NEW YORK (TheStreet) -- Ever since the financial crisis, banking news has focused mainly on regulatory issues, but that may not be the most important issue for investors.
How banks' financial performance responds to changes in interest rates will affect the stock price just as much, if not more.
For example, Deutsche Bank analyst Matthew O'Connor recently wrote that a 1% rise in both short- and long-term interest rates would increase Bank of America's 2015 earnings by 20%, or about $3 billion.
The impact is likely even greater for big regional banks such as Comerica (CMA) or Zions Bancorp (ZION), according to Paul Miller, analyst at FBR Capital Markets. When 10-year Treasury yields climbed from 1.90% April 20 to 2.28% May 11, shares of all three banks posted gains that outpaced the broader market.
Zions shares rose 4.86%, Comerica shares jumped 5.37% and Bank of America shares -- possibly because the stock is more widely followed than the other two -- climbed by nearly 6%. The S&P 500, meanwhile, rose by just 1.15% in the same time frame.
The numbers might easily be missed by a regular reader of business news. Banks use all kinds of geeky terminology to talk about how interest rates affect their performance, and the phrase net interest margin -- which gauges the profitability of a bank's lending -- is not one you're ever going to see in the headline of a general interest news story.