Is Preferred Bank (California) overvalued or undervalued?

As of 7 July 2025, Preferred Bank (California) has moved from expensive to fair in its valuation grade. The company appears to be fairly valued based on its current metrics, with a P/E ratio of 10, a Price to Book Value of 1.58, and an EV to EBITDA of 2.09. In comparison to its peers, Customers Bancorp, Inc. has a P/E ratio of 11.99, while 1st Source Corp. stands at 12.92, indicating that Preferred Bank is competitively priced within its industry.
Despite a fair valuation, Preferred Bank has underperformed against the S&P 500 over longer periods, notably with a 3-year return of 38.40% compared to the S&P 500's 70.41%. However, it has shown resilience with a 1-year return of 17.08%, closely matching the S&P 500's 17.14%. Overall, the company's valuation metrics suggest it is neither undervalued nor overvalued, aligning well with its peers in the regional banking sector.