South State Corporation Reports Second Quarter 2019 Results and Declares Increase in Quarterly Cash Dividend

COLUMBIA, S.C.--(BUSINESS WIRE)--South State Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and six-month period ended June 30, 2019. The Company reported consolidated net income of $41.5 million, or $1.17 per diluted common share for the three months ended June 30, 2019, a $2.9 million decrease, or $0.07 per share decline in EPS, compared to the first quarter of 2019. Adjusted consolidated net income (non-GAAP) was $49.4 million, or $1.40 per diluted common share for the three months ended June 30, 2019, a $4.6 million increase, or $0.15 per share increase in adjusted diluted EPS, compared to the first quarter of 2019.

“The strength of our culture and team provides a great platform to build banking relationships,” said Robert R. Hill, Jr., CEO of South State Corporation. “This was apparent this quarter, as all lines of business performed well. This foundation and the investments made the past few years are helping drive performance consistent with our long term performance targets. As we enter the second half of the year, I am optimistic regarding South State’s ability to drive additional growth.”

Focus on Long-Term Results

We communicated several long-term goals at our Investor Day held in December 2018 and we remain committed to those objectives while adhering to our core operating philosophy of soundness, profitability, and growth. These included loan growth, expense control, capital management, and dividend payout that will result in return on average tangible common equity (non-GAAP) of 16% to 18%.

Operating Leverage

This quarter reflected an increase of $5.6 million, or 17%, in noninterest income from the first quarter of 2019, and was driven by all four lines of business. Net interest income growth of $3.9 million was supported by an increase in average loan balances of $134.9 million, an increase in the investment securities portfolio and in short term investments. In addition, noninterest bearing deposits grew by $162.3 million on average, during the second quarter.

Noninterest expense increased by $11.2 million compared to 1Q 2019, and adjusted (non-GAAP) noninterest expense increased by $678,000 compared to 1Q 2019, an annualized increase of 2.8%, resulting in modest growth in adjusted noninterest expenses. We have completed a significant portion of our announced cost saves and believe these will contribute to further incremental operating leverage improvement over time.

Soundness

Asset quality remains strong with annualized net charge offs on non-acquired loans of 0.02% annualized. Total past due loans across all portfolios were 0.44% of total loans, and total nonperforming assets were 0.26% of total assets as of June 30, 2019. Overall, net charge-offs and OREO losses (from write downs and disposals) remain at very low levels and totaled $2.7 million for the first six months of 2019, and $1.9 million for the second quarter of 2019.

We continue to take advantage of our balance sheet strength and optionality. During the second quarter of 2019, we remained active in repurchasing company common stock and bought 641,200 shares at an average price of $73.13 per share, or $46.9 million. Tangible equity to tangible assets equaled 8.99%, dropping below 9% for the first time since March of 2017. In June of 2019, the Company’s Board of Directors authorized a new Repurchase Program of 2,000,000 shares, and there were 1,859,000 shares available for repurchase under this new plan as of June 30, 2019. At June 30 ,2019, outstanding common shares totaled 34,735,587, and the Company has acquired 594,400 shares thus far in the third quarter of 2019, at an average price of $75.08 per share, or $44.6 million.

The Company’s Board of Directors voted to increase the common stock dividend this quarter by $0.03 to $0.43 per share, which is a 7.5% increase compared to last quarter, and an $0.08 per share increase, or 22.9%, compared to the same quarter one year ago. The dividend will be payable on August 16, 2019 to shareholders of record as of August 9, 2019.

Branch consolidation and other cost initiatives – 2019

In mid-January 2019, the Company scheduled the closure of 13 branch locations during 2019. All but one of those locations was closed during the second quarter of 2019. In addition, certain cost reduction initiatives began during the first quarter of 2019. The cost incurred with these closures and cost initiatives totals $3.1 million for the first six months, with $2.1 million in the second quarter of 2019. The annual savings of these closures and cost initiatives is expected to be $13.0 million, and the net impact on 2019 anticipated to be approximately $10.0 million. In the second quarter of 2019, the Company recognized approximately $2.5 million in cost saves, and expect to realize another $6.4 million in the third and fourth quarter of 2019.

Pension plan termination – 2Q 2019

During the second quarter of 2019, the Company recorded the impact of the termination of the pension plan. The pre-tax, non-cash charge totaled $9.5 million. $7.7 million was recorded in accumulated other comprehensive loss (AOCL) and was reclassified from equity into the income statement, and the remaining charge of $1.8 million was from the net pension plan asset. This action supports the Company’s long-term focus on managing noninterest expense to 0% to 3% growth annually.

Second Quarter 2019 Financial Performance

	Three Months Ended															Six Months Ended
(Dollars in thousands, except per share data)	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			June 30,
INCOME STATEMENT		2019			2019			2018			2018			2018			2019			2018
Interest income
Loans, including fees (8)	$	135,388		$	131,834		$	132,541		$	132,043		$	129,852		$	267,222		$	256,893
Investment securities, federal funds sold and securities purchased under agreements to resell		14,594			11,556			11,327			11,517			11,880			26,150			22,887
Total interest income		149,982			143,390			143,868			143,560			141,732			293,372			279,780
Interest expense
Deposits		17,393			16,645			15,310			13,220			10,009			34,038			16,922
Federal funds purchased, securities sold under agreements to repurchase, and other borrowings		5,410			3,478			2,166			2,051			2,161			8,888			4,323
Total interest expense		22,803			20,123			17,476			15,271			12,170			42,926			21,245
Net interest income		127,179			123,267			126,392			128,289			129,562			250,446			258,535
Provision for loan losses		3,704			1,488			3,734			3,117			4,478			5,192			6,932
Net interest income after provision for loan losses		123,475			121,779			122,658			125,172			125,084			245,254			251,603
Noninterest income		37,618			32,058			35,642			32,027			37,525			69,676			78,080
Pre-tax operating expense		107,329			97,125			96,664			95,818			96,410			204,588			198,577
Branch consolid./acquisition and merger expense		2,078			1,114			--			4,476			14,096			3,058			25,392
Total noninterest expense		109,407			98,239			96,664			100,294			110,506			207,646			223,969
Income before provision for income taxes		51,686			55,598			61,636			56,905			52,103			107,284			105,714
Provision for income taxes, includes deferred tax revaluation		10,226			11,231			12,632			9,823			11,644			21,457			22,929
Net income	$	41,460		$	44,367		$	49,004		$	47,082		$	40,459		$	85,827		$	82,785
Adjusted net income (non-GAAP) (3)
Net income (GAAP)	$	41,460		$	44,367		$	49,004		$	47,082		$	40,459		$	85,827		$	82,785
Securities losses (gains), net of tax		(1,371	)		(432	)		2			9			505			(1,803	)		505
Provision for income taxes, deferred tax revaluation		--			--			--			(1,602	)		613			--			613
FHLB prepayment penalty		--			107			--			--			--			107			--
Pension plan termination expense, net of tax		7,641															7,641			--
Branch consolid./acquisition and merger expense, net of tax		1,667			782			--			3,577			11,112			2,449			20,030
Adjusted net income (non-GAAP)	$	49,397		$	44,824		$	49,006		$	49,066		$	52,689		$	94,221		$	103,933
Basic earnings per common share	$	1.18		$	1.25		$	1.36		$	1.28		$	1.10		$	2.43		$	2.25
Diluted earnings per common share	$	1.17		$	1.25		$	1.35		$	1.28		$	1.09		$	2.42		$	2.24
Adjusted net income per common share - Basic (non-GAAP) (3)	$	1.41		$	1.26		$	1.36		$	1.34		$	1.44		$	2.67		$	2.84
Adjusted net income per common share - Diluted (non-GAAP) (3)	$	1.40		$	1.26		$	1.35		$	1.33		$	1.43		$	2.66		$	2.82
Dividends per common share	$	0.40		$	0.38		$	0.36		$	0.35		$	0.34		$	0.78		$	0.67
Basic weighted-average common shares outstanding		35,089,129			35,445,087			36,154,922			36,645,181			36,676,887			35,268,574			36,656,689
Diluted weighted-average common shares outstanding		35,299,747			35,618,705			36,364,873			36,893,496			36,928,981			35,461,383			36,909,739
Effective tax rate		19.78	%		20.20	%		20.49	%		17.26	%		22.35	%		20.00	%		21.69	%

The Company reported consolidated net income of $41.5 million, or $1.17 per diluted common share for the three-months ended June 30, 2019, a $2.9 million decrease, or $0.08 per share decline in EPS compared to the first quarter of 2019. Compared to the second quarter of 2018, net income totaled $40.5 million, or $1.09 per diluted common share. Weighted average diluted shares declined by 319,000, from the first quarter of 2019, due to the continuation of the Company repurchasing common shares under the prior and new Repurchase Programs, which improved second quarter diluted EPS by $0.01 per diluted share. Net interest income increased by $3.9 million compared to the first quarter of 2019 on $6.6 million higher in interest income and $2.7 million higher interest expense. Interest income increased from the loan portfolio (excluding loans held for sale) by $3.4 million, from the securities portfolio by $1.1 million, and from federal funds sold by $2.0 million. These increases were offset partially by an increase of $2.7 million in interest expense with $2.0 million in other borrowings and $460,000 in time deposits. The second quarter of 2019 reflects an additional $200 million FHLB advance with a cash flow hedge, effectively locking in five-year funding at 1.89%. This advance and related hedge was identical to the two transactions executed in March of 2019 totaling $500 million. The funding cost of these FHLB advances and the related hedges total 2.06%, including the positive impact of the estimated dividend over time, and have a weighted average maturity of 4.3 years. The Company’s cost of interest-bearing liabilities was 0.95% for the second quarter of 2019, an increase of 0.06% from the first quarter of 2019. Compared to the second quarter of 2018, our overall cost of funds increased by 0.31% which was primarily the result of rising interest rates and competition within our markets. The total provision for loan losses increased $2.2 million compared to the first quarter of 2019. Valuation allowance impairment related to acquired loans was $251,000 compared to $13,000 in the first quarter of 2019. The provision for loan losses related to acquired non-credit impaired loans was higher by $1.3 million compared to the first quarter of 2019. This increase was related to two loans that totaled $1.3 million in charge offs for 2Q 2019. The provision for loan losses on non-acquired loans was $2.0 million, $727,000 higher than first quarter of 2019, and exceeded net charge-offs by $1.6 million. Noninterest income increased by $5.6 million resulting primarily from increases in all categories, except acquired loan recoveries. Excluding securities gains, noninterest income increased by $4.4 million in the second quarter of 2019. Noninterest expense was higher by $11.2 million due to the pension plan termination cost of $9.5 million and $1.1 million increase in branch consolidation expense and other cost initiatives. Adjusted noninterest expense (non-GAAP) increased by $678,000 in 2Q 2019 compared to 1Q 2019, with the largest portion of the increase in professional fees.

Income Tax Expense

During the second quarter of 2019, our effective income tax rate declined to 19.78% from 20.20% in the first quarter of 2019 and from 22.35% in the second quarter of 2018. The primary factor in the lower effective tax rate compared to the first quarter of 2019 was lower pre-tax book income. Compared to the second quarter of 2018, the lower effective tax rate was attributable to an increase in federal tax credits available and the absence of the tax expense related to the revaluation of deferred taxes.

Balance Sheet and Capital

(dollars in thousands, except per share and share data)	Ending Balance
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
BALANCE SHEET		2019			2019			2018			2018			2018
Assets
Cash and cash equivalents	$	851,971		$	949,591		$	408,983		$	307,309		$	396,849
Investment securities:
Securities held to maturity		--			--			--			500			499
Securities available for sale, at fair value		1,717,276			1,466,249			1,517,067			1,551,281			1,577,999
Other investments		49,124			40,624			25,604			19,229			19,229
Total investment securities		1,766,400			1,506,873			1,542,671			1,571,010			1,597,727
Loans held for sale		47,796			33,297			22,925			33,752			36,968
Loans:
Acquired credit impaired		419,961			452,258			485,119			512,633			551,979
Acquired non-credit impaired		2,180,281			2,378,737			2,594,826			2,786,102			3,076,424
Non-acquired		8,621,327			8,310,613			7,933,286			7,606,478			7,197,539
Less allowance for non-acquired loan losses		(53,590	)		(52,008	)		(51,194	)		(49,869	)		(47,874	)
Loans, net		11,167,979			11,089,600			10,962,037			10,855,344			10,778,068
Other real estate owned ("OREO")		14,506			11,297			11,410			12,119			17,222
Premises and equipment, net		321,348			322,553			241,076			241,909			245,288
Bank owned life insurance		231,708			230,629			230,105			229,075			227,588
Deferred tax asset		28,240			31,884			37,128			47,943			48,853
Mortgage servicing rights		30,332			32,415			34,727			36,056			35,107
Core deposit and other intangibles		56,351			59,619			62,900			66,437			69,975
Goodwill		1,002,900			1,002,900			1,002,900			1,002,900			1,002,722
Other assets		163,806			136,229			119,466			118,361			110,121
Total assets	$	15,683,337		$	15,406,887		$	14,676,328		$	14,522,215		$	14,566,488
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing	$	3,255,906		$	3,219,864		$	3,061,769		$	3,157,478		$	3,152,828
Interest-bearing		8,666,374			8,699,107			8,585,164			8,456,397			8,485,461
Total deposits		11,922,280			11,918,971			11,646,933			11,613,875			11,638,289
Federal funds purchased and securities sold under agreements to repurchase		298,029			276,891			270,649			279,698			331,969
Other borrowings		816,414			616,250			266,084			115,919			115,754
Other liabilities		272,636			218,298			126,366			144,584			132,109
Total liabilities		13,309,359			13,030,410			12,310,032			12,154,076			12,218,121
Shareholders' equity:
Preferred stock - $.01 par value; authorized 10,000,000 shares		--			--			--			--			--
Common stock - $2.50 par value; authorized 80,000,000 shares		86,839			88,421			89,574			91,808			92,064
Surplus		1,676,229			1,719,396			1,750,495			1,805,685			1,811,446
Retained earnings		609,444			582,034			551,108			515,155			480,928
Accumulated other comprehensive income (loss)		1,466			(13,374	)		(24,881	)		(44,509	)		(36,071	)
Total shareholders' equity		2,373,978			2,376,477			2,366,296			2,368,139			2,348,367
Total liabilities and shareholders' equity	$	15,683,337		$	15,406,887		$	14,676,328		$	14,522,215		$	14,566,488
Common shares issued and outstanding		34,735,587			35,368,521			35,829,549			36,723,238			36,825,556

At June 30, 2019, the Company’s total assets were $15.7 billion, an increase of $1.0 billion from December 31, 2018, and an increase of $1.1 billion, or 7.7%, from June 30, 2018. During the second quarter of 2019, changes in the balance sheet include the following:

1. Net loan growth totaled $80.1 million, or 2.9% annualized. Non-acquired loans increased by $310.7 million or 15.0% annualized and acquired loans decreased by $230.6 million, or 32.6% annualized.
2. Sold 11,400 shares of Class B VISA common stock recognized a gain of $1.8 million.
3. Executed one 90-day FHLB advance of $200.0 million with a cash flow hedge, effectively locking in five year funding at 1.89%, as we continued to add leverage within the balance sheet to support future loan growth and increase the size of the investment portfolio.
4. Non-interest bearing deposits grew by $36.0 million, or 4.5% annualized.
5. Repurchased 641,200 common shares totaling $46.9 million.

The Company’s book value per common share increased to $68.34 per share at June 30, 2019, compared to $67.19 at March 31, 2019 and $63.77 at June 30, 2018. Total equity (capital) decreased by $2.5 million due to the shares of common stock repurchased during the second quarter. The decrease from the repurchased stock of $46.9 million was mostly offset by an improvement in the unrealized gain position of available for sale securities at June 30, 2019, and net income earned, net of the dividend paid, of $27.4 million, during the quarter. Tangible book value (“TBV”) per common share increased by $0.70 per share to $37.85 at June 30, 2019, compared to $37.15 at March 31, 2019, and increased by $3.21 per share, or 9.3%, from $34.64 at June 30, 2018. The quarterly increase of $0.70 per share in tangible book value was the result of (1) earnings per share, excluding amortization of intangibles, of $1.27, offset by the dividend paid to shareholders of $0.40 per share; (2) an increase from the change in AOCI of $0.43 per share; (3) the increase from the impact of share-based compensation and employee stock purchases of $0.06 per share; and (4) a net decrease of $0.66 per share due primarily to the buyback of common stock.

“Sound credit quality continues to be a strength of the company, as many of our credit metrics continued to improve,” said John C. Pollok, Chief Financial Officer. “South State experienced nice improvement during the second quarter in total revenue, in both net interest income and noninterest income, and good control of adjusted noninterest expense, all resulting in an adjusted return on average tangible equity of 15.79%, which approaches our long-term goal of 16% to 18%.”

Performance and Capital Ratios

	Three Months Ended															Six Months Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			June 30,		June 30,
PERFORMANCE RATIOS	2019			2019			2018			2018			2018			2019		2018
Return on average assets (annualized)		1.08	%		1.21	%		1.33	%		1.28	%		1.12	%	1.14	%	1.15	%
Adjusted return on average assets (annualized) (non-GAAP) (3)		1.28	%		1.23	%		1.33	%		1.33	%		1.45	%	1.26	%	1.45	%
Return on average equity (annualized)		6.98	%		7.61	%		8.24	%		7.89	%		6.96	%	7.29	%	7.18	%
Adjusted return on average equity (annualized) (non-GAAP) (3)		8.32	%		7.69	%		8.24	%		8.23	%		9.06	%	8.00	%	9.02	%
Return on average tangible common equity (annualized) (non-GAAP) (7)		13.38	%		14.66	%		15.91	%		15.29	%		13.79	%	14.01	%	14.23	%
Adjusted return on average tangible common equity (annualized) (non-GAAP) (3) (7)		15.79	%		14.80	%		15.91	%		15.90	%		17.68	%	15.30	%	17.64	%
Efficiency ratio (tax equivalent)		66.87	%		63.24	%		59.43	%		62.31	%		65.63	%	65.10	%	66.16	%
Adjusted efficiency ratio (non-GAAP) (9)		59.78	%		62.52	%		59.43	%		59.53	%		57.26	%	61.12	%	58.65	%
Dividend payout ratio (2)		33.89	%		30.29	%		26.63	%		27.30	%		30.93	%	32.03	%	29.78	%
Book value per common share	$	68.34		$	67.19		$	66.04		$	64.49		$	63.77
Tangible common equity per common share (non-GAAP) (7)	$	37.85		$	37.15		$	36.30		$	35.37		$	34.64
CAPITAL RATIOS
Equity-to-assets		15.14	%		15.42	%		16.12	%		16.31	%		16.12	%
Tangible equity-to-tangible assets (non-GAAP) (7)		8.99	%		9.16	%		9.56	%		9.65	%		9.45	%
Tier 1 common equity (6)		11.6	%		11.8	%		12.1	%		12.3	%		12.0	%
Tier 1 leverage (6)		10.0	%		10.5	%		10.6	%		10.8	%		10.6	%
Tier 1 risk-based capital (6)		12.6	%		12.8	%		13.1	%		13.3	%		13.0	%
Total risk-based capital (6)		13.1	%		13.3	%		13.6	%		13.8	%		13.5	%
OTHER DATA
Number of branches		156			168			168			168			169
Number of employees (full-time equivalent basis)		2,544			2,589			2,602			2,640			2,654

Asset Quality

	Ending Balance
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
(Dollars in thousands)		2019			2019			2018			2018			2018
NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonperforming loans	$	15,605		$	15,910		$	15,018		$	15,315		$	14,870
Non-acquired OREO and other nonperforming assets		4,374			4,070			4,037			3,229			8,179
Total non-acquired nonperforming assets		19,979			19,980			19,055			18,544			23,049
Acquired
Acquired nonperforming loans		9,985			14,558			13,651			10,800			9,590
Acquired OREO and other nonperforming assets		10,412			7,782			7,755			9,302			9,527
Total acquired nonperforming assets		20,397			22,340			21,406			20,102			19,117
Total nonperforming assets	$	40,376		$	42,320		$	40,461		$	38,646		$	42,166
	Three Months Ended															Six Months Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			June 30,		June 30,
		2019			2019			2018			2018			2018		2019		2018
ASSET QUALITY RATIOS:
Allowance for non-acquired loan losses as a
percentage of non-acquired loans (1)		0.62	%		0.63	%		0.65	%		0.66	%		0.67	%	0.62	%	0.67	%
Allowance for non-acquired loan losses as a percentage of non-acquired nonperforming loans		343.42	%		326.89	%		340.88	%		325.62	%		321.95	%	343.22	%	321.95	%
Net charge-offs on non-acquired loans as a percentage of average non-acquired loans (annualized) (1)		0.02	%		0.02	%		0.06	%		0.07	%		0.01	%	0.02	%	0.02	%
Net charge-offs on acquired non-credit impaired loans as a percentage of average acquired non-credit impaired loans (annualized) (1)		0.25	%		0.03	%		0.09	%		0.01	%		0.14	%	0.14	%	0.08	%
Total nonperforming assets as a percentage of total assets		0.26	%		0.27	%		0.28	%		0.27	%		0.29	%
Excluding Acquired Assets
NPLs as a percentage of period end non-acquired loans (1)		0.18	%		0.19	%		0.19	%		0.20	%		0.21	%
Total nonperforming assets as a percentage of total non-acquired loans and repossessed assets (1) (4)		0.23	%		0.24	%		0.24	%		0.24	%		0.32	%
Total nonperforming assets as a percentage of total assets (5)		0.13	%		0.13	%		0.13	%		0.13	%		0.16	%

Total nonperforming assets decreased by $1.9 million to $40.4 million, representing 0.26% of total assets, a decrease of 1 basis point compared to March 31, 2019. Non-performing acquired non-credit impaired loans decreased by $4.6 million and totaled $10.0 million. Legacy non-performing loans decreased by $305,000 during the second quarter of 2019 to $15.6 million at June 30, 2019. The allowance for loan losses as a percentage of non-acquired nonaccrual loans was 343% at June 30, 2019, up from 327% in the first quarter of 2019, and up from 322% at June 30, 2018.

At June 30, 2019, the allowance for non-acquired loan losses was $53.6 million, or 0.62%, of non-acquired period-end loans and $52.0 million, or 0.63%, at March 31, 2019, and $47.9 million, or 0.67% at June 30, 2018. Net charge-offs within the non-acquired portfolio were $452,000, or 0.02% annualized, in the second quarter of 2019, compared to $493,000, or 0.02% annualized, in the first quarter of 2019. Second quarter 2018 net charge-offs totaled $189,000, or 0.01% annualized. Net charge-offs (recoveries) related to the non-acquired loan portfolio were ($292,000) during the second quarter of 2019. The remaining net charge-offs were from overdraft and ready reserve accounts and totaled $744,000.

During the second quarter of 2019, the provision for loan losses totaled $2.0 million for the non-acquired loan portfolio compared to $1.3 million in the first quarter of 2019, and $2.9 million in the second quarter of 2018.

Net charge offs related to “acquired non-credit impaired loans” were $1.4 million, or 0.25% annualized, in the second quarter of 2019; and the Company recorded a provision for loan losses, accordingly. Net charge-offs in the first quarter of 2019 totaled $168,000, or 0.03% annualized, and in the second quarter of 2018, net charge-offs totaled $1.1 million, or 0.14% annualized. There were two loans with charge-offs that totaled $1.3 million in the second quarter of 2019, which comprise the majority of the $1.4 million in provision for loan losses recorded.

During the first quarter of 2019, the Company recorded a net impairment of $251,000 within the acquired credit impaired loan pools compared to $13,000 in the first quarter of 2019. During the second quarter of 2018, the Company recorded net impairment of $522,000.

Total OREO increased during the second quarter due to the branch closures that were completed, and increased by $3.2 million to $14.5 million. This was still below the balance of OREO of $17.2 million at June 30, 2018.

Net Interest Income and Margin

	Three Months Ended
	June 30, 2019						March 31, 2019						June 30, 2018
(Dollars in thousands)	Average		Income/		Yield/		Average		Income/		Yield/		Average		Income/		Yield/
YIELD ANALYSIS	Balance		Expense		Rate		Balance		Expense		Rate		Balance		Expense		Rate
Interest-Earning Assets:
Federal funds sold, reverse repo, and time deposits	$	602,351	$	3,426	2.28	%	$	248,620	$	1,463	2.39	%	$	203,189	$	1,218	2.40	%
Investment securities (taxable)		1,429,378		9,551	2.68	%		1,327,336		8,597	2.63	%		1,439,334		9,048	2.52	%
Investment securities (tax-exempt)		191,686		1,617	3.38	%		187,732		1,496	3.23	%		213,712		1,614	3.03	%
Loans held for sale		33,804		337	4.00	%		19,308		214	4.49	%		32,313		337	4.18	%
Loans		11,157,942		135,051	4.85	%		11,023,005		131,620	4.84	%		10,723,400		129,515	4.84	%
Total interest-earning assets		13,415,161		149,982	4.48	%		12,806,001		143,390	4.54	%		12,611,948		141,732	4.51	%
Noninterest-earning assets		2,004,786						2,006,898						1,934,359
Total Assets	$	15,419,947					$	14,812,899					$	14,546,307
Interest-Bearing Liabilities:
Transaction and money market accounts	$	5,515,060	$	9,632	0.70	%	$	5,429,375	$	9,340	0.70	%	$	5,203,265	$	4,691	0.36	%
Savings deposits		1,354,812		1,252	0.37	%		1,379,688		1,256	0.37	%		1,459,851		1,160	0.32	%
Certificates and other time deposits		1,749,782		6,509	1.49	%		1,773,365		6,049	1.38	%		1,784,269		4,158	0.93	%
Federal funds purchased and repurchase agreements		281,187		673	0.96	%		284,350		753	1.07	%		339,917		642	0.76	%
Other borrowings		677,858		4,737	2.80	%		301,696		2,725	3.66	%		165,940		1,519	3.67	%
Total interest-bearing liabilities		9,578,699		22,803	0.95	%		9,168,474		20,123	0.89	%		8,953,242		12,170	0.55	%
Noninterest-bearing liabilities		3,458,506						3,280,126						3,260,626
Shareholders' equity		2,382,742						2,364,299						2,332,439
Total Non-IBL and shareholders' equity		5,841,248						5,644,425						5,593,065
Total liabilities and shareholders' equity	$	15,419,947					$	14,812,899					$	14,546,307
Net interest income and margin (NON-TAX EQUIV.)			$	127,179	3.80	%			$	123,267	3.90	%			$	129,562	4.12	%
Net interest margin (TAX EQUIVALENT)					3.82	%					3.92	%					4.14	%
Overall Cost of Funds (including demand deposits)					0.71	%					0.67	%					0.40	%

Non-taxable equivalent net interest income was $127.2 million for the second quarter of 2019, a $3.9 million increase from the first quarter of 2019. The increase resulted from the leverage of the balance sheet that allowed for higher interest income from investment securities of $1.1 million and federal funds sold of $2.0 million. In addition, interest income from the loan portfolio added $3.4 million, which was attributable to higher yield on the non-acquired loan portfolio to 4.32% from 4.30%, and $387.1 million increase in the average balance. This was offset, partially by $2.2 million decline in acquired loan interest income which resulted from the continued decline in the average acquired loan balance of $252.2 million. Interest expense increased by $2.7 million, with $2.0 million coming from other borrowings (FHLB advances). Time deposit funding cost increased 11 basis points during 2Q 2019 and resulted in $460,000 of additional funding cost. Lastly, there was one more day in the second quarter of 2019 compared to the first quarter of 2019.

Tax-equivalent net interest margin declined 10 basis points from the first quarter of 2019 and declined by 32 basis points from the second quarter of 2018. During the second quarter of 2019, the Company’s average total assets increased to $15.4 billion, an increase of $607.0 million from the first quarter of 2019, and an increase of $873.6 million from the second quarter of 2018. Average earning assets totaled $13.4 billion up $609.2 million from 1Q 2019, and up $803.2 million from 2Q 2018. Average interest-bearing liabilities totaled $9.6 billion at 2Q 2019, an increase of $410.2 million from 1Q 2019; and up $625.5 million from 2Q 2018. Average non-interest bearing liabilities increased by $178.4 million, from 1Q 2019, to $3.5 billion; and was up $197.9 million from 2Q 2018. Including the impact of noninterest bearing deposits, the Company’s overall cost of funds was 71 basis points for the second quarter of 2019 compared to 67 basis points in the first quarter of 2019, and compared to 40 basis points one year ago.

The first table below reflects the quarterly roll forward of the acquired credit impaired loan accretable yield, including a fair value adjustment of $1.5 million recorded in the second quarter of 2018 for the Park Sterling merger. The table reflects the amount of acquired credit impaired loan interest income recognized each quarter, split between (1) contractual loan interest; and (2) the accretion recognized from the performance of the acquired credit impaired loans.

The second table below shows the split between principal and interest that will be accreted into interest income over the expected remaining life of the ACI loans, the third table shows the nonaccretable difference split between principal and interest which is not expected to be collected, and the fourth table shows “total acquired accretion income” recorded over the past five quarters. The amount increased slightly in the second quarter of 2019 when compared to the first quarter of 2019. The largest impact was the partial collection of the legal balance of an acquired credit impaired loan during the second quarter totaling $1.0 million.

The amount of ANCI discount recognized in the second quarter of 2019 was $3.2 million compared to $3.2 million recognized in the first quarter of 2019. The remaining balance of the discount on the acquired noncredit impaired loan portfolio totals $26.9 million at June 30, 2019, $30.2 million at March 31, 2019, and $43.6 million at June 30, 2018.

1 - Accretable Yield Rollforward (Acquired credit impaired loans)	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
(Dollars in thousands)		2019			2019			2018			2018			2018
Balance at beginning of period	$	106,978		$	116,754		$	114,985		$	121,804		$	129,857
Contractual interest income *		(7,111	)		(7,078	)		(7,837	)		(8,228	)		(8,354	)
Accretion on acquired loans		(5,167	)		(5,120	)		(5,099	)		(4,892	)		(5,212	)
Additions (decreases) from Park Sterling Bank Acquisition		--			--			--			--			(1,460	)
Improved cash flows affecting nonaccretable difference		5,994			2,474			14,698			6,350			7,118
Other changes, net		(81	)		(52	)		7			(49	)		(145	)
Balance at end of period	$	100,613		$	106,978		$	116,754		$	114,985		$	121,804
* Contractual interest income does not include interest income from loan advances post-acquisition on lines of credit, late fees or other loan fees.
2 - Principal & Interest of Accretable Yield Period End Balance
Principal - expected to be collected in future periods and recorded as interest income	$	43,616		$	46,673		$	48,896		$	46,526		$	50,474
Interest - expected to be collected in future periods and recorded as interest income		56,997			60,305			67,859			68,459			71,331
Total accretable balance at period end	$	100,613		$	106,978		$	116,754		$	114,985		$	121,805
3 - Principal & Interest of the Nonaccretable Difference
Contractual principal which is not expected to be collected	$	13,151		$	15,203		$	19,055		$	30,081		$	32,557
Contractual interest which is not expected to be collected		5,005		$	9,079			5,763			8,341			10,840
Total nonaccretable difference	$	18,156		$	24,282		$	24,818		$	38,422		$	43,397
4 - Acquired accretion income over Past 5 Quarters	Three months Ended
(in thousands)	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
		2019			2019			2018			2018			2018
Acquired non credit impaired accretion income and fees	$	3,209		$	3,237		$	3,792		$	6,786		$	7,671
Acquired credit impaired accretion income		5,167			5,120			5,099			4,892			5,212
Other interest and late fees		773			780			770			742			759
Total acquired accretion income	$	9,149		$	9,137		$	9,662		$	12,420		$	13,642

Noninterest Income and Expense

	Three Months Ended
	June 30,		Mar. 31,		Dec. 31,			Sept. 30,			June 30,
(Dollars in thousands)	2019		2019		2018			2018			2018
Noninterest income:
Fees on deposit accounts	$	18,741	$	17,808	$	18,704		$	17,790		$	22,612
Mortgage banking income		5,307		2,385		2,501			2,824			3,317
Trust and investment services income		7,720		7,269		7,621			7,527			7,567
Securities (losses) gains, net		1,709		541		(3	)		(11	)		(641	)
Recoveries of fully charged off acquired loans		1,347		1,867		2,737			1,238			2,167
Other		2,794		2,188		4,082			2,659			2,503
Total noninterest income	$	37,618	$	32,058	$	35,642		$	32,027		$	37,525
Noninterest expense:
Salaries and employee benefits	$	58,547	$	58,431	$	57,705		$	57,934		$	55,026
Pension plan termination expense		9,526		--		--			--			--
Net occupancy expense		7,616		7,199		7,205			7,630			7,815
Information services expense		8,671		9,009		7,877			7,804			8,903
Furniture and equipment expense		4,233		4,413		4,599			4,605			4,519
FHLB prepayment penalty		--		134		--			--			--
OREO expense and loan related		881		751		831			(19	)		1,037
Business development and staff related		2,171		2,288		2,822			2,463			2,765
Amortization of intangibles		3,268		3,281		3,537			3,537			3,722
Professional fees		2,781		2,240		3,148			2,138			1,898
Supplies, printing and postage expense		1,495		1,504		1,480			1,561			1,406
FDIC assessment and other regulatory charges		1,455		1,535		1,340			2,525			3,277
Advertising and marketing		959		807		1,273			1,049			1,163
Other operating expenses		5,726		5,667		4,847			4,591			4,879
Branch consolid. or merger / convers related exp.		2,078		980		--			4,476			14,096
Total noninterest expense	$	109,407	$	98,239	$	96,664		$	100,294		$	110,506

Noninterest income totaled $37.6 million during the second quarter of 2019, an increase of $5.6 million from the first quarter of 2019. The increase was the result of higher income in all categories, other than recoveries on acquired loans, which declined by $520,000. Mortgage banking income increased by $2.9 million as gains from the sale of loans improved $1.9 million and mortgage servicing rights (MSR), net of the hedge increased by $1.0 million. Trust and investment services income improved by $451,000, and fees on deposit accounts increased by $933,000, primarily in bankcard income. Also, in the second quarter of 2019, the Company sold another 11,400 shares of VISA class B stock resulting in a gain of $1.8 million, which was partially offset by realized losses of $100,000 on lower yielding investment securities which were sold.

Compared to the second quarter of 2018, noninterest income was slightly up by $93,000. The categories were as follows:

1. $2.0 million improvement in mortgage banking income primarily from higher secondary market income;
2. $2.4 million increase in securities gains in 2Q 2019 compared to securities losses of $641,000 in 2Q 2018; offset by
3. Fees on deposit accounts were down $3.9 million due primarily to the impact of the Durbin Amendment, which reduced income beginning in the third quarter of 2018; and
4. Lower recoveries on acquired loans of $820,000.

Noninterest expense was $109.4 million in the second quarter of 2019, an increase of $11.2 million from $98.2 million in the first quarter of 2019. The increase was primarily related to the following: (1) the termination of the pension plan in the second quarter of 2019, which totaled $9.5 million, and (2) additional branch consolidation and other cost saving initiatives resulted in $2.1 million of expense in the second quarter of 2019. Excluding these cost, adjusted noninterest expense totaled $97.8 million, an increase of $678,000, or 0.7% compared to first quarter 2019.

Compared to the second quarter of 2018, noninterest expense was lower by $1.1 million. The net decrease was primarily due to the following: (1) merger-related and branch consolidated cost declined $12.0 million, as additional Park Sterling merger / conversion cost were incurred in 2Q 2018, (2) $1.8 million in lower FDIC assessment and other regulatory charges were incurred; offset by (3) higher salaries and benefits which increased by $13.0 million due primarily to the termination of the pension plan ($9.5 million), higher benefits from self-funded medical cost ($907,000) and higher 401(k) matching contributions ($828,000), and higher incentive expense ($1.5 million). Adjusted noninterest expense (non-GAAP) increased $1.4 million, or 1.4%, compared to the second quarter of 2018.

South State Corporation will hold a conference call tomorrow, July 30, 2019, at 10 a.m. Eastern Time, during which management will review earnings and performance trends. Callers wishing to participate may call toll-free by dialing 877-506-9272. The number for international participants is 412-380-2004. The conference ID number is 10133216. Participants can also listen to the live audio webcast through the Investor Relations section of www.SouthStateBank.com. A replay will be available beginning July 30, 2019 by 2:00 p.m. Eastern Time until 9:00 a.m. on August 13, 2019. To listen to the replay, dial 877-344-7529 or 412-317-0088. The passcode is 10133216.

***************

South State Corporation is a financial services company headquartered in Columbia, South Carolina with approximately $15.7 billion in assets. South State Bank, the company’s primary subsidiary, provides consumer, commercial, mortgage, and wealth management solutions throughout the Carolinas, Georgia and Virginia. South State has served customers since 1934. Additional information is available at www.SouthStateBank.com.

Non-GAAP Measures

Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Management believes that these non-GAAP measures provide additional useful information which allows readers to evaluate the ongoing performance of the Company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP.

	Three Months Ended															Six Months Ended
(Dollars in thousands, except per share data)	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
RECONCILIATION OF GAAP TO Non-GAAP		2019			2019			2018			2018			2018			2019			2018
Adjusted net income (non-GAAP) (3)
Net income (GAAP)	$	41,460		$	44,367		$	49,004		$	47,082		$	40,459		$	85,827		$	82,785
Securities losses (gains), net of tax		(1,371	)		(432	)		2			9			505			(1,803	)		505
Provision for income taxes - Deferred Tax Asset Write-Off		--			--			--			(1,602	)		613			--			613
Pension plan termination expense, net of tax		7,641			--			--			--			--			7,641			--
FHLB prepayment penalty, net of tax		--			107			--			--			--			107			--
Merger and branch consolidation/acq. expense, net of tax		1,667			782			--			3,577			11,112			2,449			20,030
Adjusted net income (non-GAAP)	$	49,397		$	44,824		$	49,006		$	49,066		$	52,689		$	94,221		$	103,933
Adjusted net income per common share - Basic (3)
Earnings per common share - Basic (GAAP)	$	1.18		$	1.25		$	1.36		$	1.28		$	1.10		$	2.43		$	2.25
Effect to adjust for securities losses (gains)		(0.04	)		(0.01	)		--			0.00			0.01			(0.05	)		0.01
Effect to adjust for provision for income tax DTA Write-Off		--			--			--			(0.04	)		0.02			--			0.02
Effect to adjust for pension plan termination expense, net of tax		0.22			--			--			--			--			0.22			--
Effect to adjust for FHLB prepayment penalty, net of tax		--			0.00			--			--			--			0.00			--
Effect to adjust for merger & branch consol./acq expenses, net of tax		0.05			0.02			--			0.10			0.31			0.07			0.56
Adjusted net income per common share - Basic (non-GAAP)	$	1.41		$	1.26		$	1.36		$	1.34		$	1.44		$	2.67		$	2.84
Adjusted net income per common share - Diluted (3)
Earnings per common share - Diluted (GAAP)	$	1.17		$	1.25		$	1.35		$	1.28		$	1.09		$	2.42		$	2.24
Effect to adjust for securities losses (gains)		(0.04	)		(0.01	)		--			0.00			0.01			(0.05	)		0.01
Effect to adjust for provision for income tax DTA Write-Off		--			--			--			(0.05	)		0.02			--			0.02
Effect to adjust for pension plan termination expense, net of tax		0.22			--			--			--			---			0.22			--
Effect to adjust for FHLB prepayment penalty, net of tax		--			0.00			--			--			---			0.00			--
Effect to adjust for merger & branch consol./acq expenses, net of tax		0.05			0.02			--			0.10			0.31			0.07			0.55
Adjusted net income per common share - Diluted (non-GAAP)	$	1.40		$	1.26		$	1.35		$	1.33		$	1.43		$	2.66		$	2.82
Adjusted Return of Average Assets (3)
Return on average assets (GAAP)		1.08	%		1.21	%		1.33	%		1.28	%		1.12	%		1.14	%		1.15	%
Effect to adjust for securities losses (gains)		-0.04	%		-0.01	%		0.00	%		0.00	%		0.01	%		-0.02	%		0.01	%
Effect to adjust for provision for income tax DTA Write-Off		0.00	%		0.00	%		0.00	%		-0.04	%		0.02	%		0.00	%		0.01	%
Effect to adjust for pension plan termination expense, net of tax		0.20	%		0.00	%		0.00	%		0.00	%		0.00	%		0.10	%		0.00	%
Effect to adjust for FHLB prepayment penalty, net of tax		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Effect to adjust for merger & branch consol./acq expenses, net of tax		0.04	%		0.03	%		0.00	%		0.09	%		0.30	%		0.04	%		0.28	%
Adjusted return on average assets (non-GAAP)		1.28	%		1.23	%		1.33	%		1.33	%		1.45	%		1.26	%		1.45	%
Adjusted Return of Average Equity (3)
Return on average equity (GAAP)		6.98	%		7.61	%		8.24	%		7.89	%		6.96	%		7.29	%		7.18	%
Effect to adjust for securities losses (gains)		-0.23	%		-0.07	%		0.00	%		0.00	%		0.09	%		-0.15	%		0.04	%
Effect to adjust for provision for income tax DTA Write-Off		0.00	%		0.00	%		0.00	%		-0.27	%		0.11	%		0.00	%		0.05	%
Effect to adjust for pension plan termination expense, net of tax		1.29	%		0.00	%		0.00	%		0.00	%		0.00	%		0.65	%		0.00	%
Effect to adjust for FHLB prepayment penalty, net of tax		0.00	%		0.02	%		0.00	%		0.00	%		0.00	%		0.01	%		0.00	%
Effect to adjust for merger & branch consol./acq expenses, net of tax		0.28	%		0.13	%		0.00	%		0.61	%		1.90	%		0.20	%		1.75	%
Adjusted return on average equity (non-GAAP)		8.32	%		7.69	%		8.24	%		8.23	%		9.06	%		8.00	%		9.02	%
Adjusted Return on Average Common Tangible Equity (3) (7)
Return on average common equity (GAAP)		6.98	%		7.61	%		8.24	%		7.89	%		6.96	%		7.29	%		7.18	%
Effect to adjust for securities losses (gains)		-0.23	%		-0.07	%		0.00	%		0.00	%		0.09	%		-0.15	%		0.04	%
Effect to adjust for provision for income tax DTA Write-Off		0.00	%		0.00	%		0.00	%		-0.27	%		0.11	%		0.00	%		0.05	%
Effect to adjust for pension plan termination expense, net of tax		1.29	%		0.00	%		0.00	%		0.00	%		0.00	%		0.65	%		0.00	%
Effect to adjust for FHLB prepayment penalty, net of tax		0.00	%		0.02	%		0.00	%		0.00	%		0.00	%		0.01	%		0.00	%
Effect to adjust for merger & branch consol./acq expenses, net of tax		0.28	%		0.13	%		0.00	%		0.60	%		1.91	%		0.21	%		1.74	%
Effect to adjust for intangible assets		7.47	%		7.11	%		7.67	%		7.68	%		8.61	%		7.29	%		8.63	%
Adjusted return on average common tangible equity (non-GAAP)		15.79	%		14.80	%		15.91	%		15.90	%		17.68	%		15.30	%		17.64	%
Tangible Book Value Per Common Share (7)
Book value per common share (GAAP)	$	68.34		$	67.19		$	66.04		$	64.49		$	63.77
Effect to adjust for intangible assets		(30.49	)		(30.04	)		(29.74	)		(29.12	)		(29.13	)
Tangible book value per common share (non-GAAP)	$	37.85		$	37.15		$	36.30		$	35.37		$	34.64
Tangible Equity-to-Tangible Assets (7)
Equity-to-assets (GAAP)		15.14	%		15.42	%		16.12	%		16.31	%		16.12	%
Effect to adjust for intangible assets		-6.15	%		-6.26	%		-6.56	%		-6.66	%		-6.67	%
Tangible equity-to-tangible assets (non-GAAP)		8.99	%		9.16	%		9.56	%		9.65	%		9.45	%

Footnotes to tables:

(1) Loan data excludes mortgage loans held for sale.

(2) The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period.

(3) Adjusted earnings, adjusted return on average assets, and adjusted return on average equity are non-GAAP measures and exclude the after-tax effect of gains on acquisitions, gains or losses on sales of securities, other-than-temporary-impairment (OTTI), and merger and branch consolidation related expense. It also reflects an adjustment for the deferred tax asset revaluation in the third quarter of 2018. Management believes that non-GAAP adjusted measures provide additional useful information that allows readers to evaluate the ongoing performance of the company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP. Adjusted earnings and the related adjusted return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis: (a) pre-tax merger and branch consolidation related expense of $2.1 million, $980,000, $4.5 million, and $14.1 million for the quarters ended June 30, 2019, March 31, 2019, September 30, 2018, and June 30, 2018, respectively; (b) securities (losses) gains, net of $1.7 million, $541,000, ($3,000), ($11,000), and ($641,000), for the quarters ended June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018, and June 30, 2018; (c) Pension plan termination expense of $9.5 million for the quarter ended June 30, 2019; and (d) FHLB prepayment penalty of $134,000 for the quarter ended March 31, 2019. In the third quarter of 2018 and second quarter of 2018, the Company revalued its net deferred tax assets with the Tax Act of 2017 with a(n) (decrease) increase in our income tax provision of ($1.6 million) and $613,000, respectively.

(4) Repossessed assets include OREO and other nonperforming assets.

(5) Calculated by dividing total non-acquired NPAs by total assets.

(6) June 30, 2019 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C; all other periods are presented as filed.

(7) 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 intangibles to GAAP basis net income. Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP. The sections titled "Reconciliation of Non-GAAP to GAAP" provide tables that reconcile non-GAAP measures to GAAP.

(8) Includes noncash loan interest income related to the discount on acquired performing loans of $3.2 million, $3.2 million, $3.8 million, $6.7 million, and $7.6 million, respectively, during the five quarters above.

(9) Adjusted efficiency ratio is calculated by taking the noninterest expense excluding branch consolidation cost and merger cost and the FHLB prepayment penalty divided by net interest income and noninterest income excluding securities gains (losses) and OTTI.

Cautionary Statement Regarding 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 Securities Exchange Act of 1934. Forward looking statements are based on, among other things, management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and South State Corporation (“South State”). Words and phrases such as “may,” “approximately,” “continue,” “should,” “expects,” “projects,” “anticipates,” “is likely,” “look ahead,” “look forward,” “believes,” “will,” “intends,” “estimates,” “strategy,” “plan,” “could,” “potential,” “possible” and variations of such words and similar expressions are intended to identify such forward-looking statements. South State cautions readers that forward looking statements are subject to certain risks, uncertainties and assumptions that are difficult to predict with regard to, among other things, timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, the following: (1) economic downturn risk, potentially resulting in deterioration in the credit markets, greater than expected noninterest expenses, excessive loan losses and other negative consequences, which risks could be exacerbated by potential negative economic developments resulting from federal spending cuts and/or one or more federal budget-related impasses or actions; (2) increased expenses, loss of revenues, and increased regulatory scrutiny associated with our total assets having exceeded $10.0 billion; (3) controls and procedures risk, including the potential failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures; (4) ownership dilution risk associated with potential acquisitions in which South State’s stock may be issued as consideration for an acquired company; (5) potential deterioration in real estate values; (6) the impact of competition with other financial institutions, including pricing pressures (including those resulting from the Tax Cuts and Jobs Act) and the resulting impact, including as a result of compression to net interest margin; (7) credit risks associated with an obligor’s failure to meet the terms of any contract with the bank or otherwise fail to perform as agreed under the terms of any loan-related document; (8) interest risk involving the effect of a change in interest rates on the bank’s earnings, the market value of the bank’s loan and securities portfolios, and the market value of South State’s equity; (9) liquidity risk affecting the bank’s ability to meet its obligations when they come due; (10) risks associated with an anticipated increase in South State’s investment securities portfolio, including risks associated with acquiring and holding investment securities or potentially determining that the amount of investment securities South State desires to acquire are not available on terms acceptable to South State; (11) price risk focusing on changes in market factors that may affect the value of traded instruments in “mark-to-market” portfolios; (12) transaction risk arising from problems with service or product delivery; (13) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (14) regulatory change risk resulting from new laws, rules, regulations, accounting principles, proscribed practices or ethical standards, including, without limitation, the possibility that regulatory agencies may require higher levels of capital above the current regulatory-mandated minimums and including the impact of the recently enacted Tax Cuts and Jobs Act, the Consumer Financial Protection Bureau rules and regulations, and the possibility of changes in accounting standards, policies, principles and practices, including changes in accounting principles relating to loan loss recognition (CECL); (15) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (16) reputation risk that adversely affects earnings or capital arising from negative public opinion; (17) terrorist activities risk that results in loss of consumer confidence and economic disruptions; (18) cybersecurity risk related to the dependence of South State on internal computer systems and the technology of outside service providers, as well as the potential impacts of third party security breaches, subjects each company to potential business disruptions or financial losses resulting from deliberate attacks or unintentional events; (19) greater than expected noninterest expenses; (20) noninterest income risk resulting from the effect of regulations that prohibit financial institutions from charging consumer fees for paying overdrafts on ATM and one-time debit card transactions, unless the consumer consents or opts‑in to the overdraft service for those types of transactions; (21) excessive loan losses; (22) failure to realize synergies and other financial benefits from, and to limit liabilities associated with, mergers and acquisitions within the expected time frame; (23) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with merger and acquisition integration, including, without limitation, and potential difficulties in maintaining relationships with key personnel; (24) the risks of fluctuations in market prices for South State common stock that may or may not reflect economic condition or performance of South State; (25) the payment of dividends on South State common stock is subject to regulatory supervision as well as the discretion of the board of directors of South State, South State’s performance and other factors; (26) operational, technological, cultural, regulatory, legal, credit and other risks associated with the exploration, consummation and integration of potential future acquisition, whether involving stock or cash consideration; and (27) other risks and uncertainties disclosed in South State’s most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC) or disclosed in documents filed or furnished by South State with or to the SEC after the filing of such Annual Reports on Form 10-K, and of which could cause actual results to differ materially from future results expressed, implied or otherwise anticipated by such forward-looking statements.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. South State does not undertake any obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.