SouthState Corporation Reports First Quarter 2021 Results and Declares Quarterly Cash Dividend

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WINTER HAVEN, Fla., April 28, 2021 /PRNewswire/ -- SouthState Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month period ended March 31, 2021.

The Company reported consolidated net income of $2.06 per diluted common share for the three months ended March 31, 2021, compared to $1.21 per diluted common share for the three months ended December 31, 2020, and compared to $0.71 per diluted common share one year ago.

Adjusted net income (non-GAAP) totaled $2.17 per diluted share for the three months ended March 31, 2021, compared to $1.44 per diluted share, in the fourth quarter of 2020, and compared to $0.82 per diluted share one year ago. Adjusted net income in the first quarter of 2021 excludes $7.8 million of merger-related and branch closure costs (after-tax). In the fourth quarter of 2020, adjusted net income excluded $16.3 million of merger-related and branch closure costs (after-tax), $31.8 million in swap termination expense (after-tax), and $31.5 million of income tax benefit related to the ability to carryback tax losses under the CARES Act.

Highlights of the first quarter of 2021 include:

Returns

  • Reported & adjusted diluted Earnings per Share ("EPS") of $2.06 and $2.17 (Non-GAAP), respectively

  • Recorded a negative provision for credit losses of $58.4 million compared to $18.2 million in provision expense in the prior quarter

  • Reported & adjusted Return on Average Tangible Common Equity of 21.2% (Non-GAAP) and 22.2% (Non-GAAP), respectively

  • Pre-Provision Net Revenue ("PPNR") of $140 million, or 1.48% PPNR ROAA (Non-GAAP)

  • Book value per share of $66.42 increased by $0.93 per share compared to the prior quarter

  • Tangible book value ("TBV") per share of $42.02 (Non-GAAP), up $4.01, or 10.5% from the year ago figure

Performance

  • Net interest margin ("NIM", tax equivalent) of 3.12%, down 2 basis points from prior quarter

  • Recognized $10.4 million in loan accretion compared to $12.7 million in the prior quarter

  • Recognized $20.4 million in PPP net deferred loan fee income compared to $16.6 million in the prior quarter

  • Total deposit cost of 0.15% down 2 basis points from prior quarter

  • Noninterest income of $96.3 million, 1.02% of assets

Balance Sheet / Credit

  • Total deposits increased $1.7 billion with core deposit growth totaling $2.0 billion, or 30.3% annualized; 33.3% of deposits are noninterest-bearing

  • Loans, excluding PPP loans, decreased $185.0 million, or 3.3% annualized, centered in $131.1 million decline in consumer real estate loans and home equity lines of credit; C&I loans grew for the third consecutive quarter

  • Total PPP loans grew by $12.3 million, including the addition of $731.8 million round 2 PPP loans

  • Net loan recoveries of $21,000, or 0.00% annualized

  • Loan deferrals totaled $186.3 million, or 0.83% of the total loan portfolio, excluding PPP loans and held for sale loans as of March 31, 2021

Other Events

  • Completed Duncan-Williams, Inc. acquisition on February 1, 2021

  • Consolidated 4 branch locations in the first quarter

  • Declared a cash dividend on common stock of $0.47 per share, payable on May 21, 2021 to shareholders of record as of May 14, 2021

  • Received board and regulatory approval to redeem $25 million of subordinated debt and $38.5 million of trust preferred securities assumed from CenterState Bank Corporation ("CSFL"); Management intends to redeem by the next quarterly interest distribution date and expects to accelerate approximately $11 million of unamortized fair value discount related to the trust preferred securities

"We are pleased to begin 2021 with solid results in the first quarter", said John C. Corbett, Chief Executive Officer. "Our longstanding focus on asset quality has benefited us through this environment, with four consecutive quarters with minimal to no net loan losses. The improvement in the economy and in economic forecasts led us to release loss reserves in the quarter, aiding our net income, though we continue to have a solid reserve position should the economic recovery falter. We are also pleased to have expanded our Correspondent division with the February 1 addition of the Duncan Williams team to the company."

"South State's balance sheet is strong and continues to strengthen with annualized total deposit growth of 23% for the quarter and Tangible Book Value growth of 10.5% compared to last year," said Robert R. Hill, Jr., Executive Chairman. "This foundation, coupled with strong fee businesses, has us well-positioned for the future."

First Quarter 2021 Financial Performance



Three Months Ended

(Dollars in thousands, except per share data)


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


March 31,

INCOME STATEMENT


2021


2020


2020


2020


2020

Interest income
















Loans, including fees (1)


$

259,967


$

269,632


$

280,825


$

167,707


$

133,034

Investment securities, trading securities, federal funds sold and securities
















purchased under agreements to resell



18,509



16,738



14,469



12,857



14,766

Total interest income



278,476



286,370



295,294



180,564



147,800

Interest expense
















Deposits



11,257



13,227



15,154



12,624



14,437

Federal funds purchased, securities sold under agreements
















to repurchase, and other borrowings



5,221



7,596



9,792



5,383



5,350

Total interest expense



16,478



20,823



24,946



18,007



19,787

Net interest income



261,998



265,547



270,348



162,557



128,013

Provision (benefit) for credit losses



(58,420)



18,185



29,797



151,474



36,533

Net interest income after provision for credit losses



320,418



247,362



240,551



11,083



91,480

Noninterest income



96,285



97,871



114,790



54,347



44,132

Noninterest expense
















Pre-tax operating expense



218,702



219,719



215,225



134,634



103,118

Merger and/or branch consolid. expense



10,009



19,836



21,662



40,279



4,129

SWAP termination expense





38,787







Federal Home Loan Bank advances prepayment fee





56





199



Total noninterest expense



228,711



278,398



236,887



175,112



107,247

Income before provision for income taxes



187,992



66,835



118,454



(109,682)



28,365

Income taxes (benefit) provision



41,043



(19,401)



23,233



(24,747)



4,255

Net income (loss)


$

146,949


$

86,236


$

95,221


$

(84,935)


$

24,110

















Adjusted net income (non-GAAP) (2)
















Net income (loss) (GAAP)


$

146,949


$

86,236


$

95,221


$

(84,935)


$

24,110

Securities gains, net of tax





(29)



(12)





Income taxes benefit - carryback tax loss





(31,468)







FHLB prepayment penalty, net of tax





46





154



SWAP termination expense, net of tax





31,784







Initial provision for credit losses - NonPCD loans and UFC









92,212



Merger and/or branch consolid. expense, net of tax



7,824



16,255



17,413



31,191



3,510

Adjusted net income (non-GAAP)


$

154,773


$

102,824


$

112,622


$

38,622


$

27,620

















Basic earnings per common share


$

2.07


$

1.22


$

1.34


$

(1.96)


$

0.72

Diluted earnings per common share


$

2.06


$

1.21


$

1.34


$

(1.96)


$

0.71

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


$

2.18


$

1.45


$

1.59


$

0.89


$

0.82

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


$

2.17


$

1.44


$

1.58


$

0.89


$

0.82

Dividends per common share


$

0.47


$

0.47


$

0.47


$

0.47


$

0.47

Basic weighted-average common shares outstanding



71,009,209



70,941,200



70,905,027



43,317,736



33,566,051

Diluted weighted-average common shares outstanding



71,484,490



71,294,864



71,075,866



43,317,736



33,804,908

Adjusted diluted weighted-average common shares outstanding*



71,484,490



71,294,864



71,075,866



43,606,333



33,804,908

Effective tax rate



21.83%



(29.03)%



19.61%



22.56%



15.00%

Adjusted effective tax rate



21.83%



18.05%



19.61%



22.56%



15.00%


*Adjusted diluted weighted average common shares was calculated with the result of adjusted net income (non-GAAP).

Performance and Capital Ratios




Three Months Ended



Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,



2021


2020


2020


2020


2020

PERFORMANCE RATIOS
















Return on average assets (annualized)



1.56%



0.90%



1.00%



(1.49)%



0.60%

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



1.64%



1.08%



1.18%



0.68%



0.69%

Return on average equity (annualized)



12.71%



7.45%



8.31%



(11.78)%



4.15%

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



13.39%



8.88%



9.83%



5.36%



4.75%

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



21.16%



13.05%



14.66%



(19.71)%



8.35%

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



22.24%



15.35%



17.14%



10.23%



9.45%

Efficiency ratio (tax equivalent)



61.06%



73.59%



58.91%



78.37%



60.37%

Adjusted efficiency ratio (non-GAAP) (4)



58.27%



57.52%



53.30%



59.76%



57.98%

Dividend payout ratio (5)



22.72%



38.67%



35.01%



N/A



65.70%

Book value per common share


$

66.42


$

65.49


$

64.34


$

63.35


$

69.40

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


$

42.02


$

41.16


$

39.83


$

38.33


$

38.01

















CAPITAL RATIOS
















Equity-to-assets



11.9%



12.3%



12.1%



11.9%



14.0%

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



7.9%



8.1%



7.8%



7.6%



8.2%

Tier 1 leverage (6) *



8.5%



8.3%



8.1%



13.3%



9.5%

Tier 1 common equity (6) *



12.1%



11.8%



11.5%



10.7%



11.0%

Tier 1 risk-based capital (6) *



12.1%



11.8%



11.5%



10.7%



12.0%

Total risk-based capital (6) *



14.5%



14.2%



13.9%



12.9%



12.7%

















OTHER DATA
















Number of branches



281



285



305



305



155

Number of employees (full-time equivalent basis)



5,210



5,184



5,266



5,369



2,583


*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)


Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,

BALANCE SHEET


2021


2020


2020


2020


2020

Assets
















Cash and due from banks


$

392,556


$

363,306


$

344,389


$

380,661


$

259,579

Federal Funds Sold and interest-earning deposits with banks



5,581,581



4,245,949



4,127,250



3,983,047



1,003,257

Cash and cash equivalents



5,974,137



4,609,255



4,471,639



4,363,708



1,262,836

















Trading securities, at fair value



83,947



10,674



-



494



-

Investment securities:
















Securities held-to-maturity



1,214,313



955,542



-



-



-

Securities available for sale, at fair value



3,891,490



3,330,672



3,561,929



3,137,718



1,971,195

Other investments



161,468



160,443



185,199



133,430



62,994

Total investment securities



5,267,271



4,446,657



3,747,128



3,271,148



2,034,189

Loans held for sale



352,997



290,467



456,141



603,275



71,719

Loans:
















Purchased credit deteriorated



2,680,466



2,915,809



3,143,822



3,323,754



311,271

Purchased non-credit deteriorated



8,433,913



9,458,869



10,557,907



11,577,833



1,632,700

Non-acquired



13,377,086



12,289,456



11,536,086



10,597,560



9,562,919

Less allowance for credit losses



(406,460)



(457,309)



(440,159)



(434,608)



(144,785)

Loans, net



24,085,005



24,206,825



24,797,656



25,064,539



11,362,105

Other real estate owned ("OREO")



11,471



11,914



13,480



18,016



7,432

Premises and equipment, net



569,171



579,239



626,259



627,943



312,151

Bank owned life insurance



562,624



559,368



556,475



556,807



233,849

Mortgage servicing rights



54,285



43,820



34,578



25,441



26,365

Core deposit and other intangibles



153,861



162,592



171,637



170,911



46,809

Goodwill



...1,579,758



1,563,942



1,566,524



1,603,383



1,002,900

Other assets



1,035,805



1,305,120



1,377,849



1,419,691



282,556

Total assets


$

39,730,332


$

37,789,873


$

37,819,366


$

37,725,356


$

16,642,911

















Liabilities and Shareholders' Equity
















Deposits:
















Noninterest-bearing


$

10,801,812


$

9,711,338


$

9,681,095


$

9,915,700


$

3,367,422

Interest-bearing



21,639,598



20,982,544



20,288,859



20,041,585



8,977,125

Total deposits



32,441,410



30,693,882



29,969,954



29,957,285



12,344,547

Federal funds purchased and securities
















sold under agreements to repurchase



878,581



779,666



706,723



720,479



325,723

Other borrowings



390,323



390,179



1,089,637



1,089,279



1,316,100

Reserve for unfunded commitments



35,829



43,380



43,161



21,051



8,555

Other liabilities



1,264,369



1,234,886



1,446,478



1,445,412



326,943

Total liabilities



35,010,512



33,141,993



33,255,953



33,233,506



14,321,868

















Shareholders' equity:
















Common stock - $2.50 par value; authorized 80,000,000 shares



177,651



177,434



177,321



177,268



83,611

Surplus



3,772,248



3,765,406



3,764,482



3,759,166



1,584,322

Retained earnings



770,952



657,451



604,564



542,677



643,345

Accumulated other comprehensive income (loss)



(1,031)



47,589



17,046



12,739



9,765

Total shareholders' equity



4,719,820



4,647,880



4,563,413



4,491,850



2,321,043

Total liabilities and shareholders' equity


$

39,730,332


$

37,789,873


$

37,819,366


$

37,725,356


$

16,642,911

















Common shares issued and outstanding



71,060,446



70,973,477



70,928,304



70,907,119



33,444,236

Net Interest Income and Margin




Three Months Ended



March 31, 2021


December 31, 2020


March 31, 2020

(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, reverse repo, and time deposits


$4,757,717


$989


0.08%


$4,509,137


$1,098


0.10%


$538,310


$1,452


1.08%

Investment securities


4,683,152


17,520


1.52%


4,070,218


15,641


1.53%


2,022,726


13,314


2.65%

Loans held for sale


298,970


1,991


2.70%


382,115


2,328


2.42%


41,812


331


3.18%

Total loans, excluding PPP


22,612,722


232,770


4.17%


22,701,841


245,273


4.30%


11,439,676


132,703


4.67%

Total PPP loans


1,879,367


25,206


5.44%


2,189,696


22,031


4.00%


-


-


0.00%

Total loans


24,492,089


257,976


4.27%


24,891,536


267,304


4.27%


11,439,676


132,703


4.67%

Total interest-earning assets


34,231,928


278,476


3.30%


33,853,006


286,371


3.37%


14,042,524


147,800


4.23%

Noninterest-earning assets


4,013,482






4,174,105






2,010,409





Total Assets


$38,245,410






$38,027,111






$16,052,933
























Interest-Bearing Liabilities:



















Transaction and money market accounts


$14,678,248


$5,387


0.15%


14,038,057


$6,675


0.19%


5,976,771


$7,682


0.52%

Savings deposits


2,780,361


434


0.06%


2,667,211


505


0.08%


1,323,770


650


0.20%

Certificates and other time deposits


3,672,818


5,436


0.60%


3,805,708


6,047


0.63%


1,642,749


6,105


1.49%

Federal funds purchased and repurchase agreements


852,277


351


0.17%


754,457


435


0.23%


328,372


615


0.75%

Other borrowings


390,043


4,870


5.06%


876,781


7,161


3.25%


887,431


4,735


2.15%

Total interest-bearing liabilities


22,373,747


16,478


0.30%


22,142,214


20,823


0.37%


10,159,093


19,787


0.78%

Noninterest-bearing liabilities ("Non-IBL")


11,184,514






11,277,541






3,557,492





Shareholders' equity


4,687,149






4,607,356






2,336,348





Total Non-IBL and shareholders' equity


15,871,663






15,884,897






5,893,840





Total Liabilities and Shareholders' Equity


$38,245,410






$38,027,111






$16,052,933





Net Interest Income and Margin (Non-Tax Equivalent)



$261,998


3.10%




$265,548


3.12%




$128,013


3.67%

Net Interest Margin (Tax Equivalent)






3.12%






3.14%






3.68%

Total Deposit Cost (without Debt and Other Borrowings)




0.15%






0.17%






0.46%

Overall Cost of Funds (including Demand Deposits)





0.21%






0.26%






0.59%




















Total Accretion on Acquired Loans (1)




$10,416






$12,686






$10,931



TEFRA (included in NIM, Tax Equivalent)




$1,286






$1,663






$530



The remaining loan discount on acquired loans to be accreted into loan interest income totals $87.3 million and the remaining net deferred fees on PPP loans totals $33.3 million as of March 31, 2021.

Noninterest Income and Expense




Three Months Ended



Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,

(Dollars in thousands)


2021


2020


2020


2020


2020

Noninterest Income:
















Fees on deposit accounts


$

25,282


$

25,153


$

24,346


$

16,679


$

18,141

Mortgage banking income



26,880



25,162



48,022



18,371



14,647

Trust and investment services income



8,578



7,506



7,404



7,138



7,389

Securities gains, net



-



35



15



-



-

Correspondent banking and capital market income



28,748



27,751



26,432



10,067



493

Bank owned life insurance income



3,300



3,341



4,127



1,381



2,530

Other



3,498



8,923



4,444



711



932

Total Noninterest Income


$

96,286


$

97,871


$

114,790


$

54,347


$

44,132

















Noninterest Expense:
















Salaries and employee benefits


$

140,361


$

138,982


$

134,919


$

81,720


$

60,978

Swap termination expense



-



38,787



-



-



-

Occupancy expense



23,331



23,496



23,845



15,959



12,287

Information services expense



18,789



19,527



18,855



12,155



9,306

FHLB prepayment penalty



-



56



-



199



-

OREO expense and loan related



1,002



728



1,146



1,107



587

Business development and staff related



3,371



3,835



2,599



1,447



2,244

Amortization of intangibles



9,164



9,760



9,560



4,665



3,007

Professional fees



3,274



4,306



4,385



2,848



2,494

Supplies and printing expense



2,670



2,809



2,755



1,610



1,505

FDIC assessment and other regulatory charges



3,771



3,403



2,849



2,403



2,058

Advertising and marketing



1,740



1,544



1,203



531



814

Other operating expenses



11,229



11,329



13,109



10,189



7,838

Branch consolidation and merger expense



10,009



19,836



21,662



40,279



4,129

Total Noninterest Expense


$

228,711


$

278,398


$

236,887


$

175,112


$

107,247

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,


Sept. 30,


June 30,


Mar. 31,

LOAN PORTFOLIO


2021


2020


2020


2020


2020

Construction and land development


$

1,888,901


$

1,899,066


$

1,840,111


$

1,999,062


$

1,105,308

Investor commercial real estate



6,489,580



6,518,771



6,565,869



6,671,554



2,699,067

Commercial owner occupied real estate



4,826,651



4,842,092



4,846,020



4,762,520



2,177,738

Commercial and industrial, excluding PPP



3,141,643



3,113,685



3,067,399



3,005,030



1,418,421

Consumer real estate



5,313,597



5,444,731



5,658,984



5,799,653



3,423,887

Consumer/other



885,320



912,327



907,711



924,995



682,469

Subtotal



22,545,692



22,730,672



22,886,094



23,162,814



11,506,890

PPP loans



1,945,773



1,933,462



2,351,721



2,336,333



-

Total Loans


$

24,491,465


$

24,664,134


$

25,237,815


$

25,499,147


$

11,506,890

The following table presents a summary of the deposit types (dollars in thousands):




Ending Balance

(Dollars in thousands)


Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,

DEPOSITS


2021


2020


2020


2020


2020

Noninterest-bearing checking


$

10,801,812


$

9,711,338


$

9,681,095


$

9,915,700


$

3,367,422

Interest-bearing checking



7,369,066



6,955,575



6,414,905



6,192,915



2,963,679

Savings



2,906,673



2,694,010



2,618,877



2,503,514



1,337,730

Money market



7,884,132



7,584,353



7,404,299



7,196,456



3,029,769

Time deposits



3,479,727



3,748,605



3,850,778



4,148,700



1,645,947

Total Deposits


$

32,441,410


$

30,693,881


$

29,969,954


$

29,957,285


$

12,344,547

















Core Deposits (excludes Time Deposits)


$

28,961,683


$

26,945,276


$

26,119,176


$

25,808,585


$

10,698,600

Asset Quality




Ending Balance



Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,

(Dollars in thousands)


2021


2020


2020


2020


2020

NONPERFORMING ASSETS:
















Non-acquired
















Non-acquired nonperforming loans


$

21,034


$

29,171


$

22,463


$

22,883


$

23,912

Non-acquired OREO and other nonperforming assets



654



688



825



1,689



941

Total non-acquired nonperforming assets



21,688



29,859



23,288



24,572



24,853

Acquired
















Acquired nonperforming loans



80,024



77,668



89,974



100,399



32,791

Acquired OREO and other nonperforming assets



11,292



11,568



12,904



16,987



6,802

Total acquired nonperforming assets



91,316



89,236



102,878



117,386



39,593

Total nonperforming assets


$

113,004


$

119,095


$

126,166


$

141,958


$

64,446



















Three Months Ended



Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,



2021


2020


2020


2020


2020

ASSET QUALITY RATIOS:
















Allowance for credit losses as a percentage of loans



1.66%



1.85%



1.74%



1.70%



1.26%

Allowance for credit losses as a percentage of loans, excluding PPP loans



1.80%



2.01%



1.92%



1.88%



N/A

Allowance for credit losses as a percentage of nonperforming loans *



402.20%



428.04%



391.47%



352.53%



255.34%

Net (recoveries) charge-offs as a percentage of average loans (annualized)



(0.00)%



0.01%



0.01%



0.00%



0.05%

Total nonperforming assets as a percentage
















of total assets *



0.28%



0.32%



0.33%



0.38%



0.39%

Nonperforming loans as a percentage of period end loans *



0.41%



0.43%



0.45%



0.48%



0.49%


* With the merger with CSFL on June 7, 2020, the amount of acquired nonaccrual loans increased by approximately $69.9 million during the second quarter of 2020.

Current Expected Credit Losses ("CECL")


Effective January 1, 2020, the Company adopted ASU 2016-13 ("CECL"), which affects the allowance for credit losses and the liability for unfunded
commitments ("UFC"). Below is a table showing the roll forward of the ACL and UFC for the first quarter of 2021:




Allowance for Credit Losses ("ACL & UFC")



NonPCD ACL


PCD ACL


Total


UFC

Ending Balance 12/31/2020


$

315,470


$

141,839


$

457,309


$

43,380

Charge offs



(1,947)



-



(1,947)



-

Acquired charge offs



(570)



(857)



(1,427)



-

Recoveries



1,024



-



1,024



-

Acquired recoveries



956



1,415



2,371



-

Provision for credit losses



(30,676)



(20,194)



(50,870)



(7,551)

Ending balance 3/31/2021


$

284,257


$

122,203


$

406,460


$

35,829














Period end loans (includes PPP Loans)


$

21,810,999


$

2,680,466


$

24,491,465



N/A

Reserve to Loans (includes PPP Loans)



1.30%



4.56%



1.66%



N/A

Period end loans (excludes PPP Loans)


$

19,865,226


$

2,680,466


$

22,545,692



N/A

Reserve to Loans (excludes PPP Loans)



1.43%



4.56%



1.80%



N/A

Unfunded commitments (off balance sheet) *











$

4,859,717

Reserve to unfunded commitments (off balance sheet)












0.74%


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

Conference Call

The Company will announce its first quarter 2021 earnings results in a news release after the market closes on April 28, 2021. At 10:00 a.m. Eastern Time on April 29, 2021, the Company will host a conference call to discuss its first quarter results. Callers wishing to participate may call toll-free by dialing 877-506-9272. The number for international participants is (412) 380-2004. The conference ID number is 10153950. 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 29, 2021 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. 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 in thousands)









PRE-PROVISION NET REVENUE ("PPNR") (NON-GAAP)


Mar. 31, 2021


Dec. 31, 2020


Sept. 30, 2020


June 30, 2020

Net income (loss) (GAAP)


$ 146,949


$ 86,236


$ 95,221


$ (84,935)

PCL legacy SSB


(58,420)


18,185


29,797


31,259

PCL legacy CSB NonPCD and UFC - Day 1


-


-


-


119,079

PCL legacy CSB for June, 2020


-


-


-


1,136

Tax provision (benefit)


41,043


(19,401)


23,233


(24,747)

Merger-related costs


10,009


19,836


21,662


40,279

Securities gain


-


(35)


(15)


-

FHLB advance prepayment cost


-


56


-


199

Swap termination cost


-


38,787


-


-

CSB pre-merger PPNR


-


-


-


74,791

Pre-provision net revenue (PPNR) Non-GAAP


$ 139,581


$ 143,664


$ 169,898


$ 157,061










SSB average asset balance (GAAP)


$ 38,245,410


$ 38,027,111


$ 37,865,217


$ 22,898,925

CSB average asset balance pre-merger








14,604,081

Total average balance June 30, 2020 (Non-GAAP)








$ 37,503,006










PPNR ROAA


1.48%


1.50%


1.79%


1.68%



Three Months Ended

(Dollars in thousands, except per share data)


Mar. 31,


Dec. 31


Sept. 30,


June 30,


Mar. 31,

RECONCILIATION OF GAAP TO NON-GAAP


2021


2020


2020


2020


2020

Adjusted Net Income (non-GAAP) (2)











Net income (loss) (GAAP)


$146,949


$86,236


$95,221


$(84,935)


$24,110

Securities gains, net of tax



(29)


(12)



PCL - NonPCD loans & unfunded commitments





92,212


Swap termination expense, net of tax



31,784




Provision (Benefit) for income taxes - carryback tax loss



(31,468)




FHLB prepayment penalty, net of tax



46



154


Merger and branch consolidation/acq. expense, net of tax


7,824


16,255


17,413


31,191


3,510

Adjusted net income (non-GAAP)


$154,773


$102,824


$112,622


$38,622


$27,620












Adjusted Net Income per Common Share - Basic (2)











Earnings (loss) per common share - Basic (GAAP)


$2.07


$1.22


$1.34


$(1.96)


$0.72

Effect to adjust for securities gains



(0.00)


(0.00)



Effect to adjust for PCL - NonPCD loans & unfunded commitments





2.13


Effect to adjust for swap termination expense, net of tax



0.45




Effect to adjust for benefit for income taxes - carryback tax loss



(0.44)




Effect to adjust for FHLB prepayment penalty, net of tax



0.00



0.00


Effect to adjust for merger & branch consol./acq expenses, net of tax

0.11


0.23


0.25


0.72


0.10

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


$2.18


$1.45


$1.59


$0.89


$0.82












Adjusted Net Income per Common Share - Diluted (2)











Earnings (loss) per common share - Diluted (GAAP)


$2.06


$1.21


$1.34


$(1.96)


$0.71

Effect to adjust for securities gains



(0.00)


(0.00)



Effect to adjust for PCL - NonPCD loans & unfunded commitments





2.11


Effect to adjust for swap termination expense, net of tax



0.45




Effect to adjust for benefit for income taxes - carryback tax loss



(0.44)




Effect to adjust for FHLB prepayment penalty, net of tax



0.00



0.00


Effect to adjust for merger & branch consol./acq expenses, net of tax

0.11


0.23


0.24


0.72


0.11

Effect of adjusted weighted ave shares due to adjusted net income





0.02


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


$2.17


$1.44


$1.58


$0.89


$0.82












Adjusted Return of Average Assets (2)











Return on average assets (GAAP)


1.56%


0.90%


1.00%


(1.49)%


0.60%

Effect to adjust for securities gains


—%


(0.00)%


—%


—%


—%

Effect to adjust for PCL - NonPCD loans & unfunded commitments


—%


—%


—%


1.62%


—%

Effect to adjust for swap termination expense


—%


0.33%


—%


—%


—%

Effect to adjust for benefit for income taxes - carryback tax loss


—%


(0.33)%


—%


—%


—%

Effect to adjust for FHLB prepayment penalty, net of tax


—%


0.00%


—%


—%


—%

Effect to adjust for merger & branch consol./acq expenses, net of tax

0.08%


0.18%


0.18%


0.55%


0.09%

Adjusted return on average assets (non-GAAP)


1.64%


1.08%


1.18%


0.68%


0.69%












Adjusted Return of Average Equity (2)











Return on average equity (GAAP)


12.71%


7.45%


8.31%


(11.78)%


4.15%

Effect to adjust for securities gains


—%


0.00%


—%


—%


—%

Effect to adjust for PCL - NonPCD loans & unfunded commitments


—%


—%


—%


12.79%


—%

Effect to adjust for swap termination expense


—%


2.74%


—%


—%


—%

Effect to adjust for benefit for income taxes - carryback tax loss


—%


(2.72)%


—%


—%


—%

Effect to adjust for FHLB prepayment penalty, net of tax


—%


(0.00)%


—%


0.02%


—%

Effect to adjust for merger & branch consol./acq expenses, net of tax

0.68%


1.41%


1.52%


4.33%


0.60%

Adjusted return on average equity (non-GAAP)


13.39%


8.88%


9.83%


5.36%


4.75%












Adjusted Return on Average Common Tangible Equity (2) (3)









Return on average common equity (GAAP)


12.71%


7.45%


8.31%


(11.78)%


4.15%

Effect to adjust for securities gains


—%


—%


—%


—%


—%

Effect to adjust for PCL - NonPCD loans & unfunded commitments


—%


—%


—%


12.79%


—%

Effect to adjust for swap termination expense


—%


2.74%


—%


—%


—%

Effect to adjust for benefit for income taxes - carryback tax loss


—%


(2.72)%


—%


—%


—%

Effect to adjust for FHLB prepayment penalty, net of tax


—%


—%


—%


0.02%


—%

Effect to adjust for merger & branch consol./acq expenses, net of tax

0.68%


1.40%


1.52%


4.32%


0.60%

Effect to adjust for intangible assets


8.85%


6.48%


7.31%


4.88%


4.70%

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


22.24%


15.35%


17.14%


10.23%


9.45%



Three Months Ended

(Dollars in thousands, except per share data)


Mar. 31,


Dec. 31


Sept. 30,


June 30,


Mar. 31,

RECONCILIATION OF GAAP TO NON-GAAP


2021


2020


2020


2020


2020

Adjusted Efficiency Ratio (4)











Efficiency ratio


61.06%


73.59%


58.91%


78.37%


60.37%

Effect to adjust for merger and branch consolidation related expenses

(2.79)%


(16.07)%


(5.61)%


(18.61)%


(2.39)%

Adjusted efficiency ratio


58.26%


57.52%


53.30%


59.76%


57.98%












Tangible Book Value Per Common Share (3)











Book value per common share (GAAP)


$ 66.42


$ 65.49


$ 64.34


$ 63.35


$ 69.40

Effect to adjust for intangible assets


(24.40)


(24.33)


(24.51)


(25.02)


(31.39)