Preferred Bank

Big Lake, MN · Cert 1414

FDIC · 23 branches

Q3 2018

$2.0BAssets

$1.1BLoans

$1.7BDeposits

$197.7MEquity

Loan mix

Deposit mix

NIM

Market Position · Minneapolis-St. Paul-Bloomington, MN-WI · 2018 SOD (annual) · 0.9% share · #9 of 149 inst. · $1.6B of $184.8B

41.3% Carver

21.2% Scott

8.7% Wright

0.1% Hennepin

Earnings: ROA of 1.87%, up 49 bps year over year; NIM at 3.45%.
Asset quality: problem loans at 0.49% of loans (-45 bps YoY), with net charge-offs at 0.01%.

Return on Assets (YTD, annualized)

1.87%+49 bps YoY

Net Interest Margin (YTD, annualized)

3.45%+30 bps YoY

Efficiency Ratio (YTD, annualized)

59.78%-637 bps YoY

Tier 1 Leverage Ratio

10.03%+88 bps YoY

Year to date, annualized, through each quarter.

Metric	Q3 2017	Q4 2017	Q1 2018	Q2 2018	Q3 2018	YoY Δ	Trend
Earnings
Return on Assets	1.38%	1.36%	1.50%	1.62%	1.87%	+49 bps
Return on Equity	13.34%	13.19%	14.96%	16.20%	18.63%	+529 bps
Net Interest Margin	3.15%	3.07%	3.33%	3.32%	3.45%	+30 bps
Efficiency Ratio	66.15%	66.00%	66.48%	63.04%	59.78%	-637 bps
Non-Interest Burden	1.73%	1.69%	1.92%	1.75%	1.60%	-14 bps
Growth
Asset Growth (YoY)	2.88%	4.72%	3.11%	0.88%	-0.66%	-354 bps
Loan Growth (YoY)	8.41%	8.78%	6.53%	3.31%	0.90%	-750 bps
Deposit Growth (YoY)	5.36%	6.29%	6.77%	5.46%	2.25%	-311 bps
Asset Quality
Nonperforming Loans / Loans	0.93%	0.78%	0.90%	0.69%	0.49%	-45 bps
Net Charge-Offs / Loans	0.01%	0.04%	0.05%	0.05%	0.01%	+1 bps
Allowance / Loans	1.27%	1.21%	1.21%	1.20%	1.21%	-5 bps
Allowance Coverage of NPLs	1.4x	1.5x	1.3x	1.7x	2.5x	+1.1x
Capital
Tier 1 Leverage Ratio	9.14%	8.96%	9.45%	9.42%	10.03%	+88 bps
Total Risk-Based Capital	13.15%	13.19%	13.69%	13.92%	14.44%	+129 bps
Equity / Assets	10.30%	10.08%	9.94%	10.00%	10.09%	-22 bps
Liquidity & Funding
Loans / Deposits	64.38%	64.45%	62.85%	63.27%	63.53%	-85 bps
Liquid Assets / Assets	0.28%	0.02%	1.75%	0.66%	1.02%	+74 bps
CRE / Total Capital	n/a	n/a	n/a	n/a	n/a	n/a	n/a