Southstate Bank Corporation · NYSE:SSB
Southstate Bank — South State — Q3 2018 Earnings Presentation
40 slides from Southstate Bank's earnings presentation, Nov 6, 2018
Slide 1: Investor Presentation Third Quarter 2018
1 Investor Presentation Third 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 Columbia Greenville Charlotte Charleston Richmond Wilmington Savannah Myrtle Beach Hilton Head Raleigh Atlanta Augusta
Slide 4: How We Operate the Company
44 How We Operate the Company Soundness Profitability Growth
Slide 5: 3Q 2018 Highlights
55 3Q 2018 Highlights *Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses. GAAP Adjusted* Net Income $47.1 million $49.1 million EPS $1.28 $1.33 Return on Average Assets 1.28% 1.33% Return on Average Tang
Slide 6: Soundness
6 Soundness
Slide 7: Capital Adequacy
77 Capital Adequacy SSB 9/30/18 estimates Source: S&P Global Market Intelligence and Company filings. 9.7% 10.8% 12.3% 13.3% 13.8% 9.0% 9.8% 11.6% 12.0% 13.5% Tangible Common Equity / Tangible Assets Leverage Ratio CET1 Ratio Tier 1 Capital Ratio Total RBC Ratio SSB (9/30/18) KRX Median (6/30/18)
Slide 8: Asset Quality
88 Asset Quality 0.74% 0.63% 0.38% 0.29% 0.23% 0.24% 2013 2014 2015 2016 2017 3Q 18 NPLs / Loans(1) 1.36% 1.02% 0.63% 0.43% 0.25% 0.27% 2013 2014 2015 2016 2017 3Q 18 NPAs / Assets(2) 81.2% 121.1% 181.8% 250.7% 293.0% 326.0% 2013 2014 2015 2016 2017 3Q 18 ALLL / NPLs(3) 0.41% 0.16% 0.09% 0.06% 0.04%
Slide 9: CRE Concentration
99 CRE Concentration 3Q 18 Regulatory Guideline Balance % of RBC* Balance % of RBC* CRE $3.2 212% $4.5 300% Construction Land & Development $1.1 76% $1.5 100% Dollars in billions * Concentration limits calculated based upon bank level total Risk Based Capital (RBC). $1.3 Billion in CRE Lending Capac
Slide 10: 3Q 18 Funding
1010 Demand Deposits $3,157 Transaction Accounts $6,630 Time Deposits $1,826 Other Borrowings $396 3Q 18 Funding Dollars in millions 81% Core Funded Non-Core Funding 19%
Slide 11: Funding vs. Peers
1111 Funding Loans / Deposits Cost of Funds vs. Peers(1) Borrowings / Total Funding vs. Peers(2) Reliance on Wholesale Funding(3) Data per S&P Global Market Intelligence. Peer group includes the 20 largest, major exchange traded banks headquartered in the Southeast with total assets <$50 billion exc
Slide 12: Profitability
12 Profitability
Slide 13: Earnings Per Diluted Share
1313 $3.08 $4.11 $4.18 $2.93 $3.52 $3.75 $4.31 $4.55 $4.85 $4.15 2014 2015 2016 2017 3Q 18 YTD 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,
Slide 14: Net Interest Margin
1414 Net Interest Margin Dollars in millions 4.11% 4.18% 4.22% 4.14% 4.04% $100.3 $112.3 $129.0 $129.6 $128.3 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 Net Interest Margin Net Interest Income
Slide 15: Fee Income and Revenue Composition
1515 Deposit Accounts 57% Mortgage Banking 10% Trust & Investment Services 20% Other 13% Fee Income $110.7 Million YTD 2018 Revenue Composition 77% 75% 74% 72% 75% 78% 23% 25% 26% 28% 25% 22% 2013 2014 2015 2016 2017 YTD 2018 Noninterest Income Net Interest Income Excludes Securities Gains/Losses.
Slide 16: Efficiency Ratio
1616 58.8% 68.0% 66.7% 65.6% 62.3% 57.6% 56.3% 60.0% 57.3% 59.5% 3Q 17 4Q 17 1Q 18 2Q 18 3Q 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 lo
Slide 17: Common Stock Dividends
1717 $0.69 $0.74 $0.82 $0.98 $1.21 $1.32 $1.02 $0.36 2012 2013 2014 2015 2016 2017 YTD 2018 4Q18 Dividend Declared* Dividend per Common Share $1.38 Common Stock Dividends * 4Q 2018 dividend of $0.36 declared 10/18/2018 with a record date of 11/9/2018 and paid 11/16/2018.
Slide 18: Tangible Book Value + Cumulative Dividends
1818 Tangible Book Value + Cumulative Dividends $12.86 $19.18 $29.13 $44.71 $47.49 - 10.00 20.00 30.00 40.00 50.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q 18 Cumulative Dividend TBV 15 year increase of 235% $ YTD
Slide 19: Growth
19 Growth
Slide 20: Market Demographics
2020 Market Demographics 9.66% 8.11% 8.02% 8.02% 7.29% 7.09% 6.18% 6.15% 5.58% 4.51% 4.31% 3.56% Population Growth Projected Change 2019 - 2024 Source: S&P Global Market Intelligence. MSA Branches Myrtle Beach 10 Charleston 24 Hilton Head 9 Raleigh 1 Charlotte 22 Wilmington 4 Greenville 14 Savannah
Slide 21: SSB Footprint Market Share
2121 SSB Footprint Market Share Rank Institution Deposits Market Share 1 Wells Fargo & Co. $ 32.6 18.3% 2 BB&T Corp. 23.2 13.0 3 Bank of America Corp. 22.6 12.7 4 SunTrust Banks Inc. 12.9 7.3 5 First Citizens BancShares Inc. 11.9 6.7 6 South State Corp. 11.7 6.6 7 Toronto-Dominion Bank 4.7 2.7 8 Uni
Slide 22: Market Highlights
2222 Market Highlights Richmond Branches Deposits Share 1 Wells Fargo & Co. (CA) 56 $ 4,672 21.46% 2 BB&T Corp. (NC) 36 3,161 14.52 3 Union Bkshs Corp (VA) 31 2,998 13.77 4 SunTrust Banks Inc. (GA) 37 2,860 13.14 5 Bank of America Corp. (NC) 21 2,088 9.59 6 TowneBank (VA) 9 860 3.95 7 Southern Natio
Slide 23: Economic Highlights
2323 Economic Highlights Columbia Greenville Charlotte Charleston Richmond Wilmington Savannah Myrtle Beach Hilton Head Raleigh Atlanta Augusta
Slide 24: Appendix
Appendix SOUTH STATE CORPORATION
Slide 25: Average Interest Earning Assets
2525 Average Interest Earning Assets Dollars in millions Quarterly Averages Assets % of Earning Assets 2Q 18 % of Earning Assets 3Q 18 Change Short-Term Investments 1.6% $ 203 1.8% $ 233 $ 30 Investment Securities 13.1 1,653 12.6 1,589 (64) Loans – Acquired 29.7 3,742 27.1 3,429 (313) Loans – Non-ac
Slide 26: Loan Portfolio Mix
2626 $2,865 $3,468 $4,221 $5,241 $6,492 $7,606 $2,822 $2,248 $1,783 $1,439 $4,127 $3,299 $5,687 $5,716 $6,004 $6,680 $10,619 $10,905 2013 2014 2015 2016 2017 3Q 18 Non Acquired Acquired* Loan Portfolio Mix Dollars in millions *Acquired loans are net of discounts.
Slide 27: Acquired Loan Portfolio
2727 Acquired Loan Portfolio Dollars in millions Annualized Yields As of September 30, 2018 Balance Sheet UPB Discount Carrying Value Average Balance Accretable Yield/Discount Credit Impaired $ 589.2 $ (76.6) $ 512.6 $ 533.2 $ 115.0 Non-Credit Impaired 2,823.2 (37.1) 2,786.1 2,896.5 37.1 Total $ 3,4
Slide 28: Loans by Type
2828 Commercial Real Estate 29.3% Consumer 37.0% Commercial 33.7% 3Q 18 Loans by Type Total Loans $10.9 billion
Slide 29: Stratification of Loan Portfolio
2929 Stratification of Loan Portfolio % 29,465 86,301 0 20 40 60 80 100 12/31/10 9/30/2018 < $100 $100 - $999 $1,000+ # of Active Notes Average Loan Size All Loans $127 Commercial 335 Mortgage 225 Consumer 28 Dollars In thousands
Slide 30: Investment Portfolio Composition
3030 Agency Mortgage- Backed Securities 70% State & Municipal- HTM 1% State & Municipal AFS 13% SBA 13% U.S. Agency/GSE Debentures 3% 3Q 18 Investment Portfolio Composition Bank Fixed Income Portfolio (AFS & HTM) Tax Equivalent Yield 2.7% Weighted Average Life 4.8 years Effective Duration 3.8 Total
Slide 31: Transaction Deposit Composition
3131 3Q 18 Transaction Deposit Composition Interest Bearing $6,630 68% Non-Interest Bearing $3,157 32% Dollar Balance Interest Bearing 59% Non- Interest Bearing 41% Number of Accounts ~374,000 accounts ~264,000 accounts Dollars in millions Includes all deposits accounts except certificates of deposi
Slide 32: Wealth
3232 Wealth $5,624 $5,511 $4,170 $3,933 $3,828 $3,406 3Q 18 2017 2016 2015 2014 2013 Assets Under Management or Care (millions) $22,608 $25,401 $19,764 $20,117 $18,344 $12,661 YTD 2018 2017 2016 2015 2014 2013 Noninterest Income (thousands)
Slide 33: Mortgage Banking
3333 Mortgage Banking $1,163 $1,577 $1,404 $1,379 $1,195 $1,668 YTD 2018 2017 2016 2015 2014 2013 Production (millions) $11,089 $17,954 $20,547 $21,761 $16,170 $9,149 YTD 2018 2017 2016 2015 2014 2013 Noninterest Income (thousands) * Source: S&P Global Market Intelligence
Slide 34: Branch Network
3434 Branch Network Total branches 12/31/2009 48 Acquired 201 Consolidated or sold (81) Total branches 9/30/2018 168 Average deposits per branch (in millions) 6/30/2009 $46 9/30/2018 69
Slide 35: Asset Growth
3535 Asset Growth $2.7 $3.6 $3.9 $5.1 $7.9 $7.8 $8.6 $8.9 $14.5 $14.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q 2018 Dollars in billions
Slide 36: M&A History
3636 M&A History 2010 2011 2012 2013 2014 2015 2016 2017 $3.6 Bn $14.5 Bn Community Bank & Trust $1.0 Bn January 2010 BankMeridian $234 MM July 2011 First Financial Holdings, Inc. $3.2 Bn July 2013 Peoples Bancorporation $546 MM April 2012 Savannah Bancorp, Inc $950 MM December 2012 Bank of America
Slide 37: Market Performance Since 2006
3737 -100 -50 0 50 100 150 200 250 300 2006 2009 2012 2015 2018 SSB SSB Total Return KRX 153% 100% -3% Market Performance Since 2006 Source: S&P Global Market Intelligence; Updated through 10/24/2018 %
Slide 38: Analyst Coverage
3838 Analyst Coverage Brean Capital FIG Partners Keefe, Bruyette & Woods Piper Jaffray Sandler O’Neill Stephens SunTrust Robinson Humphrey
Slide 39: Investor Contacts
3939 Investor Contacts 520 Gervais Street Columbia, South Carolina 29201 800-277-2175 www.southstatebank.com Robert R. Hill, Jr. Chief Executive Officer John C. Pollok Senior Executive Vice President Chief Financial Officer James C. Mabry IV Executive Vice President Investor Relations and Mergers &
Slide 40: South State Corporation
S$ SOUTH STATE CORPORATION