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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
$1.14B
Dividend Yield3.4%
Average Volume (3M)136.83K
Price to Earnings (P/E)9.1
Beta (1Y)0.83
Revenue Growth0.94%
EPS Growth-8.61%
CountryUS
Employees323
SectorFinancial
Sector Strength85
IndustryBanks - Regional
Share Statistics
EPS (TTM)2.23
Shares Outstanding13,392,737
10 Day Avg. Volume135,034
30 Day Avg. Volume136,831
Financial Highlights & Ratios
PEG Ratio-4.01
Price to Book (P/B)1.41
Price to Sales (P/S)0.00
P/FCF Ratio6.79
Enterprise Value/Market Cap1.12
Enterprise Value/Revenue0.74
Enterprise Value/Gross Profit2.81
Enterprise Value/Ebitda2.85
Forecast
1Y Price Target
$93.67Price Target Upside9.80% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
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 |
| 184.03M | 210.63M | 226.22M | 133.83M | 96.86M | EBITDA |
| 186.18M | 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
Positive
85.31
Price Trends
81.62
Positive
84.15
Positive
83.43
Positive
Market Momentum
1.07
Negative
59.06
Neutral
67.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFBC, the sentiment is Positive. The current price of 85.31 is above the 20-day moving average (MA) of 82.89, above the 50-day MA of 81.62, and above the 200-day MA of 83.43, indicating a bullish trend. The MACD of 1.07 indicates Negative momentum. The RSI at 59.06 is Neutral, neither overbought nor oversold. The STOCH value of 67.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PFBC.
Preferred Bank Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.14B | 9.05 | 17.21% | 3.40% | 0.94% | -8.61% | |
75 Outperform | $1.10B | 9.75 | 10.12% | 5.19% | 7.34% | -4.94% | |
74 Outperform | $1.27B | 12.19 | 11.98% | 2.28% | 12.38% | 26.96% | |
73 Outperform | $1.25B | 10.06 | 11.08% | 1.36% | 7.68% | -1.13% | |
73 Outperform | $1.15B | 17.08 | 10.82% | 1.42% | 18.79% | -11.25% | |
70 Outperform | $1.06B | 14.01 | 6.75% | 1.75% | 1.00% | -7.88% | |
64 Neutral | $12.82B | 9.83 | 7.68% | 17000.34% | 12.38% | -5.56% |
* Financial Sector Average
Performance Comparison
PFBC
Preferred Bank
85.31
9.55
12.61%
PEBO
Peoples Bancorp
30.82
2.44
8.60%
RBCAA
Republic Bancorp
73.34
21.35
41.07%
BY
Byline Bancorp
27.09
3.65
15.57%
OBK
Origin Bancorp
34.17
1.71
5.27%
BFC
Bank First National
116.25
36.46
45.69%
Preferred Bank Earnings Call Summary
Earnings Call Date:Apr 25, 2025
(Q1-2025)
| % Change Since: -0.78%|
Next Earnings Date:Jul 16, 2025
Earnings Call Sentiment Neutral
The earnings call reveals challenges due to non-performing loans and external economic uncertainties, such as the tariff war. However, there are positive aspects, including deposit growth and ongoing efforts to resolve non-performing loans. The sentiment is balanced but slightly leans towards the negative due to significant challenges and uncertainties.Q1-2025 Updates
Positive Updates
Net Income and Earnings Per Share
Preferred Bank reported a net income of $30 million or $2.23 per share for the first quarter of 2025.
Deposit Growth
Deposits increased by 2.6% on a linked-quarter basis. Deposit costs are reducing as planned.
Loan Resolutions
A non-performing loan valued at $28.5 million is under contract for sale, with non-refundable deposits received. Another $37 million loan is in bankruptcy proceedings with a loan-to-value of 71% and interest from buyers at $49 million.
Negative Updates
Impact of Non-Performing Loans
Net income was negatively impacted by an outsized reversal of interest income due to elevated non-performing loans totaling $71 million.
Loan Growth Challenges
Negative loan growth of $6 million, approximately 0.1% of the total loan portfolio, was reported.
Tariff War Uncertainty
The ongoing tariff war creates significant uncertainty, impacting loan demand and necessitating careful monitoring of the loan portfolio.
Interest Reversals Affecting Net Interest Margin
Reversal of interest has impacted the net interest margin, reported at 3.75% for the quarter, down from an internally estimated 4.06%.
Company Guidance
During the Preferred Bank First Quarter 2025 Earnings Conference Call, management provided detailed financial insights and guidance. The bank reported a net income of $30 million, equating to $2.23 per share, for the first quarter ending March 31, 2025. The quarter's performance was impacted by a $1.3 million charge-off related to real estate owned loans and a reversal of interest income due to $71 million in non-performing loans, with $66 million tied to a single borrower relationship. The bank's net interest margin stood at 3.75%, affected by these reversals, though internally estimated to be closer to 4.06% without them. Despite a slight negative loan growth of $6 million (approximately 0.1% of the total loan portfolio), deposits increased by 2.6% quarter-over-quarter, with a noted reduction in deposit costs. The bank expressed cautious optimism regarding loan demand amidst uncertainties stemming from global tariff issues and emphasized ongoing portfolio monitoring, particularly within its $200 million trade finance segment. The management also highlighted the bank's cautious approach in the face of potential economic uncertainties while maintaining a robust focus on risk assessment and customer engagement.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.