FBR Research Downgrades Preferred Bank (Los Angeles) (PFBC) to Underperform
PFBC Hot Sheet
Rating Summary:2 Buy, 0 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
FBR Research Downgrades Preferred Bank (Los Angeles) (Nasdaq: PFBC) from Market Perform to Underperform. Price target lowered to $1.50 from $4.00.
FBR analyst says, "Lowering rating on PFBC and lowering our FY09 core EPS loss estimate to ($4.09) from ($1.55), and raising our FY10 core EPS loss estimate to ($1.30) from ($2.00). We expect the stock to be weak over the next few quarters, and it will likely continue to trade at a material discount to TBV/share due to the increasing uncertainty regarding Preferred's capital position and potential future regulatory action stemming from its most recent regulatory exam, which resulted in a meaningful downward revision to 3Q09 operating results. Specifically, NPA levels now stand at more than 19% of loans plus OREO (excluding "current" NPLs, NPAs are 15.8% of loans plus OREO). As a result of higher provisions and OREO valuation charges, we estimate the company's pro forma total risk-based capital level has now fallen below the "well capitalized" regulatory threshold and its Tier 1 leverage capital ratio is now below the minimum requirement outlined under its outstanding Memorandum of Understanding (MOU), initially entered into in April 2009. In our view, this could prompt more severe regulatory action and increases the probability that the company will be required to raise additional capital. Although management currently expects to return to profitability in 4Q09, aided by a net charge-off recovery, we fear 4Q could prove only a brief respite in the losses, and we expect credit pressure to continue in 1H10...We estimate the 3Q09 diluted EPS loss decreases to ($3.38) from ($1.31), pro forma TBV/share drops to $7.22, from $8.65, and the company's TCE ratio falls 160 bps to 8.1%."
To see all the upgrades/downgrades on shares of PFBC, visit our Analyst Ratings page.
Preferred Bank (the Bank) is an independent commercial bank in California focusing on the Chinese-American market.
FBR analyst says, "Lowering rating on PFBC and lowering our FY09 core EPS loss estimate to ($4.09) from ($1.55), and raising our FY10 core EPS loss estimate to ($1.30) from ($2.00). We expect the stock to be weak over the next few quarters, and it will likely continue to trade at a material discount to TBV/share due to the increasing uncertainty regarding Preferred's capital position and potential future regulatory action stemming from its most recent regulatory exam, which resulted in a meaningful downward revision to 3Q09 operating results. Specifically, NPA levels now stand at more than 19% of loans plus OREO (excluding "current" NPLs, NPAs are 15.8% of loans plus OREO). As a result of higher provisions and OREO valuation charges, we estimate the company's pro forma total risk-based capital level has now fallen below the "well capitalized" regulatory threshold and its Tier 1 leverage capital ratio is now below the minimum requirement outlined under its outstanding Memorandum of Understanding (MOU), initially entered into in April 2009. In our view, this could prompt more severe regulatory action and increases the probability that the company will be required to raise additional capital. Although management currently expects to return to profitability in 4Q09, aided by a net charge-off recovery, we fear 4Q could prove only a brief respite in the losses, and we expect credit pressure to continue in 1H10...We estimate the 3Q09 diluted EPS loss decreases to ($3.38) from ($1.31), pro forma TBV/share drops to $7.22, from $8.65, and the company's TCE ratio falls 160 bps to 8.1%."
To see all the upgrades/downgrades on shares of PFBC, visit our Analyst Ratings page.
Preferred Bank (the Bank) is an independent commercial bank in California focusing on the Chinese-American market.
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