WINTER HAVEN, Fla., July 23, 2021 /PRNewswire/ -- SouthState Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and six-month period ended June 30, 2021.

SouthState Corporation Reports Second Quarter 2021 Results

The Company reported consolidated net income of $1.39 per diluted common share for the three months ended June 30, 2021, compared to $2.06 per diluted common share for the three months ended March 31, 2021, and compared to consolidated net loss of ($1.96) per diluted common share one year ago. 

Adjusted net income (non-GAAP) totaled $1.87 per diluted share for the three months ended June 30, 2021, compared to $2.17 per diluted share for the three months ended March 31, 2021, and compared to $0.89 per diluted share one year ago.  Adjusted net income in the second quarter of 2021 excludes $25.6 million of merger-related and branch closure costs (after-tax), $9.1 million of extinguishment of debt cost (after-tax) and $28,000 in gains from security sales (after-tax). 

Net income was negatively impacted during the second quarter of 2021 by a $10.3 million decline in accretion on acquired loans and PPP fees compared to the previous quarter.  Core net interest income (non-GAAP), excluding such accretion, increased $1.4 million from the first quarter of 2021.  Net income during the second quarter of 2021 was also impacted by the effect of pipeline marks included in mortgage banking revenue, which declined by $16.8 million, in spite of a $105 million quarterly increase in production to $1.4 billion.  A healthy 72% of mortgage production during the second quarter of 2021 was purchase volume, and portfolio loans increased to 43% of total production from 33% in the first quarter of 2021.

"We experienced solid growth this quarter, with loans increasing 3% annualized, loan production up 25% from the first quarter of 2021, and our commercial loan pipeline nearly double the level of the pandemic lows. In addition, core net interest income increased for the first time since the start of the pandemic," said John C. Corbett, Chief Executive Officer.  "We made the strategic decision to retain more of our mortgage production on balance sheet which resulted in a negative pipeline mark but will drive higher interest revenue moving forward."

Highlights of the second quarter of 2021 include:

Returns

  • Reported & adjusted diluted Earnings per Share ("EPS") of $1.39 and $1.87 (Non-GAAP), respectively
  • Recorded a negative provision for credit losses of $58.8 million compared to a negative provision for credit losses of $58.4 million in the prior quarter
  • Reported & adjusted Return on Average Tangible Common Equity of 14.1% (Non-GAAP) and 18.7% (Non-GAAP), respectively
  • Pre-Provision Net Revenue ("PPNR") of $113.4 million, or 1.14% PPNR ROAA (Non-GAAP)
  • Book value per share of $67.60 increased by $1.18 per share compared to the prior quarter
  • Tangible book value ("TBV") per share of $43.07 (Non-GAAP), up $4.74, or 12.4% from the year ago quarter

Performance

  • Core net interest income (non-GAAP) (excluding loan accretion and deferred fees on PPP) increased $1.4 million from prior quarter
  • Loan accretion on acquired loans and PPP net deferred loan fees declined a combined $10.3 million compared to the first quarter of 2021
  • Total deposit cost of 0.12%, down 3 basis points from prior quarter
  • Noninterest income of $79.0 million, down $17.3 million compared to the prior quarter, primarily due to a $16.8 million decrease in mortgage banking income caused by an approximately $230 million decline in the secondary mortgage pipeline and by a 148 basis point reduction in gain on sale margins, leading to a negative secondary pipeline mark
  • Recorded $11.7 million in extinguishment of debt cost from the redemption of $38.5 million of trust preferred securities assumed from CenterState Bank Corporation ("CSFL")

Balance Sheet / Credit

  • Loans, excluding PPP loans, increased $168.8 million, or 3.0% annualized, centered in $253.0 million growth in investor commercial real estate, commercial owner occupied real estate, and single family construction to permanent loans (which are included in the construction and land development loans category)
  • Cash position increased to $6.4 billion, 15.9% of total assets, which creates a potential significant earnings lever as it is deployed into future loans and securities
  • Total deposits increased $801.0 million with core deposit growth totaling $941.4 million, or 13.0% annualized
  • 33.6% of deposits are noninterest-bearing
  • Net loan charge-offs of $2.1 million, or 0.03% annualized
  • Loan deferrals totaled $120.2 million, or 0.53% of the total loan portfolio, excluding PPP loans and held for sale loans

Capital Returns

  • Repurchased 700,000 shares during 2Q 2021 and approximately 273,000 shares in July 2021, bringing total 2021 repurchases to approximately 973,000 shares at a weighted average price of $83.70

Mergers & Acquisitions

  • On July 23, 2021, the Company announced the execution of an Agreement and Plan of Merger with Atlantic Capital Bancshares, Inc. ("Atlantic Capital")

Financial Performance




Three Months Ended


Six Months Ended


(Dollars in thousands, except per share data)


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Jun. 30,


Jun. 30,


INCOME STATEMENT


2021


2021


2020


2020


2020


2021


2020


Interest income























   Loans, including fees (1)


$

246,177


$

259,967


$

269,632


$

280,825


$

167,707


$

506,144


$

300,741


   Investment securities, trading securities, federal funds sold and securities























      purchased under agreements to resell



21,364



18,509



16,738



14,469



12,857



39,873



27,623


Total interest income



267,541



278,476



286,370



295,294



180,564



546,017



328,364


Interest expense























   Deposits



9,537



11,257



13,227



15,154



12,624



20,795



27,061


   Federal funds purchased, securities sold under agreements























      to repurchase, and other borrowings



4,874



5,221



7,596



9,792



5,383



10,094



10,732


Total interest expense



14,411



16,478



20,823



24,946



18,007



30,889



37,793


Net interest income



253,130



261,998



265,547



270,348



162,557



515,128



290,571


   Provision (benefit) for credit losses



(58,793)



(58,420)



18,185



29,797



151,474



(117,213)



188,007


Net interest income after provision for credit losses



311,923



320,418



247,362



240,551



11,083



632,341



102,564


Noninterest income



79,020



96,285



97,871



114,790



54,347



175,305



98,479


Noninterest expense























Pre-tax operating expense



218,707



218,702



219,719



215,225



134,634



437,409



237,753


Merger and/or branch consolid. expense



32,970



10,009



19,836



21,662



40,279



42,979



44,408


Extinguishment of debt cost



11,706











11,706




SWAP termination expense







38,787










Federal Home Loan Bank advances prepayment fee







56





199





199


Total noninterest expense



263,383



228,711



278,398



236,887



175,112



492,094



282,360


Income before provision for income taxes



127,560



187,992



66,835



118,454



(109,682)



315,552



(81,317)


Income taxes (benefit) provision



28,600



41,043



(19,401)



23,233



(24,747)



69,643



(20,492)


Net income (loss)


$

98,960


$

146,949


$

86,236


$

95,221


$

(84,935)


$

245,909


$

(60,825)

























Adjusted net income (non-GAAP) (2)























Net income (loss) (GAAP)


$

98,960


$

146,949


$

86,236


$

95,221


$

(84,935)


$

245,909


$

(60,825)


Securities gains, net of tax



(28)





(29)



(12)





(28)




Income taxes benefit - carryback tax loss







(31,468)










FHLB prepayment penalty, net of tax







46





154





154


SWAP termination expense, net of tax







31,784










Initial provision for credit losses - NonPCD loans and UFC











92,212





92,212


Merger and/or branch consolid. expense, net of tax



25,578



7,824



16,255



17,413



31,191



33,402



34,701


Extinguishment of debt cost, net of tax



9,081











9,081




Adjusted net income (non-GAAP)


$

133,591


$

154,773


$

102,824


$

112,622


$

38,622


$

288,364


$

66,242

























   Basic earnings per common share


$

1.40


$

2.07


$

1.22


$

1.34


$

(1.96)


$

3.47


$

(1.58)


   Diluted earnings per common share


$

1.39


$

2.06


$

1.21


$

1.34


$

(1.96)


$

3.44


$

(1.58)


   Adjusted net income per common share - Basic (non-GAAP) (2)


$

1.89


$

2.18


$

1.45


$

1.59


$

0.89


$

4.07


$

1.72


   Adjusted net income per common share - Diluted (non-GAAP) (2)


$

1.87


$

2.17


$

1.44


$

1.58


$

0.89


$

4.04


$

1.71


   Dividends per common share


$

0.47


$

0.47


$

0.47


$

0.47


$

0.47


$

0.94


$

0.94


   Basic weighted-average common shares outstanding



70,866,193



71,009,209



70,941,200



70,905,027



43,317,736



70,937,301



38,438,535


   Diluted weighted-average common shares outstanding



71,408,888



71,484,490



71,294,864



71,075,866



43,317,736



71,444,631



38,438,535


   Adjusted diluted weighted-average common shares outstanding*



71,408,888



71,484,490



71,294,864



71,075,866



43,606,333



71,444,631



38,793,092


   Effective tax rate



22.42%



21.83%



(29.03)%



19.61%



22.56%



22.07%



25.20%


   Adjusted effective tax rate



22.42%



21.83%



18.05%



19.61%



22.56%



22.07%



25.20%

























*Adjusted diluted weighted average common shares was calculated with the result of adjusted net income (non-GAAP) for the periods ending June 30, 2020.

 

Performance and Capital Ratios




Three Months Ended


Six Months Ended




Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Jun. 30,


Jun. 30,




2021


2021


2020


2020


2020


2021


2020


PERFORMANCE RATIOS





















Return on average assets (annualized)



1.00

%


1.56

%


0.90

%


1.00

%


(1.49)

%

1.27

%

(0.63)

%

Adjusted return on average assets (annualized) (non-GAAP) (2)



1.35

%


1.64

%


1.08

%


1.18

%


0.68

%

1.49

%

0.68

%

Return on average equity (annualized)



8.38

%


12.71

%


7.45

%


8.31

%


(11.78)

%

10.52

%

(4.67)

%

Adjusted return on average equity (annualized) (non-GAAP) (2)



11.31

%


13.39

%


8.88

%


9.83

%


5.36

%

12.34

%

5.09

%

Return on average tangible common equity (annualized) (non-GAAP) (3)



14.12

%


21.16

%


13.05

%


14.66

%


(19.71)

%

17.59

%

(7.52)

%

Adjusted return on average tangible common equity (annualized) (non-GAAP) (2) (3)



18.74

%


22.24

%


15.35

%


17.14

%


10.23

%

20.46

%

9.83

%

Efficiency ratio (tax equivalent)



76.28

%


61.06

%


73.59

%


58.91

%


78.37

%

68.38

%

72.32

%

Adjusted efficiency ratio (non-GAAP) (4)



62.88

%


58.27

%


57.52

%


53.30

%


59.76

%

60.49

%

60.89

%

Dividend payout ratio (5)



33.65

%


22.72

%


38.67

%


35.01

%


N/A


27.12

%

N/A


Book value per common share


$

67.60


$

66.42


$

65.49


$

64.34


$

63.35






Tangible book value per common share (non-GAAP) (3)


$

43.07


$

42.02


$

41.16


$

39.83


$

38.33



























CAPITAL RATIOS





















Equity-to-assets



11.8

%


11.9

%


12.3

%


12.1

%


11.9

%





Tangible equity-to-tangible assets (non-GAAP) (3)



7.8

%


7.9

%


8.1

%


7.8

%


7.6

%





Tier 1 leverage (6) *



8.1

%


8.5

%


8.3

%


8.1

%


13.3

%





Tier 1 common equity (6) *



12.1

%


12.2

%


11.8

%


11.5

%


10.7

%





Tier 1 risk-based capital (6) *



12.1

%


12.2

%


11.8

%


11.5

%


10.7

%





Total risk-based capital (6) *



14.1

%


14.5

%


14.2

%


13.9

%


12.9

%


























OTHER DATA





















Number of branches



281



281



285



305



305






*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)


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,

BALANCE SHEET


2021


2021


2020


2020


2020

Assets
















   Cash and due from banks


$

529,434


$

392,556


$

363,306


$

344,389


$

380,661

   Federal Funds Sold and interest-earning deposits with banks



5,875,078



5,581,581



4,245,949



4,127,250



3,983,047

Cash and cash equivalents



6,404,512



5,974,137



4,609,255



4,471,639



4,363,708

















Trading securities, at fair value



89,925



83,947



10,674





494

Investment securities:
















   Securities held-to-maturity



1,189,265



1,214,313



955,542





   Securities available for sale, at fair value



4,369,159



3,891,490



3,330,672



3,561,929



3,137,718

   Other investments



160,607



161,468



160,443



185,199



133,430

               Total investment securities



5,719,031



5,267,271



4,446,657



3,747,128



3,271,148

Loans held for sale



171,447



352,997



290,467



456,141



603,275

Loans:
















Purchased credit deteriorated



2,434,259



2,680,466



2,915,809



3,143,822



3,323,754

Purchased non-credit deteriorated



7,457,950



8,433,913



9,458,869



10,557,907



11,577,833

Non-acquired



14,140,869



13,377,086



12,289,456



11,536,086



10,597,560

    Less allowance for credit losses



(350,401)



(406,460)



(457,309)



(440,159)



(434,608)

               Loans, net



23,682,677



24,085,005



24,206,825



24,797,656



25,064,539

Other real estate owned ("OREO")



5,039



11,471



11,914



13,480



18,016

Premises and equipment, net



568,473



569,171



579,239



626,259



627,943

Bank owned life insurance



773,452



562,624



559,368



556,475



556,807

Mortgage servicing rights



57,351



54,285



43,820



34,578



25,441

Core deposit and other intangibles



145,126



153,861



162,592



171,637



170,911

Goodwill



1,581,085



1,579,758



1,563,942



1,566,524



1,603,383

Other assets



1,177,751



1,035,805



1,305,120



1,377,849



1,419,691

                Total assets


$

40,375,869


$

39,730,332


$

37,789,873


$

37,819,366


$

37,725,356

















Liabilities and Shareholders' Equity
















Deposits:
















   Noninterest-bearing


$

11,176,338


$

10,801,812


$

9,711,338


$

9,681,095


$

9,915,700

   Interest-bearing



22,066,031



21,639,598



20,982,544



20,288,859



20,041,585

               Total deposits



33,242,369



32,441,410



30,693,882



29,969,954



29,957,285

Federal funds purchased and securities
















   sold under agreements to repurchase



862,429



878,581



779,666



706,723



720,479

Other borrowings



351,548



390,323



390,179



1,089,637



1,089,279

Reserve for unfunded commitments



30,981



35,829



43,380



43,161



21,051

Other liabilities



1,130,919



1,264,369



1,234,886



1,446,478



1,445,412

               Total liabilities



35,618,246



35,010,512



33,141,993



33,255,953



33,233,506

















Shareholders' equity:
















   Common stock - $2.50 par value; authorized 160,000,000 shares



175,957



177,651



177,434



177,321



177,268

   Surplus



3,720,946



3,772,248



3,765,406



3,764,482



3,759,166

   Retained earnings



836,584



770,952



657,451



604,564



542,677

   Accumulated other comprehensive income (loss)



24,136



(1,031)



47,589



17,046



12,739

               Total shareholders' equity



4,757,623



4,719,820



4,647,880



4,563,413



4,491,850

               Total liabilities and shareholders' equity


$

40,375,869


$

39,730,332


$

37,789,873


$

37,819,366


$

37,725,356

















Common shares issued and outstanding



70,382,728



71,060,446



70,973,477



70,928,304



70,907,119

















 

Net Interest Income and Margin




Three Months Ended



Jun. 30, 2021


Mar. 31, 2021


Jun. 30, 2020

(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, reverse repo, and time deposits


$

5,670,674


$

1,350


0.10%


$

4,757,717


$

989


0.08%


$

2,033,910


$

432


0.09%

Investment securities



5,371,985



20,014


1.49%



4,683,152



17,520


1.52%



2,307,471



12,425


2.17%

Loans held for sale



281,547



1,977


2.82%



298,970



1,991


2.70%



203,267



1,498


2.96%

Total loans, excluding PPP



22,588,076



225,664


4.01%



22,612,722



232,770


4.17%



14,711,596



155,968


4.26%

Total PPP loans



1,719,323



18,536


4.32%



1,879,367



25,206


5.44%



1,005,791



10,241


4.10%

Total loans held for investment



24,307,399



244,200


4.03%



24,492,089



257,976


4.27%



15,717,387



166,209


4.25%

     Total interest-earning assets



35,631,605



267,541


3.01%



34,231,928



278,476


3.30%



20,262,035



180,564


3.58%

Noninterest-earning assets



4,201,147








4,013,482








2,636,890






     Total Assets


$

39,832,752







$

38,245,410







$

22,898,925































Interest-Bearing Liabilities:

























Transaction and money market accounts


$

15,453,940


$

4,513


0.12%


$

14,678,248


$

5,387


0.15%


$

8,132,276


$

5,096


0.25%

Savings deposits



2,995,871



453


0.06%



2,780,361



434


0.06%



1,699,377



336


0.08%

Certificates and other time deposits



3,408,778



4,571


0.54%



3,672,818



5,436


0.60%



2,321,684



7,192


1.25%

Federal funds purchased and repurchase agreements



914,641



323


0.14%



852,277



351


0.17%



415,304



391


0.38%

Other borrowings



368,897



4,551


4.95%



390,043



4,870


5.06%



1,216,884



4,992


1.65%

     Total interest-bearing liabilities



23,142,127



14,411


0.25%



22,373,747



16,478


0.30%



13,785,525



18,007


0.53%

Noninterest-bearing liabilities ("Non-IBL")



11,951,384








11,184,514








6,212,957






Shareholders' equity



4,739,241








4,687,149








2,900,443






     Total Non-IBL and shareholders' equity



16,690,625








15,871,663








9,113,400






     Total Liabilities and Shareholders' Equity


$

39,832,752







$

38,245,410







$

22,898,925






Net Interest Income and Margin (Non-Tax Equivalent)





$

253,130


2.85%





$

261,998


3.10%





$

162,557


3.23%

Net Interest Margin (Tax Equivalent)








2.87%








3.12%








3.24%

Total Deposit Cost (without Debt and Other Borrowings)








0.12%








0.15%








0.29%

Overall Cost of Funds (including Demand Deposits)








0.17%








0.21%








0.37%


























Total Accretion on Acquired Loans (1)





$

6,292







$

10,416







$

10,108



Total Net Deferred Fee Income on PPP Loans





$

14,232







$

20,402







$

7,332



TEFRA (included in NIM, Tax Equivalent)





$

1,424







$

1,286







$

579




























(1)

The remaining loan discount on acquired loans to be accreted into loan interest income totals $81.0 million and the remaining net deferred fees on PPP loans totals $25.9 million as of June 30, 2021.

 

Noninterest Income and Expense




Three Months Ended


Six Months Ended



Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Jun. 30,


Jun. 30,

(Dollars in thousands)


2021


2021


2020


2020


2020


2021


2020

Noninterest Income:






















   Fees on deposit accounts


$

23,936


$

25,282


$

25,153


$

24,346


$

16,679


$

49,218


$

34,820

   Mortgage banking income



10,115



26,880



25,162



48,022



18,371



36,995



33,018

   Trust and investment services income



9,733



8,578



7,506



7,404



7,138



18,311



14,527

   Securities gains, net



36





35



15





36



   Correspondent banking and capital market income



25,877



28,748



27,751



26,432



10,067



54,625



10,560

   Bank owned life insurance income



5,047



3,300



3,341



4,127



1,381



8,347



3,911

   Other



4,276



3,498



8,923



4,444



711



7,773



1,643

         Total Noninterest Income


$

79,020


$

96,286


$

97,871


$

114,790


$

54,347


$

175,305


$

98,479























Noninterest Expense:






















   Salaries and employee benefits


$

137,379


$

140,361


$

138,982


$

134,919


$

81,720


$

277,740


$

142,698

   Swap termination expense







38,787









   Occupancy expense



22,844



23,331



23,496



23,845



15,959



46,175



28,246

   Information services expense



19,078



18,789



19,527



18,855



12,155



37,867



21,462

FHLB prepayment penalty







56





199





199

   OREO expense and loan related



240



1,002



728



1,146



1,107



1,242



1,694

   Business development and staff related



4,305



3,371



3,835



2,599



1,447



7,676



3,691

   Amortization of intangibles



8,968



9,164



9,760



9,560



4,665



18,132



7,672

   Professional fees



2,301



3,274



4,306



4,385



2,848



5,575



5,342

   Supplies and printing expense



2,500



2,670



2,809



2,755



1,610



5,170



3,115

   FDIC assessment and other regulatory charges



4,931



3,771



3,403



2,849



2,403



8,702



4,461

   Advertising and marketing



1,659



1,740



1,544



1,203



531



3,399



1,345

   Other operating expenses



14,502



11,229



11,329



13,109



10,189



25,731



18,027

   Branch consolidation and merger expense



32,970



10,009



19,836



21,662



40,279



42,979



44,408

   Extinguishment of debt cost



11,706











11,706



         Total Noninterest Expense


$

263,383


$

228,711


$

278,398


$

236,887


$

175,112


$

492,094


$

282,360























 

Loans and Deposits


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




Ending Balance

(Dollars in thousands)


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,

LOAN PORTFOLIO


2021


2021


2020


2020


2020

Construction and land development*


$

1,947,646


$

1,888,240


$

1,890,846


$

1,829,345


$

1,978,900

Investor commercial real estate*



7,094,109



6,978,326



7,007,146



7,050,104



7,137,308

Commercial owner occupied real estate



4,895,189



4,817,346



4,832,697



4,836,405



4,754,753

Commercial and industrial, excluding PPP



3,121,625



3,140,893



3,112,848



3,066,551



3,004,179

Consumer real estate*



4,748,693



4,835,567



4,974,808



5,195,978



5,362,679

Consumer/other



907,181



885,320



912,327



907,711



924,995

Subtotal



22,714,443



22,545,692



22,730,672



22,886,094



23,162,814

PPP loans



1,318,635



1,945,773



1,933,462



2,351,721



2,336,333

Total Loans


$

24,033,078


$

24,491,465


$

24,664,134


$

25,237,815


$

25,499,147


















As a result of the conversion of legacy CenterState's core system to the Company's core system completed in 2Q 2021, several loans were reclassified to conform with the Company's loan segmentation, most notably residential investment loans which were reclassed from consumer real estate to investor commercial real estate.  All prior periods presented above were revised to conform with the current loan segmentation.


* 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.

The following table presents a summary of the deposit types (dollars in thousands):



Ending Balance

(Dollars in thousands)


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,

DEPOSITS


2021


2021


2020


2020


2020

Noninterest-bearing checking


$

11,176,338


$

10,801,812


$

9,711,338


$

9,681,095


$

9,915,700

Interest-bearing checking



7,651,433



7,369,066



6,955,575



6,414,905



6,192,915

Savings



3,051,229



2,906,673



2,694,010



2,618,877



2,503,514

Money market



8,024,117



7,884,132



7,584,353



7,404,299



7,196,456

Time deposits



3,339,252



3,479,727



3,748,605



3,850,778



4,148,700

Total Deposits


$

33,242,369


$

32,441,410


$

30,693,881


$

29,969,954


$

29,957,285

















Core Deposits (excludes Time Deposits)


$

29,903,117


$

28,961,683


$

26,945,276


$

26,119,176


$

25,808,585

















 

Asset Quality




Ending Balance



Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,

(Dollars in thousands)


2021


2021


2020


2020


2020

NONPERFORMING ASSETS:
















Non-acquired
















Non-acquired nonperforming loans


$

16,624


$

21,034


$

29,171


$

22,463


$

22,883

Non-acquired OREO and other nonperforming assets



695



654



688



825



1,689

Total non-acquired nonperforming assets



17,319



21,688



29,859



23,288



24,572

Acquired
















Acquired nonperforming loans



69,053



80,024



77,668



89,974



100,399

Acquired OREO and other nonperforming assets



4,777



11,292



11,568



12,904



16,987

Total acquired nonperforming assets



73,830



91,316



89,236



102,878



117,386

Total nonperforming assets


$

91,149


$

113,004


$

119,095


$

126,166


$

141,958



















Three Months Ended



Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,



2021


2021


2020


2020


2020

ASSET QUALITY RATIOS:
















Allowance for credit losses as a percentage of loans



1.46%



1.66%



1.85%



1.74%



1.70%

Allowance for credit losses as a percentage of loans, excluding PPP loans



1.54%



1.80%



2.01%



1.92%



1.88%

Allowance for credit losses as a percentage of nonperforming loans *



408.98%



402.20%



428.04%



391.47%



352.53%

Net (recoveries) charge-offs as a percentage of average loans (annualized)



0.03%



(0.00)%



0.01%



0.01%



0.00%

Total nonperforming assets as a percentage of total assets *



0.23%



0.28%



0.32%



0.33%



0.38%

Nonperforming loans as a percentage of period end loans *



0.36%



0.41%



0.43%



0.45%



0.48%

















* With the merger with CSFL on June 7, 2020, the amount of acquired nonaccrual loans increased by approximately $69.9 million during the second quarter of 2020. 

 

Current Expected Credit Losses ("CECL")


Below is a table showing the roll forward of the ACL and UFC for the second quarter of 2021:




Allowance for Credit Losses ("ACL & UFC")



NonPCD ACL


PCD ACL


Total


UFC

Ending Balance 3/31/2021


$

284,257


$

122,203


$

406,460


$

35,829

Charge offs



(1,974)





(1,974)



Acquired charge offs



(3,103)



(586)



(3,689)



Recoveries



1,242





1,242



Acquired recoveries



659



1,647



2,306



Provision for credit losses



(35,713)



(18,231)



(53,944)



(4,848)

Ending balance 6/30/2021


$

245,368


$

105,033


$

350,401


$

30,981














Period end loans (includes PPP Loans)


$

21,598,819


$

2,434,259


$

24,033,078



N/A

Reserve to Loans (includes PPP Loans)



1.14%



4.31%



1.46%



N/A

Period end loans (excludes PPP Loans)


$

20,280,184


$

2,434,259


$

22,714,443



N/A

Reserve to Loans (excludes PPP Loans)



1.21%



4.31%



1.54%



N/A

Unfunded commitments (off balance sheet) *











$

5,140,653

Reserve to unfunded commitments (off balance sheet)












0.60%














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

Conference Call

The Company will host a conference call to discuss its second quarter results and merger announcement at 8:00 a.m. Eastern Time on July 23, 2021. Callers wishing to participate may call toll-free by dialing 877-506-9272. The number for international participants is (412) 380-2004. The conference ID number is 10158736.  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 July 23, 2021 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.  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 in thousands)





















PRE-PROVISION NET REVENUE ("PPNR") (NON-GAAP)


Jun. 30, 2021



Mar. 31, 2021



Dec. 31, 2020



Sep. 30, 2020



Jun. 30, 2020


Net income (loss) (GAAP)


$

98,960



$

146,949



$

86,236



$

95,221



$

(84,935)


PCL legacy SSB



(58,793)




(58,420)




18,185




29,797




31,259


PCL legacy CSB NonPCD and UFC - Day 1















119,079


PCL legacy CSB for June, 2020















1,136


Tax provision (benefit)



28,600




41,043




(19,401)




23,233




(24,747)


Merger-related costs



32,970




10,009




19,836




21,662




40,279


Extinguishment of debt costs



11,706














Securities gains



(36)







(35)




(15)





FHLB advance prepayment cost









56







199


Swap termination cost









38,787








CSB pre-merger PPNR















74,791


Pre-provision net revenue (PPNR) (Non-GAAP)


$

113,407



$

139,581



$

143,664



$

169,898



$

157,061























SSB average asset balance (GAAP)


$

39,832,752



$

38,245,410



$

38,027,111



$

37,865,217



$

22,898,925


CSB average asset balance pre-merger



















14,604,081


Total average balance June 30, 2020 (Non-GAAP)


















$

37,503,006























ROAA PPNR



1.14

%



1.48

%



1.50

%



1.79

%



1.68

%






















 



Three Months Ended



Six Months Ended


(Dollars in thousands, except per share data)


Jun. 30,



Mar. 31,



Dec. 31,



Sep. 30,



Jun. 30,



Jun. 30,



Jun. 30,


RECONCILIATION OF GAAP TO NON-GAAP


2021



2021



2020



2020



2020



2021



2020


Adjusted Net Income (non-GAAP) (2)





























Net income (loss) (GAAP)


$

98,960



$

146,949



$

86,236



$

95,221



$

(84,935)



$

245,909



$

(60,825)


Securities gains, net of tax



(28)







(29)




(12)







(28)





PCL - NonPCD loans & unfunded commitments















92,212







92,212


Swap termination expense, net of tax









31,784














Benefit for income taxes - carryback tax loss









(31,468)














FHLB prepayment penalty, net of tax









46







154







154


Merger and branch consolidation/acq. expense, net of tax



25,578




7,824




16,255




17,413




31,191




33,402




34,701


Extinguishment of debt cost, net of tax



9,081
















9,081





Adjusted net income (non-GAAP)


$

133,591



$

154,773



$

102,824



$

112,622



$

38,622



$

288,364



$

66,242































Adjusted Net Income per Common Share - Basic (2)





























Earnings (loss) per common share - Basic (GAAP)


$

1.40



$

2.07



$

1.22



$

1.34



$

(1.96)



$

3.47



$

(1.58)


Effect to adjust for securities gains



(0.00)







(0.00)




(0.00)







(0.00)





Effect to adjust for PCL - NonPCD loans & unfunded commitments















2.13







2.40


Effect to adjust for swap termination expense, net of tax









0.45














Effect to adjust for benefit for income taxes - carryback tax loss









(0.44)














Effect to adjust for FHLB prepayment penalty, net of tax









0.00







0.00







0.00


Effect to adjust for merger & branch consol./acq expenses, net of tax



0.36




0.11




0.23




0.25




0.72




0.47




0.90


Effect to adjust for extinguishment of debt cost



0.13
















0.13





Adjusted net income per common share - Basic (non-GAAP)


$

1.89



$

2.18



$

1.45



$

1.59



$

0.89



$

4.07



$

1.72































Adjusted Net Income per Common Share - Diluted (2)





























Earnings (loss) per common share - Diluted (GAAP)


$

1.39



$

2.06



$

1.21



$

1.34



$

(1.96)



$

3.44



$

(1.58)


Effect to adjust for securities gains



(0.00)







(0.00)




(0.00)







(0.00)





Effect to adjust for PCL - NonPCD loans & unfunded commitments















2.11







2.39


Effect to adjust for swap termination expense, net of tax









0.45














Effect to adjust for benefit for income taxes - carryback tax loss









(0.44)














Effect to adjust for FHLB prepayment penalty, net of tax









0.00







0.00







0.00


Effect to adjust for merger & branch consol./acq expenses, net of tax



0.35




0.11




0.23




0.24




0.72




0.47




0.90


Effect to adjust for extinguishment of debt cost



0.13
















0.13





Effect of adjusted weighted avg. shares due to adjusted net income















0.02








Adjusted net income per common share - Diluted (non-GAAP)


$

1.87



$

2.17



$

1.44



$

1.58



$

0.89



$

4.04



$

1.71































Adjusted Return of Average Assets (2)





























Return on average assets (GAAP)



1.00

%



1.56

%



0.90

%



1.00

%



(1.49)

%



1.27

%



(0.63)

%

Effect to adjust for securities gains



(0.00)

%



%



(0.00)

%



(0.00)

%



%



(0.00)

%



%

Effect to adjust for PCL - NonPCD loans & unfunded commitments



%



%



%



%



1.62

%



%



0.95

%

Effect to adjust for swap termination expense



%



%



0.33

%



%



%



%



%

Effect to adjust for benefit for income taxes - carryback tax loss



%



%



(0.33)

%



%



%



%



%

Effect to adjust for FHLB prepayment penalty, net of tax



%



%



0.00

%



%



%



%



0.00

%

Effect to adjust for merger & branch consol./acq expenses, net of tax



0.26

%



0.08

%



0.18

%



0.18

%



0.55

%



0.17

%



0.36

%

Effect to adjust for extinguishment of debt cost



0.09

%



%



%



%



%



0.05

%



%

Adjusted return on average assets (non-GAAP)



1.35

%



1.64

%



1.08

%



1.18

%



0.68

%



1.49

%



0.68

%






























Adjusted Return of Average Equity (2)





























Return on average equity (GAAP)



8.38

%



12.71

%



7.45

%



8.31

%



(11.78)

%



10.52

%



(4.67)

%

Effect to adjust for securities gains



(0.00)

%



%



(0.00)

%



(0.00)

%



%



(0.00)

%



%

Effect to adjust for PCL - NonPCD loans & unfunded commitments



%



%



%



%



12.79

%



%



7.08

%

Effect to adjust for swap termination expense



%



%



2.74

%



%



%



%



%

Effect to adjust for benefit for income taxes - carryback tax loss



%



%



(2.72)

%



%



%



%



%

Effect to adjust for FHLB prepayment penalty, net of tax



%



%



(0.00)

%



%



0.02

%



%



0.01

%

Effect to adjust for merger & branch consol./acq expenses, net of tax



2.17

%



0.68

%



1.41

%



1.52

%



4.33

%



1.43

%



2.67

%

Effect to adjust for extinguishment of debt cost



0.77

%



%



%






%



0.39

%



%

Adjusted return on average equity (non-GAAP)



11.31

%



13.39

%



8.88

%



9.83

%



5.36

%



12.34

%



5.09

%






























Adjusted Return on Average Common Tangible Equity (2) (3)





























Return on average common equity (GAAP)



8.38

%



12.71

%



7.45

%



8.31

%



(11.78)

%



10.52

%



(4.67)

%

Effect to adjust for securities gains



(0.00)

%



%



(0.00)

%



(0.00)

%



%



(0.00)

%



%

Effect to adjust for PCL - NonPCD loans & unfunded commitments



%



%



%



%



12.79

%



%



7.08

%

Effect to adjust for swap termination expense



%



%



2.74

%



%



%



%



%

Effect to adjust for benefit for income taxes - carryback tax loss



%



%



(2.72)

%



%



%



%



%

Effect to adjust for FHLB prepayment penalty, net of tax



%



%



%



%



0.02

%



%



0.01

%

Effect to adjust for merger & branch consol./acq expenses, net of tax



2.16

%



0.68

%



1.40

%



1.52

%



4.32

%



1.43

%



2.67

%

Effect to adjust for extinguishment of debt cost



0.77

%



%



%






%



0.39

%



%

Effect to adjust for intangible assets



7.43

%



8.85

%



6.48

%



7.31

%



4.88

%



8.12

%



4.74

%

Adjusted return on average common tangible equity (non-GAAP)



18.74

%



22.24

%



15.35

%



17.14

%



10.23

%



20.46

%



9.83

%






























 



Three Months Ended



Six Months Ended


(Dollars in thousands, except per share data)


Jun. 30,



Mar. 31,



Dec. 31,



Sep. 30,



Jun. 30,



Jun. 30,



Jun. 30,


RECONCILIATION OF GAAP TO NON-GAAP


2021



2021



2020



2020



2020



2021



2020


Adjusted Efficiency Ratio (4)





























Efficiency ratio



76.28

%



61.06

%



73.59

%



58.91

%



78.37

%



68.38

%



72.32

%

Effect to adjust for merger and branch consolidation related expenses



(13.38)

%



(2.79)

%



(16.07)

%



(5.61)

%



(18.61)

%



7.89

%



11.43

%

Adjusted efficiency ratio



62.88

%



58.26

%



57.52

%



53.30

%



59.76

%



60.49

%



60.89

%






























Tangible Book Value Per Common Share (3)





























Book value per common share (GAAP)


$

67.60



$

66.42



$

65.49



$

64.34



$

63.35










Effect to adjust for intangible assets



(24.53)




(24.40)




(24.33)




(24.51)




(25.02)










Tangible book value per common share (non-GAAP)


$

43.07



$

42.02



$

41.16



$

39.83



$

38.33







































Tangible Equity-to-Tangible Assets (3)





























Equity-to-assets (GAAP)



11.78

%



11.88

%



12.30

%



12.07

%



11.91

%









Effect to adjust for intangible assets



(3.94)

%



(4.02)

%



(4.20)

%



(4.24)

%



(4.35)

%









Tangible equity-to-tangible assets (non-GAAP)



7.84

%



7.86

%



8.10

%



7.83

%



7.56

%






































Certain prior period information has been reclassified to conform to the current period presentation, and these reclassifications had no impact on net income or equity as previously reported.

Footnotes to tables:



(1)

Includes loan accretion (interest) income related to the discount on acquired loans of $6.3 million, $10.4 million, $12.7 million, $22.4 million and $10.1 million, respectively, during the five quarters above.

(2)

Adjusted earnings, adjusted return on average assets, adjusted EPS, and adjusted return on average equity are non-GAAP measures and exclude the gains or losses on sales of securities, FHLB Advances prepayment penalty, initial provision for credit losses on non-PCD loans and unfunded commitments, income tax benefit related to the carryback of tax losses under the CARES Act, swap termination expense, extinguishment of debt cost and merger and branch consolidation related expense. Management believes that non-GAAP adjusted measures provide additional useful information that 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.  Adjusted earnings and the related adjusted return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis:  (a) pre-tax merger and branch consolidation related expense of $33.0 million, $10.0 million, $19.8 million, $21.7 million and $40.3 million, for the quarters ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020 , respectively; (b) net securities gains of $36,000, $35,000 and $15,000 for the quarters ended June 30, 2021, December 31, 2020 and September 30, 2020, respectively; (c) FHLB prepayment penalty of $56,000 and $199,000 for the quarters ended December 31, 2020 and June 30, 2020, respectively; (d) swap termination expense of $38.8 million for the quarter ended December 31, 2020; (e) tax carryback losses under the CARES Act of $31.5 million for the quarter ended December 31, 2020; (f) initial provision for credit losses on non-PCD loans and unfunded commitments of $119.1 million for the quarter ended June 30, 2020; and (g) extinguishment of debt cost of $11.7 million for the quarter ended June 30, 2021.

(3)

The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets.  The tangible returns on equity and common equity measures also add back the after-tax amortization of intangibles to GAAP basis net income.  Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities.  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.  The sections titled "Reconciliation of Non-GAAP to GAAP" provide tables that reconcile non-GAAP measures to GAAP.

(4)

Adjusted efficiency ratio is calculated by taking the noninterest expense excluding swap termination expense, branch consolidation cost and merger cost, extinguishment of debt cost, tax carryback losses under the CARES Act, amortization of intangible assets, and the FHLB prepayment penalty divided by net interest income and noninterest income excluding securities gains (losses). The pre-tax amortization expense of intangible assets were $9.0 million, $9.2 million, $9.8 million, $9.6 million and $4.7 million, for the quarters ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.

(5)

The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period.

(6)

June 30, 2021 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C; all other periods are presented as filed.

(7)

Loan data excludes mortgage loans held for sale.

Cautionary Statement Regarding Forward Looking Statements

Statements included in this communication, which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on, among other things, management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and SouthState. Words and phrases such as "may," "approximately," "continue," "should," "expects," "projects," "anticipates," "is likely," "look ahead," "look forward," "believes," "will," "intends," "estimates," "strategy," "plan," "could," "potential," "possible" and variations of such words and similar expressions are intended to identify such forward-looking statements. South State cautions readers that forward-looking statements are subject to certain risks, uncertainties and assumptions that are difficult to predict with regard to, among other things, timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, the following: (1) economic downturn risk, potentially resulting in deterioration in the credit markets, greater than expected noninterest expenses, excessive loan losses and other negative consequences, which risks could be exacerbated by potential continued negative economic developments resulting from the Covid19 pandemic, or from federal spending cuts and/or one or more federal budget-related impasses or actions; (2) interest rate risk primarily resulting from the low interest rate environment and historically low yield curve primarily due to government programs in place under the CARES Act and otherwise in response to the Covid19 pandemic, and their impact on the Bank's earnings, including from the correspondent and mortgage divisions, housing demand, the market value of the bank's loan and securities portfolios, and the market value of SouthState's equity; (3) risks related to the merger and integration of SouthState and CSFL including, among others, (i) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (ii) the risk that the integration of each party's operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate each party's businesses into the other's businesses, (iii) the amount of the costs, fees, expenses and charges related to the merger, (iv) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger, (3) risks related to the merger and integration of SouthState and Atlantic Capital including, among others, (i) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (ii) disruption to the parties' businesses as a result of the announcement and pendency of the merger, (iii) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, (iv) the risk that the integration of each party's operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate each party's businesses into the other's businesses, (v) the failure to obtain the necessary approvals by the shareholders of South State or Atlantic Capital, (vi) the amount of the costs, fees, expenses and charges related to the merger, (vii) the ability by each of SouthState and Atlantic Capital to obtain required governmental approvals of the merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction),  (viii) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger, (ix) the failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing the merger, (x) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (xi) the dilution caused by South State's issuance of additional shares of its common stock in the merger, (xii) general competitive, economic, political and market conditions, and (xiii) other factors that may affect future results of Atlantic Capital and SouthState including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; and other actions of the Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency and legislative and regulatory actions and reforms (4) risks relating to the continued impact of the Covid19 pandemic on the company, including possible impact to the company and its employees from contacting Covid19, and to efficiencies and the control environment due to the continued work from home environment and to our results of operations due to government stimulus and other interventions to blunt the impact of the pandemic; (5) the impact of increasing digitization of the banking industry and movement of customers to on-line platforms, and the possible impact on the Bank's results of operations, customer base, expenses, suppliers and operations; (6) controls and procedures risk, including the potential failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures; (7) potential deterioration in real estate values; (8) the impact of competition with other financial institutions, including pricing pressures (including those resulting from the CARES Act) and the resulting impact, including as a result of compression to net interest margin; (9) risks relating to the ability to retain our culture and attract and retain qualified people; (10) credit risks associated with an obligor's failure to meet the terms of any contract with the bank or otherwise fail to perform as agreed under the terms of any loan-related document; (11) risks related to the ability of the company to pursue its strategic plans which depend upon certain growth goals in our lines of business; (12) liquidity risk affecting the Bank's ability to meet its obligations when they come due; (13) risks associated with an anticipated increase in SouthState's investment securities portfolio, including risks associated with acquiring and holding investment securities or potentially determining that the amount of investment securities SouthState desires to acquire are not available on terms acceptable to SouthState; (14) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (15) transaction risk arising from problems with service or product delivery; (16) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (17) regulatory change risk resulting from new laws, rules, regulations, accounting principles, proscribed practices or ethical standards, including, without limitation, the possibility that regulatory agencies may require higher levels of capital above the current regulatory-mandated minimums and including the impact of the CARES Act, the Consumer Financial Protection Bureau regulations, and the possibility of changes in accounting standards, policies, principles and practices, including changes in accounting principles relating to loan loss recognition (CECL); (18) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (19) reputation risk that adversely affects earnings or capital arising from negative public opinion; (20) cybersecurity risk related to the dependence of SouthState on internal computer systems and the technology of outside service providers, as well as the potential impacts of internal or external security breaches, which may subject the company to potential business disruptions or financial losses resulting from deliberate attacks or unintentional events; (21) reputational and operational risks associated with environment, social and governance matters; (22) greater than expected noninterest expenses; (23) excessive loan losses; (24) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with the Atlantic Capital integration, and potential difficulties in maintaining relationships with key personnel; (25) the risks of fluctuations in market prices for SouthState common stock that may or may not reflect economic condition or performance of SouthState; (26) the payment of dividends on SouthState common stock, which is subject to legal and regulatory limitations as well as the discretion of the board of directors of SouthState, SouthState's performance and other factors; (27) ownership dilution risk associated with potential acquisitions in which SouthState's stock may be issued as consideration for an acquired company; (28) operational, technological, cultural, regulatory, legal, credit and other risks associated with the exploration, consummation and integration of potential future acquisition, whether involving stock or cash consideration; (29) major catastrophes such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including infectious disease outbreaks, including the ongoing Covid19 pandemic, and the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on SouthState and its customers and other constituencies; (30) terrorist activities risk that results in loss of consumer confidence and economic disruptions; (31) risks related to the proposed merger of South State and Atlantic Capital, including, among others, (i) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (ii) disruption to the parties' businesses as a result of the announcement and pendency of the merger, (iii) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, (iv) the risk that the integration of each party's operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate each party's businesses into the other's businesses, (v) the failure to obtain the necessary approvals by the shareholders of South State or Atlantic Capital, (vi) the amount of the costs, fees, expenses and charges related to the merger, (vii) the ability by each of SouthState and Atlantic Capital to obtain required governmental approvals of the merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction), (viii) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger, (ix) the failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing the merger, (x) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (xi) the dilution caused by South State's issuance of additional shares of its common stock in the merger, (xii) general competitive, economic, political and market conditions, and (xiii) other factors that may affect future results of Atlantic Capital and SouthState including changes in asset quality and credit risk, and (32) other factors that may affect future results of SouthState, as disclosed in SouthState's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by SouthState with the U.S. Securities and Exchange Commission ("SEC") and available on the SEC's website at http://www.sec.gov, any of which could cause actual results to differ materially from future results expressed, implied or otherwise anticipated by such forward-looking statements.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. SouthState does not undertake any obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

 

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