Why Regional Bank FB Financial (FBK) Could Be a Smart Buy for Income and Growth in 2026

In the ever-evolving landscape of income-oriented investing, regional banks have long been a source of both stability and growth potential. However, 2025 has seen a stark divergence in performance within the sector, with some institutions thriving while others falter. FB Financial Corporation (FBK) stands out as a compelling case study in this dynamic, combining strong institutional backing, robust financial performance, and a dividend yield that outpaces broader market benchmarks.

Institutional Buying: A Signal of Confidence

One of the most telling indicators of a stock's potential lies in the actions of institutional investors. In Q3 2025, Mendon Capital Advisors Corp. made a significant move by acquiring a $7.62 million stake in FBK, representing 2.92% of its $260.71 million in reportable U.S. equity assets as of September 30, 2025. This investment, while not among Mendon Capital's top five holdings, aligns with its strategy of targeting high-conviction regional banks. Managed by Anton Schutz, Mendon Capital is known for its deep expertise in the financial sector, and its decision to allocate capital to FBK underscores the company's strategic appeal.

Sector Outperformance: A Tale of Two Banking Segments

FBK's performance has consistently outpaced both its regional banking peers and the broader S&P 500. Over the past three years, the stock has delivered a 12.6% compound annual growth rate (CAGR), significantly outperforming the 7.9% CAGR of the State Street SPDR S&P Regional Banking ETF (KRE). This outperformance is not merely a function of market timing but reflects FBK's operational strength. In Q3 2025, the company reported adjusted pre-tax, pre-provision net revenue of $81.0 million-a 38.1% increase from the prior quarter and a 50.6% jump year-over-year. Such results highlight FBK's ability to capitalize on favorable market conditions while maintaining disciplined risk management.

In contrast, the regional banking sector as a whole has faced headwinds. While major banks like JPMorgan Chase and Bank of America exceeded expectations in Q3 2025, regional lenders such as Zions Bancorp and Western Alliance Bancorp struggled with loan portfolio issues, leading to sharp declines in their stock prices. This divergence underscores the importance of selecting regional banks with strong fundamentals-a category in which FBK clearly belongs.

Dividend Yield: A Competitive Edge in a Low-Yield Environment

For income-focused investors, FBK's 1.33% dividend yield may initially appear modest. However, this yield outperforms the S&P 500's current 1.15% yield, making it a more attractive option for those seeking regular cash flow. While FBK's yield ranks in the bottom 50% of its sector (https://www.dividend.com/stocks/financials/banking/banks/fbk-fb-financial-corporation/), its combination of a growing asset base and disciplined capital allocation positions it to sustain and potentially increase payouts in 2026. This is particularly compelling in a market where dividend growth has stagnated since 2020.

Strategic Positioning: A Southeastern Powerhouse

FBK's geographic focus on the southeastern United States further enhances its appeal. The region has seen consistent economic growth, driven by population migration and business expansion. As a regional bank holding company offering a broad range of services, FBK is well-positioned to capitalize on these trends. Its ability to maintain a 2.2% total return over the past year, despite the S&P 500's 14.3% gain, demonstrates resilience in a challenging environment.

Risks and Considerations

No investment is without risk. The regional banking sector remains under pressure due to macroeconomic uncertainties, including trade tensions and interest rate volatility. However, FBK's strong balance sheet, coupled with its institutional backing and outperformance relative to peers, suggests it is better prepared to navigate these challenges than many of its competitors.

Conclusion: A Dual-Pronged Opportunity

FB Financial (FBK) presents a rare combination of income and growth potential in today's market. Institutional buying by Mendon Capital, a track record of outperformance against both peers and the S&P 500, and a competitive dividend yield collectively make a compelling case for inclusion in a diversified portfolio. As 2026 unfolds, investors who recognize the interplay of these factors may find themselves well-positioned to benefit from FBK's strategic advantages.