LOS ANGELES, April 20, 2021 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ:PFBC), one of the larger independent California banks, today reported results for the quarter ended March 31, 2021. Preferred Bank ("the Bank") reported net income of $21.2 million or $1.42 per diluted share for the first quarter of 2021. This is up from net income of $20.9 million or $1.40 per diluted share for the fourth quarter of 2020 and easily tops recorded net income of $16.2 million or $1.08 per diluted share for the first quarter of 2020. The primary reasons for the increase compared to the prior year is a $3.9 million decrease in the provision for credit losses this quarter, an increase in net interest income of $3.6 million, partially offset by a decrease in noninterest income of $325,000 as well as an increase in non-interest expense of $468,000. When compared to the prior quarter, the provision for credit losses decreased by $2.8 million but that was partially offset by a decrease in net interest income as well as an increase in noninterest expense.

First Quarter 2021 Highlights:

Net income of $21.2 million, or $1.42 per diluted share
Linked quarter loan growth (non - PPP) of 2.6%
Linked quarter deposit growth of 6.3%
NIM held fairly steady at 3.61%
Return on average assets ("ROA") of 1.65%
Return on beginning equity ("ROE") of 16.36%

Li Yu, Chairman and CEO, commented, "We are pleased to report another record quarter of earnings for our Bank. For the first quarter of 2021, our net income was $21.2 million or $1.42 per share.

"The quarter features significant growth in total assets of 5.9%, resulting from deposit growth of $280 million or 6.30% from year-end totals. This outsized growth in deposits increased the Bank's excess cash on hand but moderately compressed capital ratios, ROA, net interest income and net interest margin. It does, however, provide the Bank with more opportunities to grow.

"First quarter loan growth was $104 million excluding PPP or 2.6% from year end. We can't help but take note of how our customers have become more optimistic about the nation's economy and thus are increasing their business or expansion activities. Likewise, we are also planning for increased efforts to serve our customers. During the quarter, we opened a loan production office in Houston, Texas and will continue to look for opportunities in new markets. In California, we have also added several relationship officers.

"You may recall that beginning in the fourth quarter of 2020, we started discussing potential inflation and its potential impact on the yield curve. We are convinced, going forward that interest rates overall will be trending upward. Therefore, we have been preparing and will continue to work to generate more asset sensitivity in our balance sheet.

"At March 31, 2021, credit metrics are stable. Total loans on payment deferral from COVID is down to $25.8 million. Operation expenses were elevated this quarter but for very specific reasons. We are now preparing ourselves for post-pandemic normalized operations to begin in the summer."

Results of Operations

Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $45.3 million for the first quarter of 2021. This was down slightly from the $46.1 million recorded in the fourth quarter of 2020 but was well ahead of the $41.8 million recorded in the first quarter of 2020. The decrease from last quarter was due primarily to two items that increased fourth quarter 2020 loan interest. One was a non-recurring fee collected in the Main Street Lending Program and the second was interest we had collected on a purchased credit deteriorated loan. These two items added $972,000 to fourth quarter loan interest. The increase over first quarter of 2020 was due to a substantial decrease in interest expense ($7.1 million) partially offset by a decrease in interest income of $3.5 million. The Bank's taxable equivalent net interest margin was 3.61% for the first quarter of 2021, down slightly from the 3.66% achieved in the fourth quarter of 2020 and a 9 basis point decrease from the 3.70% posted in the first quarter of 2020.

Noninterest Income. For the first quarter of 2021, noninterest income was $1,347,000 compared with $1,672,000 for the same quarter last year and compared to $1,356,000 for the fourth quarter of 2020. The decrease compared to last year was due to loss on sales of loans of $379,000 this quarter. Although total noninterest income was relatively flat compared to last quarter, there were variances; letter of credit ("LC") fee income was down by $197,000 this quarter and last quarter the Bank recorded a $663,000 loss on sale of investment securities.

Noninterest Expense. Total noninterest expense was $15.7 million for the first quarter of 2021. This is up compared to the $15.2 million recorded in the same quarter last year and is also up from the $14.2 million posted in the fourth quarter of 2020. Salaries and benefits expense totaled $11.1 million for the first quarter of 2021, an increase of $221,000 from the first quarter of 2020 and an increase of $1.7 million from the fourth quarter of 2020. The increase over the prior quarter was due mainly to higher incentive compensation expense and the increase over the prior year was due to increased payroll tax expense, increased vacation accrual and lowered capitalized loan origination costs versus the fourth quarter of 2020. Occupancy expense totaled $1.4 million for the quarter which was relatively flat compared to both comparable periods. Business development and promotion expense was $73,000 for the quarter, a decrease from both comparable periods. The decrease from the fourth quarter of 2020 was due to the fact that our annual donations typically are paid out in the fourth quarter each year. The decrease from the first quarter of last year was due primarily to fewer opportunities to engage in person with clients for events such as lunches and entertainment. Professional services expense was $981,000 for the first quarter of 2021, a slight decrease from the $1.0 million posted in the same period last year and a $103,000 decrease from the previous quarter. The decrease from the fourth quarter of 2020 was due to lower legal fees. Other expenses were $1.6 million for the first quarter of 2021, an increase of $405,000 over the same period last year and essentially flat compared to the fourth quarter of 2020. The increase over the prior year was due to FDIC insurance premiums which were significantly lower in the first quarter of 2020. For the quarter ended March 31, 2021, the Bank's efficiency ratio was 33.5%, a small increase from the two comparable periods.

Income Taxes. The Bank recorded a provision for income taxes of $8.4 million for the first quarter of 2021. This represents an effective tax rate ("ETR") of 28.5% and a slight increase from the ETR of 28.1% for the prior quarter but a decrease from the ETR of 29.7% 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 March 31, 2021 were $4.16 billion, an increase of $128.8 million or 3.2% over the total of $4.04 billion as of December 31, 2020. Total deposits increased to $4.72 billion, an increase of $280.0 million or 6.3% over the $4.44 billion as of December 31, 2020. Total assets ended the quarter at $5.45 billion, an increase of $304.4 million or 5.9% over the total of $5.14 billion as of December 31, 2020.

Asset Quality

As of March 31, 2021, nonaccrual loans totaled $22.0 million, up slightly from the $20.5 million reported as of December 31, 2020. A $2.3 million CRE loan on nonaccrual status was paid off, however a C&I loan of $3.8 million, related to the C&I loan already on nonaccrual status, was placed on nonaccrual status. Total net charge-offs (recoveries) for the first quarter of 2021 were ($57,000) compared to $0 in the first quarter of 2020 and compared $2.0 million in the fourth quarter of 2020.

At March 31, 2021, total dollar amount of loans that were in COVID-19 deferral status were equal to 0.6% of the Bank's loan portfolio. Of the total modifications at present, approximately 62% are for the deferral of principal only and 38% are for principal and interest deferral.

Allowance for Credit Losses

The provision for credit losses for the first quarter of 2021 was $1.4 million compared to $5.3 million for the same period last year and to $4.2 million for the fourth quarter of 2020. In the first quarter of 2020, the Bank implemented the current expected credit losses ("CECL") methodology under Accounting Standards Codification ("ASC") 326, in which the allowance for credit losses now reflects expected credit losses over the life of loans and held-to-maturity debt securities, and incorporates macroeconomic forecasts as well as historical loss rates. Between the adoption of CECL in the first quarter of last year, and the heightened provisions for credit losses in 2020, the Bank's allowance coverage ratio has increased to 1.59% of total non-PPP loans as of March 31, 2021 from a total coverage level of 0.94% as of December 31, 2019.

Capitalization

As of March 31, 2021, the Bank's leverage ratio was 10.26% the common equity tier 1 capital ratio was 11.34% and the total capital ratio was 14.73%. 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%.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss Preferred Bank's first quarter 2021 financial results will be held tomorrow, April 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 May 5, 2021; the passcode is 10155105.

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. 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.

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,
					2021			2020			2020
Interest income:
	Loans, including fees			$	49,859		$	51,299		$	51,564
	Investment securities				2,277			2,320			3,979
	Fed funds sold				24			30			124
		Total interest income			52,160			53,649			55,667

Interest expense:
	Interest-bearing demand				1,437			1,499			3,368
	Savings				19			21			14
	Time certificates				3,827			4,534			8,962
	Subordinated debit				1,531			1,532			1,531
		Total interest expense			6,814			7,586			13,876
		Net interest income			45,346			46,063			41,791
Provision for credit losses					1,400			4,200			5,300
		Net interest income after provision for
			credit losses		43,946			41,863			36,491

Noninterest income:
	Fees & service charges on deposit accounts				426			456			405
	Letters of credit fee income				808			1,004			848
	BOLI income				96			96			94
	Net gain (loss) on called and sale of investment securities				-			(663	)		-
	Net gain (loss) on sale of loans				(379	)		-			-
	Other income				396			463			325
		Total noninterest income			1,347			1,356			1,672

Noninterest expense:
	Salary and employee benefits				11,123			9,440			10,902
	Net occupancy expense				1,401			1,378			1,396
	Business development and promotion expense				73			204			151
	Professional services				981			1,084			1,014
	Office supplies and equipment expense				438			454			489
	Other real estate owned expense				-			-			1
	Other				1,636			1,617			1,231
		Total noninterest expense			15,652			14,177			15,184
		Income before provision for income taxes			29,641			29,042			22,979
Income tax expense					8,447			8,162			6,825
		Net income		$	21,194		$	20,880		$	16,154

Dividend and earnings allocated to participating securities					(3	)		(42	)		(51	)
Net income available to common shareholders				$	21,191		$	20,838		$	16,103

Income per share available to common shareholders
		Basic		$	1.42		$	1.40		$	1.08
		Diluted		$	1.42		$	1.40		$	1.08

Weighted-average common shares outstanding
		Basic			14,950,019			14,895,925			14,870,715
		Diluted			14,950,019			14,895,925			14,870,715

Cash dividends per common share				$	0.38		$	0.30		$	0.30

PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)


			March 31,			December 31,
			2021			2020
			(Unaudited)			(Audited)
Assets
Cash and due from banks			$	921,626		$	739,465
Fed funds sold				21,500			20,000
	Cash and cash equivalents			943,126			759,465

Securities held to maturity, at amortized cost				6,039			6,568
Securities available-for-sale, at fair value				228,635			239,682
Loans				4,164,241			4,035,394
	Less allowance for credit losses			(64,883	)		(63,426	)
	Less amortized deferred loan fees, net			(4,872	)		(4,574	)
	Loans, net			4,094,486			3,967,394

Customers' liability on acceptances				9,670			3,596
Bank furniture and fixtures, net				11,571			11,825
Bank-owned life insurance				9,893			9,828
Accrued interest receivable				23,095			23,692
Investment in affordable housing partnerships				59,824			62,521
Federal Home Loan Bank stock, at cost				15,000			15,000
Deferred tax assets				25,573			24,466
Operating lease right-of-use assets				17,141			16,106
Other assets				3,951			3,498
	Total assets		$	5,448,004		$	5,143,641

Liabilities and Shareholders' Equity
Deposits:
	Non-interest bearing demand deposits		$	1,026,260		$	938,911
	Interest-bearing deposits:			1,751,951			1,700,818
		Savings		37,551			34,702
		Time certificates of $250,000 or more		927,043			912,546
		Other time certificates		979,694			855,503
		Total deposits		4,722,499			4,442,480

Acceptances outstanding				9,670			3,596
Subordinated debt issuance, net				99,365			99,334
Commitments to fund investment in affordable housing partnerships				27,918			30,715
Operating lease liabilities				19,331			18,682
Accrued interest payable				2,619			1,245
Other liabilities				27,333			22,142
	Total liabilities			4,908,735			4,618,194

Shareholders' equity				539,269			525,447
	Total liabilities and shareholders' equity		$	5,448,004		$	5,143,641

Book value per common share			$	36.07		$	31.47
Number of common shares outstanding				14,951,838			14,931,861

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,
				2021			2020			2020			2020			2020
Unaudited historical quarterly operations data:
	Interest income		$	52,160		$	53,649		$	52,782		$	52,164		$	55,667
	Interest expense			6,814			7,586			8,663			9,983			13,876
		Interest income before provision for credit losses		45,346			46,063			44,119			42,181			41,791
	Provision for credit losses			1,400			4,200			9,000			7,500			5,300
	Noninterest income			1,347			1,356			1,605			1,430			1,672
	Noninterest expense			15,652			14,177			13,663			14,334			15,184
	Income tax expense			8,447			8,162			5,936			6,468			6,825
		Net income	$	21,194		$	20,880		$	17,125		$	15,309		$	16,154

	Earnings per share
		Basic	$	1.42		$	1.40		$	1.15		$	1.03		$	1.08
		Diluted	$	1.42		$	1.40		$	1.15		$	1.03		$	1.08

Ratios for the period:
	Return on average assets			1.65	%		1.63	%		1.34	%		1.26	%		1.40	%
	Return on beginning equity			16.36	%		16.49	%		13.94	%		13.00	%		13.82	%
	Net interest margin (Fully-taxable equivalent)			3.61	%		3.66	%		3.54	%		3.57	%		3.70	%
	Noninterest expense to average assets			1.22	%		1.10	%		1.07	%		1.18	%		1.31	%
	Efficiency ratio			33.52	%		29.90	%		29.88	%		32.87	%		34.93	%
	Net charge-offs (recoveries) to average loans (annualized)			-0.01	%		0.20	%		0.35	%		-0.01	%		0.00	%

Ratios as of period end:
	Tier 1 leverage capital ratio			10.26	%		10.08	%		9.75	%		9.87	%		10.05	%
	Common equity tier 1 risk-based capital ratio			11.34	%		11.21	%		11.02	%		10.39	%		10.80	%
	Tier 1 risk-based capital ratio			11.34	%		11.21	%		11.02	%		10.39	%		10.80	%
	Total risk-based capital ratio			14.73	%		14.64	%		14.51	%		13.80	%		14.26	%
	Allowances for credit losses to loans at end of period			1.56	%		1.57	%		1.55	%		1.41	%		1.24	%
	Allowance for credit losses to non-performing loans			294.74	%		308.96	%		243.56	%		211.08	%		2263.66	%

Average balances:
	Total securities		$	242,200		$	251,284		$	237,801		$	250,134		$	247,689
	Total loans		$	4,044,800		$	3,971,537		$	3,956,145		$	3,919,674		$	3,717,175
	Total earning assets		$	5,102,291		$	5,018,031		$	4,975,005		$	4,768,537		$	4,548,512
	Total assets		$	5,200,079		$	5,110,065		$	5,073,548		$	4,868,356		$	4,651,956
	Total time certificate of deposits		$	1,820,461		$	1,764,528		$	1,841,901		$	1,757,531		$	1,765,816
	Total interest bearing deposits		$	3,531,358		$	3,508,276		$	3,501,275		$	3,399,924		$	3,244,711
	Total deposits		$	4,486,399		$	4,426,326		$	4,408,882		$	4,220,197		$	4,010,629
	Total interest bearing liabilities		$	3,630,705		$	3,607,592		$	3,600,560		$	3,499,178		$	3,343,933
	Total equity		$	538,282		$	518,567		$	503,421		$	486,931		$	475,409

PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)



				As of

				March 31,			December 31,			September 30,			June 30,			March 31,
					2021			2020			2020			2020			2020
Unaudited quarterly statement of financial position data:
Assets:
	Cash and cash equivalents			$	943,126		$	759,465		$	807,791		$	656,183		$	484,869
	Securities held-to-maturity, at amortized cost				6,039			6,568			6,727			6,922			7,077
	Securities available-for-sale, at fair value				228,635			239,682			219,778			270,667			235,097
	Loans:
		Real estate – Mortgage:
			Real estate—Residential	$	541,313		$	523,789		$	528,371		$	511,354		$	493,226
			Real estate—Commercial		1,925,554			1,911,485			1,808,200			1,781,660			1,730,017
			Total Real Estate – Mortgage		2,466,867			2,435,274			2,336,571			2,293,014			2,223,243
		Real estate – Construction:
			R/E Construction — Residential		123,302			148,825			170,773			187,083			177,364
			R/E Construction — Commercial		229,933			215,032			223,706			217,729			223,385
			Total real estate construction loans		353,235			363,857			394,480			404,812			400,749
		Commercial and industrial			1,248,550			1,165,990			1,144,051			1,192,056			1,269,242
		PPP			95,434			70,234			74,551			73,524			-
		Consumer and others			155			39			68			241			91
			Gross loans		4,164,241			4,035,394			3,949,721			3,963,647			3,893,325
	Allowance for credit losses on loans				(64,883	)		(63,426	)		(61,262	)		(55,762	)		(48,130	)
	Net deferred loan fees				(4,872	)		(4,574	)		(4,411	)		(5,097	)		(3,084	)
		Net loans, excluding loans held for sale		$	4,094,486		$	3,967,394		$	3,884,048		$	3,902,788		$	3,842,111
	Loans held for sale			$	-		$	-		$	-		$	-		$	-
		Net loans		$	4,094,486		$	3,967,394		$	3,884,048		$	3,902,788		$	3,842,111

	Investment in affordable housing partnerships				59,824			62,521			47,917			49,658			51,400
	Federal Home Loan Bank stock, at cost				15,000			15,000			15,000			15,000			13,101
	Other assets				100,894			93,011			104,313			103,239			93,979
		Total assets		$	5,448,004		$	5,143,641		$	5,085,574		$	5,004,457		$	4,727,634

Liabilities:
	Deposits:
		Demand		$	1,026,260		$	938,911		$	926,166		$	934,764		$	753,750
		Interest-bearing demand			1,751,951			1,700,818			1,620,495			1,594,682			1,503,618
		Savings			37,551			34,702			32,830			27,737			23,035
		Time certificates of $250,000 or more			927,043			912,546			977,821			970,649			1,030,282
		Other time certificates			979,694			855,503			857,113			822,404			775,792
		Total deposits		$	4,722,499		$	4,442,480		$	4,414,425		$	4,350,236		$	4,086,477

	Acceptances outstanding			$	9,670		$	3,596		$	7,463		$	6,112		$	6,507
	Subordinated debt issuance, net				99,365			99,334			99,304			99,273			99,242
	Commitments to fund investment in affordable housing partnerships				2,619			30,715			16,689			17,536			21,195
	Other liabilities				74,582			42,069			43,826			42,571			40,428
		Total liabilities		$	4,908,735		$	4,618,194		$	4,581,707		$	4,515,728		$	4,253,849

Equity:
	Net common stock, no par value			$	218,593		$	217,444		$	213,519		$	212,187		$	210,091
	Retained earnings				316,481			300,969			284,568			271,923			261,095
	Accumulated other comprehensive income				4,195			7,034			5,780			4,619			2,599
		Total shareholders' equity		$	539,269		$	525,447		$	503,867		$	488,729		$	473,785
		Total liabilities and shareholders' equity		$	5,448,004		$	5,143,641		$	5,085,574		$	5,004,457		$	4,727,634

			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,
			2021							2020							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)		$	4,044,823			49,859	5.00	%	$	3,974,599		$	51,299	5.13	%	$	3,717,212		$	51,564	5.58	%
	Investment securities ⁽³⁾			242,200			1,884	3.16	%		251,284			1,936	3.07	%		247,689			2,127	3.45	%
	Federal funds sold			21,474			24	0.45	%		22,939			30	0.51	%		30,153			124	1.66	%
	Other earning assets			793,794			493	0.25	%		769,209			487	0.25	%		553,458			1,946	1.41	%
		Total interest-earning assets		5,102,291			52,260	4.15	%		5,018,031			53,752	4.26	%		4,548,512			55,761	4.93	%
	Deferred loan fees, net			(4,344	)						(4,162	)						(3,079	)
	Allowance for credit losses on loans			(63,450	)						(60,875	)						(42,800	)
Noninterest earning assets:
	Cash and due from banks			9,923							8,214							6,334
	Bank furniture and fixtures			11,772							11,892							12,269
	Right of use assets			16,847							16,272							17,006
	Other assets			127,040							120,693							113,714
		Total assets	$	5,200,079						$	5,110,065						$	4,651,956

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
	Deposits:
		Interest-bearing demand and savings		1,710,897		$	1,456	0.35	%		1,743,748		$	1,520	0.35	%	$	1,478,895		$	3,382	0.92	%
		TCD $250K or more		919,155			1,918	0.85	%		923,079			2,298	0.99	%		969,343			4,852	2.01	%
		Other time certificates		901,306			1,909	0.86	%		841,449			2,236	1.06	%		796,473			4,111	2.08	%
		Total interest-bearing deposits		3,531,358			5,283	0.61	%		3,508,276			6,054	0.69	%		3,244,711			12,345	1.53	%
Short-term borrowings				-			-	0.00	%		3			0	0.20	%		-			-	0.00	%
Subordinated debt, net				99,347			1,531	6.25	%		99,316			1,532	6.14	%		99,222			1,531	6.21	%
		Total interest-bearing liabilities		3,630,705			6,814	0.76	%		3,607,595			7,586	0.84	%		3,343,933			13,876	1.67	%
Non-interest bearing liabilities:
	Demand deposits			955,041							918,050							765,918
	Lease Liability			19,289							18,936							20,314
	Other liabilities			56,762							46,917							463,382
		Total liabilities		4,661,797							4,591,498							4,176,547
Shareholders' equity				538,282							518,567							475,409
		Total liabilities and shareholders' equity	$	5,200,079						$	5,110,065						$	4,651,956
Net interest income						$	45,446						$	46,166						$	41,885
Net interest spread								3.39	%						3.42	%						3.26	%
Net interest margin								3.61	%						3.66	%						3.70	%

Cost of Deposits:
	Noninterest bearing demand deposits		$	955,041						$	918,050						$	765,918
	Interest bearing deposits			3,531,358			5,283	0.61	%		3,508,276			6,054	0.69	%		3,244,711			12,345	1.53	%
		Total Deposits	$	4,486,399		$	5,283	0.48	%	$	4,426,326		$	6,054	0.54	%	$	4,010,629		$	12,345	1.24	%

⁽¹⁾	Includes non-accrual loans and loans held for sale
⁽²⁾	Net loan fee income of $539,000, $1.1 million and $670,000 for the quarter ended March 31, 2021, December 31, 2020 and March 31, 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
			Three Months Ended			Year ended
			March 31, 2021			December 31, 2020
			(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period			$	63,426		$	34,830
	Charge-Offs
		Commercial & Industrial		-			3,700
		Mini-perm Real Estate		-			1,900
		Others		-			7
		Total Charge-Offs		-			5,607

	Recoveries
		Commercial & Industrial		57			-
		Mini-perm Real Estate		-			-
		Construction - Commercial		-			194
		Land - Commercial		-			9
		Total Recoveries		57			203

	Net Charge-Offs (Recoveries)			(57	)		5,404
	Provision for Credit Losses:
		CECL Cumulative Effect Adjustment		-			8,000
		Current Provision		1,400			26,000
Balance at End of Period			$	64,883		$	63,426
Average Loans Held for Investment			$	4,044,823		$	3,892,811
Loans Held for Investment at End of Period			$	4,164,241		$	4,035,394
Net Charge-Offs (Recoveries) to Average Loans				-0.01	%		0.14	%
Allowances for Credit Losses to Loans at End of Period				1.56	%		1.57	%

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 Reports Quarterly Earnings