Preferred Bank · NASDAQ:PFBC
Preferred Bank — Stephens Bank Forum 2024
25 slides from Preferred Bank's conference presentation, Sep 17, 2024
Slide 1: Stephens Bank Forum, September 17-18, 2024
Stephens Bank Forum, September 17-18, 2024
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: Franchise Overview: Preferred Bank
Franchise Overview: Preferred Bank ➢ $6.8 billion commercial bank headquartered in Los Angeles, Preferred Bank (NASDAQ: PFBC) CA, targeting small/medium businesses and high net worth Headquarters Los Angeles, CA individuals within footprint lending Founded / IPO 1991 / 2005 ➢ Services customers thro
Slide 4: PFBC Stock Profile
PFBC Stock Profile Ticker Symbol NASDAQ: PFBC Recent Price $81.62 (8/26/24) Shares O/S 13.39mm Market Cap $1.10bb Avg Volume (50-day) 84.8m shares Raymond James & Co Piper Sandler Companies Annual Dividend: $2.80 Janney Montgomery Scott Current Yield: 3.43% Stephens Co D.A. Davidson 4
Slide 5: Management Overview and Business Model
Management Overview and Business Model Long-Tenured Management Team with Average of [~17] Years in Current Roles How We Execute – Business Model Li Yu ➢ Founded Preferred Bank in 1991 ➢ Largest individual shareholder ➢ Ultra high-touch service – our frontline personnel Chairman & CEO 39 years of ban
Slide 6: Branch Map
Branch Map ➢ Primarily serving ethnic Chinese in: Branch light model • San Gabriel Valley area of Southern with average branch California (Alhambra, Arcadia, size of $380mm in Diamond Bar, City of Industry) deposits • South Bay (Torrance) • Irvine (2) • San Francisco (Business District) • Flushing,
Slide 7: Performance
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Slide 8: Consistent Profitability…
Consistent Profitability… Pre Tax ROA 3.50% 3.32% 3.27% 3.23% 3.25% 2.90% 2.79% 3.00% 2.70% 2.77% 2.48% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 ROA 3.00% 2.48% 2.50% 2.37% 2.33% 2.31% 2.25% 2.27% 1.98% 1.96% 2.00% 1.77% 1.50% 1.00%
Slide 9: Superior ROE and Operating Efficiency
Superior ROE and Operating Efficiency ROE 29.00% 23.80% 23.67% 23.32% 23.19% 24.00% 21.21% 20.14% 19.36% 18.30% 19.00% 19.00% 14.00% 9.00% 4.00% Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Efficiency Ratio 35.00% 29.84% 30.00% 28.06% 27.29% 27.99% 28.11% 25.97% 26.01% 24.
Slide 10: Consistent Loan and Deposit Growth
Consistent Loan and Deposit Growth….. $5,800 Total Loans $5,429 $5,400 $5,326 $5,274 $5,119 $5,128 $5,075 $5,058 $5,011 $5,000 $4,920 $4,600 $4,200 $3,800 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 $6,400 Total Deposits $6,000 $5,879 $5,802 $5,683 $5,709 $5,557 $5,589 $5
Slide 11: 5-Year Total Return vs S&P West Banks > $5bb
5-Year Total Return vs S&P West Banks > $5bb 120.0% 109.7% 100.0% 84.8%77.9% 80.0% 56.7% 60.0% 40.0% 25.8% 20.2% 20.0% 11.4% 7.8% 1.0% 0.5% 0.0% -20.0% -0.7% -1.4% -4.3% -6.7% -0.9% -8.2% -8.4% -9.4% -10.6% -7.6% -26.1% -16.0% -31.0% -40.0% -37.7% -47.2% -60.0% -53.1% -55.9% 5 Year TSR for Period en
Slide 12: Capital
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Slide 13: Capital Ratios – June 30, 2024
Capital Ratios – June 30, 2024 Well Capitalized Regulatory Guidance 16.00% 14.93% 14.00% 12.00% 11.52% 11.52% 10.89% 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 13
Slide 14: Tangible Book Value per Share
Tangible Book Value per Share TBVPS – 10 Years $60.00 $54.23 $55.00 $50.00 $47.04 $45.00 $40.44 $40.00 $37.36 $35.00 $32.73 $29.50 $30.00 $25.14 $25.00 $20.99 $20.00 $20.00 $18.16 $15.00 $10.00 30-Jun-15 30-Jun-16 30-Jun-17 30-Jun-18 30-Jun-19 30-Jun-20 30-Jun-21 30-Jun-22 30-Jun-23 30-Jun-24 CAGR o
Slide 15: Stock Repurchase 2023-2024
Stock Repurchase 2023-2024 • As deposit growth has slowed, total asset growth slows concurrently which leads to outsized capital ratios, even after dividends, due to the Bank’s superior profitability metrics • On May 16, 2023, shareholders approved a $150 million stock repurchase • Throughout the se
Slide 16: Credit Overview
Credit Overview
Slide 17: Loan Portfolio Composition – June 30, 2024
Loan Portfolio Composition – June 30, 2024 • Diverse loan portfolio – 25.9% 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 Com
Slide 18: Real Estate Loan Portfolio – June 30, 2024
Real Estate Loan Portfolio – June 30, 2024 Portfolio Characteristics Other 1-4 Family 7.2% 6.1% 20 Largest Relationships 27.2% of total CRE Wtd Avg Maturity 2.5 Years Hotel/Motel Wtd Avg Coupon 8.35% 15.6% Average DCR 1.66x Wtd Average LTV 56.2% Multi- Family 19.2% Industrial 13.3% Retail 23.0% Offi
Slide 19: C&I Portfolio Detail – June 30, 2024
C&I Portfolio Detail – June 30, 2024 Data Processing, Hosting Credit Intermediation Activities Services 0.9% 7.6% Media Assets 2.8% Service Manufacturing 32.1% 7.8% Securities Brokerage 5.8% Food Service Other 1.3% 14.2% Food distribution Healthcare 2.9% 5.1% Electronics Motion Pictures 2.3% Profess
Slide 20: NPA's
NPA’s Nonperforming Assets $60,000 57,267 $50,000 45,435 $40,000 36,104 35,031 $33,095 $32,257 $30,000 $27,470 $20,327 $20,000 $17,151 $10,000 $0 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 20
Slide 21: Deposits
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Slide 22: Deposit Composition – June 30, 2024
Deposit Composition – June 30, 2024 DDA 11% CD's > $250k 24% MMDA 40% CD's < $250k 25% Savings 0.5% Characteristics Percentage DDA 11.5% MRQ Cost of Deposits 4.08% LQA Growth Rate 5.3% Core Deposits / Total Deposits 60.7% 22
Slide 23: Recent Expansion
Recent Expansion • In December of 2023, the Bank opened a 2nd full service branch office in Orange County, California. As of today, the branch has $60mm in deposits • The Bank recently received regulatory approval to establish a full service branch office in Manhattan, New York. This office will be
Slide 24: Reasons to Invest
Reasons to Invest • The Bank has high levels of liquidity (cash equal to 15.6% of total deposits) and a short duration balance sheet • Strong capital base with over 10.5% tangible common equity • The Bank has moved from high asset sensitivity which benefitted the Bank through 2022 and 2023 to a more
Slide 25: Questions?
PREFERRED Bank Questions? 25