South State (SSB) - 2025 Q1 - Quarterly Results

First Quarter 2025 Highlights SouthState's Q1 2025 marked strategic transformations including the IBTX acquisition, sale-leaseback, and securities restructuring, resulting in adjusted EPS of $2.15 and a 3.85% net interest margin - The CEO described Q1 2025 as a "strategic reset" significantly improving the company's earnings profile, driven by the IBTX acquisition, a sale-leaseback, and a securities restructure which boosted the net interest margin to 3.85%[3] Q1 2025 Key Performance Metrics | Metric | Value | | :--- | :--- | | Diluted EPS (GAAP) | $0.87 | | Adjusted Diluted EPS (Non-GAAP) | $2.15 | | Net Income (GAAP) | $89.1 million | | Adjusted Net Income (Non-GAAP) | $219.3 million | | Net Interest Margin (NIM, TE) | 3.85% | | Adjusted ROAA (Non-GAAP) | 1.38% | | Adjusted ROATCE (Non-GAAP) | 19.9% | | Adjusted Efficiency Ratio (Non-GAAP) | 50% | - Key strategic transactions completed in Q1 2025 include the acquisition of Independent Bank Group, a sale-leaseback generating a $229 million gain, and a securities portfolio restructuring resulting in a $229 million net loss[6] - The Board of Directors declared a quarterly cash dividend of $0.54 per share, payable on May 16, 2025[6] Financial Performance Q1 2025 saw net interest income rise to $544.5 million, total assets grow to $65.1 billion, and strong adjusted performance ratios Consolidated Income Statement In Q1 2025, SouthState reported net interest income of $544.5 million, with GAAP net income of $89.1 million and adjusted net income of $219.3 million Q1 2025 Income Statement Highlights (vs. Q4 2024) | Metric (in thousands) | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Net Interest Income | $544,547 | $369,779 | | Provision for credit losses | $100,562 | $6,371 | | Total Noninterest Income | $86,088 | $80,545 | | Total Noninterest Expense | $408,826 | $256,609 | | Net Income (GAAP) | $89,080 | $144,178 | | Adjusted Net Income (Non-GAAP) | $219,282 | $148,764 | | Diluted EPS (GAAP) | $0.87 | $1.87 | | Adjusted Diluted EPS (Non-GAAP) | $2.15 | $1.93 | Performance and Capital Ratios Q1 2025 adjusted performance ratios were strong, with ROAA at 1.38% and ROATCE at 19.85%, and robust capital ratios including an 11.0% Tier 1 Common Equity ratio Key Performance and Capital Ratios (Q1 2025 vs Q4 2024) | Ratio | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Adjusted ROAA (Non-GAAP) | 1.38% | 1.27% | | Adjusted ROATCE (Non-GAAP) | 19.85% | 15.56% | | Adjusted Efficiency Ratio (Non-GAAP) | 50.24% | 54.42% | | Tangible Book Value per Share | $50.07 | $51.11 | | Tier 1 Common Equity Ratio | 11.0% | 12.6% | | Total Risk-Based Capital Ratio | 13.7% | 15.0% | Consolidated Balance Sheet As of March 31, 2025, total assets increased to $65.1 billion, with loans at $46.1 billion and deposits at $53.3 billion, primarily due to the IBTX acquisition Balance Sheet Highlights (as of March 31, 2025 vs. Dec 31, 2024) | Metric (in thousands) | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $65,135,454 | $46,381,204 | | Loans, net | $46,143,042 | $33,437,647 | | Total Deposits | $53,337,615 | $38,060,866 | | Goodwill | $3,088,059 | $1,923,106 | | Total Shareholders' Equity | $8,624,361 | $5,890,415 | - The Independent acquisition added $13.1 billion in loans and $15.2 billion in deposits[27] Detailed Financial Analysis This section details the company's financial performance, including net interest margin expansion, noninterest income and expense, loan and deposit growth, and asset quality metrics post-acquisition Net Interest Income and Margin Net interest margin expanded by 37 basis points to 3.85% in Q1 2025, driven by a 6.25% total loan yield and $61.8 million in loan accretion income Net Interest Margin Analysis (Q1 2025 vs Q4 2024) | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Net Interest Margin (TE, Non-GAAP) | 3.85% | 3.48% | | Total Loan Yield | 6.25% | 5.76% | | Total Deposit Cost | 1.89% | 1.75% | | Loan Accretion Income (in thousands) | $61,798 | $2,887 | - The remaining loan discount on acquired loans to be accreted into future interest income totals $457.1 million as of March 31, 2025[11] Noninterest Income and Expense Total noninterest income for Q1 2025 was $86.1 million, heavily influenced by offsetting one-time items, while noninterest expense rose to $408.8 million due to merger costs and expanded workforce - Noninterest income was significantly impacted by a $229.3 million gain on a sale-leaseback, which was nearly offset by a $228.8 million net loss on securities[13] Noninterest Expense Breakdown (Q1 2025 vs Q4 2024) | Expense Category (in thousands) | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Salaries and employee benefits | $195,811 | $154,116 | | Occupancy expense | $35,493 | $22,831 | | Merger and restructuring expense | $68,006 | $6,531 | | Total Noninterest Expense | $408,826 | $256,609 | Loan and Deposit Composition At the end of Q1 2025, total loans reached $46.8 billion and total deposits grew to $53.3 billion, driven by the IBTX acquisition, with core deposits comprising $46.2 billion Loan Portfolio by Type (March 31, 2025) | Loan Category (in thousands) | Balance | | :--- | :--- | | Investor commercial real estate | $16,822,119 | | Consumer real estate | $9,838,952 | | Commercial and industrial | $8,106,484 | | Commercial owner occupied real estate | $7,417,116 | | Construction and land development | $3,497,909 | | Total Loans | $46,766,732 | Deposit Composition (March 31, 2025) | Deposit Category (in thousands) | Balance | | :--- | :--- | | Money market | $17,447,738 | | Noninterest-bearing checking | $13,757,255 | | Interest-bearing checking | $12,034,973 | | Time deposits | $7,158,242 | | Total Deposits | $53,337,615 | Asset Quality and Credit Losses Asset quality metrics in Q1 2025 reflect the Independent Bank portfolio addition, with nonperforming assets at 0.43% of total assets and an ACL of 1.33% of total loans Asset Quality Ratios (March 31, 2025) | Ratio | Value | | :--- | :--- | | Nonperforming assets as a % of total assets | 0.43% | | Nonperforming loans as a % of period end loans | 0.58% | | Allowance for credit losses as a % of loans | 1.33% | | Net charge-offs as a % of average loans (annualized) | 0.38% | | Net charge-offs (excl. acquisition date charge-offs) as a % of avg. loans | 0.04% | - The Allowance for Credit Losses (ACL) increased from $465.3 million to $623.7 million, primarily due to initial provisions for acquired loans from Independent[18] - The company recorded $39.4 million in acquisition date charge-offs on acquired PCD loans from Independent to conform with its own charge-off policies[6][18] Company and Shareholder Information This section provides details for investors, including the announcement of a quarterly dividend and information regarding the upcoming earnings conference call, and a brief overview of company operations Dividend Declaration The Board of Directors declared a quarterly cash dividend of $0.54 per share, payable on May 16, 2025, to shareholders of record as of May 9, 2025 Q1 2025 Dividend Information | | Details | | :--- | :--- | | Dividend per Share | $0.54 | | Record Date | May 9, 2025 | | Payment Date | May 16, 2025 | Conference Call Information SouthState will host a conference call to discuss its Q1 2025 financial results on April 25, 2025, at 9:00 a.m. Eastern Time, with webcast access available on the investor relations website - A conference call to discuss Q1 2025 results is scheduled for April 25, 2025, at 9:00 a.m. Eastern Time[21] - SouthState Corporation is headquartered in Winter Haven, Florida, serving over one million customers across Florida, Alabama, Georgia, the Carolinas, Virginia, Texas, and Colorado through its bank subsidiary[22] Non-GAAP Financial Measures This section reconciles GAAP results to non-GAAP measures, which management uses to provide a clearer view of ongoing performance by adjusting for securities losses, sale-leaseback gains, merger expenses, and initial credit loss provisions Reconciliation of GAAP to Adjusted Net Income (Q1 2025, in thousands) | Description | Amount | | :--- | :--- | | Net Income (GAAP) | $89,080 | | Securities losses, net of tax | $178,639 | | Gain on sale leaseback, net of tax | ($179,004) | | Initial PCL - Non-PCD loans & UFC, net of tax | $71,892 | | Merger & restructuring expense, net of tax | $53,094 | | Deferred tax asset remeasurement | $5,581 | | Adjusted Net Income (Non-GAAP) | $219,282 | Reconciliation of GAAP to Adjusted Diluted EPS (Q1 2025) | Description | Amount | | :--- | :--- | | Diluted EPS (GAAP) | $0.87 | | Effect of securities losses | $1.76 | | Effect of gain on sale leaseback | ($1.76) | | Effect of initial PCL | $0.71 | | Effect of merger & restructuring expense | $0.52 | | Effect of deferred tax remeasurement | $0.05 | | Adjusted Diluted EPS (Non-GAAP) | $2.15 | - Management uses non-GAAP measures like Adjusted Net Income, Adjusted EPS, Tangible Book Value, and Adjusted Efficiency Ratio to provide additional useful information by excluding items such as merger costs, securities gains/losses, and other one-time events[23][27] Forward-Looking Statements The report includes forward-looking statements subject to significant risks and uncertainties, including economic volatility, merger integration, interest rate, credit, cybersecurity, and regulatory risks, with no commitment to updates - The report contains forward-looking statements based on management's current beliefs and assumptions, which are not guarantees of future performance[28] - Key risks that could cause actual results to differ include economic volatility, inflation, merger and integration risks with Independent Bank Group, interest rate, credit, and liquidity risks, competition, regulatory changes, cybersecurity, and geopolitical risks[29] - SouthState cautions readers not to place undue reliance on forward-looking statements and undertakes no obligation to update them[30]