3/8/25
FB Financial Corporation (FBK) is a regional bank headquartered in Tennessee, serving as the parent company for FirstBank. The company has built a strong presence across the Southeast, offering a variety of banking services, including commercial and consumer lending, mortgage origination, and wealth management. As a mid-cap bank with a market value of around $2.19 billion, FBK has steadily expanded its footprint while maintaining disciplined financial management.
For dividend investors, FBK presents an interesting mix of a steady payout, a manageable payout ratio, and earnings growth that supports future dividend increases. With a profit margin of over 26% and a return on equity of nearly 8%, the bank demonstrates solid profitability that allows it to continue rewarding shareholders. Let’s take a closer look at how FBK stacks up as a dividend investment.
Key Dividend Metrics
💰 Forward Dividend: $0.76 per share
📈 Dividend Yield: 1.62%
🔄 Trailing Dividend: $0.68 per share
📊 5-Year Average Yield: 1.35%
🛡 Payout Ratio: 27.42%
📆 Most Recent Payment: February 25, 2025
⚠ Ex-Dividend Date: February 11, 2025
Dividend Overview
FBK’s dividend yield of 1.62% is slightly above its five-year average of 1.35%, making it an attractive option for investors looking for steady income with potential for growth. While this yield isn’t the highest among regional banks, it comes with a strong earnings foundation, making it more sustainable over the long term.
A key highlight is the bank’s conservative payout ratio of 27.42%. This low payout level means FBK is keeping a large portion of its earnings to reinvest in growth while still providing a return to shareholders. Companies that pay out less than half of their earnings as dividends tend to have more flexibility in maintaining and increasing those payments, even in economic downturns.
Dividend Growth and Safety
One of the best indicators of a strong dividend stock is its ability to consistently raise payouts. FBK has a track record of increasing its dividend, and given its earnings growth, there’s room for future hikes.
Profitability is another key factor in dividend safety. FBK’s quarterly earnings growth came in at an impressive 29% year over year, while its operating margin stands at over 41%. These numbers suggest the company is not only generating solid profits but also efficiently managing its operations.
Another reassuring factor is the bank’s balance sheet strength. With over $1 billion in cash and a relatively low debt load of $269 million, FBK is in a strong financial position. Having a healthy level of liquidity is essential for banks, especially in times of economic uncertainty.
Chart Analysis
Price Trend and Movement
FB Financial Corporation (FBK) has seen a strong rally over the past year, with the price climbing steadily before peaking above $55. That surge was followed by a gradual decline, which has become more pronounced in recent months. The stock now sits around $46.88, reflecting a pullback from its highs.
This kind of movement suggests the stock went through a period of accumulation, followed by a sharp markup phase where demand pushed the price higher. Now, it appears to be in a corrective phase, where some profit-taking and general market conditions are weighing on the stock.
Moving Averages
The 50-day moving average, which had been sloping upward for most of the uptrend, has now started to turn downward. The stock is trading below this key level, signaling that short-term momentum has shifted to the downside.
The 200-day moving average remains in an uptrend, indicating that the longer-term trend is still intact. However, the stock is currently testing this support area. A decisive break below this level could mean the trend is weakening, while a bounce could reaffirm long-term strength.
Volume and Market Participation
Volume tells an interesting story in this chart. During the stock’s rapid climb, there were multiple spikes in trading activity, especially near the peak. This often indicates that investors were actively participating in the rally, but it can also be a sign of distribution, where some are cashing out after strong gains.
More recently, volume has settled into a more balanced range, showing that there hasn’t been a major rush to buy the dip just yet. If volume starts picking up again, it could suggest renewed interest from buyers.
Relative Strength Index (RSI)
The RSI has been declining steadily and is now approaching levels that suggest the stock is moving toward oversold territory. It hasn’t hit extreme lows yet, but the downward trend in RSI reflects the loss of momentum. If RSI continues dropping, it could indicate that selling pressure is still in control. On the other hand, if it stabilizes or turns up, it could be a sign that the selling is slowing down.
Recent Candlestick Activity
Looking at the last few candlesticks, there has been some indecision in the market. The wicks on both the top and bottom of the candles suggest that buyers and sellers are battling for control. The most recent closing price at $46.88 sits near a potential support area, making the next few trading sessions particularly important.
If the stock holds near this level and starts forming stronger bullish candles, it could suggest a reversal. However, continued weakness could lead to another leg lower, particularly if it breaks below the 200-day moving average.
Analyst Ratings
📉 In November 2024, Hovde Group downgraded FBK from a buy to a hold rating, setting a price target of $60. This shift was driven by concerns over net interest income pressures, which were weighing on earnings per share estimates. The company’s mortgage segment, though still profitable, was seeing a reduction in expected contribution, signaling some operational headwinds. There were also concerns about deposit declines and stagnant loan-to-deposit ratios, suggesting potential challenges in maintaining depositor confidence.
📈 In December 2024, Keefe, Bruyette & Woods maintained their hold rating but raised the price target from $50 to $58. The firm cited strong cost management and consistent profitability as reasons for optimism, even in a tough economic environment. Analysts noted that FBK’s solid capital position and disciplined risk management were key factors that could help support earnings stability and future growth.
📊 As of the latest consensus among analysts, the average price target for FBK is $50.20, with a high estimate of $60 and a low estimate of $42. The overall consensus rating is hold, indicating a neutral stance on the stock’s near-term potential.
🔄 These ratings reflect a balanced view on FBK, with some analysts pointing to income pressures and operational hurdles, while others recognize the company’s financial strength and ability to navigate economic challenges. Investors appear to be taking a cautious but steady approach to the stock, keeping an eye on interest rate trends and overall banking sector performance.
Earning Report Summary
FB Financial Corporation wrapped up the fourth quarter of 2024 with solid numbers, showing steady growth and a strong financial position despite a few challenges along the way.
Solid Earnings Performance
For the quarter, the company reported a net income of $37.9 million, which translated to earnings per share of $0.81. After adjusting for certain one-time items, that number moved up slightly to $0.85 per share. Over the course of the full year, earnings per share came in at $2.48, and the adjusted figure landed at $3.40, reflecting a solid 13% increase from the previous year. This kind of steady growth shows that FB Financial is focused on smart banking practices, efficient cost management, and expanding its reach in key markets.
Revenue and Profitability Holding Strong
Total revenue for the quarter hit $130.38 million, just shy of expectations. Even so, the company maintained solid profitability, keeping an adjusted return on average assets at 1.25% and an efficiency ratio at 58.4%. Those figures point to disciplined financial management, with a focus on keeping operations running efficiently without unnecessary costs.
Growth in Loans and Deposits
Loans were up 7.2% on an annualized basis, and deposits grew by 5.4%. The company is expecting that growth to continue into 2025, with an outlook for mid-single-digit expansion in the near term and potentially reaching low double digits over the year. Deposit growth is a key focus, as the bank aims to strengthen its balance sheet and maintain a steady funding base.
Expanding Into New Markets
One of the highlights of the quarter was FB Financial’s continued expansion into new regions. The bank made its way into Tuscaloosa, Alabama, and Nashville, North Carolina, reinforcing its local banking model. On top of that, the company brought in six senior revenue producers during the quarter, bringing the total for the year to 20. That kind of investment in talent shows a commitment to long-term growth, both on the retail and commercial side of the business.
Smart Capital Moves and Risk Management
FB Financial also made some strategic adjustments to its balance sheet, selling off $319 million in securities at a pre-tax loss of $40 million but reinvesting the funds at a much higher yield. While that may sound like a tough hit, it’s actually a smart move that should pay off in the long run.
On the risk management side, there were a few charge-offs, including a notable commercial and industrial loan that had been previously reserved for losses. That said, the company reassured investors that this was an isolated issue, not a sign of broader problems with the loan book.
Looking Ahead
The company remains optimistic about the economic landscape, particularly in the regions it serves. Strong demographic trends, corporate relocations, and local business investments are expected to keep fueling growth. FB Financial seems well-positioned to continue its steady upward trajectory while keeping a close eye on profitability and risk.
Financial Health and Stability
For dividend investors, financial stability is just as important as yield. A company that looks great on paper but has shaky financials can quickly become a dividend trap. FBK, however, has solid financial footing.
- Book value per share sits at $33.59, and with a price-to-book ratio of 1.40, the stock is trading at a reasonable premium relative to its assets.
- The company holds $1.07 billion in cash, which is a strong buffer against potential downturns.
- Debt levels remain manageable at $269.2 million, reducing financial strain.
- Return on assets is at 0.90%, which is decent, though slightly lower than some larger competitors.
The company’s ability to generate strong cash flow also supports dividend payments. While FBK does not explicitly report free cash flow, its operating cash flow of $138.8 million suggests it has more than enough to sustain and grow its dividend.
Valuation and Stock Performance
FBK is currently trading at 18.90 times trailing earnings and 14.88 times forward earnings, which places it in a fair valuation range. Compared to historical levels, the forward P/E of 14.88 suggests the stock isn’t overvalued, making it a reasonable entry point for long-term investors.
A few other valuation metrics:
- Price-to-sales ratio is 4.79, which is higher than many regional banks, indicating that investors see growth potential.
- Enterprise value to revenue stands at 5.29, suggesting the stock is priced at a slight premium relative to sales.
Looking at stock performance, FBK has gained 28.83% over the past year, significantly outperforming the broader market’s 12.74% rise. The stock has been trading between $33.35 and $58.88 over the past 52 weeks, with its 50-day moving average at $51.39 and its 200-day moving average at $47.49.
After reaching its recent highs, the stock has pulled back slightly. For investors looking to build a position, this may present an opportunity to buy in at a more attractive valuation.
Risks and Considerations
No investment is risk-free, and while FBK has strong fundamentals, there are some potential headwinds to keep in mind.
1️⃣ Interest rate fluctuations can impact the bank’s profitability. If rates decline, net interest margin (the spread between what banks earn on loans and what they pay on deposits) could shrink, affecting earnings.
2️⃣ Economic slowdowns could lead to reduced loan demand and higher loan defaults, which would weigh on FBK’s financial performance.
3️⃣ Stock price volatility is another factor. With a beta of 1.16, FBK tends to be slightly more volatile than the overall market.
4️⃣ Institutional ownership stands at 67.3%, meaning large funds and asset managers have a significant stake. If they decide to exit their positions, it could put downward pressure on the stock price.
5️⃣ Short interest is relatively low at 1.96% of the float, but it does indicate some skepticism from traders.
Final Thoughts
FB Financial Corporation presents an appealing case for dividend investors looking for a combination of yield, stability, and growth potential. While its 1.62% dividend yield may not be the highest in the sector, it’s backed by a low payout ratio, strong profitability, and a solid balance sheet. The company has room to continue increasing dividends while reinvesting in its business, making it a well-balanced option for those focused on long-term income.
With the stock pulling back from recent highs, investors looking for an entry point may want to keep an eye on valuation levels. However, as with any investment, factors like interest rate movements and economic conditions should be monitored closely. For those seeking a regional bank stock with a strong financial foundation and a growing dividend, FBK is worth considering as part of a diversified income portfolio.
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