SSB - Earnings call transcript Q1 2018

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Operator

Good morning and welcome to the South State Corporation Quarterly Earnings Conference Call. Today's call is being recorded and all participants will be in listen-only mode for the first part of the call. Later we will open the line for questions with the research analyst community. I will now turn the call over to Jim Mabry, South State Corporation, Executive Vice President in-charge of Investor Relations and M&A.

Jim Mabry

…contains forward-looking statements regarding our financial condition and results. X use regarding of Slide discussion statements to the regarding non-GAAP refer for forward-looking cautions and Please measures. begin I Robert would call. will Hill, introduce the our Chief now Executive Officer like to who

Robert Hill

morning. Good

and banking in to bankers focus relationship approach conversion talented the and accounts checking taken X.XX% progress Sterling in that which growth $X.XX the represents this continued call We also of diluted customers weekend quarter, share. strong completed period. highlights. and quarter and We're for XXXX, were Park return on first a and then we return expense with successfully will per our merger-related to further and million is update equity income has this decades team's conversions to for of Park $X.XX one assets and a quality, per growth begin summary assets about average Even very Adjusting earnings on XXXX. a experience into accomplishments attract quarter an return culture I'm We Park the control, respectively. deposit tangible the and with This our on expenses return The merger merger. on million to a the the insight efforts and $XX.X share off Sterling start or XX.XX% are X.XX% a of which acquisition, comments Net with on on were the asset provide billion, the integration comes tangible with crossing to $XX.X the to build. of able Sterling focused first Park activity. ability Sterling upon from for performance totaled performance equity represents average with past the excited and build our system with XX associated for on were XX.XX% new pleased respectively. or this a

May I'll dividend the call quarter to of $X.XX turn of XXXX. XX, cash higher financial quarterly a declared of on $X.XX quarter. John than more for share, the performance last the shareholders now detail to as payable Board Our for per Pollok over record

John Pollok

you, Robert. Thank

margin. on start increase We increase were expansion the that interest-bearing net points at see XX net quarters our basis interest income from XX cost in on and X, Slide impact our basis a interest net in earning in linked income interest a non-acquired million. portfolio loan in take assets. of margin asset increased interest liabilities The basis the and look interest yields net points Slide the benefited as in basis about Sterling earning Interest of XX% Let's can resulting million $XX.X X of and quarter. our XX to you $XXX full yield seen of and four up Park represented on points it increased

points Our benefited of interest representing interest quarter The merger the earning the first resulted Sterling the portfolio from a greater weighting earning impact over of asset during The XX to due asset yield but quarter. book higher the yield the by on declined the to compared quarter fourth waiting. linked interest-earning yield to to XX% contributed quarter Park also book. loan assets XX% in basis overall higher in the acquired full acquired a acquired still X.XX%

discount future in loan business performance was our X shows the in should Sterling. the portfolio, remaining yield X. as lines Park income noninterest quarter of impacted to peer You of the improvement accreted legacy also contractual be Slide positively and million strong by $X.X a periods impact on Slide well purchase as as earned full our accretion can the on enhancing see accounting of acquired

increased ratio from on Slide shown as X. efficiency XX.X% adjusted Our XX.X% to

these in the cost million As cost XX% of first saves annual quarter. total, have planned saves reminder, we $XX through of have realized a we

was cost the of weekend saves third systems by the Our quarter. expect conversion end of the and we remainder achieve past to this

our from we merger. remix it tell growth, can you as muted customary continue Sterling loan As is to post loan the portfolio Park

are non-core the on reducing certain acquired funding transaction. focused in also We

also merger $X.X per turn a summary during AOCI million our incentives Act. had the in and due of to tangible the from XXXX the the lower as the a quarter impact Slide book to some impact investment one-time higher This given Robert full and increase XX quarter. start XXXX Tax the the $X.XX to over shows significant value strong the call of rate in I in Reform This X comments. Slide for will shows in growth was now cost performance nice the values result earnings in great environment. share

Robert Hill

you, Thank the to of forward rest XXXX. We John. look

unique have growing great operating company people We a makes with of strong franchise, in teams a fast unique. markets our culture

prepared big remarks. We share. This to State's the well are well South banks grow behind positioned success. continued just This for our concludes bodes

questions. would to for the open I operator ask the call So

Operator

first Please from The Demba of go comes [Operator ahead. Instructions] SunTrust. question Jennifer

Jennifer Demba

always Just question from think that but loans also that Sterling, and - share opportunities how you what have left from how Thanks. you remix seeing in to long Park guys days? are in bigger on these take. you for Wells ran you details markets seeing during us exited give you seen outsized your question, - loan opportunities will of to And many I are the you you've some do second know the quarter and can the gain

John Pollok

as Park you the its us. know On historically for book, Sterling

to tendency the different book, a have at We asset look the loan classes. remix

the now finance book, million in national quarter, book. sold book, So unwinding the million I CRE look kind $XX we we’ve credit at $XX are And I builder know, we book. as a their of process things, of tendency comes it then worth we shared mentioned in of their few about done a have to that you about last think have as

the just the We we our So had in evaluating end, changed we’re size. of week this conversion so process that. systems

and of look we kind to book. as this the individual happens at quarter meet out what customers all So we continue go the is, with

for remixing do it six to to typically XX So takes months us, that.

the So compared anything that done I we’ve past. in what don’t see unusual to

Jennifer Demba

disproportionate of any wealth days? hiring for terms opportunities customer acquisition in these or So

Robert Hill

I’ll touch couple touch but touch in trends it, before the I of seeing trends just are volume on the obviously underlying that I that on portfolio. we’re loan things a is underlying noisy terms of me let mean just very QX positive. on

pipeline market, is segment markets coming up you If we by QX impacted market think of about to from. good. kind our was XX% QX look non-merger and growth really growth good this about seeing from we’re The the this looks I good feel pretty

was strong has part of $X significant CRE has pipeline, up very got the merger. impacted consumer So dry a powder, a the about the and business and companies makes been commercial in strong, from on most our the then operating we obviously Charlotte billion been side,

pipeline So have Charlotte portfolio. significant a the that most of in But fairly we had the quarter remix we actually flat they company. some have down were some that as

probably as a like The overall been So, the on while. switch feel other in perspective your question. gears underlying as trends loan good a they've are from

course, I it think banks and while we've we've of from while seen this a terms for seen in included. of Wells talent I for a larger would

I think twofold. it's

I also the other is one disruption at impact order this be much there's disruption think and is and Wells I companies. that our but company at obviously a institutions may other is change in think and that

especially than have in the platform a we've had, Commercial ever We Bank. stronger

have and from bringing of well markets from that's decades, a had a larger of with be we known we platform, one bankers years for the do. who's just Our that had few and platform, able a treasury in capital very just track might a not guy couple we higher to relationship talent our solid to this past banker over platform solid, banks today these ago our quarter, banker and caliber brought Wells a

So, I think it's multi-faceted.

unhappiness we've platform inside some larger some dissatisfaction past I and bankers or we've there's track the robust in support also to got them. think be had and to a the organizations, that able from people more

Operator

is next The Stafford question Stephens. Please of Tyler ahead. go from

Tyler Stafford

just question. I Jennifer's remix on Sterling following Park wanted maybe on to up start

back high of still pace can that that half repositioning, you year? to the Given do mid digit you for think single the hit

John Pollok

depends year, second hard the next it tell you tell. kind to will beginning little our back kind - number, get the is view it to is quarter. got the to that the in year a I second of the of think I we of half

it's mentioned Robert our good. a little that As think to pipelines still are early happens. tell looks exactly when I good The but growth

Robert Hill

at we’re pipeline And do think $XX look bank, this I credit unwound. point do CRE now of there heavier stuff are certain I of is a then CRE and you side segments think all being unwound it's shared just out move do tower good right underlying getting that we away our from how out concentration finance the looks some shifting about good. it certainly is take quickly was is noisy trends the we're but million, front-end we The saw little to million, that park capital of the of the the bit little the just time banker It's focus a our but loaded. CRE - around a not feel and that declined then is bank. question $XX goes productivity The national more builder so can but good. CRE

John Pollok

year we when you're heavy time off, growing with have remix the think going come where two XX% just it's you to year when last heavy, you're acquisitions. so that and natural growth a Tyler I book a

part clearly strategy before of the to as core we our done grow we've something is this product. So try

Tyler Stafford

That makes complete sense.

Robert Hill

fit. trying credit front be And to to better credit two get front quickly. the find that out going were what gate end it to do teams one to in, bit the little fit end end but is, loaded on the and what's comes was the run a And it is no not to of you everybody not be are a going of like, creates off. culture we've and what's to of what then we're think there lot There just going right to kind on similarities of right it's and gotten add of I does between portion going certainly look on our what decide, the to front box we that you the

Tyler Stafford

you And finance of entirety that mentioned just builder the millions, in credit portfolio? out its parks want or such the are more you $XX that you that portfolio existing portfolio on calling selectively you the just the

Robert Hill

but it would the and where middle be want than area consumer these an market think space capital. one we of that amongst not we and we This it with lot of the we end and but finance for deep down. winding relationships We’re be there more would is group the a that builder of speculative user. consider finance We do can lot of mortgage deploy player to that's weren't was effectively. some space just We just portfolio many I in larger our the a clear, deploy construction to a space, do builders more

Tyler Stafford

side parse And then State deposit out you much of can was the Park of how related kind quarter pricing seeing Legacy the normal just on versus help the the increase us the of average fourth just market South from the Sterling cost house, portfolio? you're across deposit

John Pollok

It's little hard say. to

when you us I rid look we getting of focus balance sheet step the think and kind things to was of the of one the wanted of funding. at that you side that for back on is, non-core

subs some some advances CDs. debt, FHLB broker So

been So on has our the little the a back deposit that. to kind into and bit pricing of aggressive market, go strategy replace more get

finding. tell up bit more non-core we to wanted we our a aggressive quarter, because were but can little for replace clearly deposit be to in you the that growth wanted As nicely,

back So now loan to about our is ratio deposit XX%. to down

So clearly got to CD aggressive non-core makes replace on noisy when little the that side. that but to trying way little funding, you're split much clearly out a trying more we it a it

growth, funding you bank, DDA I core non-interest think look of when at now back and is DDA. checking XX% in you we're our accounts noninterest step our the growing over

because bit up was transaction, want more because born and little a that funding. non-core it just to So our the was strategy different of replace a competitive. were We not little rates

Robert Hill

that, kind feel noisy the about. really to the we but a similar it's growth Just good add of trends loan just underlying on story to

our quarter probably but new we've as strongest obviously, John remakes ever said, X%, had. So we account grow noninterest did but growth DDA

I of lot really a So up of volume, we areas account goes much a more Sterling. two Treasury think picked robust platform Park new lot that with

deposits Treasury we’ll weekend place pipeline the for customers digital migrating team customer that on to platform, our pipeline a now doing We significant and our and are And but the platform State took robust. our outstanding new we've over in year a have between coming end job of year very now there, XX% has conversion expanded the had our is delivery. been and digital growth of that year really mobile format. then and XX% be the in deposit this that side South We the

momentum bank. underlying see just deposit the side of we the overall positive So,

John Pollok

go back cost it now kind about I was thing third last XX of points, it Sterling's release quarter Tyler, picture were get know last if and their points. the quarter XX of One basis year you that last to basis XX. big think you funds about we and Park almost of up a full take

we've in ours cost with only that those been about we're able funds accomplish side, So pleased on and bringing what going pretty of up XX. to

Tyler Stafford

know a great I point. that's

guys have a far. me. taking of Thanks sides for You much my re-mixing great so That’s questions. clearly job it balance done both so sheet the for

Operator

Katherine Please is next The Miller ahead. KBW. from of question go

Katherine Miller

million trend $X.X the next you bonus give Can out able the I you savings. to seasonality. an you And and for we'll should some how probably outlook come guess impact and talk then bit cost about have full of expenses quarter, higher us expenses a are little

there what and at rate over move expense way, kind run a the quarters? the for is to of can takes So look of just Thanks. next the couple puts

John Pollok

I We We announced at they Park, Let had a me annualized $XX million of million saves. can that year. shot for see about you. that. of about you at $XX in When a if look expenses cost realized well take

go about got an basis. we million on So to $XX annualized

about ought third of like at XX% get of If to XX% quarter, next that. we But realize XXX% feel to we’ll we the we range. as be in able to look to get we now, you got the we've end quarter, be realize that

Katherine Miller

And to the and XQ like well? in quantify you of seasonality anyway I press mentioned things release as higher then the taxes think that?

John Pollok

I'm sure FICA that that totally have could in clearly taxes they the go I that not you give dollars, in but time. raises during you

I on under we think expense successful focused expenses on a That's historically can contain lot. something when we side core X% the is, growth rate. where we've that that been

expense the the about looking over think you pipe at would growth you give I'd So years. last few I our color you as around rate

Katherine Miller

I quickly about how loan able rise, competition then asset some about about you think or bps move your And how of on - as point to to how much that? is commentary offsetting Any how yields, beta continue loan yield be quarter. think rates to margin, higher on the and back non-acquired were up legacy legacy loan XX yields increased you'll

John Pollok

closing went and you the quarter. book loan now as legacy of legacy can sensitive, points XX fixed north back see asset our about what a we seizing book to excited I we're rate. We was XX% yields up our in Park more first basis would kind quarter We're X%. say from in of of linked made us

Now, about rate. fixed XX% we're

right, One lot about a of of in there. the more you're churn asset churn things our portfolio grow didn't seeing the great sensitivity,

on clearly As has Robert are so mentioned, pipelines that impact the big a the full, margin.

amount Our over what loan there in little average still seen. we've a holding $XXX,XXX, it’s

sheet, XX we so ARM business, on growth balance seeing the on a like shifted We've lot, some bit more what there but little mortgage XXs like I'd now, better. the a that nice are rates seeing we small the So business. side, to the say and

are competitive? Good I about pretty So the competitive. feel side on we pricing. think it especially good are Absolutely. Is extremely commercial loans

I think now, got though we've more as mentioned - just Robert we've firepower. got

rate interest a all have bigger robust have we put and not compete just our new to take can go we then in. but risk. the markets where some platform, We deals, treasury area on out that capital And

to on we'll betas we've good Like when customers a think a you of be have that think list over. we to know continue of about your growing have DDA, fairly XX% We in on that funded non-interest tested when number that prospects think and bring by core - just we that deposits, able I funding, you're I focus betas you got core better. when general, performed have focus as

know when beta we'll Howard’s be loan to up. that As portfolio, I wise, side of funding to our I on competitive noisy it's at our but we look there, question, able mentioned, trying when sheet, in we good think to yields loan be think of feel that little but the kind to remix gets drive were continue you off going the yields it balance a the out you're the lean going, where I more non-core

Operator

[Operator go Partners. Instructions] FIG Our next of Christopher Marinac Please from comes question ahead.

Christopher Marinac

you you about a Robert, tell avoiding whether deal things within portfolio structure, John and could the us are bit color? just sort the little some loan types of that’s of

RobertHill

we’ve and just we dividing for way it relationship is always perfectly not we transactional piece, a good or versus doesn't relationship international transaction, line Fundamentally, Finance go whole structured, Shared a transaction like line builders type, that funding, not in major it's or National that just just get got really just National the the Credits to a we've find when is so We just think get Builder what of say down, Credit’s tend same that best be do. interested. dividing like credit regulatory Shared we so the primarily relationships, the but one businesses the that’s if got outstanding, take I to the segment believe we credit to and us I’d really returns the Group, way.

of dividing been that space, the say CRE certainly in multifamily has markets say growth hospitality that would seen the we’re certainly very in. we’ve high a I’d space, while. ultimate areas, the So especially would I be for in the a line. those lot

so some been seen in in have we’ve So and we have a have careful seen but has then that any and of And occurring up. some lot economy weaknesses we’re there. that good seen demand those businesses well markets, don’t see we certainly leveraged we’ve

be sheet cautious balance are about. ones little their have So leverage going on that to more companies bit that a step we’re

to relationship I differentiator add? anything the big So is think that’s versus none. broad John, range, a

John Pollok

to we I to to get able add would want be fund is, think what our banks. the deposits I

deposits So interested we, as come something if really the said, Robert don’t that transactions not is with in. we’re

the the be the - your rates got able way bank. this you’ve feel are we like So way to to core moving is, fund

today, you pace. those betas is, you in things consider at the If funding wholesale an look moving those and fast some of prices at were extremely

mentioned, So or in can to bank? the As really that’s not we partner their really, we’re back something relationship, it relationship, round out us interested be Robert second a be to third we gets in. can for

is grow feel a higher, the core our that the feel can balance treasury now getting the still fund day what we if ultimately wholesale ability we’re of end the can of take a the with we and the like We that side looks market space. middle whether that earnings sheet transaction and the really we have needed see in view options we it seems like and think coming But we I or dealing what whether people we’re got dollar and the at some hires the today we left, just We’ve on than excited quality right. there it’s platform the very of we same, it a from then like - valued lot trigger got we’re like of we a to and being core perspective it’s just with. today, differently it. out from relationship it about pull

Robert Hill

think in sure companies. mortgage just be the commercial it’s trying there And to all sized consumer and we’re expect there I absolutely think got just we’ve we’re first been we’ve Chris, the we talent And I you that know banking, our can area, deliver call. don’t that to our platform And we’re bank. to to in absolutely – – the making

there a are there wasn’t it clearly ago, they years few now theory, well today. Our

be all the in. we’re been customers not commercial that’s the call And I commercial expect to to that our has into these and segments. first and our we’re So the segments, think we going position for but bank bank where company moving in be

Christopher Marinac

original great back guys. a is still John, that good Park way the was background. quick you This us then, you for Thank on follow-up. The that charge just a gave figure today? Sterling merger

John Pollok

today a It couple got we’re but number, come of to quarters go. feels original bit than little we in lower to like a our going still

be today that. looking about million and cost, it’s we’re at quarter $X original it next a million estimate. to about merger like our under $XX probably feels So little after quarter But the going probably

Operator

at will are the I additional over now time. back this questions John call There to no Pollok. turn

John Pollok

time your Thanks everyone for today.

on reporting be in Services will Financial We you participating forward XXnd. Humphrey Robinson Conference again to the We May soon. SunTrust New the in look to beginning York

Operator

The you attending conference for has Thank concluded. today’s now presentation.

You may disconnect. now

SouthState (SSB) 24 Apr 182018 Q1 Earnings call transcript