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Preferred Bank Reports Quarterly Earnings
Source: Nasdaq GlobeNewswire / 19 Apr 2022 16:05:01 America/New_York
LOS ANGELES, April 19, 2022 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter March 31, 2022. Preferred Bank (“the Bank”) reported net income of $26.0 million or $1.74 per diluted share for the first quarter of 2022. This represents an increase of $4.8 million or 22.8% over the same quarter last year down slightly from the $26.4 million or $1.80 per share posted in the fourth quarter of 2021. The primary reasons for the increase compared to the prior year was an increase in net interest income of $4.7 million primarily driven by loan growth. The decrease from the fourth quarter of 2021 was due mainly to an increase in noninterest expense of $1.4 million which was the result of higher personnel costs.
First quarter 2022 highlights:
- Linked quarter loan growth (Ex-PPP) of 4.0%
- Return on average assets (“ROA”) of 1.75%
- Return on beginning equity (“ROBE”) of 17.99%
- Pre-provision, pre-tax (“PPPT”) ROBE of 24.98% 1
- Efficiency ratio of 30.89%
Li Yu, Chairman and CEO, commented, “We had a strong first quarter to start 2022, compared to all the prior years. Net income was $26.0 or $1.74 per fully diluted share as compared to $21.2 and $1.42 per share respectively, for the first quarter 2021.
Loan growth for the first quarter, excluding PPP was $176 million, or 16.1% annualized and was the highlight of the quarter. The momentum of fourth quarter’s origination activities has been carried over to this quarter and pay-off activities have moderately subsided. Looking forward, we are encouraged by the new applications received for lending opportunities in the following quarters.
Deposit growth was moderate, increasing by $84 million, or 6.44% annualized. As we are facing the Federal Reserve’s tightening of liquidity, this growth rate is well within our expected range and allows us to deploy some of our excess liquidity into more profitable applications.
The Bank’s net interest margin for the quarter was 3.42%, an increase of 14 basis points from the previous quarter partially reflecting the change in leverage on the balance sheet. Looking forward, we expect our margin to expand under the rate rising environment, which seems to be the unanimous consensus of all economists. Following is a breakdown of the Bank’s assets, which will support our margin expansion conviction:
Total Adj/Floating Rate Loans $ 3,824,913 Loans with no Floor $ 688,006 Loans Above Floor or at Floor 753,071 Cash and Floating Rate Securities 1,215,162 Total Interest Earning Assets to Reprice Immediately $ 2,656,239 Floating Rate Loans which will Reprice When Rates are Increased by: 0 - 25 bps $ 196,213 26 - 50 bps 393,437 51 - 75 bps 492,037 76 - 100 bps 305,055 > 100 bps 997,094 Total $ 2,383,836 On the liability side, the Bank’s time certificates of deposit portfolio of $1.86 billion has an average life of 7.3 months. This group of deposits will reprice slower than the interest-bearing transactional accounts.
We are also making progress on resolving our troubled assets. After months of court battles, two main non-accrual loans have finally advanced to the OREO and repossessed-asset stage and expect to be resolved shortly. Our total non-performing loans at March 31, 2022, is now just $2.2 million and total non-performing assets are $17.7 million. Charge-offs for this quarter are primarily related to these legacy loans and places us in a position to offload them.
Under the current inflationary environment, increases in operating expenses will be inevitable. As we have always been disciplined with our operating costs, we expect expense growth to stay at approximately the industry average and be more than fully absorbed by growth in net interest income.”
Results of Operations
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $50.0 million for the first quarter of 2022. This was an increase from the $45.4 million recorded in the same quarter last year and also an increase over the $49.4 million posted in the fourth quarter of 2021. Loan growth was the primary driver of the increase in net interest income as was an increase in investment securities along with a decline in interest expense. The taxable equivalent margin was 3.42% for the first quarter of 2022, as compared to 3.28% in the fourth quarter of 2021 and versus 3.61% for the same period last year.
Noninterest Income. For the first quarter of 2022, noninterest income was $2,266,000 compared with $1,347,000 for the same quarter last year and compared to $1,966,000 for the fourth quarter of 2021. The increase compared to last year was due to a $379,000 loss on sale of loans recorded in the first quarter of last year in addition to service charges increasing this quarter by $245,000 over that period as well. The increase over the fourth quarter of 2021 was mainly due to an increase in letter of credit (“LC”) fees which were up by $214,000 this quarter.
Noninterest Expense. Total noninterest expense was $16.2 million for the first quarter of 2022. This is up compared to the $15.7 million recorded in the same quarter last year and an increase over the $14.8 million posted in the fourth quarter of 2021. In comparing to the same quarter last year, personnel expense and other professional services contributed most to the overall increase. Personnel expense increased over the prior year primarily due to additional staffing and merit increases. The increase in noninterest expense over the prior quarter was due to personnel expense. This increase in personnel expense was due to an increase in payroll taxes of $612,000 which were Bank-incurred payroll taxes on incentive compensation payments, which are distributed each first quarter. Occupancy expense totaled $1.4 million for the quarter which was relatively flat compared to both the prior quarter and when compared to the same quarter last year. Professional services expense was $1.2 million for the first quarter of 2022, an increase of $262,000 over the same period last year and an increase of $168,000 over the fourth quarter of 2021. The increase over both periods was mainly due to legal fees as the Bank continues to wind down and liquidate the two aforementioned non-performing assets. Other expenses were $1.2 million for the first quarter of 2022, down from the $1.6 million recorded in the first quarter of 2021 and down slightly from the $1.3 million posted last quarter. Lower FDIC premiums were the primary reason for the decrease compared to the same period last year. For the quarter ended March 31, 2022, the Bank’s efficiency ratio was 30.9%, up from the 28.8% posted last quarter and down from last year’s 33.5%.
Income Taxes. The Bank recorded a provision for income taxes of $10.4 million for the first quarter of 2022. This represents an effective tax rate (“ETR”) of 28.5% and slightly below the ETR of 29.5% in the prior quarter and flat compared to the ETR of 28.5% in the same period last year. The Bank’s ETR will fluctuate slightly from quarter to quarter within a fairly small range due to the timing of taxable events throughout the year
Balance Sheet Summary
Total gross loans at March 31, 2022 were $4.59 billion, an increase of $167 million or 3.8% over the total of $4.42 billion as of December 31, 2021. Total deposits increased to $5.31 billion, an increase of $84 million or 1.6% over the $5.23 billion as of December 31, 2021. Total assets ended the quarter at $6.14 billion, an increase of $96 million or 1.6% over the total of $6.05 billion as of December 31, 2021.
Asset Quality
As of March 31, 2022, nonaccrual loans totaled $2.2 million, down from $14.8 million as of the end of 2021. In addition, OREO and repossessed assets totaled $15.5 million as of March 31, 2022. Total net charge-offs for the first quarter of 2022 were $1.2 million as compared to $267,000 in the prior quarter and compared to a net recovery of $57,000 in the first quarter of 2021.
Allowance for Credit Losses
The (reversal of) provision for credit losses for the first quarter of 2022 was ($250,000) as compared to a reversal of ($900,000) in the prior quarter and compared to the $1.4 million provision for credit losses posted in the first quarter of 2021. A consistently improving economic outlook, among other factors such as credit quality led to a lower allowance requirement. The Bank’s allowance coverage ratio now stands at 1.28% of total loans (excluding PPP loans).
Capitalization
As of March 31, 2022, the Bank’s leverage ratio was 9.92%, the common equity tier 1 capital ratio was 11.20% and the total capital ratio stood at 15.12%. As of December 31, 2021, the Bank’s leverage ratio was 9.54%, the common equity tier 1 ratio was 11.26% and the total risk-based capital ratio was 15.37%.
GAAP – Non-GAAP Reconciliation -First quarter 2022 PPPT ROBE Net Income $ 26,027 Add: Reversal of provision for credit losses (250 ) Add: Income tax expense 10,364 Pre-provision and pre-tax income $ 36,141 Total equity - 12/31/21 $ 586,718 Pre-provision and pre-tax ROBE 24.98 % Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s first quarter 2022 financial results will be held tomorrow, April 20, 2022 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com. Web participants are encouraged to go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
Preferred Bank's Chairman and Chief Executive Officer Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi and Deputy Chief Operating Officer Johnny Hsu will be present to discuss Preferred Bank's financial results, business highlights and outlook. After the live webcast, a replay will remain available in the Investor Relations section of Preferred Bank's website. A replay of the call will also be available at 877-344-7529 (domestic) or 412-317-0088 (international) through May 4, 2022; the passcode is 2138387.
About Preferred Bank
Preferred Bank is one of the larger independent commercial banks headquartered in California. The Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Bank conducts its banking business from its main office in Los Angeles, California, and through eleven full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)) and one branch in Flushing, New York. In addition, the Bank operates a Loan Production Office in the Houston, Texas suburb of Sugar Land. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank's results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2021 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at www.preferredbank.com.
AT THE COMPANY: AT FINANCIAL PROFILES: Edward J. Czajka Jeffrey Haas Executive Vice President General Information Chief Financial Officer (310) 622-8240 (213) 891-1188 PFBC@finprofiles.com PREFERRED BANK Condensed Consolidated Statements of Operations (unaudited) (in thousands, except for net income per share and shares) For the Quarter Ended March 31, December 31, March 31, 2022 2021 2021 Interest income: Loans, including fees $ 52,119 $ 51,906 $ 49,859 Investment securities 2,886 2,867 2,277 Fed funds sold 19 18 24 Total interest income 55,024 54,791 52,160 Interest expense: Interest-bearing demand 1,431 1,511 1,437 Savings 19 17 19 Time certificates 2,217 2,521 3,827 Subordinated debt 1,325 1,325 1,531 Total interest expense 4,992 5,374 6,814 Net interest income 50,032 49,417 45,346 (Reversal of) provision for credit losses (250 ) (900 ) 1,400 Net interest income after (reversal of) provision for credit losses 50,282 50,317 43,946 Noninterest income: Fees & service charges on deposit accounts 671 581 426 Letters of credit fee income 933 719 808 BOLI income 99 99 96 Net loss on sale of loans - - (379 ) Other income 563 567 396 Total noninterest income 2,266 1,966 1,347 Noninterest expense: Salary and employee benefits 11,640 10,278 11,123 Net occupancy expense 1,422 1,396 1,401 Business development and promotion expense 101 280 73 Professional services 1,243 1,075 981 Office supplies and equipment expense 489 498 438 Other real estate owned expense 16 - - Other 1,246 1,279 1,636 Total noninterest expense 16,157 14,806 15,652 Income before provision for income taxes 36,391 37,477 29,641 Income tax expense 10,364 11,056 8,447 Net income $ 26,027 $ 26,421 $ 21,194 Dividend and earnings allocated to participating securities (1 ) (3 ) (3 ) Net income available to common shareholders $ 26,026 $ 26,418 $ 21,191 Income per share available to common shareholders Basic $ 1.76 $ 1.80 $ 1.42 Diluted $ 1.74 $ 1.80 $ 1.42 Weighted-average common shares outstanding Basic 14,765,337 14,677,515 14,950,019 Diluted 14,978,667 14,677,515 14,950,019 Cash dividends per common share $ 0.43 $ 0.43 $ 0.38 PREFERRED BANK Condensed Consolidated Statements of Financial Condition (unaudited) (in thousands) March 31, December 31, 2022 2021 (Unaudited) (Audited) Assets Cash and due from banks $ 965,162 $ 1,030,610 Fed funds sold 20,000 20,000 Cash and cash equivalents 985,162 1,050,610 Securities held to maturity, at amortized cost 13,496 13,962 Securities available-for-sale, at fair value 430,280 451,911 Loans 4,591,567 4,424,992 Less allowance for credit losses (58,496 ) (59,969 ) Less amortized deferred loan fees, net (8,573 ) (6,316 ) Loans, net 4,524,498 4,358,707 Other real estate owned and repossessed assets 15,547 - Customers' liability on acceptances 8,222 10,188 Bank furniture and fixtures, net 10,189 10,533 Bank-owned life insurance 10,154 10,088 Accrued interest receivable 15,166 14,646 Investment in affordable housing partnerships 56,946 59,018 Federal Home Loan Bank stock, at cost 15,000 15,000 Deferred tax assets 31,086 26,674 Operating lease right-of-use assets 21,451 21,969 Other assets 5,159 2,997 Total assets $ 6,142,356 $ 6,046,303 Liabilities and Shareholders' Equity Deposits: Non-interest bearing demand deposits $ 1,251,613 $ 1,305,692 Interest-bearing deposits: 2,159,178 2,032,819 Savings 39,946 37,839 Time certificates of $250,000 or more 924,317 934,444 Other time certificates 934,615 914,717 Total deposits 5,309,669 5,225,511 Acceptances outstanding 8,222 10,188 Subordinated debt issuance, net 147,818 147,758 Commitments to fund investment in affordable housing partnerships 22,606 22,606 Operating lease liabilities 21,901 22,861 Accrued interest payable 1,966 715 Other liabilities 34,889 29,946 Total liabilities 5,547,071 5,459,585 Shareholders' equity 595,285 586,718 Total liabilities and shareholders' equity $ 6,142,356 $ 6,046,303 Book value per common share $ 40.19 $ 39.97 Number of common shares outstanding 14,810,635 14,679,769 PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) For the Quarter Ended March 31, December 31, September 30, June 30, March 31, 2022 2021 2021 2021 2021 Unaudited historical quarterly operations data: Interest income $ 55,024 $ 54,791 $ 53,611 $ 50,473 $ 52,160 Interest expense 4,992 5,374 5,858 7,112 6,814 Interest income before provision for credit losses 50,032 49,417 47,753 43,361 45,346 (Reversal of) provision for credit losses (250 ) (900 ) (1,500 ) - 1,400 Noninterest income 2,266 1,966 2,784 1,646 1,347 Noninterest expense 16,157 14,806 15,370 14,964 15,652 Income tax expense 10,364 11,056 10,522 8,563 8,447 Net income $ 26,027 $ 26,421 $ 26,145 $ 21,480 $ 21,194 Earnings per share Basic $ 1.76 $ 1.80 $ 1.76 $ 1.44 $ 1.42 Diluted $ 1.74 $ 1.80 $ 1.76 $ 1.44 $ 1.42 Ratios for the period: Return on average assets 1.75 % 1.72 % 1.80 % 1.58 % 1.65 % Return on beginning equity 17.99 % 18.65 % 18.56 % 15.98 % 16.36 % Net interest margin (Fully-taxable equivalent) 3.42 % 3.28 % 3.36 % 3.25 % 3.61 % Noninterest expense to average assets 1.08 % 0.97 % 1.06 % 1.10 % 1.22 % Efficiency ratio 30.89 % 28.82 % 30.41 % 33.25 % 33.52 % Net charge-offs (recoveries) to average loans (annualized) 0.11 % 0.03 % 0.10 % 0.12 % -0.01 % Ratios as of period end: Tier 1 leverage capital ratio 9.92 % 9.54 % 9.64 % 10.07 % 10.26 % Common equity tier 1 risk-based capital ratio 11.20 % 11.26 % 11.19 % 11.28 % 11.34 % Tier 1 risk-based capital ratio 11.20 % 11.26 % 11.19 % 11.28 % 11.34 % Total risk-based capital ratio 15.12 % 15.37 % 15.47 % 15.61 % 14.73 % Allowances for credit losses to loans at end of period 1.27 % 1.36 % 1.41 % 1.49 % 1.56 % Allowance for credit losses to non-performing loans 27.15x 4.05x 2.93x 2.91x 2.95x Average balances: Total securities $ 455,899 $ 470,811 $ 401,641 $ 269,000 $ 242,200 Total loans 4,367,095 4,218,699 4,156,289 4,130,190 4,044,800 Total earning assets 5,938,519 5,984,055 5,659,678 5,364,598 5,102,291 Total assets 6,044,155 6,079,934 5,760,056 5,467,678 5,200,079 Total time certificate of deposits 1,869,654 1,915,116 1,959,514 1,893,247 1,820,461 Total interest bearing deposits 3,947,616 3,945,275 3,783,704 3,704,771 3,531,358 Total deposits 5,215,810 5,277,507 4,971,607 4,724,104 4,486,399 Total interest bearing liabilities 4,095,399 4,093,002 3,931,375 3,815,964 3,630,705 Total equity 597,214 576,495 569,624 553,561 538,282 PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) As of March 31, December 31, September 30, June 30, March 31, 2022 2021 2021 2021 2021 Unaudited quarterly statement of financial position data: Assets: Cash and cash equivalents $ 985,162 $ 1,050,610 $ 1,082,634 $ 896,474 $ 943,126 Securities held-to-maturity, at amortized cost 13,496 13,962 15,294 15,749 6,039 Securities available-for-sale, at fair value 430,280 451,911 461,356 278,460 228,635 Loans: Real estate – Mortgage: Real estate—Residential $ 531,957 $ 536,286 $ 540,725 $ 558,147 $ 541,313 Real estate—Commercial 2,375,519 2,267,063 2,093,692 2,019,995 1,925,554 Total Real Estate – Mortgage 2,907,476 2,803,349 2,634,417 2,578,142 2,466,867 Real estate – Construction: R/E Construction — Residential 141,218 130,842 122,382 120,363 123,302 R/E Construction — Commercial 209,726 202,482 213,833 224,323 229,933 Total real estate construction loans 350,944 333,324 336,215 344,686 353,235 Commercial and industrial 1,300,478 1,245,734 1,286,995 1,259,668 1,248,550 PPP 32,554 42,467 63,897 95,765 95,434 Consumer and others 115 118 6 143 155 Gross loans 4,591,567 4,424,992 4,321,529 4,278,403 4,164,241 Allowance for credit losses on loans (58,496 ) (59,969 ) (61,135 ) (63,635 ) (64,883 ) Net deferred loan fees (8,573 ) (6,316 ) (5,498 ) (5,329 ) (4,872 ) Net loans $ 4,524,498 $ 4,358,707 $ 4,254,896 $ 4,209,439 $ 4,094,486 Other real estate owned and repossessed assets $ 15,547 $ - $ - $ - $ - Investment in affordable housing partnerships 56,946 59,018 53,399 55,452 59,824 Federal Home Loan Bank stock, at cost 15,000 15,000 15,000 15,000 15,000 Other assets 101,427 97,095 97,261 105,334 100,894 Total assets $ 6,142,356 $ 6,046,303 $ 5,979,840 $ 5,575,908 $ 5,448,004 Liabilities: Deposits: Demand $ 1,251,613 $ 1,305,692 $ 1,349,114 $ 1,063,472 $ 1,026,260 Interest-bearing demand 2,159,178 2,032,819 1,861,334 1,774,668 1,751,951 Savings 39,946 37,839 33,417 32,560 37,551 Time certificates of $250,000 or more 924,317 934,444 959,826 930,976 927,043 Other time certificates 934,615 914,717 990,228 994,630 979,694 Total deposits $ 5,309,669 $ 5,225,511 $ 5,193,919 $ 4,796,306 $ 4,722,499 Acceptances outstanding $ 8,222 $ 10,188 $ 7,697 $ 7,797 $ 9,670 Subordinated debt issuance, net 147,818 147,758 147,699 147,787 99,365 Commitments to fund investment in affordable housing partnerships 22,606 22,606 17,900 19,197 27,918 Other liabilities 58,756 53,522 50,604 45,852 49,283 Total liabilities $ 5,547,071 $ 5,459,585 $ 5,417,819 $ 5,016,939 $ 4,908,735 Equity: Net common stock, no par value $ 209,065 $ 208,840 $ 203,844 $ 219,958 $ 218,593 Retained earnings 392,610 372,952 352,843 332,276 316,481 Accumulated other comprehensive income (6,390 ) 4,926 5,334 6,735 4,195 Total shareholders' equity $ 595,285 $ 586,718 $ 562,021 $ 558,969 $ 539,269 Total liabilities and shareholders' equity $ 6,142,356 $ 6,046,303 $ 5,979,840 $ 5,575,908 $ 5,448,004 PREFERRED BANK Quarter-to-Date Average Balances, Yield And Rates (Unaudited) Three months ended March 31, Three months ended December 31, Three months ended March 31, 2022 2021 2021 Interest Average Interest Average Interest Average Average Income or Yield/ Average Income or Yield/ Average Income or Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate ASSETS (Dollars in thousands) Interest-earning assets: Loans (1,2) $ 4,367,095 52,119 4.84 % $ 4,218,699 $ 51,906 4.88 % 4,044,823 $ 49,859 5.00 % Investment securities (3) 455,899 2,224 1.98 % 470,811 2,228 1.88 % 242,200 1,884 3.16 % Federal funds sold 20,122 19 0.38 % 20,380 18 0.36 % 21,474 24 0.45 % Other earning assets 1,095,403 770 0.29 % 1,274,165 752 0.23 % 793,794 493 0.25 % Total interest-earning assets 5,938,519 55,132 3.77 % 5,984,055 54,904 3.64 % 5,102,291 52,260 4.15 % Deferred loan fees, net (6,322 ) (5,530 ) (4,344 ) Allowance for credit losses on loans (59,951 ) (61,123 ) (63,450 ) Noninterest earning assets: Cash and due from banks 11,589 11,933 9,923 Bank furniture and fixtures 10,440 10,810 11,772 Right of use assets 21,754 21,150 16,847 Other assets 128,126 118,639 127,040 Total assets $ 6,044,155 $ 6,079,934 $ 5,200,079 LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Deposits: Interest-bearing demand and savings 2,077,962 $ 1,450 0.28 % 2,030,159 $ 1,528 0.30 % $ 1,710,897 $ 1,456 0.35 % TCD $250K or more 929,170 1,027 0.45 % 942,201 1,151 0.48 % 919,155 1,918 0.85 % Other time certificates 940,484 1,190 0.51 % 972,915 1,370 0.56 % 901,306 1,909 0.86 % Total interest-bearing deposits 3,947,616 3,667 0.38 % 3,945,275 4,049 0.41 % 3,531,358 5,283 0.61 % Short-term borrowings - - 0.00 % 3 0 0.22 % - - 0.00 % Subordinated debt, net 147,783 1,325 3.64 % 147,724 1,325 3.56 % 99,347 1,531 6.25 % Total interest-bearing liabilities 4,095,399 4,992 0.49 % 4,093,002 5,374 0.52 % 3,630,705 6,814 0.76 % Non-interest bearing liabilities: Demand deposits 1,268,194 1,332,232 955,041 Lease Liability 22,463 22,298 19,289 Other liabilities 60,885 55,907 56,762 Total liabilities 5,446,941 5,503,439 4,661,797 Shareholders’ equity 597,214 576,495 538,282 Total liabilities and shareholders’ equity $ 6,044,155 $ 6,079,934 $ 5,200,079 Net interest income $ 50,140 $ 49,530 $ 45,446 Net interest spread 3.27 % 3.12 % 3.39 % Net interest margin 3.42 % 3.28 % 3.61 % Cost of Deposits: Noninterest bearing demand deposits $ 1,268,194 $ 1,332,232 $ 955,041 Interest bearing deposits 3,947,616 3,667 0.38 % 3,945,275 4,049 0.41 % 3,531,358 5,283 0.61 % Total Deposits $ 5,215,810 $ 3,667 0.29 % $ 5,277,507 $ 4,049 0.30 % $ 4,486,399 $ 5,283 0.48 % (1) Includes non-accrual loans and loans held for sale (2) Net loan fee income of $765,000, $1.1 million and $539,000 for the quarter ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively, are included in the yield computations (3) Yields on securities have been adjusted to a tax-equivalent basis Preferred Bank Loan and Credit Quality Information Allowance For Credit Losses History Quarter Ended Year ended March 31, 2022 December 31, 2021 (Dollars in 000's) Allowance For Credit Losses Balance at Beginning of Period $ 59,969 $ 63,426 Charge-Offs Commercial & Industrial 1,222 1,697 Mini-perm Real Estate 1 817 Total Charge-Offs 1,223 2,514 Recoveries Commercial & Industrial - 57 Total Recoveries - 57 Net Charge-Offs 1,223 2,457 Reversal of Provision for Credit Losses: (250 ) (1,000 ) Balance at End of Period $ 58,496 $ 59,969 Average Loans Held for Investment $ 4,367,095 $ 4,138,023 Loans Held for Investment at End of Period $ 4,591,567 $ 4,424,992 Net Charge-Offs (Recoveries) to Average Loans 0.11 % 0.06 % Allowances for Credit Losses to Loans at End of Period 1.27 % 1.36 %
1 This is a non-GAAP measure and linking to the reconciliation on page 5.
