Results

South State Corporation

04/25/2024 | Press release | Distributed by Public on 04/25/2024 14:20

SouthState Corporation Reports First Quarter 2024 Results - Form 8-K

SouthState Corporation Reports First Quarter 2024 Results

Declares Quarterly Cash Dividend

For Immediate Release

Media Contact

Jackie Smith, 803.231.3486

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

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

Highlights of the first quarter of 2024 include:

Returns

● Reported Diluted Earnings per Share ("EPS") of $1.50; Adjusted Diluted EPS (Non-GAAP) of $1.58
● Net Income of $115.1 million; Adjusted Net Income (Non-GAAP) of $121.3 million
● Return on Average Common Equity of 8.4%; Return on Average Tangible Common Equity (Non-GAAP) of 13.6% and Adjusted Return on Average Tangible Common Equity(Non-GAAP) of 14.4%*
● Return on Average Assets ("ROAA") of 1.03% and Adjusted ROAA (Non-GAAP) of 1.08%*
● Pre-Provision Net Revenue ("PPNR") per Weighted Average Diluted Share (Non-GAAP) of $2.28
● Book Value per Share of $72.82; Tangible Book Value ("TBV") per Share (Non-GAAP) of $46.48

Performance

● Net Interest Income of $344 million; Core Net Interest Income (excluding loan accretion) (Non-GAAP) of $340 million
● Net Interest Margin ("NIM"), non-tax equivalent of 3.40% and tax equivalent (Non-GAAP) of 3.41%
● Net charge-offs of $2.7 million, or 0.03% annualized; $12.7 million Provision for Credit Losses ("PCL"), including release for unfunded commitments; total allowance for credit losses ("ACL") plus reserve for unfunded commitments of 1.60%
● Noninterest Income of $72 million; Noninterest Income represented 0.64% of average assets for the first quarter of 2024
● Recorded FDIC special assessment expense of $3.9 million
● Efficiency Ratio of 58% and Adjusted Efficiency Ratio (Non-GAAP) of 56%

Balance Sheet

● Loans increased $279 million, or 3% annualized, led by consumer real estate; ending loan to deposit ratio of 88%
● Deposits increased $130 million, or 1% annualized
● Total deposit cost of 1.74%, up 0.14% from prior quarter, resulting in a 33% cycle-to-date beta
● Repurchased a total of 100,000 shares during 1Q 2024 at a weighted average price of $79.85
● Strong capital position with Tangible Common Equity, Total Risk-Based Capital, Tier 1 Leverage, and Tier 1 Common Equity ratios of 8.2%, 14.4%, 9.6%, and 11.9%, respectively†

Subsequent Events

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

∗Annualized percentages

† Preliminary

Financial Performance

Three Months Ended

(Dollars in thousands, except per share data)

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

INCOME STATEMENT

2024

2023

2023

2023

2023

Interest Income

Loans, including fees (1)

$

463,688

$

459,880

$

443,805

$

419,355

$

393,366

Investment securities, trading securities, federal funds sold and securities

purchased under agreements to resell

53,567

55,555

56,704

58,698

57,043

Total interest income

517,255

515,435

500,509

478,053

450,409

Interest Expense

Deposits

160,162

149,584

133,944

100,787

55,942

Federal funds purchased, securities sold under agreements

to repurchase, and other borrowings

13,157

11,620

11,194

15,523

13,204

Total interest expense

173,319

161,204

145,138

116,310

69,146

Net Interest Income

343,936

354,231

355,371

361,743

381,263

Provision for credit losses

12,686

9,893

32,709

38,389

33,091

Net Interest Income after Provision for Credit Losses

331,250

344,338

322,662

323,354

348,172

Noninterest Income

71,558

65,489

72,848

77,214

71,355

Noninterest Expense

Operating expense

240,923

245,774

238,042

240,818

231,093

Merger, branch consolidation, severance related and other expense (8)

4,513

1,778

164

1,808

9,412

FDIC special assessment

3,854

25,691

-

-

-

Total noninterest expense

249,290

273,243

238,206

242,626

240,505

Income before Income Taxes Provision

153,518

136,584

157,304

157,942

179,022

Income taxes provision

38,462

29,793

33,160

34,495

39,096

Net Income

$

115,056

$

106,791

$

124,144

$

123,447

$

139,926

Adjusted Net Income (non-GAAP) (2)

Net Income (GAAP)

$

115,056

$

106,791

$

124,144

$

123,447

$

139,926

Securities losses (gains), net of tax

-

2

-

-

(35)

Merger, branch consolidation, severance related and other expense, net of tax (8)

3,382

1,391

130

1,414

7,356

FDIC special assessment, net of tax

2,888

20,087

-

-

-

Adjusted Net Income (non-GAAP)

$

121,326

$

128,271

$

124,274

$

124,861

$

147,247

Basic earnings per common share

$

1.51

$

1.40

$

1.63

$

1.62

$

1.84

Diluted earnings per common share

$

1.50

$

1.39

$

1.62

$

1.62

$

1.83

Adjusted net income per common share - Basic (non-GAAP) (2)

$

1.59

$

1.69

$

1.63

$

1.64

$

1.94

Adjusted net income per common share - Diluted (non-GAAP) (2)

$

1.58

$

1.67

$

1.62

$

1.63

$

1.93

Dividends per common share

$

0.52

$

0.52

$

0.52

$

0.50

$

0.50

Basic weighted-average common shares outstanding

76,301,411

76,100,187

76,139,170

76,057,977

75,902,440

Diluted weighted-average common shares outstanding

76,660,081

76,634,100

76,571,430

76,417,537

76,388,954

Effective tax rate

25.05%

21.81%

21.08%

21.84%

21.84%

2

Performance and Capital Ratios

Three Months Ended

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

2024

2023

2023

2023

2023

PERFORMANCE RATIOS

Return on average assets (annualized)

1.03

%

0.94

%

1.10

%

1.11

%

1.29

%

Adjusted return on average assets (annualized) (non-GAAP) (2)

1.08

%

1.13

%

1.10

%

1.12

%

1.35

%

Return on average common equity (annualized)

8.36

%

7.99

%

9.24

%

9.34

%

10.96

%

Adjusted return on average common equity (annualized) (non-GAAP) (2)

8.81

%

9.60

%

9.25

%

9.45

%

11.53

%

Return on average tangible common equity (annualized) (non-GAAP) (3)

13.63

%

13.53

%

15.52

%

15.81

%

18.81

%

Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)

14.35

%

16.12

%

15.54

%

15.98

%

19.75

%

Efficiency ratio (tax equivalent)

58.48

%

63.43

%

54.00

%

53.59

%

51.41

%

Adjusted efficiency ratio (non-GAAP) (4)

56.47

%

56.89

%

53.96

%

53.18

%

49.34

%

Dividend payout ratio (5)

34.42

%

37.01

%

31.84

%

30.75

%

27.09

%

Book value per common share

$

72.82

$

72.78

$

68.81

$

69.61

$

69.19

Tangible book value per common share (non-GAAP) (3)

$

46.48

$

46.32

$

42.26

$

42.96

$

42.40

CAPITAL RATIOS

Equity-to-assets

12.3

%

12.3

%

11.6

%

11.8

%

11.7

%

Tangible equity-to-tangible assets (non-GAAP) (3)

8.2

%

8.2

%

7.5

%

7.6

%

7.5

%

Tier 1 leverage (6)

9.6

%

9.4

%

9.3

%

9.2

%

9.1

%

Tier 1 common equity (6)

11.9

%

11.8

%

11.5

%

11.3

%

11.1

%

Tier 1 risk-based capital (6)

11.9

%

11.8

%

11.5

%

11.3

%

11.1

%

Total risk-based capital (6)

14.4

%

14.1

%

13.8

%

13.5

%

13.3

%

3

Balance Sheet

Ending Balance

(Dollars in thousands, except per share and share data)

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

BALANCE SHEET

2024

2023

2023

2023

2023

Assets

Cash and due from banks

$

478,271

$

510,922

$

514,917

$

552,900

$

558,158

Federal funds sold and interest-earning deposits with banks

731,186

487,955

814,220

960,849

1,438,504

Cash and cash equivalents

1,209,457

998,877

1,329,137

1,513,749

1,996,662

Trading securities, at fair value

66,188

31,321

114,154

56,580

16,039

Investment securities:

Securities held to maturity

2,446,589

2,487,440

2,533,713

2,585,155

2,636,673

Securities available for sale, at fair value

4,598,400

4,784,388

4,623,618

4,949,334

5,159,999

Other investments

187,285

192,043

187,152

196,728

217,991

Total investment securities

7,232,274

7,463,871

7,344,483

7,731,217

8,014,663

Loans held for sale

56,553

50,888

27,443

42,951

27,289

Loans:

Purchased credit deteriorated

1,031,283

1,108,813

1,171,543

1,269,983

1,325,400

Purchased non-credit deteriorated

4,534,583

4,796,913

5,064,254

5,275,913

5,620,290

Non-acquired

27,101,444

26,482,763

25,780,875

24,990,889

23,750,452

Less allowance for credit losses

(469,654)

(456,573)

(447,956)

(427,392)

(370,645)

Loans, net

32,197,656

31,931,916

31,568,716

31,109,393

30,325,497

Premises and equipment, net

512,635

519,197

516,583

518,353

517,146

Bank owned life insurance

997,562

991,454

984,881

979,494

967,750

Mortgage servicing rights

87,970

85,164

89,476

87,539

85,406

Core deposit and other intangibles

83,193

88,776

95,094

102,256

109,603

Goodwill

1,923,106

1,923,106

1,923,106

1,923,106

1,923,106

Other assets

778,244

817,454

996,055

875,694

940,666

Total assets

$

45,144,838

$

44,902,024

$

44,989,128

$

44,940,332

$

44,923,827

Liabilities and Shareholders' Equity

Deposits:

Noninterest-bearing

$

10,546,410

$

10,649,274

$

11,158,431

$

11,489,483

$

12,422,583

Interest-bearing

26,632,024

26,399,635

25,776,767

25,252,395

23,979,009

Total deposits

37,178,434

37,048,909

36,935,198

36,741,878

36,401,592

Federal funds purchased and securities

sold under agreements to repurchase

554,691

489,185

513,304

581,446

544,108

Other borrowings

391,812

491,904

391,997

792,090

1,292,182

Reserve for unfunded commitments

53,229

56,303

62,347

63,399

85,068

Other liabilities

1,419,663

1,282,625

1,855,295

1,471,509

1,351,873

Total liabilities

39,597,829

39,368,926

39,758,141

39,650,322

39,674,823

Shareholders' equity:

Common stock - $2.50 par value; authorized 160,000,000 shares

190,443

190,055

190,043

189,990

189,649

Surplus

4,230,345

4,240,413

4,238,753

4,228,910

4,224,503

Retained earnings

1,749,215

1,685,166

1,618,080

1,533,508

1,448,636

Accumulated other comprehensive loss

(622,994)

(582,536)

(815,889)

(662,398)

(613,784)

Total shareholders' equity

5,547,009

5,533,098

5,230,987

5,290,010

5,249,004

Total liabilities and shareholders' equity

$

45,144,838

$

44,902,024

$

44,989,128

$

44,940,332

$

44,923,827

Common shares issued and outstanding

76,177,163

76,022,039

76,017,366

75,995,979

75,859,665

4

Net Interest Income and Margin

Three Months Ended

​

Mar. 31, 2024

Dec. 31, 2023

Mar. 31, 2023

(Dollars in thousands)

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

YIELD ANALYSIS

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Interest-Earning Assets:

Federal funds sold and interest-earning deposits with banks

$

668,349

$

8,254

4.97%

$

814,244

$

10,029

4.89%

$

759,239

$

8,921

4.77%

Investment securities

7,465,735

45,313

2.44%

7,382,800

45,526

2.45%

8,232,582

48,122

2.37%

Loans held for sale

42,872

681

6.39%

28,878

552

7.58%

23,123

402

7.05%

Total loans held for investment

32,480,220

463,007

5.73%

32,239,455

459,328

5.65%

30,394,396

392,964

5.24%

Total interest-earning assets

40,657,176

517,255

5.12%

40,465,377

515,435

5.05%

39,409,340

450,409

4.64%

Noninterest-earning assets

4,353,987

4,572,255

4,695,138

Total Assets

$

45,011,163

$

45,037,632

$

44,104,478

Interest-Bearing Liabilities ("IBL"):

Transaction and money market accounts

$

19,544,019

$

117,292

2.41%

$

18,957,647

$

107,994

2.26%

$

16,874,909

$

40,516

0.97%

Savings deposits

2,589,251

1,818

0.28%

2,680,065

1,888

0.28%

3,298,221

1,756

0.22%

Certificates and other time deposits

4,282,749

41,052

3.86%

4,294,555

39,702

3.67%

3,114,354

13,670

1.78%

Federal funds purchased

256,506

3,369

5.28%

256,672

3,453

5.34%

193,259

2,187

4.59%

Repurchase agreements

280,674

1,358

1.95%

265,839

1,458

2.18%

373,563

666

0.72%

Other borrowings

563,848

8,430

6.01%

438,701

6,709

6.07%

785,571

10,351

5.34%

Total interest-bearing liabilities

27,517,047

173,319

2.53%

26,893,479

161,204

2.38%

24,639,877

69,146

1.14%

Noninterest-bearing liabilities ("Non-IBL")

11,957,565

12,844,262

14,287,553

Shareholders' equity

5,536,551

5,299,891

5,177,048

Total Non-IBL and shareholders' equity

17,494,116

18,144,153

19,464,601

Total Liabilities and Shareholders' Equity

$

45,011,163

$

45,037,632

$

44,104,478

Net Interest Income and Margin (Non-Tax Equivalent)

$

343,936

3.40%

$

354,231

3.47%

$

381,263

3.92%

Net Interest Margin (Tax Equivalent) (non-GAAP)

3.41%

3.48%

3.93%

Total Deposit Cost (without Debt and Other Borrowings)

1.74%

1.60%

0.63%

Overall Cost of Funds (including Demand Deposits)

1.83%

1.69%

0.75%

Total Accretion on Acquired Loans (1)

$

4,287

$

3,870

$

7,398

Tax Equivalent ("TE") Adjustment

$

528

$

659

$

1,020

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

5

Noninterest Income and Expense

Three Months Ended

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

(Dollars in thousands)

2024

2023

2023

2023

2023

Noninterest Income:

Fees on deposit accounts

$

33,145

$

33,225

$

32,830

$

33,101

$

29,859

Mortgage banking income

6,169

2,191

2,478

4,354

4,332

Trust and investment services income

10,391

10,131

9,556

9,823

9,937

Securities (losses) gains, net

-

(2)

-

-

45

Correspondent banking and capital markets income

14,591

16,081

24,808

27,734

21,956

Expense on centrally-cleared variation margin

(10,280)

(12,677)

(11,892)

(8,547)

(8,362)

Total correspondent banking and capital markets income

4,311

3,404

12,916

19,187

13,594

Bank owned life insurance income

6,892

6,567

7,039

6,271

6,813

Other

10,650

9,973

8,029

4,478

6,775

Total Noninterest Income

$

71,558

$

65,489

$

72,848

$

77,214

$

71,355

Noninterest Expense:

Salaries and employee benefits

$

150,453

$

145,850

$

146,146

$

147,342

$

144,060

Occupancy expense

22,577

22,715

22,251

22,196

21,533

Information services expense

22,353

22,000

21,428

21,119

19,925

OREO and loan related expense (income)

606

948

613

(14)

169

Business development and staff related

5,799

7,492

5,995

6,672

5,957

Amortization of intangibles

5,998

6,615

6,616

7,028

7,299

Professional fees

3,115

7,025

3,456

4,364

3,702

Supplies and printing expense

2,540

2,761

2,623

2,554

2,640

FDIC assessment and other regulatory charges

8,534

8,325

8,632

9,819

6,294

Advertising and marketing

1,984

2,826

3,009

1,521

2,118

Other operating expenses

16,964

19,217

17,273

18,217

17,396

Merger, branch consolidation, severance related and other expense (8)

4,513

1,778

164

1,808

9,412

FDIC special assessment

3,854

25,691

-

-

-

Total Noninterest Expense

$

249,290

$

273,243

$

238,206

$

242,626

$

240,505

6

Loans and Deposits

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

Ending Balance

(Dollars in thousands)

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

LOAN PORTFOLIO (7)

2024

2023

2023

2023

2023

Construction and land development * †

$

2,437,343

$

2,923,514

$

2,776,241

$

2,817,125

$

2,749,290

Investor commercial real estate*

9,752,529

9,227,968

9,372,683

9,187,948

8,957,507

Commercial owner occupied real estate

5,511,855

5,497,671

5,539,097

5,585,951

5,522,514

Commercial and industrial

5,544,131

5,504,539

5,458,229

5,378,294

5,321,306

Consumer real estate *

8,223,066

7,993,450

7,608,145

7,275,495

6,860,831

Consumer/other

1,198,386

1,241,347

1,262,277

1,291,972

1,284,694

Total Loans

$

32,667,310

$

32,388,489

$

32,016,672

$

31,536,785

$

30,696,142

* Single family home construction-to-permanent loans originated by the Company's mortgage banking division are included in construction and land development category until completion. Investor commercial real estate loans include commercial non-owner occupied real estate and other income producing property. Consumer real estate includes consumer owner occupied real estate and home equity loans.

† Includes single family home construction-to-permanent loans of $623.9 million, $715.5 million, $863.1 million, $928.4 million, and $893.7 million for the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.

Ending Balance

(Dollars in thousands)

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

DEPOSITS

2024

2023

2023

2023

2023

Noninterest-bearing checking

$

10,546,410

$

10,649,274

$

11,158,431

$

11,489,483

$

12,422,583

Interest-bearing checking

7,898,835

7,978,799

7,806,243

8,185,609

8,316,023

Savings

2,557,203

2,632,212

2,760,166

2,931,320

3,156,214

Money market

11,895,385

11,538,671

10,756,431

9,710,032

8,388,275

Time deposits

4,280,601

4,249,953

4,453,927

4,425,434

4,118,497

Total Deposits

$

37,178,434

$

37,048,909

$

36,935,198

$

36,741,878

$

36,401,592

Core Deposits (excludes Time Deposits)

$

32,897,833

$

32,798,956

$

32,481,271

$

32,316,444

$

32,283,095

7

Asset Quality

Ending Balance

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

(Dollars in thousands)

2024

2023

2023

2023

2023

NONPERFORMING ASSETS:

Non-acquired

Non-acquired nonaccrual loans and restructured loans on nonaccrual

$

106,189

$

110,467

$

105,856

$

104,772

$

68,176

Accruing loans past due 90 days or more

2,497

11,305

783

3,620

2,667

Non-acquired OREO and other nonperforming assets

1,589

711

449

227

186

Total non-acquired nonperforming assets

110,275

122,483

107,088

108,619

71,029

Acquired

Acquired nonaccrual loans and restructured loans on nonaccrual

63,451

59,755

57,464

60,734

52,795

Accruing loans past due 90 days or more

135

1,174

1,821

571

983

Acquired OREO and other nonperforming assets

655

712

378

981

3,446

Total acquired nonperforming assets

64,241

61,641

59,663

62,286

57,224

Total nonperforming assets

$

174,516

$

184,124

$

166,751

$

170,905

$

128,253

Three Months Ended

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

2024

2023

2023

2023

2023

ASSET QUALITY RATIOS (7):

Allowance for credit losses as a percentage of loans

1.44%

1.41%

1.40%

1.36%

1.21%

Allowance for credit losses, including reserve for unfunded commitments, as a percentage of loans

1.60%

1.58%

1.59%

1.56%

1.48%

Allowance for credit losses as a percentage of nonperforming loans

272.62%

249.90%

269.98%

251.86%

297.42%

Net charge-offs as a percentage of average loans (annualized)

0.03%

0.09%

0.16%

0.04%

0.01%

Total nonperforming assets as a percentage of total assets

0.39%

0.41%

0.37%

0.38%

0.29%

Nonperforming loans as a percentage of period end loans

0.53%

0.56%

0.52%

0.54%

0.41%

Current Expected Credit Losses ("CECL")

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

Allowance for Credit Losses ("ACL and UFC")

(Dollars in thousands)

NonPCD ACL

PCD ACL

Total ACL

UFC

Ending balance 12/31/2023

$

423,876

$

32,697

$

456,573

$

56,303

Charge offs

(4,829)

-

(4,829)

-

Acquired charge offs

(2,889)

(222)

(3,111)

-

Recoveries

2,703

-

2,703

-

Acquired recoveries

272

2,286

2,558

-

Provision (recovery) for credit losses

20,055

(4,295)

15,760

(3,074)

Ending balance 3/31/2024

$

439,188

$

30,466

$

469,654

$

53,229

Period end loans

$

31,636,027

$

1,031,283

$

32,667,310

N/A

Allowance for Credit Losses to Loans

1.39%

2.95%

1.44%

N/A

Unfunded commitments (off balance sheet) *

$

8,160,594

Reserve to unfunded commitments (off balance sheet)

0.65%

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

Conference Call

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

SouthState Corporationis 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.

###

8

Non-GAAP Measures

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

(Dollars and shares in thousands, except per share data)

Three Months Ended

PRE-PROVISION NET REVENUE ("PPNR") (NON-GAAP)

Mar. 31, 2024

Dec. 31, 2023

Sep. 30, 2023

Jun. 30, 2023

Mar. 31, 2023

Net income (GAAP)

$

115,056

$

106,791

$

124,144

$

123,447

$

139,926

Provision for credit losses

12,686

9,893

32,709

38,389

33,091

Tax provision

38,462

29,793

33,160

34,495

39,096

Merger, branch consolidation, severance related and other expense (8)

4,513

1,778

164

1,808

9,412

FDIC special assessment

3,854

25,691

-

-

-

Securities losses (gains)

-

2

-

-

(45)

Pre-provision net revenue (PPNR) (Non-GAAP)

$

174,571

$

173,948

$

190,177

$

198,139

$

221,480

Average asset balance (GAAP)

$

45,011,163

$

45,037,632

$

44,841,319

$

44,628,124

$

44,104,478

PPNR ROAA

1.56

%

1.53

%

1.68

%

1.78

%

2.04

%

Diluted weighted-average common shares outstanding

76,660

76,634

76,571

76,418

76,389

PPNR per weighted-average common shares outstanding

$

2.28

$

2.27

$

2.48

$

2.59

$

2.90

(Dollars in thousands)

Three Months Ended

CORE NET INTEREST INCOME (NON-GAAP)

Mar. 31, 2024

Dec. 31, 2023

Sep. 30, 2023

Jun. 30, 2023

Mar. 31, 2023

Net interest income (GAAP)

$

343,936

$

354,231

$

355,371

$

361,743

$

381,263

Less:

Total accretion on acquired loans

4,287

3,870

4,053

5,481

7,398

Core net interest income (Non-GAAP)

$

339,649

$

350,361

$

351,318

$

356,262

$

373,865

NET INTEREST MARGIN ("NIM"), TE (NON-GAAP)

Net interest income (GAAP)

$

343,936

$

354,231

$

355,371

$

361,743

$

381,263

Total average interest-earning assets

40,657,176

40,465,377

40,376,380

40,127,836

39,409,340

NIM, non-tax equivalent

3.40

%

3.47

%

3.49

%

3.62

%

3.92

%

Tax equivalent adjustment (included in NIM, TE)

528

659

646

698

1,020

Net interest income, tax equivalent (Non-GAAP)

$

344,464

$

354,890

$

356,017

$

362,441

$

382,283

NIM, TE (Non-GAAP)

3.41

%

3.48

%

3.50

%

3.62

%

3.93

%

9

Three Months Ended

(Dollars in thousands, except per share data)

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Mar. 31,

RECONCILIATION OF GAAP TO NON-GAAP

2024

2023

2023

2023

2023

Adjusted Net Income (non-GAAP) (2)

Net income (GAAP)

$

115,056

$

106,791

$

124,144

$

123,447

$

139,926

Securities losses (gains), net of tax

-

2

-

-

(35)

Merger, branch consolidation, severance related and other expense, net of tax (8)

3,382

1,391

130

1,414

7,356

FDIC special assessment, net of tax

2,888

20,087

-

-

-

Adjusted net income (non-GAAP)

$

121,326

$

128,271

$

124,274

$

124,861

$

147,247

Adjusted Net Income per Common Share - Basic (2)

Earnings per common share - Basic (GAAP)

$

1.51

$

1.40

$

1.63

$

1.62

$

1.84

Effect to adjust for securities losses (gains), net of tax

-

0.00

-

-

(0.00)

Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)

0.04

0.03

0.00

0.02

0.10

Effect to adjust for FDIC special assessment, net of tax

0.04

0.26

-

-

-

Adjusted net income per common share - Basic (non-GAAP)

$

1.59

$

1.69

$

1.63

$

1.64

$

1.94

Adjusted Net Income per Common Share - Diluted (2)

Earnings per common share - Diluted (GAAP)

$

1.50

$

1.39

$

1.62

$

1.62

$

1.83

Effect to adjust for securities losses (gains), net of tax

-

-

-

-

(0.00)

Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)

0.04

0.02

0.00

0.01

0.10

Effect to adjust for FDIC special assessment, net of tax

0.04

0.26

-

-

-

Adjusted net income per common share - Diluted (non-GAAP)

$

1.58

$

1.67

$

1.62

$

1.63

$

1.93

Adjusted Return on Average Assets (2)

Return on average assets (GAAP)

1.03

%

0.94

%

1.10

%

1.11

%

1.29

%

Effect to adjust for securities losses (gains), net of tax

-

%

0.00

%

-

%

-

%

(0.00)

%

Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)

0.02

%

0.01

%

-

%

0.01

%

0.06

%

Effect to adjust for FDIC special assessment, net of tax

0.03

%

0.18

%

-

%

-

%

-

%

Adjusted return on average assets (non-GAAP)

1.08

%

1.13

%

1.10

%

1.12

%

1.35

%

Adjusted Return on Average Common Equity (2)

Return on average common equity (GAAP)

8.36

%

7.99

%

9.24

%

9.34

%

10.96

%

Effect to adjust for securities losses (gains), net of tax

-

%

0.00

%

-

%

-

%

(0.00)

%

Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)

0.24

%

0.11

%

0.01

%

0.11

%

0.57

%

Effect to adjust for FDIC special assessment, net of tax

0.21

%

1.50

%

-

%

-

%

-

%

Adjusted return on average common equity (non-GAAP)

8.81

%

9.60

%

9.25

%

9.45

%

11.53

%

Return on Average Common Tangible Equity (3)

Return on average common equity (GAAP)

8.36

%

7.99

%

9.24

%

9.34

%

10.96

%

Effect to adjust for intangible assets

5.27

%

5.54

%

6.28

%

6.47

%

7.85

%

Return on average tangible equity (non-GAAP)

13.63

%

13.53

%

15.52

%

15.81

%

18.81

%

Adjusted Return on Average Common Tangible Equity (2) (3)

Return on average common equity (GAAP)

8.36

%

7.99

%

9.24

%

9.34

%

10.96

%

Effect to adjust for securities losses (gains), net of tax

-

%

0.00

%

-

%

-

%

(0.00)

%

Effect to adjust for merger, branch consolidation, severance related and other expense, net of tax (8)

0.25

%

0.10

%

0.01

%

0.11

%

0.58

%

Effect to adjust for FDIC special assessment, net of tax

0.21

%

1.50

%

-

%

-

%

-

%

Effect to adjust for intangible assets, net of tax

5.53

%

6.53

%

6.29

%

6.53

%

8.21

%

Adjusted return on average common tangible equity (non-GAAP)

14.35

%

16.12

%

15.54

%

15.98

%

19.75

%

Adjusted Efficiency Ratio (4)

Efficiency ratio

58.48

%

63.43

%

54.00

%

53.59

%

51.41

%

Effect to adjust for merger, branch consolidation, severance related and other expense (8)

(1.08)

%

(0.43)

%

(0.04)

%

(0.41)

%

(2.07)

%

Effect to adjust for FDIC special assessment

(0.93)

%

(6.11)

%

-

%

-

%

-

%

Adjusted efficiency ratio

56.47

%

56.89

%

53.96

%

53.18

%

49.34

%

Tangible Book Value Per Common Share (3)

Book value per common share (GAAP)

$

72.82

$

72.78

$

68.81

$

69.61

$

69.19

Effect to adjust for intangible assets

(26.34)

(26.46)

(26.55)

(26.65)

(26.79)

Tangible book value per common share (non-GAAP)

$

46.48

$

46.32

$

42.26

$

42.96

$

42.40

Tangible Equity-to-Tangible Assets (3)

Equity-to-assets (GAAP)

12.29

%

12.32

%

11.63

%

11.77

%

11.68

%

Effect to adjust for intangible assets

(4.08)

%

(4.11)

%

(4.15)

%

(4.16)

%

(4.18)

%

Tangible equity-to-tangible assets (non-GAAP)

8.21

%

8.21

%

7.48

%

7.61

%

7.50

%

10

Footnotes to tables:

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

11

Cautionary Statement Regarding Forward Looking Statements

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

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

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

12