Preferred Bank · NASDAQ:PFBC
Preferred Bank — D.A. Davidson & Co. 22nd Annual Financial Institutions Virtual Conference (2020)
26 slides from Preferred Bank's conference presentation, 2020
Slide 1: 22nd Annual Financial Institutions Virtual Conference
D.A. Davidson & Co. 22nd Annual Financial Institutions Virtual Conference
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 • $4.7 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 $35.08(12/2/19) Shares O/S 14.92mm Market Cap $523.3mm Average Daily Volume 112.8m D.A. Davidson Co. Piper Sandler & Co. Annual Dividend: $1.20 Raymond James & Co. Current Yield: 3.42% B Riley FBR Stephens, Inc. Janney Montgomery Scott 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 36 29 Wellington Chen President & COO 35 9 Edward Czajka Chief Financial Offi
Slide 6: Coronavirus
Coronavirus • We took action early and began to place higher risk employees at home to work • We communicated to our clients and staff early • We eliminated all weekend hours at branches and reduced branch hours daily • Branch staff are now working on a 50/50 two-week rotation • All support and admi
Slide 7: 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 8: 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 9: Branch Locations
: | PREFERRED Branch Locations Leones!
Slide 10: 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 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Pre Tax ROAA PFBC Pre Tax ROAA Peers 10
Slide 11: 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 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 ROAA PFBC ROAA Peers Q4 2017 ROA Includes the effect of $6.0mm DTA charge PFBC Average ROA Above: 1.71% Pee
Slide 12: Superior Return on Equity
Superior Return on Equity ROE - VS FDIC Peers 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 PFBC Peers 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 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 PFBC Peers 13
Slide 14: Consistent Loan Growth…..
Consistent Loan Growth….. Total Loans $4,000,000 $3,600,000 $3,200,000 $2,800,000 $2,400,000 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 14
Slide 15: And Deposit Growth
And Deposit Growth $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 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 15
Slide 16: Capital
Capital
Slide 17: Capital Ratios – March 31, 2020
Capital Ratios – March 31, 2020 PFBC Well Capitalized Regulatory Guidance 16.00% 14.26% 14.00% 12.00% 10.80% 10.80% 10.05% 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 17
Slide 18: Credit Overview
Credit Overview
Slide 19: Loan Portfolio Composition – March 31, 2020
Loan Portfolio Composition – March 31, 2020 • Diverse loan portfolio – 33% 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 Comp
Slide 20: Real Estate Loan Portfolio – March 31, 2020
Real Estate Loan Portfolio – March 31, 2020 Other 1-4 Family Portfolio Characteristics 11% 12% 20 Largest Relationships 33% of total CRE Wtd Average Maturity 2.74 Years Wtd Average Coupon 5.32% Average DCR 1.58x Hotel/Motel Wtd Average LTV 54.4% 16% Multi-Family 12% Industrial 13% Retail 21% Office
Slide 21: C&I Portfolio Detail – March 31, 2020
C&I Portfolio Detail – March 31, 2020 Other 15% Food Distribution 2% Electronics 7% Service Related 45% Merchant/Wholesaler 6% Professionals 7% Motion Pictures Food Service 8% Healthcare 5% 5% Portfolio Characteristics 20 Largest Relationships 38% of C&I Loans Line Usage % 73.4% Wtd Avg Maturity 2.2
Slide 22: NPA's
NPA’s Nonperforming Assets $60,000 $54,612 $54,514 $50,000 $44,834 $40,000 $30,000 $20,000 $10,000 $7,412 6,820 $3,593 3,444 2,136 2,120 $- Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 22
Slide 23: Deposits
Deposits
Slide 24: Deposit Composition – March 31, 2020
Deposit Composition – March 31, 2020 DDA 18% CD's > $250k 25% CD's < $250k MMDA 19% 37% Savings 0.5% Characteristics Percentage DDA 18.0% MRQ Cost of Deposits 1.24% MRQ Growth Rate 2.6% Core Deposits / Total Deposits 58.9% 24
Slide 25: Current Challenges
Current Challenges • Currently no end in sight to the pandemic – news continues to be mixed • We have received deferment requests on approximately $391mm in loans • Fairly sizeable retail CRE portfolio although it is characterized by low LTV neighborhood centers • Hotel portfolio represents 9% of lo
Slide 26: Why We are Confident
Why We are Confident • Except for NY, our markets continue to have low rates of infection due to early orders • We have a tremendous amount of liquidity; on and off balance sheet • We have a strong capital base at over 10% tangible capital and over 14% total capital • PPNR’s are among the strongest