Preferred Bank (NASDAQ: PFBC), one of the larger
independent California banks, today reported results for the
quarter March 31, 2022. Preferred Bank (“the Bank”) reported net
income of $26.0 million or $1.74 per diluted share for the first
quarter of 2022. This represents an increase of $4.8 million or
22.8% over the same quarter last year down slightly from the $26.4
million or $1.80 per share posted in the fourth quarter of 2021.
The primary reasons for the increase compared to the prior year was
an increase in net interest income of $4.7 million primarily driven
by loan growth. The decrease from the fourth quarter of 2021 was
due mainly to an increase in noninterest expense of $1.4 million
which was the result of higher personnel costs.
First quarter 2022 highlights:
- Linked quarter loan
growth (Ex-PPP) of 4.0%
- Return on average
assets (“ROA”) of 1.75%
- Return on beginning
equity (“ROBE”) of 17.99%
- Pre-provision,
pre-tax (“PPPT”) ROBE of 24.98% 1
- Efficiency ratio of
30.89%
Li Yu, Chairman and CEO, commented, “We had a strong first
quarter to start 2022, compared to all the prior years. Net income
was $26.0 or $1.74 per fully diluted share as compared to $21.2 and
$1.42 per share respectively, for the first quarter 2021.
Loan growth for the first quarter, excluding PPP was $176
million, or 16.1% annualized and was the highlight of the quarter.
The momentum of fourth quarter’s origination activities has been
carried over to this quarter and pay-off activities have moderately
subsided. Looking forward, we are encouraged by the new
applications received for lending opportunities in the following
quarters.
Deposit growth was moderate, increasing by $84 million, or 6.44%
annualized. As we are facing the Federal Reserve’s tightening of
liquidity, this growth rate is well within our expected range and
allows us to deploy some of our excess liquidity into more
profitable applications.
The Bank’s net interest margin for the quarter was 3.42%, an
increase of 14 basis points from the previous quarter partially
reflecting the change in leverage on the balance sheet. Looking
forward, we expect our margin to expand under the rate rising
environment, which seems to be the unanimous consensus of all
economists. Following is a breakdown of the Bank’s assets, which
will support our margin expansion conviction:
Total Adj/Floating Rate Loans |
$ |
3,824,913 |
|
|
Loans with
no Floor |
$ |
688,006 |
Loans Above
Floor or at Floor |
|
753,071 |
Cash and
Floating Rate Securities |
|
1,215,162 |
Total Interest Earning Assets to Reprice
Immediately |
$ |
2,656,239 |
|
|
Floating Rate Loans which will Reprice When Rates are
Increased by: |
|
0 - 25
bps |
$ |
196,213 |
26 - 50
bps |
|
393,437 |
51 - 75
bps |
|
492,037 |
76 - 100
bps |
|
305,055 |
> 100
bps |
|
997,094 |
Total |
$ |
2,383,836 |
On the liability side, the Bank’s time certificates of deposit
portfolio of $1.86 billion has an average life of 7.3 months. This
group of deposits will reprice slower than the interest-bearing
transactional accounts.
We are also making progress on resolving our troubled assets.
After months of court battles, two main non-accrual loans have
finally advanced to the OREO and repossessed-asset stage and expect
to be resolved shortly. Our total non-performing loans at March 31,
2022, is now just $2.2 million and total non-performing assets are
$17.7 million. Charge-offs for this quarter are primarily related
to these legacy loans and places us in a position to offload
them.
Under the current inflationary environment, increases in
operating expenses will be inevitable. As we have always been
disciplined with our operating costs, we expect expense growth to
stay at approximately the industry average and be more than fully
absorbed by growth in net interest income.”
Results of Operations
Net Interest Income and Net Interest Margin.
Net interest income before provision for credit losses was $50.0
million for the first quarter of 2022. This was an increase from
the $45.4 million recorded in the same quarter last year and also
an increase over the $49.4 million posted in the fourth quarter of
2021. Loan growth was the primary driver of the increase in net
interest income as was an increase in investment securities along
with a decline in interest expense. The taxable equivalent margin
was 3.42% for the first quarter of 2022, as compared to 3.28% in
the fourth quarter of 2021 and versus 3.61% for the same period
last year.
Noninterest Income. For the first quarter of
2022, noninterest income was $2,266,000 compared with $1,347,000
for the same quarter last year and compared to $1,966,000 for the
fourth quarter of 2021. The increase compared to last year was due
to a $379,000 loss on sale of loans recorded in the first quarter
of last year in addition to service charges increasing this quarter
by $245,000 over that period as well. The increase over the fourth
quarter of 2021 was mainly due to an increase in letter of credit
(“LC”) fees which were up by $214,000 this quarter.
Noninterest Expense. Total
noninterest expense was $16.2 million for the first quarter of
2022. This is up compared to the $15.7 million recorded in the same
quarter last year and an increase over the $14.8 million posted in
the fourth quarter of 2021. In comparing to the same quarter last
year, personnel expense and other professional services contributed
most to the overall increase. Personnel expense increased over the
prior year primarily due to additional staffing and merit
increases. The increase in noninterest expense over the prior
quarter was due to personnel expense. This increase in personnel
expense was due to an increase in payroll taxes of $612,000 which
were Bank-incurred payroll taxes on incentive compensation
payments, which are distributed each first quarter. Occupancy
expense totaled $1.4 million for the quarter which was relatively
flat compared to both the prior quarter and when compared to the
same quarter last year. Professional services expense was $1.2
million for the first quarter of 2022, an increase of $262,000 over
the same period last year and an increase of $168,000 over the
fourth quarter of 2021. The increase over both periods was mainly
due to legal fees as the Bank continues to wind down and liquidate
the two aforementioned non-performing assets. Other expenses were
$1.2 million for the first quarter of 2022, down from the $1.6
million recorded in the first quarter of 2021 and down slightly
from the $1.3 million posted last quarter. Lower FDIC premiums were
the primary reason for the decrease compared to the same period
last year. For the quarter ended March 31, 2022, the Bank’s
efficiency ratio was 30.9%, up from the 28.8% posted last quarter
and down from last year’s 33.5%.
Income Taxes. The Bank recorded a provision for
income taxes of $10.4 million for the first quarter of 2022. This
represents an effective tax rate (“ETR”) of 28.5% and slightly
below the ETR of 29.5% in the prior quarter and flat compared to
the ETR of 28.5% in the same period last year. The Bank’s ETR will
fluctuate slightly from quarter to quarter within a fairly small
range due to the timing of taxable events throughout the year
Balance Sheet Summary
Total gross loans at March 31, 2022 were $4.59 billion, an
increase of $167 million or 3.8% over the total of $4.42 billion as
of December 31, 2021. Total deposits increased to $5.31 billion, an
increase of $84 million or 1.6% over the $5.23 billion as of
December 31, 2021. Total assets ended the quarter at $6.14 billion,
an increase of $96 million or 1.6% over the total of $6.05 billion
as of December 31, 2021.
Asset Quality
As of March 31, 2022, nonaccrual loans totaled $2.2 million,
down from $14.8 million as of the end of 2021. In addition, OREO
and repossessed assets totaled $15.5 million as of March 31, 2022.
Total net charge-offs for the first quarter of 2022 were $1.2
million as compared to $267,000 in the prior quarter and compared
to a net recovery of $57,000 in the first quarter of 2021.
Allowance for Credit Losses
The (reversal of) provision for credit losses for the first
quarter of 2022 was ($250,000) as compared to a reversal of
($900,000) in the prior quarter and compared to the $1.4 million
provision for credit losses posted in the first quarter of 2021. A
consistently improving economic outlook, among other factors such
as credit quality led to a lower allowance requirement. The Bank’s
allowance coverage ratio now stands at 1.28% of total loans
(excluding PPP loans).
Capitalization
As of March 31, 2022, the Bank’s leverage ratio was 9.92%, the
common equity tier 1 capital ratio was 11.20% and the total capital
ratio stood at 15.12%. As of December 31, 2021, the Bank’s leverage
ratio was 9.54%, the common equity tier 1 ratio was 11.26% and the
total risk-based capital ratio was 15.37%.
GAAP –
Non-GAAP Reconciliation -First quarter 2022
PPPT ROBE |
Net Income |
$ |
26,027 |
|
Add: Reversal of provision for
credit losses |
|
(250 |
) |
Add: Income tax expense |
|
10,364 |
|
Pre-provision and pre-tax
income |
$ |
36,141 |
|
|
|
Total equity - 12/31/21 |
$ |
586,718 |
|
Pre-provision and pre-tax
ROBE |
|
24.98 |
% |
|
|
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred
Bank’s first quarter 2022 financial results will be held tomorrow,
April 20, 2022 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 Chief Executive Officer Li Yu,
President and Chief Operating Officer Wellington Chen, Chief
Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi
and Deputy Chief Operating Officer Johnny Hsu 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 May 4, 2022; the
passcode is 2138387.
About Preferred Bank
Preferred Bank is one of the larger independent commercial banks
headquartered 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 Bank conducts its banking business from its main office in
Los Angeles, California, and through eleven full-service branch
banking offices in California (Alhambra, Century City, City of
Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera,
Tarzana and San Francisco (2)) and one branch in Flushing, New
York. In addition, the Bank operates a Loan Production Office in
the Houston, Texas suburb of Sugar Land. 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 2021 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: |
AT FINANCIAL PROFILES: |
Edward J. Czajka |
Jeffrey Haas |
Executive Vice President |
General Information |
Chief Financial Officer |
(310) 622-8240 |
(213) 891-1188 |
PFBC@finprofiles.com |
PREFERRED
BANK |
Condensed
Consolidated Statements of Operations |
(unaudited) |
(in
thousands, except for net income per share and
shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
Interest income: |
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
52,119 |
|
|
$ |
51,906 |
|
|
$ |
49,859 |
|
|
Investment securities |
|
|
2,886 |
|
|
|
2,867 |
|
|
|
2,277 |
|
|
Fed funds sold |
|
|
19 |
|
|
|
18 |
|
|
|
24 |
|
|
|
Total interest income |
|
|
55,024 |
|
|
|
54,791 |
|
|
|
52,160 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
Interest-bearing demand |
|
|
1,431 |
|
|
|
1,511 |
|
|
|
1,437 |
|
|
Savings |
|
|
19 |
|
|
|
17 |
|
|
|
19 |
|
|
Time certificates |
|
|
2,217 |
|
|
|
2,521 |
|
|
|
3,827 |
|
|
Subordinated debt |
|
|
1,325 |
|
|
|
1,325 |
|
|
|
1,531 |
|
|
|
Total interest expense |
|
|
4,992 |
|
|
|
5,374 |
|
|
|
6,814 |
|
|
|
Net interest income |
|
|
50,032 |
|
|
|
49,417 |
|
|
|
45,346 |
|
(Reversal of) provision for credit losses |
|
|
(250 |
) |
|
|
(900 |
) |
|
|
1,400 |
|
|
|
Net interest income after (reversal of) provision for |
|
|
|
|
|
|
|
|
|
credit
losses |
|
|
50,282 |
|
|
|
50,317 |
|
|
|
43,946 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
Fees & service charges on deposit accounts |
|
|
671 |
|
|
|
581 |
|
|
|
426 |
|
|
Letters of credit fee income |
|
|
933 |
|
|
|
719 |
|
|
|
808 |
|
|
BOLI income |
|
|
99 |
|
|
|
99 |
|
|
|
96 |
|
|
Net loss on sale of loans |
|
|
- |
|
|
|
- |
|
|
|
(379 |
) |
|
Other income |
|
|
563 |
|
|
|
567 |
|
|
|
396 |
|
|
|
Total noninterest income |
|
|
2,266 |
|
|
|
1,966 |
|
|
|
1,347 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
Salary and employee benefits |
|
|
11,640 |
|
|
|
10,278 |
|
|
|
11,123 |
|
|
Net occupancy expense |
|
|
1,422 |
|
|
|
1,396 |
|
|
|
1,401 |
|
|
Business development and promotion expense |
|
|
101 |
|
|
|
280 |
|
|
|
73 |
|
|
Professional services |
|
|
1,243 |
|
|
|
1,075 |
|
|
|
981 |
|
|
Office supplies and equipment expense |
|
|
489 |
|
|
|
498 |
|
|
|
438 |
|
|
Other real estate owned expense |
|
|
16 |
|
|
|
- |
|
|
|
- |
|
|
Other |
|
|
|
1,246 |
|
|
|
1,279 |
|
|
|
1,636 |
|
|
|
Total noninterest expense |
|
|
16,157 |
|
|
|
14,806 |
|
|
|
15,652 |
|
|
|
Income before provision for income taxes |
|
|
36,391 |
|
|
|
37,477 |
|
|
|
29,641 |
|
Income tax expense |
|
|
10,364 |
|
|
|
11,056 |
|
|
|
8,447 |
|
|
|
Net income |
|
$ |
26,027 |
|
|
$ |
26,421 |
|
|
$ |
21,194 |
|
|
|
|
|
|
|
|
|
|
|
Dividend and earnings allocated to participating securities |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(3 |
) |
Net income available to common shareholders |
|
$ |
26,026 |
|
|
$ |
26,418 |
|
|
$ |
21,191 |
|
|
|
|
|
|
|
|
|
|
|
Income per share available to common shareholders |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.76 |
|
|
$ |
1.80 |
|
|
$ |
1.42 |
|
|
|
Diluted |
|
$ |
1.74 |
|
|
$ |
1.80 |
|
|
$ |
1.42 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
14,765,337 |
|
|
|
14,677,515 |
|
|
|
14,950,019 |
|
|
|
Diluted |
|
|
14,978,667 |
|
|
|
14,677,515 |
|
|
|
14,950,019 |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per common share |
|
$ |
0.43 |
|
|
$ |
0.43 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
|
PREFERRED
BANK |
Condensed
Consolidated Statements of Financial Condition |
(unaudited) |
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
(Unaudited) |
|
(Audited) |
Assets |
|
|
|
Cash and due from banks |
$ |
965,162 |
|
|
$ |
1,030,610 |
|
Fed funds sold |
|
20,000 |
|
|
|
20,000 |
|
|
Cash and cash equivalents |
|
985,162 |
|
|
|
1,050,610 |
|
|
|
|
|
|
|
|
Securities held to maturity, at amortized cost |
|
13,496 |
|
|
|
13,962 |
|
Securities available-for-sale, at fair value |
|
430,280 |
|
|
|
451,911 |
|
Loans |
|
4,591,567 |
|
|
|
4,424,992 |
|
|
Less allowance for credit losses |
|
(58,496 |
) |
|
|
(59,969 |
) |
|
Less amortized deferred loan fees, net |
|
(8,573 |
) |
|
|
(6,316 |
) |
|
Loans, net |
|
4,524,498 |
|
|
|
4,358,707 |
|
|
|
|
|
|
|
|
Other real estate owned and repossessed assets |
|
15,547 |
|
|
|
- |
|
Customers' liability on acceptances |
|
8,222 |
|
|
|
10,188 |
|
Bank furniture and fixtures, net |
|
10,189 |
|
|
|
10,533 |
|
Bank-owned life insurance |
|
10,154 |
|
|
|
10,088 |
|
Accrued interest receivable |
|
15,166 |
|
|
|
14,646 |
|
Investment in affordable housing partnerships |
|
56,946 |
|
|
|
59,018 |
|
Federal Home Loan Bank stock, at cost |
|
15,000 |
|
|
|
15,000 |
|
Deferred tax assets |
|
31,086 |
|
|
|
26,674 |
|
Operating lease right-of-use assets |
|
21,451 |
|
|
|
21,969 |
|
Other assets |
|
5,159 |
|
|
|
2,997 |
|
|
Total assets |
$ |
6,142,356 |
|
|
$ |
6,046,303 |
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
Deposits: |
|
|
|
|
Non-interest bearing demand deposits |
$ |
1,251,613 |
|
|
$ |
1,305,692 |
|
|
Interest-bearing deposits: |
|
2,159,178 |
|
|
|
2,032,819 |
|
|
|
Savings |
|
39,946 |
|
|
|
37,839 |
|
|
|
Time certificates of $250,000 or more |
|
924,317 |
|
|
|
934,444 |
|
|
|
Other time certificates |
|
934,615 |
|
|
|
914,717 |
|
|
|
Total deposits |
|
5,309,669 |
|
|
|
5,225,511 |
|
|
|
|
|
|
|
|
Acceptances outstanding |
|
8,222 |
|
|
|
10,188 |
|
Subordinated debt issuance, net |
|
147,818 |
|
|
|
147,758 |
|
Commitments to fund investment in affordable housing
partnerships |
|
22,606 |
|
|
|
22,606 |
|
Operating lease liabilities |
|
21,901 |
|
|
|
22,861 |
|
Accrued interest payable |
|
1,966 |
|
|
|
715 |
|
Other liabilities |
|
34,889 |
|
|
|
29,946 |
|
|
Total liabilities |
|
5,547,071 |
|
|
|
5,459,585 |
|
|
|
|
|
|
|
|
Shareholders' equity |
|
595,285 |
|
|
|
586,718 |
|
|
Total liabilities and shareholders' equity |
$ |
6,142,356 |
|
|
$ |
6,046,303 |
|
|
|
|
|
|
|
|
Book value per common share |
$ |
40.19 |
|
|
$ |
39.97 |
|
Number of common shares outstanding |
|
14,810,635 |
|
|
|
14,679,769 |
|
PREFERRED
BANK |
Selected
Consolidated Financial Information |
(unaudited) |
(in
thousands, except for ratios) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter
Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
December 31, |
September 30, |
June 30, |
March 31, |
|
|
|
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
Unaudited historical quarterly operations
data: |
|
|
|
|
|
|
Interest income |
$ |
55,024 |
|
$ |
54,791 |
|
$ |
53,611 |
|
$ |
50,473 |
|
$ |
52,160 |
|
|
Interest expense |
|
4,992 |
|
|
5,374 |
|
|
5,858 |
|
|
7,112 |
|
|
6,814 |
|
|
|
Interest income before provision for credit losses |
|
50,032 |
|
|
49,417 |
|
|
47,753 |
|
|
43,361 |
|
|
45,346 |
|
|
(Reversal of) provision for credit losses |
|
(250 |
) |
|
(900 |
) |
|
(1,500 |
) |
|
- |
|
|
1,400 |
|
|
Noninterest income |
|
2,266 |
|
|
1,966 |
|
|
2,784 |
|
|
1,646 |
|
|
1,347 |
|
|
Noninterest expense |
|
16,157 |
|
|
14,806 |
|
|
15,370 |
|
|
14,964 |
|
|
15,652 |
|
|
Income tax expense |
|
10,364 |
|
|
11,056 |
|
|
10,522 |
|
|
8,563 |
|
|
8,447 |
|
|
|
Net income |
$ |
26,027 |
|
$ |
26,421 |
|
$ |
26,145 |
|
$ |
21,480 |
|
$ |
21,194 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
Basic |
$ |
1.76 |
|
$ |
1.80 |
|
$ |
1.76 |
|
$ |
1.44 |
|
$ |
1.42 |
|
|
|
Diluted |
$ |
1.74 |
|
$ |
1.80 |
|
$ |
1.76 |
|
$ |
1.44 |
|
$ |
1.42 |
|
|
|
|
|
|
|
|
|
|
Ratios for the period: |
|
|
|
|
|
|
Return on average assets |
|
1.75 |
% |
|
1.72 |
% |
|
1.80 |
% |
|
1.58 |
% |
|
1.65 |
% |
|
Return on beginning equity |
|
17.99 |
% |
|
18.65 |
% |
|
18.56 |
% |
|
15.98 |
% |
|
16.36 |
% |
|
Net interest margin (Fully-taxable equivalent) |
|
3.42 |
% |
|
3.28 |
% |
|
3.36 |
% |
|
3.25 |
% |
|
3.61 |
% |
|
Noninterest expense to average assets |
|
1.08 |
% |
|
0.97 |
% |
|
1.06 |
% |
|
1.10 |
% |
|
1.22 |
% |
|
Efficiency ratio |
|
30.89 |
% |
|
28.82 |
% |
|
30.41 |
% |
|
33.25 |
% |
|
33.52 |
% |
|
Net charge-offs (recoveries) to average loans (annualized) |
|
0.11 |
% |
|
0.03 |
% |
|
0.10 |
% |
|
0.12 |
% |
|
-0.01 |
% |
|
|
|
|
|
|
|
|
|
Ratios as of period end: |
|
|
|
|
|
|
Tier 1 leverage capital ratio |
|
9.92 |
% |
|
9.54 |
% |
|
9.64 |
% |
|
10.07 |
% |
|
10.26 |
% |
|
Common equity tier 1 risk-based capital ratio |
|
11.20 |
% |
|
11.26 |
% |
|
11.19 |
% |
|
11.28 |
% |
|
11.34 |
% |
|
Tier 1 risk-based capital ratio |
|
11.20 |
% |
|
11.26 |
% |
|
11.19 |
% |
|
11.28 |
% |
|
11.34 |
% |
|
Total risk-based capital ratio |
|
15.12 |
% |
|
15.37 |
% |
|
15.47 |
% |
|
15.61 |
% |
|
14.73 |
% |
|
Allowances for credit losses to loans at end of period |
|
1.27 |
% |
|
1.36 |
% |
|
1.41 |
% |
|
1.49 |
% |
|
1.56 |
% |
|
Allowance for credit losses to non-performing loans |
27.15x |
|
4.05x |
|
2.93x |
|
2.91x |
|
2.95x |
|
|
|
|
|
|
|
|
|
|
Average balances: |
|
|
|
|
|
|
Total securities |
$ |
455,899 |
|
$ |
470,811 |
|
$ |
401,641 |
|
$ |
269,000 |
|
$ |
242,200 |
|
|
Total loans |
|
4,367,095 |
|
|
4,218,699 |
|
|
4,156,289 |
|
|
4,130,190 |
|
|
4,044,800 |
|
|
Total earning assets |
|
5,938,519 |
|
|
5,984,055 |
|
|
5,659,678 |
|
|
5,364,598 |
|
|
5,102,291 |
|
|
Total assets |
|
6,044,155 |
|
|
6,079,934 |
|
|
5,760,056 |
|
|
5,467,678 |
|
|
5,200,079 |
|
|
Total time certificate of deposits |
|
1,869,654 |
|
|
1,915,116 |
|
|
1,959,514 |
|
|
1,893,247 |
|
|
1,820,461 |
|
|
Total interest bearing deposits |
|
3,947,616 |
|
|
3,945,275 |
|
|
3,783,704 |
|
|
3,704,771 |
|
|
3,531,358 |
|
|
Total deposits |
|
5,215,810 |
|
|
5,277,507 |
|
|
4,971,607 |
|
|
4,724,104 |
|
|
4,486,399 |
|
|
Total interest bearing liabilities |
|
4,095,399 |
|
|
4,093,002 |
|
|
3,931,375 |
|
|
3,815,964 |
|
|
3,630,705 |
|
|
Total equity |
|
597,214 |
|
|
576,495 |
|
|
569,624 |
|
|
553,561 |
|
|
538,282 |
|
|
|
|
|
|
|
|
|
|
PREFERRED
BANK |
Selected
Consolidated Financial Information |
(unaudited) |
(in
thousands, except for ratios) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2021 |
|
Unaudited quarterly statement of financial position
data: |
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
985,162 |
|
|
$ |
1,050,610 |
|
|
$ |
1,082,634 |
|
|
$ |
896,474 |
|
|
$ |
943,126 |
|
|
Securities held-to-maturity, at amortized cost |
|
13,496 |
|
|
|
13,962 |
|
|
|
15,294 |
|
|
|
15,749 |
|
|
|
6,039 |
|
|
Securities available-for-sale, at fair value |
|
430,280 |
|
|
|
451,911 |
|
|
|
461,356 |
|
|
|
278,460 |
|
|
|
228,635 |
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
Real estate – Mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate—Residential |
$ |
531,957 |
|
|
$ |
536,286 |
|
|
$ |
540,725 |
|
|
$ |
558,147 |
|
|
$ |
541,313 |
|
|
|
|
Real
estate—Commercial |
|
2,375,519 |
|
|
|
2,267,063 |
|
|
|
2,093,692 |
|
|
|
2,019,995 |
|
|
|
1,925,554 |
|
|
|
|
Total Real Estate – Mortgage |
|
2,907,476 |
|
|
|
2,803,349 |
|
|
|
2,634,417 |
|
|
|
2,578,142 |
|
|
|
2,466,867 |
|
|
|
Real estate – Construction: |
|
|
|
|
|
|
|
|
|
|
|
|
R/E
Construction — Residential |
|
141,218 |
|
|
|
130,842 |
|
|
|
122,382 |
|
|
|
120,363 |
|
|
|
123,302 |
|
|
|
|
R/E
Construction — Commercial |
|
209,726 |
|
|
|
202,482 |
|
|
|
213,833 |
|
|
|
224,323 |
|
|
|
229,933 |
|
|
|
|
Total real estate construction loans |
|
350,944 |
|
|
|
333,324 |
|
|
|
336,215 |
|
|
|
344,686 |
|
|
|
353,235 |
|
|
|
Commercial and industrial |
|
1,300,478 |
|
|
|
1,245,734 |
|
|
|
1,286,995 |
|
|
|
1,259,668 |
|
|
|
1,248,550 |
|
|
|
PPP |
|
32,554 |
|
|
|
42,467 |
|
|
|
63,897 |
|
|
|
95,765 |
|
|
|
95,434 |
|
|
|
Consumer and others |
|
115 |
|
|
|
118 |
|
|
|
6 |
|
|
|
143 |
|
|
|
155 |
|
|
|
|
Gross
loans |
|
4,591,567 |
|
|
|
4,424,992 |
|
|
|
4,321,529 |
|
|
|
4,278,403 |
|
|
|
4,164,241 |
|
|
Allowance for credit losses on loans |
|
(58,496 |
) |
|
|
(59,969 |
) |
|
|
(61,135 |
) |
|
|
(63,635 |
) |
|
|
(64,883 |
) |
|
Net deferred loan fees |
|
(8,573 |
) |
|
|
(6,316 |
) |
|
|
(5,498 |
) |
|
|
(5,329 |
) |
|
|
(4,872 |
) |
|
|
Net loans |
$ |
4,524,498 |
|
|
$ |
4,358,707 |
|
|
$ |
4,254,896 |
|
|
$ |
4,209,439 |
|
|
$ |
4,094,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned and repossessed assets |
$ |
15,547 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Investment in affordable housing partnerships |
|
56,946 |
|
|
|
59,018 |
|
|
|
53,399 |
|
|
|
55,452 |
|
|
|
59,824 |
|
|
Federal Home Loan Bank stock, at cost |
|
15,000 |
|
|
|
15,000 |
|
|
|
15,000 |
|
|
|
15,000 |
|
|
|
15,000 |
|
|
Other assets |
|
101,427 |
|
|
|
97,095 |
|
|
|
97,261 |
|
|
|
105,334 |
|
|
|
100,894 |
|
|
|
Total assets |
$ |
6,142,356 |
|
|
$ |
6,046,303 |
|
|
$ |
5,979,840 |
|
|
$ |
5,575,908 |
|
|
$ |
5,448,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Demand |
$ |
1,251,613 |
|
|
$ |
1,305,692 |
|
|
$ |
1,349,114 |
|
|
$ |
1,063,472 |
|
|
$ |
1,026,260 |
|
|
|
Interest-bearing demand |
|
2,159,178 |
|
|
|
2,032,819 |
|
|
|
1,861,334 |
|
|
|
1,774,668 |
|
|
|
1,751,951 |
|
|
|
Savings |
|
39,946 |
|
|
|
37,839 |
|
|
|
33,417 |
|
|
|
32,560 |
|
|
|
37,551 |
|
|
|
Time certificates of $250,000 or more |
|
924,317 |
|
|
|
934,444 |
|
|
|
959,826 |
|
|
|
930,976 |
|
|
|
927,043 |
|
|
|
Other time certificates |
|
934,615 |
|
|
|
914,717 |
|
|
|
990,228 |
|
|
|
994,630 |
|
|
|
979,694 |
|
|
|
Total deposits |
$ |
5,309,669 |
|
|
$ |
5,225,511 |
|
|
$ |
5,193,919 |
|
|
$ |
4,796,306 |
|
|
$ |
4,722,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceptances outstanding |
$ |
8,222 |
|
|
$ |
10,188 |
|
|
$ |
7,697 |
|
|
$ |
7,797 |
|
|
$ |
9,670 |
|
|
Subordinated debt issuance, net |
|
147,818 |
|
|
|
147,758 |
|
|
|
147,699 |
|
|
|
147,787 |
|
|
|
99,365 |
|
|
Commitments to fund investment in affordable housing
partnerships |
|
22,606 |
|
|
|
22,606 |
|
|
|
17,900 |
|
|
|
19,197 |
|
|
|
27,918 |
|
|
Other liabilities |
|
58,756 |
|
|
|
53,522 |
|
|
|
50,604 |
|
|
|
45,852 |
|
|
|
49,283 |
|
|
|
Total liabilities |
$ |
5,547,071 |
|
|
$ |
5,459,585 |
|
|
$ |
5,417,819 |
|
|
$ |
5,016,939 |
|
|
$ |
4,908,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
Net common stock, no par value |
$ |
209,065 |
|
|
$ |
208,840 |
|
|
$ |
203,844 |
|
|
$ |
219,958 |
|
|
$ |
218,593 |
|
|
Retained earnings |
|
392,610 |
|
|
|
372,952 |
|
|
|
352,843 |
|
|
|
332,276 |
|
|
|
316,481 |
|
|
Accumulated other comprehensive income |
|
(6,390 |
) |
|
|
4,926 |
|
|
|
5,334 |
|
|
|
6,735 |
|
|
|
4,195 |
|
|
|
Total shareholders' equity |
$ |
595,285 |
|
|
$ |
586,718 |
|
|
$ |
562,021 |
|
|
$ |
558,969 |
|
|
$ |
539,269 |
|
|
|
Total liabilities and shareholders' equity |
$ |
6,142,356 |
|
|
$ |
6,046,303 |
|
|
$ |
5,979,840 |
|
|
$ |
5,575,908 |
|
|
$ |
5,448,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREFERRED
BANK |
Quarter-to-Date Average Balances, Yield And
Rates |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
Three months ended December 31, |
|
Three months ended March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
|
|
Interest |
Average |
|
|
Interest |
Average |
|
|
Interest |
Average |
|
|
|
Average |
Income
or |
Yield/ |
|
Average |
Income
or |
Yield/ |
|
Average |
Income
or |
Yield/ |
|
|
|
Balance |
Expense |
Rate |
|
Balance |
Expense |
Rate |
|
Balance |
Expense |
Rate |
ASSETS |
(Dollars in
thousands) |
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1,2) |
$ |
4,367,095 |
|
|
52,119 |
4.84 |
% |
|
$ |
4,218,699 |
|
$ |
51,906 |
4.88 |
% |
|
|
4,044,823 |
|
$ |
49,859 |
5.00 |
% |
|
Investment securities (3) |
|
455,899 |
|
|
2,224 |
1.98 |
% |
|
|
470,811 |
|
|
2,228 |
1.88 |
% |
|
|
242,200 |
|
|
1,884 |
3.16 |
% |
|
Federal funds sold |
|
20,122 |
|
|
19 |
0.38 |
% |
|
|
20,380 |
|
|
18 |
0.36 |
% |
|
|
21,474 |
|
|
24 |
0.45 |
% |
|
Other earning assets |
|
1,095,403 |
|
|
770 |
0.29 |
% |
|
|
1,274,165 |
|
|
752 |
0.23 |
% |
|
|
793,794 |
|
|
493 |
0.25 |
% |
|
|
Total interest-earning assets |
|
5,938,519 |
|
|
55,132 |
3.77 |
% |
|
|
5,984,055 |
|
|
54,904 |
3.64 |
% |
|
|
5,102,291 |
|
|
52,260 |
4.15 |
% |
|
Deferred loan fees, net |
|
(6,322 |
) |
|
|
|
|
(5,530 |
) |
|
|
|
|
(4,344 |
) |
|
|
|
Allowance for credit losses on loans |
|
(59,951 |
) |
|
|
|
|
(61,123 |
) |
|
|
|
|
(63,450 |
) |
|
|
Noninterest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
11,589 |
|
|
|
|
|
11,933 |
|
|
|
|
|
9,923 |
|
|
|
|
Bank furniture and fixtures |
|
10,440 |
|
|
|
|
|
10,810 |
|
|
|
|
|
11,772 |
|
|
|
|
Right of use assets |
|
21,754 |
|
|
|
|
|
21,150 |
|
|
|
|
|
16,847 |
|
|
|
|
Other assets |
|
128,126 |
|
|
|
|
|
118,639 |
|
|
|
|
|
127,040 |
|
|
|
|
|
Total
assets |
$ |
6,044,155 |
|
|
|
|
$ |
6,079,934 |
|
|
|
|
$ |
5,200,079 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
|
2,077,962 |
|
$ |
1,450 |
0.28 |
% |
|
|
2,030,159 |
|
$ |
1,528 |
0.30 |
% |
|
$ |
1,710,897 |
|
$ |
1,456 |
0.35 |
% |
|
|
TCD $250K or
more |
|
929,170 |
|
|
1,027 |
0.45 |
% |
|
|
942,201 |
|
|
1,151 |
0.48 |
% |
|
|
919,155 |
|
|
1,918 |
0.85 |
% |
|
|
Other time
certificates |
|
940,484 |
|
|
1,190 |
0.51 |
% |
|
|
972,915 |
|
|
1,370 |
0.56 |
% |
|
|
901,306 |
|
|
1,909 |
0.86 |
% |
|
|
Total
interest-bearing deposits |
|
3,947,616 |
|
|
3,667 |
0.38 |
% |
|
|
3,945,275 |
|
|
4,049 |
0.41 |
% |
|
|
3,531,358 |
|
|
5,283 |
0.61 |
% |
Short-term borrowings |
|
- |
|
|
- |
0.00 |
% |
|
|
3 |
|
|
0 |
0.22 |
% |
|
|
- |
|
|
- |
0.00 |
% |
Subordinated debt, net |
|
147,783 |
|
|
1,325 |
3.64 |
% |
|
|
147,724 |
|
|
1,325 |
3.56 |
% |
|
|
99,347 |
|
|
1,531 |
6.25 |
% |
|
|
Total
interest-bearing liabilities |
|
4,095,399 |
|
|
4,992 |
0.49 |
% |
|
|
4,093,002 |
|
|
5,374 |
0.52 |
% |
|
|
3,630,705 |
|
|
6,814 |
0.76 |
% |
Non-interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
1,268,194 |
|
|
|
|
|
1,332,232 |
|
|
|
|
|
955,041 |
|
|
|
|
Lease Liability |
|
22,463 |
|
|
|
|
|
22,298 |
|
|
|
|
|
19,289 |
|
|
|
|
Other liabilities |
|
60,885 |
|
|
|
|
|
55,907 |
|
|
|
|
|
56,762 |
|
|
|
|
|
Total
liabilities |
|
5,446,941 |
|
|
|
|
|
5,503,439 |
|
|
|
|
|
4,661,797 |
|
|
|
Shareholders’ equity |
|
597,214 |
|
|
|
|
|
576,495 |
|
|
|
|
|
538,282 |
|
|
|
|
|
Total
liabilities and shareholders’ equity |
$ |
6,044,155 |
|
|
|
|
$ |
6,079,934 |
|
|
|
|
$ |
5,200,079 |
|
|
|
Net interest income |
|
$ |
50,140 |
|
|
|
$ |
49,530 |
|
|
|
$ |
45,446 |
|
Net interest spread |
|
|
3.27 |
% |
|
|
|
3.12 |
% |
|
|
|
3.39 |
% |
Net interest margin |
|
|
3.42 |
% |
|
|
|
3.28 |
% |
|
|
|
3.61 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing demand deposits |
$ |
1,268,194 |
|
|
|
|
$ |
1,332,232 |
|
|
|
|
$ |
955,041 |
|
|
|
|
Interest bearing deposits |
|
3,947,616 |
|
|
3,667 |
0.38 |
% |
|
|
3,945,275 |
|
|
4,049 |
0.41 |
% |
|
|
3,531,358 |
|
|
5,283 |
0.61 |
% |
|
|
Total
Deposits |
$ |
5,215,810 |
|
$ |
3,667 |
0.29 |
% |
|
$ |
5,277,507 |
|
$ |
4,049 |
0.30 |
% |
|
$ |
4,486,399 |
|
$ |
5,283 |
0.48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes non-accrual loans and loans held for sale |
|
|
|
|
|
|
|
|
|
|
(2) |
Net loan fee income of
$765,000, $1.1 million and $539,000 for the quarter ended March 31,
2022, December 31, 2021 and March 31, 2021, respectively, are
included in the yield computations |
(3) |
Yields on securities have been adjusted to a tax-equivalent
basis |
|
|
|
|
|
|
|
|
|
Preferred
Bank |
Loan and
Credit Quality Information |
|
|
|
|
|
|
|
|
Allowance For
Credit Losses History |
|
|
|
|
|
Quarter Ended |
|
Year ended |
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
(Dollars in 000's) |
Allowance For Credit Losses |
|
|
|
|
Balance at Beginning of Period |
|
$ |
59,969 |
|
|
$ |
63,426 |
|
|
Charge-Offs |
|
|
|
|
|
|
Commercial & Industrial |
|
|
1,222 |
|
|
|
1,697 |
|
|
|
Mini-perm Real Estate |
|
|
1 |
|
|
|
817 |
|
|
|
Total Charge-Offs |
|
|
1,223 |
|
|
|
2,514 |
|
|
|
|
|
|
|
|
|
|
Recoveries |
|
|
|
|
|
|
Commercial & Industrial |
|
|
- |
|
|
|
57 |
|
|
|
Total Recoveries |
|
|
- |
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
Net Charge-Offs |
|
|
1,223 |
|
|
|
2,457 |
|
|
Reversal of Provision for Credit Losses: |
|
|
(250 |
) |
|
|
(1,000 |
) |
Balance at End of Period |
|
$ |
58,496 |
|
|
$ |
59,969 |
|
|
|
|
|
|
|
|
|
Average Loans Held for Investment |
|
$ |
4,367,095 |
|
|
$ |
4,138,023 |
|
Loans Held for Investment at End of Period |
|
$ |
4,591,567 |
|
|
$ |
4,424,992 |
|
Net Charge-Offs (Recoveries) to Average Loans |
|
|
0.11 |
% |
|
|
0.06 |
% |
Allowances for Credit Losses to Loans at End of Period |
|
|
1.27 |
% |
|
|
1.36 |
% |
|
|
|
|
|
|
|
|
1 This is a non-GAAP measure and linking to the reconciliation
on page 5.
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