3 US Bank Stocks Earning More From Higher Interest Rates

Inflation is still running hotter than the Fed’s target, rate hike chatter is back on the table, and bond yields are keeping borrowing costs high. That mix can squeeze some assets while creating fresh room for others to earn more on loans and investment portfolios. This article walks through three stocks exposed to this interest rate story, showing where higher yields might help and where they could hurt.

The three examples below only scratch the surface of this higher rate theme, since the full screen surfaced 26 more US financial companies with equally compelling interest rate stories that are not covered here. To go straight to the broader opportunity set, analyze and filter the US banks and insurers universe with the US Financials – Banks and Insurers Benefiting from Higher Interest Rates screener.

Heritage Financial (HFWA)

Overview: Heritage Financial is a regional bank holding company that provides loans, deposits, and banking services to small and mid sized US businesses.

Operations: Heritage Financial generates about $295 million in commercial banking revenue, all from customers located within the United States.

Market Cap: US$1.16 billion

Heritage Financial fits this higher rate screener because its core business is simple banking spread income, where loan yields and funding costs drive the story more than trading or fee swings.

"Ongoing investments in digital platforms and technology are expected to improve operational efficiency, reduce cost-to-income ratios, and enhance net margins as digital banking adoption accelerates among regional customers."

What really matters next is how one less visible pressure shapes the balance between that higher rate income and the cost of holding it.

That hidden pressure is exactly what the full narrative for Heritage Financial unpacks. It shows how Heritage Financial’s rate sensitivity could be quietly reshaping returns and risk.

Five Star Bancorp (FSBC)

Overview: Five Star Bancorp is a Northern California regional bank focused on lending and deposit services for small and medium sized businesses.

Operations: Five Star Bancorp generates about $168 million in banking revenue, all from customers located within the United States.

Market Cap: US$1.13 billion

Five Star Bancorp sits squarely in the higher rate theme because its core earnings engine is net interest income tied to business lending and relationship deposits.

"Strategic expansion into high-growth Bay Area and Walnut Creek markets, accompanied by new business development hires, is increasing core deposit and loan growth opportunities, directly supporting sustainable top-line revenue and potential market share gains."

The key variable now is how one unseen shift in its funding mix shapes future margins if elevated rates persist.

If that shift in funding is what you are watching, the full narrative for Five Star Bancorp shows how Five Star Bancorp’s margin story could be quietly accelerating.

Huntington Bancshares (HBAN)

Overview: Huntington Bancshares is a large regional bank holding company that earns most of its money from US commercial, consumer, and mortgage lending closely tied to net interest margins.

Operations: Huntington Bancshares generates about US$3.2b from Commercial Banking and US$6.3b from Consumer & Regional Banking, all from customers in the United States.

Market Cap: US$33.6b

Huntington Bancshares sits near the center of this higher rate theme, because so much of its income depends on how loan yields stack up against deposit costs as the Fed leans toward further hikes.

"The expansion into Texas via the Veritex acquisition, combined with ongoing organic growth in high-population-growth markets (Texas, North Carolina, South Carolina), is set to substantially increase Huntington's addressable market and fee-generating opportunities, likely driving higher revenue and earnings growth as these regions mature."

What investors may watch most closely now is how one unresolved shift in funding behavior ultimately feeds through to Huntington Bancshares' margins.

That funding question is exactly what the full narrative for Huntington Bancshares unpacks, revealing where Huntington Bancshares' deposit behavior, rate sensitivity, and fee trends may be quietly decoupling.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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