Financial Comparison: PCB Bancorp (NASDAQ:PCB) vs. Preferred Bank (NASDAQ:PFBC)

Preferred Bank (NASDAQ:PFBC) and PCB Bancorp (NASDAQ:PCB) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Insider and Institutional Ownership

72.8% of Preferred Bank shares are owned by institutional investors. Comparatively, 33.0% of PCB Bancorp shares are owned by institutional investors. 25.0% of PCB Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Preferred Bank and PCB Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Preferred Bank	0	2	1	0	2.33
PCB Bancorp	0	2	0	0	2.00

Preferred Bank presently has a consensus price target of $92.33, indicating a potential upside of 8.26%. PCB Bancorp has a consensus price target of $22.00, indicating a potential upside of 5.47%. Given Preferred Bank’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Preferred Bank is more favorable than PCB Bancorp.

Risk & Volatility

Preferred Bank has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, PCB Bancorp has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Earnings & Valuation

This table compares Preferred Bank and PCB Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Preferred Bank	$283.96 million	4.33	$130.66 million	$9.42	9.05
PCB Bancorp	$102.63 million	2.92	$25.81 million	$1.94	10.75

Preferred Bank has higher revenue and earnings than PCB Bancorp. Preferred Bank is trading at a lower price-to-earnings ratio than PCB Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Preferred Bank and PCB Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Preferred Bank	25.00%	17.80%	1.91%
PCB Bancorp	13.45%	9.02%	0.90%

Dividends

Preferred Bank pays an annual dividend of $3.00 per share and has a dividend yield of 3.5%. PCB Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 3.8%. Preferred Bank pays out 31.8% of its earnings in the form of a dividend. PCB Bancorp pays out 41.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Preferred Bank has raised its dividend for 5 consecutive years and PCB Bancorp has raised its dividend for 7 consecutive years. PCB Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Preferred Bank beats PCB Bancorp on 13 of the 17 factors compared between the two stocks.

About Preferred Bank

Preferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals. The company accepts checking, savings, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; commercial loans comprising lines of credit for working capital, term loans for capital expenditures, and commercial and stand-by letters of credit; and small business administration loans. In addition, the company offers trade finance services, including commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, acceptances/trust receipt financing products, export financing, and bills purchase programs. Further, it provides cash management services; and internet, mobile, and tablet banking services. The company operates through full-service branch offices in the California counties of Los Angeles, Orange and San Francisco; Flushing, New York; Houston suburb of Sugar Land, Texas; and a satellite office in Manhattan, New York. The company was incorporated in 1991 and is headquartered in Los Angeles, California.

About PCB Bancorp

PCB Bancorp operates as the bank holding company for PCB Bank that provides various banking products and services to small to medium-sized businesses, individuals, and professionals in Southern California. The company offers demand, savings, money market, and time deposits, as well as certificates of deposit; and trade finance, remote deposit capture, courier deposit services, positive pay services, zero balance accounts, and sweep accounts. It also provides real estate loans, including commercial and residential, Small Business Administration (SBA) property, and construction loans; commercial and industrial loans, such as commercial term and lines of credit, SBA commercial term, and SBA Paycheck Protection Program loans; and consumer loans comprising residential mortgage; and automobile loans, unsecured lines of credit, and term loans. In addition, the company offers access to account balances, online transfers, and online bill payment and electronic delivery of customer statements; and mobile banking solutions that include remote check deposit and mobile bill pay. Further, it provides automated teller machines; and banking by telephone, mail, personal appointment, debit cards, direct deposit, and cashier's checks, as well as treasury management, wire transfer, and automated clearing house services. The company operates through a network of full-service branches in Los Angeles and Orange counties, California; Carrollton and Dallas, Texas; and Englewood Cliffs and Palisade Park, New Jersey, and Bayside, New York. It also operates loan production offices in Los Angeles and Orange Counties, California; Annandale, Virginia; Atlanta, Georgia; Bellevue, Washington; Aurora, Colorado; and Carrollton, Texas. The company was formerly known as Pacific City Financial Corporation and changed its name to PCB Bancorp in July 2019. PCB Bancorp was founded in 2003 and is headquartered in Los Angeles, California.