SouthState (SSB) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $132.4 million, up 7.2% year-over-year and 15% sequentially; diluted EPS rose to $1.73 (GAAP) and $1.79 (adjusted).

• Loan growth was 7% annualized for the quarter, with total loans increasing $567 million; deposits declined $80 million (1% annualized) and remain a challenge.

• Announced acquisition/merger with Independent Bank Group, expected to be 27% accretive to EPS, with integration on track and closing targeted for Q1 2025.

• Maintained strong asset quality and capital ratios, with efficiency improvements and robust credit metrics.

• Cybersecurity incident in early 2024 resulted in $7.9 million in one-time costs and ongoing litigation.

Financial highlights

• Total revenue reached $425 million, with net interest income at $350 million and non-interest income at $75 million.

• Net interest margin (tax equivalent) was 3.44%, up from 3.41% in Q1 2024; loan yields increased to 5.82%, deposit costs rose to 1.80%.

• Non-interest expense, excluding non-recurring items, was $242 million; efficiency ratio improved to 57% (adjusted 56%).

• Provision expense was $4 million, matching net charge-offs; allowance for credit losses plus reserve for unfunded commitments at 1.57% of loans.

• Book value per share was $74.16; tangible book value per share $47.90.

Outlook and guidance

• Loan growth guidance remains mid-single digits, with pipelines stable but some tailwinds from construction loan funding expected to abate.

• Non-interest expense expected to be around $250 million in Q3 and Q4 2024 due to merit increases and project expenses.

• Net interest margin guidance for 2024 is 3.40–3.50%; expected to be flat in Q3, with potential 3–5 basis point improvement per rate cut.

• By Q4 2025, pro forma with IBTX, loans projected at $50 billion, deposits at $55 billion, and NIM in the 3.75–3.85% range.

• 2025 EPS accretion projected at 27.3% (GAAP), 20.4% (excluding rate marks/CDI), and 16.5% (excluding rates/CDI/CECL).