Banking on Resilience: Why U.S. Banks Are Poised to Soar Amid Tariffs and Inflation

The U.S. banking sector is facing a high-wire act: navigating tariffs, inflation, and geopolitical tensions while maintaining profitability. But here's the kicker—they're winning. Major banks like Bank of America and regional powerhouses like Huntington Bancshares are proving that loan growth, credit stability, and strategic moves into high-growth markets are their secret weapons. If you're an investor, this is the moment to look closely—because when trade uncertainties clear, these banks will surge.

The Loan Growth Story: Where Banks Are Thriving

Despite downward revisions in loan growth estimates for 2025—down to 2.5% for the top 20 banks—some institutions are smashing expectations. Take Bank of America, which projects 3.9% loan growth in 2025, the highest among large banks. Why? Cross-border commercial lending and AI-driven efficiency gains are fueling its momentum. Meanwhile, the Federal Reserve's H.8 data shows a $76.9 billion spike in loans between April 2–16, driven by businesses prepping for tariffs. This “Liberation Day” rush isn't just a blip—it's a sign that companies are acting decisively, even amid uncertainty.

But don't overlook regional banks. Huntington Bancshares (HBAN) is a standout. Its Q2 loan growth hit 8% year-over-year, fueled by expansions into Texas, North Carolina, and South Carolina. The $1.9 billion acquisition of Veritex Holdings, giving it a Texas footprint of $25 billion in loans, is a masterstroke. These high-growth markets are where the economy's engine is roaring—energy, real estate, and tech sectors are booming. Huntington's strategy is simple: be where the money is moving.

Credit Quality: The Foundation of Resilience

While tariffs and inflation are causing headaches, U.S. banks are keeping credit metrics in check. Nonperforming loans (NPLs) remain historically low, with delinquency rates stable. Even in sectors like middle-market commercial lending, banks are proactive—Huntington's allowance for credit losses (ACL) rose to 1.86% of loans, a prudent buffer.

The key here is conservative underwriting. Post-2008 reforms mean banks aren't repeating past mistakes. As one analyst noted, “They're avoiding the credit excesses that would trigger a crisis.” Even with inflation nudging core CPI to 2.9%, banks are insulated by strong capital ratios (CET1 levels at 12.5%–13.5%) and liquidity reserves.

Regional Banks: The Undiscovered Gems

Huntington isn't alone in its regional dominance. Consider its playbook:
1. Target high-growth geographies: Texas's GDP growth outpaces the national average, and Huntington's Veritex deal gives it 30+ branches in booming Dallas/Fort Worth and Houston.
2. Diversify revenue streams: Wealth management and capital markets fees rose 6% YoY in Q1, a trend continuing in Q2.
3. Exit risky sectors: Huntington exited healthcare asset-based lending, focusing instead on safer commercial verticals.

This focus is paying off. Analysts project Huntington's 2025 EPS to hit $1.44, up 16% from 2024, with Texas and Carolinas loans driving $2 billion in new business.

Why Now Is the Time to Invest

The market is pricing in pessimism—tariffs, inflation, and a potential slowdown—but this is a setup for a rebound. Once trade policies stabilize, businesses will reignite investment, boosting loan demand. Look for these catalysts:
- Tariff clarity: If negotiations reduce trade barriers, corporate spending will surge.
- Fed easing: If core inflation cools, rate cuts could boost mortgage and auto loan demand.
- Regional bank expansions: Huntington's Texas footprint and similar plays by others will compound growth.

Action Plan: Buy Now, Wait for the Pop

For income investors: Bank of America's 2.3% dividend yield and stable NII growth offer safety.
For growth investors: Huntington's Texas expansion and EPS upside make it a buy now, with a $17.90 price target (7.8% upside). Wait for a pullback post-Q2 earnings, then pounce.

Avoid banks overly exposed to commercial real estate or tariff-sensitive sectors. Stick to those with strong credit metrics, geographic diversity, and—most importantly—moats in high-growth regions.

Final Word: This Is a Banker's Market

The U.S. banking sector isn't just surviving—it's thriving. With loan growth accelerating in key markets, credit quality intact, and strategic plays like Huntington's Texas expansion, now is the time to bet on these institutions. When trade clouds clear, these banks will shine. Don't miss the train.

Invest wisely,
A Financial Insider