Slide 1: Earnings Call 3Q 2024
Earnings Call 3Q 2024 October 24, 2024
Slide 2: Cautionary Note Regarding Forward Looking Statements
C A U T I O N A R Y N O T E R E G A R D I N G F O R W A R D L O O K I N G S T AT E M E N T S This communication contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made purs
Slide 3: SouthState Corporation Overview of Franchise
SouthState Corporation Overview of Franchise (1) $46 Billion in assets $34 Billion in loans Ranked (251) $38 Billion in deposits #14 by S&P Global 17 Greenwich Excellence & Best Brand Awards for Small Business Banking from $7.4 Coalition Greenwich Billion market cap 3 (1) Financial metrics as of Sep
Slide 4: The WHY The WHAT The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2023 ($ in trillions) 17.8% $0.9B US $27.4 $0.6B 13.7% China $17.7 12.8% 11.9% SSB Footprint $4.8 8.9% 8.3% $3.1B 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 and Income 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 A N D I N C O M E M I G R AT I O N TO T H E S O UT 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. Id
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 Gr
Slide 9: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 2Q24 3Q24 GAAP Net Income $ 132.4 $ 143.2 EPS (Diluted) $ 1.73 $ 1.86 Return on Average Assets 1.17 % 1.25 % Non-GAAP(1) Return on Average Tangible Common Equity 15.5 % 15.6 % Non-GAAP, Adjusted(1) Net Income $ 137.2 $ 145.7 EPS (Diluted) $ 1.79 $ 1.90 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 | 3 Q 2 0 2 4 • Reported Diluted Earnings per Share (“EPS”) of $1.86; adjusted Diluted EPS (non-GAAP)(1) of $1.90 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $182.9 million • Loans increased $314 million, or 4% annualized • Deposits increased $540 millio
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 Net Interest Margin, TE (1) $400 4.00% $350 3.75% $ in millions 3.50% 3.48% $300 3.44% 3.50% 3.41% 3.40% $355.4 $354.2 $350.3 $351.5 $343.9 $250 3.25% $200 3.00% 3Q23 4Q23 1Q24 2Q24 3Q24 Dollars in millions; Amounts may not total due to round
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 $2,369 $ in millions $2,500 $2,355 $2,181 $2,079 $2,049 $1,933 $1,879 $1,834 $2,000 $1,791 $1,699 $1,648 $1,470 $1,535 $1,459 $1,500 $1,256 (2) $1,3
Slide 13: Balance Sheet
Balance Sheet Gr
Slide 14: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans (1) Deposits Noninterest-bearing Checking ("DDA") Interest-bearing Checking MMA & Savings Time Deposits Total $42 $1.2B Deposits $42 $36.9B $37.0B $37.2B $37.1B $37.6B $36 $36 $4.7 $1.0B $4.5 $4.2 $4.3 $4.6 $30 $30 $0.8B $ in billions $13.5 $14.2 $14.5 $14.6 $15.1 $24 $
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 3% Investor CRE 7,830 $ 9.9B $ 1,259,000 CDL (1) Investor CRE (2) Consumer RE 45,885 8.6B 188,500 7% 29% Owner-Occupied CRE 7,610 5.5B 728,600 C&I 19,206 5.9B 308,800 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 Noninterest- 100% Deposits bearing 12% 18% $4.7B Checking 43% 80% $10.4B Commercial 40% 38% 60% Total Deposits 40% $37.6 Billion 30% Small Business M
Slide 17: Credit
Credit
Slide 18: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs to Loans • $171 million in provision for credit losses vs. 1.00% $39 million in net charge-offs trailing eight 0.75% quarters 0.50% • Increased ACL plus reserve for unfunded 0.25% 0.16% 0.09% commitments by 21 bp to 1.52% from 3Q22 to 0.03% 0.05% 0.07% 3Q24 —%
Slide 19: 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 (Recovery) for Credit Losses Net Charge-Offs (Recoveries) Total ACL Reserve for Unfunded Commitments % of Total Loans $50 $47.1
Slide 20: Loan Portfolio – Office Exposure
LOAN PORTFOLIO – OFFICE E XPOSURE State MSA AL 2% Other 5% FL 43% NC 5% VA 6% Greenville GA SC 18% 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 21: FRB Kansas City Expected Office Default Rates Study
F R B K A N S A S C I T Y E X P E C T E D O F F I C E D E F A U L T R AT E S T U D Y – S S B G R A N U L A R O F F I C E P O R T F O L I O S H O W S M E A N I N G F U L LY L O W E R E X P E C T E D D E FA U LT R AT E S Federal Reserve Bank of Kansas City: Expected Default Rates on Office Properties
Slide 22: 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 $2,098 $1.7 1.76 53% 2% 5
Slide 23: Capital
Capital Gr
Slide 24: Capital Ratios
C A P I T A L R AT I O S 2Q24 3Q24(2) Tangible Common Equity(1) 8.4 % 8.9 % Tier 1 Leverage 9.7 % 10.0 % Tier 1 Common Equity 12.1 % 12.5 % Tier 1 Risk-Based Capital 12.1 % 12.5 % Total Risk-Based Capital 14.4 % 14.9 % Bank CRE Concentration Ratio 231 % 227 % Bank CDL Concentration Ratio 51 % 47 % (
Slide 25: Appendix
Appendix Gr
Slide 26: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 0.4% 2.45% 2.44% 2.48% 2.42% Agency MBS(1) 2.50% 2.36% Treasury, Agency & SBA 2.20% 15% 1.90% Municipal 1.60% Corporates 10% 1.30% Total Investment 1.00% Portfolio† 3Q23 4Q23 1Q24 2Q24 3Q24 $6.9 Billi
Slide 27: Current & Historical - Qtr Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $429M $420M $416M $426M $427M $400 4.0% Total 100% 5.0% 3.50% 3.48% Revenue 16% 3.41% 3.44
Slide 28: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production Portfolio 3Q23 2Q24 3Q24 • Mortgage banking income of $3.2 million in 3Q 2024 Secondary 42% compared to $5.9 million in 2Q 2024 47% 41% 53% 59% 58% • Secondary pipeline of $109 million at 3Q 2024, as compared to $122 million at 2Q 20
Slide 29: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,258 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues, gross Interest on VM FI Revenues Operational Revenues Total Revenues, gross $35 $35.0 $30 $24.8 $30.0 $25 $25.0 $20 $16.1 $16.3 $17.4 $14.6 $20.0 $ in millions $15 $15.0 $10 $10.0 $5 $— $5
Slide 30: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 3Q 2024 422 Branches 251 Branches 268 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $150M Branches 85 434 268 251 Increased deposits per branch 3.75x from 2009 to 3Q24 30
Slide 31: SouthState Acquisition of Independent Bank Group
SouthState Acquisition of Independent Bank Group
Slide 32: Creating the South's Leading Regional Bank
C R E AT I N G T H E S O U T H ’ S L E A D I N G R E G I O N A L B A N K Enhanced Scale Through Partnership(1) Pro Forma Branch Footprint Projected Population Growth $65B $48B $55B Top 20% of U.S. MSAs highlighted in blue Assets Loans Deposits Colorado Virginia Dominant Southern Franchise Oklahoma N
Slide 33: Financial Impact
F I N A N C I A L I M PA C T Earnings and TBV Impact Strong Capital and Liquidity Excluding Excluding (1) GAAP Rate Marks/CDI Rates/CDI/CECL 10.4% 12.8% 89% 27.3% 20.4% 16.5% CET1 Ratio Total Risk-Based Capital Ratio Loan-to-Deposit Ratio 2025 EPS 2025 EPS 2025 EPS Accretion(2) Accretion(2) Accretio
Slide 34: Non-GAAP Reconciliations – Return on Avg. Tangible Common Equity
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 COMMON EQUITY Return on Average Tangible Equity 2Q24 3Q24 Net income (GAAP) $ 132,370 $ 143,179 Plus: Amortization of intangibles 5,744 5,327 Effective tax rate 23 % 23 % Amortization of intangibles, net of tax 4,
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 2Q24 3Q24 Net income (GAAP) $ 132,370 $ 143,179 Plus: Merger, branch consolidation, severance related and other expense, net of tax (1) 4,430 2,536 FDIC s
Slide 36: Non-GAAP Reconciliations – Adjusted Return on Avg. Assets & Avg. Tangible Common Equity
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 2Q24 3Q24 Adjusted net income (non-GAAP) $ 137,274 $ 145,715 Total average assets 45,427,734 45,597,230 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) 3Q23 4Q23 1Q24 2Q24 3Q24 Net interest income (GAAP) $ 355,371 $ 354,231 $ 343,936 $
Slide 38: Non-GAAP Reconciliations – PPNR, Adjusted & 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 & 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 (Non-GAAP) 3Q23 4Q23 1Q24 2Q24 3Q24 SSB SSB SSB SSB SSB Net interest income (GAAP) $ 355,371 $ 354,231 $ 343,936 $ 350,25
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 ) Efficiency Ratio (Non-GAAP) & Adjusted Efficiency Ratio (Non-GAAP) 3Q23 4Q23 1Q24 2Q24 3Q24 Noninterest expense (GAAP) $ 238,206 $ 273,243 $ 249,290 $ 248,747 $ 2
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 2Q24 3Q24 Tangible common equity (non-GAAP) $ 3,649,908 $ 3,909,639 Total assets (GAAP) 45,493,970 46,082,647 Less: Intangible assets 2,000,495 1,994,941 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 September 30, 2024; excludes $2.4B of loans and $3.9B of deposits from national lines of business and brokered deposits. • Country GDP as of 2023; State GDP as of 2Q24 • Sources: S&P Global, Internatio
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 16 End Notes † Core deposits defined as non-time deposits (1) Source: S&P Global Market Intelligence; 3Q24 MRQs available as of October 22, 2024; Peers as disclosed in the most recent SSB proxy statement. Slide 19 End Notes (1) Unamortized
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 28 End Notes (1) Includes pipeline, LHFS and MBS forwards. Slide 29 End Notes (1) Interest on centrally-cleared variation margin (expense or income) is included in ARC revenue within Correspondent Banking and Capital Markets Income. 43
Slide 44: SouthState
S SouthState