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Mergers and Acquisitions | 3 Months Ended
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Mar. 31, 2025
Mergers and Acquisitions |
Mergers and Acquisitions | ​ Note 4 — Mergers and Acquisitions Independent Bank Group, Inc. (“Independent”) On January 1, 2025, the Company acquired Independent in an all-stock merger transaction. Upon the terms and subject to the conditions set forth in the merger agreement for the Independent transaction, Independent merged with and into the Company, with the Company continuing as the surviving corporation in the merger. Immediately following the merger, Independent’s wholly owned banking subsidiary, Independent Bank merged with and into the Bank, with the Bank continuing as the surviving bank. Shareholders of Independent received 0.60 shares of the Company’s common stock for each share of Independent common stock they owned. In total, the purchase price for Independent was $2.5 billion. ​ In the Independent acquisition, the Company acquired $13.1 billion of loans, at fair value, net of $600.6 million, or 4.4%, estimated discount to the outstanding principal balance, representing 38.7% of the Company’s total loans at December 31, 2024. Of the total loans acquired, management identified $2.8 billion that had more than insignificantly deteriorated since origination and were thus determined to be PCD loans. ​ The operating results of Independent have been included in the consolidated financial statement from the acquisition date. Due to the integration of Independent's financial information into the Bank as of acquisition date, it is impractical to separately disclose the revenue and earnings of Independent. ​ During the three months ended March 31, 2025, the Company incurred approximately $66.5 million of acquisition costs related to the Independent acquisition. These acquisition costs are reported in Merger, Branch Consolidation, Severance Related and Other Expenses on the Company’s Consolidated Statements of Net Income. ​ ​ The Independent acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805. The Company recognized goodwill on this acquisition of $1.2 billion. The goodwill was calculated based on the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date, and subject to change as additional information becomes available during the measurement period. In addition to the preliminary fair value adjustments for assets acquired and liabilities assumed from Independent, the table below includes on the line adjustments representing expenses contingent upon the consummation of the acquisition incurred by Independent, as well as reclassifications to conform with the Company’s presentation and other adjustments. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | Reclassifications | ​ | Adjusted | ​ | Preliminary | ​ | Fair Value of | ​
​ | ​ | As Recorded | ​ | On The Line | ​ | and Other | ​ | Acquired | ​ | Fair Value | ​ | Net Assets Acquired at | ​
(Dollars in thousands) |  | by Independent |  | Adjustments | ​ | Adjustments |  | Balance Sheet |  | Adjustments | ​ | Date of Acquisition |
Assets | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ |  | ​
Cash and cash equivalents | ​ | $ | 1,043,293 | ​ | $ | — | ​ | $ | (2,415) | (d) | $ | 1,040,878 | ​ | $ | — | ​ | $ | 1,040,878 | ​
Investment securities | ​ | ​ | 1,644,381 | ​ | ​ | — | ​ | ​ | 2,782 | (e) | ​ | 1,647,163 | ​ | ​ | (56,711) | (i) | ​ | 1,590,452 | ​
Loans held for sale | ​ | ​ | 12,430 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 12,430 | ​ | ​ | — | ​ | ​ | 12,430 | ​
Loans held for investment, net of allowance for credit losses | ​ |  | 13,452,928 | ​ |  | — | ​ |  | 750 | (f) |  | 13,453,678 | ​ | ​ | (445,321) | (j) |  | 13,008,357 | ​
Premises and equipment, net | ​ |  | 348,071 | ​ |  | — | ​ |  | 33,133 | (g) |  | 381,204 | ​ | ​ | (65,530) | (k) |  | 315,674 | ​
Bank owned life insurance | ​ | ​ | 252,001 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 252,001 | ​ | ​ | — | ​ | ​ | 252,001 | ​
Deferred tax asset | ​ | ​ | 72,362 | ​ | ​ | 6,596 | (a) | ​ | 231 | (h) | ​ | 79,189 | ​ | ​ | 35,374 | (l) | ​ | 114,563 | ​
Bank property held for sale | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 72,000 | (m) | ​ | 72,000 | ​
Goodwill | ​ | ​ | 476,021 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 476,021 | ​ | ​ | (476,021) | (n) | ​ | — | ​
Core deposit and other intangible assets | ​ | ​ | 38,808 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 38,808 | ​ | ​ | 373,270 | (o) | ​ | 412,078 | ​
Other assets | ​ |  | 226,032 | ​ |  | (23,000) | (b) |  | (35,915) | (e, g) |  | 167,117 | ​ | ​ | (11,530) | (p) |  | 155,587 | ​
Total assets | ​ | $ | 17,566,327 | ​ | $ | (16,404) | ​ | $ | (1,434) | ​ | $ | 17,548,489 | ​ | $ | (574,469) | ​ | $ | 16,974,020 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Deposits: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Noninterest-bearing | ​ | $ | 3,241,446 | ​ | $ | — | ​ | $ | (3,276) | (d) | $ | 3,238,170 | ​ | $ | — | ​ | $ | 3,238,170 | ​
Interest-bearing | ​ |  | 11,966,362 | ​ |  | — | ​ |  | 2,459 | (d) |  | 11,968,821 | ​ | ​ | 1,722 | (q) |  | 11,970,543 | ​
Total deposits | ​ |  | 15,207,808 | ​ |  | — | ​ |  | (817) | ​ |  | 15,206,991 | ​ | ​ | 1,722 | ​ |  | 15,208,713 | ​
Other borrowings | ​ | ​ | 354,713 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 354,713 | ​ | ​ | 5,809 | (r) | ​ | 360,522 | ​
Other liabilities | ​ |  | 95,409 | ​ |  | 6,859 | (c) |  | (1,103) | (d) |  | 101,165 | ​ | ​ | (4,488) | (s) |  | 96,677 | ​
Total liabilities | ​ | ​ | 15,657,930 | ​ | ​ | 6,859 | ​ | ​ | (1,920) | ​ | ​ | 15,662,869 | ​ | ​ | 3,043 | ​ | ​ | 15,665,912 | ​
Net identifiable assets acquired over liabilities assumed | ​ | ​ | 1,908,397 | ​ | ​ | (23,263) | ​ | ​ | 486 | ​ | ​ | 1,885,620 | ​ | ​ | (577,512) | ​ | ​ | 1,308,108 | ​
Goodwill | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ | ​ | 1,164,953 | ​ |  | 1,164,953 | ​
Net assets acquired over liabilities assumed | ​ | $ | 1,908,397 | ​ | $ | (23,263) | ​ | $ | 486 | ​ | $ | 1,885,620 | ​ | $ | 587,441 | ​ | $ | 2,473,061 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consideration: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
SouthState Corporation common shares issued | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 24,858,731 | ​
Purchase price per share of the Company's common stock | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 99.48 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Company common stock issued | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 2,472,947 | ​
Cash exchanged for fractional shares | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 114 | ​
Fair value of total consideration transferred | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 2,473,061 | ​
On the Line Adjustments
| (a) | represents deferred tax assets related to the on the line adjustments which were contingent upon the consummation of the merger.
| (b) | represents acquiree investment banker fees contingent upon the consummation of the merger paid by Independent prior to the effective time of the merger.
| (c) | represents employer payroll taxes related to the acceleration of outstanding stock awards that fully vested upon the consummation of the merger.
​ Reclassification and Other Adjustments
| (d) | represents the reclassification of cash and other in-process accounts between cash and cash equivalents, deposits and other liabilities to conform with SouthState's presentation, and miscellaneous accruals.
| (e) | represents the reclassification of other investments from other assets to investment securities to conform with SouthState's presentation.
| (f) | represents a loan recovery received by Independent effective as of the acquisition date.
| (g) | represents the reclassification of right of use assets and software from other assets to premises and equipment, net to conform with SouthState's presentation.
| (h) | represents deferred tax assets related to other miscellaneous adjustments.
​ Fair Value Adjustments
| (i) | represents an adjustment of $56.7 million to record investment securities at fair value.
| (j) | represents approximately 1.6%, or $214.8 million, preliminary credit mark on the loan portfolio and 4.4% total preliminary mark, or $600.6 million, including interest rate discount, derived from a third party valuation. Also includes the reversal of Independent's ending allowance for credit losses of $133.0 million and $22.2 million of existing Independent fair value adjustments.
| (k) | represents the preliminary fair value adjustments of $65.5 million on bank premises and equipment, inclusive of bank property transferred to held for sale as of the acquisition date.
| (l) | represents net deferred tax assets related to the preliminary fair value adjustments with effective tax rate of 23.5%. This includes an adjustment from Independent's blended tax rate to SouthState's blended tax rate. The difference in tax rates relates to state income taxes.
| (m) | represents a transfer of $72.0 million of bank real estate to bank property held for sale.
| (n) | represents the reversal of Independent's existing goodwill.
| (o) | represents preliminary core deposit intangibles ("CDI") of $412.1 million, or 3.6% of core deposits, derived from a third party valuation, net of $38.8 million of existing CDI from prior transactions completed by Independent and reversed on the acquisition date.
| (p) | represents preliminary fair value adjustments on repossessed real estate of $4.2 million and write-offs of $7.3 million of prepaids and miscellaneous other assets.
| (q) | represents preliminary premium for fixed maturity time deposits of $1.7 million derived from a third party valuation.
| (r) | represents the reversal of the existing Independent discount and issuance costs on trust preferred securities and subordinated debentures of $7.6 million, and recording the preliminary net discount of $1.8 million for trust preferred securities and subordinated debentures derived from a third party valuation.
| (s) | represents the reversal of $2.9 million of the existing reserve for unfunded commitments, a preliminary fair value adjustment of $2.2 million for lease liabilities, net of adjustments of approximately $660 thousand for miscellaneous accruals.
Comparative and Pro Forma Financial Information for the Independent Acquisition Pro-forma data for the three months ended March 31, 2024 listed in the table below presents pro-forma information as if the Independent acquisition occurred at the beginning of 2024. These results combine the historical results of Independent in the Company’s Consolidated Statements of Income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the Independent acquisition taken place on January 1, 2024. ​ Merger-related costs of $66.5 million from the Independent acquisition were incurred during the first quarter of 2025. No adjustments have been made to reduce the impact of any Other Real Estate Owned (“OREO”) write downs, investment securities sold or repayment of borrowings recognized by Independent in 2024. Expenses related to systems conversions and other costs of integration are expected to be recorded during 2025 for the Independent acquisition. The Company expects to achieve further operating cost savings and other business synergies as a result of the Independent acquisition, which are not reflected in the pro forma amounts below. The total revenues presented below represent pro-forma net interest income plus pro-forma noninterest income: ​
​ | ​ | ​ | ​ | ​
​ | ​ | Pro Forma | ​
​ | ​ | Three Months Ended | ​
(Dollars in thousands) | ​ | March 31, 2024 | ​
Total revenues (net interest income plus noninterest income) |  | $ | 599,479 |
Net interest income | ​ | $ | 515,051 | ​
Net adjusted income available to the common shareholder | ​ | $ | 108,272 | ​
EPS — basic | ​ | $ | 1.07 | ​
EPS — diluted | ​ | $ | 1.07 | ​
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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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