Preferred Bank · NASDAQ:PFBC
Preferred Bank — Raymond James U.S. Bank Conference 2020
27 slides from Preferred Bank's conference presentation, Sep 9, 2020
Slide 1: Raymond James U.S. Bank Conference
Raymond James U.S. Bank Conference September 9-10, 2020
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 $5.0 billion in total assets, 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 $37.59 (9/4/20) Shares O/S 14.93mm Market Cap $561.3mm Average Daily Volume 67.6m Raymond James & Co. Annual Dividend: $1.20 D.A. Davidson Co. Piper Sandler & Co. Current Yield: 3.19% B Riley FBR Janney Montgomery Scott 4
Slide 5: Management Experience
Management Experience • Li Yu, Chairman and CEO • Founder and single largest individual shareholder • 37 years of banking experience • Wellington Chen, President and Chief Operating Officer • Joined Preferred Bank in 2011, 36 years in banking • Former EVP and Corporate Banking Director at East-West
Slide 6: Coronavirus
Coronavirus • We took action very early and began to place higher risk employees at home to work • We eliminated all weekend hours at branches and reduced weekday hours • Branch staff are now working on a 50/50 two-week rotation • All support and administrative personnel are working from home wherev
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, (1/3 of total Ban
Slide 8: Digital Strategy
Digital Strategy The Bank has undergone a ‘digital transformation’ over the past two years. Although we previously offered a host of digital banking products, our product suite is now much more robust: • Full Suite of Cash Management Products: • Online Banking – Banno/NetTeller • Business Bill Pay –
Slide 9: Core Competencies
Core Competencies – Business banking – Commercial and real estate lending, residential and non-residential – Letter of Credit Financing • Serving Ethnic Chinese in: • San Gabriel Valley area of Southern California (Alhambra, Arcadia, Diamond Bar, City of Industry) • South Bay (Torrance) • Orange Cou
Slide 10: Branch Locations
: | PREFERRED Branch Locations Leones!
Slide 11: Performance
Performance
Slide 12: Higher Net Profitability vs Peers…
Higher Net Profitability vs Peers… Pre Tax ROA - VS FDIC Peers 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Pre Tax ROAA PFBC Pre Tax ROAA 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%
Slide 13: Superior ROE and Operating Efficiency vs Peers
Superior ROE and Operating Efficiency vs Peers ROE - VS FDIC Peers 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 PFBC Peers Efficiency Ratio - VS FDIC Peers 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% Q2 2018
Slide 14: Consistent Loan and Deposit Growth…..
Consistent Loan and Deposit Growth….. Total Loans $4,000,000 $3,600,000 $3,200,000 $2,800,000 $2,400,000 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 $4,400,000 Total Deposits $4,200,000 $4,000,000 $3,800,000 $3,600,000 $3,400,000 $3,200,000 $3,000,000 Q2 2018 Q3 2018 Q4 2
Slide 15: Capital
Capital
Slide 16: Capital Ratios – June 30, 2020
Capital Ratios – June 30, 2020 PFBC Well Capitalized Regulatory Guidance 16.00% 13.80% 14.00% 12.00% 10.39% 10.39% 9.87% 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 16
Slide 17: Credit Overview
Credit Overview
Slide 18: Loan Portfolio Composition – June 30, 2020
Loan Portfolio Composition – June 30, 2020 • Diverse loan portfolio – 32% 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 a high level of deal flow • Drives strong loan yields Loan Compo
Slide 19: Real Estate Loan Portfolio – June 30, 2020
Real Estate Loan Portfolio – June 30, 2020 Portfolio Characteristics Other 20 Largest Relationships 37% of total CRE 1-4 Family 10% 12% Wtd Avg Maturity 2.60 Years Wtd Avg Coupon 5.28% Average DCR 1.55x Wtd Average LTV 55.4% Hotel/Motel 15% Multi-Family 12% Industrial 12% Retail 21% Office 18% 19
Slide 20: C&I Portfolio Detail – June 30, 2020
C&I Portfolio Detail – June 30, 2020 Other Food Distribution 13% 2% Electronics 3% Merchant/Wholesaler 6% Service Related 52% Professionals 8% Motion Pictures 9% Healthcare Food Service 5% 2% Portfolio Characteristics 20 Largest Relationships 38% of C&I Loans Line Usage % 72.1% Wtd Avg Maturity 2.5
Slide 21: Loan Portfolio by Type - June 30, 2020
Loan Portfolio by Type - June 30, 2020 Category Loan Count Total Balance % of Loan Average Average DCR Balance LTV Cash Secured 84 $ 35,473,587 0.89% N/A N/A Commercial 1,706 1,133,757,679 28.60% N/A N/A International 122 23,064,877 0.58% N/A N/A Construction - 1-4 Residential 58 187,082,518 4.72% 4
Slide 22: COVID-19 Deferrals-Payment Resumptions
COVID-19 Deferrals-Payment Resumptions Resume Payments-end of Total Clients Modification? June 30, 2020 August 31, 2020 Contacted Yes No $ # $ # $ # $ # $ # C&I $ 39,518 97 $ 32,452 20 $ 32,452 20 $ 26,321 16 $ 6,131 4 CRE $ - Office 28,696 3 28,696 3 28,696 3 28,696 3 - Industrial 29,495 13 26,212
Slide 23: COVID-19 Deferral Commentary
COVID-19 Deferral Commentary Total peak deferrals were approximately $630mm, during the 2nd quarter At August 31, 2020, a total of $201mm in loans had reinstated payments Balance of $429mm remains in deferral at August 31, 2020 Of the $429mm in deferral status, borrowers representing $414mm
Slide 24: NPA’s
NPA’s Nonperforming Assets $60,000 $54,612 $54,514 $50,000 $44,834 $40,000 $30,000 26,418 $20,000 $10,000 6,820 $3,593 3,444 2,136 2,120 $- Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 24
Slide 25: Deposits
Deposits
Slide 26: Deposit Composition – June 30, 2020
Deposit Composition – June 30, 2020 DDA 21% CD's > $250k 22% CD's < $250k 19% MMDA Savings 37% 0.6% Characteristics Percentage DDA 21.5% MRQ Cost of Deposits 0.81% MRQ Growth Rate 6.5% Core Deposits / Total Deposits 61.0% 26
Slide 27: Why We are Confident
Why We are Confident • We have seen over $200mm in deferral reinstatements and are now far from peak deferrals – expectations for reinstatements are very strong • Large levels of liquidity, both on and off balance sheet provide • We have a strong capital base at close to 10% tangible capital and nea
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