Regional Bank Growth and Profitability: Why First Financial and FirstBank Are Outperformers in Q2 2025

In a year marked by economic uncertainty and shifting interest rate dynamics, regional banks like First Financial (NASDAQ: FFBC) and FirstBank (parent company: FB Financial Corporation) have emerged as standout performers in Q2 2025. Their outperformance is not accidental but the result of disciplined strategic acquisitions, robust loan growth, and operational efficiency improvements. For investors seeking long-term value in the banking sector, these two institutions exemplify how regional banks can leverage organic and inorganic growth to navigate macroeconomic headwinds.

Strategic Acquisitions: Fueling Scale and Geographic Diversification

First Financial and FirstBank executed high-impact acquisitions in Q2 2025 that directly address two critical challenges for regional banks: scale and geographic diversification.

First Financial sealed a $325 million cash-and-stock deal for Westfield Bancorp, the parent of Westfield Bank. This acquisition added $2.32 billion in loans and $2.47 billion in deposits, expanding First Financial's total assets from $18.5 billion to $20.6 billion. The transaction is projected to be 12% accretive to earnings and deliver a tangible book value earn-back in 2.9 years. More importantly, it solidified First Financial's presence in Northeast Ohio and complemented its recent expansions into Chicago and Grand Rapids, creating a cohesive Midwestern footprint.

Meanwhile, FirstBank completed its merger with Southern States Bancshares, a $368.4 million transaction that added 93 full-service branches across Tennessee, Georgia, and Alabama. Southern States brought $2.32 billion in loans and $2.47 billion in deposits, increasing FirstBank's total assets to $16 billion. CEO Christopher Holmes emphasized the merger's role in enhancing “strategic flexibility” for both organic growth and future inorganic opportunities.

Loan Growth: A Catalyst for Earnings Resilience

Both banks demonstrated exceptional loan growth in Q2 2025, driven by strong demand in commercial and industrial (C&I) lending.

• FirstBank reported 6% core loan growth on a linked-quarter annualized basis, with C&I loans surging by $156.1 million—$78.4 million in Florida and $64.4 million in Puerto Rico. This outpaced the industry average and underscored the bank's ability to capitalize on its regional expertise.
• First Financial saw total loans rise 21.62% year-over-year to $3.9 billion, driven by the Westfield acquisition and organic growth in commercial and specialty lending. Its net interest income hit a record $52.7 million, a 34% increase from Q2 2024.

These results highlight a critical advantage of regional banks: their agility in tailoring products to local markets. As larger banks face regulatory constraints, regional players like First Financial and FirstBank can pivot quickly to meet demand in high-growth sectors.

Efficiency and Capital Deployment: Balancing Growth with Prudence

In a cost-conscious environment, both banks maintained top-quartile efficiency ratios, a testament to their disciplined expense management.

• FirstBank's efficiency ratio held steady at 49.97%, just below its 50% target. Non-interest expenses remained flat at $123.3 million, while cost-cutting initiatives reduced employee compensation by $2.1 million.
• First Financial achieved a 1.34% return on average assets (ROAA) in Q2 2025, up from 0.94% in Q2 2024, despite the acquisition-related costs.

Capital deployment also played a pivotal role in their outperformance. FirstBank redeemed $28 million in shares and maintained a 107% payout ratio for dividends, while First Financial committed to a $500,000 community investment through its Foundation, reinforcing its brand as a stakeholder-focused institution.

Why These Banks Are Compelling Long-Term Investments

For investors, the combination of strategic acquisitions, loan growth, and operational discipline positions First Financial and FirstBank as compelling long-term plays.

1. First Financial offers a clear path to scale: Its Midwestern expansion is still in early stages, and the Westfield acquisition provides a platform for cross-selling wealth management and insurance services. With a forward P/E of 9.8x and a 12% earnings accretion from the latest deal, the stock is undervalued relative to its growth trajectory.
2. FirstBank's Southern States merger enhances its capital position (17.87% total capital ratio) and liquidity ($736.7 million in cash), giving it flexibility to pursue further deals or raise dividends. Its net interest margin of 3.68% suggests pricing power in a competitive lending environment.

Final Thoughts: A Blueprint for Regional Bank Success

The Q2 2025 results of First Financial and FirstBank underscore a broader trend: regional banks that prioritize strategic scale, local market expertise, and prudent capital management can outperform in any economic climate. As the Federal Reserve's rate policy stabilizes and credit demand rebounds, these institutions are uniquely positioned to capitalize on opportunities. For investors seeking a mix of growth and stability, both stocks represent attractive additions to a diversified portfolio.