SouthState Corp
NYSE:SSB
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SouthState Corp
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Hello, and welcome to SouthState Corporation Q4 2022 Earnings Conference Call. [Operator instructions]
I'd now like to turn the conference over to Will Matthews, CFO. Please go ahead.
Good morning, and welcome to SouthState's fourth quarter 2022 earnings call. This is Will Matthews, and I am here with John Corbett, Steve Young and Jeremy Lucas. John and I will make a few prepared remarks and then we'll open it up for questions. As always, a copy of the earnings release and the presentation slides are located on our website on the Investor Relations tab.
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 will 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 think that 2021 is a year that we were taking the time to plant the seeds for the future, and 2022 was a year where those seeds began to take root and to grow, and that growth is reflected in the results that we announced last night.
During the fourth quarter, PPNR per share increased 11% over the third quarter. That took us to a PPNR return on assets over 2% and a return on tangible equity of 20%. We set aside $47 million in 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.
Total 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 as C&I loans specifically grew at 27% annualized.
In the period, deposits declined 6% annualized and we've still got balance sheet flexibility with an 83% loan to deposit ratio. 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, PPNR per share was up 36% over 2021. Loans grew 17%, deposits decreased 5%, and as we right sized 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, and our Atlanta bankers are doing a terrific job in a dynamic market.
The Census Bureau released their latest population report last month. We updated a 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 $1.7 million people in the Western states, the Northeast and the Midwest, sold their homes, they packed their bags and they moved to the South, and of the 1.7 million people that moved to the South, two-thirds of them landed in our SouthState markets.
Based on the latest census reports, SouthState continues to do business in four of the six rowing states in the country, with Florida ranking number one as the fastest growing state in the country last year.
As we think about the economy and 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 we don't know if 2023 will be a soft landing, a mild or a 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 CenterState and SouthState 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're now witnessing the earnings power of their hard work. So I'll close by congratulating and thanking all of our team members from our IT team that made big improvements to our digital offerings, to our risk management areas that have strengthened our defences, 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 Will, I'll turn it over to you.
Thank you, John, and I'll echo your comments. The team's 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 and net interest revenue with a 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. Non-interest income totalled $63 million down $10 million from Q3.
A few items I'll mention impacting non-interest income. We wrote down the value of our MSR asset by $3.2 million, which led to negative mortgage division revenue for the quarter. We also wrote down our SBA servicing rights asset by $900,000 for a combined $4.1 million right down on servicing assets in the quarter.
You'll also note that we began applying settle to market accounting for a 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 non-interest 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 from mortgage production in 2023 remained muted at 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. Non-interest expenses of $228 million were up slightly from Q3 with no big swings versus the prior quarter.
Looking to 2023, we currently estimate NIE in the $950 million range with the first quarter being in the low $230 million. 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 NIE 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're starting to see some slight increased 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 pre-flight discussions declined and a general sense of cautiousness amongst borrowers.
Deposits declined approximately $600 million in the quarter. So coupled with loan growth, our cash and fed funds position declined $1.6 billion to end the quarter at $1.3 billion. We continued to have very little wholesale funding with only $150 million in brokerage CDs and no FHLB 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 7.2%. Ending TBV per share rose back above $40 to end 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 off for the quarter in the year one and two basis points respectively, and in fact, excluding DDA 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% government guaranteed. So net unguaranteed NPLs were almost flat. As John mentioned, criticized and classified assets were down significantly with a $12 million decline in substandard loans and an $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 forecast 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 in the reserve for unfunded commitments. The combined total was 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 and Slides 33 and 34.
Operator, we'll now take questions.
[Operator instructions] Our first question today comes from Stephen Scouten from Piper Sandler. Your line is now open.
Thank you. Good morning, everyone. I guess maybe if I could start just with a question around resi mortgage and 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, will you might have more mortgage going to the secondary market next year. What's the driver of that? Is that pricing or is that more 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, it's Steven. Steve yeah, it's been a really nice year for residential mortgage and if you think about the volatility in that in that business, particularly with the rates, it's changed a lot since the beginning of the year. I think at the beginning of the year, the 30-year fixed rate mortgage was somewhere in the 3% to 3.25%. It hit a high of about 7% I think 7%, 7.5%, in the late third quarter.
We have a slide in the deck which talks, I think its Page 15 in the deck, and it describes sort of the balance sheet growth over the last three years in residential mortgage. And what you'll see in that graph if you look at it is, when rates were very low in 2020 and early '21, we strength the residential portfolio and then and sold a lot of our production in the secondary market when rates or when gain on sale margins were high.
And then you can see as rates started rising, we started putting more of that on our balance sheet. So if you kind of looked at our three-year cycle, we grew about $950 million, but we shrink some and we grew some depending on the balance sheet management side. So it was about 6% CAGR over the 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 got 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 and the secondary market is a little bit more attractive than it was a few months ago.
Okay, that makes a lot of sense. Thanks Steve. And then I think last quarter you said an 80% to 85% kind of loan-to-deposit ratio by year end '23. Obviously, we're already that 83% level. So do you think that moves higher than that 85% range at this point. And then is the 24% cycle deposit beta 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?
Yeah, this is Steve again. I guess from a loan-to-deposit ratio, let's talk about 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 were -- our goal is for 2023 is to grow loans mid-single digits and keep deposits roughly flat or maybe slightly up, but somewhere in that area. We have that page, but let me take a bigger picture just for a second. And I think you're trying to get to the question about margin. So let me kind of just talk to that a little bit.
John mentioned it on the call, but 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 the quarter this year and NIM's up 120 basis points. I've never seen that in my career from the last -- from the last fourth quarter, and it's actually at 41 basis points this quarter.
So as we talk about 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 margin, there's really three things. It's the size of the interest earning assets, it's the assumption of interest rates, and it's the last question you asked, which was the deposit data assumption.
So in October, when we have this call, we gave a guidance about $40 billion average interest earning assets based in '23 and we're starting out a little smaller than that, but probably under little larger. So there's really no change to that guidance.
On the last earnings call, as it relates to interest rates, on the last earnings call in October, the Moody's consensus forecast was for fed funds to peak out at 4.75% in 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 by the fourth quarter. So if you kind of average it out, it's basically the same for 2023.
The question you ask on Page 20 is our deposit data and it shows our cycle to deposit -- cycle to deposit beta is at 5% versus our historical at 24% from last time and we just continue to model the same deposit by beta as lifecycle. And then based on the interest rate forecast deposit beta, we would expect deposit cost to get in that 1.15% to 1.25%, that second part of the year, which is about a 100 basis points from where we were there this past quarter and as we think about that timing, we would expect, 40% to 50% of that to happen in the first quarter with the remainder of that over the -- of the rest of the year.
So with all that, I'd just say, during our last call, we guided to -- in '23, we guided to a 3.60% to 3.80% NIM range for 2023. And our guidance -- or our assumptions really haven't changed on any 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 of the interest cost on the swap collateral that is now in noninterest income.
Our noninterest -- our net interest income guide increases by 10 basis points, and it decreases by the same amount to noninterest income, but total revenue is the same. But really, our guidance is essentially the same just with the whole geography change. So it's a long-winded answer. But hopefully, that gives you the pieces and parts as we're thinking about '23.
Yes. Extremely helpful color, Steve. And if I could just squeeze in one last one. Just maybe more high level here. John, you noted three years since you announced the larger MOE here, and you still have an advantage currency, and as you said, in really some of the markets 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, your focus there? Is it still deepening further in your current markets? Would you look to expand into other strong Southeast markets? Or how do you think about the franchise over the next couple of years?
Sure, Stephen. I think this question was asked last quarter and really, 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 there's not a lot of clarity as it relates to potential recession risk.
I think the whole industry is going to be slow on M&A in 2023. I believe it's likely to pick up towards the end of the year as banks begin to meet and think about 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've built the company in high-growth markets. And typically, the type of target that makes the most sense for us is something that's about 10% our size to one 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 four of the six fastest-growing states in the country.
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 fish where we're at.
Our next question comes from Catherine Mealor from KBW. Your line is now open.
Just a follow-up on the deposit beta conversation. Your betas has just been so incredible. And I think the call for them to stay at about a 24% level is obviously going to be industry-leading. And so is there a way to just -- I think a lot of it is because of your deposit composition, right? You've got so much in check, and it's a very granular portfolio, but we're seeing betas really accelerate across the industry.
So is there a way to kind of explain why the beta won't accelerate as much as you're seeing some peers? Is it -- and maybe within that, kind of talk about the balance -- or the deposit composition. Are you expecting much change in that composition or for your kind of balance of CDs, checking and DDAs to remain about the same?
And then maybe give us a sense as to the betas within each deposit category just to kind of show that maybe some of your higher cost categories really are having a beta like everybody else, but it's your mix that's driving this better performance.
Sure, Catherine. It's Steve, and that's a mouthful of a question, but I think I get your questions. So let me kind of -- I'll go back to Page 18 is our sort of our deposit discussion. And I think you laid out a couple of these things and then help me -- I'll try 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 are at 43%. So if I were to point to one thing, I think that would probably be the reason that we think the overall deposit beta is at 24%.
When you look at the different pieces, it's not just commercial. It's not just small business. It's not retail. It's really almost one third, one third, one third in each of those categories, and you can see the various average checking balances.
Having said all that, it is clearly a battle on the deposit front. And the most sensitive things that are going to be to 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 those 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 front-loaded into the first quarter. And the reason for that is we certainly are feeling the pressure on the money market CD side. And as of January 1, we raised rates across the board.
So I think that area of the balance sheet is going to feel much more rate-sensitive than our checking accounts. And our job, of course, is to continue to grow core clients to protect the deposit franchise, which is, as you know, the most important part of our balance sheet.
So as you see volatility in rates and how the yield curve has changed over the past 12 months, it was going to catch up. It is catching up for sure, but we still feel good today about our total cycle beta. And assuming that the Fed stops raising rates here in the next quarter or so, we'll see a lag. It'll definitely continue to increase some, but we like sort of our position and that NIM guide kind of has all that put together. So hopefully, that's helpful.
And Catherine, its Will. I would -- just to elaborate a little bit. Obviously, this cycle is a little different than 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 balancing the same battle everyone else is. We do feel like we entered it with a really healthy core deposit base and mix.
And we've really allowed 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 and have a say somewhat like last time, but it is a different environment. Of course, we acknowledge that.
For sure. Okay. That's duty helpful. And maybe the other question is this is just on the on the reclass of the interest cost of the swap collateral that you disclosed this quarter. I saw it's about $8.4 million today as -- and that's been increasing, obviously, as rates have been going up over the past couple of quarters.
So as we think about what -- if we're trying to model what that number is, is it fairly steady at this $8.4 million, assuming the Fed maybe up a little bit with just 2 more hikes? And then as it plateaus, this is about where that level should be? Or is there something more with rates changing that drives what that number is over the next few quarters?
Yes, Catherine. There's really 2 pieces to it, and it's not easy to predict. That's the short answer. But there are 2 factors. Now we're talking about the amount of collateral we post. And the amount of the collateral is really dependent on the 10-year treasury, essentially.
And then the cost of that collateral is depending on the Fed funds rate. So -- and if you think about it, really, we're sort of at a neutral point in the 10 year is around 2%. So as rates come down, less collateral posted to us, the tender rate comes 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 -- he was just given -- he was assuming about $10 million a quarter in that 10 basis point comment he made a few minutes ago about margin dollar -- moving the margin dollars from noninterest income, but it's a little bit of a swag at this point.
Great. Okay. I guess my big picture was thinking that there wasn't -- it wasn't like that's going away, and that's part of the guidance for the NIM. I mean it should be stable going forward, which helps.
Yes. Catherine, I'd just say that it's about $800 million at the end of the quarter, give or take, a little bit. And if we're to close to 5% Fed funds rate, that's about $40 million a year, and that's sort of the assumption, and that's the 10 basis points on assets.
Got it. That makes sense. Okay. Perfect. And then maybe my last question is just on the fee outlook. Has anything changed? The correspondent has been a little bit lighter than expected outside the reclass. So just any kind of thoughts on your forward guidance for fees as we enter '23?
Yes. Catherine, fee income was a little over $63 million, 57 basis points of assets. Our last guidance was between 60 basis points and 70 basis points. But as Will mentioned earlier, we have some one-off events in mortgage servicing, SBA servicing, asset write-downs.
I think that was $4.1 million or $4.2 million and of course, the reclass, the central collateral was another $8.5 million. So if you kind of threw all that out, it'd been up 68 basis points. So it has been kind of in the middle of the range.
But as we kind of think about comparing the fourth quarter to future, until the Fed stops raising rates and some of our interest rate-sensitive businesses like mortgage and core deposit, we think it's probably similar, 55 to 65 basis points of assets. And then 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 the noninterest income to average assets to increase back towards 60 to 70 basis points.
So -- but we're in a transition period where NIM is obviously 120 basis points up. Noninterest income has fallen. My guess is, is when the Fed stops raising rates -- we've guided with you with the NIM, and probably the noninterest income businesses start moving back up towards the back half of the year if our interest rate forecast is right.
Our next question comes from Michael Rose from Raymond James. Your line is now open.
Just on the expenses, just a couple of questions. Can you just remind us what the expectation is for the FDIC expense pickup is this quarter? And if you can kind of remind us what you're assuming for annual merit increases like 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 NIE for the year.
Yes. Michael, I don't have the precise FDIC insurance expense model in my head, so I can't answer that part of the question. We've modeled 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 just completed in the fall.
And so there's some new hires coming in as well on some of that. And that will be come in throughout the course of the year as those initiatives begin, but all that's baked into that $950 million number that I referenced and expecting something in the low 2.30% in the first quarter.
Like I said in my prepared remarks, and you know this, 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 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 moving to credit. Obviously, you guys built the reserve this quarter. It seems obviously changing a little bit of the modeling inputs, but 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?
There's been a lot of talk around office and commercial real estate, maybe construction to some degree. I think this was asked every quarter. But just generally, how are you guys feeling about credit? And assuming the backdrop continues to soften or deteriorate, would we expect to see that reserve ratio continue to kind of grind higher under those pre-tense?
Michael, it's John. I can maybe start on the asset quality. If Will has an opinion on CECL. I know I can tackle that. But as you mentioned, the asset quality is remarkably good right now. I mean charge-offs, 1 basis point is really all DDAs. So we've had 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 nonguaranteed portion is basically flat.
We've added some slides, too, Michael, you might be interested in Page 33 and 34 that kind of breaks out our underwriting loan-to-value debt service coverages on commercial real estate and then also our consumer portfolio.
But as far as the areas that we kind of are focused on and we think could be challenging in the next year or two, small business naturally is one. I mentioned that pickup in SBA loans. But fortunately, we've got the guarantees there. But if 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, that continues to be something that we're working through, some weakness there. And on office, the metrics are all great right now for us.
But there is this social demographic shift that's going on. We look at our office book, and it's about 4.4% of the total loan portfolio. Right now, we're at a 62% loan-to-value and a 1.67x debt service coverage. So it underwrites fine.
I think the advantage for us on office is that we've done mostly smaller properties, 78% of them are under 150,000 square feet. And our average office loan is only $1.3 million. So 90% of the portfolio in office for us doesn't mature until 2025 or after.
So hopefully, the office ship will be a slow-moving train, and our clients and us will be able to react as the market shifts. But those are the areas we're watching so far. We haven't seen the deterioration or past dues are stable, and special mention classifieds are coming down.
Yes. On the CECL point, Michael, I guess a couple of things. One, our CECL model utilizes loss data from every bank we've acquired, excluding five or six banks dating back to 2004. And this is both of the companies making up our MOE. And that's about 60 or 61 banks in total, I think.
Our loss drivers really vary by loan type, but they include South Atlantic region unemployment. The housing price index year-over-year change. The CRE price index year-over-year change, apartment rental vacancy rate and GDP for the South Atlantic region. So our future reserve levels or our future provisioning expense is going to depend upon changes and 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 than Moody's. Our reserve is about 20% to 25% higher than it would be under the straight Moody's baseline scenario, though Moody's has gotten a little more conservative showing more economic weakening this quarter.
I don't think it's appropriate for me to comment on the validity of an accounting standard of FASB makes the rules, and we live by them. But if you look at our company over the last 3 years and you sum up the absolute value of our provision expense, positive and negative, and you get something north of $500 million. And over the same 3-year period, we've had cumulated net charge-offs of something around $12 million.
I'm not suggesting that 1.5 basis points a year is 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 lose in net charge-offs, because until we charge it off, the provision expense really just moves from one form of capital to another.
No, I certainly appreciate that. And John, I appreciate those slides put in the back, I forgot to mention those in the outset of the question. So it's good to hear. Just one final one for me, point of clarification. Obviously, the NIM guide moving up a little bit. That's the all-in in, correct? And if so, if you can just tell us what the expectation is for accretion -- or scheduled accretion is this year.
Yes, Michael. Yes, that's right, all-in NIM between 3.70% and 3.90% for the year. The accretion, of course, I think in the fourth quarter was around $7 million, $7.5 million. I think we are modeling that around $20 million for full year of 2023. So it comes down a little bit. But all that's factored in the entire cut. .
Yes. And just to reiterate, though, the move off essentially was the geography change with respect to the collateral. So as Steve said earlier, I just want to make sure that point is clear that we got -- it moves guidance up on the NIM but by a similar amount down on the noninterest income. So total revenue essentially where he was -- where we were guiding last quarter.
[Operator Instructions] Our next question comes from David Bishop from Hovde Group.
Appreciate the guidance in terms of the expectations for loan growth. Obviously, you guys have had entered fourth quarter with plenty of excess liquidity or planned liquidity, took down cash a bit. How should we think about the funding of that loan growth? Is that securities runoff, a little bit more cash? Did you get a little bit more aggressive on wholesale borrowings? Just curious how you're thinking about the funding of the growth this year.
Yes, David. This is Steve. Mid-single digits, let's say it's $1.5 billion of loan growth, give or take, a little bit is our expectation for 2023. We have about, I don't know, $800 million to $900 million coming off the investment portfolio, so we'll use that cash. And then with our guide with deposits, somewhere between flatten up $500 million to $600 million is sort of the expectation for the year.
And then as it relates to deposits, as Will mentioned on the call, at the end of the year, I think we had $150 million or so of broker that's been out there for, I don't know, three or four years, and no wholesale borrowings at the Federal Home Loan Bank.
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 had a little over $1 billion, $1.2 billion between broker and FHLB. 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 deposits, a little bit up.
Okay. Appreciate that. And then curious, just a final question for me. In terms of onboarding of new loans this quarter, just curious where you're seeing new loan yields on new production this quarter versus last.
Yes. David, our new loan production, I don't have in front of me the fourth quarter. I think in December, it was approaching 6% or so on the new loan production. I think our overall portfolio yield as a spot day at the end of the quarter was a little less than 5%, but close to 5%. So essentially, you're -- portfolio is around 5%. I think we ended in line with the quarter was around 43% I think was the average. I think our ending was a little less than 5%, and we're putting on loans close to 6%, give or take.
There are no further questions at this time, so I'll hand you back over to John Corbett.
All right. So 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. Hope you guys have a great day.
That concludes today's SouthState Corporation Q4 2022 earnings conference call. You may now disconnect your lines.