Bank stocks represent shares in banks, such as JPMorgan Chase, Wells Fargo and Citigroup. There are pros and cons to bank stocks, but when interest rates are high and the stock market is in a good position, there's potential for strong performance. Most recently, the five largest U.S. banks (JPMorgan, Goldman Sachs, Bank of America, Citigroup and Wells Fargo) all reported earnings that beat expectations. This was largely driven by their investment banking units, which brought in huge sums during Q2's market volatility.
Goldman, for example, made $7.42 billion in equities in Q2, a staggering year-over-year increase of 72%. The stock has jumped nearly 10% on the news. However, these top banks aren't actually the best-performing over the last year. Here's how that list shakes out.
Best bank stocks by one-year performance
Below is a list of the seven best-performing bank stocks in the S&P 500 index, ordered by one-year performance.
The best-performing regional bank stock by one-year return is Citizens Financial Group Inc (CFG), which is up 51.34%. | ||||
|---|---|---|---|---|
Ticker | Company | Performance (Year) | ||
CFG | Citizens Financial Group Inc | 51.34% | ||
C | Citigroup Inc | 47.23% | ||
USB | U.S. Bancorp | 37.08% | ||
FITB | Fifth Third Bancorp | 34.25% | ||
BAC | Bank Of America Corp | 34.06% | ||
PNC | PNC Financial Services Group Inc | 31.37% | ||
KEY | Keycorp | 30.80% | ||
Source: Finviz. Data is current as of July 15, 2026, and is intended for informational purposes only. | ||||
Bank stock categories
There are a few ways to categorize bank stocks, such as by bank size or core business.
National, regional and community banks
National banks manage more than $100 billion in assets and typically have operations throughout the United States.
Regional banks manage between $10 billion and $100 billion in assets, and they may restrict their operations to specific states or other geographic areas.
Community banks manage less than $10 billion in assets and may operate in only one metro area or part of a state.
Investment, commercial and retail banks
Investment banks cater to publicly traded companies, governments and other large institutions. Their services include wealth management and help with mergers and initial public offerings. Their performance is often tied to the stock market.
Commercial banks cater to smaller companies. Their services include business accounts and loans. Their performance tends to be related to interest rates (higher rates can lead to higher loan profit margins) and to the overall strength of the economy.
Retail banks cater to individuals, providing services such as checking and savings accounts, credit cards and sometimes personal financial advice. Like commercial banks, their performance largely depends on interest rates and economic conditions.
The lines between these categories are sometimes blurred. Many big national banks — like JPMorgan Chase, Bank of America and Citigroup, the three largest in the U.S. — have investment banking, commercial banking and retail divisions.
Brokerage firms | |
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Pros and cons of investing in bank stocks
Bank stocks, like the ones shown above, might look particularly appealing when interest rates are high, but it’s important to understand that they have unique downsides as well as unique upsides.
Pros of bank stocks
- Commercial and retail banks like higher interest rates: Noninvestment banks make most of their money by lending. Higher interest rates mean more lending income.
- Most banks pay dividends: Dividends are seen as an important signal of financial health, so the vast majority of bank stocks pay dividends consistently.
Cons of bank stocks
- Values: For those looking to invest in companies that align with their values, some may struggle with bank stocks. Many banks, especially big ones, count fossil fuel companies and gun companies among their clients. Some have even been implicated in money laundering and sanctions evasion on an international scale.
- Investment banks don’t like bear markets: Big investment banks largely serve publicly traded companies. That means they do well when the market is doing well. But when times are tough, companies tend to tighten their purse strings. That means less revenue for investment banks.
- Regulatory risks: In the aftermath of the 2008 financial crisis, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, which gives the Federal Reserve the authority to restrict increases in bank stock dividends and share buybacks during periods of financial stress. The Fed imposed these restrictions during the 2020 recession.
Related articles
- Check out our list of the best-performing ESG funds.
- Learn the terms: Bull market vs. bear market.
- On a similar note: See our list of dividend stocks with high yields
How to buy bank stocks
If you’re totally new to investing and you’re interested in buying bank stocks, the first step is to open a brokerage account. A brokerage account is an investment account, or where you can purchase investments from. It's not an investment itself.
Once you’ve done that, you’ll need to decide whether to buy individual bank stocks or bank exchange-traded funds (ETFs). ETFs are baskets of stocks held together in one investment. Bank ETFs will focus on holding bank and other financial institution stocks.
Individual bank stocks
Shares of specific banks can be powerful moneymakers, but investing in individual stocks can be risky. If you pour a significant portion of your portfolio into an individual bank stock, you could end up with a substantial loss as a result of a few bad decisions by management, or a regional economic downturn in the case of a regional bank. That's why many advisors urge investors to diversify with broad-market investments such as S&P 500 index funds.
Buying individual stocks can also have a high upfront cost if you’re adding several to your portfolio.
Experts say you can mitigate these risks somewhat by limiting individual stocks to about 10% of your overall portfolio and carefully researching them before buying.
Bank ETFs
Another approach is to buy dozens of bank stocks at once through a bank ETF. These provide a degree of diversification, and they're often much cheaper than buying individual shares of the banks within them.
Different kinds of bank ETFs are available for different segments of the banking industry.
If you’re looking for exposure to national banks with investment banking operations, consider financial sector ETFs, which largely consist of big Wall Street firms. If you’re looking for exposure to regional commercial and retail banks, check out regional bank ETFs.
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
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- 1.Goldman Sachs. Second Quarter 2026 Earnings Results.
