Southstate Bank Corporation · NYSE:SSB
Southstate Bank — Q1 2024 Earnings Presentation
44 slides from Southstate Bank's earnings presentation, Apr 26, 2024
Slide 1: Earnings Call 1Q 2024
Earnings Call 1Q 2024 April 26, 2024
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 Billion in assets $33 Billion in loans Ranked (251) $37 Billion in deposits #14 by S&P Global 17 Greenwich Excellence & Best Brand Awards for Small Business Banking from $6.1 Coalition Greenwich Billion market cap 3 (1) Financial metrics as of Mar
Slide 4: The WHY The WHAT The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2023 ($ in trillions) 17.8% $0.8B US $27.4 $0.6B 13.7% China $17.7 12.8% 11.9% SSB Footprint $4.6 8.9% 8.3% $3.0B Germany $4.4 The combined GDP of 6.0% $2.1B SouthState’s 6 state branch Japan $4.2 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 Top 10 States Net Domestic Migration 1. Florida 818,762 2. Texas 656,220 3. North Carolina 310,189 4. South Carolina 248,055 5. Arizona 218,247 6. Tennessee 207,097 7. Georgia 185,752 8. Idaho 104,313 9. Ala
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 4Q23 1Q24 GAAP Net Income $ 106.8 $ 115.1 EPS (Diluted) $ 1.39 $ 1.50 Return on Average Assets 0.94 % 1.03 % Non-GAAP(1) Return on Average Tangible Common Equity 13.5 % 13.6 % Non-GAAP, Adjusted(1) Net Income $ 128.3 $ 121.3 EPS (Diluted) $ 1.67 $ 1.58 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 4 • Reported Diluted Earnings per Share (“EPS”) of $1.50; adjusted Diluted EPS (non-GAAP)(1) of $1.58 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $174.6 million, or 1.56% PPNR ROAA (non-GAAP)(2) • PPNR per weighted average diluted share (non-
Slide 11: 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) $400 $381.3 4.4% $7.4 $361.7 $355.4 $354.2 $5.5 $343.9 $350 3.93% $4.1 $3.9 $4.3 4.0% $300 3.62% 3.50% 3.48% 3.6% $ in millions 3.41% $250 $373.9 $356.2 $351.3 $350.
Slide 12: 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 $2,369 $ in millions $2,500 $2,181 $2,079 $1,933 $1,879$1,834 $2,000 $1,791 $1,699 $1,470$1,535 $1,459 $1,500 $1,256(2) $1,352 $1,233 $1,451 $
Slide 13: Balance Sheet
Balance Sheet Ga
Slide 14: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans (1) Deposits Noninterest-bearing Checking ("DDA") Interest-bearing Checking MMA & Savings Time Deposits $42 $33.0B $42 $350, 000,000.0B $36 $36 $300, 000,000.0B $4.3 $32.5B $4.1 $4.4 $4.5 $4.2 $30 $32.0B $30 $250, 000,000.0B $11.5 $12.6 $ in billions $13.5 $14.2 $14.5 $
Slide 15: 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 8,107 $ 9.8B $ 1,203,000 CDL (1) Investor CRE (2) Consumer RE 45,011 8.2B 182,700 7% 30% Owner-Occupied CRE 7,758 5.5B 710,500 C&I 19,405 5.5B 285,700 C&I Constr., Dev. & Land
Slide 16: 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% Noninterest- Deposits 11% bearing 17% $4.3B Checking 42% 80% $10.5B Commercial 39% 38% 60% Total Deposits 40% $37.2 Billion 30% Small Business M
Slide 17: 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 6.0% 6.0% 24% deposit 33% deposit beta in beta in 5.25% 5.31% 5.31% previous current cycle 4.98% 5.0% cycle 5.0% to date 4.50% 4.0% 4.0% 3.64% 3.0% 3.0% 2.40% 2.40% 2.22% 2.
Slide 18: Credit
Credit
Slide 19: Loan Portfolio – Office Exposure
LOAN PORTFOLIO – OFFICE E XPOSURE State MSA AL 2% Other 5% FL NC 44% 5% VA 6% GA Greenville 18% SC 21% Atlanta Charleston Granular and Diversified Office Portfolio • Office represents 4% of the loan portfolio • Average loan size only $1.4 million Jacksonville • 95% located in the SouthState footprin
Slide 20: CRE Trends – SouthState Footprint vs. Top 25 MSAs
(1) C R E T R E N D S – S O U T H S T AT E F O O T P R I N T V S . T O P 2 5 M S A s Office Multifamily Rent Growth (Last 3 Years) Vacancy (12/31/23) Rent Growth (Last 3 Years) Vacancy (12/31/23) Miami 25% Savannah 2% Savannah 27% New York 2% Sarasota 25% Port St. Lucie 4% Sarasota 25% Miami 4% Sava
Slide 21: Loan Portfolio – Nonowner-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 $2,124 $1.7 1.76 54% 2% 5
Slide 22: Loan Portfolio – Commercial Real Estate Maturities by Year
L O A N P O R T F O L I O – C O M M E R C I A L R E A L E S T AT E M AT U R I T I E S B Y Y E A R ( 1 ) 86% of CRE loans mature in 2026 or later $9.0 52% 50% $8.0 $7.0 40% $6.0 $ in billions $5.0 30% $4.0 $7.9 20% $3.0 12% 11% 11% $2.0 8% 6% 10% $1.0 $1.9 $1.7 $1.3 $1.6 $0.9 $— 0% 2024 2025 2026 202
Slide 23: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs to Loans • $217 million in provision for credit losses vs. 0.25% $29 million in net charge-offs trailing eight 0.16% quarters 0.15% 0.09% 0.04% • Increased ACL plus reserve for unfunded 0.03% 0.05% 0.01% commitments by 35 bps to 1.60% from 1Q22 to 1Q24 (0.05)%
Slide 24: 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 Provision for Credit Losses Net Charge-Offs (Recoveries) Total ACL Reserve for Unfunded Commitments % of Total Loans $50 $47.1 $550 2.20%
Slide 25: Capital
Capital Ga
Slide 26: Capital Ratios
C A P I T A L R AT I O S 4Q23 1Q24(2) Tangible Common Equity(1) 8.2 % 8.2 % Tier 1 Leverage 9.4 % 9.6 % Tier 1 Common Equity 11.8 % 11.9 % Tier 1 Risk-Based Capital 11.8 % 11.9 % Total Risk-Based Capital 14.1 % 14.4 % Bank CRE Concentration Ratio 237 % 235 % Bank CDL Concentration Ratio 60 % 49 % (1
Slide 27: Appendix
Appendix Ga
Slide 28: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 0.4% 2.45% 2.44% Agency MBS(1) 2.50% 2.37% 2.35% 2.36% Treasury, Agency & SBA 2.20% 14% 1.90% Municipal 1.60% Corporates 12% 1.30% Total Investment 1.00% Portfolio† 1Q23 2Q23 3Q23 4Q23 1Q24 $7.0 Billi
Slide 29: Current & Historical Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $453M $440M $400 4.5% $429M $420M $416M Total 100% 5.0% 3.93% Revenue 16% 16% 18% 17% 17%
Slide 30: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production Portfolio 1Q23 4Q23 1Q24 • Mortgage banking income of $6.2 million in 1Q 2024 Secondary 28% compared to $2.2 million in 4Q 2023 49% 51% 47% 53% 72% • Secondary pipeline of $118 million at 1Q 2024, as compared to $64 million at 4Q 202
Slide 31: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,229 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues, gross Interest on VM FI Revenues Operational Revenues Total Revenues, gross $35 $35.0 $27.7 $30 $24.8 $30.0 $25 $22.0 $25.0 $20 $16.1 $14.6 $20.0 $ in millions $15 $15.0 $10 $10.0 $5 $— $5
Slide 32: 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% 18% 15% 21% 22% 80% 80% 80% 35% 36% 82% 85% 79% 78% 60% 60% 60% 65% 64% 40% 40% 40% 20% 20% 20% —% —% —% 1Q23 1Q24 1Q23 1Q24 1Q23 1Q24 Branch Digital Branch Digital Branch Digital *
Slide 33: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 1Q 2024 422 Branches 251 Branches 268 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $148M Branches 85 434 268 251 Increased deposits per branch 3.7x from 2009 to 1Q24 33
Slide 34: 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 4Q23 1Q24 Net income (GAAP) $ 106,791 $ 115,056 Plus: Amortization of intangibles 6,615 5,998 Effective tax ra
Slide 35: 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 4Q23 1Q24 Net income (GAAP) $ 106,791 $ 115,056 Plus: Securities losses, net of tax 2 — Merger, branch consolidation, severance related and other expense,
Slide 36: Non-GAAP Reconciliations – Adjusted ROAA & ROATCE
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 4Q23 1Q24 Adjusted net income (non-GAAP) $ 128,271 $ 121,326 Total average assets 45,037,632 45,011,163 Adjusted Return
Slide 37: 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) 1Q23 2Q23 3Q23 4Q23 1Q24 Net interest income (GAAP) $ 381,263 $ 361,743 $ 355,371 $
Slide 38: Non-GAAP Reconciliations – PPNR and Correspondent & Capital Markets Income
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 (Non-GAAP) 1
Slide 39: Non-GAAP Reconciliations – Current & Historical 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 ) 1Q23 2Q23 3Q23 4Q23 1Q24 Noninterest expense (GAAP) $ 240,505 $ 242,626 $ 238,206 $ 273,243 $ 249,290 Less: Amortization of intangible assets 7,299 7,028 6,616 6,
Slide 40: 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 4Q23 1Q24 Tangible common equity (non-GAAP) $ 3,521,216 $ 3,540,710 Total assets (GAAP) 44,902,024 45,144,838 Less: Intangible assets 2,011,882 2,006,299 Tangible asse
Slide 41: 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 March 31, 2024; excludes $2.2B of loans and $3.4B of deposits from national lines of business and brokered deposits. • Country GDP as of 2023; State GDP as of 4Q23 • Sources: S&P Global, International
Slide 42: 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 (1) CDL includes residential construction, commercial construction, and all land development loans. (2) Investor CRE includes nonowner-occupied CRE and other income producing property. (3) Excludes SELF loans acquired from ACBI
Slide 43: 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 29 End Notes (1) Total revenue and noninterest income are adjusted by gains or losses on sales of securities and tax equivalent adjustments; Tax equivalent NIM, efficiency ratio and adjusted efficiency ratio are Non- GAAP financial measures
Slide 44: SouthState
S SouthState