Southstate Bank Corporation · NYSE:SSB
Southstate Bank — South State — Q4 2018 Earnings Presentation
41 slides from Southstate Bank's earnings presentation, Feb 13, 2019
Slide 1: Investor Presentation Fourth Quarter 2018
1 Investor Presentation Fourth Quarter 2018
Slide 2: Forward Looking Statements
22 Forward Looking Statements 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 Securi
Slide 3: South State Corporation: SSB
33 South State Corporation: SSB Richmond Columbia Greenville Charlotte Charleston Wilmington Savannah Myrtle Beach Raleigh Atlanta Augusta
Slide 4: How We Operate the Company
44 How We Operate the Company Soundness Profitability Growth
Slide 5: 2018 Highlights
55 2018 Highlights *Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses. 3Q18 4Q18 2018 GAAP Net Income (millions) $ 47.1 $ 49.0 $ 178.9 EPS $ 1.28 $ 1.35 $ 4.86 Return on Average Assets 1.28% 1.33% 1.23%
Slide 6: Soundness
6 Soundness
Slide 7: Capital Adequacy
77 Capital Adequacy SSB 12/31/18 estimates Source: S&P Global Market Intelligence and Company filings. 9.6% 10.6% 12.0% 13.0% 13.5% Tangible Common Equity / Tangible Assets Leverage Ratio CET1 Ratio Tier 1 Capital Ratio Total RBC Ratio SSB (12/31/18)
Slide 8: Asset Quality
88 Asset Quality 0.74% 0.63% 0.38% 0.29% 0.23% 0.19% 2013 2014 2015 2016 2017 4Q 18 NPLs / Loans(1) 1.36% 1.02% 0.63% 0.43% 0.25% 0.28% 2013 2014 2015 2016 2017 4Q 18 NPAs / Assets(2) 81.2% 121.1% 181.8% 250.7% 293.0% 340.9% 2013 2014 2015 2016 2017 2018 ALLL / NPLs(3) 0.41% 0.16% 0.09% 0.06% 0.04%
Slide 9: CRE Concentration
99 CRE Concentration Dollars in billions * Concentration limits calculated based upon bank level total Risk Based Capital (RBC). 4Q 18 Regulatory Guideline Balance % of RBC* Balance % of RBC* CRE $3.3 216% $4.5 300% Construction Land & Development $1.1 70% $1.5 100% $1.2 Billion in CRE Lending Capac
Slide 10: 4Q 18 Funding
1010 Non-Interest Bearing DDA $3,062 Interest Bearing DDA $2,829 Savings $1,400 Money Market $2,578 Time Deposits $1,778 Other Borrowings $537 4Q 18 Funding Dollars in millions
Slide 11: Profitability
11 Profitability
Slide 12: Earnings Per Diluted Share
1212 $3.08 $4.11 $4.18 $2.93 $4.86 $3.75 $4.31 $4.55 $4.85 $5.50 2014 2015 2016 2017 2018 EPS Adjusted* EPS (Non-GAAP) Earnings Per Diluted Share * Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses, defe
Slide 13: Net Interest Margin
1313 Net Interest Margin Dollars in millions 4.18% 4.22% 4.14% 4.04% 3.98% $112.3 $129.0 $129.6 $128.3 $126.4 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 Net Interest Margin Net Interest Income
Slide 14: Fee Income and Revenue Composition
1414 Deposit Accounts 56% Mortgage Banking 9% Trust & Investment Services 21% Other 14% Fee Income $145.8 Million 2018 Revenue Composition 77% 75% 74% 72% 75% 78% 23% 25% 26% 28% 25% 22% 2013 2014 2015 2016 2017 2018 Noninterest Income Net Interest Income Excludes Securities Gains/Losses.
Slide 15: Efficiency Ratio
1515 68.0% 66.7% 65.6% 62.3% 59.4% 56.3% 60.0% 57.3% 59.5% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 Efficiency Ratio Adjusted* Efficiency Ratio Efficiency Ratio * Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses.
Slide 16: Common Stock Dividends
1616 $0.74 $0.82 $0.98 $1.21 $1.32 $1.38 $0.38 2013 2014 2015 2016 2017 2018 YTD 2019 1Q19 Dividend Declared* Dividend per Common Share Common Stock Dividends * 1Q 19 dividend of $0.38 declared 01/25/2019 with a record date of 2/15/2019 and payable on 2/22/2019.
Slide 17: Tangible Book Value + Cumulative Dividends
1717 Tangible Book Value + Cumulative Dividends $12.86 $19.18 $29.13 $44.71 $48.78 - 10.00 20.00 30.00 40.00 50.00 60.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cumulative Dividend TBV 15 year increase of 244% $
Slide 18: Growth
18 Growth
Slide 19: Market Demographics
1919 Market Demographics Source: S&P Global Market Intelligence. 71% of Branch Footprint in High Growth Markets 2.7x 2.3 2.3 2.3 2.0 2.0 1.7x 1.7 1.6 1.3 1.2 MSA Branches Myrtle Beach 10 Charleston 24 Hilton Head 9 Raleigh 1 Charlotte 22 Wilmington 4 Greenville 14 Savannah 7 Columbia 9 Augusta 12 Ri
Slide 20: SSB Footprint Market Share
2020 SSB Footprint Market Share Rank Institution Deposits Market Share 1 BB&T / SunTrust $ 36.1 20.3% 2 Wells Fargo & Co. 32.6 18.3 3 Bank of America Corp. 22.6 12.7 4 First Citizens BancShares Inc. 11.9 6.7 5 South State Corp. 11.7 6.6 6 Toronto-Dominion Bank 4.7 2.7 7 United Community Banks Inc. 4
Slide 21: Selected Markets
2121 Selected Markets Richmond Branches Deposits Share 1 BB&T / SunTrust 74 $ 6,021 27.7% 2 Wells Fargo & Co. (CA) 56 4,672 21.5 3 Union Bkshs Corp (VA) 31 2,998 13.8 4 Bank of America Corp. (NC) 21 2,088 9.6 5 TowneBank (VA) 9 860 4.0 6 Southern National Bncp of VA (VA) 13 846 3.9 7 C&F Financial C
Slide 22: BBT / STI Branch Overlap
2222 BBT / STI Branch Overlap Charlotte 50% Greenville 79% Richmond 63% Charleston 70% Savannah 86% Raleigh 59% Source: S&P Global Market Intelligence. Percentage overlap of BBT / STI branches within a 2 mile radius of each other. South State
Slide 23: Economic Highlights
2323 Economic Highlights Richmond Columbia Greenville Charlotte Charleston Wilmington Savannah Myrtle Beach Raleigh Atlanta Augusta
Slide 24: Appendix
24 Appendix
Slide 25: Stock Repurchase Plan
2525 Stock Repurchase Plan • New share repurchase plan announced in 1Q 19 with authorization to repurchase up to 1,000,000 shares • 500,000 shares repurchased as of February 11, 2019 at an average price of $66.56 • 500,000 shares remaining under existing plan
Slide 26: Average Interest Earning Assets
2626 Average Interest Earning Assets Dollars in millions Quarterly Averages Assets % of Earning Assets 3Q 18 % of Earning Assets 4Q 18 Change Short-Term Investments 1.8% $ 233 1.4% $ 173 $ (60) Investment Securities 12.6 1,589 12.2 1,548 (41) Loans – Acquired 27.1 3,429 25.1 3,175 (254) Loans – Non-
Slide 27: Accretion / Total Interest Income
2727 18.3% 12.5% 9.4% 8.7% 6.7% 5% 10% 15% 20% 1Q15 4Q15 3Q16 2Q17 1Q18 4Q18 Accretion / Total Interest Income Accretable Yield Fourth Quarter 2018 (Yields Annualized) Income Statement Contractual Interest Accretion Total Income Contractual Yield Total Yield Acquired Credit Impaired $ 7.8 $5.9 $13.7
Slide 28: Acquired Loan Portfolio
2828 Acquired Loan Portfolio As of December 31, 2018 Balance Sheet UPB Discount Carrying Value Accretable Yield / Disc Acquired Credit Impaired $553.1 (A) ($68.0) $485.1 (B) $116.8 Acquired NonCredit Impaired 2,628.2 (33.4) 2,594.8 33.4 Total $3,181.3 ($101.4) $3,079.9 $150.2 (A) Represents total lo
Slide 29: Loan Portfolio Mix
2929 $2,865 $3,468 $4,221 $5,241 $6,492 $7,933$2,822 $2,248 $1,783 $1,439 $4,127 $3,080 $5,687 $5,716 $6,004 $6,680 $10,619 $11,013 2013 2014 2015 2016 2017 2018 Non Acquired Acquired* Loan Portfolio Mix Dollars in millions *Acquired loans are net of discounts.
Slide 30: 4Q Loan Characteristics
3030 4Q 18 Loan Characteristics Floaters $2,451 23% Hybrid ARMs $2,119 19% Adjustable $370 3% Fixed $6,006 55% Maturities or Re-prices <1 year 30% 1 - 5 years 34 5+ years 36 Overall Weighted Average Life of 3-4 Years Dollars in millions
Slide 31: Net Loan Growth
3131 Net Loan Growth $10,623 $11,018 $945 Unfunded $2,388 4Q17 Runoff / Amortization Production 4Q18 ($1,993) $3,333 Dollars in millions
Slide 32: 4Q Loans Organic Growth
3232 4Q 18 Loans Organic Growth Non-acquired Loan Growth 17% Annualized Relationship Driven Top 25 5.1% of Total loans Average Loan Size $128,166 Asset Quality NPAs/Assets 0.28% Non-acquired Charge-offs 0.04% Consum er 37.2% Commer cial Real Estate 29.1% Commer cial 33.7% Loans by Type NC $2.0 SC $6
Slide 33: Investment Portfolio Composition
3333 Agency Mortgage- Backed Securities 71% State & Municipal AFS 13% SBA 13% U.S. Agency/GSE Debentures 3% 4Q 18 Investment Portfolio Composition Bank Fixed Income Portfolio (AFS & HTM) Tax Equivalent Yield 2.7% Weighted Average Life 4.5 years Effective Duration 3.5 Total Carrying Value $1.5 Billio
Slide 34: Transaction Deposits and Digital Banking
3434 4Q18 Transaction Deposits ~267,000 accounts Relationship Based Avg. Balance $13,100 Avg. Age 10 Years Consumer Digital Banking Online Banking ~261,000 users Mobile App ~171,000 users DDA & Loan New Accounts ~9% Digital Debit Card Annual Transactions ~102 million 267,000 $3.1 187,000 $2.9 # of A
Slide 35: Wealth
3535 Wealth $4,943 $5,511 $4,170 $3,933 $3,828 $3,406 2018 2017 2016 2015 2014 2013 Assets Under Management or Care (millions) $30,229 $25,401 $19,764 $20,117 $18,344 $12,661 2018 2017 2016 2015 2014 2013 Noninterest Income (thousands)
Slide 36: Mortgage Banking
3636 Mortgage Banking $1,514 $1,577 $1,404 $1,379 $1,195 $1,668 2018 2017 2016 2015 2014 2013 Production (millions) $13,590 $17,954 $20,547 $21,761 $16,170 $9,149 2018 2017 2016 2015 2014 2013 Noninterest Income (thousands)
Slide 37: Branch Network
3737 Branch Network Total branches 12/31/2009 48 Acquired 201 Consolidated or sold (81) Total branches 12/31/18 168 Average deposits per branch (in millions) 6/30/2009 $46 12/31/2018 69 Announced 2019 Branch Closures 13
Slide 38: Asset Growth
3838 Asset Growth Dollars in billions $2.7 $3.6 $3.9 $5.1 $7.9 $7.8 $8.6 $8.9 $14.5 $14.7 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 39: Analyst Coverage
3939 Analyst Coverage Brean Capital FIG Partners Keefe, Bruyette & Woods Piper Jaffray Sandler O’Neill Stephens SunTrust Robinson Humphrey
Slide 40: Investor Contacts
4040 Investor Contacts 520 Gervais Street Columbia, South Carolina 29201 800-277-2175 www.southstatebank.com Robert R. Hill, Jr. Chief Executive Officer John C. Pollok Senior Executive Vice President Chief Financial Officer James C. Mabry IV Executive Vice President Investor Relations and Mergers &
Slide 41: South State
S$ . SOUTH STATE