South State Corp. (NASDAQ: SSB) reported Q2 EPS of $0.89, $0.77 better than the analyst estimate of $0.12.

Highlights of the second quarter included:

• Closed the merger of equals with CenterState Bank Corporation (“CSFL”) on June 7th (see page 7 for additional details).
• After recording a total loan loss provision expense of $151 million, $119 million of which was for the CenterState acquired NonPCD loans and unfunded commitments (the initial provision), and after $40 million in merger-related costs, the company reported a net loss of ($85 million) for the quarter, resulting in an ROAA of (1.49%), annualized. The initial provision expense on the acquired NonPCD loans is a result of the accounting requirements for mergers under the Current Expected Credit Loss (“CECL”) standard, which became effective in 2020.
• The quarter’s results only include the operations of CenterState for the final 23 days of the quarter. On a combined historical basis* (as if the companies had been merged for the full quarter, a Non-GAAP measure), Pre-Provision Net Revenue (“PPNR”) was $157 million, for a 1.68% PPNR ROAA. On the same combined basis, the Company had record revenue for the quarter.
• Strong core deposit growth.
• Minimal net charge-offs of $101,000, or 0.00% annualized.
• Significant allowance for credit losses and credit marks on the balance sheet due to provision for credit losses and required purchase accounting marks.
• Ending tangible book value (“TBV”) per share of $38.33, up $0.32 from Q1.

“We are pleased to have closed our merger of equals between South State and CenterState on June 7th,” said John C. Corbett, Chief Executive Officer. “While accounting rules under the recently-implemented CECL standard required us to book a large provision for credit loss expense on the closing of the merger, leading us to report a net loss for the quarter, I am very pleased with the underlying fundamental operating performance of the Company.”

“53 days into our merger, we are off to a solid start,” said Robert R. Hill, Jr., Executive Chairman. “We are building a sound, profitable, and growing company and I am pleased with our team’s progress to date.”

“In a quarter in which over 90% of our employees are working from home, the team produced record revenues”, Corbett continued. “And, while we are operating in an uncertain economic environment due to the pandemic, our credit metrics remain at strong levels, with low past dues, minimal charge-offs, and low non-performing assets. The underlying performance of the business, the loss absorption capacity existing on the balance sheet post-merger, and the way our team has performed give me great confidence in the future.”

For earnings history and earnings-related data on South State Corp. (SSB) click here.