Rate Hikes Could Favor These US Bank Stocks

The Federal Reserve's potential rate hikes could have a significant impact on US bank stocks. With inflation stuck around 3.7% to 4.1%, some institutions may see stronger net interest margins, while others face tougher funding and credit conditions.

Hancock Whitney (HWC) is one regional US bank that could benefit from rising rates. It generates all of its approximately $1.4 billion in revenue from banking operations in the United States and has a market cap of $6.2 billion. The company has a long dividend record, with quarterly payments stretching back to 1967 and a current yield of 2.58%. However, it also faces risks such as insider selling, integration costs from recent deals, and credit or funding risks if economic conditions weaken.

Bancorp (TBBK) is another US financial holding company that could be positively exposed to the rate backdrop. It generates about $531.9 million in revenue, all from the United States, and has a market cap of $2.8 billion. The company's management has built a large fintech solutions engine behind popular payment and card programs, which could drive earnings growth even as reported revenue declines.

Midland States Bancorp (MSBI) is a regional US financial holding company that stands out in the rate-sensitive space. It generates about $264.5 million of revenue from Banking and $33.2 million from Wealth Management, with virtually all of its $286.1 million revenue coming from the United States. The bank combines a 3.82% dividend, ongoing buybacks, and a recent lift in quarterly earnings, along with long-established wealth management operations that can add fee income when loan growth is slower.