Slide 1: Earnings Call 3Q 2022
Earnings Call 3Q 2022 October 25, 2022
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 #1 in Florida #3 in South Carolina $29 Billion in loans “Best Places to Work” Ranked #30 (252) $38 Billion in deposits designation in South Carolina by S&P Global 16 Greenwich Excellence and Best Brand awards from Coalition Green
Slide 4: The WHY, The WHAT, The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2022 ($ in trillions) US $23.0 16.9% $0.6B $0.5B China $17.7 12.6% 12.2% 11.1% Japan $4.9 8.9% 8.3% $2.5B Germany $4.2 The combined GDP of 5.8% $2.1B SouthState’s 6 state branch SSB Footprint $4.1 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 U.S. Net Domestic Migration During Covid, July 2020 to July 2021 Source: U.S. Census Bureau 6
Slide 7: Investment Thesis
INVESTMENT THESIS • High growth markets • 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 markets plat
Slide 8: Quarterly Results
Quarterly Results Ga
Slide 9: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 2Q22 3Q22 GAAP Net Income $ 119.2 $ 133.0 EPS (Diluted) $ 1.57 $ 1.75 Return on Average Assets 1.04 % 1.16 % Non-GAAP(1) Return on Average Tangible Common Equity 16.59 % 17.99 % Non-GAAP, Adjusted(1) Net Income $ 123.4 $ 143.7 EPS (Diluted) $ 1.62 $ 1.89 Return on Average
Slide 10: Quarterly Highlights
Q U A R T E R LY H I G H L I G H T S | 3 Q 2 0 2 2 • Reported Earnings per Share (“EPS”) of $1.75; Adjusted Diluted EPS (non-GAAP) of $1.89 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $208.6 million, or 1.83% PPNR ROAA(2) • PPNR per diluted share (non-GAAP)(2) of $2.74, up 18% from the prio
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) $3.00 $2.74 $2.50 $2.32 $2.00 $1.87 $1.89 $1.79 $1.50 3Q21 4Q21 1Q22 2Q22 3Q22 (1) For end note descriptions, Earnings Presentation End Notes starting on slide 40 11
Slide 12: Net Interest Margin
N E T I N T E R E S T M A R G I N (1) (3) Net Interest Income excld. Accretion (2) Accretion(2) Net Interest Income Net Interest Margin 43 bps quarterly improvement in Net Interest Margin $358.2 3.8% $350 $9.5 $314.3 3.55% $300 $12.8 3.5% $ in millions $260.0 $258.1 $261.5 $250 $13.4 $7.7 3.12% $21.
Slide 13: Loan Production vs Loan Growth
LOAN PRODUCTION VS LOAN GROWTH (3) Loan Production Loan Portfolio Growth (3) (1) $4,000 $3,863 (1) $3,500 $3,372 $3,129 $3,000 (1) $2,636 $2,582 $2,500 $2,355 $ in millions $2,079 $1,933 $1,879 $1,834 $2,000 $1,791 $1,699 (2) $1,470 $1,535 $1,500 $1,256 $1,451 $1,000 $933 $500 $180 $82 $267 $153 $18
Slide 14: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production 3Q21 2Q22 3Q22 Portfolio • Mortgage banking income of $2.3 million in 3Q 2022 Secondary 22% 27% compared to $5.5 million in 2Q 2022 46% 54% 73% 78% • Secondary pipeline of $76 million at 3Q 2022, as compared to $126 million at 2Q 202
Slide 15: Residential Mortgage Portfolio
RESIDENTIAL MORTGAGE PORTFOLIO GAIN ON SALE (“GOS”) MARGIN AND INTEREST RATES Consumer R/E Loan Growth ($) 30-yr Fixed Mortgage Rate GOS Margin $600 6.21% $700 6.5% 5.54% 4.49% 4.56% 4.33% 4.25% $450 $500 4.11% 3.63% 3.46% $517 3.25% 3.04% 3.08% 3.13% 3.25% $472 3.00% $ in millions $300 2.87% 3.5% $
Slide 16: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,182 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues FI Revenues Operational Revenues Total Revenue $35 $35.0 $30.2 $30 $28.0 $27.6 $30.0 $25.2 $25 $25.0 $20.6 $ in millions $20 $20.0 $15 $15.0 $10 $10.0 $5 $5.0 $- $0.0 3Q21 4Q21 1Q22 2Q22 3Q
Slide 17: Interest Rate Sensitivity
Interest Rate Sensitivity Go
Slide 18: Premium Core Deposit Franchise
PREMIUM CORE† DEPOSIT FRANCHISE Deposit Mix vs. Peers Deposits by Type Checking Accounts MM & Savings Time Deposits Checking Accounts Composition Time 100% 7% 7% Deposits Noninterest- $2.6B bearing 35% 80% 34% Checking Commercial 49% $13.7B 60% Money Market Total Deposits $9.1B $37.7 Billion 35% 40%
Slide 19: 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 6% 60% 5% 50% 4.9% 4% 40% 3% 30% 50% 50% 2% 2.5% 20% 41% 30% 1% 1.3% 10% 20% 0.7% 9% 0% 0% Up 25 bps Up
Slide 20: Remain Well-Positioned During Current Cycle
REMAIN WELL-POSITIONED DURING CURRENT CYCLE – PREVIOUS 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 3.0% 24% deposit 3.0% 3% deposit beta in beta in previous current 2.5% 2.40%2.40% cycle 2.5% cycle 2.22% 2.17% 1.92% 2.0% 2.0% 1.74% 1.45% 1.5% 1.5% 1.16%1.20% 0.95% 1.0% 1.0% 0.70
Slide 21: Balance Sheet
Balance Sheet Ga
Slide 22: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans(1) Deposits Total Loans PPP Noninterest-bearing Checking Interest-bearing Checking MMA & Savings Time Deposits $32 $42 $38.8B $38.9B $350, 000,000.0B $28.8B $35.0B $27.9B $37.7B $26.6B $35.1B $2.7 $33.6B $2.8 $2.6 $36 $300, 000,000.0B $23.9B $30.0B $23.8B $0.1 $2.8 $24
Slide 23: 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 Loan Type Balance Loans Balance Cons / Other Constr., Dev. & Land 5,629 $ 2.5B $ 453,000 4% CDL (1) 9% Investor CRE (2) Investor CRE 8,949 8.6B 965,600 30% Owner-Occupied CRE 8,194 5.4B 662,300 C&I 18,668 5.0B 265,200 Consumer Total Loa
Slide 24: Asset Quality Metrics
ASSET QUALIT Y METRICS Net (Recoveries) Charge-Offs to Loans Nonperforming Assets to Loans & OREO 0.25% 1.0% 0.8% 0.15% 0.44% 0.5% 0.40% 0.35% 0.33% 0.35% 0.04% 0.03% 0.05% 0.02% 0.00% 0.3% (0.02)% (0.05)% 0.0% 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q22 3Q22 Criticized & Classified Asset Trends Co
Slide 25: Capital Ratios
C A P I T A L R AT I O S 2Q22 3Q22(2) Tangible Common Equity(1) 6.8 % 6.7 % Tier 1 Leverage 8.0 % 8.3 % Tier 1 Common Equity 11.1 % 11.0 % Tier 1 Risk-Based Capital 11.1 % 11.0 % Total Risk-Based Capital 13.0 % 12.9 % Bank CRE Concentration Ratio 248 % 248 % Bank CDL Concentration Ratio 61 % 60 % (1
Slide 26: Appendix
Appendix Ga
Slide 27: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 3Q 2022 422 Branches 252 Branches 267 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $149M Branches 85 434 267 252 ~273% growth in deposits per branch 3rd Quarter 2022 Activit
Slide 28: Technology | Digital
T E C H N O L O G Y | D I G I TA L 2020-2022 Foundation Future System Conversion Complete • Strategic Talent Adds Tech Stack with Best-in-Class Systems • Efficiency, Capacity, Automation Talent retained and in place for next phase • Data Analytics • Money Movement • Digital First Target: Digit
Slide 29: Tangible Book Value per Share Plus Capital Return per Share
TA N G I B L E B O O K VA L U E P E R S H A R E (1) P L U S C A P I TA L R E T U R N P E R S H A R E $68.00 Tangible Book Value per Share ("TBVPS") Cumulative Dividends since FYE 2019 Cumulative Repurchases per Share since FYE 2019 Cumulative Change in AOCI per Share since FYE 2019 $68.00 $50.96 $47
Slide 30: Current & Historical - Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”) Noninterest Income / Revenue Total Revenue ($MM) Avg. 10-year UST NIM ($) NIM (%) $435M 3.6% $370 4.0% Total $347M $350M $348M $403M 120% 3.09% 3.55% Revenue 100% 3.0% 25% 26% 24% 22
Slide 31: Loss Absorption Capacity
L O S S A B S O R P T I O N C A PA C I T Y | 3 Q 2 0 2 2 3Q22 % of Total Loans(1) Allowance for Credit Losses (“ACL”) Non-PCD ACL $ 270.9 PCD ACL 53.5 Total ACL $ 324.4 1.13 % Reserve for Unfunded Commitments Reserve for unfunded commitments 53.0 0.18 % Total ACL plus Reserve for Unfunded Commitment
Slide 32: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 2.2% 2.03% 2.06% 7% 1.75% 9% 1.51% 1.53% Agency MBS(1) 1.6% Municipal 12% Total Investment 1.0% Portfolio† 3Q21 4Q21 1Q22 2Q22 3Q22 Treasury & agency $8.1 Billion Other 72% Municipal Bond Rating 23% 1
Slide 33: 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 2Q22 3Q22 Net income (GAAP) $ 119,175 $ 133,043 Plus: Amortization of intangibles 8,847 7,837 Effective tax ra
Slide 34: 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 2Q22 3Q22 Net income (GAAP) $ 119,175 $ 133,043 Plus: Securities gains, net of tax - (24) Merger and branch consolidation related expense, net of tax 4,22
Slide 35: Non-GAAP Reconciliations – Adjusted ROAA & Adjusted 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 2Q22 3Q22 Adjusted net income (non-GAAP) $ 123,398 $ 143,657 Total average assets 45,847,789 45,344,935 Adjusted Return
Slide 36: 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) 3Q21 4Q21 1Q22 2Q22 3Q22 Net interest income (GAAP) $ 259,986 $ 258,104 $ 261,474 $
Slide 37: Non-GAAP Reconciliations – PPNR, 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) 3
Slide 38: 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 ) 3Q21 4Q21 1Q22 2Q22 3Q22 Noninterest expense (GAAP) $ 232,290 $ 224,037 $ 228,600 $ 231,169 $ 240,433 Less: Amortization of intangible assets 8,543 8,517 8,494 8,
Slide 39: Non-GAAP Reconciliations – Tangible Book Value & TCE 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 B O O K V A L U E / S H A R E & 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 Book Value per Common Share 2019 2020 2021 3Q22 Shareholders' common equity $ 2,373,013 $ 4,647,880 $ 4,802,940 $ 4,921,186 Less: Intangible assets
Slide 40: 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 9 End Notes (1) The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets. The tangible returns on equity and common equity measures also add back the after-tax amortization of
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 29 End Notes (1) The tangible measure is a non-GAAP measure and excludes the effect of period end balances of intangible assets - See reconciliation of GAAP to Non-GAAP measures in Appendix. Slide 30 End Notes (1) Total revenue and noninter
Slide 42: SouthState
S SouthState