Slide 1: Earnings Call 1Q 2021
Earnings Call 1Q 2021 Thursday, April 29, 2021
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) $40 Billion in assets $24 Billion in loans (281) $32 Billion in deposits $5.9 Billion market cap 3 (1) Financial metrics as of March 31, 2021; market cap as of April 26, 2021
Slide 4: How We Operate the Company
H O W W E O P E R AT E T H E C O M P A N Y The WHAT The HOW Guiding Principles Our 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 closest to the customer. Long-Term Horizon We think
Slide 5: Investment Thesis
INVESTMENT THESIS • Well-positioned to compete with largest banks with capital markets platform and upgraded technology solutions • High growth markets • Low-cost core deposit base • Diversified revenue streams • Strong credit quality and disciplined underwriting • Energetic and experienced manageme
Slide 6: Financial Highlights - Reported
Financial Highlights - Reported
Slide 7: Tangible Book Value Per Share
TA N G I B L E B O O K V A L U E P E R S H A R E ( 1 ) $43.00 $42.02 $42.00 $41.16 $41.00 $40.00 $39.83 $39.00 $38.33 $38.01 $38.00 $37.00 $36.00 1Q20 2Q20 3Q20 4Q20 1Q21 (1) The tangible measure is a non-GAAP measure and excludes the effect of period end balances of intangible assets - See reconcil
Slide 8: Quarterly Highlights
Q U A R T E R LY H I G H L I G H T S | 1 Q 2 0 2 1 Returns Balance Sheet/Credit • Reported & adjusted diluted Earnings per Share (“EPS”)(1) of $2.06 and $2.17, • Deposits increased by $1.75 billion with core deposit growth totaling $2.02 respectively billion, or 30.3%, annualized • Recorded a negati
Slide 9: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 4Q20 1Q21 GAAP Net Income $ 86.2 $ 146.9 EPS (Diluted) $ 1.21 $ 2.06 Return on Average Assets 0.90 % 1.56 % Non-GAAP* Return on Average Tangible Common Equity 13.05 % 21.16 % Non-GAAP, Adjusted* Net Income $ 102.8 $ 154.8 EPS (Diluted) $ 1.44 $ 2.17 Return on Average Asse
Slide 10: Net Interest Margin
NET INTEREST MARGIN Net Interest Income excld. Accretion** Accretion** Net Interest Income Net Interest Margin* $500 4.0% 3.68% $400 3.5% 3.24% $270.3 3.22% $265.5 $262.0 $ in millions $300 3.14% 3.12% $30.9 $29.3 $30.8 3.0% $162.6 $200 $128.0 $17.3 $11.0 $239.4 $236.2 $231.2 2.5% $100 $117.0 $145.3
Slide 11: Combined Business Basis Performance
Combined Business Basis Performance
Slide 12: Cash & Securities (Combined Business Basis)
CASH & SECURITIES (COMBINED BUSINESS BASIS) Investments ($) Fed Funds & Int. Earning Cash ($) 10-Yr Treasury (1) 1.92% $10.9B $11.0 2.0% $10.5 $10.0 1.74% $9.5 $9.0 $8.7B 1.6% $8.5 $7.8B $8.0 $7.3B $5.6 $7.5 $7.0 $6.4B $ in billions $6.5 $4.2 1.2% $6.0 $4.7B $4.1 0.92% $5.5 $5.0 $2.0 $4.0 0.69% $4.5
Slide 13: Excess Liquidity Provides Significant Tailwind
E X C E S S L I Q U I D I T Y P R O V I D E S S I G N I F I C A N T TA I L W I N D ( C O M B I N E D B U S I N E S S BASIS) Fed Funds & Interest Earning Cash / Assets Investments / Assets Peer Avg. - Fed Funds & Interest Earning Cash / Assets (1) Peer Avg. - Investments / Assets (1) 20% 20.0% 18.0%
Slide 14: Current & Historical - Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E ( CO M B I N E D B U S I N E S S B A S I S ) Revenue Composition Net Interest Margin (“NIM”) NIM / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM ($) NIM (%) $381M $383M $385M 3.0% $300 3.94% 4.5% $363M $358M 120% Total Rev
Slide 15: Mortgage Banking Division
MORTGAGE BANKING DIVISION (COMBINED BUSINESS BASIS) Secondary Portfolio Secondary Gain on Sale Margin (1) $2,000 QTD 120% Production $987 $1,493 $1,574 $1,413 $1,299 5.0% $1,600 100%($) 4.41% 4.05% 4.0% 34% 27% 28% 28% 33% 80% $1,200 3.07% 3.25% 3.0% 60% $800 2.40% 2.0% 40% 66% 73% 72% 72% 67% 20% $
Slide 16: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION (COMBINED BUSINESS BASIS) 1,011 Client Banks Correspondent Revenue Breakout ARC Revenues FI Revenues Operational Revenues $35 $30 $25 $ in millions $20 $15 $10 $5 $0 1Q20* 2Q20* 3Q20 4Q20 1Q21 • Provides capital markets hedging (ARC), fixed income sales, international,
Slide 17: Current & Historical Trend
CURRENT & HISTORICAL TREND (COMBINED BUSINESS BASIS) Loans(1) Deposits Total Loans PPP Noninterest-bearing Checking Interest-bearing Checking MMA & Savings Time Deposits $40 $26.0B $40 $350,000,000.0B $25.5B $32.4B $300,000,000.0B $30.0B $30.0B $30.7B $30 $30 $3.5 $25.5B $25.2B $24.6B $24.4B $25.0B
Slide 18: Residential Portfolio
RESIDENTIAL PORTFOLIO (COMBINED BUSINESS BASIS) Portfolio Loans MSR Servicing Loans Total Mortgage Servicing Loans $12 $9.9 $10.0 $10 $9.3 $8.6 $8.8 $8 $5.1 $5.4 $ in billions $3.4 $3.7 $4.3 $6 $4 $5.2 $5.1 $5.0 $4.8 $4.6 $2 $- 1Q20* 2Q20 3Q20 4Q20 1Q21 Dollars in billions * The combined historical
Slide 19: Asset Quality
ASSET QUALIT Y (COMBINED BUSINESS BASIS) Net Charge-Offs (Recoveries) to Loans Nonperforming Assets to Loans & OREO 0.06% 0.05% 1.0% 0.05% 0.8% 0.65% 0.04% 0.56% 0.50% 0.48% 0.46% 0.6% 0.03% 0.4% 0.02% 0.01% 0.01% 0.01% 0.01% (0.00)% 0.2% 0.00% 0.0% -0.01% 1Q20* 2Q20* 3Q20 4Q20 1Q21 1Q20* 2Q20 3Q20
Slide 20: Capital Ratios
C A P I TA L R AT I O S 4Q20 1Q21(1) Tangible Common Equity* 8.1 % 7.9 % Tier 1 Leverage 8.3 % 8.5 % Tier 1 Common Equity 11.8 % 12.1 % Tier 1 Risk-Based Capital 11.8 % 12.1 % Total Risk-Based Capital 14.2 % 14.5 % Bank CRE Concentration Ratio 230 % 224 % Bank CDL Concentration Ratio 54 % 53 % (1) P
Slide 21: Premium Core Deposit Franchise
PREMIUM CORE† DEPOSIT FRANCHISE Deposits by Type Deposit Mix vs. Peers Checking Accounts MM & Savings Time Deposits 100% 11% 11% Time Checking Accounts Noninterest- 80% Deposits (Noninterest & Interest-bearing) bearing 33% $3.5 Checking 49% 60% $10.8 Retail 34% Small 40% Money Total Deposits Busines
Slide 22: Branch Optimization
B R A N C H O P T I M I Z AT I O N 2009 …..……………..………..……....…………………………….. March 2021 420 Branches 281 Branches 236 Branches 85 Branches Acquired Plus Consolidated or Average Size Average Size $40M 12 DeNovo Sold $115M Branches 85 432 236 281 ~188% growth in deposits per branch 1st Quarter 2021 Acti
Slide 23: COVID Effect
Teller Transactions Call Center Volume 29% 30% COVID Effect 1Q20 vs 1Q21 Mobile Deposits ATM Deposits 36% 11% *SSB Legacy Basis by Units 23
Slide 24: Digital Investments
D I G I TA L I N V E S T M E N T S Online Checking to Total Checking Online Consumer Loans to Deposits Accounts Opened Total Consumer Loans 8% 10% 13% 20% 14% 16% 18% 22% 29% 9% 14% 19% 100% 100% 100% 91% 92% 90% 87% 86% 84% 86% 81% 82% 78% 80% 71% 50% 50% 50% 0% 0% 0% 1Q19 1Q20 1Q21 1Q18 1Q19 1Q20
Slide 25: Appendix
Appendix Gr
Slide 26: Loss Absorption Capacity
L O S S A B S O R P T I O N C A PA C I T Y | 1 Q 2 0 2 1 1Q21 % of Total Loans (1) Allowance for Credit Losses (“ACL”) Non-PCD ACL $ 284.2 PCD ACL 122.2 Total ACL $ 406.4 1.80 % Reserve for Unfunded Commitments Reserve for unfunded commitments 35.8 0.16 % Total ACL plus Reserve for Unfunded Commitme
Slide 27: Merger-Related Expenses / Deal Costs
M E R G E R - R E L AT E D E X P E N S E S / D E A L C O S T S ( 1 ) | 2 0 2 0 - 2 0 2 1 CSFL(2) SSB Total MRE 1Q20 $ 3,076 $ 4,114 $ 7,190 4/1-6/7 33,526 33,526 2Q20 40,229 40,229 3Q20 21,574 21,574 4Q20 17,036 17,036 2020 YTD $ 36,602 $ 82,953 $ 119,555 1Q21 9,999 9,999 LTD $ 36,602 $ 92,952 $ 129
Slide 28: PPP Update
P P P U P D AT E PPP Totals ($ in millions) Not Forgiven Forgiven 1Q21 Forgiven 4Q20 Round 1 $1,285 $704 $420 Round 2 (1) $716 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400 (1) Gross origination of $731.8 million, net of $15.9 million of deferred fees • As of 1Q21, a
Slide 29: Total Loan Portfolio
T O TA L L O A N P O R T F O L I O Cons / Other 4% No. of Avg. Loan Loan Type Balance Loans Balance CDL (1) Constr., Dev. & Land 5,473 $ 1,889MM $ 345,100 8% Investor CRE 6,219 6,490MM 1,043,500 Consumer RE 24% Owner-Occupied CRE 8,701 4,827MM 554,700 Investor CRE (2) Commercial & Industrial 6,469 3
Slide 30: Loans - Industry Exposures
LO A N S – I N D U S T R Y E X P O S U R E S (1) Selected Industries Lodging $978 4.3% (% of total loan portfolio) Restaurants $434 1.9% Retail CRE $2,212 9.8% Dollars in millions, unless otherwise noted (1) Loan portfolio excluding loans held for sale and PPP loans 30
Slide 31: Loans - Industry Exposures | Lodging Portfolio
LOANS – INDUSTRY E XPOSURES | LODGING PORTFOLIO Lodging Portfolio Other National Brands $54 Hyatt Marriott $34 • 59% weighted average loan to value $287 Wyndham $38 • Lodging is $978 million or 4.3% of loan portfolio(1) Choice $62 Hilton • 13% of portfolio under deferral IHG $260 $97 • Top 3 MSA’s:
Slide 32: Loans - Industry Exposures | Restaurant Portfolio
L O A N S – I N D U S T R Y E X P O S U R E S | R E S TA U R A N T P O R T F O L I O Restaurant Non-RE Secured Portfolio $0.46 CDL Owner • 56% weighted average loan to value Occupied $6 Real Estate $274 • Restaurant is $434 million or 1.9% of loan portfolio(1) Non-Owner • 1.6% of portfolio under def
Slide 33: Loans - Industry Exposures | Retail Portfolio
L O A N S – I N D U S T R Y E X P O S U R E S | R E TA I L P O R T F O L I O Non-Real Retail Portfolio Estate $0.21 CDL • 53% weighted average loan to value $82 Non-Owner • Retail CRE is $2.2 billion or 9.8% of loan portfolio(1) Owner Occupied Occupied Real Estate Real Estate $1,751 • 0.03% of portf
Slide 34: Non-GAAP Reconciliations - Current & Historical
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 & NET INTEREST MARGIN(UNAUDITED) Combined Business Basis 1Q20 2Q20 3Q20 4Q20 1Q21 SSB CSFL Combined (1) SSB CSFL (2) Combined SSB SSB SSB Noninterest expense (GAAP) $ 107,247 $ 122,772
Slide 35: Non-GAAP Reconciliations - Investments
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 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 SSB CSFL Combined (1) SSB CSFL Combined (1) SSB SSB SSB SSB
Slide 36: Non-GAAP Reconciliations - 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 & 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 (Non-GAAP) 1Q21 SSB Net interest income (GAAP) $ 261,998 Plus: Noninterest income 96,285 Less: Gain (loss) on sale of sec
Slide 37: Non-GAAP Reconciliations - Tangible Book Value
N O N - G A A P R E C O N C I L I AT I O N S – TA N G I B L E B O O K V A L U E / S H A R E & TA 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 1Q20 2Q20 3Q20 4Q20 1Q21 Shareholders' common equity (excludes preferred stock) $ 2,321,043 $ 4,491,850 $ 4,563,413 $ 4,6
Slide 38: Return on Avg. Tangible Common Equity
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 . TA 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 Common Equity 4Q20 1Q21 Net income (GAAP) $ 86,236 $ 146,949 Plus: Amortization of intangibles 9,760 9,164 Effective t
Slide 39: 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 4Q20 1Q21 Net income (GAAP) $ 86,236 $ 146,949 Plus: Securities gain, net of tax (29) - Income tax benefit - carryback of tax losses under the CARES Act (
Slide 40: Adjusted Return on Avg. Assets & Avg. Tangible Common Equity
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 & A V 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 4Q20 1Q21 Adjusted net income (non-GAAP) $ 102,824 $ 154,773 Total average assets 38,027,111 38,245,410 Adjusted Retur
Slide 41: Net Interest Margin, Tax Equivalent
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 , TA X E Q U I V A L E N T Net Interest Margin - Tax Equivalent (Non-GAAP) 1Q20 2Q20 3Q20 4Q20 1Q21 Net interest income (GAAP) $ 128,013 $ 162,557 $ 270,348 $ 265,547 $ 261,998 Tax equivalent adjustments 530 579 734 1,6
Slide 42: SouthState
S SouthState