Slide 1: Earnings Call 4Q 2022
Earnings Call 4Q 2022 January 27, 2023
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) $44 Billion in assets #1 in Florida #3 in South Carolina $30 Billion in loans Ranked #30 (251) $36 Billion in deposits by S&P Global 16 Greenwich Excellence and Best Brand awards from Coalition Greenwich $5.8 Billion market cap Top 30 Forbes 100 Best
Slide 4: The WHY, The WHAT, The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2023 ($ in trillions) 17.8% $0.7B US $25.0 $0.5B China $18.3 13.7% 12.8% 11.9% Japan $4.3 8.9% 8.3% $2.7B 6.0% $2.0B SSB Footprint $4.1 The combined GDP of Germany $4.0 SouthState’s 6 state branch 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 Net Domestic Migration in SouthState Footprint Florida 622,476 North Carolina 211,867 South Carolina 165,948 Georgia 128,089 Alabama 65,355 Virginia -29,775 TOTAL 1,163,960 Source: U.S. Census Bureau
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 3Q22 4Q22 GAAP Net Income $ 133.0 $ 143.5 EPS (Diluted) $ 1.75 $ 1.88 Return on Average Assets 1.17 % 1.28 % Non-GAAP(1) Return on Average Tangible Common Equity 17.99 % 20.17 % Non-GAAP, Adjusted(1) Net Income $ 143.7 $ 144.7 EPS (Diluted) $ 1.89 $ 1.90 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 | 4 Q 2 0 2 2 • Reported Earnings per Share (“EPS”) of $1.88; Adjusted Diluted EPS (non-GAAP) of $1.90 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $231.4 million, or 2.07% PPNR ROAA(2) • PPNR per diluted share (non-GAAP)(2) of $3.03, up 11% 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) $3.50 $3.03 $3.00 $2.74 $2.50 $2.32 $2.00 $1.89 $1.79 $1.50 4Q21 1Q22 2Q22 3Q22 4Q22 (1) For end note descriptions, Earnings Presentation End Notes starting on slide 42 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 120 bps improvement in Net Interest Margin(3)(4Q21-4Q22) $396.0 $400 4.4% $7.4 $362.3 $9.5 3.99% $350 $315.8 4.0% $ in millions $300 $12.8 3.58% $258.1 $261.5 3.6%
Slide 13: Loan Production vs Loan Growth
LOAN PRODUCTION VS LOAN GROWTH (3) Loan Production Loan Portfolio Growth (3) $15,500 (1) $13,121 $12,000 $9,954 $ in millions $8,500 (2) $7,060 $6,583 (1) $5,000 $4,112 $1,500 $682 $953 ($2,000) $(623) (4) (4) 2019 2020 2021 2022 Dollars in millions (1) 2022 loan production excludes production by le
Slide 14: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production 4Q21 3Q22 4Q22 Portfolio • Mortgage banking income of ($545) thousand in 4Q Secondary 2022 compared to $2.3 million in 3Q 2022 47% 22% 19% 53% • Secondary pipeline of $39 million at 4Q 2022, as 78% 81% compared to $76 million at 3Q 2
Slide 15: Residential Mortgage Portfolio
RESIDENTIAL MORTGAGE PORTFOLIO GAIN ON SALE (“GOS”) MARGIN AND INTEREST RATES Consumer R/E Loan Growth ($) 30-yr Fixed Mortgage Rate GOS Margin $600 $700 7.08% 8.0% 6.21% 5.54% 6.0% $450 $500 4.49% 4.56% 4.11% 4.33% 4.25% $517 $498 3.63% $472 $ in millions 3.00% 3.13% 3.25% 4.0% 2.87% $300 $300 2.13
Slide 16: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,191 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues FI Revenues Operational Revenues Total Revenue $35 $35.0 $30.2 $30 $28.0 $30.0 $26.1 $25 $25.0 $ in millions $20 $20.0 $16.4 $15 $15.0 $10 $8.3 $10.0 $5 $5.0 $- $0.0 4Q21 1Q22 2Q22 3Q22 4Q2
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% 8% Deposits Noninterest- $2.4B bearing 35% 80% 32% Checking Commercial $13.2B 49% Money 60% Market $8.3B Total Deposits 34% 40% $36.4 Billion
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 3.0% 60% 2.0% 2.2% 50% 1.0% 1.2% 40% 0.0% —% 30% (1.0)% 50% 50% (1.2)% 20% 41% (2.0)% 30% (3.0)% 10% 20
Slide 20: 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 4.0% 4.0% 24% deposit 5% deposit 3.64% beta in beta in previous current cycle cycle to date 3.0% 3.0% 2.40%2.40% 2.22% 2.17% 1.92% 2.0% 1.74% 2.0% 1.45% 1.16%1.20% 0.95% 1.0
Slide 21: Balance Sheet
Balance Sheet Ga
Slide 22: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans(1) Deposits Noninterest-bearing Checking Interest-bearing Checking Loans excld. PPP Total Loans MMA & Savings Time Deposits $32 $30.2B $42 $38.7B $38.4B $350, 000,000.0B $28.8B $35.0B $27.9B $36.9B $36.4B $26.6B $35.1B $2.8 $2.7 $36 $2.5 $2.4 $300, 000,000.0B $23.9B $30
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 5,357 $ 2.9B $ 533,900 CDL (1) Investor CRE (2) 4% Investor CRE 8,829 8.8B 993,300 9% 29% Owner-Occupied CRE 8,111 5.4B 673,200 C&I 18,931 5.3B 280,200 Total Loans Consum
Slide 24: Asset Quality Metrics
ASSET QUALIT Y METRICS Provision for Credit Losses & Net Charge-Offs (Recoveries) Net Charge-Offs (Recoveries) to Loans Provision for Credit Losses Net Charge-Offs (Recoveries) 0.25% $47.1 $50 $ in millions $40 0.15% $30 $23.9 $19.3 $20 0.04% 0.03% 0.05% 0.02% 0.01% $10 $1.0 $2.3 $2.3 $0.9 (0.02)% $
Slide 25: Capital Ratios
C A P I T A L R AT I O S 3Q22 4Q22(2) Tangible Common Equity(1) 6.8 % 7.2 % Tier 1 Leverage 8.4 % 8.7 % Tier 1 Common Equity 11.0 % 11.0 % Tier 1 Risk-Based Capital 11.0 % 11.0 % Total Risk-Based Capital 13.0 % 13.0 % Bank CRE Concentration Ratio 248 % 249 % Bank CDL Concentration Ratio 60 % 65 % (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 …..……………..………..……....…………………………….. 4Q 2022 422 Branches 251 Branches 268 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $145M Branches 85 434 268 251 ~263% growth in deposits per branch 4th Quarter 2022 Activit
Slide 28: Digital Trends
D I G I TA L T R E N D S 2 0 2 2 C O M PA R E D TO 2 0 2 1 Digital Sales Digital Services Digital Payments 14% 20% 103% Online Checking Accounts Mobile Users Zelle Transactions 28% 6% 43% Online Consumer Loans Digital Deposits Bank to Bank Transactions 28
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 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 $60.00 $60.00 $50.96 $49
Slide 30: Current & Historical - Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $462M $438M $400 4.5% Total $352M $348M $405M 3.83%3.9% 3.99% Revenue 4.0% 120% 3.3% 3.58%
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 | 4 Q 2 0 2 2 4Q22 % of Total Loans(1) Allowance for Credit Losses (“ACL”) Non-PCD ACL $ 309.6 PCD ACL 46.8 Total ACL $ 356.4 1.18 % Unrecognized Discount – Acquired Loans (2) 72.1 0.24 % Total ACL plus Unrecognized Discount on Acquired Loans $ 428.5 1.42 %
Slide 32: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 2.4% 2.29% 7% 2.03% 2.06% 2.1% 8% 1.75% Agency MBS(1) 1.7% 1.53% 1.4% Municipal 13% Total Investment 1.0% Portfolio† 4Q21 1Q22 2Q22 3Q22 4Q22 Treasury & agency $8.0 Billion Other 72% Municipal Bond Ra
Slide 33: 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 $2,144 $1.6 1.69 57% 2% 5
Slide 34: Loan Portfolio – Consumer, Residential Mortgage and HELOC
LOAN PORTFOLIO – CONSUMER, RESIDENTIAL MORTGAGE AND HELOC Consumer, Residential Mtg and HELOC Segment Credit Indicator 3Q22 4Q22 Mortgage 15% NPL Ratio (Non-Accruals & 90+ DPD & Accruing) 0.37% 0.35% HELOCs Other Consumer 70% 12% Net Charge-Offs Ratio 0.01% 0.00% CD-Secured 30+ DPD Ratio (Accruing &
Slide 35: 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 3Q22 4Q22 Net income (GAAP) $ 133,043 $ 143,502 Plus: Amortization of intangibles 7,837 8,027 Effective tax ra
Slide 36: 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 3Q22 4Q22 Net income (GAAP) $ 133,043 $ 143,502 Plus: Securities gains, net of tax (24) - Merger and branch consolidation related expense, net of tax 10,6
Slide 37: Non-GAAP Reconciliations – Adjusted Return on Avg. Assets & 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 3Q22 4Q22 Adjusted net income (non-GAAP) $ 143,657 $ 144,713 Total average assets 44,985,713 44,429,894 Adjusted Return
Slide 38: 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) 4Q21 1Q22 2Q22 3Q22 4Q22 Net interest income (GAAP) $ 258,096 $ 261,518 $ 315,815 $
Slide 39: Non-GAAP Reconciliations – PPNR, Adjusted
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) 4
Slide 40: 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 ) 4Q21 1Q22 2Q22 3Q22 4Q22 Noninterest expense (GAAP) $ 224,037 $ 228,600 $ 231,169 $ 240,433 $ 229,499 Less: Amortization of intangible assets 8,517 8,494 8,847 7,
Slide 41: Non-GAAP Reconciliations – Tangible Book Value / Share & 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 2022 Shareholders' common equity $ 2,373,013 $ 4,647,880 $ 4,802,940 $ 5,074,927 Less: Intangible assets
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 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 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) 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 44: SouthState
S SouthState