WINTER HAVEN, Fla., July 28, 2022 /PRNewswire/ -- SouthState Corporation (NASDAQ:SSB) today released its unaudited results of operations and other financial information for the three-month and six-month periods ended June 30, 2022.

The Company reported consolidated net income of $1.57 per diluted common share for the three months ended June 30, 2022, compared to $1.39 per diluted common share for the three months ended March 31, 2022, and compared to $1.39 per diluted common share one year ago.

Adjusted net income (non-GAAP) totaled $1.62 per diluted share for the three months ended June 30, 2022, compared to $1.69 per diluted share for the three months ended March 31, 2022, and compared to $1.87 per diluted share one year ago. Adjusted net income in the second quarter of 2022 excludes $4.2 million of merger and branch consolidation related expense (after-tax).

"We are pleased to report very strong performance in the second quarter, with record pre-provision net revenue, robust loan growth, and continued strength in asset quality," said John C. Corbett, Chief Executive Officer. "Our strong revenue growth in the quarter and limited expense growth combined to produce 12% operating leverage. We are also pleased that our pre-provision net revenue per diluted share rose almost 30% from Q1 levels."

Highlights of the second quarter of 2022 include:

Returns

Reported and Adjusted Diluted Earnings per Share ("EPS") of $1.57 and $1.62 (Non-GAAP), respectively
Net Income and Adjusted Net Income of $119.2 million and $123.4 million (Non-GAAP), respectively
Return on Average Common Equity of 9.36%^* and Reported and Adjusted Return on Average Tangible Common Equity of 16.6%^* (Non-GAAP) and 17.2%^* (Non-GAAP), respectively
Return on Average Assets ("ROAA") and Adjusted ROAA of 1.04%^* and 1.08%^* (Non-GAAP), respectively
Pre-Provision Net Revenue ("PPNR") of $176.8 million (Non-GAAP), or 1.55%^* PPNR ROAA (Non-GAAP)
PPNR per weighted average diluted share (Non-GAAP) of $2.32, up nearly 30% from the prior quarter's $1.79 and up 46% from $1.59 one year ago
Book Value per Share of $66.64 decreased by $1.66 per share compared to the prior quarter primarily due to the $2.60 per share impact from the change in accumulated other comprehensive loss
Tangible Book Value ("TBV") per Share of $39.47 (Non-GAAP), down $1.58, or 3.8% from the prior quarter
Recorded a provision for credit losses of $19.3 million compared to a negative provision for credit losses of $8.4 million in the prior quarter

∗ Annualized

Performance

Net Interest Income of $314.3 million; Core Net Interest Income (non-GAAP) (excluding loan accretion and deferred fees on PPP) increased $47.8 million from prior quarter
Net Interest Margin ("NIM"), non-tax equivalent and tax equivalent (non-GAAP) of 3.10% and 3.12%, respectively, up 0.35% from prior quarter
Total deposit cost of 0.06%, up 1 basis point from prior quarter
Noninterest Income of $88.3 million, up $2.2 million compared to the prior quarter, with a $4.8 million increase in fee income on deposit accounts offset by a $5.1 million decline in mortgage banking income
Noninterest Income represented 0.77% of average assets for the second quarter of 2022
Noninterest Expense, excluding merger and branch consolidation related expense (Non-GAAP), increased $7.5 million compared to the prior quarter; salaries and employee benefits declined by $636 thousand
Efficiency ratio and adjusted efficiency ratio (non-GAAP) improved to 54.9% and 53.6%, respectively, from prior quarter's 63.0% and 60.1%, respectively

Balance Sheet / Credit

Fed funds and interest-earning cash of $4.2 billion represents 9.0% of assets
Loan production† of $3.9 billion, excluding production by legacy Atlantic Capital Bancshares, Inc. ("ACBI")
Loans, excluding PPP loans, increased $1.5 billion, or 22.0% annualized. Of the second quarter loan growth, 53% was commercial loan growth, led by commercial and industrial loans, and 47% was consumer growth, led by consumer real estate loans.
Loans, excluding PPP loans, grew 12.3% over the last year
Deposits increased $100.0 million, or 1.0% annualized, with core deposit growth totaling $224.1 million, or 2.5% annualized
36.9% of total deposits are noninterest-bearing checking
Net charge-offs of $2.3 million, or 0.03% annualized

† Loan production indicates committed balance total

Subsequent Events

The Board of Directors of the Company increased its quarterly cash dividend on its common stock from $0.49 per share to $0.50 per share; the dividend is payable on August 19, 2022 to shareholders of record as of August 12, 2022

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	2022		2022		2021		2021		2021		2022		2021
Interest income
Loans, including fees (1)	$	272,000	$	233,617	$	238,310	$	246,065	$	246,177	$	505,617	$	506,144
Investment securities, trading securities, federal funds sold and securities
purchased under agreements to resell		53,659		36,847		29,071		25,384		21,364		90,506		39,873
Total interest income		325,659		270,464		267,381		271,449		267,541		596,123		546,017
Interest expense
Deposits		5,776		4,628		5,121		7,267		9,537		10,404		20,795
Federal funds purchased, securities sold under agreements
to repurchase, and other borrowings		5,604		4,362		4,156		4,196		4,874		9,966		10,094
Total interest expense		11,380		8,990		9,277		11,463		14,411		20,370		30,889
Net interest income		314,279		261,474		258,104		259,986		253,130		575,753		515,128
Provision (recovery) for credit losses		19,286		(8,449)		(9,157)		(38,903)		(58,793)		10,837		(117,213)
Net interest income after provision (recovery) for credit losses		294,993		269,923		267,261		298,889		311,923		564,916		632,341
Noninterest income		88,292		86,090		91,894		87,010		79,020		174,382		175,305
Noninterest expense
Pre-tax operating expense		225,779		218,324		217,392		214,672		218,707		444,103		437,409
Merger and branch consolidation related expense		5,390		10,276		6,645		17,618		32,970		15,666		42,979
Extinguishment of debt cost		—		—		—		—		11,706		—		11,706
Total noninterest expense		231,169		228,600		224,037		232,290		263,383		459,769		492,094
Income before provision for income taxes		152,116		127,413		135,118		153,609		127,560		279,529		315,552
Income taxes provision		32,941		27,084		28,272		30,821		28,600		60,025		69,643
Net income	$	119,175	$	100,329	$	106,846	$	122,788	$	98,960	$	219,504	$	245,909

Adjusted net income (non-GAAP) (2)
Net income (GAAP)	$	119,175	$	100,329	$	106,846	$	122,788	$	98,960	$	219,504	$	245,909
Securities gains, net of tax		—		—		(2)		(51)		(28)		—		(28)
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		4,223		8,092		5,255		14,083		25,578		12,314		33,402
Extinguishment of debt cost, net of tax		—		—		—		—		9,081		—		9,081
Adjusted net income (non-GAAP)	$	123,398	$	121,913	$	112,099	$	136,820	$	133,591	$	245,310	$	288,364

Basic earnings per common share	$	1.58	$	1.40	$	1.53	$	1.75	$	1.40	$	2.99	$	3.47
Diluted earnings per common share	$	1.57	$	1.39	$	1.52	$	1.74	$	1.39	$	2.96	$	3.44
Adjusted net income per common share - Basic (non-GAAP) (2)	$	1.64	$	1.71	$	1.61	$	1.95	$	1.89	$	3.34	$	4.07
Adjusted net income per common share - Diluted (non-GAAP) (2)	$	1.62	$	1.69	$	1.59	$	1.94	$	1.87	$	3.31	$	4.04
Dividends per common share	$	0.49	$	0.49	$	0.49	$	0.49	$	0.47	$	0.98	$	0.94
Basic weighted-average common shares outstanding		75,461,157		71,447,429		69,651,334		70,066,235		70,866,193		73,464,620		70,937,301
Diluted weighted-average common shares outstanding		76,094,198		72,110,746		70,289,971		70,575,726		71,408,888		74,103,640		71,444,631
Effective tax rate		21.66 %		21.26 %		20.92 %		20.06 %		22.42 %		21.47 %		22.07 %

Performance and Capital Ratios


	Three Months Ended															Six Months Ended
	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Jun. 30,		Jun. 30,
	2022			2022			2021			2021			2021			2022		2021
PERFORMANCE RATIOS
Return on average assets (annualized)		1.04	%		0.95	%		1.02	%		1.20	%		1.00	%	1.00	%	1.27	%
Adjusted return on average assets (annualized) (non-GAAP) (2)		1.08	%		1.15	%		1.08	%		1.34	%		1.35	%	1.11	%	1.49	%
Return on average common equity (annualized)		9.36	%		8.24	%		8.84	%		10.21	%		8.38	%	8.81	%	10.52	%
Adjusted return on average common equity (annualized) (non-GAAP) (2)		9.69	%		10.01	%		9.28	%		11.37	%		11.31	%	9.85	%	12.34	%
Return on average tangible common equity (annualized) (non-GAAP) (3)		16.59	%		13.97	%		14.63	%		16.86	%		14.12	%	15.28	%	17.59	%
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)		17.15	%		16.79	%		15.30	%		18.68	%		18.74	%	16.97	%	20.46	%
Efficiency ratio (tax equivalent)		54.92	%		62.99	%		61.27	%		64.22	%		76.28	%	58.66	%	68.38	%
Adjusted efficiency ratio (non-GAAP) (4)		53.59	%		60.05	%		59.39	%		59.16	%		62.88	%	56.58	%	60.49	%
Dividend payout ratio (5)		31.03	%		33.71	%		32.02	%		27.94	%		33.65	%	32.26	%	27.12	%
Book value per common share	$	66.64		$	68.30		$	69.27		$	68.55		$	67.60
Tangible book value per common share (non-GAAP) (3)	$	39.47		$	41.05		$	44.62		$	43.98		$	43.07

CAPITAL RATIOS
Equity-to-assets		10.9	%		11.2	%		11.4	%		11.7	%		11.8	%
Tangible equity-to-tangible assets (non-GAAP) (3)		6.8	%		7.0	%		7.7	%		7.8	%		7.8	%
Tier 1 leverage (6) *		8.0	%		8.5	%		8.1	%		8.1	%		8.1	%
Tier 1 common equity (6) *		11.1	%		11.4	%		11.8	%		11.9	%		12.1	%
Tier 1 risk-based capital (6) *		11.1	%		11.4	%		11.8	%		11.9	%		12.1	%
Total risk-based capital (6) *		13.0	%		13.3	%		13.6	%		13.8	%		14.1	%

* 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


	Ending Balance
(Dollars in thousands, except per share and share data)	Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,
BALANCE SHEET	2022		2022		2021		2021		2021
*Assets*
Cash and due from banks	$	561,516	$	588,372	$	476,653	$	597,321	$	529,434
Federal Funds Sold and interest-earning deposits with banks		4,160,583		5,444,234		6,366,494		5,701,002		5,875,078
Cash and cash equivalents		4,722,099		6,032,606		6,843,147		6,298,323		6,404,512

Trading securities, at fair value		88,088		74,234		77,689		61,294		89,925
Investment securities:
Securities held to maturity		2,806,465		2,827,769		1,819,901		1,641,485		1,189,265
Securities available for sale, at fair value		5,666,008		5,924,206		5,193,478		4,631,554		4,369,159
Other investments		179,815		179,258		160,568		160,592		160,607
Total investment securities		8,652,288		8,931,233		7,173,947		6,433,631		5,719,031
Loans held for sale		73,880		130,376		191,723		242,813		171,447
Loans:
Purchased credit deteriorated		1,707,592		1,939,033		1,987,322		2,255,874		2,434,259
Purchased non-credit deteriorated		6,908,234		7,633,824		5,890,069		6,554,647		7,457,950
Non-acquired		19,319,440		16,983,570		16,050,775		14,978,428		14,140,869
Less allowance for credit losses		(319,708)		(300,396)		(301,807)		(314,144)		(350,401)
Loans, net		27,615,558		26,256,031		23,626,359		23,474,805		23,682,677
Other real estate owned ("OREO")		1,431		3,290		2,736		3,687		5,039
Premises and equipment, net		562,781		568,332		558,499		569,817		568,473
Bank owned life insurance		953,970		942,922		783,049		778,552		773,452
Mortgage servicing rights		87,463		83,339		65,620		60,922		57,351
Core deposit and other intangibles		132,694		140,364		128,067		136,584		145,126
Goodwill		1,922,525		1,924,024		1,581,085		1,581,085		1,581,085
Other assets		1,394,645		1,114,790		928,111		1,262,195		1,177,751
Total assets	$	46,207,422	$	46,201,541	$	41,960,032	$	40,903,708	$	40,375,869

*Liabilities and Shareholders' Equity*
Deposits:
Noninterest-bearing	$	14,337,018	$	14,052,332	$	11,498,840	$	11,333,881	$	11,176,338
Interest-bearing		24,538,833		24,723,498		23,555,989		22,226,677		22,066,031
Total deposits		38,875,851		38,775,830		35,054,829		33,560,558		33,242,369
Federal funds purchased and securities
sold under agreements to repurchase		669,999		770,409		781,239		859,736		862,429
Other borrowings		392,460		405,553		327,066		326,807		351,548
Reserve for unfunded commitments		32,543		30,368		30,510		28,289		30,981
Other liabilities		1,196,144		1,044,973		963,448		1,335,377		1,130,919
Total liabilities		41,166,997		41,027,133		37,157,092		36,110,767		35,618,247

Shareholders' equity:
Common stock - $2.50 par value; authorized 160,000,000 shares		189,103		189,403		173,331		174,795		175,957
Surplus		4,195,976		4,214,897		3,653,098		3,693,622		3,720,946
Retained earnings		1,146,230		1,064,064		997,657		925,044		836,584
Accumulated other comprehensive (loss) income		(490,884)		(293,956)		(21,146)		(520)		24,136
Total shareholders' equity		5,040,425		5,174,408		4,802,940		4,792,941		4,757,623
Total liabilities and shareholders' equity	$	46,207,422	$	46,201,541	$	41,960,032	$	40,903,708	$	40,375,869

Common shares issued and outstanding		75,641,322		75,761,018		69,332,297		69,918,037		70,382,728

Net Interest Income and Margin


	Three Months Ended
	Jun. 30, 2022					Mar. 31, 2022					Jun. 30, 2021
(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	$	4,597,551	$	8,635	0.75 %	$	5,678,147	$	2,852	0.20 %	$	5,670,674	$	1,350	0.10 %
Investment securities		8,880,419		45,024	2.03 %		7,895,281		33,995	1.75 %		5,371,985		20,014	1.49 %
Loans held for sale		76,567		791	4.14 %		110,542		869	3.19 %		281,547		1,977	2.82 %
Total loans, excluding PPP		27,055,042		271,003	4.02 %		24,675,512		231,373	3.80 %		22,588,076		225,664	4.01 %
Total PPP loans		77,816		206	1.06 %		167,541		1,375	3.33 %		1,719,323		18,536	4.32 %
Total loans held for investment		27,132,858		271,209	4.01 %		24,843,053		232,748	3.80 %		24,307,399		244,200	4.03 %
Total interest-earning assets		40,687,395		325,659	3.21 %		38,527,023		270,464	2.85 %		35,631,605		267,541	3.01 %
Noninterest-earning assets		5,160,394					4,419,309					4,201,147
Total Assets	$	45,847,789				$	42,946,332				$	39,832,752

Interest-Bearing Liabilities:
Transaction and money market accounts	$	18,316,890	$	3,836	0.08 %	$	17,473,192	$	2,217	0.05 %	$	15,453,940	$	4,513	0.12 %
Savings deposits		3,548,192		143	0.02 %		3,408,129		130	0.02 %		2,995,871		453	0.06 %
Certificates and other time deposits		2,776,478		1,797	0.26 %		2,848,829		2,281	0.32 %		3,408,778		4,571	0.54 %
Federal funds purchased		333,326		628	0.76 %		354,899		111	0.13 %		520,585		112	0.09 %
Repurchase agreements		403,008		153	0.15 %		438,258		158	0.15 %		394,056		211	0.21 %
Other borrowings		405,241		4,823	4.77 %		354,133		4,093	4.69 %		368,897		4,551	4.95 %
Total interest-bearing liabilities		25,783,135		11,380	0.18 %		24,877,440		8,990	0.15 %		23,142,127		14,411	0.25 %
Noninterest-bearing liabilities ("Non-IBL")		14,955,329					13,131,727					11,951,384
Shareholders' equity		5,109,325					4,937,165					4,739,241
Total Non-IBL and shareholders' equity		20,064,654					18,068,892					16,690,625
Total Liabilities and Shareholders' Equity	$	45,847,789				$	42,946,332				$	39,832,752
Net Interest Income and Margin (Non-Tax Equivalent)			$	314,279	3.10 %			$	261,474	2.75 %			$	253,130	2.85 %
Net Interest Margin (Tax Equivalent)					3.12 %					2.77 %					2.87 %
Total Deposit Cost (without Debt and Other Borrowings)					0.06 %					0.05 %					0.12 %
Overall Cost of Funds (including Demand Deposits)					0.12 %					0.10 %					0.17 %

Total Accretion on Acquired Loans (1)			$	12,770				$	6,741				$	6,292
Total Deferred Fees on PPP Loans			$	8				$	983				$	14,232
Tax Equivalent Adjustment			$	2,249				$	1,885				$	1,424


(1)	The remaining loan discount on acquired loans to be accreted into loan interest income totals $89.0 million as of June 30, 2022.

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)	2022		2022		2021		2021		2021		2022		2021
Noninterest Income:
Fees on deposit accounts	$	33,658	$	28,902	$	30,293	$	26,130	$	23,936	$	62,560	$	49,218
Mortgage banking income		5,480		10,594		12,044		15,560		10,115		16,074		36,995
Trust and investment services income		9,831		9,718		9,520		9,150		9,733		19,549		18,311
Securities gains, net		—		—		2		64		36		—		36
Correspondent banking and capital market income		27,604		27,994		30,216		25,164		25,877		55,598		54,625
Bank owned life insurance income		6,246		5,260		4,932		5,132		5,047		11,506		8,346
Other		5,473		3,622		4,887		5,810		4,276		9,095		7,774
Total Noninterest Income	$	88,292	$	86,090	$	91,894	$	87,010	$	79,020	$	174,382	$	175,305

Noninterest Expense:
Salaries and employee benefits	$	137,037	$	137,673	$	137,321	$	136,969	$	137,379	$	274,710	$	277,740
Occupancy expense		22,759		21,840		22,915		23,135		22,844		44,599		46,175
Information services expense		19,947		19,193		18,489		18,061		19,078		39,140		37,867
OREO and loan related (income) expense		(3)		(238)		(740)		1,527		240		(241)		1,242
Business development and staff related		4,916		4,276		4,577		4,424		4,305		9,192		7,676
Amortization of intangibles		8,847		8,494		8,517		8,543		8,968		17,341		18,132
Professional fees		4,331		3,749		2,639		2,415		2,301		8,080		5,575
Supplies and printing expense		2,400		2,189		2,179		2,310		2,500		4,589		5,170
FDIC assessment and other regulatory charges		5,332		4,812		4,965		4,245		4,931		10,144		8,772
Advertising and marketing		2,286		1,763		2,375		2,185		1,659		4,049		3,399
Other operating expenses		17,927		14,573		14,155		10,858		14,502		32,500		25,661
Merger and branch consolidation related expense		5,390		10,276		6,645		17,618		32,970		15,666		42,979
Extinguishment of debt cost		—		—		—		—		11,706		—		11,706
Total Noninterest Expense	$	231,169	$	228,600	$	224,037	$	232,290	$	263,383	$	459,769	$	492,094

Loans and Deposits

The following table presents a summary of the loan portfolio by type (dollars in thousands):


	Ending Balance
(Dollars in thousands)	Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,
LOAN PORTFOLIO	2022		2022		2021		2021		2021
Construction and land development * †	$	2,527,062	$	2,316,313	$	2,029,216	$	2,032,731	$	1,947,646
Investor commercial real estate*		8,393,630		8,158,457		7,432,503		7,131,192		7,094,109
Commercial owner occupied real estate		5,421,725		5,346,583		4,970,116		4,988,490		4,895,189
Commercial and industrial, excluding PPP		4,760,355		4,447,279		3,516,485		3,458,520		3,121,625
Consumer real estate *		5,505,531		4,988,736		4,806,958		4,733,567		4,748,693
Consumer/other		1,279,790		1,179,697		928,240		943,243		907,181
Total loans, excluding PPP		27,888,093		26,437,065		23,683,518		23,287,743		22,714,443
PPP loans		47,173		119,362		244,648		501,206		1,318,635
Total Loans	$	27,935,266	$	26,556,427	$	23,928,166	$	23,788,949	$	24,033,078

* 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 $795.7 million, $733.7 million, $686.5 million, $665.0 million and $599.4 million for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively.


	Ending Balance
(Dollars in thousands)	Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,
DEPOSITS	2022		2022		2021		2021		2021
Noninterest-bearing checking	$	14,337,018	$	14,052,332	$	11,498,840	$	11,333,881	$	11,176,338
Interest-bearing checking		8,953,332		9,275,208		9,018,987		7,920,236		7,651,433
Savings		3,616,819		3,479,743		3,350,547		3,201,543		3,051,229
Money market		9,264,257		9,140,005		8,376,380		8,110,162		8,024,117
Time deposits		2,704,425		2,828,542		2,810,075		2,994,736		3,339,252
Total Deposits	$	38,875,851	$	38,775,830	$	35,054,829	$	33,560,558	$	33,242,369

Core Deposits (excludes Time Deposits)	$	36,171,426	$	35,947,288	$	32,244,754	$	30,565,822	$	29,903,117

Asset Quality

SouthState Corporation Reports Second Quarter 2022 Results, Declares an Increase in the Quarterly Cash Dividend