SouthState Bank Q2 Earnings Call Highlights

Key Points

• SouthState Bank posted solid Q2 2026 results with a 1.36% return on assets, 17.6% return on tangible common equity, and continued balance-sheet growth. Loans rose 8% over the past year and deposits increased 5%, while quarterly loan growth ran at an 11% annualized pace.
• Net interest margin and credit quality remained strong, with margin at 3.78% and credit metrics improving as nonperforming assets fell 14% and net charge-offs stayed low at 6 basis points. Management said the margin should stay within its 3.75% to 3.80% target range, helped by repricing opportunities.
• The bank continued returning capital and investing for growth, repurchasing 1 million shares in the quarter while keeping CET1 at 11.1% and expanding use of AI across credit, fraud, and customer-service operations. SouthState also grew its commercial banking sales force, which has already generated $600 million in loan production and supports a stronger loan pipeline.

SouthState Bank NYSE: SSB reported second-quarter 2026 results marked by continued loan growth, stable net interest margin, low credit losses and ongoing investment in banker recruiting and artificial intelligence initiatives.

Chief Executive Officer John Corbett said the company generated a 1.36% return on assets and a 17.6% return on tangible common equity during the quarter. He said results reflected “solid balance sheet growth, stable margins, improving efficiency, and continued strength in credit quality.”

Over the past year, loans increased 8% and deposits rose 5%, both within the company’s previously issued guidance ranges. During the second quarter, loan growth totaled $1.35 billion, representing an 11% annualized rate. Average loan growth also ran at an 11% annualized pace.

Corbett said growth was broad-based across SouthState’s footprint, with Florida leading the company in loan-growth dollars. Florida, Texas and South Carolina were the largest contributors by dollar amount, while Atlanta, Virginia and Alabama posted strong percentage growth, including commercial and industrial lending gains in Atlanta.

Recruiting Supports Growth Strategy

SouthState has expanded its commercial banking sales force by more than 10% over the past three quarters as it seeks to capitalize on disruption in its markets. Corbett said the company had offered division presidents the opportunity to increase their commercial relationship manager teams by 15% to 20% over several years.

The newer hires have generated $600 million of loan production so far and have a $1.5 billion pipeline, according to Corbett. Texas has been the strongest market for sales-force expansion, with its commercial relationship manager count up 25%.

The company expects loan growth to remain in the mid- to upper-single-digit range. Corbett said SouthState sees a potential mix shift in the second half, with commercial and industrial lending expected to increase while planned commercial real estate payoffs, including multifamily projects, rise.

Construction lending increased during the quarter, driven partly by owner-occupied projects for commercial clients and multifamily construction. However, Corbett noted that the overall construction category remained about 10% below its level a year earlier.

Margin Outlook Remains Stable

SouthState reported a net interest margin of 3.78%, down 1 basis point from the first quarter and within its 3.75% to 3.80% guidance range. Deposit costs were unchanged from the prior quarter at 1.76%, while loan yields declined 5 basis points to 5.91% due to lower purchase-accounting accretion income.

Excluding accretion, loan yields increased 1 basis point and net interest margin rose 4 basis points, the company said. Net interest income totaled $576 million, up $14 million from the first quarter.

Chief Strategy Officer Steve Young said management’s outlook assumes no interest-rate increases or reductions through 2027 and calls for net interest margin to remain within the 3.75% to 3.80% range. He said deposit costs could rise modestly as the company funds loan growth, but anticipated asset repricing should help support the margin.

SouthState said approximately 76% of quarterly loan production carried floating rates. The share of the overall loan portfolio in floating-rate loans has increased to 38%, from 32% a year earlier.

Management also pointed to future repricing opportunities, including roughly $6 billion of loans expected to reprice over the next year and about $1 billion of securities expected to cash flow and be reinvested. Young said legacy loans with coupons in the 3% to 4% range are being replaced at rates in the 6% range.

Credit Quality and Expenses

Credit quality improved during the quarter. Nonperforming assets declined 14%, classified loans also decreased, and net charge-offs were 6 basis points. It was the eighth time in the past nine quarters that SouthState’s net charge-offs were below 10 basis points.

Provision expense was $16 million, primarily reflecting loan growth. Management said it expects modest downward pressure on reserve levels absent meaningful changes in Moody’s economic forecasts and other loss drivers. The company continues to use a more conservative weighting toward Moody’s pessimistic scenario than its traditional model weighting.

Noninterest income was $97 million, or 57 basis points of average assets, within the company’s 55- to 60-basis-point guidance range. The figure was $3 million below the first quarter, as higher deposit fees were offset by lower mortgage revenue. SouthState said it continues to expect correspondent banking revenue of roughly $25 million per quarter.

Noninterest expense totaled $358 million, slightly better than guidance. Management maintained its forecast for 4% noninterest expense growth in 2026. It expects compensation costs to rise in the second half as recently hired employees remain in the run rate and company merit increases take effect July 1.

Capital Returns and Technology Investment

SouthState repurchased 1 million shares during the quarter at a weighted average price of $97.62, producing a 68% total payout ratio including dividends. Year-to-date repurchases totaled 2.5 million shares and the total payout ratio was 80%.

Corbett said the company repurchased nearly 5% of its outstanding shares over the past year while increasing its dividend and maintaining a common equity tier 1 capital ratio above 11%. CET1 ended the quarter at 11.1%, tangible common equity was 8.7%, and tangible book value per share was $58.72, up 13% from a year earlier.

Management reiterated its longer-term total capital return framework of 40% to 60%, saying recent higher repurchase activity is not expected to be sustained if the company continues to target mid- to high-single-digit loan growth while maintaining CET1 in an 11% to 12% range.

Corbett also highlighted artificial intelligence as a strategic priority. The company is using the technology in credit operations, fraud management and call-center support, as well as through an internally developed small language model. SouthState is also testing commodity-hedging and foreign-exchange offerings, though Young said those initiatives are expected to launch in 2027 rather than materially affect 2026 results.

About SouthState Bank (NYSE:SSB)

SouthState Bank NYSE: SSB is a bank holding company headquartered in Winter Haven, Florida, that provides a range of commercial and retail banking services. Through its subsidiary, SouthState Bank, the company serves businesses, institutions and individuals with deposit, lending and treasury management solutions. Its core business lines include commercial and industrial loans, commercial real estate lending, consumer mortgages and home equity loans.

In addition to traditional lending and deposit products, SouthState Bank offers specialized services such as treasury and cash management, merchant services, payment solutions and online banking.

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