Yesterday morning, Treasury Secretary Scott Bessent wrote on X:
Last week, I visited my hometown of Charleston, [South Carolina], where a new Boeing plant is creating 1,000 jobs. I also toured a rare earth plant in Sumter, SC, which is bringing 300 permanent jobs, with the potential for 3,000 more.
This was part of a larger point that:
These are just a few examples of [President Trump’s] efforts to attract trillions in investments and implement policies that are revitalizing U.S. manufacturing. With the Working Families Tax Bill providing strong incentives, 2026 is poised to be a landmark year.
And I don’t doubt him there. But there will be states that get a whole lot less out of those efforts – like New York, a topic I detailed on Monday (and last Thursday) – and states that get a whole lot more.
As Bessent already noted, South Carolina is one of the latter.
I’ve known there was something special about my home state for decades. But it has even more appeal under Trump’s Make America Great Again agenda. As I wrote on May 1:
The larger U.S. economy may have contracted 0.3% [in the first quarter]. But here in my home state, business is booming.
Our state senate just passed a bill for a new power plant to meet our growing energy needs from the influx of new residents and burgeoning businesses… There’s economic optimism almost everywhere I look in South Carolina, and I understand why. It’s a great place to be.
We’re well-situated on the Eastern Seaboard between Washington, D.C., and Florida. We have business-friendly laws on the books that make us a welcome change from hyper-regulated areas of the country. And we have a reasonable cost of living that’s especially welcome to all ages and stages of life during these inflationary times.
Businesses that come here have solid economics to help them succeed – not to mention local resources that are hard to beat.
I mention all this because the Carolinas’ continued upswing is just more evidence of our “New American Migration” thesis in action.
Allow me to explain…
Americans on the Move
Americans have always been on the move…
Over the centuries, the country has seen a series of migrations – the post-Civil War migration, Manifest Destiny and westward expansion, and the Dust Bowl Migration, to name just a few.
But today, a new migration is happening. As I explained in our April edition of The Wide Moat Letter:
Today, there is a new migration.
This migration began during the COVID-19 era, and it’s still happening today.
We’re seeing Americans flee areas with high costs of living, high taxes, and high regulatory burdens in favor of the sunny South.
[… ]
Researchers at the Brennan Center say that if current migration trends continue, California could lose four congressional seats, New York could lose two, Illinois could lose one, and Pennsylvania could lose one.
“By contrast,” the organization says, “the South has emerged as this decade’s growth engine, adding almost 3.9 million people and accounting for nearly all U.S. population gains since 2020.”
The recommendation in that issue was NextEra Energy (NEE) – a utilities company that generates approximately 68% of its revenue from the Florida Power and Light (FPL) subsidiary. NEE is up about 33% since I recommended it, handily beating the S&P over the same time.
NextEra is just one company benefiting from this new migration to America’s Sun Belt.
Back in May, I brought up companies like leading investment firm NorthMark Strategies. It had just chosen my town of Spartanburg to build a $2.8 billion state-of-the-art computing center for engineering and tech support.
And I already cited Bessent’s examples of rare earth production and Boeing’s (BA) activity elsewhere in South Carolina. But you can also add:
-
Aircraft-component maker Woodward, which broke ground in Greer last week for a 300,000 square-foot manufacturing facility
-
Vehicle-axle supplier ZF Chassis Systems Duncan announcing a $55.4 million investment in Spartanburg
-
Modular building expert BMarko Structures relocating to Williamston
Then there’s German automotive supplier ElringKlinger expanding into Pickens County. Its CEO, Thomas Jessulat, cited “the distinguished characteristics of the state of South Carolina” as a major motivating factor.
Individuals are recognizing those characteristics just as much as corporations. We recently learned from moveBuddha’s “2025 Moving Trends Report” that South Carolina is this year’s No. 1 state to relocate to, with a “1.97 in-to-out move ratio.”
The publication notes how:
South Carolina is not only doing a great job of retaining residents, but it’s also maintaining a place of popularity for movers coming in from other states. It’s the 6th year in a row that movers have shown more than double the interest for moves in than out.
North Carolina comes in second at 1.61, and Idaho is third at 1.6. Whereas New York is 46th on the list, followed by Connecticut, New Jersey, California, and Hawaii.
South Carolina’s influx of businesses and residents – alongside those who have already been here – naturally need proper financial options to thrive: places to keep their personal money (other than their mattresses)… institutions to finance their mortgages… sources of liquidity for companies…
All of which puts Southern First Bancshares (SFST) in an ideal spot for the foreseeable future.
My Hometown Advantage
Established in 1999 in Greenville, South Carolina, Southern First Bank has since expanded into Columbia, South Carolina; Atlanta, Georgia; Raleigh, North Carolina; Greensboro, North Carolina; and Charlotte, North Carolina. It now sports over $4.4 billion in total assets, $3.8 billion in loans, and $3.7 billion in total deposits.
I’ve been a customer of Southern First for over a decade now, back when it was a sleepy local bank. So it has been fascinating to watch it transform into one of the most dynamic and fastest-growing markets in the Southeast.
It’s also fascinating examining it as investor instead of a customer. Southern First is only covered by two Wall Street analysts, which makes this pick a diamond in the rough.
Upon examination of the bank’s loan mix, we found that its loan portfolio consists of such things as:
-
Residential mortgages – 30.6%
-
Commercial non-owner-occupied loans – 24.9%
-
Commercial owner-occupied loans – 18.6%
-
Business loans – 16% (with 2.6% exposure to construction and 6.3% to home equity)
It’s also worth noting that Southern First has modest exposure to the office sector – 5.2% of its portfolio – with an average loan size of $1.4 million. Yet overall, past due loans are well-managed, amounting to just 0.18% of total loans. And the bank has minimal direct credit exposure to private credit providers.
Plus, it’s asset-light, with fewer banking offices. This allows it to operate more efficiently than many of its peers.
In short, fundamentals are rock solid. And in terms of valuation, Southern First is screaming, “Buy me!”
Shares are trading at 14.3 times price to earnings compared with its long-term average of 16 times. As you can see below, shares traded as low as 6 times during the Great Financial Crisis and 9 times during COVID-19.
Source: FAST Graphs
Given the strong demand we’re now seeing in South Carolina, I consider Southern First’s fair value multiple to be closer to 18 times.
There’s the bonus possibility that my hometown bank could be snapped up by a larger regional bank in the future. While I always caution against buying stocks based on merger and acquisition prospects alone, it’s hard to deny that Southern First makes an attractive target.
Again, there are just two analysts covering Southern First. And only one has provided consensus growth estimates for 2026 and 2027.
Based on that one analyst data point and a reversion to 16.6 times, it’s possible that this diamond in the rough could return 60% in 12 months’ time.
Source: FAST Graphs
I don’t own any shares of Southern First myself. But I can tell you as a customer that this bank is a well-oiled machine.
Southern First is a company to keep on your radar as the New American Migration thesis plays out in the years ahead.
Regards,
Brad Thomas
Editor, Wide Moat Daily
|