3 Bank Stocks Set to Rebound in 2026

After performing well in late 2025, bank stocks have once again encountered volatility just weeks into the new year. Various factors may be driving this. For instance, one factor might be President Donald Trump's call for Congress to enact an interest rate cap on credit cards. Or it may simply be due to banks reporting results and guidance slightly short of previously sky-high expectations. Many bank stocks have fallen post-earnings for this reason.

Still, irrespective of root cause, consider this sell-off an opportunity, not a warning. Mostly, that's because there are so many bank stocks that, thanks to bank-specific catalysts, could bounce back from their recent losses, and then some.

Three top examples of these include Citigroup (NYSE: C), Flagstar Bank (NYSE: FLG), and Pinnacle Financial Partners (NYSE: PNFP).

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A major turnaround is still in motion with Citigroup

Citigroup started the year strong, with its stock extending a 2025 rally. However, in line with other major bank stocks, the share price of this money center bank experienced a moderate pullback, falling from nearly $125 per share to around $114 per share.

Even so, Citigroup's long-term catalyst remains in motion. After improving earnings by 18% last year, the banking giant's turnaround is entering its final stage, largely through additional cost-cutting.

If successful, the impact on Citigroup's stock price could be tremendous. The stock trades at around 11 times forward earnings today, a discount to the mid-teens forward valuations of its competitors. Hence, it may be possible for shares to rally on both earnings growth and valuation expansion.

Flagstar Bank is a high-risk, high-reward turnaround story

Flagstar Bank is the result of a 2022 merger between the former Flagstar, a Michigan-based regional bank operating mainly in the Midwest, and New York Community Bancorp.

Since then, however, Flagstar shares have struggled. Mostly, that is due to high exposure to commercial real estate loans as a result of its acquisition of the failed Signature Bank in 2023. Flagstar has also faced challenges related to some of its multifamily property loans.

Nevertheless, better times may lie ahead. Through various turnaround measures, management is targeting a return to profitability by this year. Guidance even calls for earnings to hit $2.10 to $2.20 per share by 2027. If achieved, Flagstar, at around $13 per share today, could surge to the mid-$20s per share.

Merger synergies could move the needle for Pinnacle Financial Partners

Pinnacle Financial Partners is a regional bank operating primarily in the southeastern United States. This bank stock's price has fallen more than 15% over the past year, but it could be on a clear path back to prior price levels.

How so? At the start of 2026, Pinnacle completed its acquisition of Synovus Financial. Pinnacle anticipates significant post-merger cost synergies. Per the company's merger press release issued last summer, management expects this merger to be 21% accretive to 2027 earnings.

With sell-side analysts already calling for Pinnacle to report around 12% earnings growth in 2026, it's possible that earnings two years from now come in more than 35% above 2025 estimates. Even if Pinnacle's 10.5 times forward earnings multiple holds constant, this could mean a healthy amount of upside over a relatively short time frame.

Citigroup is an advertising partner of Motley Fool Money. Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.