10 Best Small Cap Bank Stocks To Invest In Now

8. Preferred Bank (NASDAQ:PFBC)

Market Capitalization as of March 28: $1.12 billion

Number of Hedge Fund Holders: 24

Preferred Bank (NASDAQ:PFBC) offers commercial banking products and services to small and mid-sized businesses and their owners, as well as other high-net-worth individuals. It provides real estate mortgage loans, real estate construction loans, commercial loans, and term loans among others. The company also offers trade finance, cash management, and internet, mobile, & tablet banking services.

The company’s commercial real estate (CRE) lending portfolio is a resilient and growth-driving segment, particularly within the Asian community markets. CRE drove the overall loan growth for 2024 to equal 7% year-over-year. The company’s strategy to mitigate risks here is to ensure that the loans are fully sponsored and backed by strong guarantors. Its underwriting also emphasizes guarantor strength and prioritizes cash flow and asset value.

The mortgage loan segment in the CRE portfolio usually remains unaffected by regional challenges, such as the recent LA wildfires. This stability also comes from strong underwriting together with strong borrowers. In its loan portfolio, the company reduced non-performing loans by 50% and criticized loans by 33% in Q4 2024.