Howe Barnes Hoefer

1

• Howe Barnes Hoefer Arnett
• 13th Annual Community Bank Conference
• August 20, 2008
• Edward J. Czajka, CFO

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Forward Looking Statements
During the course of this presentation,
management may make statements regarding events
or future financial performance of the Bank.
These statements may include comments with
respect to our objectives and strategies, and the
results of our operations and our business.
However, by their nature, these forward-looking
statements involve numerous assumptions,
uncertainties and opportunities, both general and
specific. These statements are based on the
beliefs and assumptions of the management of
PFBC, and on the information available to
management at the time the presentation materials
were prepared. The risk exists that these
statements may not be fulfilled. We caution
readers of this presentation not to place undue
reliance on these forward-looking statements as a
number of factors could cause future results to
differ materially from these statements.
Forward-looking statements may be influenced in
particular by factors such as fluctuations in
interest rates and stock indices, the effects of
competition in the areas in which we operate, and
changes in economic, political, and regulatory
conditions. We caution that the foregoing list
is not exhaustive. When relying on
forward-looking statements to make decisions,
investors should carefully consider the
aforementioned factors as well as other
uncertainties and events.
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About Preferred Bank (PFBC)

• Founded in December 1991
• Headquartered in Los Angeles, CA
• 11 branches in Southern California, 2 more
  approved
• Serving both Chinese and mainstream markets
• Focused on banking small businesses and wealthy
  individuals no consumer loans
• IPO in February 2005, 1,478,000 shares issued at
  25
• - Figures restated to reflect three-for-two
  stock split in February, 2007

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About Preferred Bank (PFBC)

• At June 30, 2008
• 1.52 billion in total assets
• 1.28 billion in total deposits
• 1.20 billion in total loans
• 2008 Q2 diluted EPS of 0.00 vs. 0.65 in Q2 2007
• 2008 Q2 cash dividend of 0.10/share
• Average daily trading volume of 226k shares-
  represents 2.3 of TSO

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About Preferred Bank (PFBC)
Board members, officers and employees increased
their stake in Preferred Bank during Q2 to
approximately 31, excluding options Board owns
approximately 19of TSO Employees own
approximately12of TSO
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PFBC Stock Profile
Ticker Symbol NASDAQ PFBC Recent Price 9.88
(8/12/08) Shares O/S 9.7mm Market
Cap 96.4mm Average Volume 226m Annual
Dividend .40 Dividend Yield 4.05
Analyst Coverage Keefe, Bruyette Woods,
Inc Sandler ONeill Partners, LP D.A. Davidson
Co RBC Capital Markets Friedman, Billings,
Ramsey Co. Inc Howe Barnes Hoefer Arnett, Inc
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Q2 Results Summary

• 7.2mm provision for loan losses--
• Compared to 750k in Q2 2007
• Compared to 5.1mm in Q1 2008
• 7.2mm in charge-offs
• 1.9mm OTTI impairment charge
• Non-accrual loans increased 18mm to 54.2mm
• Loans 30-89 days past due decreased from 50.7mm
  in Q1 2008 to 18.7mm in Q2 2008

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Q2 Results Summary vs Q1

• Two of three capital ratios improved
• Tier 1 risk-based improved to 10.94 from 10.53
• Total risk-based improved to 12.20 from 11.93
• Tier 1 leverage ratio- slightly down at 9.80
• Net loan-to-deposit ratio decreased from 97.2 to
  92.7
• Total borrowed funds decreased from 111mm to
  77mm
• NIM decreased from 4.11 to 3.63 of which 30 bps
  due to non-accrual
• Efficiency ratio (ex OTTI charge) at 32.9, up
  slightly from 32.0 (46.8 including OTTI)

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Our Market
L. A., Orange, San Bernardino Counties Total
Population of 14.4 million Over 455,000 people of
Chinese descent, represents 41 of Chinese in
California Business Market Total of 250,000
businesses 526 billion in annual total
sales/receipts - 2005 Census Estimates
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(No Transcript)
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Loan Portfolio
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Geographic Dispersion of R/E Loans
Inland Southern All Other Outside
of Loan Type
Empire California California California
Mini-Perm Residential 14,190
154,436 53,513 11,415Mini-Perm
Commercial 31,281 213,376
14,257 31,407 Commercial Construction
9,146 76,640 7,464
--Residential. Construction
17,305 230,086 3,200
12,789Totals 71,922 674,538
78,434 55,611 of Total R/E Loans
8.2 76.6 8.9
6.3
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Non-Performing Loans
90 Days Accruing Non-Accrual
Commercial Industrial -
- 4 3,528,000 Real Estate -
- 2 1,535,000 Construction Commercial -
- - - Construction
- Housing 1 2,704,000 1 15,857,000 Construc
tion Condo - - 4
22,125,000 Land Residential 3
15,350,000 2 11,147,000 Land Commercial 1
5,735,000 -
- Total 5 23,789,000 13 54,192,000
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Inland Empire Exposure
Total Outstanding Non-Performing
Commercial Industrial -
- - - Real
Estate 9 15,558,000 -
- Construction Commercial 4 9,146,000 -
- Construction - Housing 1 15,857,00
0 1 15,857,000 Construction Condo -
- - - Land
Residential 11 15,635,000 2 11,270,000 Land
Commercial 4 15,723,000 1 5,735,000
Total 29 71,922,000 4 32,86
2,000
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Loan Portfolio Composition
 
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Construction Portfolio Composition
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Commercial Real Estate Portfolio Composition
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Net Interest Margin
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Operating Results Net Interest Margin
Q2 08 NIM decreased by 30 bps due to
non-accrual interest reversals
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Funding Composition
 
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Capital
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Capital Cushion
PB as of 6/30/08 Well-Capitalized Excess Tier
1 Leverage Ratio 9.8 5.0 4.8 152.3mm 7
7.5mm 74.8mm Tier 1 Risk-Based
Ratio 10.9 6.0 4.9 152.3mm 83.5mm 68
.8mm Total Risk Based Capital Ratio 12.2 10.0
2.2 169.7mm 139.2mm 30.5mm
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Business Model
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Business Model - Efficiency
We focus on our core target market
Small/Medium-size businesses Wealthy
individuals Real estate investors Few
accounts Approximately 14,600 deposit accounts
which is an average of 88,000 per
account 116.7mm in deposits per office
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• Business Model - Efficiency

• Outsource back-office support functions
• Human Resources
• Local Area Network Telecommunications
• Core Processor
• Item Processing
• Financial Reporting
• Internal Audit
• Q2 2008 Efficiency Ratio of 32.9
• Ex OTTI Charge

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Priorities
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Priorities
Manage credit and credit costs Maintain
conservative provision stance Strengthen credit
monitoring function Hired Workout
specialist Hired new SVP of Credit Admin Take
advantage of market dislocation Continue to
bolster liquidity Add to production
staff Increase branch locations
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Priorities

• Take advantage of better loan pricing in this
  lending environment
• Communicate to our customers and shareholders
• We are a safe bank with solid capital and good
  earnings
• We are looking for qualified new business

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Questions