Preferred Bank gets approval for $125 million stock buyback plan

LOS ANGELES - Preferred Bank (NASDAQ:PFBC), a commercial bank with a market capitalization of $1 billion, has received regulatory approval to implement its $125 million stock repurchase plan, the California-based institution announced Monday.

The bank's board of directors has approved an initial $50 million tranche of repurchases, which will be executed through open market purchases. The full buyback plan was previously approved by shareholders in May. According to InvestingPro data, the stock currently trades near its Fair Value, with three analysts recently revising their earnings estimates upward for the upcoming period.

As Preferred Bank is not registered with the Securities and Exchange Commission, it required regulatory approval before proceeding with the stock repurchase program.

In addition to the buyback authorization, the board declared a quarterly cash dividend of $0.75 per share, payable on July 22, 2025, to shareholders of record as of July 8, 2025. The bank has maintained dividend payments for 12 consecutive years, with a current dividend yield of 3.7%. InvestingPro subscribers can access additional insights about PFBC's dividend history and growth potential, along with numerous other financial metrics.

"We are pleased to be in a position to repurchase our own stock utilizing our strong balance sheet supplemented by our superior profitability metrics," said Li Yu, Chairman and CEO of Preferred Bank, in the press release statement. The bank's financial strength is reflected in its "GREAT" Financial Health Score of 3.07 out of 4 from InvestingPro, with particularly strong scores in profitability and cash flow metrics.

Preferred Bank operates primarily in California with its main office in Los Angeles and twelve full-service branch banking offices throughout the state. The bank also maintains two branches in New York, one in Texas, and a loan production office in Sunnyvale, California.

The institution provides deposit services, real estate finance, commercial loans, and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals, and high net worth individuals.

Preferred Bank's deposits are insured by the Federal Deposit Insurance Corporation to the maximum extent permitted by law.

In other recent news, Preferred Bank announced its Q1 2025 earnings, revealing an earnings per share (EPS) of $2.23, which fell short of the analyst forecast of $2.33. The bank's revenue also missed expectations, reporting $66.65 million compared to the anticipated $70.46 million. In light of these results, Preferred Bank's stock price experienced a decline, though specific figures were not detailed. Meanwhile, the bank has introduced a new stock repurchase program valued at $125 million, following the completion of its previous $150 million buyback plan. This initiative aims to efficiently utilize excess capital and is pending regulatory approval. Additionally, Preferred Bank appointed Nick Pi as Executive Vice President and Chief Risk Officer, a move to strengthen its risk management practices. The bank is also facing ongoing challenges from global tariff tensions, which could impact its loan portfolio and trade finance segment. Despite these hurdles, Preferred Bank's deposits increased by 2.6% quarter-over-quarter, indicating some areas of growth amidst the broader challenges.

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