Chairman's Message from the 2015 Annual Report


April 9, 2016


Dear Shareholders:


Last year I wrote to you that I believed that 2014 was perhaps the most successful year in the history of Preferred Bank. Although not surprised, I am very pleased to report to you that our performance in 2015 was even better.

Although we executed very well against our Plan for 2015, that performance was not necessarily reflected in the performance of our common stock as bank stocks fell out of favor in the latter part of 2015. Even against this headwind, the total return to our shareholders was still in excess of 20% for the year.

During 2015, Preferred Bank acquired United International Bank in Flushing New York, our first acquisition which contributed $149 million in loans and $157 million in deposits to our growth for the year. At this time, I am very pleased to say that we have thus far executed well against our integration and growth plans. This important transaction opens up a new market for us (New York) in a very meaningful way.

Preferred Bank now has reached an all-time high in total assets of $2.6 billion. During the year, excluding the UIB acquisition, we grew loans by $305.6 million or 19.1% and we grew deposits by $354.6 million or 20.0% while improving the deposit mix at the same time. Fully diluted net income per share grew from $1.78 to $2.14 for the year, an increase of 20.2%.

We continue to work hard to manage our overhead costs. Even with the acquisition-related charges incurred in the third and fourth quarters of 2015, our efficiency ratio came in at 40.7% for 2015, just slightly down from the 40.8% we posted in 2014.

While growing the Bank, we are continually mindful of potential changes in interest rates. As we have stated in the past, our balance sheet is very well positioned to take full advantage of an increase in short term interest rates.

S&P Global Intelligence recently ranked U.S. banks based on a number of criteria; for 2015 Preferred Bank was ranked number 3 in the U.S. for banks between $1 billion and $10 billion in total assets and was number 1 on the same list for banks that are publicly-traded.

The Board of Directors and management are grateful for the support and confidence placed in us – we are very optimist about 2016.


Very truly yours,


Li Yu

Chairman of the Board

Chief Executive Officer