Slide 1: Earnings Call 4Q 2023
Earnings Call 4Q 2023 January 26, 2024
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 $6.3 Forbes 100 Best Banks in America Billion market
Slide 4: The WHY The WHAT The HOW
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned for the Future in the Best Growth Markets in America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA Actual Population Growth GDP 2010-2023 ($ in trillions) 17.8% $0.8B US $27.0 $0.6B 13.7% China $17.7 12.8% 11.9% SSB Footprint $4.5 8.9% 8.3% $2.9B 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 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 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. Idaho 104,313 9. Ala
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 3Q23 4Q23 GAAP Net Income $ 124.1 $ 106.8 EPS (Diluted) $ 1.62 $ 1.39 Return on Average Assets 1.10 % 0.94 % Non-GAAP(1) Return on Average Tangible Common Equity 15.5 % 13.5 % Non-GAAP, Adjusted(1) Net Income $ 124.3 $ 128.3 EPS (Diluted) $ 1.62 $ 1.67 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 | 4 Q 2 0 2 3 • Reported Diluted Earnings per Share (“EPS”) of $1.39; adjusted Diluted EPS (non-GAAP)(1) of $1.67 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $173.9 million, or 1.53% 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 excld. Accretion(2) Accretion (2) Net Interest Income Net Interest Margin(3) $396.0 $400 $381.3 4.4% $7.4 $7.4 $361.7 $355.4 $354.2 3.99% $5.5 $350 3.93% $4.1 $3.9 4.0% $300 3.62% 3.50% 3.48% 3.6% $ in millions $250 $388.6 $373.9 $356.2 $351.
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 $1,933 $1,879 $1,834 $2,000 $1,791 $1,699 $1,470 $1,535 $1,459 $1,500 $1,256(2) $1,233 $1,451 $1,34
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 $42 $33.0B $42 $350, 000,000.0B $36 $36 $32.5B $2.4 $300, 000,000.0B $4.1 $4.4 $4.5 $4.2 $32.0B $30 $30 $250, 000,000.0B $11.8 $ in billions $ in billions $31.5B $11.
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 8,216 $ 9.2B $ 1,123,200 Investor CRE (2) CDL (1) Consumer RE 44,408 8.0B 180,000 28% 9% Owner-Occupied CRE 7,816 5.5B 703,400 C&I 19,287 5.5B 285,400 Constr., Dev. & Land 3,6
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% $4.2B Checking $10.6B 41% 80% Commercial 38% 38% 60% Total Deposits 31% 40% $37.0 Billion 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 30% deposit beta in beta in 5.25% 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% 2.22% 2.17% 1.
Slide 18: Credit
Credit
Slide 19: Loan Portfolio – Office Exposure
LOAN PORTFOLIO – OFFICE E XPOSURE State MSA AL 2% NC 4% FL 45% Other 4% VA 5% GA SC Greenville 18% 22% Atlanta Charleston Granular and Diversified Office Portfolio • Office represents 4% of the loan portfolio • Average loan size only $1.4 million Jacksonville • 96% located in the SouthState footprin
Slide 20: 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 $2,104 $1.6 1.78 54% 2% 5
Slide 21: 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 ) 93% of CRE loans mature in 2025 or later $9.0 52% 50% $8.0 $7.0 40% $6.0 $ in billions $5.0 30% $4.0 $7.7 20% $3.0 12% 11% 11% $2.0 7% 7% 10% $1.0 $1.7 $1.7 $1.6 $1.1 $1.0 $— 0% 2024 2025 2026 202
Slide 22: Loan Portfolio – Consumer, Residential Mortgage and HELOC
LOAN PORTFOLIO – CONSUMER, RESIDENTIAL MORTGAGE AND HELOC Consumer, Residential Mtg and HELOC Segment Credit Indicator 3Q23 4Q23 Mortgage(1) 14% NPL Ratio (Non-Accruals & 90+ DPD & Accruing) 0.34% 0.38% HELOCs Other Consumer 11% Net Charge-Offs Ratio 0.02% 0.02% 74% CD-Secured 30+ DPD Ratio (Accruin
Slide 23: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs to Loans • $196 million in provision for credit losses vs. 0.25% $29 million in net charge-offs trailing eight 0.16% quarters 0.15% 0.09% 0.04% • Increased ACL plus reserve for unfunded 0.05% 0.01% 0.01% commitments by 18 bps to 1.58% from 4Q22 to 4Q23 (0.05)%
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 3Q23 4Q23(2) Tangible Common Equity(1) 7.5 % 8.2 % Tier 1 Leverage 9.3 % 9.4 % Tier 1 Common Equity 11.5 % 11.8 % Tier 1 Risk-Based Capital 11.5 % 11.8 % Total Risk-Based Capital 13.8 % 14.1 % Bank CRE Concentration Ratio 240 % 237 % Bank CDL Concentration Ratio 58 % 60 % (1
Slide 27: 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 16.00% 16.00% 12.00% 12.00% 9.42% 8.21% 8.21% 8.30% 8.00% 8.00% 5.00% 4.00% 4.00% 4.00% —% —% As Reported With AOCI Impact As Reported With AOCI Impact CET 1 Risk-based Capital Ratio Total Risk-based
Slide 28: Appendix
Appendix Ga
Slide 29: 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 December 31, 2023 Total Net (in millions) Available Amount Used Availability Cash and Cash Equivalents $ 999 $ — $ 999 Federal Home Loan Bank of Atlanta 7,089 103 6,986 Federal
Slide 30: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 0.4% 2.45% Agency MBS(1) 2.50% 2.37% 2.35% 2.36% 2.29% Treasury, Agency & SBA 2.20% 13% 1.90% Municipal 1.60% Corporates 13% 1.30% Total Investment 1.00% Portfolio† 4Q22 1Q23 2Q23 3Q23 4Q23 $7.3 Billi
Slide 31: Current & Historical - Qtr Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $462M $453M $440M $429M $420M $400 4.5% Total 3.99% 100% 5.0% 3.93% Revenue 14% 16% 16% 18
Slide 32: Mortgage Banking Division
MORTGAGE BANKING DIVISION Highlights Quarterly Mortgage Production Portfolio 4Q22 3Q23 4Q23 • Mortgage banking income of $2.2 million in 4Q 2023 Secondary 19% compared to $2.5 million in 3Q 2023 47% 49% 51% 53% 81% • Secondary pipeline of $64 million at 4Q 2023, as compared to $92 million at 3Q 2023
Slide 33: Residential Mortgage Portfolio
RESIDENTIAL MORTGAGE PORTFOLIO GAIN ON SALE (“GOS”) MARGIN AND INTEREST RATES Consumer R/E Loan Growth ($) 30-yr Fixed Mortgage Rate GOS Margin 7.50% $600 $700 7.08% 8.0% 6.75% 6.50% 6.21% 6.38% 5.54% 6.0% $450 $500 4.56% 4.33% 4.49% 4.25% $517 3.63% 4.11% $472 $498 $ in millions 3.00% 3.13% 3.25% 2
Slide 34: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,208 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 $22.0 $25.0 $20 $16.8 $16.1 $20.0 $ in millions $15 $15.0 $10 $10.0 $5 $— $5
Slide 35: 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% 16% 17% 24% 80% 80% 80% 35% 36% 84% 83% 79% 76% 60% 60% 60% 65% 64% 40% 40% 40% 20% 20% 20% —% —% —% 4Q22 4Q23 4Q22 4Q23 4Q22 4Q23 Branch Digital Branch Digital Branch Digital *
Slide 36: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. 4Q 2023 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 4Q23 36
Slide 37: 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 3Q23 4Q23 Net income (GAAP) $ 124,144 $ 106,791 Plus: Amortization of intangibles 6,616 6,615 Effective tax ra
Slide 38: 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 3Q23 4Q23 Net income (GAAP) $ 124,144 $ 106,791 Plus: Securities losses, net of tax — 2 Merger, branch consolidation and severance related expense, net of
Slide 39: 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 3Q23 4Q23 Adjusted net income (non-GAAP) $ 124,274 $ 128,271 Total average assets 44,841,319 45,037,632 Adjusted Return
Slide 40: 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) 4Q22 1Q23 2Q23 3Q23 4Q23 Net interest income (GAAP) $ 396,004 $ 381,263 $ 361,743 $
Slide 41: Non-GAAP Reconciliations – PPNR and Correspondent Income
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 4Q22 1Q23 2Q
Slide 42: 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 ) 4Q22 1Q23 2Q23 3Q23 4Q23 Noninterest expense (GAAP) $ 229,499 $ 240,505 $ 242,626 $ 238,206 $ 273,243 Less: Amortization of intangible assets 8,027 7,299 7,028 6,
Slide 43: 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 3Q23 4Q23 Tangible common equity (non-GAAP) $ 3,212,787 $ 3,521,216 Total assets (GAAP) 44,989,128 44,902,024 Less: Intangible assets 2,018,200 2,011,882 Tangible asse
Slide 44: 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) December 31, 2023 December 31, 2
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 December 31, 2023; excludes $2.2B of loans and $3.4B of deposits from national lines of business and brokered deposits. • Country GDP as of 2023; State GDP as of 3Q23 • Sources: S&P Global, Internation
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 15 End Notes (1) CDL includes residential construction, commercial construction, and all land development loans. (2) Investor CRE includes nonowner-occupied CRE and other income producing property. (3) Excludes SELF loans acquired from ACBI
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 27 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 48: SouthState
S SouthState