Preferred Bank (PFBC) Q4 2024 Earnings Call Highlights: Strong Financial Performance Amidst ...
Net Income (Annual): $131 million or $9.64 per share.
Net Income (Q4): $30.3 million or $2.25 per share.
Return on Assets: 19.1%.
Return on Investment of Equity: 18.8%.
Loan Growth (Annual): 7%.
Deposit Growth (Annual): 3.6%.
Non-Performing Loans: Reduced from $20 million to $10 million, a 50% improvement.
Dividend Increase: From $0.70 to $0.75, payable in January.
Share Repurchase: 464,000 shares for $34 million.
Leverage Capital Ratio: Improved from 10.85% to 11.3%.
Tangible Book Value: Increased from $50.54 to $57.86.
Warning! GuruFocus has detected 8 Warning Signs with HLI.
Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Preferred Bank (NASDAQ:PFBC) reported a net income of $131 million for the year, with a return on assets of 19.1% and return on equity of 18.8%, outperforming industry averages.
The bank achieved a 50% reduction in non-performing loans, decreasing from $20 million to $10 million, and a 33% reduction in criticized loans.
Preferred Bank (NASDAQ:PFBC) increased its dividend from $0.70 to $0.75, reflecting confidence in its financial stability.
The bank repurchased 464,000 shares of its common stock for $34 million, indicating a strong capital position and commitment to shareholder value.
The leverage capital ratio improved from 10.85% to 11.3%, and the tangible book value per share increased from $50.54 to $57.86, showcasing financial strength and growth.
The bank's net income for the fourth quarter was negatively impacted by a $8.1 million correction to rental expenses, equating to a $0.42 after-tax adjustment.
Loan growth was moderate at 7% and deposit growth at 3.6%, reflecting a slow growth year for the banking industry.
The Los Angeles wildfire posed a risk to the bank's commercial real estate loan portfolio, although initial assessments showed minimal impact.
The bank faces competitive pressure in deposit rates, particularly within the local Asian community, affecting its flexibility in pricing.
Non-interest expenses are expected to rise in the first quarter due to increased payroll taxes, legal fees, and charitable contributions related to wildfire relief efforts.
Q: Can you provide insights on the margin outlook for the first quarter, considering the mix of floating rate loans? A: Li Yu, Chairman and CEO, stated that the margin is expected to remain relatively stable in the first quarter, with no major effects anticipated. Edward Czajka, CFO, added that the spot margin for December was 3.98%, with a quarterly NIM of 4.06%, and they do not foresee significant further compression.
Q: What is the status of time deposits repricing in the first quarter, and what are the new offered rates? A: Edward Czajka, CFO, mentioned that about $1.6 billion in time deposits are coming due in Q1 at a weighted average rate of 4.75%. The offered rates are currently below that, ranging from the low 3s to the mid 4s, depending on the term and competition.
Q: What are your plans for capital repatriation in 2025, particularly regarding share buybacks? A: Li Yu, Chairman and CEO, explained that buybacks will depend on factors such as loan growth prospects, stock pricing, and capital ratios. If the stock remains undervalued, they may consider buybacks.
Q: Can you provide details on the expected non-interest expenses for the first quarter? A: Edward Czajka, CFO, indicated that non-interest expenses are expected to be around $23 million for Q1, including elevated payroll taxes and professional services costs. They also plan to make a charitable contribution to local wildfire relief funds.
Q: What is the outlook for criticized loans and charge-offs in the first quarter? A: Nick Pi, Chief Credit Officer, stated that charge-offs were due to delays in resolving impaired loans, but they expect criticized loans to decrease in Q1 as some loans are paid off or refinanced, and additional collateral is provided for others.
Q: How is the competitive landscape affecting loan growth and payoff activity? A: Li Yu, Chairman and CEO, noted that payoff activity was elevated in the fourth quarter due to sales transactions. The origination remained consistent, but the market is cautious, with many investors waiting for more favorable conditions.
Q: Are there any changes in liquidity strategy, particularly regarding the securities portfolio? A: Edward Czajka, CFO, mentioned that they have been purchasing 10-year treasuries, totaling about $60 million, to take advantage of current market conditions. However, this is a cautious approach, and they will reassess as needed.
Q: What is the current strategy for managing the allowance ratio? A: Nick Pi, Chief Credit Officer, explained that the allowance ratio is expected to gradually reduce, aligning with peer banks. The bank maintains a philosophy of fully reserving for loan losses, which has kept their ratio slightly higher than peers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
22 minutes ago
- Yahoo
Nvidia Just Became the World's Most Valuable Company. Here's What May Happen Next.
Nvidia, with a market value of $3.444 trillion, topped software giant Microsoft. This happened a week after Nvidia's report of double-digit revenue growth and strong demand for its artificial intelligence chips. 10 stocks we like better than Nvidia › Nvidia (NASDAQ: NVDA) might be the company everyone's talking about thanks to its dominance in the high-growth area of artificial intelligence (AI), but it remained behind one other tech player, Microsoft, in terms of market value. Until this week. On June 3, Nvidia roared past the software giant to become the world's most valuable company with a market value of $3.444 trillion. Microsoft's market value totaled $3.441 trillion at the close of trading. This happened a week after Nvidia's fiscal 2026 first-quarter earnings report, one that maintained the company's track record of surpassing analysts' estimates and delivering double-digit revenue growth. And even though investors questioned the strength of AI demand and spending in recent months, Nvidia's words -- and comments from its biggest customers -- showed business still is booming. All of this is great news, but can this AI chip powerhouse maintain this position in the market cap top spot? It's important to note that this isn't the first time Nvidia has claimed the title of the world's most valuable company. In fact, just a few months ago, in January, Nvidia's market value surpassed those of Microsoft and smartphone giant Apple. But concerns about technology spending weighed heavily on Nvidia shares in recent months, and that pushed market value lower once again. Now, though, two elements clearly are driving this rebound in the AI giant. First, market sentiment and stock performance have improved in recent weeks on optimism that President Donald Trump's import tariffs won't result in extreme headwinds for corporate earnings. The U.S. struck an initial trade deal with China at lower-than-expected tariff levels and is working on a permanent arrangement. Lower tariffs suggest less strain on companies' budgets and on the consumer's wallet. Second, as mentioned, Nvidia reported strong demand for its latest release, the Blackwell architecture and chip, and noted that customers are rushing to the company for inferencing power. Nvidia's chips -- graphics processing units (GPUs) -- fuel this process that allows large language models to think through problems and generate answers. All of this helped Nvidia report a 69% increase in revenue to $44 billion in the quarter and deliver strong profitability on sales. Even including a charge Nvidia took for canceled sales to China following U.S. export controls, Nvidia's gross margin came in at more than 60%. And excluding the impact of the charge, Nvidia met its forecast of gross margin in the low-70% range. On top of this, forecasts showing the AI market will increase from hundreds of billions of dollars today to trillions of dollars by early next decade suggest there's room for Nvidia and other AI leaders to grow. So, will Nvidia keep its title as the world's biggest company? One potential risk to Nvidia's share price performance -- and market value gains -- is the situation concerning the export of AI chips to China. Today, U.S. restrictions prevent Nvidia from selling its H20 chip -- one that it designed specifically for the Chinese market -- to that country. If Nvidia remains completely blocked from the Chinese market, revenue growth and stock performance could suffer, at least in the short term. But any progress in that area, even small, could act as a catalyst for share gains. Considering all of these elements, the positive and the negative, I think Nvidia may once again remain neck and neck with Microsoft and Apple when it comes to market cap in the months and quarters to come. We might see each of these companies periodically take the top spot. If tariff issues and the China export situation are completely resolved, though, Nvidia could have the advantage. Nvidia's leadership and innovation in the high-growth AI market as well as its double-digit revenue increases quarter after quarter could eventually push it ahead, making it the world's biggest company for the long term. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $656,825!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $865,550!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Nvidia Just Became the World's Most Valuable Company. Here's What May Happen Next. was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23 minutes ago
- Yahoo
Wall Street Still Loves This Stock--Even After It Crashed nearly 18% in a Day
PVH Corp (NYSE:PVH) just got hammereddown nearly 18% at 12.22pm. The selloff came despite a blockbuster year: record gross margins of 59.4%, $600 million in free cash flow, and a 10% operating margin. Non-GAAP EPS for fiscal 2024 came in at a record $11.74, up 10% from last year. The company even returned $500 million to shareholders through buybacks. On paper, these are the kinds of numbers that should get a standing ovation. Instead, investors hit the exits. So what's going on? A few storm clouds are hanging over the 2025 outlook. Management is guiding for flat to slightly higher revenue, and while EPS could rise to $12.75, the road ahead looks bumpier. Freight costs are ticking up, promotions are likely to intensify, and Chinaone of PVH's key marketsis facing a slowdown post-holiday. To make matters worse, PVH was added to China's unreliable entity list by MOFCOM, introducing a new layer of geopolitical risk. Calvin Klein also ran into product development delays, adding short-term margin pressure to the mix. And yetWall Street hasn't given up. The average price target from 13 analysts sits at $98.23, implying a potential 48.9% upside from current levels. GuruFocus places PVH's fair value at $97.10. Brokerage consensus is still Outperform. Underneath the headline drop, there are signals of strength: EBIT surged over 40% in North America, Europe's store traffic picked up in back-to-back quarters, and core product sell-through is improving. This might just be a stock investors don't like right nowbut could end up regretting not buying later. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27 minutes ago
- Yahoo
Is Amazon Paying $4 Billion to Break Up With UPS?
Amazon is planning to spend up to $4 billion to enhance its ability to deliver in rural areas. The e-commerce giant has forged a partnership with FedEx on the delivery front. United Parcel Service is dramatically reducing its relationship with Amazon. 10 stocks we like better than Amazon › Amazon (NASDAQ: AMZN) is an online retail powerhouse, selling and delivering its own products and acting as a middleman for other retailers. The company's delivery trucks are ubiquitous in some areas of the country. But it has even bigger aspirations when it comes to getting products to customers. So why did United Parcel Service (NYSE: UPS) decide to stop handling as many Amazon deliveries? As with any good breakup drama, the story between Amazon and UPS, as United Parcel Service is called for short, is hard to call. UPS says that the Amazon business it was doing was high volume, but low margin. That meant that it didn't add enough to the bottom line to make it worth the top-line benefit. UPS says it plans to step away from half of the business it does with Amazon over the next couple of years. That effort is in keeping with UPS' goal of improving the quality of its business. But management highlighted that it will still work with Amazon on some things. Notably, Amazon is increasingly good at delivering its own wares, but it doesn't have a strong handle on returns. With a large retail store network, UPS can still provide return services to Amazon at an attractive return for UPS shareholders. So the relationship isn't dead -- it's just different. Or, you could say, they will still be friends. UPS' decision to put limits on its relationship with Amazon is a problem for Amazon. While it is true that Amazon has been growing its distribution capabilities, it now has to step up more quickly than it might have planned. To that end, Amazon recently announced that it was making a capital investment of up to $4 billion to enhance its ability to make rural deliveries. And it inked a deal with UPS' peer FedEx (NYSE: FDX), where that carrier will handle larger packages for Amazon. The market saw all of this as a win for FedEx and a loss for UPS. For Amazon, it wasn't too big a deal, noting that the stock is widely adored on Wall Street right now. While Amazon's stock is about 15% below its all-time high, its price-to-sales and price-to-earnings ratios are both above their five-year averages. And they are both fairly lofty on an absolute basis, as well. Still, it looks a little like Amazon is scrambling to take on the distribution services that UPS is willingly giving up. So what about UPS? The company's stock has lost more than half of its value since hitting a peak in 2022. In fact, it made the Amazon announcement just as it appeared it was getting its business back on track following a period of weakness that led to a corporate overhaul. Indeed, revenue had started to grow and margins appeared to have stabilized. Moving away from low-value Amazon business was a preemptive move made at a time when UPS had shifted from business weakness to business strength. In other words, UPS is being proactive because it sees the writing on the wall. Its Amazon business was going to keep shrinking anyway, so why not get ahead of it? The costs Amazon is incurring to make up for the loss of UPS as a delivery service is a sign that this was a big deal. But it will be a bigger deal for Amazon than UPS, since UPS was clear that the business wasn't very profitable. In fact, UPS could end up the big winner if the ability to slim down allows it to further improve its margins, even if the top line of its income statement shrinks along the way. Wall Street loves Amazon, and perhaps for good reason. But the stock is trading with a premium price tag. UPS, which could actually end up being the big winner in its breakup with Amazon, is deeply unloved. Notably, its price-to-sales and price-to-earnings ratios are well below their five-year averages. The stock's dividend yield, meanwhile, is historically high at around 6.7%. There's no question that UPS has extended the length of its turnaround by breaking up with Amazon. But the near-term pain could be exactly what it needs to rise up again. Contrarian investors, dividend investors, and value investors should all be doing a deep dive into UPS today with the idea of adding this unloved delivery service to their portfolios. Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $869,841!* Now, it's worth noting Stock Advisor's total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and FedEx. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy. Is Amazon Paying $4 Billion to Break Up With UPS? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
