Slide 1: Earnings Call 2Q 2024
Earnings Call 2Q 2024 July 25, 2024
Slide 2: Cautionary Note Regarding Forward Looking Statements
C A U T I O N A R Y N O T E R E G A R D I N G F O R W A R D L O O K I N G S T AT E M E N T S This communication contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made purs
Slide 3: SouthState Corporation Overview of Franchise
SouthState Corporation Overview of Franchise (1) $45 Billion in assets $33 Billion in loans Ranked (251) $37 Billion in deposits #14 by S&P Global 17 Greenwich Excellence & Best Brand Awards for Small Business Banking from $7.1 Coalition Greenwich Billion market cap 3 (1) Financial metrics as of Jun
Slide 4: The WHY, The WHAT, The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2023 ($ in trillions) 17.8% $0.9B US $27.4 $0.6B 13.7% China $17.7 12.8% 11.9% SSB Footprint $4.7 8.9% 8.3% $3.1B Germany $4.4 The combined GDP of 6.0% $2.0B SouthState’s 6 state branch Japan $4.2 footp
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 Top 10 States Net Domestic Migration 1. Florida 818,762 2. Texas * 656,220 3. North Carolina 310,189 4. South Carolina 248,055 5. Arizona 218,247 6. Tennessee 207,097 7. Georgia 185,752 8. Id
Slide 7: 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 8: Quarterly Results
Quarterly Results Ga
Slide 9: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 1Q24 2Q24 GAAP Net Income $ 115.1 $ 132.4 EPS (Diluted) $ 1.50 $ 1.73 Return on Average Assets 1.03 % 1.17 % Non-GAAP(1) Return on Average Tangible Common Equity 13.6 % 15.5 % Non-GAAP, Adjusted(1) Net Income $ 121.3 $ 137.2 EPS (Diluted) $ 1.58 $ 1.79 Return on Average A
Slide 10: 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 4 • Reported Diluted Earnings per Share (“EPS”) of $1.73; adjusted Diluted EPS (non-GAAP)(1) of $1.79 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $183.1 million, or 1.62% PPNR ROAA (non-GAAP)(2) • PPNR per weighted average diluted share (non-
Slide 11: Net Interest Margin
N E T I N T E R E S T M A R G I N (1) Net Interest Income Net Interest Margin, TE (1) $400 4.4% $350 4.0% $300 3.62% 3.50% 3.48% 3.6% 3.44% $ in millions 3.41% $250 $361.7 $355.4 $354.2 $350.3 $343.9 3.2% $200 2.8% $150 $100 2.4% 2Q23 3Q23 4Q23 1Q24 2Q24 Dollars in millions; Amounts may not total du
Slide 12: 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 $2,049 $1,933 $1,879$1,834 $2,000 $1,791 $1,699 $1,470$1,535 $1,459 $1,500 $1,256(2) $1,352 $1,233
Slide 13: Balance Sheet
Balance Sheet Ga
Slide 14: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans (1) Deposits Noninterest-bearing Checking ("DDA") Interest-bearing Checking MMA & Savings Time Deposits Total $42 $1.2B Deposits $42 $36.7B $36.9B $37.0B $37.2B $37.1B $36 $36 $1.0B $4.4 $4.5 $4.2 $4.3 $4.6 $30 $30 $0.8B $12.6 $ in billions $13.5 $14.2 $14.5 $14.6 $24 $
Slide 15: 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 7,947 $ 9.7B $ 1,224,600 Investor CRE (2) CDL (1) Consumer RE 45,512 8.4B 185,500 29% 8% Owner-Occupied CRE 7,677 5.5B 719,500 C&I 19,488 5.8B 296,000 C&I Constr., Dev. & Land
Slide 16: 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% 17% $4.6B Checking 42% 80% $10.4B Commercial 40% 39% 60% Total Deposits 40% $37.1 Billion 30% Small Business M
Slide 17: 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 6.0% 6.0% 24% deposit 34% deposit beta in beta in 5.25% 5.31% 5.31% 5.31% previous current cycle 4.98% 5.0% cycle 5.0% to date 4.50% 4.0% 4.0% 3.64% 3.0% 3.0% 2.40% 2.40% 2.
Slide 18: Credit
Credit
Slide 19: Loan Portfolio – Office Exposure
LOAN PORTFOLIO – OFFICE E XPOSURE State MSA AL 2% OTHER 5% FL 43% NC 5% VA 6% GA Greenville 18% SC 21% Atlanta Charleston Granular and Diversified Office Portfolio • Office represents 4% of the loan portfolio • Average loan size only $1.4 million Jacksonville • 95% located in the SouthState footprin
Slide 20: SSB Granular Office Portfolio Shows Meaningfully Lower Expected Default Rates
F R B K A N S A S C I T Y E X P E C T E D O F F I C E D E F A U L T R AT E S T U D Y – S S B G R A N U L A R O F F I C E P O R T F O L I O S H O W S M E A N I N G F U L LY L O W E R E X P E C T E D D E FA U LT R AT E S Federal Reserve Bank of Kansas City: Expected Default Rates on Office Properties
Slide 21: Loan Portfolio – Non-Owner-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 $2,116 $1.7 1.76 53% 2% 5
Slide 22: 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 ) 87% of CRE loans mature in 2026 or later $9.0 53% 50% $8.0 $7.0 40% $6.0 $ in billions $5.0 30% $4.0 $8.1 20% $3.0 13% 11% $2.0 10% 8% 10% $1.0 4% $1.9 $1.7 $1.6 $1.3 $0.7 $— 0% 2024 2025 2026 202
Slide 23: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs to Loans • $202 million in provision for credit losses vs. 0.25% $31 million in net charge-offs trailing eight 0.16% quarters 0.15% 0.09% 0.04% 0.05% • Increased ACL plus reserve for unfunded 0.03% 0.05% commitments by 31 bp to 1.57% from 2Q22 to 2Q24 (0.05)% 2
Slide 24: 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 Provision for Credit Losses Net Charge-Offs (Recoveries) Total ACL Reserve for Unfunded Commitments % of Total Loans $50 $47.1 $550 2.20%
Slide 25: Capital
Capital Ga
Slide 26: Capital Ratios
C A P I T A L R AT I O S 1Q24 2Q24(2) Tangible Common Equity(1) 8.2 % 8.4 % Tier 1 Leverage 9.6 % 9.7 % Tier 1 Common Equity 11.9 % 12.1 % Tier 1 Risk-Based Capital 11.9 % 12.1 % Total Risk-Based Capital 14.4 % 14.4 % Bank CRE Concentration Ratio 235 % 231 % Bank CDL Concentration Ratio 49 % 51 % (1
Slide 27: Appendix
Appendix Ga
Slide 28: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 0.4% 2.45% 2.44% 2.48% Agency MBS(1) 2.50% 2.35% 2.36% Treasury, Agency & SBA 2.20% 14% 1.90% Municipal 1.60% Corporates 11% 1.30% Total Investment 1.00% Portfolio† 2Q23 3Q23 4Q23 1Q24 2Q24 $6.8 Billi
Slide 29: Current & Historical Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $440M $429M $420M $416M $426M $400 4.0% Total 3.62% 100% 5.0% 3.50% 3.48% Revenue 16% 3.41
Slide 30: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production Portfolio 2Q23 1Q24 2Q24 • Mortgage banking income of $5.9 million in 2Q 2024 Secondary 38% 41% compared to $6.2 million in 1Q 2024 47% 62% 53% 59% • Secondary pipeline of $122 million at 2Q 2024, as compared to $118 million at 1Q 20
Slide 31: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,237 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues, gross Interest on VM FI Revenues Operational Revenues Total Revenues, gross $35 $35.0 $27.7 $30 $24.8 $30.0 $25 $25.0 $20 $16.1 $16.3 $14.6 $20.0 $ in millions $15 $15.0 $10 $10.0 $5 $— $5
Slide 32: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 2Q 2024 422 Branches 251 Branches 268 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $148M Branches 85 434 268 251 Increased deposits per branch 3.7x from 2009 to 2Q24 32
Slide 33: SouthState Acquisition of Independent Bank Group
SouthState Acquisition of Independent Bank Group
Slide 34: Creating the South's Leading Regional Bank
C R E AT I N G T H E S O U T H ’ S L E A D I N G R E G I O N A L B A N K Enhanced Scale Through Partnership(1) Pro Forma Branch Footprint Projected Population Growth $65B $48B $55B Top 20% of U.S. MSAs highlighted in blue Assets Loans Deposits Colorado Virginia Dominant Southern Franchise Oklahoma N
Slide 35: Positioned for the Future in the Best U.S. Growth Markets
POSITIONED FOR THE FUTURE IN THE BEST U.S. GROWTH MARKETS Pro Forma Deposit Footprint Fort Collins $1.1 Denver Colorado Colorado $1.5 Springs Colorado Front Range $0.5 31 Branches Pro Forma Richmond Virginia Deposits by State North Carolina Raleigh Florida 27% Tennessee Oklahoma $2.4 Texas 22% Texas
Slide 36: Financial Impact
F I N A N C I A L I M PA C T Earnings and TBV Impact Strong Capital and Liquidity Excluding Excluding (1) GAAP Rate Marks/CDI Rates/CDI/CECL 10.4% 12.8% 89% 27.3% 20.4% 16.5% CET1 Ratio Total Risk-Based Capital Ratio Loan-to-Deposit Ratio 2025 EPS 2025 EPS 2025 EPS Accretion(2) Accretion(2) Accretio
Slide 37: Pro Forma Performance vs. Peers
PRO FORMA PERFORMANCE VS. PEERS 2025E ROAA (%) Benefit to SouthState 1.53 1.45 +22 1.35 1.34 1.26 1.23 1.18 1.14 1.12 1.11 1.08 1.05 1.05 1.04 1.01 1.00 0.99 0.82 0.82 0.81 0.80 0.77 0.64 0.34 bps Pro Peer Forma(1) Median 2025E ROATCE (%) 18.0 17.5 16.2 15.9 15.9 15.1 +440 14.5 14.4 14.0 13.9 13.7 1
Slide 38: 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 1Q24 2Q24 Net income (GAAP) $ 115,056 $ 132,370 Plus: Amortization of intangibles 5,998 5,744 Effective tax ra
Slide 39: 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 1Q24 2Q24 Net income (GAAP) $ 115,056 $ 132,370 Plus: Merger, branch consolidation, severance related and other expense, net of tax (1) 3,382 4,430 FDIC s
Slide 40: Non-GAAP Reconciliations – Adjusted ROAA & Adjusted ROATCE
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 1Q24 2Q24 Adjusted net income (non-GAAP) $ 121,326 $ 137,274 Total average assets 45,011,163 45,427,734 Adjusted Return
Slide 41: 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) 1Q23 2Q23 3Q23 1Q24 2Q24 Net interest income (GAAP) $ 361,743 $ 355,371 $ 354,231 $
Slide 42: Non-GAAP Reconciliations – PPNR, Adjusted PPNR
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 (Non-GAAP) 1
Slide 43: 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 ) 1Q23 2Q23 3Q23 1Q24 2Q24 Noninterest expense (GAAP) $ 242,626 $ 238,206 $ 273,243 $ 249,290 $ 248,747 Less: Amortization of intangible assets 7,028 6,616 6,615 5,
Slide 44: 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 1Q24 2Q24 Tangible common equity (non-GAAP) $ 3,540,710 $ 3,649,908 Total assets (GAAP) 45,144,838 45,493,970 Less: Intangible assets 2,006,299 2,000,495 Tangible asse
Slide 45: 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, 2024; excludes $2.3B of loans and $3.8B of deposits from national lines of business and brokered deposits. • Country GDP as of 2023; State GDP as of 1Q24 • Sources: S&P Global, International M
Slide 46: 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 † Core deposits defined as non-time deposits (1) Source: S&P Global Market Intelligence; 2Q24 MRQs available as of July 23, 2024; Peers as disclosed in the most recent SSB proxy statement. Slide 19 End Notes (1) Review consists
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 30 End Notes (1) Includes pipeline, LHFS and MBS forwards. Slide 31 End Notes (1) Interest on centrally-cleared variation margin (expense or income) is included in ARC revenue within Correspondent Banking and Capital Markets Income. 47
Slide 48: SouthState
S SouthState