Southstate Bank Corporation · NYSE:SSB
Southstate Bank — South State — Investor Day (November 2016)
79 slides from Southstate Bank's investor day presentation, Nov 2, 2016
Slide 1: 2016 Investor Day
2016 InvestorDay November 2, 2016
Slide 2: Forward Looking Statements
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 Securities
Slide 3: Welcome
Welcome Jim Mabry Executive Vice President Investor Relations and Mergers & Acquisitions
Slide 4: Agenda
Agenda Introduction Line Management Bank Overview Regional Bank Discussion Robert Hill John Windley Jack Goettee Greg Lapointe Break Business Lines Wealth Mortgage George King Tom Ledbetter Lunch Board Members Support Areas Credit Support and Risk Joe Burns Renee Brooks Creating Shareholder Value Jo
Slide 5: Introduction
Introduction Robert Hill Chief Executive Officer South State Corporation
Slide 6: Mission
Mission 6 Our mission is to build a high-performing bank based on a balance of soundness, profitability and growth. We will accomplish this through relationship banking, delivered by engaged employees with clear strategic goals, objectives and values.
Slide 7: Strategic Focus
Strategic Focus Culture Deeper & denser market coverage Long term focus Enhancing shareholder value Customer experience Growth 7
Slide 8: Structure
Structure Renee Brooks RELATIONS AND & ACQUISITIONS Jim Mabry 8 CHIEF EXECUTIVE OFFICER, SOUTH STATE CORPORATION Robert Hill CHIEF FINANCIAL OFFICER AND CHIEF OPERATING OFFICER John Pollok PRESIDENT AND CHIEF EXECUTIVE OFFICER, SOUTH STATE BANK John Windley CHIEF CREDIT OFFICER Joe Burns CHIEF ADMIN
Slide 9: Bank Overview
BankOverview John Windley President and Chief Executive Officer South State Bank
Slide 10: John Windley
John Windley President and Chief Executive Officer South State Bank 40 years in banking South State 14 years C&S Bank/Bank of America 26 years 10
Slide 11: Structure
Structure 11 SOUTH STATE BANK John Windley NORTHERN GROUP Greg Lapointe SOUTHERN GROUP Jack Goettee MORTGAGE Tom Ledbetter WEALTH George King RETAIL Jeff Fulp COMMERCIAL Cutter Davis
Slide 12: Geographic Footprint
Geographic Footprint NORTH CAROLINA Raleigh Charlotte Greenville SOUTH CAROLINA Columbia Wilmington Atlanta Myrtle Beach Augusta Pro Forma Highlights ($ in billions) $7.6 loans 8.8 deposits 130 branches 628,000 customers Charleston GEORGIA Savannah 12 See endnotes (1) SSB SBFC
Slide 13: Growth Markets
Growth Markets Augusta, GA $1,593 2 4.6% Charleston, SC 1,537 3 8.7% Savannah, GA – Hilton Head, SC Greenville, SC 1,147 4 7.7% 5.8% 807 8 NE Georgia 716 6 6.6% Charlotte, NC 568 12 7.2% Myrtle Beach – Georgetown, SC Columbia, SC 539 6 9.8% 5.7% 466 8 7.1% Wilmington, NC 140 11 National Average 3.8%
Slide 14: Competitive Landscape in SSB Footprint
Competitive Landscape in SSB Footprint >$100 $10 – $100 6 8 47% Distribution of banks by asset size (in billions) First Citizens 6 101 < $10 14 See endnotes (3) Pro Forma Deposit Share 1Wells Fargo21% 2Bank of America15 3BB&T11 4South State Bank7 5SunTrust6
Slide 15: SBFC Overview
SBFC Overview Cultural fit Dynamic market - #2 share Core funded Similar lines of business Dominant mortgage operation Consistent with deeper & denser approach Expected close date 1/3/2017 15
Slide 16: Retail
SS SOUTH STATE CORPORATION
Slide 17: Retail
Retail Well positioned for growth Low cost of funding Retail delivery transformation Improving the customer experience Opportunity for efficiencies 17
Slide 18: Transaction Account Balance by Market
Transaction Account Balance by Market Lowcountry 6% Orangeburg 6% Myrtle Beach 7% Other 7% Greenville 13% Charleston 19% Wilmington 2% Savannah 15% Columbia 5% Charlotte 9% NE Georgia 11% $3.7 billion @ 0.11% cost of funds 18 See endnotes (4)
Slide 19: Commercial
3 SOUTH STATE CORPORATION
Slide 20: Commercial Opportunities in SSB Markets
Commercial Opportunities in SSB Markets Business Annual Revenue (in millions) • • • High-touch service delivery Customized treasury solutions 2,500+ $20 - $300 • Retail delivery with regional resources Simplified treasury products 5,700+ $5 - $20 • • • • • Retail delivery model Basic products 18,000
Slide 21: Commercial Initiatives
Commercial Initiatives • • Named head of commercial banking Continued recruitment People • Streamlining application & closing process Underwriting larger credits Process • • • Enhancing treasury management Interest rate derivatives Product 21
Slide 22: Commercial Loan Growth by Market
Commercial Loan Growth by Market Millions $ 140 120 100 80 60 40 20 - 24% 23% 5% 5% 24% $392 million net commercial loan growth YTD 18% annualized growth 22 See endnotes (6) 37% 12%13%
Slide 23: Regional Discussion
Regional Discussion Jack Goettee Southern Group President Greg Lapointe Northern Group President
Slide 24: Jack Goettee
Jack Goettee Southern Group President 33 years in banking South State 11 years Bank of America 20 years Wachovia 2 years 24
Slide 25: Southern Group
Southern Group NORTH CAROLINA Raleigh Charlotte Greenville SOUTH CAROLINA Columbia Atlanta Myrtle Beach Charleston Hilton Head GEORGIA ($ in billions) $2.9 loans 4.0 deposits 67 branches 25 See endnotes (7)
Slide 26: Economic Highlights
Economic Highlights ., MUSC MEDICAL UNIVERSITY of SOUTH CAROLI NA 'I' $ 26 SOUTH STATE CORPORATION
Slide 27: Economic Highlights
Economic Highlights UNIVERSITY OF SOUTH CAROLINA € SCG.inNaA ® ENERGY Fort Jackson South Carolina STATE CORPORATION
Slide 28: Greg Lapointe
Greg Lapointe Northern Group President 32 years in banking South State 7 years Bank of America 18 years Wells Fargo/Wachovia 7 years 28
Slide 29: Northern Group
Northern Group Raleigh NORTH CAROLINA Spartanburg Greenville Charlotte Anderson Rock Hill SOUTH CAROLINA Gainesville Wilmington Columbia Atlanta Athens Charleston ($ in billions) $3.1 loans 3.1 deposits 51 branches GEORGIA Savannah 29 See endnotes (8)
Slide 30: Economic Highlights
Economic Highlights POULTRYCAP 0 1h ''ORLD $ SOUTH STATE CORPORATION 30
Slide 31: Wealth
Wealth George King Director of Wealth Management
Slide 32: George King
George King Director of Wealth Management 26 years in financial services industry South State 8 years Smith Barney / Citigroup 10 years Bank of Columbia / Comsouth 3 years Bank of America 5 years 32
Slide 33: Structure
Structure 33 SOUTH STATE WEALTH PRIVATE WEALTH & ASSET MANAGEMENT •AUM: $1.8 billion •Client focus: Affluent Individuals and Institutions •Services: Asset Management, Financial Planning and Trust •Target size: relationships greater than $1 million INVESTMENT SERVICES •AUM: $1.3 billion •Client focus
Slide 34: Wealth Assets Under Management
Wealth Assets Under Management or Care (in millions) Noninterest Income (in thousands) 2012 2012 2013 2013 406 2014 2014 $3,828 $18,344 2015 2015 $3,940 $20,117 3Q16 3Q16 YTD $4,140 3 34 $6,360 $12,661 $14,57 $1,620 $3,
Slide 35: Wealth Teams
Wealth Teams NORTH CAROLINA Charlotte Rock Hill SOUTH CAROLINA Florence Columbia Cornelia Gainesville Greenville Wilmington Athens Greenwood Atlanta Myrtle Beach Georgetown Aiken Orangeburg Augusta Charleston Investment Services Ridgeland GEORGIA Hilton Head Island Savannah Private Wealth SBFC 35
Slide 36: Target Households by Market
Target Households by Market Households 100,000 Private Wealth 75,000 50,000 25,000 - 450,000 target households in market 36 See endnotes (9) Investment Services
Slide 37: The Right People
The Right People Leadership – Average Tenure and Experience • • 11 years with SSB 24 years in industry Hire great people and give them the tools to be successful Culture of teamwork, entrepreneurial spirit and winning Aligning goals 37
Slide 38: Opportunities
Opportunities Market expansion and penetration Changing competitive landscape Strength of brand Employer of choice 38
Slide 39: Mortgage
Mortgage Tom Ledbetter President, Mortgage Division
Slide 40: Tom Ledbetter
Tom Ledbetter President, Mortgage Division 34 years in banking South State 14 years Bank of America 20 years 40
Slide 41: Structure
Structure 41 See endnotes (10) SERVICED LOANS $4.6 Billion SOLD LOANS 52% PORTFOLIO LOANS 48% DIRECT PRODUCTION 70 MLOs SOUTH STATE MORTGAGE Tom Ledbetter
Slide 42: Mortgage Production
Mortgage Production (in millions) Noninterest Income (in thousands) 2012 2012 $2,198 2013 2013 1,668 2014 2014 170 2015 2015 $21,761 3Q16 YTD 3Q16 YTD 4 42 $12,545 $9,149 $16, $16,10 $ $1,195 $1,379 $1,038
Slide 43: Mortgage Investors
Mortgage Investors Secondary Jumbo 5% Portfolio 48% Government 6% Fannie Mae 41% $1.0 billion production YTD 43 See endnotes (11)
Slide 44: Mortgage Market Share
Mortgage Market Share 44 See endnotes (12) Georgia 1 Wells Fargo 8.2% 2 Quicken Loans 5.2 3 SunTrust 3.9 4 Fidelity Bank 3.4 5 Bank of America 2.6 64 South State Bank 0.4 North Carolina 1 Wells Fargo 8.9% 2 State Employees’ CU 5.8 3 BB&T 5.0 4 Quicken Loans 4.8 5 Movement Mortgage 3.6 52 South State
Slide 45: Purchase Money
Purchase Money 66% 45 See endnotes (13) 69% 63% 2013201420152016 YTD NationalSSB 60% 55% 53% 46% 40%
Slide 46: Performance Indicators
Performance Indicators 46 See endnotes (14) Loans per FTE 8 6 4 2 MLOSupport BenchmarkSSB Customer Satisfaction 10091 8074 60 40 Net Promoter ScoreOverall Satisfaction SSB Fixed vs Adjustable IndustrySSB FixedAdjustable Loan Purpose PurchaseConstructionRefinance
Slide 47: Credit
Credit Joe Burns Senior Executive Vice President Chief Credit Officer
Slide 48: Joe Burns
Joe Burns Senior Executive Vice President Chief Credit Officer 36 years in banking South State 16 years Bank of America 20 years 48
Slide 49: Structure
Structure 49 CREDIT ADMINISTRATION Joe Burns CONSUMER CHIEF CREDIT OFFICER COMMERCIAL CHIEF CREDIT OFFICER
Slide 50: Asset Quality
Asset Quality 3.00% 2.50% 2.68% 5.00% 4.13% 4.00% 1.70% 2.00% 1.50% 1.00% 0.50% 0.00% 2.50% 3.00% 2.00% 1.36% 0.74% 0.63% 1.02% 0.63% 0.48% 0.38% 0.30% 1.00% 0.00% 2011 2012 2013 2014 20153Q16 2011 2012 2013 2014 20153Q16 1.12% 248.6% 1.20% 250% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 181.8% 200% 150% 1
Slide 51: Credit Culture
Credit Culture Credit Culture is the cumulative sum decisions and actions of our lending Two heads are better than one If you can’t measure it, you can’t manage it Inspect what you expect Risk based approaches 51
Slide 52: Credit Approval Process
Credit Approval Process $2.9B requirements based on $2.4B recommendations at point Consumer $1.2B All managed by a robust credit committee structure & after the fact review 52 See endnotes (16) • Decentralized underwriting Commercial• Risk-based approval relationship size Small Business• Centralized
Slide 53: Lessons Learned
Lessons Learned Consumer Owner Occupied Commercial Owner Occupied Commercial Income Producing Commercial Non-Real Estate 22.3% 18.3 14.3 10.9 36.4% 19.6 11.8 10.0 9.4% Consumer Non-Real Estate Other Income Producing 4.0 7.1 7.7 4.4 53 Construction23.1%8.06.2 Land15.13.2 12/31/20089/30/2016
Slide 54: CRE Concentration Capacity
CRE Concentration Capacity Dollars in billions See endnotes (17) 54 September 30, 2016 Regulatory Guideline Remaining Balance % of RBC Balance % of RBC CRE $1.4 167% $2.5 300% $1.1 Construction Land & Development $0.6 74% $0.8 100% $0.2
Slide 55: Stratification of Loan Portfolio
Stratification of Loan Portfolio 100 % 70,000 60,000 80 50,000 60 40,000 30,000 40 20,000 20 10,000 0 - 12/31/2010 9/30/2016 < $100m $100m - $499m $500m - $999m $1M+ # of Active Notes 55 61,800 Avg Size (in thousands) All Loans $107 Commercial 275 Mortgage 192 Consumer 31
Slide 56: Focus
Focus Economy Concentration management Softening of multi-family development Pricing and structure discipline Increasing demands on information / data architecture 56
Slide 57: Support and Risk
Support andRisk Renee Brooks Senior Executive Vice President Chief Administrative Officer and Chief Risk Officer
Slide 58: Renee Brooks
Renee Brooks Chief Administrative Officer and Chief Risk Officer 25 years in banking South State 21 years Wachovia 4 years 58
Slide 59: Structure
Structure 59 SUPPORT AND RISK Renee Brooks TECHNOLOGY BANK OPERATIONS RISK/COMPLIANCE HR/TRAINING/CORPORATE COMMUNICATIONS
Slide 60: Regulatory Relations
Regulatory Relations Value Added Relationships (Beginning January 2017) 60
Slide 61: Investing for the Future
Investing for the Future Bank Operations Technology Risk/ Compliance 61
Slide 62: $10 Billion and Beyond
$10 Billion and Beyond Value-added Risk Framework Best in Class / Scalable Technology Improved Efficiencies Digital Strategy 62
Slide 63: Checking Account Customer Profile
Checking Account Customer Profile New Checking Accounts 2016 YTD All Checking Accounts 12/31/2015 Gen 23% Gen X 24% Baby Boomers 22% Baby Boomers Gen Y / Millennials 25% Mature 7% Gen Y / Millennials 48% Mature 17% 63 See endnotes (18) Gen Y / Millennials16 – 35 Gen X36 – 51 Baby Boomers52 – 70 Matu
Slide 64: Creating Shareholder Value
Creating Shareholder Value John Pollok Senior Executive Vice President Chief Financial Officer and Chief Operating Officer
Slide 65: John Pollok
John Pollok Chief Financial Officer and Chief Operating Officer 28 years in banking South State 20 years RHNB / NationsBank 5 years Wachovia 3 years 65
Slide 66: How We Create Shareholder Value?
How We Create Shareholder Value? Leadership $ 66 SOUTH STATE CORPORATION
Slide 67: Quality of Balance Sheet
Quality of Balance Sheet Growth Profitability • • • Strong Asset Quality Core Funded Capital Structure 67 Soundness
Slide 68: High Performance Growth
High Performance Growth • • • • Return on Assets Return on Tangible Equity Earnings per Share Dividends & Book Value Profitability SoSuounnddneessss 68
Slide 69: Earnings Per Diluted Share
Earnings Per Diluted Share $ 5.00 $4.11 4.00 3.00 2.00 1.00 - 2012 2013 2014 2015 2016 YTD Adjusted* EPS (Non - GAAP) EPS 69 See endnotes (19) $4.31 $3.40 $3.75 $3.16$3.08 $3.18 $2.49$2.38 $2.03
Slide 70: Dividends and Book Value
Dividends and Book Value $ 50.00 TOTAL RETURN 324% Dividends TBV 40.00 30.00 20.00 $9.91 10.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q16 70 Cumulative $42.01 $26.60 $16.08
Slide 71: Opportunities for Growth
Opportunities for Growth • Market Share • Dense Footprint Growth • Mergers & Acquisitions Profitability SoSuounnddneessss 71
Slide 72: SSB Footprint Market Share
SSB Footprint Market Share 72 See endnotes (20) 1 Wells Fargo 21.1% 2 Bank of America 14.7 3 BB&T 11.2 4 South State Bank 7.1 5 SunTrust 6.0 5 First Citizens 6.0 7 Synovus 3.6 8 TD Bank 3.1 9 Regions 2.0 10 United Community 1.9 Total$124 Billion100%
Slide 73: Another Piece of the Puzzle
Another Piece of the Puzzle 73 SSB Branch SBFC Branch Existing Markets New Market
Slide 74: Mergers and Acquisitions
Mergers and Acquisitions 298 institutions headquartered in GA, NC, and SC 60 $750 mm - $10 B 56 33 >$10 B 7 Distribution of Banks by Asset Size 182 258 <$750 mm 74 See endnotes (21)
Slide 75: S$ SouTH STATE
S$ SouTH STATE CORPORATION
Slide 76: South State Bank
South State Bank NORTH CAROLINA Raleigh Charlotte Greenville SOUTH CAROLINA Gainesville Columbia Wilmington Atlanta Athens Myrtle Beach Augusta Charleston Hilton Head GEORGIA Savannah 76 SSB SBFC
Slide 77: Endnotes
Endnotes 1. 2. 3. Pro Forma highlights as of 9/30/2016 and is exclusive of any purchase accounting adjustments. Source: SNL Financial, 6/30/2016 Pro Forma FDIC deposits. NE Georgia rank excludes Atlanta MSA, Greenville includes Spartanburg MSA. Source: SNL Financial, data as of 6/30/16. Pro Forma de
Slide 78: Investor Contacts
Investor Contacts Robert R. Hill, Jr. Chief Executive Officer John C. Pollok Senior Executive Vice President and Chief Financial Officer / Chief Operating Officer James C. Mabry IV Executive Vice President Investor Relations and Mergers & Acquisitions 520 Gervais Street Columbia, South Carolina 2920
Slide 79: S SOUTH STATE
S SOUTH STATE CORPORATION