Under the Radar US Regional Banks Poised for Rate-Related Gains

With Federal Reserve Chair Kevin Warsh signaling a tougher line on inflation and hinting at higher interest rates, investors are watching how this new rate story ripples through banks and insurers. Some stocks from our U.S. Interest-Rate Beneficiary Financials screener could see their business models tested or supported by this shift.

Three under the radar US regional bank stocks to consider are Horizon Bancorp (HBNC), National Bank Holdings (NBHC), and Equity Bancshares (EQBK). These banks have a direct exposure to how higher interest rates can affect net interest margins, and their operations show promise in navigating the current economic landscape.

Horizon Bancorp is a community-focused commercial and retail bank in Indiana and Michigan that offers traditional loan and deposit services. It has been working to shift toward higher margin commercial loans and keep costs in check, but still faces trade-offs such as losses, dividend coverage questions, and heavier competition.

National Bank Holdings, on the other hand, is closely tied to the U.S. Interest Rate Beneficiary Financials theme due to its commercial and consumer lending book combined with a traditional deposit base. It has seen an increase in net interest income despite recent earnings declines, but its ROE of 5.9% and prior shareholder dilution indicate a more complex story.

Equity Bancshares offers a broad mix of lending, mortgage, and deposit services across Arkansas, Kansas, Missouri, and Oklahoma. It has a balance sheet built for times like this, with asset yields moving first, but recent non-recurring losses and modest ROE show that earnings quality and credit exposure still need scrutiny.