Preferred Bank (PFBC) AI Stock Analysis

• Market Cap: $1.26B
• Dividend Yield: 3.13%
• Average Volume (3M): 95.68K
• Price to Earnings (P/E): 10.2
• Beta (1Y): 0.82
• Revenue Growth: -2.96%
• EPS Growth: -7.14%
• Country: US
• Employees: 323
• Sector: Financial
• Sector Strength: 72
• Industry: Banks - Regional
• EPS (TTM): 2.52
• Shares Outstanding: 13,392,737
• 10 Day Avg. Volume: 89,195
• 30 Day Avg. Volume: 95,682
• PEG Ratio: -4.70
• Price to Book (P/B): 1.65
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 7.85
• Enterprise Value/Market Cap: 0.45
• Enterprise Value/Revenue: 0.28
• Enterprise Value/Gross Profit: 2.09
• Enterprise Value/Ebitda: 0.74
• 1Y Price Target: $105.00
• Price Target Upside: 11.55% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 79 Outperform
• Price Target: $111.00 ▲(17.92%Upside)

Preferred Bank presents a solid investment opportunity, driven primarily by strong financial performance and reasonable valuation. Positive earnings call insights, including net income and loan growth, bolster its outlook. However, caution is advised due to technical indicators suggesting overbought conditions and economic uncertainties that may affect future performance.

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 its lending activities. The bank extends various types of loans, including commercial real estate loans, commercial and industrial loans, and consumer loans, which contribute significantly to its interest income. Additionally, the bank earns non-interest income from service charges, fees related to treasury management, and other financial services. Preferred Bank also benefits from investment securities, which provide a steady flow of income. Overall, the bank's revenue model relies heavily on managing the spread between interest earned on loans and investments and the interest paid on deposits and borrowed funds.

Preferred Bank Financial Statement Overview

Summary

Preferred Bank exhibits strong financial health with robust profitability, low leverage, and efficient cash flow management. The company shows steady revenue growth and high margins, although there is a need to enhance cost management. The balance sheet reflects financial stability with increasing equity and low debt levels. While the cash flow statement indicates effective cash generation and management, attention to ongoing capital expenditures is necessary.

Income Statement

Preferred Bank demonstrates strong profitability with a gross profit margin of 53.11% and a net profit margin of 24.98% in the TTM. The revenue growth rate is moderate at 5.73% from 2023 to 2024, indicating steady expansion. EBIT and EBITDA margins are robust at 35.24% and 35.65% respectively, showcasing efficient operational management. However, a slight decline in gross profit margin over the years suggests pressure on cost-effectiveness.

Balance Sheet

The balance sheet is healthy with a low debt-to-equity ratio of 0.22, reflecting minimal leverage risk. Return on equity is impressive at 16.34%, indicating strong shareholder returns. The equity ratio stands at 10.97%, which is reasonable, although there is room for improvement in equity financing. The consistent increase in stockholders' equity over time is a positive indicator of financial stability.

Cash Flow

The cash flow statement is favorable, with a free cash flow growth rate of 1.21% from 2023 to 2024, signaling stable cash generation. The operating cash flow to net income ratio is healthy at 1.31, indicating efficient cash conversion. Additionally, a free cash flow to net income ratio of 1.30 shows strong cash flow management. However, there is a need to monitor investing cash flows which are consistently negative, reflecting ongoing capital investments.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	520.43M	481.76M	301.43M	218.78M	220.32M
Gross Profit	271.86M	283.14M	247.05M	193.62M	154.21M
EBITDA	186.18M	211.57M	181.09M	135.72M	98.77M
Net Income	130.66M	150.04M	128.84M	95.24M	69.47M
Balance Sheet
Total Assets	6.92B	6.67B	6.43B	6.05B	5.14B
Cash, Cash Equivalents and Short-Term Investments	765.51M	1.20B	1.18B	1.48B	979.15M
Total Debt	165.46M	168.00M	168.94M	170.62M	118.02M
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

• Technical Analysis Sentiment: Positive
• Last Price: 94.13
• 50DMA: Positive
• 100DMA: Positive
• 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 Positive. The current price of 94.13 is above the 20-day moving average (MA) of 91.52, above the 50-day MA of 86.42, and above the 200-day MA of 85.04, indicating a bullish trend. The MACD of 2.86 indicates Negative momentum. The RSI at 61.51 is Neutral, neither overbought nor oversold. The STOCH value of 64.72 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BFC	81 Outperform	$1.26B	19.13	11.24%	4.10%	17.31%	-12.46%
PFBC	79 Outperform	$1.26B	10.23	17.20%	3.13%	-2.96%	-7.14%
BY	79 Outperform	$1.13B	10.29	11.08%	1.41%	7.63%	-1.13%
PEBO	76 Outperform	$1.07B	10.28	9.25%	5.54%	2.32%	-16.87%
RBCAA	76 Outperform	$1.26B	11.77	12.34%	2.36%	9.00%	27.47%
OBK	74 Outperform	$1.17B	15.44	6.08%	1.59%	-4.22%	-14.67%
Sector *	68 Neutral	$17.10B	11.44	9.70%	3.58%	11.11%	-4.78%