SouthState Bank Q3 Earnings Call Highlights

Key Points

• SouthState reported broad-based growth in the third quarter, with annualized loan and deposit growth of 9%, commercial and industrial lending up 12% annualized, and net interest margin stable at 3.78%.
• Credit quality remained strong, with net charge-offs at just 9 basis points and improving classified and criticized asset trends. Management maintained its expectation for high-single-digit loan growth in 2026 and mid- to high-single-digit growth in 2027.
• Higher Treasury rates reduced capital-markets revenue, contributing to a decline in noninterest income, while employee compensation lifted expenses. SouthState continued share repurchases and expects to prioritize dividends, organic growth and buybacks over acquisitions in 2027.

SouthState Bank NYSE: SSB reported third-quarter 2026 results marked by annualized loan and deposit growth of 9%, stable net interest margin and continued low credit losses, while higher Treasury rates weighed on capital-markets fee income.

Chief Executive Officer John Corbett said loan growth was broad-based across the company’s footprint and led by commercial and industrial lending, which increased 12% annualized. Deposits also grew 9% annualized, while net interest margin held steady from the second quarter at 3.78%.

“SouthState delivered another quarter of healthy growth, strong profitability, and stable credit,” Corbett said. He said the company’s expansion in the Southeast and Texas, along with increased commercial banker hiring, supported production during the quarter.

Loan Growth and Floating-Rate Mix

SouthState said it expanded its commercial relationship banker workforce by 10% over the past year. Those bankers have originated about $1 billion in new loans and maintain a healthy pipeline, according to Corbett.

Total loan production approached $5 billion in the third quarter, up 45% from a year earlier, Corbett said during the question-and-answer session. C&I lending was up 13% year over year, while the company’s pipeline declined to roughly $5 billion after reaching about $6.4 billion during the first quarter. Corbett attributed some of the decline to higher rates and said commercial real estate activity had become somewhat weaker while C&I activity remained strong.

For 2026, management continued to expect loan growth in the high-single-digit range. The company expects loan growth in the mid- to high-single-digit range in 2027, although Corbett said quarterly results can vary with borrower demand and market rates.

The bank has increased the share of floating-rate loans in its portfolio to 39%, compared with 28% when SouthState announced its acquisition of Independent Financial in 2024. Between 55% and 60% of recently originated loans have carried floating rates, Corbett said.

Chief Strategy Officer Steve Young said the company expects net interest margin to range from 3.75% to 3.85% through 2027, based on its assumptions for rate hikes, deposit costs, loan growth and fixed-rate asset repricing. Young said the updated range was 5 basis points higher than the prior-quarter outlook, supported by the company’s asset sensitivity, higher yields on fixed-rate loan repricing and new production.

Income, Expenses and Capital Markets

Chief Financial Officer Will Matthews said net interest income totaled $592 million, up $16 million from the first quarter. The company reported loan yields of 5.92%, up 1 basis point from the prior quarter, while its deposit cost increased 4 basis points to 1.80% following the quarter’s rate hike.

Excluding purchase-accounting accretion, loan yields increased 7 basis points and net interest margin increased 4 basis points to 3.61%, Matthews said. Third-quarter pre-provision net revenue per share, excluding accretion income and core deposit intangible amortization expense, rose 10.5% from the third quarter of 2025.

Noninterest income was $94 million, down $3 million from the second quarter, primarily because of lower capital-markets revenue. Correspondent banking income fell to $20.1 million from $24.8 million, Young said, as the five-year Treasury yield rose 87 basis points during the quarter, including a 60-basis-point increase in September.

Young said correspondent banking income could remain between the third-quarter result and the company’s prior $25 million quarterly target over the next quarter or so, before recovering as rates stabilize. The company also expects to roll out commodities and foreign-exchange platforms, with commodities anticipated in the first quarter and the foreign-exchange offering delayed to about April 1. Young said the two products could generate $10 million to $15 million on a full-year run-rate basis once established.

Noninterest expense was $375 million, up $17 million from the second quarter, driven largely by employee compensation. Matthews cited increased incentive accruals, July merit increases and lower deferred loan costs. SouthState expects fourth-quarter noninterest expense to approximate or be slightly above the third-quarter level.

The company’s hiring initiative for revenue producers cost approximately $15 million year to date, including compensation, recruiting and business-development expenses. Matthews said the full-year cost could reach $21 million to $22 million, reflecting stronger recruiting success than initially anticipated. SouthState expects 2026 noninterest expense growth of about 4% from 2025 and currently estimates 2027 expense growth of 3.5% to 4%.

Credit Quality and Capital Deployment

Credit trends remained stable, with net charge-offs of 9 basis points. Matthews said nine of the past 10 quarters have recorded net charge-offs below 10 basis points. Provision expense was $20 million, primarily reflecting loan growth.

Corbett said classified and criticized asset trends were improving and management did not see material near-term changes in charge-offs. He noted that many commercial real estate loans originated in 2021 and 2022 have weighted average loan-to-values of approximately 55%, providing borrowers with a cushion as loans mature or reset.

SouthState repurchased 250,000 shares during the quarter, resulting in a 40% total payout ratio including dividends. Year-to-date repurchases totaled 2.75 million shares, producing a 67% total payout ratio, while the trailing 12-month payout ratio was 75%.

Capital remained above the company’s stated target range, with common equity tier 1 capital at 11.1%, tangible common equity at 8.4% and tangible book value per share of $58.19. Matthews said potential tailoring-rule changes could add roughly 85 basis points to CET1, but management does not currently plan to change its capital risk appetite. The company expects to operate near the lower end of its long-term 40% to 60% payout range in 2027, prioritizing dividend growth, organic expansion and repurchases ahead of acquisitions.

About SouthState Bank (NYSE:SSB)

SouthState Bank is a regional banking institution and the principal banking subsidiary of SouthState Corporation NYSE: SSB. The bank provides financial services to individuals, families, businesses and institutions, including checking and savings accounts, certificates of deposit, consumer and commercial loans, residential mortgages, credit cards and online and mobile banking.

SouthState also offers business banking and treasury-management services, commercial real estate lending, equipment financing, wealth management and investment services.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.