TheFederal Reserve's decision to reduce interest rates by 50 basis points on Wednesday has set the stage for a notable shift, particularly in the banking sector among mid- and small-cap banks.

With rates expected to drop further over the next two years, JPMorgan analyst Steven Alexopoulos believes this marks a crucial inflection point. This and further cuts should help boost banks' net interest margins (NIMs) while reigniting commercial loan demand. The steepening yield curve and easing credit concerns will help banks recalibrate deposit costs, improving performance across various segments.

Let's break down the investment opportunities among large...