Preferred Bank gets green light for $150M stock buyback

LOS ANGELES - Preferred Bank (NASDAQ: PFBC), an independent commercial bank with a market capitalization of $1.1 billion, has announced it received regulatory approval to proceed with its $150 million stock repurchase plan. The bank had previously bought back $84.3 million of its common stock over 2023 and 2024, but needed to halt the program as regulatory approval lapsed in January 2025. According to InvestingPro data, the bank maintains a "GOOD" overall financial health score, suggesting strong operational stability.

The latest authorization allows Preferred Bank to resume the repurchase of the remaining $65.7 million worth of shares until the approval expires in May 2025. To date, the bank has repurchased 1.3 million shares at an average price of $63.94 per share through the open market. The bank’s stock has delivered an impressive 19% return over the past year, while maintaining a consistent dividend program with 12 consecutive years of payments and a current yield of 3.7%.

As a state-chartered, non-member bank, Preferred Bank is obliged to obtain regulatory consent for any actions that alter its capital structure. The bank has secured both shareholder and regulatory nods to continue the buyback plan. With a P/E ratio of 8.4 and trading near its InvestingPro Fair Value, investors seeking deeper insights can access comprehensive analysis and additional ProTips through the platform’s detailed research reports.

Preferred Bank operates predominantly in California, with a network of branches that serve a diverse client base, including small and mid-sized businesses, entrepreneurs, real estate developers, professionals, and high net worth individuals. While it began as a Chinese-American bank, its customer base has since expanded beyond the ethnic Chinese community. The bank’s strong market position is reflected in its robust return on equity of 18% and healthy revenue growth prospects.

The bank’s financial services encompass a wide range of deposit and loan products, targeting both commercial and consumer sectors. Preferred Bank also maintains branches in New York and Texas, as well as a loan production office in Sunnyvale, California.

The announcement of the stock repurchase plan’s continuation is based on a press release statement from Preferred Bank.

In other recent news, Preferred Bank reported its fourth-quarter 2024 earnings, revealing a slight miss on expected earnings per share (EPS) but surpassing revenue forecasts. The bank’s EPS came in at $2.25, which was below the forecast of $2.35, while revenue reached $72.81 million, exceeding the anticipated $69.54 million. DA Davidson responded by increasing its price target for Preferred Bank shares to $101 from $98, maintaining a Neutral rating. The firm’s analysts noted strong quarterly performance with higher-than-expected net interest income and net interest margin. Despite the positive revenue figures, Preferred Bank’s loan growth showed signs of deceleration due to increased payoff levels. The bank continues to focus on strategic initiatives, including the opening of a new branch in Manhattan expected in March 2024. Preferred Bank’s full-year net income was reported at $131 million, translating to $9.64 per share, with a return on assets of 19.1% and a return on equity of 18.8%. Looking ahead, Preferred Bank plans to continue its selective treasury investments and projects non-interest expenses to be around $23 million for the first quarter of 2025.

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