Under the proposed rights offering, each shareholder of record as of the June 22, 2009 record date, will receive, at no charge, one non-transferable subscription right for each share of Preferred Bank common stock owned on the record date. Each right will entitle the holder to purchase its pro rata allocation of shares of Preferred Bank common stock. The subscription price will be determined immediately prior to commencement of the rights offering.

The proposed rights offering will also include an over- subscription privilege which will entitle each rights holder that exercises its basic subscription privilege in full to purchase any shares not purchased by other shareholders pursuant to their basic subscription privilege at the same subscription price per share that applies to the basic subscription privilege.

Any shares of common stock that remain unsubscribed (after taking into account all over-subscription rights exercised) at the expiration of the rights offering will be offered to the public.

Preferred Bank may, in its sole discretion, increase the number of shares offered by up to an additional 10% of the offering amount. Fractional shares of Preferred Bank's common stock resulting from the exercise of the basic subscription right will be eliminated by rounding down to the nearest whole share, with the total subscription payment being adjusted accordingly.

Preferred Bank will commence the rights offering upon receipt of and subject to the issuance of a stock permit from the California Commissioner of Financial Institutions. The commencement and expiration dates of the rights offering will be included in the final offering circular. It is anticipated that the rights offering will commence within the next four weeks.

The common stock will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. Shares of Preferred Bank's common stock are exempt from registration under the U.S.