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    SSB
    Earnings call· Jun 2026(Q2 FY26)

    SouthState Bank Corp SSB

    Jul 24, 2026 Source

    Executive summary

    SouthState Bank Corporation Q2 FY26 — Strong Performance with Solid Growth and Stable Margins

    SouthState Bank delivered a strong second quarter, marked by robust balance sheet growth, stable net interest margins, and excellent credit quality. The company is actively investing in talent and technology, particularly AI, to drive future growth and efficiency. Management remains committed to disciplined capital allocation, balancing growth with profitability and shareholder returns, while maintaining a stable outlook for key financial metrics.

    Highlights

    5

    • Generated a return on assets (ROA) of 1.36% and a return on tangible common equity (ROTCE) of 17.6%.

    • Loans grew 8% year-over-year and 11% annualized in Q2, with new hires contributing $600 million in production.

    • Nonperforming assets (NPAs) declined 14% and net charge-offs (NCOs) remained exceptionally low at 6 basis points.

    • Maintained a CET1 capital ratio above 11.1% while repurchasing 1 million shares in Q2.

    • Deposit costs remained unchanged at 1.76%, contributing to a stable net interest margin of 3.78%.

    Concerns

    3

    • Accretion income declined $6 million from Q1, partially offset by the positive impact of an extra day.

    • Noninterest income was $3 million below Q1 levels, primarily due to lower mortgage revenue.

    • Share repurchase activity slowed in Q2 compared to the year-to-date pace, aligning with a long-term 40% to 60% payout ratio.

    Guidance & targets

    5
    CategoryTargetConfidence
    Net Interest Margin (NIM)
    3.75% to 3.80% range
    high materiality
    High
    Loan Growth
    mid- to high single-digit range
    high materiality
    High
    Deposit Growth
    mid- to upper single digits
    medium materiality
    Medium
    Noninterest Expense (NIE) Growth
    4% growth over 2025 levels
    high materiality
    High
    Total Payout Ratio
    40% to 60% range
    high materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Texas
    Loan growth is now at the same rate as the Southeast franchise. The team has had the most success in expanding the sales force.
    Loan growth: 10-11% rate (excluding specialty lines)Commercial RMs expansion: 25%
    		————

    Operational metrics

    24
    Return on Assets (ROA)
    1.36%
    Q2 FY26

    Extends consistent high performance over the last several quarters.

    Loan Production (New Hires)
    $600 million
    last 3 quarters

    Contribution from commercial banking sales force expanded by more than 10%.

    Loan Pipeline (New Hires)
    $1.5 billion
    current

    Pipeline coming behind the $600 million in loan production from new hires.

    Loan Production
    $1.35 billion11% annualized rate
    Q2 FY26

    Record quarter for loan growth and production.

    Floating Rate Loan Production
    76%
    Q2 FY26

    Reflects efforts to increase floating rate exposure in an uncertain rate environment.

    Floating Rate Loan Portfolio
    38%up from 32% (June 30 last year)
    Q2 FY26

    Progress made in improving the balance sheet mix for interest rate sensitivity.

    Noninterest Income as % of Average Assets
    57 bps
    Q2 FY26

    Within the guidance range of 55 to 60 basis points.

    Core Deposit Intangible (CDI) Amortization
    $21 million
    Q2 FY26

    Noncash expense resulting from purchase accounting rules, expected to cross quarterly accretion number in 4-5 quarters.

    EPS (Excluding Accretion & CDI Amortization)
    13%up
    Q2 FY26 vs Q2 FY25

    Highlights underlying earnings power excluding specific non-cash items.

    Tangible Book Value (TBV) per Share
    $58.72up 13% from year ago level
    Q2 FY26

    Achieved despite repurchasing over 4.9 million shares (approximately 5% of the company) over the last year.

    Shares Repurchased (YTD)
    2.5 million
    YTD FY26

    Contributed to an 80% total payout ratio year-to-date.

    Treasury Management Accounts Growth
    16%annualized
    YTD FY26

    Underlying growth in treasury management activity.

    Treasury Management Balances Growth
    8%annualized
    YTD FY26

    Underlying growth in treasury management activity.

    New Money Market Rates
    $268 million
    Q2 FY26

    Average rate for new money market accounts, indicating a calming trend from higher rates seen at the end of last quarter.

    New and Renewed Retail CDs
    $1.1 billion
    Q2 FY26

    Average rate for retail CDs has slightly calmed down from Q1.

    Loan-to-Deposit Ratio
    just north of 90%
    Q2 FY26

    Management typically aims for mid-70s at cycle start, 90% in later stages, with a potential ceiling of 92%.

    Construction Loan Category
    10%down
    YoY

    Despite the YoY decline, there was an increase in Q2 due to owner-occupied construction and multifamily projects.

    Moody's Scenario Weighting (Pessimistic S3)
    40%vs 30% traditional
    current

    Reflects a more conservative approach due to economic uncertainty, compared to the traditional 40-30-30 weighting.

    Moody's Scenario Weighting (Optimistic S1)
    20%vs 30% traditional
    current

    Reflects a more conservative approach due to economic uncertainty, compared to the traditional 40-30-30 weighting.

    Correspondent Revenue (Gross)
    $5 millionup
    YoY

    Increase in gross revenue from correspondent services.

    Correspondent Revenue per Quarter
    $24.8 millionvs $24.4 million (Q1 FY26)
    Q2 FY26

    Current run rate for correspondent revenue, with a good run rate going on.

    Correspondent Banking Efficiency Ratio (Fixed Income)
    ~70%
    current

    Efficiency ratio for the fixed income portion of the correspondent banking business.

    Correspondent Banking Efficiency Ratio (Other Products)
    ~60%
    current

    Efficiency ratio for other products within the correspondent banking business.

    Texas/Colorado CD Rates Premium
    ~25 bpshigher than Southeast markets
    current

    Indicates higher competitive pressure on the deposit side in these markets.

    Industry KPIs

    13
    MetricValueDetails
    Loans$1.35 billionUSD
    Deposits5%%
    Rotce ROE17.6%%
    Cet1 ratio11.1%%
    Capital returns1 million sharesshares
    Fee income lines$97 millionUSD
    Allowance reserves1.30%%
    Net interest income$576 millionUSD
    Net interest margin3.78%%
    Net charge offs npls6 basis pointsbps
    Total operating expenses$358 millionUSD
    Provision for credit losses$16 millionUSD
    Efficiency ratio operating leverage—

    Product announcements

    2
    ProductTypeDetails
    Commodity Hedgingroadmap
    FX Initiatives for Commercial Clientsroadmap

    Risks & headwinds

    3
    Economic Uncertaintyongoing

    Tariffs and Middle East conflict

    Mitigation: Maintaining a conservative scenario weighting for allowance for credit losses (40% in pessimistic S3 scenario).

    Competitive Market for Talentongoing

    Not quantified

    Mitigation: Offering a strong value proposition beyond compensation, including culture, operating structure, and ownership culture.

    Increased Loan PayoffsH2 FY26

    Planned multifamily CRE payoffs

    Mitigation: Expected to be offset by a pickup in C&I growth, maintaining overall loan growth guidance.

    What to watch in Q3 FY26

    5

    Net Interest Margin (NIM) Stability

    next quarter
    Current3.78%
    Target3.75% to 3.80% range

    Why it matters

    NIM trajectory is a key driver of profitability, and its stability despite declining accretion income and potential deposit cost increases is crucial for the investment thesis.

    But all of that to say that we continue to expect NIM if we have flat rates through 2027 just to continue to be in that 3.75 to 3.80 range.

    Q&A highlights

    6

    How do NIM trends look given continued high single-digit loan growth and deposit costs? Is management willing to accept slight NIM compression for good customer/loan growth?

    NIM is expected to remain stable in the 3.75-3.80% range through 2027, assuming flat rates. Management confirms they are willing to make trade-offs for growth, balancing soundness, profitability, and growth, especially with new hires driving production.

    “Yes, that's exactly right, Stephen. We set out a plan for this year that we're going to expand the team and we're successfully doing that and they're producing for us.”

    asked by Stephen Scouten · answered by John Corbett

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Priorities and Talent Acquisition

    SouthState is actively pursuing four key priorities: attracting top talent, growing the balance sheet, disciplined capital allocation, and building artificial intelligence capabilities. The commercial banking sales force has expanded by over 10% in the last three quarters, with new hires contributing $600 million in loan production and generating a $1.5 billion pipeline. This strategic investment in talent is a differentiator in competitive markets, empowering local decision-making and fostering long-term relationships.

    02

    Balance Sheet Growth and Management

    The company achieved robust balance sheet growth, with loans increasing 8% year-over-year and an 11% annualized rate in Q2. This growth was broad-based across all markets, with Florida leading in dollar growth, and Atlanta, Virginia, and Alabama showing strong percentage growth in C&I. Management emphasizes a disciplined approach to balancing soundness, profitability, and growth, leveraging opportunities in vibrant markets to build profitable relationships while maintaining asset quality.

    03

    Net Interest Margin Dynamics and Core Expansion

    Net interest margin (NIM) for Q2 was 3.78%, a slight 1 basis point decrease from Q1, but within the guided range of 3.75% to 3.80%. While accretion income declined by $6 million, core NIM is expected to expand. This expansion is driven by approximately $6 billion of loans repricing within the next year at higher rates (around 50 basis points increase) and $1 billion in securities cash flow, shifting the earnings mix from accretion to core interest income.

    04

    Credit Quality Strength and Conservative Provisioning

    Asset quality continued to improve, with nonperforming assets declining 14% and net charge-offs remaining exceptionally low at 6 basis points. Provision expense of $16 million was primarily driven by loan growth. The company maintains a conservative stance on its allowance for credit losses, weighting 40% of its Moody's scenario analysis to the pessimistic S3 scenario, reflecting ongoing economic uncertainties despite overall positive trends.

    05

    Capital Allocation and Shareholder Returns

    SouthState repurchased 1 million shares in Q2 at a weighted average price of $97.62, contributing to a 68% total payout ratio for the quarter. Year-to-date, 2.5 million shares have been repurchased, resulting in an 80% total payout ratio. While recent activity has been higher, the company's long-term total payout ratio guidance remains in the 40% to 60% range, balancing capital return with maintaining a strong CET1 ratio (11.1%) and supporting high single-digit loan growth.

    06

    AI Adoption and Operational Efficiency

    Artificial intelligence is a significant focus, with initiatives aimed at improving speed, quality, and scale across various departments. Productivity gains are already being realized in credit operations, fraud management, and call center support, alongside the continued adoption of an internally developed small language model. Noninterest expenses of $358 million were slightly better than guided, and the full-year 2026 NIE guidance remains at 4% growth over 2025 levels.

    AI-generated summary of the company’s earnings call. Not investment advice.