SSB - Earnings call transcript Q2 2022

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Operator

Hello all, and a warm welcome to the SouthState Corporation Q2 2022 Earnings Conference Call. My name is Lydia, and I'll be your operator to today. [Operator Instructions]. It's my pleasure to now hand you over to our host, Will Matthews. Please go ahead when you're ready.

William Matthews

to Quarter welcome Earnings and morning, SouthState's XXXX Second Call. Good me Will and call Matthews, is on Steve and Corbett This John joining this Hill, are Young. Robert prepared be format for up we The call we'll will the will open for questions. provide remarks, it and then that issued release evening, earnings quarter. to for we Yesterday announce the a press posted also on we Investor website. Relations that our to refer We've will slides presentation call on today's

are to the uncertainties, safe harbor remind include rules. Before of harbor which may make you information comments and I Please we and the begin Litigation may to within our we in more disclaimer XXXX. forward-looking release Securities affect forward-looking Private press want statements us. of forward-looking may Any meaning remarks, the language presentation subject the and review risks make safe Act statements that for the about Reform such we

Now I Executive Hill, will Chairman. turn Robert the to over call

Robert Hill

your the significant SouthState. you of interest thank support and by made progress quarter morning, second many our team for Good areas. and in for reflect results The the

from will the results and progress XXXX. at Will point have and had You excellent we the about halfway John hear of

I'll profitability for growth. well the solid John performance consistent on and X With the it turn over me the our team, for economy for areas: markets positioned customer our exist that sheet, gives out. that the SouthState quarter. base many our the and today, soundness, are details our shareholders will of diverse external in environment, our uncertainties confidence strengths stand many the of in more focus to now Regardless our balance call

John Corbett

trends a been positive everything betas banking as everyone. from deposit growth, quarter SouthState, an morning, control, a broad-based. positive Generally whole. expense revenue in the been good for quarter the it's growth, Good industry is saw and asset Robert. loan exceptional and for We But quality. momentum speaking, this Thanks, has

in our in year of the volatile best change with Atlantic Capital acquisition, per this the is With the and reserves share. the share PPNR CECL swings earnings count over environment of measurement growth last from the core

For point. quarter year-over-year there's is cost XX% a and share XXX liquid basis, room Fed increased share focus function up way, year, deposits the from with The earnings This able ramp this rising balance basis and growth. earnings of only the organic expense funds deposit loan our on per a bps, And the for sheet, of more is total our low accelerate rate our deposit on to second a cost balances hold quarter, prior X the to here. We up points ended we X basis of steep PPNR a quarter. And deposits flat. with XX%. Fed per PPNR hikes increased from is were and of beta, strong rates,

beta So so the is will we X% as our less than move through far cycle. deposit but up naturally pick

During end-of-cycle cycle was it a the and was peers this last which rate our advantage relative below industry be as beta XX%, should well. cycle,

cash of stable such hold since past excellent. plenty loan as dues Credit substandard remains to fund growth. for deposits decreased quality the the charge-offs of we've hand and leading on is also year plan remainder got declined. indicators, quality and to loans asset Our our Net

too CECL in weren't reserves pandemic been total we've released Over the X were million reserves prior $XXX the last putative the forecast year, releasing the during and loss for The a of loan quarters. necessary.

ended the on reversed with $XX set a and we provision, our Even a equity common about XX%. return provision. net with we quarter, up extra of million we course, And X.X%. This quarter, XX% tangible aside And with so the increased X-point that's comparison up expenses to XX%, prior improved ratio in from efficiency XX.X%. to adjusted in drop. only our rise, the nice on a margin down interest Revenue

Atlantic weekend, the cost economy We this quarter. and quarter. completed this from got to conversion realized on prior track And fuel growth the the the sign our from for announced, on branches opportunities efficient. XX.X% past of cost to it as become system we've track no of of we're more be to in we're and Southeast, planned Population continues Capital. got XX savings leverage operating We've quarter. saves And previously consolidate excellent top still on saw we the we also the in fourth our to slowing. there's that, So of

and are investing enjoying the clients in So in many record results future. they're cases, our operating

last refi loan led and shop. by we've loan portfolios. We're annualized growth had at organic a and loan the the accelerated not broad-based. of quarter, the Over to the grew course Every the residential category of was second XX% year, growth XX%. digits, In double C&I

mortgage also seen a production pickup at the with lows, billion rate in quarter despite But $X.X program. surprisingly We've construction second at increases. record more So steady the remained our activity there's listings now. physician in

slide residential new mortgages professional a the is that's is which production arrived in the rate interesting. margins We've gain Our the physician what got sell our and how sale quarter. on to high low, pretty It the are coupon of decision illustrates up the when made program deck happened pandemic. in loan during we've XX% at and

coupon rates is Gain higher. much are opposite the and on Now are sale true. low spreads the

balance production So on logically, sheet. more we're holding the

that's the we labor it's and and the markets to long look think sustainable not the housing is we run. a not are thing. white seeing cooling we The that healthy signs been economy in off. good point have ahead, hot it's And As

now about be I'll rest XX%. are level rate slow Loan And will to the you the the and XX%. of this having in it will we So numbers. an at the growth over the Will, through at the top can loan he end of hikes walk back that guidance our half quarter's impact. from flip of anticipate XXXX in interest of year growth

William Matthews

John. Thanks,

loans say to expectations. you funds we constant funding on I'd while of core the income several strength very $X.XXX quarter, held expense give cash us and and quarter summary fronts. benefited close performing As control from it noninterest of were our encouraging If to of was our deposit I'd redeployed a spread the into our with noted, for businesses billion high-level base. a good note also Fed sold I

make I only that full had X we the remarks, As for quarter. remind in in my Capital the month prior the quarter Atlantic company versus everyone I'll

basis income NIM our $XXX if by a a X.XX% and a we interest So QX, in Capital net excluding have we with QX. X.XX%. our with make from some points Atlantic and to you of of yields quarter million by Loan keep rose interest that XX sequential XX points, XX basis and by for comparisons normalize XX point. Slide The full NIM mind was Accretion to X basis increased deposits asset points statement history. yields, million PPP, by approximately $XX core This $XX the of our was income quarter. quarter. X-quarter for in as excluding PPP, quarter's XX million $XX.X record reaching accretion million, cost the and net points basis or rose only in grew the increase income basis shows earning quarter, NIM, was expanding for our

essentially of XX.X%. and except loan the XX% We last billion growth for brings our portfolio quarter, flat, moves, first million Capital. $X.XX balances annualized normalized from to was quarters' quarter cash sold income but funds for the which rate, full securities and in the flat $XX of growth loan billion. million held $X X a were AOCI growth when a up Fed deposits and essentially down $X.X to equated Atlantic Our Noninterest

XX% mortgage only was of production As billion in noted purchase volume sold $X.X on and market. in Slide XX, production XX% the secondary of our was

product. last pause I'll supply So and this down year that the our mortgage with period means production XX%. to revenue flat construction have declined to the $X a industries quarter. with approximately first XXXX here was same half in volume million drive our continued nice for essentially to Housing constraints mortgage year note perm

rates, John our noted, margins relationship and Slide the XX As between secondary breakout. versus shows portfolio gain-on-sale

when declined, see margins move sell we are of to are our margins gain production. and You'll sale intended low gain-on-sale as the that high, portfolio Conversely, up most rates percentage increases. rates and on

with Slide was second division, back the quarter that same of slide capital markets our swap quarter's that correspondent with levels. in is continues in million The it $XX similar fixed XXXX. on environment to shown portfolio the estate real interest revenue, while our in had growth note on This only QX is also quarter rate XX, for business another first a good to consumer as loans, portfolio even You'll weaker. to size ending income be better the bit

QX. million continues perform QX, $X was expenses, also an premerger additional to million With million in versus to well. for Atlantic Management million Wealth months from month up was approximately respect or X in rate $XX run $X Capital's business NIE X our month but per Our $XXX

improvement some showed we So quarter-over-quarter.

had our As leverage the our John ratio so our expense very outstripped improvement operating to by in efficiency leverage noted, reflected operating this Similarly, XX.X%, quarter. XX.X%. this growth good in was growth revenue also we

to we million call, potentially quarter's in guidance charge-offs ahead losses. of effective only net X in quarterly few low quarters, $X and NIE basis with on these XXXs high our last the be with million next points in were overdraft net had Looking QX. expense with On July would deposit rest increases loan in X, we $X.X merit the credit, in what the said the XXXs, or consistent charge-offs

assets. saw a commitments took provision past basis and basis outlined expense, we loans of decline dues again, a or on unfunded to a our cognizant also quarter, criticized declined, of our including as in reserve thus and classified the conservative the points, to our approach provision This scenario. recession the As Slide this weighting reserve in With million increasing a respect our XXX risk which $XX of to is points XX, Slide for on Moody's modeling increasing led noted and brought we're SX XX. expense, XXX NPAs more of CECL and further we ending

capital. to Turning

shares remain additional strong at investment our approximately though the second we April the in with in those ratio not combined repurchase classified AFS, activity decrease The regulatory rates CETX Given in the our per growth to With beyond in caused we conduct dropping and annualized to we decline strong further as growth ending quarter of XX.X%. $XX.XX. the ratios, move X.X%, quarter XXX,XXX cause share AOCI, did in XX% any XX% TBV loan they an were portfolio capital our April. to the early early a of TCE and the repurchases our experiencing, repurchased in loan slight

mark our measure nature back a high-quality to of to of portfolio, sheet as you, we being long-term to it par component this accounting convention they maturity we over meaningful securities view time. and John. the don't expect these requiring on as only accrete approach a one turn Given balance I'll the

John Corbett

Thanks, Will.

folks closing of the closing through and what complete worked anniversary lot thoughts. Sunday Just accomplished some of rose Capital just and as I'm on quarter. team our Atlantic this to second of Also, we they of the proud the the conversion. incredibly to the MOE. night passed the And they've always, A challenge. Saturday

Our position sheet and of those digital, balance the the priorities. top X priorities were: culture, profitability benefits harvesting to the preserve into headed company growth. soundness to We're to protect and the invest the in of quartile merger to the for now

best digital the in platforms in Our have country. situated the been We're upgraded. markets

the built Our perfect the relationship several share that line over and years. large a open share our over from the questions. in PPNR XX% Operator, please are take managers year. to position production. record We to past for next now is the hitting And have grew banks per franchise last

Operator

Instructions]. [Operator

Stephen from of comes question first Piper Our Scouten Sandler.

Stephen Scouten

maybe just said saying the any end repurchase there share additional what I from wasn't XXX,XXX, at start I were the didn't completely. sure you to the you I you plans. X.X%. repurchase know So TCE wanted on

kind the would hold term repurchase share the on Or of you logic the think there? you would near given what's in back moves? the So ASDI

William Matthews

Yes, Steve.

is Our for we our given growth growth. purchases first the capital And had we curtailed capital and in been generation has investment quarter, always XX% the based our strong securities philosophy growth. of growth, priority loan that in upon

would I repurchases, continue we're as out be share depending to But the how us active present to here. repurchasing likely think to less the sheet I growth with balance foreseeable for shakes expect at upon into to redeploy shares. capital opposed from time, future,

Stephen Scouten

were Okay. guess, continuing I into focused upgraded digital. guys you solutions tech Good. I and the of And push in on think further one slides to some then, that noted

I for set throughout the You deck. future adoption, goals digital some slide think,

large-scale incremental if So investments already there or we need tech wanted understand reach to been these have I of kind future of if spent? targets. should those any that to How think made to made just about is the all investments be

John Corbett

of the back branch over brick-and-mortar the to There's XX the consolidation platforms quarter. base slide got a from Stephen, a of consolidating deck the We've our it's investments transition we're talks years in merger of John. couple our decade. We're ago this branches technology about made into expense the continuing We of that lot during equals. last a efforts in technology. another that new the

So QX, Salesforce. commercial app in place loan for we've processing, got through mobile nCino brand-new a

really, those believe needed the So platforms. on software the we into investments platforms we've we made. to And significant made mature be got to now that

Moving to become largely around the be ways more as area analytics. as well forward, through our technology of will the in investments robotics company efficient operations data

So going or forward two two has be in lift it years. the it year last been won't near the as next the in

Stephen Scouten

about for markets. I'm guess And I Okay. Great. capital curious me helpful. last That's thing really kind then is of just

you you potentially guess that banks. I size of if on or larger develop bolt-on that, need bank, to Are any have within or that are noted pretty guys desired? markets you focused expansions team you're that's with that some could following you area big there capital there of expand we the is those You differentiator feel needed And capabilities further? at acquisitions compete your to helps see for like an all a some

Stephen Young

Capital as our but rate But our of has it's We've probably to an it's And working other group mention area. now. focused interest capabilities to for right correspondent now, big on, part enough Stephen, in so. that that's on got not primarily some swaps. been we're talent That we area or the that last Markets Right Steve. recruit group we in decade continue and others. that today but base we $XX out. balance the the continues that billion growth, with into an to opportunity be sheet, clearly build managers but the in opportunity the we for team, But time and to and have banks, team distribution along have future. out happy about grow That's real going to money an marry that's we're what take continued that in

Stephen Scouten

quarter. on Congrats phenomenal a

John Corbett

Steve. you, Thank

Operator

from question next queue D.A. the Davidson. comes in of today Our Kevin Fitzsimmons

Kevin Fitzsimmons

Good morning, everyone. Okay.

outlook been Just curious could sheet it's dig of a the driven the down. is? NII the a continuing grow last So you where drivers we've come to mainly for years period has balance your by obviously, where few off gone what if the deeper little into that percentage in margin future and the

asset even going has been to that or be and most average seems growth we've deposits. Now on percentage for is reversing up flipping pressure banks, the given and seen earning or flat margin slower

continue you margin can for this dynamics the do think within about if some go? give those how the use fund average curious loan low Will just you terms what in I expansion, but quarter I'm you earning about So assets, loan growth, having kind of of instance, -- talked you to that What saw growth. can would the of to see securities? that cash you've same already

those So just of items. into digging a few

Stephen Young

best I Kevin, this is I'll mouthful, do Steve. but the can. That's a

your question. Just further in can of I down a and couple maybe of thoughts, then big kind drill picture,

we I have think there. a slide in

it us it's about had speaks sheet we've a as and of it versus XX, just management. the securities a peers came it is and flexibility. it And compares into balance lot what so year sheet our cash, with us it our shows about Page Slide our balance in there but to last several quarters, which for And in cash really peers. of assets, talks think #XX, XX% I gives this percentage of we

loan flat, -- growth our you've kept Now loan assets still the be we we're X%. cash growth, seen as sheet funded at significant balance

how normal think would in range really X% that cash. we That's So of generally about X% to the assets. We it. $X would be run it's good billion normally in position times a in to

what but over communicated for call interest-earning from of our the next, cash kind flat we've and loan-to-deposit will looking we're the we the think through months take just as prior calls, flat the balance XX the that it, the ratio to we balance assets. 'XX is or before by sheet, have can end flat of XXXX. a to is And that XX% way we up end try of so keep maneuver And sheet. XX% on So deposits in to

balance how of a to and couple about So thinking different sheet rate has lot of think it Clearly, there, the but we're over currently and we're the things that's how changed, just that's thought years. have there's management. environment about about last

the the market and us, As is we rate get margin, if think the we Fed guided the about a the sort for see has towards we'll us funds what Fed assumptions year. of kind of That's of peak at there. telling X.X% end

Another fundamental our was for We're historical it the page the on a XX that this betas will beta. deposit around that be cycle. about margin same last there and assuming assumption around have is cumulative Page as was a betas talks our historical in XX% we cycle

you cost if XX to in assuming rate. of the Fed So would basis points to a X.X% XX get in get year, middle deposit forecast about think the that funds we next that

anyway, those on X.X% So to get margin would a maybe expect sheet, flat expansion assumptions, based we we that from And to give would with in we margin, there balance -- to expect mid-XXXX, all here. a take. or early sometime

As is basis we basis each us hike worth said X last to quarter, points point NIM. XX about

X.X%, the and that's the to you don't there. that environment. for doesn't on get balance interest basis subtract they we're XX the then every depending kind XX well as hike sheet But get how over of X points can management as thinking months about the So to Fed next rate

helpful. that's hopeful I'm So

Kevin Fitzsimmons

going balance positive securities, funding keeping loan Yes, stable be one on growth? helpful. that sheet or would likely last very that the of outlook a And piece source the given that's forward of more

Stephen Young

Yes.

flat. but expectation Our keep with will just growth loan the securities the

assets around the securities page XX%. on our think I is

the expectation. unless would materially, XX% to probably would XX% be that be that rate something environment in in right, range changes So our

Kevin Fitzsimmons

this purchase last housekeeping the one higher quarter. accounting obviously Okay. was on And

what of rate wondering run going Will, to forward? Just digit that think

Stephen Young

Yes, that. always payoffs this things next basis to X to this margin. probably expectation all add Steve. points are margin -- That's the would That's X but XX some what quarter. is kind our the Those high. is It hard it be Kevin, were months. to basis would to it was next in that points and of There predict, over XX

high at points. it This was a basis quarter little XX

like somewhere million quarter, between something million a $X that's $X So and that.

Operator

next James. Our of Raymond today from Jennifer Demba question comes

William Matthews

Jennifer, didn't know you firms. changed

Jennifer Demba

loan Truist Securities. No, question growth. on A

second it half moderate this a in just to pipeline, You Or selectivity on the was you're seeing. you're than it lower said conservatism? what it is quarter I'm year. ago? as would definitely of Curious the wondering your seeing client in more based what is and

John Corbett

we with yet adjusted higher now lot rate rates lag to curve kind some has on are really of the cap think deals seeing for to Yes. with on billion. Jennifer, we pipeline about what not it's $X.X the about a still the -- what first end rise was And What's increasing. losing yield and the It from side right believe then effect yield that environment valuations And to John. $X.X borrowers have that that folks seeing are The on happen is deals rates, billion the the is away and is competition done. and we commercial flat. we waiting are going pipeline it's at is the sidelines also selectively relatively the But to CRE walk I on in some are secondly, of CRE aggressive structure is curve. what overly reflect of rate. quarter, the the

we see it environment. the with seeing down. slowing activity is do amount rate I residential interest declined the on naturally house of down well mean, The side. as we things So are slow

upper calendar to we loan guided the in about for done the single growth half. organic year. So We've first growth annualized I digits think to XX% XX%

digits, wind get year the mid-single of of roughly for if up I we half back in So the to XX% growth loan in the XXXX.

Operator

from today of Raymond Our next comes Michael question James. Rose

Michael Rose

you looking just loan-to-deposit the Slide Most I looking again, grind of rate assumptions be as slide, the just those but higher at plan drivers questions and But me are which know to up to bit give of scenarios with some a down, to my fairly look, and have beta let XX of -- could been that I what answered. healthy. to some of appreciate little still XX%. cash perhaps the ratio the and us like levels then seems conservative. It asked kind cash color rate Can is at the

deposit I like of You're assumptions me up keep being could conservative. It seems those to outflow mentioned. a like going little to book the securities some end bit just

Stephen Young

ratios guess is the history costs, Michael, Steve, our telling could what were different bankers to model balance Yes, One all But than of we're in relative we're is history, of from What's and to begin sheet, we much are what going this in hearing model. our think from our we're probably cycle, and Will it's we with. larger maybe add the quantitative what a And X I it. deposit as too, sort time is lower to history. we on can as industry about seen. the that things. this is tightening we're loan-to-deposit market to our ever we've

those we me, obviously, a of of, And on sheet cash or our So billion. other. offset $X sitting flexibility kind lot X% balance the then each at with have to

manage we're excess to to So try deposits. going

our our go judgments on excess client grow earn As And let them may you make be opportunities balance the our operating we'll and we wealth to still want know, will. accounts but cases. group group. we the deposits. into better those better sheet. not sometimes, and when and yields relationships There be our We in private some on might clients to have they control to funds But like

those the best the going going are to is history forward. we're things to to Will... thing look the have future. the can in But So But that forward we manage

William Matthews

prior in the the to the size and the is around time this of moves relative Michael, past. what had speed versus guess, I difference. cycles other one just And Yes. just we've

make those to factors all model. it So difficult

the love think aggressive would I would better, margins be earlier. that to Steve don't we thought certainly do outlined than but more we would Our modeling recommend

Michael Rose

answers look growth just, here has and the all maybe that's I production outlook. slide, mean loan the really sit I as the helpful. been are again, strong a been know pull-through rebuild an you at and mean, quarter as back and have of the I going any maybe there's year-end. sense some comments pretty questions. but at I little of kind aren't others to have to were, expectation the seeing tone what the the as But heard and The rates That's there's good. prepared full they really, in of paydowns I've cautiousness this of strong. And those point? will I that sort and I really pullback pipelines slowed Okay. then -- think is been from this as we move into

just with just if especially boost being more are get you little from So you sense a trying to ACBI. bit that conservative, perhaps get guys the a

John Corbett

it's Michael, John.

we the criteria the yield naturally, upon in are increase adjusting based So our curve. underwriting

the So underwriting, a for fair -- our shocked that it use we've amount. interest we up rate

So than then at is good and metro. Supply Retail, Tractor of different the when historically. seeing about franchises, in just Dollar of activity feel maybe were far there's area you multifamily And one Starbucks office. But strong. probably little size credits, in certain as to has still we're look because classes you there's as we more good General, we suburban some of rather the and select that would we're there. if and Industrial, the of only port slowed self-storage. offices exception this are activity Amazon are some asset than being expanding. down Publix, be book our the activity very XX% Over kind we activity Office effect. with the activity, That's activity watching. so decent is Savannah in activity, business our And conservative

market. what there down flavor be interest we're construction Housing so activity So of that low, a in gives lot There's with higher seeing you in a rates. slow will a of are there. decline but because the inventories kind doing will we're total, CRE of that

to this increases the being and of more watching takes cautious more rates, economy it little are So best think them us where a that's a see as I And want little our judgment. our interest Fed being has effect. and as well an When cautious. a borrowers lot

Stephen Young

I think or just the mortgage so I percent. on get I'd X.XX Yes, saw just you to mean, Michael, residential add, side. rates

in Now the range. they're down X X/X

So has really catch if this hard borrower. a been you're market to

growth little So I to to bit settle a just we'll order have it needs resume think to those in for in levels, at see.

Michael Rose

me. nonaccrual into the I color. dollar of And noticed loans amount that appreciate one Anything final for that? ticked I read up. just the maybe question to Okay. quick

William Matthews

No, Michael. to -- that. is signify doesn't Will. This like I read don't trend nothing there's any That really that. into

I loan. may think have X it been

John Corbett

I decline, right? think dollars the of total NPAs

William Matthews

And good lines earlier, that, like classified, things as said things, our early warning well. Yes. John have trend all as

right So look now, good. like we feel all very those indicators

Operator

[Operator Instructions].

next Our Bishop David comes of from queue the in question Group. Hovde

David Bishop

back inflationary noted in here the operating some high expenses, I coming to maybe think expect third to XXXs. in that you preamble, you pressure the the quarter up the XXXs, low

line or planned on the merit slide of it expense consolidation. out inflationary curious, elsewhere items? are to Slide be and purely among is causing the appreciate in are the maybe and puts the takes going spread of branch that terms what But XX to I some compensation going pressure. Is Just that raises

William Matthews

it's Dave, in prominently the compensation It's Yes, side. Will.

our X. in increases have we July So merit kick

quarter. So third fully beginning will be that of the evident the at

We of raised our pay also quarter. frontline the in teller middle the second

So I and lot environment of an heard kicks that. of have with that, a in. quarter feel to pressure sure is you've full all of I'm this labor tight calls lot too, a And inflationary other and that a supply

will that fourth saves branch evident more closing Capital additional cost On as to the kick some Atlantic side, positive in it cost realize well. we saves quarter. The the be have in there

of in guidance the high of in the kind low to puts led XXXs and that maybe those XXXs fourth all get So takes quarter. and the

David Bishop

of that some increase did the right in Just Appreciate And quarter, loan CECL stayed there the in curious there some it. modeling there? noted was loss change I was provision intact? the guidance. this in hear what then assumption Got -- you

William Matthews

back about our up I'll Maybe a second, talk CECL process.

assimilation the I in forecast a numbers they out the comparing committee money other of is essentially, publications pessimistic upon or and the in discussions the or based too just on addition what to verbiage healthy committee-based is committee the the in what that whatnot. the are varies reading all that process. And process. that that. reading receiving what Moody's has the very And do quarter of quarter. in and addition think here think optimistic. market It's by themselves we around, around actually And we in are they forecast Moody's scenarios right too does read some -- to and and have And to that, healthy the we

last conservative, like the felt more needed to be pessimistic, what We we if was saying. have, than Moody's you quarters, few will, for more

have which weighting we a great based SX, also their to is crisis-type have qualitative scenario some the half, factor So upon recessionary all not well is scenario more financial a as we but than adjustments that. of overlaid It's scenario. now it where increased their and steadily recessionary

standpoint, left As percentage you reserve with last quarter. flat essentially a we our can see from

how And really number. and that kind $X.X works, generated been in sort our really so $XX and would that keeping growth million that of with it thinking. the was provision loan -- that's process billion of But flat have

recession. more we more talking of read about everything Just people seem and the a to be likelihood

David Bishop

of or growth are the from we potential amount you target, we or overall just how -- as a of think migration percent targeting dollar of with sort the of I'm loans? allowance about or model a And reserves loan motive forward ratio? curious should

William Matthews

-- change of too they're makes give We're internally region, -- out for and to CRE -- unemployment hard for drive that reserve And to statistically less. we either or it's with form, you come may drivers, in of index if and more more lost it tell that, for model, could forecasts, hard things easier or change. better working those for too like really that's scenario see going it's model other forecasts driver the not price but to I then higher us. a us hard we're how what their terms pessimistic the going or our lower worse loss the know index to to But things until the know requirement. what be if the those for in we and case, what based wish I see of things, it'd in GDP and housing the dollar we and really you, on Yes, baseline sort or dramatically we weigh it those or and I all

Operator

comes Mealor queue the of from in question KBW. Catherine next The

Catherine Mealor

to accretable back is loan and as to go little we going for the trajectory, betas to or margin your about mean, a one think bit. and and deposit cycle less all piece model about again about loan harder will yields no talk historical little the all cycle. and to the margin I that, is wanted in But I that I argue think think this that's low of a because number. acquisitions yield I yield be

as of the well? of loan think forward, kind yields a and to that that maybe see head gets quickly loan where of margin? XXX back as mentioned you thinking And next level margin XXX loan head reprice certain as we about yields we towards how as moving the we are How year. Steve, into repricing you So kind kind about yields, we of

Stephen Young

Yes. Catherine. Sure,

have We XX, our guess, a talks repricing. of of have shows we what XX% that kind daily loan our I Slide there basically, about a And basis. is portfolio that it floats which on slide, about

cycle. this kind through you if whole that model, the of started we So run

think I like first yields around the loan was XXX, our something quarter that. in

just funds yield of if a basis so the your you rate And point a at over would loan move in basis Fed up time. kind of period XXX points XX look increase

of the fixed about as books. rate call you'll, of older loan have that, I stuff to yield the X-month sort of X-month yields after then beta So X- And your higher on tied some of the, course, range. the being in it, think thinking just you reprice sort that loan I'd to range,

floating the of think of about it of way best after our X the of think the hold. would to then be a sort in that rate Fed ago book XXXX, and from years was fixed if direct the repricing the is is hike loan X-year be the just I something between of to sort XXXX, that which X help? think as couple is a to it you that, Does XX% rates pretty about late it rate and wherever X months more middle So And book, loan driver. somewhere would

Catherine Mealor

reviews fixed you pricing new on of where you the it on on on has Yes, color heard new of does. move give mixed And does. gone new just production this of quarter, rate the saw I've side, as any It how a not big but pricing kind going? maybe can is

Stephen Young

past Yes. this dramatic probably your type the the and in a I'll in movement there rate depending -- that gotten lock such on days, you it's of quarter the for -- you you was between just the lock was you've from your you talk customers, others. them answer tell product. somewhere for customers, XX cycle think such a direct in to same There when that I XX

in lock did And your rates if things the in you production you in and back April in in did April that February. in June so

point that. was or in would saw what So XX basis from the and the of highs quarter, saw we move you to we a about expect lows the so kind

but loan kind I the yield So in XXXs, yield for our off production average think in this low new -- was it XXX. started of quarter

So honestly judge, because in this movement hard of to rates. it's at the just stage probably

Catherine Mealor

that Yes, makes sense.

And on of service off of charges don't Great. some or rest on And ACBI just any trajectory into COVID loads. this year that's the know rebound service nice quarter. a really I next? But for Okay. saw kind the increase of thoughts of and of the then charges, the

John Corbett

of some lot just you seasonality we the see what a a little in June, activity be we quarter It'd of month in month. more up and said, that saw the Catherine, picking second just consumer in bit

It but seasonality little precision. we've pattern from say sort ahead, lot here, bit to a a that tap there. of it's might had Looking down historical with hard of

Stephen Young

Yes.

is changes in our other the about will quarter didn't kick the quarter. third just are Catherine, our in the that thing think, to making I we about talk add plan, last we in overdraft in, and

have kind of so will forward. And an going effect that

about assets, between of average to a the noninterest things know of I think kind we've of income that as fee assets. guided One income, percentage we

got last quarter rate. XX points points I think of because we of between the basis basis and kind go-forward acquisition of XX run the ACBI,

this quarter higher range, points, maybe little quarter, the XX the the in basis kind right than of we a range. This middle were -- of the past middle of

for going and next the probably our end about think rate mortgage, of and quarters sensitivity lower couple and just with markets, But XX we or to we we this of kind of move you and to have XX businesses just volatility of points XXXX. of think interest of before the the that -- that's kind As in down the middle settle then basis on the rebound range be like in correspondent quarter of the particularly sort with the next range between higher. X

you income. model all noninterest helps your So that with anyway, hopefully,

Operator

Instructions]. [Operator

We have of a question Christopher Janney Marinac Montgomery Scott. from

Christopher Marinac

that sort particularly And you you in on accounts more Steve's the push sheet incenting do I slides. call. balance the to of you the the about down manage deposit you earlier Are growth drill trying the any now? think for as want and highlighted how growth just to deposit differently given deposit And in comments

Stephen Young

And break portfolio in small in accounts. we about business or accounts. deposit low retail. that the sort Slide checking Yes. XX% Steve. it deposit I checking I DDA XX% is XX% our those Chris, we which very this XX, of It's out talk and either on I of then commercial, think is mean, accounts, interest-bearing mean XX%

and more Atlanta, more Miami, in pretty And markets would that And then markets. portfolio. model it's on the Orlando, more and our depending which we've markets are suburban there area are like which commercial small retail are Charlotte, the Tampa, are markets. way So there of be the diversified business a run company kind of you

deposit we're the potential small And well recession, I if treasury a might is as But side, have has ACBI clearly, of continues a the grow the on, deposits there could of post-MOE on be you seen, that bit. coming perspective. the resilient. commercial particularly into to business really point management comes balances little down some coming portfolio management we platform advent if a think pretty some of what as down. with cash see where new been the cash a from And retail those

So say. kind of it's hard really to

deposits that's were where even at banks. our we in past. have We haven't we been the the rates zero, a think because than And differently value have that done is. metrics still incented when huge incentive the franchise we any what core always of But implemented

Christopher Marinac

relationships? Great. Steve, question changes there behavior of state any the note? there related government just of some Is on a municipal

Stephen Young

for then up third and the second typically here quarter note. first and they then to happens in those the start quarter. in Typically, the Nothing draining down And what ramp fourth bit balances a they they're as quarter. quite

-- in from fourth. up draining the the typically, pattern, back third So they start seasonal typically sort and up fourth second they quarter in the a in first, move then fourth of and

So in there's towns, do a Where really we districts, forth. of in is we on work a no business small report. so of a and that range small lot trend to in municipality lot school it because of the lot do we're so

-- past, I may in continue I would a the I move of don't those in disclosed think And but is to sensitive. expect as believe huge reasonably have our up, so we be we deposits. range But this, X% portfolio it far, clearly, rates know haven't to move but in we to the seen I that. disclose So, that X%

take. the $X it's or So around but billion, I somewhere number, don't remember give exactly

Operator

in further no We questions have the queue.

for final I'll call So over the remarks. back any hand

John Corbett

Steve right. If a last John. and a Lydia, this to any of out take questions thank have over am And be job. guys, I hesitate great remiss really support proud congratulate All and lot Thank them. had our really, moment a conversion Capital or to is team They the Bank worked And for you, in hard, today. just reach if weekend. tremendous I'd Atlantic anyway, calling so a a there's I you, I models, they Will. did you to in your and And just didn't hope of week, great our don't team.

Operator

you Thank joining. call. for today's concludes This

now disconnect your may You lines.

SouthState (SSB) 29 Jul 222022 Q2 Earnings call transcript