The death of former Fed chair Alan Greenspan has put interest rate debates and market history back under the spotlight, and financial stocks are front and center in that conversation. When investors reassess the legacy of policies linked to the “Greenspan put” and long periods of low rates, banks and asset managers can see sentiment shift quickly, for better or worse. This article looks at how that renewed focus may affect select Financial Sector Stocks screener constituents, and highlights 3 stocks that appear positively exposed to this news driven theme right now.

Arrow Financial (AROW)

Overview: Arrow Financial is a regional bank holding company based in Glens Falls, New York that collects deposits from customers and provides a wide range of loans, from commercial and real estate financing to mortgages and auto loans, along with wealth management, retirement planning and insurance services.

Operations: Arrow Financial generates all of its US$168.4m in revenue from community banking services in the United States.

Market Cap: US$641.3m

Arrow Financial stands out in the current focus on monetary policy history because it is a regional bank that appears closely tied to market stability and liquidity conditions. The shares are trading slightly below one estimate of fair value based on discounted cash flows. Earnings growth of 79.7% over the past year, a 30.2% net margin and high quality earnings all point to a business that is currently converting that backdrop into profit, while still offering a 3.07% dividend yield. At the same time, return on equity of 11.6% is on the low side and recent board turnover, with several new directors, adds a governance angle you should understand before relying on the recent rebound.

Arrow Financial’s earnings acceleration and dividend yield present a strong narrative, but the valuation gap suggests there may be factors the market is overlooking. Test your thesis against the DCF valuation analysis for Arrow Financial

Columbia Financial (CLBK)

Overview: Columbia Financial is a New Jersey based bank holding company that, through Columbia Bank, offers a broad range of loans, deposit accounts, wealth management and cash management services to households and businesses, and also provides title insurance products.

Operations: Columbia Financial generates US$259.2m in revenue from financial services in the United States.

Market Cap: US$2.09b

Columbia Financial sits at the heart of the current interest rate conversation, because its commercial and residential lending, deposit base and wealth services are closely linked to how resilient the financial system feels to investors right now. On the other hand, a low 4.8% return on equity and a P/E that is much higher than many US banks suggest expectations are already demanding, and the pending Northfield Bancorp merger adds another layer you need to understand before forming a view on Columbia Financial’s long term potential.

Columbia Financial’s relatively high P/E ratio and modest 4.8% return on equity suggest that expectations may be running ahead of the company’s current story. Put those expectations to the test with the analysis report for Columbia Financial

Beacon Financial (BBT)

Overview: Beacon Financial is a Boston based bank holding company that collects commercial, municipal and retail deposits, provides mortgage and commercial real estate lending, offers commercial loans and leases, and delivers cash management, trust, SBA lending and wealth management services in the United States and internationally.

Operations: Beacon Financial generates US$632.9m in revenue from banking services, all of which currently comes from the United States.

Market Cap: US$2.49b

Beacon Financial provides exposure to how a large Northeast commercial bank responds when markets revisit the Greenspan era and rethink the value of balance sheet strength, earnings growth and interest rate sensitivity. Forecast earnings growth of about 42% a year, a recent jump in net income and the board’s approval of a US$50m share repurchase program indicate that management is actively trying to reshape the equity story. The regular dividend adds another layer of potential appeal. At the same time, a 4.7% return on equity, a large past one off loss and rising net charge offs show that credit quality, merger integration and governance depth remain important considerations. The key question is whether the current valuation and analyst expectations fairly reflect that trade off.

Beacon Financial’s earnings story is accelerating, and the share repurchase plan and regular dividend may only be half the picture. See how analysts frame the next chapter in the analyst forecasts for Beacon Financial

The three stocks discussed here are just a starting point, as the full Financial Sector Stocks (Banks & Asset Managers) screener includes 39 more companies with equally compelling financial sector stories that may respond differently to shifts in rates and market sentiment. Use Simply Wall St to identify and analyze the specific catalysts, risk profiles and narratives that matter most to you so that you can focus on the highest conviction opportunities in this theme.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.