|
|
7,133 |
0.81 |
% |
|
|
3,050,318 |
|
|
13,544 |
1.76 |
% |
|
|
Total Deposits |
$ |
4,426,326 |
|
$ |
6,054 |
0.54 |
% |
|
$ |
4,408,882 |
|
$ |
7,133 |
0.64 |
% |
|
$ |
3,849,825 |
|
$ |
13,544 |
1.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes non-accrual loans and loans held for sale |
(2) |
Net loan fee income of $1.1 million, $683,000 and $449,000 for the
quarter ended December 31, 2020, September 30, 2020 and December
31, 2019, respectively, are included in the yield computations |
(3) |
Yields on securities have been adjusted to a tax-equivalent
basis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREFERRED BANK |
YEAR-TO-DATE AVERAGE BALANCES, YIELD AND
RATES |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
2020 |
2019 |
|
|
|
|
Interest |
Average |
|
|
Interest |
Average |
|
|
|
Average |
Income or |
Yield/ |
|
Average |
Income or |
Yield/ |
|
|
|
Balance |
Expense |
Rate |
|
Balance |
Expense |
Rate |
ASSETS |
(Dollars in thousands) |
Interest-earning assets: |
|
|
|
|
|
|
|
|
Loans (1,2) |
$ |
3,892,811 |
|
$ |
203,093 |
5.22 |
% |
|
$ |
3,482,555 |
|
$ |
207,218 |
5.95 |
% |
|
Investment securities (3) |
|
246,715 |
|
|
8,130 |
3.30 |
% |
|
|
232,537 |
|
|
8,644 |
3.72 |
% |
|
Federal funds sold |
|
25,301 |
|
|
215 |
0.85 |
% |
|
|
38,003 |
|
|
961 |
2.53 |
% |
|
Other earning assets |
|
663,618 |
|
|
3,222 |
0.49 |
% |
|
|
460,176 |
|
|
10,324 |
2.24 |
% |
|
|
Total interest-earning assets |
|
4,828,445 |
|
|
214,660 |
4.45 |
% |
|
|
4,213,271 |
|
|
227,147 |
5.39 |
% |
|
Deferred loan fees, net |
|
(3,788 |
) |
|
|
|
|
(1,910 |
) |
|
|
|
Allowance for credit losses on loans |
|
(51,971 |
) |
|
|
|
|
(32,903 |
) |
|
|
Noninterest earning assets: |
|
|
|
|
|
|
|
|
Cash and due from banks |
|
7,545 |
|
|
|
|
|
5,597 |
|
|
|
|
Bank furniture and fixtures |
|
12,002 |
|
|
|
|
|
11,379 |
|
|
|
|
Right of use assets |
|
16,648 |
|
|
|
|
|
14,644 |
|
|
|
|
Other assets |
|
118,000 |
|
|
|
|
|
105,096 |
|
|
|
|
|
Total assets |
$ |
4,926,881 |
|
|
|
|
$ |
4,315,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
Interest-bearing demand/ savings |
|
1,631,487 |
|
$ |
7,833 |
0.48 |
% |
|
|
1,335,837 |
|
$ |
18,010 |
1.35 |
% |
|
|
TCD $250K or more |
|
956,269 |
|
|
13,767 |
1.44 |
% |
|
|
850,266 |
|
|
19,505 |
2.29 |
% |
|
|
Other time certificates |
|
826,289 |
|
|
12,384 |
1.50 |
% |
|
|
789,563 |
|
|
18,427 |
2.33 |
% |
|
|
Total interest-bearing deposits |
|
3,414,045 |
|
|
33,984 |
1.00 |
% |
|
|
2,975,666 |
|
|
55,942 |
1.88 |
% |
Short-term borrowings |
|
1 |
|
|
0 |
0.15 |
% |
|
|
1 |
|
|
0 |
1.57 |
% |
Subordinated debt |
|
99,269 |
|
|
6,124 |
6.17 |
% |
|
|
99,142 |
|
|
6,123 |
6.18 |
% |
Long-term debt |
|
- |
|
|
0 |
0.00 |
% |
|
|
522 |
|
|
19 |
3.71 |
% |
|
|
Total interest-bearing liabilities |
|
3,513,315 |
|
|
40,108 |
1.14 |
% |
|
|
3,075,331 |
|
|
62,084 |
2.02 |
% |
Non-interest bearing liabilities: |
|
|
|
|
|
|
|
|
Demand deposits |
|
853,289 |
|
|
|
|
|
726,066 |
|
|
|
|
Lease Liability |
|
19,620 |
|
|
|
|
|
17,804 |
|
|
|
|
Other liabilities |
|
44,501 |
|
|
|
|
|
46,453 |
|
|
|
|
|
Total liabilities |
|
4,430,725 |
|
|
|
|
|
3,865,654 |
|
|
|
Shareholders’ equity |
|
496,156 |
|
|
|
|
|
449,520 |
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
4,926,881 |
|
|
|
|
$ |
4,315,174 |
|
|
|
Net interest income |
|
$ |
174,552 |
|
|
|
$ |
165,063 |
|
Net interest spread |
|
|
3.30 |
% |
|
|
|
3.37 |
% |
Net interest margin |
|
|
3.62 |
% |
|
|
|
3.92 |
% |
|
|
|
|
|
|
|
|
|
|
Cost of Deposits: |
|
|
|
|
|
|
|
|
Noninterest bearing demand deposits |
$ |
853,289 |
|
|
|
|
$ |
726,066 |
|
|
|
|
Interest bearing deposits |
|
3,414,045 |
|
|
33,984 |
1.00 |
% |
|
|
2,975,666 |
|
|
55,942 |
1.88 |
% |
|
|
Total Deposits |
$ |
4,267,334 |
|
$ |
33,984 |
0.80 |
% |
|
$ |
3,701,732 |
|
$ |
55,942 |
1.51 |
% |
|
|
|
|
|
|
|
|
|
|
(1) |
Includes non-accrual loans and loans held for sale |
(2) |
Net loan fee income of $3.0 million and $2.1 million for the year
ended December 31, 2020 and 2019, 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 |
|
|
|
|
Year Ended |
|
Year ended |
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
(Dollars in 000's) |
Allowance For Credit Losses |
|
|
|
|
Balance at Beginning of Period |
|
$ |
34,830 |
|
|
$ |
31,065 |
|
|
Charge-Offs |
|
|
|
|
|
|
Commercial & Industrial |
|
|
3,700 |
|
|
|
526 |
|
|
|
Mini-perm Real Estate |
|
|
1,900 |
|
|
|
101 |
|
|
|
Others |
|
|
7 |
|
|
|
- |
|
|
|
Total Charge-Offs |
|
|
5,607 |
|
|
|
627 |
|
|
|
|
|
|
|
|
|
Recoveries |
|
|
|
|
|
|
Commercial & Industrial |
|
|
- |
|
|
|
527 |
|
|
|
Mini-perm Real Estate |
|
|
- |
|
|
|
415 |
|
|
|
Construction - Commercial |
|
|
194 |
|
|
|
- |
|
|
|
Land - Commercial |
|
|
9 |
|
|
|
- |
|
|
|
Total Recoveries |
|
|
203 |
|
|
|
942 |
|
|
|
|
|
|
|
|
|
Net Charge-Offs (Recoveries) |
|
|
5,404 |
|
|
|
(315 |
) |
|
Provision for Credit Losses: |
|
|
|
|
|
|
CECL Cumulative Effect Adjustment |
|
|
8,000 |
|
|
|
- |
|
|
|
Current Provision |
|
|
26,000 |
|
|
|
3,450 |
|
Balance at End of Period |
|
$ |
63,426 |
|
|
$ |
34,830 |
|
Average Loans Held for Investment |
|
$ |
3,891,530 |
|
|
$ |
3,482,218 |
|
Loans Held for Investment at End of Period |
|
$ |
4,035,394 |
|
|
$ |
3,724,922 |
|
Net Charge-Offs (Recoveries) to Average Loans |
|
|
0.14 |
% |
|
|
-0.01 |
% |
Allowances for Credit Losses to Loans at End of Period |
|
|
14.59 |
% |
|
|
0.94 |
% |
|
|
|
|
|
|
|
AT THE COMPANY: Edward J. Czajka
Executive Vice President Chief Financial Officer (213)
891-1188 |
AT FINANCIAL PROFILES:Jeffrey HaasGeneral
Information(310) 622-8240PFBC@finprofiles.com |
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