PFBC - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon and welcome to the Preferred Bank first quarter 2021 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]. is event this note, being recorded. Please now Jeff Haas would like to to over conference the of turn I Financial Profiles. Please go ahead.

Jeff Haas

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

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

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

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

Li Yu

only share, quarter Preferred to Thank have to a quarter this compared days or XX Bank's prior per $X.XX bank days. as record of you. quarter the was quite we quarter fourth of XX because compared $XX.X million favorably Good income morning first

a have distribution on quarter quarterly bonus specific payroll this payout. in we addition, In taxes

strong This quarter growth basis featured annualized on an deposit XX%-plus.

deposits additional have it income do opportunities noticed net return many grow We compressing to are But being we interest the and interest excess us assets, margin. as more on because capital ratios, gives net also our have and thrilled these to cash flow moderately to things.

First million quarter was growth XX.X% $XXX annualized loan on basis. or

with have various We our future noticed more of or about are and action they to commit and transactions they through taking optimistic now our are customer contact more business generally our or expansion transactions. economy already to investment planning the

went their potential as wants feeling this inflation assets To we to the demand, meet point at in then of for Some a five as look and of far far four about team officers added team time. in even increased one, and commit them have resources Houston, have relationship throughout to total year. relationship of six we added California, talents new so officers In to continue will the Texas. and this

the will on We relationship York move up are down. than rather Internally, new in working areas set we and for interesting going other that are convinced be places coming New next officers.

have very we preparing have sheet and balance been our assets actively ourselves are we become always that, with So been sensitive. to

compared slightly is very open questions. the March for not million, much. ready quarter-specific you And of $XX.X business economy moderate. have eagerly different is to waiting as am service well which Thank that COVID-XX up and for to aware can to are I is one-on-one with model The more our was reach out loans high-touch actively. the quarters. we As down our your expense so customers our to of, relationship customer we Operating seems taxes, it deferred credit payroll previous stable. XX, related total was quite but matrix much higher, as considering we you

Operator

Instructions]. [Operator

Li Yu

No questions there?

Operator

Please go Jaffray. Our from first question comes ahead. from Piper Clark Matthew

Matthew Clark

Hi. Good everyone. morning

Li Yu

Hi.

Edward Czajka

morning. Good

Matthew Clark

trying we have the just if this material. first in the don't on I don't in interest think it's could was I from the that hone contribution know, income But quarter? PPP, I margin, and If you excluding contribution the to margin PPP. start on core

Li Yu

by The answer Ed, best okay.

Edward Czajka

say, totals to fees due in the rate Yes. X% I the recent fact Matthew, about would million, $XX PPP most that months. about was the including

So it's $X against pretty a negligible billion portfolio.

say point margin. a So basis would the I maybe probably on

Matthew Clark

Okay. No worries. It's fine.

rate And on growth. on know Okay. margin, the you can I a just And pressure given we some have incremental to should good your outlook lot new the the growth, up that the for pretty fair And of speak maybe put originations? you you business? assume guys portfolio, existing then but on new to margin, from on floors some see the is it the

Li Yu

that margin prediction situation a we has Matt, all time. become watch the Okay.

be trend For XX from okay. rate many a to And points want. was to are And ago the lower of for period also rate of This many mainly, renegotiating loan being we about just mentioned environment, time of that when on those quarter their have coming you the mentioning, the have payoff XX points, quite for low on instance, in of side. you have of done, people we growing sort the a that all basis previous first of to our portion has floors. high floor, up statistically interest it's large the nearly And a have loans we yes. quarter widened two, loan okay. cases, than customers floor changes loans years new higher back is a extended agree kind has of basis the a rate and three and competition they And was pricing

pressure going of the also is, cost two not force the the additional interest to sub we NIM, reducing will okay, reduction, continues net interest positive debt plus negative cost that the our of But pools, income. potential have what is refinance So margin the it the and factors forward okay. interest these

okay. situation, the compression have if strong margin balance will some we out So growth, it of

Matthew Clark

just just give for the Could quarter? strong. sense also Yes. a maybe by that Yes. this from, type or came is this business us NII industry on then type quarter great. C&I where That's very focus. the growth, And clearly the

Li Yu

Okay.

to some want And to specifics first? that? have that mention do you mention I want but You

Wellington Chen

This Sure. mentioned and Again, clients Matt. as see Wellington. they that Yes. opportunity. our Mr. happy bullish very are Hi is Yu and

business also relationship Some through some taking okay. is expansion new over have of existing industry, and base our client relationship the that to

have, were like cetera. fastener, We healthcare packaging, data pipes, communication. professionals, also the for like example, are some example, et building there of material produce These the centers,

Li Yu

to you, Just most new of represents they usage. growth but clients tell the additional are about the also

in million. $XX by usage client neighborhood of existing the Our interest our

Matthew Clark

on of side Ed. helpful. maybe things, Okay. expense That's the then Thank you. for just non-interest And

comp the the additional you that I additional should the of have little of probably like sounds hires rate, pressure terms about hired run it upward a think In we some the how potential on rest run for that put guys of guess for rate year? overall the relationship line. bit and officers

Edward Czajka

So for half yes, Houston quarter. the we quarter don't instance, have there. not That's That's personnel. about LPO, baked a the in full

to every that, tax every year QX, payroll high the of in incentive expense pay every in fairly was because February as compensation our year. So addition we it is

bump $XXX,XXX a about on run rate. So to that's the $XXX,XXX of

around would say forward, we guess. this my say would XX right were going would be I probably I going quarter. be in forward will So X.XX

Matthew Clark

just then what was the in some exactly property terms maybe on Great. situation give and that color in us general? lastly sold amount of that Can the the Okay. And in was you just there sold. type loans and were

Li Yu

Okay.

SNC downgraded been because portfolio one substandard, okay. have keep we it's to And loan We loan okay. want this was substandard, don't in our

we it. So sold

Matthew Clark

you. Thank it. Got

Operator

Tenner Gary D.A. from from ahead. comes question next The Please Davidson. go

Gary Tenner

color amount floors of appreciated. be how to Thanks. little portfolio talked to is much would get an little would what that's noted Good comments get the the press terms more of love But just working are? money asset in your I become on morning. be wanted I on as commentary get today, bit of floating? update about in your you more in are any to sensitive. release And mean portfolio the the to you you the subject doing sensitive bit. a of floors? How asset floors a But to about to

Li Yu

you it have handy. Ed,

Edward Czajka

Hi total data total okay. it CDs. requires XX% But updated and work. of XX% secured and for book, fixed didn't X/XX time get floors, rate, over rate, is Gary. I in apologize, by again of we Of the book floating Yes. a rate to or floating lot this either because year-end, Of CDs of have the the quite as it tied XX%

of rate increases, the where I of the terms basis where moves portfolio. $XX a XX move terms another we start next another basis first $XX think moves really reprice. points after to start $XX majority see the basis and And of then The The Gary about you get interest XX $XX In million next only headed points to XX we million. are that's million of going points, in we moves to portfolio million. upward,

we points to of upside are XX down floors. So the XX you roughly can assume basis in that on terms

Gary Tenner

great. growth That's And here new the the are now? about for you good hires, quarter and then Expectations obviously in the for terms the this loan remainder customers from appreciate ex-PPP the for of year growth what right seeing color. I you pipeline talked year, of based quarter. on

Li Yu

our here's Well, clear, been I of have that crystal not the is ball saying that, okay. situation always kind that

And quantify People ourselves have of the things, is up So sentiment is our those level. increasing. obviously speed is economy, growth. least that the I that But we among open, is it organic at dedicated active. in difficult. that time in continue think it there pick variables like have But as what we you reasonable a a historically it's to And know okay. again, always to all when lot historical the and percentage other staff on business to that more is been

quantify to the continue So growth it cannot will that I the quarters. just I really few feel that next but we in answer say

Gary Tenner

target? hires just it to lending Is focus terms real estate? the the the And it Is there, C&Is? of LPO and there? Okay. what's the regards across What's with in Houston

Li Yu

Yes.

as into Okay. or more California, two off gradually new are new Outside more is the the the move of we we getting we C&I. CRE are of gradually started four officers with are them new then California hires, In loan five community and obviously loan we officers, C&I. that

Gary Tenner

Okay.

be So makes That Houston initially sense. estate will commercial real focused. more

Li Yu

Yes.

Gary Tenner

right. All my taking you questions. for Thank Great. Okay.

Operator

David comes Our Raymond James. from question from next Feaster

David Feaster

everybody. Hi. Good afternoon

Li Yu

Hi David

David Feaster

pretty the would like update LPO. get I just That's to on an exciting. Houston

the pipeline kind how the maybe guess hear early read in trending? the on that. How to quarter? of is I the was contribution And curious just Just

Li Yu

you answer Well, do you want want that? answer me or to to

Wellington Chen

Well, can answer both we that.

pipeline, weeks presented XX doable that say, deals. about our first think was would our pipeline over, I I real meeting initial ago, they

it's and pipeline weekly a deals meeting their back-office place just just a now So And them. start we of with in putting together. have meeting, the after people matter getting this

customer have base customer And so seems it have we officer looks like like so they a and Yu? the They Mr. that the far, portable. know here, are market.

Li Yu

are speaking, But any the David, couple Houston no is okay. of today, from there to closed. loan Okay. And not a number-wise of we yet. them contribution ready as in first booked have be quarter,

David Feaster

Okay. Texas and disruption of kind these And probably, consolidation priority there. some de of country, That's encouraging. to But novo your that more maybe at clearly is be The what growth across an of just opportunity just given expansions? create some of maybe top recent markets the more the are does going in list? and the for type

Li Yu

area. a know Then or have always to find banker where his, other the area relationship the is we expansion. in we he of hers that Well, have type team. and expertise words, you those the people-specific go In in areas, we the

So I am come sure that up which not area will first.

on are areas We now, several okay. right working

not currently And one three God, follow about are are the the which looking up available on okay. will be just, that okay, first, good reviews the of But grace maybe okay. meaning will other hired. sure end we we or that, can regions be So will four at, there are talents by

David Feaster

Yes.

you loan or your And new of more have And pricing? the in guys then You How yields continued curve conversations? loan new all of trending? are at yields. peaking on a up point Was talked of just pricing your about to on spread. the pressure better maybe Okay. following the allowed basis commentary mix maybe that has XX function on

Li Yu

reading it my one to quantify situation hate first just the quarter my couple information the mix got enough this shouldn't was and big in, point of that. I last means quarter And have that okay. so-called be as I out, is not basis okay. that deals it that points in, days answers. I the and XX are as of is the other issue, XX dived ago coming basis day into with because there But day the

the trend cannot bit we year be discounts. that much yet. So to But it probably point. less a terms XX continue is, basis it compress really should than But quantify of in will

people okay. a once because their rate are pricing our XX-year below just interest thing fixed loans margin, net competition, okay. on And So

or reasons, So unless would get one what. specific is we for we very compete there cannot cases them that two with because other

David Feaster

see you are do Where being find Or competition? from the smaller it it the Yes. the is banks? banks you competitive? most that the Do most larger community

Li Yu

banks. Larger

David Feaster

All Okay. Thanks everybody. right.

Operator

Our from comes Coffey next question from Janney. Tim

Tim Coffey

Great. Thank you. everybody. Good morning

Edward Czajka

Tim. Hello

Tim Coffey

I the the any growth the that different in well of bank? by loan to wanted introduction as commentary activity terms to Would describing in as on deposit Li clients Yu, the Mr. Wellington be you ask clients than more growth quarter. what was of you saw about new

Li Yu

most actually, coming inflows process the Well, them clients. existing our of from

okay. be it any it in customers, okay. two, than quarter taking the a clients basically existing or come new our from can We And deposit represent that But one are huge okay. basis, more not

it base financial our is better, you we that So means getting customer grows, feel generally, condition okay. know,

So this what observed. we is

Tim Coffey

Okay.

being back, in in that's the tax of do well would you deposits XQ? any you With filing type date pushed that see kind the anticipate seasonal outflow above

Li Yu

hope, the a lose because date, deposit net hundred will that couple I dollars improve the tax income. during it our deposits, okay, would is selfish interest Well, hope we my that million

Tim Coffey

would That Yes. definitely help.

Li Yu

should reducing likely to bit. It a be reducing, be

Tim Coffey

we Okay. idea quarter, at maturing volume could time this what and what do Ed, you next you as price any look the have And share be might like, then, differential deposits the can be? the

Edward Czajka

can. I do. I

Tim Coffey

Great.

Edward Czajka

of be at XX average points XX million it's basis points. replaced quarter Tim, an $XXX over be to rate just around second basis somewhere the under maturing

our We offered again rates. have lowered just CD actually recently

So that's for the quarter. beta the

Tim Coffey

team too next getting early? and Mr. middle you the out could you you Ed. set that do I Thanks And that that experienced a or are mean of than leader LPO, of the have goal by of origination then Great. Yu, million it Houston the $XXX a obviously you there better loan year, got sense really is

Li Yu

that goal Well, has this for far set is so us, leader okay. a our Houston

a set produce So the be do of everything, worried reaction $XXX have our they about to negative that hope we we to year, reasonable But on that. okay. we office, new But high push obviously experience in starting close can we Angeles obviously, to get hands. in If be the to too better. first you Los we prior million from people judging think we sitting if can the staff psychology of a goal, our out be is will have going to and because with deals it's

Tim Coffey

questions. you Okay. much all All very for right. my that. Great. Thank were Those

Operator

next Stephens. Our Andrew from comes question from Terrell

Andrew Terrell

morning. Hi. Thanks. Good

Li Yu

Hi Andrew.

Edward Czajka

Good morning.

Andrew Terrell

So year? trend pretty for see charge-off outlook the reserve what remind the was quarter us as to moving you this number. forward Can go is the just we loss was negative positive this it nice throughout and loan

Li Yu

it's Well, let all, a of me okay. seasonal first just, calculation,

loan XXXX, $X.X want $XX And of Nick okay. about million. charge million. I your we We had seasonal So first recall say all, let provided me then a memory, that. to In off to provision loss talk and first something expert in of of

million One the one, situation. So macroeconomic areas. is have the must two general $XX

we second to downgrades, some proactive of The them called is all reserve like think okay. quite is of what And okay. proactive, for we

after Now those provisions, made not credits whereas deteriorate. did these we

somewhere in together the along the be upgraded, situation. future So it the periods, in with general will improvement macro okay,

year latest I availability. it quarter. want in in because don't we tell of nice receive that the the conceivable very to to that up have is retain It's it on kind you, have releases I in personally am don't But this know to around year, happy the okay, use I the next first we just would year. this calculation. may some So mid depend

add? So Nick, have to you anything

Nick Pi

as mentioned days because past limited. that not Mr. assets the last downgrade Yu Andrew, declining projection, of quite well it's volume like I loan this quality for and in are believe, changes year this of our just in XX time request deferment nonperforming and at of as the stable year's volume portfolio due the as quite terms Tim, loans is of

year. reserve will it we this mentioned, to not year, to supposed ourselves be just the Mr. a believe Yu pandemic make for make, we during like that We like time. So prepare is to try last

or next have don’t at be that and much year, this probably reserve some this So time. we will need picture revision. That’s year a the of

Andrew Terrell

extremely I That’s helpful color. Okay. it. appreciate

balance of balances, you of total of about just lot term. not thinking this the us to the a maybe over just manage can some liquidity liquidity as cash kind Just can assets? the you a remind it obviously you on like earning sheet, percentage sway guys in, of deposits near are longer the if it where term and and alone flows But

Li Yu

It's reading There are with generally for to we is banks, two deposits a the situation. flush only loan because countries can engineer, operator, times financial growth and an cash. happened be edge Okay. the as fighting to seems like And the other a other And sword I okay. tighter market. with deposit are flush an crazy, was this reports, but in the I okay not it are all operator cash, a be speaking as okay. and everybody

an just like As deposit staff. capable is operator,

number just turn away You into short reducing and it back deposit come need our costs but we long it the is, productive. Would deposit, relationship. grow and hit it we it we a certain to negative gradually a slowly hope because And get when turn differences away them. though such we term you term it's What is will we so-called get in need once a when to even we it. see see negative

consideration operator, an as slightly different. is our So

Andrew Terrell

guys you and Okay. great Understood. a taking congrats quarter. Thank on questions my for

Li Yu

you. Thank

Operator

[Operator Instructions].

Riley with comes next question Our from Moss Steve B. Securities.

Steve Moss

guys. Good Hi. morning

Li Yu

Steve. Hi

Steve Moss

questions my of have Most here.. question one and just been answered. had I Hi. asked

and terms here, cost. stable was other the the of just quarter-over-quarter basically deposit of of checking your deposit terms savings base half interest-bearing In in

CDs? here those repriced were with lower wondering if Just

Edward Czajka

repricing place category, were rates when of down within quite coming the The Steve, that in majority precipitously. took XXXX

not repricing categories. there or the has account any in now So been market savings or money

Li Yu

repricing, going low anything, we already to we our is are close already very, peer group. Going the if be of the forward, to moderate because very

Steve Moss

it. Got

much. you only Okay. that’s Great Thank my very Well, quarter. remaining question.

Li Yu

Thank you.

Edward Czajka

Steve. Thanks

Operator

This Mr. remarks. back concludes to CEO any our would question-and-answer and over conference to for I Chairman like Li closing Yu, session. turn the

Li Yu

Thank you much. very

we in of last the hope leg pandemic. I know, You are this really

very and is much. our So I safe I get stay for everyone you economy. that which hope back boom in Thank pray a new we cycle

Operator

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

You disconnect. may now

Preferred Bank (PFBC) 21 Apr 212021 Q1 Earnings call transcript