Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-12669
SOUTHSTATE BANK CORPORATION
(Exact name of registrant as specified in its charter)
Florida
39-3424417
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification No.)
1101 First Street South, Suite 202
Winter Haven, Florida
33880
(Address of principal executive offices)
(Zip Code)
(863) 293-4710
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading Symbol
Name of each exchange on which registered:
Common Stock, $2.50 par value
SSB
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒
Accelerated Filer ☐
Non-Accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of issuer’s classes of common stock, as of the latest practicable date:
Class
Outstanding as of April 30, 2026
97,668,043
49
SouthState Bank Corporation and Subsidiaries
March 31, 2026 Form 10-Q
INDEX
Page
PART I — FINANCIAL INFORMATION
Item 1.
Financial Statements (unaudited)
Consolidated Balance Sheets at March 31, 2026 and December 31, 2025
3
Consolidated Statements of Income for the Three Months Ended March 31, 2026 and 2025
4
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2026 and 2025
5
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2026 and 2025
6
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025
7
Notes to Consolidated Financial Statements (unaudited)
9
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
48
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
79
Item 4.
Controls and Procedures
80
PART II — OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
81
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
82
Item 5.
Other Information
Item 6.
Exhibits
2
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets (unaudited)
(Dollars in thousands, except par value)
March 31,
December 31,
2026
2025
ASSETS
Cash and cash equivalents:
Cash and due from banks
$
598,218
583,375
Federal funds sold and interest-earning deposits with banks
1,972,614
2,286,928
Deposits in other financial institutions (restricted cash)
296,250
302,180
Total cash and cash equivalents
2,867,082
3,172,483
Trading securities, at fair value
117,590
110,183
Investment securities:
Securities held to maturity (fair value of $1,684,138 and $1,732,850)
2,007,249
2,048,030
Securities available for sale, at fair value
6,530,348
6,313,756
Other investments
370,924
353,428
Total investment securities
8,908,521
8,715,214
Loans held for sale
327,935
345,343
Loans:
Acquired - non-purchased credit deteriorated loans
10,714,489
11,232,414
Acquired - purchased credit deteriorated loans
2,818,360
2,977,499
Non-acquired loans
35,963,934
34,388,614
Less allowance for credit losses
(585,882)
(585,197)
Loans, net
48,910,901
48,013,330
Goodwill
3,094,059
Premises and equipment, net
993,584
994,176
Bank owned life insurance (“BOLI”)
1,302,382
1,293,574
Deferred tax assets
99,555
112,578
Other real estate owned ("OREO")
26,061
8,771
Derivatives assets
191,332
222,886
Core deposit and other intangibles
364,686
386,326
Mortgage servicing rights
90,018
84,032
Other assets
685,517
644,457
Total assets
67,979,223
67,197,412
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing
13,650,799
13,375,697
Interest-bearing
42,224,864
41,770,100
Total deposits
55,875,663
55,145,797
Federal funds purchased
343,758
306,841
Securities sold under agreements to repurchase
299,628
311,374
Corporate and subordinated debentures
696,642
696,536
Reserve for unfunded commitments
69,229
69,619
Derivative liabilities
562,406
554,748
Other liabilities
1,100,981
1,053,389
Total liabilities
58,948,307
58,138,304
Shareholders’ equity:
Common stock - $2.50 par value; authorized 160,000,000 shares;
97,937,653 and 99,138,204 shares issued and outstanding, respectively
244,844
247,845
Surplus
6,332,285
6,480,471
Retained earnings
2,779,896
2,614,173
Accumulated other comprehensive loss
(326,109)
(283,381)
Total shareholders’ equity
9,030,916
9,059,108
Total liabilities and shareholders’ equity
The Accompanying Notes are an Integral Part of the Financial Statements.
Consolidated Statements of Income (unaudited)
(In thousands, except per share data)
Three Months Ended
Interest income:
Loans, including fees
721,571
724,640
Taxable
72,254
53,870
Tax-exempt
7,212
7,516
Federal funds sold, securities purchased under agreements to resell and
interest-bearing deposits with banks
15,792
22,540
Total interest income
816,829
808,566
Interest expense:
Deposits
238,522
245,957
Federal funds purchased and securities sold under agreements to repurchase
4,196
4,909
12,506
12,505
Other borrowings
—
648
Total interest expense
255,224
264,019
Net interest income
561,605
544,547
Provision for credit losses
10,808
100,562
Net interest income after provision for credit losses
550,797
443,985
Noninterest income:
Fees on deposit accounts
38,699
35,933
Mortgage banking income
11,016
7,737
Trust and investment services income
14,471
14,932
Correspondent banking and capital markets income
21,427
9,545
SBA income
1,500
3,232
Securities (losses) gains, net
(228,811)
Gain on sale-leaseback, net of transaction costs
229,279
Other income
12,985
14,241
Total noninterest income
100,098
86,088
Noninterest expense:
Salaries and employee benefits
205,653
195,811
Information services expense
29,704
31,362
OREO and loan related expense
4,378
1,784
Occupancy expense
42,302
35,493
Merger, branch consolidation, severance-related, and other expense
68,006
FDIC assessment and other regulatory charges
10,257
11,258
Supplies, printing and postage expense
3,254
3,128
Amortization of intangibles
21,304
23,831
Professional fees
5,239
4,709
Advertising and marketing
3,325
2,290
Other expense
34,108
31,154
Total noninterest expense
359,524
408,826
Earnings:
Income before provision for income taxes
291,371
121,247
Provision for income taxes
65,551
32,167
Net income
225,820
89,080
Earnings per common share:
Basic
2.29
0.88
Diluted
2.28
0.87
Weighted average common shares outstanding:
98,544
101,410
98,922
101,829
Consolidated Statements of Comprehensive Income (unaudited)
(Dollars in thousands)
Other comprehensive (loss) income:
Unrealized holding (losses) gains on available for sale securities:
Unrealized holding (losses) gains arising during period
(56,014)
74,754
Tax effect
13,286
(18,168)
Reclassification adjustment for net loss included in net income
228,811
(55,143)
Net of tax amount
(42,728)
230,254
Other comprehensive (loss) income, net of tax
Comprehensive income
183,092
319,334
Consolidated Statements of Changes in Shareholders’ Equity (unaudited)
Three months ended March 31, 2026 and 2025
(Dollars in thousands, except for share data)
Accumulated Other
Common Stock
Retained
Comprehensive
Shares
Amount
Earnings
Loss
Total
Balance, December 31, 2024
76,322,206
190,805
4,259,722
2,046,809
(606,921)
5,890,415
Comprehensive income:
Other comprehensive income, net of tax effects
Total comprehensive income
Cash dividends declared on common stock at $0.54 per share
(54,736)
Cash dividend equivalents paid on restricted stock units
(1,100)
Stock options exercised
6,976
18
312
330
Stock issued pursuant to restricted stock units
399,961
1,000
(1,000)
Stock issued in lieu of cash - directors fees
903
91
93
Common stock repurchased - equity plans
(109,712)
(274)
(10,902)
(11,176)
Share-based compensation expense
8,254
Common stock issued for Independent Bank Group, Inc. (“Independent”) acquisition
24,858,731
62,147
2,410,800
2,472,947
Balance, March 31, 2025
101,479,065
253,698
6,667,277
2,080,053
(376,667)
8,624,361
Balance, December 31, 2025
99,138,204
Other comprehensive loss, net of tax effects
Cash dividends declared on common stock at $.60 per share
(58,991)
(1,106)
Employee stock purchases
14,413
36
1,230
1,266
6,018
15
290
305
367,212
918
(918)
1,252
126
129
Common stock repurchased - buyback plan
(1,500,000)
(3,750)
(147,554)
(151,304)
(89,446)
(223)
(8,909)
(9,132)
9,344
Excise tax on repurchase of common stock
(1,795)
Balance, March 31, 2026
97,937,653
Consolidated Statements of Cash Flows (unaudited)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
38,623
35,268
Deferred income taxes
24,707
95,115
Losses on sale of securities, net
Accretion of discount related to acquired loans
(38,786)
(61,798)
Losses (gains) on disposal of premises and equipment
212
(136)
Gains on sale of bank properties held for sale and repossessed real estate
(295)
(229,430)
Net amortization of premiums and discounts on investment securities
2,599
2,428
Bank properties held for sale and repossessed real estate write downs
3,896
135
Fair value adjustment for loans held for sale
1,125
(305)
Originations and purchases of loans held for sale
(537,890)
(730,655)
Proceeds from sales of loans held for sale
245,565
326,105
Gains on sales of loans held for sale
(3,569)
(6,155)
Increase in cash surrender value of BOLI
(9,450)
(8,685)
Net change in:
Accrued interest receivable
(6,612)
(4,196)
Prepaid assets
2,126
15,743
Operating leases
2,100
872
Bank owned life insurance
(50)
(122)
Trading securities
278,411
308,411
Derivative assets
31,553
(9,044)
Miscellaneous other assets
(28,311)
35,648
Accrued interest payable
(2,224)
(39,243)
Accrued income taxes
(12,945)
(66,697)
7,658
(188,610)
Miscellaneous other liabilities
54,602
(27,616)
Net cash provided by (used in) operating activities
299,017
(126,260)
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale
2,874,110
Proceeds from maturities and calls of investment securities held to maturity
39,888
57,703
Proceeds from maturities and calls of investment securities available for sale
1,691,029
398,326
Proceeds from sales and redemptions of other investment securities
1,942
38,183
Purchases of investment securities available for sale
(1,965,340)
(3,156,990)
Purchases of other investment securities
(17)
(115,494)
Net (increase) decrease in loans
(899,010)
275,337
Net cash received from acquisitions
1,040,765
Net cash paid for acquisition of customer list
(279)
Recoveries of loans previously charged off
3,921
2,982
Purchases of premises and equipment
(16,061)
(12,822)
Proceeds from redemption and payout of bank owned life insurance policies
692
544
Proceeds from sale of bank properties held for sale and repossessed real estate
4,216
461,842
Proceeds from sale of premises and equipment
34
969
Net cash (used in) provided by investing activities
(1,138,706)
1,865,176
Cash flows from financing activities:
Net increase in deposits
729,745
70,869
Net increase in federal funds purchased and securities sold under
agreements to repurchase and other short-term borrowings
25,171
164,425
Proceeds from borrowings
700,000
Repayment of borrowings
(700,000)
Common stock issuance
1,395
Common stock repurchases
(160,436)
Dividends paid
(60,097)
(55,834)
Excess tax paid on repurchases of corporate stock
Net cash provided by financing activities
534,288
168,707
Net (decrease) increase in cash and cash equivalents
(305,401)
1,907,623
Cash and cash equivalents at beginning of period
1,392,067
Cash and cash equivalents at end of period
3,299,690
Supplemental Disclosures:
Cash Flow Information:
Cash paid for:
Interest
257,448
303,262
Income taxes
49,512
191
Recognition of operating lease assets in exchange for lease liabilities
1,818
389,613
Schedule of Noncash Operating Transactions:
Creation of interest only strips from pooling of SBA loans held for sale
26,360
32,068
Pooling of SBA loans held for sale into trading securities
285,817
312,881
Schedule of Noncash Investing Transactions:
Acquisitions:
Fair value of tangible assets acquired
16,561,942
Other intangible assets acquired
412,078
Liabilities assumed
15,665,912
Net identifiable assets acquired over liabilities assumed
1,164,953
Common stock issued in acquisition
Real estate transferred from premises and equipment to premises held for sale
related to the sale-leaseback transaction
230,143
Real estate acquired in full or in partial settlement of loans
25,106
2,804
8
Note 1 — Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, otherwise referred to as US GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
The consolidated balance sheet at December 31, 2025 has been derived from the audited financial statements as of that date but does not include all of the information and disclosures required by US GAAP for complete financial statements.
Note 2 — Summary of Significant Accounting Policies
The information contained in the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2026, should be referenced when reading these unaudited consolidated financial statements. Unless otherwise mentioned or unless the context requires otherwise, references herein to “SouthState,” the “Company,” “we,” “us,” “our” or similar references mean SouthState Bank Corporation and its consolidated subsidiaries. References to the “Bank” or “SouthState Bank” means SouthState Bank Corporation’s wholly owned subsidiary, South State Bank, National Association.
Loans
Loans that management has originated and has the intent and ability to hold for the foreseeable future or until maturity or pay off generally are reported at their unpaid principal balances, less unearned income and net of any deferred loan fees and costs, including unamortized fair value discount or premium. Unearned income on installment loans is recognized as income over the terms of the loans by methods that generally approximate the interest method. Interest on other loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. If the loan is prepaid, the remaining unamortized fees and costs are charged or credited to interest income. Amortization ceases for non-accrual loans.
We place loans on nonaccrual once reasonable doubt exists about the collectability of all principal and interest due. Generally, this occurs when principal or interest is 90 days or more past due, unless the loan is well secured and in the process of collection and excludes factored receivables. For factored receivables, which are commercial trade credits rather than promissory notes, the Company’s practice, in most cases, is to charge-off unpaid recourse receivables when they become 240 days past due from the invoice due date and the non-recourse receivables when they become 240 days past due from the statement due date. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.
Allowance for Credit Losses (“ACL”) – Investment Securities
Management monitors the held to maturity securities portfolio to determine whether a valuation account should be recorded. Management evaluates impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value at least quarterly, and more frequently when economic or market concerns warrant such evaluation. The Company’s methodology on how the ACL is calculated is disclosed in Note 1 — Summary of Significant Accounting Policies, under the “ACL – Investment Securities” section, of our Annual Report for the year ended December 31, 2025. As of March 31, 2026 and December 31, 2025, the Company had $2.0 billion of held to maturity securities and no related valuation account.
The Company follows its nonaccrual policy by reversing interest income in the income statement when the Company determines the interest for held to maturity securities is uncollectible. Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the investment securities and does not record an allowance for credit losses on accrued interest receivable. As of March 31, 2026 and December 31, 2025, the accrued interest receivables for all investment securities recorded in Other Assets were $42.0 million and $38.9 million, respectively.
ACL – Loans and Certain Off-Balance-Sheet Credit Exposures
The ACL for loans held for investment reflects management’s estimate of credit losses that will result from the inability of our borrowers to make required loan payments. The Company makes adjustments to the ACL by recording a provision for or recovery of credit losses through earnings. Loans charged off are recorded as reductions to the ACL on the balance sheet and subsequent recoveries of loan charge-offs are recorded as increases to the ACL when they are received.
Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, credit quality, or term, as well as for changes in macroeconomic conditions, such as changes in unemployment rates, gross domestic product, property values, or other relevant factors. Acquired portfolios may be supported by separate credit models using loss histories relevant to those portfolios. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected losses may result in a range of expected losses. The Company’s ACL recorded in the balance sheet reflects management’s best estimate within the range of expected losses. The Company recognizes in net income the amount needed to adjust the ACL for management’s current estimate of expected losses.
The Company generally uses an eight-quarter forecast period, based on a single forecast scenario or a blend of multiple forecast scenarios, using variables management believes are most relevant to each portfolio segment. For periods beyond which management is able to develop reasonable and supportable forecasts, the Company reverts to the average historical loss rate, reflecting historical default probabilities and loss severities, using a reversion speed that approximates four quarters. The forecast period and scenarios used are reviewed on a quarterly basis and may be adjusted based on management's view of the current economic conditions and level of predictability the forecast can provide.
While quantitative allowance methodologies strive to reflect all risk factors, any estimate involves assumptions and uncertainties resulting in some level of imprecision. Imprecision exists in the estimation process due to the inherent time lag between obtaining information, performing the calculation, as well as variations between estimates and actual outcomes. As a result, amounts determined under the methodologies described above are adjusted by management to consider the potential impact of other qualitative factors not captured in the quantitative model adjustments which include, but are not limited to, the following: imprecision or conditions not captured in economic scenario assumptions, emerging risks related to either changes in the internal or external environment that are affecting specific portfolios, trends in loan or portfolio level credit metrics not captured in quantitative modeling, or model imprecision adjustments. The consideration of these items results in adjustments to allowance amounts included in the Company’s allowance for credit losses for each loan portfolio.
10
The Company’s ACL is calculated using collectively evaluated and individually evaluated loans. Even though portions of the allowance may be allocated to specific loans or pools of loans, the entire allowance is available for any credit that, in management’s judgment, should be charged off.
When a loan no longer shares similar risk characteristics with its segment, the asset is assessed to determine
whether it should be included in another pool or should be individually evaluated. The Company’s threshold for individually evaluated loans includes all non-accrual loans with a net book balance in excess of $1.0 million. During an acquisition, the Company may identify accruing loans that do not share similar risk characteristics as pooled loans and therefore be individually evaluated. These loans are identified during the credit review process, have unique characteristics or circumstances, and identified as purchased credit-deteriorated (“PCD”) loans, though the loans may remain on accrual status. Management will monitor the credit environment and make adjustments to this threshold in the future if warranted. Based on the threshold above, consumer financial assets will generally remain in pools unless they meet the dollar threshold. The expected credit losses on individually evaluated loans will be estimated based on discounted cash flow analysis unless the loan meets the criteria for use of the fair value of collateral, either by virtue of an expected foreclosure or through meeting the definition of collateral-dependent. Accruing individually evaluated loans will remain in this status until 1) the loan is upgraded to pass, or 2) the loan is downgraded to non-accrual and follow the non-accrual individually evaluated process. Financial assets that have been individually evaluated can be returned to a pool for purposes of estimating the expected credit loss insofar as their credit profile improves and that the repayment terms were not considered to be unique to the asset.
Management measures expected credit losses over the contractual term of a loan. When determining the contractual term, the Company considers expected prepayments but is precluded from considering expected extensions, renewals, or modifications. Loans modified to a borrower experiencing financial difficulty are reviewed by the Bank to determine if an interest rate reduction, a term extension, an other-than-insignificant payment delay, a principal forgiveness, or any combination of these has occurred.
The ACL includes expected losses from modifications of receivables to borrowers experiencing financial difficulty. Losses on modifications of non-accrual loans over $1 million to borrowers experiencing financial difficulty are estimated on an individual basis. Because the effect of the remainder of modifications made to borrowers experiencing financial difficulty is already incorporated into the measurement methodologies used to estimate the allowance, they are accounted for as pooled loans.
PCD assets are defined as acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment. The Company records acquired PCD loans by adding the expected credit losses (i.e., allowance for credit losses) to the purchase price of the financial assets rather than recording through the provision for credit losses in the income statement. The expected credit loss, as of the acquisition day, of a PCD loan is added to the allowance for credit losses. The non-credit discount or premium is the difference between the unpaid principal balance and the amortized cost basis as of the acquisition date. Subsequent to the acquisition date, the change in the ACL on PCD loans is recognized through the Provision for Credit Losses in the Consolidated Statements of Income. The non-credit discount or premium is accreted or amortized, respectively, into interest income over the remaining life of the PCD loan on a level-yield basis.
The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status. Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an allowance for credit losses on accrued interest receivable. As of March 31, 2026 and December 31, 2025, the accrued interest receivables for loans recorded in Other Assets were $189.2 million and $186.5 million, respectively.
11
The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include undrawn portions of revolving lines of credit and standby letters of credit. The expected losses associated with these exposures within the unfunded portion of the expected credit loss are recorded as a liability on the balance sheet. Management has determined that a majority of the Company’s off-balance sheet credit exposures are not unconditionally cancellable. Management completes funding studies based on internal historical data to estimate the percentage of unfunded loan commitments that will ultimately be funded to calculate the reserve for unfunded commitments. Management applies this funding rate, along with the loss factor rate determined for each pooled loan segment, to unfunded loan commitments, excluding unconditionally cancellable exposures and letters of credit, to arrive at the reserve for unfunded loan commitments. As of March 31, 2026 and December 31, 2025, the liabilities recorded for expected credit losses on unfunded commitments were $69.2 million and $69.6 million, respectively. The current adjustment to the reserve for unfunded commitments is recognized through the Provision for Credit Losses in the Consolidated Statements of Income.
The methodology used in the estimation of the allowance, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions. Changes are reflected in the pool-basis allowance and in reserves assigned on an individual basis as the collectability of classified loans is evaluated with new information. As the Company’s portfolio has matured, historical loss ratios have been closely monitored. The review of the appropriateness of the allowance is performed by executive management and presented to the Audit and Risk Committees of the Board of Directors for their review. The committees report to the board as part of the board's quarterly review of the Company’s consolidated financial statements.
Reclassification and Correction
Certain amounts previously reported have been reclassified to conform to the current quarter’s presentation. Such reclassifications had no effect on net income and shareholders’ equity.
Note 3 — Recent Accounting and Regulatory Pronouncements
Accounting Standards Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve disclosures about a public entity’s reportable segments and address requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses. Segment information gives investors an understanding of overall performance and is key to assessing potential future cash flows. In addition, although information about a segment’s revenue and measure of profit or loss is disclosed in an entity’s financial statements, there is limited information disclosed about a segment’s expenses. The key amendments include annual and interim disclosures of significant expenses and other segment items that are regularly provided to the chief operating decision maker and included within each reported measure of profit or loss, as well as any other key measure of performance used for segment management decisions. This ASU also requires disclosure of key profitability measures used in assessing performance and how to allocate resources. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 using the retrospective approach. Aside from the new disclosures required by ASU No. 2023-07, the ASU did not have a material impact on our consolidated financial statements. See Note 22 — Segment Reporting for further disclosure.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which aims to address requests for improved income tax disclosures from investors, lenders, creditors and other allocators of capital (collectively, “investors”) that use the financial statements to make capital allocation decisions. The amendments in this ASU address investor requests for more transparency about income tax information, including jurisdictional information, by requiring consistent categories and greater disaggregation of information in both the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024. The adoption of this ASU did not have a material impact on its financial statements beyond the additional required disclosures.
12
Issued But Not Yet Adopted Accounting Standards
In December 2026, the FASB issued Accounting Standards Update (ASU) No. 2025-08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans, which expands the population of acquired financial assets subject to the gross-up approach for accounting for credit losses. This ASU introduces the concept of purchased seasoned loans and requires certain acquired loans (excluding credit cards) that have not experienced significant credit deterioration since origination to be accounted for using the gross-up approach, addressing longstanding stakeholder concerns regarding the complexity and reduced comparability under previous guidance that distinguished between PCD and non-PCD assets. The amendments clarify initial and subsequent measurement, including recognition of an allowance for credit losses at acquisition with an offsetting gross-up to the purchase price, and require purchased seasoned loans to follow the same interest income recognition model as originated financial assets. The ASU also updates disclosure requirements to include separate presentation of the initial allowance recognized for purchased seasoned loans. The amendments are effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within those annual periods, with early adoption permitted. The amendments must be applied prospectively to loans acquired on or after the adoption date. In the event of future acquisitions, this ASU will likely have a material impact on the Company’s financial statements.
In September 2025, the FASB issued Accounting Standards Update (ASU) No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, seeking to update the guidance on accounting for software. This ASU addresses stakeholder and investor concerns on the challenges of applying current internal-use software accounting requirements that do not specifically address software developed using modern incremental and iterative methods, which has led to diversity in practice in determining when to begin capitalizing software costs. The ASU removes all references to a prescriptive and sequential software development method. The amendments require an entity to start capitalizing software costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2027, and for interim reporting periods beginning after December 15, 2027. The Company does not anticipate this ASU will have a material impact on its financial statements.
In November 2024, the FASB has issued Accounting Standards Update ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to provide investors with more decision-useful information about a public business entity’s expense by improving disclosures on income statement expenses. The amendments in the ASU are effective for public business entities only for annual reporting periods beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027. The Company does not anticipate this ASU will have a material impact on its financial statements.
13
Note 4 — Securities
Investment Securities
The following is the amortized cost and fair value of investment securities held to maturity:
Gross
Amortized
Unrealized
Fair
Cost
Gains
Losses
Value
March 31, 2026:
U.S. Government agencies
132,914
(16,892)
116,022
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
1,123,852
(181,274)
942,578
Residential collateralized mortgage-obligations issued by U.S. government
372,106
(58,553)
313,553
Commercial mortgage-backed securities issued by U.S. government
332,619
(58,228)
274,391
Small Business Administration loan-backed securities
45,758
(8,164)
37,594
(323,111)
1,684,138
December 31, 2025:
132,913
(15,767)
117,146
1,153,024
(177,101)
975,923
379,107
(55,232)
323,875
336,910
(58,332)
278,578
46,076
(8,748)
37,328
(315,180)
1,732,850
The following is the amortized cost and fair value of investment securities available for sale:
1,991,530
5,089
(147,521)
1,849,098
2,148,049
9,383
(52,877)
2,104,555
1,047,410
1,545
(78,644)
970,311
State and municipal obligations
1,191,625
593
(151,023)
1,041,195
567,569
464
(24,548)
543,485
Corporate securities
23,000
(1,296)
21,704
6,969,183
17,074
(455,909)
1,826,307
10,108
(138,307)
1,698,108
2,208,710
23,979
(47,105)
2,185,584
903,209
3,282
(74,042)
832,449
1,141,377
(135,217)
1,007,412
593,973
548
(26,088)
568,433
(1,230)
21,770
6,696,576
39,169
(421,989)
14
The following is the amortized cost and carrying value of other investment securities:
Carrying
Federal Home Loan Bank stock
18,086
Federal Reserve Bank stock
234,374
Investment in unconsolidated subsidiaries
5,287
Other investment securities
113,177
95,681
The Company’s other investment securities consist of non-marketable equity and other securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of March 31, 2026, the Company has determined that there was no impairment on its other investment securities.
The amortized cost and fair value of debt securities at March 31, 2026 by contractual maturity are detailed below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.
Securities
Held to Maturity
Available for Sale
Due in one year or less
19,129
19,092
Due after one year through five years
180,963
168,977
403,443
399,986
Due after five years through ten years
341,754
297,376
1,149,497
1,083,644
Due after ten years
1,484,532
1,217,785
5,397,114
5,027,626
During the three months ended March 31, 2026, there were no sales of securities available for sale. During the three months ended March 31, 2025, the Company sold a portion of the available for sale investment securities acquired from Independent and recognized no gain or loss on these investment securities as each security was marked to fair value at the acquisition date. In addition to the sale of the investment securities acquired from Independent, the Company executed an investment portfolio restructuring and sold $1.8 billion of available for sale investment securities from its existing investment securities portfolio.
The following table provides additional details of the available for sale investment securities sold during the three months ended March 31, 2025:
Sales of Securities Acquired from Independent
Investment Securities Sales
Sale proceeds
1,279,717
1,594,393
Gross realized gains
8,892
Gross realized losses
(237,703)
Net realized (losses) gain
There were no sales of held to maturity securities during the three months ended March 31, 2026 or March 31, 2025.
The Company had 1,135 securities with gross unrealized losses at March 31, 2026. Information pertaining to our securities with gross unrealized losses at March 31, 2026, and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is as follows:
Less Than
12 Months
or More
Gross Unrealized
Securities Held to Maturity
16,892
181,274
58,553
58,228
8,164
323,111
Securities Available for Sale
4,751
563,659
142,770
774,259
3,122
413,837
49,755
267,423
3,447
391,493
75,197
395,381
2,715
131,282
148,308
855,726
302
159,630
24,246
248,694
9,997
1,294
11,706
14,339
1,669,898
441,570
2,553,189
15,767
177,101
55,232
323,874
58,332
278,579
8,748
315,180
459
145,357
137,848
803,407
46
40,399
47,059
278,620
228
152,299
73,814
423,165
572
43,620
134,645
903,784
680
284,036
25,408
202,322
21,769
1,985
665,711
420,004
2,633,067
The Company’s valuation methodology for securities impairment is disclosed in Note 1 — Summary of Significant Accounting Policies, under “Investment Securities” section, of our Annual Report on Form 10-K for the year ended December 31, 2025. All debt securities in an unrealized loss position as of March 31, 2026 continue to perform as scheduled and management does not believe there is a credit loss or a provision for credit losses is necessary. Management does not currently intend to sell the securities within the portfolio, and it is not more-likely-than-not that the Company will be required to sell the debt securities. See Note 2 — Summary of Significant Accounting Policies for further discussion.
16
At March 31, 2026, investment securities with a market value of $5.0 billion and a carrying value of $5.3 billion were pledged to secure public funds deposits and for other purposes required and permitted by law (excluding securities pledged to secure repurchase agreement disclosed in Note 20 — Short-Term Borrowings, under the “Securities Sold Under Agreements to Repurchase (“Repurchase agreements”)” section). Of the $5.3 billion carrying value of investment securities pledged, $5.2 billion were pledged to secure public funds deposits, $26.7 million were pledged to secure FHLB advances, and $80.8 million were pledged to secure interest rate swap positions with correspondent banks. At December 31, 2025, investment securities with a market value of $5.2 billion and a carrying value of $5.5 billion were pledged to secure public funds deposits and for other purposes required and permitted by law. Of the $5.5 billion carrying value of investment securities pledged, $5.2 billion were pledged to secure public funds deposits, $182.2 million were pledged to secure FHLB advances and $83.3 million were pledged to secure interest rate swap positions with correspondent banks.
Trading Securities
At March 31, 2026, and December 31, 2025, trading securities, at estimated fair value, were as follows:
14,504
1,872
Residential mortgage pass-through securities issued or guaranteed by U.S.
government agencies or sponsored enterprises
5,787
9,799
Other residential mortgage issued or guaranteed by U.S. government
7,302
1,419
27,728
5,966
26,573
24,816
34,887
66,173
Other debt securities
809
138
Net gains on trading securities for the three months ended March 31, 2026 and 2025 were as follows:
Net gains on sales transaction
383
362
Net unrealized (losses) gains
(576)
121
Net (losses) gains on trading securities
(193)
483
Note 5 — Loans
The following is a summary of total loans:
Construction and land development (1)
2,592,908
2,548,360
Commercial non-owner-occupied
17,097,738
16,651,760
Commercial owner-occupied real estate
7,671,535
7,576,991
Consumer owner-occupied (2)
8,717,832
8,618,434
Home equity loans
1,856,065
1,831,789
Commercial and industrial
9,385,926
9,181,408
Other income producing property
1,201,200
1,232,153
Consumer
923,413
955,266
Other loans
50,166
2,366
Total loans
49,496,783
48,598,527
Less: allowance for credit losses
17
The above table reflects the loan portfolio at the amortized cost basis for the periods ended March 31, 2026 and December 31, 2025, to include net deferred costs of $97.4 million and $97.0 million, respectively, and unamortized discount total related to loans acquired of $219.0 million and $259.5 million, respectively. Accrued interest receivables of $189.2 million and $186.5 million, respectively, are accounted for separately and reported in other assets for the periods March 31, 2026 and December 31, 2025.
As part of the ongoing monitoring of the credit quality of our loan portfolio, management tracks certain credit quality indicators, including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below), and (iv) the general economic conditions of the markets that we serve.
The Company utilizes a risk grading matrix to assign a risk grade to each commercial loan. Classified loans are assessed at a minimum of every six months. A description of the general characteristics of the risk grades is as follows:
Construction and land development loans in the following table are on commercial and speculative real estate. Consumer owner-occupied loans are collateralized by 1-4 family owner-occupied properties with a business intent.
The following table presents the credit risk profile by risk grade of commercial loans by origination year as of and for the period ending March 31, 2026:
Term Loans Amortized Cost Basis by Origination Year
As of March 31, 2026
2024
2023
2022
Prior
Revolving
Construction and land development
Risk rating:
Pass
173,000
944,346
536,790
155,974
102,693
89,586
168,322
2,170,711
Special mention
693
1,803
4,020
819
720
8,184
Substandard
2,071
5,103
6,972
32,258
938
6,243
53,585
Doubtful
Total Construction and land development
175,071
950,142
543,891
190,035
107,651
96,648
169,042
2,232,480
Current-period gross charge-offs
166
1,255,907
2,678,645
1,127,469
1,206,881
3,590,717
4,965,255
213,741
15,038,615
11,475
40,197
12,643
48,965
357,823
122,355
1,070
594,528
33,976
121,359
27,981
161,686
643,473
475,616
500
1,464,591
Total Commercial non-owner-occupied
1,301,358
2,840,201
1,168,093
1,417,532
4,592,013
5,563,230
215,311
Commercial Owner-Occupied
347,687
1,236,738
719,477
628,145
1,091,286
3,147,003
96,577
7,266,913
5,273
3,637
12,317
10,784
23,063
487
55,561
4,886
21,656
20,615
48,093
125,668
126,054
2,072
349,044
Total commercial owner-occupied
352,573
1,263,676
743,733
688,555
1,227,738
3,296,124
99,136
Commercial owner-occupied
45
38
94
1,170,424
1,996,467
989,560
535,461
812,299
1,099,481
2,375,124
8,978,816
263
3,216
2,647
8,168
4,767
4,379
7,495
30,935
10,997
18,209
49,444
62,556
47,530
59,668
127,520
375,924
23
52
70
28
72
251
Total commercial and industrial
1,181,688
2,017,894
1,041,674
606,237
864,666
1,163,556
2,510,211
89
603
5,807
1,521
866
1,100
352
10,338
53,141
155,107
100,011
76,881
255,567
344,789
63,612
1,049,108
74
1,844
231
2,273
510
5,241
277
1,911
639
1,905
13,193
21,270
304
39,499
Total other income producing property
53,492
158,862
100,881
78,832
269,023
368,332
64,426
1,093,848
Consumer owner-occupied
1,269
15,721
3,804
18,259
10,608
35,588
28,810
114,059
111
735
130
976
1,757
64
585
2,406
1
Total Consumer owner-occupied
17,589
4,539
18,389
35,653
29,395
117,442
Total other loans
Total Commercial Loans
3,051,594
7,027,024
3,477,111
2,621,601
5,863,170
9,681,702
2,946,186
34,668,388
11,812
51,334
20,022
71,429
377,657
152,889
10,282
695,425
52,207
169,995
105,651
306,498
830,802
688,915
130,981
2,285,049
27
37
273
3,115,617
7,248,364
3,602,811
2,999,580
7,071,699
10,523,543
3,087,521
37,649,135
Commercial Loans
5,818
1,566
1,304
10,598
19
The following table presents the credit risk profile by risk grade of commercial loans by origination year as of and for the period ending December 31, 2025:
As of December 31, 2025
2021
862,035
575,253
264,370
175,486
57,814
40,977
147,911
2,123,846
706
137
1,815
20,580
335
24,083
5,292
7,512
32,431
5,898
892
5,564
57,589
868,033
582,902
298,616
201,964
59,041
47,051
2,205,518
2,564,868
1,161,720
1,304,297
3,828,512
2,440,726
2,996,445
185,751
14,482,319
51,864
17,084
100,316
383,957
27,680
96,579
10,484
687,964
169,713
28,225
100,542
598,777
357,340
226,461
415
1,481,473
2,786,445
1,207,029
1,505,155
4,811,246
2,825,747
3,319,488
196,650
4,565
1,237
18,033
9,800
33,635
1,210,501
777,109
634,593
1,105,730
1,110,749
2,218,753
102,835
7,160,270
4,609
1,075
12,204
10,424
5,539
17,866
438
52,155
19,657
38,394
52,341
115,676
33,813
102,965
1,703
364,549
1,234,776
816,582
699,138
1,231,830
1,150,101
2,339,588
104,976
1,095
874
1,628
184
1,317
50
5,148
2,644,081
1,056,432
613,536
876,480
410,578
771,994
2,396,981
8,770,082
2,283
20,226
6,023
2,955
2,208
14,387
53,171
10,054
50,362
52,210
52,356
37,921
31,469
123,611
357,983
43
68
172
2,659,224
1,109,080
686,015
934,927
451,504
805,673
2,534,985
23,240
2,947
4,351
9,157
12,680
11,844
10,007
74,226
157,404
114,264
88,883
272,672
173,188
210,459
55,663
1,072,533
2,020
463
145
269
542
2,897
602
6,938
1,936
420
1,918
15,540
2,294
17,247
39,903
161,360
115,147
90,946
288,481
176,024
230,603
56,813
1,119,374
15,587
3,687
20,410
10,949
11,145
25,248
31,042
118,068
118
745
131
994
1,376
209
158
588
2,331
17,081
4,641
20,541
25,407
31,630
121,394
7,456,842
3,688,465
2,926,089
6,269,829
4,204,200
6,263,876
2,920,183
33,729,484
64,406
21,787
134,837
421,253
37,051
120,060
25,911
825,305
208,028
125,122
239,442
788,247
432,260
383,864
126,865
2,303,828
51
194
7,729,285
3,835,381
3,300,411
7,479,397
4,673,562
6,767,810
3,072,965
36,858,811
24,335
9,790
12,022
30,913
22,961
10,057
113,025
20
For the consumer segment, delinquency of a loan is determined by past due status. Consumer loans are automatically placed on nonaccrual status once the loan is 90 days past due. Construction and land development loans are on 1-4 family residential properties and lots.
The following table presents the credit risk profile by past due status of consumer loans by origination year as of and for the period ending March 31, 2026:
Days past due:
Current
334,294
1,173,523
616,621
946,580
2,360,385
3,104,324
8,535,727
30 days past due
1,973
4,441
4,546
2,153
6,296
19,409
60 days past due
2,971
2,136
404
1,664
7,855
90 days past due
2,112
8,078
11,893
4,842
10,474
37,399
1,178,288
632,111
965,155
2,367,784
3,122,758
8,600,390
181
539
170
1,582
1,198
1,791
4,977
2,410
3,667
13,205
1,818,332
1,845,580
259
30
642
2,985
3,916
92
105
357
1,881
2,435
77
713
886
1,555
4,134
Total Home equity loans
5,405
3,258
4,570
15,090
1,824,753
61
51,018
171,883
120,336
144,710
141,022
204,194
85,247
918,410
180
600
633
226
1,840
127
88
204
57
254
732
215
385
367
1,391
55
2,431
Total consumer
172,208
120,760
145,379
142,046
206,472
85,530
203
198
298
117
73
1,216
2,133
16,080
155,836
65,089
25,986
51,572
45,442
360,005
154
423
26,140
51,841
360,428
808
3,626
1,193
7,732
49,310
44,182
106,942
258
144
405
1,196
49,568
44,331
107,352
Total Consumer Loans
403,398
1,506,659
808,216
1,127,418
2,605,956
3,411,347
1,903,670
11,766,664
4,821
4,656
2,753
7,576
3,211
25,170
807
3,151
2,445
461
2,275
1,883
11,022
2,130
8,373
13,145
6,639
12,895
1,610
44,792
1,511,749
824,561
1,147,664
2,615,809
3,434,093
1,910,374
11,847,648
Consumer Loans
384
951
847
287
123
3,836
The following table presents the credit risk profile by past due status of total loans by origination year as of and for the period ending March 31, 2026:
Total Loans
3,519,015
8,760,113
4,427,372
4,147,244
9,687,508
13,957,636
4,997,895
987
6,769
2,413
1,153
1,427
1,568
14,434
21
The following table presents the credit risk profile by past due status of consumer loans by origination year as of and for the period ending December 31, 2025:
1,182,075
647,315
1,014,555
2,407,217
1,639,720
1,543,231
8,434,113
2,060
3,805
5,472
3,926
3,369
21,864
685
2,557
2,670
620
559
1,626
8,717
1,156
9,661
8,967
6,584
1,524
4,454
32,346
1,185,976
663,338
1,031,664
2,417,653
1,645,729
1,552,680
8,497,040
122
926
981
458
53
107
1,627
5,549
2,618
3,463
1,308
13,961
1,794,239
1,822,765
26
160
199
502
2,752
3,689
108
1,615
2,059
218
577
610
3,276
1,677
5,843
3,567
4,622
1,446
15,181
1,799,453
66
551
193,165
134,608
156,266
154,801
62,652
156,314
91,731
949,537
271
205
1,295
75
2,322
41
427
268
65
921
67
177
532
365
47
1,288
2,486
193,328
134,972
157,529
155,487
62,904
159,165
91,881
390
912
910
776
114
2,655
6,007
11,764
129,749
80,514
27,590
53,698
26,284
24,390
342,225
617
27,744
54,161
342,842
3,638
2,037
7,756
50,859
16,477
31,521
86
112,374
128
389
2,040
51,117
31,665
112,779
1,510,254
870,023
1,208,785
2,670,038
1,746,441
1,769,417
1,886,056
11,661,014
2,165
3,948
5,936
3,702
4,131
5,166
2,827
27,875
726
2,677
3,309
744
2,018
1,680
11,713
1,223
10,059
10,230
8,556
1,709
6,480
857
39,114
1,514,368
886,707
1,228,260
2,683,040
1,752,840
1,783,081
1,891,420
11,739,716
512
1,904
1,891
167
3,177
14,962
The following table presents the credit risk profile by past due status of total loans by origination year as of and for the period ending December 31, 2025:
9,243,653
4,722,088
4,528,671
10,162,437
6,426,402
8,550,891
4,964,385
24,847
4,851
11,681
13,326
31,080
26,138
16,064
127,987
22
The following table presents an aging analysis of past due accruing loans, segregated by class, as of March 31, 2026 and December 31, 2025:
30 - 59 Days
60 - 89 Days
90+ Days
Non-
Past Due
Accruing
March 31, 2026
4,530
2,581,007
7,371
23,530
2,794
202
26,526
17,012,289
58,923
8,658
1,229
1,879
11,766
7,621,081
38,688
12,792
201
12,993
8,626,165
78,674
3,124
2,025
5,151
1,841,863
9,051
23,652
6,779
6,818
37,249
9,253,867
94,810
660
414
1,074
1,198,132
1,994
1,728
481
2,209
917,555
3,649
13,923
8,901
101,498
49,102,125
293,160
December 31, 2025
3,018
472
139
3,629
2,537,171
7,560
8,457
408
9,169
16,575,180
67,411
14,821
4,651
865
20,337
7,516,697
39,957
16,301
901
17,202
8,527,681
73,551
2,739
1,226
3,966
1,819,479
8,344
24,890
5,860
2,913
33,663
9,052,979
94,766
827
615
3,024
1,227,020
2,109
2,002
793
2,795
949,014
3,457
73,810
15,034
4,941
93,785
48,207,587
297,155
The following table is a summary of information pertaining to nonaccrual loans by class, including loans modified for borrowers with financial difficulty as of March 31, 2026 and December 31, 2025:
Greater than
Non-accrual
90 Days Accruing(1)
with no allowance(1)
5,720
6,786
1,484
13,752
Total loans on nonaccrual status
78,104
There is no interest income recognized during the period on nonaccrual loans. The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status. Loans on nonaccrual status in which there is no allowance assigned are individually evaluated loans that do not carry a specific reserve. See Note 2 — Summary of Significant Accounting Policies for further detailed descriptions on individually evaluated loans.
The following is a summary of collateral dependent loans, by type of collateral, and the extent to which they are collateralized during the period:
Collateral
Coverage
%
Other
7,725
135%
5,778
134%
Church
3,260
5,288
162%
3,315
6,075
183%
3,526
5,373
152%
6,157
9,549
155%
Commercial non-owner-occupied real estate
Hotel
8,420
17,082
203%
Retail
3,561
5,251
147%
3,451
1,458
120%
1,250
1,512
121%
Office
12,567
14,854
118%
12,250
22,015
180%
Multifamily
24,598
27,351
111%
44,860
50,894
113%
45,577
46,526
102%
49,491
46,539
94%
1-4 family investment property
717
545
76%
1st Mtg Residential
2,250
Total collateral dependent loans
109,929
133,158
128,753
152,355
The Bank designates individually evaluated loans on non-accrual with a net book balance exceeding the designated threshold as collateral dependent loans. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the ACL. The Bank has adopted the collateral maintenance practical expedient to measure the ACL based on the fair value of collateral. The ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for selling costs, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. The Bank’s threshold for individually evaluated loans is $1.0 million. The changes above in collateral percentage are generally due to appraisal value updates or changes in the number of loans within the asset class and collateral type. Overall collateral dependent loans decreased $18.8 million during the three months ended March 31, 2026.
Loans on nonaccrual status at the date of modification are initially classified as nonaccrual. Loans on accruing status at the date of modification are initially classified as accruing if the note is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the modification date if reasonable doubt exists as to the collection of interest or principal under the modification agreement. Nonaccrual loans are returned to accruing status when there is economic substance to the modification, there is documented credit evaluation of the borrower’s financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months). See Note 2 — Summary of Significant Accounting Policies for how such modifications are factored into the determination of the ACL for the periods presented above.
24
The following tables present loans designated as modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025, respectively. The loans are segregated by type of modification and asset class, indicating the financial effect of the modifications.
Three Months Ended March 31,
Reduction in Weighted
% of Total
Average Contractual
Asset Class
Interest Rate
Interest rate reduction
2,848
0.02%
1.28%
15,088
0.10%
8.00% to 7.09%
289
0.00%
0.39%
8.75% to 7.00%
Total interest rate reductions
3,137
15,477
Increase in
Weighted Average
Life of Loan
Term extension
1,207
0.05%
6 months
295
0.01%
9 months
Commercial non-owner occupied
55,182
0.32%
4 months
3,588
7 months
1,298
2 months
26,738
0.28%
2,000
3 months
Total term extensions
88,555
3,593
Weighted Average of
Months Payments
Were Deferred
Other-than-insignificant payment delay
67,595
0.40%
1,056
13 months
7,271
0.08%
Total payment delays
75,922
Reduction in
Weighted
Contractual
Average
Combination - Term Extension and Interest Rate Reduction
1,813
1.75%
16 months
1,233
0.53%
38 months
490
7.13% to 3.00%
Total term extension and interest rate reduction combinations
3,046
Amortization
Term
Combination - Interest Rate Reduction and Payment Delay
7.75% to 7.00%
12 months
Total interest rate reduction and payment delay combinations
25
The Bank on occasion will enter into modification agreements which extend the maturity payoff on a loan or reduce the interest rate for borrowers willing to continue to pay, to minimize losses for the Bank. At March 31, 2026, the Company had $4.2 million in remaining commitments to lend additional funds on loans to borrowers experiencing financial difficulty and modified during the current reporting period.
The following table presents the changes in status of loans modified within the previous twelve months to borrowers experiencing financial difficulty, as of March 31, 2026 and 2025, by type of modification. The subsequent defaults were all due to past due status greater than 89 days.
Paying Under
Restructured
Converted to
Foreclosures
Terms
Nonaccrual
and Defaults
723
884
3,860
16,362
7,237
64,982
4,563
7,716
962
27,979
425
12,352
5,144
8,016
1,119
2,642
328
112,989
1,544
23,005
6,434
105,010
3,575
1,801
8,789
117,374
Term Extension and Interest Rate Reduction
2,063
Total term extension and interest rate combinations
3,876
Term Extension and Payment Delay
2,520
186
Total term extension and payment delay combinations
2,706
Interest Rate Reduction and Payment Delay
29,740
270,545
3,680
42,110
The following table depicts the performance of loans modified within the previous twelve months to borrowers experiencing financial difficulty, as of March 31, 2026 and 2025:
March 31, 2025
Payment Status (Amortized Cost Basis)
30-89 Days
9,050
197,146
7,954
8,861
8,409
39,243
13,935
8,414
2,481
638
3,529
1,182
262,926
10,435
2,864
41,256
6,106
Note 6 — Allowance for Credit Losses (ACL)
See Note 2 — Summary of Significant Accounting Policies for further detailed descriptions of our estimation process and methodology related to the allowance for credit losses.
The following table presents a disaggregated analysis of activity in the allowance for credit losses for the three months ended March 31, 2026 and 2025:
Residential
Comm Constr.
CRE Owner-
Non-Owner-
Mortgage Sr.
Mortgage Jr.
HELOC
Construction
& Dev.
Municipal
Occupied
Occupied CRE
C & I
Three Months Ended March 31, 2026
Allowance for credit losses:
Balance at end of period December 31, 2025
55,947
1,356
14,150
8,732
53,494
19,280
58,678
1,799
73,871
174,797
123,093
585,197
Charge-offs
(1,582)
(121)
(166)
(2,133)
(94)
(10,338)
(14,434)
Recoveries
354
54
83
2,378
Net (charge-offs) recoveries
(1,533)
233
(112)
(1,247)
(11)
(7,960)
(10,513)
Provision (recovery) (2)
4,545
(65)
(617)
(550)
(6,841)
(247)
(2,832)
2,939
13,341
1,407
11,198
Balance at end of period March 31, 2026
58,959
1,384
13,766
8,182
46,541
17,786
55,862
1,917
76,799
188,146
116,540
585,882
Three Months Ended March 31, 2025
Balance at end of period December 31, 2024
42,687
432
14,845
9,298
65,553
17,484
22,279
1,197
78,753
111,538
101,214
465,280
Allowance Adjustment – FMV for Independent Merger
1,852
6,448
8,075
93,820
4,773
118,643
Initial Allowance for Non-PCD loans acquired during period
8,910
85
4,700
11,751
1,947
3,186
31,557
13,685
79,971
Independent Day 1 Loan Net Charge-offs PCD (1)
(61)
(2,323)
(1,302)
(13,556)
(22,187)
(39,429)
(507)
(13)
(229)
(1,805)
(204)
(4,664)
(7,422)
200
380
98
830
96
(368)
151
(3,298)
(1,456)
(13,460)
(25,547)
(43,869)
1,245
265
(219)
(1,443)
(5,309)
1,750
4,315
(2,037)
13,098
(51,121)
43,121
3,665
Balance at end of period March 31, 2025
54,326
14,868
12,555
78,541
16,304
33,960
1,107
101,656
172,334
137,246
623,690
Note 7 — Leases
As of March 31, 2026 and December 31, 2025, we had operating right-of-use (“ROU”) assets of $500.3 million and $507.1 million, respectively, and operating lease liabilities of $520.5 million and $525.3 million, respectively. We maintain operating leases on land and buildings for some of our operating centers, branch facilities and ATM locations. Most leases include one or more options to renew, with renewal terms extending up to 20 years. The exercise of renewal options is based on the sole judgment of management and what they consider to be reasonably certain given the environment today. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to us if the option is not exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet and instead are recognized in lease expense on a straight-line basis over the lease term.
Lease Cost Components:
Amortization of ROU assets – finance leases
115
Interest on lease liabilities – finance leases
Operating lease cost (cost resulting from lease payments)
16,731
9,369
Short-term lease cost
355
Variable lease cost (cost excluded from lease payments)
949
755
Total lease cost
18,002
10,601
Supplemental Cash Flow and Other Information Related to Leases:
Finance lease – operating cash flows
Finance lease – financing cash flows
Operating lease – operating cash flows (fixed payments)
14,638
8,587
Operating lease – operating cash flows (net change asset/liability)
(6,381)
(4,985)
New ROU assets – operating leases
Weighted – average remaining lease term (years) – finance leases
2.23
3.20
Weighted – average remaining lease term (years) – operating leases
12.65
13.13
Weighted – average discount rate - finance leases
1.8%
1.7%
Weighted – average discount rate - operating leases
6.3%
6.4%
Operating lease payments due:
2026 (excluding 3 months ended March 31, 2026)
43,545
2027
59,023
2028
60,300
2029
59,817
2030
58,316
Thereafter
507,920
Total undiscounted cash flows
788,921
Discount on cash flows
(268,429)
Total operating lease liabilities
520,492
Terms and conditions are similar to those real estate operating leases described above. Lease classifications from the acquired institutions were retained. At March 31, 2026, we did not maintain any leases with related parties, and determined that the number and dollar amount of our equipment leases was immaterial. As of March 31, 2026, we had no operating leases that had not yet commenced.
Sale-leaseback Transaction
On February 28, 2025, the Bank completed a sale-leaseback transaction for the purchase and sale of real property (the “Sale Agreement”) with entities affiliated with Blue Owl Real Estate Capital LLC (“Blue Owl”), providing for the sale to entities affiliated with Blue Owl of 165 bank branch properties owned and operated by the Bank (collectively, the “Branches”). The Branches are located in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia. The sales price for the Branches was $467.2 million, and the Company recorded a gain on sale of the Branches of $229.3 million (net of transaction costs). Under the Sale Agreement, the Bank has agreed, concurrently with the closing of the sale of the Branches, to enter into triple net lease agreements (the “Lease Agreements”) with entities affiliated with Blue Owl, pursuant to which the Bank will lease each of the Branches (the “Sale-leaseback Transaction”). Each of the Lease Agreements will have initial terms of 15 years and provide the Bank with three consecutive renewal options of five years each. The Lease Agreements also will include a 2% annual rent escalation during the initial term and the renewal terms. With the Sale-leaseback Transaction, the Company recorded an additional lease right of use assets of $361.1 million.
Equipment Lessor
SouthState has an Equipment Finance Group which does business directly with customers and primarily focuses on serving the construction and utility segments. Lease terms typically range from 24 months to 120 months. At the end of the lease term, the lessee has the option to renew the lease, return the equipment, or purchase the equipment. In the event the equipment is returned, there is a remarketing agreement with the intermediary to sell the equipment. The Equipment Finance Group offers the following lease products: TRAC Leases, Split-TRAC Leases, and FMV Leases. Direct finance equipment leases are included in commercial and industrial loans category, which is included in the Non-acquired Loans on the Consolidated Balance Sheets.
The estimated residual values for direct finance leases are established by an approved intermediary who utilizes internally developed analyses, external studies, and/or third-party appraisals to establish a residual position. FMV and Split-TRAC leases have residual risk due to their unguaranteed residual value whereas TRAC leases have a guaranteed residual value. Expected credit losses on direct financing leases and the related estimated residual values are included in the Commercial and Industrial loan segment for the ACL.
The following table summarizes lease receivables and investment in operating leases and their corresponding balance sheet location at March 31, 2026 and December 31, 2025:
Direct financing leases:
Lease receivables
112,341
92,927
Guaranteed residual values
4,469
4,212
Unguaranteed residual values
14,007
11,335
Initial direct costs
4,949
3,502
Less: Unearned income
(21,380)
(17,690)
Total net investment in direct financing leases
114,386
94,286
29
The following table summarizes direct financing lease income recorded for the three months ended March 31, 2026 and 2025 and remaining lease payment receivable for each of the next five years:
Direct financing lease income
Interest income
1,648
629
Remaining lease payments receivable:
20,029
25,010
24,391
22,237
18,195
6,948
Total undiscounted lease receivable
116,810
Less: unearned interest income
Net lease receivables
95,430
See Note 1 — Summary of Significant Accounting Policies, under the “Leases” section, of our Annual Report on Form 10-K for the year ended December 31, 2025 on accounting for leases.
Note 8 — Deposits
Our total deposits as of March 31, 2026 and December 31, 2025, are comprised of the following:
Noninterest-bearing checking
Interest-bearing checking
14,119,614
13,838,558
Savings
2,841,408
2,820,621
Money market
18,014,140
17,751,688
Time deposits
7,249,702
7,359,233
At March 31, 2026, and December 31, 2025, we had $2.2 billion and $2.1 billion in certificates of deposits greater than $250,000, respectively.
Note 9 — Retirement Plans
The Company sponsors an employees’ savings plan under the provisions of the Internal Revenue Code Section 401(k). Electing employees are eligible to participate in the employees’ savings plan after attaining age 18. Plan participants elect to contribute portions of their annual base compensation as a before- or after-tax contribution. Employer contributions may be made from current or accumulated net profits. Participants may elect to contribute 1% to 85% of annual base compensation as a before or after tax contribution. Employees participating in the plan receive a 100% match of their 401(k) plan contribution from the Company, up to 4% of their salary. We expensed $5.7 million for the three months ended March 31, 2026 and $5.4 million for the three months ended March 31, 2025 related to the Company’s employees’ savings plan.
Employees can enter the savings plan on or after the first day of each month. The employee may enter into a salary deferral agreement at any time to select an alternative deferral amount or to elect not to defer in the plan. If the employee does not elect an investment allocation, the plan administrator will select a retirement-based portfolio according to the employee’s number of years until normal retirement age. The plan’s investment valuations are generally provided on a daily basis.
Note 10 — Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding during each period, excluding non-vested restricted shares. Our diluted earnings per share is based on the weighted-average shares of common stock outstanding during each period plus the maximum dilutive effect of common stock issuable upon exercise of stock options or vesting of restricted stock units. Stock options and unvested restricted stock units are considered common stock equivalents and are only included in the calculation of diluted earnings per common share when their effect is dilutive.
The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2026 and 2025:
(Dollars and shares in thousands, except for per share amounts)
Basic earnings per common share:
Weighted-average basic common shares
Basic earnings per common share
Diluted earnings per common share:
Effect of dilutive securities
378
419
Weighted-average dilutive shares
Diluted earnings per common share
Note 11 — Share-Based Compensation
Our 2012 and 2020 share-based compensation plans are long-term retention plans intended to attract, retain, and provide incentives for key employees and non-employee directors in the form of incentive and non-qualified stock options and RSUs. Our 2020 plan was adopted by our shareholders at our annual meeting on October 29, 2020. The 2020 plan was subsequently amended and restated during our annual meeting on April 24, 2024 to increase the number of shares of common stock available for future grants.
Stock Options
With the exception of non-qualified stock options granted to directors under the 2012 plans, which in some cases may be exercised at any time prior to expiration and in some other cases may be exercised at intervals less than a year following the grant date, incentive stock options granted under our 2012 plan may not be exercised in whole or in part within a year following the date of the grant, as these incentive stock options become exercisable in 25% increments pro ratably over the four-year period following the grant date. The options are granted at an exercise price at least equal to the fair value of the common stock at the date of grant and expire ten years from the date of grant. No options were granted under the 2012 plan after February 1, 2019, and the plan is closed other than for any options still unexercised and outstanding.
31
Activity in the Company’s stock option plans is summarized in the following table:
Aggregate
Remaining
Intrinsic
Price
(Yrs.)
(000’s)
Outstanding at January 1, 2026
28,815
61.00
Exercised
(6,018)
50.65
Expired
(278)
44.21
Outstanding at March 31, 2026
22,519
63.97
1.24
643
Exercisable at March 31, 2026
The fair value of options is estimated at the date of grant using the Black-Scholes option pricing model and expensed over the options’ vesting periods. There have been no stock options issued during the first three months of 2026. Because all outstanding stock options had vested as of December 31, 2025, there was no unrecognized compensation cost related to nonvested stock option grants under the plans or fair value of shares vested during the three months ended March 31, 2026. The intrinsic value of stock option shares exercised for the three months ended March 31, 2026 was $301,000.
Restricted Stock Units (“RSUs”)
From time-to-time, we also grant performance RSUs and time-vested RSUs to key employees, and time-vested RSUs to non-employee directors. These awards help align the interests of these employees with the interests of our shareholders by providing economic value directly related to our performance. Some performance RSU grants contain a three-year performance period while others contain a one to two-year performance period and a time-vested requirement (generally two to four years from the grant date). The performance-based awards for our long-term incentive plans are dependent on the achievement of tangible book value growth and return on average tangible common equity relative to the Company’s peer group during each three-year performance period. We communicate threshold, target, and maximum performance RSU awards and performance targets to the applicable key employees at the beginning of a performance period. With respect to some long-term incentive awards, dividend equivalents are accrued at the same rate as cash dividends paid for each share of the Company’s common stock during the performance or time-vested period, and subsequently paid when the shares are issued on the vesting or settlement date. Grants to non-employee directors typically vest within a 12-month period. The value of the RSUs awarded is established as the fair market value of the stock at the time of the grant. We recognize expense on a straight-line basis typically over the performance or time-vesting periods based upon the probable performance target, as applicable, that will be met.
Outstanding RSUs for the three months ended March 31, 2026 is summarized in the following table.
Weighted-
Grant-Date
Restricted Stock Units
Fair Value
820,878
86.43
Granted
413,496
93.74
Vested
(367,212)
81.11
867,162
92.17
If maximum performance is achieved pursuant to the 2024, 2025 and 2026 Long Term Incentive performance-based RSU grants, an additional 133,447 shares in total may be issued by the Company at the end of the three-year performance periods.
As of March 31, 2026, there was $56.1 million of total unrecognized compensation cost at target related to nonvested RSUs granted under the plan. This cost is expected to be recognized over a weighted-average period of 1.66 years as of March 31, 2026. The total fair value of RSUs vested and released during the three months ended March 31, 2026 was $37.6 million.
32
Note 12 — Commitments and Contingent Liabilities
In the normal course of business, we make various commitments and incur certain contingent liabilities, which are not reflected in the accompanying financial statements. The commitments and contingent liabilities include guarantees, commitments to extend credit, and standby letters of credit. At March 31, 2026, commitments to extend credit and standby letters of credit totaled $14.0 billion. As of March 31, 2026, the liability recorded for expected credit losses on unfunded commitments, excluding unconditionally cancellable exposures and letters of credit, was $69.2 million and recorded on the Balance Sheet. See Note 2 — Summary of Significant Accounting Policies for discussion of liability recorded for expected credit losses on unfunded commitments.
We have been named as defendant in various legal actions, arising from its normal business activities, in which damages in various amounts are claimed. We are also exposed to litigation risk related to the prior business activities of banks acquired through whole bank acquisitions. Although the amount of any ultimate liability with respect to such matters cannot be determined, in the opinion of management, as of March 31, 2026, any such liability is not expected to have a material effect on our consolidated financial statements.
Cyber Incident Litigation. On April 3, 2024, a putative class action lawsuit was filed against the Bank in the U.S. District Court for the Middle District of Florida, Tampa Division (the “Original Suit”). The plaintiff, who purports to represent the class of individuals harmed by alleged actions and/or omissions by the Bank in connection with the cybersecurity incident that was detected on February 6, 2024 (the “Cyber Incident”, as previously reported in the Form 8-K filed with the SEC on February 9, 2024), asserts a variety of common law and statutory claims seeking monetary damages, injunctive relief and other related relief related to the potential unauthorized access by third parties to personal identifiable information. While the Original Suit has been voluntarily dismissed, the same plaintiffs as well as additional plaintiffs initiated litigation that names the Bank as a defendant. These cases have been consolidated into one putative class action, which as of March 31, 2026, remains pending against the Bank in the Circuit Court for Polk County, Florida (the “Cyber Incident Suit”).
During the first quarter of 2026, the parties agreed to a settlement of the Cyber Incident Suit, subject to court approval, under which the Company has agreed to fund documented losses, pay attorney’s fees, and administration costs and credit monitoring fees. The settlement is expected to be paid from the Company’s cyber insurance coverage.
Note 13 — Fair Value
GAAP defines fair value and establishes a framework for measuring and disclosing fair value. Fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Available for sale and trading securities, derivative contracts, mortgage loans held for sale, SBA servicing rights, and mortgage servicing rights (“MSRs”) are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans, OREO, bank properties held for sale, and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.
FASB ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
Level 1
Observable inputs such as quoted prices in active markets;
Level 2
Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
A description of valuation methodologies used for assets recorded at fair value is disclosed in Note 23 — Fair Value of our Annual Report on Form 10-K for the year ended December 31, 2025.
33
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis:
Quoted Prices
In Active
Significant
Markets
for Identical
Observable
Unobservable
Assets
Inputs
(Level 1)
(Level 2)
(Level 3)
Derivative financial instruments
Mortgage loans held for sale
48,094
Securities available for sale:
Total securities available for sale
SBA servicing asset
5,176
6,982,558
6,887,364
95,194
Liabilities
61,400
5,512
6,797,769
6,708,225
89,544
Fair Value Option
The Company has elected the fair value option for mortgage loans held for sale primarily to ease the operational burden required to maintain hedge accounting for these loans. The Company also has opted for the fair value option for the SBA servicing asset, as it is the industry-preferred method for valuing such assets.
The following table summarizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale and the changes in fair value of these loans:
Fair value
Unpaid principal balance
47,102
59,371
Fair value less aggregated unpaid principal balance
992
2,029
Changes in Level 1, 2 and 3 Fair Value Measurements
When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, since Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources), the gains and losses below include changes in fair value due in part to observable factors that are part of the valuation methodology.
There were no changes in hierarchy classifications of Level 3 assets or liabilities for the three months ended March 31, 2026. A reconciliation of the beginning and ending balances of the MSRs recorded at fair value on a recurring basis for the three months ended March 31, 2026 is as follows. The changes in fair value of the MSRs are recorded in Mortgage Banking Income on the Consolidated Statements of Income.
MSRs
Fair value, January 1, 2026
Servicing assets that resulted from transfers of financial assets
Changes in fair value due to valuation inputs or assumptions
6,564
Changes in fair value due to decay
(2,205)
Fair value, March 31, 2026
A reconciliation of the beginning and ending balances of the SBA servicing asset, a Level 3 asset recorded at fair value on a recurring basis for the three months ended March 31, 2026 is as follows. The changes in fair value of the SBA servicing asset are recorded in in SBA Income on the Consolidated Statements of Income.
SBA Servicing Asset
156
(502)
There were no unrealized losses included in accumulated other comprehensive income related to Level 3 financial assets and liabilities at March 31, 2026.
See Note 18 — Mortgage Loan Servicing, Obligation, and Loans Held for Sale for information about recurring Level 3 fair value measurements of mortgage servicing rights.
35
Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
The tables below present the recorded amount of assets and liabilities measured at fair value on a nonrecurring basis:
OREO
Individually evaluated loans
268,343
328,452
For an individually evaluated loan, the fair value of collateral is measured based on appraisal or third-party valuation when the loan is placed on nonaccrual. For OREO and bank properties held for sale, the fair value is initially recorded based on external appraisals at the time of transfer. These assets recorded at fair value on a nonrecurring basis are updated on at least an annual basis.
Quantitative Information about Level 3 Fair Value Measurement
Weighted Average Discount
Valuation Technique
Unobservable Input
Nonrecurring measurements:
Discounted appraisals and discounted cash flows
Collateral discounts
OREO and Bank properties held for sale
Discounted appraisals
Collateral discounts and estimated costs to sell
Fair Value of Financial Instruments
We used the following methods and assumptions in estimating our fair value disclosures for financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those models are significantly affected by the assumptions used, including the discount rates and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. The use of different methodologies may have a material effect on the estimated fair value amounts. The fair value estimates presented in the table below are based on pertinent information available to management as of March 31, 2026, and December 31, 2025. Such amounts have not been revalued for purposes of these consolidated financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.
Methods and assumptions used to estimate the fair value of each class of financial instruments are disclosed in Note 23 — Fair Value of our Annual Report on Form 10-K for the year ended December 31, 2025.
The estimated fair value, and related carrying amount, of our financial instruments are as follows:
Financial assets:
Cash and cash equivalents
Investment securities
8,585,410
272,804
8,214,486
98,120
330,177
Loans, net of allowance for credit losses
47,966,971
239,877
37,007
202,870
Interest rate swap – non-designated hedge
189,355
Other derivative financial instruments (mortgage banking related)
1,977
Financial liabilities:
Interest-bearing other than time deposits
34,975,162
7,234,725
643,386
676,337
46,748
560,264
2,142
8,400,034
274,730
8,046,606
78,698
348,381
47,378,022
233,265
35,302
197,963
221,835
1,051
34,410,867
7,347,648
618,215
683,772
48,972
554,433
315
Note 14 — Accumulated Other Comprehensive Income (Loss)
The changes in each component of accumulated other comprehensive income (losses), net of tax, for the three months ended March 31, 2026 and 2025, were as follows:
Unrealized Losses
Benefit
on Securities
Plans
Balance at December 31, 2025
565
(283,946)
Other comprehensive loss before reclassifications
Net comprehensive loss
Balance at March 31, 2026
(326,674)
Balance at December 31, 2024
578
(607,499)
Other comprehensive income before reclassifications
56,586
Amounts reclassified from accumulated other comprehensive loss
173,668
Net comprehensive income
Balance at March 31, 2025
(377,245)
The table below presents the reclassifications out of accumulated other comprehensive income (loss), net of tax:
Amount Reclassified from Other Comprehensive Income (Loss)
For the Three Months Ended March 31,
Accumulated Other Comprehensive Loss Component
Income StatementLine Item Affected
Loss on sale of available for sale securities:
Securities losses, net
Total reclassifications for the period
Note 15 — Derivative Financial Instruments
The Company uses certain derivative instruments to meet the needs of customers as well as to manage the interest rate risk associated with certain transactions. The following table summarizes the derivative financial instruments used by the Company as of March 31, 2026 and December 31, 2025:
Balance Sheet
Notional
Estimated Fair Value
Location
Gain
Fair value hedge of interest rate risk:
Pay fixed rate swap with counterparty
Other Assets
2,615
44
Not designated hedges of interest rate risk:
Customer related interest rate contracts:
Matched interest rate swaps with borrowers
Other Assets and Other Liabilities
15,530,662
111,165
14,912,622
143,879
Matched interest rate swaps with counterparty (1)
15,340,807
78,112
14,719,305
77,799
Economic hedges of interest rate risk:
Pay floating rate swap with counterparty
2,663,000
2,519,000
113
Not designated hedges of interest rate risk – mortgage banking activities:
Contracts used to hedge mortgage servicing rights
271,000
192,000
69
Contracts used to hedge mortgage pipeline
128,500
81,000
982
Total derivatives
33,936,584
32,426,542
The following table summarizes the derivative assets and derivative liabilities related to the counterparties on our interest rate swaps subject to master netting agreements where the Company has elected to net the fair values. The Company has elected to not offset cash collateral against the netted derivative assets and liabilities subject to master netting agreements.
Interest rate contracts subject to master netting agreements included in table above
Total gross derivative instruments, before netting
1,791,216
83,072
2,704
1,844,842
81,240
3,781
Less: Netting adjustment
192,450
(2,704)
221,941
(3,781)
Total gross derivative instruments, after netting
80,368
77,459
*
As of March 31, 2026, and December 31, 2025, counterparties provided $28.9 million and $25.9 million, respectively, of cash collateral to the Company to secure swap asset positions that were not centrally cleared, which is included in Interest-bearing Deposits within Total Liabilities on the Consolidated Balance Sheets. Counterparties also pledged $27.6 million and $28.1 million in investment securities to secure swap asset positions that were not centrally cleared. The Company provided $1.7 million to counterparties to secure swap positions that were not centrally cleared as of both March 31, 2026, and December 31, 2025.
Balance Sheet Fair Value Hedge
As of March 31, 2026, and December 31, 2025, the Company maintained loan swaps, with an aggregate notional amount of $2.6 million accounted for as fair value hedges. The amortized cost basis of the loans being hedged were $2.6 million as of both March 31, 2026 and December 31, 2025. This derivative protects us from interest rate risk caused by changes in the SOFR curve in relation to a certain designated fixed rate loan. The derivative converts the fixed rate loan to a floating rate. Settlement occurs in any given period where there is a difference in the stated fixed rate and variable rate and the difference is recorded in net interest income. The fair value of this hedge is recorded in either other assets or in other liabilities depending on the position of the hedge with the offset recorded in loans.
Non-designated Hedges of Interest Rate Risk
Customer Swap
The Company maintains interest rate swap contracts with loan customers of respondent bank customers of the Correspondent Banking Division, in addition to loan customers of the Bank, that are classified as non-designated hedges and are not speculative in nature. These agreements are designed to convert customers’ variable rate loans with the Company and respondent bank customers to fixed rate. These interest rate swaps are executed with loan customers to facilitate a respective risk management strategy and allow the customer to pay a fixed rate of interest to the Company. These interest rate swaps are simultaneously hedged by executing offsetting interest rate swaps with unrelated market counterparties to minimize the net risk exposure to the Company resulting from the transactions and allow the Company to receive a variable rate of interest. The interest rate swaps pay and receive interest based on a one-month SOFR floating rate plus a credit spread, with payments being calculated on the notional amount. The interest rate swaps are settled monthly with varying maturities.
The variation margin settlement payment and the related derivative instruments fair value are considered a single unit of account for accounting and financial reporting purposes. Depending on the net position of the swaps with LCH and CME, the fair value, net of the variation margin, is reported in Derivative Assets or Derivative Liabilities on the Consolidated Balance Sheets. In addition, the expense or income attributable to the variation margin for the centrally cleared swaps with LCH and CME is reported in Noninterest Income, specifically within Correspondent and Capital Markets Income. The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.
As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. As of March 31, 2026, and December 31, 2025, the interest rate swaps had an aggregate notional amount of approximately $30.9 billion and $29.6 billion, respectively. At March 31, 2026, the fair value of the interest rate swap derivatives is recorded in other assets at $189.3 million and in other liabilities at $560.3 million. The fair value of derivative assets at March 31, 2026 was reduced by $373.2 million in variation margin payments applicable to swaps centrally cleared through LCH and CME. At December 31, 2025, the fair value of the interest rate swap derivatives was recorded in other assets at $221.7 million and other liabilities at $554.4 million. The fair value of derivative assets at December 31, 2025 was reduced by $333.7 million in variation margin payments applicable to swaps centrally cleared through LCH and CME. All changes in fair value are recorded through earnings within Correspondent and Capital Markets Income, a component of Noninterest Income on the Consolidated Statements of Income. There was a net gain of $1.1 million recorded on these derivatives for the three months ended March 31, 2026. There was a net loss of $172,000 recorded on these derivatives for the three months ended March 31, 2025. As of March 31, 2026, we provided $295.8 million of cash collateral on the customer swaps, which is included in Cash and Cash Equivalents on the Consolidated Balance Sheets as Deposits in Other Financial Institutions (Restricted Cash). We also provided $72.8 million in investment securities at market value as collateral on the customer swaps which is included in Investment Securities – available for sale on the Consolidated Balance Sheets. Counterparties provided $28.9 million of cash collateral to the Company to secure swap asset positions that were not centrally cleared, which is included in Interest-bearing Deposits within Total Liabilities on the Consolidated Balance Sheets.
39
Balance Sheet Economic Hedge
During the third quarter of 2023, management began executing a series of short-term interest rate hedges to address monthly accrual mismatches related to the Company’s Assumable Rate Conversion (“ARC”) program and its transition from LIBOR to SOFR after June 30, 2023. The Company is required to execute the correspondent side of its back-to-back swaps with customers with the central clearinghouses (CME or LCH). Term SOFR was not available to execute through CME and LCH, and therefore, management elected to convert to the CME-eligible daily SOFR. Because many of the respondent bank customers converted to Term SOFR, this created interest rate basis risk. To address this risk, monthly interest rate hedges were executed to minimize the impact of accrual mismatches between the monthly Term SOFR used by the customer and the daily SOFR rates used by the central clearinghouses.
As of March 31, 2026 and December 31, 2025, the Company maintained an aggregate notional amount of $2.7 billion and $2.5 billion, respectively, in short-term interest rate hedges that were accounted for as economic hedges. As noted above, the derivatives protect the Company from interest rate risk caused by changes in the term and daily SOFR accrual mismatches. The fair value of these hedges is recorded in either Other Assets or in Other Liabilities depending on the position of the hedge with the offset recorded in Correspondent Banking and Capital Market Income, a component of Noninterest Income on the Consolidated Statements of Income. There was a net gain of $25,000 for these derivatives for the three months ended March 31, 2026. There was a net loss of $14,000 for these derivatives for the three months ended March 31, 2025.
Foreign Exchange
The Company may enter into foreign exchange contracts with customers to accommodate their need to convert certain foreign currencies into U.S. Dollars. To offset the foreign exchange risk, the Company may enter into substantially identical agreements with an unrelated market counterparty to hedge these foreign exchange contracts. At March 31, 2026, there were no outstanding contracts or agreements related to foreign currency. There was no gain or loss recorded related to the foreign exchange derivative for the three months ended March 31, 2026 and 2025.
Mortgage Banking
The Company also has derivatives contracts that are not classified as accounting hedges to mitigate risks related to the Company’s mortgage banking activities. These instruments may include financial forwards, futures contracts, and options written and purchased, which are used to hedge MSRs; while forward sales commitments are typically used to hedge the mortgage pipeline. Such instruments derive their cash flows, and therefore their values, by reference to an underlying instrument, index or referenced interest rate. The Company does not elect hedge accounting treatment for any of these derivative instruments and as a result, changes in fair value of the instruments (both gains and losses) are recorded in the Company’s Consolidated Statements of Income in Mortgage Banking Income.
Mortgage Servicing Rights (“MSRs”)
Derivatives contracts related to MSRs are used to help offset changes in fair value and are written in amounts referred to as notional amounts. Notional amounts provide a basis for calculating payments between counterparties but do not represent amounts to be exchanged between the parties and are not a measure of financial risk. On March 31, 2026, we had derivative financial instruments outstanding with notional amounts totaling $271.0 million related to MSRs, compared to $192.0 million on December 31, 2025. The estimated net fair value of the open contracts related to the MSRs was recorded as a loss of $2.1 million at March 31, 2026, compared to a gain of $69,000 at December 31, 2025.
Mortgage Pipeline
The following table presents our notional value of forward sale commitments and the fair value of those obligations along with the fair value of the mortgage pipeline related to the held for sale portfolio:
Mortgage loan pipeline
120,258
55,318
Expected closures
107,610
48,106
Fair value of mortgage loan pipeline commitments
1,199
Forward sales commitments
Fair value of forward commitments
778
(315)
40
Note 16 — Capital Ratios
The Company is subject to regulations with respect to certain risk-based capital ratios. These risk-based capital ratios measure the relationship of capital to a combination of balance sheet and off-balance sheet risks. The values of both balance sheet and off-balance sheet items are adjusted based on the rules to reflect categorical credit risk. In addition to the risk-based capital ratios, the regulatory agencies have also established a leverage ratio for assessing capital adequacy. The leverage ratio is equal to Tier 1 capital divided by total consolidated on-balance sheet assets (minus amounts deducted from Tier 1 capital). The leverage ratio does not involve assigning risk weights to assets.
Under current regulations, the Company and the Bank are subject to a minimum required ratio of common equity Tier 1 capital (“CET1”) to risk-weighted assets of 4.5% and a minimum required ratio of Tier 1 capital to risk-weighted assets of 6%. The minimum required leverage ratio is 4%. The minimum required total capital to risk-weighted assets ratio is 8%.
In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, a covered banking organization is also required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of CET1, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer consists of an additional amount of Tier 1 common equity equal to 2.5% of risk-weighted assets.
The Bank is also subject to the regulatory framework for prompt corrective action, which identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized) and is based on specified thresholds for each of the three risk-based regulatory capital ratios (CET1, Tier 1 capital and total capital) and for the leverage ratio.
The following table presents actual and required capital ratios as of March 31, 2026, and December 31, 2025 for the Company and the Bank under the current capital rules. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations.
Required to be
Minimum Capital
Considered Well
Actual
Required – Basel III
Capitalized
Ratio
Capital Amount
Common equity Tier 1 to risk-weighted assets:
Consolidated
5,993,557
11.27
3,722,768
7.00
3,456,856
6.50
SouthState Bank (the Bank)
6,553,175
12.33
3,721,167
3,455,369
Tier 1 capital to risk-weighted assets:
4,520,504
8.50
4,254,592
8.00
4,518,560
4,252,762
Total capital to risk-weighted assets:
7,279,005
13.69
5,584,152
10.50
5,318,240
10.00
7,143,023
13.44
5,581,750
5,315,953
Tier 1 capital to average assets (leverage ratio):
9.38
2,557,093
4.00
3,196,366
5.00
10.27
2,553,560
3,191,950
5,885,568
11.36
3,625,944
3,366,948
6,496,379
12.54
3,625,076
3,366,142
4,402,932
4,143,936
4,401,878
4,142,944
7,166,829
13.84
5,438,915
5,179,920
7,082,039
13.68
5,437,614
5,178,680
9.26
2,543,294
3,179,117
10.22
2,542,489
3,178,111
As of March 31, 2026, and December 31, 2025, the capital ratios of the Company and the Bank were in excess of the minimum regulatory requirements and exceeded the thresholds for the “well capitalized” regulatory classification.
Note 17 — Goodwill and Other Intangible Assets
The carrying amount of goodwill was $3.1 billion at both March 31, 2026 and December 31, 2025. The Company’s other intangible assets, consisting of core deposit intangibles, noncompete intangibles, and client list intangibles are included on the face of the balance sheet.
The Company last completed its annual valuation of the carrying value of its goodwill as of October 31, 2025 and determined there was more likely than not that no impairment of the Company’s goodwill. Management continues to monitor the impact of market conditions on the Company’s business, operating results, cash flows and/or financial condition.
The following is a summary of gross carrying amounts and accumulated amortization of other intangible assets:
Gross carrying amount
689,084
689,419
Accumulated amortization
(324,398)
(303,093)
Amortization expense totaled $21.3 million for the quarter ended March 31, 2026, compared to $23.8 million for the quarter ended March 31, 2025. Other intangibles, which includes core deposit intangibles, noncompete intangibles, and client list intangibles are amortized using either the straight-line method or an accelerated basis over their estimated useful lives, with lives generally between two and 15 years. The SBA servicing assets are carried at fair value and along with goodwill, are not amortized.
Estimated amortization expense for other intangibles for each of the next five quarters and thereafter is as follows:
Quarter ending:
June 30, 2026
21,041
September 30, 2026
20,628
December 31, 2026
March 31, 2027
18,517
June 30, 2027
18,188
260,508
359,510
Note 18 — Mortgage Loan Servicing, Origination, and Loans Held for Sale
The portfolio of residential mortgages serviced for others, which is not included in the accompanying Consolidated Balance Sheets, was $6.6 billion as of March 31, 2026, and December 31, 2025, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts and disbursing payments to investors. The amounts of contractually specified servicing fees we earned during the three months ended March 31, 2026 and March 31, 2025 were $4.2 million and $4.3 million, respectively. Servicing fees are recorded in Mortgage Banking Income in our Consolidated Statements of Income.
At March 31, 2026, and December 31, 2025, MSRs were $90.0 million and $84.0 million on our Consolidated Balance Sheets, respectively. MSRs are recorded at fair value with changes in fair value recorded as a component of Mortgage Banking Income in the Consolidated Statements of Income. The market value adjustments related to MSRs recorded in Mortgage Banking Income for the three months ended March 31, 2026 and March 31, 2025 were gains of $6.6 million, compared with losses of $3.1 million, respectively. The Company has used various free standing derivative instruments to mitigate the income statement effect of changes in fair value resulting from changes in market value adjustments, in addition to changes in valuation inputs and assumptions related to MSRs.
42
See Note 13 — Fair Value for the changes in fair value of MSRs. The following table presents the changes in the fair value of the MSR and offsetting hedge.
Increase/(decrease) in fair value of MSRs
6,563
(3,081)
Decay of MSRs
(1,028)
(Loss) gain related to derivatives
(1,726)
2,340
Net effect on Consolidated Statements of Income
2,632
(1,769)
The fair value of MSRs is highly sensitive to changes in assumptions and is determined by estimating the present value of the asset’s future cash flows utilizing market-based prepayment rates, discount rates and other assumptions validated through industry surveys, third-party vendor analyses, and market sales data. Changes in prepayment speed assumptions have the most significant impact on the fair value of MSRs. Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value of the MSR. Measurement of fair value is limited to the conditions existing and the assumptions utilized as of a particular point in time, and those assumptions may not be appropriate if applied at a different time. See Note 13 — Fair Value for additional information regarding fair value.
The characteristics and sensitivity analysis of the MSRs are included in the following table.
Composition of residential loans serviced for others
Fixed-rate mortgage loans
100.0
Adjustable-rate mortgage loans
Weighted average life
7.5
years
Constant Prepayment rate (CPR)
7.9
Estimated impact on fair value of a 10% increase
(1,210)
(1,082)
Estimated impact on fair value of a 20% increase
(2,469)
(2,101)
Estimated impact on fair value of a 10% decrease
1,292
1,142
Estimated impact on fair value of a 20% decrease
2,333
Weighted average discount rate
9.5
10.7
(3,695)
(3,140)
(7,098)
(6,208)
4,021
3,105
8,411
5,982
Effect on fair value due to change in interest rates
25 basis point increase
3,265
2,505
50 basis point increase
6,509
4,822
25 basis point decrease
(3,219)
(2,599)
50 basis point decrease
(6,312)
(5,128)
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the residential MSRs is calculated without changing any other assumption, while in reality changes in one factor may result in changes in another, which may either magnify or counteract the effect of the change. The derivative instruments utilized by the Company would serve to reduce the estimated impacts to fair value included in the table above.
Whole loan sales were $196.5 million for the three months ended March 31, 2026, compared to $281.4 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, $126.5 million, or 64.4%, were sold with the servicing rights retained by the Company, compared to $164.9 million, or 58.6% for the three months ended March 31, 2025.
The Company retains no beneficial interests in these sales but may retain the servicing rights for the loans sold. The risks related to the sold loans with the retained servicing rights due to a representation or warranty violation such as noncompliance with eligibility or servicing requirements, or customer fraud, that should have been identified in a loan file review are disclosed in Note 1 — Summary of Significant Accounting Policies, under the “Loans Held for Sale” section, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Company is obligated to subsequently repurchase a loan if such representation or warranty violation is identified by the purchaser. The aggregated principal balances of loans repurchased for the three months ended March 31, 2026 and March 31, 2025 were approximately $627,000 and $1.1 million, respectively.
Mortgage loans held for sale have historically been comprised of residential mortgage loans awaiting sale in the secondary market, which generally settle in 15 to 45 days. Mortgage loans held for sale were $48.1 million and $61.4 million at March 31, 2026, and December 31, 2025, respectively. Please see Note 13 — Fair Value, under the “Fair Value Option”, section in this Quarterly Report on Form 10-Q for summary of the fair value and the unpaid principal balance of loans held for sale and the changes in fair value of these loans.
Note 19 — Small Business Administration (“SBA”) Loans Held for Sale
The Company purchases the guaranteed portions of SBA loans from third-party originators. The guaranteed portions of SBA loans purchased by the Company are aggregated into pools with similar characteristics to create a security representing an interest in those pools through the SBA’s fiscal transfer agent (“FTA”). The individual guaranteed portions of the SBA loans may also be sold prior to pooling into a security. The guaranteed portion of the SBA loans are pooled and securities representing interests in that pool are issued, the Company sells the pooled securities into the secondary market. These securities are carried at fair value and classified as trading instruments. Gains or losses on the sale of the securities and individual guaranteed portions of loans are both recorded in Correspondent Banking and Capital Markets Income in Noninterest Income on the Consolidated Statements of Income. The Company does not retain any interest in the securities once sold. The guaranteed portion of the SBA loans that have not been pooled or sold, are reported as Loans Held for Sale on the Consolidated Balance Sheet and recorded at the lower of cost or estimated fair value. The fair value of the purchased guaranteed portion of the SBA loans is determined based upon their committed sales price, and actual observable market color provided to secondary market participants from the originating banks who are selling their guaranteed portions of loans. These nonrecurring fair value measurements for purchased guaranteed portion of SBA loans are classified within Level 2 of the fair value hierarchy.
During the first quarter of 2026, the Company purchased approximately $346.7 million in guaranteed portions of SBA loans. During the first quarter of 2026, the Company pooled approximately $285.8 million of the guaranteed portions of SBA loans into securities selling approximately $294.2 million into the secondary market. The Company also sold approximately $34.6 million in individual loans during the three months ended March 31, 2026. During the first quarter of 2025, the Company purchased approximately $450.9 million in guaranteed portions of SBA loans. The Company pooled approximately $312.9 million of the guaranteed portions of SBA loans into securities selling approximately $321.0 million into the secondary market during the first quarter of 2025. The Company also sold approximately $15.4 million in individual loans during the three months ended March 31, 2025. The Company held approximately $279.8 million and $283.9 million, respectively, in the guaranteed portion of SBA loans held for sale at March 31, 2026 and December 31, 2025.
The Company also separately originates SBA loans and sells the guaranteed portions of these loans into the secondary market. During the three months ended March 31, 2026 and 2025, the Company sold approximately $8.3 million and $22.6 million, respectively, in guaranteed portions of SBA loans originated at the Bank and recognized net gains of $748,000 and $2.0 million, respectively.
Note 20 — Short-Term Borrowings
Securities Sold Under Agreements to Repurchase (“Repurchase agreements”)
Repurchase agreements represent funds received from customers, generally on an overnight or continuous basis, which are collateralized by investment securities owned or, at times, borrowed and re-hypothecated by the Company. Repurchase agreements are subject to terms and conditions of the master repurchase agreements between the Company and the client and are accounted for as secured borrowings. Repurchase agreements are included in Securities Sold Under Agreements to Repurchase on the Consolidated Balance Sheets. At March 31, 2026, and December 31, 2025, our repurchase agreements totaled $299.6 million and $311.4 million, respectively. All of our repurchase agreements were overnight or continuous (until-further-notice) agreements at March 31, 2026, and December 31, 2025. These borrowings were collateralized with government, government-sponsored enterprise, or state and political subdivision-issued securities with a carrying value of $351.2 million and $331.5 million at March 31, 2026, and December 31, 2025, respectively. Declines in the value of the collateral would require us to increase the amounts of securities pledged.
Federal Funds Purchased
Federal funds purchased are generally overnight daily borrowings with no defined maturity date. At March 31, 2026, and December 31, 2025, our federal funds purchased totaled $343.8 million and $306.8 million, respectively.
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) Borrowings
The Company has, from time to time, entered into borrowing agreements with the FHLB and FRB. Borrowings under these agreements are collateralized by stock in the FHLB, qualifying first and second mortgage residential loans, investment securities, and commercial real estate loans under a blanket-floating lien.
As of March 31, 2026, and December 31, 2025, the Company had no outstanding FHLB borrowings. Net eligible loans of the Company pledged via a blanket lien to the FHLB for advances and letters of credit at March 31, 2026, were approximately $9.0 billion (collateral value of $5.7 billion) and investment securities and cash pledged were approximately $30.1 million (collateral value of $22.2 million). This allows the Company a total borrowing capacity at the FHLB of approximately $5.7 billion. After accounting for the secured collateral required totaling $17.8 million, the Company had unused net credit available with the FHLB in the amount of approximately $5.7 billion at March 31, 2026. The Company also has a total borrowing capacity at the FRB of $11.4 billion at March 31, 2026 secured by a blanket lien on $15.0 billion (collateral value of $11.4 billion) in net eligible loans of the Company. The Company had no outstanding borrowings with the FRB at March 31, 2026 or December 31, 2025.
Note 21 — Stock Repurchase Program
On January 21, 2026, the Board of Directors of the Company approved a stock repurchase plan for the repurchase of up to 5,560,000 shares of the Company’s common stock (the “2026 Repurchase Plan”). The 2026 Repurchase Plan replaces the Company’s 2025 Repurchase Plan, under which 560,000 shares remained available for repurchase. The 2025 Repurchase Plan was cancelled in connection with the Board’s approval of the 2026 Repurchase Plan. During the first quarter of 2026, the Company repurchased a total of 1,500,000 shares at a weighted average price of $100.87 per share (including commission paid) pursuant to the 2026 Stock Repurchase Plan. Based on the shares repurchased through the 2026 Repurchase Plan in the first quarter of 2026, the Company accrued an estimated excise tax of approximately $1.8 million during the quarter to be paid in 2027. This excise tax of 1% on the fair market value of corporate stock repurchased was enacted under the Inflation Reduction Act of 2022 for stock repurchases and is recorded against Surplus in shareholders’ equity when accrued. During the first quarter of 2025, the Company did not repurchase any shares pursuant to the 2025 Repurchase Plan.
The Company repurchased 89,446 and 109,712 shares at a cost of $9.1 million and $11.2 million, respectively, during the three months ended March 31, 2026 and 2025 under other arrangements whereby directors or officers surrender shares to the Company to cover the option cost for stock option exercises or tax liabilities resulting from the vesting of restricted stock awards or restricted stock units.
Note 22 — Segment Reporting
The Company, through the Bank, provides a broad range of financial services to individuals and companies primarily in South Carolina, North Carolina, Florida, Alabama, Georgia, Virginia, Texas and Colorado. These services include, but not limited to, demand, time and savings deposits; lending and credit card servicing; ATM processing; mortgage banking services; correspondent banking services and wealth management and trust services. The Company’s operations are managed and financial performance is evaluated on an organization-wide basis. Accordingly, the Company’s banking and finance operations are not considered by management to constitute more than one reportable operating segment. This single segment is the General Banking Unit.
The Company’s chief operating decision maker (“CODM”) is the Executive Committee. The CODM generally meets monthly and membership includes the senior executive management team including the Chief Executive Officer, Chief Strategy Officer, President, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer, among other executives.
The CODM assesses performance of the General Banking Unit using a variety of figures, metrics and key performance indicators. However, the CODM primarily utilizes net income and Net Interest Margin (“NIM”) to make business decisions. The CODM monitors these profitability measures at each meeting, and is regularly featured in various investor presentations, earnings releases, and other internal management reports. These performance and profitability measures influence business decisions and allocation of resources within the General Banking Unit.
The table below provides net income and NIM information about the General Banking Unit. The most significant expenses to the General Banking Unit are deposit and other borrowing interest expense as well as employee compensation.
Net Income (GAAP)
Interest expense
Net interest income (a)
Securities (losses) gain, net
Other operating noninterest income
85,620
Employee salaries
142,471
135,728
Employee commissions
16,112
11,276
Employee incentives
29,657
28,766
Other salaries and benefits
37,569
36,965
Deferred loan costs
(20,156)
(16,924)
Business development and staff related
11,362
6,510
Merger and branch consolidation related expense
Other operating expense
33,703
31,846
Income before income tax provision
Income tax provision
Net income (GAAP)
Net Interest Margin, Non-Tax Equivalent ("Non-TE") (GAAP)
Average interest earning assets (b)
60,201,176
57,497,453
Net interest margin, non-TE ((a)/(b)) (GAAP)
3.78%
3.84%
Note 23 — Subsequent Events
Stock Repurchases
Subsequent to March 31, 2026, the Company repurchased 399,019 shares of the Company’s common stock pursuant to the 2026 Repurchase Plan at a weighted average price of $97.71 per share. As of April 30, 2026, the Company may repurchase up to an additional 3,660,981 shares of common stock under the 2026 Repurchase Plan.
Second Quarter 2026 Quarterly Cash Dividend Declaration
On April 23, 2026, the Company announced the declaration of a quarterly cash dividend on its common stock at $0.60 per share. The dividend is payable on May 15, 2026 to shareholders of record as of May 8, 2026.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) relates to the financial statements contained in this Quarterly Report beginning on page 3. For further information, refer to the MD&A appearing in the Annual Report on Form 10-K for the year ended December 31, 2025. Results for the three months ended March 31, 2026, are not necessarily indicative of the results for the year ending December 31, 2026 or any future period.
Unless otherwise mentioned or unless the context requires otherwise, references to “SouthState,” the “Company,” “we,” “us,” “our” or similar references mean SouthState Bank Corporation and its consolidated subsidiaries. References to the “Bank” means SouthState Bank Corporation’s wholly owned subsidiary, SouthState Bank, National Association.
Overview
SouthState Bank Corporation is a financial holding company headquartered in Winter Haven, Florida. We provide a wide range of banking services and products to our customers through our Bank. The Bank operates SouthState Securities Corp. (“SouthState Securities”), a full-service registered broker dealer headquartered in Memphis, Tennessee. The services offered by SouthState Securities are complementary to the Bank’s correspondent banking and capital markets businesses and provide additional opportunities to the Bank’s client base. The Bank also operates SouthState Private Capital Management LLC (“SouthState PCM”), a wholly-owned registered investment advisor, which offers support to the Bank’s wealth management line of business. The Bank, through its Corporate Billing Division, provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers nationwide. The Bank operates SSB First Street Corporation, an investment subsidiary headquartered in Wilmington, Delaware, to hold tax-exempt municipal investment securities as part of the Bank’s investment portfolio. The holding company also owns SSB Insurance Corp., a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code.
At March 31, 2026, we had $68.0 billion in assets and 6,390 full-time equivalent employees. Through our Bank branches, ATMs and online banking platforms, we provide our customers with a wide range of financial products and services, through an eight (8) state footprint in Florida, South Carolina, Texas, Georgia, Colorado, North Carolina, Alabama, and Virginia. These financial products and services include deposit accounts such as checking accounts, savings and time deposits of various types, safe deposit boxes, bank money orders, wire transfer and ACH services, brokerage services and alternative investment products such as annuities and mutual funds, trust and asset management services, loans of all types, including business loans, agriculture loans, real estate-secured (mortgage) loans, personal use loans, home improvement loans, automobile loans, manufactured housing loans, boat loans, credit cards, letters of credit, home equity lines of credit, treasury management services, and merchant services.
We also operate a correspondent banking and capital markets division within our national bank subsidiary, of which the majority of its bond salesmen, traders and operational personnel are housed in facilities located in Atlanta, Georgia, Memphis, Tennessee, Walnut Creek, California, and Birmingham, Alabama. This division’s primary revenue generating activities are related to its capital markets division, which includes commissions earned on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities; and its correspondent banking division, which includes spread income earned on correspondent bank deposits (i.e., federal funds purchased) and correspondent bank checking account deposits and fees from safe-keeping activities, bond accounting services for correspondents, asset/liability consulting related activities, international wires, and other clearing and corporate checking account services.
We have pursued, and continue to pursue, a growth strategy that focuses on organic growth, supplemented by acquisitions of select financial institutions, or branches in certain market areas.
The following discussion describes our results of operations for the quarter ended March 31, 2026, compared to the quarter ended March 31, 2025, and also analyzes our financial condition as of March 31, 2026, as compared to December 31, 2025. Like most financial institutions, we derive most of our income from interest we receive on our loans and investments. Our primary source of funds for making these loans and investments is our deposits, on which we may pay interest. Consequently, one of the key measures of our success is the amount of our net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on our interest-bearing liabilities, such as deposits. Another key measure is the spread between the yield we earn on these interest-earning assets and the rate we pay on our interest-bearing liabilities.
Of course, there are risks inherent in all loans, as such, we maintain an allowance for credit losses, otherwise referred to herein as ACL, to absorb probable losses on existing loans that may become uncollectible. We establish and maintain this allowance by charging a provision for credit losses against our operating earnings. In the following discussion, we have included a detailed discussion of this process.
In addition to earning interest on our loans and investments, we earn income through fees and other services we charge to our customers. We incur costs in addition to interest expense on deposits and other borrowings, the largest of which is salaries and employee benefits. We describe the various components of this noninterest income and noninterest expense in the following discussion.
The following sections also identify significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements. We encourage you to read this discussion and analysis in conjunction with the financial statements and the related notes and the other statistical information also included in this report.
Recent Events
Capital Management
On January 11, 2026, the Board of Directors of the Company approved the 2026 Repurchase Plan authorizing the Company to repurchase up to 5,560,000 shares of the Company’s common stock. This 2026 Repurchase Plan authorization replaces the Company’s pre-existing authorization approved in January 2025, under which 560,000 shares remained available for repurchase, and which was cancelled in connection with the Board’s approval of the 2026 Repurchase Plan. See accompanying Note 21 — Stock Repurchase Program to our consolidated financial statements.
Governmental and Regulatory Environment
We continue to assess regulatory and other changes being made by the Trump Administration and its impact on our business. This includes the impact of the Iran conflict, immigration reform, tariff changes and changes in regulation and supervision, including the proposal, modification, rescission, or withdrawal of regulation or guidance, or changes in supervisory approaches and enforcement of rules and guidance applicable to us, including those described below.
On March 19, 2026, the Federal Reserve, OCC and FDIC jointly issued two joint notices of proposed rulemaking to modernize the U.S. regulatory capital framework. The proposals include a new expanded risk-based approach to calculating risk-weighted assets, which applies to the largest and most internationally active banks, and revisions to the existing standardized approach to calculating risk-based assets, which applies to Category III and IV institutions and smaller banking organizations, such as the Bank (the “Standardized Approach Proposal”). The Standardized Approach Proposal would improve the calibration and risk sensitivity of risk weights. The timing and content of any final rules, and the potential effects of any final rules on the Bank, remain uncertain.
Critical Accounting Policies
Our consolidated financial statements are prepared based on the application of accounting policies in accordance with GAAP and follow general practices within the banking industry. Our financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues and expenses. Differences in the application of these policies could result in material changes in our consolidated financial position and consolidated results of operations and related disclosures. Understanding our accounting policies is fundamental to understanding our consolidated financial position and consolidated results of operations. Accordingly, our significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in Note 2 — Summary of Significant Accounting Policies and Note 3 — Recent Accounting and Regulatory Pronouncements of our consolidated financial statements in this Quarterly Report on Form 10-Q and in Note 1 — Summary of Significant Accounting Policies of our Annual Report on Form 10-K for the year ended December 31, 2025.
The following is a summary of our allowance for credit losses (“ACL”) critical accounting policy, which is highly dependent on estimates, assumptions and judgments.
Allowance for Credit Losses (ACL)
The ACL reflects management’s estimate of the portion of the amortized cost of loans and unfunded commitments that it does not expect to collect. Management has a methodology determining its ACL for loans held for investment and certain off-balance-sheet credit exposures. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. The Company’s ACL recorded on the balance sheet reflects management’s best estimate within the range of expected credit losses. The Company recognizes in net income the amount needed to adjust the ACL for management’s current estimate of expected credit losses. See Note 2 — Summary of Significant Accounting Policies for further detailed descriptions of our estimation process and methodology related to the ACL. See also Note 6 — Allowance for Credit Losses and “Allowance for Credit Losses (ACL) on Loans and Certain Off-Balance-Sheet Credit Exposures” in this MD&A.
One of the most significant judgments influencing the ACL is the macroeconomic forecasts from the third-party service provider. Changes in the economic forecasts may significantly affect the estimated credit losses which may potentially lead to materially different quantitatively modeled allowance levels from one reporting period to the next. Given the dynamic relationship between macroeconomic variables, it is difficult to estimate the impact of a change in any one individual variable on the ACL. SouthState uses a third-party service provider to support the economic forecast assumptions under CECL forecast by providing various levels of economic scenarios. These scenarios are weighted in accordance with management assessment of scenarios as well as expectations of the general market and industry conditions. To illustrate the sensitivity of these scenarios, if a 100% probability weighting was applied to the adverse scenario rather than using the probability-weighted three scenario approach, this would result in an increase in the ACL by approximately $194 million. Conversely, if a 100% probability weighting was applied to the upside scenario, this would result in a decrease in the ACL by approximately $137 million. The adverse scenario includes assumptions including, but not limited to, rising unemployment consistent with a recession, high levels of inflation and weakened consumer and business spending, elevated interest rates, tightening credit, widening Federal deficit, and exacerbated geopolitical and trade tensions. Conversely, the upside scenario includes assumptions such as a stronger domestic economy, swift resolution of international conflicts and strengthening global economy, more than full employment, reduced political tensions, and other favorable assumptions. This sensitivity analysis and related impact on the ACL is a hypothetical analysis and is not intended to represent management’s judgments at March 31, 2026.
Results of Operations
We reported consolidated net income of $225.8 million, or diluted earnings per share (“EPS”) of $2.28, for the first quarter of 2026 as compared to consolidated net income of $89.1 million, or diluted EPS of $0.87, in the comparable period of 2025, a 153.5% increase in consolidated net income and a 162.1% increase in diluted EPS. The $136.7 million increase in consolidated net income was the net result of the following items:
Our quarterly efficiency ratio improved to 51.1% in the first quarter of 2026 compared to 61.0% in the first quarter of 2025. The improvement in the efficiency ratio compared to the first quarter of 2025 was the result of a 12.2% decrease in noninterest expense (excluding amortization of intangibles) and a 4.9% increase in the total tax-equivalent net interest income and noninterest income. The decrease in noninterest expense was mainly due to the merger related expenses related to the Independent acquisition completed in the first quarter of 2025. The increase in the total of tax-equivalent net interest income and noninterest income was mainly due to an increase in investment securities interest income of $18.1 million, a decrease in interest expense on deposits of $7.4 million and an increase in correspondent banking and capital markets income of $11.9 million.
Basic and diluted EPS were $2.29 and $2.28, respectively, for the first quarter of 2026, compared to $0.88 and $0.87, respectively, for the first quarter of 2025. The increase in basic and diluted EPS was due to a 153.5% increase in net income in the first quarter of 2026 compared to the same period in 2025 along with a decrease in average basic common shares of 2.8%. The increase in net income in the first quarter of 2026 was mainly attributable to acquisition related expenses resulting from the Independent acquisition during the first quarter of 2025. These expenses included the initial provision for credit losses on Non-PCD loan portfolio and unfunded commitments of $92.1 million and the $66.5 million in merger expenses. The decrease in average basic common shares was mainly due to the Company repurchasing 3.9 million common shares through the buyback plan in the open market over the last 12 months.
Selected Figures and Ratios
Return on average assets (annualized)
1.37
0.56
Return on average equity (annualized)
10.11
4.29
Return on average tangible equity (annualized)*
17.59
8.99
Dividend payout ratio
26.12
61.45
Equity to assets ratio
13.28
13.24
Average shareholders’ equity
9,057,229
8,418,112
Denotes a non-GAAP financial measure. The section titled “Reconciliation of GAAP to non-GAAP” below provides a table that reconciles GAAP measures to non-GAAP measures.
Net Interest Income and Margin
Non-Tax Equivalent (“TE”) net interest income increased $17.1 million, or 3.1%, to $561.6 million in the first quarter of 2026 compared to $544.5 million in the same period in 2025. Interest earning assets averaged $60.2 billion during the three months ended March 31, 2026 compared to $57.5 billion for the same period in 2025, an increase of $2.7 billion, or 4.7%. Interest bearing liabilities averaged $42.8 billion during the three months ended March 31, 2026 compared to $40.8 billion for the same period in 2025, an increase of $2.1 billion, or 5.1%. Despite a decline in net interest margin, net interest income increased year over year as growth in average interest‑earning assets more than offset the impact of lower asset yields.
Since the first quarter of 2025, the Federal Reserve reduced the target federal funds rate by a total of 75 basis points. These rate cuts lowered the target federal funds rate range to 3.50% to 3.75% as of March 31, 2026. Accordingly, interest rate conditions during the first quarter of 2026 were lower when compared to the first quarter of 2025, impacting both asset yields and funding costs. Some key highlights are outlined below:
The table below summarizes the analysis of changes in interest income and interest expense for the quarter ended March 31, 2026 and 2025 and net interest margin on a tax equivalent basis.
Balance
Earned/Paid
Yield/Rate
Interest-Earning Assets:
1,881,020
3.40
2,199,800
4.16
Investment securities (taxable) (1)
8,259,612
3.55
7,385,704
2.96
Investment securities (tax-exempt) (1)
961,804
3.04
940,071
3.24
223,084
3,732
6.78
174,833
3,678
8.53
Acquired loans, net
13,866,484
232,271
6.79
17,240,501
312,059
7.34
35,009,172
485,568
5.62
29,556,544
408,903
5.61
Total interest-earning assets
5.50
5.70
Noninterest-Earning Assets:
531,648
582,933
6,777,406
6,798,857
Allowance for credit losses
(582,699)
(595,817)
Total noninterest-earning assets
6,726,355
6,785,973
Total Assets
66,927,531
64,283,426
Interest-Bearing Liabilities:
Transaction and money market accounts
31,499,841
172,453
2.22
29,249,015
176,949
2.45
Savings deposits
2,822,510
1,642
0.24
2,904,961
1,944
0.27
Certificates and other time deposits
7,215,388
64,427
3.62
7,165,188
67,064
3.80
295,207
2,635
323,400
3,479
4.36
Securities sold with agreements to repurchase
319,873
1,561
1.98
298,305
1,430
1.94
696,597
7.28
752,408
6.74
59,728
4.40
Total interest-bearing liabilities
42,849,416
2.42
40,753,005
2.63
Noninterest-Bearing Liabilities:
Demand deposits
13,359,214
13,493,329
1,661,672
1,618,980
Total noninterest-bearing liabilities (“Non-IBL”)
15,020,886
15,112,309
Shareholders’ equity
Total Non-IBL and shareholders’ equity
24,078,115
23,530,421
Total Liabilities and Shareholders’ Equity
Net Interest Income and Margin (Non-Tax Equivalent)
3.78
3.84
Net Interest Margin (Tax Equivalent)
3.79
3.85
Total Deposit Cost (without debt and other borrowings)
1.76
1.89
Overall Cost of Funds (including demand deposits)
1.84
1.97
The interest earned on investment securities increased by $18.1 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This is a result of the Bank carrying a higher average balance in investment securities along with an increase in the yield on the investment portfolio in 2026 compared to the same period in 2025. The average balance of investment securities for the three months ended March 31, 2026 increased $895.6 million from the comparable period in 2025 due to the reinvestment of the securities acquired from the Independent acquisition along with the Company’s repositioning strategy of legacy investment securities in the first quarter of 2025. In the first quarter of 2026, the investment securities from these transactions were held for a full quarter while during the period of the transactions in 2025 the investment securities were only held for a partial quarter. The yield on the total investment securities increased 50 basis points during the three months ended March 31, 2026 compared to the same period in 2025. The Company saw an improvement in the yield of the investment portfolio as a result of the securities repositioning completed during the first quarter of 2025.
Interest earned on loans held for investment decreased $3.1 million to $717.8 million in the quarter ended March 31, 2026 compared to the same period in 2025. The decrease in interest income primarily reflects the continued runoff of acquired loans and related accretion income, while yields on the non‑acquired loan portfolio remained stable. Some key highlights for the quarter ended March 31, 2026 are outlined below:
Interest-Bearing Liabilities
The quarter-to-date average balance of interest-bearing liabilities increased $2.1 billion, or 5.1%, in the first quarter of 2026 compared to the same period in 2025. The cost of interest-bearing liabilities decreased by 21 basis points to 2.42% and the overall cost of funds, including demand deposits, decreased by 13 basis points to 1.84% in the first quarter of 2026 compared to the same period in 2025, reflecting lower market interest rates and deposit repricing during the period. Some key highlights for the quarter ended March 31, 2026 compared to the same period in 2025 include:
We continue to monitor and adjust rates paid on deposit products as part of our strategy to manage our net interest margin. Interest-bearing liabilities include interest-bearing transaction accounts, savings deposits, CDs, other time deposits, federal funds purchased, and other borrowings. Interest-bearing transaction accounts include NOW, HSA, Interest on Lawyers’ Trust Accounts (“IOLTA”), and Market Rate checking accounts.
Noninterest-Bearing Deposits
Noninterest-bearing deposits are transaction accounts that provide our Bank with “interest-free” sources of funds. Average noninterest-bearing deposits decreased $134.1 million, or 1.0%, to $13.4 billion in the first quarter of 2026 compared to $13.5 billion during the same period in 2025. The decrease in the average balance of noninterest bearing deposits primarily reflects a continued shift in customer funds to interest‑bearing transactional and money market deposit accounts.
Noninterest Income
Noninterest income provides us with additional revenues that are significant sources of income. For the three months ended March 31, 2026 and 2025, noninterest income comprised 15.1% and 13.7%, respectively, of total net interest income and noninterest income.
Service charges on deposit accounts
25,740
24,952
Debit, prepaid, ATM and merchant card related income
12,959
10,981
Bank owned life insurance income
9,494
10,199
3,491
4,042
Noninterest income increased by $14.0 million, or 16.3%, during the first quarter of 2026 compared to the same period in 2025. This quarterly change in total noninterest income resulted from the following:
56
Noninterest Expense
Business development and staff related expense
22,746
24,644
Noninterest expense decreased by $49.3 million, or 12.1%, in the first quarter of 2026 compared to the same period in 2025. The quarterly decrease in total noninterest expense primarily resulted from the following:
Income Tax Expense
Our effective tax rate was 22.50% for the three months ended March 31, 2026 compared to 26.53% for the three months ended March 31, 2025. The decrease in the effective rate for the quarter, when compared to the same period in the prior year, is driven primarily by higher non-deductible executive compensation related to the acquisition of Independent, as well as non-deductible merger expense, and one-time expense of $5.6 million related to the remeasurement of the Company’s deferred tax balances resulting from the acquisition of Independent and new blended income tax rate recognized in the first quarter of 2025 compared to 2026. This was partially offset by an increase in pre-tax book income in the first quarter of 2026 compared to the same period in 2025.
Segment Reporting
As discussed in Note 22 —Segment Reporting, the Company’s operations are managed and financial performance is evaluated on an organization-wide basis, and the Company’s banking and finance operations are considered by management to constitute one reportable operating segment, the General Banking Unit.
The Company’s Chief Operating Decision Maker (“CODM”), the Executive Committee, consists of the Company’s senior executive management team, including the Chief Executive Officer, Chief Strategy Officer, President, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer, Chief Credit Officer and other executives. The CODM generally meets monthly to assess performance of the General Banking Unit using a variety of figures, metrics and key performance indicators. In addition to net income and non-Tax Equivalent (“TE”) Net Interest Margin (“NIM”), the CODM considers Pre-Provision Net Revenue (“PPNR”), PPNR Per Share and TE NIM to make business decisions. The CODM monitors these profitability measures at each meeting, and is regularly featured in various investor presentations, earnings releases, and other internal management reports. These performance and profitability measures influence business decisions and allocation of resources within the General Banking Unit.
58
The table below provides PPNR and TE NIM information of the General Banking Unit.
Pre-Provision Net Revenue, Pre-Provision Net Revenue Per Share and Tax Equivalent Net Interest Margin
(Dollars and shares in thousands except for per share amounts)
PPNR (Non-GAAP)
Net Income (GAAP) (a)
Plus:
PPNR (Non-GAAP) (b)
302,179
221,809
PPNR, Adjusted (Non-GAAP)
Less:
Gain on sale leaseback, net of transaction costs
(229,279)
PPNR, adjusted (Non-GAAP) (d)
289,347
PPNR per Share (Non-GAAP)
Diluted weighted-average common share outstanding (c)
Earnings per common share - Diluted ((a)/(c)) (GAAP)
PPNR per share ((b)/(c)) (Non-GAAP)
3.05
2.18
Adjusted PPNR per Share (Non-GAAP)
Adjusted PPNR per share ((d)/(c)) (Non-GAAP)
2.84
Net Interest Margin, Tax Equivalent ("TE") (Non-GAAP)
Average interest earning assets (e)
Net interest income (f)
Net interest margin, non-TE ((f)*/(e)) (GAAP)
TE adjustment (g)
760
784
Net interest margin, TE (((f)+(g))*/(e)) (Non-GAAP)
3.79%
3.85%
* Annualized
59
Analysis of Financial Condition
Summary
Our total assets increased by approximately $781.8 million, or 1.2%, from December 31, 2025 to approximately $68.0 billion at March 31, 2026. Within total assets, cash and cash equivalents decreased by $305.4 million, or 9.6%, loans increased by $898.3 million or 1.8% and investment securities increased by $193.3 million, or 2.2% during the period. Within total liabilities, deposits grew $729.9 million, or 1.3%. Total shareholder’s equity decreased by $28.2 million, or 0.3%. The decrease in cash and cash equivalents was due to the funding of investment securities and loan growth in the first quarter of 2026. All categories of deposits increased during the first quarter of 2026 except for time deposits. The increase in loans was through organic growth. Our loan to deposit ratio was 89% and 88% at March 31, 2026 and December 31, 2025, respectively, while our percentage of non-interest-bearing deposit accounts to total deposits was 24% at both March 31, 2026 and December 31, 2025.
We use investment securities, our second largest category of earning assets, to generate interest income, provide liquidity, fund loan demand or deposit liquidation, and to pledge as collateral for public funds deposits, repurchase agreements, derivative exposures and to augment borrowing capacity at the Federal Reserve Bank of Atlanta, and the Federal Home Loan Bank of Atlanta. At March 31, 2026, investment securities totaled $8.9 billion, compared to $8.7 billion at December 31, 2025, an increase of $193.3 million, or 2.2%. During the three months ended March 31, 2026, we purchased $2.0 billion in available for sale investment securities mostly from reinvesting funds provided by the paydowns, maturities and calls of investment securities. There were no sales of available for sale or held to maturity securities during the quarter. The Company had maturities, redemptions, calls, and paydowns of investment securities totaling $1.7 billion and net amortization of premiums of $2.6 million. At March 31, 2026, approximately 73.3% of the investment portfolio was classified as available for sale, approximately 22.5% was classified as held to maturity and 4.2% was classified as other investments.
At March 31, 2026, the unrealized net loss of the available for sale securities portfolio was $438.8 million, or 6.3%, below its amortized cost basis, compared to an unrealized net loss of $382.8 million, or 5.7%, at December 31, 2025. At March 31, 2026, the unrealized net loss of the held to maturity securities portfolio was $323.1 million, or 16.1%, below its amortized cost basis, compared to an unrealized net loss of $315.2 million, or 15.4%, at December 31, 2025. The increase in the unrealized net loss in the available for sale investment portfolio of $56.0 and the held to maturity portfolio of $7.9 million was due to recent changes in market interest rates and lower expectations of future Federal Reserve Bank rate reductions.
The following is the combined amortized cost and fair value of investment securities available for sale and held for maturity, aggregated by credit quality indicator:
Net Loss
AAA – A
Not Rated
agencies or sponsored enterprises *
3,115,382
2,791,676
(323,706)
90
3,115,292
2,520,155
2,418,108
(102,047)
1,380,029
1,244,702
(135,327)
94,206
1,285,823
(150,430)
1,184,295
7,330
613,327
581,079
(32,248)
8,976,432
(761,946)
2,024,832
6,951,600
* Agency mortgage-backed securities (“MBS”), agency collateralized mortgage-obligations (“CMO”) and agency commercial mortgage-backed securities (“CMBS”) are guaranteed by the issuing government-sponsored enterprise (“GSE”) as to the timely payments of principal and interest. Except for Government National Mortgage Association securities, which have the full faith and credit backing of the United States Government, the GSE alone is responsible for making payments on this guaranty. While the rating agencies have not rated any of the MBS, CMO and CMBS issued, senior debt securities issued by GSEs are rated consistently as “Triple-A.” Most market participants consider agency MBS, CMOs and CMBSs as carrying an implied Aaa rating (S&P rating of AA+) because of the guarantees of timely payments and selection criteria of mortgages backing the securities. We do not own any private label mortgage-backed securities. The balances presented under the ratings above reflect the amortized cost of the investment securities.
60
At March 31, 2026, we had 1,135 investment securities, including both available for sale and held to maturity in an unrealized loss position, which totaled $779.0 million. At December 31, 2025, we had 1,073 investment securities, including both available for sale and held to maturity, in an unrealized loss position, which totaled $737.2 million. The total number of investment securities with an unrealized loss position increased by 62, while the total dollar amount of the unrealized loss increased by$41.8 million The increase in the number of securities in a loss position and level of unrealized losses during the quarter was mainly due to recent changes in market interest rates and lower expectations of future Federal Reserve Bank rate reductions.
All investment securities in an unrealized loss position as of March 31, 2026, continue to perform as scheduled. We have evaluated the securities and have determined that the decline in fair value, relative to its amortized cost, is not due to credit-related factors. In addition, we have the ability and intent to hold these securities within the portfolio until maturity or until the value recovers, and we believe that it is more likely than not that we will not be required to sell these securities prior to recovery. We continue to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of our securities may be sold or would require a charge to earnings as a provision for credit losses in such periods. Any charges as a provision for credit losses related to investment securities could impact cash flow, tangible capital or liquidity. See Note 2 — Summary of Significant Accounting Policies and Note 4 — Securities for further discussion on the application of ASU 2016-13 on the investment securities portfolio.
As securities held for investment are purchased, they are designated as held to maturity or available for sale based upon our intent, which incorporates liquidity needs, interest rate expectations, asset/liability management strategies, and capital requirements. Although securities classified as available for sale may be sold from time to time to meet liquidity or other needs, it is not our normal practice to trade this segment of the investment securities portfolio. From time to time, the Bank may execute transactions to reposition the investment portfolio, as we did during the quarter ended March 31, 2025. Such activity has not expanded the broad asset classes used by the Bank. While management generally holds these assets on a long-term basis or until maturity, any short-term investments or securities available for sale could be converted at an earlier point, depending partly on changes in interest rates and alternative investment opportunities.
The following table presents a summary of our investment portfolio by contractual maturity and related yield as of March 31, 2026:
Due In
Due After
1 Year or Less
1 Thru 5 Years
5 Thru 10 Years
10 Years
Yield
Held to Maturity (amortized cost)
32,928
99,986
1.68
1.73
58,886
2.08
120,205
1.26
944,761
1.91
1.85
2.53
89,149
1.05
121,563
1.62
121,907
1.92
1.58
1.20
Total held to maturity
1.54
1.51
2.04
Available for Sale (fair value)
119
2.46
6,030
2.17
123,821
3.30
1,719,128
3.56
350
2.54
1,001
83,265
4.85
2,019,939
4.58
4.60
2,353
4.28
346,583
3.99
451,266
3.35
170,109
3.23
9,729
3.41
26,959
3.12
225,551
2.74
778,956
3.34
3.21
6,541
2.50
9,415
3.94
188,035
4.24
339,494
3.25
3.61
9,998
6.73
5.35
Total available for sale
3.18
3.96
3.50
3.86
Total other investments
2.37
580,949
1,425,398
3.02
6,883,082
3.39
Percent of total
Cumulative percent of total
100
Approximately 86.5% (based on amortized cost) of the investment portfolio (excluding other investment securities) is comprised of U.S. Treasury securities, U.S. Government agency securities, and U.S. Government Agency Mortgage-backed securities. These securities may be pledged to the Federal Home Loan Bank of Atlanta or the Federal Reserve Bank of Atlanta Discount Window. Approximately 13.3% (based on amortized cost) of the investment portfolio (excluding other investment securities) is comprised of municipal securities. A portion of the municipal bond portfolio may be pledged to the Federal Home Loan Bank of Atlanta subject to their credit approval. Approximately 99% of the municipal bond portfolio has ratings in the Single A, Double A or Triple A category.
As of March 31, 2026, the portfolio had an effective duration of 4.65 years. We continue to monitor duration risk and seek to align actual duration with the target range.
The following table presents a summary of our investment portfolio duration for the periods presented:
(Dollars in thousands, duration in years)
Duration
5.34
6.06
6.60
6.63
4.89
5.05
5.75
5.99
5.91
5.97
4.33
4.43
2.66
4.18
4.55
8.27
7.79
2.24
2.19
0.42
0.51
4.22
Other Investments
Other investment securities include primarily our investments in FHLB and FRB stock with no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of March 31, 2026, we determined that there was no impairment on our other investment securities. As of March 31, 2026, other investment securities represented approximately $370.9 million, or 0.55% of total assets, and primarily consists of FHLB and FRB stock which totals to approximately $252.5 million, or 0.37% of total assets. There were no gains or losses on the sales of these securities for three months ended March 31, 2026 and 2025, respectively.
We have a trading portfolio associated with our Correspondent Banking Division and its subsidiary SouthState Securities. This portfolio is carried at fair value and realized and unrealized gains and losses are included in trading securities revenue, a component of Correspondent Banking and Capital Markets Income in our Consolidated Statements of Income. Securities purchased for this portfolio have primarily been municipal bonds, treasuries and mortgage-backed agency securities, which are held for short periods of time and totaled $117.6 million and $110.2 million at March 31, 2026, and December 31, 2025.
Loans Held for Sale
The balance of loans held for sale decreased $17.4 million from December 31, 2025 to $327.9 million at March 31, 2026. Loans held for sale at March 31, 2026, and December 31, 2025 consisted of mortgage and SBA loans held for sale.
62
The Company purchases the guaranteed portions of SBA loans from third-party originators with the intent to aggregate the guaranteed portion of the SBA loans into pools with similar characteristics to create a security representing an interest in those pools through the SBA’s fiscal transfer agent. SBA loans held for sale totaled $279.8 million at March 31, 2026 compared to $283.9 million at December 31, 2025. See Note 19 — SBA Loans Held for Sale for more information.
Mortgage loans held for sale totaled $48.1 million at March 31, 2026, a decrease from $61.4 million at December 31, 2025. Total mortgage production was $661 million in the first quarter of 2026. This compares to $741 million in the fourth quarter of 2025 and $459 million in the first quarter of 2025. Mortgage production has remained relatively stable in the first quarter of 2026 as mortgage rates declined slightly through most of the quarter. However, mortgage rates increased the last half of March 2026 in reaction to the economic effects of the conflict in the Middle East. The percentage of mortgage production sold into the secondary market remained flat at 28% for the first quarter of 2026 compared to the fourth quarter of 2025 and declined from 56% in the first quarter of 2025. The allocation of mortgage production between portfolio and secondary market depends on the Company’s liquidity, market spreads and rate changes during each period and will fluctuate over time.
The following table presents a summary of the loan portfolio by category (excludes loans held for sale):
LOAN PORTFOLIO
% of
Acquired loans:
Acquired - non-purchased credit deteriorated loans:
523,434
1.1
580,657
1.2
4,633,005
9.4
4,766,211
9.9
1,918,673
3.9
1,982,641
4.1
1,129,938
2.3
1,171,043
2.4
196,723
0.4
209,048
0.5
1,619,908
3.3
1,789,588
3.7
636,769
1.3
672,593
1.4
Consumer non real estate
55,935
0.1
60,528
104
Total acquired - non-purchased credit deteriorated loans
21.8
23.1
Acquired - purchased credit deteriorated loans (PCD):
78,204
0.2
106,815
1,884,766
3.8
1,960,076
4.0
469,912
0.9
486,118
1.0
179,995
186,905
18,119
18,797
121,297
148,089
0.3
45,756
49,090
20,311
21,609
Total acquired - purchased credit deteriorated loans (PCD)
5.6
6.1
Total acquired loans
13,532,849
27.4
14,209,913
29.2
Non-acquired loans:
1,991,270
1,860,888
10,579,967
21.4
9,925,473
20.4
5,282,950
5,108,232
10.5
7,407,899
15.0
7,260,486
14.9
1,641,223
1,603,944
7,644,721
15.4
7,243,731
518,675
510,470
847,167
1.7
873,129
1.8
50,062
2,261
Total non-acquired loans
72.6
70.8
Total loans (net of unearned income)
63
Total loans, net of deferred loan costs and fees (excluding mortgage loans held for sale), increased by $898.3 million to $49.5 billion at March 31, 2026. Our non-acquired loan portfolio increased by $1.6 billion, or 18.6% annualized, driven by organic growth and the migration of loans from acquired loans as they renew. Commercial non-owner-occupied loans, commercial and industrial loans, commercial owner-occupied real estate loans, consumer owner-occupied loans, construction and land development loans, home equity loans and other income producing loans led the way with $654.5 million, $401.0 million, $174.7 million, $147.4 million, $130.4 million, $37.3 million and $8.2 million in year-to-date loan growth, respectively, or 26.7%, 22.5%, 13.9%, 8.2%, 28.4%, 9.4% and 6.5% annualized growth, respectively. The acquired loan portfolio decreased by $677.1 million. This decline in acquired loans was due to paydowns and payoffs in both the PCD and Non-PCD loan categories along with renewals of acquired loans that were moved to our non-acquired loan portfolio. The main categories that declined were commercial non-owner-occupied loans, commercial and industrial loans, construction and land development loans, commercial owner-occupied real estate loans, consumer owner-occupied loans and other income producing property loans which decreased by $208.5 million, $196.5 million, $85.8 million, $80.2 million, $48.0 million and $39.2 million, respectively, during the quarter. Acquired loans as a percentage of total loans decreased to 27.4% and non-acquired loans as a percentage of the overall portfolio increased to 72.6% at March 31, 2026. This compares to acquired loans as a percentage of total loans of 29.2% and non-acquired loans as a percentage of total loans of 70.8% at December 31, 2025.
Total commercial non-owner-occupied loans of $17.1 billion, approximately 34.5% of the total loans held for investment, was the largest category of the loan portfolio as of March 31, 2026. As of March 31, 2026, approximately 94% of the commercial non-owner-occupied portfolio was located within the Company’s footprint. Of the $17.1 billion, approximately $1.8 billion, or 4% of the total loans, represented our office segment. Approximately 95% of the office segment was located in the Company’s footprint.
The following table presents the top eight loan segments of the commercial non-owner-occupied loan category (excluding loans held for sale). The loan segments in the table below are determined by the call code, used for the Bank’s regulatory reporting requirements issued by the FDIC for the FFIEC 041, also referred to as the Call Report.
Commercial Non-Owner-Occupied Loans
Net Book
Weighted-Average
% of Substandard &
Balance (1)
Loan Size
Loan-to-Value (3)
Non-Accrual
Special Mention
Loan Type:
4,707,339
2,352
0.10
1.57
2,677,091
3,972
1.12
26.78
10.92
Warehouse/Industrial
2,627,143
2,271
0.03
6.35
1,795,492
1,619
0.72
8.54
2.83
1,423,708
5,476
0.59
2.13
1,101,286
1,963
5.04
1.07
Medical
958,347
2,120
2.39
Self Storage
702,885
3,480
9.20
4.86
Allowance for Credit Losses (“ACL”) on Loans and Certain Off-Balance-Sheet Credit Exposures
The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. The Company records loans charged off against the ACL and subsequent recoveries, if any, increase the ACL when they are recognized. Please see Note 1 — Summary of Significant Accounting Policies, under the “ACL – Loans” section, of our Annual Report on Form 10-K for the year ended December 31, 2025 and Note 2 — Significant Accounting Policies in this Quarterly Report on Form 10-Q for further detailed descriptions of our estimation process and methodology related to the ACL on loans.
Management considers forward-looking information in estimating expected credit losses. The Company subscribes to a third-party service which provides a quarterly macroeconomic baseline outlook and alternative scenarios for the United States economy. The baseline, along with the evaluation of alternative scenarios, is used by management to determine the best estimate within the range of expected credit losses. Management evaluates the appropriateness of the reasonable and supportable forecast scenarios and takes into consideration the scenarios in relation to actual economic and other data, such as gross domestic product growth, monetary and fiscal policy, inflation, supply chain issues and global events like the Russian/Ukraine conflict, unrest in middle east, and changes in global trade policy, as well as the volatility and magnitude of changes within those scenarios quarter over quarter, and consideration of conditions within the Bank’s operating environment and geographic area. Additional forecast scenarios may be weighted along with the baseline forecast to arrive at the final reserve estimate. While periods of relative economic stability should generally lead to stability in forecast scenarios and weightings to estimate credit losses, periods of instability can likewise require management to adjust the selection of scenarios and weightings, in accordance with the accounting standards. For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long term mean of historical factors within four quarters using a straight-line approach. The Company generally uses an eight-quarter forecast and a four-quarter reversion period.
There are several headwinds that continue to weigh on the economy, though the U.S. has thus far avoided a recession. Management continues to use a blended forecast scenario of the baseline, upside, and more severe scenario, depending on the circumstances and economic outlook. For the quarter ending March 31, 2026, management selected a baseline weighting of 40%, an upside scenario weighting of 20% and a more severe scenario weighting of 40%. Scenario weightings are generally expected to remain stable but are reviewed on a quarterly basis. The more severe scenario weighting increased by 5%, and the upside scenario decreased by 5%, to reflect events occurring subsequent to and not captured in the otherwise improved economic forecast, around the conflict in Iran and the market reaction to military escalation. Without a shift, the forecast changes inferred a level of economic improvement that does not align with Management’s outlook, which includes continued recognition of downside risks and elevated uncertainty in the economic forecast from high interest rates, inflation, lack of clarity on trade impacts from policy and geopolitical conflicts, and tightening credit conditions. Employment resilience and improvement in the commercial real estate markets kept expected losses largely stable. The Company recorded a total provision for credit losses of $10.8 million for the first quarter of 2026.
The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include undrawn portions of revolving lines of credit and standby letters of credit. Please see MD&A, under the “Financial Condition”, “Allowance for Credit Losses (“ACL”)” section, of our Annual Report on Form 10-K for the year ended December 31, 2025 and Note 2 — Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q for further detailed descriptions of our estimation process and methodology related to the ACL on certain off-balance-sheet credit exposures.
As of March 31, 2026, the balance of the ACL was $585.9 million or 1.18% of total loans. The ACL increased $0.7 million from the balance of $585.2 million recorded at December 31, 2025. The net increase during the first quarter of 2026 included an $11.2 million provision for credit loss and $10.5 million in net charge-offs. During the three months ended March 31, 2026, the Company recorded a provision for credit losses based on loan growth and current forecasts applied to our modeling to adequately capture growing economic recessionary risks.
At March 31, 2026, the Company had a reserve for unfunded commitments of $69.2 million, which was recorded as a liability on the Consolidated Balance Sheet, compared to $69.6 million at December 31, 2025. The decrease of $0.4 million was recorded in Provision for Credit Losses on the Consolidated Statements of Income. The Company did not have an allowance for credit losses or record a provision for credit losses on investment securities or other financial assets during the first three months of 2026.
The ACL provides 1.94 times coverage of nonperforming loans at March 31, 2026. Net charge-offs to the total average loans during the three months ended March 31, 2026 were 0.09%. We continued to experience solid and stable asset quality numbers and ratios as of March 31, 2026.
The following table provides the allocation of expected credit losses by loan segment and each loan segment as a percentage of the total loan portfolio as of March 31, 2026:
%*
Residential Mortgage Senior
19.6
Residential Mortgage Junior
Revolving Mortgage
Residential Construction
Other Construction and Development
1.9
5.4
Owner-Occupied Commercial Real Estate
15.5
Non-Owner-Occupied Commercial Real Estate
29.0
Commercial and Industrial
17.6
* Loan balance in each category expressed as a percentage of total loans.
The following table presents a summary of net charge-off ratios (annualized) by loan segment, for the quarters ended March 31, 2026 and 2025:
Net Recovery (Charge-Off)
Average Balance
Net Recovery (Charge-Off) Ratio
9,622,267
(0.06)
9,719,220
(0.02)
46,447
0.81
41,030
0.11
1,919,650
0.05
1,946,671
594,255
647,257
1,909,344
2,640,423
0.02
936,549
(0.54)
1,223,549
(1.09)
2,735,779
0.00
2,361,507
923,945
917,205
7,576,814
(0.00)
7,623,351
(0.08)
14,063,588
12,118,854
(0.45)
8,547,018
(0.38)
7,557,978
(1.37)
48,875,656
(0.09)
46,797,045
The following table presents a summary of the changes in the ACL, for the three months ended March 31, 2026, and 2025:
Non-PCD
PCD
Balance at beginning of period
516,041
69,156
444,959
20,321
Allowance adjustment - FMV for Independent acquisition
Independent Day 1 PCD loan net charge-offs
Loans charged off
(13,595)
(839)
(7,024)
(398)
3,033
888
1,636
1,346
(10,562)
(5,388)
(38,481)
Provision (recovery) for credit losses
15,140
(3,942)
7,073
(3,408)
Balance at end of period
520,619
65,263
526,615
97,075
Total loans, net of unearned income:
At period end
46,766,732
Net charge-offs as a percentage of average loans (annualized)
0.09
0.38
Allowance for credit losses as a percentage of period end loans
1.18
1.33
Allowance for credit losses as a percentage of period end non-performing loans (“NPLs”)
193.96
229.15
Nonperforming Assets (“NPAs”)
The following table summarizes our nonperforming assets for the past five quarters:
September 30,
June 30,
Non-acquired:
Nonaccrual loans
159,011
157,662
141,409
132,313
144,079
Accruing loans past due 90 days or more
6,915
2,997
4,352
3,273
Modified loans to a borrower experiencing financial difficulty - nonaccrual
18,147
4,313
5,342
9,597
7,594
Total non-acquired nonperforming loans
184,073
164,972
151,103
145,597
154,946
Other real estate owned (“OREO”) (1) (6)
7,971
4,961
11,404
16,842
1,570
Other nonperforming assets (2)
368
566
446
Total nonperforming assets excluding acquired assets
192,412
170,245
163,073
162,885
157,236
Acquired:
Nonaccrual loans (3)
106,922
129,402
143,839
145,423
110,474
1,986
891
707
537
9,080
5,856
6,043
6,217
Total acquired nonperforming loans
117,988
137,124
150,586
152,173
117,228
Acquired OREO (1) (7)
18,090
3,810
7,015
8,728
5,899
Other acquired nonperforming assets (2)
132
Total acquired nonperforming assets
136,143
141,025
157,733
160,956
123,204
Total nonperforming assets
328,555
311,270
320,806
323,841
280,440
Excluding Acquired Assets
Total nonperforming assets as a percentage of total loans and repossessed assets (4)
0.53
0.49
0.50
0.52
Total nonperforming assets as a percentage of total assets (5)
0.28
0.25
Nonperforming loans as a percentage of period end loans (4)
0.48
0.46
Including Acquired Assets
0.66
0.64
0.67
0.68
0.60
0.43
0.61
0.62
0.63
0.58
Total nonperforming assets were $328.6 million, or 0.66% of total loans and repossessed assets, at March 31, 2026, an increase of $17.3 million, or 5.6%, from December 31, 2025. Total nonperforming loans were $302.1 million at both March 31, 2026 and December 31, 2025, or 0.61% and 0.62% of total loans, respectively. Non-acquired nonperforming loans increased by $19.1 million from December 31, 2025. The increase in non-acquired nonperforming loans was driven primarily by an increase in consumer nonaccrual loans of $5.3 million, an increase in modified loans to a borrower experiencing financial difficulty of $13.8 million, an increase in accruing loans past due 90 days or more of $3.9 million, offset by a decline in commercial nonaccrual loans of $3.9 million. Acquired nonperforming loans declined $19.1 million from December 31, 2025. The decrease in the acquired nonperforming loan balances was due primarily to a decrease in commercial nonaccrual loans of $22.1 million, offset by an increase in modified loans to a borrower experiencing financial difficulty of $3.3 million. The majority of the decrease in acquired commercial nonaccrual loans was due to one commercial non-owner occupied loan moving to OREO.
Interest-bearing liabilities include interest-bearing transaction accounts, savings deposits, CDs, other time deposits, federal funds purchased, securities sold under agreements to repurchase and other borrowings. Interest-bearing transaction accounts include NOW, HSA, Interest on Layers’ Trust Accounts (“IOLTA”), and Market Rate checking accounts.
Total interest-bearing deposits increased by $454.8 million, or 4.4% annualized, to $42.2 billion at March 31, 2026 from $41.8 billion at December 31, 2025. Interest-bearing checking accounts increased $281.1 million, savings accounts increased by $20.8 million and money market accounts increased by $262.5 million during the first quarter of 2026. The growth in interest-bearing checking accounts and money market accounts was mainly through reciprocal and brokered checking accounts. Time deposits decreased $109.5 million during the quarter which was driven by $143.8 million decline in brokered time deposits. Federal funds purchases related to the Correspondent Banking Division and securities sold under agreements to repurchase were $643.4 million at March 31, 2026, a $25.2 million increase from December 31, 2025. Corporate and subordinated debentures declined by $107,000 to $696.6 million.
Due to competitive pressures to retain deposits, the Company has not lowered rates the full rate decreases on interest-bearing deposit accounts. Average interest-bearing deposits increased $2.2 billion to $41.5 billion in the quarter ended March 31, 2026 compared to the same period in 2025. The increase in average interest-bearing deposits from the first quarter of 2025 was mainly due to a $1.9 billion increase in brokered interest-bearing checking accounts, including brokered money market accounts. For more information on the composition of our total deposits, see Note 8 — Deposits.
Noninterest-bearing deposits are transaction accounts that provide our Bank with “interest-free” sources of funds. At March 31, 2026, noninterest-bearing deposits totaled $13.7 billion compared to $13.4 billion at December 31, 2025, increasing $275.1 million. Average noninterest-bearing deposits were $13.4 billion for the first quarter of 2026 compared to $13.5 billion for the first quarter of 2025.
Uninsured Deposits
At March 31, 2026, and December 31, 2025, the Company had approximately $21.7 billion and $22.0 billion, respectively, in estimated uninsured deposits. The amounts above are estimates and are based on the same methodologies and assumptions used for the Bank’s regulatory reporting requirements issued by the FDIC for the FFIEC 041, also referred to as the Call Report.
Capital Resources
Our ongoing capital requirements have been met primarily through retained earnings, less the payment of cash dividends. As of March 31, 2026, shareholders’ equity was $9.0 billion, a decrease of $28.2 million, or 0.3%, from December 31, 2025.
The following table shows the changes in shareholders’ equity during the three months ended March 31, 2026.
Total shareholders' equity at December 31, 2025
Dividends paid on common shares ($0.60 per share)
Dividends paid on restricted stock units
Net decrease in market value of securities available for sale, net of deferred taxes
Equity based compensation
Total shareholders' equity at March 31, 2026
On January 21, 2026, the Board of Directors of the Company approved a stock repurchase plan for the repurchase of up to 5,560,000 shares of the Company’s common stock (the “2026 Repurchase Plan”). The 2026 Repurchase Plan replaced the Company’s 2025 Repurchase Plan, under which 560,000 shares remained available for repurchase. During the first quarter of 2026, the Company repurchased a total of 1,500,000 shares at a weighted average price of $100.87 per share (including commission paid) pursuant to the 2026 Stock Repurchase Plan. The number of shares to be purchased and the timing of the purchases are based on a variety of factors, including, but not limited to, the level of cash balances, general business conditions, regulatory requirements, the market price of our common stock, and the availability of alternative investment opportunities. As of March 31, 2026, the Company may repurchase up to an additional 4,060,000 shares of common stock under the 2026 Repurchase Plan.
Under current regulations, the Company and the Bank are subject to a minimum ratio of common equity Tier 1 capital (“CET1”) to risk-weighted assets of 4.5% and a minimum required ratio of Tier 1 capital to risk-weighted assets of 6%. The minimum required leverage ratio is 4%. The minimum required total capital to risk-weighted assets ratio is 8%. Refer to Note 16 — Capital Ratios for more information regarding Company and Bank’s regulatory capital compliance requirements.
The well-capitalized minimums and the Company’s and the Bank’s regulatory capital ratios for the following periods are reflected below:
Well-Capitalized
Minimums
SouthState Bank Corporation:
Common equity Tier 1 risk-based capital
N/A
Tier 1 risk-based capital
6.00
Total risk-based capital
Tier 1 leverage
SouthState Bank:
The Company’s and Bank’s Common equity Tier 1 risk-based capital, Tier 1 risk-based capital and Total risk-based capital ratios as of March 31, 2026 all declined as compared to December 31, 2025. The capital ratios declined due mainly to the Company repurchasing 1,500,000 shares through its 2026 Stock Repurchase Plan in the first quarter of 2026. The common stock repurchases at the Company were funded through dividends from the Bank. Tier 1 capital increased by 1.8% and 0.9% at both the Company and Bank, respectively, while total risk-based capital increased by 1.6% and 0.9% at both the Company and Bank, respectively. The increases in capital ratios were mainly due to net income during the first quarter of 2026 net of the effects of dividends paid and stock repurchases. Both regulatory risk-based assets and quarterly average assets increased in the first quarter of 2026 when compared to the fourth quarter with average assets for both the Company and Bank increasing approximately by 0.5% and 0.4%, respectively, and risk-based assets increasing by 2.7%. The Tier 1 leverage ratio for the Company and the Bank both slightly increased in the first quarter of 2026 as quarterly average assets only increased approximately 0.5% and 0.4%, respectively, which is less than the increase in Tier 1 capital at both the Company and the Bank. Our capital ratios are currently well in excess of the minimum standards and continue to be in the “well capitalized” regulatory classification.
Liquidity
Liquidity refers to our ability to generate sufficient cash to meet our financial obligations, which arise primarily from the withdrawal of deposits, extension of credit and payment of operating expenses. Liquidity risk is the risk that the Bank’s financial condition or overall safety and soundness is adversely affected by an inability (or perceived inability) to meet its obligations. Our Asset Liability Management Committee (“ALCO”) is charged with the responsibility of monitoring policies designed to ensure an acceptable composition of our asset/liability mix. Two critical areas of focus for ALCO are interest rate sensitivity and liquidity risk management. We have employed our funds in a manner to provide liquidity from both assets and liabilities sufficient to meet our cash needs.
The ALCO has established key risk indicators to monitor liquidity and interest rate risk. The key risk indicators are reviewed and approved by the ALCO on an annual basis. The liquidity key risk indicators include the loan to deposit ratio (policy limit not to exceed 100%), net noncore funding dependence ratio (policy limit not to exceed 30%), on-hand liquidity to total liabilities ratio (policy limit not to fall below 5%), the percentage of securities pledged to total securities (policy limit not to exceed 85%), primary liquidity to uninsured deposits excluding collateralized deposits (policy limit to maintain a minimum of 95%), primary liquidity to uninsured deposits including collateralized deposits (policy limit to maintain a minimum of 80%) and the ratio of brokered deposits to total deposits (policy limit not to exceed 15%). As of March 31, 2026, the Company was operating within its liquidity policy limits.
Asset liquidity is maintained by the maturity structure of loans, investment securities and other short-term investments. Management has policies and procedures governing the length of time to maturity on loans and investments. Normally, changes in the earning asset mix are of a longer-term nature and are not used for day-to-day corporate liquidity needs.
Our liabilities provide liquidity on a day-to-day basis. Daily liquidity needs are met from deposit levels or from our use of federal funds purchased, securities sold under agreements to repurchase, interest-bearing deposits at other banks and other short-term borrowings. We engage in routine activities to retain deposits intended to enhance our liquidity position. These routine activities include various measures, such as the following:
Our non-acquired loan portfolio increased during the three months ended March 31, 2026 by approximately $1.6 billion, or approximately 18.6% annualized, compared to the balance at December 31, 2025. The increase from December 31, 2025, was mainly related to organic growth and renewals of acquired loans that are moved to our non-acquired loan portfolio. The acquired loan portfolio decreased by $677.1 million from the balance at December 31, 2025 due to principal paydowns, charge-offs, foreclosures and renewals of acquired loans.
Our investment securities portfolio (excluding trading securities) increased during the three months ended March 31, 2026 by $193.3 billion compared to the balance at December 31, 2025. The increase in the investment securities portfolio came from purchases totaling $2.0 billion in the first quarter of 2026. The increase in investment securities from the purchases were partially offset by maturities, calls, sales and paydowns of investment securities totaling $1.7 billion and a reduction from the net amortization of premiums of $2.6 million. The market value of the available for sale securities also decreased during the quarter by $56.0 million as the expectation for further rate cuts in the near term by the Federal Reserve Bank lowered. Of the $2.0 billion in purchases of investment securities during the quarter, all were in available for sale securities. There were no purchases of held to maturity securities during the quarter. The Bank pledges a portion of its available for sale and held to maturity investment portfolios for a variety of purposes, including, but not limited to, collateral for public funds and credit with the Federal Home Loan Bank of Atlanta. As of March 31, 2026, the bank pledged 65.6% of the market value of its available for sale and held to maturity investment portfolios. As of March 31, 2026, the Bank had unpledged securities with a market value of $2.8 billion. These securities included Treasury, Agency, Agency MBS, Municipals and Corporate securities.
Total cash and cash equivalents were $2.9 billion at March 31, 2026 as compared to $3.2 billion at December 31, 2025. The decrease in cash and cash equivalents was primarily due to funding growth in the loan portfolio of $898.2 million and the investment securities portfolio of $193.3 million in the first quarter of 2026. Deposits increased $729.9 million and federal funds purchased and securities sold under agreements to repurchase increased $25.2 million during the quarter to also provide funding for the loan and investment securities growth. The increase in deposits was through in-market growth of noninterest-bearing deposits of $275.1 million and $454.8 million of interest-bearing deposits mainly through interest-bearing checking and money market reciprocal and brokered checking accounts
Total deposits were $55.9 billion at March 31, 2026, an increase of $729.9 million from $55.1 billion at December 31, 2025. At March 31, 2026, and December 31, 2025, we had $1.6 billion and $1.7 billion of traditional, out–of–market brokered time deposits, respectively. At March 31, 2026, and December 31, 2025, we had $4.2 billion and $4.0 billion, respectively, of reciprocal deposits. At March 31, 2026 and December 31, 2025, we also had $2.4 billion and $2.0 billion in brokered interest-bearing checking and money market accounts. The Company has allowed some higher costing local deposits run to off in 2026 and replaced the deposits with brokered and other out of market deposits at lower interest rates. See further discussion on changes in deposits in the Interest-Bearing Liabilities and Noninterest-Bearing Deposits section of this MD&A. Total short-term borrowings at March 31, 2026 were $643.4 million, consisting of $343.8 million in federal funds purchased and $299.6 million in securities sold under agreements to repurchase. Total long-term borrowings at March 31, 2026, were $696.6 million and consisted of trust preferred securities and subordinated debentures. To the extent that we employ other types of non-deposit funding sources, typically to accommodate retail and correspondent customers, we continue to take in shorter maturities of such funds. Our current approach may provide an opportunity to sustain a low funding rate or possibly lower our cost of funds but could also increase our cost of funds if interest rates rise.
Deposit flows are significantly influenced by general and local economic conditions, changes in prevailing interest rates, internal pricing decisions and competition. Our deposits are primarily obtained from depositors located around our branch footprint, and we believe that we have attractive opportunities to capture additional retail and commercial deposits in our markets, in addition to having access to brokered deposits. Of the $55.9 billion in total deposits at March 31, 2026, approximately 70% were insured or collateralized. The Bank has a granular deposit base comprised of over 1.4 million accounts, with an average deposit size of $39,000. Approximately 24% of total deposits are noninterest-bearing.
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As discussed previously and presented below, the Bank maintains credit facilities with the Federal Home Loan Bank of Atlanta and the Federal Reserve Bank of Atlanta. The table below compares Primary Funding Sources to uninsured deposits as of March 31, 2026.
(Dollars in millions)
Available Capacity
Federal Home Loan Bank of Atlanta
5,728
Federal Reserve Bank of Atlanta Discount Window
11,433
Liquid cash and cash equivalents
2,750
Fair value of securities that can be pledged
Total primary sources
22,615
Uninsured and uncollateralized deposits
16,835
Uninsured and collateralized deposits
21,748
Coverage ratio, uninsured deposits
104.0
Coverage ratio, uninsured and uncollateralized deposits
134.3
Ratio of uninsured and collateralized deposits to total deposits
38.9
Through the operations of our Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of time. We manage the credit risk on these commitments by subjecting them to normal underwriting and risk management processes. We believe that we have adequate sources of liquidity to fund commitments that are drawn upon by the borrowers. In addition to commitments to extend credit, we also issue standby letters of credit, which are assurances to third parties that they will not suffer a loss if our customer fails to meet its contractual obligation to the third-party. Although our experience indicates that many of these standby letters of credit will expire unused, through our various sources of liquidity, we believe that we will have the resources to meet these obligations should the need arise.
Our ongoing philosophy is to remain in a liquid position, as reflected by such indicators as the composition of our earning assets, typically including some level of reverse repurchase agreements; federal funds sold; balances at the Federal Reserve Bank; and/or other short-term investments; asset quality; well-capitalized position; and profitable operating results. Cyclical and other economic trends and conditions can disrupt our desired liquidity position at any time. We expect that these conditions would generally be of a short-term nature. Under such circumstances, we expect our reverse repurchase agreements and federal funds sold positions, or balances at the Federal Reserve Bank, if any, to serve as the primary source of immediate liquidity. We could draw on additional alternative immediate funding sources from lines of credit extended to us from our correspondent banks. The Bank may also access funds from borrowing facilities established with the Federal Home Loan Bank of Atlanta and the discount window of the Federal Reserve Bank of Atlanta.
At March 31, 2026, the Bank had a total FHLB credit facility of $5.7 billion, with no outstanding borrowings in short-term FHLB advances and $17.8 million in secured credit exposure at quarter end, leaving $5.7 billion in availability on the FHLB credit facility. At March 31, 2026, the Bank had $11.4 billion of credit available at the Federal Reserve Bank’s discount window and federal funds credit lines of $300.0 million with no balances outstanding at March 31, 2026. The Bank has $2.7 billion in market value of unpledged securities at March 31, 2026, that can be pledged to attain additional funds if necessary. The Bank has an internal limit on brokered deposits of 15% of total deposits, which would allow capacity of $8.4 billion at March 31, 2026. The Bank had $4.0 billion of outstanding brokered deposits at the end of the quarter-end leaving $4.4 billion in available capacity as per the internal policy limit of 15% of total deposits. All of the primary sources noted in the table above (excluding the liquid cash and cash equivalents), the federal funds lines of credit and the brokered deposit remaining available capacity would provide an additional $24.5 billion in funding if we needed additional liquidity. We can also consider actions such as deposit promotions to increase core deposits. The Company has a $100.0 million unsecured line of credit with U.S. Bank National Association with no balance outstanding at March 31, 2026. We believe that our liquidity position continues to be adequate and readily available.
In addition to adequate liquidity, the Company and Bank are considered well capitalized by all regulatory capital standards as the Company and the Bank were significantly above the required capital levels as of March 31, 2025. The Company’s tier 1 leverage ratio, CET 1 risk-based capital ratio and total risk-based capital ratio were 9.38%, 11.27% and 13.69%, respectively, at March 31, 2026. The Bank’s Tier 1 leverage ratio, CET 1 risk-based capital ratio and total risk-based capital ratio were 10.27%, 12.33% and 13.44%, respectively, at March 31, 2026. As permitted, we elected to exclude accumulated other comprehensive income related to available for sale securities from Tier 1, CET 1 and total risk-based capital; however, even if our unrealized losses as of March 31, 2026 in our available for sale and held to maturity investment portfolios were recognized by selling the portfolios for liquidity purposes, all else being equal, our regulatory capital ratios would remain well in excess of the minimum standards and continue to be in the “well capitalized” regulatory classification.
Our contingency funding plan describes several potential stages based on stressed liquidity levels. Liquidity key risk indicators are reported to the Board of Directors on a quarterly basis. As noted previously, we maintain various wholesale sources of funding. If our deposit retention efforts were to be unsuccessful, we would use these alternative sources of funding. Under such circumstances, depending on the external source of funds, our interest cost would vary based on the range of interest rates charged. This could increase our cost of funds, impacting our net interest margin and net interest spread.
Asset-Liability Management and Market Risk Sensitivity
Our earnings and the economic value of equity vary in relation to the behavior of interest rates and the accompanying fluctuations in market prices of certain of our financial instruments. We define interest rate risk as the risk to earnings and equity arising from the behavior of interest rates. These behaviors include increases and decreases in interest rates as well as continuation of the current interest rate environment.
Our interest rate risk principally consists of reprice, option, basis, and yield curve risk. Reprice risk results from differences in the maturity or repricing characteristics of asset and liability portfolios. Option risk arises from embedded options in the investment and loan portfolios such as investment securities calls and loan prepayment options. Option risk also exists since deposit customers may withdraw funds at their discretion in response to general market conditions, competitive alternatives to existing accounts or other factors. The exercise of such options may result in higher costs or lower revenue. Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which subsequently result in narrowing spreads on interest-earning assets and interest-bearing liabilities. Basis risk also exists in administered rate liabilities, such as interest-bearing checking accounts, savings accounts, and money market accounts where the price sensitivity of such products may vary relative to general markets rates. Yield curve risk refers to adverse consequences of nonparallel shifts in the yield curves of various market indices that impact our assets and liabilities.
We use simulation analysis as a primary method to assess earnings at risk and equity at risk due to assumed changes in interest rates. Management uses the results of its various simulation analyses in combination with other data and observations to formulate strategies designed to maintain interest rate risk within risk tolerances.
Simulation analysis involves the use of several assumptions including, but not limited to, the timing of cash flows such as the terms of contractual agreements, investment security calls, loan prepayment speeds, deposit attrition rates, the interest rate sensitivity of loans and deposits relative to general market rates, and the behavior of interest rates and spreads. The assumptions for loan prepayments, deposit decay, and nonstable deposit balances are derived from models that use historical bank data. These models are independently validated. Equity at risk simulation uses assumptions regarding discount rates that value cash flows. Simulation analysis is highly dependent on model assumptions that may vary from actual outcomes. Key simulation assumptions are subject to sensitivity analysis to assess the impact of assumption changes on earnings at risk and equity at risk. Model assumptions are reviewed by our Assumptions Committee. While the Bank is continuously refining its modeling methodology, the core principles of the methodology have remained stable over for several years.
Earnings at risk is defined as the percentage change in net interest income due to assumed changes in interest rates. Earnings at risk is generally used to assess interest rate risk over relatively short time horizons.
Equity at risk is defined as the percentage change in the net economic value of assets and liabilities due to changes in interest rates compared to a base net economic value. The discounted present value of all cash flows represents our economic value of equity. Equity at risk is generally considered a measure of the long-term interest rate exposures of the balance sheet at a point in time.
The earnings simulation models consider our contractual agreements with regard to investments, loans, deposits, borrowings, and derivatives as well as a number of behavioral assumptions applied to certain assets and liabilities.
Mortgage banking derivatives used in the ordinary course of business consist of forward sales contracts and interest rate lock commitments on residential mortgage loans. These derivatives involve underlying items, such as interest rates, and are designed to mitigate risk. Derivatives are also used to hedge mortgage servicing rights. For additional information see Note 15 — Derivative Financial Instruments in the consolidated financial statements.
From time to time, we execute interest rate swaps to hedge some of our interest rate risks. Under these arrangements, the Company enters into a variable rate loan with a client in addition to a swap agreement. The swap agreement effectively converts the client’s variable rate loan into a fixed rate loan. The Company then enters into a matching swap agreement with a third-party dealer to offset its exposure on the customer swap. The Company may also execute interest rate swap agreements that are not specific to client loans. As of March 31, 2026, the Company had a series of short-term interest rate hedges to address monthly accrual mismatches related to the Company’s ARC program related to tenor mismatches related to SOFR. For additional information on these derivatives refer to Note 15 — Derivative Financial Instruments in the consolidated financial statements.
Our interest rate risk key indicators are applied to a static balance sheet using forward rates from the Moody’s Baseline Scenario. The Company will also use other rate forecasts, including, but not limited to, Moody’s Consensus Scenario. This Base Case Scenario assumes the maturity composition of asset and liability rollover volumes is modeled to approximately replicate current consolidated balance sheet characteristics throughout the simulation. These treatments are consistent with the Company’s goal of assessing current interest rate risk embedded in its current balance sheet. The Base Case Scenario assumes that maturing or repricing assets and liabilities are replaced at prices referencing forward rates derived from the selected rate forecast consistent with current balance sheet pricing characteristics. Key rate drivers are used to price assets and liabilities with sensitivity assumptions used to price non-maturity deposits. The sensitivity assumptions for the pricing of non-maturity deposits are subjected to sensitivity analysis no less frequently than on an annual basis.
Interest rate shocks are applied to the Base Case on an instantaneous basis. Our policy establishes the use of upward and downward interest rate shocks applied in 100 basis point increments through 400 basis points. We calculate smaller rate shocks as needed. At times, market conditions may result in assumed rate movements that will be deemphasized. For example, during a period of ultra-low interest rates, certain downward rate shocks may be impractical. The model simulation results produced from the Base Case Scenario and related instantaneous shocks for changes in net interest income and changes in the economic value of equity are referred to as the Core Scenario Analysis and constitute the policy key risk indicators for interest rate risk when compared to risk tolerances. As of March 31, 2026, the Company was operating within its interest rate key risk indicator policy limits.
Management uses historical data and regression analysis to estimate the deposit beta in various rate environments. The modeled beta is subject to model validation, back testing, and Assumptions Committee oversight. For internal modeling purposes, and based on the deposit mix as of March 31, 2026, the total deposit beta assumption was 37.6%. Management will apply overlays to certain assumptions to adjust for current market conditions as appropriate.
The following interest rate risk metrics are derived from analysis using the Moody’s Baseline Scenario published in April 2026 as the Base Case Scenario. As of March 31, 2026, the earnings simulations indicated that the year 1 impact of an instantaneous 100 basis point parallel increase / decrease in rates would result in an estimated 3.0% increase (up 100) and 3.2% decrease (down 100) in net interest income.
We use Economic Value of Equity (“EVE”) analysis as an indicator of the extent to which the present value of our capital could change, given potential changes in interest rates. This measure also assumes a static balance sheet (Base Case Scenario) with rate shocks applied as described above. At March 31, 2026, the percentage change in EVE due to a 100-basis point increase or decrease in interest rates was 2.6% decrease and 1.8% increase, respectively. The percentage changes in EVE due to a 200-basis point increase or decrease in interest rates were 6.2% decrease and 2.8% increase, respectively. Downward shocks are constrained on various balance sheet categories due to the inability to price products below floors or zero. This is particularly meaningful given the cost of deposits as of March 31, 2026.
The analysis below reflects a Base Case and shocked scenarios that assume a static balance sheet projection where volume is added to maintain balances consistent with current levels. Base Case assumes new and repricing volumes reference forward rates derived from the Moody’s Baseline rate forecast. Instantaneous, parallel, and sustained interest rate shocks are applied to the Base Case scenario over a one-year time horizon.
Percentage Change in Net Interest Income over One Year
Up 300 basis points
8.2
Up 200 basis points
5.8
Up 100 basis points
3.0
Base Case
Down 100 basis points
(3.2)
Down 200 basis points
(6.6)
Down 300 basis points
(10.3)
Deposit Concentrations
At March 31, 2026, and December 31, 2025, we have no material concentration of deposits from any single customer or group of customers. We have no significant portion of our deposits concentrated within a single industry or group of related industries. We do not believe there are any material seasonal factors that would have a material adverse effect on us. The total deposit balances held by top 10 and 20 deposit holders were 4% and 5%, respectively, of the Company’s average total deposit balances at March 31, 2026. We do not have any foreign deposits.
Concentration of Credit Risk
Each category of earning assets has a certain degree of credit risk. We use various techniques to measure credit risk. Credit risk in the investment portfolio can be measured through bond ratings published by independent agencies. In the investment securities portfolio, the investments consist of U.S. government-sponsored entity securities, tax-free securities, or other securities having ratings of “AAA” to “Not Rated”. All securities, with the exception of those that are not rated, were rated by at least one of the nationally recognized statistical rating organizations. The credit risk of the loan portfolio can be measured by historical experience. We maintain our loan portfolio in accordance with credit policies that we have established. Although the Bank has a diversified loan portfolio, a substantial portion of our borrowers’ abilities to honor their contracts is dependent upon economic conditions within our geographic footprint and the surrounding regions.
We consider concentrations of credit to exist when, pursuant to regulatory guidelines, the amounts loaned to a multiple number of borrowers engaged in similar business activities which would cause them to be similarly impacted by general economic conditions represents 25% of total Tier 1 capital plus regulatory adjusted allowance for credit losses of the Company, or $1.6 billion at March 31, 2026. Based on this criteria, we had seven such credit concentrations at March 31, 2026, including loans to lessors of nonresidential buildings (except mini-warehouses) of $10.9 billion, loans secured by owner-occupied office buildings (including medical office buildings) of $2.4 billion, loans secured by owner-occupied nonresidential buildings (excluding office buildings) of $3.0 billion, loans to lessors of residential buildings (investment properties and multi-family) of $4.3 billion, loans secured by 1st mortgage 1-4 family owner-occupied residential property (including condos and home equity lines) of $11.1 billion, loans secured by jumbo (original loans greater than the amount set by Federal Housing Finance Agency) of $3.2 billion and loans secured by business assets including accounts receivable, inventory and equipment of $3.5 billion. The Company also has purchased commercial and industrial syndication and participation loans of $2.3 billion, some of which are also included in the business assets loans noted above. The risk for these loans and for all loans is managed collectively through the use of credit underwriting practices developed and updated over time. The loss estimate for these loans is determined using our standard ACL methodology.
Banking regulators established guidelines for calculating credit concentrations. Banking regulators set the guidelines for construction, land development and other land loans to total less than 100% of total Tier 1 capital less modified CECL transitional amount plus ACL (CDL concentration ratio) and for total commercial real estate loans (construction, land development and other land loans along with other non-owner-occupied commercial real estate and multifamily loans) to total less than 300% of total Tier 1 capital less modified CECL transitional amount plus ACL (CRE concentration ratio). Both ratios are calculated by dividing certain types of loan balances for each of the two categories by the Bank’s total Tier 1 capital less modified CECL transitional amount plus ACL. At March 31, 2026, and December 31, 2025, the Bank’s CDL concentration ratio was 35.5% and 35.2%, respectively, and its CRE concentration ratio was 275.8% and 271.8%, respectively. As of March 31, 2026, the Bank was below the established regulatory guidelines. When a bank’s ratios are in excess of one or both of these loan concentration ratios guidelines, banking regulators generally require an increased level of monitoring in these lending areas by bank management. Therefore, we monitor these two ratios as part of our concentration management processes.
Reconciliation of GAAP to Non-GAAP
The return on average tangible equity is a non-GAAP financial measure that excludes the effect of the average balance of intangible assets and adds back the after-tax amortization of intangibles to GAAP basis net income. Management believes these non-GAAP financial measures provide additional information that is useful to investors in evaluating our performance and capital and may facilitate comparisons with other institutions in the banking industry as well as period-to-period comparisons. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, are not audited, and may not be comparable to other similarly titled financial measures used by other companies. Investors should not consider non-GAAP measures in isolation or as a substitute for analysis of the Company’s results or financial condition as reported under GAAP.
Return on average equity (GAAP)
Effect to adjust for intangible assets
7.48
4.70
Return on average tangible equity (non-GAAP)
Average shareholders’ equity (GAAP)
Average intangible assets
(3,469,249)
(3,558,378)
Adjusted average shareholders’ equity (non-GAAP)
5,587,980
4,859,734
(4,793)
(5,225)
Net income excluding the after-tax effect of amortization of intangibles (non-GAAP)
242,331
107,686
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Cautionary Note Regarding Any Forward-Looking Statements
Statements included in this report, which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements are based on, among other things, management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and our acquisition of Independent in all-stock merger transaction. Words and phrases such as “may,” “approximately,” “continue,” “should,” “expects,” “projects,” “anticipates,” “is likely,” “look ahead,” “look forward,” “believes,” “will,” “intends,” “estimates,” “strategy,” “plan,” “could,” “potential,” “possible” and variations of such words and similar expressions are intended to identify such forward-looking statements. We caution readers that forward-looking statements are subject to certain risks, uncertainties and assumptions that are difficult to predict with regard to, among other things, timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, the following:
Risks relating to our Business and Business Strategy
Risks relating to the Regulatory Environment
Risks relating to our Common Stock
78
Risks relating to Economic Conditions and Other Outside Forces
For any forward-looking statements made in this report or in any documents incorporated by reference into this Report, we claim the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. All forward-looking statements speak only as of the date they are made and are based on information available at that time. We do not undertake any obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. All subsequent written and oral forward-looking statements by us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.
Additional information with respect to factors that may cause actual results to differ materially from those contemplated by our forward-looking statements may also be included in other reports that we file with the SEC. We caution that the foregoing list of risk factors is not exclusive and not to place undue reliance on forward-looking statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our quantitative and qualitative disclosures about market risk as of March 31, 2026 from those disclosures presented in our Annual Report on Form 10-K for the year ended 2025.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
SouthState’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of SouthState’s disclosure controls and procedures as of March 31, 2026, in accordance with Rule 13a-15 of the Securities Exchange Act of 1934. We applied our judgment in the process of reviewing these controls and procedures, which, by their nature, can provide only reasonable assurance regarding our control objectives. Based upon that evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that SouthState’s disclosure controls and procedures as of March 31, 2026, were effective to provide reasonable assurance regarding our control objectives.
The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the three months ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 1. LEGAL PROCEEDINGS
We or our Bank subsidiary is periodically a party to or otherwise involved in legal proceedings arising in the normal course of business, such as claims to enforce liens, claims involving the making and servicing of real property loans, and other issues incident to our products and services and our businesses. We do not believe any pending or threatened legal proceedings in the ordinary course against the Bank would have a material adverse effect on our consolidated results of operations or consolidated financial position.
Other than the Cyber Incident Suit (as discussed in Note 12 — Commitments and Contingent Liabilities), as of March 31, 2026, and the date of this Quarterly Report on Form 10-Q, we believe that we are not party to, nor is any of our property the subject of, any pending material legal proceeding other than those that may occur in the ordinary course of our business.
On April 3, 2024, a putative class action lawsuit (the “Original Suit”) was filed against the Bank purportedly on behalf of a class consisting of those persons impacted by the Cyber Incident (as defined in Note 12 — Commitments and Contingent Liabilities). While the Original Suit has been voluntarily dismissed, the same plaintiffs as well as additional plaintiffs initiated litigation that names the Bank as a defendant. These cases have been consolidated into one putative class action, which as of the date of this Quarterly Report on Form 10-Q, remains pending against the Bank in the Circuit Court for Polk County, Florida (the “Cyber Incident Suit”). During the first quarter of 2026, the parties agreed to a settlement of the Cyber Incident Suit, subject to court approval, under which the Company has agreed to fund documented losses, pay attorneys’ fees and administration costs and credit monitoring fees. The settlement is expected to be paid from the Company’s cyber insurance coverage. For more information, please refer to Note 12 — Commitments and Contingent Liabilities, in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Item 1A. RISK FACTORS
Investing in shares of our common stock involves certain risks, including those identified and described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as well as cautionary statements contained in this Quarterly Report on Form 10-Q, including those under the caption “Cautionary Note Regarding Any Forward-Looking Statements” set forth in Part I, Item 2. of this Quarterly Report on Form 10-Q, risks and matters described elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the SEC.
There have been no material changes to the risk factors disclosed in Item 1A. of Part I in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On January 21, 2026, the Board of Directors of the Company approved a stock repurchase plan for the repurchase of up to 5,560,000 shares of the Company’s common stock (the “2026 Repurchase Plan”). The 2026 Repurchase Plan replaces the Company’s 2025 Repurchase Plan, under which 560,000 shares remained available for repurchase. The 2025 Repurchase Plan was cancelled in connection with the Board’s approval of the 2026 Repurchase Plan. Repurchases under the 2026 Stock Repurchase Plan will be made from time to time by the Company as conditions allow. The 2026 Stock Repurchase Plan will be made available until December 31, 2027, unless shortened or extended by the Company’s Board of Directors.
During the first quarter of 2026, the Company repurchased a total of 1,500,000 shares at a weighted average price of $100.87 per share (including commission paid) pursuant to the 2026 Stock Repurchase Plan. The number of shares to be purchased and the timing of the purchases are based on a variety of factors, including, but not limited to, the level of cash balances, general business conditions, regulatory requirements, the market price of our common stock, and the availability of alternative investment opportunities. As of March 31, 2026, the Company may repurchase up to an additional 4,060,000 shares of common stock under the 2026 Repurchase Plan. During the first quarter of 2025, the Company did not repurchase any shares pursuant to the 2025 Repurchase Plan.
The following table reflects share repurchase activity during the first quarter of 2026:
(d) Maximum
(c) Total
Number (or
Number of
Approximate
Shares (or
Dollar Value) of
Units)
(a) Total
Purchased as
Units) that May
Part of Publicly
Yet Be
(b) Average
Announced
Purchased
Price Paid per
Plans or
Under the Plans
Period
Share (or Unit)
Programs
or Programs
January 1 ‑ January 31
456,763
100.47
430,253
5,129,747
February 1 ‑ February 28
880,453
104.19
819,747
4,310,000
March 1 ‑ March 31
252,230
90.43
250,000
4,060,000
1,589,446
1,500,000
For the three months ended March 31, 2026, monthly totals include 26,510, 60,706, and 2,230 shares, respectively, that were repurchased under arrangements, authorized by our stock-based compensation plans and Board of Directors, whereby officers or directors may sell previously owned shares to SouthState in order to pay for the exercises of stock options or for income taxes owed on vesting shares of restricted stock. These shares were not repurchased under the 2026 Repurchase Plan.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. MINE SAFETY DISCLOSURES
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS
The exhibits required to be filed as part of this Quarterly Report on Form 10-Q are listed in the Exhibit Index attached hereto and are incorporated by reference.
Exhibit Index
Exhibit No.
Description of Exhibit
Incorporated by Reference
Form
Commission File No.
Exhibit
Filing Date
Filed
Herewith
31.1
Rule 13a-14(a) Certification of Principal Executive Officer
X
31.2
Rule 13a-14(a) Certification of Principal Financial Officer
Section 1350 Certifications of Principal Executive Officer and Principal Financial Officer
101
The following financial statements from the Quarterly Report on Form 10-Q of SouthState Bank Corporation for the quarter ended March 31, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statement of Cash Flows and (vi) Notes to Consolidated Financial Statements.
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Date: May 1, 2026
/s/ John C. Corbett
John C. Corbett
President and Chief Executive Officer
(Principal Executive Officer)
/s/ William E. Matthews, V
William E. Matthews, V
Senior Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
/s/ Sara G. Arana
Sara G. Arana
Executive Vice President and
Principal Accounting Officer