Last Update 31 Oct 25
Fair value Decreased 2.79%Analysts have revised their price targets for SouthState Bank downward by several dollars per share. This reflects slightly reduced fair value and revenue growth estimates, due to tempered net interest margin outlooks and evolving market expectations.
Analyst Commentary
Recent analyst assessments of SouthState Bank reveal both optimistic and cautious perspectives, with changes to price targets reflecting nuanced views on execution, growth outlooks, and valuation drivers.
Bullish Takeaways- Bullish analysts highlight that the company’s quarterly results surpassed expectations in several financial metrics, particularly with respect to capital markets-driven fees and correspondent banking performance.
- Organic growth momentum is reportedly building, supported by strong lending pipelines in both new and legacy markets. This positions the bank for potential acceleration in loan growth by 2026.
- Cost management remains a positive focus. Lower expenses have helped offset some of the near-term pressures from net interest margins.
- Higher loan accretion and robust fee income streams are contributing to sustained earnings strength, indicating resilience in core profitability.
- Bearish analysts express concern over lower core net interest income and a tempered outlook for net interest margins, factors that are weighing on longer-term revenue and profit expectations.
- Price targets have been revised downward due to an industry-wide re-evaluation of fair value and more modest top-line growth projections.
- There is an ongoing debate about the sustainability of rapid earnings growth, with some investors wary that outsized profitability may not persist at current rates.
- A less favorable outlook for deposit betas and associated funding costs presents ongoing challenges to margin preservation.
What's in the News
- SouthState Bank Corporation reported net charge-offs of $32.2 million, or 0.27 percent, for the third quarter ended September 30, 2025. This amount was primarily due to a single credit charge-off (company announcement).
- Year-to-date net charge-offs stood at 12 basis points. This figure excludes acquisition-related charge-offs from earlier quarters in 2025 (company announcement).
Valuation Changes
- Fair Value: Lowered from $118.35 to $115.04 per share, reflecting a modest decrease of roughly 3%.
- Discount Rate: Kept unchanged at 6.78%.
- Revenue Growth: Reduced sharply from 15.48% to 10.33%, indicating a significantly more cautious outlook on top-line expansion.
- Net Profit Margin: Declined slightly from 37.99% to 37.53%.
- Future P/E: Remained essentially stable, moving marginally from 14.67x to 14.70x.
Key Takeaways
- Expansion in high-growth markets and successful acquisitions are fueling operational efficiency, increased technology investment, and stronger revenue potential.
- Diversification into business banking and capital markets enhances revenue stability, while disciplined expense management supports resilient earnings.
- Geographic concentration, CRE portfolio exposure, fintech competition, regulatory challenges, and rising funding costs collectively heighten risk to SouthState's growth, margins, and profitability.
Catalysts
About SouthState- Operates as the bank holding company for SouthState Bank, National Association that provides a range of banking services and products to individuals and companies in the United States.
- Continued strong loan production growth in Texas and Colorado, which are among the fastest-growing states in the country, positions SouthState to benefit from population migration and economic expansion in the Sunbelt; this is likely to accelerate revenue and earnings growth.
- The successful integration of recent acquisitions (notably Independent Bank) and the bank's established scale are driving operational efficiencies and enabling further investments in technology and digital platforms, supporting higher net margins over time.
- Substantial pipeline increases and ongoing recruitment of revenue producers in high-growth markets signal potential for sustained organic loan growth, bolstering both top-line revenue and net interest income.
- Improving efficiency ratios and low credit costs indicate disciplined expense management and sound asset quality, suggesting more stable and resilient earnings amid industry consolidation and regulatory shifts.
- Expansion into business banking and adoption of fee-generating capital markets products (such as interest rate swaps for CRE clients) allow SouthState to diversify revenue streams beyond traditional interest income, positioning the bank for higher, less volatile future earnings.
SouthState Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming SouthState's revenue will grow by 15.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 28.7% today to 38.5% in 3 years time.
- Analysts expect earnings to reach $1.2 billion (and earnings per share of $10.12) by about September 2028, up from $591.7 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.1x on those 2028 earnings, down from 17.3x today. This future PE is greater than the current PE for the US Banks industry at 11.9x.
- Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
SouthState Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Limited geographic diversification, despite recent expansion into Texas and Colorado, means SouthState remains heavily exposed to economic conditions in the Southeast and select markets, increasing its vulnerability to regional downturns or adverse demographic shifts, which could reduce loan growth, credit quality, and revenue.
- Heavy reliance on commercial real estate (CRE) lending, illustrated by integration synergies involving legacy CRE portfolios, exposes SouthState to sector-specific risks; a prolonged CRE downturn or credit event could result in higher charge-offs and provisions, negatively impacting earnings and net margins.
- Intensifying competition from digital banking and fintechs, as well as peer regional banks, could erode SouthState's market share, pressure on customer acquisition/retention, and limit organic deposit growth-potentially holding back non-interest income growth and compressing revenue.
- Continued industry regulatory changes and rising compliance costs, particularly as SouthState grows toward asset thresholds ($66B, tracking toward $100B), may require additional investments in risk management infrastructure and limit operating leverage, thereby pressuring expense ratios and profitability.
- Sector-wide pressure on deposit costs and funding, flagged by management as likely to rise with continued loan growth, may squeeze net interest margins and increase reliance on higher-cost CDs or wholesale funding, which could limit net interest income expansion and increase earnings volatility.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $116.083 for SouthState based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.2 billion, earnings will come to $1.2 billion, and it would be trading on a PE ratio of 14.1x, assuming you use a discount rate of 6.8%.
- Given the current share price of $101.03, the analyst price target of $116.08 is 13.0% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Read more narratives
There are no other narratives for this company.
View all narratives