Southstate Bank Corporation · NYSE:SSB
Southstate Bank — South State — KBW Southeast Bank Conference 2019
44 slides from Southstate Bank's conference presentation, Jun 19, 2019
Slide 1: Investor Presentation KBW Southeast Bank Conference June 20, 2019
1 Investor Presentation KBW Southeast Bank Conference June 20, 2019
Slide 2: Forward Looking Statements
2 2 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 Secur
Slide 3: South State Corporation: SSB
3 3 South State Corporation: SSB Richmond Columbia Greenville Charlotte Charleston Wilmington Savannah Myrtle Beach Raleigh Atlanta Augusta Announced Closures New Branch
Slide 4: How We Operate the Company
4 4 How We Operate the Company Soundness Profitability Growth
Slide 5: 1Q Highlights
5 5 1Q 19 Highlights *Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, securities gains or losses. GAAP Adjusted* Net Income (millions) $44.37 $44.82 EPS $1.25 $1.26 Return on Average Assets 1.21% 1.23% Return on Average Tangible Equ
Slide 6: Longer-term Targets
6 6 Longer-term Targets Loan Growth 5 - 10% Expense Growth 0 - 3% Efficiency Ratio 56 - 57% Capital TCE / TA 8 - 9% New Dividend Payout Range 30-35% ROTCE 16 - 18%
Slide 7: Company Updates
7 7 Company Updates • Share Repurchases • 373,072 shares purchased in the second quarter at an average price of $73.38 • Termination of Pension Plan • One-time $9.5mm non-cash expense in 2Q 19 • Up to $1mm reduction in expense run rate • Selected nCino to implement a state-of-the-art commercial loan
Slide 8: Soundness
8 Soundness
Slide 9: Capital Adequacy
9 9 Capital Adequacy 9.2% 10.5% 11.8% 12.8% 13.3% Tangible Common Equity / Tangible Assets Leverage Ratio CET1 Ratio Tier 1 Capital Ratio Total RBC Ratio SSB (3/31/19)
Slide 10: Asset Quality
10 10 Asset Quality 0.63% 0.38% 0.29% 0.23% 0.26% 0.27% 2014 2015 2016 2017 2018 1Q 19 NPLs / Loans(1) 1.02% 0.63% 0.43% 0.25% 0.28% 0.27% 2014 2015 2016 2017 2018 1Q 19 NPAs / Assets(2) 121.1% 181.8% 250.7% 293.0% 340.9% 326.9% 2014 2015 2016 2017 2018 1Q 19 ALLL / NPLs(3) 0.16% 0.09% 0.06% 0.04% 0
Slide 11: CRE Concentration
11 11 CRE Concentration Dollars in billions * Concentration limits calculated based upon bank level total Risk Based Capital (RBC). 1Q 19 Regulatory Guideline Balance % of RBC* Balance % of RBC* CRE $3.3 219% $4.5 300% Construction Land & Development $1.0 63% $1.5 100% $1.2 Billion in CRE Lending Ca
Slide 12: 1Q 19 Funding
12 12 Non-Interest Bearing DDA $3,220 Interest Bearing DDA $2,835 Savings $1,375 Money Market $2,727 Time Deposits $1,762 Other Borrowings $893 1Q 19 Funding Dollars in millions
Slide 13: Profitability
13 Profitability
Slide 14: Earnings Per Diluted Share
14 14 $4.11 $4.18 $2.93 $4.86 $1.25 $4.31 $4.55 $4.85 $5.50 $1.26 2015 2016 2017 2018 YTD 2019 EPS Adjusted* EPS (Non-GAAP) Earnings Per Diluted Share * Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses,
Slide 15: Net Interest Margin
15 15 Net Interest Margin 4.20% 4.13% 4.11% 4.18% 4.22% 4.14% 4.04% 3.98% 3.92% $86.0 $90.4 $91.7 $101.3 $114.5 $115.9 $115.6 $116.5 $114.1 $97.4 $99.0 $100.3 $112.3 $129.0 $129.6 $128.3 $126.4 $123.3 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Net Interest Margin NII - E
Slide 16: Revenue Composition
16 16 Deposit Accounts 56% Mortgage Banking 8% Trust & Investment Services 23% Other 13% Fee Income $31.5 Million Revenue Composition 75% 74% 72% 75% 78% 80% 25% 26% 28% 25% 22% 20% 2014 2015 2016 2017 2018 YTD 2019 Noninterest Income Net Interest Income Excludes Securities Gains/Losses.
Slide 17: Efficiency Ratio
17 17 66.7% 65.6% 62.3% 59.4% 63.2% 60.0% 57.3% 59.5% 59.4% 62.5% 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 Efficiency Ratio Adjusted* Efficiency Ratio Efficiency Ratio * Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or l
Slide 18: Operating Leverage
18 18 Operating Leverage Balance Sheet Growth • Increased on-hand liquidity by over $600 million • $350 million in new longer term borrowings • $272 million increase in deposits • Fund future loan / security growth Expense Management • Savings of $13 million (pre-tax) identified • Includes previousl
Slide 19: Common Stock Dividends
19 19 $0.74 $0.82 $0.98 $1.21 $1.32 $1.38 $0.38 $0.40 2013 2014 2015 2016 2017 2018 YTD 2019 2Q19 Dividend Declared* Dividend per Common Share Common Stock Dividends CAGR Calculated based on 1Q 13 dividend of $0.18 to 2Q 19 dividend of $0.40. * 2Q 19 dividend of $0.40 declared 04/25/2019 with a reco
Slide 20: Tangible Book Value + Cumulative Dividends
20 20 $12.38 $14.43 $23.49 $31.89 $47.49 $48.87 - 10.00 20.00 30.00 40.00 50.00 60.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q 19 TBV Cumulative Dividend Tangible Book Value + Cumulative Dividends 15 year increase of 295% $ Cumulative Dividends begin January 1, 2006.
Slide 21: Growth
21 Growth
Slide 22: Market Demographics
22 22 Market Demographics Source: S&P Global Market Intelligence. 71% of Branch Footprint in High Growth Markets 2.7x 2.3 2.3 2.3 2.0 2.0 1.7x 1.7 1.6 1.3 1.2 MSA Branches Myrtle Beach 10 Charleston 24 Hilton Head 9 Raleigh 1 Charlotte 22 Wilmington 4 Greenville 14 Savannah 7 Columbia 9 Augusta 12 R
Slide 23: SSB Footprint Market Share
23 23 SSB Footprint Market Share Rank Institution Deposits Market Share 1 BB&T / SunTrust $ 36.1 20.3% 2 Wells Fargo & Co. 32.6 18.3 3 Bank of America Corp. 22.6 12.7 4 First Citizens BancShares Inc. 11.9 6.7 5 South State Corp. 11.7 6.6 6 Toronto-Dominion Bank 4.7 2.7 7 United Community Banks Inc.
Slide 24: Selected Markets
24 24 Selected Markets Richmond Branches Deposits Share 1 BB&T / SunTrust 74 $ 6,021 27.7% 2 Wells Fargo & Co. (CA) 56 4,672 21.5 3 Union Bkshs Corp (VA) 31 2,998 13.8 4 Bank of America Corp. (NC) 21 2,088 9.6 5 TowneBank (VA) 9 860 4.0 6 Southern National Bncp of VA (VA) 13 846 3.9 7 C&F Financial
Slide 25: BBT / STI Branch Overlap
25 25 BBT / STI Branch Overlap Charlotte 50% Greenville 79% Richmond 63% Charleston 70% Savannah 86% Raleigh 59% Source: S&P Global Market Intelligence as of 12/31/2018. Percentage overlap of BBT / STI branches within a 2 mile radius of each other. South State
Slide 26: Economic Highlights
26 26 Economic Highlights Richmond Columbia Greenville Charlotte Charleston Wilmington Savannah Myrtle Beach Raleigh Atlanta Augusta
Slide 27: Appendix
27 Appendix
Slide 28: Appendix Contents
28 28 Appendix Contents Share Repurchase Activity 29 Pension Plan Termination 30 Average Interest Earning Assets 31 Accretable Yield 32 Loan Portfolio 33 - 36 Investment Portfolio 37 Deposits 38 Lines of Business 39– 41
Slide 29: Share Repurchase Activity
29 29 Share Repurchase Activity 2018 Total • 1,000,000 shares • $68.43 per share average • $68.4 million 1Q19 • 500,000 shares • $66.58 per share average • $33.3 million 2Q19 • 373,072 shares in 2Q through 6/14/19 • $73.38 per share average • $27.4 million 2019 Total • 873,072 shares • $69.46 per sh
Slide 30: Pension Plan Termination
30 30 Pension Plan Termination Balance Sheet • Net unrealized loss of $7.7mm pre-tax in AOCL • Net pension plan asset of $1.8mm pre-tax • After-tax reduction in TBV per share of $0.05 • Risk Based Capital ratios reduced ~4 – 8 bps Income Statement • One-time expense to recognize net unrealized losse
Slide 31: Average Interest Earning Assets
31 31 Average Interest Earning Assets Dollars in millions Quarterly Averages Assets % of Earning Assets 4Q 18 % of Earning Assets 1Q 19 Change Short-Term Investments 1.4% $ 173 1.9% $ 249 $ 76 Investment Securities 12.2 1,548 11.9 1,515 (33) Loans – Acquired 25.0 3,175 23.0 2,947 (228) Loans – Non-a
Slide 32: Accretable Yield
32 32 Accretable Yield First Quarter 2019 (Yields Annualized) Income Statement Contractual Interest Accretion Total Income Contractual Yield Total Yield Acquired Credit Impaired $ 7.1 $5.9 $13.0 5.35% 11.20% Acquired NonCredit Impaired 29.9 3.2 33.1 4.83 5.42 Total $37.0 $9.1 $46.1 4.92% 6.34% Dolla
Slide 33: Acquired Loan Portfolio
33 33 Acquired Loan Portfolio As of March 31, 2019 Acquired Loans UPB Discount Carrying Value Accretable Yield / Disc Credit Impaired $ 514.1 (A) ($61.9) $ 452.3 (B) $107.0 Non-Credit Impaired 2,408.9 (30.2) 2,378.7 30.2 Total $ 2,923.0 ($92.1) $ 2,831.0 $137.2 (A) Represents total loan discount mad
Slide 34: Loan Portfolio Mix
34 34 $3,468 $4,221 $5,241 $6,492 $7,933 $8,311 $2,248 $1,783 $1,439 $4,127 $3,080 $2,831 $5,716 $6,004 $6,680 $10,619 $11,013 $11,142 2014 2015 2016 2017 2018 1Q 19 Non Acquired Acquired* Loan Portfolio Mix Dollars in millions *Acquired loans are net of discounts.
Slide 35: 1Q Loan Characteristics
35 35 1Q 19 Loan Characteristics Floaters $2,395 22% Hybrid ARMs $2,484 22% Adjustable $93 1% Fixed $6,086 55% Maturity or Repricing <1 year 29% 1 - 5 years 34 5+ years 37 Overall Weighted Average Life of 3-4 Years Dollars in millions
Slide 36: 1Q Loans
36 36 1Q 19 Loans Organic Growth Non-acquired Loan Growth 5% Annualized Relationship Driven Top 25 7.3% of Total loans Average Loan Size $129,461 Asset Quality NPAs/Assets 0.27% Non-acquired Charge-offs 0.02% Consumer 37.2% Commercial Real Estate 29.4% Commercial 33.4% Loans by Type NC $2.0 Other $0
Slide 37: Investment Portfolio Composition
37 37 Agency Mortgage- Backed Securities 69% State & Municipal AFS 12% SBA 14% U.S. Agency/GSE Debentures 5% 1Q 19 Investment Portfolio Composition Fixed Income Portfolio (AFS & HTM) Tax Equivalent Yield 2.8% Weighted Average Life 4.4 years Effective Duration 3.9 Total Carrying Value $1.5 Billion Fa
Slide 38: 1Q Transaction Deposits
38 38 1Q 19 Transaction Deposits ~267,000 accounts Relationship Based Avg. Balance $12,800 Avg. Age 10 Years Consumer Digital Banking Online Banking ~266,000 users Mobile App ~174,000 users DDA & Loan New Accounts ~9% Digital Debit Card Annual Transactions ~103 million 273,000 $3.2 187,000 $2.7 # of
Slide 39: Wealth
39 39 Wealth $5,310 $4,943 $5,511 $4,170 $3,933 $3,828 1Q 19 2018 2017 2016 2015 2014 Assets Under Management or Care (millions) $7,269 $30,229 $25,401 $19,764 $20,117 $18,344 YTD 2019 2018 2017 2016 2015 2014 Noninterest Income (thousands)
Slide 40: Mortgage Banking
40 40 Mortgage Banking $295 $1,514 $1,577 $1,404 $1,379 $1,195 YTD 2019 2018 2017 2016 2015 2014 Production (millions) $2,385 $13,590 $17,954 $20,547 $21,761 $16,170 YTD 2019 2018 2017 2016 2015 2014 Noninterest Income (thousands)
Slide 41: Branch Network
41 41 Branch Network Total Branches 12/31/2009 48 Acquired 201 De Novo 1 Consolidated or sold (82) Total Branches 3/31/19 168 Announced branch closures (12) Pro Forma Total Branches 3/31/19 156 Average deposits per branch 6/30/2009 $ 46 3/31/2019 71 Dollars in millions Average deposits per branch ba
Slide 42: Analyst Coverage
42 42 Analyst Coverage Brean Capital FIG Partners Keefe, Bruyette & Woods Piper Jaffray Sandler O’Neill Stephens SunTrust Robinson Humphrey
Slide 43: Investor Contacts
43 43 Investor Contacts 520 Gervais Street Columbia, South Carolina 29201 800-277-2175 www.SouthStateBank.com Robert R. Hill, Jr. Chief Executive Officer John C. Pollok Senior Executive Vice President Chief Financial Officer James C. Mabry IV Executive Vice President Investor Relations and Mergers &
Slide 44: South State
S$ . SOUTH STATE