Regional Banks Poised to Profit from Rising Interest Rates

Rising inflation and potential Fed rate hikes are causing some parts of the market to decline while creating opportunities elsewhere. Regional banks that earn money from core lending and deposits, which are directly influenced by short-term rates, may be well-positioned for growth.

One such bank is Farmers National Banc (FMNB), a regional bank holding company in Ohio that generates revenue from its Bank segment, trust, and retirement services. With a market cap of $933 million and a 4.32% dividend yield, rate-focused investors may find this bank appealing.

Another bank is Arrow Financial (AROW), which runs a regional banking and financial services group in upstate New York that funds local loans with customer deposits. With community banking producing interest-driven revenue of $170 million and a 3.07% dividend yield, this bank may also be worth considering.

Community West Bancshares (CWBC) is another bank that aligns with the rising rates theme, with commercial and agribusiness loans producing interest income that moves with higher yields. With a market cap of $713 million and forecasted double-digit earnings and revenue growth, this bank may be an attractive option for investors.