SouthState's Q2 2025 Earnings Call: Unpacking Contradictions in Deposit Costs, Interest Sensitivity, and Loan Trends

Deposit cost outlook, interest rate sensitivity and margin impact, deposit costs and sensitivity, loan paydowns and funding trends, and deposit cost beta are the key contradictions discussed in SouthState Corporation's latest 2025Q2 earnings call.



Improved Earnings and Loan Growth:
- SouthState Corporation reported a significant increase in loan production from around $2 billion per quarter to over $3 billion in the second quarter, resulting in solid loan growth.
- This was driven by a significant increase in loan pipelines in Texas and Colorado, and successful integration of the acquired computer systems.

Net Interest Margin and Margin Outlook:
- The net interest margin improved by 17 basis points in the second quarter, driven by a full quarter's benefit from securities portfolio restructuring, lower cost of deposits, and higher loan yields.
- SouthState maintains a guidance of between 380 and 390 basis points for the remainder of the year, with expectations of further improvement in 2026 due to repricing of the legacy SouthState loan book.

Dividend Increase and Capital Allocation:
- The Board of Directors approved an 11% increase in the dividend, reflecting strong earnings growth and capital levels.
- The company plans to continue prioritizing dividend increases while considering opportunistic share buybacks, given the favorable capital position.

Regulatory and M&A Considerations:
- The company acknowledges the evolving regulatory environment and anticipates remaining below the $100 billion regulatory threshold for the foreseeable future, allowing for infrastructure development and regulatory compliance.
- SouthState is focused on organic growth and strategic talent acquisition, rather than pursuing immediate M&A opportunities, given their current strong performance.