Mergers and Acquisitions (Tables) - Atlantic Capital

3 Months Ended

Mar. 31, 2022

Mergers and Acquisitions

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

			Initial
	As Recorded		Fair Value			As Recorded by
(Dollars in thousands)	by Atlantic Capital		Adjustments			the Company
Assets
Cash and cash equivalents	$	250,134	$	24	(a)	$	250,158
Investment securities		717,332		(13,622)	(b)		703,710
Loans, net of allowance and mark		2,394,256		(18,964)	(c)		2,375,292
Premises and equipment		16,892		2,608	(d)		19,500
Intangible assets		22,572		(1,781)	(e)		20,791
Bank owned life insurance		74,613		—			74,613
Deferred tax asset		30,231		2,273	(f)		32,504
Other assets		45,274		(1,277)	(g)		43,997
Total assets	$	3,551,304	$	(30,739)		$	3,520,565
Liabilities
Deposits:
Noninterest-bearing	$	1,411,671	$	—		$	1,411,671
Interest-bearing		1,616,970		—			1,616,970
Total deposits		3,028,641		—			3,028,641
Federal funds purchased and securities sold under agreements to repurchase		50,000		—			50,000
Other borrowings		74,131		4,286	(h)		78,417
Other liabilities		50,711		(2,075)	(i)		48,636
Total liabilities		3,203,483		2,211			3,205,694
Net identifiable assets acquired over (under) liabilities assumed		347,821		(32,950)			314,871
Goodwill		—		342,939			342,939
Net assets acquired over liabilities assumed	$	347,821	$	309,989		$	657,810
Consideration:
South State Corporation common shares issued							7,330,803
Purchase price per share of the Company's common stock						$	90.00
Company common stock issued ($659,772) and cash exchanged for fractional shares ($19)						$	659,791
Stock option conversion							1,135
Restricted stock unit conversion							2,870
Restricted stock awards conversion (unvested awards)							(5,986)
Fair value of total consideration transferred						$	657,810

Explanation of fair value adjustments

(a)— Represents an adjustment to record time deposits with financial institutions at fair value (premium).

(b)— Represents the reversal of Atlantic Capital 's existing fair value adjustments of $17.2 million and the adjustment to record securities and time deposits at fair value (discount) totaling $30.9 million (includes reclassification of all securities held as HTM to AFS totaling $237.6 million).

(c)— Represents approximately 1.23%, or $29.7 million, credit mark of the loan portfolio and 2.01% total mark, or $48.7 million, including discount, based on a third party valuation. Also, includes a reversal of Atlantic Capital's ending allowance for credit losses of $22.1 million and $7.6 million of existing Atlantic Capital’s deferred fees and costs.

(d)— Represents the preliminary fair value adjustments of $2.6 million on fixed assets and leased assets.

(e)— Represents approximately $17.5 million, or 0.63%, of CDI amount and $3.2 million for SBA servicing asset based on a third party valuation. Prior to the merger, goodwill and servicing asset of $19.9 million and $2.6 million, respectively, were written-off.

(f)— Represents deferred tax asset related to fair value adjustments with effective tax rate of 24.6%, which includes an adjustment from the Atlantic Capital rate to the Company’s rate. The difference in rates relates to state income

taxes.

(g)— Represents the fair value adjustment (decrease) for Investment in low income housing investment of $1.1 million and write-off of prepaid assets.

(h)— Represents the reversal of the existing Atlantic Capital’s issuance costs on subordinated debt of $0.9 million, and recording the fair value adjustment (premium) of $3.4 million, based on a third party valuation.

(i)— Represents the reversal of $2.8 million of unfunded commitment liability at purchase date and the fair value adjustment to increase lease liabilities associated with rental facilities totaling $1.4 million. Also includes the reversal of uncertain tax liability of $0.7 million.

Schedule of proforma information

	Pro Forma		Pro Forma
	Three Months Ended		Three Months Ended
(Dollars in thousands)	March 31, 2022		March 31, 2021
Total revenues (net interest income plus noninterest income)	$	367,675	$	391,080
Net interest income	$	278,056	$	291,233
Net adjusted income available to the common shareholder	$	124,685	$	147,366
EPS - basic	$	1.64	$	1.88
EPS - diluted	$	1.62	$	1.87