South State Corporation Reports First Quarter 2017 Results and 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 period ended March 31, 2017. Highlights for the first
quarter of 2017 include the following:


  • Net income was $18.3 million for the first quarter of 2017 compared
    to $24.2 million for the fourth quarter of 2016, a decline of $5.9
    million, or 24.5% decrease, while adjusted net income (non-GAAP) was
    $33.4 million in the first quarter of 2017, up $5.4 million, or 19.3%
    increase, from the fourth quarter of 2016

    • Earnings per share (EPS) – diluted was $0.63 for the first quarter
      of 2017 compared to $1.00 for the fourth quarter of 2016, or a 37%
      decrease;
    • Adjusted net income per share (non-GAAP) – diluted was $1.15 for
      both the first quarter of 2017 and fourth quarter of 2016;
    • Increased dividend paid to common shareholders in the first
      quarter of 2017 by 3.1% compared to the fourth quarter of 2016 and
      17.9% compared to the first quarter of 2016
    • Completed the merger with Southeastern Bank Financial Corporation
      (“SBFC” or “Southeastern”) – see table on page 3
  • Net loan growth for the first quarter of 2017 was $177.1 million,
    or 10.6% annualized, excluding Southeastern Bank Financial Corporation
    (“SBFC”) acquired loans

    • Non-acquired loan growth totaling $323.3 million, or 24.7%; which
    • Outpaced acquired loan runoff of $146.2 million
  • Performance ratios first quarter 2017 compared to fourth quarter
    2016

    • Return on average assets totaled 0.68% compared to 1.08%
    • Adjusted return on average assets (non-GAAP) was 1.25% compared to
      1.26%
    • Return on average tangible equity (non-GAAP) decreased to 8.87%
      compared to 13.42%
    • Adjusted return on average tangible equity (non-GAAP) increased to
      15.55% from 15.44%
    • Efficiency ratio was 77.5% and increased from 65.8%
    • Adjusted efficiency ratio (non-GAAP) was 62.0% up from 61.6%
      (excluding branch consolidation and merger expenses)
  • Balance sheet and equity comparison March 31, 2017 to December 31,
    2016

    • Cash and cash equivalents increased by $288.7 million as acquired
      securities were sold and deposits increased
    • Investment securities portfolio increased by $385.6 million,
      including a net increase of $369.3 million through the acquisition
      of SBFC
    • Goodwill increased by $257.4 million from the SBFC acquisition
    • Noninterest bearing deposits increased by $400.1 million,
      including $278.8 million from SBFC
    • Interest bearing deposits increased by $1.3 billion, including
      $1.1 billion from SBFC
    • Shareholders’ equity increased $445.3 million, or 39.2%, to $1.6
      billion, primarily from the shares issued in the acquisition of
      SBFC
    • Equity to assets improved to 14.17% from 12.75% at year end
    • Tangible equity to tangible assets (Non-GAAP) declined to 8.85%
      from 8.88%
  • Asset quality in first quarter of 2017 compared to the fourth
    quarter of 2016

    • Nonperforming assets (NPAs) increased by $79,000, or 0.2%, to
      $38.7 million
    • NPAs to total assets improved to 0.35% from 0.43% due to the
      acquisition of SBFC
    • Net charge offs on non-acquired loans were 0.05% annualized, or
      $628,000, and equaled the fourth quarter of 2016
    • Net charge offs on acquired non-credit impaired loans were 0.08%,
      or $326,000, compared to 0.06%, or $122,000
    • Coverage ratio of ALLL on non-acquired non-performing loans
      improved to 295.0% from 250.7%

Quarterly Cash Dividend

The Board of Directors of South State Corporation has declared a
quarterly cash dividend on April 20, 2017, of $0.33 per share payable on
its common stock. This per share amount is the same as last quarter, and
$0.03 per share, or 10.0% higher than the dividend paid a year ago. The
dividend will be payable on May 19, 2017 to shareholders of record as of
May 12, 2017.

Merger with Southeastern

On January 3, 2017, South State Corporation closed its merger with SBFC,
and its wholly-owned bank subsidiary, Georgia Bank & Trust, merged into
South State Bank. The Company issued 4,978,338 shares using an exchange
ratio of 0.7307. The total purchase price was $435.1 million. The
initial allocation of the purchase price to the fair value of assets and
liabilities acquired has been completed and is in the following table:

           
South State Corporation Fair Value of
Southeastern Bank Financial Corp Net Assets
Acquisition Date of January 3, 2017 Initial Acquired at
As Recorded Fair Value Date of
(Dollars in thousands) by SBFC Adjustments Acquisition
Assets
Cash and cash equivalents $ 72,043 $ $ 72,043
Investment securities 591,824 (1,770 ) 590,054
Loans held for sale 13,652 13,652
Loans 1,060,618 (10,668 ) 1,049,950
Premises and equipment 25,419 (2,212 ) 23,207
Intangible assets 140 17,980 18,120
Other real estate owned and repossessed assets 580 (30 ) 550
Bank owned life insurance 44,513 44,513
Deferred tax asset 16,247 (687 ) 15,560
Other assets   7,545   (482 )   7,063
Total assets $ 1,832,581 $ 2,131   $ 1,834,712
Liabilities
Noninterest-bearing deposits $ 262,967 $ $ 262,967
Interest-bearing deposits   1,257,953       1,257,953
Total deposits 1,520,920 1,520,920

Federal funds purchased and securities sold under agreements to
repurchase

1,014 1,014
Other borrowings 110,620 (1,120 ) 109,500
Other liabilities   19,980   5,553     25,533
Total liabilities   1,652,534   4,433     1,656,967

Net identifiable assets acquired over liabilities assumed

180,047 (2,302 ) 177,745
Goodwill     257,370     257,370
Net assets acquired over liabilities assumed $ 180,047 $ 255,068   $ 435,115
Consideration:
South State Corporation common shares issued 4,978,338
Purchase price per share of the Company’s common stock $ 87.30

Company common stock issued and cash exchanged for fractional
shares

$ 434,625
Cash paid for stock option redemptions   490
Fair value of total consideration transferred $ 435,115
 

Below are some observations of the merger with SBFC:

  • Goodwill was approximately $100.0 million higher than announced in
    June 2016, due to the stock price increase of SSB from $67.68 in June
    2016 to $87.30 per share at closing
  • Core deposit intangible of 1.50% modeled compared to actual result of
    1.61%
  • Low single digit EPS accretion in first quarter of 2017 as modeled,
    excluding the merger expenses
  • On track to achieve 35% cost saves as modeled
  • Merger cost incurred during the first quarter were as expected
  • System conversion and branding change occurred over President’s Day
    weekend in February 2017
  • Added 12 offices in the Augusta, GA and Aiken, SC markets, and ranked
    second in market share in the Augusta market.

First Quarter 2017 Financial Performance

   
Three Months Ended
(Dollars in thousands, except per share data) Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31,
INCOME STATEMENT 2017 2016 2016 2016 2016
Interest income
Loans, including fees (8) $ 91,752 $ 76,709 $ 77,344 $ 77,154 $ 77,254

Investment securities, federal funds sold and securities purchased
under agreements to resell

  9,234     5,979     5,937     6,225     6,561  
Total interest income 100,986 82,688 83,281 83,379 83,815
Interest expense
Deposits 2,497 1,423 1,412 1,368 1,600

Federal funds purchased, securities sold under agreements to
repurchase, and other borrowings

1,127 665 624 612 613
Total interest expense   3,624     2,088     2,036     1,980     2,213  
Net interest income 97,362 80,600 81,245 81,399 81,602
Provision for loan losses (1)   3,707     622     912     2,728     2,557  
Net interest income after provision for loan losses   93,655     79,978     80,333     78,671     79,045  
Noninterest income   36,435     32,831     35,340     32,118     30,041  
Pre-tax operating expense 83,699 70,400 72,482 72,280 71,072
Branch consolid./acquisition and merger expense 21,024 4,841 709 1,573 958
Total noninterest expense   104,723     75,241     73,191     73,853     72,030  
Income before provision for income taxes 25,367 37,568 42,482 36,936 37,056
Provision for income taxes   7,103     13,391     14,387     12,420     12,562  
Net income $ 18,264   $ 24,177   $ 28,095   $ 24,516   $ 24,494  
 
Adjusted net income (non-GAAP) (3)
Net income (GAAP) $ 18,264 $ 24,177 $ 28,095 $ 24,516 $ 24,494

Securities gains, net of tax

(81 )
FDIC LSA early termination, net of tax 2,938
Branch consolid./acquisition and merger expense   15,137     3,814     468     1,044     634  
Adjusted net income (non-GAAP) $ 33,401   $ 27,991   $ 28,563   $ 28,498   $ 25,047  
 
Basic earnings per common share $ 0.63 $ 1.01 $ 1.17 $ 1.02 $ 1.02
Diluted earnings per common share $ 0.63 $ 1.00 $ 1.16 $ 1.01 $ 1.01
Adjusted net income per common share – Basic (non-GAAP) (3) $ 1.16 $ 1.16 $ 1.19 $ 1.19 $ 1.04
Adjusted net income per common share – Diluted (non-GAAP) (3) $ 1.15 $ 1.15 $ 1.18 $ 1.18 $ 1.04
Dividends per common share $ 0.33 $ 0.32 $ 0.31 $ 0.30 $ 0.28
Basic weighted-average common shares outstanding 28,891,669 24,035,960 24,016,075 23,995,054 23,969,080
Diluted weighted-average common shares outstanding 29,158,523 24,287,496 24,278,294 24,237,457 24,191,065
Effective tax rate 28.00 % 35.64 % 33.87 % 33.63 % 33.90 %
 

The Company reported consolidated net income of $18.3 million, or $0.63
per diluted common share for the three-months ended March 31, 2017, a
$5.9 million decrease from the fourth quarter of 2016. Interest income
was up $18.3 million mainly due to the merger with SBFC, with investment
securities interest income increasing $3.3 million and acquired loan
interest income increasing $12.8 million. Non-acquired loan interest
income also increased by $2.3 million during the quarter. Interest
expense increased by $1.5 million across all funding sources primarily
from the balance increases with the merger of SBFC. SBFC’s funding cost
was slightly higher than legacy South State’s and resulted in a 7 basis
point increase in our cost of funds to 22 basis point for the first
quarter of 2017 compared to the fourth quarter of 2016. The provision
for loan losses increased $3.1 million in the first quarter. Valuation
allowance (impairment) related to acquired loans was $1.0 million higher
than fourth quarter of 2016, provision for loan losses related to
acquired non-credit impaired loans was higher by $204,000, and the
provision for loan losses on non-acquired loans was $1.8 million higher
than last quarter primarily related to loan growth. Noninterest income
increased by $3.6 million in all categories due primarily to the merger
with SBFC, and $197,000 improvement in recoveries of acquired loans.
Noninterest expense increased by $29.5 million. The increase was
primarily the result of the merger with SBFC and included $16.2 million
increase in merger-related expenses.

Income Tax Expense

During the quarter, our effective income tax rate declined to 28.00%
from 35.64% in the fourth quarter of 2016 and from 33.90% in the first
quarter of 2016. There are two primary reasons for the decrease: (1)
lower pretax net income due to the large merger-related cost associated
with SBFC, and (2) the implementation of the new accounting standard
which requires the excess tax benefit associated with vested or
exercised stock awards be included in determination of the effective tax
rate each reporting period. A significant number of stock awards vested
during the first quarter which reduced our effective tax rate by 2.90%,
or $735,000. This is a discrete income tax item which will not occur at
this level in subsequent quarters during 2017. The effective income tax
rate going forward is expected to be between 33% and 34% for the
remainder of the year.

“We are pleased with the first quarter accomplishments,” said Robert R.
Hill, Jr., CEO of South State Corporation. “South State continued to
perform at a high level with strong growth in all lines of business, a
good start to 2017. The merger with Southeastern was completed and we
look forward to building upon their long history of success in Augusta
and Aiken. Our team in Augusta and Aiken has done a tremendous job, and
we feel very fortunate to have such a talented group of bankers.”

Balance Sheet and Capital

   
Ending Balance
Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31,
BALANCE SHEET 2017 2016 2016 2016 2016
Assets
Cash and cash equivalents $ 663,126   $ 374,448   $ 507,517   $ 481,912   $ 697,277  
Investment securities:
Securities held to maturity 6,095 6,094 6,851 7,921 7,920
Securities available for sale, at fair value 1,381,013 999,405 925,374 989,610 978,047
Other investments   13,501     9,482     9,482     9,529     9,539  
Total investment securities   1,400,609     1,014,981     941,707     1,007,060     995,506  
Loans held for sale   46,988     50,572     57,052     48,926     34,933  
Loans:
Acquired credit impaired 627,340 602,546 632,617 658,835 692,437
Acquired non-credit impaired 1,715,642 836,699 885,657 941,886 999,238
Non-acquired 5,564,307 5,241,041 5,008,113 4,816,875 4,472,668
Less allowance for non-acquired loan losses (1)   (38,449 )   (36,960 )   (37,319 )   (36,939 )   (35,115 )
Loans, net   7,868,840     6,643,326     6,489,068     6,380,657     6,129,228  
FDIC receivable for loss share agreements 2,091
Other real estate owned (“OREO”) 20,007 18,316 22,211 22,427 25,953
Premises and equipment, net 203,505 183,510 179,450 177,950 176,412
Bank owned life insurance 149,562 104,148 103,427 102,815 102,199
Deferred tax asset 43,075 31,123 25,357 25,915 32,045
Mortgage servicing rights 30,063 29,037 23,064 22,350 23,697
Core deposit and other intangibles 55,461 39,848 41,738 43,629 45,521
Goodwill 595,711 338,340 338,340 338,340 338,340
Other assets   73,123     72,943     68,234     72,012     67,555  
Total assets $ 11,150,070   $ 8,900,592   $ 8,797,165   $ 8,723,993   $ 8,670,757  
 
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing $ 2,599,111 $ 2,199,046 $ 2,176,155 $ 2,117,246 $ 2,020,632
Interest-bearing   6,434,327     5,135,377     5,071,251     5,046,680     5,141,316  
Total deposits   9,033,438     7,334,423     7,247,406     7,163,926     7,161,948  

Federal funds purchased and securities sold under agreements to
repurchase

352,431 313,773 305,268 341,064 312,034
Other borrowings 107,988 55,358 55,306 55,254 55,210
Other liabilities   76,313     62,450     65,053     59,406     59,511  
Total liabilities   9,570,170     7,766,004     7,673,033     7,619,650     7,588,703  
 
Shareholders’ equity:
Preferred stock – $.01 par value; authorized 10,000,000 shares
Common stock – $2.50 par value; authorized 40,000,000 shares 73,077 60,576 60,523 60,488 60,445
Surplus 1,132,172 711,307 705,124 703,445 701,462
Retained earnings 379,535 370,916 354,490 333,900 316,642
Accumulated other comprehensive income (loss)   (4,884 )   (8,211 )   3,995     6,510     3,505  
Total shareholders’ equity   1,579,900     1,134,588     1,124,132     1,104,343     1,082,054  
Total liabilities and shareholders’ equity $ 11,150,070   $ 8,900,592   $ 8,797,165   $ 8,723,993   $ 8,670,757  
 
Common shares issued and outstanding 29,230,734 24,230,392 24,209,122 24,195,226 24,177,833
 

At March 31, 2017, the Company’s total assets were $11.2 billion, an
increase of $2.2 billion from December 31, 2016 and an increase of $2.5
billion from March 31, 2016. Total assets acquired from SBFC, including
goodwill, totaled $2.1 billion. During the first quarter of 2017, the
Company experienced asset growth in most categories due to the merger
with SBFC. Loans increased $1.2 billion, including $1.0 billion from the
merger. Investment securities increased $385.6 million, with $369.6
million, net of sales during the quarter of approximately $210.0
million, coming from the merger. Cash and cash equivalents increased
$288.7 million from December 31, 2016, primarily from the growth in
deposits and proceeds from sales of securities. Non-acquired loans
increased by $323.3 million, with $273.3 million coming from legacy
South State and $50.0 million coming from the Augusta / Aiken market.
Bank owned life insurance increased due primarily to the policies
acquired from SBFC totaling $44.5 million. Other real estate owned
increased by $1.7 million during the quarter, primarily from two assets
formerly held as fixed assets (not merger related). Total deposits
increased $1.7 billion. $400.1 million was from noninterest-bearing
deposits, with $278.8 million coming from the merger with SBFC.
Interest-bearing deposits increased $1.3 billion, with $1.1 billion from
the merger. Total deposits grew $223.9 million, or 12% annualized,
excluding the merger with SBFC. Fed funds purchased and securities sold
under repurchase agreements increased by $38.7 million during the first
quarter to $352.4 million.

The Company’s book value per common share increased to $54.05 per share
at March 31, 2017, compared to $46.82 at December 31, 2016, and $44.75
at March 31, 2016. During the first quarter of 2017, capital increased
$445.3 million due to the common stock issued in the merger with SBFC
totaling $434.6 million and net income of $18.3 million, which was
partially offset by the common dividend paid of $9.6 million.
Accumulated other comprehensive income (“AOCI”) increased $3.3 million
due primarily to the unrealized gains in the AFS securities portfolio
during the quarter of $3.2 million, net of tax. Tangible book value
(“TBV”) per common share increased by $0.55 per share to $31.77 at March
31, 2017, compared to $31.22 at December 31, 2016, and increased by
$2.89 per share, or 10%, from $28.88 at March 31, 2016. The quarterly
increase of $0.55 per share in tangible book value was primarily the
result of earnings per share, excluding amortization of intangibles, of
$0.69, offset by the dividend paid to shareholders of $0.33 per share
and the increase in AOCI of $0.11 per share (primarily from the change
in fair value of the available for sale securities portfolio to an
unrealized gain position during the quarter). This increase also
reflects the additional 5.0 million shares issued in the merger with
SBFC, and the additional capital reduced by goodwill and amortizing
intangible asset (CDI).

“Despite $21.0 million in merger-related cost, tangible book value grew
by $0.55 during the first quarter of 2017, to $31.77 per share,” said
John C. Pollok, COO and CFO. “Our estimated total risk-based capital
ratio was 13.3% at March 31, 2017, up from 13.0% at December 31, 2016.”

   
Three Months Ended
Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31,
PERFORMANCE RATIOS 2017 2016 2016 2016 2016
Return on average assets (annualized) 0.68 % 1.08 % 1.28 % 1.13 % 1.15 %
Adjusted return on average assets (annualized) (non-GAAP) (3) 1.25 % 1.26 % 1.30 % 1.32 % 1.18 %
Return on average equity (annualized) 4.74 % 8.50 % 10.00 % 9.02 % 9.18 %
Adjusted return on average equity (annualized) (non-GAAP) (3) 8.67 % 9.84 % 10.17 % 10.48 % 9.38 %
Return on average tangible common equity (annualized) (non-GAAP) (7) 8.87 % 13.42 % 15.86 % 14.59 % 15.04 %
Adjusted return on average tangible common equity (annualized)
(non-GAAP) (3) (7)
15.55 % 15.44 % 16.11 % 16.85 % 15.36 %
Efficiency ratio (tax equivalent) 77.51 % 65.82 % 62.30 % 64.54 % 64.07 %
Adjusted efficiency ratio (Non-GAAP) (9) 61.95 % 61.59 % 61.70 % 60.81 % 63.22 %
Dividend payout ratio (2) 52.82 % 32.06 % 26.71 % 29.61 % 27.64 %
Book value per common share $ 54.05 $ 46.82 $ 46.43 $ 45.64 $ 44.75
Tangible common equity per common share (non-GAAP) (7) $ 31.77 $ 31.22 $ 30.73 $ 29.86 $ 28.88
 
CAPITAL RATIOS
Equity-to-assets 14.17 % 12.75 % 12.78 % 12.66 % 12.48 %
Tangible equity-to-tangible assets (non-GAAP) (7) 8.85 % 8.88 % 8.84 % 8.66 % 8.43 %
Tier 1 common equity (6) 11.9 % 11.7 % 11.5 % 11.2 % 11.6 %
Tier 1 leverage (6) 10.0 % 9.9 % 9.7 % 9.5 % 9.4 %
Tier 1 risk-based capital (6) 12.8 % 12.4 % 12.3 % 12.0 % 12.4 %
Total risk-based capital (6) 13.3 % 13.0 % 12.9 % 12.6 % 13.0 %
 
OTHER DATA
Number of branches 129 118 119 120 128
Number of employees (full-time equivalent basis) 2,277 2,055 2,039 2,032 2,039
 

Asset Quality

   
Ending Balance
Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31,
(Dollars in thousands) 2017 2016 2016 2016 2016
NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonperforming loans $ 13,035 $ 14,745 $ 15,010 $ 18,372 $ 19,235
Non-acquired OREO and other nonperforming assets   5,705     3,998     6,614     6,862     7,779  
Total non-acquired nonperforming assets   18,740     18,743     21,624     25,234     27,014  
Acquired
Acquired nonperforming loans 4,950 4,834 4,633 4,438 3,951
Acquired OREO and other nonperforming assets   14,992     15,026     16,279     16,258     18,946  
Total acquired nonperforming assets   19,942     19,860     20,912     20,696     22,897  
Total nonperforming assets $ 38,682   $ 38,603   $ 42,536   $ 45,930   $ 49,911  
 
Three Months Ended
Mar. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2017 2016 2016 2016 2015
ASSET QUALITY RATIOS:

Allowance for non-acquired loan losses as a percentage of
non-acquired loans (1)

0.69 % 0.71 % 0.75 % 0.77 % 0.79 %

Allowance for non-acquired loan losses as a percentage of
non-acquired nonperforming loans

294.96 % 250.66 % 248.63 % 201.06 % 182.56 %

Net charge-offs on non-acquired loans as a percentage of average
non-acquired loans (annualized) (1)

0.05 % 0.05 % 0.03 % 0.06 % 0.09 %

Net charge-offs on acquired non-credit impaired loans as a
percentage of average acquired non-credit impaired loans
(annualized) (1)

0.08 % 0.06 % 0.07 % 0.07 % 0.08 %

Total nonperforming assets as a percentage of total assets

0.35 % 0.43 % 0.48 % 0.53 % 0.58 %
Excluding Acquired Assets
NPLs as a percentage of period end non-acquired loans (1) 0.23 % 0.28 % 0.30 % 0.38 % 0.43 %

Total nonperforming assets as a percentage of total non-acquired
loans and repossessed assets (1) (4)

0.34 % 0.36 % 0.43 % 0.52 % 0.60 %

Total nonperforming assets as a percentage of total assets (5)

0.17 % 0.21 % 0.25 % 0.29 % 0.31 %
 

During the first quarter of 2017, overall asset quality remained good as
total nonperforming assets were $38.7 million, representing 0.35% of
total assets, which decreased from fourth quarter of 2016 due to the
increase in total assets from the merger with SBFC. Compared to March
31, 2016, NPAs have declined by $11.2 million, or 22.5%, and represented
0.58% of total assets. During the first quarter of 2017, non-acquired
NPAs, excluding acquired loans and acquired OREO, were flat at $18.7
million. Non-acquired nonperforming loans decreased by $1.7 million, or
11.6%, and non-acquired OREO and other assets repossessed increased $1.7
million, or 42.7%. Non-acquired NPAs as a percentage of total
non-acquired loans and repossessed assets declined to 0.34% compared to
0.36% at December 31, 2016.

During the first quarter, the Company reported $5.0 million in
nonperforming loans related to “acquired non-credit impaired loans”.
This was an increase of $116,000 from the balance at December 31, 2016.
Additionally, acquired nonperforming OREO and other assets owned
decreased by $34,000 from December 31, 2016 and declined by $4.0 million
from March 31, 2016.

At March 31, 2017, the allowance for non-acquired loan losses was $38.4
million, or 0.69%, of non-acquired period-end loans down from 0.71% at
December 31, 2016. The current allowance for loan losses provides 2.95
times coverage of period-end non-acquired nonperforming loans, up from
2.51 times at December 31, 2016, and 1.83 times at March 31, 2016. Net
charge-offs within the non-acquired portfolio were $628,000, or 0.05%
annualized, in the first quarter of 2017 compared to $644,000 for the
fourth quarter, or 0.05% annualized. First quarter 2016 net charge-offs
totaled $955,000, or 0.09% annualized. During the first quarter of 2017,
the provision for non-acquired loan losses totaled $2.1 million compared
to $284,000 in the fourth quarter of 2016, and $2.0 million in the first
quarter of 2016. The increase in the non-acquired provision for loan
losses in the first quarter of 2017 resulted from non-acquired loan
growth.

Net charge offs related to “acquired non-credit impaired loans” were
$326,000, or 0.08% annualized, and the Company recorded a provision for
loan losses, accordingly, during the first quarter of 2017.

Contacts

South State Corporation
Media Contact:
Donna Pullen,
803-765-4558
or
Analyst Contact:
Jim Mabry, 843-529-5593

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