Executive Summary

Q4 2020 was solid operationally but reported EPS declined sequentially due to a $38.8M swap termination expense and merger/branch costs, partially offset by a $31.5M CARES Act tax benefit; GAAP diluted EPS was $1.21 and adjusted diluted EPS was $1.44 .
Net interest margin compressed 8 bps q/q to 3.14% TE amid excess liquidity, lower accretion, and PPP dynamics; deposit costs fell to 0.17%, and noninterest income was $97.9M, with mortgage revenue down $22.9M q/q following an intentional pipeline slowdown for systems integration .
Balance sheet quality remained strong: NCOs were 0.01% annualized, ACL rose to 1.85% of loans (2.01% excl. PPP), and NPAs fell to 0.32% of assets; core deposits grew $826M while loans declined annualized 9.0% driven by PPP paydowns and residential runoff .
Strategic actions: paid off $700M FHLB advances, authorized a new 3.5M share buyback (~5% of shares), declared a $0.47 dividend, consolidated 20 branches, and scheduled system conversion for Q2 2021 .
Street consensus comparisons unavailable via S&P Global for Q4 (EPS and revenue); investors should focus on NIM trajectory, fee-income durability, credit normalization, and capital deployment catalysts (buyback) [GetEstimates errors].

What Went Well and What Went Wrong

What Went Well

Strong credit quality and reserve position: NCOs at 0.01% annualized; ACL 1.85% of loans (2.01% excl. PPP), NPAs down to 0.32% of assets .
Fee income resiliency: Correspondent banking revenue was $27.7M; mortgage banking remained robust despite intentional pipeline slowdown; management highlighted “double 2019 profits” in correspondent and “almost four times” profits in mortgage for 2020 on a combined basis .
Core deposit growth and lower funding costs: Core deposits up $826M (12.6% annualized); total deposit cost fell to 0.17%; overall cost of funds 0.26% .
Capital and shareholder returns: $0.47 dividend declared; 3.5M share repurchase authorization; TCE ratio improved to 8.1%, TBVPS rose to $41.16 .

Management quote: “Our diverse revenue streams continue to help offset the pressures of the historically low interest rate environment… we look forward to 2021 and our system conversion in the second quarter.” — CEO John Corbett .

What Went Wrong

Margin pressure and lower accretion: NIM down 8 bps q/q to 3.14% TE; loan yields declined and accretion fell to $12.7M from $22.4M; excess liquidity (~$4.5B average) weighed on NIM .
Mortgage revenue declined $22.9M q/q due to fair value impacts from intentionally reduced pipeline ahead of mid-January systems integration (temporary) .
One-time expenses weighed on GAAP results: swap termination expense ($38.8M pre-tax), merger/branch costs ($19.8M pre-tax) elevated NIE and reduced GAAP EPS .
Loans declined annualized 9.0% (ex-PPP down 2.7% annualized), with residential runoff significant ($203M) despite strong mortgage production shifting to secondary market .

Financial Results

Core P&L and Key Ratios (SouthState standalone/combined as disclosed)

Metric	Q2 2020	Q3 2020	Q4 2020
Total Revenue ($USD Millions, combined business basis)	$383	$385	$363
Net Interest Income ($USD Millions)	$162.6	$270.3	$265.5
Noninterest Income ($USD Millions)	$54.3	$114.8	$97.9
Diluted EPS (GAAP) ($)	($1.96)	$1.34	$1.21
Diluted EPS (Adjusted) ($)	$0.89	$1.58	$1.44
ROAA (GAAP, %)	(1.49)	1.00	0.90
ROAA (Adjusted, %)	0.68	1.18	1.08
NIM (TE, %)	3.24	3.22	3.14
Adjusted Efficiency Ratio (%)	61.91	55.78	60.19

Noninterest Income Composition

Category ($USD Millions)	Q2 2020	Q3 2020	Q4 2020
Mortgage Banking Income	$18.371	$48.022	$25.162
Correspondent Banking & Capital Markets Income	$10.067	$26.432	$27.751
Fees on Deposit Accounts	$16.679	$24.346	$25.153
Bank Owned Life Insurance Income	$1.381	$4.127	$3.341
Other	$0.711	$4.444	$8.923
Total Noninterest Income	$54.347	$114.790	$97.871

Net Interest Metrics

Metric	Q2 2020	Q3 2020	Q4 2020
NIM (TE, %)	3.24	3.22	3.14
Loan Yield (Total Loans, %)	4.25	4.35	4.27
Total Deposit Cost (%)	0.29	0.20	0.17
Overall Cost of Funds (%)	0.37	0.31	0.26
Accretion on Acquired Loans ($USD Millions)	$7.416	$22.445	$12.686

Balance Sheet and Credit

Metric	Q2 2020	Q3 2020	Q4 2020
Total Loans ($USD Millions)	$25,499.147	$25,237.815	$24,664.134
PPP Loans ($USD Millions)	$2,336.333	$2,351.721	$1,933.462
Total Deposits ($USD Millions)	$29,957.285	$29,969.954	$30,693.881
Core Deposits excl. CDs ($USD Millions)	$25,808.585	$26,119.176	$26,945.276
ACL / Loans (%)	1.70	1.74	1.85
ACL / Loans excl. PPP (%)	N/A	1.92	2.01
Net Charge-offs ($USD Thousands, annualized %)	$101; 0.00%	$594; 0.01%	$816; 0.01%
NPAs / Total Assets (%)	0.39	0.33	0.32

Segment/KPIs

KPI	Q2 2020	Q3 2020	Q4 2020
PPNR ($USD Millions)	$157.061	$169.898	$143.664
TBVPS ($)	$38.33	$39.83	$41.16
TCE Ratio (%)	7.56	7.83	8.10

Vs Estimates

Metric	Q2 2020	Q3 2020	Q4 2020
EPS vs S&P Global Consensus	Unavailable	Unavailable	Unavailable
Revenue vs S&P Global Consensus	Unavailable	Unavailable	Unavailable

Consensus estimates were unavailable via S&P Global for these periods at time of analysis.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Income trend	FY 2021	Not previously quantified	Low-to-mid single-digit decline if rates/yield curve remain similar; better if curve steepens	New qualitative guidance
PPP Round 2 Volume	Q1–Q2 2021	N/A	Applications ~5,200 for ~$600M after ~8–9 days; management expects ~~40–50% of Round 1 (~~$1.0–$1.2B)	New
PPP Forgiveness (Round 1)	Q1 2021	N/A	~~similar to Q4 (~~$400M), heavier in Q2–Q3	New timing detail
System Conversion	Q2 2021	Scheduled	Reaffirmed (May/Q2 timing)	Maintained
Dividend	Q1 2021	$0.47	$0.47 declared payable Feb 19, 2021	Maintained
Share Repurchase	2-year authorization	Prior plan replaced	New 3.5M shares (~5%); 2-year horizon	Raised optionality

Earnings Call Themes & Trends

Topic	Q2 2020 (Q-2)	Q3 2020 (Q-1)	Q4 2020 (Current)	Trend
Margin & Liquidity	Excess liquidity and PPP muted NIM; TE NIM 3.24%	TE NIM 3.22%; liquidity ~$4.4B avg; sensitivity to investment redeploy	TE NIM 3.14%; accretion down; deposit costs lower; NIM ex accretion/PPP noted	Gradual compression; management cautious on redeployment
Fee Income (Mortgage/Correspondent)	Record mortgage and strong correspondent; combined noninterest income $108M	Mortgage production $1.57B; correspondent $26M; Duncan Williams acquisition announced	Mortgage down q/q due to pipeline; correspondent $27.7M; mortgage still strong post-integration	Durable, with near-term mortgage normalization
Credit/Reserves	CECL “double count” at merger; strong loss absorption (2.66%)	Reserves built; criticized/classified migrations; hotel exposures managed; NPAs 0.33%	Deferrals ~1% of loans; ACL ↑ to 1.85%; NPAs down to 0.32%; NCOs ~0.01%	Stable to improving metrics
PPP	~$2.4B originated; forgiveness timing uncertain	Deposit impact visible; forgiveness beginning; still excess liquidity	Round 2 portal opened; expected ~$1.0–$1.2B; forgiveness cadence outlined	Ongoing operational focus
Digital/Branch Strategy	Digital investment; branch rationalization underway post-merger	20 branches to be consolidated; mobile/web rollout; recruiting middle market bankers	Consolidated 20 branches; 4 more in Q1; new mobile app completed integration	Execution progressing
Capital/Buyback	Sub-debt raised; TCE mid-7%	TCE 7.83%; buyback optionality discussed for 2021	TCE 8.10%; 3.5M share buyback authorized	Optionality increased

Management Commentary

CEO John Corbett: “Our diverse revenue streams continue to help offset the pressures of the historically low interest rate environment… and our longstanding strategic focus on soundness… continues to help us report good credit quality metrics.”
CFO Will Matthews: “Our net interest margin was 3.14%… accretion was $12.7M… we recognized $16.6M in deferred PPP fees in Q4… NIM excluding accretion was 2.99%… NIM excluding accretion and total PPP declined 4 bps to 2.92%.”
CEO (on credit reserves): “Where we are with the reserve is due to national factors… this bank has had three quarters in a row with only one basis point of charge-off… every day, we feel better.”
CEO (on buyback): “Reauthorization… gives us 3.5M shares… we have been active in the past, and now, we have that flexibility going forward.”

Q&A Highlights

Credit stance: Reserve weighting included Moody’s baseline and downside scenario (change from baseline-only in Q3); release possible as picture clarifies; franchise credit metrics strong .
NIM outlook: If rates stay similar and loan growth low-to-mid single digits, NII expected to decline low-to-mid single digits in 2021; fee income offsets in low-rate environments; deposit base (54% checking) supports faster margin expansion if curve steepens .
Mortgage dynamics: Pipeline intentionally lowered ahead of integration; cash margins ~4.5% in Q3, ~4.5% range referenced; post-conversion activity robust; purchase-heavy mix (~two-thirds) offers durability .
PPP cadence: Round 2 applications ~~$600M early; expected ~~40–50% of Round 1 (~~$1.0–$1.2B); forgiveness Q1 similar to Q4 (~~$400M) and heavier in Q2–Q3 .
M&A and recruiting: Opportunistic post-conversion; middle market banker recruitment strong across SE markets .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q4 2020 (and prior quarters used here) were unavailable at the time of query; therefore, beat/miss vs Street cannot be assessed. Investors should monitor updated consensus as margin, fee income normalization, and PPP timing drive revisions [GetEstimates errors].

Where estimates may need to adjust:

Lower NII trajectory given margin commentary; partial offsets from fee income businesses and securities redeployment; PPP fee recognition cadence through mid-2021 .
Credit normalization likely supportive of lower provision assumptions given sustained low NCOs and declining NPAs .

Key Takeaways for Investors

Near-term: Expect continued NIM pressure from excess liquidity and lower accretion, partially offset by lower funding costs and durable fee income; watch mortgage normalization post-integration and securities deployment pace .
Credit: High-quality metrics (NCOs ~0.01%) and robust ACL (2.01% excl. PPP) reduce tail-risk; reserve methodology remains conservative with downside scenario weighting .
Capital returns: Buyback authorization (3.5M shares) and steady dividend provide catalysts; TCE ratio rising enhances optionality .
PPP dynamics: Round 2 volumes (~$1.0–$1.2B) and forgiveness timing (Q1–Q3) will influence fee recognition and liquidity run-off; monitor SBA processing cadence .
Strategic execution: Q2 2021 system conversion, branch optimization, and digital adoption underpin structural efficiency improvements; recruiting bolsters middle market growth .
Medium-term thesis: If yield curve steepens, margin expansion and loan growth in high-growth SE markets could re-accelerate ROE; in a prolonged low-rate regime, fee businesses and credit stability support earnings resilience .

Citations: .

SouthState Corp (SSB)·Q4 2020 Earnings Summary