Slide 1: Earnings Call 2Q 2022
Earnings Call 2Q 2022 July 29, 2022
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) $46 Billion in assets #1 in Florida #3 in South Carolina $28 Billion in loans “Best Places to Work” Ranked #30 (283) $39 Billion in deposits designation in South Carolina by S&P Global 16 Greenwich Excellence and Best Brand awards from Coalition Green
Slide 4: The WHY, The WHAT, The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2022 ($ in trillions) 16.9% $0.7B US $23.0 $0.5B China $17.7 12.6% 12.2% 11.1% Japan $4.9 8.9% 8.3% $2.4B 5.8% $2.2B Germany $4.2 The combined GDP of SSB Footprint $3.9 SouthState’s 6 state branch footp
Slide 6: Pandemic Accelerates Population 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 M I G R AT I O N T O T H E S O U T H U.S. Net Domestic Migration During Covid, July 2020 to July 2021 Source: U.S. Census Bureau 6
Slide 7: Investment Thesis
INVESTMENT THESIS • High growth markets • 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 markets plat
Slide 8: Quarterly Results
Quarterly Results Ga
Slide 9: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 1Q22 2Q22 GAAP Net Income $ 100.3 $ 119.2 EPS (Diluted) $ 1.39 $ 1.57 Return on Average Assets 0.95 % 1.04 % Non-GAAP(1) Return on Average Tangible Common Equity 13.97 % 16.59 % Non-GAAP, Adjusted(1) Net Income $ 121.9 $ 123.4 EPS (Diluted) $ 1.69 $ 1.62 Return on Average
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 2 • Reported & adjusted diluted Earnings per Share (“EPS”)(1) of $1.57 and $1.62, respectively • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $176.8 million, or 1.55% PPNR ROAA(2) • PPNR per diluted share (non-GAAP)(2) of $2.32, up 29.6% from th
Slide 11: PPNR per Diluted Share
P P N R P E R D I L U T E D S H A R E (1) $2.50 $2.32 $2.00 $1.87 $1.89 $1.79 $1.59 $1.50 2Q21 3Q21 4Q21 1Q22 2Q22 (1) For end note descriptions, Earnings Presentation End Notes starting on slide 44 11
Slide 12: Net Interest Margin
N E T I N T E R E S T M A R G I N (1) (3) Net Interest Income excld. Accretion (2) Accretion(2) Net Interest Income Net Interest Margin 35 bps quarterly improvement in Net Interest Margin 3.5% $350 $314.3 $300 $12.8 3.3% $ in millions $260.0 $258.1 $261.5 3.12% $253.1 $250 $13.4 $7.7 $21.6 $20.5 3.0
Slide 13: Loan Production vs Loan Growth
LOAN PRODUCTION VS LOAN GROWTH (3) Loan Production Loan Portfolio Growth (3) (1) $4,000 $3,863 $3,500 $3,129 $3,000 (1) $2,636 $2,582 $2,500 $2,355 $ in millions $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 $1,000 $500 $180 $82 $267 $153 $180 $169 $573 $396
Slide 14: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production 2Q21 1Q22 2Q22 Portfolio • Mortgage banking income of $5.5 million in 2Q 2022 Secondary 27% compared to $10.6 million in 1Q 2022 57% 43% 47% 53% 73% • Secondary pipeline at 2Q 2022 of $126 million, as compared to $260 million at 1Q 2
Slide 15: Residential Mortgage Portfolio
RESIDENTIAL MORTGAGE PORTFOLIO GAIN ON SALE (“GOS”) MARGIN AND INTEREST RATES Consumer R/E Loan Growth ($) 30-yr Fixed Mortgage Rate GOS Margin 5.54% $600 $700 6.0% 4.49% 4.56% 4.33% $450 4.11% 4.25% $500 3.63% 3.46% 3.25% 3.04% 3.08% 3.00% 3.13% 3.25% $517 2.87% $ in millions 3.0% 2.13% $300 $300 3
Slide 16: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,172 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues FI Revenues Operational Revenues Total Revenue $35 $35.0 $30.2 $30 $28.0 $27.6 $30.0 $25.9 $25.2 $25 $25.0 $ in millions $20 $20.0 $15 $15.0 $10 $10.0 $5 $5.0 $- $0.0 2Q21 3Q21 4Q21 1Q22 2Q
Slide 17: Interest Rate Sensitivity
Interest Rate Sensitivity Go
Slide 18: Premium Core Deposit Franchise
PREMIUM CORE† DEPOSIT FRANCHISE Deposit Mix vs. Peers Deposits by Type Checking Accounts MM & Savings Time Deposits Checking Accounts Composition 100% 7% 7% Time Deposits $2.7B 80% 33% Noninterest- 37% 50% bearing Checking Commercial 60% $14.3B Money Market 40% $9.3B Total Deposits 34% 60% $38.9 Bil
Slide 19: Interest Rate Risk Profile
I N T E R E S T R AT E R I S K P R O F I L E Percentage Change in Net Interest Income Loan Repricing Frequency (excluding PPP) Instantaneous Shock/Static Balance Sheet(1) Fixed Variable Adjustable 10% 60% 9% 9.0% 8% 50% 7% 40% 6% 5% 30% 4% 4.7% 51% 51% 20% 41% 3% 31% 2% 2.4% 10% 18% 1% 1.2% 8% 0% 0%
Slide 20: Well-Positioned for Higher Rates – Historical Deposit Beta
W E L L - P O S I T I O N E D F O R H I G H E R R AT E S – H I S T O R I C A L D E P O S I T B E T A ( 1 ) 24% total deposit beta 2.88% 3.0% from 4Q15 – 2Q19 2.76% 2.80% 2.53% 2.47% 2.40% 2.5% 2.22% Avg. Fed Funds Rate 2.07% 1.94% 1.92% 2.40% Avg. 5-YR UST 2.0% 1.80% 1.81% 2.12% 1.74% 1.58% 1.61% 1.
Slide 21: Balance Sheet
Balance Sheet Ga
Slide 22: Loan and Deposit Trends
LOAN AND DEPOSIT TRENDS Loans(1) Deposits Total Loans PPP Noninterest-bearing Checking Interest-bearing Checking MMA & Savings Time Deposits $27.9B $30 $42 $38.8B $38.9B $26.6B $350, 000,000.0B $29.0B $24.0B $23.8B $23.9B $35.1B $2.8 $2.7 $0.1 $28.0B $36 $33.2B $33.6B $300, 000,000.0B $24 $0.2 $2.8
Slide 23: 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 Loan Type Balance Loans Balance Cons / Other Constr., Dev. & Land 5,547 $ 2.5B $ 455,500 CDL (1) 5% Investor CRE (2) Investor CRE 9,097 8.4B 922,800 9% 30% Owner-Occupied CRE 8,288 5.4B 654,100 C&I 18,624 4.8B 255,000 Total Loans Consum
Slide 24: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs to Loans Nonperforming Assets to Loans & OREO 0.25% 1.0% 0.20% 0.8% 0.15% 0.44% 0.5% 0.38% 0.40% 0.35% 0.33% 0.10% 0.04% 0.3% 0.05% 0.03% 0.03% 0.02% 0.00% -% 0.0% 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Criticized & Classified Asset Trends Combined S
Slide 25: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield (2) 6% 2.2% 2.03% 8% Agency MBS(1) 1.75% 1.6% 1.49% 1.51% 1.53% Municipal 13% Total Investment Portfolio† Treasury & agency $8.5 Billion 1.0% 2Q21 3Q21 4Q21 1Q22 2Q22 Other 73% 1% 0.4% Municipal Bond Rat
Slide 26: Capital Ratios
C A P I T A L R AT I O S 1Q22 2Q22(2) Tangible Common Equity(1) 7.0 % 6.8 % Tier 1 Leverage 8.5 % 8.0 % Tier 1 Common Equity 11.4 % 11.1 % Tier 1 Risk-Based Capital 11.4 % 11.1 % Total Risk-Based Capital 13.3 % 13.0 % Bank CRE Concentration Ratio 243 % 248 % Bank CDL Concentration Ratio 57 % 61 % (1
Slide 27: Appendix
Appendix Ga
Slide 28: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 2Q 2022 422 Branches 283 Branches 236 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $137M Branches 85 434 236 283 ~243% growth in deposits per branch Planned 3rd Quarter 2022
Slide 29: Technology | Digital
T E C H N O L O G Y | D I G I TA L 2020-2022 Foundation Future System Conversion Complete • Strategic Talent Adds Tech Stack with Best-in-Class Systems • Efficiency, Capacity, Automation Talent retained and in place for next phase • Data Analytics • Money Movement • Digital First Target: Digit
Slide 30: Tangible Book Value per Share Plus Capital Return per Share
TA N G I B L E B O O K VA L U E P E R S H A R E (1) P L U S C A P I TA L R E T U R N P E R S H A R E Tangible Book Value per Share ("TBVPS") Cumulative Dividends Cumulative Repurchases per Share Change in AOCI per Share $68.00 $64.00 $60.00 $56.00 $50.96 $48.29 $52.00 $43.49 $48.00 $44.00 $2.54 $40.
Slide 31: Capital Return to Shareholders
C A P I TA L R E T U R N TO S H A R E H O L D E R S • Returned $181.1 million to shareholders through YTD 2022 share repurchases and dividends • 1.3 million shares repurchased YTD represents 1.7%(1) of outstanding shares • Annualized dividend of $2.00 represents an attractive dividend yield of 2.4%(
Slide 32: Current & Historical - Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”) Noninterest Income / Revenue Total Revenue ($MM) Avg. 10-year UST NIM ($) NIM (%) 3.6% $350 3.5% Total $347M 120% $332M $350M $348M $403M 2.93% 3.12% Revenue 100% 3.0% 24% 25% 26% 24
Slide 33: Loss Absorption Capacity
L O S S A B S O R P T I O N C A PA C I T Y | 2 Q 2 0 2 2 2Q22 % of Total Loans(1) Allowance for Credit Losses (“ACL”) Non-PCD ACL $ 257.4 PCD ACL 62.3 Total ACL $ 319.7 1.15 % Reserve for Unfunded Commitments Reserve for unfunded commitments 32.5 0.12 % Total ACL plus Reserve for Unfunded Commitment
Slide 34: Significant Purchase Accounting Marks
S I G N I F I C A N T P U R C H A S E A CC O U N T I N G M A R K S (1) Loan Balance % of (2) Credit Mark Interest Mark Total Mark Total NonPCD Loans ~$ 2.3B 94 % ~$ 20.3mm ~0.9 % ~$ 14.3mm ~0.6 % ~$ 34.6mm ~1.5 % PCD Loans ~$ 0.1B 6 % ~$ 13.8mm ~10.0 % ~$ 5.9mm ~4.3 % ~$ 19.7mm ~14.3 % Total $ 2.4B
Slide 35: Excess Liquidity Provides Significant Tailwind
E X C E S S L I Q U I D I T Y P R O V I D E S S I G N I F I C A N T TA I L W I N D Fed Funds & Interest Earning Cash / Assets Investments / Assets Peer Avg. - Fed Funds & Interest Earning Cash / Assets (1) Peer Avg. - Investments / Assets (1) 22.6% 24% 21.0% 21.5% 21.2% 23.0% 20.3% 19.3% 18.6% 18.8%
Slide 36: Non-GAAP Reconciliations – ROATCE & 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 1Q22 2Q22 Net income (GAAP) $ 100,329 $ 119,175 Plus: Amortization of intangibles 8,494 8,847 Effective tax ra
Slide 37: Non-GAAP Reconciliations – Adjusted Net Income & 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 1Q22 2Q22 Net income (GAAP) $ 100,329 $ 119,175 Plus: Initial provision for credit losses - NonPCD loans and UFC from the ACBI merger, net of tax 13,492 -
Slide 38: Non-GAAP Reconciliations – Adjusted ROAA & 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 1Q22 2Q22 Adjusted net income (non-GAAP) $ 121,913 $ 123,398 Total average assets 42,946,332 45,847,789 Adjusted Return
Slide 39: Non-GAAP Reconciliations – Net Interest Margin & Core NII
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) 2Q21 3Q21 4Q21 1Q22 2Q22 Net interest income (GAAP) $ 253,130 $ 259,986 $ 258,104 $
Slide 40: 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 (Non-GAAP) 2
Slide 41: 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 ) 2Q21 3Q21 4Q21 1Q22 2Q22 Noninterest expense (GAAP) $ 263,383 $ 232,290 $ 224,037 $ 228,600 $ 231,169 Less: Amortization of intangible assets 8,968 8,543 8,517 8,
Slide 42: Non-GAAP Reconciliations – Investments, Fed Funds & Cash
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 : I N V E S T M E N T S , F E D F U N D S S O L D & I N T. E A R N I N G C A S H ( U N A U D I T E D ) Combined Business Basis (SSB & CSFL)(1) 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 (2) (2) SSB CSFL Co
Slide 43: Non-GAAP Reconciliations – Tangible Book Value & TCE 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 B O O K V A L U E / S H A R E & 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 Book Value per Common Share 2Q21 3Q21 4Q21 1Q22 2Q22 Shareholders' common equity (excludes preferred stock) $ 4,757,623 $ 4,792,941 $ 4,802,940 $ 5
Slide 44: 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 9 End Notes (1) 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 amortization of
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 26 End Notes (1) 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. Slide 30 End Notes (1) The tangible measure is a n
Slide 46: SouthState
S SouthState