Preferred Bank PFBC obtained regulatory approval to proceed with its shareholder-approved existing $150 million share repurchase program.
Details of PFBC’s Repurchase Plan
Preferred Bank launched the $150 million program in June 2023 and received regulatory approval to initiate the first leg of the plan. Under this, the bank repurchased $72.5 million worth of shares at an average price of $62.02. The approval expired in July 2024.
The currently obtained approval is for the remaining $77.5 million worth of shares, which is set to expire in February 2025.
Being a state-chartered, non-member bank, Preferred Bank is required to obtain regulatory approval before proceeding with any transaction that may alter its capital levels.
Prior to the existing authorization, PFBC had a share buyback plan of up to $50 million announced in 2021. Under the plan, the bank repurchased 0.5 million shares for a total consideration of $32 million.
Preferred Bank’s Dividend History
Apart from share repurchases, Preferred Bank pays quarterly dividends regularly and has increased dividends four times in the last five years. In December 2023, the bank announced a 27.3% dividend hike from the prior payout to 70 cents per share.
Considering Friday’s closing price of $82.85, its annualized dividend yield is 3.4%. Apart from being attractive to investors, the yield represents a steady income stream.
The company has a five-year annualized dividend growth of 20.94% with a dividend payout ratio of 27%.
As of June 30, 2024, Preferred Banks’ cash and cash equivalent balance was $917.7 million. The cash levels are higher than its subordinated debt issuance, net of unamortized costs, and premium and other liabilities of $182.5 million.
Hence, a solid balance sheet position, along with its earnings strength, indicates that its capital distributions are sustainable.
Zacks Rank & Price Performance
Year to date, shares of Preferred Bank have risen 13.4% compared with the industry’s 9% growth.
Image Source: Zacks Investment Research
Currently, PFBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar Steps by Other Banks
Last month, Capital City Bank Group, Inc. CCBG announced a quarterly cash dividend of 23 cents per share. This reflects a 9.5% hike from the prior payout of 21 cents per share. The dividend will be paid out on Sept. 23, 2024, to shareholders of record as of Sept. 9.
Before this, in February 2024, CCBG hiked its dividend by 5% to 21 cents. It has increased its dividend payout nine times in the past five years.
Northrim BanCorp, Inc. NRIM announced a quarterly cash dividend of 62 cents per share. This reflects a 1.6% hike from the prior payout. The dividend will be paid out on Sept. 13, 2024, to shareholders of record as of Sept. 5.
Prior to the latest hike, NRIM increased its dividend by 1.7% to 61 cents per share this January. The company has hiked its dividend 10 times in the last five years, with an annualized dividend growth of 17.18%.
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