Preferred Bank announces $125 million stock buyback plan

LOS ANGELES - Preferred Bank (NASDAQ: PFBC), a prominent independent commercial bank in California with a market capitalization of $1.09 billion, has announced that its shareholders approved a new stock repurchase program valued at $125 million. According to InvestingPro analysis, the bank’s stock is currently trading at fair value, with a P/E ratio of 8.7x. This decision comes after the bank successfully completed its previous $150 million stock repurchase plan on May 8, 2025. During the first two quarters of the year, Preferred Bank bought back 818,059 shares for $65.7 million, concluding the repurchase program authorized in 2023. InvestingPro data reveals the bank maintains excellent financial health with an overall score of GREAT (3.1/5), suggesting strong operational efficiency.

Over the entirety of the last repurchase initiative, the bank acquired 2,146,252 shares at an average price of $70.13 per share. The new repurchase plan, however, will require regulatory approval due to the bank’s structure, which operates without a holding company. The bank anticipates that the necessary approvals will be secured promptly.

Chairman and CEO Li Yu commented on the repurchase, highlighting that as the bank’s organic growth has moderated, the capital ratios have increased due to sustained profitability. Yu emphasized that repurchasing common stock represents an efficient method of utilizing excess capital and indirectly returning value to shareholders. The bank currently offers a 3.6% dividend yield and has raised its dividend for four consecutive years, as noted in InvestingPro’s analysis, which includes 7 additional key insights available to subscribers.

Preferred Bank, chartered by the State of California, provides a variety of deposit and loan services to commercial and consumer clients. With its main office in Los Angeles, the bank operates across several branches in California, New York, and Texas, and maintains a loan production office in Sunnyvale, California. The bank’s customer base is diverse, covering small and mid-sized businesses, entrepreneurs, real estate developers, professionals, and high net worth individuals, with a historical focus on the Chinese-American community and the broader East Asian immigrant population in California. Analysts maintain a positive outlook on the bank’s prospects, with three analysts recently revising their earnings estimates upward for the upcoming period.

The information regarding the new stock repurchase plan is based on a press release statement from Preferred Bank.

In other recent news, Preferred Bank reported its Q1 2025 earnings, revealing an earnings per share (EPS) of $2.23, which fell short of the forecasted $2.33. The bank’s revenue also missed expectations, reaching $66.65 million compared to the anticipated $70.46 million. This earnings miss marks a deviation from the bank’s previous quarters, where it typically met or exceeded expectations. Additionally, Preferred Bank announced the appointment of Nick Pi as Executive Vice President and Chief Risk Officer, a strategic move to enhance the bank’s enterprise risk oversight. The bank’s net interest margin was reported at 3.75%, slightly below the normalized rate of 3.94%, as it faces challenges from global tariff tensions and supply chain concerns. Deposits increased by 2.6% quarter-over-quarter, although the loan portfolio experienced a slight decrease. As part of its leadership strengthening efforts, the bank’s Board of Directors expressed confidence in Pi’s ability to manage risk effectively. Despite the earnings miss, Preferred Bank anticipates potential stabilization in its loan portfolio by late Q2 2025.

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