Preferred Bank · NASDAQ:PFBC
Preferred Bank — Raymond James 40th Annual Institutional Investors Conference 2019
29 slides from Preferred Bank's conference presentation, Mar 3, 2019
Slide 1: Raymond James 40th Annual Institutional Investors Conference
Raymond James 40th Annual Institutional Investors Conference March 3-6, 2019
Slide 2: Forward Looking Statements
Forward Looking Statements During the course of this presentation, management may make statements regarding events or future financial performance of the Bank. These statements may include comments with respect to our objectives and strategies, and the results of our operations and our business. How
Slide 3: Company Overview
Company Overview • Founded in December 1991 • $4.2 Billion commercial bank headquartered in Los Angeles, CA • High-performing community banking franchise with operations in San Francisco and New York • Strong insider ownership aligned with stakeholders – Directors and Officers collectively own over
Slide 4: PFBC Stock Profile
PFBC Stock Profile Ticker Symbol NASDAQ: PFBC Recent Price $51.54 (2/26/19) Shares O/S 15.31mm Market Cap $789.0mm Average Daily Volume 85.0m Raymond James & Co. Stephens, Inc. Annual Dividend: $1.20 B. Riley / FBR Current Yield: 2.33% Sandler O’Neill & Partners, LP FIG Partners D.A. Davidson & Co.
Slide 5: Management Experience
Management Experience • Management team averages 32 years of industry experience • Deep ties to the Chinese American and mainstream banking communities Years of Years With Name Position Experience PFBC Li Yu Chairman & CEO 35 28 Wellington Chen President & COO 34 8 Edward Czajka Chief Financial Offi
Slide 6: Our Strategy
Our Strategy • Stay True to Our Core Competencies – Business banking – Commercial and multi-family real estate lending – Letter of Credit Financing – Serving ethnic Chinese in the markets of: • San Gabriel Valley area of Southern California (Alhambra, Arcadia, Diamond Bar, City of Industry) • South
Slide 7: Our Strategy
Our Strategy • How We Execute – Business Model – Ultra high-touch service – our frontline personnel develop long lasting and deep relationships with their clients, fostering loyalty and word of mouth advertising – We place a large percentage of our personnel in frontline positions, (34% of total Ban
Slide 8: Branch Locations
PREFERRED Branch Locations Lenawee PREFERRED ANK
Slide 9: Loans and Deposits by Region – December 31, 2018
Loans and Deposits by Region – December 31, 2018 Loans by Region 8% 10% L.A N.Y S.F. 82% Deposits by Region 7% 10% L.A N.Y S.F 83% 9
Slide 10: Market Share Potential
Market Share Potential Deposit Market Share - L.A. Long Beach MSA B of A 18.81% Wells Fargo 14.72% Chase 12.63% Union Bank 8.15% CIT Bank 5.69% Los Angeles County: City National Bank 4.93% Population, July 2017: 10.16 million CitiBank 4.22% NonFarm Businesses (Approx) 269,000 East West Bank 3.71% Un
Slide 11: Consistent and Growing Profitability
Consistent and Growing Profitability….. Diluted EPS $1.30 Quarterly EPS up $1.22 $1.20 $1.20 72% from two $0.80 years ago $1.09 $1.10 $1.00 $0.97 $0.94 $0.90 $0.80 $0.80 $0.71 $0.71 $0.70 $0.60 $0.50 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2017 results impacted by
Slide 12: Higher Pre-tax Profitability vs Peers
Higher Pre-tax Profitability vs Peers… Pre Tax ROA - VS FDIC Peers 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Pre Tax ROAA PFBC Pre Tax ROAA Peers Average is 2.32% pre-tax PFBC ROA vs Peer 1.62% Pre-tax ROA 12
Slide 13: Higher Net Profitability vs Peers
Higher Net Profitability vs Peers… ROA - VS FDIC Peers 2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 ROAA PFBC ROAA Peers Q4 2017 ROA Includes the effect of $6.0mm DTA charge 13
Slide 14: Superior Operating Efficiency vs Peers
Superior Operating Efficiency vs Peers Efficiency Ratio - VS FDIC Peers 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 PFBC Peers MRQ 35.7% vs 58.6% 14
Slide 15: Consistent Loan Growth
Consistent Loan Growth….. Total Loans $3,300,000 $3,100,000 $2,900,000 $2,700,000 $2,500,000 $2,300,000 $2,100,000 $1,900,000 $1,700,000 $1,500,000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 15
Slide 16: And Consistent Deposit Growth
And Consistent Deposit Growth Total Deposits $3,750,000 $3,500,000 $3,250,000 $3,000,000 $2,750,000 $2,500,000 $2,250,000 $2,000,000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 16
Slide 17: Stock Performance
Stock Performance • PFBC stock has significantly outperformed peers over the past 5 years Source: S&P Global. Market data as of February 25, 2019 17
Slide 18: Regulatory Capital Position
Regulatory Capital Position
Slide 19: Capital Ratios – December 31, 2018
Capital Ratios – December 31, 2018 PFBC Well Capitalized Regulatory Guidance 16.00% 14.00% 13.72% 12.00% 10.38% 10.38% 10.11% 10.00% 10.00% 8.00% 8.00% 6.00% 6.50% 5.00% 4.00% Tier 1 Leverage Ratio Common Equity Tier 1 Tier 1 Capital Ratio Total Capital Ratio Ratio 19
Slide 20: Credit Overview
Credit Overview
Slide 21: Loan Portfolio Composition – December 31, 2018
Loan Portfolio Composition – December 31, 2018 • Diverse loan portfolio – 31% of loans are C & I • High level of diversification among industries • Above-average number of Senior Lenders and Business Development staff allow PFBC to look at tremendous deal flow • Drives strong loan yields Loan Compos
Slide 22: Real Estate Loan Portfolio – December 31, 2018
Real Estate Loan Portfolio – December 31, 2018 Other Portfolio Characteristics 1-4 Family 12% 14% 20 Largest Relationships 32% of total CRE Wtd Average Maturity 3.0 Years Wtd Average Coupon 6.21% Hotel/Motel Average DCR 1.76x 10% Wtd Average LTV 56% Multi-Family 11% Industrial 12% Retail 22% Office
Slide 23: C&I Portfolio Detail – December 31, 2018
C&I Portfolio Detail – December 31, 2018 Other 15% Food Distribution 3% Service Related Electronics 38% 5% Merchant/Wholesaler 7% Professionals 6% Food Service Motion Pictures 10% Healthcare 8% 8% Portfolio Characteristics 20 Largest Relationships 31% of C&I Loans Line Usage % 64.0% Wtd Avg Maturity
Slide 24: NPA's
NPA’s Nonperforming Assets $60,000 $54,612 $54,514 $50,000 $44,834 $40,000 $30,000 $20,000 $11,913 $10,646 $10,612 $10,612 $10,000 $7,412 $- Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 24
Slide 25: Other Real Estate Owned
December 31, 2018 Other Real Estate Owned $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,112 $4,112 $4,112 $4,112 $4,112 $4,112 4112 $4,000 $2,000 0 $- Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 25
Slide 26: Liquidity & Rate Sensitivity
Liquidity & Rate Sensitivity
Slide 27: Deposit Composition – December 31, 2018
Deposit Composition – December 31, 2018 DDA CD's > $250k 20% 20% CD's < $250k 21% MMDA Savings 38% 1% Characteristics Percentage DDA 20.1% MRQ Cost of Deposits 1.29% MRQ Growth Rate 3.4% Core Deposits / Total Deposits 76% 27
Slide 28: Rate Sensitivity Analysis – December 31, 2018
Rate Sensitivity Analysis – December 31, 2018 % Change in NII 60.0% 55.6% 50.0% 41.7% 40.0% 27.9% 30.0% 20.0% 14.0% 10.0% 0.0% Up 400 Up 300 Up 200 Up 100 Down 100 Down 300 -10.0% -9.7% -20.0% -30.0% -24.0% EVE % Change 40.0% 28.4% 30.0% 22.5% 20.0% 15.9% 8.5% 10.0% 0.0% Up 400 Up 300 Up 200 Up 100
Slide 29: Why PFBC?
Why PFBC? • Focused on creating scarcity value in attractive markets • Superior earnings power and growth profile vs. peers ̶ Q4 2018 ROA of 1.83%, ROE of 18.5% • Experienced management team with deep ties to the community • The potential and discipline to acquire if organic growth slows • Asset-sen
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