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Keefe, Bruyette & Woods (KBW) has released its outlook for Southeast bank stocks ahead of its Southeast Bank Trip scheduled for June 17-18, 2025, in Charleston, South Carolina. The report highlights varying growth trajectories among 12 regional banks, with First Bancorp (NYSE:FBK), Cadence Bank (NYSE:CADE), and United Community Banks (NASDAQ:NYSE:UCB) projected to achieve the highest organic growth rates of 5-6% in 2025.
Growth across the Southeast banking sector is currently averaging just 3% in 2025, reflecting uncertainty around tariffs, macroeconomic conditions, elevated loan pay-downs, and reduced activity in commercial real estate. KBW forecasts growth to accelerate in 2026, with Ameris Bancorp (NASDAQ:NYSE:ABCB) and First Bancorp expected to lead with 7% and 8% growth respectively, while Synovus Financial (NYSE:SNV) and Hancock Whitney (NASDAQ:HWC) are positioned for potential outperformance if growth exceeds expectations. First Bancorp’s revenue growth forecast for 2025 stands at 32%, significantly outpacing its 5-year revenue CAGR of 4%. InvestingPro subscribers can access detailed growth metrics and 5 additional ProTips to better evaluate investment opportunities in the banking sector.
The interest rate environment remains volatile, with markets pricing in approximately two rate cuts for the remainder of 2025. KBW identifies Synovus, First Bancorp, Cadence Bank, Hancock Whitney, Trustmark (NASDAQ:TRMK), Renasant (NASDAQ:NYSE:RNST), and United Community Banks as best equipped for a higher-for-longer rate scenario, while South State Bank (NASDAQ:NYSE:SSB), First Bancorp of North Carolina (NASDAQ:FBNC), and Simmons First National (NASDAQ:SFNC) appear better protected against rate decreases. First Bancorp has maintained its dividend payments for 39 consecutive years, currently offering a 2.16% yield, with a conservative debt-to-equity ratio of 0.07, suggesting strong financial stability amid rate fluctuations.
Credit quality remains a focus as higher rates potentially impact loan performance, though KBW notes the normalization process has been orderly with manageable levels of net charge-offs and provisioning. The attending banks average 0.56% in non-performing assets, 0.17% in last-twelve-month net charge-offs, and expected provisions of only 0.28% for 2025, with particular attention on commercial and industrial portfolios due to potential tariff impacts.
Merger and acquisition activity remains robust among Southeast banks, with seven pending or recently closed transactions involving Cadence Bank, First Bancorp, Renasant, South State Bank, United Bankshares (NASDAQ:UBSI), and United Community Banks. KBW attributes this trend to improving valuations, strong capital positions, an improved regulatory environment, the need for scale, and desire for growth, while share repurchase activity has increased amid softer growth, with Synovus (4%), Trustmark (3%), and Hancock Whitney (2%) expected to lead in buyback activity.
In other recent news, First Bancorp announced an increase in its quarterly cash dividend to $0.23 per share, attributing this decision to strong first-quarter performance and solid credit quality. The dividend will be payable to shareholders on July 25, 2025. In leadership changes, First Bank (NASDAQ:FRBA), a subsidiary of First Bancorp, appointed Larry Jackson as Chief Credit Officer, bringing over two decades of experience in credit risk management to the role. Analyst firm Piper Sandler initiated coverage on First Bancorp with a Neutral rating and a price target of $48, citing the bank’s potential for organic growth and mergers, though noting the stock’s premium valuation. Meanwhile, Stephens analyst Russell Gunther raised the price target for First Bancorp to $50, maintaining an Overweight rating due to the company’s strong net interest margin and favorable revenue results. At its annual shareholder meeting, First Bancorp’s shareholders elected 11 directors and approved executive compensation, among other proposals. The meeting also ratified Crowe, LLP as the independent auditors for 2025. These developments reflect ongoing strategic and financial activities within the company.
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