SouthState (SSB) 28 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Will Matthews	Chief Financial Officer
John Corbett	Chief Executive Officer
Steve Young	Chief Strategy Officer
Catherine Mealor	KBW
Kevin Fitzsimmons	D.A. Davidson
Stephen Scouten	Piper Sandler
Michael Rose	Raymond James
Brody Preston	UBS
Brandon King	Truist Securities
David Bishop	Hovde Group

Call transcript

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Operator

Hello, everyone, and welcome to the SouthState Corporation Q1 2023 Earnings Conference Call. My name is Charlie and I'll be coordinating the call today.

You will have the opportunity to ask a question at the end of the presentation. [Operator Instructions]

I will now hand over to our host, Will Matthews, CFO, to begin. ahead. go please Will,

Will Matthews

a to Matthews. quarter Corbett, I'm Lucas. for will and Welcome we remarks This it open Steve earnings is Jeremy up make I and Will here John brief SouthState's morning. prepared XXXX before first questions. call. Young few Good with John

earnings As Investor Relations our our deck release a always, of are investor website. and copy located our on

to the uncertainties, the comments our within the rules. press are which we let we may you securities of make the statements information the include review begin in presentation me and and statements forward-looking remarks, forward-looking more we regulations. that affect for us. Before disclaimer safe harbor subject and release statements about may language forward-looking and meaning forward-looking Any federal safe risks laws harbor our remind such make Please and may

Now CEO. let over Corbett, John me the turn to our call

John Corbett

previous the delivered X. on the the line results turmoil, Well economy those system showed of economy speed to casualties you, to the pivot pandemic team pivot our banking easing made fighting you the year, Will. all of of result Last Thank the spite right that It we've Good shutdown everybody. In March All casualties. massive Fed's hard the in Fed that inflation the anniversary anniversary however, response. passed in the in from and and marked SouthState that also us. a right. fighting we been pandemic worried intuitively with economy. would scale of the In up join were the Thank third morning, time third of recent guidance. making quantitative for March, the

return increased produced of growth a from and loans, and XX% tangible share During the $X.XX of our common capital the that about liquidity period yielded same XX%. ratios. on year, equity Earnings per last quarter, deposits, we in

liquidity, and liquidity into deposit immediate touch hiking risks, we've building cycle two rate year the base in $X and capital March I'll a been billion longer-term market following came cash On risks, weeks And identified earnings X, the diversified and each. we this and a In briefly two ago. decades. credit. also with for on granular

accounts X.X manages deposit our lowest average deposit group million $XX,XXX account. is with at size an SouthState of that only peer per the

ratio. On adds granularity we've provides that itemized a uncollateralized that So liquidity and billion billion and uninsured coverage and to percentage Page $XX of $XX deposits. lower cover less uninsured deposits of stability sources than available of XXX% a XX,

the weeks been liquidity. March capital, regulatory the So reflected whether in ratios. be there's there's ample speculation X, and following unrealized in will capital On about regulatory losses response eventually

to XX, all Page a on SouthState the that ratios impact On include of capitalized we AOCI. you remains regulatory if illustrate show waterfall well

held-to-maturity impact the at and Those ratios our to calculated to include all securities grows available-for-sale more we sheet should it well-capitalized and requirements. ratios pace. regulatory of Additionally, build securities capital both the moderate of balance as still a continue exceed

book tangible first during the In per fact, X% value quarter. increased share

our year. deposit with costs. are banks, XX finished beta last of with cumulative beta risk We a in the line share low came in deposits over guidance. PPNR XX% which And our of prior grow that points, of right to helped basis forecast per a cost deposit and On to XX% our earnings, first most like the biggest total earnings the quarter only

on credit. will earnings and updated moderate, the some can on And potential finally, moving deposit X, share Q&A on the March growth Given betas forward. ramp Steve events that thoughts on

excellent and metrics quality remain stable. Asset

conservatively However, we building are reserves.

the in in charge-offs. office increasing the slide And last a compared on in can deck Over focus we added $X quarters, the $XXX we reserves Will the that million on touch added just segment, to new in four loan loss with his million remarks.

like manage shakeup FDIC this a like every management to from new back growth and start it's cycle. of in team transactions involved challenges presents X what And events, and soundness. through guiding with has knows new profitability and Stepping this That's been opportunities. current our soundness, principles why

job to already higher well. seeing is for the we're And climate vibrant to to and The continue it population month, where business in facility the thousands opportunities states to to Census X four announcement an of friendly recruit there in the remarks the as in flows It jobs new scarce. have in spreads known liquidity bankers conclude the on will multibillion-dollar Southeast. latest new capital capital country. team. of is loan doesn't becoming with by I'll is thanking report, located our opportunities those a seems treated its every of We my migration. be and command fastest manufacturing leading Based markets like is country. are operates the hurt And growing industry new opportunities Southeast in most SouthState

those You swan when event the SouthState's relationships most matter run are never the when black long-term deep. times relationships long But and can predict client will occur. and a

And now I'll details to the you walk quarter. on to through over it turn Will

Will Matthews

I'll balance decided After we few questions. perspective, quarter bit more margin first high-level to were March measures we better or our slightly deposit sheet. build at and before a our prior the to the a on open speak John. From X, a Thanks, briefly events than costs guidance. liquidity for it of up

points Our basis it was basis increase from deposits we yields a to had of XX points increased tax basis X.XX of XX from in A X last quarter. point basis basis basis with by cost line a in down was increase offset guidance point XX quarter, budgeted. approximately point asset X XX was points the fourth XX better earning increase NIM of of than funds. our XX to in although equivalent Cost total

interest-bearing below at Our points. deposit slightly costs X% XX remained basis

growth X% expectations, down went from an a issued that X% $X.XX actually of utilization in brokered of rate quarter. HELOC million. at QX additional included $X up of remained single-family C&I late annualized planned rate, and line $XXX of the billion flat. in at industry is Loans million Line line had and grew quarter deposit We and in issuance $XXX budgeted ahead light our CD X% billion residential with in some a the almost usage in the grew with to predominantly usage issue credit during flat Deposits concern. but

Excluding brokered approximately season. CDs, our drawdowns deposits declined that million collection public normal amount, billion $XXX funds tax approximately $X.X the Of quarter. was after QX in

improved debit with quarter and continued cash the balances more balance the to cards in cash growth of deposit FHLB We carry quarter. be over income in customers we quarter, million, borrowings steady the did funds performance had and core $XXX better elected Non-interest for than quarter. up $XXX see million. We managed and NIE $X of Non-interest the management. from as $XXX on Fed continued expected banking to and and the slightly led in outstanding accounts, mortgage $X expenses number million end, the sheet at quarter with well wealth million million up fourth by fourth correspondent in

at our levels X.XX%. a of was points another for low end overdraft recoveries charge-offs. combined the reserve the up allowance quarter provision $XXX credit stood million had quarter, of which unfunded unfunded million of of expense, to commitments million the losses net and $XX added loan total net and at The X losses very excluding reserve for $XX commitments. basis with We million We this to quarter $X with in again only total

points in basis that's $XXX coverage last provision loan reserve As in four before John charge-offs over versus our period. only charge-offs noted, quarters expanded net net expense XX by including over million overdraft we million $X with the recoveries and this

to Slide very the be loans XX quality continue points of solid. QX were last from assets essentially slightly $XX down over NPAs metrics flat up and million to NPLs loans shows and asset quarters. with criticized, $XX Past special These XX slightly dues basis classified up were from quarter. trends $XX first were and down substandard XXXX up down. the also million. mention million, were loans five

current interest the respect in CRE, highlights with I'll Given to mention a portfolio. few that office

X% loan As market. less District. feet size is million of on very XX% located smaller vast XX, this the than $X.X Business in are and of properties is granular portfolio the and XXX,XXX office not with than represents of loans our noted outstanding approximately the of average an majority Central portfolio Slide in The and CRE square

service only one and coverage is X.XXx also XX%. is metrics our on are and of average point this levels debt loan-to-value on weighted average delinquencies portfolio low basis Credit weighted strong Our nonaccrual. with very

some begin capital. Additionally, we’ve and deposits, added disclosures on XX, liquidity Slide covering

include Our capital John were remain position And noted, as so continues AOCI. regulatory to would if to changed be ratios strong.

continued of credit in positioned well we’re a our deposit while metrics. month rather strong base, granular and industry, we last strong for capital tumultuous the revenue the quarter All all, believe with solid funding, was

Operator, we’ll now take questions.

Operator

your Mealor Catherine from comes open, question first Our please ahead. of line Catherine is Instructions] go KBW. [Operator

Catherine Mealor

morning. good Thanks,

John Corbett

Catherine. Hey,

Catherine Mealor

about to up how I’d Steve deposit there I acceleration start Steve, your get keep the on beta couple of thoughts, you just and John, Hello the deposit are quarters? and of the question wanted beta thinking next thought for over you

Steve Young

Yes, course, to of you, the is throws Catherine and Steve. talk John Good to this softball. me

So here I go.

overall talk kind put be think perspective. I in describes mentioned, the good of than Will really in beta. Obviously, first just of may we – want, kind the just a to had first a longer you little And in it John all kind quarter, margin me it deposit me and X.XX. of of window Let but let of context general. NIM this both

guidance, between X.XX which Deposit costs were and really somewhere excited within was year Our we guidance were our for about. X.XX. the

to of as we as a liquidity As thinking industry hold same for you the for it in more I’m going first desire give the just XXXX to March, caveat, rate-sensitive assumptions. guidance really margin, customers’ with when few with about toward products. how changed the when updates our you talk well our experienced around And to much the the

number the assets. about the of one, asked. the interest assumptions two, So you as our size beta we Number changed. those Number is it’s rates. of three interest-earning think assumptions, Then question three the deposit three haven’t assumption

there and of assets first, up move XXXX. on we expect quarter the In we for January, Fed the stay asset the X% our baseline the Fed talked then about to points no change talked and interest Moody’s guidance that. in have be to by through Two, funds forecast So forecast, and funds a consensus the we year. an peak XXXX, base fourth earning basis XX around to X.XX% about was new week $XX Moody’s average all at in billion interest-earning this January, about rates. to way based then we in But interest lower call, here on of

our XX% historical the cycle. Page in at graph our on is XX% XX, cycle-to-date beta So at last beta shows versus our

XXs If low result our basis XX%. XX to our rise year. points our a the banking gradual the that on our industry expect half the in beta bringing Fed history, March, of versus we deposit points. much continue costs or stops the rise a second taste the rates to we in cycle-to-date are back This would increase into at estimating – beta of quarter XX will will in deposit deposit beta deposit turmoil As the move the quarter up percentage historical based in more costs raising second cause to few could full cycle to a

and having don’t But March. To it’s well. XXXX that, be really whole XXX in deposit stabilize betas, know, expect XXX range and full the in XXXX. in all confident honest interest we been humble of is deposit to around it and With be those assumptions year answer seems we’re our the into said timing base and to all doing new about our unusual to rates NIM change we’d

as last rates next upward assets funds very The will low two falls environment just correct is baseline favorable into point, with Fed our the yield deposit threes is will higher. while our and the adjustable slightly fixed one Moody’s sloping us be curve. lowered, a years, still interest-sensitive reprice for are So over

really driven perform provide growth assets. answer, income hopefully, margin franchise by by but not That’s with that deposit stable Our margin, continued real but long-winded a and in gives environment you interest-earning to interest net time.

John Corbett

deposit [indiscernible]. I thought, beta was somewhere there in the

Catherine Mealor

Maybe as few a you, that. helpful. awesome was to always. very follow-ups That Thank

Is billion. average So, cash, is asset $XX growth maybe little that more same size with on within that the loans a a low the where shift more outlook? there moderate have you a your comment at less

Steve Young

right. That’s

four think back things I the we’re the John and credit, talked capital that X, about on earnings. to March – everybody mentioned, liquidity, as

bit this just carry to little time, going liquidity probably just more We’re through prudently. a

Will Matthews

any bigger Yes. But not dramatically say, Catherine, liquidity I’d position.

do of I’ll that early was were from file sources post And all lot out it to think all continuing uncertainty. we time a we all have and trying to to in increased deck. figure And and we’ve we’re there. say in on, of light what that our I spent needed quarter further the contingent increasing liquidity got the end

to of sheet wouldn’t but liquidity dramatically access is the liquidity sheet size on having by I the increase we’re say balance important, to big so going And balance numbers.

Catherine Mealor

to so lot deposit into across And back noninterest-bearing – there’s the Okay. conversation, interest-bearing out remix then industry. a we’re of seeing of

days, So of How deposit guide, guide? and out net with deposit you you to shift much of to continue that’s beta a remix. total within bearing to going that your giving include us that interest see do are expect

Steve Young

Catherine, look XXs. Yes. our Hey the in XX% DDA deposits. of when history, our at Pre-pandemic, we was today total back is high it

the I’m out. I go there, industry, play to that the but of would all So, it’s that don’t that back would going but however, not you to have continue imagine we to to much to going way sure going track it’s we know. that’s drift, pretty kind assume

Catherine Mealor

Okay.

Steve Young

and business do steady. other in about small And really, call, retail, on one that’s it’s deposit slide is of we commercial in I deposits. business as of the retail, is granular commercial. remix of pretty space small think I we’ve base talked the think XXX this sort not primarily around And have a is between in pretty And granularity we business course, that around times shows and been each, the and have that that thought

Catherine Mealor

follow-up pick just and deposit I have on betas kind small in did side, as of business at the But on point. retail you any your really think, X the driven piece, March industry? mostly seen you commercial been or you up, change behavior – just that Maybe the agree, look have behavior see Yes. across What I especially after the that volatility?

Steve Young

Yes, think customer look deposits. probably base around it’s I entire the up just excess

in of some money. checking. a business, that little are managing sensitive a in folks to a from And it were excess primarily, bit of more more was deposits sitting than remix you really other March a was X. really, then really They business. small it So, business retail it more But March volatility on, within was were X look people’s if or where there nonprofits there with issues the were at

Will Matthews

volume. give how the around that an the X volume and only I’ll March FDIC points calls center with XX,XXX center a which We calls two was surprised Catherine, It any our little we XX do call weeks coverage, had statistic. basis you interesting calls, in insurance following call had activity total Yes. of to and was so normal had me five subject. something

Catherine Mealor

very For interesting. much. Thanks sure that’s so I’ll Well that’s queue. all help. hop out of the

John Corbett

Great, thank you Catherine.

Operator

Thank you.

of is Our D.A. Fitzsimmons next from proceed. please line comes question Davidson. Kevin open, Kevin your

Kevin Fitzsimmons

Hey good morning everyone.

John Corbett

morning. Good

Kevin Fitzsimmons

just down balance the slowing growth. little comments was a I about more looking into to drill sheet

– from I think guiding I So, to we’re you remember, guys had rapid growth. what don’t

last mid-single had said you digit. think I

and has And over does And help so year? that is Does slower that demand than we’re the more if – the concerns, you just Thanks. it proactively that, the the on what more driven guys going – – of quickly? given really cost maybe brakes with Fed happen more the us economic the the wants that tapping that Or steadily et economy? even by course is funding happen the done is of on it what the the loan, getting credit just cetera? Fed’s

John Corbett

John. Yes, Kevin, it’s

quarter. first was in in the half I think for year. to the more would mid-single-digit in the came year loan of things maybe be that, that half at X% the XXXX that may the imagine weighted We I the our guide for growth have back year. slowdown and first loan we growth of previous heavily would can

buyers a the discovery As and price you have in and sellers. liquidity system lack between of just

lot The make but a before of good, activity our C&I borrower C&I. business in in down of that mode expenditures. So wait-and-see think capital a I standpoint, they kind major them are is from still slowed M&A

of CRE out our has significantly, space. of banks slowed Our and some seeing we’re back peer that

a X% less priced strong single-family want industrial. industrial there. out because here. Savannah real And of we’ve is is are migration a still And particularly, near of in still of than we’ve vacancy the selective population still Charleston be and demand got so we got ports, to a Multifamily on and rates folks strong market, lot lot

think just mid-single growing in effect in were think with feels I quarter. X% – increases, the first I in XXXX right. a rate digits I for loans XXXX, there’s the lag we Kevin, in the So, interest still the mid-teens the year full Fed about

Unidentified Analyst

expectations. maybe year, rate top-line, think we given run Okay. to a Are a – Great. for getting now check Or said just quarter, the think more in I expense tougher expenses the And I $XXX that your a still are about better be expenses. there outlook? – things came on the line? is going quick on you told we’re that scrutiny the I and little than is us million Thanks. know you on last

Will Matthews

Hopefully, Yes, to everybody little applying culture and appropriate Kevin, than scrutiny they target. the we’re did always a NIE it’s applying base we’re their better that reference base. Will. as level of I through think ownership our NIE

higher had and think our have hopefully, decisions that it. that is approved I to we Those we $X the it. do make think budget, this, pretty will in maybe we think the we budget so we much this need to environment had $XXX may on that do like of about in good of in that the of can through something or Obviously, sure need still necessarily an make higher hold top team rethink, kind that number. do We on more, that quarter way. first you is though, million million owners off a

an of capitalization in we’re ahead point. loan are NIE. quarter, cost bit through harder our little here that year production But that budget lower right to for lower origination about regard production on predict. and is costs, volume guidance that NIE still pleased are sitting are to loan of One think I’m full offset higher the this is which There a offset leads has feels impact factors I still first the NIE. at the on the

Steve Young

Yes. work to that that’s a on our we and just And to experience. XXXX, I Kevin, to is got employee think platforms spend is big that, sure picture good going out customer really we’ve in money just add to would we’re And that make that dividends continuing those pay and what XXXX. on

the confident And there’ll And where teams this so things and create. opportunities want denominator to the and other people I trying the all lowest within do ultimately like have expense that base. will there’ll in have manage But be Will’s that. hire point, again to we’re opportunity to to to ability you always and manage the environments we’re as be going always of expenses then think to that,

Will Matthews

wanted out, our most increase. too, employees’ modeling, – make, I about our cycle typical And annual think I’ll to increase a Yes. you as July of is point X just

So you’ll quarter see year. event that’s third every

Unidentified Analyst

thing a one Steve, it then, And nice correspondent. – just that. I rebound for appreciate I quarter Okay. was

about if a we wondering pace how line? sustainable or that’s Just should that think

Steve Young

your to describe had interest-sensitive revenues businesses Kind which of the should yield the this the way and kind correspondent difficult curve lower. the some just the interest stability, that kind has Fed now way year. obviously, a probably and I done will the of quarter. But back good on hiking swap until like next the point, about mortgage No, really of come half rates maybe towards in of we sheet. we right a it quarter rate business balance get is, and is that is – These the stay way bank’s Fixed I the of good because quarter. think shape correspondent great income cash had –

that go rates, until assets of the good, need points the after to until to really Fed raising just I points to of would XX that for guide in XX% – stability I be So, and basis then we to XX% on because expect and back to wouldn’t those of basis mean that our quarter XX original we kind starts [indiscernible] businesses. is I go some kind that first

Unidentified Analyst

Got guys. it. Thanks much very

Operator

you. Thank

Stephen comes question ahead. your Scouten Piper from open. go of Our is Stephen Please line Sandler. next

Stephen Scouten

you may model was just may you dead your model of turmoil curious banking a kind your think morning beyond. high regional somehow everyone. business kind high on think, guess of a a changed have I your think at I’m March level I with is or at way, if what level, Good and any how are Everybody changed? curious how in the now. X kind business has all to do Yes. views not on that seems of model from

John Corbett

it’s Yes, John. Stephen,

things I one come our think about Number our is to in local business the business model and model. a of mind. leadership market couple

to income In comes deposit and has manage I interest decisions own own better sheet And at their bullets than business rather We think best all much to local market someone betas. cost to for I balance headquarters. that these you’re out making to they have headquarter-centric deposits on it statement. guessing of valuable their rate the for deposit away. type their figure leaders where proved they regional be managing and XX very very it’s presidents, when the and of shoot the model, a customers hundreds think much, of miles need And pricing

I think of part has been valuable. our model very very, that So,

The other diversified of it’s is – the model. model piece a

talk got to one-third the concentration XXXX, banks And the about base, you back the portfolio. on go one-third it XXXX, You loan retail, small was Steve business, if what in commercial of the one-third treasury. diversity deposit trouble, heard

we’ve at look You deposit trouble with the on in got concentration cycle, banks side. this

of And some our our has and very proved think business decentralized proven model be kept I stability. leadership mix very think diversity So, to be I the valuable. has to valuable

about we So, is to something I business. do thinking way crisis don’t know this the that change that’s going we’re

proven it’s be resilient. I think to

Stephen Scouten

stable it. Great. really That’s on Appreciate Congrats really helpful. a great quarter.

Operator

Thank you.

James. open. Michael proceed. line Raymond Please comes Rose Our your Michael next question from of is

Michael Rose

morning questions. my taking for good Thanks guys. Hey

to The margin popped for Just sale go to up. a back second. mortgage on wanted gain

the if better a quarter gain. had you out MSR back You

portfolioing this balance contributed But the then made I quarter’s sheet missed them. mortgages, might of growth. more obviously been you outlook think kind just I you’ve there. of have wanted get to just the some the which on the comments, side, – And to

much wanted forward? to you there how the a going plan for outlook to on might Just quarterly portfolios Thanks. get basis

Steve Young

This a right. you’re Sure, Yes, bit quarter. Steve. little on is did come sales Michael. back The this gain

I think about that. total million which million we was our $XXX $XXX of production around portfolio of

quite. not So

was portfolio. it’s arms adjustable on I XX% think of XX% that. The that

So our rate adjustable most of in mortgages. is it just putting on we’re

of future, we we for the that little about run-up see think a As huge a don’t things a kind in stabilize business until bit. while

I think who so we're and an we a we portfolio is owner CP production was and balance what loan doing most seeing have out why a arm much house have of building person so kind inventory, is on that they're just into firms a sheet. on an that our

Typically, these are professional doctors.

– that number was the with portfolio in quarter. think of the mid-XX% I I production first our most think in the

we're is, the and But sense lows any in certainly in anything else, us a right fee those my so are But little sees now, a management these these to and seeing all to to for lot least pickup wealth like of rebuild businesses not bit. seeing sort off types So businesses. build which opportunities, secondary – a the on. of huge business. of it's like obviously we're opportunities build At traditional come these continue

so to correspondent because in six three how pay next XX, to investing in next XX we're thinking so businesses. it's kind mortgage off We're of not off group. some recruiting in and those that's will actively recruiting We're of those it all to months, we're but doing actively And because the bankers. about actively things, our going pay the

Michael Rose

to going deposits, of wanted Maybe helpful. just flows. back to just talk Very kind about

guys broker quarter. you added obviously, this So some

in You seasonal funds. had public the decline

core and Just grow? kind since excluding seen everything stabilize kind maybe trends plan then the those And about Thanks. Can of impacts, forward core early balances perhaps deposits? going went deposits have happened of grow obviously to you in the two just is March down. to talk what you

Will Matthews

our can and Hey elaborate. market to Will. March markets. Xth our deposits within probably Steve maybe a I'd John – we us on caused the start and and various I'll be Mike, say more events on focused within little jump in its or

so And little on became forward. deposit that sales the a from our more hat side important point

point regard. you'll see forward, is activity And so I that in think this more think lot what from a I

period March Xth essentially at saw you million. that our about down $XXX look If in the you XXst activity, commercial March deposits to

Our bank rest other $XXX is the about of up deposits, the million.

that down over about million. net-net, you're $XXX period, So

We have going what's the a from on. obviously, lot various in categories, period-to-period of swings depending on

So said, had we like that's were few the call at we how surprised a measure. calls I positive not real center. But

can John of activity that with time. with our some the we the around we Maybe on customer's right touch some outreach have did of

John Corbett

Yes. And I that March even stabilized of that I drawdowns go seeing January. seasonal. piece, back don't funds that's in lot the in before to Things the were And Xth a we some deposits know events. of was February. public January,

campaign in portfolio good were February the and feeling the deposit until deposit day. we stability again stabilize So up things this get March. picked we the naturally up started and about you of really, really in April, then things tax picked and runoff the

the ebbs in So that's the of months. the kind flows and few last

Monday data size deposit one and the average of SouthState the and size percentages some accounts to had uninsured of But leaders market we lowest that of we confidence Michael, our And had the uninsured in we I system instilled peers Xth the correctly met we was thing and deposits Monday important the that after to morning. that our the were XXX think of more on our with for had of with deposits. probably identified any risk lowest great and or us, share our March deposit bankers bankers frontline total morning the of

lot translated that gave bankers of turn a that think confidence our to confidence and I in confidence. our customers'

Will Matthews

deposits. I other mentioned the One commercial point, data too,

they use utilization roughly to businesses tend like to by fell line during of the It commercial speak. X% credit so looks our Our use cash cash, quarter. their before

Michael Rose

point, makes That this would of lot know capital me, if what the of using come in, for a kind it? the the Thanks. commodity guys just kind of not, in calculus definitely for I buyback you Any sense. insights. a Maybe is but for on at has near-term, have change finally And a you? place. stock precious Thanks thoughts

Will Matthews

Yes.

capital think as capital we – to continue as of Michael, allow got opportunities more mentioned doing this. build us to a allow and John in opportunistic will having is near-term, accrete a some the history And capital And in strength think I out of that to coming that. be we've remarks, develop prepared should wise. his to

on to statutorily our in to some accrete. kind affect the below continue downhill. changes to plan guidance, the some and or regulatory get capital that we billion It'd flows that don't future, good even regulation-wise, banks clarity let necessarily $XXX changes view for often be regulatory So of foreseeable guidance

understand able we'll and us formation to to picture be way you have to growth, credit, use a want what's well. allow digest Longer et rate. hopefully we'll very capital figure out that good to term, So best clearer what's on the cetera a as still

Michael Rose

for it. taking question, appreciate my Thanks Great.

Operator

[Operator question UBS. Brody Please your Instructions] is go Brody, of Preston ahead. comes open. line Our from next

Brody Preston

for and everyone morning Good Hey. thanks the taking questions.

Will Matthews

You bet.

Brody Preston

just line predict. Steve, of give non-interest-bearing. up year. to thought But I the the you rest really it's on the the on for I follow hard of know wanted to for did margin expectations

there expecting like comments other And you it some further sounded based the on you're mix so gave.

to non-interest-bearing expecting guys mix? wanted within guidance, margin deposit I So your for ask, just you what are

Steve Young

definitely just sure. We happens we months, over say we would two from quarters some the we high-XXs. honestly. know, that next the if next know it we're XX% have not publicly. movement We Yes. – think I know XX or But there's really just don't don't into that the that happens all don't in some

industry would remix. just seeing continued lot that be assume we're to and the I So the like a going

assume they we Xth that I raising that of probably quarter raising then think right then so probably there maybe the rates in the would moment two about a remix some I May now most happening this that in expect will there's think in next after rates, over four I of picture, stop quarter, this that another March over remix I wake-up quarters that X%, would so. until that. next think quarter stops dribble to out stabilizes was or get I the that and let's would is because Fed is trends and it the that probably after And what's assume

Brody Preston

your on how your to some for as amount also want I deposits That's the correspondent trended give of ask what did could correspondent relationships it. from XX/XX bank, come you us Got helpful. from those a X/XX? to and sense

Steve Young

dollars business, million couple have correspondent deposit – going being a market and maybe gather couple gathering million few we a been in business of a versus we accounts, a that business pretty about DDA, to dollars guess hundred in do income business to $XXX million of deposits. relative money maybe. intentional hundred I’m That hundred a million always fee in Yes. We've

to we sits their all sort of sheet – $X.X the instead with balance come us billion Fed. we $X.X about which putting balance have We wires ACH it off of us our through sheet [ph], the with EBA send billion and has our on that but

balance point disciplined always wanted been we've pretty much our to in put So around how on sheet that we at of any time.

helpful. So hopefully, that's

Brody Preston

that X% owner-occupied No. included office is? that – That questions. do did office And for put then had what is there if have that the I is is, And the portion sense their you out that appreciate appreciated I portfolio I within to you of a is last there? that. slide. I total two want ask,

Steve Young

the non-owner-occupied office That's Brody. space,

Brody Preston

non-owner-occupied you Got other much the clarification. give exposure it. the in but Got nonowner-occupied just it. the again you did very But did on want did I have for on small the office ask substandard nursing then the to portion question, for ask in the maybe I Just guess, triangulated I I hotel ask, the portfolios. should special home? particularly CRE very on before what ratios want want to just I of nursing portion, Thank there's know there. I And and the interested kind two rest special have to if portfolios to home, did book, going mention loan the higher wondering, those – the than of anything nursing what's is I a causes ask home you. that

John Corbett

as The you carryover a get financial upgrading COVID. these we continually on is Yes, that statements from see and we're we trend bet. hotels, hotels And continuing. those,

Florida Actually, performing COVID. is very, well convention Tourism back from just that's business The hotels a to normal. very hangover back is right about normal. to are in about So now.

do in near problems we So in forecast the space. hotel not the term

new become we and basically, during online COVID the are slower a On our that of fear less the X% occupied. came care than of COVID. its of the loans. a it's facilities had to living couple space, health And assisted facilities costs, But little

Unidentified Analyst

know – kind across guess, built that I seeing already book. look a when the maybe that I newer of facilities of higher desk? the in Do is are of you slowness some rates? of trend, small your an it. of of some being that you older facilities it's occupancy and had your a across kind really guess, lease-up portion But versus ones living that I Got come you assisted across kind occupancy Are or deals the that

John Corbett

it what prior I Yes. was space be to will think to is a COVID. COVID, of just slow come that it because to and challenged I think, back

mean an I it's just issue. I overall think COVID So

Will Matthews

we inflation all from Brody, got most have saw of the and kind with problems labor shortages. Yes, They ends. labor it

us. big a big now. good status a really nor said, those us, on a appetite – for while we've is had it an you space But much As it's not for of for – and downgraded

Steve Young

Yes. and two facilities; We've are on got both of assisted payments. current living other them nonaccrual

anticipate So loss there. we a don't

Unidentified Analyst

Got it. you. Thank

Will Matthews

that XX% it's nonperforming payments. current on loans On note, are our of

Unidentified Analyst

to Okay, questions. I much my for All guys. taking good appreciate right know. very it. you Thank that’s

Operator

line next Our Instructions] question from comes open. King Please Brandon, [Operator ahead. Brandon Truist go your you. of Securities. is Thank

Brandon King

morning. good Hey

John Corbett

morning, Good Brandon.

Brandon King

that Steve, maybe mentioned current kind basis you So repricing? could if loan loan does offset loan fixed levels, towards we went that they I know the from the points about benefit could yields increase much But from wanted to just XX think half how yields how year rate deposit know then And with to costs XX that how increase you to repricing? us with I help and how of deposits? get can in of second the latter in you quarter. trend

Steve Young

Yes, and there's half the that's year Brandon, stability we of think margin. look good it's in of the a why with back question, kind

in about our a that at rate book. fixed talks got about look book, slide deck have the our you If – we've we

– of billion about hike X.XX%. be that's So $XX floating next We've half probably about call that daily, about it $X.X to and weighted months And XX so here average is billion is so. rate has about then fixed billion got that's more its rate. adjustable going about so We've it. we have the rate or one $X.X in is that in got

So it if or have it's one reprice what on treasury year the a sets you, based somewhere. likely to that's in going

have reprice year. adjustable further will And then that the reprice we $X.X billion, out than past up some other they'll

think will basis pretty in move yields, loan So XX points a we about yields, would for portfolio significant in say I loan think over the quarter. there. as we year next at it's first had the I probably end the crest of in and somewhere XX the somewhere that be XX quarters the between X.XX X.XX, of we couple out to and maybe

Brandon King

it. what appetite And And quarter? side, is Got then what in Got broker for were you share of broker could kind it. Very, deposits? helpful. to maturity deposit the raised and the rate kind on you very deposits of the that the continued

Steve Young

Brandon. sure, Yes,

If about – we to long X% of billion duration. coupon you and $X.XX kind is three answer. a answer it's about year short of quarters answer give the did of – and is out got I'm at short right a you going The

go longer thing. back stress kind of times The answer. same is, we you times these answer – back look the short did if of sort at to XXXX, I'll of the that's when the of like So March

deposits borrowed, or uncertain small really businesses, $X.X was of think, in about March about it because $X We I billion billion pandemic. of XXXX broker

is of think sort So sheet. we over to source we the But that can about that quickly the way ebb bolster continue expect a we'd to it that would time, to balance probably that's down. we get

think assets in pre pandemic If home December bank about you of went we loan deposits. XXXX, either X.X% had of pre-cycle, in I to our were or broker

average. get good My time. over down Today back guess a probably is five. at we're that's long-term So we'll

Brandon King

start then charge-offs to level? can continue when net and long begin? lastly, you at peers have on net how think credit, pace And do charge-offs that of of much you your of just seen And already – very think blips. some do normalization kind will low, sense. to I'm you some be of just Makes keep this normalization curious longer

John Corbett

remarks, net just actually quarter, we question, And last aside have and I to cycle mentioned million set Good we prepared But we've see Yes. the the $XXX this of reserves we'll recoveries. for have loan how think unfolds. to in $X in they're only the you for portfolio, at detail in there the the loan about year. values I XXs. loan lot a of got if appendix in we've the think But look million high our

we've we've sponsorship from equity hand see careers how going our got. in cycle have but we we've like great liquidity face to and a This the – standpoint, our in We're is to anything got our like book feel great with unlike that out. clients. plays just So this we we

Brandon King

for Got it. questions. my Thanks taking

John Corbett

You bet.

Operator

Thank you.

open. from Bishop go next line Our Group. comes of question ahead. your David is Hovde David, Please

David Bishop

that the of this think the we the cash should this how in and Yes, that here. And But has – liquidity cautiousness, been [ph] rest the of given and Is borrowings I of gentlemen trending Thanks. runoff answered. the here good mode here year? morning about if on just short-term had come I question just apologize jump dislocation to noticed and through quarter? short-term and so investments asked

Steve Young

reiterated a billion mid-single-digit growth. is that this base. earlier We David, interest-earning asset Steve. Yes, loan $XX was we What kind of reiterated

ended the end cash a if So we up cash. imagine But we than I spot you sort quarter would our a think bit basis down that a at of with that – come bit interest-earning bit. look the higher little assets the I'd expect guide. on little that's at of little would more

huge So way. I don't think it’s move either a

David Bishop

Great. Thank you.

Operator

for final remarks. I'll stage, team At you. management over currently to the no further we back any questions. hand Thank this have

John Corbett

morning. yesterday. us. of was releases a a I Thanks I joining you joining It's this Yes. for lot busy appreciate us earnings there morning. know

on have a you hesitate to give great day. a us have questions If Hope don't any modeling, your ring. you

Operator

you this joining. Thank for gentlemen, concludes today's call. Ladies and

You may now disconnect your lines.

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