SouthState Corporation ((SSB)) has held its Q3 earnings call. Read on for the main highlights of the call.
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SouthState Corporation’s recent earnings call painted a picture of balanced optimism, with significant achievements in earnings growth and loan production, juxtaposed against challenges such as a large loan charge-off and rising deposit costs. The overall sentiment was one of cautious optimism, highlighting both the company’s strengths and areas of concern.
Strong Earnings Performance
SouthState Corporation reported a robust increase in earnings, with earnings per share rising by 30% compared to the previous year. The company also achieved a return on tangible equity of 20%, underscoring its strong financial performance and efficient capital utilization.
Loan Production and Growth
The company saw a significant boost in loan production, reaching nearly $3.4 billion. This growth was particularly pronounced in Texas and Colorado, where loan production surged by 67% since the first quarter. Overall, SouthState experienced moderate growth in both loans and deposits, indicating a healthy expansion in its lending activities.
Improved Net Interest Income
Net interest income for the quarter was $600 million, marking an increase of $22 million over the previous quarter. This improvement was driven by a tax-equivalent margin of 4.06%, reflecting the company’s effective interest rate management.
Noninterest Income Growth
Noninterest income rose to $99 million, bolstered by strong performance in the Capital Markets division and increased deposit fees. This growth highlights the company’s successful diversification of revenue streams beyond traditional interest income.
Large Loan Charge-Off
A significant challenge during the quarter was a $21 million loan charge-off, linked to a supply chain finance credit associated with First Brands. Despite this setback, the company’s year-to-date net charge-offs remained low at 12 basis points.
Increased Cost of Deposits
The cost of deposits increased by 7 basis points to 1.91%, a change influenced by a higher amount of subordinated debt outstanding during the quarter. This rise in deposit costs presents a challenge for maintaining net interest margins.
Accretion Concerns
The company noted higher than expected accretion, with a forward-looking expectation of decreased loan accretion. This could impact future net interest margin guidance, necessitating careful management of interest rate dynamics.
Forward-Looking Guidance
Looking ahead, SouthState Corporation plans for strategic growth and market opportunities in 2026, supported by a solid capital position with a CET1 capital ratio of 11.5%. Despite the challenges faced, the company remains optimistic about its ability to navigate the financial landscape and capitalize on growth opportunities.
In conclusion, SouthState Corporation’s earnings call reflected a balanced outlook, with significant achievements in earnings and loan production tempered by challenges such as loan charge-offs and rising deposit costs. The company remains well-positioned for future growth, supported by its strong capital base and strategic focus.