Preferred Bank (PFBC) of Los Angeles has signed a memorandum of understanding with regulators after a more formal consent order was lifted.

The memorandum with the California Department of Financial Institutions and the Federal Deposit Insurance Corp. requires the $1.4 billion-asset bank to maintain a Tier 1 leverage ratio of at least 10%. At March 31, the bank's core capital leverage ratio was 12.69%, according to the FDIC.

The memorandum also requires the bank to continue to reduce its adversely classified assets, Preferred said Thursday. At March 31, Preferred's noncurrent loans totaled 3.24%, down from 11.74% a year earlier, according to the FDIC.

The consent order from March 2010 had required the bank to review the effectiveness of its management and personnel structure, increase its allowance for loan and lease losses and implement a written liquidity and funds management policy that addresses liquidity needs. The bank also could not pay any dividends without approval.

Preferred reported in April first-quarter income of $22.3 million after the reversal of its valuation allowance on its deferred tax asset.

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