SouthState (SSB) 8-K South State Corporation Reports Increase in 2014 Net Income of 55.4%; 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 Increase in 2014 Net Income of 55.4%; Increases Quarterly Cash Dividend

COLUMBIA, S.C.—January 27, 2015—South State Corporation (NASDAQ: SSB) today released its unaudited results of operations and other financial information for the three-month and twelve-month periods ended December 31, 2014.  Annual (2014) highlights include the following:

·Net income available to the common shareholder improved by 55.4% to $74.4 million

·Earnings per share (EPS) — diluted was $3.08 compared to $2.38 in 2013, an increase of 29.4%

·Operating earnings available to the common shareholder improved by 42.9% to $90.6 million

·Operating EPS — diluted was $3.75 compared to $3.16 in 2013, an increase of 18.7%

·Increased dividend paid to common shareholders by 10.8%

·Non-acquired loan growth for 2014 was $602.6 million or 21.0%

·C&I loans grew by $84.1 million or 26.1%

·Construction & land development loans grew by $64.3 million or 21.4%

·Consumer real estate loans grew by $265.4 million or 33.0%

·Commercial owner occupied loans grew by $74.4 million or 8.9%

·Consumer non real estate loans grew by $52.9 million or 38.8%

·Performance ratio improvement

·Return on average assets improved to 0.95% from 0.77%

·Operating return on average assets improved to 1.15% from 1.02%

·Return on average tangible equity improved to 13.77% from 11.54%

·Operating return on average tangible common equity improved to 16.56% from 15.00%

·Efficiency ratio improved to 71.41% from 75.85%

·Balance sheet and tangible book value continued to strengthen

·Net loan growth of $28.4 million (non-acquired loan growth offset the acquired loan run off)

·OREO decreased $22.2 million, or 34.2% to $42.7 million

·Noninterest bearing deposits increased by $153.5 million or 10.3%

·Tangible book value improved to $25.59 per share, a $3.23 per share increase, or 14.5%

·Tangible common equity to tangible assets improved to 8.28% from 7.13%

·Asset quality continued improvement

·Nonperforming assets (NPAs) declined by 26.4%, or $28.6 million, to $79.6 million

·NPAs to total assets improved to 1.02% from 1.36% in 2013

·Net charge offs on non-acquired loans declined to 0.16% in 2014 compared to 0.41% in 2013

·Coverage ratio on non-acquired non-performing loans improved to 121.1% from 81.2% in 2013

Quarterly Cash Dividend

The Board of Directors of South State Corporation has declared a quarterly cash dividend of $0.23 per share payable on its common stock.  This per share amount is $0.01 per share, or 4.5% higher than the dividend paid in the immediately preceding quarter and is $0.04 per share, or 21.1%, higher than a year ago.  The dividend will be payable on February 20, 2015 to shareholders of record as of February 13, 2015.

Fourth 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 $21.2 million, or $0.88 per diluted common share for the three months ended December 31, 2014 up from $19.3 million, or $0.80 per diluted common share for the three months ended September 30, 2014.  The $1.9 million increase was primarily the result of $1.2 million increase in net interest income, a decline in the provision for loan losses of $610,000, an increase in noninterest income of $850,000, lower noninterest expenses of $380,000, partially offset by an increase in the provision for income taxes of $1.1 million.  During the quarter, our effective income tax rate remained low at 30.77% similar to the 30.16% in third quarter of 2014.  The low rate in the fourth quarter of 2014 was primarily the result of additional state income tax credits acquired during the quarter.  The full year effective tax rate was 32.30% compared to 34.00% for 2013.  Going forward, the Company expects to have an effective tax rate of approximately 34%.

“I am pleased to report an increase in net income of 55.4% and a 10.8% increase in our dividends paid during 2014.  It was a transformational year for our company, as we completed the integration of First Federal, consolidated our five brands into South State and made significant gains in building a platform that will carry our company forward,” said Robert R. Hill, Jr., CEO of South State Corporation.  “During the year much changed, but our continued focus on our customers allowed us to attract new customer relationships while retaining and enhancing existing relationships.  The quality of our loan portfolio was also a major contributor to our success this year.  Our total non-performing assets declined to approximately the 1% level, while net charge offs declined to 0.16%.  The strength of our balance sheet, 16.56% operating return on tangible common equity, and the significant steps undertaken to continue building our infrastructure should have us very well-positioned for the future.”

Asset Quality

During the fourth quarter of 2014, overall asset quality continued to improve.  Non-acquired NPAs, excluding acquired loans and acquired other real estate owned (OREO), declined by $3.4 million, or 8.5%, to $36.5 million.  Non-acquired nonperforming loans decreased by $2.0 million, or 6.4%, and non-acquired OREO decreased $1.4 million, or 15.1%.  Non-acquired NPAs as a percentage of total non-acquired loans and repossessed assets declined to 1.05% compared to 1.20% in the third quarter of 2014.  Total NPAs, including acquired NPAs, declined by $8.6 million from the third quarter 2014 level of $88.2 million to $79.6 million at December 31, 2014.

During the fourth quarter, the Company reported $7.6 million in nonperforming loans related to “acquired non-credit impaired loans”.  This was an increase of $1.8 million from the third quarter of 2014.  Additionally, acquired nonperforming OREO and other assets owned declined by $7.1 million from September 30, 2014.  From December 31, 2013, total nonperforming assets, including acquired assets, has declined by more than 26%, or $28.6 million.

At December 31, 2014, the allowance for non-acquired loan losses was $34.5 million or 1.00% of non-acquired period-end loans.  The current allowance for loan losses provides 1.21 times coverage of period-end non-acquired nonperforming loans, up from 1.14 times at the end of the third quarter of 2014 and up from 0.81 times at December 31, 2013.  Net charge-offs within the non-acquired portfolio were $1.1 million for the quarter or 0.13%

annualized, down from the third quarter of 2014 of $2.1 million or 0.26% annualized, and down from the fourth quarter of 2013 of $1.8 million or 0.26% annualized.

During the quarter, net charge offs related to “acquired non-credit impaired loans” were $490,000 or 0.14% annualized, and the Company recorded a provision for loan losses, accordingly.

Total OREO decreased by $8.5 million during the fourth quarter to $42.7 million compared to the third quarter of 2014 of $51.3 million.  This decline was the result of our continued effort in disposing of these assets.  Additionally, non-acquired OREO write downs during the fourth quarter were $100,000 on four assets compared to $950,000 on fifteen assets in the third quarter.  As a result, our OREO and loan related costs were down $850,000 during the quarter to $2.5 million compared to the third quarter of $3.4 million.

Net Interest Income and Margin

Non-taxable equivalent net interest income was $81.6 million for the fourth quarter of 2014, a $1.2 million increase from the third quarter of 2014, resulting primarily from the following:

1.A $118.5 million decrease in the average balance of acquired loans from the third quarter of 2014, coupled with the fourth quarter recast where loan pools nonaccretable yield reduced by approximately $51.0 million (the majority coming from loan pools of the First Federal acquired loan pools).  This release resulted in net improved accretable yield of approximately $40.0 million which will be recognized over time.  In the fourth quarter, the yield on the acquired loan portfolio increased 40 basis points from 7.28% to 7.68% resulting in an increase of $136,000 in interest income;

2.A $136.8 million increase in the average balance of non-acquired loans which resulted in an increase in interest income of approximately $800,000; while the yield declined from 4.15% during the third quarter to 4.08% in the fourth quarter; and

3.The decrease in interest expense from funding sources was $150,000.  Transaction and money market accounts were responsible for the majority of this decline which was driven primarily by a decline in interest rates.

Tax-equivalent net interest margin increased 7 basis points from the third quarter of 2014 and declined by 19 basis points from the fourth quarter of 2013.  The Company’s average yield on interest-earning assets increased 6 basis points while the average rate on interest-bearing liabilities decreased 1 basis point from the third quarter of 2014.  During the fourth quarter of 2014, the Company’s average total assets slightly decreased to $7.9 billion and average earning assets remained at $6.9 billion.  Average interest-bearing liabilities declined by approximately $78.8 million to $5.2 billion.  Average non-interest bearing demand deposits increased by $22.5 million during the quarter and by $167.9 million from December 31, 2013.

Noninterest Income and Expense

Noninterest income was higher than the third quarter of 2014 by approximately $850,000 to $25.3 million for the fourth quarter of 2014.  The increase was primarily the result of lower amortization of the FDIC indemnification asset by $650,000 and higher other revenue of $460,000.  These two were partially offset by declines in service charges on deposit accounts and lower bankcard services income.  Compared to the fourth quarter of 2013, noninterest income grew by $4.7 million due primarily to the reduced amortization of the indemnification asset by $3.3 million and improved mortgage banking income of $1.6 million.

Noninterest expense was $74.7 million in the fourth quarter of 2014, down from $75.1 million in the third quarter of 2014.  This decrease from the third quarter of 2014 was primarily due to lower cost in salaries and employee benefits, OREO expense and other loan related, and merger-branding related charges.  These three categories were offset with increases due primarily to discretionary related spending, timing relative to the conversion during third quarter, loan production related cost and passive losses from investments for tax credits which increased $800,000 during the quarter.

The efficiency ratio for the quarter was 69.3%, down from 71.0% in the third quarter.  Our operating efficiency ratio, which excludes merger and brand-related expenses and OREO and loan related expenses, increased to 62.7% compared to 61.3% in the third quarter.

Compared to the fourth quarter of 2013, noninterest expense was down from the fourth quarter of 2013 by $9.2 million.  There was a decline in most categories from a year ago led by merger/branding related, OREO expense and other loan related, salaries and employee benefits, furniture and equipment expense and information services expense.  These declines were offset by increases in supplies, printing and postage and an increase in passive losses related to certain tax advantaged investments.

Balance Sheet and Capital

At December 31, 2014, the Company’s total assets were $7.8 billion, down from $7.9 billion at September 30, 2014, and at December 31, 2013.  Since December 31, 2013, the Company has experienced asset growth in the following areas:  investment securities portfolio by $14.3 million or 1.8%, non-acquired loans by $602.6 million, or 21.0%, and loans held for sale by $29.7 million, or 97.1%.  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 $574.2 million, the FDIC receivable by $64.3 million, cash and cash equivalents by $61.6 million, decrease in deferred tax assets of $30.2 million and OREO by $22.2 million.

The Company’s book value per common share increased to $40.78 per share at December 31, 2014, compared to $40.07 at September 30, 2014.  Capital increased by $17.9 million due primarily to net income of $21.2 million, which was offset by the common dividend paid of $5.3 million.  Accumulated comprehensive loss decreased by $764,000, net of tax, in the fourth quarter, primarily the result of the increased unrealized gain in the available for sale investment securities portfolio, which was partially offset by an unrealized loss in the pension plan recorded in the fourth quarter.  At December 31, 2014, capital was $3.5 million greater than the level at December 31, 2013 even with the redemption of $65.0 million of preferred stock in March of 2014 and paying cash dividends of $20.8 million during 2014 (both common and preferred).  Tangible book value (“TBV”) per common share increased by $0.81 per share to $25.59 at December 31, 2014, from $24.78 at September 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 8.28% at December 31, 2014 up from 7.96% at the end of the third quarter of 2014.  Tangible common equity was 7.13% at December 31, 2013.

The total risk-based capital ratio is estimated to be 14.3% up from September 30, 2014 of 14.1%.  Tier 1 leverage ratio increased to approximately 9.4% from 9.1% at September 30, 2014.  The increase was driven by net income for the quarter.  The Company’s capital position remains “well-capitalized” by all measures at December 31, 2014.

“Our tangible book value increased by $0.81 per share during the quarter, a 13.0% annualized increase, to $25.59, while our tangible common equity to tangible assets increased from 7.96% at the end third quarter to 8.28% at December 31, 2014” said John C. Pollok, COO and CFO.  “In addition during 2014, GAAP diluted earnings per share improved from $0.55 per share in the fourth quarter of 2013 to $0.88 per share in the fourth quarter of 2014, a 60.0% increase, and operating diluted earnings per share improved from $0.80 per share in the fourth quarter of 2013 to $1.01 per share in the fourth quarter of 2014, a 26.3% increase.”

South State Corporation will hold a conference call today, January 27th; 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 10058469.  Participants can also listen to the live audio webcast through the Investor Relations section of www.SouthStateBank.com.  A replay will be available beginning January 27th by 2:00 p.m. Eastern Time until 9:00 a.m. on February 11, 2015.  To listen to the replay, dial 877-344-7529 or 412-317-0088.  The passcode is 10058469.

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

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 $7.8 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)

																Fourth
	Three Months Ended															Quarter		Twelve Months Ended						YTD
	December 31,			September 30,			June 30,			March 31,			December 31,			2014 - 2013		December 31,						2014 - 2013
	2014			2014			2014			2014			2013			% Change		2014			2013			% Change
EARNINGS SUMMARY (non tax equivalent)
Interest income (A)	$	85,380		$	84,348		$	84,831		$	87,463		$	88,766		-3.8	%	$	342,022		$	286,348		19.4	%
Interest expense	3,829			3,979			3,858			3,996			4,351			-12.0	%	15,662			12,987			20.6	%
Net interest income	81,551			80,369			80,973			83,467			84,415			-3.4	%	326,360			273,361			19.4	%
Provision for loan losses (1)	1,481			2,091			2,169			849			(12		)	-12441.7	%	6,590			1,886			249.4	%
Noninterest income	25,299			24,453			24,399			20,545			20,649			22.5	%	94,696			53,720			76.3	%
Noninterest expense	74,676			75,058			75,889			77,415			83,888			-11.0	%	303,038			250,620			20.9	%
Income before provision for income taxes	30,693			27,673			27,314			25,748			21,188			44.9	%	111,428			74,575			49.4	%
Provision for income taxes	9,445			8,346			9,368			8,832			7,204			31.1	%	35,991			25,356			41.9	%
Net income	21,248			19,327			17,946			16,916			13,984			51.9	%	75,437			49,219			53.3	%
Preferred stock dividends	—			—			—			1,073			812					1,073			1,354
Net income available to common shareholders (GAAP)	$	21,248		$	19,327		$	17,946		$	15,843		$	13,172		61.3	%	$	74,364		$	47,865		55.4	%
Effective tax rate	30.77		%	30.16		%	34.30		%	34.30		%	34.00		%			32.30		%	34.00		%
Basic weighted-average common shares	23,911,515			23,898,982			23,892,245			23,873,178			23,825,636			0.4	%	23,897,051			19,865,674			20.3	%
Diluted weighted-average common shares	24,189,289			24,160,461			24,140,600			24,116,174			24,079,350			0.5	%	24,153,657			20,077,108			20.3	%
Earnings per common share - Basic	$	0.89		$	0.81		$	0.75		$	0.66		$	0.55		61.8	%	$	3.11		$	2.41		29.0	%
Earnings per common share - Diluted	0.88			0.80			0.74			0.66			0.55			60.0	%	3.08			2.38			29.4	%
Cash dividends declared per common share	$	0.22		$	0.21		$	0.20		$	0.19		$	0.19		15.8	%	$	0.82		$	0.74		10.8	%
Dividend payout ratio (2)	25.00		%	26.22		%	26.89		%	28.91		%	34.74		%	-28.0	%	26.61		%	31.91		%	-16.6	%
Operating Earnings (non-GAAP) (3)
Net income (GAAP)	$	21,248		$	19,327		$	17,946		$	16,916		$	13,984		51.9	%	$	75,437		$	49,219		53.3	%
Securities (gains) losses, net of tax	—			63			(58		)	—			—					1			—
Merger and branding related expense, net of tax	3,184			4,781			4,277			3,932			6,147			-48.2	%	16,207			15,514
Net operating earnings (loss) (non-GAAP)	24,432			24,171			22,165			20,848			20,131			21.4	%	91,646			64,733			41.6	%
Preferred stock dividends	—			—			—			1,073			812					1,073			1,354
Net operating earnings (loss) available to common shareholders (non-GAAP)	$	24,432		$	24,171		$	22,165		$	19,775		$	19,319		26.5	%	$	90,573		$	63,379		42.9	%
Operating earnings (loss) per common share - Basic	$	1.02		$	1.01		$	0.93		$	0.83		$	0.81		25.9	%	$	3.79		$	3.19		18.8	%
Operating earnings (loss) per common share - Diluted	1.01			1.00			0.92			0.82			0.80			26.3	%	3.75			3.16			18.7	%

											Fourth
	AVERAGE for Quarter Ended										Quarter		AVERAGE for Twelve Months				YTD
	December 31,		September 30,		June 30,		March 31,		December 31,		2014 - 2013		December 31,		December 31,		2014 - 2013
	2014		2014		2014		2014		2013		% Change		2014		2013		% Change
BALANCE SHEET HIGHLIGHTS
Loans held for sale	$	46,540	$	50,116	$	50,423	$	29,386	$	35,673	30.5	%	$	38,745	$	45,015	-13.9	%
Acquired non-credit impaired loans	1,347,453		1,429,100		1,479,412		1,575,392		1,614,294		-16.5	%	1,458,309		710,836		105.2	%
Acquired credit impaired loans, net of allowance for acquired loan losses	951,038		987,874		1,077,960		1,162,467		1,269,015		-25.1	%	1,042,573		1,102,589		-5.4	%
Non-acquired loans	3,382,795		3,246,025		3,061,529		2,909,175		2,793,522		21.1	%	3,151,482		2,677,450		17.7	%
Total loans (1)	5,681,286		5,662,999		5,618,901		5,647,034		5,676,831		0.1	%	5,652,364		4,490,875		25.9	%
FDIC receivable for loss share agreements	27,372		38,061		60,967		83,010		105,554		-74.1	%	52,161		118,977		-56.2	%
Total investment securities	819,625		822,833		810,909		801,263		699,592		17.2	%	813,733		610,252		33.3	%
Intangible assets	367,622		369,460		374,021		377,265		379,894		-3.2	%	372,058		235,341		58.1	%
Earning assets	6,928,942		6,930,480		6,910,549		6,842,708		6,881,478		0.7	%	6,868,918		5,539,057		24.0	%
Total assets	7,891,909		7,952,004		7,942,953		7,959,787		7,977,604		-1.1	%	7,938,437		6,354,973		24.9	%
Noninterest-bearing deposits	1,678,589		1,656,120		1,591,002		1,485,014		1,510,734		11.1	%	1,604,421		1,215,052		32.0	%
Interest-bearing deposits	4,838,316		4,900,038		4,986,465		5,033,181		5,098,095		-5.1	%	4,938,857		4,037,194		22.3	%
Total deposits	6,516,905		6,556,158		6,577,467		6,518,195		6,608,829		-1.4	%	6,543,278		5,252,246		24.6	%
Federal funds purchased and repurchase agreements	238,842		256,000		247,672		273,636		229,382		4.1	%	253,948		274,080		-7.3	%
Other borrowings	101,173		101,090		101,763		102,269		101,948		-0.8	%	101,195		76,421		32.4	%
Shareholders’ common equity (excludes preferred stock)	976,396		959,536		942,935		931,961		914,335		6.8	%	952,848		684,753		39.2	%
Shareholders’ equity	976,396		959,536		942,935		994,073		979,335		-0.3	%	968,163		712,890		35.8	%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Fourth
	ENDING Balance															Quarter
	December 31,			September 30,			June 30,			March 31,			December 31,			2014 - 2013
	2014			2014			2014			2014			2013			% Change
BALANCE SHEET HIGHLIGHTS
Loans held for sale	$	60,270		$	56,595		$	56,407		$	57,200		$	30,586		97.1	%
Acquired non-credit impaired loans	1,327,999			1,377,343			1,447,583			1,512,201			1,600,935			-17.0	%
Acquired credit impaired loans	926,767			988,524			1,056,495			1,124,809			1,232,256			-24.8	%
Non-acquired loans	3,467,826			3,304,708			3,174,625			2,979,958			2,865,216			21.0	%
Total loans (1)	5,722,592			5,670,575			5,678,703			5,616,968			5,698,407			0.4	%
FDIC receivable for loss share agreements	22,161			30,983			43,766			67,984			86,447			-74.4	%
Total investment securities	826,943			826,021			816,648			814,533			812,603			1.8	%
Intangible assets	366,927			368,979			371,118			375,315			377,596			-2.8	%
Allowance for acquired credit impaired loan losses	(7,365		)	(8,032		)	(9,159		)	(11,046		)	(11,618		)	-36.6	%
Allowance for non-acquired loan losses (1)	(34,539		)	(34,804		)	(35,422		)	(34,669		)	(34,331		)	0.6	%
Premises and equipment	171,772			173,425			184,113			187,127			188,114			-8.7	%
Total assets	7,826,227			7,880,088			7,993,686			7,990,975			7,931,498			-1.3	%
Noninterest-bearing deposits	1,639,953			1,654,308			1,623,291			1,581,157			1,486,445			10.3	%
Interest-bearing deposits	4,821,092			4,863,920			4,952,847			5,049,496			5,067,699			-4.9	%
Total deposits	6,461,045			6,518,228			6,576,138			6,630,653			6,554,144			-1.4	%
Federal funds purchased and repurchase agreements	221,541			231,229			280,595			254,985			211,401			4.8	%
Other borrowings	101,210			101,127			101,045			100,963			102,060			-0.8	%
Total liabilities	6,841,307			6,913,093			7,040,668			7,056,812			6,950,029			-1.6	%
Shareholders’ common equity (excludes preferred stock)	984,920			966,995			953,018			934,163			916,469			7.5	%
Shareholders’ equity	984,920			966,995			953,018			934,163			981,469			0.4	%
Common shares issued and outstanding	24,150,702			24,135,220			24,130,006			24,118,243			24,104,124			0.2	%

																Fourth
	ENDING Balance															Quarter
	December 31,			September 30,			June 30,			March 31,			December 31,			2014 - 2013
	2014			2014			2014			2014			2013			% Change
NONPERFORMING ASSETS (ENDING BALANCE) (7)
Non-acquired
Non-acquired nonaccrual loans	$	18,569		$	20,419		$	26,546		$	29,190		$	31,333		-40.7	%
Restructured loans	9,425			9,633			8,409			8,156			10,690			-11.8	%
Non-acquired other real estate owned (“OREO”)	7,947			9,360			9,003			12,187			13,456			-40.9	%
Accruing loans past due 90 days or more	522			429			358			96			258			102.3	%
Other nonperforming assets	—			—			—			—			—
Total non-acquired nonperforming assets	36,463			39,841			44,316			49,629			55,737			-34.6	%
Acquired non-credit impaired loans
Acquired nonaccrual loans	7,538			5,359			—			—			—
Acquired accruing loans past due 90 days or more	108			501			—			—			—
Total acquired non-credit impaired loans	7,646			5,860			—			—			—
Acquired OREO and other nonperforming assets
OREO covered under FDIC loss share agreements	16,227			18,961			21,999			29,003			27,520			-41.0	%
OREO not covered under FDIC loss share agreements	18,552			22,929			22,732			22,957			23,941			-22.5	%
Other nonperforming assets	694			640			811			1,032			943
Total acquired OREO and other nonperforming assets	35,473			42,530			45,542			52,992			52,404			-32.3	%
Total acquired nonperforming assets	43,119			48,390			45,542			52,992			52,404			-17.7	%
Total nonperforming assets	$	79,582		$	88,231		$	89,858		$	102,621		$	108,141		-26.4	%
Excluding Acquired Assets
NPLs as a percentage of period end non-acquired loans	0.82		%	0.92		%	1.11		%	1.26		%	1.48		%
Total nonperforming assets as a percentage of total non-acquired loans and repossessed assets (1) (4)	1.05		%	1.20		%	1.39		%	1.66		%	1.94		%
Total nonperforming assets as a percentage of total assets (5)	0.47		%	0.51		%	0.55		%	0.62		%	0.70		%
Including Acquired Assets
NPLs as a percentage of period end loans	0.63		%	0.64		%	0.62		%	0.67		%	0.74		%
Total nonperforming assets as a percentage of total loans and repossessed assets (1) (4)	1.38		%	1.54		%	1.57		%	1.81		%	1.88		%
Total nonperforming assets as a percentage of total assets	1.02		%	1.12		%	1.12		%	1.28		%	1.36		%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Fourth
	Quarter Ended															Quarter		Twelve Months Ended						YTD
	December 31,			September 30,			June 30,			March 31,			December 31,			2014 - 2013		December 31,			December 31,			2014 - 2013
	2014			2014			2014			2014			2013			% Change		2014			2013			% Change
ALLOWANCE FOR LOAN LOSSES (1)
Non-acquired Loans:
Balance at beginning of period	$	34,804		$	35,422		$	34,669		$	34,331		$	36,145		-3.7	%	$	34,331		$	44,378		-22.6	%
Loans charged off	(849		)	(1,500		)	(1,359		)	(901		)	(2,778		)	-69.4	%	(4,609		)	(13,568		)	-66.0	%
Overdrafts charged off	(695		)	(1,213		)	(530		)	(469		)	(389		)	78.7	%	(2,907		)	(1,720		)	69.0	%
Loan recoveries	201			362			413			817			1,215			-83.5	%	1,793			3,572			-49.8	%
Overdraft recoveries	203			213			144			221			138			47.1	%	781			651			20.0	%
Net charge-offs	(1,140		)	(2,138		)	(1,332		)	(332		)	(1,814		)	-37.2	%	(4,942		)	(11,065		)	-55.3	%
Provision for loan losses on non-acquired loans	875			1,520			2,085			670			—					5,150			1,018			405.9	%
Balance at end of period, non-acquired loans	$	34,539		$	34,804		$	35,422		$	34,669		$	34,331		0.6	%	$	34,539		$	34,331		0.6	%
Acquired Non-Credit Impaired Loans:
Balance at beginning of period	$	—		$	—		$	—		$	—		$	—				$	—		$	—
Loans charged off	(653		)	(879		)	—			—			—					(1,531		)	—
Overdrafts charged off	—			—			—			—			—					—			—
Loan recoveries	163			441			—			—			—					604			—
Overdraft recoveries	—			—			—			—			—					—			—
Net charge-offs	(490		)	(438		)	—			—			—					(927		)	—
Provision for loan losses on acquired non-credit impaired loans	490			438			—			—			—					927			—
Balance at end of period, acquired non-credit impaired loans	$	—		$	—		$	—		$	—		$	—				$	—		$	—
Total provision for loan losses charged to operations	$	1,223		$	2,091		$	2,169		$	849		$	(12	)			$	6,331		$	1,886
Allowance for non-acquired loan losses as a percentage of non-acquired loans (1)	1.00		%	1.05		%	1.12		%	1.16		%	1.20		%			1.00		%	1.20		%
Allowance for non-acquired loan losses as a percentage of non-acquired nonperforming loans	121.12		%	114.18		%	100.31		%	92.59		%	81.20		%			121.12		%	81.20		%
Net charge-offs on non-acquired loans as a percentage of average non-acquired loans (annualized) (1)	0.13		%	0.26		%	0.17		%	0.05		%	0.26		%			0.16		%	0.41		%
Net charge-offs on acquired non-credit impaired loans as a percentage of average acquired non-credit impaired loans (annualized) (1)	0.14		%	0.12		%	0.00		%	0.00		%	0.00		%			0.06		%	0.00		%
DAY 2 VALUATION ALLOWANCE ON ACQUIRED CREDIT IMPAIRED LOANS
Balance at beginning of period	$	8,032		$	9,159		$	11,046		$	11,618		$	12,260				$	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	(118		)	(658		)	(1,438		)	304			73					(1,910		)	(918		)
Benefit attributable to FDIC loss share agreements	(24		)	791			1,522			(125		)	(85		)			2,164			1,786
Net provision for loan losses on acquired credit impaired loans	(142		)	133			84			179			(12		)			254			868
Provision for loan losses recorded through the FDIC loss share receivable	24			(791		)	(1,522		)	125			85					(2,164		)	(1,786		)
Reduction due to loan removals (12)	(550		)	(469		)	(449		)	(876		)	(715		)			(2,344		)	(4,682		)
Balance at end of period, acquired credit impaired loans	$	7,364		$	8,032		$	9,159		$	11,046		$	11,618				$	7,364		$	11,618

South State Corporation
(Unaudited)
(Dollars in thousands, except per share data)

											Fourth
	ENDING Balance										Quarter
	December 31,		September 30,		June 30,		March 31,		December 31,		2014 - 2013
	2014		2014		2014		2014		2013		% Change
LOAN PORTFOLIO (ENDING balance) (1)
Acquired loans:
Acquired covered loans:
Commercial non-owner occupied real estate:
Construction and land development	$	20,275	$	22,291	$	30,859	$	37,757	$	43,396	-53.3	%
Commercial non-owner occupied	35,035		36,653		47,017		50,814		53,525		-34.5	%
Total commercial non-owner occupied real estate	55,310		58,944		77,876		88,571		96,921		-42.9	%
Consumer real estate:
Consumer owner occupied	30,304		31,757		36,017		37,111		38,946		-22.2	%
Home equity loans	35,509		35,471		33,684		34,627		35,884		-1.0	%
Total consumer real estate	65,813		67,228		69,701		71,738		74,830		-12.0	%
Commercial owner occupied real estate	45,986		54,776		72,247		78,861		88,722		-48.2	%
Commercial and industrial	9,887		10,450		11,711		11,964		14,475		-31.7	%
Other income producing property	20,820		22,445		27,521		29,471		31,739		-34.4	%
Consumer non real estate	675		821		1,583		1,772		1,878		-64.1	%
Total acquired covered loans	198,491		214,664		260,639		282,377		308,565		-35.7	%
Acquired non-covered loans:
Commercial non-owner occupied real estate:
Construction and land development	65,959		76,167		86,830		96,981		129,289		-49.0	%
Commercial non-owner occupied	181,652		192,322		191,637		204,094		226,530		-19.8	%
Total commercial non-owner occupied real estate	247,611		268,489		278,467		301,075		355,819		-30.4	%
Consumer real estate:
Consumer owner occupied	842,995		879,302		912,346		951,131		981,834		-14.1	%
Home equity loans	294,589		303,615		313,318		324,686		335,241		-12.1	%
Total consumer real estate	1,137,584		1,182,917		1,225,664		1,275,817		1,317,075		-13.6	%
Commercial owner occupied real estate	176,268		188,482		188,490		200,370		211,030		-16.5	%
Commercial and industrial	67,028		62,003		69,953		76,016		98,046		-31.6	%
Other income producing property	139,496		146,819		154,100		160,498		171,544		-18.7	%
Consumer non real estate	288,288		302,493		326,765		340,857		371,112		-22.3	%
Total acquired non-covered loans	2,056,275		2,151,203		2,243,439		2,354,633		2,524,626		-18.6	%
Total acquired loans	2,254,766		2,365,867		2,504,078		2,637,010		2,833,191		-20.4	%
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	364,221		385,318		371,751		319,441		299,951		21.4	%
Commercial non-owner occupied	333,590		318,470		302,961		285,145		291,170		14.6	%
Total commercial non-owner occupied real estate	697,811		703,788		674,712		604,586		591,121		18.0	%
Consumer real estate:
Consumer owner occupied	786,778		702,521		637,071		595,652		548,170		43.5	%
Home equity loans	283,934		276,341		271,028		263,057		257,139		10.4	%
Total consumer real estate	1,070,712		978,862		908,099		858,709		805,309		33.0	%
Commercial owner occupied real estate	907,913		881,403		849,048		845,728		833,513		8.9	%
Commercial and industrial	405,923		355,580		353,211		333,574		321,824		26.1	%
Other income producing property	150,928		154,822		151,928		158,186		143,204		5.4	%
Consumer non real estate	189,317		183,451		170,982		147,710		136,410		38.8	%
Other	45,222		46,802		66,645		31,465		33,835		33.7	%
Total non-acquired loans	3,467,826		3,304,708		3,174,625		2,979,958		2,865,216		21.0	%
Total loans (net of unearned income) (1)	$	5,722,592	$	5,670,575	$	5,678,703	$	5,616,968	$	5,698,407	0.4	%
Loans held for sale	$	60,270	$	56,595	$	56,407	$	57,200	$	30,586	97.1	%

South State Corporation
(Unaudited)

(Dollars in thousands, except per share data)

	Quarter Ended															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,		December 31,
	2014			2014			2014			2014			2013			2014		2013
SELECTED RATIOS
Return on average assets (annualized)	1.07		%	0.96		%	0.91		%	0.86		%	0.70		%	0.95	%	0.77	%
Operating return on average assets (annualized) (non-GAAP) (3)	1.23		%	1.21		%	1.12		%	1.06		%	1.00		%	1.15	%	1.02	%
Return on average common equity (annualized)	8.63		%	7.99		%	7.63		%	6.89		%	5.72		%	7.80	%	6.99	%
Return on average equity (annualized)	8.63		%	7.99		%	7.63		%	6.90		%	5.67		%	7.79	%	6.90	%
Operating return on average common equity (annualized) (non-GAAP) (3)	9.93		%	9.99		%	9.43		%	8.61		%	8.38		%	9.51	%	9.26	%
Operating return on average equity (annualized) (non-GAAP) (3)	9.93		%	9.99		%	9.43		%	8.51		%	8.16		%	9.47	%	9.08	%
Return on average tangible common equity (annualized) (non-GAAP) (10)	14.77		%	13.97		%	13.62		%	12.59		%	10.90		%	13.77	%	11.54	%
Operating return on average tangible common equity (annualized) (non-GAAP) (10)	16.85		%	17.23		%	16.59		%	15.47		%	15.46		%	16.56	%	15.00	%
Return on average tangible equity (annualized) (non-GAAP) (10)	14.77		%	13.97		%	13.62		%	12.03		%	10.25		%	13.60	%	10.86	%
Net interest margin (tax equivalent)	4.72		%	4.65		%	4.75		%	4.99		%	4.91		%	4.80	%	5.00	%
Efficiency ratio (tax equivalent)	69.34		%	70.98		%	71.52		%	73.84		%	79.22		%	71.41	%	75.85	%
Operating efficiency ratio excluding OREO expense	62.73		%	61.32		%	63.62		%	64.06		%	66.30		%	62.98	%	64.87	%
Book value per common share	$	40.78		$	40.07		$	39.50		$	38.73		$	40.72
Tangible common equity per common share (non-GAAP) (10)	$	25.59		$	24.78		$	24.12		$	23.17		$	22.36
Common shares issued and outstanding	24,150,702			24,135,220			24,130,006			24,118,243			24,104,124
Common equity-to-assets	12.58		%	12.27		%	11.92		%	11.69		%	11.55		%
Equity-to-assets	12.58		%	12.27		%	11.92		%	11.69		%	12.37		%
Tangible common equity-to-tangible assets (non-GAAP) (10)	8.28		%	7.96		%	7.63		%	7.34		%	7.13		%
Tangible equity-to-tangible assets (non-GAAP) (10)	8.28		%	7.96		%	7.63		%	7.34		%	7.99		%
Tier 1 leverage (9)	9.4		%	9.1		%	8.9		%	8.6		%	9.3		%
Tier 1 risk-based capital (9)	13.5		%	13.2		%	12.9		%	12.7		%	13.5		%
Total risk-based capital (9)	14.3		%	14.1		%	13.8		%	13.6		%	14.4		%

South State Corporation

(Unaudited)

(Dollars in thousands, except per share data)

	Quarter Ended															Twelve Months Ended						YTD
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,			2014 - 2013
	2014			2014			2014			2014			2013			2014			2013			% Change
RECONCILIATION OF NON-GAAP TO GAAP
Pre-tax, Pre-provision Operating Earnings (6)
Net income (GAAP)	$	21,248		$	19,327		$	17,946		$	16,916		$	13,984		$	75,437		$	49,219		53.3	%
Provision for loan losses (1)	1,481			2,091			2,169			849			(12		)	6,590			1,886			249.4	%
Provision for income taxes	9,445			8,346			9,368			8,832			7,204			35,991			25,356			41.9	%
Pre-tax, pre-provision income	32,174			29,764			29,483			26,597			21,176			118,018			76,461			54.4	%
Securities gains	—			90			(88		)	—			—			2			—
Merger and branding related expense	4,599			6,846			6,510			5,985			9,314			23,940			22,534
Pre-tax, pre-provision operating earnings (non-GAAP)	$	36,773		$	36,700		$	35,905		$	32,582		$	30,490		$	141,960		$	98,995		43.4	%
Operating Return of Average Assets (3)
Operating return on average assets (non-GAAP)	1.23		%	1.21		%	1.12		%	1.06		%	1.00		%	1.15		%	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	-0.16		%	-0.25		%	-0.21		%	-0.20		%	-0.30		%	-0.20		%	-0.25		%
Return on average assets (GAAP)	1.07		%	0.96		%	0.91		%	0.86		%	0.70		%	0.95		%	0.77		%
Operating Return of Average Common Equity (3)
Operating return on average equity (non-GAAP)	9.93		%	9.99		%	9.43		%	8.61		%	8.38		%	9.51		%	9.26		%
Effect to adjust for securities gains (losses)	0.00		%	-0.03		%	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.30		%	-1.97		%	-1.82		%	-1.72		%	-2.66		%	-1.71		%	-2.27		%
Return on average common equity (GAAP)	8.63		%	7.99		%	7.63		%	6.89		%	5.72		%	7.80		%	6.99		%
Operating Return of Average Equity (3)
Operating return on average equity (non-GAAP)	9.93		%	9.99		%	9.43		%	8.51		%	8.16		%	9.47		%	9.08		%
Effect to adjust for securities gains (losses)	0.00		%	-0.03		%	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.30		%	-1.97		%	-1.82		%	-1.61		%	-2.49		%	-1.68		%	-2.18		%
Return on average equity (GAAP)	8.63		%	7.99		%	7.63		%	6.90		%	5.67		%	7.79		%	6.90		%
Return on Average Common Tangible Equity
Return on average common tangible equity (non-GAAP)	14.77		%	13.97		%	13.62		%	12.59		%	10.90		%	13.77		%	11.54		%
Effect to adjust for intangible assets	-6.14		%	-5.98		%	-5.99		%	-5.70		%	-5.18		%	-5.97		%	-4.55		%
Return on average common equity (GAAP)	8.63		%	7.99		%	7.63		%	6.89		%	5.72		%	7.80		%	6.99		%
Operating Return on Average Common Tangible Equity
Operating return on average common tangible equity (non-GAAP)	16.85		%	17.23		%	16.59		%	15.47		%	15.46		%	16.56		%	15.00		%
Effect to adjust for securities gains (losses)	0.00		%	-0.03		%	0.02		%	0.00		%	0.00		%	0.00		%	0.00		%
Effect to adjust for merger and branding related expenses	-1.29		%	-1.98		%	-1.82		%	-1.71		%	-2.67		%	-1.70		%	-2.27		%
Effect to adjust for intangible assets	-6.93		%	-7.24		%	-7.17		%	-6.87		%	-7.07		%	-7.06		%	-5.74		%
Return on average common equity (GAAP)	8.63		%	7.99		%	7.63		%	6.89		%	5.72		%	7.80		%	6.99		%
Return on Average Tangible Equity (10)
Return on average tangible equity (non-GAAP)	14.77		%	13.97		%	13.62		%	12.03		%	10.25		%	13.60		%	10.86		%
Effect to adjust for intangible assets	-6.14		%	-5.98		%	-5.99		%	-5.13		%	-4.58		%	-5.81		%	-3.96		%
Return on average equity (GAAP)	8.63		%	7.99		%	7.63		%	6.90		%	5.67		%	7.79		%	6.90		%
Operating efficiency ratio excluding OREO expense
Operating efficiency ratio excluding OREO expense	62.73		%	61.32		%	63.62		%	64.06		%	66.30		%	62.98		%	64.87		%
Effect to adjust for OREO and loan related expense	2.34		%	3.19		%	1.77		%	4.07		%	4.13		%	2.79		%	4.16		%
Effect to adjust for merger and branding expenses	4.27		%	6.47		%	6.13		%	5.71		%	8.79		%	5.64		%	6.82		%
Efficiency ratio (Tax Equivalent)	69.34		%	70.98		%	71.52		%	73.84		%	79.22		%	71.41		%	75.85		%
Tangible Book Value Per Common Share (10)
Tangible book value per common share (non-GAAP)	$	25.59		$	24.78		$	24.12		$	23.17		$	22.36
Effect to adjust for intangible assets	15.19			15.29			15.38			15.56			18.36
Book value per common share (GAAP)	$	40.78		$	40.07		$	39.50		$	38.73		$	40.72
Tangible Common Equity-to-Tangible Assets
Tangible common equity-to-tangible assets (non-GAAP)	8.28		%	7.96		%	7.63		%	7.34		%	7.13		%
Effect to adjust for intangible assets	4.30		%	4.31		%	4.29		%	4.35		%	4.42		%
Common equity-to-assets (GAAP)	12.58		%	12.27		%	11.92		%	11.69		%	11.55		%
Tangible Equity-to-Tangible Assets (10)
Tangible equity-to-tangible assets (non-GAAP)	8.28		%	7.96		%	7.63		%	7.34		%	7.99		%
Effect to adjust for intangible assets	4.30		%	4.31		%	4.29		%	4.35		%	4.38		%
Equity-to-assets (GAAP)	12.58		%	12.27		%	11.92		%	11.69		%	12.37		%

South State Corporation

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	December 31, 2014							December 31, 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	$	381,491		$	463	0.48	%	$	469,382		$	541	0.46	%
Investment securities (taxable)	675,672			3,898		2.29	%	548,725			3,392		2.45	%
Investment securities (tax-exempt)	143,953			1,126		3.10	%	150,867			1,191		3.13	%
Loans held for sale	46,540			636		5.42	%	35,673			357		3.97	%
Acquired loans, net of allowance for acquired loan losses	2,298,491			44,505		7.68	%	2,883,309			52,278		7.19	%
Non-acquired loans (1)	3,382,795			34,752		4.08	%	2,793,522			31,007		4.40	%
Total interest-earning assets	6,928,942			85,380		4.89	%	6,881,478			88,766		5.12	%
Noninterest-Earning Assets:
Cash and due from banks	145,225							160,164
Other assets	852,523							972,372
Allowance for non-acquired loan losses	(34,781		)					(36,410		)
Total noninterest-earning assets	962,967							1,096,126
Total Assets	$	7,891,909						$	7,977,604
Interest-Bearing Liabilities:
Transaction and money market accounts	$	2,911,247		$	765	0.10	%	$	2,860,770		$	888	0.12	%
Savings deposits	658,664			119		0.07	%	647,969			120		0.07	%
Certificates and other time deposits	1,268,408			1,362		0.43	%	1,590,114			1,748		0.44	%
Federal funds purchased and repurchase agreements	238,842			80		0.13	%	229,382			82		0.14	%
Other borrowings	101,173			1,503		5.89	%	106,812			1,513		5.62	%
Total interest-bearing liabilities	5,178,334			3,829		0.29	%	5,435,047			4,351		0.32	%
Noninterest-Bearing Liabilities:
Demand deposits	1,678,589							1,510,734
Other liabilities	58,590							52,488
Total noninterest-bearing liabilities (“Non-IBL”)	1,737,179							1,563,222
Shareholders’ equity	976,396							979,335
Total Non-IBL and shareholders’ equity	2,713,575							2,542,557
Total liabilities and shareholders’ equity	$	7,891,909						$	7,977,604
Net interest income and margin (NON-TAX EQUIV.)				$	81,551	4.67	%				$	84,415	4.87	%
Net interest margin (TAX EQUIVALENT)						4.72	%						4.91	%

South State Corporation

(Unaudited)

(Dollars in thousands)

	Twelve Months Ended
	December 31, 2014							December 31, 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	$	364,076		$	1,793	0.49	%	$	392,915		$	1,906	0.49	%
Investment securities (taxable)	667,033			15,758		2.36	%	458,344			11,073		2.42	%
Investment securities (tax-exempt)	146,700			4,589		3.13	%	151,908			4,773		3.14	%
Loans held for sale	38,745			1,766		4.56	%	45,015			1,620		3.60	%
Acquired loans, net of allowance for acquired loan losses	2,500,882			186,655		7.46	%	1,813,425			148,597		8.19	%
Non-acquired loans (1)	3,151,482			131,461		4.17	%	2,677,450			118,379		4.42	%
Total interest-earning assets	6,868,918			342,022		4.98	%	5,539,057			286,348		5.17	%
Noninterest-Earning Assets:
Cash and due from banks	193,993							125,324
Other assets	910,560							730,784
Allowance for non-acquired loan losses	(35,034		)					(40,192		)
Total noninterest-earning assets	1,069,519							815,916
Total Assets	$	7,938,437						$	6,354,973
Interest-Bearing Liabilities:
Transaction and money market accounts	$	2,894,137		$	3,295	0.11	%	$	2,280,055		$	2,897	0.13	%
Savings deposits	663,659			488		0.07	%	479,367			398		0.08	%
Certificates and other time deposits	1,381,049			5,518		0.40	%	1,277,772			5,194		0.41	%
Federal funds purchased and repurchase agreements	253,948			357		0.14	%	274,080			426		0.16	%
Other borrowings	101,195			6,004		5.93	%	76,421			4,072		5.33	%
Total interest-bearing liabilities	5,293,988			15,662		0.30	%	4,387,695			12,987		0.30	%
Noninterest-Bearing Liabilities:
Demand deposits	1,604,421							1,215,052
Other liabilities	71,865							39,336
Total noninterest-bearing liabilities (“Non-IBL”)	1,676,286							1,254,388
Shareholders’ equity	968,163							712,890
Total Non-IBL and shareholders’ equity	2,644,449							1,967,278
Total liabilities and shareholders’ equity	$	7,938,437						$	6,354,973
Net interest income and margin (NON-TAX EQUIV.)				$	326,360	4.75	%				$	273,361	4.94	%
Net interest margin (TAX EQUIVALENT)						4.80	%						5.00	%

South State Corporation

(Unaudited)

(Dollars in thousands)

																Fourth
	Three Months Ended															Quarter		Twelve Months Ended						YTD
	December 31,			September 30,			June 30,			March 31,			December 31,			2014 - 2013		December 31,						2014 - 2013
	2014			2014			2014			2014			2013			% Change		2014			2013			% Change
NONINTEREST INCOME & EXPENSE
Noninterest income:
Service charges on deposit accounts	$	8,986		$	9,126		$	9,144		$	8,988		$	10,097		-11.0	%	36,244			30,561			18.6	%
Bankcard services income	7,320			7,489			7,741			7,084			7,230			1.2	%	29,634			21,844			35.7	%
Mortgage banking income	4,072			4,124			4,683			3,291			2,520			61.6	%	16,170			9,149			76.7	%
Trust and investment services income	4,499			4,490			4,812			4,543			4,315			4.3	%	18,344			12,661			44.9	%
Securities gains, net (8)	—			(90		)	88			—			—					(2		)	—
Amortization of FDIC indemnification asset	(4,177		)	(4,825		)	(5,815		)	(7,078		)	(7,429		)	43.8	%	(21,895		)	(29,535		)	-25.9	%
Other	4,599			4,139			3,746			3,717			3,916			17.4	%	16,201			9,040			79.2	%
Total noninterest income	$	25,299		$	24,453		$	24,399		$	20,545		$	20,649		22.5	%	$	94,696		$	53,720		76.3	%
Noninterest expense:
Salaries and employee benefits	$	39,034		$	40,029		$	40,276		$	39,093		$	40,634		-3.9	%	$	158,432		$	122,096		29.8	%
Information services expense	3,724			3,417			4,279			4,424			4,381			-15.0	%	15,844			14,469			9.5	%
OREO expense and loan related	2,520			3,374			1,875			4,064			4,344			-42.0	%	11,833			13,727			-13.8	%
Net occupancy expense	5,701			5,387			5,731			5,640			5,894			-3.3	%	22,459			17,590			27.7	%
Furniture and equipment expense	3,100			3,166			3,264			3,741			3,816			-18.8	%	13,271			12,111			9.6	%
Merger and branding related expense	4,599			6,846			6,510			5,985			9,314			-50.6	%	23,940			22,534			6.2	%
Business development and staff related	1,736			1,482			1,747			1,578			1,778			-2.4	%	6,543			5,519			18.6	%
FDIC assessment and other regulatory charges	1,321			1,268			1,267			1,576			1,193			10.7	%	5,432			5,034			7.9	%
Supplies, printing and postage expense	2,074			1,681			1,599			1,583			1,551			33.7	%	6,937			4,891			41.8	%
Bankcard expense	2,043			2,141			2,187			2,192			2,287			-10.7	%	8,563			6,550			30.7	%
Amortization of intangibles	2,052			2,080			2,084			2,104			2,287			-10.3	%	8,320			6,081			36.8	%
Professional fees	1,459			1,068			1,190			1,243			1,430			2.0	%	4,960			4,210			17.8	%
Advertising and marketing	1,172			837			1,054			1,093			1,729			-32.2	%	4,156			4,532			-8.3	%
Other	4,141			2,282			2,826			3,099			3,250			27.4	%	12,348			11,276			9.5	%
Total noninterest expense	$	74,676		$	75,058		$	75,889		$	77,415		$	83,888		-11.0	%	$	303,038		$	250,620		20.9	%

Notes:

(A)  Includes noncash loan interest income related the discount on acquired performing loans on $2.3 million; $2.4 million; $2.2 million; $3.0 million; and $3.5 million, respectively during the five quarters above,

and for the year ended the amounts were $9.9 million and $6.7 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 $4.6 million, $6.8 million, $6.5 million, $6.0 million, and $9.3 million, for the quarters ended December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 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) December 31, 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)

	December 31,			December 31,
	2014			2013
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	229,901		$	212,473
Interest-bearing deposits with banks	7,456			4,770
Federal funds sold and securities purchased under agreements to resell	180,512			262,218
Total cash and cash equivalents	417,869			479,461
Investment securities:
Securities held to maturity (fair value of $10,233, and $12,891, respectively)	9,659			12,426
Securities available for sale, at fair value	806,766			786,791
Other investments	10,518			13,386
Total investment securities	826,943			812,603
Loans held for sale	60,270			30,586
Loans:
Acquired credit impaired (covered of $182,464, and $289,123, respectively; non-covered of $736,938, and $931,515, respectively), net of allowance for loan losses	919,402			1,220,638
Acquired non-credit impaired (covered of $9,376, and $7,824, respectively; non-covered of $1,318,623, and $1,593,111, respectively)	1,327,999			1,600,935
Non-acquired	3,467,826			2,865,216
Less allowance for non-acquired loan losses	(34,539		)	(34,331		)
Loans, net	5,680,688			5,652,458
Goodwill	317,688			317,688
Premises and equipment, net	171,772			188,114
Bank owned life insurance	99,140			97,197
FDIC receivable for loss share agreements	22,161			86,447
Deferred tax asset	42,692			72,914
Other real estate owned (covered of $16,227, and $27,520, respectively; non-covered of $26,499, and $37,398, respectively)	42,726			64,918
Core deposit and other intangibles	49,239			59,908
Mortgage servicing rights	21,601			20,729
Other assets	73,438			48,475
Total assets	$	7,826,227		$	7,931,498
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	1,639,953		$	1,486,445
Interest-bearing	4,821,092			5,067,699
Total deposits	6,461,045			6,554,144
Federal funds purchased and securities sold under agreements to repurchase	221,541			211,401
Other borrowings	101,210			102,060
Other liabilities	57,511			82,424
Total liabilities	6,841,307			6,950,029
Shareholders’ equity:
Preferred stock - $.01 par value; authorized 10,000,000 shares; 0, and 65,000 shares issued and outstanding, respectively	—			1
Common stock - $2.50 par value; authorized 40,000,000 shares; 24,150,702, and 24,104,124 shares issued and outstanding, respectively	60,377			60,260
Surplus	701,764			762,354
Retained earnings	223,156			168,577
Accumulated other comprehensive (loss)	(377		)	(9,723		)
Total shareholders’ equity	984,920			981,469
Total liabilities and shareholders’ equity	$	7,826,227		$	7,931,498

SOUTH STATE CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2014			2013			2014			2013
Interest income:
Loans, including fees	$	79,893		$	83,642		$	319,882		$	268,596
Investment securities:
Taxable	3,898			3,392			15,758			11,073
Tax-exempt	1,126			1,191			4,589			4,773
Federal funds sold and securities purchased under agreements to resell	463			541			1,793			1,906
Total interest income	85,380			88,766			342,022			286,348
Interest expense:
Deposits	2,246			2,756			9,301			8,489
Federal funds purchased and securities sold under agreements to repurchase	80			82			357			426
Other borrowings	1,503			1,513			6,004			4,072
Total interest expense	3,829			4,351			15,662			12,987
Net interest income	81,551			84,415			326,360			273,361
Provision for loan losses	1,481			(12		)	6,590			1,886
Net interest income after provision for loan losses	80,070			84,427			319,770			271,475
Noninterest income:
Service charges on deposit accounts	8,986			10,097			36,244			30,561
Bankcard services income	7,320			7,230			29,634			21,844
Mortgage banking income	4,072			2,520			16,170			9,149
Trust and investment services income	4,499			4,315			18,344			12,661
Securities gains (losses), net	—			—			(2		)	—
Amortization of FDIC indemnification asset	(4,177		)	(7,429		)	(21,895		)	(29,535		)
Other	4,599			3,916			16,201			9,040
Total noninterest income	25,299			20,649			94,696			53,720
Noninterest expense:
Salaries and employee benefits	39,034			40,634			158,432			122,096
Information services expense	3,724			4,381			15,844			14,470
OREO expense and loan related	2,520			4,344			11,833			13,727
Net occupancy expense	5,701			5,894			22,459			17,590
Furniture and equipment expense	3,100			3,816			13,271			12,112
Merger and branding related expense	4,599			9,314			23,940			22,534
FDIC assessment and other regulatory charges	1,321			1,193			5,432			5,034
Supplies, printing and postage expense	2,074			1,551			6,937			4,891
Bankcard expense	2,043			2,287			8,563			6,550
Amortization of intangibles	2,052			2,287			8,320			6,081
Professional fees	1,459			1,430			4,960			4,210
Advertising and marketing	1,172			1,729			4,156			4,532
Other	5,877			5,028			18,891			16,794
Total noninterest expense	74,676			83,888			303,038			250,621
Earnings:
Income before provision for income taxes	30,693			21,188			111,428			74,574
Provision for income taxes	9,445			7,204			35,991			25,355
Net income	21,248			13,984			75,437			49,219
Preferred stock dividends	—			812			1,073			1,354
Accretion on preferred stock discount	—			—			—			—
Net income available to common shareholders	$	21,248		$	13,172		$	74,364		$	47,865
Earnings per common share:
Basic	$	0.89		$	0.55		$	3.11		$	2.41
Diluted	$	0.88		$	0.55		3.08			2.38
Dividends per common share	$	0.22		$	0.19		$	0.82		$	0.74
Weighted-average common shares outstanding:
Basic	23,912			23,826			23,897			19,866
Diluted	24,189			24,079			24,154			20,077