SouthState Bank Corp Q1 FY2025 earnings call

• Three strategic capital moves (acquisition closing, sale leaseback, securities restructure) led to a materially higher net interest margin and improved earnings power. - Balance sheet growth slowed but pipelines have grown considerably. - Asset quality remains fine with low credit costs. - Texas and Colorado teams are performing well and will drive future performance. - The quarter had moving parts with acquisition, sale leaseback, and securities portfolio restructuring, and an added slide to assess operating performance vs. impact of these items.

The quarter had a net interest margin of 3.85%, with tax equivalent NIM improving 37 basis points from the fourth quarter. Revenue was $630 million, with noninterest income at $86 million. Loan yield improved to 6.25%. Credit costs remained low with only four basis points in net charge-offs and an $8 million provision. Asset quality was fine with nonaccruals and substandard loans stable. PPNR per share grew by 25% in the last year.

• NIM guidance: Expect NIM to be pretty steady between 3.80% and 3.90% for the rest of the year, drifting a little higher into 2026 as assets reprice. - Expense guidance: Q2 and Q3 NIE in $350 million to $360 million range, Q4 in $345 million to $350 million range. - Loan growth: Expect growth to resume with pipelines up and loan growth seen in April. - Noninterest income: Guidance was between fifty and fifty-five basis points of assets, and it was close to that with some segments having fluctuations but overall flat.

• Impact of tariffs on growth trajectory for the rest of the year. - CRE exposure, particularly industrial warehouse near ports. - Uncertainty around economic conditions and its effect on loan volume and capital markets.

Q: What drove the accretion income so high this quarter?

A: Early payoff on a couple of acquired loans increased loan yields by six basis points, and there was traditional accretion. The accretable yield has components, with about just under 20% representing non-PCD credit mark.

Q: How should we think about the core margin moving forward?

A: The core margin is the reported margin from here on, similar to how the securities book was handled where selling at a higher coupon means reported margin is core.

Q: On expenses, how is the guide for the rest of the year?

A: Q2 and Q3 NIE in $350 million to $360 million range, Q4 in $345 million to $350 million range, with factors like merit increases and cost saves factored in.

Q: Is there sensitivity to a weakening Moody's baseline in credit CECL calculation?

A: We hold scenario weightings constant and added a Q factor for tariff-related business conditions, with provision based on forward-looking loss drivers including unemployment, commercial real estate price index, etc.

Q: Thoughts on deposit attrition within the IBTX depositor base?

A: Not expecting significant attrition as frontline bankers are kept, and there are plans to have SouthState Corporation people help during transition, with practice mock conversions done.