Preferred Bank Revises 2008 Results

LOS ANGELES, March 25 /PRNewswire-FirstCall/ -- Preferred Bank (Nasdaq: PFBC), an independent commercial bank focusing on the Chinese-American and diversified Southern California mainstream market, today reported an additional revision to results for the quarter and year ended December 31, 2008 due to the receipt of an appraisal on an impaired construction loan. Preferred Bank had previously reported, on March 18, 2009 a net loss of $3.2 million or $0.32 per diluted share for the fourth quarter of 2008 and a net loss of $3.2 million or $0.32 per diluted share for the year ended December 31, 2008. Subsequent to March 18, 2009, management recorded an additional $3.1 million in provision for loan losses due to an increase in the impairment loss on an impaired loan based upon the receipt of a new appraisal on the loan's collateral. For the quarter ended December 31, 2008, Preferred Bank posted a net loss of $5.0 million or $0.51 per diluted share and for the year ended December 31, 2008, the Bank reported a net loss of $5.0 million or $0.51 per diluted share.

Preferred Bank received the appraisal report in March on a townhouse-style condominium project in downtown San Diego that is 99.5% complete. As of the Press Release of March 18, 2009, the Bank had allocated $584,000 in specific allowances which was based on discounting an appraisal dated November, 2007 by the decline in residential real estate values for the San Diego metropolitan area.

Mr. Li Yu, Chairman and President of Preferred Bank commented, "This appraisal indicates a value deterioration far beyond our estimation for that area and far in excess of published market statistics for that market area. This appraisal has been forwarded to a third party appraiser for a thorough review. Although this appraisal is still being reviewed, we believe that since we received this information prior to our 10-K filing, that it is prudent to record a specific allowance on this credit based on this appraised value as of December 31, 2008."

The following is a brief summary of information relative to the history of values of this 14-unit condominium:

    Appraised Value (Bulk) as of November 2007:                 $7,910,000
    Discounted Value used for March 18, 2009 Press Release:     $6,764,000
    New 'As-Is' Bulk Value from new appraisal:                  $3,720,000

Based on this latest revision to our allowance for loan losses, our ratio of allowance for loan losses to total loans is now at 2.19%, from the earlier reported ratio of 1.94%.

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 2007 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 RELATIONS BOARD:
    Edward J. Czajka                  Lasse Glassen
    Executive Vice President          General Information
    Chief Financial Officer           (213) 486-6546
    (213) 891-1188                    lglassen@financialrelationsboard.com

SOURCE Preferred Bank

RELATED LINKS
http://www.preferredbank.com