PFBC Preferred Bank

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
						Interest		Average						Interest		Average						Interest		Average
			Average			Income or		Yield/			Average			Income or		Yield/			Average			Income or		Yield/
			Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate
ASSETS			(Dollars in thousands)
Interest-earning assets:
	Loans (1,2)		$	4,044,823			49,859	5.00	%		$	3,974,599		$	51,299	5.13	%		$	3,717,212		$	51,564	5.58	%
	Investment securities (3)			242,200			1,884	3.16	%			251,284			1,936	3.07	%			247,689			2,127	3.45	%
	Federal funds sold			21,474			24	0.45	%			22,939			30	0.51	%			30,153			124	1.66	%
	Other earning assets			793,794			493	0.25	%			769,209			487	0.25	%			553,458			1,946	1.41	%
		Total interest-earning assets		5,102,291			52,260	4.15	%			5,018,031			53,752	4.26	%			4,548,512			55,761	4.93	%
	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		$	1,456	0.35	%			1,743,748		$	1,520	0.35	%		$	1,478,895		$	3,382	0.92	%
		TCD $250K or more		919,155			1,918	0.85	%			923,079			2,298	0.99	%			969,343			4,852	2.01	%
		Other time certificates		901,306			1,909	0.86	%			841,449			2,236	1.06	%			796,473			4,111	2.08	%
		Total interest-bearing deposits		3,531,358			5,283	0.61	%			3,508,276			6,054	0.69	%			3,244,711			12,345	1.53	%
Short-term borrowings				-			-	0.00	%			3			0	0.20	%			-			-	0.00	%
Subordinated debt, net				99,347			1,531	6.25	%			99,316			1,532	6.14	%			99,222			1,531	6.21	%
		Total interest-bearing liabilities		3,630,705			6,814	0.76	%			3,607,595			7,586	0.84	%			3,343,933			13,876	1.67	%
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			5,283	0.61	%			3,508,276			6,054	0.69	%			3,244,711			12,345	1.53	%
		Total Deposits	$	4,486,399		$	5,283	0.48	%		$	4,426,326		$	6,054	0.54	%		$	4,010,629		$	12,345	1.24	%
(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 Ended				Year 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. Czajka	Jeffrey Haas
Executive Vice President	General Information
Chief Financial Officer	(310) 622-8240
(213) 891-1188	PFBC@finprofiles.com