SouthState (SSB) 8-K Increases Quarterly Cash Dividend

Exhibit 99.1

For Immediate Release	Media Contact:     Donna Pullen (803) 765-4558
	Analyst Contact: John C. Pollok (803) 765-4628

South State Corporation Reports Operating Results of $0.92 per share;

Increases Quarterly Cash Dividend

COLUMBIA, S.C.—July 29, 2014—South State Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and six-month periods ended June 30, 2014.  Highlights of the second quarter 2014 include the following:

·Net income available to common shareholders of $17.9 million, or $0.74 diluted EPS in 2Q 2014, up 13.3%, compared to $15.8 million, or $0.66 diluted EPS in 1Q 2014, and up 43.2% from $12.5 million, or $0.74 diluted EPS in 2Q 2013;

·Operating earnings of $22.2 million, which exclude merger and branding expenses and include preferred stock dividends, or $0.92 diluted operating EPS in 2Q 2014, up 12.1%, compared to $19.8 million, or $0.82 diluted operating EPS in 1Q 2014, and up 69.1% from $13.1 million, or $0.77 diluted operating EPS in 2Q 2013;

·Rebranded and changed the name to South State Corporation and South State Bank;

·Return on average assets was 0.91% annualized in 2Q 2014 compared to 0.86% in 1Q 2014 and 0.99% in 2Q 2013;  Operating return on average assets was 1.12% annualized in 2Q 2014 compared to 1.06% in 1Q 2014 and 1.04% in 2Q 2013;

·Return on average tangible common equity was 13.6% annualized in 2Q 2014 compared to 12.6% in 1Q 2014, and 13.5% in 2Q 2013;  Operating return on average tangible common equity was 16.6% in 2Q 2014 compared to 15.5% in 1Q 2014 and 14.1% in 2Q 2013;

·Tangible common equity per share increased by $1.02 during the second quarter to $24.13;

·Net charge-offs of non-acquired loans increased to 0.17% annualized in 2Q 2014, compared to 0.05% annualized in 1Q 2014 and decreased from 0.40% annualized in 2Q 2013;

·Operating efficiency ratio decreased to 63.6% in 2Q2014, compared to 64.1% in 1Q2014 and 63.8% in 2Q2013;

·Legacy loan growth for 2Q 2014 was $194.7 million or 26.1% annualized.

Quarterly Cash Dividend

The Board of Directors of South State Corporation has declared a quarterly cash dividend of $0.21 per share payable on its common stock.  This per share amount is $0.01 per share, or 5.0% higher than the dividend paid in the immediately preceding quarter and is $0.02 per share, or 10.5%, higher than a year ago.  The dividend will be payable on August 22, 2014 to shareholders of record as of August 15, 2014.

Second Quarter 2014 Financial Performance

Please refer to the accompanying tables for detailed comparative data on results of operations and financial results.

The Company reported consolidated net income available to common shareholders of $17.9 million, or $0.74 per diluted common share for the three months ended June 30, 2014 up from $15.8 million, or $0.66 per diluted common share for the three months ended March 31, 2014.  This $2.1 million increase was primarily the result of improved noninterest income, lower noninterest expense, and the elimination of the preferred stock dividend with the redemption of the preferred stock in March of 2014.  These three improvements were offset by lower net interest income, higher provision for loan losses and higher provision for income taxes in terms of dollars (same effective tax rate).

“The second quarter was highlighted by very strong organic loan growth of $195 million.  This was complemented by improved growth and profitability in mortgage banking, wealth management, and bankcard services,” said Robert R. Hill, Jr., CEO of South State Corporation.  “I am especially pleased with our operating return on tangible common equity of 16.6% and our increase in tangible book value per share by $1.02.  The combination of the merger with First Financial, good credit quality, and strong organic growth resulted in operating earnings of $22.2 million, a 69% increase over the second quarter of 2013.”

Asset Quality

During the second quarter of 2014, the Company’s trend of improved asset quality continued, excluding acquired loans and acquired other real estate owned (OREO), as nonperforming loans declined by $2.1 million, or 5.7%.  Non-acquired nonperforming assets (NPAs) as a percentage of total non-acquired loans and repossessed assets declined to 1.39% compared to 1.66% in the first quarter of 2014.  NPAs, excluding acquired NPAs, declined by $5.3 million from the first quarter 2014 level.

At June 30, 2014, the allowance for non-acquired loan losses was $35.4 million or 1.12% of non-acquired period-end loans.  The current allowance for loan losses provides 1.00 times coverage of period-end non-acquired nonperforming loans, up from 0.93 times at the end of the first quarter of 2014.  Net charge-offs within the non-acquired portfolio were $1.3 million for the quarter or 0.17% annualized, up from the first quarter of 2014 of $332,000 or 0.05% annualized, and down from the second quarter of 2013 of $2.6 million or 0.40% annualized.

OREO decreased by more than $10.4 million during the second quarter to $53.7 million compared to the first quarter of 2014 of $64.1 million.  Non-acquired OREO declined by $3.2 million, while acquired (covered and uncovered) OREO declined by $7.2 million.  This decline was partially the result of an auction which was held in late May where approximately $5.5 million in OREO assets (both acquired and non-acquired) were sold.  The remaining decline of $4.9 million was from the recurring transactions of OREO during the quarter.  OREO and loan related costs were down significantly as well during the quarter to $1.9 million compared to the first quarter of $4.3 million.

Net Interest Income and Margin

Non-taxable equivalent net interest income was $81.0 million for the second quarter of 2014, a $2.4 million decrease from the first quarter of 2014, resulting primarily from the following:

1.A $180.5 million decrease in the average balance of acquired loans from the first quarter of 2014, coupled with a decrease of 23 basis points in the yield on acquired loans from 7.56% to 7.33% which resulted in a decrease of $4.3 million; which was partially offset by

2.Non-acquired loans average balance growing by more than $152.4 million, however, the yield on these loans declined from 4.25% during the first quarter to 4.18% resulting in an increase in interest income of $1.4 million; and

3.The decline in interest expense on certificates and other time deposits of $148,000, from both a decline in the average rate and a decline in the average balance.

Tax-equivalent net interest margin decreased 24 basis points from the first quarter of 2014 and by 26 basis points from the second quarter of 2013.  The Company’s average yield on interest-earning assets decreased 26 basis points while the average rate on interest-bearing liabilities declined 1 basis point from the first quarter of 2014.  During the second quarter of 2014, the Company’s average total assets remained at approximately $7.9 billion and average earning assets increased slightly to $6.9 billion.  Average interest-bearing liabilities declined by approximately $73.1 million.

Noninterest Income and Expense

Noninterest income was up by more than $3.7 million in the second quarter of 2014 to $24.4 million compared to the first quarter of 2014 of $20.7 million.  Increases in all categories contributed and were led by mortgage banking income, bankcard services, trust and investment services, and a reduction in the negative accretion on the indemnification asset, all totaling $3.5 million.  Compared to the second quarter of 2013, noninterest income grew significantly by $15.9 million due primarily to the First Financial merger and the reduction in negative accretion on the indemnification asset.

Noninterest expense was $75.9 million in the second quarter of 2014, down from $77.4 million from the first quarter of 2014.  This decrease from the first quarter of 2014 was primarily due to much lower OREO expense and loan related cost by $2.4 million.  This decline was partially offset by an increase in salaries and employee benefits by $1.2 million which was attributable to hiring new loan producers and support personnel, overtime pay and merit increases.  During the quarter, the company incurred $1.3 million of branding related cost and $5.2 million of merger cost, which combined was $525,000 more than first quarter 2014.  Many of the other noninterest expense categories declined, except for occupancy, information services, and business development and staff related compared to the first quarter.  The efficiency ratio for the quarter was 71.5%, down from 73.8% in the first quarter.  Our operating efficiency ratio, which excludes merger and branding expenses and OREO and loan related expenses, declined to 63.6% compared to 64.1% in the first quarter.

Compared to the second quarter of 2013, noninterest expense was $31.0 million higher than second quarter of 2014.  This significant increase was primarily the result of the First Financial merger.

Balance Sheet and Capital

At June 30, 2014, the Company’s total assets were $8.0 billion, up from $5.0 billion at June 30, 2013, and from $7.9 billion at December 31, 2013.  Since December 31, 2013, the Company has experienced asset growth in the following areas:  cash and short-term investments by $110.1 million, or 23.0%, non-acquired loans by $309.4 million, or 10.8%, and loans held for sale by $25.8 million, or 84.4%.  Loans held for sale increased primarily from the increase in closings of mortgage loans from the pipeline

during the quarter.  Partially offsetting these increases were decreases in acquired loans by $319.2 million, the FDIC receivable by $50.2 million and OREO by $11.2 million.

The Company’s book value per common share increased to $39.50 per share at June 30, 2014, compared to $38.73 at March 31, 2014.  Capital increased by $18.9 million due primarily to net income of $17.9 million, which was offset by the common dividend paid of $4.8 million.  Accumulated comprehensive income increased by $4.5 million, net of tax, in the second quarter, primarily the result of change in the fair value of the available for sale investment securities portfolio.  In March of 2014, the Company redeemed $65.0 million of preferred stock, which resulted in a decline in capital.  Tangible book value (“TBV”) per common share increased by $1.02 per share to $24.13 at June 30, 2014 from $23.11, at March 31, 2014.  This increase was primarily the result of the strong net income, reduced intangibles (from purchase accounting adjustments and amortization charges), and improvement in accumulated other comprehensive income (AFS securities).

In addition, tangible common equity to tangible assets increased to 7.64% at June 30, 2014 up from 7.32% at the end of the first quarter of 2014.

The total risk-based capital ratio is estimated to be around 13.8% up from March 31, 2014 of 13.6%.  Tier 1 leverage ratio increased to approximately 8.9% from 8.6% at March 31, 2014.  The increase was driven by net income for the quarter.  The Company’s capital position remains “well-capitalized” by all measures at June 30, 2014.

“Our balance sheet reflected solid improvement during the quarter as net loan balances grew by more than $60.0 million, OREO declined by more than $10.4 million, noninterest bearing deposits continued to increase by more than $42.0 million and equity improved by more than $18.8 million,” said John C. Pollok, COO and CFO.  “Our cost savings for the second quarter came in as expected, and slightly better than first quarter cost savings, as we closed only two branches.  We anticipate additional cost savings during third quarter as eight more branches will be consolidated or closed, and the conversion from last week triggers various systems cost savings that will impact us beginning in August.  Our fourth quarter results should reflect the majority of our cost savings initiatives.”

South State Corporation will hold a conference call today, July 29th, at 11 a.m. Eastern Time during which management will review earnings and performance trends.  Callers wishing to participate may call toll-free by dialing 877-506-9272.  The number for international participants is 412-380-2004.  The conference ID number is 10048886.  Participants can also listen to the live audio webcast through the Investor Relations section of www.SouthStateBank.com.  A replay will be available beginning July 29th by 2:00 p.m. Eastern Time until 9:00 a.m. on August 13, 2014.  To listen to the replay, dial 877-344-7529 or 412-317-0088.  The pass code is 10048886.

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

South State Corporation is the largest publicly traded bank holding company headquartered in South Carolina. Founded in 1933, the company’s primary subsidiary, South State Bank, has been serving the financial needs of its local communities in 19 South Carolina counties, 12 Georgia counties and 4 North Carolina counties for over 80 years.  The bank also operates Minis & Co., Inc. and First Southeast 401K Fiduciaries, Inc., both registered investment advisors; and First Southeast Investor Services, Inc., a limited purpose broker-dealer. South State Corporation has assets of approximately $8.0 billion and its stock is traded under the symbol SSB on the NASDAQ Global Select Market. More information can be found at www.SouthStateBank.com.

Non-GAAP Measures

Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures.  Management believes that these non-GAAP measures provide additional useful information.  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.

Cautionary Statement Regarding Forward Looking Statements

Statements included in this report 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 21E of the Securities Exchange Act of 1934.   Forward looking statements generally include words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions.   The Company cautions readers that forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from anticipated results.  Such risks and uncertainties, include, among others, the following possibilities: (1) the outcome of any legal proceedings instituted against the Company; (2) 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; (3) 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 the Company’s equity; (4) liquidity risk affecting the bank’s ability to meet its obligations when they come due; (5) risks associated with an anticipated increase in the Company’s investment securities portfolio, including risks associated with acquiring and holding investment securities or potentially determining that the amount of investment securities the Company desires to acquire are not available on terms acceptable to the Company; (6) price risk focusing on changes in market factors that may affect the value of traded instruments in “mark-to-market” portfolios; (7) transaction risk arising from problems with service or product delivery; (8) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (9) regulatory change risk resulting from new laws, rules, regulations, accounting principles, proscribed practices or ethical standards, including, without limitation, increased capital requirements (including, without limitation, the impact of the capital rules adopted to implement Basel III), Consumer Financial Protection Bureau rules and regulations, and potential changes in accounting principles relating to loan loss recognition; (10) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (11) reputation risk that adversely affects earnings or capital arising from negative public opinion; (12) terrorist activities risk that results in loss of consumer confidence and economic disruptions; (13) cybersecurity risk related to our dependence on internal computer systems and the technology of outside service providers, as well as the potential impacts of third-party security breaches, subjects the company to potential business disruptions or financial losses resulting from deliberate attacks or unintentional events; (14) economic downturn risk potentially resulting in deterioration in the credit markets, greater than expected non-interest 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; (15) greater than expected noninterest expenses; (16) excessive loan losses; (17) failure to realize synergies and other financial benefits from, and to limit liabilities associated with, mergers and acquisitions, including, without limitation, the merger with First Financial Holdings, Inc. (“FFCH”), within the expected time frame; (18) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with merger and acquisition integration, including, without limitation, with respect to FFCH, and including, without limitation, potential difficulties in maintaining relationships with key personnel and other integration related-matters; (19) the risks of fluctuations in market prices for Company common stock that may or may not reflect economic condition or performance of the Company; (20) the payment of dividends on Company common stock is subject to regulatory supervision as well as the discretion of the board of directors of the Company, the Company’s performance and other factors; and (21) other risks and uncertainties disclosed in the Company’s most recent Annual Report on Form 10-K filed with the SEC or disclosed in documents filed or furnished by the Company with or to the SEC after the filing of such Annual report on Form 10-K, any of which could cause actual results to differ materially from future results expressed, implied or otherwise anticipated by such forward looking statements.  The Company undertakes no obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

SOUTH STATE CORPORATION AND SUBSIDIARY

(Unaudited)

(Dollars in thousands, except per share data)

																Second
	Three Months Ended															Quarter		Six Months Ended						YTD
	June 30,			March 31,			December 31,			September 30,			June 30,			2014 - 2013		June 30,						2014 - 2013
	2014			2014			2013			2013			2013			% Change		2014			2013			% Change
EARNINGS SUMMARY (non tax equivalent)
Interest income (A)	$	84,831		$	87,338		$	88,748		$	83,808		$	57,530		47.5	%	$	172,169		$	113,699		51.4	%
Interest expense	3,858			3,996			4,359			4,029			2,246			71.8	%	7,854			4,614			70.2	%
Net interest income	80,973			83,342			84,389			79,779			55,284			46.5	%	164,315			109,085			50.6	%
Provision for loan losses (1)	2,169			849			(12		)	659			179			1111.7	%	3,018			1,239			143.6	%
Noninterest income	24,399			20,679			20,683			15,157			8,485			187.6	%	45,078			18,008			150.3	%
Noninterest expense	75,889			77,423			83,896			75,419			44,885			69.1	%	153,312			91,326			67.9	%
Income before provision for income taxes	27,314			25,749			21,188			18,858			18,705			46.0	%	53,063			34,528			53.7	%
Provision for income taxes	9,368			8,832			7,204			6,804			6,173			51.8	%	18,200			11,347			60.4	%
Net income	17,946			16,917			13,984			12,054			12,532			43.2	%	34,863			23,181			50.4	%
Preferred stock dividends	—			1,073			812			542			—					1,073			—
Net income available to common shareholders (GAAP)	$	17,946		$	15,844		$	13,172		$	11,512		$	12,532		43.2	%	$	33,790		$	23,181		45.8	%
Effective tax rate	34.30		%	34.30		%	34.00		%	36.08		%	33.00		%			34.30		%	32.86		%
Basic weighted-average common shares	23,892,245			23,873,178			23,825,636			21,893,528			16,790,167			42.3	%	23,881,649			16,803,656			42.1	%
Diluted weighted-average common shares	24,140,600			24,116,174			24,079,350			22,127,979			16,989,818			42.1	%	24,126,105			16,986,172			42.0	%
Earnings per common share - Basic	$	0.75		$	0.66		$	0.55		$	0.53		$	0.75		0.0	%	$	1.41		$	1.38		2.2	%
Earnings per common share - Diluted	0.74			0.66			0.55			0.52			0.74			0.0	%	1.40			1.36			2.9	%
Cash dividends declared per common share	$	0.20		$	0.19		$	0.19		$	0.19		$	0.18		11.1	%	$	0.39		$	0.36		8.3	%
Dividend payout ratio (2)	26.89		%	28.91		%	34.74		%	39.71		%	24.46		%	9.9	%	27.84		%	26.43		%	5.3	%
Operating Earnings (non-GAAP) (3)
Net income (GAAP)	$	17,946		$	16,917		$	13,984		$	12,054		$	12,532		43.2	%	$	34,863		$	23,181		50.4	%
Securities (gains) losses, net of tax	(58		)	—			—			—			—					(58		)	—
Merger and branding related expense, net of tax	4,277			3,932			6,147			7,326			576			642.3	%	8,209			1,897
Net operating earnings (loss) (non-GAAP)	22,165			20,849			20,131			19,380			13,108			69.1	%	43,015			25,078			71.5	%
Preferred stock dividends	—			1,073			812			542			—					1,073			—
Net operating earnings (loss) available to common shareholders (non-GAAP)	$	22,165		$	19,776		$	19,319		$	18,838		$	13,108		69.1	%	$	41,942		$	25,078		67.2	%
Operating earnings (loss) per common share - Basic	$	0.93		$	0.83		$	0.81		$	0.86		$	0.78		19.2	%	$	1.76		$	1.49		18.1	%
Operating earnings (loss) per common share - Diluted	0.92			0.82			0.80			0.85			0.77			19.5	%	1.74			1.48			17.6	%

											Second
	AVERAGE for Quarter Ended										Quarter		AVERAGE for Six Months				YTD
	June 30,		March 31,		December 31,		September 30,		June 30,		2014 - 2013		June 30,		June 30,		2014 - 2013
	2014		2014		2013		2013		2013		% Change		2014		2013		% Change
BALANCE SHEET HIGHLIGHTS
Loans held for sale	$	50,423	$	29,386	$	35,673	$	53,204	$	40,040	25.9	%	$	39,962	$	45,597	-12.4	%
Acquired non-credit impaired loans	1,479,412		1,575,392		1,635,418		1,227,822		72,998		1926.6	%	1,529,501		71,434		2041.1	%
Acquired credit impaired loans, net of allowance for acquired loan losses	1,077,960		1,162,467		1,247,891		1,199,761		854,234		26.2	%	1,117,616		890,495		25.5	%
Non-acquired loans	3,061,529		2,909,175		2,793,522		2,698,580		2,629,897		16.4	%	2,985,772		2,603,368		14.7	%
Total loans (1)	5,618,901		5,647,034		5,676,831		5,126,163		3,557,129		58.0	%	5,632,889		3,565,297		58.0	%
FDIC receivable for loss share agreements	60,967		83,010		105,554		116,849		114,724		-46.9	%	71,928		126,881		-43.3	%
Total investment securities	810,909		801,263		699,592		656,658		527,926		53.6	%	806,113		540,501		49.1	%
Intangible assets	374,021		377,265		379,894		308,730		123,881		201.9	%	375,634		124,565		201.6	%
Earning assets	6,910,549		6,842,708		6,880,973		6,254,128		4,496,053		53.7	%	6,898,827		4,492,640		53.6	%
Total assets	7,942,953		7,959,787		7,977,604		7,214,418		5,069,993		56.7	%	7,951,324		5,093,368		56.1	%
Noninterest-bearing deposits	1,591,002		1,485,014		1,510,734		1,359,137		1,023,668		55.4	%	1,538,300		996,685		54.3	%
Interest-bearing deposits	4,986,465		5,033,181		5,098,095		4,626,023		3,150,909		58.3	%	5,009,696		3,193,523		56.9	%
Total deposits	6,577,467		6,518,195		6,608,829		5,985,160		4,174,577		57.6	%	6,547,996		4,190,208		56.3	%
Federal funds purchased and repurchase agreements	247,672		273,636		229,382		251,551		297,025		-16.6	%	260,582		308,251		-15.5	%
Other borrowings	101,763		102,269		101,948		93,849		54,461		86.9	%	102,014		54,587		86.9	%
Shareholders’ common equity (excludes preferred stock)	942,935		931,961		914,335		790,554		517,141		82.3	%	937,479		514,282		82.3	%
Shareholders’ equity	942,935		994,073		979,335		837,185		517,141		82.3	%	968,363		514,282		88.3	%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Second
	ENDING Balance															Quarter
	June 30,			March 31,			December 31,			September 30,			June 30,			2014 - 2013
	2014			2014			2013			2013			2013			% Change
BALANCE SHEET HIGHLIGHTS
Loans held for sale	$	56,407		$	57,200		$	30,586		$	52,467		$	47,980		17.6	%
Acquired non-credit impaired loans	1,447,583			1,512,201			1,598,051			1,665,333			69,653			1978.3	%
Acquired credit impaired loans	1,056,495			1,124,809			1,227,698			1,328,889			835,051			26.5	%
Non-acquired loans	3,174,625			2,979,958			2,865,216			2,741,242			2,665,595			19.1	%
Total loans (1)	5,678,703			5,616,968			5,690,965			5,735,464			3,570,299			59.1	%
FDIC receivable for loss share agreements	43,766			67,984			93,947			115,773			104,048			-57.9	%
Total investment securities	816,648			814,533			812,603			652,610			531,579			53.6	%
Intangible assets	370,756			376,676			379,015			381,302			126,451			193.2	%
Allowance for acquired credit impaired loan losses	(9,159		)	(11,046		)	(11,618		)	(12,260		)	(14,461		)	-36.7	%
Allowance for non-acquired loan losses (1)	(35,422		)	(34,669		)	(34,331		)	(36,145		)	(38,625		)	-8.3	%
Premises and equipment	184,113			187,127			188,114			184,959			109,794			67.7	%
Total assets	7,993,686			7,990,975			7,931,498			8,028,441			5,043,078			58.5	%
Noninterest-bearing deposits	1,623,291			1,581,157			1,487,798			1,481,791			1,038,382			56.3	%
Interest-bearing deposits	4,952,847			5,049,496			5,067,699			5,181,315			3,144,587			57.5	%
Total deposits	6,576,138			6,630,653			6,555,497			6,663,106			4,182,969			57.2	%
Federal funds purchased and repurchase agreements	280,595			254,985			211,401			233,792			262,447			6.9	%
Other borrowings	101,045			100,963			102,060			101,347			54,372			85.8	%
Total liabilities	7,040,668			7,056,812			6,950,029			7,058,415			4,526,486			55.5	%
Shareholders’ common equity (excludes preferred stock)	953,018			934,163			916,469			905,026			516,592			84.5	%
Shareholders’ equity	953,018			934,163			981,469			970,026			516,592			84.5	%
Common shares issued and outstanding	24,130,006			24,118,243			24,104,124			24,066,545			17,032,061			41.7	%

																Second
	ENDING Balance															Quarter
	June 30,			March 31,			December 31,			September 30,			June 30,			2014 - 2013
	2014			2014			2013			2013			2013			% Change
NONPERFORMING ASSETS (ENDING BALANCE) (7)
Non-acquired
Non-acquired nonaccrual loans	$	26,546		$	29,190		$	31,333		$	38,631		$	40,854		-35.0	%
Restructured loans	8,409			8,156			10,690			10,837			11,689			-28.1	%
Non-acquired other real estate owned (“OREO”)	9,003			12,187			13,456			16,555			15,950			-43.6	%
Accruing loans past due 90 days or more	358			96			258			122			198			80.8	%
Other nonperforming assets	—			—			—			—			—
Total non-acquired nonperforming assets	44,316			49,629			55,737			66,145			68,691			-35.5	%
Acquired non-credit impaired loans
Acquired nonaccrual loans	—			—			—			—			—
Acquired accruing loans past due 90 days or more	—			—			—			—			—
Total acquired non-credit impaired loans	—			—			—			—			—
Acquired OREO and other nonperforming assets
OREO covered under FDIC loss share agreements	21,999			29,003			27,520			40,543			35,142			-37.4	%
OREO not covered under FDIC loss share agreements	22,732			22,957			23,941			18,775			17,536			29.6	%
Other nonperforming assets	811			1,032			943			718			—
Total acquired OREO and other nonperforming assets	45,542			52,992			52,404			60,036			52,678			-13.5	%
Total acquired nonperforming assets	45,542			52,992			52,404			60,036			52,678			-13.5	%
Total nonperforming assets	$	89,858		$	102,621		$	108,141		$	126,181		$	121,369		-26.0	%
Excluding Acquired Assets
NPLs as a percentage of period end non-acquired loans	1.11		%	1.26		%	1.48		%	1.81		%	1.98		%
Total nonperforming assets as a percentage of total non-acquired loans and repossessed assets (1) (4)	1.39		%	1.66		%	1.94		%	2.40		%	2.56		%
Total nonperforming assets as a percentage of total assets (5)	0.55		%	0.62		%	0.70		%	0.82		%	1.36		%
Including Acquired Assets
NPLs as a percentage of period end loans	0.62		%	0.67		%	0.74		%	0.86		%	1.47		%
Total nonperforming assets as a percentage of total loans and repossessed assets (1) (4)	1.57		%	1.81		%	1.88		%	2.16		%	3.32		%
Total nonperforming assets as a percentage of total assets	1.12		%	1.28		%	1.36		%	1.57		%	2.41		%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Second
	Quarter Ended															Quarter		Six Months Ended						YTD
	June 30,			March 31,			December 31,			September 30,			June 30,			2014 - 2013		June 30,			June 30,			2014 - 2013
	2014			2014			2013			2013			2013			% Change		2014			2013			% Change
ALLOWANCE FOR LOAN LOSSES (1)
Non-acquired Loans:
Balance at beginning of period	$	34,669		$	34,331		$	36,145		$	38,625		$	41,669		-16.8	%	$	34,331		$	44,378		-22.6	%
Loans charged off	(1,359		)	(901		)	(2,778		)	(3,815		)	(2,827		)	-51.9	%	(2,260		)	(6,975		)	-67.6	%
Overdrafts charged off	(530		)	(469		)	(389		)	(479		)	(393		)	34.9	%	(999		)	(852		)	17.3	%
Loan recoveries	413			817			1,215			1,095			436			-5.3	%	1,230			1,262			-2.5	%
Overdraft recoveries	144			221			138			154			140			2.9	%	365			359			1.7	%
Net charge-offs	(1,332		)	(332		)	(1,814		)	(3,045		)	(2,644		)	-49.6	%	(1,664		)	(6,206		)	-73.2	%
Provision for loan losses on non-acquired loans	2,085			670			—			565			(400		)	-621.3	%	2,755			453			508.2	%
Balance at end of period, non-acquired loans	$	35,422		$	34,669		$	34,331		$	36,145		$	38,625		-8.3	%	$	35,422		$	38,625		-8.3	%
Allowance for non-acquired loan losses as a percentage of non-acquired loans (1)	1.12		%	1.16		%	1.20		%	1.32		%	1.45		%			1.12		%	1.45		%
Allowance for non-acquired loan losses as a percentage of non-acquired nonperforming loans	100.31		%	92.59		%	81.20		%	72.89		%	73.23		%			100.31		%	73.23		%
Net charge-offs on non-acquired loans as a percentage of average non-acquired loans (annualized) (1)	0.17		%	0.05		%	0.26		%	0.45		%	0.40		%			0.11		%	0.48		%
DAY 2 VALUATION ALLOWANCE ON ACQUIRED LOANS
Balance at beginning of period	$	11,046		$	11,618		$	12,260		$	14,461		$	15,605				$	11,618		$	17,218
Provision for loan losses on acquired loans:
Provision for loan losses before benefit attributable to FDIC loss share agreements	(1,438		)	304			73			(456		)	320					(1,134		)	(535		)
Benefit attributable to FDIC loss share agreements	1,522			(125		)	(85		)	550			259					1,397			1,322
Net provision for loan losses on acquired loans	84			179			(12		)	94			579					263			787
Provision for loan losses recorded through the FDIC loss share receivable	(1,522		)	125			85			(550		)	(259		)			(1,397		)	(1,322		)
Reduction due to loan removals (12)	(449		)	(876		)	(715		)	(1,745		)	(1,464		)			(1,325		)	(2,222		)
Balance at end of period, acquired credit impaired loans	$	9,159		$	11,046		$	11,618		$	12,260		$	14,461				$	9,159		$	14,461

South State Corporation

(Unaudited)

(Dollars in thousands, except per share data)

											Second
	ENDING Balance										Quarter
	June 30,		March 31,		December 31,		September 30,		June 30,		2014 - 2013
	2014		2014		2013		2013		2013		% Change
LOAN PORTFOLIO (ENDING balance) (1)
Acquired loans:
Acquired covered loans:
Commercial non-owner occupied real estate:
Construction and land development	$	30,859	$	37,757	$	43,396	$	50,582	$	31,647	-2.5	%
Commercial non-owner occupied	47,017		50,814		53,525		62,985		42,945		9.5	%
Total commercial non-owner occupied real estate	77,876		88,571		96,921		113,567		74,592		4.4	%
Consumer real estate:
Consumer owner occupied	36,017		37,111		38,946		41,379		39,005		-7.7	%
Home equity loans	33,684		34,627		35,884		37,943		20,857		61.5	%
Total consumer real estate	69,701		71,738		74,830		79,322		59,862		16.4	%
Commercial owner occupied real estate	72,247		78,861		88,722		93,309		41,401		74.5	%
Commercial and industrial	11,711		11,964		14,475		16,596		9,454		23.9	%
Other income producing property	27,521		29,471		31,739		37,543		34,941		-21.2	%
Consumer non real estate	1,583		1,772		1,878		2,322		1,696		-6.7	%
Total acquired covered loans	260,639		282,377		308,565		342,659		221,946		17.4	%
Acquired non-covered loans:
Commercial non-owner occupied real estate:
Construction and land development	86,830		96,981		129,289		134,342		72,453		19.8	%
Commercial non-owner occupied	191,637		204,094		226,530		245,046		158,100		21.2	%
Total commercial non-owner occupied real estate	278,467		301,075		355,819		379,388		230,553		20.8	%
Consumer real estate:
Consumer owner occupied	912,346		951,131		974,392		1,013,022		90,258		910.8	%
Home equity loans	313,318		324,686		335,241		349,517		70,903		341.9	%
Total consumer real estate	1,225,664		1,275,817		1,309,633		1,362,539		161,161		660.5	%
Commercial owner occupied real estate	188,490		200,370		211,030		230,849		124,312		51.6	%
Commercial and industrial	69,953		76,016		98,046		111,135		61,237		14.2	%
Other income producing property	154,100		160,498		171,544		183,996		97,747		57.7	%
Consumer non real estate	326,765		340,857		371,112		383,656		7,748		4117.4	%
Total acquired non-covered loans	2,243,439		2,354,633		2,517,184		2,651,563		682,758		228.6	%
Total acquired loans	2,504,078		2,637,010		2,825,749		2,994,222		904,704		176.8	%
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	371,751		319,441		299,951		288,199		285,370		30.3	%
Commercial non-owner occupied	302,961		285,145		291,170		282,678		298,769		1.4	%
Total commercial non-owner occupied real estate	674,712		604,586		591,121		570,877		584,139		15.5	%
Consumer real estate:
Consumer owner occupied	637,071		595,652		548,170		498,734		460,434		38.4	%
Home equity loans	271,028		263,057		257,139		255,291		250,988		8.0	%
Total consumer real estate	908,099		858,709		805,309		754,025		711,422		27.6	%
Commercial owner occupied real estate	849,048		845,728		833,513		814,259		802,125		5.8	%
Commercial and industrial	353,211		333,574		321,824		301,845		294,580		19.9	%
Other income producing property	151,928		158,186		143,204		140,024		136,957		10.9	%
Consumer non real estate	170,982		147,710		136,410		116,312		104,239		64.0	%
Other	66,645		31,465		33,835		43,900		32,133		107.4	%
Total non-acquired loans	3,174,625		2,979,958		2,865,216		2,741,242		2,665,595		19.1	%
Total loans (net of unearned income) (1)	$	5,678,703	$	5,616,968	$	5,690,965	$	5,735,464	$	3,570,299	59.1	%
Loans held for sale	$	56,407	$	57,200	$	30,586	$	52,467	$	47,980	17.6	%

South State Corporation

(Unaudited)

(Dollars in thousands, except per share data)

	Quarter Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,		June 30,
	2014			2014			2013			2013			2013			2014		2013
SELECTED RATIOS
Return on average assets (annualized)	0.91		%	0.86		%	0.70		%	0.66		%	0.99		%	0.88	%	0.92	%
Operating return on average assets (annualized) (non-GAAP) (3)	1.12		%	1.06		%	1.00		%	1.07		%	1.04		%	1.09	%	0.99	%
Return on average common equity (annualized)	7.63		%	6.89		%	5.72		%	5.78		%	9.72		%	7.27	%	9.09	%
Return on average equity (annualized)	7.63		%	6.90		%	5.67		%	5.71		%	9.72		%	7.26	%	9.09	%
Operating return on average common equity (annualized) (non-GAAP) (3)	9.43		%	8.61		%	8.38		%	9.45		%	10.17		%	9.02	%	9.83	%
Operating return on average equity (annualized) (non-GAAP) (3)	9.43		%	8.51		%	8.16		%	9.18		%	10.17		%	8.96	%	9.83	%
Return on average tangible common equity (annualized) (non-GAAP) (10)	13.62		%	12.59		%	10.90		%	10.39		%	13.48		%	13.12	%	12.71	%
Operating return on average tangible common equity (annualized) (non-GAAP) (10)	16.59		%	15.47		%	15.46		%	16.43		%	14.07		%	16.04	%	13.69	%
Return on average tangible equity (annualized) (non-GAAP) (10)	13.62		%	12.03		%	10.25		%	9.88		%	13.48		%	12.80	%	12.71	%
Net interest margin (tax equivalent)	4.75		%	4.99		%	4.91		%	5.11		%	5.01		%	4.85	%	4.97	%
Efficiency ratio (tax equivalent)	71.52		%	73.84		%	79.22		%	78.74		%	69.49		%	72.68	%	70.92	%
Operating efficiency ratio excluding OREO expense	63.62		%	64.06		%	66.30		%	64.27		%	63.79		%	63.84	%	64.13	%
Book value per common share	$	39.50		$	38.73		$	40.72		$	40.31		$	30.33
Tangible common equity per common share (non-GAAP) (10)	$	24.13		$	23.11		$	22.30		$	21.76		$	22.91
Common shares issued and outstanding	24,130,006			24,118,243			24,104,124			24,066,545			17,032,061
Common equity-to-assets	11.92		%	11.69		%	11.55		%	11.27		%	10.24		%
Equity-to-assets	11.92		%	11.69		%	12.37		%	12.08		%	10.24		%
Tangible common equity-to-tangible assets (non-GAAP) (10)	7.64		%	7.32		%	7.12		%	6.85		%	7.94		%
Tangible equity-to-tangible assets (non-GAAP) (10)	7.64		%	7.32		%	7.98		%	7.70		%	7.94		%
Tier 1 leverage (9)	8.9		%	8.6		%	9.3		%	10.0		%	9.2		%
Tier 1 risk-based capital (9)	12.9		%	12.7		%	13.5		%	13.1		%	13.6		%
Total risk-based capital (9)	13.8		%	13.6		%	14.4		%	14.4		%	14.8		%

South State Corporation

(Unaudited)

(Dollars in thousands, except per share data)

	Quarter Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2014			2014			2013			2013			2013			2014			2013
RECONCILIATION OF NON-GAAP TO GAAP
Pre-tax, Pre-provision Operating Earnings (6)
Net income (GAAP)	$	17,946		$	16,917		$	13,984		$	12,054		$	12,532		$	34,863		$	23,181		50.4	%
Provision for loan losses (1)	2,169			849			(12		)	659			179			3,018			1,239			143.6	%
Provision for income taxes	9,368			8,832			7,204			6,804			6,173			18,200			11,347			60.4	%
Pre-tax, pre-provision income	29,483			26,598			21,176			19,517			18,884			56,081			35,767			56.8	%
Securities gains	(88		)	—			—			—			—			(88		)	—
Merger and branding related expense	6,510			5,985			9,314			10,397			860			12,495			2,823
Pre-tax, pre-provision operating earnings (non-GAAP)	$	35,905		$	32,583		$	30,490		$	29,914		$	19,744		$	68,488		$	38,590		77.5	%
Operating Return of Average Assets (3)
Operating return on average assets (non-GAAP)	1.12		%	1.06		%	1.00		%	1.07		%	1.04		%	1.09		%	0.99		%
Effect to adjust for securities gains (losses)	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%
Effect to adjust for merger and branding related expenses	-0.21		%	-0.20		%	-0.30		%	-0.41		%	-0.05		%	-0.21		%	-0.07		%
Return on average assets (GAAP)	0.91		%	0.86		%	0.70		%	0.66		%	0.99		%	0.88		%	0.92		%
Operating Return of Average Common Equity (3)
Operating return on average equity (non-GAAP)	9.43		%	8.61		%	8.38		%	9.45		%	10.17		%	9.02		%	9.83		%
Effect to adjust for securities gains (losses)	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%	0.01		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.82		%	-1.72		%	-2.66		%	-3.67		%	-0.45		%	-1.76		%	-0.74		%
Return on average common equity (GAAP)	7.63		%	6.89		%	5.72		%	5.78		%	9.72		%	7.27		%	9.09		%
Operating Return of Average Equity (3)
Operating return on average equity (non-GAAP)	9.43		%	8.51		%	8.16		%	9.18		%	10.17		%	8.96		%	9.83		%
Effect to adjust for securities gains (losses)	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%	0.01		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.82		%	-1.61		%	-2.49		%	-3.47		%	-0.45		%	-1.71		%	-0.74		%
Return on average equity (GAAP)	7.63		%	6.90		%	5.67		%	5.71		%	9.72		%	7.26		%	9.09		%
Return on Average Common Tangible Equity
Return on average common tangible equity (non-GAAP)	13.62		%	12.59		%	10.90		%	10.39		%	13.48		%	13.12		%	12.71		%
Effect to adjust for intangible assets	-5.99		%	-5.70		%	-5.18		%	-4.61		%	-3.76		%	-5.85		%	-3.62		%
Return on average common equity (GAAP)	7.63		%	6.89		%	5.72		%	5.78		%	9.72		%	7.27		%	9.09		%
Operating Return on Average Common Tangible Equity
Operating return on average common tangible equity (non-GAAP)	16.59		%	15.47		%	15.46		%	16.43		%	14.07		%	16.04		%	13.69		%
Effect to adjust for securities gains (losses)	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%	0.01		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.82		%	-1.71		%	-2.67		%	-3.68		%	-0.45		%	-1.77		%	-0.74		%
Effect to adjust for intangible assets	-7.17		%	-6.87		%	-7.07		%	-6.97		%	-3.90		%	-7.02		%	-3.86		%
Return on average common equity (GAAP)	7.63		%	6.89		%	5.72		%	5.78		%	9.72		%	7.27		%	9.09		%
Return on Average Tangible Equity (10)
Return on average tangible equity (non-GAAP)	13.62		%	12.03		%	10.25		%	9.88		%	13.48		%	12.80		%	12.71		%
Effect to adjust for intangible assets	-5.99		%	-5.13		%	-4.58		%	-4.17		%	-3.76		%	-5.54		%	-3.62		%
Return on average equity (GAAP)	7.63		%	6.90		%	5.67		%	5.71		%	9.72		%	7.26		%	9.09		%
Operating efficiency ratio excluding OREO expense
Operating efficiency ratio excluding OREO expense	63.62		%	64.06		%	66.30		%	64.27		%	63.79		%	63.84		%	64.13		%
Effect to adjust for OREO and loan related expense	1.77		%	4.07		%	4.13		%	3.61		%	4.37		%	2.91		%	4.60		%
Effect to adjust for merger and branding expenses	6.13		%	5.71		%	8.79		%	10.86		%	1.33		%	5.93		%	2.19		%
Efficiency ratio (Tax Equivalent)	71.52		%	73.84		%	79.22		%	78.74		%	69.49		%	72.68		%	70.92		%
Tangible Book Value Per Common Share (10)
Tangible book value per common share (non-GAAP)	$	24.13		$	23.11		$	22.30		$	21.76		$	22.91
Effect to adjust for intangible assets	15.36			15.62			18.42			18.54			7.42
Book value per common share (GAAP)	$	39.50		$	38.73		$	40.72		$	40.31		$	30.33
Tangible Common Equity-to-Tangible Assets
Tangible common equity-to-tangible assets (non-GAAP)	7.64		%	7.32		%	7.12		%	6.85		%	7.94		%
Effect to adjust for intangible assets	4.28		%	4.37		%	4.43		%	4.42		%	2.30		%
Common equity-to-assets (GAAP)	11.92		%	11.69		%	11.55		%	11.27		%	10.24		%
Tangible Equity-to-Tangible Assets (10)
Tangible equity-to-tangible assets (non-GAAP)	7.64		%	7.32		%	7.98		%	7.70		%	7.94		%
Effect to adjust for intangible assets	4.28		%	4.37		%	4.39		%	4.38		%	2.30		%
Equity-to-assets (GAAP)	11.92		%	11.69		%	12.37		%	12.08		%	10.24		%

South State Corporation

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	June 30, 2014							June 30, 2013
	Average			Interest		Average		Average			Interest		Average
	Balance			Earned/Paid		Yield/Rate		Balance			Earned/Paid		Yield/Rate
YIELD ANALYSIS
Interest-Earning Assets:
Federal funds sold, reverse repo, and time deposits	$	430,316		$	441	0.41	%	370,958			$	444	0.48	%
Investment securities (taxable)	663,751			3,997		2.42	%	378,426			2,096		2.22	%
Investment securities (tax-exempt)	147,158			1,071		2.92	%	149,500			1,174		3.15	%
Loans held for sale	50,423			676		5.38	%	40,040			337		3.38	%
Acquired loans, net of allowance for acquired loan losses	2,557,372			46,759		7.33	%	927,232			24,492		10.59	%
Non-acquired loans (1)	3,061,529			31,887		4.18	%	2,629,897			28,987		4.42	%
Total interest-earning assets	6,910,549			84,831		4.92	%	4,496,053			57,530		5.13	%
Noninterest-Earning Assets:
Cash and due from banks	251,533							96,132
Other assets	815,797							519,351
Allowance for non-acquired loan losses	(34,926		)					(41,543		)
Total noninterest-earning assets	1,032,404							573,940
Total Assets	$	7,942,953						$	5,069,993
Interest-Bearing Liabilities:
Transaction and money market accounts	$	2,893,767		$	824	0.11	%	$	1,832,006		$	570	0.12	%
Savings deposits	675,286			124		0.07	%	353,574			81		0.09	%
Certificates and other time deposits	1,417,413			1,312		0.37	%	974,957			812		0.33	%
Federal funds purchased and repurchase agreements	247,672			89		0.14	%	297,025			115		0.16	%
Other borrowings	101,763			1,508		5.94	%	54,461			668		4.92	%
Total interest-bearing liabilities	5,335,901			3,857		0.29	%	3,512,023			2,246		0.26	%
Noninterest-Bearing Liabilities:
Demand deposits	1,591,002							1,015,075
Other liabilities	73,115							25,754
Total noninterest-bearing liabilities (“Non-IBL”)	1,664,117							1,040,829
Shareholders’ equity	942,935							517,141
Total Non-IBL and shareholders’ equity	2,607,052							1,557,970
Total liabilities and shareholders’ equity	$	7,942,953						$	5,069,993
Net interest income and margin (NON-TAX EQUIV.)				$	80,974	4.70	%				$	55,284	4.93	%
Net interest margin (TAX EQUIVALENT)						4.75	%						5.01	%

South State Corporation

(Unaudited)

(Dollars in thousands)

	Six Months Ended
	June 30, 2014							June 30, 2013
	Average			Interest		Average		Average			Interest		Average
	Balance			Earned/Paid		Yield/Rate		Balance			Earned/Paid		Yield/Rate
YIELD ANALYSIS
Interest-Earning Assets:
Federal funds sold, reverse repo, and time deposits	$	419,863		$	901	0.43	%	$	341,245		$	862	0.51	%
Investment securities (taxable)	657,967			7,878		2.41	%	386,627			4,257		2.22	%
Investment securities (tax-exempt)	148,146			2,227		3.03	%	153,874			2,381		3.12	%
Loans held for sale	39,962			755		3.81	%	45,597			719		3.18	%
Acquired loans, net of allowance for acquired loan losses	2,647,117			91,770		6.99	%	961,929			47,862		10.03	%
Non-acquired loans (1)	2,985,772			68,638		4.64	%	2,603,368			57,618		4.46	%
Total interest-earning assets	6,898,827			172,169		5.03	%	4,492,640			113,699		5.10	%
Noninterest-Earning Assets:
Cash and due from banks	228,225							108,002
Other assets	859,331							535,658
Allowance for non-acquired loan losses	(35,059		)					(42,932		)
Total noninterest-earning assets	1,052,497							600,728
Total Assets	$	7,951,324						$	5,093,368
Interest-Bearing Liabilities:
Transaction and money market accounts	$	2,887,999		$	1,638	0.11	%	$	1,843,716		$	1,176	0.13	%
Savings deposits	665,833			243		0.07	%	351,781			162		0.09	%
Certificates and other time deposits	1,455,842			2,781		0.39	%	1,004,439			1,684		0.34	%
Federal funds purchased and repurchase agreements	260,582			191		0.15	%	308,251			251		0.16	%
Other borrowings	102,014			3,009		5.95	%	54,587			1,340		4.95	%
Total interest-bearing liabilities	5,372,270			7,862		0.30	%	3,562,774			4,613		0.26	%
Noninterest-Bearing Liabilities:
Demand deposits	1,538,300							991,523
Other liabilities	72,391							24,789
Total noninterest-bearing liabilities (“Non-IBL”)	1,610,691							1,016,312
Shareholders’ equity	968,363							514,282
Total Non-IBL and shareholders’ equity	2,579,054							1,530,594
Total liabilities and shareholders’ equity	$	7,951,324						$	5,093,368
Net interest income and margin (NON-TAX EQUIV.)				$	164,307	4.80	%				$	109,086	4.90	%
Net interest margin (TAX EQUIVALENT)						4.85	%						4.97	%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Second
	Three Months Ended															Quarter		Six Months Ended						YTD
	June 30,			March 31,			December 31,			September 30,			June 30,			2014 - 2013		June 30,						2014 - 2013
	2014			2014			2013			2013			2013			% Change		2014			2013			% Change
NONINTEREST INCOME & EXPENSE
Noninterest income:
Service charges on deposit accounts	$	9,144		$	8,988		$	10,098		$	8,966		$	5,736		59.4	%	18,132			11,497			57.7	%
Bankcard services income	7,741			7,124			7,252			6,493			4,244			82.4	%	14,865			8,138			82.7	%
Mortgage banking income	4,683			3,291			2,489			1,342			1,922			143.7	%	7,974			5,277			51.1	%
Trust and investment services income	4,812			4,543			4,316			3,593			2,439			97.3	%	9,355			4,752			96.9	%
Securities gains, net (8)	88			—			—			—			—					88			—
Amortization of FDIC indemnification asset	(5,815		)	(7,078		)	(7,429		)	(7,625		)	(7,310		)	20.5	%	(12,893		)	(14,481		)	-11.0	%
Other	3,746			3,811			3,957			2,388			1,454			157.6	%	7,557			2,825			167.5	%
Total noninterest income	$	24,399		$	20,679		$	20,683		$	15,157		$	8,485		187.6	%	$	45,078		$	18,008		150.3	%
Noninterest expense:
Salaries and employee benefits	$	40,276		$	39,093		$	40,634		$	34,464		$	23,746		69.6	%	$	79,369		$	46,998		68.9	%
Information services expense	4,313			4,222			4,323			3,827			2,992			44.2	%	8,535			6,183			38.0	%
OREO expense and loan related	1,875			4,269			4,375			3,461			2,820			-33.5	%	6,144			5,922			3.7	%
Net occupancy expense	5,731			5,590			5,855			5,046			3,272			75.2	%	11,321			6,617			71.1	%
Furniture and equipment expense	3,264			3,754			3,824			3,523			2,266			44.0	%	7,018			4,782			46.8	%
Merger and branding related expense	6,510			5,985			9,314			10,397			860			657.0	%	12,495			2,823			342.6	%
Business development and staff related	1,756			1,567			1,773			1,235			1,276			37.6	%	3,323			2,504			32.7	%
FDIC assessment and other regulatory charges	1,267			1,576			1,193			1,521			1,096			15.6	%	2,843			2,320			22.5	%
Bankcard expense	2,187			2,299			2,283			1,752			1,236			76.9	%	4,486			2,400			86.9	%
Amortization of intangibles	2,084			2,104			2,287			1,738			1,022			103.9	%	4,188			2,056			103.7	%
Professional fees	1,190			1,270			1,438			1,328			760			56.6	%	2,460			1,451			69.5	%
Advertising and marketing	1,054			1,134			1,301			1,150			648			62.7	%	2,188			1,490			46.8	%
Other	4,382			4,560			5,296			5,977			2,891			51.6	%	8,942			5,780			54.7	%
Total noninterest expense	$	75,889		$	77,423		$	83,896		$	75,419		$	44,885		69.1	%	$	153,312		$	91,326		67.9	%

Notes:

(A)  Includes noncash loan interest income related the discount on acquired performing loans on $2.2 million; $3.0 million; $3.5 million; $2.5 million and $812,000, respectively during the five quarters above,

and for the six months ended the amounts were $5.2 million and $1.1 million.

(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) Operating earnings, operating return on average assets, and operating 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, OTTI, and merger and branding related expense.  Management believes that non-GAAP operating 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.  Operating earnings and the related operating return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis:  (a) pre-tax merger and branding related expense of $6.5 million, $6.0 million, $9.3 million, $10.4 million, and $860,000, for the quarters ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013, respectively; and (b) securities gains of $88,000 for the quarter ended June 30, 2014.

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

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

(6) Pre-tax, pre-provision operating earnings is a non-GAAP measure and excludes the effect of the provision for loan losses, the provision for income taxes, the gains on acquisitions, gains or losses on sales of securities, OTTI, and merger and branding related expense.  Management believes that non-GAAP pre-tax, pre-provision operating earnings provides 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.

(7) Acquired credit impaired loans are not included in non-performing assets because the accretion method is being used for these acquired loan pools.

(8) If an other-than-temporary impairment charge was recorded during the quarter, the amount would be reflected in the “securities gains (losses), net” line item.

(9) June 30, 2014 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.  All ratios are rounded down to one decimal point.

(10) 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.

(11) Classified asset data excludes acquired assets.

(12) The allowance for acquired loan losses is reduced for any loan removals, which occur when a loan has been fully paid off, fully charged off, sold or transferred to OREO.

SOUTH STATE CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

	June 30,			December 31,			June 30,
	2014			2013			2013
	(Unaudited)						(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	388,852		$	184,611		$	157,362
Interest-bearing deposits with banks	6,418			32,632			4,478
Federal funds sold and securities purchased under agreements to resell	194,253			262,218			274,641
Total cash and cash equivalents	589,523			479,461			436,481
Investment securities:
Securities held to maturity (fair value of $11,058, $12,891, and $13,047, respectively)	10,389			12,426			12,427
Securities available for sale, at fair value	795,741			786,791			511,347
Other investments	10,518			13,386			7,805
Total investment securities	816,648			812,603			531,579
Loans held for sale	56,407			30,586			47,980
Loans:
Acquired credit impaired (covered of $243,942, $289,122, and $207,485, respectively; non-covered of $803,394, $926,958 and $613,105, respectively), net of allowance for loan losses	1,047,336			1,216,080			820,590
Acquired non-credit impaired (covered of $7,538, $7,824, and $0, respectively; non-covered of $1,440,045, $1,590,227 and $69,653, respectively)	1,447,583			1,598,051			69,653
Non-acquired	3,174,625			2,865,216			2,665,595
Less allowance for non-acquired loan losses	(35,422		)	(34,331		)	(38,625		)
Loans, net	5,634,122			5,645,016			3,517,213
Goodwill	317,385			319,107			103,292
Premises and equipment, net	184,113			188,114			109,794
Bank owned life insurance	97,933			97,197			43,286
FDIC receivable for loss share agreements	43,766			93,947			104,048
Deferred tax asset	66,780			76,690			36,144
Other real estate owned (covered of $21,998, $27,520, and $35,142, respectively; non-covered of $31,735, $37,398, and $33,486, respectively)	53,733			64,918			68,628
Core deposit and other intangibles	53,371			59,908			23,159
Mortgage servicing rights	21,015			20,729			—
Other assets	58,890			43,222			21,474
Total assets	$	7,993,686		$	7,931,498		$	5,043,078
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	1,623,291		$	1,487,798		$	1,038,382
Interest-bearing	4,952,847			5,067,699			3,144,587
Total deposits	6,576,138			6,555,497			4,182,969
Federal funds purchased and securities sold under agreements to repurchase	280,595			211,401			262,447
Other borrowings	101,045			102,060			54,372
Other liabilities	82,890			81,071			26,698
Total liabilities	7,040,668			6,950,029			4,526,486
Shareholders’ equity:
Preferred stock - $.01 par value; authorized 10,000,000 shares; 0, 65,000, and 0 shares issued and outstanding, respectively	—			1			—
Common stock - $2.50 par value; authorized 40,000,000 shares; 24,130,006, 24,104,124, and 17,017,904 shares issued and outstanding, respectively	60,325			60,260			42,580
Surplus	699,324			762,354			330,563
Retained earnings	192,961			168,577			153,040
Accumulated other comprehensive (loss)	408			(9,723		)	(9,591		)
Total shareholders’ equity	953,018			981,469			516,592
Total liabilities and shareholders’ equity	$	7,993,686		$	7,931,498		$	5,043,078

SOUTH STATE CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Interest income:
Loans, including fees	$	79,322		$	53,816		$	161,163		$	106,199
Investment securities:
Taxable	3,997			2,096			7,878			4,257
Tax-exempt	1,071			1,174			2,227			2,381
Federal funds sold and securities purchased under agreements to resell	441			444			901			862
Total interest income	84,831			57,530			172,169			113,699
Interest expense:
Deposits	2,261			1,463			4,654			3,023
Federal funds purchased and securities sold under agreements to repurchase	89			115			191			251
Other borrowings	1,508			668			3,009			1,340
Total interest expense	3,858			2,246			7,854			4,614
Net interest income	80,973			55,284			164,315			109,085
Provision for loan losses	2,169			179			3,018			1,239
Net interest income after provision for loan losses	78,804			55,105			161,297			107,846
Noninterest income:
Service charges on deposit accounts	9,144			5,736			18,132			11,497
Bankcard services income	7,741			4,244			14,865			8,138
Mortgage banking income	4,683			1,922			7,974			5,277
Trust and investment services income	4,812			2,439			9,355			4,752
Securities gains (losses), net	88			—			88			—
Amortization of FDIC indemnification asset	(5,815		)	(7,310		)	(12,893		)	(14,481		)
Other	3,746			1,454			7,557			2,825
Total noninterest income	24,399			8,485			45,078			18,008
Noninterest expense:
Salaries and employee benefits	40,276			23,746			79,369			46,998
Information services expense	4,313			2,992			8,535			6,184
OREO expense and loan related	1,875			2,820			6,144			5,922
Net occupancy expense	5,731			3,272			11,321			6,617
Furniture and equipment expense	3,264			2,266			7,018			4,783
Merger and branding related expense	6,510			860			12,495			2,823
FDIC assessment and other regulatory charges	1,267			1,096			2,843			2,320
Bankcard expense	2,187			1,236			4,486			2,400
Amortization of intangibles	2,084			1,022			4,188			2,056
Professional fees	1,190			760			2,460			1,451
Advertising and marketing	1,054			648			2,188			1,490
Other	6,138			4,167			12,265			8,282
Total noninterest expense	75,889			44,885			153,312			91,326
Earnings:
Income before provision for income taxes	27,314			18,705			53,063			34,528
Provision for income taxes	9,368			6,173			18,200			11,347
Net income	17,946			12,532			34,863			23,181
Preferred stock dividends	—			—			1,073			—
Accretion on preferred stock discount	—			—			—			—
Net income available to common shareholders	$	17,946		$	12,532		$	33,790		$	23,181
Earnings per common share:
Basic	$	0.75		$	0.75		$	1.41		$	1.38
Diluted	$	0.74		$	0.74		1.40			1.36
Dividends per common share	$	0.20		$	0.18		$	0.39		$	0.36
Weighted-average common shares outstanding:
Basic	23,892			16,790			23,882			16,804
Diluted	24,141			16,990			24,126			16,986