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Preferred Bank (PFBC) Stock Rises on 13.2% Dividend Hike

Preferred Bank's (PFBC) quarterly dividend hike and share buyback program to continue enhancing shareholder value.

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This story originally appeared on Zacks

Preferred Bank PFBC announced a dividend hike for the second time this year. Hence, since the announcement late last week, the company’s shares have risen 2%.

Preferred Bank declared a quarterly cash dividend of 43 cents per share, marking an increase of 13.2% from the prior payout. The dividend will be paid out on Jan 21, 2022, to shareholders on record as of Jan 7.

Considering the last day’s closing price of $69.66, Preferred Bank’s dividend yield currently stands at 2.47%. This yield is not only attractive for income investors but represents a steady income stream. It is also impressive compared with the industry’s 1.94%.

Li Yu, Chairman and CEO of Preferred Bank, said, “We are very pleased to increase the dividend as it is a direct reflection of the strong performance of the Bank through the pandemic year.”

Preferred Bank continues to enhance shareholders’ value through sustained capital deployment activities. Prior to this increase, in March, the company announced a 26.7% dividend hike after a gap of more than two years to 38 cents per share.

Apart from regular dividends, Preferred Bank has a share repurchase plan in place. In August 2021, following the approval by the California Department of Financial Protection and Innovation, the company announced a buyback authorization worth $50 million. As of Sep 30, 2021, almost $32.5 million worth of shares remained under the program.

Preferred Bank has a solid balance sheet. As of Sep 30, 2021, it had total debt of $165.6 million, while its cash and cash equivalents were $1.08 billion. Thus, given a solid balance sheet position and earnings strength, the bank’s capital deployment activities look sustainable.

Shares of Preferred Bank have gained 3.7% over the past three months, outperforming the industry’s 0.5% rise.

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Zacks Investment ResearchImage Source: Zacks Investment Research

At present, Preferred Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Banks Undertaking Similar Steps

Over the past few months, several banks have rewarded shareholders with dividend hikes. Some of these are Farmers National Banc Corp. FMNB, United Bankshares, Inc. UBSI and The Community Financial Corporation TCFC.

Farmers National announced a sequential hike in the quarterly dividend of 27.3% to 14 cents per share. The dividend will be paid out on Dec 31 to shareholders on record as of Dec 10, 2021.

This marks the sixth consecutive quarter of an increase by Farmers National. Prior to this, FMNB hiked the dividend by 10% to 11 cents per share.

Farmers National’s management noted, “since 2015, our annual cash dividend has increased at an impressive 26% compound annual growth rate, reflecting our strong financial results and commitment to returning capital to shareholders.”

United Bankshares announced a dividend of 36 cents per share, which represents a hike of 2.9% from the prior payout. The dividend will be paid out on Jan 3, 2022, to shareholders on record as of Dec 2, 2021.

In aggregate, United Bankshares will pay nearly $46.5 million on 129.2 million shares. Prior to the recent hike, UBSI announced an increase in its quarterly dividend by 2.9% to 35 cents per share in November 2019.

Community Financial announced a 17% sequential hike in the quarterly cash dividend. The company will now pay a dividend of 17.5 cents per share. The dividend will be paid out on Jan 24 to shareholders on record as of Jan 10, 2022.

TCFC’s management noted, "Our performance in the past year has been exceptional, despite many pandemic related challenges felt across the industry and Country. This increase in the quarterly dividend reflects the strong financial position of the Company and our continued commitment to returning value to shareholders."

Earlier in February, Community Financial hiked its dividend by 20% to 15 cents per share.



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Preferred Bank (PFBC): Free Stock Analysis Report

 

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Farmers National Banc Corp. (FMNB): Free Stock Analysis Report

 

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