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Preferred Bank (PFBC)
NASDAQ:PFBC
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Preferred Bank
(NASDAQ:PFBC)
76Outperform
Preferred Bank (PFBC) vs. S&P 500 (SPY)
Market Cap
$1.06B
Dividend Yield3.6%
Average Volume (3M)120.32K
Price to Earnings (P/E)8.2
Beta (1Y)0.92
Revenue Growth8.03%
EPS Growth-8.05%
CountryUS
Employees300
SectorFinancial
Sector Strength85
IndustryBanks - Regional
Share Statistics
EPS (TTM)9.63
Shares Outstanding13,392,737
10 Day Avg. Volume147,540
30 Day Avg. Volume120,319
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.52
Price to Cash Flow (P/CF)5.40
P/FCF Ratio3.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$106.00Price Target Upside33.67% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Preferred Bank Business Overview & Revenue Model
Company DescriptionPreferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals in the United States. The company accepts checking, savings, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; and commercial loans comprising lines of credit for working capital, term loans for capital expenditures, and commercial and stand-by letters of credit; and SBA loans. In addition, the company offers trade finance services, including commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, acceptances/trust receipt financing products, export financing, documentary collections, and bills purchase programs. Further, it provides various high-wealth banking services to wealthy individuals residing in the Pacific Rim area; and remote deposit capture, and online and mobile banking services. Additionally, the company offers various banking services to physicians, accountants, attorneys, business managers, and other professionals; and safe deposit boxes, account reconciliation, courier service, and cash management services to the manufacturing, service, and distribution companies. As of December 31, 2021, it had eleven full-service branch offices in Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera, Tarzana, and San Francisco; and one branch in Flushing, New York. The company was incorporated in 1991 and is headquartered in Los Angeles, California.
How the Company Makes MoneyPreferred Bank makes money primarily through interest income from its lending activities, including commercial real estate loans, business loans, and personal loans. The bank also generates revenue from fees associated with its deposit products and other banking services, such as treasury management and international banking services. Additionally, the bank earns income from investment securities and other financial instruments. Preferred Bank benefits from its strategic focus on serving the financial needs of the Chinese-American community and other niche markets, allowing it to leverage relationships and specialized knowledge to drive growth and profitability.
Preferred Bank Financial Statement Overview
Summary
Preferred Bank demonstrates solid financial health with consistent revenue growth and a strong balance sheet. While profitability indicators show potential areas for improvement, especially in managing costs and liabilities, the bank's cash flow positions it well for strategic investments. Continued focus on cost efficiency and leverage management will be critical to sustaining growth and profitability.Income Statement
Preferred Bank exhibits robust revenue growth over the years, with a steady increase from $170.9M in 2019 to $283.9M in 2024. The gross profit margin remains consistent at 100%, indicative of the banking industry's nature. However, a decline in net income from $150M in 2023 to $130.7M in 2024 suggests a need to improve cost management or address declining profitability. EBIT and EBITDA margins are not available for the latest year, limiting a full profitability assessment.78
Positive
Balance Sheet
The bank maintains a strong equity position, with stockholders' equity growing from $470M in 2019 to $763.2M in 2024. The debt-to-equity ratio is low, indicating prudent leverage and financial stability. The equity ratio improved, showcasing a balanced asset structure. However, the increment in total liabilities necessitates vigilant risk management.82
Very Positive
Cash Flow
Operating cash flow remains positive, supporting ongoing operations with a slight decline from $175.4M in 2023 to $164.5M in 2024. Free cash flow is stable, yet the growth rate has slowed. The free cash flow to net income ratio remains strong, reflecting efficient cash conversion. However, significant investing cash outflows highlight potential long-term strategic investments.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 283.96M | 275.59M | 254.40M | 193.62M | 180.21M | Gross Profit |
| 283.96M | 481.76M | 254.40M | 193.62M | 180.21M | EBIT |
| 0.00 | 210.63M | 226.22M | 133.83M | 96.86M | EBITDA |
| 0.00 | 211.57M | 181.09M | 135.72M | 98.77M | Net Income Common Stockholders |
| 130.66M | 150.04M | 128.84M | 95.24M | 69.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 765.51M | 910.85M | 1.18B | 1.48B | 979.15M | Total Assets |
| 6.92B | 6.67B | 6.43B | 6.05B | 5.14B | Total Debt |
| 165.46M | 168.00M | 168.94M | 170.62M | 118.02M | Net Debt |
| -600.06M | -742.85M | -578.58M | -859.99M | -621.45M | Total Liabilities |
| 6.16B | 5.97B | 5.79B | 5.46B | 4.62B | Stockholders Equity |
| 763.15M | 695.11M | 630.43M | 586.72M | 525.45M |
| Cash Flow | Free Cash Flow | |||
| 163.60M | 172.98M | 143.40M | 119.03M | 102.27M | Operating Cash Flow |
| 164.52M | 175.39M | 143.76M | 119.63M | 103.77M | Investing Cash Flow |
| -421.62M | -98.03M | -699.89M | -620.01M | -318.77M | Financing Cash Flow |
| 131.76M | 65.97M | 273.05M | 791.52M | 438.82M |
Preferred Bank Technical Analysis
Negative
79.30
Price Trends
83.85
Negative
85.98
Negative
82.98
Negative
Market Momentum
-1.72
Negative
46.12
Neutral
63.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFBC, the sentiment is Negative. The current price of 79.3 is below the 20-day moving average (MA) of 80.45, below the 50-day MA of 83.85, and below the 200-day MA of 82.98, indicating a bearish trend. The MACD of -1.72 indicates Negative momentum. The RSI at 46.12 is Neutral, neither overbought nor oversold. The STOCH value of 63.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PFBC.
Preferred Bank Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.06B | 8.20 | 17.92% | 3.60% | 8.03% | -8.05% | |
75 Outperform | $960.60M | 8.15 | 10.77% | 5.82% | 17.88% | -3.25% | |
72 Outperform | $1.02B | 14.98 | 10.83% | 1.62% | 19.72% | -10.57% | |
71 Outperform | $1.09B | 12.15 | 10.64% | 2.65% | 18.29% | 13.31% | |
70 Outperform | $1.07B | 8.66 | 11.60% | 1.55% | 16.41% | 3.09% | |
67 Neutral | $928.26M | 12.12 | 6.93% | 1.99% | 5.48% | -9.46% | |
63 Neutral | $12.75B | 9.36 | 8.64% | 84.32% | 13.82% | -3.89% |
* Financial Sector Average
Performance Comparison
PFBC
Preferred Bank
79.30
10.37
15.04%
PEBO
Peoples Bancorp
27.69
1.86
7.20%
RBCAA
Republic Bancorp
62.55
16.49
35.80%
BY
Byline Bancorp
23.97
4.39
22.42%
OBK
Origin Bancorp
30.37
3.02
11.04%
BFC
Bank First National
106.27
31.33
41.81%
Preferred Bank Earnings Call Summary
Earnings Call Date: Jan 27, 2025 | % Change Since: -7.47% | Next Earnings Date: Apr 25, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a generally strong financial performance with substantial improvements in credit quality and shareholder returns. However, there were challenges such as moderate growth in loans and deposits, and a significant non-recurring expense. The sentiment is balanced with both positive achievements and notable challenges.Highlights
Net Income Achievement
Preferred Bank reported a net income of $131 million for the year with a return on assets of 19.1% and a return on equity of 18.8%, outperforming industry averages.
Successful Share Repurchase
The bank repurchased 464,000 shares of common stock for a total of $34 million, indicating strong financial management.
Improved Credit Quality
Non-performing loans reduced by 50% from $20 million to $10 million, and criticized loans decreased by 33% in the fourth quarter.
Dividend Increase
The board announced an increase in dividends from $0.70 to $0.75 payable in January.
Tangible Book Value Growth
Tangible book value on common stock improved from $50.54 to $57.86.
Lowlights
Non-Recurring Expense Impact
An $8.1 million adjustment to rental expenses over five years negatively impacted net income by $0.42 per share.
Moderate Loan and Deposit Growth
Loan growth of 7% and deposit growth of 3.6% were considered moderate compared to previous years.
Los Angeles Wildfire Impact
The wildfire caused significant damage in the community, potentially affecting commercial real estate loans.
Higher Operating Expenses Anticipated
Non-interest expenses are expected to be around $23 million in Q1 due to increased payroll taxes and donations to wildfire relief funds.
Company Guidance
During the Preferred Bank Fourth Quarter 2024 Earnings Call, several key financial metrics were highlighted. The bank closed the year with a net income of $131 million, translating to $9.64 per share, and a return on assets of 19.1%, while return on equity was 18.8%. For the quarter, net income reached $30.3 million, or $2.25 per share, negatively impacted by a $8.1 million correction of rental expenses, equivalent to $0.42 per share after-tax. Loan and deposit growth were moderate at 7% and 3.6%, respectively, with non-performing loans reduced by 50% to $10 million. The leverage capital ratio improved from 10.85% to 11.33%, and the tangible book value per share increased from $50.54 to $57.86. Additionally, the board announced a dividend increase from $0.70 to $0.75 per share and repurchased 464,000 shares for $34 million. The net interest margin was stable, with a quarterly NIM of 4.06% and a spot margin for December at 3.98%. The bank anticipates relatively stable margins for the first quarter of 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.