(FORTUNE Magazine) – Even before Greenspan & Co. added a quarter point to the Fed funds rate, mortgage lender Washington Mutual warned about an earnings shortfall. Three days later it was New York Community Bancorp's turn. Indeed, it has been a lousy several months for bank stock shareholders in general. But does that mean investors should flee all financial services firms? Not necessarily. Opportunities in the sector may be more limited now, but analysts say there's no need to bail out of every bank stock. While mortgage lenders may struggle amid rising rates, institutions serving the commercial market, for example, should fare better as the business rebound continues and demand for industrial loans grows.

One financial firm that many money managers and analysts still like is U.S. Bancorp (USB, $28). The Minneapolis-based bank, the seventh-largest in the country, operates in 24 states across the West and Midwest. It stands to benefit from a pickup in manufacturing, and its earnings are projected to grow by more than 10% next year. With a P/E ratio of just 11.5 based on those 2005 estimates, USB shares should have room to rise. "The outlook for the company appears to be better than that of most banks," analyst Richard X. Bove of Hoefer & Arnett noted in a recent report. "It is likely to be a clear beneficiary of the recovery in the industrial economy." Adding to the appeal, U.S. Bancorp's management remains committed to returning 80% of earnings to shareholders in the form of dividends and stock buybacks. Naturally, you'll find plenty of evidence of that in the current 3.4% dividend yield.

--Yuval Rosenberg