SouthState Corporation Reports Fourth Quarter 2022 Results, Declares Quarterly Cash Dividend

Jan 26 2023 21:01 GMT

WINTER HAVEN, Fla. , Jan. 26, 2023 /PRNewswire/ -- SouthState Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and twelve-month periods ended December 31, 2022.

"The resilience of SouthState's deposit franchise drove our performance in the 4th quarter and in 2022," said John C. Corbett, Chief Executive Officer. "With a cumulative deposit beta of 5% and a total cost of deposits of 21 basis points, our net interest margin expanded 120 basis points in 2022 and our PPNR per share increased 60% from the same quarter last year. In addition to the strength of the deposit franchise, our loan portfolio grew 19% annualized in the current quarter and asset quality metrics remain pristine. With the benefit of continued population migration to our southeast markets, our team is energized about the prospects for 2023 and the years ahead."

Highlights of the fourth quarter of 2022 include:

Returns

Reported Diluted Earnings per Share ("EPS") of $1.88; Adjusted Diluted EPS (Non-GAAP) of $1.90
Net Income of $143.5 million; Adjusted Net Income (Non-GAAP) of $144.7 million
Return on Average Common Equity of 11.4% and Reported Return on Average Tangible Common Equity (Non-GAAP) of 20.2%; Adjusted Return on Average Tangible Common Equity (Non-GAAP) of 20.3%*
Return on Average Assets ("ROAA") of 1.28%; Adjusted ROAA (Non-GAAP) of 1.29%*
Pre-Provision Net Revenue ("PPNR") per weighted average diluted share (Non-GAAP) of $3.03, up 11% from the prior quarter's $2.74 and up 60% from $1.89 in the year ago quarter
Book Value per Share of $67.04 increased by $2.01 per share compared to the prior quarter
Tangible Book Value ("TBV") per Share (Non-GAAP) of $40.09, up $2.12 from the prior quarter

∗ Annualized percentages

Performance

Net Interest Income of $396 million; Core Net Interest Income (excluding loan accretion and deferred fees on PPP) (Non-GAAP) increased $36 million from prior quarter
Net Interest Margin ("NIM"), non-tax equivalent and tax equivalent (Non-GAAP) of 3.96% and 3.99%, respectively, up 41 basis points from prior quarter
Noninterest Income of $63 million down $10 million compared to the prior quarter due to correspondent banking and capital markets income and mortgage banking; Noninterest Income represented 0.57% of average assets for the fourth quarter of 2022
Noninterest Expense, excluding merger and branch consolidation related expense (Non-GAAP), increased $1 million compared to the prior quarter
5.5% revenue growth with 0.5% expense growth generated 5.0% operating leverage in the quarter
Efficiency Ratio improved to 48% from the prior quarter's 53%; Adjusted Efficiency Ratio (Non-GAAP) improved to 48% from the prior quarter's 50%
$47.1 million Provision for Credit Losses ("PCL") driven by changing economic forecasts and loan portfolio growth, in spite of net loan recoveries and only $873 thousand in total net charge-offs (including DDA charge-offs)

Balance Sheet

Loans increased $1.3 billion, or 19% annualized, led by consumer real estate, commercial and industrial, and construction and land development loans; ending loan to deposit ratio of 83%
Deposits declined $559 million, or 6% annualized; total deposit cost was 0.21%, up 13 basis points from prior quarter
Began applying settle-to-market accounting to variation margin payments for centrally cleared swaps, resulting in an offset of $824 million recorded with market value of derivatives in Other Assets and $8.5 million of interest cost during the current quarter. Refer to the non-interest income table on page 6 and note 8 on page 11 for more details.

Subsequent Events

The Board of Directors of the Company declared a quarterly cash dividend on its common stock of $0.50 per share, payable on February 17, 2023 to shareholders of record as of February 10, 2023

Financial Performance

	Three Months Ended										Twelve Months Ended
(Dollars in thousands, except per share data)	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
INCOME STATEMENT	2022		2022		2022		2022		2021		2022		2021
Interest income
Loans, including fees (1)	$	359,552	$	312,856	$	272,000	$	233,617	$	238,310	$	1,178,026	$	990,519
Investment securities, trading securities, federal funds sold and securities
purchased under agreements to resell (8)		64,337		63,476		54,333		36,854		29,063		218,999		94,285
Total interest income		423,889		376,332		326,333		270,471		267,373		1,397,025		1,084,804
Interest expense
Deposits (8)		19,945		7,534		4,914		4,591		5,121		36,984		33,182
Federal funds purchased, securities sold under agreements
to repurchase, and other borrowings		7,940		6,464		5,604		4,362		4,156		24,370		18,447
Total interest expense		27,885		13,998		10,518		8,953		9,277		61,354		51,629
Net interest income (8)		396,004		362,334		315,815		261,518		258,096		1,335,671		1,033,175
Provision (recovery) for credit losses		47,142		23,876		19,286		(8,449)		(9,157)		81,855		(165,273)
Net interest income after provision (recovery) for credit losses		348,862		338,458		296,529		269,967		267,253		1,253,816		1,198,448
Noninterest income (8)		63,392		73,053		86,756		86,046		91,902		309,247		354,252
Noninterest expense
Operating expense		227,957		226,754		225,779		218,324		217,392		898,813		869,473
Merger and branch consolidation related expense		1,542		13,679		5,390		10,276		6,645		30,888		67,242
Extinguishment of debt cost		—		—		—		—		—		—		11,706
Total noninterest expense		229,499		240,433		231,169		228,600		224,037		929,701		948,421
Income before provision for income taxes		182,755		171,078		152,116		127,413		135,118		633,362		604,279
Income taxes provision		39,253		38,035		32,941		27,084		28,272		137,313		128,736
Net income	$	143,502	$	133,043	$	119,175	$	100,329	$	106,846	$	496,049	$	475,543

Adjusted net income (non-GAAP) (2)
Net income (GAAP)	$	143,502	$	133,043	$	119,175	$	100,329	$	106,846	$	496,049	$	475,543
Securities gains, net of tax		—		(24)		—		—		(2)		(24)		(81)
Initial provision for credit losses - NonPCD loans and UFC from ACBI, net of tax		—		—		—		13,492		—		13,492		—
Merger and branch consolidation related expense, net of tax		1,211		10,638		4,223		8,092		5,255		24,163		52,740
Extinguishment of debt cost, net of tax		—		—		—		—		—		—		9,081
Adjusted net income (non-GAAP)	$	144,713	$	143,657	$	123,398	$	121,913	$	112,099	$	533,680	$	537,283

Basic earnings per common share	$	1.90	$	1.76	$	1.58	$	1.40	$	1.53	$	6.65	$	6.76
Diluted earnings per common share	$	1.88	$	1.75	$	1.57	$	1.39	$	1.52	$	6.60	$	6.71
Adjusted net income per common share - Basic (non-GAAP) (2)	$	1.91	$	1.90	$	1.64	$	1.71	$	1.61	$	7.16	$	7.63
Adjusted net income per common share - Diluted (non-GAAP) (2)	$	1.90	$	1.89	$	1.62	$	1.69	$	1.59	$	7.10	$	7.58
Dividends per common share	$	0.50	$	0.50	$	0.49	$	0.49	$	0.49	$	1.98	$	1.92
Basic weighted-average common shares outstanding		75,639,640		75,605,960		75,461,157		71,447,429		69,651,334		74,550,708		70,393,262
Diluted weighted-average common shares outstanding		76,326,777		76,182,131		76,094,198		72,110,746		70,289,971		75,181,305		70,888,896
Effective tax rate		21.48 %		22.23 %		21.66 %		21.26 %		20.92 %		21.68 %		21.30 %

Performance and Capital Ratios

	Three Months Ended															Twelve Months Ended
	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,		Dec. 31,
	2022			2022			2022			2022			2021			2022		2021
PERFORMANCE RATIOS
Return on average assets (annualized) (8)		1.28	%		1.17	%		1.05	%		0.95	%		1.03	%	1.12	%	1.19	%
Adjusted return on average assets (annualized) (non-GAAP) (2) (8)		1.29	%		1.27	%		1.09	%		1.15	%		1.08	%	1.20	%	1.35	%
Return on average common equity (annualized)		11.41	%		10.31	%		9.36	%		8.24	%		8.84	%	9.84	%	10.01	%
Adjusted return on average common equity (annualized) (non-GAAP) (2)		11.50	%		11.13	%		9.69	%		10.01	%		9.28	%	10.59	%	11.31	%
Return on average tangible common equity (annualized) (non-GAAP) (3)		20.17	%		17.99	%		16.59	%		13.97	%		14.63	%	17.16	%	16.64	%
Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)		20.33	%		19.36	%		17.15	%		16.79	%		15.30	%	18.40	%	18.68	%
Efficiency ratio (tax equivalent)		47.96	%		53.14	%		54.92	%		62.99	%		61.27	%	54.21	%	65.55	%
Adjusted efficiency ratio (non-GAAP) (4)		47.63	%		50.02	%		53.59	%		60.05	%		59.39	%	52.34	%	59.88	%
Dividend payout ratio (5)		26.40	%		28.44	%		31.03	%		33.71	%		32.02	%	29.54	%	28.43	%
Book value per common share	$	67.04		$	65.03		$	66.64		$	68.30		$	69.27
Tangible book value per common share (non-GAAP) (3)	$	40.09		$	37.97		$	39.47		$	41.05		$	44.62

CAPITAL RATIOS
Equity-to-assets (8)		11.6	%		11.1	%		11.0	%		11.2	%		11.5	%
Tangible equity-to-tangible assets (non-GAAP) (3) (8)		7.2	%		6.8	%		6.8	%		7.1	%		7.7	%
Tier 1 leverage (6) (8) *		8.7	%		8.4	%		8.0	%		8.5	%		8.1	%
Tier 1 common equity (6) (8) *		11.0	%		11.0	%		11.1	%		11.4	%		11.8	%
Tier 1 risk-based capital (6) (8) *		11.0	%		11.0	%		11.1	%		11.4	%		11.8	%
Total risk-based capital (6) (8) *		13.0	%		13.0	%		13.0	%		13.3	%		13.6	%

The regulatory capital ratios presented above include the assumption of the transitional method relative to the CARES Act in relief of COVID-19 pandemic on the economy and financial institutions in the United States. The referenced relief allows a total five-year "phase in" of the CECL impact on capital and relief over the next two years for the impact on the allowance for credit losses resulting from COVID-19.

Balance Sheet

	Ending Balance
(Dollars in thousands, except per share and share data)	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,
BALANCE SHEET	2022		2022		2022		2022		2021
Assets
Cash and due from banks	$	548,387	$	394,794	$	561,516	$	588,372	$	476,653
Federal funds sold and interest-earning deposits with banks (8)		764,176		2,529,415		4,259,490		5,604,419		6,244,918
Cash and cash equivalents		1,312,563		2,924,209		4,821,006		6,192,791		6,721,571

Trading securities, at fair value		31,263		51,940		88,088		74,234		77,689
Investment securities:
Securities held to maturity		2,683,241		2,738,178		2,806,465		2,827,769		1,819,901
Securities available for sale, at fair value		5,326,822		5,369,610		5,666,008		5,924,206		5,193,478
Other investments		179,717		179,755		179,815		179,258		160,568
Total investment securities		8,189,780		8,287,543		8,652,288		8,931,233		7,173,947
Loans held for sale		28,968		34,477		73,880		130,376		191,723
Loans:
Purchased credit deteriorated		1,429,731		1,544,562		1,707,592		1,939,033		1,987,322
Purchased non-credit deteriorated		5,943,092		6,365,175		6,908,234		7,633,824		5,890,069
Non-acquired		22,805,039		20,926,566		19,319,440		16,983,570		16,050,775
Less allowance for credit losses		(356,444)		(324,398)		(319,708)		(300,396)		(301,807)
Loans, net		29,821,418		28,511,905		27,615,558		26,256,031		23,626,359
Other real estate owned ("OREO")		1,023		2,160		1,431		3,290		2,736
Premises and equipment, net		520,635		531,160		562,781		568,332		558,499
Bank owned life insurance		964,708		960,052		953,970		942,922		783,049
Mortgage servicing rights		86,610		90,459		87,463		83,339		65,620
Core deposit and other intangibles		116,450		125,390		132,694		140,364		128,067
Goodwill		1,923,106		1,922,525		1,922,525		1,924,024		1,581,085
Other assets (8)		922,172		980,557		854,506		829,786		928,111
Total assets	$	43,918,696	$	44,422,377	$	45,766,190	$	46,076,722	$	41,838,456

Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing	$	13,168,656	$	13,660,244	$	14,337,018	$	14,052,332	$	11,498,840
Interest-bearing (8)		23,181,967		23,249,545		24,097,601		24,598,679		23,555,989
Total deposits		36,350,623		36,909,789		38,434,619		38,651,011		35,054,829
Federal funds purchased and securities
sold under agreements to repurchase		556,417		557,802		669,999		770,409		781,239
Other borrowings		392,275		392,368		392,460		405,553		327,066
Reserve for unfunded commitments		67,215		52,991		32,543		30,368		30,510
Other liabilities (8)		1,477,239		1,588,241		1,196,144		1,044,973		841,872
Total liabilities		38,843,769		39,501,191		40,725,765		40,902,314		37,035,516

Shareholders' equity:
Common stock - $2.50 par value; authorized 160,000,000 shares		189,261		189,191		189,103		189,403		173,331
Surplus		4,215,712		4,207,040		4,195,976		4,214,897		3,653,098
Retained earnings		1,347,042		1,241,413		1,146,230		1,064,064		997,657
Accumulated other comprehensive loss		(677,088)		(716,458)		(490,884)		(293,956)		(21,146)
Total shareholders' equity		5,074,927		4,921,186		5,040,425		5,174,408		4,802,940
Total liabilities and shareholders' equity	$	43,918,696	$	44,422,377	$	45,766,190	$	46,076,722	$	41,838,456

Common shares issued and outstanding		75,704,563		75,676,445		75,641,322		75,761,018		69,332,297

Net Interest Income and Margin

	Three Months Ended
	Dec. 31, 2022					Sep. 30, 2022					Dec. 31, 2021
(Dollars in thousands)	Average		Income/		Yield/	Average		Income/		Yield/	Average		Income/		Yield/
YIELD ANALYSIS	Balance		Expense		Rate	Balance		Expense		Rate	Balance		Expense		Rate
Interest-Earning Assets:
Federal funds sold and interest-earning deposits with banks (8)	$	1,849,877	$	16,491	3.54 %	$	3,403,421	$	18,190	2.12 %	$	5,934,353	$	2,216	0.15 %
Investment securities		8,286,894		47,846	2.29 %		8,705,657		45,286	2.06 %		6,945,952		26,847	1.53 %
Loans held for sale		25,633		401	6.21 %		47,119		620	5.22 %		206,920		1,526	2.93 %
Total loans, excluding PPP		29,480,843		359,120	4.83 %		28,267,741		312,172	4.38 %		23,445,336		230,337	3.90 %
Total PPP loans		12,489		31	0.98 %		27,236		64	0.93 %		363,083		6,447	7.04 %
Total loans held for investment		29,493,332		359,151	4.83 %		28,294,977		312,236	4.38 %		23,808,419		236,784	3.95 %
Total interest-earning assets (8)		39,655,736		423,889	4.24 %		40,451,174		376,332	3.69 %		36,895,644		267,373	2.88 %
Noninterest-earning assets (8)		4,774,158					4,534,539					4,328,068
Total Assets	$	44,429,894				$	44,985,713				$	41,223,712

Interest-Bearing Liabilities ("IBL"):
Transaction and money market accounts (8)	$	17,044,865	$	16,901	0.39 %	$	17,503,416	$	5,353	0.12 %	$	16,492,540	$	2,230	0.05 %
Savings deposits		3,536,330		1,021	0.11 %		3,621,493		488	0.05 %		3,267,366		135	0.02 %
Certificates and other time deposits		2,444,361		2,023	0.33 %		2,627,280		1,693	0.26 %		2,889,741		2,756	0.38 %
Federal funds purchased		186,232		1,694	3.61 %		240,814		1,312	2.16 %		493,776		107	0.09 %
Repurchase agreements		363,336		253	0.28 %		376,985		194	0.20 %		390,212		150	0.15 %
Other borrowings		435,806		5,993	5.46 %		392,427		4,958	5.01 %		326,921		3,899	4.73 %
Total interest-bearing liabilities (8)		24,010,930		27,885	0.46 %		24,762,415		13,998	0.22 %		23,860,556		9,277	0.15 %
Noninterest-bearing liabilities ("Non-IBL") (8)		15,427,380					15,101,738					12,568,742
Shareholders' equity		4,991,584					5,121,560					4,794,414
Total Non-IBL and shareholders' equity		20,418,964					20,223,298					17,363,156
Total Liabilities and Shareholders' Equity	$	44,429,894				$	44,985,713				$	41,223,712
Net Interest Income and Margin (Non-Tax Equivalent) (8)			$	396,004	3.96 %			$	362,334	3.55 %			$	258,096	2.78 %
Net Interest Margin (Tax Equivalent) (non-GAAP) (8)					3.99 %					3.58 %					2.79 %
Total Deposit Cost (without Debt and Other Borrowings)					0.21 %					0.08 %					0.06 %
Overall Cost of Funds (including Demand Deposits)					0.29 %					0.14 %					0.10 %

Total Accretion on Acquired Loans (1)			$	7,350				$	9,550				$	7,707
Total Deferred Fees on PPP Loans			$	—				$	—				$	5,655
Tax Equivalent ("TE") Adjustment			$	2,397				$	2,345				$	1,734

(1) The remaining loan discount on acquired loans to be accreted into loan interest income totals $72.1 million as of December 31, 2022.

Noninterest Income and Expense

	Three Months Ended										Twelve Months Ended
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
(Dollars in thousands)	2022		2022		2022		2022		2021		2022		2021
Noninterest Income:
Fees on deposit accounts	$	34,480	$	31,188	$	33,658	$	28,902	$	30,293	$	128,228	$	105,641
Mortgage banking (loss) income		(545)		2,262		5,480		10,594		12,044		17,790		64,599
Trust and investment services income		9,867		9,603		9,831		9,718		9,520		39,019		36,981
Securities gains, net		—		30		—		—		2		30		102
Correspondent banking and capital market income (8)		16,760		20,552		27,604		27,994		30,216		92,910		110,005
Interest on centrally-cleared variation margin (8)		(8,451)		(4,125)		(1,536)		(44)		8		(14,155)		43
Total Correspondent banking and capital market income (8)		8,309		16,427		26,068		27,950		30,224		78,755		110,048
Bank owned life insurance income		6,723		6,082		6,246		5,260		4,932		24,311		18,410
Other		4,558		7,461		5,473		3,622		4,887		21,114		18,471
Total Noninterest Income (8)	$	63,392	$	73,053	$	86,756	$	86,046	$	91,902	$	309,247	$	354,252

Noninterest Expense:
Salaries and employee benefits	$	140,440	$	139,554	$	137,037	$	137,673	$	137,321	$	554,704	$	552,030
Occupancy expense		22,412		22,490		22,759		21,840		22,915		89,501		92,225
Information services expense		19,847		20,714		19,947		19,193		18,489		79,701		74,417
OREO and loan related expense (income)		78		532		(3)		(238)		(740)		369		2,029
Business development and staff related		5,851		5,090		4,916		4,276		4,577		20,133		16,677
Amortization of intangibles		8,027		7,837		8,847		8,494		8,517		33,205		35,192
Professional fees		3,756		3,495		4,331		3,749		2,639		15,331		10,629
Supplies and printing expense		2,411		2,621		2,400		2,189		2,179		9,621		9,659
FDIC assessment and other regulatory charges		6,589		6,300		5,332		4,812		4,965		23,033		17,982
Advertising and marketing		2,669		2,170		2,286		1,763		2,375		8,888		7,959
Other operating expenses		15,877		15,951		17,927		14,573		14,155		64,327		50,674
Merger and branch consolidation related expense		1,542		13,679		5,390		10,276		6,645		30,888		67,242
Extinguishment of debt cost		—		—		—		—		—		—		11,706
Total Noninterest Expense	$	229,499	$	240,433	$	231,169	$	228,600	$	224,037	$	929,701	$	948,421

Loans and Deposits

The following table presents a summary of the loan portfolio by type (dollars in thousands):

	Ending Balance
(Dollars in thousands)	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,
LOAN PORTFOLIO	2022		2022		2022		2022		2021
Construction and land development * †	$	2,860,360	$	2,550,552	$	2,527,062	$	2,316,313	$	2,029,216
Investor commercial real estate*		8,769,201		8,641,316		8,393,630		8,158,457		7,432,503
Commercial owner occupied real estate		5,460,193		5,426,216		5,421,725		5,346,583		4,970,116
Commercial and industrial, excluding PPP		5,303,379		4,962,616		4,760,355		4,447,279		3,516,485
Consumer real estate *		6,475,210		5,977,120		5,505,531		4,988,736		4,806,958
Consumer/other		1,299,415		1,263,362		1,279,790		1,179,697		928,240
Total loans, excluding PPP		30,167,758		28,821,182		27,888,093		26,437,065		23,683,518
PPP loans		10,104		15,121		47,173		119,362		244,648
Total Loans	$	30,177,862	$	28,836,303	$	27,935,266	$	26,556,427	$	23,928,166

* Single family home construction-to-permanent loans originated by the Company's mortgage banking division are included in construction and land development category until completion. Investor commercial real estate loans include commercial non-owner occupied real estate and other income producing property. Consumer real estate includes consumer owner occupied real estate and home equity loans.

† Includes single family home construction-to-permanent loans of $904.1 million, $881.3 million, $795.7 million, $733.7 million, and $686.5 million for the quarters ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

	Ending Balance
(Dollars in thousands)	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,
DEPOSITS	2022		2022		2022		2022		2021
Noninterest-bearing checking	$	13,168,656	$	13,660,244	$	14,337,018	$	14,052,332	$	11,498,840
Interest-bearing checking		8,955,519		8,741,447		8,953,332		9,275,208		9,018,987
Savings		3,464,351		3,602,560		3,616,819		3,479,743		3,350,547
Money market (8)		8,342,111		8,369,826		8,823,025		9,015,186		8,376,380
Time deposits		2,419,986		2,535,712		2,704,425		2,828,542		2,810,075
Total Deposits (8)	$	36,350,623	$	36,909,789	$	38,434,619	$	38,651,011	$	35,054,829

Core Deposits (excludes Time Deposits) (8)	$	33,930,637	$	34,374,077	$	35,730,194	$	35,822,469	$	32,244,754

Asset Quality

	Ending Balance
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,
(Dollars in thousands)	2022		2022		2022		2022		2021
NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonaccrual loans and restructured loans on nonaccrual	$	44,671	$	34,374	$	20,716	$	19,582	$	18,700
Accruing loans past due 90 days or more		2,358		2,358		1,371		22,818		4,612
Non-acquired OREO and other nonperforming assets		245		114		93		464		590
Total non-acquired nonperforming assets		47,274		36,846		22,180		42,864		23,902
Acquired
Acquired nonaccrual loans and restructured loans on nonaccrual		59,554		61,866		63,526		59,267		56,718
Accruing loans past due 90 days or more		1,992		1,430		4,418		12,768		251
Acquired OREO and other nonperforming assets		922		2,234		1,577		3,118		2,875
Total acquired nonperforming assets		62,468		65,530		69,521		75,153		59,844
Total nonperforming assets	$	109,742	$	102,376	$	91,701	$	118,017	$	83,746

	Three Months Ended
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,
	2022		2022		2022		2022		2021
ASSET QUALITY RATIOS:
Allowance for credit losses as a percentage of loans		1.18 %		1.12 %		1.14 %		1.13 %		1.26 %
Allowance for credit losses as a percentage of loans, excluding PPP loans		1.18 %		1.14 %		1.15 %		1.14 %		1.27 %
Allowance for credit losses as a percentage of nonperforming loans		328.29 %		324.30 %		355.11 %		262.50 %		375.94 %
Net charge-offs (recoveries) as a percentage of average loans (annualized)		0.01 %		(0.02) %		0.03 %		0.04 %		0.02 %
Total nonperforming assets as a percentage of total assets		0.25 %		0.23 %		0.20 %		0.26 %		0.20 %
Nonperforming loans as a percentage of period end loans		0.36 %		0.35 %		0.32 %		0.43 %		0.34 %

Current Expected Credit Losses ("CECL")

Below is a table showing the roll forward of the ACL and UFC for the fourth quarter of 2022:

Allowance for Credit Losses ("ACL and UFC")

NonPCD ACL

PCD ACL

Total ACL

UFC

Ending balance 9/30/2022

270,919

53,479

324,398

52,991

Charge offs

(3,783)

—

(3,783)

—

Acquired charge offs

(331)

(553)

(884)

—

Recoveries

2,290

—

2,290

—

Acquired recoveries

827

677

1,504

—

Provision (recovery) for credit losses

39,684

(6,765)

32,919

14,224

Ending balance 12/31/2022

309,606

46,838

356,444

67,215

Period end loans (includes PPP Loans)

28,748,131

1,429,731

30,177,862

N/A

Reserve to Loans (includes PPP Loans)

1.08 %

3.28 %

1.18 %

N/A

Period end loans (excludes PPP Loans)

28,738,027

1,429,731

30,167,758

N/A

Reserve to Loans (excludes PPP Loans)

1.08 %

3.28 %

1.18 %

N/A

Unfunded commitments (off balance sheet) *

10,173,471

Reserve to unfunded commitments (off balance sheet)

0.66 %

* Unfunded commitments exclude unconditionally cancelable commitments and letters of credit.

Conference Call

The Company will host a conference call to discuss its fourth quarter results at 10:00 a.m. Eastern Time on January 27, 2023. Callers wishing to participate may call toll-free by dialing 844-200-6205. The number for international participants is (929) 526-1599. The conference ID number is 040590. Alternatively, individuals may listen to the live webcast of the presentation by visiting SouthStateBank.com. An audio replay of the live webcast is expected to be available by the evening of January 27, 2023 on the Investor Relations section of SouthStateBank.com.

SouthState Corporation is a financial services company headquartered in Winter Haven, Florida. SouthState Bank, N.A., the Company's nationally chartered bank subsidiary, provides consumer, commercial, mortgage and wealth management solutions to more than one million customers throughout Florida, Alabama, Georgia, the Carolinas and Virginia. The Bank also serves clients coast to coast through its correspondent banking division. Additional information is available at SouthStateBank.com.

Non-GAAP Measures

Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables that provide a reconciliation of non-GAAP measures to GAAP measures. Although other companies may use calculation methods that differ from those used by SouthState for non-GAAP measures, Management believes that these non-GAAP measures provide additional useful information, which allows readers to evaluate the ongoing performance of the Company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP.

(Dollars and shares in thousands, except per share data)	Three Months Ended
PRE-PROVISION NET REVENUE ("PPNR") (NON-GAAP)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021
Net income (GAAP)	$	143,502		$	133,043		$	119,175		$	100,329		$	106,846
Provision (recovery) for credit losses		47,142			23,876			19,286			(8,449)			(9,157)
Tax provision		39,253			38,035			32,941			27,084			28,272
Merger and branch consolidation related expense		1,542			13,679			5,390			10,276			6,645
Securities gains		—			(30)			—			—			(2)
Pre-provision net revenue (PPNR) (Non-GAAP)	$	231,439		$	208,603		$	176,792		$	129,240		$	132,604

Average asset balance (GAAP)	$	44,429,894		$	44,985,713		$	45,576,742		$	42,907,268		$	41,223,712
PPNR ROAA		2.07	%		1.84	%		1.56	%		1.22	%		1.28	%

Diluted weighted-average common shares outstanding		76,327			76,182			76,094			72,111			70,290
PPNR per weighted-average common shares outstanding	$	3.03		$	2.74		$	2.32		$	1.79		$	1.89

(Dollars in thousands)	Three Months Ended
CORE NET INTEREST INCOME (NON-GAAP)	Dec. 31, 2022			Sep. 30, 2022			Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021
Net interest income (GAAP) (8)	$	396,004		$	362,334		$	315,815		$	261,518		$	258,096
Less:
Total accretion on acquired loans		7,350			9,550			12,770			6,741			7,707
Total deferred fees on PPP loans		—			—			8			983			5,655
Core net interest income (Non-GAAP)	$	388,654		$	352,784		$	303,037		$	253,794		$	244,734

NET INTEREST MARGIN ("NIM"), TAX EQUIVALENT (NON-GAAP)
Net interest income (GAAP) (8)	$	396,004		$	362,334		$	315,815		$	261,518		$	258,096
Total average interest-earning assets (8)		39,655,736			40,451,174			40,899,365			38,564,661			36,895,644
NIM, non-tax equivalent (8)		3.96	%		3.55	%		3.10	%		2.75	%		2.78	%

Tax equivalent adjustment (included in NIM, tax equivalent)		2,397			2,345			2,249			1,885			1,734
Net interest income, tax equivalent (Non-GAAP) (8)	$	398,401		$	364,679		$	318,064		$	263,403		$	259,830
NIM, tax equivalent (Non-GAAP) (8)		3.99	%		3.58	%		3.12	%		2.77	%		2.79	%

	Three Months Ended															Twelve Months Ended
(Dollars in thousands, except per share data)	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
RECONCILIATION OF GAAP TO NON-GAAP	2022			2022			2022			2022			2021			2022			2021
Adjusted Net Income (non-GAAP) (2)
Net income (GAAP)	$	143,502		$	133,043		$	119,175		$	100,329		$	106,846		$	496,049		$	475,543
Securities gains, net of tax		—			(24)			—			—			(2)			(24)			(81)
PCL - NonPCD loans and UFC, net of tax		—			—			—			13,492			—			13,492			—
Merger and branch consolidation related expense, net of tax		1,211			10,638			4,223			8,092			5,255			24,163			52,740
Extinguishment of debt cost, net of tax		—			—			—			—			—			—			9,081
Adjusted net income (non-GAAP)	$	144,713		$	143,657		$	123,398		$	121,913		$	112,099		$	533,680		$	537,283

Adjusted Net Income per Common Share - Basic (2)
Earnings per common share - Basic (GAAP)	$	1.90		$	1.76		$	1.58		$	1.40		$	1.53		$	6.65		$	6.76
Effect to adjust for securities gains		—			(0.00)			—			—			(0.00)			(0.00)			(0.00)
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—			—			—			0.19			—			0.19			—
Effect to adjust for merger and branch consolidation related expense, net of tax		0.01			0.14			0.06			0.12			0.08			0.32			0.74
Effect to adjust for extinguishment of debt cost		—			—			—			—			—			—			0.13
Adjusted net income per common share - Basic (non-GAAP)	$	1.91		$	1.90		$	1.64		$	1.71		$	1.61		$	7.16		$	7.63

Adjusted Net Income per Common Share - Diluted (2)
Earnings per common share - Diluted (GAAP)	$	1.88		$	1.75		$	1.57		$	1.39		$	1.52		$	6.60		$	6.71
Effect to adjust for securities gains		—			(0.00)			—			—			(0.00)			(0.00)			(0.00)
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—			—			—			0.19			—			0.18			—
Effect to adjust for merger and branch consolidation related expense, net of tax		0.02			0.14			0.05			0.11			0.07			0.32			0.74
Effect to adjust for extinguishment of debt cost		—			—			—			—			—			—			0.13
Adjusted net income per common share - Diluted (non-GAAP)	$	1.90		$	1.89		$	1.62		$	1.69		$	1.59		$	7.10		$	7.58

Adjusted Return on Average Assets (2)
Return on average assets (GAAP) (8)		1.28	%		1.17	%		1.05	%		0.95	%		1.03	%		1.12	%		1.19	%
Effect to adjust for securities gains		—	%		(0.00)	%		—	%		—	%		(0.00)	%		(0.00)	%		(0.00)	%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—	%		—	%		—	%		0.13	%		—	%		0.03	%		—	%
Effect to adjust for merger and branch consolidation related expense, net of tax		0.01	%		0.10	%		0.04	%		0.07	%		0.05	%		0.05	%		0.14	%
Effect to adjust for extinguishment of debt cost		—	%		—	%		—	%		—	%		—	%		—	%		0.02	%
Adjusted return on average assets (non-GAAP) (8)		1.29	%		1.27	%		1.09	%		1.15	%		1.08	%		1.20	%		1.35	%

Adjusted Return on Average Common Equity (2)
Return on average common equity (GAAP)		11.41	%		10.31	%		9.36	%		8.24	%		8.84	%		9.84	%		10.01	%
Effect to adjust for securities gains		—	%		(0.00)	%		—	%		—	%		(0.00)	%		(0.00)	%		(0.00)	%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—	%		—	%		—	%		1.11	%		—	%		0.27	%		—	%
Effect to adjust for merger and branch consolidation related expense, net of tax		0.09	%		0.82	%		0.33	%		0.66	%		0.44	%		0.48	%		1.11	%
Effect to adjust for extinguishment of debt cost		—	%		—	%		—	%		—	%		—	%		—	%		0.19	%
Adjusted return on average common equity (non-GAAP)		11.50	%		11.13	%		9.69	%		10.01	%		9.28	%		10.59	%		11.31	%

Return on Average Common Tangible Equity (3)
Return on average common equity (GAAP)		11.41	%		10.31	%		9.36	%		8.24	%		8.84	%		9.84	%		10.01	%
Effect to adjust for intangible assets		8.76	%		7.68	%		7.23	%		5.73	%		5.79	%		7.32	%		6.63	%
Return on average tangible equity (non-GAAP)		20.17	%		17.99	%		16.59	%		13.97	%		14.63	%		17.16	%		16.64	%

Adjusted Return on Average Common Tangible Equity (2) (3)
Return on average common equity (GAAP)		11.41	%		10.31	%		9.36	%		8.24	%		8.84	%		9.84	%		10.01	%
Effect to adjust for securities gains		—	%		(0.00)	%		—	%		—	%		(0.00)	%		(0.00)	%		(0.00)	%
Effect to adjust for PCL - NonPCD loans and UFC, net of tax		—	%		—	%		—	%		1.11	%

Company Announcements

SouthState Corporation Reports Fourth Quarter 2022 Results, Declares Quarterly Cash Dividend