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.

Are bank stocks cyclical?

The short answer is yes. Bank stocks are generally affected by recessions for a couple of 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 (taking in deposits and lending money) is highly cyclical, and this is especially true for banks that specialize in riskier forms of lending, such as credit cards. On the other hand, investment banking tends to do even better during turbulent times, so banks that have large investment banking operations tend to see profits hold up quite well.

How do you analyze bank stocks?

When trying to analyze a particular bank stock, it's a good idea to focus on four main things:What the bank actually does.The stock's price.Its earnings power.The amount of risk it's taking to achieve that earnings power.

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.

Best Bank Stocks for 2026 and How to Invest

Loading paragraph...

Ticker Information Table
Name and ticker	Market cap	Dividend yield	Industry
Bank of America (NYSE:BAC)	$335.3 billion	2.35%	Banks
JPMorgan Chase (NYSE:JPM)	$764.4 billion	2.05%	Banks
U.S. Bancorp (NYSE:USB)	$79.2 billion	4.00%	Banks
Citigroup (NYSE:C)	$184.9 billion	2.23%	Banks
SoFi Technologies (NASDAQ:SOFI)	$22.6 billion	0.00%	Consumer Finance

Data as of Mar 14, 2026. Showing 5 of 5 tickers.

Loading ticker_table...

1. Bank of America

Loading paragraph...

NYSE: BAC

Bank of America

Today's Change

(-0.90%) $-0.42

Current Price

$46.70

Key Data Points

Market Cap

$335B

Day's Range

$46.66 - $47.82

52wk Range

$33.06 - $57.55

Volume

1.6M

Avg Vol

41M

Dividend Yield

2.35%

Loading company_card...

Bank of America has been one of the most impressive turnaround stories in the post-financial crisis era. In recent years, the bank increased its loan portfolio at rates well ahead of its peers, and the company has made major improvements in efficiency while building out its online and mobile technology.

Bank of America's asset quality is also excellent, and although the bank's deposit cost is relatively low, margins have been pressured lately due to 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 in a strong position to weather most storms with a combination of an excellent retail banking operation and an investment bank that can benefit from market volatility.

Loading paragraph...

2. JPMorgan Chase

Loading paragraph...

NYSE: JPM

JPMorgan Chase

Today's Change

(0.19%) $0.55

Current Price

$283.44

Key Data Points

Market Cap

$764B

Day's Range

$282.95 - $287.19

52wk Range

$202.16 - $337.25

Volume

9.1M

Avg Vol

11M

Dividend Yield

2.05%

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 has operations in just about 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 it has made some key investments in financial technology (fintech) companies.

Although the company's Chase consumer banking operation is one of the largest in the U.S., it is worth noting that JPMorgan Chase has one of the largest investment banks in the United States as well.

Loading paragraph...

3. U.S. Bancorp

Loading paragraph...

NYSE: USB

U.S. Bancorp

Today's Change

(-0.94%) $-0.48

Current Price

$50.99

Key Data Points

Market Cap

$79B

Day's Range

$50.91 - $52.16

52wk Range

$35.18 - $61.19

Volume

525K

Avg Vol

11M

Dividend Yield

4.00%

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 been under pressure due to elevated interest rates. It's important to mention that it was one of the only major banks in the country to remain profitable throughout the 2008-09 financial crisis and has an excellent history of smart risk management.

Loading paragraph...

4. Citigroup

Loading paragraph...

NYSE: C

Citigroup

Today's Change

(0.18%) $0.19

Current Price

$105.69

Key Data Points

Market Cap

$185B

Day's Range

$105.39 - $107.90

52wk Range

$55.51 - $125.16

Volume

11M

Avg Vol

15M

Dividend Yield

2.23%

Loading company_card...

Citigroup (C +0.11%) has been a bank in turnaround for some time, but it has made excellent progress in recent quarters. In the second quarter of 2025, Citi's revenue grew by approximately 9% year over year, and thanks to significant improvements in efficiency, Citigroup's earnings increased by 23%.

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 other areas.

Despite the excellent progress made in its turnaround, Citi is still the cheapest of the "Big Four" U.S. banks by a wide margin, in terms of price-to-book value. 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

(0.25%) $0.04

Current Price

$17.75

Key Data Points

Market Cap

$23B

Day's Range

$17.54 - $18.15

52wk Range

$8.60 - $32.73

Volume

Avg Vol

57M

Gross Margin

61.06%

Loading company_card...

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

@MattFrankelCFP

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.