SouthState Bank consolidating 30 branches into nearby existing branches

Winter Haven, Fla.-based SouthState Bank NA, the subsidiary bank of SouthState Corp., will consolidate 30 branches across its footprint into nearby existing branches.

Those branches consist of 16 across Florida, five in Georgia, six in South Carolina, two in North Carolina and one in Virginia. The branches will operate until the completion of the closures, which is expected to happen in the third quarter.

The move is part of SouthState's ongoing evaluation of customer service delivery and efficiencies, specifically considering changing foot traffic and customer practices in the last two years due to the COVID-19 pandemic, and cost structure. The decision is also due to the company's assessment that the communities in affected markets "can be served by remaining branch locations located there," according to a Form 8-K filing.

SouthState estimates the cost connected with the branch closures to be about $8 million, mainly including personnel, facilities and equipment cost. The net annual savings in 2023 for the closures are anticipated to come in at approximately $10 million.

In a research report, Raymond James analyst Michael Rose said the news should be viewed "favorably" since it will give SouthState's management the ability to lower the company's efficiency ratio from 62.5% in the first quarter to a "more normalized" mid-50% range more quickly.

"[W]e note that [SouthState] has the enviable position of being able to reduce their branch footprint, while also continuing to harvest expense synergies from the recently closed [Atlantic Capital Bancshares Inc.] transaction," Rose wrote, also mentioning the closures represent about 10.5% of SouthState's 283 branches as of March 31.

Similarly, Piper Sandler analyst Stephen Scouten thinks SouthState's move "makes a lot of sense" in light of a seemingly permanent shift in customer behavior and continued inflationary pressures, though he noted the savings associated with the branch consolidation are "relatively small."

"We would not expect much reaction in the shares given the small overall impact, but we take it as another sign of [SouthState]'s commitment to positive operating leverage," Scouten wrote in a research report.