Southstate Bank Corporation · NYSE:SSB
Southstate Bank — South State — Q3 2019 Earnings Presentation
41 slides from Southstate Bank's earnings presentation, Nov 13, 2019
Slide 1: Investor Presentation Third Quarter 2019
1 Investor Presentation Third Quarter 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
Slide 4: How We Operate the Company: Soundness, Profitability, Growth
4 4 How We Operate the Company Soundness Profitability Growth
Slide 5: 3Q Highlights
5 5 3Q 19 Highlights *Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses. GAAP Adjusted* Net Income (millions) $51.56 $51.22 EPS $1.50 $1.49 Return on Average Assets 1.31% 1.30% Return on Average Tangible
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% Dividend Payout Range 30 - 35% ROTCE 16 - 18%
Slide 7: Soundness
7 Soundness
Slide 8: Capital Adequacy
8 8 Capital Adequacy 8.8% 9.7% 11.2% 12.2% 12.7% Tangible Common Equity / Tangible Assets Leverage Ratio CET1 Ratio Tier 1 Capital Ratio Total RBC Ratio 9/30/2019
Slide 9: Asset Quality
9 9 Asset Quality 0.63% 0.38% 0.29% 0.23% 0.26% 0.26% 2014 2015 2016 2017 2018 3Q 19 NPLs / Loans(1) 1.02% 0.63% 0.43% 0.25% 0.28% 0.27% 2014 2015 2016 2017 2018 3Q 19 NPAs / Assets(2) 121.1% 181.8% 250.7% 293.0% 340.9% 286.3% 2014 2015 2016 2017 2018 3Q 19 ALLL / NPLs(3) 0.16% 0.09% 0.06% 0.04% 0.0
Slide 10: CRE Concentration
10 10 CRE Concentration Dollars in billions * Concentration limits calculated based upon bank level total Risk Based Capital (RBC). 3Q 19 Regulatory Guideline Balance % of RBC* Balance % of RBC* CRE $3.5 233% $4.5 300% Construction Land & Development $1.1 70% $1.5 100% $1 Billion in CRE Lending Capa
Slide 11: 3Q 19 Funding
11 11 Non-Interest Bearing DDA $3,308 Interest Bearing DDA $2,813 Savings $1,318 Money Market $2,869 Time Deposits $1,715 Other Borrowings $1,086 3Q 19 Funding Dollars in millions
Slide 12: Profitability
12 Profitability
Slide 13: Earnings Per Diluted Share
13 13 $4.11 $4.18 $2.93 $4.86 $3.92 $4.31 $4.55 $4.85 $5.50 $4.15 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 14: Net Interest Margin
14 14 Net Interest Margin Dollars in millions 4.04% 3.98% 3.92% 3.82% 3.73% $115.6 $116.5 $114.1 $118.0 $119.3 $128.3 $126.4 $123.3 $127.2 $127.4 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 Net Interest Margin NII - Excluding Accretion Net Interest Income
Slide 15: Revenue Composition
15 15 Deposit Accounts 54% Mortgage Banking 13% Trust & Investment Services 21% Other 12% Noninterest Income $104.6 Million Revenue Composition 75% 74% 72% 75% 78% 78% 25% 26% 28% 25% 22% 22% 2014 2015 2016 2017 2018 YTD 2019 Noninterest Income Net Interest Income Excludes Securities Gains/Losses.
Slide 16: Efficiency Ratio
16 16 Efficiency Ratio * Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses, deferred tax asset revaluation, and FDIC loss share early termination. 62.3% 59.4% 63.2% 66.9% 58.4% 59.5% 59.4% 62.5% 59.8% 58
Slide 17: Dividend per Common Share
17 17 $0.74 $0.82 $0.98 $1.21 $1.32 $1.38 $0.38 $0.40 $0.43 0.46 2013 2014 2015 2016 2017 2018 YTD 2019 4Q 19 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. * 4Q 19 dividend of $0.46 declared 10/28/19 w
Slide 18: Tangible Book Value + Cumulative Dividends
18 18 $12.38 $14.43 $23.49 $31.89 $47.49 $50.60 - 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 3Q19 TBV Cumulative Dividend Tangible Book Value + Cumulative Dividends 15 year increase of 309% $ Cumulative Dividends begin January 1, 2006.
Slide 19: Growth
19 Growth
Slide 20: Market Demographics
20 20 Market Demographics Source: S&P Global Market Intelligence. 86% of Branch Footprint in High Growth Markets 2.8x 2.4 2.3 2.3 2.2 2.1 1.9 1.7 1.7 1.3 1.3 MSA Branches Myrtle Beach 8 Raleigh 2 Charleston 22 Hilton Head 9 Wilmington 4 Charlotte 21 Greenville 14 Savannah 5 Columbia 9 Augusta 11 Ric
Slide 21: SSB Footprint Market Share
21 21 SSB Footprint Market Share Rank Institution Deposits Market Share 1 Wells Fargo & Co. $ 38.4 19.3% 2 BB&T Corp. 37.9 19.1 3 Bank of America Corp. 27.4 13.8 4 First Citizens BancShares Inc. 12.8 6.4 5 South State Corp. 11.9 6.0 6 United Community Banks, Inc. 4.9 2.5 7 Toronto-Dominion Bank 4.9
Slide 22: Selected Markets
22 22 Selected Markets Richmond Branches Deposits Share 1 BB&T Corp. (NC) 71 $ 6,881 26.1% 2 Wells Fargo & Co. (CA) 56 5,810 22.1 3 Atlantic Union Bankshares Corp. (VA) 30 3,447 13.1 4 Bank of America Corp. (NC) 22 3,046 11.6 5 TowneBank (VA) 9 1,102 4.2 6 Capital One Financial Corp. (VA) 1 1,000 3.
Slide 23: BBT / STI Branch Overlap
23 23 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 24: Economic Highlights
24 24 Economic Highlights Richmond Columbia Greenville Charlotte Charleston Wilmington Savannah Myrtle Beach Raleigh Atlanta Augusta
Slide 25: Appendix
25 Appendix
Slide 26: Appendix Contents
26 26 Appendix Contents Share Repurchase Activity 27 Average Interest Earning Assets 28 Accretable Yield 29 Loan Portfolio 30 – 33 Investment Portfolio 34 Deposits 35 Lines of Business 36 – 38
Slide 27: Share Repurchase Activity
27 27 Share Repurchase Activity 1Q19 • 500,000 shares • $66.58 per share average • $33.3 million 2Q19 • 641,200 shares • $73.13 per share average • $46.9 million 3Q19 • 858,800 shares purchased through 9/6/2019 • $75.08 per share average • $64.4 million 4Q19 to date • 165,000 shares • $74.88 per sha
Slide 28: Average Interest Earning Assets
28 28 Average Interest Earning Assets Dollars in millions Quarterly Averages Assets % of Earning Assets 2Q 19 % of Earning Assets 3Q 19 Change Short-Term Investments 4.5% $ 602 3.6% $ 492 $ (110) Investment Securities 12.1 1,621 13.4 1,820 199 Loans – Acquired 20.1 2,695 18.2 2,471 (224) Loans – Non
Slide 29: Accretable Yield
29 29 Accretable Yield Dollars in millions * Yields Annualized Income Statement Contractual Interest Accretion Total Income Contractual Yield* Total Yield* 3Q 19 Acquired Credit Impaired $ 6.3 $5.4 $11.7 5.49% 11.50% Acquired NonCredit Impaired 25.0 2.7 27.7 4.74 5.31 Total $31.3 $8.1 $39.4 4.87% 6.
Slide 30: Acquired Loan Portfolio
30 30 Acquired Loan Portfolio Dollars in millions (A) Represents total loan discount made up of $9.9 million credit mark ($15.3 million total non-accretable difference less $5.4 million interest portion of non-accretable difference) and a non-credit discount of $39.2 million (B) Represents cash flow
Slide 31: Loan Portfolio Mix
31 31 $3,468 $4,221 $5,241 $6,492 $7,933 $8,929 $2,248 $1,783 $1,439 $4,127 $3,080 $2,356 $5,716 $6,004 $6,680 $10,619 $11,013 $11,285 2014 2015 2016 2017 2018 3Q 19 Non Acquired Acquired* Loan Portfolio Mix Dollars in millions *Acquired loans are net of discounts.
Slide 32: 3Q Loan Characteristics
32 32 3Q 19 Loan Characteristics Floaters $2,362 21% Hybrid ARMs $2,488 22% Adjustable $90 1% Fixed $6,294 56% Maturity or Repricing <1 year 28% 1 - 5 years 36 5+ years 36 Overall Weighted Average Life of 3-4 Years Dollars in millions Excludes Non-Accrual loans
Slide 33: 3Q Loans
33 33 3Q 19 Loans Organic Growth Non-acquired Loan Growth 14% Annualized Relationship Driven Top 2 5 7.3% of Total loans Average Loan Size $129,461 Asset Quality NPAs/Assets 0.27% Non-acquired Charge-offs 0.05% Consumer 37.1% Commercial Real Estate 30.0% Commercial 32.9% Loans by Type NC $2.0 Other
Slide 34: Investment Portfolio Composition
34 34 Agency Mortgage- Backed Securities 70% State & Municipal AFS 10% SBA 18% U.S. Agency/GSE Debentures 2% 3Q 19 Investment Portfolio Composition Fixed Income Portfolio (AFS & HTM) Tax Equivalent Yield 2.8% Weighted Average Life 4.3 years Effective Duration 2.6 Total Carrying Value $1.9 Billion Fa
Slide 35: 3Q Transaction Deposits
35 35 3Q 19 Transaction Deposits Relationship Based Avg. Balance $13,100 Avg. Age 9 Years Consumer Digital Banking Online Banking ~274,000 users Mobile App ~209,000 users DDA & Loan New Accounts ~10% Digital Debit Card Annual Transactions ~108 million 287,000 $3.3 186,000 $2.9 # of Accounts Dollar B
Slide 36: Wealth
36 36 Wealth $5,268 $4,943 $5,511 $4,170 $3,933 $3,828 3Q 19 2018 2017 2016 2015 2014 Assets Under Management or Care (millions) $22,309 $30,229 $25,401 $19,764 $20,117 $18,344 YTD 2019 2018 2017 2016 2015 2014 Noninterest Income (thousands)
Slide 37: Mortgage Banking
37 37 Mortgage Banking $1,167 $1,514 $1,577 $1,404 $1,379 $1,195 YTD 2019 2018 2017 2016 2015 2014 Production (millions) $13,807 $13,590 $17,954 $20,547 $21,761 $16,170 YTD 2019 2018 2017 2016 2015 2014 Noninterest Income (thousands)
Slide 38: Branch Network
38 38 Branch Network Total Branches 12/31/2009 48 Acquired 201 De Novo 1 Consolidated or sold (95) Total Branches 9/30/2019 156 Average deposits per branch 6/30/2009 $ 46 9/30/2019 77 Dollars in millions Average deposits per branch based on total deposits and branch count per company filings.
Slide 39: Analyst Coverage
39 39 Analyst Coverage Janney Montgomery Scott Keefe, Bruyette & Woods Sandler O’Neill Stephens SunTrust Robinson Humphrey
Slide 40: Investor Contacts
40 40 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 41: South State
S$ x SOUTH STATE