SouthState Corporation Reports First Quarter 2024 Results, Declares Quarterly Cash Dividend

WINTER HAVEN, Fla., April 25, 2024 /PRNewswire/ -- SouthState Corporation (NYSE: SSB) today released its unaudited results of operations and other financial information for the three-month period ended March 31, 2024.

SouthState Corporation Reports First Quarter 2024 Results

"In the midst of a transition year for the US economy, SouthState produced first quarter revenue and earnings per share in line with our guidance," commented John C. Corbett, SouthState's Chief Executive Officer.  "Loans and deposits grew in the low-single digit percent range and asset quality remains stable with strong reserves. Our markets are resilient, and people are migrating to the South as an attractive place to live and grow a business."

Highlights of the first quarter of 2024 include:

Returns

• Reported Diluted Earnings per Share ("EPS") of $1.50; Adjusted Diluted EPS (Non-GAAP) of $1.58

• Net Income of $115.1 million; Adjusted Net Income (Non-GAAP) of $121.3 million

• Return on Average Common Equity of 8.4%; Return on Average Tangible Common Equity (Non-GAAP) of 13.6% and Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 14.4%*

• Return on Average Assets ("ROAA") of 1.03% and Adjusted ROAA (Non-GAAP) of 1.08%*

• Pre-Provision Net Revenue ("PPNR") per Weighted Average Diluted Share (Non-GAAP) of $2.28

• Book Value per Share of $72.82; Tangible Book Value ("TBV") per Share (Non-GAAP) of $46.48

∗ Annualized percentages

Performance

• Net Interest Income of $344 million; Core Net Interest Income (excluding loan accretion) (Non-GAAP) of $340 million

• Net Interest Margin ("NIM"), non-tax equivalent of 3.40% and tax equivalent (Non-GAAP) of 3.41%

• Net charge-offs of $2.7 million, or 0.03% annualized; $12.7 million Provision for Credit Losses ("PCL"), including release for unfunded commitments; total allowance for credit losses ("ACL") plus reserve for unfunded commitments of 1.60%

• Noninterest Income of $72 million; Noninterest Income represented 0.64% of average assets for the first quarter of 2024

• Recorded FDIC special assessment expense of $3.9 million

• Efficiency Ratio of 58% and Adjusted Efficiency Ratio (Non-GAAP) of 56%

Balance Sheet

• Loans increased $279 million, or 3% annualized, led by consumer real estate; ending loan to deposit ratio of 88%

• Deposits increased $130 million, or 1% annualized

• Total deposit cost of 1.74%, up 0.14% from prior quarter, resulting in a 33% cycle-to-date beta

• Repurchased a total of 100,000 shares during 1Q 2024 at a weighted average price of $79.85

• Strong capital position with Tangible Common Equity, Total Risk-Based Capital, Tier 1 Leverage, and Tier 1 Common Equity ratios of 8.2%, 14.4%, 9.6%, and 11.9%, respectively†

† Preliminary

Subsequent Events

• The Board of Directors of the Company declared a quarterly cash dividend on its common stock of $0.52 per share, payable on May 17, 2024 to shareholders of record as of May 10, 2024

Financial Performance

		Three Months Ended
(Dollars in thousands, except per share data)		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
INCOME STATEMENT		2024			2023			2023			2023			2023
Interest Income
Loans, including fees (1)		$	463,688		$	459,880		$	443,805		$	419,355		$	393,366
Investment securities, trading securities, federal funds sold and securities
purchased under agreements to resell			53,567			55,555			56,704			58,698			57,043
Total interest income			517,255			515,435			500,509			478,053			450,409
Interest Expense
Deposits			160,162			149,584			133,944			100,787			55,942
Federal funds purchased, securities sold under agreements
to repurchase, and other borrowings			13,157			11,620			11,194			15,523			13,204
Total interest expense			173,319			161,204			145,138			116,310			69,146
Net Interest Income			343,936			354,231			355,371			361,743			381,263
Provision for credit losses			12,686			9,893			32,709			38,389			33,091
Net Interest Income after Provision for Credit Losses			331,250			344,338			322,662			323,354			348,172
Noninterest Income			71,558			65,489			72,848			77,214			71,355
Noninterest Expense
Operating expense			240,923			245,774			238,042			240,818			231,093
Merger, branch consolidation, severance related and other expense (8)			4,513			1,778			164			1,808			9,412
FDIC special assessment			3,854			25,691			—			—			—
Total noninterest expense			249,290			273,243			238,206			242,626			240,505
Income before Income Taxes Provision			153,518			136,584			157,304			157,942			179,022
Income taxes provision			38,462			29,793			33,160			34,495			39,096
Net Income		$	115,056		$	106,791		$	124,144		$	123,447		$	139,926
Adjusted Net Income (non-GAAP) (2)
Net Income (GAAP)		$	115,056		$	106,791		$	124,144		$	123,447		$	139,926
Securities losses (gains), net of tax			—			2			—			—			(35)
Merger, branch consolidation, severance related and other expense, net of tax (8)			3,382			1,391			130			1,414			7,356
FDIC special assessment, net of tax			2,888			20,087			—			—			—
Adjusted Net Income (non-GAAP)		$	121,326		$	128,271		$	124,274		$	124,861		$	147,247
Basic earnings per common share		$	1.51		$	1.40		$	1.63		$	1.62		$	1.84
Diluted earnings per common share		$	1.50		$	1.39		$	1.62		$	1.62		$	1.83
Adjusted net income per common share - Basic (non-GAAP) (2)		$	1.59		$	1.69		$	1.63		$	1.64		$	1.94
Adjusted net income per common share - Diluted (non-GAAP) (2)		$	1.58		$	1.67		$	1.62		$	1.63		$	1.93
Dividends per common share		$	0.52		$	0.52		$	0.52		$	0.50		$	0.50
Basic weighted-average common shares outstanding			76,301,411			76,100,187			76,139,170			76,057,977			75,902,440
Diluted weighted-average common shares outstanding			76,660,081			76,634,100			76,571,430			76,417,537			76,388,954
Effective tax rate			25.05 %			21.81 %			21.08 %			21.84 %			21.84 %

 

Performance and Capital Ratios

		Three Months Ended
		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
		2024			2023			2023			2023			2023
PERFORMANCE RATIOS
Return on average assets (annualized)			1.03	%		0.94	%		1.10	%		1.11	%		1.29	%
Adjusted return on average assets (annualized) (non-GAAP) (2)			1.08	%		1.13	%		1.10	%		1.12	%		1.35	%
Return on average common equity (annualized)			8.36	%		7.99	%		9.24	%		9.34	%		10.96	%
Adjusted return on average common equity (annualized) (non-GAAP) (2)			8.81	%		9.60	%		9.25	%		9.45	%		11.53	%
Return on average tangible common equity (annualized) (non-GAAP) (3)			13.63	%		13.53	%		15.52	%		15.81	%		18.81	%
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)			14.35	%		16.12	%		15.54	%		15.98	%		19.75	%
Efficiency ratio (tax equivalent)			58.48	%		63.43	%		54.00	%		53.59	%		51.41	%
Adjusted efficiency ratio (non-GAAP) (4)			56.47	%		56.89	%		53.96	%		53.18	%		49.34	%
Dividend payout ratio (5)			34.42	%		37.01	%		31.84	%		30.75	%		27.09	%
Book value per common share		$	72.82		$	72.78		$	68.81		$	69.61		$	69.19
Tangible book value per common share (non-GAAP) (3)		$	46.48		$	46.32		$	42.26		$	42.96		$	42.40
CAPITAL RATIOS
Equity-to-assets			12.3	%		12.3	%		11.6	%		11.8	%		11.7	%
Tangible equity-to-tangible assets (non-GAAP) (3)			8.2	%		8.2	%		7.5	%		7.6	%		7.5	%
Tier 1 leverage (6)			9.6	%		9.4	%		9.3	%		9.2	%		9.1	%
Tier 1 common equity (6)			11.9	%		11.8	%		11.5	%		11.3	%		11.1	%
Tier 1 risk-based capital (6)			11.9	%		11.8	%		11.5	%		11.3	%		11.1	%
Total risk-based capital (6)			14.4	%		14.1	%		13.8	%		13.5	%		13.3	%

 

Balance Sheet

		Ending Balance
(Dollars in thousands, except per share and share data)		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
BALANCE SHEET		2024			2023			2023			2023			2023
Assets
Cash and due from banks		$	478,271		$	510,922		$	514,917		$	552,900		$	558,158
Federal funds sold and interest-earning deposits with banks			731,186			487,955			814,220			960,849			1,438,504
Cash and cash equivalents			1,209,457			998,877			1,329,137			1,513,749			1,996,662
Trading securities, at fair value			66,188			31,321			114,154			56,580			16,039
Investment securities:
Securities held to maturity			2,446,589			2,487,440			2,533,713			2,585,155			2,636,673
Securities available for sale, at fair value			4,598,400			4,784,388			4,623,618			4,949,334			5,159,999
Other investments			187,285			192,043			187,152			196,728			217,991
Total investment securities			7,232,274			7,463,871			7,344,483			7,731,217			8,014,663
Loans held for sale			56,553			50,888			27,443			42,951			27,289
Loans:
Purchased credit deteriorated			1,031,283			1,108,813			1,171,543			1,269,983			1,325,400
Purchased non-credit deteriorated			4,534,583			4,796,913			5,064,254			5,275,913			5,620,290
Non-acquired			27,101,444			26,482,763			25,780,875			24,990,889			23,750,452
Less allowance for credit losses			(469,654)			(456,573)			(447,956)			(427,392)			(370,645)
Loans, net			32,197,656			31,931,916			31,568,716			31,109,393			30,325,497
Premises and equipment, net			512,635			519,197			516,583			518,353			517,146
Bank owned life insurance			997,562			991,454			984,881			979,494			967,750
Mortgage servicing rights			87,970			85,164			89,476			87,539			85,406
Core deposit and other intangibles			83,193			88,776			95,094			102,256			109,603
Goodwill			1,923,106			1,923,106			1,923,106			1,923,106			1,923,106
Other assets			778,244			817,454			996,055			875,694			940,666
Total assets		$	45,144,838		$	44,902,024		$	44,989,128		$	44,940,332		$	44,923,827
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing		$	10,546,410		$	10,649,274		$	11,158,431		$	11,489,483		$	12,422,583
Interest-bearing			26,632,024			26,399,635			25,776,767			25,252,395			23,979,009
Total deposits			37,178,434			37,048,909			36,935,198			36,741,878			36,401,592
Federal funds purchased and securities
sold under agreements to repurchase			554,691			489,185			513,304			581,446			544,108
Other borrowings			391,812			491,904			391,997			792,090			1,292,182
Reserve for unfunded commitments			53,229			56,303			62,347			63,399			85,068
Other liabilities			1,419,663			1,282,625			1,855,295			1,471,509			1,351,873
Total liabilities			39,597,829			39,368,926			39,758,141			39,650,322			39,674,823
Shareholders' equity:
Common stock - $2.50 par value; authorized 160,000,000 shares			190,443			190,055			190,043			189,990			189,649
Surplus			4,230,345			4,240,413			4,238,753			4,228,910			4,224,503
Retained earnings			1,749,215			1,685,166			1,618,080			1,533,508			1,448,636
Accumulated other comprehensive loss			(622,994)			(582,536)			(815,889)			(662,398)			(613,784)
Total shareholders' equity			5,547,009			5,533,098			5,230,987			5,290,010			5,249,004
Total liabilities and shareholders' equity		$	45,144,838		$	44,902,024		$	44,989,128		$	44,940,332		$	44,923,827
Common shares issued and outstanding			76,177,163			76,022,039			76,017,366			75,995,979			75,859,665

 

Net Interest Income and Margin

		Three Months Ended
		Mar. 31, 2024								Dec. 31, 2023								Mar. 31, 2023
(Dollars in thousands)		Average			Income/			Yield/		Average			Income/			Yield/		Average			Income/			Yield/
YIELD ANALYSIS		Balance			Expense			Rate		Balance			Expense			Rate		Balance			Expense			Rate
Interest-Earning Assets:
Federal funds sold and interest-earning deposits with banks		$	668,349		$	8,254		4.97 %		$	814,244		$	10,029		4.89 %		$	759,239		$	8,921		4.77 %
Investment securities			7,465,735			45,313		2.44 %			7,382,800			45,526		2.45 %			8,232,582			48,122		2.37 %
Loans held for sale			42,872			681		6.39 %			28,878			552		7.58 %			23,123			402		7.05 %
Total loans held for investment			32,480,220			463,007		5.73 %			32,239,455			459,328		5.65 %			30,394,396			392,964		5.24 %
Total interest-earning assets			40,657,176			517,255		5.12 %			40,465,377			515,435		5.05 %			39,409,340			450,409		4.64 %
Noninterest-earning assets			4,353,987								4,572,255								4,695,138
Total Assets		$	45,011,163							$	45,037,632							$	44,104,478
Interest-Bearing Liabilities ("IBL"):
Transaction and money market accounts		$	19,544,019		$	117,292		2.41 %		$	18,957,647		$	107,994		2.26 %		$	16,874,909		$	40,516		0.97 %
Savings deposits			2,589,251			1,818		0.28 %			2,680,065			1,888		0.28 %			3,298,221			1,756		0.22 %
Certificates and other time deposits			4,282,749			41,052		3.86 %			4,294,555			39,702		3.67 %			3,114,354			13,670		1.78 %
Federal funds purchased			256,506			3,369		5.28 %			256,672			3,453		5.34 %			193,259			2,187		4.59 %
Repurchase agreements			280,674			1,358		1.95 %			265,839			1,458		2.18 %			373,563			666		0.72 %
Other borrowings			563,848			8,430		6.01 %			438,701			6,709		6.07 %			785,571			10,351		5.34 %
Total interest-bearing liabilities			27,517,047			173,319		2.53 %			26,893,479			161,204		2.38 %			24,639,877			69,146		1.14 %
Noninterest-bearing liabilities ("Non-IBL")			11,957,565								12,844,262								14,287,553
Shareholders' equity			5,536,551								5,299,891								5,177,048
Total Non-IBL and shareholders' equity			17,494,116								18,144,153								19,464,601
Total Liabilities and Shareholders' Equity		$	45,011,163							$	45,037,632							$	44,104,478
Net Interest Income and Margin (Non-Tax Equivalent)					$	343,936		3.40 %					$	354,231		3.47 %					$	381,263		3.92 %
Net Interest Margin (Tax Equivalent) (non-GAAP)								3.41 %								3.48 %								3.93 %
Total Deposit Cost (without Debt and Other Borrowings)								1.74 %								1.60 %								0.63 %
Overall Cost of Funds (including Demand Deposits)								1.83 %								1.69 %								0.75 %
Total Accretion on Acquired Loans (1)					$	4,287							$	3,870							$	7,398
Tax Equivalent ("TE") Adjustment					$	528							$	659							$	1,020

•	The remaining loan discount on acquired loans to be accreted into loan interest income totals $47.0 million as of March 31, 2024.

 

Noninterest Income and Expense

		Three Months Ended
		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
(Dollars in thousands)		2024			2023			2023			2023			2023
Noninterest Income:
Fees on deposit accounts		$	33,145		$	33,225		$	32,830		$	33,101		$	29,859
Mortgage banking income			6,169			2,191			2,478			4,354			4,332
Trust and investment services income			10,391			10,131			9,556			9,823			9,937
Securities (losses) gains, net			—			(2)			—			—			45
Correspondent banking and capital markets income			14,591			16,081			24,808			27,734			21,956
Expense on centrally-cleared variation margin			(10,280)			(12,677)			(11,892)			(8,547)			(8,362)
Total correspondent banking and capital markets income			4,311			3,404			12,916			19,187			13,594
Bank owned life insurance income			6,892			6,567			7,039			6,271			6,813
Other			10,650			9,973			8,029			4,478			6,775
Total Noninterest Income		$	71,558		$	65,489		$	72,848		$	77,214		$	71,355
Noninterest Expense:
Salaries and employee benefits		$	150,453		$	145,850		$	146,146		$	147,342		$	144,060
Occupancy expense			22,577			22,715			22,251			22,196			21,533
Information services expense			22,353			22,000			21,428			21,119			19,925
OREO and loan related expense (income)			606			948			613			(14)			169
Business development and staff related			5,799			7,492			5,995			6,672			5,957
Amortization of intangibles			5,998			6,615			6,616			7,028			7,299
Professional fees			3,115			7,025			3,456			4,364			3,702
Supplies and printing expense			2,540			2,761			2,623			2,554			2,640
FDIC assessment and other regulatory charges			8,534			8,325			8,632			9,819			6,294
Advertising and marketing			1,984			2,826			3,009			1,521			2,118
Other operating expenses			16,964			19,217			17,273			18,217			17,396
Merger, branch consolidation, severance related and other expense (8)			4,513			1,778			164			1,808			9,412
FDIC special assessment			3,854			25,691			—			—			—
Total Noninterest Expense		$	249,290		$	273,243		$	238,206		$	242,626		$	240,505

 

Loans and Deposits

The following table presents a summary of the loan portfolio by type:

		Ending Balance
(Dollars in thousands)		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
LOAN PORTFOLIO (7)		2024			2023			2023			2023			2023
Construction and land development * †		$	2,437,343		$	2,923,514		$	2,776,241		$	2,817,125		$	2,749,290
Investor commercial real estate*			9,752,529			9,227,968			9,372,683			9,187,948			8,957,507
Commercial owner occupied real estate			5,511,855			5,497,671			5,539,097			5,585,951			5,522,514
Commercial and industrial			5,544,131			5,504,539			5,458,229			5,378,294			5,321,306
Consumer real estate *			8,223,066			7,993,450			7,608,145			7,275,495			6,860,831
Consumer/other			1,198,386			1,241,347			1,262,277			1,291,972			1,284,694
Total Loans		$	32,667,310		$	32,388,489		$	32,016,672		$	31,536,785		$	30,696,142

*	Single family home construction-to-permanent loans originated by the Company's mortgage banking division are included in construction and land development category until completion.  Investor commercial real estate loans include commercial non-owner occupied real estate and other income producing property.  Consumer real estate includes consumer owner occupied real estate and home equity loans.
†	Includes single family home construction-to-permanent loans of $623.9 million, $715.5 million, $863.1 million, $928.4 million, and $893.7 million for the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.

		Ending Balance
(Dollars in thousands)		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
DEPOSITS		2024			2023			2023			2023			2023
Noninterest-bearing checking		$	10,546,410		$	10,649,274		$	11,158,431		$	11,489,483		$	12,422,583
Interest-bearing checking			7,898,835			7,978,799			7,806,243			8,185,609			8,316,023
Savings			2,557,203			2,632,212			2,760,166			2,931,320			3,156,214
Money market			11,895,385			11,538,671			10,756,431			9,710,032			8,388,275
Time deposits			4,280,601			4,249,953			4,453,927			4,425,434			4,118,497
Total Deposits		$	37,178,434		$	37,048,909		$	36,935,198		$	36,741,878		$	36,401,592
Core Deposits (excludes Time Deposits)		$	32,897,833		$	32,798,956		$	32,481,271		$	32,316,444		$	32,283,095

 

Asset Quality

		Ending Balance
		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
(Dollars in thousands)		2024			2023			2023			2023			2023
NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonaccrual loans and restructured loans on nonaccrual		$	106,189		$	110,467		$	105,856		$	104,772		$	68,176
Accruing loans past due 90 days or more			2,497			11,305			783			3,620			2,667
Non-acquired OREO and other nonperforming assets			1,589			711			449			227			186
Total non-acquired nonperforming assets			110,275			122,483			107,088			108,619			71,029
Acquired
Acquired nonaccrual loans and restructured loans on nonaccrual			63,451			59,755			57,464			60,734			52,795
Accruing loans past due 90 days or more			135			1,174			1,821			571			983
Acquired OREO and other nonperforming assets			655			712			378			981			3,446
Total acquired nonperforming assets			64,241			61,641			59,663			62,286			57,224
Total nonperforming assets		$	174,516		$	184,124		$	166,751		$	170,905		$	128,253

 

		Three Months Ended
		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
		2024			2023			2023			2023			2023
ASSET QUALITY RATIOS (7):
Allowance for credit losses as a percentage of loans			1.44 %			1.41 %			1.40 %			1.36 %			1.21 %
Allowance for credit losses, including reserve for unfunded commitments, as a percentage of loans			1.60 %			1.58 %			1.59 %			1.56 %			1.48 %
Allowance for credit losses as a percentage of nonperforming loans			272.62 %			249.90 %			269.98 %			251.86 %			297.42 %
Net charge-offs as a percentage of average loans (annualized)			0.03 %			0.09 %			0.16 %			0.04 %			0.01 %
Total nonperforming assets as a percentage of total assets			0.39 %			0.41 %			0.37 %			0.38 %			0.29 %
Nonperforming loans as a percentage of period end loans			0.53 %			0.56 %			0.52 %			0.54 %			0.41 %

 

Current Expected Credit Losses ("CECL")

Below is a table showing the roll forward of the ACL and UFC for the first quarter of 2024:

		Allowance for Credit Losses ("ACL and UFC")
(Dollars in thousands)		NonPCD ACL			PCD ACL			Total ACL			UFC
Ending balance 12/31/2023		$	423,876		$	32,697		$	456,573		$	56,303
Charge offs			(4,829)			—			(4,829)			—
Acquired charge offs			(2,889)			(222)			(3,111)			—
Recoveries			2,703			—			2,703			—
Acquired recoveries			272			2,286			2,558			—
Provision (recovery) for credit losses			20,055			(4,295)			15,760			(3,074)
Ending balance 3/31/2024		$	439,188		$	30,466		$	469,654		$	53,229
Period end loans		$	31,636,027		$	1,031,283		$	32,667,310			N/A
Allowance for Credit Losses to Loans			1.39 %			2.95 %			1.44 %			N/A
Unfunded commitments (off balance sheet) *											$	8,160,594
Reserve to unfunded commitments (off balance sheet)												0.65 %

*	Unfunded commitments exclude unconditionally cancelable commitments and letters of credit.

 

Conference Call

The Company will host a conference call to discuss its first quarter results at 9:00 a.m. Eastern Time on April 26, 2024.  Callers wishing to participate may call toll-free by dialing (888) 350-3899 within the US and (646) 960-0343 for all other locations.  The numbers for international participants are listed at https://events.q4irportal.com/custom/access/2324/.  The conference ID number is 4200408.   Alternatively, individuals may listen to the live webcast of the presentation by visiting SouthStateBank.com.  An audio replay of the live webcast is expected to be available by the evening of April 26, 2024 on the Investor Relations section of SouthStateBank.com.

SouthState Corporation is a financial services company headquartered in Winter Haven, Florida.  SouthState Bank, N.A., the Company's nationally chartered bank subsidiary, provides consumer, commercial, mortgage and wealth management solutions to more than one million customers throughout Florida, Alabama, Georgia, the Carolinas and Virginia.  The Bank also serves clients coast to coast through its correspondent banking division.  Additional information is available at SouthStateBank.com.

Non-GAAP Measures

Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables that provide a reconciliation of non-GAAP measures to GAAP measures.  Although other companies may use calculation methods that differ from those used by SouthState for non-GAAP measures, management believes that these non-GAAP measures provide additional useful information, which allows readers to evaluate the ongoing performance of the Company.  Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.  Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

 

(Dollars and shares in thousands, except per share data)		Three Months Ended
PRE-PROVISION NET REVENUE ("PPNR") (NON-GAAP)		Mar. 31, 2024				Dec. 31, 2023				Sep. 30, 2023				Jun. 30, 2023				Mar. 31, 2023
Net income (GAAP)		$	115,056			$	106,791			$	124,144			$	123,447			$	139,926
Provision for credit losses			12,686				9,893				32,709				38,389				33,091
Tax provision			38,462				29,793				33,160				34,495				39,096
Merger, branch consolidation, severance related and other expense (8)			4,513				1,778				164				1,808				9,412
FDIC special assessment			3,854				25,691				—				—				—
Securities losses (gains)			—				2				—				—				(45)
Pre-provision net revenue (PPNR) (Non-GAAP)		$	174,571			$	173,948			$	190,177			$	198,139			$	221,480
Average asset balance (GAAP)		$	45,011,163			$	45,037,632			$	44,841,319			$	44,628,124			$	44,104,478
PPNR ROAA			1.56	%			1.53	%			1.68	%			1.78	%			2.04	%
Diluted weighted-average common shares outstanding			76,660				76,634				76,571				76,418				76,389
PPNR per weighted-average common shares outstanding		$	2.28			$	2.27			$	2.48			$	2.59			$	2.90
(Dollars in thousands)		Three Months Ended
CORE NET INTEREST INCOME (NON-GAAP)		Mar. 31, 2024				Dec. 31, 2023				Sep. 30, 2023				Jun. 30, 2023				Mar. 31, 2023
Net interest income (GAAP)		$	343,936			$	354,231			$	355,371			$	361,743			$	381,263
Less:
Total accretion on acquired loans			4,287				3,870				4,053				5,481				7,398
Core net interest income (Non-GAAP)		$	339,649			$	350,361			$	351,318			$	356,262			$	373,865
NET INTEREST MARGIN ("NIM"), TE (NON-GAAP)
Net interest income (GAAP)		$	343,936			$	354,231			$	355,371			$	361,743			$	381,263
Total average interest-earning assets			40,657,176				40,465,377				40,376,380				40,127,836				39,409,340
NIM, non-tax equivalent			3.40	%			3.47	%			3.49	%			3.62	%			3.92	%
Tax equivalent adjustment (included in NIM, TE)			528				659				646				698				1,020
Net interest income, tax equivalent (Non-GAAP)		$	344,464			$	354,890			$	356,017			$	362,441			$	382,283
NIM, TE (Non-GAAP)			3.41	%			3.48	%			3.50	%			3.62	%			3.93	%

 

		Three Months Ended
(Dollars in thousands, except per share data)		Mar. 31,				Dec. 31,				Sep. 30,				Jun. 30,				Mar. 31,
RECONCILIATION OF GAAP TO NON-GAAP		2024				2023				2023				2023				2023
Adjusted Net Income (non-GAAP) (2)
Net income (GAAP)		$	115,056			$	106,791			$	124,144			$	123,447			$	139,926
Securities losses (gains), net of tax			—				2				—				—				(35)
Merger, branch consolidation, severance related and other expense, net of tax (8)			3,382				1,391				130				1,414				7,356
FDIC special assessment, net of tax			2,888				20,087				—				—				—
Adjusted net income (non-GAAP)		$	121,326			$	128,271			$	124,274			$	124,861			$	147,247
Adjusted Net Income per Common Share - Basic (2)
Earnings per common share - Basic (GAAP)		$	1.51			$	1.40			$	1.63			$	1.62			$	1.84
Effect to adjust for securities losses (gains), net of tax			—				0.00				—				—				(0.00)
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)			0.04				0.03				0.00				0.02				0.10
Effect to adjust for FDIC special assessment, net of tax			0.04				0.26				—				—				—
Adjusted net income per common share - Basic (non-GAAP)		$	1.59			$	1.69			$	1.63			$	1.64			$	1.94
Adjusted Net Income per Common Share - Diluted (2)
Earnings per common share - Diluted (GAAP)		$	1.50			$	1.39			$	1.62			$	1.62			$	1.83
Effect to adjust for securities losses (gains), net of tax			—				—				—				—				(0.00)
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)			0.04				0.02				0.00				0.01				0.10
Effect to adjust for FDIC special assessment, net of tax			0.04				0.26				—				—				—
Adjusted net income per common share - Diluted (non-GAAP)		$	1.58			$	1.67			$	1.62			$	1.63			$	1.93
Adjusted Return on Average Assets (2)
Return on average assets (GAAP)			1.03	%			0.94	%			1.10	%			1.11	%			1.29	%
Effect to adjust for securities losses (gains), net of tax			—	%			0.00	%			—	%			—	%			(0.00)	%
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)			0.02	%			0.01	%			—	%			0.01	%			0.06	%
Effect to adjust for FDIC special assessment, net of tax			0.03	%			0.18	%			—	%			—	%			—	%
Adjusted return on average assets (non-GAAP)			1.08	%			1.13	%			1.10	%			1.12	%			1.35	%
Adjusted Return on Average Common Equity (2)
Return on average common equity (GAAP)			8.36	%			7.99	%			9.24	%			9.34	%			10.96	%
Effect to adjust for securities losses (gains), net of tax			—	%			0.00	%			—	%			—	%			(0.00)	%
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)			0.24	%			0.11	%			0.01	%			0.11	%			0.57	%
Effect to adjust for FDIC special assessment, net of tax			0.21	%			1.50	%			—	%			—	%			—	%
Adjusted return on average common equity (non-GAAP)			8.81	%			9.60	%			9.25	%			9.45	%			11.53	%
Return on Average Common Tangible Equity (3)
Return on average common equity (GAAP)			8.36	%			7.99	%			9.24	%			9.34	%			10.96	%
Effect to adjust for intangible assets			5.27	%			5.54	%			6.28	%			6.47	%			7.85	%
Return on average tangible equity (non-GAAP)			13.63	%			13.53	%			15.52	%			15.81	%			18.81	%
Adjusted Return on Average Common Tangible Equity (2) (3)
Return on average common equity (GAAP)			8.36	%			7.99	%			9.24	%			9.34	%			10.96	%
Effect to adjust for securities losses (gains), net of tax			—	%			0.00	%			—	%			—	%			(0.00)	%
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)			0.25	%			0.10	%			0.01	%			0.11	%			0.58	%
Effect to adjust for FDIC special assessment, net of tax			0.21	%			1.50	%			—	%			—	%			—	%
Effect to adjust for intangible assets, net of tax			5.53	%			6.53	%			6.29	%			6.53	%			8.21	%
Adjusted return on average common tangible equity (non-GAAP)			14.35	%			16.12	%			15.54	%			15.98	%			19.75	%
Adjusted Efficiency Ratio (4)
Efficiency ratio			58.48	%			63.43	%			54.00	%			53.59	%			51.41	%
Effect to adjust for merger, branch consolidation, severance related and other expense (8)			(1.08)	%			(0.43)	%			(0.04)	%			(0.41)	%			(2.07)	%
Effect to adjust for FDIC special assessment			(0.93)	%			(6.11)	%			—	%			—	%			—	%
Adjusted efficiency ratio			56.47	%			56.89	%			53.96	%			53.18	%			49.34	%
Tangible Book Value Per Common Share (3)
Book value per common share (GAAP)		$	72.82			$	72.78			$	68.81			$	69.61			$	69.19
Effect to adjust for intangible assets			(26.34)				(26.46)				(26.55)				(26.65)				(26.79)
Tangible book value per common share (non-GAAP)		$	46.48			$	46.32			$	42.26			$	42.96			$	42.40
Tangible Equity-to-Tangible Assets (3)
Equity-to-assets (GAAP)			12.29	%			12.32	%			11.63	%			11.77	%			11.68	%
Effect to adjust for intangible assets			(4.08)	%			(4.11)	%			(4.15)	%			(4.16)	%			(4.18)	%
Tangible equity-to-tangible assets (non-GAAP)			8.21	%			8.21	%			7.48	%			7.61	%			7.50	%

 

Footnotes to tables:
(1)	Includes loan accretion (interest) income related to the discount on acquired loans of $4.3 million, $3.9 million, $4.1 million, $5.5 million, and $7.4 million during the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.
(2)	Adjusted earnings, adjusted return on average assets, adjusted EPS, and adjusted return on average equity are non-GAAP measures and exclude the gains or losses on sales of securities, merger, branch consolidation, severance related and other expense, and FDIC special assessments.  Management believes that non-GAAP adjusted measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company.  Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.  Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.  Adjusted earnings and the related adjusted return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis: (a) pre-tax merger, branch consolidation, severance related and other expense of $4.5 million, $1.8 million, $164,000, $1.8 million, and $9.4 million for the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively; (b) pre-tax net securities (losses) gains of $(2,000) and $45,000 for the quarters ended December 31, 2023 and March 31, 2023, respectively; and (c) pre-tax FDIC special assessment of $3.9 million and $25.7 million for the quarters ended March 31, 2024 and December 31, 2023, respectively.
(3)	The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets.  The tangible returns on equity and common equity measures also add back the after-tax amortization of intangibles to GAAP basis net income.  Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities.  Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.  Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. The sections titled "Reconciliation of GAAP to Non-GAAP" provide tables that reconcile GAAP measures to non-GAAP.
(4)	Adjusted efficiency ratio is calculated by taking the noninterest expense excluding merger, branch consolidation, severance related and other expense, FDIC special assessment and amortization of intangible assets, divided by net interest income and noninterest income excluding securities gains (losses). The pre-tax amortization expenses of intangible assets were $6.0 million, $6.6 million, $6.6 million, $7.0 million, and $7.3 million for the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.
(5)	The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period.
(6)	March 31, 2024 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C; all other periods are presented as filed.
(7)	Loan data excludes mortgage loans held for sale.
(8)	Includes pre-tax cyber incident costs of $4.4 million for the quarter ended March 31, 2024.

 

Cautionary Statement Regarding Forward Looking Statements

Statements included in this communication, which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on, among other things, management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and SouthState. Words and phrases such as "may," "approximately," "continue," "should," "expects," "projects," "anticipates," "is likely," "look ahead," "look forward," "believes," "will," "intends," "estimates," "strategy," "plan," "could," "potential," "possible" and variations of such words and similar expressions are intended to identify such forward-looking statements.

SouthState cautions readers that forward-looking statements are subject to certain risks, uncertainties and assumptions that are difficult to predict with regard to, among other things, timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, the following: (1) economic downturn risk, potentially resulting in deterioration in the credit markets, inflation, greater than expected noninterest expenses, excessive loan losses and other negative consequences, which risks could be exacerbated by potential negative economic developments resulting from federal spending cuts and/or one or more federal budget-related impasses or actions; (2) risks related to the ability of the Company to pursue its strategic plans which depend upon certain growth goals in our lines of business; (3) risks relating to the ability to retain our culture and attract and retain qualified people, which could be exacerbated by the continuing work from remote environment; (4) credit risks associated with an obligor's failure to meet the terms of any contract with the Bank or otherwise fail to perform as agreed under the terms of any loan-related document; (5) interest rate risk primarily resulting from our inability to effectively manage the risk, and their impact on the Bank's earnings, including from the correspondent and mortgage divisions, housing demand, the market value of the Bank's loan and securities portfolios, and the market value of SouthState's equity; (6) a decrease in our net interest income due to the interest rate environment; (7) liquidity risk affecting the Bank's ability to meet its obligations when they come due; (8) unexpected outflows of uninsured deposits may require us to sell investment securities at a loss; (9) potential deterioration in real estate values; (10) the loss of value of our investment portfolio could negatively impact market perceptions of us and could lead to deposit withdrawals; (11) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (12) transaction risk arising from problems with service or product delivery; (13) the impact of increasing digitization of the banking industry and movement of customers to on-line platforms, and the possible impact on the Bank's results of operations, customer base, expenses, suppliers and operations; (14) controls and procedures risk, including the potential failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures; (15) volatility in the financial services industry (including failures or rumors of failures of other depository institutions), along with actions taken by governmental agencies to address such turmoil, could affect the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital; (16) the impact of competition with other financial institutions, including deposit and loan pricing pressures and the resulting impact, including as a result of compression to net interest margin; (17) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards, and contractual obligations regarding data privacy and cybersecurity; (18) regulatory change risk resulting from new laws, rules, regulations, accounting principles, proscribed practices or ethical standards, including, without limitation, the possibility that regulatory agencies may require higher levels of capital above the current regulatory-mandated minimums and including the impact of special FDIC assessments, the Consumer Financial Protection Bureau regulations or other guidance, and the possibility of changes in accounting standards, policies, principles and practices; (19) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (20) reputation risk that adversely affects earnings or capital arising from negative public opinion including the effects of social media on market perceptions of us and banks generally; (21) cybersecurity risk related to the dependence of SouthState on internal computer systems and the technology of outside service providers, as well as the potential impacts of internal or external security breaches, which may subject the Company to potential business disruptions or financial losses resulting from deliberate attacks or unintentional events; (22) reputational and operational risks associated with environment, social and governance (ESG) matters, including the impact of changes in federal and state laws, regulations and guidance relating to climate change; (23) excessive loan losses; (24) reputational risk and possible higher than estimated reduced revenue from previously announced or proposed regulatory changes in the Bank's consumer programs and products; (25) operational, technological, cultural, regulatory, legal, credit and other risks associated with the exploration, consummation and integration of potential future acquisitions, whether involving stock or cash consideration; (26) catastrophic events such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including public health crises and infectious disease outbreaks, as well as any government actions in response to such events, and the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on SouthState and its customers and other constituencies; (27) geopolitical risk from terrorist activities and armed conflicts that may result in economic and supply disruptions, and loss of market and consumer confidence; (28) the risks of fluctuations in market prices for SouthState common stock that may or may not reflect economic condition or performance of SouthState; (29) the payment of dividends on SouthState common stock, which is subject to legal and regulatory limitations as well as the discretion of the board of directors of SouthState, SouthState's performance and other factors; (30) ownership dilution risk associated with potential acquisitions in which SouthState's stock may be issued as consideration for an acquired company; and (31) other factors that may affect future results of SouthState, as disclosed in SouthState's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by SouthState with the U.S. Securities and Exchange Commission ("SEC") and available on the SEC's website at http://www.sec.gov, any of which could cause actual results to differ materially from future results expressed, implied or otherwise anticipated by such forward-looking statements.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. SouthState does not undertake any obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Cision

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SOURCE SouthState Corporation