Preferred Bank
NASDAQ:PFBC
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Preferred Bank
Preferred Bank, founded in 1991 and headquartered in Los Angeles, California, has carved out a niche as a leading player catering to the financial needs of middle-market businesses and high-net-worth individuals. The bank's roots reflect its strategic focus on relationship banking, emphasizing personalized service and tailored solutions. This approach distinguishes Preferred Bank from larger institutions, as it thrives on its ability to offer flexibility and rapid decision-making. With a concentration in commercial real estate and business lending, Preferred's operations are heavily tied to the dynamic economic ecosystem of Southern California. Its agility in meeting the complex demands of its clients is bolstered by a team of seasoned banking professionals who offer bespoke financial strategies, seamlessly blending traditional banking services with a forward-thinking approach to addressing financial complexities.
In terms of its business model, Preferred Bank capitalizes on its robust loan portfolio, which consists largely of real estate, commercial, and personal loans, generating interest income, which is its primary revenue stream. By maintaining a disciplined risk management framework, the bank balances loan growth with asset quality, ensuring profitability while safeguarding its financial health. Additionally, the bank earns significant non-interest income through banking services such as cash management and foreign exchange services, which serve the dual purpose of enhancing client relationships and diversifying revenue streams. As a public company, Preferred Bank leverages its solid financial performance and regional expertise to attract investors, underscoring its commitment to growth and shareholder value. In navigating the competitive and regulatory financial landscape, Preferred Bank's targeted lending approach and regional expertise continue to underpin its success in delivering consistent financial results.
Preferred Bank, founded in 1991 and headquartered in Los Angeles, California, has carved out a niche as a leading player catering to the financial needs of middle-market businesses and high-net-worth individuals. The bank's roots reflect its strategic focus on relationship banking, emphasizing personalized service and tailored solutions. This approach distinguishes Preferred Bank from larger institutions, as it thrives on its ability to offer flexibility and rapid decision-making. With a concentration in commercial real estate and business lending, Preferred's operations are heavily tied to the dynamic economic ecosystem of Southern California. Its agility in meeting the complex demands of its clients is bolstered by a team of seasoned banking professionals who offer bespoke financial strategies, seamlessly blending traditional banking services with a forward-thinking approach to addressing financial complexities.
In terms of its business model, Preferred Bank capitalizes on its robust loan portfolio, which consists largely of real estate, commercial, and personal loans, generating interest income, which is its primary revenue stream. By maintaining a disciplined risk management framework, the bank balances loan growth with asset quality, ensuring profitability while safeguarding its financial health. Additionally, the bank earns significant non-interest income through banking services such as cash management and foreign exchange services, which serve the dual purpose of enhancing client relationships and diversifying revenue streams. As a public company, Preferred Bank leverages its solid financial performance and regional expertise to attract investors, underscoring its commitment to growth and shareholder value. In navigating the competitive and regulatory financial landscape, Preferred Bank's targeted lending approach and regional expertise continue to underpin its success in delivering consistent financial results.
Earnings: Preferred Bank reported Q4 net income of $34.8 million, or $2.79 per share, and full-year net income of $134 million, or $10.41 per share.
Margins: Net interest margin declined in Q4 due to federal rate cuts, ending December at 3.66%. Deposit costs remain high and are declining more slowly than expected.
Loan & Deposit Growth: Q4 loan growth was $182 million (over 12%), and deposit growth was $115 million (7.4%). Full-year loan and deposit growth were 7.3% and 7.2%, respectively.
Credit Quality: Nonperforming assets declined slightly, but classified assets increased by $97 million mainly due to a large downgraded loan relationship. The bank expects to resolve most issues within two quarters.
Expense Guidance: Noninterest expenses are guided to 21.5%–22% of revenue for Q1, with full-year growth expected in the mid- to high single digits.
Outlook: Management expects stronger loan demand and is budgeting higher growth for 2026, while remaining cautious about share repurchases and M&A opportunities.
Deposit Competition: Competition for deposits remains strong, with large banks actively promoting CDs, putting pressure on deposit pricing.
