Preferred Bank (PFBC) AI Stock Analysis

• Market Cap: $1.22B
• Dividend Yield: 3.32%
• Average Volume (3M): 81.21K
• Price to Earnings (P/E): 9.2
• Beta (1Y): 0.87
• Revenue Growth: -3.05%
• EPS Growth: -0.51%
• Country: US
• Employees: 323
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 2.84
• Shares Outstanding: 13,392,737
• 10 Day Avg. Volume: 83,173
• 30 Day Avg. Volume: 81,213
• PEG Ratio: -1.12
• Price to Book (P/B): 1.51
• Price to Sales (P/S): 2.22
• P/FCF Ratio: 7.05
• Enterprise Value/Market Cap: 0.58
• Enterprise Value/Revenue: 1.39
• Enterprise Value/Gross Profit: 2.57
• Enterprise Value/Ebitda: 3.88
• 1Y Price Target: $111.50
• Price Target Upside: 23.22% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: $102.00 ▲(12.72% Upside)

Preferred Bank's overall stock score reflects its solid financial performance and attractive valuation. The earnings call provided a cautiously optimistic outlook, though technical indicators suggest potential short-term volatility. Continued focus on revenue growth and cash flow management will be crucial.

Preferred Bank Business Overview & Revenue Model

Company Description

Preferred 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 Money

Preferred Bank generates revenue primarily through interest income from loans, which is the largest component of its earnings. The bank offers various types of loans, including commercial real estate loans, construction loans, and lines of credit, each carrying interest that contributes to its revenue stream. Additionally, PFBC earns fee income from services such as account maintenance, transaction fees, and service charges. The bank also benefits from its deposit accounts, where it attracts deposits from customers, which are then utilized to fund loans. Strategic partnerships with local businesses and community organizations further enhance its customer base and drive additional deposits and loan opportunities, contributing to its overall profitability.

Preferred Bank Financial Statement Overview

Summary

Preferred Bank demonstrates solid financial health with strong profitability and a stable balance sheet. However, there are concerns regarding declining revenue growth and cash flow conversion, which need attention to sustain financial performance.

Income Statement

Preferred Bank shows strong profitability with a consistent net profit margin around 25% in recent periods. However, the revenue growth rate has declined in the TTM period, indicating potential challenges in revenue generation. The gross profit margin has decreased over time, suggesting increased cost pressures. Despite these challenges, EBIT and EBITDA margins remain healthy, reflecting efficient operations.

Balance Sheet

The balance sheet is robust with a manageable debt-to-equity ratio, which has increased slightly in the TTM period but remains at a comfortable level. Return on equity is strong, indicating effective use of equity to generate profits. The equity ratio is stable, showing a solid capital structure. Overall, the balance sheet reflects financial stability and prudent management of leverage.

Cash Flow

Cash flow metrics indicate a slight decline in free cash flow growth in the TTM period, which could be a concern if it persists. The operating cash flow to net income ratio is low, suggesting potential issues in converting income to cash. However, the free cash flow to net income ratio is nearly 1, indicating that the company is effectively converting its net income into free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	502.88M	520.43M	481.76M	301.43M	218.78M	220.32M
Gross Profit	272.68M	271.86M	283.14M	247.05M	194.62M	154.21M
EBITDA	180.74M	186.18M	211.57M	181.09M	135.72M	98.77M
Net Income	126.47M	130.66M	150.04M	128.84M	95.24M	69.47M
Balance Sheet
Total Assets	7.28B	6.92B	6.67B	6.43B	6.05B	5.14B
Cash, Cash Equivalents and Short-Term Investments	776.32M	765.51M	1.20B	1.18B	1.48B	979.15M
Total Debt	371.68M	165.46M	168.00M	168.94M	170.62M	118.02M
Total Liabilities	6.53B	6.16B	5.97B	5.79B	5.46B	4.62B
Stockholders Equity	747.66M	763.15M	695.11M	630.43M	586.72M	525.45M
Cash Flow
Free Cash Flow	165.37M	163.60M	172.98M	143.40M	119.03M	102.27M
Operating Cash Flow	165.86M	164.52M	175.39M	143.76M	119.63M	103.77M
Investing Cash Flow	-566.17M	-421.62M	-98.03M	-699.89M	-620.01M	-318.77M
Financing Cash Flow	278.89M	131.76M	65.97M	273.05M	791.52M	438.82M

Preferred Bank Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 90.49
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 90.49 is above the 20-day moving average (MA) of 90.05, below the 50-day MA of 91.17, and above the 200-day MA of 86.57, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 49.51 is Neutral, neither overbought nor oversold. The STOCH value of 47.65 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PFBC	74 Outperform	$1.22B	9.19	16.91%	3.32%	-3.05%	-0.51%
RBCAA	74 Outperform	$1.14B	10.07	12.35%	2.68%	5.25%	24.22%
WABC	73 Outperform	$1.20B	10.29	13.05%	3.83%	-13.17%	-16.37%
BFC	73 Outperform	$1.19B	17.03	11.20%	4.01%	14.13%	-12.75%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CNOB	63 Neutral	$1.21B	19.50	4.40%	3.02%	15.55%	-28.10%
BY	58 Neutral	$1.25B	9.68	10.78%	1.48%	1.46%	2.02%

Preferred Bank Corporate Events

Preferred Bank Achieves Record Third Quarter Earnings

Preferred Bank, a prominent independent commercial bank based in California, offers a wide range of financial services including deposit and loan products to both commercial and consumer clients, with a strong focus on personalized service and real estate finance. The bank has a significant presence in California, New York, and Texas, and caters to a diverse clientele, including a substantial number of ethnic Chinese customers.