Preferred Bank in Los Angeles has revised its fourth-quarter earnings for the second time, increasing its loss to $5 million.
Initially the $1.5 billion-asset company said it lost $468,000. Last week it increased the loss to $3.2 million, citing the need for a higher loan-loss provision after updated appraisals.
Late Wednesday Preferred said it hiked the provision by another $3.1 million. It attributed the increase to a construction loan for a 14-unit condominium project that is 99.5% complete. A recent appraisal put its value at $3.7 million, roughly half of what the company expected.
Li Yu, Preferred's chairman and president, said it questions the appraisal's accuracy. However, since Preferred received the appraisal before filing its annual results with the Securities and Exchange Commission, it decided to adjust the provision.
"This appraisal indicates a value deterioration far beyond our estimation for that area and far in excess of published market statistics," Yu said. "This appraisal has been forwarded to a third-party appraiser for a thorough review."
The adjustment increased the ratio of allowance to total loans to 2.19%, from 1.94% at the last revision on March 18.