DA Davidson Starts Preferred Bank (PFBC) at Buy, NPA Level Above Peers

DA Davidson initiates coverage on shares of Preferred Bank (NASDAQ: PFBC) with a Buy rating and $10.50 price target.

The firm notes that the company has been turning around its asset quality and bottom line in the past few quarters and believes that the valuation is really attractive. They project that the bank will generate a ROE of 6.4 percent in 2012.

The banks NPA levels are well above its peers, but still are well below is historical highs.

An analyst at DA Davidson comments, "PFBC has a $27.1 million DTA valuation allowance of which it expects a partial recovery in the upcoming third quarter with the remainder to follow in subsequent periods. Based on the current share count, a DTA recovery could add $1 to TBV and 105bp-115bp to the company’s TCE/TA ratio."

The firm released its 2011 and 2012 EPS estimates at $0.43 and $0.79.

For more ratings news on Preferred Bank click here and for the rating history of Preferred Bank click here.

Shares of Preferred Bank closed at $8.26 yesterday.

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