SSB Q3 Deep Dive: Loan Growth and Integration Drive Results Amid Margin Uncertainty

Regional banking company SouthState (NYSE:SSB) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 63.9% year on year to $698.8 million. Its non-GAAP profit of $2.58 per share was 17.2% above analysts’ consensus estimates.

Is now the time to buy SSB? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

SouthState’s third quarter was marked by revenue and profit figures that exceeded Wall Street expectations, yet the market reacted negatively, reflecting investor caution. Management attributed the performance largely to the full integration of the Independent Financial acquisition, which began delivering earnings synergies during the quarter, and to solid growth in both loans and deposits. CEO John Corbett emphasized that loan production increased, particularly in Texas and Colorado, while charge-offs were elevated due to a single large commercial credit. Corbett described credit metrics as stable overall, noting, “Nonaccruals are down slightly, and we've only experienced 12 basis points of charge-offs year-to-date.”

Looking ahead, SouthState’s outlook is shaped by its confidence in capturing organic growth opportunities amid banking sector disruption, especially across the Southeast, Texas, and Colorado. Management expects net loan growth to accelerate and sees room for additional banker recruitment to support expansion. CFO Stephen Young outlined margin expectations, stating that “NIM [net interest margin] is expected to be in the 3.80% to 3.90% range,” assuming several Federal Reserve rate cuts over the next 18 months. While management is optimistic about capital flexibility and further cost discipline, they caution that noninterest income from capital markets may not sustain recent highs, and deposit cost trends will be crucial as interest rates shift.

Key Insights from Management’s Remarks

Management cited the successful integration of Independent Financial, growth in loan production especially in new markets, and stable credit quality as key factors influencing Q3 performance.

• Integration of Independent Financial: The completion of core system conversion in May allowed SouthState to begin realizing full earnings power from the acquisition, contributing to higher operating efficiency and profit margins this quarter.
• Loan growth in new markets: Loan production increased nearly $3.4 billion, with Texas and Colorado showing a 67% rise in activity since earlier in the year. Management highlighted a growing loan pipeline in these markets as a strategic focus.
• Stable asset quality: Despite one significant commercial credit charge-off, credit metrics remained steady. The company reported only 12 basis points of charge-offs year-to-date and expects full-year charge-offs to remain near historic lows.
• Capital markets and fee income: Noninterest income rose due to strong performance in the correspondent capital markets division and higher deposit-related fees, though management views this level as above the long-term expectation.
• Expense management progress: Noninterest expense was flat from the prior quarter and at the low end of guidance, reflecting early realization of cost savings from the merger and ongoing efficiency initiatives.

Drivers of Future Performance

SouthState’s future results will be influenced by organic loan growth, margin management amid rate cuts, and disciplined expense control.

• Organic loan growth focus: Management expects loan growth to continue, especially in Texas and Colorado, supported by recruitment of experienced bankers. CEO John Corbett cited a growing loan pipeline and opportunities to capitalize on market disruption in core regions.
• Margin sensitivity to rate cuts: CFO Stephen Young projected that net interest margin will remain in the 3.80% to 3.90% range, but noted that margin stability depends on the pace of Federal Reserve rate cuts and the responsiveness (deposit beta) of deposit costs to falling rates. Young cautioned that deposit costs and loan accretion will be key factors.
• Expense discipline and capital flexibility: The company plans to keep noninterest expense growth in the mid-single digits, balancing investments in organic growth with continued efficiency efforts. Strong capital levels provide optionality for share repurchases or future expansion, but management will evaluate capital deployment on a quarter-to-quarter basis.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will focus on (1) the pace of loan growth and banker recruitment in Texas, Colorado, and Southeast markets; (2) evidence of stable or improving net interest margin as rate cuts materialize and deposit costs shift; and (3) whether expense controls and merger synergies continue to support operating efficiency. The sustainability of fee income, especially from capital markets activities, will also be an important marker of performance.

SouthState currently trades at $91.04, down from $93.85 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

Now Could Be The Perfect Time To Invest In These Stocks

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.