8-K: SouthState Corporation Reports Strong Fourth Quarter 2024 Results, Declares Quarterly Cash Dividend

SouthState Corporation announced its unaudited results of operations and other financial information for the three-month and twelve-month periods ended December 31, 2024, highlighting steady growth in loans and deposits.

Summary

• SouthState Corporation reported net income of $144.2 million for the fourth quarter of 2024.
• Adjusted net income (non-GAAP) was $148.8 million.
• Diluted earnings per share (EPS) were reported at $1.87, with adjusted diluted EPS (non-GAAP) at $1.93.
• The company's return on average common equity was 9.7%, and the return on average tangible common equity (non-GAAP) was 15.1%.
• Adjusted return on average tangible common equity (non-GAAP) reached 15.6%.
• Net interest income amounted to $370 million, while core net interest income (excluding loan accretion) was $367 million.
• The net interest margin (NIM) was 3.48% on both a non-tax equivalent and tax equivalent (non-GAAP) basis.
• Loans increased by $355 million, or 4% annualized, driven by growth in commercial and industrial, and commercial owner-occupied real estate.
• Deposits increased by $423 million, or 4% annualized.
• The company's efficiency ratio was 56%, and the adjusted efficiency ratio (non-GAAP) was 54%.
• A quarterly cash dividend of $0.54 per share was declared, payable on February 14, 2025, to shareholders of record as of February 7, 2025.
• The merger with Independent Bank Group, Inc. was completed on January 1, 2025.
• SouthState Bank, N.A. entered into an agreement on January 8, 2025, to sell branch properties and lease them back under triple net lease agreements.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, successful merger completion, and strategic focus on high-growth markets. While risks are acknowledged, the overall tone is optimistic and confident.

Positives

• SouthState finished 2024 strong with steady growth in loans and deposits.
• There was a nice uptick in net interest margin and fees.
• Net income was $144 million, and there was a 9% increase in PPNR over the third quarter, driven by 6% revenue growth.
• Regulatory approval of the IBTX acquisition was received promptly, allowing the company to close ahead of schedule on January 1, 2025.
• The company has a strong capital position with Tangible Common Equity, Total Risk-Based Capital, Tier 1 Leverage, and Tier 1 Common Equity ratios of 8.8%, 15.0%, 10.0%, and 12.6%, respectively.
• The company's efficiency ratio of 56% and adjusted efficiency ratio of 54% indicate good cost management.

Negatives

• Total loan yield decreased by 0.10% from the prior quarter, landing at 5.76%.
• Total deposit cost decreased by 0.15% from the prior quarter, landing at 1.75%.

Risks

• Economic volatility, including inflation, could lead to higher rates and deterioration in credit markets.
• The integration of Independent Bank Group may face delays or higher costs than anticipated.
• Deposit attrition, client loss, or revenue loss following completed mergers or acquisitions may be greater than anticipated.
• Interest rate risk could impact the bank's earnings and the market value of its loan and securities portfolios.
• Cybersecurity risks could lead to business disruptions or financial losses.
• Geopolitical risks from terrorist activities and armed conflicts may result in economic and supply disruptions.

Future Outlook

The company expects its momentum to carry forward into 2025 with the integration of Independent Financial, focusing on building a high-quality bank with scale in fast-growing markets.

Management Comments

• SouthState finished strong in 2024.
• We produced steady growth in loans and deposits and had a nice uptick in net interest margin and fees.
• The result was net income of $144 million and a 9% increase in PPNR over the third quarter, driven by 6% revenue growth.
• We were also pleased to receive prompt regulatory approval of the IBTX acquisition, which allowed us to close ahead of schedule on January 1.
• With Independent Financial, our momentum carries forward into 2025.
• We will continue working to build a high-quality bank with scale in the fastest growing markets in the country.

Industry Context

SouthState's acquisition of Independent Bank Group and its focus on high-growth markets align with the industry trend of consolidation and expansion into regions with strong economic potential. The company's emphasis on technology solutions and a capital markets platform positions it as a strong competitor against larger banks.

Comparison to Industry Standards

• SouthState's return on average tangible common equity (ROTCE) of 15.1% is competitive with other regional banks such as Truist Financial (ROTCE ~12%) and Regions Financial (ROTCE ~14%).
• The efficiency ratio of 56% is better than many peers, indicating effective cost management; for example, Fifth Third Bancorp has an efficiency ratio of around 58%.
• SouthState's focus on high-growth markets in the South mirrors strategies employed by banks like PNC Financial Services, which have been expanding their presence in the Southeast.
• The company's digital banking initiatives and correspondent banking division are similar to those of larger institutions like JPMorgan Chase, aiming to provide comprehensive financial services to a wide range of clients.

Stakeholder Impact

• Shareholders will benefit from the declared quarterly cash dividend of $0.54 per share.
• Customers will gain access to a broader range of services and a larger branch network following the merger with Independent Bank Group.
• Employees may experience changes related to the integration of the two companies, with potential opportunities for growth and development.
• The communities served by SouthState will benefit from the company's commitment to investing in local markets and supporting economic growth.

Next Steps

• Integrate Independent Bank Group into SouthState's operations.
• Continue building a high-quality bank with scale in the fastest-growing markets.
• Execute the agreement to sell and lease back branch properties.
• Focus on managing credit risk and maintaining strong asset quality.
• Monitor and adapt to changes in the interest rate environment and regulatory landscape.

Key Dates

Keywords

financial results, SouthState Corporation, earnings, dividends, merger, acquisitions, net income, EPS, NIM, loans, deposits, banking