SouthState Corp

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) relates to the financial statements contained in this Quarterly Report beginning on page 3. For further information, refer to the MD&A appearing in the Annual Report on Form 10-K for the year ended December 31, 2024. Results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or any future period.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) relates to the financial statements contained in this Quarterly Report beginning on page 3. For further information, refer to the MD&A appearing in the Annual Report on Form 10-K for the year ended December 31, 2024. Results for the three and six months ended June 30, 2025, are not necessarily indicative of the results for the year ending December 31, 2025, or any future period.

Previous wording

SouthState Corporation is a financial holding company headquartered in Winter Haven, Florida, and was incorporated under the laws of South Carolina in 1985. We provide a wide range of banking services and products to our customers through our Bank. The Bank operates SouthState|Duncan-Williams Securities Corp. (“SouthState|Duncan-Williams”), 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 Advisory, Inc., a wholly-owned registered investment advisor, and Private Capital Management, also a wholly-owned registered investment advisor which it acquired through the Independent acquisition completed on January 1, 2025. 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. 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. The holding company also owns SSB Insurance Corp., a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code.

Current wording

SouthState Corporation is a financial holding company headquartered in Winter Haven, Florida, and was incorporated under the laws of South Carolina in 1985. We provide a wide range of banking services and products to our customers through our Bank. The Bank operates SouthState|DuncanWilliamsSouthState|DuncanWilliams Securities Corp. (“SouthState|DuncanWilliamsSouthState|DuncanWilliams”), 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 Advisory, Inc., a wholly-owned registered investment advisor, and Private Capital Management, LLC, also a wholly-owned registered investment advisor which it acquired through the Independent acquisition completed on January 1, 2025. 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. 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. The holding company also owns SSB Insurance Corp., a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code.

Previous wording

At March 31, 2025, we had $65.1 billion in assets and 6,405 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 Alabama, Colorado, Florida, Georgia, North Carolina, South Carolina, Texas, 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. As of December 31, 2024, our workforce included employees that are White (70.95%), Black or African American (14.78%), Hispanic (7.78%), Asian (1.95%), Native - American or Alaskan) (0.23%), Native Hawaiian/Pacific Islander (0.17%), Two or more races (2.05%), and Other (2.09%).

Current wording

At June 30, 2025, we had approximately $65.9 billion in assets and 6,306 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 Alabama, Colorado, Florida, Georgia, North Carolina, South Carolina, Texas, 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.

Previous wording

The following discussion describes our results of operations for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, and also analyzes our financial condition as of March 31, 2025 as compared to December 31, 2024. Like most financial 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 which we may pay interest. Consequently, one of the key measures of our success is the amount of our 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.

Current wording

The following discussion describes our results of operations for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, and also analyzes our financial condition as of June 30, 2025, as compared to December 31, 2024. Like most financial 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 which we may pay interest. Consequently, one of the key measures of our success is the amount of our 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.

Previous wording

On January 1, 2025, the Company acquired Independent, a Texas-based corporation, the bank holding company for Independent Bank, in an all-stock transaction. Pursuant to the Agreement dated May 17, 2024, shareholders of Independent received 0.60 shares of the Company’s common stock in exchange for each share of Independent stock resulting in the Company issuing 24,858,731 shares of its common stock. In total, the purchase price for Independent was $2.5 billion.

Current wording

On January 1, 2025, the Company acquired Independent, a Texas-based corporation, the bank holding company for Independent Bank, in an all-stock transaction. Pursuant to the Agreement dated May 17, 2024, shareholders of Independent received 0.60 shares of the Company’s common stock in exchange for each share of Independent stock resulting in the Company issuing 24,858,731 shares of its common stock. In total, the purchase price for Independent was $2.5 billion. See accompanying Note 4 — Mergers and Acquisitions to our consolidated financial statements.

Previous wording

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; however, the final rule is subject to ongoing litigation that could impact whether and when the Company and the Bank are required to comply with the rule. We continue to evaluate the final rule and the potential impacts on the Company and the Bank.

Current wording

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; however, following the issuance of the rule, a lawsuit was filed to challenge the rule in court. In May 2025, the CFPB filed a motion for summary judgment in the litigation, in which the CFPB stated that it had concluded that the final rule exceeds the agency’s statutory authority. As a result, the CFPB requested that the court grant the plaintiffs’ motion for summary judgment and vacate the final rule. The district court has not yet ruled on the CFPB’s motion.

Previous wording

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 $246 million. Conversely, if a 100% probability weighting was applied to the upside scenario, this would result in a decrease in the ACL by approximately $118 million. The adverse scenario includes assumptions including, but not limited to, rising unemployment consistent with a recession, high levels of inflation and weakened consumer and business spending, elevated interest rates, tightening credit, widening Federal deficit, and continued geopolitical tensions. Conversely, the upside scenario includes assumptions such as a stronger domestic economy, swift resolution of international conflicts and strengthening global economy, more than full employment, reduced political tensions, and other favorable assumptions. This sensitivity analysis and related impact on the ACL is a hypothetical analysis and is not intended to represent management’s judgments at March 31, 2025.

Current wording

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 $219 million. Conversely, if a 100% probability weighting was applied to the upside scenario, this would result in a decrease in the ACL by approximately $131 million. The adverse scenario includes assumptions including, but not limited to, rising unemployment consistent with a recession, high levels of inflation and weakened consumer and business spending, elevated interest rates, tightening credit, widening Federal deficit, and exacerbated geopolitical and trade tensions. Conversely, the upside scenario includes assumptions such as a stronger domestic economy, swift resolution of international conflicts and strengthening global economy, more than full employment, reduced political tensions, and other favorable assumptions. This sensitivity analysis and related impact on the ACL is a hypothetical analysis and is not intended to represent management’s judgments at June 30, 2025.

Previous wording

We reported consolidated net income of $89.1 million, or diluted earnings per share (“EPS”) of $0.87, for the first quarter of 2025 as compared to consolidated net income of $115.1 million, or diluted EPS of $1.50, in the comparable period of 2024, a 22.6% decrease in consolidated net income and a 42.0% decrease in diluted EPS. The $26.0 million decrease in consolidated net income was the net result of the following items:

Current wording

We reported consolidated net income of $215.2 million, or diluted earnings per share (“EPS”) of $2.11, for the second quarter of 2025 compared to consolidated net income of $132.4 million, or diluted EPS of $1.73, in the comparable period of 2024, a 62.6% increase in consolidated net income and a 22.0% increase in diluted EPS. During the six months ended June 30, 2025, we reported consolidated net income of $304.3 million, or diluted EPS of $2.99, compared to consolidated net income of $247.4 million, or diluted EPS of $3.23, in the comparable period of 2024, a 23.0% increase in consolidated net income and a 7.4% decrease in diluted EPS. The $82.9 million increase in consolidated net income for the second quarter of 2025 compared to the same period of 2024 was the net result of the following items:

Previous wording

Our quarterly efficiency ratio increased to 61.0% in the first quarter of 2025 compared to 58.5% in the first quarter of 2024. The increase in the efficiency ratio compared to the first quarter of 2024 was the result of a 58.2% increase in noninterest expense (excluding amortization of intangibles) partially offset by 51.8% increase in the total of tax-equivalent net interest income and noninterest income. The overall increase in both noninterest expense and tax-equivalent net interest income and noninterest income was due to the acquisition of Independent in the first quarter of 2025. The higher increase in noninterest expense was mainly due to the $63.5 million increase in merger, branch consolidation, severance related and other restructuring expenses during the first quarter of 2025 compared to the first quarter of 2024.

Current wording

Our quarterly efficiency ratio decreased to 52.7% in the second quarter of 2025 compared to 57.0% in the second quarter of 2024. The decrease in the efficiency ratio compared to the second quarter of 2024 was the result of a 56.2% increase in the total of tax-equivalent net interest income and noninterest income being greater than a 44.4% 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 the first quarter of 2025. The higher increase in tax-equivalent net interest income and noninterest income was due to the $264.3 million increase in interest income related to loans held for investment, which was mainly attributable to loans acquired in the acquisition of Independent.

Previous wording

Basic and diluted EPS were $0.88 and $0.87, respectively, for the first quarter of 2025, compared to $1.51 and $1.50, respectively, for the first quarter of 2024. The decrease in basic and diluted EPS was due to a 22.6% decrease in net income in the first quarter of 2025 compared to the same period in 2024 along with an increase in average basic common shares of 32.9%. The decrease in net income in the first quarter of 2025 was mainly attributable to the initial provision for credit losses on Non-PCD loan portfolio and unfunded commitments from Independent of $92.1 million, an $63.5 million increase in merger, branch consolidation, severance related and other restructuring expenses and the impact of the deferred tax remeasurement of $5.6 million during the first quarter of 2025. The increase in average basic common shares was mainly due to the issuance of approximately 24.9 million shares of common stock related to the acquisition of Independent in the first quarter of 2025.

Current wording

Basic and diluted EPS were $2.12 and $2.11, respectively, for the second quarter of 2025, compared to $1.74 and $1.73, respectively, for the second quarter of 2024. The increase in basic and diluted EPS was due to a 62.6% increase in net income in the second quarter of 2025 compared to the same period in 2024. The effects from the increase in net income were partially offset by an increase in average basic common shares of 33.1%. The increase in net income in the second quarter of 2025 was mainly attributable to an increase in net interest income of $227.7 million derived from the interest-earning assets and interest-bearing liabilities acquired from Independent in the first quarter of 2025. The increase in average basic common shares was mainly due to the issuance of approximately 24.9 million shares of common stock related to the acquisition of Independent

Previous wording

The Federal Reserve implemented a total rate cut of 100 basis-point, beginning with a 50 basis-point reduction in mid-September 2024. This was followed by two additional cuts of 25 basis-point each, one in early November 2024 and the other in mid-December 2024. These rate cuts came after a series of rate hikes that began in March 2022, resulting in a target range of 4.25% to 4.50% at March 31, 2025. As a result, the Company operated in a comparatively lower rate environment for the first quarter of 2025 compared to the first quarter of 2024. Some key highlights are outlined below:

Current wording

The Federal Reserve implemented a total rate cut of 100 basis-point, beginning with a 50 basis-point reduction in mid-September 2024. This was followed by two additional cuts of 25 basis-point each, one in early November 2024 and the other in mid-December 2024. These rate cuts came after a series of rate hikes that began in March 2022, resulting in a target range of 4.25% to 4.50% at June 30, 2025. As a result, the Company operated in a comparatively lower rate environment for the three and six months ended June 30, 2025 compared to the same time periods in 2024. Some key highlights are outlined below:

Previous wording

The table below summarizes the analysis of changes in interest income and interest expense for the quarter ended March 31, 2025 and 2024 and net interest margin on a tax equivalent basis.

Current wording

The tables below summarize the analysis of changes in interest income and interest expense for the three and six months ended June 30, 2025, and 2024 and net interest margin on a tax equivalent basis:

Previous wording

The interest earned on investment securities increased by $16.1 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This is a result of the Bank carrying a higher average balance in investment securities along with an increase in the yield on the investment portfolio in 2025 compared to the same period in 2024. The average balance of investment securities for the three months ended March 31, 2025 increased $860.0 million from the comparable period in 2024 due to the Company acquiring $1.6 billion in investment securities through the acquisition of Independent during the quarter. These securities were subsequently sold during the quarter 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 due to maturities and mortgage paydowns within the AFS and HTM investment portfolios. The yield on the total investment securities increased 55 basis points during the three months ended March 31, 2025 compared to the same period in 2024. This was due to recent purchases, including the reinvestment of the Independent investment portfolio at current market rates. The Company also conducted a securities repositioning during the quarter where it sold approximately $1.8 billion in investment securities 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.

Current wording

The interest earned on investment securities increased by $29.7 million and $45.8 million, respectively, in the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024. This is a result of the Bank carrying a higher average balance in investment securities along with an increase in the yield on the investment portfolio in 2025 compared to the same period in 2024. The average balance of investment securities increased $1.3 billion and $1.1 billion, respectively, for the three and six months ended June 30, 2025, from the comparable periods in 2024, 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 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 due to maturities and mortgage paydowns within the AFS and HTM investment portfolios. The yield on the investment securities increased 102 basis points and 79 basis points, respectively, during the three and six months ended June 30, 2025, compared to the same periods in 2024. The Company purchased investment securities, including the reinvestment of the Independent investment portfolio, at current market rates during the first quarter of 2025. The Company saw an improvement in the yield and risk weightings, as well as a shortened duration, of the investment portfolio for a full quarter during the current quarter as a result of the securities repositioning completed during the first quarter of 2025.

Previous wording

Interest earned on loans held for investment increased $258.0 million to $721.0 million in the quarter ended March 31, 2025 compared to the same period in 2024. Interest earned on loans held for investment included loan accretion income recognized during the quarters ended March 31, 2025 and 2024 of $61.8 million and $4.3 million, respectively, an increase of $57.5 million. Some key highlights for the quarter ended March 31, 2025 are outlined below:

Current wording

Interest earned on loans held for investment increased $264.3 million to $741.6 million and increased $522.2 million to $1.5 billion, respectively, during the three and six months ended June 30, 2025, from the comparable periods in 2024. Interest earned on loans held for investment included loan accretion income recognized during the three and six months ended June 30, 2025, and 2024 of $63.5 million, $125.3 million, $4.4 million and $8.7 million, respectively, an increase of $59.1 million and $116.6 million, respectively. Some key highlights for the quarter ended June 30, 2025, are outlined below:

Previous wording

The quarter-to-date average balance of interest-bearing liabilities increased $13.2 billion, or 48.1%, in the first quarter of 2025 compared to the same period in 2024. The cost of interest-bearing liabilities increased by 10 basis points to 2.63% and the overall cost of funds, including demand deposits, increased by 14 basis points to 1.97% in the first quarter of 2025 compared to the same period in 2024. Some key highlights for the quarter ended March 31, 2025 compared to the same period in 2024 include:

Current wording

The quarter-to-date average balance of interest-bearing liabilities increased by $12.9 billion, or 46.4%, in the second quarter of 2025 compared to the same period in 2024. The cost of interest-bearing liabilities decreased slightly to 2.60% compared to the same period in 2024, while the overall cost of funds, including demand deposits, slightly increased by 4 basis points to 1.94% in the second quarter of 2025, compared to the same period in 2024. Some key highlights for the quarter ended June 30, 2025, compared to the same period in 2024 include:

Previous wording

Noninterest-bearing deposits are transaction accounts that provide our Bank with “interest-free” sources of funds. Average noninterest-bearing deposits increased $3.0 billion, or 28.1%, to $13.5 billion in the first quarter of 2025 compared to $10.5 billion during the same period in 2024. The increase in the average balance of noninterest bearing deposits was primarily due to noninterest-bearing deposit balances assumed from Independent during the first quarter of 2025.

Current wording

Noninterest-bearing deposits are transaction accounts that provide our Bank with “interest-free” sources of funds. Average noninterest-bearing deposits increased $3.1 billion, or 29.1%, to $13.6 billion in the second quarter of 2025 compared to $10.6 billion during the same period in 2024. The increase in the average balance of noninterest bearing deposits was primarily due to noninterest-bearing deposit balances assumed from Independent during the first quarter of 2025.

Previous wording

Noninterest income provides us with additional revenues that are significant sources of income. For the three months ended March 31, 2025 and 2024, noninterest income comprised 13.7% and 17.2%, respectively, of total net interest income and noninterest income.

Current wording

Noninterest income provides us with additional revenues that are significant sources of income. For the three months ended June 30, 2025, and 2024, noninterest income comprised 13.1%, and 17.7%, respectively, of total net interest income and noninterest income. For the six months ended June 30, 2025, and 2024, noninterest income comprised 13.3%, and 17.5%, respectively, of total net interest income and noninterest income.

Previous wording

Noninterest income increased by $14.5 million, or 20.3%, during the first quarter of 2025 compared to the same period in 2024. This quarterly change in total noninterest income resulted from the following:

Current wording

Noninterest income increased by $11.6 million, or 15.4%, during the second quarter of 2025 compared to the same period in 2024. This quarterly change in total noninterest income resulted from the following:

Previous wording

Noninterest expense increased by $159.5 million, or 64.0%, in the first quarter of 2025 compared to the same period in 2024. The quarterly increase in total noninterest expense primarily resulted from the following:

Current wording

Noninterest expense increased by $126.3 million, or 50.8%, in the second quarter of 2025 compared to the same period in 2024. The quarterly increase in total noninterest expense primarily resulted from the following:

Previous wording

Our effective tax rate was 26.53% for the three months ended March 31, 2025 compared to 25.05% for the three months ended March 31, 2024. The increase in the effective rate for the quarter, when compared to the same period in the prior year, is driven primarily by an increase in non-deductible executive compensation related to the acquisition of Independent, as well as an increase in non-deductible FDIC premiums, an increase in non-deductible merger expense, and one-time expense of $5.6 million related to the remeasurement of the Company’s deferred tax balances resulting from the acquisition of Independent and new blended income tax rate. This was partially offset by an increase in the cash surrender value of BOLI policies, increased tax-exempt interest income, and additional tax benefits associated with the vesting of incentive stock compensation during the first quarter of 2025.

Current wording

Our effective tax rate was 23.73% for the three months ended June 30, 2025, compared to 23.42% for the three months ended June 30, 2024. The increase in the effective rate for the quarter, when compared to the same period in the prior year, is driven primarily by an increase in pretax book income as well as higher non-deductible executive compensation and disallowed FDIC premiums. This increase was partially offset by an increase in the cash surrender value of BOLI policies and an increase in tax-exempt income in the current quarter.

Previous wording

Our total assets increased by approximately $18.8 billion, or 40.4%, from December 31, 2024 to approximately $65.1 billion at March 31, 2025. Within total assets, cash and cash equivalents increased by $1.9 billion, or 137.0% and loans increased by $12.9 billion or 37.9% during the period, while investment securities increased by $1.6 billion, or 23.5%. Within total liabilities, deposits grew $15.3 billion, or 40.1%, and federal funds purchased and securities sold under agreements to repurchase increased by $164.4 million, or 31.9%. Total borrowings increased by $361.3 million, or 92.3%. Total shareholder’s equity increased by $2.7 billion, or 46.4%. The increases in total assets, cash and cash equivalents, investment securities, loans, deposits and equity were all primarily driven by the acquisition of Independent on January 1, 2025. The increase in cash and cash equivalents was also due to the cash received from the sale-leaseback transaction of approximately $456.4 million, an increase in deposits (excluding deposits acquired with Independent) of approximately $68.0 million and an increase in federal funds purchased and securities sold under agreements to repurchase of $164.4 million. The increase in deposits excluding deposits acquired with Independent was mainly from the increases in money market accounts and time deposit accounts. Loans declined $263.2 million during the quarter, excluding the $13.1 billion in loans acquired in the Independent acquisition. Our loan to deposit ratio was 88% and 89% at March 31, 2025 and December 31, 2024, respectively, while our percentage of noninterest-bearing deposit accounts to total deposits was 26% and 27% at March 31, 2025 and December 31, 2024, respectively.

Current wording

Our total assets increased approximately $19.5 billion, or 42.1%, from December 31, 2024, to June 30, 2025, to approximately $65.9 billion. Within total assets, cash and cash equivalents increased by $2.1 billion, or 148.8%, and net loans increased $13.2 billion, or 39.5%, while investment securities increased $1.6 billion, or 24.0%, during the period. Within total liabilities, deposits grew $15.6 billion, or 41.1%, and federal funds purchased and securities sold under agreements to repurchase increased by $115.6 million, or 22.5%. Total borrowings increased by $708.2 million, or 180.9%. Total shareholder’s equity increased $2.9 billion, or 49.4%. The increases in total assets, cash and cash equivalents, investment securities, loans, deposits, other borrowings and equity were all primarily driven by the acquisition of Independent on January 1, 2025. The increase in cash and cash equivalents was also 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 $427.4 million, an increase in federal funds purchased and securities sold under agreements to repurchase of $115.6 million and due to the issuance of new subordinated debentures of $350.0 million in the second quarter of 2025. The increase in deposits, excluding deposits assumed from Independent, was mainly from the increases in interest-bearing checking and time deposit accounts. Our loan to deposit ratio was 88% and 89% at June 30, 2025 and December 31, 2024, respectively, while our percentage of noninterest-bearing deposit accounts to total deposits was 26% and 27%, respectively at June 30, 2025, and December 31, 2024.

Previous wording

We use investment securities, our second largest category of earning assets, to generate interest income, provide liquidity, fund loan demand or deposit liquidation, and to 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 March 31, 2025, investment securities totaled $8.4 billion, compared to $6.8 billion at December 31, 2024, an increase of $1.6 billion, or 23.5%. During the first quarter of 2025, the Company acquired $1.6 billion in investment securities through the acquisition of Independent. A majority of these securities were subsequently sold during the quarter with the proceeds reinvested into securities that fit the Company’s investment strategy. The Company executed a securities repositioning during the quarter 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. We purchased $3.3 billion in investment securities during the quarter from reinvesting funds provided by the sales of securities acquired from Independent and reinvesting 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, sales and paydowns of investment securities totaling $3.6 billion and a reduction from the net amortization of premiums of $2.4 million. Of the $3.3 billion in purchases of investment securities during the quarter, $3.2 billion were available-for-sale securities and $115.5 million were 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. $38.0 million was redeemed by the Federal Home Loan Bank during the first quarter of 2025. The purchases in the Federal Home Loan Bank Stock and Federal Reserve Bank Stock during the quarter were mainly due to stock holding requirements related to the Independent acquisition. At March 31, 2025, approximately 69.7% of the investment portfolio was classified as available for sale, approximately 26.2% was classified as held to maturity and 4.1% was classified as other investments.

Current wording

We use investment securities, our second largest category of earning assets, to generate interest income, provide liquidity, fund loan demand or deposit liquidation, and to 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 June 30, 2025, investment securities totaled $8.4 billion, compared to $6.8 billion at December 31, 2024, an increase of $1.6 billion, or 24.0%. During the first quarter of 2025, the Company acquired $1.6 billion in investment securities through the acquisition of Independent. A majority of these securities were subsequently sold during the quarter with the proceeds reinvested into securities that fit the Company’s investment strategy. The Company executed a securities repositioning during the first quarter 2025 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 Bank purchased $3.6 billion of investment securities during thesix months ended June 30, 2025 from reinvesting funds provided by 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, sales and paydowns of investment securities totaling $3.7 billion and a reduction from the net amortization of premiums of $5.4 million during the six months ended June 30, 2025. Of the $3.6 billion in purchases of investment securities during the quarter, $3.5 billion were available-for-sale securities and $117.4 million were other investment securities. There were no purchases of held to maturity securities during the quarter. During the six months ended June 30, 2025, we purchased $33.3 million of capital stock of the Federal Home Loan Bank of Atlanta classified as other investment securities on the Balance Sheet and sold back $45.1 million. At June 30, 2025, approximately 70.3% of the investment portfolio was classified as available for sale, approximately 25.5% was classified as held to maturity and approximately 4.2% was classified as other investments.

Previous wording

At March 31, 2025, the unrealized net loss of the available for sale securities portfolio was $505.1 million, or 7.9%, below its amortized cost basis, compared to an unrealized net loss of $808.6 million, or 15.8%, at December 31, 2024. At March 31, 2025, the unrealized net loss of the held to maturity securities portfolio was $375.5 million, or 17.1%, below its amortized cost basis, compared to an unrealized net loss of $420.1 million, or 18.6%, at December 31, 2024. The decrease in the unrealized net loss in the available for sale investment portfolio of $303.6 was mainly due to the securities repositioning transaction where the Company sold $1.8 billion in securities during the quarter and recognized a loss of $228.8 million. The proceeds from this transaction were reinvested in investment securities at current pricing. The decrease in the unrealized net loss for the held to maturity portfolio of $44.6 during the first three months of 2025 was due to changes in market interest rates during the quarter.

Current wording

At June 30, 2025, the unrealized net losses of the available for sale securities portfolio was $498.8 million, or 7.8%, below its amortized cost basis, compared to an unrealized net loss of $808.6 million, or 15.8%, at December 31, 2024. At June 30, 2025, the unrealized net loss of the held to maturity securities portfolio was $364.2 million, or 17.0%, below its amortized cost basis, compared to an unrealized net loss of $420.1 million, or 18.6%, at December 31, 2024.

Previous wording

At March 31, 2025, we had 1,123 investment securities, including both available for sale and held to maturity in an unrealized loss position, which totaled $893.6 million unrealized loss position. At December 31, 2024, we had 1,214 investment securities, including both available for sale and held to maturity, in an unrealized loss position, which totaled $1.3 billion. The total number of investment securities with an unrealized loss position decreased by 91 securities, while the total dollar amount of the unrealized loss decreased by $335.9 million. The reduction in the number of securities in a loss position and level of unrealized losses during the quarter was mainly due the securities repositioning strategy during the quarter where we sold certain available-for-sale investment securities and recognized the losses and then reinvested the proceeds in investment securities at current market prices. The reduction was also due to changes in interest rate during the quarter.

Current wording

At June 30, 2025, we had 1,098 inves tment securities including both available for sale and held to maturity, in an unrealized loss position, which totaled $885.4 million. At December 31, 2024, we had 1,214 investment securities, including both available for sale and held to maturity, in an unrealized loss position, which totaled $1.3 billion. The total number of investment securities with an unrealized loss position decreased by 116 securities, while the total dollar amount of the unrealized loss decreased by$344.1 million. The reduction in the number of securities in a loss position and level of unrealized losses was mainly due to the securities repositioning strategy completed during the first quarter of 2025 where we sold certain available-for-sale investment securities and recognized the losses and reinvested the proceeds in investment securities at current market prices. The reduction was also due to changes in interest rates during the first six months of 2025.

Previous wording

All investment securities in an unrealized loss position as of March 31, 2025, continue to perform as scheduled. We have evaluated the securities and have determined that the decline in fair value, relative to its amortized cost, is not due to credit-related factors. In addition, we have the ability and intent to hold these securities within the portfolio until maturity or until the value recovers, and we believe that it is more likely than not that we will not be required to sell these securities prior to recovery. We continue to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of our securities may be sold or would require a charge to earnings as a provision for credit losses in such periods. Any charges as a provision for credit losses related to investment securities could impact cash flow, tangible capital or liquidity. See Note 2 — Summary of Significant Accounting Policies and Note 5 — Securities for further discussion on the application of ASU 2016-13 on the investment securities portfolio.

Current wording

All investment securities in an unrealized loss position as of June 30, 2025, continue to perform as scheduled. We have evaluated the securities and have determined that the decline in fair value, relative to its amortized cost, is not due to credit-related factors. In addition, we have the ability and intent to hold these securities within the portfolio until maturity or until the value recovers, and we believe that it is more likely than not that we will not be required to sell these securities prior to recovery. We continue to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of our securities may be sold or would require a charge to earnings as a provision for credit losses in such periods. Any charges as a provision for credit losses related to investment securities could impact cash flow, tangible capital or liquidity. See Note 2 — Summary of Significant Accounting Policies and Note 5 — Investment Securities for further discussion on the application of ASU 2016-13 on the investment securities portfolio.

Previous wording

As securities held for investment are purchased, they are designated as held to maturity or available for sale based upon our intent, which incorporates liquidity needs, interest rate expectations, asset/liability management strategies, and capital requirements. Although securities classified as available for sale may be sold from time to time to meet liquidity or other needs, it is not our normal practice to trade this segment of the investment securities portfolio. From time to time, the Bank may execute transactions to reposition the investment portfolio, as we did during the quarter ended March 31, 2025. Such activity has not expanded the broad asset classes used by the Bank. While management generally holds these assets on a long-term basis or until maturity, any short-term investments or securities available for sale could be converted at an earlier point, depending partly on changes in interest rates and alternative investment opportunities.

Current wording

As securities held for investment are purchased, they are designated as held to maturity or available for sale based upon our intent, which incorporates liquidity needs, interest rate expectations, asset/liability management strategies, and capital requirements. Although securities classified as available for sale may be sold from time to time to meet liquidity or other needs, it is not our normal practice to trade this segment of the investment securities portfolio. From time to time, the Bank may execute transactions to reposition the investment portfolio. Such activity has not expanded the broad asset classes used by the Bank. While management generally holds these assets on a long-term basis or until maturity, any short-term investments or securities available for sale could be converted at an earlier point, depending partly on changes in interest rates and alternative investment opportunities.

Previous wording

Approximately 83.6% (based on amortized cost) 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. Approximately 12.2% (based on amortized cost) 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.

Current wording

Approxim ately 86.7% (based on amortized cost) 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. Approximately 12.9% (based on amortized cost) 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.

Previous wording

As of March 31, 2025, the portfolio had an effective duration of 4.77 years. We continue to monitor duration risk and seek to align actual duration with the target range.

Current wording

As of June 30, 2025, the portfolio had an effective duration of 5.15 years. We continue to monitor duration risk and seek to align actual duration with the target range.

Previous wording

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 March 31, 2025, we determined that there was no impairment on our other investment securities. As of March 31, 2025, other investment securities represented approximately $345.7 million, or 0.53% of total assets, and primarily consists of FHLB and FRB stock which totals to approximately $257.7 million, or 0.40% of total assets. There were no gains or losses on the sales of these securities for three months ended March 31, 2025 and 2024, respectively.

Current wording

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 June 30, 2025, we determined that there was no impairment on our other investment securities. As of June 30, 2025, other investment securities represented approximately $357.5 million, or 0.54% of total assets, and primarily consists of FHLB and FRB stock which totals $252.5 million, or 0.38% of total assets. There were no gains or losses on the sales of these securities for three and six months ended June 30, 2025, and 2024, respectively.

Previous wording

We have a trading portfolio associated with our Correspondent Banking Division and its subsidiary SouthState|Duncan-Williams. 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 and mortgage-backed agency securities, which are held for short periods of time and totaled $107.4 million and $102.9 million at March 31, 2025 and December 31, 2024, respectively.

Current wording

We have a trading portfolio associated with our Correspondent Banking Division and the Bank’s subsidiary, SouthState|DuncanWilliams. 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 and mortgage-backed agency securities, which are held for short periods of time and totaled $95.3 million and $102.9 million at June 30, 2025 and December 31, 2024.

Previous wording

The balance of loans held for sale increased $78.5 million from December 31, 2024 to $357.9 million at March 31, 2025. Loans held for sale at March 31, 2025 and December 31, 2024 consisted of mortgage and SBA loans held for sale.

Current wording

The balance of loans held for sale increased $39.6 million from December 31, 2024, to $319.0 million on June 30, 2025. Loans held for sale at June 30, 2025 and December 31, 2024 consisted of mortgage and SBA loans held for sale.

Previous wording

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 $271.1 million at March 31, 2025 compared to $181.3 million at December 31, 2024. See Note 20 — SBA Loans Held for Sale for more information.

Current wording

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 $247.9 millionat June 30, 2025 compared to $181.3 million at December 31, 2024. See Note – 20 – SBA Loans Held for Sale for more information.

Previous wording

Mortgage loans held for sale totaled $86.8 million at March 31, 2025, a decrease from $98.1 million at December 31, 2024. Total mortgage production was $459 million in the first quarter of 2025. This compares to $456 million in the fourth quarter of 2024. Mortgage production has remained relatively stable as mortgage rates declined slightly during the quarter. The percentage of mortgage production sold into the secondary market decreased to 56% at March 31, 2025 compared to 60% at December 31, 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.

Current wording

Mortgage loans held for sale totaled $71.0 million at June 30, 2025, a decrease of $27.1 million compared to $98.1 million at December 31, 2024. Total mortgage production was $672 million in the second quarter of 2025. This compares to $459 million in the first quarter of 2025 and $552 million in the second quarter of 2024. Mortgage production has increased as mortgage rates declined slightly during the quarter along with the seasonal nature of home sales during the spring and summer months. The percentage of mortgage production sold into the secondary market decreased in the second quarter of 2025 to 37% from 56% in the first quarter of 2025 and from 59% in the second quarter of 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.

Previous wording

Total loans, net of deferred loan costs and fees (excluding mortgage loans held for sale), increased by $12.9 billion to $46.8 billion at March 31, 2025. Our non-acquired loan portfolio increased by $642.4 million, or 8.9% annualized, driven by organic growth and the migration of loans from acquired loans as they renew. Commercial non-owner-occupied loans, commercial owner-occupied real estate loans, consumer owner-occupied loans, commercial and industrial loans, home equity loans and construction and land development loans led the way with $307.9 million, $133.1 million, $103.8 million, $102.4 million, $33.7 million and $4.3 million in year-to-date loan growth, respectively, or 16.2%, 11.9%, 6.4%, 7.4%, 10.1% and .8% annualized growth, respectively. The acquired loan portfolio increased by $12.2 billion. 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 main categories that increased were commercial non-owner-occupied loans, commercial and industrial loans, commercial owner-occupied real estate loans, construction and land development loans, consumer owner-occupied loans and other income producing property loans which increased by $5.8 billion, $1.8 billion, $1.6 billion, $1.3 billion, $919.8 million and $687.0 million, respectively, during the quarter. Acquired loans as a percentage of total loans increased to 35.7% and non-acquired loans as a percentage of the overall portfolio decreased to 64.3% at March 31, 2025. This compares to acquired loans as a percentage of total loans of 13.3% and non-acquired loans as a percentage of total loans of 86.7% at December 31, 2024.

Current wording

Total loans, net of deferred loan costs and fees (excluding loans held for sale), increased by $13.4 billion, or 79.5% annualized, to $47.3 billion at June 30, 2025. Our non-acquired loan portfolio increased by $2.0 billion, or 13.4% annualized, mainly driven by organic growth. Commercial non-owner-occupied loans, commercial and industrial loans, consumer owner-occupied loans, commercial owner-occupied real estate, and home equity loans led the way with $700.0 million, $571.7 million, $317.9 million, $294.1 million and $110.2 million in year-to-date loan growth, respectively, or 18.3%, 20.5%, 9.8%, 13.1% and 16.4% annualized growth, respectively. The acquired loan portfolio increased by $11.4 billion, or 511.3% annualized. 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 main categories that increased were commercial non-owner-occupied loans, commercial and industrial loans, commercial owner-occupied real estate loans, construction and land development loans, consumer owner-occupied loans and other income producing property loans which increased by $5.6 billion, $1.7 billion, $1.5 billion, $1.1 billion, $867.7 million and $681.1 million, respectively, year-to-date. Acquired loans as a percentage of total loans increased to 33.6% and non-acquired loans as a percentage of the overall portfolio decreased to 66.4% at June 30, 2025. This compares to acquired loans as a percentage of total loans of 13.3% and non-acquired loans as a percentage of total loans of 86.7% at December 31, 2024.

Previous wording

Total commercial non-owner-occupied loans of $15.5 billion, approximately 33.2% of the total loans held for investment, was the largest category of the loan portfolio as of March 31, 2025. As of March 31, 2025, approximately 94% of the commercial non-owner-occupied portfolio was located within the Company’s footprint. Of the $15.5 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 and approximately 5% was located within the metropolitan or central business district.

Current wording

Total commercial non-owner-occupied loans of $15.6 billion, approximately 33.1% of the total loans held for investment, was the largest category of the loan portfolio as of June 30, 2025. As of June 30, 2025, approximately 93% of the commercial non-owner-occupied portfolio was located within the Company’s footprint. Of the $15.6 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.

Previous wording

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, unrest in 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 losses, periods of instability 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.

Current wording

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 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 losses, periods of instability 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.

Previous wording

In spite of the rapid interest rate hikes experienced cycle-to-date, the U.S. has thus far avoided a recession, although an inverted yield curve such as observed in the current interest rate environment often portends a coming recession. Management continues to use a blended forecast scenario of the baseline, upside, and more severe scenario, depending on the circumstances and economic outlook. For the quarter ending March 31, 2025, management selected a baseline weighting of 40%, a 30% weighting for an upside scenario and a 30% weighting for the more severe scenario. The scenario weightings were unchanged from the prior quarter. Scenario weightings are generally expected to remain stable but are reviewed on a quarterly basis. The scenario weightings reflect continued recognition of downside risks in the economic forecast from persistent levels of inflation, high interest rates, and tightening credit conditions conducive of a mild recession. While employment figures still show resilience and actual loan losses remain at low levels, continued projected borrower weakness related to high interest rates, uncertainty, and lingering chances of an economic downturn continue to moderate optimism in the path of the forecast and kept expected losses mostly flat. The Company recorded a total provision for credit losses of $100.6 million for the first quarter of 2025, which included an initial provision for credit losses of $80.0 million and $12.1 million for Non-PCD loans and unfunded commitments, respectively, acquired from Independent. Excluding this initial provision for balances acquired from Independent, the Company recorded a provision for credit losses of $3.7 million and $4.8 million for funded loans and unfunded commitments, respectively, during the first quarter of 2025.

Current wording

Despite numerous headwinds, the U.S. has thus far avoided a recession, although an inverted yield curve such as observed in the current interest rate environment often portends a coming recession, however, downside risks to the outlook remain. Management continues to use a blended forecast scenario of the baseline, upside, and more severe scenario, depending on the circumstances and economic outlook. For the quarter ending June 30, 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. The shift in scenario weightings reflects a mostly neutral stance but recognition of downside risks and higher levels of uncertainty in the economic forecast from persistent levels of inflation, high interest rates, lack of clarity on trade and fiscal policy impacts, and tightening credit conditions conducive of a mild recession. While employment figures still show resilience and actual loan losses remain at low levels, continued projected borrower weakness related to high interest rates, uncertainty, and lingering chances of an economic downturn continue to moderate optimism in the path of the forecast and kept expected losses mostly flat. The Company recorded a total provision for credit losses of $7.5 million for the second quarter of 2025. The Company recorded a provision for credit losses of $5.1 million and $2.4 million for funded loans and unfunded commitments, respectively, during the second quarter of 2025.

Previous wording

At March 31, 2025, the Company had a reserve on unfunded commitments of $62.3 million, which was recorded as a liability on the Consolidated Balance Sheet, compared to $45.3 million at December 31, 2024. During the three months ended March 31, 2025, the Company recorded an increase in the reserve for unfunded commitments of $16.9 million, which was comprised of $12.1 million in the initial provision for unfunded commitments acquired from Independent and $4.8 million for all other unfunded commitments. This amount was recorded in Provision for Credit Losses on the Consolidated Statements of Income. For the comparative period in 2024, the Company had a reserve on unfunded commitments of $53.2 million recorded at March 31, 2024. The Company did not have an allowance for credit losses or record a provision for credit losses on investment securities or other financial assets during the first three months of 2025.

Current wording

At June 30, 2025, the Company had a reserve on unfunded commitments of $64.7 million, which was recorded as a liability on the Consolidated Balance Sheet, compared to $62.3 million at March 31, 2025, and $45.3 million at December 31, 2024. During the three and six months ended June 30, 2025, the Company recorded an increase in the reserve for unfunded commitments of $2.4 million and $19.3 million, respectively. Of the $19.3 million of provision for credit losses recorded for unfunded commitments during the six months ended June 30, 2025, $12.1 million was related to the initial provision for unfunded commitments acquired from Independent and $7.2 million was for all other unfunded commitments. For the prior comparative period, the Company recorded a decrease in the reserve for unfunded commitments of $3.0 million and $6.1 million, respectively, during the three and six months ended June 30, 2024. The Company did not have an allowance for credit losses or record a provision for credit losses on investment securities or other financial asset during the six months ended June 30, 2025.

Previous wording

The ACL provides 2.29 times coverage of nonperforming loans at March 31, 2025. Net charge-offs to the total average loans during the three months ended March 31, 2025 were 0.38%, including the acquisition date charge-offs on PCD loans acquired from Independent, compared to 0.03% during the three months ended March 31, 2024. We continued to experience solid and stable asset quality numbers and ratios as of March 31, 2025.

Current wording

The ACL provides 2.09 times coverage of nonperforming loans at June 30, 2025. Net charge-offs, excluding acquisition date charge-offs recorded for PCD loans acquired from Independent, to total average loans during the three and six months ended June 30, 2025, were 0.06% and 0.05%, respectively, compared to net charge-offs to total average loans of 0.05% and 0.04%, respectively, during the three and six months ended June 30, 2024. We continued to experience solid and stable asset quality numbers and ratios as of June 30, 2025.

Previous wording

The following table presents a summary of net charge-off ratios (annualized) by loan segment, for the quarters ended March 31, 2025 and 2024:

Current wording

The following table presents a summary of net charge off ratios (annualized) by loan segment, for the three and six months ended June 30, 2025, and 2024: