SouthState Bank Corp "Balanced Risk/Reward - Assuming at Neutral" (Neutral)

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SouthState Bank Corp "Balanced Risk/Reward - Assuming at Neutral" (Neutral)

ty franchise offers

balanced risk/reward at current levels. The key debate, in our opinion, is whether better growth is

enough to offset higher marginal funding costs and normalized credit. Our Neutral rating reflects

~10% upside to our $108 PT, UBS FY26/27 EPS estimates ~2%/~3% below consensus, and FY27

NIM outlook 5bps below the Street. SSB should continue to compound TBV and generate mid-teens

ROTCE, but the growth engine is now testing the deposit advantage investors are paying for. We

remain on the sidelines until there is evidence that TX/CO loan growth can be funded without

incremental deposit pressure.

EVIDENCE Recent results and due diligence support both sides of the debate. SSB generated 1Q26 ROA of

1.36%, ROTCE of 16.4%, 7% annualized loan growth, 5% annualized deposit growth, 9 bps of

NCOs, and a CET1 ratio of 11.3%. TX/CO production doubled Y/Y, pipelines were up meaningfully,

and the bank has been successful adding bankers in TX. At the same time, management lowered the

NIM guide to 3.75-3.80%, noted deposit costs are likely grinding higher in a no-cut backdrop (we

model 1 hike), and called out the higher cost of TX and metro-market deposits.

WHAT´S PRICED IN? At ~$100/s, SSB trades at ~9.7x forward two-year EPS, offering ~8% upside to our $108 PT, not a

demanding valuation for a bank with SSB’s footprint, credit history, and capital position. The question

is whether it deserves more credit for growth when the funding cost of that growth is rising. We

believe the current multiple fairly balances SSB’s premium franchise with the risk that TX/CO growth

narrows, rather than expands, the deposit-cost advantage.

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