Slide 1: Earnings Call 1Q 2023
Earnings Call 1Q 2023 April 28, 2023
Slide 2: Disclaimer
DISCLAIMER Statements included in this communication, which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act o
Slide 3: SouthState Corporation Overview of Franchise
SouthState Corporation Overview of Franchise (1) $45 #1 in Florida Billion in assets #3 in South Carolina $31 Billion in loans (251) $36 Billion in deposits Ranked #30 by S&P Global 16 Greenwich Excellence and Best Brand awards from Coalition Greenwich $5.0 Billion market cap Top 30 Forbes 100 Best
Slide 4: The WHY, The WHAT, The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2023 ($ in trillions) 17.8% $0.7B US $25.0 $0.5B 13.7% China $18.3 12.8% 11.9% Japan $4.3 8.9% 8.3% $2.7B 6.0% $1.9B SSB Footprint $4.2 The combined GDP of Germany $4.0 SouthState’s 6 state branch footp
Slide 6: Pandemic Accelerates Population Migration to the South
P A N D E M I C A C C E L E R AT E S P O P U L AT I O N M I G R AT I O N T O T H E S O U T H Net Domestic Migration in SouthState Footprint Florida 622,476 North Carolina 211,867 South Carolina 165,948 Georgia 128,089 Alabama 65,355 Virginia -29,775 TOTAL 1,163,960 Source: U.S. Census Bureau 6
Slide 7: Investment Thesis
INVESTMENT THESIS • High growth markets • Granular, low-cost core deposit base • Diversified revenue streams • Strong credit quality and disciplined underwriting • Energetic and experienced management team with entrepreneurial ownership culture • True alternative to the largest banks with capital ma
Slide 8: Quarterly Results
Quarterly Results Ga
Slide 9: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 4Q22 1Q23 GAAP Net Income $ 143.5 $ 139.9 EPS (Diluted) $ 1.88 $ 1.83 Return on Average Assets 1.28 % 1.29 % Non-GAAP(1) Return on Average Tangible Common Equity 20.2 % 18.8 % Non-GAAP, Adjusted(1) Net Income $ 144.7 $ 147.2 EPS (Diluted) $ 1.90 $ 1.93 Return on Average A
Slide 10: Quarterly Highlights
Q U A R T E R LY H I G H L I G H T S | 1 Q 2 0 2 3 • Reported Diluted Earnings per Share (“EPS”) of $1.83; adjusted Diluted EPS (non-GAAP)(1) of $1.93 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $221.5 million, or 2.04% PPNR ROAA (non-GAAP)(2) • PPNR per diluted share (non-GAAP)(2) of $2.90
Slide 11: PPNR per Diluted Share
P P N R P E R D I L U T E D S H A R E (1) $3.50 62% increase 1Q22-1Q23 $3.03 $3.00 $2.90 $2.74 $2.50 $2.32 $2.00 $1.79 $1.50 1Q22 2Q22 3Q22 4Q22 1Q23 (1) For end note descriptions, Earnings Presentation End Notes starting on slide 46. 11
Slide 12: Net Interest Margin
N E T I N T E R E S T M A R G I N (1) Net Interest Income excld. Accretion(2) Accretion (2) Net Interest Income Net Interest Margin(3) 116 bps improvement in Net Interest Margin(3)(1Q22-1Q23) $396.0 $400 $381.3 4.4% $7.4 $362.3 $7.4 $9.5 3.99% $350 3.93% $315.8 4.0% $12.8 $300 3.58% $ in millions $2
Slide 13: Loan Production vs Loan Growth
LOAN PRODUCTION VS LOAN GROWTH (3) (3) Loan Production Loan Portfolio Growth (1) $4,000 $3,863 (1) $3,500 $3,372 $3,305 $3,129 $3,000 (1) $2,636 $2,582 $2,355 $ in millions $2,500 $2,181 $2,079 $1,933 $1,879 $1,834 $2,000 $1,791 $1,699 $1,470 $1,535 $1,500 $1,256(2) $1,451 $1,347 $1,000 $933 $500 $5
Slide 14: Interest Rate Sensitivity
Interest Rate Sensitivity Go
Slide 15: Premium Core Deposit Franchise
PREMIUM CORE† DEPOSIT FRANCHISE Deposits by Type Deposit Mix vs. Peers Checking Accounts Checking Accounts MM & Savings Time Deposits Composition Time 100% Deposits Noninterest- 11% 10% $4.1B bearing 35% Checking Commercial 80% $12.4B 32% 47% 60% Money Total Deposits 34% Market $36.4 Billion Small B
Slide 16: Remain Well-Positioned During Current Cycle
REMAIN WELL-POSITIONED DURING CURRENT CYCLE – P R E V I O U S A N D C U R R E N T R I S I N G I N T E R E S T R AT E C Y C L E 5.0% 5.0% 24% deposit 13% deposit beta in beta in 4.50% previous current cycle cycle to date 4.0% 4.0% 3.64% 3.0% 3.0% 2.40% 2.40% 2.22% 2.17% 1.92% 2.0% 1.74% 2.0% 1.45% 1.
Slide 17: Interest Rate Risk Profile
I N T E R E S T R AT E R I S K P R O F I L E Percentage Change in Net Interest Income Loan Repricing Frequency (excluding PPP) Instantaneous Shock/Static Balance Sheet (1) Fixed Variable Adjustable 3.0% 60% 2.0% 2.1% 50% 1.0% 1.1% 40% 0.0% —% 30% (1.0)% 51% 51% (1.3)% 20% 41% (2.0)% 29% 10% 20% (3.0
Slide 18: Balance Sheet
Balance Sheet Ga
Slide 19: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans (1) Deposits Noninterest-bearing Checking Interest-bearing Checking MMA & Savings Time Deposits $42 $32.0B $42 $38.7B $38.4B $350, 000,000.0B $36.9B $36.4B $36.4B $2.8 $2.7 $36 $36 $31.0B $2.5 $2.4 $300, 000,000.0B $4.1 $30.0B $30 $30 $12.5 $12.4 $250, 000,000.0B $ in b
Slide 20: Total Loan Portfolio
TOTA L L O A N P O R T F O L I O Loans by Type No. of Avg. Loan Cons / Other Loan Type Loans Balance Balance 4% Investor CRE 8,703 $ 9.0B $ 1,029,400 Investor CRE (2) CDL (1) Consumer RE 42,010 6.9B 163,300 29% 9% Owner-Occupied CRE 8,080 5.5B 683,500 C&I 19,179 5.3B 277,000 Constr., Dev. & Land 4,8
Slide 21: Loan Portfolio – Office Exposure
LOAN PORTFOLIO – OFFICE E XPOSURE State MSA AL 3% Other FL 3% 46% NC 4% VA GA Greenville 5% SC 19% 20% Atlanta Granular and Diversified Office Portfolio • Office represents 4% of the loan portfolio • Average loan size only $1.4 million Jacksonville • 97% located in the SouthState footprint Gainesvil
Slide 22: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs (Recoveries) to Loans • $123 million in provision for credit losses vs. 0.25% $3 million in net charge-offs trailing four quarters 0.15% • Increased ACL plus reserve for unfunded 0.05% 0.04% 0.03% 0.01% 0.01% commitments by 23 bps to 1.48% from 1Q22 to (0.02)%
Slide 23: Loss Absorption Capacity Trend
L O S S A B S O R P T I O N C A PA C I T Y T R E N D Provision for Credit Losses & Net Charge-Offs (Recoveries) Total ACL(1) plus Reserve for Unfunded Commitments PCL Net C/O (Recv) Total ACL Reserve for Unfunded Commitments % of Total Loans $50 $47.1 $500 2.2% $450 $40 $33.1 $85 $400 $30 $67 1.8% $
Slide 24: Capital Ratios
C A P I T A L R AT I O S 4Q22 1Q23(2) Tangible Common Equity(1) 7.2 % 7.5 % Tier 1 Leverage 8.7 % 9.1 % Tier 1 Common Equity 11.0 % 11.1 % Tier 1 Risk-Based Capital 11.0 % 11.1 % Total Risk-Based Capital 13.0 % 13.3 % Bank CRE Concentration Ratio 249 % 243 % Bank CDL Concentration Ratio 65 % 61 % (1
Slide 25: Liquidity & Capital
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Slide 26: Stable Funding Base and Strong Liquidity Position
S TA B L E F U N D I N G B A S E A N D S T R O N G L I Q U I D I T Y P O S I T I O N Primary Contingency Funding Sources at March 31, 2023 Total Net (in millions) Available Amount Used Availability $ $ $ Cash and Cash Equivalents 1,997 — 1,997 Federal Home Loan Bank of Atlanta 6,896 902 5,994 Federa
Slide 27: Well Capitalized Including AOCI Impact
W E L L C A P I TA L I Z E D I N C L U D I N G A O C I I M PA C T TCE Ratio(1) Tier 1 Leverage Ratio 14.00% 14.00% 12.00% 12.00% 10.00% 10.00% 9.05% 7.50% 7.50% 7.78% 8.00% 8.00% 6.00% 6.00% 5.00% 4.00% 4.00% 4.00% 2.00% 2.00% 0.00% 0.00% As Reported With AOCI Impact As Reported With AOCI Impact CET
Slide 28: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 0.3% 2.37% Agency MBS(1) 2.4% 2.29% 2.03% 2.06% Treasury, Agency & SBA 12% 2.1% 1.75% Municipal 1.7% Corporates 1.4% 15% Total Investment 1.0% Portfolio† 1Q22 2Q22 3Q22 4Q22 1Q23 $7.8 Billion 72% Muni
Slide 29: Appendix
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Slide 30: Loan Portfolio – Non Owner-Occupied Commercial Real Estate
L O A N P O R T F O L I O – N O N O W N E R - O C C U P I E D C O M M E R C I A L R E A L E S T AT E ( 1 ) Non- Substandard Special Wtd Avg Wtd Avg OTHER Accrual & Accruing Mention Loan Type Balance Avg Loan Size DSC(2) LTV(2) AL% FL% GA% NC% SC% VA% % %(3) %(3) %(3) Retail $2,119 $1.6 1.79 56% 2% 5
Slide 31: Loan Portfolio – Consumer, Residential Mortgage and HELOC
LOAN PORTFOLIO – CONSUMER, RESIDENTIAL MORTGAGE AND HELOC Consumer, Residential Mtg and HELOC Segment Credit Indicator 4Q22 1Q23 Mortgage(1) 15% HELOCs NPL Ratio (Non-Accruals & 90+ DPD & Accruing) 0.35% 0.35% Other Consumer 12% Net Charge-Offs Ratio 0.00% 0.00% CD-Secured 71% 30+ DPD Ratio (Accruin
Slide 32: Current & Historical – Qtr Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $462M $453M $438M $400 4.5% Total $348M $405M 3.99% Revenue 3.65%3.9% 3.93% 4.0% 120% 3.3%
Slide 33: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production 1Q22 4Q22 1Q23 Portfolio • Mortgage banking income of $4.3 million in 1Q 2023 Secondary 19% 28% compared to ($545) thousand in 4Q 2022 47% 53% 72% 81% • Secondary pipeline of $107 million at 1Q 2023, as compared to $39 million at 4Q
Slide 34: Residential Mortgage Portfolio
RESIDENTIAL MORTGAGE PORTFOLIO GAIN ON SALE (“GOS”) MARGIN AND INTEREST RATES Consumer R/E Loan Growth ($) 30-yr Fixed Mortgage Rate GOS Margin $600 $700 7.08% 8.0% 6.21% 6.38% 5.54% 6.0% $450 $500 4.56% 4.33% 4.49% 4.25% $517 4.11% $472 $498 3.63% $ in millions 3.00% 3.13% 3.25% 2.87% 4.0% $300 $38
Slide 35: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,201 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues, gross Interest on VM FI Revenues Operational Revenues Total Revenues, gross $35 $35.0 $28.0 $27.6 $30 $30.0 $25 $22.0 $20.6 $25.0 $20 $16.8 $20.0 $ in millions $15 $15.0 $10 $10.0 $5 $5.0
Slide 36: Digital Trends
D I G I TA L T R E N D S Digital Sales – Deposit Accounts * Digital Sales – Loans ** Digital Deposits* 100% 100% 100% 19% 21% 16% 18% 35% 80% 80% 80% 81% 84% 82% 32% 79% 60% 60% 60% 68% 65% 40% 40% 40% 20% 20% 20% 0% 0% 0% 1Q22 1Q23 1Q22 1Q23 1Q22 1Q23 Branch Digital Branch Digital Branch Digital *
Slide 37: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 1Q 2023 422 Branches 251 Branches 268 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $145M Branches 85 434 268 251 Increased deposits per branch 3.6x from 2009 to 1Q23 37
Slide 38: Non-GAAP Reconciliations – Return on Avg. Tangible Common Equity & PPNR ROAA
N O N - G A A P R E C O N C I L I AT I O N S – R E T U R N O N A V G . T A N G I B L E C O M M O N E Q U I T Y & P P N R R E T U R N O N AV G . A S S E T S Return on Average Tangible Equity 4Q22 1Q23 Net income (GAAP) $ 143,502 $ 139,926 Plus: Amortization of intangibles 8,027 7,299 Effective tax ra
Slide 39: Non-GAAP Reconciliations – Adjusted Net Income & Adjusted EPS
N O N - G A A P R E C O N C I L I AT I O N S – A D J U S T E D N E T I N C O M E & A D J U S T E D EARNINGS PER SHARE (“EPS”) Adjusted Net Income 4Q22 1Q23 Net income (GAAP) $ 143,502 $ 139,926 Plus: Securities gains, net of tax — (35) Merger, branch consolidation and severance related expense, net
Slide 40: Non-GAAP Reconciliations – Adjusted ROAA & Adjusted ROTCE
N O N - G A A P R E C O N C I L I AT I O N S – A D J U S T E D R E T U R N O N A V G . A S S E T S & AV G . TA N G I B L E C O M M O N E Q U I T Y Adjusted Return on Average Assets 4Q22 1Q23 Adjusted net income (non-GAAP) $ 144,713 $ 147,247 Total average assets 44,429,894 44,104,478 Adjusted Return
Slide 41: Non-GAAP Reconciliations – Net Interest Margin & Core Net Interest Income
N O N - G A A P R E C O N C I L I AT I O N S – N E T I N T E R E S T M A R G I N & C O R E N E T I N T E R E S T I N CO M E ( E XC L D. F M V & P P P ACC R E T I O N ) Net Interest Margin - Tax Equivalent (Non-GAAP) 1Q22 2Q22 3Q22 4Q22 1Q23 Net interest income (GAAP) $ 261,518 $ 315,815 $ 362,334 $
Slide 42: Non-GAAP Reconciliations – PPNR, Correspondent & Capital Markets
N O N - G A A P R E C O N C I L I AT I O N S – P P N R , A D J U S T E D , P P N R / W E I G H T E D A V G . C S & C O R R E S P O N D E N T & C A P I TA L M A R K E T S I N C O M E ( U N A U D I T E D ) PPNR, Adjusted & PPNR, Adjusted per Weighted Avg. Common Shares Oustanding, Diluted 1Q22 2Q22 3Q
Slide 43: Non-GAAP Reconciliations – Efficiency Ratios
N O N - G A A P R E C O N C I L I AT I O N S – C U R R E N T & H I S T O R I C A L : E F F I C I E N C Y R AT I O S ( U N A U D I T E D ) 1Q22 2Q22 3Q22 4Q22 1Q23 Noninterest expense (GAAP) $ 228,600 $ 231,169 $ 240,433 $ 229,499 $ 240,505 Less: Amortization of intangible assets 8,494 8,847 7,837 8,
Slide 44: Non-GAAP Reconciliations – Tangible Common Equity Ratio
N O N - G A A P R E C O N C I L I AT I O N S – T A N G I B L E C O M M O N E Q U I T Y R AT I O Tangible Common Equity ("TCE") Ratio 4Q22 1Q23 Tangible common equity (non-GAAP) $ 3,035,371 $ 3,216,295 Total assets (GAAP) 43,918,696 44,923,827 Less: Intangible assets 2,039,556 2,032,709 Tangible asse
Slide 45: Non-GAAP Reconciliations – Capital Ratios with AOCI Impact
N O N - G A A P R E C O N C I L I AT I O N S – C A P I T A L R AT I O S W I T H A O C I I M P A C T Tier 1 Leverage Ratio with AOCI Impact CET 1 Risk-based Capital Ratio with AOCI Impact Total Risk-based Capital Ratio with AOCI Impact (non-GAAP) (non-GAAP) (non-GAAP) March 31, 2023 March 31, 2023 Ma
Slide 46: Earnings Presentation End Notes
E A R N I N G S P R E S E N TAT I O N E N D N O T E S Slide 5 End Notes • Loans and deposits as of 3/31/23; excludes $2.0B of loans and $3.7B of deposits from internal accounts and national lines of business • Country GDP as of 2022; State GDP as of 4Q22 • Sources: S&P Global, International Monetary
Slide 47: Earnings Presentation End Notes
E A R N I N G S P R E S E N TAT I O N E N D N O T E S Slide 15 End Notes † Core deposits defined as non-time deposits (1) Source: S&P Global Market Intelligence; 1Q23 MRQs available as of April 25, 2023; Peers as disclosed in the most recent SSB proxy statement. Slide 17 End Notes (1) Denotes the pe
Slide 48: Earnings Presentation End Notes
E A R N I N G S P R E S E N TAT I O N E N D N O T E S Slide 28 End Notes † Investment portfolio excludes non-marketable equity. (1) MBS issued by U.S. government agencies or sponsored enterprises (commercial and residential collateral) (2) Investment securities yield include non-marketable equity an
Slide 49: SouthState
S SouthState