Mergers and Acquisitions (Tables)

3 Months Ended

Mar. 31, 2018


	Estimated/Actual For PSC		Pro Forma
	For the Three Months		Three Months
(Dollars in thousands)	Ended March 31, 2018		Ended March 31, 2017
Total revenues (net interest income plus noninterest income)	$	36,085	$	167,044
Net adjusted income available to the common shareholder	$	11,072	$	49,233

Park Sterling Corporation

Mergers and Acquisitions

Schedule of assets acquired, liabilities assumed, and fair value of total consideration transferred

The PSC transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. The following table presents the assets acquired and liabilities assumed as of November 30, 2017 and their initial and subsequent fair value estimates, as recorded by the Company. Fair values are preliminary and subject to refinement for up to a year after the closing date of the acquisition.


			Initial			Subsequent
	As Recorded		Fair Value			Fair Value			As Recorded by
(Dollars in thousands)	by Park		Adjustments			Adjustments			the Company
Assets
Cash and cash equivalents	$	116,454	$	—		$	—		$	116,454
Investment securities		461,261		1,444	(a)		219	(a)		462,924
Loans held for sale		2,200		68,686	(b)		—			70,886
Loans, net of allowance and mark		2,346,612		(95,878)	(c)		(50)	(c)		2,250,684
Premises and equipment		61,059		(4,882)	(d)		(387)	(d)		55,790
Intangible assets		73,090		(46,915)	(e)		—			26,175
OREO and repossessed assets		2,549		(429)	(f)		210	(f)		2,330
Bank owned life insurance		72,703		—			—			72,703
Deferred tax asset		17,963		11,596	(g)		3	(g)		29,562
Other assets		21,595		(476)	(h)		—			21,119
Total assets	$	3,175,486	$	(66,854)		$	(5)		$	3,108,627

Liabilities
Deposits:
Noninterest-bearing	$	561,874	$	—		$	—		$	561,874
Interest-bearing		1,886,810		2,692	(i)		—			1,889,502
Total deposits		2,448,684		2,692			—			2,451,376
Federal funds purchased and securities sold under agreements to repurchase		—		—			—			—
Other borrowings		329,249		11,689	(j)		—			340,938
Other liabilities		24,179		2,131	(k)		—			26,310
Total liabilities		2,802,112		16,512			—			2,818,624
Net identifiable assets acquired over (under) liabilities assumed		373,374		(83,366)			(5)			290,003
Goodwill		—		402,951			5			402,956
Net assets acquired over liabilities assumed	$	373,374	$	319,585		$	—		$	692,959

Consideration:
South State Corporation common shares issued										7,480,343
Purchase price per share of the Company's common stock									$	92.05

Company common stock issued ($688,566) and cash exchanged for fractional shares ($88)									$	688,654
Cash paid for stock option redemptions										4,305
Fair value of total consideration transferred									$	692,959

Explanation of fair value adjustments

(a)—Adjustment reflects marking the securities portfolio to fair value as of the acquisition date.

(b)—Adjustment reflects a reclass of $68.7 million by SSB of Shared National Credits (loans) from loans held for investment to loans held for sale.

(c)—Adjustment reflects the fair value adjustments (discount) of $60.9 million based on the Company’s evaluation of the acquired loan portfolio. This amount excludes the allowance for loan losses (“ALLL”) and fair value adjustment (discount) of $12.5 million and $21.3 million, respectively, recorded by PSC and is net of the $68.7 million reclass related to the Shared National Credits noted in (b).

(d)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired premises and equipment.

(e)—Adjustment reflects the recording of a 1.66% Core Deposit Intangible (“CDI”) on the acquired deposit accounts that totaled $26.2 million offset by a write-off of $73.1 million of existing goodwill and CDI acquired from PSC.

(f)—Adjustment reflects the fair value adjustments to other real estate owned (“OREO”) based on the Company’s evaluation of the acquired OREO portfolio.

(g)—Adjustment to record deferred tax asset related to the fair value adjustments and an adjustment from the PSC tax rate to the SSB tax rate.

(h)—Adjustment reflects the write-off of accrued interest receivable and along with certain prepaid expenses.

(i)—Adjustment reflects the premium for fixed maturity time deposits of $2.95 million offset by the write-off of existing fair value marks of $253,000 acquired from PSC.

(j)—Adjustment reflects the fair value adjustment (discount) of $2.4 million on PSC’s Trust Preferred Securities offset by the write-off of the existing PSC discount on its senior debt and TRUPs of $14.0 million.

(k)—Adjustment reflects the fair value adjustments to employee benefit plans of $1.5 million along with other

adjustments of miscellaneous liabilities.

Southeastern Bank Financial

Mergers and Acquisitions

Schedule of assets acquired, liabilities assumed, and fair value of total consideration transferred

The following table presents the assets acquired and liabilities assumed as of January 3, 2017 and their initial and subsequent fair value estimates, as recorded by the Company. The Company has up to one year after the acquisition date to make subsequent fair value adjustments.


			Initial			Subsequent
	As Recorded		Fair Value			Fair Value			As Recorded by
(Dollars in thousands)	by SBFC		Adjustments			Adjustments			the Company
Assets
Cash and cash equivalents	$	72,043	$	—		$	—		$	72,043
Investment securities		591,824		(1,770)	(a)		—			590,054
Loans held for sale		13,652		—			—			13,652
Loans, net of allowance and mark		1,060,618		(10,668)	(b)		—			1,049,950
Premises and equipment		25,419		(2,212)	(c)		870	(c)		24,077
Intangible assets		140		17,980	(d)		—			18,120
OREO and repossessed assets		580		(30)	(e)		(100)	(e)		450
Bank owned life insurance		44,513		—			—			44,513
Deferred tax asset		16,247		(687)	(f)		515	(f)		16,075
Other assets		7,545		(482)	(g)		—			7,063
Total assets	$	1,832,581	$	2,131		$	1,285		$	1,835,997

Liabilities
Deposits:
Noninterest-bearing	$	262,967	$	—		$	—		$	262,967
Interest-bearing		1,257,953		—			—			1,257,953
Total deposits		1,520,920		—			—			1,520,920
Federal funds purchased and securities sold under agreements to repurchase		1,014		—			—			1,014
Other borrowings		110,620		(1,120)	(h)		—			109,500
Other liabilities		19,980		5,553	(i)		2,210	(i)		27,743
Total liabilities		1,652,534		4,433			2,210			1,659,177
Net identifiable assets acquired over (under) liabilities assumed		180,047		(2,302)			(925)			176,820
Goodwill		—		257,370			925			258,295
Net assets acquired over liabilities assumed	$	180,047	$	255,068		$	—		$	435,115

Consideration:
South State Corporation common shares issued										4,978,338
Purchase price per share of the Company's common stock									$	87.30

Company common stock issued ($434,609) and cash exchanged for fractional shares ($16)									$	434,625
Cash paid for stock option redemptions										490
Fair value of total consideration transferred									$	435,115

Explanation of fair value adjustments

(a)—Adjustment reflects marking the securities portfolio to fair value as of the acquisition date.

(b)—Adjustment reflects the fair value adjustments of $30.7 million based on the Company’s evaluation of the acquired loan portfolio and excludes the allowance for loan losses (“ALLL”) of $20.1 million recorded by SBFC.

(c)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired premises and equipment.

(d)—Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts that totaled $18.1 million.

(e)—Adjustment reflects the fair value adjustments to other real estate owned (“OREO”) and repossessed assets based on the Company’s evaluation of the acquired OREO and repossessed assets portfolio.

(f)—Adjustment to record deferred tax asset related to the fair value adjustments.

(g)—Adjustment reflects uncollectible portion of accrued interest receivable and loan fees receivable along with the write-off of certain prepaid expenses.

(h)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of other borrowings of Trust Preferred Securities with a discount of $2.1 million, netted with premium on certain Federal Home Loan Bank (“FHLB “) advances of $1.0 million.

(i)—Adjustment reflects the fair value adjustments to employee benefit plans of $8.3 million netted against an adjustment of other miscellaneous liabilities of $496,000.