Preferred Bank (PFBC, Financial) announced a net income of $30 million for the first quarter of 2025, resulting in earnings of $2.23 per fully diluted share. Despite a notable impact of approximately $2.8 million on nonaccrual loans affecting interest income, the bank's financial performance remains robust.
The value of the bank's one OREO (Other Real Estate Owned) property experienced a write-down by $1.3 million. As of March 31, 2025, the total of non-accrual loans stood at $78.9 million, primarily comprising two major loans amounting to $65.6 million. These loans are well-secured, leading the bank to anticipate no losses from these credits.
Furthermore, the bank has seen a reduction in overall criticized loans, declining to $129.2 million from $158.2 million recorded at the end of the previous year. There has been minimal movement of new loans into the criticized category, indicating stability in the bank's loan portfolio.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Preferred Bank (PFBC, Financial) is $97.50 with a high estimate of $108.00 and a low estimate of $91.00. The average target implies an upside of 13.40% from the current price of $85.98. More detailed estimate data can be found on the Preferred Bank (PFBC) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Preferred Bank's (PFBC, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Preferred Bank (PFBC, Financial) in one year is $82.90, suggesting a downside of 3.58% from the current price of $85.98. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Preferred Bank (PFBC) Summary page.
PFBC Key Business Developments
Release Date: January 28, 2025
- Net Income (Annual): $131 million or $9.64 per share.
- Net Income (Q4): $30.3 million or $2.25 per share.
- Return on Assets: 19.1%.
- Return on Investment of Equity: 18.8%.
- Loan Growth (Annual): 7%.
- Deposit Growth (Annual): 3.6%.
- Non-Performing Loans: Reduced from $20 million to $10 million, a 50% improvement.
- Dividend Increase: From $0.70 to $0.75, payable in January.
- Share Repurchase: 464,000 shares for $34 million.
- Leverage Capital Ratio: Improved from 10.85% to 11.3%.
- Tangible Book Value: Increased from $50.54 to $57.86.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Preferred Bank (PFBC, Financial) reported a net income of $131 million for the year, with a return on assets of 19.1% and return on equity of 18.8%, outperforming industry averages.
- The bank achieved a 50% reduction in non-performing loans, decreasing from $20 million to $10 million, and a 33% reduction in criticized loans.
- Preferred Bank (PFBC) increased its dividend from $0.70 to $0.75, reflecting confidence in its financial stability.
- The bank repurchased 464,000 shares of its common stock for $34 million, indicating a strong capital position and commitment to shareholder value.
- The leverage capital ratio improved from 10.85% to 11.3%, and the tangible book value per share increased from $50.54 to $57.86, showcasing financial strength and growth.
Negative Points
- The bank's net income for the fourth quarter was negatively impacted by a $8.1 million correction to rental expenses, equating to a $0.42 after-tax adjustment.
- Loan growth was moderate at 7% and deposit growth at 3.6%, reflecting a slow growth year for the banking industry.
- The Los Angeles wildfire posed a risk to the bank's commercial real estate loan portfolio, although initial assessments showed minimal impact.
- The bank faces competitive pressure in deposit rates, particularly within the local Asian community, affecting its flexibility in pricing.
- Non-interest expenses are expected to rise in the first quarter due to increased payroll taxes, legal fees, and charitable contributions related to wildfire relief efforts.
