-
Preferred Bank Reports Quarterly Earnings
Источник: Nasdaq GlobeNewswire / 20 окт 2021 16:05:01 America/New_York
LOS ANGELES, Oct. 20, 2021 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended September 30, 2021. Preferred Bank (“the Bank”) reported net income of $26.1 million or $1.76 per diluted share for the third quarter of 2021. This is an increase of $4.7 million or 21.7% over the prior quarter and up significantly from the $17.1 million or $1.15 per share posted in the same quarter of last year. The primary reason for the increase compared to the prior year was a $9.0 million provision for credit losses recorded in the third quarter of last year as compared to a reversal of $1.5 million in allowance for credit losses (“ACL”) this quarter, a difference of $10.5 million. In comparison to the second quarter of 2021, net interest income increased $4.4 million, the beneficial change in the provision for credit losses was $1.5 million and noninterest income increased by $1.1 million.
Third quarter 2021 highlights:
- Net income of $26.1 million, or $1.76 per diluted share (company all-time high)
- Linked quarter deposit growth of 8.3%
- Linked quarter loan growth (Ex-PPP) of 1.8%
- Return on average assets (“ROA”) of 1.80%
- Return on beginning equity (“ROBE”) of 18.56%
- Pre-provision, pre-tax (“PPPT”) ROBE of 25.0%
Li Yu, Chairman and CEO, commented, “I am pleased to report third quarter 2021 net income of $26.1 million or $1.76 per share. Excluding a release of allowance for credit losses in the amount of $1.5 million, our net interest income and net income set new quarterly records for our Bank.
“This quarter we experienced significant asset growth. Total assets are approaching $6 billion, principally due to the $398 million or 8.3% linked-quarter deposit growth.
“Loan growth for the quarter was $77 million excluding PPP, or 1.8% on a linked quarter basis. We continue to experience moderate margin compression. Together with the strong deposit growth, our net interest margin for the quarter came in at 3.36%.
“Our loan quality was stable. There are no deferred loans granted under the CARES Act as of September 30, 2021. Total PPP balances have been reduced to $64 million as of that date.
“Non-interest income increased $1.1 million from the prior quarter principally due to increased letter of credit (“LC”) fees. Operating expenses continue to be under control for the quarter, as our efficiency ratio clocked in at 30.4%.
“We are highly encouraged by this quarter’s results considering the current low interest rate environment and the slow progress, nationally of controlling the delta variant. We are optimistic that both of these will improve gradually”
Results of Operations
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $47.8 million for the third quarter of 2021. This was an increase from the $43.4 million recorded in the second quarter of 2021 and was also ahead of the $44.1 million recorded in the third quarter of 2020. The second quarter of 2021 was negatively impacted by a $2.29 million interest reversal on our troubled debt restructured loan as well as a charge of $614,000 to interest expense related to the unamortized issuance costs of the subordinated notes that were called in the second quarter of 2021. These two items drove the Bank’s taxable equivalent net interest margin down to 3.25%, excluding these items, the Bank’s margin would have been 3.47%. The taxable equivalent margin was 3.36% for the third quarter of 2021, as compared to 3.47% (adjusted, see table below) in the second quarter of 2021 and versus 3.54% for the same period last year.
Noninterest Income. For the third quarter of 2021, noninterest income was $2,784,000 compared with $1,605,000 for the same quarter last year and compared to $1,646,000 for the second quarter of 2021. The increase compared to last year was due to LC fee income which increased by $886,000 and service charges on deposits which increased by $153,000 over last year. When compared to the second quarter of 2021, LC fees increased by $765,000 and in the prior quarter the Bank recorded a loss on sale of loans of $261,000 which did not recur this quarter.
Noninterest Expense. Total noninterest expense was $15.4 million for the third quarter of 2021. This is up compared to the $13.7 million recorded in the same quarter last year and also up from the $15.0 million posted in the second quarter of 2021. Salaries and benefits expense totaled $10.9 million for the third quarter of 2021, an increase of $1.8 million from the third quarter of 2020 and an increase of $635,000 over the $10.3 million posted in the second quarter of 2021. The increase over the prior year was due mainly to staff expansion and an increase in the Bank’s incentive compensation expense and the increase over the second quarter of 2021 was mainly due to higher incentive compensation expense. Occupancy expense totaled $1.4 million for the quarter which was flat compared to the prior quarter’s $1.4 million and down slightly from the $1.5 million recorded in the third quarter of last year. Professional services expense was $1.1 million for the third quarter of 2021, a slight increase of $79,000 over the prior quarter and an increase of $101,000 over the same period last year. Other expenses were $1.4 million for the third quarter of 2021, down from the $1.7 million recorded last quarter and also up from the $1.6 million recorded in the same quarter last year. Lower FDIC premiums were the primary reason for the decrease compared to both periods. For the quarter ended September 30, 2021, the Bank’s efficiency ratio was 30.4%, down slightly from last quarter’s 33.2% mark and just slightly over the remarkable 29.9% ratio achieved in the same period last year.
Income Taxes. The Bank recorded a provision for income taxes of $10.5 million for the third quarter of 2021. This represents an effective tax rate (“ETR”) of 28.7% and just slightly over the ETR of 28.5% in the prior quarter but up from the ETR of 25.7% 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 September 30, 2021 were $4.32 billion, an increase of $286 million or 7.1% over the total of $4.04 billion as of December 31, 2020. Total deposits increased to $5.2 billion, an increase of $751 million or 16.9% over the $4.44 billion as of December 31, 2020. Total assets ended the quarter at $5.98 billion, an increase of $836 million or 16.3% over the total of $5.14 billion as of December 31, 2020.
Asset Quality
As of September 30, 2021, nonaccrual loans totaled $20.9 million, up slightly from the $20.2 million reported as of June 30, 2021. Total net charge-offs for the third quarter of 2021 were $1.0 million compared to $1.2 million in the prior quarter and compared to net charge-offs of $3.5 million in the third quarter of 2020.
At September 30, 2021, the Bank had no loans remaining on COVID-19 deferral status. Also important to note that as of September 30, 2021, the Bank had recouped 78% of all interest deferred during the deferral period.
Allowance for Credit Losses
The provision for (release of) credit losses for the third quarter of 2021 was ($1.5 million) compared to $0 recorded last quarter and compared to $9.0 million posted in the third quarter of 2020. A consistently improving economic outlook led to a lower allowance requirement. The Bank’s allowance coverage ratio now stands at 1.44% of total loans (excluding PPP loans).
Capitalization
As of September 30, 2021, the Bank’s leverage ratio was 9.64%, the common equity tier 1 capital ratio was 11.19% and the total capital ratio stood at 15.47%. As of December 31, 2020, the Bank’s leverage ratio was 10.08%, the common equity tier 1 ratio was 11.21% and the total risk-based capital ratio was 14.64%. In accordance with the Bank’s stock repurchase plan, during the third quarter, the Bank repurchased a total of 282,949 common shares at a total cost of $17.47 million.
GAAP – Non-GAAP Reconciliation -Second Quarter 2021 NIM Net interest margin - GAAP 3.25 % Add: $2.3MM loan interest income 0.17 % Add: $614K unamortized $100M sub-debt issuance cost 0.05 % Net interest margin - non-GAAP 3.47 % GAAP – Non-GAAP Reconciliation -Third Quarter 2021 PPPT ROBE Net Income $ 26,145 Add: Reversal of credit losses (1,500 ) Add: Income tax expense 10,522 Pre-provision and pre-tax income $ 35,167 Total equity - 6/30/21 $ 558,969 Pre-provision and pre-tax ROBE 24.96 % Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s third quarter 2021 financial results will be held tomorrow, October 21, 2021 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 November 4, 2021; the passcode is 10161195.
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 2020 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, 2021 2021 2020 Interest income: Loans, including fees $ 50,866 $ 47,906 $ 50,417 Investment securities 2,725 2,548 2,335 Fed funds sold 20 19 30 Total interest income 53,611 50,473 52,782 Interest expense: Interest-bearing demand 1,486 1,530 1,432 Savings 3 18 20 Time certificates 3,045 3,419 5,681 Subordinated debt 1,324 2,145 1,530 Total interest expense 5,857 7,112 8,663 Net interest income 47,754 43,361 44,119 (Reversal of) provision for credit losses (1,500 ) - 9,000 Net interest income after (reversal of) provision for credit losses 49,254 43,361 35,119 Noninterest income: Fees & service charges on deposit accounts 581 525 428 Letters of credit fee income 1,576 811 690 BOLI income 98 98 96 Net gain on called and sale of investment securities 41 - 15 Net loss on sale of loans - (261 ) - Other income 488 473 376 Total noninterest income 2,784 1,646 1,605 Noninterest expense: Salary and employee benefits 10,920 10,285 9,126 Net occupancy expense 1,430 1,429 1,455 Business development and promotion expense 98 117 95 Professional services 1,075 996 974 Office supplies and equipment expense 467 476 443 Other 1,380 1,661 1,570 Total noninterest expense 15,370 14,964 13,663 Income before provision for income taxes 36,668 30,043 23,061 Income tax expense 10,522 8,563 5,936 Net income $ 26,146 $ 21,480 $ 17,125 Dividend and earnings allocated to participating securities (3 ) (3 ) (53 ) Net income available to common shareholders $ 26,143 $ 21,477 $ 17,072 Income per share available to common shareholders Basic $ 1.76 $ 1.44 $ 1.15 Diluted $ 1.76 $ 1.44 $ 1.15 Weighted-average common shares outstanding Basic 14,884,570 14,954,688 14,893,774 Diluted 14,884,570 14,954,688 14,893,774 Cash dividends per common share $ 0.38 $ 0.38 $ 0.30 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 2021 2020 % Interest income: Loans, including fees $ 148,631 $ 151,794 -2.1 % Investment securities 7,550 8,634 -12.6 % Fed funds sold 63 185 -66.2 % Total interest income 156,244 160,613 -2.7 % Interest expense: Interest-bearing demand 4,453 6,262 -28.9 % Savings 40 51 -22.3 % Time certificates 10,291 21,617 -52.4 % Subordinated debt 5,000 4,592 8.9 % Total interest expense 19,783 32,522 -39.2 % Net interest income 136,461 128,091 6.5 % (Reversal of) provision for credit losses (100 ) 21,800 -100.5 % Net interest income after (reversal of) provision for credit losses 136,561 106,291 28.5 % Noninterest income: Fees & service charges on deposit accounts 1,532 1,172 30.7 % Letters of credit fee income 3,195 2,280 40.1 % BOLI income 292 285 2.5 % Net (loss) gain on called and sale of investment securities 41 (98 ) -141.9 % Net (loss) gain on sale of loans (640 ) 15 -4363.5 % Other income 1,357 1,053 28.9 % Total noninterest income 5,777 4,707 22.7 % Noninterest expense: Salary and employee benefits 32,328 30,123 7.3 % Net occupancy expense 4,260 4,147 2.7 % Business development and promotion expense 288 360 -20.0 % Professional services 3,052 2,994 1.9 % Office supplies and equipment expense 1,381 1,391 -0.7 % Other 4,677 4,166 12.3 % Total noninterest expense 45,986 43,181 6.5 % Income before provision for income taxes 96,352 67,817 42.1 % Income tax expense 27,532 19,229 43.2 % Net income $ 68,820 $ 48,588 41.6 % Dividend and earnings allocated to participating securities $ (8 ) $ (153 ) -94.6 % Net income available to common shareholders $ 68,812 $ 48,435 42.1 % Income per share available to common shareholders Basic $ 4.61 $ 3.25 41.6 % Diluted $ 4.61 $ 3.25 41.6 % Weighted-average common shares outstanding Basic 14,929,519 14,881,381 0.3 % Diluted 14,929,519 14,881,381 0.3 % Dividends per share $ 1.14 $ 0.90 26.7 % PREFERRED BANK Condensed Consolidated Statements of Financial Condition (unaudited) (in thousands) September 30, December 31, 2021 2020 (Unaudited) (Audited) Assets Cash and due from banks $ 1,060,634 $ 739,465 Fed funds sold 22,000 20,000 Cash and cash equivalents 1,082,634 759,465 Securities held to maturity, at amortized cost 15,294 6,568 Securities available-for-sale, at fair value 461,356 239,682 Loans 4,321,529 4,035,394 Less allowance for credit losses (61,135 ) (63,426 ) Less amortized deferred loan fees, net (5,498 ) (4,574 ) Loans, net 4,254,896 3,967,394 Customers' liability on acceptances 7,697 3,596 Bank furniture and fixtures, net 10,955 11,825 Bank-owned life insurance 10,022 9,828 Accrued interest receivable 16,551 23,692 Investment in affordable housing partnerships 53,399 62,521 Federal Home Loan Bank stock, at cost 15,000 15,000 Deferred tax assets 25,128 24,466 Income tax receivable 1,192 - Operating lease right-of-use assets 20,598 16,106 Other assets 5,118 3,498 Total assets $ 5,979,840 $ 5,143,641 Liabilities and Shareholders' Equity Deposits: Non-interest bearing demand deposits $ 1,349,114 $ 938,911 Interest-bearing deposits: 1,861,334 1,700,818 Savings 33,417 34,702 Time certificates of $250,000 or more 959,826 912,546 Other time certificates 990,228 855,503 Total deposits 5,193,919 4,442,480 Acceptances outstanding 7,697 3,596 Subordinated debt issuance, net 147,699 99,334 Commitments to fund investment in affordable housing partnerships 17,900 30,715 Operating lease liabilities 21,933 18,682 Accrued interest payable 2,081 1,245 Other liabilities 26,590 22,142 Total liabilities 5,417,819 4,618,194 Shareholders' equity 562,021 525,447 Total liabilities and shareholders' equity $ 5,979,840 $ 5,143,641 Book value per common share $ 38.29 $ 31.47 Number of common shares outstanding 14,679,215 14,931,861 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, 2021 2021 2021 2020 2020 Unaudited historical quarterly operations data: Interest income $ 53,611 $ 50,473 $ 52,160 $ 53,649 $ 52,782 Interest expense 5,857 7,112 6,814 7,586 8,663 Interest income before provision for credit losses 47,754 43,361 45,346 46,063 44,119 (Reversal of) provision for credit losses (1,500 ) - 1,400 4,200 9,000 Noninterest income 2,784 1,646 1,347 1,356 1,605 Noninterest expense 15,370 14,964 15,652 14,177 13,663 Income tax expense 10,522 8,563 8,447 8,162 5,936 Net income $ 26,146 $ 21,480 $ 21,194 $ 20,880 $ 17,125 Earnings per share Basic $ 1.76 $ 1.44 $ 1.42 $ 1.40 $ 1.15 Diluted $ 1.76 $ 1.44 $ 1.42 $ 1.40 $ 1.15 Ratios for the period: Return on average assets 1.80 % 1.58 % 1.65 % 1.63 % 1.34 % Return on beginning equity 18.56 % 15.98 % 16.36 % 16.49 % 13.94 % Net interest margin (Fully-taxable equivalent) 3.36 % 3.25 % 3.61 % 3.66 % 3.54 % Noninterest expense to average assets 1.06 % 1.10 % 1.22 % 1.10 % 1.07 % Efficiency ratio 30.41 % 33.25 % 33.52 % 29.90 % 29.88 % Net charge-offs (recoveries) to average loans (annualized) 0.10 % 0.12 % -0.01 % 0.20 % 0.35 % Ratios as of period end: Tier 1 leverage capital ratio 9.64 % 10.07 % 10.26 % 10.08 % 9.75 % Common equity tier 1 risk-based capital ratio 11.19 % 11.28 % 11.34 % 11.21 % 11.02 % Tier 1 risk-based capital ratio 11.19 % 11.28 % 11.34 % 11.21 % 11.02 % Total risk-based capital ratio 15.47 % 15.61 % 14.73 % 14.64 % 14.51 % Allowances for credit losses to loans at end of period 1.41 % 1.49 % 1.56 % 1.57 % 1.55 % Allowance for credit losses to non-performing loans 292.84 % 290.58 % 294.74 % 308.96 % 243.56 % Average balances: Total securities $ 401,641 $ 269,000 $ 242,200 $ 251,284 $ 237,801 Total loans 4,156,289 4,130,190 4,044,800 3,971,537 3,956,145 Total earning assets 5,659,678 5,364,598 5,102,291 5,018,031 4,975,005 Total assets 5,760,056 5,467,678 5,200,079 5,110,065 5,073,548 Total time certificate of deposits 1,959,514 1,893,247 1,820,461 1,764,528 1,841,901 Total interest bearing deposits 3,783,704 3,704,771 3,531,358 3,508,276 3,501,275 Total deposits 4,971,607 4,724,104 4,486,399 4,426,326 4,408,882 Total interest bearing liabilities 3,931,375 3,815,964 3,630,705 3,607,592 3,600,560 Total equity 569,624 553,561 538,282 518,567 503,421 PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) For the Nine Months Ended September 30, September 30, 2021 2020 Interest income $ 156,244 $ 160,613 Interest expense 19,783 32,522 Interest income before provision for credit losses 136,461 128,091 (Reversal of) provision for credit losses (100 ) 21,800 Noninterest income 5,777 4,707 Noninterest expense 45,986 43,181 Income tax expense 27,532 19,229 Net income $ 68,820 $ 48,588 Earnings per share Basic $ 4.61 $ 3.25 Diluted $ 4.61 $ 3.25 Ratios for the period: Return on average assets 1.68 % 1.33 % Return on beginning equity 17.51 % 13.81 % Net interest margin (Fully-taxable equivalent) 3.40 % 3.60 % Noninterest expense to average assets 1.12 % 1.19 % Efficiency ratio 32.33 % 32.52 % Net charge-offs to average loans 0.07 % 0.12 % Average balances: Total securities $ 304,865 $ 245,181 Total loans 4,110,835 3,864,667 Total earning assets 5,377,565 4,764,789 Total assets 5,477,989 4,865,382 Total time certificate of deposits 1,891,583 1,788,612 Total interest bearing deposits 3,674,201 3,382,405 Total deposits 4,729,147 4,213,950 Total interest bearing liabilities 3,793,782 3,481,659 Total equity 553,937 488,641 PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) As of September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Unaudited quarterly statement of financial position data: Assets: Cash and cash equivalents $ 1,082,634 $ 896,474 $ 943,126 $ 759,465 $ 807,791 Securities held-to-maturity, at amortized cost 15,294 15,749 6,039 6,568 6,727 Securities available-for-sale, at fair value 461,356 278,460 228,635 239,682 219,778 Loans: Real estate – Mortgage: Real estate—Residential $ 540,725 $ 558,147 $ 541,313 $ 523,789 $ 528,371 Real estate—Commercial 2,093,692 2,019,995 1,925,554 1,911,485 1,808,200 Total Real Estate – Mortgage 2,634,417 2,578,142 2,466,867 2,435,274 2,336,571 Real estate – Construction: R/E Construction — Residential 122,382 120,363 123,302 148,825 170,773 R/E Construction — Commercial 213,833 224,323 229,933 215,032 223,706 Total real estate construction loans 336,215 344,686 353,235 363,857 394,480 Commercial and industrial 1,286,995 1,259,668 1,248,550 1,165,990 1,144,051 PPP 63,897 95,765 95,434 70,234 74,551 Consumer and others 6 143 155 39 68 Gross loans 4,321,529 4,278,403 4,164,241 4,035,394 3,949,721 Allowance for credit losses on loans (61,135 ) (63,635 ) (64,883 ) (63,426 ) (61,262 ) Net deferred loan fees (5,498 ) (5,329 ) (4,872 ) (4,574 ) (4,411 ) Net loans, excluding loans held for sale $ 4,254,896 $ 4,209,439 $ 4,094,486 $ 3,967,394 $ 3,884,048 Loans held for sale $ - $ - $ - $ - $ - Net loans $ 4,254,896 $ 4,209,439 $ 4,094,486 $ 3,967,394 $ 3,884,048 Investment in affordable housing partnerships 53,399 55,452 59,824 62,521 47,917 Federal Home Loan Bank stock, at cost 15,000 15,000 15,000 15,000 15,000 Other assets 97,261 105,334 100,894 93,011 104,313 Total assets $ 5,979,840 $ 5,575,908 $ 5,448,004 $ 5,143,641 $ 5,085,574 Liabilities: Deposits: Demand $ 1,349,114 $ 1,063,472 $ 1,026,260 $ 938,911 $ 926,166 Interest-bearing demand 1,861,334 1,774,668 1,751,951 1,700,818 1,620,495 Savings 33,417 32,560 37,551 34,702 32,830 Time certificates of $250,000 or more 959,826 930,976 927,043 912,546 977,821 Other time certificates 990,228 994,630 979,694 855,503 857,113 Total deposits $ 5,193,919 $ 4,796,306 $ 4,722,499 $ 4,442,480 $ 4,414,425 Acceptances outstanding $ 7,697 $ 7,797 $ 9,670 $ 3,596 $ 7,463 Subordinated debt issuance, net 147,699 147,787 99,365 99,334 99,304 Commitments to fund investment in affordable housing partnerships 17,900 19,197 27,918 30,715 16,689 Other liabilities 50,604 45,852 49,283 42,069 43,826 Total liabilities $ 5,417,819 $ 5,016,939 $ 4,908,735 $ 4,618,194 $ 4,581,707 Equity: Net common stock, no par value $ 203,844 $ 219,958 $ 218,593 $ 217,444 $ 213,519 Retained earnings 352,843 332,276 316,481 300,969 284,568 Accumulated other comprehensive income 5,334 6,735 4,195 7,034 5,780 Total shareholders' equity $ 562,021 $ 558,969 $ 539,269 $ 525,447 $ 503,867 Total liabilities and shareholders' equity $ 5,979,840 $ 5,575,908 $ 5,448,004 $ 5,143,641 $ 5,085,574 PREFERRED BANK Quarter-to-Date Average Balances, Yield and Rates (unaudited) Three months ended September 30, Three months ended June 30, Three months ended September 30, 2021 2021 2020 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) $ 4,156,289 50,866 4.86 % $ 4,132,451 $ 47,906 4.65 % $ 3,956,145 $ 50,417 5.07 % Investment securities (3) 401,641 2,163 2.14 % 269,000 2,058 3.07 % 237,801 1,967 3.29 % Federal funds sold 21,837 20 0.36 % 20,437 19 0.36 % 23,828 30 0.50 % Other earning assets 1,079,911 679 0.25 % 942,710 597 0.25 % 757,231 474 0.25 % Total interest-earning assets 5,659,678 53,728 3.77 % 5,364,598 50,580 3.78 % 4,975,005 52,888 4.23 % Deferred loan fees, net (5,176 ) (4,924 ) (4,713 ) Allowance for credit losses on loans (63,608 ) (64,842 ) (55,822 ) Noninterest earning assets: Cash and due from banks 14,457 10,620 7,355 Bank furniture and fixtures 11,123 11,468 11,856 Right of use assets 21,136 19,735 16,550 Other assets 122,446 131,023 123,317 Total assets $ 5,760,056 $ 5,467,678 $ 5,073,548 LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Deposits: Interest-bearing demand and savings 1,824,190 $ 1,489 0.32 % 1,811,524 $ 1,548 0.34 % $ 1,659,374 $ 1,452 0.35 % TCD $250K or more 964,656 1,542 0.63 % 926,161 1,688 0.73 % 987,631 2,993 1.21 % Other time certificates 994,858 1,503 0.60 % 967,086 1,731 0.72 % 854,270 2,688 1.25 % Total interest-bearing deposits 3,783,704 4,534 0.48 % 3,704,771 4,967 0.54 % 3,501,275 7,133 0.81 % Subordinated debt, net 147,671 1,324 3.56 % 111,193 2,145 7.74 % 99,285 1,530 6.13 % Total interest-bearing liabilities 3,931,375 5,858 0.59 % 3,815,964 7,112 0.75 % 3,600,560 8,663 0.96 % Non-interest bearing liabilities: Demand deposits 1,187,903 1,019,333 907,607 Lease Liability 22,747 21,765 19,400 Other liabilities 48,407 57,055 42,560 Total liabilities 5,190,432 4,914,117 4,570,127 Shareholders’ equity 569,624 553,561 503,421 Total liabilities and shareholders’ equity $ 5,760,056 $ 5,467,678 $ 5,073,548 Net interest income $ 47,870 $ 43,468 $ 44,225 Net interest spread 3.18 % 3.03 % 3.27 % Net interest margin 3.36 % 3.25 % 3.54 % Cost of Deposits: Noninterest bearing demand deposits $ 1,187,903 $ 1,019,333 $ 907,607 Interest bearing deposits 3,783,704 4,534 0.48 % 3,704,771 4,967 0.54 % 3,501,275 7,133 0.81 % Total Deposits $ 4,971,607 $ 4,534 0.36 % $ 4,724,104 $ 4,967 0.42 % $ 4,408,882 $ 7,133 0.64 % (1) Includes non-accrual loans and loans held for sale (2) Net loan fee income of $823,000, $669,000 and $683,000 for the quarter ended September 30, 2021, June 30, 2021, September 30, 2020, respectively, are included in the yield computations (3) Yields on securities have been adjusted to a tax-equivalent basis PREFERRED BANK Year-to-Date Average Balances, Yield and Rates (unaudited) Nine Months ended September 30, 2021 2020 Interest Average Interest Average Average Income or Yield/ Average Income or Yield/ Balance Expense Rate Balance Expense Rate ASSETS (Dollars in thousands) Interest-earning assets: Loans (1,2) $ 4,111,596 $ 148,631 4.83 % $ 3,865,350 $ 151,794 5.25 % Investment securities (3) 304,865 6,104 2.68 % 245,181 6,193 3.37 % Federal funds sold 21,251 63 0.39 % 26,093 185 0.95 % Other earning assets 939,853 1,769 0.25 % 628,165 2,736 0.58 % Total interest-earning assets 5,377,565 156,567 3.89 % 4,764,789 160,908 4.51 % Deferred loan fees, net (4,818 ) (3,662 ) Allowance for credit losses on loans (63,967 ) (48,981 ) Noninterest earning assets: Cash and due from banks 11,683 7,321 Bank furniture and fixtures 11,452 12,039 Right of use assets 19,255 16,774 Other assets 126,819 117,102 Total assets $ 5,477,989 $ 4,865,382 LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Deposits: Interest-bearing demand/ savings 1,782,618 $ 4,492 0.34 % 1,593,793 $ 6,313 0.53 % TCD $250K or more 936,825 5,148 0.73 % 967,413 11,469 1.58 % Other time certificates 954,758 5,143 0.72 % 821,199 10,148 1.65 % Total interest-bearing deposits 3,674,201 14,783 0.54 % 3,382,405 27,930 1.10 % Subordinated debt, net 119,581 5,000 5.59 % 99,254 4,592 6.18 % Total interest-bearing liabilities 3,793,782 19,783 0.70 % 3,481,659 32,522 1.25 % Non-interest bearing liabilities: Demand deposits 1,054,946 831,545 Lease Liability 21,280 19,850 Other liabilities 54,044 43,687 Total liabilities 4,924,052 4,376,741 Shareholders’ equity 553,937 488,641 Total liabilities and shareholders’ equity $ 5,477,989 $ 4,865,382 Net interest income $ 136,784 $ 128,386 Net interest spread 3.20 % 3.26 % Net interest margin 3.40 % 3.60 % Cost of Deposits: Noninterest bearing demand deposits $ 1,054,946 $ 831,545 Interest bearing deposits 3,674,201 14,783 0.54 % 3,382,405 27,930 1.10 % Total Deposits $ 4,729,147 $ 14,783 0.42 % $ 4,213,950 $ 27,930 0.89 % (1) Includes non-accrual loans and loans held for sale (2) Net loan fee income of $2.0 million and $1.9 million for the nine months ended September 30, 2021 and 2020, 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 Nine Months Ended Nine Months Ended September 30, 2021 September 30, 2020 (Dollars in 000's) Allowance For Credit Losses Balance at Beginning of Period $ 63,426 $ 34,830 Charge-Offs Commercial & Industrial 1,431 1,661 Mini-perm Real Estate 817 1,900 Total Charge-Offs 2,248 3,561 Recoveries Commercial & Industrial 57 - Construction - Commercial - 193 Total Recoveries 57 193 Net Charge-Offs 2,191 3,368 (Reversal of) Provision for Credit Losses: CECL Cumulative Effect Adjustment - 8,000 Current (Reversal) Provision (100 ) 21,800 Balance at End of Period $ 61,135 $ 61,262 Average Loans Held for Investment $ 4,110,835 $ 3,864,667 Loans Held for Investment at End of Period $ 4,321,529 $ 3,949,721 Net Charge-Offs (Recoveries) to Average Loans 0.07 % 0.12 % Allowances for Credit Losses to Loans at End of Period 1.41 % 1.55 % AT THE COMPANY:
Edward J. Czajka
Executive Vice President
Chief Financial Officer
(213) 891-1188AT FINANCIAL PROFILES:
Jeffrey Haas
General Information
(310) 622-8240
PFBC@finprofiles.com
