SouthState (SSB) 8-K Increases Quarterly Cash Dividend

Exhibit 99.1

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

South State Corporation Reports Operating Results of $1.00 per share;

Increases Quarterly Cash Dividend

COLUMBIA, S.C.—October 28, 2014—South State Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and nine-month periods ended September 30, 2014.  Highlights of the third quarter 2014 include the following:

·Net income available to common shareholders of $19.3 million, or $0.80 diluted EPS in 3Q 2014, up 7.7%, compared to $17.9 million, or $0.74 diluted EPS in 2Q 2014, and up 67.9% from $11.5 million, or $0.52 diluted EPS in 3Q 2013;

·Operating earnings of $24.2 million, or $1.00 diluted operating EPS, up 9.1%, compared to $22.2 million, or $0.92 diluted operating EPS in 2Q 2014, and up 28.3% from $18.8 million, or $0.85 diluted operating EPS in 3Q 2013 (operating earnings exclude merger and branding expenses and include preferred stock dividends paid);

·Successfully executed the system conversion related to the First Financial merger and rebranded the Company to South State Bank;

·Return on average assets was 0.96% annualized in 3Q 2014, up from 0.91% in 2Q 2014 and 0.66% in 3Q 2013;  Operating return on average assets was 1.21% annualized in 3Q 2014 compared to 1.12% in 2Q 2014 and 1.07% in 3Q 2013;

·Return on average tangible common equity was 14.0% annualized in 3Q 2014 compared to 13.6% in 2Q 2014, and 10.4% in 3Q 2013;  Operating return on average tangible common equity was 17.2% in 3Q 2014 compared to 16.6% in 2Q 2014 and 16.4% in 3Q 2013;

·Tangible common equity per share increased by $0.66 during the third quarter to $24.78;

·Net charge-offs of non-acquired loans increased to 0.26% annualized in 3Q 2014, compared to 0.17% annualized in 2Q 2014 and decreased from 0.45% annualized in 3Q 2013;

·Operating efficiency ratio decreased to 61.3% in 3Q2014, compared to 63.6% in 2Q2014 and 64.3% in 3Q2013;

·Legacy loan growth for 3Q 2014 was $130.1 million or 16.4% annualized.

Quarterly Cash Dividend

The Board of Directors of South State Corporation has declared a quarterly cash dividend of $0.22 per share payable on its common stock.  This per share amount is $0.01 per share, or 4.8% higher than the dividend paid in the immediately preceding quarter and is $0.03 per share, or 15.8%, higher than a year ago.  The dividend will be payable on November 21, 2014 to shareholders of record as of November 14, 2014.

Third 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 $19.3 million, or $0.80 per diluted common share for the three months ended September 30, 2014 up from $17.9 million, or $0.74 per diluted common share for the three months ended June 30, 2014.  The $1.4 million increase was primarily the result of a lower provision for income taxes of $1.0 million.  During the quarter, our effective income tax rate declined to 30.16% compared to 34.30%.  This decrease was primarily the result of additional tax credits (both federal and state related) included in the December 31, 2013 returns filed in September 2014 than what was included in the 2013 income tax provision, and additional tax credits for 2014.  These additional tax credits for 2014 were the result of our investment in certain tax advantaged community projects and “new job” related credits in South Carolina.

“Our third quarter results were highlighted by operating return on tangible equity exceeding 17%, operating return on average assets of 1.21% and a year over year increase in operating earnings of 28.3%,” said Robert R. Hill, Jr., CEO of South State Corporation.  “We are also pleased to achieve $1.00 in operating earnings per share for the third quarter, a number we have previously discussed as a post integration target for the company.  Our team has done an outstanding job with our merger and branding integration that was completed during the third quarter.  The company’s performance has allowed a third consecutive quarterly dividend increase to $0.22 per share this quarter, an increase of 15.8% in our dividend year over year.”

Asset Quality

During the third 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 $4.8 million, or 13.7%.  Non-acquired nonperforming assets (NPAs) as a percentage of total non-acquired loans and repossessed assets declined to 1.20% compared to 1.39% in the second quarter of 2014.  NPAs, excluding acquired NPAs, declined by $4.5 million from the second quarter 2014 level of $44.3 million.

During the third quarter, the Company reported $5.9 million in nonperforming loans related to “acquired non-credit impaired loans”.  In addition, acquired nonperforming OREO and other assets owned declined by $3.0 million from June 30, 2014.  Total nonperforming assets, including acquired assets, declined from $89.9 million at June 30, 2014 to $88.2 million at September 30, 2014.  From September 30, 2013, total nonperforming assets, including acquired assets, has declined by more than 30%, or $38.0 million.

At September 30, 2014, the allowance for non-acquired loan losses was $34.8 million or 1.05% of non-acquired period-end loans.  The current allowance for loan losses provides 1.14 times coverage of period-end non-acquired nonperforming loans, up from 1.00 times at the end of the second quarter of 2014.  Net charge-offs within the non-acquired portfolio were $2.1 million for the quarter or 0.26% annualized, up from the second quarter of 2014 of $1.3 million or 0.17% annualized, and down from the second quarter of 2013 of $3.0 million or 0.45% annualized.

During the quarter, net charge offs related to “acquired non-credit impaired loans” were $438,000 or 0.12% annualized, and the Company recorded a provision for loan losses, accordingly.

Total OREO decreased by $2.5 million during the third quarter to $51.2 million compared to the second quarter of 2014 of $53.7 million.  Non-acquired OREO increased by $357,000, while acquired (covered and uncovered) OREO declined by $2.8 million.  This decline was the result of our continued effort in disposition of these assets.  Additionally, OREO assets (both acquired and non-acquired) were written down during the quarter by approximately $2.3 million, an increase of $2.0 million over the write downs from second quarter.  As a result, our OREO and loan related costs were up significantly during the quarter to $3.4 million compared to the second quarter of $1.9 million.

Net Interest Income and Margin

Non-taxable equivalent net interest income was $80.4 million for the third quarter of 2014, a $605,000 decrease from the second quarter of 2014, resulting primarily from the following:

1.A $140.4 million decrease in the average balance of acquired loans from the second quarter of 2014, coupled with a decrease of 5 basis points in the yield on acquired loans from 7.33% to 7.28% which resulted in a decrease of $2.4 million; which was mostly offset by

2.Non-acquired loans average balance growing by more than $184.5 million and the yield on these loans declined from 4.18% during the second quarter to 4.15% resulting in an increase in interest income of $2.1 million; and

3.The increase in interest expense from funding sources was $122,000.  Certificates and other time deposits accounted for approximately half of the increase and money market accounts the other half, as the deposit base of both categories declined during the quarter and the related rate paid increased by 4 basis points and 1 basis point, respectively.

Tax-equivalent net interest margin decreased 10 basis points from the second quarter of 2014 and by 46 basis points from the third quarter of 2013.  The Company’s average yield on interest-earning assets decreased 9 basis points while the average rate on interest-bearing liabilities increased 1 basis point from the second quarter of 2014.  During the third quarter of 2014, the Company’s average total assets slightly increased to $8.0 billion and average earning assets remained at $6.9 billion.  Average interest-bearing liabilities declined by approximately $78.8 million.  Average non-interest bearing demand deposits increased by $65.1 million during the quarter and by $297.0 million from September 30, 2013.

Noninterest Income and Expense

Noninterest income was flat from the second quarter of 2014 at $24.5 million for the third quarter 2014.  All categories declined, except for the amortization of the FDIC indemnification asset and other revenue, which combined offset the declines in all categories.  Compared to the third quarter of 2013, noninterest income grew significantly by $9.3 million due primarily to the First Financial merger which

included three months of revenue in 2014 compared to two months of the quarter in 2013.  Additionally, the amortization of the indemnification asset declined by approximately $2.8 million.

Noninterest expense was $75.1 million in the third quarter of 2014, down from $75.9 million from the second quarter of 2014.  This decrease from the second quarter of 2014 was primarily due to lower cost in all categories totaling approximately $2.7 million, which was the result of the system conversion in July and eight branch closures throughout the quarter.  These lower costs were offset by increases in OREO and loan related expenses of $1.5 million and merger and brand-related expense of $336,000 to $6.8 million.  The efficiency ratio for the quarter was 71.0%, down from 71.5% in the second quarter.  Our operating efficiency ratio, which excludes merger and brand-related expenses and OREO and loan related expenses, declined to 61.3% compared to 63.6% in the second quarter.

Compared to the third quarter of 2013, noninterest expense was slightly down from the third quarter of 2013 which was $75.4 million.  There was a significant increase as a result of the First Financial merger in salaries and benefits expense of approximately $5.6 million, which was offset by declines in merger and branding related expenses, information services, advertising and marketing, and in other expense.

Balance Sheet and Capital

At September 30, 2014, the Company’s total assets were $7.9 billion, down from $8.0 billion at September 30, 2013, and flat 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 $23.6 million, or 4.9%, non-acquired loans by $439.5 million, or 15.3%, loans held for sale by $42.1 million, or 137.5%, and the investment securities portfolio by $13.4 million, or 1.7%.  Loans held for sale increased primarily from the increase in closings of mortgage loans from the pipeline.  Fully offsetting these increases were decreases in acquired loans by $463.7 million, the FDIC receivable by $55.5 million and OREO by $13.7 million.

The Company’s book value per common share increased to $40.07 per share at September 30, 2014, compared to $39.50 at June 30, 2014.  Capital increased by $14.0 million due primarily to net income of $19.3 million, which was offset by the common dividend paid of $5.1 million.  Accumulated comprehensive income decreased by $1.5 million, net of tax, in the third quarter, primarily the result of change in the fair value of the available for sale investment securities portfolio.  As of September 30, 2014, capital was within $3.0 million from the level at September 30, 2013 even with the redemption of $65.0 million of preferred stock in March of 2014.  Tangible book value (“TBV”) per common share increased by $0.66 per share to $24.78 at September 30, 2014, from $24.12 at June 30, 2014.  This increase was primarily the result of the strong net income during the quarter, net of the dividend paid to shareholders.

In addition, tangible common equity to tangible assets increased to 7.94% at September 30, 2014 up from 7.63% at the end of the second quarter of 2014.  Tangible common equity was 6.87% at September 30, 2013.

The total risk-based capital ratio is estimated to be around 14.1% up from June 30, 2014 of 13.8%.  Tier 1 leverage ratio increased to approximately 9.1% from 8.9% at June 30, 2014.  The increase was driven by net income for the quarter.  The Company’s capital position remains “well-capitalized” by all measures at September 30, 2014.

“Our balance sheet continued to strengthen during the quarter as nonperforming assets declined both in loans and in OREO.  Non-acquired loans now comprise more than 58% of our total loans compared to 56% last quarter.  The FDIC receivable balance declined another $12.8 million through cash collections and negative accretion.  Our capital position improved by $14.0 million and noninterest bearing deposits increased another $31.0 million,” said John C. Pollok, COO and CFO.

South State Corporation will hold a conference call today, October 28th; 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 10053513.  Participants can also listen to the live audio webcast through the Investor Relations section of www.SouthStateBank.com.  A replay will be available beginning October 28th by 2:00 p.m. Eastern Time until 9:00 a.m. on November 12, 2014.  To listen to the replay, dial 877-344-7529 or 412-317-0088.  The pass code is 10053513.

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

South State Corporation is the largest 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 $7.9 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)

																Third
	Three Months Ended															Quarter		Nine Months Ended						YTD
	September 30,			June 30,			March 31,			December 31,			September 30,			2014 - 2013		September 30,						2014 - 2013
EARNINGS SUMMARY (non tax equivalent)	2014			2014			2014			2013			2013			% Change		2014			2013			% Change
Interest income (A)	$	84,348		$	84,831		$	87,463		$	88,748		$	83,793		0.7	%	$	256,642		$	197,494		29.9	%
Interest expense	3,979			3,858			3,996			4,359			4,038			-1.5	%	11,833			8,648			36.8	%
Net interest income	80,369			80,973			83,467			84,389			79,755			0.8	%	244,809			188,846			29.6	%
Provision for loan losses (1)	2,091			2,169			849			(12		)	659			217.3	%	5,109			1,898			169.2	%
Noninterest income	24,453			24,399			20,545			20,683			15,170			61.2	%	69,397			33,173			109.2	%
Noninterest expense	75,058			75,889			77,415			83,896			75,408			-0.5	%	228,362			166,735			37.0	%
Income before provision for income taxes	27,673			27,314			25,748			21,188			18,858			46.7	%	80,735			53,386			51.2	%
Provision for income taxes	8,346			9,368			8,832			7,204			6,804			22.7	%	26,546			18,151			46.3	%
Net income	19,327			17,946			16,916			13,984			12,054			60.3	%	54,189			35,235			53.8	%
Preferred stock dividends	—			—			1,073			812			542					1,073			542
Net income available to common shareholders (GAAP)	$	19,327		$	17,946		$	15,843		$	13,172		$	11,512		67.9	%	$	53,116		$	34,693		53.1	%
Effective tax rate	30.16		%	34.30		%	34.30		%	34.00		%	36.08		%			32.88		%	34.00		%
Basic weighted-average common shares	23,898,982			23,892,245			23,873,178			23,825,636			21,893,528			9.2	%	23,889,546			18,517,610			29.0	%
Diluted weighted-average common shares	24,160,461			24,140,600			24,116,174			24,079,350			22,127,979			9.2	%	24,139,374			18,717,181			29.0	%
Earnings per common share - Basic	$	0.81		$	0.75		$	0.66		$	0.55		$	0.53		52.8	%	$	2.22		$	1.87		18.7	%
Earnings per common share - Diluted	0.80			0.74			0.66			0.55			0.52			53.8	%	2.20			1.85			18.9	%
Cash dividends declared per common share	$	0.21		$	0.20		$	0.19		$	0.19		$	0.19		10.5	%	$	0.60		$	0.55		9.1	%
Dividend payout ratio (2)	26.22		%	26.89		%	28.91		%	34.74		%	39.71		%	-34.0	%	27.25		%	30.84		%	-11.6	%
Operating Earnings (non-GAAP) (3)
Net income (GAAP)	$	19,327		$	17,946		$	16,916		$	13,984		$	12,054		60.3	%	$	54,189		$	35,235		53.8	%
Securities (gains) losses, net of tax	63			(58		)	—			—			—					5			—
Merger and branding related expense, net of tax	4,781			4,277			3,932			6,147			7,326			-34.7	%	12,982			9,224
Net operating earnings (loss) (non-GAAP)	24,171			22,165			20,848			20,131			19,380			24.7	%	67,176			44,459			51.1	%
Preferred stock dividends	—			—			1,073			812			542					1,073			542
Net operating earnings (loss) available to common shareholders (non-GAAP)	$	24,171		$	22,165		$	19,775		$	19,319		$	18,838		28.3	%	$	66,103		$	43,917		50.5	%
Operating earnings (loss) per common share - Basic	$	1.01		$	0.93		$	0.83		$	0.81		$	0.86		17.4	%	$	2.77		$	2.37		16.9	%
Operating earnings (loss) per common share - Diluted	1.00			0.92			0.82			0.80			0.85			17.6	%	2.74			2.35			16.6	%
																Third
	AVERAGE for Quarter Ended															Quarter		AVERAGE for Nine Months						YTD
	September 30,			June 30,			March 31,			December 31,			September 30,			2014 - 2013		September 30,			September 30,			2014 - 2013
BALANCE SHEET HIGHLIGHTS	2014			2014			2014			2013			2013			% Change		2014			2013			% Change
Loans held for sale	$	50,116		$	50,423		$	29,386		$	35,673		$	53,204		-5.8	%	$	39,456		$	48,161		-18.1	%
Acquired non-credit impaired loans	1,429,100			1,479,412			1,575,392			1,635,418			1,227,822			16.4	%	1,495,667			406,374			268.1	%
Acquired credit impaired loans, net of allowance for acquired loan losses	987,874			1,077,960			1,162,467			1,247,891			1,199,761			-17.7	%	1,073,420			1,050,662			2.2	%
Non-acquired loans	3,246,025			3,061,529			2,909,175			2,793,522			2,698,580			20.3	%	3,073,530			2,634,362			16.7	%
Total loans (1)	5,662,999			5,618,901			5,647,034			5,676,831			5,126,163			10.5	%	5,642,617			4,091,398			37.9	%
FDIC receivable for loss share agreements	38,061			60,967			83,010			105,554			116,849			-67.4	%	60,515			123,500			-51.0	%
Total investment securities	822,833			810,909			801,263			699,592			656,658			25.3	%	811,747			579,646			40.0	%
Intangible assets	369,460			374,021			377,265			379,894			308,729			19.7	%	373,553			186,628			100.2	%
Earning assets	6,930,480			6,910,549			6,842,708			6,880,973			6,254,128			10.8	%	6,852,027			5,086,351			34.7	%
Total assets	7,952,004			7,942,953			7,959,787			7,977,604			7,214,418			10.2	%	7,950,384			5,808,156			36.9	%
Noninterest-bearing deposits	1,656,120			1,591,002			1,485,014			1,510,734			1,359,137			21.9	%	1,579,427			1,115,407			41.6	%
Interest-bearing deposits	4,900,038			4,986,465			5,033,181			5,098,095			4,626,023			5.9	%	4,972,736			3,679,676			35.1	%
Total deposits	6,556,158			6,577,467			6,518,195			6,608,829			5,985,160			9.5	%	6,552,163			4,795,083			36.6	%
Federal funds purchased and repurchase agreements	256,000			247,672			273,636			229,382			251,551			1.8	%	259,038			289,143			-10.4	%
Other borrowings	101,090			101,763			102,269			101,948			93,849			7.7	%	101,202			67,818			49.2	%
Shareholders’ common equity (excludes preferred stock)	959,536			942,935			931,961			914,335			790,554			21.4	%	944,912			607,385			55.6	%
Shareholders’ equity	959,536			942,935			994,073			979,335			837,185			14.6	%	965,388			623,099			54.9	%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Third
	ENDING Balance															Quarter
	September 30,			June 30,			March 31,			December 31,			September 30,			2014 - 2013
BALANCE SHEET HIGHLIGHTS	2014			2014			2014			2013			2013			% Change
Loans held for sale	$	72,639		$	56,407		$	57,200		$	30,586		$	51,207		41.9	%
Acquired non-credit impaired loans	1,377,343			1,447,583			1,512,201			1,600,935			1,665,334			-17.3	%
Acquired credit impaired loans	988,524			1,056,495			1,124,809			1,232,256			1,328,888			-25.6	%
Non-acquired loans	3,304,708			3,174,625			2,979,958			2,865,216			2,741,242			20.6	%
Total loans (1)	5,670,575			5,678,703			5,616,968			5,690,965			5,735,464			-1.1	%
FDIC receivable for loss share agreements	30,983			43,766			67,984			93,947			115,773			-73.2	%
Total investment securities	826,021			816,648			814,533			812,603			652,610			26.6	%
Intangible assets	368,979			371,118			375,315			377,655			379,883			-2.9	%
Allowance for acquired credit impaired loan losses	(8,032		)	(9,159		)	(11,046		)	(11,618		)	(12,260		)	-34.5	%
Allowance for non-acquired loan losses (1)	(34,804		)	(35,422		)	(34,669		)	(34,331		)	(36,145		)	-3.7	%
Premises and equipment	173,425			184,113			187,127			188,114			184,959			-6.2	%
Total assets	7,896,132			7,993,686			7,990,975			7,931,498			8,028,441			-1.6	%
Noninterest-bearing deposits	1,654,308			1,623,291			1,581,157			1,487,798			1,477,793			11.9	%
Interest-bearing deposits	4,863,920			4,952,847			5,049,496			5,067,699			5,181,315			-6.1	%
Total deposits	6,518,228			6,576,138			6,630,653			6,555,497			6,659,108			-2.1	%
Federal funds purchased and repurchase agreements	231,229			280,595			254,985			211,401			233,792			-1.1	%
Other borrowings	101,127			101,045			100,963			102,060			101,347			-0.2	%
Total liabilities	6,929,137			7,040,668			7,056,812			6,950,029			7,058,415			-1.8	%
Shareholders’ common equity (excludes preferred stock)	966,995			953,018			934,163			916,469			905,026			6.8	%
Shareholders’ equity	966,995			953,018			934,163			981,469			970,026			-0.3	%
Common shares issued and outstanding	24,135,220			24,130,006			24,118,243			24,104,124			24,066,545			0.3	%

																Third
	ENDING Balance															Quarter
	September 30,			June 30,			March 31,			December 31,			September 30,			2014 - 2013
NONPERFORMING ASSETS (ENDING BALANCE) (7)	2014			2014			2014			2013			2013			% Change
Non-acquired
Non-acquired nonaccrual loans	$	20,419		$	26,546		$	29,190		$	31,333		$	38,631		-47.1	%
Restructured loans	9,633			8,409			8,156			10,690			10,837			-11.1	%
Non-acquired other real estate owned (“OREO”)	9,360			9,003			12,187			13,456			16,555			-43.5	%
Accruing loans past due 90 days or more	429			358			96			258			122			251.6	%
Other nonperforming assets	—			—			—			—			—
Total non-acquired nonperforming assets	39,841			44,316			49,629			55,737			66,145			-39.8	%
Acquired non-credit impaired loans
Acquired nonaccrual loans	5,359			—			—			—			—
Acquired accruing loans past due 90 days or more	501			—			—			—			—
Total acquired non-credit impaired loans	5,860			—			—			—			—
Acquired OREO and other nonperforming assets
OREO covered under FDIC loss share agreements	18,961			21,999			29,003			27,520			40,543			-53.2	%
OREO not covered under FDIC loss share agreements	22,929			22,732			22,957			23,941			18,775			22.1	%
Other nonperforming assets	640			811			1,032			943			718
Total acquired OREO and other nonperforming assets	42,530			45,542			52,992			52,404			60,036			-29.2	%
Total acquired nonperforming assets	48,390			45,542			52,992			52,404			60,036			-19.4	%
Total nonperforming assets	$	88,231		$	89,858		$	102,621		$	108,141		$	126,181		-30.1	%
Excluding Acquired Assets
NPLs as a percentage of period end non-acquired loans	0.92		%	1.11		%	1.26		%	1.48		%	1.81		%
Total nonperforming assets as a percentage of total non-acquired loans and repossessed assets (1) (4)	1.20		%	1.39		%	1.66		%	1.94		%	2.40		%
Total nonperforming assets as a percentage of total assets (5)	0.50		%	0.55		%	0.62		%	0.70		%	0.82		%
Including Acquired Assets
NPLs as a percentage of period end loans	0.64		%	0.62		%	0.67		%	0.74		%	0.86		%
Total nonperforming assets as a percentage of total loans and repossessed assets (1) (4)	1.54		%	1.57		%	1.81		%	1.88		%	2.16		%
Total nonperforming assets as a percentage of total assets	1.12		%	1.12		%	1.28		%	1.36		%	1.57		%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Third
	Quarter Ended															Quarter		Nine Months Ended						YTD
	September 30,			June 30,			March 31,			December 31,			September 30,			2014 - 2013		September 30,			September 30,			2014 - 2013
ALLOWANCE FOR LOAN LOSSES (1)	2014			2014			2014			2013			2013			% Change		2014			2013			% Change
Non-acquired Loans:
Balance at beginning of period	$	35,422		$	34,669		$	34,331		$	36,145		$	38,625		-8.3	%	$	34,331		$	44,378		-22.6	%
Loans charged off	(1,500		)	(1,359		)	(901		)	(2,778		)	(3,815		)	-60.7	%	(3,760		)	(10,790		)	-65.2	%
Overdrafts charged off	(1,213		)	(530		)	(469		)	(389		)	(479		)	153.2	%	(2,212		)	(1,331		)	66.2	%
Loan recoveries	362			413			817			1,215			1,095			-66.9	%	1,592			2,357			-32.5	%
Overdraft recoveries	213			144			221			138			154			38.3	%	578			513			12.7	%
Net charge-offs	(2,138		)	(1,332		)	(332		)	(1,814		)	(3,045		)	-29.8	%	(3,802		)	(9,251		)	-58.9	%
Provision for loan losses on non-acquired loans	1,520			2,085			670			—			565			169.0	%	4,275			1,018			319.9	%
Balance at end of period, non-acquired loans	$	34,804		$	35,422		$	34,669		$	34,331		$	36,145		-3.7	%	$	34,804		$	36,145		-3.7	%
Acquired Non-Credit Impaired Loans:
Balance at beginning of period	$	—		$	—		$	—		$	—		$	—				$	—		$	—
Loans charged off	(879		)	—			—			—			—					(879		)	—
Overdrafts charged off	—			—			—			—			—					—			—
Loan recoveries	441			—			—			—			—					441			—
Overdraft recoveries	—			—			—			—			—					—			—
Net charge-offs	(438		)	—			—			—			—					(438		)	—
Provision for loan losses on acquired non-credit impaired loans	438			—			—			—			—					438			—
Balance at end of period, acquired non-credit impaired loans	—			—			—			—			—					—			—
Total provision for loan losses charged to operations	$	2,091		$	2,169		$	849		$	(12	)	$	659				$	5,109		$	1,898
Allowance for non-acquired loan losses as a percentage of non-acquired loans (1)	1.05		%	1.12		%	1.16		%	1.20		%	1.32		%			1.05		%	1.32		%
Allowance for non-acquired loan losses as a percentage of non-acquired nonperforming loans	114.18		%	100.31		%	92.59		%	81.20		%	72.89		%			114.18		%	72.89		%
Net charge-offs on non-acquired loans as a percentage of average non-acquired loans (annualized) (1)	0.26		%	0.17		%	0.05		%	0.26		%	0.45		%			0.17		%	0.47		%
Net charge-offs on acquired non-credit impaired loans as a percentage of average acquired non-credit impaired loans (annualized) (1)	0.12		%	0.00		%	0.00		%	0.00		%	0.00		%			0.04		%	0.00		%
DAY 2 VALUATION ALLOWANCE ON ACQUIRED CREDIT IMPAIRED LOANS
Balance at beginning of period	$	9,159		$	11,046		$	11,618		$	12,260		$	14,461				$	11,618		$	17,218
Provision for loan losses on acquired credit impaired loans:
Provision for loan losses before benefit attributable to FDIC loss share agreements	(658		)	(1,438		)	304			73			(456		)			(1,792		)	(991		)
Benefit attributable to FDIC loss share agreements	791			1,522			(125		)	(85		)	550					2,188			1,871
Net provision for loan losses on acquired credit impaired loans	133			84			179			(12		)	94					396			880
Provision for loan losses recorded through the FDIC loss share receivable	(791		)	(1,522		)	125			85			(550		)			(2,188		)	(1,871		)
Reduction due to loan removals (12)	(469		)	(449		)	(876		)	(715		)	(1,745		)			(1,794		)	(3,967		)
Balance at end of period, acquired credit impaired loans	$	8,032		$	9,159		$	11,046		$	11,618		$	12,260				$	8,032		$	12,260

South State Corporation

(Unaudited)

(Dollars in thousands, except per share data)

											Third
	ENDING Balance										Quarter
	September 30,		June 30,		March 31,		December 31,		September 30,		2014 - 2013
LOAN PORTFOLIO (ENDING balance) (1)	2014		2014		2014		2013		2013		% Change
Acquired loans:
Acquired covered loans:
Commercial non-owner occupied real estate:
Construction and land development	$	22,291	$	30,859	$	37,757	$	43,396	$	50,582	-55.9	%
Commercial non-owner occupied	36,653		47,017		50,814		53,525		62,985		-41.8	%
Total commercial non-owner occupied real estate	58,944		77,876		88,571		96,921		113,567		-48.1	%
Consumer real estate:
Consumer owner occupied	31,757		36,017		37,111		38,946		41,379		-23.3	%
Home equity loans	35,471		33,684		34,627		35,884		37,943		-6.5	%
Total consumer real estate	67,228		69,701		71,738		74,830		79,322		-15.2	%
Commercial owner occupied real estate	54,776		72,247		78,861		88,722		93,309		-41.3	%
Commercial and industrial	10,450		11,711		11,964		14,475		16,596		-37.0	%
Other income producing property	22,445		27,521		29,471		31,739		37,543		-40.2	%
Consumer non real estate	821		1,583		1,772		1,878		2,322		-64.6	%
Total acquired covered loans	214,664		260,639		282,377		308,565		342,659		-37.4	%
Acquired non-covered loans:
Commercial non-owner occupied real estate:
Construction and land development	76,167		86,830		96,981		129,289		134,342		-43.3	%
Commercial non-owner occupied	192,322		191,637		204,094		226,530		245,046		-21.5	%
Total commercial non-owner occupied real estate	268,489		278,467		301,075		355,819		379,388		-29.2	%
Consumer real estate:
Consumer owner occupied	879,302		912,346		951,131		981,834		1,013,022		-13.2	%
Home equity loans	303,615		313,318		324,686		335,241		349,517		-13.1	%
Total consumer real estate	1,182,917		1,225,664		1,275,817		1,317,075		1,362,539		-13.2	%
Commercial owner occupied real estate	188,482		188,490		200,370		211,030		230,849		-18.4	%
Commercial and industrial	62,003		69,953		76,016		98,046		111,135		-44.2	%
Other income producing property	146,819		154,100		160,498		171,544		183,996		-20.2	%
Consumer non real estate	302,493		326,765		340,857		371,112		383,656		-21.2	%
Total acquired non-covered loans	2,151,203		2,243,439		2,354,633		2,524,626		2,651,563		-18.9	%
Total acquired loans	2,365,867		2,504,078		2,637,010		2,833,191		2,994,222		-21.0	%
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	385,318		371,751		319,441		299,951		288,199		33.7	%
Commercial non-owner occupied	318,470		302,961		285,145		291,170		282,678		12.7	%
Total commercial non-owner occupied real estate	703,788		674,712		604,586		591,121		570,877		23.3	%
Consumer real estate:
Consumer owner occupied	702,521		637,071		595,652		548,170		498,734		40.9	%
Home equity loans	276,341		271,028		263,057		257,139		255,291		8.2	%
Total consumer real estate	978,862		908,099		858,709		805,309		754,025		29.8	%
Commercial owner occupied real estate	881,403		849,048		845,728		833,513		814,259		8.2	%
Commercial and industrial	355,580		353,211		333,574		321,824		301,845		17.8	%
Other income producing property	154,822		151,928		158,186		143,204		140,024		10.6	%
Consumer non real estate	183,451		170,982		147,710		136,410		116,312		57.7	%
Other	46,802		66,645		31,465		33,835		43,900		6.6	%
Total non-acquired loans	3,304,708		3,174,625		2,979,958		2,865,216		2,741,242		20.6	%
Total loans (net of unearned income) (1)	$	5,670,575	$	5,678,703	$	5,616,968	$	5,698,407	$	5,735,464	-1.1	%
Loans held for sale	$	72,639	$	56,407	$	57,200	$	30,586	$	51,207	41.9	%

South State Corporation

(Unaudited)

(Dollars in thousands, except per share data)

	Quarter Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,		September 30,
SELECTED RATIOS	2014			2014			2014			2013			2013			2014		2013
Return on average assets (annualized)	0.96		%	0.91		%	0.86		%	0.70		%	0.66		%	0.91	%	0.81	%
Operating return on average assets (annualized) (non-GAAP) (3)	1.21		%	1.12		%	1.06		%	1.00		%	1.07		%	1.13	%	1.02	%
Return on average common equity (annualized)	7.99		%	7.63		%	6.89		%	5.72		%	5.78		%	7.52	%	7.64	%
Return on average equity (annualized)	7.99		%	7.63		%	6.90		%	5.67		%	5.71		%	7.50	%	7.56	%
Operating return on average common equity (annualized) (non-GAAP) (3)	9.99		%	9.43		%	8.61		%	8.38		%	9.45		%	9.35	%	9.67	%
Operating return on average equity (annualized) (non-GAAP) (3)	9.99		%	9.43		%	8.51		%	8.16		%	9.18		%	9.30	%	9.54	%
Return on average tangible common equity (annualized) (non-GAAP) (10)	13.97		%	13.62		%	12.59		%	10.90		%	10.39		%	13.41	%	11.82	%
Operating return on average tangible common equity (annualized) (non-GAAP) (10)	17.23		%	16.59		%	15.47		%	15.46		%	16.43		%	16.45	%	14.75	%
Return on average tangible equity (annualized) (non-GAAP) (10)	13.97		%	13.62		%	12.03		%	10.25		%	9.88		%	13.19	%	11.39	%
Net interest margin (tax equivalent)	4.65		%	4.75		%	4.99		%	4.91		%	5.11		%	4.83	%	5.03	%
Efficiency ratio (tax equivalent)	70.98		%	71.52		%	73.84		%	79.22		%	78.74		%	72.11	%	74.26	%
Operating efficiency ratio excluding OREO expense	61.32		%	63.62		%	64.06		%	66.30		%	64.27		%	63.06	%	64.19	%
Book value per common share	$	40.07		$	39.50		$	38.73		$	40.72		$	40.31
Tangible common equity per common share (non-GAAP) (10)	$	24.78		$	24.12		$	23.17		$	22.35		$	21.82
Common shares issued and outstanding	24,135,220			24,130,006			24,118,243			24,104,124			24,066,545
Common equity-to-assets	12.25		%	11.92		%	11.69		%	11.55		%	11.27		%
Equity-to-assets	12.25		%	11.92		%	11.69		%	12.37		%	12.08		%
Tangible common equity-to-tangible assets (non-GAAP) (10)	7.94		%	7.63		%	7.34		%	7.13		%	6.87		%
Tangible equity-to-tangible assets (non-GAAP) (10)	7.94		%	7.63		%	7.34		%	7.99		%	7.72		%
Tier 1 leverage (9)	9.1		%	8.9		%	8.6		%	9.3		%	10.0		%
Tier 1 risk-based capital (9)	13.2		%	12.9		%	12.7		%	13.5		%	13.1		%
Total risk-based capital (9)	14.1		%	13.8		%	13.6		%	14.4		%	14.4		%

South State Corporation

(Unaudited)

(Dollars in thousands, except per share data)

	Quarter Ended															Nine Months Ended						YTD
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,			2014 - 2013
RECONCILIATION OF NON-GAAP TO GAAP	2014			2014			2014			2013			2013			2014			2013			% Change
Pre-tax, Pre-provision Operating Earnings (6)
Net income (GAAP)	$	19,327		$	17,946		$	16,916		$	13,984		$	12,054		$	54,189		$	35,235		53.8	%
Provision for loan losses (1)	2,091			2,169			849			(12		)	659			5,109			1,898			169.2	%
Provision for income taxes	8,346			9,368			8,832			7,204			6,804			26,546			18,151			46.3	%
Pre-tax, pre-provision income	29,764			29,483			26,597			21,176			19,517			85,844			55,284			55.3	%
Securities gains	90			(88		)	—			—			—			2			—
Merger and branding related expense	6,846			6,510			5,985			9,314			10,397			19,341			13,220
Pre-tax, pre-provision operating earnings (non-GAAP)	$	36,700		$	35,905		$	32,582		$	30,490		$	29,914		$	105,187		$	68,504		53.5	%
Operating Return of Average Assets (3)
Operating return on average assets (non-GAAP)	1.21		%	1.12		%	1.06		%	1.00		%	1.07		%	1.13		%	1.02		%
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	-0.25		%	-0.21		%	-0.20		%	-0.30		%	-0.41		%	-0.22		%	-0.21		%
Return on average assets (GAAP)	0.96		%	0.91		%	0.86		%	0.70		%	0.66		%	0.91		%	0.81		%
Operating Return of Average Common Equity (3)
Operating return on average equity (non-GAAP)	9.99		%	9.43		%	8.61		%	8.38		%	9.45		%	9.35		%	9.67		%
Effect to adjust for securities gains (losses)	-0.03		%	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.97		%	-1.82		%	-1.72		%	-2.66		%	-3.67		%	-1.83		%	-2.03		%
Return on average common equity (GAAP)	7.99		%	7.63		%	6.89		%	5.72		%	5.78		%	7.52		%	7.64		%
Operating Return of Average Equity (3)
Operating return on average equity (non-GAAP)	9.99		%	9.43		%	8.51		%	8.16		%	9.18		%	9.30		%	9.54		%
Effect to adjust for securities gains (losses)	-0.03		%	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.97		%	-1.82		%	-1.61		%	-2.49		%	-3.47		%	-1.80		%	-1.98		%
Return on average equity (GAAP)	7.99		%	7.63		%	6.90		%	5.67		%	5.71		%	7.50		%	7.56		%
Return on Average Common Tangible Equity
Return on average common tangible equity (non-GAAP)	13.97		%	13.62		%	12.59		%	10.90		%	10.39		%	13.41		%	11.82		%
Effect to adjust for intangible assets	-5.98		%	-5.99		%	-5.70		%	-5.18		%	-4.61		%	-5.89		%	-4.18		%
Return on average common equity (GAAP)	7.99		%	7.63		%	6.89		%	5.72		%	5.78		%	7.52		%	7.64		%
Operating Return on Average Common Tangible Equity
Operating return on average common tangible equity (non-GAAP)	17.23		%	16.59		%	15.47		%	15.46		%	16.43		%	16.45		%	14.75		%
Effect to adjust for securities gains (losses)	-0.03		%	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.98		%	-1.82		%	-1.71		%	-2.67		%	-3.68		%	-1.84		%	-2.03		%
Effect to adjust for intangible assets	-7.24		%	-7.17		%	-6.87		%	-7.07		%	-6.97		%	-7.09		%	-5.08		%
Return on average common equity (GAAP)	7.99		%	7.63		%	6.89		%	5.72		%	5.78		%	7.52		%	7.64		%
Return on Average Tangible Equity (10)
Return on average tangible equity (non-GAAP)	13.97		%	13.62		%	12.03		%	10.25		%	9.88		%	13.19		%	11.39		%
Effect to adjust for intangible assets	-5.98		%	-5.99		%	-5.13		%	-4.58		%	-4.17		%	-5.69		%	-3.83		%
Return on average equity (GAAP)	7.99		%	7.63		%	6.90		%	5.67		%	5.71		%	7.50		%	7.56		%
Operating efficiency ratio excluding OREO expense
Operating efficiency ratio excluding OREO expense	61.32		%	63.62		%	64.06		%	66.30		%	64.27		%	63.06		%	64.19		%
Effect to adjust for OREO and loan related expense	3.19		%	1.77		%	4.07		%	4.13		%	3.61		%	2.91		%	4.60		%
Effect to adjust for merger and branding expenses	6.47		%	6.13		%	5.71		%	8.79		%	10.86		%	5.93		%	2.19		%
Efficiency ratio (Tax Equivalent)	70.98		%	71.52		%	73.84		%	79.22		%	78.74		%	72.11		%	74.26		%
Tangible Book Value Per Common Share (10)
Tangible book value per common share (non-GAAP)	$	24.78		$	24.12		$	23.17		$	22.35		$	21.82
Effect to adjust for intangible assets	15.29			15.38			15.56			18.36			18.49
Book value per common share (GAAP)	$	40.07		$	39.50		$	38.73		$	40.72		$	40.31
Tangible Common Equity-to-Tangible Assets
Tangible common equity-to-tangible assets (non-GAAP)	7.94		%	7.63		%	7.34		%	7.13		%	6.87		%
Effect to adjust for intangible assets	4.31		%	4.29		%	4.35		%	4.42		%	4.40		%
Common equity-to-assets (GAAP)	12.25		%	11.92		%	11.69		%	11.55		%	11.27		%
Tangible Equity-to-Tangible Assets (10)
Tangible equity-to-tangible assets (non-GAAP)	7.94		%	7.63		%	7.34		%	7.99		%	7.72		%
Effect to adjust for intangible assets	4.31		%	4.29		%	4.35		%	4.38		%	4.36		%
Equity-to-assets (GAAP)	12.25		%	11.92		%	11.69		%	12.37		%	12.08		%

South State Corporation

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	September 30, 2014							September 30, 2013
	Average			Interest		Average		Average			Interest		Average
YIELD ANALYSIS	Balance			Earned/Paid		Yield/Rate		Balance			Earned/Paid		Yield/Rate
Interest-Earning Assets:
Federal funds sold, reverse repo, and time deposits	$	392,407		$	430	0.43	%	418,103			$	505	0.48	%
Investment securities (taxable)	676,230			3,982		2.34	%	507,575			3,315		2.59	%
Investment securities (tax-exempt)	146,603			1,236		3.34	%	149,083			1,202		3.20	%
Loans held for sale	52,241			375		2.85	%	53,204			543		4.05	%
Acquired loans, net of allowance for acquired loan losses	2,416,974			44,369		7.28	%	2,427,583			48,458		7.92	%
Non-acquired loans (1)	3,246,025			33,956		4.15	%	2,698,580			29,770		4.38	%
Total interest-earning assets	6,930,480			84,348		4.83	%	6,254,128			83,793		5.32	%
Noninterest-Earning Assets:
Cash and due from banks	168,320							124,562
Other assets	888,442							874,312
Allowance for non-acquired loan losses	(35,238		)					(38,584		)
Total noninterest-earning assets	1,021,524							960,290
Total Assets	$	7,952,004						$	7,214,418
Interest-Bearing Liabilities:
Transaction and money market accounts	$	2,892,934		$	895	0.12	%	$	2,560,731		$	831	0.13	%
Savings deposits	664,395			126		0.08	%	561,773			115		0.08	%
Certificates and other time deposits	1,342,709			1,374		0.41	%	1,503,519			1,765		0.47	%
Federal funds purchased and repurchase agreements	256,000			87		0.13	%	251,551			92		0.15	%
Other borrowings	101,090			1,497		5.88	%	93,849			1,235		5.22	%
Total interest-bearing liabilities	5,257,128			3,979		0.30	%	4,971,423			4,038		0.32	%
Noninterest-Bearing Liabilities:
Demand deposits	1,656,120							1,359,137
Other liabilities	79,220							46,673
Total noninterest-bearing liabilities (“Non-IBL”)	1,735,340							1,405,810
Shareholders’ equity	959,536							837,185
Total Non-IBL and shareholders’ equity	2,694,876							2,242,995
Total liabilities and shareholders’ equity	$	7,952,004						$	7,214,418
Net interest income and margin (NON-TAX EQUIV.)				$	80,369	4.60	%				$	79,755	5.06	%
Net interest margin (TAX EQUIVALENT)						4.65	%						5.11	%

South State Corporation

(Unaudited)

(Dollars in thousands)

	Nine Months Ended
	September 30, 2014							September 30, 2013
	Average			Interest		Average		Average			Interest		Average
YIELD ANALYSIS	Balance			Earned/Paid		Yield/Rate		Balance			Earned/Paid		Yield/Rate
Interest-Earning Assets:
Federal funds sold, reverse repo, and time deposits	$	358,207		$	1,331	0.50	%	$	367,146		$	1,366	0.50	%
Investment securities (taxable)	664,121			11,860		2.39	%	427,386			7,572		2.37	%
Investment securities (tax-exempt)	147,626			3,463		3.14	%	152,260			3,582		3.15	%
Loans held for sale	40,093			1,131		3.77	%	45,406			1,262		3.72	%
Acquired loans, net of allowance for acquired loan losses	2,569,087			142,150		7.40	%	1,457,036			96,319		8.84	%
Non-acquired loans (1)	3,073,530			96,707		4.21	%	2,634,362			87,393		4.44	%
Total interest-earning assets	6,852,664			256,642		5.01	%	5,083,596			197,494		5.19	%
Noninterest-Earning Assets:
Cash and due from banks	210,428							113,584
Other assets	922,411							652,442
Allowance for non-acquired loan losses	(35,119		)					(41,466		)
Total noninterest-earning assets	1,097,720							724,560
Total Assets	$	7,950,384						$	5,808,156
Interest-Bearing Liabilities:
Transaction and money market accounts	$	2,888,371		$	2,530	0.12	%	$	2,084,504		$	2,007	0.13	%
Savings deposits	665,343			369		0.07	%	422,548			276		0.09	%
Certificates and other time deposits	1,419,008			4,157		0.39	%	1,172,624			3,450		0.39	%
Federal funds purchased and repurchase agreements	259,038			277		0.14	%	289,143			343		0.16	%
Other borrowings	101,202			4,500		5.95	%	67,818			2,572		5.07	%
Total interest-bearing liabilities	5,332,962			11,833		0.30	%	4,036,637			8,648		0.29	%
Noninterest-Bearing Liabilities:
Demand deposits	1,579,427							1,115,407
Other liabilities	72,607							33,013
Total noninterest-bearing liabilities (“Non-IBL”)	1,652,034							1,148,420
Shareholders’ equity	965,388							623,099
Total Non-IBL and shareholders’ equity	2,617,422							1,771,519
Total liabilities and shareholders’ equity	$	7,950,384						$	5,808,156
Net interest income and margin (NON-TAX EQUIV.)				$	244,809	4.78	%				$	188,846	4.97	%
Net interest margin (TAX EQUIVALENT)						4.83	%						5.03	%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Third
	Three Months Ended															Quarter		Nine Months Ended						YTD
	September 30,			June 30,			March 31,			December 31,			September 30,			2014 - 2013		September 30,						2014 - 2013
NONINTEREST INCOME & EXPENSE	2014			2014			2014			2013			2013			% Change		2014			2013			% Change
Noninterest income:
Service charges on deposit accounts	$	9,126		$	9,144		$	8,988		$	10,098		$	8,966		1.8	%	27,258			20,462			33.2	%
Bankcard services income	7,489			7,741			7,084			7,252			6,476			15.6	%	22,314			14,614			52.7	%
Mortgage banking income	4,124			4,683			3,291			2,489			1,342			207.3	%	12,098			6,629			82.5	%
Trust and investment services income	4,490			4,812			4,543			4,316			3,593			25.0	%	13,845			8,345			65.9	%
Securities gains, net (8)	(90		)	88			—			—			—					(2		)	—
Amortization of FDIC indemnification asset	(4,825		)	(5,815		)	(7,078		)	(7,429		)	(7,625		)	36.7	%	(17,718		)	(22,106		)	-19.8	%
Other	4,139			3,746			3,717			3,957			2,418			71.2	%	11,602			5,229			121.9	%
Total noninterest income	$	24,453		$	24,399		$	20,545		$	20,683		$	15,170		61.2	%	$	69,397		$	33,173		109.2	%
Noninterest expense:
Salaries and employee benefits	$	40,029		$	40,276		$	39,093		$	40,634		$	34,463		16.2	%	$	119,398		$	81,461		46.6	%
Information services expense	3,417			4,313			4,424			4,323			3,905			-12.5	%	12,154			10,087			20.5	%
OREO expense and loan related	3,374			1,875			4,064			4,375			3,461			-2.5	%	9,313			9,383			-0.7	%
Net occupancy expense	5,387			5,731			5,640			5,855			5,079			6.1	%	16,758			11,696			43.3	%
Furniture and equipment expense	3,166			3,264			3,741			3,824			3,513			-9.9	%	10,171			8,295			22.6	%
Merger and branding related expense	6,846			6,510			5,985			9,314			10,397			-34.2	%	19,341			13,220			46.3	%
Business development and staff related	1,482			1,756			1,578			1,773			1,233			20.2	%	4,816			3,737			28.9	%
FDIC assessment and other regulatory charges	1,268			1,267			1,576			1,193			1,521			-16.6	%	4,111			3,841			7.0	%
Bankcard expense	2,141			2,187			2,192			2,283			1,865			14.8	%	6,520			4,264			52.9	%
Amortization of intangibles	2,080			2,084			2,104			2,287			1,738			19.7	%	6,268			3,794			65.2	%
Professional fees	1,068			1,190			1,243			1,438			1,329			-19.6	%	3,501			2,780			25.9	%
Advertising and marketing	837			1,054			1,093			1,301			1,313			-36.3	%	2,984			2,803			6.5	%
Other	3,963			4,382			4,682			5,296			5,591			-29.1	%	13,027			11,374			14.5	%
Total noninterest expense	$	75,058		$	75,889		$	77,415		$	83,896		$	75,408		-0.5	%	$	228,362		$	166,735		37.0	%

Notes:

(A)  Includes noncash loan interest income related the discount on acquired performing loans on $2.4 million; $2.2 million; $3.0 million; $3.5 million; and $2.5 million, respectively during the five quarters above,

and for the nine months ended the amounts were $7.6 million and $3.6 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 $6.8 million, $6.5 million, $6.0 million, $9.3 million, and $10.4 million, for the quarters ended September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, and September 30, 2013, respectively; and (b) securities gains (losses) of ($90,000) and $88,000 for the quarters ended September 30, 2014 and 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) September 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)

	September 30,			December 31,			September 30,
	2014			2013			2013
	(Unaudited)						(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	269,480		$	184,611		$	292,625
Interest-bearing deposits with banks	7,382			32,632			4,720
Federal funds sold and securities purchased under agreements to resell	226,166			262,218			347,821
Total cash and cash equivalents	503,028			479,461			645,166
Investment securities:
Securities held to maturity (fair value of $11,019, $12,891, and $12,992, respectively)	10,389			12,426			12,426
Securities available for sale, at fair value	805,114			786,791			626,798
Other investments	10,518			13,386			13,386
Total investment securities	826,021			812,603			652,610
Loans held for sale	72,639			30,586			51,207
Loans:
Acquired credit impaired (covered of $197,944, $289,123, and $321,969, respectively; non-covered of $782,548, $931,515 and $994,659, respectively), net of allowance for loan losses	980,492			1,220,638			1,316,628
Acquired non-credit impaired (covered of $9,459, $7,824, and $8,430, respectively; non-covered of $1,367,884, $1,593,111 and $1,656,904, respectively)	1,377,343			1,600,935			1,665,334
Non-acquired	3,304,708			2,865,216			2,741,242
Less allowance for non-acquired loan losses	(34,804		)	(34,331		)	(36,145		)
Loans, net	5,627,739			5,652,458			5,687,059
Goodwill	317,688			317,688			317,688
Premises and equipment, net	173,425			188,114			184,959
Bank owned life insurance	98,505			97,197			96,551
FDIC receivable for loss share agreements	30,983			86,447			115,773
Deferred tax asset	60,322			72,914			73,135
Other real estate owned (covered of $18,771, $27,520, and $40,543, respectively; non-covered of $32,479, $37,398, and $35,330, respectively)	51,250			64,918			75,873
Core deposit and other intangibles	51,291			59,908			62,195
Mortgage servicing rights	22,052			20,729			18,908
Other assets	61,189			48,475			47,317
Total assets	$	7,896,132		$	7,931,498		$	8,028,441
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	1,654,308		$	1,487,798		$	1,477,793
Interest-bearing	4,863,920			5,067,699			5,181,315
Total deposits	6,518,228			6,555,497			6,659,108
Federal funds purchased and securities sold under agreements to repurchase	231,229			211,401			233,792
Other borrowings	101,127			102,060			101,347
Other liabilities	78,553			81,071			64,168
Total liabilities	6,929,137			6,950,029			7,058,415
Shareholders’ equity:
Preferred stock - $.01 par value; authorized 10,000,000 shares; 0, 65,000, and 0 shares issued and outstanding, respectively	—			1			1
Common stock - $2.50 par value; authorized 40,000,000 shares; 24,135,220, 24,104,124, and 24,066,545 shares issued and outstanding, respectively	60,338			60,260			60,166
Surplus	700,579			762,354			760,507
Retained earnings	207,219			168,577			159,980
Accumulated other comprehensive (loss)	(1,141		)	(9,723		)	(10,628		)
Total shareholders’ equity	966,995			981,469			970,026
Total liabilities and shareholders’ equity	$	7,896,132		$	7,931,498		$	8,028,441

SOUTH STATE CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Interest income:
Loans, including fees	$	78,700		$	78,771		$	239,988		$	184,974
Investment securities:
Taxable	3,982			3,315			11,860			7,572
Tax-exempt	1,236			1,202			3,463			3,582
Federal funds sold and securities purchased under agreements to resell	430			505			1,331			1,366
Total interest income	84,348			83,793			256,642			197,494
Interest expense:
Deposits	2,395			2,711			7,056			5,733
Federal funds purchased and securities sold under agreements to repurchase	87			92			277			343
Other borrowings	1,497			1,235			4,500			2,572
Total interest expense	3,979			4,038			11,833			8,648
Net interest income	80,369			79,755			244,809			188,846
Provision for loan losses	2,091			659			5,109			1,898
Net interest income after provision for loan losses	78,278			79,096			239,700			186,948
Noninterest income:
Service charges on deposit accounts	9,126			8,966			27,258			20,462
Bankcard services income	7,489			6,476			22,314			14,614
Mortgage banking income	4,124			1,342			12,098			6,629
Trust and investment services income	4,490			3,593			13,845			8,345
Securities gains (losses), net	(90		)	—			(2		)	—
Amortization of FDIC indemnification asset	(4,825		)	(7,625		)	(17,718		)	(22,106		)
Other	4,139			2,418			11,602			5,229
Total noninterest income	24,453			15,170			69,397			33,173
Noninterest expense:
Salaries and employee benefits	40,029			34,463			119,398			81,461
Information services expense	3,417			3,905			12,154			10,088
OREO expense and loan related	3,374			3,461			9,313			9,383
Net occupancy expense	5,387			5,079			16,758			11,696
Furniture and equipment expense	3,166			3,513			10,171			8,296
Merger and branding related expense	6,846			10,397			19,341			13,220
FDIC assessment and other regulatory charges	1,268			1,521			4,111			3,841
Bankcard expense	2,141			1,865			6,520			4,264
Amortization of intangibles	2,080			1,738			6,268			3,794
Professional fees	1,068			1,329			3,501			2,780
Advertising and marketing	837			1,313			2,984			2,803
Other	5,445			6,824			17,843			15,109
Total noninterest expense	75,058			75,408			228,362			166,735
Earnings:
Income before provision for income taxes	27,673			18,858			80,735			53,386
Provision for income taxes	8,346			6,804			26,546			18,151
Net income	19,327			12,054			54,189			35,235
Preferred stock dividends	—			542			1,073			542
Accretion on preferred stock discount	—			—			—			—
Net income available to common shareholders	$	19,327		$	11,512		$	53,116		$	34,693
Earnings per common share:
Basic	$	0.81		$	0.53		$	2.22		$	1.87
Diluted	$	0.80		$	0.52		2.20			1.85
Dividends per common share	$	0.21		$	0.19		$	0.60		$	0.55
Weighted-average common shares outstanding:
Basic	23,899			21,894			23,890			18,518
Diluted	24,160			22,128			24,139			18,717