Post Mortem: The U.S. Bank Stock Turn We Called In December

A quick note on the bullish U.S. Bank thesis from December

Everyone had their say when the banks cracked. Some shouted collapse while others placed short bets with false confidence. A few leaned in and bought what the market had discarded.

By the end of 2024, the dust began to settle. Big banks came roaring back, finishing the year up 37%. Regionals moved slower, climbing around 13% It wasn’t euphoria, more like the start of something steadier.

Now, halfway through 2025, the scoreboard tells its own story. BKX is up roughly 15% YTD outpacing both the S&P 500 and the Nasdaq. And as we head into another earnings season, we’re preparing new screens. Screens designed to show you who’s still undervalued, who’s fully priced, and who’s quietly winning the next phase of the cycle. Because it’s not an all out “everyone wins” world.

Before we release those, it’s worth revisiting what we published in December. We laid out four core drivers behind our bullish stance: earnings reversion, a steepening yield curve, a friendlier regulatory climate, and private credit absorbing risk from bank balance sheets. That framework shaped everything we positioned for.

Here’s a quick rundown:

We said earnings would rise, that credit would stay contained, and that the path of least resistance was higher EPS into 2025. That held. Forward estimates have steadily improved. Big banks and regionals alike are tracking 10% to 15% EPS growth. The rate cuts took longer than expected, but the core logic played out. As the short end begins to fall, 2026 sets up to be stronger still. Score: A-.

We said the yield curve would steepen. That the inversion, one of the longest in modern history, would finally unwind. It did. The short end has dropped and the long end held firm. Net interest margins are no longer under pressure, some are even expanding. Score: A.

We said regulation would loosen. That a shift in political winds would bring capital relief, faster M&A approvals, and a less hostile supervisory tone. It came faster than expected. DFAST passed recently without issue. SLR reform is here. Buybacks are returning with lower capital requirments. Mikki Bowman was nominated to Vice Chair and she is a huge positive for banks. Overall, the tone is for less regulations, not more like in the Biden era. Score: A.

We said private credit would absorb the riskiest paper. That the loans which once clogged bank balance sheets would now find a home elsewhere. It’s happening. Non-bank lenders have taken CRE exposure, high LTV deals, and distressed C&I risk off the books. Banks are holding the senior tranches and shedding the tail. Defaults are manageable and in consumer actually improving. The credit cycle isn’t over, but the worst of the balance sheet stress never showed. Score: A-.

The point isn’t to claim victory. It’s to validate the map, every core thesis is still intact. Earnings are rising. Curves are normalizing. Regulation is shifting. Credit risk is being offloaded efficiently. If anything, the second half of 2025 may bring more clarity than the first and without a recession, even more gains for U.S. banks.

But here’s the deal, the next leg will be about stock selection. Some banks will rip, some will coast, and others will stall. Our updated screens are built to help you navigate that divergence without emotion or noise. Just to see the world clearly and move with the flow.

Read the original post if you haven’t, because it’s held up. But more importantly, stay focused on what matters now.

The best is ahead,

Victaurs

PS - pricing will be increasing in 2 weeks, so if you’re on the fence. Sign up now.