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| Statement |
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| We've got a strong capital position, we got a strong reserve, we've got a good capital formation rate and so it gives us a lot of things to think about with respect to, to capital deployment |
| Will can cover the details but high level we continue to see steady growth in loans and customer deposits, liquidity is stable, capital ratios are growing, deposit funding is best in class and our net interest margin is settling in at a pretty good spot |
| In the earnings release last night, you can see that SouthState delivered a solid quarter that was right in-line with our previous guidance |
| pretty reasonable well-priced deal, some solid accretion and the stock is actually mildly outperforming today, which is nice to see |
| And I'm really glad that we're in a position where capital has grown over the last year, the earnings, the PPNR earnings have been really good and, and the loan-loss provisions have been stocked away, so I think we're in a good position to have some flexibility |
| We continue to have very strong capital ratios with CE Tier-1 of 11.5%, were 9.25% if AOCI were included in the calculation |
| We had another good quarter in deposit fees similar to Q2 |
| We had another solid quarter with deposit costs, margin and noninterest income ending up in-line with our expectations, solid PPNR and good credit costs outside of the one sizable charge-off that impacted us and some of our peers |
| We think that there is a tremendous opportunity on the horizon for a bank of our size in our geography and with our deposit franchise |
| Obviously it's catching-up a little bit, but still extremely, extremely strong |
| With loan growth expectations continuing to moderate, risk-weighted asset growth should be in a range that allows us to continue to grow our regulatory capital ratios and provide us with flexibility |
| I just think it's -- if I was forecasting, I think, I think activity for the industry is going to be more robust second-half of 2024, but, but we are not opposed to it, it's something attractive and accretive to our franchise came along |
| Now for SouthState, our granular deposit base has served as a ballast for our franchise and we've been able to continue to grow our deposits with a cumulative deposit beta of only 27% at a total cost of deposits of 1.44% for the quarter |
| I mean at current prices, our stock is pretty attractive |
| But at the same time, we're excited |
| I think about our management associate program we've had going for years where we bring in 35 college interns every summer, we convert 15 to 20 into management associates every year to build that bench strength on the credit team and on the lending team |
| Over on the asset side, we're also about to benefit from a tailwind of loan repricing; 70% of our loans are based on a fixed or adjustable-rates |
| Just wanted to follow up on that last point on expenses, you guys are in a pretty enviable, enviable position from a fundamental standpoint |
| That the cycle is more severe than many are predicting, those reserves plus our excess capital will allow SouthState to be opportunistic on the back side of the cycle where the opportunities to create shareholder value are the greatest |
| So, we continue to think about all of those options as well as some of the growth opportunities afforded us by terminal markets and the good, good economy, in which we operate |
| So, we, we like that flexibility |
| I'd say we, we have flexibility, which we like |
| Wealth had another solid quarter, but mortgage revenue of $2.5 million was down $1.9 million from Q2 |
| So, I want to close by thanking our team for keeping their eye on the long-term horizon of building a franchise that can weather the storm and come out stronger on the other side |
| So, we're going to see a significant portion of our loan portfolio repriced by more than 300 basis-points as they renew and that should help offset any additional drift in deposit costs |
| Loan yields were up 14 basis points, but deposits were up 33 basis points, which was in-line with our 30-basis point to 35-basis point guidance bringing our cycle to date deposit beta to 27% |
| Have a great day |
| Now the predictable and necessary response is that the industry trades away future earnings power as deposit costs rise |
| Thanks for joining us |
| Brody Preston Hi guys, how are you this morning? John Corbett Good morning, we are doing well |
| Statement |
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| Our net interest income of $355 million was down $7 million from Q2 on one more day |
| We've seen a couple of these deals happen, but it's still really-really challenging to get the math to work with the AOCI and the regulatory delay risks |
| Clearly the, the logic is there for M&A given the revenue pressures in the industry and we're just going to stay out on the street visiting peer banks that possibly could be partners in the future, but it's challenging in the short-run |
| While pipeline trends will be going down and probably new loan production will be going down |
| I think that's the biggest issue right now probably labor, the nursing shortage you hear about some of the rates the traveling nurses get and then interest costs going up and so you've got two major expense headwinds |
| The assisted-living space just never really recovered from COVID and they continue to face labor pressures and everybody is talking about office |
| Turning to the income statement, our 3.50% NIM was down 12 basis points from Q2 |
| Noninterest income of $73 million was down $4 million from Q2, though still a solid quarter |
| So, but the main issue, Brody, is the nursing shortage and labor cost |
| That has an effect on our capital markets teams at least in the short-run, in the pipelines until everybody kind of gets used to it, so, I would expect, like I said that our non-interest income to assets this next quarter would still be 64 basis points, will be closer down to the lower-end of the guide 55 basis points |
| And then, you still got the revenue headwind following COVID about people's desire to be in a nursing home post COVID |
| Expenses came in a bit lower-than-expected this quarter largely due to a revaluation of SERP retirement plan liabilities due to higher interest rates reducing NIE by $5.9 million |
| And then as you think about next year and you look at the Moody's consensus, it looks like the 10-year treasury starts coming down towards 4% towards the end of next year |
| Now, the interesting part is I think the loan growth will be a little bit disconnected from the pipeline trends |
| So, we're cautious now |
| I'm not sure that we got that, but I do think in the, in the immediate environment, our -- as we think about, we talked about NIM, if we talk about fee income that's going to be a bit more challenging I think in the, in the next quarter or so, just with the 10-year treasury rising up one of the businesses that were added, the correspondent division and we see with the ten-year rising, some of the swap opportunities probably aren't there, at least in this quarter and it bounces around from time-to-time and, and so on, so I, I'd imagine that won't eventually come up, but our range of, of non-interest income to assets I think this, if you look-back at this quarter, we guided to 55 basis points to 65 basis points |
| Payoffs have screeched to a halt |
| John Corbett And I would say, and echoing comments that I think some of our peers have made in their calls, we're seeing the -- while there's still deposit cost pressure, the rate of change has slowed a bit in the -- it looks like the heaviest competition in that regard is behind us |
| Correspondent revenue was $13 million after $12 million in interest expense on swap collateral for $25 million in gross revenue, down approximately $3 million from Q2 |
| On the balance sheet, our 6% annualized loan growth moderated from the first-half of the year in-line with our expectations |
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