SouthState Corporation Reports Second Quarter 2022 Results, Declares an Increase in the Quarterly Cash Dividend
WINTER HAVEN, Fla., July 28, 2022 /PRNewswire/ -- SouthState Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and six-month periods ended June 30, 2022.
The Company reported consolidated net income of $1.57 per diluted common share for the three months ended June 30, 2022, compared to $1.39 per diluted common share for the three months ended March 31, 2022, and compared to $1.39 per diluted common share one year ago.
Adjusted net income (non-GAAP) totaled $1.62 per diluted share for the three months ended June 30, 2022, compared to $1.69 per diluted share for the three months ended March 31, 2022, and compared to $1.87 per diluted share one year ago. Adjusted net income in the second quarter of 2022 excludes $4.2 million of merger and branch consolidation related expense (after-tax).
"We are pleased to report very strong performance in the second quarter, with record pre-provision net revenue, robust loan growth, and continued strength in asset quality," said John C. Corbett, Chief Executive Officer. "Our strong revenue growth in the quarter and limited expense growth combined to produce 12% operating leverage. We are also pleased that our pre-provision net revenue per diluted share rose almost 30% from Q1 levels."
Highlights of the second quarter of 2022 include:
Returns
- Reported and Adjusted Diluted Earnings per Share ("EPS") of $1.57 and $1.62 (Non-GAAP), respectively
- Net Income and Adjusted Net Income of $119.2 million and $123.4 million (Non-GAAP), respectively
- Return on Average Common Equity of 9.36%* and Reported and Adjusted Return on Average Tangible Common Equity of 16.6%* (Non-GAAP) and 17.2%* (Non-GAAP), respectively
- Return on Average Assets ("ROAA") and Adjusted ROAA of 1.04%* and 1.08%* (Non-GAAP), respectively
- Pre-Provision Net Revenue ("PPNR") of $176.8 million (Non-GAAP), or 1.55%* PPNR ROAA (Non-GAAP)
- PPNR per weighted average diluted share (Non-GAAP) of $2.32, up nearly 30% from the prior quarter's $1.79 and up 46% from $1.59 one year ago
- Book Value per Share of $66.64 decreased by $1.66 per share compared to the prior quarter primarily due to the $2.60 per share impact from the change in accumulated other comprehensive loss
- Tangible Book Value ("TBV") per Share of $39.47 (Non-GAAP), down $1.58, or 3.8% from the prior quarter
- Recorded a provision for credit losses of $19.3 million compared to a negative provision for credit losses of $8.4 million in the prior quarter
∗ Annualized
Performance
- Net Interest Income of $314.3 million; Core Net Interest Income (non-GAAP) (excluding loan accretion and deferred fees on PPP) increased $47.8 million from prior quarter
- Net Interest Margin ("NIM"), non-tax equivalent and tax equivalent (non-GAAP) of 3.10% and 3.12%, respectively, up 0.35% from prior quarter
- Total deposit cost of 0.06%, up 1 basis point from prior quarter
- Noninterest Income of $88.3 million, up $2.2 million compared to the prior quarter, with a $4.8 million increase in fee income on deposit accounts offset by a $5.1 million decline in mortgage banking income
- Noninterest Income represented 0.77% of average assets for the second quarter of 2022
- Noninterest Expense, excluding merger and branch consolidation related expense (Non-GAAP), increased $7.5 million compared to the prior quarter; salaries and employee benefits declined by $636 thousand
- Efficiency ratio and adjusted efficiency ratio (non-GAAP) improved to 54.9% and 53.6%, respectively, from prior quarter's 63.0% and 60.1%, respectively
Balance Sheet / Credit
- Fed funds and interest-earning cash of $4.2 billion represents 9.0% of assets
- Loan production† of $3.9 billion, excluding production by legacy Atlantic Capital Bancshares, Inc. ("ACBI")
- Loans, excluding PPP loans, increased $1.5 billion, or 22.0% annualized. Of the second quarter loan growth, 53% was commercial loan growth, led by commercial and industrial loans, and 47% was consumer growth, led by consumer real estate loans.
- Loans, excluding PPP loans, grew 12.3% over the last year
- Deposits increased $100.0 million, or 1.0% annualized, with core deposit growth totaling $224.1 million, or 2.5% annualized
- 36.9% of total deposits are noninterest-bearing checking
- Net charge-offs of $2.3 million, or 0.03% annualized
† Loan production indicates committed balance total
Subsequent Events
- The Board of Directors of the Company increased its quarterly cash dividend on its common stock from $0.49 per share to $0.50 per share; the dividend is payable on August 19, 2022 to shareholders of record as of August 12, 2022
Financial Performance
Three Months Ended | Six Months Ended | |||||||||||||||||||||
(Dollars in thousands, except per share data) | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Jun. 30, | Jun. 30, | |||||||||||||||
INCOME STATEMENT | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||
Interest income | ||||||||||||||||||||||
Loans, including fees (1) | $ | 272,000 | $ | 233,617 | $ | 238,310 | $ | 246,065 | $ | 246,177 | $ | 505,617 | $ | 506,144 | ||||||||
Investment securities, trading securities, federal funds sold and securities | ||||||||||||||||||||||
purchased under agreements to resell | 53,659 | 36,847 | 29,071 | 25,384 | 21,364 | 90,506 | 39,873 | |||||||||||||||
Total interest income | 325,659 | 270,464 | 267,381 | 271,449 | 267,541 | 596,123 | 546,017 | |||||||||||||||
Interest expense | ||||||||||||||||||||||
Deposits | 5,776 | 4,628 | 5,121 | 7,267 | 9,537 | 10,404 | 20,795 | |||||||||||||||
Federal funds purchased, securities sold under agreements | ||||||||||||||||||||||
to repurchase, and other borrowings | 5,604 | 4,362 | 4,156 | 4,196 | 4,874 | 9,966 | 10,094 | |||||||||||||||
Total interest expense | 11,380 | 8,990 | 9,277 | 11,463 | 14,411 | 20,370 | 30,889 | |||||||||||||||
Net interest income | 314,279 | 261,474 | 258,104 | 259,986 | 253,130 | 575,753 | 515,128 | |||||||||||||||
Provision (recovery) for credit losses | 19,286 | (8,449) | (9,157) | (38,903) | (58,793) | 10,837 | (117,213) | |||||||||||||||
Net interest income after provision (recovery) for credit losses | 294,993 | 269,923 | 267,261 | 298,889 | 311,923 | 564,916 | 632,341 | |||||||||||||||
Noninterest income | 88,292 | 86,090 | 91,894 | 87,010 | 79,020 | 174,382 | 175,305 | |||||||||||||||
Noninterest expense | ||||||||||||||||||||||
Pre-tax operating expense | 225,779 | 218,324 | 217,392 | 214,672 | 218,707 | 444,103 | 437,409 | |||||||||||||||
Merger and branch consolidation related expense | 5,390 | 10,276 | 6,645 | 17,618 | 32,970 | 15,666 | 42,979 | |||||||||||||||
Extinguishment of debt cost | — | — | — | — | 11,706 | — | 11,706 | |||||||||||||||
Total noninterest expense | 231,169 | 228,600 | 224,037 | 232,290 | 263,383 | 459,769 | 492,094 | |||||||||||||||
Income before provision for income taxes | 152,116 | 127,413 | 135,118 | 153,609 | 127,560 | 279,529 | 315,552 | |||||||||||||||
Income taxes provision | 32,941 | 27,084 | 28,272 | 30,821 | 28,600 | 60,025 | 69,643 | |||||||||||||||
Net income | $ | 119,175 | $ | 100,329 | $ | 106,846 | $ | 122,788 | $ | 98,960 | $ | 219,504 | $ | 245,909 | ||||||||
Adjusted net income (non-GAAP) (2) | ||||||||||||||||||||||
Net income (GAAP) | $ | 119,175 | $ | 100,329 | $ | 106,846 | $ | 122,788 | $ | 98,960 | $ | 219,504 | $ | 245,909 | ||||||||
Securities gains, net of tax | — | — | (2) | (51) | (28) | — | (28) | |||||||||||||||
Initial provision for credit losses - NonPCD loans and UFC from ACBI, net of tax | — | 13,492 | — | — | — | 13,492 | — | |||||||||||||||
Merger and branch consolidation related expense, net of tax | 4,223 | 8,092 | 5,255 | 14,083 | 25,578 | 12,314 | 33,402 | |||||||||||||||
Extinguishment of debt cost, net of tax | — | — | — | — | 9,081 | — | 9,081 | |||||||||||||||
Adjusted net income (non-GAAP) | $ | 123,398 | $ | 121,913 | $ | 112,099 | $ | 136,820 | $ | 133,591 | $ | 245,310 | $ | 288,364 | ||||||||
Basic earnings per common share | $ | 1.58 | $ | 1.40 | $ | 1.53 | $ | 1.75 | $ | 1.40 | $ | 2.99 | $ | 3.47 | ||||||||
Diluted earnings per common share | $ | 1.57 | $ | 1.39 | $ | 1.52 | $ | 1.74 | $ | 1.39 | $ | 2.96 | $ | 3.44 | ||||||||
Adjusted net income per common share - Basic (non-GAAP) (2) | $ | 1.64 | $ | 1.71 | $ | 1.61 | $ | 1.95 | $ | 1.89 | $ | 3.34 | $ | 4.07 | ||||||||
Adjusted net income per common share - Diluted (non-GAAP) (2) | $ | 1.62 | $ | 1.69 | $ | 1.59 | $ | 1.94 | $ | 1.87 | $ | 3.31 | $ | 4.04 | ||||||||
Dividends per common share | $ | 0.49 | $ | 0.49 | $ | 0.49 | $ | 0.49 | $ | 0.47 | $ | 0.98 | $ | 0.94 | ||||||||
Basic weighted-average common shares outstanding | 75,461,157 | 71,447,429 | 69,651,334 | 70,066,235 | 70,866,193 | 73,464,620 | 70,937,301 | |||||||||||||||
Diluted weighted-average common shares outstanding | 76,094,198 | 72,110,746 | 70,289,971 | 70,575,726 | 71,408,888 | 74,103,640 | 71,444,631 | |||||||||||||||
Effective tax rate | 21.66 % | 21.26 % | 20.92 % | 20.06 % | 22.42 % | 21.47 % | 22.07 % | |||||||||||||||
Performance and Capital Ratios
Three Months Ended | Six Months Ended | ||||||||||||||||||||
Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Jun. 30, | Jun. 30, | |||||||||||||||
2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||
PERFORMANCE RATIOS | |||||||||||||||||||||
Return on average assets (annualized) | 1.04 | % | 0.95 | % | 1.02 | % | 1.20 | % | 1.00 | % | 1.00 | % | 1.27 | % | |||||||
Adjusted return on average assets (annualized) (non-GAAP) (2) | 1.08 | % | 1.15 | % | 1.08 | % | 1.34 | % | 1.35 | % | 1.11 | % | 1.49 | % | |||||||
Return on average common equity (annualized) | 9.36 | % | 8.24 | % | 8.84 | % | 10.21 | % | 8.38 | % | 8.81 | % | 10.52 | % | |||||||
Adjusted return on average common equity (annualized) (non-GAAP) (2) | 9.69 | % | 10.01 | % | 9.28 | % | 11.37 | % | 11.31 | % | 9.85 | % | 12.34 | % | |||||||
Return on average tangible common equity (annualized) (non-GAAP) (3) | 16.59 | % | 13.97 | % | 14.63 | % | 16.86 | % | 14.12 | % | 15.28 | % | 17.59 | % | |||||||
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3) | 17.15 | % | 16.79 | % | 15.30 | % | 18.68 | % | 18.74 | % | 16.97 | % | 20.46 | % | |||||||
Efficiency ratio (tax equivalent) | 54.92 | % | 62.99 | % | 61.27 | % | 64.22 | % | 76.28 | % | 58.66 | % | 68.38 | % | |||||||
Adjusted efficiency ratio (non-GAAP) (4) | 53.59 | % | 60.05 | % | 59.39 | % | 59.16 | % | 62.88 | % | 56.58 | % | 60.49 | % | |||||||
Dividend payout ratio (5) | 31.03 | % | 33.71 | % | 32.02 | % | 27.94 | % | 33.65 | % | 32.26 | % | 27.12 | % | |||||||
Book value per common share | $ | 66.64 | $ | 68.30 | $ | 69.27 | $ | 68.55 | $ | 67.60 | |||||||||||
Tangible book value per common share (non-GAAP) (3) | $ | 39.47 | $ | 41.05 | $ | 44.62 | $ | 43.98 | $ | 43.07 | |||||||||||
CAPITAL RATIOS | |||||||||||||||||||||
Equity-to-assets | 10.9 | % | 11.2 | % | 11.4 | % | 11.7 | % | 11.8 | % | |||||||||||
Tangible equity-to-tangible assets (non-GAAP) (3) | 6.8 | % | 7.0 | % | 7.7 | % | 7.8 | % | 7.8 | % | |||||||||||
Tier 1 leverage (6) * | 8.0 | % | 8.5 | % | 8.1 | % | 8.1 | % | 8.1 | % | |||||||||||
Tier 1 common equity (6) * | 11.1 | % | 11.4 | % | 11.8 | % | 11.9 | % | 12.1 | % | |||||||||||
Tier 1 risk-based capital (6) * | 11.1 | % | 11.4 | % | 11.8 | % | 11.9 | % | 12.1 | % | |||||||||||
Total risk-based capital (6) * | 13.0 | % | 13.3 | % | 13.6 | % | 13.8 | % | 14.1 | % | |||||||||||
* The regulatory capital ratios presented above include the assumption of the transitional method relative to the CARES Act in relief of COVID-19 pandemic on the economy and financial institutions in the United States. The referenced relief allows a total five-year "phase in" of the CECL impact on capital and relief over the next two years for the impact on the allowance for credit losses resulting from COVID-19. |
Balance Sheet
Ending Balance | ||||||||||||||||
(Dollars in thousands, except per share and share data) | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | |||||||||||
BALANCE SHEET | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 561,516 | $ | 588,372 | $ | 476,653 | $ | 597,321 | $ | 529,434 | ||||||
Federal Funds Sold and interest-earning deposits with banks | 4,160,583 | 5,444,234 | 6,366,494 | 5,701,002 | 5,875,078 | |||||||||||
Cash and cash equivalents | 4,722,099 | 6,032,606 | 6,843,147 | 6,298,323 | 6,404,512 | |||||||||||
Trading securities, at fair value | 88,088 | 74,234 | 77,689 | 61,294 | 89,925 | |||||||||||
Investment securities: | ||||||||||||||||
Securities held to maturity | 2,806,465 | 2,827,769 | 1,819,901 | 1,641,485 | 1,189,265 | |||||||||||
Securities available for sale, at fair value | 5,666,008 | 5,924,206 | 5,193,478 | 4,631,554 | 4,369,159 | |||||||||||
Other investments | 179,815 | 179,258 | 160,568 | 160,592 | 160,607 | |||||||||||
Total investment securities | 8,652,288 | 8,931,233 | 7,173,947 | 6,433,631 | 5,719,031 | |||||||||||
Loans held for sale | 73,880 | 130,376 | 191,723 | 242,813 | 171,447 | |||||||||||
Loans: | ||||||||||||||||
Purchased credit deteriorated | 1,707,592 | 1,939,033 | 1,987,322 | 2,255,874 | 2,434,259 | |||||||||||
Purchased non-credit deteriorated | 6,908,234 | 7,633,824 | 5,890,069 | 6,554,647 | 7,457,950 | |||||||||||
Non-acquired | 19,319,440 | 16,983,570 | 16,050,775 | 14,978,428 | 14,140,869 | |||||||||||
Less allowance for credit losses | (319,708) | (300,396) | (301,807) | (314,144) | (350,401) | |||||||||||
Loans, net | 27,615,558 | 26,256,031 | 23,626,359 | 23,474,805 | 23,682,677 | |||||||||||
Other real estate owned ("OREO") | 1,431 | 3,290 | 2,736 | 3,687 | 5,039 | |||||||||||
Premises and equipment, net | 562,781 | 568,332 | 558,499 | 569,817 | 568,473 | |||||||||||
Bank owned life insurance | 953,970 | 942,922 | 783,049 | 778,552 | 773,452 | |||||||||||
Mortgage servicing rights | 87,463 | 83,339 | 65,620 | 60,922 | 57,351 | |||||||||||
Core deposit and other intangibles | 132,694 | 140,364 | 128,067 | 136,584 | 145,126 | |||||||||||
Goodwill | 1,922,525 | 1,924,024 | 1,581,085 | 1,581,085 | 1,581,085 | |||||||||||
Other assets | 1,394,645 | 1,114,790 | 928,111 | 1,262,195 | 1,177,751 | |||||||||||
Total assets | $ | 46,207,422 | $ | 46,201,541 | $ | 41,960,032 | $ | 40,903,708 | $ | 40,375,869 | ||||||
Liabilities and Shareholders' Equity | ||||||||||||||||
Deposits: | ||||||||||||||||
Noninterest-bearing | $ | 14,337,018 | $ | 14,052,332 | $ | 11,498,840 | $ | 11,333,881 | $ | 11,176,338 | ||||||
Interest-bearing | 24,538,833 | 24,723,498 | 23,555,989 | 22,226,677 | 22,066,031 | |||||||||||
Total deposits | 38,875,851 | 38,775,830 | 35,054,829 | 33,560,558 | 33,242,369 | |||||||||||
Federal funds purchased and securities | ||||||||||||||||
sold under agreements to repurchase | 669,999 | 770,409 | 781,239 | 859,736 | 862,429 | |||||||||||
Other borrowings | 392,460 | 405,553 | 327,066 | 326,807 | 351,548 | |||||||||||
Reserve for unfunded commitments | 32,543 | 30,368 | 30,510 | 28,289 | 30,981 | |||||||||||
Other liabilities | 1,196,144 | 1,044,973 | 963,448 | 1,335,377 | 1,130,919 | |||||||||||
Total liabilities | 41,166,997 | 41,027,133 | 37,157,092 | 36,110,767 | 35,618,247 | |||||||||||
Shareholders' equity: | ||||||||||||||||
Common stock - $2.50 par value; authorized 160,000,000 shares | 189,103 | 189,403 | 173,331 | 174,795 | 175,957 | |||||||||||
Surplus | 4,195,976 | 4,214,897 | 3,653,098 | 3,693,622 | 3,720,946 | |||||||||||
Retained earnings | 1,146,230 | 1,064,064 | 997,657 | 925,044 | 836,584 | |||||||||||
Accumulated other comprehensive (loss) income | (490,884) | (293,956) | (21,146) | (520) | 24,136 | |||||||||||
Total shareholders' equity | 5,040,425 | 5,174,408 | 4,802,940 | 4,792,941 | 4,757,623 | |||||||||||
Total liabilities and shareholders' equity | $ | 46,207,422 | $ | 46,201,541 | $ | 41,960,032 | $ | 40,903,708 | $ | 40,375,869 | ||||||
Common shares issued and outstanding | 75,641,322 | 75,761,018 | 69,332,297 | 69,918,037 | 70,382,728 | |||||||||||
Net Interest Income and Margin
Three Months Ended | |||||||||||||||||||||||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | |||||||||||||||||||||||
(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 | $ | 4,597,551 | $ | 8,635 | 0.75 % | $ | 5,678,147 | $ | 2,852 | 0.20 % | $ | 5,670,674 | $ | 1,350 | 0.10 % | ||||||||||
Investment securities | 8,880,419 | 45,024 | 2.03 % | 7,895,281 | 33,995 | 1.75 % | 5,371,985 | 20,014 | 1.49 % | ||||||||||||||||
Loans held for sale | 76,567 | 791 | 4.14 % | 110,542 | 869 | 3.19 % | 281,547 | 1,977 | 2.82 % | ||||||||||||||||
Total loans, excluding PPP | 27,055,042 | 271,003 | 4.02 % | 24,675,512 | 231,373 | 3.80 % | 22,588,076 | 225,664 | 4.01 % | ||||||||||||||||
Total PPP loans | 77,816 | 206 | 1.06 % | 167,541 | 1,375 | 3.33 % | 1,719,323 | 18,536 | 4.32 % | ||||||||||||||||
Total loans held for investment | 27,132,858 | 271,209 | 4.01 % | 24,843,053 | 232,748 | 3.80 % | 24,307,399 | 244,200 | 4.03 % | ||||||||||||||||
Total interest-earning assets | 40,687,395 | 325,659 | 3.21 % | 38,527,023 | 270,464 | 2.85 % | 35,631,605 | 267,541 | 3.01 % | ||||||||||||||||
Noninterest-earning assets | 5,160,394 | 4,419,309 | 4,201,147 | ||||||||||||||||||||||
Total Assets | $ | 45,847,789 | $ | 42,946,332 | $ | 39,832,752 | |||||||||||||||||||
Interest-Bearing Liabilities: | |||||||||||||||||||||||||
Transaction and money market accounts | $ | 18,316,890 | $ | 3,836 | 0.08 % | $ | 17,473,192 | $ | 2,217 | 0.05 % | $ | 15,453,940 | $ | 4,513 | 0.12 % | ||||||||||
Savings deposits | 3,548,192 | 143 | 0.02 % | 3,408,129 | 130 | 0.02 % | 2,995,871 | 453 | 0.06 % | ||||||||||||||||
Certificates and other time deposits | 2,776,478 | 1,797 | 0.26 % | 2,848,829 | 2,281 | 0.32 % | 3,408,778 | 4,571 | 0.54 % | ||||||||||||||||
Federal funds purchased | 333,326 | 628 | 0.76 % | 354,899 | 111 | 0.13 % | 520,585 | 112 | 0.09 % | ||||||||||||||||
Repurchase agreements | 403,008 | 153 | 0.15 % | 438,258 | 158 | 0.15 % | 394,056 | 211 | 0.21 % | ||||||||||||||||
Other borrowings | 405,241 | 4,823 | 4.77 % | 354,133 | 4,093 | 4.69 % | 368,897 | 4,551 | 4.95 % | ||||||||||||||||
Total interest-bearing liabilities | 25,783,135 | 11,380 | 0.18 % | 24,877,440 | 8,990 | 0.15 % | 23,142,127 | 14,411 | 0.25 % | ||||||||||||||||
Noninterest-bearing liabilities ("Non-IBL") | 14,955,329 | 13,131,727 | 11,951,384 | ||||||||||||||||||||||
Shareholders' equity | 5,109,325 | 4,937,165 | 4,739,241 | ||||||||||||||||||||||
Total Non-IBL and shareholders' equity | 20,064,654 | 18,068,892 | 16,690,625 | ||||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 45,847,789 | $ | 42,946,332 | $ | 39,832,752 | |||||||||||||||||||
Net Interest Income and Margin (Non-Tax Equivalent) | $ | 314,279 | 3.10 % | $ | 261,474 | 2.75 % | $ | 253,130 | 2.85 % | ||||||||||||||||
Net Interest Margin (Tax Equivalent) | 3.12 % | 2.77 % | 2.87 % | ||||||||||||||||||||||
Total Deposit Cost (without Debt and Other Borrowings) | 0.06 % | 0.05 % | 0.12 % | ||||||||||||||||||||||
Overall Cost of Funds (including Demand Deposits) | 0.12 % | 0.10 % | 0.17 % | ||||||||||||||||||||||
Total Accretion on Acquired Loans (1) | $ | 12,770 | $ | 6,741 | $ | 6,292 | |||||||||||||||||||
Total Deferred Fees on PPP Loans | $ | 8 | $ | 983 | $ | 14,232 | |||||||||||||||||||
Tax Equivalent Adjustment | $ | 2,249 | $ | 1,885 | $ | 1,424 | |||||||||||||||||||
(1) | The remaining loan discount on acquired loans to be accreted into loan interest income totals $89.0 million as of June 30, 2022. |
Noninterest Income and Expense
Three Months Ended | Six Months Ended | |||||||||||||||||||||
Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Jun. 30, | Jun. 30, | ||||||||||||||||
(Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||
Noninterest Income: | ||||||||||||||||||||||
Fees on deposit accounts | $ | 33,658 | $ | 28,902 | $ | 30,293 | $ | 26,130 | $ | 23,936 | $ | 62,560 | $ | 49,218 | ||||||||
Mortgage banking income | 5,480 | 10,594 | 12,044 | 15,560 | 10,115 | 16,074 | 36,995 | |||||||||||||||
Trust and investment services income | 9,831 | 9,718 | 9,520 | 9,150 | 9,733 | 19,549 | 18,311 | |||||||||||||||
Securities gains, net | — | — | 2 | 64 | 36 | — | 36 | |||||||||||||||
Correspondent banking and capital market income | 27,604 | 27,994 | 30,216 | 25,164 | 25,877 | 55,598 | 54,625 | |||||||||||||||
Bank owned life insurance income | 6,246 | 5,260 | 4,932 | 5,132 | 5,047 | 11,506 | 8,346 | |||||||||||||||
Other | 5,473 | 3,622 | 4,887 | 5,810 | 4,276 | 9,095 | 7,774 | |||||||||||||||
Total Noninterest Income | $ | 88,292 | $ | 86,090 | $ | 91,894 | $ | 87,010 | $ | 79,020 | $ | 174,382 | $ | 175,305 | ||||||||
Noninterest Expense: | ||||||||||||||||||||||
Salaries and employee benefits | $ | 137,037 | $ | 137,673 | $ | 137,321 | $ | 136,969 | $ | 137,379 | $ | 274,710 | $ | 277,740 | ||||||||
Occupancy expense | 22,759 | 21,840 | 22,915 | 23,135 | 22,844 | 44,599 | 46,175 | |||||||||||||||
Information services expense | 19,947 | 19,193 | 18,489 | 18,061 | 19,078 | 39,140 | 37,867 | |||||||||||||||
OREO and loan related (income) expense | (3) | (238) | (740) | 1,527 | 240 | (241) | 1,242 | |||||||||||||||
Business development and staff related | 4,916 | 4,276 | 4,577 | 4,424 | 4,305 | 9,192 | 7,676 | |||||||||||||||
Amortization of intangibles | 8,847 | 8,494 | 8,517 | 8,543 | 8,968 | 17,341 | 18,132 | |||||||||||||||
Professional fees | 4,331 | 3,749 | 2,639 | 2,415 | 2,301 | 8,080 | 5,575 | |||||||||||||||
Supplies and printing expense | 2,400 | 2,189 | 2,179 | 2,310 | 2,500 | 4,589 | 5,170 | |||||||||||||||
FDIC assessment and other regulatory charges | 5,332 | 4,812 | 4,965 | 4,245 | 4,931 | 10,144 | 8,772 | |||||||||||||||
Advertising and marketing | 2,286 | 1,763 | 2,375 | 2,185 | 1,659 | 4,049 | 3,399 | |||||||||||||||
Other operating expenses | 17,927 | 14,573 | 14,155 | 10,858 | 14,502 | 32,500 | 25,661 | |||||||||||||||
Merger and branch consolidation related expense | 5,390 | 10,276 | 6,645 | 17,618 | 32,970 | 15,666 | 42,979 | |||||||||||||||
Extinguishment of debt cost | — | — | — | — | 11,706 | — | 11,706 | |||||||||||||||
Total Noninterest Expense | $ | 231,169 | $ | 228,600 | $ | 224,037 | $ | 232,290 | $ | 263,383 | $ | 459,769 | $ | 492,094 | ||||||||
Loans and Deposits
The following table presents a summary of the loan portfolio by type (dollars in thousands):
Ending Balance | ||||||||||||||||
(Dollars in thousands) | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | |||||||||||
LOAN PORTFOLIO | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||
Construction and land development * † | $ | 2,527,062 | $ | 2,316,313 | $ | 2,029,216 | $ | 2,032,731 | $ | 1,947,646 | ||||||
Investor commercial real estate* | 8,393,630 | 8,158,457 | 7,432,503 | 7,131,192 | 7,094,109 | |||||||||||
Commercial owner occupied real estate | 5,421,725 | 5,346,583 | 4,970,116 | 4,988,490 | 4,895,189 | |||||||||||
Commercial and industrial, excluding PPP | 4,760,355 | 4,447,279 | 3,516,485 | 3,458,520 | 3,121,625 | |||||||||||
Consumer real estate * | 5,505,531 | 4,988,736 | 4,806,958 | 4,733,567 | 4,748,693 | |||||||||||
Consumer/other | 1,279,790 | 1,179,697 | 928,240 | 943,243 | 907,181 | |||||||||||
Total loans, excluding PPP | 27,888,093 | 26,437,065 | 23,683,518 | 23,287,743 | 22,714,443 | |||||||||||
PPP loans | 47,173 | 119,362 | 244,648 | 501,206 | 1,318,635 | |||||||||||
Total Loans | $ | 27,935,266 | $ | 26,556,427 | $ | 23,928,166 | $ | 23,788,949 | $ | 24,033,078 | ||||||
* 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 $795.7 million, $733.7 million, $686.5 million, $665.0 million and $599.4 million for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively. |
Ending Balance | ||||||||||||||||
(Dollars in thousands) | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | |||||||||||
DEPOSITS | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||
Noninterest-bearing checking | $ | 14,337,018 | $ | 14,052,332 | $ | 11,498,840 | $ | 11,333,881 | $ | 11,176,338 | ||||||
Interest-bearing checking | 8,953,332 | 9,275,208 | 9,018,987 | 7,920,236 | 7,651,433 | |||||||||||
Savings | 3,616,819 | 3,479,743 | 3,350,547 | 3,201,543 | 3,051,229 | |||||||||||
Money market | 9,264,257 | 9,140,005 | 8,376,380 | 8,110,162 | 8,024,117 | |||||||||||
Time deposits | 2,704,425 | 2,828,542 | 2,810,075 | 2,994,736 | 3,339,252 | |||||||||||
Total Deposits | $ | 38,875,851 | $ | 38,775,830 | $ | 35,054,829 | $ | 33,560,558 | $ | 33,242,369 | ||||||
Core Deposits (excludes Time Deposits) | $ | 36,171,426 | $ | 35,947,288 | $ | 32,244,754 | $ | 30,565,822 | $ | 29,903,117 | ||||||
Asset Quality
Ending Balance | ||||||||||||||||
Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | ||||||||||||
(Dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||
NONPERFORMING ASSETS: | ||||||||||||||||
Non-acquired | ||||||||||||||||
Non-acquired nonaccrual loans and restructured loans on nonaccrual | $ | 20,716 | $ | 19,582 | $ | 18,700 | $ | 23,800 | $ | 16,065 | ||||||
Accruing loans past due 90 days or more | 1,371 | 22,818 | 4,612 | 1,729 | 559 | |||||||||||
Non-acquired OREO and other nonperforming assets | 93 | 464 | 590 | 365 | 695 | |||||||||||
Total non-acquired nonperforming assets | 22,180 | 42,864 | 23,902 | 25,894 | 17,319 | |||||||||||
Acquired | ||||||||||||||||
Acquired nonaccrual loans and restructured loans on nonaccrual | 63,526 | 59,267 | 56,718 | 64,583 | 69,053 | |||||||||||
Accruing loans past due 90 days or more | 4,418 | 12,768 | 251 | 89 | — | |||||||||||
Acquired OREO and other nonperforming assets | 1,577 | 3,118 | 2,875 | 3,804 | 4,777 | |||||||||||
Total acquired nonperforming assets | 69,521 | 75,153 | 59,844 | 68,476 | 73,830 | |||||||||||
Total nonperforming assets | $ | 91,701 | $ | 118,017 | $ | 83,746 | $ | 94,370 | $ | 91,149 | ||||||
Three Months Ended | ||||||||||||||||
Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | ||||||||||||
2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||
ASSET QUALITY RATIOS: | ||||||||||||||||
Allowance for credit losses as a percentage of loans | 1.14 % | 1.13 % | 1.26 % | 1.32 % | 1.46 % | |||||||||||
Allowance for credit losses as a percentage of loans, excluding PPP loans | 1.15 % | 1.14 % | 1.27 % | 1.35 % | 1.54 % | |||||||||||
Allowance for credit losses as a percentage of nonperforming loans | 355.11 % | 262.50 % | 375.94 % | 348.27 % | 408.98 % | |||||||||||
Net charge-offs as a percentage of average loans (annualized) | 0.03 % | 0.04 % | 0.02 % | 0.00 % | 0.03 % | |||||||||||
Total nonperforming assets as a percentage of total assets | 0.20 % | 0.26 % | 0.20 % | 0.23 % | 0.23 % | |||||||||||
Nonperforming loans as a percentage of period end loans | 0.32 % | 0.43 % | 0.34 % | 0.38 % | 0.36 % | |||||||||||
Current Expected Credit Losses ("CECL")
Below is a table showing the roll forward of the ACL and UFC for the second quarter of 2022:
Allowance for Credit Losses ("ACL and UFC") | |||||||||||||
NonPCD ACL | PCD ACL | Total ACL | UFC | ||||||||||
Ending balance 3/31/2022 | $ | 227,829 | $ | 72,567 | $ | 300,396 | $ | 30,368 | |||||
ACL - Adjustment for PCD loans from ACBI | — | 4,540 | 4,540 | — | |||||||||
Charge offs | (3,215) | — | (3,215) | — | |||||||||
Acquired charge offs | (637) | (2,311) | (2,948) | — | |||||||||
Recoveries | 1,166 | — | 1,166 | — | |||||||||
Acquired recoveries | 1,188 | 1,470 | 2,658 | — | |||||||||
Provision (recovery) for credit losses | 31,097 | (13,986) | 17,111 | 2,175 | |||||||||
Ending balance 6/30/2022 | $ | 257,428 | $ | 62,280 | $ | 319,708 | $ | 32,543 | |||||
Period end loans (includes PPP Loans) | $ | 26,227,674 | $ | 1,707,592 | $ | 27,935,266 | N/A | ||||||
Reserve to Loans (includes PPP Loans) | 0.98 % | 3.65 % | 1.14 % | N/A | |||||||||
Period end loans (excludes PPP Loans) | $ | 26,180,501 | $ | 1,707,592 | $ | 27,888,093 | N/A | ||||||
Reserve to Loans (excludes PPP Loans) | 0.98 % | 3.65 % | 1.15 % | N/A | |||||||||
Unfunded commitments (off balance sheet) * | $ | 8,204,567 | |||||||||||
Reserve to unfunded commitments (off balance sheet) | 0.40 % | ||||||||||||
* Unfunded commitments exclude unconditionally cancelable commitments and letters of credit. |
Conference Call
The Company will host a conference call to discuss its second quarter results at 9:00 a.m. Eastern Time on July 29, 2022. Callers wishing to participate may call toll-free by dialing 844-200-6205. The number for international participants is (929) 526-1599. The conference ID number is 322914. 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 July 29, 2022 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. 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 in thousands, except per share data) | Three Months Ended | |||||||||||||||||||
PRE-PROVISION NET REVENUE ("PPNR") (NON-GAAP) | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | |||||||||||||||
Net income (GAAP) | $ | 119,175 | $ | 100,329 | $ | 106,846 | $ | 122,788 | $ | 98,960 | ||||||||||
Provision (recovery) for credit losses | 19,286 | (8,449) | (9,157) | (38,903) | (58,793) | |||||||||||||||
Tax provision | 32,941 | 27,084 | 28,272 | 30,821 | 28,600 | |||||||||||||||
Merger and branch consolidation related expense | 5,390 | 10,276 | 6,645 | 17,618 | 32,970 | |||||||||||||||
Extinguishment of debt costs | — | — | — | — | 11,706 | |||||||||||||||
Securities gains | — | — | (2) | (64) | (36) | |||||||||||||||
Pre-provision net revenue (PPNR) (Non-GAAP) | $ | 176,792 | $ | 129,240 | $ | 132,604 | $ | 132,260 | $ | 113,407 | ||||||||||
Average asset balance (GAAP) | $ | 45,847,789 | $ | 42,946,332 | $ | 41,359,708 | $ | 40,593,766 | $ | 39,832,752 | ||||||||||
PPNR ROAA | 1.55 | % | 1.22 | % | 1.27 | % | 1.29 | % | 1.14 | % | ||||||||||
Diluted weighted-average common shares outstanding | 76,094 | 72,111 | 70,290 | 70,576 | 71,409 | |||||||||||||||
PPNR per weighted-average common shares outstanding | $ | 2.32 | $ | 1.79 | $ | 1.89 | $ | 1.87 | $ | 1.59 | ||||||||||
(Dollars in thousands) | Three Months Ended | |||||||||||||||||||
CORE NET INTEREST INCOME (NON-GAAP) | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | |||||||||||||||
Net interest income (GAAP) | $ | 314,279 | $ | 261,474 | $ | 258,104 | $ | 259,986 | $ | 253,130 | ||||||||||
Less: | ||||||||||||||||||||
Total accretion on acquired loans | 12,770 | 6,741 | 7,707 | 5,243 | 6,292 | |||||||||||||||
Total deferred fees on PPP loans | 8 | 983 | 5,655 | 16,369 | 14,232 | |||||||||||||||
Core net interest income (Non-GAAP) | $ | 301,501 | $ | 253,750 | $ | 244,742 | $ | 238,374 | $ | 232,606 | ||||||||||
NET INTEREST MARGIN ("NIM"), TAX EQUIVALENT (NON-GAAP) | ||||||||||||||||||||
Net interest income (GAAP) | $ | 314,279 | $ | 261,474 | $ | 258,104 | $ | 259,986 | $ | 253,130 | ||||||||||
Total average interest-earning assets | 40,687,395 | 38,527,023 | 37,031,640 | 36,218,437 | 35,631,605 | |||||||||||||||
NIM, non-tax equivalent | 3.10 | % | 2.75 | % | 2.77 | % | 2.85 | % | 2.85 | % | ||||||||||
TEFRA (included in NIM, tax equivalent) | 2,249 | 1,885 | 1,734 | 1,477 | 1,424 | |||||||||||||||
Net interest income, tax equivalent (Non-GAAP) | $ | 316,528 | $ | 263,359 | $ | 259,838 | $ | 261,463 | $ | 254,554 | ||||||||||
NIM, tax equivalent (Non-GAAP) | 3.12 | % | 2.77 | % | 2.78 | % | 2.86 | % | 2.87 | % | ||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Jun. 30, | Jun. 30, | |||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP | 2022 | 2022 | 2021 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||||||||
Adjusted Net Income (non-GAAP) (2) | ||||||||||||||||||||||||||||
Net income (GAAP) | $ | 119,175 | $ | 100,329 | $ | 106,846 | $ | 122,788 | $ | 98,960 | $ | 219,504 | $ | 245,909 | ||||||||||||||
Securities gains, net of tax | — | — | (2) | (51) | (28) | — | (28) | |||||||||||||||||||||
PCL - NonPCD loans and UFC, net of tax | — | 13,492 | — | — | — | 13,492 | — | |||||||||||||||||||||
Merger and branch consolidation related expense, net of tax | 4,223 | 8,092 | 5,255 | 14,083 | 25,578 | 12,314 | 33,402 | |||||||||||||||||||||
Extinguishment of debt cost, net of tax | — | — | — | — | 9,081 | — | 9,081 | |||||||||||||||||||||
Adjusted net income (non-GAAP) | $ | 123,398 | $ | 121,913 | $ | 112,099 | $ | 136,820 | $ | 133,591 | $ | 245,310 | $ | 288,364 | ||||||||||||||
Adjusted Net Income per Common Share - Basic (2) | ||||||||||||||||||||||||||||
Earnings per common share - Basic (GAAP) | $ | 1.58 | $ | 1.40 | $ | 1.53 | $ | 1.75 | $ | 1.40 | $ | 2.99 | $ | 3.47 | ||||||||||||||
Effect to adjust for securities gains | — | — | (0.00) | (0.00) | (0.00) | — | (0.00) | |||||||||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | 0.19 | — | — | — | 0.18 | — | |||||||||||||||||||||
Effect to adjust for merger and branch consolidation related expense, net of tax | 0.06 | 0.12 | 0.08 | 0.20 | 0.36 | 0.17 | 0.47 | |||||||||||||||||||||
Effect to adjust for extinguishment of debt cost | — | — | — | — | 0.13 | — | 0.13 | |||||||||||||||||||||
Adjusted net income per common share - Basic (non-GAAP) | $ | 1.64 | $ | 1.71 | $ | 1.61 | $ | 1.95 | $ | 1.89 | $ | 3.34 | $ | 4.07 | ||||||||||||||
Adjusted Net Income per Common Share - Diluted (2) | ||||||||||||||||||||||||||||
Earnings per common share - Diluted (GAAP) | $ | 1.57 | $ | 1.39 | $ | 1.52 | $ | 1.74 | $ | 1.39 | $ | 2.96 | $ | 3.44 | ||||||||||||||
Effect to adjust for securities gains | — | — | (0.00) | (0.00) | (0.00) | — | (0.00) | |||||||||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | 0.19 | — | — | — | 0.18 | — | |||||||||||||||||||||
Effect to adjust for merger and branch consolidation related expense, net of tax | 0.05 | 0.11 | 0.07 | 0.20 | 0.35 | 0.17 | 0.47 | |||||||||||||||||||||
Effect to adjust for extinguishment of debt cost | — | — | — | — | 0.13 | — | 0.13 | |||||||||||||||||||||
Adjusted net income per common share - Diluted (non-GAAP) | $ | 1.62 | $ | 1.69 | $ | 1.59 | $ | 1.94 | $ | 1.87 | $ | 3.31 | $ | 4.04 | ||||||||||||||
Adjusted Return on Average Assets (2) | ||||||||||||||||||||||||||||
Return on average assets (GAAP) | 1.04 | % | 0.95 | % | 1.02 | % | 1.20 | % | 1.00 | % | 1.00 | % | 1.27 | % | ||||||||||||||
Effect to adjust for securities gains | — | % | — | % | (0.00) | % | (0.00) | % | (0.00) | % | — | % | (0.00) | % | ||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | % | 0.13 | % | — | % | — | % | — | % | 0.06 | % | — | % | ||||||||||||||
Effect to adjust for merger and branch consolidation related expense, net of tax | 0.04 | % | 0.07 | % | 0.06 | % | 0.14 | % | 0.26 | % | 0.05 | % | 0.17 | % | ||||||||||||||
Effect to adjust for extinguishment of debt cost | — | % | — | % | — | % | — | % | 0.09 | % | — | % | 0.05 | % | ||||||||||||||
Adjusted return on average assets (non-GAAP) | 1.08 | % | 1.15 | % | 1.08 | % | 1.34 | % | 1.35 | % | 1.11 | % | 1.49 | % | ||||||||||||||
Adjusted Return on Average Common Equity (2) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 9.36 | % | 8.24 | % | 8.84 | % | 10.21 | % | 8.38 | % | 8.81 | % | 10.52 | % | ||||||||||||||
Effect to adjust for securities gains | — | % | — | % | (0.00) | % | (0.00) | % | (0.00) | % | — | % | (0.00) | % | ||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | % | 1.11 | % | — | % | — | % | — | % | 0.54 | % | — | % | ||||||||||||||
Effect to adjust for merger and branch consolidation related expense, net of tax | 0.33 | % | 0.66 | % | 0.44 | % | 1.16 | % | 2.16 | % | 0.50 | % | 1.43 | % | ||||||||||||||
Effect to adjust for extinguishment of debt cost | — | % | — | % | — | % | — | % | 0.77 | % | — | % | 0.39 | % | ||||||||||||||
Adjusted return on average common equity (non-GAAP) | 9.69 | % | 10.01 | % | 9.28 | % | 11.37 | % | 11.31 | % | 9.85 | % | 12.34 | % | ||||||||||||||
Return on Average Common Tangible Equity (3) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 9.36 | % | 8.24 | % | 8.84 | % | 10.21 | % | 8.38 | % | 8.81 | % | 10.52 | % | ||||||||||||||
Effect to adjust for intangible assets | 7.23 | % | 5.73 | % | 5.79 | % | 6.65 | % | 5.74 | % | 6.47 | % | 7.07 | % | ||||||||||||||
Return on average tangible equity (non-GAAP) | 16.59 | % | 13.97 | % | 14.63 | % | 16.86 | % | 14.12 | % | 15.28 | % | 17.59 | % | ||||||||||||||
Adjusted Return on Average Common Tangible Equity (2) (3) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 9.36 | % | 8.24 | % | 8.84 | % | 10.21 | % | 8.38 | % | 8.81 | % | 10.52 | % | ||||||||||||||
Effect to adjust for securities gains | — | % | — | % | (0.00) | % | (0.00) | % | (0.00) | % | — | % | (0.00) | % | ||||||||||||||
Effect to adjust for PCL - NonPCD loans and UFC, net of tax | — | % | 1.11 | % | — | % | — | % | — | % | 0.54 | % | — | % | ||||||||||||||
Effect to adjust for merger and branch consolidation related expense, net of tax | 0.33 | % | 0.66 | % | 0.43 | % | 1.17 | % | 2.16 | % | 0.49 | % | 1.43 | % | ||||||||||||||
Effect to adjust for extinguishment of debt cost | — | % | — | % | — | % | — | % | 0.77 | % | — | % | 0.39 | % | ||||||||||||||
Effect to adjust for intangible assets | 7.46 | % | 6.78 | % | 6.03 | % | 7.30 | % | 7.43 | % | 7.12 | % | 8.12 | % | ||||||||||||||
Adjusted return on average common tangible equity (non-GAAP) | 17.15 | % | 16.79 | % | 15.30 | % | 18.68 | % | 18.74 | % | 16.97 | % | 20.46 | % | ||||||||||||||
Adjusted Efficiency Ratio (4) | ||||||||||||||||||||||||||||
Efficiency ratio | 54.92 | % | 62.99 | % | 61.27 | % | 64.22 | % | 76.28 | % | 58.66 | % | 68.38 | % | ||||||||||||||
Effect to adjust for merger and branch consolidation related expense | (1.33) | % | (2.94) | % | (1.89) | % | (5.06) | % | (13.38) | % | (2.08) | % | (7.89) | % | ||||||||||||||
Adjusted efficiency ratio | 53.59 | % | 60.05 | % | 59.39 | % | 59.16 | % | 62.88 | % | 56.58 | % | 60.49 | % | ||||||||||||||
Tangible Book Value Per Common Share (3) | ||||||||||||||||||||||||||||
Book value per common share (GAAP) | $ | 66.64 | $ | 68.30 | $ | 69.27 | $ | 68.55 | $ | 67.60 | ||||||||||||||||||
Effect to adjust for intangible assets | (27.17) | (27.25) | (24.65) | (24.57) | (24.53) | |||||||||||||||||||||||
Tangible book value per common share (non-GAAP) | $ | 39.47 | $ | 41.05 | $ | 44.62 | $ | 43.98 | $ | 43.07 | ||||||||||||||||||
Tangible Equity-to-Tangible Assets (3) | ||||||||||||||||||||||||||||
Equity-to-assets (GAAP) | 10.91 | % | 11.20 | % | 11.45 | % | 11.72 | % | 11.78 | % | ||||||||||||||||||
Effect to adjust for intangible assets | (4.15) | % | (4.15) | % | (3.76) | % | (3.87) | % | (3.94) | % | ||||||||||||||||||
Tangible equity-to-tangible assets (non-GAAP) | 6.76 | % | 7.05 | % | 7.69 | % | 7.85 | % | 7.84 | % | ||||||||||||||||||
Certain prior period information has been reclassified to conform to the current period presentation, and these reclassifications had no impact on net income or equity as previously reported. |
Footnotes to tables:
- Includes loan accretion (interest) income related to the discount on acquired loans of $12.8 million, $6.7 million, $7.7 million, $5.2 million and $6.3 million, respectively, during the five quarters above.
- 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 and branch consolidation related expense, initial PCL on nonPCD loans and unfunded commitments from acquisitions and extinguishment of debt cost. 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 and branch consolidation related expense of $5.4 million, $10.3 million, $6.6 million, $17.6 million and $33.0 million for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively; and (b) net securities gains of $2,000, $64,000, and $36,000 for the quarters ended December 31, 2021, September 30, 2021, and June 30, 2021, respectively; (c) initial PCL on nonPCD loans and unfunded commitments acquired from ACBI of $17.1 million for the quarter ended March 31, 2022; and (d) extinguishment of debt cost of $11.7 million for the quarter ended June 30, 2021.
- 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 Non-GAAP to GAAP" provide tables that reconcile non-GAAP measures to GAAP.
- Adjusted efficiency ratio is calculated by taking the noninterest expense excluding merger and branch consolidation related expense 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 $8.8 million, $8.5 million, $8.5 million, $8.5 million and $9.0 million, for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively.
- The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period.
- June 30, 2022 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.
- 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 continued negative economic developments resulting from the Covid19 pandemic, or 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, rising interest rates, 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) risks related to the merger and integration of SouthState and Atlantic Capital including, among others, (i) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (ii) the risk that the integration of Atlantic Capital's operations into SouthState's operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate Atlantic Capital's businesses into SouthState's businesses, (iii) the amount of the costs, fees, expenses and charges related to the merger, and (iv) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger; (4) risks relating to the continued impact of the Covid19 pandemic on the Company, including possible impact to the Company and its employees from contacting Covid19, and to efficiencies and the control environment due to the changing work environment and to our results of operations due to government stimulus and other interventions to mitigate the impact of the pandemic; (5) 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; (6) 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; (7) potential deterioration in real estate values; (8) the impact of competition with other financial institutions, including pricing pressures (including those resulting from the CARES Act) and the resulting impact, including as a result of compression to net interest margin; (9) risks relating to the ability to retain our culture and attract and retain qualified people; (10) 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; (11) risks related to the ability of the company to pursue its strategic plans which depend upon certain growth goals in our lines of business; (12) liquidity risk affecting the Bank's ability to meet its obligations when they come due; (13) 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; (14) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (15) transaction risk arising from problems with service or product delivery; (16) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (17) 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 the CARES Act, the Consumer Financial Protection Bureau regulations, and the possibility of changes in accounting standards, policies, principles and practices, including changes in accounting principles relating to loan loss recognition (CECL); (18) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (19) reputation risk that adversely affects earnings or capital arising from negative public opinion; (20) 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; (21) reputational and operational risks associated with environment, social and governance (ESG) matters, including the impact of recently issued proposed regulatory guidance and regulation relating to climate change; (22) greater than expected noninterest expenses; (23) excessive loan losses; (24) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with the Atlantic Capital integration, and potential difficulties in maintaining relationships with key personnel; (25) reputational risk and possible higher than estimated reduced revenue from announced changes in the Bank's consumer overdraft programs; (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) major catastrophes such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including infectious disease outbreaks, such as the ongoing Covid19 pandemic, 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) terrorist activities risk that results in loss of consumer confidence and economic disruptions; 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.
SOURCE SouthState Corporation
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