South Carolina's largest homegrown bank had been fixed on acquisitions in recent years, on its way to becoming a nearly $15 billion lender with a four-state footprint.
This year, some of the focus will shift to reining in expenses without stunting growth.
South State Corp. will further prune its brick-and-mortar network to trim its cost structure by shuttering 11 branches and two drive-thrus in 2019 for a nearly 8 percent reduction.
The lender announced the latest cost-cutting measure while reporting that its fourth-quarter earnings topped Wall Street’s expectations.
The South State Bank parent estimated the closings would eliminate about 50 full-time jobs in the Carolinas and Georgia and save it about $2.5 million a year. All but one of the offices will be shut down by June 30 and consolidated into the next-closest location.
Finance chief John Pollak said the bank is paying more attention to costs after digesting some fairly big acquisitions, namely Charlotte-based Park Sterling and Southeastern Bank Financial of Augusta.
Last year, for example, South State mothballed 14 branches, bringing its total to 167, while also reducing nearly 120 full-time jobs, he said.
The spending target for 2019 calls for an increase of no more than 3 percent — preferably less.
Pollak said the “goal is always to really limit expense growth in the company while still investing in the company,” in areas such as online banking services, a trend that helped drive the recently announced tie-up between SunTrust and BB&T.
“So I think branch rationalization is just kind of part of something we've got to stay focused on,” he said during a recent earnings call with financial analysts.
The planned payroll cuts and branch closings don’t mean South State is putting the kibosh on growth. It expects to add jobs in its newer markets, namely the Charlotte, Raleigh and Richmond areas.
The company also sees a chance to wrest some business away as a result of the pending BB&T-SunTrust marriage. At an industry conference last week, South State executives pointed out how many of their branches overlap with offices operated by the two bigger rivals in six key markets. The figures ranged from 50 percent in Charlotte to 70 percent in Charleston to 86 percent in Savannah, according to the investor presentation.
The Columbia-based bank's cost-saving plan was announced as it reported a sharp jump in 2018 earnings.
Profits for the fourth quarter soared by more than $46 million to $49 million, largely because a onetime tax-related expanse dented its bottom line a year earlier. For all of 2018, net income more than doubled to $179 million.
South State CEO Robert Hill Jr. said the company hit two of its three primary goals last year.
“Significant steps were made in building upon the soundness of the bank and profitability metrics continue to be very good," he said. “Our growth, however, was slower-than-normal during 2018.”
This year, the focus will be “on growing what has been built over the last couple of decades,“ Hill added.
“Our goal is to have success in all three of the primary objectives in 2019, while building a franchise that is deep and dense in great markets,” he said.