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Preferred Bank Reports Record Quarterly Earnings

LOS ANGELES, Oct. 19, 2016 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended September 30, 2016. Preferred Bank (“the Bank”) reported net income of $9.9 million or $0.69 per diluted share for the third quarter of 2016. This compares to net income of $7.9 million or $0.57 per diluted share for the third quarter of 2015 and compares to net income of $8.6 million or $0.61 per diluted share for the second quarter of 2016.

Highlights from the third quarter of 2016:

Total assets $3.11 billion
Linked quarter loan growth $160.4 million or 7.1%
Linked quarter deposit growth $144.1 million or 5.7%
Return on average assets 1.31%
Return on beginning equity 13.92%
Efficiency ratio 37.7%
Net interest margin 3.59%

Li Yu, Chairman and CEO commented, “I am very pleased to report that net income for the third quarter reached $9.9 million, or $0.69 per diluted share. This represents a quarterly earnings record for the Bank.

“During the quarter, the Bank issued an additional $37.5 million in subordinated notes. That, along with the original second quarter issuance of $62.5 million brings the total size of the debt issuance to $100 million. With this new source of funding, we purchased a total of $70.4 million in home mortgages in the quarter as we continue to diversify our loan portfolio as well. The additional issuance of subordinated debt, although somewhat offset by the home mortgage pools purchased, has greatly affected our net interest margin for the quarter. The cost of the debt is 6% and the yield on the pools of loans purchased was approximately 4.2%. That, together with the organic deposit and loan growth put the NIM at 3.59% for the third quarter. Without those items, the NIM level would have been closer to that of prior quarters. However the additional issuance of subordinated debt does allow us to continue to originate commercial real estate loans at our current pace.

“Total loan growth for the quarter was $160.4 million. Excluding the $70.4 million in home mortgages purchased, organic loan growth amounted to $90.0 million, or 4.0% on a linked quarter. Total deposit growth again outpaced organic loan growth as the increase for the quarter was $144.1 million or 5.7% from June 30, 2016 totals. We are extremely pleased with the deposit growth as that allows us to continue to grow the loan portfolio.

“The efficiency ratio for the quarter was 37.7% which was the result of strong growth in net interest income coupled with a legal cost recovery of $415,000 due to a favorable legal settlement.

“The Bank’s total assets grew to $3.1 billion. To further the growth of the Bank, we will continue to make investments in both systems and human resources both on the front line and in the support areas. Also on the drawing board is the ongoing development of a home mortgage origination platform and new potential branch locations.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $26.5 million for the third quarter of 2016. This compares favorably to the $21.6 million recorded in the third quarter of 2015 and to the $25.7 million recorded in the second 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 3.59% for the third quarter of 2016, a 41 basis point decrease from the 4.00% achieved in the third quarter of 2015 and a 28 basis point decrease from the 3.87% recorded in the second quarter of 2016. The decrease compared to both periods was almost exclusively due to the issuance of $100 million in subordinated debt; $62.5 million of which was issued in late June 2016, then another $10.0 million in early July and then the final $27.5 million on September 30. So for the majority of the quarter, the Bank had interest expenses related to $72.5 million of subordinated debt at a rate of 6.0% per annum.

Noninterest Income. For the third quarter of 2016, noninterest income was $1,350,000 compared with $940,000 for the same quarter last year and compared to $1,660,000 for the second quarter of 2016. The increase over the third quarter of 2015 is due to letter of credit fee income as that activity has increased year over year. The decrease from the second quarter of 2016 is due to a decrease in other income of $306,000 as unutilized line fees on loans decreased from that period. Service charges on deposits were fairly consistent but were up by $32,000 compared to this quarter last year but down by $16,000 compared to the second quarter of 2016.

Noninterest Expense. Total noninterest expense was $10.5 million for the third quarter of 2016, an increase of $1.7 million over the same period last year and down from the $10.8 million recorded in the second quarter of 2016. Salaries and benefits expense totaled $6.1 million for the third quarter of 2016, an increase over the $4.9 million recorded for the same period last year and flat when compared to the second quarter of 2016. The increase over the same period last year is primarily due to the acquisition of United International Bank (“UIB”), as well as regular staffing and merit increases. Occupancy expense totaled $1.2 million for the quarter, an increase of $253,000 over the $908,000 recorded in the same period in 2015 but down slightly from the $1.3 million recorded in the second 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 third quarter of 2016 compared to $1.3 million for the same quarter of 2015 and $1.4 million recorded in the second quarter of 2016. The Bank incurred $196,000 in costs related to its one OREO property. This compares to a gain of $19,000 in the third quarter of 2015 and expense of $243,000 in the second quarter of 2016. Other expenses were $1.1 million for the third quarter of 2016 compared to $1.3 million for the same period last year and $1.3 million for the second quarter of 2016. The decrease from last year was mainly due to the recording of $415,000 in acquisition related costs in the third quarter of 2015.

Income Taxes

The Bank recorded a provision for income taxes of $6.1 million for the third quarter of 2016. This represents an effective tax rate (“ETR”) of 38.1% for the quarter. This is down from the ETR of 40.0% for the third quarter of 2015 and down from the 40.6% ETR recorded in the second quarter of 2016. The decrease from both periods is due to adjustments made to the provision calculation as a result of the finalization and filing of the Bank’s 2015 tax returns. The Bank expects that in the fourth quarter of 2016, the ETR will be similar to that of the third quarter but will likely return to historical levels in 2017. 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 municipal bonds and various Low Income Housing Income Tax Credit (“LIHTC”) funds.

Balance Sheet Summary

Total gross loans and leases at September 30, 2016 were $2.43 billion, an increase of $373.3 million or 18.1% over the total of $2.06 billion as of December 31, 2015. Total deposits reached $2.66 billion, an increase of $373.4 million or 16.3% over the total of $2.29 billion as of December 31, 2015. Total assets reached $3.11 billion as of September 30, 2016, an increase of $511.6 million or 19.7% over the total of $2.60 billion as of December 31, 2015.

Asset Quality

As of September 30, 2016 nonaccrual loans totaled $1.7 million, a decrease of $306,000 from the $2.0 million total as of December 31, 2015. Total net charge-offs for the third quarter of 2016 were $827,000 compared to $2.0 million in the second quarter of 2016 and compared to a net charge off of $203,000 for the third quarter of 2015. The Bank recorded a provision for loan loss of $1.4 million for the third quarter of 2016, compared to a provision of $500,000 recorded in the same quarter last year and compared to the $2.3 million provision recorded in the second quarter of 2016. The allowance for loan loss at September 30, 2016 was $24.6 million or 1.01% of total loans compared to $22.7 million or 1.10% of total loans at December 31, 2015.

OREO

As of September 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 September 30, 2016, the Bank’s leverage ratio was 9.47%, the common equity tier 1 capital ratio was 10.05% and the total capital ratio was 14.48%. 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 third quarter 2016 financial results will be held tomorrow, October 20th 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 November 4, 2016; the passcode is 10094338.

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, 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
September 30, June 30, September 30,
2016 2016 2015
Interest income:
Loans, including fees $ 29,547 $ 27,892 $ 22,812
Investment securities 2,216 1,722 1,531
Fed funds sold 125 109 37
Total interest income 31,889 29,723 24,380
Interest expense:
Interest-bearing demand 1,309 1,051 794
Savings 19 18 14
Time certificates 2,897 2,661 1,929
FHLB borrowings 66 67 46
Subordinated debit issuance 1,102 186 -
Total interest expense 5,394 3,982 2,783
Net interest income 26,495 25,741 21,597
Provision for loan losses 1,400 2,300 500
Net interest income after provision for
loan losses 25,095 23,441 21,097
Noninterest income:
Fees & service charges on deposit accounts 322 338 290
Trade finance income 686 669 380
BOLI income 86 89 85
Net gain on sale of investment securities - - -
Other income 257 564 185
Total noninterest income 1,350 1,660 940
Noninterest expense:
Salary and employee benefits 6,066 6,065 4,893
Net occupancy expense 1,161 1,267 908
Business development and promotion expense 231 152 133
Professional services 1,434 1,409 1,289
Office supplies and equipment expense 345 376 267
Other real estate owned related (income)expense and valuation allowance on LHFS 196 243 (19)
Other 1,054 1,279 1,269
Total noninterest expense 10,486 10,791 8,740
Income before provision for income taxes 15,959 14,310 13,297
Income tax expense 6,080 5,724 5,396
Net income $ 9,879 $ 8,586 $ 7,901
Dividend and earnings allocated to participating securities (155) (137) (146)
Net income available to common shareholders $ 9,724 $ 8,449 $ 7,755
Income per share available to common shareholders
Basic $ 0.70 $ 0.61 $ 0.57
Diluted $ 0.69 $ 0.61 $ 0.57
Weighted-average common shares outstanding
Basic 13,899,986 13,851,081 13,509,986
Diluted 13,997,343 13,957,117 13,690,228
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 Nine Months Ended
September 30, September 30, Change
2016 2015 %
Interest income:
Loans, including fees $ 82,900 $ 64,443 28.6%
Investment securities 5,722 4,719 21.3%
Fed funds sold 311 117 166.2%
Total interest income 88,933 69,279 28.4%
Interest expense:
Interest-bearing demand 3,410 2,289 49.0%
Savings 55 44 26.0%
Time certificates 7,872 5,305 48.4%
FHLB borrowings 192 112 71.0%
Subordinated debit issuance 1,288 - 100.0%
Total interest expense 12,818 7,751 65.4%
Net interest income 76,115 61,527 23.7%
Provision for credit losses 4,500 1,500 200.0%
Net interest income after provision for
loan losses 71,615 60,028 19.3%
Noninterest income:
Fees & service charges on deposit accounts 954 925 3.2%
Trade finance income 1,771 1,177 50.4%
BOLI income 259 253 2.4%
Net gain on sale of investment securities 36 - 100.0%
Other income 1,152 584 97.2%
Total noninterest income 4,173 2,939 42.0%
Noninterest expense:
Salary and employee benefits 19,153 15,712 21.9%
Net occupancy expense 3,631 2,657 36.7%
Business development and promotion expense 604 366 65.0%
Professional services 3,805 3,547 7.3%
Office supplies and equipment expense 1,072 784 36.7%
Other real estate owned related expense(income) and valuation allowance on LHFS 638 (481) -232.6%
Other 3,413 3,235 5.5%
Total noninterest expense 32,315 25,820 25.2%
Income before provision for income taxes 43,473 37,147 17.0%
Income tax expense 17,165 14,967 14.7%
Net income $ 26,308 $ 22,180 18.6%
Dividend and earnings allocated to participating securities (413) (391) 5.5%
Net income available to common shareholders $ 25,895 $ 21,789 18.8%
Income per share available to common shareholders
Basic $ 1.87 $ 1.62 15.7%
Diluted $ 1.86 $ 1.60 16.2%
Weighted-average common shares outstanding
Basic 13,849,504 13,462,247 2.9%
Diluted 13,956,298 13,648,442 2.3%
Dividends per share $ 0.45 $ 0.36 25.0%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
September 30, December 31,
2016 2015
(Unaudited) (Audited)
Assets
Cash and due from banks $ 325,522 $ 296,175
Fed funds sold 80,000 13,000
Cash and cash equivalents 405,522 309,175
Securities held to maturity, at amortized cost 4,812 5,830
Securities available-for-sale, at fair value 203,272 169,502
Loans and leases 2,432,667 2,059,392
Less allowance for loan and lease losses (24,556) (22,658)
Less net deferred loan fees (1,913) (3,012)
Net loans and leases 2,406,198 2,033,722
Other real estate owned 4,112 4,112
Customers' liability on acceptances 1,494 897
Bank furniture and fixtures, net 5,424 5,601
Bank-owned life insurance 8,767 8,763
Accrued interest receivable 8,859 8,128
Investment in affordable housing 24,278 16,052
Federal Home Loan Bank stock 9,331 7,162
Deferred tax assets 22,944 23,802
Income tax receivable - 299
Other asset 5,411 5,801
Total assets $ 3,110,424 $ 2,598,846
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand $ 575,388 $ 558,906
Interest-bearing demand 945,358 748,918
Savings 31,344 30,703
Time certificates of $250,000 or more 416,807 321,537
Other time certificates 691,099 626,495
Total deposits $ 2,659,996 $ 2,286,559
Acceptances outstanding 1,494 897
Advances from Federal Home Loan Bank 26,544 26,635
Subordinated debt issuance 98,851 -
Commitments to fund investment in affordable housing partnership 11,015 3,958
Accrued interest payable 4,193 1,919
Other liabilities 17,064 14,733
Total liabilities 2,819,157 2,334,701
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; no issued and outstanding
shares at September 30, 2016 and December 31, 2015
Common stock, no par value. Authorized 100,000,000 shares; issued
and outstanding 14,135,907 and 13,884,942 shares at September 30, 2016
and December 31, 2015 , respectively
168,331 166,560
Treasury stock (19,115) (19,115)
Additional paid-in-capital 39,214 34,672
Accumulated income 100,813 81,046
Accumulated other comprehensive income:
Unrealized gain on securities, available-for-sale, net of tax of $1,469 and
$713 at September 30, 2016 and December 31, 2015, respectively
2,024 982
Total shareholders' equity 291,267 264,145
Total liabilities and shareholders' equity $ 3,110,424 $ 2,598,846


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
For the Quarter Ended
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Unaudited historical quarterly operations data:
Interest income $ 31,889 $ 29,723 $ 27,321 $ 25,423 $ 24,380
Interest expense 5,394 3,982 3,442 3,105 2,783
Interest income before provision for credit losses 26,495 25,741 23,879 22,318 21,597
Provision for credit losses 1,400 2,300 800 300 500
Noninterest income 1,350 1,660 1,163 954 940
Noninterest expense 10,486 10,791 11,038 9,890 8,740
Income tax expense 6,080 5,724 5,361 5,518 5,396
Net income 9,879 8,586 7,843 7,563 7,901
Earnings per share
Basic $ 0.70 $ 0.61 $ 0.56 $ 0.55 $ 0.57
Diluted $ 0.69 $ 0.61 $ 0.56 $ 0.54 $ 0.57
Ratios for the period:
Return on average assets 1.31% 1.26% 1.21% 1.28% 1.42%
Return on beginning equity 13.92% 12.62% 11.94% 11.67% 12.55%
Net interest margin (Fully-taxable equivalent) 3.59% 3.87% 3.79% 3.88% 4.00%
Noninterest expense to average assets 1.39% 1.58% 1.70% 1.67% 1.58%
Efficiency ratio 37.66% 39.38% 44.08% 42.50% 38.78%
Net charge-offs (recoveries) to average loans (annualized) 0.14% 0.36% -0.04% 0.36% 0.05%
Ratios as of period end:
Tier 1 leverage capital ratio 9.47% 10.05% 10.29% 10.46% 11.47%
Common equity tier 1 risk-based capital ratio 10.05% 10.41% 10.74% 11.03% 11.80%
Tier 1 risk-based capital ratio 10.05% 10.41% 10.74% 11.03% 11.80%
Total risk-based capital ratio 14.48% 13.65% 11.70% 12.00% 12.93%
Allowances for credit losses to loans and leases at end of period 1.01% 1.06% 1.10% 1.10% 1.31%
Allowance for credit losses to non-performing
loans and leases 1460.49% 722.47% 2346.18% 1140.29% 303.27%
Average balances:
Total loans and leases $ 2,344,102 $ 2,248,652 $ 2,067,047 $ 1,876,544 $ 1,741,762
Earning assets $ 2,953,325 $ 2,687,435 $ 2,550,821 $ 2,297,154 $ 2,160,075
Total assets $ 3,009,457 $ 2,746,031 $ 2,605,907 $ 2,345,319 $ 2,201,060
Total deposits $ 2,590,701 $ 2,400,756 $ 2,291,764 $ 2,039,567 $ 1,907,719
(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 Nine Months Ended
September 30, September 30,
2016 2015
Interest income $ 88,933 $ 69,279
Interest expense 12,818 7,751
Interest income before provision for credit losses 76,115 61,527
Provision for credit losses 4,500 1,500
Noninterest income 4,173 2,939
Noninterest expense 32,315 25,820
Income tax expense 17,165 14,967
Net income 26,308 22,180
Earnings per share
Basic $ 1.87 $ 1.62
Diluted $ 1.86 $ 1.60
Ratios for the period:
Return on average assets 1.26% 1.38%
Return on beginning equity 13.30% 12.62%
Net interest margin (Fully-taxable equivalent) 3.74% 3.95%
Noninterest expense to average assets 1.55% 1.61%
Efficiency ratio 40.25% 40.05%
Net charge-offs (recoveries) to average loans 0.16% 0.03%
Average balances:
Total loans and leases $ 2,220,438 $ 1,676,320
Earning assets $ 2,731,362 $ 2,098,549
Total assets $ 2,787,977 $ 2,144,830
Total deposits $ 2,428,402 $ 1,858,592

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
As of
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents $ 405,522 $ 376,485 $ 293,547 $ 309,175 $ 232,707
Securities held-to-maturity, at amortized cost 4,812 5,143 5,550 5,830 6,307
Securities available-for-sale, at fair value 203,272 201,256 162,654 169,502 164,378
Loans and Leases:
Real estate - Single and multi-family residential $ 493,489 $ 393,076 $ 401,708 $ 415,003 $ 328,124
Real estate - Land for housing 14,796 14,817 14,838 14,408 14,429
Real estate - Land for income properties 1,809 6,316 1,816 1,795 1,876
Real estate - Commercial 1,037,687 995,213 924,913 861,317 770,494
Real estate - For sale housing construction 104,973 95,519 82,153 73,858 79,406
Real estate - Other construction 96,147 72,963 66,636 57,546 48,438
Commercial and industrial 659,306 659,701 626,599 596,887 555,680
Trade finance and other 24,460 34,625 39,323 38,578 38,602
Gross loans 2,432,667 2,272,230 2,157,986 2,059,392 1,837,049
Allowance for loan and lease losses (24,556) (23,983) (23,681) (22,658) (24,055)
Net deferred loan fees (1,913) (3,682) (3,065) (3,012) (2,476)
Total loans, net $ 2,406,198 $ 2,244,565 $ 2,131,240 $ 2,033,722 $ 1,810,518
Other real estate owned $ 4,112 $ 4,112 $ 4,112 $ 4,112 $ -
Investment in affordable housing 24,278 24,886 25,499 16,052 16,589
Federal Home Loan Bank stock 9,331 9,332 6,965 7,162 6,677
Other assets 52,899 49,862 53,783 53,291 45,370
Total assets $ 3,110,424 $ 2,915,641 $ 2,683,350 $ 2,598,846 $ 2,282,546
Liabilities:
Deposits:
Demand $ 575,388 $ 540,374 $ 528,126 $ 558,906 $ 477,523
Interest-bearing demand 945,358 855,661 803,374 748,918 697,402
Savings 31,344 29,031 30,002 30,703 21,159
Time certificates of $250,000 or more 416,807 398,736 339,971 321,537 263,949
Other time certificates 691,099 692,063 656,386 626,495 527,602
Total deposits $ 2,659,996 $ 2,515,865 $ 2,357,859 $ 2,286,559 $ 1,987,635
Advances from Federal Home Loan Bank $ 26,544 $ 26,573 $ 26,601 $ 26,635 $ 20,000
Subordinated debt issuance 98,851 61,475 - - -
Commitments to fund investment in affordable housing partnership 11,015 11,454 11,454 3,958 4,139
Other liabilities 22,751 17,922 13,862 17,549 13,590
Total liabilities $ 2,819,157 $ 2,633,289 $ 2,409,776 $ 2,334,701 $ 2,025,364
Equity:
Net common stock, no par value $ 188,430 $ 187,212 $ 185,780 $ 182,118 $ 180,310
Retained earnings 100,813 93,119 86,716 81,046 75,629
Accumulated other comprehensive income 2,024 2,021 1,079 982 1,243
Total shareholders' equity $ 291,267 $ 282,352 $ 273,574 $ 264,145 $ 257,182
Total liabilities and shareholders' equity $ 3,110,424 $ 2,915,641 $ 2,683,350 $ 2,598,846 $ 2,282,546

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
Nine Months Ended Year Ended
September 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 4,322 1,475
Mini-perm Real Estate - 1,793
Construction - Residential - -
Construction - Commercial - -
Land - Residential - -
Land - Commercial - -
Others - -
Total Charge-Offs 4,322 3,268
Recoveries
Commercial & Industrial 983 131
Mini-perm Real Estate - 144
Construction - Residential - -
Construction - Commercial 26 20
Land - Residential - 100
Land - Commercial 711 757
Total Recoveries 1,720 1,152
Net Loan Charge-Offs 2,602 2,116
Provision for Credit Losses 4,500 1,800
Balance at End of Period $ 24,556 $ 22,658
Average Loans and Leases $ 2,220,438 $ 1,731,871
Loans and Leases at end of Period $ 2,432,667 $ 2,059,392
Net Charge-Offs to Average Loans and Leases 0.16% 0.12%
Allowances for credit losses to loans and leases at end of period 1.01% 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