Southstate Bank Corporation · NYSE:SSB
Southstate Bank — Q4 2024 Earnings Presentation
37 slides from Southstate Bank's earnings presentation, Jan 24, 2025
Slide 1: Earnings Call 4Q 2024
Earnings Call 4Q 2024 January 24, 2025
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 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
Slide 3: SouthState Corporation Overview
(1) S O U T H S T AT E C O R P O R AT I O N O V E R V I E W Enhanced Enhanced ScaleIBTX Scale Through Through Partnership PROJECTED POPULATION GROWTH(2) IBTX Partnership Fastest-growing 20% of $65 B $48 B Assets Loans $47B MSAs highlighted in blue $64B $55 B $7.4 B Assets Deposits Loans Market Cap D
Slide 4: The Why, The What, The How
The WHY To invest in the entrepreneurial spirit, pursue excellence and inspire a greater purpose. The WHAT The HOW Guiding Principles Core Values Local Market Leadership Our business model supports the unique character of the communities we serve and encourages decision making by the banker that is
Slide 5: Positioned For The Future In The Best Growth Markets In America
POSITIONED FOR THE FUTURE IN THE BEST GROWTH MARKETS IN AMERICA GDP ($ in trillions) $3.7B US $29.2 $4.0B $1.0B $0.6B China $18.3 SSB Footprint $8.2 $3.2B Germany $4.7 The combined GDP of $2.1B SouthState’s 8 state branch Japan $4.1 footprint would represent the $7.5B world’s third largest economy.
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 872,722 2. Texas 747,730 3. North Carolina 392,010 4. South Carolina 314,953 5. Arizona 252,654 6. Tennessee 252,180 7. Georgia 205,811 8. Idaho 120,350 9. Ala
Slide 7: Investment Thesis
INVESTMENT THESIS • High growth markets • Granular, low-cost core deposit base • Strong credit quality and disciplined underwriting • Energetic and experienced management team with entrepreneurial ownership culture • True alternative to the largest banks with capital markets platform and upgraded te
Slide 8: Quarterly Results
Quarterly Results Gr
Slide 9: Highlights | Linked Quarter
HIGHLIGHTS | LINKED QUARTER 3Q24 4Q24 GAAP Net Income $ 143.2 $ 144.2 EPS (Diluted) $ 1.86 $ 1.87 Return on Average Assets 1.25 % 1.23 % Non-GAAP(1) Return on Average Tangible Common Equity 15.6 % 15.1 % Non-GAAP, Adjusted(1) Net Income $ 145.7 $ 148.8 EPS (Diluted) $ 1.90 $ 1.93 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 4 • Reported Diluted Earnings per Share (“EPS”) of $1.87; adjusted Diluted EPS (non-GAAP)(1) of $1.93 • Pre-Provision Net Revenue (“PPNR”)(non-GAAP)(2) of $199.7 million • Loans increased $355 million, or 4% annualized • Deposits increased $423 millio
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 4.00% $350 3.75% $ in millions 3.48% 3.48% $300 3.44% 3.50% 3.41% 3.40% $369.8 $354.2 $350.3 $351.5 $343.9 $250 3.25% $200 3.00% 4Q23 1Q24 2Q24 3Q24 4Q24 Dollars in millions; Amounts may not total due to round
Slide 12: Loan Production Vs Loan Growth
LOAN PRODUCTION VS LOAN GROWTH (1) (1) Loan Production Loan Portfolio Growth $3,500 $3,000 $2,500 $2,369 $ in millions $2,181 $2,049 $1,932 $2,000 $1,648 $1,459 $1,500 $1,352 $1,233 $1,000 $841 $500 $519 $568 $480 $372 $355 $279 $314 $— 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Dollars in millions (1)
Slide 13: Balance Sheet
Balance Sheet Gr
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 $37.2B $37.6B $38.1B $37.0B $37.1B $36 $36 $4.7 $4.2 $1.0B $4.2 $4.3 $4.6 $30 $30 $0.8B $15.5 $ in billions $14.2 $14.5 $14.6 $15.1 $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 3% Investor CRE 7,670 $ 10.0B $ 1,302,800 CDL (1) Investor CRE (2) Consumer RE 46,005 8.7B 189,400 6% 30% Owner-Occupied CRE 7,585 5.7B 753,700 C&I 19,049 6.2B 326,600 C&I 18% Constr., Dev. &
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 11% 18% $4.2B Checking 45% 80% $10.2B Commercial 41% 60% 39% Total Deposits 40% $38.1 Billion 28% Small Business M
Slide 17: Credit
Credit
Slide 18: Asset Quality Metrics
ASSET QUALIT Y METRICS Net Charge-Offs to Loans 1.00% • Current total reserve is over 8x last four years' 0.75% cumulative net charge-offs 0.50% 0.25% 0.09% 0.07% 0.06% 0.03% 0.05% —% 4Q23 1Q24 2Q24 3Q24 4Q24 Nonperforming Assets to Loans & OREO Criticized & Classified Asset Trends Special Mention /
Slide 19: 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 (Recovery) for Credit Losses Net Charge-Offs Total ACL Reserve for Unfunded Commitments % of Total Loans $50 $47.1 $550 2.20% $
Slide 20: FRB Kansas City Expected Office Default Rates Study
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: Capital
Capital Gr
Slide 22: Capital Ratios
C A P I T A L R AT I O S 3Q24 4Q24(2) Tangible Common Equity(1) 8.9 % 8.8 % Tier 1 Leverage 10.0 % 10.0 % Tier 1 Common Equity 12.4 % 12.6 % Tier 1 Risk-Based Capital 12.4 % 12.6 % Total Risk-Based Capital 14.7 % 15.0 % Bank CRE Concentration Ratio 227 % 219 % Bank CDL Concentration Ratio 47 % 41 %
Slide 23: Appendix
Appendix Gr
Slide 24: High Quality Investment Portfolio
HIGH QUALIT Y INVESTMENT PORTFOLIO Investment Portfolio† Composition Investment Securities Yield(2) 0.4% 2.45% 2.44% 2.48% 2.50% 2.42% Agency MBS(1) 2.50% Treasury, Agency & SBA 2.20% 14% 1.90% Municipal 1.60% Corporates 10% 1.30% Total Investment 1.00% Portfolio† 4Q23 1Q24 2Q24 3Q24 4Q24 $6.6 Billi
Slide 25: Current & Historical - Quarterly Performance
C U R R E N T & H I S TO R I C A L 5 - QT R P E R F O R M A N C E (1) Revenue Composition Net Interest Margin (“NIM”, TE) NIM, TE / Revenue Noninterest Income / Revenue Avg. 10-year UST NIM, TE ($) NIM, TE (%) $420M $416M $426M $427M $451M $400 4.0% Total 100% 5.0% 3.48% 3.48% Revenue 16% 3.41% 3.44
Slide 26: Correspondent Banking Division
CORRESPONDENT BANKING DIVISION 1,283 Financial Institution Clients Correspondent Revenue Breakout ARC Revenues, gross Interest on VM FI Revenues Operational Revenues Total Revenues, gross $35 $35.0 $30 $30.0 $25 $20.9 $25.0 $20 $16.1 $16.3 $17.4 $14.6 $20.0 $ in millions $15 $15.0 $10 $10.0 $5 $— $5
Slide 27: Legacy Independent Selected Financial Highlights
LEGACY INDEPENDENT SELECTED FINANCIAL HIGHLIGHTS 4Q24 Federal Funds Sold and Interest-Earning Deposits with Banks $ 949 Total Investment Securities 1,632 Total Loans 13,586 Total Interest-Earning Assets $ 16,191 Total Assets $ 17,566 Noninterest-Bearing Deposits $ 3,241 Interest-Bearing Deposits exc
Slide 28: Non-GAAP Reconciliations - 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 . T A N G I B L E COMMON EQUITY Return on Average Tangible Equity 3Q24 4Q24 Net income (GAAP) $ 143,179 $ 144,178 Plus: Amortization of intangibles 5,327 5,326 Effective tax rate 23 % 23 % Amortization of intangibles, net of tax 4,
Slide 29: 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 3Q24 4Q24 Net income (GAAP) $ 143,179 $ 144,178 Plus: Securities losses, net of tax — 38 (1) Merger, branch consolidation, severance related and other exp
Slide 30: Non-GAAP Reconciliations - Adjusted ROA & Adjusted ROTCE
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 3Q24 4Q24 Adjusted net income (non-GAAP) $ 145,715 $ 148,764 Total average assets 45,597,230 46,509,766 Adjusted Return
Slide 31: 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) 4Q23 1Q24 2Q24 3Q24 4Q24 Net interest income (GAAP) $ 354,231 $ 343,936 $ 350,259 $
Slide 32: Non-GAAP Reconciliations - PPNR, Adjusted & Correspondent & Capital Markets 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 & 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) 4Q23 1Q24 2Q24 3Q24 4Q24 Net interest income (GAAP) $ 354,231 $ 343,936 $ 350,259 $ 351,480 $ 369,779 Plus: No
Slide 33: 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 ) Efficiency Ratio (Non-GAAP) & Adjusted Efficiency Ratio (Non-GAAP) 4Q23 1Q24 2Q24 3Q24 4Q24 Noninterest expense (GAAP) $ 273,243 $ 249,290 $ 248,747 $ 246,847 $ 2
Slide 34: 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 3Q24 4Q24 Tangible common equity (non-GAAP) $ 3,909,639 $ 3,900,851 Total assets (GAAP) 46,082,647 46,381,204 Less: Intangible assets 1,994,941 1,989,564 Tangible asse
Slide 35: 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 3 End Notes (1) Financial metrics as of December 31, 2024 (*); market cap as of January 22, 2025 (2) Projected population growth shown as the percent growth 2025 – projected 2030 (3) Includes MSAs with greater than 1 million in total popula
Slide 36: 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; 4Q24 MRQs available as of January 22, 2025; Peers as disclosed in the most recent SSB proxy statement. Slide 19 End Notes (1) Unamortized
Slide 37: SouthState
S SouthState