SouthState Bank Corporation

Thank you, and I would now like to turn the conference over to Mr. Will Matthews. You may begin.

Good morning, and welcome to South State's first quarter 2024 earnings call. This is Will Matthews, and I'm here with John Corbett, Steve Young, and Jeremy Lucas. As always, John and I will make some brief remarks and then move into questions. We understand you can all read our earnings release and the investor presentation and copies of which are on our investor relations website. We thus won't regurgitate all of the information, but rather we'll try to point out a few key highlights and items of interest before moving on to Q&A. Before we begin our remarks, I want to remind you that comments we make may include forward-looking statements within the meaning of the federal securities laws and regulations. Any such forward-looking statements we may make are subject to the safe harbor rules. Please review the forward-looking disclaimer and safe harbor language in the press release and presentation for more information about our forward-looking statements and risks and uncertainties which may affect us. Now I'll turn the call over to John Corbett, our CEO.

Thank you, Will. Good morning, everybody. Thanks for joining us. As you've seen in our earnings release, South State delivered a solid and steady quarter that was consistent with our guidance. At a high level, it was another quarter of positive but modest growth for both loans and deposits. Asset quality continues to be good, with past dues, non-accruals, and charge-offs all declining in the quarter. Net interest margin dipped to the low end of our guidance but should be at or near a bottom. And capital ratios are on the higher end of our peer group and have grown every quarter over the last year. Like every other banker and investor, we're trying to understand the broader macro picture, the risk of a recession and what the yield curve is going to look like. At the same time, we believe the dynamics will be different in every region of the country. As we study our bank and our markets, commercial loan pipelines took a sharp drop of about 25% following the banking turmoil last spring, and they stayed low through the summer and early fall. But by November, pipelines started growing again, and in the last few months have now returned to the same level they were before the banking turmoil. And the momentum seems to be building, which is encouraging. But with rates where they are, CRE activity, not surprising, is much slower. So nearly all the pipeline growth and momentum has been in the CNI portfolio. In fact, as it relates to commercial real estate, our concentration ratios for both CRE and construction are at the lowest levels they've been in three years. Dan Bockhorst and our credit team are doing a great job servicing and analyzing our loan portfolio. And while rising interest rates are putting pressure on debt service coverage ratios, The South is disproportionately benefiting from net migration, and we clearly see that in the rental rate trends on all types of commercial real estate. In the last three years, rental rates in our markets have increased 16% for office compared to 3% outside our markets. Rental rates are up 21% in multifamily versus 14% outside our markets today. and rents are up 38% in industrial compared to 24% outside our markets. On fee income, we were up for the quarter. We saw some improvement in mortgage as the gain on sale margin opened up. Wealth management continues to be a reliable and growing contributor, and we now have assets under management over $8 billion. And our correspondent division recently expanded with the addition of a new team that specializes in the packaging and sale of the government-guaranteed portion of SBA loans. This is a longstanding and experienced team based in Houston, and Steve can give you more information. And finally, as we think about capital management, over the last year, we've maintained a level balance sheet. It's $45 billion in assets, while earning a return on tangible common equity in the mid-teens. As a result, we've seen our capital ratios increase every quarter. Our CET1 currently sits at about 12%. We've also significantly increased our loan loss reserves, which currently sit at 1.6%. I mentioned earlier that we're all trying to play economist and forecast the yield curve. And obviously, we don't have a crystal ball. And the only thing we know for sure is that all of our forecasts will be wrong. So our goal is flexibility and optionality. And with these higher levels of capital and reserves, we're in a perfect position to be opportunistic regardless if we have a soft landing, a hard landing, or no landing at all. I'll pass it back to Will now to walk you through the details on the quarter.