SouthState (SSB) Q3 2024 earnings summary

Executive summary

• Reported GAAP net income of $143.2 million and diluted EPS of $1.86 for Q3 2024, with adjusted net income of $145.7 million and adjusted EPS of $1.90; net income rose 15.3% year-over-year.

• Achieved broad-based growth in loans, deposits, revenue, and EPS, maintaining stable asset quality and controlled expenses despite hurricane-related disruptions.

• Tangible book value per share increased 7% sequentially to $51.26; book value per share was $77.42.

• The merger with Independent Bank Group (IBTX) is progressing as planned, with shareholder approval received and regulatory approval pending; expected to close in Q1 2025 and add $18.6 billion in assets.

• Business continuity was maintained during widespread power outages, and employee support was provided through the Sunshine Fund.

Financial highlights

• Net interest income for Q3 2024 was $351.5 million; core net interest income (excluding loan accretion) was $349 million; net interest margin (tax equivalent) was 3.40%, with deposit cost at 1.90%.

• Loans grew by $314 million (4% annualized), led by single-family residential and C&I segments; total deposits grew by $540 million (6% annualized).

• Noninterest income was $75 million, representing 0.65% of average assets, with mixed performance across business lines.

• Provision for credit losses saw a net release of $7 million, driven by strong asset quality and economic data; net charge-offs remained low at $6 million (7 bps annualized).

• Efficiency ratio was 57%, with adjusted efficiency ratio at 56%.

Outlook and guidance

• NIM expected to expand by 4-5 bps in Q4, with further improvement anticipated in 2025, especially post-merger; for every Fed rate cut, NIM is projected to improve by 3-5 bps.

• The IBTX merger is expected to deliver 16.5–27.3% EPS accretion in 2025, with strong capital ratios and efficiency improvements; pro forma CET1 ratio projected at 10.4%.

• Non-interest income to average assets expected at the high end of 50-55 bps post-merger; NIE for Q4 forecasted at $245-$250 million.

• Mid-single-digit loan growth guidance maintained for 2024, with potential acceleration as the yield curve normalizes.

• Management is monitoring the impact of regulatory changes, including OCC merger policy and CFPB open banking rule.