Preferred Bank Announces $77 Million Capital Raise in Private Transaction

LOS ANGELES, June 21 /PRNewswire-FirstCall/ -- Preferred Bank (Nasdaq: PFBC) (the "Company") today reported a successful $77 million capital raise through a private placement of Series A Mandatorily Convertible Non-Cumulative Non-Voting Perpetual Preferred Stock ("Series A Preferred Stock").  In connection with the sale of the Series A Preferred Stock, the Company entered into a subscription agreement with selected institutional investors, directors, executive officers and certain other accredited investors. The proceeds from this private placement will be used for general corporate purposes and to meet the capital requirements of the Consent Order issued to the Company by the California Department of Financial Institutions and the Federal Deposit Insurance Corporation.  Sandler O'Neill + Partners, L.P. served as sole placement agent in this private placement.

The Company sold 77,000 shares of Series A Preferred Stock to the investors in the private placement at a price of $1,000 per share ("Series A Share Price"). The Series A Preferred Stock will automatically convert into shares of the Company's common stock following receipt of the requisite shareholder approvals for the conversion from its common shareholders (under applicable NASDAQ listing rules) and from the holders of the Series A Preferred Stock.  The Company intends to promptly hold a shareholders' meeting to approve the issuance of the common stock upon conversion of the Series A Preferred Stock.  The conversion ratio for each share of Series A Preferred Stock will be equal to the quotient obtained by dividing the Series A Share Price by the conversion price, which is initially set at $1.50. As such, each share of Series A Preferred Stock will initially be convertible into approximately 666.67 shares of the Company's common stock. The conversion price is subject to possible adjustments in the future under certain circumstances.

"We are extremely pleased with the level of interest in this transaction both by the institutional investor community and by our friends. We were able to raise more than half of the funds in this transaction from directors and officers of the Bank and through the Bank's network of friends and customers. Our initial goal was to raise $70 million, but due to the overwhelming response from investors and our desire to maintain a strong capital position, we decided to increase the size. This transaction puts our capital ratios well beyond those required by our Consent Order and will allow us to continue the significant progress we have made in implementing our business plan and improving asset quality," commented Li Yu, Chairman and CEO of Preferred Bank.

About Preferred Bank

Preferred Bank is one of the largest independent commercial banks in California focusing on the Chinese-American market. Preferred Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation to the maximum extent permitted by law.  Preferred Bank conducts its banking business from its main office in Los Angeles, California, and through nine full-service branch banking offices in Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Anaheim and Pico Rivera, California. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers.  Preferred 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.  

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 Preferred Bank's future financial and operating results, Preferred 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 Preferred 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 Preferred Bank's results to differ materially from those described in the forward-looking statements can be found in Preferred Bank's 2009 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 Preferred 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 Preferred Bank's website at www.preferredbank.com.

SOURCE Preferred Bank

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