SouthState Corp enters $350M underwriting agreement

SouthState Corporation (SSB) has announced an agreement to sell $350 million in 7.000% Fixed-to-Floating Rate Subordinated Notes due 2035, underwritten by Morgan Stanley, Piper Sandler, and Keefe, Bruyette & Woods. This move follows a strong Q1 2025 performance with EPS of $2.15, exceeding forecasts, and revenue of $630.64 million, also surpassing expectations; analysts from Keefe, Bruyette & Woods and Jefferies have issued positive ratings, while Citi adjusted its price target to $113, maintaining a Buy rating, reflecting overall positive sentiment despite slight underperformance post-earnings release.

Analysis

SouthState Corporation (NYSE:SSB), a regional bank with a $9.04 billion market capitalization and trading at a P/E ratio of 14.44, has announced an agreement to sell $350 million in 7.000% Fixed-to-Floating Rate Subordinated Notes due 2035, a move intended to provide additional capital for operations as part of its broader financial strategy. This planned debt issuance complements the company's demonstrated financial strength, which includes 29 consecutive years of dividend payments (current yield 2.38%) and 13.69% revenue growth over the last twelve months; InvestingPro data also suggests the company appears slightly undervalued. The announcement follows a robust Q1 2025, where SouthState reported earnings per share of $2.15, significantly surpassing the $0.88 forecast, and revenues of $630.64 million, which exceeded the anticipated $611.62 million. The bank's net interest margin was reported at 3.85%, exceeding guidance, and its recently completed integration with Independent Bank of Texas is expected to bolster future growth and profitability. Analyst sentiment is predominantly positive: Keefe, Bruyette & Woods maintained an Outperform rating, Jefferies initiated coverage with a Buy rating, and Citi, while adjusting its price target to $113 from $123 due to slight post-earnings underperformance, reiterated a Buy rating, reflecting confidence in the bank's solid financial position and strategic initiatives. This positive outlook is further reinforced by nine analysts revising their earnings estimates upward for the company.

Key Decisions for Investors

• Consider the $350 million subordinated note issuance as a positive step by SouthState to strengthen its capital structure, which could support ongoing growth initiatives and operational flexibility.
• The combination of strong Q1 2025 results, including significant EPS and revenue beats, a healthy net interest margin, positive analyst ratings, and upward earnings revisions, suggests a compelling investment case for SSB.
• Investors should monitor the ongoing integration benefits from Independent Bank and the company's ability to maintain its net interest margin performance amidst prevailing market conditions.