It’s been about two years since two of the biggest and oldest banks based in South Carolina tied the knot.
It’s been about a year since the aged newlyweds took a shared name.
It’s been a match made in heaven as CEO Robert Hill Jr. sees it.
Two key indicators — loans and deposits — are on the rise at South State Bank. Shareholders have seen their dividend checks edge higher in each of the past six quarters. The stock price, meanwhile, is up more than 80 percent since the day the merger was announced in early 2013.
“Any way you look at it from any angle, it’s far exceeded our expectations,” Hill said of the arranged marriage between a pair of 80-year-old South Carolina lenders that survived both the Great Depression and the Great Recession.
The new South State brand made its debut last summer, a year after Columbia-based SCBT Corp. acquired the owner of First Federal of Charleston in a deal valued at $447 million. The buyout paired SCBT ’s strong presence in the Midlands and along the Upstate’s Interstate 85 corridor with First Federal’s attractive coastal franchise.
The unified bank, which has $8 billion in assets and a stock market value of about $1.9 billion, hasn’t shown any symptoms of the typical post-merger hangover, Hill said.
“I think most of the hurdles involved getting two computers to talk to each other,” he said.
Hill, a Citadel graduate who began his banking career as a teller and since has presided over his share of buyouts, said it normally takes a couple of years after a sizable acquisition to get traction in the customer growth category. Not this time.
“We’ve seen growth right out of the gate,” Hill said.
He added: “The overall performance — if you boil it down to just numbers — we’re doing 20 to 25 percent better than we thought we would when we planned it out.”
Bill Medich rattles off the local figures. Since the name change took effect last summer, he said, South State’s Charleston area loan portfolio has increased by 4 percent. Core deposits, namely checking, savings and money market accounts, have climbed by 9 percent.
“That indicates our customers stayed with us through the conversion and moved even more money to us, and that enabled us to attract more customers. ... We’re very happy with that,” said Medich, regional president for the Charleston market.
Looking ahead, he predicted the bank this year would increase its local lending by 10 percent and add another 10,000 checking accounts.
Locally, at least, the merger has defied the notion that big acquisitions automatically equal big job cuts. Not surprisingly, South State has been closing unneeded overlapping branches since the First Federal purchase to reduce costs, including 10 in the Charleston region, and moving the accounts to nearby locations. At the same time, it’s filling in some of the bare spots. For example, South State will take over in the next week or so 13 retail offices that it’s buying from Bank of America, mostly in smaller markets across the middle of the state.
“We’re beefing up where we need to beef up and paring back where we need to pare back,” Hill said.
The former holds true in the Charleston area, where South State’s payroll has increased over the past two years. The lender now has about 660 employees spread throughout the three-county region, said Jack Goettee, president of the Southern banking group.
“It’s up almost 10 percent,” Goettee said. “We take a lot of pride in that.”
Hill said it boils down partly to numbers. Charleston, by all measures, is the biggest market in the South State footprint, he said.
Another reason is a former Kroger supermarket at U.S. Interstate 26 and Mall Drive in North Charleston, a low-slung building that thousands of local commuters pass every day. First Federal had the vision to redevelop and add onto the abandoned suburban retail property in 1980s for its expanding back-office operations. It was an investment that would pay off when SCBT came knocking in 2013.
Hill said the support center became a critical piece of the merger puzzle because it was clearly capable of handling the higher transaction volume of a much larger bank like South State — and it was all neatly housed in one convenient location.
“That was one reason this partnership with First Federal was so important,” he said. “This center was a big part of that.”
Hill said the campus is now the “nerve center” for the three-state franchise. It’s staffed by about 450 employees, a mix of former First Federal workers, transfers from SCBT and new hires. It includes South State’s mortgage operation, wealth management, retirement services, a customer call center and a fair number of high-ranking executives, including Goettee and the head of human resources. It also has a mock branch where all newly hired tellers train in a simulated but realistic working environment.
“It is absolutely the machine that really makes the bank run,” Hill said.
South State is getting ready to invest about $5 million into the newer portion of the North Charleston office complex, a three-story building known as “The Summit,” to accommodate its future real estate needs. Tenants that now lease the surplus space will be moving out as their leases expire to make room for future South State employees, Hill said.
“As we continue to grow, this will be a hub of growth on the support side,” he said of the entire Mall Drive campus. “As we continue to invest and expand and acquire and ... build the company, this will be a very important part of that success and process.”
Contact John McDermott at 937-5572.