PFBC - Earnings call transcript Q4 2020

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Operator

Good day and welcome to the Preferred Bank Fourth Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jeff Haas of Financial Profiles. ahead. go Please

Jeff Haas

management Hello to Andrew. fourth questions. Operating thank for today you Chen; ended Yu; we CEO, of Thank and summary your President Officer, Preferred everyone, call Bank's us from me With discuss XX, the the and Chairman then financial joining and Chief Chief open December Li Edward you, XXXX. and are results quarter Chief up Deputy to brief and Officer, provide Johnny Officer, a Wellington will the Operating Hsu. Financial Czajka, Management will results for

specific this During of that the Act the not may course by call, may of meaning Securities statements, Private conference XXXX. forward-looking Such may or within of assumptions the correct. management upon prove include forward-looking Reform made statements Litigation statements based are

many are which statements relating factors environment, Preferred Forward-looking unknown and subject difficult Bank. the known are and to which, all also risks, and other uncertainties and control of Bank's of business of are Preferred operations, beyond to to predict

could Mr. over statements. At results this call I'd please set these Preferred materially of description these time, incorrect, to the as differ Corporation SEC files such materialize, Yu, risks these the please to the refer Bank's that any to statements. forward-looking from documents any prove to required go the a of Bank If of in FDIC. Federal or Deposit with obligation For forth or expectations, these its update assumes and no Li Insurance like assumptions uncertainties, detailed ahead. uncertainties turn Preferred Bank

Li Yu

Preferred or a bank. a record report pleased gentlemen. and was share. This $XX.X ladies our fourth million morning very $X.XX Good much. income very quarter of XXXX. of net you to Bank’s new is Thank I'm

year On the pre-provision a PT, a XXXX Preferred record basis, pre-tax also Bank. of is PP

benefited enhanced This and income, interest quarter’s relatively or margin are interest items. net two by net net all income non-recurring

But at now earned The in of is margin fees one of $XXX,XXX. Net would outpaced than X.XX%, reduction program yield. Again, it basis recovery items, interest moderation quarter. next of costs deposit costs this of is terminated been points previous X all the better the points without loan mainstream interest [X] X.XX%, non-recurring better. quarter, or of the came the quarter $XXX,XXX. of lending First basis these interest for have

interest a $XXX Looking security certificate roughly million ahead, a of have was of for in basis sales we $XXX,XXX. On savings. will income repricing as XX shall loss be saving first on continued of the quarter time quarter $X.XX, net affected by deposits or points negatively roughly cost

$XX million pandemic. For and the of the a loan quarter, myth drought after very is growth this is during or sequentially, long X.X% encouraging

things the to things After the us finally is we improvement bank seen in pandemic related only remain to economy. Deposits have nation's We the at And grew Fourth more customers as picked uncertainty much seen mildly the better. posture. good. be our Perhaps quarter very positive however, credit really years to of has million. up. $XX the of nearly are liquidity our most our getting [pipeline] loan seem on comforting

time million. now million $XX $XXX of Specifically, peak deferments. But deferred loans to reduced are the deferments to compared these most partial of

expenses. XX.X% situation regarding which a to XX came early reserve And ratio, were total $XX signal only At We be quarter. due million our Efficiency no is is days for always the million. million a Total we will the again, We which total December past performing. million, TDR at usually past stands non-accruals now end. $XX.X loans principal is in $X.X X.X%. $XX interest. XX is continue loans. were loans careful classified operating includes the and which reduced are collect to There at loans to and deferring the due XX on now credit XX days

Washington, be availability your the a and is will am a for Los things we believe with Bank. good package vaccine, year a likelihood the better. questions. ready Angeles its XXXX Preferred I from Thank And be with of believe of it availability you. stimulus situation quite County, chaotic although we but in will With much for

Operator

At begin question Instructions] time, this roster. and [Operator to will At answer time, session. we this now will we our momentarily pause the assemble

Sandler. Cucharale comes The first from question ahead. Nick Piper of Please go

Nick Cucharale

all day, you gentlemen. Hope well. Good are

Li Yu

Thank you.

are. We

Nick Cucharale

Good, good.

production first, broad loan I to one just in get given quarter pandemic sense impact now specifically a your Cree geographies, year’s What was growth a in this in nice am across trying based was the rebound markets, So to . balances. differences related specific across that country? activity the the

Li Yu

mean, I Wellington, give all all that. some -- color want cost it’s first on across you across. First it's to

Wellington Chen

This between Nick. and geographical is as evenly balanced. It’s distributed footprints, well and Southern Production Coast Hi, very is course of pretty our East in New area. well Wellington. California Norco Yes. York as

Nick Cucharale

maturity Great. in And expansion. for core is NIM going one-time feel like you or Do out still maintain? to for yields some then you secondly have asset so than I items the schedule. next that the room Even liability cost quarters erosion the challenging run of you on margin, the to be calling appreciate posted declining you out couple

Li Yu

Yes, will a Liability there be be. will generally very costs trend. on positive

market today's million interest okay. but to the refinancing effect with I change result less. the I doesn't a the which okay. likelihood little have And competition, quarter, second first [virtual] basis condition sub debt, At the XX at savings. rate the And market $XXX maturity, good end of the of due are be the is provided reasonably second we of mean, highly quarter, very quarter all, probably may PCD we will of first quarter, of mean, repriced bit or points First have residual

are So costs interest our positive regarding outlook. we

Nick Cucharale

worried impressive asset see hotel when portfolio. guys you driving work is mind deferral on What modifications you, what of particularly down great to color. An current about? was no comes quarter, in It's and this especially the to quality for it are top positive the loans

Li Yu

long [indiscernible] to call that loan level, for we seeking either deferment are table time, period the presenting, low, to okay, LTV closed have their basically of XX% their the we out or people we okay. personal had especially, to flow case that And you leads taken of of -- the time okay. on, many had are would continuous about careful been is we've those obviously since them worried the Well, we people particular forgot group the to savings, of the mostly XXs, require of one be the at that this personal in global or very and quite a lockdown their cash been extending these sponsorship And that people XX, our that's handling they lost origination okay. business benefited look leads and so about XXX% okay. of And property the job people. be of they to to leads a at a in by second if are law guarantee, were people

good that have of people one-year still have about may been having all you cost been, of we they So the reduction have But may poor the business, some no in people -- the okay. categories. has basically a

now. in some that way some paying from finally So the finally, along help needed --

Nick Cucharale

credit, step Okay. you And last this coming fee up was earlier in quarters of me for revert then letters level at from big to year? elevated a to in where or expect back stay lastly, that line it income

Li Yu

and that can a relatively We be going stable, then on it color think Wellington you too provide but it's right. to

Wellington Chen

Nick, believe stable. it looking about that pipeline I at relatively think will I our be

Nick Cucharale

Thank taking you for questions. my

Operator

comes question of next ahead. The from Timothy Please Janney. go Coffey

Timothy Coffey

you. Thank Good morning, everybody.

Li Yu

Hi.

Timothy Coffey

this of a people reflection bit loan expectations? a we at growth Is Hi, this getting to capital Mr. sidelines the that quarter. look back or Yu, of was and ahead getting business off

Li Yu

Well, but is to getting requests are some we people. of to and And business in. the very, still have being all alert are very that difficult due in would mode hired some requests people do we represent seen with highly time new sidelines, if new mode, pandemic in new we of off And we obviously new activities coming I say okay. basically there us. to the coming But the -- had that someone’s

Timothy Coffey

year, for it States you to loan Okay. growth the next start What about tells California the reopen? loan know, growth potential as is like

Li Yu

-- we outstanding $XXX loan activities, to always is of it But I not anything fourth million else. had about and crystal represents this wish which It Well, the quarter-by-quarter And note million alone. the would difficult have quarter have especially is fourth [got] on you that loan probably growth forecast a $XXX commitment based amount I total the amount. new quarter the loans of in mean ball.

close in will lockdown us, because first -- really or have the But over our again, customers. fact carry contact be So when hope our the factors has for for to lifted, very partially about lifted the it with quarter, need will people we okay.

are we generally So it. going variables there's positive but forward. with And some feeling about

Timothy Coffey

the and competition the to loans And now? you like serve level what's right like customers the you originate,

Li Yu

observations, some Wellington I would to personal yes. have let first, answer the I

Wellington Chen

Hi, Tim, this Wellington. is

competition pretty I think still stiff is -- out there. is

We all we have discipline. know interest work We out of just sustain low again, they very a don't force. there to rate. But how lot We going try offering that maintain forward. competitor can

mentioned the really just be been earlier, I Yu history. continue. the Li As selective business mean, and our throughout of nature it's always

work have So faster, continue just to more to we efficient.

Li Yu

Tim okay. is this Tim. Li Yu,

worth basically lot $XXX customer thought within the to We to seems That banks competition it territories, are being facing of from that million whole our now be okay. $XX million our after. net individuals high

for -- can they them. So to business give also other

that find is that margin, loan okay. below people we X% interest net XX-year X%, And below instance, For rate that our refinance fixed out giving okay.

not obviously that While to decided doing loans admiring we of capability we the their match. are many

Timothy Coffey

marketing? curious That's starts be the very pressure I is and looking was from at to traveling expenses reopen, is that potential then to if going there for on upward additional helpful. about. And the And -- expenses, economy

Edward Czajka

Tim, Hey, Ed. this is

the our in accrual profitability improves the over of expense benefits of in bank. tied directly to because the the forward will XXXX is extent the you terms Looking increase expense. profitability year XXXX, salary over see To and non-interest bonus

really your is us because will an size relatively small. and significant simply that are specifically So relative about so to costs our up, asset reopening and forth. entire They for go still terribly to workforce point company more as our not travel

supplies year-over-year. look will items the So in at line see benefited we those you down as when this And line office specifically, year, and it's actually items, equipment. and went where have development as actually promotion, well you business

that, we of benefit of comes of non-interest So some be outside there's benefit increased us an it lockdown. the not with But forward, in. in that's increasing where opening but of material. up, then for going amount won't have tremendous really in expense will And a terms terms the expenses,

Li Yu

you good is about tell in XXXX. something, to a okay. management feel That posture we growth again like the I because team Tim, pretty here

So our okay. branches different new locations or likely, for efforts so in looking we up new will things, new step and

production our to increasing somewhere And usually long-term likely be we personnel. So the expenses year, benefit. are our personnel if a successful to obviously along larger those will lead

Timothy Coffey

Yes, That's of course. All much. right. exceptionally Well, helpful. very you thank

Operator

ahead. Raymond next The question go David from of James. comes Feaster Please

David Feaster

Hi, everybody. good morning,

Li Yu

Hi.

David Feaster

last just I kind how to be And or in about are new wanted organic about there follow you up into interested on kind expansion in and that your comment just expansion terms markets organic side? of new curious, just that might thinking of that -- you any of are offices.

Li Yu

market team Yes, even of with organic we that Los with are which have represented team neighborhood producers. all a so along a found which start we, new the usually whenever first about up of lend every we of business the is consider that business a centers. can branch California And we whether they area, many run have the represent with spots, not vibrant goes all, banker, us, even supporting We then I by open able -- -- Angeles we area. then test, sale in have we [indiscernible] always of them comes

the Our really locating hard people. work is of

it So new been will see whenever new tree this we opportunity, -- be has organic,

David Feaster

Okay.

guys your in have quality, improve posture proven itself. defensive And of asset then, is Okay. you when to terms continued

we actually ratio release like about it outlook XXX, we so and looking potentially then doing closer point should to grow, reserves what's would quarter comfortable ‘XX? improved seen just the do have be Is think be to think what light ratio? We would kind that the I and how to at that you kind maybe in Is of reserve more at? you opportunity economic in the you continue normalized of where reserve improved of guess, and of first quality, saw credit which

Li Yu

trend, okay. looking the Well, I at am

okay. okay. And first some release rate But the generally plays will of of are with able will So if whole not all to may I this worst, then reserves, the time, the we year's But assets very have, today, reduction it very that I growth minimum the I mean point what that is turning okay. on speaking the somewhere provision the on expense some to of we see is to and along little provision, provisional a based be perhaps can how remains can it situation. quality see all the also see also year, can we that affected situation at of comparatively out. It has be extent, speaking. depends I

David Feaster

makes changed that sensitivity I am of the floors thinking are and then about sensitivity has your just just sensitive. historically how am guys Okay, of asset just been then in forward? you maybe stands you sense. entities, curious how curious managing how impact that going just And asset just, pretty and light today, And have the liquidity your and I assets

Li Yu

how’s this you that? share start first. I and you Ed, Okay, question,

Edward Czajka

the of is rate. such rate the you situation head balance of now, the the short and book on end be And kind to between seems curve very overnight the right divergence cash, of very nail floating then But long own interest relative loans, steepen. to rate we basis. adjustable Well, an Okay. a because sheet, we interesting continuing hit XX% sensitive, to and have our roughly a simply obviously, the on is asset which the is have lot the

those XX% were a take below approximately number maybe large when their rates the very asset of yields right side had come up that those the place. we terms quite years below we three, And a talking waiting sensitivity, that -- definitely loans of waiting back similar it with this still had to their about above But really scenario or on of asset a is are two still rise, same asset it's for so saw once being we them floors those And the their from few one to standpoint, thing, floors and to and acceleration on for floors, to in floors. will took now, we of sensitive. the we quantitative preponderance the

Li Yu

XX% Okay. floors, our the them of okay, floors, of loans Obviously, many at okay. this always point with time, rate loans, of are floating

the So currently than that's floor is [indiscernible] par higher we okay. coupon mean, the okay. under operating are rate, I

basis is -- So, going rise of maintain will And the on to forward, points, going do on okay. will XX to interest know history, new along don't billion to be I we rates very $X.X repricing -- two been TCD the on upward somewhat the defensive some the we other, to of increase, the we the Fed portfolio change when side, of mean, always But pricing, the okay, offset if not things. is will rate each our the XX the perhaps usually to them that, rate to carefully. tried Along the I exact depend of loans in these interest large aspects gradually have while timing offsetting maybe XX rate. side, see a our have

David Feaster

Thanks, Okay, that's everybody. all.

Operator

The Riley. go B. next ahead. question comes from Please Steve Moss of

Steve Moss

morning. Good

Li Yu

Hi.

Steve Moss

yields up just what pricing just kind terms curious I the start with following of I off in here for yields on were -- of origination days? these quarter just

Li Yu

Okay.

the originating right For now, okay. loans, the quarter, it are okay. hand pricing, I with me it we the right have In

the rate is average okay. With X.XX%,

So --

Steve Moss

Okay.

Li Yu

As you you have quarter in the payoffs. same

Steve Moss

Okay.

Li Yu

the little more XX have about higher. bit moderate huge main compression That higher basis is of one reasons -- you Payoffs points

Steve Moss

side, as these CD kind there where the on are to offering you rates the on then And helpful. that's Okay, of curious days?

Edward Czajka

is a terms probably a holds months in Hi one-year, through basis terms around market On well, it's three year And doesn't that terribly one right points. now. the our Ed. two-year, through XX down six six of Steve, offering and as lot that become months about of is that months this kind CD a rate right

Li Yu

cash didn't the that from so okay. those in notice And The Steve, match too and CDs. time, first is [indiscernible] this we is -- much sitting in lost opinion had basis to you key at decided because points liquid, quarter, XX earning that we some CDs, my maturity point to okay. not bank

are strategic those really more So move.

Steve Moss

Right.

to here, XXXX. like in helpful. then to seems in it's build continue And of that's Okay, going quarter, building terms capital this

curious what thoughts Just of capital potential to kind are for deployment? on as your

Li Yu

Okay.

have slight a may even as continue this all, of there of to improvement of First earnings, level be this. in kind we hopefully,

Sometime will that's the about that thinking be in we XXXX, a dedicated recommend increase to we dividend, obviously thing board, we will that okay. almost have the

we thing Now, will the basically studying situation say lucky let's I buyback, in the like the effect cannot immediately, in wait loans growth next our growth, through have in largely okay, If the now be on slightly levels have the growth or to return But we a are over we we okay. what the level, all organic original enough then okay. that to have would will enough right is primary getting if obviously, using buyback capital is studying we the If area. as -- redeployment loans, that you in capital be loan years loan is things, always ago, we again XX%. two What looking see our current, is to am do capital is this at a us okay? loan

So are are area see we and how that comfortable studying, we is that -- to one

Steve Moss

Thank very helpful. great. That's Okay, much. very you

Operator

this Li conference the any like back to to And I and turn Yu session. our over closing question answer would for remarks. concludes

Li Yu

that for that into Well, continues thank as it all year a soon. us attention of which freedom is bank good quarter. said will I hope normal important more okay, but. the of And performance are be our of we our than anything the probably pandemic to out back back, getting we you life get hopefully had earlier, that your very much next and And we and

for for So Thank with you. that best let's XXXX. the wish

Operator

attending now conference today's presentation. concluded. Thank The has you for you. Thank

now You disconnect. may

Preferred Bank (PFBC) 26 Jan 212020 Q4 Earnings call transcript