Preferred Bank(US:PFBC)2019-07-18 21:32Financial Data and Key Metrics Changes - The bank earned $20 million or $1.31 per share for the quarter, showing strong performance compared to previous quarters [8] - Loan production increased over 21% for the quarter, attributed to heavy draw-downs by commercial customers and other fluctuations [8] - Deposits decreased by $43 million, primarily due to significant draw-downs in the last 10 days of June [9] - Net interest margin was reported at 4.07%, with an efficiency ratio of 31.7%, ROA at 1.89%, and ROE at 18.5% [11] Business Line Data and Key Metrics Changes - The growth in commercial and industrial (C&I) loans was driven by new loans to long-time customers and new customers in distribution and financial services [15] - Loan origination yield for the second quarter was approximately 5.9% [25] Market Data and Key Metrics Changes - The bank's deposit balance increased by about $100 million since the quarter end, indicating efforts to rebuild deposits [21] - The bank's current deposit rates are competitive compared to competitors [21] Company Strategy and Development Direction - The bank announced a $30 million capital stock buyback to manage capital more efficiently [12] - The management is focused on continuously developing deposits and maintaining a comfortable loan-to-deposit ratio [23] Management Comments on Operating Environment and Future Outlook - Management expressed uncertainty about predicting C&I loan growth in the third and fourth quarters due to the unpredictable nature of the market [18] - The bank is closely monitoring the impact of trade tariffs on its loan portfolio, with minimal exposure noted [36][38] Other Important Information - The bank implemented ASC 842 lease accounting standard, which may affect occupancy costs in the near term [42] - Legal fees were unusually low this quarter, which is not expected to continue in future quarters [43] Q&A Session Summary Question: What caused the impressive C&I growth this quarter? - The growth came from new loans made to long-time customers and new customers, with some draw-downs being temporary due to emergency needs [15][16] Question: What is the loan origination yield for the second quarter? - The average loan origination yield was about 5.9% [25] Question: How do you see the NIM trending throughout the year? - Rate cuts will reduce revenues, but the bank expects to benefit from lower costs as TCVs mature and are re-priced [30] Question: Are there any sectors the bank is becoming more cautious about? - The bank is reviewing its loan portfolio, especially in relation to trade tariffs, but has minimal exposure to affected loans [36][38]