Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. Furthermore, economic conditions have supported loan growth and fee income, a trend that has enabled the banking industry to return 13.2% over the past six months, almost identical to the S&P 500.

Regardless of these results, investors must exercise caution as many banks are sensitive to interest rate fluctuations and economic cycles. With that said, here are three bank stocks that may face trouble.

Preferred Bank (PFBC)

Market Cap: $1.18 billion

Founded in 1991 with a focus on serving the Pacific Rim community in Southern California, Preferred Bank (NASDAQ: PFBC) is a commercial bank that provides banking products and services to small and mid-sized businesses, entrepreneurs, real estate developers, and high net worth individuals.

Why Is PFBC Not Exciting?

1. 9.9% annual net interest income growth over the last five years was slower than its banking peers
2. Net interest margin shrank by 74 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
3. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 4.7% annually, worse than its revenue

At $95.40 per share, Preferred Bank trades at 1.5x forward P/B. If you’re considering PFBC for your portfolio, see our FREE research report to learn more.

Comerica (CMA)

Market Cap: $10.62 billion

Founded in 1849 during the California Gold Rush era, Comerica (NYSE: CMA) is a financial services company that provides commercial banking, retail banking, and wealth management services to businesses and individuals.

Why Should You Sell CMA?

1. Annual net interest income growth of 3% over the last five years was below our standards for the banking sector
2. Sales were less profitable over the last two years as its earnings per share fell by 23% annually, worse than its revenue declines
3. Tangible book value per share stagnated over the last five years, limiting its ability to leverage its balance sheet to make additional investments

Comerica is trading at $83.15 per share, or 1.5x forward P/B. To fully understand why you should be careful with CMA, check out our full research report (it’s free for active Edge members).

Ladder Capital (LADR)

Market Cap: $1.40 billion

Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE: LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.

Why Do We Pass on LADR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 15.4% annually over the last two years
2. Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
3. Flat tangible book value per share over the last five years suggest it must find different ways to enhance shareholder value during this cycle

Ladder Capital’s stock price of $11.00 implies a valuation ratio of 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than LADR.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.