SouthState Bank Corporation

star followed by number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Will Matthews, South State's Chief Financial Officer. Thank you. Please go ahead.

Will Matthews Good morning and welcome to South State's fourth quarter 2024 earnings call. This is Will Matthews and I'm here with John Corbett, Steve Young, and Jeremy Lucas. As always, John and I will make some brief remarks to highlight a few items of interest and then move into questions. Our comments will reference the earnings release and investor presentation, which you can find on our website under the investor relations tab. Before we begin our remarks, I want to remind you that comments we make may include forward looking statements within the meaning of the federal securities laws and regulations. Any such forward looking statements we may make are subject to the safe harbor rules. Please review the forward looking disclaimer and safe harbor language in the press release and presentation for more information about our forward-looking statements and risks and uncertainties which may affect us. Now I'll turn the call over to John Corbett, our CEO.

Thank you, Will. Good morning, everybody. Thanks for joining us for South State's fourth quarter results. For the quarter, we clearly felt the effects of the Federal Reserve's first rate cut in September. In October, we started to see deposit growth across all our regions, and the growth occurred even as we were cutting deposit rates at the same time. Now some of the growth is seasonal and it's amplified by the normal pickup in municipal deposits during the tax collection cycle. So deposits normally get a little inflated in the fourth quarter anyway. Steve used some of the excess liquidity and he paid down our brokered CDs. But if you back out that decline in brokered CDs, customer deposits actually grew by 9% on an annualized basis. So it's nice to feel like we've reached the end of the tightening cycle. Liquidity is improving. and deposit pricing is becoming more rational. That improving backdrop led to a 9% pickup in PPNR for the quarter, led by a 6% increase in total revenue. For the year as a whole, I feel like our regional presidents did a great job managing the inverted yield curve. They were able to generate moderate mid-single-digit growth, and they did it with an eye on maintaining our net interest margins. Earlier this month, we announced a sale-leaseback transaction on approximately 170 branches. We've looked at this type of transaction several times over the years and felt like the stars align now. We're able to harvest approximately $225 million of off-balance sheet capital, and the cost of capital is very attractive compared to the other sources of capital. We now have the option to convert this extra capital into future revenue growth. And finally, our biggest development was the regulatory approval of independent financial in December and the subsequent closing on January 1. When we announced the acquisition in May, we modeled a closing at the end of the first quarter, so things progressed a little faster than planned. We've got the conversion scheduled for Memorial Day, so we should have a relatively clean fourth quarter after cost saves. Our teams have spent a lot of time together over the last few months, and I can sense both their excitement and their eagerness to finish the integration and keep building the company and serving our clients. Our strategy has been to build the company in the best geographies in the country with the best scale and the best business model. And the independent franchise fits that strategy like a glove. The Census Bureau released their latest report in December, and not surprising, Florida, Texas, and the Carolinas continue to lead the nation for growth. Will, why don't you go ahead and walk us through the moving parts in the balance sheet and the income statement?