Preferred Bank · NASDAQ:PFBC
Preferred Bank — Raymond James U.S. Bank Conference 2017
28 slides from Preferred Bank's conference presentation, Sep 6, 2017
Slide 1: Raymond James U.S. Bank Conference
Raymond James U.S. Bank Conference September 6, 2017
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 • $3.6 Billion commercial bank headquartered in Los Angeles, CA • Leading Los Angeles-based community banking franchise with operations in San Francisco and New York • Strong insider ownership aligned with stakeholders – Directors and Officers collectively
Slide 4: PFBC Stock Profile
PFBC Stock Profile Ticker Symbol NASDAQ: PFBC Recent Price $54.30 (8/30/17) Shares O/S 14.54 mm Market Cap $790.4mm Average Daily Volume 89.6 m Raymond James & Assoc. Sandler O’Neill & Partners, LP Annual Dividend: $0.80 Stephens & Co Current Yield: 1.47% FIG Partners D.A. Davidson & Co. FBR & Co 4
Slide 5: Management Experience
Management Experience • Management team averages 31 years of industry experience • Deep ties to the Chinese American and mainstream banking communities Years of Name Position Experience Li Yu Chairman & CEO 34 Wellington Chen President & Chief Operating Officer 33 Edward Czajka Chief Financial Offic
Slide 6: Our Strategy
Our Strategy • Stick 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 Bay
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, (32% of total Ban
Slide 8: Branch Locations
Branch Locations ‘San Rafael Berkeley © ~ Oakland San S Francisco S & San Francisco Bay » California New York @ L NGELE pee Os ANGELES oo Laconsda COUNTY Burbank C7) e wie Gp Panta Arcatlia af oS @ Mtns can 7 Century City Los Angeles 9 0 @ o,..% oe 2 Diamond Bar () PicoRivera ——““itvot Industry mene
Slide 9: Market Share Potential
Market Share Potential Deposit Market Share - L.A. Long Beach MSA B of A 18.51% Wells Fargo 15.82% Chase 11.11% Union Bank 8.94% CIT Bank 6.42% Los Angeles County: City National Bank 4.90% Population, July 2015: 10.23 million CitiBank 3.74% NonFarm Businesses (Approx) 250,000 East West Bank 3.26% Un
Slide 10: Consistent and Growing Profitability
Consistent and Growing Profitability….. Diluted EPS $0.85 20.6% CAGR over last two years $0.80 $0.75 $0.71 $0.71 $0.69 $0.65 $0.61 $0.57 $0.56 $0.55 $0.54 $0.55 $0.48 $0.45 $0.35 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q1 2017 results impacted by $1.55mm in le
Slide 11: And Higher Profitability vs Peers
…And Higher Profitability vs Peers Pre Tax ROA - VS FDIC Peers 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Pre Tax ROAA PFBC Pre Tax ROAA Peers 11
Slide 12: Higher Profitability (cont'd)
…Higher Profitability (cont’d) ROA - VS FDIC Peers 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 ROAA PFBC ROAA 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% 0.00% Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 PFBC Peers 13
Slide 14: Consistent Loan Growth
Consistent Loan Growth….. Total Loans $3,300,000 5-Year CAGR of 18.5% (Ex acquisition) $2,800,000 $2,300,000 $1,800,000 $1,300,000 $800,000 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 14
Slide 15: And Consistent Deposit Growth
And Consistent Deposit Growth $3,300,000 Total Deposits 5-Year CAGR of 18.5% (Ex Acquisition) $2,800,000 $2,300,000 $1,800,000 $1,300,000 $800,000 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 15
Slide 16: Stock Performance
Stock Performance • PFBC stock has significantly outperformed peers over the past 5 years Source: SNL Financial. Market data as of August 29, 2017 16
Slide 17: Regulatory Capital Position
Regulatory Capital Position
Slide 18: Capital Ratios – June 30, 2017
Capital Ratios – June 30, 2017 PFBC Well Capitalized Regulatory Guidance 14.00% 13.04% 13.00% 12.00% 11.00% 10.00% 9.13% 9.13% 10.00% 9.00% 8.69% 8.00% 8.00% 7.00% 6.00% 6.50% 5.00% 5.00% 4.00% Tier 1 Leverage Ratio Common Equity Tier 1 Tier 1 Capital Ratio Total Capital Ratio Ratio 18
Slide 19: Credit Overview
Credit Overview
Slide 20: Loan Portfolio Composition – June 30, 2017
Loan Portfolio Composition – June 30, 2017 • 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 Compositio
Slide 21: Real Estate Loan Portfolio – June 30, 2017
Real Estate Loan Portfolio – June 30, 2017 Portfolio Characteristics Other 1-4 Family 16% 16% 20 Largest Relationships 36% of total CRE Wtd Average Maturity 3.4 Years Wtd Average Coupon 5.27% Average DCR 1.94x Hotel/Motel Wtd Average LTV 56% 7% Multi-Family 10% Industrial 12% Retail 24% Office 15% 2
Slide 22: C&I Portfolio Detail – June 30, 2017
C&I Portfolio Detail – June 30, 2017 Other 19% Food Distribution 2% Service / Others 39% Merchant/Wholesaler 4% Professionals 7% Motion Pictures 9% Food Service Healthcare 10% 10% Portfolio Characteristics 20 Largest Relationships 39% of C&I Loans Line Usage % 66.0% Wtd Avg Maturity 2.1 Years Weight
Slide 23: NPA's Remain At Very Low Levels
NPA’s Remain At Very Low Levels Nonperforming Assets $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $11,760 $11,913 $10,646 $10,000 $7,944 $7,932 $6,446 $6,775 $5,121 $5,793 $5,000 $- Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 23
Slide 24: One Property as of June 30, 2017
One Property as of June 30, 2017 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 $4,112 $4,000 $2,000 $- $- $- Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 24
Slide 25: Liquidity & Rate Sensitivity
Liquidity & Rate Sensitivity
Slide 26: Deposit Composition – June 30, 2017
Deposit Composition – June 30, 2017 DDA CD's > $250k 21% 17% CD's < $250k 22% Savings MMDA 1% 39% Characteristics Percentage DDA 20.5% MRQ Cost of Deposits 0.71% MRQ Growth Rate 5.8% Core Deposits / Total Deposits 69% 26
Slide 27: Rate Sensitivity Analysis – June 30, 2017
Rate Sensitivity Analysis – June 30, 2017 % Change in NII 70.00% 64.20% 60.00% 48.30% 50.00% 40.00% 32.20% 30.00% 20.00% 15.98% 10.00% 0.00% Up 400 Up 300 Up 200 Up 100 Down 100 Down 300 -10.00% -9.27% -10.40% -20.00% EVE % Change 40.00% 35.81% 28.43% 30.00% 20.20% 20.00% 10.55% 10.00% 0.00% Up 400
Slide 28: Why PFBC?
Why PFBC? • Focused on creating scarcity value in an attractive market • Superior earnings power and growth profile vs. peers ̶ Organic loan and deposit CAGR of 22.9% and 25.5%, respectively over the past two years ̶ Q2 2017 ROA of 1.31% and ROE of 15.9% • Experienced management team with deep ties
Preferred Bank — Raymond James U.S. Bank Conference 2017 on 6ix