Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10.
Directors, Executive Officers and Corporate Governance(1)
Item 11.
Executive Compensation(1)
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters(1)
Item 13.
Certain Relationships and Related Transactions, and Director Independence(1)
Item 14.
Principal Accounting Fees and Services(1)
PART IV
Item 15.
Exhibits, Financial Statement Schedules
Signatures
All or portions of this item are incorporated by reference to the Registrant’s Definitive Proxy Statement for its 2026 Annual Meeting of Shareholders.
Table of Contents
Forward-Looking Statements
The disclosures set forth in this Report are qualified by Part I, Item 1A. Risk Factors and the section captioned “Forward Looking Statements” in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Report and other cautionary statements set forth elsewhere in this Report.
PART I
Item 1. Business .
Overview
SouthState Bank Corporation (“We,” “Our,” “SouthState” or the “Company”) is a financial holding company headquartered in Winter Haven, Florida. During the third quarter of 2025, the Company was redomiciled to the state of Florida by merging SouthState Corporation, a South Carolina corporation, with and into SouthState Bank Corporation, a Florida corporation that was wholly-owned by SouthState Corporation prior to such merger, and adopting its name. We provide a wide range of banking services and products to our customers through our wholly owned bank subsidiary, SouthState Bank, National Association (the “Bank”), a national banking association, from our headquarters branch in Winter Haven, Florida and, as of December 31, 2025, a 342-branch network located throughout Florida, South Carolina, Texas, Georgia, Colorado, North Carolina, Alabama, and Virginia. In addition, the Company owns SSB Insurance Corp., a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code, which has been in dissolution since 2024. We do not engage in any significant operations other than the ownership of our banking subsidiary.
Through the Bank, we operate a correspondent banking and capital markets service division for over 1,200 small and medium sized community financial institutions, credit unions, and money managers throughout the United States. Based primarily in Atlanta, Georgia and Birmingham, Alabama, this division earns commissions on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities. In addition, the Bank operates SouthState Securities Corp. (formally known as SouthState|DuncanWilliams Securities Corp., “SouthState Securities”), a full-service registered broker dealer headquartered in Memphis, Tennessee. The services offered by SouthState Securities are complementary to the Bank’s correspondent banking and capital markets businesses and provide additional opportunities to the Bank’s client base. The Bank also operates SouthState Private Capital Management LLC (“SouthState PCM”), a wholly-owned registered investment advisor, which offers support to the Bank’s Wealth line of business. SouthState PCM is the result of the December 31, 2025 merger of SouthState Advisory, Inc., a wholly-owned registered investment advisor, with and into Private Capital Management LLC, also a wholly-owned registered investment advisor the Bank acquired through the Independent Bank Group, Inc. (“Independent”) acquisition completed on January 1, 2025 (the “Independent Merger”). The Bank operates Corporate Billing, a transaction-based finance division headquartered in Decatur, Alabama that provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers nationwide. In 2023, the Bank formed SSB First Street Corporation, an investment subsidiary headquartered in Wilmington, Delaware, to hold tax-exempt municipal investment securities as part of the Bank’s investment portfolio.
At December 31, 2025, we had approximately $67.2 billion in assets, $48.6 billion in loans, $55.1 billion in deposits, $9.1 billion in shareholders’ equity, and a market capitalization of approximately $9.3 billion.
Our principal executive offices are located at, and our mailing address is, 1101 First Street South, Suite 202, Winter Haven, Florida 33880. Our telephone number is (863) 293-4710.
Our revenue is primarily derived from interest on, and fees received in connection with, real estate and other loans, interest and dividends from investment securities and short-term investments, commissions on bond sales, fees from deposit accounts, hedging services, and gains from the sale of residential mortgage loans. The principal sources of funds for our lending activities are customer deposits, repayment of loans, and the sale and maturity of investment securities. Our principal expenses are interest paid on deposits and operating and general administrative expenses.
Table of Contents
As is the case with banking institutions generally, our operations are materially and significantly influenced by the real estate market, general economic conditions, and by the tax, monetary and fiscal policies of the U.S. and state government and regulatory agencies, including the Federal Reserve. Deposit flows and costs of funds are influenced by interest rates on competing investments and general market rates of interest. Lending activities are affected by the demand for financing of real estate, equipment, receivables and other commercial collateral, and other types of loans, which in turn is affected by the interest rates at which such financing may be offered and other factors affecting local demand and availability of funds, including tax rates and regulatory structure. We face strong competition in the attraction of deposits (our primary source of lendable funds) and in the origination of loans. See “Competition.”
Products and Services
Lending Activities
Our loan portfolio includes commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans. The principal risk associated with each category of loans we make is the creditworthiness of the borrower. Borrower creditworthiness is affected by general economic conditions and the attributes of the borrower and the borrower’s market or industry. Attributes of the relevant business market or industry include the competitive environment, customer and supplier availability, the threat of substitutes and barriers to entry and exit.
Commercial Real Estate Loans. As of December 31, 2025, $28.0 billion, or 58%, of our loan portfolio consisted of loans secured by commercial real estate (including owner occupied and non-owner occupied commercial real estate, other income producing property and construction and land development lending). We offer construction financing, acquisition financing or refinancing of properties, commercial lines of credit and other loans that are secured by commercial real estate.
Residential Real Estate Loans. As of December 31, 2025, $10.5 billion, or 21%, of our loan portfolio consisted of residential real estate loans including home equity loans. We provide one-to-four family residential real estate loans with terms ranging from 10 to 30 years, with either fixed or adjustable interest rates and home equity lines. It is not our normal business practice to originate subprime loans. Our closed-end first lien loans are for purposes of property purchased, or for refinancing existing loans. The majority of our loans are owner-occupied, full documentation loans.
Commercial and Industrial (“C&I”) Loans. As of December 31, 2025, $9.2 billion, or 19%, of our loan portfolio consisted of commercial and industrial loans. Our C&I loans include lines of credit, acquisition finance credit facilities and other types of commercial credit and typically have maturities of five years or less. We also have a SBA 7(a) line of business whereby we routinely sell the government guaranteed portion of the SBA loans to investors with the unguaranteed portion of the loan and the servicing rights retained.
Other Consumer Loans. As of December 31, 2025, $1.0 billion, or 2%, of our loan portfolio consisted of other types of consumer loans. We offer consumer loans to our customers for personal, family and household purposes, including auto, boat, and personal installment loans.
We believe we have a strong team of consumer and commercial bankers to execute on our client-centered, relationship-driven banking model. Our commercial banking team consists of experienced professionals that use an advisory approach that emphasizes understanding each client’s business and offering a broad suite of loan, deposit and treasury management products and services. Our consumer banking team consists of experienced professionals that focus on knowing their individual clients in order to best meet their financial needs, offering a full complement of loan, deposit and online banking solutions. We generally do business with clients located in the areas served by our branches, and we focus our marketing efforts on these areas.
Table of Contents
Deposit Products, Treasury Services, and Other Funding Sources
We offer our customers a variety of deposit products and services, including checking accounts, savings accounts, money market accounts, time deposit accounts, and treasury and merchant services, through multiple channels, including our network of 342 full-service branches, as of December 31, 2025, and our online, mobile and telephone banking platforms. As of December 31, 2025, our deposit portfolio was comprised of 24% noninterest-bearing deposits and 76% interest bearing deposits. We intend to continue our efforts to provide funding for our business from customer relationship deposits.
Deposit flows are significantly influenced by general and local economic conditions, changes in prevailing interest rates, internal pricing decisions and competition. Our deposits are primarily obtained from depositors located around our branch footprint, and we believe that we have attractive opportunities to capture additional retail and commercial deposits in our markets. To attract and retain deposits, we rely on providing quality service, offering a suite of retail and commercial products and services and introducing new products and services that meet our customers’ needs as they evolve.
In addition to traditional banking activities and the other products and services specified above, we provide a broad array of financial services to our customers, including debit card and mobile services, funds transfer products and services, and treasury management services, including merchant services, automated clearing house services, lock-box services, remote deposit capture services and other treasury services.
Correspondent Banking and Capital Markets
We operate a correspondent banking and capital markets business division through the Bank and through SouthState Securities, the Bank’s broker dealer. This line of business’s primary revenue generating activities are related to the capital markets division, which includes commissions earned on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities; and its correspondent banking division, which includes spread income earned on correspondent bank deposits (i.e., federal funds purchased) and correspondent bank checking account deposits and fees from safe-keeping activities, bond accounting services for correspondents, asset/liability consulting related activities, international wires, and other clearing and corporate checking account services. The fees derived from the correspondent banking services are less volatile than those generated through the capital markets group. The customer base includes small to medium sized financial institutions located throughout the United States.
Wealth Management
Through the Bank and SouthState PCM, we offer wealth management and other fiduciary and private banking services targeted to affluent clients, including individuals, business owners, families, and professional service companies. In addition to fiduciary and investment management fee income, we believe these services enable us to build new relationships and expand existing relationships to grow our deposits and loans. Through our wealth management line of business, we offer financial planning, retirement services and trust and investment management for affluent clients as well as clients with more modest resources. We offer a wide range of investment alternatives, including certificates of deposits, mutual funds, annuities, individual retirement accounts, money market accounts and other financial products.
Mortgage Banking
We have a mortgage line of business that originates single-family home loans and either sells into the secondary market or holds in our portfolio those mortgages. We retain servicing rights for those loans we hold in our portfolio and for the majority of the loans that are sold.
Table of Contents
Growth Strategy
Our business strategy has been to grow our business organically within our footprint and adjoining market areas faster than the related economic growth in those markets through our existing relationship managers and through targeted hiring of talented officers or teams. Our business growth, profitability and market share have been enhanced by engaging in strategic mergers and acquisitions or branch expansion either within or contiguous to our existing footprint. That expansion strategy focuses on banking institutions that:
are consistent with our guiding principles of soundness, profitability and growth, and are a good fit with our culture;
are strategically attractive by enhancing our footprint, allowing for cost savings and economies of scale, or providing market diversification, or otherwise strategically compelling;
have been determined to meet our risk appetite and profile; and
meet our financial criteria.
We expect to continue to assess future opportunities of financial companies using these criteria, based on market and other conditions.
Competition
Our profitability depends principally on our ability to compete effectively in the markets in which we conduct business. In the financial services industry, market demands, technological and regulatory changes and economic pressures have increased competition among banks, as well as other financial institutions. Competition may further intensify as additional companies enter the markets where we conduct business, and we enter mature markets in accordance with our expansion strategy.
We experience strong competition from both bank and non-bank competitors. We compete with national banks, super-regional banks, smaller community banks, nontraditional internet-based banks, credit unions, insurance companies and government sponsored entities. We also compete with other financial intermediaries and investment alternatives such as mortgage companies, credit card issuers, leasing companies, finance companies, money market mutual funds, brokerage firms, governmental and corporation bonds, and other securities firms.
We encounter strong competition in making loans and attracting deposits. We compete with other financial institutions to offer customers competitive interest rates on deposit accounts, competitive interest rates charged on loans and other credit products and reasonable service charges. In addition, we also compete based on the quality and scope of the services we provide and the convenience of our banking facilities, compared to our competitors. The larger national and super-regional banks may have significantly greater lending limits and may offer additional products. However, by emphasizing customer service and by providing a wide variety of services, we believe that our Bank has generally been able to compete successfully with our competitors, regardless of their size.
Technological advances have made it possible for our competitors, including nonbank competitors, to offer products and services that traditionally were banking products and for financial institutions and other companies to provide electronic and internet-based financial solutions, including online deposit accounts, electronic payment processing and marketplace lending, without having a physical presence where their customers are located. Moreover, technological change has introduced new technology-driven products and services, including innovative ways that customers can make payments or manage their accounts, such as through the use of mobile payments, digital wallets, or digital assets. In addition, many of our non-bank competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally insured banks. In many cases, our competitors have substantially greater resources and lending limits and offer certain services that we do not currently provide.
Legislation has continued to heighten the competitive environment in which financial institutions must conduct their business, and the potential for competition among financial institutions of all types has increased significantly. To compete, we rely upon specialized services, responsive handling of customer needs, and personal contacts by our officers, directors, and staff.
Table of Contents
Human Capital Management
We consider our relationship with our employees instrumental to the success of our business. We value our employees by investing in a healthy work-life balance, competitive compensation and benefit packages, and a team-oriented environment centered on professional service and open communication amongst employees. The Board of Directors oversees the strategic management of our human capital resources. The Human Resources Department’s day-to-day responsibility is managing our human capital resources.
Core Values and Culture
A strategic priority for the Company is to develop a dynamic, high performing team by, in part, facilitating a culture that increases employee engagement, devotes resources to recruiting, developing, and retaining talent, and recognizes the benefits of different perspectives and experiences. The Company’s core values, an essential cultural cornerstone, set the course by which we intend to meet this goal through our interactions with each other, our customers, and our suppliers:
Local Market Leadership - Our business model supports the unique character of the communities we serve and encourages decision-making by a banker that is closest to the customer.
Long-Term Horizon - We think and act like owners and measure success over entire economic cycles. We prioritize soundness over short-term profitability and growth.
Remarkable Experiences - We will make our customers’ lives better by anticipating their needs and responding with a sense of urgency. Each of us has the freedom and responsibility to do the right thing for our customers.
Meaningful and Lasting Relationships - We communicate with candor and transparency. The relationship is more valuable than the transaction.
Greater Purpose - We enable our team members to pursue their ultimate purpose in life – their personal faith, their family, and their service to the community.
Because we recognize the importance of encouraging an environment that inspires our employees to act consistently with the Company’s core values, we incorporate our core values into our strategic planning process, requiring any initiative to further one or more of those values. In addition, our management-level Culture Council oversees the internal and external culture and values messaging, and implements a program for continuing to build and retain a diverse and inclusive employee base, as well as to recruit, train and retain the leadership and talent necessary to deliver the Company’s vision, and maintaining an employee engagement program with clear objectives.
The Company’s Code of Ethics, which also addresses conflicts of interest and self-dealing, applies to all directors, officers, and employees, each of whom are expected to adhere to it in every transaction. The Company believes that each employee is entitled to work in an atmosphere and environment free of discrimination and unlawful harassment. As a result, the Company has established and communicated to all employees a reporting structure for reporting incidents of harassment or discrimination. The Company’s Whistleblower hotline, which is located on our website and governed by our Whistleblower Policy, provides employees, customers, vendors and others with a confidential mechanism to express concerns or complaints regarding the Company’s accounting, internal accounting controls, auditing matters, securities law compliance, or any provision of federal law relating to fraud against shareholders. Other complaints or concerns, such as relating to human resources matters, may also be submitted confidentially through the whistleblower process, and any such matters are referred to our Human Resources Department or other departments, as appropriate, for resolution. Reporting on whistleblower are reviewed by the Audit Committee of the Board.
Table of Contents
Demographic Information
As of December 31, 2025, we had 6,190 full-time employees (compared to 4,986 as of the same date in 2024) and 203 part-time team members. As of December 31, 2025, approximately 96.98% of our team members are located in the Bank’s eight-state branch footprint of Florida (26.07%), South Carolina (25.54%), Texas (13.79%), Georgia (13.51%), North Carolina (5.89%), Colorado (5.72%), Alabama (4.96%), and Virginia (1.5%). To date, none of our team members are covered by collective bargaining agreements and all team members live in the United States. During fiscal year 2025, we hired 1,786 team members, and our voluntary turnover rate was 11.82% for all team members and 1.49% for management-level team members in 2025. Additional workforce demographics by gender, race or ethnicity and generation as of December 31, 2025, are reflected in the graphics above.
Corporate Stewardship
Our company remains committed to creating a diverse workforce and a culture that creates a sense of belonging. Our efforts are enhanced through the work of the Cultural Council and the Corporate Stewardship Council and Working Group that started over 5 years ago. Our Director of Corporate Stewardship bears primary responsibility for overseeing and directing strategic initiatives related to corporate stewardship, community development, management development, recruiting a diverse talent pool, and the Employee Sunshine Fund, which is funded voluntarily by Company employees to provide emergency monetary grants to Company employees facing financial difficulties.
Through intentional collaboration and relationship building with local leaders, the Company formed the Corporate Stewardship Council and Working Group has made meaningful progress with removing barriers that impacted recruitment and of diverse candidates and developing talent throughout the enterprise. We will continue to use various metrics to monitor the results, track outcomes, and work together to maintain a workforce with diverse leaders and teams.
The results from the adoption of our 2021 corporate stewardship strategic plan led to the creation of SouthState Connects Team Member Network Groups in 2024, starting with the Women’s Network Group, followed by Women in Technology, Military & Veterans. The engagement and camaraderie around this group allowed additional points of connection, and in 2025, we launched the Rising Leaders Network Group, which works closely with SouthState Leads. Through educational webinars, cultural awareness, fireside chats with leaders, and book clubs, team members can connect, network, and collaborate more together. In 2025, team members supported various organizations that brought awareness to financial literacy, empowerment of girls and women, and support for military and veteran organizations.
Table of Contents
Talent Acquisition, Retention, and Employee Development
Recruitment is an essential part of managing our human capital resources. We seek to hire well-qualified employees who are also a good fit for our value system. Through our commercial banking internships and management training programs, we recruit from a talented, diverse pool of students from local colleges and universities. To complement other recruitment efforts, our Talent Acquisition team is committed to attending job fairs hosted by Historical Black Colleges and Universities within our footprint. Additionally, the Talent Acquisition team partners closely with regional line of business leadership to network and recruit in-market, experienced and diverse talent in metropolitan markets within our footprint who bring with them a requisite skill set, professional background and aptitude to help grow the Bank and position our teams to support and lead a larger financial institution in the future.
We encourage and support the growth and development of our employees and, when possible, seek to fill positions by promotion and transfer from within the organization. We invest in the growth and development of our employees by providing opportunities to participate in continuing education courses that are relevant to the banking industry and their job function within the Company. Our internal Corporate Learning team offers a suite of leadership development programs to support various levels of leadership experience and expertise with graduated topics designed to engage and develop leaders by improving business acumen and offering 360-degree reviews, individual coaching opportunities and education on topics as varied as culture, communication styles and mentoring. Because the banking industry is highly regulated, we also require employees to complete annual compliance training, the classes for which are selected based on each employee’s actual job responsibilities. In 2025, in the aggregate, our employees completed over 300,000 Company-provided training courses, including compliance-related courses that were assigned based on job roles and responsibilities.
Employee retention helps us operate efficiently. We stive to offer competitive salaries, and many of our officers and key employees participate in the Company’s incentive program, which offers short-term cash incentives to reward annual performance and long-term incentives designed to reward sustainable shareholder value creation and encourage talent retention. In addition, we provide a comprehensive employee benefit program that includes: group life, health, dental and vision insurance; prescription benefits; flexible spending accounts; health savings accounts; employee wellness program; educational opportunities; an employee stock purchase plan; deferred compensation plans for officers and key employees; and a 401(k) plan with a Company match. The Company offers a broad leave plan awarded based on tenure of service and officer title, to include paid time off, paid parental leave, paid volunteer time, and paid leave for personal illness and for caring of their immediate family members. The Company-sponsored Employee Stock Purchase Plan encourages our employees to invest in the Company by offering shares at a discounted price to participants.
Employee Health, Wellness and Safety
The overall well-being of our employees is a top priority. To raise awareness of good health habits, the Company offers employees a robust wellness program that provides extensive wellness resources to include on-site biometric screenings and a health risk assessment program. The Company also provides support through wellness resources and the Employee Assistance Program designed to support physical, financial, career, social, and mental wellness. The Company offers flexible work options in support of employees optimizing their workplace experience, with approximately 25.7% of our employees work effectively from remote locations.
Table of Contents
Oversight of Corporate Stewardship Matters
The Governance and Nominating Committee of the Company’s Board of Directors oversees the Company’s current and emerging environmental, corporate stewardship, and governance matters that are relevant to the business, operations, or public image of the Company or that are otherwise pertinent to the Company and its shareholders, employees, customers, and parties with whom it does business. The Company issues a Corporate Social Responsibility Report on an annual basis, which highlights the Company’s environmental and corporate stewardship initiatives, including the Company’s commitment to: building vibrant communities where we operate and where our customers live and work; fostering a strong culture that supports and encourages a diverse and inclusive workforce; promoting the highest ethical standards and acting as good stewards; and being environmentally resourceful as we support efficient and sustainable practices. Our commitment to our communities, colleagues, corporate stewardship, and the environment will inform our Company’s actions as we strive to meet our vision: investing in the entrepreneurial spirit, pursuing excellence, and inspiring a greater purpose. During 2025, we continued to build out our transition and climate risk programs, actively working toward developing the necessary structure to understand the Bank’s direct and indirect greenhouse gas scopes and emissions across the Company and to develop a process for undertaking climate risk assessments. A copy of the Company’s 2025 Corporate Social Responsibility Report is available on the Bank’s website at 2025 Corporate Social Responsibility Report.
Effect of Governmental Policies
Our earnings and business are and will be affected by the policies of various regulatory authorities of the United States, especially the Federal Reserve. The Federal Reserve, among other things, seeks to influence interest rates and the supply of money and credit within the United States. Among the traditional methods that have been used to achieve this objective are open market operations in U.S. government securities, changes in the discount rate for bank borrowings, expanded access to funds for non-banks and changes in reserve requirements against bank deposits. The Federal Reserve steeply increased the size of its balance sheet by buying securities in 2020-2021, and since then tapered such purchases to gradually reduce its balance sheet, but has resumed purchasing mortgage-backed securities to increase liquidity in the market. Since the financial crisis, the Federal Reserve has paid interest on excess reserves held by banks at the Federal Reserve. The Federal Reserve decreased its target federal funds rate three times during 2025 from 3.50% to 3.75%. Both the traditional and more recent methods are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, interest rates on loans and securities, and rates paid for deposits. The monetary policies of the Federal Reserve have had a significant effect on the operating results of commercial banks and are expected to continue to do so in the future. The monetary policies of the Federal Reserve are influenced by various factors, including inflation, , and short-term and long-term changes in the international trade balance and in the fiscal policies of the U.S. government. Future monetary policies, including whether and when the Federal Reserve will increase or decrease the federal funds rate and whether or at what pace it will reduce or increase the size of its balance sheet, and the effect of such policies on the future business and earnings of the Company and our subsidiary bank cannot be predicted.
Supervision and Regulation
We are extensively regulated and supervised under federal and state law. The following is a brief summary of certain aspects of that regulation that are material to us and does not purport to be a complete description of all regulations that affect us or all aspects of those regulations. To the extent particular statutory and regulatory provisions are described, the description is qualified in its entirety by reference to the particular statute or regulation. Proposals to change the laws and regulations governing the banking industry are frequently raised at both the state and federal levels. The likelihood and timing of any changes in these laws and regulations, and the impact such changes may have on the Company and the Bank, are difficult to ascertain. In addition to laws and regulations, bank regulatory agencies may issue policy statements, interpretive letters and similar written guidance applicable to the Company or the Bank. A change in applicable laws, regulations or regulatory guidance, or in the manner such laws, regulations or regulatory guidance are interpreted by regulatory agencies or courts, may have a material adverse effect on the Company’s and the Bank’s business, operations, and earnings. Supervision, regulation, and examination of banks by regulatory agencies are intended primarily for the protection of depositors and customers, the deposit insurance fund and the U.S. banking and financial system rather than shareholders.
Table of Contents
In the past year, the scope of the laws and regulations and the intensity of the supervision to which we are subject have decreased in response to the Trump Administration’s deregulatory policies. The Company expects that its business will remain subject to extensive regulation and supervision despite the recent deregulatory environment.
We are also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, both as administered by the SEC, as well as the rules of the NYSE that apply to companies with securities listed on the New York Stock Exchange.
Regulation of the Company
We are registered as a bank holding company with the Federal Reserve under the Bank Holding Company Act of 1956 (the “BHC Act”) and have elected to be a financial holding company. As a financial holding company, we are subject to comprehensive regulation, examination and supervision by the Federal Reserve and are subject to its regulatory reporting requirements. Federal law subjects financial holding companies, such as the Company, to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations.
As a financial holding company, we are permitted to engage in, and be affiliated with companies engaging in, a broader range of activities than those permitted for a bank holding company. Bank holding companies are generally restricted to engaging in the business of banking, managing or controlling banks and certain other activities determined by the Federal Reserve to be related closely to banking. Financial holding companies may also engage in activities that are considered to be financial in nature, as well as those incidental or complementary to financial activities, including certain insurance underwriting activities. We and the Bank must each remain “well-capitalized” and “well-managed”, and the Bank must receive a Community Reinvestment Act (“CRA”) rating of at least “Satisfactory” at its most recent examination in order for us to maintain our status as a financial holding company. In addition, the Federal Reserve has the power to order a financial holding company or its subsidiaries to terminate any activity or terminate its ownership or control of any subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that financial holding company.
A financial holding company is required to act as a source of financial and managerial strength to its subsidiary bank and to maintain resources adequate to support its bank. The term “source of financial strength” has been defined as the ability of a company to provide financial assistance to its insured depository institution subsidiaries in the event of financial distress. The appropriate federal banking agency for the depository institution (in this case, the Office of the Comptroller of the Currency or “OCC”) may require reports from the Company to assess its ability to serve as a source of strength and to enforce compliance with the source-of-strength requirements by requiring the holding company to provide financial assistance to the Bank if its capital were to become impaired. If the Company fails to provide such assistance within three months, it could be ordered to sell its stock of the Bank to cover the deficiency. Any capital loans by the Company to the Bank would be subordinate in right of payment to deposits and certain other debts of the Bank. In the event of the Company’s , any commitment by the Company to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the trustee and entitled to a priority of payment.
The BHC Act requires that a financial holding company obtain the prior approval of the Federal Reserve before (i) acquiring direct or indirect ownership or control of more than 5% of the voting shares of any additional bank or bank holding company, (ii) taking any action that causes an additional bank or bank holding company to become a subsidiary of the financial holding company, or (iii) merging or consolidating with any other bank holding company. The Federal Reserve may not approve any such transaction that would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any section of the United States, or the effect of which may be substantially to lessen competition or to tend to create a monopoly in any section of the country, or that in any other manner would be in restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The Federal Reserve is also required to consider (1) the financial and managerial resources of the companies involved, including pro forma capital ratios; (2) the risk to the of the United States banking or financial system; (3) the convenience and needs of the communities to be served, including the companies’ performance under the CRA; and (4) the effectiveness of the companies in combatting money . We are permitted under applicable federal and state law to make out-of-state acquisitions and mergers of other banks and bank holding companies, subject to the requirements summarized above.
Table of Contents
Federal law restricts the amount of voting stock of a bank holding company and a bank that a person may acquire without the prior approval of banking regulators. The overall effect of such laws is to make it more difficult to acquire a bank holding company and a bank by tender offer or similar means than it might be to acquire control of another type of corporation. Consequently, shareholders of the Company may be less likely to benefit from the rapid increases in stock prices that may result from tender offers or similar efforts to acquire control of other companies. Federal law also imposes restrictions on acquisitions of stock in a bank holding company or a national bank. Under the federal Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to the Federal Reserve before acquiring control of any bank holding company, such as the Company, and the OCC before acquiring control of any national bank, such as the Bank. Upon receipt of such notice, the bank regulatory agencies may approve or disapprove the acquisition. The Change in Bank Control Act creates a rebuttable presumption of control if a member or group acquires a certain percentage or more of a bank holding company’s or bank’s voting stock, or if one or more other control factors set forth in the Act are present. As a result, a person or entity generally must provide prior notice to the Federal Reserve before acquiring the power to vote 10% or more of our outstanding common stock. Investors should be aware of these requirements when acquiring shares of our stock.
Regulation of the Bank
The Bank is a national bank subject to comprehensive regulation, examination and supervision by the OCC and is subject to its regulatory reporting requirements. The deposits of the Bank are insured by the FDIC and, accordingly, the Bank is also subject to certain FDIC regulations and the FDIC has backup examination authority and some enforcement powers over the Bank. The Bank also is subject to certain Federal Reserve regulations. These regulations include limitations on loans to a single borrower and to its directors, officers and employees; restrictions on the opening and closing of branch offices; the maintenance of required capital and liquidity ratios; the granting of credit under equal and fair conditions; the disclosure of the costs and terms of such credit, requirements to maintain reserves against deposits and loans, limitation on the types of investment that may be made and requirements governing risk management practices.
The Bank also is subject to restrictions on its ability to lend to and engage in other transactions with the Company and the Bank’s other affiliates. Under these provisions, individual loans or other extensions of credit between the Bank and the Company or any nonbank affiliate generally are limited to 10% of the Bank’s capital and surplus, and all such transactions between the Bank and either the Company or any nonbank affiliate are limited to 20% of the Bank’s capital and surplus. Loans and other extensions of credit from the Bank to any affiliate generally are required to be secured by eligible collateral in specified amounts. In addition, any transaction between the Bank and any affiliate is required to be on arm’s length terms and conditions. The definition of “extension of credit” for these purposes includes credit exposures arising from a derivative transaction, a repurchase or reverse repurchase agreement and a securities lending or borrowing transaction. Federal banking laws also place similar restrictions on loans and other extensions of credit by FDIC-insured banks, such as the Bank, to their directors, executive officers and principal shareholders. These restrictions have not had a material impact on the Company or the Bank.
The Bank is permitted under federal law to branch on a de novo basis across state lines where the laws of the state would permit banks chartered by that state to open a de novo branch.
In 2024, the Department of Justice (the "DOJ”) withdrew its 1995 Bank Merger Guidelines and issued the 2024 Banking Addendum to 2023 Merger Guidelines (the “2024 Banking Addendum”). The DOJ clarified that it will assess competition considerations in connection with bank and bank holding company mergers using its 2023 Merger Guidelines, which is the general merger review framework the DOJ now uses to evaluate transactions in all segments of the economy, and the 2024 Banking Addendum. The 2024 Banking Addendum provides guidance on how the DOJ will assess competition in the context of bank and bank holding company mergers. An analysis under the 2023 Merger Guidelines and 2024 Banking Addendum may include consideration of theories of harm and relevant markets not considered under the 1995 Bank Merger Guidelines, which focused primarily on concentrations of deposits and branches. While the 2024 Banking Addendum remains in effect, the DOJ appears to be assessing bank mergers under a looser standard than implied by the 2024 Banking Addendum.
Table of Contents
As a result of Independent Merger into the Company, the Bank grew above $50 billion in assets as of January 1, 2025, and thus would become subject, effective the fourth quarter of 2026, to the OCC’s heightened standards guidelines. These guidelines set expectations for the governance and risk management practices of large depository institutions subject to its supervision with more than $50 billion in assets. The guidelines require such institutions to establish and adhere to a written governance framework in order to manage and control their risk-taking activities and to incorporate their risk appetite statement and concentration risk limits into capital and liquidity stress testing and planning processes. On December 23, 2025, the OCC issued a notice of proposed rulemaking that would increase the threshold at which the heightened standards apply from $50 billion to $700 billion in total assets. If the rule is adopted as proposed, the Bank would not become subject to the OCC’s heightened standards in the fourth quarter of 2026. The changes are not expected to have any impact on the Bank’s risk management program.
Supervision, Examination and Enforcement
The Federal Reserve, OCC and FDIC have broad supervisory, examination and enforcement authority with regard to bank holding companies and banks, including the power to impose nonpublic supervisory agreements, issue cease and desist or removal orders, impose fines and other civil and criminal penalties, initiate injunctive actions, terminate deposit insurance and appoint a conservator or receiver. In general, these actions may be initiated for violations of laws and regulations, as well as engagement in unsafe and unsound practices, and certain of these actions also may be taken against an “institution affiliated party” as defined in the law. Specifically, the regulators may direct a bank holding company or bank to, among other things, increase its capital, sell subsidiaries or other assets, limit its dividends and distributions, restrict its growth or remove officers and directors. Supervision and examinations are confidential, and the outcomes of these actions may not be made public.
We also are supervised and examined by the Consumer Financial Protection Bureau (“CFPB”) with respect to consumer protection laws and regulations.
FDIC Insurance Assessments and Depositor Preference
The deposits of the Bank are insured by the FDIC up to the limits under applicable law, which currently are set at $250,000 for accounts under the same name and title. The Bank is subject to deposit insurance premium assessments. The FDIC imposes a risk-based deposit premium assessment system. Under this system, the assessment rates for an insured depository institution vary according to the level of risk incurred in its activities. To arrive at an assessment rate for a banking institution, the FDIC places it in one of four risk categories determined by reference to its capital levels and supervisory ratings. In the case of those institutions in the lowest risk category, the FDIC further determines its assessment rate based on certain specified financial ratios or, if applicable, long-term debt ratings. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits. Under the current system, premiums are assessed quarterly. The FDIC has published guidelines on the adjustment of assessment rates for certain institutions.
The FDIC uses a performance score and loss-severity score to calculate the Bank’s initial FDIC assessment rate. In calculating these scores, the FDIC uses the Bank’s capital level and regulatory supervisory ratings and certain financial measures to assess the Bank’s ability to withstand asset-related and funding related stress, and make certain adjustments based on risk factors that are not adequately captured in these calculations.
Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by a bank’s federal regulatory agency. Deposits and certain claims for administrative expenses and employee compensation against insured depository institutions are afforded a priority over other general unsecured claims against the institution, including federal funds and letters of credit, in the liquidation or other resolution of that institution by any receiver appointed by federal authorities. These priority creditors include the FDIC.
Table of Contents
In response to the bank failures in early 2023, the FDIC implemented a special assessment to recover the losses to the FDIC’s Deposit Insurance Fund at an annual rate of approximately 13.4 basis points over eight quarterly assessment periods beginning with the first quarterly assessment period of 2024. The base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion. The FDIC anticipates that the total amount of the special assessment will be collected for a total of eight quarterly assessment period. In December 2025, the FDIC issued an interim final rule that would reduce the special assessment for the eight collection quarter from 3.35 basis points to 2.97 basis points. Under the interim final rule, upon termination of the receiverships, the FDIC will either provide an offset to regular quarterly deposit insurance assessments for insured depository institutions subject to the special assessment if the amount collected exceeds losses or collect from insured depository institutions subject to the special assessment a one-time final shortfall special assessment if losses at the of the receiverships exceed the amount collected. The total estimated FDIC special assessment allocable to the Bank is approximately $33.5 million, which includes the special assessment applicable to the deposits assumed from Independent on January 1, 2025 and subject to the special assessment for the period subsequent to the acquisition date. The FDIC may impose additional special assessments from time to time based on the actual incurred by the FDIC as a result of the March 2023 bank or future .
Resolution Planning
In June 2024, the FDIC released a final rule amending its requirements for insured depository institutions with
more than $50 billion in assets to develop and submit plans demonstrating how they could be resolved in an orderly and timely manner in the event of receivership. As a result of the Independent Merger, the Bank grew above $50 billion in assets as of January 1, 2025, and is actively planning to comply with its requirements, which the FDIC had advised the Bank was in October 2026. In December 2025, the FDIC announced plans to propose changes to the Resolution Planning Rule for FDIC Board consideration in 2026. As a result, submissions due in October 2026, including those of the Bank, have been deferred, and the Bank anticipates that its submission will be due in 2027, pending finalization of any revisions to the Resolution Planning Rule.
Dividend Restrictions
The Company is a legal entity separate and distinct from its banking and other subsidiaries and has in the past relied on dividends from the Bank as its primary source of liquidity. There are limitations on the payment of dividends by the Bank to the Company, as well as by the Company to its shareholders.
The OCC has the general authority to limit the dividends paid by the Bank if such payment may be deemed to constitute an unsafe and unsound practice. The Bank may not pay dividends from its paid-in surplus. All dividends must be paid out of undivided profits then on hand, after deducting expenses, including reserves for losses and bad debts. In addition, a national bank, such as the Bank, is prohibited from declaring a dividend on its shares of common stock until its surplus equals its stated capital, unless there has been a transfer to surplus of no less than one tenth of the bank’s net profits of the preceding two consecutive half-year periods (in the case of an annual dividend). The approval of the OCC is required if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus.
We and the Bank must maintain the applicable common equity Tier 1 (“CET1”) capital conservation buffer of 2.5% to avoid becoming subject to restrictions on capital distributions, including dividends. For more information on the CET1 capital conservation buffer, see Part I Item 1 “Supervision and Regulation – Capital Requirements.”
Table of Contents
In addition, Federal Reserve policy provides that bank holding companies, such as the Company, should generally pay dividends to shareholders only if (i) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality and overall financial condition; and (iii) the organization will continue to meet minimum capital adequacy ratios. The policy also provides that a bank holding company should inform the Federal Reserve reasonably in advance of declaring or paying a dividend that exceeds earnings for the period for which the dividend is being paid or that could result in a material adverse change to the bank holding company’s capital structure. Bank holding companies also are required to consult with the Federal Reserve before increasing dividends or redeeming or repurchasing capital instruments. Additionally, the Federal Reserve could prohibit or limit the payment of dividends by a bank holding company if it determines that payment of the dividend would constitute an unsafe or unsound practice.
Capital Requirements
We are required under federal law to maintain certain minimum capital levels at each of the Company and the Bank. The federal banking agencies have issued substantially similar risk-based and leverage capital requirements to banking organizations they supervise. Under these requirements, the Company and the Bank are required to maintain certain capital standards based on ratios of capital to total assets and capital to risk-weighted assets. The requirements also define the weights assigned to assets and off-balance sheet items to determine the risk-weighted asset components of the risk-based capital rules. The required capital ratios are minimums, and the Federal Reserve and OCC may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s exposure to a decline in the economic value of its capital due to changes in interest rates, and an institution’s ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution’s overall capital adequacy.
Under the applicable capital rules, the Company and the Bank are subject to the following risk-based capital ratios: a CET1 risk-based capital ratio, a Tier 1 risk-based capital ratio, which includes CET1 and additional Tier 1 capital, and a total capital ratio, which includes Tier 1 and Tier 2 capital. CET1 is primarily comprised of the sum of common stock instruments and related surplus net of treasury stock, retained earnings, and certain qualifying minority interests, less certain adjustments and deductions, including with respect to goodwill, intangible assets, mortgage servicing assets and deferred tax assets subject to temporary timing differences. Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock, tier 1 minority interests and grandfathered trust preferred securities, if applicable.
Tier 2 capital consists of instruments disqualified from Tier 1 capital, including qualifying subordinated debt, certain trust preferred securities, other preferred stock and certain hybrid capital instruments, and a limited amount of loan loss reserves up to a maximum of 1.25% of risk-weighted assets, subject to certain eligibility criteria. The Company’s trust preferred securities and subordinated debentures qualify as Tier 2 capital. For institutions, such as us, that have exercised an opt-out election regarding the treatment of accumulated other comprehensive income (“AOCI”), up to 45% of net unrealized gains on available for sale equity securities with readily determinable fair market values are also included in Tier 2 capital. The capital rules also define the risk-weights assigned to assets and off-balance sheet items to determine the risk-weighted asset components of the risk-based capital rules, including, for example, “high volatility” commercial real estate, past due assets, structured securities and equity holdings.
The capital rules require a minimum CET1 risk-based capital ratio of 4.5%, a minimum overall Tier 1 risk-based capital ratio of 6.0%, and a total risk-based capital ratio of 8.0%. In addition, the capital rules require a capital conservation buffer of 2.5% above each of the minimum capital ratio requirements (CET1, Tier 1, and total risk-based capital), which must be met for a bank or bank holding company to be able to pay dividends, engage in share buybacks or make discretionary bonus payments to executive management without automatic restriction. The capital conservation buffer is 2.50%, so a banking organization needs to maintain a CET1 capital ratio of at least 7%, a total Tier 1 capital ratio of at least 8.5% and a total risk-based capital ratio of at least 10.5% or it would be subject to restrictions on capital distributions and discretionary bonus payments to its executive management.
The leverage capital ratio, which serves as a minimum capital standard, is the ratio of Tier 1 capital to quarterly average total assets, less goodwill and other disallowed intangible assets. The required minimum leverage ratio for all banks and bank holding companies is 4%.
Table of Contents
To be well-capitalized, the Bank must maintain the following capital ratios:
CET1 risk-based capital ratio of 6.5% or greater;
Tier 1 risk-based capital ratio of 8.0% or greater;
Total risk-based capital ratio of 10.0% or greater; and
Tier 1 leverage ratio of 5.0% or greater.
The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital requirements imposed under the current capital rules. For purposes of the Federal Reserve’s Regulation Y, including determining whether a bank holding company meets the requirements to be a financial holding company, bank holding companies, such as the Company, must maintain a Tier 1 risk-based capital ratio of 6.0% or greater and a total risk-based capital ratio of 10.0% or greater to be well-capitalized. If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of December 31, 2025, would exceed such revised well-capitalized standard. The Federal Reserve may require bank holding companies, including the Company, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a bank holding company’s particular condition, risk profile and growth plans.
Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our operations or financial condition. For example, only a well-capitalized depository institution may accept brokered deposits without prior regulatory approval. Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on the Company’s or the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications or other restrictions on its growth.
As of December 31, 2025, the Company’s and the Bank’s regulatory capital ratios were above the well-capitalized standards and met the fully phased-in capital conservation buffer. Please refer to the table below for a summary of the Company’s and the Bank’s regulatory capital ratios as of December 31, 2025 and 2024, calculated using the regulatory capital methodology applicable to us during 2025.
Minimum
Minimum Ratio +
Well-
Regulatory
Capital Conservation
Capitalized
Capital Above
Capital Ratio
Buffer
Minimums (1)
Actual
Minimums (2)
As of December 31, 2025
Tier 1 leverage ratio
Consolidated
Bank
CET 1 risk-based capital ratio
Consolidated
Bank
Tier 1 risk-based capital ratio
Consolidated
Bank
Total risk-based capital ratio
Consolidated
Bank
As of December 31, 2024
Tier 1 leverage ratio
Consolidated
Bank
CET 1 risk-based capital ratio
Consolidated
Bank
Tier 1 risk-based capital ratio
Consolidated
Bank
Total risk-based capital ratio
Consolidated
Bank
Reflects the well-capitalized standard applicable to the Bank and the well-capitalized standard applicable to the Company under Federal Reserve Regulation Y.
Amount greater than the highest of the minimum regulatory capital ratio, the minimum regulatory capital ratio plus the capital conservation buffer and the well-capitalized minimum, as applicable.
At December 31, 2024, approximately $15.3 million was added to Tier 1 capital at the Bank and Holding Company as a result of the modified CECL transition.
Table of Contents
On July 27, 2023, the banking agencies released a proposed rule to implement major changes to the capital rules for banking organizations with $100 billion or more in assets intended to bring the U.S. capital rules into conformance with the current international capital standards issued by the Basel Committee on Banking Supervision (“Basel Framework”). In light of the adverse reaction to the proposal, the Federal Reserve announced that it would publish a re-proposal of regulations finalizing the Basel III standards. The re-proposal is expected in early 2026.
Safety and Soundness Guidelines
The federal banking agencies have adopted guidelines prescribing safety and soundness standards relating to internal controls, risk management, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, fees and benefits. These guidelines in general require appropriate systems and practices to identify and manage specified risks and exposures. The guidelines prohibit excessive compensation as an unsafe and unsound practice and characterize compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer or employee, director or principal shareholder. In addition, the agencies have adopted regulations that authorize but do not require an agency to order an institution that has been given notice by the agency that it is not in compliance with any of the safety and soundness standards to submit a compliance plan. If after being so notified, an institution fails to submit an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types, including those that may limit growth or capital distributions.
Lending Standards and Guidance
The federal banking agencies have adopted uniform regulations prescribing standards for extensions of credit that are secured by liens or interests in real estate or made for the purpose of financing permanent improvements to real estate. Under these regulations, all insured depository institutions, such as the Bank, must adopt and maintain written policies establishing appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards, prudent underwriting standards (including loan-to-value limits) that are clear and measurable, loan administration procedures, and documentation, approval and reporting requirements. The real estate lending policies must reflect consideration of the federal bank regulators’ Interagency Guidelines for Real Estate Lending Policies.
The federal banking agencies have also jointly issued guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”), which defines commercial real estate loans as exposures secured by raw land, land development and construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (that is, loans for which 50% or more of the source of repayment comes from third-party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations. If a concentration is present, management must employ heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending. The required heightened risk management practices could include enhanced strategic planning, underwriting policies, risk management, internal controls, portfolio stress testing and risk exposure limits as well as appropriately designed compensation and incentive programs. Higher allowances for credit losses and capital levels may also be required. The Guidance states that the following metrics may indicate a concentration of commercial real estate loans, but that these metrics are neither limits nor a safe harbor: (1) total reported loans for construction, land development, and other land represent 100% or more of total risk-based capital; or (2) total reported loans secured by multi-family properties, non-farm non-residential properties (excluding those that are owner-occupied), and loans for construction, land development, and other land represent 300% or more of total risk-based capital and the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months. As of December 31, 2025, our total reported loans for construction, land development, and other land were 35.2% of the Bank’s total Tier 1 capital plus the allowance for credit (excluding reserve for commitments) and our total reported loans secured by multifamily and non-farm nonresidential properties and loans for construction, land development, and other land were 271.8% of the Bank’s total Tier 1 capital plus the allowance for credit .
Table of Contents
Consumer Protection Laws
The Bank is subject to a number of federal laws designed to protect its customers. These consumer protection laws apply to a broad range of our activities and to various aspects of our business and include laws relating to interest rates, fair lending, disclosures of credit terms and estimated transaction costs to consumer borrowers, debt collection practices, the use of and the provision of information to consumer reporting agencies, and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. Administration of many of these consumer protection rules are the responsibility of the CFPB, which has exclusive supervisory authority over insured depository institutions with more than $10 billion in total assets and any affiliates thereof. The CFPB also has authority to define and prevent unfair, deceptive and abusive practices in the consumer financial area, and expanded data collecting powers for purposes of determining bank compliance with fair lending laws.
The CFPB has promulgated many mortgage-related final rules, including rules related to the ability to repay and qualified mortgage standards, mortgage servicing standards, loan originator compensation standards, high-cost mortgage requirements, Home Mortgage Disclosure Act requirements and appraisal and escrow standards for higher priced mortgages. In addition, several proposed revisions to mortgage-related rules are pending finalization. The mortgage-related final rules issued by the CFPB have materially restructured the origination, servicing and securitization of residential mortgages in the United States. These rules have impacted, and will continue to impact, the business practices of mortgage lenders, including the Company. For example, under the CFPB’s Ability to Repay and Qualified Mortgage rule, before making a mortgage loan, a lender must establish that a borrower has the ability to repay the mortgage. “Qualified mortgages,” as defined in the rule, are presumed to comply with this requirement and, as a result, present less litigation risk to lenders. For a loan to qualify as a qualified mortgage, the loan must satisfy certain limits on terms and conditions, pricing and a maximum debt-to-income ratio. Loans eligible for purchase, guarantee or insurance by a government agency or government-sponsored enterprise are exempt from some of these requirements. Satisfying the qualified mortgage standards, ensuring correct calculations are made for individual loans, recordkeeping and monitoring, as well as understanding the effect of the qualified mortgage standards on CRA obligations, impose significant new compliance obligations on, and involve compliance costs for, mortgage lenders, including the Company.
Under applicable law, the Bank, as a debit card issuer, may receive a maximum permissible interchange fee equal to no more than $0.21 plus 5.0 basis points of the transaction value for many types of debit interchange transactions. Further, a debit card issuer may also recover $0.01 per transaction for fraud prevention purposes if the issuer complies with certain fraud-related requirements required by the Federal Reserve. In addition, the Federal Reserve rules governing routing and exclusivity require debit card issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product.
In 2023, the Federal Reserve released a notice of proposed rulemaking that would lower the maximum interchange fee that a large debit card issuer can receive on a debit card transaction. Under the proposal, the Federal Reserve would set the components of the maximum interchange fee to amounts lower than those in the currently applicable Regulation II. In addition, the proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered from large debit card issuers. The proposal has not been finalized and if it were to be finalized as proposed, would likely materially decrease the Bank’s noninterest income.
In 2023, the CFPB issued the “Small Business Lending Rule” to implement Section 1071 of the Dodd-Frank Act for the stated purpose of increasing transparency in small business lending, promoting economic development, and combating unlawful discrimination. Under this rule, covered lenders, including the Bank, are required to collect and report information about the small business credit applications they receive, including, but not limited to, geographic and demographic data. As a result of ongoing litigation since the “Small Business Lending Rule” was first issued, implementation of the final rule had been delayed and postponed. In November 2025, the CFPB published a new notice of proposed rulemaking on the Small Business Lending Rule. The proposed rule will revise the scope of data collected, with the intention of reducing complexity and improving data quality, while still meeting the purpose of the Small Business Lending Rule. The mandatory compliance date for all covered lenders is anticipated to be January 1, 2028. As the Bank has had a formal project to comply with the original rule, we believe the reproposed rule, if adopted as proposed, will not have a material impact on the Bank.
Table of Contents
In October 2024, the CFPB finalized a rule to implement Section 1033 of the Dodd-Frank Act, which would require certain entities, including the Company and the Bank, to, among other things, make available to a consumer, upon request, information in its control or possession concerning the consumer financial product or service that the consumer obtained from that entity. In general, the rule also requires, among other things, data providers holding a consumer account, such as the Bank, to establish a developer interface satisfying certain data security specifications and other standards, through which the data provider can receive requests for, and provide, specific types of data covered by the rule in electronic, usable form to authorized third parties, including data aggregators. Under the rule, data providers are prohibited from, among other things, charging consumers or third parties fees for processing these consumer data requests. The rule also places certain data security, authorization and other obligations on third parties accessing covered data from data providers, which could include the Company and the Bank when acting in certain capacities. The rule requires third parties to limit their collection, use, and retention of the data received to only what is reasonably necessary to provide the consumers’ requested product or service. The compliance date for a depository institution data provider that holds at least $10 billion in total assets but less than $250 billion in total assets is April 1, 2027. In August 2025, the CFPB released an advance notice of proposed rulemaking seeking comments on certain aspects of the Section 1033 rule. The release did not extend the compliance dates set forth in the original rule and various agencies have requested those dates be rescinded. We continue to monitor the release of the final rule and evaluate the impact this will have on the Company and Bank.
In December 2024, the CFPB issued a final rule that removes an exception for overdraft lending services from longstanding provisions of the Truth in Lending Act (“TILA”) and other consumer financial protection laws by requiring banks with assets greater than or equal to $10 billion to treat overdraft loans like credit cards and other loans, including providing clear disclosures, to the extent the bank charges customer fees in excess of the direct costs of providing the service or in accordance with established benchmarks by the CFPB. This rule would have likely had a material impact on the Bank by reducing revenue from overdraft lending services. In May 2025, this rule was invalidated by a Congressional Review Act resolution.
Community Reinvestment Act
The CRA requires the appropriate federal banking agency, in connection with its examination of a bank, to assess the bank’s record in meeting the credit needs of the communities served by the institution, including low- and moderate-income neighborhoods. Furthermore, the relevant federal bank regulatory agency is required to consider a bank’s CRA assessment when considering the bank’s application to, among other things, merge or consolidate with or acquire the assets or assume the liabilities of an insured depository institution or open or relocate a branch office. The relevant federal banking agency, the OCC in the Bank’s case, examines each bank and assigns it a public CRA rating. Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “unsatisfactory.” The Bank received a “satisfactory” rating at its most recent CRA evaluation.
In October 2023, the Federal Reserve, the FDIC, and the OCC issued a final rule amending the agencies’ CRA regulations. In July 2025, the federal banking agencies issued a joint Notice of Proposed Rulemaking, which, if finalized, would rescind the 2023 final rule and reinstate the CRA framework that existed prior to the issuance of that rule. Implementation of the October 2023 final rule, which was subject to an injunction and has not taken effect, would have materially changed the CRA framework, including imposing additional costs and changing how CRA performance would be assessed.
Anti-Money Laundering Rules
The Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, (together, the “BSA”) and its implementing regulations require financial institutions to, among other duties, implement and maintain an effective anti-money laundering / countering the financing of terrorism (“AML/CFT”) compliance program and file suspicious activity and currency transaction reports when appropriate.
Table of Contents
The Anti-Money Laundering Act of 2020, enacted on January 1, 2021 as part of the National Defense Authorization Act (“AMLA”), amends the BSA but does not directly impose new requirements on banks. However, AMLA requires the U.S. Treasury Department to, among other things, issue National Anti-Money Laundering and Countering the Financing of Terrorism Priorities and implementing regulations, and conduct studies and issue regulations that may, over the next few years, significantly alter certain due diligence, recordkeeping and reporting requirements that the BSA and its implementing regulations impose on banks. AMLA also contains provisions that increase penalties for violations of the BSA and includes whistleblower incentives, both of which could increase regulatory enforcement against banks. Implementation of AMLA is ongoing and is anticipated to impact the Bank’s AML/CET compliance program.
Violations of the BSA and its implementing regulations can result in substantial civil and criminal penalties, and the federal banking agencies are required to consider the effectiveness of a financial institution’s AML compliance program when reviewing bank mergers and bank holding company acquisitions. In addition to the federal banking agencies, FinCEN is authorized to impose significant civil monetary penalties for violations of the BSA and its implementing regulations and has recently engaged in coordinated enforcement actions with state and federal law enforcement agencies and banking regulators.
OFAC Regulation
The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) is responsible for administering U.S. economic sanctions, which can prohibit certain transactions with designated foreign countries or territories, nationals and others. OFAC-administered sanctions take on many different forms. For example, sanctions may include: (1) restrictions on trade with or investment in a sanctioned country or territory, including prohibitions against direct or indirect imports from and exports to a sanctioned country or territory and prohibitions on U.S. persons engaging in financial transactions relating to, making investments in, or providing investment-related advice or assistance to, a sanctioned country or territory; and (2) blocking assets in which certain sanctioned foreign governments, entities or individuals have an interest, by prohibiting transfers of property subject to U.S. jurisdiction, including property in the possession or control of U.S. persons. OFAC also maintains lists of designated persons, groups or entities that are the target of sanctions, including the “Specially Designated Nationals and Blocked Persons List.” The assets of designated persons, groups or entities are blocked, and U.S. persons are generally prohibited from dealing with any such persons. Moreover, blocked assets, for example property and bank deposits, cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. If we find a name on any transaction, account or wire transfer associated with a sanctioned person, we must freeze or block such account or transaction, file a blocked property report with OFAC and notify the appropriate authorities. to comply with U.S. economic sanctions could have legal and reputational consequences.
Table of Contents
Data Privacy and Cybersecurity
Various federal, state and local laws, rules, regulations and standards contain extensive data privacy and cybersecurity provisions, and the legal and regulatory framework for data privacy and cybersecurity is in considerable flux and rapidly evolving. For example, current federal laws, rules, regulations and standards, including the Gramm-Leach-Bliley Act (the “GLBA”), require financial institutions to, among other things, periodically disclose their privacy policies and practices relating to sharing personal information and enable retail customers to opt out of our ability to share such personal information with unaffiliated third parties under certain circumstances. Such laws and regulations also require financial institutions to implement a comprehensive cybersecurity program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information. An amendment to Regulation S-P, an implementing regulation promulgated under the GLBA, was adopted by the SEC on May 16, 2024 and requires broker-dealers and registered investment advisers to, among other things, adopt and implement an incident response program as part of their formal cybersecurity policies and procedures and report data breaches to affected individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization within 30 days of becoming aware of such data . Other federal and state laws and regulations impact our ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers. Federal law also makes it a offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial nature by or means. The Bank is also subject to rules and regulations issued by the Federal Trade Commission, which regulates or acts or practices, including with respect to data privacy and cybersecurity. Additionally, like other lenders, the Bank uses credit bureau data in its underwriting activities. Use of such data is regulated under the Fair Credit Reporting Act, which also regulates reporting information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates, and using affiliate data for marketing purposes. Similar state laws may impose additional requirements on us and our subsidiaries. The federal government also is considering, and may pass, additional data privacy and cybersecurity legislation, to which we may become subject if passed.
The enactment of the Cyber Incident Reporting for Critical Infrastructure Act (the “CIRCIA”) in 2022, once rulemaking is complete, will require, among other things, certain companies to report significant cyber incidents to the Cybersecurity and Infrastructure Agency (the “CISA”) within 72 hours from the time the company reasonably believes the incident occurred (and within 24 hours of making a ransom payment as a result of a ransomware attack). On April 4, 2024, the CISA proposed a rule to finalize the regulations implementing CIRCIA that would clarify the scope of cyber incidents to be reported and would further define covered entities subject to CIRCIA to expressly include companies in the financial services industry that are required to report cyber incidents to their primary federal regulators. We continue to monitor for the final requirements to implement this rule.
We also are subject to federal regulations that, among other things, require a banking organization to notify its primary federal regulators as soon as possible and within 36 hours after identifying a “computer-security incident” that has materially disrupted or degraded, or the banking organization believes in good faith is reasonably likely to materially disrupt or degrade its business or operations in a manner that would, among other things, jeopardize the viability of its operations, result in customers being unable to access their deposit and other accounts, result in a material loss of revenue, profit or franchise value, or pose a threat to the financial stability of the U.S. financial sector. Additionally, the federal banking regulators, as well as the SEC and related self-regulatory organizations, regularly issue guidance regarding cybersecurity that is intended to enhance cyber risk management among financial institutions.
Data privacy and cybersecurity are also areas of increasing state legislative focus. For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, the “CCPA”), among other things, gives California residents the right to request access to or correct personal information collected about them, and whether that personal information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of certain sharing and sales of their personal information, and the right not to be discriminated against for exercising these rights. The CCPA contains several exemptions, including that many, but not all, requirements of the CCPA are inapplicable to personal information that is collected, sold, disclosed or otherwise processed subject to certain federal laws, including the GLBA. Similar laws have been or may be adopted by other states where we do business or collect personal information. In addition, laws in all 50 U.S. states generally require businesses to provide notice under certain circumstances to individuals whose personal information has been disclosed as a result of a data breach.
Table of Contents
For further information regarding the risks associated with data privacy and cybersecurity laws, please see Part I – Item 1A – Risk Factors – “ We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability ” and “ We face cybersecurity risks from cyber-attacks, information security breaches and other similar incidents that could result in the disclosure of confidential and other information (including personal information), adversely affect our business or reputation, and create significant legal and financial exposure .”
Broker Dealer and Investment Adviser Regulation
Our broker dealer subsidiary and investment adviser subsidiary are subject to regulation by the SEC. FINRA is the primary self-regulatory organization for our registered broker-dealer subsidiary. The broker dealer and investment adviser subsidiaries also are subject to additional regulation by states or local jurisdictions. The SEC and FINRA have active enforcement functions that oversee broker dealers and investment advisers and can bring actions that result in fines, restitution, a limitation on permitted activities, disqualification to continue to conduct certain activities and an inability to rely on certain favorable exemptions. Certain types of infractions and violations also can affect the Company’s ability to issue new securities expeditiously. In addition, certain changes in the activities of a broker dealer require approval from FINRA, and FINRA takes into account a variety of considerations in acting upon applications for such approval, including internal controls, capital levels, management experience and quality, prior enforcement and disciplinary history, and supervisory concerns.
Future Legislation and Regulation
Banking statutes, regulations and policies are continually under review by Congress, state legislatures and federal and state regulatory agencies. In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters and similar written guidance applicable to us and our subsidiaries. We cannot predict the substance or impact of pending or future legislation or regulation or the application of those laws or regulations, although enactment of any significant proposal could affect how we operate and could significantly increase our costs, impede the efficiency of internal business processes or limit our ability to pursue business opportunities in an efficient manner, any of which could materially and adversely affect our business, financial condition and results of operations.
Availability of Reports Furnished or Filed with the Securities and Exchange Commission
We make available at no cost all of our reports filed electronically with the United States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and the annual proxy statement, as well as amendments to those reports, through the Investor Relations page of our website at www.SouthStatebank.com. These filings are also accessible on the SEC’s website at www.sec.gov.
We also will provide without charge a copy of our Annual Report on Form 10-K to any shareholder by mail. Requests should be sent to SouthState Bank Corporation, Attention: Corporate Secretary, 1101 First Street South, Winter Haven, Florida 33880.
Information with respect to the Company’s Board of Directors, Executive Officers and corporate governance policies and principles is presented on the Company’s website, www.SouthStatebank.com, on the Investor Relations page. We encourage our employees to take initiative and be responsible for their actions. We have implemented a Whistleblower program and adopted a Code of Ethics, and information about both is available under Corporate Overview/Governance Documents on the Investor Relations page of our website located at www.SouthStatebank.com. We also adopted a formal corporate governance policy, a copy of which is available under Corporate Overview/Governance Documents/Corporate Governance Guidelines on the Investor Relations page of our website located at www.SouthStatebank.com.
Table of Contents
Item 1A. Risk Factors .
Summary of Risk Factors
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock. These risks include, but are not limited to, the following:
Risks related to our Business and Business Strategy :
our ability to continue to integrate and realize the benefits of the merger between SouthState and Independent;
our ability to grow or to manage our growth effectively;
our ability to realize the benefits expected from strategic initiatives;
our ability to adequately anticipate and respond to changes in market interest rates;
the negative impact of inflation on our business and profitability;
an increase in the cost of funds as a result of general economic conditions, FDIC insurance assessments, interest rates, and competitive pressures on deposits;
our ability to attract and retain experienced people and maintain our culture;
the pace of adoption and use of artificial intelligence tools by us and our third-party vendors and service providers;
the implementation of new lines of business or new products and services;
the impact of technological changes, including artificial intelligence and online and mobile banking, on our business model, and that we may have fewer resources than many competitors to invest in technological improvements;
a significant portion of our loan portfolio being secured by real estate;
our loan portfolio including commercial and commercial real estate loans that may have higher risks;
the risk of default by our clients and counterparties;
our ability to effectively manage credit risk and interest rate risk;
lack of liquidity or inability to effectively manage liquidity risk;
the results of our most recent stress tests not accurately predicting the impact on our financial condition if the economy were to deteriorate;
the impact of the Current Expected Credit Loss standard, merger activity, and global events on our allowance for credit losses;
our size and continued pace of growth requiring us to raise additional capital in the future that may not be available when it is needed;
our processes for managing risk not being effective to mitigate risk or losses;
changes in mortgage rates and adverse changes in mortgage conditions;
our recent results not being indicative of our future results;
environmental risks in our lending activities;
appraisals used in deciding whether to make a loan that is secured by real estate not ensuring the value of the real property collateral;
losses due to errors, omissions or fraudulent behavior by employees, clients, counterparties and third parties;
sustainability, stewardship and governance risks that adversely affect our reputation and/or our business, operations and earnings;
our ability to offer our key management personnel long-term incentive compensation and our ability to retain such personnel;
our reliance on the performance of highly skilled personnel and our ability to attract, retain, develop and motivate our human capital in the form of well-qualified employees;
our ability to implement information technology and cybersecurity system enhancements and operational initiatives;
a failure of disruption to our operational or security systems or infrastructure, or those of our third-party service providers;
risks from cyber-attacks, information security breaches, and other similar incidents;
future expansion;
Table of Contents
the availability of attractive acquisition opportunities in the future;
our disclosure controls and procedures not preventing or detecting all errors or acts of fraud;
our accounting policies and processes;
the value of the securities in our investment portfolio;
consumers opting not to use banks to complete their financial transactions; and
our ability to maintain our reputation.
Risks relating to the Regulatory Environment :
the expectations of regulatory agencies exposing the Company to risk as it grows;
government regulations that could limit or restrict our activities;
our obligation to maintain capital to meet regulatory requirements;
periodic examination and scrutiny by a number of banking agencies and any adjustments to our business resulting from such examination;
our obligation to comply with the Bank Secrecy Act and other anti-money laundering statutes and regulations;
our obligation to comply with numerous laws designed to protect consumers, including the CRA and fair lending laws;
increases in FDIC deposit insurance premiums and assessments;
changes to our requirement to commit capital resources to support the Bank;
changes in tax laws, regulations, and interpretations or challenges to our income tax provision; and
complex and evolving laws, regulations, rules, standards, and contractual obligations regarding data privacy and cybersecurity.
Risks relating to our Common Stock :
state law and provisions in our articles of incorporation or bylaws that make it more difficult for another company to purchase us;
shares of our common stock not being insured deposits and losing value;
future capital needs resulting in dilution of shareholder investment;
trading volume in our common stock and the sale of substantial amounts of our common stock in the public market that could depress the price of our common stock;
our ability to pay dividends;
rights of our holders of our junior subordinated debentures that are senior to those of our common shareholders;
volatility of our stock price; and
a small number of our institutional shareholders exercising significant influence over us and having interests that differ from our other shareholders.
Risks relating to Economic Conditions and Other Outside Forces :
changes to the political and economic environment;
changes and instability in global economic conditions and geopolitical matters, including as a result of possible tariffs or other trade disruptions;
a slowdown in economic growth or a resumption of recessionary economic conditions;
the soundness of other financial institutions;
the success of the local economies where we operate;
natural disasters, adverse weather, or manmade events;
physical and financial risks associated with climate change and other weather and natural disaster impacts;
market volatility that could adversely affect our operations or ability to access capital;
competition;
changes in the fiscal and monetary policies of the federal government and its agencies; and
suits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental and self-regulatory agencies.
Table of Contents
Risk Factors
An investment in our common stock is subject to risks inherent in our business. The following discussion highlights the risks that management believes are material for our Company, but do not necessarily include all the risks that we may face. You should carefully consider the risk factors and uncertainties described below and elsewhere in this Annual Report on Form 10-K (“Report”) in evaluating an investment in our common stock.
Risks relating to our Business and Business Strategy
Our business strategy includes continued growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.
We intend to continue to pursue a growth strategy for our business. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in pursuing such growth strategies. Our ability to continue to grow successfully will depend on a variety of factors, including economic conditions in the markets in which we operate as well as in the U.S. and globally; geopolitical factors resulting in tariffs or other trade disruptions, continued availability of desirable business opportunities; our ability to successfully recruit relationship managers and other front line business officers, the competitive responses from other financial and non-financial institution competitors in our market areas; the regulatory environment in which we operate, including risk management, capital and liquidity expectations; our ability to continue to implement and improve our operational, credit, financial, management and other risk controls and processes and our reporting systems and procedures to manage a growing number of client relationships; and our ability to integrate any acquisitions and develop consistent policies throughout our various businesses. While we believe our market areas are among the growth areas in the country, and that we have the management, internal systems, and other resources in place to manage our future growth, there can be no assurance growth will be available, or growth will be managed. In addition, if we are to manage future expansion in our operations, we may experience regulatory, compliance or operational , have to the pace of growth, or have to incur additional expenditures beyond current projections to support such growth, any of which could affect our business. Particularly in light of prevailing economic and competitive conditions, there can be no assurance that we will be to expand our market presence in our existing markets or enter new markets, or that any such expansion will not affect our results of operations. to manage our growth effectively could have a material effect on our business, future prospects, financial condition or results of operations, and could affect our ability to implement our business strategy. Also, if our growth occurs more than anticipated or , our operating results could be materially affected.
We face continued risks related to integration of operations between Independent and the Company.
The Company and Independent undertook the Independent Merger Agreement with the expectation that the Independent Merger would result in various synergies including, among other things, benefits relating to enhanced revenues, a strengthened and expanded market position for the combined organization in Texas, entry into the Colorado market, technology efficiencies, cost savings and operating efficiencies. Achieving the anticipated benefits of the Independent Merger is subject to a number of uncertainties, including whether the Company continues to integrate the institutions and its relationship managers in an effective manner, as well as general competitive factors in the marketplace. Failure to achieve or delays in achieving these anticipated benefits could result in a share price reduction as well as increased costs, decreases in the amount of expected revenues, and diversion of management’s time and energy could materially and adversely affect the Company’s financial condition, results of operations, business and prospects.
Furthermore, while the Independent Merger closed January 1, 2025, and we successfully integrated the systems and people in May 2025, the success of the Merger depends on, among other things, the ability of the Company and Independent to combine their businesses in a manner that facilitates and enhances growth and business opportunities as well as realizes cost savings. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the Independent Merger may not be realized fully, or at all, or may take longer to realize than expected.
Table of Contents
We may not realize the expected benefits from our strategic initiatives, either in whole or in part, which could negatively impact our future profitability.
Our current strategic plan contains growth, investment, risk management and efficiency initiatives in order to create a better and more profitable Company and remain competitive with other bank and non-bank financial services providers. To achieve our strategic goals, we must successfully execute these initiatives. Our current initiatives include, but are not limited to, organically growing our business in our core market and surrounding areas, continuing to grow our middle market and larger corporate banking and correspondent divisions, implementing an AI strategy to be able to adopt appropriate AI capabilities internally and from vendors to enhance our efficiency with appropriate controls in place to maintain accuracy and reduce or eliminate bias; and building upon our digital banking initiatives by continuing to implement digital banking platforms and expanding our payment capabilities, including by being able to act as a reserve and issuer for stablecoins, continuing to enhance our technology and cybersecurity infrastructure and our risk management framework. While we have met our strategic initiatives in the past, there is no guarantee that these initiatives will be in supporting growth or the expected and revenue that we anticipate.
Furthermore, our strategic initiatives may result in an increase in expenses, divert management attention, take away from other opportunities, negatively impact operational effectiveness or impact employee morale. In addition, management expects to continue to make strategic investments in technology and talent that are expected to improve our client experience and support future growth, which will require an increase in our expenditures. There can be no assurance that we will ultimately realize the anticipated benefits of these strategic initiatives, or that these strategic initiatives will not negatively impact our organization. These initiatives may fail to meet our own or our clients’ expectations and may fail to keep pace with bank and non-bank competition and we may realize significant losses as a result.
We may not be able to adequately anticipate and respond to changes in market interest rates.
We may be unable to anticipate changes in market interest rates, which are affected by many factors beyond our control including but not limited to inflation, monetary and fiscal policy, money supply, recessionary pressures, unemployment and other changes that affect domestic and foreign financial markets.
We depend on our net interest income to drive our profitability. Net interest income is the difference between the interest income we receive from interest-earning assets (e.g., loans and investment securities) and the interest expense we pay on interest-bearing liabilities (e.g., deposits and borrowings). Our net interest income is affected by the level and pace of interest rate changes and other developments such as the shape of the yield curve and relationships between interest sensitive instruments and key driver rates, as well as balance sheet growth, customer loan and deposit preferences, competitive dynamics and the timing of changes in these variables. We are exposed to changes in general interest rate levels and other economic factors beyond our control, and an increase in our cost of funds could negatively impact our net interest income. Net interest income will decline in a particular period if:
in a rising or heightened interest rate environment, more interest-bearing liabilities than interest earning assets re-price or mature, or in a declining interest rate environment, more interest earning assets than interest bearing liabilities re-price or mature, or
for acquired loans, expected total cash flows decline as our loan balances decline.
Our net interest income may also decline based on our exposure to a difference in short-term and long-term interest rates. If the difference between the interest rates shrinks or disappears, the difference between rates paid on deposits and received on loans could narrow significantly resulting in a decrease in net interest income. In addition to these factors, if market interest rates rise rapidly, interest rate adjustment caps may limit increases in the interest rates on adjustable rate loans, thus reducing our net interest income. In addition, certain adjustable rate loans reprice based on lagging interest rate indices. This lagging effect may also negatively impact our net interest income when general interest rates continue to rise periodically.
The Federal Reserve’s interest rate changes (whether increases or decreases) have impacted the rates we charge borrowers and depositors and our net interest margin. We cannot predict the nature or timing of future changes in monetary policies or the precise effects that they may have on our activities and financial results.
Table of Contents
In addition, our net interest income may be adversely affected by resurgent inflationary pressures and new global supply chain challenges, fiscal policies, geopolitical matters, including as a result of changes in U.S. presidential administrations or Congress, the implementation of tariffs and other protectionist trade policies, weather events or other developments. While the rate of inflation for 2025 was lower than that experienced earlier in the decade, it continued to exceed the Federal Reserve’s two percent (2%) annual target. There is a risk that inflation may become higher or persist for longer periods of time and not decrease. We increased rates in response to the Federal Reserve’s interest rate increases, and decreased rates in response to Federal Reserve’s interest rate decreases and loan demand has increased over 2025 across our footprint but there is no guarantee that this strong loan demand will continue. As interest rates rise, competition for deposits increased, leading to higher deposit costs and reduced liquidity, and as rates have fallen, deposit costs have been moderating, and liquidity has increased. Any new increase in interest rates to address inflationary pressures or otherwise could result in declines in demand for our banking products and services and could impact, among other things, our liquidity, regulatory capital, goodwill and our growth strategy.
Inflation could negatively impact our business and our profitability.
Continued inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expense related to talent acquisition and retention, and the demand for our products and services. Additionally, inflation may lead to a decrease in consumer and clients purchasing power and negatively affect the need or demand for our products and services. If significant inflation continues, our business could be negatively affected by, among other things, increased default rates leading to credit losses which could decrease our appetite for new credit extensions. These inflationary pressures could also result in missed earnings and budgetary projections.
Our cost of funds may increase as a result of general economic conditions, FDIC insurance assessments, interest rates and competitive pressures.
Our cost of funds may increase as a result of increases in interest rates, competitive pressures, general economic conditions and FDIC insurance assessments. We have traditionally obtained funds principally through local deposits and we have a base of lower cost transaction deposits. Generally, we believe local deposits are a less expensive and more stable source of funds than other borrowings because interest rates paid for local deposits are typically lower than interest rates charged for borrowings from other institutional lenders and reflect a mix of transaction and time deposits, whereas brokered deposits typically are higher cost time deposits. Our costs of funds and our profitability and liquidity are likely to be adversely affected, if and to the extent we have to rely upon higher cost borrowings from other institutional lenders or brokers to fund loan demand or liquidity needs, and changes in our deposit mix and growth could adversely affect our profitability and the ability to expand our loan portfolio.
A decrease in the supply of deposits or significant increase in competition for deposits could result in substantial increases in costs to retain and service deposits. In addition, increased adoption of consumer banking technology can result in reduced deposit stickiness due to the relative ease with which depositors may transfer deposits to a different depository institution in the event that confidence is lost in the Bank. The cost of resolving the bank failures in early 2023 prompted the FDIC to issue a special assessment to recover costs to the Deposit Insurance Fund, and such special assessments may continue to be imposed. Please see Item I – Part 1 – “Supervision and Regulation – FDIC Insurance Assessments and Depositor Preference” for further information.
Table of Contents
The implementation of new lines of business or new products and services may subject us to additional risk.
We continuously evaluate our service offerings and may implement new lines of business or offer new products and services within existing lines of business in new sales channels such as online and mobile banking in the future. There are substantial risks and uncertainties associated with these efforts. In developing and marketing new lines of business and/or new products and services, we undergo a new product process to assess the risks of, and resources needed for, the initiative and invest significant time and resources to build internal controls, policies and procedures to mitigate those risks, including hiring experienced management to oversee the implementation of the initiative. Initial timetables for the introduction and development of new lines of business and/or new products or services and/or new sales channels may not be achieved, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business and/or a new product or service and/or sales channels. Furthermore, any new line of business and/or new product or service could require the establishment of new key and other controls and have a significant impact on our existing system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business and/or new products or services could have a material effect on our business and, in turn, our financial condition and results of operations.
Technological changes, including artificial intelligence and online and mobile banking, have the potential of disrupting our business model, and we may have fewer resources than many competitors to invest in technological improvements.
The financial services industry continues to undergo rapid technological changes with frequent introductions of new technology-driven products and services, including artificial intelligence tools to enhance efficiencies, as well as mobile and online banking services. Changes in customer behaviors have increased the need to offer these options to our customers. The past several years accelerated technological change as our employees and the customers and communities to which we provide products and services converted to remote work, shopping and banking as we experienced supply chain interruptions.
In addition to serving clients better, investments in, and the effective use of, technology, including artificial intelligence, may increase efficiency and may enable financial institutions to reduce costs. We have adopted a formal AI Strategy and are making focused investments in AI tools and automation and other technology solutions to improve both our customer facing and back-office services for internal efficiencies, investments may not be sufficient or provide the anticipated benefits or desired return. We can make no assurance that investments will be sufficient to increase efficiencies, retain existing customers or attract new customers in the future.
Our future success will depend, in part, upon our ability to invest in and use technology to provide products and services that provide convenience to customers and to create additional efficiencies in operations. One of our strategic goals is to continue to focus on technological change and digital transformation of our product and service channels, which will impact how we deliver our products and services in the future as well as make our internal processes more efficient. We need to make significant additional capital investments in technology in the future to achieve this strategic goal, and we may not be able to implement effectively new technology-driven products and services in a timely manner in response to changes in customer behaviors, thus adversely impacting our operations. Many competitors have substantially greater resources to invest in technological improvements than the Company.
Table of Contents
The adoption and use of artificial intelligence tools by us and our third-party vendors and service providers may increase the risk of errors, omissions, unfair treatment or fraudulent behavior by our employees, clients, or counterparties, or other third parties.
Our adoption and use of artificial intelligence, including generative artificial intelligence, machine learning, and similar tools and technologies that collect, aggregate, analyze or generate data or other materials or content (collectively, “AI”), for internal use has increased our efficiency, and we expect to continue to adopt such tools as appropriate, in line with our AI Strategy. In addition, we expect our third-party vendors and service providers to increasingly develop and incorporate AI into their product offerings faster than we are able to do so independently. There are significant and evolving risks involved in utilizing AI, and no assurance can be provided that our or our third-party vendors’ or service providers’ use of AI will enhance our or our third-party vendors’ or service providers’ products or services or produce the intended results. The adoption and incorporation of such AI tools can lead to concerns around safety and soundness, fair access to financial services, fair treatment of consumers, and compliance with applicable laws and regulations. Such risk can result from models being incorrectly or inadequately designed or trained, inadequate model testing or validation, narrow or limited human oversight, planning or due diligence, or data practices by developers or end-users, and other factors affecting public opinion of AI and the acceptance of AI solutions. Further, generative AI has been known to, and may continue to, create biased, , , or -quality output or produce other discriminatory or results, , or , any of which may not be detectable. AI solutions may also be impacted by , technical , cyber-attacks, cybersecurity , service or other similar , or material performance issues. We have implemented an AI governance function and risk management framework that includes a risk assessment of internal and vendor AI solutions, due diligence, model validation, and controls. However, given the pace of rapid adoption of such tools by vendors and service providers, we may not be aware of the addition of AI solutions prior to such tools being introduced into our environment. to manage AI risks can result in results and decisions made by , forms of bias, access to sensitive, confidential, proprietary or personal information, and of applicable laws and regulations, to operational , competitive , reputational , ethical , legal liability, , , and other impacts on our business and financial results. If we do not have sufficient rights to use the data or other material or content on which the AI tools we use rely, or to use the output of such AI tools, we also may incur liability through the of applicable laws and regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party. Further, our competitors or other third parties may incorporate AI into their business or operations more quickly or more than us, which could our ability to compete effectively.
In addition, regulation of AI is rapidly evolving as legislatures and regulators are increasingly focused on these powerful emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, data privacy and cybersecurity, consumer protection, competition, equal opportunity, and fair lending laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations. AI is the subject of ongoing review by various U.S. governmental and regulatory agencies, and various U.S. states are applying, or are considering applying, existing laws and regulations to AI or are considering general legal frameworks for AI. We may not be able to anticipate how to respond to these rapidly evolving frameworks, and we may need to expend resources to adjust our operations or offerings in certain jurisdictions if the legal frameworks are inconsistent across jurisdictions. Furthermore, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all the legal, operational or technological risks that may arise relating to the use of AI. We expect our use of AI will require additional resources, including the incurrence of additional costs, to develop and maintain our products and services to minimize potentially harmful or unintended consequences, to comply with applicable and emerging laws and regulations, to maintain or extend our competitive position, and to address any ethical, reputational, technical, operational, legal, competitive or regulatory issues which may arise as a result of any of the foregoing.
Table of Contents
A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business.
A significant portion of our loan portfolios are secured by real estate. As of December 31, 2025, approximately 78.5% of such loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. There can be no assurance that our local markets will not experience another economic decline. A decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of other financial institutions whose real estate loan portfolios are more geographically diverse. Any weakening of the real estate market may increase the likelihood of default of these loans, which could negatively impact our loan portfolio’s performance and asset quality. Such a determination may lead to an additional increase in our allowance for credit losses, which could also adversely affect our business, financial condition, and results of operations.
Our loan portfolio includes commercial and commercial real estate loans that may have higher risks.
Our commercial industrial, construction and land development and commercial real estate loans at December 31, 2025 and 2024 were $37.2 billion and $24.1 billion, respectively, or 77% and 71%, respectively, of total loans. Commercial and commercial real estate loans generally carry larger loan balances and can involve a greater degree of financial and credit risk than other loans. The increased financial and credit risk associated with these types of loans are a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the size of loan balances, the effects of general economic conditions on income-producing properties and the increased difficulty of evaluating and monitoring these types of loans. Any formal or informal action by our supervisors may require us to take increased reserves on these loans and could affect our share price.
As a result, banking regulators give greater scrutiny to lenders with a high concentration of commercial real estate loans in their portfolios, and such lenders are expected to implement stricter underwriting, internal controls, risk management policies and portfolio stress testing, as well as maintain higher capital levels and loss allowances. Concentrations in commercial real estate are monitored by regulatory agencies and subject to especially heightened scrutiny both on a public and confidential basis. The Guidance states that the following metrics may indicate a concentration of commercial real estate loans, but that these metrics are neither limits nor a safe harbor:
total reported loans for construction, land development, and other land equal 100% or more of total risk-based capital (as of December 31, 2025, our bank ratio was 35.2%); and
total reported loans secured by multifamily and non-farm nonresidential properties and loans for construction, land development, and other land equal 300% or more of total risk-based capital (as of December 31, 2025, our bank ratio was 271.8%).
Regulators may require banks to maintain elevated levels of capital or liquidity due to commercial real estate loan concentrations, and could do so, especially if there is a downturn in our local real estate markets. See Part I Item 1 “Supervision and Regulation – Lending Standards and Guidance” for further details on the Guidance.
Furthermore, the repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate or commercial project. If the cash flows from the project are reduced, a borrower’s ability to repay the loan may be impaired. This cash flow shortage may result in the failure to make loan payments. In such cases, we may be compelled to modify the terms of the loan. In addition, the nature of these loans is such that they are generally less predictable and more difficult to evaluate and monitor. As a result, repayment of these loans may, to a greater extent than residential loans, be subject to adverse conditions in the real estate market or economy.
We are subject to the risk of default by our clients and counterparties.
Many of our transactions expose us to credit risk if counterparties or clients default on their obligations. This risk increases if the collateral cannot be liquidated or is sold at a price insufficient to cover the full loan. When engaging in credit transactions, we rely on representations and information provided by counterparties and clients, such as financial statements, credit reports, and other disclosures. If the information or representations are inaccurate, our ability to assess default risk effectively may be compromised, potentially leading to unfavorable transactions that could impact our financial condition and results of operations.
Table of Contents
If we fail to effectively manage credit risk and interest rate risk, our business and financial condition will suffer.
We must effectively manage credit risk. There are risks inherent in making any loan, including risks with respect to the period of time over which the loan may be repaid, risks relating to proper loan underwriting and guidelines, risks resulting from changes in economic and industry conditions, risks inherent in dealing with individual borrowers and risks resulting from uncertainties as to the future value of collateral. There is no assurance that our credit risk monitoring and loan approval procedures are or will be adequate or will reduce the inherent risks associated with lending. Our credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting customers and the quality of our loan portfolio. Any failure to manage such credit risks may adversely affect our business, financial condition, and results of operations.
We must also effectively manage interest rate risk. Because mortgage loans typically have much longer maturities than deposits or other types of funding, rising interest rates can raise the cost of funding relative to the value of the mortgage loan. We manage this risk in part by holding adjustable rate mortgages in portfolios and through other means. Conversely, the value of our mortgage servicing assets may fall when interest rates fall, as borrowers refinance into lower rate loans. There can be no assurance that we will successfully manage the lending and servicing businesses through all future interest rate environments.
A lack of liquidity and/or ineffective liquidity management practices could affect our operations and jeopardize our financial condition.
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity. Our funding sources include core deposits, federal funds purchased, securities sold under repurchase agreements, non-core deposits, and short- and long-term debt. Other sources of liquidity are available to us should they be needed, including our ability to acquire additional non-core deposits, the issuance and sale of debt securities, a secured line of credit we have with U.S. Bank, advances from the Federal Home Loan Bank of Atlanta and the Federal Reserve Discount Window, and the issuance and sale of preferred or common securities in public or private transactions. Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. Our ability to borrow could be impaired by factors that are not specific to us, such as further disruption in the financial markets or negative views and expectations about the prospects for the financial services industry in light of the recent faced by banking organizations and the continued in credit markets.
Further, effective management of liquidity risk includes, among other practices, establishing liquidity key risk indicators and related risk tolerances, maintaining a portfolio of high-quality liquid assets, building and maintaining loan collateral at the Federal Home Loan Bank of Atlanta and Federal Reserve Discount Window, cash flow forecasting, diversifying funding sources, designing and using stress testing scenarios, and implementing an operational contingency funding plan. Our failure to effectively manage our liquidity risk through one or more of these practices could lead to operational disruptions, financial losses, and reputational damage, resulting in an adverse effect on our business, financial condition, and results of operations.
The results of our most recent stress tests may not accurately predict the impact on our financial condition if the economy were to deteriorate.
We perform capital stress testing on an annual basis using the stress testing assumptions provided by the regulators for the CCAR stress tests. We perform liquidity stress testing and credit stress testing on a quarterly basis. Under the capital stress test, we estimate our loan losses (loan charge-offs), resources available to absorb those losses and any necessary additions to capital that would be required under the “severely adverse” stress test scenario. The results of these stress tests involve many assumptions about the economy and future loan losses and default rates and may not accurately reflect the impact on our financial condition if the economy were to deteriorate. Any of the economy could result in credit significantly higher, with a corresponding impact on our financial condition and capital, than those predicted by our internal test.
Table of Contents
The Current Expected Credit Loss (“CECL”) standard and merger activity may result in increased volatility and further increases in our allowance for credit losses (“ACL”).
The measure of our ACL is dependent on the interpretation of applicable accounting standards, as well as external events, the path of interest rates and inflation, market conditions, including recession risk and the possible impact on the unemployment rate and the performance of our loan portfolio, and other factors including the conflict in Ukraine, the conflicts in the middle east and tensions in the Americas and other geopolitical tensions, performance of the commercial real estate markets, and natural disasters such as hurricanes and flooding or pandemics such as COVID-19. Under the CECL model, we are required to present certain financial assets carried at amortized cost, such as loans held for investment and held to maturity debt securities, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount and certain management judgments over the life of the loan.
The CECL model has resulted in and may continue to result in differences in the impact of forward-looking information and timing of reserve builds and releases from our ACL, as compared to the “incurred loss” standard that we previously applied in determining our ACL. The CECL model requires us to estimate the lifetime “expected credit loss” with respect to loans and other applicable financial assets, which may produce changes of a greater magnitude than the level of “incurred losses” that would have been used to determine our allowance for loan losses under the prior incurred loss standard. The challenges associated with estimated lifetime credit losses in view of the economic aftermath of the COVID-19 pandemic and government fiscal and monetary intervention have resulted in continued forecasting uncertainties that impact the timing and magnitude of changes in our ACL in the future, which could have a material and adverse effect on our business, financial condition and results of operations. The Company’s estimate of its ACL involves a high degree of judgment; therefore, the Company's process for determining expected credit may result in a range of expected credit . It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. Further, if management’s assumptions and judgments prove to be and the allowance for credit is to absorb going forward, or if bank regulatory authorities require us to increase the allowance for credit as a part of their examination process, our earnings and capital could be significantly and affected.
Our size and continued pace of growth may require us to raise additional capital in the future, but that capital may not be available when it is needed.
We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. The Company also may be compelled to raise capital if regulatory or supervisory requirements change and as a result of the acquisition of Independent may face further government scrutiny due to the increased size of the Company’s business. Our ability to raise capital, if needed, in the future to meet capital requirements or otherwise will depend on conditions in the capital markets at that time, which are outside our control, and on our financial performance. Accordingly, there is no assurance as to our ability to raise additional capital if needed on terms acceptable to us. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired.
Our ability to access the capital markets, if needed, will depend on a number of factors, including the state of the financial markets. Rising interest rates, disruptions in financial markets, negative perceptions of our business or our financial strength, or other factors may impact our ability to raise additional capital, if needed, on terms acceptable to us. For example, in the event of future turmoil in the banking industry or other idiosyncratic events, there is no guarantee that the U.S. government will invoke the systemic risk exception, create additional liquidity programs, or take any other action to stabilize the banking industry or provide liquidity. Any diminished ability to access short-term funding or capital markets to raise additional capital, if needed, could subject us to liability, restrict our ability to grow, require us to take actions that would affect our earnings negatively or otherwise affect our business and our ability to implement our business plan, capital plan and strategic goals adversely.
Table of Contents
Our processes for managing risk may not be effective in mitigating risk or losses to us.
The objectives of our risk management program and processes are to mitigate risk and loss to our organization. We have established an enterprise risk framework and program that are intended to identify, measure, monitor, report and analyze the types of risks to which we are subject across the organization and business lines, including liquidity risk, credit risk, strategic risk, market risk, interest rate risk, operational risk (including payments risk, AML/CFT risk, and model risk), cybersecurity risk, corporate governance and legal risk, compliance risk, and strategic risk (including environmental and social risks), among others. We also assess new and emerging risks on our existing programs. However, this framework will evolve as we grow and become more complex. In addition, as with any risk management process, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified. The ongoing developments in the financial services industry continue to highlight both the importance and some of the limitations of managing unanticipated risks. Any potential new regulations or modifications to existing regulations would also likely necessitate changes to our existing regulatory compliance and risk management infrastructure. If our risk management processes prove ineffective, we could and could be materially affected.
Changing mortgage rates and adverse changes in mortgage market conditions could adversely impact our mortgage line of business.
Our mortgage line of business contributes significantly to our results of operations. The residential real estate mortgage lending business is sensitive to changes in interest rates, especially long-term interest rates. As interest rates increased, the demand for mortgages has decreased materially, and our mortgage volume has substantially decreased as well. While we have adjusted our business model in response to these changes in demand, to, among other things, retain a larger portion of our originations on our balance sheet, the portion of our mortgage loans that are originated for our portfolio subjects the Company to increased interest rate risk. Additionally, the fair value of our mortgage servicing rights is sensitive to changes in interest rates and interest rate volatility. Any change in the fair value of our mortgage servicing rights may negatively impact earnings. As a result of these and other factors, our price and profitability targets for this business may not be met, reducing our results of operations in the line of business and our net income. Further, risk in the mortgage business is heightened due to external factors, such as compliance with regulations, historically low housing inventories restraining home sales, competitive alternatives, changing tax rates and strategies, economic conditions, and shifting market preferences, which could impact the profitability of these lines of business and have a material effect on our businesses, and, in turn, our financial condition and results of operations.
Our recent results may not be indicative of our future results.
We may not be able to sustain our historical rate of growth or may not even be able to grow our business at all. In addition, our recent growth may distort some of our historical financial ratios and statistics. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may also impede or prohibit our ability to expand our market presence. If we experience a significant decrease in our historical rate of growth, our results of operations and financial condition may be adversely affected due to a high percentage of our operating costs being fixed expenses.
Table of Contents
We are subject to environmental risks in our lending activities.
Because a significant portion of our loan portfolio is secured by real property, we may foreclose upon and take title to such property in the ordinary course of business. If hazardous substances were discovered on any of these properties, we may be liable to governmental agencies or third parties for the full costs of investigation, remediation, as well as for related personal injury and property damage. Environmental laws might require us to incur substantial expenses, materially reduce the property’s value, or limit our ability to use or sell the property. Although our management has policies requiring environmental reviews before loans secured by real property are made and before foreclosure is commenced, it is still possible that environmental risks might not be detected and that the associated costs might have a material adverse effect on our financial condition and results of operations. Many environmental laws impose strict liability regardless of whether the Company knew of, or was responsible for, the contamination. In addition, banks’ credit and underwriting policies that result in funding fossil fuel projects may impact climate change and lead to increased greenhouse gas emissions. Banks have very limited control over the actions of their clients, and while banks can monitor environmental profiles, information currently available is to assess both environmental risk and the financial risk inherent in making lending decisions. Accordingly, the Bank may be to assess how our lending decisions affect both our risk profile and our .
While we use appraisals in deciding whether to make a loan that is secured by real estate, they do not ensure the value of the real property collateral.
In deciding whether to make a loan secured by real property, we generally require an appraisal. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made. If the appraisal amount does not reflect the amount that may be obtained upon a sale or foreclosure of the property, we may not realize an amount equal to the indebtedness secured by the property.
We are subject to losses due to errors, omissions or fraudulent behavior by our employees, clients, counterparties or other third parties.
We are exposed to many types of operational risk, including the risk of fraud by third parties, customers and employees, clerical recordkeeping errors and transactional errors. Like the financial services industry overall, we have seen an increase in fraudulent attempts on accounts, online transactions, and debit cards during 2025, and these attempts may continue to accelerate with the increased use of artificial intelligence to produce sophisticated malware, phishing schemes, and other fraudulent activities. While (i) our procedures are designed to follow customary, industry-specific security precautions, (ii) we use software to monitor check and online and digital transaction, (iii) we provide employees with ongoing training, table-top exercises and regular communications and guidance to combat fraud, and (iv) we have adopted additional cybersecurity tools and solutions designed to identify fraudulent attempts, our efforts might not be successful in mitigating or reducing fraudulent attempts resulting in financial , increased risk and reputational .
Our business also is dependent on our employees as well as third-party service providers to process a large number of increasingly larger and more complex transactions. These risks will increase as we implement a real-time payments platform. We could be materially and adversely affected if employees, clients, counterparties or other third parties caused an operational breakdown or failure, either as a result of human error, fraudulent manipulation or purposeful damage to any of our operations or systems.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished to us by or on behalf of clients and counterparties, including financial statements and other financial information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to clients, we may assume that a customer’s audited financial statements conform to GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our earnings are significantly affected by our ability to properly originate, underwrite and service loans. Our financial condition and results of operations could be negatively impacted to the extent we incorrectly assess the creditworthiness of our borrowers, fail to detect or respond to deterioration in asset quality in a timely manner, or rely on financial statements that do not comply with GAAP or are materially misleading.
Table of Contents
Our business could suffer if we fail to maintain our culture and attract and retain experienced people.
Our success depends, in large part, on our ability to attract and retain competent, experienced people. Our strategic goals in particular require that we be able to attract qualified and experienced retail, commercial and corporate banking officers, mortgage loan officers, and SBA lenders in our existing markets as well as those markets in which we may want to expand who share our relationship banking philosophy and have those customer relationships that will allow us to grow successfully. We also need to attract and retain qualified and experienced technology, risk and back-office personnel to operate our business. Many of our competitors are pursuing the same relationship banking strategy in our markets and are looking to hire and retain qualified technology, risk and back-office personnel, which increases the competition to identify, hire and retain talented employees.
The Company’s recent mergers and the continued integration of the Company’s operations and employees into one bank creates an additional risk to the Company’s culture. If we fail to consider and account for corporate cultural differences across the companies due to various mergers, we will face increased difficulty in creating a cohesive culture.
We have focused, and will continue to focus, our strategic attention on our employees and our corporate culture, including enhancing our employee orientation, ongoing general credit and management training, leadership training and mentoring, and employee work environment as well as diversity and employee advancement. Our failure to maintain our culture and attractive working environment, through competitive compensation packages that reward initiative, as well as mentoring, training, and advancement opportunities in order to successfully compete for experienced, qualified employees may have an adverse effect on our ability to meet our financial goals and thus adversely affect our future results of operations.
In addition, advances in technology, such as automation and AI, may lead to workforce evolution. This could require the Company to invest in additional employee training, manage impacts on morale and retention, and compete for candidates who possess more advanced technological skills, all of which could have a negative impact on the Company’s businesses and operations.
If we are unable to offer our key management personnel long-term incentive compensation, including restricted stock units and performance share units, as part of their total compensation package, we may have difficulty retaining such personnel, which would adversely affect our operations and financial performance.
We have a management team that has substantial experience in banking and financial services in the markets we serve. We rely on our management team to achieve and sustain our profitability. Our future success and profitability are substantially dependent upon this management and banking abilities of our senior executives. Although we currently have employment agreements in place with our executive management team and our regional presidents, we cannot guarantee that our executives will remain with us. Changes in key personnel and their responsibilities may be disruptive to our business because of their skills, customer relationship and/or the potential difficulty of promptly replacing them with successors.
We have historically granted equity awards under an equity compensation plan, which includes granting performance share units and restricted stock awards or restricted stock units, to key management personnel as part of a competitive compensation package. Our ability to grant these awards has been vital to attracting, retaining and aligning shareholder interest with a talented management team in a highly competitive marketplace.
Shareholder advisory groups have implemented guidelines and issued voting recommendations related to how much equity companies should be able to grant to employees. The factors used to formulate these guidelines and voting recommendations include the volatility of a company’s share price and are influenced by broader macroeconomic conditions that can change year to year. The variables used by shareholder advisory groups to formulate equity plan recommendations may limit our ability to adopt new equity plans in the future. In addition, the federal banking regulators have issued guidance on executive compensation and have also, along with the SEC, proposed rules that would prohibit certain incentive compensation arrangements. We do not believe that the guidance or proposal will impact our current compensation arrangements.
Table of Contents
If we are limited in our ability to grant equity compensation awards, we would need to explore offering other compelling alternatives to supplement our compensation, including long-term cash compensation plans or significantly increased short-term cash compensation, in order to continue to attract and retain key management personnel. If we used these alternatives to long-term equity awards, our compensation costs could increase, and our financial performance could be adversely affected. If we are unable to offer key management personnel long-term incentive compensation, including stock options, restricted stock or restricted stock units, or performance share units, as part of their total compensation package, we may have difficulty attracting and retaining such personnel, which would adversely affect our operations and financial performance.
We rely on the performance of highly skilled personnel and if we are unable to attract, retain, develop and motivate our human capital in the form of well-qualified employees, our business and results of operations could be harmed.
We believe our success has depended, continues to and in the future will depend, on the efforts and talents of our management team and our highly skilled employees and workers. Our future success depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. The loss of any of our senior management or key employees could materially and adversely affect our ability to build on the efforts that they have undertaken and to execute our business plan, and we may not be able to find adequate replacements. Despite our current efforts, we cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we do not succeed in attracting well-qualified employees or developing, retaining, and motivating our employees, our business and results of operations could be harmed.
We may not be able to successfully implement current or future information technology and cybersecurity system enhancements and operational initiatives, which could adversely affect our business operations and profitability.
We continue to invest significant resources in our information technology and cybersecurity systems, including by deepening and expanding our use of cloud-based applications, in order to provide enhanced functionality and security at an appropriate level, improve our operating efficiency, and streamline our client experience. These initiatives significantly increase the complexity of our relationships with third-party service providers, and such relationships may be difficult to unwind. We may not be able to successfully implement and integrate such system enhancements and initiatives, which could adversely impact our ability to enhance our product and service offerings and meet the expectations of our customers. In addition, these projects could have higher than expected costs and/or result in operating inefficiencies, which could increase the costs associated with the implementation as well as ongoing operations. Failure to properly adopt system could result in charges that impact our financial condition and results of operations, could result in significant costs to remediate or replace the components and could impact our ability to compete. In addition, we may incur significant training, licensing, maintenance, consulting and amortization expense during and after implementation, and any such costs may continue for an extended period of time. As such, we cannot guarantee that the anticipated long-term benefits of these system and operational initiatives will be realized.
Table of Contents
A failure of or disruption to our operational or security systems or infrastructure, or those of our third-party service providers, could disrupt our business, damage our reputation, increase our costs and cause losses.
The potential for operational risk exposure exists throughout our business and, as a result of our interactions with, and reliance on, third parties, is not limited to our own internal operational functions. We depend on our ability to process, record and monitor a large number of client transactions on a continuous basis. Further, third parties provide key components of our business infrastructure, such as our core processing, underwriting and servicing software, data collection and analysis, loan and deposit documents, compliance and risk software, product and service offerings, and internet connections and network access. As client, public and regulatory expectations regarding operational, information, and cybersecurity have increased, we and our third-party service providers must continue to safeguard and monitor our operational and security systems and infrastructure for potential failures, threats, disruptions and breakdowns. Our business, financial, accounting, data processing, or other operating systems and facilities, or those of our third-party service providers, may stop operating properly or become disabled or damaged as a result of a number of factors, including events that are wholly or partially beyond our control. Although we have information and cybersecurity policies and procedures, business continuity plans and other safeguards in place, our business operations may be affected by significant and widespread of or to our operational and security systems and infrastructure that support our businesses and clients. Any or in our operational or security systems or infrastructure or the services provided by third parties, or any by us or these third parties to handle current or higher volumes of use, could affect our ability to deliver products and services to our clients, process transactions and otherwise to conduct business.
For example, our financial, accounting, data processing, backup or other operational or security systems or infrastructure, or those of our third-party service providers, may fail to operate properly or become disabled or damaged as a result of a number of factors, including: sudden increases in customer transaction volume; electrical, telecommunications or other major physical infrastructure outages; cyber-attacks, information security breaches or other similar incidents; natural disasters such as earthquakes, tornadoes, hurricanes and floods; pandemics; and events arising from local or larger scale political or social matters, including wars and terrorist acts. In addition, we rely on our employees and third parties in our day-to-day and ongoing operations, who may, as a result of human error, misconduct, malfeasance or failure, expose us to risk. Moreover, technological or financial difficulties of one of our third-party service providers or their sub-contractors could affect our business to the extent those result in the or of services provided by that party. In the event that backup systems are utilized, they may not process data as quickly as our primary systems and some data might not have been saved to backup systems, potentially resulting in a temporary or permanent of such data. Further, our ability to implement backup systems and other safeguards with respect to third-party systems is more limited than with respect to our own systems. Our business recovery plan may not be adequate and may not prevent significant of our operations or substantial . While we have policies and procedures designed to prevent or limit the effect of a to or of the operation of our operational and security systems and infrastructure, there could be no assurance that any such or will not occur or, if they do, that they will be addressed. Any or in the operation of our communications and information systems and networks could or prevent the operation of our customer relationship management, general ledger, deposit, lending or other functions. We frequently update our systems to support our operations and growth and to remain compliant with all applicable laws, rules and regulations. This updating entails significant costs and creates risks associated with implementing new systems and integrating them with existing ones, including business . Implementation and testing of controls related to our computer systems, security monitoring and retaining and training personnel required to operate our systems also entail significant costs.
We may not be insured against all types of losses as a result of disruptions to or failures of our operational and security systems and infrastructure or those of our third-party service providers, and our insurance coverage may not be available on reasonable terms, or at all, or may be inadequate to cover all losses resulting from such disruptions or failures. Disruptions or failures in our business structure or in the structure of one or more of our third-party service providers could interrupt the operations or increase the cost of doing business. The occurrence of any disruptions or failures impacting our or our third-party service providers’ operational or security systems or infrastructure could damage our reputation, result in a of customer business, and us to additional regulatory , civil , and possible financial liability, any of which could have a material effect on our liquidity, financial condition and results of operations.
Table of Contents
We face cybersecurity risks from cyber-attacks, information security breaches and other similar incidents that could result in the disclosure of confidential and other information (including personal information), adversely affect our business or reputation, and create significant legal and financial exposure.
Our computer systems and network infrastructure and those of third parties, on which we are highly dependent, are subject to cybersecurity risks and could be susceptible to cyber-attacks, information security breaches and other similar incidents. Our business relies on the secure processing, transmission, storage, retrieval and other processing of confidential, proprietary, personal and other information in our computer and data management systems and networks, and in the computer and data management systems and networks of third parties. In addition, to access our network, products and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.
We, our customers, regulators and other third parties, including other financial services institutions and companies engaged in data processing, have been subject to, and are likely to continue to be the target of, cyber-attacks, information security breaches, and other similar incidents. These may include hacking, terrorist activities, identity theft, computer viruses, malicious or destructive code, phishing attacks, denial of service attacks, ransomware, improper access by employees or third parties, social engineering, attacks on personal email of employees, or other information security breaches or similar incidents that could result in the unauthorized release, gathering, monitoring, misuse, misappropriation, loss, disclosure or destruction of confidential, proprietary, personal and other information of ours, our employees, our customers or of third parties, our systems or otherwise materially our or our customers’ or other third parties’ network access or business operations. As cyber continue to evolve, we may be required to expend significant additional resources to continue to modify or our protective measures or to and remediate any cyber-attacks, information security , or other similar . efforts to ensure the of our systems and implement controls, processes, policies and other protective measures, we may not be to anticipate or detect all cyber-attacks, information security , or other similar , nor may we be to implement guaranteed preventive measures cyber-attacks, information security , or other similar . Cyber are increasing and rapidly evolving, and we may not be to anticipate or prevent all such attacks and could be held liable for any security or .
Cybersecurity risks for banking organizations have significantly increased in recent years, in part because of the proliferation of new technologies and the use of the internet and telecommunications technologies to conduct financial transactions. For example, cybersecurity risks may increase in the future as we continue to increase our mobile payment and other internet-based product offerings and expand our internal usage of web-based products and applications and as AI tools are increasingly used for purposes of cyber-attacks, information security breaches, and other similar incidents, including for targeted social engineering attacks. In addition, cybersecurity risks have significantly increased in recent years in part due to the increased sophistication and activities of organized crime affiliates, terrorist organizations, hostile foreign governments, disgruntled employees, service providers, activists and other external parties, including those involved in corporate espionage. Even the most advanced internal control environment may be vulnerable to compromise. For example, targeted social engineering attacks and “spear phishing” attacks are becoming more sophisticated and are extremely difficult to prevent. In such an attack, an attacker will attempt to fraudulently induce colleagues, customers or other users of our systems to sensitive information to access to its data or that of its clients. attackers may in penetrating defenses given enough resources, time, and motive. The techniques used by cyber change frequently and may not be recognized until launched or until well after a has occurred.
Table of Contents
The risk of a security breach caused by a cyber-attack at a service provider or by unauthorized service provider access has also increased in recent years. Additionally, the existence of cyber-attacks, information security breaches, or other similar incidents at third-party service providers with access to our confidential, proprietary, personal and other information may not be disclosed to us in a timely manner, and we cannot guarantee that we can obtain adequate or any reimbursement from such third-party service providers in the event we should suffer any disruption, compromise, failure, liability, reputational harm or other cost or expense. While we have processes in place to monitor our third-party service providers’ data and information security safeguards, we do not control such service providers’ day to day operations and a successful cyber-attack, information security breach, or other similar at one or more of such third-party service providers is not within our control. The occurrence of any such cyber-attacks, information security , or other could our reputation, result in a of customer business, and us to additional regulatory , civil , and possible financial liability, any of which could have a material effect on our financial condition and results of operations. Further, due to applicable laws and regulations or contractual obligations, we may be held responsible for system , , or cyber-attacks attributed to such third-party service providers as they relate to the information we share with them.
We also face indirect technology, cybersecurity and operational risks relating to the customers, clients and other third parties with whom we do business or upon whom we rely to facilitate or enable our business activities, including, for example, financial counterparties, regulators, and providers of critical infrastructure such as internet access and electrical power. As a result of increasing consolidation, interdependence and complexity of financial entities and technology systems, a technology failure, cyber-attack, information security breach or other similar incident that significantly degrades, deletes or compromises the systems or data of one or more financial entities could have a material impact on counterparties or other market participants, including us. This consolidation, interconnectivity and complexity increases the risk of operational failure, on both individual and industry-wide bases, as disparate systems need to be integrated, often on an accelerated basis. Any third-party technology failure, cyber-attack, information security breach, or other similar incident could, among other things, affect our ability to effect transactions, service our clients, manage our exposure to risk or expand our business. In addition, we, our employees, and our customers are increasingly transitioning our and their computing infrastructure to cloud-based computing, storage, data processing, networking and other services, which may increase our cybersecurity risk.
Cyber-attacks, information security breaches, and other similar incidents, whether directed at us or third parties, may result in a material loss or have material consequences. Furthermore, the public perception that a cyber-attack on our systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with whom we do business. Hacking or other unauthorized disclosure of personal information and identity theft risks, in particular, could cause serious reputational harm. A successful penetration or circumvention of system security could cause us serious negative consequences, including our loss of customers and business opportunities, significant business disruption to our operations and business, or of our confidential, proprietary, personal or other information and/or that of our customers or other third parties, or to our or our customers’ and/or third parties’ computers or systems, and could result in a of applicable data privacy and cybersecurity laws and other laws, exposure, regulatory , or intervention, of confidence in our security measures, reputational , reimbursement or other compensatory costs and additional compliance costs, and could impact our results of operations, liquidity and financial condition. We may not be insured all types of as a result of cyber-attacks, information security , and other similar , and our insurer may coverage as to any future claim or insurance coverage may not be available on reasonable terms, or at all, or may be to cover all resulting from such .
We experienced a cybersecurity incident in February 2024 involving unauthorized activity in the Company’s systems, which was investigated using a cybersecurity firm and as a result of which we mailed notices to individuals that may have been impacted. A consolidated putative class action is pending against us in Circuit Court in Polk County Florida related to the incident. Although we enhanced our cybersecurity defenses since the incident and to date, and we have not experienced any material losses related to this event, there is no assurance that we will not experience cyber-attacks, information security breaches, or other similar incidents in the future or that we will not suffer material losses from such incidents in the future.
Table of Contents
We may face risks with respect to future expansion.
Our business growth, profitability and market share has been enhanced by us engaging in strategic mergers and acquisitions and de novo branching either within or contiguous to our existing footprint. While we are focused on organic growth strategies in order to capitalize on the growth of our core markets and possible disruption of competitor financial institutions that are undergoing mergers and acquisitions, we e may acquire other financial institutions or parts of financial institutions in the future and engage in lift outs of our banking teams or de novo branching. We may also consider and enter into or acquire new lines of business or offer new products or services, which may also use new sales channels, such as online and mobile banking. As part of our acquisition strategy, we seek companies that are culturally similar to us, have experienced management, and are in markets in which we operate or close to those markets so we can achieve economies of scale.
We expect to continue to evaluate merger and acquisition opportunities that are presented to us in our current and expected markets and conduct due diligence related to those opportunities, as well as negotiate to acquire or merge with other institutions. We may issue equity securities, including common stock and securities convertible into shares of our common stock in connection with future acquisitions. We also may issue debt to finance one or more transactions, including subordinated debt issuances. Generally, acquisitions of financial institutions involve the payment of a premium over book and market values, resulting in dilution of our tangible book value and fully diluted earnings per share, as well as dilution to our existing shareholders. We also face litigation risks with respect to potential mergers and acquisitions, and such litigation is common. We may incur substantial costs to expand, and we can give no assurance such expansion will result in the levels of profits we seek.
Moreover, the standards by which bank and financial institution acquisitions will be evaluated may continue to change as there are changes in presidential administrations and Congress. While the current administration’s policies favors mergers and acquisitions, the Company’s ability to complete future acquisitions thus may depend on factors outside its control, including changes in the presidential administration or in one or both houses of Congress.
There is no assurance that market conditions will favor mergers or the financial feasibility of completing an acquisition, obtaining cost savings and operational efficiencies, or realizing merger synergies upon integration. Failure to achieve or delays in achieving anticipated benefits could result in a share price reduction as well as increased costs, decreases in the amount of expected revenues, and diversion of management’s time and energy and could materially and adversely affect the Company’s financial condition, results of operations, business and prospects. Further, there is no assurance that, following any future mergers or acquisitions, our integration efforts will be successful or our Company, after giving effect to the acquisition, will achieve increased revenues comparable to or better than our historical experience, and failure to realize such expected revenue increases, cost savings, increases in market presence or other benefits could have a material effect on our financial conditions and results of operations.
Attractive acquisition opportunities may not be available to us in the future.
While we seek continued organic growth, we anticipate continuing to evaluate merger and acquisition opportunities presented to us in our core markets, contiguous markets, and beyond. The number of financial institutions headquartered in our market areas in the Southeastern United States and across the country continues to decline through merger and other activity. We expect that other banking and financial services companies, many of which have significantly greater resources, will compete with us to acquire financial services businesses. This competition, as the number of appropriate merger targets decreases, could increase prices for potential acquisitions which could reduce our potential returns, and reduce the attractiveness of these opportunities to us. In addition, acquisitions are subject to various regulatory approvals, and if we fail to receive the appropriate regulatory approvals, we will not be able to consummate an acquisition that we believe is in our best interests. Among other things, our regulators consider our capital, liquidity, profitability, risk management, regulatory and fair lending compliance, including with respect to BSA compliance obligations, consumer protection laws, CRA obligations, and levels of goodwill and intangibles when considering acquisition and expansion proposals. Any acquisition could be dilutive to our earnings and shareholders' equity per share of our common stock.
Table of Contents
We are subject to sustainability, stewardship and governance risks that could adversely affect our reputation and/or our business, operations, and earnings.
Governments, investors, customers, and the general public have been focused on sustainability, stewardship and governance practices and disclosures. For us and others in the financial services industry, this focus extends to the practices and disclosures of customers, counterparties, and service providers with whom we choose to do business. In addition, certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed scores and ratings to evaluate companies based upon sustainability, stewardship and governance metrics, and certain investors integrate these factors into their analysis of the expected risk and return of potential investments. Currently, there are no universal standards for such scores, ratings or analyses, and views are diverse, dynamic, and rapidly changing. Further, because we have multiple stakeholders, often those stakeholders have differing and sometimes conflicting priorities and expectations regarding these issues that must be considered. If we fail or are perceived to fail in meeting our stakeholders’ expectations, or if we take actions in conflict with these expectations, this could lead to loss of business, negative publicity in traditional and social media, or an adverse impact on our ability to attract and retain customers and employees.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports we file or submit with the SEC is accurately accumulated and communicated to management, and recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. We believe that any disclosure controls and procedures or controls and procedures, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the controls systems are met.
These inherent limitations include the reality that judgments and decision making can be faulty, that alternative reasoned judgments can be drawn, and that breakdowns can occur because of a simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an authorized override of the controls. In addition, properly integrating our acquisitions into our disclosure controls and procedures in a timely manner presents challenges. Accordingly, because of the inherent limitations in our controls systems, misstatements due to error or fraud may occur and not be detected, which could result in a material weakness in our internal controls over financial reporting and the restatement of previously filed financial statements.
Our accounting policies and processes are critical to how we report our financial condition and results of operations and require our management to make estimates about matters that are uncertain.
Accounting policies and processes are fundamental to how we record and report our financial condition and results of operations. Some of these policies require the use of estimates and assumptions that may affect the value of our assets or liabilities and financial results. Several of our accounting policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Pursuant to generally accepted accounting principles, we are required to make certain assumptions and estimates in preparing our financial statements, including determining credit loss reserves, reserves related to litigation and the fair value of certain assets and liabilities, among other items. If the assumptions or estimates underlying our financial statements are incorrect, we may experience material losses.
Certain of our financial instruments, including trading assets and liabilities, derivatives, securities, and certain loans, among other items, require a determination of their fair value in order to prepare our financial statements. Where quoted market prices are not available, we may make fair value determinations based on internally developed models or other means which ultimately rely to some degree on management judgment. Some of these and other assets and liabilities may have no direct observable price levels, making their valuation particularly subjective, being based on significant estimation and judgment. In addition, some illiquidity in markets and declines in prices of certain loans and securities may make it more difficult to value certain balance sheet items, which may lead to the possibility that such valuations will be subject to further change or adjustment, it could lead to declines in our earnings.
Table of Contents
The value of securities in our investment portfolio may decline in the future.
As of December 31, 2025, we owned $8.7 billion of investment securities, which included $2.0 billion in held to maturity securities, $6.3 billion in available for sale securities and $353.4 million in other investments. The fair value of our investment securities may be adversely affected by market conditions, including changes in interest rates, and the occurrence of any events adversely affecting the issuer of particular securities in our investments portfolio. For available for sale securities, the unrealized gains and losses are recorded in equity, net of tax, in accumulated other comprehensive income (“AOCI”). The Company has elected to exclude AOCI from its regulatory capital calculations, however, after the failure of a few financial institutions in the first quarter of 2023, many investors are taking into consideration losses in available for sale securities included in AOCI along with losses in held to maturity securities, both of which are not included in our statement of income, in looking at the valuations of financial institutions.
We analyze each available for sale security quarterly on an individual basis to determine if there has been a decline in fair value below the amortized cost basis of the security to determine whether there is a credit loss associated with the decline in fair value. We consider the nature of the collateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets secured with similar collateral among other factors. We use a systematic methodology to determine the ACL for investment securities held to maturity. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the held to maturity portfolio. We consider the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the held to maturity portfolio. Our estimate of the ACL involves a high degree of judgment; therefore, our process for determining expected credit losses my result in a range of expected credit . We monitor the held to maturity portfolio on a quarterly basis to determine whether a valuation account needs to be recorded. Because of changing economic and market conditions affecting issuers, we may be required to recognize expected credit on securities in future periods, which could have a material effect on our business, financial condition or results of operations.
Consumers may decide not to use banks to complete their financial transactions.
Technology and other changes are allowing parties to complete financial transactions that historically have involved banks through alternative methods. For example, consumers can now maintain funds that would have historically been held as bank deposits in brokerage accounts, mutual funds or general purpose reloadable prepaid cards. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.
Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance.
Our reputation is one of the most valuable components of our business. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring, and retaining and providing growth opportunities for employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers, and caring about our customers and employees. If our reputation is negatively affected by the actions of our employees or otherwise, including as a result of a successful cyber-attack, information security breach or other similar incident we experience or any other unauthorized release or loss of customer information (including personal information), our business and, therefore, our operating results, may be materially adversely affected.
Actions by the financial service industry generally or by institutions or individuals in the industry can adversely affect our reputation indirectly by association. The proliferation of social media may increase the likelihood that negative public opinion from any of the real or perceived events in the financial services industry could impact our reputation and business. Negative public opinion could adversely affect the Company’s ability to attract and retain clients and teammates and can result in litigation and regulatory actions. All of these could adversely affect our growth, results of operation, and financial conditions.
Table of Contents
Risks relating to the Regulatory Environment
As the Company grows, the heightened expectations of regulatory agencies may expose us to additional regulatory risk.
Following completion of the Independent Merger, the Company reached $66 billion in assets, requiring the Company to bolster its risk management and governance framework to support a larger company consistent with the OCC’s heightened standards for larger institutions. These standards include established minimum standards for the design and implementation of the risk management framework and increased oversight and credible challenge by the Board of Directors over the Company’s risk profile and risk management practices. While we have been working to meet these heightened standards over the past three years, on December 23, 2025, the OCC approved a Notice of Proposed Rulemaking which would increase the threshold for applying the guidelines from $50 billion to $700 billion. In the event the standard remains in effect for institutions with $50 billion in assets, our existing enterprise risk framework and program may not be easily scalable to meet such heightened standards, thereby requiring lengthy or costly modifications to meet such standards. Further, the Company’s existing workforce may not be sufficient or have the requisite skillset to design, operate and manage the bolstered framework, thereby requiring the Company to expend financial resources to hire and/or train the necessary staff. The Company’s failure to meet such heightened standards, to the extent applicable, may it to regulatory enforcement actions and civil which could have an material impact on the Company’s business, financial condition, operations and reputation and could the Company’s ability to pursue acquisition .
We are subject to extensive regulation that could limit or restrict our activities.
We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various agencies, including the Federal Reserve, the OCC, CFPB, and the FDIC. These laws, regulations, and rules are imposed primarily to protect depositors, the FDIC Deposit Insurance Fund, consumers, and the banking system as a whole. We also are regulated by the SEC and the Financial Industry Regulatory Authority, or FINRA, whose regulations are designed to protect investors. Our compliance with these regulations is costly and potentially restricts certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid and deposits and locations of our offices. We are also subject to capital guidelines established by our regulators, which require us to maintain sufficient capital to support our growth. Regulation of the financial services industry has increased significantly since the global financial crisis. The laws and regulations applicable to the banking industry have been changing and could continue to change at any time. The extent and timing of any regulatory reform, as well as any effect on our business and financial results, are uncertain. Additionally, legislation or regulation may impose unexpected or unintended consequences, the impact of which is difficult to predict. Because government regulation affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could affect our ability to operate .
The Trump Administration’s agenda also includes a heightened focus on immigration reform and the use of sanctions and export controls to support U.S. economic interests. We cannot predict future changes in the applicable laws, regulations and regulatory agency policies, including any changes resulting from changes in the U.S. presidential administration or U.S. Congress, such as with respect to proposed regulations on capital and long-term debt, or the interpretation or implementation of merger policies. Nevertheless, such changes may have a material impact on our business, financial condition and results of operations.
Some of the regulations finalized in the prior administration that are applicable to financial institutions have been modified, rescinded, or withdrawn or are subject to reevaluation, creating further uncertainty. Moreover, political and policy goals of elected and appointed officials may change over time, which could impact the rulemaking, supervision, examination, and enforcement priorities of the federal banking agencies. It is possible the expected changes in law, regulation and policy do not occur or are reversed subsequently, or the regulatory measures that are ultimately enacted deliver significant competitive advantages to financial services that are structured differently or serve different markets than us.
Table of Contents
Regulatory responses in connection with severe market downturns or unforeseen stress events may alter or disrupt our planned future strategies and actions. Adverse developments affecting the overall strength and soundness of other financial institutions, the financial services industry as a whole and the general economic climate and the U.S. Treasury market could have a negative impact on perceptions about the strength and soundness of our business even if we are not subject to the same adverse developments. For example, during 2023, the FDIC took control and was appointed receiver of Silicon Valley Bank, Signature Bank, and First Republic Bank, respectively. The failure of other banks and financial institutions and the measures taken by governments and regulators in response to these events, including increased regulatory scrutiny and heightened supervisory expectations, could impact our business, financial condition and results of operations.
Recent regulatory proposals may increase capital and liquidity risks.
We face the risk of becoming subject to new or more stringent requirements in connection with the introduction of new regulations or modifications of existing regulations, which could require us to hold more capital or liquidity or have other adverse effects on our businesses or profitability. For example, the banking regulators proposed changes to the capital rules intended to bring the U.S. capital rules into conformance with the Basel Framework, which would require banking organizations with assets of $100 billion or more to face significantly increased capital requirements. While the proposed rule may change to apply to organizations larger than $100 billion in assets, it may adversely impact the Company due to general regulatory and investor expectations for the Company and the Bank to hold additional capital or as a result of larger banking organizations making changes in response to the increased capital requirements, which could have a material impact on the Company’s financial results and business mix. Please see Item I – Part 1 – “Supervision and Regulation – Capital Requirements” for further information regarding the capital rule proposal.
We are required to maintain capital to meet regulatory requirements, and if we fail to maintain sufficient capital, whether due to losses, an inability to raise additional capital or otherwise, our financial condition, liquidity and results of operations, as well as our ability to maintain regulatory compliance, would be adversely affected.
The Company and the Bank each must meet regulatory capital requirements and maintain sufficient liquidity. Banking organizations experiencing growth, especially those making acquisitions, are expected to hold additional capital above regulatory minimums. From time to time, the regulators implement changes to these regulatory capital adequacy guidelines. In recent years, these market and regulatory expectations have increased substantially and have resulted in higher and more stringent capital requirements for us and the Bank.
Actions (if necessary) to increase capital may adversely affect us. Our ability to raise additional capital, when and if needed, will depend on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry and market condition, and governmental activities, many of which are outside our control, and on our financial condition and performance. Accordingly, we cannot assure you that we will be able to raise additional capital if needed or on terms acceptable to us. If we fail to meet these capital and other regulatory requirements, our financial condition, liquidity and results of operations would be materially and adversely affected.
Our failure to remain “well capitalized” for bank regulatory purposes could affect customer confidence, our ability to grow, our costs of funds, and FDIC insurance costs, our ability to pay dividends on common stock and make distributions on our trust preferred securities, our ability to make acquisitions, and our business, results of operations and financial condition. Under FDIC rules, if our subsidiary bank ceases to be a “well capitalized” institution for bank regulatory purposes, the interest rates that it pays and its ability to accept brokered deposits may be restricted. At December 31, 2025, we had approximately $4.0 billion of in-market CDARs and Insured Cash Sweep (“ICS”) reciprocal deposits, $1.9 billion of ICS brokered demand deposits, $1.7 billion in wholesale brokered time deposits, $83.6 million of other brokered demand deposits, and approximately $45.9 million of deposits related to our prepaid card business, which are considered brokered deposits for regulatory purposes.
Table of Contents
We are subject to examination and scrutiny by a number of banking agencies and, depending upon the findings and determinations of these agencies, we may be required to make adjustments to our business that could adversely affect us.
The banking agencies regularly conduct examinations of our business, including our compliance with applicable laws and regulations. If, as a result of an examination, a banking agency were to determine that the financial condition, capital resources, asset quality, asset concentration, earning prospects, management, liquidity, sensitivity to market risk, consumer compliance, or other aspects of any of our operations has become unsatisfactory, or that we or our management is in violation of any law or regulation, the agency could take a number or different remedial actions as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to change the asset composition of our portfolio or balance sheet, to assess civil money penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of to depositors, to our deposit insurance. If we become subject to such regulatory actions, our business, results of operations and reputation may be impacted.
The Company and other large banking organizations are becoming subject to increased scrutiny, more intense supervision and regulation, and a higher risk of enforcement action, with increased fines and penalties, which we expect to continue. We expect that our businesses will remain subject to extensive regulation and supervision.
The Bank is subject to the Bank Secrecy Act and other anti-money laundering statutes and regulations, and any deemed deficiency by the Bank with respect to these laws could result in significant liability and have material impact on our business strategy.
The BSA and its implementing regulations require financial institutions to, among other duties, implement and maintain an effective AML/CFT compliance program and file suspicious activity and currency transaction reports when appropriate. The Bank is also subject to scrutiny from OFAC with respect to its compliance with the U.S. economic sanctions laws and regulations, which include, among other things, the prohibition against dealing with, and the need to block or freeze assets of, persons that are the subject of U.S. economic sanctions. Please see Item I – Part 1 – “Supervision and Regulation - Anti-Money Laundering Rules” and Item 1 – Part 1 – “Supervision and Regulation - OFAC Regulation” for further information regarding the Bank’s obligations under the BSA and its implementing regulations and U.S. economic sanctions laws and regulations, respectively.
If the Bank’s policies, procedures, and systems are deemed deficient, or the policies, procedures and systems of the financial institutions that we have already acquired or may acquire in the future are deficient, the Bank could be subject to liability, including fines and regulatory actions, which may include restrictions on its ability to pay dividends and the necessity and ability to obtain regulatory approvals to proceed with certain aspects of its business plan, including acquisition plans. Failure to maintain and implement an effective AML/CFT and/or santions compliance program could also have serious reputational consequences for the Bank. Any of these results could have a material adverse effect on the Bank’s business, financial condition, results of operations, and future prospects.
The Bank is subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to material penalties and other sanctions.
The CRA, the Equal Credit Opportunity Act, the Fair Housing Act, and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The U.S. DOJ and other federal agencies are responsible for enforcing these laws and regulations. A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on the Bank’s business, financial condition, results of operations, and future prospects.
Table of Contents
Higher FDIC deposit insurance premiums and assessments could adversely affect our financial condition.
The FDIC insures deposits at FDIC-insured depository institutions, such as our subsidiary Bank, up to applicable limits. The amount of a particular institution’s deposit insurance assessment is based on that institution’s risk classification under an FDIC risk-based assessment system. The FDIC uses a performance score and loss-severity score to calculate the Bank’s initial FDIC assessment rate. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to its regulators. While our risk management processes are designed to reduce risk by maintaining capital levels and mitigating any supervisory concerns, we may be unable to control the amount of premiums that we are required to pay for FDIC insurance in the event of a new economic downturn and an increase in financial institution failures. For example, we incurred a special assessment of approximately $33.5 million, which includes the special assessment applicable to the deposits assumed from Independent on January, 1, 2025 and subject to the special assessment for the period subsequent to the acquisition date, by the FDIC to help recoup to the Deposit Insurance Fund resulting from bank in 2023. Any future increases in assessments or required prepayments in FDIC insurance premiums may materially affect results of operations, including by reducing our or limiting our ability to pursue business .
The Federal Reserve may require us to commit capital resources to support the Bank.
Applicable law and the Federal Reserve require a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. Under these requirements, in the future, we could be required to provide financial assistance to our Bank if it experiences financial distress.
A capital injection may be required at times when we do not have the resources to provide it, and therefore we may be required to borrow the funds. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of its note obligations. Thus, any borrowing that must be done by any holding company in order to make the required capital injection into a bank is difficult and expensive and will adversely impact the holding company’s cash flows, financial condition, results of operations and prospects.
We could be subject to changes in tax laws, regulations and interpretations or challenges to our income tax provision.
We compute our income tax provision based on enacted tax rates in the jurisdictions in which we operate. Any change in enacted tax laws, rules or regulatory or judicial interpretations, or any change in the pronouncements relating to accounting for income taxes could adversely affect our effective tax rate, tax payments and results of operations. The taxing authorities in the jurisdictions in which we operate may challenge our tax positions, which could increase our effective tax rate and harm our financial position and results of operations. We are subject to audit and review by U.S. federal and state tax authorities. Any adverse outcome of such a review or audit could have a negative effect on our financial position and results of operations. In addition, changes in enacted tax laws, such as adoption of a lower income tax rate in any of the jurisdictions in which we operate, could impact our ability to obtain the future tax benefits represented by our deferred tax assets. In addition, the determination of our provision for income taxes and other liabilities requires significant judgment by management. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and could have a material effect on our financial results in the period or periods for which such determination is made.
Table of Contents
We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability.
We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations relating to the data privacy and cybersecurity of the personal information of customers, employees or others, and any failure to comply with these laws, regulations, rules, standards and contractual obligations could expose us to liability and reputational damage. As new data privacy and cybersecurity-related laws, regulations, rules and standards are implemented, the time and resources needed for us to comply with such laws, regulations, rules and standards as well as our potential liability for non-compliance and reporting obligations in the case of cyber-attacks, information security breaches, or other similar incidents, may significantly increase. Compliance with these laws, regulations, rules and standards may require us to change our policies, procedures and technology for information security and segregation of data, which could, among other things, make us more vulnerable to operational failures and to monetary penalties for breach of such laws, regulations, rules and standards.
For example, we are subject to federal laws, rules, regulations and standards, including the Gramm-Leach-Bliley Act (the “GLBA”), which require financial institutions to, among other things, periodically disclose their privacy policies and practices relating to sharing personal information and enable retail customers to opt out of our ability to share such personal information with unaffiliated third parties under certain circumstances. Such laws and regulations also require financial institutions to implement a comprehensive cybersecurity program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information. An amendment to Regulation S-P, an implementing regulation promulgated under the GLBA, was adopted by the SEC on May 16, 2024 and requires broker-dealers and registered investment advisers to, among other things, adopt and implement an incident response program as part of their formal cybersecurity policies and procedures and report data breaches to affected individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization within 30 days of becoming aware of such breach. The Bank is also subject to rules and regulations issued by the Federal Trade Commission, which regulates unfair or acts or practices, including with respect to data privacy and cybersecurity. Additionally, like other lenders, the Bank uses credit bureau data in its underwriting activities. Use of such data is regulated under the Fair Credit Reporting Act, which also regulates reporting information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates, and using affiliate data for marketing purposes. Similar state laws may impose additional requirements on us and our subsidiaries. The federal government also is considering, and may pass, additional data privacy and cybersecurity legislation, to which we may become subject if passed.
We also are subject to federal regulations that, among other things, require a banking organization to notify its primary federal regulators as soon as possible and within 36 hours after identifying a “computer-security incident” that has materially disrupted or degraded, or the banking organization believes in good faith is reasonably likely to materially disrupt or degrade its business or operations in a manner that would, among other things, jeopardize the viability of its operations, result in customers being unable to access their deposit and other accounts, result in a material loss of revenue, profit or franchise value, or pose a threat to the financial stability of the U.S. financial sector. Additionally, the federal banking regulators, as well as the SEC and related self-regulatory organizations, regularly issue guidance regarding cybersecurity that is intended to enhance cyber risk management among financial institutions.
Data privacy and cybersecurity are also areas of increasing state legislative focus. For example, the CCPA, among other things, gives California residents certain rights with respect to their personal information. Similar laws have been or may be adopted by other states where we do business or from which we collect personal information. In addition, laws in all 50 U.S. states generally require businesses to provide notice under certain circumstances to individuals whose personal information has been disclosed as a result of a data breach.
Certain state laws and regulations may be more stringent, broader in scope, or offer greater individual rights, with respect to personal information than federal or other state laws and regulations, and such laws and regulations may differ from each other, which may complicate compliance efforts and increase compliance costs. Aspects of the CCPA and other federal and state laws and regulations relating to data privacy and cybersecurity, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.
Table of Contents
Further, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy or cybersecurity. Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged to have failed to do so. The publication of our privacy policies and other documentation that provide promises and assurances about data privacy and cybersecurity can subject us to potential federal or state action if they are found to be deceptive, unfair, or misrepresentative of our actual practices. Additional risks could arise in connection with any failure or perceived failure by us, our service providers or other third parties with which we do business to provide adequate disclosure or transparency to our customers about the personal information collected from them and its use, to receive, document or the privacy preferences expressed by our customers, to protect personal information from disclosure, or to maintain proper training on privacy practices for all employees or third parties who have access to personal information in our possession or control.
Any failure or perceived failure by us to comply with our privacy policies, or applicable data privacy and cybersecurity laws, regulations, rules, standards or contractual obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal information, may result in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources, proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgments, awards, penalties, sanctions and costly litigation (including class actions). Any of the foregoing could harm our reputation, our management and technical personnel, increase our costs of doing business, affect the demand for our products and services, and ultimately result in the imposition of liability, any of which could have a material effect on our business, financial condition and results of operations. For further discussion of the data privacy and cybersecurity laws, regulations, rules and standards we are, or may in the future become, subject to, see Part I – Item 1 – “Supervision and Regulation – Data Privacy and Cybersecurity.”
Risks relating to our Common Stock
State law and provisions in our articles of incorporation or bylaws could make it more difficult for another company to purchase us, even though such a purchase may increase shareholder value.
In many cases, shareholders may receive a premium for their shares if we are purchased by another company. State law and our articles of incorporation and bylaws could make it difficult for anyone to purchase us without the approval of our Board of Directors.
Our articles of incorporation provide that a merger, exchange or consolidation of the Company with, or the sale, exchange or lease of all or substantially all of our assets to, any person or entity (referred to herein as a “Fundamental Change”), must be approved by the holders of at least 80% of our outstanding voting stock if the Board of Directors does not recommend a vote in favor of the Fundamental Change. The approval by the holders of at least 80% of our outstanding voting stock is required to amend or repeal these provisions contained in our articles of incorporation. Consequently, a takeover attempt that is not supported by our Board may prove difficult, and shareholders may not realize the highest possible price for their securities. If this 80% vote requirement does not apply because the Board of Directors recommends the transaction, then pursuant to the provisions of the Florida Business Corporation Act, the Fundamental Change generally must be approved by a majority of the votes entitled to be cast with respect thereto.
Shares of our Common Stock are not insured deposits and may lose value.
Shares of our common stock are not savings or deposit accounts and are not insured by the FDIC, or any other agency or private entity. Such shares are subject to investment risk, including the possible loss of some or all of the value of your investment.
Future capital needs could result in dilution of shareholder investment.
Our Board of Directors may determine from time to time that there is a need to obtain additional capital through the issuance of additional shares of our common stock or other securities. These issuances would dilute the ownership interest of our shareholders and may dilute the per share book value of our common stock. New investors also may have rights, preferences and privileges senior to our shareholders which may adversely impact our shareholders.
Table of Contents
The trading volume in our common stock and the sale of substantial amounts of our common stock in the public market could depress the price of our common stock.
We cannot predict the effect, if any, that future sales of our common stock in the market, or availability of shares of our common stock for sale in the market, will have on the market price of our common stock. Our stock price can fluctuate widely in response to a variety of factors. General market fluctuations, industry factors, and general economic and political conditions and events, such as terrorist attacks, economic slowdowns or recessions, interest rate changes, tax rate changes, credit loss trends, or currency fluctuations, also could cause our stock price to decrease regardless of operating results. We therefore can give no assurance that sales of substantial amounts of our common stock in the market, or the potential for large amounts of sales in the market, or any of the other factors discussed above, would not cause the price of our common stock to decline or impair our ability to raise capital through sales of our common stock.
Our ability to pay dividends is limited and we may be unable to pay future dividends.
Our ability to pay dividends is limited by regulatory restrictions and the need to maintain sufficient consolidated capital. The ability of the Bank to pay dividends to us is limited by its obligations to maintain sufficient capital and by other general restrictions on its dividends that are applicable to national banks that are regulated by the OCC. For information on these regulatory restrictions on the right of the Bank to pay dividends to us and on the right of the Company to pay dividends to its shareholders, see Part I - Item 1 – “Supervision and Regulation - Dividend Restrictions.” If we do not satisfy these regulatory requirements, or if the Bank does not have sufficient earnings to make payments to us while maintaining adequate capital levels, we will be unable to pay dividends on our common stock.
Holders of our junior subordinated debentures have rights that are senior to those of our common shareholders.
We have helped support our continued growth through the issuance of, and the acquisition of, through prior mergers, trust preferred securities from special purpose trusts and accompanying junior subordinated debentures. As of December 31, 2025, we had outstanding trust preferred securities and accompanying junior subordinated debentures totaling $171.7 million, net of fair value adjustments. Payments of the principal and interest on these debt instruments are conditionally guaranteed by us. Further, the accompanying junior subordinated debentures we issued to the special purpose trusts are senior to our shares of common stock. As a result, we must make payments on the junior subordinated debentures before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the junior subordinated debentures must be satisfied before any distributions can be made on our common stock. We have the right to defer distributions on our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid on our common stock.
Our stock price may be volatile, which could result in losses to our investors and litigation against us.
Our stock price has been volatile in the past and several factors could cause the price to fluctuate substantially in the future. These factors include but are not limited to: actual or anticipated variations in earnings; changes in analysts’ recommendations or projections; our announcement of developments related to our businesses, operations and stock performance of other companies deemed to be peers; new technology used or services offered by traditional and non-traditional competitors; news reports of trends, concerns, irrational exuberance on the part of investors, and other issues related to the financial services industry. Our stock price may fluctuate significantly in the future, and these fluctuations may be unrelated to our performance. General market declines or market volatility in the future, especially in the financial institutions sector, could adversely affect the price of the Company’s common stock, and the current market price may not be indicative of future market prices.
Stock price volatility may make it more difficult for our investors to resell their common stock when they desire and at prices they find attractive. Moreover, in the past, securities class action lawsuits have been instituted against some companies following periods of volatility in the market price of its securities. We could in the future be the target of similar litigation. Securities litigation could result in substantial costs and divert management’s attention and resources from our normal business.
Table of Contents
At December 31, 2025, a small number of institutional shareholders own a significant portion of our common stock and they may exercise significant influence over us and their interests may be different from our other shareholders.
Based on their 13F forms filed for the year end December 31, 2025, our shareholders include two funds that collectively own approximately 20% of the outstanding shares of our common stock. The top ten institutional owners collectively own approximately 42% of our outstanding shares of common stock, as reported by S&P Global. While the federal banking laws require prior bank regulatory approval if shareholders owning in excess of 9.9% of a financial holding company’s outstanding voting shares desire to act in concert, these institutional owners nonetheless could vote the same way on matters submitted to our shareholders without being deemed to be acting in concert and, if so, could exercise significant influence over us and actions taken by our shareholders. Interests of institutional funds may be different from our other shareholders. Accordingly, given their collective ownership, the funds could have significant influence over whether or not a proposal submitted to our shareholders receives required shareholder approval.
Risks relating to Economic Conditions and other Outside Forces
Changes to the U.S. political and economic environment could adversely affect our business operations and financial condition.
The political and economic environment in the United States and elsewhere has resulted in and will continue to result in some uncertainty. Changing regulatory policies because of the changing political environment, could impact our regulatory and compliance costs and expected revenues, all of which could materially and adversely affect our business, financial condition and operating results. Additionally, financial markets may be adversely affected by fiscal or monetary policies established by central banks and financial regulators, uncertainty concerning government shutdowns, debt ceilings or funding for the government, actual or perceived instability in the U.S. banking system, stricter immigration policies, civil unrest, and the current or anticipated impact of geopolitical instability or conflict, including in the Middle East, Ukraine, Taiwan, and Latin America, as well as terrorism and other geopolitical events.
Further, the change in the U.S. presidential administration and congressional seat turnover following the 2024 election cycle may result in continued increased regulatory uncertainty. Changes in federal policy by the executive branch and regulatory agencies may occur over time through the new presidential administration’s and/or Congress’s policy and personnel changes, which could lead to changes involving the level of oversight and focus on the financial services industry; however, the nature, timing and economic and political effects of such potential changes remain highly uncertain. At this time, it is unclear what laws, regulations and policies may change and whether future changes or uncertainty surrounding future changes will adversely affect our operating environment and therefore our business, financial condition and results of operations.
Changes and instability in global economic conditions and geopolitical matters could have a material adverse effect on our business, financial condition and results of operations.
Our business, financial condition and results of operations have been in the past and may, in the future, be materially affected by global economic conditions and geopolitical matters, including, both directly and indirectly, through the impact on client activity levels. The macroeconomic environment in the United States is susceptible to global events and volatility in the financial markets. Global economic and political developments, such as the conflicts in Ukraine and the Middle East, tensions in the Americas and between America and Europe, and increased global trade and other multinational tensions, including possible tariffs or other trade disruptions; and other global events, have adverse consequences that impact the macroeconomic environment, and these impacts may persist for some time, including disruptions of global supply chains, cross-border migration trends, labor gluts or shortages, increased energy prices, inflationary pressures and higher interest rates. Changes in the global economic and geopolitical environment have resulted in significant adverse effects for many different types of businesses nationwide and in the regions in which we operate, which could impact economic and market conditions for the Company and its clients and counterparties.
Table of Contents
The impacts of the Federal Reserve’s interest rate increases have dampened loan demand, and global events and geopolitical tensions could cause economic disruption which may result in further declines in demand for our banking products and services, and could negatively impact, among other things, our liquidity, regulatory capital, goodwill and our growth strategy. Developments related to the U.S. federal debt ceiling, including the possibility of a government shutdown, default by the U.S. government on its debt obligations, or related credit-rating downgrades, could have adverse effects on the broader economy, disrupt access to capital markets, and contribute to, or worsen, an economic recession. In addition, our net interest margin has increased in 2025 due in part to the impact on our margin from the Independent Merger and in part from decreasing interest rates, which has allowed us to decrease deposit costs while maintaining our loan yields. In addition, increases in our loan pricing impacts our borrowers’ ability to repay existing loans or refinance loans as they become due, which could influence the recognition of credit on loans and securities and increase the allowance for credit , result in additional revenue, cause additional increases in expenses, result in goodwill charges, result in the of other financial and nonfinancial assets, and increase the Company’s cost of capital. Any one or more of these developments could have a material effect on our business, financial condition and results of operations.
A slowdown in economic growth or a resumption of recessionary economic conditions could have an adverse effect on our business in the future.
The economy is subject to worldwide events, such as the COVID-19 pandemic and geopolitical tensions in the Middle East, the Americas, South America, and Europe, as well as domestic events, any or all of which could impact inflationary pressures and interest rates to dampen demand, and these and other political and market developments are affecting and could continue to affect consumer confidence levels and cause adverse changes in loan payment patterns, causing increases in delinquencies and default rates, which may impact our charge-offs and the provision for credit losses. Changes in the financial services industry and the effects of current and future law and regulations that may be imposed in response to future market developments also could negatively affect us by restricting our business operations, including our ability to originate or sell loans, and adversely impact our financial performance.
The soundness of other financial institutions could adversely affect us.
Our ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. Defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and losses of depositor, creditor and counterparty confidence and could lead to losses or defaults by us or by other institutions. We could experience increases in deposits and assets as a result of other banks’ difficulties or failure, which would increase the capital we need to support our growth.
We may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased expenses, including FDIC insurance premiums, and could affect our ability to attract and retain depositors and to borrow or raise capital. For example, during 2023 the FDIC took control and was appointed receiver of Silicon Valley Bank, Signature Bank, and First Republic Bank. In addition, adverse developments with respect to third parties with whom we have important relationships could also negatively impact perceptions about us. These perceptions about us could cause our business to be negatively affected and exacerbate the other risks that we face. The failure of other banks and financial institutions and the measures taken by governments, businesses and other organizations in response to these events could adversely impact the Company’s business, financial condition and results of operations.
Our business is subject to the success of the local economies where we operate.
Our success significantly depends upon the growth in population, income levels, deposits and housing starts in our primary and secondary markets. If the communities in which we operate do not grow or if prevailing economic conditions locally or nationally become challenging, our business may be adversely affected. We are less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies. We cannot give any assurance we will continue to benefit from market growth or favorable economic conditions in our primary market areas if they do occur.
Table of Contents
Natural disasters, adverse weather or manmade events could negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations.
Our current market areas are in Florida, South Carolina, Texas, Georgia, Colorado, North Carolina, Alabama, and Virginia. These regions are susceptible to hurricanes, tropical storms, severe thunderstorms and hail, and related flooding and wind damage as well as blizzards, snowstorms, tornados and other types of strong storms. While no storms impacted our market area or disrupted business in 2025, these types of weather events may increase in frequency or intensity because of changes in weather patterns and other factors including climate change. In addition, many of our customers have incurred, or may in the future incur, significantly higher property and casualty insurance premiums on their properties located in our markets, which may adversely affect real estate sales and values in those markets.
Natural disasters, adverse weather events and manmade events could in the future disrupt our operations, result in damage to properties and negatively affect the local economies in the markets where we operate. We cannot predict whether or to what extent damage that may be caused by future natural disasters, adverse weather events or manmade events will affect our operations or the economies in our current or future market areas. Such events could result in a decline in loan originations, a decline in the value or destruction of properties securing our loans, as well as our own properties, and an increase in delinquencies, bankruptcies, foreclosures or loan losses that could result in a higher level of non-performing assets, net charge-offs, and provision for loan . Our business or results of operations may be affected by these and other effects of future natural , weather events or manmade events.
We are subject to physical and financial risks associated with climate change and other weather and natural disaster impacts.
There continues to be concern over the current and anticipated effects of climate change. These concerns over the anticipated and unanticipated impacts of climate change (including physical risk and transition risk) have led to, and will continue to lead to, governmental efforts to mitigate those impacts. In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions. Although the U.S. is taking steps to withdraw from the Paris Agreement pursuant to President Trump’s Executive Order issued on January 20, 2025, such withdrawal to take effect on January 27, 2026, state legislatures and federal and state regulatory agencies have continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change, each of which may result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes, which may require us to expend significant capital and incur compliance, operating, maintenance and remediation costs. In addition, the methodologies and data used to manage and monitor climate risk continue to evolve. Climate-related data, particularly greenhouse gas emissions for clients and counterparties, remains limited in availability and varies in quality. As a result, it is difficult to predict how climate change may impact our financial condition and operations; however, as a banking organization, the physical effects of climate change on the Bank may present certain unique risks.
The physical risks of climate change include longer-term shifts in climate patterns, such as extreme heat, sea level rise, and more frequent and prolonged drought. Weather events such as flooding, hurricanes and wildfires may increase from longer term climate change. Physical risks may alter the Company’s strategic direction to mitigate certain financial risks. A significant portion of our operations is located in coastal areas in the Southeastern United States, regions that are susceptible to hurricanes, or in areas of the Southern U.S. that are susceptible to tornadoes and other severe weather events including severe droughts, floods, and sea level rise. Any of these, or any other severe weather event, could cause disruption to our operations and could have a material adverse effect on our overall business, results of operations or financial condition. We have taken certain preemptive measures that we believe will mitigate these adverse effects; however, such measures cannot prevent or mitigate the that a earthquake, fire, hurricane, tornado or other weather event could cause to the markets that we serve and any resulting impact on our customers, such as our borrowers’ ability to timely repay their loans, the value of any collateral held by us, supply chains, causing significant property , causing us to incur additional expense or resulting in a of revenue, and affecting the of our deposit base. The and impact of future earthquakes, fires, hurricanes, tornadoes, , sea level rise, floods, hail and snowstorms, and other weather-related events are to predict and may be by global climate change. Such events may also cause reductions in regional and local economic activity that may have an effect on our customers, which could limit our ability to raise and invest capital in these areas and communities, each of which could have a material effect on our financial condition and results of operations.
Table of Contents
Climate change may worsen the frequency and severity of weather events natural disasters such as fires, hurricanes, tornadoes, droughts, sea level rise, floods, hail and snowstorms and other extreme weather-related events that could cause disruption to our business and operations. Chronic results of climate change such as shifting weather patterns could also cause disruption to our business and operations. Climate change may also result in new and/or more stringent regulatory requirements for the Company, which could materially affect the Company’s results of operations by requiring the Company to take costly measures to comply with any new laws or regulations related to climate change that may be forthcoming.
Transition risks of climate change include policy, legal, technology and market changes. Examples of these transition risks include new regulations, shifts in customer behaviors, supply chain disruptions or breakthroughs in technologies that accelerate the transition to a lower carbon economy. Any of these risks may negatively affect certain sectors and borrowers in our loan portfolio, impacting their ability to timely repay their loans or decreasing the value of any collateral held by us. Transition risk resulting from our customers retooling their businesses to transition from reliance on fossil fuels to cleaner energy also may impact the Bank. While loan demand to facilitate that transition may increase, some businesses may not have the financial capacity to make those changes, impacting their ability to timely repay their loans or decreasing the value of any collateral held by us, which may adversely impact our results of operations.
The Company faces potential reputational risks as a result of its practices related to climate change, including as a result of the Company’s direct or indirect involvement in certain industries, as well as any decisions management makes in response to managing climate risk, especially as views on climate-related matters become subject to increased polarization. Further, there is increased scrutiny of climate change-related policies, goals, and disclosures, which could result in litigation and regulatory investigations and actions. We may incur additional costs and require additional resources as we evolve our strategy, practices and related disclosures with respect to these matters. In addition, California has passed climate disclosure laws that are applicable to companies (such as the Company) that have more than $1 billion in annual revenues and operations in California. While the Company has established a corporate stewardship program and a climate risk steering committee and is in the process of determining its Scope 1 and 2 emissions to comply with these laws, these laws will require material investment by the Company to fully implement. Legislative or regulatory change regarding sustainability, stewardship and governance or climate-related risks or disclosures, including inconsistent requirements and uncertainties, could result in loss of revenue or increased credit, compliance, reputational and other risks and costs.
Market volatility could adversely affect our operations or ability to access capital.
The capital and credit markets have experienced volatility and disruption from time to time during the past several years. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuers’ underlying financial condition or performance. If these periodic market disruptions and volatility continue or worsen, we may experience adverse effects, which may be material, on our ability to maintain or access capital and on our business, financial condition and results of operations.
Competition from financial institutions and other financial service providers may adversely affect our profitability.
The banking business is highly competitive and we experience competition in our markets from many other financial institutions. We compete with commercial banks, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other super-regional, national and international financial institutions and fintech or e-commerce companies that operate in our primary market areas and elsewhere. Some of these competitors may have a long history of successful operation in our markets, greater ties to local businesses and more expansive banking relationships, as well as better established depositor bases. Competitors with greater resources or more advanced technology may possess an advantage by being capable of maintaining numerous and more convenient banking locations, easy to use and available mobile and computer apps or Internet platforms, operating more ATMs and conducting extensive promotional and advertising campaigns.
Table of Contents
In addition, fintechs and other technology-driven platforms are expanding their presence, offering a wide variety of products and services that challenge traditional banking models. The growing experimentation with and adoption of technologies such as artificial intelligence, quantum computing, blockchain, stablecoins, and other digital currencies—including the potential issuance, acceptance, and integration of central bank digital currencies—have the potential to fundamentally reshape the financial services landscape. Developments in the regulatory landscape relating to emerging technologies, such as the enactment and implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (“GENIUS Act”) and potential enactment of the Digital Asset Market Clarity Act of 2025 (“CLARITY Act”) or similar market structure legislation, may affect our clients’ needs and expectations for products and services. Failure to keep pace with technological advancements may adversely affect our competitive position, diminish customer satisfaction, and reduce the accessibility and relevance of our products and services.
We compete with these institutions both in attracting deposits and in making loans. In addition, we have to attract our customer base from other existing financial institutions and from new residents. Many of our competitors are well-established, larger financial institutions and credit unions. While we believe we can and do successfully compete with these other financial institutions in our primary markets, we may face a competitive disadvantage as a result of our smaller size, lack of geographic diversification, sophisticated online or mobile applications, and inability to spread our marketing costs across a broader market. Although we compete by concentrating our marketing efforts in our primary markets with local advertisements, personal contacts, and greater flexibility and responsiveness in working with local customers, we can give no assurance this strategy will be successful.
The fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings.
The Federal Reserve regulates the supply of money and credit in the U.S. as its policies determine in large part the cost of funds for lending and investing and return earned on those loans and investments, both of which affect our net interest margin. They can also materially decrease the value of financial assets we hold. Federal Reserve policies also can adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans, or could result in volatile markets and rapid declining collateral values. Changes in Federal Reserve policies are beyond our control and difficult to predict. Accordingly, the impact of these changes on our activities and results of operations is difficult to predict.
We are or may become involved from time to time in suits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences.
Many aspects of the banking business involve a substantial risk of legal liability. The Company and the Bank have been named or threatened to be named as defendants in various lawsuits arising from our business activities (and in some cases from the activities of companies that we have acquired). In addition, from time to time, we are, or may become, the subject of information-gathering requests, reviews, investigations and proceedings, and other forms of regulatory inquiry, including by bank regulatory agencies, the SEC, self-regulatory organizations and law enforcement authorities. The results of such proceedings could lead to significant civil or criminal penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way the Company and the Bank conduct their business, or reputational harm.
Item 1B. Unresolved Staff Comments .
None.
Table of Contents
Item 1C. Cybersecurity
Cybersecurity risk management is an integral part of our overall enterprise risk management system. We have a cross-departmental approach to identifying, assessing, and managing cybersecurity risk, including input from employees and our Board of Directors (the “Board”). The Board and its Risk Committee and Audit Committee (respectively, the “Risk Committee” and the “Audit Committee”), as well as senior management in, among other areas, the information security, information technology, operations, and risk management (including enterprise and operational risk) areas, devote significant resources to cybersecurity and risk management processes to adapt to the changing cybersecurity landscape and to identify and respond to cybersecurity threats and incidents in a timely and effective manner. Our cybersecurity risk management program leverages the National Institute of Standards and Technology (NIST) framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover. We regularly assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, identification, and remediation. Our information technology and information security areas review enterprise risk management-level cybersecurity risks continually, and key cybersecurity risks are incorporated into the Company’s Enterprise Risk Management Framework that supports its Risk Appetite Statement. In addition, we have a set of Company-wide policies and procedures concerning cybersecurity matters, such as policies related to encryption standards, antivirus protection, remote access, multifactor authentication, confidential information, and the use of the internet, social media, email and wireless devices. These policies go through an internal review process and are approved by appropriate members of management. On an annual basis, the Board approves the Company’s Information Security Policy and Program which provides a layered approach to cybersecurity, and includes administrative, technical, and physical safeguards designed to protect the security, confidentiality, and of customer information in accordance with applicable law.
The Company’s Chief Information Security Officer (“ CISO ”) is responsible for developing and implementing our information security program and reporting on cybersecurity matters to the Company’s Chief Risk Officer (“CRO”), who oversees and supervises the risk function, including the information security, compliance, legal, operational (which includes business continuity, model risk, and third party risk functions) and enterprise risk areas. Our CISO has over 20 years of experience in information technology leadership, eight years of which is experience in leading information security oversight, and others on our information security team have various information security degrees and certifications within applicable disciplines. Our CISO receives reports from our information security team on a regular basis and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents.
Our information security team regularly monitors alerts and meets to discuss threat levels, trends and remediation. The team also regularly collects data on cybersecurity threats and risk areas and conducts an annual risk assessment. Further, we conduct periodic external and internal control validations to assess our processes and procedures and the threat landscape, and we maintain a vulnerability management program designed to identify vulnerabilities and coordinate remediation efforts for any identified vulnerabilities in the environment. We regularly test defenses by performing simulations and drills at both a technical level (including through penetration tests) and by reviewing our operational policies and procedures with third-party experts. These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, customers, employees, and vendors. Results of these ongoing activities are reported quarterly to management through the Cyber and Information Technology Steering Committee. In addition, we periodically perform simulations and tabletop exercises at the management level and incorporate external resources and advisors as needed. All employees are required to complete information security training at least once every year, and we require employees in certain roles to complete additional role-based, specialized cybersecurity trainings.
We have continued to expand investments in information security and cybersecurity, including providing additional end-user training, using layered defenses, identifying and protecting critical assets, strengthening monitoring and alerting, and engaging third-party cybersecurity experts. For example, in response to the Bank’s engagement with a third-party cybersecurity consultant to conduct a review of the Company’s information security and cybersecurity program in relation to overall threat trends and specific factors affecting the Bank’s cyber risk profile, the Bank established a three-year program to enhance and mature its cybersecurity program. The Bank is in the third year of its program to enhance and mature its cybersecurity defenses. The Company also maintains cybersecurity insurance provided by carriers that can provide additional technical, legal, and consultation services in the event of a security event that requires additional staff or expertise, including attorneys, forensic accountants, and public relations professionals, among others.
Table of Contents
In addition to assessing our own cybersecurity preparedness, we also identify, evaluate and manage cybersecurity risks associated with use of third-party vendors and service providers . Our third-party risk function conducts an annual review of third-party hosted applications with a specific focus on any sensitive data shared with third parties. Our information security area regularly reviews third-party vendors and service providers, including their System and Organization Controls (SOC) 1 or SOC 2 report. If a third-party vendor or service provider is not able to provide a SOC 1 or SOC 2 report, we take additional steps to assess its cybersecurity preparedness and assess our relationship on that basis. The frequency and granularity of our review of third-party vendors and service providers is based on an assigned risk rating for each third-party vendor and service provider. Our assessment of risks associated with use of third-party vendors and service providers is part of our overall cybersecurity risk management framework.
The Board has ultimate oversight responsibility for the Company’s risk management and recognizes the importance of protecting the data provided by the Company’s customers and employees and devotes considerable time and attention to overseeing the strategies the Company employs to protect our data and systems and to mitigate against cybersecurity risk. A cybersecurity expert chairs the Risk Committee and provides technology-related insight and guidance to the Company. As part of the Risk Committee’s responsibility for monitoring key business and regulatory risks, the Risk Committee receives from both our Chief Information Officer and CISO quarterly reports and materials which include a review of cybersecurity and information technology key risk indicators, test results and related remediation, and any recent cybersecurity threats or incidents and how the Company is managing those threats or incidents. The Risk Committee also periodically reviews reports on the threat environment, vulnerability assessments, results of penetration testing, and potential cybersecurity and data privacy incidents, as well as information on ongoing employee training relating to data privacy and cybersecurity and how to protect data cyber . Further, on a quarterly basis, our CRO presents to the Risk Committee updates from our Director of Enterprise and Operational Management on the Company’s business continuity program, which covers, among other things, and and recovery and business continuity testing. The Risk Committee also approves the annual risk assessment required by the Gramm-Leach-Bliley Act. Moreover, the CISO follows a risk-based escalation process to notify the Risk Committee outside of the cycle of regular updates when management has identified an emerging risk or material issue related to cybersecurity. The Risk Committee also reports material cybersecurity risks to the full Board, based on our CISO’s assessment of risk. In addition, the Audit Committee reviews reports of the Company’s internal audit department’s periodic audits of our information security area and various components thereof .
We face a number of cybersecurity risks in connection with our business and we have, from time to time, experienced threats to and incidents involving our data and systems. For more information about the cybersecurity risks we face, see the risk factors captioned “ We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability ” and “ We face cybersecurity risks from cyber-attacks, information security breaches and other similar incidents that could result in the disclosure of confidential and other information (including personal information), adversely affect our business or reputation, and create significant legal and financial exposure. ” In Item 1A- Risk Factors.
Item 2. Properties .
Our corporate headquarters are located in a branch located at 1101 First Street South, Suite 202, Winter Haven, Florida 33880. As of December 31, 2025, our bank owns 108 properties and leases 299 properties, most of which are used as branch locations, mortgage loan production offices, wealth management offices or operations centers in Florida, South Carolina, Texas, Georgia, Colorado, North Carolina, Alabama, Virginia, and Tennessee. We also operate a correspondent banking and capital markets division within our national bank subsidiary, of which the majority of its bond salesmen, traders and operational personnel are housed in facilities located in Georgia, Alabama, Tennessee, and California. In addition, we lease some space in South Carolina, Texas, Colorado, North Carolina, and California related to the correspondent banking and capital markets division and occupy a space in Tennessee related to SouthState Securities. Although the properties owned and leased are generally considered adequate, we have a continuing program of modernization, expansion, and when necessary, occasional replacement of facilities. For additional information relating to the Company’s premises, equipment and lease commitments, see accompanying Note 6—Premises and Equipment and Note 19—Leases to our audited consolidated financial statements.
Table of Contents
On January 1, 2025, the Company acquired all of the outstanding common stock of Independent, a Texas corporation, in a stock transaction. Upon the closing of the merger, the Company acquired Independent’s 92 branch locations, which are located in Texas and Colorado.
In addition, on January 8, 2025, the Bank entered into an agreement for the purchase and sale of real property with entities affiliated with Blue Owl Real Estate Capital LLC, providing for the sale to entities affiliated with Blue Owl of certain bank branch properties owned and operated by the Bank. The branch properties are located in Florida, South Carolina, Georgia, North Carolina, Alabama, and Virginia. Under the sale agreement, the Bank, concurrently with the closing of the sale of the branches, entered into triple net lease agreements with entities affiliated with Blue Owl, pursuant to which the Bank will lease each of the branches. The Company completed the sale-leaseback transaction on February 28, 2025.
For additional information relating to the Company’s acquisition of Independent and the sale-leaseback agreement with entities affiliated with Blue Owl, see accompanying with Note 2—Mergers and Acquisitions and Note 19—Leases to our audited consolidated financial statements.
Item 3. Legal Proceedings .
We or our Bank subsidiary is periodically a party to or otherwise involved in legal proceedings arising in the normal course of business, such as claims to enforce liens, claims involving the making and servicing of real property loans, and other issues incident to our products and services and our businesses. We do not believe any pending or threatened legal proceedings in the ordinary course against the Bank would have a material adverse effect on our consolidated results of operations or consolidated financial position.
Item 4. Mine Safety Disclosures .
Not applicable.
Table of Contents
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of February 19, 2026, we had issued and outstanding 98,068,647 shares of common stock which were held by approximately 6,400 registered shareholders. Our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SSB.”
The table below describes historical information regarding our common stock for the last five fiscal years:
Stock Performance
Dividends per share
Dividend payout ratio
Dividend yield (based on the average of the high and low for the year)
Price/earnings ratio (based on year‑end stock price and diluted earnings per share)
Price/book ratio (end of year)
Common Stock Statistics
Stock price ranges:
High
Low
Close
Volume traded on exchanges
As a percentage of average shares outstanding
Earnings per share, basic
Earnings per share, diluted
Book value per share
Quarterly Common Stock Price Ranges and Dividends
The table below describes the high and low trading price and dividends paid on our common stock for each quarterly period within the two most recent fiscal years.
Year Ended December 31,
Quarter
High
Low
Dividend
High
Low
Dividend
Dividends
We intend to continue to pay comparable quarterly cash dividends on our common stock, subject to approval by our Board of Directors, although we may elect not to pay dividends or to change the amount of such dividends. The payment of dividends is a decision by our Board of Directors based upon then-existing circumstances, including our rate of growth, profitability, financial condition, existing and anticipated capital requirements, the amount of funds legally available for the payment of cash dividends, regulatory constraints and such other factors as the Board of Directors determines relevant.
The Company is a legal entity separate and distinct from the Bank. Federal Reserve policy places certain restrictions on our ability pay dividends to our shareholders and Federal bank regulators have also placed restrictions on the Bank’s ability to transfer funds to SouthState in the form of cash dividends. These restrictions are described under Part I - Item 1 – “Supervision and Regulation – Dividend Restrictions .”
Table of Contents
We pay cash dividends to our shareholders from our assets, which are provided primarily by dividends paid to SouthState by our Bank. Certain restrictions exist regarding the ability of the Bank to transfer funds to SouthState in the form of cash dividends, loans or advances, as described under Part I - Item 1 – “Supervision and Regulation – Dividend Restrictions .” Federal bank regulators have stated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current earnings. The approval of the OCC is required if the total of all dividends declared by the Bank in any calendar year exceeds the total of its net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus. During 2025, the Bank paid dividends to SouthState totaling $485.0 million. We used these funds primarily to pay dividends to shareholders of approximately $230.2 million and buyback shares of common stock on the open market of $224.1 million during 2025.
Stock Performance Graph
The following stock performance graph compares SouthState’s cumulative total shareholder return on our common stock over the most recent five-year period with the NYSE Composite and the KBW NASDAQ Regional Bank Index, an index that comprises performance of U.S. companies that do business as regional banks or thrifts. The stock performance graph assumes $100 was invested in our common stock and the above indexes on December 31, 2020. The cumulative total return on each investment assumed the reinvestment of dividends.
Period Ending
SouthState Bank Corporation
NYSE Composite Index
KBW NASDAQ Regional Bank Index
Table of Contents
Repurchases of Equity Securities
On February 11, 2025, the Company's 2025 stock repurchase program (the “2025 Repurchase Program”) became effective . The 2025 Repurchase Program authorized the Company to repurchase up to 3,000,000 shares, or up to approximately three percent, of the Company’s outstanding shares of common stock as of January 2, 2025. During 2025, the Company repurchased 2,440,000 shares at a weighted average price of $91.85 per share pursuant to the 2025 Stock Repurchase Program. As of December 31, 2025, there was a total of 560,000 shares remaining authorized to be repurchased .
The Board approved a new share repurchase program in January 2026 allowing management to repurchase up to 5,560,000 or approximately 5% of outstanding shares over the next two years (“2026 Repurchase Plan”). As part of that approval, the 2025 Repurchase Program was cancelled and the remaining 560,000 shares under that plan was added to the 2026 Repurchase Plan.
Shares of common stock under the 2026 Stock Repurchase Plan may be repurchased periodically in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The actual means and timing of any repurchases, target number of shares and prices or range of prices under the 2026 Stock Repurchase Plan may be determined by us in our discretion and depend on a number of factors, including the market price of our common stock, share issuances under our equity plans, general market and economic conditions, and applicable legal and regulatory requirements .
The following table reflects our share repurchase activity during the fourth quarter of 2025:
(d) Maximum
(c) Total
Number (or
Number of
Approximate
Shares (or
Dollar Value) of
Units)
Shares (or
(a) Total
Purchased as
Units) that May
Number of
Part of Publicly
Yet Be
Shares (or
(b) Average
Announced
Purchased
Units)
Price Paid per
Plans or
Under the Plans
Period
Purchased
Share (or Unit)
Programs
or Programs
October 1 ‑ October 31
November 1 ‑ November 30
December 1 ‑ December 31
Total
During the three months ended December 31, 2025, monthly totals include 315 shares, 415 shares and 1,604 shares, respectively, that were repurchased under arrangements, authorized by our stock based compensation plans and Board of Directors, whereby officers or directors may sell previously owned shares to SouthState in order to pay for the exercises of stock options or for income taxes owed on vesting shares of restricted stock. These shares were not repurchased under the 2025 Stock Repurchase Program.
Item 6. Selected Financial Data .
Pursuant to the November 2020 Amendments, we elect to provide disclosures consistent with the amendments to Regulation S-K, Item 301, which eliminate the requirement to provide selected financial data in comparative tabular form for each of the last five fiscal years.
Table of Contents
Item 7. Management’s Discussion and Analysi s of Financial Condition and Results of Operations.
Forward-Looking Statements
Statements included in this Report, which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements are based on, among other things, management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, and the economy. Words and phrases such as “may,” “approximately,” “continue,” “should,” “expects,” “projects,” “anticipates,” “is likely,” “look ahead,” “look forward,” “believes,” “will,” “intends,” “estimates,” “strategy,” “plan,” “could,” “potential,” “possible” and variations of such words and similar expressions are intended to identify such forward-looking statements. We caution readers that forward-looking statements are subject to certain risks, uncertainties and assumptions that are difficult to predict with regard to, among other things, timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions, include, among others, those risks listed under “Summary of Risk Factors” starting on page 22 of this Report.
For any forward-looking statements made in this Report or in any documents incorporated by reference into this Report, we claim the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. All forward-looking statements speak only as of the date they are made and are based on information available at that time. We do not undertake any obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. All subsequent written and oral forward-looking statements by us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.
Additional information with respect to factors that may cause actual results to differ materially from those contemplated by our forward looking statements may also be included in other reports that we file with the SEC. We caution that the foregoing list of risk factors is not exclusive and not to place undue reliance on forward looking statements.
Introduction
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes SouthState Bank Corporation and its subsidiary’s results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024, and also analyzes our financial condition as of December 31, 2025 as compared to December 31, 2024. Like most banking institutions, we derive most of our income from interest we receive on our loans and investments. Our primary source of funds for making these loans and investments is our deposits, on most of which we pay interest. Consequently, one of the key measures of our success is the amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on our interest- bearing liabilities, such as deposits. Another key measure is the spread between the yield we earn on these interest-earning assets and the rate we pay on our interest-bearing liabilities or the net interest margin.
There are risks inherent in all loans, so we maintain an allowance for credit losses to absorb our estimate of probable losses on existing loans that may become uncollectible. We establish and maintain this allowance by recording a provision or recovery for credit losses against our earnings. In the following section, we have included a detailed discussion of this process.
In addition to earning interest on our loans and investments, we earn income through fees and other services we charge to our customers. We incur costs in addition to interest expense on deposits and other borrowings, the largest of which is salaries and employee benefits. We describe the various components of this noninterest income and noninterest expense in the following discussion.
Table of Contents
The following section also identifies significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements. We encourage you to read this discussion and analysis in conjunction with the financial statements and the related notes and the other information included in this Report.
Overview
SouthState Bank Corporation is a financial holding company headquartered in Winter Haven, Florida. During the third quarter of 2025, the Company was redomiciled to the state of Florida by merging SouthState Corporation, a South Carolina corporation, with and into SouthState Bank Corporation, a Florida corporation that was wholly-owned by SouthState Corporation prior to such merger, and adopting its name. We provide a wide range of banking services and products to our customers through our Bank. The Bank operates SouthState Securities, a registered broker-dealer headquartered in Memphis, Tennessee that serves primarily institutional clients across the U.S. in the fixed income business. The Bank also operates SouthState PCM, Inc., a wholly-owned registered investment advisor. The Bank, through its Corporate Billing Division, provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers nationwide. The Bank operates SSB First Street Corporation, an investment subsidiary headquartered in Wilmington, Delaware, to hold tax-exempt municipal investment securities as part of the Bank’s investment portfolio. The holding company also owns SSB Insurance Corp., a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code.
At December 31, 2025, we had $67.2 billion in assets and 6,317 full- time equivalent employees. Through our Bank branches, ATMs and online banking platforms, we provide our customers with a wide range of financial products and services, through an eight (8) state footprint in Florida, South Carolina, Texas, Georgia, Colorado, North Carolina, Alabama, and Virginia. These financial products and services include deposit accounts such as checking accounts, savings and time deposits of various types, safe deposit boxes, bank money orders, wire transfer and ACH services, brokerage services and alternative investment products such as annuities and mutual funds, trust and asset management services, loans of all types, including business loans, agriculture loans, real estate-secured (mortgage) loans, personal use loans, home improvement loans, automobile loans, manufactured housing loans, boat loans, credit cards, letters of credit, home equity lines of credit, treasury management services, and merchant services.
We also operate a correspondent banking and capital markets division within our national bank subsidiary, of which the majority of its bond salesmen, traders and operational personnel are housed in facilities located in Atlanta, Georgia, Birmingham, Alabama, Memphis, Tennessee, and Walnut Creek, California. This division’s primary revenue generating activities are related to its capital markets division, which includes commissions earned on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities; and its correspondent banking division, which includes spread income earned on correspondent bank deposits (i.e., federal funds purchased) and correspondent bank checking account deposits and fees from safe-keeping activities, bond accounting services for correspondents, asset/liability consulting related activities, international wires, and other clearing and corporate checking account services.
We earned net income of $798.7 million, or $7.87 diluted earnings per share (“EPS”), during 2025 compared to net income of $534.8 million, or $6.97 diluted EPS, in 2024. Net income available to the common shareholders was up $263.9 million, or 49.3%, in 2025 compared to 2024. For further discussion of the Company’s results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024, see Results of Operations section of this MD&A starting on page 65.
At December 31, 2025, we had total assets of approximately $67.2 billion compared to approximately $46.4 billion at December 31, 2024. See the Financial Condition section of this MD&A starting on page 73 for a more detailed description of the change in our balance sheet.
Table of Contents
Our overall asset quality results remained strong during the year. Net charge-offs as a percentage of average loans increased to 0.23% for the year ended December 31, 2025 compared to 0.06% for the year ended December 31, 2024. Net charge-offs, excluding acquisition date charge-offs recorded for PCD loans acquired from Independent of $56.7 million, to total average loans, during the year ended December 31, 2025 were 0.11%. The increase in charge-offs excluding acquisition date charge-offs on PCD loans acquired from Independent in 2025 was mainly due to one commercial and industrial charge-off recorded in the third quarter of 2025 of $21.5 million. If this individual charge-off was also excluded, net charge-offs as a percentage of average loans would have been 0.07% for the year 2025, a 0.01% increase compared to the year ended December 31, 2024. The total nonperforming assets (“NPAs”) increased by $97.9 million to $311.3 million at December 31, 2025 from $213.4 million at December 31, 2024. Non-acquired NPAs increased $23.8 million to $170.2 million at December 31, 2025 from $146.5 million at December 31, 2024, which was related to an increase in non-acquired nonperforming loans of $19.7 million. Non-acquired OREO and other NPAs increased by $4.1 million to $5.3 million as of December 31, 2025 compared to $1.2 million as of December 31, 2024. Acquired NPAs increased $74.1 to $141.0 million at December 31, 2025 from $66.9 million at December 31, 2024. Acquired nonperforming loans increased $71.8 million and acquired OREO and other assets increased $2.3 million. Total NPAs as a percentage of total assets remained flat at 0.46% at December 31, 2025 and December 31, 2024. We continue to experience solid and asset quality numbers and ratios in 2025.
Our efficiency ratio was 53.1% for the year ended December 31, 2025 compared to 56.9% for the same period in 2024. The improvement of our efficiency ratio was due to the result of a 56.1% increase in the total of tax-equivalent net interest income and noninterest income being greater than a 45.7% increase in noninterest expense, excluding amortization of intangibles. The overall increase in both tax-equivalent net interest income and noninterest income and noninterest expense was due to the acquisition of Independent in 2025. The higher increase in tax-equivalent net interest income and noninterest income was due to the $1.1 billion increase in interest income related to loans held for investment, which was mainly attributable to loans acquired in the acquisition of Independent in 2025.
We continue to remain well-capitalized with a total risk-based capital ratio of 13.8% and a Tier 1 leverage ratio of 9.3%, as of December 31, 2025, compared to 15.0% and 10.0%, respectively, at December 31, 2024. The decline in the capital ratios was mainly due to the effects on capital and assets from the acquisition of Independent. Total risk-based capital increased with the increase in equity resulting from the issuance of shares of common stock for the Independent acquisition, the net income recognized during 2025, along with the increase in the allowance for credit losses and unfunded commitments includable in Tier 2 capital. Total risk-weighted assets increased $15.8 billion, or 43.7%, in 2025. The decline in the Tier 1 leverage ratio was due to the increase in average assets resulting from the acquisition of Independent . Regulatory average assets used to calculate the Tier 1 leverage ratio increased $18.3 billion, or 40.4%, in 2025. We believe our current capital ratios position us well to grow both organically and through certain strategic opportunities. For further discussion of the Company’s financial condition as of December 31, 2025 compared to December 31, 2024, see Financial Condition section of this MD&A starting on page 73.
Recent Events
Capital Management
On January 11, 2026, the Board of Directors of the Company approved the 2026 Repurchase Plan authorizing the Company to repurchase up to 5,560,000 shares of the Company’s common stock. This 2026 Repurchase Plan authorization replaces the Company’s pre-existing authorization approved in January 2025, under which 560,000 shares remained available for repurchase, and which was cancelled in connection with the Board’s approval of the 2026 Repurchase Plan. See accompanying with Note 31—Subsequent Events to our audited consolidated financial statements.
Table of Contents
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared based on the application of accounting policies in accordance with generally accepted accounting principles (“GAAP”) and follow general practices within the banking industry. Our financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues and expenses. Differences in the application of these policies could result in material changes in our consolidated financial position and consolidated results of operations and related disclosures. Understanding our accounting policies is fundamental to understanding our consolidated financial position and consolidated results of operations. Accordingly, our significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in Note 1—Summary of Significant Accounting Policies of our audited consolidated financial statements.
The following is a summary of our critical accounting policies that are highly dependent on estimates, assumptions and judgments.
Business Combinations
We account for acquisitions under FASB ASC Topic 805, Business Combinations , which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, and liabilities assumed, are recorded at fair value. This includes intangible assets identified as a result of the acquisition. ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires us to record purchased financial assets with credit deterioration (PCD assets), defined as a more-than-insignificant deterioration in credit quality since origination or issuance, at the purchase price plus the allowance for credit losses expected at the time of acquisition. Under this method, there is no provision for credit losses affecting net income on acquired PCD assets. Changes in estimates of expected credit losses after acquisition are recognized as provision for credit loss expense (or recovery of credit losses) in subsequent periods as they arise. Any non-credit discount or premium resulting from acquiring a pool of purchased financial assets with credit shall be allocated to each individual asset. At the acquisition date, the initial allowance for credit determined on a collective basis shall be allocated to individual assets to appropriately allocate any non-credit discount or premium. The non-credit discount or premium, after the adjustment for the allowance for credit , shall be accreted into interest income using the interest method based on the interest rate determined after the adjustment for credit at the adoption date.
A purchased financial asset that does not qualify as a PCD asset is accounted for similar to an originated financial asset. Generally, this means that an entity recognizes the allowance for credit losses for non-PCD assets through net income at the time of acquisition. In addition, both the credit discount and non-credit discount or premium resulting from acquiring a pool of purchased financial assets that do not qualify as PCD assets shall be allocated to each individual asset. This combined discount or premium shall be accreted into interest income using the effective yield method.
For further discussion of our loan accounting and acquisitions, see Note 1—Summary of Significant Accounting Policies, Note 2—Mergers and Acquisitions, Note 4—Loans and Note 5—Allowance for Credit Losses to the audited consolidated financial statements.
Allowance for Credit Losses or ACL
The ACL reflects management’s estimate of the portion of the amortized cost of loans and unfunded commitments that it does not expect to collect. Management has a methodology determining its ACL for loans held for investment and certain off-balance-sheet credit exposures. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. The Company’s ACL recorded on the balance sheet reflects management’s best estimate within the range of expected credit losses. The Company recognizes in net income the amount needed to adjust the ACL for management’s current estimate of expected credit losses. See Note 1—Summary of Significant Accounting Policies for further detailed descriptions of our estimation process and methodology related to the ACL. See also Note 5—Allowance for Credit Losses and “Provision for Credit ” in this MD&A.
Table of Contents
One of the most significant judgments influencing the ACL is the macroeconomic forecasts from the third-party service provider. Changes in the economic forecasts may significantly affect the estimated credit losses which may potentially lead to materially different quantitatively modeled allowance levels from one reporting period to the next. Given the dynamic relationship between macroeconomic variables, it is difficult to estimate the impact of a change in any one individual variable on the ACL. SouthState uses a third-party service provider to support the economic forecast assumptions under CECL forecast by providing various levels of economic scenarios. These scenarios are weighted in accordance with management assessment of scenarios as well as expectations of the general market and industry conditions. To illustrate the sensitivity of these scenarios, if a 100% probability weighting was applied to the adverse scenario rather than using the probability-weighted three scenario approach, this would result in an increase in the ACL by approximately $208 million. Conversely, if a 100% probability weighting was applied to the upside scenario, this would result in a decrease in the ACL by approximately $122 million. The adverse scenario includes assumptions including, but not limited to, rising unemployment consistent with a recession, high levels of inflation and consumer and business spending, elevated interest rates, credit, widening Federal , and geopolitical and trade tensions. Conversely, the upside scenario includes assumptions such as a domestic economy, swift resolution of international and global economy, more than full employment, reduced political tensions, and other assumptions. This sensitivity analysis and related impact on the ACL is a hypothetical analysis and is not intended to represent management’s judgments at December 31, 2025.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed in a business combination. As of December 31, 2025 and 2024, the balance of goodwill was $3.1 billion and $1.9 billion, respectively. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.
Under the ASU Topic 350, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on the difference. The impairment charge will be limited to the amount of goodwill allocated to the reporting unit. An entity is able to perform an optional qualitative goodwill impairment assessment before proceeding to the quantitative step of determining whether the reporting unit’s carrying amount exceeds its fair value.
We evaluated the carrying value of goodwill as of October 31, 2025, our annual test date, and determined that more likely than not that no impairment charge was necessary as the fair value of the entity exceeded the carrying value. We will continue to monitor the impact of current economic conditions and other events on the Company’s business, operating results, cash flows and financial condition. If the current economic conditions and other events were to deteriorate and our stock price falls below current levels, we will have to reevaluate the impact on our financial condition and potential impairment of goodwill.
Core deposit intangibles and client list intangibles consist primarily of amortizing assets established during the acquisition of other banks. This includes whole bank acquisitions and the acquisition of certain assets and liabilities from other financial institutions. Core deposit intangibles represent the estimated value of long-term deposit relationships acquired in these transactions. Client list intangibles represent the value of long-term client relationships for the correspondent banking and wealth and trust management business. These costs are amortized over the estimated useful lives, such as deposit accounts in the case of core deposit intangible, on a method that we believe reasonably approximates the anticipated benefit stream from this intangible. The estimated useful lives are periodically reviewed for reasonableness.
Table of Contents
Income Taxes and Deferred Tax Assets
Income taxes are provided for the tax effects of the transactions reported in our consolidated financial statements and consist of taxes currently due plus deferred taxes related to differences between the tax basis and accounting basis of certain assets and liabilities. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. The Company determines the realization of deferred tax assets by considering all positive and negative evidence available, including the impact of recent operating results, future reversals of taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards and tax planning strategies. Determining whether deferred tax assets are realizable is subjective and requires the use of significant judgment. A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax asset will not be realized. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The Company and its subsidiaries file a consolidated federal income tax return. Additionally, income tax returns are filed by the Company or its subsidiaries in various state and local jurisdictions based on the Company’s footprint. The tax laws and regulations in each jurisdiction are complex and may be subject to different interpretations by the Company and the relevant taxing authorities. Therefore, the Company is required to exercise judgment in determining tax accruals and evaluating the Company’s tax positions, including evaluating uncertain tax positions. See Note 1 —Summary of Significant Accounting Policies and Note 11—Income Taxes to the consolidated financial statements for further details and discussion.
Recent Accounting Standards and Pronouncements
For information relating to recent accounting standards and pronouncements, see Note 1—Summary of Significant Accounting Policies to our audited consolidated financial statements entitled “Summary of Significant Accounting Policies.”
Results of Operations
Consolidated net income available to common shareholders increased by $263.9 million, or 49.3%, to $798.7 million for the year ended December 31, 2025, compared to $534.8 million for the year ended December 31, 2024. Below are key highlights of our results of operations during 2025:
A $1.2 billion increase in interest income, resulting from a $1.1 billion increase in interest income from loans and loans held for sale, a $108.3 million increase in interest income from investment securities, and a $54.1 million increase in interest income on federal funds sold, securities purchased under agreement to resell and interest-bearing deposits (See Net Interest Income section on page 66 for further discussion);
A $350.3 million increase in interest expense primarily resulted from a $323.2 million increase in interest expense from deposits and a $36.4 million increase in interest expense from subordinated debentures. These increases were partially offset by a $9.3 million decrease in interest expense from other borrowings (See Net Interest Income section on page 66 for further discussion);
A $103.8 million increase in the provision for credit losses, as the Company recorded a provision for credit losses of $119.8 million in 2025 compared to $16.0 million in 2024. During 2025, we reported a higher provision for credit losses as the Company recorded the initial provision for credit losses of $80.0 million and $12.1 million on the Independent non-PCD loans portfolio and unfunded commitments, respectively;
A $75.5 million increase in noninterest income, which resulted primarily due to an increase in correspondent banking and capital market income of $39.4 million, an increase in trust and investment services income of $12.7 million and an increase in fees on deposit accounts of $22.2 million (See Noninterest Income section on page 69 for further discussion);
A $519.6 million increase in noninterest expense, resulted primarily from a $191.0 million increase in salaries and employee benefits expense, a $97.6 million increase in merger, branch consolidation, severance-related and other expense, a $72.3 million increase in amortization expense of intangible assets, and a $70.3 million increase in occupancy expense (See Noninterest Expense section on page 71 for further discussion);
Table of Contents
Higher income tax provision of $76.1 million primarily due to the change in pre-tax book income between the two years. The Company recorded pre-tax book income of $1.0 billion in 2025 compared to pre-tax book income of $700.2 million in 2024. The Company’s effective tax rate was 23.22% for the year ended December 31, 2025 compared to 23.63% for the year ended December 31, 2024;
Basic earnings per common share increased 12.7% to $7.90 in 2025, from $7.01 in 2024;
Diluted earnings per common share increased 12.9% to $7.87 in 2025, from $6.97 in 2024;
Return on average assets was 1.22% in 2025, an increase compared to 1.17% in 2024. The increase in 2025 compared to 2024 resulted from net income growing at a faster rate than average total assets, with net income increasing by $263.9 million, or 49.3%, to $798.7 million while total average assets increasing $19.6 billion, or 43.0%, to $65.2 billion in 2025;
Return on average common shareholders’ equity decreased to 9.13% in 2025, compared to 9.41% in 2024, and increased in 2024 from 9.37% in 2023. The decrease in 2025 compared to 2024 was due to the growth in average common shareholders’ equity of 53.9% being greater than the increase in net income of 49.3%; and
Our dividend payout ratio was 28.82% for 2025 compared with 30.22% in 2024 and 31.34% in 2023. The decrease in the dividend payout ratio in 2025 compared to 2024 was due to the increase in net income available to common shareholders of 49.3%, or $263.9 million, exceeding the increase in total dividends paid during 2025 of 42.5%, or $68.6 million. The increase in dividends paid was due to the increase in outstanding common shares in 2025 resulting from the issuance of 24.9 million shares of common stock for the acquisition of Independent in the first quarter of 2025, along with the Company increasing its dividend per share from $0.54 to $0.60 in the third quarter of 2025.
Net Interest Income
Net interest income is the largest component of our net income. Net interest income is the difference between income earned on interest- earning assets and interest paid on deposits and borrowings. Net interest income is determined by the yields earned on interest-earning assets, rates paid on interest-bearing liabilities, the relative balances of interest-earning assets and interest-bearing liabilities, the degree of mismatch, and the maturity and repricing characteristics of interest-earning assets and interest- bearing liabilities. Net interest income divided by average interest-earning assets represents our net interest margin.
The Federal Reserve implemented total rate cuts of 175 basis-point, beginning with a 50 basis-point reduction in mid-September 2024. This was followed by five additional cuts of 25 basis-point each, one in early November 2024, one in mid-December 2024, one in late October 2025, and the latest one in December 2025. These rate cuts came after a series of rate hikes that began in March 2022, resulting in a target range of 3.50% to 3.75% at December 31, 2025 . As a result, the Company operated in a comparatively lower rate environment in 2025 compared to 2024.
2025 compared to 2024
Net interest income and net interest margin are highlighted for the year ended December 31, 2025, compared to 2024:
The non-tax equivalent and the Tax Equivalent (“TE”) net interest margin increased by 51 basis points and 52 basis points, respectively, in 2025 compared to 2024. The net interest margin increased primarily due to a 60-basis point rise in the yield on interest earning assets, while the cost of interest-bearing liabilities remained stable.
Overall, our yield on interest-earning assets in 2025 increased 60 basis points to 5.78% from 2024, primarily due to higher yields on investments securities and loans held for investment. The yield on investment securities increased due to the investment portfolio restructuring completed in the first quarter of 2025. The yield on loans increased primarily due to loan accretion recognized during 2025 of approximately $258.6 million, which was mainly attributable to the loan portfolio acquired from Independent. In addition, the average balance of the higher yielding acquired loans increased by $10.8 billion and the average balance of investment securities increased by $1.3 billion, mainly due to balances acquired from Independent, while the average balance of non-acquired loans increased by $3.5 billion.
Table of Contents
The average cost of interest-bearing liabilities in 2025 compared to 2024 slightly increased by 2 basis points to 2.61%. The average cost of corporate and subordinated debentures increased by 134 basis points, primarily driven by higher interest expense incurred resulting from a $419.9 million increase in average balances. The increase in average balances includes the assumption of $360.5 million in corporate and subordinated debentures in connection with the Independent acquisition, as well as the issuance of $350.0 million in aggregate principal amount of subordinated notes during the second quarter of 2025. These increases were partially offset by the redemption of $405.0 million of subordinated debentures that occurred during the latter half of the third quarter of 2025. The cost increase was offset by lower costs associated with other borrowings, federal funds purchased, securities sold with agreements to repurchase, and decreases across all deposit categories, reflecting the comparatively lower rate environment. The average cost of other borrowings was 4.40% for the year 2025. This compares to a cost of 5.55% for the year 2024. The Company had no other borrowings outstanding as of December 31, 2025 and 2024. The average cost of federal funds purchased, securities sold with agreements to repurchase decreased by 96 basis points and 7 basis points, respectively, despite increases of $56.5 million and $22.6 million, respectively, in average balances. Our overall cost of funds, including noninterest-bearing deposits, was 1.96% for the year 2025, compared to 1.88% for the year 2024 .
Our net interest income increased by $887.9 million, or 62.7%, to $2.3 billion during 2025 compared to 2024, as our interest income increased $1.2 billion while interest expense increased $350.3 million.
Our interest income increased by $1.2 billion led by higher acquired loan interest income of $867.8 million due to a higher average balance of $10.8 billion, and a higher yield of 126 basis points. Interest income on non-acquired loans increased $195.8 million due to an increase in the average balance of $3.5 billion. Interest income on investment securities increased by $108.3 million due to higher average balance of $1.3 billion and a higher yield of 89 basis points. Interest income on federal funds sold and repurchase agreements increased by $54.1 million due to higher average balance of $1.4 billion. Interest income on loans held for sale increased by $12.1 million due to a higher average balance of $162.1 million and a higher yield of 46 basis points.
Our interest expense increased by $350.3 million in 2025 compared to 2024, due primarily to an increase in interest expense on interest-bearing deposits of $323.2 million. The increase in interest expense on interest-bearing deposit was attributable to an increase in the average balances of $12.9 billion primarily as a result of the balances assumed from the Independent acquisition. Interest expense on corporate and subordinated debentures and securities sold with agreements to repurchase increased by $36.4 million and $260,000, respectively, due to increases in the average balances of $419.9 million and $22.6 million, respectively. During 2025, we recorded lower interest expense related to other borrowings of $9.3 million due to a decrease in the average balance of $164.5 million. Interest expense on federal funds purchased was lower by $287,000 despite an increase in the average balance of $56.5 million, reflecting the comparatively lower rate environment.
Average interest-earning assets increased by $17.2 billion, or 41.5%, to $58.5 billion in 2025 compared to 2024.
The increase in the average balance on the acquired loan portfolio of $10.8 billion was due to the loans acquired in the Independent acquisition, offset by paydowns, pay-offs and renewals of acquired loans that are moved to our non-acquired loan portfolio.
The increase in the average balance on non-acquired loan portfolio of $3.5 billion was due to organic growth and renewals of matured acquired loans that are moved to our non-acquired loan portfolio.
The average balance on federal funds sold, securities purchased under agreements to resell and other interest earning deposits increased by $1.4 billion.
The average balance in investment securities increased by $1.3 billion. The increase in average was primarily due to the Company acquiring $1.6 billion in investment securities through the acquisition of Independent. These securities were subsequently sold during the first quarter of 2025 with the proceeds reinvested into purchases of new securities that fit the Company’s investment strategy. The increase in investment securities related to the Independent acquisition was partially offset by maturities, calls and paydowns on available for sale and held to maturity securities.
The increase in the average balance of loans held for sale of $162.1 million was primarily due to the SBA loans purchased from third-party originators. The Company began purchasing and pooling the guaranteed portion of SBA loans during the third quarter of 2024.
Table of Contents
Average interest-bearing liabilities increased by $13.3 billion, or 47.4%, to $41.3 billion in 2025 compared to 2024.
The average balance of interest-bearing deposits increased by $12.9 billion mainly due to $12.0 billion of interest-bearing deposits assumed from Independent in the first quarter of 2025. Money market, transaction, time deposit, and savings accounts’ average balances increased by $4.9 billion, $4.7 billion, $2.9 billion, and $391.3 million, respectively.
The average balance of federal funds purchased increased by $56.5 million and repurchase agreements increased by $22.6 million.
The average balance of corporate and subordinated debentures increased by $419.9 million. The increase in average balances includes the assumption of $360.5 million in corporate and subordinated debentures in connection with the Independent acquisition, as well as the issuance of $350.0 million in aggregate principal amount of subordinated notes during the second quarter of 2025. These increases were partially offset by the redemption of $405.0 million of subordinated debentures that occurred during the latter half of the third quarter of 2025.
The average balance of other borrowings decreased by $164.5 million. The Company utilized short-term borrowings from the FHLB, FRB Discount Window, AFX and US Bank line of credit throughout 2025, mostly in early 2025. In 2024, the Company utilized FHLB advances until the third quarter of 2024, as deposits markets became more competitive. All of the outstanding balance was subsequently paid off, with no outstanding balances as of December 31, 2025 and 2024.
Table 1—Yields on Average Interest-Earning Assets and Rates on Average Interest-Bearing Liabilities
Year Ended December 31,
Interest
Average
Interest
Average
Interest
Average
Average
Earned/
Yield/
Average
Earned/
Yield/
Average
Earned/
Yield/
(Dollars in thousands)
Balance
Paid
Rate
Balance
Paid
Rate
Balance
Paid
Rate
Assets
Interest‑earning assets:
Non‑acquired loans, net of unearned income (1)
Acquired loans, net
Loans held for sale
Investment securities (2) :
Taxable
Tax‑exempt
Federal funds sold, securities purchased under agreement to resell and interest-earning deposits with banks
Total interest‑earning assets
Noninterest‑earning assets:
Cash and due from banks
Other assets
Allowance for credit losses
Total noninterest‑earning assets
Total assets
Liabilities
Interest‑bearing liabilities:
Deposits
Transaction and money market accounts
Savings deposits
Certificates and other time deposits
Federal funds purchased
Securities sold with agreements to repurchase
Corporate and subordinated debentures
Other borrowings
Total interest‑bearing liabilities
Noninterest‑bearing liabilities:
Noninterest‑bearing deposits
Other liabilities
Total noninterest‑bearing liabilities
Shareholders’ equity
Total noninterest‑bearing liabilities and shareholders’ equity
Total liabilities and shareholders’ equity
Net interest spread
Net interest income and margin (non‑taxable equivalent)
TEFRA (included in net interest margin, tax equivalent)
Net interest income and margin (taxable equivalent)
Total Deposit Cost (without corporate and subordinated debentures and other borrowings)
Overall Cost of Funds (including interest-bearing deposits)
Nonaccrual loans are included in the above analysis.
Investment securities (taxable and tax-exempt) include trading securities.
Table of Contents
Table 2—Volume and Rate Variance Analysis
2025 Compared to 2024
2024 Compared to 2023
Increase (Decrease) due to
Increase (Decrease) due to
(Dollars in thousands)
Volume (1)
Rate (1)
Total
Volume (1)
Rate (1)
Total
Interest income on:
Non‑acquired loans, net of unearned income (2)
Acquired loans (2)
Loans held for sale
Investment securities:
Taxable
Tax exempt (3)
Federal funds sold and securities purchased under agreements to resell and time deposits
Total interest income
Interest expense on:
Deposits
Transaction and money market accounts
Savings deposits
Certificates and other time deposits
Federal funds purchased
Securities sold under agreements to repurchase
Other borrowings
Total interest expense
Net interest income
The rate/volume variance for each category has been allocated on the same basis between rate and volumes.
Nonaccrual loans are included in the above analysis.
Tax exempt income is not presented on a taxable-equivalent basis in the above analysis.
Noninterest Income and Expense
Noninterest income provides us with additional revenues that are significant sources of income. In 2025, 2024, and 2023, noninterest income comprised 14.1%, 17.6%, and 16.5%, respectively, of total net interest income and noninterest income.
Table 3—Noninterest Income for the Three Years
Year Ended December 31,
(Dollars in thousands)
Service charges on deposit accounts
Debit, prepaid, ATM and merchant card related income
Mortgage banking income
Trust and investment services income
Correspondent banking and capital markets income
Securities (losses) gain, net
Gain on sale-leaseback, net of transaction costs
SBA income
Bank owned life insurance income
Other
Total noninterest income
2025 compared to 2024
Our noninterest income increased by $75.5 million, or 25.0%, for the year ended December 31, 2025 compared to 2024. This change in total noninterest income resulted from the following:
Service charges on deposit accounts were higher in 2025 by $11.4 million, or 12.5%, compared to 2024. The increase was mainly attributable to deposit accounts assumed from Independent. Account maintenance fees increased by $8.7 million and retail service charges increased by approximately $2.3 million in 2025 compared to 2024.
Debit, prepaid, ATM and merchant card related income increased by $10.8 million, or 24.1%, in 2025 compared to 2024. The increase in debit, ATM, prepaid and merchant card related income was mainly attributable to higher bank card and ATM related fee income $7.7 million and higher card and ATM system expense of $3.1 million.
Table of Contents
Mortgage banking income increased by $4.2 million, or 21.2%, which comprised of a $2.7 million, or 18.5%, increase in secondary market mortgage income and a $1.5 million, or 28.7%, increase in mortgage servicing related income. Mortgage production increased from $1.9 billion in 2024 to $2.5 billion in 2025 with relatively lower mortgage rates in 2025 compared to the same period in 2024. During 2025, we sold 37% of our mortgage production to the secondary market versus 58% in 2024.
Mortgage income from the secondary market increased by $2.7 million between the comparable periods resulting from a $5.5 million increase in gain on sale of mortgage loans, which is net of the commission expense related to mortgage production, offset primarily by decreases in the fair value of MBS forward trades of $1.9 million. Mortgage commission expense was $7.6 million during 2025 compared to $11.3 million during 2024.
The mortgage servicing related income, net of the hedge, increased by $1.5 million in 2025. The increase was mainly due to a $1.4 million increase in the change in fair value of the MSR, including decay. The increase in fair value of the MSR between the comparable periods was primarily due to an increase from gains/losses on the MSR hedge of $10.2 million, offset by a decrease in the change in fair value from interest rates of $9.0 million.
Trust and investment services income increased by $12.7 million, or 28.0%, in 2025 compared to 2024, as assets under management have increased by $66.1 million, or 0.6%, in that same time frame. The trust and investment services income increased during 2025, primarily due to higher asset values and the addition of new clients through wealth management services provided by Private Capital Management LLC (“PCM”), which became the Bank’s wholly owned subsidiary through the Company’s acquisition of Independent during 2025. Effective December 31, 2025, PCM and SouthState Advisory, Inc., both wholly-owned registered investment advisors of the Bank, merged and now operate under the name SouthState PCM.
Correspondent banking and capital markets income increased by $39.4 million, or 120.7%, from 2024. The increase was primarily related to an increase of $15.8 million in income generated from the sale of customer swap ARC hedges during 2025 compared to 2024, resulting from the comparatively lower interest rates in 2025. The increase was also due to lower expense attributable to the variation margin payments for centrally cleared swaps where we recorded an expense of $20.0 million related to variation margin payments in 2025 compared to $36.5 million in 2024 .
During the first quarter of 2025, the Company recorded net losses of $228.8 million on the sales of investment securities, excluding the sales of investment securities acquired from Independent.
The Company recorded a gain on the sale of bank properties of $229.3 million, net of transaction costs, from a sale-leaseback transaction completed in February 2025.
SBA income decreased by $7.0 million, or 43.3% , compared to 2024. SBA income includes changes in the fair value of the servicing asset, loan servicing fees and gains on sale of SBA loans. The decrease was primarily attributable to lower gains on the sale of SBA loans of $6.3 million.
Bank owned life insurance income increased by $9.1 million, or 29.8%, in 2025 compared to 2024. This increase was primarily due to the acquisition of bank owned life insurance assets from Independent.
Other income decreased by $5.7 million, or 26.5%, in 2025 compared to 2024. In 2025, the Company recognized approximately $6.9 million in gains from the sale of a bank property held for sale. The Company also recorded $5.6 million in impairment expense related to a Right-of-Use (“ROU”) asset. During 2024, the Company recognized approximately $5.2 million of benefit from federal tax refunds received for net operating loss carrybacks.
Table of Contents
Table 4—Noninterest Expense for the Three Years
Year Ended December 31,
(Dollars in thousands)
Salaries and employee benefits
Occupancy expense
Information services expense
OREO and loan related expense
Amortization of intangibles
Business development and staff related expense
Supplies, printing and postage expense
Professional fees
FDIC assessment and other regulatory charges
FDIC special assessment
Advertising and marketing
Merger, branch consolidation, severance-related, and other expense
Other
Total noninterest expense
2025 compared to 2024
Noninterest expense represents the largest expense category for the Company. Noninterest expense increased $519.6 million, or 51.9%, for the year ended December 31, 2025 compared to 2024. The change in total noninterest expense resulted from the following:
Salaries and employee benefits increased by $191.0 million, or 31.5%, in 2025 compared to 2024. The increase was primarily associated with the addition of Independent employees during the first quarter of 2025. Salaries increased by $110.3 million resulting from both merit increases and an increase in the number of employees, along with higher commission and incentive expense of $46.4 million and higher employee benefits from higher FICA tax paid and medical insurance expense of $34.2 million during 2025.
Occupancy expense increased by $70.3 million, or 78.1%, in 2025 compared to 2024. The increase was primarily due to increases in lease expense and branch maintenance and repair expenses of $54.1 million and $17.8 million, respectively. The increase in the lease expense was primarily due to the sale-leaseback transaction completed in February 2025.
Information services expense increased by $28.8 million, or 31.2%, in 2025 compared to 2024. The increase was due to additional costs associated with the Company updating systems and expenses associated with transferring, managing, and processing data as it grows in size and complexity.
OREO expense and loan related expense increased by $5.7 million, or 121.3%, in 2025 compared to 2024, primarily due to a $6.1 million increase in loan related expenses, including legal, tax and other costs.
Amortization of intangibles increased by $72.3 million, or 323.0%, which is related to the Independent acquisition.
Business development and staff related expense increased $12.3 million, or 51.7%, in 2025 compared to 2024, due mainly to the increase in employees resulting from the Independent acquisition and additional employee travel, training, and entertainment-related costs.
Professional fees increased by $5.4 million, or 32.7%, in 2025 compared to 2024. This increase was primarily due to an increase in legal fees of $3.4 million and an increase in consulting related fees totaling $1.7 million.
FDIC assessment and other regulatory charges, excluding the FDIC special assessment, increased by $9.8 million, or 31.6% in 2025 compared to 2024. The increase reflects changes in the Company’s size, primarily due to the acquisition of Independent, and complexity along with the effects from the increase in the Company’s classified assets.
The FDIC’s special assessment decreased by $7.7 million as the FDIC announced a projected reduction in the special assessment rate in late 2025. The FDIC announced an interim final rule to reduce the special assessment rate, which resulted in a reduction of our assessment accrual by approximately $3.8 million. The Company accrued a total of $3.9 million during 2024.
Table of Contents
Merger, branch consolidation, severance-related, and other expense increased by $97.6 million, or 485.0%, in 2025 compared to 2024. Of the $117.8 million of expense recognized in 2025, approximately $119.8 million pertains to the Independent acquisition. The expense was partially offset by an insurance reimbursement of approximately $3.6 million received in 2025. The reimbursement pertains to costs previously incurred in connection with the cybersecurity incident in February 2024.
Other noninterest expense increased by $26.8 million, or 38.2%, in 2025 compared to 2024. This increase was primarily driven by increases in earnings credit expense to Homeowners Association (“HOA”) customers of $7.1 million. The Bank provides credit to HOA customers based on the average deposit balances held that reduces fees for other services provided. Additional increases included a $6.6 million increase in other miscellaneous operational expense and an approximately $2.6 million increase in donations. The remaining increases was attributed to a number of smaller expense increase across various categories, reflecting higher operating costs associated with the full-year impact of the Company’s acquisition of Independent.
Income Tax Expense
Our effective tax rate decreased to 23.22% at December 31, 2025, compared to 23.63% for the year-ended December 31, 2024. The decrease was primarily due to a decrease in state tax expense due to state tax planning and lowering of related state apportionment in specific jurisdictions as well as the increase in tax-exempt income and an increase in the cash surrender value of BOLI policies held by the Bank. This benefit was partially offset by the increase in pretax book income and higher non-deductible executive compensation and disallowed FDIC premiums during the current period, when compared to 2024. For additional information refer to Note 11—Income Taxes in the consolidated financial statements.
Segment Reporting
As discussed in Note 29—Segment Reporting, the Company’s operations are managed and financial performance is evaluated on an organization-wide basis, and the Company’s banking and finance operations are considered by management to constitute one reportable operating segment, the General Banking Unit.
The Company’s Chief Operating Decision Maker (“CODM”), the Executive Committee, consists of the Company’s senior executive management team, including the Chief Executive Officer, Chief Strategy Officer, President, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer, Chief Credit Officer and other executives. The CODM generally meets monthly to assess performance of the General Banking Unit using a variety of figures, metrics and key performance indicators. In addition to net income and non-Tax Equivalent (“TE”) Net Interest Margin (“NIM”), the CODM considers Pre-Provision Net Revenue (“PPNR”) and TE NIM to make business decisions. The CODM monitors these profitability measures at each meeting, and is regularly featured in various investor presentations, earnings releases, and other internal management reports. These performance and profitability measures influence business decisions and allocation of resources within the General Banking Unit.
Table of Contents
The table below provides PPNR and TE NIM information of the General Banking Unit.
Table 5— Pre-Provision Net Revenue and Tax Equivalent Net Interest Margin
Year Ended December 31,
(Dollars in thousands)
Revenue, Adjusted (Non-GAAP)
Net interest income (GAAP) (a)
Plus:
Noninterest income
Revenue (GAAP)
Less:
Securities (losses) gain, net
Gain on sale-leaseback, net of transaction costs
Revenue, adjusted (Non-GAAP)
PPNR, Adjusted (Non-GAAP)
Revenue, adjusted (Non-GAAP)
Less:
Noninterest expense
PPNR (Non-GAAP)
Plus:
Merger, branch consolidation, severance-related, and other expense
FDIC special assessment
PPNR, adjusted (Non-GAAP)
Net Interest Margin, Tax Equivalent ("TE") (non-GAAP)
Average interest earning assets (b)
Net interest margin, non-TE ((a)/(b)) (GAAP)
TE adjustment (c)
Net interest margin, TE (((a)+(c))/(b)) (non-GAAP)
Financial Condition
Overview
At December 31, 2025, we had total assets of approximately $67.2 billion, consisting principally of $48.6 billion in total loans, before taking into account the allowance for credit losses of $585.2 million, $8.7 billion in investment securities, $3.2 billion in cash and cash equivalents and $3.1 billion in goodwill. Our liabilities at December 31, 2025 totaled $58.1 billion, consisting principally of deposits of $55.1 billion ($13.4 billion in noninterest-bearing and $41.8 billion in interest-bearing), $554.7 million derivative liabilities and $1.3 billion of short-term and long-term borrowings. At December 31, 2025, our shareholders’ equity was $9.1 billion.
At December 31, 2024, we had total assets of approximately $46.4 billion, consisting principally of $33.9 billion in total loans, before taking into account the allowance for credit losses of $465.3 million, $6.8 billion in investment securities, $1.4 billion in cash and cash equivalents and $1.9 billion in goodwill. Our liabilities at December 31, 2024 totaled $40.5 billion, consisting principally of deposits of $38.1 billion ($10.2 billion in noninterest-bearing and $27.9 in interest-bearing) and short-term and long-term borrowings of $906.4 million. At December 31, 2024, our shareholders’ equity was $5.9 billion.
Book value per common share was $91.38 at the end of 2025, an increase from $77.18 at the end of 2024. Book value per common share increased in 2025 as shareholder equity increased by $3.2 billion, or 53.8%, while common shares outstanding increased by 29.9%. The primary reason for an increase in shareholders’ equity was primarily due to the acquisition of Independent. The Company issued $2.5 billion in stock related to the acquisition of Independent.
Our common equity to assets ratio increased to 13.5% in 2025, compared to 12.7% in 2024. The improvement during 2025 was due to an increase in shareholders’ equity of 53.8%, resulting from the items noted above, while total assets increased 44.9%.
Table of Contents
Trading Securities
We have a trading portfolio associated with our Correspondent Bank Division and its subsidiary SouthState Securities. This portfolio is carried at fair value and realized and unrealized gains and losses are included in trading securities revenue, a component of Correspondent Banking and Capital Markets Income in our Consolidated Statements of Income. Securities purchased for this portfolio have primarily been municipal bonds, treasuries, mortgage-backed agency securities, and SBA securities, which are held for short periods of time and totaled $110.2 million and $102.9 million at December 31, 2025 and 2024, respectively.
Investment Securities
We use investment securities, our second largest category of earning assets, to generate interest income, provide liquidity, fund loan demand or deposit liquidation, and pledge as collateral for public funds deposits, repurchase agreements, derivative exposures and to augment borrowing capacity at the Federal Reserve Bank of Atlanta, and the Federal Home Loan Bank of Atlanta. At December 31, 2025 and 2024, investment securities totaled $8.7 billion and $6.8 billion, respectively . For the year ended December 31, 2025, average investment securities were $8.4 billion, or 14.3% of average earning assets, compared with $7.1 billion, or 17.6% of average earning assets for the year ended December 31, 2024. The expected average life of the investment portfolio at December 31, 2025 was approximately 5.83 years, compared with 7.73 years at December 31, 2024. See Note 1 — Summary of Significant Accounting Policies in the audited consolidated financial statements for our accounting policy on investment securities.
As securities are purchased, they are designated as held to maturity or available for sale based upon our intent, which considers liquidity needs, interest rate expectations, asset/liability management strategies, and capital requirements.
The following table presents the reported values of investment securities for the past two years:
Table 6—Values of Investment Securities
December 31,
(Dollars in thousands)
Held to Maturity (amortized cost):
U.S. Government agencies
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Small Business Administration loan-backed securities
Total held to maturity
Available for Sale (fair value):
U.S. Treasuries
U.S. Government agencies
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
State and municipal obligations
Small Business Administration loan-backed securities
Corporate securities
Total available for sale
Total other investments
Total investment securities
Table of Contents
During 2025, our total investment securities increased $1.9 billion, or 28.2%, from December 31, 2024. The Company acquired $1.6 billion in investment securities through the acquisition of Independent. A majority of these securities were subsequently sold with the proceeds reinvested into securities that fit the Company’s investment strategy. The Company also executed a securities repositioning and sold investment securities with a book value of approximately $1.8 billion at a loss of $228.8 million and used the proceeds to purchase new securities. This securities repositioning improved the yield and risk weightings and shortened the duration of the investment portfolio.
The Company purchased $7.1 billion of investment securities during the year ended December 31, 2025, funded by maturities, calls, and paydowns, along with reinvestment of proceeds from the sales of securities acquired from Independent, and proceeds from the sale of securities involved in the repositioning strategy. The increases in investment securities from the acquisition and purchases were partially offset as a result of maturities, calls, and paydowns of investment securities totaling $7.0 billion and a reduction from the net amortization of premiums of $11.0 million during the year ended December 31, 2025. All of the $7.1 billion in purchases of investment securities during the year ended December 31, 2025, were classified as available for sale securities or other investment securities. There were no purchases of held to maturity securities during the year ended December 31, 2025.
At December 31, 2025, the unrealized net loss of the available for sale investment securities portfolio was $382.8 million, or 5.7%, below its amortized cost basis. Comparable valuations at December 31, 2024 reflected an unrealized net loss of the available for sale investment portfolio of $808.6 million, or 15.8%, below its amortized cost basis. The decrease in the unrealized net loss of the available for sale portfolio at December 31, 2025 compared to December 31, 2024 was due to the securities restructuring executed during the first quarter of 2025 and the impact of lower interest rates on the value of the securities portfolio. At December 31, 2025, the unrealized net loss of the held to maturity investment securities portfolio was $315.2 million, or 15.4%, below its amortized cost basis. At December 31, 2024, the unrealized net loss of the held to maturity investment securities portfolio was $420.1 million, or 18.6%, below its amortized cost basis.
Table 7—Credit Ratings of Investment Securities
Amortized
Fair
Unrealized
(Dollars in thousands)
Cost
Value
Net Loss
AAA – A
Not Rated
December 31, 2025
U.S. Government agencies
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises *
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises *
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises *
State and municipal obligations
Small Business Administration loan-backed securities
Corporate securities
Agency mortgage-backed securities (“MBS”), agency collateralized mortgage-obligations (“CMO”) and agency commercial mortgage-backed securities (“CMBS”) are guaranteed by the issuing government-sponsored enterprise (“GSE”) as to the timely payments of principal and interest. Except for Government National Mortgage Association securities, which have the full faith and credit backing of the United States Government, the GSE alone is responsible for making payments on this guaranty. While the rating agencies have not rated any of the MBS, CMO and CMBS issued, senior debt securities issued by GSEs are rated consistently as “Triple-A.” Most market participants consider agency MBS, CMOs and CMBSs as carrying an implied Aaa rating (S&P rating of AA+) because of the guarantees of timely payments and selection criteria of mortgages backing the securities. We do not own any private label mortgage-backed securities. The balances presented under the ratings above reflect the amortized cost of the investment securities.
Table of Contents
Held to maturity
As described above, the Company elected to classify some of its securities as held to maturity at the time of purchase. The securities designated as held to maturity are securities the Company does not intend to sell and expects to hold through maturity. The securities consist of $132.9 million of agency securities, $1.9 billion of residential and commercial mortgage-backed securities issued by U.S government agencies or sponsored enterprises and $46.1 million of Small Business Administration loan-backed securities. The following are highlights of our held to maturity portfolio:
Total amortized cost of held to maturity portfolio totaled $2.0 billion.
The balance of securities held to maturity represented 3.0% of total assets at December 31, 2025.
No purchases or sales of held to maturity investment securities in 2025; maturities, calls and paydowns totaled $202.5 million in 2025.
Available for sale
Securities available for sale consist of debentures of government sponsored entities, state and municipal bonds, residential and commercial mortgage-backed securities issued by U.S government agencies or sponsored enterprises, Small Business Administration loan-backed securities and corporate securities. At December 31, 2025, investment securities with a fair value and amortized cost of $6.3 billion and $6.7 billion, respectively, were classified as available for sale. The adjustment for net unrealized losses of $382.8 million between the carrying value of these securities and their amortized cost has been reflected, net of tax, in the Consolidated Balance Sheet as a component of Accumulated Other Comprehensive Loss. The following are highlights of our available for sale securities:
Total securities available for sale increased $2.0 billion, or 46.1%, from the balance at December 31, 2024 . The net unrealized loss position on the investment portfolio decreased $425.8 million and net amortization of premiums was $6.9 million during 2025. We purchased $7.0 billion of available for sale investment securities in 2025, partially offset by maturities, calls and paydowns totaling $3.8 billion and sales totaling $2.6 billion in 2025. These purchases included $1.6 billion in acquired balances from Independent.
The balance of securities available for sale represented 9.4% of total assets at December 31, 2025 and 9.3% of total assets at December 31, 2024.
Interest income earned on all investment securities in 2025 was $286.7 million, an increase of $108.3 million, or 60.7%, from $178.4 million in 2024. The increase was due to an increase in total average securities balances of $1.3 billion in 2025 and an increase in the yield on investment securities. Both were primarily a result of the securities acquired and reinvested in the Independent acquisition and the securities portfolio restructuring executed during 2025.
At December 31, 2025, we had 1,073 investment securities (including both available for sale and held to maturity) in an unrealized loss position, which totaled $737.2 million, compared to 1,214 investment securities in an unrealized loss position, which totaled $1.3 billion at December 31, 2024. See Note 1—Summary of Significant Accounting Policies and Note 3—Investment Securities in the consolidated financial statements for additional information.
Table of Contents
Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. For securities designated as available for sale, credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the extent to which the fair value has been less than cost, (4) our intent to hold the security as well as there being no requirement to sell the security, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third-party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. The Company performed an analysis that determined that the following securities have a zero expected credit : U.S. Treasury Securities, Agency-Backed Securities including securities issued by Ginnie Mae, Fannie Mae, FHLB, FFCB and SBA. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United States Government or the credit backing of one of its agencies. Municipal securities and all other securities that do not have a zero expected credit are evaluated quarterly to determine whether there is a credit associated with a in fair value. All debt securities in an unrealized position as of December 31, 2025 continue to perform as scheduled and we do not believe there is a credit or a provision for credit is necessary. Also, as part of our evaluation of our intent and ability to hold investments, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio, and it is not more-likely-than-not that we will be required to sell the debt securities.
Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio, and it is not more-likely-than-not that we will be required to sell the debt securities. Changes in the above considerations may affect our intent in the future. See Note 1 — Summary of Significant Account Policies for further discussion.
Other Investments
Other investment securities include primarily our investments in FHLB and FRB stock with no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of December 31, 2025, other investment securities represented approximately $353.4 million, or 0.53% of total assets and primarily consisted of FRB and FHLB stock, which totaled $234.4 million and $18.1 million, respectively. There were no gains or losses on the sales of these securities during 2025 or 2024.
Table of Contents
Table 8—Maturity Distribution and Yields of Investment Securities
Due In
Due After
Due After
Due After
1 Year or Less
1 Thru 5 Years
5 Thru 10 Years
10 Years
Total
(Dollars in thousands)
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Held to Maturity (amortized cost)
U.S. Government agencies
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Small Business Administration loan-backed securities
Total held to maturity
Available for Sale (fair value)
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
State and municipal obligations
Small Business Administration loan-backed securities
Corporate securities
Total available for sale
Total other investments
Total investment securities
Percent of total
Cumulative percent of total
The expected average life for U.S. Government agencies is 6.23 years.
The expected average life for residential mortgage-backed securities issued by U.S. government agencies or sponsored enterprises is 5.91 years; 6.79 years for held to maturity and 5.30 years for available for sale.
The expected average life for residential collateralized mortgage-obligations securities issued by U.S. government agencies or sponsored enterprises is 4.35 years; 7.26 years for held to maturity and 3.85 years for available for sale.
The expected average life for commercial mortgage-backed securities issued by U.S. government agencies or sponsored enterprises is 5.41 years; 5.63 years for held to maturity and 5.33 years for available for sale.
Weighted average yields on tax-exempt income have been presented on a taxable- equivalent basis, assuming a federal tax rate of 21.00% and a state tax rate of 3.04%, which is net of federal tax benefit in the above table. These yields were calculated using coupon interest and adjusting for discount accretion and premium amortization, where applicable.
The expected average life for state and municipal obligations is 10.87 years.
The expected average life for Small Business Administration loan-backed securities is 4.11 years; 4.89 years for held to maturity and 4.05 years for available for sale.
The expected average life for corporate securities is 3.53 years.
FRB, FHLB and other non-marketable equity securities have no set maturity date and are classified in “Due after 10 Years.”
The expected average life for the total investment securities portfolio is 5.83 years (not including FRB, FHLB and corporate stock with no maturity date).
The total values presented in the table above represent the total fair value of available for sale securities and amortized cost for held to maturity.
Approximately 84.1% of the investment portfolio is comprised of U.S. Treasury securities, U.S. Government agency securities, and U.S. Government Agency Mortgage-backed securities. These securities may be pledged to the Federal Home Loan Bank of Atlanta or the Federal Reserve Bank of Atlanta Discount Window or Bank Term Funding Program. Approximately 11.6% of the investment portfolio is comprised of municipal securities. A portion of the municipal bond portfolio may be pledged to the Federal Home Loan Bank of Atlanta subject to their credit approval. Approximately 99% of the municipal bond portfolio has ratings in the Double A or Triple A category.
As of December 31, 2025, the portfolio had an effective duration of 4.60 years. We continue to monitor duration risk and seek to align actual duration with the target range.
Table of Contents
The following table presents a summary of our investment portfolio duration for the periods presented:
Table 9—Investment Portfolio Duration
December 31, 2025
December 31, 2024
(Dollars in thousands, duration in years)
Amount
Duration
Amount
Duration
Held to Maturity (amortized cost)
U.S. Government agencies
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Small Business Administration loan-backed securities
Total held to maturity
Available for Sale (fair value)
U.S. Treasuries
U.S. Government agencies
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises
State and municipal obligations
Small Business Administration loan-backed securities
Corporate securities
Total available for sale
Loans Held for Sale
The balance of loans held for sale increased $65.9 million from December 31, 2024, to $345.3 million on December 31, 2025. Loans held for sale at December 31, 2025 and 2024 consisted of mortgage and SBA loans held for sale. The increase in loans held for sale in 2025 was driven by an increase in SBA loans held for sale as this line of business became more established in 2025.
During the third quarter of 2024, the Company began purchasing the guaranteed portions of SBA loans from third-party originators with the intent to aggregate the guaranteed portion of the SBA loans into pools with similar characteristics to create a security representing an interest in those pools through the SBA’s fiscal transfer agent. SBA loans held for sale totaled $283.9 million at December 31, 2025, a $102.6 million increase from $181.3 million at December 31, 2024. See Note – 28 – SBA Loans Held for Sale for more information.
Mortgage loans held for sale totaled $61.4 million at December 31, 2025, a decrease from $98.1 million at December 31, 2024. Total mortgage production was $2.5 billion in 2025. This compares to $1.9 billion 2024. Mortgage production increased from 2024 as average mortgage rates have declined in 2025 along with the effects of adding new markets with the acquisition of Independent on January 1, 2025. The percentage of mortgage production sold into the secondary market decreased in 2025 to 37% from 58% in 2024. The allocation of mortgage production between portfolio and secondary market depends on the Company’s liquidity, market spreads and rate changes during each period and will fluctuate over time.
Interest income from loans held for sale increased $12.1 million, or 180.3%, during 2025 to $18.8 million from $6.7 million in 2024. This increase was due to an increase in the average balance of loans held for sale of $162.1 million, or 162.4%, from $99.9 million for the year ended December 31, 2024 to $262.0 million for the year ended December 31, 2025. Of this increase, $158.0 million was related to SBA loans held for sale and $4.2 million was related to mortgage loans held for sale. The yield on loans held for sale increased in 2025 compared to 2024. For year ended 2025 the yield on loans held for sale was 7.17% compared to 6.71% in 2024. This increase was driven by the higher average balance held of SBA loans held for sale in 2025 which have higher yields.
Table of Contents
See Note 1—Summary of Significant Accounting Policies, under Loans Held for Sale section for more information.
Loan Portfolio
Our loan portfolio remains our largest category of interest- earning assets. At December 31, 2025, total loans, excluding loans held for sale, were $48.6 billion, which was an overall increase of $14.7 billion, or 43.3%, from the balance at the end of 2024. Non- acquired loan growth was $5.0 billion, or 16.9% for 2025, driven by organic growth and renewals of acquired loans moved to our non-acquired loan portfolio. The loan growth was made up of a 28.9% increase in commercial and industrial loans, a 19.6% increase in commercial non-owner occupied real estate loans (including construction and land development loans), a 12.6% increase in owner-occupied real estate loans, an 11.8% increase in consumer real estate loans and a 8.1% increase in other income producing property loans. Total acquired loans increased by $9.7 billion, or 215.9% from the balance at the end of 2024. This increase in acquired loans was due to the addition of $13.1 billion from the acquisition of Independent, net of offsets from paydowns and payoffs in both the PCD and Non-PCD loan categories along with renewals of acquired loans that were moved to our non-acquired loan portfolio. The loan growth was made up of a 333.2% increase in commercial non-owner occupied real estate loans (including construction and land development loans), a 433.0% increase in other income producing property loans, a 222.2% increase in commercial and industrial loans, a 109.4% increase in owner-occupied real estate loans, and a 101.3% increase in consumer real estate loans.
Average total loans outstanding during 2025 were $47.4 billion, an increase of $14.3 billion, or 43.0%, over the 2024 average of $33.1 billion. (For further discussion of the Company’s acquired loan accounting, see Note 1—Summary of Significant Accounting Policies, Note 2—Mergers and Acquisitions, Note 4—Loans and Note 5—Allowance for Credit Losses in the consolidated financial statements.)
Table of Contents
The following table presents a summary of the loan portfolio by category (excludes loans held for sale):
Table 10—Distribution of Loans by Type
December 31,
(Dollars in thousands)
Acquired loans:
Acquired - non-purchased credit deteriorated loans:
Non‑owner-occupied real estate (1)
Consumer real estate (2)
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Other
Total acquired - non-purchased credit deteriorated loans
Acquired - purchased credit deteriorated loans (PCD):
Non‑owner-occupied real estate (3)
Consumer real estate (2)
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Total acquired ‑ purchased credit deteriorated loans (PCD)
Total acquired loans
Non-acquired loans:
Non‑owner-occupied real estate (4)
Consumer real estate (2)
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Other loans
Total non‑acquired loans
Total loans (net of unearned income)
Includes $580.7 million and $37.5 million of construction and land development loans at December 31, 2025 and 2024, respectively.
Includes loans on both 1-4 family owner-occupied property, as well as loans collateralized by 1-4 family owner-occupied property with a business intent.
Includes $106.8 million and $5.9 million of construction and land development loans at December 31, 2025 and 2024, respectively.
Includes $1.9 billion and $2.1 billion of construction and land development loans at December 31, 2025 and 2024, respectively.
The following highlights of our loan portfolio as of December 31, 2025 compared to December 31, 2024:
Non-acquired loans were $34.4 billion, or 70.8% of total loans at December 31, 2025. This compares to non-acquired loans of $29.4 billion, or 86.7% at December 31, 2024. The increase in non-acquired loans of $5.0 billion was due to organic growth and renewals of acquired loans that were moved to the non-acquired loan portfolio. Acquired loans were $14.2 billion, or 29.2% of total loans at December 31, 2025. This compares to acquired loans of $4.5 billion, or 13.3%, at December 31, 2024. The $9.7 billion increase in acquired loans was due to the addition of $13.1 billion from the acquisition of Independent, net of offsets from paydowns and payoffs in both the PCD and Non-PCD loan categories along with renewals of acquired loans that were moved to our non-acquired loan portfolio.
Non-acquired loans secured by non-owner occupied and consumer real estate were $20.7 billion and comprised 42.5% of the total loan portfolio at December 31, 2025. This was an increase of $2.9 billion, or 16.1%, over December 31, 2024. At December 31, 2025, acquired loans secured by non-owner occupied and consumer real estate were $9.0 billion and comprised 18.5% of the total loan portfolio. This was an increase of $6.5 billion, or 260.1%, over December 31, 2024. Between both the non-acquired and acquired portfolios, 61.0% of loans were non-owner occupied and consumer real estate loans.
Table of Contents
Of the non-acquired real estate loans at December 31, 2025, $11.8 billion, or 24.3% of the loan portfolio were secured by non-owner-occupied real estate. Loans secured by consumer real estate were $8.9 billion, or 18.2% of the total loan portfolio at December 31, 2025. This compared to loans secured by non-owner-occupied real estate of $9.9 billion, or 29.1%, and loans secured by consumer real estate of $7.9 billion, or 23.4% of the loan portfolio at December 31, 2024.
Of the acquired real estate loans, $7.4 billion, or 15.3% of the loan portfolio were secured by non-owner-occupied real estate at December 31, 2025. Loans secured by consumer real estate were $1.6 million, or 3.3% of the loan portfolio. This compared to acquired loans secured by non-owner-occupied real estate of $1.7 billion, or 5.0%, and loans secured by consumer real estate of $787.9 million, or 2.3% of the loan portfolio at December 31, 2024.
Included within loans secured by non-owner-occupied real estate noted above are construction and land development loans. Total construction and land development loans were $2.5 billion at December 31, 2025 compared to $2.2 billion at December 31, 2024. Construction and land development loans are more susceptible to a risk of loss during a downturn in the business cycle.
Non-acquired construction and land development loans declined $280.0 million to $1.9 billion in 2025 from $2.1 billion at December 31, 2024.
Acquired construction and land development loans increased $644.1 million to $687.5 million in 2025 from $43.4 million at December 31, 2024 due to the Independent merger, net of principal payments, charge offs, foreclosures and renewals of acquired loans that were moved to our non-acquired loan portfolio.
Total consumer real estate loans were comprised of $8.6 billion in consumer owner occupied loans and $1.8 billion in home equity line loans at December 31, 2025. This compares to $7.1 billion in consumer owner-occupied loans and $1.6 billion in home equity line loans at December 31, 2024. During 2025, the consumer real estate loan portfolio increased by $1.7 billion from December 31, 2024 through organic growth, as well as the merger with Independent, net of principal payments, charge offs, foreclosures and renewals of acquired loans that were moved to our non-acquired loan portfolio.
Non-acquired loans secured by consumer real estate were comprised of $7.3 billion in consumer owner occupied loans and $1.6 billion in home equity loans at December 31, 2025. At December 31, 2024, we had $6.6 billion in consumer owner occupied loans and $1.4 billion in home equity loans in the non-acquired loan portfolio.
Acquired loans secured by consumer real estate are comprised of $1.4 billion in consumer owner occupied loans and $228.8 million in home equity loans at December 31, 2025. At December 31, 2024, we had $574.0 million in consumer owner occupied loans and $213.9 million in home equity loans in the acquired loan portfolio.
Non-acquired and acquired commercial owner-occupied real estate loans were $5.1 billion, or 10.5%, and $2.5 billion, or 5.1%, respectively, of the total loan portfolio at December 31, 2025 compared to $4.5 billion, or 13.4%, and $1.2 billion, or 3.5%, respectively, of the loan portfolio at December 31, 2024.
Non-acquired commercial owner-occupied real estate loans increased $570.9 million through organic growth and renewals of acquired loans.
Acquired commercial owner-occupied real estate loans increased $1.3 billion due to the Independent merger, net of principal payments, charge offs, foreclosures and renewals of acquired loans that were moved to our non-acquired loan portfolio from December 31, 2024 compared to December 31, 2025.
Non-acquired and acquired commercial and industrial loans were $7.2 billion, or 14.9%, and $1.9 billion, or 4.0%, respectively, of the total loan portfolio at December 31, 2025 compared to $5.6 billion, or 16.6%, and $601.3 million, or 1.8%, respectively, of the loan portfolio at December 31, 2024.
Non-acquired commercial and industrial loans increased $1.6 billion during 2025 from December 31, 2024.
Acquired commercial and industrial loans increased $1.3 billion from December 31, 2024 compared to December 31, 2025.
Table of Contents
Total loan interest income was $3.0 billion in 2025, an increase of $1.2 billion, or 55.9%, compared to $1.9 billion in 2024. This increase was due to both an increase in the average balance and an increase in the yield on the total loan portfolio in 2025. The overall average balance in the loan portfolio increased $14.3 billion in 2025. The average balance increased on the non-acquired loan portfolio and the acquired loan portfolio $3.5 billion and $10.8 billion, respectively. The growth in the non-acquired loan portfolio average balance was due to normal organic growth and renewals of acquired loans. The growth in the acquired loan portfolio was due to the merger with Independent, net of paydowns and payoffs, along with renewals of acquired loans that were moved to our non-acquired loan portfolio. The overall yield on the loan portfolio increased by 124 basis points in 2025. This increase was due to a 2-basis point decrease in the yield on the non-acquired portfolio and a 126-basis point increase in the yield on the acquired portfolio. The yield on the non-acquired loan portfolio decreased from 5.72% in 2024, to 5.70% in 2025 and the yield on the acquired loan portfolio increased from 6.20% in 2024, to 7.46% in 2025. The overall increase in the yield on the loan portfolio was primarily due to additional loan accretion on acquired Independent loans.
The table below shows the contractual maturity of the non-acquired loan portfolio at December 31, 2025.
Table 11—Maturity Distribution of Non-acquired Loans
December 31, 2025
1 Year
Maturity
Maturity
Over
(Dollars in thousands)
Total
or Less
1 to 5 Years
5 to 15 Years
15 Years
Non‑owner-occupied real estate
Consumer real estate
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Other loans
Total non‑acquired loans
Table 12—Non-Acquired Loans Due After One Year - Fixed or Floating
December 31, 2025
(Dollars in thousands)
Fixed Rate
Variable Rate
Non‑owner-occupied real estate
Consumer real estate
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Total non‑acquired loans
The table below shows the contractual maturity of the acquired non-purchased credit deteriorated loan portfolio at December 31, 2025.
Table 13—Maturity Distribution of Acquired Non-purchased Credit Deteriorated Loans
December 31, 2025
1 Year
Maturity
Maturity
Over
(Dollars in thousands)
Total
or Less
1 to 5 Years
5 to 15 Years
15 Years
Non‑owner-occupied real estate
Consumer real estate
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Other
Total acquired - non-purchased credit deteriorated loans
Table of Contents
Table 14—Acquired Non-PCD Loans Due After One Year - Fixed or Floating
December 31, 2025
(Dollars in thousands)
Fixed Rate
Variable Rate
Non‑owner-occupied real estate
Consumer real estate
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Total acquired - non-purchased credit deteriorated loans
The table below shows the contractual maturity of the acquired purchased credit deteriorated loan portfolio at December 31, 2025.
Table 15—Maturity Distribution of Acquired Purchased Credit Deteriorated Loans
December 31, 2025
1 Year
Maturity
Maturity
Over
(Dollars in thousands)
Total
or Less
1 to 5 Years
5 to 15 Years
15 Years
Non‑owner-occupied real estate
Consumer real estate
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Total acquired ‑ purchased credit deteriorated loans (PCD)
Table 16—Acquired PCD Loans Due After One Year - Fixed or Floating
December 31, 2025
(Dollars in thousands)
Fixed Rate
Variable Rate
Non‑owner-occupied real estate
Consumer real estate
Commercial owner-occupied real estate
Commercial and industrial
Other income producing property
Consumer
Total acquired ‑ purchased credit deteriorated loans (PCD)
Total commercial non-owner-occupied loans of $16.7 billion, approximately 34.3% of the total loans held for investment, was the largest category of the loan portfolio as of December 31, 2025. As of December 31, 2025, approximately 94% of the commercial non-owner-occupied portfolio was located within the Company’s footprint. Of the $16.7 billion, approximately $1.8 billion, or 4% of the total loans, represented our office segment. Approximately 96% of the office segment was located in the Company’s footprint.
Table of Contents
The following table presents the top eight loan segments of the commercial non-owner-occupied loan category (excluding loans held for sale). The loan segments in the table below are determined by the call code, used for the Bank’s regulatory reporting requirements issued by the FDIC for the FFIEC 041, also referred to as the Call Report.
Table 17—Commercial Non-Owner-Occupied Loans
Commercial Non-Owner-Occupied Loans
Net Book
Average
% of Substandard &
(Dollars in thousands)
Balance (1)
Loan Size
Non-Accrual
Accruing
Special Mention
December 31, 2025
Loan Type:
Retail
Multifamily
Warehouse/Industrial
Office
Hotel
Medical
Other
Self Storage
Net book balance in each segment that represents 2% or more of commercial non-owner-occupied portfolio as of December 31, 2025.
Nonperforming Assets (“NPAs”)
The level of risk elements in the loan portfolio, OREO and other nonperforming assets for the past two years is shown below:
Table 18—Nonperforming Assets
December 31,
(Dollars in thousands)
Non-acquired:
Nonaccrual loans
Accruing loans past due 90 days or more
Modified loans to a borrower experiencing financial difficulty – nonaccrual
Total non-acquired nonperforming loans
Other real estate owned (“OREO”) (1) (2)
Other nonperforming assets (3)
Total OREO and other nonperforming assets excluding acquired assets
Total nonperforming assets excluding acquired assets
Acquired:
Nonaccrual loans (4)
Accruing loans past due 90 days or more
Modified loans to a borrower experiencing financial difficulty – nonaccrual
Total acquired nonperforming loans
Acquired OREO and other nonperforming assets:
Acquired OREO (1)
Other acquired nonperforming assets (3)
Total acquired OREO and other nonperforming assets
Total acquired nonperforming assets
Total nonperforming assets
Excluding acquired assets:
Total nonperforming assets as a percentage of total loans and repossessed assets (5)
Total nonperforming assets as a percentage of total assets (6)
Nonperforming loans as a percentage of period end loans (5)
Including acquired assets:
Total nonperforming assets as a percentage of total loans and repossessed assets (5)
Total nonperforming assets as a percentage of total assets (6)
Nonperforming loans as a percentage of period end loans (5)
Consists of real estate acquired as a result of foreclosure. Excludes certain property no longer intended for bank use.
Table of Contents
Excludes non-acquired bank premises held for sale of $0 and $3.3 million as of December 31, 2025 and 2024, respectively, that is now separately disclosed on the balance sheet.
Consists of non-real estate foreclosed assets, such as repossessed vehicles.
Includes nonaccrual loans that are purchase credit deteriorated (PCD loans).
Loan data excludes mortgage loans held for sale.
For purposes of this calculation, total assets include all assets (both acquired and non-acquired).
Total non-acquired nonperforming loans were $165.0 million, or 0.48% of total non-acquired loans, an increase of approximately $19.7 million, or 13.6%, from December 31, 2024. The increase in nonperforming loans was driven primarily by an increase in consumer nonaccrual loans of $23.3 million, offset by a decrease in commercial nonaccrual loans of $497,000, a decrease in modified loans to borrowers with financial difficulties on nonaccrual of $2.8 million and a decrease in accruing loans past due 90 days or more of $296,000. The increase in consumer nonaccrual loans year over year was primarily in first mortgage 1-4 family owner occupied loans. Acquired nonperforming loans were $137.1 million, or 0.96% of total acquired loans, an increase of $71.8, or 109.9% from December 31, 2024. The increase in acquired nonperforming loans was mainly driven by an increase in commercial nonaccrual loans of $68.7 million, an increase in consumer nonaccrual loans of $1.8 million, an increase in accruing loans past due 90 days or more of $1.9 million, offset by a decrease in restructured loans of $612,000. The majority of the increase in acquired commercial nonaccrual loans was due to the addition of $75.1 million in loans acquired in the merger with Independent, offset by a $6.4 million decline in legacy commercial nonaccrual loans. The $75.1 million in nonaccrual loans acquired were primarily commercial real estate and commercial and industrial loans.
The top ten nonaccrual loans at December 31, 2025 totaled $96.1 million and consisted of four loans located in Texas, two in North Carolina, one in Alabama, one in Florida, one in Georgia, and one in South Carolina. These loans comprise 32.3% of total nonaccrual loans at December 31, 2025, with around 60% being real estate collateral dependent and the other 40% being non real estate. We currently hold a specific reserve against three of these ten loans, totaling $15.9 million. The remaining seven loans do not carry a specific reserve due to carrying balances being below current collateral values.
As of December 31, 2025, the Bank had a total of $195.0 million loans to borrowers experiencing financial difficulty. Of the $195.0 million, $189.5 million loans were current, $4.5 million loans were 30 to 89 days past due and $925,000 were 90 days past due.
Allowance for Credit Losses (“ACL”) on Loans and Certain Off-Balance-Sheet Credit Exposure
The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. The Company records loans charged off against the ACL and subsequent recoveries, if any, increase the ACL when they are recognized. Please see Note 1 — Summary of Significant Accounting Policies, under the “ACL – Loans” section, in this Annual Report on Form 10-K for further detailed descriptions of our estimation process and methodology related to the ACL on loans.
Management considers forward-looking information in estimating expected credit losses. The Company subscribes to a third-party service which provides a quarterly macroeconomic baseline outlook and alternative scenarios for the United States economy. The baseline, along with the evaluation of alternative scenarios, is used by management to determine the best estimate within the range of expected credit losses. Management evaluates the appropriateness of the reasonable and supportable forecast scenarios and takes into consideration the scenarios in relation to actual economic and other data, such as gross domestic product growth, monetary and fiscal policy, inflation, supply chain issues and global events like the Russian/Ukraine conflict and unrest in the middle east, and changes in global trade policy, as well as the volatility and magnitude of changes within those scenarios quarter over quarter, and consideration of conditions within the Bank’s operating environment and geographic area. Additional forecast scenarios may be weighted along with the baseline forecast to arrive at the final reserve estimate. While periods of relative economic stability should generally lead to stability in forecast scenarios and weightings to estimate credit , periods of can likewise require management to adjust the selection of scenarios and weightings, in accordance with the accounting standards. For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long term mean of historical factors within four quarters using a straight-line approach. The Company generally uses an eight-quarter forecast and a four-quarter reversion period.
Table of Contents
There are several headwinds that continue to weigh on the economy, though the U.S. has thus far avoided a recession. Management continues to use a blended forecast scenario of the baseline, upside, and more severe scenario, depending on the circumstances and economic outlook. As of December 31, 2025, management selected a baseline weighting of 40%, a 25% weighting for an upside scenario and a 35% weighting for the more severe scenario. Scenario weightings are generally expected to remain stable but are reviewed on a quarterly basis. Weightings were unchanged from the prior quarter and reflect a broadly neutral outlook with continued recognition of downside risks and elevated uncertainty in the economic forecast from flat job growth, high interest rates, lack of clarity on trade policy impacts, and tightening credit conditions. Improved GDP growth and employment resilience kept expected losses largely stable.
The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include undrawn portions of revolving lines of credit and standby letters of credit. Please see Note 1—Summary of Significant Accounting Policies in this Report on Form 10-K for further detailed descriptions of our estimation process and methodology related to the ACL on certain off-balance-sheet credit exposures. As of December 31, 2025 and 2024, the liabilities recorded for expected credit losses on unfunded commitments were $69.6 million and $45.3 million, respectively. The current adjustment to the ACL for unfunded commitments is recognized through the Provision for Credit Losses in the Consolidated Statements of Income.
As of December 31, 2025, the balance of the ACL was $585.2 million, or 1.20%, of total loans. For the year ended December 31, 2025, the ACL increased $119.9 million from the balance of $465.3 million at December 31, 2024. The increase in ACL of $119.9 million included an initial provision related to PCD loans acquired from Independent of $135.4 million, an initial provision related to Non-PCD loans acquired from Independent of $80.0 million, a $15.5 million provision for all other loans, and $111.0 million in net charge-offs, which included $56.7 million of acquisition date charge-offs on PCD loans acquired from Independent. For both the three and twelve months ended December 31, 2025, the Company recorded provision for credit losses due to loan growth and current forecasts applied to our modeling to adequately capture growing economic recessionary risks . As of December 31, 2024, the balance of the ACL was $465.3 million or 1.37% of total loans. For the year ended December 31, 2024, the ACL increased $8.7 million from the balance of $456.6 million at December 31, 2023. The increase in ACL of $8.7 million included $27.0 million of provision for credit losses, and $18.2 million in net charge-offs. For both the three and twelve months ended December 31, 2024, the Company recorded provision for credit losses due to loan growth and current forecasts applied to our modeling to capture growing economic risks.
At December 31, 2025, the Company had a reserve on unfunded commitments of $69.6 million, which was recorded as a liability on the Consolidated Balance Sheet, compared to $45.3 million at December 31, 2024. During the three and twelve months ended December 31, 2025, the Company recorded an increase in the reserve for unfunded commitments of $1.1 million and $24.3 million, respectively. Of the $24.3 million of provision for credit losses recorded for unfunded commitments during the twelve months ended December 31, 2025, $12.1 million was related to the initial provision for unfunded commitments acquired from Independent and $12.2 million was for all other unfunded commitments. For the prior comparative period, the Company recorded an increase in the reserve for unfunded commitments of $3.8 million and a release for $11.0 million, respectively. The provision for credit losses for unfunded commitments is based on the growth in unfunded loan commitments, production mix, and current forecast scenarios applied to our modeling to capture growing economic risks. This amount was recorded in Provision for Credit on the Consolidated Statements of Income. The Company did not have an allowance for credit or record a provision for credit on investment securities or other financial assets during 2025.
The ACL provides 1.94 times coverage of nonperforming loans at December 31, 2025. Net charge offs to total average loans during the year ended December 31, 2025 were 0.23%, compared to 0.06% during the year ended December 31, 2024. Net charge-offs, excluding acquisition date charge-offs recorded for PCD loans acquired from Independent of $56.7 million, to total average loans, during the twelve months ended December 31, 2025 were 0.11%. The ACL, including reserve for unfunded commitments, as a percentage of loans were 1.35% and 1.51%, respectively, as of December 31, 2025 and 2024.
The following table provides the allocation, by segment, for expected credit losses for the year ended December 31, 2025. While non-owner occupied CRE is the largest segment of our loan portfolio, the risk profile of the non-owner occupied CRE portfolio remains low and stable. We have a granular loan portfolio where the average loan size of the non-owner occupied CRE portfolio is less than $2.5 million. Loans for the commercial office space, which are included in the non-owner occupied CRE portfolio, represent approximately 4% of the total outstanding portfolio with an average loan size of less than $2 million as of December 31, 2025. 94% of these office spaces are located in the Company’s southeast footprint, of which approximately 72% mature in 2027 or later.
Table of Contents
Table 19—Allocation of the Allowance by Segment
December 31, 2025
December 31, 2024
(Dollars in thousands)
Amount
Amount
Residential Mortgage Senior
Residential Mortgage Junior
Revolving Mortgage
Residential Construction
Other Construction and Development
Consumer
Multifamily
Municipal
Owner-Occupied Commercial Real Estate
Non-Owner-Occupied Commercial Real Estate
Commercial and Industrial
Total
* Loan balance in each category expressed as a percentage of total loans.
The following table presents a summary of net charge off ratios by loan segment, for the year ended December 31, 2025 and 2024:
Table 20—Disaggregated Net Recovery (Charge Off) Ratio by Segment
Year Ended
December 31, 2025
December 31, 2024
(Dollars in thousands)
Net Recovery (Charge-Off)
Average Balance
Net Recovery (Charge-Off) Ratio
Net Recovery (Charge-Off)
Average Balance
Net Recovery (Charge-Off) Ratio
Residential Mortgage Senior
Residential Mortgage Junior
Revolving Mortgage
Residential Construction
Other Construction and Development
Consumer
Multifamily
Municipal
Owner-Occupied Commercial Real Estate
Non-Owner-Occupied Commercial Real Estate
Commercial and Industrial
Total
Table of Contents
The following table presents a summary of the changes in the ACL for the years ended December 31, 2025, 2024 and 2023:
Table 21—Summary of the Changes in ACL
Year Ended December 31,
Non-PCD
PCD
Non-PCD
PCD
Non-PCD
PCD
(Dollars in thousands)
Loans
Loans
Total
Loans
Loans
Total
Loans
Loans
Total
Allowance for credit losses at January 1
Allowance adjustment - FMV for Independent acquisition
Initial Allowance for Non-PCD loans acquired during period
Independent Day 1 PCD loan net charge-offs
Loans charged-off
Recoveries of loans previously charged off
Net (charge-offs) recoveries
Provision (recovery) for credit losses
Balance at end of period
Total loans, net of unearned income:
At period end
Average
Net charge-offs as a percentage of average loans (annualized)
Allowance for credit losses as a percentage of period end loans
Allowance for credit losses as a percentage of period end non-performing loans (“NPLs”)
* Net charge-offs at December 31, 2025, 2024 and 2023 include automated overdraft protection (“AOP”) and insufficient fund (“NSF”) principal net charge-offs of $3.8 million, $2.8 million and $6.8 million, respectively, that are included in the consumer classification above.
** Average loans, net of unearned income does not include loans held for sale 3
Deposits
We rely on deposits by our customers as the primary source of funds for the continued growth of our loan and investment securities portfolios. Customer deposits are categorized as either noninterest-bearing deposits or interest- bearing deposits. Noninterest-bearing deposits (or demand deposits) are transaction accounts that provide us with “interest- free” sources of funds. Interest-bearing deposits include savings deposit, interest-bearing transaction accounts, certificates of deposits, and other time deposits. Interest- bearing transaction accounts include NOW, HSA, IOLTA, and Market Rate checking accounts. The Company uses brokered time deposits as a secondary source of deposits to supplement its primary source through organic growth of deposits from our customers.
The following table presents total deposits for the two years at December 31:
Table 22—Total Deposits
December 31,
(Dollars in thousands)
Noninterest-bearing deposits
Savings deposits
Interest‑bearing demand deposits
Total savings and interest‑bearing demand deposits
Certificates of deposit
Other time deposits
Total time deposits
Total deposits
The following are key highlights regarding overall changes in total deposits:
Total deposits increased $17.1 billion, or 44.9%, for the year ended December 31, 2025, compared to 2024, reflecting balances assumed through the Independent acquisition during the first quarter of 2025 and organic deposit growth.
Noninterest-bearing deposits (demand deposits) increased by $3.2 billion, or 31.2%, for the year ended December 31, 2025.
Savings deposits increased $406.4 million, or 16.8%, when compared with December 31, 2024.
Money market (Market Rate Checking) and other interest-bearing demand deposits increased $10.3 billion, or 48.4% , for the year ended December 31, 2025
Table of Contents
Time deposits, including brokered time deposits, increased by $3.2 billion, or 76.7%, when compared with December 31, 2024. The Company saw an increase in its brokered time deposits to $1.7 billion at December 31, 2025 from $614.5 million at December 31, 2024, reflecting increased use of brokered deposits to support balance sheet growth.
At December 31, 2025, and 2024, core deposits (total deposits excluding time deposits) represented 87% and 89%, respectively, of total deposits.
The following are key highlights regarding overall growth in average total deposits:
Total deposits averaged $53.4 billion in 2025, an increase of $16.0 million, or 42.8%, from 2024, primarily attributable to deposit balances assumed in the Independent acquisition.
Average interest-bearing deposits increased by $12.9 billion, or 48.1%, to $39.8 billion in 2025 compared to 2024.
Average noninterest-bearing demand deposits increased by $3.1 billion, or 29.1%, to $13.6 billion in 2025 compared to 2024.
The following table provides a maturity distribution of certificates of deposit of $250,000 or more for the next twelve months as of December 31:
Table 23—Maturity Distribution of Certificates of Deposits of $250 Thousand or More
December 31,
December 31,
(Dollars in thousands)
% Change
Within three months
After three through six months
After six through twelve months
After twelve months
At December 31, 2025 and 2024, the Company estimates that it has approximately $22.0 billion and $14.7 billion, respectively, in uninsured deposits. The amounts above are estimates and are based on the same methodologies and assumptions used for the Bank’s regulatory reporting requirements by the FDIC for the Call Report.
The following table provides a maturity distribution of uninsured time deposits for the next twelve months as of December 31, 2025 and 2024:
Table 24—Maturity Distribution of Uninsured Time Deposits
December 31,
(Dollars in thousands)
% Change
Within three months
After three through six months
After six through twelve months
After twelve months
Table of Contents
Short-Term Borrowed Funds
Our short- term borrowed funds consist of federal funds purchased and securities sold under repurchase agreements, FRB borrowings on a secured line of credit, short-term FHLB Advances and the U.S. Bank line of credit. Note 9 — Federal Funds Purchased and Securities Sold Under Agreements to Repurchase in our audited financial statements provides a profile of these funds at each year-end, the average amounts outstanding during each period, the maximum amounts outstanding at any month-end, and the weighted average interest rates on year- end and average balances in each category. Federal funds purchased and securities sold under agreements to repurchase most typically have maturities within one to three days from the transaction date. Certain of these borrowings have no defined maturity date. Note 10 — Other Borrowings in our audited financial statements provide provides a profile of short-term FHLB advances, FRB borrowings and the U.S. Bank line of credit at each year-end, the average amount outstanding during each period and the weighted average interest rates on year- end and average balances. Short-term FHLB advances has a maturity of less than one year and the FRB borrowings and U.S. Bank line of credit has a daily maturity.
Long-Term Borrowed Funds
Our long- term borrowed funds consist of trust preferred junior subordinated debt and corporate subordinated debt. Note 10 — Other Borrowings in our audited financial statements provides a profile of these funds at each year- end, the balance at year end, the interest rate at year end and the weighted average interest rate for long-term borrowings. Each issuance of trust preferred junior subordinated debt has a maturity of 30 years, but we can call the debt at any time without penalty.
Capital and Dividends
Our ongoing capital requirements have been met primarily through retained earnings, less the payment of cash dividends. As of December 31, 2025, shareholders’ equity was $9.1 billion, an increase of $3.2 billion, or 53.8%, compared to the balance at December 31, 2024. The change from year-end 2024 was mainly attributable to the issuance of $2.5 billion in stock related to the acquisition of Independent, net income of $798.7 million, an increase in the market value of securities available for sale, net of tax of $323.6 million and the recognition of equity based compensation of $37.0 million. These increases were offset by dividends paid on common shares of $230.2 million and common stock repurchased under our stock repurchase plan and equity plans of $235.8 million.
The following shows the changes in shareholders’ equity during 2025:
Table 25—Changes in Shareholders’ Equity
(Dollars in thousands)
Total shareholders' equity at December 31, 2024
Net income
Dividends paid on common shares ($2.28 per share)
Dividends paid on restricted stock units
Net increase in market value of securities available for sale, net of deferred taxes
Net decrease in market value of post retirement plan, net of deferred taxes
Stock options exercised
Employee stock purchases
Equity based compensation
Excise tax on repurchase of corporate stock
Common stock repurchased - buyback plan
Common stock repurchased - equity plans
Stock issued pursuant to the acquisition of Independent
Stock issued in lieu of cash - directors fees
Total shareholders' equity at December 31, 2025
Table of Contents
The 2025 Repurchase Program authorized the Company to repurchase up to 3,000,000 shares, or up to approximately three percent, of the Company’s outstanding shares of common stock as of January 2, 2025. During 2025, the Company repurchased 2,440,000 shares at a weighted average price of $91.85 per share pursuant to the 2025 Stock Repurchase Program . As of December 31, 2025, there was a total of 560,000 shares remaining authorized to be repurchased.
On January 11, 2026, the Board of Directors of the Company approved the 2026 Repurchase Plan. This 2026 Repurchase Plan authorization replaces the Company’s pre-existing authorization previously approved in January 2025, under which 560,000 shares remained available for repurchase, and which was cancelled in connection with the Board’s approval of the 2026 Repurchase Plan.
We are subject to regulations with respect to certain risk-based capital ratios. These risk-based capital ratios measure the relationship of capital to a combination of balance sheet and off-balance sheet risks. The values of both balance sheet and off-balance sheet items are adjusted based on the rules to reflect categorical credit risk. In addition to the risk-based capital ratios, the regulatory agencies have also established a leverage ratio for assessing capital adequacy. The leverage ratio is equal to Tier 1 capital divided by total consolidated on-balance sheet assets (minus amounts deducted from Tier 1 capital). The leverage ratio does not involve assigning risk weights to assets.
Specifically, we are required to maintain the following minimum capital ratios:
a CET1, risk-based capital ratio of 4.5%;
a Tier 1 risk-based capital ratio of 6%;
a total risk-based capital ratio of 8%; and
a leverage ratio of 4%.
Under the current capital rules, Tier 1 capital includes two components: CET1 capital and additional Tier 1 capital. The highest form of capital, CET1 capital, consists solely of common stock (plus related surplus), retained earnings, accumulated other comprehensive income, otherwise referred to as AOCI, and limited amounts of minority interests that are in the form of common stock. Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock and Tier 1 minority interests. Tier 2 capital generally includes the allowance for loan losses up to 1.25% of risk-weighted assets, qualifying preferred stock, subordinated debt, trust preferred securities and qualifying tier 2 minority interests, less any deductions in Tier 2 instruments of an unconsolidated financial institution. AOCI is presumptively included in CET1 capital and often would operate to reduce this category of capital. When the current capital rules were first implemented, the Bank exercised its one-time opportunity to opt out of much of this treatment of AOCI, allowing us to retain our pre-existing treatment for AOCI.
In order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a banking organization must maintain a “capital conservation buffer” on top of its minimum risk-based capital requirements. This buffer must consist solely of Tier 1 Common Equity, but the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital), resulting in the following effective minimum capital plus capital conservation buffer ratios: (i) a CET1 capital ratio of 7.0%, (ii) a Tier 1 risk-based capital ratio of 8.5%, and (iii) a total risk-based capital ratio of 10.5%.
The Bank is also subject to the regulatory framework for prompt corrective action, which identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized) and is based on specified thresholds for each of the three risk-based regulatory capital ratios (CET1, Tier 1 capital and total capital) and for the leverage ratio.
Table of Contents
Table 26—Capital Adequacy Ratios
The following table presents our consolidated capital ratios under the applicable capital rules:
December 31,
(In percent)
Common equity Tier 1 risk-based capital
Tier 1 risk‑based capital
Total risk‑based capital
Tier 1 leverage
The Company’s and Bank’s Common equity Tier 1 risk-based capital, Tier 1 risk-based capital and total risk-based capital and Tier 1 leverage ratios all declined compared to December 31, 2024. The capital ratios declined mainly due to the effects on capital and assets from the acquisition of Independent. Tier 1 capital increased by 29.4% and 34.8% at both the Company and Bank, respectively, with the increase in equity resulting from the issuance of shares of common stock for the Independent acquisition and the net income recognized during 2025. Total risk-based capital increased by 32.9% and 34.3% at both the Company and Bank, respectively, with the increase in equity resulting from the issuance of shares of common stock for the Independent acquisition , the net income recognized during 2025 along with the increase in the allowance for credit losses and unfunded commitments includable in Tier 2 capital. Both regulatory risk-based assets and quarterly average assets increased in 2025 when compared to the fourth quarter with average assets for both the Company and Bank increasing by 40% and risk-based assets increasing by 44%. The increases in both average assets and risk-based assets were mainly due to the assets acquired in the Independent acquisition during the first quarter of 2025. Our capital ratios are currently well in excess of the minimum standards and continue to be in the “well capitalized” regulatory classification. Should the Company need to sell its available for sale and held to maturity securities for liquidity purposes and recognize the unrealized as of December 31, 2025 through earnings, all else equal, our capital ratios would remain well in excess of the minimum standards and continue to be in the “well capitalized” regulatory classification.
The Company pays cash dividends to shareholders from its assets, which are mainly provided by dividends from its banking subsidiary. However, certain restrictions exist regarding the ability of its banking subsidiary to transfer funds to the Company in the form of cash dividends, loans or advances. The approval of the OCC is required if the total of all dividends declared by the Bank in any calendar year exceeds the total of its net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus. The federal banking agencies have issued policy statements which provide that bank holding companies and insured banks should generally pay dividends only out of current earnings.
During 2025, the Bank paid dividends to SouthState totaling $485.0 million. The Bank was not required to obtain approval of the OCC to pay these dividends. We used these funds primarily to pay our dividend to shareholders of $230.2 million and repurchase shares of our common stock on the open market totaling $224.1 million.
The following table provides the amount of dividends and payout ratios for the years ended December 31, 2025, 2024 and 2023:
Table 27—Dividends Paid to Common Shareholders
Year Ended December 31,
(Dollars in thousands)
Dividend payments to common shareholders
Dividend payout ratios
We retain earnings to have capital sufficient to grow our loan and investment portfolios and to support certain acquisitions or other business expansion opportunities. The dividend payout ratio is calculated by dividing dividends paid during the year by net income for the year.
Table of Contents
Liquidity
Liquidity refers to our ability to generate sufficient cash to meet our financial obligations, which arise primarily from the withdrawal of deposits, extension of credit and payment of operating expenses. Liquidity risk is the risk that the Bank’s financial condition or overall safety and soundness is adversely affected by an inability (or perceived inability) to meet its obligations. Our Asset Liability Management Committee (“ALCO”) is charged with the responsibility of monitoring policies designed to ensure an acceptable composition of our asset/liability mix. Two critical areas of focus for ALCO are interest rate sensitivity and liquidity risk management. We have employed our funds in a manner to provide liquidity from both assets and liabilities sufficient to meet our cash needs.
The ALCO has established key risk indicators to monitor liquidity and interest rate risk. The key risk indicators are reviewed and approved by the ALCO on an annual basis. The liquidity key risk indicators include the loan to deposit ratio (policy limit not to exceed 100%), net noncore funding dependence ratio (policy limit not to exceed 30%), on-hand liquidity to total liabilities ratio (policy limit not to fall below 5%), the percentage of securities pledged to total securities (policy limit not to exceed 85%), primary liquidity to uninsured deposits excluding collateralized deposits (policy limit not to exceed 95%), primary liquidity to uninsured deposits including collateralized deposits (policy limit not to exceed 80%) and the ratio of brokered deposits to total deposits (policy limit not to exceed 15%). As of December 31, 2025, the Company was operating within its liquidity policy limits.
Asset liquidity is maintained by the maturity structure of loans, investment securities and other short-term investments. Management has policies and procedures governing the length of time to maturity on loans and investments. Normally, changes in the earning asset mix are of a longer-term nature and are not used for day-to-day corporate liquidity needs.
Our liabilities provide liquidity on a day-to-day basis. Daily liquidity needs are met from deposit levels or from our use of federal funds purchased, securities sold under agreements to repurchase, interest-bearing deposits at other banks and other short-term borrowings. We engage in routine activities to retain deposits intended to enhance our liquidity position. These routine activities include various measures, such as the following:
Emphasizing relationship banking to new and existing customers, where borrowers are encouraged and normally expected to maintain deposit accounts with our Bank;
Pricing deposits, including certificates of deposit, at rate levels that will attract and/or retain balances of deposits that will enhance our Bank’s asset/liability management and net interest margin requirements; and
Continually working to identify and introduce new products that will attract customers or enhance our Bank’s appeal as a primary provider of financial services.
Our non-acquired loan portfolio increased by approximately $5.0 billion, or approximately 16.9%, compared to the balance at December 31, 2024. The increase in the non-acquired loan portfolio was due to organic growth and renewals of acquired loans that are moved to our non-acquired loan portfolio. The acquired loan portfolio increased by $9.7 billion, or 215.9%, from the balance at December 31, 2024 from loans acquired from the Independent acquisition, offset by principal paydowns, charge-offs, foreclosures and renewals of acquired loans. For more detail around the changes in the loan portfolio see the Loan Portfolio section in MD&A starting on page 80.
Table of Contents
Our investment securities portfolio (excluding trading securities) increased $1.9 billion, or approximately 28.2%, compared to the balance at December 31, 2024. Increases in the investment securities portfolio came from $1.6 billion in securities acquired in the Independent acquisition and $7.1 billion in investment securities purchased during 2025, including securities purchased from reinvesting funds provided by the sales of securities acquired from Independent and the securities repositioning completed during the first quarter of 2025. The securities repositioning improved the yield and shortened the duration of the investment portfolio. The increases in investment securities from the acquisition and purchases were partially offset as a result of maturities, calls, and paydowns of investment securities totaling $7.0 billion and a reduction from the net amortization of premiums of $11.0 million. The net unrealized loss of the available for sale securities decreased during 2025 by $425.8 million mainly through the securities repositioning and the recognition of losses in the portfolio and the impact of lower market interest rates. Of the $7.1 billion in purchases of investment securities during the year, $7.0 billion were in available for sale securities and $117.4 million were in other investment securities. There were no purchases of held to maturity securities during the quarter. Other investment securities purchased were mainly related to capital stock with the Federal Home Loan Bank and Federal Reserve Bank of which we sold back $45.1 million during 2025. The purchases in the Federal Home Loan Bank Stock and Federal Reserve Bank Stock during the year were mainly due to stock holding requirements related to the Independent acquisition and FHLB borrowing activity. The Bank pledges a portion of its investment portfolio for a variety of purposes, including, but not limited to, collateral for public funds and credit with the Federal Home Loan Bank of Atlanta. As of December 31, 2025, the bank pledged 69.0% of the market value of its available for sale and held to maturity investment portfolios. As of December 31, 2025, the Bank had unpledged securities with a market value of $2.5 billion. These securities included Treasury, Agency, Agency MBS, Municipals and Corporate securities.
Total cash and cash equivalents increased $1.8 billion in 2025 to $3.2 billion at December 31, 2025, compared to $1.4 billion at December 31, 2024. The increase in cash and cash equivalents was due to the cash received from the sale-leaseback transaction of approximately $456.4 million, an increase in deposits, excluding deposits assumed from Independent, of approximately $1.9 billion, and an increase in federal funds purchased and securities sold under agreements to repurchase of $103.3 million. The increase in deposits, excluding deposits assumed from Independent, was mainly due to increases in interest-bearing checking accounts (including money market accounts) and brokered time deposits. These increases were partially offset by cash used to fund net loan growth, excluding loans assumed from Independent, of $1.6 billion and by cash used to fund investment growth, excluding investments assumed from Independent, of $325.9 million.
At December 31, 2025 and December 31, 2024, we had $1.7 billion and $614.5 million of traditional, out–of-market brokered time deposits, respectively. At December 31, 2025 and December 31, 2024, we had $4.0 billion and $2.5 billion, respectively, of reciprocal deposits. At December 31, 2025, we also had $2.0 billion in brokered interest-bearing checking and money market accounts. The Company has allowed some higher costing local deposits run off in 2025 and replaced the deposits with brokered and other out of market deposits at lower interest rates. Total deposits were $55.1 billion at December 31, 2025, an increase of $17.1 billion from $38.1 billion at December 31, 2024. Our deposit growth since December 31, 2024 was mainly attributable to the deposits acquired in the Independent acquisition of $15.2 billion. See further discussion on changes in deposits in the Interest-Bearing Liabilities and Noninterest-Bearing Deposits section of this MD&A. Total short-term borrowings at December 31, 2025 were $618.2 million consisting of $306.8 million in federal funds purchased, $311.4 million in securities sold under agreements to repurchase. Total long-term borrowings, consisting of trust preferred securities and subordinated debentures, increased by $305.0 million to $696.5 million at December 31, 2025. This increase was mainly due to $360.5 in corporate and subordinated debentures assumed in the Independent acquisition. The Company also issued $350.0 million in new subordinated debt in the second quarter of 2025 and subsequently paid off $405.0 million in subordinated debt in the third quarter of 2025 that had reached its call date and the end of its fixed rate period. To the extent that we employ other types of non-deposit funding sources, typically to accommodate retail and correspondent customers, we continue to take in shorter maturities of such funds. Our current approach may provide an to sustain a low funding rate or possibly lower our cost of funds but could also increase our cost of funds if interest rates rise.
Deposit flows are significantly influenced by general and local economic conditions, changes in prevailing interest rates, internal pricing decisions, and competition. Our deposits are primarily obtained from depositors located around our branch footprint, and we believe that we have attractive opportunities to capture additional retail and commercial deposits in our markets, in addition to having access to brokered deposits. Of the $55.1 billion in total deposits at December 31, 2025, approximately 70% were insured or collateralized. The Bank has a granular deposit base comprised of over 1.4 million accounts, with an average deposit size of $39,000. Approximately 24% of total deposits are nonin terest-bearing at December 31, 2025.
Table of Contents
The Bank supplements its in-market deposits with brokered deposits. While the Bank has a policy limit for brokered time deposits of no more than 15% of total deposits, it has operated well below this policy limit. At December 31, 2025, the Company had $3.8 billion in brokered deposits including $1.7 billion in brokered time deposits, $1.9 billion of ICS brokered demand deposits, and $83.6 million of other brokered demand deposits. Total brokered deposits represented 6.9% of total deposits at December 31, 2025. Brokered deposits totaled $614.5 million, or 1.6% of total deposits at December 31, 2024. In 2025, the Company has allowed some higher costing local deposits run off and replaced the deposits with brokered and other out of market deposits at lower interest rates.
As discussed below, the Bank maintains credit facilities with the Federal Home Loan Bank of Atlanta and the Federal Reserve Bank of Atlanta. The table below compares Primary Funding Sources to uninsured deposits as of December 31, 2025.
Table 28—Primary Funding Sources to Uninsured Deposits
(Dollars in millions)
Available Capacity
Federal Home Loan Bank of Atlanta
Federal Reserve Bank of Atlanta Discount Window
Liquid cash and cash equivalents
Fair value of securities that can be pledged
Total primary sources
Uninsured deposits, excluding collateralized deposits
Uninsured and collateralized deposits
Coverage ratio, uninsured deposits
Coverage ratio, uninsured and uncollateralized deposits
Ratio of uninsured and collateralized deposits to total deposits
Through the operations of our Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of time. We manage the credit risk on these commitments by subjecting them to normal underwriting and risk management processes. We believe that we have adequate sources of liquidity to fund commitments that are drawn upon by the borrowers. In addition to commitments to extend credit, we also issue standby letters of credit, which are assurances to third parties that they will not suffer a loss if our customer fails to meet its contractual obligation to the third-party. Although our experience indicates that many of these standby letters of credit will expire unused, through our various sources of liquidity, we believe that we will have the resources to meet these obligations should the need arise.
Our ongoing philosophy is to remain in a liquid position, as reflected by such indicators as the composition of our earning assets, typically including some level of reverse repurchase agreements; federal funds sold; balances at the Federal Reserve Bank; and/or other short-term investments; asset quality; well-capitalized position; and profitable operating results. Cyclical and other economic trends and conditions can disrupt our desired liquidity position at any time. We expect that these conditions would generally be of a short-term nature. Under such circumstances, we expect our reverse repurchase agreements and federal funds sold positions, or balances at the Federal Reserve Bank, if any, to serve as the primary source of immediate liquidity. We could draw on additional alternative immediate funding sources from lines of credit extended to us from our correspondent banks. The Bank may also access funds from borrowing facilities established with the Federal Home Loan Bank of Atlanta and the discount window of the Federal Reserve Bank of Atlanta.
At December 31, 2025, the Bank had a total FHLB credit facility of $5.7 billion, with no outstanding borrowings in short-term FHLB advances and $17.8 million in secured credit exposure at year-end, leaving $5.7 billion in availability on the FHLB credit facility. At December 31, 2025, the Bank had $11.1 billion of credit available at the Federal Reserve Bank’s discount window and federal funds credit lines of $300.0 million with no balances outstanding at year-end. The Bank has $2.4 billion in pledgeable market value of securities at December 31, 2025, that can be pledged to attain additional funds if necessary. The Bank also has an internal limit on brokered deposits of 15% of total deposits (consolidated bank), which would allow capacity of $8.3 billion at December 31, 2025. The Bank had $3.8 billion of outstanding brokered deposits at the end of the year leaving $4.5 billion in available capacity. All of these resources would provide an additional $24.0 billion in funding if we needed additional liquidity. We can also consider actions such as deposit promotions to increase core deposits. The Company has a $100.0 million unsecured line of credit with U.S. Bank with no balance outstanding at December 31, 2025. We believe that our liquidity position continues to be adequate and readily available.
Table of Contents
Our contingency funding plan describes several potential stages based on stressed liquidity levels. Liquidity key risk indicators are reported to the Board of Directors on a quarterly basis. We maintain various wholesale sources of funding. If our deposit retention efforts were to be unsuccessful, we would use these alternative sources of funding. Under such circumstances, depending on the external source of funds, our interest cost would vary based on the range of interest rates charged. This could increase our cost of funds, impacting our net interest margin and net interest spread.
Asset-Liability Management and Market Risk Sensitivity
Our earnings and the economic value of equity vary in relation to the behavior of interest rates and the accompanying fluctuations in market prices of certain of our financial instruments. We define interest rate risk as the risk to earnings and equity arising from the behavior of interest rates. These behaviors include increases and decreases in interest rates as well as continuation of the current interest rate environment.
Our interest rate risk principally consists of reprice, option, basis, and yield curve risk. Reprice risk results from differences in the maturity or repricing characteristics of asset and liability portfolios. Option risk arises from embedded options in the investment and loan portfolios such as investment securities calls and loan prepayment options. Option risk also exists since deposit customers may withdraw funds at their discretion in response to general market conditions, competitive alternatives to existing accounts or other factors. The exercise of such options may result in higher costs or lower revenue. Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which subsequently result in narrowing spreads on interest-earning assets and interest-bearing liabilities. Basis risk also exists in administered rate liabilities, such as interest-bearing checking accounts, savings accounts, and money market accounts where the price sensitivity of such products may vary relative to general markets rates. Yield curve risk refers to adverse consequences of nonparallel shifts in the yield curves of various market indices that impact our assets and liabilities.
We use simulation analysis as a primary method to assess earnings at risk and equity at risk due to assumed changes in interest rates. Management uses the results of its various simulation analyses in combination with other data and observations to formulate strategies designed to maintain interest rate risk within risk tolerances.
Simulation analysis involves the use of several assumptions including, but not limited to, the timing of cash flows such as the terms of contractual agreements, investment security calls, loan prepayment speeds, deposit attrition rates, the interest rate sensitivity of loans and deposits relative to general market rates, and the behavior of interest rates and spreads. The assumptions for loan prepayments, deposit decay, and nonstable deposit balances are derived from models that use historical bank data. These models are independently validated. Equity at risk simulation uses assumptions regarding discount rates that value cash flows. Simulation analysis is highly dependent on model assumptions that may vary from actual outcomes. Key simulation assumptions are subject to sensitivity analysis to assess the impact of assumption changes on earnings at risk and equity at risk. Model assumptions are reviewed by our Assumptions Committee. While the Bank is continuously refining its modeling methodology, the core principles of the methodology have remained stable over for several years.
Earnings at risk is defined as the percentage change in net interest income due to assumed changes in interest rates. Earnings at risk is generally used to assess interest rate risk over relatively short time horizons.
Equity at risk is defined as the percentage change in the net economic value of assets and liabilities due to changes in interest rates compared to a base net economic value. The discounted present value of all cash flows represents our economic value of equity. Equity at risk is generally considered a measure of the long-term interest rate exposures of the balance sheet at a point in time.
The earnings simulation models consider our contractual agreements with regard to investments, loans, deposits, borrowings, and derivatives as well as a number of behavioral assumptions applied to certain assets and liabilities.
Mortgage banking derivatives used in the ordinary course of business consist of forward sales contracts and interest rate lock commitments on residential mortgage loans. These derivatives involve underlying items, such as interest rates, and are designed to mitigate risk. Derivatives are also used to hedge mortgage servicing rights. For additional information see Note 26—Derivative Financial Instruments in the consolidated financial statements.
Table of Contents
From time to time, we execute interest rate swaps to hedge some of our interest rate risks. Under these arrangements, the Company enters into a variable rate loan with a client in addition to a swap agreement. The swap agreement effectively converts the client’s variable rate loan into a fixed rate loan. The Company then enters into a matching swap agreement with a third-party dealer to offset its exposure on the customer swap. The Company may also execute interest rate swap agreements that are not specific to client loans. As of December 31, 2025, the Company had a series of short-term interest rate hedges to address monthly accrual mismatches related to the Company’s ARC program and its transition from LIBOR to SOFR after June 30, 2023. For additional information on these derivatives refer to Note 26—Derivative Financial Instruments in the consolidated financial statements.
Our interest rate risk key indicators are applied to a static balance sheet using forward rates from the Moody’s Baseline Scenario. The Company will also use other rate forecasts, including, but not limited to, Moody’s Consensus Scenario. This Base Case Scenario assumes the maturity composition of asset and liability rollover volumes is modeled to approximately replicate current consolidated balance sheet characteristics throughout the simulation. These treatments are consistent with the Company’s goal of assessing current interest rate risk embedded in its current balance sheet. The Base Case Scenario assumes that maturing or repricing assets and liabilities are replaced at prices referencing forward rates derived from the selected rate forecast consistent with current balance sheet pricing characteristics. Key rate drivers are used to price assets and liabilities with sensitivity assumptions used to price non-maturity deposits. The sensitivity assumptions for the pricing of non-maturity deposits are subjected to sensitivity analysis no less frequently than on an annual basis.
Interest rate shocks are applied to the Base Case on an instantaneous basis. Our policy establishes the use of upward and downward interest rate shocks applied in 100 basis point increments through 400 basis points. We calculate smaller rate shocks as needed. At times, market conditions may result in assumed rate movements that will be deemphasized. For example, during a period of ultra-low interest rates, certain downward rate shocks may be impractical. The model simulation results produced from the Base Case Scenario and related instantaneous shocks for changes in net interest income and changes in the economic value of equity are referred to as the Core Scenario Analysis and constitute the policy key risk indicators for interest rate risk when compared to risk tolerances. As of December 31, 2025, the Company was operating within its interest rate key risk indicator policy limits.
During 2025, the beta assumption applied to deposits increased to reflect changes in deposit mix. From the beginning of the upward rate cycle, our deposit costs increased from five basis points to one hundred and ninety basis points. During that period, the federal funds rate increased 525 basis points, which implies a 35% beta. Management recognizes the difficulty in using historical data to forecast deposit betas in the current environment. For internal purposes, and based on the deposit mix as of December 31, 2025, the total deposit beta assumption was 44.3%. For internal forecasting, management will apply overlays to certain assumptions to adjust for current market conditions rather than use assumptions modeled over longer periods of time.
The following interest rate risk metrics are derived from analysis using the Moody’s Baseline Scenario published in October 2025 as the Base Case Scenario. As of December 31, 2025, the earnings simulations indicated that the year 1 impact of an instantaneous 100 basis point parallel increase / decrease in rates would result in an estimated 1.4% increase (up 100) and 1.9% decrease (down 100) in net interest income.
We use Economic Value of Equity (“EVE”) analysis as an indicator of the extent to which the present value of our capital could change, given potential changes in interest rates. This measure also assumes a static balance sheet (Base Case Scenario) with rate shocks applied as described above. At December 31, 2025, the percentage change in EVE due to a 100-basis point increase or decrease in interest rates was 1.9% decrease and 0.9% increase, respectively. The percentage changes in EVE due to a 200-basis point increase or decrease in interest rates were 4.7% decrease and 0.6% increase, respectively. Downward shocks are constrained on various balance sheet categories due to the inability to price products below floors or zero. This is particularly meaningful given the cost of deposits as of December 31, 2025.
Table of Contents
The analysis below reflects a Base Case and shocked scenarios that assume a static balance sheet projection where volume is added to maintain balances consistent with current levels. Base Case assumes new and repricing volumes reference forward rates derived from the Moody’s Baseline rate forecast. Instantaneous, parallel, and sustained interest rate shocks are applied to the Base Case scenario over a one-year time horizon.
Table 29—Rate Shock Analysis – Net Interest Income
Percentage Change in Net Interest Income over One Year
Up 300 basis points
Up 200 basis points
Up 100 basis points
Base Case
Down 100 basis points
Down 200 basis points
Down 300 basis points
Asset Credit Risk and Concentrations
The quality of our interest- earning assets is maintained through our management of certain concentrations of credit risk. We review each individual earning asset including investment securities and loans for credit risk. To facilitate this review, we have established credit and investment policies that include credit limits, documentation, periodic examination, and follow- up. In addition, we examine these portfolios for exposure to concentration in any one industry, government agency, or geographic location.
Deposit Concentrations
At December 31, 2025 and 2024, we have no material concentration of deposits from any single customer or group of customers. We have no significant portion of our deposits concentrated within a single industry or group of related industries. We do not believe there are any material seasonal factors that would have a material adverse effect on us. The total deposit balances held by top 10 and 20 deposit holders were below 6% and 5% of the Company’s average total deposit balances at December 31, 2025 and 2024. We do not have any foreign deposits.
Concentration of Credit Risk
Each category of earning assets has a certain degree of credit risk. We use various techniques to measure credit risk. Credit risk in the investment portfolio can be measured through bond ratings published by independent agencies. In the investment securities portfolio, the investments consist of U.S. government-sponsored entity securities, tax-free securities, or other securities having ratings of “AAA” to “Not Rated”. All securities, with the exception of those that are not rated, were rated by at least one of the nationally recognized statistical rating organizations. The credit risk of the loan portfolio can be measured by historical experience. We maintain our loan portfolio in accordance with credit policies that we have established. Although the Bank has a diversified loan portfolio, a substantial portion of our borrowers’ abilities to honor their contracts is dependent upon economic conditions within our geographic footprint and the surrounding regions. See Concentration of Credit Risk section in Note 1 – Summary of Significant Accounting Policies for further discussion of credit risk concentrations.
Table of Contents
Banking regulators have established guidelines for calculating credit concentrations. Banking regulators set the guidelines for construction, land development and other land loans to total less than 100% of total Tier 1 capital less modified CECL transitional amount plus ACL (CDL concentration ratio) and for total commercial real estate loans (construction, land development and other land loans along with other non-owner-occupied commercial real estate and multifamily loans) to total less than 300% of total Tier 1 capital less modified CECL transitional amount plus ACL (CRE concentration ratio). Both ratios are calculated by dividing certain types of loan balances for each of the two categories by the Bank’s total Tier 1 capital less modified CECL transitional amount plus ACL. At December 31, 2025, the Bank’s CDL concentration ratio was 35.2% and its CRE concentration ratio was 271.8%. At December 31, 2024, the Bank’s CDL concentration ratio was 40.9% and its CRE concentration ratio was 219.6%. As of December 31, 2025 and 2024, the Bank was below the established regulatory guidelines. When a bank’s ratios are in excess of one or both of these loan concentration ratios guidelines, banking regulators generally require an increased level of monitoring in these lending areas by bank management. Therefore, we monitor these two ratios as part of our concentration management processes.
Effect of Inflation and Changing Prices
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measure of financial position and results of operations in terms of historical dollars, without consideration of changes in the relative purchasing power over time due to inflation. Unlike most other industries, the majority of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant effect on a financial institution’s performance than does the effect of inflation. Interest rates do not necessarily change in the same magnitude as the prices of goods and services.
While the effect of inflation on banks is normally not as significant as is its influence on those businesses which have large investments in plant and inventories, it does have an effect. During periods of high inflation, there are normally corresponding increases in money supply, and banks will normally experience above average growth in assets, loans and deposits. Also, general increases in the prices of goods and services will result in increased operating expenses. Inflation also affects our Bank’s customers and may result in an indirect effect on our Bank’s business.
Table of Contents
Contractual Obligations
The following table presents payment schedules for certain of our contractual obligations as of December 31, 2025. Long-term debt obligations totaling $696.5 million include trust preferred junior subordinated debt and corporate subordinated debt. Operating and finance lease obligations of $801.6 million and $1.2 million, respectively, pertain to banking facilities. Certain lease agreements include payment of property taxes and insurance and contain various renewal options. Additional information regarding leases is contained in Note 19—Leases of the audited consolidated financial statements.
Table 30—Obligations
Less Than
More Than
(Dollars in thousands)
Total
1 Year
Years
Years
5 Years
Long‑term debt obligations *
Finance lease obligations
Operating lease obligations
Total
* Represents principal maturities.
