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Preferred Bank Reports Fourth Quarter And Year End Results

LOS ANGELES, Jan. 21, 2016 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter and year ended December 31, 2015.

The comparability of financial information for the fourth quarter and full year of 2015 to 2014, is affected by the acquisition of United International Bank (“UIB”) which was effective November 20, 2015. Operating results for fourth quarter and full year 2015 include the combined operations of both entities from November 21, 2015.

Preferred Bank (“the Bank”) reported net income of $7.5 million or $0.54 per diluted share for the fourth quarter of 2015. This compares to net income of $6.9 million or $0.50 per diluted share for the fourth quarter of 2014 and compares to net income of $7.9 million or $0.57 per diluted share for the third quarter of 2015. Net income for the fourth quarter was impacted by merger-related costs which totaled $658,000 on a pre-tax basis during the quarter. Excluding these costs, after-tax income would have been $8.1 million or $0.57 per share.

Highlights from the fourth quarter of 2015:

Fourth QuarterFull Year
20152015
Organic linked loan growth $72.7 million$305.6 million
Organic loan growth percentage 4.0% 19.1%
Organic linked deposit growth$143.0 million$354.6 million
Organic deposit growth percentage 7.2% 20.0%
Return on average assets 1.28% 1.35%
Return on beginning equity 11.64% 12.65%
Efficiency ratio 43.3% 40.9%
Annualized net interest income growth 13.36% 18.11%

Li Yu, Chairman and CEO commented, “For the year ended December 31, 2015, Preferred Bank earned net income of $29.7 million, which is a 20.8% increase from 2014 net income of $24.6 million. Diluted earnings per share were $2.13 as compared to $1.78 for 2014. Net income for the fourth quarter was $7.5 million or $0.54 per share. During the quarter, we closed the acquisition of United International Bank of New York. Costs related to the acquisition and integration were $658,000 for the quarter.

“The acquisition increased our deposits and loans by $158.0 million and $149.2 million, respectively. Organic loan growth for the year was 19.1% and organic deposit growth for the year was 20.0% for 2015. Likewise, excluding the acquisition, loans and deposits grew organically at 4.0% and 7.2%, respectively, measured on a linked-quarter basis.

“During the quarter, total nonperforming assets declined to $6.4 million. The reduction was largely the result of moving a nonperforming loan to OREO status and the related charge-off of the previously allocated allowance.

“The New York acquisition provides our Bank with an entrance into a very vibrant new market and the deployment of some excess capital. Other highlights of the quarter and the year include the following:

  • Continued success in overhead control and efficiency ratio improvement
  • Further diversification of the loan portfolio
  • Substantial growth in core deposits
  • Slightly expanded net interest margin year over year in a very competitive market

“As our Bank’s loan portfolio is approximately 90% floating rate, we should continue to benefit from any future rate increases in 2016. We remain very positive on all aspects of the Bank’s operations.”

Quarterly Results
Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $22.3 million for the fourth quarter of 2015. This compares favorably to the $19.4 million recorded in the fourth quarter of 2014 and to the $21.6 million recorded in the third quarter of 2015. The increase over both comparable periods is due primarily to loan growth, and was aided by the UIB acquisition on November 20, 2015. The Bank’s taxable equivalent net interest margin was 3.88% for the fourth quarter of 2015, a 12 basis point decrease from the 4.00% achieved in the third quarter of 2015 and a 10 basis point decrease from the 3.98% recorded in the fourth quarter of 2014. The margin for the third quarter of 2015 was aided by a $1.0 million interest recovery.

Noninterest Income. For the fourth quarter of 2015, noninterest income was $953,000 compared with $751,000 for the same quarter last year and compared to $940,000 for the third quarter of 2015. Service charges on deposits were down $81,000 compared to the same period last year and down $36,000 compared to the third quarter of 2015. Trade finance income was $453,000 for the fourth quarter of 2015, an increase of $251,000 compared to the same period last year and an increase of $73,000 compared to the third quarter of 2015. This was primarily due to higher deal volume. Other income was $162,000, an increase of $31,000 over the fourth quarter of 2014 and a decrease of $23,000 from the third quarter of 2015.

Noninterest Expense. Total noninterest expense was $9.9 million for the fourth quarter of 2015, an increase of $1.8 million over the same period last year and an increase of $1.2 million over the third quarter of 2015. Salaries and benefits expense totaled $5.3 million for the fourth quarter of 2015 compared to $5.1 million for the same period last year and compared to $4.9 million for the third quarter of 2015. The increase over both comparable periods was due mainly to staffing increases as well as the addition of UIB. Occupancy expense totaled $1.0 million compared to the $773,000 recorded in the same period in 2014 and the $908,000 recorded in the third quarter of 2015. The increase over the prior year was due to the addition of the New York office with the UIB acquisition as well as the new Tarzana Valley branch which opened in early 2015. Professional services expense was $1.4 million for the fourth quarter of 2015 compared to $966,000 for the same quarter of 2014 and $1.3 million recorded in the third quarter of 2015. Other expenses were $1.6 million for the fourth quarter of 2015, of which $658,000 were acquisition-related charges. Excluding these, other expenses were $957,000, up from the $867,000 recorded in the same period in 2014. Total other expense in the third quarter of 2015 was $1,269,000, of which $415,000 was acquisition-related resulting in an adjusted other expense total of $854,000.

Income Taxes

The Bank recorded a provision for income taxes of $5.5 million for the fourth quarter of 2015. This represents an effective tax rate (“ETR”) of 42.3% for the quarter. This is up from the ETR of 40.6% for the third quarter of 2015. This increase is due to purchase accounting related to the acquisition of UIB during the period, as well as the Bank’s growing profitability in 2015 relative to tax exempt income and deductible items.

Annual Results
Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses increased to $83.8 million compared to $71.0 million for 2014. This is primarily due to growth in the loan portfolio over the course of 2015 and to a lesser extent, the UIB acquisition. Interest income grew by $14.4 million or 17.9% while interest expense increased by just $1.5 million or 16.2%. The Bank’s taxable equivalent net interest margin was 3.92% for 2015, up 3 basis points from the 3.89% level posted in 2014.

Noninterest Income. Noninterest income reached $3.9 million in 2015, an increase of $271,000 over the $3.6 million recorded in 2014. This was due to an increase in Trade Finance income of $526,000 partially offset by a decrease in service charges of $354,000. Other income increased from $652,000 in 2014 to $744,000 in 2015.

Noninterest Expense. Total noninterest expense was $35.7 million in 2015, an increase of $5.3 million over the $30.4 million posted in 2014. Most of the increase in noninterest expense was in personnel expense as that increased from $17.9 million in 2014 to $21.0 million in 2015, a $3.1 million or 17.0% increase. Most of the increase is due to increased staffing levels over 2014 levels but also due to the UIB acquisition. Occupancy expense was $3.7 million, up from the $3.2 million recorded in 2014. This was mainly due to the new Tarzana Branch office as well as the acquisition of UIB. Professional services expense totaled $5.0 million for 2015 compared to $4.1 million in 2014. This increase was mainly due to an increase in legal fees associated with mostly legacy cases. Net gain/loss on OREO was a net gain of $480,000 in 2015, down from a net gain $1.1 million in 2014. Other expenses were $4.9 million in 2015, a $238,000 increase from the $4.6 million recorded in 2014.

Balance Sheet Summary

Total gross loans and leases at December 31, 2015 were $2.06 billion, an increase of $455.8 million or 28.4% over the total of $1.60 billion as of December 31, 2014. Of that total growth, $149.2 million is attributable to the acquisition of UIB. The tables below indicate loans by type as of December 31, 2015 as compared to the end of 2014:

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

Loan Type (000’s)December 31, 2015December 31, 2014$ Change% Change
R/E – Residential/Multifamily$ 415,097 $ 283,958 $ 131,139 46.2%
R/E – Land 16,713 13,621 3,092 22.7%
R/E – Commercial 861,317 653,380 207,937 31.8%
R/E – Construction 131,404 126,485 4,919 3.9%
Commercial & Industrial 635,465 526,705 108,760 20.6%
Total$ 2,059,996 $ 1,604,149 $ 455,847 28.4%

Total deposits as of December 31, 2015 were $2.29 billion, an increase of $512.9 million from the $1.78 billion at December 31, 2014. Of that increase, $158.0 million is attributable to the acquisition of UIB. As of December 31, 2015 compared to December 31, 2014; noninterest-bearing demand deposits increased by $118.1 million or 26.6%, interest-bearing demand and savings deposits increased by $231.6 million or 42.3% and time deposits increased by $163.1 million or 20.8%. Total assets were $2.6 billion, a $547.0 million or 26.6% increase from the total of $2.05 billion as of December 31, 2014.

Asset Quality
As of December 31, 2015 nonaccrual loans totaled $2.3 million, down from the $8.1 million total as of December 31, 2014. Total net charge-offs for the fourth quarter of 2015 were $1.7 million compared to $203,000 for the third quarter of 2015, which was made up of one charge-off for $1.8 million, slightly offset by recoveries totaling $95,000 across several loans. The Bank recorded a provision for loan losses of $300,000 for the fourth quarter of 2015. Although nonperforming loan and economic trends continue to be positive, management believes that due to growth and other factors, this provision is appropriate in order to maintain an allowance level deemed sufficient. This is a decrease from the $500,000 provision recorded in the same quarter last year and to the $500,000 provision recorded in the second quarter of 2015. The allowance for loan loss at December 31, 2015 was $22.7 million or 1.10% of total loans compared to $23.0 million or 1.43% of total loans at December 31, 2014.

OREO

As of December 31, 2015, the Bank holds one OREO property, a $4.1 million multi-family property located outside of California.

Capitalization
As of December 31, 2015, the Bank’s tier 1 leverage ratio was 10.49%, the common equity tier 1 capital ratio was 11.02% and the total capital ratio was 11.99%. As of December 31, 2014, the Bank’s tier 1 leverage ratio was 11.73%, the tier 1 risk based capital ratio was 12.72% and the total risk based capital ratio was 13.97%.

Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s fourth quarter 2015 financial results will be held tomorrow, January 22, 2016 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 866-652-5200 (domestic) or 412-317-6060 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com. Web participants are encouraged to go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

Preferred Bank's Chairman and CEO Li Yu, President and COO Wellington Chen, Chief Financial Officer Edward J. Czajka, and Chief Credit Officer Nick Pi will be present to discuss Preferred Bank's financial results, business highlights and outlook. After the live webcast, a replay will remain available in the Investor Relations section of Preferred Bank's website. A replay of the call will also be available at 877-344-7529 (domestic) or 412-317-0088 (international) through February 6, 2016; the passcode is 10079341.

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 eleven full-service branch banking offices in Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Anaheim, Pico Rivera, Tarzana 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.

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 2014 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at www.preferredbank.com.

Financial Tables to Follow

PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
For the Quarter Ended
December 31, September 30, December 31,
2015 2015 2014
Interest income:
Loans, including fees $ 23,792 $ 22,812 $ 20,265
Investment securities 1,585 1,531 1,519
Fed funds sold 46 37 37
Total interest income 25,423 24,380 21,821
Interest expense:
Interest-bearing demand 871 794 763
Savings 14 14 16
Time certificates 2,150 1,929 1,627
FHLB borrowings 70 46 32
Total interest expense 3,105 2,783 2,438
Net interest income 22,318 21,597 19,383
Provision for loan losses 300 500 500
Net interest income after provision for
loan losses 22,018 21,097 18,883
Noninterest income:
Fees & service charges on deposit accounts 254 290 335
Trade finance income 453 380 202
BOLI income 86 85 83
Other income 161 185 131
Total noninterest income 954 940 751
Noninterest expense:
Salary and employee benefits 5,286 4,893 5,059
Net occupancy expense 1,024 908 773
Business development and promotion expense 246 133 77
Professional services 1,421 1,289 966
Office supplies and equipment expense 336 267 314
Other real estate owned related (income) expense and valuation allowance on LHFS 1 (19) 65
Other 1,614 1,269 867
Total noninterest expense 9,928 8,740 8,121
Income before provision for income taxes 13,044 13,297 11,513
Income tax expense 5,518 5,396 4,645
Net income $ 7,526 $ 7,901 $ 6,868
Income per share available to common shareholders
Basic $ 0.55 $ 0.57 $ 0.51
Diluted $ 0.54 $ 0.57 $ 0.50
Weighted-average common shares outstanding
Basic 13,547,197 13,509,986 13,345,631
Diluted 13,743,157 13,690,228 13,689,342


PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net income per share and shares)
For the Year Ended
December 31,December 31, Change
2015 2014 %
Interest income:
Loans, including fees $ 88,235 $ 74,080 19.1%
Investment securities 6,304 6,107 3.2%
Fed funds sold 163 140 16.4%
Total interest income 94,702 80,327 17.9%
Interest expense:
Interest-bearing demand 3,160 2,773 13.9%
Savings 59 72 -18.4%
Time certificates 7,455 6,367 17.1%
FHLB borrowings 182 128 42.5%
Total interest expense 10,856 9,340 16.2%
Net interest income 83,846 70,987 18.1%
Provision for credit losses 1,800 3,350 -46.3%
Net interest income after provision for
loan losses 82,046 67,637 21.3%
Noninterest income:
Fees & service charges on deposit accounts 1,178 1,532 -23.1%
Trade finance income 1,630 1,104 47.7%
BOLI income 339 331 2.4%
Net gain (loss) on sale of investment securities - 2 -100.0%
Other income 745 652 14.3%
Total noninterest income 3,892 3,621 7.5%
Noninterest expense:
Salary and employee benefits 20,998 17,945 17.0%
Net occupancy expense 3,681 3,195 15.2%
Business development and promotion expense 611 420 45.7%
Professional services 4,968 4,092 21.4%
Office supplies and equipment expense 1,119 1,267 -11.7%
Other real estate owned related income and valuation allowance on LHFS (480) (1,120) -57.1%
Other 4,851 4,612 5.2%
Total noninterest expense 35,748 30,411 17.5%
Income before provision for income taxes 50,191 40,847 22.9%
Income tax expense 20,485 16,255 26.0%
Net income $ 29,706 $ 24,592 20.8%
Income per share available to common shareholders
Basic $ 2.16 $ 1.83 18.4%
Diluted $ 2.13 $ 1.78 19.6%
Weighted-average common shares outstanding
Basic 13,484,216 13,290,258 1.5%
Diluted 13,677,892 13,620,027 0.4%


PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
December 31, December 31,
2015 2014
Assets
Cash and due from banks $ 296,175 $ 215,194
Fed funds sold 13,000 25,000
Cash and cash equivalents 309,175 240,194
Securities held to maturity, at amortized cost 5,830 7,815
Securities available-for-sale, at fair value 169,613 150,539
Loans and leases 2,059,996 1,604,149
Less allowance for loan and lease losses (22,658) (22,974)
Less net deferred loan fees (3,092) (2,100)
Net loans and leases 2,034,246 1,579,075
Other real estate owned 4,112 8,811
Customers' liability on acceptances 897 156
Bank furniture and fixtures, net 5,251 4,132
Bank-owned life insurance 8,763 8,525
Accrued interest receivable 8,128 6,497
Investment in affordable housing 16,119 17,999
Federal Home Loan Bank stock 7,162 6,155
Deferred tax assets 23,291 21,357
Income tax receivable 94 -
Other asset 8,363 2,899
Total assets $ 2,601,044 $ 2,054,154
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand $ 561,522 $ 443,385
Interest-bearing demand 748,918 525,781
Savings 30,703 22,211
Time certificates of $250,000 or more 321,537 276,197
Other time certificates 626,494 508,685
Total deposits $ 2,289,174 $ 1,776,259
Acceptances outstanding 897 156
Advances from Federal Home Loan Bank 26,632 20,000
Commitments to fund investment in affordable housing partnership 3,958 8,151
Accrued interest payable 1,919 1,419
Other liabilities 14,375 13,143
Total liabilities 2,336,955 1,819,128
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; no issued and outstanding
shares at December 31, 2015 and December 31, 2014
Common stock, no par value. Authorized 100,000,000 shares; issued
and outstanding 13,884,942 and 13,503,458 shares at December 31, 2015 and December 31, 2014, respectively 166,560 164,023
Treasury stock (19,115) (19,115)
Additional paid-in-capital 34,650 29,631
Accumulated income 81,045 58,552
Accumulated other comprehensive income:
Unrealized gain on securities, available-for-sale, net of tax of $718 and $1,405 at December 31, 2015 and December 31, 2014 949 1,935
Total shareholders' equity 264,089 235,026
Total liabilities and shareholders' equity $ 2,601,044 $ 2,054,154


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
For the Quarter Ended
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
Unaudited historical quarterly operations data:
Interest income $ 25,423 $ 24,380 $ 23,053 $ 21,846 $ 21,821
Interest expense 3,105 2,783 2,486 2,482 2,438
Interest income before provision for credit losses 22,318 21,597 20,567 19,364 19,383
Provision for credit losses 300 500 500 500 500
Noninterest income 954 940 1,131 868 751
Noninterest expense 9,928 8,740 8,462 8,618 8,121
Income tax expense 5,518 5,396 5,147 4,424 4,645
Net income 7,526 7,901 7,589 6,690 6,868
Earnings per share
Basic $ 0.55 $ 0.57 $ 0.55 $ 0.49 $ 0.51
Diluted $ 0.54 $ 0.57 $ 0.55 $ 0.48 $ 0.50
Ratios for the period:
Return on average assets 1.27% 1.42% 1.44% 1.28% 1.37%
Return on beginning equity 11.61% 12.55% 12.49% 11.54% 11.92%
Net interest margin (Fully-taxable equivalent) 3.88% 4.00% 4.01% 3.83% 3.98%
Noninterest expense to average assets 1.68% 1.58% 1.60% 1.65% 1.62%
Efficiency ratio 42.66% 38.78% 39.00% 42.60% 40.33%
Net charge-offs (recoveries) to average loans (annualized) 0.36% 0.05% 0.03% 0.02% 0.05%
Ratios as of period end:
Tier 1 leverage capital ratio 10.49% 11.47% 11.59% 11.26% 11.73%
Common equity tier 1 risk-based capital ratio 11.02% 11.80% 11.91% 12.10% N/A
Tier 1 risk-based capital ratio 11.02% 11.80% 11.91% 12.10% 12.72%
Total risk-based capital ratio 11.99% 12.93% 13.07% 13.30% 13.97%
Allowances for credit losses to loans and leases at end of period 1.10% 1.31% 1.36% 1.40% 1.43%
Allowance for credit losses to non-performing
loans and leases 969.52% 303.27% 299.06% 288.16% 268.19%
Average balances:
Total loans and leases $ 1,876,544 $ 1,741,762 $ 1,673,710 $ 1,612,556 $ 1,555,868
Earning assets $ 2,297,154 $ 2,160,075 $ 2,070,542 $ 2,064,435 $ 1,943,034
Total assets $ 2,345,319 $ 2,201,060 $ 2,117,610 $ 2,115,354 $ 1,990,417
Total deposits $ 2,039,567 $ 1,907,719 $ 1,832,688 $ 1,834,920 $ 1,707,908
(1) Risk-based capital ratios were calculated under BASEL III rules, which became effective on January 1, 2015. Ratios for the prior periods were calculated under Basel I rules.
(2) Loans held for sale are excluded
(3) Loans held for sale are included



PREFERRED BANK
Selected Consolidated Financial Information
(in thousands, except for ratios)
For the Year Ended
December 31, December 31,
2015 2014
Interest income $ 94,702 $ 80,327
Interest expense 10,856 9,340
Interest income before provision for credit losses 83,846 70,987
Provision for credit losses 1,800 3,350
Noninterest income 3,892 3,621
Noninterest expense 35,748 30,411
Income tax expense 20,485 16,255
Net income 29,706 24,592
Earnings per share
Basic $ 2.16 $ 1.83
Diluted $ 2.13 $ 1.78
Ratios for the period:
Return on average assets 1.35% 1.31%
Return on beginning equity 12.64% 11.88%
Net interest margin (Fully-taxable equivalent) 3.92% 3.89%
Noninterest expense to average assets 1.62% 1.62%
Efficiency ratio 40.74% 40.76%
Net charge-offs (recoveries) to average loans 0.12% -0.01%
Average balances:
Total loans and leases* $ 1,731,871 $ 1,438,122
Earning assets $ 2,154,355 $ 1,836,375
Total assets $ 2,200,557 $ 1,880,019
Total deposits $ 1,909,397 $ 1,620,709
* Loans held for sale are included
** Loans held for sale are excluded


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
As of
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents $ 309,175 $ 232,707 $ 208,015 $ 242,053 $ 240,194
Securities held-to-maturity, at amortized cost 5,830 6,307 6,806 7,139 7,815
Securities available-for-sale, at fair value 169,613 164,378 161,775 165,330 150,539
Loans and Leases:
Real estate - Single and multi-family residential $ 415,097 $ 328,124 $ 290,186 $ 306,284 $ 283,958
Real estate - Land for housing 14,408 14,429 13,102 11,658 12,132
Real estate - Land for income properties 2,305 1,876 1,891 1,906 1,489
Real estate - Commercial 861,317 770,494 712,383 676,034 653,380
Real estate - For sale housing construction 73,858 79,406 71,945 50,458 48,892
Real estate - Other construction 57,546 48,438 49,413 84,065 77,593
Commercial and industrial 596,887 555,680 570,408 502,453 495,827
Trade finance and other 38,578 38,602 40,403 38,234 30,878
Gross loans 2,059,996 1,837,049 1,749,731 1,671,092 1,604,149
Allowance for loan and lease losses (22,658) (24,055) (23,758) (23,388) (22,974)
Net deferred loan fees (3,092) (2,476) (2,179) (2,216) (2,100)
Total loans, net $ 2,034,246 $ 1,810,518 $ 1,723,794 $ 1,645,488 $ 1,579,075
Other real estate owned $ 4,112 $ - $ - $ 8,811 $ 8,811
Investment in affordable housing 16,119 16,589 17,059 17,529 17,999
Federal Home Loan Bank stock 7,162 6,677 6,677 6,155 6,155
Other assets 54,786 45,370 46,030 45,208 43,566
Total assets $ 2,601,044 $ 2,282,546 $ 2,170,156 $ 2,137,713 $ 2,054,154
Liabilities:
Deposits:
Demand $ 561,522 $ 477,523 $ 519,501 $ 493,440 $ 443,385
Interest-bearing demand 748,918 697,402 568,243 585,286 525,781
Savings 30,703 21,159 23,855 24,056 22,211
Time certificates of $250,000 or more 321,537 263,949 260,205 243,360 276,197
Other time certificates 626,494 527,602 510,394 510,809 508,685
Total deposits $ 2,289,174 $ 1,987,635 $ 1,882,198 $ 1,856,950 $ 1,776,258
Advances from Federal Home Loan Bank $ 26,632 $ 20,000 $ 20,000 $ 20,000 $ 20,000
Commitments to fund investment in affordable housing partnership 3,958 4,139 4,139 7,726 8,151
Other liabilities 17,191 13,590 13,954 9,299 14,718
Total liabilities $ 2,336,955 $ 2,025,364 $ 1,920,291 $ 1,893,974 $ 1,819,128
Equity:
Net common stock, no par value $ 182,095 $ 180,260 $ 179,360 $ 177,978 $ 174,539
Retained earnings 81,045 75,679 69,431 63,545 58,552
Accumulated other comprehensive income 949 1,243 1,074 2,216 1,935
Total shareholders' equity $ 264,089 $ 257,182 $ 249,865 $ 243,739 $ 235,026
Total liabilities and shareholders' equity $ 2,601,044 $ 2,282,546 $ 2,170,156 $ 2,137,713 $ 2,054,154


Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
Year Ended Year Ended
December 31, 2015 December 31, 2014
(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period $ 22,974 $ 19,494
Charge-Offs
Commercial & Industrial 1,475 436
Mini-perm Real Estate 1,793 4,243
Construction - Residential - -
Construction - Commercial - -
Land - Residential - -
Land - Commercial - -
Others - -
Total Charge-Offs 3,268 4,679
Recoveries
Commercial & Industrial 131 3
Mini-perm Real Estate 144 -
Construction - Residential - -
Construction - Commercial 20 134
Land - Residential 100 -
Land - Commercial 757 4,672
Total Recoveries 1,152 4,809
Net Loan Charge-Offs 2,116 (130)
Provision for Credit Losses 1,800 3,350
Balance at End of Period $ 22,658 $ 22,974
Average Loans and Leases* $ 1,731,871 $ 1,438,122
Loans and Leases at end of Period* $ 2,059,996 $ 1,604,149
Net Charge-Offs to Average Loans and Leases 0.12% -0.01%
Allowances for credit losses to loans and leases at end of period ** 1.10% 1.43%
* Loans held for sale are included
** Loans held for sale are excluded

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