Business Wire | Oct 29, 2020 04:16PM EDT

South State Corporation Reports Third Quarter 2020 Results and Declares Quarterly Cash Dividend

Oct. 29, 2020

WINTER HAVEN, Fla.--(BUSINESS WIRE)--Oct. 29, 2020--South State Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and nine-month period ended September 30, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20201029006124/en/

The Company reported consolidated net income of $1.34 per diluted common share for the three months ended September 30, 2020, compared to net loss of ($1.96) per diluted common share for the three months ended June 30, 2020, and compared to $1.50 per diluted common share one year ago. Contributing to the net loss in the second quarter of 2020 was the initial provision for credit losses ("PCL") recorded on acquired non-purchase credit deteriorated ("NonPCD") loans and unfunded commitments ("UFC") which totaled $119.1 million, pre-tax, and merger-related costs of $40.3 million, pre-tax related to the June 7, 2020 merger with CenterState Bank Corporation ("CSFL").

Adjusted net income (non-GAAP) totaled $1.58 per diluted share for the three months ended September 30, 2020, compared to $0.89 per diluted share, in the second quarter of 2020, and compared to $1.49 per diluted share in the year ago period. Adjusted net income in the third quarter of 2020 removes $17.4 million of merger-related costs, after-tax; and in the second quarter of 2020 removed two primary adjustments: (1) the initial PCL on NonPCD loans and UFC of $92.2 million, after-tax, and (2) merger-related costs of $31.2 million, after-tax.

Highlights of the third quarter included:

* Return on Average Equity of 8.3%. * Return on Average Tangible Common Equity of 14.7% (Non-GAAP); Adjusted Return on Average Tangible Common Equity of 17.1% (Non-GAAP). * Return on Average Assets ("ROAA") of 1.00%, and Adjusted ROAA of 1.18% (Non-GAAP). * Third quarter of 2020 Pre-Provision Net Revenue ("PPNR ") was $170 million, or 1.79% PPNR ROAA. This compares to the second quarter of 2020, where on a combined historical basis* (as if the companies had been merged for the full quarter, Non-GAAP), PPNR of $157 million, or 1.68% PPNR ROAA. The second quarter's results only include the operations of CSFL for the final 23 days of the quarter. * Book value per share of $64.34 increased by $0.99 per share from 2Q 2020. * Tangible book value ("TBV") per share of $39.83, up $1.50 from 2Q 2020 (Non-GAAP). * Record quarterly revenue of $385 million (compared to actual prior period and combined historical basis). * Net interest margin, declined by 2 basis points to 3.22% during 3Q 2020 from 2Q 2020. * Significant allowance for credit losses and credit marks on the balance sheet representing 2.58% of total loans (excluding PPP loans). * Net charge-offs of $594,000, or 0.01% annualized. * As of 10/23/2020, loan deferrals totaled $452.4million, or 1.98% of the total loan portfolio, excluding PPP loans and held for sale loans.

"After closing our merger late in the second quarter, we are pleased with our first full quarter of operations as a combined company," said John C. Corbett, Chief Executive Officer. "Our fee businesses continue to perform well, leading us to another record quarter of revenue. While the current environment includes challenges and uncertainties, we look forward to the future with great optimism."

Robert R. Hill, Jr., Executive Chairman added, "The CenterState and South State partnership is about the long-term but you can clearly see the progress being made in the short-term. Progress with technology, products, efficiency, and talent all have us uniquely positioned. We are off to a solid start."

_______________ *The combined historical information presented is based on the reported GAAP results of the Company for three-month period ended June 30, 2020 and historical GAAP results of CSFL for the period from April 1, 2020 through June 7, 2020. The combined historical financial information set forth in this release has not been prepared in accordance with Article 11 of Regulation S-X, and therefore does not reflect any of the pro forma adjustments that would be required thereby.

Loan / Deposit Growth

As of September 30, 2020, we have assisted customers with nearly 20,000 Paycheck Protection Program ("PPP") loans and have an outstanding balance of $2.4 billion. We have recognized $8.5 million in deferred loan fees, net of costs in the income statement during the third quarter of 2020, and $15.9 million on a YTD basis. $53.3 million of net deferred fees remains to be recognized over the life of these loans. During the third quarter, loans (nonacquired and acquired) declined by $261.3 million, or 4.1% annualized. The third quarter decline in loans was centered in construction and development loans and single-family residential mortgage loans. Total deposits increased $12.7 million with core deposit growth totaling $310.6 million, or 4.8% annualized.

Quarterly Cash Dividend

The Company's Board of Directors declared a common stock dividend of $0.47 per share, payable on November 20, 2020 to shareholders of record as of November 13, 2020.

Third Quarter2020 FinancialPerformance

Three Months Ended Nine Months Ended

(Dollars inthousands, Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, Sept. 30,except per sharedata)INCOME STATEMENT 2020 2020 2020 2019 2019 2020 2019

Interest incomeLoans, including $ 280,825 $ 167,707 $ 133,034 $ 132,615 $ 134,953 $ 581,566 $ 402,175 fees (6)Investmentsecurities,federal fundssold and 14,469 12,857 14,766 14,839 15,048 42,092 41,198 securitiespurchased underagreements toresellTotal interest 295,294 180,564 147,800 147,454 150,001 623,658 443,373 incomeInterest expenseDeposits 15,154 12,624 14,437 15,227 16,655 42,215 50,693

Federal fundspurchased,securities sold 9,792 5,383 5,350 5,771 5,973 20,525 14,861 under agreementsto repurchase,and otherborrowingsTotal interest 24,946 18,007 19,787 20,998 22,628 62,740 65,554 expenseNet interest 270,348 162,557 128,013 126,456 127,373 560,918 377,819 incomeProvision for 29,797 151,474 36,533 3,557 4,028 217,804 9,220 credit losses("PCL")Net interestincome after 240,551 11,083 91,480 122,899 123,345 343,114 368,599 provision forloan lossesNoninterest 114,790 54,347 44,132 36,307 37,582 213,269 107,258 incomePre-tax 215,225 134,634 103,118 99,134 96,364 452,977 291,158 operatingexpenseMerger and/or 21,662 40,279 4,129 1,494 -- 66,070 3,192 branch consolid.expenseFederal HomeLoan Bank -- 199 -- -- -- 199 134 advancesprepayment feePension plan -- -- -- -- -- -- 9,526 terminationexpenseTotal 236,887 175,112 107,247 100,628 96,364 519,246 304,010 noninterestexpenseIncome (loss) 118,454 (109,682 ) 28,365 58,578 64,563 37,137 171,847 before provisionfor income taxesProvision for 23,233 (24,747 ) 4,255 9,487 12,998 2,741 34,455 income taxesNet income $ 95,221 $ (84,935 ) $ 24,110 $ 49,091 $ 51,565 $ 34,396 $ 137,392 (loss) Adjusted netincome(non-GAAP) (3)Net income $ 95,221 $ (84,935 ) $ 24,110 $ 49,091 $ 51,565 $ 34,396 $ 137,392 (loss) (GAAP)Securities (12 ) -- -- (20 ) (349 ) (12 ) (2,152 )gains, net oftaxFHLB prepayment -- 154 -- -- -- 154 107 penaltyPension plantermination -- -- -- -- -- -- 7,641 expense, net oftaxInitialprovision for -- 92,212 -- -- -- 92,212 -- credit losses -NonPCD loans andUFCMerger and/or 17,413 31,191 3,510 1,252 - 52,114 2,449 branch consolid.expenseAdjusted net $ 112,622 $ 38,622 $ 27,620 $ 50,323 $ 51,216 $ 178,864 $ 145,437 income(non-GAAP) Basic earnings $ 1.34 $ (1.96 ) $ 0.72 $ 1.46 $ 1.51 $ 0.70 $ 3.94 (loss) percommon shareDiluted earnings $ 1.34 $ (1.96 ) $ 0.71 $ 1.45 $ 1.50 $ 0.69 $ 3.92 (loss) percommon shareAdjusted netincome per $ 1.59 $ 0.89 $ 0.82 $ 1.49 $ 1.50 $ 3.63 $ 4.17 common share -Basic (non-GAAP)(3)Adjusted netincome per $ 1.58 $ 0.89 $ 0.82 $ 1.48 $ 1.49 $ 3.60 $ 4.15 common share -Diluted(non-GAAP) (3)Dividends per $ 0.47 $ 0.47 $ 0.47 $ 0.46 $ 0.43 $ 1.41 $ 1.21 common shareBasicweighted-average 70,905,027 43,317,736 33,566,051 33,677,851 34,056,771 49,330,267 34,858,503 common sharesoutstandingDilutedweighted-average 71,075,866 43,317,736 33,804,908 33,964,216 34,300,206 49,635,882 35,068,610 common sharesoutstandingAdjusted dilutedweighted-average 71,075,866 43,606,333 33,804,908 33,964,216 34,300,206 49,635,882 35,068,610 common sharesoutstanding *Effective tax 19.61 % 22.56 % 15.00 % 16.20 % 20.13 % 7.38 % 20.05 %rate *Adjusted diluted weighted average common shares was calculated with the resultof adjusted net income (non-GAAP).

The Company reported consolidated net income of $95.2 million, or $1.34 per diluted common share for the three-months ended September 30, 2020, an increase of $180.2 million, or $3.30 per diluted common share, from the second quarter of 2020. The net loss in the second quarter of 2020 was the result of the initial PCL recorded on the acquired NonPCD loans and the merger-related cost incurred from the merger with CSFL. Weighted-average diluted shares increased by 27.8 million shares, or 64.1%, compared to the second quarter of 2020, due primarily to the merger with CSFL in early June, in which the Company issued 37.3 million shares. These shares were outstanding all of the third quarter of 2020 compared to only 23 days in the second quarter of 2020. Net interest income increased by $107.8 million in the third quarter of 2020, compared to the second quarter of 2020, due to the full quarter impact of the merger with CSFL in the third quarter of 2020 compared to only 23 days in the second quarter of 2020. Interest income on acquired loans included $22.4 million of loan accretion. The PCL decreased by $121.7 million, due to the PCL on NonPCD loans and unfunded commitments associated with CSFL merger that were recognized in the second quarter of 2020. Noninterest income in was up $60.4 million compared to second quarter of 2020 to $114.8 million in the third quarter of 2020, due to the strong results from mortgage banking (primarily within the secondary market) and correspondent banking and capital markets income. Correspondent banking was added to the Company from the merger with CSFL and contributed $24.4 million in the third quarter of 2020 compared to $8.3 million in the month of June during the second quarter of 2020. Noninterest expense was higher in the third quarter of 2020 compared to the second quarter of 2020 by $61.8 million due primarily to the full quarter impact of the expenses of CSFL. Merger-related expense were lower by $18.6 million compared to the second quarter of 2020 when all professional services were incurred at legal close in early June of 2020. Adjusted noninterest expense was up approximately 59.9% over second quarter 2020, which relates directly to the addition of CSFL operating expense for all of the third quarter of 2020. The efficiency ratio (Non-GAAP) and adjusted efficiency ratio were 61.4% and 55.8% in 3Q 2020, respectively, compared to 80.5% and 61.9% in 2Q 2020, respectively.

Current Expected Credit Losses ("CECL")

Effective January 1, 2020, the Company adopted ASU 2016-13 ("CECL"), which impacts the allowance for credit losses and the liability for UFC. Below is a table showing the roll forward of the ACL and UFC for the third quarter of 2020:

Allowance for Credit Losses ("ACL & UFC")

NonPCD ACL PCD ACL Total UFC

Ending balance 6/30 $ 280,301 $ 154,307 $ 434,608 $ 21,051 /2020Measurement period (1,542 ) (1,542 )adj - PCD loansfrom CSFL mergerCharge offs (1,897 ) (1,897 )

Acquired charge (886 ) (1,859 ) (2,745 )offsRecoveries 1,220 1,220

Acquired recoveries 691 2,137 2,828

Provision for 7,077 610 7,687 22,110 credit lossesEnding balance 9/30 $ 286,506 $ 153,653 $ 440,159 $ 43,161 /2020 Period end loans $ 22,094,095 $ 3,143,720 $ 25,237,815 N/A (includes PPPLoans)Reserve to Loans 1.30 % 4.89 % 1.74 % N/A (includes PPPLoans)Period end loans $ 19,742,374 $ 3,143,720 $ 22,886,094 N/A (excludes PPPLoans)Reserve to Loans 1.45 % 4.89 % 1.92 % N/A (excludes PPPLoans)Unfunded $ 4,584,160 commitments (offbalance sheet) *Reserve to unfunded 0.94 %commitments (offbalance sheet) * Unfunded commitments excludes unconditionally cancelable commitments andletters of credit.

The ACL related to all loans totals $440.2 million compared to $434.6 million at June 30, 2020, and was recorded as a contra asset on its own line within the balance sheet, while the liability for UFC of $43.2 million was recorded on its own line in the liabilities section of the balance sheet. The total provision for credit losses recorded in the third quarter of 2020 was $29.8 million, including $22.1 million related to the liability for unfunded commitments (which was the result of a change in the methodology with the merger of CSFL and the Company). In the second quarter of 2020, (including the initial provision for credit losses related to acquired NonPCD loans and UFC from CSFL) the total provision for credit losses was $151.5 million.

Income Tax Expense

During the third quarter of 2020, our effective tax rate decreased to 19.61% from 22.56% in the second quarter of 2020 and from 20.13% in the third quarter of 2019. The primary reason for the decline relates to the fact that the Company was back in a pre-tax income position in 3Q 2020 compared to a pre-tax loss position in 2Q 2020, and the impact of the rate reducing items on the effective tax rate. The lower effective tax rate in 3Q 2020 compared to 3Q 2019 was mainly due to an increase in federal tax credits, as well as additional tax-exempt income resulting from the merger with CSFL. Lastly, an additional income tax benefit was recorded when legacy South State's deferred taxes were revalued as a result of the merger. This was slightly offset by an increase in pre-tax income compared to the same period in 2019.

Balance Sheet andCapital

(dollars in thousands, Ending Balanceexcept per share andshare data) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,

BALANCE SHEET 2020 2020 2020 2019 2019

AssetsCash and cash $ 4,471,639 $ 4,363,708 $ 1,262,836 $ 688,704 $ 719,194 equivalentsInvestment securities:Securities available 3,561,929 3,137,718 1,971,195 1,956,047 1,813,134 for sale, at fairvalueOther investments 185,199 133,924 62,994 49,124 49,124

Total investment 3,747,128 3,271,642 2,034,189 2,005,171 1,862,258 securitiesLoans held for sale 456,141 603,275 71,719 59,363 87,393

Loans:Acquired - PCD 3,143,761 3,323,754 311,271 356,782 390,714

Acquired - NonPCD 10,557,968 11,577,833 1,632,700 1,760,427 1,965,603

Non-acquired 11,536,086 10,597,560 9,562,919 9,252,831 8,928,512

Less allowance for (440,159 ) (434,608 ) (144,785 ) (56,927 ) (54,937 )loan lossesLoans, net 24,797,656 25,064,539 11,362,105 11,313,113 11,229,892

Bank property held for 24,504 25,541 5,412 5,425 8,424 saleOther real estate 13,480 18,016 7,432 6,539 4,991 owned ("OREO")Premises and 626,259 627,943 312,151 317,321 323,506 equipment, netBank owned life 556,475 556,807 233,849 234,567 233,206 insuranceDeferred tax asset 107,500 107,532 46,365 31,316 27,844

Mortgage servicing 34,578 25,441 26,365 30,525 28,674 rightsCore deposit and other 171,637 170,911 46,809 49,816 53,083 intangiblesGoodwill 1,566,524 1,603,383 1,002,900 1,002,900 1,002,900

Other assets 1,245,845 1,286,618 230,779 176,332 170,717

Total assets $ 37,819,366 $ 37,725,356 $ 16,642,911 $ 15,921,092 $ 15,752,082

Liabilities andShareholders' EquityDeposits:Noninterest-bearing $ 9,681,095 $ 9,915,700 $ 3,367,422 $ 3,245,306 $ 3,307,532

Interest-bearing 20,288,859 20,041,585 8,977,125 8,931,790 8,716,255

Total deposits 29,969,954 29,957,285 12,344,547 12,177,096 12,023,787

Federal fundspurchased and 706,723 720,479 325,723 298,741 269,072 securities sold underagreements torepurchaseOther borrowings 1,089,637 1,089,279 1,316,100 815,936 815,771

Reserve for unfunded 43,161 21,051 8,555 335 335 commitmentsOther liabilities 1,446,478 1,445,411 326,943 255,971 292,161

Total liabilities 33,255,953 33,233,506 14,321,868 13,548,079 13,401,126

Shareholders' equity:Preferred stock - $.01 -- -- -- -- -- par value; authorized10,000,000 sharesCommon stock - $2.50 177,321 177,268 83,611 84,361 84,757 par value; authorized160,000,000 sharesSurplus 3,764,482 3,759,166 1,584,322 1,607,740 1,617,004

Retained earnings 604,564 542,677 643,345 679,895 646,325

Accumulated other 17,046 12,739 9,765 1,017 2,870 comprehensive incomeTotal shareholders' 4,563,413 4,491,850 2,321,043 2,373,013 2,350,956 equityTotal liabilities and $ 37,819,366 $ 37,725,356 $ 16,642,911 $ 15,921,092 $ 15,752,082 shareholders' equity Common shares issued 70,928,304 70,907,119 33,444,236 33,744,385 33,902,726 and outstanding At September 30, 2020, the Company's total assets were $37.8 billion, an increase of $94.0 million from June 30, 2020. Below are highlights of certain line items:

1. Cash and cash equivalents increased by $107.9 million to $4.5 billion. 2. Investment securities portfolio increased by $476.0 million, and totaled $3.7 billion, representing 9.9% of total assets, an increase from 8.7% at June 30, 2020. 3. Total loans decreased by $261.3 million, with non-acquired loans increasing by $938.5 million and acquired loans decreasing by $1.2 billion. 4. Goodwill decreased by $36.9 million from measurement period adjustments related to fair value mark of loans (reduced loan discount) totaling $29.8 million, an intangible related to correspondent banking business acquired in the CSFL merger of $10.0 million, fair value adjustments to bank property of $6.0 million, and reduced deferred tax asset of $9.0 million 5. Non-interest bearing deposits decreased by $234.6 million. 6. Interest bearing deposits grew by $247.3 million. 7. Equity increased by $71.6 million during the third quarter from the following: (a) net income of $95.2 million, (b) other comprehensive income increasing by $4.3 million and (c) impact of equity awards increasing capital by $5.4 million, which were all partially offset by (d) dividends of $33.3 million.

The Company's book value per common share increased to $64.34 per share at September 30, 2020, compared to $63.35 per share at June 30, 2020 and decreased compared to $69.34 at September 30, 2019. TBV per common share increased by $1.50 per share to $39.83 at September 30, 2020, compared to $38.33 at June 30, 2020, and increased by $1.63 per share, or 4.28%, from $38.20 at September 30, 2019. Total tangible equity (capital) increased by $107.7 million in the third quarter of 2020.

The following table presents a summary of the loan portfolio by type (dollars in thousands):

Ending Balance

Sept. 30, June 30, March 31, Dec. 31, Sept. 30,

LOAN 2020 2020 2020 2019 2019PORTFOLIO Construction $ 1,840,111 $ 1,999,062 $ 1,105,308 $ 1,016,692 $ 1,024,627and landdevelopmentCommercialnon-owner 5,936,372 6,021,317 2,371,371 2,322,590 2,356,335occupied realestateCommercialowner 4,846,020 4,762,520 2,177,738 2,158,701 2,093,795occupied realestateConsumerowner 4,311,186 4,421,247 2,665,405 2,704,405 2,757,424occupied realestateHome equity 1,347,798 1,378,406 758,482 758,020 773,363loansCommercial 5,419,120 5,341,363 1,418,421 1,386,303 1,261,527andindustrialOther income 629,497 650,237 327,696 346,554 361,879producingpropertyConsumer non 900,171 916,623 674,791 662,883 654,422real estateOther 7,540 8,372 7,678 13,892 1,457

Total loans $ 25,237,815 $ 25,499,147 $ 11,506,890 $ 11,370,040 $ 11,284,829

The following table presents a summary of the deposit types (dollars in thousands):

Ending Balance

Sept. 30, June 30, March 31, Dec. 31, Sept. 30,

DEPOSITS 2020 2020 2020 2019 2019

Type

Demand $ 9,681,095 $ 9,915,700 $ 3,367,422 $ 3,245,306 $ 3,307,532depositsInterest 6,414,905 6,192,915 2,963,679 2,989,467 2,812,912bearingdepositsSavings 2,618,877 2,503,514 1,337,730 1,309,896 1,317,705

Money 7,404,299 7,196,456 3,029,769 2,977,029 2,869,217marketTime 3,850,778 4,148,700 1,645,947 1,655,398 1,716,421deposits Total $ 29,969,954 $ 29,957,285 $ 12,344,547 $ 12,177,096 $ 12,023,787deposits Coredeposits 26,119,176 25,808,585 10,698,600 10,521,698 10,307,366(excludesCDs) Merger with CSFL

The merger with CSFL closed on June 7, 2020. The Company issued 37,271,069 shares using an exchange ratio of 0.3001. The total purchase price was $2.262 billion. The initial (preliminary) allocation of the purchase price to the fair value of assets and liabilities acquired was completed as of June 30, 2020. Below is a table that reflects that initial allocation of the purchase price and additional measurement period adjustments recorded during the third quarter of 2020:

South State Fair ValueCorporation of

CenterState Bank Net AssetsCorporation

Merger Date of June 7, Measurement Acquired at2020

As Recorded Fair Value Period Date of

(Dollars in thousands) by CSFL Adjustments Adjustments Acquisition

AssetsCash and cash $ 2,566,450 $ -- $ 2,566,450equivalentsInvestment securities 1,188,403 5,507 -- 1,193,910

Loans held for sale 453,578 -- 453,578

Loans 12,969,091 (48,342 ) 29,834 12,950,583

Premises and equipment 324,396 2,392 5,999 332,787

Intangible assets 1,294,211 (1,163,349 ) 10,000 140,862

Other real estate 10,849 (791 ) (49 ) 10,009owned and repossessedassetsBank owned life 333,053 -- 333,053insuranceDeferred tax asset 54,122 (8,681 ) (8,952 ) 36,489

Other assets 1,061,136 (604 ) 26 1,060,558

Total assets $ 20,255,289 $ (1,213,868 ) $ 36,858 $ 19,078,279

LiabilitiesDeposits:Noninterest-bearing $ 5,291,443 $ -- $ -- $ 5,291,443

Interest-bearing 10,312,370 19,702 -- 10,332,072

Total deposits 15,603,813 19,702 -- 15,623,515

Federal fundspurchased and 401,546 -- -- 401,546securities sold underagreements torepurchaseOther borrowings 278,900 (7,401 ) -- 271,499

Other liabilities 1,088,048 (4,592 ) -- 1,083,456

Total liabilities 17,372,307 7,709 -- 17,380,016

Net identifiable 2,882,982 (1,221,577 ) 36,858 1,698,263assets acquired overliabilities assumedGoodwill 600,483 (36,858 ) 563,625

Net assets acquired $ 2,882,982 $ (621,094 ) $ -- $ 2,261,888over liabilitiesassumed Consideration:South State 37,271,069Corporation commonshares issuedPurchase price per $ 60.27share of the Company'scommon stockCompany common stockissued and cash $ 2,246,401exchanged forfractional sharesStock Option 8,080ConversionRestricted Stock 7,407ConversionFair value of total $ 2,261,888considerationtransferred The measurement period adjustments related to the merger between the Company and CSFL include the following:

* Goodwill was reduced by $36.9 million with the measurement period adjustments recorded during the third quarter of 2020, resulting in total goodwill from the merger with CSFL of $563.6 million. * Lower loan mark (discount) of $29.8 million from an updated loan valuation ($28.3 million) and revised lower loan marks on certain PCD loans ($1.5 million). * The fair value adjustments for certain premises where updated appraisals were received and totaled $6.0 million. * Identification of an intangible related to the correspondent banking business totaling $10.0 million. * Deferred tax liability recorded for each of these adjustments totaling $9.0 million.

In addition, with respect to the merger and conversion:

* Merger cost incurred during the third quarter was as expected at $21.7 million, and included contract terminations, professional fees, and severance and support incentives to personnel. * The merger integration, conversion, and cost savings identification process continues to be on schedule.

Performance andCapital Ratios

Three Months Ended Nine Months Ended

Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, Sept. Sept. 30, 30,

PERFORMANCE RATIOS 2020 2020 2020 2019 2019 2020 2019

Return on average 1.00 % -1.49 % 0.60 % 1.23 % 1.31 % 0.18 % 1.20 %assets(annualized)Adjusted return onaverage assets 1.18 % 0.68 % 0.69 % 1.26 % 1.30 % 0.93 % 1.27 %(annualized)(non-GAAP) (3)Return on average 8.31 % -11.78 % 4.15 % 8.26 % 8.70 % 1.41 % 7.76 %equity(annualized)Adjusted return onaverage equity 9.83 % 5.36 % 4.75 % 8.47 % 8.64 % 7.31 % 8.22 %(annualized)(non-GAAP) (3)Return on averagetangible common 14.66 % -19.71 % 8.35 % 15.79 % 16.62 % 3.51 % 14.88 %equity(annualized)(non-GAAP) (5)Adjusted return onaverage tangible 17.14 % 10.23 % 9.45 % 16.17 % 16.51 % 13.58 % 15.71 %common equity(annualized)(non-GAAP) (3) (5)Efficiency ratio 61.39 % 80.52 % 62.11 % 61.64 % 58.40 % 66.82 % 62.82 %(tax equivalent)Adjusted 55.78 % 61.91 % 59.72 % 60.73 % 58.40 % 58.29 % 60.19 %efficiency ratio(non-GAAP) (7)Dividend payout 35.01 % N/A 65.70 % 31.62 % 28.48 % 188.71 % 30.70 %ratio (2)Book value per $ 64.34 $ 63.35 $ 69.40 $ 70.32 $ 69.34 common shareTangible commonequity per common $ 39.83 $ 38.33 $ 38.01 $ 39.13 $ 38.20 share (non-GAAP)(5) CAPITAL RATIOSEquity-to-assets 12.07 % 11.91 % 13.95 % 14.90 % 14.92 %

Tangibleequity-to-tangible 7.83 % 7.56 % 8.15 % 8.88 % 8.81 %assets (non-GAAP)(5)Tier 1 common 11.5 % 10.7 % 11.0 % 11.3 % 11.2 %equity (4) *Tier 1 leverage 8.1 % 13.3 % 9.5 % 9.7 % 9.7 %(4) *Tier 1 risk-based 11.5 % 10.7 % 12.0 % 12.3 % 12.2 %capital (4) *Total risk-based 13.9 % 12.9 % 12.7 % 12.8 % 12.7 %capital (4) * OTHER DATANumber of branches 305 305 155 155 157

Number ofemployees 5,266 5,369 2,583 2,547 2,544 (full-timeequivalent basis) *The regulatory capital ratios presented above include the assumption of the transitional method relative to the CAREs Act in relief of COVID-19 pandemic on the economy and financial institutions in the United States. The referenced relief allows a total five-year "phase in" of the CECL impact on capital and relief over the next two years for the impact on the allowance for credit losses resulting from COVID-19.

Asset Quality

Ending Balance

Sept. 30, June 30, Mar. 31, Dec. 31, Sept 30,

(Dollars in 2020 2020 2020 2019 2019thousands)NONPERFORMINGASSETS:Non-acquiredNon-acquired $ 22,463 $ 22,883 $ 23,912 $ 22,816 $ 19,187 nonperformingloansNon-acquired OREOand other 825 1,689 941 1,011 1,464 nonperformingassetsTotal non-acquired 23,288 24,572 24,853 23,827 20,651 nonperformingassetsAcquiredAcquirednonperformingloans (2019 89,974 100,399 32,791 11,114 9,596 periods acquirednon-creditimpaired loansonly) *Acquired OREO andother 12,904 16,987 6,802 5,848 7,207 nonperformingassetsTotal acquired 102,878 117,386 39,593 16,962 16,803 nonperformingassetsTotal $ 126,166 $ 141,958 $ 64,446 $ 40,789 $ 37,454 nonperformingassets * Three Months Ended

Sept. 30, June 30, Mar. 31, Dec. 31, Sept 30,

2020 2020 2020 2019 2019

ASSET QUALITYRATIOS:Allowance fornon-acquired loanlosses as a N/A N/A N/A 0.62 % 0.62 %percentage ofnon-acquired loans(1)Allowance forcredit losses as a 1.74 % 1.70 % 1.26 % N/A N/A percentage ofloansAllowance forcredit losses as a 1.92 % 1.88 % N/A N/A N/A percentage ofloans, excludingPPP loansAllowance fornon-acquired loanlosses as a N/A N/A N/A 249.50 % 286.32 %percentage ofnon-acquirednonperformingloansAllowance forcredit losses as a 391.47 % 352.53 % 255.34 % N/A N/A percentage ofnonperformingloans *Net charge-offs onnon-acquired loans N/A N/A N/A 0.06 % 0.05 %as a percentage ofaverage(annualized) (1)Net charge-offs asa percentage of 0.01 % 0.00 % 0.05 % N/A N/A average loans(annualized)Net charge-offs onacquired loans asa percentage of N/A N/A N/A -0.01 % 0.15 %average acquiredloans (annualized)(1)Totalnonperforming 0.33 % 0.38 % 0.39 % 0.26 % 0.24 %assets as apercentage oftotal assets *Nonperformingloans as a 0.45 % 0.48 % 0.49 % 0.30 % 0.25 %percentage ofperiod end loans * *Total nonperforming assets now include nonaccrual loans that are purchase credit deteriorated ("PCD loans"). In prior periods, these loans, which were called acquired credit impaired ("ACI") loans, were excluded from nonperforming assets. The adoption of CECL resulted in the discontinuation of the pool-level accounting for ACI loans and replaced it with loan-level evaluation for PCD nonaccrual status. The Company's nonperforming loans increased by $21.0 million in the first quarter of 2020 from these loans. The Company has not assumed or taken on any additional risk relative to these assets. With the merger with CSFL, the amount of acquired nonaccruals loans increased by approximately $69.9 million.

Total nonperforming assets decreased by $15.8 million to $126.2 million, representing 0.33% of total assets, a decrease of 5 basis points compared to June 30, 2020. The decrease was due primarily to the reduction in nonperforming assets acquired, both in loans ($10.4 million) and in OREO ($4.1 million). Non-acquired non-performing assets decreased by $1.3 million during the third quarter of 2020 to $23.3 million at September 30, 2020. The ACL as a percentage of total nonperforming loans was 391% at September 30, 2020, up from 353% of total nonperforming loans at June 30, 2020.

At September 30, 2020, the ACL was $440.2 million, or 1.74%, of period end loans. Additionally, unfunded commitments have a reserve of $43.2 million, or 0.94% of unfunded commitments (off balance sheet). The ACL was $434.6 million, or 1.70%, of period end loans at June 30, 2020. Net charge-offs totaled $594,000, or 0.01%, annualized of average total loans, in the third quarter of 2020 compared to $101,000, or 0.00%, annualized in the second quarter of 2020.

During the third quarter of 2020, the provision for credit losses totaled $29.8 million for the loan portfolio compared to $151.5 million for the provision for credit losses in the second quarter of 2020. The significant provision in the second quarter of 2020 was the result of the merger with CSFL and the initial provision for credit losses recorded on NonPCD loans acquired, the unfunded commitment liability related to CSFL, and the additional PCL related to non-acquired South State loans totaled $28.4 million. This initial PCL on NonPCD acquired loans and UFC totaled $119.1 million. The total provision for credit losses of $29.8 million recorded in the third quarter of 2020 included $22.1 million related to the liability for unfunded commitments and $7.7 million from the expected lifetime losses of loans outstanding. Prior to the merger, each of CSFL and the Company ran separate CECL models. The CECL calculation at June 30, 2020 was the result of combining the results of the two models. During the third quarter, the Company consolidated into one CECL model. This change led to an increase in the reserve for unfunded commitments since the consolidated model used a differing methodology from that used for 2Q 2020.

Total OREO decreased during the third quarter of 2020 to $13.5 million, a $4.5 million decrease from the balance at June 30, 2020.

Net Interest Incomeand Margin

Three Months Ended

September 30, 2020 June 30, 2020 September 30, 2019

(Dollars in thousands) Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/

YIELD ANALYSIS Balance Expense Rate Balance Expense Rate Balance Expense Rate

Interest-EarningAssets:Federal funds sold, $ 4,406,376 $ 1,215 0.11 % $ 2,033,910 $ 432 0.09 % $ 491,627 $ 2,676 2.16 %reverse repo, and timedepositsInvestment securities 2,792,649 11,118 1.58 % 2,109,609 10,920 2.08 % 1,638,461 10,785 2.61 %(taxable)Investment securities 435,339 2,136 1.95 % 197,862 1,505 3.06 % 181,434 1,587 3.47 %(tax-exempt)Loans held for sale 556,670 4,151 2.97 % 203,267 1,498 2.96 % 58,829 541 3.65 %

Loans 25,312,632 276,674 4.35 % 15,717,387 166,209 4.25 % 11,225,593 134,412 4.75 %

Total interest-earning 33,503,666 295,294 3.51 % 20,262,035 180,564 3.58 % 13,595,944 150,001 4.38 %assetsNoninterest-earning 4,361,551 2,636,890 2,014,172assetsTotal Assets $ 37,865,217 $ 22,898,925 $ 15,610,116

Interest-BearingLiabilities:Transaction and money $ 13,671,430 $ 7,853 0.23 % $ 8,132,276 $ 5,096 0.25 % $ 5,581,057 $ 8,932 0.63 %market accountsSavings deposits 2,570,500 584 0.09 % 1,699,377 336 0.08 % 1,323,377 1,027 0.31 %

Certificates and other 4,007,542 6,717 0.67 % 2,321,684 7,192 1.25 % 1,730,567 6,696 1.54 %time depositsFederal funds 710,369 509 0.29 % 415,304 391 0.38 % 272,900 612 0.89 %purchased andrepurchase agreementsOther borrowings 1,089,399 9,283 3.39 % 1,216,884 4,992 1.65 % 816,188 5,361 2.61 %

Total interest-bearing 22,049,240 24,946 0.45 % 13,785,525 18,007 0.53 % 9,724,089 22,628 0.92 %liabilitiesNoninterest-bearing 11,259,916 6,212,957 3,534,873liabilitiesShareholders' equity 4,556,061 2,900,443 2,351,154

Total Non-IBL and 15,815,977 9,113,400 5,886,027shareholders' equityTotal liabilities and $ 37,865,217 $ 22,898,925 $ 15,610,116shareholders' equityNet interest income $ 270,348 3.21 % $ 162,557 3.23 % $ 127,373 3.72 %and margin (NON-TAXEQUIV.)Net interest margin 3.22 % 3.24 % 3.73 %(TAX EQUIVALENT)Total Deposit Cost of 0.20 % 0.29 % 0.56 %FundsOverall Cost of Funds 0.31 % 0.37 % 0.69 %(including demanddeposits) The net interest margin ("NIM") declined by 2 basis points to 3.22% at September 30, 2020, from 3.24% at June 30, 2020, and declined from 3.73% from September 30, 2019. These declines were the result of the current low interest rate environment from the COVID-19 pandemic and the stimulus from the CARES Act. The yield on the acquired loan portfolio declined to 4.76% compared 5.08% in the second quarter of 2020, while the non-acquired loan portfolio only declined 1 basis point to 3.83% from 3.84% in the second quarter of 2020. Deposit cost declined by 9 basis points to 20 basis points in the third quarter of 2020. Including the impact of noninterest bearing deposits, the Company's overall cost of funds declined to 31 basis points for the third quarter of 2020 compared to 37 basis points in the second quarter of 2020, and decreased from 69 basis points in the year ago period. The average balances for each category and the totals increased significantly in the third quarter of 2020, due primarily from the full quarter impact of the CSFL merger compared to only 23 days included in the second quarter of 2020.

Acquired Loans and Loan Accretion

With the adoption of CECL, loan accretion, accretable yield, and the related discounts are now consistently accounted for within the balance sheet and income statement. Acquired loans reflected the following results in the third quarter of 2020:

* Contractual interest income totaled $146.3 million, or 4.13% yield. * Loan accretion totaled $22.4 million, compared to $10.1 million in the second quarter of 2020. The amount of accretion recognized in third quarter from the CSFL acquired loan portfolio totaled $14.7 million compared to $2.9 million in the second quarter which only included 23 days from the merger closing date. * Including the loan accretion, total interest income was $168.8 million on acquired loans resulting in 4.76% yield during the third quarter of 2020, down from 5.08% in the second quarter of 2020.

The table below reflects the remaining discount on acquired loans, which will be accreted into loan interest income over the contractual life of the loan and includes the discount recorded from the merger with CSFL, including a third quarter of 2020 measurement period adjustment primarily related to an updated loan valuation (dollars in thousands):

Unrecognized discount on acquired loansBeginning balance, June 30, 2020 $ 160,802

Measurement period adjustment of discount from the CSFL merger (27,996 )

Loan accretion recognized in 3Q 2020 (22,445 )

Ending balance, September 30, 2020 $ 110,361

Noninterest Income and Expense

Three Months Ended

Nine Months Ended

Sept. 30,

June 30,

Mar. 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

(Dollars in thousands)2020

2020

2020

2019

2019

2020

2019

Noninterest income:Fees on deposit accounts$

24,346

$

16,679

$

18,141

$

19,161

$

19,725

$

59,166

$

56,274

Mortgage banking income48,022

18,371

14,647

3,757

6,115

81,040

13,807

Trust and investment services income7,404

7,138

7,389

6,935

7,320

21,931

22,309

Securities gains, net15

--

--

24

437

15

2,687

Correspondent banking and capital market income26,432

10,067

493

1,357

690

36,992

1,536

Bank owned life insurance income4,127

1,381

2,530

1,361

1,498

8,038

4,399

Recoveries of fully charged off acquired loans--

--

--

2,232

1,401

--

4,615

Other4,444

711

932

1,480

396

6,087

1,631

Total noninterest income$

114,790

$

54,347

$

44,132

$

36,307

$

37,582

$

213,269

$

107,258

Noninterest expense:Salaries and employee benefits$

134,919

$

81,720

$

60,978

$

58,218

$

59,551

$

277,617

$

176,529

Pension plan termination expense-

-

-

--

--

-

9,526

Occupancy expense23,845

15,959

12,287

12,113

11,883

52,091

35,344

Information services expense18,855

12,155

9,306

8,919

8,878

40,316

26,558

FHLB prepayment penalty--

199

--

--

--

199

134

OREO expense and loan related1,146

1,107

587

1,013

597

2,840

2,229

Business development and staff related2,599

1,447

2,244

2,905

2,018

6,290

6,477

Amortization of intangibles9,560

4,665

3,007

3,267

3,268

17,232

9,817

Professional fees4,385

2,848

2,494

2,862

2,442

9,727

7,463

Supplies, printing and postage expense2,755

1,610

1,505

1,464

1,418

5,870

4,417

FDIC assessment and other regulatory charges2,849

2,403

2,058

1,327

228

7,310

3,218

Advertising and marketing1,203

531

814

1,491

1,052

2,548

2,818

Other operating expenses13,109

10,189

7,838

5,555

5,029

31,136

16,422

Branch consolid. or merger / convers related exp.21,662

40,279

4,129

1,494

-

66,070

3,058

Merger and branding related expense--

--

--

--

--

--

--

Total noninterest expense$

236,887

$

175,112

$

107,247

$

100,628

$

96,364

$

519,246

$

304,010

Noninterest income totaled $114.8 million for the third quarter of 2020 compared to $54.3 million in the second quarter of 2020, an increase of $60.4 million. This large increase within all categories was due to the inclusion of income for the full quarter from the merger with CSFL compared to only 23 days in the second quarter of 2020. The largest increases were $29.7 million in mortgage banking income and $16.4 million in correspondent banking and capital markets income. Mortgage banking income improved by $23.5 million from the gains within the secondary market, net of commissions; and from $6.2 million of income associated with the MSR, net of the hedge.

Compared to the third quarter of 2019, noninterest income increased by $77.2 million due to the impact of merger with CSFL. Correspondent banking and capital markets income discussed above improved by $25.7 million and mortgage banking income increased by $41.9 million. Secondary market mortgage income was up $39.9 million from the increase in the gain on sale of mortgage loans, from both higher volume of loans and at higher margins. The other categories of noninterest income all increased, except for recoveries from acquired loans, which now flow through the allowance for credit losses, and resulted in a $1.4 million decrease.

Noninterest expense was $236.9 million in the third quarter of 2020, an increase of $61.8 million from $175.1 million in the second quarter of 2020. The increase was related to the full quarter impact of expense associated with the merger with CSFL (compared to only 23 days in 2Q 2020). Merger-related costs totaled $21.7 million for the quarter and was a decrease of $18.6 million from the second quarter of 2020. Adjusted noninterest expense totaled $215.2 million in 3Q 2020, which was $80.6 million higher than second quarter of 2020, and resulted in an adjusted efficiency ratio of 55.8% compared to 61.9%, in second quarter of 2020.

Compared to the third quarter of 2019, noninterest expense was higher by $140.5 million. The increase was due to the merger with CSFL in June 2020, and the inclusion of the combined company expenses for all of the third quarter of 2020. In addition, the third quarter of 2020 includes $21.7 million of additional merger-related cost. Adjusted noninterest expense (non-GAAP) increased $118.9 million, compared to the third quarter of 2019.

Conference Call

The Company will announce its third quarter 2020 earnings results in a news release after the market closes on October 29, 2020. At 10:30 a.m. Eastern Time on October 30, 2020, the Company will host a conference call to discuss its third quarter results. Callers wishing to participate may call toll-free by dialing 877-506-9272. Participants may also pre-register for the conference by navigating to https://dpregister.com/sreg/10148509/da2c128419. A dial in number and unique PIN will be provided upon completion of registration. Alternatively, individuals may listen to the live webcast of the presentation by visiting the link at the Company's website at www.SouthStateBank.com. An audio replay of the live webcast is expected to be available by the evening of October 30, 2020 through the Investor Relations section of www.SouthStateBank.com.

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

South State Corporation is a financial services company headquartered in Winter Haven, Florida. South State Bank, N.A., the company's nationally chartered bank subsidiary, provides consumer, commercial, mortgage and wealth management solutions to more than one million customers throughout Florida, Alabama, Georgia, the Carolinas and Virginia. The bank also serves clients coast to coast through its correspondent banking division. Additional information is available at SouthStateBank.com.

Non-GAAP Measures

Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables that 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.

NoninterestIncome andExpense

Three Months Ended Nine Months Ended

Sept. 30, June 30, Mar. 31, Dec. 31, Sept. Sept. 30, Sept. 30, 30,

(Dollars in 2020 2020 2020 2019 2019 2020 2019thousands)Noninterestincome:Fees on $ 24,346 $ 16,679 $ 18,141 $ 19,161 $ 19,725 $ 59,166 $ 56,274depositaccountsMortgage 48,022 18,371 14,647 3,757 6,115 81,040 13,807bankingincomeTrust andinvestment 7,404 7,138 7,389 6,935 7,320 21,931 22,309servicesincomeSecurities 15 -- -- 24 437 15 2,687gains, netCorrespondentbanking and 26,432 10,067 493 1,357 690 36,992 1,536capitalmarket incomeBank ownedlife 4,127 1,381 2,530 1,361 1,498 8,038 4,399insuranceincomeRecoveries offully charged -- -- -- 2,232 1,401 -- 4,615off acquiredloansOther 4,444 711 932 1,480 396 6,087 1,631

Total $ 114,790 $ 54,347 $ 44,132 $ 36,307 $ 37,582 $ 213,269 $ 107,258noninterestincome Noninterestexpense:Salaries and $ 134,919 $ 81,720 $ 60,978 $ 58,218 $ 59,551 $ 277,617 $ 176,529employeebenefitsPension plan - - - -- -- - 9,526terminationexpenseOccupancy 23,845 15,959 12,287 12,113 11,883 52,091 35,344expenseInformation 18,855 12,155 9,306 8,919 8,878 40,316 26,558servicesexpenseFHLB -- 199 -- -- -- 199 134prepaymentpenaltyOREO expense 1,146 1,107 587 1,013 597 2,840 2,229and loanrelatedBusinessdevelopment 2,599 1,447 2,244 2,905 2,018 6,290 6,477and staffrelatedAmortization 9,560 4,665 3,007 3,267 3,268 17,232 9,817ofintangiblesProfessional 4,385 2,848 2,494 2,862 2,442 9,727 7,463feesSupplies,printing and 2,755 1,610 1,505 1,464 1,418 5,870 4,417postageexpenseFDICassessment 2,849 2,403 2,058 1,327 228 7,310 3,218and otherregulatorychargesAdvertising 1,203 531 814 1,491 1,052 2,548 2,818and marketingOther 13,109 10,189 7,838 5,555 5,029 31,136 16,422operatingexpensesBranchconsolid. or 21,662 40,279 4,129 1,494 - 66,070 3,058merger /conversrelated exp.Merger andbranding -- -- -- -- -- -- --relatedexpenseTotal $ 236,887 $ 175,112 $ 107,247 $ 100,628 $ 96,364 $ 519,246 $ 304,010noninterestexpense Noninterest income totaled $114.8 million for the third quarter of 2020 compared to $54.3 million in the second quarter of 2020, an increase of $60.4 million. This large increase within all categories was due to the inclusion of income for the full quarter from the merger with CSFL compared to only 23 days in the second quarter of 2020. The largest increases were $29.7 million in mortgage banking income and $16.4 million in correspondent banking and capital markets income. Mortgage banking income improved by $23.5 million from the gains within the secondary market, net of commissions; and from $6.2 million of income associated with the MSR, net of the hedge.

Compared to the third quarter of 2019, noninterest income increased by $77.2 million due to the impact of merger with CSFL. Correspondent banking and capital markets income discussed above improved by $25.7 million and mortgage banking income increased by $41.9 million. Secondary market mortgage income was up $39.9 million from the increase in the gain on sale of mortgage loans, from both higher volume of loans and at higher margins. The other categories of noninterest income all increased, except for recoveries from acquired loans, which now flow through the allowance for credit losses, and resulted in a $1.4 million decrease.

Noninterest expense was $236.9 million in the third quarter of 2020, an increase of $61.8 million from $175.1 million in the second quarter of 2020. The increase was related to the full quarter impact of expense associated with the merger with CSFL (compared to only 23 days in 2Q 2020). Merger-related costs totaled $21.7 million for the quarter and was a decrease of $18.6 million from the second quarter of 2020. Adjusted noninterest expense totaled $215.2 million in 3Q 2020, which was $80.6 million higher than second quarter of 2020, and resulted in an adjusted efficiency ratio of 55.8% compared to 61.9%, in second quarter of 2020.

Compared to the third quarter of 2019, noninterest expense was higher by $140.5 million. The increase was due to the merger with CSFL in June 2020, and the inclusion of the combined company expenses for all of the third quarter of 2020. In addition, the third quarter of 2020 includes $21.7 million of additional merger-related cost. Adjusted noninterest expense (non-GAAP) increased $118.9 million, compared to the third quarter of 2019.

Conference Call

The Company will announce its third quarter 2020 earnings results in a news release after the market closes on October 29, 2020. At 10:30 a.m. Eastern Time on October 30, 2020, the Company will host a conference call to discuss its third quarter results. Callers wishing to participate may call toll-free by dialing 877-506-9272. Participants may also pre-register for the conference by navigating to https://dpregister.com/sreg/10148509/da2c128419. A dial in number and unique PIN will be provided upon completion of registration. Alternatively, individuals may listen to the live webcast of the presentation by visiting the link at the Company's website at www.SouthStateBank.com. An audio replay of the live webcast is expected to be available by the evening of October 30, 2020 through the Investor Relations section of www.SouthStateBank.com.

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

South State Corporation is a financial services company headquartered in Winter Haven, Florida. South State Bank, N.A., the company's nationally chartered bank subsidiary, provides consumer, commercial, mortgage and wealth management solutions to more than one million customers throughout Florida, Alabama, Georgia, the Carolinas and Virginia. The bank also serves clients coast to coast through its correspondent banking division. Additional information is available at SouthStateBank.com.

Non-GAAP Measures

Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables that 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.

Pre-provision net revenue (in thousands) Sept. 30, 2020 June 30, 2020

Netincome (loss) (GAAP) $ 95,221 $ (84,935 )

PCL legacy SSB 29,797 31,259

PCL legacy CSB NonPCD and UFC - Day 1 - 119,079

PCL legacy CSB for June - 1,136

Tax provision (benefit) 23,233 (24,747 )

Merger-related costs 21,662 40,279

Securities gain (15 ) -

FHLB advance prepayment cost - 199

CSB pre-merger PPNR - 74,791

Pre-provision net revenue (PPNR) Non-GAAP $ 169,898 $ 157,061

SSB average asset balance (GAAP) $ 37,865,217 $ 22,898,925

CSB average asset balance pre-merger 14,604,081

Total average balance June 30, 2020 (Non-GAAP) $ 37,503,006

ROAA PPNR 1.79 % 1.68 %

Three Months Ended

Nine Months Ended

(Dollars in thousands, except per share data)Sept. 30,

June 30,

Mar. 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

RECONCILIATION OF GAAP TO Non-GAAP2020

2020

2020

2019

2019

2020

2019

Adjusted net income (non-GAAP) (3)Net income (loss) (GAAP)$

95,221

$

(84,935

)

$

24,110

$

49,091

$

51,565

$

34,396

$

137,392

Securities gains, net of tax(12

)

--

--

(20

)

(349

)

(12

)

(2,152

)

PCL - NonPCD loans & unfunded commitments--

92,212

--

--

--

92,212

--

Pension plan termination expense, net of tax--

--

--

--

--

--

7,641

FHLB prepayment penalty, net of tax--

154

--

--

--

154

107

Merger and branch consolidation/acq. expense, net of tax17,413

31,191

3,510

1,252

--

52,114

2,449

Adjusted net income (non-GAAP)$

112,622

$

38,622

$

27,620

$

50,323

$

51,216

$

178,864

$

145,437

Adjusted net income per common share - Basic (3)Earnings (loss) per common share - Basic (GAAP)$

1.34

$

(1.96

)

$

0.72

$

1.46

$

1.51

$

0.70

$

3.94

Effect to adjust for securities gains(0.00

)

--

--

(0.01

)

(0.01

)

(0.00

)

(0.06

)

Effect to adjust for PCL - NonPCD loans & unfunded commitments--

2.13

--

-

-

1.87

--

Effect to adjust for pension plan termination expense, net of tax--

--

--

-

-

--

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 tax0.25

0.72

0.10

0.04

-

1.06

0.07

Adjusted net income per common share - Basic (non-GAAP)$

1.59

$

0.89

$

0.82

$

1.49

$

1.50

$

3.63

$

4.17

Adjusted net income per common share - Diluted (3)Earnings (loss) per common share - Diluted (GAAP)$

1.34

$

(1.96

)

$

0.71

$

1.45

$

1.50

$

0.69

$

3.92

Effect to adjust for securities gains(0.00

)

--

--

(0.01

)

(0.01

)

(0.00

)

(0.06

)

Effect to adjust for PCL - NonPCD loans & unfunded commitments--

2.11

--

-

-

1.86

--

Effect to adjust for pension plan termination expense, net of tax--

--

--

-

-

--

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 tax0.24

0.72

0.11

0.04

-

1.05

0.07

Effect of adjusted weighted ave shares due to adjusted net income-

0.02

--

Adjusted net income per common share - Diluted (non-GAAP)$

1.58

$

0.89

$

0.82

$

1.48

$

1.49

$

3.60

$

4.15

Adjusted Return of Average Assets (3)Return on average assets (GAAP)1.00

%

-1.49

%

0.60

%

1.23

%

1.31

%

0.18

%

1.20

%

Effect to adjust for securities gains0.00

%

0.00

%

0.00

%

0.00

%

-0.01

%

0.00

%

-0.02

%

Effect to adjust for PCL - NonPCD loans & unfunded commitments0.00

%

1.62

%

0.00

%

0.00

%

0.00

%

0.48

%

0.00

%

Effect to adjust for pension plan termination expense, net of tax0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.07

%

Effect to adjust for FHLB prepayment penalty, net of tax0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

Effect to adjust for merger & branch consol./acq expenses, net of tax0.18

%

0.55

%

0.09

%

0.03

%

0.00

%

0.27

%

0.02

%

Adjusted return on average assets (non-GAAP)1.18

%

0.68

%

0.69

%

1.26

%

1.30

%

0.93

%

1.27

%

Adjusted Return of Average Equity (3)Return on average equity (GAAP)8.31

%

-11.78

%

4.15

%

8.26

%

8.70

%

1.41

%

7.76

%

Effect to adjust for securities gains0.00

%

0.00

%

0.00

%

0.00

%

-0.06

%

0.00

%

-0.12

%

Effect to adjust for PCL - NonPCD loans & unfunded commitments0.00

%

12.79

%

0.00

%

0.00

%

0.00

%

3.77

%

0.00

%

Effect to adjust for pension plan termination expense, net of tax0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.43

%

Effect to adjust for FHLB prepayment penalty, net of tax0.00

%

0.02

%

0.00

%

0.00

%

0.00

%

0.01

%

0.01

%

Effect to adjust for merger & branch consol./acq expenses, net of tax1.52

%

4.33

%

0.60

%

0.21

%

0.00

%

2.12

%

0.14

%

Adjusted return on average equity (non-GAAP)9.83

%

5.36

%

4.75

%

8.47

%

8.64

%

7.31

%

8.22

%

Adjusted Return on Average Common Tangible Equity (3) (5)Return on average common equity (GAAP)8.31

%

-11.78

%

4.15

%

8.26

%

8.70

%

1.41

%

7.76

%

Effect to adjust for securities gains0.00

%

0.00

%

0.00

%

0.00

%

-0.06

%

0.00

%

-0.12

%

Effect to adjust for PCL - NonPCD loans & unfunded commitments0.00

%

12.79

%

0.00

%

0.00

%

0.00

%

3.77

%

0.00

%

Effect to adjust for pension plan termination expense, net of tax0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

0.43

%

Effect to adjust for FHLB prepayment penalty, net of tax0.00

%

0.02

%

0.00

%

0.00

%

0.00

%

0.01

%

0.01

%

Effect to adjust for merger & branch consol./acq expenses, net of tax1.52

%

4.32

%

0.60

%

0.21

%

0.00

%

2.13

%

0.14

%

Effect to adjust for intangible assets7.31

%

4.88

%

4.70

%

7.70

%

7.87

%

6.26

%

7.49

%

Adjusted return on average common tangible equity (non-GAAP)17.14

%

10.23

%

9.45

%

16.17

%

16.51

%

13.58

%

15.71

%

Adjusted efficiency ratio (5)Efficiency ratio61.39

%

80.52

%

62.11

%

61.64

%

58.40

%

Effect to adjust for merger and branch consolidation related expenses-5.61

%

-18.61

%

-2.39

%

-0.91

%

0.00

%

Adjusted efficiency ratio55.78

%

61.91

%

59.72

%

60.73

%

58.40

%

Tangible Book Value Per Common Share (5)Book value per common share (GAAP)$

64.34

$

63.35

$

69.40

$

70.32

$

69.34

Effect to adjust for intangible assets(24.51

)

(25.02

)

(31.39

)

(31.19

)

(31.14

)

Tangible book value per common share (non-GAAP)$

39.83

$

38.33

$

38.01

$

39.13

$

38.20

Tangible Equity-to-Tangible Assets (5)Equity-to-assets (GAAP)12.07

%

11.91

%

13.95

%

14.90

%

14.92

%

Effect to adjust for intangible assets-4.24

%

-4.35

%

-5.80

%

-6.02

%

-6.11

%

Tangible equity-to-tangible assets (non-GAAP)7.83

%

7.56

%

8.15

%

8.88

%

8.81

%

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, and merger and branch consolidation related expense. 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 $21.7 million, $40.3 million, $4.1 million, and $1.5 million, for the quarters ended September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively; (b) securities (losses) gains, net of $15,000, $24,000, and $437,000, for the quarters ended September 30, 2020, December 31, 2019, and September 30, 2019, respectively; and (c) FHLB prepayment penalty of $199,000 for the quarter ended June 30, 2020. (4) September 30, 2020 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. (5) 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. (6) Includes loan accretion (interest) income related to the discount on acquired loans of $22.4 million, $10.1 million, $10.9 million $7.4 million, and $8.1 million, respectively, during the five quarters above. (7) Adjusted efficiency ratio is calculated by taking the noninterest expense excluding branch consolidation cost and merger cost, pension plan termination and the FHLB prepayment penalty divided by net interest income and noninterest income excluding securities gains (losses).

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. 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) 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; (3) potential deterioration in real estate values; (4) the impact of competition with other financial institutions, including pricing pressures (including those resulting from the CARES Act) and the resulting impact, including as a result of compression to net interest margin; (5) 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; (6) 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; (7) liquidity risk affecting the bank's ability to meet its obligations when they come due; (8) 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; (9) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (10) transaction risk arising from problems with service or product delivery; (11) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (12) 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 CARES 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); (13) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (14) reputation risk that adversely affects earnings or capital arising from negative public opinion; (15) terrorist activities risk that results in loss of consumer confidence and economic disruptions; (16) 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; (17) greater than expected noninterest expenses; (18) 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; (19) excessive loan losses; (20) failure to realize synergies and other financial benefits from, and to limit liabilities associated with, the merger with CSFL within the expected time frame, and ownership dilution risk associated with potential acquisitions in which South State's stock may be issued as consideration for an acquired company; (21) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with the merger with CSFL integration, including, without limitation, and potential difficulties in maintaining relationships with key personnel; (22) 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; (23) 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; (24) 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; (25) major catastrophes such as earthquakes, floods or other natural or human disasters, including infectious disease outbreaks, including the recent outbreak of the COVID-19 coronavirus, and the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on South State and its customers and other constituencies; and (26) other risks related to the merger of South State and CSFL including, among others, (i) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (ii) the risk that the integration of each party's operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate each party's businesses into the other's businesses, (iii) the amount of the costs, fees, expenses and charges related to the merger, (iv) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger, and (27) other factors that may affect future results of South State and CenterState, as disclosed in South State's Annual Report on Form 10-K, as amended, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and CenterState's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, in each case filed by South State or CenterState, as applicable, with the U.S. Securities and Exchange Commission ("SEC") and available on the SEC's website at http://www.sec.gov, any 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.

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CONTACT: Jackie Smith (803) 231-3486