South State (US:SSB)2025-10-31 13:01Financial Performance - Consolidated net income for Q3 2025 was $246.6 million, a 72.3% increase from $143.2 million in Q3 2024, with diluted EPS rising to $2.42 from $1.86 [244]. - For the nine months ended September 30, 2025, consolidated net income reached $550.9 million, a 41.0% increase compared to $390.6 million in the same period of 2024 [244]. - The efficiency ratio improved to 49.9% in Q3 2025 from 56.6% in Q3 2024, reflecting a 63.9% increase in tax-equivalent net interest income and noninterest income [246]. - Basic and diluted EPS for Q3 2025 were $2.44 and $2.42, respectively, compared to $1.88 and $1.86 in Q3 2024, with a 32.7% increase in average basic common shares [247]. - Noninterest income increased by $24.2 million, driven by growth in correspondent banking and capital market income, as well as trust and investment services income, largely due to the Independent acquisition [248]. - Noninterest income for the nine months ended September 30, 2025, increased by $50.3 million, or 22.7%, compared to the same period in 2024 [266]. - The company’s net income (GAAP) for the nine months ended September 30, 2025, was $550,945,000, an increase from $390,605,000 in 2024 [374]. Asset and Liability Management - As of September 30, 2025, SouthState Bank Corporation had approximately $66.0 billion in assets and employed 6,259 full-time equivalent employees [216]. - Total assets grew to $64.8 billion as of September 30, 2025, compared to $45.3 billion a year earlier, reflecting the impact of the Independent acquisition [256]. - Total deposits reached $54.1 billion as of September 30, 2025, an increase of $16.0 billion from $38.1 billion at December 31, 2024, largely attributed to the $15.2 billion in deposits acquired from Independent [340]. - Total interest-bearing deposits increased $12.8 billion to $40.6 billion at September 30, 2025, from $27.9 billion at December 31, 2024, primarily driven by the acquisition of Independent [323]. - Cash and cash equivalents rose by $1.8 billion, or 125.9%, while net loans increased by $13.8 billion, or 40.6% during the same period [279]. - The average interest-earning assets increased to $58.7 billion, with a net interest margin of 4.06% for the three months ended September 30, 2025 [277]. Acquisition and Integration - The company completed the acquisition of Independent Bank Group, Inc. on January 1, 2025, in an all-stock transaction valued at $2.5 billion, issuing 24,858,731 shares of its common stock [231]. - The company completed its redomicile to Florida on August 31, 2025, through the merger of SouthState Corporation with SouthState Bank Corporation [224]. - The company issued $2.5 billion in stock related to the acquisition of Independent during the first quarter of 2025 [328]. - The integration of Independent's operations may encounter delays or higher costs than anticipated, affecting the merger's success [375]. Credit Quality and Risk Management - Allowance for Credit Losses (ACL) was $590.1 million, or 1.24% of total loans, down from $621.0 million at June 30, 2025 [310]. - The net charge-off ratio for the three months ended September 30, 2025, is 0.27%, compared to 0.07% for the same period in 2024, indicating an increase in charge-offs [315]. - The company maintained a blended forecast scenario for estimating expected credit losses, reflecting a mostly neutral stance with recognition of downside risks [308]. - The total expected credit losses amount to $590,133 thousand, with Non-Owner-Occupied Commercial Real Estate accounting for the largest share at 28.3% [314]. - The company must manage credit risk effectively to meet obligations, with potential impacts from economic downturns [376]. Regulatory and Economic Environment - The company is subject to regulatory changes, including the CFPB's finalized rule under Section 1033 of the Dodd-Frank Act, which may impact its operations [226]. - Regulatory changes may require higher capital levels, impacting the company's ability to pursue acquisition opportunities [379]. - Economic volatility risks could lead to higher rates, increased noninterest expenses, and potential loan losses, impacting overall financial performance [376]. Capital and Equity - Total shareholder's equity increased by $3.1 billion, or 53.0% [279]. - As of September 30, 2025, the Company's Tier 1 capital increased by 28.6% and the Bank's Tier 1 capital increased by 33.3% compared to December 31, 2024, primarily due to the acquisition of Independent and net income recognized [332]. - The Bank's Tier 1 leverage ratio, CET 1 risk-based capital ratio, and total risk-based capital ratio were 10.28%, 12.62%, and 13.76%, respectively, as of September 30, 2025, indicating a well-capitalized status [347]. Interest Rate and Market Risks - Interest rate risk could decrease net interest income, particularly from correspondent and mortgage divisions, impacting overall earnings [376]. - The total deposit beta assumption increased to 44.3% as of September 30, 2025, reflecting a rise in deposit costs from 5 basis points to 190 basis points during the upward rate cycle [362]. - The Economic Value of Equity (EVE) analysis indicated a 1.8% decrease and a 0.7% increase in EVE due to a 100 basis point increase and decrease in interest rates, respectively [364]. Noninterest Income and Expenses - Noninterest expense increased by $125.5 million, mainly due to higher salaries and employee benefits, and expenses related to the Independent acquisition [248]. - Noninterest expense for the nine months ended September 30, 2025, increased by $411.3 million, or 55.2%, compared to the same period in 2024 [270]. - Salaries and employee benefits increased by $48.3 million, or 32.0%, in Q3 2025, mainly due to the addition of Independent employees [269].