SouthState Corporation Reports Second Quarter 2024 Results, Declares an Increase in the Quarterly Cash Dividend
WINTER HAVEN, Fla., July 24, 2024 /PRNewswire/ -- SouthState Corporation (NYSE: SSB) today released its unaudited results of operations and other financial information for the three-month and six-month periods ended June 30, 2024.
"Both revenue and net interest margin inflected during the second quarter as loans repriced faster than deposits. Loans grew at a 7% annualized pace and earnings per share increased 15% over the first quarter", commented John C. Corbett, SouthState's Chief Executive Officer. "On May 20th, we announced the acquisition of Texas-based Independent Bank Group. During June, we traveled in town hall meetings with the Independent team and are increasingly excited about partnering with David Brooks and his relationship bankers in the best growth markets in the country."
Highlights of the second quarter of 2024 include:
Returns
- Reported Diluted Earnings per Share ("EPS") of $1.73; Adjusted Diluted EPS (Non-GAAP) of $1.79
- Net Income of $132.4 million; Adjusted Net Income (Non-GAAP) of $137.3 million
- Return on Average Common Equity of 9.6%; Return on Average Tangible Common Equity (Non-GAAP) of 15.5% and Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 16.1%*
- Return on Average Assets ("ROAA") of 1.17% and Adjusted ROAA (Non-GAAP) of 1.22%*
- Pre-Provision Net Revenue ("PPNR") per Weighted Average Diluted Share (Non-GAAP) of $2.39
- Book Value per Share of $74.16; Tangible Book Value ("TBV") per Share (Non-GAAP) of $47.90
∗ Annualized percentages |
Performance
- Net Interest Income of $350 million; Core Net Interest Income (excluding loan accretion) (Non-GAAP) of $346 million
- Net Interest Margin ("NIM"), non-tax equivalent of 3.43% and tax equivalent (Non-GAAP) of 3.44%
- Net charge-offs of $4.2 million, or 0.05% annualized; $3.9 million Provision for Credit Losses ("PCL"), including release for unfunded commitments; total allowance for credit losses ("ACL") plus reserve for unfunded commitments of 1.57%
- Noninterest Income of $75 million; Noninterest Income represented 0.67% of average assets for the second quarter of 2024
- Efficiency Ratio of 57% and Adjusted Efficiency Ratio (Non-GAAP) of 56%
Balance Sheet
- Loans increased $567 million, or 7% annualized, led by commercial and industrial and consumer real estate; ending loan to deposit ratio of 90%
- Deposits decreased $80 million, or 1% annualized
- Total loan yield of 5.82%, up 0.09% from prior quarter, resulting in a 39% cycle-to-date beta
- Total deposit cost of 1.80%, up 0.06% from prior quarter, resulting in a 34% cycle-to-date beta
- Strong capital position with Tangible Common Equity, Total Risk-Based Capital, Tier 1 Leverage, and Tier 1 Common Equity ratios of 8.4%, 14.4%, 9.7%, and 12.1%, respectively†
† Preliminary |
Mergers & Acquisitions
- On May 20, 2024, the Company announced its acquisition of Independent Bank Group, Inc.
Subsequent Events
- The Board of Directors of the Company increased its quarterly cash dividend on its common stock from $0.52 per share to $0.54 per share; the dividend is payable on August 16, 2024 to shareholders of record as of August 9, 2024
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 | 2024 | 2024 | 2023 | 2023 | 2023 | 2024 | 2023 | |||||||||||||||
Interest Income | ||||||||||||||||||||||
Loans, including fees (1) | $ | 478,360 | $ | 463,688 | $ | 459,880 | $ | 443,805 | $ | 419,355 | $ | 942,048 | $ | 812,720 | ||||||||
Investment securities, trading securities, federal funds sold and securities | ||||||||||||||||||||||
purchased under agreements to resell | 52,764 | 53,567 | 55,555 | 56,704 | 58,698 | 106,331 | 115,742 | |||||||||||||||
Total interest income | 531,124 | 517,255 | 515,435 | 500,509 | 478,053 | 1,048,379 | 928,462 | |||||||||||||||
Interest Expense | ||||||||||||||||||||||
Deposits | 165,481 | 160,162 | 149,584 | 133,944 | 100,787 | 325,643 | 156,729 | |||||||||||||||
Federal funds purchased, securities sold under agreements | ||||||||||||||||||||||
to repurchase, and other borrowings | 15,384 | 13,157 | 11,620 | 11,194 | 15,523 | 28,541 | 28,727 | |||||||||||||||
Total interest expense | 180,865 | 173,319 | 161,204 | 145,138 | 116,310 | 354,184 | 185,456 | |||||||||||||||
Net Interest Income | 350,259 | 343,936 | 354,231 | 355,371 | 361,743 | 694,195 | 743,006 | |||||||||||||||
Provision for credit losses | 3,889 | 12,686 | 9,893 | 32,709 | 38,389 | 16,575 | 71,480 | |||||||||||||||
Net Interest Income after Provision for Credit Losses | 346,370 | 331,250 | 344,338 | 322,662 | 323,354 | 677,620 | 671,526 | |||||||||||||||
Noninterest Income | 75,225 | 71,558 | 65,489 | 72,848 | 77,214 | 146,783 | 148,569 | |||||||||||||||
Noninterest Expense | ||||||||||||||||||||||
Operating expense | 242,343 | 240,923 | 245,774 | 238,042 | 240,818 | 483,266 | 471,911 | |||||||||||||||
Merger, branch consolidation, severance related and other expense (8) | 5,785 | 4,513 | 1,778 | 164 | 1,808 | 10,298 | 11,220 | |||||||||||||||
FDIC special assessment | 619 | 3,854 | 25,691 | — | — | 4,473 | — | |||||||||||||||
Total noninterest expense | 248,747 | 249,290 | 273,243 | 238,206 | 242,626 | 498,037 | 483,131 | |||||||||||||||
Income before Income Taxes Provision | 172,848 | 153,518 | 136,584 | 157,304 | 157,942 | 326,366 | 336,964 | |||||||||||||||
Income taxes provision | 40,478 | 38,462 | 29,793 | 33,160 | 34,495 | 78,940 | 73,591 | |||||||||||||||
Net Income | $ | 132,370 | $ | 115,056 | $ | 106,791 | $ | 124,144 | $ | 123,447 | $ | 247,426 | $ | 263,373 | ||||||||
Adjusted Net Income (non-GAAP) (2) | ||||||||||||||||||||||
Net Income (GAAP) | $ | 132,370 | $ | 115,056 | $ | 106,791 | $ | 124,144 | $ | 123,447 | $ | 247,426 | $ | 263,373 | ||||||||
Securities losses (gains), net of tax | — | — | 2 | — | — | — | (35) | |||||||||||||||
Merger, branch consolidation, severance related and other expense, net of tax (8) | 4,430 | 3,382 | 1,391 | 130 | 1,414 | 7,812 | 8,770 | |||||||||||||||
FDIC special assessment, net of tax | 474 | 2,888 | 20,087 | — | — | 3,362 | — | |||||||||||||||
Adjusted Net Income (non-GAAP) | $ | 137,274 | $ | 121,326 | $ | 128,271 | $ | 124,274 | $ | 124,861 | $ | 258,600 | $ | 272,108 | ||||||||
Basic earnings per common share | $ | 1.74 | $ | 1.51 | $ | 1.40 | $ | 1.63 | $ | 1.62 | $ | 3.24 | $ | 3.47 | ||||||||
Diluted earnings per common share | $ | 1.73 | $ | 1.50 | $ | 1.39 | $ | 1.62 | $ | 1.62 | $ | 3.23 | $ | 3.45 | ||||||||
Adjusted net income per common share - Basic (non-GAAP) (2) | $ | 1.80 | $ | 1.59 | $ | 1.69 | $ | 1.63 | $ | 1.64 | $ | 3.39 | $ | 3.58 | ||||||||
Adjusted net income per common share - Diluted (non-GAAP) (2) | $ | 1.79 | $ | 1.58 | $ | 1.67 | $ | 1.62 | $ | 1.63 | $ | 3.37 | $ | 3.56 | ||||||||
Dividends per common share | $ | 0.52 | $ | 0.52 | $ | 0.52 | $ | 0.52 | $ | 0.50 | $ | 1.04 | $ | 1.00 | ||||||||
Basic weighted-average common shares outstanding | 76,251,401 | 76,301,411 | 76,100,187 | 76,139,170 | 76,057,977 | 76,276,406 | 75,980,638 | |||||||||||||||
Diluted weighted-average common shares outstanding | 76,607,281 | 76,660,081 | 76,634,100 | 76,571,430 | 76,417,537 | 76,629,796 | 76,394,174 | |||||||||||||||
Effective tax rate | 23.42 % | 25.05 % | 21.81 % | 21.08 % | 21.84 % | 24.19 % | 21.84 % | |||||||||||||||
Performance and Capital Ratios
Three Months Ended | Six Months Ended | ||||||||||||||||||||
Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Jun. 30, | Jun. 30, | |||||||||||||||
2024 | 2024 | 2023 | 2023 | 2023 | 2024 | 2023 | |||||||||||||||
PERFORMANCE RATIOS | |||||||||||||||||||||
Return on average assets (annualized) | 1.17 | % | 1.03 | % | 0.94 | % | 1.10 | % | 1.11 | % | 1.10 | % | 1.20 | % | |||||||
Adjusted return on average assets (annualized) (non-GAAP) (2) | 1.22 | % | 1.08 | % | 1.13 | % | 1.10 | % | 1.12 | % | 1.15 | % | 1.24 | % | |||||||
Return on average common equity (annualized) | 9.58 | % | 8.36 | % | 7.99 | % | 9.24 | % | 9.34 | % | 8.97 | % | 10.14 | % | |||||||
Adjusted return on average common equity (annualized) (non-GAAP) (2) | 9.94 | % | 8.81 | % | 9.60 | % | 9.25 | % | 9.45 | % | 9.38 | % | 10.47 | % | |||||||
Return on average tangible common equity (annualized) (non-GAAP) (3) | 15.49 | % | 13.63 | % | 13.53 | % | 15.52 | % | 15.81 | % | 14.57 | % | 17.27 | % | |||||||
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3) | 16.05 | % | 14.35 | % | 16.12 | % | 15.54 | % | 15.98 | % | 15.20 | % | 17.82 | % | |||||||
Efficiency ratio (tax equivalent) | 57.03 | % | 58.48 | % | 63.43 | % | 54.00 | % | 53.59 | % | 57.75 | % | 52.48 | % | |||||||
Adjusted efficiency ratio (non-GAAP) (4) | 55.52 | % | 56.47 | % | 56.89 | % | 53.96 | % | 53.18 | % | 55.99 | % | 51.23 | % | |||||||
Dividend payout ratio (5) | 29.93 | % | 34.42 | % | 37.01 | % | 31.84 | % | 30.75 | % | 32.02 | % | 28.81 | % | |||||||
Book value per common share | $ | 74.16 | $ | 72.82 | $ | 72.78 | $ | 68.81 | $ | 69.61 | |||||||||||
Tangible book value per common share (non-GAAP) (3) | $ | 47.90 | $ | 46.48 | $ | 46.32 | $ | 42.26 | $ | 42.96 | |||||||||||
CAPITAL RATIOS | |||||||||||||||||||||
Equity-to-assets | 12.4 | % | 12.3 | % | 12.3 | % | 11.6 | % | 11.8 | % | |||||||||||
Tangible equity-to-tangible assets (non-GAAP) (3) | 8.4 | % | 8.2 | % | 8.2 | % | 7.5 | % | 7.6 | % | |||||||||||
Tier 1 leverage (6) | 9.7 | % | 9.6 | % | 9.4 | % | 9.3 | % | 9.2 | % | |||||||||||
Tier 1 common equity (6) | 12.1 | % | 11.9 | % | 11.8 | % | 11.5 | % | 11.3 | % | |||||||||||
Tier 1 risk-based capital (6) | 12.1 | % | 11.9 | % | 11.8 | % | 11.5 | % | 11.3 | % | |||||||||||
Total risk-based capital (6) | 14.4 | % | 14.4 | % | 14.1 | % | 13.8 | % | 13.5 | % | |||||||||||
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 | 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 507,425 | $ | 478,271 | $ | 510,922 | $ | 514,917 | $ | 552,900 | ||||||
Federal funds sold and interest-earning deposits with banks | 609,741 | 731,186 | 487,955 | 814,220 | 960,849 | |||||||||||
Cash and cash equivalents | 1,117,166 | 1,209,457 | 998,877 | 1,329,137 | 1,513,749 | |||||||||||
Trading securities, at fair value | 92,161 | 66,188 | 31,321 | 114,154 | 56,580 | |||||||||||
Investment securities: | ||||||||||||||||
Securities held to maturity | 2,348,528 | 2,446,589 | 2,487,440 | 2,533,713 | 2,585,155 | |||||||||||
Securities available for sale, at fair value | 4,498,264 | 4,598,400 | 4,784,388 | 4,623,618 | 4,949,334 | |||||||||||
Other investments | 201,516 | 187,285 | 192,043 | 187,152 | 196,728 | |||||||||||
Total investment securities | 7,048,308 | 7,232,274 | 7,463,871 | 7,344,483 | 7,731,217 | |||||||||||
Loans held for sale | 100,007 | 56,553 | 50,888 | 27,443 | 42,951 | |||||||||||
Loans: | ||||||||||||||||
Purchased credit deteriorated | 957,255 | 1,031,283 | 1,108,813 | 1,171,543 | 1,269,983 | |||||||||||
Purchased non-credit deteriorated | 4,253,323 | 4,534,583 | 4,796,913 | 5,064,254 | 5,275,913 | |||||||||||
Non-acquired | 28,023,986 | 27,101,444 | 26,482,763 | 25,780,875 | 24,990,889 | |||||||||||
Less allowance for credit losses | (472,298) | (469,654) | (456,573) | (447,956) | (427,392) | |||||||||||
Loans, net | 32,762,266 | 32,197,656 | 31,931,916 | 31,568,716 | 31,109,393 | |||||||||||
Premises and equipment, net | 517,382 | 512,635 | 519,197 | 516,583 | 518,353 | |||||||||||
Bank owned life insurance | 1,001,998 | 997,562 | 991,454 | 984,881 | 979,494 | |||||||||||
Mortgage servicing rights | 88,904 | 87,970 | 85,164 | 89,476 | 87,539 | |||||||||||
Core deposit and other intangibles | 77,389 | 83,193 | 88,776 | 95,094 | 102,256 | |||||||||||
Goodwill | 1,923,106 | 1,923,106 | 1,923,106 | 1,923,106 | 1,923,106 | |||||||||||
Other assets | 765,283 | 778,244 | 817,454 | 996,055 | 875,694 | |||||||||||
Total assets | $ | 45,493,970 | $ | 45,144,838 | $ | 44,902,024 | $ | 44,989,128 | $ | 44,940,332 | ||||||
Liabilities and Shareholders' Equity | ||||||||||||||||
Deposits: | ||||||||||||||||
Noninterest-bearing | $ | 10,374,464 | $ | 10,546,410 | $ | 10,649,274 | $ | 11,158,431 | $ | 11,489,483 | ||||||
Interest-bearing | 26,723,938 | 26,632,024 | 26,399,635 | 25,776,767 | 25,252,395 | |||||||||||
Total deposits | 37,098,402 | 37,178,434 | 37,048,909 | 36,935,198 | 36,741,878 | |||||||||||
Federal funds purchased and securities | ||||||||||||||||
sold under agreements to repurchase | 542,403 | 554,691 | 489,185 | 513,304 | 581,446 | |||||||||||
Other borrowings | 691,719 | 391,812 | 491,904 | 391,997 | 792,090 | |||||||||||
Reserve for unfunded commitments | 50,248 | 53,229 | 56,303 | 62,347 | 63,399 | |||||||||||
Other liabilities | 1,460,795 | 1,419,663 | 1,282,625 | 1,855,295 | 1,471,509 | |||||||||||
Total liabilities | 39,843,567 | 39,597,829 | 39,368,926 | 39,758,141 | 39,650,322 | |||||||||||
Shareholders' equity: | ||||||||||||||||
Common stock - $2.50 par value; authorized 160,000,000 shares | 190,489 | 190,443 | 190,055 | 190,043 | 189,990 | |||||||||||
Surplus | 4,238,192 | 4,230,345 | 4,240,413 | 4,238,753 | 4,228,910 | |||||||||||
Retained earnings | 1,841,933 | 1,749,215 | 1,685,166 | 1,618,080 | 1,533,508 | |||||||||||
Accumulated other comprehensive loss | (620,211) | (622,994) | (582,536) | (815,889) | (662,398) | |||||||||||
Total shareholders' equity | 5,650,403 | 5,547,009 | 5,533,098 | 5,230,987 | 5,290,010 | |||||||||||
Total liabilities and shareholders' equity | $ | 45,493,970 | $ | 45,144,838 | $ | 44,902,024 | $ | 44,989,128 | $ | 44,940,332 | ||||||
Common shares issued and outstanding | 76,195,723 | 76,177,163 | 76,022,039 | 76,017,366 | 75,995,979 | |||||||||||
Net Interest Income and Margin
Three Months Ended | |||||||||||||||||||||||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | |||||||||||||||||||||||
(Dollars in thousands) | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||
YIELD ANALYSIS | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||
Interest-Earning Assets: | |||||||||||||||||||||||||
Federal funds sold and interest-earning deposits with banks | $ | 732,252 | $ | 8,248 | 4.53 % | $ | 668,349 | $ | 8,254 | 4.97 % | $ | 947,526 | $ | 11,858 | 5.02 % | ||||||||||
Investment securities | 7,226,582 | 44,516 | 2.48 % | 7,465,735 | 45,313 | 2.44 % | 7,994,330 | 46,840 | 2.35 % | ||||||||||||||||
Loans held for sale | 63,307 | 1,018 | 6.47 % | 42,872 | 681 | 6.39 % | 36,114 | 568 | 6.31 % | ||||||||||||||||
Total loans held for investment | 32,989,521 | 477,342 | 5.82 % | 32,480,220 | 463,007 | 5.73 % | 31,149,866 | 418,787 | 5.39 % | ||||||||||||||||
Total interest-earning assets | 41,011,662 | 531,124 | 5.21 % | 40,657,176 | 517,255 | 5.12 % | 40,127,836 | 478,053 | 4.78 % | ||||||||||||||||
Noninterest-earning assets | 4,416,072 | 4,353,987 | 4,500,288 | ||||||||||||||||||||||
Total Assets | $ | 45,427,734 | $ | 45,011,163 | $ | 44,628,124 | |||||||||||||||||||
Interest-Bearing Liabilities ("IBL"): | |||||||||||||||||||||||||
Transaction and money market accounts | $ | 19,653,436 | $ | 120,722 | 2.47 % | $ | 19,544,019 | $ | 117,292 | 2.41 % | $ | 17,222,660 | $ | 65,717 | 1.53 % | ||||||||||
Savings deposits | 2,504,809 | 1,830 | 0.29 % | 2,589,251 | 1,818 | 0.28 % | 3,031,153 | 1,951 | 0.26 % | ||||||||||||||||
Certificates and other time deposits | 4,286,950 | 42,929 | 4.03 % | 4,282,749 | 41,052 | 3.86 % | 4,328,388 | 33,119 | 3.07 % | ||||||||||||||||
Federal funds purchased | 270,028 | 3,621 | 5.39 % | 256,506 | 3,369 | 5.28 % | 215,085 | 2,690 | 5.02 % | ||||||||||||||||
Repurchase agreements | 270,815 | 1,362 | 2.02 % | 280,674 | 1,358 | 1.95 % | 330,118 | 845 | 1.03 % | ||||||||||||||||
Other borrowings | 715,401 | 10,401 | 5.85 % | 563,848 | 8,430 | 6.01 % | 865,770 | 11,988 | 5.55 % | ||||||||||||||||
Total interest-bearing liabilities | 27,701,439 | 180,865 | 2.63 % | 27,517,047 | 173,319 | 2.53 % | 25,993,174 | 116,310 | 1.79 % | ||||||||||||||||
Noninterest-bearing liabilities ("Non-IBL") | 12,171,825 | 11,957,565 | 13,333,253 | ||||||||||||||||||||||
Shareholders' equity | 5,554,470 | 5,536,551 | 5,301,697 | ||||||||||||||||||||||
Total Non-IBL and shareholders' equity | 17,726,295 | 17,494,116 | 18,634,950 | ||||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 45,427,734 | $ | 45,011,163 | $ | 44,628,124 | |||||||||||||||||||
Net Interest Income and Margin (Non-Tax Equivalent) | $ | 350,259 | 3.43 % | $ | 343,936 | 3.40 % | $ | 361,743 | 3.62 % | ||||||||||||||||
Net Interest Margin (Tax Equivalent) (non-GAAP) | 3.44 % | 3.41 % | 3.62 % | ||||||||||||||||||||||
Total Deposit Cost (without Debt and Other Borrowings) | 1.80 % | 1.74 % | 1.11 % | ||||||||||||||||||||||
Overall Cost of Funds (including Demand Deposits) | 1.90 % | 1.83 % | 1.23 % | ||||||||||||||||||||||
Total Accretion on Acquired Loans (1) | $ | 4,386 | $ | 4,287 | $ | 5,481 | |||||||||||||||||||
Tax Equivalent ("TE") Adjustment | $ | 631 | $ | 528 | $ | 698 | |||||||||||||||||||
• The remaining loan discount on acquired loans to be accreted into loan interest income totals $42.7 million as of June 30, 2024. |
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) | 2024 | 2024 | 2023 | 2023 | 2023 | 2024 | 2023 | |||||||||||||||
Noninterest Income: | ||||||||||||||||||||||
Fees on deposit accounts | $ | 33,842 | $ | 33,145 | $ | 33,225 | $ | 32,830 | $ | 33,101 | $ | 66,987 | $ | 62,960 | ||||||||
Mortgage banking income | 5,912 | 6,169 | 2,191 | 2,478 | 4,354 | 12,081 | 8,686 | |||||||||||||||
Trust and investment services income | 11,091 | 10,391 | 10,131 | 9,556 | 9,823 | 21,482 | 19,760 | |||||||||||||||
Securities (losses) gains, net | — | — | (2) | — | — | — | 45 | |||||||||||||||
Correspondent banking and capital markets income | 16,267 | 14,591 | 16,081 | 24,808 | 27,734 | 30,858 | 49,690 | |||||||||||||||
Expense on centrally-cleared variation margin | (11,407) | (10,280) | (12,677) | (11,892) | (8,547) | (21,687) | (16,909) | |||||||||||||||
Total correspondent banking and capital markets income | 4,860 | 4,311 | 3,404 | 12,916 | 19,187 | 9,171 | 32,781 | |||||||||||||||
Bank owned life insurance income | 7,372 | 6,892 | 6,567 | 7,039 | 6,271 | 14,264 | 13,084 | |||||||||||||||
Other | 12,148 | 10,650 | 9,973 | 8,029 | 4,478 | 22,798 | 11,253 | |||||||||||||||
Total Noninterest Income | $ | 75,225 | $ | 71,558 | $ | 65,489 | $ | 72,848 | $ | 77,214 | $ | 146,783 | $ | 148,569 | ||||||||
Noninterest Expense: | ||||||||||||||||||||||
Salaries and employee benefits | $ | 151,435 | $ | 150,453 | $ | 145,850 | $ | 146,146 | $ | 147,342 | $ | 301,888 | $ | 291,402 | ||||||||
Occupancy expense | 22,453 | 22,577 | 22,715 | 22,251 | 22,196 | 45,030 | 43,729 | |||||||||||||||
Information services expense | 23,144 | 22,353 | 22,000 | 21,428 | 21,119 | 45,497 | 41,044 | |||||||||||||||
OREO and loan related expense (income) | 1,307 | 606 | 948 | 613 | (14) | 1,913 | 155 | |||||||||||||||
Business development and staff related | 6,220 | 5,799 | 7,492 | 5,995 | 6,672 | 12,019 | 12,629 | |||||||||||||||
Amortization of intangibles | 5,744 | 5,998 | 6,615 | 6,616 | 7,028 | 11,742 | 14,327 | |||||||||||||||
Professional fees | 3,906 | 3,115 | 7,025 | 3,456 | 4,364 | 7,021 | 8,066 | |||||||||||||||
Supplies and printing expense | 2,526 | 2,540 | 2,761 | 2,623 | 2,554 | 5,066 | 5,194 | |||||||||||||||
FDIC assessment and other regulatory charges | 7,771 | 8,534 | 8,325 | 8,632 | 9,819 | 16,305 | 16,113 | |||||||||||||||
Advertising and marketing | 2,594 | 1,984 | 2,826 | 3,009 | 1,521 | 4,578 | 3,639 | |||||||||||||||
Other operating expenses | 15,243 | 16,964 | 19,217 | 17,273 | 18,217 | 32,207 | 35,613 | |||||||||||||||
Merger, branch consolidation, severance related and other expense (8) | 5,785 | 4,513 | 1,778 | 164 | 1,808 | 10,298 | 11,220 | |||||||||||||||
FDIC special assessment | 619 | 3,854 | 25,691 | — | — | 4,473 | — | |||||||||||||||
Total Noninterest Expense | $ | 248,747 | $ | 249,290 | $ | 273,243 | $ | 238,206 | $ | 242,626 | $ | 498,037 | $ | 483,131 | ||||||||
Loans and Deposits
The following table presents a summary of the loan portfolio by type:
Ending Balance | ||||||||||||||||
(Dollars in thousands) | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | |||||||||||
LOAN PORTFOLIO (7) | 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||
Construction and land development * † | $ | 2,592,307 | $ | 2,437,343 | $ | 2,923,514 | $ | 2,776,241 | $ | 2,817,125 | ||||||
Investor commercial real estate* | 9,731,773 | 9,752,529 | 9,227,968 | 9,372,683 | 9,187,948 | |||||||||||
Commercial owner occupied real estate | 5,522,978 | 5,511,855 | 5,497,671 | 5,539,097 | 5,585,951 | |||||||||||
Commercial and industrial | 5,769,838 | 5,544,131 | 5,504,539 | 5,458,229 | 5,378,294 | |||||||||||
Consumer real estate * | 8,440,724 | 8,223,066 | 7,993,450 | 7,608,145 | 7,275,495 | |||||||||||
Consumer/other | 1,176,944 | 1,198,386 | 1,241,347 | 1,262,277 | 1,291,972 | |||||||||||
Total Loans | $ | 33,234,564 | $ | 32,667,310 | $ | 32,388,489 | $ | 32,016,672 | $ | 31,536,785 | ||||||
* | 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 $544.2 million, $623.9 million, $715.5 million, $863.1 million, and $928.4 million for the quarters ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively. |
Ending Balance | ||||||||||||||||
(Dollars in thousands) | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | |||||||||||
DEPOSITS | 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||
Noninterest-bearing checking | $ | 10,374,464 | $ | 10,546,410 | $ | 10,649,274 | $ | 11,158,431 | $ | 11,489,483 | ||||||
Interest-bearing checking | 7,547,406 | 7,898,835 | 7,978,799 | 7,806,243 | 8,185,609 | |||||||||||
Savings | 2,475,130 | 2,557,203 | 2,632,212 | 2,760,166 | 2,931,320 | |||||||||||
Money market | 12,122,336 | 11,895,385 | 11,538,671 | 10,756,431 | 9,710,032 | |||||||||||
Time deposits | 4,579,066 | 4,280,601 | 4,249,953 | 4,453,927 | 4,425,434 | |||||||||||
Total Deposits | $ | 37,098,402 | $ | 37,178,434 | $ | 37,048,909 | $ | 36,935,198 | $ | 36,741,878 | ||||||
Core Deposits (excludes Time Deposits) | $ | 32,519,336 | $ | 32,897,833 | $ | 32,798,956 | $ | 32,481,271 | $ | 32,316,444 | ||||||
Asset Quality
Ending Balance | ||||||||||||||||
Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | ||||||||||||
(Dollars in thousands) | 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||
NONPERFORMING ASSETS: | ||||||||||||||||
Non-acquired | ||||||||||||||||
Non-acquired nonaccrual loans and restructured loans on nonaccrual | $ | 110,774 | $ | 106,189 | $ | 110,467 | $ | 105,856 | $ | 104,772 | ||||||
Accruing loans past due 90 days or more | 5,843 | 2,497 | 11,305 | 783 | 3,620 | |||||||||||
Non-acquired OREO and other nonperforming assets | 2,876 | 1,589 | 711 | 449 | 227 | |||||||||||
Total non-acquired nonperforming assets | 119,493 | 110,275 | 122,483 | 107,088 | 108,619 | |||||||||||
Acquired | ||||||||||||||||
Acquired nonaccrual loans and restructured loans on nonaccrual | 78,287 | 63,451 | 59,755 | 57,464 | 60,734 | |||||||||||
Accruing loans past due 90 days or more | 916 | 135 | 1,174 | 1,821 | 571 | |||||||||||
Acquired OREO and other nonperforming assets | 598 | 655 | 712 | 378 | 981 | |||||||||||
Total acquired nonperforming assets | 79,801 | 64,241 | 61,641 | 59,663 | 62,286 | |||||||||||
Total nonperforming assets | $ | 199,294 | $ | 174,516 | $ | 184,124 | $ | 166,751 | $ | 170,905 | ||||||
Three Months Ended | ||||||||||||||||
Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | ||||||||||||
2024 | 2024 | 2023 | 2023 | 2023 | ||||||||||||
ASSET QUALITY RATIOS (7): | ||||||||||||||||
Allowance for credit losses as a percentage of loans | 1.42 % | 1.44 % | 1.41 % | 1.40 % | 1.36 % | |||||||||||
Allowance for credit losses, including reserve for unfunded | 1.57 % | 1.60 % | 1.58 % | 1.59 % | 1.56 % | |||||||||||
Allowance for credit losses as a percentage of nonperforming loans | 241.19 % | 272.62 % | 249.90 % | 269.98 % | 251.86 % | |||||||||||
Net charge-offs as a percentage of average loans (annualized) | 0.05 % | 0.03 % | 0.09 % | 0.16 % | 0.04 % | |||||||||||
Total nonperforming assets as a percentage of total assets | 0.44 % | 0.39 % | 0.41 % | 0.37 % | 0.38 % | |||||||||||
Nonperforming loans as a percentage of period end loans | 0.59 % | 0.53 % | 0.56 % | 0.52 % | 0.54 % | |||||||||||
Current Expected Credit Losses ("CECL")
Below is a table showing the roll forward of the ACL and UFC for the second quarter of 2024:
Allowance for Credit Losses ("ACL and UFC") | |||||||||||||
(Dollars in thousands) | NonPCD ACL | PCD ACL | Total ACL | UFC | |||||||||
Ending balance 3/31/2024 | $ | 439,188 | $ | 30,466 | $ | 469,654 | $ | 53,229 | |||||
Charge offs | (5,422) | — | (5,422) | — | |||||||||
Acquired charge offs | (910) | (2,258) | (3,168) | — | |||||||||
Recoveries | 2,779 | — | 2,779 | — | |||||||||
Acquired recoveries | 632 | 954 | 1,586 | — | |||||||||
Provision (recovery) for credit losses | 11,361 | (4,492) | 6,869 | (2,981) | |||||||||
Ending balance 6/30/2024 | $ | 447,628 | $ | 24,670 | $ | 472,298 | $ | 50,248 | |||||
Period end loans | $ | 32,277,309 | $ | 957,255 | $ | 33,234,564 | N/A | ||||||
Allowance for Credit Losses to Loans | 1.39 % | 2.58 % | 1.42 % | N/A | |||||||||
Unfunded commitments (off balance sheet) * | $ | 7,917,682 | |||||||||||
Reserve to unfunded commitments (off balance sheet) | 0.63 % | ||||||||||||
* 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 25, 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 July 25, 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) | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | |||||||||||||||
Net income (GAAP) | $ | 132,370 | $ | 115,056 | $ | 106,791 | $ | 124,144 | $ | 123,447 | ||||||||||
Provision for credit losses | 3,889 | 12,686 | 9,893 | 32,709 | 38,389 | |||||||||||||||
Tax provision | 40,478 | 38,462 | 29,793 | 33,160 | 34,495 | |||||||||||||||
Merger, branch consolidation, severance related and other expense (8) | 5,785 | 4,513 | 1,778 | 164 | 1,808 | |||||||||||||||
FDIC special assessment | 619 | 3,854 | 25,691 | — | — | |||||||||||||||
Securities losses | — | — | 2 | — | — | |||||||||||||||
Pre-provision net revenue (PPNR) (Non-GAAP) | $ | 183,141 | $ | 174,571 | $ | 173,948 | $ | 190,177 | $ | 198,139 | ||||||||||
Average asset balance (GAAP) | $ | 45,427,734 | $ | 45,011,163 | $ | 45,037,632 | $ | 44,841,319 | $ | 44,628,124 | ||||||||||
PPNR ROAA | 1.62 | % | 1.56 | % | 1.53 | % | 1.68 | % | 1.78 | % | ||||||||||
Diluted weighted-average common shares outstanding | 76,607 | 76,660 | 76,634 | 76,571 | 76,418 | |||||||||||||||
PPNR per weighted-average common shares outstanding | $ | 2.39 | $ | 2.28 | $ | 2.27 | $ | 2.48 | $ | 2.59 | ||||||||||
(Dollars in thousands) | Three Months Ended | |||||||||||||||||||
CORE NET INTEREST INCOME (NON-GAAP) | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | |||||||||||||||
Net interest income (GAAP) | $ | 350,259 | $ | 343,936 | $ | 354,231 | $ | 355,371 | $ | 361,743 | ||||||||||
Less: | ||||||||||||||||||||
Total accretion on acquired loans | 4,386 | 4,287 | 3,870 | 4,053 | 5,481 | |||||||||||||||
Core net interest income (Non-GAAP) | $ | 345,873 | $ | 339,649 | $ | 350,361 | $ | 351,318 | $ | 356,262 | ||||||||||
NET INTEREST MARGIN ("NIM"), TE (NON-GAAP) | ||||||||||||||||||||
Net interest income (GAAP) | $ | 350,259 | $ | 343,936 | $ | 354,231 | $ | 355,371 | $ | 361,743 | ||||||||||
Total average interest-earning assets | 41,011,662 | 40,657,176 | 40,465,377 | 40,376,380 | 40,127,836 | |||||||||||||||
NIM, non-tax equivalent | 3.43 | % | 3.40 | % | 3.47 | % | 3.49 | % | 3.62 | % | ||||||||||
Tax equivalent adjustment (included in NIM, TE) | 631 | 528 | 659 | 646 | 698 | |||||||||||||||
Net interest income, tax equivalent (Non-GAAP) | $ | 350,890 | $ | 344,464 | $ | 354,890 | $ | 356,017 | $ | 362,441 | ||||||||||
NIM, TE (Non-GAAP) | 3.44 | % | 3.41 | % | 3.48 | % | 3.50 | % | 3.62 | % | ||||||||||
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 | 2024 | 2024 | 2023 | 2023 | 2023 | 2024 | 2023 | |||||||||||||||||||||
Adjusted Net Income (non-GAAP) (2) | ||||||||||||||||||||||||||||
Net income (GAAP) | $ | 132,370 | $ | 115,056 | $ | 106,791 | $ | 124,144 | $ | 123,447 | $ | 247,426 | $ | 263,373 | ||||||||||||||
Securities losses (gains), net of tax | — | — | 2 | — | — | — | (35) | |||||||||||||||||||||
Merger, branch consolidation, severance related and other expense, net of tax (8) | 4,430 | 3,382 | 1,391 | 130 | 1,414 | 7,812 | 8,770 | |||||||||||||||||||||
FDIC special assessment, net of tax | 474 | 2,888 | 20,087 | — | — | 3,362 | — | |||||||||||||||||||||
Adjusted net income (non-GAAP) | $ | 137,274 | $ | 121,326 | $ | 128,271 | $ | 124,274 | $ | 124,861 | $ | 258,600 | $ | 272,108 | ||||||||||||||
Adjusted Net Income per Common Share - Basic (2) | ||||||||||||||||||||||||||||
Earnings per common share - Basic (GAAP) | $ | 1.74 | $ | 1.51 | $ | 1.40 | $ | 1.63 | $ | 1.62 | $ | 3.24 | $ | 3.47 | ||||||||||||||
Effect to adjust for securities losses (gains), net of tax | — | — | 0.00 | — | — | — | (0.00) | |||||||||||||||||||||
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8) | 0.05 | 0.04 | 0.03 | 0.00 | 0.02 | 0.11 | 0.12 | |||||||||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.01 | 0.04 | 0.26 | — | — | 0.04 | — | |||||||||||||||||||||
Adjusted net income per common share - Basic (non-GAAP) | $ | 1.80 | $ | 1.59 | $ | 1.69 | $ | 1.63 | $ | 1.64 | $ | 3.39 | $ | 3.58 | ||||||||||||||
Adjusted Net Income per Common Share - Diluted (2) | ||||||||||||||||||||||||||||
Earnings per common share - Diluted (GAAP) | $ | 1.73 | $ | 1.50 | $ | 1.39 | $ | 1.62 | $ | 1.62 | $ | 3.23 | $ | 3.45 | ||||||||||||||
Effect to adjust for securities losses (gains), net of tax | — | — | 0.00 | — | — | — | (0.00) | |||||||||||||||||||||
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8) | 0.05 | 0.04 | 0.02 | 0.00 | 0.01 | 0.10 | 0.11 | |||||||||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.01 | 0.04 | 0.26 | — | — | 0.04 | — | |||||||||||||||||||||
Adjusted net income per common share - Diluted (non-GAAP) | $ | 1.79 | $ | 1.58 | $ | 1.67 | $ | 1.62 | $ | 1.63 | $ | 3.37 | $ | 3.56 | ||||||||||||||
Adjusted Return on Average Assets (2) | ||||||||||||||||||||||||||||
Return on average assets (GAAP) | 1.17 | % | 1.03 | % | 0.94 | % | 1.10 | % | 1.11 | % | 1.10 | % | 1.20 | % | ||||||||||||||
Effect to adjust for securities losses (gains), net of tax | — | % | — | % | 0.00 | % | — | % | — | % | — | % | (0.00) | % | ||||||||||||||
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8) | 0.05 | % | 0.02 | % | 0.01 | % | 0.00 | % | 0.01 | % | 0.04 | % | 0.04 | % | ||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.00 | % | 0.03 | % | 0.18 | % | — | % | — | % | 0.01 | % | — | % | ||||||||||||||
Adjusted return on average assets (non-GAAP) | 1.22 | % | 1.08 | % | 1.13 | % | 1.10 | % | 1.12 | % | 1.15 | % | 1.24 | % | ||||||||||||||
Adjusted Return on Average Common Equity (2) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 9.58 | % | 8.36 | % | 7.99 | % | 9.24 | % | 9.34 | % | 8.97 | % | 10.14 | % | ||||||||||||||
Effect to adjust for securities losses (gains), net of tax | — | % | — | % | 0.00 | % | — | % | — | % | — | % | (0.00) | % | ||||||||||||||
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8) | 0.33 | % | 0.24 | % | 0.11 | % | 0.01 | % | 0.11 | % | 0.29 | % | 0.33 | % | ||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.03 | % | 0.21 | % | 1.50 | % | — | % | — | % | 0.12 | % | — | % | ||||||||||||||
Adjusted return on average common equity (non-GAAP) | 9.94 | % | 8.81 | % | 9.60 | % | 9.25 | % | 9.45 | % | 9.38 | % | 10.47 | % | ||||||||||||||
Return on Average Common Tangible Equity (3) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 9.58 | % | 8.36 | % | 7.99 | % | 9.24 | % | 9.34 | % | 8.97 | % | 10.14 | % | ||||||||||||||
Effect to adjust for intangible assets | 5.91 | % | 5.27 | % | 5.54 | % | 6.28 | % | 6.47 | % | 5.60 | % | 7.13 | % | ||||||||||||||
Return on average tangible equity (non-GAAP) | 15.49 | % | 13.63 | % | 13.53 | % | 15.52 | % | 15.81 | % | 14.57 | % | 17.27 | % | ||||||||||||||
Adjusted Return on Average Common Tangible Equity (2) (3) | ||||||||||||||||||||||||||||
Return on average common equity (GAAP) | 9.58 | % | 8.36 | % | 7.99 | % | 9.24 | % | 9.34 | % | 8.97 | % | 10.14 | % | ||||||||||||||
Effect to adjust for securities losses (gains), net of tax | — | % | — | % | 0.00 | % | — | % | — | % | — | % | (0.00) | % | ||||||||||||||
Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8) | 0.32 | % | 0.25 | % | 0.10 | % | 0.01 | % | 0.11 | % | 0.28 | % | 0.33 | % | ||||||||||||||
Effect to adjust for FDIC special assessment, net of tax | 0.03 | % | 0.21 | % | 1.50 | % | — | % | — | % | 0.12 | % | — | % | ||||||||||||||
Effect to adjust for intangible assets, net of tax | 6.12 | % | 5.53 | % | 6.53 | % | 6.29 | % | 6.53 | % | 5.83 | % | 7.35 | % | ||||||||||||||
Adjusted return on average common tangible equity (non-GAAP) | 16.05 | % | 14.35 | % | 16.12 | % | 15.54 | % | 15.98 | % | 15.20 | % | 17.82 | % | ||||||||||||||
Adjusted Efficiency Ratio (4) | ||||||||||||||||||||||||||||
Efficiency ratio | 57.03 | % | 58.48 | % | 63.43 | % | 54.00 | % | 53.59 | % | 57.75 | % | 52.48 | % | ||||||||||||||
Effect to adjust for merger, branch consolidation, severance related and other expense (8) | (1.36) | % | (1.08) | % | (0.43) | % | (0.04) | % | (0.41) | % | (1.23) | % | (1.25) | % | ||||||||||||||
Effect to adjust for FDIC special assessment | (0.15) | % | (0.93) | % | (6.11) | % | — | % | — | % | (0.53) | % | — | % | ||||||||||||||
Adjusted efficiency ratio | 55.52 | % | 56.47 | % | 56.89 | % | 53.96 | % | 53.18 | % | 55.99 | % | 51.23 | % | ||||||||||||||
Tangible Book Value Per Common Share (3) | ||||||||||||||||||||||||||||
Book value per common share (GAAP) | $ | 74.16 | $ | 72.82 | $ | 72.78 | $ | 68.81 | $ | 69.61 | ||||||||||||||||||
Effect to adjust for intangible assets | (26.26) | (26.34) | (26.46) | (26.55) | (26.65) | |||||||||||||||||||||||
Tangible book value per common share (non-GAAP) | $ | 47.90 | $ | 46.48 | $ | 46.32 | $ | 42.26 | $ | 42.96 | ||||||||||||||||||
Tangible Equity-to-Tangible Assets (3) | ||||||||||||||||||||||||||||
Equity-to-assets (GAAP) | 12.42 | % | 12.29 | % | 12.32 | % | 11.63 | % | 11.77 | % | ||||||||||||||||||
Effect to adjust for intangible assets | (4.03) | % | (4.08) | % | (4.11) | % | (4.15) | % | (4.16) | % | ||||||||||||||||||
Tangible equity-to-tangible assets (non-GAAP) | 8.39 | % | 8.21 | % | 8.21 | % | 7.48 | % | 7.61 | % | ||||||||||||||||||
Footnotes to tables: | |
(1) | Includes loan accretion (interest) income related to the discount on acquired loans of $4.4 million, $4.3 million, $3.9 million, $4.1 million, and $5.5 million during the quarters ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively, and $8.7 million and $12.9 million during the six months ended June 30, 2024 and 2023, respectively. |
(2) | Adjusted earnings, adjusted return on average assets, adjusted EPS, and adjusted return on average equity are non-GAAP measures and exclude the gains or losses on sales of securities, merger, branch consolidation, severance related and other expense, and FDIC special assessments. Management believes that non-GAAP adjusted measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. Adjusted earnings and the related adjusted return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis: (a) pre-tax merger, branch consolidation, severance related and other expense of $5.8 million, $4.5 million, $1.8 million, $164,000, and $1.8 million for the quarters ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively, and $10.3 million and $11.2 million for the six months ended June 30, 2024 and 2023, respectively; (b) pre-tax net securities losses of $(2,000) for the quarters ended December 31, 2023, and $45,000 for the six months ended June 30, 2023; and (c) pre-tax FDIC special assessment of $619,000, $3.9 million and $25.7 million for the quarters ended June 30, 2024, March 31, 2024 and December 31, 2023, respectively, and $4.5 million for the six months ended June 30, 2024. |
(3) | The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets. The tangible returns on equity and common equity measures also add back the after-tax amortization of intangibles to GAAP basis net income. Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. The sections titled "Reconciliation of GAAP to Non-GAAP" provide tables that reconcile GAAP measures to non-GAAP. |
(4) | Adjusted efficiency ratio is calculated by taking the noninterest expense excluding merger, branch consolidation, severance related and other expense, FDIC special assessment and amortization of intangible assets, divided by net interest income and noninterest income excluding securities gains (losses). The pre-tax amortization expenses of intangible assets were $5.7 million, $6.0 million, $6.6 million, $6.6 million, and $7.0 million for the quarters ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively, and $11.7 million and $14.3 million for the six months ended June 30, 2024 and 2023, respectively. |
(5) | The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period. |
(6) | June 30, 2024 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C; all other periods are presented as filed. |
(7) | Loan data excludes mortgage loans held for sale. |
(8) | Includes pre-tax cyber incident costs of $3.5 million and $4.4 million for the quarters ended June 30, 2024 and March 31, 2024, respectively, and $7.9 million for the six months ended June 30, 2024. |
Cautionary Statement Regarding Forward Looking Statements
This communication contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and other related federal securities laws. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, including information about Independent Bank Group, Inc.'s ("IBTX"), SouthState Corporation's ("SouthState") or the combined company's possible or assumed future results of operations, including its future revenues, income, expenses, provision for taxes, effective tax rate, earnings (loss) per share and cash flows, its future capital expenditures and dividends, its future financial condition and changes therein, including changes in IBTX's, SouthState's or the combined company's loan portfolio and allowance for credit losses, IBTX's, SouthState's or the combined company's future capital structure or changes therein, the plan and objectives of management for future operations, IBTX's, SouthState's or the combined company's future or proposed acquisitions, the future or expected effect of acquisitions on IBTX's, SouthState's or the combined company's operations, results of operations and financial condition, IBTX's, SouthState's or the combined company's future economic performance and the statements of the assumptions underlying any such statement. Such statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is estimated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may" or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. The forward-looking statements that IBTX and SouthState make are based on their current plans, estimates, expectations, ambitions and assumptions regarding IBTX's, SouthState's and the combined company's business, the economy and other future conditions.
Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are beyond the control of IBTX and SouthState. IBTX's, SouthState's and the combined company's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Many possible events or factors could affect IBTX's, SouthState's and the combined company's future financial results and performance and could cause those results or performance to differ materially from those expressed in the forward-looking statements. In addition to factors previously disclosed in IBTX's and SouthState's reports filed with the U.S. Securities and Exchange Commission (the "SEC"), the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between IBTX and SouthState providing for the acquisition of IBTX by SouthState (the "Transaction"); (2) the outcome of any legal proceedings that may be instituted against IBTX or SouthState; (3) the possibility that the Transaction does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Transaction); (4) the risk that the benefits from the Transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in, or problems arising from, general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which IBTX and SouthState operate; (5) disruption to the parties' businesses as a result of the announcement and pendency of the Transaction; (6) the risk that the integration of each party'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 each party's businesses into the other's businesses; (7) the possibility that the Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (8) reputational risk and potential adverse reactions of IBTX's or SouthState's customers, suppliers, employees or other business partners, including those resulting from the announcement or completion of the Transaction; (9) the dilution caused by SouthState's issuance of additional shares of its capital stock in connection with the Transaction; (10) a material adverse change in the financial condition of SouthState or IBTX; (11) general competitive, economic, political and market conditions; (12) major catastrophes such as earthquakes, floods or other natural or human disasters, including infectious disease outbreaks; (13) the diversion of management's attention and time from ongoing business operations and opportunities on merger-related matters; and (14) other factors that may affect future results of IBTX and SouthState including changes in asset quality and credit risk, the inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, the impact, extent and timing of technological changes, capital management activities and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.
These factors are not necessarily all of the factors that could cause IBTX's, SouthState's or the combined company's actual results, performance or achievements to differ materially from those expressed in or implied by any of the forward-looking statements. Other factors, including unknown or unpredictable factors, also could harm IBTX's, SouthState's or the combined company's results.
IBTX and SouthState urge you to consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements made by IBTX and/or SouthState. As a result of these and other matters, including changes in facts, assumptions not being realized or other factors, the actual results relating to the subject matter of any forward-looking statement may differ materially from the anticipated results expressed or implied in that forward-looking statement. Any forward-looking statement made in this communication or made by IBTX or SouthState in any report, filing, document or information incorporated by reference in this communication, speaks only as of the date on which it is made. IBTX and SouthState undertake no obligation to update any such forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. IBTX and SouthState believe that these assumptions or bases have been chosen in good faith and that they are reasonable. However, IBTX and SouthState caution you that assumptions as to future occurrences or results almost always vary from actual future occurrences or results, and the differences between assumptions and actual occurrences and results can be material. Therefore, IBTX and SouthState caution you not to place undue reliance on the forward-looking statements contained in this filing or incorporated by reference herein.
If IBTX or SouthState update one or more forward-looking statements, no inference should be drawn that IBTX or SouthState will make additional updates with respect to those or other forward-looking statements. Further information regarding IBTX, SouthState and factors which could affect the forward-looking statements contained herein can be found in IBTX's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1564618/000156461824000025/ibtx-20231231.htm), and its other filings with the SEC, and in SouthState's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/764038/000155837024002302/ssb-20231231x10k.htm), and its other filings with the SEC.
SOURCE SouthState Corporation
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