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Preferred Bank Reports Quarterly Results
Source: Nasdaq GlobeNewswire / 23 Apr 2024 08:00:30 America/New_York
LOS ANGELES, April 23, 2024 (GLOBE NEWSWIRE) -- Preferred Bank (NASDAQ: PFBC), one of the larger independent California banks, today reported results for the quarter ended March 31, 2024. Preferred Bank (“the Bank”) reported net income of $33.5 million or $2.44 per diluted share for the first quarter of 2024. This represents a decrease in net income of $2.4 million or 6.6% from the prior quarter and down by $4.6 million from the same quarter last year. Despite the decrease in net income, Preferred Bank continues to deliver top-of-class profitability metrics and long term shareholder returns.
Highlights for the Quarter:
- Return on average assets was 2.00%
- Return on beginning equity of 19.36%
- Net interest margin was 4.19%
- Total deposits increased by $92 million or 1.62% for the quarter
- Total loans increased $52 million or 1.0% for the quarter
- Efficiency ratio was 28.0%
Li Yu, Chairman and CEO, commented, “We are pleased to report first quarter 2024 net income of $33.5 million or $2.44 per diluted share. For the quarter, loans grew $52 million and total deposits increased $92 million from December 31, 2023, which equates to annual growth rates of 4.0% and 6.5%, respectively. The Bank’s net interest margin for the quarter was 4.19% which was better than expected. This compares to a margin of 4.24% for the previous quarter and the slight decrease was primarily the result of higher deposit costs.
“At March 31, 2024 criticized loans were $86.6 million, an increase of $3.7 million from the $83.0 million as of December 31, 2023. Non-accrual loans decreased from $28.7 million at December 31, 2023 to $18.3 million at March 31, 2024. Charge-offs for the quarter were $3.4 million which were on two loans that had been previously identified as having loss content and fully reserved for. The Bank recorded a first quarter provision of $4.4 million. Allowance for loan loss reserve now stands at 1.49% of total loans.
“During the first quarter, we repurchased 256,986 shares of our common stock for a total consideration of $18.2 million.
“Our Bank opened a new Orange County, California Branch in January. This branch provides complete banking services, staffed with a deposit group and a lending group. As of today, we have signed a lease and are in the process of opening up a loan production office in Silicon Valley, California. We also plan to increase relationship staff in several current operating locations in the ensuing months.
“In view of the current moderately declining interest rate environment, we have made some adjustment to our loan portfolio by reducing the level of rate sensitivity to better balance with our deposit composition. We believe such adjustments will bring long term benefits to our Bank.”
Results of Operations
Net Interest Income and Net Interest Margin. Net interest income before provision for credit losses was $68.5 million for the first quarter of 2024. This was a decrease from the $73.7 million recorded in the same quarter last year and down slightly from the $69.4 million posted in the fourth quarter of 2023. The Bank’s taxable equivalent net interest margin declined by 5 basis points to 4.19%, from 4.24% last quarter. Although the NIM compressed this quarter, it held up much better than anticipated. Comparing to the same quarter last year, which was the Bank’s peak NIM in this cycle, the margin was down by 58 basis points from the 4.77% NIM posted in the first quarter of 2023.
Noninterest Income. For the first quarter of 2024, noninterest income (loss) was $3.1 million compared with ($1.1) million for the same quarter last year and compared to $2.1 million for the fourth quarter of 2023. The increase over the prior quarter was primarily due to a $929,000 loss on sale of approximately $29 million in investment securities in the fourth quarter of 2023. This was done to reposition a part of the portfolio into higher-yielding instruments. In comparing to the same quarter last year; service charges on deposits and LC fee income were both up over last year and gains in loan sales were down. In addition, the Bank incurred a $4.1 million loss last year on the sale of the Bank’s Signature Bank bond with no such loss this year.
Noninterest Expense. Total noninterest expense was $20.0 million for the first quarter of 2024 compared to $17.9 million for the fourth quarter of 2023 and compared to the $18.9 million recorded in the same period last year. Comparing this quarter to the first quarter of last year, the major variances were: professional services was up by $308,000 due to increased legal fees, occupancy expense was up by $237,000 due to our new location and personnel expense increased by $172,000. In comparing the first quarter of 2024 to the prior quarter; personnel expense increased by $1.8 million, occupancy expense was up by $175,000 and OREO expense declined by $159,000. For the quarter ended March 31, 2024, the Bank’s efficiency ratio was 28.0%, off from the 25.0% posted last quarter and off from the 26.0% posted this quarter last year.
Income Taxes. The Bank recorded a provision for income taxes of $13.7 million for the first quarter of 2024. This represents an effective tax rate (“ETR”) of 29.0%, up from the ETR of 28.5% recorded in both comparable periods. 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, 2024 were $5.33 billion, an increase of $52.4 million from the total of $5.27 billion as of December 31, 2023. Total deposits increased to $5.80 billion from the $5.71 billion as of December 31, 2023, an increase of $92.4 million. Total assets were $6.76 billion, an increase of $96.9 million over the total of $6.66 billion as of December 31, 2023.
Asset Quality
As of March 31, 2024, nonaccrual loans declined to $18.3 million, down from the $28.7 million as of December 31, 2023. The decrease was primarily due to the sale of notes of a certain borrower relationship for which the Bank received principal at par. OREO and repossessed assets totaled $16.7 million as of March 31, 2024, no change from December 31, 2023. Criticized loans increased slightly from $83.0 million as of December 31, 2023 to $86.6 million as of March 31, 2024. Total net charge-offs (recoveries) were $3.4 million for the first quarter of 2024 as compared to net recoveries of ($6,000) last quarter and compared to $43,000 for the first quarter last year. Management is acutely aware that commercial real estate is under some pressure given the rise in interest rates over the past year and the work from home dynamic that has impacted office property values. However in reviewing the portfolio, this weakness has yet to appear. We will be vigilant going forward.
Allowance for Credit Losses
The provision for credit losses for the first quarter of 2024 was $4.4 million compared to $3.5 million last quarter and compared to $500,000 in the same quarter last year. The aforementioned charge-offs recorded during the quarter as well as loan growth were the primary drivers of the provision for the quarter. The Bank’s allowance coverage ratio remains unchanged at 1.49% of total loans.
Capitalization
As of March 31, 2024, the Bank’s leverage ratio was 10.80%, the common equity tier 1 capital ratio was 11.50% and the total capital ratio stood at 15.08%. As of December 31, 2023, the Bank’s leverage ratio was 10.85%, the common equity tier 1 ratio was 11.57% and the total capital ratio was 15.18%.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss Preferred Bank’s first quarter 2024 financial results will be held tomorrow, April 23, 2024 at 2:00 p.m. Eastern / 11:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 844-826-3037 (domestic) or 412-317-5182 (international) and referencing “Preferred Bank.” There will also be a live webcast of the call available at the Investor Relations section of Preferred Bank's website at www.preferredbank.com.
Preferred Bank's Chairman and CEO Li Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward J. Czajka, Chief Credit Officer Nick Pi and Deputy Chief Operating Officer Johnny Hsu will discuss Preferred Bank's financial results, business highlights and outlook. After the live webcast, a replay will be available at the Investor Relations section of Preferred Bank's website. A replay of the call will also be available at 877-344-7529 (domestic) or 412-317-0088 (international) through May 7, 2024; the passcode is 9065569.
About Preferred Bank
Preferred Bank is one of the larger independent commercial banks headquartered in California. The Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Bank conducts its banking business from its main office in Los Angeles, California, and through twelve full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine (2), Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)), one branch in Flushing, New York and a branch office in the Houston, Texas suburb of Sugar Land. Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Bank’s future financial and operating results, the Bank's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Bank’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: changes in economic conditions; changes in the California real estate market; the loss of senior management and other employees; natural disasters or recurring energy shortage; changes in interest rates; competition from other financial services companies; ineffective underwriting practices; inadequate allowance for loan and lease losses to cover actual losses; risks inherent in construction lending; adverse economic conditions in Asia; downturn in international trade; inability to attract deposits; inability to raise additional capital when needed or on favorable terms; inability to manage growth; inadequate communications, information, operating and financial control systems, technology from fourth party service providers; the U.S. government’s monetary policies; government regulation; environmental liability with respect to properties to which the bank takes title; and the threat of terrorism. Additional factors that could cause the Bank's results to differ materially from those described in the forward-looking statements can be found in the Bank’s 2023 Annual Report on Form 10-K filed with the Federal Deposit Insurance Corporation which can be found on Preferred Bank’s website. The forward-looking statements in this press release speak only as of the date of the press release, and the Bank assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements. For additional information about Preferred Bank, please visit the Bank’s website at www.preferredbank.com.
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 Financial Tables to Follow
PREFERRED BANK Condensed Consolidated Statements of Operations (unaudited) (in thousands, except for net income per share and shares) For the Quarter Ended March 31, December 31, March 31, 2024 2023 2023 Interest income: Loans, including fees $ 109,980 $ 107,709 $ 95,881 Investment securities 16,257 16,973 12,979 Fed funds sold 283 282 224 Total interest income 126,520 124,964 109,084 Interest expense: Interest-bearing demand 22,290 21,716 17,038 Savings 75 72 39 Time certificates 34,330 32,455 16,593 FHLB borrowings - - 374 Subordinated debt 1,325 1,325 1,325 Total interest expense 58,020 55,568 35,369 Net interest income 68,500 69,396 73,715 Provision for credit losses 4,400 3,500 500 Net interest income after provision for credit losses 64,100 65,896 73,215 Noninterest income: Fees & service charges on deposit accounts 845 857 694 Letters of credit fee income 1,503 1,486 1,324 BOLI income 105 105 101 Net loss on called and sale of investment securities - (929 ) (4,117 ) Net gain on sale of loans 103 205 340 Other income 509 382 592 Total noninterest income 3,065 2,106 (1,066 ) Noninterest expense: Salary and employee benefits 13,900 12,058 13,728 Net occupancy expense 1,711 1,536 1,474 Business development and promotion expense 266 239 105 Professional services 1,457 1,355 1,149 Office supplies and equipment expense 473 391 404 Loss on sale of OREO, valuation allowance and related expense 135 294 72 Other 2,086 2,000 1,968 Total noninterest expense 20,028 17,873 18,900 Income before provision for income taxes 47,137 50,129 53,249 Income tax expense 13,671 14,290 15,176 Net income $ 33,466 $ 35,839 $ 38,073 Income per share available to common shareholders Basic $ 2.48 $ 2.63 $ 2.64 Diluted $ 2.44 $ 2.60 $ 2.61 Weighted-average common shares outstanding Basic 13,508,878 13,617,225 14,430,606 Diluted 13,736,986 13,804,315 14,602,149 Cash dividends per common share $ 0.70 $ 0.70 $ 0.55
PREFERRED BANK Condensed Consolidated Statements of Financial Condition (unaudited) (in thousands) March 31, December 31, 2024 2023 (Unaudited) (Audited) Assets Cash and due from banks $ 916,600 $ 890,852 Fed funds sold 20,000 20,000 Cash and cash equivalents 936,600 910,852 Securities held-to-maturity, at amortized cost 20,904 21,171 Securities available-for-sale, at fair value 333,411 313,842 Loans 5,325,854 5,273,498 Less allowance for credit losses (79,311 ) (78,355 ) Less amortized deferred loan fees, net (10,460 ) (11,079 ) Loans, net 5,236,083 5,184,064 Loans held for sale, at lower of cost or fair value 605 360 Other real estate owned and repossessed assets 16,716 16,716 Customers' liability on acceptances - 315 Bank furniture and fixtures, net 9,962 9,694 Bank-owned life insurance 10,702 10,632 Accrued interest receivable 35,592 33,892 Investment in affordable housing partnerships 62,854 65,276 Federal Home Loan Bank stock, at cost 15,000 15,000 Deferred tax assets 49,389 48,991 Income tax receivable - 2,391 Operating lease right-of-use assets 23,068 22,050 Other assets 5,327 4,030 Total assets $ 6,756,213 $ 6,659,276 Liabilities and Shareholders' Equity Deposits: Noninterest bearing demand deposits $ 709,767 $ 786,995 Interest bearing deposits: 2,159,948 2,075,156 Savings 29,261 29,167 Time certificates of $250,000 or more 1,349,927 1,317,862 Other time certificates 1,552,805 1,500,162 Total deposits 5,801,708 5,709,342 Acceptances outstanding - 315 Subordinated debt issuance, net 148,292 148,232 Commitments to fund investment in affordable housing partnerships 29,647 30,824 Operating lease liabilities 20,215 19,766 Accrued interest payable 15,718 16,124 Other liabilities 41,075 39,568 Total liabilities 6,056,655 5,964,171 Shareholders' equity 699,558 695,105 Total liabilities and shareholders' equity $ 6,756,213 $ 6,659,276 Book value per common share $ 52.23 $ 50.54 Number of common shares outstanding 13,392,737 13,753,246
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, 2024 2023 2023 2023 2023 Unaudited historical quarterly operations data: Interest income $ 126,520 $ 124,964 $ 125,529 $ 118,411 $ 109,084 Interest expense 58,020 55,568 52,575 45,102 35,369 Interest income before provision for credit losses 68,500 69,396 72,954 73,309 73,715 Provision for credit losses 4,400 3,500 3,500 2,500 500 Noninterest income 3,065 2,106 2,972 3,101 (1,066 ) Noninterest expense 20,028 17,873 19,009 20,852 18,900 Income tax expense 13,671 14,290 15,225 15,122 15,176 Net income $ 33,466 $ 35,839 $ 38,192 $ 37,936 $ 38,073 Earnings per share Basic $ 2.48 $ 2.63 $ 2.74 $ 2.63 $ 2.64 Diluted $ 2.44 $ 2.60 $ 2.71 $ 2.61 $ 2.61 Ratios for the period: Return on average assets 2.00 % 2.15 % 2.25 % 2.32 % 2.41 % Return on beginning equity 19.36 % 21.21 % 22.66 % 23.18 % 24.49 % Net interest margin (Fully-taxable equivalent) 4.19 % 4.24 % 4.39 % 4.58 % 4.77 % Noninterest expense to average assets 1.20 % 1.07 % 1.12 % 1.28 % 1.20 % Efficiency ratio 27.99 % 25.00 % 25.04 % 27.29 % 26.02 % Net charge-offs (recoveries) to average loans (annualized) 0.26 % 0.00 % 0.01 % 0.00 % 0.00 % Ratios as of period end: Tier 1 leverage capital ratio 10.80 % 10.85 % 10.46 % 10.61 % 10.63 % Common equity tier 1 risk-based capital ratio 11.50 % 11.57 % 11.63 % 11.51 % 11.30 % Tier 1 risk-based capital ratio 11.50 % 11.57 % 11.63 % 11.51 % 11.30 % Total risk-based capital ratio 15.08 % 15.18 % 15.32 % 15.14 % 14.91 % Allowances for credit losses to loans at end of period 1.49 % 1.49 % 1.46 % 1.40 % 1.36 % Allowance for credit losses to non-performing loans 4.33x 2.73x 3.86x 13.86x 254.56x Average balances: Total securities $ 348,961 $ 349,863 $ 368,968 $ 397,905 $ 442,852 Total loans 5,263,562 5,126,918 5,086,241 5,044,004 5,012,862 Total earning assets 6,585,853 6,499,469 6,597,557 6,432,950 6,276,630 Total assets 6,718,018 6,627,349 6,719,859 6,558,651 6,400,849 Total time certificate of deposits 2,852,860 2,767,385 2,680,854 2,617,872 2,209,370 Total interest bearing deposits 5,004,834 4,906,947 4,800,227 4,549,519 4,451,299 Total deposits 5,761,488 5,689,713 5,654,350 5,481,457 5,479,945 Total interest bearing liabilities 5,153,089 5,055,143 5,069,014 4,847,596 4,630,982 Total equity 704,996 683,141 678,020 677,306 650,963
PREFERRED BANK Selected Consolidated Financial Information (unaudited) (in thousands, except for ratios) As of March 31, December 31, September 30, June 30, March 31, 2024 2023 2023 2023 2023 Unaudited quarterly statement of financial position data: Assets: Cash and cash equivalents $ 936,600 $ 910,852 $ 1,021,108 $ 1,049,745 $ 885,691 Securities held-to-maturity, at amortized cost 20,904 21,171 21,474 21,818 22,155 Securities available-for-sale, at fair value 333,411 313,842 335,608 352,548 367,492 Loans: Real estate – Mortgage: Real estate—Residential $ 724,101 $ 688,058 $ 663,021 $ 631,795 $ 612,907 Real estate—Commercial 2,777,608 2,760,761 2,688,148 2,744,074 2,813,681 Total Real Estate – Mortgage 3,501,709 3,448,819 3,351,169 3,375,879 3,426,588 Real estate – Construction: R/E Construction — Residential 236,596 246,201 226,482 186,239 175,286 R/E Construction — Commercial 213,727 179,775 164,666 153,418 142,319 Total real estate construction loans 450,323 425,976 391,148 339,657 317,605 Commercial and industrial 1,368,353 1,393,830 1,377,675 1,388,865 1,299,325 SBA 3,914 3,469 2,424 4,427 7,306 Trade finance 1,176 1,041 5,541 9,348 6,885 Consumer and others 379 363 285 345 19 Gross loans 5,325,854 5,273,498 5,128,242 5,118,511 5,057,728 Allowance for credit losses on loans (79,311 ) (78,355 ) (74,849 ) (71,429 ) (68,929 ) Net deferred loan fees (10,460 ) (11,079 ) (10,240 ) (10,464 ) (10,286 ) Net loans, excluding loans held for sale $ 5,236,083 $ 5,184,064 $ 5,043,153 $ 5,036,618 $ 4,978,513 Loans held for sale $ 605 $ 360 $ - $ 176 $ - Net loans $ 5,236,688 $ 5,184,424 $ 5,043,153 $ 5,036,794 $ 4,978,513 Other real estate owned and repossessed assets $ 16,716 $ 16,716 $ 16,716 $ 16,728 $ 18,628 Investment in affordable housing partnerships 62,854 65,276 54,679 56,844 59,009 Federal Home Loan Bank stock, at cost 15,000 15,000 15,000 15,000 15,000 Other assets 134,040 131,995 124,793 118,465 115,049 Total assets $ 6,756,213 $ 6,659,276 $ 6,632,530 $ 6,667,942 $ 6,461,537 Liabilities: Deposits: Demand $ 709,767 $ 786,995 $ 838,300 $ 870,282 $ 1,050,992 Interest bearing demand 2,159,948 2,075,156 2,091,384 2,005,298 1,751,439 Savings 29,261 29,167 30,427 32,089 33,861 Time certificates of $250,000 or more 1,349,927 1,317,862 1,283,461 1,244,128 1,329,720 Other time certificates 1,552,805 1,500,162 1,439,699 1,437,194 1,241,754 Total deposits $ 5,801,708 $ 5,709,342 $ 5,683,271 $ 5,588,991 $ 5,407,766 Acceptances outstanding $ - $ 315 $ 103 $ 448 $ 107 Advance from Federal Home Loan Bank - - - 150,000 150,000 Subordinated debt issuance, net 148,292 148,232 148,173 148,114 148,055 Commitments to fund investment in affordable housing partnerships 29,647 30,824 20,824 20,930 26,709 Other liabilities 77,008 75,458 109,651 90,692 72,359 Total liabilities $ 6,056,655 $ 5,964,171 $ 5,962,022 $ 5,999,175 $ 5,804,996 Equity: Net common stock, no par value $ 115,915 $ 134,534 $ 143,584 $ 167,404 $ 181,208 Retained earnings 616,417 592,325 566,027 535,373 505,207 Accumulated other comprehensive income (32,774 ) (31,754 ) (39,103 ) (34,010 ) (29,874 ) Total shareholders' equity $ 699,558 $ 695,105 $ 670,508 $ 668,767 $ 656,541 Total liabilities and shareholders' equity $ 6,756,213 $ 6,659,276 $ 6,632,530 $ 6,667,942 $ 6,461,537
PREFERRED BANK Quarter-to-Date Average Balances, Yields and Rates (Unaudited) Three months ended March 31, Three months ended December 31, Three months ended March 31, 2024 2023 2023 Interest Average Interest Average Interest Average Average Income or Yield/ Average Income or Yield/ Average Income or Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate ASSETS (Dollars in thousands) Interest earning assets: Loans(1,2) $ 5,265,940 $ 109,980 8.40 % $ 5,127,935 $ 107,709 8.33 % $ 5,013,740 $ 95,881 7.76 % Investment securities(3) 348,961 3,430 3.95 % 349,863 3,335 3.78 % 442,852 3,994 3.66 % Federal funds sold 20,390 283 5.58 % 20,028 282 5.58 % 20,222 224 4.50 % Other earning assets 950,562 12,928 5.47 % 1,001,643 13,739 5.44 % 799,816 9,087 4.61 % Total interest earning assets 6,585,853 126,621 7.73 % 6,499,469 125,065 7.63 % 6,276,630 109,186 7.05 % Deferred loan fees, net (10,694 ) (10,421 ) (9,937 ) Allowance for credit losses on loans (78,349 ) (74,965 ) (68,466 ) Noninterest earning assets: Cash and due from banks 11,244 12,376 11,527 Bank furniture and fixtures 10,084 9,243 8,977 Right of use assets 22,003 20,338 21,867 Other assets 177,877 171,309 160,251 Total assets $ 6,718,018 $ 6,627,349 $ 6,400,849 LIABILITIES AND SHAREHOLDERS' EQUITY Interest bearing liabilities: Deposits: Interest bearing demand and savings $ 2,151,974 $ 22,365 4.18 % $ 2,139,562 $ 21,788 4.04 % $ 2,241,929 $ 17,077 3.09 % TCD $250K or more 1,341,298 16,501 4.95 % 1,294,531 15,600 4.78 % 1,266,072 10,743 3.44 % Other time certificates 1,511,562 17,829 4.74 % 1,472,854 16,855 4.54 % 943,298 5,850 2.52 % Total interest bearing deposits 5,004,834 56,695 4.56 % 4,906,947 54,243 4.39 % 4,451,299 33,670 3.07 % Short-term borrowings - - 0.00 % 2 0 6.08 % - - 0.00 % Advance from Federal home loan bank - - 0.00 % - - 0.00 % 31,667 374 4.78 % Subordinated debt, net 148,255 1,325 3.59 % 148,194 1,325 3.55 % 148,016 1,325 3.63 % Total interest bearing liabilities 5,153,089 58,020 4.53 % 5,055,143 55,568 4.36 % 4,630,982 35,369 3.10 % Noninterest bearing liabilities: Demand deposits 756,654 782,766 1,028,646 Lease Liability 19,500 18,179 20,993 Other liabilities 83,779 88,120 69,265 Total liabilities 6,013,022 5,944,208 5,749,886 Shareholders’ equity 704,996 683,141 650,963 Total liabilities and shareholders’ equity $ 6,718,018 $ 6,627,349 $ 6,400,849 Net interest income $ 68,601 $ 69,497 $ 73,817 Net interest spread 3.20 % 3.27 % 3.96 % Net interest margin 4.19 % 4.24 % 4.77 % Cost of Deposits: Noninterest bearing demand deposits $ 756,654 $ 782,766 $ 1,028,646 Interest bearing deposits 5,004,834 56,695 4.56 % 4,906,947 54,243 4.39 % 4,451,299 33,670 3.07 % Total Deposits $ 5,761,488 $ 56,695 3.96 % $ 5,689,713 $ 54,243 3.78 % $ 5,479,945 $ 33,670 2.49 % (1) Includes non-accrual loans and loans held for sale (2) Net loan fee income of $1.1 million, $1.0 million and $1.2 million for the quarter ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively, are included in the yield computations (3) Yields on securities have been adjusted to a tax-equivalent basis
Preferred Bank Loan and Credit Quality Information Allowance For Credit Losses History Quarter Ended Year Ended March 31, 2024 December 31, 2023 (Dollars in 000's) Allowance For Credit Losses Balance at Beginning of Period $ 78,355 $ 68,472 Charge-Offs Commercial & Industrial 3,445 124 Mini-perm Real Estate - - Total Charge-Offs 3,445 124 Recoveries Commercial & Industrial 1 7 Mini-perm Real Estate - - Total Recoveries 1 7 Net Charge-Offs (recoveries) 3,444 117 Provision for Credit Losses: 4,400 10,000 Balance at End of Period $ 79,311 $ 78,355 Average Loans Held for Investment $ 5,263,562 $ 5,067,870 Loans Held for Investment at End of Period $ 5,325,854 $ 5,273,498 Net Charge-Offs (recoveries) to Average Loans 0.26 % 0.00 % Allowances for Credit Losses to Loans at End of Period 1.49 % 1.49 % 
