Preferred Bank Bumps Up Quarterly Dividend By 26.7%

Preferred Bank increased its quarterly cash dividend by 26.7% to $0.38 per share. Prior to this, the commercial bank raised its dividend payout by 20% to $0.30 in Dec. 2018.

Preferred Bank (PFBC) announced that the new dividend will be paid on April 21 to shareholders of record as of April 7.

The company’s annual dividend of $1.52 per share now reflects a dividend yield of 2.34%.

Preferred Bank CEO Li Yu commented, “We are very pleased to increase the dividend and it is a direct reflection of the strong performance of the Bank through the past year as well as expectations for the future. This also serves to maintain our stated desired dividend payout ratio.”

In January, Preferred Bank reported 4Q results. The company’s 4Q earnings rose 6.9% year-over-year to $1.40 per share and outpaced Street estimates of $1.16. Net interest income jumped 14% to $46.1 million and exceeded analysts’ expectations of $44.4 million. (See Preferred Bank stock analysis on TipRanks)

On Feb. 24, B.Riley Financial analyst Steve Moss raised the stock’s price target to $75 (15.4% upside potential) from $73 and reiterated a Buy rating.

In a note to investors, Moss said, “Preferred is well positioned to grow earnings in 2021 as credit costs decline and loan growth accelerates at attractive spreads.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 1 Buy and 2 Holds. The average analyst price target of $64.50 implies that shares are almost fully valued at current levels. Shares have increased 32% so far this year.

Preferred Bank scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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