SouthState Bank Corporation
02/20/2026 | Press release | Distributed by Public on 02/20/2026 07:30
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
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, and the economy. Words and phrases such as "may," "approximately," "continue," "should," "expects," "projects," "anticipates," "is likely," "look ahead," "look forward," "believes," "will," "intends," "estimates," "strategy," "plan," "could," "potential," "possible" and variations of such words and similar expressions are intended to identify such forward-looking statements. We caution readers that forward-looking statements are subject to certain risks, uncertainties and assumptions that are difficult to predict with regard to, among other things, timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, those risks listed under "Summary of Risk Factors" starting on page 22 of this Report.
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.
Introduction
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") describes SouthState Bank Corporation and its subsidiary's results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024, and also analyzes our financial condition as of December 31, 2025 as compared to December 31, 2024. Like most banking institutions, we derive most of our income from interest we receive on our loans and investments. Our primary source of funds for making these loans and investments is our deposits, on most of which we pay interest. Consequently, one of the key measures of our success is the amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on our interest-bearing liabilities, such as deposits. Another key measure is the spread between the yield we earn on these interest-earning assets and the rate we pay on our interest-bearing liabilities or the net interest margin.
There are risks inherent in all loans, so we maintain an allowance for credit losses to absorb our estimate of probable losses on existing loans that may become uncollectible. We establish and maintain this allowance by recording a provision or recovery for credit losses against our earnings. In the following section, we have included a detailed discussion of this process.
In addition to earning interest on our loans and investments, we earn income through fees and other services we charge to our customers. We incur costs in addition to interest expense on deposits and other borrowings, the largest of which is salaries and employee benefits. We describe the various components of this noninterest income and noninterest expense in the following discussion.
The following section also identifies significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements. We encourage you to read this discussion and analysis in conjunction with the financial statements and the related notes and the other information included in this Report.
Overview
SouthState Bank Corporation is a financial holding company headquartered in Winter Haven, Florida. During the third quarter of 2025, the Company was redomiciled to the state of Florida by merging SouthState Corporation, a South Carolina corporation, with and into SouthState Bank Corporation, a Florida corporation that was wholly-owned by SouthState Corporation prior to such merger, and adopting its name. We provide a wide range of banking services and products to our customers through our Bank. The Bank operates SouthState Securities, a registered broker-dealer headquartered in Memphis, Tennessee that serves primarily institutional clients across the U.S. in the fixed income business. The Bank also operates SouthState PCM, Inc., a wholly-owned registered investment advisor. The Bank, through its Corporate Billing Division, provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers nationwide. The Bank operates SSB First Street Corporation, an investment subsidiary headquartered in Wilmington, Delaware, to hold tax-exempt municipal investment securities as part of the Bank's investment portfolio. The holding company also owns SSB Insurance Corp., a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code.
At December 31, 2025, we had $67.2 billion in assets and 6,317 full-time equivalent employees. Through our Bank branches, ATMs and online banking platforms, we provide our customers with a wide range of financial products and services, through an eight (8) state footprint in Florida, South Carolina, Texas, Georgia, Colorado, North Carolina, Alabama, and Virginia. These financial products and services include deposit accounts such as checking accounts, savings and time deposits of various types, safe deposit boxes, bank money orders, wire transfer and ACH services, brokerage services and alternative investment products such as annuities and mutual funds, trust and asset management services, loans of all types, including business loans, agriculture loans, real estate-secured (mortgage) loans, personal use loans, home improvement loans, automobile loans, manufactured housing loans, boat loans, credit cards, letters of credit, home equity lines of credit, treasury management services, and merchant services.
We also operate a correspondent banking and capital markets division within our national bank subsidiary, of which the majority of its bond salesmen, traders and operational personnel are housed in facilities located in Atlanta, Georgia, Birmingham, Alabama, Memphis, Tennessee, and Walnut Creek, California. This division's primary revenue generating activities are related to its capital markets division, which includes commissions earned on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities; and its correspondent banking division, which includes spread income earned on correspondent bank deposits (i.e., federal funds purchased) and correspondent bank checking account deposits and fees from safe-keeping activities, bond accounting services for correspondents, asset/liability consulting related activities, international wires, and other clearing and corporate checking account services.
We earned net income of $798.7 million, or $7.87 diluted earnings per share ("EPS"), during 2025 compared to net income of $534.8 million, or $6.97 diluted EPS, in 2024. Net income available to the common shareholders was up $263.9 million, or 49.3%, in 2025 compared to 2024. For further discussion of the Company's results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024, see Results of Operations section of this MD&A starting on page 65.
At December 31, 2025, we had total assets of approximately $67.2 billion compared to approximately $46.4 billion at December 31, 2024. See the Financial Condition section of this MD&A starting on page 73 for a more detailed description of the change in our balance sheet.
Our overall asset quality results remained strong during the year. Net charge-offs as a percentage of average loans increased to 0.23% for the year ended December 31, 2025 compared to 0.06% for the year ended December 31, 2024. Net charge-offs, excluding acquisition date charge-offs recorded for PCD loans acquired from Independent of $56.7 million, to total average loans, during the year ended December 31, 2025 were 0.11%. The increase in charge-offs excluding acquisition date charge-offs on PCD loans acquired from Independent in 2025 was mainly due to one commercial and industrial charge-off recorded in the third quarter of 2025 of $21.5 million. If this individual charge-off was also excluded, net charge-offs as a percentage of average loans would have been 0.07% for the year 2025, a 0.01% increase compared to the year ended December 31, 2024. The total nonperforming assets ("NPAs") increased by $97.9 million to $311.3 million at December 31, 2025 from $213.4 million at December 31, 2024. Non-acquired NPAs increased $23.8 million to $170.2 million at December 31, 2025 from $146.5 million at December 31, 2024, which was related to an increase in non-acquired nonperforming loans of $19.7 million. Non-acquired OREO and other NPAs increased by $4.1 million to $5.3 million as of December 31, 2025 compared to $1.2 million as of December 31, 2024. Acquired NPAs increased $74.1 to $141.0 million at December 31, 2025 from $66.9 million at December 31, 2024. Acquired nonperforming loans increased$71.8 million and acquired OREO and other nonperforming assets increased $2.3 million. Total NPAs as a percentage of total assets remained flat at 0.46% at December 31, 2025 and December 31, 2024. We continue to experience solid and stable asset quality numbers and ratios in 2025.
Our efficiency ratio was 53.1% for the year ended December 31, 2025 compared to 56.9% for the same period in 2024. The improvement of our efficiency ratio was due to the result of a 56.1% increase in the total of tax-equivalent net interest income and noninterest income being greater than a 45.7% increase in noninterest expense, excluding amortization of intangibles. The overall increase in both tax-equivalent net interest income and noninterest income and noninterest expense was due to the acquisition of Independent in 2025. The higher increase in tax-equivalent net interest income and noninterest income was due to the $1.1 billion increase in interest income related to loans held for investment, which was mainly attributable to loans acquired in the acquisition of Independent in 2025.
We continue to remain well-capitalized with a total risk-based capital ratio of 13.8% and a Tier 1 leverage ratio of 9.3%, as of December 31, 2025, compared to 15.0% and 10.0%, respectively, at December 31, 2024. The decline in the capital ratios was mainly due to the effects on capital and assets from the acquisition of Independent.Total risk-based capital increased with the increase in equity resulting from the issuance of shares of common stock for the Independent acquisition, the net income recognized during 2025, along with the increase in the allowance for credit losses and unfunded commitments includable in Tier 2 capital. Total risk-weighted assets increased $15.8 billion, or 43.7%, in 2025. The decline in the Tier 1 leverage ratio was due to the increase in average assets resulting from the acquisition of Independent. Regulatory average assets used to calculate the Tier 1 leverage ratio increased $18.3 billion, or 40.4%, in 2025. We believe our current capital ratios position us well to grow both organically and through certain strategic opportunities. For further discussion of the Company's financial condition as of December 31, 2025 compared to December 31, 2024, see Financial Condition section of this MD&A starting on page 73.
Recent Events
Capital Management
On January 11, 2026, the Board of Directors of the Company approved the 2026 Repurchase Plan authorizing the Company to repurchase up to 5,560,000 shares of the Company's common stock. This 2026 Repurchase Plan authorization replaces the Company's pre-existing authorization approved in January 2025, under which 560,000 shares remained available for repurchase, and which was cancelled in connection with the Board's approval of the 2026 Repurchase Plan. See accompanying with Note 31-Subsequent Events to our audited consolidated financial statements.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared based on the application of accounting policies in accordance with generally accepted accounting principles ("GAAP") and follow general practices within the banking industry. Our financial position and results of operations are affected by management's application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues and expenses. Differences in the application of these policies could result in material changes in our consolidated financial position and consolidated results of operations and related disclosures. Understanding our accounting policies is fundamental to understanding our consolidated financial position and consolidated results of operations. Accordingly, our significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in Note 1-Summary of Significant Accounting Policies of our audited consolidated financial statements.
The following is a summary of our critical accounting policies that are highly dependent on estimates, assumptions and judgments.
Business Combinations
We account for acquisitions under FASB ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, and liabilities assumed, are recorded at fair value. This includes intangible assets identified as a result of the acquisition. ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires us to record purchased financial assets with credit deterioration (PCD assets), defined as a more-than-insignificant deterioration in credit quality since origination or issuance, at the purchase price plus the allowance for credit losses expected at the time of acquisition. Under this method, there is no provision for credit losses affecting net income on acquired PCD assets. Changes in estimates of expected credit losses after acquisition are recognized as provision for credit loss expense (or recovery of credit losses) in subsequent periods as they arise. Any non-credit discount or premium resulting from acquiring a pool of purchased financial assets with credit deterioration shall be allocated to each individual asset. At the acquisition date, the initial allowance for credit losses determined on a collective basis shall be allocated to individual assets to appropriately allocate any non-credit discount or premium. The non-credit discount or premium, after the adjustment for the allowance for credit losses, shall be accreted into interest income using the interest method based on the effective interest rate determined after the adjustment for credit losses at the adoption date.
A purchased financial asset that does not qualify as a PCD asset is accounted for similar to an originated financial asset. Generally, this means that an entity recognizes the allowance for credit losses for non-PCD assets through net income at the time of acquisition. In addition, both the credit discount and non-credit discount or premium resulting from acquiring a pool of purchased financial assets that do not qualify as PCD assets shall be allocated to each individual asset. This combined discount or premium shall be accreted into interest income using the effective yield method.
For further discussion of our loan accounting and acquisitions, see Note 1-Summary of Significant Accounting Policies, Note 2-Mergers and Acquisitions, Note 4-Loans and Note 5-Allowance for Credit Losses to the audited consolidated financial statements.
Allowance for Credit Losses or ACL
The ACL reflects management's estimate of the portion of the amortized cost of loans and unfunded commitments that it does not expect to collect. Management has a methodology determining its ACL for loans held for investment and certain off-balance-sheet credit exposures. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company's estimate of its ACL involves a high degree of judgment; therefore, management's process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. The Company's ACL recorded on the balance sheet reflects management's best estimate within the range of expected credit losses. The Company recognizes in net income the amount needed to adjust the ACL for management's current estimate of expected credit losses. See Note 1-Summary of Significant Accounting Policies for further detailed descriptions of our estimation process and methodology related to the ACL. See also Note 5-Allowance for Credit Losses and "Provision for Credit Losses" in this MD&A.
One of the most significant judgments influencing the ACL is the macroeconomic forecasts from the third-party service provider. Changes in the economic forecasts may significantly affect the estimated credit losses which may potentially lead to materially different quantitatively modeled allowance levels from one reporting period to the next. Given the dynamic relationship between macroeconomic variables, it is difficult to estimate the impact of a change in any one individual variable on the ACL. SouthState uses a third-party service provider to support the economic forecast assumptions under CECL forecast by providing various levels of economic scenarios. These scenarios are weighted in accordance with management assessment of scenarios as well as expectations of the general market and industry conditions. To illustrate the sensitivity of these scenarios, if a 100% probability weighting was applied to the adverse scenario rather than using the probability-weighted three scenario approach, this would result in an increase in the ACL by approximately $208 million. Conversely, if a 100% probability weighting was applied to the upside scenario, this would result in a decrease in the ACL by approximately $122 million. The adverse scenario includes assumptions including, but not limited to, rising unemployment consistent with a recession, high levels of inflation and weakened consumer and business spending, elevated interest rates, tightening credit, widening Federal deficit, and exacerbated geopolitical and trade tensions. Conversely, the upside scenario includes assumptions such as a stronger domestic economy, swift resolution of international conflicts and strengthening global economy, more than full employment, reduced political tensions, and other favorable assumptions. This sensitivity analysis and related impact on the ACL is a hypothetical analysis and is not intended to represent management's judgments at December 31, 2025.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed in a business combination. As of December 31, 2025 and 2024, the balance of goodwill was $3.1 billion and $1.9 billion, respectively. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value.
Under the ASU Topic 350, if a reporting unit's carrying amount exceeds its fair value, an entity will record an impairment charge based on the difference. The impairment charge will be limited to the amount of goodwill allocated to the reporting unit. An entity is able to perform an optional qualitative goodwill impairment assessment before proceeding to the quantitative step of determining whether the reporting unit's carrying amount exceeds its fair value.
We evaluated the carrying value of goodwill as of October 31, 2025, our annual test date, and determined that more likely than not that no impairment charge was necessary as the fair value of the entity exceeded the carrying value. We will continue to monitor the impact of current economic conditions and other events on the Company's business, operating results, cash flows and financial condition. If the current economic conditions and other events were to deteriorate and our stock price falls below current levels, we will have to reevaluate the impact on our financial condition and potential impairment of goodwill.
Core deposit intangibles and client list intangibles consist primarily of amortizing assets established during the acquisition of other banks. This includes whole bank acquisitions and the acquisition of certain assets and liabilities from other financial institutions. Core deposit intangibles represent the estimated value of long-term deposit relationships acquired in these transactions. Client list intangibles represent the value of long-term client relationships for the correspondent banking and wealth and trust management business. These costs are amortized over the estimated useful lives, such as deposit accounts in the case of core deposit intangible, on a method that we believe reasonably approximates the anticipated benefit stream from this intangible. The estimated useful lives are periodically reviewed for reasonableness.
Income Taxes and Deferred Tax Assets
Income taxes are provided for the tax effects of the transactions reported in our consolidated financial statements and consist of taxes currently due plus deferred taxes related to differences between the tax basis and accounting basis of certain assets and liabilities. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. The Company determines the realization of deferred tax assets by considering all positive and negative evidence available, including the impact of recent operating results, future reversals of taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards and tax planning strategies. Determining whether deferred tax assets are realizable is subjective and requires the use of significant judgment. A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax asset will not be realized. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The Company and its subsidiaries file a consolidated federal income tax return. Additionally, income tax returns are filed by the Company or its subsidiaries in various state and local jurisdictions based on the Company's footprint. The tax laws and regulations in each jurisdiction are complex and may be subject to different interpretations by the Company and the relevant taxing authorities. Therefore, the Company is required to exercise judgment in determining tax accruals and evaluating the Company's tax positions, including evaluating uncertain tax positions. See Note 1-Summary of Significant Accounting Policies and Note 11-Income Taxes to the consolidated financial statements for further details and discussion.
Recent Accounting Standards and Pronouncements
For information relating to recent accounting standards and pronouncements, see Note 1-Summary of Significant Accounting Policies to our audited consolidated financial statements entitled "Summary of Significant Accounting Policies."
Results of Operations
Consolidated net income available to common shareholders increased by $263.9 million, or 49.3%, to $798.7 million for the year ended December 31, 2025, compared to $534.8 million for the year ended December 31, 2024. Below are key highlights of our results of operations during 2025:
| ● | A $1.2 billion increase in interest income, resulting from a $1.1 billion increase in interest income from loans and loans held for sale, a $108.3 million increase in interest income from investment securities, and a $54.1 million increase in interest income on federal funds sold, securities purchased under agreement to resell and interest-bearing deposits (See Net Interest Income section on page 66 for further discussion); |
| ● | A $350.3 million increase in interest expense primarily resulted from a $323.2 million increase in interest expense from deposits and a $36.4 million increase in interest expense from subordinated debentures. These increases were partially offset by a $9.3 million decrease in interest expense from other borrowings (See Net Interest Income section on page 66 for further discussion); |
| ● | A $103.8 million increase in the provision for credit losses, as the Company recorded a provision for credit losses of $119.8 million in 2025 compared to $16.0 million in 2024. During 2025, we reported a higher provision for credit losses as the Company recorded the initial provision for credit losses of $80.0 million and $12.1 million on the Independent non-PCD loans portfolio and unfunded commitments, respectively; |
| ● | A $75.5 million increase in noninterest income, which resulted primarily due to an increase in correspondent banking and capital market income of $39.4 million, an increase in trust and investment services income of $12.7 million and an increase in fees on deposit accounts of $22.2 million (See Noninterest Income section on page 69 for further discussion); |
| ● | A $519.6 million increase in noninterest expense, resulted primarily from a $191.0 million increase in salaries and employee benefits expense, a $97.6 million increase in merger, branch consolidation, severance-related and other expense, a $72.3 million increase in amortization expense of intangible assets, and a $70.3 million increase in occupancy expense (See Noninterest Expense section on page 71 for further discussion); |
| ● | Higher income tax provision of $76.1 million primarily due to the change in pre-tax book income between the two years. The Company recorded pre-tax book income of $1.0 billion in 2025 compared to pre-tax book income of $700.2 million in 2024. The Company's effective tax rate was 23.22% for the year ended December 31, 2025 compared to 23.63% for the year ended December 31, 2024; |
| ● | Basic earnings per common share increased 12.7% to $7.90 in 2025, from $7.01 in 2024; |
| ● | Diluted earnings per common share increased 12.9% to $7.87 in 2025, from $6.97 in 2024; |
| ● | Return on average assets was 1.22% in 2025, an increase compared to 1.17% in 2024. The increase in 2025 compared to 2024 resulted from net income growing at a faster rate than average total assets, with net income increasing by $263.9 million, or 49.3%, to $798.7 million while total average assets increasing $19.6 billion, or 43.0%, to $65.2 billion in 2025; |
| ● | Return on average common shareholders' equity decreased to 9.13%in 2025, compared to 9.41% in 2024, and increased in 2024 from 9.37% in 2023. The decrease in 2025 compared to 2024 was due to the growth in average common shareholders' equity of 53.9% being greater than the increase in net income of 49.3%; and |
| ● | Our dividend payout ratio was 28.82% for 2025 compared with 30.22% in 2024 and 31.34% in 2023. The decrease in the dividend payout ratio in 2025 compared to 2024 was due to the increase in net income available to common shareholders of 49.3%, or $263.9 million, exceeding the increase in total dividends paid during 2025 of 42.5%, or $68.6 million. The increase in dividends paid was due to the increase in outstanding common shares in 2025 resulting from the issuance of 24.9 million shares of common stock for the acquisition of Independent in the first quarter of 2025, along with the Company increasing its dividend per share from $0.54 to $0.60 in the third quarter of 2025. |
Net Interest Income
Net interest income is the largest component of our net income. Net interest income is the difference between income earned on interest-earning assets and interest paid on deposits and borrowings. Net interest income is determined by the yields earned on interest-earning assets, rates paid on interest-bearing liabilities, the relative balances of interest-earning assets and interest-bearing liabilities, the degree of mismatch, and the maturity and repricing characteristics of interest-earning assets and interest-bearing liabilities. Net interest income divided by average interest-earning assets represents our net interest margin.
The Federal Reserve implemented total rate cuts of 175 basis-point, beginning with a 50 basis-point reduction in mid-September 2024. This was followed by five additional cuts of 25 basis-point each, one in early November 2024, one in mid-December 2024, one in late October 2025, and the latest one in December 2025. These rate cuts came after a series of rate hikes that began in March 2022, resulting in a target range of 3.50% to 3.75% at December 31, 2025. As a result, the Company operated in a comparatively lower rate environment in 2025 compared to 2024.
2025 compared to 2024
Net interest income and net interest margin are highlighted for the year ended December 31, 2025, compared to 2024:
| ● | The non-tax equivalent and the Tax Equivalent ("TE") net interest margin increased by 51 basis points and 52 basis points, respectively, in 2025 compared to 2024. The net interest margin increased primarily due to a 60-basis point rise in the yield on interest earning assets, while the cost of interest-bearing liabilities remained stable. |
| o | Overall, our yield on interest-earning assets in 2025 increased 60 basis points to 5.78% from 2024, primarily due to higher yields on investments securities and loans held for investment. The yield on investment securities increased due to the investment portfolio restructuring completed in the first quarter of 2025. The yield on loans increased primarily due to loan accretion recognized during 2025 of approximately $258.6 million, which was mainly attributable to the loan portfolio acquired from Independent. In addition, the average balance of the higher yielding acquired loans increased by $10.8 billion and the average balance of investment securities increased by $1.3 billion, mainly due to balances acquired from Independent, while the average balance of non-acquired loans increased by $3.5 billion. |
| o | The average cost of interest-bearing liabilities in 2025 compared to 2024 slightly increased by 2 basis points to 2.61%. The average cost of corporate and subordinated debentures increased by 134 basis points, primarily driven by higher interest expense incurred resulting from a $419.9 million increase in average balances. The increase in average balances includes the assumption of $360.5 million in corporate and subordinated debentures in connection with the Independent acquisition, as well as the issuance of $350.0 million in aggregate principal amount of subordinated notes during the second quarter of 2025. These increases were partially offset by the redemption of $405.0 million of subordinated debentures that occurred during the latter half of the third quarter of 2025. The cost increase was offset by lower costs associated with other borrowings, federal funds purchased, securities sold with agreements to repurchase, and decreases across all deposit categories, reflecting the comparatively lower rate environment. The average cost of other borrowings was 4.40% for the year 2025. This compares to a cost of 5.55% for the year 2024. The Company had no other borrowings outstanding as of December 31, 2025 and 2024. The average cost of federal funds purchased, securities sold with agreements to repurchase decreased by 96 basis points and 7 basis points, respectively, despite increases of $56.5 million and $22.6 million, respectively, in average balances. Our overall cost of funds, including noninterest-bearing deposits, was 1.96% for the year 2025, compared to 1.88% for the year 2024. |
| ● | Our net interest income increased by $887.9 million, or 62.7%, to $2.3 billion during 2025 compared to 2024, as our interest income increased $1.2 billion while interest expense increased $350.3 million. |
| o | Our interest income increased by $1.2 billion led by higher acquired loan interest income of $867.8 million due to a higher average balance of $10.8 billion, and a higher yield of 126 basis points. Interest income on non-acquired loans increased $195.8 million due to an increase in the average balance of $3.5 billion. Interest income on investment securities increased by $108.3 million due to higher average balance of $1.3 billion and a higher yield of 89 basis points. Interest income on federal funds sold and repurchase agreements increased by $54.1 million due to higher average balance of $1.4 billion. Interest income on loans held for sale increased by $12.1 million due to a higher average balance of $162.1 million and a higher yield of 46 basis points. |
| o | Our interest expense increased by $350.3 million in 2025 compared to 2024, due primarily to an increase in interest expense on interest-bearing deposits of $323.2 million. The increase in interest expense on interest-bearing deposit was attributable to an increase in the average balances of $12.9 billion primarily as a result of the balances assumed from the Independent acquisition. Interest expense on corporate and subordinated debentures and securities sold with agreements to repurchase increased by $36.4 million and $260,000, respectively, due to increases in the average balances of $419.9 million and $22.6 million, respectively. During 2025, we recorded lower interest expense related to other borrowings of $9.3 million due to a decrease in the average balance of $164.5 million. Interest expense on federal funds purchased was lower by $287,000 despite an increase in the average balance of $56.5 million, reflecting the comparatively lower rate environment. |
| ● | Average interest-earning assets increased by $17.2 billion, or 41.5%, to $58.5 billion in 2025 compared to 2024. |
| o | The increase in the average balance on the acquired loan portfolio of $10.8 billion was due to the loans acquired in the Independent acquisition, offset by paydowns, pay-offs and renewals of acquired loans that are moved to our non-acquired loan portfolio. |
| o | The increase in the average balance on non-acquired loan portfolio of $3.5 billion was due to organic growth and renewals of matured acquired loans that are moved to our non-acquired loan portfolio. |
| o | The average balance on federal funds sold, securities purchased under agreements to resell and other interest earning deposits increased by $1.4 billion. |
| o | The average balance in investment securities increased by $1.3 billion. The increase in average was primarily due to the Company acquiring $1.6 billion in investment securities through the acquisition of Independent. These securities were subsequently sold during the first quarter of 2025 with the proceeds reinvested into purchases of new securities that fit the Company's investment strategy. The increase in investment securities related to the Independent acquisition was partially offset by maturities, calls and paydowns on available for sale and held to maturity securities. |
| o | The increase in the average balance of loans held for sale of $162.1 million was primarily due to the SBA loans purchased from third-party originators. The Company began purchasing and pooling the guaranteed portion of SBA loans during the third quarter of 2024. |
| ● | Average interest-bearing liabilities increased by $13.3 billion, or 47.4%, to $41.3 billion in 2025 compared to 2024. |
| o | The average balance of interest-bearing deposits increased by $12.9 billion mainly due to $12.0 billion of interest-bearing deposits assumed from Independent in the first quarter of 2025. Money market, transaction, time deposit, and savings accounts' average balances increased by $4.9 billion, $4.7 billion, $2.9 billion, and $391.3 million, respectively. |
| o | The average balance of federal funds purchased increased by $56.5 million and repurchase agreements increased by $22.6 million. |
| o | The average balance of corporate and subordinated debentures increased by$419.9 million. The increase in average balances includes the assumption of $360.5 million in corporate and subordinated debentures in connection with the Independent acquisition, as well as the issuance of $350.0 million in aggregate principal amount of subordinated notes during the second quarter of 2025. These increases were partially offset by the redemption of $405.0 million of subordinated debentures that occurred during the latter half of the third quarter of 2025. |
| o | The average balance of other borrowings decreased by $164.5 million. The Company utilized short-term borrowings from the FHLB, FRB Discount Window, AFX and US Bank line of creditthroughout 2025, mostly in early 2025. In 2024, the Company utilized FHLB advances until the third quarter of 2024, as deposits markets became more competitive. All of the outstanding balance was subsequently paid off, with no outstanding balances as of December 31, 2025 and 2024. |
Table 1-Yields on Average Interest-Earning Assets and Rates on Average Interest-Bearing Liabilities
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|
|
Year Ended December 31, |
|||||||||||||||||||||||
|
|
|
2025 |
|
2024 |
|
2023 |
|||||||||||||||||||
|
|
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
|
|
|
|
Interest |
|
Average |
||||
|
|
|
Average |
|
Earned/ |
|
Yield/ |
|
Average |
|
Earned/ |
|
Yield/ |
|
Average |
|
Earned/ |
|
Yield/ |
|||||||
|
(Dollars in thousands) |
|
Balance |
|
Paid |
|
Rate |
|
Balance |
|
Paid |
|
Rate |
|
Balance |
|
Paid |
|
Rate |
|||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-acquired loans, net of unearned income (1) |
|
$ |
31,413,927 |
|
$ |
1,791,729 |
5.70 |
% |
$ |
27,920,075 |
|
$ |
1,595,916 |
5.72 |
% |
$ |
24,813,599 |
|
$ |
1,312,452 |
5.29 |
% |
|||
|
Acquired loans, net |
|
15,974,336 |
|
1,191,072 |
7.46 |
% |
5,212,144 |
|
323,225 |
6.20 |
% |
6,589,692 |
|
401,914 |
6.10 |
% |
|||||||||
|
Loans held for sale |
|
262,000 |
|
18,775 |
7.17 |
% |
99,857 |
|
6,697 |
6.71 |
% |
30,740 |
|
2,039 |
6.63 |
% |
|||||||||
|
Investment securities (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
7,680,915 |
|
260,119 |
3.39 |
% |
6,435,688 |
|
155,470 |
2.42 |
% |
7,014,604 |
|
162,907 |
2.32 |
% |
|||||||||
|
Tax-exempt |
|
876,525 |
|
26,573 |
3.03 |
% |
813,960 |
|
22,928 |
2.82 |
% |
813,695 |
|
23,455 |
2.88 |
% |
|||||||||
|
Federal funds sold, securities purchased under agreement to resell and interest-earning deposits with banks |
|
2,251,227 |
|
91,230 |
4.05 |
% |
817,853 |
|
37,126 |
4.54 |
% |
836,068 |
|
41,639 |
4.98 |
% |
|||||||||
|
Total interest-earning assets |
|
58,458,930 |
|
3,379,498 |
5.78 |
% |
41,299,577 |
|
2,141,362 |
5.18 |
% |
40,098,398 |
|
1,944,406 |
4.85 |
% |
|||||||||
|
Noninterest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
570,621 |
|
|
|
|
|
|
437,084 |
|
|
|
|
|
|
471,418 |
|
|
|
|
|
|
|||
|
Other assets |
|
6,825,790 |
|
|
|
|
|
|
4,366,169 |
|
|
|
|
|
|
4,486,196 |
|
|
|
|
|
|
|||
|
Allowance for credit losses |
|
(607,258) |
|
|
|
|
|
|
(465,809) |
|
|
|
|
|
|
(400,051) |
|
|
|
|
|
|
|||
|
Total noninterest-earning assets |
|
6,789,153 |
|
|
|
|
|
|
4,337,444 |
|
|
|
|
|
|
4,557,563 |
|
|
|
|
|
|
|||
|
Total assets |
|
$ |
65,248,083 |
|
|
|
|
|
|
$ |
45,637,021 |
|
|
|
|
|
|
$ |
44,655,961 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and money market accounts |
|
$ |
29,618,180 |
|
$ |
716,185 |
2.42 |
% |
$ |
19,991,510 |
|
$ |
488,865 |
2.45 |
% |
$ |
17,843,581 |
|
$ |
307,692 |
1.72 |
% |
|||
|
Savings deposits |
|
2,884,938 |
|
7,723 |
0.27 |
% |
2,493,636 |
|
7,282 |
0.29 |
% |
2,961,654 |
|
7,514 |
0.25 |
% |
|||||||||
|
Certificates and other time deposits |
|
7,304,382 |
|
271,101 |
3.71 |
% |
4,394,644 |
|
175,678 |
4.00 |
% |
4,042,052 |
|
125,051 |
3.09 |
% |
|||||||||
|
Federal funds purchased |
|
337,538 |
|
14,359 |
4.25 |
% |
281,031 |
|
14,646 |
5.21 |
% |
225,642 |
|
11,457 |
5.08 |
% |
|||||||||
|
Securities sold with agreements to repurchase |
|
|
290,289 |
|
|
5,882 |
|
2.03 |
% |
|
267,713 |
|
|
5,622 |
|
2.10 |
% |
|
317,879 |
|
|
4,132 |
|
1.30 |
% |
|
Corporate and subordinated debentures |
|
|
811,652 |
|
|
60,293 |
|
7.43 |
% |
|
391,729 |
|
|
23,874 |
|
6.09 |
% |
|
392,099 |
|
|
23,617 |
|
6.02 |
% |
|
Other borrowings |
|
14,728 |
|
648 |
4.40 |
% |
179,235 |
|
9,941 |
5.55 |
% |
243,014 |
|
12,335 |
5.08 |
% |
|||||||||
|
Total interest-bearing liabilities |
|
41,261,707 |
|
1,076,191 |
2.61 |
% |
27,999,498 |
|
725,908 |
2.59 |
% |
26,025,921 |
|
491,798 |
1.89 |
% |
|||||||||
|
Noninterest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
13,581,113 |
|
|
|
|
|
|
10,515,850 |
|
|
|
|
|
|
11,777,053 |
|
|
|
|
|
|
|||
|
Other liabilities |
|
1,653,888 |
|
|
|
|
|
|
1,435,705 |
|
|
|
|
|
|
1,575,621 |
|
|
|
|
|
|
|||
|
Total noninterest-bearing liabilities |
|
15,235,001 |
|
|
|
|
|
|
11,951,555 |
|
|
|
|
|
|
13,352,674 |
|
|
|
|
|
|
|||
|
Shareholders' equity |
|
8,751,375 |
|
|
|
|
|
|
5,685,968 |
|
|
|
|
|
|
5,277,366 |
|
|
|
|
|
|
|||
|
Total noninterest-bearing liabilities and shareholders' equity |
|
23,986,376 |
|
|
|
|
|
|
17,637,523 |
|
|
|
|
|
|
18,630,040 |
|
|
|
|
|
|
|||
|
Total liabilities and shareholders' equity |
|
$ |
65,248,083 |
|
|
|
|
|
|
$ |
45,637,021 |
|
|
|
|
|
|
$ |
44,655,961 |
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
|
3.17 |
% |
|
|
|
|
|
2.59 |
% |
|
|
|
|
|
2.96 |
% |
|||
|
Net interest income and margin (non-taxable equivalent) |
|
|
|
|
$ |
2,303,307 |
3.94 |
% |
|
|
|
$ |
1,415,454 |
3.43 |
% |
|
|
|
$ |
1,452,608 |
3.62 |
% |
|||
|
TEFRA (included in net interest margin, tax equivalent) |
|
|
|
|
|
2,973 |
|
|
|
|
|
|
|
2,192 |
|
|
|
|
|
|
|
3,023 |
|
|
|
|
Net interest income and margin (taxable equivalent) |
|
|
|
|
$ |
2,306,280 |
3.95 |
% |
|
|
|
$ |
1,417,646 |
3.43 |
% |
|
|
|
$ |
1,455,631 |
3.63 |
% |
|||
|
Total Deposit Cost (without corporate and subordinated debentures and other borrowings) |
|
|
|
|
|
|
|
1.86 |
% |
|
|
|
|
|
|
1.80 |
% |
|
|
|
|
|
|
1.20 |
% |
|
Overall Cost of Funds (including interest-bearing deposits) |
|
|
|
|
|
|
1.96 |
% |
|
|
|
|
|
1.88 |
% |
|
|
|
|
|
1.30 |
% |
|||
| (1) | Nonaccrual loans are included in the above analysis. |
| (2) | Investment securities (taxable and tax-exempt) include trading securities. |
Table 2-Volume and Rate Variance Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 Compared to 2024 |
|
2024 Compared to 2023 |
|||||||||||||||
|
|
|
Increase (Decrease) due to |
|
Increase (Decrease) due to |
|||||||||||||||
|
(Dollars in thousands) |
|
Volume (1) |
|
Rate (1) |
|
Total |
|
Volume(1) |
|
Rate(1) |
|
Total |
|||||||
|
Interest income on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-acquired loans, net of unearned income (2) |
|
$ |
199,709 |
|
$ |
(3,896) |
|
$ |
195,813 |
|
$ |
164,309 |
|
$ |
119,155 |
|
$ |
283,464 |
|
|
Acquired loans (2) |
|
667,405 |
|
200,442 |
|
867,847 |
|
(84,018) |
|
5,329 |
|
(78,689) |
|
||||||
|
Loans held for sale |
|
10,874 |
|
1,204 |
|
12,078 |
|
4,585 |
|
73 |
|
4,658 |
|
||||||
|
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
30,082 |
|
74,567 |
|
104,649 |
|
(13,445) |
|
6,008 |
|
(7,437) |
|
||||||
|
Tax exempt (3) |
|
1,762 |
|
1,883 |
|
3,645 |
|
8 |
|
(535) |
|
(527) |
|
||||||
|
Federal funds sold and securities purchased under agreements to resell and time deposits |
|
65,067 |
|
(10,963) |
|
54,104 |
|
(907) |
|
(3,606) |
|
(4,513) |
|
||||||
|
Total interest income |
|
974,899 |
|
263,237 |
|
1,238,136 |
|
70,532 |
|
126,424 |
|
196,956 |
|
||||||
|
Interest expense on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and money market accounts |
|
235,407 |
|
(8,087) |
|
227,320 |
|
37,039 |
|
144,134 |
|
181,173 |
|
||||||
|
Savings deposits |
|
1,143 |
|
(702) |
|
441 |
|
(1,187) |
|
955 |
|
(232) |
|
||||||
|
Certificates and other time deposits |
|
116,384 |
|
(20,961) |
|
95,423 |
|
10,877 |
|
39,750 |
|
50,627 |
|
||||||
|
Federal funds purchased |
|
2,945 |
|
(3,232) |
|
(287) |
|
2,812 |
|
377 |
|
3,189 |
|
||||||
|
Securities sold under agreements to repurchase |
|
|
474 |
|
|
(214) |
|
|
260 |
|
|
(652) |
|
|
2,142 |
|
|
1,490 |
|
|
Other borrowings |
|
15,127 |
|
11,999 |
|
27,126 |
|
(3,631) |
|
1,494 |
|
(2,137) |
|
||||||
|
Total interest expense |
|
371,480 |
|
(21,197) |
|
350,283 |
|
45,258 |
|
188,852 |
|
234,110 |
|
||||||
|
Net interest income |
|
$ |
603,419 |
|
$ |
284,434 |
|
$ |
887,853 |
|
$ |
25,274 |
|
$ |
(62,428) |
|
$ |
(37,154) |
|
| (1) | The rate/volume variance for each category has been allocated on the same basis between rate and volumes. |
| (2) | Nonaccrual loans are included in the above analysis. |
| (3) | Tax exempt income is not presented on a taxable-equivalent basis in the above analysis. |
Noninterest Income and Expense
Noninterest income provides us with additional revenues that are significant sources of income. In 2025, 2024, and 2023, noninterest income comprised 14.1%, 17.6%, and 16.5%, respectively, of total net interest income and noninterest income.
Table 3-Noninterest Income for the Three Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|
2023 |
||||
|
Service charges on deposit accounts |
|
$ |
102,773 |
|
$ |
91,333 |
|
$ |
88,271 |
|
|
Debit, prepaid, ATM and merchant card related income |
|
55,551 |
|
44,761 |
|
40,744 |
|
|||
|
Mortgage banking income |
|
24,293 |
|
20,047 |
|
13,355 |
|
|||
|
Trust and investment services income |
|
58,192 |
|
45,474 |
|
39,447 |
|
|||
|
Correspondent banking and capital markets income |
|
|
71,987 |
|
|
32,619 |
|
|
49,101 |
|
|
Securities (losses) gain, net |
|
(228,811) |
|
(50) |
|
43 |
|
|||
|
Gain on sale-leaseback, net of transaction costs |
|
|
229,279 |
|
|
- |
|
|
- |
|
|
SBA income |
|
9,196 |
|
16,226 |
|
13,929 |
|
|||
|
Bank owned life insurance income |
|
|
39,582 |
|
|
30,484 |
|
|
26,690 |
|
|
Other |
|
15,702 |
|
21,368 |
|
15,326 |
|
|||
|
Total noninterest income |
|
$ |
377,744 |
|
$ |
302,262 |
|
$ |
286,906 |
|
2025 compared to 2024
Our noninterest income increased by $75.5 million, or 25.0%, for the year ended December 31, 2025 compared to 2024. This change in total noninterest income resulted from the following:
| ● | Service charges on deposit accounts were higher in 2025 by $11.4 million, or 12.5%, compared to 2024. The increase was mainly attributable to deposit accounts assumed from Independent. Account maintenance fees increased by $8.7 million and retail service charges increased by approximately $2.3 million in 2025 compared to 2024. |
| ● | Debit, prepaid, ATM and merchant card related income increased by $10.8 million, or 24.1%, in 2025 compared to 2024. The increase in debit, ATM, prepaid and merchant card related income was mainly attributable to higher bank card and ATM related fee income $7.7 million and higher card and ATM system expense of $3.1 million. |
| ● | Mortgage banking income increased by $4.2 million, or 21.2%, which comprised of a $2.7 million, or 18.5%, increase in secondary market mortgage income and a $1.5 million, or 28.7%, increase in mortgage servicing related income. Mortgage production increased from $1.9 billion in 2024 to $2.5 billion in 2025 with relatively lower mortgage rates in 2025 compared to the same period in 2024. During 2025, we sold 37% of our mortgage production to the secondary market versus 58% in 2024. |
| o | Mortgage income from the secondary market increased by $2.7 million between the comparable periods resulting from a $5.5 million increase in gain on sale of mortgage loans, which is net of the commission expense related to mortgage production, offset primarily by decreases in the fair value of MBS forward trades of $1.9 million. Mortgage commission expense was $7.6 million during 2025 compared to $11.3 million during 2024. |
| o | The mortgage servicing related income, net of the hedge, increased by $1.5 million in 2025. The increase was mainly due to a $1.4 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 from gains/losses on the MSR hedge of $10.2 million, offset by a decrease in the change in fair value from interest rates of $9.0 million. |
| ● | Trust and investment services income increased by $12.7 million, or 28.0%, in 2025 compared to 2024, as assets under management have increased by $66.1 million, or 0.6%, in that same time frame. The trust and investment services income increased during 2025, primarily due to higher asset values and the addition of new clients through wealth management services provided by Private Capital Management LLC ("PCM"), which became the Bank's wholly owned subsidiary through the Company's acquisition of Independent during 2025. Effective December 31, 2025, PCM and SouthState Advisory, Inc., both wholly-owned registered investment advisors of the Bank, merged and now operate under the name SouthState PCM. |
| ● | Correspondent banking and capital markets income increased by $39.4 million, or 120.7%, from 2024. The increase was primarily related to an increase of $15.8 million in income generated from the sale of customer swap ARC hedges during 2025 compared to 2024, resulting from the comparatively lower interest rates in 2025. The increase was also due to lower expense attributable to the variation margin payments for centrally cleared swaps where we recorded an expense of $20.0 million related to variation margin payments in 2025 compared to $36.5 million in 2024. |
| ● | During the first quarter of 2025, the Company recorded net losses of $228.8 million on the sales of investment securities, excluding the sales of investment securities acquired from Independent. |
| ● | The Company recorded a gain on the sale of bank properties of $229.3 million, net of transaction costs, from a sale-leaseback transaction completed in February 2025. |
| ● | SBA income decreased by $7.0 million, or 43.3%, compared to 2024. SBA income includes changes in the fair value of the servicing asset, loan servicing fees and gains on sale of SBA loans. The decrease was primarily attributable to lower gains on the sale of SBA loans of $6.3 million. |
| ● | Bank owned life insurance income increased by $9.1 million, or 29.8%, in 2025 compared to 2024. This increase was primarily due to the acquisition of bank owned life insurance assets from Independent. |
| ● | Other income decreased by $5.7 million, or 26.5%, in 2025 compared to 2024. In 2025, the Company recognized approximately $6.9 million in gains from the sale of a bank property held for sale. The Company also recorded $5.6 million in impairment expense related to a Right-of-Use ("ROU") asset. During 2024, the Company recognized approximately $5.2 million of benefit from federal tax refunds received for net operating loss carrybacks. |
Table 4-Noninterest Expense for the Three Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|
2023 |
||||
|
Salaries and employee benefits |
|
$ |
797,835 |
|
$ |
606,869 |
|
$ |
583,398 |
|
|
Occupancy expense |
|
160,441 |
|
90,103 |
|
88,695 |
|
|||
|
Information services expense |
|
120,948 |
|
92,193 |
|
84,472 |
|
|||
|
OREO and loan related expense |
|
10,373 |
|
4,687 |
|
1,716 |
|
|||
|
Amortization of intangibles |
|
94,722 |
|
22,395 |
|
27,558 |
|
|||
|
Business development and staff related expense |
|
36,085 |
|
23,782 |
|
25,055 |
|
|||
|
Supplies, printing and postage expense |
|
13,969 |
|
10,558 |
|
10,578 |
|
|||
|
Professional fees |
|
21,771 |
|
16,404 |
|
18,547 |
|
|||
|
FDIC assessment and other regulatory charges |
|
40,985 |
|
31,152 |
|
33,070 |
|
|||
|
FDIC special assessment |
|
|
(3,835) |
|
|
3,852 |
|
|
25,691 |
|
|
Advertising and marketing |
|
12,990 |
|
9,143 |
|
9,474 |
|
|||
|
Merger, branch consolidation, severance-related, and other expense |
|
117,768 |
|
20,133 |
|
13,162 |
|
|||
|
Other |
|
97,032 |
|
70,222 |
|
73,164 |
|
|||
|
Total noninterest expense |
|
$ |
1,521,084 |
|
$ |
1,001,493 |
|
$ |
994,580 |
|
2025 compared to 2024
Noninterest expense represents the largest expense category for the Company. Noninterest expense increased $519.6 million, or 51.9%, for the year ended December 31, 2025 compared to 2024. The change in total noninterest expense resulted from the following:
| ● | Salaries and employee benefits increased by $191.0 million, or 31.5%, in 2025 compared to 2024. The increase was primarily associated with the addition of Independent employees during the first quarter of 2025. Salaries increased by $110.3 million resulting from both merit increases and an increase in the number of employees, along with higher commission and incentive expense of $46.4 million and higher employee benefits from higher FICA tax paid and medical insurance expense of $34.2 million during 2025. |
| ● | Occupancy expense increased by $70.3 million, or 78.1%, in 2025 compared to 2024. The increase was primarily due to increases in lease expense and branch maintenance and repair expenses of $54.1 million and $17.8 million, respectively. The increase in the lease expense was primarily due to the sale-leaseback transaction completed in February 2025. |
| ● | Information services expense increased by $28.8 million, or 31.2%, in 2025 compared to 2024. The increase was due to additional costs associated with the Company updating systems and expenses associated with transferring, managing, and processing data as it grows in size and complexity. |
| ● | OREO expense and loan related expense increased by $5.7 million, or 121.3%, in 2025 compared to 2024, primarily due to a $6.1 million increase in loan related expenses, including legal, tax and other costs. |
| ● | Amortization of intangibles increased by $72.3 million, or 323.0%, which is related to the Independent acquisition. |
| ● | Business development and staff related expense increased $12.3 million, or 51.7%, in 2025 compared to 2024, due mainly to the increase in employees resulting from the Independent acquisition and additional employee travel, training, and entertainment-related costs. |
| ● | Professional fees increased by $5.4 million, or 32.7%, in 2025 compared to 2024. This increase was primarily due to an increase in legal fees of $3.4 million and an increase in consulting related fees totaling $1.7 million. |
| ● | FDIC assessment and other regulatory charges, excluding the FDIC special assessment, increased by $9.8 million, or 31.6% in 2025 compared to 2024. The increase reflects changes in the Company's size, primarily due to the acquisition of Independent, and complexity along with the effects from the increase in the Company's classified assets. |
| ● | The FDIC's special assessment decreased by $7.7 million as the FDIC announced a projected reduction in the special assessment rate in late 2025. The FDIC announced an interim final rule to reduce the special assessment rate, which resulted in a reduction of our assessment accrual by approximately $3.8 million. The Company accrued a total of $3.9 million during 2024. |
| ● | Merger, branch consolidation, severance-related, and other expense increased by $97.6 million, or 485.0%, in 2025 compared to 2024. Of the $117.8 million of expense recognized in 2025, approximately $119.8 million pertains to the Independent acquisition. The expense was partially offset by an insurance reimbursement of approximately $3.6 million received in 2025. The reimbursement pertains to costs previously incurred in connection with the cybersecurity incident in February 2024. |
| ● | Other noninterest expense increased by $26.8 million, or 38.2%, in 2025 compared to 2024. This increase was primarily driven by increases in earnings credit expense to Homeowners Association ("HOA") customers of $7.1 million. The Bank provides credit to HOA customers based on the average deposit balances held that reduces fees for other services provided. Additional increases included a $6.6 million increase in other miscellaneous operational expense and an approximately $2.6 million increase in donations. The remaining increases was attributed to a number of smaller expense increase across various categories, reflecting higher operating costs associated with the full-year impact of the Company's acquisition of Independent. |
Income Tax Expense
Our effective tax rate decreased to 23.22% at December 31, 2025, compared to 23.63% for the year-ended December 31, 2024. The decrease was primarily due to a decrease in state tax expense due to state tax planning and lowering of related state apportionment in specific jurisdictions as well as the increase in tax-exempt income and an increase in the cash surrender value of BOLI policies held by the Bank. This benefit was partially offset by the increase in pretax book income and higher non-deductible executive compensation and disallowed FDIC premiums during the current period, when compared to 2024. For additional information refer to Note 11-Income Taxes in the consolidated financial statements.
Segment Reporting
As discussed in Note 29-Segment Reporting, the Company's operations are managed and financial performance is evaluated on an organization-wide basis, and the Company's banking and finance operations are considered by management to constitute one reportable operating segment, the General Banking Unit.
The Company's Chief Operating Decision Maker ("CODM"), the Executive Committee, consists of the Company's senior executive management team, including the Chief Executive Officer, Chief Strategy Officer, President, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer, Chief Credit Officer and other executives. The CODM generally meets monthly to assess performance of the General Banking Unit using a variety of figures, metrics and key performance indicators. In addition to net income and non-Tax Equivalent ("TE") Net Interest Margin ("NIM"), the CODM considers Pre-Provision Net Revenue ("PPNR") and TE NIM to make business decisions. The CODM monitors these profitability measures at each meeting, and is regularly featured in various investor presentations, earnings releases, and other internal management reports. These performance and profitability measures influence business decisions and allocation of resources within the General Banking Unit.
The table below provides PPNR and TE NIM information of the General Banking Unit.
Table 5- Pre-Provision Net Revenue and Tax Equivalent Net Interest Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|||||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|
2023 |
|
|||
|
Revenue, Adjusted (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
Net interest income (GAAP) (a) |
|
$ |
2,303,307 |
|
$ |
1,415,454 |
|
$ |
1,452,608 |
|
|
Plus: |
|
|
|
|
|
|
|
|||
|
Noninterest income |
|
|
377,744 |
|
|
302,262 |
|
|
286,906 |
|
|
Revenue (GAAP) |
|
$ |
2,681,051 |
|
$ |
1,717,716 |
|
$ |
1,739,514 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Securities (losses) gain, net |
|
|
(228,811) |
|
|
(50) |
|
|
43 |
|
|
Gain on sale-leaseback, net of transaction costs |
|
|
229,279 |
|
|
- |
|
|
- |
|
|
Revenue, adjusted (Non-GAAP) |
|
$ |
2,680,583 |
|
$ |
1,717,766 |
|
$ |
1,739,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPNR, Adjusted (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
Revenue, adjusted (Non-GAAP) |
|
$ |
2,680,583 |
|
$ |
1,717,766 |
|
$ |
1,739,471 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
|
|
1,521,084 |
|
|
1,001,493 |
|
|
994,580 |
|
|
PPNR (Non-GAAP) |
|
$ |
1,159,499 |
|
$ |
716,273 |
|
$ |
744,891 |
|
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
Merger, branch consolidation, severance-related, and other expense |
|
|
117,768 |
|
|
20,133 |
|
|
13,162 |
|
|
FDIC special assessment |
|
|
(3,835) |
|
|
3,852 |
|
|
25,691 |
|
|
PPNR, adjusted (Non-GAAP) |
|
$ |
1,273,432 |
|
$ |
740,258 |
|
$ |
783,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Margin, Tax Equivalent ("TE") (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
Average interest earning assets (b) |
|
$ |
58,458,930 |
|
$ |
41,299,577 |
|
$ |
40,098,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin, non-TE ((a)/(b)) (GAAP) |
|
|
3.94% |
|
|
3.43% |
|
|
3.62% |
|
|
TE adjustment (c) |
|
|
2,974 |
|
|
2,192 |
|
|
3,023 |
|
|
Net interest margin, TE (((a)+(c))/(b)) (non-GAAP) |
|
|
3.95% |
|
|
3.43% |
|
|
3.63% |
|
Financial Condition
Overview
At December 31, 2025, we had total assets of approximately $67.2 billion, consisting principally of $48.6 billion in total loans, before taking into account the allowance for credit losses of $585.2 million, $8.7 billion in investment securities, $3.2 billion in cash and cash equivalents and $3.1 billion in goodwill. Our liabilities at December 31, 2025 totaled $58.1 billion, consisting principally of deposits of $55.1 billion ($13.4 billion in noninterest-bearing and $41.8 billion in interest-bearing), $554.7 million derivative liabilities and $1.3 billion of short-term and long-term borrowings. At December 31, 2025, our shareholders' equity was $9.1 billion.
At December 31, 2024, we had total assets of approximately $46.4 billion, consisting principally of $33.9 billion in total loans, before taking into account the allowance for credit losses of $465.3 million, $6.8 billion in investment securities, $1.4 billion in cash and cash equivalents and $1.9 billion in goodwill. Our liabilities at December 31, 2024 totaled $40.5 billion, consisting principally of deposits of $38.1 billion ($10.2 billion in noninterest-bearing and $27.9 in interest-bearing) and short-term and long-term borrowings of $906.4 million. At December 31, 2024, our shareholders' equity was $5.9 billion.
Book value per common share was $91.38 at the end of 2025, an increase from $77.18 at the end of 2024. Book value per common share increased in 2025 as shareholder equity increased by $3.2 billion, or 53.8%, while common shares outstanding increased by 29.9%. The primary reason for an increase in shareholders' equity was primarily due to the acquisition of Independent. The Company issued $2.5 billion in stock related to the acquisition of Independent.
Our common equity to assets ratio increased to 13.5% in 2025, compared to 12.7% in 2024. The improvement during 2025 was due to an increase in shareholders' equity of 53.8%, resulting from the items noted above, while total assets increased 44.9%.
Trading Securities
We have a trading portfolio associated with our Correspondent Bank 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, mortgage-backed agency securities, and SBA securities, which are held for short periods of time and totaled $110.2 million and $102.9 million at December 31, 2025 and 2024, respectively.
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 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 December 31, 2025 and 2024, investment securities totaled $8.7 billion and $6.8 billion, respectively. For the year ended December 31, 2025, average investment securities were $8.4 billion, or 14.3% of average earning assets, compared with $7.1 billion, or 17.6% of average earning assets for the year ended December 31, 2024. The expected average life of the investment portfolio at December 31, 2025 was approximately 5.83 years, compared with 7.73 years at December 31, 2024. See Note 1-Summary of Significant Accounting Policies in the audited consolidated financial statements for our accounting policy on investment securities.
As securities are purchased, they are designated as held to maturity or available for sale based upon our intent, which considers liquidity needs, interest rate expectations, asset/liability management strategies, and capital requirements.
The following table presents the reported values of investment securities for the past two years:
Table 6-Values of Investment Securities
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|||
|
Held to Maturity (amortized cost): |
|
|
|
|
|
|
|
|
U.S. Government agencies |
|
$ |
132,913 |
|
$ |
147,272 |
|
|
Residential mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
1,153,024 |
|
|
1,297,543 |
|
|
Residential collateralized mortgage-obligations issued by U.S. government |
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
379,107 |
|
|
411,721 |
|
|
Commercial mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
336,910 |
|
|
348,338 |
|
|
Small Business Administration loan-backed securities |
|
|
46,076 |
|
|
49,796 |
|
|
Total held to maturity |
|
$ |
2,048,030 |
|
$ |
2,254,670 |
|
|
Available for Sale (fair value): |
|
|
|
|
|
|
|
|
U.S. Treasuries |
|
|
- |
|
|
10,656 |
|
|
U.S. Government agencies |
|
|
- |
|
|
150,418 |
|
|
Residential mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
1,698,108 |
|
|
1,377,525 |
|
|
Residential collateralized mortgage-obligations issued by U.S. government |
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
2,185,584 |
|
|
459,095 |
|
|
Commercial mortgage-backed securities issued by U.S. government |
|
|
|
|
|
||
|
agencies or sponsored enterprises |
|
832,449 |
|
1,040,555 |
|
||
|
State and municipal obligations |
|
1,007,412 |
|
945,723 |
|
||
|
Small Business Administration loan-backed securities |
|
568,433 |
|
310,112 |
|
||
|
Corporate securities |
|
21,770 |
|
26,509 |
|
||
|
Total available for sale |
|
6,313,756 |
|
4,320,593 |
|
||
|
Total other investments |
|
353,428 |
|
223,613 |
|
||
|
Total investment securities |
|
$ |
8,715,214 |
|
$ |
6,798,876 |
|
During 2025, our total investment securities increased $1.9 billion, or 28.2%, from December 31, 2024. The Company acquired $1.6 billion in investment securities through the acquisition of Independent. A majority of these securities were subsequently sold with the proceeds reinvested into securities that fit the Company's investment strategy. The Company also executed a securities repositioning and sold investment securities with a book value of approximately $1.8 billion at a loss of $228.8 million and used the proceeds to purchase new securities. This securities repositioning improved the yield and risk weightings and shortened the duration of the investment portfolio.
The Company purchased $7.1 billion of investment securities during the year ended December 31, 2025, funded by maturities, calls, and paydowns, along with reinvestment of proceeds from the sales of securities acquired from Independent, and proceeds from the sale of securities involved in the repositioning strategy. The increases in investment securities from the acquisition and purchases were partially offset as a result of maturities, calls, and paydowns of investment securities totaling $7.0 billion and a reduction from the net amortization of premiums of $11.0 million during the year ended December 31, 2025. All of the $7.1 billion in purchases of investment securities during the year ended December 31, 2025, were classified as available for sale securities or other investment securities. There were no purchases of held to maturity securities during the year endedDecember 31, 2025.
At December 31, 2025, the unrealized net loss of the available for sale investment securities portfolio was $382.8 million, or 5.7%, below its amortized cost basis. Comparable valuations at December 31, 2024 reflected an unrealized net loss of the available for sale investment portfolio of $808.6 million, or 15.8%, below its amortized cost basis. The decrease in the unrealized net loss of the available for sale portfolio at December 31, 2025 compared to December 31, 2024 was due to the securities restructuring executed during the first quarter of 2025 and the impact of lower interest rates on the value of the securities portfolio.At December 31, 2025, the unrealized net loss of the held to maturity investment securities portfolio was $315.2 million, or 15.4%, below its amortized cost basis. At December 31, 2024, the unrealized net loss of the held to maturity investment securities portfolio was $420.1 million, or 18.6%, below its amortized cost basis.
Table 7-Credit Ratings of Investment Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
Amortized |
|
Fair |
|
Unrealized |
|
|
|
|
|
|
||||
|
(Dollars in thousands) |
|
Cost |
|
Value |
|
Net Loss |
|
AAA - A |
|
Not Rated |
||||||
|
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government agencies |
|
$ |
132,913 |
|
$ |
117,146 |
|
$ |
(15,767) |
|
$ |
132,913 |
|
$ |
- |
|
|
Residential mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises * |
|
|
2,979,331 |
|
|
2,674,031 |
|
|
(305,300) |
|
|
90 |
|
|
2,979,241 |
|
|
Residential collateralized mortgage-obligations issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises * |
|
|
2,587,817 |
|
|
2,509,459 |
|
|
(78,358) |
|
|
- |
|
|
2,587,817 |
|
|
Commercial mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises * |
|
1,240,119 |
|
|
1,111,027 |
|
|
(129,092) |
|
|
53,442 |
|
1,186,677 |
|
||
|
State and municipal obligations |
|
1,141,377 |
|
|
1,007,412 |
|
|
(133,965) |
|
|
1,135,216 |
|
6,161 |
|
||
|
Small Business Administration loan-backed securities |
|
640,049 |
|
|
605,761 |
|
|
(34,288) |
|
|
640,049 |
|
- |
|
||
|
Corporate securities |
|
|
23,000 |
|
|
21,770 |
|
|
(1,230) |
|
|
- |
|
|
23,000 |
|
|
|
|
$ |
8,744,606 |
|
$ |
8,046,606 |
|
$ |
(698,000) |
|
$ |
1,961,710 |
|
$ |
6,782,896 |
|
|
* |
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. |
Held to maturity
As described above, the Company elected to classify some of its securities as held to maturity at the time of purchase. The securities designated as held to maturity are securities the Company does not intend to sell and expects to hold through maturity. The securities consist of $132.9 million of agency securities, $1.9 billion of residential and commercial mortgage-backed securities issued by U.S government agencies or sponsored enterprises and $46.1 million of Small Business Administration loan-backed securities. The following are highlights of our held to maturity portfolio:
| ● | Total amortized cost of held to maturity portfolio totaled $2.0 billion. |
| ● | The balance of securities held to maturity represented 3.0% of total assets at December 31, 2025. |
| ● | No purchases or sales of held to maturity investment securities in 2025; maturities, calls and paydowns totaled $202.5 million in 2025. |
Available for sale
Securities available for sale consist of debentures of government sponsored entities, state and municipal bonds, residential and commercial mortgage-backed securities issued by U.S government agencies or sponsored enterprises, Small Business Administration loan-backed securities and corporate securities. At December 31, 2025, investment securities with a fair value and amortized cost of $6.3 billion and $6.7 billion, respectively, were classified as available for sale. The adjustment for net unrealized losses of $382.8 million between the carrying value of these securities and their amortized cost has been reflected, net of tax, in the Consolidated Balance Sheet as a component of Accumulated Other Comprehensive Loss. The following are highlights of our available for sale securities:
| ● | Total securities available for sale increased $2.0 billion, or 46.1%, from the balance at December 31, 2024. The net unrealized loss position on the investment portfolio decreased $425.8 million and net amortization of premiums was $6.9 million during 2025. We purchased $7.0 billion of available for sale investment securities in 2025, partially offset by maturities, calls and paydowns totaling $3.8 billion and sales totaling $2.6 billion in 2025. These purchases included $1.6 billion in acquired balances from Independent. |
| ● | The balance of securities available for sale represented 9.4% of total assets at December 31, 2025 and 9.3% of total assets at December 31, 2024. |
| ● | Interest income earned on all investment securities in 2025 was $286.7 million, an increase of $108.3 million, or 60.7%, from $178.4 million in 2024. The increase was due to an increase in total average securities balances of $1.3 billion in 2025 and an increase in the yield on investment securities. Both were primarily a result of the securities acquired and reinvested in the Independent acquisition and the securities portfolio restructuring executed during 2025. |
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, compared to 1,214 investment securities in an unrealized loss position, which totaled $1.3 billion at December 31, 2024. See Note 1-Summary of Significant Accounting Policies and Note 3-Investment Securities in the consolidated financial statements for additional information.
Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. For securities designated as available for sale, credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the extent to which the fair value has been less than cost, (4) our intent to hold the security as well as there being no requirement to sell the security, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third-party guarantees, and (8) collateral values. In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer's financial condition, and the issuer's anticipated ability to pay the contractual cash flows of the investments. The Company performed an analysis that determined that the following securities have a zero expected credit loss: U.S. Treasury Securities, Agency-Backed Securities including securities issued by Ginnie Mae, Fannie Mae, FHLB, FFCB and SBA. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United States Government or the credit backing of one of its agencies. Municipal securities and all other securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value. All debt securities in an unrealized loss position as of December 31, 2025 continue to perform as scheduled and we do not believe there is a credit loss or a provision for credit losses is necessary. Also, as part of our evaluation of our intent and ability to hold investments, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio, and it is not more-likely-than-not that we will be required to sell the debt securities.
Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio, and it is not more-likely-than-not that we will be required to sell the debt securities. Changes in the above considerations may affect our intent in the future. See Note 1-Summary of Significant Account Policies for further discussion.
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 December 31, 2025, other investment securities represented approximately $353.4 million, or 0.53% of total assets and primarily consisted of FRB and FHLB stock, which totaled $234.4 million and $18.1 million, respectively. There were no gains or losses on the sales of these securities during 2025 or 2024.
Table 8-Maturity Distribution and Yields of Investment Securities
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|
|
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due In |
|
Due After |
|
Due After |
|
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 |
|
$ |
- |
|
- |
% |
$ |
32,928 |
|
1.89 |
% |
$ |
99,985 |
|
1.68 |
% |
$ |
- |
|
- |
% |
$ |
132,913 |
|
1.73 |
% |
|
Residential mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
192,095 |
|
1.50 |
|
|
960,929 |
|
1.88 |
|
|
1,153,024 |
|
1.82 |
|
|
Residential collateralized mortgage-obligations issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
379,107 |
|
2.54 |
|
|
379,107 |
|
2.54 |
|
|
Commercial mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
- |
|
- |
|
|
90,085 |
|
1.06 |
|
|
122,869 |
|
0.97 |
|
|
123,956 |
|
1.64 |
|
|
336,910 |
|
1.24 |
|
|
Small Business Administration loan-backed securities |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
46,076 |
|
1.23 |
|
|
46,076 |
1.23 |
|
|
|
Total held to maturity |
|
$ |
- |
- |
% |
$ |
123,013 |
1.28 |
% |
$ |
414,949 |
1.39 |
% |
$ |
1,510,068 |
2.01 |
% |
$ |
2,048,030 |
1.84 |
% |
|||||
|
Available for Sale (fair value) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
$ |
120 |
|
2.31 |
% |
$ |
6,823 |
|
2.18 |
% |
$ |
104,950 |
|
3.05 |
% |
$ |
1,586,215 |
|
3.48 |
% |
$ |
1,698,108 |
|
3.46 |
% |
|
Residential collateralized mortgage-obligations issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
370 |
|
2.52 |
|
|
1,358 |
|
2.18 |
|
|
4,919 |
|
2.30 |
|
|
2,178,937 |
|
4.67 |
|
|
2,185,584 |
|
4.67 |
|
|
Commercial mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
3,332 |
|
3.19 |
|
|
316,944 |
|
4.08 |
|
|
331,901 |
|
3.15 |
|
|
180,272 |
|
1.83 |
|
|
832,449 |
|
3.14 |
|
|
State and municipal obligations |
|
8,698 |
|
3.41 |
|
32,976 |
|
3.20 |
|
209,650 |
|
2.68 |
|
756,088 |
|
3.13 |
|
1,007,412 |
3.04 |
|
||||||
|
Small Business Administration loan-backed securities |
|
10,808 |
|
2.28 |
|
11,331 |
|
4.47 |
|
195,529 |
|
4.48 |
|
350,765 |
|
3.42 |
|
568,433 |
3.79 |
|
||||||
|
Corporate securities |
|
- |
|
- |
|
9,976 |
|
6.90 |
|
11,794 |
|
4.29 |
|
- |
|
- |
|
21,770 |
5.43 |
|
||||||
|
Total available for sale |
|
$ |
23,328 |
|
2.84 |
% |
$ |
379,408 |
|
4.05 |
% |
$ |
858,743 |
|
3.34 |
% |
$ |
5,052,277 |
|
3.88 |
% |
$ |
6,313,756 |
|
3.81 |
% |
|
Total other investments |
|
$ |
- |
|
- |
% |
$ |
- |
|
- |
% |
$ |
- |
|
- |
% |
$ |
353,428 |
|
2.36 |
% |
$ |
353,428 |
2.36 |
% |
|
|
Total investment securities |
|
$ |
23,328 |
2.84 |
% |
$ |
502,421 |
3.37 |
% |
$ |
1,273,692 |
2.70 |
% |
$ |
6,915,773 |
3.39 |
% |
$ |
8,715,214 |
3.28 |
% |
|||||
|
Percent of total |
|
1 |
% |
|
|
5 |
% |
|
|
13 |
% |
|
|
81 |
% |
|
|
|
|
|
|
|
||||
|
Cumulative percent of total |
|
1 |
% |
|
|
5 |
% |
|
|
19 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
||||
| (1) | The expected average life for U.S. Government agencies is 6.23 years. |
| (2) | The expected average life for residential mortgage-backed securities issued by U.S. government agencies or sponsored enterprises is 5.91 years; 6.79 years for held to maturity and 5.30 years for available for sale. |
| (3) | The expected average life for residential collateralized mortgage-obligations securities issued by U.S. government agencies or sponsored enterprises is 4.35 years; 7.26 years for held to maturity and 3.85 years for available for sale. |
| (4) | The expected average life for commercial mortgage-backed securities issued by U.S. government agencies or sponsored enterprises is 5.41 years; 5.63 years for held to maturity and 5.33 years for available for sale. |
| (5) | Weighted average yields on tax-exempt income have been presented on a taxable-equivalent basis, assuming a federal tax rate of 21.00% and a state tax rate of 3.04%, which is net of federal tax benefit in the above table. These yields were calculated using coupon interest and adjusting for discount accretion and premium amortization, where applicable. |
| (6) | The expected average life for state and municipal obligations is 10.87 years. |
| (7) | The expected average life for Small Business Administration loan-backed securities is 4.11 years; 4.89 years for held to maturity and 4.05 years for available for sale. |
| (8) | The expected average life for corporate securities is 3.53 years. |
| (9) | FRB, FHLB and other non-marketable equity securities have no set maturity date and are classified in "Due after 10 Years." |
| (10) | The expected average life for the total investment securities portfolio is 5.83 years (not including FRB, FHLB and corporate stock with no maturity date). |
| (11) | The total values presented in the table above represent the total fair value of available for sale securities and amortized cost for held to maturity. |
Approximately 84.1% of the investment portfolio 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 or Bank Term Funding Program. Approximately 11.6% of the investment portfolio 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 Double A or Triple A category.
As of December 31, 2025, the portfolio had an effective duration of 4.60 years. We continue to monitor duration risk and seek to align actual duration with the target range.
The following table presents a summary of our investment portfolio duration for the periods presented:
Table 9-Investment Portfolio Duration
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|
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|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
December 31, 2024 |
|
||||||
|
(Dollars in thousands, duration in years) |
|
Amount |
|
Duration |
|
Amount |
|
Duration |
|
||
|
Held to Maturity (amortized cost) |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government agencies |
|
$ |
132,913 |
|
5.62 |
|
$ |
147,272 |
|
5.85 |
|
|
Residential mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
1,153,024 |
|
6.06 |
|
|
1,297,543 |
|
5.94 |
|
|
Residential collateralized mortgage-obligations issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
379,107 |
|
6.63 |
|
|
411,721 |
|
6.76 |
|
|
Commercial mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
336,910 |
|
5.05 |
|
|
348,338 |
|
6.12 |
|
|
Small Business Administration loan-backed securities |
|
|
46,076 |
|
5.99 |
|
|
49,796 |
|
9.12 |
|
|
Total held to maturity |
|
$ |
2,048,030 |
|
5.97 |
|
$ |
2,254,670 |
|
6.18 |
|
|
Available for Sale (fair value) |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries |
|
$ |
- |
|
- |
|
$ |
10,656 |
|
0.10 |
|
|
U.S. Government agencies |
|
|
- |
|
- |
|
|
150,418 |
|
3.95 |
|
|
Residential mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
1,698,108 |
|
4.43 |
|
|
1,377,525 |
|
5.73 |
|
|
Residential collateralized mortgage-obligations issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
2,185,584 |
|
2.54 |
|
|
459,095 |
|
6.00 |
|
|
Commercial mortgage-backed securities issued by U.S. government |
|
|
|
|
|
|
|
|
|
|
|
|
agencies or sponsored enterprises |
|
|
832,449 |
|
4.55 |
|
|
1,040,555 |
|
5.35 |
|
|
State and municipal obligations |
|
1,007,412 |
7.79 |
|
945,723 |
10.08 |
|
||||
|
Small Business Administration loan-backed securities |
|
568,433 |
|
2.19 |
|
310,112 |
|
5.09 |
|
||
|
Corporate securities |
|
21,770 |
|
0.51 |
|
26,509 |
|
1.27 |
|
||
|
Total available for sale |
|
$ |
6,313,756 |
|
4.22 |
|
$ |
4,320,593 |
|
6.47 |
|
Loans Held for Sale
The balance of loans held for sale increased $65.9 million from December 31, 2024, to $345.3 million on December 31, 2025. Loans held for sale at December 31, 2025 and 2024 consisted of mortgage and SBA loans held for sale. The increase in loans held for sale in 2025 was driven by an increase in SBA loans held for sale as this line of business became more established in 2025.
During the third quarter of 2024, the Company began purchasing 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 $283.9 million at December 31, 2025, a $102.6 million increase from $181.3 million at December 31, 2024. See Note - 28 - SBA Loans Held for Sale for more information.
Mortgage loans held for sale totaled $61.4 million at December 31, 2025, a decrease from $98.1 million at December 31, 2024. Total mortgage production was $2.5 billion in 2025. This compares to $1.9 billion 2024. Mortgage production increased from 2024 as average mortgage rates have declined in 2025 along with the effects of adding new markets with the acquisition of Independent on January 1, 2025. The percentage of mortgage production sold into the secondary market decreased in 2025 to 37% from 58% in 2024. 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.
Interest income from loans held for sale increased $12.1 million, or 180.3%, during 2025 to $18.8 million from $6.7 million in 2024. This increase was due to an increase in the average balance of loans held for sale of $162.1 million, or 162.4%, from $99.9 million for the year ended December 31, 2024 to $262.0 million for the year ended December 31, 2025. Of this increase, $158.0 million was related to SBA loans held for sale and $4.2 million was related to mortgage loans held for sale. The yield on loans held for sale increased in 2025 compared to 2024. For year ended 2025 the yield on loans held for sale was 7.17% compared to 6.71% in 2024. This increase was driven by the higher average balance held of SBA loans held for sale in 2025 which have higher yields.
See Note 1-Summary of Significant Accounting Policies, under Loans Held for Sale sectionfor more information.
Loan Portfolio
Our loan portfolio remains our largest category of interest-earning assets. At December 31, 2025, total loans, excluding loans held for sale, were $48.6 billion, which was an overall increase of $14.7 billion, or 43.3%, from the balance at the end of 2024. Non-acquired loan growth was $5.0 billion, or 16.9% for 2025, driven by organic growth and renewals of acquired loans moved to our non-acquired loan portfolio. The loan growth was made up of a 28.9% increase in commercial and industrial loans, a 19.6% increase in commercial non-owner occupied real estate loans (including construction and land development loans), a 12.6% increase in owner-occupied real estate loans, an 11.8% increase in consumer real estate loans and a 8.1% increase in other income producing property loans. Total acquired loans increased by $9.7 billion, or 215.9% from the balance at the end of 2024. This increase in acquired loans was due to the addition of $13.1 billion from the acquisition of Independent, net of offsets from 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 loan growth was made up of a 333.2% increase in commercial non-owner occupied real estate loans (including construction and land development loans), a 433.0% increase in other income producing property loans, a 222.2% increase in commercial and industrial loans, a 109.4% increase in owner-occupied real estate loans, and a 101.3% increase in consumer real estate loans.
Average total loans outstanding during 2025 were $47.4 billion, an increase of $14.3 billion, or 43.0%, over the 2024 average of $33.1 billion. (For further discussion of the Company's acquired loan accounting, see Note 1-Summary of Significant Accounting Policies, Note 2-Mergers and Acquisitions, Note 4-Loans and Note 5-Allowance for Credit Losses in the consolidated financial statements.)
The following table presents a summary of the loan portfolio by category (excludes loans held for sale):
Table 10-Distribution of Loans by Type
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|||
|
Acquired loans: |
|
|
|
|
|
|
|
|
Acquired - non-purchased credit deteriorated loans: |
|
|
|
|
|
|
|
|
Non-owner-occupied real estate (1) |
|
$ |
5,346,868 |
|
$ |
1,355,452 |
|
|
Consumer real estate (2) |
|
1,380,091 |
|
619,208 |
|
||
|
Commercial owner-occupied real estate |
|
1,982,641 |
|
912,760 |
|
||
|
Commercial and industrial |
|
1,789,588 |
|
579,883 |
|
||
|
Other income producing property |
|
672,593 |
|
111,394 |
|
||
|
Consumer |
|
60,528 |
|
56,879 |
|
||
|
Other |
|
|
105 |
|
|
206 |
|
|
Total acquired - non-purchased credit deteriorated loans |
|
|
11,232,414 |
|
|
3,635,782 |
|
|
Acquired - purchased credit deteriorated loans (PCD): |
|
|
|
|
|
|
|
|
Non-owner-occupied real estate (3) |
|
|
2,066,891 |
|
|
355,891 |
|
|
Consumer real estate (2) |
|
205,702 |
|
168,737 |
|
||
|
Commercial owner-occupied real estate |
|
486,118 |
|
266,288 |
|
||
|
Commercial and industrial |
|
148,089 |
|
21,451 |
|
||
|
Other income producing property |
|
49,090 |
|
24,013 |
|
||
|
Consumer |
|
21,609 |
|
25,775 |
|
||
|
Total acquired - purchased credit deteriorated loans (PCD) |
|
|
2,977,499 |
|
|
862,155 |
|
|
Total acquired loans |
|
|
14,209,913 |
|
|
4,497,937 |
|
|
Non-acquired loans: |
|
|
|
|
|
|
|
|
Non-owner-occupied real estate (4) |
|
|
11,786,361 |
|
|
9,856,716 |
|
|
Consumer real estate (2) |
|
8,864,430 |
|
7,927,024 |
|
||
|
Commercial owner-occupied real estate |
|
5,108,232 |
|
4,537,328 |
|
||
|
Commercial and industrial |
|
7,243,731 |
|
5,621,542 |
|
||
|
Other income producing property |
|
510,470 |
|
472,343 |
|
||
|
Consumer |
|
873,129 |
|
979,945 |
|
||
|
Other loans |
|
2,261 |
|
10,092 |
|
||
|
Total non-acquired loans |
|
|
34,388,614 |
|
|
29,404,990 |
|
|
Total loans (net of unearned income) |
|
$ |
48,598,527 |
|
$ |
33,902,927 |
|
| (1) | Includes $580.7 million and $37.5 million of construction and land development loans at December 31, 2025 and 2024, respectively. |
| (2) | Includes loans on both 1-4 family owner-occupied property, as well as loans collateralized by 1-4 family owner-occupied property with a business intent. |
| (3) | Includes $106.8 million and $5.9 million of construction and land development loans at December 31, 2025 and 2024, respectively. |
| (4) | Includes $1.9 billion and $2.1 billion of construction and land development loans at December 31, 2025 and 2024, respectively. |
The following highlights of our loan portfolio as of December 31, 2025 compared to December 31, 2024:
| ● | Non-acquired loans were $34.4 billion, or 70.8% of total loans at December 31, 2025. This compares to non-acquired loans of $29.4 billion, or 86.7% at December 31, 2024. The increase in non-acquired loans of $5.0 billion was due to organic growth and renewals of acquired loans that were moved to the non-acquired loan portfolio. Acquired loans were $14.2 billion, or 29.2% of total loans at December 31, 2025. This compares to acquired loans of $4.5 billion, or 13.3%, at December 31, 2024. The $9.7 billion increase in acquired loans was due to the addition of $13.1 billion from the acquisition of Independent, net of offsets from 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. |
| o | Non-acquired loans secured by non-owner occupied and consumer real estate were $20.7 billion and comprised 42.5% of the total loan portfolio at December 31, 2025. This was an increase of $2.9 billion, or 16.1%, over December 31, 2024. At December 31, 2025, acquired loans secured by non-owner occupied and consumer real estate were $9.0 billion and comprised 18.5% of the total loan portfolio. This was an increase of $6.5 billion, or 260.1%, over December 31, 2024. Between both the non-acquired and acquired portfolios, 61.0% of loans were non-owner occupied and consumer real estate loans. |
| ◾ | Of the non-acquired real estate loans at December 31, 2025, $11.8 billion, or 24.3% of the loan portfolio were secured by non-owner-occupied real estate. Loans secured by consumer real estate were $8.9 billion, or 18.2% of the total loan portfolio at December 31, 2025. This compared to loans secured by non-owner-occupied real estate of $9.9 billion, or 29.1%, and loans secured by consumer real estate of $7.9 billion, or 23.4% of the loan portfolio at December 31, 2024. |
| ◾ | Of the acquired real estate loans, $7.4 billion, or 15.3% of the loan portfolio were secured by non-owner-occupied real estate at December 31, 2025. Loans secured by consumer real estate were $1.6 million, or 3.3% of the loan portfolio. This compared to acquired loans secured by non-owner-occupied real estate of $1.7 billion, or 5.0%, and loans secured by consumer real estate of $787.9 million, or 2.3% of the loan portfolio at December 31, 2024. |
| o | Included within loans secured by non-owner-occupied real estate noted above are construction and land development loans. Total construction and land development loans were $2.5 billion at December 31, 2025 compared to $2.2 billion at December 31, 2024. Construction and land development loans are more susceptible to a risk of loss during a downturn in the business cycle. |
| ◾ | Non-acquired construction and land development loans declined $280.0 million to $1.9 billion in 2025 from $2.1 billion at December 31, 2024. |
| ◾ | Acquired construction and land development loans increased $644.1 million to $687.5 million in 2025 from $43.4 million at December 31, 2024 due to the Independent merger, net of principal payments, charge offs, foreclosures and renewals of acquired loans that were moved to our non-acquired loan portfolio. |
| o | Total consumer real estate loans were comprised of $8.6 billion in consumer owner occupied loans and $1.8 billion in home equity line loans at December 31, 2025. This compares to $7.1 billion in consumer owner-occupied loans and $1.6 billion in home equity line loans at December 31, 2024. During 2025, the consumer real estate loan portfolio increased by $1.7 billion from December 31, 2024 through organic growth, as well as the merger with Independent, net of principal payments, charge offs, foreclosures and renewals of acquired loans that were moved to our non-acquired loan portfolio. |
| ◾ | Non-acquired loans secured by consumer real estate were comprised of $7.3 billion in consumer owner occupied loans and $1.6 billion in home equity loans at December 31, 2025. At December 31, 2024, we had $6.6 billion in consumer owner occupied loans and $1.4 billion in home equity loans in the non-acquired loan portfolio. |
| ◾ | Acquired loans secured by consumer real estate are comprised of $1.4 billion in consumer owner occupied loans and $228.8 million in home equity loans at December 31, 2025. At December 31, 2024, we had $574.0 million in consumer owner occupied loans and $213.9 million in home equity loans in the acquired loan portfolio. |
| o | Non-acquired and acquired commercial owner-occupied real estate loans were $5.1 billion, or 10.5%, and $2.5 billion, or 5.1%, respectively, of the total loan portfolio at December 31, 2025 compared to $4.5 billion, or 13.4%, and $1.2 billion, or 3.5%, respectively, of the loan portfolio at December 31, 2024. |
| ◾ | Non-acquired commercial owner-occupied real estate loans increased $570.9 million through organic growth and renewals of acquired loans. |
| ◾ | Acquired commercial owner-occupied real estate loans increased $1.3 billion due to the Independent merger, net of principal payments, charge offs, foreclosures and renewals of acquired loans that were moved to our non-acquired loan portfolio from December 31, 2024 compared to December 31, 2025. |
| o | Non-acquired and acquired commercial and industrial loans were $7.2 billion, or 14.9%, and $1.9 billion, or 4.0%, respectively, of the total loan portfolio at December 31, 2025 compared to $5.6 billion, or 16.6%, and $601.3 million, or 1.8%, respectively, of the loan portfolio at December 31, 2024. |
| ◾ | Non-acquired commercial and industrial loans increased $1.6 billion during 2025 from December 31, 2024. |
| ◾ | Acquired commercial and industrial loans increased $1.3 billion from December 31, 2024 compared to December 31, 2025. |
Total loan interest income was $3.0 billion in 2025, an increase of $1.2 billion, or 55.9%, compared to $1.9 billion in 2024. This increase was due to both an increase in the average balance and an increase in the yield on the total loan portfolio in 2025. The overall average balance in the loan portfolio increased $14.3 billion in 2025. The average balance increased on the non-acquired loan portfolio and the acquired loan portfolio $3.5 billion and $10.8 billion, respectively. The growth in the non-acquired loan portfolio average balance was due to normal organic growth and renewals of acquired loans. The growth in the acquired loan portfolio was due to the merger with Independent, net of paydowns and payoffs, along with renewals of acquired loans that were moved to our non-acquired loan portfolio. The overall yield on the loan portfolio increased by 124 basis points in 2025. This increase was due to a 2-basis point decrease in the yield on the non-acquired portfolio and a 126-basis point increase in the yield on the acquired portfolio. The yield on the non-acquired loan portfolio decreased from 5.72% in 2024, to 5.70% in 2025 and the yield on the acquired loan portfolio increased from 6.20% in 2024, to 7.46% in 2025.The overall increase in the yield on the loan portfolio was primarily due to additional loan accretion on acquired Independent loans.
The table below shows the contractual maturity of the non-acquired loan portfolio at December 31, 2025.
Table 11-Maturity Distribution of Non-acquired Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
1 Year |
|
Maturity |
|
Maturity |
|
Over |
||||||
|
(Dollars in thousands) |
|
Total |
|
or Less |
|
1 to 5 Years |
|
5 to 15 Years |
|
15 Years |
||||||
|
Non-owner-occupied real estate |
|
$ |
11,786,361 |
|
$ |
2,100,719 |
|
$ |
5,887,252 |
|
$ |
3,494,176 |
|
$ |
304,214 |
|
|
Consumer real estate |
|
8,864,430 |
|
84,150 |
|
482,258 |
|
1,245,342 |
|
7,052,680 |
|
|||||
|
Commercial owner-occupied real estate |
|
5,108,232 |
|
323,641 |
|
2,145,699 |
|
2,430,283 |
|
208,609 |
|
|||||
|
Commercial and industrial |
|
7,243,731 |
|
1,409,942 |
|
3,399,095 |
|
1,756,057 |
|
678,637 |
|
|||||
|
Other income producing property |
|
510,470 |
|
91,323 |
|
272,527 |
|
78,424 |
|
68,196 |
|
|||||
|
Consumer |
|
873,129 |
|
61,458 |
|
290,817 |
|
279,195 |
|
241,659 |
|
|||||
|
Other loans |
|
2,261 |
|
2,261 |
|
- |
|
- |
|
- |
|
|||||
|
Total non-acquired loans |
|
$ |
34,388,614 |
|
$ |
4,073,494 |
|
$ |
12,477,648 |
|
$ |
9,283,477 |
|
$ |
8,553,995 |
|
Table 12-Non-Acquired Loans Due After One Year - Fixed or Floating
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
Fixed Rate |
|
Variable Rate |
|
||
|
Non-owner-occupied real estate |
|
$ |
2,823,819 |
|
$ |
6,861,823 |
|
|
Consumer real estate |
|
3,547,028 |
|
5,233,252 |
|
||
|
Commercial owner-occupied real estate |
|
2,595,503 |
|
2,189,088 |
|
||
|
Commercial and industrial |
|
3,162,853 |
|
2,670,936 |
|
||
|
Other income producing property |
|
256,026 |
|
163,121 |
|
||
|
Consumer |
|
775,697 |
|
35,974 |
|
||
|
Total non-acquired loans |
|
$ |
13,160,926 |
|
$ |
17,154,194 |
|
The table below shows the contractual maturity of the acquired non-purchased credit deteriorated loan portfolio at December 31, 2025.
Table 13-Maturity Distribution of Acquired Non-purchased Credit Deteriorated Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
1 Year |
|
Maturity |
|
Maturity |
|
Over |
||||||
|
(Dollars in thousands) |
|
Total |
|
or Less |
|
1 to 5 Years |
|
5 to 15 Years |
|
15 Years |
||||||
|
Non-owner-occupied real estate |
|
$ |
5,346,868 |
|
$ |
1,356,567 |
|
$ |
2,918,640 |
|
$ |
988,665 |
|
$ |
82,996 |
|
|
Consumer real estate |
|
1,380,091 |
|
66,747 |
|
251,646 |
|
164,024 |
|
897,674 |
|
|||||
|
Commercial owner-occupied real estate |
|
1,982,641 |
|
248,972 |
|
797,508 |
|
733,324 |
|
202,837 |
|
|||||
|
Commercial and industrial |
|
1,789,588 |
|
364,167 |
|
1,070,720 |
|
299,816 |
|
54,885 |
|
|||||
|
Other income producing property |
|
672,593 |
|
137,991 |
|
308,497 |
|
155,482 |
|
70,623 |
|
|||||
|
Consumer |
|
60,528 |
|
13,840 |
|
15,548 |
|
29,805 |
|
1,335 |
|
|||||
|
Other |
|
|
105 |
|
|
105 |
|
|
- |
|
- |
|
|
- |
|
|
|
Total acquired - non-purchased credit deteriorated loans |
|
$ |
11,232,414 |
|
$ |
2,188,389 |
|
$ |
5,362,559 |
|
$ |
2,371,116 |
|
$ |
1,310,350 |
|
Table 14-Acquired Non-PCD Loans Due After One Year - Fixed or Floating
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
Fixed Rate |
|
Variable Rate |
|
||
|
Non-owner-occupied real estate |
|
$ |
1,781,600 |
|
$ |
2,208,701 |
|
|
Consumer real estate |
|
698,700 |
|
614,644 |
|
||
|
Commercial owner-occupied real estate |
|
624,241 |
|
1,109,428 |
|
||
|
Commercial and industrial |
|
602,756 |
|
822,665 |
|
||
|
Other income producing property |
|
260,540 |
|
274,062 |
|
||
|
Consumer |
|
41,683 |
|
5,005 |
|
||
|
Total acquired - non-purchased credit deteriorated loans |
|
$ |
4,009,520 |
|
$ |
5,034,505 |
|
The table below shows the contractual maturity of the acquired purchased credit deteriorated loan portfolio at December 31, 2025.
Table 15-Maturity Distribution of Acquired Purchased Credit Deteriorated Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
1 Year |
|
Maturity |
|
Maturity |
|
Over |
||||||
|
(Dollars in thousands) |
|
Total |
|
or Less |
|
1 to 5 Years |
|
5 to 15 Years |
|
15 Years |
||||||
|
Non-owner-occupied real estate |
|
$ |
2,066,891 |
|
$ |
660,896 |
|
$ |
1,111,660 |
|
$ |
266,406 |
|
$ |
27,929 |
|
|
Consumer real estate |
|
205,702 |
|
8,064 |
|
27,405 |
|
37,720 |
|
132,513 |
|
|||||
|
Commercial owner-occupied real estate |
|
486,118 |
|
56,834 |
|
228,092 |
|
142,692 |
|
58,500 |
|
|||||
|
Commercial and industrial |
|
148,089 |
|
83,388 |
|
55,462 |
|
5,708 |
|
3,531 |
|
|||||
|
Other income producing property |
|
49,090 |
|
8,790 |
|
25,119 |
|
10,718 |
|
4,463 |
|
|||||
|
Consumer |
|
21,609 |
|
704 |
|
5,360 |
|
15,544 |
|
1 |
|
|||||
|
Total acquired - purchased credit deteriorated loans (PCD) |
|
$ |
2,977,499 |
|
$ |
818,676 |
|
$ |
1,453,098 |
|
$ |
478,788 |
|
$ |
226,937 |
|
Table 16-Acquired PCD Loans Due After One Year - Fixed or Floating
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
Fixed Rate |
|
Variable Rate |
|
||
|
Non-owner-occupied real estate |
|
$ |
648,659 |
|
$ |
757,336 |
|
|
Consumer real estate |
|
111,927 |
|
85,711 |
|
||
|
Commercial owner-occupied real estate |
|
161,326 |
|
267,958 |
|
||
|
Commercial and industrial |
|
21,057 |
|
43,644 |
|
||
|
Other income producing property |
|
8,467 |
|
31,833 |
|
||
|
Consumer |
|
20,905 |
|
- |
|
||
|
Total acquired - purchased credit deteriorated loans (PCD) |
|
$ |
972,341 |
|
$ |
1,186,482 |
|
Total commercial non-owner-occupied loans of $16.7 billion, approximately 34.3% of the total loans held for investment, was the largest category of the loan portfolio as of December 31, 2025. As of December 31, 2025, approximately 94% of the commercial non-owner-occupied portfolio was located within the Company's footprint. Of the $16.7 billion, approximately $1.8 billion, or 4% of the total loans, represented our office segment. Approximately 96% 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.
Table 17-Commercial Non-Owner-Occupied Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Non-Owner-Occupied Loans |
|
Net Book |
|
Average |
|
% of |
|
|
% of Substandard & |
|
|
% of |
|
|
||
|
(Dollars in thousands) |
|
Balance (1) |
|
Loan Size |
|
Non-Accrual |
|
|
Accruing |
|
|
Special Mention |
|
|
||
|
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
$ |
4,516,819 |
|
$ |
2,278 |
|
0.10 |
% |
|
1.75 |
% |
|
1.57 |
% |
|
|
Multifamily |
|
|
2,843,452 |
|
|
4,127 |
|
1.71 |
% |
|
22.64 |
% |
|
12.55 |
% |
|
|
Warehouse/Industrial |
|
|
2,449,760 |
|
|
2,143 |
|
- |
% |
|
6.43 |
% |
|
2.69 |
% |
|
|
Office |
|
|
1,839,157 |
|
|
1,605 |
|
0.73 |
% |
|
8.16 |
% |
|
3.14 |
% |
|
|
Hotel |
|
|
1,383,286 |
|
|
5,300 |
|
0.04 |
% |
|
5.99 |
% |
|
3.11 |
% |
|
|
Medical |
|
|
929,856 |
|
|
2,094 |
|
- |
% |
|
2.25 |
% |
|
0.47 |
% |
|
|
Other |
|
|
924,936 |
|
|
1,697 |
|
- |
% |
|
6.50 |
% |
|
5.50 |
% |
|
|
Self Storage |
|
|
699,843 |
|
|
3,431 |
|
- |
% |
|
12.68 |
% |
|
4.93 |
% |
|
| (1) | Net book balance in each segment that represents 2% or more of commercial non-owner-occupied portfolio as of December 31, 2025. |
Nonperforming Assets ("NPAs")
The level of risk elements in the loan portfolio, OREO and other nonperforming assets for the past two years is shown below:
Table 18-Nonperforming Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
||||
|
(Dollars in thousands) |
|
|
2025 |
|
2024 |
|
||
|
Non-acquired: |
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
|
|
$ |
157,662 |
|
$ |
134,867 |
|
|
Accruing loans past due 90 days or more |
|
|
2,997 |
|
3,293 |
|
||
|
Modified loans to a borrower experiencing financial difficulty - nonaccrual |
|
|
4,313 |
|
7,115 |
|
||
|
Total non-acquired nonperforming loans |
|
|
164,972 |
|
145,275 |
|
||
|
Other real estate owned ("OREO") (1) (2) |
|
|
4,961 |
|
648 |
|
||
|
Other nonperforming assets (3) |
|
|
312 |
|
534 |
|
||
|
Total OREO and other nonperforming assets excluding acquired assets |
|
|
5,273 |
|
1,182 |
|
||
|
Total nonperforming assets excluding acquired assets |
|
|
170,245 |
|
146,457 |
|
||
|
Acquired: |
|
|
|
|
|
|
|
|
|
Nonaccrual loans (4) |
|
|
129,402 |
|
58,923 |
|
||
|
Accruing loans past due 90 days or more |
|
|
1,944 |
|
- |
|
||
|
Modified loans to a borrower experiencing financial difficulty - nonaccrual |
|
|
|
5,778 |
|
|
6,391 |
|
|
Total acquired nonperforming loans |
|
|
137,124 |
|
65,314 |
|
||
|
Acquired OREO and other nonperforming assets: |
|
|
|
|
|
|
|
|
|
Acquired OREO (1) |
|
|
3,810 |
|
1,505 |
|
||
|
Other acquired nonperforming assets (3) |
|
|
91 |
|
78 |
|
||
|
Total acquired OREO and other nonperforming assets |
|
|
3,901 |
|
1,583 |
|
||
|
Total acquired nonperforming assets |
|
|
141,025 |
|
66,897 |
|
||
|
Total nonperforming assets |
|
|
$ |
311,270 |
|
$ |
213,354 |
|
|
Excluding acquired assets: |
|
|
|
|
|
|
|
|
|
Total nonperforming assets as a percentage of total loans and repossessed assets (5) |
|
|
0.49 |
% |
0.50 |
% |
||
|
Total nonperforming assets as a percentage of total assets (6) |
|
|
0.25 |
% |
0.32 |
% |
||
|
Nonperforming loans as a percentage of period end loans (5) |
|
|
0.48 |
% |
0.49 |
% |
||
|
Including acquired assets: |
|
|
|
|
|
|
|
|
|
Total nonperforming assets as a percentage of total loans and repossessed assets (5) |
|
|
0.64 |
% |
0.63 |
% |
||
|
Total nonperforming assets as a percentage of total assets (6) |
|
|
0.46 |
% |
0.46 |
% |
||
|
Nonperforming loans as a percentage of period end loans (5) |
|
|
0.62 |
% |
0.62 |
% |
||
| (1) | Consists of real estate acquired as a result of foreclosure. Excludes certain property no longer intended for bank use. |
| (2) | Excludes non-acquired bank premises held for sale of $0 and $3.3 million as of December 31, 2025 and 2024, respectively, that is now separately disclosed on the balance sheet. |
| (3) | Consists of non-real estate foreclosed assets, such as repossessed vehicles. |
| (4) | Includes nonaccrual loans that are purchase credit deteriorated (PCD loans). |
| (5) | Loan data excludes mortgage loans held for sale. |
| (6) | For purposes of this calculation, total assets include all assets (both acquired and non-acquired). |
Total non-acquired nonperforming loans were $165.0 million, or 0.48% of total non-acquired loans, an increase of approximately $19.7 million, or 13.6%, from December 31, 2024. The increase in nonperforming loans was driven primarily by an increase in consumer nonaccrual loans of $23.3 million, offset by a decrease in commercial nonaccrual loans of $497,000, a decrease in modified loans to borrowers with financial difficulties on nonaccrual of $2.8 million and a decrease in accruing loans past due 90 days or more of $296,000. The increase in consumer nonaccrual loans year over year was primarily in first mortgage 1-4 family owner occupied loans. Acquired nonperforming loans were $137.1 million, or 0.96% of total acquired loans, an increase of $71.8, or 109.9% from December 31, 2024. The increase in acquired nonperforming loans was mainly driven byan increase in commercial nonaccrual loans of $68.7 million, an increase in consumer nonaccrual loans of $1.8 million, an increase in accruing loans past due 90 days or more of $1.9 million, offset by a decrease in restructured loans of $612,000. The majority of the increase in acquired commercial nonaccrual loans was due to the addition of $75.1 million in loans acquired in the merger with Independent, offset by a $6.4 million decline in legacy commercial nonaccrual loans. The $75.1 million in nonaccrual loans acquired were primarily commercial real estate and commercial and industrial loans.
The top ten nonaccrual loans at December 31, 2025 totaled $96.1 million and consisted of four loans located in Texas, two in North Carolina, one in Alabama, one in Florida, one in Georgia, and one in South Carolina. These loans comprise 32.3% of total nonaccrual loans at December 31, 2025, with around 60% being real estate collateral dependent and the other 40% being non real estate. We currently hold a specific reserve against three of these ten loans, totaling $15.9 million. The remaining seven loans do not carry a specific reserve due to carrying balances being below current collateral values.
As of December 31, 2025, the Bank had a total of $195.0 million loans to borrowers experiencing financial difficulty. Of the $195.0 million, $189.5 million loans were current, $4.5 million loans were 30 to 89 days past due and $925,000 were 90 days past due.
Allowance for Credit Losses ("ACL") on Loans and Certain Off-Balance-Sheet Credit Exposure
The ACL reflects management's estimate of losses that will result from the inability of our borrowers to make required loan payments. The Company records loans charged off against the ACL and subsequent recoveries, if any, increase the ACL when they are recognized. Please see Note 1 - Summary of Significant Accounting Policies, under the "ACL - Loans" section, in this Annual Report on Form 10-K for further detailed descriptions of our estimation process and methodology related to the ACL on loans.
Management considers forward-looking information in estimating expected credit losses. The Company subscribes to a third-party service which provides a quarterly macroeconomic baseline outlook and alternative scenarios for the United States economy. The baseline, along with the evaluation of alternative scenarios, is used by management to determine the best estimate within the range of expected credit losses. Management evaluates the appropriateness of the reasonable and supportable forecast scenarios and takes into consideration the scenarios in relation to actual economic and other data, such as gross domestic product growth, monetary and fiscal policy, inflation, supply chain issues and global events like the Russian/Ukraine conflict and unrest in the middle east, and changes in global trade policy, as well as the volatility and magnitude of changes within those scenarios quarter over quarter, and consideration of conditions within the Bank's operating environment and geographic area. Additional forecast scenarios may be weighted along with the baseline forecast to arrive at the final reserve estimate. While periods of relative economic stability should generally lead to stability in forecast scenarios and weightings to estimate credit losses, periods of instability can likewise require management to adjust the selection of scenarios and weightings, in accordance with the accounting standards. For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long term mean of historical factors within four quarters using a straight-line approach. The Company generally uses an eight-quarter forecast and a four-quarter reversion period.
There are several headwinds that continue to weigh on the economy, though the U.S. has thus far avoided a recession. Management continues to use a blended forecast scenario of the baseline, upside, and more severe scenario, depending on the circumstances and economic outlook. As of December 31, 2025, management selected a baseline weighting of 40%, a 25% weighting for an upside scenario and a 35% weighting for the more severe scenario. Scenario weightings are generally expected to remain stable but are reviewed on a quarterly basis. Weightings were unchanged from the prior quarter and reflect a broadly neutral outlook with continued recognition of downside risks and elevated uncertainty in the economic forecast from flat job growth, high interest rates, lack of clarity on trade policy impacts, and tightening credit conditions. Improved GDP growth and employment resilience kept expected losses largely stable.
The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include undrawn portions of revolving lines of credit and standby letters of credit. Please see Note 1-Summary of Significant Accounting Policies in this Report on Form 10-K for further detailed descriptions of our estimation process and methodology related to the ACL on certain off-balance-sheet credit exposures. As of December 31, 2025 and 2024, the liabilities recorded for expected credit losses on unfunded commitments were $69.6 million and $45.3 million, respectively. The current adjustment to the ACL for unfunded commitments is recognized through the Provision for Credit Losses in the Consolidated Statements of Income.
As of December 31, 2025, the balance of the ACL was $585.2 million, or 1.20%, of total loans. For the year ended December 31, 2025, the ACL increased $119.9 million from the balance of $465.3 million at December 31, 2024. The increase in ACL of $119.9 million included an initial provision related to PCD loans acquired from Independent of $135.4 million, an initial provision related to Non-PCD loans acquired from Independent of $80.0 million, a $15.5 million provision for all other loans, and $111.0 million in net charge-offs, which included $56.7 million of acquisition date charge-offs on PCD loans acquired from Independent. For both the three and twelve months ended December 31, 2025, the Company recorded provision for credit losses due to loan growth and current forecasts applied to our modeling to adequately capture growing economic recessionary risks. As of December 31, 2024, the balance of the ACL was $465.3 million or 1.37% of total loans. For the year ended December 31, 2024, the ACL increased $8.7 million from the balance of $456.6 million at December 31, 2023. The increase in ACL of $8.7 million included $27.0 million of provision for credit losses, and $18.2 million in net charge-offs. For both the three and twelve months ended December 31, 2024, the Company recorded provision for credit losses due to loan growth and current forecasts applied to our modeling to adequately capture growing economic recessionary risks.
At December 31, 2025, the Company had a reserve on unfunded commitments of $69.6 million, which was recorded as a liability on the Consolidated Balance Sheet, compared to $45.3 million at December 31, 2024. During the three and twelve months ended December 31, 2025, the Company recorded an increase in the reserve for unfunded commitments of $1.1 million and $24.3 million, respectively. Of the $24.3 million of provision for credit losses recorded for unfunded commitments during the twelve months ended December 31, 2025, $12.1 million was related to the initial provision for unfunded commitments acquired from Independent and $12.2 million was for all other unfunded commitments. For the prior comparative period, the Company recorded an increase in the reserve for unfunded commitments of $3.8 million anda release for $11.0 million, respectively. The provision for credit losses for unfunded commitments is based on the growth in unfunded loan commitments, production mix, and current forecast scenarios applied to our modeling to adequately capture growing economic recessionary risks. This amount was recorded in Provision for Credit Losses on the Consolidated Statements of Income. The Company did not have an allowance for credit losses or record a provision for credit losses on investment securities or other financial assets during 2025.
The ACL provides 1.94 times coverage of nonperforming loans at December 31, 2025. Net charge offs to total average loans during the year ended December 31, 2025 were 0.23%, compared to 0.06% during the year ended December 31, 2024. Net charge-offs, excluding acquisition date charge-offs recorded for PCD loans acquired from Independent of $56.7 million, to total average loans, during the twelve months ended December 31, 2025 were 0.11%. The ACL, including reserve for unfunded commitments, as a percentage of loans were 1.35% and 1.51%, respectively, as of December 31, 2025 and 2024.
The following table provides the allocation, by segment, for expected credit losses for the year ended December 31, 2025. While non-owner occupied CRE is the largest segment of our loan portfolio, the risk profile of the non-owner occupied CRE portfolio remains low and stable. We have a granular loan portfolio where the average loan size of the non-owner occupied CRE portfolio is less than $2.5 million. Loans for the commercial office space, which are included in the non-owner occupied CRE portfolio, represent approximately 4% of the total outstanding portfolio with an average loan size of less than $2 million as of December 31, 2025. 94% of these office spaces are located in the Company's southeast footprint, of which approximately 72% mature in 2027 or later.
Table 19-Allocation of the Allowance by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
December 31, 2024 |
|
||||||
|
(Dollars in thousands) |
|
|
Amount |
|
% * |
|
Amount |
|
% * |
|
||
|
Residential Mortgage Senior |
|
|
$ |
55,947 |
19.8 |
% |
$ |
42,687 |
22.4 |
% |
||
|
Residential Mortgage Junior |
|
|
1,356 |
0.1 |
% |
432 |
0.1 |
% |
||||
|
Revolving Mortgage |
|
|
14,150 |
3.9 |
% |
14,845 |
4.8 |
% |
||||
|
Residential Construction |
|
|
8,732 |
1.2 |
% |
9,298 |
1.1 |
% |
||||
|
Other Construction and Development |
|
|
53,494 |
3.9 |
% |
65,553 |
5.2 |
% |
||||
|
Consumer |
|
|
19,280 |
2.0 |
% |
17,484 |
3.1 |
% |
||||
|
Multifamily |
|
|
|
58,678 |
|
5.8 |
% |
|
22,279 |
|
4.7 |
% |
|
Municipal |
|
|
|
1,799 |
|
1.9 |
% |
|
1,197 |
|
2.3 |
% |
|
Owner-Occupied Commercial Real Estate |
|
|
|
73,871 |
|
15.5 |
% |
|
78,753 |
|
16.9 |
% |
|
Non-Owner-Occupied Commercial Real Estate |
|
|
|
174,797 |
|
28.5 |
% |
|
111,538 |
|
23.1 |
% |
|
Commercial and Industrial |
|
|
123,093 |
17.4 |
% |
101,214 |
16.3 |
% |
||||
|
Total |
|
|
$ |
585,197 |
100.0 |
% |
$ |
465,280 |
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 by loan segment, for the year ended December 31, 2025 and 2024:
Table 20-Disaggregated Net Recovery (Charge Off) Ratio by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
||||||||||||||||
|
|
|
December 31, 2025 |
|
December 31, 2024 |
||||||||||||||
|
(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 |
|
$ |
(2,052) |
|
$ |
9,365,431 |
|
(0.02) |
% |
|
$ |
(379) |
|
$ |
7,369,909 |
|
(0.01) |
% |
|
Residential Mortgage Junior |
|
363 |
|
47,813 |
|
0.76 |
% |
|
222 |
|
18,642 |
|
1.19 |
% |
||||
|
Revolving Mortgage |
|
253 |
|
1,817,066 |
|
0.01 |
% |
|
949 |
|
1,546,347 |
|
0.06 |
% |
||||
|
Residential Construction |
|
150 |
|
633,257 |
|
0.02 |
% |
|
(263) |
|
517,782 |
|
(0.05) |
% |
||||
|
Other Construction and Development |
|
1,161 |
|
2,334,425 |
|
0.05 |
% |
|
(868) |
|
1,970,675 |
|
(0.04) |
% |
||||
|
Consumer |
|
(8,994) |
|
999,052 |
|
(0.90) |
% |
|
(5,664) |
|
1,139,980 |
|
(0.50) |
% |
||||
|
Multifamily |
|
|
(18,867) |
|
|
2,652,011 |
|
(0.71) |
% |
|
|
66 |
|
|
1,234,870 |
|
0.01 |
% |
|
Municipal |
|
|
- |
|
|
876,841 |
|
- |
% |
|
|
- |
|
|
761,195 |
|
- |
% |
|
Owner-Occupied Commercial Real Estate |
|
|
(4,929) |
|
|
7,454,173 |
|
(0.07) |
% |
|
|
(380) |
|
|
5,554,828 |
|
(0.01) |
% |
|
Non-Owner-Occupied Commercial Real Estate |
|
|
(12,198) |
|
|
13,337,427 |
|
(0.09) |
% |
|
|
1,184 |
|
|
7,889,448 |
|
0.02 |
% |
|
Commercial and Industrial |
|
(65,876) |
|
7,870,767 |
|
(0.84) |
% |
|
(13,111) |
|
5,128,543 |
|
(0.26) |
% |
||||
|
Total |
|
$ |
(110,989) |
|
$ |
47,388,263 |
|
(0.23) |
% |
|
$ |
(18,244) |
|
$ |
33,132,219 |
|
(0.06) |
% |
The following table presents a summary of the changes in the ACL for the years ended December 31, 2025, 2024 and 2023:
Table 21-Summary of the Changes in ACL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||||||||||||||||
|
|
|
2025 |
|
2024 |
|
2023 |
||||||||||||||||||||||
|
|
|
Non-PCD |
|
PCD |
|
|
|
Non-PCD |
|
PCD |
|
|
|
Non-PCD |
|
PCD |
|
|
||||||||||
|
(Dollars in thousands) |
|
Loans |
|
Loans |
|
Total |
|
Loans |
|
Loans |
|
Total |
|
Loans |
|
Loans |
|
Total |
||||||||||
|
Allowance for credit losses at January 1 |
$ |
444,959 |
|
$ |
20,321 |
|
$ |
465,280 |
|
$ |
423,876 |
|
$ |
32,697 |
|
$ |
456,573 |
|
$ |
309,606 |
|
$ |
46,838 |
|
$ |
356,444 |
|
|
|
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 |
(66,680) |
|
|
(4,619) |
|
(71,299) |
|
(30,347) |
|
|
(4,723) |
|
(35,070) |
|
(39,077) |
|
|
(1,571) |
|
(40,648) |
|
|||||||
|
Recoveries of loans previously charged off |
10,090 |
|
|
6,908 |
|
16,998 |
|
12,433 |
|
|
4,393 |
|
16,826 |
|
9,987 |
|
|
5,795 |
|
15,782 |
|
|||||||
|
Net (charge-offs) recoveries |
(56,590) |
|
|
(54,399) |
|
(110,989) |
|
(17,914) |
|
|
(330) |
|
(18,244) |
|
(29,090) |
|
|
4,224 |
|
(24,866) |
|
|||||||
|
Provision (recovery) for credit losses |
|
47,701 |
|
|
(32,207) |
|
15,494 |
|
38,997 |
|
|
(12,046) |
|
26,951 |
|
143,360 |
|
|
(18,365) |
|
124,995 |
|
||||||
|
Balance at end of period |
$ |
516,041 |
|
$ |
69,156 |
|
$ |
585,197 |
|
$ |
444,959 |
|
$ |
20,321 |
|
$ |
465,280 |
|
$ |
423,876 |
|
$ |
32,697 |
|
$ |
456,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total loans, net of unearned income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
At period end |
|
$ |
48,598,527 |
|
|
|
|
|
|
|
$ |
33,902,927 |
|
|
|
|
|
|
|
$ |
32,388,489 |
|
|
|
|
|
|
|
|
Average |
|
47,388,263 |
|
|
|
|
|
|
|
33,132,219 |
|
|
|
|
|
|
|
31,403,291 |
|
|
|
|
|
|
|
|||
|
Net charge-offs as a percentage of average loans (annualized) |
|
0.23 |
% |
|
|
|
|
|
|
0.06 |
% |
|
|
|
|
|
|
0.08 |
% |
|
|
|
|
|
|
|||
|
Allowance for credit losses as a percentage of period end loans |
|
1.20 |
% |
|
|
|
|
|
|
1.37 |
% |
|
|
|
|
|
|
1.41 |
% |
|
|
|
|
|
|
|||
|
Allowance for credit losses as a percentage of period end non-performing loans ("NPLs") |
|
193.71 |
% |
|
|
|
|
|
|
220.94 |
% |
|
|
|
|
|
|
249.90 |
% |
|
|
|
|
|
|
|||
* Net charge-offs at December 31, 2025, 2024 and 2023 include automated overdraft protection ("AOP") and insufficient fund ("NSF") principal net charge-offs of $3.8 million, $2.8 million and $6.8 million, respectively, that are included in the consumer classification above.
** Average loans, net of unearned income does not include loans held for sale3
Deposits
We rely on deposits by our customers as the primary source of funds for the continued growth of our loan and investment securities portfolios. Customer deposits are categorized as either noninterest-bearing deposits or interest-bearing deposits. Noninterest-bearing deposits (or demand deposits) are transaction accounts that provide us with "interest-free" sources of funds. Interest-bearing deposits include savings deposit, interest-bearing transaction accounts, certificates of deposits, and other time deposits. Interest-bearing transaction accounts include NOW, HSA, IOLTA, and Market Rate checking accounts. The Company uses brokered time deposits as a secondary source of deposits to supplement its primary source through organic growth of deposits from our customers.
The following table presents total deposits for the two years at December 31:
Table 22-Total Deposits
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|||
|
Noninterest-bearing deposits |
|
$ |
13,375,697 |
|
$ |
10,192,116 |
|
|
Savings deposits |
|
2,820,621 |
|
2,414,172 |
|
||
|
Interest-bearing demand deposits |
|
31,590,246 |
|
21,288,856 |
|
||
|
Total savings and interest-bearing demand deposits |
|
34,410,867 |
|
23,703,028 |
|
||
|
Certificates of deposit |
|
7,354,868 |
|
4,161,095 |
|
||
|
Other time deposits |
|
4,365 |
|
4,627 |
|
||
|
Total time deposits |
|
7,359,233 |
|
4,165,722 |
|
||
|
Total deposits |
|
$ |
55,145,797 |
|
$ |
38,060,866 |
|
The following are key highlights regarding overall changes in total deposits:
| ● | Total deposits increased $17.1 billion, or 44.9%, for the year ended December 31, 2025, compared to 2024, reflecting balances assumed through the Independent acquisition during the first quarter of 2025 and organic deposit growth. |
| o | Noninterest-bearing deposits (demand deposits) increased by $3.2 billion, or 31.2%, for the year ended December 31, 2025. |
| o | Savings deposits increased $406.4 million, or 16.8%, when compared with December 31, 2024. |
| o | Money market (Market Rate Checking) and other interest-bearing demand deposits increased $10.3 billion, or 48.4%, for the year ended December 31, 2025 |
| o | Time deposits, including brokered time deposits, increased by $3.2 billion, or 76.7%, when compared with December 31, 2024. The Company saw an increase in its brokered time deposits to $1.7 billion at December 31, 2025 from $614.5 million at December 31, 2024, reflecting increased use of brokered deposits to support balance sheet growth. |
| o | At December 31, 2025, and 2024, core deposits (total deposits excluding time deposits) represented 87% and 89%, respectively, of total deposits. |
The following are key highlights regarding overall growth in average total deposits:
| ● | Total deposits averaged $53.4 billion in 2025, an increase of $16.0 million, or 42.8%, from 2024, primarily attributable to deposit balances assumed in the Independent acquisition. |
| o | Average interest-bearing deposits increased by $12.9 billion, or 48.1%, to $39.8 billion in 2025 compared to 2024. |
| o | Average noninterest-bearing demand deposits increased by $3.1 billion, or 29.1%, to $13.6 billion in 2025 compared to 2024. |
The following table provides a maturity distribution of certificates of deposit of $250,000 or more for the next twelve months as of December 31:
Table 23-Maturity Distribution of Certificates of Deposits of $250 Thousand or More
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|
% Change |
|||
|
Within three months |
|
$ |
1,080,218 |
|
$ |
707,894 |
52.6 |
% |
|
|
After three through six months |
|
692,531 |
|
243,784 |
184.1 |
% |
|||
|
After six through twelve months |
|
328,191 |
|
118,763 |
176.3 |
% |
|||
|
After twelve months |
|
38,816 |
|
23,234 |
67.1 |
% |
|||
|
|
|
$ |
2,139,756 |
|
$ |
1,093,675 |
95.6 |
% |
|
At December 31, 2025 and 2024, the Company estimates that it has approximately $22.0 billion and $14.7 billion, respectively, in uninsured deposits. The amounts above are estimates and are based on the same methodologies and assumptions used for the Bank's regulatory reporting requirements by the FDIC for the Call Report.
The following table provides a maturity distribution of uninsured time deposits for the next twelve months as of December 31, 2025 and 2024:
Table 24-Maturity Distribution of Uninsured Time Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|
% Change |
|||
|
Within three months |
|
$ |
539,973 |
|
$ |
343,644 |
57.1 |
% |
|
|
After three through six months |
|
371,031 |
|
117,784 |
215.0 |
% |
|||
|
After six through twelve months |
|
222,691 |
|
75,513 |
194.9 |
% |
|||
|
After twelve months |
|
20,567 |
|
13,984 |
47.1 |
% |
|||
|
|
|
$ |
1,154,262 |
|
$ |
550,925 |
109.5 |
% |
|
Short-Term Borrowed Funds
Our short-term borrowed funds consist of federal funds purchased and securities sold under repurchase agreements, FRB borrowings on a secured line of credit, short-term FHLB Advances and the U.S. Bank line of credit. Note 9-Federal Funds Purchased and Securities Sold Under Agreements to Repurchase in our audited financial statements provides a profile of these funds at each year-end, the average amounts outstanding during each period, the maximum amounts outstanding at any month-end, and the weighted average interest rates on year-end and average balances in each category. Federal funds purchased and securities sold under agreements to repurchase most typically have maturities within one to three days from the transaction date. Certain of these borrowings have no defined maturity date. Note 10-Other Borrowings in our audited financial statements provide provides a profile of short-term FHLB advances, FRB borrowings and the U.S. Bank line of credit at each year-end, the average amount outstanding during each period and the weighted average interest rates on year-end and average balances. Short-term FHLB advances has a maturity of less than one year and the FRB borrowings and U.S. Bank line of credit has a daily maturity.
Long-Term Borrowed Funds
Our long-term borrowed funds consist of trust preferred junior subordinated debt and corporate subordinated debt. Note 10-Other Borrowings in our audited financial statements provides a profile of these funds at each year-end, the balance at year end, the interest rate at year end and the weighted average interest rate for long-term borrowings. Each issuance of trust preferred junior subordinated debt has a maturity of 30 years, but we can call the debt at any time without penalty.
Capital and Dividends
Our ongoing capital requirements have been met primarily through retained earnings, less the payment of cash dividends. As of December 31, 2025, shareholders' equity was $9.1 billion, an increase of $3.2 billion, or 53.8%, compared to the balance at December 31, 2024.The change from year-end 2024 was mainly attributable to the issuance of $2.5 billion in stock related to the acquisition of Independent, net income of $798.7 million, an increase in the market value of securities available for sale, net of tax of $323.6 million and the recognition of equity based compensation of $37.0 million. These increases were offset by dividends paid on common shares of $230.2 million and common stock repurchased under our stock repurchase plan and equity plans of $235.8 million.
The following shows the changes in shareholders' equity during 2025:
Table 25-Changes in Shareholders' Equity
|
|
|
|
|
|
(Dollars in thousands) |
|
|
|
|
Total shareholders' equity at December 31, 2024 |
|
$ |
5,890,415 |
|
Net income |
|
|
798,667 |
|
Dividends paid on common shares ($2.28 per share) |
|
|
(230,203) |
|
Dividends paid on restricted stock units |
|
|
(1,100) |
|
Net increase in market value of securities available for sale, net of deferred taxes |
|
|
323,553 |
|
Net decrease in market value of post retirement plan, net of deferred taxes |
|
|
(13) |
|
Stock options exercised |
|
|
472 |
|
Employee stock purchases |
|
|
4,543 |
|
Equity based compensation |
|
|
37,005 |
|
Excise tax on repurchase of corporate stock |
|
|
(1,832) |
|
Common stock repurchased - buyback plan |
|
|
(224,108) |
|
Common stock repurchased - equity plans |
|
|
(11,712) |
|
Stock issued pursuant to the acquisition of Independent |
|
|
2,472,947 |
|
Stock issued in lieu of cash - directors fees |
|
|
474 |
|
Total shareholders' equity at December 31, 2025 |
|
$ |
9,059,108 |
The 2025 Repurchase Program authorized the Company to repurchase up to 3,000,000 shares, or up to approximately three percent, of the Company's outstanding shares of common stock as of January 2, 2025. During 2025, the Company repurchased 2,440,000 shares at a weighted average price of $91.85 per share pursuant to the 2025 Stock Repurchase Program. As of December 31, 2025, there was a total of 560,000 shares remaining authorized to be repurchased.
On January 11, 2026, the Board of Directors of the Company approved the 2026 Repurchase Plan. This 2026 Repurchase Plan authorization replaces the Company's pre-existing authorization previously approved in January 2025, under which 560,000 shares remained available for repurchase, and which was cancelled in connection with the Board's approval of the 2026 Repurchase Plan.
We are subject to regulations with respect to certain risk-based capital ratios. These risk-based capital ratios measure the relationship of capital to a combination of balance sheet and off-balance sheet risks. The values of both balance sheet and off-balance sheet items are adjusted based on the rules to reflect categorical credit risk. In addition to the risk-based capital ratios, the regulatory agencies have also established a leverage ratio for assessing capital adequacy. The leverage ratio is equal to Tier 1 capital divided by total consolidated on-balance sheet assets (minus amounts deducted from Tier 1 capital). The leverage ratio does not involve assigning risk weights to assets.
Specifically, we are required to maintain the following minimum capital ratios:
| ● | a CET1, risk-based capital ratio of 4.5%; |
| ● | a Tier 1 risk-based capital ratio of 6%; |
| ● | a total risk-based capital ratio of 8%; and |
| ● | a leverage ratio of 4%. |
Under the current capital rules, Tier 1 capital includes two components: CET1 capital and additional Tier 1 capital. The highest form of capital, CET1 capital, consists solely of common stock (plus related surplus), retained earnings, accumulated other comprehensive income, otherwise referred to as AOCI, and limited amounts of minority interests that are in the form of common stock. Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock and Tier 1 minority interests. Tier 2 capital generally includes the allowance for loan losses up to 1.25% of risk-weighted assets, qualifying preferred stock, subordinated debt, trust preferred securities and qualifying tier 2 minority interests, less any deductions in Tier 2 instruments of an unconsolidated financial institution. AOCI is presumptively included in CET1 capital and often would operate to reduce this category of capital. When the current capital rules were first implemented, the Bank exercised its one-time opportunity to opt out of much of this treatment of AOCI, allowing us to retain our pre-existing treatment for AOCI.
In order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a banking organization must maintain a "capital conservation buffer" on top of its minimum risk-based capital requirements. This buffer must consist solely of Tier 1 Common Equity, but the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital), resulting in the following effective minimum capital plus capital conservation buffer ratios: (i) a CET1 capital ratio of 7.0%, (ii) a Tier 1 risk-based capital ratio of 8.5%, and (iii) a total risk-based capital ratio of 10.5%.
The Bank is also subject to the regulatory framework for prompt corrective action, which identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized) and is based on specified thresholds for each of the three risk-based regulatory capital ratios (CET1, Tier 1 capital and total capital) and for the leverage ratio.
Table 26-Capital Adequacy Ratios
The following table presents our consolidated capital ratios under the applicable capital rules:
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|||||
|
(In percent) |
|
2025 |
|
2024 |
|
2023 |
|
|
Common equity Tier 1 risk-based capital |
|
11.36 |
% |
12.62 |
% |
11.75 |
% |
|
Tier 1 risk-based capital |
11.36 |
% |
12.62 |
% |
11.75 |
% |
|
|
Total risk-based capital |
13.84 |
% |
14.96 |
% |
14.08 |
% |
|
|
Tier 1 leverage |
9.26 |
% |
10.04 |
% |
9.42 |
% |
|
The Company's and Bank's Common equity Tier 1 risk-based capital, Tier 1 risk-based capital and total risk-based capital and Tier 1 leverage ratios all declined compared to December 31, 2024. The capital ratios declined mainly due to the effects on capital and assets from the acquisition of Independent. Tier 1 capital increased by 29.4% and 34.8% at both the Company and Bank, respectively, with the increase in equity resulting from the issuance of shares of common stock for the Independent acquisition and the net income recognized during 2025. Total risk-based capital increased by 32.9% and 34.3% at both the Company and Bank, respectively, with the increase in equity resulting from the issuance of shares of common stock for the Independent acquisition, the net income recognized during 2025 along with the increase in the allowance for credit losses and unfunded commitments includable in Tier 2 capital. Both regulatory risk-based assets and quarterly average assets increased in 2025 when compared to the fourth quarter with average assets for both the Company and Bank increasing by 40% and risk-based assets increasing by 44%. The increases in both average assets and risk-based assets were mainly due to the assets acquired in the Independent acquisition during the first quarter of 2025. Our capital ratios are currently well in excess of the minimum standards and continue to be in the "well capitalized" regulatory classification. Should the Company need to sell its available for sale and held to maturity securities for liquidity purposes and recognize the unrealized losses as of December 31, 2025 through earnings, all else equal, our capital ratios would remain well in excess of the minimum standards and continue to be in the "well capitalized" regulatory classification.
The Company pays cash dividends to shareholders from its assets, which are mainly provided by dividends from its banking subsidiary. However, certain restrictions exist regarding the ability of its banking subsidiary to transfer funds to the Company in the form of cash dividends, loans or advances. The approval of the OCC is required if the total of all dividends declared by the Bank in any calendar year exceeds the total of its net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus. The federal banking agencies have issued policy statements which provide that bank holding companies and insured banks should generally pay dividends only out of current earnings.
During 2025, the Bank paid dividends to SouthState totaling $485.0 million. The Bank was not required to obtain approval of the OCC to pay these dividends. We used these funds primarily to pay our dividend to shareholders of $230.2 million and repurchase shares of our common stock on the open market totaling $224.1 million.
The following table provides the amount of dividends and payout ratios for the years ended December 31, 2025, 2024 and 2023:
Table 27-Dividends Paid to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||
|
(Dollars in thousands) |
|
2025 |
|
2024 |
|
2023 |
||||
|
Dividend payments to common shareholders |
|
$ |
230,203 |
|
$ |
161,597 |
|
$ |
154,919 |
|
|
Dividend payout ratios |
|
28.82 |
% |
30.22 |
% |
31.34 |
% |
|||
We retain earnings to have capital sufficient to grow our loan and investment portfolios and to support certain acquisitions or other business expansion opportunities. The dividend payout ratio is calculated by dividing dividends paid during the year by net income for the year.
Liquidity
Liquidity refers to our ability to generate sufficient cash to meet our financial obligations, which arise primarily from the withdrawal of deposits, extension of credit and payment of operating expenses. Liquidity risk is the risk that the Bank's financial condition or overall safety and soundness is adversely affected by an inability (or perceived inability) to meet its obligations. Our Asset Liability Management Committee ("ALCO") is charged with the responsibility of monitoring policies designed to ensure an acceptable composition of our asset/liability mix. Two critical areas of focus for ALCO are interest rate sensitivity and liquidity risk management. We have employed our funds in a manner to provide liquidity from both assets and liabilities sufficient to meet our cash needs.
The ALCO has established key risk indicators to monitor liquidity and interest rate risk. The key risk indicators are reviewed and approved by the ALCO on an annual basis. The liquidity key risk indicators include the loan to deposit ratio (policy limit not to exceed 100%), net noncore funding dependence ratio (policy limit not to exceed 30%), on-hand liquidity to total liabilities ratio (policy limit not to fall below 5%), the percentage of securities pledged to total securities (policy limit not to exceed 85%), primary liquidity to uninsured deposits excluding collateralized deposits (policy limit not to exceed 95%), primary liquidity to uninsured deposits including collateralized deposits (policy limit not to exceed 80%) and the ratio of brokered deposits to total deposits (policy limit not to exceed 15%). As of December 31, 2025, the Company was operating within its liquidity policy limits.
Asset liquidity is maintained by the maturity structure of loans, investment securities and other short-term investments. Management has policies and procedures governing the length of time to maturity on loans and investments. Normally, changes in the earning asset mix are of a longer-term nature and are not used for day-to-day corporate liquidity needs.
Our liabilities provide liquidity on a day-to-day basis. Daily liquidity needs are met from deposit levels or from our use of federal funds purchased, securities sold under agreements to repurchase, interest-bearing deposits at other banks and other short-term borrowings. We engage in routine activities to retain deposits intended to enhance our liquidity position. These routine activities include various measures, such as the following:
| ● | Emphasizing relationship banking to new and existing customers, where borrowers are encouraged and normally expected to maintain deposit accounts with our Bank; |
| ● | Pricing deposits, including certificates of deposit, at rate levels that will attract and/or retain balances of deposits that will enhance our Bank's asset/liability management and net interest margin requirements; and |
| ● | Continually working to identify and introduce new products that will attract customers or enhance our Bank's appeal as a primary provider of financial services. |
Our non-acquired loan portfolio increased by approximately $5.0 billion, or approximately 16.9%, compared to the balance at December 31, 2024. The increase in the non-acquired loan portfolio was due to organic growth and renewals of acquired loans that are moved to our non-acquired loan portfolio. The acquired loan portfolio increased by $9.7 billion, or 215.9%, from the balance at December 31, 2024 from loans acquired from the Independent acquisition, offset by principal paydowns, charge-offs, foreclosures and renewals of acquired loans. For more detail around the changes in the loan portfolio see the Loan Portfolio section in MD&A starting on page 80.
Our investment securities portfolio (excluding trading securities) increased $1.9 billion, or approximately 28.2%, compared to the balance at December 31, 2024. Increases in the investment securities portfolio came from $1.6 billion in securities acquired in the Independent acquisition and $7.1 billion in investment securities purchased during 2025, including securities purchased from reinvesting funds provided by the sales of securities acquired from Independent and the securities repositioning completed during the first quarter of 2025. The securities repositioning improved the yield and shortened the duration of the investment portfolio. The increases in investment securities from the acquisition and purchases were partially offset as a result of maturities, calls, and paydowns of investment securities totaling $7.0 billion and a reduction from the net amortization of premiums of $11.0 million. The net unrealized loss of the available for sale securities decreased during 2025 by $425.8 million mainly through the securities repositioning and the recognition of losses in the portfolio and the impact of lower market interest rates. Of the $7.1 billion in purchases of investment securities during the year, $7.0 billion were in available for sale securities and $117.4 million were in other investment securities. There were no purchases of held to maturity securities during the quarter. Other investment securities purchased were mainly related to capital stock with the Federal Home Loan Bank and Federal Reserve Bank of which we sold back $45.1 million during 2025. The purchases in the Federal Home Loan Bank Stock and Federal Reserve Bank Stock during the year were mainly due to stock holding requirements related to the Independent acquisition and FHLB borrowing activity. The Bank pledges a portion of its investment portfolio 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 December 31, 2025, the bank pledged 69.0% of the market value of its available for sale and held to maturity investment portfolios. As of December 31, 2025, the Bank had unpledged securities with a market value of $2.5 billion. These securities included Treasury, Agency, Agency MBS, Municipals and Corporate securities.
Total cash and cash equivalents increased $1.8 billion in 2025 to $3.2 billion at December 31, 2025, compared to $1.4 billion at December 31, 2024. The increase in cash and cash equivalents was due to the cash received from the sale-leaseback transaction of approximately $456.4 million, an increase in deposits, excluding deposits assumed from Independent, of approximately $1.9 billion, and an increase in federal funds purchased and securities sold under agreements to repurchase of $103.3 million. The increase in deposits, excluding deposits assumed from Independent, was mainly due to increases in interest-bearing checking accounts (including money market accounts) and brokered time deposits. These increases were partially offset by cash used to fund net loan growth, excluding loans assumed from Independent, of $1.6 billion and by cash used to fund investment growth, excluding investments assumed from Independent, of $325.9 million.
At December 31, 2025 and December 31, 2024, we had $1.7 billion and $614.5 million of traditional, out-of-market brokered timedeposits, respectively. At December 31, 2025 and December 31, 2024, we had $4.0 billion and $2.5 billion, respectively, of reciprocal deposits. At December 31, 2025, we also had $2.0 billion in brokered interest-bearing checking and money market accounts. The Company has allowed some higher costing local deposits run off in 2025 and replaced the deposits with brokered and other out of market deposits at lower interest rates.Total deposits were $55.1 billion at December 31, 2025, an increase of $17.1 billion from $38.1 billion at December 31, 2024. Our deposit growth since December 31, 2024 was mainly attributable to the deposits acquired in the Independent acquisition of $15.2 billion. See further discussion on changes in deposits in the Interest-Bearing Liabilities and Noninterest-Bearing Deposits section of this MD&A.Total short-term borrowings at December 31, 2025 were $618.2 million consisting of $306.8 million in federal funds purchased, $311.4 million in securities sold under agreements to repurchase. Total long-term borrowings, consisting of trust preferred securities and subordinated debentures, increased by $305.0 million to $696.5 million at December 31, 2025. This increase was mainly due to $360.5 in corporate and subordinated debentures assumed in the Independent acquisition. The Company also issued $350.0 million in new subordinated debt in the second quarter of 2025 and subsequently paid off $405.0 million in subordinated debt in the third quarter of 2025 that had reached its call date and the end of its fixed rate period. To the extent that we employ other types of non-deposit funding sources, typically to accommodate retail and correspondent customers, we continue to take in shorter maturities of such funds. Our current approach may provide an opportunity to sustain a low funding rate or possibly lower our cost of funds but could also increase our cost of funds if interest rates rise.
Deposit flows are significantly influenced by general and local economic conditions, changes in prevailing interest rates, internal pricing decisions, and competition. Our deposits are primarily obtained from depositors located around our branch footprint, and we believe that we have attractive opportunities to capture additional retail and commercial deposits in our markets, in addition to having access to brokered deposits. Of the $55.1 billion in total deposits at December 31, 2025, approximately 70% were insured or collateralized. The Bank has a granular deposit base comprised of over 1.4 million accounts, with an average deposit size of $39,000. Approximately 24% of total deposits are noninterest-bearing at December 31, 2025.
The Bank supplements its in-market deposits with brokered deposits. While the Bank has a policy limit for brokered time deposits of no more than 15% of total deposits, it has operated well below this policy limit. At December 31, 2025, the Company had $3.8 billion in brokered deposits including $1.7 billion in brokered time deposits, $1.9 billion of ICS brokered demand deposits, and $83.6 million of other brokered demand deposits. Total brokered deposits represented 6.9% of total deposits at December 31, 2025. Brokered deposits totaled $614.5 million, or 1.6% of total deposits at December 31, 2024. In 2025, the Company has allowed some higher costing local deposits run off and replaced the deposits with brokered and other out of market deposits at lower interest rates.
As discussed below, the Bank maintains credit facilities with the Federal Home Loan Bank of Atlanta and the Federal Reserve Bank of Atlanta. The table below compares Primary Funding Sources to uninsured deposits as of December 31, 2025.
Table 28-Primary Funding Sources to Uninsured Deposits
|
|
|
|
|
|
|
|
(Dollars in millions) |
|
Available Capacity |
|
|
|
|
Federal Home Loan Bank of Atlanta |
|
$ |
5,732 |
|
|
|
Federal Reserve Bank of Atlanta Discount Window |
|
|
11,139 |
|
|
|
Liquid cash and cash equivalents |
|
|
3,148 |
|
|
|
Fair value of securities that can be pledged |
|
|
2,395 |
|
|
|
Total primary sources |
|
$ |
22,414 |
|
|
|
Uninsured deposits, excluding collateralized deposits |
|
$ |
16,663 |
|
|
|
Uninsured and collateralized deposits |
|
$ |
21,970 |
|
|
|
Coverage ratio, uninsured deposits |
|
|
102.0 |
% |
|
|
Coverage ratio, uninsured and uncollateralized deposits |
|
|
134.5 |
% |
|
|
Ratio of uninsured and collateralized deposits to total deposits |
|
|
39.8 |
% |
|
Through the operations of our Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of time. We manage the credit risk on these commitments by subjecting them to normal underwriting and risk management processes. We believe that we have adequate sources of liquidity to fund commitments that are drawn upon by the borrowers. In addition to commitments to extend credit, we also issue standby letters of credit, which are assurances to third parties that they will not suffer a loss if our customer fails to meet its contractual obligation to the third-party. Although our experience indicates that many of these standby letters of credit will expire unused, through our various sources of liquidity, we believe that we will have the resources to meet these obligations should the need arise.
Our ongoing philosophy is to remain in a liquid position, as reflected by such indicators as the composition of our earning assets, typically including some level of reverse repurchase agreements; federal funds sold; balances at the Federal Reserve Bank; and/or other short-term investments; asset quality; well-capitalized position; and profitable operating results. Cyclical and other economic trends and conditions can disrupt our desired liquidity position at any time. We expect that these conditions would generally be of a short-term nature. Under such circumstances, we expect our reverse repurchase agreements and federal funds sold positions, or balances at the Federal Reserve Bank, if any, to serve as the primary source of immediate liquidity. We could draw on additional alternative immediate funding sources from lines of credit extended to us from our correspondent banks. The Bank may also access funds from borrowing facilities established with the Federal Home Loan Bank of Atlanta and the discount window of the Federal Reserve Bank of Atlanta.
At December 31, 2025, the Bank had a total FHLB credit facility of $5.7 billion, with no outstanding borrowings in short-term FHLB advances and $17.8 million in secured credit exposure at year-end, leaving $5.7 billion in availability on the FHLB credit facility.At December 31, 2025, the Bank had $11.1 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 year-end. The Bank has $2.4 billion in pledgeable market value of securities at December 31, 2025, that can be pledged to attain additional funds if necessary. The Bank also has an internal limit on brokered deposits of 15% of total deposits (consolidated bank), which would allow capacity of $8.3 billion at December 31, 2025. The Bank had $3.8 billion of outstanding brokered deposits at the end of the year leaving $4.5 billion in available capacity. All of these resources would provide an additional $24.0 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 with no balance outstanding atDecember 31, 2025. We believe that our liquidity position continues to be adequate and readily available.
Our contingency funding plan describes several potential stages based on stressed liquidity levels. Liquidity key risk indicators are reported to the Board of Directors on a quarterly basis. We maintain various wholesale sources of funding. If our deposit retention efforts were to be unsuccessful, we would use these alternative sources of funding. Under such circumstances, depending on the external source of funds, our interest cost would vary based on the range of interest rates charged. This could increase our cost of funds, impacting our net interest margin and net interest spread.
Asset-Liability Management and Market Risk Sensitivity
Our earnings and the economic value of equity vary in relation to the behavior of interest rates and the accompanying fluctuations in market prices of certain of our financial instruments. We define interest rate risk as the risk to earnings and equity arising from the behavior of interest rates. These behaviors include increases and decreases in interest rates as well as continuation of the current interest rate environment.
Our interest rate risk principally consists of reprice, option, basis, and yield curve risk. Reprice risk results from differences in the maturity or repricing characteristics of asset and liability portfolios. Option risk arises from embedded options in the investment and loan portfolios such as investment securities calls and loan prepayment options. Option risk also exists since deposit customers may withdraw funds at their discretion in response to general market conditions, competitive alternatives to existing accounts or other factors. The exercise of such options may result in higher costs or lower revenue. Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which subsequently result in narrowing spreads on interest-earning assets and interest-bearing liabilities. Basis risk also exists in administered rate liabilities, such as interest-bearing checking accounts, savings accounts, and money market accounts where the price sensitivity of such products may vary relative to general markets rates. Yield curve risk refers to adverse consequences of nonparallel shifts in the yield curves of various market indices that impact our assets and liabilities.
We use simulation analysis as a primary method to assess earnings at risk and equity at risk due to assumed changes in interest rates. Management uses the results of its various simulation analyses in combination with other data and observations to formulate strategies designed to maintain interest rate risk within risk tolerances.
Simulation analysis involves the use of several assumptions including, but not limited to, the timing of cash flows such as the terms of contractual agreements, investment security calls, loan prepayment speeds, deposit attrition rates, the interest rate sensitivity of loans and deposits relative to general market rates, and the behavior of interest rates and spreads. The assumptions for loan prepayments, deposit decay, and nonstable deposit balances are derived from models that use historical bank data. These models are independently validated. Equity at risk simulation uses assumptions regarding discount rates that value cash flows. Simulation analysis is highly dependent on model assumptions that may vary from actual outcomes. Key simulation assumptions are subject to sensitivity analysis to assess the impact of assumption changes on earnings at risk and equity at risk. Model assumptions are reviewed by our Assumptions Committee. While the Bank is continuously refining its modeling methodology, the core principles of the methodology have remained stable over for several years.
Earnings at risk is defined as the percentage change in net interest income due to assumed changes in interest rates. Earnings at risk is generally used to assess interest rate risk over relatively short time horizons.
Equity at risk is defined as the percentage change in the net economic value of assets and liabilities due to changes in interest rates compared to a base net economic value. The discounted present value of all cash flows represents our economic value of equity. Equity at risk is generally considered a measure of the long-term interest rate exposures of the balance sheet at a point in time.
The earnings simulation models consider our contractual agreements with regard to investments, loans, deposits, borrowings, and derivatives as well as a number of behavioral assumptions applied to certain assets and liabilities.
Mortgage banking derivatives used in the ordinary course of business consist of forward sales contracts and interest rate lock commitments on residential mortgage loans. These derivatives involve underlying items, such as interest rates, and are designed to mitigate risk. Derivatives are also used to hedge mortgage servicing rights. For additional information see Note 26-Derivative Financial Instruments in the consolidated financial statements.
From time to time, we execute interest rate swaps to hedge some of our interest rate risks. Under these arrangements, the Company enters into a variable rate loan with a client in addition to a swap agreement. The swap agreement effectively converts the client's variable rate loan into a fixed rate loan. The Company then enters into a matching swap agreement with a third-party dealer to offset its exposure on the customer swap. The Company may also execute interest rate swap agreements that are not specific to client loans. As of December 31, 2025, the Company had a series of short-term interest rate hedges to address monthly accrual mismatches related to the Company's ARC program and its transition from LIBOR to SOFR after June 30, 2023. For additional information on these derivatives refer to Note 26-Derivative Financial Instruments in the consolidated financial statements.
Our interest rate risk key indicators are applied to a static balance sheet using forward rates from the Moody's Baseline Scenario. The Company will also use other rate forecasts, including, but not limited to, Moody's Consensus Scenario. This Base Case Scenario assumes the maturity composition of asset and liability rollover volumes is modeled to approximately replicate current consolidated balance sheet characteristics throughout the simulation. These treatments are consistent with the Company's goal of assessing current interest rate risk embedded in its current balance sheet. The Base Case Scenario assumes that maturing or repricing assets and liabilities are replaced at prices referencing forward rates derived from the selected rate forecast consistent with current balance sheet pricing characteristics. Key rate drivers are used to price assets and liabilities with sensitivity assumptions used to price non-maturity deposits. The sensitivity assumptions for the pricing of non-maturity deposits are subjected to sensitivity analysis no less frequently than on an annual basis.
Interest rate shocks are applied to the Base Case on an instantaneous basis. Our policy establishes the use of upward and downward interest rate shocks applied in 100 basis point increments through 400 basis points. We calculate smaller rate shocks as needed. At times, market conditions may result in assumed rate movements that will be deemphasized. For example, during a period of ultra-low interest rates, certain downward rate shocks may be impractical. The model simulation results produced from the Base Case Scenario and related instantaneous shocks for changes in net interest income and changes in the economic value of equity are referred to as the Core Scenario Analysis and constitute the policy key risk indicators for interest rate risk when compared to risk tolerances. As of December 31, 2025, the Company was operating within its interest rate key risk indicator policy limits.
During 2025, the beta assumption applied to deposits increased to reflect changes in deposit mix. From the beginning of the upward rate cycle, our deposit costs increased from five basis points to one hundred and ninety basis points. During that period, the federal funds rate increased 525 basis points, which implies a 35% beta. Management recognizes the difficulty in using historical data to forecast deposit betas in the current environment. For internal purposes, and based on the deposit mix as of December 31, 2025, the total deposit beta assumption was 44.3%. For internal forecasting, management will apply overlays to certain assumptions to adjust for current market conditions rather than use assumptions modeled over longer periods of time.
The following interest rate risk metrics are derived from analysis using the Moody's Baseline Scenario published in October 2025 as the Base Case Scenario. As of December 31, 2025, 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 1.4% increase (up 100) and 1.9% decrease (down 100) in net interest income.
We use Economic Value of Equity ("EVE") analysis as an indicator of the extent to which the present value of our capital could change, given potential changes in interest rates. This measure also assumes a static balance sheet (Base Case Scenario) with rate shocks applied as described above. At December 31, 2025, the percentage change in EVE due to a 100-basis point increase or decrease in interest rates was 1.9% decrease and 0.9% increase, respectively. The percentage changes in EVE due to a 200-basis point increase or decrease in interest rates were 4.7% decrease and 0.6% 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 December 31, 2025.
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.
Table 29-Rate Shock Analysis - Net Interest Income
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Percentage Change in Net Interest Income over One Year |
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Up 300 basis points |
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3.5 |
% |
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|
Up 200 basis points |
|
2.6 |
% |
|
|
Up 100 basis points |
|
1.4 |
% |
|
|
Base Case |
|
- |
% |
|
|
Down 100 basis points |
|
(1.9) |
% |
|
|
Down 200 basis points |
|
(4.1) |
% |
|
|
Down 300 basis points |
|
(7.1) |
% |
|
Asset Credit Risk and Concentrations
The quality of our interest-earning assets is maintained through our management of certain concentrations of credit risk. We review each individual earning asset including investment securities and loans for credit risk. To facilitate this review, we have established credit and investment policies that include credit limits, documentation, periodic examination, and follow-up. In addition, we examine these portfolios for exposure to concentration in any one industry, government agency, or geographic location.
Deposit Concentrations
At December 31, 2025 and 2024, 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 6% and 5% of the Company's average total deposit balances at December 31, 2025 and 2024. 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. See Concentration of Credit Risk section in Note 1 - Summary of Significant Accounting Policies for further discussion of credit risk concentrations.
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 December 31, 2025, the Bank's CDL concentration ratio was 35.2% and its CRE concentration ratio was 271.8%. At December 31, 2024, the Bank's CDL concentration ratio was 40.9% and its CRE concentration ratio was 219.6%. As of December 31, 2025 and 2024, 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.
Effect of Inflation and Changing Prices
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measure of financial position and results of operations in terms of historical dollars, without consideration of changes in the relative purchasing power over time due to inflation. Unlike most other industries, the majority of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant effect on a financial institution's performance than does the effect of inflation. Interest rates do not necessarily change in the same magnitude as the prices of goods and services.
While the effect of inflation on banks is normally not as significant as is its influence on those businesses which have large investments in plant and inventories, it does have an effect. During periods of high inflation, there are normally corresponding increases in money supply, and banks will normally experience above average growth in assets, loans and deposits. Also, general increases in the prices of goods and services will result in increased operating expenses. Inflation also affects our Bank's customers and may result in an indirect effect on our Bank's business.
Contractual Obligations
The following table presents payment schedules for certain of our contractual obligations as of December 31, 2025. Long-term debt obligations totaling $696.5 million include trust preferred junior subordinated debt and corporate subordinated debt. Operating and finance lease obligations of $801.6 million and $1.2 million, respectively, pertain to banking facilities. Certain lease agreements include payment of property taxes and insurance and contain various renewal options. Additional information regarding leases is contained in Note 19-Leases of the audited consolidated financial statements.
Table 30-Obligations
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Less Than |
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1 to 3 |
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3 to 5 |
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More Than |
|||||
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(Dollars in thousands) |
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Total |
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1 Year |
|
Years |
|
Years |
|
5 Years |
||||||
|
Long-term debt obligations * |
|
$ |
696,536 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
696,536 |
|
|
Finance lease obligations |
|
|
1,190 |
|
|
494 |
|
|
696 |
|
|
- |
|
|
- |
|
|
Operating lease obligations |
|
801,604 |
|
57,805 |
|
118,751 |
|
117,613 |
|
507,435 |
|
|||||
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Total |
|
$ |
1,499,330 |
|
$ |
58,299 |
|
$ |
119,447 |
|
$ |
117,613 |
|
$ |
1,203,971 |
|
* Represents principal maturities.
SouthState Bank Corporation published this content on February 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 20, 2026 at 13:30 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]