Press Release

SouthState Corporation Reports Third Quarter 2022 Results, Declares Quarterly Cash Dividend – QNT Press Release

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WINTER HAVEN, Fla., Oct. 24, 2022 /PRNewswire/ — SouthState Corporation (NASDAQ:SSB) today released its unaudited results of operations and other financial information for the three-month and nine-month periods ended September 30, 2022.

"SouthState reported very strong performance in the third quarter," said John C. Corbett, Chief Executive Officer.  "We produced another record for pre-provision net revenue, robust net interest margin expansion, and another quarter of good expense control.  We are also pleased to have net loan recoveries, though we remain vigilant in the face of an uncertain economy."

Highlights of the third quarter of 2022 include:

Returns

  • Reported Earnings per Share ("EPS") of $1.75; Adjusted Diluted EPS (Non-GAAP) of $1.89
  • Net Income of $133.0 million; Adjusted Net Income (Non-GAAP) of $143.7 million
  • Return on Average Common Equity of 10.3% and Reported Return on Average Tangible Common Equity (Non-GAAP) of 18.0%; Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 19.4%*
  • Return on Average Assets ("ROAA") of 1.16%; Adjusted ROAA (Non-GAAP) of 1.26%*
  • PPNR per weighted average diluted share (Non-GAAP) of $2.74, up 18% from the prior quarter's $2.32 and up 47% from $1.87 in the year ago quarter
  • Book Value per Share of $65.03 decreased by $1.61 per share compared to the prior quarter primarily due to the $2.98 per share impact from the change in Accumulated Other Comprehensive Loss ("AOCI")
  • Tangible Book Value ("TBV") per Share (Non-GAAP) of $37.97, down $1.50 from the prior quarter, also due to the impact of AOCI

Performance

  • Net Interest Income of $358 million; Core Net Interest Income (excluding loan accretion and deferred fees on PPP) (Non-GAAP) increased $47 million from prior quarter
  • Net Interest Margin ("NIM"), non-tax equivalent and tax equivalent (Non-GAAP) of 3.53% and 3.55%, respectively, up 0.43% from prior quarter
  • Noninterest Income of $77 million declined $11 million compared to the prior quarter due to mortgage banking and correspondent banking and capital markets income; Noninterest Income represented 0.67% of average assets for the third quarter of 2022*
  • Noninterest Expense, excluding merger and branch consolidation related expense (Non-GAAP), increased $1 million compared to the prior quarter
  • Efficiency ratio improved to 53% from the prior quarter's 55%; adjusted efficiency ratio (Non-GAAP) improved to 50% from the prior quarter's 54%

∗ Annualized percentages

Balance Sheet / Credit

  • Fed funds and interest-earning cash of $2.4 billion (5% of assets) and ending loan to deposit ratio of 77% provide balance sheet flexibility
  • Loans increased $901 million, or 13% annualized, led by consumer real estate, commercial and industrial, and commercial real estate loans
  • Average deposits declined $384 million, or 4% annualized; average noninterest-bearing deposits remained flat from the prior quarter; total deposit cost was 0.11%, up 5 basis points from prior quarter
  • Period-end deposits declined $1.2 billion primarily due to the timing of ACH payments for the payroll business.  In a quarter ending on a Friday, such as Q3 2022, balances temporarily contract as payments are made from the accounts of payroll companies to their clients' employees.  The impact on the third quarter 2022 ending balances was a $457 million temporary decline in noninterest bearing deposits.  The payroll deposit impact, along with the average balance decline above represents the majority of the $1 billion reduction in period end core deposits.
  • Net recoveries of $1.3 million, or (0.02)% annualized

Subsequent Events

  • The Board of Directors of the Company declared a quarterly cash dividend on its common stock of $0.50 per share, payable on November 18, 2022 to shareholders of record as of November 11, 2022

Financial Performance

Three Months Ended

 Nine Months Ended

(Dollars in thousands, except per share data)

Sep. 30,

Jun. 30,

Mar. 31,

Dec. 31,

Sep. 30,

Sep. 30,

Sep. 30,

INCOME STATEMENT

2022

2022

2022

2021

2021

2022

2021

Interest income

   Loans, including fees (1)

$

312,856

$

272,000

$

233,617

$

238,310

$

246,065

$

818,473

$

752,209

   Investment securities, trading securities, federal funds sold and securities

      purchased under agreements to resell

61,954

53,659

36,847

29,071

25,384

152,460

65,257

Total interest income

374,810

325,659

270,464

267,381

271,449

970,933

817,466

Interest expense

   Deposits

10,137

5,776

4,628

5,121

7,267

20,541

28,061

   Federal funds purchased, securities sold under agreements

      to repurchase, and other borrowings

6,464

5,604

4,362

4,156

4,196

16,430

14,291

Total interest expense

16,601

11,380

8,990

9,277

11,463

36,971

42,352

Net interest income

358,209

314,279

261,474

258,104

259,986

933,962

775,114

  Provision (recovery) for credit losses

23,876

19,286

(8,449)

(9,157)

(38,903)

34,713

(156,116)

Net interest income after provision (recovery) for credit losses

334,333

294,993

269,923

267,261

298,889

899,249

931,230

Noninterest income

77,178

88,292

86,090

91,894

87,010

251,560

262,315

Noninterest expense

Operating expense

226,754

225,779

218,324

217,392

214,672

670,857

652,080

Merger and branch consolidation related expense

13,679

5,390

10,276

6,645

17,618

29,345

60,598

Extinguishment of debt cost

—

—

—

—

—

—

11,706

Total noninterest expense

240,433

231,169

228,600

224,037

232,290

700,202

724,384

Income before provision for income taxes

171,078

152,116

127,413

135,118

153,609

450,607

469,161

Income taxes provision

38,035

32,941

27,084

28,272

30,821

98,060

100,464

Net income

$

133,043

$

119,175

$

100,329

$

106,846

$

122,788

$

352,547

$

368,697

Adjusted net income (non-GAAP) (2)

Net income (GAAP)

$

133,043

$

119,175

$

100,329

$

106,846

$

122,788

$

352,547

$

368,697

Securities gains, net of tax

(24)

—

—

(2)

(51)

(24)

(79)

Initial provision for credit losses – NonPCD loans and UFC from ACBI, net of tax

—

—

13,492

—

—

13,492

—

Merger and branch consolidation related expense, net of tax

10,638

4,223

8,092

5,255

14,083

22,953

47,485

Extinguishment of debt cost, net of tax

—

—

—

—

—

—

9,081

Adjusted net income (non-GAAP)

$

143,657

$

123,398

$

121,913

$

112,099

$

136,820

$

388,968

$

425,184

   Basic earnings per common share

$

1.76

$

1.58

$

1.40

$

1.53

$

1.75

$

4.75

$

5.22

   Diluted earnings per common share

$

1.75

$

1.57

$

1.39

$

1.52

$

1.74

$

4.71

$

5.19

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

$

1.90

$

1.64

$

1.71

$

1.61

$

1.95

$

5.24

$

6.02

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

$

1.89

$

1.62

$

1.69

$

1.59

$

1.94

$

5.20

$

5.98

   Dividends per common share

$

0.50

$

0.49

$

0.49

$

0.49

$

0.49

$

1.48

$

1.43

   Basic weighted-average common shares outstanding

75,605,960

75,461,157

71,447,429

69,651,334

70,066,235

74,184,816

70,643,289

   Diluted weighted-average common shares outstanding

76,182,131

76,094,198

72,110,746

70,289,971

70,575,726

74,791,139

71,108,204

   Effective tax rate

22.23 %

21.66 %

21.26 %

20.92 %

20.06 %

21.76 %

21.41 %

 

Performance and Capital Ratios

Three Months Ended

 Nine Months Ended

Sep. 30,

Jun. 30,

Mar. 31,

Dec. 31,

Sep. 30,

Sep. 30,

Sep. 30,

2022

2022

2022

2021

2021

2022

2021

PERFORMANCE RATIOS

Return on average assets (annualized)

1.16

%

1.04

%

0.95

%

1.02

%

1.20

%

1.05

%

1.25

%

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

1.26

%

1.08

%

1.15

%

1.08

%

1.34

%

1.16

%

1.44

%

Return on average common equity (annualized)

10.31

%

9.36

%

8.24

%

8.84

%

10.21

%

9.32

%

10.41

%

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

11.13

%

9.69

%

10.01

%

9.28

%

11.37

%

10.28

%

12.01

%

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

17.99

%

16.59

%

13.97

%

14.63

%

16.86

%

16.19

%

17.34

%

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

19.36

%

17.15

%

16.79

%

15.30

%

18.68

%

17.77

%

19.85

%

Efficiency ratio (tax equivalent)

53.14

%

54.92

%

62.99

%

61.27

%

64.22

%

56.63

%

66.99

%

Adjusted efficiency ratio (non-GAAP) (4)

50.02

%

53.59

%

60.05

%

59.39

%

59.16

%

54.17

%

60.05

%

Dividend payout ratio (5)

28.44

%

31.03

%

33.71

%

32.02

%

27.94

%

30.82

%

27.39

%

Book value per common share

$

65.03

$

66.64

$

68.30

$

69.27

$

68.55

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

$

37.97

$

39.47

$

41.05

$

44.62

$

43.98

CAPITAL RATIOS

Equity-to-assets

10.9

%

10.9

%

11.2

%

11.4

%

11.7

%

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

6.7

%

6.8

%

7.0

%

7.7

%

7.8

%

Tier 1 leverage (6) *

8.3

%

8.0

%

8.5

%

8.1

%

8.1

%

Tier 1 common equity (6) *

11.0

%

11.1

%

11.4

%

11.8

%

11.9

%

Tier 1 risk-based capital (6) *

11.0

%

11.1

%

11.4

%

11.8

%

11.9

%

Total risk-based capital (6) *

12.9

%

13.0

%

13.3

%

13.6

%

13.8

%

*

The regulatory capital ratios presented above include the assumption of the transitional method relative to the CARES Act in relief of COVID-19 pandemic on the economy and financial institutions in the United States.  The referenced relief allows a total five-year "phase in" of the CECL impact on capital and relief over the next two years for the impact on the allowance for credit losses resulting from COVID-19.

 

Balance Sheet

<td xmlns="http://www.w3.org/1999/xhtml" class="prngen16" colspan="1" rowspan="1" …

Ending Balance

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

Sep. 30,

Jun. 30,

Mar. 31,

Dec. 31,

Sep. 30,

BALANCE SHEET

2022

2022

2022

2021

2021

Assets

   Cash and due from banks

$

394,794

$

561,516

$

588,372

$

476,653

$

597,321

   Federal Funds Sold and interest-earning deposits with banks

2,414,901

4,160,583

5,444,234

6,366,494

5,701,002

Cash and cash equivalents

2,809,695

4,722,099

6,032,606

6,843,147

6,298,323

Trading securities, at fair value

51,940

88,088

74,234

77,689

61,294

Investment securities:

   Securities held to maturity

2,738,178

2,806,465

2,827,769

1,819,901

1,641,485

   Securities available for sale, at fair value

5,369,610

5,666,008

5,924,206

5,193,478

4,631,554

   Other investments

179,755

179,815

179,258

160,568

160,592

               Total investment securities

8,287,543

8,652,288

8,931,233

7,173,947

6,433,631

Loans held for sale

34,477

73,880

130,376

191,723

242,813

Loans:

Purchased credit deteriorated

1,544,562

1,707,592

1,939,033

1,987,322

2,255,874

Purchased non-credit deteriorated

6,365,175

6,908,234

7,633,824

5,890,069

6,554,647

Non-acquired

20,926,566

19,319,440

16,983,570

16,050,775

14,978,428

    Less allowance for credit losses

(324,398)

(319,708)

(300,396)

(301,807)

(314,144)

               Loans, net

28,511,905

27,615,558

26,256,031

23,626,359

23,474,805

Other real estate owned ("OREO")

2,160

1,431

3,290

2,736

3,687

Premises and equipment, net

531,160

562,781

568,332

558,499

569,817

Bank owned life insurance

960,052

953,970

942,922

783,049

778,552

Mortgage servicing rights

90,459

87,463

83,339

65,620

60,922

Core deposit and other intangibles

125,390

132,694

140,364

128,067

136,584

Goodwill

1,922,525

1,922,525

1,924,024

1,581,085

1,581,085

Other assets

1,851,303

1,394,645

1,114,790

928,111

1,262,195

                Total assets

$

45,178,609

$

46,207,422

$

46,201,541

$

41,960,032

$

40,903,708

Liabilities and Shareholders' Equity

Deposits:

   Noninterest-bearing

$

13,660,244

$

14,337,018

$

14,052,332

$

11,498,840

$

11,333,881

   Interest-bearing

24,005,777

24,538,833

24,723,498

23,555,989

22,226,677

               Total deposits

37,666,021

38,875,851

38,775,830

35,054,829

33,560,558

Federal funds purchased and securities

   sold under agreements to repurchase

557,802

669,999

770,409

781,239

859,736

Other borrowings

392,368

392,460

405,553

327,066

326,807

Reserve for unfunded commitments

52,991

32,543

30,368

30,510

28,289

Other liabilities

1,588,241

1,196,144

1,044,973

963,448

1,335,377

               Total liabilities

40,257,423

41,166,997

41,027,133

37,157,092

36,110,767

Shareholders' equity:

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

189,191

189,103

189,403

173,331

174,795

   Surplus

4,207,040

4,195,976

4,214,897

3,653,098

3,693,622

   Retained earnings

1,241,413

1,146,230

1,064,064

997,657

925,044

   Accumulated other comprehensive (loss) income

(716,458)

(490,884)

(293,956)

(21,146)

(520)

               Total shareholders' equity

4,921,186

5,040,425

5,174,408

4,802,940

4,792,941

               Total liabilities and shareholders' equity

$

45,178,609

Full story available on Benzinga.com

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