Preferred Bank (NASDAQ: PFBC) Earnings Report Analysis

• Preferred Bank (NASDAQ: PFBC) reported an EPS of $2.25, missing the estimated $2.42 and marking a negative surprise of 7.02%.
• The bank generated revenue of $72.81 million, surpassing the estimated $68.27 million and indicating a positive revenue surprise of 4.01%.
• Net income for the quarter was $30.2 million, with a notable decline from the previous year, primarily due to increased occupancy expenses.

Preferred Bank (NASDAQ: PFBC), a well-known independent bank based in California, operates within the Zacks Banks - West industry, providing a range of financial services. The bank competes with other regional banks in the area, focusing on delivering personalized banking solutions to its clients.

On January 27, 2025, PFBC reported earnings per share (EPS) of $2.25, which was below the estimated $2.42. This represents a negative surprise of 7.02%, as highlighted by Zacks. The EPS also declined from $2.60 in the same quarter last year. Despite this, the bank has a history of surpassing consensus EPS estimates in three of the last four quarters.

PFBC generated revenue of $72.81 million, exceeding the estimated $68.27 million. This revenue figure marks a 1.8% increase from the same period last year and a positive surprise of 4.01% compared to the Zacks Consensus Estimate of $70 million. The bank has consistently outperformed consensus revenue estimates in three of the last four quarters.

The bank's net income for the quarter was $30.2 million, equating to $2.25 per diluted share. This marks a decline of $3.2 million from the previous quarter and a $5.6 million decrease compared to the same quarter last year. The decline is primarily due to a one-time $8.1 million increase in occupancy expenses, resulting from an error in the calculation of ASC 842, Accounting for Leases.

PFBC's financial ratios provide insight into its valuation and financial health. The bank has a price-to-earnings (P/E) ratio of approximately 8.47 and a price-to-sales ratio of about 2.54. Its enterprise value to sales ratio is around 1.21, and the enterprise value to operating cash flow ratio is approximately 4.40. The debt-to-equity ratio is about 0.23, indicating a relatively low level of debt compared to equity. The current ratio is about 0.32, reflecting the company's ability to cover short-term liabilities with short-term assets.