SouthState Corporation Q4 FY2025 earnings call

• Successful integration of the independent financial deal: Navigated regulatory approvals and systems conversions, with Mark Thompson playing a key role in leading the integration before retirement. - Financial performance: EPS up over 30% excluding merger costs, tangible book value per share double-digit growth, dividend raised 11%, and 2 million shares repurchased in Q4. - Q4 performance: Balance sheet growth and noninterest income offset by higher noninterest expenses, margin and deposit costs in line with guidance, NIM excluding accretion up 2 basis points, efficiency ratio below 50% for the quarter and year. - Capital activity: Repurchased 2 million shares, total payout ratio near 100% in Q4, capital ratios remain healthy with TCE at 8.8% and CET1 at 11.4%.

In Q4, PPNR was $323 million, with full-year PPNR at $1.27 billion. EPS was $2.47 in Q4 and $9.50 for the full year. Return on tangible common equity for the year was approximately 20%. Loan growth was 8% and deposit growth was 8% during the quarter. Excluding merger costs, earnings per share in 2025 were up over 30%, and tangible book value per share had double-digit growth. Net interest margin was 3.86% (tax equivalent), with deposit costs at 1.82%. Noninterest income in Q4 was $106 million, up $7 million, and full-year noninterest income was better than guided and modeled.

• NIM guidance: Expect NIM to continue between 3.80% to 3.90% in 2026, with assumptions including interest-earning assets averaging $61-$62 billion, three rate cuts, loan accretion of $125 million, and deposit beta around 27%. - Loan growth: Mid- to upper single-digit loan growth expected for 2026, with pipeline building in Texas and Colorado. - NIE outlook: Expect 2026 NIE to increase ~4% over 2025 levels of $1.407 billion, leaning into expanding revenue producers.

• Regulatory and integration risks: Initial high risks during the integration process, including regulatory approvals and systems conversions. - Economic and credit risks: Future provision expense likely a function of loan growth and net charge-offs, subject to economic and credit condition changes. - Share price disconnect risk: Potential disconnect between fundamental performance and share price affecting share repurchase decisions.

Q: John McDonald asked Steve Young about the net interest margin for the year and deposit costs/funding loan growth.

A: Steve Young said NIM was in line with guidance at 3.86%, deposit costs down 9 basis points, and 2026 NIM expected to be between 3.80%-3.90% with assumptions on interest-earning assets, rate forecast, loan accretion, and deposit beta.

Q: Stephen Scouten inquired about hiring activity and correspondent banking strength.

A: John Corbett mentioned ~550-600 commercial RMs hired, with potential to increase 10%-15%, and Stephen Young discussed correspondent banking strength driven by rate changes, expecting it to be sustainable on an annual average basis.

Q: Anthony Elian asked about expenses and buyback.

A: Will Matthews said Q4 expenses were impacted by performance, seasonality, and growth initiatives, and buyback authorization is flexible based on share price relative to intrinsic value.

Q: Catherine Mealor asked about margin, loan yields, and repricing.

A: Stephen Young updated on loan repricing schedules, with legacy bank fixed rate loans and independent book loans having positive net repricing, and NIM expected to stay in 3.80%-3.90% range.

Q: Jared Shaw asked about tech investments and deposit pricing.

A: Stephen Young mentioned investments in tech platforms like commercial loan servicing, AI, and FX, and deposit beta expected to start around 27% with potential to move lower over time based on growth.

Q: Gary Tenner asked about loan production in Texas/Colorado.

A: William Matthews said Texas and Colorado combined production was $888 million in Q4, 15% higher than Q3, with 17 of 26 new commercial RMs hired in Q4 in those markets.

Q: David Bishop asked about hiring efforts and lift outs.

A: John Corbett said there's a formal pipeline process for hiring bankers, with 200 in Q3 and 237 in Q4 having conversations for potential hires.