Preferred Bank (PFBC) 2008 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Preferred Bank Second Quarter 2008 Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (OPERATOR INSTRUCTIONS)

This conference is being recorded today, Tuesday, July 22, 2008. I'd now like to turn the conference over to Lasse Glassen with the Financial Relations Board. Please go ahead, sir.

Thank you. Good day, everyone, and thanks for joining us to discuss Preferred Bank's results for the second quarter ended June 30, 2008.

With us today from management are Mr. Li Yu, Chairman, President, and Chief Executive Officer; Bob Kosof, Chief Credit Officer; and Ed Czajka, Chief Financial Officer.

Management will provide a brief summary of the quarter, and then we'll open the call up 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 related to Preferred Bank's operations and business environment, all of which are difficult to predict and many which are beyond the control of Preferred Bank.

For a detailed description of these risks and uncertainties, please refer to the documents the Company 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 now like to turn the call over to Mr. Li Yu. Mr. Yu?

Thank you, Lasse. Good afternoon, ladies and gentlemen.

With the highest earning record in the past, I'm certainly not pleased with the second quarter earning that we're reporting today. However, I'm not totally disappointed.

During this quarter, we have been very aggressive in taking a historically high $7.2 million in loan loss reserve. We also chose to write down the value of Freddie Mac preferred stock by $1.9 million even though subsequently at this time the value of these securities seems to have greater prospects now.

The housing market in Southern California has not improved much in the third quarter; in fact, as of this moment, it has not improved much. Although the greatest value deterioration seems to be over or behind us and the value reduction the last couple months seems to be much more milder -- in some areas, it's not even happening -- but today the new challenge or the problem is the mortgage availability.

Today, a good qualified borrower will find it very hard to get a mortgage. The mortgage lender had no problem lending $105 on $100 property in the past. Now, they have great problem. On the same property, they're lending $64 on $80 value.

As a result, our [Buta] customers are under pressure. Interest carrying certainly becomes a big burden, and sometimes partnership price can lead to legal action that we're dragged into it.

However, about the only one bright spot in this area is that the migration of loans from our performing portfolio into the past-due category seemed to have slowed down very much in the months of May and June, and we pray that this is not a temporary situation.

During this very difficult quarter, we also made improvement to our financial conditions. We have improved our capital ratio. We have improved our liquidity. And we think we've improved our balance sheet structure.

Looking forward, although we hope things will change soon, but I must say it remains my -- my vision remains that it is challenging and difficult. However, it is my opinion that there's nothing that we cannot manage, and I believe my board and my staff feel the same way.

As a result, many board members, together with myself and many, many of our office employees have been purchasing our stock. Insider ownership now is estimated over 30% and probably up to 32% now.

Now, with all this information, I'm opening for questions. Lasse?

I'm sorry, sir. And ladies and gentlemen, we will now begin the question-and-answer session. (OPERATOR INSTRUCTIONS)

And we currently have no participants in the audio queue, sir.

Okay, nobody's asking questions?

No, sir.

Okay. Well, in that case, thank you very much. Thank you all for your attention. Good afternoon again.

Ladies and gentlemen, this concludes the Preferred Bank's Second Quarter 2008 conference call. If you would like to listen to a replay of today's conference, please dial 800-405-2236 or 303-590-3000, with the passcode 11117331. ACT would like to thank you for your participation, and you may now disconnect.