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Preferred Bank Reports Second Quarter Results

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LOS ANGELES, July 23, 2014 (GLOBE NEWSWIRE) -- Preferred Bank (Nasdaq:PFBC), an independent commercial bank focusing on the diversified California market, today reported results for the quarter ended June 30, 2014. Preferred Bank ("the Bank") reported net income of $5.9 million or $0.43 per diluted share for the second quarter of 2014. This compares to net income of $4.3 million or $0.32 per diluted share for the second quarter of 2013 and compares to net income of $5.2 million or $0.38 per diluted share for the first quarter of 2014. Net income for the second quarter of 2014 was aided by $768,000 in net gains on sales of other real estate owned ("OREO"). Net income for the six months ended June 30, 2014 totaled $11.1 million or $0.81 per diluted share compared to $8.3 million or $0.61 per diluted share for the same period last year. This represents an increase of $2.8 million or 33.7% over 2013 year to date earnings.

Highlights from the second quarter of 2014:

  • Quarterly net income of $0.43 per diluted share, a 34% increase from prior year
  • Strong linked quarter loan growth of $68 million and deposit growth of $88 million
  • Net interest margin remained steady at 3.93%
  • ROA was 1.33%
  • ROBE was 11.1%
  • Efficiency ratio was 39.3%

Li Yu, Chairman and CEO commented, "The second quarter of 2014 was one of growth for Preferred Bank. First, linked quarter loan growth was $68 million, or 4.9%. Loan growth was well balanced between commercial & industrial loans and real estate loans. This quarter we also saw linked quarter deposit growth of $88 million or 5.6%. The extent of this quarter's deposit growth was a pleasant surprise, especially considering 70% of that deposit growth was in DDA, which also contributed to a 6 basis point NIM expansion.

Substantially all of the loan growth this quarter occurred in the latter part of June, which resulted in a limited impact to the quarter's revenue growth. Meanwhile, we recorded what we believe is a full provision for loan losses to account for the growth.

We sold two OREO properties this quarter at a gain. As of June 30, 2014, there is only one OREO property left on our books and we are hopeful the property can be disposed of before the end of the year. Gains from OREO sales net of valuations were $768,000 this quarter.

During the first half of the year, we incurred a high level of consulting fees, primarily in the area of BSA and Compliance, but this also included I.T., Credit Administration, Treasury and other areas. Much of the work is complete and correspondingly we expect these costs to abate in the second half of the year. Despite the above, our efficiency ratio for the quarter, aided by the OREO gains, was 39.3%.

I am very pleased to report the Bank's second quarter earnings of $5.94 million or $0.43 per diluted share. This is 34% better than the $0.32 per diluted share that we earned in the same period last year."

Operating Results

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses increased to $17.1 million compared to $14.4 million recorded in the second quarter of 2013 and an increase from the $16.5 million recorded in the first quarter of 2014. The increase over the second quarter of 2013 and over the prior quarter is due primarily to loan growth. The Bank's taxable equivalent net interest margin was 3.93% for the second quarter of 2014, a 6 basis point increase from the 3.87% achieved in the first quarter of 2014 and a 10 basis point increase over the 3.83% recorded in the second quarter of 2013. The increase in the margin from the first quarter of 2014 was primarily due to an increase in total average loans as well as an increase in investment securities as the Bank put some of its excess cash to work during the latter part of the first quarter and into the second quarter. This helped to move total asset yields up slightly as the Bank was able to maintain a flat cost of funds on a sequential quarter basis.

Noninterest Income. For the second quarter of 2014, noninterest income was $914,000 compared with $718,000 for the same quarter last year and compared to $1,028,000 for the first quarter of 2014. Service charges on deposits were down compared to the same period last year but Trade Finance income was up significantly from last year due to an increase in LC fees. In comparing to the first quarter of 2014; service charges were down $57,000 while Trade Finance income was up by $32,000 and other income was down $89,000.

Noninterest Expense.Total noninterest expense was $7.1 million for the second quarter of 2014, down slightly from the $7.2 million recorded in the same quarter last year and down when compared to the $7.8 million posted in the first quarter of 2014. Salaries and benefits expense totaled $3.9 million for the second quarter of 2014 compared to $4.0 million for the same period last year and compared to $4.7 million for the first quarter of 2014. Although relatively flat compared to this period last year, salaries & benefits expense was down compared to the first quarter due to a lower level of payroll tax expense which is associated with bonus payouts made in the first quarter of 2014. In addition, a higher level of loan origination/renewal activity in this quarter drove a larger credit to salary expense as those loan origination costs are capitalized. Occupancy expense was flat compared to both other periods; coming in at approximately $800,000 for all three periods presented. Professional services expense was $1,347,000 for the second quarter of 2014 compared to $794,000 for the same quarter of 2013 and $761,000 recorded in the first quarter of 2014. The increase was due primarily to consulting fees associated with the enhancement of the Bank's BSA and Compliance programs. OREO related and loans held for sale ("LHFS") expenses totaled $(715,000) for the second quarter of 2014 compared to $206,000 for the same period last year and compared to $(78,000) for the first quarter of 2014. The Bank recorded a gain on sale on one OREO property and wrote down the value of another property for a net gain of $768,000. Other expenses were $1.3 million in the second quarter of 2014, an increase over the same period in 2013 and an increase over the $1.2 million recorded in the first quarter of 2014. The increase over 2013 is due to the depreciation expense of the investment in the Bank's low income housing tax credits.

Income Taxes

The Bank recorded a provision for income taxes of $3.9 million for the second quarter of 2014. This represents an effective tax rate ("ETR") of 39.5% for the quarter. This is up slightly from the ETR of 39.0% for the first quarter of 2014. This small increase is due to the Bank's higher overall levels of profitability in 2014 relative to tax exempt income and deductible items.

Balance Sheet Summary

Total gross loans and leases (including loans held for sale) at June 30, 2014 were $1.44 billion, an increase of $114.5 million or 8.6% over the total of $1.33 billion as of December 31, 2013. The tables below indicate loans by type as of June 30, 2014 as compared to the end of 2013:

Loans by Type – Year over Year (ooo's)

Loan Type (000's) June 30, 2014 December 31, 2013 $ Change % Change
R/E – Residential/Multifamily $ 208,080 $ 228,490 $ (20,410) -8.9%
R/E – Land 15,065 15,161 (96) -0.6%
R/E – Commercial 700,725 627,888 72,837 11.6%
R/E – Construction 99,777 73,285 26,492 36.2%
Commercial & Industrial 414,884 378,607 36,277 9.6%
Loans Held for Sale 5,632 6,207 (575) -9.3%
Total $ 1,444,163 $ 1,329,638 $ 114,525 8.6%

Total deposits as of June 30, 2014 were $1.65 billion, an increase of $120.5 million from the $1.53 billion at December 31, 2013. As of June 30, 2014 compared to December 31, 2013; noninterest-bearing demand deposits increased by $50.0 million or 14.8%, interest-bearing demand and savings deposits increased by $21.1 million or 4.3% and time deposits increased by $49.5 million or 7.1%. Total assets were $1.9 billion, a $134.6 million or 7.6% increase from the total of $1.77 billion as of December 31, 2013.

Asset Quality

As of June 30, 2014 total nonaccrual loans (excluding loans held for sale) increased to $12.7 million compared to $7.8 million as of December 31, 2013. Total net charge-offs for the second quarter of 2014 were $2.3 million compared to $967,000 for the first quarter of 2014. The Bank recorded a provision for loan losses of $1.1 million for the second quarter of 2014. This compares to a provision of $250,000 recorded in the same quarter last year and compares to a $1.25 million provision recorded in the first quarter of 2014. Although nonperforming loans did tick up slightly during the quarter, the loan that was placed on nonaccrual status during the quarter is real estate secured and is now carried below the appraised value of the underlying property. Management believes that resolution will occur during the next two quarters at its current book value. During the second quarter, the Bank was advised by the lead bank for one of its nonaccrual loans (held for sale) that the borrower has proposed to make a large principal reduction. This payment is expected to be received in the third quarter of 2014 and will result in a notable recovery for Preferred Bank (due to a prior charge-off) and the full payoff of this held for sale nonaccrual loan. Due to the significance of this transaction the Bank expects to issue a press release upon the closing of the transaction. The allowance for loan loss at June 30, 2014 was $18.6 million or 1.29% of total loans compared to $19.5 million or 1.47% of total loans at December 31, 2013.

NPA Migration

Non-Performing Assets Migration – Q2 2014


Non-Accrual
Loans


OREO
Balance, March 31, 2014 $ 5,526 $ 8,902
Additions 9,479 -
Transfer to OREO - -
Loans Cured - -
Sales/Payoffs (1,206) (5,602)
Charge-off (1,108) (980)
Balance, June 30, 2014 $ 12,689 $ 2,320

The tables above exclude loans held for sale and TDR's that are on accrual status. Performing TDR's totaled $400,000 as of June 30, 2014. The $5.6 million in loans held for sale consists of one loan which is current, on nonaccrual status.

OREO

Total OREO decreased to $2.3 million compared to $8.9 million as of March 31, 2014. This was primarily due to the sale of a $5.6 million property and the partial writedown of another property. In addition, the Bank sold a small OREO property which had been previously charged off.

Capitalization

As of June 30, 2014, the Bank's tier 1 leverage ratio was 12.31%, the tier 1 risk based capital ratio was 13.16% and the total risk-based capital ratio was 14.28%. This compares to 11.80%, 13.78% and 15.03% as of December 31, 2013, respectively.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank's second quarter 2014 financial results will be held tomorrow, July 24, 2014 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 800-344-6698 (domestic) or 785-830-7979 (international). The passcode for the call is 9557103. There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com. Web participants are encouraged to go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

Preferred Bank's Chairman and CEO Li Yu, President and COO Wellington Chen, Chief Financial Officer Edward J. Czajka and Chief Credit Officer Louie Couto 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 888-203-1112 (domestic) or 719-457-0820 (international) through July 31, 2014; the passcode is 9557103.

About Preferred Bank

Preferred Bank is one of the larger independent commercial banks in California. The bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Company conducts its banking business from its main office in Los Angeles, California, and through ten full-service branch banking offices in Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Anaheim, Pico Rivera and San Francisco, California. 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.

The Preferred Bank logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11817

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 2013 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 Three Months Ended
June 30, March 31, June 30,
2014 2014 2013
Interest income:
Loans, including fees $ 17,681 $ 17,342 $ 14,686
Investment securities 1,565 1,389 1,552
Fed funds sold 48 19 5
Total interest income 19,294 18,750 16,243
Interest expense:
Interest-bearing demand 627 646 508
Savings 17 19 22
Time certificates 1,554 1,550 1,288
FHLB borrowings 31 32 3
Total interest expense 2,229 2,247 1,820
Net interest income 17,065 16,503 14,423
Provision for loan losses 1,100 1,250 250
Net interest income after provision for loan losses 15,965 15,253 14,173
Noninterest income:
Fees & service charges on deposit accounts 399 456 570
Trade finance income 331 299 144
BOLI income 82 82 83
Net loss on sale of investment securities - - (358)
Other income 102 191 279
Total noninterest income 914 1,028 718
Noninterest expense:
Salary and employee benefits 3,867 4,735 3,975
Net occupancy expense 804 801 805
Business development and promotion expense 122 87 83
Professional services 1,347 761 794
Office supplies and equipment expense 285 338 301
Total other-than-temporary impairment losses - - 95
Portion of loss recognized in other comprehensive income - - (92)
Other real estate owned related expense (income) and valuation allowance on LHFS (715) (78) 206
Other 1,348 1,188 1,051
Total noninterest expense 7,058 7,832 7,218
Income before provision for income taxes 9,821 8,449 7,673
Income tax expense 3,881 3,296 3,404
Net income $ 5,940 $ 5,153 $ 4,269
Income allocated to participating securities (77) (48) (54)
Net income available to common shareholders $ 5,863 $ 5,105 $ 4,215
Income per share available to common shareholders
Basic $ 0.44 $ 0.39 $ 0.32
Diluted $ 0.43 $ 0.38 $ 0.32
Weighted-average common shares outstanding
Basic 13,261,820 13,241,885 13,085,394
Diluted 13,612,772 13,534,067 13,355,059
PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
For the Six Months Ended
June 30, June 30, Change
2014 2013 %
Interest income:
Loans, including fees $ 35,023 $ 29,625 18.2%
Investment securities 2,954 3,102 -4.8%
Fed funds sold 67 5 1170.2%
Total interest income 38,044 32,732 16.2%
Interest expense:
Interest-bearing demand 1,273 1,039 22.6%
Savings 36 43 -15.9%
Time certificates 3,104 2,565 21.0%
FHLB borrowings 63 3 1911.1%
Total interest expense 4,476 3,650 22.6%
Net interest income 33,568 29,082 15.4%
Provision for credit losses 2,350 250 840.0%
Net interest income after provision for loan losses 31,218 28,832 8.3%
Noninterest income:
Fees & service charges on deposit accounts 855 1,117 -23.5%
Trade finance income 630 351 79.2%
BOLI income 164 164 0.0%
Net loss on sale of investment securities - (358) -100.0%
Other income 293 301 -2.5%
Total noninterest income 1,942 1,575 23.3%
Noninterest expense:
Salary and employee benefits 8,602 8,248 4.3%
Net occupancy expense 1,605 1,573 2.0%
Business development and promotion expense 208 178 16.7%
Professional services 2,108 1,683 25.2%
Office supplies and equipment expense 623 608 2.5%
Total other-than-temporary impairment losses - 99 -100.0%
Portion of loss recognized in other comprehensive income - (92) -100.0%
Other real estate owned related expense (income) and valuation allowance on LHFS (793) 1,570 -150.5%
Other 2,537 2,193 15.7%
Total noninterest expense 14,890 16,059 -7.3%
Income before provision for income taxes 18,270 14,348 27.3%
Income tax expense 7,177 6,049 18.6%
Net income $ 11,093 $ 8,299 33.7%
Income allocated to participating securities (123) (105) 17.3%
Net income available to common shareholders $ 10,970 $ 8,194 33.9%
Income per share available to common shareholders
Basic $ 0.83 $ 0.63 32.1%
Diluted $ 0.81 $ 0.61 31.7%
Weighted-average common shares outstanding
Basic 13,251,908 13,078,347 1.3%
Diluted 13,570,967 13,347,084 1.7%
PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)

June 30,
December 31,
2014 2013
Assets
Cash and due from banks $ 207,585 $ 226,615
Fed funds sold 25,000 20,000
Cash and cash equivalents 232,585 246,615
Securities available-for-sale, at fair value 185,288 142,670
Loans and leases 1,438,531 1,323,431
Less allowance for loan and lease losses (18,599) (19,494)
Less net deferred loan fees (2,159) (2,562)
Net loans and leases 1,417,773 1,301,375
Loans held for sale, at lower of cost or fair value 5,632 6,207
Other real estate owned 2,320 5,602
Customers' liability on acceptances 1,935 2,061
Bank furniture and fixtures, net 4,075 4,205
Bank-owned life insurance 8,407 8,290
Accrued interest receivable 5,733 5,378
Investment in affordable housing 8,706 6,411
Federal Home Loan Bank stock 6,155 5,296
Deferred tax assets 22,002 23,331
Income tax receivable - 1,783
Other asset 2,972 9,734
Total assets $ 1,903,583 $ 1,768,959
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand $ 388,497 $ 338,530
Interest-bearing demand 489,313 469,976
Savings 24,712 22,984
Time certificates of $250,000 or more 250,276 213,362
Other time certificates 497,021 484,462
Total deposits $ 1,649,819 $ 1,529,314
Acceptances outstanding 1,935 2,061
Advances from Federal Home Loan Bank 20,000 20,000
Accrued interest payable 1,319 983
Other liabilities 8,122 9,685
Total liabilities 1,681,195 1,562,043
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; no issued and outstanding shares at June 30, 2014 and December 31, 2013
Common stock, no par value. Authorized 20,000,000 shares; issued and outstanding 13,441,488 and 13,280,653 shares at June 30, 2014 and December 31, 2013, respectively 163,509 163,237
Treasury stock (19,115) (19,115)
Additional paid-in-capital 28,248 25,974
Accumulated income 47,773 36,680
Accumulated other comprehensive income:
Unrealized loss on securities, available-for-sale, net of tax of $1,432 and $102 at June 30, 2014 and December 31, 2013, respectively 1,973 140
Total shareholders' equity 222,388 206,916
Total liabilities and shareholders' equity $ 1,903,583 $ 1,768,959
PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
As of or for the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013
Unaudited historical quarterly operations data:
Interest income $ 19,294 $ 18,750 $ 18,513 $ 18,480 $ 16,243
Interest expense 2,229 2,247 2,112 1,967 1,820
Interest income before provision for credit losses 17,065 16,503 16,401 16,513 14,423
Provision for credit losses 1,100 1,250 1,800 1,200 250
Noninterest income 914 1,028 214 213 718
Noninterest expense 7,058 7,832 5,412 7,789 7,218
Income tax expense 3,881 3,296 3,535 2,705 3,404
Net income 5,940 5,153 5,868 5,032 4,269
Earnings per share
Basic $ 0.44 $ 0.39 $ 0.45 $ 0.38 $ 0.32
Diluted $ 0.43 $ 0.38 $ 0.43 $ 0.37 $ 0.32
Ratios for the period:
Return on average assets 1.33% 1.17% 1.33% 1.20% 1.09%
Return on beginning equity 11.11% 10.10% 11.62% 10.27% 8.90%
Net interest margin (Fully-taxable equivalent) 3.93% 3.87% 3.85% 4.10% 3.83%
Noninterest expense to average assets 1.58% 1.78% 1.18% 1.83% 1.84%
Efficiency ratio 39.26% 44.68% 31.44% 45.87% 47.67%
Net charge-offs (recoveries) to average loans (annualized) 0.66% 0.29% 0.20% 0.28% 0.83%
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents 232,585 214,430 $ 246,615 $ 190,405 $ 181,100
Securities available-for-sale, at fair value 185,288 169,845 142,670 166,821 183,690
Loans and Leases:
Real estate - Single and multi-family residential $ 208,080 $ 220,193 $ 228,490 $ 197,119 $ 190,037
Real estate - Land for housing 13,536 13,574 13,611 9,149 23,079
Real estate - Land for income properties 1,529 1,539 1,550 1,560 1,571
Real estate - Commercial 700,725 653,146 627,888 610,764 549,907
Real estate - For sale housing construction 36,069 29,303 24,680 22,631 25,177
Real estate - Other construction 63,708 52,014 48,605 43,413 46,061
Commercial and industrial 374,128 353,017 338,681 346,261 328,676
Trade finance and other 40,756 47,402 39,926 48,067 49,917
Gross loans 1,438,531 1,370,188 1,323,431 1,278,964 1,214,425
Allowance for loan and lease losses (18,599) (19,777) (19,494) (18,344) (18,011)
Net deferred loan fees (2,159) (2,014) (2,562) (2,429) (2,197)
Loans excluding loans held for sale 1,417,773 1,348,397 1,301,375 1,258,191 1,194,217
Loans held for sale 5,632 5,977 6,207 11,329 14,685
Total loans, net $ 1,423,405 $ 1,354,374 $ 1,307,582 $ 1,269,520 $ 1,208,902
Other real estate owned $ 2,320 $ 8,902 5,602 11,936 14,513
Investment in affordable housing 8,706 8,964 6,411 4,752 4,940
Federal Home Loan Bank stock 6,155 5,296 5,296 5,296 5,296
Other assets 45,124 43,327 54,783 52,439 58,872
Total assets $ 1,903,583 $ 1,805,138 $ 1,768,959 $ 1,701,169 $ 1,657,313
Liabilities:
Deposits:
Demand $ 388,497 $ 327,036 $ 338,530 $ 338,579 $ 350,641
Interest-bearing demand 489,313 477,965 469,976 409,319 378,360
Savings 24,712 23,824 22,984 23,223 21,713
Time certificates of $250,000 or more 250,276 261,984 213,362 203,579 213,494
Other time certificates 497,021 471,250 484,462 495,437 468,035
Total deposits $ 1,649,819 $ 1,562,059 $ 1,529,314 $ 1,470,137 $ 1,432,243
Advances from Federal Home Loan Bank $ 20,000 $ 20,000 20,000 20,000 20,000
Other liabilities 11,376 8,536 12,729 10,743 10,630
Total liabilities $ 1,681,195 $ 1,590,594 $ 1,562,043 $ 1,500,880 $ 1,462,873
Equity:
Net common stock, no par value $ 172,642 $ 171,722 $ 170,096 $ 169,925 $ 169,395
Retained earnings 47,773 41,833 36,680 30,812 25,780
Accumulated other comprehensive income 1,973 989 140 (448) (735)
Total shareholders' equity $ 222,388 $ 214,544 $ 206,916 $ 200,289 $ 194,440
Total liabilities and shareholders' equity $ 1,903,583 $ 1,805,138 $ 1,768,959 $ 1,701,169 $ 1,657,313
Ratios as of period end:
Tier 1 leverage capital ratio 12.31% 11.97% 11.80% 11.84% 12.18%
Tier 1 risk-based capital ratio 13.16% 13.65% 13.78% 13.34% 13.51%
Total risk-based capital ratio 14.28% 14.90% 15.03% 14.58% 14.76%
Allowances for credit losses to loans and leases at end of period ** 1.29% 1.44% 1.47% 1.43% 1.48%
Allowance for credit losses to non-performing loans and leases 101.52% 171.94% 138.80% 103.47% 71.79%
Average balances:
Total loans and leases* $ 1,378,444 $ 1,351,555 $ 1,283,583 $ 1,245,753 $ 1,198,818
Earning assets $ 1,752,032 $ 1,739,768 $ 1,695,758 $ 1,608,366 $ 1,520,024
Total assets $ 1,792,317 $ 1,783,384 $ 1,749,140 $ 1,665,591 $ 1,572,529
Total deposits $ 1,543,739 $ 1,540,369 $ 1,512,318 $ 1,436,385 $ 1,362,295
* Loans held for sale are included
** Loans held for sale are excluded
Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
Six Months Ended Year Ended
June 30, 2014 December 31, 2013
(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period $ 19,494 $ 20,607
Charge-Offs
Commercial & Industrial 111 4,158
Mini-perm Real Estate 3,136 1,668
Construction - Residential - 2,438
Construction - Commercial - -
Land - Residential - -
Land - Commercial - -
Others - -
Total Charge-Offs 3,247 8,264
Recoveries
Commercial & Industrial 2 366
Mini-perm Real Estate - 1,379
Construction - Residential - 1,951
Construction - Commercial - 163
Land - Residential - 38
Land - Commercial - 4
Total Recoveries 2 3,901
Net Loan Charge-Offs 3,245 4,363
Provision for Credit Losses 2,350 3,250
Balance at End of Period $ 18,599 $ 19,494
Average Loans and Leases* $ 1,358,911 $ 1,217,383
Loans and Leases at end of Period* $ 1,444,163 $ 1,329,638
Net Charge-Offs to Average Loans and Leases 0.48% 0.36%
Allowances for credit losses to loans and leases at end of period ** 1.29% 1.47%
* Loans held for sale are included
** Loans held for sale are excluded

CONTACT: AT THE COMPANY: Edward J. Czajka Executive Vice President Chief Financial Officer (213) 891-1188 AT FINANCIAL PROFILES: Kristen Papke General Information (310) 663-8007 kpapke@finprofiles.com

Source:Preferred Bank