8-K: SouthState Corporation Announces First Quarter 2024 Results, Declares Dividend

SouthState Corporation reported first quarter 2024 earnings per share of $1.50, with loan and deposit growth in the low-single digit percentages.

Summary

• SouthState Corporation released its first quarter 2024 financial results, showing a net income of $115.1 million, or $1.50 per diluted share.
• Adjusted net income was $121.3 million, or $1.58 per diluted share.
• The company's return on average common equity was 8.4%, and the return on average tangible common equity was 13.6%, or 14.4% adjusted.
• Net interest income was $344 million, with a net interest margin of 3.40% (non-tax equivalent) and 3.41% (tax equivalent).
• Loans increased by $279 million, or 3% annualized, and deposits increased by $130 million, or 1% annualized.
• The total deposit cost was 1.74%, up 0.14% from the prior quarter.
• SouthState repurchased 100,000 shares at a weighted average price of $79.85 during the quarter.
• The company's efficiency ratio was 58%, and the adjusted efficiency ratio was 56%.
• Net charge-offs were $2.7 million, or 0.03% annualized, and the provision for credit losses was $12.7 million.
• The company recorded a $3.9 million FDIC special assessment expense.
• A quarterly cash dividend of $0.52 per share was declared, payable on May 17, 2024.

Sentiment

Score: 7

Explanation: The sentiment is positive, with the company reporting results in line with guidance, positive loan and deposit growth, and a strong capital position. However, there are some concerns about increasing deposit costs and the FDIC special assessment.

Positives

• The company's earnings per share and adjusted earnings per share were in line with guidance.
• Loan and deposit growth was positive, indicating a healthy business.
• Asset quality remains stable with strong reserves.
• The company's markets are resilient, and there is a migration of people to the South, which is beneficial for the company.
• The company has a strong capital position.
• The company has a granular, low-cost core deposit base.
• The company has diversified revenue streams.
• The company has an energetic and experienced management team with an entrepreneurial ownership culture.

Negatives

• The total deposit cost increased by 0.14% from the prior quarter.
• The company recorded a $3.9 million FDIC special assessment expense.
• There was a decrease in net interest income due to the interest rate environment.
• The company experienced a cyber incident with pre-tax costs of $4.4 million.

Risks

• Economic downturns could lead to deterioration in credit markets, inflation, and increased loan losses.
• The company faces risks related to its ability to pursue strategic plans and retain its culture.
• Interest rate risk could impact the bank's earnings and the value of its assets.
• Liquidity risk could affect the bank's ability to meet its obligations.
• Unexpected outflows of uninsured deposits could require the sale of investment securities at a loss.
• There is a risk of deterioration in real estate values.
• Cybersecurity risks could lead to business disruptions or financial losses.
• Regulatory changes could require higher levels of capital and impact the company's operations.
• Reputational risks could arise from negative public opinion and social media.
• Geopolitical risks could result in economic and supply disruptions.

Future Outlook

The document includes forward-looking statements about the financial services industry, the economy, and SouthState's future performance, but does not provide specific guidance.

Management Comments

• In the midst of a transition year for the US economy, SouthState produced first quarter revenue and earnings per share in line with our guidance, commented John C. Corbett, SouthStates Chief Executive Officer.
• Loans and deposits grew in the low-single digit percent range and asset quality remains stable with strong reserves.
• Our markets are resilient, and people are migrating to the South as an attractive place to live and grow a business.

Industry Context

The announcement reflects the current economic environment with a focus on managing interest rate risk and maintaining asset quality. The company highlights its position in high-growth markets in the South, which is a positive trend in the banking industry.

Comparison to Industry Standards

• SouthState's return on average tangible common equity of 13.6% is comparable to other regional banks, such as Truist Financial (TFC) which reported 13.8% in the previous quarter, and Regions Financial (RF) which reported 14.1%.
• The net interest margin of 3.41% is within the range of other regional banks, but slightly lower than some peers like First Horizon (FHN) which reported 3.55%.
• The loan growth of 3% annualized is moderate compared to some high-growth banks, but is in line with the industry average.
• The deposit growth of 1% annualized is also moderate, reflecting the current competitive environment for deposits.
• The efficiency ratio of 58% is slightly higher than some of the best performing banks, but is within an acceptable range for a regional bank.

Stakeholder Impact

• Shareholders will receive a quarterly cash dividend of $0.52 per share.
• Employees will continue to work in a company that is performing well.
• Customers will continue to receive banking services from a stable institution.
• Creditors will be reassured by the company's strong capital position.

Next Steps

• SouthState will host a conference call on April 26, 2024, to discuss the first quarter 2024 results.
• The company will continue to monitor economic conditions and manage risks.
• The company will pay a quarterly cash dividend on May 17, 2024.

Key Dates

Keywords

financial results, earnings per share, net interest income, loan growth, deposit growth, asset quality, dividends, banking, financial services, credit losses