Q4 2022 SouthState Corp Earnings Call
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Now I'll turn the call over to John Corbett our CEO .
Thank you will good morning, everybody thanks for joining our call.
We're really proud of our team and the momentum that's been building throughout 2022 I.
I think of 2021 is a year that we were taking the time to plant the seeds for the future in 2022 was a year, where those seeds began to take root and to grow in.
And that growth is reflected in the results that we announced last night.
During the fourth quarter <unk> per share increased 11% over the third quarter that took us to a <unk> return on assets over 2% and a return on tangible equity of 20%.
We set aside $47 million of reserves, but incurred less than $1 million in charge offs. So credit quality metrics continue to be excellent and will can walk you through the impacts of the Moody's economic forecast later in the call.
Loans grew 19% annualized in the quarter and over the last few years, we've recruited some of the best middle market bankers in the southeast and that team is doing a great job of C&I loans, specifically grew at 27% annualized.
End of period deposits declined 6% annualized and we still got balance sheet flexibility with at 83% loan to deposit ratio or.
Our total cost of deposits landed at 21 basis points.
And so far this cycle, our cumulative total deposit beta is only 5%.
If you step back and look at the full year for 2022 <unk> per share was up 36% over 2021.
Loans grew 17%.
Deposits decreased 5%.
And as we right size the balance sheet net interest margin expanded 120 basis points.
Over the entire year, we set aside $82 million in loan loss provisions, but only incurred $4 million in charge offs. So we strengthened our reserves in 2022 to prepare for a likely economic slowdown in 2023.
In addition to organic growth our integration team successfully completed the Atlantic capital conversion last summer in our Atlanta bankers are doing a terrific job in a dynamic market.
The census Bureau, released their latest population report last month.
We updated our census Bureau map on page six of the deck that breaks out the four regions of the country.
And since the pandemic began in 2020.
One 7 million people in the Western states, the northeast and the Midwest sold their homes, they pack their bags and they move to the south.
And of the $1 7 million people that moved to the south two thirds of them landed in our South state markets based on the latest census report South State continues to do business in four of the six fastest growing states in the country with Florida ranking number one is the fastest growing state in the country last year.
As we think about the economy in the year ahead, it seems to us that the fed is getting what it wanted the economy is slowing and loan pipelines are shrinking so.
So we don't know if 2023 will be a soft landing a mild or moderate recession, but what we believe is that regardless of the direction of the economy based on the level of population migration, the south will outperform other areas of the country.
We believe in the power of compounding over time, so our aspiration has always been to grow everything good in the bank at a compounded annual growth rate of 10% a year over a cycle.
Three years ago. This week, we announced the merger of equals of center state in South State and began the integration process Coincidentally right when the pandemic hit.
It's obviously been a volatile three years of monetary policy since the merger announcement and our growth has been lumpy, but if you look back over the last three years and if you smooth out the lumpiness of the cycle, we've grown at the pace that we planned.
Deposits have grown at a compounded annual growth rate of 13% since the merger announcement and loans have grown at a compounded annual growth rate of 9% a year since the merger announcement. So our team is executing on our plan and we are now witnessing the earnings power of their hard work, so I'll close by congratulating and thanking all of our.
<unk> members from our team that made big improvements to our digital offerings to our risk management areas that have strengthened our defenses to our bankers that generated $13 billion of new loans during the year and our branch employees that have cared for our clients through countless changes you've done a great job in a challenging environment.
So we'll I'll turn it over to you.
Thank you John and I will Echo your comments the team has really done a great job executing in this environment, leading to great results for the quarter and the year.
We had another very strong quarter in net interest revenue, where the tax equivalent NIM of $3 99 up 41 basis points from the third quarter and core net interest income up $36 million.
Our loan yields improved by 45 basis points and our cost of total deposits rose by 13 basis points versus the third quarter.
As we noted last quarter, we expect our deposit beta to increase from this point forward.
Noninterest income totaled $63 million down $10 million from Q3.
Q items, I'll mentioned impacting noninterest income.
We wrote down the value of our MSR asset of $3 2 million, which led to negative mortgage division revenue for the quarter.
We also wrote down our SBA servicing rights asset by 900000 for a combined $4 1 million write down on servicing assets in the quarter.
You'll also note that we began applying settled to market accounting for variation margin collateral on exchange cleared swaps to net against the swap asset or liability.
That resulted in a decrease in deposits and swap assets on the balance sheet and a decrease in the corresponding interest expense and noninterest income with no effect on net income.
And to help with your models, we've adjusted prior periods. Accordingly, as noted on page 11 of the release.
Mortgage production fell in the quarter to approximately $700 million with 81% of the volume being portfolio looking forward expectations for mortgage production in 2023 remain muted across the industry.
We expect ours to also be down significantly from 2022, but we expect our percentage of secondary market production to increase.
Correspondent income continued to be somewhat challenged in this rate environment.
Service charge income showed a seasonal lift in our wealth management division closed out another strong year.
Noninterest expenses of $228 million were up slightly from Q3 with no big swings versus the prior quarter.
Looking to 2023, we currently estimate NII and the $950 million range with the first quarter being in the low to <unk> that would represent an increase of approximately 5% from 2022, if normalized for 12 months of Atlantic capital.
I will note that there are of course factors in our business lines and in loan production that can cause the NIH number to increase or decrease through the year due to the impact on commissions incentives and deferred loan costs.
On the balance sheet, the $1 3 billion in loan growth. John mentioned was centered in single family residential CRE and CRE construction and C&I loans.
Although we are starting to see some slight increase usage on commercial lines line of credit utilization remains about 5% below pre pandemic levels.
Expectations for loan growth in 2023 are in the mid single digit percent range as we're seeing pipelines and preflight discussions declined in a general sense of cautiousness amongst borrowers.
Deposits declined approximately $600 million in the quarter, so coupled with loan growth or cash and fed funds sold position declined $1 6 billion during the quarter at $1 3 billion.
We continue to have very little wholesale funding with only $150 million in brokerage Cds and <unk> advances at year end.
Our risk based regulatory capital ratios were essentially flat compared to Q3, and our TCE ratio improved approximately 40 basis points to seven 2%.
Ending TBB per share rose back above $40 in the year.
Turning to credit as John noted, we continue to have excellent credit results, though we recorded a higher provision expense due to economic forecast changes.
We had minimal net charge offs for the quarter and the year, one and two basis points respectively.
In fact, excluding DVA overdraft charge offs, we had net loan recoveries for both the quarter and the year.
Npls were up $8 million ending at 36 basis points of loans caused by a $9 million increase in acquired SBA Npls, which are generally 75% in government guaranteed so net and guaranteed npls were almost flat.
As John mentioned criticized and classified assets were down significantly with a $12 million decline in substandard loans and $85 million decline in special mention loans.
Our $47 million in provision expense was up $23 million from Q3 and was not due to a deterioration in credit, but rather due primarily to changes in economic forecasts with growth a secondary factor.
$33 million of this provision expense was for loan losses and $14 million was for the reserve for unfunded commitments.
As noted on slide 31, the ending reserve was 118 basis points of loans with another $67 million and the reserve for unfunded commitments.
The combined total as a percentage of loans is up approximately nine basis points from Q3.
Finally, I'll note that we've included some additional credit information on loan categories of interest in slides 33 and 34.
Operator, we'll now take questions.
Yeah.
Thank you Sir you may ask that today's Q&A session. If you would like to ask a question. Please press star followed by one on your telephone keypad now.
Your mind, Please press star followed by <unk>.
Our first question today comes from Stephen Scouten from Piper Sandler Your line is now live.
Thank you good morning, everyone.
Maybe if I could start just with a question around.
Rajeev mortgaging in what you would expect to see that do on balance sheet and that's been a nice additive portion of growth, but I think you just said well you might have more in mortgage going into secondary <unk>.
Market next year, what's the driver of that is that pricing or is that more of that you're reaching more of a concentration limit on your balance sheet or how can we think about that the interplay there on mortgage.
Yeah, Hey, Hey, Stephen.
Yeah, it's been a really nice year for residential mortgage and if you think about the volatility in that in that business, particularly at the rates changed.
Changed a lot since the beginning of the year I think at the beginning of the year, the 30 year fixed rate mortgage with somewhere in the 3% to 3.25%.
It hit a high of about 7%.
77, and a half and in the late third quarter, we have a slide in the deck, which talks about I think it's page 15 of the deck.
And it's described sort of the balance sheet growth over the last.
Three years in residential mortgage and what Youll see in that graph. If you look at it as well.
When rates were.
Very low in 2020 and early 'twenty, one we strength the residential portfolio and then.
And so a lot of our production in the secondary.
Market win win rates our win gain on sale margins were high.
And then you can see as rates are rising we started putting more of that on our balance sheet. So if you kind of look at a three year cycle, we grew about $950 million, but we shrink some but I would agree with them depending on the balance sheet management side that was about 6% CAGR over a course of a three year period.
As we sort of normalize that I would think that.
Our residential mortgage will grow about the same as the rest of our loan book and I think we've guided to mid single digits. So just to kind of give you. Some perspective, we've grown 6% CAGR over the course of a three year period.
But clearly residential rates have come down in the secondary market, a little bit more attractive than it was.
Now a few months ago.
Okay that makes a lot of sense. Thanks Pete.
And then I think last quarter, you said on the $80 to 85% kind of loan to deposit ratio by year end 'twenty three.
They were already at 83% level.
I think that moved higher than that 85% range at this point and then is the 24% cycle deposit beta is still the right.
Number to think about or given how much outperformance you've had to date do you think it's better than that.
Yes.
This is Steve again.
I guess from a from a loan to deposit ratio, let's talk about sort of our guidance and really it really hasn't changed a whole lot I think our starting point changed a little bit on the deposit side and that's why we had a little bit higher deposit rate, but what we are you know our goal is for 2023.
Grow loans mid single digits keep deposits, roughly flat or maybe slightly up but somewhere in that in that area.
Yes, we have that page.
Let me, let me take a bigger picture just for a second I think you are trying to get to the question about margins. So let me kind of just talk to that a little bit.
Yes, John mentioned on the call but.
Yes, we had a great year on margin expansion and I think we have a page 12 in the deck that talks about kind of the progression of net interest margin from the fourth quarter of last year to two this quarter of this year and NIM was up 120 basis points I've never seen that in my career from the last.
From last fourth quarter, and it's actually up 41 basis points this quarter. So.
As we talk about guidance.
Guidance for margin I'm going to give you the same guidance for 2023 that we had in October with just one update so.
As you think about the assumptions for for margin. There is really three things it's the <unk>.
Size of the interest earning assets.
The assumption of interest rates.
Last question, you asked which was the deposit beta assumption.
So in October when we had this call we gave a guidance toward about $40 billion average interest, earning asset base in 'twenty three we're starting out a little smaller than that but probably a little larger so there's really no change to that to that guidance.
On the last earnings call as it relates to our interest rates on the last earnings call in October Moody's consensus forecast was for fed funds to peak out at $4 75, and 2023 I think in the last forecast, it's moved up 25 basis points to peak out at 5% and then there to be a 25 basis point decrease.
The fourth quarter. So if you kind of average it out it's basically the same for 2023.
The question you ask on on page 20 of our deposit data.
It shows our cycle the deposit cycle to date deposit beta is at 5%.
Our historical at 24% from last time, and we just continue to model the same deposit beta as lifecycle.
And then based on the interest rate forecast deposit beta we would expect deposit cost to get them at 115 to 125 that second part of the year, which is about 100 basis points from where we are aware of this past quarter.
And as we think about that timing, we would expect $40 to 55% of that to happen in the first quarter with the remainder of that over the rest of the year.
So with all that I'd just say.
During our last call we guided to at the in 'twenty three we guided to a $3 60 to $3 80, NIM range for 2023 and.
In our guidance, our assumptions really haven't changed assumptions.
But we are increasing our NIM guide to $3 70 to $3 90 for 2023.
And that increase really is due to the 10 basis point re class into.
The interest cost on the swap collateral that is now.
Now in the noninterest income.
Non interest our net interest income guide increases by 10 basis points and it decreases by the same amount to noninterest income, but total revenues the same but really our guidance is essentially the same just the whole geography, Jay So that's a long winded answer, but hopefully that gives you the pieces and parts as we're thinking about 'twenty three.
Yes extremely helpful color. Thank you and if I could just squeezing one last one just maybe more high level here.
John You noted three years since you announced the larger Mou here and you still have an advantaged currency and as you said and really some of the best market in the country, but if you were to do incremental M&A over the next let's call. It two years, what would be do you think youre focused on or is it still deepening further in your current market would you look to expand.
And then the other strong southeast markets or how do you think about the franchise over the next couple of years.
Sure Steven.
I think this question was asked last quarter. It really are our thoughts on M&A have not changed.
Our view is that as we look into 2023 M&A is going to be pretty slow.
For a couple of reasons I mean, right now there's just not a lot of clarity as it relates to the regulatory approval process and.
And theres not a lot of clarity as it relates to potential recession risk. So I think the whole industry is going to be slow on M&A.
In 2023.
I believe its likely to pick up.
Towards the end of the year as bank boards begin to meet and think about that.
The future earnings stream, if you've got an inverted yield curve, it's likely that earnings are going to flatten off in 2024 and people will be more.
Enthused about M&A than they are today.
Our thought process, we have built the company in high growth markets.
And.
Typically the type of target that makes the most sense for us as something thats about 10% of our size to a third of our size and our preference is our existing high growth markets, it's easier to get synergies and we've got markets that are 4% to six fastest growing state.
And the countries so that would be our preference if we ever left the existing footprint that we have today, we would look for similar kind of growth characteristics, but if you look at the GDP of the six states. We're in it would represent the fourth largest GDP in the world. So we've got a lot of opportunities to fill.
Where we're at.
Great.
Really interesting statistic I appreciate that thanks for all the color and congrats on a great quarter and great year.
Okay.
Yeah.
Our next question comes from Catherine Mealor from Kb VW. Your line is now open.
Thanks, Good morning.
Good morning, Kevin.
Just to follow up on the deposit data conversation betas have just been so incredible and I think that call for them to stay at about a 24%.
Level is obviously going to be industry, leading.
Is there a way just.
Yes, I think a lot of it is because of your deposit composition, Brett you got so much in check in it's been granular portfolio, but yes.
We're seeing data has really accelerated across the industry. So.
Is there a way to kind of explain why the data well accelerate as much as youre seeing from peers does it maybe within that talk about.
The balance or the deposit competition are you expecting much change in that composition or for your kind of balance a C check andas to remain about the same and then maybe give us a sense as to the data as with any deposit category kind of show that maybe some of your higher cost categories really are.
Having a data like everybody else, but your mix that that's.
Driving this better.
Thanks.
Sure Kathryn it's Steven.
Paul for the question, but I think I think I get your question. So let me kind of.
I'll go back to page 18 is our sort of our deposit.
Got you and then I think you laid out a couple of these things and then help me I'll try to.
I tried to expand on that.
61% on page 18, 61% of our deposits are in checking accounts.
And typically those are the warehouse accounts for commercial small business and retail our peers at 43%. So if I were to point to one thing I think that would probably be the the reason that we think the overall deposit beta.
Yes, it was at 24%.
When you look at the different pieces, if not just commercial it's not just small businesses about retail is really almost a third a third a third in each of those categories and you can see the the.
The various average checking balances having said all that I mean, it is clearly a battle on the deposit front and the most sensitive things that are going to be too.
Interest rates on deposit accounts are going to be money markets and Cds and like everyone else. We're feeling the same thing and that's why I think as we.
Look at the next year and if we look at the deposit betas and we assume that we end the year about 100 basis points higher than where we are today a lot of that we think 40% to 50% of that gets frontloaded and into the first quarter and the reason for that is we certainly are feeling the pressure on the money market Cds.
And then as a.
January one we raised rates across the board so.
I think that area.
The balance sheet is going to feel much more rate sensitive that are checking accounts and our job of course is to continue to grow core clients to protect the deposit franchise, which as you know the most important part of our balance sheet. So as.
As you see volatility in rates and how the yield curve has changed over time.
12 months.
It was going to catch up it is catching up for sure, but we still feel good today about our total cycle baked data.
And that the fed stops raising rates here in the next quarter or so.
We will see lag definitely continued to increase.
But we like sort of our position in that NIM guide kind of has all of that put together. So hopefully that's helpful.
Yes.
I was just just elaborate a little bit obviously this cycle is a little different than the ones. We've seen in the past and we're giving you our best estimates based on what we see thus far but we're certainly.
Out there.
Balanced same battle, everyone else is we do feel like we enter with a really healthy.
Core deposit base and mix and we've we've really allowed our our market leaders, who are closest to the customers and the ability to negotiate.
With clients on a one off basis and rather than us trying to make all the decisions from headquarters.
So that's our strategy, thus far and hopefully we'll be successful.
Beta somewhat like last time, but it is a different environment of course, we acknowledge that.
For sure Okay.
That's very helpful.
And then the other question is just on the.
On the re class of the interest cost of the swap collateral that Tommy you could close this quarter I saw that you have that.
4 million today.
Yes.
Increasing obviously as rates have been going up over the past couple of quarters or so.
As we think about what we're trying to model what that number is is it fairly steady at $8 4 million assuming is that right.
Maybe up a little bit was just two more hikes and then plateaued.
It's about where that level should be.
Is there something more with rates changing that drive what that number is.
The next few quarters, yes, Catherine there's really two pieces to it.
And it's not easy to predict that's the short answer but the two factors.
Number one we're talking about the amount of collateral we post.
<unk>.
The amount of the collateral is really dependent on the 10 year Treasury essentially and then the cost of that collateral is dependent on the fed funds rate. So.
And if you if you think about it we're sort of in a neutral point and the 10 years around 2%.
So as rates come down less collateral posted to us.
The 10 year rate come down as the fed fund rate moves up or down the interest thereon moves up or down.
So it's kind of hard to predict I think Steve's numbers Ive. Just given you have is assuming about 10 million a quarter and that 10 basis point comp.
Comment he made a few minutes ago.
Margin dollars moving to margin dollars from noninterest income, but it's a little bit.
Swag at this point.
Great. Okay, I guess my big.
Because you were thinking that there wasn't it looks like that's going away and that's part of that.
Guidance for the NIM.
Just to be stable going forward.
Withheld.
Yes.
Yes.
Kevin I would just say that it was about $800 million at the end of the quarter give or take a little bit.
Close to 5% fed funds rate, that's about $40 million, a year and that sort of assumption and that's the 10 basis points on assets.
Got it that makes sense, okay perfect.
Okay.
And then my last question is just on the fee outlook has anything changed you have a correspondent has just been a little bit lighter than expected.
The re class though.
Just any kind of thoughts on your forward guidance does proceed as we enter 2003.
Yes, Kevin.
Fee income was little over $63 million.
57 basis points of assets.
Our guidance was between 60 and 70 basis points, but yes.
As will mentioned earlier, we had some one off events mortgage servicing SBA servicing asset write downs I think that was four one or $4 2 million and of course the.
The re class at the center of their collateral.
Another $8 million, which kind of through all that out it would be about 68 basis points. So it had been kind of in the middle of the range, but as we kind of think about comparing the fourth quarter the future.
Until the fed stops raising rates.
Some of our interest rate sensitive businesses like mortgage and of course, a lot of it we think it's probably similar.
<unk> 55 to 65 basis points of assets.
And then.
But that's not decline of 10 basis points, but.
If the fed stops raising rates, we would expect that to start picking back up again and for it to.
Noninterest income to average assets to increase back towards 60 to 70 basis points. So that we're in a transition.
Transition period, where NIM is obviously 120 basis points up non interest income that's fallen my guess is is when the fed starts raising rates.
We've guided with you with the NIM and probably the non interest income businesses start moving back up towards the back half of the year, if our interest rate forecast is right.
Great. Okay very helpful. Thank you great quarter.
Alright, Thank you Catherine.
Our next question comes from Michael Rice from Raymond James. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions I appreciate all the color.
Just on the expenses just the.
A couple a couple of questions can you.
Remind us what the what the expectation is for the FDIC.
Expense pickup as this quarter and if you can kind of remind us what you're assuming for.
Annual Merit increases FICA in the first quarter, just trying to get kind of a level set as we think about.
Just kind of the first quarter within the context of roughly $950 million of NII equaled the year. Thanks.
Yeah.
Yes, Michael.
Don't have the precise FDIC insurance expense model in my head. So I can't answer that part of the question.
We have with <unk>.
Model.
Essentially a 4%.
Merit increase across the footprint and we do have some new hires we're investing in a number of.
Parts of our business across the footprint as a result of our strategic planning and strategic initiatives process that we've just completed in the fall.
So there are some new hires coming in as well and some of that and.
They'll be coming in throughout the course of the year as those initiatives begin.
But all of that's baked into that $950 million number that I referenced.
Expecting something in the low to <unk> in the first quarter like I said in my prepared remarks.
But there are factors that can cause that to move around a little bit I mean loan production moving up or down will impact deferred loan costs.
Production.
<unk> versus confidence versus incentive goals will affect incentive compensation things like that so those are all variables that are in there, but that's our best estimate at this point.
Perfect and then just move into credit obviously, you guys built the reserve this quarter teams, obviously changing a little bit of a modeling question.
It seems pretty conservative, especially with.
Criticized classified moving actually down again Q on Q.
Is there anything that when you look out at the portfolio that kind of worries you theres been a lot of talk around office and commercial real estate, maybe construction to some degree.
Yes, I think this was asked every quarter, but just generally how are you guys feeling about credit in <unk>.
Assuming the backdrop.
Continues to soften or deteriorate would we expect to see that reserve ratio continue to kind of grind higher under those pretentious. Thanks.
Hey, Michael its John I could maybe start on the asset quality.
Has an opinion on seasonal north him tackle that but as you mentioned is the asset quality is remarkably good right now I'm in charge offs, one basis points. It really all DDA, so with that net recoveries loan recoveries in the quarter and in last year.
Non accruals did pick up but it's almost entirely as will said government guaranteed SBA. So the non guaranteed portion is basically flat.
We've added some slides to Michael you might be interested in page 33, and 34 that kind of breaks out our underwriting loan to value debt service coverage is on commercial real estate and then also our consumer portfolio, but as far as the areas that we kind of focused on that we think could be challenging in the next year or two small business.
Naturally as one.
And that pickup in SBA loans, but Fortunately, we've got the guarantees there, but do you think about the pressure on small businesses with wage inflation rent inflation interest rate cost that's an area to watch.
It's very small for US a couple of hundred million dollars, but the assisted living area.
With Covid that continues to be something that we're working through some weakness there.
In an office to the metrics are all great right now for us and but there is this social demographic shift that's going on we look at our office book, It's about four 4% of the total loan portfolio.
Right now we're at a 62% loan to value and a 167 times debt service coverage that underwrites fine. Thank you.
The advantage for us and officers that we've done mostly smaller properties.
78% of them are under 150000 square feet and our average office loan is only a 1 million three so.
90% of the portfolio in office for US doesn't mature till 2025 are after so hopefully the office shift will be a slow moving train.
And our clients and also be able to react as the market market shifts, but those are the areas. We're watching so far we haven't seen.
The deterioration of our past dues are stable and special mentioned classifieds are coming down.
Yes on the seasonal.
The point, Michael I guess, a couple of things one.
See some model utilizes loss data from every bank, we've acquired excluding five or six failed banks dating back to 2004 and this is both of the companies making up.
Thank you <unk> and Thats about $60 61 banks in total I think.
Our loss drivers really vary by loan type.
But they include South Atlantic region unemployment housing price index year over year change the CRE priced index year over year change apartment rental vacancy rate and GDP for the South Atlantic region.
So our future reserve levels of our future provisioning expense is going to depend upon changes in forecast for those loss drivers as well as our actual net losses, which of course brings down the reserve.
We continue to be more conservative in our outlook and Moody's.
Our reserve is about 20%, 25% higher than it would be under the straight Moody's baseline scenario.
Moody's has gotten.
A little more conservative showing more economic weakening this quarter.
<unk>.
I don't think it's appropriate for me to comment on the validity of an accounting standard FASB makes the rules and we live by them, but if you look at our company over the last three years and you sum up the absolute value.
Our provision expense positive and negative and you get something north of $500 million.
Same three year period, we've had cumulative net charge offs of something around $12 million.
I'm not suggesting that one five basis points a year as a sustainable net charge off level, but I think in our view what's more important is not so much how much provision expense, we have but rather how much money, we're losing net charge offs.
Because until we charged off the provision expense really just moves from one form of capital one from a capital to another.
No I certainly appreciate that and John I. Appreciate those slides you put in the bag I forgot to mention those in the outset of the question. So it's good to hear just one final one from a point of clarification, obviously, the NIM guide moving up a little bit.
Thats the all in them correctly and if so.
If you can just.
Tell us.
What the expectation is for.
For accretion our scheduled accretion is this year. Thanks.
Yes, Michael.
<unk> had fallen NIM between $3 70, and $3 90 for the year.
The accretion of course, I think in the fourth quarter was around $775 million I think we are modeling that around $20 million for the full year of 2023, so that kept that a little bit but all of that is factored in the entire entire cut yes, and just to reiterate though.
The move up essentially was the geography change with respect to the collateral so as Steve said earlier just to make sure that points clear that we've got it moves has got us up on the NIM, but by a similar amount down on the non interest income. So total revenue essentially where he was where we were guiding last quarter.
Yes.
Appreciate it thanks guys.
Thank you Michael.
Okay.
Just curious if you would like to ask a question. Please press star followed by one on your telephone keypad. Our next question comes from David Bishop from hubs Great. Your line is now open.
Yes, good morning, gentlemen.
Hi, David.
I appreciate the guidance in terms of the expectations for loan growth.
Obviously, you guys have had entered fourth quarter with plenty of excess liquidity upon liquidity.
Cash a bit how.
How should we think about the funding of that loan growth.
That securities run off a little bit more cash you.
Do you get a little bit more aggressive on wholesale borrowings just curious how you're thinking about the <unk>.
Funding of the growth this year.
Yes, David it's Steve.
The mid single digits, let's say, it's a 1 billion and a half dollars of loan growth give or take a little bit.
Our expectation for 2023.
We have about eight.
$8 million to $900 million coming off the investment portfolio.
That cash and then with our guide with deposits and somewhere between flat and up about $600 million.
It's sort of the expectation for the year and then as it relates to <unk>.
Deposits.
As will mentioned on the call.
The year, I think we had $150 million or so of broker that's been out there for three or four years.
And no wholesale borrowings with the federal home loan Bank, Yes, I think as we kind of go through this period I would expect I think let me go back in 2019.
At the end of 2019, I think we have a little over $1 billion $1, two and between brokered and <unk>. It wouldn't surprise me if over the course of the next 12 months, we had something similar to that but.
Bottom line is pretty close to flat on deposit with us.
Okay appreciate that and then.
I'm just curious just a final question for me.
Terms of Onboarding of new launches this quarter, just curious what youre seeing new loan yields on new production this quarter versus last.
Okay.
Yes, David our.
New loan production.
And finally, the fourth quarter I think in December it was approaching 6% or so on the new loan production I think our overall portfolio yield.
Spot days at the end of the quarter was a little less than five but close to 5% so essentially here.
<unk> portfolio is around five I think we ended the quarter was around 43, I think with the average I think our timing was little less than five and we're putting out loans close to six give or take.
Great I appreciate the color.
There are no further questions at this time, so I'll hand, you back over to John Corbett.
Alright, Thank you and those are good questions and as always we appreciate your interest in joining us on a busy earnings call morning. So appreciate that if you have any follow up questions. In your models don't hesitate to give us a ring, but you guys have a great day.
That concludes today's Softbank Corporation <unk> 2000, <unk> Conference call you May now disconnect your lines.
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