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Preferred Bank Reports Second Quarter Results

LOS ANGELES, July 18, 2017 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended June 30, 2017. Preferred Bank (“the Bank”) reported net income of $11.7 million or $0.80 per diluted share for the second quarter of 2017. This compares to net income of $8.6 million or $0.61 per diluted share for the second quarter of 2016 and compares to net income of $10.3 million or $0.71 per diluted share for the first quarter of 2017. The increase over the same period last year was primarily due to an increase in net interest income of $5.5 million and the increase over the first quarter was due to an increase in net interest income as well as a decrease in non-interest expense.

Highlights from the second quarter of 2017:

• Linked quarter deposit growth $171 million or 5.8%
• Linked quarter loan growth $102 million or 3.8%
• Return on average assets 1.36%
• Return on beginning equity 15.96%
• Efficiency ratio 38.1%
• Net interest margin 3.75%

Li Yu, Chairman and CEO commented, “I am pleased to report second quarter 2017 net income of $11.7 million or $0.80 per diluted share which is 37% and 33% higher than the same quarter last year, respectively.

“Loans and deposits continued to grow this quarter. On a linked-quarter basis, loans increased $102 million or 3.8% and deposits increased $171 million or 5.8%. Compared to the balances at the end of 2016, loans have increased by $246 million or 9.7% and deposits have grown by $358 million or 12.9%. We are delighted with the strong deposit growth which enhances our liquidity and long term franchise value, although in the short term, it can have the effect of reducing capital ratios, return on average assets and net interest margin (“NIM”).

“Net interest margin for the second quarter was 3.75%, an 8 basis point increase from the first quarter 2017. Given the rate increases in March and June of 2017, the margin increase was less than expected largely due to the significant deposit growth which reduced the Bank’s leverage during the quarter. Asset pricing competition also had the effect of dampening NIM growth. The deposit growth, however, has little impact on the net income and earnings per share of the Bank.

“Since mid-2016, we have been continuously reviewing the loan portfolio, paying particular attention to those borrowers who may be affected by e-commerce disruption or by an increasing minimum wage in California and New York. We have also been closely monitoring our non-owner occupied commercial real estate (“CRE”) concentration ratio which currently stands at 331% of total capital as of June 30, 2017, unchanged from the ratio as of March 31, 2017. Included in this reported non-owner occupied CRE was approximately $93 million (22% of total capital) of revolving commercial lines of credit secured by real estate. In some cases, the real estate collateral was discretionary and taken as additional collateral.

“With the strong deposit growth in the latest twelve months, our tangible common capital ratio dropped below 9% for the first time since 2009. In our capital planning process, we must assume our asset growth will continue and therefore we must be proactive. In this regard, we have obtained a negotiating permit from the State of California which allows us to offer to sell our common stock. We plan to increase our capital by $50 million in this transaction and plan to use an At The Market (“ATM”) transaction to raise the capital in installments, which will more accurately match with the Bank’s growth.

“In June, our Board declared a dividend of $0.20 per share which is an increase of 11% from the $0.18 per share previously declared. The increase reflects our strong earnings performance and our confidence in the future.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $31.3 million for the second quarter of 2017. This compares favorably to the $25.7 million recorded in the second quarter of 2016 and to the $28.4 million recorded in the first quarter of 2017. The increase over both comparable periods is due primarily to loan growth as well as increases in the fed funds and Prime rates. The Bank’s taxable equivalent net interest margin was 3.75% for the second quarter of 2017, an 8 basis point increase over the 3.67% achieved in the first quarter of 2017 but a 20 basis point decrease from the 3.87% achieved in the second quarter of 2016. The increase over the first quarter of 2017 would have been higher; however the Bank’s average loan to deposit ratio dropped to 89.7% for the second quarter as compared to the 92.3% average loan to deposit ratio posted in the first quarter of 2017. This ‘de-leveraging’ of the balance sheet during the second quarter had the effect of muting the increase in average asset yields.

Noninterest Income. For the second quarter of 2017, noninterest income was $1,275,000 compared with $1,660,000 for the same quarter last year and compared to $2,090,000 for the first quarter of 2017. Service charges on deposits decreased by $34,000 this quarter when compared to the same quarter last year and by $49,000 when compared to the first quarter of 2017. Letter of Credit fee income was $581,000 for the second quarter of 2017, a decrease of $254,000 compared to the same period last year and a decrease of $214,000 compared to the first quarter of 2017 as LC activity declined. Other income was $303,000, a decrease from the $398,000 recorded in the same period last year and from the $856,000 recorded in the first quarter of 2017. In the first quarter of 2017, Other income was bolstered by $345,000 of OREO income.

Noninterest Expense. Total noninterest expense was $12.4 million for the second quarter of 2017, an increase of $1.6 million over the same period last year and a decrease of $764,000 from the first quarter of 2017. Salaries and benefits expense totaled $7.7 million for the second quarter of 2017 compared to $6.1 million recorded for the same period last year and compared to the $7.5 million recorded in the first quarter of 2017. The increase over the same period last year and the prior quarter was due primarily to staffing/merit increases, a larger bonus accrual and a reduction in capitalized loan origination costs. Occupancy expense totaled $1.2 million for the second quarter of 2017 and was down slightly from the $1.3 million recorded in the same period last year but was flat when compared to the first quarter of 2017. Professional services expense was $1.0 million for the second quarter of 2017 compared to $1.4 million for the same quarter of 2016 and also down from the $1.2 million recorded in the first quarter of 2017. The decrease compared to both was due to a reduction in legal fees. The Bank incurred $118,000 in costs related to its one OREO property and this compares to OREO expense of $243,000 in the second quarter of 2016 and $108,000 in the first quarter of 2017. Other expenses were $1.8 million for the second quarter of 2017, an increase of $594,000 over the second quarter of 2016 but a decrease of $751,000 from the $2.6 million recorded in the first quarter of 2017. The decrease from the first quarter was mainly due to the legal settlement reserve of $1.6 million recorded in the first quarter of 2017. The Bank’s efficiency ratio came in at 38.1% for the quarter.

Income Taxes

The Bank recorded a provision for income taxes of $7.2 million for the second quarter of 2017. This represents an effective tax rate (“ETR”) of 38.1% for the quarter. This is down from the ETR of 40.0% for the second quarter of 2016 and up from the 35.2% ETR recorded in the first quarter of 2017. The relatively low ETR in the first quarter of 2017 was due to the adoption of Accounting Standards Update (ASU) 2016-09 which resulted in an excess tax benefit from share-based compensation and a $768,000 net tax benefit on the income statement. The ETR recorded this quarter was lower than the Bank’s statutory rate due mainly to a $154,000 reversal of ASC 740-10 expense recognized in earlier years for uncertain tax positions related to its California Net Interest Deduction for Lenders as well as an excess tax benefit recognized from share-based compensation of $398,000.

Balance Sheet Summary

Total gross loans and leases at June 30, 2017 were $2.79 billion, an increase of $246.5 million or 9.7% over the total of $2.54 billion as of December 31, 2016. Total deposits as of June 30, 2017 were $3.12 billion, an increase of $357.6 million or 12.9% over the $2.76 billion at December 31, 2016. Total assets as of June 30, 2017 were $3.58 billion, an increase of $357.8 million or 11.1% over the $3.22 billion as of December 31, 2016.

Asset Quality
As of June 30, 2017 nonaccrual loans totaled $6.5 million, down slightly from the $7.8 million as of March 31, 2017 and also down from the $7.6 million total as of December 31, 2016. Total net charge-offs for the second quarter of 2017 were $1.2 million as compared to $121,000 in the first quarter of 2017 and compared to $2.0 million in the second quarter of 2016. The Bank recorded a provision for loan losses of $1.2 million for the second quarter of 2017, down from the $2.3 million provision recorded in the same quarter and down from the $1.5 million provision recorded in the first quarter of 2017. The allowance for loan loss at June 30, 2017 was $27.9 million or 1.00% of total loans compared to $26.5 million or 1.04% of total loans at December 31, 2016.

OREO

As of June 30, 2017 and December 31, 2016, the Bank held one OREO property, a $4.1 million multi-family property located outside of California.

Capitalization
As of June 30, 2017, the Bank’s leverage ratio was 8.69%, the common equity tier 1 capital ratio was 9.13% and the total capital ratio was 13.04%. As of December 31, 2016, the Bank’s leverage ratio was 9.43%, the common equity tier 1 ratio was 9.83% and the total risk based capital ratio was 14.09%.

Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s second quarter 2017 financial results will be held tomorrow, July 19th at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com. Web participants are encouraged to go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

Preferred Bank's Chairman and 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 2, 2017; the passcode is 10110443.

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 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 2016 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,
2017
2017
2016
Interest income:
Loans, including fees $34,941 $31,919 $27,892
Investment securities 2,940 2,482 1,722
Fed funds sold 232 231 109
Total interest income 38,113 34,632 29,723
Interest expense:
Interest-bearing demand 1,944 1,465 1,051
Savings 17 21 18
Time certificates 3,283 1,160 2,661
FHLB borrowings 60 65 67
Subordinated debit 1,531 1,531 186
Total interest expense 6,835 6,190 3,982
Net interest income 31,278 28,442 25,741
Provision for loan losses 1,200 1,500 2,300
Net interest income after provision for loan losses 30,078 26,942 23,441
Noninterest income:
Fees & service charges on deposit accounts 304 353 338
Letters of credit fee income 581 795 835
BOLI income 87 86 89
Net gain on sale of investment securities 0 - -
Other income 303 856 398
Total noninterest income 1,275 2,090 1,660
Noninterest expense:
Salary and employee benefits 7,673 7,509 6,065
Net occupancy expense 1,214 1,182 1,267
Business development and promotion expense 188 240 152
Professional services 1,038 1,162 1,409
Office supplies and equipment expense 310 353 376
Other real estate owned related expense and valuation allowance on LHFS 118 108 243
Other 1,873 2,624 1,279
Total noninterest expense 12,414 13,178 10,791
Income before provision for income taxes 18,939 15,854 14,310
Income tax expense 7,222 5,573 5,724
Net income $11,717 $10,281 $8,586
Dividend and earnings allocated to participating securities (135) (110) (137)
Net income available to common shareholders $11,582 $10,171 $8,449
Income per share available to common shareholders
Basic $0.81 $0.71 $0.61
Diluted $0.80 $0.71 $0.61
Weighted-average common shares outstanding
Basic 14,348,310 14,314,624 13,851,081
Diluted 14,407,317 14,386,402 13,957,117
Dividends per share $0.20 $0.18 $0.15

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
2017
2016
%
Interest income:
Loans, including fees $66,860 $53,352 25.3%
Investment securities 5,422 3,506 54.7%
Fed funds sold 463 186 148.9%
Total interest income 72,745 57,044 27.5%
Interest expense:
Interest-bearing demand 3,409 2,101 62.3%
Savings 38 36 4.5%
Time certificates 6,391 4,975 28.5%
FHLB borrowings 125 126 -0.5%
Subordinated debit issuance 3,062 186 100.0%
Total interest expense 13,025 7,424 75.4%
Net interest income 59,720 49,620 20.4%
Provision for credit losses 2,700 3,100 -12.9%
Net interest income after provision for loan losses 57,020 46,520 22.6%
Noninterest income:
Fees & service charges on deposit accounts 657 632 3.9%
Letters of credit fee income 1,375 1,252 9.9%
BOLI income 174 174 -0.2%
Net gain on sale of investment securities 0 36 100.0%
Other income 1,159 729 59.0%
Total noninterest income 3,365 2,823 19.2%
Noninterest expense:
Salary and employee benefits 15,182 13,086 16.0%
Net occupancy expense 2,396 2,470 -3.0%
Business development and promotion expense 428 374 14.6%
Professional services 2,200 2,371 -7.2%
Office supplies and equipment expense 663 727 -8.9%
Other real estate owned related expense and valuation allowance on LHFS 226 442 -48.8%
Other 4,497 2,359 90.6%
Total noninterest expense 25,592 21,829 17.2%
Income before provision for income taxes 34,793 27,514 26.5%
Income tax expense 12,795 11,085 15.4%
Net income $21,998 $16,429 33.9%
Dividend and earnings allocated to participating securities (248) (258) -4.1%
Net income available to common shareholders $21,750 $16,171 34.5%
Income per share available to common shareholders
Basic $1.52 $1.17 29.7%
Diluted $1.51 $1.16 30.2%
Weighted-average common shares outstanding
Basic 14,331,560 13,823,986 3.7%
Diluted 14,396,988 13,933,721 3.3%
Dividends per share $0.38 $0.30 26.7%

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
June 30, December 31,
2017
2016
(Unaudited) (Audited)
Assets
Cash and due from banks$395,034 $306,330
Fed funds sold 107,500 97,500
Cash and cash equivalents 502,534 403,830
Securities held to maturity, at amortized cost 9,610 10,337
Securities available-for-sale, at fair value 192,475 199,833
Loans and leases 2,790,014 2,543,549
Less allowance for loan and lease losses (27,863) (26,478)
Less net deferred loan fees (3,245) (1,682)
Net loans and leases 2,758,906 2,515,389
Other real estate owned 4,112 4,112
Customers' liability on acceptances 7,018 772
Bank furniture and fixtures, net 5,232 5,313
Bank-owned life insurance 8,941 8,825
Accrued interest receivable 10,684 9,550
Investment in affordable housing 37,029 23,670
Federal Home Loan Bank stock 11,078 9,331
Deferred tax assets 25,701 26,605
Other asset 6,075 4,031
Total assets$3,579,395 $3,221,598
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand$641,153 $586,272
Interest-bearing demand 1,231,595 1,019,058
Savings 27,870 34,067
Time certificates of $250,000 or more 535,211 427,172
Other time certificates 685,445 697,155
Total deposits $3,121,274 $2,763,724
Acceptances outstanding 7,018 772
Advances from Federal Home Loan Bank 6,459 26,516
Subordinated debt issuance 98,901 98,839
Commitments to fund investment in affordable housing partnership
20,966 10,632
Accrued interest payable 3,182 3,199
Other liabilities 16,370 19,851
Total liabilities 3,274,170 2,923,533
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; issued and no outstanding shares at June 30, 2017 and December 31, 2016
Common stock, no par value. Authorized 20,000,000 shares; issued and outstanding 14,540,588 at June 30, 2017 and 14,232,907 at December 31, 2016, respectively. 173,863 169,861
Treasury stock (33,233) (19,115)
Additional paid-in-capital 39,480 39,929
Accumulated income 124,740 108,261
Accumulated other comprehensive income (loss):
Unrealized gain (loss) on securities, available-for-sale, net of tax of $272 and $(632) at June 30, 2017 and December 31, 2016, respectively 375 (871)
Total shareholders' equity 305,225 298,065
Total liabilities and shareholders' equity$3,579,395 $3,221,598

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,
20172017201620162016
Unaudited historical quarterly operations data:
Interest income $38,113 $34,632 $33,980 $31,889 $29,723
Interest expense 6,835 6,190 5,916 5,394 3,982
Interest income before provision for credit losses 31,278 28,442 28,064 26,495 25,741
Provision for credit losses 1,200 1,500 1,900 1,400 2,300
Noninterest income 1,275 2,090 1,286 1,350 1,660
Noninterest expense 12,414 13,178 11,223 10,486 10,791
Income tax expense 7,222 5,573 6,166 6,080 5,724
Net income 11,717 10,281 10,061 9,879 8,586
Earnings per share
Basic $0.81 $0.71 $0.71 $0.70 $0.61
Diluted $0.80 $0.71 $0.71 $0.69 $0.61
Ratios for the period:
Return on average assets 1.36% 1.29% 1.28% 1.31% 1.26%
Return on beginning equity 15.96% 13.99% 13.74% 13.92% 12.62%
Net interest margin (Fully-taxable equivalent) 3.75% 3.67% 3.67% 3.59% 3.87%
Noninterest expense to average assets 1.44% 1.66% 1.43% 1.39% 1.58%
Efficiency ratio 38.13% 43.16% 38.24% 37.66% 39.38%
Net charge-offs (recoveries) to average loans (annualized) 0.18% 0.02% 0.00% 0.14% 0.36%
Ratios as of period end:
Tier 1 leverage capital ratio 8.69% 9.01% 9.43% 9.47% 10.05%
Common equity tier 1 risk-based capital ratio 9.13% 9.15% 9.83% 9.96% 10.40%
Tier 1 risk-based capital ratio 9.13% 9.15% 9.83% 9.96% 10.40%
Total risk-based capital ratio 13.04% 13.21% 14.09% 14.36% 13.68%
Allowances for credit losses to loans and leases at end of period 1.00% 1.04% 1.04% 1.01% 1.06%
Allowance for credit losses to non-performing loans and leases 426.43% 357.09% 346.22% 1460.49% 722.47%
Average balances:
Total loans and leases $ 2,695,208 $ 2,563,473 $ 2,465,492 $ 2,344,102 $ 2,248,652
Earning assets $3,401,193 $3,167,031 $3,066,189 $2,953,325 $2,687,435
Total assets $3,466,094 $3,228,142 $3,124,984 $3,009,457 $2,746,031
Total deposits $3,002,583 $2,775,830 $2,666,878 $2,590,702 $2,400,756


PREFERRED BANK
Selected Consolidated Financial Information
(in thousands, except for ratios)
For the Six Months Ended
June 30, June 30,
2017
2016
Interest income$72,745 $57,044
Interest expense 13,025 7,424
Interest income before provision for credit losses 59,720 49,620
Provision for credit losses 2,700 3,100
Noninterest income 3,365 2,823
Noninterest expense 25,592 21,829
Income tax expense 12,795 11,085
Net income 21,998 16,429
Earnings per share
Basic$1.52 $1.17
Diluted$1.51 $1.16
Ratios for the period:
Return on average assets 1.32% 1.23%
Return on beginning equity 14.88% 12.51%
Net interest margin (Fully-taxable equivalent) 3.69% 3.83%
Noninterest expense to average assets 1.54% 1.59%
Efficiency ratio 40.57% 41.63%
Net charge-offs (recoveries) to average loans 0.10% 0.16%
Average balances:
Total loans and leases$ 2,629,947 $ 2,158,158
Earning assets$3,285,422 $2,619,290
Total assets$3,348,450 $2,676,157
Total deposits$2,890,418 $2,346,462

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
As of
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents$502,534 $450,355 $403,830 $405,522 $376,485
Securities held-to-maturity, at amortized cost 9,610 9,912 10,337 4,812 5,143
Securities available-for-sale, at fair value 192,475 197,455 199,833 203,272 201,256
Loans and Leases:
Real estate - Single and multi-family residential$494,725 $479,279 $490,683 $493,489 $393,076
Real estate - Land for housing 14,728 14,754 14,774 14,796 14,817
Real estate - Land for income properties 1,784 1,792 1,801 1,809 6,316
Real estate - Commercial 1,217,254 1,160,077 1,047,321 1,037,687 995,213
Real estate - For sale housing construction 95,462 109,703 104,960 104,973 95,519
Real estate - Other construction 148,580 150,322 128,434 96,147 72,963
Commercial and industrial 791,362 741,339 733,709 659,306 659,701
Trade finance and other 26,119 30,337 21,867 24,460 34,625
Gross loans 2,790,014 2,687,603 2,543,549 2,432,667 2,272,230
Allowance for loan and lease losses (27,863) (27,857) (26,478) (24,556) (23,983)
Net deferred loan fees (3,245) (2,572) (1,682) (1,913) (3,682)
Total loans, net$2,758,906 $2,657,174 $2,515,389 $2,406,198 $2,244,565
Other real estate owned
$4,112 $4,112 $4,112 $4,112 $4,112
Investment in affordable housing
37,029 22,904 23,670 24,278 24,886
Federal Home Loan Bank stock
11,078 9,330 9,331 9,331 9,332
Other assets
63,651 61,687 55,096 52,899 49,862
Total assets
$3,579,395 $3,412,929 $3,221,598 $3,110,424 $2,915,641
Liabilities:
Deposits:
Demand$641,153 $576,060 $586,272 $575,388 $540,374
Interest-bearing demand 1,231,595 1,137,145 1,019,058 945,358 855,661
Savings 27,870 34,434 34,067 31,344 29,031
Time certificates of $250,000 or more 535,211 495,177 427,172 416,807 398,736
Other time certificates 685,445 707,830 697,155 691,099 692,063
Total deposits$3,121,274 $2,950,646 $2,763,724 $2,659,996 $2,515,865
Advances from Federal Home Loan Bank
$6,459 $26,487 $26,516 $26,544 $26,573
Subordinated debt issuance 98,901 98,870 98,839 98,851 61,475
Commitments to fund investment in affordable housing partnership 20,966 10,354 10,632 11,015 11,454
Other liabilities
26,570 32,189 23,822 22,760 17,922
Total liabilities$3,274,170 $3,118,546 $2,923,533 $2,819,166 $2,633,289
Equity:
Net common stock, no par value$180,110 $178,884 $190,675 $188,430 $187,212
Retained earnings 124,740 115,931 108,261 100,804 93,119
Accumulated other comprehensive income 375 (432) (871) 2,024 2,021
Total shareholders' equity$305,225 $294,383 $298,065 $291,258 $282,352
Total liabilities and shareholders' equity$ 3,579,395 $ 3,412,929 $ 3,221,598 $ 3,110,424 $ 2,915,641

Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
Six Months Ended Year Ended
June 30, 2017 December 31, 2016
(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period $26,478 $22,658
Charge-Offs
Commercial & Industrial 1,451 4,323
Mini-perm Real Estate - -
Construction - Residential - -
Construction - Commercial - -
Land - Residential - -
Land - Commercial - -
Others - -
Total Charge-Offs 1,451 4,323
Recoveries
Commercial & Industrial 53 985
Mini-perm Real Estate - -
Construction - Residential - -
Construction - Commercial 17 26
Land - Residential - -
Land - Commercial 61 732
Total Recoveries 131 1,743
Net Loan Charge-Offs 1,320 2,580
Provision for Credit Losses 2,700 6,400
Balance at End of Period $27,858 $26,478
Average Loans and Leases $ 2,629,947 $2,282,074
Loans and Leases at end of Period $2,790,014 $2,687,603
Net Charge-Offs to Average Loans and Leases 0.10% 0.11%
Allowances for credit losses to loans and leases at end of period 1.00% 1.04%

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