SouthState Corporation Reports Fourth Quarter 2023 Results, Declares Quarterly Cash Dividend
WINTER HAVEN, Fla., Jan. 25, 2024 /PRNewswire/ -- SouthState Corporation (NYSE: SSB) today released its unaudited results of operations and other financial information for the three-month and twelve-month periods ended December 31, 2023.
"We ended a year that demonstrated the resilience of the SouthState deposit franchise in the face of unprecedented change. In addition, loans grew 7% and we materially built our reserve", commented John C. Corbett, SouthState's Chief Executive Officer. "While we remain cautious of the lag effects of the recent rate increases, we see tremendous opportunity coming out of the cycle. Since the pandemic, Florida has grown by over one million people and SouthState benefits from operating in 4 of the 5 fastest growing states in the country. We are in a great position to deliver outsized results for our shareholders, and I want to thank our team for their hard work and service to our clients during 2023."
Highlights of the fourth quarter of 2023 include:
Returns
- Reported Diluted Earnings per Share ("EPS") of $1.39; Adjusted Diluted EPS (Non-GAAP) of $1.67
- Net Income of $106.8 million; Adjusted Net Income (Non-GAAP) of $128.3 million
- Return on Average Common Equity of 8.0%; Return on Average Tangible Common Equity (Non-GAAP) of 13.5% and Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 16.1%*
- Return on Average Assets ("ROAA") of 0.94% and Adjusted ROAA (Non-GAAP) of 1.13%*
- Pre-Provision Net Revenue ("PPNR") per Weighted Average Diluted Share (Non-GAAP) of $2.27
- Book Value per Share of $72.78; Tangible Book Value ("TBV") per Share (Non-GAAP) of $46.32
∗ Annualized percentages
Performance
- Net Interest Income of $354 million; Core Net Interest Income (excluding loan accretion) (Non-GAAP) of $350 million
- Net Interest Margin ("NIM"), non-tax equivalent of 3.47% and tax equivalent (Non-GAAP) of 3.48%
- Net charge-offs of $7.3 million, or 0.09% annualized; $9.9 million Provision for Credit Losses ("PCL"), including release for unfunded commitments; total allowance for credit losses ("ACL") plus reserve for unfunded commitments of 1.58%; year-to-date net charge-offs of $24.9 million, or 0.08%
- Noninterest Income of $65 million, down $7 million compared to the prior quarter, primarily due to a decrease in correspondent banking and capital markets income; Noninterest Income represented 0.58% of average assets for the fourth quarter of 2023
- Recorded FDIC special assessment expense of $26 million
- Efficiency Ratio of 63% and Adjusted Efficiency Ratio (Non-GAAP) of 57%
Balance Sheet
- Loans increased $372 million, or 5% annualized, led by consumer real estate; ending loan to deposit ratio of 87%
- Deposits increased $114 million, or 1% annualized, despite a $339 million decline in brokered CDs; excluding brokered CDs, deposits increased $453 million, or 5% annualized, from prior quarter
- Total deposit cost of 1.60%, up 0.16% from prior quarter, resulting in a 30% cycle-to-date beta
- Repurchased a total of 100,000 shares during 4Q 2023 at a weighted average price of $67.45
- Strong capital position with Tangible Common Equity, Total Risk-Based Capital, Tier 1 Leverage, and Tier 1 Common Equity ratios of 8.2%, 14.1%, 9.4%, and 11.8%, 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 February 16, 2024 to shareholders of record as of February 9, 2024
Financial Performance
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
(Dollars in thousands, except per share data) | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||
INCOME STATEMENT | 2023 | 2023 | 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Interest Income | ||||||||||||||||||||||
Loans, including fees (1) | $ | 459,880 | $ | 443,805 | $ | 419,355 | $ | 393,366 | $ | 359,552 | $ | 1,716,405 | $ | 1,178,026 | ||||||||
Investment securities, trading securities, federal funds sold and securities | ||||||||||||||||||||||
purchased under agreements to resell | 55,555 | 56,704 | 58,698 | 57,043 | 64,337 | 228,001 | 218,999 | |||||||||||||||
Total interest income | 515,435 | 500,509 | 478,053 | 450,409 | 423,889 | 1,944,406 | 1,397,025 | |||||||||||||||
Interest Expense | ||||||||||||||||||||||
Deposits | 149,584 | 133,944 | 100,787 | 55,942 | 19,945 | 440,257 | 36,984 | |||||||||||||||
Federal funds purchased, securities sold under agreements | ||||||||||||||||||||||
to repurchase, and other borrowings | 11,620 | 11,194 | 15,523 | 13,204 | 7,940 | 51,541 | 24,370 | |||||||||||||||
Total interest expense | 161,204 | 145,138 | 116,310 | 69,146 | 27,885 | 491,798 | 61,354 | |||||||||||||||
Net Interest Income | 354,231 | 355,371 | 361,743 | 381,263 | 396,004 | 1,452,608 | 1,335,671 | |||||||||||||||
Provision for credit losses | 9,893 | 32,709 | 38,389 | 33,091 | 47,142 | 114,082 | 81,855 | |||||||||||||||
Net Interest Income after Provision for Credit Losses | 344,338 | 322,662 | 323,354 | 348,172 | 348,862 | 1,338,526 | 1,253,816 | |||||||||||||||
Noninterest Income | 65,489 | 72,848 | 77,214 | 71,355 | 63,392 | 286,906 | 309,247 | |||||||||||||||
Noninterest Expense | ||||||||||||||||||||||
Operating expense | 245,774 | 238,042 | 240,818 | 231,093 | 227,957 | 955,727 | 898,813 | |||||||||||||||
Merger, branch consolidation and severance related expense | 1,778 | 164 | 1,808 | 9,412 | 1,542 | 13,162 | 30,888 | |||||||||||||||
FDIC special assessment | 25,691 | — | — | — | — | 25,691 | — | |||||||||||||||
Total noninterest expense | 273,243 | 238,206 | 242,626 | 240,505 | 229,499 | 994,580 | 929,701 | |||||||||||||||
Income before Income Taxes Provision | 136,584 | 157,304 | 157,942 | 179,022 | 182,755 | 630,852 | 633,362 | |||||||||||||||
Income taxes provision | 29,793 | 33,160 | 34,495 | 39,096 | 39,253 | 136,544 | 137,313 | |||||||||||||||
Net Income | $ | 106,791 | $ | 124,144 | $ | 123,447 | $ | 139,926 | $ | 143,502 | $ | 494,308 | $ | 496,049 | ||||||||
Adjusted Net Income (non-GAAP) (2) | ||||||||||||||||||||||
Net Income (GAAP) | $ | 106,791 | $ | 124,144 | $ | 123,447 | $ | 139,926 | $ | 143,502 | $ | 494,308 | $ | 496,049 | ||||||||
Securities losses (gains), net of tax | 2 | — | — | (35) | — | (33) | (24) | |||||||||||||||
Initial provision for credit losses - NonPCD loans and UFC from ACBI, net of tax | — | — | — | — | — | — | 13,492 | |||||||||||||||
Merger, branch consolidation and severance related expense, net of tax | 1,391 | 130 | 1,414 | 7,356 | 1,211 | 10,291 | 24,163 | |||||||||||||||
FDIC special assessment, net of tax | 20,087 | — | — | — | — | 20,087 | — | |||||||||||||||
Adjusted Net Income (non-GAAP) | $ | 128,271 | $ | 124,274 | $ | 124,861 | $ | 147,247 | $ | 144,713 | $ | 524,653 | $ | 533,680 | ||||||||
Basic earnings per common share | $ | 1.40 | $ | 1.63 | $ | 1.62 | $ | 1.84 | $ | 1.90 | $ | 6.50 | $ | 6.65 | ||||||||
Diluted earnings per common share | $ | 1.39 | $ | 1.62 | $ | 1.62 | $ | 1.83 | $ | 1.88 | $ | 6.46 | $ | 6.60 | ||||||||
Adjusted net income per common share - Basic (non-GAAP) (2) | $ | 1.69 | $ | 1.63 | $ | 1.64 | $ | 1.94 | $ | 1.91 | $ | 6.90 | $ | 7.16 | ||||||||
Adjusted net income per common share - Diluted (non-GAAP) (2) | $ | 1.67 | $ | 1.62 | $ | 1.63 | $ | 1.93 | $ | 1.90 | $ | 6.86 | $ | 7.10 | ||||||||
Dividends per common share | $ | 0.52 | $ | 0.52 | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 2.04 | $ | 1.98 | ||||||||
Basic weighted-average common shares outstanding | 76,100,187 | 76,139,170 | 76,057,977 | 75,902,440 | 75,639,640 | 76,050,730 | 74,550,708 | |||||||||||||||
Diluted weighted-average common shares outstanding | 76,634,100 | 76,571,430 | 76,417,537 | 76,388,954 | 76,326,777 | 76,479,557 | 75,181,305 | |||||||||||||||
Effective tax rate | 21.81 % | 21.08 % | 21.84 % | 21.84 % | 21.48 % | 21.64 % | 21.68 % | |||||||||||||||
Performance and Capital Ratios
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||
2023 | 2023 | 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
PERFORMANCE RATIOS | |||||||||||||||||||||
Return on average assets (annualized) | 0.94 | % | 1.10 | % | 1.11 | % | 1.29 | % | 1.28 | % | 1.11 | % | 1.12 | % | |||||||
Adjusted return on average assets (annualized) (non-GAAP) (2) | 1.13 | % | 1.10 | % | 1.12 | % | 1.35 | % | 1.29 | % | 1.17 | % | 1.20 | % | |||||||
Return on average common equity (annualized) | 7.99 | % | 9.24 | % | 9.34 | % | 10.96 | % | 11.41 | % | 9.37 | % | 9.84 | % | |||||||
Adjusted return on average common equity (annualized) (non-GAAP) (2) | 9.60 | % | 9.25 | % | 9.45 | % | 11.53 | % | 11.50 | % | 9.94 | % | 10.59 | % | |||||||
Return on average tangible common equity (annualized) (non-GAAP) (3) | 13.53 | % | 15.52 | % | 15.81 | % | 18.81 | % | 20.17 | % | 15.87 | % | 17.16 | % | |||||||
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3) | 16.12 | % | 15.54 | % | 15.98 | % | 19.75 | % | 20.33 | % | 16.80 | % | 18.40 | % | |||||||
Efficiency ratio (tax equivalent) | 63.43 | % | 54.00 | % | 53.59 | % | 51.41 | % | 47.96 | % | 55.50 | % | 54.21 | % | |||||||
Adjusted efficiency ratio (non-GAAP) (4) | 56.89 | % | 53.96 | % | 53.18 | % | 49.34 | % | 47.63 | % | 53.27 | % | 52.34 | % | |||||||
Dividend payout ratio (5) | 37.01 | % | 31.84 | % | 30.75 | % | 27.09 | % | 26.40 | % | 31.34 | % | 29.54 | % | |||||||
Book value per common share | $ | 72.78 | $ | 68.81 | $ | 69.61 | $ | 69.19 | $ | 67.04 | |||||||||||
Tangible book value per common share (non-GAAP) (3) | $ | 46.32 | $ | 42.26 | $ | 42.96 | $ | 42.40 | $ | 40.09 | |||||||||||
CAPITAL RATIOS | |||||||||||||||||||||
Equity-to-assets | 12.3 | % | 11.6 | % | 11.8 | % | 11.7 | % | 11.6 | % | |||||||||||
Tangible equity-to-tangible assets (non-GAAP) (3) | 8.2 | % | 7.5 | % | 7.6 | % | 7.5 | % | 7.2 | % | |||||||||||
Tier 1 leverage (6) | 9.4 | % | 9.3 | % | 9.2 | % | 9.1 | % | 8.7 | % | |||||||||||
Tier 1 common equity (6) | 11.8 | % | 11.5 | % | 11.3 | % | 11.1 | % | 11.0 | % | |||||||||||
Tier 1 risk-based capital (6) | 11.8 | % | 11.5 | % | 11.3 | % | 11.1 | % | 11.0 | % | |||||||||||
Total risk-based capital (6) | 14.1 | % | 13.8 | % | 13.5 | % | 13.3 | % | 13.0 | % | |||||||||||
Balance Sheet
Ending Balance | ||||||||||||||||
(Dollars in thousands, except per share and share data) | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||
BALANCE SHEET | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 510,922 | $ | 514,917 | $ | 552,900 | $ | 558,158 | $ | 548,387 | ||||||
Federal funds sold and interest-earning deposits with banks | 487,955 | 814,220 | 960,849 | 1,438,504 | 764,176 | |||||||||||
Cash and cash equivalents | 998,877 | 1,329,137 | 1,513,749 | 1,996,662 | 1,312,563 | |||||||||||
Trading securities, at fair value | 31,321 | 114,154 | 56,580 | 16,039 | 31,263 | |||||||||||
Investment securities: | ||||||||||||||||
Securities held to maturity | 2,487,440 | 2,533,713 | 2,585,155 | 2,636,673 | 2,683,241 | |||||||||||
Securities available for sale, at fair value | 4,784,388 | 4,623,618 | 4,949,334 | 5,159,999 | 5,326,822 | |||||||||||
Other investments | 192,043 | 187,152 | 196,728 | 217,991 | 179,717 | |||||||||||
Total investment securities | 7,463,871 | 7,344,483 | 7,731,217 | 8,014,663 | 8,189,780 | |||||||||||
Loans held for sale | 50,888 | 27,443 | 42,951 | 27,289 | 28,968 | |||||||||||
Loans: | ||||||||||||||||
Purchased credit deteriorated | 1,108,813 | 1,171,543 | 1,269,983 | 1,325,400 | 1,429,731 | |||||||||||
Purchased non-credit deteriorated | 4,796,913 | 5,064,254 | 5,275,913 | 5,620,290 | 5,943,092 | |||||||||||
Non-acquired | 26,482,763 | 25,780,875 | 24,990,889 | 23,750,452 | 22,805,039 | |||||||||||
Less allowance for credit losses | (456,573) | (447,956) | (427,392) | (370,645) | (356,444) | |||||||||||
Loans, net | 31,931,916 | 31,568,716 | 31,109,393 | 30,325,497 | 29,821,418 | |||||||||||
Premises and equipment, net | 519,197 | 516,583 | 518,353 | 517,146 | 520,635 | |||||||||||
Bank owned life insurance | 991,454 | 984,881 | 979,494 | 967,750 | 964,708 | |||||||||||
Mortgage servicing rights | 85,164 | 89,476 | 87,539 | 85,406 | 86,610 | |||||||||||
Core deposit and other intangibles | 88,776 | 95,094 | 102,256 | 109,603 | 116,450 | |||||||||||
Goodwill | 1,923,106 | 1,923,106 | 1,923,106 | 1,923,106 | 1,923,106 | |||||||||||
Other assets | 817,454 | 996,055 | 875,694 | 940,666 | 923,195 | |||||||||||
Total assets | $ | 44,902,024 | $ | 44,989,128 | $ | 44,940,332 | $ | 44,923,827 | $ | 43,918,696 | ||||||
Liabilities and Shareholders' Equity | ||||||||||||||||
Deposits: | ||||||||||||||||
Noninterest-bearing | $ | 10,649,274 | $ | 11,158,431 | $ | 11,489,483 | $ | 12,422,583 | $ | 13,168,656 | ||||||
Interest-bearing | 26,399,635 | 25,776,767 | 25,252,395 | 23,979,009 | 23,181,967 | |||||||||||
Total deposits | 37,048,909 | 36,935,198 | 36,741,878 | 36,401,592 | 36,350,623 | |||||||||||
Federal funds purchased and securities | ||||||||||||||||
sold under agreements to repurchase | 489,185 | 513,304 | 581,446 | 544,108 | 556,417 | |||||||||||
Other borrowings | 491,904 | 391,997 | 792,090 | 1,292,182 | 392,275 | |||||||||||
Reserve for unfunded commitments | 56,303 | 62,347 | 63,399 | 85,068 | 67,215 | |||||||||||
Other liabilities | 1,282,625 | 1,855,295 | 1,471,509 | 1,351,873 | 1,477,239 | |||||||||||
Total liabilities | 39,368,926 | 39,758,141 | 39,650,322 | 39,674,823 | 38,843,769 | |||||||||||
Shareholders' equity: | ||||||||||||||||
Common stock - $2.50 par value; authorized 160,000,000 shares | 190,055 | 190,043 | 189,990 | 189,649 | 189,261 | |||||||||||
Surplus | 4,240,413 | 4,238,753 | 4,228,910 | 4,224,503 | 4,215,712 | |||||||||||
Retained earnings | 1,685,166 | 1,618,080 | 1,533,508 | 1,448,636 | 1,347,042 | |||||||||||
Accumulated other comprehensive loss | (582,536) | (815,889) | (662,398) | (613,784) | (677,088) | |||||||||||
Total shareholders' equity | 5,533,098 | 5,230,987 | 5,290,010 | 5,249,004 | 5,074,927 | |||||||||||
Total liabilities and shareholders' equity | $ | 44,902,024 | $ | 44,989,128 | $ | 44,940,332 | $ | 44,923,827 | $ | 43,918,696 | ||||||
Common shares issued and outstanding | 76,022,039 | 76,017,366 | 75,995,979 | 75,859,665 | 75,704,563 | |||||||||||
Net Interest Income and Margin
Three Months Ended | |||||||||||||||||||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |||||||||||||||||||||||
(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 | $ | 814,244 | $ | 10,029 | 4.89 % | $ | 822,805 | $ | 10,831 | 5.22 % | $ | 1,849,877 | $ | 16,491 | 3.54 % | ||||||||||
Investment securities | 7,382,800 | 45,526 | 2.45 % | 7,714,079 | 45,873 | 2.36 % | 8,286,894 | 47,846 | 2.29 % | ||||||||||||||||
Loans held for sale | 28,878 | 552 | 7.58 % | 34,736 | 517 | 5.90 % | 25,633 | 401 | 6.21 % | ||||||||||||||||
Total loans, excluding PPP | 32,234,772 | 459,316 | 5.65 % | 31,799,469 | 443,275 | 5.53 % | 29,480,843 | 359,120 | 4.83 % | ||||||||||||||||
Total PPP loans | 4,683 | 12 | 1.02 % | 5,291 | 13 | 0.97 % | 12,489 | 31 | 0.98 % | ||||||||||||||||
Total loans held for investment | 32,239,455 | 459,328 | 5.65 % | 31,804,760 | 443,288 | 5.53 % | 29,493,332 | 359,151 | 4.83 % | ||||||||||||||||
Total interest-earning assets | 40,465,377 | 515,435 | 5.05 % | 40,376,380 | 500,509 | 4.92 % | 39,655,736 | 423,889 | 4.24 % | ||||||||||||||||
Noninterest-earning assets | 4,572,255 | 4,464,939 | 4,774,158 | ||||||||||||||||||||||
Total Assets | $ | 45,037,632 | $ | 44,841,319 | $ | 44,429,894 | |||||||||||||||||||
Interest-Bearing Liabilities ("IBL"): | |||||||||||||||||||||||||
Transaction and money market accounts | $ | 18,957,647 | $ | 107,994 | 2.26 % | $ | 18,291,300 | $ | 93,465 | 2.03 % | $ | 17,044,865 | $ | 16,901 | 0.39 % | ||||||||||
Savings deposits | 2,680,065 | 1,888 | 0.28 % | 2,845,250 | 1,919 | 0.27 % | 3,536,330 | 1,021 | 0.11 % | ||||||||||||||||
Certificates and other time deposits | 4,294,555 | 39,702 | 3.67 % | 4,413,855 | 38,560 | 3.47 % | 2,444,361 | 2,023 | 0.33 % | ||||||||||||||||
Federal funds purchased | 256,672 | 3,453 | 5.34 % | 236,732 | 3,128 | 5.24 % | 186,232 | 1,694 | 3.61 % | ||||||||||||||||
Repurchase agreements | 265,839 | 1,458 | 2.18 % | 303,339 | 1,163 | 1.52 % | 363,336 | 253 | 0.28 % | ||||||||||||||||
Other borrowings | 438,701 | 6,709 | 6.07 % | 456,187 | 6,903 | 6.00 % | 435,806 | 5,993 | 5.46 % | ||||||||||||||||
Total interest-bearing liabilities | 26,893,479 | 161,204 | 2.38 % | 26,546,663 | 145,138 | 2.17 % | 24,010,930 | 27,885 | 0.46 % | ||||||||||||||||
Noninterest-bearing liabilities ("Non-IBL") | 12,844,262 | 12,965,744 | 15,427,380 | ||||||||||||||||||||||
Shareholders' equity | 5,299,891 | 5,328,912 | 4,991,584 | ||||||||||||||||||||||
Total Non-IBL and shareholders' equity | 18,144,153 | 18,294,656 | 20,418,964 | ||||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 45,037,632 | $ | 44,841,319 | $ | 44,429,894 | |||||||||||||||||||
Net Interest Income and Margin (Non-Tax Equivalent) | $ | 354,231 | 3.47 % | $ | 355,371 | 3.49 % | $ | 396,004 | 3.96 % | ||||||||||||||||
Net Interest Margin (Tax Equivalent) (non-GAAP) | 3.48 % | 3.50 % | 3.99 % | ||||||||||||||||||||||
Total Deposit Cost (without Debt and Other Borrowings) | 1.60 % | 1.44 % | 0.21 % | ||||||||||||||||||||||
Overall Cost of Funds (including Demand Deposits) | 1.69 % | 1.52 % | 0.29 % | ||||||||||||||||||||||
Total Accretion on Acquired Loans (1) | $ | 3,870 | $ | 4,053 | $ | 7,350 | |||||||||||||||||||
Tax Equivalent ("TE") Adjustment | $ | 659 | $ | 646 | $ | 2,397 | |||||||||||||||||||
(1) The remaining loan discount on acquired loans to be accreted into loan interest income totals $51.3 million as of December 31, 2023. |
Noninterest Income and Expense
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Noninterest Income: | ||||||||||||||||||||||
Fees on deposit accounts | $ | 33,225 | $ | 32,830 | $ | 33,101 | $ | 29,859 | $ | 33,612 | $ | 129,015 | $ | 124,810 | ||||||||
Mortgage banking income (loss) | 2,191 | 2,478 | 4,354 | 4,332 | (545) | 13,355 | 17,790 | |||||||||||||||
Trust and investment services income | 10,131 | 9,556 | 9,823 | 9,937 | 9,867 | 39,447 | 39,019 | |||||||||||||||
Securities (losses) gains, net | (2) | — | — | 45 | — | 43 | 30 | |||||||||||||||
Correspondent banking and capital markets income | 16,081 | 24,808 | 27,734 | 21,956 | 16,760 | 90,579 | 92,910 | |||||||||||||||
Expense on centrally-cleared variation margin | (12,677) | (11,892) | (8,547) | (8,362) | (8,451) | (41,478) | (14,155) | |||||||||||||||
Total correspondent banking and capital markets income | 3,404 | 12,916 | 19,187 | 13,594 | 8,309 | 49,101 | 78,755 | |||||||||||||||
Bank owned life insurance income | 6,567 | 7,039 | 6,271 | 6,813 | 6,723 | 26,690 | 24,311 | |||||||||||||||
Other | 9,973 | 8,029 | 4,478 | 6,775 | 5,426 | 29,255 | 24,532 | |||||||||||||||
Total Noninterest Income | $ | 65,489 | $ | 72,848 | $ | 77,214 | $ | 71,355 | $ | 63,392 | $ | 286,906 | $ | 309,247 | ||||||||
Noninterest Expense: | ||||||||||||||||||||||
Salaries and employee benefits | $ | 145,850 | $ | 146,146 | $ | 147,342 | $ | 144,060 | $ | 140,440 | $ | 583,398 | $ | 554,704 | ||||||||
Occupancy expense | 22,715 | 22,251 | 22,196 | 21,533 | 22,412 | 88,695 | 89,501 | |||||||||||||||
Information services expense | 22,000 | 21,428 | 21,119 | 19,925 | 19,847 | 84,472 | 79,701 | |||||||||||||||
OREO and loan related (income) expense | 948 | 613 | (14) | 169 | 78 | 1,716 | 369 | |||||||||||||||
Business development and staff related | 7,492 | 5,995 | 6,672 | 5,957 | 5,851 | 26,116 | 20,133 | |||||||||||||||
Amortization of intangibles | 6,615 | 6,616 | 7,028 | 7,299 | 8,027 | 27,558 | 33,205 | |||||||||||||||
Professional fees | 7,025 | 3,456 | 4,364 | 3,702 | 3,756 | 18,547 | 15,331 | |||||||||||||||
Supplies and printing expense | 2,761 | 2,623 | 2,554 | 2,640 | 2,411 | 10,578 | 9,621 | |||||||||||||||
FDIC assessment and other regulatory charges | 8,325 | 8,632 | 9,819 | 6,294 | 6,589 | 33,070 | 23,033 | |||||||||||||||
Advertising and marketing | 2,826 | 3,009 | 1,521 | 2,118 | 2,669 | 9,474 | 8,888 | |||||||||||||||
Other operating expenses | 19,217 | 17,273 | 18,217 | 17,396 | 15,877 | 72,103 | 64,327 | |||||||||||||||
Merger, branch consolidation and severance related expense | 1,778 | 164 | 1,808 | 9,412 | 1,542 | 13,162 | 30,888 | |||||||||||||||
FDIC special assessment | 25,691 | — | — | — | — | 25,691 | — | |||||||||||||||
Total Noninterest Expense | $ | 273,243 | $ | 238,206 | $ | 242,626 | $ | 240,505 | $ | 229,499 | $ | 994,580 | $ | 929,701 | ||||||||
Loans and Deposits
The following table presents a summary of the loan portfolio by type:
Ending Balance | ||||||||||||||||
(Dollars in thousands) | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||
LOAN PORTFOLIO (7) | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||
Construction and land development * † | $ | 2,923,514 | $ | 2,776,241 | $ | 2,817,125 | $ | 2,749,290 | $ | 2,860,360 | ||||||
Investor commercial real estate* | 9,227,968 | 9,372,683 | 9,187,948 | 8,957,507 | 8,769,201 | |||||||||||
Commercial owner occupied real estate | 5,497,671 | 5,539,097 | 5,585,951 | 5,522,514 | 5,460,193 | |||||||||||
Commercial and industrial | 5,504,539 | 5,458,229 | 5,378,294 | 5,321,306 | 5,313,483 | |||||||||||
Consumer real estate * | 7,993,450 | 7,608,145 | 7,275,495 | 6,860,831 | 6,475,210 | |||||||||||
Consumer/other | 1,241,347 | 1,262,277 | 1,291,972 | 1,284,694 | 1,299,415 | |||||||||||
Total Loans | $ | 32,388,489 | $ | 32,016,672 | $ | 31,536,785 | $ | 30,696,142 | $ | 30,177,862 | ||||||
* 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 $715.5 million, $863.1 million, $928.4 million, $893.7 million, and $904.1 million, for the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively. |
Ending Balance | ||||||||||||||||
(Dollars in thousands) | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||
DEPOSITS | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||
Noninterest-bearing checking | $ | 10,649,274 | $ | 11,158,431 | $ | 11,489,483 | $ | 12,422,583 | $ | 13,168,656 | ||||||
Interest-bearing checking | 7,978,799 | 7,806,243 | 8,185,609 | 8,316,023 | 8,955,519 | |||||||||||
Savings | 2,632,212 | 2,760,166 | 2,931,320 | 3,156,214 | 3,464,351 | |||||||||||
Money market | 11,538,671 | 10,756,431 | 9,710,032 | 8,388,275 | 8,342,111 | |||||||||||
Time deposits | 4,249,953 | 4,453,927 | 4,425,434 | 4,118,497 | 2,419,986 | |||||||||||
Total Deposits | $ | 37,048,909 | $ | 36,935,198 | $ | 36,741,878 | $ | 36,401,592 | $ | 36,350,623 | ||||||
Core Deposits (excludes Time Deposits) | $ | 32,798,956 | $ | 32,481,271 | $ | 32,316,444 | $ | 32,283,095 | $ | 33,930,637 | ||||||
Asset Quality
Ending Balance | ||||||||||||||||
Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | ||||||||||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||
NONPERFORMING ASSETS: | ||||||||||||||||
Non-acquired | ||||||||||||||||
Non-acquired nonaccrual loans and restructured loans on nonaccrual | $ | 110,467 | $ | 105,856 | $ | 104,772 | $ | 68,176 | $ | 44,671 | ||||||
Accruing loans past due 90 days or more | 11,305 | 783 | 3,620 | 2,667 | 2,358 | |||||||||||
Non-acquired OREO and other nonperforming assets | 711 | 449 | 227 | 186 | 245 | |||||||||||
Total non-acquired nonperforming assets | 122,483 | 107,088 | 108,619 | 71,029 | 47,274 | |||||||||||
Acquired | ||||||||||||||||
Acquired nonaccrual loans and restructured loans on nonaccrual | 59,755 | 57,464 | 60,734 | 52,795 | 59,554 | |||||||||||
Accruing loans past due 90 days or more | 1,174 | 1,821 | 571 | 983 | 1,992 | |||||||||||
Acquired OREO and other nonperforming assets | 712 | 378 | 981 | 3,446 | 922 | |||||||||||
Total acquired nonperforming assets | 61,641 | 59,663 | 62,286 | 57,224 | 62,468 | |||||||||||
Total nonperforming assets | $ | 184,124 | $ | 166,751 | $ | 170,905 | $ | 128,253 | $ | 109,742 | ||||||
Three Months Ended | ||||||||||||||||
Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | ||||||||||||
2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||
ASSET QUALITY RATIOS (7): | ||||||||||||||||
Allowance for credit losses as a percentage of loans | 1.41 % | 1.40 % | 1.36 % | 1.21 % | 1.18 % | |||||||||||
Allowance for credit losses, including reserve for unfunded commitments, as a percentage of loans | 1.58 % | 1.59 % | 1.56 % | 1.48 % | 1.40 % | |||||||||||
Allowance for credit losses as a percentage of nonperforming loans | 249.90 % | 269.98 % | 251.86 % | 297.42 % | 328.29 % | |||||||||||
Net charge-offs (recoveries) as a percentage of average loans (annualized) | 0.09 % | 0.16 % | 0.04 % | 0.01 % | 0.01 % | |||||||||||
Total nonperforming assets as a percentage of total assets | 0.41 % | 0.37 % | 0.38 % | 0.29 % | 0.25 % | |||||||||||
Nonperforming loans as a percentage of period end loans | 0.56 % | 0.52 % | 0.54 % | 0.41 % | 0.36 % | |||||||||||
Current Expected Credit Losses ("CECL")
Below is a table showing the roll forward of the ACL and UFC for the fourth quarter of 2023:
Allowance for Credit Losses ("ACL and UFC") | |||||||||||||
(Dollars in thousands) | NonPCD ACL | PCD ACL | Total ACL | UFC | |||||||||
Ending balance 9/30/2023 | $ | 409,850 | $ | 38,106 | $ | 447,956 | $ | 62,347 | |||||
Charge offs | (8,398) | — | (8,398) | — | |||||||||
Acquired charge offs | (1,307) | (768) | (2,075) | — | |||||||||
Recoveries | 1,416 | — | 1,416 | — | |||||||||
Acquired recoveries | 788 | 948 | 1,736 | — | |||||||||
Provision (recovery) for credit losses | 21,527 | (5,589) | 15,938 | (6,044) | |||||||||
Ending balance 12/31/2023 | $ | 423,876 | $ | 32,697 | $ | 456,573 | $ | 56,303 | |||||
Period end loans | $ | 31,279,676 | $ | 1,108,813 | $ | 32,388,489 | N/A | ||||||
Allowance for Credit Losses to Loans | 1.36 % | 2.95 % | 1.41 % | N/A | |||||||||
Unfunded commitments (off balance sheet) * | $ | 8,457,055 | |||||||||||
Reserve to unfunded commitments (off balance sheet) | 0.67 % | ||||||||||||
* Unfunded commitments exclude unconditionally cancelable commitments and letters of credit. |
Conference Call
The Company will host a conference call to discuss its fourth quarter results at 9:00 a.m. Eastern Time on January 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 January 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) | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |||||||||||||||
Net income (GAAP) | $ | 106,791 | $ | 124,144 | $ | 123,447 | $ | 139,926 | $ | 143,502 | ||||||||||
Provision for credit losses | 9,893 | 32,709 | 38,389 | 33,091 | 47,142 | |||||||||||||||
Tax provision | 29,793 | 33,160 | 34,495 | 39,096 | 39,253 | |||||||||||||||
Merger, branch consolidation and severance related expense | 1,778 | 164 | 1,808 | 9,412 | 1,542 | |||||||||||||||
FDIC special assessment | 25,691 | — | — | — | — | |||||||||||||||
Securities losses (gains) | 2 | — | — | (45) | — | |||||||||||||||
Pre-provision net revenue (PPNR) (Non-GAAP) | $ | 173,948 | $ | 190,177 | $ | 198,139 | $ | 221,480 | $ | 231,439 | ||||||||||
Average asset balance (GAAP) | $ | 45,037,632 | $ | 44,841,319 | $ | 44,628,124 | $ | 44,104,478 | $ | 44,429,894 | ||||||||||
PPNR ROAA | 1.53 | % | 1.68 | % | 1.78 | % | 2.04 | % | 2.07 | % | ||||||||||
Diluted weighted-average common shares outstanding | 76,634 | 76,571 | 76,418 | 76,389 | 76,327 | |||||||||||||||
PPNR per weighted-average common shares outstanding | $ | 2.27 | $ | 2.48 | $ | 2.59 | $ | 2.90 | $ | 3.03 | ||||||||||
(Dollars in thousands) | Three Months Ended | |||||||||||||||||||
CORE NET INTEREST INCOME (NON-GAAP) | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |||||||||||||||
Net interest income (GAAP) | $ | 354,231 | $ | 355,371 | $ | 361,743 | $ | 381,263 | $ | 396,004 | ||||||||||
Less: | ||||||||||||||||||||
Total accretion on acquired loans | 3,870 | 4,053 | 5,481 | 7,398 | 7,350 | |||||||||||||||
Core net interest income (Non-GAAP) | $ | 350,361 | $ | 351,318 | $ | 356,262 | $ | 373,865 | $ | 388,654 | ||||||||||
NET INTEREST MARGIN ("NIM"), TE (NON-GAAP) | ||||||||||||||||||||
Net interest income (GAAP) | $ | 354,231 | $ | 355,371 | $ | 361,743 | $ | 381,263 | $ | 396,004 | ||||||||||
Total average interest-earning assets | 40,465,377 | 40,376,380 | 40,127,836 | 39,409,340 | 39,655,736 | |||||||||||||||
NIM, non-tax equivalent | 3.47 | % | 3.49 | % | 3.62 | % | 3.92 | % | 3.96 | % | ||||||||||
Tax equivalent adjustment (included in NIM, TE) | 659 | 646 | 698 | 1,020 | 2,397 | |||||||||||||||
Net interest income, tax equivalent (Non-GAAP) | $ | 354,890 | $ | 356,017 | $ | 362,441 | $ | 382,283 | $ | 398,401 | ||||||||||
NIM, TE (Non-GAAP) | 3.48 | % | 3.50 | % | 3.62 | % | 3.93 | % | 3.99 | % | ||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP | 2023 | 2023 | 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||
Adjusted Net Income (non-GAAP) (2) | ||||||||||||||||||||||||||||
Net income (GAAP) | $ | 106,791 | $ | 124,144 | $ | 123,447 | $ | 139,926 | $ | 143,502 | $ | 494,308 | $ | 496,049 | ||||||||||||||
Securities losses (gains), net of tax | 2 | — | — | (35) | — | (33) | (24) | |||||||||||||||||||||
PCL - NonPCD loans and UFC, net of tax | — | — | — | — | — | — | 13,492 | |||||||||||||||||||||
Merger, branch consolidation and severance related expense, net of tax | 1,391 | 130 | 1,414 | 7,356 | 1,211 | 10,291 | 24,163 | |||||||||||||||||||||
FDIC special assessment, net of tax | 20,087 | — | — | — | — | 20,087 | — | |||||||||||||||||||||
Adjusted net income (non-GAAP) | $ | 128,271 | $ | 124,274 | $ | 124,861 | $ | 147,247 | $ | 144,713 | $ | 524,653 | $ | 533,680 | ||||||||||||||
Adjusted Net Income per Common Share - Basic (2) | ||||||||||||||||||||||||||||
Earnings per common share - Basic (GAAP) | $ | 1.40 | $ | 1.63 | $ | 1.62 | $ | 1.84 | $ | 1.90 | $ | 6.50 | $ | 6.65 | ||||||||||||||
Effect to adjust for securities losses (gains) | 0.00 | — | — | (0.00) | — | (0.00) | (0.00) | |||||||||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | — | — | — | — | — | 0.19 | |||||||||||||||||||||
Effect to adjust for merger, branch consolidation and severance related expense, net of tax | 0.03 | 0.00 | 0.02 | 0.10 | 0.01 | 0.14 | 0.32 | |||||||||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.26 | — | — | — | — | 0.26 | — | |||||||||||||||||||||
Adjusted net income per common share - Basic (non-GAAP) | $ | 1.69 | $ | 1.63 | $ | 1.64 | $ | 1.94 | $ | 1.91 | $ | 6.90 | $ | 7.16 | ||||||||||||||
Adjusted Net Income per Common Share - Diluted (2) | ||||||||||||||||||||||||||||
Earnings per common share - Diluted (GAAP) | $ | 1.39 | $ | 1.62 | $ | 1.62 | $ | 1.83 | $ | 1.88 | $ | 6.46 | $ | 6.60 | ||||||||||||||
Effect to adjust for securities losses (gains) | 0.00 | — | — | (0.00) | — | (0.00) | (0.00) | |||||||||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | — | — | — | — | — | 0.18 | |||||||||||||||||||||
Effect to adjust for merger, branch consolidation and severance related expense, net of tax | 0.02 | 0.00 | 0.01 | 0.10 | 0.02 | 0.14 | 0.32 | |||||||||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.26 | — | — | — | — | 0.26 | — | |||||||||||||||||||||
Adjusted net income per common share - Diluted (non-GAAP) | $ | 1.67 | $ | 1.62 | $ | 1.63 | $ | 1.93 | $ | 1.90 | $ | 6.86 | $ | 7.10 | ||||||||||||||
Adjusted Return on Average Assets (2) | ||||||||||||||||||||||||||||
Return on average assets (GAAP) | 0.94 | % | 1.10 | % | 1.11 | % | 1.29 | % | 1.28 | % | 1.11 | % | 1.12 | % | ||||||||||||||
Effect to adjust for securities losses (gains) | 0.00 | % | — | % | — | % | (0.00) | % | — | % | (0.00) | % | (0.00) | % | ||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | % | — | % | — | % | — | % | — | % | — | % | 0.03 | % | ||||||||||||||
Effect to adjust for merger, branch consolidation and severance related expense, net of tax | 0.01 | % | — | % | 0.01 | % | 0.06 | % | 0.01 | % | 0.02 | % | 0.05 | % | ||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.18 | % | — | % | — | % | — | % | — | % | 0.04 | % | — | % | ||||||||||||||
Adjusted return on average assets (non-GAAP) | 1.13 | % | 1.10 | % | 1.12 | % | 1.35 | % | 1.29 | % | 1.17 | % | 1.20 | % | ||||||||||||||
Adjusted Return on Average Common Equity (2) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 7.99 | % | 9.24 | % | 9.34 | % | 10.96 | % | 11.41 | % | 9.37 | % | 9.84 | % | ||||||||||||||
Effect to adjust for securities losses (gains) | 0.00 | % | — | % | — | % | (0.00) | % | — | % | (0.00) | % | (0.00) | % | ||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | % | — | % | — | % | — | % | — | % | — | % | 0.27 | % | ||||||||||||||
Effect to adjust for merger, branch consolidation and severance related expense, net of tax | 0.11 | % | 0.01 | % | 0.11 | % | 0.57 | % | 0.09 | % | 0.19 | % | 0.48 | % | ||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 1.50 | % | — | % | — | % | — | % | — | % | 0.38 | % | — | % | ||||||||||||||
Adjusted return on average common equity (non-GAAP) | 9.60 | % | 9.25 | % | 9.45 | % | 11.53 | % | 11.50 | % | 9.94 | % | 10.59 | % | ||||||||||||||
Return on Average Common Tangible Equity (3) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 7.99 | % | 9.24 | % | 9.34 | % | 10.96 | % | 11.41 | % | 9.37 | % | 9.84 | % | ||||||||||||||
Effect to adjust for intangible assets | 5.54 | % | 6.28 | % | 6.47 | % | 7.85 | % | 8.76 | % | 6.50 | % | 7.32 | % | ||||||||||||||
Return on average tangible equity (non-GAAP) | 13.53 | % | 15.52 | % | 15.81 | % | 18.81 | % | 20.17 | % | 15.87 | % | 17.16 | % | ||||||||||||||
Adjusted Return on Average Common Tangible Equity (2) (3) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 7.99 | % | 9.24 | % | 9.34 | % | 10.96 | % | 11.41 | % | 9.37 | % | 9.84 | % | ||||||||||||||
Effect to adjust for securities losses (gains) | 0.00 | % | — | % | — | % | (0.00) | % | — | % | (0.00) | % | (0.00) | % | ||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | % | — | % | — | % | — | % | — | % | — | % | 0.27 | % | ||||||||||||||
Effect to adjust for merger, branch consolidation and severance related expense, net of tax | 0.10 | % | 0.01 | % | 0.11 | % | 0.58 | % | 0.10 | % | 0.20 | % | 0.48 | % | ||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 1.50 | % | — | % | — | % | — | % | — | % | 0.38 | % | — | % | ||||||||||||||
Effect to adjust for intangible assets | 6.53 | % | 6.29 | % | 6.53 | % | 8.21 | % | 8.82 | % | 6.85 | % | 7.81 | % | ||||||||||||||
Adjusted return on average common tangible equity (non-GAAP) | 16.12 | % | 15.54 | % | 15.98 | % | 19.75 | % | 20.33 | % | 16.80 | % | 18.40 | % | ||||||||||||||
Adjusted Efficiency Ratio (4) | ||||||||||||||||||||||||||||
Efficiency ratio | 63.43 | % | 54.00 | % | 53.59 | % | 51.41 | % | 47.96 | % | 55.50 | % | 54.21 | % | ||||||||||||||
Effect to adjust for merger, branch consolidation and severance related expense | (0.43) | % | (0.04) | % | (0.41) | % | (2.07) | % | (0.33) | % | (0.76) | % | (1.87) | % | ||||||||||||||
Effect to adjust for FDIC special assessment | (6.11) | % | — | % | — | % | — | % | — | % | (1.47) | % | — | % | ||||||||||||||
Adjusted efficiency ratio | 56.89 | % | 53.96 | % | 53.18 | % | 49.34 | % | 47.63 | % | 53.27 | % | 52.34 | % | ||||||||||||||
Tangible Book Value Per Common Share (3) | ||||||||||||||||||||||||||||
Book value per common share (GAAP) | $ | 72.78 | $ | 68.81 | $ | 69.61 | $ | 69.19 | $ | 67.04 | ||||||||||||||||||
Effect to adjust for intangible assets | (26.46) | (26.55) | (26.65) | (26.79) | (26.95) | |||||||||||||||||||||||
Tangible book value per common share (non-GAAP) | $ | 46.32 | $ | 42.26 | $ | 42.96 | $ | 42.40 | $ | 40.09 | ||||||||||||||||||
Tangible Equity-to-Tangible Assets (3) | ||||||||||||||||||||||||||||
Equity-to-assets (GAAP) | 12.32 | % | 11.63 | % | 11.77 | % | 11.68 | % | 11.56 | % | ||||||||||||||||||
Effect to adjust for intangible assets | (4.11) | % | (4.15) | % | (4.16) | % | (4.18) | % | (4.31) | % | ||||||||||||||||||
Tangible equity-to-tangible assets (non-GAAP) | 8.21 | % | 7.48 | % | 7.61 | % | 7.50 | % | 7.25 | % | ||||||||||||||||||
Certain prior period information has been reclassified to conform to the current period presentation, and these reclassifications have no impact on net income or equity as previously reported.
Footnotes to tables: | |
(1) | Includes loan accretion (interest) income related to the discount on acquired loans of $3.9 million, $4.1 million, $5.5 million, $7.4 million, and $7.3 million during the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, 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 and severance related expense, initial PCL on nonPCD loans and unfunded commitments from acquisitions, 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 and severance related expense of $1.8 million, $164,000, $1.8 million, $9.4 million, and $1.5 million for the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, 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 $25.7 million for the quarter ended December 31, 2023. |
(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 non-GAAP measures to GAAP. |
(4) | Adjusted efficiency ratio is calculated by taking the noninterest expense excluding merger, branch consolidation and severance related 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 $6.6 million, $6.6 million, $7.0 million, $7.3 million, and $8.0 million for the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, 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) | December 31, 2023 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. |
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) interest rate risk primarily resulting from the interest rate environment, the number and pace of interest rate increases, 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; (3) 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; (4) 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; (5) 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; (6) potential deterioration in real estate values; (7) 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; (8) 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; (9) 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; (10) risks related to the ability of the Company to pursue its strategic plans which depend upon certain growth goals in our lines of business; (11) liquidity risk affecting the Bank's ability to meet its obligations when they come due; (12) risks associated with an anticipated increase in SouthState's investment securities portfolio, including risks associated with acquiring and holding investment securities or potentially determining that the amount of investment securities SouthState desires to acquire are not available on terms acceptable to SouthState; (13) unexpected outflows of uninsured deposits may require us to sell investment securities at a loss; (14) the loss of value of our investment portfolio could negatively impact market perceptions of us and could lead to deposit withdrawals; (15) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (16) transaction risk arising from problems with service or product delivery; (17) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (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 recently passed state legislation and proposed federal and state regulatory guidance and regulation relating to climate change; (23) greater than expected noninterest expenses; (24) excessive loan losses; (25) reputational risk and possible higher than estimated reduced revenue from previously announced changes in the Bank's consumer overdraft programs and other deposit products; (26) the risks of fluctuations in market prices for SouthState common stock that may or may not reflect economic condition or performance of SouthState; (27) 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; (28) ownership dilution risk associated with potential acquisitions in which SouthState's stock may be issued as consideration for an acquired company; (29) 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; (30) 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; (31) geopolitical risk from terrorist activities and armed conflicts that may result in economic and supply disruptions, and loss of market and consumer confidence; and (32) 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.
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