Regional Bank Stocks Ride High Interest Rates Wave

With inflation above 3% and potential Fed rate hikes on the table, interest rates are dictating which U.S. financial stocks feel the heat or find a tailwind. This article looks at three bank stocks that have shown resilience to higher rates: Nicolet Bankshares (NIC), Southern First Bancshares (SFST), and NB Bancorp (NBBK). These regional banks operate in Wisconsin, Michigan, Minnesota, South Carolina, North Carolina, Georgia, and Greater Boston, with a focus on lending and deposit services.

Nicolet Bankshares is a mid-cap bank holding company with a market cap of around $3.6 billion, generating roughly $510 million in revenue from consumer and commercial banking services. Its net interest income has already run well above last year's levels, making it an attractive option for investors expecting higher rates to continue.

Southern First Bancshares is another regional bank that fits the higher rate theme, with a market cap of approximately $603 million. It generates around $129 million from its core banking operations and has seen net interest income reach $32.37 million in Q2 2026, pushing profit margins above 30%. However, ROE sits at under 10%, and the stock trades at a P/E premium to many bank peers.

NB Bancorp is also worth considering, with a market cap of around $946 million. Its profitability depends heavily on the spread between loan yields and deposit costs, which has been impacted by higher rates. Net interest income and net income in Q2 2026 were $69.15 million and $21.12 million respectively, but ROE sits at only 7%, and profit margins have compressed from 28.4% to 23.7%. A discounted cash flow estimate suggests the stock may be pricing in a lot of future growth.