SouthState (SSB) 24 Jan 252024 Q4 Earnings call transcript

Company Profile

Participants

William Matthews	executive
John Corbett	executive
Catherine Mealor	analyst
Stephen Young	executive
Stephen Scouten	analyst
Russell Elliott Gunther	analyst
Michael Rose	analyst
Samuel Varga	analyst
Gary Tenner	analyst
Benjamin Gerlinger	analyst
David Bishop	analyst

Call transcript

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Operator

Good morning, and welcome to SouthState's Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Will Matthews, SouthState's Chief Financial Officer. Thank you. ahead. go Please

William Matthews

welcome This and John Fourth XXXX Quarter Steve Good Will to Matthews, Call. Lucas. is and with and Earnings Young morning, Jeremy SouthState's I'm Corbett, here

some always, brief items As interest move then questions. and I and will of remarks highlight a John to few into make

Our under presentation, Relations the you comments tab. earnings find can investor reference and the Investor on will release which our website

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

John CEO. I'll over our turn Corbett, to call the Now

John Corbett

Thanks you, SouthState's everybody. Thank us results. Good quarter for fourth Will. morning, for joining

For time. the in the effects as cutting first at deposit September. to occurred In started the regions, quarter, cut growth same growth deposit Reserve's Federal see and were we we the even rate all of our October, the we clearly across rates felt

Now the tax municipal it's deposits the collection is during cycle. amplified some of normal seasonal, and the growth by pickup in

So deposits quarter normally get a little fourth inflated in anyway. the

brokerage that on in and down X% brokered our basis. decline if customer grew liquidity back paid the he used excess out of annualized Steve some CDs. But deposits an you by CDs, actually

backdrop by total X% and more quarter of is to PPNR X% reached end tightening the cycle. rational. led deposit revenue. a like led pickup a is improving the we've in pricing nice in it's to for becoming increase feel That improving So Liquidity the

eye generate presidents times we they great month, an were like on did it to stars margin. We've and did maintaining this For XXX feel with the Earlier branches. managing our yield at our inverted announced the They this looked as I aligned job able on mid-single-digit approximately a several curve. transaction felt growth moderate a the a net regional interest like over transaction whole, years year sale-leaseback of now. and the type

off-balance approximately capital cost the harvest is revenue to $XXX extra very compared to and We the convert million sources the of of capital able option future sheet this attractive capital We're into of now have growth. to capital. we quarter. And When finally, January and regulatory was development our biggest the on a of modeled the end first December May, the at of the subsequent we Independent X. in closing approval closing announced in Financial acquisition other the

things progressed so a after cost should Memorial conversion So Day, We've saves. for we planned. little than relatively clean fourth scheduled a the have quarter got faster

can and months. building the and I Our teams have lot spent sense clients. together last their of over the finish time company to integration serving both the And their eagerness excitement few a and keep our

globe. the lead the the strategy the the The continue to And fits Our surprising, Census the strategy that with in growth. geographies the Florida, in best business December the in released Carolinas been model. report the franchise company and and best scale independent has Texas latest nation like Bureau their and to not build for best country

income walk don't moving us the statement. go the sheet why balance on you and and Will, ahead through the parts

William Matthews

Thank you, John.

excluding noted. growth with X.X% was in sheet guidance John High brokered, in good solid or end million $X loans million to X.X% As revenue of line leverage. our operating several growth up mid-single-digit you annualized year $XX fourth growth made with up the annualized X% and Balance said, level, respects. the in quarter in for quarter deposits a was over expense a versus as

and year, grew loans deposits grew X%. the X% For

helped Noninterest deposits point QX basis XX of over grew NIM total basis point million an to $XX drive X.XX%. On the a income Net in statement, by income in interest X reduction income our $X.X margin improvement cost our improvement, with was $X which day million by the expense. same was the of up led on variation $XX million third count. correspondent, flat on quarter up almost million somewhat broad-based from

the Mortgage up charge and Deposit prior our had year $X in commission in The up up commission-based XX% the largest was $X.X and million. guidance. wealth which Noninterest increase up million in which I'll high million, income its a due note income that was million wealth at to to expense, was of were quarter over record million, expenses the performance $XXX.X with with higher up over businesses. million $X was $XX.X $X.X also year. was $XXX,XXX end revenue, up service

improved growth also to points annualized, X the which points. efficiency ratio points quarter charge-offs million, basis we credit to with had XXX million the XX.X%. quarter-over-quarter in basis and or in expenses, our credit net basis charge-offs our $X by year X for net $XX expense, full On Even brought

leaving was allowance healthy million, ending levels provision reserve quarter was X.X%. fourth $X total over The loans Our expense to at flat.

down XXXX's Our which NPAs QX XX basis basis $XX XX XX is past were and points. from year-end from 'XX levels. ended year X the also points points, to XX dues down million basis basis points, at XX up from year-end

payments. that XX% SBA also our Substandard of note a and on are loans were loans approximately of guarantee are current nonperforming with our loans up. XX% I'll XX% loans nonperforming

with as losses. as these view to than primarily rather transitional interest substandard to continue loans indicative of rates for the We downgrades due expected most part

capital capital, As year healthy with to CETX ended we with XX.X%. at the levels

full capital and QX respectively, X.XX% of Our a healthy rate. and X.XX%, with ROAA year provided formation us

move now we'll to Operator, questions.

Operator

first KBW. Our question Mealor from Catherine Instructions] comes [Operator from

Catherine Mealor

the wanted the X we see does projection moving what the Fed's the the with see projection just margin on we've expansion. of time us maybe margin to out kind quarter thoughts you that kind and could thinking now the update what the deal I you're this versus on about mark especially year? of your on and NIM then margin the the of thoughts NII of with updated maybe higher couple if updates to last a forward that course and over closed cuts to nice of got Really where taking is also spoke,

Stephen Young

of is Sure, And recognizing quarter, was of this did thanks cost X yes, basis X.XX%, is that really NIM lot was than regional as really that to our presidents really deposit The a X that points. did were nice up Catherine. And X about to John higher happy really, the the together. for which mentioned, margin basis of We Steve. points. and that job the bringing expansion. a work guide This

you NIM guidance Independent of date, help I the maybe moving for I X, closed you. line, of we January to the and parts than has kind probably and will closing but bottom XXXX you that walking now much So on changed update parts pieces, our assumptions, the other not think through kind just and hopefully need on the

we Independent major now the XXXX that assumptions assets closed earning So average about -- the January for on as has X, think is one.

is rate our Second forecast.

how SouthState rate the then the The And just -- loan reprices. the around you is third loan fixed merger fourth legacy mentioned. as is marks

the on expect billion, rate year, the the So growth we mid-single-digit expected as based a we think average earning year. for full loan that's about $XX assets about for

and ending the start less over year assuming that billion. a little little year are the maybe we somewhere $XX $XX then We a billion, around

our is forecast. Second rate

So rates XX/XX/XX yield holding this curve. flat from we the have no We're rate cuts guidance. in

which just third legacy times part, the And repricing loan our talked book. we've about is many then

as that's should $X goes have Xs the We on high time increase and approximately Xs basis about margin billion early repricing the XXX or from the a a that into quarter. That's X high points. pickup, about basis Xs. point

earning that you run million if So that it's over assets. $XX math,

then the the And one last one, is was marks. the what you fourth mentioned merger

just from date, the about We really finalize the our X-year X-year fell the is marks merger average of that by around independent kind X.X% anecdotally So of financial treasury, team which originally announcement modeled XX treasury discount points. basis working the by a approximate life XX. rate. March loans, the to And is

would we that, in whole a on XX spreads change basis assuming moving point parts. to that know, XX So something expect, you range, something lot, as like many depending don't less

X bit earnings little we'll So and anything less a day doing else. capital little more a have absent

X.XX% the between So exit based then of first legacy we this because the year And assumptions, expect and be in X.XX%. all of these X.XX% -- NIM between and loan repricing to quarter would loan X.XX% quarter. fourth the on the we'd

said capital that end from capital excess Having some Independent on all first last from have the get of that, at to some transaction as the before, X done mentioned we're likely announced quarter. day marks well sale-leaseback will hopefully as interest I our as previously

So we would restructure first we it deploy the some at the capital of a excess and of end quarter. would securities take potential at that expect

additional an $XX around the million Our equate expectation $XX in additional to would would expansion of second basis we lease the be starting annually. offset would to point margin This million expense X quarter.

quarter of summary fourth quarter add first of at all X X.XX% we the basis the the start in that, points second in would to X.XX% additional revenue in would deploy 'XX, we X.XX% originally future So and quarter we us to capital future. margin growth it to the to X.XX% at to what well X.XX% excuse as gives X.XX% -- as exit modeled. into me, in versus to

I back yield do basis to continued per XXXX repricing quarter. as upward book an expect it the X legacy curve, and NIM as of sloping think about SouthState continue And expansion of then to lastly, the points we'd

helps a you lot line, of this as you model of the in think all that moving parts. year. So is sort hopefully, there's throughout And of but

William Matthews

Catherine, me is Yes. maybe let too, this jump Will. in

point. securities make say end as quarter, towards then continue quarter potential decision we to decisions is and through that shape how Just and evaluate this potential marks We've up just that the restructuring at at the we'll no of maybe the point. see portfolio that made a get the

regard So thus in far. decided has been nothing that

Catherine Mealor

sense. makes That

your in was X.XX% talked And so to I last as quarter, to X.XX%. mean, margin, we exit about

I margin quarter. I'm of simplify like can bit of a It little feels going better -- a So if almost it. kind this

a that by leave what way do base then same to that So with impact offset, forecast of a you taking fair restructure exiting is better can you few plus kind out the of on cuts kind 'XX. level base in at kind the maybe of you're really a to of better the Is maybe core bond and of the coming to?

John Corbett

the probably course, then, down expansion to a talked us. with extra think and little decide that third margin in us the independent, quarter to I fair -- second bit X I gives day to XX adds basis And to a a can rates about capital additional deploy curve, would XX points that. add we XX, say think we And that was not the thought we Yes, of and so I think of way XX how little it.

William Matthews

in off flat, as would that cost like rates on and we Yes. pickup we continued the stay from even of help And quarter, where just bit a first things expect too flat. deposits if little mature even started rates with to get CDs that. would

Catherine Mealor

Okay. also X And is I still this think X you that know to each bps adds it, a -- is that your you've cuts. the guidance about Is past to to rate as said that think way the margin. company, combined given no fair about about cut in

John Corbett

have accounting Sure. is interesting, fair Yes, a this you to for value think second. through and

it yield absent normalized the the upward think So per about would points keep we we I -- is basis be quarter way if loan X on accretive. repricing sloping, curve, the would to legacy meaning expect continue to

would in X more raise get X from conversely, would be another cut hit they're still X our that a margin would if probably cuts, back book the move here, independent but would [ And basis bit the X for rate from ] rates what legacy reason, the they it to a liability point there, from get independent points, basis. a because we to combined then If our legacy or be they from we XX rates as a increase X points. sensitive would company. we so subtract from basis basis basis we X on the points book, if And some

it'd be accretive, So accretive. but still as it be wouldn't

of loan kind that, the if from long have we -- repricing rate our as the a deposit time much franchise. to it be our a more will talked NIM And will neutral thing sheet this transaction, from we So it back NIM really the about get legacy drive the makes little independent cuts, really book makes we'll bit SouthState. puts probably more ago, continue it balance then some from that will -- and our better get

Catherine Mealor

early. closing on deal Congrats the

Operator

Piper Sandler. Our next question comes from from Scouten Stephen

Stephen Scouten

that But might like I wanted for sale math any know, you can here securities kind to felt the additional of restructure do process. see around whatever kind the walk if you of excess there just capital you if why kind to what of I for John, reason, through the leaseback. us say and the And was things thought was said with thoughts the aligned let's right you other priorities decision a now? be? weren't the

John Corbett

Yes, Stephen. over we've got comfortable done of the with the today. so kind decade, network and sure, a Yes, last of lot branch -- branch we we've that very we're repositioning

So fact time. kind on entering sale quite not for leaseback into long-term branches being is in the of some this plan we that to these

really really, about So capital. any capital not it's that sheet harvesting for. off-balance getting credit we're

when than we other was ran the capital numbers, And cost attractive of sources capital. the of more

the things more want versus a is will and you thing looked rate the as the we've the other that narrow. flexibility it, give was to rate, exercise of it management going it's at look spread pretty the forward. of risk-free of really, capital So is cap one at us And

felt we opportunity a good was do like to this So it.

Stephen Scouten

Got it.

around securities past? kind high? the of is slightly restructure, you takes if puts potential becomes rates that if get the maybe environment mean, done, what's does I for Or more something Okay. to math And best that and advantageous the the the of a mathematical -- remain

Stephen Young

Stephen, Yes, Steve. this is

that, most and probably we marks capital landing on to a securities our important think where we're restructure extent. probably going be. bond And what are if we're or restructure I decide to do going the to is based

independent parts think there's for I lot So with us, of a moving the transaction.

to in is, able is the to the We restructure, all in But way it, end we're attractive And going first you the quarter, call be guess the the is here, as of places by an piece other going well. of answers. sale And sale the we're it lots to things. attractive could get certainly we deploy I all be April, tell those know from in have securities by -- which ways, leaseback. But describe a would an I those is of leaseback ability lots to whether can different capital. certainly one of it's this

going those make we're So just as through. to go we decisions

William Matthews

consider to I would different were to Stephen, your a that. And portfolio add, around philosophies are we if question, there structure

more those your earn-back and rid that that better You deepest get underwater can have you are moderate, take are ones profile. bonds can or take but of a

is of think those mean and so marks we'll as that times haven't yet, we I a finalized And about all our things. said process couple we've ongoing.

won't first final, by we closer [ have right final, lot the better final. but to be the at be be where a is think of could somewhere it closing. the hope going X% ] We capital idea And to than a north end now, we of I quarter mean closer announcement. probably see our and be I the sit, at of that, we be range CETX position maybe to time better the to merger XX% XX announced should the

months optionality probably So again, modeled and through we base little a more than flexibility capital ago. that

John Corbett

Yes.

just like and profile. told so and on. profile the want to mean we Now really as and our our about I'd say PPNR our you revenue we -- last I that thing love we forecasted is margin

So we it's just of to do. have top this And a have. that, lever else I is to capital extra we whatever need do nice on think to

William Matthews

Yes.

Stephen Scouten

let's within more it. Texas you'd if it. fully? for see active a if really out integration, closing, on barely me. kind know play to hit And the more just we And to right Got XX-, think. guys hit to, the on thing now, where the do up right everybody the dry call let deal bulled Got last like XX-month try is and M&A. just of prepared you build-out Or it desk? but do this here another banks came getting I ink's we IBTX that that window pass to environment markets on do first focus want be the more Would you think your if deal it,

John Corbett

the feel A to best strategy like, the lot assets. we scale finding of talk billion Stephen, And somewhere business that billion about banking is $XX today, our in model. is $XX of our scale the best in

good IBTX partnership. And productive to regulations the the of XXXX, Trump and in the new hurdles the focus and just team $XXX what is understanding billion and XXXX is about be. the second administration feeling be our then on for are So growing learning that a what and going entirely integrating getting better under at getting thing would

as might those So we're know we hurdles billion $XX to what until to the the to is the be, progresses. size best in we more think place learn but going $XX billion year be,

Operator

Stephens. Gunther from comes Russell question next from Our

Russell Elliott Gunther

to the repricing embedded on how about of the balance guide? opportunities wanted in strong the CD NIM, of a minute side cost rate you're sheet, back repricing The And well of and understood. But just could. in guys legacy opportunity trends? I terms other and maturity if you SouthState kind start could spend then any is deposit thinking the we fixed

John Corbett

Sure. No, that's Russell. question, good a

As company first -- about quarter kind the last a X% around fourth after of as I cut the about to came December. pro good in think would we model remember think and it forma about the forma way be deposit the pro a rate would quarter, in costs, the we think end mid that company

into January. So until deposit really that get we our didn't costs

told in So XX% it XXX combined. as our the expecting kind XX% been first but basis be of the combined a at fourth relates repricing a looked the X%, and there. as our I X.XX%, deposit -- took But look was so be if if think, end -- pricing if at around a if on quarter, there third peak we company, IBTX opportunity, be, beta up you about of points kind looked X.X%. about then as at quarter, we it'd one beta. a little us our forma If pro you would certainly combined there's were And the quarter, that you X%. higher a around to beta stand-alone CD we'd you be the company and is Street And XX on would XXXX, that We cuts. what of

So a expected, X% of use than point to I a basis to wouldn't change maybe but expect but originally over as time, down little drifts we're that. kind originally a we bit guide modeled, better would I doing and a huge it

Russell Elliott Gunther

the over of No, to if us average And for then sense gears, to guide? banking your expect any pro I course could and the just of be a give update switching correspondent to trend kind that. forma you how asset you'd appreciate the guys business year

John Corbett

Sure. XX, XX to average Yes. at average Thanks, assets the income earlier, of point the increased And Russell. On look the noninterest was noninterest XX. basis of points Will's our Page third It quarter. income versus to we $X.Xmillion really from nicely, assets. guide

income So And we increased bank. quarter. about related the due correspondent it was year due of of fixed Houston. recruited of the to and the it is in $X.X our new to that which securitization earlier to in really great million most a sales, was It that SBA was of most mainly, most really team

great to improve that. of [ XX we're where see And wealth. and increases closing That's if other kind I noninterest had here. guidance IBTX, of and ] we Wealth well. There don't in what basis changing We mentioned a then is year. mortgage our points we'd continuing they guiding that of glad I I the to think But really plan. was the think income, was with that So higher doing be really range. quarter, of on end really would thought nice increase, kind XX guess, it to had a great of

would to all the improve a started capital think I businesses. that basis again, we're to of some Fed be points, that what would if our attractive So rates sudden XX if markets of be cutting would closer

probably that XX. so start you'd towards trend And seeing

around around up. million kind of revenue the correspondent of think So you the of $XX look I I we're that's frame revenue. way $XX quarter we annualized, kind in it the were I'd this -- year, the if million at We're bank fourth in improvement think

That's number if I towards think get see go we something our And the million, about XXXX like that. $XX then you maybe good expectation. starting rate higher from here, that's probably point. a it cuts

Operator

Our from Raymond next Rose James. comes Michael question from

Michael Rose

the Just expect now, core we we environment wanted lending to and move could in at just growth. markets the on get in your Texas of have just is pipelines acceleration half are of kind environment as little a looking what looks more reported year, a favorable, sense back think and but like right and through loan the more in talking a most both that bit I then it companies

Just in sides are guys wanted markets? table. the to your what on And you of see seeing both other

John Corbett

loan the line year, it's and landed. we about We growth a did that's in was in really had We quarter, In third John. with $X.X so in guided billion originations in about XXXX, XX%. the quarter, Yes, to Earlier X% loan guidance. the growth, fourth where loan mid-single-digit the in we $X.X Michael, billion for about quarter. the production up fourth

still we companies are seasonal was we do in hurricanes. Generally, repair other inflation, Along I'd that business lending consumers time adjusting see just front, businesses. of tighter clients of Some -- rates budgets. and sentiment to their the it budgets, with both higher lot people's storm this a customer in for on things of after makes that that of with interest forms year say the

and may they waiting to if come come down So rates down. folks not see some are

lot there's lag but the from effect pro-growth it deregulatory there's optimism that until a sometimes pipeline. of think I you clients So agenda from about the optimism in our see a here,

is appropriate, up might be begin and a think So with as slower pick bit later. that we continuing into growth mid-single-digit little head to I XXXX, with

and You asked IBTX about the SouthState. pipelines of

in yesterday good little start some. talked Colorado and we pipelines and but in and actually as softer pipelines are SouthState, fourth in closings Brooks the about Texas up quarter, had picked with we down I Texas have the a the Dan first XX%, quarter our

the pipeline So headed year. growth their they're feeling good into about

Michael Rose

or relates maybe then to updated average expectations forma Steve. one a on Any basis? it expenses assets And Great. as for to assets pro

William Matthews

that take I'll Michael, it's one. Will.

of leaseback XX We're depreciation. give higher assumptions which guess, foregone the would lease the off, sale March a First I mind. that the closes net keep months of to you in assuming of expense X, currently couple

So that that's XX-month also saves achieve to or approximately of in $XX year roughly XX% the the period. We're million to for we that NIE in add so XXXX. assuming cost

then So that's Memorial around even you'll earlier, though Day And because of $XX conversion or you the weekend. mark, noted, have quarter finalize, conversion amortized really some we a a date have that post on our end more of we as And stick is through ] to conversion, and clean course, of closed marks, have Steve still [ in the noted folks so as which CDR remains and earlier, QX. includes an million accelerated May, date, John basis.

on how So up, shapes well. could an have depending it that impact as

over with X, high as say, or quarter. then range the raises, year to per 'XX of range first $XXX earlier the in million and sort $XXX And million year, million levels, inflationary to 'XX, like So last more of in pickup midyear be for that would a the in we all after any be exit that, $XXX the to quarter, things of quarter part in level, the the a I the million, would $XXX NIE that.

Michael Rose

Are at from both Great. I were of all like in brokered kind good for And quarter. just you finally to this and me. we point feel this kind basis. of do deposits you Any then spot go-forward IBTX Okay. know down -- a more maybe at for a you're there?

Stephen Young

and us had this good growth the Michael, fourth as guess is quarter. customer you think both I independent, happened really about for we quarter in Yes, this deposit Steve. what past

growth around our I ex X%. was deposit think brokered CDs, I think

of So I on use in think as customer deposits. bit we the a lever growth brokered depending a

are order our kind as is the growth. sort So that next deposits we'll kind mid-single-digit lever loan of to brokered of of use a year. expectation customer in growth And fund

about we're So it. that's how of kind thinking

Operator

comes question Varga next from from Our Samuel UBS.

Samuel Varga

wanted updated the around on to how given impressive start loss I front you could sort credit of if off deal closed the combined some thoughts give actually rate, just I was. us to see with XXXX wanted the

John Corbett

good Maybe I performance and our basis past very mean the But quarter. X were range. in as Will, Will only XX can payment end has point were you I at been can points in dues, here. XXXX. mentioned, client chime the basis throughout the Charge-offs start, of

are doing So our clients well. really, really

have assets in classified classified loans, it's our tick a issue. up coverage We debt issue service a a floating really seen and rate and

really performance a client issues. not or performance It's payment

substandard So team, I see really XX% mean there. loans have our don't CRE in -- our as talked loan-to-value. loss book, to credit any really a visibility I they

of seeing So coverage. have and are equity give loans negative Most where you floating our we're substandard that loans slightly sponsors. about of of being great real loans are debt And stabilization. commercial transition classifieds an in a institutional talked there's may lots some estate example, the of XX% CRE these and have I'll projects that rate service a Will and

market, But today's would interest permanent rate permanent if positive the have in you use coverage. they a debt service

So that's part of this transitionary type thing that we're going through here.

particularly they're sell. multifamily. property when of liquidity and gone. mature Those We're market, the loans loans the in plenty mature, the So seeing

of XXXX, will head the So -- the It and losses, side. extent anyway, you really charge-offs probably to in we I we think CRE the the still or as SBA small the don't feeling have general they're of interest more likely into market middle interest space it see higher effects the be in C&I labor inflation. where business area area in higher and cost it's in either or rates because rates,

So both as book the the true and book think well. that's independent both SouthState for I for

William Matthews

had if were you many criticized of they what higher of fourth just at the add, third those had quarter And pretty and credits. little quarter, paydowns to similar independent, some but flat level in had Sam, they of look production, their in they I'll the Yes. for

So the kind of pay downs you see like occur. to

year. or when at basis, operate going would have that's course, it. too, that plus mark day on we love is probably is non-PCD double the points loss mark a would And the marks, X PCD non-PCD allowance, they call the provision sustainable In level we also to the do credit X PC, while we we'll have accounting I split. very on a rate, the low have But of We'll the forward. terms also combined credit purchase that of affectionately the remind on you, great we think -- level, as basis but that a goes at booked count that into not that

exercise So absorption capacity loss created a lot as that well. through of

Samuel Varga

fee or potentially Great. and John, synergy do then, on updated could if us give around just anything Obviously, side XXXX that might some But And you perhaps of the that especially the not just opportunities might thoughts, BMS any products impact have that income cross-sell you the the and you beyond? on how understand there. side, revenue when assuming you're I perhaps enhancing the

John Corbett

Yes, Samuel, to clients job. John. They've bank, doing country. what a and bank, been been in best been one it's doing and a great great the want doing. the asset it They've been quality have with growing keep they've histories Independent We're the quality of doing we bankers they've

want So doing we they're doing doing. continue comfortable them really and what to

C&I we in layer And Over time, management platform attractive see there. a those opportunities to opportunities that We in more clients treasury could to see be great markets. markets. they're

in Texas which country #X told last creation occurs I Dan think me yesterday the had year, the frequently. Brooks job

they've top there's CRE think C&I of great the to on done we historically. tremendous opportunities So layer work that

Stephen Young

we've facilitate interest X capital more at would Steve. this January, markets Markets pieces immediate lending is Capital done group help our I in swap. product, parts and to our this think rate be I a or And the some of IBTX. just know I particularly Yes. our from kind guess transaction there already

can an John think platform, independent you and market the capital mortgage, that just would sense private the is as time, wealth mortgage we the the wealth and then capital provide. space. hopefully, I probably think wealth continues to I'd be, grow think platform, some of the going platform, retail which it and get probably management, as I about in the lift partnerships it's from some mentioned, But say over be And treasury, then we to that immediate platforms retail. advisers,

Operator

next from Tenner D.A. Our comes Davidson. question from Gary

Gary Tenner

if their approaching I and based that runoff. that's of behind of book. don't just there, declined had where wanted targeted your runoff to kind of I something anything but about scenes that recall from of a the in you just on there's any driving sense ask what you loans give being looks kind part there $X billion loan like announcement. particular It portfolios deck us a maybe IBTX the since can by come

John Corbett

Sure. John. it's Gary,

business you'll in mortgage going business. the And the in talked down was spring, a the if calls our over that we back that wind prior So warehouse to and summer exit. were about recall we

bulk the is that So of that change.

in quarter, commercial the quarter. fourth have at sales paydowns. the million some about then $XXX They roughly they did And as loan third the elevated the IBTX of the real $XX same was Fannie was production with had estate permanent There were apartment collection to properties Colorado, million into million $XX a Mae, of list of properties. fortunate market of refinanced that kind exit credits. they in and of watch but

the of telegraphed So we warehouse quarter, summer some the had over and difference. the that's paydowns fourth between exit mortgage the that these in

Stephen Young

is mortgage this to that warehouse, on Steve, And the transaction. add we in our modeled

certainly modeled that's upfront. didn't So why just NIM we that our changing. guidance modeled. May, But talk it isn't in really was We but that certainly about

Gary Tenner

I mortgage is your should the to well, lease trade, that my threshold fair warehouse on and it offset bond of Okay. And incremental relates the potential a anything do costs correctly, of minimum the the sale I comments as would kind be mind. business, -- reminder minimum, interpreted if that that's still appreciate that a activity? -- to the say leaseback then to it serve you in at

William Matthews

model if not minimum, expense reasonable say decisions. do higher we be That would at receive least approach be would the we the though we'll on Gary, I firm noninterest -- said to to if don't that we've and we that the any restructure small that could one would Well, something like has that I you made a marks would and done use you to the you do at -- net everything. the reasonable and a been said that Like before, interest sale at determine from point, we decided neutralize all. again, anything wait did of cash have where after this all But the leaseback, that. nothing be

Stephen Young

point, if anything in wouldn't first And Yes. quarter. do -- the we until the to we later

and -- second effect quarter, did. when into go get what the in on exactly wouldn't it call you'll So we we the know

Operator

next from [Operator Ben Instructions] comes Gerlinger Citi. question Our from

Benjamin Gerlinger

rules said the rules to XX So sweet currently size, here. spot But don't terms XX as is of I the relative I'd totally know say in the agree. I stands. you change

the too playing you The Is worth size the entertain? just We up. for trying or would were, are to a would something that just from with question -- numbers it? small but it's worth billion $X isn't deal guys the squeeze. philosophical there be something juice Like I'm it a status quo. not be to not came think if

John Corbett

No.

in definitely $X we opportunity right came opportunity the would was there at right and if along, the a think billion that. market look I

they're really, these we So these deepen in, markets, that a you if of would market share And in if about that. we the markets, great inventory. there's think attractive markets limited really consider one our in we're could

Benjamin Gerlinger

Got you.

business, grade XX upgrades just made make are of I And or the other our of and doing kind months? with investment XX, not be quarter. now fourth the although possibly expense you think like you numbers, 'XX, just more know Or think investments or but any about gave numbers do obviously, back there That's double the Okay. give material need then you you just are run kind the trying beyond for cost systems I'm type you're the behind of this any next helpful. bank that a in year for conversion, or When the 'XX think as going money, will about the of think to scenes, rate over you we to how bigger to office?

William Matthews

of period drill, I'd sort really more have year, regard from in Ben, XXXX, start John the over in elaborate. ] finishing we made I'll and a can and and lot that up the investments in the MOE the [ will, you say if Yes, that we've significant through regard. maybe last been of Steve

like rate also rate the you strategic inflation of expenses of continues other of and in we we our inflation Steve runs that projects, terms degree of -- that, our probably exceed tech get our digital will. for would and things spend I'll you... our But automation that. But remind with along on our hopefully, to spend, efficiency some through planning efforts, how Steve,

Stephen Young

Yes.

expense, So expenses guide. and on working cross approved. I'd talked just things And be over our -- way other are on would got you about not that's it say that incremental but the are, bringing strategic and describe to all there as And that so done and XX clearly things have that we for week that getting been the this included in board Will's long that is time, plan a extraordinary we I already. we've there'll there's nothing

modeled about think the you're to XXXX, to in inflationary pickup of kind and expenses X%. the of going about pluses think and you whatever As are XXXX the minuses inflation get you're to course, in XXXX, But at get to relates year the cost of it We this so million -- of half $XX it million, going the or 'XX, as next it year, half also $XX full saves. year.

part, And most those each the should, for other XXXX. so offset in

Operator

come question from last Hovde Group. Our Bishop will from David

David Bishop

Just to maybe kind the book. deposit John, IBTX curious, as it of relates legacy

then maybe more you approach how perspective, how more you're and for and from curious leaving the alone of date? approaching sort curious that that. close as from are Just you're going to repricing get term away aggressive rates farther Just get you repricing near a the

Stephen Young

Steve. -- approach how at The approach we it be is Independent. is David, it will SouthState way at we this

both how loan that then they of, We set we to level, a from -- kind have freedom decide and goals the deposit run call deposit framework push that local within and it, out. company and market pricing leaders I'll pricing for the

of that markets. else I would on anything button is create and deposit various the to over loan describe to more going it time pricing to a a corporate the in say little push pricing I at The way hopefully ownership at presidents independent. alignment So the change both wouldn't the or we're

huge a relates than will be will I to the presidents like just less be us other the So [indiscernible] charge-offs. as way it change wouldn't expect PPNR there to be

David Bishop

question. Got will the gotten income as result tax Any it. has first the effective here or bit that? housekeeping a And quarter. bigger the Obviously, change little of in rate a then statement one be to

William Matthews

that No, year a good to items permanent -- added where place is there's of big will sort we're no so we probably right running this now be model.

Operator

closing to remarks. further no I have turn for like back John Corbett questions. over to We the would call

John Corbett

thanks a close community and at All for right. and here, covering this to Independent, partners a the Wee of Thanks our of morning. extend investment companies. And I to us welcome team know special and you're lot lot, from jumping the members a January joining want all X Independent. just given around

give hesitate great don't you ring. for Thanks. a calling. have to Have thanks So us And if follow-up any questions, a day.

Operator

for Thank participation, conference today's and you your may call. you now concludes disconnect. This

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