Southstate Bank Corporation · NYSE:SSB
Southstate Bank — South State — Q3 2020 Earnings Presentation
33 slides from Southstate Bank's earnings presentation, Oct 29, 2020
Slide 1: Earnings Call 3Q 2020
Earnings Call 3Q 2020 Friday, October 30, 2020 Exhibit 99.2
Slide 2: Disclaimer
2 Disclaimer Statements included in this communication, whic h are not historical in nature are intended to be, and are hereby identif ied as, forward looking statements for purposes of the safe harbor prov ided by Section 27A of the Securities Act of 1933 and Section 21E of the S ecurities Exchange
Slide 3: South State Corporation Overview of Franchise
3 South State Corporation Winter Haven Tampa Orlando Charleston Atlanta Charlotte Richmond SSB (305) –$38B in assets –$25B in loans –$30B in deposits –$4.1B market cap Overview of Franchise(1) (1) Financial metrics as of September 30, 2020; market cap as of October 28, 2020
Slide 4: How We Operate the Company
4 How We Operate the Company Soundness Profitability Growth
Slide 5: Quarterly Highlights
5 Quarterly Highlights • Returns – Adjusted & reported diluted Earnings per Share (“EPS”)(1) of $1.58 and $1.34, respectively – 17.1% adjusted Return on Average Tangible Common Equity (“ROATCE”)(1) – 1.79% PPNR ROAA(2); Strong Pre-Provision Net Revenue (“PPNR”)(2) of $170 million – Tangible Book Val
Slide 6: Pre-Provision Net Revenue (PPNR)
6 Current & Historical (combined business basis) Pre-Provision Net Revenue (“PPNR”)(1) Dollars in millions (1) Adjusted PPNR is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger-related expenses, securities gains or losses, FHLB Advances prepayment penalty ($199 t
Slide 7: Tangible Book Value per Share
7 Tangible Book Value per Share(1) $38.20 $39.13 $38.01 $38.33 $39.83 3Q19 4Q19 1Q20 2Q20 3Q20 (1) The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets - See reconciliation of GAAP to Non- GAAP measures in Appendix
Slide 8: Loss Absorption Capacity – September 30, 2020
8 Loss Absorption Capacity – September 30,2020 Dollars in millions (1) Excludes PPP loans and loan held for sale (2) Includes mark on CSFL loans and prior SSB acquisitions 3Q20 % of Total Loans (1) Allowance for Credit Losses (“ACL”) Non-PCD ACL $286.5 PCD ACL 153.7 Total ACL $440.2 1.92% Reserve fo
Slide 9: Asset Quality (combined business basis)
9 Asset Quality (combined business basis) Dollars in millions, unless otherwise noted (1) Excludes loans held for sale and PPP loans ** Booked deferrals as of October 23, 2020 * The com bined historical informa tion referred to in this presentation as the “Com bined Business Basis” presented is base
Slide 10: Capital Ratios
10 Capital Ratios (1) Preliminary * The tangible measures are non-GAAP measures and exclude the effect of period end balance of intangible assets - See reconciliation of GAAP to Non-GAAP measures in Appendix 2Q20 3Q20(1) Tangible Common Equity* 7.6% 7.8% Tier 1 Leverage 13.3% 8.1% Tier 1 Common Equi
Slide 11: Merger-Related Expenses/Deal Costs
11 Merger-Related Expenses/Deal Costs(1) • System conversion scheduled for 2Q 2021 • Cost save realization process on track • Estimated $205 million total spend; $102.5 million remaining Dollars in thousands, unless otherwise noted (1) Only includes SSB/CSFL merger-related expenses (2) Merger-relate
Slide 12: Financial Highlights - Reported
Financial Highlights - Reported
Slide 13: Highlights – Linked Quarter
13 2Q20 3Q20 GAAP Net Income (Loss) $(84.9) $95.2 EPS (Diluted) $(1.96) $1.34 Return on Average Assets (1.49)% 1.00% Non-GAAP* Return on Average Tangible Common Equity (19.71)% 14.66% Non-GAAP, Adjusted* Net Income $38.6 $112.6 EPS (Diluted) $0.89 $1.58 Return on Average Assets 0.68% 1.18% Return on
Slide 14: Net Interest Margin
14 Net Interest Margin Dollars in millions * Tax equivalent Tax equivalent NIM is Non-GAAP financial measures - See reconciliation of GAAP to Non-GAAP measures in Appendix 3.73% 3.64% 3.68% 3.24% 3.22% $127.4 $126.5 $128.0 $162.6 $270.3 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.
Slide 15: Correspondent Banking Division
15 Correspondent Banking Division • Provides capital markets hedging (ARC), fixed income sales, international, clearing and other services to financial institutions • Recently announced expansion of Correspondent Banking Division with the agreement to acquire Duncan Williams, Inc. (terms not disclos
Slide 16: Mortgage Banking Division
16 Mortgage Banking Division • Quarter-to-Date Production: 5,263 loans / $1.574 billion in volume • Secondary vs Portfolio – Secondary Gain on Sale Margin: 4.05% • Purchase vs Refinance • Pipeline as of September 30, 2020: 3,140 units / $993 million 3Q20 QTD Secondary $1.141 Billion / 70% of QTD vol
Slide 17: Combined Business Basis Performance
Combined Business Basis Performance
Slide 18: Current & Historical Trend (combined business basis)
18 (1) Noninterest income and total revenue are adjusted by securities gains or losses; Tax equivalent NIM, efficiency ratio and adjusted efficiency ratio are Non- GAAP financial measures; Adjusted Efficiency Ratio excludes the impact of branch consolidation, merger-related expenses, securities gain
Slide 19: Current & Historical Trend (combined business basis)
19 Dollars in billions (1) Excludes loans held for sale * The c ombined historic al informa tion referred to in this presentation asthe “Combined Business Ba sis” presented is based on the repo rted GAAP resul ts of the Company and CenterSta te for the applica ble periods without adjustm ents a nd t
Slide 20: Branch Optimization
20 Branch Optimization 305 Branches 9/30/2020 20 Branches Consolidated or Sold 285 Branches 2020 YE 85 Branches Average Size $40M 420 Branches Acquired Plus 12 DeNovo Branches 212 Branches Consolidated or Sold 305 Branches Average Size $99M ~145% growth in deposits per branch 85 432 212 305 2009 …..
Slide 21: Appendix
Appendix
Slide 22: Loans – Industry Exposures
22 Loans – Industry Exposures(1) Selected Industries (% of total loan portfolio) Lodging $973 4.2% Restaurants $497 2.2% Retail CRE $2,183 9.5% Dollars in millions, unless otherwise noted (1) Excludes loans held for sale and PPP loans Total Portfolio $22.9 Billion Commercial 56% Mortgage 21% Consume
Slide 23: Lodging Portfolio
23 Lodging Portfolio • 55% weighted average loan to value • Lodging is $973 million or 4.2% of loan portfolio(1) • 12% of portfolio under deferral(2) • Top 3 MSA’s: Charleston, Greenville, Charlotte Dollars in millions (1) Loan portfolio excluding loans held for sale and PPP loans (2) Booked deferra
Slide 24: Restaurant Portfolio
24 Restaurant Portfolio • 55% weighted average loan to value • Restaurant is $497 million or 2.2% of loan portfolio(1) • 2% of portfolio under deferral(2) • Top 3 MSA’s: Atlanta, Charleston, Jacksonville Dollars in millions (1) Loan portfolio excluding loans held for sale and PPP loans (2) Booked de
Slide 25: Retail CRE Portfolio
25 Retail CRE Portfolio • 57% weighted average loan to value • Retail CRE is $2.2 billion or 9.5% of loan portfolio(1) • 4% of portfolio under deferral(2) • Top 3 MSA’s: Miami, Orlando, Tampa Dollars in millions (1) Loan portfolio excluding loans held for sale and PPP loans (2) Booked deferrals as o
Slide 26: Current & Historical PPNR, Adjusted
26 Current & Historical PPNR, Adjusted (Unaudited) Dollars in thousands (1) Through June 7, 2020 (2) Does not include purchase accounting adjustments The combined historical information referred to in this presentation as the “Combined Company Basis” presented is based on the reported GAAP results o
Slide 27: Current & Historical Efficiency Ratios & Net Interest Margin
27 Current & Historical Efficiency Ratios & Net Interest Margin (Unaudited) Dollars in thousands (1) Through June 7, 2020 (2) Does not include purchase accounting adjustments (3) Legacy CSFL also adjusted noninterest expense by intangible assets’ amortization expenses for the adjusted efficiency rat
Slide 28: Non-GAAP Reconciliations: Tangible Book Value per Share & TCE Ratio
28 Non-GAAP Reconciliations Tangible Book Value per Share & Tangible Common Equity (“TCE”) Ratio Dollars in thousands, except for per share data Tangible Book Value per Share 3Q19 4Q19 1Q20 2Q20 3Q20 Shareholders' common equity (excludes preferred stock) $ 2,350,956 $ 2,373,013 $ 2,321,043 $ 4,491,8
Slide 29: Non-GAAP Reconciliations: ROATCE & PPNR ROAA
29 Non-GAAP Reconciliations Return on Average Tangible Common Equity & PPNR Return on Average Assets Dollars in thousands 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 measure
Slide 30: Non-GAAP Reconciliations: Adjusted Net Income & EPS
30 Non-GAAP Reconciliations Adjusted Net Income (Loss) & Adjusted Earnings Per Share (“EPS”) Dollars in thousands, except for per share data Adjusted Net Income (Loss) 2Q20 3Q20 Net income (loss) (GAAP) $ (84,935) $ 95,221 Plus: Securities gain, net of tax -(12) Merger and branch consolidation relat
Slide 31: Non-GAAP Reconciliations: Adjusted ROAA & ROATCE
31 Non-GAAP Reconciliations Adjusted Return on Average Assets & Average Tangible Common Equity Dollars in thousands 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
Slide 32: Non-GAAP Reconciliations: NIM & Adjusted Efficiency Ratios
32 Non-GAAP Reconciliations Net Interest Margin, Tax Equivalent & Adjusted Efficiency Ratios Dollars in thousands Net Interest Margin - Tax Equivalent (Non-GAAP) 3Q19 4Q19 1Q20 2Q20 3Q20 Net interest income (GAAP) $ 127,373 $ 126,456 $ 128,013 $ 162,557 $ 270,348 Tax equivalent adjustments 496 503 5
Slide 33: South State
Ss SOUTH STATE