LOS ANGELES, Jan. 27, 2025 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended December 31, 2024. Preferred Bank (“the Bank”) reported net income of $30.2 million or $2.25 per diluted share for the fourth quarter of 2024. This represents a decrease in net income of $3.2 million from the prior quarter and a decrease of $5.6 from the same quarter last year. The decrease compared to both periods was mainly due to a one-time $8.1 million increase in occupancy expense this quarter due to the previously disclosed error in the calculation of ASC 842, Accounting for Leases. As previously disclosed, this calculation error goes back to the adoption of ASC 842 in 2019 and the $8.1 million item represents the cumulative erroneous calculation through the years from 2019 to present.
Net interest income was $69.2 million, up by $325,000 compared to last quarter’s $68.8 million and down slightly from the $69.4 million recorded one year ago. Noninterest expense was $28.2 million, an increase of $6.2 million from the previous quarter and an increase of $10.4 million over the same quarter last year. These increases were due to the aforementioned non-recurring occupancy expense item. The provision for credit losses was $2.0 million this quarter compared to $3.2 million last quarter and compared to $3.5 million this quarter last year. Despite the non-recurring expense item, Preferred Bank continues to deliver top-of-peer group profitability metrics and long term shareholder returns.
Highlights for the Quarter:
- Return on average assets was 1.74%
- Return on beginning equity of 16.03%
- Net interest margin (NIM) held strong at 4.06%
- Total loans increased by $71 million or 1.3%
- Efficiency ratio was 38.8%
Highlights for the Year:
- Return on average assets was 1.91%
- Return on beginning equity of 18.80%
- The NIM was 4.08%
- Total loans increased by $369 million or 7.0%
- Efficiency ratio was 31.47%
Li Yu, Chairman and CEO, commented, “We completed the year 2024 with net income of $130.7 million or $9.64 per diluted share. Return on assets was 1.91% for the year and return on beginning equity was 18.8%, which should be well above peer group and the industry average.
”Fourth quarter net income of $30.2 million or $2.25 per diluted share was negatively impacted by a correction to our lease expense of $8.1 million. This correction was previously announced and is non-recurring in nature. The after-tax effect of this item was approximately $0.42.
“Under a high interest rate and high inflation environment, Preferred Bank’s loan growth and deposit growth were less than our historical performance. 2024 loan growth of 7.0% and deposit growth of 3.6% were still in- line with industry averages.
“At December 31, 2024, our credit metrics improved from September 30, 2024. Non-performing loans decreased by $10.0 million or 52% and criticized loans decreased by $76.7 million or 32.6%. The Bank’s allowance for credit losses to total loans was 1.27% as of December 31, 2024.
“The recent wildfires in the Los Angeles area have wrought unprecedented damage to our community. We at Preferred Bank will be dedicated to making the utmost effort to help rebuild the homes and businesses lost in this tragedy. At this time, the Bank has confirmed the existence of one property that secures a commercial loan which was affected by the fires but we can confirm the property had the appropriate insurance. We are most grateful that none of our residential home mortgage borrowers have been affected and that none of our employees have been directly impacted.
“In December, our Board of Directors announced an increase in the quarterly dividend from $0.70 per quarter to $0.75 per quarter, the first of which is payable in January of 2025. For the year, we also repurchased 464,314 shares of our common stock for total consideration of $34.3 million. At December 31, 2024, the Bank’s tier 1 leverage ratio improved to 11.33% from 10.85% as of December 31, 2023. Tangible book value per common share increased from $50.54 at the end of 2023 to $57.86 as of December 31, 2024, a 13.1% increase.
“We look forward to continue our consistently strong financial performance into 2025.”
Results of Operations - Quarter
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $69.2 million for the fourth quarter of 2024. This was a $325,000 increase from the $68.8 million recorded in the prior quarter and a $223,000 decrease from the same quarter last year. Compared to the prior quarter, interest income was down by $3.6 million but interest expense also decreased by $3.9 million. In comparison to the same quarter last year, interest income increased by $894,000 but interest expense increased by $1.1 million. The Bank’s net interest margin came in at 4.06% for the quarter, this is down slightly from the 4.10% recorded last quarter and was down by 18 basis points from the 4.24% margin achieved in the fourth quarter of the prior year. Management believes that efforts to reduce the Bank’s asset sensitivity have been largely effective as the margin has held up much better than originally anticipated when the first rate cut occurred in September of 2024.
Noninterest Income. For the fourth quarter of 2024, noninterest income was $3.6 million compared with $2.1 million for the same quarter last year and compared to $3.5 million for the third quarter of 2024. The increase over the prior quarter was primarily due to other income and fees which increased by $131,000. In comparing to the same quarter last year, letter of credit (LC) fee income was up by $491,000 and last year the Bank recorded a loss on sale of investment securities of $929,000. Finally, other income was up by $303,000 over last year.
Noninterest Expense. Total noninterest expense was $28.2 million for the fourth quarter of 2024 compared to $22.1 million for the third quarter of 2024 and compared to the $17.9 million recorded in the same period last year. The primary reason for the increase over the prior year and over the prior quarter was the $8.1 million occupancy expense adjustment related to accounting pronouncement ASC 842 mentioned earlier. In comparing to the prior quarter; personnel expense was down by $246,000, business development expense was up by $99,000 and OREO expense was lower by $1.8 million due to a $1.6 million valuation allowance recorded last quarter. In comparing to same quarter last year; personnel expense was up by $1.2 million due to additional personnel, professional services was up by $251,000 and other expense was up by $360,000. For the quarter ended December 31, 2024, the Bank’s efficiency ratio was 38.8%, higher than the 30.6% posted last quarter and higher than the 25.0% posted this quarter last year.
Income Taxes. The Bank recorded a provision for income taxes of $12.3 million for the fourth quarter of 2024. This represents an effective tax rate (“ETR”) of 29.0% which is identical to the ETR for last quarter and up from the 28.5% ETR recorded 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 December 31, 2024 were $5.64 billion, an increase of $369 million from the total of $5.27 billion as of December 31, 2023. Total deposits were $5.92 billion, an increase of $207.5 million from the $5.71 billion as of December 31, 2023. Total assets were $6.92 billion, an increase of $264.2 million over the total of $6.66 billion as of December 31, 2023.
Results of Operations – Year
The Bank’s net income for the year ended December 31, 2024 was $130.7 million or $9.64 per diluted share. This is down from $150.0 million or $10.52 per diluted share for 2023. The decrease was due to net interest income which was down by $16.7 million as well as noninterest expense which increased by $13.4 million. This was partially offset by noninterest income which increased in 2024 by $6.5 million over 2023. Despite this decline, the Bank’s earnings metrics still remain top-of-class as ROA was 1.91%, ROBE was 18.8% and the Bank’s efficiency ratio was 31.5%. Also, during 2024 the Bank repurchased 464,314 shares at an average price of $73.76 which contributed approximately $0.17 per diluted share for 2024.
Asset Quality
Non-accrual loans and loans 90 days past due and still accruing totaled $9.4 million as of December 31, 2024, a decrease of $10.0 million from $19.4 million on September 30, 2024 and a decrease of $19.3 million from the $28.7 million in nonperforming loans as of December 31, 2023. Total net charge-offs for the quarter were $6.6 million and all were previously fully reserved.
Total criticized loans decreased to $158.1 million from $234.8 million last quarter. The Bank expects to upgrade a number of the remaining credits in this cohort once more collateral is in place.
Allowance for Credit Losses
The provision for credit losses for the fourth quarter of 2024 was $2.0 million compared to $3.2 million last quarter and compared to $3.5 million in the same quarter last year. The Bank’s allowance coverage ratio declined to 1.27% of loans as compared to 1.36% in the prior quarter.
Capitalization
As of December 31, 2024, the Bank’s leverage ratio was 11.33%, the common equity tier 1 capital ratio was 11.80% and the total capital ratio stood at 15.11%. As of December 31, 2023, the Bank’s leverage ratio was 10.85%, the common equity tier 1 ratio was 11.57% and the total capital ratio was 15.18%.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s fourth quarter 2024 financial results will be held tomorrow, January 28, 2025 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.
Preferred Bank's Chairman and CEO 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 discuss Preferred Bank's financial results, business highlights and outlook. After the live webcast, a replay will be available at 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 February 11, 2025; the passcode is 6335378.
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 twelve full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)), one branch in Flushing, New York and a branch office in the Houston, Texas suburb of Sugar Land. In addition, the Bank also operates a loan production office in Sunnyvale, California. 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 2023 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 | |||||||||||
| December 31, | September 30, | December 31, | |||||||||
| 2024 | 2024 | 2023 | |||||||||
| Interest income: | |||||||||||
| Loans, including fees | $ | 111,596 | $ | 114,112 | $ | 107,709 | |||||
| Investment securities | 14,013 | 15,032 | 16,973 | ||||||||
| Fed funds sold | 249 | 280 | 282 | ||||||||
| Total interest income | 125,858 | 129,424 | 124,964 | ||||||||
| Interest expense: | |||||||||||
| Interest-bearing demand | 18,245 | 23,211 | 21,716 | ||||||||
| Savings | 85 | 84 | 72 | ||||||||
| Time certificates | 37,030 | 35,956 | 32,455 | ||||||||
| Subordinated debt | 1,325 | 1,325 | 1,325 | ||||||||
| Total interest expense | 56,685 | 60,576 | 55,568 | ||||||||
| Net interest income | 69,173 | 68,848 | 69,396 | ||||||||
| Provision for credit losses | 2,000 | 3,200 | 3,500 | ||||||||
| Net interest income after provision for credit losses | 67,173 | 65,648 | 65,896 | ||||||||
| Noninterest income: | |||||||||||
| Fees & service charges on deposit accounts | 761 | 747 | 857 | ||||||||
| Letters of credit fee income | 1,977 | 1,959 | 1,486 | ||||||||
| BOLI income | 102 | 108 | 105 | ||||||||
| Net loss on called and sale of investment securities | - | - | (929 | ) | |||||||
| Net gain on sale of loans | 112 | 91 | 205 | ||||||||
| Other income | 685 | 554 | 382 | ||||||||
| Total noninterest income | 3,637 | 3,459 | 2,106 | ||||||||
| Noninterest expense: | |||||||||||
| Salary and employee benefits | 13,279 | 13,525 | 12,058 | ||||||||
| Net occupancy expense | 10,110 | 1,883 | 1,536 | ||||||||
| Business development and promotion expense | 340 | 241 | 239 | ||||||||
| Professional services | 1,606 | 1,816 | 1,355 | ||||||||
| Office supplies and equipment expense | 396 | 435 | 391 | ||||||||
| OREO valuation allowance and related expense | 155 | 1,915 | 294 | ||||||||
| Other | 2,360 | 2,274 | 2,000 | ||||||||
| Total noninterest expense | 28,246 | 22,089 | 17,873 | ||||||||
| Income before provision for income taxes | 42,564 | 47,018 | 50,129 | ||||||||
| Income tax expense | 12,343 | 13,635 | 14,290 | ||||||||
| Net income | $ | 30,221 | $ | 33,383 | $ | 35,839 | |||||
| Income per share available to common shareholders | |||||||||||
| Basic | $ | 2.29 | $ | 2.50 | $ | 2.63 | |||||
| Diluted | $ | 2.25 | $ | 2.46 | $ | 2.60 | |||||
| Weighted-average common shares outstanding | |||||||||||
| Basic | 13,190,696 | 13,327,848 | 13,617,225 | ||||||||
| Diluted | 13,442,294 | 13,544,273 | 13,804,315 | ||||||||
| Cash dividends per common share | $ | 0.75 | $ | 0.70 | $ | 0.70 | |||||
| PREFERRED BANK | |||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||
| (unaudited) | |||||||||||
| (in thousands, except for net income per share and shares) | |||||||||||
| For the Twelve Months Ended | |||||||||||
| December 31, | December 31, | Change | |||||||||
| 2024 | 2023 | % | |||||||||
| Interest income: | |||||||||||
| Loans, including fees | $ | 445,139 | $ | 412,505 | 7.9 | % | |||||
| Investment securities | 62,854 | 64,427 | -2.4 | % | |||||||
| Fed funds sold | 1,103 | 1,056 | 4.5 | % | |||||||
| Total interest income | 509,096 | 477,988 | 6.5 | % | |||||||
| Interest expense: | |||||||||||
| Interest-bearing demand | 87,951 | 75,417 | 16.6 | % | |||||||
| Savings | 323 | 225 | 43.5 | % | |||||||
| Time certificates | 142,894 | 103,853 | 37.6 | % | |||||||
| FHLB borrowings | 0 | 3,819 | -100.0 | % | |||||||
| Subordinated debt | 5,300 | 5,300 | 0.0 | % | |||||||
| Total interest expense | 236,468 | 188,614 | 25.4 | % | |||||||
| Net interest income | 272,628 | 289,374 | -5.8 | % | |||||||
| Provision for credit losses | 12,100 | 10,000 | 21.0 | % | |||||||
| Net interest income after provision for credit losses | 260,528 | 279,374 | -6.7 | % | |||||||
| Noninterest income: | |||||||||||
| Fees & service charges on deposit accounts | 3,172 | 3,333 | -4.8 | % | |||||||
| Letters of credit fee income | 7,188 | 5,798 | 24.0 | % | |||||||
| BOLI income | 420 | 412 | 2.1 | % | |||||||
| Net loss on called and sale of investment securities | - | (5,046 | ) | -100.0 | % | ||||||
| Net gain on sale of loans | 659 | 752 | -12.4 | % | |||||||
| Other income | 2,126 | 1,864 | 14.0 | % | |||||||
| Total noninterest income | 13,565 | 7,113 | 90.7 | % | |||||||
| Noninterest expense: | |||||||||||
| Salary and employee benefits | 53,648 | 51,314 | 4.5 | % | |||||||
| Net occupancy expense | 15,420 | 6,049 | 154.9 | % | |||||||
| Business development and promotion expense | 1,250 | 737 | 69.6 | % | |||||||
| Professional services | 6,711 | 5,270 | 27.3 | % | |||||||
| Office supplies and equipment expense | 1,781 | 1,588 | 12.2 | % | |||||||
| OREO valuation allowance and related expense | 2,234 | 3,344 | -33.2 | % | |||||||
| Other | 9,016 | 8,332 | 8.2 | % | |||||||
| Total noninterest expense | 90,060 | 76,634 | 17.5 | % | |||||||
| Income before provision for income taxes | 184,033 | 209,853 | -12.3 | % | |||||||
| Income tax expense | 53,371 | 59,813 | -10.8 | % | |||||||
| Net income | $ | 130,662 | $ | 150,040 | -12.9 | % | |||||
| Income per share available to common shareholders | |||||||||||
| Basic | $ | 9.79 | $ | 10.64 | -8.0 | % | |||||
| Diluted | $ | 9.64 | $ | 10.52 | -8.4 | % | |||||
| Weighted-average common shares outstanding | |||||||||||
| Basic | 13,347,004 | 14,095,745 | -5.3 | % | |||||||
| Diluted | 13,554,266 | 14,261,644 | -5.0 | % | |||||||
| Dividends per share | $ | 2.85 | $ | 2.35 | 21.3 | % | |||||
| PREFERRED BANK | |||||||
| Condensed Consolidated Statements of Financial Condition | |||||||
| (unaudited) | |||||||
| (in thousands) | |||||||
| December 31, | December 31, | ||||||
| 2024 | 2023 | ||||||
| (Unaudited) | (Audited) | ||||||
| Assets | |||||||
| Cash and due from banks | $ | 765,515 | $ | 890,852 | |||
| Fed funds sold | 20,000 | 20,000 | |||||
| Cash and cash equivalents | 785,515 | 910,852 | |||||
| Securities held-to-maturity, at amortized cost | 20,021 | 21,171 | |||||
| Securities available-for-sale, at fair value | 348,706 | 313,842 | |||||
| Loans held for sale, at lower of cost or fair value | 2,214 | 360 | |||||
| Loans | 5,640,615 | 5,273,498 | |||||
| Less allowance for credit losses | (71,477 | ) | (78,355 | ) | |||
| Less amortized deferred loan fees, net | (9,234 | ) | (11,079 | ) | |||
| Loans, net | 5,559,904 | 5,184,064 | |||||
| Other real estate owned and repossessed assets | 14,991 | 16,716 | |||||
| Customers' liability on acceptances | - | 315 | |||||
| Bank furniture and fixtures, net | 8,462 | 9,694 | |||||
| Bank-owned life insurance | 10,433 | 10,632 | |||||
| Accrued interest receivable | 33,561 | 33,892 | |||||
| Investment in affordable housing partnerships | 58,346 | 65,276 | |||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | |||||
| Deferred tax assets | 47,316 | 48,991 | |||||
| Income tax receivable | 2,281 | 2,391 | |||||
| Operating lease right-of-use assets | 13,182 | 22,050 | |||||
| Other assets | 3,497 | 4,030 | |||||
| Total assets | $ | 6,923,429 | $ | 6,659,276 | |||
| Liabilities and Shareholders' Equity | |||||||
| Deposits: | |||||||
| Noninterest bearing demand deposits | $ | 704,859 | $ | 786,995 | |||
| Interest bearing deposits: | 2,026,965 | 2,075,156 | |||||
| Savings | 30,150 | 29,167 | |||||
| Time certificates of $250,000 or more | 1,477,931 | 1,317,862 | |||||
| Other time certificates | 1,676,943 | 1,500,162 | |||||
| Total deposits | 5,916,848 | 5,709,342 | |||||
| Acceptances outstanding | - | 315 | |||||
| Subordinated debt issuance, net | 148,469 | 148,232 | |||||
| Commitments to fund investment in affordable housing partnerships | 21,623 | 30,824 | |||||
| Operating lease liabilities | 16,990 | 19,766 | |||||
| Accrued interest payable | 16,517 | 16,124 | |||||
| Other liabilities | 39,830 | 39,568 | |||||
| Total liabilities | 6,160,277 | 5,964,171 | |||||
| Shareholders' equity | 763,152 | 695,105 | |||||
| Total liabilities and shareholders' equity | 6,923,429 | 6,659,276 | |||||
| Book value per common share | $ | 57.86 | $ | 50.54 | |||
| Number of common shares outstanding | 13,188,776 | 13,753,246 | |||||
| PREFERRED BANK | |||||||||||||||
| Selected Consolidated Financial Information | |||||||||||||||
| (unaudited) | |||||||||||||||
| (in thousands, except for ratios) | |||||||||||||||
| For the Quarter Ended | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2024 | 2024 | 2024 | 2024 | 2023 | |||||||||||
| Unaudited historical quarterly operations data: | |||||||||||||||
| Interest income | $ | 125,858 | $ | 129,424 | $ | 127,294 | $ | 126,520 | $ | 124,964 | |||||
| Interest expense | 56,685 | 60,576 | 61,187 | 58,020 | 55,568 | ||||||||||
| Interest income before provision for credit losses | 69,173 | 68,848 | 66,107 | 68,500 | 69,396 | ||||||||||
| Provision for credit losses | 2,000 | 3,200 | 2,500 | 4,400 | 3,500 | ||||||||||
| Noninterest income | 3,637 | 3,459 | 3,404 | 3,065 | 2,106 | ||||||||||
| Noninterest expense | 28,246 | 22,089 | 19,697 | 20,028 | 17,873 | ||||||||||
| Income tax expense | 12,343 | 13,635 | 13,722 | 13,671 | 14,290 | ||||||||||
| Net income | $ | 30,221 | $ | 33,383 | $ | 33,592 | $ | 33,466 | $ | 35,839 | |||||
| Earnings per share | |||||||||||||||
| Basic | $ | 2.29 | $ | 2.50 | $ | 2.51 | $ | 2.48 | $ | 2.63 | |||||
| Diluted | $ | 2.25 | $ | 2.46 | $ | 2.48 | $ | 2.44 | $ | 2.60 | |||||
| Ratios for the period: | |||||||||||||||
| Return on average assets | 1.74 | % | 1.95 | % | 1.97 | % | 2.00 | % | 2.15 | % | |||||
| Return on beginning equity | 16.03 | % | 18.37 | % | 19.44 | % | 19.36 | % | 21.21 | % | |||||
| Net interest margin (Fully-taxable equivalent) | 4.06 | % | 4.10 | % | 3.96 | % | 4.19 | % | 4.24 | % | |||||
| Noninterest expense to average assets | 1.62 | % | 1.29 | % | 1.15 | % | 1.20 | % | 1.07 | % | |||||
| Efficiency ratio | 38.79 | % | 30.55 | % | 28.34 | % | 27.99 | % | 25.00 | % | |||||
| Net charge-offs to average loans (annualized) | 0.47 | % | -0.00 | % | 0.68 | % | 0.26 | % | -0.00 | % | |||||
| Ratios as of period end: | |||||||||||||||
| Tangible common equity ratio | 11.02 | % | 10.92 | % | 10.55 | % | 10.35 | % | 10.43 | % | |||||
| Tier 1 leverage capital ratio | 11.33 | % | 11.28 | % | 10.89 | % | 10.80 | % | 10.85 | % | |||||
| Common equity tier 1 risk-based capital ratio | 11.80 | % | 11.66 | % | 11.52 | % | 11.50 | % | 11.57 | % | |||||
| Tier 1 risk-based capital ratio | 11.80 | % | 11.66 | % | 11.52 | % | 11.50 | % | 11.57 | % | |||||
| Total risk-based capital ratio | 15.11 | % | 15.06 | % | 14.93 | % | 15.08 | % | 15.18 | % | |||||
| Allowances for credit losses to loans at end of period | 1.27 | % | 1.36 | % | 1.34 | % | 1.49 | % | 1.49 | % | |||||
| Allowance for credit losses to non-performing loans | 7.64 | x | 3.92 | x | 1.79 | x | 4.33 | x | 2.73 | x | |||||
| Average balances: | |||||||||||||||
| Total securities | $ | 350,732 | $ | 356,590 | $ | 353,357 | $ | 348,961 | $ | 349,863 | |||||
| Total loans | 5,542,558 | 5,458,613 | 5,320,360 | 5,263,562 | 5,126,918 | ||||||||||
| Total earning assets | 6,788,487 | 6,684,766 | 6,728,498 | 6,585,853 | 6,499,469 | ||||||||||
| Total assets | 6,920,325 | 6,817,979 | 6,863,829 | 6,718,018 | 6,627,349 | ||||||||||
| Total time certificate of deposits | 3,144,523 | 2,874,985 | 2,884,259 | 2,852,860 | 2,767,385 | ||||||||||
| Total interest bearing deposits | 5,220,655 | 5,124,245 | 5,203,034 | 5,004,834 | 4,906,947 | ||||||||||
| Total deposits | 5,905,127 | 5,828,227 | 5,901,976 | 5,761,488 | 5,689,713 | ||||||||||
| Total interest bearing liabilities | 5,369,092 | 5,272,617 | 5,351,347 | 5,153,089 | 5,055,143 | ||||||||||
| Total equity | 760,345 | 747,222 | 715,190 | 704,996 | 683,141 | ||||||||||
| PREFERRED BANK | |||||||
| Selected Consolidated Financial Information | |||||||
| (unaudited) | |||||||
| (in thousands, except for ratios) | |||||||
| For the Twelve Months Ended | |||||||
| December 31, | December 31, | ||||||
| 2024 | 2023 | ||||||
| Interest income | $ | 509,096 | $ | 477,988 | |||
| Interest expense | 236,468 | 188,614 | |||||
| Interest income before provision for credit losses | 272,628 | 289,374 | |||||
| Provision for credit losses | 12,100 | 10,000 | |||||
| Noninterest income | 13,565 | 7,113 | |||||
| Noninterest expense | 90,060 | 76,634 | |||||
| Income tax expense | 53,371 | 59,813 | |||||
| Net income | $ | 130,662 | $ | 150,040 | |||
| Earnings per share | |||||||
| Basic | $ | 9.79 | $ | 10.64 | |||
| Diluted | $ | 9.64 | $ | 10.52 | |||
| Ratios for the period: | |||||||
| Return on average assets | 1.91 | % | 2.28 | % | |||
| Return on beginning equity | 18.80 | % | 23.80 | % | |||
| Net interest margin (Fully-taxable equivalent) | 4.08 | % | 4.49 | % | |||
| Noninterest expense to average assets | 1.32 | % | 1.17 | % | |||
| Efficiency ratio | 31.47 | % | 25.85 | % | |||
| Net charge-off to average loans | 0.35 | % | 0.00 | % | |||
| Average balances: | |||||||
| Total securities | $ | 352,416 | $ | 389,584 | |||
| Total loans | 5,396,844 | 5,068,486 | |||||
| Total earning assets | 6,697,118 | 5,067,870 | |||||
| Total assets | 6,830,252 | 6,452,661 | |||||
| Total time certificate of deposits | 2,939,543 | 6,577,690 | |||||
| Total interest bearing deposits | 5,849,300 | 2,570,706 | |||||
| Total deposits | 5,849,300 | 4,678,893 | |||||
| Total interest bearing liabilities | 5,849,300 | 5,577,155 | |||||
| Total equity | 732,058 | 4,902,616 | |||||
| PREFERRED BANK | ||||||||||||||||||||||
| Selected Consolidated Financial Information | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| (in thousands, except for ratios) | ||||||||||||||||||||||
| As of | ||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||
| 2024 | 2024 | 2024 | 2024 | 2023 | ||||||||||||||||||
| Unaudited quarterly statement of financial position data: | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 785,515 | $ | 804,994 | $ | 917,677 | $ | 936,600 | $ | 910,852 | ||||||||||||
| Securities held-to-maturity, at amortized cost | 20,021 | 20,311 | 20,605 | 20,904 | 21,171 | |||||||||||||||||
| Securities available-for-sale, at fair value | 348,706 | 337,363 | 331,909 | 333,411 | 313,842 | |||||||||||||||||
| Loans: | ||||||||||||||||||||||
| Real estate – Mortgage: | ||||||||||||||||||||||
| Real estate—Residential | $ | 790,069 | $ | 753,453 | $ | 732,251 | $ | 724,101 | $ | 688,058 | ||||||||||||
| Real estate—Commercial | 2,840,771 | 2,882,506 | 2,833,430 | 2,777,608 | 2,760,761 | |||||||||||||||||
| Total Real Estate – Mortgage | 3,630,840 | 3,635,959 | 3,565,681 | 3,501,709 | 3,448,819 | |||||||||||||||||
| Real estate – Construction: | ||||||||||||||||||||||
| R/E Construction — Residential | 296,580 | 274,214 | 238,062 | 236,596 | 246,201 | |||||||||||||||||
| R/E Construction — Commercial | 287,185 | 290,308 | 247,582 | 213,727 | 179,775 | |||||||||||||||||
| Total real estate construction loans | 583,765 | 564,522 | 485,644 | 450,323 | 425,976 | |||||||||||||||||
| Commercial and industrial | 1,418,930 | 1,365,550 | 1,371,694 | 1,369,529 | 1,394,871 | |||||||||||||||||
| SBA | 6,833 | 5,424 | 5,463 | 3,914 | 3,469 | |||||||||||||||||
| Consumer and others | 247 | 124 | 118 | 379 | 363 | |||||||||||||||||
| Gross loans | 5,640,615 | 5,571,579 | 5,428,600 | 5,325,854 | 5,273,498 | |||||||||||||||||
| Allowance for credit losses on loans | (71,477 | ) | (76,051 | ) | (72,848 | ) | (79,311 | ) | (78,355 | ) | ||||||||||||
| Net deferred loan fees | (9,234 | ) | (10,414 | ) | (10,502 | ) | (10,460 | ) | (11,079 | ) | ||||||||||||
| Net loans, excluding loans held for sale | $ | 5,559,904 | $ | 5,485,114 | $ | 5,345,250 | $ | 5,236,083 | $ | 5,184,064 | ||||||||||||
| Loans held for sale | $ | 2,214 | $ | 225 | $ | 955 | $ | 605 | $ | 360 | ||||||||||||
| Net loans | $ | 5,562,118 | $ | 5,485,339 | $ | 5,346,205 | $ | 5,236,688 | $ | 5,184,424 | ||||||||||||
| Other real estate owned and repossessed assets | $ | 14,991 | $ | 15,082 | $ | 16,716 | $ | 16,716 | $ | 16,716 | ||||||||||||
| Investment in affordable housing partnerships | 58,346 | 58,009 | 60,432 | 62,854 | 65,276 | |||||||||||||||||
| Federal Home Loan Bank stock, at cost | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | |||||||||||||||||
| Other assets | 118,732 | 136,246 | 138,036 | 134,040 | 131,995 | |||||||||||||||||
| Total assets | $ | 6,923,429 | $ | 6,872,344 | $ | 6,846,580 | $ | 6,756,213 | $ | 6,659,276 | ||||||||||||
| Liabilities: | ||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||
| Demand | $ | 704,859 | $ | 682,859 | $ | 675,767 | $ | 709,767 | $ | 786,995 | ||||||||||||
| Interest bearing demand | 2,026,965 | 1,994,288 | 2,326,214 | 2,159,948 | 2,075,156 | |||||||||||||||||
| Savings | 30,150 | 29,793 | 28,251 | 29,261 | 29,167 | |||||||||||||||||
| Time certificates of $250,000 or more | 1,477,931 | 1,478,500 | 1,406,149 | 1,349,927 | 1,317,862 | |||||||||||||||||
| Other time certificates | 1,676,943 | 1,682,324 | 1,442,381 | 1,552,805 | 1,500,162 | |||||||||||||||||
| Total deposits | $ | 5,916,848 | $ | 5,867,764 | $ | 5,878,762 | $ | 5,801,708 | $ | 5,709,342 | ||||||||||||
| Acceptances outstanding | $ | - | $ | - | $ | - | $ | - | $ | 315 | ||||||||||||
| Subordinated debt issuance, net | 148,469 | 148,410 | 148,351 | 148,292 | 148,232 | |||||||||||||||||
| Commitments to fund investment in affordable housing partnerships | 21,623 | 23,617 | 27,946 | 29,647 | 30,824 | |||||||||||||||||
| Other liabilities | 73,337 | 82,436 | 68,394 | 77,008 | 75,458 | |||||||||||||||||
| Total liabilities | $ | 6,160,277 | $ | 6,122,227 | $ | 6,123,453 | $ | 6,056,655 | $ | 5,964,171 | ||||||||||||
| Equity: | ||||||||||||||||||||||
| Net common stock, no par value | $ | 105,501 | $ | 109,928 | $ | 113,509 | $ | 115,915 | $ | 134,534 | ||||||||||||
| Retained earnings | 685,108 | 664,808 | 640,675 | 616,417 | 592,325 | |||||||||||||||||
| Accumulated other comprehensive income | (27,457 | ) | (24,619 | ) | (31,057 | ) | (32,774 | ) | (31,754 | ) | ||||||||||||
| Total shareholders' equity | $ | 763,152 | $ | 750,117 | $ | 723,127 | $ | 699,558 | $ | 695,105 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 6,923,429 | $ | 6,872,344 | $ | 6,846,580 | $ | 6,756,213 | $ | 6,659,276 | ||||||||||||
| PREFERRED BANK | |||||||||||||||||||||||||||||
| Quarter-to-Date Average Balances, Yield and Rates | |||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||
| Three months ended December 31, | Three months ended September 30, | Three months ended December 31, | |||||||||||||||||||||||||||
| 2024 | 2024 | 2023 | |||||||||||||||||||||||||||
| 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) | $ | 5,543,215 | $ | 111,596 | 8.01 | % | $ | 5,459,842 | $ | 114,112 | 8.31 | % | $ | 5,127,935 | $ | 107,709 | 8.33 | % | |||||||||||
| Investment securities (3) | 350,732 | 3,566 | 4.04 | % | 356,590 | 3,610 | 4.03 | % | 349,863 | 3,335 | 3.78 | % | |||||||||||||||||
| Federal funds sold | 20,172 | 249 | 4.91 | % | 20,164 | 280 | 5.52 | % | 20,028 | 282 | 5.58 | % | |||||||||||||||||
| Other earning assets | 874,368 | 10,546 | 4.80 | % | 848,170 | 11,521 | 5.40 | % | 1,001,643 | 13,739 | 5.44 | % | |||||||||||||||||
| Total interest earning assets | 6,788,487 | 125,957 | 7.38 | % | 6,684,766 | 129,523 | 7.71 | % | 6,499,469 | 125,065 | 7.63 | % | |||||||||||||||||
| Deferred loan fees, net | (9,808 | ) | (10,248 | ) | (10,421 | ) | |||||||||||||||||||||||
| Allowance for credit losses on loans | (75,474 | ) | (72,899 | ) | (74,965 | ) | |||||||||||||||||||||||
| Noninterest earning assets: | |||||||||||||||||||||||||||||
| Cash and due from banks | 10,626 | 10,826 | 12,376 | ||||||||||||||||||||||||||
| Bank furniture and fixtures | 8,866 | 9,419 | 9,243 | ||||||||||||||||||||||||||
| Right of use assets | 28,570 | 22,496 | 20,338 | ||||||||||||||||||||||||||
| Other assets | 169,058 | 173,619 | 171,309 | ||||||||||||||||||||||||||
| Total assets | $ | 6,920,325 | $ | 6,817,979 | $ | 6,627,349 | |||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Interest bearing demand and savings | $ | 2,076,132 | $ | 18,330 | 3.51 | % | $ | 2,249,260 | $ | 23,295 | 4.12 | % | $ | 2,139,562 | $ | 21,788 | 4.04 | % | |||||||||||
| TCD $250K or more | 1,481,219 | 17,514 | 4.70 | % | 1,412,073 | 17,866 | 5.03 | % | 1,294,531 | 15,600 | 4.78 | % | |||||||||||||||||
| Other time certificates | 1,663,304 | 19,516 | 4.67 | % | 1,462,912 | 18,090 | 4.92 | % | 1,472,854 | 16,855 | 4.54 | % | |||||||||||||||||
| Total interest bearing deposits | 5,220,655 | 55,360 | 4.22 | % | 5,124,245 | 59,251 | 4.60 | % | 4,906,947 | 54,243 | 4.39 | % | |||||||||||||||||
| Short-term borrowings | 3 | 0 | 3.31 | % | - | - | 0.00 | % | 2 | 0 | 6.08 | % | |||||||||||||||||
| Subordinated debt, net | 148,434 | 1,325 | 3.55 | % | 148,372 | 1,325 | 3.55 | % | 148,194 | 1,325 | 3.55 | % | |||||||||||||||||
| Total interest bearing liabilities | 5,369,092 | 56,685 | 4.20 | % | 5,272,617 | 60,576 | 4.57 | % | 5,055,143 | 55,568 | 4.36 | % | |||||||||||||||||
| Noninterest bearing liabilities: | |||||||||||||||||||||||||||||
| Demand deposits | 684,472 | 703,982 | 782,766 | ||||||||||||||||||||||||||
| Lease liability | 25,486 | 18,882 | 18,179 | ||||||||||||||||||||||||||
| Other liabilities | 80,930 | 75,276 | 88,120 | ||||||||||||||||||||||||||
| Total liabilities | 6,159,980 | 6,070,757 | 5,944,208 | ||||||||||||||||||||||||||
| Shareholders’ equity | 760,345 | 747,222 | 683,141 | ||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,920,325 | $ | 6,817,979 | $ | 6,627,349 | |||||||||||||||||||||||
| Net interest income | $ | 69,272 | $ | 68,947 | $ | 69,497 | |||||||||||||||||||||||
| Net interest spread | 3.18 | % | 3.14 | % | 3.27 | % | |||||||||||||||||||||||
| Net interest margin | 4.06 | % | 4.10 | % | 4.24 | % | |||||||||||||||||||||||
| Cost of Deposits: | |||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 684,472 | $ | 703,982 | $ | 782,766 | |||||||||||||||||||||||
| Interest bearing deposits | 5,220,655 | 55,360 | 4.22 | % | 5,124,245 | 59,251 | 4.60 | % | 4,906,947 | 54,243 | 4.39 | % | |||||||||||||||||
| Total Deposits | $ | 5,905,127 | $ | 55,360 | 3.73 | % | $ | 5,828,227 | $ | 59,251 | 4.04 | % | $ | 5,689,713 | $ | 54,243 | 3.78 | % | |||||||||||
| (1) | Includes non-accrual loans and loans held for sale | |
| (2) | Net loan fee income of $1.2 million, $991,000, and $1.0 million for the quarter ended December 31, 2024, September 30, 2024 and December 31, 2023, 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) | |||||||||||||||||||
| Twleve Months ended December 31, | |||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||
| 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) | $ | 5,398,916 | $ | 445,139 | 8.24 | % | $ | 5,068,486 | $ | 412,505 | 8.14 | % | |||||||
| Investment securities (3) | 352,416 | 14,257 | 4.05 | % | 389,584 | 14,461 | 3.71 | % | |||||||||||
| Federal funds sold | 20,397 | 1,103 | 5.41 | % | 20,090 | 1,056 | 5.26 | % | |||||||||||
| Other earning assets | 925,389 | 48,994 | 5.29 | % | 974,501 | 50,372 | 5.17 | % | |||||||||||
| Total interest earning assets | 6,697,118 | 509,493 | 7.61 | % | 6,452,661 | 478,394 | 7.41 | % | |||||||||||
| Deferred loan fees, net | (10,301 | ) | (10,212 | ) | |||||||||||||||
| Allowance for credit losses on loans | (76,448 | ) | (70,992 | ) | |||||||||||||||
| Noninterest earning assets: | |||||||||||||||||||
| Cash and due from banks | 10,624 | 11,978 | |||||||||||||||||
| Bank furniture and fixtures | 9,537 | 9,010 | |||||||||||||||||
| Right of use assets | 23,997 | 21,417 | |||||||||||||||||
| Other assets | 175,725 | 163,828 | |||||||||||||||||
| Total assets | $ | 6,830,252 | $ | 6,577,690 | |||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Interest bearing demand/ savings | $ | 2,198,837 | $ | 88,274 | 4.01 | % | $ | 2,108,187 | $ | 75,642 | 3.59 | % | |||||||
| TCD $250K or more | 1,403,663 | 69,176 | 4.93 | % | 1,267,859 | 53,200 | 4.20 | % | |||||||||||
| Other time certificates | 1,535,880 | 73,718 | 4.80 | % | 1,302,847 | 50,653 | 3.89 | % | |||||||||||
| Total interest \bearing deposits | 5,138,380 | 231,168 | 4.50 | % | 4,678,893 | 179,495 | 3.84 | % | |||||||||||
| Short-term borrowings | 1 | 0 | 2.50 | % | 1 | 0 | 3.06 | % | |||||||||||
| Advance from Federal Home Loan Bank | - | 0 | 0.00 | % | 75,616 | 3,819 | 5.05 | % | |||||||||||
| Subordinated debt, net | 148,344 | 5,300 | 3.57 | % | 148,106 | 5,300 | 3.58 | % | |||||||||||
| Total interest bearing liabilities | 5,286,725 | 236,468 | 4.47 | % | 4,902,616 | 188,614 | 3.85 | % | |||||||||||
| Noninterest bearing liabilities: | |||||||||||||||||||
| Demand deposits | 710,920 | 898,262 | |||||||||||||||||
| Lease liability | 20,931 | 19,902 | |||||||||||||||||
| Other liabilities | 79,618 | 84,449 | |||||||||||||||||
| Total liabilities | 6,098,194 | 5,905,229 | |||||||||||||||||
| Shareholders’ equity | 732,058 | 672,461 | |||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,830,252 | $ | 6,577,690 | |||||||||||||||
| Net interest income | $ | 273,025 | $ | 289,780 | |||||||||||||||
| Net interest spread | 3.13 | % | 3.57 | % | |||||||||||||||
| Net interest margin | 4.08 | % | 4.49 | % | |||||||||||||||
| Cost of Deposits: | |||||||||||||||||||
| Noninterest bearing demand deposits | $ | 710,920 | $ | 898,262 | |||||||||||||||
| Interest bearing deposits | 5,138,380 | 231,168 | 4.50 | % | 4,678,893 | 179,495 | 3.84 | % | |||||||||||
| Total Deposits | $ | 5,849,300 | $ | 231,168 | 3.95 | % | $ | 5,577,155 | $ | 179,495 | 3.22 | % | |||||||
| (1) | Includes non-accrual loans and loans held for sale | |
| (2) | Net loan fee income of $4.6 million and $4.2 million for the year ended December 31, 2024 and 2023, 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 | |||||||
| Year ended | |||||||
| December 31, 2024 | December 31, 2023 | ||||||
| (Dollars in 000's) | |||||||
| Allowance For Credit Losses | |||||||
| Balance at Beginning of Period | $ | 78,355 | $ | 68,472 | |||
| Charge-Offs | |||||||
| Commercial & Industrial | 19,028 | 124 | |||||
| Total Charge-Offs | 19,028 | 124 | |||||
| Recoveries | |||||||
| Commercial & Industrial | 50 | 7 | |||||
| Total Recoveries | 50 | 7 | |||||
| Net Charge-Offs | 18,978 | 117 | |||||
| Provision for Credit Losses: | 12,100 | 10,000 | |||||
| Balance at End of Period | $ | 71,477 | $ | 78,355 | |||
| Average Loans Held for Investment | $ | 5,396,844 | $ | 5,067,870 | |||
| Loans Held for Investment at End of Period | $ | 5,640,615 | $ | 5,273,498 | |||
| Net Charge-Offs to Average Loans | 0.35 | % | 0.00 | % | |||
| Allowances for Credit Losses to Loans at End of Period | 1.27 | % | 1.49 | % | |||
| 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 | [email protected] |
