About Preferred Bank

Preferred Bank provides financial services to individuals and companies located primarily in Southern California. The company’s services include demand, time and savings deposits and real estate, business and consumer lending. It provides personalized deposit products and services, as well as real estate finance, commercial loans and trade finance credit facilities to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals and high net worth individuals. In addition, as an accommodation to many of its clients and as a way to gain new business, the company offers single family residential mortgage loans. The company conducts operations from its main office in downtown Los Angeles, California and through full-service branch banking offices in Los Angeles, Orange, and San Francisco Counties in California, as well as in Queens County in New York. It markets its services and conducts its business primarily in the same markets as its branch office locations. Market The company conducted operations from its main office in downtown Los Angeles, California and through full-service branch banking offices in Los Angeles, Orange, and San Francisco Counties in California; and in Queens County, New York. The company markets its services and conducts its business primarily in the same markets as its branch office locations. Traditional Banking Business The company provides a range of deposit and loan products and services to customers primarily within the following categories: Real Estate Finance: Consisting of investors and developers within the real estate industry and of owner-occupied properties in Southern California. The company provides construction loans and mini-permanent (‘mini-perm’) loans for residential, commercial, industrial and other income producing properties, although construction lending is no longer a focus for new business. A portion of the company’s real estate loans are to borrowers who are also international trade finance customers. Middle Market Business: Consisting of manufacturing, service and distribution companies with the annual sales of approximately $5 million to $100 million and with borrowing requirements of approximately $12 million. The company offers a range of lending products to customers in this market, including working capital loans, equipment financing and commercial real estate loans. Additionally, it provides a range of deposit products and related services, including safe deposit boxes, account reconciliation, courier service and cash management services. Trade Finance: Consisting of importers and exporters based in the U.S. requiring both borrowing and operational products. The company offers a range of products to international trade finance customers, including commercial and standby letters of credit, acceptance financing, documentary collections, foreign draft collections, international wires and foreign exchange. High-wealth Banking: Consisting of wealthy individuals residing in the Pacific Rim area with residences, real estate investments or businesses in Southern California. The company offers its banking products and services to this segment through its multi-lingual team in the business environment and financial affairs of Pacific Rim countries. Professionals: Consisting of physicians, accountants, attorneys, business managers and other professionals. The company provides specialized personal banking services to customers in this segment, including courier service, various types of specialized deposit accounts and personal and business loans, as well as lines of credit. Mortgage: The company provides an array of financing options for the purchase and refinance of single family residential homes and condominiums. Typically, these loans are not ‘Qualifying Mortgages’ (QM) as defined by the Consumer Financial Protection Bureau. Loans originated that qualify as QM’s are sold to the Federal Home Loan Mortgage Corporation. All other loans originated are for the company’s own portfolio. The company provides an internet banking website with bill pay and treasury management services, as well as mobile banking for phone and tablet applications for its clients. In 2019, the company also began to offer online account opening for certain deposit products. Lending Activities The company’s loan portfolio primarily includes five categories of loans, including real estate mortgage loans; commercial loans; real estate construction loans; Small Business Administration (SBA) loans; and trade finance. Real Estate Mortgage Loans The company’s real estate mortgage portfolio consists primarily of real estate mini-perm loans, as well as residential mortgages. Real estate loans are secured by retail, industrial, office, special purpose, and residential single and multi-family properties and included 63% of its loan portfolio, as of December 31, 2021. Real Estate Construction The company’s construction loans are short-term loans of approximately 24 months for the purpose of funding the costs of constructing a building. Commercial Loans The company offers various commercial loan products, including lines of credit for working capital, term loans for capital expenditures and commercial and stand-by letters of credit. Lines of credit have a one to two year commitment and are secured by the borrower’s assets. SBA Loans SBA loans consist of Paycheck Protection Program (PPP) loans made pursuant to The Coronavirus Aid, Relief, and Economic Security Act, which provide loans to eligible small businesses through the SBA’s 7(a) loan guaranty program. Trade Finance Credits The company’s new trade finance credit relationships result from contacts and relationships with existing clients, certified public accountants and trade facilitators, such as customs brokers. The company offers various services to importers, including commercial letters of credit; import lines of credit; documentary collections; international wire transfers; and acceptances/trust receipt financing. The company offers various services to exporters, such as export letters of credit; export finance; documentary collections; bills purchase program; and international wire transfers. Deposits The company provides an array of deposit products. It offers regular checking, savings and money market deposit accounts; fixed-rate, fixed maturity retail certificates of deposit ranging in terms from one month to three years; and individual retirement accounts and non-retail certificates of deposit consisting of Jumbo certificates of deposit (CDs). Investment Activities The company’s portfolio of investment securities consists primarily of investment grade corporate notes, the U.S. agency mortgage-backed securities, municipal bonds, collateralized mortgage obligations and the U.S. government agency securities, the U.S. treasury bills, and Small Business Administration (SBA) securities. Regulation and Supervision Regulation and supervision by the federal and state banking agencies is intended primarily for the protection of depositors, the Deposit Insurance Fund (DIF) administered by the Federal Deposit Insurance Corporation (FDIC), borrowers and the stability of the U.S. banking system, and not for the benefit of the bank’s shareholders. As a California state-chartered bank that is not a member of the Federal Reserve System, the company is subject to supervision, periodic examination and regulation by the California Department of Financial Protection and Innovation (CDFPI), CDFPI as the bank’s state regulator, and the FDIC as the bank’s primary federal regulator. The FDIC insures the company’s customer deposits through the DIF up to prescribed limits for each depositor. The company is a member of the FHLB. The bank’s common stock is publicly held and listed on the NASDAQ Global Select Market (NASDAQ), and the bank is subject to the periodic reporting information, proxy solicitation, insider trading, corporate governance and other requirements and restrictions of the Securities Exchange Act of 1934, as amended as adopted by the FDIC and the regulations of the Securities and Exchange Commission promulgated thereunder to the extent such regulations have been adopted by the FDIC, as well as listing requirements of NASDAQ. The bank is subject to Federal Reserve Regulation O and companion California banking law limitations. The bank is also subject to certain restrictions imposed by Federal Reserve Act Sections 23A and 23B and Federal Reserve Regulation W on any extensions of credit to, or the issuance of a guarantee or letter of credit on behalf of, any affiliates, the purchase of, or investments in, stock or other securities thereof, the taking of such securities as collateral for loans, and the purchase of assets of any affiliates. The bank must comply with various federal and state anti-money laundering and consumer protection statutes and implementing regulations, including the USA PATRIOT Act of 2001, the Bank Secrecy Act, the Foreign Account Tax Compliance Act, the Community Reinvestment Act, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, the California Homeowner Bill of Rights and various federal and state privacy protection laws. The company’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC). It is a member of the Federal Home Loan Bank (FHLB) of San Francisco and of the FHLB of New York. History Preferred Bank was founded in 1991. The company was incorporated in 1991.