Preferred Bank Reports Quarterly Earnings

Nachrichtenquelle: globenewswire
21.07.2020, 22:27  |  104   |   |   

LOS ANGELES, July 21, 2020 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), an independent commercial bank, today reported results for the quarter ended June 30, 2020. Preferred Bank (“the Bank”) reported net income of $15.3 million or $1.03 per diluted share for the second quarter of 2020. This is down from net income of $20.0 million or $1.31 per diluted share for the second quarter of 2019 and also down from net income of $16.2 million or $1.08 per diluted share for the first quarter of 2020. The primary reason for the decrease compared to both periods is the provision for credit losses, which totaled $7.5 million for the second quarter of 2020, as compared to $1.6 million in the second quarter of 2019 and compared to $5.3 million in the first quarter of 2020. The higher provision for this quarter is primarily due to the ongoing uncertainty of the impact of the economic shutdown due to the COVID-19 pandemic.

Li Yu, Chairman and CEO, commented, “I am pleased to report second quarter net income of $15.3 million or $1.03 per diluted share.  Given the economic backdrop, the Bank recorded an outsized provision for credit losses of $7.5 million, or nearly five times the $1.6 million provision recorded in the same period last year. In spite of that, we achieved an ROA of 1.26% and an ROE of 12.65%. This is evidence of Preferred Bank’s earnings power and I believe positions us well in this economic environment.

“We’ll be receiving approximately $1.94 million of fee income on originations of $74.8 million of Paycheck Protection Program or “PPP” loans and these fees will be accreted into income over the life of the loans which will either be when forgiveness is granted or, if forgiveness is not granted, over an approximate 2 year period.  The origination of PPP loans has increased total loans for the quarter but has had a negative impact on the net interest margin due to the contractual rate of 1%.  It has also affected return on assets and our capital ratios, although not as significantly.

“This quarter deposits grew at a very strong pace of $263.8 million and loans grew by $70.3 million, inclusive of PPP.  The outpacing of deposit growth relative to loan growth has also negatively affected the net interest margin.

“The Bank’s net interest margin contracted 13 basis points from the first quarter to 3.57% for the second quarter.  An interest reversal from downgrading of certain loans to nonaccrual status also contributed to the decrease.  Between quarters, our loan yield decreased 47 basis points and deposit costs decreased 43 basis points.  Going forward, we expect deposit costs to continue to improve through the maturity and repricing of TCD’s.

“Loan modification activity has moderated considerably toward the end of the quarter.  Until recently, we have been granting three months of deferment only.  At June 30, 2020, there were $467.1 million in loans under some type of payment deferment. Although many loans are now returning to normal payment schedule, some loans (notably hospitality industry) may require further deferment.

“Due to the uncertainty surrounding the economy, we continue to record elevated credit loss provisions. This quarter we set aside $7.5 million compared to $5.3 million last quarter.  We will continue to build up our reserves based upon developments taking place regarding the economy, our loan portfolio and the pandemic.

“As of June 30, 2020, Preferred Bank became a $5 billion Bank, a milestone for our staff and the Board of Directors.  The large deposit increase has enhanced liquidity at the expense of reducing our ROA and capital ratios.  Regardless, our operating metrics and profitability profile remain very favorable.”

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $42.2 million for the second quarter of 2020. This is slightly above the $41.8 million recorded in the second quarter of 2019 and the $41.8 million recorded in the first quarter of 2020. The increase over both periods is due to loan growth as well as declining deposit costs. The Bank’s taxable equivalent net interest margin was 3.57% for the second quarter of 2020, a 50 basis point decrease from the 4.07% achieved in the second quarter of 2019 and a 13 basis point decrease from the 3.70% posted in the first quarter of 2020. The decrease to 3.57% this quarter was due to a number of factors which included a $521,000 interest reversal on loans placed into nonaccrual status during the quarter. In addition, the growth in loans was far outpaced by deposit growth which essentially de-levers the balance sheet during the quarter, adding to the margin compression.

Noninterest Income. For the second quarter of 2020, noninterest income was $1,430,000 compared with $1,985,000 for the same quarter last year and compared to $1,672,000 for the first quarter of 2020. The decrease from the second quarter of 2019 was due mainly to letter of credit fee income which decreased by $329,000. The decrease from the first quarter of 2020 was primarily due to a $113,000 loss on sale of securities.

Noninterest Expense. Total noninterest expense was $14.3 million for the second quarter of 2020. This represents an increase of $449,000 from the same quarter last year and a decrease of $850,000 from the first quarter of 2020. Salaries and benefits expense totaled $10.1 million for the second quarter of 2020, an increase of $616,000 over the second quarter of 2019 and a decrease of $807,000 from the first quarter of 2020. The decrease from the prior quarter is mostly to a decrease in payroll taxes and bonus expense. The increase over the prior year is due mainly to reduced loan origination volume in the current period as capitalized loan origination salary expense was lower off of lower volume. Occupancy expense totaled $1.3 million for the quarter and was flat compared to the same period last year and was down $100,000 from the first quarter of 2020. Professional services expense was $1.0 million for the second quarter of 2020 and was relatively flat compared to the $1.1 million recorded in the same quarter of 2019 and the $1.0 million recorded in the first quarter of 2020.  Other expenses were $1.4 million for the second quarter of 2020, flat compared to the same period last year but up by $132,000 over the first quarter of 2020. This was due to an increase in FDIC insurance premiums.

Income Taxes. The Bank recorded a provision for income taxes of $6.5 million for the second quarter of 2020. This represents an effective tax rate (“ETR”) of 29.7% and a slight increase from the ETR of 29.5% for the same quarter last year but flat compared to the 29.7% recorded in the first 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 June 30, 2020 were $3.96 billion, an increase of $238.7 million or 6.4% over the total of $3.72 billion as of December 31, 2019. Total deposits increased to $4.35 billion, an increase of $366.9 million or 9.2% over the $3.98 billion as of December 31, 2019. Total assets eclipsed $5 billion to end at $5.004 billion, an increase of $376.0 million or 8.1% 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 June 30, 2020:

Category Loan  Count Total Balance (000's) % of Loan Balance Average LTV Average DCR
Cash Secured   84 $   35,474 0.89% N/A  N/A
Commercial   1,706     1,133,758 28.60% N/A  N/A
International   122     23,065 0.58% N/A  N/A
Construction - 1-4 Residential   58     187,083 4.72% 48.4%  N/A
Construction - Commercial   42     217,730 5.49% 52.4%  N/A
Real Estate - 1-4 Residential   155     233,420 5.89% 53.3% 1.70
Real Estate - Industrial   100     246,349 6.22% 49.0% 1.98
Real Estate - Multifamily   61     235,106 5.93% 55.9% 1.36
Real Estate - Office   74     353,895 8.93% 52.3% 1.41
Real Estate - Retail   129     433,950 10.95% 56.8% 1.38
Real Estate - Special Purpose   76     511,330 12.90% 50.6% 1.75
Real Estate - Vacant Land   4       7,801 0.20% 36.8%  N/A
SBA   210       73,524 1.85% N/A N/A
Consumer   6     1,557 0.04% 42.4% N/A
Residential Mortgage    403   269,606 6.80% 59.8% % (DTI)
Total   3,230 $     3,963,647 100.00%    

Asset Quality
As of June 30, 2020, nonaccrual loans totaled $26.4 million, up from the $2.1 million reported as of March 31, 2020 and also up over the $2.1 million reported at December 31, 2019. Total net recoveries for the second quarter of 2020 were $132,000 compared to $0 in the first quarter of 2020 and compared to $315,000 for the second quarter of 2019.

COVID – 19 Relief Modifications
Below is a breakdown of loans at June 30, 2020 that are in some form of payment deferment by segment:

Loan Type # Loans Modified Interest Deferral (000's) Principal Deferral (000's) Full Payment Deferral (000's) Total $ Modified (000's) % of Total Loan Type Weighted Average Loan to Value
C&I 97 $ 16,546 $ 7,736 $ 15,236 $ 39,518 3.4% -
               
Office 3 $ 17,700 $ 10,996 $ - $ 28,696 8.1% 52.3%
Industrial 13   -   9,820   19,675   29,495 12.0% 49.0%
Retail 22   32,391   17,259   38,668   88,319 20.4% 56.8%
Multi-Family 3   -   -   17,593   17,593 7.5% 55.9%
1-4R 9   -   -   6,624   6,624 2.8% 53.3%
Restaurant 3   -   -   6,149   6,149 79.6% 46.3%
Special Purpose / Hotel 15   23,707   27,471   121,353   172,531 55.6% 54.5%
Special Purpose / Other 10   2,438   17,118   31,677   51,232 25.5% 44.7%
Construction / AD 0   -   -   -   - 0.0% -
Total CRE and Construction / AD 78 $ 76,235 $ 82,665 $ 241,739 $ 400,640 16.5% -
               
Mortgage 34   -   -   26,935   26,935 10.0% 58.6%
               
Grand Total 209 $ 92,782 $ 90,401 $ 283,910 $ 467,093 11.8% -

At June 30, 2020, total dollar amount of loans in deferral were equal to 11.78% of the Bank’s loan portfolio. Approximately 85% are deferred from 2-4 months and the remaining 15% are 6 month deferrals. Of the total modifications, 20% are for the deferral of interest only and 19% are for principal deferral only. There are approximately $4 million of requested modifications that are currently in process.

Allowance for Credit Losses

Due primarily to the ongoing partial economic shutdown and uncertainty regarding future economic activity, the provision for credit losses continues to be elevated at $7.5 million for this quarter. This compares to the $5.3 million provision recorded in the first quarter of 2020 and is well ahead of the $1.6 million recorded in this quarter last year. In the first quarter of 2020, the Bank implemented the 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 now totaling 1.41% of total loans.

Capitalization
As of June 30, 2020, the Bank’s leverage ratio was 9.87%, the common equity tier 1 capital ratio was 10.39% and the total capital ratio was 13.80%. 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 second quarter 2020 financial results will be held tomorrow, July 22, 2020 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 August 5, 2020; the passcode is 10146151.

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 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
          June 30,   March 31,   June 30,  
            2020       2020       2019    
Interest income:              
  Loans, including fees   $ 49,813     $ 51,564     $ 52,844    
  Investment securities     2,320       3,979       4,707    
  Fed funds sold     32       124       271    
    Total interest income     52,165       55,667       57,822    
                     
Interest expense:              
  Interest-bearing demand     1,462       3,368       4,819    
  Savings     17       14       13    
  Time certificates     6,973       8,963       9,612    
  FHLB borrowings     -       -       7    
  Subordinated debit     1,531       1,531       1,530    
    Total interest expense     9,983       13,876       15,981    
    Net interest income     42,182       41,791       41,841    
Provision for credit losses     7,500       5,300       1,600    
    Net interest income after provision for              
    credit losses     34,682       36,491       40,241    
                     
Noninterest income:              
  Fees & service charges on deposit accounts     339       405       418    
  Letters of credit fee income     742       848       1,071    
  BOLI income     95       94       92    
  Net gain (loss) on called and sale of investment securities     (113 )     -       -    
  Other income     367       325       404    
    Total noninterest income     1,430       1,672       1,985    
                     
Noninterest expense:              
  Salary and employee benefits     10,095       10,902       9,479    
  Net occupancy expense     1,296       1,396       1,270    
  Business development and promotion expense     114       151       187    
  Professional services     1,006       1,014       1,090    
  Office supplies and equipment expense     459       489       497    
  Net loss (gain) on sale of other real estate owned and expense     2       1       (45 )  
  Other       1,363       1,231       1,407    
    Total noninterest expense     14,335       15,184       13,885    
    Income before provision for income taxes     21,777       22,979       28,341    
Income tax expense     6,468       6,825       8,362    
    Net income   $ 15,309     $ 16,154     $ 19,979    
                     
Dividend and earnings allocated to participating securities     (49 )     (51 )     (158 )  
Net income available to common shareholders   $ 15,260     $ 16,103     $ 19,821    
                     
Income per share available to common shareholders              
    Basic   $ 1.03     $ 1.08     $ 1.31    
    Diluted   $ 1.03     $ 1.08     $ 1.31    
                     
Weighted-average common shares outstanding              
    Basic     14,879,383       14,870,715       15,171,399    
    Diluted     14,879,383       14,870,715       15,171,399    
                     
Cash dividends per common share   $ 0.30     $ 0.30     $ 0.30    
                     


PREFERRED BANK    
Condensed Consolidated Statements of Financial Condition    
(unaudited)    
(in thousands)    
                   
                   
        June 30,   December 31,   June 30,  
          2020       2019       2019    
        (Unaudited)   (Audited)   (Unaudited)  
Assets            
Cash and due from banks $ 630,683     $ 498,645     $ 304,121    
Fed funds sold   25,500       37,000       47,000    
  Cash and cash equivalents   656,183       535,645       351,121    
                   
Securities held to maturity, at amortized cost   6,922       7,310       7,702    
Securities available-for-sale, at fair value   270,667       240,640       238,589    
Loans   3,963,647       3,724,922       3,585,686    
  Less allowance for credit losses   (55,762 )     (34,830 )     (33,811 )  
  Amortized deferred loan fees, net   (5,097 )     (3,028 )     (1,401 )  
  Loans, net   3,902,788       3,687,064       3,550,474    
                   
Customers' liability on acceptances   6,112       7,379       8,074    
Bank furniture and fixtures, net   11,833       12,236       12,757    
Bank-owned life insurance   9,699       9,571       9,443    
Accrued interest receivable   20,554       14,961       15,510    
Investment in affordable housing   49,658       53,142       41,136    
Federal Home Loan Bank stock   15,000       13,101       13,101    
Deferred tax assets   21,671       19,560       17,804    
Income tax receivable   9,525       3,368       3,585    
Operating lease right-of-use assets   16,656       17,103       17,616    
Other assets   7,189       7,401       7,513    
  Total assets $ 5,004,457     $ 4,628,481     $ 4,294,425    
                   
Liabilities and Shareholders' Equity            
Deposits:            
  Non-interest bearing demand deposits $ 934,764     $ 835,790     $ 718,611    
  Interest-bearing deposits:   1,594,682       1,328,863       1,279,104    
    Savings   27,737       23,784       20,927    
    Time certificates of $250,000 or more   970,649       976,727       839,203    
    Other time certificates   822,404       818,130       819,163    
    Total deposits   4,350,236       3,983,294       3,677,008    
                   
Acceptances outstanding   6,112       7,379       8,074    
Subordinated debt issuance   99,273       99,211       99,149    
Commitments to fund investment in affordable housing partnership   17,536       24,149       15,186    
Operating lease liabilities   19,589       20,497       21,416    
Accrued interest payable   1,815       3,324       5,753    
Other liabilities   21,167       20,612       16,397    
  Total liabilities   4,515,728       4,158,466       3,842,983    
                   
Shareholders' equity   488,729       470,015       451,442    
  Total liabilities and shareholders' equity $ 5,004,457     $ 4,628,481     $ 4,294,425    
                   
Book value per common share $ 32.73     $ 31.47     $ 29.50    
Number of common shares outstanding   14,933,648       14,933,768       15,300,577    



PREFERRED BANK  
Selected Consolidated Financial Information  
(unaudited)  
(in thousands, except for ratios)  
                   
                   
                   
        For the Quarter Ended  
                   
        June 30, March 31, December 31, September 30, June 30,  
        2020 2020 2019 2019 2019  
Unaudited historical quarterly operations data:            
  Interest income $ 52,165   $ 55,667   $ 55,483   $ 57,959   $ 57,822    
  Interest expense   9,983     13,876     15,074     16,482     15,981    
    Interest income before provision for credit losses   42,182     41,791     40,409     41,477     41,841    
  Provision for credit losses   7,500     5,300     450     900     1,600    
  Noninterest income   1,430     1,672     1,883     1,737     1,985    
  Noninterest expense   14,335     15,184     13,770     13,898     13,885    
  Income tax expense   6,468     6,825     8,456     8,383     8,362    
    Net income $ 15,309   $ 16,154   $ 19,616   $ 20,033   $ 19,979    
                   
  Earnings per share            
    Basic $ 1.03   $ 1.08   $ 1.31   $ 1.32   $ 1.31    
    Diluted $ 1.03   $ 1.08   $ 1.31   $ 1.32   $ 1.31    
                   
Ratios for the period:            
  Return on average assets   1.26 %   1.40 %   1.74 %   1.81 %   1.89 %  
  Return on beginning equity   13.00 %   13.82 %   16.95 %   17.61 %   18.54 %  
  Net interest margin (Fully-taxable equivalent)   3.57 %   3.70 %   3.67 %   3.84 %   4.07 %  
  Noninterest expense to average assets   1.18 %   1.31 %   1.22 %   1.25 %   1.31 %  
  Efficiency ratio   32.87 %   34.93 %   32.56 %   32.16 %   31.68 %  
  Net charge-offs (recoveries) to average loans (annualized)   -0.01 %   0.00 %   -0.01 %   0.05 %   -0.04 %  
                   
Ratios as of period end:            
  Tier 1 leverage capital ratio   9.87 %   10.05 %   10.32 %   10.27 %   10.50 %  
  Common equity tier 1 risk-based capital ratio   10.39 %   10.80 %   10.57 %   10.40 %   10.53 %  
  Tier 1 risk-based capital ratio   10.39 %   10.80 %   10.57 %   10.40 %   10.53 %  
  Total risk-based capital ratio   13.80 %   14.26 %   13.70 %   13.53 %   13.74 %  
  Allowances for credit losses to loans and leases at end of period   1.41 %   1.24 %   0.94 %   0.93 %   0.94 %  
  Allowance for credit losses to non-performing loans and leases   211.08 %   2263.66 %   1631.42 %   895.30 %   981.65 %  
                   
Average balances:            
  Total securities $ 250,134   $ 247,689   $ 248,904   $ 249,060   $ 241,664    
  Total loans * $ 3,921,694   $ 3,717,212   $ 3,614,621   $ 3,534,283   $ 3,450,583    
  Total earning assets $ 4,768,537   $ 4,548,512   $ 4,381,206   $ 4,298,523   $ 4,134,320    
  Total assets $ 4,868,356   $ 4,651,955   $ 4,482,210   $ 4,395,357   $ 4,235,612    
  Total time certificate of deposits $ 1,757,531   $ 1,765,816   $ 1,756,480   $ 1,650,965   $ 1,627,953    
  Total interest bearing deposits $ 3,399,924   $ 3,244,711   $ 3,050,318   $ 3,051,007   $ 2,924,526    
  Total deposits $ 4,220,197   $ 4,010,629   $ 3,849,825   $ 3,772,097   $ 3,625,021    
  Total interest bearing liabilities $ 3,499,178   $ 3,343,933   $ 3,149,511   $ 3,150,167   $ 3,024,452    
  Total equity $ 486,931   $ 475,409   $ 463,849   $ 460,451   $ 445,101    
                   
*Incudes loans held for sale            


 

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
                         
                         
                         
        As of
                         
        June 30,   March 31,   December 31,   September 30,   June 30,
        2020   2020   2019   2019   2019
Unaudited quarterly statement of financial position data:                  
Assets:                    
  Cash and cash equivalents $ 656,183     $ 484,869     $ 535,645     $ 465,189     $ 351,121  
  Securities held-to-maturity, at amortized cost   6,922       7,077       7,310       7,545       7,702  
  Securities available-for-sale, at fair value   270,667       235,097       240,640       242,655       238,589  
  Loans and Leases:                  
    Real estate - Single and multi-family residential   739,689       721,006       686,906       642,824       646,830  
    Real estate - Land   7,801       7,818       7,838       7,950       9,330  
    Real estate - Commercial   1,545,524       1,494,694       1,504,594       1,533,566       1,419,224  
    Real estate - For sale housing construction   187,082       177,364       173,951       179,651       171,584  
    Real estate - Other construction   217,730       223,385       218,562       216,812       212,988  
    Commercial and industrial, trade finance and other   1,265,821       1,269,058       1,133,071       1,090,647       1,125,730  
      Gross loans   3,963,647       3,893,325       3,724,922       3,671,450       3,585,686  
  Allowance for loan and lease losses   (55,762 )     (48,130 )     (34,830 )     (34,281 )     (33,811 )
  Net deferred loan fees   (5,097 )     (3,084 )     (3,028 )     (2,518 )     (1,401 )
    Net loans, excluding loans held for sale $ 3,902,788     $ 3,842,111     $ 3,687,064     $ 3,634,651     $ 3,550,474  
  Loans held for sale $ -     $ -     $ -     $ 2,999     $ -  
    Net loans and leases $ 3,902,788     $ 3,842,111     $ 3,687,064     $ 3,637,650     $ 3,550,474  
                         
  Investment in affordable housing   49,658       51,400       53,142       39,780       41,136  
  Federal Home Loan Bank stock   15,000       13,101       13,101       13,101       13,101  
  Other assets   103,239       93,979       91,579       89,564       92,302  
    Total assets $ 5,004,457     $ 4,727,634     $ 4,628,481     $ 4,495,484     $ 4,294,425  
                         
Liabilities:                    
  Deposits:                  
    Demand $ 934,764     $ 753,750     $ 835,790     $ 774,869     $ 718,611  
    Interest-bearing demand   1,594,682       1,503,618       1,328,863       1,435,144       1,279,104  
    Savings   27,737       23,035       23,784       21,985       20,927  
    Time certificates of $250,000 or more   970,649       1,030,282       976,727       849,574       839,203  
    Other time certificates   822,404       775,792       818,130       787,392       819,163  
    Total deposits $ 4,350,236     $ 4,086,477     $ 3,983,294     $ 3,868,964     $ 3,677,008  
                         
  Acceptances outstanding $ 6,112     $ 6,507     $ 7,379     $ 7,333     $ 8,074  
  Subordinated debt issuance   99,273       99,242       99,211       99,180       99,149  
  Commitments to fund investment in affordable housing partnership   17,536       21,195       24,149       12,904       15,186  
  Other liabilities   42,571       40,428       44,433       48,023       43,566  
    Total liabilities $ 4,515,728     $ 4,253,849     $ 4,158,466     $ 4,036,404     $ 3,842,983  
                         
Equity:                      
  Net common stock, no par value $ 212,187     $ 210,091     $ 210,998     $ 215,123     $ 224,314  
  Retained earnings   271,923       261,095       255,050       239,914       224,401  
  Accumulated other comprehensive income   4,619       2,599       3,967       4,043       2,727  
    Total shareholders' equity $ 488,729     $ 473,785     $ 470,015     $ 459,080     $ 451,442  
    Total liabilities and shareholders' equity $ 5,004,457     $ 4,727,634     $ 4,628,481     $ 4,495,484     $ 4,294,425  
                         

 

      PREFERRED BANK  
      QUARTER-TO-DATE AVERAGE BALANCES, YIELD AND RATES  
      (Unaudited)  
                             
                             
      Three months ended June 30,   Three months ended March 31,   Three months ended June 30,  
      2020   2020
  2019
 
        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) $ 3,921,694   $ 49,813 5.11 %   $ 3,717,212   $ 51,564 5.58 %   $ 3,450,583   $ 52,844 6.14 %  
  Investment securities (3)   250,134     2,098 3.37 %     247,689     2,127 3.45 %     241,664     2,276 3.78 %  
  Federal funds sold   24,324     31 0.52 %     30,153     124 1.66 %     40,067     271 2.71 %  
  Other earning assets   572,385     318 0.22 %     553,458     1,946 1.41 %     402,006     2,543 2.54 %  
    Total interest-earning assets   4,768,537     52,260 4.41 %     4,548,512     55,761 4.93 %     4,134,320     57,934 5.62 %  
  Deferred loan fees, net   (3,182 )         (3,079 )         (1,253 )      
  Allowance for credit losses on loans   (48,247 )         (42,800 )         (32,257 )      
Noninterest earning assets:                        
  Cash and due from banks   8,274           6,334           6,361        
  Bank furniture and fixtures   11,993           12,269           11,607        
  Right of use assets   16,768           17,006           17,547        
  Other assets   114,213           113,713           99,287        
    Total assets $ 4,868,356         $ 4,651,955         $ 4,235,612        
                             
LIABILITIES AND SHAREHOLDERS' EQUITY                        
Interest-bearing liabilities:                        
  Deposits:                        
    Interest-bearing demand and savings   1,642,393   $ 1,479 0.36 %     1,478,895   $ 3,382 0.92 %   $ 1,296,573   $ 4,832 1.49 %  
    TCD $250K or more   945,043     3,624 1.54 %     969,343     4,852 2.01 %     834,092     4,914 2.36 %  
    Other time certificates   812,488     3,349 1.66 %     796,473     4,111 2.08 %     793,861     4,698 2.37 %  
    Total interest-bearing deposits   3,399,924     8,452 1.00 %     3,244,711     12,345 1.53 %     2,924,526     14,444 1.98 %  
Subordinated debt   99,254     1,531 6.20 %     99,222     1,531 6.21 %     99,118     1,530 6.19 %  
Long-term debt   -     - 0.00 %     -     - 0.00 %     808     7 3.66 %  
    Total interest-bearing liabilities   3,499,178     9,983 1.15 %     3,343,933     13,876 1.67 %     3,024,452     15,981 2.12 %  
Non-interest bearing liabilities:                        
  Demand deposits   820,273           765,918           700,495        
  Lease Liability   19,841           20,314           21,474        
  Other liabilities   42,133           46,381           44,090        
    Total liabilities   4,381,425           4,176,546           3,790,511        
Shareholders’ equity   486,931           475,409           445,101        
    Total liabilities and shareholders’ equity $ 4,868,356         $ 4,651,955         $ 4,235,612        
Net interest income   $ 42,277       $ 41,885       $ 41,953    
Net interest spread     3.26 %       3.26 %       3.50 %  
Net interest margin     3.57 %       3.70 %       4.07 %  
                             
Cost of Deposits:                        
  Noninterest bearing demand deposits   820,273           765,918           700,495        
  Interest bearing deposits   3,399,924     8,452 1.00 %     3,244,711     12,345 1.53 %     2,924,526     14,444 1.98 %  
    Total Deposits   4,220,197     8,452 0.81 %     4,010,629     12,345 1.24 %     3,625,021     14,444 1.60 %  
                             
(1) Includes non-accrual loans and loans held for sale                      
(2) Net loan fee income of $542,000 and $541,000 for the quarter ended June 30, 2020 and 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)  
                     
                     
      Six months ended June 30,  
      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) $ 3,819,453   $ 101,377 5.34 %   $ 3,389,136   $ 103,304 6.15 %  
  Investment securities (3)   248,912     4,225 3.41 %     215,818     4,190 3.92 %  
  Federal funds sold   27,238     156 1.15 %     42,720     577 2.72 %  
  Other earning assets   562,921     2,263 0.81 %     436,906     5,405 2.49 %  
    Total interest-earning assets   4,658,524     108,021 4.66 %     4,084,580     113,476 5.60 %  
  Deferred loan fees, net   (3,131 )         (1,721 )      
  Allowance for credit losses on loans   (45,523 )         (31,776 )      
Noninterest earning assets:                
  Cash and due from banks   7,304           5,923        
  Bank furniture and fixtures   12,131           10,201        
  Right of use assets   16,887           11,852        
  Other assets   113,964           110,456        
    Total assets $ 4,760,156         $ 4,189,515        
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                
Interest-bearing liabilities:                
  Deposits:                
    Interest-bearing demand/ savings   1,560,644   $ 4,861 0.63 %     1,324,550   $ 9,587 1.46 %  
    TCD $250K or more   957,193     8,476 1.78 %     787,522     8,872 2.27 %  
    Other time certificates   804,481     7,460 1.86 %     787,354     8,988 2.30 %  
    Total interest-bearing deposits   3,322,318     20,797 1.26 %     2,899,426     27,447 1.91 %  
Subordinated debt   99,238     3,062 6.20 %     99,108     3,062 6.23 %  
Long-term debt   -     - 0.00 %     1,052     19 3.71 %  
    Total interest-bearing liabilities   3,421,556     23,859 1.40 %     2,999,586     30,528 2.05 %  
Non-interest bearing liabilities:                
  Demand deposits   793,095           691,266        
  Lease Liability   20,077           14,546        
  Other liabilities   44,258           47,452        
    Total liabilities   4,278,986           3,752,850        
Shareholders’ equity   481,170           436,665        
    Total liabilities and shareholders’ equity $ 4,760,156         $ 4,189,515        
Net interest income   $ 84,162       $ 82,948    
Net interest spread     3.26 %       3.55 %  
Net interest margin     3.63 %       4.10 %  
                     
Cost of Deposits:                
  Noninterest bearing demand deposits   793,095           691,266        
  Interest bearing deposits   3,322,318     20,797 1.26 %     2,899,426     27,447 1.91 %  
    Total Deposits   4,115,413     20,797 1.02 %     3,590,692     27,447 1.54 %  
                     
(1) Includes non-accrual loans and loans held for sale                
(2) Net loan fee income of $1.2 million and $973,000 for the six months ended June 30, 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  
          Six Months Ended   Year ended  
          June 30, 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     61       526    
    Mini-perm Real Estate     -       101    
    Total Charge-Offs     61       627    
                 
  Recoveries          
    Commercial & Industrial     -       527    
    Mini-perm Real Estate     193       415    
    Total Recoveries     193       942    
                 
  Net Recoveries     (132 )     (315 )  
  Provision for Credit Losses:          
    CECL Cumulative Effect Adjustment     8,000       -    
    Current Provision     12,800       3,450    
Balance at End of Period   $ 55,762     $ 34,830    
Average Loans Held for Investment   $ 3,818,424     $ 3,482,218    
Loans Held for Investment at End of Period   $ 3,963,647     $ 3,724,922    
Net Recoveries to Average Loans     -0.01%       -0.01%    
Allowances for Credit Losses to Loans at End of Period     1.41%       0.94%    


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

Preferred Bank Aktie jetzt ab 0€ handeln - auf Smartbroker.de



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