Preferred Bank (NASDAQ:PFBC) Q4 2023 Earnings Call Transcript January 25, 2024

Preferred Bank isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and welcome to the Preferred Bank Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Jeff Haas with Financial Profiles. Please go ahead.

Jeff Haas: Thank you, Rocco. Hello, everyone and thank you for joining us to discuss Preferred Bank's financial results for the fourth quarter ended December 31, 2023. With me today from management are Chairman and CEO, Li Yu; President and Chief Operating Officer, Wellington Chen; Chief Financial Officer, Edward Czajka; and Chief Credit Officer, Nick Pi. Management will provide a brief summary of the results and then we will open up the call to your questions. During the course of this conference call, statements made by management may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon specific assumptions that may or may not prove correct.

Forward-looking statements are also subject to known and unknown risks, uncertainties and other factors relating to Preferred Bank's operations and business environment, all of which are difficult to predict and many of which are beyond the control of Preferred Bank. For a detailed description of these risks and uncertainties, please refer to the SEC required documents the bank files with the Federal Deposit Insurance Corporation, or FDIC. If any of these uncertainties materialize or any of these assumptions prove incorrect, Preferred Bank's results could differ materially from its expectations as set forth in these statements. Preferred Bank assumes no obligation to update such forward-looking statements. At this time, I'd like to turn the call over to Mr. Li Yu. Please go ahead.

Li Yu: Thank you. Good morning, ladies and gentlemen. Thank you for coming to our earnings conference phone call. I'm pleased to report that the Bank's fourth quarter net income was $35.8 million or $2.60 a share. We closed out the year with a record earnings of $150 million or $10.52 a share. We attribute this to our active margin management and our continuous cost control. During the fourth quarter, credit quality remained stable. We have a reduction in total criticized loans. However, we have an increase of nonperforming loan. The increase in nonperforming loans is one real estate relationship whereby it was previously classified and now are in the foreclosure process which means we'll be closer to the ultimate resolution.