The financial sector is booming, including small companies like Unity Bancorp Nasdaq: UNTYBancorp Pens Nasdaq: PLBCand Community Trust Bancorp Nasdaq: CTPI. The 2024 results show that consumers remain healthy, trade volumes are improving, and higher long-term interest rates lead to strong investment income. These stock prices are rising due to business trends and are likely to continue rising in 2025.
Bank stock prices will continue to rise because the outlook for all three industry sectors remains strong, including cash flow and earnings. The Fed is unlikely to cut interest rates by more than 25 basis points, leaving interest rates higher than year-end 2024 expectations, increasing net investment income. Labor market and consumer trends remain healthy, and economic tailwinds are expected to develop, driving consumer and business activity. Trump’s pro-growth agenda is expected to drive activity at all levels of the system, which is good news for the banking industry.
High prices, resilient consumers and business activity are driving business
Community Trust Bancorp Today
Community Trust Bancorp
As of 01/15/2025 at 04:00 PM ET
- 52 week range
- $38.44
▼
$61.67
- Dividend yield
- 3.48%
- P/E ratio
- 12.27
- Price target
- $57.67
All reported strong quarters for calendar 2024, with revenue and earnings growth. National Insurance was a contributing factor in all cases, and the Comprehensive Nuclear Test Ban Initiative emerged. It recorded a 15% increase in net investment income and outperformed in other metrics as well.
The group’s business performance was also driven by improvement in loans and deposits in the retail and commercial segments. Guidance for 2025 includes expectations of improved loan demand and confidence in the ability to continue generating profitable growth.
Analysts’ forecasts for 2025 are strong. These companies are expected to post up and down results, and estimates are likely to be cautious. Possibly the most notable bank in 2025, Plumas Bancorp is the smallest bank on the list, expected to grow its revenue by 15% and expand its margin.
Cash flow and returns on capital are growing
Unity Bancorp today
As of 01/15/2025 at 04:00 PM ET
- 52 week range
- $25.33
▼
$48.44
- Dividend yield
- 1.15%
- P/E ratio
- 11.67
- Price target
- $47.50
Among the crucial details are returns on capital. These banks have healthy balance sheets with adequate provisions for credit losses to meet increased volatility in consumer markets. Credit write-downs have increased but remain at healthy levels, leaving cash flow intact and able to sustain dividends.
Yields in early Q1 2024 range from 1.2% for Unity to more than 3.5% for Community Trust Bancorp, but all are attractive. The trade-off with the yield is a higher payout ratio, but even the highest ratio, again Community Trust Bancorp, is relatively low and under 45%. The lowest payout is Unity, but it is also the safest to pay. Unity’s payout ratio is less than 15% compared to current expectations.
Analysts and institutions love these small banks
Plumas Bancorp Today
As of 01/15/2025 at 04:00 PM ET
- 52 week range
- $32.50
▼
$51.33
- Dividend yield
- 2.32%
- P/E ratio
- 9.77
- Price target
- $52.50
None of these stocks have significant coverage from analysts, but coverage of the group is enough to paint a bullish picture. These stocks are covered by five analysis companies, two each for UNTY and PLBC and three for CTBI, and there is overlap. Companies with coverage include Steffans, Raymond James, and Pepper Sandler, who all classify it as buys. Price targets are also bullish, anticipating a mid-single to mid-teens advance in 2025.
As for institutions, institutional activity is mixed from name to name and from quarter to quarter, but three things are true in all cases. Institutions own large amounts of these shares, ranging from 40% to 60%. They bought on the balance in 2024, and activity was bullish in Q3 2025, in line with rises in stock prices. The charts show that these stocks are gaining momentum in the second half of 2024 and are poised to rally in 2024.
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