South State (US:SSB)2026-01-23 15:00Financial Data and Key Metrics Changes - For the full year 2025, earnings per share (EPS) increased by over 30%, with a full-year EPS of $9.50 and a return on tangible common equity of approximately 20% [4][8] - The company achieved a net interest margin (NIM) of 3.86% and a cost of deposits of 1.82% [8] - Tangible book value per share experienced double-digit growth, despite the dilution from the merger [5][12] Business Line Data and Key Metrics Changes - The company reported an 8% growth in both loans and deposits during the fourth quarter [5][9] - Non-interest income for the fourth quarter was $106 million, up $7 million from the previous quarter, driven by performance in the correspondent capital markets division [10] - The company repurchased 2 million shares, representing approximately 2% of the company, as part of its share repurchase plan [6][12] Market Data and Key Metrics Changes - The loan production in Texas and Colorado reached $888 million in the fourth quarter, a 15% increase from the third quarter [57] - The overall loan pipeline grew from $3.4 billion to $5 billion over the year, indicating strong future loan growth potential [20] Company Strategy and Development Direction - The company successfully integrated the Independent Financial acquisition, expanding into new markets in Texas and Colorado, and is now focusing on organic growth [3][4] - The strategic plan for 2025 included achieving a clean conversion and cost savings, which were accomplished, allowing the company to focus on growth [6] - The company is investing in technology and revenue-producing initiatives, including AI and commercial loan servicing platforms [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's fundamentals and the reduced risk profile following the merger integration [6] - The outlook for 2026 includes expectations for continued loan growth and a stable NIM in the range of 380-390 basis points [18][47] - Management noted that the economic environment and interest rate changes will influence future performance, particularly in loan pricing and deposit costs [44][52] Other Important Information - The company increased its dividend by 11% in July 2025 and maintained healthy capital ratios, with a TCE ratio of 8.8% and a CET1 ratio of 11.4% [12] - The total payout ratio, including dividends and share repurchases, was nearly 100% for the quarter, indicating a strong commitment to returning capital to shareholders [12][38] Q&A Session Summary Question: Thoughts on net interest margin and deposit costs - Management indicated that the NIM was in line with guidance and deposit costs were down, with expectations for NIM to remain stable in 2026 [16][17] Question: Loan growth expectations - The company expects mid to upper single-digit loan growth for 2026, supported by a strong pipeline [20][21] Question: Hiring activity and expense guidance - Management discussed plans to increase the number of commercial relationship managers by 10-15% to support organic growth [25][26] Question: Correspondent banking strength sustainability - Management noted that the recent strength in correspondent capital markets is expected to continue, although it may fluctuate seasonally [27][28] Question: Expense growth and buyback authorization - Management confirmed that expense growth guidance remains appropriate and discussed the flexibility of capital return strategies based on share price and economic outlook [35][38]