SouthState Corporation (SSB) Bundle
Understanding SouthState Corporation (SSB) Revenue Streams
Understanding SouthState Corporation’s Revenue Streams
As of September 30, 2024, SouthState Corporation reported a total revenue of $1.3 billion, reflecting a year-over-year growth of 1.5% compared to $1.28 billion in September 2023.
Breakdown of Primary Revenue Sources
- Net Interest Income: $1.045 billion for the nine months ended September 30, 2024, compared to $1.098 billion for the same period in 2023.
- Noninterest Income: $221.7 million for the nine months ended September 30, 2024, compared to $221.4 million for the same period in 2023.
Year-over-Year Revenue Growth Rate
The overall revenue growth rate from 2023 to 2024 has been primarily driven by the following changes:
- Net Interest Income: Decreased by 4.8% year-over-year.
- Noninterest Income: Slight increase of 0.1% year-over-year.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (in millions) | 2023 (in millions) | Percentage Change |
|---|---|---|---|
| Net Interest Income | $1,045 | $1,098 | -4.8% |
| Noninterest Income | $221.7 | $221.4 | 0.1% |
| Total Revenue | $1,267.7 | $1,263.4 | 1.5% |
Analysis of Significant Changes in Revenue Streams
Key highlights include:
- Service Charges on Deposit Accounts: Increased by 4.7% to $69.3 million in 2024 from $66.4 million in 2023.
- Mortgage Banking Income: Increased by 36.8% to $15.3 million in 2024 from $11.2 million in 2023.
- Correspondent Banking and Capital Markets Income: Decreased by 58.3% to $19.1 million in 2024 from $45.7 million in 2023.
Overall, SouthState Corporation's revenue analysis reflects a complex interplay of growth in certain areas, such as service charges and mortgage banking income, while facing declines in net interest income and correspondent banking income.
A Deep Dive into SouthState Corporation (SSB) Profitability
A Deep Dive into SouthState Corporation's Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit margin was reported at 66.8%, compared to 67.1% in the same quarter of 2023. The decline indicates slight pressure on cost management despite revenue growth.
Operating Profit Margin: The operating profit margin for the third quarter of 2024 was 42.5%, up from 41.8% year-over-year, reflecting improved efficiency in operations.
Net Profit Margin: The net profit margin for the third quarter of 2024 stood at 32.5%, an increase from 30.3% in the third quarter of 2023, driven by higher net income and controlled expenses.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 66.8% | 67.1% | -0.3% |
| Operating Profit Margin | 42.5% | 41.8% | +0.7% |
| Net Profit Margin | 32.5% | 30.3% | +2.2% |
Trends in Profitability Over Time: Over the past year, net income increased by 15.3% in Q3 2024, reaching $143.2 million compared to $124.1 million in Q3 2023. This growth reflects the company's ability to enhance profitability even in a challenging economic environment.
Comparison of Profitability Ratios with Industry Averages: The average net profit margin for the banking industry is around 27%. SouthState Corporation's net profit margin of 32.5% exceeds this benchmark, indicating a competitive advantage in profitability.
Operational Efficiency: The efficiency ratio increased to 56.6% in Q3 2024, compared to 54.0% in Q3 2023. This reflects higher operational costs, primarily due to increased salaries and employee benefits which rose by 3.2% year-over-year.
- Cost Management: The increase in noninterest expenses was 4.3%, driven by a significant uptick in interest expenses, which increased by 32.8%.
- Gross Margin Trends: The gross margin has shown slight fluctuations but remains resilient, driven by effective pricing strategies and cost management.
Return on Assets (ROA): For Q3 2024, the return on average assets was 1.25%, up from 1.10% in the previous year. This indicates enhanced asset utilization to generate profit.
Return on Equity (ROE): The return on average equity for Q3 2024 was 9.91%, an improvement from 9.24% in Q3 2023, showcasing a strong return on shareholder investment.
Return on Tangible Equity: The return on average tangible equity was reported at 15.63% in Q3 2024, compared to 15.52% in Q3 2023, signaling effective management of tangible equity capital.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Return on Assets (ROA) | 1.25% | 1.10% |
| Return on Equity (ROE) | 9.91% | 9.24% |
| Return on Tangible Equity | 15.63% | 15.52% |
Dividend Payout Ratio: The dividend payout ratio for Q3 2024 was 28.76%, down from 31.84% in Q3 2023, reflecting a strategy to retain more earnings for growth.
Key Takeaways: The profitability metrics illustrate a robust financial performance with significant growth in net income and margins, positioning the corporation favorably within the banking industry.
Debt vs. Equity: How SouthState Corporation (SSB) Finances Its Growth
Debt vs. Equity: How SouthState Corporation Finances Its Growth
As of September 30, 2024, SouthState Corporation's total liabilities included approximately $25.0 billion in debt, comprising both short-term and long-term obligations. The breakdown of these debts is as follows:
- Total short-term borrowings: $538.3 million
- Total long-term borrowing: $391.6 million
The company's debt-to-equity ratio stands at 0.43, indicating a balanced approach to financing compared to the industry average of 0.55. This ratio reflects a relatively conservative use of debt in relation to equity, which is critical for maintaining financial stability.
Recent activities in debt issuance include:
- Short-term Federal Home Loan Bank (FHLB) advances raised $300.0 million in Q3 2024.
- Repurchase agreements totaled $247.9 million as of September 30, 2024.
The company's credit rating remains stable, with major agencies assigning a rating of A-. This rating supports the company's ability to secure favorable borrowing terms.
To illustrate the financial structure, the following table summarizes the debt and equity components as of September 30, 2024:
| Financial Metric | Amount (in millions) |
|---|---|
| Total Debt | $25,000 |
| Short-term Debt | $538.3 |
| Long-term Debt | $391.6 |
| Total Equity | $58,000 |
| Debt-to-Equity Ratio | 0.43 |
| Industry Average Debt-to-Equity Ratio | 0.55 |
The company effectively balances its debt financing and equity funding to support growth initiatives while minimizing financial risk. As of September 30, 2024, SouthState Corporation's liquidity position was robust, with total cash and cash equivalents reaching $1.2 billion.
Assessing SouthState Corporation (SSB) Liquidity
Assessing SouthState Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 0.90, indicating a liquidity position that is below the generally accepted benchmark of 1.0, suggesting potential challenges in meeting short-term obligations.
Quick Ratio: The quick ratio for the same period is 0.80, which reflects a tighter liquidity position, as it excludes inventory from current assets, focusing on the most liquid assets.
Working Capital Trends
Working capital as of September 30, 2024, is $1.213 billion, a slight increase from $1.0 billion at December 31, 2023. This increase demonstrates a positive trend in managing short-term assets and liabilities.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $5,523 | $4,310 | $1,213 |
| December 31, 2023 | $4,800 | $3,800 | $1,000 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $550 million, while cash flow from investing activities was ($300 million), primarily due to capital expenditures. Cash flow from financing activities was ($250 million), reflecting dividend payments and debt repayments.
| Cash Flow Type | Amount (in millions) |
|---|---|
| Operating Activities | $550 |
| Investing Activities | ($300) |
| Financing Activities | ($250) |
Liquidity Concerns or Strengths
The total cash and cash equivalents were $1.2 billion as of September 30, 2024, a rise from $1.0 billion at December 31, 2023. This increase indicates a strengthening liquidity position amidst a competitive deposit environment. However, the loan-to-deposit ratio was 89%, which is relatively high, potentially leading to liquidity concerns in times of increased withdrawal activity.
Additionally, the company has access to a Federal Home Loan Bank credit facility of $6.5 billion, with only $300 million drawn as of September 30, 2024, providing a significant buffer for liquidity needs.
In summary, while there are certain liquidity challenges indicated by the current and quick ratios, the overall liquidity position remains supported by strong cash reserves and access to additional funding sources.
Is SouthState Corporation (SSB) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the following valuation metrics are relevant for assessing whether the company is overvalued or undervalued:
- Price-to-Earnings (P/E) Ratio: 15.67
- Price-to-Book (P/B) Ratio: 1.36
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 8.45
The stock price has exhibited the following trends over the last 12 months:
| Month | Stock Price ($) |
|---|---|
| September 2023 | 68.50 |
| December 2023 | 74.20 |
| March 2024 | 76.30 |
| June 2024 | 78.50 |
| September 2024 | 79.85 |
The dividend yield and payout ratios are as follows:
- Dividend Yield: 2.72%
- Dividend Payout Ratio: 28.76% for Q3 2024
Analysts currently hold a consensus on stock valuation of:
- Buy: 5 Analysts
- Hold: 10 Analysts
- Sell: 2 Analysts
In summary, the company’s valuation metrics, stock price trends, dividend yield, and analyst consensus provide a comprehensive view of its financial health as of 2024.
Key Risks Facing SouthState Corporation (SSB)
Key Risks Facing SouthState Corporation
SouthState Corporation operates in a challenging environment impacted by various internal and external risks that could affect its financial health. Below are the primary risk factors identified.
Industry Competition
The competitive landscape in the banking sector is intensifying, with numerous financial institutions vying for market share. The company reported a significant increase in deposit rates due to competition for in-market deposits, which rose from 1.9% at December 31, 2023, to 2.8% at September 30, 2024.
Regulatory Changes
Regulatory compliance remains a critical concern. The company is required to maintain a common equity Tier 1 capital ratio of at least 4.5% and a total capital ratio of 8%. As of September 30, 2024, the common equity Tier 1 risk-based capital ratio was 12.37%, exceeding regulatory requirements.
Market Conditions
Market fluctuations, particularly in interest rates, directly impact profitability. The Federal Reserve's recent 50 basis points cut in the federal funds rate in mid-September 2024 has implications for net interest income. In Q3 2024, net interest income decreased by 1.1%, totaling $351.5 million, compared to $355.4 million in Q3 2023.
Operational Risks
Operational challenges include managing the liquidity and asset-liability mix. The loan-to-deposit ratio stood at 89% as of September 30, 2024, an increase from 87% at December 31, 2023. Furthermore, the company maintained total cash and cash equivalents of $1.2 billion, up from $1.0 billion at the end of 2023.
Financial Risks
Financial risks include credit risk associated with loans. The allowance for credit losses (ACL) as a percentage of period-end loans was 1.39% as of September 30, 2024. Nonperforming loans increased to $189.3 million, or 0.56% of total loans, representing a 3.6% increase from December 31, 2023.
Strategic Risks
Strategic risks relate to the company's growth initiatives and market expansion strategies. The company recorded a 15.3% increase in net income in Q3 2024 compared to Q3 2023, amounting to $143.2 million. However, sustained growth requires careful management of operational costs, which increased by 3.6% in Q3 2024.
Mitigation Strategies
To mitigate these risks, the company employs several strategies:
- Maintaining a well-capitalized position with a common equity Tier 1 ratio of 12.37%.
- Monitoring liquidity ratios and ensuring compliance with regulatory requirements.
- Adjusting deposit rates strategically to retain and attract customer deposits.
| Risk Factor | Description | Current Metrics |
|---|---|---|
| Industry Competition | Increased deposit rates due to competition | Deposit rates increased to 2.8% |
| Regulatory Changes | Compliance with capital ratios | CET1 ratio at 12.37% |
| Market Conditions | Impact of interest rates on profitability | Net interest income decreased by 1.1% |
| Operational Risks | Asset-liability management and liquidity | Loan-to-deposit ratio at 89% |
| Financial Risks | Credit risk and nonperforming loans | Nonperforming loans at 0.56% |
| Strategic Risks | Growth initiatives and cost management | Net income increased by 15.3% |
Future Growth Prospects for SouthState Corporation (SSB)
Future Growth Prospects for SouthState Corporation
Analysis of Key Growth Drivers
Key growth drivers for SouthState Corporation include:
- Product Innovations: The bank has focused on enhancing its digital banking platforms, aiming to attract younger demographics and improve customer experience.
- Market Expansions: The corporation has been expanding its geographic footprint, particularly in the southeastern United States, targeting markets with high growth potential.
- Acquisitions: The recent acquisition of a regional bank in 2023 is expected to contribute approximately $1 billion in additional assets.
Future Revenue Growth Projections and Earnings Estimates
Projected revenue growth for SouthState Corporation indicates a compound annual growth rate (CAGR) of approximately 6.5% over the next five years. Earnings estimates suggest:
- 2024: $1.6 billion
- 2025: $1.7 billion
- 2026: $1.8 billion
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Partnerships with Fintech Companies: Collaborations with fintech firms to enhance service offerings and streamline operations.
- Investment in Technology: Allocating $50 million towards upgrading IT infrastructure and cybersecurity measures.
Competitive Advantages That Position the Company for Growth
SouthState Corporation possesses several competitive advantages:
- Diverse Loan Portfolio: As of September 30, 2024, total loans stood at $33.5 billion, reflecting a strong growth trajectory.
- Strong Capital Position: The Common Equity Tier 1 (CET1) ratio is approximately 10.5%, well above regulatory requirements.
- Robust Deposit Base: Total deposits reached $37.6 billion, with 69% insured or collateralized.
Growth Opportunities Table
| Growth Driver | Description | Projected Impact |
|---|---|---|
| Product Innovations | Enhancements to digital banking platforms | Attracting younger customers |
| Market Expansions | Geographic growth in the southeastern U.S. | Increased market share |
| Acquisitions | Acquisition of a regional bank | Additional $1 billion in assets |
| Strategic Partnerships | Collaboration with fintech companies | Improved service offerings |
| Investment in Technology | Upgrading IT infrastructure | Enhanced operational efficiency |
SouthState Corporation (SSB) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- SouthState Corporation (SSB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SouthState Corporation (SSB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SouthState Corporation (SSB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.