Preferred Bank (PFBC): history, ownership, mission, how it works & makes money

A Brief History of Preferred Bank (PFBC)

Formation and Early Years

Preferred Bank, established in 1991, is headquartered in Los Angeles, California. The bank was founded to serve the banking needs of businesses and individuals within the community, focusing particularly on the Chinese-American community.

Growth and Expansion

By 2000, Preferred Bank had already established a significant presence, with assets exceeding $200 million. The bank expanded its services, offering a range of commercial banking products tailored to small and medium-sized enterprises.

Public Offering

On December 16, 2000, Preferred Bank went public, trading under the ticker symbol PFBC on the NASDAQ. The initial offering consisted of 1.5 million shares priced at $10 each, raising approximately $15 million.

Financial Performance

As of the end of 2022, Preferred Bank reported total assets of approximately $5.5 billion, with net income for the year reaching a record $63 million.

Acquisitions

In 2021, Preferred Bank acquired a local competitor, which added $300 million in deposits and significantly expanded its branch network throughout Southern California.

Community Involvement

Preferred Bank has been actively involved in supporting local charities and community development initiatives, contributing over $1 million annually to various organizations.

Technological Advancements

In recent years, the bank has invested heavily in digital banking technologies, with over 75% of transactions now conducted through online platforms. This investment is reflected in the bank's growing customer base, which reached 35,000 active accounts as of 2023.

Current Strategies

Preferred Bank continues to focus on expanding its lending portfolio, particularly in commercial real estate and small business loans, with a loan-to-deposit ratio of 85% as of Q2 2023.

Future Outlook

The bank's management has projected a continued increase in profitability, targeting a 10% growth in net income for 2023 based on ongoing expansion efforts and improved operational efficiency.

A Who Owns Preferred Bank (PFBC)

Overview of Ownership

As of the latest available data, Preferred Bank (PFBC) is predominantly owned by institutional investors and individual shareholders. The company operates as a community bank serving various financial needs.

Top Shareholders

• BlackRock, Inc. - 9.7% of shares
• Dimensional Fund Advisors LP - 7.4% of shares
• Vanguard Group, Inc. - 6.2% of shares
• State Street Corporation - 5.6% of shares

Insider Ownership

Insider ownership plays a crucial role in corporate governance at Preferred Bank.

Stock Performance

Preferred Bank's stock has displayed various performance metrics.

Recent Changes in Share Ownership

Recent regulatory filings show changes in the ownership structure of Preferred Bank:

• BlackRock increased its holdings by 2.1% in the last quarter.
• Dimensional Fund Advisors reduced its stake by 0.5%.
• Vanguard Group maintained its position with no change in holdings.

Institutional Ownership Trends

Institutional ownership comprises a significant portion of the bank's total shares.

Summary of Financial Performance

The fiscal performance of Preferred Bank illustrates its economic standing.

Preferred Bank (PFBC) Mission Statement

Overview

The mission of Preferred Bank (PFBC) revolves around providing exceptional financial services that cater to the needs of its community and clients. The focus is on fostering long-lasting relationships while maintaining integrity and professionalism in every transaction.

Core Values

• Integrity: Upholding the highest ethical standards.
• Customer-centricity: Prioritizing client needs and feedback.
• Innovation: Continuously improving services and products.
• Collaboration: Working together for mutual success.
• Community Engagement: Supporting local initiatives and development.

Financial Performance Metrics

As of the latest fiscal year ending December 31, 2022, Preferred Bank reported significant financial achievements:

Service Offerings

Preferred Bank provides a wide array of financial products and services, including:

• Commercial banking solutions.
• Real estate loans.
• Consumer banking services.
• Wealth management options.
• Online banking and digital services.

Target Market

The bank primarily targets:

• Small to medium-sized enterprises (SMEs).
• Real estate investors and developers.
• Individual consumers seeking tailored banking solutions.
• Community organizations that require banking partnerships.

Community Commitment

Preferred Bank actively engages in community initiatives:

• Contributes to local nonprofits.
• Participates in community development programs.
• Offers financial literacy workshops.
• Encourages employee volunteerism.

Future Goals

In alignment with its mission statement, Preferred Bank aims to:

• Expand its footprint in key markets.
• Enhance digital banking capabilities.
• Increase community engagement initiatives.
• Improve overall customer satisfaction ratings.

Conclusion

While the above details encapsulate the mission and operations of Preferred Bank, the ongoing dedication to serving clients and the community remains at the forefront of its mission statement.

How Preferred Bank (PFBC) Works

Banking Services

Preferred Bank offers a range of banking services that cater primarily to small to mid-sized businesses and individuals in the Chinese-American community. Services include:

• Commercial Banking: Providing business loans, lines of credit, and cash management services.
• Personal Banking: Offering personal loans, savings and checking accounts, and credit cards.
• Real Estate Financing: Mortgage and refinancing options for residential and commercial properties.

Financial Performance

As of the end of Q2 2023, Preferred Bank reported the following financial highlights:

Loan Portfolio

The bank's loan portfolio is diversified across various sectors. Breakdown as of Q2 2023:

Branch Network

Preferred Bank operates through a network of branches primarily located in California. Key locations include:

• Los Angeles
• San Francisco
• San Diego
• New York City
• Seattle

Technology and Innovation

Preferred Bank invests in technology to enhance customer experience and operational efficiency. As of 2023, key initiatives include:

• Online Banking Platform: Providing 24/7 access for customers.
• Mobile App: Offering features such as mobile deposits and account management.
• Cybersecurity Enhancements: Regular updates and monitoring for customer data protection.

Community Engagement

Preferred Bank actively participates in community initiatives, contributing funds and resources to local organizations. In 2022, the bank donated approximately:

Regulatory Environment

Preferred Bank, as a financial institution, is subject to regulations by the Federal Reserve and the FDIC. Key compliance areas include:

• Capital Adequacy: Maintaining a capital ratio above the required 8%.
• Liquidity Coverage Ratio: Ensuring a minimum ratio of 100%.
• Consumer Protection Regulations: Adhering to the Truth in Lending Act and Fair Housing Act.

How Preferred Bank (PFBC) Makes Money

Core Banking Operations

Preferred Bank primarily generates revenue through its core banking operations, which include lending activities and interest income. As of Q2 2023, the total loans outstanding reached approximately $2.5 billion.

Interest Income

The bank earns a significant portion of its revenue from interest on loans. In 2022, interest income was reported at approximately $99.3 million, reflecting the bank's focus on commercial real estate and small business loans.

Fee-Based Income

Preferred Bank also capitalizes on fee-based services such as account maintenance fees, transaction fees, and service fees for various banking services. In 2022, fee income amounted to $14.2 million, contributing to overall profitability.

Loan Interest Rates

The interest rates on loans can significantly influence the bank's profitability. The average interest rate on loans as of Q1 2023 was approximately 4.42%.

Deposit Services

Deposit services provide another important revenue stream. In Q2 2023, Preferred Bank had total deposits of around $2.8 billion, which supports its lending activities and overall liquidity.

Spread Income

The spread between interest earned on loans and interest paid on deposits is crucial. For 2022, the net interest margin was recorded at 3.56%, showcasing the bank's effective management of the spread.

Investment Securities

Investment in securities also generates income. In Q2 2023, Preferred Bank held securities totaling approximately $700 million, earning interest from this portfolio.

Operating Expenses

While revenue generation is essential, managing operating expenses is equally important. For 2022, the total operating expenses were roughly $45 million, including salaries, rent, and other operational costs.

Financial Overview Table

Commercial and Retail Banking Services

Preferred Bank offers a range of banking services, including commercial and retail banking. These services encompass a variety of products designed to meet the needs of businesses and individual customers alike.

Risk Management and Compliance

Effective risk management practices ensure that the bank maintains regulatory compliance and minimizes potential losses. Compliance efforts help avoid costly penalties and improve overall operational efficiency.

Market Positioning

Preferred Bank has strategically positioned itself within the market, primarily serving the Asian-American communities in California. This demographic focus allows for targeted marketing and customer acquisition strategies.