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Mergers and Acquisitions | 9 Months Ended
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Sep. 30, 2023
Mergers and Acquisitions |
Mergers and Acquisitions | Note 4 — Mergers and Acquisitions ​ Atlantic Capital Bancshares, Inc. (“Atlantic Capital” or “ACBI”) ​ On March 1, 2022, the Company acquired all of the outstanding common stock of Atlantic Capital in a stock transaction. Upon the terms and subject to the conditions set forth therein, Atlantic Capital merged with and into the Company, with the Company continuing as the surviving corporation in the merger. Immediately following the merger, Atlantic Capital’s wholly owned banking subsidiary, Atlantic Capital Bank, N.A. (“ACB”) merged with and into the Bank, which continues as the surviving bank. Shareholders of Atlantic Capital received 0.36 shares of the Company’s common stock for each share of Atlantic Capital common stock they owned. In total, the purchase price for Atlantic Capital was $657.8 million. ​ In the acquisition, the Company acquired $2.4 billion of loans, including PPP loans, at fair value, net of $54.3 million, or 2.24%, estimated discount to the outstanding principal balance, representing 10.0% of the Company’s total loans at December 31, 2021. Of the total loans acquired, management identified $137.9 million that had more than insignificantly deteriorated since origination and were thus determined to be PCD loans. ​ During the nine months ended September 30, 2023, the Company incurred approximately $2.4 million of acquisition costs related to this transaction. The Company did not incur acquisition cost related to this transaction during the three months ended September 30, 2023. During the three and nine months ended September 30, 2022, the Company incurred approximately $7.1 million and $15.0 million, respectively, of acquisition costs related to this transaction. These acquisition costs are reported in Merger and Branch Consolidation Related Expenses on the Company’s Consolidated Statements of Net Income. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805. The Company recognized goodwill on this acquisition of $342.0 million. The goodwill was calculated based on the fair values of the assets acquired and liabilities assumed as of the acquisition date. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Initial | ​ | Subsequent | ​ | ​ | ​
​ | ​ | As Recorded | ​ | Fair Value | ​ | Fair Value | ​ | As Recorded by | ​
(Dollars in thousands) |  | by Atlantic Capital |  | Adjustments |  | Adjustments | ​ | the Company |
Assets | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ |  | ​
Cash and cash equivalents | ​ | $ | 250,134 | ​ | $ | 24 | (a) | $ | — | ​ | $ | 250,158 | ​
Investment securities | ​ | ​ | 717,332 | ​ | ​ | (13,622) | (b) | ​ | — | ​ | ​ | 703,710 | ​
Loans, net of allowance and mark | ​ |  | 2,394,256 | ​ |  | (18,964) | (c) | ​ | (5,614) | (c) |  | 2,369,678 | ​
Premises and equipment | ​ |  | 16,892 | ​ |  | 2,608 | (d) | ​ | — | ​ |  | 19,500 | ​
Intangible assets | ​ | ​ | 22,572 | ​ | ​ | (1,781) | (e) | ​ | — | ​ | ​ | 20,791 | ​
Bank owned life insurance | ​ | ​ | 74,613 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 74,613 | ​
Deferred tax asset | ​ | ​ | 30,231 | ​ | ​ | 2,273 | (f) | ​ | (1,025) | (f) | ​ | 31,479 | ​
Other assets | ​ |  | 45,274 | ​ |  | (1,277) | (g) | ​ | 7,557 | (g) |  | 51,554 | ​
Total assets | ​ | $ | 3,551,304 | ​ | $ | (30,739) | ​ | $ | 918 | ​ | $ | 3,521,483 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Deposits: | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Noninterest-bearing | ​ | $ | 1,411,671 | ​ | $ | — | ​ | $ | — | ​ | $ | 1,411,671 | ​
Interest-bearing | ​ |  | 1,616,970 | ​ |  | — | ​ | ​ | — | ​ |  | 1,616,970 | ​
Total deposits | ​ |  | 3,028,641 | ​ |  | — | ​ | ​ | — | ​ |  | 3,028,641 | ​
Federal funds purchased and securities sold under agreements to repurchase | ​ | ​ | 50,000 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 50,000 | ​
Other borrowings | ​ | ​ | 74,131 | ​ | ​ | 4,286 | (h) | ​ | — | ​ | ​ | 78,417 | ​
Other liabilities | ​ |  | 50,711 | ​ |  | (2,075) | (i) | ​ | — | ​ |  | 48,636 | ​
Total liabilities | ​ | ​ | 3,203,483 | ​ | ​ | 2,211 | ​ | ​ | — | ​ | ​ | 3,205,694 | ​
Net identifiable assets acquired over (under) liabilities assumed | ​ | ​ | 347,821 | ​ | ​ | (32,950) | ​ | ​ | 918 | ​ | ​ | 315,789 | ​
Goodwill | ​ |  | — | ​ |  | 342,939 | ​ | ​ | (918) | ​ |  | 342,021 | ​
Net assets acquired over liabilities assumed | ​ | $ | 347,821 | ​ | $ | 309,989 | ​ | $ | — | ​ | $ | 657,810 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consideration: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
SouthState Corporation common shares issued | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 7,330,803 | ​
Purchase price per share of the Company's common stock | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 90.00 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Company common stock issued ($659,772) and cash exchanged for fractional shares ($19) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 659,791 | ​
Stock option conversion | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 1,135 | ​
Restricted stock unit conversion | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 2,870 | ​
Restricted stock awards conversion (unvested awards) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | (5,986) | ​
Fair value of total consideration transferred | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 657,810 | ​
Explanation of fair value adjustments (a)— Represents an adjustment to record time deposits with financial institutions at fair value (premium). (b)— Represents the reversal of Atlantic Capital's existing fair value adjustments of $17.2 million and the adjustment to record securities at fair value (discount) totaling $30.9 million (includes reclassification of all securities held as HTM to AFS totaling $237.6 million). (c)— Represents approximately 1.40%, or $34.0 million, net credit discount of the loan portfolio and 2.24% total net discount, or $54.3 million, including non-credit discount, based on a third-party valuation. Also, includes a reversal of Atlantic Capital's ending ACL of $22.1 million and $7.6 million of existing Atlantic Capital’s deferred fees and costs. (d)— Represents the preliminary fair value adjustments of $2.6 million on fixed assets and leased assets. (e)— Represents approximately $17.5 million, or 0.63%, of CDI amount and $3.2 million for SBA servicing asset based on a third-party valuation. Atlantic Capital’s pre-merger goodwill and servicing asset of $19.9 million and $2.6 million, respectively, were written-off. (f)— Represents deferred tax asset related to fair value adjustments with marginal tax rate of 23.9%, which includes an adjustment from Atlantic Capital’s effective tax rate to the Company’s effective tax rate. The difference in effective tax rates relates to state income taxes. (g)— Represents the fair value adjustment (decrease) for low-income housing investments of $1.1 million, write-off of prepaid assets of $233,000, adjustments to receivables of $154,000 and fair value adjustment for Small Business Investment Company (“SBIC”) investments of $7.4 million. (h)— Represents the reversal of the existing Atlantic Capital’s issuance costs on subordinated debt of $0.9 million and recording the fair value adjustment (premium) of $3.4 million, based on a third-party valuation. (i)— Represents the reversal of $2.8 million of unfunded commitment liability at purchase date and the fair value adjustment to increase lease liabilities associated with rental facilities totaling $1.4 million. Also includes the reversal of uncertain tax liability of $0.7 million.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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