SouthState Corporation Reports First Quarter 2023 Results, Declares Quarterly Cash Dividend

News provided by

Apr 27, 2023, 16:01 ET

WINTER HAVEN, Fla., April 27, 2023 /PRNewswire/ -- SouthState Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month period ended March 31, 2023.

SouthState Corporation Reports First Quarter 2023 Results

"SouthState's first quarter results demonstrate the resilience of our franchise", said John C. Corbett, Chief Executive Officer. "In a turbulent macro environment, we delivered growth in loans, deposits, liquidity, and capital ratios. Furthermore, earnings per share increased 32% from the same period last year. Looking ahead, SouthState is positioned to be opportunistic as the economic cycle unfolds."

Highlights of the first quarter of 2023 include:

Returns

Reported Diluted Earnings per Share ("EPS") of $1.83; Adjusted Diluted EPS (Non-GAAP) of $1.93
Net Income of $139.9 million; Adjusted Net Income (Non-GAAP) of $147.2 million
Return on Average Common Equity of 11.0% and Return on Average Tangible Common Equity (Non-GAAP) of 18.8%; Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 19.8%*
Return on Average Assets ("ROAA") of 1.29%; Adjusted ROAA (Non-GAAP) of 1.35%*
Pre-Provision Net Revenue ("PPNR") per weighted average diluted share (Non-GAAP) of $2.90, up 62% from $1.79 a year ago
Book Value per Share of $69.19 increased by $2.15 per share compared to the prior quarter
Tangible Book Value ("TBV") per Share (Non-GAAP) of $42.40, up 6% from the prior quarter

∗ Annualized percentages

Performance

Net Interest Income of $381 million; Core Net Interest Income (excluding loan accretion and deferred fees on PPP) (Non-GAAP) decreased $15 million from prior quarter
Net Interest Margin ("NIM"), non-tax equivalent and tax equivalent (Non-GAAP) of 3.92% and 3.93%, respectively, up 1.17% and 1.16%, respectively, from the first quarter of 2022
Noninterest Income of $71 million, up $8 million compared to the prior quarter; Noninterest Income represented 0.66% of average assets for the first quarter of 2023
Efficiency Ratio of 51%; Adjusted Efficiency Ratio (Non-GAAP) of 49%
$33.1 million Provision for Credit Losses ("PCL"), including provision for unfunded commitments, driven by moderate changes in economic forecasts and loan growth, in spite of net loan recoveries and only $1.0 million in total net charge-offs (including DDA charge-offs)

Balance Sheet

Loans increased $519 million, or 7% annualized, led by consumer real estate; ending loan to deposit ratio of 84%
Deposits increased $51 million, or 1% annualized as brokered CDs increased $1.2 billion, offset by a $400 million decline in public funds due to expected first quarter seasonality; excluding brokered CDs, deposits declined $1.2 billion from prior quarter
Total deposit cost was 0.63%, up 42 basis points from prior quarter
Total cash and cash equivalents increased $684 million to $2.0 billion at the end of the current quarter
Other borrowings increased $900 million due to FHLB advances outstanding as of current quarter-end
Strong capital position with Tangible Common Equity, Total Risk-Based Capital, and Tier 1 Leverage ratios of 7.5%, 13.3% and 9.1%, respectively†

† Preliminary

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 May 19, 2023 to shareholders of record as of May 12, 2023

Financial Performance

	Three Months Ended
(Dollars in thousands, except per share data)	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
INCOME STATEMENT	2023		2022		2022		2022		2022
Interest income
Loans, including fees (1)	$	393,366	$	359,552	$	312,856	$	272,000	$	233,617
Investment securities, trading securities, federal funds sold and securities
purchased under agreements to resell (8)		57,043		64,337		63,476		54,333		36,854
Total interest income		450,409		423,889		376,332		326,333		270,471
Interest expense
Deposits (8)		55,942		19,945		7,534		4,914		4,591
Federal funds purchased, securities sold under agreements
to repurchase, and other borrowings		13,204		7,940		6,464		5,604		4,362
Total interest expense		69,146		27,885		13,998		10,518		8,953
Net interest income (8)		381,263		396,004		362,334		315,815		261,518
Provision (recovery) for credit losses		33,091		47,142		23,876		19,286		(8,449)
Net interest income after provision (recovery) for credit losses		348,172		348,862		338,458		296,529		269,967
Noninterest income (8)		71,355		63,392		73,053		86,756		86,046
Noninterest expense
Operating expense		231,093		227,957		226,754		225,779		218,324
Merger, branch consolidation and severance related expense		9,412		1,542		13,679		5,390		10,276
Total noninterest expense		240,505		229,499		240,433		231,169		228,600
Income before provision for income taxes		179,022		182,755		171,078		152,116		127,413
Income taxes provision		39,096		39,253		38,035		32,941		27,084
Net income	$	139,926	$	143,502	$	133,043	$	119,175	$	100,329

Adjusted net income (non-GAAP) (2)
Net income (GAAP)	$	139,926	$	143,502	$	133,043	$	119,175	$	100,329
Securities gains, net of tax		(35)		—		(24)		—		—
Initial provision for credit losses - NonPCD loans and UFC from ACBI, net of tax		—		—		—		—		13,492
Merger, branch consolidation and severance related expense, net of tax		7,356		1,211		10,638		4,223		8,092
Adjusted net income (non-GAAP)	$	147,247	$	144,713	$	143,657	$	123,398	$	121,913

Basic earnings per common share	$	1.84	$	1.90	$	1.76	$	1.58	$	1.40
Diluted earnings per common share	$	1.83	$	1.88	$	1.75	$	1.57	$	1.39
Adjusted net income per common share - Basic (non-GAAP) (2)	$	1.94	$	1.91	$	1.90	$	1.64	$	1.71
Adjusted net income per common share - Diluted (non-GAAP) (2)	$	1.93	$	1.90	$	1.89	$	1.62	$	1.69
Dividends per common share	$	0.50	$	0.50	$	0.50	$	0.49	$	0.49
Basic weighted-average common shares outstanding		75,902,440		75,639,640		75,605,960		75,461,157		71,447,429
Diluted weighted-average common shares outstanding		76,388,954		76,326,777		76,182,131		76,094,198		72,110,746
Effective tax rate		21.84 %		21.48 %		22.23 %		21.66 %		21.26 %

Performance and Capital Ratios

	Three Months Ended
	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
	2023			2022			2022			2022			2022
PERFORMANCE RATIOS
Return on average assets (annualized) (8)		1.29	%		1.28	%		1.17	%		1.05	%		0.95	%
Adjusted return on average assets (annualized) (non-GAAP) (2) (8)		1.35	%		1.29	%		1.27	%		1.09	%		1.15	%
Return on average common equity (annualized)		10.96	%		11.41	%		10.31	%		9.36	%		8.24	%
Adjusted return on average common equity (annualized) (non-GAAP) (2)		11.53	%		11.50	%		11.13	%		9.69	%		10.01	%
Return on average tangible common equity (annualized) (non-GAAP) (3)		18.81	%		20.17	%		17.99	%		16.59	%		13.97	%
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)		19.75	%		20.33	%		19.36	%		17.15	%		16.79	%
Efficiency ratio (tax equivalent)		51.41	%		47.96	%		53.14	%		54.92	%		62.99	%
Adjusted efficiency ratio (non-GAAP) (4)		49.34	%		47.63	%		50.02	%		53.59	%		60.05	%
Dividend payout ratio (5)		27.09	%		26.40	%		28.44	%		31.03	%		33.71	%
Book value per common share	$	69.19		$	67.04		$	65.03		$	66.64		$	68.30
Tangible book value per common share (non-GAAP) (3)	$	42.40		$	40.09		$	37.97		$	39.47		$	41.05

CAPITAL RATIOS
Equity-to-assets (8)		11.7	%		11.6	%		11.1	%		11.0	%		11.2	%
Tangible equity-to-tangible assets (non-GAAP) (3) (8)		7.5	%		7.2	%		6.8	%		6.8	%		7.1	%
Tier 1 leverage (6) (8) *		9.1	%		8.7	%		8.4	%		8.0	%		8.5	%
Tier 1 common equity (6) (8) *		11.1	%		11.0	%		11.0	%		11.1	%		11.4	%
Tier 1 risk-based capital (6) (8) *		11.1	%		11.0	%		11.0	%		11.1	%		11.4	%
Total risk-based capital (6) (8) *		13.3	%		13.0	%		13.0	%		13.0	%		13.3	%

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	2023		2022		2022		2022		2022
Assets
Cash and due from banks	$	558,158	$	548,387	$	394,794	$	561,516	$	588,372
Federal funds sold and interest-earning deposits with banks (8)		1,438,504		764,176		2,529,415		4,259,490		5,604,419
Cash and cash equivalents		1,996,662		1,312,563		2,924,209		4,821,006		6,192,791

Trading securities, at fair value		16,039		31,263		51,940		88,088		74,234
Investment securities:
Securities held to maturity		2,636,673		2,683,241		2,738,178		2,806,465		2,827,769
Securities available for sale, at fair value		5,159,999		5,326,822		5,369,610		5,666,008		5,924,206
Other investments		217,991		179,717		179,755		179,815		179,258
Total investment securities		8,014,663		8,189,780		8,287,543		8,652,288		8,931,233
Loans held for sale		27,289		28,968		34,477		73,880		130,376
Loans:
Purchased credit deteriorated		1,325,400		1,429,731		1,544,562		1,707,592		1,939,033
Purchased non-credit deteriorated		5,620,290		5,943,092		6,365,175		6,908,234		7,633,824
Non-acquired		23,750,452		22,805,039		20,926,566		19,319,440		16,983,570
Less allowance for credit losses		(370,645)		(356,444)		(324,398)		(319,708)		(300,396)
Loans, net		30,325,497		29,821,418		28,511,905		27,615,558		26,256,031
Other real estate owned ("OREO")		3,473		1,023		2,160		1,431		3,290
Premises and equipment, net		517,146		520,635		531,160		562,781		568,332
Bank owned life insurance		967,750		964,708		960,052		953,970		942,922
Mortgage servicing rights		85,406		86,610		90,459		87,463		83,339
Core deposit and other intangibles		109,603		116,450		125,390		132,694		140,364
Goodwill		1,923,106		1,923,106		1,922,525		1,922,525		1,924,024
Other assets (8)		937,193		922,172		980,557		854,506		829,786
Total assets	$	44,923,827	$	43,918,696	$	44,422,377	$	45,766,190	$	46,076,722

Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing	$	12,422,583	$	13,168,656	$	13,660,244	$	14,337,018	$	14,052,332
Interest-bearing (8)		23,979,009		23,181,967		23,249,545		24,097,601		24,598,679
Total deposits		36,401,592		36,350,623		36,909,789		38,434,619		38,651,011
Federal funds purchased and securities
sold under agreements to repurchase		544,108		556,417		557,802		669,999		770,409
Other borrowings		1,292,182		392,275		392,368		392,460		405,553
Reserve for unfunded commitments		85,068		67,215		52,991		32,543		30,368
Other liabilities (8)		1,351,873		1,477,239		1,588,241		1,196,144		1,044,973
Total liabilities		39,674,823		38,843,769		39,501,191		40,725,765		40,902,314

Shareholders' equity:
Common stock - $2.50 par value; authorized 160,000,000 shares		189,649		189,261		189,191		189,103		189,403
Surplus		4,224,503		4,215,712		4,207,040		4,195,976		4,214,897
Retained earnings		1,448,636		1,347,042		1,241,413		1,146,230		1,064,064
Accumulated other comprehensive loss		(613,784)		(677,088)		(716,458)		(490,884)		(293,956)
Total shareholders' equity		5,249,004		5,074,927		4,921,186		5,040,425		5,174,408
Total liabilities and shareholders' equity	$	44,923,827	$	43,918,696	$	44,422,377	$	45,766,190	$	46,076,722

Common shares issued and outstanding		75,859,665		75,704,563		75,676,445		75,641,322		75,761,018

Net Interest Income and Margin

	Three Months Ended
	Mar. 31, 2023					Dec. 31, 2022					Mar. 31, 2022
(Dollars in thousands)	Average		Income/		Yield/	Average		Income/		Yield/	Average		Income/		Yield/
YIELD ANALYSIS	Balance		Expense		Rate	Balance		Expense		Rate	Balance		Expense		Rate
Interest-Earning Assets:
Federal funds sold and interest-earning deposits with banks (8)	$	759,239	$	8,921	4.77 %	$	1,849,877	$	16,491	3.54 %	$	5,715,785	$	2,859	0.20 %
Investment securities		8,232,582		48,122	2.37 %		8,286,894		47,846	2.29 %		7,895,281		33,995	1.75 %
Loans held for sale		23,123		402	7.05 %		25,633		401	6.21 %		110,542		869	3.19 %
Total loans, excluding PPP		30,384,754		392,941	5.24 %		29,480,843		359,120	4.83 %		24,675,512		231,373	3.80 %
Total PPP loans		9,642		23	0.97 %		12,489		31	0.98 %		167,541		1,375	3.33 %
Total loans held for investment		30,394,396		392,964	5.24 %		29,493,332		359,151	4.83 %		24,843,053		232,748	3.80 %
Total interest-earning assets (8)		39,409,340		450,409	4.64 %		39,655,736		423,889	4.24 %		38,564,661		270,471	2.84 %
Noninterest-earning assets (8)		4,695,138					4,774,158					4,342,607
Total Assets	$	44,104,478				$	44,429,894				$	42,907,268

Interest-Bearing Liabilities ("IBL"):
Transaction and money market accounts (8)	$	16,874,909	$	40,516	0.97 %	$	17,044,865	$	16,901	0.39 %	$	17,471,805	$	2,180	0.05 %
Savings deposits		3,298,221		1,756	0.22 %		3,536,330		1,021	0.11 %		3,408,129		130	0.02 %
Certificates and other time deposits		3,114,354		13,670	1.78 %		2,444,361		2,023	0.33 %		2,848,829		2,281	0.32 %
Federal funds purchased		193,259		2,187	4.59 %		186,232		1,694	3.61 %		354,899		111	0.13 %
Repurchase agreements		373,563		666	0.72 %		363,336		253	0.28 %		438,258		158	0.15 %
Other borrowings		785,571		10,351	5.34 %		435,806		5,993	5.46 %		354,133		4,093	4.69 %
Total interest-bearing liabilities (8)		24,639,877		69,146	1.14 %		24,010,930		27,885	0.46 %		24,876,053		8,953	0.15 %
Noninterest-bearing liabilities ("Non-IBL") (8)		14,287,553					15,427,380					13,094,050
Shareholders' equity		5,177,048					4,991,584					4,937,165
Total Non-IBL and shareholders' equity		19,464,601					20,418,964					18,031,215
Total Liabilities and Shareholders' Equity	$	44,104,478				$	44,429,894				$	42,907,268
Net Interest Income and Margin (Non-Tax Equivalent) (8)			$	381,263	3.92 %			$	396,004	3.96 %			$	261,518	2.75 %
Net Interest Margin (Tax Equivalent) (non-GAAP) (8)					3.93 %					3.99 %					2.77 %
Total Deposit Cost (without Debt and Other Borrowings)					0.63 %					0.21 %					0.05 %
Overall Cost of Funds (including Demand Deposits)					0.75 %					0.29 %					0.10 %

Total Accretion on Acquired Loans (1)			$	7,398				$	7,350				$	6,741
Total Deferred Fees on PPP Loans			$	—				$	—				$	983
Tax Equivalent ("TE") Adjustment			$	1,020				$	2,397				$	1,885

(1) The remaining loan discount on acquired loans to be accreted into loan interest income totals $64.7 million as of March 31, 2023.

Noninterest Income and Expense

	Three Months Ended
	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
(Dollars in thousands)	2023		2022		2022		2022		2022
Noninterest Income:
Fees on deposit accounts	$	29,859	$	33,612	$	30,327	$	32,862	$	28,009
Mortgage banking income (loss)		4,332		(545)		2,262		5,480		10,594
Trust and investment services income		9,937		9,867		9,603		9,831		9,718
Securities gains, net		45		—		30		—		—
Correspondent banking and capital market income (8)		21,956		16,760		20,552		27,604		27,994
Expense on centrally-cleared variation margin (8)		(8,362)		(8,451)		(4,125)		(1,536)		(44)
Total Correspondent banking and capital market income (8)		13,594		8,309		16,427		26,068		27,950
Bank owned life insurance income		6,813		6,723		6,082		6,246		5,260
Other		6,775		5,426		8,322		6,269		4,515
Total Noninterest Income (8)	$	71,355	$	63,392	$	73,053	$	86,756	$	86,046

Noninterest Expense:
Salaries and employee benefits	$	144,060	$	140,440	$	139,554	$	137,037	$	137,673
Occupancy expense		21,533		22,412		22,490		22,759		21,840
Information services expense		19,925		19,847		20,714		19,947		19,193
OREO and loan related expense (income)		169		78		532		(3)		(238)
Business development and staff related		5,957		5,851		5,090		4,916		4,276
Amortization of intangibles		7,299		8,027		7,837		8,847		8,494
Professional fees		3,702		3,756		3,495		4,331		3,749
Supplies and printing expense		2,640		2,411		2,621		2,400		2,189
FDIC assessment and other regulatory charges		6,294		6,589		6,300		5,332		4,812
Advertising and marketing		2,118		2,669		2,170		2,286		1,763
Other operating expenses		17,396		15,877		15,951		17,927		14,573
Merger, branch consolidation and severance related expense *		9,412		1,542		13,679		5,390		10,276
Total Noninterest Expense	$	240,505	$	229,499	$	240,433	$	231,169	$	228,600

* During the current quarter, the Company recorded $8.1 million in severance payments, which are included in the Merger, branch consolidation and severance related expense in the table above.

Loans and Deposits

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

	Ending Balance
(Dollars in thousands)	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
LOAN PORTFOLIO	2023		2022		2022		2022		2022
Construction and land development * †	$	2,749,290	$	2,860,360	$	2,550,552	$	2,527,062	$	2,316,313
Investor commercial real estate*		8,957,507		8,769,201		8,641,316		8,393,630		8,158,457
Commercial owner occupied real estate		5,522,514		5,460,193		5,426,216		5,421,725		5,346,583
Commercial and industrial		5,321,306		5,313,483		4,977,737		4,807,528		4,566,641
Consumer real estate *		6,860,831		6,475,210		5,977,120		5,505,531		4,988,736
Consumer/other		1,284,694		1,299,415		1,263,362		1,279,790		1,179,697
Total loans	$	30,696,142	$	30,177,862	$	28,836,303	$	27,935,266	$	26,556,427

* 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 $893.7 million, $904.1 million, $881.3 million, $795.7 million, and $733.7 million for the quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.

	Ending Balance
(Dollars in thousands)	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
DEPOSITS	2023		2022		2022		2022		2022
Noninterest-bearing checking	$	12,422,583	$	13,168,656	$	13,660,244	$	14,337,018	$	14,052,332
Interest-bearing checking		8,316,023		8,955,519		8,741,447		8,953,332		9,275,208
Savings		3,156,214		3,464,351		3,602,560		3,616,819		3,479,743
Money market (8)		8,388,275		8,342,111		8,369,826		8,823,025		9,015,186
Time deposits		4,118,497		2,419,986		2,535,712		2,704,425		2,828,542
Total Deposits (8)	$	36,401,592	$	36,350,623	$	36,909,789	$	38,434,619	$	38,651,011

Core Deposits (excludes Time Deposits) (8)	$	32,283,095	$	33,930,637	$	34,374,077	$	35,730,194	$	35,822,469

Asset Quality

	Ending Balance
	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
(Dollars in thousands)	2023		2022		2022		2022		2022
NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonaccrual loans and restructured loans on nonaccrual	$	68,176	$	44,671	$	34,374	$	20,716	$	19,582
Accruing loans past due 90 days or more		2,667		2,358		2,358		1,371		22,818
Non-acquired OREO and other nonperforming assets		186		245		114		93		464
Total non-acquired nonperforming assets		71,029		47,274		36,846		22,180		42,864
Acquired
Acquired nonaccrual loans and restructured loans on nonaccrual		52,795		59,554		61,866		63,526		59,267
Accruing loans past due 90 days or more		983		1,992		1,430		4,418		12,768
Acquired OREO and other nonperforming assets		3,446		922		2,234		1,577		3,118
Total acquired nonperforming assets		57,224		62,468		65,530		69,521		75,153
Total nonperforming assets	$	128,253	$	109,742	$	102,376	$	91,701	$	118,017


	Three Months Ended
	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
	2023		2022		2022		2022		2022
ASSET QUALITY RATIOS:
Allowance for credit losses as a percentage of loans		1.21 %		1.18 %		1.12 %		1.14 %		1.13 %
Allowance for credit losses, including reserve for unfunded commitments, as a percentage of loans		1.48 %		1.40 %		1.31 %		1.26 %		1.25 %
Allowance for credit losses as a percentage of nonperforming loans		297.42 %		328.29 %		324.30 %		355.11 %		262.50 %
Net charge-offs (recoveries) as a percentage of average loans (annualized)		0.01 %		0.01 %		(0.02) %		0.03 %		0.04 %
Total nonperforming assets as a percentage of total assets		0.29 %		0.25 %		0.23 %		0.20 %		0.26 %
Nonperforming loans as a percentage of period end loans		0.41 %		0.36 %		0.35 %		0.32 %		0.43 %

Current Expected Credit Losses ("CECL")

Below is a table showing the roll forward of the ACL and UFC for the first quarter of 2023:

Allowance for Credit Losses ("ACL and UFC")

NonPCD ACL

PCD ACL

Total ACL

UFC

Ending balance 12/31/2022

309,606

46,838

356,444

67,215

Charge offs

(3,858)

—

(3,858)

—

Acquired charge offs

(658)

(111)

(769)

—

Recoveries

1,555

—

1,555

—

Acquired recoveries

772

1,262

2,034

—

Provision (recovery) for credit losses

20,498

(5,259)

15,239

17,853

Ending balance 3/31/2023

327,915

42,730

370,645

85,068

Period end loans (includes PPP Loans)

29,370,742

1,325,400

30,696,142

N/A

Allowance for Credit Losses to Loans (includes PPP Loans)

1.12 %

3.22 %

1.21 %

N/A

Period end loans (excludes PPP Loans)

29,361,548

1,325,400

30,686,948

N/A

Allowance for Credit Losses to Loans (excludes PPP Loans)

1.12 %

3.22 %

1.21 %

N/A

Unfunded commitments (off balance sheet) *

10,089,388

Reserve to unfunded commitments (off balance sheet)

0.84 %

* 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 28, 2023. Callers wishing to participate may call toll-free by dialing 833-470-1428. The number for international participants is (929) 526-1599. The conference ID number is 991051. 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 28, 2023 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)	Mar. 31, 2023			Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022
Net income (GAAP)	$	139,926		$	143,502		$	133,043		$	119,175		$	100,329
Provision (recovery) for credit losses		33,091			47,142			23,876			19,286			(8,449)
Tax provision		39,096			39,253			38,035			32,941			27,084
Merger, branch consolidation and severance related expense		9,412			1,542			13,679			5,390			10,276
Securities gains		(45)			—			(30)			—			—
Pre-provision net revenue (PPNR) (Non-GAAP)	$	221,480		$	231,439		$	208,603		$	176,792		$	129,240

Average asset balance (GAAP)	$	44,104,478		$	44,429,894		$	44,985,713		$	45,576,742		$	42,907,268
PPNR ROAA		2.04	%		2.07	%		1.84	%		1.56	%		1.22	%

Diluted weighted-average common shares outstanding		76,389			76,327			76,182			76,094			72,111
PPNR per weighted-average common shares outstanding	$	2.90		$	3.03		$	2.74		$	2.32		$	1.79


(Dollars in thousands)	Three Months Ended
CORE NET INTEREST INCOME (NON-GAAP)	Mar. 31, 2023			Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022
Net interest income (GAAP) (8)	$	381,263		$	396,004		$	362,334		$	315,815		$	261,518
Less:
Total accretion on acquired loans		7,398			7,350			9,550			12,770			6,741
Total deferred fees on PPP loans		—			—			—			8			983
Core net interest income (Non-GAAP)	$	373,865		$	388,654		$	352,784		$	303,037		$	253,794

NET INTEREST MARGIN ("NIM"), TAX EQUIVALENT (NON-GAAP)
Net interest income (GAAP) (8)	$	381,263		$	396,004		$	362,334		$	315,815		$	261,518
Total average interest-earning assets (8)		39,409,340			39,655,736			40,451,174			40,899,365			38,564,661
NIM, non-tax equivalent (8)		3.92	%		3.96	%		3.55	%		3.10	%		2.75	%

Tax equivalent adjustment (included in NIM, tax equivalent)		1,020			2,397			2,345			2,249			1,885
Net interest income, tax equivalent (Non-GAAP) (8)	$	382,283		$	398,401		$	364,679		$	318,064		$	263,403
NIM, tax equivalent (Non-GAAP) (8)		3.93	%		3.99	%		3.58	%		3.12	%		2.77	%


	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	2023			2022			2022			2022			2022
Adjusted Net Income (non-GAAP) (2)
Net income (GAAP)	$	139,926		$	143,502		$	133,043		$	119,175		$	100,329
Securities gains, net of tax		(35)			—			(24)			—			—
PCL - NonPCD loans and UFC, net of tax		—			—			—			—			13,492
Merger, branch consolidation and severance related expense, net of tax		7,356			1,211			10,638			4,223			8,092
Adjusted net income (non-GAAP)	$	147,247		$	144,713		$	143,657		$	123,398		$	121,913

Adjusted Net Income per Common Share - Basic (2)
Earnings per common share - Basic (GAAP)	$	1.84		$	1.90		$	1.76		$	1.58		$	1.40
Effect to adjust for securities gains		(0.00)			—			(0.00)			—			—
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—			—			—			—			0.19
Effect to adjust for merger, branch consolidation and severance related expense, net of tax		0.10			0.01			0.14			0.06			0.12
Adjusted net income per common share - Basic (non-GAAP)	$	1.94		$	1.91		$	1.90		$	1.64		$	1.71

Adjusted Net Income per Common Share - Diluted (2)
Earnings per common share - Diluted (GAAP)	$	1.83		$	1.88		$	1.75		$	1.57		$	1.39
Effect to adjust for securities gains		(0.00)			—			(0.00)			—			—
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—			—			—			—			0.19
Effect to adjust for merger, branch consolidation and severance related expense, net of tax		0.10			0.02			0.14			0.05			0.11
Adjusted net income per common share - Diluted (non-GAAP)	$	1.93		$	1.90		$	1.89		$	1.62		$	1.69

Adjusted Return on Average Assets (2)
Return on average assets (GAAP) (8)		1.29	%		1.28	%		1.17	%		1.05	%		0.95	%
Effect to adjust for securities gains		(0.00)	%		—	%		(0.00)	%		—	%		—	%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—	%		—	%		—	%		—	%		0.13	%
Effect to adjust for merger, branch consolidation and severance related expense, net of tax		0.06	%		0.01	%		0.10	%		0.04	%		0.07	%
Adjusted return on average assets (non-GAAP) (8)		1.35	%		1.29	%		1.27	%		1.09	%		1.15	%

Adjusted Return on Average Common Equity (2)
Return on average common equity (GAAP)		10.96	%		11.41	%		10.31	%		9.36	%		8.24	%
Effect to adjust for securities gains		(0.00)	%		—	%		(0.00)	%		—	%		—	%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—	%		—	%		—	%		—	%		1.11	%
Effect to adjust for merger, branch consolidation and severance related expense, net of tax		0.57	%		0.09	%		0.82	%		0.33	%		0.66	%
Adjusted return on average common equity (non-GAAP)		11.53	%		11.50	%		11.13	%		9.69	%		10.01	%

Return on Average Common Tangible Equity (3)
Return on average common equity (GAAP)		10.96	%		11.41	%		10.31	%		9.36	%		8.24	%
Effect to adjust for intangible assets		7.85	%		8.76	%		7.68	%		7.23	%		5.73	%
Return on average tangible equity (non-GAAP)		18.81	%		20.17	%		17.99	%		16.59	%		13.97	%

Adjusted Return on Average Common Tangible Equity (2) (3)
Return on average common equity (GAAP)		10.96	%		11.41	%		10.31	%		9.36	%		8.24	%
Effect to adjust for securities gains		(0.00)	%		—	%		(0.00)	%		—	%		—	%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—	%		—	%		—	%		—	%		1.11	%
Effect to adjust for merger, branch consolidation and severance related expense, net of tax		0.58	%		0.10	%		0.82	%		0.33	%		0.66	%
Effect to adjust for intangible assets		8.21	%		8.82	%		8.23	%		7.46	%		6.78	%
Adjusted return on average common tangible equity (non-GAAP)		19.75	%		20.33	%		19.36	%		17.15	%		16.79	%

Adjusted Efficiency Ratio (4)
Efficiency ratio		51.41	%		47.96	%		53.14	%		54.92	%		62.99	%
Effect to adjust for merger, branch consolidation and severance related expense, net of tax		(2.07)	%		(0.33)	%		(3.12)	%		(1.33)	%		(2.94)	%
Adjusted efficiency ratio		49.34	%		47.63	%		50.02	%		53.59	%		60.05	%

Tangible Book Value Per Common Share (3)
Book value per common share (GAAP)	$	69.19		$	67.04		$	65.03		$	66.64		$	68.30
Effect to adjust for intangible assets		(26.79)			(26.95)			(27.06)			(27.17)			(27.25)
Tangible book value per common share (non-GAAP)	$	42.40		$	40.09		$	37.97		$	39.47		$	41.05

Tangible Equity-to-Tangible Assets (3)
Equity-to-assets (GAAP) (8)		11.68	%		11.56	%		11.08	%		11.01	%		11.23	%
Effect to adjust for intangible assets		(4.18)	%		(4.31)	%		(4.30)	%		(4.18)	%		(4.16)	%
Tangible equity-to-tangible assets (non-GAAP) (8)		7.50	%		7.25	%		6.78	%		6.83	%		7.07	%

Certain prior period information has been reclassified to conform to the current period presentation, and these reclassifications had no impact on net income or equity as previously reported.

Footnotes to tables:

(1)	Includes loan accretion (interest) income related to the discount on acquired loans of $7.4 million, $7.3 million, $9.6 million, $12.8 million, and $6.7 million during the quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.
(2)	Adjusted earnings, adjusted return on average assets, adjusted EPS, and adjusted return on average equity are non-GAAP measures and exclude the gains or losses on sales of securities, merger, branch consolidation and severance related expense, and initial PCL on nonPCD loans and unfunded commitments from acquisitions. Management believes that non-GAAP adjusted measures provide additional useful information that allows readers to evaluate the ongoing performance of the company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP. Adjusted earnings and the related adjusted return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis: (a) pre-tax merger, branch consolidation and severance related expense of $9.4 million, $1.5 million, $13.7 million, $5.4 million, and $10.3 million, for the quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively; (b) net securities gains of $45,000 and $30,000 for the quarters ended March 31, 2023 and September 30, 2022, respectively; and (c) initial PCL on nonPCD loans and unfunded commitments acquired from ACBI of $17.1 million for the quarter ended March 31, 2022.
(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 Non-GAAP to GAAP" provide tables that reconcile non-GAAP measures to GAAP.
(4)	Adjusted efficiency ratio is calculated by taking the noninterest expense excluding merger, branch consolidation and severance related expense 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 $7.3 million, $8.0 million, $7.8 million, $8.8 million, and $8.5 million for the quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.
(5)	The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period.
(6)	March 31, 2023 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C; all other periods are presented as filed.
(7)	Loan data excludes mortgage loans held for sale.
(8)	During the fourth quarter of 2022, the Company determined the variation margin payments for its interest rate swaps centrally cleared through London Clearing House ("LCH") and Chicago Mercantile Exchange ("CME") met the legal characteristics of daily settlements of the derivatives rather than collateral. As a result, the variation margin payment and the related derivative instruments are considered a single unit of account for accounting and financial reporting purposes. Depending on the net position, the fair value of the single unit of account is reported in other assets or other liabilities on the consolidated balance sheets, as opposed to interest-earning deposits or interest-bearing deposits. In addition, the expense or income attributable to the variation margin payments for the centrally cleared swaps is reported in noninterest income, specifically within correspondent and capital markets income, as opposed to interest income or interest expense. The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument. The table below discloses the net change in all the balance sheet and income statement line items, as well as performance metrics, impacted by the correction from collateralize-to-market to settle-to-market accounting treatment for prior periods. There was no impact to net income or equity as previously reported.

	Three Months Ended
(Dollars in thousands)	Sep. 30,			Jun. 30,			Mar. 31,
INCOME STATEMENT	2022			2022			2022
Interest income:
Effect to interest income on federal funds sold and interest-earning
deposits with banks	$	1,522		$	674		$	7
Interest expense:
Effect to interest expense on money market deposits		(2,603)			(862)			(37)
Net interest income:
Net effect to net interest income	$	4,125		$	1,536		$	44
Noninterest Income:
Effect to correspondent banking and capital market income	$	(4,125)		$	(1,536)		$	(44)

BALANCE SHEET
Assets:
Effect to federal funds sold and interest-earning deposits with banks	$	114,514		$	98,907		$	160,185
Effect to other assets		(870,746)			(540,139)			(285,004)
Net effect to total assets	$	(756,232)		$	(441,232)		$	(124,819)

Liabilities:
Effect to money market deposits	$	(756,232)		$	(441,232)		$	(124,819)
Net effect to total liabilities	$	(756,232)		$	(441,232)		$	(124,819)

AVERAGE BALANCES
Interest-earning assets:
Effect to federal funds sold and interest-earning deposits with banks	$	210,108		$	211,970		$	37,638
Noninterest-earning assets:
Effect to noninterest-earning assets		(569,329)			(483,017)			(76,702)
Net effect to total average assets	$	(359,221)		$	(271,047)		$	(39,064)
Interest-bearing liabilities:
Effect to transaction and money market accounts	$	(359,221)		$	(271,047)		$	(1,387)
Noninterest-bearing liabilities:
Effect to Non-IBL		—			—			(37,677)
Net effect to total average liabilities	$	(359,221)		$	(271,047)		$	(39,064)


	Three Months Ended
	Sep. 30,			Jun. 30,			Mar. 31,
YIELD ANALYSIS	2022			2022			2022
Interest-earning assets:
Effect to federal funds sold and interest-earning deposits with banks		0.05	%		0.03	%		—	%
Effect to total interest-earning assets		(0.01)	%		(0.01)	%		(0.01)	%
Interest-bearing liabilities:
Effect to transaction and money market accounts		(0.06)	%		(0.01)	%		0.00	%
Effect to total interest-bearing liabilities		(0.04)	%		(0.01)	%		0.00	%

Net effect to NIM		0.02	%		0.00	%		—	%
Net effect to NIM, TE (non-GAAP)		0.03	%		—	%		—	%

PERFORMANCE RATIOS
Effect to return on average assets (annualized)		0.01	%		0.01	%		—	%
Effect to adjusted return on average assets (annualized) (non-GAAP) (2)		0.01	%		0.01	%		—	%

Effect to equity-to-assets		0.2	%		0.1	%		—	%
Effect to tangible equity-to-tangible assets (non-GAAP) (3)		0.1	%		—	%		0.1	%
Effect to Tier 1 leverage		0.1	%		0.1	%		—	%
Effect to Tier 1 common equity		—	%		—	%		—	%
Effect to Tier 1 risk-based capital		—	%		—	%		—	%
Effect to Total risk-based capital		0.1	%		—	%		—	%

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) interest rate risk primarily resulting from the interest rate environment, the number and pace of interest rate increases, and their impact on the Bank's earnings, including from the correspondent and mortgage divisions, housing demand, the market value of the bank's loan and securities portfolios, and the market value of SouthState's equity; (3) volatility in the financial services industry (including failures or rumors of failures of other depositor institutions), along with actions taken by governmental agencies to address such turmoil, could affect the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital (4) risks related to the merger and integration of SouthState and Atlantic Capital including, among others, (i) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (ii) the risk that the integration of Atlantic Capital's operations into SouthState's operations will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate Atlantic Capital's businesses into SouthState's businesses, (iii) the amount of the costs, fees, expenses and charges related to the merger, and (iv) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger; (5) risks relating to the continued impact of the Covid19 pandemic on the Company, including to efficiencies and the control environment due to the changing work environment; (6) 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; (7) 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; (8) potential deterioration in real estate values; (9) 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; (10) risks relating to the ability to retain our culture and attract and retain qualified people; (11) 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; (12) risks related to the ability of the Company to pursue its strategic plans which depend upon certain growth goals in our lines of business; (13) liquidity risk affecting the Bank's ability to meet its obligations when they come due; (14) risks associated with an anticipated increase in SouthState's investment securities portfolio, including risks associated with acquiring and holding investment securities or potentially determining that the amount of investment securities SouthState desires to acquire are not available on terms acceptable to SouthState; (15) unexpected outflows of uninsured deposits may require us to sell investment securities at a loss; (16) the loss of value of our investment portfolio could negatively impact market perceptions of us and could lead to deposit withdrawals; (17) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (18) transaction risk arising from problems with service or product delivery; (19) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (20) 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, and the possibility of changes in accounting standards, policies, principles and practices; (21) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (22) 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; (23) 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; (24) reputational and operational risks associated with environment, social and governance (ESG) matters, including the impact of recently issued proposed regulatory guidance and regulation relating to climate change; (25) greater than expected noninterest expenses; (26) excessive loan losses; (27) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with the Atlantic Capital integration, and potential difficulties in maintaining relationships with key personnel; (28) reputational risk and possible higher than estimated reduced revenue from announced changes in the Bank's consumer overdraft programs; (29) the risks of fluctuations in market prices for SouthState common stock that may or may not reflect economic condition or performance of SouthState; (30) 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; (31) ownership dilution risk associated with potential acquisitions in which SouthState's stock may be issued as consideration for an acquired company; (32) 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; (33) major catastrophes such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including infectious disease outbreaks, 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; (34) terrorist activities risk that results in loss of consumer confidence and economic disruptions; and (35) 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.

SOURCE SouthState Corporation