Preferred Bank Reports Preliminary Fourth Quarter Results
LOS ANGELES, Jan. 27 /PRNewswire-FirstCall/ -- Preferred Bank (Nasdaq: PFBC), an independent commercial bank focusing on the Chinese-American and diversified Southern California mainstream market, today reported preliminary results for the quarter and year ended December 31, 2009. Preferred Bank reported net income of $803,000 or $0.05 per diluted share for the quarter compared to a net loss of $5.0 million or $0.51 per diluted share for the fourth quarter of 2008 and compared to a net loss of $37.0 million or $3.38 per diluted share for the third quarter of 2009. (The results for the third quarter of 2009 reflect those amounts intended to be included in the 3rd quarter 10-Q/A which is expected to be filed soon).
- Highlights from the quarter include:
- Net income of $803,000
- OREO sales resulted in net gains of $357,000
- Other-than-temporary-impairment charge (credit-related) of $684,000
- Continued decrease of exposure in housing, construction and land development loans as most construction loans are now near completion.
- Loans 30-89 days past due continue to decrease; now stand at $13.4 million from $28.5 million as of September 30, 2009.
Li Yu, Chairman, President and CEO commented, "We are pleased to report net income for the fourth quarter 2009 of $803,000. Our operating income although relatively modest by past standards, is truly precious in the current environment.
"During the quarter, we noted some good signs of credit quality improvements. The most important of all is the reduction of loans that are 30 – 89 days delinquent which went from $87 million at June 30, 2009 to $28 million at September 30, 2009 and is now further reduced to $13 million at December 31, 2009. Improvement in this area generally means smaller amount of migration of loans into non-performing status as well as reduced future loan loss provisions.
"As of December 31, 2009, approximately $64 million of our housing construction loans were now on the market for sale by our borrowers. Escrow prices of units or properties were above the carrying amount of our loans. We therefore expect significant reduction of construction loans in the next two quarters.
"During the quarter, appraisal reports received also signal that the market value of underlying collateral has begun to stabilize. In a few cases, appraised values actually improved slightly. More activities were also noted in the liquidation of troubled assets. During the quarter, we disposed a total of $18.8 million in loans and OREO with several other assets currently in the sales negotiation stage.
"The year 2009 as a whole was very disappointing and we have many challenges awaiting us in 2010. We hope the credit trend continues to stabilize and improve. With that, we will be optimistic with our asset quality and operating results as well."
Operating Results for the Quarter
Net Interest Income and Net Interest Margin. Net interest income before provision for loan and lease losses decreased to $8.8 million, compared to $11.2 million for the fourth quarter of 2008. The 21.3% decrease was due primarily to lower loan totals as well as a significant increase in nonaccrual loans in 2009. The Company's taxable equivalent net interest margin was 2.58% for the fourth quarter of 2009, down from the 3.31% achieved in the fourth quarter of 2008 but up from the 2.35% for the third quarter of 2009.
Noninterest Income. For the fourth quarter of 2009 noninterest income was $1,118,000 compared with $2,401,000 for the same quarter last year and $3,355,000 for the third quarter of 2009. The decrease in noninterest income this quarter compared to the fourth quarter of 2008 was due to the receipt of $1.6 million in December 2008 in life insurance proceeds due to the passing of a former Bank executive in November 2008. The difference in non-interest income for the fourth quarter of 2009 to the third quarter of 2009 was due to gain on sales of securities of $2,597,000 in the third quarter of 2009.
Noninterest Expense. Total noninterest expense was $8.7 million for the fourth quarter of 2009, compared to $11.9 million for the same period in 2008 and $26.1 million for the third quarter of 2009. Salaries and benefits decreased slightly by 6.7% from the fourth quarter of 2008 due primarily to staff reductions. Occupancy expense increased by $245,000 over the same period in 2008 due to a one-time credit to rent expense booked in the fourth quarter of 2008. Professional services expense increased by $129,000 due primarily to an increase in legal costs associated with non-performing loans and OREO. Credit-related other-than-temporary-impairment charges were $684,000 for the fourth quarter of 2009 and were related to two trust preferred collateralized debt obligations ("CDO's"). This compares to $4.5 million in the same period of 2008 and $587,000 in the third quarter of 2009. OREO related expenses totaled $2.0 million for the fourth quarter of 2009 (consisting of $95,000 in valuation charges and over $1.1 million in property tax expense) and were essentially flat compared to the $2.0 million in OREO expense posted in the fourth quarter of 2008 and were down significantly compared to the $18.1 million posted in the third quarter of 2009. Other expenses were $1.8 million in the fourth quarter of 2009, an increase of $580,000 over the same period in 2008 and a decrease of $1,485,000 from the third quarter of 2009. The decrease mainly resulted from additional FDIC premium expense recorded in the third quarter of 2009 which related to prior periods.
Balance Sheet Summary
Total gross loans and leases at December 31, 2009 were $1.05 billion, down from $1.23 billion as of December 31, 2008. Comparing balances as of December 31, 2008 to December 31, 2009: Residential real estate loans decreased from $177.9 million to $164.9 million; total land loans decreased from $127.0 million to $74.8 million; commercial real estate loans increased from $287.8 million to $325.7 million; for-sale housing construction loans decreased from $191.1 million to $147.9 million; other construction loans decreased from $99.7 million to $58.3 million and total commercial loans decreased from $347.7 million to $277.6 million.
Total deposits as of December 31, 2009 were $1.16 billion, a decrease of $97 million from the $1.26 billion at December 31, 2008. As of December 31, 2009 compared to December 31, 2008; noninterest-bearing demand deposits increased by $8.1 million or 4.1%, interest-bearing demand and savings deposits decreased by $25.9 million or 13.7% and time deposits decreased by $79.1 million or 9.1%. Total assets were $1.33 billion, a $148.2 million or 10.0% decrease from the total of $1.48 billion as of December 31, 2008. Total borrowings decreased from $58 million as of December 31, 2008 to $49 million as of December 31, 2009. The net loan-to-deposit ratio as of December 31, 2009 was 86.4% compared to 95.8% as of December 31, 2008.
Asset Quality
As of December 31, 2009 total nonaccrual loans were $141.8 million compared to $66.6 million as of December 31, 2008 and $169.9 million as of September 30, 2009. Total loans 90 days past due and still accruing were $7.6 million compared to $0 as of December 31, 2008 and $263,000 as of September 30, 2009. Total net charge-offs (recoveries) for the fourth quarter of 2009 were ($3.6 million) compared to $34.8 million for the third quarter of 2009. The net recovery in the fourth quarter of 2009 was due to a legal settlement with another financial institution on a participation loan that had previously been charged off. Based on a detailed analysis of all impaired and classified loans, as well as an analysis of other qualitative factors, the Bank did not record a provision for loan losses for the fourth quarter of 2009 compared to $14.6 million in the fourth quarter of 2008 and $48.3 million for the third quarter of 2009. The allowance for loan loss at December 31, 2009 was $47.7 million or 4.54% of total loans compared to $26.9 million or 2.19% of total loans at December 31, 2008.
Nonaccrual Loans
Nonaccrual Loan Migration – Q4 2009
($in millions) Previously Examination
Reported Results Total
-----------------------------------------------------------------------
As of 9/30/09 $95.5 * $75.4 $170.9
Loans Resolved 51.5 22.8 74.3
Additional Nonaccruals 17.8 25.7 43.5
---------------------------------------------
As of 12/31/09 $61.8 $78.3 $141.8
---------------------------------------------
* 9/30/09 amount shown net of $12.7 million in examination charge-offs,
reported amount was $108.2 million
Previously Reported Nonaccruals
As noted in the table above, during the fourth quarter of 2009, management resolved sixteen nonaccrual loan relationships amounting to $51.5 million or 54% of the nonaccrual amount previously reported as of September 30, 2009. However, management also placed an additional seven loan relationships totaling $18 million on nonaccrual, resulting in a net figure of $62 million as of December 31, 2009. Management expects the resolution of credits amounting to between $25 million to $40 million in the first quarter of 2010, with a majority of the remaining nonaccruals to be resolved in the second and third quarters of 2010.
Although the Bank will report nonaccrual loans totaling $141.8 million, as outlined in the table below, many of the loans reported as nonaccrual are actually current loans. In the case of five loan relationships amounting to $48.7 million, the customer is making payments out of pocket. The $141.8 million figure also includes three construction projects amounting to $16.8 million with monthly payments coming from a Bank-funded interest reserve. In each case, the project is progressing in an adequate manner; however, recent appraisals indicate a higher than normal loan to value ratio. Given the recent evidence of stabilization of real estate values, in each case we expect the future net sales proceeds to be more than sufficient to fully repay all contractually due principal and interest.
Loans Past Due 30-89 Days
Loans 30-89 days past due at December 31,2009 were $13.4 million, down 53% from the total of $28.5 million as of September 30, 2009.
Real Estate Owned
Total OREO increased to $59.9 million compared to $31.5 million as of September 30, 2009 and $35.1 million as of December 31, 2008. During the fourth quarter of 2009, the Bank sold 5 OREO properties with a book value of $7.3 million.
NPA Summary Table
90+ Still
($in thousands) 30-89 Days Accruing Nonaccrual OREO
# $ # $ # $ # $
------------------------------------------------------
Land-Residential - $- - $- 4 $25,389 11 $27,731
Land Commercial - - - - 4 14,727 3 7,683
Construction:
Residential - - - - 9 65,755 2 933
Commercial 1 8,759 - - 2 5,138 1 1,611
R/E-Housing for
Sale 1 1,095 - - - - 1 1,073
CRE-Commercial 2 3,177 2 7,570 9 28,826 2 20,885
C&I/Trade Finance 1 359 - - 6 1,939 - -
------------------------------------------------------
Totals 5 $13,390 2 $7,570 34 $141,774 20 $59,916
------------------------------------------------------
Total nonaccrual
loans that are
paid current (8) (65,500)
------------------------------------------------------
Delinquent
Nonaccruals 26 $76,274
------------------------------------------------------
Capitalization
Due to the fact that work is ongoing relative to the Bank's deferred tax asset and tax receivable calculations, we do not yet have final capital ratios for December 31, 2009. These will be published as soon as they are complete. The Bank expects to be 'adequately capitalized' as of December 31, 2009 but no assurances can be made at this time.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank's fourth quarter 2009 financial results will be held today, January 27, at 5:00 p.m. Eastern / 2:00 p.m. Pacific. Interested participants and investors may access the conference call by dialing (888) 561-1799 (domestic) or (480) 629-9869 (international). There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's web site at www.preferredbank.com. Web participants are encouraged to go to the web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
Preferred Bank's Chairman, President and CEO Li Yu and Chief Financial Officer Edward Czajka 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 web site. A replay of the call will be available at (800) 406-7325 (domestic) or (303) 590-3030 (international) through February 3, 2010; the pass code is 4204732.
About Preferred Bank
Preferred Bank is one of the largest independent commercial banks in California focusing on the Chinese-American market. 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 Company conducts its banking business from its main office in Los Angeles, California, and through eleven full-service branch banking offices in Alhambra, Century City, Chino Hills, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Santa Monica, Anaheim and Pico Rivera, 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. Preferred Bank continues to benefit from the significant migration to Southern California of ethnic Chinese from China and other areas of East Asia. While its business is not solely dependent on the Chinese-American market, it represents an important element of the bank's operating strategy, especially for its branch network and deposit products and services. Preferred Bank believes it is well positioned to compete effectively with the smaller Chinese-American community banks, the larger commercial banks and other major banks operating in Southern California by offering a high degree of personal service and responsiveness, experienced multi-lingual staff and substantial lending limits.
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 2008 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.
For Further Information: |
||
AT THE COMPANY: |
AT FINANCIAL RELATIONS BOARD: |
|
Edward J. Czajka |
Lasse Glassen |
|
Executive Vice President |
General Information |
|
Chief Financial Officer |
(213) 486-6546 |
|
(213) 891-1188 |
||
Financial Tables to Follow
PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net (loss) income per share and shares)
For the Three Months Ended
-----------------------------------------
December 31, September 30, December 31,
2009 2009 2008
------------ ------------- ------------
Interest income:
Loans, including fees $12,118 $10,773 $17,040
Investment securities 1,296 1,338 1,610
Fed funds sold 3 - 39
---------- ---------- ---------
Total interest income 13,417 12,111 18,689
---------- ---------- ---------
Interest expense:
Interest-bearing demand $195 211 255
Savings 115 149 252
Time certificates of $100,000
or more 1,696 2,408 3,504
Other time certificates 2,236 1,481 2,878
Fed funds purchased - - 8
FHLB borrowings 336 517 632
Senior debt 189 190 -
---------- ---------- ---------
Total interest expense $4,767 4,956 7,529
---------- ---------- ---------
Net interest income 8,650 7,155 11,160
Provision for loan losses - 48,250 14,600
---------- ---------- ---------
Net interest (loss) income
after provision for
loan losses 8,650 (41,095) (3,440)
Noninterest income:
Fees & service charges on
deposit accounts 545 531 467
Trade finance income 78 72 112
BOLI income 81 80 92
Net gain (loss) on sale of
investment securities 85 2,597 -
Other income 329 75 1,731
---------- ---------- ---------
Total noninterest income 1,118 3,355 2,402
Noninterest expense:
Salary and employee benefits 1,868 1,816 2,060
Net occupancy expense 901 903 655
Business development and
promotion expense 10 98 196
Professional services 1,049 1,030 921
Office supplies and equipment
expense 343 304 362
Total other-than-temporary
impairment losses 684 587 4,472
Portion of loss recognized in
other comprehensive income - - -
Other real estate owned
related expense 1,994 18,098 2,040
Other 1,799 3,284 1,219
---------- ---------- ---------
Total noninterest expense 8,648 26,120 11,925
Loss (income) before
provision for income
taxes 1,120 (63,860) (12,963)
Income tax (benefit) expense 317 (26,844) (7,956)
---------- ---------- ---------
Net (loss) income $803 (37,016) (5,007)
========== ========== =========
Net (loss) income per share -
basic $0.05 $(3.38) $(0.51)
Net (loss) income per share -
diluted $0.05 $(3.38) $(0.51)
Weighted-average common
shares outstanding
Basic 15,767,126 10,935,554 9,755,207
Diluted 15,767,126 10,935,554 9,761,160
PREFERRED BANK
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for net (loss) income per share and shares)
For the Twelve Months Ended
-------------------------------------
December 31, December 31, Change
2009 2008 %
---------- --------- -----
Interest income:
Loans, including fees $53,055 $75,120 -29.4%
Investment securities 5,784 10,743 -46.2%
Fed funds sold 37 96 -61.6%
---------- --------- -----
Total interest income 58,876 85,959 -31.5%
---------- --------- -----
Interest expense:
Interest-bearing demand 842 1,364 -38.3%
Savings 687 1,433 -52.0%
Time certificates of $100,000
or more 10,521 20,047 -47.5%
Other time certificates 8,080 8,349 -3.2%
Fed funds purchased - 533 -100.0%
FHLB borrowings 2,014 2,908 -30.8%
Senior debt 668 - 100.0%
---------- --------- -----
Total interest expense 22,812 34,634 -34.1%
---------- --------- -----
Net interest income 36,064 51,325 -29.7%
Provision for credit losses 70,250 30,560 129.9%
---------- --------- -----
Net interest (loss)
income after provision
for loan losses (34,186) 20,765 -264.6%
Noninterest income:
Fees & service charges on
deposit accounts 2,189 1,764 24.1%
Trade finance income 384 652 -41.0%
BOLI income 318 362 -12.3%
Net gain (loss) on sale of
investment securities 3,142 (11) NM
Other income 643 2,174 -70.4%
---------- --------- -----
Total noninterest income 6,676 4,941 35.1%
---------- --------- -----
Noninterest expense:
Salary and employee benefits 7,629 8,557 -10.9%
Net occupancy expense 3,415 2,822 21.0%
Business development and
promotion expense 201 424 -52.6%
Professional services 4,063 3,023 34.4%
Office supplies and equipment
expense 1,246 1,269 -1.8%
Total other-than-temporary
impairment losses 4,774 12,371 -61.4%
Portion of loss recognized in
other comprehensive income (2,727) - -100.0%
Other real estate owned
related expense 22,546 3,016 NM
Other 8,430 4,112 105.0%
---------- --------- -----
Total noninterest expense 49,577 35,594 39.3%
---------- --------- -----
(Loss) income before
provision for income
taxes (77,087) (9,888) NM
Income tax (benefit) expense (33,754) (4,876) NM
---------- --------- -----
Net (loss) income $(43,332) $(5,012) NM
========== ========= =====
Net (loss) income per share -
basic $(3.73) $(0.51) NM
Net (loss) income per share -
diluted $(3.73) $(0.51) NM
Weighted-average common shares
outstanding
Basic 11,601,685 9,790,858 18.5%
Diluted 11,601,685 9,810,391 18.3%
PREFERRED BANK
Condensed Consolidated Statements of Financial Condition
(unaudited)
(in thousands)
December 31, December 31,
2009 2008
---------- ----------
Assets
Cash and due from banks $14,071 $19,386
Fed funds sold 54,000 50,200
---------- ----------
Cash and cash equivalents 68,071 69,586
Securities available-for-sale, at fair
value 114,464 104,406
Loans and leases 1,049,145 1,231,232
Less allowance for loan and lease losses (47,658) (26,935)
Less net deferred loan fees 588 (167)
---------- ----------
Net loans and leases 1,002,075 1,204,130
---------- ----------
Loans held for sale, at lower of cost or
market - -
Other real estate owned 59,916 35,127
Customers' liability on acceptances - 786
Bank furniture and fixtures, net 6,325 7,157
Bank-owned life insurance 7,304 8,454
Accrued interest receivable 5,582 7,807
Federal Home Loan Bank stock 4,996 4,996
Deferred tax assets 32,435 25,903
Other asset 33,558 14,879
---------- ----------
Total assets $1,334,726 $1,483,231
========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand $204,545 $196,408
Interest-bearing demand 119,168 126,251
Savings 44,033 62,883
Time certificates of $100,000 or more 328,597 464,085
Other time certificates 464,069 407,696
---------- ----------
Total deposits $1,160,412 $1,257,323
Acceptances outstanding - 786
Advances from Federal Home Loan Bank 23,000 58,000
Senior debt issuance 25,996 -
Fed funds purchased - -
Accrued interest payable 2,949 5,446
Other liabilities 8,609 24,185
---------- ----------
Total liabilities 1,220,966 1,345,740
---------- ----------
Commitments and contingencies
Shareholders' equity:
Preferred stock. Authorized 5,000,000
shares; no share issued and
outstanding at December 31, 2009
and December 31, 2008 - -
Common stock, no par value. Authorized
100,000,000 shares; issued
and outstanding 15,767,126 and
9,755,207 shares at December 31,
2009, December 31, 2008, respectively 89,038 72,009
Treasury stock (19,115) (19,115)
Additional paid-in-capital 6,291 4,582
Retained earnings 42,469 84,996
Accumulated other comprehensive loss:
Non-credit portion of loss recognized,
net of tax (1,580) -
Unrealized loss on securities
available-for-sale, net of tax (3,343) (4,981)
---------- ----------
Total shareholders' equity 113,760 137,491
---------- ----------
Total liabilities and shareholders'
equity $1,334,726 $1,483,231
========== ==========
PREFERRED BANK
Selected Consolidated Financial Information
(unaudited)
(in thousands, except for ratios)
For the Three Months Ended
------------------------------------------------------
December 30, September 30, June 30, December 31,
2009 2009 2009 2008
------------ ------------- -------- ------------
For the period:
Return on
average assets 0.22% -10.47% -1.62% -1.38%
Return on
average equity 2.74% -100.78% -17.09% -13.70%
Net interest
margin (Fully-
taxable
equivalent) 2.58% 2.35% 3.33% 3.31%
Noninterest
expense to
average assets 2.38% 7.39% 2.30% 3.28%
Efficiency
ratio 88.54% 248.52% 71.65% 87.93%
Net charge-offs
(recoveries) to
average loans
(annualized) -1.32% 12.13% 5.27% 0.95%
Period end:
Tier 1 leverage
capital ratio TBD TBD 9.46% 9.76%
Tier 1 risk-
based capital
ratio TBD TBD 10.86% 10.39%
Total risk-based
capital ratio TBD TBD 12.13% 11.65%
Allowances for
credit losses to
loans and leases
at end of period
** 4.54% 4.12% 2.67% 2.19%
Allowance for
credit losses to
non-performing
loans and leases 31.83% 23.78% 37.85% 40.33%
Average balances:
Total loans and
leases* $1,089,820 $1,139,149 $1,197,274 $1,225,986
Earning assets $1,366,020 $1,245,234 $1,300,528 $1,367,862
Total assets $1,444,273 $1,403,177 $1,433,340 $1,447,892
Total deposits $1,257,229 $1,177,855 $1,201,475 $1,205,901
Period end:
Loans and Leases:**
Real estate -
Single and multi-
family
residential $164,906 $169,045 $191,021 $177,890
Real estate -
Land for
housing 36,515 49,469 65,658 74,816
Real estate -
Land for income
properties 38,254 38,050 41,999 52,232
Real estate -
Commercial 325,734 337,584 299,165 287,759
Real estate -
For sale housing
construction 147,869 130,772 141,196 191,073
Real estate -
Other
construction 58,282 69,011 113,122 99,730
Commercial and
industrial 228,960 234,626 239,420 273,890
Trade finance
and other 48,625 40,006 54,514 73,842
---------- ---------- ---------- ----------
Total gross
loans and
leases 1,049,145 1,068,563 1,146,095 1,231,232
Allowance for
loan and lease
losses (47,658) (44,041) (30,611) (26,935)
Net deferred
loan fees 588 700 330 (167)
---------- ---------- ---------- ----------
Net loans and
leases $1,002,075 $1,025,222 $1,115,814 $1,204,130
========== ========== ========== ==========
Deposits:
Noninterest-
bearing demand $204,545 $207,957 $195,146 $196,408
Interest-
bearing demand
and savings 163,201 171,762 161,676 189,134
---------- ---------- ---------- ----------
Total core
deposits 367,746 379,719 356,822 385,542
Time deposits 792,666 816,153 783,037 871,781
---------- ---------- ---------- ----------
Total
deposits $1,160,412 $1,195,872 $1,139,859 $1,257,323
========== ========== ========== ==========
* Loans held for sale are included
** Loans held for sale are excluded
Preferred Bank
Loan and Credit Quality Information
Allowance For Credit Losses & Loss History
Year Ended Year Ended
December 31, 2009 December 31, 2008
----------------- -----------------
(Dollars in 000's)
Allowance For Credit Losses
Balance at Beginning of Period $26,935 $14,896
Charge-Offs
Commercial & Industrial 9,215 4,686
Mini-perm Real Estate 10,138 688
Construction - Residential 16,803 8,636
Construction - Commercial 3,526 -
Land - Residential 13,771 4,518
Land - Commercial 410 -
Total Charge-Offs 53,863 18,528
Recoveries
Commercial & Industrial 3,924 -
Mini-perm Real Estate 15 -
Construction - Residential 397 -
Construction - Commercial - -
Land - Residential - 7
Land - Commercial - -
Total Recoveries 4,336 7
Net Loan Charge-Offs 49,527 18,521
Provision for Credit Losses 70,250 30,560
---------- ----------
Balance at End of Period $47,658 $26,935
Average Loans and Leases* $1,164,538 $1,220,348
Loans and Leases at end of Period* $1,049,145 $1,231,232
Net Charge-Offs to Average Loans
and Leases 4.25% 1.52%
Allowances for credit losses to
loans and leases at end of period
** 4.54% 2.19%
30-89 Days 90+ Still
Asset Quality Past Due Accruing Non-Accrual OREO
# $ # $ # $ # $
-----------------------------------------------------------
Commercial &
Industrial 1 $359,000 - $- 6 $1,939,000 - $-
Mini-perm
Real
Estate 3 4,272,000 2 7,570,000 9 28,826,000 2 21,958,000
Construction -
Commercial 1 8,759,000 - - 2 5,138,000 1 1,611,000
Construction
- Residential - - - - 9 65,755,000 1 933,000
Land -
Residential - - - - 4 25,389,000 12 27,731,000
Land -
Commercial - - - - 4 14,727,000 3 7,683,000
-----------------------------------------------------------
Total 5 $13,390,000 2 $7,570,000 34 $141,774,000 19 $59,916,000
===========================================================
Preferred Bank
Loan and Credit Quality Information
Commercial Real Estate Portfolio *
(Dollars in Thousands)
# Loans # Loans Avg
LTV @ DCR @ Over Over Loan
$ Size Origination Origination $10mm $5mm Size
------------------------------------------------------------
Office
Building $56,476 51.7% 1.87 1 1 $1,614
Retail 113,435 60.3% 1.47 3 3 $2,315
Industrial 61,785 62.6% 1.39 - 2 $1,626
Hospitality 32,819 59.1% 1.54 - 2 $3,647
Medical
Office 27,616 62.6% 1.22 1 - $5,523
Hospital 15,370 50.1% 2.43 - 2 $5,123
Other Use 18,233 56.8% 1.68 - 1 $2,026
------------------------------------------------------------
$325,734 58.6% 1.55 5 11 2,201
SOURCE Preferred Bank
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