Preferred Bank

Good day, and welcome to the Preferred Bank Fourth Quarter 2024 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by a zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Jeff Haas of Financial Profiles. Please go ahead.

Thank you, Michael. Hello, everyone, and thank you for joining us to discuss Preferred Bank's financial results for the fourth quarter ended December 31, 2024. With me today for management are Chairman and CEO Lee Yu, President and Chief Operating Officer Wellington Chen, Chief Financial Officer Edward Chayka, Chief Credit Officer Nick Pye, and Deputy Chief Operating Officer Johnny Hsu. 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 banks' operations and business environment, all of which are difficult to predict and many of which are beyond the control of preferred banks. For a detailed description of these risks and uncertainties, please refer to the FEC-required documents that 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.

Thank you very much. Tomorrow, January 29th, is a first day of a new year on the lunar calendar, which I personally observe. And I'd like to use this opportunity to wish every one of you a most happy and most healthy new year. Now with Preferred Bank. We close out the year with a net income of $131 million, or $9.64. Return on assets was 19.1%. Return on investment of equity was 18.8%. Both numbers compared very well with the peer group and industry average. For the fourth quarter, our net income was $30.3 million, or $2.25 a share average. This number was negatively impacted by a correction to the rental expenses accumulated over five years in the total amount of $8.1 million. This non-recurring expense adjustment equaled to roughly 42 cents on the after-tax basis. The year... 2024 is a slow growth year for the banking industry. We, too, are not an exception. Our loan growth for the year of 7% and deposit growth of 3.6% was moderate compared to previous year, but probably very much in line with the industry average. Looking forward, at present, we don't see the activity as significant increases yet. For the quarter, we have made good progress in the credit front. Non-performing loans has reduced from $20 million to $10 million a 50% improvement, and criticized loans reduced 33% during the first quarter. We hope the new year will see further progress in this area. The unfortunate event of Los Angeles Wi-Fi has brought very significant damage to our community. Early survey indicated that maybe one commercial real estate loan property may be significantly damaged. Gratefully, our mortgage loan portfolio seems to be unaffected. And also, personally, I'm so pleased to see that none of our employees' homes suffered any significant damage. We at Preferred Bank will be dedicating our best effort to help rebuild our communities, our businesses, and homes. In December, our board has announced the increase in dividends from $0.70 to $0.75 payable in January. This year, meaning 2024, we will also repurchase 464,000 shares of our common stock for a total consideration of $34 million. The Leverage capital ratio has actually improved from 10.85% in the beginning of the year to 11.33% at the end of the year. And common share, I mean, tangible book value on common stock also improved from $50.54 to $57.00. All of us at Prefer Bank is looking forward to continue our consistent performances in the year of 2025. Thank you very much. Now we're ready for your questions.