8-K: SouthState Corporation Announces Fourth Quarter 2023 Results, Declares Dividend

SouthState Corporation reported its fourth quarter 2023 financial results, highlighting loan growth and a strong deposit base, while also declaring a quarterly cash dividend.

Summary

• SouthState Corporation released its financial results for the three and twelve-month periods ending December 31, 2023.
• The company reported diluted earnings per share (EPS) of $1.39, or an adjusted EPS of $1.67.
• Net income was $106.8 million, with an adjusted net income of $128.3 million.
• The return on average common equity was 8.0%, while the adjusted return on average tangible common equity was 16.1%.
• Net interest income was $354 million, with a net interest margin of 3.47%.
• Loans increased by $372 million, or 5% annualized, and deposits increased by $114 million, or 1% annualized.
• The company repurchased 100,000 shares at a weighted average price of $67.45 during the quarter.
• A quarterly cash dividend of $0.52 per share was declared, payable on February 16, 2024.

Sentiment

Score: 6

Explanation: The document presents a mixed picture with positive loan and deposit growth, but also a decrease in net income and an increase in expenses. The company is navigating a challenging economic environment, but its strong capital position and strategic focus provide some optimism.

Positives

• The company demonstrated resilience in its deposit franchise despite market changes.
• Loan growth was strong at 7% for the year.
• The company materially built its reserve.
• SouthState operates in 4 of the 5 fastest-growing states in the country.
• The company has a strong capital position with a tangible common equity ratio of 8.2%.
• The efficiency ratio improved to 63%, and the adjusted efficiency ratio was 57%.

Negatives

• Noninterest income decreased by $7 million compared to the prior quarter, primarily due to a decrease in correspondent banking and capital markets income.
• The company recorded a $26 million FDIC special assessment expense.
• Total deposit cost increased to 1.60%, up 0.16% from the prior quarter.

Risks

• The company is cautious about the lag effects of recent interest rate increases.
• Economic downturns could lead to deterioration in credit markets and increased loan losses.
• Interest rate volatility could impact earnings and the value of loan and securities portfolios.
• Failures or rumors of failures of other depository institutions could affect the ability to attract and retain depositors.
• Increasing digitization of the banking industry could impact the company's operations and customer base.
• Cybersecurity risks and potential breaches could lead to business disruptions and financial losses.
• Reputational and operational risks associated with ESG matters could impact the company.

Future Outlook

The company remains cautious about the lag effects of recent rate increases but sees tremendous opportunity coming out of the cycle, particularly given the population growth in its operating areas.

Management Comments

• We ended a year that demonstrated the resilience of the SouthState deposit franchise in the face of unprecedented change.
• In addition, loans grew 7% and we materially built our reserve.
• While we remain cautious of the lag effects of the recent rate increases, we see tremendous opportunity coming out of the cycle.
• Since the pandemic, Florida has grown by over one million people and SouthState benefits from operating in 4 of the 5 fastest growing states in the country.
• We are in a great position to deliver outsized results for our shareholders, and I want to thank our team for their hard work and service to our clients during 2023.

Industry Context

The announcement comes amid a period of economic uncertainty and interest rate volatility, impacting the financial services industry. SouthState's focus on high-growth markets and a strong deposit base positions it well compared to peers.

Comparison to Industry Standards

• SouthState's deposit beta of 30% cycle-to-date is favorable compared to the peer average.
• The company's average deposit size of approximately $27,000 is the lowest in its peer group, indicating a granular and low-cost deposit base.
• SouthState's efficiency ratio of 63% and adjusted efficiency ratio of 57% are competitive within the industry.
• The company's loan growth of 5% annualized for the quarter is a positive sign in the current economic environment.
• SouthState's capital ratios, including a tangible common equity ratio of 8.2%, are strong compared to regulatory requirements.

Stakeholder Impact

• Shareholders will receive a quarterly cash dividend of $0.52 per share.
• Employees are recognized for their hard work and service to clients.
• Customers will continue to receive consumer, commercial, mortgage, and wealth management solutions.
• The company's performance impacts the broader financial services industry and the communities it serves.

Next Steps

• SouthState will host a conference call on January 26, 2024, to discuss the fourth quarter results.
• The company will continue to monitor the economic environment and its impact on its operations.
• The company will pay a quarterly cash dividend on February 16, 2024.

Key Dates

Keywords

financial results, earnings, dividends, loan growth, deposit growth, net interest margin, credit losses, FDIC assessment, share repurchase, banking