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SouthState Bank Corporation

07/31/2026 | Press release | Distributed by Public on 07/31/2026 07:14

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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. The MD&A section in this Form 10-Q discusses updates to the Company's business since the year ended December 31, 2025. Results for the three and six months ended June 30, 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, a national banking 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. There have been no material changes to the Company's business or organizational structure during the six months ended June 30, 2026, except as described below. During the second quarter of 2026, the Company completed the legal dissolution of one of its subsidiaries, SSB Insurance Corp., a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code. The Company's business structure remains otherwise unchanged.

At June 30, 2026, we had approximately $68.9 billion in assets and 6,431 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 Alabama, Colorado, Florida, Georgia, North Carolina, South Carolina, Texas, and Virginia.

The following discussion describes our results of operations for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, and also analyzes our financial condition as of June 30, 2026, as compared to December 31, 2025.

Recent Events

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. There have been no material changes to those policies during the six months ended June 30, 2026, except as described below.

Allowance for Credit Losses (ACL)

SouthState utilizes economic forecasts provided by a third-party service provider and applies probability weightings to multiple economic scenarios based on management's assessment of economic and market conditions. As a sensitivity analysis, applying a 100% weighting to the adverse scenario would increase the ACL by approximately $176 million, while applying a 100% weighting to the upside scenario would decrease the ACL by approximately $122 million. The adverse scenario reflects recessionary economic conditions, while the upside scenario reflects stronger-than-expected economic performance. This analysis is hypothetical and does not represent management's estimate of expected credit losses as of June 30, 2026.

Results of Operations

Overview

We reported consolidated net income of $230.0 million, or diluted earnings per share ("EPS") of $2.35, for the second quarter of 2026 compared to consolidated net income of $215.2 million, or diluted EPS of $2.11, in the comparable period of 2025, a 6.9% increase in consolidated net income and a 11.4% increase in diluted EPS. During the six months ended June 30, 2026, we reported consolidated net income of $455.8 million, or diluted EPS of $4.64, compared to consolidated net income of $304.3 million, or diluted EPS of $2.99, in the comparable period of 2025, a 49.8% increase in consolidated net income and a 55.2% increase in diluted EPS. The $14.8 million increase in consolidated net income for the second quarter of 2026 compared to the same period of 2025 was the net result of the following items:

●

A $2.2 million decrease in interest income, resulted from a $1.8 million decrease in interest income from loans and loans held for sale and a $7.6 million decrease in interest income on federal funds sold, securities purchased under agreement to resell and interest-bearing deposits, partially offset by a $7.2 million increase in interest income from investment securities. See Net Interest Income and Margin section on page 43 for further discussion.

●

An $0.2 million decrease in interest expense, which resulted from a $1.3 million decrease in interest expense in federal funds purchased and securities sold under agreements to repurchase and a $1.6 million decrease in interest expense from corporate and subordinated debentures and other borrowings, partially offset by a $2.6 million increase in interest expense from deposits. See Net Interest Income and Margin section on page 43 for further discussion.

●

A $8.4 million increase in the provision for credit losses, as the Company recorded a provision for credit losses of $15.9 million in the second quarter of 2026 while recording a provision for credit losses of $7.5 million in the second quarter of 2025. The main reason for the increase in the provision for credit losses was higher loan production and net loan growth in the second quarter of 2026 compared to the same period in 2025. During the second quarter of 2026, the Company had loan production of $5.2 billion and net loan growth of $1.4 billion compared to loan production of $3.3 billion and net loan growth of $501.0 million in the second quarter of 2025.

●

A $9.9 million increase in noninterest income primarily from increases in service charges on deposit accounts and debit, prepaid, ATM and merchant card related income of $3.7 million and correspondent banking and capital market income of $7.0 million. These increases were slightly offset by a decline in SBA income of $1.2 million and mortgage banking income of $1.0 million. See Noninterest Income section on page 47 for further discussion;

●

A $17.3 million decrease in noninterest expense, which resulted primarily from a decrease in merger, branch consolidation, severance related and other restructuring expenses of $24.4 million and a reduction in amortization of intangibles of $3.0 million. These decreases were partially offset by increases in salaries and employee benefits of $5.2 million, occupancy expense of $2.4 million and business development expense of $3.5 million. See Noninterest Expense section on page 48 for further discussion; and

●

Higher income tax provision of $2.0 million is mostly due to higher pretax book income between the two quarters. The Company recorded pretax book income of $299.0 million in the second quarter of 2026 compared to pretax book income of $282.2 million in the second quarter of 2025. Our effective tax rate was 23.07% for the three months ended June 30, 2026, compared to 23.73% for the three months ended June 30, 2025. See Income Tax Expense section on page 48 for further discussion.

Our quarterly efficiency ratio improved to 50.0% in the second quarter of 2026 compared to 52.7% in the second quarter of 2025. The improvement in the efficiency ratio compared to the second quarter of 2025 was the result of a 4.1% decrease in noninterest expense (excluding amortization of intangibles) and a 1.2% increase in the total tax-equivalent net interest income and noninterest income. The decrease in noninterest expense was mainly due to a decline in 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 $7.2 million, an increase in service charges and fees on deposit accounts of $3.7 million and an increase in correspondent banking and capital markets income of $7.0 million.

Basic and diluted EPS were $2.36 and $2.35, respectively, for the second quarter of 2026, compared to $2.12 and $2.11, respectively, for the second quarter of 2025. The increase in basic and diluted EPS was due to a 6.9% increase in net income in the second quarter of 2026 compared to the same period in 2025 and a decrease in average basic common shares of 4.1%. The increase in net income in the second quarter of 2026 was mainly attributable to an increase in non-interest income of $9.9 million and a $17.3 million decline in non-interest expense. The decrease in average basic common shares was mainly due to the Company repurchasing approximately 4.9 million shares through the Company's stock buyback plan since June 30, 2025.

Selected Figures and Ratios

The following table presents selected financial figures and ratios for the three and six months ended June 30, 2026 and 2025:


		Three Months Ended						Six Months Ended
		June 30,						June 30,
(Dollars in thousands)		2026			2025			2026			2025
Return on average assets (annualized)			1.36	%		1.34	%		1.36	%		0.95	%
Return on average equity (annualized)			10.19	%		9.93	%		10.15	%		7.17	%
Return on average tangible equity (annualized)*			17.62	%		18.17	%		17.60	%		13.73	%
Dividend payout ratio			25.31	%		25.47	%		25.71	%		36.00	%
Equity to assets ratio			13.25	%		13.36	%		13.25	%		13.36	%
Average shareholders' equity		$	9,053,100		$	8,692,582		$	9,055,153		$	8,556,105

●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

Net interest income is the Company's principal source of income and a key driver of overall financial performance. Net interest income and net interest margin are affected by the level and mix of interest-earning assets and interest-bearing liabilities, as well as changes in long-term and short-term market interest rates. Since the second quarter of 2025, the Federal Reserve reduced the target federal funds rate by a total of 75 basis points, lowering the target federal funds rate range to 3.50% to 3.75% as of June 30, 2026. Accordingly, interest rate conditions during the second quarter of 2026 were lower compared to the second quarter of 2025, impacting both asset yields and funding costs.

The decline in non-tax equivalent and the Tax Equivalent ("TE") net interest margin of 24 basis points in the second quarter of 2026 compared to the same quarter of 2025 primarily reflected lower yields on interest-earning assets, driven by reduced loan accretion income and a lower interest rate environment, partially offset by lower funding costs and balance-sheet mix changes.

●

Lower non-TE yield on interest-earning assets was primarily driven by lower loan yields, largely attributable to continued runoff of acquired loans and a reduction in loan accretion income of approximately $30.5 million. The average balance of higher-yielding acquired loans decreased by $3.5 billion, while the yield on acquired loans declined by 63 basis points. The non-TE yield on federal funds sold and interest-earning deposits with banks decreased by 68 basis points, and non-TE yield on non-acquired loans decreased by 15 basis points in the lower interest environment. These effects were partially offset by a change in asset mix, as the average balance of lower-yielding assets, such as federal funds sold and interest-earning deposits with banks, declined while the average balance of higher yielding loans and investment securities increased.

●

Funding costs declined during the second quarter of 2026, primarily due to a lower interest rate environment, which reduced rates across all interest-bearing deposits, federal funds purchased, securities sold with agreements to repurchase, and corporate and subordinated debentures categories. Overall, the Company's cost of funds, including noninterest-bearing deposits, declined by 10 basis points to 1.84% compared to the three months ended June 30, 2025.

The tables below summarize the analysis of changes in interest income and interest expense for the three and six months ended June 30, 2026, and 2025 and net interest margin on a tax equivalent basis:


	Three Months Ended
	June 30, 2026						June 30, 2025
	Average		Interest		Average		Average		Interest		Average
(Dollars in thousands)	Balance		Earned/Paid		Yield/Rate		Balance		Earned/Paid		Yield/Rate
Interest-Earning Assets:
Federal funds sold and interest-earning deposits with banks	$	1,386,864	$	12,236	3.54	%	$	1,884,133	$	19,839	4.22	%
Investment securities (taxable) ⁽¹⁾		8,212,365		73,078	3.57	%		7,680,130		68,081	3.56	%
Investment securities (tax-exempt) ⁽¹⁾		1,000,994		8,293	3.32	%		833,309		6,136	2.95	%
Loans held for sale		286,422		4,602	6.44	%		283,017		4,829	6.84	%
Acquired loans, net		13,058,669		217,584	6.68	%		16,585,942		302,259	7.31	%
Non-acquired loans		37,188,445		522,466	5.64	%		30,443,470		439,360	5.79	%
Total interest-earning assets		61,133,759		838,259	5.50	%		57,710,001		840,504	5.84	%
Noninterest-Earning Assets:
Cash and due from banks		560,843						585,975
Other assets		6,719,415						6,882,510
Allowance for credit losses		(585,851)						(627,605)
Total noninterest-earning assets		6,694,407						6,840,880
Total Assets	$	67,828,166					$	64,550,881

Interest-Bearing Liabilities:
Transaction and money market accounts	$	32,098,340	$	180,220	2.25	%	$	28,986,998	$	173,481	2.40	%
Savings deposits		2,817,269		1,638	0.23	%		2,921,780		2,012	0.28	%
Certificates and other time deposits		7,184,745		62,358	3.48	%		7,177,451		66,100	3.69	%
Federal funds purchased		289,337		2,616	3.63	%		360,588		3,943	4.39	%
Securities sold with agreements to repurchase		293,341		1,477	2.02	%		287,341		1,462	2.04	%
Corporate and subordinated debentures		696,713		12,516	7.21	%		821,542		15,558	7.60	%
Other borrowings		154,947		1,485	3.84	%		3		-	-	%
Total interest-bearing liabilities		43,534,692		262,310	2.42	%		40,555,703		262,556	2.60	%
Noninterest-Bearing Liabilities:
Demand deposits		13,521,146						13,643,265
Other liabilities		1,719,228						1,659,331
Total noninterest-bearing liabilities ("Non-IBL")		15,240,374						15,302,596
Shareholders' equity		9,053,100						8,692,582
Total Non-IBL and shareholders' equity		24,293,474						23,995,178
Total Liabilities and Shareholders' Equity	$	67,828,166					$	64,550,881

Net Interest Income and Margin (Non-Tax Equivalent)			$	575,949	3.78	%			$	577,948	4.02	%
Net Interest Margin (Tax Equivalent)					3.78	%					4.02	%

Total Deposit Cost (without debt and other borrowings)					1.76	%					1.84	%
Overall Cost of Funds (including demand deposits)					1.84	%					1.94	%

(1)

Investment securities (taxable) and (tax-exempt) include trading securities.


	Six Months Ended
	June 30, 2026						June 30, 2025
	Average		Interest		Average		Average		Interest		Average
(Dollars in thousands)	Balance		Earned/Paid		Yield/Rate		Balance		Earned/Paid		Yield/Rate
Interest-Earning Assets:
Federal funds sold and interest-earning deposits with banks	$	1,632,577	$	28,029	3.46	%	$	2,041,094	$	42,379	4.19	%
Investment securities (taxable) ⁽¹⁾		8,235,859		145,332	3.56	%		7,533,730		121,951	3.26	%
Investment securities (tax-exempt) ⁽¹⁾		981,507		15,505	3.19	%		886,395		13,652	3.11	%
Loans held for sale		254,928		8,333	6.59	%		229,224		8,507	7.48	%
Acquired loans, net		13,460,345		449,855	6.74	%		16,911,413		614,318	7.33	%
Non-acquired loans		36,104,829		1,008,034	5.63	%		30,002,457		848,263	5.70	%
Total interest-earning assets		60,670,045		1,655,088	5.50	%		57,604,313		1,649,070	5.77	%
Noninterest-Earning Assets:
Cash and due from banks		546,326						584,462
Other assets		6,748,249						6,840,917
Allowance for credit losses		(584,284)						(611,799)
Total noninterest-earning assets		6,710,291						6,813,580
Total Assets	$	67,380,336					$	64,417,893

Interest-Bearing Liabilities:
Transaction and money market accounts	$	31,800,744	$	352,673	2.24	%	$	29,117,282	$	350,430	2.43	%
Savings deposits		2,819,875		3,280	0.23	%		2,913,417		3,956	0.27	%
Certificates and other time deposits		7,199,982		126,785	3.55	%		7,171,354		133,164	3.74	%
Federal funds purchased		292,256		5,251	3.62	%		342,096		7,422	4.38	%
Securities sold with agreements to repurchase		306,533		3,037	2.00	%		292,793		2,892	1.99	%
Corporate and subordinated debentures		696,655		25,023	7.24	%		787,166		28,063	7.19	%
Other borrowings		77,902		1,485	3.84	%		29,701		648	4.40	%
Total interest-bearing liabilities		43,193,947		517,534	2.42	%		40,653,809		526,575	2.61	%
Noninterest-Bearing Liabilities:
Demand deposits		13,440,627						13,568,711
Other liabilities		1,690,609						1,639,268
Total noninterest-bearing liabilities ("Non-IBL")		15,131,236						15,207,979
Shareholders' equity		9,055,153						8,556,105
Total Non-IBL and shareholders' equity		24,186,389						23,764,084
Total Liabilities and Shareholders' Equity	$	67,380,336					$	64,417,893

Net Interest Income and Margin (Non-Tax Equivalent)			$	1,137,554	3.78	%			$	1,122,495	3.93	%
Net Interest Margin (Tax Equivalent)					3.79	%					3.93	%

Total deposit cost (without debt and other borrowings)					1.76	%					1.86	%
Overall Cost of Funds (including demand deposits)					1.84	%					1.96	%

(1)

Investment securities (taxable) and (tax-exempt) include trading securities.

Investment Securities

The interest earned on investment securities increased in the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to a higher average balance in investment securities and a modest increase in the yield on the investment portfolio. The average balance of investment securities for the three and six months ended June 30, 2026 increased by approximately $699.9 million and $797.2 million, respectively, compared to the same periods in 2025. The Company has increased the size of the investment securities portfolio commensurate with the growth in the balance sheet. The improvement in the yield, as well as a shortened duration of the investment portfolio is a result of the reinvestment and repositioning strategies executed in the first quarter of 2025.

Loans

Interest earned on loans held for investment decreased slightly during the three and six months ended June 30, 2026, from the comparable periods in 2025. Some key highlights for the quarter ended June 30, 2026, are outlined below:

●

Our non-TE yield on total loans decreased 42 basis points in the second quarter of 2026 compared to the same period in 2025.

The yield on the acquired loan portfolio decreased 63 basis-point in the second quarter of 2026 compared to the same period in 2025.

◾

The decrease in interest income on acquired loans was primarily attributable to continued paydowns, pay-offs and renewals of acquired loans that were moved to our non-acquired loan portfolio, as well as a decrease in loan accretion of approximately $30.5 million and $53.5 million, respectively, for the three and six months ended June 30, 2026 compared to the same periods in 2025. The loan accretion is primarily related to the loan portfolio acquired from Independent.

The yield on the non-acquired loan portfolio decreased 15 basis points in the second quarter of 2026 compared to the same period in 2025.

◾

The decline in the yield on non-acquired loans primarily reflects the impact of new and renewed loans originating at lower rates in the current rate environment compared to the same period in 2025. The growth in interest income on non-acquired loans was attributable to organic loan growth and renewals of matured acquired loans that were moved to our non-acquired loan portfolio.

Interest-Bearing Liabilities

The quarter-to-date average balance of interest-bearing liabilities increased in the second quarter of 2026 compared to the same period in 2025, while the cost of interest-bearing liabilities decreased, reflecting lower market interest rates across most deposit and borrowing categories. Some key highlights for the quarter ended June 30, 2026, compared to the same period in 2025 include:

●

The cost of interest-bearing deposits decreased to 2.33% for the second quarter of 2026, compared to 2.48% for the same period in 2025.

Interest expense on interest-bearing deposits increased, as growth in the average balance of transaction and money market accounts outweighed the effect of lower interest rates paid across all deposit categories.

●

The average cost and interest expense of federal funds purchased decreased, reflecting both a lower average balance and lower costs in the lower interest rate environment.

●

The average cost and interest expense of corporate and subordinated debentures decreased. The decreases reflect the net effect of debt redemptions and subsequent subordinated debt issuances following prior-period debt assumed in the Independent acquisition along with the lower interest rate environment.

●

The average cost of other borrowings was 3.84% with an average balance of $154.9 million for the second quarter of 2026. The Company had no significant other borrowings during the second quarter 2025.

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 $122.1 million, or 0.9%, to $13.5 billion in the second quarter of 2026 compared to $13.6 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 June 30, 2026, and 2025, noninterest income comprised 14.4%, and 13.1%, respectively, of total net interest income and noninterest income. For the six months ended June 30, 2026, and 2025, noninterest income comprised 14.8%, and 13.3%, respectively, of total net interest income and noninterest income.


		Three Months Ended						Six Months Ended
		June 30,						June 30,
(Dollars in thousands)		2026			2025			2026			2025
Service charges on deposit accounts		$	26,838		$	24,667		$	52,578		$	49,619
Debit, prepaid, ATM and merchant card related income			14,730			13,202			27,689			24,183
Mortgage banking income			4,890			5,936			15,906			13,673
Trust and investment services income			15,164			14,419			29,635			29,351
Correspondent banking and capital markets income			20,811			13,767			42,238			23,312
Securities losses, net			-			-			-			(228,811)
Gain on sale-leaseback, net of transaction costs			-			-			-			229,279
SBA income			1,264			2,430			2,764			5,662
Bank owned life insurance income			9,624			9,153			19,118			19,352
Other			3,405			3,243			6,896			7,285
Total noninterest income		$	96,726		$	86,817		$	196,824		$	172,905

Noninterest income increased during the second quarter of 2026 compared to the same period in 2025. This quarterly change in total noninterest income resulted from the following:

●

Service charges on deposit accounts were higher mainly attributable to deposit fee income from the growth in deposit accounts.

●

Correspondent banking and capital markets income was higher, primarily attributable to a $3.0 million increase in income generated from the sale of customer swap ARC hedges, reflecting increased hedging activity in a comparatively lower interest rate environment. The increase was also driven by lower expense associated with variation margin payments for centrally cleared swaps where we recorded an expense of $4.0 million related to variation margin payments in the second quarter of 2026 compared to an expense of $5.4 million in the second quarter of 2025. In addition, other operational revenue was higher by approximately $1.7 million.

Noninterest income increased during the six months ended June 30, 2026 compared to the same period in 2025. The categories and explanations for the fluctuations year-to-date, except the items discussed below, are similar to the ones noted above in the quarterly comparison.

●

Debit, prepaid, ATM and merchant card related income was higher in 2026 compared to 2025 mainly due to higher bank card and ATM related fee income of $3.5 million.

●

Mortgage banking income was higher in 2026 compared to 2025, as an increase in mortgage servicing related income was partially offset by a decrease in secondary market mortgage income. Mortgage production increased from $1.1 billion in the first six months of 2025 to $1.7 billion in the first six months of 2026. During the first six months of 2026, we sold 25% of our mortgage production to the secondary market versus 45% during the same period in 2025.

The mortgage servicing related income, net of the hedge, increased mainly due to a $4.5 million increase in the change in fair value of the MSR, including decay. The increase in fair value of the MSR between the comparable periods was primarily due to an increase in the change in fair value from interest rates of $14.1 million, offset by decreases from gains/losses on the MSR hedge of $7.5 million and an increase in MSR decay of $2.1 million.

Mortgage income from the secondary market decreased between the comparable periods resulting from a $2.7 million decrease in gain on sale of mortgage loans, which is net of the commission expense related to mortgage production, partially offset by an increase in MBS forward trades of $1.4 million. Mortgage commission expense was $3.7 million in 2026 compared to $4.1 million in 2025.

●

During the first quarter of 2025, the Company recorded net losses on the sales of investment securities, excluding the sales of investment securities acquired from Independent, substantially offset by a gain on the sale of bank properties, net of transaction costs, from a sale-leaseback transaction completed in February 2025.

●

SBA income was lower primarily attributable to lower gains on the sale of SBA loans of $2.3 million. SBA income includes changes in the fair value of the servicing asset, loan servicing fees and gains on sale of SBA loans.

Noninterest Expense


		Three Months Ended						Six Months Ended
		June 30,						June 30,
(Dollars in thousands)		2026			2025			2026		2025
Salaries and employee benefits		$	205,377		$	200,162		$	411,030	$	395,973
Occupancy expense			43,878			41,507			86,180		77,000
Information services expense			29,136			30,155			58,840		61,517
OREO and loan related expense			952			2,295			5,330		4,079
Amortization of intangibles			21,041			24,048			42,345		47,879
Business development and staff related expense			10,639			7,182			22,001		13,692
Supplies, printing and postage expense			3,885			3,970			7,139		7,098
Professional fees			5,090			4,658			10,329		9,367
FDIC assessment and other regulatory charges			10,753			11,469			21,010		22,727
Advertising and marketing			3,836			3,010			7,161		5,300
Merger, branch consolidation, severance-related, and other expense			-			24,379			-		92,385
Other			23,162			22,226			45,908		46,870
Total noninterest expense		$	357,749		$	375,061		$	717,273	$	783,887

Noninterest expense decreased by $17.3 million, or 4.6%, in the second quarter of 2026 compared to the same period in 2025, primarily resulted from the following expenses:

●

Salaries and employee benefits increased primarily attributable to higher commission expense of $4.9 million, resulting from an increase in the number of employees as a result of a hiring initiative to expand our sales force.

●

Occupancy expense increased in the second quarter of 2026 compared to the same period in 2025, due mainly to increases in furniture and equipment costs, including related depreciation, and lease expenses of $1.5 million and $1.0 million, respectively.

●

Amortization of intangibles decreased by $3.0 million, or 12.5%, due to lower amortization expense related to the core deposit intangible recognized in connection with the Independent acquisition, which is subject to accelerated amortization in the earlier periods of its estimated life.

●

Business development and staff related expense increased due mainly to higher employee travel and entertainment, and recruitment-related costs of approximately $1.4 million and $1.5 million, respectively.

●

The Company did not record merger, branch consolidation, severance related and other expense in the second quarter of 2026. During the second quarter of 2025, the Company recorded $24.4 million of such expenses, primarily associated with the Independent acquisition.

Noninterest expense decreased by $66.6 million, or 8.5%, during the six months ended June 30, 2026, compared to the same period in 2025. The categories and explanations for the year-to-date fluctuations are generally consistent with those discussed in the quarterly comparison above, except as noted below.

●

Information services expense decreased $2.7 million, or 4.4%, in 2026 compared to the same period in 2025. The decrease was primarily attributable to lower costs associated with systems and software initiatives that were completed in prior periods.

Income Tax Expense

Our effective tax rate was 23.07% for the three months ended June 30, 2026, compared to 23.73% for the three months ended June 30, 2025. The decrease in the effective rate for the quarter, when compared to the same period in the prior year, was driven primarily by higher non-deductible executive compensation, as well as non-deductible merger expenses related to the acquisition of Independent in 2025 compared to 2026. In addition, there was an increase in tax-exempt interest income in the current quarter compared to the same period in 2025. This was partially offset by an increase in pre-tax book income in the second quarter of 2026 compared to the second quarter of 2025.

Our effective tax rate for the first six months of the year was 22.79% compared to 24.57% for the first six months of 2025. The decrease in the year-to-date effective tax rate compared to the same period of 2025 was due primarily to a reduction in non-deductible executive compensation, an increase in tax-exempt interest income and a decrease in non-deductible FDIC premiums. In addition to these items, there was a $5.6 million remeasurement of the Company's deferred tax balances resulting from the acquisition of Independent in the first quarter of 2025.

Segment Reporting

As discussed in Note 21 - 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. There have been no material changes to the Company's segment structure during the six months ended June 30, 2026.

The table below provides PPNR and TE NIM information of the General Banking Unit.

Pre-Provision Net Revenue and Tax Equivalent Net Interest Margin


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars and shares in thousands except for per share amounts)	2026		2025		2026		2025
PPNR (Non-GAAP)
Net Income (GAAP) (a)	$	230,022	$	215,224	$	455,842		304,304
Plus:
Provision for credit losses		15,919		7,505		26,727		108,067
Income tax provision		68,985		66,975		134,536		99,142
PPNR (Non-GAAP) (b)	$	314,926	$	289,704	$	617,105	$	511,513

PPNR, Adjusted (Non-GAAP)
PPNR (Non-GAAP)	$	314,926	$	289,704	$	617,105	$	511,513
Less:
Gain on sale leaseback, net of transaction costs		-		-		-		(229,279)
Plus:
Securities losses, net		-		-		-		228,811
Merger, branch consolidation, severance-related, and other expense		-		24,379		-		92,385
PPNR, adjusted (Non-GAAP) (d)	$	314,926	$	314,083	$	617,105	$	603,430

PPNR per Share (Non-GAAP)
Diluted weighted-average common share outstanding (c)		97,677		101,845		98,292		101,836
Earnings per common share - Diluted ((a)/(c)) (GAAP)	$	2.35	$	2.11	$	4.64	$	2.99

PPNR per share ((b)/(c)) (Non-GAAP)	$	3.22	$	2.84	$	6.28	$	5.02

Adjusted PPNR per Share (Non-GAAP)
Adjusted PPNR per share ((d)/(c)) (Non-GAAP)	$	3.22	$	3.08	$	6.28	$	5.93

Net Interest Margin, Tax Equivalent ("TE") (Non-GAAP)
Average interest earning assets (e)	$	61,133,759	$	57,710,001	$	60,670,045	$	57,604,313

Net interest income (f)		575,949		577,948		1,137,554		1,122,495
Net interest margin, non-TE ((f)*/(e)) (GAAP)		3.78%		4.02%		3.78%		3.93%
TE adjustment (g)		751		672		1,511		1,456
Net interest margin, TE (((f)+(g))*/(e)) (Non-GAAP)		3.78%		4.02%		3.79%		3.93%

Analysis of Financial Condition

Summary

Our total assets increased approximately $1.7 billion, or 2.5%, from December 31, 2025, to June 30, 2026, to approximately $68.9 billion. Within total assets, cash and cash equivalents decreased by $822.2 million, or 25.9%, and net loans increased $2.2 billion, or 4.7%, while investment securities increased $205.7 million, or 2.4%, during the period. Within total liabilities, deposits grew $1.2 billion, or 2.2%, and federal funds purchased and securities sold under agreements to repurchase decreased by $48.7 million, or 7.9%. Total corporate and subordinated debentures and other borrowings increased by $300.2 million, or 43.1%. Total shareholder's equity increased $72.4 million, or 0.8%. The decrease in cash and cash equivalents was due to the funding of investment securities and loan growth in the first half of 2026. The increase in deposits was mainly related to an $871.8 million increase in interest-bearing checking accounts and a $501.2 million increase in time deposits. The increase in loans was driven by organic growth. Our loan to deposit ratio was 90% and 88% at June 30, 2026 and December 31, 2025, respectively, while our percentage of noninterest-bearing deposit accounts to total deposits was 24% at both June 30, 2026, and December 31, 2025.

Investment Securities

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 June 30, 2026, investment securities totaled $8.9 billion, compared to $8.7 billion at December 31, 2025, an increase of $205.7 million, or 2.4%. The Bank purchased $2.4 billion of investment securities during the six months ended June 30, 2026 mostly from reinvesting funds provided by the paydowns, maturities and calls of investment securities. The increases in investment securities were partially offset by reductions from maturities, calls, sales and paydowns of investment securities totaling $2.1 billion and the net amortization of premiums of $5.6 million during the six months ended June 30, 2026. At June 30, 2026, approximately 74.0% of the investment portfolio was classified as available for sale, approximately 21.9% was classified as held to maturity and approximately 4.1% was classified as other investments.

At June 30, 2026, the unrealized net losses of the available for sale securities portfolio was $418.3 million, or 6.0%, below its amortized cost basis, compared to an unrealized net loss of $382.8 million, or 5.7%, at December 31, 2025. At June 30, 2026, the unrealized net loss of the held to maturity securities portfolio was $314.7 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 following is the combined amortized cost and fair value of investment securities available for sale and held for maturity, aggregated by credit quality indicator:

 

Amortized

Fair

Unrealized

(Dollars in thousands)

Cost

Value

Net Loss

AAA - A

Not Rated

June 30, 2026

U.S. Government agencies

132,915

116,120

(16,795)

132,915

Residential mortgage-backed securities issued by U.S. government

agencies or sponsored enterprises *

3,116,873

2,801,204

(315,669)

3,116,784

Residential collateralized mortgage-obligations issued by U.S. government

agencies or sponsored enterprises *

2,446,682

2,340,880

(105,802)

2,446,682

Commercial mortgage-backed securities issued by U.S. government

agencies or sponsored enterprises *

1,420,750

1,285,272

(135,478)

117,132

1,303,618

State and municipal obligations

1,240,617

1,114,750

(125,867)

1,232,655

7,962

Small Business Administration loan-backed securities

591,349

558,887

(32,462)

591,349

Corporate securities

23,000

22,106

(894)

23,000

8,972,186

8,239,219

(732,967)

2,074,140

6,898,046

* 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.

At June 30, 2026, we had 1,129 investment securities including both available for sale and held to maturity, in an unrealized loss position, which totaled $747.0 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 56 securities, while the total dollar amount of the unrealized loss increased by $9.8 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 June 30, 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.

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. 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 June 30, 2026:

Due In

Due After

1 Year or Less

1 Thru 5 Years

5 Thru 10 Years

10 Years

Total

(Dollars in thousands)

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

Held to Maturity (amortized cost)

U.S. Government agencies

32,929

1.89

99,986

1.68

132,915

1.73

Residential mortgage-backed securities issued by U.S. government

agencies or sponsored enterprises

51,625

2.09

114,648

1.24

923,840

1.91

1,090,113

1.80

Residential collateralized mortgage-obligations issued by U.S. government

agencies or sponsored enterprises

363,925

2.51

363,925

2.51

Commercial mortgage-backed securities issued by U.S. government

agencies or sponsored enterprises

88,029

1.05

115,845

1.08

121,106

1.61

324,980

1.27

Small Business Administration loan-backed securities

43,821

1.28

43,821

1.28

Total held to maturity

172,583

1.52

330,479

1.32

1,452,692

1.98

1,955,754

1.83

Available for Sale (fair value)

Residential mortgage-backed securities issued by U.S. government

agencies or sponsored enterprises

2.49

6,888

2.17

163,915

3.05

1,715,667

3.66

1,886,566

3.61

Residential collateralized mortgage-obligations issued by U.S. government

agencies or sponsored enterprises

170

2.43

15,496

4.47

88,475

4.86

1,930,018

4.54

2,034,159

4.56

Commercial mortgage-backed securities issued by U.S. government

agencies or sponsored enterprises

8,703

2.78

341,664

4.01

475,076

3.39

192,036

2.18

1,017,479

3.29

State and municipal obligations

7,996

3.39

29,473

3.12

227,292

2.74

849,989

3.52

1,114,750

3.35

Small Business Administration loan-backed securities

8,560

2.16

7,811

4.50

176,473

4.28

330,273

3.13

523,117

3.53

Corporate securities

9,936

6.70

12,170

4.29

22,106

5.31

Total available for sale

25,525

2.76

411,268

4.01

1,143,401

3.47

5,017,983

3.88

6,598,177

3.81

Total other investments

366,986

2.35

366,986

2.35

Total investment securities

25,525

2.76

583,851

3.27

1,473,880

2.99

6,837,661

3.40

8,920,917

3.31

Percent of total

Cumulative percent of total

100

(1)

Yields on tax exempt income have been presented on a taxable equivalent basis in the table above.

(2)

FRB, FHLB and other non-marketable equity securities have no set maturity date and are classified in "Due after 10 Years."

(3)

The total values presented in the table above represent total fair value for available for sale and amortized cost for held to maturity.

Approximately 85.9% (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 13.8% (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 or higher category.

As of June 30, 2026, the portfolio had an effective duration of 4.63 years. We continue to monitor duration risk and seek to align duration within our risk appetite.

The following table presents a summary of our investment portfolio duration for the periods presented:


	June 30, 2026			December 31, 2025
(Dollars in thousands, duration in years)	Amount		Duration	Amount		Duration
Held to Maturity (amortized cost)
U.S. Government agencies	$	132,915	5.19	$	132,913	5.62
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises		1,090,113	5.98		1,153,024	6.06
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises		363,925	6.63		379,107	6.63
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises		324,980	4.78		336,910	5.05
Small Business Administration loan-backed securities		43,821	5.76		46,076	5.99
Total held to maturity	$	1,955,754	5.84	$	2,048,030	5.97
Available for Sale (fair value)
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises	$	1,886,566	4.30	$	1,698,108	4.43
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises		2,034,159	2.85		2,185,584	2.54
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises		1,017,479	4.19		832,449	4.55
State and municipal obligations		1,114,750	7.73		1,007,412	7.79
Small Business Administration loan-backed securities		523,117	2.22		568,433	2.19
Corporate securities		22,106	0.39		21,770	0.51
Total available for sale	$	6,598,177	4.29	$	6,313,756	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 June 30, 2026, we determined that there was no impairment on our other investment securities. As of June 30, 2026, other investment securities represented approximately $367.0 million, or 0.53% of total assets, and primarily consists of FHLB and FRB stock which totals $266.7 million, or 0.39% of total assets. There were no gains or losses on the sales of these securities for three and six months ended June 30, 2026, and 2025, respectively.

Trading Securities

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 $191.1 million and $110.2 million at June 30, 2026, and December 31, 2025.

Loans Held for Sale

The balance of loans held for sale increased $60.1 million from December 31, 2025, to $405.4 million on June 30, 2026. Loans held for sale at June 30, 2026 and December 31, 2025 consisted of mortgage and SBA loans held for sale.

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 $336.7 million at June 30, 2026 compared to $283.9 million at December 31, 2025. See Note 18 - SBA Loans Held for Sale for more information.

Mortgage loans held for sale totaled $68.7 million at June 30, 2026, an increase of $7.3 million compared to $61.4 million at December 31, 2025. Total mortgage production was $1.0 billion in the second quarter of 2026 compared to $661 million in the first quarter of 2026. The increase in production from the prior quarter was due to both seasonal timing as there is normally more activity in home sales in the spring and summer along with Company production growth initiatives in 2026 and expanding its revenue producers. The percentage of mortgage production sold into the secondary market increased in the second quarter of 2026 to 33% from 28% in the first quarter of 2026. 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.

Loans

The following table presents a summary of the loan portfolio by category (excludes loans held for sale):


LOAN PORTFOLIO	June 30,			% of		December 31,			% of
(Dollars in thousands)	2026			Total		2025			Total
Acquired loans:
Acquired - non-purchased credit deteriorated loans:
Construction and land development	$	447,548		0.9	%	$	580,657		1.2	%
Commercial non-owner-occupied		4,400,751		8.7	%		4,766,211		9.9	%
Commercial owner-occupied real estate		1,820,206		3.6	%		1,982,641		4.1	%
Consumer owner-occupied		1,072,946		2.1	%		1,171,043		2.4	%
Home equity loans		182,759		0.4	%		209,048		0.5	%
Commercial and industrial		1,366,381		2.7	%		1,789,588		3.7	%
Other income producing property		581,378		1.1	%		672,593		1.4	%
Consumer non real estate		49,718		0.1	%		60,528		0.1	%
Other		104		-	%		105		-	%
Total acquired - non-purchased credit deteriorated loans		9,921,791		19.6	%		11,232,414		23.1	%
Acquired - purchased credit deteriorated loans (PCD):
Construction and land development		69,288		0.1	%		106,815		0.2	%
Commercial non-owner-occupied		1,823,671		3.6	%		1,960,076		4.0	%
Commercial owner-occupied real estate		423,285		0.8	%		486,118		1.0	%
Consumer owner-occupied		171,224		0.3	%		186,905		0.4	%
Home equity loans		17,360		-	%		18,797		-	%
Commercial and industrial		91,453		0.2	%		148,089		0.3	%
Other income producing property		43,348		0.1	%		49,090		0.1	%
Consumer non real estate		19,163		-	%		21,609		-	%
Total acquired - purchased credit deteriorated loans (PCD)		2,658,792		5.1	%		2,977,499		6.1	%
Total acquired loans		12,580,583		24.7	%		14,209,913		29.2	%
Non-acquired loans:
Construction and land development		2,466,132		4.9	%		1,860,888		3.8	%
Commercial non-owner-occupied		11,256,695		22.1	%		9,925,473		20.4	%
Commercial owner-occupied real estate		5,608,900		11.0	%		5,108,232		10.5	%
Consumer owner-occupied		7,880,912		15.5	%		7,260,486		14.9	%
Home equity loans		1,708,901		3.4	%		1,603,944		3.3	%
Commercial and industrial		7,920,610		15.6	%		7,243,731		14.9	%
Other income producing property		550,612		1.1	%		510,470		1.1	%
Consumer non real estate		865,154		1.7	%		873,129		1.8	%
Other		8,373		-	%		2,261		-	%
Total non-acquired loans		38,266,289		75.3	%		34,388,614		70.8	%
Total loans (net of unearned income)	$	50,846,872		100.0	%	$	48,598,527		100.0	%

Total loans, net of deferred loan costs and fees (excluding loans held for sale), increased during the first six months of 2026 by $2.2 billion, or 9.3% annualized, to $50.8 billion at June 30, 2026. Our non-acquired loan portfolio increased by $3.9 billion, or 22.7% annualized, mainly driven by organic growth and renewals of acquired loans that are moved to our non-acquired loan portfolio. Commercial non-owner-occupied loans, commercial and industrial loans, consumer owner-occupied loans, construction and land development loans and commercial owner-occupied real estate loans led the way with $1.3 million, $676.9 million, $620.4 million, $605.2 million and $500.7 million in year-to-date loan growth, respectively, or 27.0%, 18.8%, 17.2%, 65.6% and 19.8% annualized growth, respectively. The acquired loan portfolio decreased by $1.6 billion, or 23.1% annualized. 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 decreased were commercial non-owner-occupied loans, commercial and industrial loans, commercial owner-occupied real estate loans, construction and land development loans and consumer owner-occupied loans which decreased by $501.9 million, $479.8 million, $225.3 million, $170.6 million and $113.8 million, respectively, during the first six months of 2026. Acquired loans as a percentage of total loans decreased to 24.7% and non-acquired loans as a percentage of the overall portfolio increased to 75.3% at June 30, 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 $17.5 billion, approximately 34.4% of the total loans held for investment, was the largest category of the loan portfolio as of June 30, 2026. As of June 30, 2026, approximately 93% of the commercial non-owner-occupied portfolio was located within the Company's footprint. Of the $17.5 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			Average		Weighted-Average		% of		% of Substandard &		% of
(Dollars in thousands)	Balance ⁽¹⁾			Loan Size		Loan-to-Value ⁽³⁾		Non-Accrual		Accruing		Special Mention
June 30, 2026
Loan Type:
Retail	$	4,847,183		$	2,410	57	%	0.10	%	1.84	%	0.80	%
Multifamily		2,739,256			4,022	54	%	0.97	%	28.33	%	10.92	%
Warehouse/Industrial		2,673,245			2,281	59	%	-	%	6.52	%	2.57	%
Office		1,795,993			1,649	57	%	0.11	%	6.23	%	2.34	%
Hotel		1,548,077			5,886	54	%	0.54	%	2.24	%	1.72	%
Other		1,034,806			1,797	55	%	0.12	%	6.37	%	2.48	%
Medical		1,023,815			2,188	60	%	-	%	1.33	%	0.60	%
Self Storage		707,850			3,522	54	%	-	%	11.29	%	7.97	%

(1)

Net book balance in each segment that represents 2% or more of commercial non-owner-occupied portfolio as of June 30, 2026.

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. In addition, 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.

Management continues to utilize a probability-weighted blend of baseline, upside, and adverse economic scenarios in estimating expected credit losses. For the quarter ended June 30, 2026, management maintained scenario weightings of 40% baseline, 20% upside, and 40% adverse. Although the June economic forecast reflected increased concern regarding inflation, interest rates, energy prices, and geopolitical developments, forecast assumptions and their impact on modeled losses remained generally consistent with the prior quarter. Management believes a moderate weighting toward adverse conditions remains appropriate given continued economic uncertainty, notwithstanding generally stable credit conditions and macroeconomic forecasts. The Company recorded a total provision for credit losses of $15.9 million for the second quarter of 2026.

As of June 30, 2026, the balance of the ACL was $586.7 million or 1.15% of total loans. The ACL increased $0.8 million from the balance of $585.9 million recorded at March 31, 2026 and increased $1.5 million from the balance of $585.2 million recorded at December 31, 2025. The increase during the second quarter of 2026 included $8.6 million in provision for credit losses and $7.8 million in net charge-offs. The increase during the six months ended June 30, 2026 included $19.8 million in provision for credit losses and $18.4 million in net charge-offs.

At June 30, 2026, the Company had a reserve on unfunded commitments of $76.5 million, which was recorded as a liability on the Consolidated Balance Sheet, compared to $69.2 million at March 31, 2026, and $69.6 million at December 31, 2025. During the three and six months ended June 30, 2026, the Company recorded an increase in the reserve for unfunded commitments of $7.3 million and $6.9 million, respectively. For the prior comparative period, the Company recorded an increase in the reserve for unfunded commitments of $2.4 million and $19.4 million, respectively. Of the $19.4 million of provision for credit losses recorded for unfunded commitments during the six months ended June 30, 2025, $12.1 million was related to the initial provision for unfunded commitments acquired from Independent and $7.3 million was for all other unfunded commitments.

The Company did not have an allowance for credit losses or record a provision for credit losses on investment securities or other financial asset during the six months ended June 30, 2026.

The ACL provides 2.14 times coverage of nonperforming loans at June 30, 2026. Net charge-offs to total average loans during the three and six months ended June 30, 2026, were 0.06% and 0.07%, respectively. Net charge-offs, excluding acquisition date charge-offs recorded for PCD loans acquired from Independent, to total average loans during the three and six months ended June 30, 2025, were 0.06% and 0.05%, respectively. We continue to experience solid and stable asset quality numbers and ratios as of June 30, 2026.

The following table provides the allocation for expected credit losses by loan segment and each loan segment as a percentage of total loans as of June 30, 2026:


	June 30, 2026
(Dollars in thousands)	Amount		%*
Residential Mortgage Senior	$	65,629	19.8	%
Residential Mortgage Junior		1,133	0.1	%
Revolving Mortgage		14,085	3.9	%
Residential Construction		9,353	1.2	%
Other Construction and Development		55,076	4.5	%
Consumer		16,616	1.8	%
Multifamily		59,324	5.4	%
Municipal		1,819	1.9	%
Owner-Occupied Commercial Real Estate		72,196	15.4	%
Non-Owner-Occupied Commercial Real Estate		178,804	29.1	%
Commercial and Industrial		112,629	16.9	%
Total	$	586,664	100.0	%

* 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 three and six months ended June 30, 2026, and 2025:


	Three Months Ended
	June 30, 2026						June 30, 2025
(Dollars in thousands)	Net Recovery (Charge-Off)		Average Balance		Net Recovery (Charge-Off) Ratio		Net Recovery (Charge-Off)		Average Balance		Net Recovery (Charge-Off) Ratio
Residential Mortgage Senior	$	(980)	$	9,900,402	(0.04)	%	$	(191)	$	9,276,546	(0.01)	%
Residential Mortgage Junior		4		44,828	0.04	%		64		50,429	0.51	%
Revolving Mortgage		(3)		1,977,323	(0.00)	%		125		1,768,088	0.03	%
Residential Construction		-		625,527	-	%		-		680,839	-	%
Other Construction and Development		314		2,105,899	0.06	%		299		2,714,334	0.04	%
Consumer		(1,342)		930,493	(0.58)	%		(1,655)		1,034,608	(0.64)	%
Multifamily		146		2,695,938	0.02	%		(18,065)		2,488,133	(2.91)	%
Municipal		-		941,235	-	%		-		844,717	-	%
Owner-Occupied Commercial Real Estate		(105)		7,750,422	(0.01)	%		(419)		7,445,999	(0.02)	%
Non-Owner-Occupied Commercial Real Estate		(921)		14,611,377	(0.03)	%		767		13,119,321	0.02	%
Commercial and Industrial		(4,954)		8,663,670	(0.23)	%		(5,431)		7,606,398	(0.29)	%
Total	$	(7,841)	$	50,247,114	(0.06)	%	$	(24,506)	$	47,029,412	(0.21)	%


	Six Months Ended
	June 30, 2026						June 30, 2025
(Dollars in thousands)	Net Recovery (Charge-Off)		Average Balance		Net Recovery (Charge-Off) Ratio		Net Recovery (Charge-Off)		Average Balance		Net Recovery (Charge-Off) Ratio
Residential Mortgage Senior	$	(2,513)	$	9,778,083	(0.05)	%	$	(559)	$	9,253,756	(0.01)	%
Residential Mortgage Junior		97		45,492	0.43	%		75		50,304	0.30	%
Revolving Mortgage		230		1,949,247	0.02	%		276		1,763,744	0.03	%
Residential Construction		-		607,779	-	%		-		679,166	-	%
Other Construction and Development		202		2,036,644	0.02	%		397		2,707,665	0.03	%
Consumer		(2,589)		936,484	(0.56)	%		(4,953)		1,032,067	(0.97)	%
Multifamily		162		2,732,796	0.01	%		(18,065)		2,482,020	(1.47)	%
Municipal		-		932,956	-	%		-		842,642	-	%
Owner-Occupied Commercial Real Estate		(116)		7,664,942	(0.00)	%		(1,875)		7,427,706	(0.05)	%
Non-Owner-Occupied Commercial Real Estate		(913)		14,316,052	(0.01)	%		(12,693)		13,087,090	(0.20)	%
Commercial and Industrial		(12,914)		8,564,699	(0.30)	%		(30,978)		7,587,710	(0.82)	%
Total	$	(18,354)	$	49,565,174	(0.07)	%	$	(68,375)	$	46,913,870	(0.29)	%

The following tables present summary of ACL for the three and six months ended June 30, 2026, and 2025:


		Three Months Ended June 30,
		2026								2025
		Non-PCD			PCD					Non-PCD			PCD
(Dollars in thousands)		Loans			Loans			Total		Loans			Loans			Total
Balance at beginning of period		$	520,619		$	65,263		$	585,882	$	526,615		$	97,075		$	623,690
Allowance adjustment - FMV for Independent acquisition			-			-			-		-			16,798			16,798
Independent Day 1 PCD loan net charge-offs			-			-			-		-			(17,259)			(17,259)
Loans charged off			(10,581)			(1,161)			(11,742)		(11,923)			(42)			(11,965)
Recoveries of loans previously charged off			2,470			1,431			3,901		2,740			1,978			4,718
Net (charge-offs) recoveries			(8,111)			270			(7,841)		(9,183)			(15,323)			(24,506)
Provision (recovery) for credit losses			13,984			(5,361)			8,623		17,582			(12,518)			5,064
Balance at end of period		$	526,492		$	60,172		$	586,664	$	535,014		$	86,032		$	621,046

Total loans, net of unearned income:
At period end		$	50,846,872							$	47,267,247
Average			50,247,114								47,029,412
Net charge-offs as a percentage of average loans (annualized)			0.06	%							0.21	%
Allowance for credit losses as a percentage of period end loans			1.15	%							1.31	%
Allowance for credit losses as a percentage of period end non-performing loans ("NPLs")			213.79	%							208.57	%


		Six Months Ended June 30,
		2026								2025
		Non-PCD			PCD					Non-PCD			PCD
(Dollars in thousands)		Loans			Loans			Total		Loans			Loans			Total
Allowance for credit losses at January 1		$	516,041		$	69,156		$	585,197	$	444,959		$	20,321		$	465,280
Allowance adjustment - FMV for Independent acquisition			-			-			-		-			135,441			135,441
Initial Allowance for Non-PCD loans acquired during period			-			-			-		79,971			-			79,971
Independent Day 1 PCD loan net charge-offs			-			-			-		-			(56,688)			(56,688)
Loans charged-off			(24,176)			(2,000)			(26,176)		(18,947)			(440)			(19,387)
Recoveries of loans previously charged off			5,503			2,319			7,822		4,376			3,324			7,700
Net (charge-offs) recoveries			(18,673)			319			(18,354)		(14,571)			(53,804)			(68,375)
Provision (recovery) for credit losses			29,124			(9,303)			19,821		24,655			(15,926)			8,729
Balance at end of period		$	526,492		$	60,172		$	586,664	$	535,014		$	86,032		$	621,046

Total loans, net of unearned income:
At period end		$	50,846,872							$	47,267,247
Average			49,565,174								46,913,870
Net charge-offs as a percentage of average loans (annualized)			0.07	%							0.29	%
Allowance for credit losses as a percentage of period end loans			1.15	%							1.31	%
Allowance for credit losses as a percentage of period end non-performing loans ("NPLs")			213.79	%							208.57	%

Nonperforming Assets ("NPAs")

The following table summarizes our nonperforming assets for the past five quarters:


		June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)		2026			2026			2025			2025			2025
Non-acquired:
Nonaccrual loans		$	152,908		$	159,011		$	157,662		$	141,409		$	132,313
Accruing loans past due 90 days or more			2,961			6,915			2,997			4,352			3,687
Modified loans to a borrower experiencing financial difficulty - nonaccrual			18,356			18,147			4,313			5,342			9,597
Total non-acquired nonperforming loans			174,225			184,073			164,972			151,103			145,597
Other real estate owned ("OREO") ^{(1) (6)}			11,175			7,971			4,961			11,404			16,842
Other nonperforming assets ⁽²⁾			547			368			312			566			446
Total nonperforming assets excluding acquired assets			185,947			192,412			170,245			163,073			162,885
Acquired:
Nonaccrual loans ⁽³⁾			66,143			106,922			129,402			143,839			145,423
Accruing loans past due 90 days or more			835			1,986			1,944			891			707
Modified loans to a borrower experiencing financial difficulty - nonaccrual			33,209			9,080			5,778			5,856			6,043
Total acquired nonperforming loans			100,187			117,988			137,124			150,586			152,173
Acquired OREO ^{(1) (7)}			1,220			18,090			3,810			7,015			8,728
Other acquired nonperforming assets ⁽²⁾			34			65			91			132			55
Total acquired nonperforming assets			101,441			136,143			141,025			157,733			160,956
Total nonperforming assets		$	287,388		$	328,555		$	311,270		$	320,806		$	323,841

Excluding Acquired Assets
Total nonperforming assets as a percentage of total loans and repossessed assets ⁽⁴⁾			0.49	%		0.53	%		0.49	%		0.50	%		0.52	%
Total nonperforming assets as a percentage of total assets ⁽⁵⁾			0.27	%		0.28	%		0.25	%		0.25	%		0.25	%
Nonperforming loans as a percentage of period end loans ⁽⁴⁾			0.46	%		0.51	%		0.48	%		0.46	%		0.46	%

Including Acquired Assets
Total nonperforming assets as a percentage of total loans and repossessed assets ⁽⁴⁾			0.57	%		0.66	%		0.64	%		0.67	%		0.68	%
Total nonperforming assets as a percentage of total assets ⁽⁵⁾			0.42	%		0.48	%		0.46	%		0.49	%		0.49	%
Nonperforming loans as a percentage of period end loans ⁽⁴⁾			0.54	%		0.61	%		0.62	%		0.63	%		0.63	%

(1)

Consists of real estate acquired as a result of foreclosure.

(2)

Consists of non-real estate foreclosed assets, such as repossessed vehicles.

(3)

Includes nonaccrual loans that are purchase credit deteriorated (PCD loans).

(4)

Loan data excludes mortgage loans held for sale.

(5)

For purposes of this calculation, total assets include all assets (both acquired and non-acquired).

(6)

Excludes non-acquired bank premises held for sale of $0, $0, $0, $8.6 million, $900,000, as of June 30, 2026, March 31, 2026, December 31, 2025, September 30, 2025, and June 30, 2025, respectively, that is now separately disclosed on the balance sheet.

(7)

Excludes acquired bank premises held for sale of $0, $0, $0, $0, $78.5 million, as of June 30, 2026, March 31, 2026, December 31, 2025, September 30, 2025, and June 30, 2025, respectively, that is now separately disclosed on the balance sheet.

Total nonperforming assets were $287.4 million, or 0.57% of total loans and repossessed assets, at June 30, 2026, a decrease of $23.9 million, or 7.7%, from December 31, 2025. Total nonperforming loans were $274.4 million, or 0.54%, of total loans, at June 30, 2026, a decrease of $27.7 million, or 9.2%, from December 31, 2025. Non-acquired nonperforming loans increased by $9.3 million from December 31, 2025. The increase in non-acquired nonperforming loans was driven primarily by an increase in modified loans to a borrower experiencing financial difficulty of $14.0 million, an increase in consumer nonaccrual loans of $5.7 million, offset by a decline in commercial nonaccrual loans of $10.4 million. Acquired nonperforming loans decreased $36.9 million from December 31, 2025. The decrease in the acquired nonperforming loan balances was due primarily to an decrease in commercial nonaccrual loans of $66.6 million, a decrease in accruing loans past due 90 days or more of $1.2 million, offset by an increase in modified loans to a borrower experiencing financial difficulty of $27.4 million and an increase in consumer nonaccrual loans of $3.4 million. Approximately $20.0 million of the decrease in acquired commercial nonaccrual loans was due to one commercial non-owner occupied loan moving to OREO during the first quarter of 2026.

Interest-Bearing Liabilities

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 $1.1 billion to $42.9 billion at June 30, 2026, from $41.8 billion at December 31, 2025. Interest-bearing checking accounts increased $871.8 million and time deposits increased by $501.2 billion while money market accounts decreased by $220.6 million during the first half of 2026. The growth in interest-bearing checking accounts was mainly through an increase in reciprocal and brokered checking accounts of $870.0 million while the growth in time deposits was mainly through an increase in brokered accounts of $525.0 million. The Company has allowed some higher costing local deposits run off in 2026, replacing them with brokered deposits at lower interest rates. Average interest-bearing deposits increased $1.1 billion to $42.1 billion for the quarter ended June 30, 2026 compared to the quarter ended December 31, 2025. The increase in average interest-bearing deposits from the fourth quarter of 2025 was due to a $1.5 billion increase in interest-bearing checking accounts and money market accounts including $917.2 million in brokered interest-bearing checking accounts. For more information on the composition of our total deposits, see Note 8 - Deposits. Due to the competitive nature for in-market deposits and higher costs, the Company has allowed some higher costing local deposits to run-off in 2026 and increased its use of brokered deposits to fund loan growth in 2026.

Federal funds purchases related to the Correspondent Banking Division and securities sold under agreements to repurchase were $569.5 million at June 30, 2026, a $48.7 million decrease from December 31, 2025. Corporate and subordinated debentures increased by $213,000 to $696.7 million. The Company borrowed $300.0 million in short term FHLB borrowings in the second quarter of 2026 which made up the balance in other borrowings at June 30, 2026. The Company had no FHLB borrowings at December 31, 2025.

Noninterest-Bearing Deposits

Noninterest-bearing deposits are transaction accounts that provide our Bank with "interest-free" sources of funds. At June 30, 2026, the period end balance of noninterest-bearing deposits was $13.5 billion, an increase of $75.4 million compared to the balance at December 31, 2025 of $13.4 billion. Average noninterest-bearing deposits were $13.5 billion for the second quarter of 2026 compared to $13.6 billion during the fourth quarter of 2025. Noninterest-bearing deposits have remained steady over the first half of 2026.

Uninsured Deposits

The Company had estimated approximately 37.8% and 39.8%, respectively, of uninsured deposits over total deposits at June 30, 2026, and December 31, 2025. 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 June 30, 2026, shareholders' equity was $9.1 billion, an increase of $72.4 billion, or 0.8%, from December 31, 2025. The increase in equity in the first half of 2026 was mainly related to net income of $455.8 million offset by dividends paid to shareholders of $117.2 million and the repurchase of common shares on the open market of $249.0 million.

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 replaced the Company's 2025 Repurchase Plan, under which 560,000 shares remained available for repurchase. During the first half of 2026, the Company repurchased a total of 2,500,000 shares at a weighted average price of $99.58 per share (including commission paid) pursuant to the 2026 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 June 30, 2026, the Company may repurchase up to an additional 3,060,000 shares of common stock under the 2026 Repurchase Plan.

The well-capitalized minimums and the Company's and the Bank's regulatory capital ratios for the following periods are reflected below:


		Well-Capitalized		June 30,		December 31,
		Minimums		2026		2025
SouthState Bank Corporation:
Common equity Tier 1 risk-based capital		N/A		11.12	%	11.36	%
Tier 1 risk-based capital		6.00	%	11.12	%	11.36	%
Total risk-based capital		10.00	%	13.49	%	13.84	%
Tier 1 leverage		N/A		9.39	%	9.26	%

SouthState Bank:
Common equity Tier 1 risk-based capital		6.50	%	12.17	%	12.54	%
Tier 1 risk-based capital		8.00	%	12.17	%	12.54	%
Total risk-based capital		10.00	%	13.27	%	13.68	%
Tier 1 leverage		5.00	%	10.28	%	10.22	%

The Company's and Bank's Common equity Tier 1 risk-based capital, Tier 1 risk-based capital and total risk-based capital as of June 30, 2026 all declined compared to December 31, 2025. The capital ratios declined due mainly to the Company repurchasing 2,500,000 shares through its 2026 Repurchase Plan in the first six months of 2026. The common stock repurchases at the Company were funded through dividends from the Bank. Tier 1 capital increased by 3.6% and 2.6% at both the Company and Bank, respectively, while total risk-based capital increased by 3.2% and 2.6% at both the Company and Bank, respectively. The increases in capital were mainly due to net income during the first six months of 2026, net of the effects of dividends paid and stock repurchases. Both regulatory risk-based assets and quarterly average assets increased in the six of 2026 when compared to the fourth quarter with average assets for both the Company and Bank increasing approximately by 2.1% and 2.0%, respectively, and risk-based assets increasing by 5.8%. The Tier 1 leverage ratio for the Company and the Bank both slightly increased in the first half of 2026 as quarterly average assets only increased approximately 2.1% and 2.0%, 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 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. Our Asset Liability Management Committee ("ALCO") is charged with the responsibility of monitoring policies designed to ensure acceptable composition of our asset/liability mix. We have employed our funds in a manner to provide liquidity from both assets and liabilities sufficient to meet our cash needs. The Company also continues to monitor liquidity conditions and maintains a contingency funding plan and performs specific procedures, including scenario analyses and stress testing, to evaluate and maintain appropriate levels of available liquidity in alignment with liquidity risk.

During the six months ended June 30, 2026, the Company continued to operate within its established liquidity risk limits. At June 30, 2026, key internal liquidity metrics, including the loan-to-deposit ratio and reliance on noncore funding, remained within policy limits and consistent with expectations. Total available borrowing capacity, including access to the Federal Home Loan Bank, Federal Reserve facilities, and unsecured federal funds lines, remained stable compared with December 31, 2025.

Total cash and cash equivalents were $2.4 billion at June 30, 2026 compared to $3.2 billion at December 31, 2025. The decrease in cash and cash equivalents was due to funding growth in the loan portfolio of $2.3 billion and the investment securities portfolio of $205.7 million during the first half of 2026.

Liquidity was also provided by growth in deposits and short term FHLB advances. Total deposits were $56.3 billion at June 30, 2026, an increase of $1.2 billion from $55.1 billion at December 31, 2025. Included in total deposits as of June 30, 2026 and December 31, 2025, we had $2.3 billion and $1.7 billion, respectively, of traditional, out-of-market brokered time deposits, $2.6 billion and $2.0 billion, respectively, in brokered interest-bearing checking and money market accounts and $4.3 billion and $4.0 billion, respectively, of reciprocal deposits. For more information on changes in deposits, see Interest-Bearing Liabilities and Noninterest-Bearing Deposits sections of the MD&A.

Along with the growth in deposits, the Company borrowed $300 million in short-term FHLB advances during the second quarter of 2026 to provide funding for interest-earning asset growth. 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.

The investment securities portfolio serves as a primary source liquidity. Proceeds from maturities and principal and interest payments of securities provide a continual flow of funds available for cash needs. Furthermore, both the available for sale and held to maturity securities portfolio can be readily used as a source of cash through various secured borrowing arrangements. 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 June 30, 2026, the Bank pledged 65.8% of the market value of its available for sale and held to maturity investment portfolios. As of June 30, 2026, the Bank had unpledged securities with a market value of $2.8 billion. These securities included Agency, Agency MBS, Municipals and Corporate securities.

The table and discussion below describes our Primary Funding Sources and their relationship to uninsured deposits as of June 30, 2026.


(Dollars in millions)	Available Capacity
Federal Home Loan Bank of Atlanta	$	5,505
Federal Reserve Bank of Atlanta Discount Window		11,670
Liquid cash and cash equivalents		2,224
Fair value of securities that can be pledged		2,673
Total primary sources	$	22,072
Uninsured and uncollateralized deposits	$	16,481
Uninsured and collateralized deposits	$	21,292
Coverage ratio, uninsured deposits		103.7	%
Coverage ratio, uninsured and uncollateralized deposits		133.9	%
Ratio of uninsured and collateralized deposits to total deposits		37.8	%

At June 30, 2026, the Bank had a total FHLB credit facility of $5.8 billion, with $300.0 million outstanding borrowings in short-term FHLB advances and $17.8 million in secured credit exposure at quarter-end, leaving $5.5 billion in availability on the FHLB credit facility. At June 30, 2026, the Bank had $11.7 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 June 30, 2026. The Bank has $2.8 billion in market value of unpledged securities at June 30, 2026, that can be pledged to attain additional funds if necessary. The Bank also has an internal limit on brokered deposits of 15% of total bank deposits, which would allow capacity of $8.5 billion at June 30, 2026. The Bank had $4.9 billion of outstanding brokered deposits at the end of the quarter-end leaving $3.6 billion in available capacity as per the internal policy limit of 15% of total bank deposits. All of the primary sources noted in the table above and the brokered deposit remaining available capacity would provide an additional $25.7 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 June 30, 2026. We believe that our liquidity position continues to be adequate and readily available.

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. There have been no material changes to the Company's interest rate risk management methodologies or underlying assumptions during the six months ended June 30, 2026.

The Company's primary interest rate risk exposures continue to include repricing risk, option risk, basis risk, and yield curve risk. During the six months ended June 30, 2026, changes in earnings at risk and EVE sensitivity measures were primarily driven by loan and deposit growth, changes in deposit mix or betas, securities portfolio activity, or shifts in funding.

Management uses deposit beta assumptions in its interest rate risk models and may apply overlays to reflect current market conditions. Based On the Company's deposit mix at June 30, 2026, the assumed deposit beta was 38.7%.

The updated interest rate sensitivity analysis is presented below. Overall, the Company's exposure to changes in interest rates remains within internal policy limits/consistent with risk appetite, and management continues to monitor and manage interest rate risk in accordance with the framework described in the 2025 Form 10-K.

The following interest rate risk metrics are derived from analysis using the Moody's Baseline Scenario published in July 2026 as the Base Case Scenario. As of June 30, 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 2.8% increase (up 100) and 2.9% decrease (down 100) in net interest income.

We use EVE analysis as an indicator of the extent to which the present value of our capital could change, given potential changes in interest rates. At June 30, 2026, the percentage change in EVE due to a 100-basis point increase or decrease in interest rates was 2.9% decrease and 2.0% increase, respectively. The percentage changes in EVE due to a 200-basis point increase or decrease in interest rates were 6.8% decrease and 3.4% 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 June 30, 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	7.6	%
Up 200 basis points	5.3	%
Up 100 basis points	2.8	%
Base Case	-	%
Down 100 basis points	(2.9)	%
Down 200 basis points	(6.0)	%
Down 300 basis points	(9.1)	%

Deposit Concentrations

As of June 30, 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 below 4% and 6%, respectively, of the Company's quarterly average total deposit balances at June 30, 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 $1.7 billion at June 30, 2026. Based on this criteria, we had eight such credit concentrations at June 30, 2026, including loans to lessors of nonresidential buildings (except mini-warehouses) of $11.4 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 $3.1 billion, loans to lessors of residential buildings (investment properties and multi-family) of $4.5 billion, loans secured by 1st mortgage 1-4 family owner-occupied residential property (including condos and home equity lines) of $11.6 billion, loans secured by jumbo loans (original loans greater than limit) of $3.5 billion, and loans secured by business assets including accounts receivable, inventory and equipment of $3.6 billion. The Company also has purchased commercial and industrial syndication and participation loans of $1.8 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 have 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 June 30, 2026, and December 31, 2025, the Bank's CDL concentration ratio was 40.4% and 35.2%, respectively, and its CRE concentration ratio was 282.6% and 271.8%, respectively. As of June 30, 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.


		Three Months Ended						Six Months Ended
		June 30,						June 30,
(Dollars in thousands)		2026			2025			2026			2025
Return on average equity (GAAP)			10.19	%		9.93	%		10.15	%		7.17	%
Effect to adjust for intangible assets			7.43	%		8.24	%		7.45	%		6.56	%
Return on average tangible equity (non-GAAP)			17.62	%		18.17	%		17.60	%		13.73	%

Average shareholders' equity (GAAP)		$	9,053,100		$	8,692,582		$	9,055,153		$	8,556,105
Average intangible assets			(3,447,492)			(3,535,410)			(3,458,310)			(3,546,831)
Adjusted average shareholders' equity (non-GAAP)		$	5,605,608		$	5,157,172		$	5,596,843		$	5,009,274

Net income (GAAP)		$	230,022		$	215,224		$	455,842		$	304,304
Amortization of intangibles			21,041			24,048			42,345			47,879
Tax effect			(4,854)			(5,707)			(9,650)			(11,103)
Net income excluding the after-tax effect of amortization of intangibles (non-GAAP)		$	246,209		$	233,565		$	488,537		$	341,080

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. There have been no material changes to the risk factors previously disclosed in the 2025 Form 10-K, except as described below.

Risks relating to our Business and Business Strategy

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Risks related to the ability of the Company to pursue its strategic plans which depend upon certain growth goals in our lines of business that are dependent on a variety of factors including economic conditions in the U.S. and globally, geopolitical factors including tariffs, competition, and the regulatory environment;

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Risks related to the ability of the Company to grow or manage its growth effectively;

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Risks relating to integrating and recognizing the benefits of the merger between SouthState and Independent;

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Interest rate risk and a decrease in our net interest income primarily resulting from our inability to effectively manage the risk, and its impact on the Bank's earnings, including from the correspondent and mortgage divisions, housing demand and changes in mortgage conditions, the market value of the Bank's loan and securities portfolios, and the market value of SouthState's equity;

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Inflationary risks negatively impacting our business and profitability, earnings and budgetary projections, or demand for our products and services;

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Risks related to the costs of funds and our profitability and liquidity, and changes in our deposit mix and growth;

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Compliance, reputational and operational risks related to implementing new lines of business or new products and services and our failure to successfully manage such risks;

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Risks caused by changes in technology, including artificial intelligence, disruptions in our business model, and the lack of resources to invest in technological improvements implemented by our competitors;

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Increased risk from the adoption and use of artificial intelligence tools by us and our third party vendors and service providers, including risk of errors, omissions, unfair treatment or fraudulent behavior by our employees, clients, counterparties or other third parties;

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Risks related to the potential deterioration in real estate values and other adverse changes in mortgage conditions, higher risks inherent in a loan portfolio that includes commercial real estate loans, environmental risks in our lending activities, and risks that appraisals used in deciding whether to make a loan that is secured by real estate not ensuring the value of the real property collateral;

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The impact of increasing digitization of the banking industry and movement of customers to on-line platforms, and the possible impact on the Bank's results of operations, customer base, expenses, suppliers and operations;

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Risks related to (i) our ability to effectively manage credit risk, interest rate risk and liquidity risk affecting the Bank's ability to meet its obligations when they come due; and (ii) an obligor's failure to meet the terms of any contract with the Bank or otherwise fail to perform as agreed under the terms of any loan-related document;

●

The results of our most recent stress tests not accurately predicting the impact on our financial condition if the economy were to deteriorate;

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The impact of the Current Expected Credit Loss (CECL) standard, merger activity, and global events on our allowance for credit losses;

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Risks related to maintaining adequate levels of capital to support our operations and the availability of additional capital when needed due to our size and continued pace of growth;

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Controls and procedures risk, including the potential failure or circumvention of our controls and procedures, the failure to comply with regulations related to controls and procedures, or the prevention or detection of errors or acts of fraud;

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Risks related to losses arising from errors, omissions or fraudulent behavior by employees, clients, counterparties and third parties;

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Reputational and operational risks associated with sustainability, stewardship and governance matters, including the impact of state legislation and inconsistent federal and state regulatory guidance and regulation;

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Risks related to our reliance on and our ability to retain our culture and attract, retain, develop, and motivate qualified and highly skilled personnel, and to offer competitive salaries and benefits;

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Our ability to successfully implement current or future information technology and cybersecurity system enhancements or operational initiatives;

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Cybersecurity risk related to the dependence of SouthState on internal computer systems and the technology of outside service providers, as well as the potential impacts of internal or external security breaches, which may subject the Company to potential business disruptions or financial losses resulting from deliberate attacks or unintentional events;

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Operational, technological, cultural, regulatory, legal, credit and other risks associated with the exploration, consummation and integration of potential future acquisitions, whether involving stock or cash consideration;

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Risks related to accounting policies and processes that enable us to report our financial condition and results of operations and require our management to make estimates about matters that are uncertain;

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Risks related to unexpected outflows of uninsured deposits requiring us to sell investment securities at a loss, price risks focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios, and the loss of value of our investment portfolio negatively impacting market perceptions of us, possibly resulting in deposit withdrawals;

●

Risks relating to consumers opting not to use banks to complete their financial transactions; and

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Reputational risk that adversely affects earnings or capital arising from negative public opinion including the effects of social media on market perceptions of us and banks generally.

Risks relating to the Regulatory Environment

●

Risks related to the heightened expectations of regulatory agencies exposing it to regulatory enforcement actions and civil penalties which could have an adverse material impact on the Company's business, financial condition, operations and reputation and could jeopardize the Company's ability to pursue acquisition opportunities;

●

Regulatory change risk resulting from new laws, rules, regulations, accounting principles, proscribed practices or ethical standards, including, without limitation, the possibility that regulatory agencies may require higher levels of capital above the current regulatory-mandated minimums, the impact of higher FDIC deposit insurance requirements or special FDIC assessments, the effects of Consumer Financial Protection Bureau regulations or other guidance, changes in policies and standards for regulatory review of bank mergers, challenges to our income tax provision following changes to tax laws, regulations or interpretations, and the possibility of changes in accounting standards, policies, principles and practices;

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Risks relating to the legal, regulatory and supervisory environment, including periodic examination and scrutiny by a number of banking agencies and any adjustments to our business resulting from such examinations, changes in financial services legislation and capital regulatory requirements, other regulations; and

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Compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards, and contractual obligations regarding data privacy and cybersecurity.

Risks relating to our Common Stock

●

Risks related to state law and provisions in our articles of incorporation or bylaws that make it more difficult for another company to purchase us; and

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Risks related to: (i) shares of our Common Stock not being insured deposits and losing value; (ii) future capital needs resulting in dilution of shareholder investment; (iii) the trading volume of sale of substantial amounts of common stock pressing the price of our common stock; (iv) our ability to pay dividends which is subject to legal and regulatory limitations as well as the discretion of the board of directors of SouthState, SouthState's performance and other factors; (v) rights of our holders of our junior subordinated debentures that are senior to those of our common shareholders; (vi) volatility of our stock price stock that may or may not reflect economic condition or performance of SouthState; and (vii) our institutional shareholders, exercising significant influence over us and having interests that differ from our other shareholders.

Risks relating to Economic Conditions and Other Outside Forces

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Geopolitical and economic risks and market volatility associated with policy changes resulting from the U.S. presidential administration, changes in the fiscal, monetary, and regulatory policies of the federal government and its agencies, and geopolitical instability or conflict;

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Changes to and instability in global economic conditions and geopolitical matters, including as a result of possible tariffs or other trade disruptions adversely affecting our business, financial conditions and results of operations;

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Risks related to a slowdown in economic growth or a resumption of recessionary economic conditions impacting inflationary pressures and interest rates to dampen demand adversely affecting consumer confidence, loan payment patterns, and our charge-offs and the provision for credit losses;

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Volatility in the financial services industry (including failures or rumors of failures of other depository institutions), along with actions taken by governmental agencies to address such turmoil, affecting the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital;

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Our success being tied to the success of the local economies where we operate;

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Catastrophic events such as hurricanes, tornados, earthquakes, floods or other natural or human disasters, including public health crises and infectious disease outbreaks, as well as any government actions in response to such events, and the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on SouthState and its customers and other constituencies;

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Market volatility adversely affecting our operations or our ability to access capital when needed;

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The impact of competition with other financial institutions, including deposit and loan pricing pressures and the resulting impact, including as a result of compression to net interest margin; and

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Risks that lawsuits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental and self-regulatory agencies result in significant civil or criminal penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way the Company and the Bank conduct their business, or reputational harm.

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.

SouthState Bank Corporation published this content on July 31, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 31, 2026 at 13:15 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]

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Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)