- South State had a lackluster fourth quarter, with core pre-provision profits coming up short on weaker mortgage banking and higher spending, as well as a higher provisioning expense.
- The move to build reserves is a curious one given recent credit quality trends, but I do not believe this presages a materially worse full-cycle charge-off estimate.
- Having combined with CenterState, South State is well-placed with a top-15 share in many of the fastest-growing MSAs in the country.
- As is, South State is probably a little pricey, but I assume further M&A activity that will boost the earnings growth into the double digits and support a double-digit annualized total return.
For further details see:
South State Bank: Not Cheap On The Multiples, But The GARP Case Is Interesting