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Preferred Bank Reports Second Quarter Results

LOS ANGELES, July 20, 2016 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended June 30, 2016. Preferred Bank (“the Bank”) reported net income of $8.6 million or $0.61 per diluted share for the second quarter of 2016. This compares to net income of $7.6 million or $0.55 per diluted share for the second quarter of 2015 and compares to net income of $7.8 million or $0.56 per diluted share for the first quarter of 2016.

Highlights from the second quarter of 2016:

Total assets
$2.92 billion
Linked quarter loan growth
$114.2 million or 5.3%
Linked quarter deposit growth
$158.0 million or 6.7%
Return on average assets
1.26%
Return on beginning equity
12.62%
Efficiency ratio
39.4%
Net interest margin
3.87%

Li Yu, Chairman and CEO commented, “The Bank recently completed a $72.5 million private placement of subordinated debentures. $62.5 million was received on June 13, 2016 and an additional $10 million was received on July 8, 2016. This new capital has substantially improved our tier 2 capital ratio and significantly reduced our CRE concentration ratio which allows for the growth momentum to continue. The interest expense on the debt was approximately $186,000 for the quarter and so in order to minimize the overall cost to the Bank going forward, we have deployed $34 million of these funds in early July to purchase a home mortgage portfolio. Further purchases like this one are under consideration, as they allow for continued diversification of our loan portfolio.

“Preferred Bank’s second quarter loan growth was strong at $114 million, or 5.3%. We are very pleased with these results as market conditions are favorable and our staff’s effort has been consistent.

“Deposit growth was even more significant for the quarter. Total deposits have increased $158 million or 6.7% on a linked quarter basis. The large deposit growth is partly the result of public recognition of Preferred Bank’s performance. Recently, S&P Global Market Intelligence ranked Preferred Bank 3rd best in the nation among all banks with $1 to $10 billion in assets, with the top two being privately held. Preferred Bank is therefore considered the top publicly-traded bank in the $1 to $10 billion asset group. Our deposits were recently rated “A-” by Kroll Bond Rating Agency.

“Net income for the quarter was $8.6 million or $0.61 per diluted share, which compares favorably with the $7.8 million earned in the first quarter of this year. An improved net interest margin and higher average outstanding loans were the main reasons. During the quarter, our efficiency ratio of 39.4% was also an improvement from the 44.1% for the first quarter of 2016. As in the past few years, we plan to continue increasing our compliance staff in order to meet new and more complex laws and regulations. Meanwhile, we also continue to add front line staff on an opportunistic basis to sustain our growth. Our Bank maintains a highly asset sensitive balance sheet which will benefit from an increase in short term rates when it occurs.

“Amid all of the positive results of the quarter, there was one setback. A Syndicated National Credit (“SNiC”) loan was downgraded to non-accrual status during the quarter. We have determined the event was an isolated case as we have underwritten the loan in accordance with our standards based upon the information provided. A larger than normal provision for loan loss was made in addition to the loan loss recovery we received during the quarter. The silver lining here is that it serves as a reminder that we need to be even more cautious going forward.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $25.7 million for the second quarter of 2016. This compares favorably to the $20.6 million recorded in the second quarter of 2015 and to the $23.9 million recorded in the first quarter of 2016. The increase over both comparable periods is due primarily to growth in interest income on loans partially offset by an increase in interest expense on deposits and borrowings. The Bank’s taxable equivalent net interest margin was 3.87% for the second quarter of 2016, a 14 basis point decrease from the 4.01% achieved in the second quarter of 2015 but was an 8 basis point increase from the 3.79% recorded in the first quarter of 2016.

Noninterest Income. For the second quarter of 2016, noninterest income was $1,660,000 compared with $1,131,000 for the same quarter last year and compared to $1,163,000 for the first quarter of 2016. The increase over both periods is primarily due to trade finance income as letter of credit activity has increased. Service charges on deposits were primarily flat compared to the same period last year but were up by $44,000 over the first quarter of 2016. Trade finance income was $835,000 for the second quarter of 2016, an increase of $344,000 compared to the same period last year and an increase of $418,000 compared to the first quarter of 2016. Other income was $398,000, an increase of $178,000 over the second quarter of 2015 and an increase of $67,000 over the first quarter of 2016. The increase over both comparable periods was due to an increase in unutilized line fees on loans.

Noninterest Expense. Total noninterest expense was $10.8 million for the second quarter of 2016, an increase of $2.3 million over the same period last year and down from the $11.0 million recorded in the first quarter of 2016. Salaries and benefits expense totaled $6.1 million for the second quarter of 2016, an increase over the $5.5 million recorded for the same period last year and a decrease from the $7.0 million recorded in the first quarter of 2016. The increase over the same period last year was due primarily to staffing/merit increases, much of that due to the acquisition of United International Bank (“UIB”), and the decrease from the first quarter of 2016 was due to heightened payroll taxes in the first quarter of 2016 as well as a higher level of capitalized loan origination costs. Occupancy expense totaled $1.3 million compared to the $899,000 recorded in the same period in 2015 and the $1.2 million recorded in the first quarter of 2016. The increase over the prior year was due mainly to the addition of the New York office with the UIB acquisition as well as a new administrative office which the Bank opened in November 2015 in El Monte, California. Professional services expense was $1.4 million for the second quarter of 2016 compared to $1.2 million for the same quarter of 2015 and $962,000 recorded in the first quarter of 2016. The Bank incurred $243,000 in costs related to its one OREO property. This compares to a gain of $552,000 in the second quarter of 2015 and expense of $199,000 in the first quarter of 2016. Other expenses were $1.3 million for the second quarter of 2016 compared to $1.0 million for the same period last year and $1.1 million for the first quarter of 2016.

Income Taxes

The Bank recorded a provision for income taxes of $5.7 million for the second quarter of 2016. This represents an effective tax rate (“ETR”) of 40.0% for the quarter. This is down from the ETR of 40.4% for the second quarter of 2015 and down from the 40.6% ETR recorded in the first quarter of 2016. The difference between the statutory rate (Federal and State combined) of 42.05% and the ETR is due to tax deductible items as well as the Bank’s investments in various Low Income Housing Income Tax Credit (“LIHTC”) funds.

Balance Sheet Summary

Total gross loans and leases at June 30, 2016 were $2.27 billion, an increase of $212.8 million or 10.3% over the total of $2.06 billion as of December 31, 2015. Total deposits reached $2.52 billion, an increase of $229.3 million or 10.0% over the total of $2.29 billion as of December 31, 2015. Total assets reached $2.92 billion as of June 30, 2016, an increase of $316.8 million or 12.2% over the total of $2.60 billion as of December 31, 2015.

Asset Quality

As of June 30, 2016 nonaccrual loans totaled $3.3 million, an increase of $1.3 million over the $2.0 million total as of December 31, 2015. Total net charge-offs for the second quarter of 2016 were $2.0 million compared to a net recovery of $223,000 in the first quarter of 2016 and compared to a net charge off of $130,000 for the second quarter of 2015. The Bank recorded a provision for loan loss of $2.3 million for the second quarter of 2016 which was impacted by the new nonaccrual loan which was deemed such in the second quarter. Although this is a new nonperforming loan, all trends and all other factors relative to the quality of the loan portfolio, as well as the economic conditions in the areas in which we operate, continue to remain strong and thrive. The $2.3 million provision is an increase from the $500,000 provision recorded in the same quarter last year and to the $800,000 provision recorded in the first quarter of 2016. The allowance for loan loss at June 30, 2016 was $24.0 million or 1.06% of total loans compared to $22.7 million or 1.10% of total loans at December 31, 2015.

OREO

As of June 30, 2016 and December 31, 2015, the Bank held one OREO property, a $4.1 million multi-family property located outside of California.

Capitalization
As of June 30, 2016, the Bank’s leverage ratio was 10.05%, the common equity tier 1 capital ratio was 10.41% and the total capital ratio was 13.65%. As of December 31, 2015, the Bank’s leverage ratio was 10.46%, the common equity tier 1 ratio was 11.03% and the total risk based capital ratio was 12.00%.

Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s second quarter 2016 financial results will be held tomorrow, July 21st 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 August 4, 2016; the passcode is 10089672.

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 the California cities of Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Anaheim, Pico Rivera, Tarzana and San Francisco, and one office 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 2015 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,
2016 2016 2015
Interest income:
Loans, including fees $ 27,892 $ 25,460 $ 21,276
Investment securities 1,722 1,784 1,731
Fed funds sold 109 77 46
Total interest income 29,723 27,321 23,053
Interest expense:
Interest-bearing demand 1,051 1,050 709
Savings 18 18 15
Time certificates 2,660 2,315 1,727
FHLB borrowings 67 59 35
Subordinated debt issuance 186 - -
Total interest expense 3,982 3,442 2,486
Net interest income 25,741 23,879 20,567
Provision for loan losses 2,300 800 500
Net interest income after provision for
loan losses 23,441 23,079 20,067
Noninterest income:
Fees & service charges on deposit accounts 338 294 336
Trade finance income 835 417 491
BOLI income 89 85 84
Net gain on sale of investment securities - 36 -
Other income 398 331 220
Total noninterest income 1,660 1,163 1,131
Noninterest expense:
Salary and employee benefits 6,065 7,021 5,507
Net occupancy expense 1,267 1,203 899
Business development and promotion expense 152 222 124
Professional services 1,409 962 1,175
Office supplies and equipment expense 376 351 263
Other real estate owned related (income) expense and valuation allowance on LHFS 243 199 (552)
Other 1,279 1,080 1,046
Total noninterest expense 10,791 11,038 8,462
Income before provision for income taxes 14,310 13,204 12,736
Income tax expense 5,724 5,361 5,147
Net income $ 8,586 $ 7,843 $ 7,589
Income per share available to common shareholders
Basic $ 0.61 $ 0.56 $ 0.55
Diluted $ 0.61 $ 0.56 $ 0.55
Weighted-average common shares outstanding
Basic 13,851,081 13,796,892 13,480,609
Diluted 13,957,117 13,911,195 13,659,167
Dividends per share $ 0.15 $ 0.15 $ 0.12

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
2016 2015 %
Interest income:
Loans, including fees $ 53,352 $ 41,631 28.2%
Investment securities 3,506 3,188 10.0%
Fed funds sold 186 80 131.9%
Total interest income 57,044 44,899 27.1%
Interest expense:
Interest-bearing demand 2,101 1,495 40.5%
Savings 36 30 19.9%
Time certificates 4,975 3,377 47.3%
FHLB borrowings 126 66 90.1%
Subordinated debt issuance 186 - 100.0%
Total interest expense 7,424 4,968 49.4%
Net interest income 49,620 39,931 24.3%
Provision for credit losses 3,100 1,000 210.0%
Net interest income after provision for
loan losses 46,520 38,931 19.5%
Noninterest income:
Fees & service charges on deposit accounts 632 635 -0.5%
Trade finance income 1,252 797 57.0%
BOLI income 174 168 3.3%
Net gain on sale of investment securities 36 - 100.0%
Other income 729 399 82.8%
Total noninterest income 2,823 1,999 41.2%
Noninterest expense:
Salary and employee benefits 13,086 10,819 21.0%
Net occupancy expense 2,470 1,749 41.2%
Business development and promotion expense 374 233 60.3%
Professional services 2,371 2,259 5.0%
Office supplies and equipment expense 727 517 40.6%
Other real estate owned related expense (income) and valuation allowance on LHFS 442 (463) -195.5%
Other 2,359 1,966 20.0%
Total noninterest expense 21,829 17,080 27.8%
Income before provision for income taxes 27,514 23,850 15.4%
Income tax expense 11,085 9,571 15.8%
Net income $ 16,429 $ 14,279 15.1%
Income per share available to common shareholders
Basic $ 1.17 $ 1.04 12.5%
Diluted $ 1.16 $ 1.03 12.7%
Weighted-average common shares outstanding
Basic 13,823,986 13,290,258 4.0%
Diluted 13,933,721 13,620,027 2.3%
Dividends per share $ 0.30 $ 0.24 25.0%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
June 30, December 31,
2016 2015
(Unaudited) (Audited)
Assets
Cash and due from banks$316,985 $296,175
Fed funds sold 59,500 13,000
Cash and cash equivalents 376,485 309,175
Securities held to maturity, at amortized cost 5,143 5,830
Securities available-for-sale, at fair value 201,256 169,502
Loans and leases 2,272,230 2,059,392
Less allowance for loan and lease losses (23,983) (22,658)
Less net deferred loan fees (3,682) (3,012)
Net loans and leases 2,244,565 2,033,722
Other real estate owned 4,112 4,112
Customers' liability on acceptances 108 897
Bank furniture and fixtures, net 5,572 5,601
Bank-owned life insurance 8,709 8,763
Accrued interest receivable 8,220 8,128
Investment in affordable housing 24,886 16,052
Federal Home Loan Bank stock 9,332 7,162
Deferred tax assets 23,049 23,802
Income tax receivable - 299
Other asset 4,204 5,801
Total assets$2,915,641 $2,598,846
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand$540,374 $558,906
Interest-bearing demand 855,661 748,918
Savings 29,031 30,703
Time certificates of $250,000 or more 398,736 321,537
Other time certificates 692,063 626,495
Total deposits$2,515,865 $2,286,559
Acceptances outstanding 108 897
Advances from Federal Home Loan Bank 26,573 26,635
Subordinated debt issuance 61,475 -
Commitments to fund investment in affordable housing partnership 11,199 3,958
Accrued interest payable 2,562 1,919
Other liabilities 15,507 14,733
Total liabilities 2,633,289 2,334,701
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; no issued and outstanding
shares at June 30, 2016 and December 31, 2015
- -
Common stock, no par value. Authorized 100,000,000 shares; issued
and outstanding 14,116,474 and 13,884,942 shares at June 30, 2016 and December 31, 2015, respectively
167,892 166,560
Treasury stock (19,115) (19,115)
Additional paid-in-capital 38,435 34,672
Accumulated income 93,119 81,046
Accumulated other comprehensive income:
Unrealized gain on securities, available-for-sale, net of tax of $1,467 and $713 at June 30, 2016 and December 31, 2015, respectively 2,021 982
Total shareholders' equity 282,352 264,145
Total liabilities and shareholders' equity$2,915,641 $2,598,846

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,
2016 2016 2015 2015 2015
Unaudited historical quarterly operations data:
Interest income$29,723 $27,321 $25,423 $24,380 $23,053
Interest expense 3,982 3,442 3,105 2,783 2,486
Interest income before provision for credit losses 25,741 23,879 22,318 21,597 20,567
Provision for credit losses 2,300 800 300 500 500
Noninterest income 1,660 1,163 954 940 1,131
Noninterest expense 10,791 11,038 9,890 8,740 8,462
Income tax expense 5,724 5,361 5,518 5,396 5,147
Net income 8,586 7,843 7,563 7,901 7,589
Earnings per share
Basic$0.61 $0.56 $0.55 $0.57 $0.55
Diluted$0.61 $0.56 $0.54 $0.57 $0.55
Ratios for the period:
Return on average assets 1.26% 1.21% 1.28% 1.42% 1.44%
Return on beginning equity 12.62% 11.94% 11.67% 12.55% 12.49%
Net interest margin (Fully-taxable equivalent) 3.87% 3.79% 3.88% 4.00% 4.01%
Noninterest expense to average assets 1.58% 1.70% 1.67% 1.58% 1.60%
Efficiency ratio 39.38% 44.08% 42.50% 38.78% 39.00%
Net charge-offs (recoveries) to average loans (annualized) 0.36% -0.04% 0.36% 0.05% 0.03%
Ratios as of period end:
Tier 1 leverage capital ratio (1) 10.05% 10.29% 10.46% 11.47% 11.59%
Common equity tier 1 risk-based capital ratio (1) 10.41% 10.74% 11.03% 11.80% 11.91%
Tier 1 risk-based capital ratio (1) 10.41% 10.74% 11.03% 11.80% 11.91%
Total risk-based capital ratio (1) 13.65% 11.70% 12.00% 12.93% 13.07%
Allowances for credit losses to loans and leases at end of period 1.06% 1.10% 1.10% 1.31% 1.36%
Allowance for credit losses to non-performing
loans and leases 722.47% 2346.18% 1140.29% 303.27% 299.06%
Average balances:
Total loans and leases$2,248,652 $2,067,047 $1,876,544 $1,741,762 $1,673,710
Earning assets$2,687,435 $2,550,821 $2,297,154 $2,160,075 $2,070,542
Total assets$2,746,031 $2,605,907 $2,345,319 $2,201,060 $2,117,610
Total deposits$2,400,756 $2,291,764 $2,039,567 $1,907,719 $1,832,688
(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.

PREFERRED BANK
Selected Consolidated Financial Information
(in thousands, except for ratios)
For the Six Months Ended
June 30, June 30,
2016 2015
Interest income$57,044 $44,899
Interest expense 7,424 4,968
Interest income before provision for credit losses 49,620 39,931
Provision for credit losses 3,100 1,000
Noninterest income 2,823 1,999
Noninterest expense 21,829 17,080
Income tax expense 11,085 9,571
Net income 16,429 14,279
Earnings per share
Basic$1.17 $1.04
Diluted$1.16 $1.03
Ratios for the period:
Return on average assets 1.23% 1.31%
Return on beginning equity 12.51% 11.88%
Net interest margin (Fully-taxable equivalent) 3.83% 3.89%
Noninterest expense to average assets 1.64% 1.62%
Efficiency ratio 41.62% 40.76%
Net charge-offs (recoveries) to average loans 0.17% -0.01%
Average balances:
Total loans and leases$2,158,158 $1,438,122
Earning assets$2,619,287 $1,836,375
Total assets$2,676,158 $1,880,019
Total deposits$2,346,462 $1,620,709

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
As of
June 30, March 31, December 31, September 30, June 30,
2016 2016 2015 2015 2015
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents$376,485 $293,547 $309,175 $232,707 $208,015
Securities held-to-maturity, at amortized cost 5,143 5,550 5,830 6,307 6,806
Securities available-for-sale, at fair value 201,256 162,654 169,502 164,378 161,775
Loans and Leases:
Real estate - Single and multi-family residential $393,076 $401,708 $415,003 $328,124 $290,186
Real estate - Land for housing 14,817 14,838 14,408 14,429 13,102
Real estate - Land for income properties 6,316 1,816 1,795 1,876 1,891
Real estate - Commercial 995,213 924,913 861,317 770,494 712,383
Real estate - For sale housing construction 95,519 82,153 73,858 79,406 71,945
Real estate - Other construction 72,963 66,636 57,546 48,438 49,413
Commercial and industrial 659,701 626,599 596,887 555,680 570,408
Trade finance and other 34,625 39,323 38,578 38,602 40,403
Gross loans 2,272,230 2,157,986 2,059,392 1,837,049 1,749,731
Allowance for loan and lease losses (23,983) (23,681) (22,658) (24,055) (23,758)
Net deferred loan fees (3,682) (3,065) (3,012) (2,476) (2,179)
Total loans, net$2,244,565 $2,131,240 $2,033,722 $1,810,518 $1,723,794
Other real estate owned $4,112 $4,112 $4,112 $- $-
Investment in affordable housing 24,886 25,499 16,052 16,589 17,059
Federal Home Loan Bank stock 9,332 6,965 7,162 6,677 6,677
Other assets 49,862 53,783 53,291 45,370 46,030
Total assets $2,915,641 $2,683,350 $2,598,846 $2,282,546 $2,170,156
Liabilities:
Deposits:
Demand$540,374 $528,126 $558,906 $477,523 $519,501
Interest-bearing demand 855,661 803,374 748,918 697,402 568,243
Savings 29,031 30,002 30,703 21,159 23,855
Time certificates of $250,000 or more 398,736 339,971 321,537 263,949 260,205
Other time certificates 692,063 656,386 626,495 527,602 510,394
Total deposits$2,515,865 $2,357,859 $2,286,559 $1,987,635 $1,882,198
Advances from Federal Home Loan Bank $26,573 $26,601 $26,635 $20,000 $20,000
Subordinated debt issuance 61,475 - - - -
Commitments to fund investment in affordable housing partnership 11,454 11,454 3,958 4,139 4,139
Other liabilities 17,922 13,862 17,549 13,590 13,954
Total liabilities$2,633,289 $2,409,776 $2,334,701 $2,025,364 $1,920,291
Equity:
Net common stock, no par value$187,212 $185,780 $182,118 $180,310 $179,360
Retained earnings 93,119 86,716 81,046 75,629 69,431
Accumulated other comprehensive income 2,021 1,079 982 1,243 1,074
Total shareholders' equity$282,352 $273,574 $264,145 $257,182 $249,865
Total liabilities and shareholders' equity$2,915,641 $2,683,350 $2,598,846 $2,282,546 $2,170,156

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
Six Months Ended Year Ended
June 30, 2016 December 31, 2015
(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period $22,658 $22,974
Charge-Offs
Commercial & Industrial 2,663 1,475
Mini-perm Real Estate - 1,793
Construction - Residential - -
Construction - Commercial - -
Land - Residential - -
Land - Commercial - -
Others - -
Total Charge-Offs 2,663 3,268
Recoveries
Commercial & Industrial 198 131
Mini-perm Real Estate - 144
Construction - Residential - -
Construction - Commercial - 20
Land - Residential - 100
Land - Commercial 690 757
Total Recoveries 888 1,152
Net Loan Charge-Offs 1,775 2,116
Provision for Credit Losses 3,100 1,800
Balance at End of Period $23,983 $22,658
Average Loans and Leases $2,158,158 $1,731,871
Loans and Leases at end of Period $2,272,230 $2,059,392
Net Charge-Offs to Average Loans and Leases 0.17% 0.12%
Allowances for credit losses to loans and leases at end of period 1.06% 1.10%





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