South State (US:SSB)2026-01-23 15:02Financial Data and Key Metrics Changes - For Q4 2025, the company reported a pre-provision net revenue (PP&R) of $323 million and earnings per share (EPS) of $2.47, resulting in a full-year PP&R of $1.27 billion and EPS of $9.50 [9][10] - The return on tangible common equity for the year was approximately 20% [9] - The company experienced an 8% growth in loans and deposits during Q4 [6][10] Business Line Data and Key Metrics Changes - Non-interest income for Q4 was $106 million, up $7 million from the previous quarter, driven by performance in the correspondent capital markets division [11] - The company achieved double-digit growth in tangible book value per share, despite the day-one dilution from the merger [5][6] Market Data and Key Metrics Changes - The loan production in Texas and Colorado for Q4 was $888 million, which is 15% higher than Q3's $775 million [58] - The overall loan production for the year in Texas and Colorado was up 10% compared to 2024 [58] Company Strategy and Development Direction - The company aims to continue funding growth while being active in share repurchases, particularly when there is a disconnect between fundamentals and share price [14] - The strategic focus includes expanding revenue producers and investing in technology platforms, including AI and commercial loan servicing [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of the Independent Financial deal and noted that the risk profile of the company has been reduced [7][8] - The company anticipates mid to upper single-digit loan growth for 2026, supported by a growing pipeline [20][21] Other Important Information - The company repurchased 2 million shares in Q4, representing approximately 2% of the company, and authorized an additional 5 million shares for repurchase [7][13] - The efficiency ratio remained below 50% for both the quarter and the year [11] Q&A Session Summary Question: Thoughts on net interest margin and deposit costs - Management indicated that the net interest margin (NIM) was 3.86%, in line with guidance, and deposit costs were down 9 basis points [16][17] Question: Loan growth expectations - The company expects mid to upper single-digit loan growth for 2026, with a strong pipeline supporting this outlook [20][21] Question: Hiring activity and expense guidance - Management noted a focus on opportunistic hiring, particularly in commercial relationship managers, with a potential increase of 10%-15% in the next year or two [24][25] Question: Correspondent banking strength sustainability - Management believes the strength in correspondent capital markets is sustainable, driven by recent rate changes [26][28] Question: Increase in substandard loans - The increase in substandard loans was attributed to a few multifamily properties in lease-up, with the credit team not concerned due to strong equity positions [55]