SouthState Corporation Reports Fourth Quarter 2022 Results, Declares Quarterly Cash Dividend

WINTER HAVEN, Fla., Jan. 26, 2023 /PRNewswire/ — SouthState Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and twelve-month periods ended December 31, 2022.

“The resilience of SouthState’s deposit franchise drove our performance in the 4th quarter and in 2022,” said John C. Corbett, Chief Executive Officer.  “With a cumulative deposit beta of 5% and a total cost of deposits of 21 basis points, our net interest margin expanded 120 basis points in 2022 and our PPNR per share increased 60% from the same quarter last year.  In addition to the strength of the deposit franchise, our loan portfolio grew 19% annualized in the current quarter and asset quality metrics remain pristine.  With the benefit of continued population migration to our southeast markets, our team is energized about the prospects for 2023 and the years ahead.”

Highlights of the fourth quarter of 2022 include:

Returns

• Reported Diluted Earnings per Share (“EPS”) of $1.88; Adjusted Diluted EPS (Non-GAAP) of $1.90
• Net Income of $143.5 million; Adjusted Net Income (Non-GAAP) of $144.7 million
• Return on Average Common Equity of 11.4% and Reported Return on Average Tangible Common Equity (Non-GAAP) of 20.2%; Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 20.3%*
• Return on Average Assets (“ROAA”) of 1.28%; Adjusted ROAA (Non-GAAP) of 1.29%*
• Pre-Provision Net Revenue (“PPNR”) per weighted average diluted share (Non-GAAP) of $3.03, up 11% from the prior quarter’s $2.74 and up 60% from $1.89 in the year ago quarter
• Book Value per Share of $67.04 increased by $2.01 per share compared to the prior quarter
• Tangible Book Value (“TBV”) per Share (Non-GAAP) of $40.09, up $2.12 from the prior quarter

∗ Annualized percentages

Performance

• Net Interest Income of $396 million; Core Net Interest Income (excluding loan accretion and deferred fees on PPP) (Non-GAAP) increased $36 million from prior quarter
• Net Interest Margin (“NIM”), non-tax equivalent and tax equivalent (Non-GAAP) of 3.96% and 3.99%, respectively, up 41 basis points from prior quarter
• Noninterest Income of $63 million down $10 million compared to the prior quarter due to correspondent banking and capital markets income and mortgage banking; Noninterest Income represented 0.57% of average assets for the fourth quarter of 2022
• Noninterest Expense, excluding merger and branch consolidation related expense (Non-GAAP), increased $1 million compared to the prior quarter
• 5.5% revenue growth with 0.5% expense growth generated 5.0% operating leverage in the quarter
• Efficiency Ratio improved to 48% from the prior quarter’s 53%; Adjusted Efficiency Ratio (Non-GAAP) improved to 48% from the prior quarter’s 50%
• $47.1 million Provision for Credit Losses (“PCL”) driven by changing economic forecasts and loan portfolio growth, in spite of net loan recoveries and only $873 thousand in total net charge-offs (including DDA charge-offs)

Balance Sheet

• Loans increased $1.3 billion, or 19% annualized, led by consumer real estate, commercial and industrial, and construction and land development loans; ending loan to deposit ratio of 83%
• Deposits declined $559 million, or 6% annualized; total deposit cost was 0.21%, up 13 basis points from prior quarter
• Began applying settle-to-market accounting to variation margin payments for centrally cleared swaps, resulting in an offset of $824 million recorded with market value of derivatives in Other Assets and $8.5 million of interest cost during the current quarter.  Refer to the non-interest income table on page 6 and note 8 on page 11 for more details. 

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 February 17, 2023 to shareholders of record as of February 10, 2023 

 

Financial Performance

		Three Months Ended															Twelve Months Ended
(Dollars in thousands, except per share data)		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
INCOME STATEMENT		2022			2022			2022			2022			2021			2022			2021
Interest income
Loans, including fees (1)		$	359,552		$	312,856		$	272,000		$	233,617		$	238,310		$	1,178,026		$	990,519
Investment securities, trading securities, federal funds sold and securities
purchased under agreements to resell (8)			64,337			63,476			54,333			36,854			29,063			218,999			94,285
Total interest income			423,889			376,332			326,333			270,471			267,373			1,397,025			1,084,804
Interest expense
Deposits (8)			19,945			7,534			4,914			4,591			5,121			36,984			33,182
Federal funds purchased, securities sold under agreements
to repurchase, and other borrowings			7,940			6,464			5,604			4,362			4,156			24,370			18,447
Total interest expense			27,885			13,998			10,518			8,953			9,277			61,354			51,629
Net interest income (8)			396,004			362,334			315,815			261,518			258,096			1,335,671			1,033,175
Provision (recovery) for credit losses			47,142			23,876			19,286			(8,449)			(9,157)			81,855			(165,273)
Net interest income after provision (recovery) for credit losses			348,862			338,458			296,529			269,967			267,253			1,253,816			1,198,448
Noninterest income (8)			63,392			73,053			86,756			86,046			91,902			309,247			354,252
Noninterest expense
Operating expense			227,957			226,754			225,779			218,324			217,392			898,813			869,473
Merger and branch consolidation related expense			1,542			13,679			5,390			10,276			6,645			30,888			67,242
Extinguishment of debt cost			—			—			—			—			—			—			11,706
Total noninterest expense			229,499			240,433			231,169			228,600			224,037			929,701			948,421
Income before provision for income taxes			182,755			171,078			152,116			127,413			135,118			633,362			604,279
Income taxes provision			39,253			38,035			32,941			27,084			28,272			137,313			128,736
Net income		$	143,502		$	133,043		$	119,175		$	100,329		$	106,846		$	496,049		$	475,543
Adjusted net income (non-GAAP) (2)
Net income (GAAP)		$	143,502		$	133,043		$	119,175		$	100,329		$	106,846		$	496,049		$	475,543
Securities gains, net of tax			—			(24)			—			—			(2)			(24)			(81)
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			1,211			10,638			4,223			8,092			5,255			24,163			52,740
Extinguishment of debt cost, net of tax			—			—			—			—			—			—			9,081
Adjusted net income (non-GAAP)		$	144,713		$	143,657		$	123,398		$	121,913		$	112,099		$	533,680		$	537,283
Basic earnings per common share		$	1.90		$	1.76		$	1.58		$	1.40		$	1.53		$	6.65		$	6.76
Diluted earnings per common share		$	1.88		$	1.75		$	1.57		$	1.39		$	1.52		$	6.60		$	6.71
Adjusted net income per common share – Basic (non-GAAP) (2)		$	1.91		$	1.90		$	1.64		$	1.71		$	1.61		$	7.16		$	7.63
Adjusted net income per common share – Diluted (non-GAAP) (2)		$	1.90		$	1.89		$	1.62		$	1.69		$	1.59		$	7.10		$	7.58
Dividends per common share		$	0.50		$	0.50		$	0.49		$	0.49		$	0.49		$	1.98		$	1.92
Basic weighted-average common shares outstanding			75,639,640			75,605,960			75,461,157			71,447,429			69,651,334			74,550,708			70,393,262
Diluted weighted-average common shares outstanding			76,326,777			76,182,131			76,094,198			72,110,746			70,289,971			75,181,305			70,888,896
Effective tax rate			21.48 %			22.23 %			21.66 %			21.26 %			20.92 %			21.68 %			21.30 %

 

Performance and Capital Ratios

		Three Months Ended															Twelve Months Ended
		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,		Dec. 31,
		2022			2022			2022			2022			2021			2022		2021
PERFORMANCE RATIOS
Return on average assets (annualized) (8)			1.28	%		1.17	%		1.05	%		0.95	%		1.03	%	1.12	%	1.19	%
Adjusted return on average assets (annualized) (non-GAAP) (2) (8)			1.29	%		1.27	%		1.09	%		1.15	%		1.08	%	1.20	%	1.35	%
Return on average common equity (annualized)			11.41	%		10.31	%		9.36	%		8.24	%		8.84	%	9.84	%	10.01	%
Adjusted return on average common equity (annualized) (non-GAAP) (2)			11.50	%		11.13	%		9.69	%		10.01	%		9.28	%	10.59	%	11.31	%
Return on average tangible common equity (annualized) (non-GAAP) (3)			20.17	%		17.99	%		16.59	%		13.97	%		14.63	%	17.16	%	16.64	%
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)			20.33	%		19.36	%		17.15	%		16.79	%		15.30	%	18.40	%	18.68	%
Efficiency ratio (tax equivalent)			47.96	%		53.14	%		54.92	%		62.99	%		61.27	%	54.21	%	65.55	%
Adjusted efficiency ratio (non-GAAP) (4)			47.63	%		50.02	%		53.59	%		60.05	%		59.39	%	52.34	%	59.88	%
Dividend payout ratio (5)			26.40	%		28.44	%		31.03	%		33.71	%		32.02	%	29.54	%	28.43	%
Book value per common share		$	67.04		$	65.03		$	66.64		$	68.30		$	69.27
Tangible book value per common share (non-GAAP) (3)		$	40.09		$	37.97		$	39.47		$	41.05		$	44.62
CAPITAL RATIOS
Equity-to-assets (8)			11.6	%		11.1	%		11.0	%		11.2	%		11.5	%
Tangible equity-to-tangible assets (non-GAAP) (3) (8)			7.2	%		6.8	%		6.8	%		7.1	%		7.7	%
Tier 1 leverage (6) (8) *			8.7	%		8.4	%		8.0	%		8.5	%		8.1	%
Tier 1 common equity (6) (8) *			11.0	%		11.0	%		11.1	%		11.4	%		11.8	%
Tier 1 risk-based capital (6) (8) *			11.0	%		11.0	%		11.1	%		11.4	%		11.8	%
Total risk-based capital (6) (8) *			13.0	%		13.0	%		13.0	%		13.3	%		13.6	%

*

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)		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,
BALANCE SHEET		2022			2022			2022			2022			2021
Assets
Cash and due from banks		$	548,387		$	394,794		$	561,516		$	588,372		$	476,653
Federal funds sold and interest-earning deposits with banks (8)			764,176			2,529,415			4,259,490			5,604,419			6,244,918
Cash and cash equivalents			1,312,563			2,924,209			4,821,006			6,192,791			6,721,571
Trading securities, at fair value			31,263			51,940			88,088			74,234			77,689
Investment securities:
Securities held to maturity			2,683,241			2,738,178			2,806,465			2,827,769			1,819,901
Securities available for sale, at fair value			5,326,822			5,369,610			5,666,008			5,924,206			5,193,478
Other investments			179,717			179,755			179,815			179,258			160,568
Total investment securities			8,189,780			8,287,543			8,652,288			8,931,233			7,173,947
Loans held for sale			28,968			34,477			73,880			130,376			191,723
Loans:
Purchased credit deteriorated			1,429,731			1,544,562			1,707,592			1,939,033			1,987,322
Purchased non-credit deteriorated			5,943,092			6,365,175			6,908,234			7,633,824			5,890,069
Non-acquired			22,805,039			20,926,566			19,319,440			16,983,570			16,050,775
Less allowance for credit losses			(356,444)			(324,398)			(319,708)			(300,396)			(301,807)
Loans, net			29,821,418			28,511,905			27,615,558			26,256,031			23,626,359
Other real estate owned (“OREO”)			1,023			2,160			1,431			3,290			2,736
Premises and equipment, net			520,635			531,160			562,781			568,332			558,499
Bank owned life insurance			964,708			960,052			953,970			942,922			783,049
Mortgage servicing rights			86,610			90,459			87,463			83,339			65,620
Core deposit and other intangibles			116,450			125,390			132,694			140,364			128,067
Goodwill			1,923,106			1,922,525			1,922,525			1,924,024			1,581,085
Other assets (8)			922,172			980,557			854,506			829,786			928,111
Total assets		$	43,918,696		$	44,422,377		$	45,766,190		$	46,076,722		$	41,838,456
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing		$	13,168,656		$	13,660,244		$	14,337,018		$	14,052,332		$	11,498,840
Interest-bearing (8)			23,181,967			23,249,545			24,097,601			24,598,679			23,555,989
Total deposits			36,350,623			36,909,789			38,434,619			38,651,011			35,054,829
Federal funds purchased and securities
sold under agreements to repurchase			556,417			557,802			669,999			770,409			781,239
Other borrowings			392,275			392,368			392,460			405,553			327,066
Reserve for unfunded commitments			67,215			52,991			32,543			30,368			30,510
Other liabilities (8)			1,477,239			1,588,241			1,196,144			1,044,973			841,872
Total liabilities			38,843,769			39,501,191			40,725,765			40,902,314			37,035,516
Shareholders’ equity:
Common stock – $2.50 par value; authorized 160,000,000 shares			189,261			189,191			189,103			189,403			173,331
Surplus			4,215,712			4,207,040			4,195,976			4,214,897			3,653,098
Retained earnings			1,347,042			1,241,413			1,146,230			1,064,064			997,657
Accumulated other comprehensive loss			(677,088)			(716,458)			(490,884)			(293,956)			(21,146)
Total shareholders’ equity			5,074,927			4,921,186			5,040,425			5,174,408			4,802,940
Total liabilities and shareholders’ equity		$	43,918,696		$	44,422,377		$	45,766,190		$	46,076,722		$	41,838,456
Common shares issued and outstanding			75,704,563			75,676,445			75,641,322			75,761,018			69,332,297

 

Net Interest Income and Margin

		Three Months Ended
		Dec. 31, 2022								Sep. 30, 2022								Dec. 31, 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 (8)		$	1,849,877		$	16,491		3.54 %		$	3,403,421		$	18,190		2.12 %		$	5,934,353		$	2,216		0.15 %
Investment securities			8,286,894			47,846		2.29 %			8,705,657			45,286		2.06 %			6,945,952			26,847		1.53 %
Loans held for sale			25,633			401		6.21 %			47,119			620		5.22 %			206,920			1,526		2.93 %
Total loans, excluding PPP			29,480,843			359,120		4.83 %			28,267,741			312,172		4.38 %			23,445,336			230,337		3.90 %
Total PPP loans			12,489			31		0.98 %			27,236			64		0.93 %			363,083			6,447		7.04 %
Total loans held for investment			29,493,332			359,151		4.83 %			28,294,977			312,236		4.38 %			23,808,419			236,784		3.95 %
Total interest-earning assets (8)			39,655,736			423,889		4.24 %			40,451,174			376,332		3.69 %			36,895,644			267,373		2.88 %
Noninterest-earning assets (8)			4,774,158								4,534,539								4,328,068
Total Assets		$	44,429,894							$	44,985,713							$	41,223,712
Interest-Bearing Liabilities (“IBL”):
Transaction and money market accounts (8)		$	17,044,865		$	16,901		0.39 %		$	17,503,416		$	5,353		0.12 %		$	16,492,540		$	2,230		0.05 %
Savings deposits			3,536,330			1,021		0.11 %			3,621,493			488		0.05 %			3,267,366			135		0.02 %
Certificates and other time deposits			2,444,361			2,023		0.33 %			2,627,280			1,693		0.26 %			2,889,741			2,756		0.38 %
Federal funds purchased			186,232			1,694		3.61 %			240,814			1,312		2.16 %			493,776			107		0.09 %
Repurchase agreements			363,336			253		0.28 %			376,985			194		0.20 %			390,212			150		0.15 %
Other borrowings			435,806			5,993		5.46 %			392,427			4,958		5.01 %			326,921			3,899		4.73 %
Total interest-bearing liabilities (8)			24,010,930			27,885		0.46 %			24,762,415			13,998		0.22 %			23,860,556			9,277		0.15 %
Noninterest-bearing liabilities (“Non-IBL”) (8)			15,427,380								15,101,738								12,568,742
Shareholders’ equity			4,991,584								5,121,560								4,794,414
Total Non-IBL and shareholders’ equity			20,418,964								20,223,298								17,363,156
Total Liabilities and Shareholders’ Equity		$	44,429,894							$	44,985,713							$	41,223,712
Net Interest Income and Margin (Non-Tax Equivalent) (8)					$	396,004		3.96 %					$	362,334		3.55 %					$	258,096		2.78 %
Net Interest Margin (Tax Equivalent) (non-GAAP) (8)								3.99 %								3.58 %								2.79 %
Total Deposit Cost (without Debt and Other Borrowings)								0.21 %								0.08 %								0.06 %
Overall Cost of Funds (including Demand Deposits)								0.29 %								0.14 %								0.10 %
Total Accretion on Acquired Loans (1)					$	7,350							$	9,550							$	7,707
Total Deferred Fees on PPP Loans					$	—							$	—							$	5,655
Tax Equivalent (“TE”) Adjustment					$	2,397							$	2,345							$	1,734

(1)  The remaining loan discount on acquired loans to be accreted into loan interest income totals $72.1 million as of December 31, 2022.

 

Noninterest Income and Expense

		Three Months Ended															Twelve Months Ended
		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
(Dollars in thousands)		2022			2022			2022			2022			2021			2022			2021
Noninterest Income:
Fees on deposit accounts		$	34,480		$	31,188		$	33,658		$	28,902		$	30,293		$	128,228		$	105,641
Mortgage banking (loss) income			(545)			2,262			5,480			10,594			12,044			17,790			64,599
Trust and investment services income			9,867			9,603			9,831			9,718			9,520			39,019			36,981
Securities gains, net			—			30			—			—			2			30			102
Correspondent banking and capital market income (8)			16,760			20,552			27,604			27,994			30,216			92,910			110,005
Interest on centrally-cleared variation margin (8)			(8,451)			(4,125)			(1,536)			(44)			8			(14,155)			43
Total Correspondent banking and capital market income (8)			8,309			16,427			26,068			27,950			30,224			78,755			110,048
Bank owned life insurance income			6,723			6,082			6,246			5,260			4,932			24,311			18,410
Other			4,558			7,461			5,473			3,622			4,887			21,114			18,471
Total Noninterest Income (8)		$	63,392		$	73,053		$	86,756		$	86,046		$	91,902		$	309,247		$	354,252
Noninterest Expense:
Salaries and employee benefits		$	140,440		$	139,554		$	137,037		$	137,673		$	137,321		$	554,704		$	552,030
Occupancy expense			22,412			22,490			22,759			21,840			22,915			89,501			92,225
Information services expense			19,847			20,714			19,947			19,193			18,489			79,701			74,417
OREO and loan related expense (income)			78			532			(3)			(238)			(740)			369			2,029
Business development and staff related			5,851			5,090			4,916			4,276			4,577			20,133			16,677
Amortization of intangibles			8,027			7,837			8,847			8,494			8,517			33,205			35,192
Professional fees			3,756			3,495			4,331			3,749			2,639			15,331			10,629
Supplies and printing expense			2,411			2,621			2,400			2,189			2,179			9,621			9,659
FDIC assessment and other regulatory charges			6,589			6,300			5,332			4,812			4,965			23,033			17,982
Advertising and marketing			2,669			2,170			2,286			1,763			2,375			8,888			7,959
Other operating expenses			15,877			15,951			17,927			14,573			14,155			64,327			50,674
Merger and branch consolidation related expense			1,542			13,679			5,390			10,276			6,645			30,888			67,242
Extinguishment of debt cost			—			—			—			—			—			—			11,706
Total Noninterest Expense		$	229,499		$	240,433		$	231,169		$	228,600		$	224,037		$	929,701		$	948,421

 

Loans and Deposits

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

		Ending Balance
(Dollars in thousands)		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,
LOAN PORTFOLIO		2022			2022			2022			2022			2021
Construction and land development * †		$	2,860,360		$	2,550,552		$	2,527,062		$	2,316,313		$	2,029,216
Investor commercial real estate*			8,769,201			8,641,316			8,393,630			8,158,457			7,432,503
Commercial owner occupied real estate			5,460,193			5,426,216			5,421,725			5,346,583			4,970,116
Commercial and industrial, excluding PPP			5,303,379			4,962,616			4,760,355			4,447,279			3,516,485
Consumer real estate *			6,475,210			5,977,120			5,505,531			4,988,736			4,806,958
Consumer/other			1,299,415			1,263,362			1,279,790			1,179,697			928,240
Total loans, excluding PPP			30,167,758			28,821,182			27,888,093			26,437,065			23,683,518
PPP loans			10,104			15,121			47,173			119,362			244,648
Total Loans		$	30,177,862		$	28,836,303		$	27,935,266		$	26,556,427		$	23,928,166

* 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 $904.1 million, $881.3 million, $795.7 million, $733.7 million, and $686.5 million for the quarters ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

 

		Ending Balance
(Dollars in thousands)		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,
DEPOSITS		2022			2022			2022			2022			2021
Noninterest-bearing checking		$	13,168,656		$	13,660,244		$	14,337,018		$	14,052,332		$	11,498,840
Interest-bearing checking			8,955,519			8,741,447			8,953,332			9,275,208			9,018,987
Savings			3,464,351			3,602,560			3,616,819			3,479,743			3,350,547
Money market (8)			8,342,111			8,369,826			8,823,025			9,015,186			8,376,380
Time deposits			2,419,986			2,535,712			2,704,425			2,828,542			2,810,075
Total Deposits (8)		$	36,350,623		$	36,909,789		$	38,434,619		$	38,651,011		$	35,054,829
Core Deposits (excludes Time Deposits) (8)		$	33,930,637		$	34,374,077		$	35,730,194		$	35,822,469		$	32,244,754

 

Asset Quality

		Ending Balance
		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,
(Dollars in thousands)		2022			2022			2022			2022			2021
NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonaccrual loans and restructured loans on nonaccrual		$	44,671		$	34,374		$	20,716		$	19,582		$	18,700
Accruing loans past due 90 days or more			2,358			2,358			1,371			22,818			4,612
Non-acquired OREO and other nonperforming assets			245			114			93			464			590
Total non-acquired nonperforming assets			47,274			36,846			22,180			42,864			23,902
Acquired
Acquired nonaccrual loans and restructured loans on nonaccrual			59,554			61,866			63,526			59,267			56,718
Accruing loans past due 90 days or more			1,992			1,430			4,418			12,768			251
Acquired OREO and other nonperforming assets			922			2,234			1,577			3,118			2,875
Total acquired nonperforming assets			62,468			65,530			69,521			75,153			59,844
Total nonperforming assets		$	109,742		$	102,376		$	91,701		$	118,017		$	83,746

 

		Three Months Ended
		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,
		2022			2022			2022			2022			2021
ASSET QUALITY RATIOS:
Allowance for credit losses as a percentage of loans			1.18 %			1.12 %			1.14 %			1.13 %			1.26 %
Allowance for credit losses as a percentage of loans, excluding PPP loans			1.18 %			1.14 %			1.15 %			1.14 %			1.27 %
Allowance for credit losses as a percentage of nonperforming loans			328.29 %			324.30 %			355.11 %			262.50 %			375.94 %
Net charge-offs (recoveries) as a percentage of average loans (annualized)			0.01 %			(0.02) %			0.03 %			0.04 %			0.02 %
Total nonperforming assets as a percentage of total assets			0.25 %			0.23 %			0.20 %			0.26 %			0.20 %
Nonperforming loans as a percentage of period end loans			0.36 %			0.35 %			0.32 %			0.43 %			0.34 %

 

Current Expected Credit Losses (“CECL”)

Below is a table showing the roll forward of the ACL and UFC for the fourth quarter of 2022:

		Allowance for Credit Losses (“ACL and UFC”)
		NonPCD ACL			PCD ACL			Total ACL			UFC
Ending balance 9/30/2022		$	270,919		$	53,479		$	324,398		$	52,991
Charge offs			(3,783)			—			(3,783)			—
Acquired charge offs			(331)			(553)			(884)			—
Recoveries			2,290			—			2,290			—
Acquired recoveries			827			677			1,504			—
Provision (recovery) for credit losses			39,684			(6,765)			32,919			14,224
Ending balance 12/31/2022		$	309,606		$	46,838		$	356,444		$	67,215
Period end loans (includes PPP Loans)		$	28,748,131		$	1,429,731		$	30,177,862			N/A
Reserve to Loans (includes PPP Loans)			1.08 %			3.28 %			1.18 %			N/A
Period end loans (excludes PPP Loans)		$	28,738,027		$	1,429,731		$	30,167,758			N/A
Reserve to Loans (excludes PPP Loans)			1.08 %			3.28 %			1.18 %			N/A
Unfunded commitments (off balance sheet) *											$	10,173,471
Reserve to unfunded commitments (off balance sheet)												0.66 %

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

Conference Call

The Company will host a conference call to discuss its fourth quarter results at 10:00 a.m. Eastern Time on January 27, 2023.  Callers wishing to participate may call toll-free by dialing 844-200-6205.  The number for international participants is (929) 526-1599.  The conference ID number is 040590.   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 January 27, 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)		Dec. 31, 2022				Sep. 30, 2022				Jun. 30, 2022				Mar. 31, 2022				Dec. 31, 2021
Net income (GAAP)		$	143,502			$	133,043			$	119,175			$	100,329			$	106,846
Provision (recovery) for credit losses			47,142				23,876				19,286				(8,449)				(9,157)
Tax provision			39,253				38,035				32,941				27,084				28,272
Merger and branch consolidation related expense			1,542				13,679				5,390				10,276				6,645
Securities gains			—				(30)				—				—				(2)
Pre-provision net revenue (PPNR) (Non-GAAP)		$	231,439			$	208,603			$	176,792			$	129,240			$	132,604
Average asset balance (GAAP)		$	44,429,894			$	44,985,713			$	45,576,742			$	42,907,268			$	41,223,712
PPNR ROAA			2.07	%			1.84	%			1.56	%			1.22	%			1.28	%
Diluted weighted-average common shares outstanding			76,327				76,182				76,094				72,111				70,290
PPNR per weighted-average common shares outstanding		$	3.03			$	2.74			$	2.32			$	1.79			$	1.89

 

(Dollars in thousands)		Three Months Ended
CORE NET INTEREST INCOME (NON-GAAP)		Dec. 31, 2022				Sep. 30, 2022				Jun. 30, 2022				Mar. 31, 2022				Dec. 31, 2021
Net interest income (GAAP) (8)		$	396,004			$	362,334			$	315,815			$	261,518			$	258,096
Less:
Total accretion on acquired loans			7,350				9,550				12,770				6,741				7,707
Total deferred fees on PPP loans			—				—				8				983				5,655
Core net interest income (Non-GAAP)		$	388,654			$	352,784			$	303,037			$	253,794			$	244,734
NET INTEREST MARGIN (“NIM”), TAX EQUIVALENT (NON-GAAP)
Net interest income (GAAP) (8)		$	396,004			$	362,334			$	315,815			$	261,518			$	258,096
Total average interest-earning assets (8)			39,655,736				40,451,174				40,899,365				38,564,661				36,895,644
NIM, non-tax equivalent (8)			3.96	%			3.55	%			3.10	%			2.75	%			2.78	%
Tax equivalent adjustment (included in NIM, tax equivalent)			2,397				2,345				2,249				1,885				1,734
Net interest income, tax equivalent (Non-GAAP) (8)		$	398,401			$	364,679			$	318,064			$	263,403			$	259,830
NIM, tax equivalent (Non-GAAP) (8)			3.99	%			3.58	%			3.12	%			2.77	%			2.79	%

 

 

		Three Months Ended																				Twelve Months Ended
(Dollars in thousands, except per share data)		Dec. 31,				Sep. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Dec. 31,				Dec. 31,
RECONCILIATION OF GAAP TO NON-GAAP		2022				2022				2022				2022				2021				2022				2021
Adjusted Net Income (non-GAAP) (2)
Net income (GAAP)		$	143,502			$	133,043			$	119,175			$	100,329			$	106,846			$	496,049			$	475,543
Securities gains, net of tax			—				(24)				—				—				(2)				(24)				(81)
PCL – NonPCD loans and UFC, net of tax			—				—				—				13,492				—				13,492				—
Merger and branch consolidation related expense, net of tax			1,211				10,638				4,223				8,092				5,255				24,163				52,740
Extinguishment of debt cost, net of tax			—				—				—				—				—				—				9,081
Adjusted net income (non-GAAP)		$	144,713			$	143,657			$	123,398			$	121,913			$	112,099			$	533,680			$	537,283
Adjusted Net Income per Common Share – Basic (2)
Earnings per common share – Basic (GAAP)		$	1.90			$	1.76			$	1.58			$	1.40			$	1.53			$	6.65			$	6.76
Effect to adjust for securities gains			—				(0.00)				—				—				(0.00)				(0.00)				(0.00)
Effect to adjust for PCL – NonPCD loans and UFC, net of tax			—				—				—				0.19				—				0.19				—
Effect to adjust for merger and branch consolidation related expense, net of tax			0.01				0.14				0.06				0.12				0.08				0.32				0.74
Effect to adjust for extinguishment of debt cost			—				—				—				—				—				—				0.13
Adjusted net income per common share – Basic (non-GAAP)		$	1.91			$	1.90			$	1.64			$	1.71			$	1.61			$	7.16			$	7.63
Adjusted Net Income per Common Share – Diluted (2)
Earnings per common share – Diluted (GAAP)		$	1.88			$	1.75			$	1.57			$	1.39			$	1.52			$	6.60			$	6.71
Effect to adjust for securities gains			—				(0.00)				—				—				(0.00)				(0.00)				(0.00)
Effect to adjust for PCL – NonPCD loans and UFC, net of tax			—				—				—				0.19				—				0.18				—
Effect to adjust for merger and branch consolidation related expense, net of tax			0.02				0.14				0.05				0.11				0.07				0.32				0.74
Effect to adjust for extinguishment of debt cost			—				—				—				—				—				—				0.13
Adjusted net income per common share – Diluted (non-GAAP)		$	1.90			$	1.89			$	1.62			$	1.69			$	1.59			$	7.10			$	7.58
Adjusted Return on Average Assets (2)
Return on average assets (GAAP) (8)			1.28	%			1.17	%			1.05	%			0.95	%			1.03	%			1.12	%			1.19	%
Effect to adjust for securities gains			—	%			(0.00)	%			—	%			—	%			(0.00)	%			(0.00)	%			(0.00)	%
Effect to adjust for PCL – NonPCD loans and UFC, net of tax			—	%			—	%			—	%			0.13	%			—	%			0.03	%			—	%
Effect to adjust for merger and branch consolidation related expense, net of tax			0.01	%			0.10	%			0.04	%			0.07	%			0.05	%			0.05	%			0.14	%
Effect to adjust for extinguishment of debt cost			—	%			—	%			—	%			—	%			—	%			—	%			0.02	%
Adjusted return on average assets (non-GAAP) (8)			1.29	%			1.27	%			1.09	%			1.15	%			1.08	%			1.20	%			1.35	%
Adjusted Return on Average Common Equity (2)
Return on average common equity (GAAP)			11.41	%			10.31	%			9.36	%			8.24	%			8.84	%			9.84	%			10.01	%
Effect to adjust for securities gains			—	%			(0.00)	%			—	%			—	%			(0.00)	%			(0.00)	%			(0.00)	%
Effect to adjust for PCL – NonPCD loans and UFC, net of tax			—	%			—	%			—	%			1.11	%			—	%			0.27	%			—	%
Effect to adjust for merger and branch consolidation related expense, net of tax			0.09	%			0.82	%			0.33	%			0.66	%			0.44	%			0.48	%			1.11	%
Effect to adjust for extinguishment of debt cost			—	%			—	%			—	%			—	%			—	%			—	%			0.19	%
Adjusted return on average common equity (non-GAAP)			11.50	%			11.13	%			9.69	%			10.01	%			9.28	%			10.59	%			11.31	%
Return on Average Common Tangible Equity (3)
Return on average common equity (GAAP)			11.41	%			10.31	%			9.36	%			8.24	%			8.84	%			9.84	%			10.01	%
Effect to adjust for intangible assets			8.76	%			7.68	%			7.23	%			5.73	%			5.79	%			7.32	%			6.63	%
Return on average tangible equity (non-GAAP)			20.17	%			17.99	%			16.59	%			13.97	%			14.63	%			17.16	%			16.64	%
Adjusted Return on Average Common Tangible Equity (2) (3)
Return on average common equity (GAAP)			11.41	%			10.31	%			9.36	%			8.24	%			8.84	%			9.84	%			10.01	%
Effect to adjust for securities gains			—	%			(0.00)	%			—	%			—	%			(0.00)	%			(0.00)	%			(0.00)	%
Effect to adjust for PCL – NonPCD loans and UFC, net of tax			—	%			—	%			—	%			1.11	%			—	%			0.27	%			—	%
Effect to adjust for merger and branch consolidation related expense, net of tax			0.10	%			0.82	%			0.33	%			0.66	%			0.43	%			0.48	%			1.11	%
Effect to adjust for extinguishment of debt cost			—	%			—	%			—	%			—	%			—	%			—	%			0.19	%
Effect to adjust for intangible assets			8.82	%			8.23	%			7.46	%			6.78	%			6.03	%			7.81	%			7.37	%
Adjusted return on average common tangible equity (non-GAAP)			20.33	%			19.36	%			17.15	%			16.79	%			15.30	%			18.40	%			18.68	%
Adjusted Efficiency Ratio (4)
Efficiency ratio			47.96	%			53.14	%			54.92	%			62.99	%			61.27	%			54.21	%			65.55	%
Effect to adjust for merger and branch consolidation related expense			(0.33)	%			(3.12)	%			(1.33)	%			(2.94)	%			(1.88)	%			(1.87)	%			(5.67)	%
Adjusted efficiency ratio			47.63	%			50.02	%			53.59	%			60.05	%			59.39	%			52.34	%			59.88	%
Tangible Book Value Per Common Share (3)
Book value per common share (GAAP)		$	67.04			$	65.03			$	66.64			$	68.30			$	69.27
Effect to adjust for intangible assets			(26.95)				(27.06)				(27.17)				(27.25)				(24.65)
Tangible book value per common share (non-GAAP)		$	40.09			$	37.97			$	39.47			$	41.05			$	44.62
Tangible Equity-to-Tangible Assets (3)
Equity-to-assets (GAAP) (8)			11.56	%			11.08	%			11.01	%			11.23	%			11.48	%
Effect to adjust for intangible assets			(4.31)	%			(4.30)	%			(4.18)	%			(4.16)	%			(3.77)	%
Tangible equity-to-tangible assets (non-GAAP) (8)			7.25	%			6.78	%			6.83	%			7.07	%			7.71	%

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 $7.3 million, $9.6 million, $12.8 million, $6.7 million, and $7.7 million, respectively, during the five quarters above.
(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 and branch consolidation related expense, initial PCL on nonPCD loans and unfunded commitments from acquisitions and extinguishment of debt cost.  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 and branch consolidation related expense of $1.5 million, $13.7 million, $5.4 million, $10.3 million, and $6.6 million for the quarters ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively; and (b) net securities gains of $30,000 and $2,000 for the quarters ended September 30, 2022 and December 31, 2021, 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 and branch consolidation 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 $8.0 million, $7.8 million, $8.8 million, $8.5 million, and $8.5 million for the quarters ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, 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)	December 31, 2022 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																Nine Months Ended				Twelve Months Ended
(Dollars in thousands)		Sep. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Sep. 30,				Dec. 31,
INCOME STATEMENT		2022				2022				2022				2021				2022				2021
Interest income:
Effect to interest income on federal funds sold and interest-earning
deposits with banks		$	1,522			$	674			$	7			$	(8)			$	2,203			$	(43)
Interest expense:
Effect to interest expense on money market deposits			(2,603)				(862)				(37)				—				(3,502)				—
Net interest income:
Net effect to net interest income		$	4,125			$	1,536			$	44			$	(8)			$	5,705			$	(43)
Noninterest Income:
Effect to correspondent banking and capital market income		$	(4,125)			$	(1,536)			$	(44)			$	8			$	(5,705)			$	43
BALANCE SHEET
Assets:
Effect to federal funds sold and interest-earning deposits with banks		$	114,514			$	98,907			$	160,185			$	(121,576)
Effect to other assets			(870,746)				(540,139)				(285,004)				—
Net effect to total assets		$	(756,232)			$	(441,232)			$	(124,819)			$	(121,576)
Liabilities:
Effect to money market deposits		$	(756,232)			$	(441,232)			$	(124,819)			$	—
Effect to other liabilities			—				—				—				(121,576)
Net effect to total liabilities		$	(756,232)			$	(441,232)			$	(124,819)			$	(121,576)
AVERAGE BALANCES
Interest-earning assets:
Effect to federal funds sold and interest-earning deposits with banks		$	210,108			$	211,970			$	37,638			$	(135,996)
Noninterest-earning assets:
Noninterest-earning assets			5,103,869				5,160,394				4,419,309				4,328,068
Effect to noninterest-earning assets			(569,329)				(483,017)				(76,702)				—
Net effect to total average assets		$	(359,221)			$	(271,047)			$	(39,064)			$	(135,996)
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)				(135,996)
Net effect to total average liabilities		$	(359,221)			$	(271,047)			$	(39,064)			$	(135,996)

 

		Three Months Ended																Twelve Months Ended
		Sep. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Dec. 31,
YIELD ANALYSIS		2022				2022				2022				2021				2021
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)	%			0.02	%
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	%			—	%			0.01	%
Net effect to NIM, TE (non-GAAP)			0.03	%			—	%			—	%			0.01	%
PERFORMANCE RATIOS
Effect to return on average assets (annualized)			0.01	%			0.01	%			—	%			0.01	%			—	%
Effect to adjusted return on average assets (annualized) (non-GAAP) (2)			0.01	%			0.01	%			—	%			—	%			0.01	%
Effect to equity-to-assets			0.2	%			0.1	%			—	%			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 continued negative economic developments resulting from the Covid19 pandemic, or 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) 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; (4) 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; (5) 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; (6) 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; (7) potential deterioration in real estate values; (8) the impact of competition with other financial institutions, including deposit and loan pricing pressures (including those resulting from the CARES Act) and the resulting impact, including as a result of compression to net interest margin; (9) risks relating to the ability to retain our culture and attract and retain qualified people; (10) 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; (11) risks related to the ability of the Company to pursue its strategic plans which depend upon certain growth goals in our lines of business; (12) liquidity risk affecting the Bank’s ability to meet its obligations when they come due; (13) 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; (14) price risk focusing on changes in market factors that may affect the value of traded instruments in “mark-to-market” portfolios; (15) transaction risk arising from problems with service or product delivery; (16) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (17) 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 the CARES Act, the Consumer Financial Protection Bureau regulations, and the possibility of changes in accounting standards, policies, principles and practices, including changes in accounting principles relating to loan loss recognition (CECL); (18) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (19) reputation risk that adversely affects earnings or capital arising from negative public opinion; (20) 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; (21) 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; (22) greater than expected noninterest expenses; (23) excessive loan losses; (24) 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; (25) reputational risk and possible higher than estimated reduced revenue from announced changes in the Bank’s consumer overdraft programs; (26) the risks of fluctuations in market prices for SouthState common stock that may or may not reflect economic condition or performance of SouthState; (27) 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; (28) ownership dilution risk associated with potential acquisitions in which SouthState’s stock may be issued as consideration for an acquired company; (29) 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; (30) major catastrophes such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including infectious disease outbreaks, such as the ongoing Covid19 pandemic, 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; (31) terrorist activities risk that results in loss of consumer confidence and economic disruptions; and (32) 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.

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SOURCE SouthState Corporation