US Regional Banks Poised for Growth Amid Industry Tailwinds

Major regional banks in the US are expected to benefit from industry tailwinds despite subdued asset quality in the near term. Zacks Equity's analysis of U.S. Bancorp (USB), State Street Corp. (STT) and Northern Trust Corp. (NTRS) suggests that these companies will continue to expand their net interest income and margins due to relatively lower rates, decent economic growth, and improving loan demand.

The Federal Reserve is likely to keep rates unchanged in the near term, which will support expansion in net interest income and margins for industry players. Additionally, business restructuring and expansion efforts, as well as ongoing digitization, are expected to provide additional support to major regional banks.

U.S. Bancorp has been expanding its capital markets platform through strategic acquisitions, including the recent purchase of BTIG. This move is expected to strengthen the company's fee-based businesses and support NII expansion. The company's total loans and deposits have grown steadily over the past few years as it continues to expand and deepen relationships with current customers.

The Zacks Major Regional Banks industry has a Zacks Industry Rank #55, indicating outperformance in the near term. The group's earnings estimates for 2026 have been revised 9% upward, and those for 2027 are up 7.9%. The industry's stock market performance has been solid, with stocks collectively jumping 64.6% over the past two years.