South State (SSB)2025-02-21 17:50Financial Overview - As of December 31, 2024, SouthState Corporation had approximately 33.9 billion in loans, 7.6 billion[18]. - The loan portfolio consisted of 53% commercial real estate loans (8.7 billion), 18% commercial and industrial loans (1.1 billion) as of December 31, 2024[23][24][25][26]. - The deposit portfolio was comprised of 27% noninterest-bearing deposits and 73% interest-bearing deposits as of December 31, 2024[28]. - SouthState Corporation's revenue is primarily derived from interest on loans, fees from deposit accounts, and commissions on bond sales[19]. Employee and Workforce Management - As of December 31, 2024, the company had 4,986 full-time employees, a decrease from 5,070 in 2023, with a voluntary turnover rate of 9%[45]. - Approximately 96% of team members are located in six states, with South Carolina (32.5%) and Florida (32%) being the largest[45]. - In fiscal year 2024, the company hired 576 team members, with a management-level turnover rate of only 0.8%[45]. - The company completed over 200,000 training courses in 2024, emphasizing compliance and job-specific education[52]. - The company established a dashboard in 2024 to track metrics related to diversity, recruitment, and retention of talent[50]. - Approximately 27% of employees work remotely, reflecting the company's support for flexible work arrangements[55]. - The company has committed to building a diverse and inclusive workplace, with initiatives including unconscious bias training completed by over 600 leaders[49]. Regulatory Environment - The company is subject to extensive regulation and supervision, with increased scrutiny following the financial crisis and recent banking turmoil[60]. - The Bank's total assets exceeded 30.2 million from the Bank over eight quarters beginning in Q2 2024[83]. - The Company must maintain a common equity Tier 1 (CET1) capital conservation buffer of 2.5% to avoid restrictions on capital distributions, including dividends[88]. - The required capital ratios for the Company and the Bank include a CET1 risk-based capital ratio, a Tier 1 risk-based capital ratio, and a total capital ratio, with specific definitions for each[90]. - The OCC has the authority to limit dividends paid by the Bank if deemed unsafe or unsound, and all dividends must be paid from undivided profits after deducting expenses[87]. - The FDIC's risk-based deposit premium assessment system categorizes institutions into four risk categories based on capital levels and supervisory ratings[80]. - The Bank is subject to restrictions on lending to affiliates, with individual loans limited to 10% of the Bank's capital and surplus[70]. - The Company is required to provide prior notice to the Federal Reserve before acquiring 10% or more of its outstanding common stock[68]. - The Federal Reserve, OCC, and FDIC have broad supervisory and enforcement authority over the Company and the Bank, including the power to impose fines and initiate injunctive actions[77]. Capital and Financial Ratios - As of December 31, 2024, the Company's CET1 risk-based capital ratio was 12.62%, exceeding the minimum requirement of 4.5% and the well-capitalized standard of 6.5%[98]. - The Tier 1 risk-based capital ratio for the Company was 12.62%, significantly above the minimum requirement of 6.0% and the well-capitalized standard of 8.0%[98]. - The total risk-based capital ratio for the Company was 14.96%, well above the minimum requirement of 8.0% and the well-capitalized standard of 10.0%[98]. - The Tier 1 leverage ratio for the Company was 10.04%, exceeding the minimum requirement of 4.0%[98]. - The Company added approximately $15.3 million to Tier 1 capital as a result of the modified CECL transition as of December 31, 2024[100]. Mergers and Acquisitions - The IBTX Merger is expected to enhance revenues and strengthen the market position in Texas, with integration scheduled for the second quarter of 2025[143]. - The Company anticipates incurring substantial expenses related to the IBTX Merger and integration, which may exceed expected savings from eliminating duplicative expenses[147]. - The Company seeks to acquire financial institutions that are culturally similar and have experienced management to achieve economies of scale[215]. Risk Management - The Company is exposed to regulatory risks that could limit or restrict business activities, including changes in capital and liquidity requirements[139]. - The Company’s loan portfolio includes commercial and commercial real estate loans, which may carry higher risks of default[134]. - The Company is actively monitoring the impact of inflation and rising interest rates on its business and profitability[134]. - Effective management of credit risk and interest rate risk is crucial; failure to do so may adversely affect the company's business and financial condition[171]. - The company is exposed to credit risk if clients or counterparties default on obligations, which could negatively impact financial condition and results of operations[170]. - The company must manage liquidity risk effectively, including maintaining high-quality liquid assets and diversifying funding sources[175]. Technology and Cybersecurity - The company continues to invest significantly in information technology and cybersecurity systems, including cloud-based applications, to enhance functionality and security[204]. - The company experienced a cybersecurity incident in February 2024, leading to unauthorized activity in its systems and resulting in a pending class action lawsuit[214]. - The company has enhanced its cybersecurity defenses since the incident, but there is no assurance against future cyber-attacks or material losses[214]. - Cybersecurity risks have escalated with the growth of mobile payment and internet-based product offerings, increasing the potential for breaches[210]. - The company relies heavily on third-party service providers, which increases vulnerability to cyber-attacks and information security breaches[211]. Strategic Initiatives and Challenges - The company intends to pursue a growth strategy, but faces risks including economic conditions, regulatory compliance, and competition, which could adversely affect future growth opportunities[149]. - The company is integrating IBTX's business and expanding digital banking initiatives, including real-time payments and enhanced payment capabilities, to support growth[150]. - Future profitability may be impacted if strategic initiatives do not yield expected benefits or if expenses increase due to technology investments[151]. - The company faces risks related to the integration of IBTX, including potential delays and increased costs that could adversely affect financial performance[144]. - The company may face challenges in integrating operations and cultures following recent mergers, which could impact its corporate culture[196].