Preferred Bank(US:PFBC)2023-07-20 21:47Financial Data and Key Metrics Changes - The net income for the second quarter was $37.9 million, translating to $2.61 per share, with a deposit increase of $181 million despite a challenging environment [92] - The total cost of deposits for June was 3.24%, and the margin was just below 4.5% [18][29] - The bank's total non-performing loans were less than $1 million, with non-performing assets at 0.33 basis points [2] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $61 million, although demand was depressed due to the high interest rate environment [5] - The bank's cash flow was over $1 billion as of June 30, indicating sufficient liquidity to handle any loan growth [19] Market Data and Key Metrics Changes - The bank's uninsured deposits were 39.9% as of June 30, with a liquidity coverage ratio of 41.2% [91] - The bank has a total loan exposure of $114 million in San Francisco, with $34 million in troubled areas [93] Company Strategy and Development Direction - The company is focusing on maintaining a moderate risk posture while navigating a challenging economic environment [50] - The bank plans to ramp up its SBA department in the second half of the year and is still looking to sell originated loans in that department [60] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty about future loan growth due to the unclear economic environment and competition [47] - The company is optimistic about seeing improvements in the economic landscape, hoping for a soft landing and better conditions in the second half of the year [77] Other Important Information - The bank has made additional provisions to increase its reserve ratio to 1.4% and has written down OREO assets for $1.9 million during the quarter [2] - The company has repurchased a total of 281,000 shares in the second quarter, with over 500,000 shares repurchased as of the latest update [94] Q&A Session Summary Question: What was the average purchase price for the shares repurchased in the second quarter? - The average purchase price was around $55, with 501,000 shares repurchased for about $28 million [38] Question: How confident is the company in maintaining the level of non-interest-bearing deposits? - Management indicated that the level of non-interest-bearing deposits has been reasonably stable [39] Question: What types of properties are included in the $34 million of loans in Downtown San Francisco? - The loans consist of seven loans, mostly residential properties, with one office property valued at less than $900,000 [34] Question: How does the company view the current loan demand and appetite for credit? - Management noted that the slowdown in growth is attributed to both demand and appetite, with fewer applicants qualifying for loans [54][56] Question: What is the outlook for the bank's net interest margin going forward? - The margin is expected to remain relatively flat unless there is a quarter-point hike from the Fed, with potential further compression anticipated [63]