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Preferred Bank Reports Third Quarter Results

LOS ANGELES, Oct. 24, 2017 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), an independent commercial bank, today reported results for the quarter ended September 30, 2017. Preferred Bank (“the Bank”) reported net income of $13.7 million or $0.94 per diluted share for the third quarter of 2017. This compares to net income of $9.9 million or $0.69 per diluted share for the third quarter of 2016 and compares to net income of $11.7 million or $0.80 per diluted share for the second quarter of 2017. The increase over the same period last year was primarily due to an increase in net interest income of $8.9 million and the increase over the prior quarter was due to an increase in net interest income as well as a decrease in noninterest expense. Interest income this quarter was aided by net interest recoveries of $1.4 million primarily from a recession-era loan charge-off. On a pre-tax basis, operating income rose by 22.4% over the prior quarter and rose by 45.3% over the same quarter last year.

Highlights from the third quarter of 2017:

  • Return on average assets
1.48%
  • Return on beginning equity
17.77%
  • Efficiency ratio
33.2%
  • Net interest margin
3.95%
  • Linked quarter deposit growth
$73.2 million or 2.3%
  • Linked quarter loan growth
$88.6 million or 3.2%

Li Yu, Chairman and CEO commented, “We achieved another record high for quarterly earnings for the third quarter of 2017. Net income was $13.7 million or $0.94 per diluted share compared to $9.9 million or $0.69 per diluted share for the same quarter last year. This represents an increase of $3.8 million or 38.4%.

“During the third quarter we had a recoveries of interest income of $1.4 million as we collected in full on a loan written off several years ago. Without this recovery diluted EPS would have been approximately $.058 lower, the net interest margin would have been approximately 16 basis points lower and the efficiency ratio would have been approximately 1.6 percentage points higher than what was reported.

“Our growth rate has moderated this quarter. Loans increased $89 million or 3.2% on a linked quarter basis as we have seen a higher level of pay-offs. Deposits increased $73 million or 2.3% on a linked quarter basis which is slightly below our more recent growth rate and this is partially because we chose not to renew some brokered deposits which matured during the quarter. The Bank’s loan pipeline, however, remains consistent with prior quarters.

“On October 4, we began the process of issuing common stock through an “At the Market” issuance mechanism. As of October 20, a total of 168,686 shares had been issued. We expect our goal of $50 million in new capital will be completed either in the fourth quarter of 2017 or the first quarter of 2018.”

Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses was $35.4 million for the third quarter of 2017. This compares favorably to the $26.5 million recorded in the third quarter of 2016 and to the $31.3 million recorded in the second quarter of 2017. The increase over both comparable periods is due to loan growth, increases in both the fed funds and Prime interest rates as well as an interest recovery of $1.4 million recorded this quarter related to a recession-era charge-off. The Bank’s taxable equivalent net interest margin was 3.95% for the third quarter of 2017, a 20 basis point increase over the 3.75% achieved in the second quarter of 2017 and a 36 basis point increase from the 3.59% achieved in the third quarter of 2016. The increase in the net interest margin was impacted by the $1.4 million interest recovery, and the margin for the quarter, excluding this item, would have been 16 basis points less.

Noninterest Income. For the third quarter of 2017, noninterest income was $1,243,000 compared with $1,350,000 for the same quarter last year and compared to $1,275,000 for the second quarter of 2017. Service charges on deposits were $299,000, basically flat compared to the $304,000 recorded in the second quarter of 2017 and down slightly from the $322,000 posted in the third quarter of 2016. Letter of Credit fee income was $632,000 for the third quarter of 2017, a decrease of $54,000 compared to the same period last year and an increase of $51,000 compared to the second quarter of 2017 as Letters of Credit activity stabilized. Other income was $224,000, a decrease from the $257,000 recorded in the same period last year and from the $303,000 recorded in the second quarter of 2017.

Noninterest Expense. Total noninterest expense was $12.2 million for the third quarter of 2017, an increase of $1.7 million over the same period last year and a decrease of $234,000 from the second quarter of 2017. Salaries and benefits expense totaled $7.9 million for the third quarter of 2017 compared to $6.1 million recorded for the same period last year and compared to the $7.7 million recorded in the second quarter of 2017. The increase over the same period last year was due primarily to staffing/merit increases, a larger bonus accrual and a reduction in capitalized loan origination costs while the increase over the prior quarter was due mainly to an increase in the bonus accrual. Occupancy expense totaled $1.3 million for the third quarter of 2017 and was up slightly over the $1.2 million recorded in both the same period last year and the second quarter of 2017. Professional services expense was $963,000 for the third quarter of 2017 compared to $1.4 million in the third quarter of 2016 and also down from the $1.0 million recorded in the second quarter of 2017. The decrease compared to the same period last year was due to a reduction in legal expenses. The Bank incurred $168,000 in costs related to its one OREO property and this compares to OREO expense of $196,000 in the third quarter of 2016 and $118,000 in the second quarter of 2017. Other expenses were $1.3 million for the third quarter of 2017, up from the $1.1 million posted in the third quarter of 2016 but a decrease of $544,000 from the $1.9 million recorded in the second quarter of 2017. The Bank’s efficiency ratio came in at 33.2% for the quarter.

Income Taxes

The Bank recorded a provision for income taxes of $9.5 million for the third quarter of 2017. This represents an effective tax rate (“ETR”) of 41.04% for the quarter. This is up from the ETR of 38.1% recorded for both the third quarter of 2016 and the second quarter of 2017. The relatively low ETR in the first quarter of 2017 was due 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 increased this quarter due mainly to last quarter’s $154,000 reversal of ASC 740-10 expense recognized in earlier years for 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 September 30, 2017 were $2.88 billion, an increase of $335.1 million or 13.2% over the total of $2.54 billion as of December 31, 2016. Total deposits as of September 30, 2017 were $3.19 billion, an increase of $430.8 million or 15.6% over the $2.76 billion at December 31, 2016. Total assets as of September 30, 2017 were $3.67 billion, an increase of $443.9 million or 13.8% over the $3.22 billion as of December 31, 2016.

Asset Quality

Loans
As of September 30, 2017 nonaccrual loans totaled $6.9 million, up slightly from the $6.5 million reported as of June 30, 2017 but down from the $7.6 million total as of December 31, 2016. Total net charge-offs for the third quarter of 2017 were $408,000 as compared to $1.2 million in the second quarter of 2017 and compared to $827,000 in the third quarter of 2016. The Bank recorded a provision for loan losses of $1.3 million for the third quarter of 2017, down slightly from the $1.4 million provision recorded in the same quarter last year but up from the $1.2 million provision recorded in the second quarter of 2017. The allowance for loan loss at September 30, 2017 was $28.8 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 September 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 September 30, 2017, the Bank’s leverage ratio was 8.54%, the common equity tier 1 capital ratio was 9.24% and the total capital ratio was 13.08%. 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 third quarter 2017 financial results will be held tomorrow, October 25th 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 November 8, 2017; the passcode is 10113085.

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.

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

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,
2017 2017 2016
Interest income:
Loans, including fees $ 39,362 $ 34,941 $ 29,548
Investment securities 3,172 2,940 2,216
Fed funds sold 320 232 125
Total interest income 42,854 38,113 31,889
Interest expense:
Interest-bearing demand 2,263 1,944 1,309
Savings 17 17 19
Time certificates 3,601 3,283 2,898
FHLB borrowings 21 60 66
Subordinated debit 1,530 1,531 1,102
Total interest expense 7,432 6,835 5,394
Net interest income 35,422 31,278 26,495
Provision for loan losses 1,300 1,200 1,400
Net interest income after provision for
loan losses 34,122 30,078 25,095
Noninterest income:
Fees & service charges on deposit accounts 299 304 322
Letters of credit fee income 632 581 686
BOLI income 88 87 85
Net gain on sale of investment securities - 0 -
Other income 224 303 257
Total noninterest income 1,243 1,275 1,350
Noninterest expense:
Salary and employee benefits 7,878 7,673 6,067
Net occupancy expense 1,257 1,214 1,161
Business development and promotion expense 251 188 230
Professional services 963 1,038 1,434
Office supplies and equipment expense 334 310 345
Other real estate owned related expense 168 118 196
Other 1,328 1,873 1,053
Total noninterest expense 12,179 12,414 10,486
Income before provision for income taxes 23,186 18,939 15,959
Income tax expense 9,516 7,222 6,080
Net income $ 13,670 $ 11,717 $ 9,879
Dividend and earnings allocated to participating securities (161) (135) (157)
Net income available to common shareholders $ 13,509 $ 11,582 $ 9,722
Income per share available to common shareholders
Basic $ 0.94 $ 0.81 $ 0.70
Diluted $ 0.94 $ 0.80 $ 0.69
Weighted-average common shares outstanding
Basic 14,378,552 14,348,310 13,899,966
Diluted 14,426,522 14,407,317 13,997,343
Dividends per share $ 0.20 $ 0.20 $ 0.15


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
2017 2016 %
Interest income:
Loans, including fees $ 106,222 $ 82,900 28.1%
Investment securities 8,594 5,722 50.2%
Fed funds sold 783 311 151.6%
Total interest income 115,599 88,933 30.0%
Interest expense:
Interest-bearing demand 5,672 3,410 66.3%
Savings 55 55 -0.2%
Time certificates 9,992 7,873 26.9%
FHLB borrowings 146 192 -23.9%
Subordinated debit issuance 4,592 1,288 100.0%
Total interest expense 20,457 12,818 59.6%
Net interest income 95,142 76,115 25.0%
Provision for credit losses 4,000 4,500 -11.1%
Net interest income after provision for
loan losses 91,142 71,615 27.3%
Noninterest income:
Fees & service charges on deposit accounts 956 954 0.2%
Letters of credit fee income 2,008 1,771 13.4%
BOLI income 262 259 1.2%
Net gain on sale of investment securities 0 36 100.0%
Other income 1,382 1,153 19.9%
Total noninterest income 4,608 4,173 10.4%
Noninterest expense:
Salary and employee benefits 23,060 19,153 20.4%
Net occupancy expense 3,653 3,631 0.6%
Business development and promotion expense 679 604 12.4%
Professional services 3,163 3,805 -16.9%
Office supplies and equipment expense 997 1,072 -7.0%
Other real estate owned related expense 394 638 -38.3%
Other 5,825 3,412 70.7%
Total noninterest expense 37,771 32,315 16.9%
Income before provision for income taxes 57,979 43,473 33.4%
Income tax expense 22,311 17,165 30.0%
Net income $ 35,668 $ 26,308 35.6%
Dividend and earnings allocated to participating securities (409) (415) -1.4%
Net income available to common shareholders $ 35,259 $ 25,893 36.2%
Income per share available to common shareholders
Basic $ 2.46 $ 1.87 31.5%
Diluted $ 2.45 $ 1.86 31.9%
Weighted-average common shares outstanding
Basic 14,347,396 13,849,504 3.6%
Diluted 14,405,770 13,956,298 3.2%
Dividends per share $ 0.58 $ 0.45 28.9%


PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
September 30, December 31,
2017 2016
(Unaudited) (Audited)
Assets
Cash and due from banks $ 413,040 $ 306,330
Fed funds sold 90,200 97,500
Cash and cash equivalents 503,240 403,830
Securities held to maturity, at amortized cost 9,076 10,337
Securities available-for-sale, at fair value 193,890 199,833
Loans and leases 2,878,599 2,543,549
Less allowance for loan and lease losses (28,756) (26,478)
Less net deferred loan fees (3,376) (1,682)
Net loans and leases 2,846,467 2,515,389
Other real estate owned 4,112 4,112
Customers' liability on acceptances 5,394 772
Bank furniture and fixtures, net 5,574 5,313
Bank-owned life insurance 9,004 8,825
Accrued interest receivable 10,477 9,550
Investment in affordable housing 35,939 23,670
Federal Home Loan Bank stock 11,077 9,331
Deferred tax assets 25,372 26,605
Other asset 5,850 4,031
Total assets $ 3,665,472 $ 3,221,598
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand $ 599,722 $ 586,272
Interest-bearing demand 1,298,895 1,019,058
Savings 27,132 34,067
Time certificates of $250,000 or more 617,231 427,172
Other time certificates 651,502 697,155
Total deposits $ 3,194,482 $ 2,763,724
Acceptances outstanding 5,394 772
Advances from Federal Home Loan Bank 6,431 26,516
Subordinated debt issuance 98,932 98,839
Commitments to fund investment in affordable housing partnership 20,684 10,632
Accrued interest payable 4,542 3,199
Other liabilities 17,982 19,851
Total liabilities 3,348,447 2,923,533
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 25,000,000 shares; issued and no outstanding
shares at September 30, 2017 and December 31, 2016
Common stock, no par value. Authorized 100,000,000 shares; issued and
outstanding 14,561,088 at September 30, 2017 and 14,232,907 at December 31, 2016, respectively.
174,171 169,861
Treasury stock (33,233) (19,115)
Additional paid-in-capital 39,762 39,929
Accumulated income 135,497 108,261
Accumulated other comprehensive income (loss):
Unrealized gain (loss) on securities, available-for-sale, net of tax of $601
and $(632) at September 30, 2017 and December 31, 2016, respectively
828 (871)
Total shareholders' equity 317,025 298,065
Total liabilities and shareholders' equity $ 3,665,472 $ 3,221,598


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,
2017 2017 2017 2016 2016
Unaudited historical quarterly operations data:
Interest income $ 42,854 $ 38,113 $ 34,632 $ 33,980 $ 31,889
Interest expense 7,432 6,835 6,190 5,916 5,394
Interest income before provision for credit losses 35,422 31,278 28,442 28,064 26,495
Provision for credit losses 1,300 1,200 1,500 1,900 1,400
Noninterest income 1,243 1,275 2,090 1,286 1,350
Noninterest expense 12,179 12,414 13,178 11,223 10,486
Income tax expense 9,516 7,222 5,573 6,166 6,080
Net income 13,670 11,717 10,281 10,061 9,879
Earnings per share
Basic $ 0.94 $ 0.81 $ 0.71 $ 0.71 $ 0.70
Diluted $ 0.94 $ 0.80 $ 0.71 $ 0.71 $ 0.69
Ratios for the period:
Return on average assets 1.48% 1.36% 1.29% 1.28% 1.31%
Return on beginning equity 17.77% 15.96% 13.99% 13.74% 13.92%
Net interest margin (Fully-taxable equivalent) 3.95% 3.75% 3.67% 3.67% 3.59%
Noninterest expense to average assets 1.32% 1.44% 1.66% 1.43% 1.39%
Efficiency ratio 33.22% 38.13% 43.16% 38.24% 37.66%
Net charge-offs (recoveries) to average loans (annualized) 0.06% 0.18% 0.02% 0.00% 0.14%
Ratios as of period end:
Tier 1 leverage capital ratio 8.54% 8.69% 9.01% 9.43% 9.47%
Common equity tier 1 risk-based capital ratio 9.24% 9.13% 9.15% 9.83% 9.96%
Tier 1 risk-based capital ratio 9.24% 9.13% 9.15% 9.83% 9.96%
Total risk-based capital ratio 13.08% 13.04% 13.21% 14.09% 14.36%
Allowances for credit losses to loans and leases at end of period 1.00% 1.00% 1.04% 1.04% 1.01%
Allowance for credit losses to non-performing
loans and leases 415.32% 426.43% 357.09% 346.22% 1460.49%
Average balances:
Total loans and leases $ 2,817,271 $ 2,695,208 $ 2,563,473 $ 2,465,492 $ 2,344,102
Earning assets $ 3,579,578 $ 3,401,193 $ 3,167,031 $ 3,066,189 $ 2,953,325
Total assets $ 3,658,835 $ 3,466,094 $ 3,228,142 $ 3,124,984 $ 3,009,457
Total deposits $ 3,190,344 $ 3,002,583 $ 2,775,830 $ 2,666,878 $ 2,590,702

PREFERRED BANK
Selected Consolidated Financial Information
(in thousands, except for ratios)
For the Nine Months Ended
September 30, September 30,
2017 2016
Interest income $ 115,599 $ 88,933
Interest expense 20,457 12,818
Interest income before provision for credit losses 95,142 76,115
Provision for credit losses 4,000 4,500
Noninterest income 4,608 4,173
Noninterest expense 37,771 32,315
Income tax expense 22,311 17,165
Net income 35,668 26,308
Earnings per share
Basic $ 2.46 $ 1.87
Diluted $ 2.45 $ 1.86
Ratios for the period:
Return on average assets 1.38% 1.26%
Return on beginning equity 16.00% 13.30%
Net interest margin (Fully-taxable equivalent) 3.78% 3.74%
Noninterest expense to average assets 1.46% 1.55%
Efficiency ratio 37.87% 40.25%
Net charge-offs (recoveries) to average loans 0.09% 0.16%
Average balances:
Total loans and leases $ 2,692,928 $ 2,220,438
Earning assets $ 3,384,472 $ 2,731,363
Total assets $ 3,452,952 $ 2,787,977
Total deposits $ 2,991,411 $ 2,428,402


PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
As of
September 30, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 2016
Unaudited quarterly statement of financial position data:
Assets:
Cash and cash equivalents $ 503,240 $ 502,534 $ 450,355 $ 403,830 $ 405,522
Securities held-to-maturity, at amortized cost 9,076 9,611 9,912 10,337 4,812
Securities available-for-sale, at fair value 193,890 192,474 197,455 199,833 203,272
Loans and Leases:
Real estate - Single and multi-family residential 507,738 $ 494,725 $ 479,279 $ 490,683 $ 493,489
Real estate - Land 15,723 16,512 16,546 16,575 16,605
Real estate - Commercial 1,279,981 1,217,254 1,160,077 1,047,321 1,037,687
Real estate - For sale housing construction 94,033 95,462 109,703 104,960 104,973
Real estate - Other construction 165,244 148,580 150,322 128,434 96,147
Commercial and industrial, trade finance and other 815,880 817,481 771,676 755,576 683,766
Gross loans 2,878,599 2,790,014 2,687,603 2,543,549 2,432,667
Allowance for loan and lease losses (28,756) (27,863) (27,857) (26,478) (24,556)
Net deferred loan fees (3,376) (3,245) (2,572) (1,682) (1,913)
Total loans, net $ 2,846,467 $ 2,758,906 $ 2,657,174 $ 2,515,389 $ 2,406,198
Other real estate owned $ 4,112 $ 4,112 $ 4,112 $ 4,112 $ 4,112
Investment in affordable housing 35,939 37,029 22,904 23,670 24,278
Federal Home Loan Bank stock 11,077 11,078 9,330 9,331 9,331
Other assets 61,671 63,651 61,687 55,096 52,899
Total assets $ 3,665,472 $ 3,579,395 $ 3,412,929 $ 3,221,598 $ 3,110,424
Liabilities:
Deposits:
Demand $ 599,722 $ 641,153 $ 576,060 $ 586,272 $ 575,388
Interest-bearing demand 1,298,895 1,231,595 1,137,145 1,019,058 945,358
Savings 27,132 27,870 34,434 34,067 31,344
Time certificates of $250,000 or more 617,231 535,211 495,177 427,172 416,807
Other time certificates 651,502 685,445 707,830 697,155 691,099
Total deposits $ 3,194,482 $ 3,121,274 $ 2,950,646 $ 2,763,724 $ 2,659,996
Advances from Federal Home Loan Bank $ 6,431 $ 6,459 $ 26,487 $ 26,516 $ 26,544
Subordinated debt issuance 98,932 98,901 98,870 98,839 98,851
Commitments to fund investment in affordable housing partnership 20,684 20,966 10,354 10,632 11,015
Other liabilities 27,918 26,570 32,189 23,822 22,760
Total liabilities $ 3,348,447 $ 3,274,170 $ 3,118,546 $ 2,923,533 $ 2,819,166
Equity:
Net common stock, no par value $ 180,700 $ 180,110 $ 178,884 $ 190,675 $ 188,430
Retained earnings 135,497 124,740 115,931 108,261 100,804
Accumulated other comprehensive income 828 375 (432) (871) 2,024
Total shareholders' equity $ 317,025 $ 305,225 $ 294,383 $ 298,065 $ 291,258
Total liabilities and shareholders' equity $ 3,665,472 $ 3,579,395 $ 3,412,929 $ 3,221,598 $ 3,110,424


Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
Nine Months Ended Year Ended
September 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 1,940 4,323
Mini-perm Real Estate - -
Construction - Residential - -
Construction - Commercial - -
Land - Residential - -
Land - Commercial - -
Others - -
Total Charge-Offs 1,940 4,323
Recoveries
Commercial & Industrial 55 985
Mini-perm Real Estate - -
Construction - Residential - -
Construction - Commercial 17 26
Land - Residential - -
Land - Commercial 146 732
Total Recoveries 218 1,743
Net Loan Charge-Offs 1,722 2,580
Provision for Credit Losses 4,000 6,400
Balance at End of Period $ 28,756 $ 26,478
Average Loans and Leases $ 2,692,928 $ 2,282,074
Loans and Leases at end of Period $ 2,878,599 2,543,549
Net Charge-Offs to Average Loans and Leases 0.09% 0.11%
Allowances for credit losses to loans and leases at end of period 1.00% 1.04%

Source:Preferred Bank