Are bank stocks cyclical?

The short answer is yes. Bank stocks are generally affected by recessions for several reasons. First, interest rates tend to fall during recessions. Second, and more importantly, unemployment tends to rise during recessions, and more consumers run into financial trouble. However, the longer answer is that every bank is different. Consumer banking (accepting deposits and making loans) is highly cyclical, especially for banks that specialize in riskier forms of lending, such as credit cards. On the other hand, investment banking tends to perform even better during turbulent times, so banks with large investment banking operations tend to see profits hold up quite well.

Are bank stocks a good investment?

Bank stocks can be a good long-term investment, but it's important to know that banking is a cyclical business. Bank stocks can perform poorly during recessions, but better during strong economic climates.

Should I invest in bank stocks for growth or income?

Bank stocks can be great for both growth and income. Banks can grow over time as their assets grow and margins expand, and most major bank stocks pay regular dividends to shareholders.

Are bank stocks expected to rise?

It is reasonable to expect your bank stocks to rise over multi-year periods. But over the short term, bank stocks can be rather volatile, rising and falling unpredictably.

Best Bank Stocks for 2026 and How to Invest

Q: How do banks make money?

At their core, banks make their money in two main ways -- commercial banking and investment banking. Commercial banking refers to the banking products and services that banks provide to individuals and businesses. Investment banking refers to the services a bank provides to corporations, governments, high-net-worth individuals, and other entities that go beyond commercial banking activities.

By Matthew Frankel, CFP – Updated Jul 17, 2026 at 3:18 PM EST | Fact-checked by Frank Bass

Key Points

Bank of America is highly profitable, leveraging tech and low deposit costs.
JPMorgan Chase leads in profitability and asset diversification among U.S. banks.
U.S. Bancorp focuses on consumer banking, offering stable revenue and dividends.

Loading paragraph...

Ticker Information Table
Name and ticker	Market capMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.	Dividend yield	Industry
Bank of America (NYSE:BAC)	$436.4 billion	1.82%	Banks
JPMorgan Chase (NYSE:JPM)	$919.5 billion	1.75%	Banks
U.S. Bancorp (NYSE:USB)	$99.7 billion	3.25%	Banks
Citigroup (NYSE:C)	$225.9 billion	1.82%	Banks
SoFi Technologies (NASDAQ:SOFI)	$22.2 billion	0.00%	Consumer Finance

Data as of Jul 17, 2026. Showing 5 of 5 total entries.

Loading ticker_table...

1. Bank of America

Loading paragraph...

NYSE: BAC

Bank of America

Today's Change

(-0.50%) $-0.31

Current Price

$61.19

Key Data Points

Market Cap

$436B

Day's Range

$60.67 - $62.11

52wk Range

$44.75 - $62.12

Volume

Avg Vol

35.7M

Dividend Yield

1.82%

Loading company_card...

Bank of America has become one of the strongest banks in the United States in the post-financial crisis era. In recent years, the bank has grown its loan portfolio at rates well ahead of its peers, and it has made major efficiency improvements while expanding its online and mobile capabilities.

Bank of America's asset quality is also excellent, and although its deposit costs are relatively low, margins have been pressured lately by elevated interest rates. However, Bank of America is an incredibly profitable bank, and could see nice tailwinds in its business as rates normalize and consumer confidence increases.

Bank of America isn't completely immune to economic headwinds. However, it is well-positioned to weather most storms, with an excellent retail banking operation and an investment bank that benefits from market volatility.

Loading paragraph...

2. JPMorgan Chase

Loading paragraph...

NYSE: JPM

JPMorgan Chase

Today's Change

(-0.44%) $-1.52

Current Price

$341.63

Key Data Points

Market Cap

$919B

Day's Range

$335.20 - $346.11

52wk Range

$279.10 - $351.24

Volume

398K

Avg Vol

9.4M

Dividend Yield

1.75%

Loading company_card...

JPMorgan Chase is hands-down the most profitable of the big U.S. banks, and it's also the largest bank by market capitalization and total assets in the U.S. The bank operates in nearly every area of both commercial and investment banking, and it has done a particularly good job of expanding its credit card and auto loan businesses in recent years. JPMorgan Chase has also done an excellent job of embracing new technologies and has made key investments in financial technology (fintech) companies.

Although the company's Chase consumer banking operation is massive, JPMorgan Chase also has one of the largest investment banks in the United States.

Loading paragraph...

3. U.S. Bancorp

Loading paragraph...

NYSE: USB

U.S. Bancorp

Today's Change

(-1.36%) $-0.87

Current Price

$63.14

Key Data Points

Market Cap

$100B

Day's Range

$63.11 - $64.84

52wk Range

$43.46 - $64.84

Volume

890.2K

Avg Vol

8.8M

Dividend Yield

3.25%

Loading company_card...

U.S. Bancorp is primarily a commercial bank, with income from loans and other consumer banking products making up virtually all of its revenue. Not only is U.S. Bancorp (known to most Americans as U.S. Bank) focused on consumer banking, but it consistently produces some of the most impressive profitability and efficiency metrics in the sector and has been an excellent dividend stock for investors.

Because it doesn't depend on investment banking, which is generally the more volatile side of the banking business, U.S. Bancorp's profitability and revenue tend to be more predictable and consistent than those of the other two banks on this list.

U.S. Bancorp is largely dependent on interest income, and margins have come under pressure amid elevated interest rates. However, it's important to note that U.S. Bancorp has an excellent track record of sound risk management and could be a strong consumer-focused bank stock to own for the long term.

Loading paragraph...

4. Citigroup

Loading paragraph...

NYSE: C

Citigroup

Today's Change

(-1.78%) $-2.35

Current Price

$129.36

Key Data Points

Market Cap

$226B

Day's Range

$127.08 - $131.25

52wk Range

$87.94 - $147.96

Volume

15.7M

Avg Vol

12.4M

Dividend Yield

1.82%

Loading company_card...

Citigroup (C -1.78%) has been a bank in turnaround for some time, but its most impressive progress has come in recent quarters. In 2025, Citi's revenue grew approximately 8% year over year, and thanks to significant efficiency and structural improvements, the bank's earnings increased by 35%. This is continuing into 2026. In the second quarter, Citigroup reported 45% year-over-year net income growth and an efficiency ratio that has improved by 530 basis points compared with the same quarter last year.

All of Citigroup's businesses are performing well. It holds a top-five market share in U.S. credit cards, retail banking, investment banking fees, fixed-income trading, and several other areas.

Despite excellent progress in its turnaround, Citi is still the cheapest of the "Big Four" U.S. banks by a wide margin on a price-to-book basis. To be clear, there's still a lot to be done, but Citigroup could be an excellent value for patient investors.

5. SoFi Technologies

Loading paragraph...

NASDAQ: SOFI

SoFi Technologies

Today's Change

(-0.14%) $-0.03

Current Price

$17.30

Key Data Points

Market Cap

$22B

Day's Range

$16.48 - $17.57

52wk Range

$14.92 - $32.73

Volume

2.5M

Avg Vol

76.4M

Gross Margin

61.74%

Loading company_card...

SoFi Technologies (SOFI -0.23%) is by far the smallest and newest bank on this list, having first received a banking charter in early 2022. But the company's performance speaks for itself.

Over the past three years, SoFi has roughly tripled its member base to 14.7 million, and profitability has grown impressively. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin has grown from 21% in 2023 to 31% in the first quarter of 2026, thanks to economies of scale and excellent progress in building asset-light streams of fee income.

SoFi is not the first online-only bank, nor is it the only one of its size. But SoFi has been most successful at building a banking replacement -- that is, a financial institution that can provide all the services its customers need, with superior products to those offered by the big banks.

How to buy bank stocks

The process for investing in bank stocks is rather straightforward:

Open your brokerage account: Log in to your brokerage account where you handle your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
Search for X: Enter the ticker “[ticker]” into the search bar to bring up the stock's trading page.
Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Loading paragraph...

Benefits and risks of investing in bank stocks

There are several major benefits to investing in bank stocks:

Income - Most bank stocks pay dividends, and many pride themselves on growing their dividends over time.
Economic expansion - To be sure, banks' sensitivity to economic conditions can be both a benefit and a risk. But banks tend to perform very well when GDP is growing, and the economy is performing well.
Several revenue streams: Banks can generate income from interest income, investment banking, wealth management, trading, and other sources.
Capital allocation - In addition to paying dividends, many large banks regularly buy back their own shares.

On the other hand, there are some major drawbacks to be aware of:

Cyclicality - During tough economic times, banks often experience lower loan demand and higher default rates.
Regulatory risk - There are few industries as tightly regulated as banking. Banks must maintain minimum capital levels and comply with certain standards, and it's not uncommon for them to face significant fines if violations are found.
Panic-sensitive: Bank panics have occurred several times in modern history. If customers quickly lose confidence in the bank, it can create a ripple effect that could even threaten the bank's continued existence.

Loading paragraph...

Methodology: How these stocks were chosen

There are dozens of well-run banks in the United States, and I selected these five stocks using the same framework I use when choosing bank stocks for my own portfolio. I looked for a mix of profitability, growth potential, balance sheet strength, and more. I evaluated returns on equity (ROE), efficiency ratios, and asset quality metrics like charge-off rates.

I intentionally built this list to not only highlight the best banks, but to represent different types of bank stocks -- large, money center banks, regional banks, and newer tech-focused banks.

Loading paragraph...

The bottom line on bank stocks

Although it's not necessarily a smart idea to buy any particular stock just because a billionaire owns it (even Warren Buffett), there does appear to be some value in the banking industry if you're a patient, long-term investor who can tolerate some short-term volatility. So if you don't have much exposure in your portfolio, one or more of the rock-solid banks discussed here could be a good fit for you.

Loading paragraph...

FAQ

Loading paragraph...

Bank stock FAQ

Loading faq...

About the Author

Matt Frankel, CFP®, is a contributing Motley Fool stock market analyst specializing in the real estate and financial sectors. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, Globe St, The National Desk, and other TV networks and publications for his real estate, financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelUSC

Citigroup is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Matt Frankel, CFP has positions in American Express, Bank of America, Berkshire Hathaway, and SoFi Technologies. The Motley Fool has positions in and recommends Berkshire Hathaway, Goldman Sachs Group, JPMorgan Chase, and U.S. Bancorp. The Motley Fool has a disclosure policy.

Best Bank Stocks for 2026 and How to Invest