South State (SSB)2022-01-25 20:46Financial Data and Key Metrics Changes - In Q4 2021, SouthState Corporation reported net interest income of $258 million, with core net interest income reaching a record $245 million, up $6 million from Q3 [16][20] - Deposits increased by 18% in Q4, amounting to $1.5 billion growth, while the cost of deposits was reduced to just six basis points [11][17] - The company ended the year with a CET1 ratio close to 12% and a tangible book value per share of $44.62 [20] Business Line Data and Key Metrics Changes - The company originated approximately $10 billion in new loans in 2021, a 40% to 50% increase compared to the previous two years, with Q4 loan originations reaching a record $3.1 billion, up 19% from Q3 [10][11] - Atlanta Capital reported a 22% annualized loan growth in Q4, with net loan growth particularly strong in commercial and industrial categories [23] Market Data and Key Metrics Changes - The South experienced a population increase of 786,000 during the pandemic, with Florida, Georgia, North Carolina, and South Carolina being among the fastest-growing states, driving strong housing demand [12] - The average noninterest-bearing deposits at Atlanta Capital increased by 33% annualized on a linked quarter basis, and grew 52% year-over-year [25] Company Strategy and Development Direction - The company aims to focus on internal growth in 2022, with plans to increase the loan-to-deposit ratio from 68% to closer to 80% over the next two years [36] - Management expressed optimism about deploying excess cash into a higher rate environment to drive revenue growth [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the excess liquidity in the system has led to elevated loan payoffs, but anticipated that rising interest rates would reduce prepayments and improve net loan growth [40] - The company is optimistic about its momentum and growth opportunities in the Southeast, particularly in light of the ongoing economic recovery [14][28] Other Important Information - The company repurchased approximately 632,000 shares in Q4, totaling 1.82 million shares for the year, representing about 2.6% of the company [20] - Noninterest income improved by approximately $5 million from the prior quarter, with a record quarter for the corresponding division [17] Q&A Session Summary Question: Update on excess cash deployment - Management indicated a goal to increase the loan-to-deposit ratio from 68% to 80% over the next two years, with plans to deploy excess liquidity opportunistically [36] Question: Outlook on expenses and inflation - Management aims to keep noninterest expense growth in low single digits for 2022, acknowledging the inflationary environment [37] Question: Expectations for loan growth and paydowns - Management noted that while loan production increased, net growth decreased due to higher payoffs, and anticipated that rising interest rates would help stabilize this [40] Question: Correspondent banking area outlook - Management expects correspondent banking revenues to remain steady, influenced by client liquidity and market conditions [54] Question: Service charges and overdraft fees outlook - Management acknowledged seasonal factors and the end of waivers contributing to increased service charges, with ongoing evaluations of overdraft fee practices [58][60] Question: Loan yield stability and future expectations - Management indicated that loan yields have remained stable, with expectations for gradual increases as interest rates rise [61] Question: Accretion income expectations - Management expects accretion income to remain in the $5 million to $6 million range post-PPP, with no significant changes anticipated from the Atlantic Capital acquisition [64][65]