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Leases

3 Months Ended

Mar. 31, 2026

Note 7 — Leases

As of March 31, 2026 and December 31, 2025, we had operating right-of-use (“ROU”) assets of $500.3 million and $507.1 million, respectively, and operating lease liabilities of $520.5 million and $525.3 million, respectively. We maintain operating leases on land and buildings for some of our operating centers, branch facilities and ATM locations. Most leases include one or more options to renew, with renewal terms extending up to 20 years. The exercise of renewal options is based on the sole judgment of management and what they consider to be reasonably certain given the environment today. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to us if the option is not exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet and instead are recognized in lease expense on a straight-line basis over the lease term.


	Three Months Ended
	March 31,
(Dollars in thousands)	2026		2025
Lease Cost Components:
Amortization of ROU assets – finance leases	$	115	$	115
Interest on lease liabilities – finance leases		5		7
Operating lease cost (cost resulting from lease payments)		16,731		9,369
Short-term lease cost		202		355
Variable lease cost (cost excluded from lease payments)		949		755
Total lease cost	$	18,002	$	10,601
Supplemental Cash Flow and Other Information Related to Leases:
Finance lease – operating cash flows	$	5	$	7
Finance lease – financing cash flows		123		121
Operating lease – operating cash flows (fixed payments)		14,638		8,587
Operating lease – operating cash flows (net change asset/liability)		(6,381)		(4,985)
New ROU assets – operating leases		1,818		389,613
Weighted – average remaining lease term (years) – finance leases		2.23		3.20
Weighted – average remaining lease term (years) – operating leases		12.65		13.13
Weighted – average discount rate - finance leases		1.8%		1.7%
Weighted – average discount rate - operating leases		6.3%		6.4%

Operating lease payments due:
2026 (excluding 3 months ended March 31, 2026)	$	43,545
2027		59,023
2028		60,300
2029		59,817
2030		58,316
Thereafter		507,920
Total undiscounted cash flows		788,921
Discount on cash flows		(268,429)
Total operating lease liabilities	$	520,492

Terms and conditions are similar to those real estate operating leases described above. Lease classifications from the acquired institutions were retained. At March 31, 2026, we did not maintain any leases with related parties, and determined that the number and dollar amount of our equipment leases was immaterial. As of March 31, 2026, we had no operating leases that had not yet commenced.

Sale-leaseback Transaction

On February 28, 2025, the Bank completed a sale-leaseback transaction for the purchase and sale of real property (the “Sale Agreement”) with entities affiliated with Blue Owl Real Estate Capital LLC (“Blue Owl”), providing for the sale to entities affiliated with Blue Owl of 165 bank branch properties owned and operated by the Bank (collectively, the “Branches”). The Branches are located in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia. The sales price for the Branches was $467.2 million, and the Company recorded a gain on sale of the Branches of $229.3 million (net of transaction costs). Under the Sale Agreement, the Bank has agreed, concurrently with the closing of the sale of the Branches, to enter into triple net lease agreements (the “Lease Agreements”) with entities affiliated with Blue Owl, pursuant to which the Bank will lease each of the Branches (the “Sale-leaseback Transaction”). Each of the Lease Agreements will have initial terms of 15 years and provide the Bank with three consecutive renewal options of five years each. The Lease Agreements also will include a 2% annual rent escalation during the initial term and the renewal terms. With the Sale-leaseback Transaction, the Company recorded an additional lease right of use assets of $361.1 million.

Equipment Lessor

SouthState has an Equipment Finance Group which does business directly with customers and primarily focuses on serving the construction and utility segments. Lease terms typically range from 24 months to 120 months. At the end of the lease term, the lessee has the option to renew the lease, return the equipment, or purchase the equipment. In the event the equipment is returned, there is a remarketing agreement with the intermediary to sell the equipment. The Equipment Finance Group offers the following lease products: TRAC Leases, Split-TRAC Leases, and FMV Leases. Direct finance equipment leases are included in commercial and industrial loans category, which is included in the Non-acquired Loans on the Consolidated Balance Sheets.

The estimated residual values for direct finance leases are established by an approved intermediary who utilizes internally developed analyses, external studies, and/or third-party appraisals to establish a residual position. FMV and Split-TRAC leases have residual risk due to their unguaranteed residual value whereas TRAC leases have a guaranteed residual value. Expected credit losses on direct financing leases and the related estimated residual values are included in the Commercial and Industrial loan segment for the ACL.

The following table summarizes lease receivables and investment in operating leases and their corresponding balance sheet location at March 31, 2026 and December 31, 2025:



	March 31,		December 31,
(Dollars in thousands)	2026		2025
Direct financing leases:
Lease receivables	$	112,341	$	92,927
Guaranteed residual values		4,469		4,212
Unguaranteed residual values		14,007		11,335
Initial direct costs		4,949		3,502
Less: Unearned income		(21,380)		(17,690)
Total net investment in direct financing leases	$	114,386	$	94,286

The following table summarizes direct financing lease income recorded for the three months ended March 31, 2026 and 2025 and remaining lease payment receivable for each of the next five years:


	Three Months Ended
	March 31,
(Dollars in thousands)	2026		2025
Direct financing lease income
Interest income	$	1,648	$	629
Remaining lease payments receivable:
2026 (excluding 3 months ended March 31, 2026)	$	20,029
2027		25,010
2028		24,391
2029		22,237
2030		18,195
Thereafter		6,948
Total undiscounted lease receivable		116,810
Less: unearned interest income		(21,380)
Net lease receivables	$	95,430

See Note 1 — Summary of Significant Accounting Policies, under the “Leases” section, of our Annual Report on Form 10-K for the year ended December 31, 2025 on accounting for leases.