SouthState Bank Corp (SSB) stock intrinsic value fair value estimate & owner earnings analysis

SouthState is a bank holding company with about $68.9 billion of assets (June 30, 2026), branches in Florida, South Carolina, Georgia, North Carolina, Alabama, Virginia, Texas and Colorado, and a correspondent-banking division serving more than 1,200 smaller banks and credit unions nationwide. At June 30, 2026 it had $50.8 billion of loans and $56.3 billion of deposits. At year-end 2025 about a quarter of deposits ($13.4 billion of $55.1 billion) paid no interest, which is the core of the franchise. Non-owner-occupied commercial real estate is its largest loan category; office buildings are about 4% of the loan portfolio, 94% of those in the Southeast, and about 72% of those mature in 2027 or later. Track record. Profit per share rose from $4.11 in 2015 to $7.87 in 2025, about 6.7% a year, but much of that came from buying banks, paid for partly in new shares: net income grew about eightfold ($99.5 million to $798.7 million) while profit per share did not quite double. The deals were CenterState (2020), Atlantic Capital (2022) and Independent Bank Group (closed January 1, 2025, an all-stock deal valued at $2.5 billion). Profit per share fell to $2.19 in the CenterState year, then was $6.71, $6.60 and $6.46 in 2021 to 2023 and $6.97 in 2024 - about 1.3% a year from 2021 to 2024 even with the Atlantic Capital deal. Credit losses have been low: net charge-offs were 0.06% of loans in 2024 and 0.11% in 2025 excluding loans written down on the day Independent was acquired. What we treat as normal earnings. Reported 2025 profit of $798.7 million ($7.87 a share) contains three items we do not count on repeating: $258.6 million of income from accreting the discount on acquired loans (Independent's loans were taken on at a $617.4 million, 4.5%, discount; accretion was only $14.4 million in 2024), about $119.8 million of acquisition costs, and a $92.1 million up-front loan-loss charge on the acquired loans and commitments. Removing all three (taxed at 22.8%, the first-half 2026 rate) leaves about $763 million, or $7.81 on the 97.7 million diluted shares of the second quarter of 2026. We then raise credit costs to 0.15% of loans a year ($76 million) from the $27.7 million actually booked for ordinary loans in 2025, which was less than the $54.3 million of ordinary net charge-offs that year; that costs $0.38 a share and gives normal earnings of $7.42 a share. We use only the one full year since the Independent deal; it added loans equal to 38.8% of the existing loan book, so earlier years describe a materially smaller bank. The first half of 2026 was stronger: net income $455.8 million, $4.64 a share ($2.35 in the second quarter), a $9.28 annual pace. We could not separate how much of that is still discount accretion or unusually low credit costs, so it informs only the bull case. Profit-per-share growth in 2025 was 12.9% (from $6.97 to $7.87); the base case starts at 1.0% because that jump was driven by the acquisition and its accretion. Base case: $129 a share. Earnings of $7.42 grow 1% a year for ten years, below the 1.3% record above and funded by keeping 7.9% of earnings (tangible equity was $5.69 billion, $58.72 a share, so $7.42 is a 12.6% return on it); the rest is paid to owners as dividends and buybacks (dividend $0.60 a quarter; $258 million of shares repurchased in the first half of 2026, taking shares outstanding from 99.1 million to 97.0 million). After year ten earnings stay flat, because the deposit franchise is a structural feature, but nothing is credited for growth. Left out: further acquisitions (each is a large step, not a repeatable small one), any remaining Independent discount income, cost savings not yet visible in the expense line, and share gains in Texas and Colorado. A bank's deposits are its raw material, so no debt is deducted; long-term borrowings were $696.5 million at year-end 2025. Bear case: $92 a share. Pre-provision earnings start 5% lower, as deposit costs squeezed profit in 2021 to 2023 (profit per share fell 3.7% from 2021 to 2023). In year three a credit cycle like 2008 to 2011 arrives; for all U.S. banks net charge-offs ran 1.29%, 2.52%, 2.55% and 1.55% of loans in 2008 to 2011 (FDIC). Applied to $50.8 billion of loans that is $580 million, $1,205 million, $1,220 million and $712 million above normal credit costs, $3.7 billion in all, nearly four years of pre-tax earnings. Profit per share is then +$2.44, -$2.50, -$2.62 and +$1.40 in years three to six, cumulatively -$126 million. Industry return on assets then recovered to 0.88% in 2011, 69% of its 1.28% in 2005-06; we use 70% of pre-provision earnings in year seven, 85% in year eight and full (5% lower) earnings after that, about $7.02 a share, flat thereafter. If the $2.40 dividend were kept throughout, tangible equity would fall about $1.06 billion (19%); capital ratios (common equity tier 1 was 11.36% at year-end 2025 against a 4.5% minimum plus a 2.5% buffer) would, if they fell in proportion, still be around 9%, so no dilution is assumed (our estimate, not a filed number). The bear value is above tangible equity because it assumes earnings recover to about $7 a share, a 12% return on that equity, once the losses pass; the industry's return on assets partly recovered in this way after 2009, from -0.07% to 0.88% by 2011. Bull case: $171 a share. The first-half 2026 pace of $9.28 holds, growing 2% a year for ten years (funded by retaining 12.7% of earnings) and flat after that. This is what happens if remaining discount income, low credit costs and the second quarter's results persist. What could make this wrong: credit costs are the largest swing; every additional 0.10% of loans in annual losses removes about $0.40 a share of earnings. Reserves were $586.7 million, 1.15% of loans, at June 30, 2026, and at year-end 2025 the reserve covered non-performing loans 1.94 times (about $302 million, 0.6% of loans). A second risk is another large stock-funded acquisition, which has diluted per-share results in the past. Compared with our earlier analysis (September 2026): the earlier view put durable earnings near $8 a share; we now use $7.42 because 2025 credit costs were below actual charge-offs, and second-quarter results and continued buybacks are new. The earlier values ($69, $131, $192) were built on a different framework and are not comparable. Margin-of-safety price: $40. We are fairly confident of the balance sheet and of earnings near $7.4 a share, less sure how much of 2026's $9.28 pace lasts, and credit costs are unusually low today. The worst plausible outcome is a 2008-2011 style credit cycle on a loan book led by commercial real estate; the bank's funding is mostly deposits and its borrowings are small ($618.2 million short-term and $696.5 million long-term at year-end 2025), and the bear case keeps capital above the regulatory minimums on our estimate; a loss rate beyond the 2008-2011 history is not modeled in any case. The price assumes a five-year holding period, with the $2.40 a year dividend (a 6.0% yield at $40, if kept) while buybacks shrink the share count. From $40 over five years with that dividend, a value of $92 at the end implies about 22.6% a year, the base case $129 about 30%, today's tangible equity of $58.72 about 13%, and $47.74 (tangible equity after the bear-case drain) about 9%. At about $44 the bear value would just imply 20%; the margin-of-safety price is set at $40 to leave room, because the bear path includes losses in years four and five when the share price could be lower and the dividend might not be kept.