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INVESTOR RELATIONS PRESS RELEASE Preferred Bank Reports Quarterly Earnings Company Release - 10/20/2021 LOS ANGELES , Oct. 20 , 2021 ( GLOBE NEWSWIRE ) -- Preferred Bank ( NASDAQ : PFBC ) , one of the larger independent California banks , today repor ended September 30 , 2021. Preferred Bank ( " the Bank " ) reported net income of $ 26.1 million or $ 1.76 per diluted share for the third quarter of 2021. This million or 21.7 % over the prior quarter and up significantly from the $ 17.1 million or $ 1.15 per share posted in the same quarter of last year . The primary r compared to the prior year was a $ 9.0 million provision for credit losses recorded in the third quarter of last year as compared to a reversal of $ 1.5 million losses ( " ACL " ) this quarter , a difference of $ 10.5 million . In comparison to the second quarter of 2021 , net interest income increased $ 4.4 million , the ben provision for credit losses was $ 1.5 million and noninterest income increased by $ 1.1 million . Third quarter 2021 highlights : • Net income of $ 26.1 million , or $ 1.76 per diluted share ( company all - time high ) • Linked quarter deposit growth of 8.3 % . Linked quarter loan growth ( Ex - PPP ) of 1.8 % Return on average assets ( " ROA " ) of 1.80 % • Return on beginning equity ( " ROBE " ) of 18.56 % • Pre - provision , pre - tax ( " PPPT " ) ROBE of 25.0 % Li Yu , Chairman and CEO , commented , " I am pleased to report third quarter 2021 net income of $ 26.1 million or $ 1.76 per share . Excluding a release of in the amount of $ 1.5 million , our net interest income and net income set new quarterly records for our Bank . " This quarter we experienced significant asset growth . Total assets are approaching $ 6 billion , principally due to the $ 398 million or 8.3 % linked - quarter d " Loan growth for the quarter was $ 77 million excluding PPP , or 1.8 % on a linked quarter basis . We continue to experience moderate margin compression deposit growth , our net interest margin for the quarter came in at 3.36 % . " Our loan quality was stable . There are no deferred loans granted under the CARES Act as of September 30 , 2021. Total PPP balances have been reduc date . “ Non - interest income increased $ 1.1 million from the prior quarter principally due to increased letter of credit ( " LC " ) fees . Operating expenses continue to quarter , as our efficiency ratio clocked in at 30.4 % . " We are highly encouraged by this quarter's results considering the current low interest rate environment and the slow progress , nationally of controlling t optimistic that both of these will improve gradually " Results of Operations Net Interest Income and Net Interest Margin . Net interest income before provision for credit losses was $ 47.8 million for the third quarter of 2021. This $ 43.4 million recorded in the second quarter of 2021 and was also ahead of the $ 44.1 million recorded in the third quarter of 2020. The second quarter of impacted by a $ 2.29 million interest reversal on our troubled debt restructured loan as well as a charge of $ 614,000 to interest expense related to the una of the subordinated notes that were called in the second quarter of 2021. These two items drove the Bank's taxable equivalent net interest margin down t items , the Bank's margin would have been 3.47 % . The taxable equivalent margin was 3.36 % for the third quarter of 2021 , as compared to 3.47 % ( adjuste second quarter of 2021 and versus 3.54 % for the same period last year . Noninterest Income . For the third quarter of 2021 , noninterest income was $ 2,784,000 compared with $ 1,605,000 for the same quarter last year and co the second quarter of 2021. The increase compared to last year was due to LC fee income which increased by $ 886,000 and service charges on deposit : $ 153,000 over last year . When compared to the second quarter of 2021 , LC fees increased by $ 765,000 and in the prior quarter the Bank recorded a loss $ 261,000 which did not recur this quarter . Noninterest Expense . Total noninterest expense was $ 15.4 million for the third quarter of 2021. This is up compared to the $ 13.7 million recorded in the and also up from the $ 15.0 million posted in the second quarter of 2021. Salaries and benefits expense totaled $ 10.9 million for the third quarter of 2021 , from the third quarter of 2020 and an increase of $ 635,000 over the $ 10.3 million posted in the second quarter of 2021. The increase over the prior year expansion and an increase in the Bank's incentive compensation expense and the increase over the second quarter of 2021 was mainly due to higher inc expense . Occupancy expense totaled $ 1.4 million for the quarter which was flat compared to the prior quarter's $ 1.4 million and down slightly from the $ 1 third quarter of last year . Professional services expense was $ 1.1 million for the third quarter of 2021 , a slight increase of $ 79,000 over the prior quarter a $ 101,000 over the same period last year . Other expenses were $ 1.4 million for the third quarter of 2021 , down from the $ 1.7 million recorded last quarter million recorded in the same quarter last year . Lower FDIC premiums were the primary reason for the decrease compared to both periods . For the quarte 2021 , the Bank's efficiency ratio was 30.4 % , down slightly from last quarter's 33.2 % mark and just slightly over the remarkable 29.9 % ratio achieved in th Income Taxes . The Bank recorded a provision for income taxes of $ 10.5 million for the third quarter of 2021. This represents an effective tax rate ( " ETR " over the ETR of 28.5 % in the prior quarter but up from the ETR of 25.7 % in the same period last year . The Bank's ETR will fluctuate slightly from quarter 1 small range due to the timing of taxable events throughout the year . Balance Sheet Summary Total gross loans at September 30 , 2021 were $ 4.32 billion , an increase of $ 286 million or 7.1 % over the total of $ 4.04 billion as of December 31 , 2020. T $ 5.2 billion , an increase of $ 751 million or 16.9 % over the $ 4.44 billion as of December 31 , 2020. Total assets ended the quarter at $ 5.98 billion , an increa 16.3 % over the total of $ 5.14 billion as of December 31 , 2020 . Asset Quality As of September 30 , 2021 , nonaccrual loans totaled $ 20.9 million , up slightly from the $ 20.2 million reported as of June 30 , 2021. Total net charge - offs fo were $ 1.0 million compared to $ 1.2 million in the prior quarter and compared to net charge - offs of $ 3.5 million in the third quarter of 2020 .