PFBF Financial Analysis

Analysis Date: 1/30/2025

Business Model

Preferred Bank generates revenue primarily through net interest income from loans and deposits, as well as fee income from various banking services.

Revenue Sources

• Net interest income (primary revenue source)
• Fee income from letters of credit and deposit services

Revenue Distribution by Channel

• Commercial and industrial loans: $1,418.9M (25.2% of total loans)
• Commercial real estate loans: $2,840.8M (50.4% of total loans)

Income Statement Analysis

• Net interest income increased slightly by 0.47% quarter-over-quarter
• Non-interest expense increased significantly due to $8.1M one-time lease accounting adjustment
• Net income decreased 9.47% primarily due to one-time expense

Balance Sheet Analysis

• Total assets grew modestly by 0.74% quarter-over-quarter
• Loan portfolio increased by 1.24% indicating steady growth
• Deposits showed stable growth of 0.84%

Capital Allocation

The bank increased its quarterly dividend from $0.70 to $0.75 and repurchased 464,314 shares for $34.3M during 2024. Tier 1 leverage ratio improved to 11.33% from 10.85% year-over-year.

Management Commentary

Q4 was closely aligned with expectations excluding one-time items

Credit metrics improved with non-performing loans decreasing 52% quarter-over-quarter

One-time $8.1M lease accounting adjustment impacted earnings

Overall Sentiment: Positive with focus on core business strength despite one-time accounting adjustment

Recommendation

Rating: Buy

Reason for Rating: Strong fundamentals and improving credit metrics support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/30/2025, 8:58:28 AM