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COLUMBIA, S.C.–(BUSINESS WIRE)–South State Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and twelve-month period ended December 31, 2019.

The Company reported consolidated net income of $1.45 per diluted common share for the three months ended December 31, 2019, compared to $1.35 per diluted common share for the three months ended December 31, 2018. For the year ended December 31, 2019, net income totaled $5.36 per diluted common share, compared to $4.86 per diluted common share, an increase of 10.3%.

Adjusted net income (non-GAAP) totaled $1.48 per diluted share for the three months ended December 31, 2019, compared to $1.35 per diluted share one year ago. For the year ended December 31, 2019, adjusted net income (non-GAAP) totaled $5.63 per diluted share, compared to $5.50 per diluted share, an increase of 2.4%.

Soundness

Balance sheet strength and optionality remains a core commitment. Asset quality was exceptional with net charge-offs on non-acquired loans at 0.06% in the fourth quarter of 2019 and 0.04% for fiscal year 2019. Capital levels were strong and tangible book value increased by 7.8% in 2019. We preserved the integrity of our balance sheet while repurchasing over 2.1 million shares, or ~6%, of the company’s outstanding common stock during 2019.

Profitability

The company enacted several initiatives in 2019 to improve our operating leverage including closing thirteen branches, termination of the pension plan, and began the process of implementing a new commercial loan system. Expenses decreased in FY19 by $16.3 million (GAAP) and $0.6 million (adjusted – non-GAAP), a decrease of 3.9% and 0.2%, respectively. We remain focused on controlling expense growth and recently announced additional branch optimization plans for 2020.

Loan / Deposit Growth

During 2019, we invested in expansion of our branch presence in Raleigh, NC, and opened a new market headquarters in Richmond, VA. We continue to recruit talent from large institutions and benefit from our deep and dense footprint in vibrant economic markets. Net loan growth was 3.2% in 2019 fueled by 9% growth in C&I loans. Overall deposits grew by 4.6% to over $12.1 billion, and we added ~4,500 transaction accounts during the year.

Quarterly Cash Dividend

The Company’s Board of Directors voted to increase the common stock dividend this quarter by $0.01 to $0.47 per share, which is a 2.2% increase compared to last quarter, and a $0.09 per share increase, or 23.7%, compared to the same quarter one year ago. The dividend will be payable on February 14, 2020 to shareholders of record as of February 7, 2020. This dividend represents the 8th consecutive quarterly increase in the cash dividend paid to the shareholders of SSB.

Fourth Quarter 2019 Financial Performance

Three Months Ended

Twelve Months Ended

(Dollars in thousands, except per share data)

Dec. 31,

Sept. 30,

June 30,

Mar. 31,

Dec. 31,

Dec. 31,

INCOME STATEMENT

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2019

 

 

2018

 

Interest income
Loans, including fees (8)

$

132,615

 

$

134,953

 

$

135,388

 

$

131,834

 

$

132,541

 

$

534,790

 

$

521,478

 

Investment securities, federal funds sold and securities
purchased under agreements to resell

 

14,839

 

 

15,048

 

 

14,594

 

 

11,556

 

 

11,327

 

 

56,037

 

 

45,730

 

Total interest income

 

147,454

 

 

150,001

 

 

149,982

 

 

143,390

 

 

143,868

 

 

590,827

 

 

567,208

 

Interest expense
Deposits

 

15,227

 

 

16,655

 

 

17,393

 

 

16,645

 

 

15,310

 

 

65,920

 

 

45,452

 

Federal funds purchased, securities sold under agreements
to repurchase, and other borrowings

 

5,771

 

 

5,973

 

 

5,410

 

 

3,478

 

 

2,166

 

 

20,632

 

 

8,540

 

Total interest expense

 

20,998

 

 

22,628

 

 

22,803

 

 

20,123

 

 

17,476

 

 

86,552

 

 

53,992

 

Net interest income

 

126,456

 

 

127,373

 

 

127,179

 

 

123,267

 

 

126,392

 

 

504,275

 

 

513,216

 

Provision for loan losses

 

3,557

 

 

4,028

 

 

3,704

 

 

1,488

 

 

3,734

 

 

12,777

 

 

13,783

 

Net interest income after provision for loan losses

 

122,899

 

 

123,345

 

 

123,475

 

 

121,779

 

 

122,658

 

 

491,498

 

 

499,433

 

Noninterest income

 

36,307

 

 

37,582

 

 

37,618

 

 

32,058

 

 

35,642

 

 

143,565

 

 

145,749

 

Pre-tax operating expense

 

99,134

 

 

96,364

 

 

97,803

 

 

97,125

 

 

96,664

 

 

400,086

 

 

391,059

 

Branch consolid./acquisition and merger expense

 

1,494

 

 

 

 

2,078

 

 

1,114

 

 

 

 

4,552

 

 

29,868

 

Pension plan termination expense

 

 

 

 

 

9,526

 

 

 

 

 

 

 

 

4,539

 

Total noninterest expense

 

100,628

 

 

96,364

 

 

109,407

 

 

98,239

 

 

96,664

 

 

404,638

 

 

420,927

 

Income before provision for income taxes

 

58,578

 

 

64,563

 

 

51,686

 

 

55,598

 

 

61,636

 

 

230,425

 

 

224,255

 

Provision for income taxes

 

9,487

 

 

12,998

 

 

10,226

 

 

11,231

 

 

12,632

 

 

43,942

 

 

45,384

 

Net income

$

49,091

 

$

51,565

 

$

41,460

 

$

44,367

 

$

49,004

 

$

186,483

 

$

178,871

 

 
Adjusted net income (non-GAAP) (3)
Net income (GAAP)

$

49,091

 

$

51,565

 

$

41,460

 

$

44,367

 

$

49,004

 

$

186,483

 

$

178,871

 

Securities losses (gains), net of tax

 

(20

)

 

(349

)

 

(1,371

)

 

(432

)

 

2

 

 

(2,173

)

 

520

 

Provision for income taxes, deferred tax revaluation

 

 

 

 

 

 

 

 

 

 

 

 

 

(990

)

FHLB prepayment penalty

 

 

 

 

 

 

 

107

 

 

 

 

107

 

 

 

Pension plan termination expense, net of tax

 

 

 

 

 

7,641

 

 

 

 

 

 

7,641

 

 

 

Branch consolid./acquisition and merger expense, net of tax

 

1,252

 

 

 

 

1,667

 

 

782

 

 

 

 

3,701

 

 

23,692

 

Adjusted net income (non-GAAP)

$

50,323

 

$

51,216

 

$

49,397

 

$

44,824

 

$

49,006

 

$

195,759

 

$

202,093

 

 
Basic earnings per common share

$

1.46

 

$

1.51

 

$

1.18

 

$

1.25

 

$

1.36

 

$

5.40

 

$

4.90

 

Diluted earnings per common share

$

1.45

 

$

1.50

 

$

1.17

 

$

1.25

 

$

1.35

 

$

5.36

 

$

4.86

 

Adjusted net income per common share – Basic (non-GAAP) (3)

$

1.49

 

$

1.50

 

$

1.41

 

$

1.26

 

$

1.36

 

$

5.66

 

$

5.53

 

Adjusted net income per common share – Diluted (non-GAAP) (3)

$

1.48

 

$

1.49

 

$

1.40

 

$

1.26

 

$

1.35

 

$

5.63

 

$

5.50

 

Dividends per common share

$

0.46

 

$

0.43

 

$

0.40

 

$

0.38

 

$

0.36

 

$

1.67

 

$

1.38

 

Basic weighted-average common shares outstanding

 

33,677,851

 

 

34,056,771

 

 

35,089,129

 

 

35,445,087

 

 

36,154,922

 

 

34,560,544

 

 

36,530,112

 

Diluted weighted-average common shares outstanding

 

33,964,216

 

 

34,300,206

 

 

35,299,747

 

 

35,618,705

 

 

36,364,873

 

 

34,797,444

 

 

36,775,632

 

Effective tax rate

 

16.20

%

 

20.13

%

 

19.78

%

 

20.20

%

 

20.49

%

 

19.07

%

 

20.24

%

The Company reported consolidated net income of $49.1 million, or $1.45 per diluted common share for the three-months ended December 31, 2019, a decrease of $2.5 million, or 4.8% from the third quarter of 2019. Diluted EPS was $1.50 in the third quarter of 2019, or $51.6 million. Compared to the fourth quarter of 2018, Diluted EPS improved $0.10, due to the decline in weighted average diluted share count of 2.4 million shares. The decline in weighted-average diluted shares resulted from the continuation of the Company repurchasing common shares over the past year. Net interest income decreased by $917,000 compared to the third quarter of 2019 on lower interest income, offset partially by lower expense. The provision for loan losses decreased by $471,000, with the nonacquired provision for loan losses increasing $978,000 compared to third quarter of 2019; while the acquired loan loss provision declined by $1.4 million. Noninterest income was down $1.3 million compared to third quarter of 2019 to $36.3 million in the fourth quarter of 2019. Excluding securities gains, noninterest income decreased by $862,000 in the fourth quarter of 2019. Noninterest expense was higher in the fourth quarter of 2019 compared to the third quarter of 2019 by $4.3 million due primarily to higher FDIC assessment cost of $1.1 million, higher branch consolidation cost of $1.5 million, and higher business development and staff related cost of $887,000. The Company received a $760,000 credit on its FDIC assessment in 4Q 2019, which was lower than the credit received in 3Q 2019 of $1.6 million. The efficiency ratio and adjusted efficiency ratio were 61.6% and 60.7% in 4Q 2019, respectively, compared to 58.4% for both in the third quarter of 2019.

Income Tax Expense

During the fourth quarter of 2019, our effective income tax rate decreased to 16.20% from 20.13% in the third quarter of 2019 and from 20.49% in the fourth quarter of 2018. The primary factor in the lower effective tax rate in the fourth quarter of 2019 was the recognition of additional income tax credits received, specifically one credit totaling approximately $2.4 million. During 2019, the Company has increased its investment in qualified affordable housing projects and other tax advantaged opportunities by approximately $39.4 million, resulting in the additional tax credits available to assist in lowering the effective tax rate in 2019 compared to 2018. In addition, pre-tax income was lower in the fourth quarter of 2019 by approximately $6.0 million than in the third quarter of 2019, further lowering the effective rate for the quarter. Compared to the fourth quarter of 2018, the lower effective rate was the result of additional federal tax credits discussed above and lower pre-tax income.

Current Expected Credit Losses (“CECL”) – update

Consistent with our prior estimates, the current estimate of our allowance for credit losses (ACL) with the adoption of ASU 2016-13 (CECL) is expected to be between $105.0 and $120.0 million, including the liability for unfunded commitments. The increase in the ACL is driven by the acquired non-credit impaired loan portfolio (ANCI), the non-acquired loan portfolio, and reserve on unfunded commitments. The total increase will range between $43.0 million and $58.0 million (pre-tax) from the allowance for loan losses and reserve on unfunded commitments recorded at December 31, 2019. The estimated decline in equity, net of tax, will range from $33.5 million to $45.2 million. Our loan portfolio is segregated into 10 loan segments (models) that use a 24-month forecast period and a 12-month reversion period. Based upon the estimates described above, our tangible common equity ratio will reduce by 20 – 30 basis points. The estimates of the initial impact from the adoption of CECL were based upon our current analysis, composition, characteristics and quality of our loan portfolio, as well as assumptions, management judgments, and forecasted economic conditions, and are subject to continued review and refinement during the first quarter of 2020.

Balance Sheet and Capital

(dollars in thousands, except per share and share data)

Ending Balance

Dec. 31,

Sept. 30,

June 30,

Mar. 31,

Dec. 31,

BALANCE SHEET

 

2019

 

 

2019

 

 

2019

 

 

2019

 

 

2018

 

Assets
Cash and cash equivalents

$

688,704

 

$

719,194

 

$

851,971

 

$

949,591

 

$

408,983

 

Investment securities:
Securities available for sale, at fair value

 

1,956,047

 

 

1,813,134

 

 

1,717,276

 

 

1,466,249

 

 

1,517,067

 

Other investments

 

49,124

 

 

49,124

 

 

49,124

 

 

40,624

 

 

25,604

 

Total investment securities

 

2,005,171

 

 

1,862,258

 

 

1,766,400

 

 

1,506,873

 

 

1,542,671

 

Loans held for sale

 

59,363

 

 

87,393

 

 

47,796

 

 

33,297

 

 

22,925

 

Loans:
Acquired credit impaired

 

356,782

 

 

390,714

 

 

419,961

 

 

452,258

 

 

485,119

 

Acquired non-credit impaired

 

1,760,427

 

 

1,965,603

 

 

2,180,281

 

 

2,378,737

 

 

2,594,826

 

Non-acquired

 

9,252,831

 

 

8,928,512

 

 

8,621,327

 

 

8,310,613

 

 

7,933,286

 

Less allowance for non-acquired loan losses

 

(56,927

)

 

(54,937

)

 

(53,590

)

 

(52,008

)

 

(51,194

)

Loans, net

 

11,313,113

 

 

11,229,892

 

 

11,167,979

 

 

11,089,600

 

 

10,962,037

 

Other real estate owned (“OREO”)

 

11,964

 

 

13,415

 

 

14,506

 

 

11,297

 

 

11,410

 

Premises and equipment, net

 

317,321

 

 

323,506

 

 

321,348

 

 

322,553

 

 

241,076

 

Bank owned life insurance

 

234,567

 

 

233,206

 

 

231,708

 

 

230,629

 

 

230,105

 

Deferred tax asset

 

31,316

 

 

27,844

 

 

28,240

 

 

31,884

 

 

37,128

 

Mortgage servicing rights

 

30,525

 

 

28,674

 

 

30,332

 

 

32,415

 

 

34,727

 

Core deposit and other intangibles

 

49,816

 

 

53,083

 

 

56,351

 

 

59,619

 

 

62,900

 

Goodwill

 

1,002,900

 

 

1,002,900

 

 

1,002,900

 

 

1,002,900

 

 

1,002,900

 

Other assets

 

176,332

 

 

170,717

 

 

163,806

 

 

136,229

 

 

119,466

 

Total assets

$

15,921,092

 

$

15,752,082

 

$

15,683,337

 

$

15,406,887

 

$

14,676,328

 

 
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing

$

3,245,306

 

$

3,307,532

 

$

3,255,906

 

$

3,219,864

 

$

3,061,769

 

Interest-bearing

$

8,931,790

 

 

8,716,255

 

 

8,666,374

 

 

8,699,107

 

 

8,585,164

 

Total deposits

 

12,177,096

 

 

12,023,787

 

 

11,922,280

 

 

11,918,971

 

 

11,646,933

 

Federal funds purchased and securities
sold under agreements to repurchase

 

298,741

 

 

269,072

 

 

298,029

 

 

276,891

 

 

270,649

 

Other borrowings

 

815,936

 

 

815,771

 

 

816,414

 

 

616,250

 

 

266,084

 

Other liabilities

 

256,306

 

 

292,496

 

 

272,636

 

 

218,298

 

 

126,366

 

Total liabilities

 

13,548,079

 

 

13,401,126

 

 

13,309,359

 

 

13,030,410

 

 

12,310,032

 

 
Shareholders’ equity:
Preferred stock – $.01 par value; authorized 10,000,000 shares

 

 

 

 

 

 

 

 

 

 

Common stock – $2.50 par value; authorized 80,000,000 shares

 

84,361

 

 

84,757

 

 

86,839

 

 

88,421

 

 

89,574

 

Surplus

 

1,607,740

 

 

1,617,004

 

 

1,676,229

 

 

1,719,396

 

 

1,750,495

 

Retained earnings

 

679,895

 

 

646,325

 

 

609,444

 

 

582,034

 

 

551,108

 

Accumulated other comprehensive income (loss)

 

1,017

 

 

2,870

 

 

1,466

 

 

(13,374

)

 

(24,881

)

Total shareholders’ equity

 

2,373,013

 

 

2,350,956

 

 

2,373,978

 

 

2,376,477

 

 

2,366,296

 

Total liabilities and shareholders’ equity

$

15,921,092

 

$

15,752,082

 

$

15,683,337

 

$

15,406,887

 

$

14,676,328

 

 
Common shares issued and outstanding

 

33,744,385

 

 

33,902,726

 

 

34,735,587

 

 

35,368,521

 

 

35,829,549

 

At December 31, 2019, the Company’s total assets were $15.9 billion, an increase of $1.2 billion from December 31, 2018, and an increase of 8.5%. During the fourth quarter of 2019, changes in the balance sheet include the following:

  1. Net loan growth totaled $85.2 million, or 3.0% annualized. Non-acquired loans increased by $324.3 million or 14.4% annualized, and acquired loans decreased by $239.1 million, or 40.3% annualized.
  2. Investment securities portfolio grew by $142.9 million to $2.0 billion, representing 12.6% of total assets.
  3. Non-interest bearing deposits declined by $62.2 million, or 7.5% annualized.
  4. Interest bearing deposits grew by $215.5 million, or 9.8% annualized.
  5. Equity increased by $22.1 million as the Company only repurchased 165,000 common shares totaling $12.4 million, and at an average price of $74.88 per share.

The Company’s book value per common share increased to $70.32 per share at December 31, 2019, compared to $69.34 at September 30, 2019 and $66.04 at December 31, 2018. Total equity (capital) increased by $22.1 million due to net income totaling $49.1 million, offset by the dividend paid of $15.5 million during the fourth quarter of 2019. Tangible book value (“TBV”) per common share increased by $0.93 per share to $39.13 at December 31, 2019, compared to $38.20 at September 30, 2019, and increased by $2.83 per share, or 7.8%, from $36.30 at December 31, 2018.

Performance and Capital Ratios

Three Months Ended Twelve Months Ended
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
PERFORMANCE RATIOS

 

2019

 

 

2019

 

 

2019

 

 

2019

 

 

2018

 

2019

 

2018

 

Return on average assets (annualized)

 

1.23

%

 

1.31

%

 

1.08

%

 

1.21

%

 

1.33

%

1.21

%

1.23

%

Adjusted return on average assets (annualized) (non-GAAP) (3)

 

1.26

%

 

1.30

%

 

1.28

%

 

1.23

%

 

1.33

%

1.27

%

1.39

%

Return on average equity (annualized)

 

8.26

%

 

8.70

%

 

6.98

%

 

7.61

%

 

8.24

%

7.89

%

7.63

%

Adjusted return on average equity (annualized) (non-GAAP) (3)

 

8.47

%

 

8.64

%

 

8.32

%

 

7.69

%

 

8.24

%

8.28

%

8.62

%

Return on average tangible common equity (annualized) (non-GAAP) (7)

 

15.79

%

 

16.62

%

 

13.38

%

 

14.66

%

 

15.91

%

15.11

%

14.93

%

Adjusted return on average tangible common equity (annualized) (non-GAAP) (3) (7)

 

16.17

%

 

16.51

%

 

15.79

%

 

14.80

%

 

15.91

%

15.82

%

16.76

%

Efficiency ratio (tax equivalent)

 

61.64

%

 

58.40

%

 

66.87

%

 

63.24

%

 

59.43

%

62.52

%

63.57

%

Adjusted efficiency ratio (non-GAAP) (9)

 

60.73

%

 

58.40

%

 

59.78

%

 

62.52

%

 

59.43

%

60.33

%

59.06

%

Dividend payout ratio (2)

 

31.62

%

 

28.48

%

 

33.89

%

 

30.29

%

 

26.63

%

30.94

%

28.27

%

Book value per common share

$

70.32

 

$

69.34

 

$

68.34

 

$

67.19

 

$

66.04

 

Tangible common equity per common share (non-GAAP) (7)

$

39.13

 

$

38.20

 

$

37.85

 

$

37.15

 

$

36.30

 

 
CAPITAL RATIOS
Equity-to-assets

 

14.90

%

 

14.92

%

 

15.14

%

 

15.42

%

 

16.12

%

Tangible equity-to-tangible assets (non-GAAP) (7)

 

8.88

%

 

8.81

%

 

8.99

%

 

9.16

%

 

9.56

%

Tier 1 common equity (6)

 

11.3

%

 

11.2

%

 

11.6

%

 

11.9

%

 

12.1

%

Tier 1 leverage (6)

 

9.7

%

 

9.7

%

 

10.0

%

 

10.5

%

 

10.7

%

Tier 1 risk-based capital (6)

 

12.3

%

 

12.2

%

 

12.6

%

 

12.9

%

 

13.1

%

Total risk-based capital (6)

 

12.8

%

 

12.7

%

 

13.1

%

 

13.4

%

 

13.6

%

 
OTHER DATA
Number of branches

 

155

 

 

157

 

 

156

 

 

168

 

 

168

 

Number of employees (full-time equivalent basis)

 

2,547

 

 

2,544

 

 

2,544

 

 

2,589

 

 

2,602

 

Asset Quality

Ending Balance
Dec. 31, Sept 30, June 30, Mar. 31, Dec. 31,
(Dollars in thousands)

 

2019

 

 

2019

 

 

2019

 

 

2019

 

 

2018

 

NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonperforming loans

$

22,816

 

$

19,187

 

$

15,605

 

$

15,910

 

$

15,018

 

Non-acquired OREO and other nonperforming assets

 

3,705

 

 

3,724

 

 

4,374

 

 

4,070

 

 

4,037

 

Total non-acquired nonperforming assets

 

26,521

 

 

22,911

 

 

19,979

 

 

19,980

 

 

19,055

 

Acquired
Acquired nonperforming loans

 

11,114

 

 

9,596

 

 

9,985

 

 

14,558

 

 

13,651

 

Acquired OREO and other nonperforming assets

 

8,579

 

 

9,938

 

 

10,412

 

 

7,782

 

 

7,755

 

Total acquired nonperforming assets

 

19,693

 

 

19,534

 

 

20,397

 

 

22,340

 

 

21,406

 

Total nonperforming assets

$

46,214

 

$

42,445

 

$

40,376

 

$

42,320

 

$

40,461

 

 
Three Months Ended Twelve Months Ended
Dec. 31, Sept 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,

 

2019

 

 

2019

 

 

2019

 

 

2019

 

 

2018

 

2019

 

2018

 

ASSET QUALITY RATIOS:
Allowance for non-acquired loan losses as a
percentage of non-acquired loans (1)

 

0.62

%

 

0.62

%

 

0.62

%

 

0.63

%

 

0.65

%

0.62

%

0.65

%

Allowance for non-acquired loan losses as a
percentage of non-acquired nonperforming loans

 

249.50

%

 

286.32

%

 

343.42

%

 

326.89

%

 

340.88

%

249.50

%

340.88

%

Net charge-offs on non-acquired loans as a percentage of
average non-acquired loans (annualized) (1)

 

0.06

%

 

0.05

%

 

0.02

%

 

0.02

%

 

0.06

%

0.04

%

0.04

%

Net charge-offs on acquired non-credit impaired loans as a percentage
of average acquired non-credit impaired loans (annualized) (1)

 

-0.01

%

 

0.15

%

 

0.25

%

 

0.03

%

 

0.09

%

0.11

%

0.06

%

Total nonperforming assets as a percentage
of total assets

 

0.29

%

 

0.27

%

 

0.26

%

 

0.27

%

 

0.28

%

Excluding Acquired Assets
NPLs as a percentage of period end non-acquired loans (1)

 

0.25

%

 

0.21

%

 

0.18

%

 

0.19

%

 

0.19

%

Total nonperforming assets as a percentage of
total non-acquired loans and repossessed assets (1) (4)

 

0.29

%

 

0.26

%

 

0.23

%

 

0.24

%

 

0.24

%

Total nonperforming assets as a percentage
of total assets (5)

 

0.17

%

 

0.15

%

 

0.13

%

 

0.13

%

 

0.13

%

Total nonperforming assets increased by $3.8 million to $46.2 million, representing 0.29% of total assets, an increase of 2 basis points compared to September 30, 2019. Non-performing acquired non-credit impaired loans increased by $1.5 million and totaled $11.1 million. Legacy non-performing loans increased by $3.6 million during the fourth quarter of 2019 to $22.8 million at December 31, 2019. The allowance for loan losses as a percentage of non-acquired nonaccrual loans was 250% at December 31, 2019, down from 286% in the third quarter of 2019, and down from 341% at December 31, 2018.

At December 31, 2019, the allowance for non-acquired loan losses was $56.9 million, or 0.62%, of non-acquired period-end loans and $54.9 million, or 0.62%, at September 30, 2019, and $51.2 million, or 0.65% at December 31, 2018. Net charge-offs within the non-acquired portfolio were $1.5 million, or 0.06% annualized, in the fourth quarter of 2019, compared to $1.1 million, or 0.05% annualized, in the third of 2019. Fourth quarter 2018 net charge-offs totaled $1.1 million, or 0.06% annualized. Net charge-offs (recoveries) related to the non-acquired loan portfolio totaled $348,000 during the fourth quarter of 2019 and ($188,000) for the twelve months ended December 31, 2019. The remaining net charge-offs were from overdraft and ready reserve accounts and totaled $1.1 million, for the fourth quarter of 2019, and, for the twelve months ended December 31, 2019, totaled $3.7 million.

During the fourth quarter of 2019, the provision for loan losses totaled $3.5 million for the non-acquired loan portfolio compared to $2.5 million in the third quarter of 2019, and $2.5 million in the fourth quarter of 2018.

Net charge offs (recoveries) related to “acquired non-credit impaired loans” were ($36,000), or -0.01% annualized, in the fourth quarter of 2019; and the Company recorded a “negative” provision for loan losses, accordingly. Net charge-offs in the third quarter of 2019 totaled $760,000, or 0.15% annualized, and in the fourth quarter of 2018, net charge-offs totaled $574,000, or 0.09% annualized.

During the fourth quarter of 2019, the Company recorded net impairment of $134,000 within the acquired credit impaired loan pools compared to $786,000 in the third quarter of 2019. During the fourth quarter of 2018, the Company recorded net impairment of $710,000.

Total OREO decreased during the fourth quarter with the disposition of property from both the nonacquired and acquired OREO assets. The decline totaled $1.5 million with a balance of $12.0 million at December 31, 2019. The OREO balance at December 31, 2018 was $11.4 million.

Net Interest Income and Margin

Three Months Ended
December 31, 2019 September 30, 2019 December 31, 2018
(Dollars in thousands) Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
YIELD ANALYSIS Balance Expense Rate Balance Expense Rate Balance Expense Rate
Interest-Earning Assets:
Federal funds sold, reverse repo, and time deposits

$

573,957

$

2,337

1.62

%

$

491,627

$

2,676

2.16

%

$

172,849

$

1,032

2.37

%

Investment securities (taxable)

 

1,713,050

 

11,016

2.55

%

 

1,638,461

 

10,785

2.61

%

 

1,358,978

 

8,838

2.58

%

Investment securities (tax-exempt)

 

176,261

 

1,486

3.34

%

 

181,434

 

1,587

3.47

%

 

188,666

 

1,457

3.06

%

Loans held for sale

 

73,541

 

664

3.58

%

 

58,829

 

541

3.65

%

 

24,820

 

291

4.65

%

Loans

 

11,297,402

 

131,951

4.63

%

 

11,225,593

 

134,412

4.75

%

 

10,928,294

 

132,250

4.80

%

Total interest-earning assets

 

13,834,211

 

147,454

4.23

%

 

13,595,944

 

150,001

4.38

%

 

12,673,607

 

143,868

4.50

%

Noninterest-earning assets

 

2,024,648

 

2,014,172

 

1,924,666

Total Assets

$

15,858,859

$

15,610,116

$

14,598,273

 
Interest-Bearing Liabilities:
Transaction and money market accounts

$

5,768,724

$

8,010

0.55

%

$

5,581,057

$

8,932

0.63

%

$

5,310,048

$

8,498

0.63

%

Savings deposits

 

1,313,991

 

769

0.23

%

 

1,323,377

 

1,027

0.31

%

 

1,416,227

 

1,324

0.37

%

Certificates and other time deposits

 

1,684,633

 

6,448

1.52

%

 

1,730,567

 

6,696

1.54

%

 

1,804,939

 

5,488

1.21

%

Federal funds purchased and repurchase agreements

 

290,287

 

590

0.81

%

 

272,900

 

612

0.89

%

 

273,994

 

660

0.96

%

Other borrowings

 

815,847

 

5,181

2.52

%

 

816,188

 

5,361

2.61

%

 

122,676

 

1,506

4.87

%

Total interest-bearing liabilities

 

9,873,482

 

20,998

0.84

%

 

9,724,089

 

22,628

0.92

%

 

8,927,884

 

17,476

0.78

%

Noninterest-bearing liabilities

 

3,628,741

 

3,534,873

 

3,310,416

Shareholders’ equity

 

2,356,636

 

2,351,154

 

2,359,973

Total Non-IBL and shareholders’ equity

 

5,985,377

 

5,886,027

 

5,670,389

Total liabilities and shareholders’ equity

$

15,858,859

$

15,610,116

$

14,598,273

Net interest income and margin (NON-TAX EQUIV.)

$

126,456

3.63

%

$

127,373

3.72

%

$

126,392

3.96

%

Net interest margin (TAX EQUIVALENT)

3.64

%

3.73

%

3.98

%

 
Overall Cost of Funds (including demand deposits)

0.63

%

0.69

%

0.57

%

Contacts

Media Contact:

Jackie Smith (803) 231-3486

Analyst Contact:

Jim Mabry (843) 529-5593

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