Southstate Bank Corporation · NYSE:SSB
Southstate Bank — SOUTH STATE — Q4 2020 Earnings Presentation
34 slides from Southstate Bank's earnings presentation, Jan 27, 2021
Slide 1: Earnings Call 4Q 2020
Exhibit 99.2 Earnings Call Thursday, January 28, 2021 4Q 2020
Slide 2: Disclaimer
DISCL A IME R 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 Ac
Slide 3: Overview of Franchise
SouthState Corporation (1) Overview of Franchise Billion in assets Billion in loans (285) Billion in deposits Billion market cap (1) Financial metrics as of December 31, 2020; market cap as of January 25, 2021 $5.6 $31 $25 $38
Slide 4: How We Operate the Company
HO W W E O P E R A TETHEC O M P ANY The WHAT The HOW Guiding Principles Our 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 closest to the customer. Long-Term Horizon We think and ac
Slide 5: 2020 Accomplishments
2 0 2 0A C C O MPLISH ME N T S Completed a merger of equals, creating a $38 billion Southeast regional bank with 285 offices in 6 states Earned a record adjusted Pre-Provision Net Revenue (“PPNR”)(1) of $629 million with minimal net charge-off of 2 bps* Originated approximately 20,000 Paycheck Prote
Slide 6: Quarterly Highlights
Q U AR TE R L YHI G HL I G HTS|4 Q2 0 2 0 Returns • Reported & adjusted diluted Earnings per Share (“EPS”)(1) of $1.21 and $1.44, respectively • Reported & adjusted Return on Average Tangible Common Equity (“ROATCE”)(1) of 13.1% and 15.4%, respectively • Pre-Provision Net Revenue (“PPNR”)(2) of $144
Slide 7: Tangible Book Value per Share
( 1) T ANG I B L E B O O K V AL UE P E R S HARE $41.16 $38.01 4Q19 1Q20 2Q20 3Q20 4Q20 (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 7 $39.83 $39.13 $38.33
Slide 8: Loss Absorption Capacity
L O SSA BSO R PT IO NCA P A CIT Y|4 Q2 0 2 0 Dollars in millions (1) Excludes PPP loans and loan held for sale (2) Includes mark on CSFL loans and prior SSB acquisitions 8 4Q20 % of Total Loans (1) Allowance for Credit Losses (“ACL”) Non-PCD ACL $315.5 PCD ACL 141.8 Total ACL $457.3 2.01% Reserve fo
Slide 9: Asset Quality (Combined Business Basis)
A SSE TQ U A LIT Y( C O MBIN E DBU SIN E SS BA SIS) Net Charge-Offs to Loans 0.10% Nonperforming Assets to Total Assets 0.12% 0.10% 0.08% 0.06% 0.04% 0.02% 0.00% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 0.44% 0.38% 0.26% 0.05% 0.33% 0.32% 0.01% 0.01% 0.01% 4Q19* 1Q20* 2Q20* 3Q20 4Q20 4Q19* 1Q20* 2Q20* 3Q20 4Q2
Slide 10: Capital Ratios
CA PI T A LR A T IO S (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 10 3Q20 4Q20(1) Tangible Common Equity* 7.8% 8.1% Tier 1 Leverage 8.1% 8.3% Tier 1 Commo
Slide 11: Merger-Related Expenses / Deal Costs
(1 ) ME R GE R - R E L A T E D E X PE N SE S/ DE A L C O ST S | 2020 • • • System conversion scheduled for 2Q 2021 Cost save realization process on track Estimated $205 million total spend; $85.4 million remaining Dollars in thousands, unless otherwise noted (1) Only includes SSB/CSFL merger-related
Slide 12: Financial Highlights - Reported
Financial Highlights - Reported
Slide 13: Highlights - Linked Quarter
HI G HL I G HTS|L I NK E DQ U AR TE R Dollars in millions, except per share data * 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 amortizat
Slide 14: Net Interest Margin
NE T I NTE RE S TM AR G I N Net Interest Margin* Net Interest Income excld. Accretion** Net Interest Income $270.3 $265.5 $239.4 $236.2 $162.6 $128.0 $126.5 $145.3 $119.0 $117.0 4Q19* 1Q20* 2Q20* 3Q20 4Q20 Dollars in millions *Tax equivalent ** Excludes PPP loans deferred fees and loan discount accr
Slide 15: Correspondent Banking Division
C O R R E SPO N DE N TBA N K IN G DIVISIO N 705 Client Banks Correspondent Revenue Breakout ARC Revenues FI Revenues Operational Revenues $35 $30 $25 $20 $15 $10 $5 $-4Q19 1Q20 2Q20 3Q20 4Q20 • Provides capital markets hedging (ARC), fixed income sales, international, clearing and other services to
Slide 16: Mortgage Banking Division
MO R T GA GEBA N K IN GDIVISIO N|4 Q2 0 2 0 • • 4Q20 Production: 4,603 loans / $1.413 billion in volume Secondary vs Portfolio Secondary Gain on Sale Margin: 2.40%(1) ⁻ • Purchase vs Refinance (1) Secondary gain on sale margin includes pipeline/LHFS changes •Pipeline as of December 31, 2020: 1,982 u
Slide 17: Combined Business Basis Performance
Combined Business Basis Performance
Slide 18: Current & Historical 5-Quarter Performance
( C O MBIN E DBU SIN E SSBA SIS) ( 1) C URRE NT& HI S T O RI C AL5 - Q TPE R F O R MA N CE Revenue Composition Net Interest Margin (“NIM”) NIM / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM ($) NIM (%) $300 $280 $260 $240 $220 $200 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 3.0% 2.5% 2.0%
Slide 19: Current & Historical Trend
CU R R E N T & H IST O R ICA L T R E N D ( C O MBIN E D BU SIN E SSBA SIS) Loans HFI (1) Total Loans Deposits PPP DDA NOW MMA & Savings Time Deposits $30 $25 $20 $15 $10 $5 $-$40 $30 $25.4B $25.4B $20 $10 $-4Q19* 1Q20* 2Q20* 3Q20 4Q20 4Q19* 1Q20* 2Q20 3Q20 4Q20 Investments & Fed Funds Wholesale Fund
Slide 20: Branch Optimization
BR A N CHO PT IMIZ A T IO N 2009 …..……………..………..……....…………………………. December 2020 420 Branches Acquired Plus 12 DeNovo Branches 432 285 Branches Average Size $108M 232 Branches 85 Branches Average Size $40M Consolidated Sold or 85 232 285 ~170% growth in deposits per branch 1st Planned Quarter 2021 Ac
Slide 21: Appendix
Appendix
Slide 22: Total Loan Portfolio
T O T ALL O AN P O R TFO L I O | AS O F D E C E M B E R 3 1 , 2 0 2 0 Cons / Other 4% CDL 8% 1-4 Family 24% Investor CRE 29% Commercial & Industrial 14% Owner-Occupied CRE 21% Loans 22 Loan portfolio balances, average balances or percentage exclude loans held for sale and PPP loans Commercial 35% Lo
Slide 23: Loans - Industry Exposures
E X PO SU R E S ( 1) L O ANS–IN DU ST R Y Selected Industries Lodging $974 4.3% (% of total loan portfolio) Retail CRE $2,183 9.6% Dollars in millions, unless otherwise noted (1) Loan portfolio excluding loans held for sale and PPP loans 23 Restaurants$4882.2%
Slide 24: Lodging Portfolio
L O ANS–IN DU ST R YE X PO SU R E S|L O DGIN G PO R T F O LIO Lodging Portfolio Other National Brands $54 M riott • 52% weighted average loan to value Lodging is $974 million or 4.3% of loan portfolio(1) Independent $155 • Hilton $260 • 18% of portfolio under deferral Hyatt $34 • Top 3 MSA’s: Charle
Slide 25: Restaurant Portfolio
L O ANS–I ND US TR YE X P O S URE S | RE S T A URANT P O R TFO L I O Restaurant Portfolio CDL $7 Non-RE • 56% weighted average loan to value Owner Occupied al Estate $273 Sec ed • Restaurant is $488 million or 2.2% of loan portfolio(1) Non-Owner Occupied Real Estate $154 • 1.1% of portfolio under de
Slide 26: Retail Portfolio
L O ANS–IN DU ST R YE X PO SU R E S | R E T A IL PO R T F O LIO Retail Portfolio Non-Real Estate $1 CDL $81 • 58% weighted average loan to value Non-Owner Occupied Real Estate $1,715 Retail CRE is $2.2 billion or 9.6% of loan portfolio(1) • Owner Occupied Real Estate $385 • 0.2% of portfolio under d
Slide 27: Current & Historical - PPNR, Adjusted
C URRE NT&HI S T O RI C AL-PPN R ,A DJ U ST E D( U N A U DIT E D) Combined Business Basis Mar. 31, 2020 Jun. 30, 2020 Sep. 30, 2020 Dec. 31, 2020 Dollars in thousands (1) Does not include purchase accounting adjustments (2) Through June 7, 2020 The combined historical information referred to in this
Slide 28: Efficiency Ratios & Net Interest Margin
C URRE NT&HI S T O RI C AL–E FFI C I E NC YR A TI O S&NE TI NTE RE S T MA R GIN ( U N A U DIT E D) Combined Business Basis Dec. 31, 2019 Mar. 31, 2020 Jun. 30, 2020 Sep. 30, 2020Dec. 31, 2020 Dollars in thousands (1) Does not include purchase accounting adjustments (2) Through June 7, 2020 (3) Legac
Slide 29: Tangible Book Value / Share & TCE Ratio
N ON - GA A PR E C O N CILI A T IO N S –T ANG I B L EB O O K V AL UE / S HARE&T ANG I B L E C O M M O N E Q UI T Y R A TI O Tangible Book Value per Share Tangible Common Equity ("TCE") Ratio Dollars in thousands, except for per share data 29 Shareholders' equity (GAAP) Less: Intangible assets Tangib
Slide 30: Return on Avg. Tangible Common Equity & PPNR ROAA
N ON - GA A PR E C O N CILI A T IO N S–RE TURNO N A V G .T ANG I B L E AS S E TS C O M M O NE Q UI T Y& P P NR RE TURN O N A V G . Return on Average Tangible Equity PPNR (adjusted) Return on Average Assets 4Q20 PPNR, Adjusted (Non-GAAP) Average assets $143,664 38,027,111 Dollars in thousands The tan
Slide 31: Adjusted Net Income & Adjusted EPS
N ON - GA A PR E C O N CILI A T IO N S– AD J US TE D NE T I NC O M E & AD J US TE D E ARNI NG SP E R S HARE ( “E P S ”) Adjusted Net Income Adjusted EPS Dollars in thousands, except for per share data 31 Adjusted diluted weighted-average common shares Net income (GAAP) Plus: Securities gain, net of
Slide 32: Adjusted Return on Avg. Assets & Tangible Common Equity
N ON - GA A PR E C O N CILI A T IO N S – AD J US TE D RE TURN O N A V G . AS S E TS & A V G . T A N GIBLEC O MMO N E Q U IT Y Adjusted Return on Average Assets Adjusted Return on Average Tangible Common Equity Dollars in thousands The tangible measures are non-GAAP measures and exclude the effect of
Slide 33: Net Interest Margin, Tax Equivalent
N ON - GA A PR E C O N CILI A T IO N S–NE TI NTE RE S TM AR G I N,T AXE Q UI V AL E NT Net Interest Margin - Tax Equivalent (Non-GAAP) Dollars in thousands 33 Net interest income (GAAP) Tax equivalent adjustments Net interest income (tax equivalent) (Non-GAAP) Average earning assets 4Q19 1Q20 2Q20 3
Slide 34: SouthState
S SouthState