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 commitments, as a percentage of loans			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 [phone] within the US and [phone] 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.

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