WINTER HAVEN, Fla., Jan. 25, 2024 /PRNewswire/ -- SouthState Corporation (NYSE: SSB) today released its unaudited results of operations and other financial information for the three-month and twelve-month periods ended December 31, 2023.
"We ended a year that demonstrated the resilience of the SouthState deposit franchise in the face of unprecedented change. In addition, loans grew 7% and we materially built our reserve", commented John C. Corbett, SouthState's Chief Executive Officer. "While we remain cautious of the lag effects of the recent rate increases, we see tremendous opportunity coming out of the cycle. Since the pandemic, Florida has grown by over one million people and SouthState benefits from operating in 4 of the 5 fastest growing states in the country. We are in a great position to deliver outsized results for our shareholders, and I want to thank our team for their hard work and service to our clients during 2023."
Highlights of the fourth quarter of 2023 include:
Returns
Reported Diluted Earnings per Share ("EPS") of $1.39; Adjusted Diluted EPS (Non-GAAP) of $1.67
Net Income of $106.8 million; Adjusted Net Income (Non-GAAP) of $128.3 million
Return on Average Common Equity of 8.0%; Return on Average Tangible Common Equity (Non-GAAP) of 13.5% and Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 16.1%*
Return on Average Assets ("ROAA") of 0.94% and Adjusted ROAA (Non-GAAP) of 1.13%*
Pre-Provision Net Revenue ("PPNR") per Weighted Average Diluted Share (Non-GAAP) of $2.27
Book Value per Share of $72.78; Tangible Book Value ("TBV") per Share (Non-GAAP) of $46.32
* Annualized percentages
Performance
Net Interest Income of $354 million; Core Net Interest Income (excluding loan accretion) (Non-GAAP) of $350 million
Net Interest Margin ("NIM"), non-tax equivalent of 3.47% and tax equivalent (Non-GAAP) of 3.48%
Net charge-offs of $7.3 million, or 0.09% annualized; $9.9 million Provision for Credit Losses ("PCL"), including release for unfunded commitments; total allowance for credit losses ("ACL") plus reserve for unfunded commitments of 1.58%; year-to-date net charge-offs of $24.9 million, or 0.08%
Noninterest Income of $65 million, down $7 million compared to the prior quarter, primarily due to a decrease in correspondent banking and capital markets income; Noninterest Income represented 0.58% of average assets for the fourth quarter of 2023
Recorded FDIC special assessment expense of $26 million
Efficiency Ratio of 63% and Adjusted Efficiency Ratio (Non-GAAP) of 57%
Balance Sheet
Loans increased $372 million, or 5% annualized, led by consumer real estate; ending loan to deposit ratio of 87%
Deposits increased $114 million, or 1% annualized, despite a $339 million decline in brokered CDs; excluding brokered CDs, deposits increased $453 million, or 5% annualized, from prior quarter
Total deposit cost of 1.60%, up 0.16% from prior quarter, resulting in a 30% cycle-to-date beta
Repurchased a total of 100,000 shares during 4Q 2023 at a weighted average price of $67.45
Strong capital position with Tangible Common Equity, Total Risk-Based Capital, Tier 1 Leverage, and Tier 1 Common Equity ratios of 8.2%, 14.1%, 9.4%, and 11.8%, respectively†
† Preliminary
Subsequent Events
The Board of Directors of the Company declared a quarterly cash dividend on its common stock of $0.52 per share, payable on February 16, 2024 to shareholders of record as of February 9, 2024
Financial Performance
Three Months Ended
Twelve Months Ended
(Dollars in thousands, except per share data)
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
INCOME STATEMENT
2023
2023
2023
2023
2022
2023
2022
Interest Income
Loans, including fees (1)
$
459,880
$
443,805
$
419,355
$
393,366
$
359,552
$
1,716,405
$
1,178,026
Investment securities, trading securities, federal funds sold and securities
purchased under agreements to resell
55,555
56,704
58,698
57,043
64,337
228,001
218,999
Total interest income
515,435
500,509
478,053
450,409
423,889
1,944,406
1,397,025
Interest Expense
Deposits
149,584
133,944
100,787
55,942
19,945
440,257
36,984
Federal funds purchased, securities sold under agreements
to repurchase, and other borrowings
11,620
11,194
15,523
13,204
7,940
51,541
24,370
Total interest expense
161,204
145,138
116,310
69,146
27,885
491,798
61,354
Net Interest Income
354,231
355,371
361,743
381,263
396,004
1,452,608
1,335,671
Provision for credit losses
9,893
32,709
38,389
33,091
47,142
114,082
81,855
Net Interest Income after Provision for Credit Losses
344,338
322,662
323,354
348,172
348,862
1,338,526
1,253,816
Noninterest Income
65,489
72,848
77,214
71,355
63,392
286,906
309,247
Noninterest Expense
Operating expense
245,774
238,042
240,818
231,093
227,957
955,727
898,813
Merger, branch consolidation and severance related expense
1,778
164
1,808
9,412
1,542
13,162
30,888
FDIC special assessment
25,691
-
-
-
-
25,691
-
Total noninterest expense
273,243
238,206
242,626
240,505
229,499
994,580
929,701
Income before Income Taxes Provision
136,584
157,304
157,942
179,022
182,755
630,852
633,362
Income taxes provision
29,793
33,160
34,495
39,096
39,253
136,544
137,313
Net Income
$
106,791
$
124,144
$
123,447
$
139,926
$
143,502
$
494,308
$
496,049
Adjusted Net Income (non-GAAP) (2)
Net Income (GAAP)
$
106,791
$
124,144
$
123,447
$
139,926
$
143,502
$
494,308
$
496,049
Securities losses (gains), net of tax
2
-
-
(35)
-
(33)
(24)
Initial provision for credit losses - NonPCD loans and UFC from ACBI, net of tax
-
-
-
-
-
-
13,492
Merger, branch consolidation and severance related expense, net of tax
1,391
130
1,414
7,356
1,211
10,291
24,163
FDIC special assessment, net of tax
20,087
-
-
-
-
20,087
-
Adjusted Net Income (non-GAAP)
$
128,271
$
124,274
$
124,861
$
147,247
$
144,713
$
524,653
$
533,680
Basic earnings per common share
$
1.40
$
1.63
$
1.62
$
1.84
$
1.90
$
6.50
$
6.65
Diluted earnings per common share
$
1.39
$
1.62
$
1.62
$
1.83
$
1.88
$
6.46
$
6.60
Adjusted net income per common share - Basic (non-GAAP) (2)
$
1.69
$
1.63
$
1.64
$
1.94
$
1.91
$
6.90
$
7.16
Adjusted net income per common share - Diluted (non-GAAP) (2)
$
1.67
$
1.62
$
1.63
$
1.93
$
1.90
$
6.86
$
7.10
Dividends per common share
$
0.52
$
0.52
$
0.50
$
0.50
$
0.50
$
2.04
$
1.98
Basic weighted-average common shares outstanding
76,100,187
76,139,170
76,057,977
75,902,440
75,639,640
76,050,730
74,550,708
Diluted weighted-average common shares outstanding
76,634,100
76,571,430
76,417,537
76,388,954
76,326,777
76,479,557
75,181,305
Effective tax rate
21.81 %
21.08 %
21.84 %
21.84 %
21.48 %
21.64 %
21.68 %
Performance and Capital Ratios
Three Months Ended
Twelve Months Ended
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
2023
2023
2023
2023
2022
2023
2022
PERFORMANCE RATIOS
Return on average assets (annualized)
0.94
%
1.10
%
1.11
%
1.29
%
1.28
%
1.11
%
1.12
%
Adjusted return on average assets (annualized) (non-GAAP) (2)
1.13
%
1.10
%
1.12
%
1.35
%
1.29
%
1.17
%
1.20
%
Return on average common equity (annualized)
7.99
%
9.24
%
9.34
%
10.96
%
11.41
%
9.37
%
9.84
%
Adjusted return on average common equity (annualized) (non-GAAP) (2)
9.60
%
9.25
%
9.45
%
11.53
%
11.50
%
9.94
%
10.59
%
Return on average tangible common equity (annualized) (non-GAAP) (3)
13.53
%
15.52
%
15.81
%
18.81
%
20.17
%
15.87
%
17.16
%
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)
16.12
%
15.54
%
15.98
%
19.75
%
20.33
%
16.80
%
18.40
%
Efficiency ratio (tax equivalent)
63.43
%
54.00
%
53.59
%
51.41
%
47.96
%
55.50
%
54.21
%
Adjusted efficiency ratio (non-GAAP) (4)
56.89
%
53.96
%
53.18
%
49.34
%
47.63
%
53.27
%
52.34
%
Dividend payout ratio (5)
37.01
%
31.84
%
30.75
%
27.09
%
26.40
%
31.34
%
29.54
%
Book value per common share
$
72.78
$
68.81
$
69.61
$
69.19
$
67.04
Tangible book value per common share (non-GAAP) (3)
$
46.32
$
42.26
$
42.96
$
42.40
$
40.09
CAPITAL RATIOS
Equity-to-assets
12.3
%
11.6
%
11.8
%
11.7
%
11.6
%
Tangible equity-to-tangible assets (non-GAAP) (3)
8.2
%
7.5
%
7.6
%
7.5
%
7.2
%
Tier 1 leverage (6)
9.4
%
9.3
%
9.2
%
9.1
%
8.7
%
Tier 1 common equity (6)
11.8
%
11.5
%
11.3
%
11.1
%
11.0
%
Tier 1 risk-based capital (6)
11.8
%
11.5
%
11.3
%
11.1
%
11.0
%
Total risk-based capital (6)
14.1
%
13.8
%
13.5
%
13.3
%
13.0
%
Balance Sheet
Ending Balance
(Dollars in thousands, except per share and share data)
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
BALANCE SHEET
2023
2023
2023
2023
2022
Assets
Cash and due from banks
$
510,922
$
514,917
$
552,900
$
558,158
$
548,387
Federal funds sold and interest-earning deposits with banks
487,955
814,220
960,849
1,438,504
764,176
Cash and cash equivalents
998,877
1,329,137
1,513,749
1,996,662
1,312,563
Trading securities, at fair value
31,321
114,154
56,580
16,039
31,263
Investment securities:
Securities held to maturity
2,487,440
2,533,713
2,585,155
2,636,673
2,683,241
Securities available for sale, at fair value
4,784,388
4,623,618
4,949,334
5,159,999
5,326,822
Other investments
192,043
187,152
196,728
217,991
179,717
Total investment securities
7,463,871
7,344,483
7,731,217
8,014,663
8,189,780
Loans held for sale
50,888
27,443
42,951
27,289
28,968
Loans:
Purchased credit deteriorated
1,108,813
1,171,543
1,269,983
1,325,400
1,429,731
Purchased non-credit deteriorated
4,796,913
5,064,254
5,275,913
5,620,290
5,943,092
Non-acquired
26,482,763
25,780,875
24,990,889
23,750,452
22,805,039
Less allowance for credit losses
(456,573)
(447,956)
(427,392)
(370,645)
(356,444)
Loans, net
31,931,916
31,568,716
31,109,393
30,325,497
29,821,418
Premises and equipment, net
519,197
516,583
518,353
517,146
520,635
Bank owned life insurance
991,454
984,881
979,494
967,750
964,708
Mortgage servicing rights
85,164
89,476
87,539
85,406
86,610
Core deposit and other intangibles
88,776
95,094
102,256
109,603
116,450
Goodwill
1,923,106
1,923,106
1,923,106
1,923,106
1,923,106
Other assets
817,454
996,055
875,694
940,666
923,195
Total assets
$
44,902,024
$
44,989,128
$
44,940,332
$
44,923,827
$
43,918,696
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing
$
10,649,274
$
11,158,431
$
11,489,483
$
12,422,583
$
13,168,656
Interest-bearing
26,399,635
25,776,767
25,252,395
23,979,009
23,181,967
Total deposits
37,048,909
36,935,198
36,741,878
36,401,592
36,350,623
Federal funds purchased and securities
sold under agreements to repurchase
489,185
513,304
581,446
544,108
556,417
Other borrowings
491,904
391,997
792,090
1,292,182
392,275
Reserve for unfunded commitments
56,303
62,347
63,399
85,068
67,215
Other liabilities
1,282,625
1,855,295
1,471,509
1,351,873
1,477,239
Total liabilities
39,368,926
39,758,141
39,650,322
39,674,823
38,843,769
Shareholders' equity:
Common stock - $2.50 par value; authorized 160,000,000 shares
190,055
190,043
189,990
189,649
189,261
Surplus
4,240,413
4,238,753
4,228,910
4,224,503
4,215,712
Retained earnings
1,685,166
1,618,080
1,533,508
1,448,636
1,347,042
Accumulated other comprehensive loss
(582,536)
(815,889)
(662,398)
(613,784)
(677,088)
Total shareholders' equity
5,533,098
5,230,987
5,290,010
5,249,004
5,074,927
Total liabilities and shareholders' equity
$
44,902,024
$
44,989,128
$
44,940,332
$
44,923,827
$
43,918,696
Common shares issued and outstanding
76,022,039
76,017,366
75,995,979
75,859,665
75,704,563
Net Interest Income and Margin
Three Months Ended
Dec. 31, 2023
Sep. 30, 2023
Dec. 31, 2022
(Dollars in thousands)
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
YIELD ANALYSIS
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Interest-Earning Assets:
Federal funds sold and interest-earning deposits with banks
$
814,244
$
10,029
4.89 %
$
822,805
$
10,831
5.22 %
$
1,849,877
$
16,491
3.54 %
Investment securities
7,382,800
45,526
2.45 %
7,714,079
45,873
2.36 %
8,286,894
47,846
2.29 %
Loans held for sale
28,878
552
7.58 %
34,736
517
5.90 %
25,633
401
6.21 %
Total loans, excluding PPP
32,234,772
459,316
5.65 %
31,799,469
443,275
5.53 %
29,480,843
359,120
4.83 %
Total PPP loans
4,683
12
1.02 %
5,291
13
0.97 %
12,489
31
0.98 %
Total loans held for investment
32,239,455
459,328
5.65 %
31,804,760
443,288
5.53 %
29,493,332
359,151
4.83 %
Total interest-earning assets
40,465,377
515,435
5.05 %
40,376,380
500,509
4.92 %
39,655,736
423,889
4.24 %
Noninterest-earning assets
4,572,255
4,464,939
4,774,158
Total Assets
$
45,037,632
$
44,841,319
$
44,429,894
Interest-Bearing Liabilities ("IBL"):
Transaction and money market accounts
$
18,957,647
$
107,994
2.26 %
$
18,291,300
$
93,465
2.03 %
$
17,044,865
$
16,901
0.39 %
Savings deposits
2,680,065
1,888
0.28 %
2,845,250
1,919
0.27 %
3,536,330
1,021
0.11 %
Certificates and other time deposits
4,294,555
39,702
3.67 %
4,413,855
38,560
3.47 %
2,444,361
2,023
0.33 %
Federal funds purchased
256,672
3,453
5.34 %
236,732
3,128
5.24 %
186,232
1,694
3.61 %
Repurchase agreements
265,839
1,458
2.18 %
303,339
1,163
1.52 %
363,336
253
0.28 %
Other borrowings
438,701
6,709
6.07 %
456,187
6,903
6.00 %
435,806
5,993
5.46 %
Total interest-bearing liabilities
26,893,479
161,204
2.38 %
26,546,663
145,138
2.17 %
24,010,930
27,885
0.46 %
Noninterest-bearing liabilities ("Non-IBL")
12,844,262
12,965,744
15,427,380
Shareholders' equity
5,299,891
5,328,912
4,991,584
Total Non-IBL and shareholders' equity
18,144,153
18,294,656
20,418,964
Total Liabilities and Shareholders' Equity
$
45,037,632
$
44,841,319
$
44,429,894
Net Interest Income and Margin (Non-Tax Equivalent)
$
354,231
3.47 %
$
355,371
3.49 %
$
396,004
3.96 %
Net Interest Margin (Tax Equivalent) (non-GAAP)
3.48 %
3.50 %
3.99 %
Total Deposit Cost (without Debt and Other Borrowings)
1.60 %
1.44 %
0.21 %
Overall Cost of Funds (including Demand Deposits)
1.69 %
1.52 %
0.29 %
Total Accretion on Acquired Loans (1)
$
3,870
$
4,053
$
7,350
Tax Equivalent ("TE") Adjustment
$
659
$
646
$
2,397
(1) The remaining loan discount on acquired loans to be accreted into loan interest income totals $51.3 million as of December 31, 2023.
Noninterest Income and Expense
Three Months Ended
Twelve Months Ended
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
(Dollars in thousands)
2023
2023
2023
2023
2022
2023
2022
Noninterest Income:
Fees on deposit accounts
$
33,225
$
32,830
$
33,101
$
29,859
$
33,612
$
129,015
$
124,810
Mortgage banking income (loss)
2,191
2,478
4,354
4,332
(545)
13,355
17,790
Trust and investment services income
10,131
9,556
9,823
9,937
9,867
39,447
39,019
Securities (losses) gains, net
(2)
-
-
45
-
43
30
Correspondent banking and capital markets income
16,081
24,808
27,734
21,956
16,760
90,579
92,910
Expense on centrally-cleared variation margin
(12,677)
(11,892)
(8,547)
(8,362)
(8,451)
(41,478)
(14,155)
Total correspondent banking and capital markets income
3,404
12,916
19,187
13,594
8,309
49,101
78,755
Bank owned life insurance income
6,567
7,039
6,271
6,813
6,723
26,690
24,311
Other
9,973
8,029
4,478
6,775
5,426
29,255
24,532
Total Noninterest Income
$
65,489
$
72,848
$
77,214
$
71,355
$
63,392
$
286,906
$
309,247
Noninterest Expense:
Salaries and employee benefits
$
145,850
$
146,146
$
147,342
$
144,060
$
140,440
$
583,398
$
554,704
Occupancy expense
22,715
22,251
22,196
21,533
22,412
88,695
89,501
Information services expense
22,000
21,428
21,119
19,925
19,847
84,472
79,701
OREO and loan related (income) expense
948
613
(14)
169
78
1,716
369
Business development and staff related
7,492
5,995
6,672
5,957
5,851
26,116
20,133
Amortization of intangibles
6,615
6,616
7,028
7,299
8,027
27,558
33,205
Professional fees
7,025
3,456
4,364
3,702
3,756
18,547
15,331
Supplies and printing expense
2,761
2,623
2,554
2,640
2,411
10,578
9,621
FDIC assessment and other regulatory charges
8,325
8,632
9,819
6,294
6,589
33,070
23,033
Advertising and marketing
2,826
3,009
1,521
2,118
2,669
9,474
8,888
Other operating expenses
19,217
17,273
18,217
17,396
15,877
72,103
64,327
Merger, branch consolidation and severance related expense
1,778
164
1,808
9,412
1,542
13,162
30,888
FDIC special assessment
25,691
-
-
-
-
25,691
-
Total Noninterest Expense
$
273,243
$
238,206
$
242,626
$
240,505
$
229,499
$
994,580
$
929,701
Loans and Deposits
The following table presents a summary of the loan portfolio by type:
Ending Balance
(Dollars in thousands)
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
LOAN PORTFOLIO (7)
2023
2023
2023
2023
2022
Construction and land development * †
$
2,923,514
$
2,776,241
$
2,817,125
$
2,749,290
$
2,860,360
Investor commercial real estate*
9,227,968
9,372,683
9,187,948
8,957,507
8,769,201
Commercial owner occupied real estate
5,497,671
5,539,097
5,585,951
5,522,514
5,460,193
Commercial and industrial
5,504,539
5,458,229
5,378,294
5,321,306
5,313,483
Consumer real estate *
7,993,450
7,608,145
7,275,495
6,860,831
6,475,210
Consumer/other
1,241,347
1,262,277
1,291,972
1,284,694
1,299,415
Total Loans
$
32,388,489
$
32,016,672
$
31,536,785
$
30,696,142
$
30,177,862
* Single family home construction-to-permanent loans originated by the Company's mortgage banking division are included in construction and land development category until completion. Investor commercial real estate loans include commercial non-owner occupied real estate and other income producing property. Consumer real estate includes consumer owner occupied real estate and home equity loans.
† Includes single family home construction-to-permanent loans of $715.5 million, $863.1 million, $928.4 million, $893.7 million, and $904.1 million, for the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
Ending Balance
(Dollars in thousands)
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
DEPOSITS
2023
2023
2023
2023
2022
Noninterest-bearing checking
$
10,649,274
$
11,158,431
$
11,489,483
$
12,422,583
$
13,168,656
Interest-bearing checking
7,978,799
7,806,243
8,185,609
8,316,023
8,955,519
Savings
2,632,212
2,760,166
2,931,320
3,156,214
3,464,351
Money market
11,538,671
10,756,431
9,710,032
8,388,275
8,342,111
Time deposits
4,249,953
4,453,927
4,425,434
4,118,497
2,419,986
Total Deposits
$
37,048,909
$
36,935,198
$
36,741,878
$
36,401,592
$
36,350,623
Core Deposits (excludes Time Deposits)
$
32,798,956
$
32,481,271
$
32,316,444
$
32,283,095
$
33,930,637
Asset Quality
Ending Balance
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
(Dollars in thousands)
2023
2023
2023
2023
2022
NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonaccrual loans and restructured loans on nonaccrual
$
110,467
$
105,856
$
104,772
$
68,176
$
44,671
Accruing loans past due 90 days or more
11,305
783
3,620
2,667
2,358
Non-acquired OREO and other nonperforming assets
711
449
227
186
245
Total non-acquired nonperforming assets
122,483
107,088
108,619
71,029
47,274
Acquired
Acquired nonaccrual loans and restructured loans on nonaccrual
59,755
57,464
60,734
52,795
59,554
Accruing loans past due 90 days or more
1,174
1,821
571
983
1,992
Acquired OREO and other nonperforming assets
712
378
981
3,446
922
Total acquired nonperforming assets
61,641
59,663
62,286
57,224
62,468
Total nonperforming assets
$
184,124
$
166,751
$
170,905
$
128,253
$
109,742
Three Months Ended
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
2023
2023
2023
2023
2022
ASSET QUALITY RATIOS (7):
Allowance for credit losses as a percentage of loans
1.41 %
1.40 %
1.36 %
1.21 %
1.18 %
Allowance for credit losses, including reserve for unfunded commitments, as a percentage of loans
1.58 %
1.59 %
1.56 %
1.48 %
1.40 %
Allowance for credit losses as a percentage of nonperforming loans
249.90 %
269.98 %
251.86 %
297.42 %
328.29 %
Net charge-offs (recoveries) as a percentage of average loans (annualized)
0.09 %
0.16 %
0.04 %
0.01 %
0.01 %
Total nonperforming assets as a percentage of total assets
0.41 %
0.37 %
0.38 %
0.29 %
0.25 %
Nonperforming loans as a percentage of period end loans
0.56 %
0.52 %
0.54 %
0.41 %
0.36 %
Current Expected Credit Losses ("CECL")
Below is a table showing the roll forward of the ACL and UFC for the fourth quarter of 2023:
Allowance for Credit Losses ("ACL and UFC")
(Dollars in thousands)
NonPCD ACL
PCD ACL
Total ACL
UFC
Ending balance 9/30/2023
$
409,850
$
38,106
$
447,956
$
62,347
Charge offs
(8,398)
-
(8,398)
-
Acquired charge offs
(1,307)
(768)
(2,075)
-
Recoveries
1,416
-
1,416
-
Acquired recoveries
788
948
1,736
-
Provision (recovery) for credit losses
21,527
(5,589)
15,938
(6,044)
Ending balance 12/31/2023
$
423,876
$
32,697
$
456,573
$
56,303
Period end loans
$
31,279,676
$
1,108,813
$
32,388,489
N/A
Allowance for Credit Losses to Loans
1.36 %
2.95 %
1.41 %
N/A
Unfunded commitments (off balance sheet) *
$
8,457,055
Reserve to unfunded commitments (off balance sheet)
0.67 %
* Unfunded commitments exclude unconditionally cancelable commitments and letters of credit.
Conference Call
The Company will host a conference call to discuss its fourth quarter results at 9:00 a.m. Eastern Time on January 26, 2024. Callers wishing to participate may call toll-free by dialing (888) 350-3899 within the US and (646) 960-0343 for all other locations. The numbers for international participants are listed at https://events.q4irportal.com/custom/access/2324/. The conference ID number is 4200408. Alternatively, individuals may listen to the live webcast of the presentation by visiting SouthStateBank.com. An audio replay of the live webcast is expected to be available by the evening of January 26, 2024 on the Investor Relations section of SouthStateBank.com.
SouthState Corporation is a financial services company headquartered in Winter Haven, Florida. SouthState Bank, N.A., the Company's nationally chartered bank subsidiary, provides consumer, commercial, mortgage and wealth management solutions to more than one million customers throughout Florida, Alabama, Georgia, the Carolinas and Virginia. The Bank also serves clients coast to coast through its correspondent banking division. Additional information is available at SouthStateBank.com.
Non-GAAP Measures
Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables that provide a reconciliation of non-GAAP measures to GAAP measures. Although other companies may use calculation methods that differ from those used by SouthState for non-GAAP measures, management believes that these non-GAAP measures provide additional useful information, which allows readers to evaluate the ongoing performance of the Company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.
(Dollars and shares in thousands, except per share data)
Three Months Ended
PRE-PROVISION NET REVENUE ("PPNR") (NON-GAAP)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Net income (GAAP)
$
106,791
$
124,144
$
123,447
$
139,926
$
143,502
Provision for credit losses
9,893
32,709
38,389
33,091
47,142
Tax provision
29,793
33,160
34,495
39,096
39,253
Merger, branch consolidation and severance related expense
1,778
164
1,808
9,412
1,542
FDIC special assessment
25,691
-
-
-
-
Securities losses (gains)
2
-
-
(45)
-
Pre-provision net revenue (PPNR) (Non-GAAP)
$
173,948
$
190,177
$
198,139
$
221,480
$
231,439
Average asset balance (GAAP)
$
45,037,632
$
44,841,319
$
44,628,124
$
44,104,478
$
44,429,894
PPNR ROAA
1.53
%
1.68
%
1.78
%
2.04
%
2.07
%
Diluted weighted-average common shares outstanding
76,634
76,571
76,418
76,389
76,327
PPNR per weighted-average common shares outstanding
$
2.27
$
2.48
$
2.59
$
2.90
$
3.03
(Dollars in thousands)
Three Months Ended
CORE NET INTEREST INCOME (NON-GAAP)
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Net interest income (GAAP)
$
354,231
$
355,371
$
361,743
$
381,263
$
396,004
Less:
Total accretion on acquired loans
3,870
4,053
5,481
7,398
7,350
Core net interest income (Non-GAAP)
$
350,361
$
351,318
$
356,262
$
373,865
$
388,654
NET INTEREST MARGIN ("NIM"), TE (NON-GAAP)
Net interest income (GAAP)
$
354,231
$
355,371
$
361,743
$
381,263
$
396,004
Total average interest-earning assets
40,465,377
40,376,380
40,127,836
39,409,340
39,655,736
NIM, non-tax equivalent
3.47
%
3.49
%
3.62
%
3.92
%
3.96
%
Tax equivalent adjustment (included in NIM, TE)
659
646
698
1,020
2,397
Net interest income, tax equivalent (Non-GAAP)
$
354,890
$
356,017
$
362,441
$
382,283
$
398,401
NIM, TE (Non-GAAP)
3.48
%
3.50
%
3.62
%
3.93
%
3.99
%
Three Months Ended
Twelve Months Ended
(Dollars in thousands, except per share data)
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
RECONCILIATION OF GAAP TO NON-GAAP
2023
2023
2023
2023
2022
2023
2022
Adjusted Net Income (non-GAAP) (2)
Net income (GAAP)
$
106,791
$
124,144
$
123,447
$
139,926
$
143,502
$
494,308
$
496,049
Securities losses (gains), net of tax
2
-
-
(35)
-
(33)
(24)
PCL - NonPCD loans and UFC, net of tax
-
-
-
-
-
-
13,492
Merger, branch consolidation and severance related expense, net of tax
1,391
130
1,414
7,356
1,211
10,291
24,163
FDIC special assessment, net of tax
20,087
-
-
-
-
20,087
-
Adjusted net income (non-GAAP)
$
128,271
$
124,274
$
124,861
$
147,247
$
144,713
$
524,653
$
533,680
Adjusted Net Income per Common Share - Basic (2)
Earnings per common share - Basic (GAAP)
$
1.40
$
1.63
$
1.62
$
1.84
$
1.90
$
6.50
$
6.65
Effect to adjust for securities losses (gains)
0.00
-
-
(0.00)
-
(0.00)
(0.00)
Effect to adjust for PCL - NonPCD loans and UFC, net of tax
-
-
-
-
-
-
0.19
Effect to adjust for merger, branch consolidation and severance related expense, net of tax
0.03
0.00
0.02
0.10
0.01
0.14
0.32
Effect to adjust for FDIC special assessment, net of tax
0.26
-
-
-
-
0.26
-
Adjusted net income per common share - Basic (non-GAAP)
$
1.69
$
1.63
$
1.64
$
1.94
$
1.91
$
6.90
$
7.16
Adjusted Net Income per Common Share - Diluted (2)
Earnings per common share - Diluted (GAAP)
$
1.39
$
1.62
$
1.62
$
1.83
$
1.88
$
6.46
$
6.60
Effect to adjust for securities losses (gains)
0.00
-
-
(0.00)
-
(0.00)
(0.00)
Effect to adjust for PCL - NonPCD loans and UFC, net of tax
-
-
-
-
-
-
0.18
Effect to adjust for merger, branch consolidation and severance related expense, net of tax
0.02
0.00
0.01
0.10
0.02
0.14
0.32
Effect to adjust for FDIC special assessment, net of tax
0.26
-
-
-
-
0.26
-
Adjusted net income per common share - Diluted (non-GAAP)
$
1.67
$
1.62
$
1.63
$
1.93
$
1.90
$
6.86
$
7.10
Adjusted Return on Average Assets (2)
Return on average assets (GAAP)
0.94
%
1.10
%
1.11
%
1.29
%
1.28
%
1.11
%
1.12
%
Effect to adjust for securities losses (gains)
0.00
%
-
%
-
%
(0.00)
%
-
%
(0.00)
%
(0.00)
%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax
-
%
-
%
-
%
-
%
-
%
-
%
0.03
%
Effect to adjust for merger, branch consolidation and severance related expense, net of tax
0.01
%
-
%
0.01
%
0.06
%
0.01
%
0.02
%
0.05
%
Effect to adjust for FDIC special assessment, net of tax
0.18
%
-
%
-
%
-
%
-
%
0.04
%
-
%
Adjusted return on average assets (non-GAAP)
1.13
%
1.10
%
1.12
%
1.35
%
1.29
%
1.17
%
1.20
%
Adjusted Return on Average Common Equity (2)
Return on average common equity (GAAP)
7.99
%
9.24
%
9.34
%
10.96
%
11.41
%
9.37
%
9.84
%
Effect to adjust for securities losses (gains)
0.00
%
-
%
-
%
(0.00)
%
-
%
(0.00)
%
(0.00)
%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax
-
%
-
%
-
%
-
%
-
%
-
%
0.27
%
Effect to adjust for merger, branch consolidation and severance related expense, net of tax
0.11
%
0.01
%
0.11
%
0.57
%
0.09
%
0.19
%
0.48
%
Effect to adjust for FDIC special assessment, net of tax
1.50
%
-
%
-
%
-
%
-
%
0.38
%
-
%
Adjusted return on average common equity (non-GAAP)
9.60
%
9.25
%
9.45
%
11.53
%
11.50
%
9.94
%
10.59
%
Return on Average Common Tangible Equity (3)
Return on average common equity (GAAP)
7.99
%
9.24
%
9.34
%
10.96
%
11.41
%
9.37
%
9.84
%
Effect to adjust for intangible assets
5.54
%
6.28
%
6.47
%
7.85
%
8.76
%
6.50
%
7.32
%
Return on average tangible equity (non-GAAP)
13.53
%
15.52
%
15.81
%
18.81
%
20.17
%
15.87
%
17.16
%
Adjusted Return on Average Common Tangible Equity (2) (3)
Return on average common equity (GAAP)
7.99
%
9.24
%
9.34
%
10.96
%
11.41
%
9.37
%
9.84
%
Effect to adjust for securities losses (gains)
0.00
%
-
%
-
%
(0.00)
%
-
%
(0.00)
%
(0.00)
%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax
-
%
-
%
-
%
-
%
-
%
-
%
0.27
%
Effect to adjust for merger, branch consolidation and severance related expense, net of tax
0.10
%
0.01
%
0.11
%
0.58
%
0.10
%
0.20
%
0.48
%
Effect to adjust for FDIC special assessment, net of tax
1.50
%
-
%
-
%
-
%
-
%
0.38
%
-
%
Effect to adjust for intangible assets
6.53
%
6.29
%
6.53
%
8.21
%
8.82
%
6.85
%
7.81
%
Adjusted return on average common tangible equity (non-GAAP)
16.12
%
15.54
%
15.98
%
19.75
%
20.33
%
16.80
%
18.40
%
Adjusted Efficiency Ratio (4)
Efficiency ratio
63.43
%
54.00
%
53.59
%
51.41
%
47.96
%
55.50
%
54.21
%
Effect to adjust for merger, branch consolidation and severance related expense
(0.43)
%
(0.04)
%
(0.41)
%
(2.07)
%
(0.33)
%
(0.76)
%
(1.87)
%
Effect to adjust for FDIC special assessment
(6.11)
%
-
%
-
%
-
%
-
%
(1.47)
%
-
%
Adjusted efficiency ratio
56.89
%
53.96
%
53.18
%
49.34
%
47.63
%
53.27
%
52.34
%
Tangible Book Value Per Common Share (3)
Book value per common share (GAAP)
$
72.78
$
68.81
$
69.61
$
69.19
$
67.04
Effect to adjust for intangible assets
(26.46)
(26.55)
(26.65)
(26.79)
(26.95)
Tangible book value per common share (non-GAAP)
$
46.32
$
42.26
$
42.96
$
42.40
$
40.09
Tangible Equity-to-Tangible Assets (3)
Equity-to-assets (GAAP)
12.32
%
11.63
%
11.77
%
11.68
%
11.56
%
Effect to adjust for intangible assets
(4.11)
%
(4.15)
%
(4.16)
%
(4.18)
%
(4.31)
%
Tangible equity-to-tangible assets (non-GAAP)
8.21
%
7.48
%
7.61
%
7.50
%
7.25
%
Certain prior period information has been reclassified to conform to the current period presentation, and these reclassifications have no impact on net income or equity as previously reported.
Footnotes to tables:
(1)
Includes loan accretion (interest) income related to the discount on acquired loans of $3.9 million, $4.1 million, $5.5 million, $7.4 million, and $7.3 million during the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
(2)
Adjusted earnings, adjusted return on average assets, adjusted EPS, and adjusted return on average equity are non-GAAP measures and exclude the gains or losses on sales of securities, merger, branch consolidation and severance related expense, initial PCL on nonPCD loans and unfunded commitments from acquisitions, and FDIC special assessments. Management believes that non-GAAP adjusted measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. Adjusted earnings and the related adjusted return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis: (a) pre-tax merger, branch consolidation and severance related expense of $1.8 million, $164,000, $1.8 million, $9.4 million, and $1.5 million for the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively; (b) pre-tax net securities (losses) gains of $(2,000) and $45,000 for the quarters ended December 31, 2023 and March 31, 2023, respectively; and (c) pre-tax FDIC special assessment of $25.7 million for the quarter ended December 31, 2023.
(3)
The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets. The tangible returns on equity and common equity measures also add back the after-tax amortization of intangibles to GAAP basis net income. Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. The sections titled "Reconciliation of GAAP to Non-GAAP" provide tables that reconcile non-GAAP measures to GAAP.
(4)
Adjusted efficiency ratio is calculated by taking the noninterest expense excluding merger, branch consolidation and severance related expense, FDIC special assessment and amortization of intangible assets, divided by net interest income and noninterest income excluding securities gains (losses). The pre-tax amortization expenses of intangible assets were $6.6 million, $6.6 million, $7.0 million, $7.3 million, and $8.0 million for the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
(5)
The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period.
(6)
December 31, 2023 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C; all other periods are presented as filed.
Statements included in this communication, which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on, among other things, management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and SouthState. Words and phrases such as "may," "approximately," "continue," "should," "expects," "projects," "anticipates," "is likely," "look ahead," "look forward," "believes," "will," "intends," "estimates," "strategy," "plan," "could," "potential," "possible" and variations of such words and similar expressions are intended to identify such forward-looking statements.
SouthState cautions readers that forward-looking statements are subject to certain risks, uncertainties and assumptions that are difficult to predict with regard to, among other things, timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, the following: (1) economic downturn risk, potentially resulting in deterioration in the credit markets, inflation, greater than expected noninterest expenses, excessive loan losses and other negative consequences, which risks could be exacerbated by potential negative economic developments resulting from federal spending cuts and/or one or more federal budget-related impasses or actions; (2) interest rate risk primarily resulting from the interest rate environment, the number and pace of interest rate increases, and their impact on the Bank's earnings, including from the correspondent and mortgage divisions, housing demand, the market value of the Bank's loan and securities portfolios, and the market value of SouthState's equity; (3) volatility in the financial services industry (including failures or rumors of failures of other depository institutions), along with actions taken by governmental agencies to address such turmoil, could affect the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital; (4) the impact of increasing digitization of the banking industry and movement of customers to on-line platforms, and the possible impact on the Bank's results of operations, customer base, expenses, suppliers and operations; (5) controls and procedures risk, including the potential failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures; (6) potential deterioration in real estate values; (7) the impact of competition with other financial institutions, including deposit and loan pricing pressures and the resulting impact, including as a result of compression to net interest margin; (8) risks relating to the ability to retain our culture and attract and retain qualified people, which could be exacerbated by the continuing work from remote environment; (9) credit risks associated with an obligor's failure to meet the terms of any contract with the Bank or otherwise fail to perform as agreed under the terms of any loan-related document; (10) risks related to the ability of the Company to pursue its strategic plans which depend upon certain growth goals in our lines of business; (11) liquidity risk affecting the Bank's ability to meet its obligations when they come due; (12) risks associated with an anticipated increase in SouthState's investment securities portfolio, including risks associated with acquiring and holding investment securities or potentially determining that the amount of investment securities SouthState desires to acquire are not available on terms acceptable to SouthState; (13) unexpected outflows of uninsured deposits may require us to sell investment securities at a loss; (14) the loss of value of our investment portfolio could negatively impact market perceptions of us and could lead to deposit withdrawals; (15) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (16) transaction risk arising from problems with service or product delivery; (17) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (18) regulatory change risk resulting from new laws, rules, regulations, accounting principles, proscribed practices or ethical standards, including, without limitation, the possibility that regulatory agencies may require higher levels of capital above the current regulatory-mandated minimums and including the impact of special FDIC assessments, the Consumer Financial Protection Bureau regulations or other guidance, and the possibility of changes in accounting standards, policies, principles and practices; (19) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (20) reputation risk that adversely affects earnings or capital arising from negative public opinion including the effects of social media on market perceptions of us and banks generally; (21) cybersecurity risk related to the dependence of SouthState on internal computer systems and the technology of outside service providers, as well as the potential impacts of internal or external security breaches, which may subject the Company to potential business disruptions or financial losses resulting from deliberate attacks or unintentional events; (22) reputational and operational risks associated with environment, social and governance (ESG) matters, including the impact of recently passed state legislation and proposed federal and state regulatory guidance and regulation relating to climate change; (23) greater than expected noninterest expenses; (24) excessive loan losses; (25) reputational risk and possible higher than estimated reduced revenue from previously announced changes in the Bank's consumer overdraft programs and other deposit products; (26) the risks of fluctuations in market prices for SouthState common stock that may or may not reflect economic condition or performance of SouthState; (27) the payment of dividends on SouthState common stock, which is subject to legal and regulatory limitations as well as the discretion of the board of directors of SouthState, SouthState's performance and other factors; (28) ownership dilution risk associated with potential acquisitions in which SouthState's stock may be issued as consideration for an acquired company; (29) operational, technological, cultural, regulatory, legal, credit and other risks associated with the exploration, consummation and integration of potential future acquisitions, whether involving stock or cash consideration; (30) catastrophic events such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including public health crises and infectious disease outbreaks, as well as any government actions in response to such events, and the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on SouthState and its customers and other constituencies; (31) geopolitical risk from terrorist activities and armed conflicts that may result in economic and supply disruptions, and loss of market and consumer confidence; and (32) other factors that may affect future results of SouthState, as disclosed in SouthState's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by SouthState with the U.S. Securities and Exchange Commission ("SEC") and available on the SEC's website at http://www.sec.gov, any of which could cause actual results to differ materially from future results expressed, implied or otherwise anticipated by such forward-looking statements.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. SouthState does not undertake any obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
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