Preferred Bank in Los Angeles blamed its lower fourth-quarter profits on tax-related items.
The $1.6 billion-asset bank, which focuses on Chinese-American communities in Southern California, announced Tuesday that it earned $3.4 million in the fourth quarter, down 10% from the year-prior period. Earnings of 25 cents per share were 4 cents above the average forecast of analysts polled by Bloomberg.
Preferred's pre-tax income rose 90%, to $4.5 million. But it failed to beat the after-tax results from the final quarter of 2011, which had benefited from the realization of a $1.4 million deferred tax asset. Preferred had $1.1 million of tax expenses in the fourth quarter of 2012.
Preferred Bank's net interest income increased 26%, to $14.2 million, as the bank ramped up its lending. The bank's net interest margin widened by 22 basis points, to 3.91%. The $2.4 million provision for loan losses was 4% lower, while chargeoffs totaled $3.3 million.
The bank's noninterest income dropped 9%, to $822,000, as a reduction in other income offset higher fee income.
Preferred Bank moved to clean up its balance sheet on the quarter, reducing nonaccrual loans by 56%, to $19 million, year over year. The bank reduced its other real estate owned by $6.7 million, or 19%, and its nonperforming assets by $3.9 million, or 17%, compared with the third quarter.