Preferred Bank · NASDAQ:PFBC
Preferred Bank — 20th Annual B. Riley FBR Investor Conference (May 2019)
28 slides from Preferred Bank's conference presentation, May 23, 2019
Slide 1: 20th Annual B. Riley FBR Investor Conference
20th Annual B. Riley FBR Investor Conference May 23, 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 • $4.3 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 $48.20 (5/14/19) Shares O/S 15.29mm Market Cap $736.8mm Average Daily Volume 65.7m B Riley FBR Raymond James & Co. Annual Dividend: $1.20 Stephens, Inc. Current Yield: 2.49% Sandler O’Neill & Partners, LP FIG Partners D.A. Davidson & Co. 4
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
eaer einer Branch Locations DP oank PREFERRED B ANK New York
Slide 9: Market Share Potential
Market Share Potential Deposit Market Share - L.A. Long Beach MSA 1 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 2018 2 10.11 million CitiBank 4.22% NonFarm Businesses (Approx) 2 269,000 East West Bank 3.7
Slide 10: Consistent and Growing Profitability
Consistent and Growing Profitability….. Diluted EPS $1.30 Quarterly EPS up $1.22 $1.23 $1.20 $1.20 73% from two years ago $1.14 $1.09 $1.10 $1.00 $0.97 $0.94 $0.90 $0.80 $0.80 $0.71 $0.70 $0.60 $0.50 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q1 2017 results impacted by
Slide 11: 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% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Pre Tax ROAA PFBC Pre Tax ROAA Peers Average is 2.32% pre-tax PFBC ROA vs Peer 1.62% Pre-tax ROA 11
Slide 12: 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% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 ROAA PFBC ROAA Peers Q4 2017 ROA Includes the effect of $6.0mm DTA charge 12
Slide 13: 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% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 PFBC Peers MRQ 35.7% vs 58.6% 13
Slide 14: Consistent Loan Growth
Consistent Loan Growth….. Total Loans $3,400,000 $3,200,000 $3,000,000 $2,800,000 $2,600,000 $2,400,000 $2,200,000 $2,000,000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 14
Slide 15: And Consistent Deposit Growth
And Consistent Deposit Growth Total Deposits $3,700,000 $3,450,000 $3,200,000 $2,950,000 $2,700,000 $2,450,000 $2,200,000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 15
Slide 16: Stock Performance
Stock Performance • PFBC stock has significantly outperformed peers over the past 5 years Source: S&P Global. Market data as of May 15, 2019 16
Slide 17: Capital
Capital
Slide 18: Capital Ratios – March 31, 2019
Capital Ratios – March 31, 2019 PFBC Well Capitalized Regulatory Guidance 16.00% 13.83% 14.00% 12.00% 10.32% 10.54% 10.54% 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 18
Slide 19: Changing Capital Trends
Changing Capital Trends….. 11.00% Capital Ratios Tier 1 Leverage 10.50% CET1 10.00% 9.50% 9.00% 8.50% 8.00% 7.50% 7.00% 6.50% 6.00% Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 19
Slide 20: Credit Overview
Credit Overview
Slide 21: Loan Portfolio Composition – March 31, 2019
Loan Portfolio Composition – March 31, 2019 • Diverse loan portfolio – 29% 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 Compositi
Slide 22: Real Estate Loan Portfolio – March 31, 2019
Real Estate Loan Portfolio – March 31, 2019 Other 1-4 Family Portfolio Characteristics 12% 12% 20 Largest Relationships 35% of total CRE Wtd Average Maturity 3.0 Years Wtd Average Coupon 6.13% Hotel/Motel Average DCR 1.70x 10% Wtd Average LTV 55% Multi-Family 12% Industrial 13% Retail 23% Office 18%
Slide 23: C&I Portfolio Detail – March 31, 2019
C&I Portfolio Detail – March 31, 2019 Other 15% Food Distribution 3% Service Related 37% Electronics 6% Merchant/Wholesaler 7% Professionals 7% Food Service Motion Pictures Healthcare 7% 10% 8% Portfolio Characteristics 20 Largest Relationships 31% of C&I Loans Line Usage % 79.0% Wtd Avg Maturity 2.
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 $3,593 $- Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 24
Slide 25: Other Real Estate Owned
March 31, 2019 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 0 $- Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 25
Slide 26: Liquidity
Liquidity
Slide 27: Deposit Composition – March 31, 2019
Deposit Composition – March 31, 2019 DDA 20% CD's > $250k 21% CD's < $250k 22% MMDA 37% Savings 0.6% Characteristics Percentage DDA 19.7% MRQ Cost of Deposits 1.48% MRQ Growth Rate 2.2% Core Deposits / Total Deposits 57% 27
Slide 28: Why PFBC?
Why PFBC? • Focused on creating scarcity value in attractive markets • Superior earnings power and growth profile vs. peers ̶ Q1 2019 ROA of 1.83%, ROE of 18.2% • Experienced management team with deep ties to the community • The potential and discipline to acquire if organic growth slows • Short dur
Preferred Bank — 20th Annual B. Riley FBR Investor Conference (May 2019) on 6ix