Slide 1: Earnings Call 2Q 2023
Earnings Call 2Q 2023 July 28, 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) $45 Billion in assets $32 Billion in loans Ranked #2 by S&P (251) $37 Global Billion in deposits 5 Greenwich Excellence & Best Brand Awards for Small Business Banking from Coalition Greenwich Top 35 $5.9 Forbes 100 Best Banks in America Billion market
Slide 4: The WHY, The WHAT, The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2023 ($ in trillions) 17.8% $0.7B US $25.0 $0.5B 13.7% China $18.3 12.8% 11.9% Japan $4.3 8.9% 8.3% $2.8B 6.0% $1.9B SSB Footprint $4.3The combined GDP of Germany $4.0 SouthState’s 6 state branch footpr
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 Net Gain/Loss in State Adjusted Gross Income Due to Domestic Migration #1 Florida $39.2B #4 North Carolina $4.5B #6 South Carolina $4.2B #12 Georgia $1.3B #15 Alabama $0.7B #44 Virginia -$1.9
Slide 7: Southeast's Booming Automotive Industry
S O UT H E AS T ’ S B O O M I N G AUTO M OT I V E I N D US T RY Recent Auto-Related / EV Announcements with 1,000+ Jobs Capital Jobs Company Product Investment Created State Announced Scout Motors Electric Trucks & SUVs $2.0B 4,000 South Carolina 2023 Hyundai Motors Electric Vehicles, Batteries $5.5
Slide 8: 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 9: Quarterly Results
Quarterly Results Ga
Slide 10: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 1Q23 2Q23 GAAP Net Income $ 139.9 $ 123.4 EPS (Diluted) $ 1.83 $ 1.62 Return on Average Assets 1.29 % 1.11 % Non-GAAP(1) Return on Average Tangible Common Equity 18.8 % 15.8 % Non-GAAP, Adjusted(1) Net Income $ 147.2 $ 124.9 EPS (Diluted) $ 1.93 $ 1.63 Return on Average A
Slide 11: Quarterly Highlights
Q U A R T E R LY H I G H L I G H T S | 2 Q 2 0 2 3 • Reported Diluted Earnings per Share (“EPS”) of $1.62 and adjusted Diluted EPS (non-GAAP)(1) of $1.63 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $198.1 million, or 1.78% PPNR ROAA (non-GAAP)(2) • PPNR per weighted average diluted share (n
Slide 12: 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 $2.90 $2.74 $2.59 $2.50 $2.32 $2.00 $1.50 2Q22 3Q22 4Q22 1Q23 2Q23 (1) For end note descriptions, Earnings Presentation End Notes starting on slide 47. 12
Slide 13: Net Interest Margin
N E T I N T E R E S T M A R G I N (1) Net Interest Income excld. Accretion(2) Accretion (2) Net Interest Income Net Interest Margin(3) $396.0 $400 $381.3 4.4% $7.4 $362.3 $7.4 $361.7 $9.5 3.99% $5.5 $350 3.93% $315.8 4.0% $12.8 $300 3.58% 3.62% 3.6% $ in millions $250 $388.6 $373.9 $303.0 $352.8 $35
Slide 14: 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 $2,355 $2,369 $ in millions $2,500 $2,181 $2,079 $1,933 $1,879 $1,834 $2,000 $1,791 $1,699 (2) $1,470 $1,535 $1,500 $1,256 $1,451 $1,347 $1,000 $933
Slide 15: Balance Sheet
Balance Sheet Ga
Slide 16: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans (1) Deposits Noninterest-bearing Checking Interest-bearing Checking MMA & Savings Time Deposits $42 $32.0B $42 $38.4B $350, 000,000.0B $36.9B $36.4B $36.4B $36.7B $36 $2.7 $36 $2.5 $2.4 $300, 000,000.0B $4.1 $4.4 $31.0B $30 $30 $12.4 $250, 000,000.0B $12.0 $11.8 $ in bi
Slide 17: 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 4% Investor CRE 8,618 $ 9.2B $ 1,066,100 Investor CRE (2) CDL (1) Consumer RE 42,711 7.3B 170,300 29% 9% Owner-Occupied CRE 8,046 5.6B 694,300 C&I 19,343 5.4B 277,700 Constr., Dev. & Land 4,4
Slide 18: 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% 14% $4.4B Checking 36% 80% $11.5B Commercial 34% 42% 60% Total Deposits 34% 40% Money $36.7 Billion Small Busi
Slide 19: 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 4.98% 5.0% 5.0% 24% deposit 22% deposit beta in beta in 4.50% previous current cycle cycle to date 4.0% 4.0% 3.64% 3.0% 3.0% 2.40% 2.40% 2.22% 2.17% 1.92% 2.0% 1.74% 2.0% 1.
Slide 20: Credit
Credit
Slide 21: Loan Portfolio – Office Exposure
LOAN PORTFOLIO – OFFICE E XPOSURE State MSA AL Other 3% 3% FL VA 44% 4% NC 4% SC Greenville GA 20% 21% Atlanta Charleston Granular and Diversified Office Portfolio • Office represents 4% of the loan portfolio • Average loan size only $1.4 million Jacksonville • 97% located in the SouthState footprin
Slide 22: 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 $2,120 $1.6 1.78 55% 2% 5
Slide 23: Loan Portfolio – Commercial Real Estate Maturities by Year
L O A N P O R T F O L I O – C O M M E R C I A L R E A L E S T AT E M AT U R I T I E S B Y Y E A R ( 1 ) 91% of CRE loans mature in 2025 or later $8.0 51% 50% $7.0 $6.0 40% $5.0 $ in billions 30% $4.0 $7.6 $3.0 20% $2.0 12% 11% 10% 6% 7% 10% $1.0 3% $1.8 $1.7 $1.4 $1.0 $1.0 $0.0 $0.4 0% 2023 2024 202
Slide 24: Loan Portfolio – Consumer, Residential Mortgage and HELOC
LOAN PORTFOLIO – CONSUMER, RESIDENTIAL MORTGAGE AND HELOC Consumer, Residential Mtg and HELOC Segment Credit Indicator 1Q23 2Q23 Mortgage(1) 14% HELOCs NPL Ratio (Non-Accruals & 90+ DPD & Accruing) 0.35% 0.33% Other Consumer 11% Net Charge-Offs Ratio 0.00% 0.00% CD-Secured 73% 30+ DPD Ratio (Accruin
Slide 25: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs (Recoveries) to Loans • $142 million in provision for credit losses vs. 0.25% $4 million in net charge-offs trailing four quarters 0.15% • Increased ACL plus reserve for unfunded 0.05% 0.03% 0.04% 0.01% 0.01% commitments by 30 bps to 1.56% from 2Q22 to (0.02)%
Slide 26: 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 PCL Net C/O (Recv) Total ACL Reserve for Unfunded Commitments % of Total Loans $50 $47.1 $500 2.20% $450 $63 $40 $38.4 $33.1 $85 $400 $30
Slide 27: Capital
Capital Ga
Slide 28: Capital Ratios
C A P I T A L R AT I O S 1Q23 2Q23(2) Tangible Common Equity(1) 7.5 % 7.6 % Tier 1 Leverage 9.1 % 9.2 % Tier 1 Common Equity 11.1 % 11.3 % Tier 1 Risk-Based Capital 11.1 % 11.3 % Total Risk-Based Capital 13.3 % 13.5 % Bank CRE Concentration Ratio 243 % 242 % Bank CDL Concentration Ratio 61 % 60 % (1
Slide 29: Well Capitalized Including AOCI Impact
W E L L C A P I TA L I Z E D I N C L U D I N G A O C I I M PA C T TCE Ratio(1) Tier 1 Leverage Ratio 14.00% 14.00% 12.00% 12.00% 10.00% 10.00% 9.17% 7.61% 7.61% 7.80% 8.00% 8.00% 6.00% 6.00% 5.00% 4.00% 4.00% 4.00% 2.00% 2.00% 0.00% 0.00% As Reported With AOCI Impact As Reported With AOCI Impact CET
Slide 30: Appendix
Appendix Ga
Slide 31: Stable Funding Base and Strong Liquidity Position
S TA B L E F U N D I N G B A S E A N D S T R O N G L I Q U I D I T Y P O S I T I O N Primary Contingency Funding Sources at June 30, 2023 Total Net (in millions) Available Amount Used Availability $ $ $ Cash and Cash Equivalents 1,514 — 1,514 Federal Home Loan Bank of Atlanta 7,819 402 7,417 Federal
Slide 32: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 0.4% 2.37% 2.35% Agency MBS(1) 2.4% 2.29% 2.03% 2.06% Treasury, Agency & SBA 13% 2.1% Municipal 1.7% Corporates 1.4% 15% Total Investment 1.0% Portfolio† 2Q22 3Q22 4Q22 1Q23 2Q23 $7.5 Billion 72% Muni
Slide 33: Current & Historical - Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $462M $453M $438M $440M $400 4.5% Total $405M 3.99% 3.9% 3.93% Revenue 3.60% 4.0% 120% 3.3
Slide 34: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production 2Q22 1Q23 2Q23 Portfolio • Mortgage banking income of $4.4 million in 2Q 2023 Secondary 27% 28% 38% compared to $4.3 million in 1Q 2023 73% 72% 62% • Secondary pipeline of $99 million at 2Q 2023, as compared to $107 million at 1Q 202
Slide 35: Residential Mortgage Portfolio
RESIDENTIAL MORTGAGE PORTFOLIO GAIN ON SALE (“GOS”) MARGIN AND INTEREST RATES Consumer R/E Loan Growth ($) 30-yr Fixed Mortgage Rate GOS Margin $600 $700 7.08% 8.0% 6.75% 6.21% 6.38% 5.54% 6.0% $450 $500 4.56% 4.33% 4.49% 4.25% $517 4.11% $472 $498 3.63% $ in millions 3.00% 3.13% 3.25% 2.87% $415 4.
Slide 36: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,224 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues, gross Interest on VM FI Revenues Operational Revenues Total Revenues, gross $35 $35.0 $27.6 $27.7 $30 $30.0 $25 $22.0 $20.6 $25.0 $20 $16.8 $20.0 $ in millions $15 $15.0 $10 $10.0 $5 $5.0
Slide 37: Digital Trends
D I G I TA L T R E N D S Digital Sales – Deposit Accounts * Digital Sales – Loans ** Digital Deposits* 100% 100% 100% 21% 22% 15% 18% 35% 80% 80% 80% 85% 32% 79% 78% 82% 60% 60% 60% 68% 65% 40% 40% 40% 20% 20% 20% 0% 0% 0% 2Q22 2Q23 2Q22 2Q23 2Q22 2Q23 Branch Digital Branch Digital Branch Digital *
Slide 38: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 2Q 2023 422 Branches 251 Branches 268 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $146M Branches 85 434 268 251 Increased deposits per branch 3.6x from 2009 to 2Q23 38
Slide 39: 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 1Q23 2Q23 Net income (GAAP) $ 139,926 $ 123,447 Plus: Amortization of intangibles 7,299 7,028 Effective tax ra
Slide 40: 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 1Q23 2Q23 Net income (GAAP) $ 139,926 $ 123,447 Plus: Securities gains, net of tax (35) — Merger, branch consolidation and severance related expense, net
Slide 41: Non-GAAP Reconciliations – Adjusted ROAA & Adjusted ROTCE
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 1Q23 2Q23 Adjusted net income (non-GAAP) $ 147,247 $ 124,861 Total average assets 44,104,478 44,628,124 Adjusted Return
Slide 42: 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) 2Q22 3Q22 4Q22 1Q23 2Q23 Net interest income (GAAP) $ 315,815 $ 362,334 $ 396,004 $
Slide 43: 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 2Q22 3Q22 4Q
Slide 44: 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 ) 2Q22 3Q22 4Q22 1Q23 2Q23 Noninterest expense (GAAP) $ 231,169 $ 240,433 $ 229,499 $ 240,505 $ 242,626 Less: Amortization of intangible assets 8,847 7,837 8,027 7,
Slide 45: 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 1Q23 2Q23 Tangible common equity (non-GAAP) $ 3,216,295 $ 3,264,648 Total assets (GAAP) 44,923,827 44,940,332 Less: Intangible assets 2,032,709 2,025,362 Tangible asse
Slide 46: Non-GAAP Reconciliations – Capital Ratios with AOCI Impact
N O N - G A A P R E C O N C I L I AT I O N S – C A P I T A L R AT I O S W I T H A O C I I M P A C T Tier 1 Leverage Ratio with AOCI Impact CET 1 Risk-based Capital Ratio with AOCI Impact Total Risk-based Capital Ratio with AOCI Impact (non-GAAP) (non-GAAP) (non-GAAP) June 30, 2023 June 30, 2023 June
Slide 47: 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 June 30, 2023; excludes $2.0B of loans and $3.5B of deposits from national lines of business and brokered deposits. • Country GDP as of 2022; State GDP as of 1Q23 • Sources: S&P Global, International M
Slide 48: 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 (1) Excludes loans held for sale and PPP loans. Slide 17 End Notes (1) CDL includes residential construction, commercial construction, and all land development loans. (2) Investor CRE includes nonowner-occupied CRE and other in
Slide 49: 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 measures are non-GAAP measures and exclude the effect of period end intangible assets - See reconciliation of GAAP to Non-GAAP measures in Appendix. • AOCI represents accumulated other comprehensive income. • A
Slide 50: SouthState
S SouthState