Q3 2023 Seacoast Banking Corporation of Florida Earnings Call

Speaker 1: Please continue to stand by. Your call is called, we'll begin momentarily.

Please continue to stand by your conference call will begin momentarily. Thank you for your patience.

[music].

Yeah.

Speaker 1: Welcome to Seaco's Banking Corporations 3rd quarter, 2023 earnings conference call. I will be your operator. During the presentation, all participants will be in the listen only mode. Afterwards, we will conduct the question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone.

Welcome to Seacoast banking Corporation's third quarter 2023 earnings Conference call. My name is Stacey and I will be your operator.

During the presentation.

Participants will be in a listen only mode.

Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the four on your telephone.

Speaker 1: Is that any time during this conference you need to reach an operator? Please press star zero.

Is that any time June this call since you need to reach an operator, Please press star zero.

Speaker 1: Before we begin, I've been asked to direct your attention to the statement at the end of the company's press release regarding Ford looking statement.

Before we begin I've been asked to direct your attention to the statement at the end of the company's press release regarding forward looking statements.

Speaker 1: will be discussing issues that constitute forward looking statements within the meaning of the Securities and Exchange Act. And its comments today are intended to be covered within the meaning of that Act. Please note that this conference is being recorded.

Seacoast will be discussing issues that constitute forward looking statements within the meaning of the securities and Exchange Act.

Unknown Executive: Please continue to stand by. Your conference call will begin momentarily. We thank you for your patience.

And its comments today are intended to be covered within the meaning of that act.

Please note that this conference is being recorded.

Speaker 1: I will now turn the call over to Chuck Schaefer, Chairman and CEO of CECOS Bank. Mr. Schaefer, he may begin.

I'll now turn the call over to Chuck Shaffer, Chairman and C. E O of Seacoast Bank. Mr. Schafer you may begin.

Thank you all for joining us this morning, as we provide our comments will reference the third quarter 2023 earnings slide deck, which you can find at seacoast banking dot com.

Speaker 2: Provide our comments where we're referenced the third quarter 2023 earning slide deck which you can find at secosbanking.com

Speaker 2: I'm joined today by Tracy Dexter, Chief Financial Officer, Michael Young, Treasurer and Director of Investor Relations.

I'm joined today by Tracey Dexter Chief Financial Officer, Michael Young Treasurer, and director of Investor Relations, James Stallings, Chief Credit Officer, David had a shell director of credit risk analytics.

Speaker 2: James Dollings, Chief Credit Officer, David Hattichel, Director of Credit Writh, then serve as the first driver of Creditaki, the deputy deputy of Credit Public Biology,

Speaker 2: The Ficus team produced another quarter of solid financial performance in line with the guidance we provided last quarter, despite the backdrop of a challenging yoke.

The seacoast team produced another quarter of solid financial performance in line with the guidance, we provided last quarter.

The backdrop of a challenging yield curve.

Speaker 2: As we discussed on last quarter's call, following a period of elevated acquisition activity, we returned our focused organic growth, leveraging the exceptional talent that adjoined and reached.

As we discussed on last quarter's call. Following a period of elevated acquisition activity. We returned our focus to organic growth leveraging the exceptional talent that has joined in recent years and the additional marketing investments. We made late in the quarter to drive low cost deposit growth and deepen client relationships.

Speaker 2: and the additional marketing investments we made late in the quarter to drive low cost deposit growth and deepen the client.

Speaker 2: This campaign resulted in 3.7% annualized organic deposit growth.

This campaign resulted in 3.7% annualized organic deposit growth in the quarter, including both expanded relationships across our customer base as well as fully new relationships the.

Speaker 2: including both expanded relationships across our customer base as well as fully new relationships. The average add-on rate for those deposits...

The average add on rate for those deposits with 375% and we use this additional funding to pay down broker deposits at rates near 5% further strengthening our fortress balance sheet and adding liquidity capacity.

Unknown Executive: Welcome to Seacoast Banking Corporation's 3rd quarter, 2023. 2023 earnings conference call.

Speaker 2: And we use this additional funding to pay down broker deposits that rates near 5.

Speaker 2: Further strengthening our fork's balance sheet and adding liquidity capacity.

Unknown Executive: My name is Daisy and I will be your operator. During the presentation, all participants will be in the listen only mode. Afterwards, we will conduct the question and answer session. At that time, if you have a question, please press the one phone by the four on your telephone. If at any time during this conference you need to reach an operator, please press star zero. Before we begin, I've been asked to direct your attention to the statement at the end of the company's press release regarding board looking statements.

We also remain intensely focused on expense discipline, reducing head count by 6% during the quarter with the full expense benefit of this head count reduction hitting Q4.

Speaker 2: We also remain intensely focused on expense discipline, reducing head count by 6% during the quarter, with the full expense benefit of this head count reduction hitting Q4. We expect expenses to decline in the fourth quarter, and we're remained vigilant operating the company where they focus on managing overhead pretty early into 2024. And Tracer will provide further expense guidance in our prepared remarks.

We expect expenses to decline in the fourth quarter and will remain vigilant operating the company with a focus on managing overhead prudently into 2024, and Tracy will provide further expense guidance in our prepared remarks.

Speaker 2: Turning the lending and credit, we continue to take a very careful approach to lending in the current environment. As we've guided on last quarter's call, loan assailant declined from the prior quarter, primarily to result in much lower cuff.

Turning to lending and credit we continue to take a very careful approach to lending in the current environment as.

As we guided on last quarter's call loan Outstandings declined from the prior quarter, primarily the result of much lower customer demand.

Unknown Executive: Seacoast will be discussing issues that constitute forward-looking statements within the meaning of the Securities and Exchange Act and its comments today are intended to be covered within the meaning of that act. Please note that this conference is being recorded.

Speaker 2: And when originating new credit facilities, we are requiring much water spreads, larger depository relationships, and conservative credit structures.

And when originating new credit credit facilities, we are requiring much wider spreads larger depository relationships and conservative credit structures.

Speaker 2: Our average out-on-rate increased the nearly 8% by late in the quarter. And in all cases required a full relationship with T.

Our average add on rate increased nearly 8% by late in the quarter and in all cases required a full relationship with chico's.

Chuck Shaffer: I will now turn the call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin. Thank you for joining us this morning.

Our asset quality remains strong with a decline in nonperforming loans and declining classified and criticized assets from the prior quarter.

Speaker 2: Our asset quality remains strong with the decline in non-performing loans and declining classified and criticized assets from the past.

Speaker 2: We did charge off $1.11.3 million on our acquired loan this quarter. This was expected and the loan was fully reserved in our allowance through purchase accounting. And thus had no impact on earnings or capital for the quarter.

We did charge off $111 $3 million acquired loan. This quarter. This was expected and the loan was fully reserved in our allowance through purchase accounting and thus had no impact on earnings or capital for the quarter.

Chuck Shaffer: As we provide our comments, we'll reference the 3rd quarter, 2023 earnings slide deck, which you can find at seacoastbanking.com. I'm joined today by Tracy Dexter, Chief Financial Officer, Michael Young, Treasurer and Director of Investor Relations, James Dollings, Chief Credit Officer, and David Hatershell, Director of Credit Risk Analytics. The Seacoast team produced another quarter of solid financial performance in line with the guidance we provide last quarter, despite the backdrop of a challenging yield curve.

Turning to M&A, we believe late 2024 will be a period of rapid industry consolidation, our gold position seacoast for this opportunity by entering 2024 with strong capital and liquidity will.

Speaker 2: Turning to M&A, we believe late 2024 will be a period of rapid industry consolidation.

Speaker 2: Our goal is to position Seacoast for this opportunity by entering 2024 with strong capital and liquidity.

Speaker 2: We'll be fully prepared to take advantage of these opportunities as they materialize and position Seacoast to be the corner of choice in Florida.

We'll be fully prepared to take advantage of these opportunities as they materialize and position seacoast to be the acquirer of choice in Florida.

Chuck Shaffer: As we discussed on last quarter's call, following a period of elevated acquisition activity, we returned our focused organic growth, leveraging the exceptional talent that adjoined in recent years, and the additional marketing investments we made late in the quarter to drive low cost deposit growth and deepen climate. Relationships. This campaign resulted in 3.7% annualized organic deposit growth in the quarter, including both expanded relationships across our customer base, as well as fully new relationships.

Speaker 2: And to conclude, we continue to operate from a position of significant strength in the nation's most robust local economies. Florida's strong statewide economic backdrop and our Fortress balance sheet positions Seacoast well compared to peers, and sets us up to take advantage of opportunities we expect will arise in the coming period.

And to conclude we continue to operate from a position of significant strength in the nation's most robust local economies, Florida strong statewide economic backdrop, and our fortress balance sheet positions. He goes well compared to peers and sets us up to take advantage of opportunities. We expect will rise in the coming periods are.

Speaker 2: Our key focus exiting this year in into 2024 will be on generating franchise value through deposit growth and diligently managing expenses. These are our two

Our key focus exiting this year and into 2024 will be on generating franchise value through deposit growth and diligently managing expenses.

These are our two areas of focus.

Chuck Shaffer: The average add-on rate for those deposits was 3.75%, and we use this additional funding to pay down broker deposits at rates near 5%, further strengthening our fortress balance sheet and adding liquidity capacity. We also remain intensely focused on expense discipline, reducing headcount by 6% during the quarter, with the full expense benefit of this headcount reduction hitting Q4. We expect expenses to decline in the fourth quarter, and we remain vigilant operating the company where they focus on managing overhead permanently into 2024, and Tracey will provide further expense guidance and are prepared remarks.

I'd like to thank all the <unk> associates for their continued hard work during the quarter and congratulate the team on a great launch of our organic growth campaign I'm excited to see where you take it in the coming quarters and.

Speaker 2: I'd like to thank all the Seco associates for the continued hard work during the quarter and congratulate the team on a great launch of our Organic Growth Campaign. I'm excited to see where you take it in the coming quarter.

And lastly, I'm proud that we moved our deposit market share in Florida from number 18% number 15 in 2023 consolidated market share in Florida will yield tremendous franchise value in the long run.

I'll now turn the call over to Tracy to walk through our financial results. Thank you Jack good morning, everyone.

Speaker 3: Thank you, Chuck. Good morning, everyone. Directing your attention to third quarter results, beginning with the highlights on slide four.

Turning your attention to the third quarter results beginning with the highlights on slide four.

Speaker 3: Annual deposit market share data released as of June 30th demonstrates the strength of our franchise and the result of our expanded market presence and strong relationship focus.

Annual deposit market share data released as of June 30th demonstrates the strength of our franchise and the result of our expanded market presence and strong relationship focus.

Chuck Shaffer: Turning to lending and credit, we continue to take a very careful approach to lending in the current environment. As we've guided on last quarter's call, loan ascending is declined from the prior quarter, primarily to result of much lower customer demand. And when originating new credit facilities, we are requiring much water spreads, larger depository relationships, and conservative credit structures. Our average add-on rate increased to nearly 8% by late in the quarter, and in all cases required a full relationship with Seacoast.

Speaker 3: Seacoast moved up three slots to number 15 in the state, maintaining a leading position in our legacy markets, and seeing strong growth in our newer markets.

I just moved up three slots to number 15 in the state maintaining a leading position in our legacy markets and seeing strong growth in our newer markets.

Speaker 3: As we work to move into the top 10, we'll continue our Relationship Center to Approach.

As we work to move into the top 10, we will continue our relationship centric approach.

Speaker 3: We're pleased to report growth in organic deposits at an annualized rate of 3.7%. Combined with $334 million in paydown to wholesale funding.

We're pleased to report growth in organic deposits at an annualized rate of three 7%.

And bind with $334 million in pay downs of wholesale funding.

Chuck Shaffer: Our asset quality remains strong with a decline in non-performing loans and declining classified and criticized assets from the prior quarter. We did charge off $1.11.3 million acquired loan this quarter. This was expected, and the loan was fully reserved in our allowance through purchase accounting, and thus had no impact on earnings or capital for the quarter.

Speaker 3: Our broker deposits and FHLB advances combined represent only 3% of total liabilities.

Our broker deposits and <unk> advances combined represent only 3% of total liabilities.

Speaker 3: We're focused on relationship-based customer acquisition and positioning CCOs for top 10 market share in all major Florida markets.

We're focused on relationship based customer acquisition and positioning <unk> for top 10 market share in all major Florida markets.

Our capital position continues to be very strong and we are committed to maintaining our fortress balance sheet.

Speaker 3: Our capital position continues to be very strong, and we're committed to maintaining our fortress balance sheet.

Chuck Shaffer: Turning to M&A, we believe late 2024 will be a period of rapid industry consolidation. Our goals position Seacoast for this opportunity by entering 2024 was strong capital and liquidity. We will be fully prepared to take advantage of these opportunities they materialize, and position Seacoast to be the choir of choice in Florida.

Speaker 3: Seacoast Tier 1 Capital Ratio increased to 13.9% and the ratio of Tangible Common Equity to Tangible Assets increased during the quarter to 8.68%.

<unk> tier one capital ratio increased to 13, 9% and the ratio of tangible common equity to tangible assets increased during the quarter to 868%.

Speaker 3: Also notable, if all health maturity securities were presented at fair value, the TCE to TA ratio would still be a strong 7.89%.

Also notable is all held to maturity securities were presented at fair value. The TCE to Ta ratio would still be a strong 789%.

Chuck Shaffer: To conclude, we continue to operate from a position of significant strength in the nation's most robust local economies, Florida's strong statewide economic backdrop, and our fortune balance sheet positions Seacoast well compared to peers, and sets us up to take advantage of opportunities we expect will arise in the coming periods. Our key focus exiting this year in into 2024 will be on generating franchise value through deposit growth, and diligently managing expenses. These are our two areas of focus.

Speaker 3: Our credit standards remained disciplined and focused on relationship lending, and our loan-to-deposit ratio ended the quarter at 83%.

Our credit standards remain disciplined and focused on relationship lending and our loan to deposit ratio ended the quarter at 83%.

Speaker 3: Credit risk metrics remain strong, with low levels of non-approval loans and criticized assets.

Credit risk metrics remained strong with low levels of non accrual loans and criticized assets.

Speaker 3: We're closely managing our expense base and executed on several expense-related initiatives during the quarter, including a headcount reduction and the consolidation of one branch location.

We're closely managing our expense base and executed on several expense related initiatives during the quarter, including a head count reduction and the consolidation of one branch location.

Chuck Shaffer: I'd like to thank all the Seacoast associates for the continued hard work during the quarter, and congratulate the team on a great launch of our Organic Growth Campaign. I'm excited to see where you take it in the coming quarters. And lastly, I'm proud that we moved our deposit market share in Florida from number 18 to number 15 in 2023. Consolidating market share in Florida will yield tremendous franchise value in the long run.

Speaker 3: Tangible book value per share increased to $14.26.

Tangible book value per share increased to $14.26.

Speaker 3: Removing the impact of the change in accumulated comprehensive income, tangible book value per share at September 30th would have been $14.56, representing an annualized growth rate of 8%. Turning to slide five.

Removing the impact of the change in accumulated comprehensive income tangible book value per share at September 30th would have been $14 56.

Representing an annualized growth rate of 8%.

Turning to slide five.

Tracey Dexter: I'll now turn the caller to Tracy to walk through our financial results. Thank you, Chuck. Good morning, everyone.

Speaker 3: Net interest income declined by 7.6 million, or 6% during the quarter, with higher deposit costs partially offset by higher yields.

Net interest income declined by $7 6 million or 6% during the quarter with higher deposit costs, partially offset by higher yields.

Tracey Dexter: Directing your attention to third quarter results, beginning with the highlights on slide four. Annual deposit market share data released as of June 30th demonstrates the strength of our franchise and the result of our expanded market presence and strong relationship focus. Seacoast moved up three slots to number 15 in the state, maintaining a leading position in our legacy markets, and seeing strong growth in our newer markets. As we work to move into the top 10, we'll continue our relationship centric approach.

Speaker 3: Consistent with our expectations, net interest margin contracted 29 basis points to 3.57%.

Consistent with our expectations net interest margin contracted 29 basis points to 357%.

Speaker 3: In the securities portfolio, yields increased 19 basis points to 3.32%.

In the securities portfolio yields increased 19 basis points to 332%.

Speaker 3: Loan yields increased four basis points to 5.93 percent with a September add-on rate near 8 percent offset by payoff activity accelerating deferred costs.

Loan yields increased four basis points to 593% with a September add on rate near 8% offset by payoff activity accelerating deferred costs.

Speaker 3: The yield on loans excluding accretion on acquired loans increased three basis points from the prior quarter.

The yield on loans, excluding accretion on acquired loans increased three basis points from the prior quarter.

Tracey Dexter: Groups. We're pleased to report growth in organic deposits at an annualized rate of 3.7% combined with $334 million in paydowns of wholesale funding. Our broker deposits and FHLB advances combined represent only 3% of total liabilities. We're focused on relationship-based customer acquisition and positioning Seacoast for top 10 market share in all major Florida markets. Our capital position continues to be very strong and we're committed to maintaining our fortress balance sheet. Seacoast Tier 1 capital ratio increased to 13.9% and the ratio of tangible common equity to tangible assets increased during the quarter to 8.68%.

Speaker 3: The cost of deposits increased to 1.79%, while the pace of that increase has slowed from the second quarter, and our funding base remains strong with 55% transaction expense.

The cost of deposits increased to 179%, while the pace of that increase has slowed from the second quarter and our funding base remains strong with 55% transaction accounts.

Speaker 3: Notably impactful to deposit costs this quarter was the Florida Bar Association's IOTA program changes enacted in May, requiring financial institutions to pay interest on these accounts at a specified spread to an index.

Notably impactful to deposit costs. This quarter was the Florida bar associations Iota program changes enacted in may requiring financial institutions to pay interest on these accounts at a specified spread to an index. This contributed approximately five basis points to the increase in deposit costs in the third quarter.

Speaker 3: This contributed approximately five basis points to the increase in deposit costs in the third quarter.

Speaker 3: Looking ahead, we expect the declines we've seen in net interest margin over the last few quarters to slow materially, though we intend to remain competitive on deposits, and we expect only 5 to 10 basis points of margin compression in the fourth quarter.

Looking ahead, we expect the declines we've seen in net interest margin over the last few quarters to slow materially, though we intend to remain competitive on deposits. We expect only five to 10 basis points of margin compression in the fourth quarter.

Tracey Dexter: Also notable, if all health maturity securities were presented at fair value, the TCE to TA ratio would still be a major's remain disciplined and focused on relationship lending and our loan to deposit ratio ended the quarter at 83%. Credit risk metrics remain strong with low levels of non accrual loans and criticized assets. We're closely managing our expense base and executed on several expense-related initiatives during the quarter including a head count reduction and the consolidation of one branch location.

Speaker 3: We expect margin to then stabilize and begin to improve in the back half of 2024. We expect we expect maximum margin at this time.

We expect margin to then stabilize and begin to improve in the back half of 2024.

Moving to slide six.

Speaker 3: As we continue to focus on growing our broad base of revenue sources, third quarter results reflect the first time impact to see coast of the Durban Amendment, which limits interchange related revenue for banks with over 10 billion in assets. This drove the decline in interchange of three-

As we continue to focus on growing our broad base of revenue sources third quarter results reflect the first time impact to sea coast of the Durbin Amendment, which limits interchange related revenue for banks with over $10 billion in assets. This drove a decline in interchange at $3 4 million.

Speaker 3: Service charges increased 2% with continued expansion of our commercial treasury management offerings and new customer acquisitions.

Service charges increased 2% with continued expansion of our commercial treasury management offerings and new customer acquisition.

Tracey Dexter: Tangible book value per share increased to $14.26. Removing the impact of the change in accumulated comprehensive income, tangible book value per share at September 30th would have been $14.56 representing an annualized growth rate of 8%. Turning to slide 5, net interest income declined by 7.6 million or 6% during the quarter with higher deposit cost partially offset by higher yields. Consistent with our expectations, net interest margin contracted 29 basis points to 3.57%.

Speaker 3: Wealth management revenues were down slightly, reflecting broader market performance. Assets under management of $1.6 billion have grown 29% year over year.

Wealth management revenues were down slightly reflecting broader market performance assets under management of $1 6 billion have grown 29% year over year.

The addition of an insurance agency business through an acquisition in the fourth quarter of 2022 added $1 2 million to third quarter noninterest income.

Speaker 3: The addition of an insurance agency business through an acquisition in the fourth quarter of 2022 added $1.2 million to third quarter non-interest income.

Speaker 3: Looking ahead, we continue to focus on growing revenue and we expect fourth quarter non-interest income of approximately 19 to 21 million.

Looking ahead, we continue to focus on growing revenue and we expect fourth quarter noninterest income of approximately $19 million to $21 million.

Tracey Dexter: In the securities portfolio, yields increased 19 basis points to 3.32%. Lone yields increased 4 basis points to 5.93%, with a September add-on rate near 8% offset by payoff activity accelerating deferred costs. The yield on loans excluding accretion on acquired loans increased 3 basis points from the prior quarter. The cost of deposits increased to 1.79% while the pace of that increase has slowed from the second quarter and our funding base remains strong with 55% transaction accounts.

Speaker 3: Moving to slide seven, assets under management increase 29% from a year ago to 1.6 billion, and have increased at a compound annual growth rate of 24% in the last three years. Our family office style offering continues to resonate with customers generating strong returns for the franchise.

Moving to slide seven assets under management increased 29% from a year ago to $1 6 billion and have increased at a compound annual growth rate of 24% in the last three years, our family office style offering continues to resonate with customers generating strong returns for the franchise.

Moving on to slide eight.

Speaker 3: Adjusted non-interest expense for the quarter was lower than the guidance we provided, coming in at 83.2 million.

Adjusted noninterest expense for the quarter was lower than the guidance, we provided coming in at $83 2 million.

Speaker 3: During the quarter we completed a 6% reduction in force and consolidated one additional branch location.

During the quarter, we completed a 6% reduction in force and consolidated one additional branch location.

Speaker 3: Looking forward, we will operate with a disciplined and prudent approach to expense management, cost synergies from recent acquisitions and recent expense reduction initiatives continue to positively impact results.

Looking forward, we will operate with a disciplined and prudent approach to expense management cost synergies from recent acquisitions and recent expense reduction initiatives continue to positively impact results.

Tracey Dexter: Notably impactful to deposit cost this quarter was the Florida Bar Association's IOTA program changes enacted in May requiring financial institutions to pay interest on these accounts at a specified spread to an index. This contributed approximately 5 basis points to the increase in deposit cost in the third quarter. Looking ahead, we expect the declines we've seen in net interest margin over the last few quarters to slow materially, though we intend to remain competitive on deposits. We expect only 5 to 10 basis points of margin compression in the fourth quarter. We expect margin to then stabilize and begin to improve in the back half of 2024. Moving to slide 6.

Speaker 3: We expect adjusted expenses for the fourth quarter to further decline as cost energies and efficiency initiatives take effect coming in at 80 to 83 million. And we anticipate maintaining that run rate into 2024.

We expect adjusted expenses for the fourth quarter to further decline as cost synergies and efficiency initiatives take effect coming in at $80 million to $83 million and we anticipate maintaining that run rate into 2024.

Speaker 3: Adding back the amortization of intangible assets, that's an expectation of 86 to 89 million. We remain committed to an intense focus on expenses and we'll continue to look for opportunities to optimize our business model.

Adding back the amortization of intangible assets, that's an expectation of 86 to 89 million.

We remain committed to an intense focus on expenses and we'll continue to look for opportunities to optimize our business model.

Speaker 3: Moving to slide 9. The efficiency ratio on an adjusted basis was 60%. The increased quarter over quarter reflects lower net interest income as deposit costs continue to increase though at a slower pace.

Moving to slide nine.

Tracey Dexter: As we continue to focus on growing our broad base of revenue sources, third quarter results reflect the first time impact to seek oath of the Durban Amendment, which Limit Interchange related revenue for banks with over 10 billion in F. Fed. This drove a decline in interchange of 3.4 million. Service charges increased 2% with continued expansion of our commercial treasury management offerings and new customer acquisition. Wealth management revenues were down slightly, reflecting broader market performance.

Efficiency ratio on an adjusted basis was 60% the increase quarter over quarter reflects lower net interest income as deposit costs continue to increase though at a slower pace.

Speaker 3: Also impactful to net interest income was the required change to interest paid on Iota accounts, which translated to approximately one and a half points on efficiency ratio. And the first full quarter of the urban amendment on interchange revenue, which impacted the efficiency ratio by another approximately one and a half points.

Also impactful to net interest income with the required change to interest paid on Iota accounts, which translated to approximately one five points on efficiency ratio and the first full quarter of the Durbin Amendment on interchange revenue, which impacted the efficiency ratio by another approximately one five points.

Tracey Dexter: Assets under management of 1.6 billion have grown 29% year over year. The addition of an insurance agency business through an acquisition in the fourth quarter of 2022 added 1.2 million to third quarter non-interest income. Looking ahead, we continue to focus on growing revenue and we expect fourth quarter non-interest income of approximately 19 to 21 million. Moving to slide seven, assets under management increased 29% from a year ago to 1.6 billion and have increased at a compound annual growth rate of 24% in the last three years.

Speaker 3: As we scale the company and adjust expenses in accordance with the rate outlook and with the return of higher margins in 2024, we believe the efficiency ratio will stabilize from this point forward.

As we scale the company and adjust expenses in accordance with the rate outlook and with the return of higher margins in 2024, we believe the efficiency ratio will stabilize from this point forward.

Turning to slide 10.

Speaker 3: Lone Out standings declined by 1% as we maintain our strict credit discipline and as we continue to see the impact of higher rates on market demand.

Loan Outstandings declined by 1% as we maintain our strict credit discipline and as we continue to see the impact of higher rates on market demand.

Speaker 3: Average loan yields increase to 5.93% with increases partially offset by higher fast cost amortization due to pay off.

Average loan yields increased to 593% with increases partially offset by higher <unk> cost amortization due to pay off.

Speaker 3: We expect loan yields to continue to increase in the coming periods as our fixed rate loans mature and reprise. New loan yields in the third quarter were near 8%.

We expect loan yields to continue to increase in the coming periods as our fixed rate loans mature and reprice.

Tracey Dexter: Our family office style offering continues to resonate with customers generating strong returns for the franchise. Moving on to slide eight. Adjusted non-interest expense for the quarter was lower than the guidance we provided coming in at 83.2 million. During the quarter we completed a 6% reduction in force and consolidated one additional branch location. Looking forward we will operate with a disciplined and prudent approach to expense management, cost synergies from recent acquisitions and recent expense reduction initiatives continue to positively impact results.

New loan yields in the third quarter were near 8%.

Speaker 3: Looking forward, we believe loan outstanding will be relatively stable in the fourth quarter and then return to modest growth in 2024.

Looking forward, we believe loan Outstandings will be relatively stable in the fourth quarter, and then returned to modest growth in 2020 for them.

Turning to slide 11.

Portfolio diversification in terms of asset mix industry and loan type has been a critical element of the company's lending strategy.

Speaker 3: Portfolio diversification in terms of asset mix, industry, and loan type has been a critical element of the company's lending strategy.

Speaker 3: Bosia across industries and collateral types is broadly distributed and we continue to be vigilant in maintaining our discipline conservative credit culture.

Exposure across industries, and collateral types as broadly distributed and we continue to be vigilant in maintaining our disciplined conservative credit culture.

Speaker 3: Construction and commercial real estate concentrations remain well below regulatory guidelines and below peer level.

Construction and commercial real estate concentrations remain well below regulatory guidelines and below peer levels.

Tracey Dexter: We expect adjusted expenses for the fourth quarter to further decline as cost synergies and efficiency initiatives take effect coming in at 80 to 83 million and we anticipate maintaining that run rate into 2024. Adding back the amortization of intangible assets, that's an expectation of 86 to 89 million. We remain committed to an intense focus on expenses and we'll continue to look for opportunities to optimize our business model. Moving to slide nine.

Speaker 3: We've managed our loan portfolio with diverse distribution across categories and retaining granularity to manage risk.

We've managed our loan portfolio with diverse distribution across categories and retaining granularity to manage risk.

Turning to slide 12, non owner occupied commercial real estate loans represent 33% of all loans and our distributed across industries and collateral types.

Speaker 3: Turning to slide 12. Non-owner occupied commercial real estate loans represent 33% of all loans and are distributed across industries and collateral types. Importantly, C&I loans and the related owner occupied DRE, which is repaid through cash flows of the business, not from the sale or leasing of the property, also represent 33% of the total portfolio.

Fortunately C&I loans and the related owner occupied CRE, which is repaid through cash flows of the business not from the sale or leasing of the property also represent 33% of the total portfolio.

Tracey Dexter: The efficiency ratio on an adjusted basis was 60%. The increased quarter over quarter reflects lower net interest income as deposit costs continue to increase though at a slower pace. Also impactful to net interest income was the required change to interest paid on Iota accounts, which translated to approximately one and a half points on efficiency ratio and the first full quarter of the Durban amendment on interchange revenue, which impacted the efficiency ratio by another approximately one and a half points.

On slides 13, and 14, we provide additional detail on the dispersion of non owner occupied commercial real estate loans in markets across the state and in categories, including retail and office, noting the strong performance of these segments to date and key credit monitoring metrics.

Speaker 3: On slides 13 and 14, we provide additional detail on the dispersion of non-owner-occupied commercial real estate loans in markets across the state, and in categories including retail and office, noting the strong performance of these segments to date in key credit monitoring metrics.

Speaker 3: diversification across industries and collateral types has been a critical tenant of our strategy, and the low average commercial loan sizes are the result of our long-time focus on granularity and on creating valuable customer relationships. Moving on to...

Diversification across industries and collateral types has been a critical tenant of our strategy and the low average commercial loan sizes are the result of our long time focus on granularity and on creating valuable customer relationships.

Tracey Dexter: As we scale the company and adjust expenses in accordance with the rate outlook and with the return of higher margins in 2024, we believe the efficiency ratio will stabilize from this point forward. Turning to slide 10. Lone outstanding decline by 1% as we maintain our strict credit discipline and as we continue to see the impact of higher rates on market demand. Average loan yields increase to 5.93% with increases partially offset by higher fast cost amortization due to pay off.

Moving on to credit topics on slide 15.

Speaker 3: The allowance for credit losses decreased during the quarter to an overall 149.7 million. A single expected charge-off totaling 11.3 million was the driver of the change. This acquired loan to a C&I borrower was fully reserved through purchase accounting and the charge-off did not impact earnings or capital.

The allowance for credit losses decreased during the quarter to an overall $149 7 million.

A single expected charge off totaling $11 3 million was the driver of the change this acquired loan to a C&I borrower was fully reserved through purchase accounting and the charge off did not impact earnings or capital.

Tracey Dexter: We expect loan yields to continue to increase in the coming periods as our fixed rate loans mature and reprise. New loan yields in the third quarter were near 8%. Looking forward, we believe loan outstanding will be relatively stable in the fourth quarter and then return to modest growth in 2024. Turning to Slide 11. Portfolio diversification in terms of asset mix, industry, and loan type has been a critical element of the company's lending strategy.

Speaker 3: Outside of that loan, charge-offs were in line with our recently historically low experience.

Outside of that loan charge offs were in line with our recently historically low experience.

Speaker 3: Combine the allowance for credit losses and the 186 million remaining unrecognized discount on acquired loans represents 3.4% of outstanding loan balances. Moving to slide.

Combined the allowance for credit losses in the $186 million remaining unrecognized discount on acquired loans represent three 4% of outstanding loan balances.

Moving to slide 16, looking at trends and credit metrics.

Speaker 3: Our credit metrics remain very strong, though we remain watchful of inflation pressures and the broader economic environment, and are carefully considering the ongoing impact of higher rates on the economy.

Our credit metrics remain very strong, but we remain watchful of inflation pressures and the broader economic environment and are carefully considering the ongoing impact of higher rates on the economy.

Tracey Dexter: Exposure across industries and collateral types is broadly distributed, and we continue to be vigilant in maintaining our disciplined, conservative, credit culture. Construction and commercial real estate concentrations remain well below regulatory guidelines and below peer levels. We've managed our loan portfolio with diverse distribution across categories and retaining granularity to manage risk. Turning to Slide 12. Non-owner occupied commercial real estate loans represent 33% of all loans and are distributed across industries and collateral types.

Speaker 3: Non-performing loans declined to 0.41% of total loans, and the percentage of criticized and classified loans to total assets declined to 1.36%.

Nonperforming loans declined to 0.41% of total loans and the percentage of criticized and classified loans to total assets declined to 136%.

Moving to slide 17 in the investment Securities portfolio.

Speaker 3: Moving to slide 17 and the Investment Security's portfolio. The average yield on securities increased during the quarter by 19 basis points to 3.32%.

The average yield on securities increased during the quarter by 19 basis points to 332%.

Speaker 3: Higher interest rates during the quarter were detrimental to portfolio values, increasing the overall unrealized loss position from the end of the prior quarter. Turning to slide 18.

Higher interest rates during the quarter were detrimental to portfolio values, increasing the overall unrealized loss position from the end of the prior quarter.

Tracey Dexter: Importantly, CNI loans and the related owner occupied BRE, which is repaid through cash flows of the business, not from the sale or leasing of the property, also represent 33% of the total portfolio. On Slide 13 and 14, we provide additional detail on the dispersion of non-owner occupied commercial real estate loans in markets across the state, and in categories, including retail and office, noting the strong performance of these segments to date. In key credit monitoring metrics, diversification across industries and collateral types has been a critical tenant of our strategy, and the low average commercial loan sizes are the result of our long time focus on granularity and on creating valuable customer relationships.

Turning to slide 18, and the deposit portfolio.

Speaker 3: Excluding the paydown of broker deposits, organic deposits increased by 108 million or 3.7% annualized, despite the typical seasonally slower period.

Excluding the pay down of broker deposits organic deposits increased by $108 million or three 7% annualized despite the typical seasonally slower period.

Speaker 3: Trends Action Accounts represent 55% of overall deposits, which continues to highlight our longstanding relationship focused approach.

Transaction accounts represent 55% of overall deposits, which continues to highlight our long standing relationship focused approach.

Speaker 3: The cost of deposits increased this quarter to 1.79% with the dynamic changes in the industry and the materially increased competitive landscape, though the pace of increase has slowed.

The cost of deposits increased this quarter to $1, 79% with the dynamic changes in the industry and the materially increased competitive landscape, though the pace of increase has slowed.

Overall, our expectation for the fourth quarter is that the cost of deposits will continue to increase with higher rates, albeit at a slower pace than previous quarters, though the extent of the impact is difficult to predict with certainty that said, we continue to outperform peers in our cost of deposits as the environment serves to highlight the strength of our low cost.

Speaker 3: Overall, our expectation for the fourth quarter is that the cost of deposits will continue to increase with higher rates, albeit at a slower pace than previous quarters, though the extent of the impact is difficult to predict with certainty. That said, we continue to outperform peers in our cost of deposits as the environment serves to highlight the strength of our low-cost deposit base and focus on relationships.

Tracey Dexter: Moving on to credit topics on Slide 15. The allowance for credit losses decreased during the quarter to an overall 149.7 million. A single expected charge off totaling 11.3 million was the driver of the change. This acquired loan to a CNI borrower was fully reserved through purchase accounting and the charge off did not impact earnings or capital. Outside of that loan, charge off were in line with our recently historically low experience. Combine the allowance for credit losses and the 186 million remaining unrecognized discount on acquired loans, represents 3.4% of outstanding loan balances.

Posit base and focus on relationships.

Speaker 3: We remain keenly focused on organic growth and expect deposit outstanding to continue to increase.

We remain keenly focused on organic growth and expect deposit outstandings to continue to increase.

Speaker 3: On slide 19, the bar chart shows the addition of balances and higher rate categories that affect the overall mix during the quarter.

On Slide 19, the Bar chart shows. The addition of balances and higher rate categories that affected the overall mix during the quarter.

Speaker 3: Seacoath continues to benefit from a diverse and granular deposit base with the top 10 depositors representing only 3% of total deposit.

<unk> continues to benefit from a diverse and granular deposit base with the top 10, depositors, representing only 3% of total deposits.

Tracey Dexter: Moving to Slide 16, looking at trends in credit metrics. Our credit metrics remain very strong, though we remain watchful of inflation pressures and the broader economic environment and are carefully considering the ongoing impact of higher rates on the economy. Non-performing loans declined to 0.41% of total loans, and the percentage of criticized and classified loans to total assets declined to 1.36%. Moving to Slide 17 and the investment securities portfolio. The average yield on securities increased during the quarter by 19 basis points to 3.32%.

Speaker 3: Our consumer franchise contributes 43% of overall deposit balances with an average balance per account of only 24,000.

Our consumer franchise contributes 43% of overall deposit balances with an average balance per account of only 24000.

Speaker 3: Business customers represent 57% of total deposits with an average balance per account of 111.

Business customers represent 57% of total deposits with an average balance per account of 111000.

Speaker 3: Our customers are highly engaged and have a long history with us, and we have a peer leading level of non-interest bearing deposits representing 32% of the deposit base.

Our customers are highly engaged and have a long history with us and we have a peer leading level of noninterest bearing deposits, representing 32% of the deposit base.

Speaker 3: This provides significant strength in maintaining deposit costs over time and reflects the granular relationship nature of our franchise.

This provides significant strength and maintaining deposit costs over time and reflects the granular relationship nature of our franchise.

On slide 20, demonstrating our significant capacity to fund potential outflows.

Speaker 3: on slide 20, demonstrating our significant capacity to fund potential outflows.

Tracey Dexter: Higher interest rates during the quarter were detrimental to portfolio values, increasing the overall unrealized loss position from the end of the prior quarter. Turning to Slide 18 and the deposit portfolio. Excluding the paydown of broker deposits, organic deposits increased by 108 million or 3.7% annualized, despite the typical seasonally slower period. Transaction Accounts represent 55% of overall deposits, which continues to highlight our longstanding relationship-focused approach. The cost of deposits increase this quarter to 1.79% with the dynamic changes in the industry and the materially increased competitive landscape, though the pace of increase has slowed.

Speaker 3: The bar on the right identifies balances above the FDIC insured limit excluding public funds accounts that have collateral-backed protection.

The bar on the right identifies balances above the FDIC insured limit excluding public funds accounts that have collateral back protection.

Speaker 3: Uninsured and uncollateralized deposits, total approximately 3.5 billion, which, if needed, would be almost completely funded by CECOS cash and borrowing capacity at the Federal Reserve. And-

Uninsured and uncollateralized deposits totaled approximately $3 5 billion, which if needed would be almost completely funded by seacoast cash and borrowing capacity at the federal reserve.

And finally on slide 21.

Speaker 3: Our capital position continues to be very strong and we're committed to maintaining our fortress balance sheet.

Our capital position continues to be very strong and we're committed to maintaining our fortress balance sheet.

Speaker 3: You can see the increase in tangible common equity to tangible assets in the third quarter as we move past the initially dilutive effect of recent acquisitions reflecting our commitment to driving shareholder value creation.

You can see the increase in tangible common equity to tangible assets in the third quarter as we move past. The initially dilutive effect of recent acquisitions, reflecting our commitment to driving shareholder value creation we.

Speaker 3: We expect this ratio to continue to increase in the coming period.

We expect this ratio to continue to increase in the coming periods.

Tracey Dexter: Overall, our expectation for the fourth quarter is that the cost of deposits will continue to increase with higher rates, albeit at a slower pace than previous quarters, though the extent of the impact is difficult to predict with certainty. That said, we continue to outperform peers in our cost of deposits as the environment serves to highlight the strength of our low-cost deposit base and focus on relationships. We remain keenly focused on organic growth and expect deposit outstanding to continue to increase.

Speaker 3: Also of note, the 13.9 percent Tier 1 capital ratio is among the highest in the industry.

Also of note the 13, 9% tier one capital ratio is among the highest in the industry.

Speaker 3: In summary, considering our strong capital levels, prudent credit culture, and high quality customer franchise, we have one of the strongest balance sheets in the industry, providing optionality if the environment becomes more challenging, and to continue building Florida's leading community bank. I'll now...

In summary, considering our strong capital levels prudent credit culture and high quality customer franchise, we have one of the strongest balance sheets in the industry, providing optionality, if the environment becomes more challenging and to continue building Florida's leading community bank.

I'll now turn the call back over to Chuck.

Speaker 2: Thank you, Tracy. All right, operator, I think we're ready for Q&A.

Alright, operator, I think we're ready for Q&A.

Tracey Dexter: On slide 19, the bar chart shows the addition of balances and higher rate categories that affect the overall mix during the quarter. Seacoast continues to benefit from the diverse and granular deposit base with the top 10 depositors representing only 3% of total deposits. Our consumer franchise contributes 43% of overall deposit balances with an average balance per account of only 24,000. Business customers represent 57% of total deposits with an average balance per account of 111,000.

Speaker 4: Thank you. If you would like to register a question, please press the one followed by the phone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered, and you would like to withdraw your registration, please press the one followed by the three. One moment please, far first question.

Thank you she would like to register a question. Please press the one followed by the phone and your telephone you will hear us Frito prompts to acknowledge your request. If your question has been answered and you would like to withdraw your registration. Please press. The one followed by the three one moment. Please our first question.

Speaker 4: Our first question comes to the line of David Feastard. Please proceed with your question.

Our first question comes from the line of David Feaster. Please proceed with your question.

Hi, good morning, everybody.

Speaker 5: You know, maybe just starting on the loan side, you know, it's great to see the improvement in the commercial loan pipeline. It sounds like we're, we're, you know, stabilizing there. I'm curious what drove the increase in the pipeline. Is it, is it demand changing or customers just?

Good morning, David Good morning.

Tracey Dexter: Our customers are highly engaged and have a long history with us, and we have a peer-leading level of non-interest bearing deposits representing 32% of the deposit base. This provides significant strength in maintaining deposit costs over time and reflects the granular relationship nature of our franchise. On slide 20, demonstrating our significant capacity to fund potential outflows. The bar on the right identifies balances above the FDIC-insured limit, excluding public funds accounts that have collateral backed protection. Uninsured and uncollateralized deposits total approximately 3.5 billion, which, if needed, would be almost completely funded by Seacoast cash and borrowing capacity at the Federal Reserve.

No maybe just starting on the loan side.

Great to see the improvement in the commercial loan pipeline. It sounds like we're stabilizing there I'm curious what drove the increase in the pipeline is it is it demand changing or customers just you know.

Speaker 5: you know, more accepting of a higher rate environment on pricing or just more competitors pulling back or just your lenders out there, you know, just blocking the tackling and gathering business. So just curious kind of what drove the increase in the commercial pipeline, the complexion of it and kind of how new loan yields are trend.

More accepting of a higher rate environment on pricing.

Or just more competitors pulling back.

Or just your lenders out there.

Blocking and tackling gathering business. So just curious kind of what drove the increase in the commercial pipeline the complexion of it and kind of how the new loan yields are trending.

Speaker 2: Well, as we discussed on prior call of David, you know, we were very cautious to drive long growth in a period where we thought the market had driven structure to a weakened standard and pricing to, you know, lower spreads than what we thought was appropriate.

Well as we've discussed on prior calls David we were very cautious to drive loan growth in a period, where we thought the market driven structure to a weakened standard and pricing to lower spreads than what we thought was appropriate.

Tracey Dexter: And finally, on slide 21, our capital position continues to be very strong and we're committed to maintaining our fortress balance sheet. You can see the increase in tangible common equity to tangible assets in the third quarter as we move past the initially dilutive effect of recent acquisitions, reflecting our commitment to driving shareholder value creation. We expect this ratio to continue to increase in the coming periods. Also of note, the 13.9 percent tier one capital ratio is among the highest in the industry.

Tracey Dexter: In summary, considering our strong capital levels, prudent credit culture, and high-quality customer franchise, we have one of the strongest balance sheets in the industry, providing optionality if the environment becomes more challenging, and to continue building Florida's leading community bank.

Speaker 2: As times marched on here, the markets got more reasonable. And what we're seeing is the ability to get conservative credit structures, strong deposits in the many cases, strong media in these relationships.

As times marched on here, the market's gotten more reasonable and what we're seeing is the ability to get conservative credit structures strong deposits and in many cases strong DDA and these relationships as well as spreads we think that appropriately reflect the.

Speaker 6: as well as spreads we think that appropriately reflect the opportunity that we're taking. So, you know, in many ways, the market has moved back towards our more conservative credit posture and as a result, we're seeing more demand, which is, you know, very much positive.

The opportunity that were taken so.

Many ways the market has moved back towards our more conservative credit posture and as a result, we are seeing more demand which is.

But very much positive.

That's great.

Speaker 5: And then maybe just falling up on that deposit front. You know, you guys touched on some of the broad deposit thoughts. And, you know, I'm just curious if we could dig in maybe some of the underlying trends that you're seeing there and competitive landscape.

And then maybe just following up on the deposit front.

Touched on some of the broad deposit thoughts.

And I'm just curious if we could dig in maybe some of the underlying trends that you're seeing there in the competitive landscape.

Chuck Shaffer: I'll now turn the call back over to Chuck. Thank you, Tracy.

Unknown Executive: All right, operator, I think we're ready for Q&A. Thank you. If you would like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered, and you would like to withdraw your registration, please press the one followed by the three. One moment please, for our first question.

Speaker 5: You know we obviously have headwinds from client deposit activation right? I mean folks using more cash and some of that migration but just curious maybe how you're seeing on like underlying account growth and relationship growth just from you know the full relationships that you talked about earlier.

We obviously have headwinds from client deposit activation right, I mean folks who use them more cash.

And some of that migration, but just curious maybe how you are seeing on like underlying account growth and relationship growth just from the full relationships that you talked about earlier.

Speaker 5: Here's where you're having wind and where you see opportunity to drive quarter-positive.

I'm curious, where you are having the wins and where you see opportunity to drive core deposit growth.

David Feaster: Our first question comes to the line of David Feaster. Please proceed with your question. All right, good morning, everybody. Good morning, David. Good morning. You know, maybe just starting on the loan side. You know, it's great to see the improvement in the commercial loan pipeline. It sounds like we're, you know, stabilizing there. I'm curious what drove the increase in the pipeline. Is it, is it demand changing or customers just, you know, more accepting of a higher rate environment on pricing or just more competitors pulling back or just your lenders out there, you know, just blocking tackle and gathering business.

Yes, I would say our biggest opportunity has been continues to be just client.

Speaker 6: Yeah, I would say our biggest opportunity has been continues to be just quiet, angst and unhappiness with larger regional banks. You know, when you look at the banker.

Angst and not happiness with larger regional banks when you look at the banker.

David Feaster: So just curious kind of what drove the increase in the commercial pipeline, the complexion of it and kind of how new loan yields are trending. Well, as we discussed on prior call, David, you know, we were very cautious to drive loan growth in a period where we thought the market had driven structure to a weakened standard and pricing to, you know, lower spreads than what we thought was appropriate. As times marched on here, the markets got more reasonable.

Speaker 6: Portfolio we have in the team that we put together there their former backgrounds typically are upstream Market banks and so we continue to see a lot of Upset customers with their you know larger more regional banks and as a result we've been just taking market share That'd be the best way to describe it in all cases

Portfolio, we have and the team that we've put together their former backgrounds typically our upstream market banks and so we continue to see a lot of upset customers with their larger more regional banks and as a result, we've been just taking market share that would be the best way to describe it in all case.

Speaker 6: We're seeing full relationships coming on. We're not out marketing high yield CDs. We're not out marketing a high cost money market. We are in the market, we are competitive, but what we're seeing is full, deep relationships coming over, you know, as we move past.

We're seeing full relationships coming on we're not out marketing high yield Cds, we're not out marketing.

High cost money market, we are in the market, we are competitive but what we're seeing is both deep relationships coming over as we move past.

Speaker 6: an elevated period of M&A, you know, we've now moved to a point here where we are very focused on organic growth across the state.

An elevated period of M&A, we've now moved to a point here, where we are very focused on organic growth across the state we've got a stronger.

Speaker 6: We've got a stronger and bigger budget for marketing in the state. We're out driving brand recognition for the company and at the same time we've got, you know, a lot of talent that's joined us in the last 24 months that is now.

And bigger budget for marketing in the state were out driving brand.

Recognition for the company and at the same time, we've got a lot of talent that's joined US in the last 24 months. There is now working their connectivity to bring on relationships. So that as I mentioned at the outset, we're seeing a reasonable add on rate for those deposits and very happy to see it and I don't know Michael what Tracy anything you want to talk about the individual items in there.

David Feaster: And what we're seeing is the ability to get conservative credit structures, strong deposits in the many cases, strong media and these relationships as well as spreads. We think that it properly reflect the, the opportunity that we're taking. So, you know, in many ways, the market is moved back towards our more conservative credit posture.

Speaker 6: working their connectivity to bring on relationships. So that, as I mentioned at the outset, we're seeing a reasonable add-on rate for those deposits and very happy to see it, and I don't know, Michael or Tracy, anything you want to talk about the individual items in there?

Speaker 7: Yeah, one other, I think just big picture comment. We pulled back on lending when we felt like it was irrational. That's long back the other way as Chuck mentioned. And then similarly, on the deposit side, coming out of March and April , there was some irrational pricing in the market from various competitors that we chose not to participate in. And so I think you're seeing more rationality on both sides of the balance sheet, particularly as Peer's loan growth is decelerating. They're being a little less competitive. It really high rates the drive market share.

Yes, one other I think just big picture comment, we kind of pulled back on lending when we felt like it was irrational.

David Feaster: And as a result, we're seeing more demand, which is, you know, very, very much positive. That's great. And then maybe just falling up on the on that deposit front, you know, you guys touched on some of the broad deposit thoughts and, you know, I'm just curious if we could dig in maybe some of the underlying trends that you're seeing there and competitive landscape. You know, we obviously have headwinds from client deposit activation, right?

Thats one back the other way as Chuck mentioned and then similarly on the deposit side coming out of March and April there was some irrational pricing in the market from various competitors that we chose not to participate in and so I think youre seeing kind of more rationality on both sides of the balance sheet, particularly as peers loan growth is decelerating.

David Feaster: I mean, folks using more cash and some of that migration, but just curious maybe how you're seeing on like underlying account growth and relationship growth just from, you know, the full relationships that you talked about earlier. So, just curious where you're having wind and where you see opportunity to drive court deposit growth. Yeah, I would say our biggest opportunity has been continues to be just client angst and unhappiness with larger regional banks.

They are being a little less competitive at really high rates to drive market share. So I think we're just seeing kind of the market stabilize and are consistent.

Speaker 7: I think we're just seeing kind of the market stabilize and our consistent process kind of.

<unk> kind of.

Speaker 7: working right on both sides of the balance sheet now, so we've made sure we didn't hurt ourselves on either loans or deposits right through the last 12 months, and now we're in really good standing as we head forward into 2024 and the back half of this year.

Working right on both sides of the balance sheet now.

So we've made sure we didn't hurt ourselves on either loans or deposits right through the last 12 months and now we're in really good standing as we head forward into 2024 in the back half of this year.

David Feaster: You know, when you look at the banker portfolio, we have in the team that we put together their, their former backgrounds typically are upstream market banks. And so, we continue to see a lot of upset customers with their, you know, larger or more regional banks and as a result, we've been just taking market share. That'd be the best way to describe it in all cases. We're seeing full relationships coming on. We're not out marketing high yield CDs.

Speaker 5: That's, that's great color. I appreciate it. And then appreciate all the guidance that you guys gave and some of the, you know, preliminary thoughts, but I'm just curious, maybe, you know, looking out to 2024 where I mean, we're not giving guidance for that yet. But I guess, as you look at the street estimates, look, there's a wide range.

That's great color I appreciate it and then appreciate all the guidance you guys gave in some of the preliminary thoughts, but I'm just curious maybe looking out to 2024, where I mean, we're not giving guidance for that yet, but I guess as you look at the street estimates look theres a wide range at this point just given there's a lot of moving parts from the M&A.

Speaker 5: at this point, just given there's a lot of moving parts from the M&A activity, I guess.

To the I guess when you look at street and consensus outlook is there anything that you see that's wildly off where do you think the streets relatively realistic based on your preliminary thoughts and just curious how you think about that as we try and manage expectations heading into next year.

Speaker 5: When you look at street and consensus outlook, is there anything that you see that's wildly off? But do you think the streets, you know, relatively realistic based on your preliminary thoughts? And just curious how you think about that as we try and manage expectations heading in the next year.

David Feaster: We're not out marketing high cost money market. We are in the market. We are competitive. But what we're seeing is full deep relationships coming over, you know, as we move past an elevated period of M&A, you know, we've now moved to a point here where we are very focused on organic growth across the state. We've got a stronger and bigger budget for marketing in the state. We're out driving brand recognition for the company in the same time.

Speaker 6: I'd say we feel good about street estimates. It generally lines up with what our thoughts are. There's some wine items won't worry the other, but overall street estimates are pretty good. Michael, I don't know if you think it'd add to that in terms of the model, but overall, we feel pretty good about street estimates. Yeah, I mean, there's, you know, obviously, some volatility around, you know, credit expectations and rate expectations that are probably in each individual model, but generally seems like we're in good shape. Generally bottom line, we're in line. Yeah. That's great. Appreciate all.

I'd say, we feel good about street estimates generally lines up with what our thoughts are there is some line items, one way or the other but overall street estimates are pretty good Michael I don't have it.

Add to that in terms of the model, but overall, we feel pretty good about street estimates.

Yes, I mean, there are obviously some volatility around credit expectations and rate expectations that are probably in each individual model, but generally.

Seems like we're in a good generally to bottomline, where more and more in line yes.

David Feaster: We've got, you know, a lot of talent that's joined us in the last 24 months that is now working their connectivity to bring on relationships. So that is, I mentioned to the outset, we're seeing a reasonable add on rate for those deposits and very happy to see it. And I don't know Michael was racing and you want to talk about the individual items in there. Yeah, one other, you know, I think just big picture comment.

That's great I appreciate all color thanks, everybody.

Thank you Dave.

Speaker 4: Our next question comes in line as Steven's gotten. Please proceed with your question.

Our next question comes from the line of Stephen Scouten. Please proceed with your question.

Speaker 6: Hey, thanks. Good morning. Appreciate you guys calling out my estimates this morning. So thank you for that.

Hey, Thanks, Good morning, I appreciate you guys not calling out my estimates. This morning. So thank you for that.

David Feaster: You know, we kind of pulled back on on lending when we felt like it was irrational. You know, that's long back the other way as Chuck mentioned and then similarly on the deposit side, you know, coming out of March and April, there was some irrational pricing in the market from various competitors that we chose not to, you know, participate in. And so I think you're seeing kind of more rationality on both sides of the balance sheet, particularly as peers, loan growth is decelerating.

Okay.

Speaker 6: Just curious, you know, you guys gave some guidance and a trace and you said maybe five to ten basis points of additional name compression expected in the fourth quarter. I don't know if you have like the September , NIM or what you're seeing, you know, you saw a quarter ran that might give us some visibility into that starting point and then thinking about that 2040, said maybe second half upside. If you could give any color about what drives that, I assume it's fixed rate loan repricing and the price and the kind of the puts and takes we might see in the 24 as well. Thanks.

Just curious.

Scott gave some guidance on that Tracy you said, maybe five to 10 basis points of additional NIM compression expected in the fourth quarter.

I don't know if you have like the September NIM or what Youre seeing.

What you saw at quarter end that might give us some visibility into that starting point and then I think.

And about that 24, you said, maybe second half upside if you could give any color about what drives that I assume its fixed rate loan repricing, but kind of.

David Feaster: They're being a little less competitive that, you know, really high rates to drive market share. So I think we're just seeing kind of the market stabilize and, you know, our consistent, you know, process kind of, that's working on both sides of the balance sheet now.

The puts and takes we might see in the 'twenty four as well thanks.

Hey, Stephen it's Michael Yeah. So just I think as we exited the quarter. It's just kind of where deposit costs are so spot deposit costs are about closer to 187 kind of exiting the quarter.

Speaker 7: I think as we exit the quarter, you know, it's just kind of where deposit costs are. So spot deposit costs are about, you know, closer to 187, kind of exiting the quarter. So we'll have some pull through that, you know, loan yields this quarter were a little low, sort of just lower fees.

Michael Young: So we've made sure we didn't hurt ourselves on either loans or deposits through the last 12 months, and now we're in really good standing as we head forward into 2024 in the back half of this year. That's great color. I appreciate it. And then appreciate all the guidance you guys gave in some of the preliminary thoughts, but I'm just curious maybe looking out to 2024, I mean, we're not giving guidance for that yet.

So we'll have some pull through that loan yields this quarter were a little low sort of just lower fees in the quarter, but those things will kind of move throughout Q4 and kind of lineup with that NIM guide. So just trying to give you a little clarity there, but as we've talked about I think big picture over the last year.

Michael Young: But I guess as you look at the street estimates, look, there's a wide range at this point, just given there's a lot of moving parts from the M&A activity. I guess when you look at street and consensus outlook, is there anything that you see that's wildly off? Do you think the streets, you know, relatively realistic based on your preliminary thoughts? And just curious how you think about that as we try and manage expectations heading in the next year.

Just with our fixed loan book repricing, we will start to see more and more benefit of that and more of our book repricing at a higher rate environment as we move through 2024 and that will outweigh any deposit cost pressure that we may feel and so you kind of see that stabilizing as we get into 2024 and the NIM starting to head higher right as we get.

Speaker 6: and more of our book repricing into the higher rate environment as we move through 2024 and that will outweigh any deposit costs, pressure that we may feel. And so you kind of see that stabilizing as we get into 2024 and the NIMs starting to head higher as we get into kind of your two, your three of the higher rate regime will repriced more of our book up into that higher pricing level. So that's kind of the right way to think about it. turn over that portfolio over the next 12 months and all that we should know.

The kind of year two year three of the higher rate regime will reprice more of our book up in about that higher pricing levels. So that's kind of the right way to think about it.

Michael Young: I'd say we feel good about street estimates generally lines up with what our thoughts are. There's some wine items won't worry the other, but overall street estimates are pretty good. Michael, I don't know if you think it added that in terms of the model, but overall, you know, we feel pretty good about street estimates. Yeah. Yeah, I mean, there's obviously some volatility around, you know, credit expectations and rate expectations that are probably in each individual model, but generally seems like we're in good shape. Generally bottom line, we're in line. Yeah. That's great. I appreciate all color.

Speaker 7: kind of the right way to think about it.

Unknown Executive: Thanks everybody. Negative.

Got it and is there.

Speaker 6: Got it. And is there, you know, do we think about just like a four year duration kind of evenly on the fixed rate loan book? Or is there any lumpiness to the, you know, kind of turnover of that portfolio over the next 12 months at all that we should know?

Do we think about just like a four year duration kind of evenly on a fixed rate loan book or are there is there any lumpiness to the.

Kind of turnover of that portfolio over the next 12 months ago that we should know.

Not when you think about it cumulatively for maturities and amortization, we don't do a lot of interest only lending. So we have a good bit of principal amortization that comes off of that as well. So when you take all that together, it's actually it's pretty smooth Q4 is usually a higher origination quarter for us. So we do have a few more.

Speaker 7: Not when you think about it cumulatively for maturities and amortization, you know, we don't do a lot of interest only lending. So we have a good bit of principal amortization that comes off of that as well. So when you take all that together, it's actually, you know, it's it's pretty smooth. Q4 is usually a higher origination quarter for us. So we do have a few more maturities this quarter than the normal. So that'll help a little bit as we get into Q4.

Steven Scouten: Our next question comes in line as Steven's gotten. Please proceed with your question. Hey, thanks. Good morning. Appreciate you guys calling out my estimates this morning. So thank you for that. Just curious, you know, you guys gave some guidance and a trace. And you said maybe five to 10 basis points of additional, and then compression expected in the fourth quarter. I don't know if you have like the September or what you're seeing, you know, we saw a quarter and that might give us some visibility into that starting point.

<unk> this quarter than normal so that will help a little bit as we get into Q4.

Got it makes sense.

Speaker 6: Got it, make sense. And then, Chuck, I like the NIM comment. I mean, the M&A commentary from 24. I hope you're right. I'm curious, it's what that looks like in your mind. I know it's hard to say, hard to know what opportunities might present themselves, but would you expect to look at larger banks at this point in time, or would you continue to take advantage of some of the maybe 500 million to a million of half kind of banks that you guys have kind of feasted on the past few years?

And then.

I like the NIM comment I mean doesn't it.

M&A commentary for 'twenty, four I hope I hope Youre right I'm curious as to what that looks like in your mind I know, it's hard to say hard to know what opportunities might present themselves but.

Would you expect to look at larger banks at this point in time or would you continue to take advantage of some of them maybe.

Steven Scouten: And then thinking about that 2040, maybe second half upside, if you could give any color about what drives that, I assume it's fixed rate loan repricing the kind of the puts and takes we might see in the 24 as well. Thanks. Hey, Steven, it's Michael. Yeah. So just I think as we exit the quarter, you know, it's just kind of where deposit costs are. So spot deposit costs are about, you know, close to 187 kind of exiting the quarter.

$500 million billion and a half kind of banks that you guys have kind of piece it all in the past few years.

Speaker 2: Yeah, I mean, that's kind of high level, but, you know,

Yes.

Kind of high level, but.

No.

Speaker 6: We continue to be very focused on the same strategy we've executed before, you know, we're focused on Florida only, we're focused on smaller transactions in Florida. That's primarily what the opportunity is, you know, 500 million to a banish type banks is what's available to us in the state.

We continue to be very focused on the same strategy. We've executed before we're focused on Florida, only we focus on smaller transactions in Florida, that's primarily what the opportunity is $500 million to a ban ish type banks as what's available to us and the state will continue to focus there you know M&A is tough right now.

Steven Scouten: So we'll have some pull through that, you know, loan yields this quarter were a little low sort of just lower fees in the quarter, but you know, those things will kind of move throughout Q4 and kind of line up with that. So just trying to give you a little clarity there, but you know, as we've talked about, I think big picture, you know, over the last year, it's, you know, just with our fixed loan book repricing, we'll start to see more and more benefit of that.

Speaker 2: We'll continue to focus there, you know, M&A's tough right now. The, you know, the math is challenging. You know, we don't have much of an appetite for.

The math is challenging we don't have much of an appetite for.

Speaker 2: dilution right now. And so it's difficult to get a deal done in the current environment, but I think on the back half of next year is, you know, we continue to see the cycle mature.

Dilution right now and so it's difficult to get a deal done in the current environment, but I think on the back half of next year as we can.

They need to see the cycle mature the struggles around generating earnings will drive sellers to become more reasonable on pricing.

Steven Scouten: And more of our book repricing into the higher rate environment as we move through 2024. And that will, you know, outweigh any deposit costs pressure that we, we may feel. And so, you know, you kind of see that stabilizing as we get into 2024 and the name starting to head higher, right, as we get into kind of your two, your three of the higher rate regime will repricise more of our book up into that, that higher pricing level.

Speaker 2: The struggles around generating earnings will drive sellers to become more reasonable on pricing and we'll probably start to see some deals, you know, come to market. It's just going to take time just like anything we're seeing sort of the market, bit-ass spread, you know, has to...

We will probably start to see some deals.

The market is just going to take time, just like anything we're seeing sort of the market bid ask spread has to come together I think it will take sort of maturing of this period to get there, but as that happens I think obviously seller prices come down that allows deals to happen.

Speaker 2: come together, I think it'll take sort of maturing of this period to get there. But is that happens? I think, you know, obviously seller prices come down that allows deals to happen. And, you know, that sellers will get liquidity in their investments. But it'll take a little time. I also think, you know, the industry, obviously we've seen.

Chuck Shaffer: So that's kind of the right way to think about it. Got it. And is there, you know, do we think about just like a four year duration kind of evenly on the fixed rate loan book, or are there any lumpiness to the, you know, kind of turnover at that portfolio over the next 12 months at all that we should know. When you think about it cumulatively for maturities and amortization, you know, we don't do a lot of interest only lending, so we have a good bit of principal amortization that comes off of that as well.

Sellers will get liquidity in their investments, but it'll take a little time I also think you know the industry, obviously, we've seen.

Speaker 8: marching compression across the entire banking industry. And the best way to solve a lot of the earnings challenges is consolidating expense basis. And so I think all the natural drivers to drive the industry there will be there. It's just when and what time does that actually happen.

Margin compression across the entire.

Banking industry and the best way to solve a lot of the earnings challenges is consolidating expense basis, and so I think that I think all the natural drivers to drive the industry. There will be there, it's just when and what time does that actually happen.

Chuck Shaffer: So when you take all that together, it's actually, you know, it's pretty smooth. And then Chuck, I like the name comment. I mean, the M and A commentary for 24. I hope you're, I hope you're right. I'm curious what that looks like in your mind. I know it's hard to say, hard to know what opportunities might present themselves, but it would you expect to look at larger banks at this point in time, or would you continue to take advantage of some of the maybe 500 million, a million and a half kind of banks that you guys have kind of feasted on the past few years.

Yes, it makes a lot of sense, Okay, and then just last thing for me.

Speaker 6: Yeah, makes a lot of sense. Okay, and then just last thing for me, um, any thoughts around like any sort of securities restructuring or would there be, and is that something you guys would consider at this point in time?

Any thoughts around like any source securities restructuring or would there be I mean is that something you guys would consider at this point in time.

Steve I'd, just say consistent commentary there we continue to evaluate and if the earn back on that is strong relative to our other capital deployment opportunities then that would be something we would look to engage and I think to date, where it has been enacted by some other.

Speaker 7: I'd just say, you know, consistent commentary there. We continue to evaluate and if the, you know, earn back on that is strong relative to our other capital deployment opportunities, then that would be something we would look to engage in. I think, you know, to date, you know, where it has been enacted by some other banks, you know, I think it's just, you know.

Banks I think it's just.

Speaker 7: It's a little too much of a yield curve bet that was made to shorten up on their securities book, sell long and reinvest short. We want to lock out the earn back if we make a move like that, so we're certain of the earn back execution and timeline of the ROI that we would get.

It's a little too much of a yield curve bet that was made right to shorten up on their securities book, So long and reinvest short and we don't want to lock out kind of the earn back if we make a move like that so we're certain of the earn back execution and timeline of the ROI that we would get.

Chuck Shaffer: Yeah, I mean, I talk kind of high level, but, you know, we continue to be very focused on the same strategy we've executed before, you know, we're focused on Florida only, we're focused on smaller transactions in Florida, that's primarily what the opportunity is, you know, 500 million to a banish type banks is what's available to us in the state. We'll continue to focus there, you know, M and A tough right now, the, you know, the math is challenging.

Speaker 6: Yep, next last sentence. Okay, appreciate all the color. Have a great day. Thanks Steve.

Yes makes a lot of sense. Okay. Appreciate all the color.

Have a great day thanks.

Thanks, Steve.

Our next question comes from the line of Brady Gailey. Please proceed with your question.

Speaker 4: Our next question comes from the line of Brady Gailey. Please proceed with your question.

Hey, Thanks, good morning, guys.

Chuck Shaffer: You know, we don't have much of an appetite for dilution right now. And so it's difficult to get a deal done in the current environment, but I think on the back half of next year is, you know, we continue to see the the cycle, mature, the struggles around generating earnings will drive sellers to become more reasonable on pricing and will probably start to see some deals, you know, come to market. It's just going to take time, just like anything we're seeing in sort of the market, a bit as spread, you know, has to come together.

Great.

Speaker 6: So, you know, M&A is not a near-term opportunity. I know you guys have been, you know, pretty successful in hiring bankers to come join the Seacoast team. But, you know, at the same time, you just did a, you know, workforce reduction and the efficiency ratio is running a little higher than it normally is for you guys. So how do you think about, you know, hiring in this environment? Is that something that you'll continue to pursue or is that, you know, on pause at this point?

So M&A is not a near term opportunity I know you guys have been.

Pretty successful in hiring bankers to come join the seacoast team.

At the same time, you just did.

The workforce reduction and the efficiency ratio is running a little higher than.

Normally is for you guys. How do you think about hiring in this environment is that something that you will continue to pursue or is that on pause at this point.

Chuck Shaffer: I think it'll take sort of maturing of this period to get there, but is is that happens. I think, you know, obviously seller prices come down that allows deals to happen and, you know, that sellers will get liquidity in their investments, but it'll take a little time. I also think, you know, the industry obviously we've seen margin compression across the entire banking industry. And in the best way to solve a lot of the earnings challenges is consolidating, you know, expense basis. And so I think that, I think, you know, all the natural drivers to drive the industry there will be there. It's just winning what time does that actually happen. Yeah, makes a lot of sense.

Either way I think about Brady as.

Speaker 8: The way I think about it, Brady, is we're focused, like I mentioned in my prepared comments on two things, or kind of our two priority focuses. One is deposit growth. It's very important.

Our focus like I mentioned in my prepared comments on two things are kind of our two priority focuses one is deposit growth is very important.

Speaker 8: and two is expense management. You know, I think we still have opportunity on expenses here going into 2024. We're keenly focused on that inside the company right now.

And two is expense management I think we still have opportunity on expenses here going into 2024, we're keenly focused on that inside the company right now.

Speaker 8: You know, if we saw a team or a banker or a bank, a few bankers that, you know, we're, you know, be immediately creative. They have the ability to drive business to us that fit our culture and want to be a part of us. We certainly would look at those opportunities, but...

So if we saw it.

A team or a bank or a bank a few bankers.

Be immediately accretive they have the ability to drive business to us that fit our culture and want to be a part of US. We certainly would look at those opportunities, but I would describe it as being carefully optimistic are carefully opportunistic is the best way to describe it we're not going to aggressively go out and hire right now if we see somebody that's.

Speaker 8: I would describe it as being carefully optimistic, or carefully opportunistic, is the best way to describe it. You know, we're not gonna.

Chuck Shaffer: Okay. And then just lasting for me, any thoughts around like any sort of security, restructuring, or would there be, is that something you guys would consider at this point in time. Steve, I'd just say, you know, consistent commentary there. We continue to evaluate. And if the, you know, earn back on that is strong relative to our other capital deployment opportunities. Then that would be something we would look to engage in. I think, you know, to date, you know, where it has been enacted by some other banks, you know, I think it's just, you know, it's a little too much of a yield curve vet that was made right to shorten up on their securities books.

Speaker 8: aggressively go out and hire right now. If we see somebody that's really a strong player and wants to join the franchise, we'll certainly look at that.

Really strong player in wants to join the franchise, we will certainly look at that but the expense management is a key focus of ours and we will then really will be going into 2024.

Speaker 8: But expense management is a key focus of ours and really will be going into 2024.

Okay.

Speaker 9: And by expense management, you know, I know you closed the location and did the reduction. I mean, is that still on the table going forward or do you think, you know, you're kind of done as far as announcing, you know, cost reduction plans?

Our expense management I know you closed the location and the <unk>.

Reduction I mean is that still on the table going forward or do you think youre kind of done as far as a balancing cost reduction plans.

Speaker 8: I think there's more work for us to do. You don't want to get into sort of specifics on that because we need to work through that, but I think we still got some up.

I think theres more work for us to do and they don't want to get into sort of specifics on that because we need to work through that but I think we still got some opportunity.

Chuck Shaffer: So long in reinvest short, and we don't, you know, we want to lock out kind of the earn back if we make a move like that. So we're certain of the earn back execution and timeline of the ROI that we would get. [inaudible] . .

Unknown Executive: Thank you, Brady.

Speaker 9: All right. And then, you know, I liked hearing the comment about the market share that Seacrest has now improving to number 15. You want to get into the top 10. Any idea or do you have a goal of when you'd like to get into the top 10? Is that a couple of years away? I'm just curious how you think about the possible timing there.

Okay, Alright, and then I like to hear the comment about the <unk>.

Market share that Chico's has now improving the number 50 and you want to get into the top 10 any idea or do you have a goal of when you'd like to get into the top tier is that a couple of years away I'm just curious how you're thinking about the possible timing there.

Speaker 8: I think about it this way. We want to be an upper quartile performer. We want to deliver strong shareholder returns, and that's our priority. Growing market share is part of that, but, you know, priority one is delivering returns. Priority two is growing market share. And so if we see opportunities, we'll take them. There's no sort of timeline to that. It's more balancing and appropriate investment to return to expense management as we move through time. But no timeline, just more importantly, delivering good returns to our shareholders. For more information visit www.FEMA.gov

I think about it this way we want to be an upper quartile performer, we wanted to deliver strong shareholder returns and that's our priority.

Growing market share as part of that but.

Priority one is delivering returns priority two is growing market share and so if we see opportunities, we'll take them theres no sort of timeline to that it's more balancing inappropriate investment to return to expense management as we move through time, but no timeline just more importantly, delivering good returns to our shareholders.

Speaker 8: And Brady, I'd just add on the heels of that, you know, not all deposit market share is the same, right? We don't have, you know, deposit verticals and things like that that we're driving after. Ours are true, you know, generally customer funds. So it's not, you know, just some corporate deposits that are placed somewhere. Yep. We're after generating franchise value. Yeah.

Brady I would just add on the heels of that not all deposit market share is the same rate, we don't have deposit verticals and things like that that we're driving after ours are true generally customer funds. So it's not just some corporate deposits that are placed somewhere.

After generating franchise value.

Yes that makes sense, thanks for the color guys.

Thanks, Brian.

Our next question comes from the line of Russell Gunther. Please proceed with your question.

Speaker 4: Our next question comes from the line of Russell Gunther. Please proceed with your question.

Hey, good morning, guys.

Just wanted to Russell just one follow up quickly.

Speaker 10: I just wanted to follow up on the loan growth conversation, I appreciate all the color on how you're thinking about things.

Yeah.

Just a follow up on the loan growth conversation appreciate all the color on how youre thinking about things.

Just one.

Speaker 10: from a growth volume perspective, modest growth in 24. You guys think about that as a low single-digit number, a mid-single-digit number, and then wherever volume shakes out, just maybe the mix you're contemplating.

From a growth volume perspective modest growth in 'twenty for you guys think about that as a low single digit number mid single digit number and then wherever volume shakes out just maybe the mix youre contemplating.

Speaker 7: Yeah, you know, I think, listen, Russell, I would gauge that based on kind of the economic backdrop that we find ourselves in 2024. I think we've been pretty conservative, right, about what we thought that might look like in particular in the first half of the year.

Yes, I think listen Russell.

Age that based on kind of the economic backdrop that we find ourselves in 2024, I think we've been pretty conservative right about what we thought that might look like in particular in the first half of the year.

Speaker 7: Obviously with a very strong GDP print here recently, maybe it's a little bit better, but not sure on sort of the macroeconomic forces. We are seeing, as Chuck mentioned earlier, kind of competitors pull back and retrench a bit, and so that does present an opportunity potentially to pick up market share. But all that together, I think we see good production. And I think we'll start to see the kind of balances grows. We move into 2024, but hard to put a fine point on it, depending on what the macroeconomic environment is.

Obviously with a very strong GDP print here recently, maybe it's a little bit better, but not sure on sort of the macroeconomic forces. We are seeing as Chuck mentioned earlier kind of competitors pull back and retrench, a bit and so that does present, an opportunity potentially to pick up market share, but all of that together I think we see good production.

And I think we'll start to see that kind of balances grow as we move into 2024, but hard to put a fine point on it depending on kind of what the macroeconomic environment is that we're in.

Speaker 8: Yeah. Okay. Great. What we won't do is just chase. We won't chase long growth, chase long growth. We're gonna take opportunities where we see good returns and I probably keeps us in the low single digits, but we'll see how things play out.

Okay, Great well, we will do is just chase, we won't chase loan growth to chase loan growth, we're going to take opportunities, where we see good returns and I probably keeps us in the low single digits, but we will see how things play out.

Okay.

Speaker 10: I appreciate it guys. And then I think just broad strokes of comments discuss expectations for continued deposit growth alongside that loan growth. So is the 80% loan to deposit ratio a target we should think about going forward or could that drift higher? How do you think about managing?

Appreciate it guys and then I think just broad strokes comments discussed expectations for continued deposit growth alongside that loan growth. So is the 80% loan to deposit ratio target, we should think about going forward or could that drift higher how do you. How do you think about managing that.

I think.

Speaker 8: I think we'd be comfortable going up to about 90%. That's about where our guardrail is. I think over time, it drifts that way, but it takes a fair amount of time to get there, so there's plenty of room to manage that ratio. But importantly, as the Fed continues to shrink the balance sheet and the deposit market remains competitive, growing deposits is very much a key focus of ours. And ideally, we'd grow deposits and keep the liquidity on the balance sheet as we move through time, but we'd be comfortable up to about 90% in the long run.

We'd be comfortable going up to about 90% that's about where our guardrail is I think over time. It drifts are that way, but it takes a fair amount of time to get there. So there's plenty of room to manage that ratio.

But importantly, as the fed continues to shrink the balance sheet in the deposit market remains competitive growing deposits is a very much a key focus of ours.

Russell Gunther: Our next question comes in line of Russell Gunther. Please proceed with your question. Hey, good morning, guys. Just want to follow up quickly. Hey, check, good morning. Follow up on the loan growth conversation, appreciate all the color on how you're thinking about things. Just one from a growth volume perspective, modest growth in 24. You guys think about that as a low single digit number, a mid single digit number, and then wherever volume shakes out just maybe the mix you're contemplating.

Ali we grow deposits and keep the liquidity on the balance sheet as we move through time, but we'd be comfortable up to about 90 in the long run.

Speaker 7: And the rest of the pace, the pacing on that, you know, just keep in mind as we said before, the cash flow off securities vote is about 330 million or so, you know, every 12 months. So that kind of limits some of our, you know, remixing, we would probably remix right out of securities and then to loans every time, but you probably pick up, you know, a couple points, you know, maybe two points or so on the loan deposit ratio a year at that pace, assuming we don't do something more meaningful, you know, in terms of a restructure or something if that became, you know, the track.

The royalty the.

Paced the pacing on that just keep in mind as we said before the cash flow off the securities book is about $330 million or so every 12 months, so that kind of limit some of our remixing, we would probably remix right out of securities and into loans over time, but you probably pick up a couple points, maybe two points or so on the loan to deposit.

Ratio a year at that pace, assuming we don't do something more meaningful in terms of a restructure or something if that became attractive at some point.

Russell Gunther: Yeah, I think with Russell, I would gauge that based on kind of the economic backdrop that we find ourselves in 2024. I think we've been pretty conservative about what we thought that might look like in particular in the first half of the year. Obviously with a very strong GDP print here recently, maybe it's a little bit better, but not sure on sort of the macroeconomic forces. We are seeing, as Chuck mentioned earlier, kind of competitors pull back and retrench a bit.

Speaker 10: That's very helpful guys. Thank you both. I'm the fee guide, so I think a little bit of a step up in 4Q. If you could just discuss the drivers there. And then I know we have the full year of Durban to contend with as we think about 24. So you expect to be able to run flat, or maybe a little bit of fee income growth, just broad strokes. Outlook would be helpful.

That's very helpful guys. Thank you both.

On the fee guide, so I think a little bit of a step up in <unk>. If you could just discuss the drivers there and then.

I know we have the full year of Durbin to contend with as we think about 'twenty four so.

To be able to run flat or maybe a little bit of fee income growth just broad strokes outlook would be helpful.

Russell Gunther: And so that does present an opportunity potentially to pick up market share, but all that together, I think we see good production. And I think we'll start to see the kind of balances grow as we move into 2024, but hard to put a fine point on it, depending on kind of what the macroeconomic environment is that we're in. Yeah, we won't do is just we won't chase long growth chase long growth.

Speaker 3: Yeah, this is Tracy. You know, in the third quarter we had expected a little bit, maybe better volumes in mortgage and SBA to some extent. So those were both a little slower than expected.

Yeah. This is Tracy in the third quarter, we had expected a little bit maybe better volumes in mortgage and SBA to some extent those were both a little slower than expected.

Speaker 3: in part because of some closings that pushed into October . So that'll be an area that comes in a little higher in the fourth quarter. I think generally deposit-related charges will continue to benefit from the increased size and breadth of the organization and some good momentum in deposit relationships as Chuck has described.

In part because of some closings that pushed into October so that'll be an area that comes in a little higher in the fourth quarter I think generally deposit related charges will continue to benefit from the increased size and breadth of the organization and some good momentum in deposit relationships as well.

Russell Gunther: We're going to take opportunities where we see good returns and you know, I probably keep us in the low single digits, but we'll see how things play out. Okay, I appreciate it guys. And then I think just broad strokes of comments discuss expectations for continued deposit growth alongside that loan growth. So is the 80% loan to deposit ratio a target we should think about going forward or could that drift tire? How do you think about managing that?

As described wealth management somewhat driven by the market conditions on interchange I think you've seen the readjustment that will see so.

Speaker 3: You know, wealth management, somewhat driven by the market conditions. On interchange, I think you've seen the adjustments that we'll see. So I expect that to remain pretty stable through the fourth quarter.

I expect that to remain pretty stable through the fourth quarter.

Okay great.

Russell Gunther: I think, you know, we'd be comfortable going up to about 90%. That's about where our guard rail is. I think over time it drifts that way, but it takes a fair amount of time to get there. So there's plenty of room to manage that ratio. But importantly, you know, it's a bed continues to shrink the balance sheet and the deposit market remains competitive. You know, growing deposits is a very much to keep focus of ours.

And then last one for me just an update on your shared national credit exposure, which I think is tight.

Speaker 10: One update on your shared national credit exposure, which I think is tiny and may be all acquired. But just...

Tiny and maybe all acquired but just.

Correct me, if I'm wrong in your general thoughts on the asset class.

Almost none the.

Speaker 8: Almost none. Less than 1,5% of the portfolios in sheer national credits, they're all acquired. We've never actually acquired our originated one here at TCOs, so it's very, very small.

Less than 5% of the portfolios in shared national credits Theyre, all acquired we've never actually.

Russell Gunther: And you know, ideally, we've grown deposits and keep the liquidity on the balance sheet as we move through time, but we'd be comfortable up to about 90 in the long room. And the rest of the pace, the pacing on that, you know, just keep in mind as we said before, the cash flow of securities vote is about 330 million or so, you know, every 12 months. So that kind of limits some of our, you know, remixing we would probably remix right out of securities and then the loans every time.

Acquired loans are originated one here at seacoast date, so it's very very small.

Okay.

We really have okay. Thanks, Jeff.

Speaker 8: We really have no bottom, you know, participation are very little bottom participation. Same thing, they've only come in through acquired acquisitions. So, you know, we've never relied on SNICs or participation to support our long growth, everything we've done and originated as Seacos has been, you know, driven organically after our banking team. I understand. because I believe they have their identity because of these individual money and who are a very low price.

No bought participations or very little Bob participation same thing they've only come in through acquired Act.

The acquisition. So we've never relied on snakes are participations to support our loan growth everything we've done in originated at seacoast has been driven organically through our banking team.

Russell Gunther: But you probably got, you know, a couple points, you know, maybe two points or so on the loan to deposit ratio a year at that pace, assuming we don't do something more meaningful, you know, in terms of a restructure or something, if that became, you know, attractive at some point.

Understood. Okay, guys. Thank you very much that's it for me.

Thank you Russell.

Speaker 11: Our next question comes in line of David Bishop. Please proceed with your question. Hey, good morning guys.

Our next question comes from the line of David Bishop. Please proceed with your question.

Tracey Dexter: That's very helpful, guys. Thank you both. On the fee guide, so I think a little bit of a step up in 4Q, if you could just discuss the drivers there. And then I know we have the full year of Durban to contend with as we think about 24. So you expect to be able to run flat or, you know, maybe a little bit of fee income growth, just broad strokes. Outlook would be helpful.

Hey, good morning, guys.

Good morning.

Speaker 8: Chuck or Mike, or Tracy, quick question. It sounded like you noted that payoffs were a little bit elevated this quarter versus last that may have restrained loan growth. Just curious if you had that number versus last quarter. And then maybe, Michael, in terms of the maturity schedule, you know, next year, fourth quarter, just curious maybe what the roll-off yields are looking like versus the add-on yields. It sounds like add-on yields are close to 8%, if I heard right, maybe just some color on those topics.

Chuck or Mike quick for Tracy quick question it sounded like it.

Did that.

Pay offs.

We're a little bit elevated this quarter versus last that may have restrained loan growth. Just curious if you have that number versus last quarter and then maybe Michael in terms of the maturity schedule.

Tracey Dexter: Yeah, this is Tracey. You know, in the third quarter, we had expected a little bit, maybe better volumes in mortgage and SBA to some extent. So those were both a little slower than expected in part because of some closings that pushed into October. So that'll be an area that comes in a little higher in the fourth quarter. I think generally deposit-related charges will continue to benefit from the increased size and breadth of the organization and some good momentum in deposits.

Next year in fourth quarter, just curious maybe what what the roll off yields are looking like versus the add on yields it sounds like add on yields or close to 8%. If I heard right, maybe just some color on those topics.

Speaker 7: Yeah, sure. So the payoffs this quarter were about $270 million, which is a little higher than what we had been seeing, and that was at a little higher yield, though, 6.3% roughly. So, you know, seeing some of the variable, you know, higher rate loans pay down as people just, you know, decide to kind of pay down those lines once you get to certain high levels of absolute rates.

Yes, sure. So the payoffs this quarter were about $270 million.

Which is a little higher than what we had been seeing and that was at a little higher yield those six 3% roughly so seeing some of the variable higher rate loans pay down as people just.

Tracey Dexter: All that relationships as Chuck has described, wealth management, somewhat driven by the market conditions. On interchange, I think you've seen the adjustments that we'll see. So I expect that to remain pretty stable through the fourth quarter.

Decided to kind of pay down those lines once you get a certain high levels of absolute rates. The new origination yields were upper 70 or upper sevens for sure seven 8% roughly in the quarter and then as we look forward into Q4 and.

Speaker 7: The new origination yields were upper 70 or upper sevens for sure, 7.8% roughly in the quarter. And then as we look forward into Q4 and next year, you know, we're seeing, you know, kind of fixed rate book paying off and paying down in the mid-fours to, you know, maybe high-fours. So, definitely a positive trend as, you know, we see that, you know, new originations replacing kind of runoff of back book and refinancing of back book. So...

Next year, we're seeing kind of fixed rate book paying off and paying down in the mid fours.

David Feaster: Okay, great. And then last one for me, just an update on your shared national credit exposure, which I think is timing and maybe all acquired, but just correct me if I'm wrong in your general thoughts on the asset class. Almost none. Less than half percent of the portfolio is in shared national credits. They're all acquired. We've never actually acquired or originated one here at TCO State. So it's very, very small. [inaudible] Next year, and fourth quarter, just here is maybe what the rolloff yields are looking like versus the add-on yields Sounds like add-on yields are close to 8% if I heard right maybe just some color on those topics Yeah, sure, so the payoffs this quarter were about 270 million Which is a little higher than what we had been seeing and that was a little higher yield those 6.3% roughly So you know seeing some of the variable, you know higher rate loans pay down as people just You know decide to kind of pay down those lines once you get to certain high levels of absolute rates The new origination yields were up or 70 or upper sevens for sure 7.8% roughly in the quarter And then as we look forward into q4 And next year, you know, we're seeing, you know, kind of fixed rate book paying off and paying down in the mid-4s to, you know, maybe high-4s So definitely a positive trend is, you know, we see that, you know, new originations are placing kind of runoff of Backbook and refinancing a backbook so I got it.

Maybe high fours, so definitely a positive trend as we see that new originations, replacing kind of run off of back book and refinancing of back book So.

Got it and then.

Speaker 8: Got it. And then, did I hear that the deposit inflows this quarter came in somewhere around, was it 250 replacing the brokers at 5%? I wasn't sure if I got those numbers right earlier in the call.

Did I hear that the deposit inflows this quarter came in somewhere around the $2 50, replacing the brokers.

5% of its insured.

Got those numbers right earlier in the call.

Speaker 10: It's a little higher than that on a blended basis, probably in the mid-3's, so replacing brokered at 5, that would have rolled up certainly in this environment probably up to the mid-5's, so that was a strong makeshift for us this quarter.

It was a little higher than that on a blended basis, probably in the mid threes, so replacing brokered five that would have rolled up certainly in this environment probably up to the mid fives. So.

A strong <unk>.

Mix shift for us this quarter.

And that did occur throughout the quarter. So we'll see some some impacts of that benefit in Q4, a little bit.

Speaker 8: And that did occur throughout the quarter, so we'll see some impacts of that benefiting Q4 a little bit.

Got it.

Speaker 6: And then, Chuck, I'm sure a topic you'd love to talk about, you mentioned the IOTA impact, any chance, any lobbying efforts out there to get that overturned, any chance that that goes away here in the near term? You think that's that's pretty sticky here for the for the duration of the release date?

And then Chuck I'm sure a topic you'd love to talk about the you mentioned the Io to impact.

Any chance any lobbying efforts out there to get that overturned it any chance that that goes away here in the near term do you think that's pretty sticky here for the.

For the <unk> or at least the near term.

Speaker 8: I'll be careful with my comments here, but I would say the Florida banking industry is working really hard to get that issue to a better place, and I'll probably leave it at

I'll be careful with my comments here, but I would say the Florida banking industry is.

Working really hard to get that issue to a better place and I'll probably leave it at that.

Speaker 12: Fair enough, fair enough. And then maybe a question for the credit wise guys just to make sure they're still awake. Curious, we've heard a lot of other competitors that you talk about some issues in the senior care or the living industry. Just curious any exposure there and if so, what you're seeing in terms of your trends internal.

Fair enough fair enough.

And then maybe a question for the critical caused us to make sure there.

Still awake.

Just curious we've heard a lot of other competitors talked about some issues on the senior care assisted living industry, just curious any exposure there and if so what youre seeing in terms of your trends internal.

Speaker 12: David, you want to take that one, or James? Well, I would say first and foremost, we are aware of the issues in the industry. We've had conversations with peers about it. The good news is that seacoast exposure is minimal. I mean, I think we might have one or two small facilities, but it's not even on my radar. Yeah, we've never been in the space, never really liked the space for a lot of reasons, and it's just not something we've done much of.

David you want to take that one.

James well I would I would say first and foremost we are aware of the issues in the industry. We've had conversations with peers about it. The good news is at seacoast exposure is minimal.

Might have one or two small facilities, but it's not even on my radar, we'd never we never been in this space never really like the space for a lot of reasons and just not something we've done much of.

Perfect I appreciate the color.

Okay.

Speaker 4: As a reminder to register for a question, press the 1-4.

As a reminder to register for a question press the one four.

Speaker 4: Our next question comes from the line of Brandon King. Please proceed with your question.

Our next question comes from the line of Brandon King. Please proceed with your question.

Hey, good morning.

Good morning, Brian.

Speaker 13: So with rates, potentially picking here, just want to get updated thoughts on how you, how you expect them to manage the balance sheet as its sensitivity going forward. If you're debating any sort of strategy, is it kind of like, just the extend duration from here?

David Feaster: And then did I hear that the deposit inflows his quarter came in somewhere around both the 250 replacing the brokers at 5% I wasn't sure what effect that those numbers write earlier in the call. It's a little higher than that on a blended basis probably in the mid-3s. So replacing broker, you know, 5 that would have rolled up certainly in this environment probably up to the mid-5. So, you know, that was a strong, strong makeshift for us this quarter.

So with rates, particularly peaking here just wanted to get updated thoughts on how you are you expecting to manage the balance sheet.

Activity going forward.

If you are debating any sort of strategy to kind of maybe kind of.

Particularly extend duration from here.

Yes, it's a good question Brandon.

Speaker 8: Yeah, it's a it's a good question, Brandon, and it's, you know, we're we're a little bit liability sensitive today. We do, you know, kind of similarly expected that rates may may kind of stabilize here for for a period.

We're a little bit liability sensitive today.

We do kind of similarly expect that rates may maybe kind of stabilize here for a period.

David Feaster: And that did occur throughout the quarter. So we'll see some, you know, some impacts of that benefiting Q4 a little bit. Got it. And then Chuck, I'm sure a topic you'd love to talk about the, you mentioned the IOT impact. Any chance, any lobbying efforts out there to get that overturned, any chance that that goes way here in the near term, you think that's that's pretty sticky here for the, for the derailleur in the real estate media term.

Speaker 8: You know, I think, you know, in general, we will manage the kind of rate sensitivity appropriately, our best case would be a somewhat steepening of the old curve or just kind of a stabilization at current rates. So I think.

I think in general we will manage.

<unk> kind of rate sensitivity appropriately our best case would be somewhat steepening of the yield curve or just kind of a stabilization at current rates. So I think the way to think about it is that we'll probably try to manage the tail risk rate if rates were to move down or up significantly consistent with our conservative nature.

Speaker 8: The way to think about it is that we'll probably try to manage the tail risk, right? If rates were to move down or up significantly, consistent with our kind of conservative nature, that's really what we're focused on. And then just optimizing the profitability and performance of the balance sheet that we have today during the interim. So those are kind of the pieces I would call out. Okay.

Really what we're focused on and then just optimizing the profitability and performance of the balance sheet that we have today.

David Feaster: I'll be careful with my comments here, but I would say the Florida banking industry is working really hard to get that issue to a better place, and I'll probably leave it at that. Fair enough, fair enough. And then maybe a question for the criticalize guys just to make sure they're still awake. Here is, you know, we've heard a lot of other competitors talk about some issues in the senior care or the living industry.

During the interim so those are kind of the pieces I would call out.

Okay.

And on the broker deposits.

Speaker 13: What is the expectation for when those could be fully paid off? Are there any, you know, chunky maturities coming up over the next few quarters?

If we are fishing for when those can be fully paid off are there any chunky maturities coming up over the next few quarters.

Speaker 7: It's kind of blended over the next year. We've got a few more, you know, larger chunks, maybe over the next, you know, kind of four or five months, but it's kind of laddered out a little bit at this point. So we'll continue likely as we have success from our team reeling in deposits to, you know, continue to pay those off and pay those down with time.

It's.

It's kind of blended over the next year, we've got a few more larger chunks, maybe over the next kind of four or five months, but it's kind of ladder it out a little bit at this point. So we will continue likely as we have success from our from our team ruling in deposits.

David Feaster: Just curious, any exposure there? And if so, what you're seeing in terms of your trends internally? David, do you want to take that one? Eric James? Well, I would say first and foremost, we are aware of the issues in the industry. We've had conversations with peers about it. The good news is that Seaco's exposure is minimal. I mean, I think we might have one or two small facilities, but it's not even on my radar. Yeah. We've never, we've never been in the space, never really liked space for a lot of reasons, and just not something we've done much of.

David Feaster: Perfect. Appreciate the color.

You continue.

Continue to pay those off and pay those down with time.

Speaker 13: And then lastly, just thinking about balance sheet growth here, is the way to think about it, maybe it's kind of a static balance sheet, maybe until the second half of next year, once you're on goal from approved, do that, compare where to, thank you, bye.

Okay.

And then lastly, just thinking about balance sheet growth here is the way to think about it maybe kind of a static balance sheet maybe into the second half of next year. Once wound Goldman proves is that a fair way to think about it.

Speaker 8: I think dependent on our success with growth and kind of what the macro environment looks like. Those are two caveats, I guess, but the team's engaged and locked in and focused on growing core relationships. And as we do that, we'll continue to see balance sheet growth, as we mentioned earlier, some of the dynamics in the market improving.

I think dependent right on our success with growth and kind of what the macro environment looks like those are two caveats I guess, but we the team is engaged and locked in and focused on growing core relationships and as we do that well, we will continue to see balance sheet growth.

Unknown Executive: As a reminder to register for a question, press the one for.

Brandon King: Our next question comes to line over Brandon King. Please proceed with your question. Hey, good morning. Yeah, Brandon. Morning. So with rates, particularly peaking here, just want to get updated thoughts on how you, are you expecting to manage the balance sheet, access, sensitivity going forward. If you're debating any sort of strategies, it's kind of maybe kind of, particularly extend the ratio from here. Yeah, it's a good question, Brandon, and it's, you know, we're a little bit liatability sensitive today.

We mentioned earlier some of the dynamics in the market improving I think youre seeing some of that to accrue to our benefit we've been patient and now we're seeing good opportunities to be active in so that's kind of where we're at right now.

Speaker 8: I think you're seeing, you know, some of that accrue to our benefit, we've been patient and now we're seeing, you know, good opportunities to be active and so that's kind of where we're at right now.

Okay.

That's all for me thanks for taking my questions.

Thanks, Brian.

Brandon King: We do, you know, kind of similarly expect that the rates may, may kind of stabilize here for a period. You know, I think, you know, in general, we will manage the kind of rate sensitivity appropriately. Our best case would be a somewhat steepening of the old curve or just kind of a stabilization at current rates. So I think the way to think about it is that we'll probably try to manage the tail risk, right?

Speaker 4: Chuck Schaefer, there are no further questions at this time. I will turn the call back over to you. OK, thank you all for joining.

Chuck Shaffer there are no further questions at this time I will turn the call back over to you.

Okay. Thank you all for joining us this morning that will conclude our call.

Speaker 4: That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your line.

Brandon King: If rates were to move down or up significantly, consistent with our kind of conservative nature, that's really what we're focused on. And then just optimizing the profitability and performance of the balance sheet that we have today during the interim. So those are kind of the pieces I would call out, and on the broker deposit, what is the Feaster for a win? Those could be fully paid off. Are there any, you know, chunky maturities coming out over the next few quarters?

Okay.

[music].

Okay.

Okay.

[music].

Sure.

Brandon King: It's kind of blended over the next year. We've got a few more, you know, larger chunks maybe over the next, you know, kind of four or five months, but it's kind of laddered out a little bit at this point. So we'll continue like we as we have success from our, from our team, ruling into positives to, you know, continue to pay those off and pay those down the time.

[music].

Sure.

Michael Young: And then lastly, just thinking about balance sheet growth here is the way to about it, maybe it's kind of a static balance sheet, maybe until the second half of next year. Once you won't go from proves, you've got a fair way to. I think, you know, dependent right on on our success with growth and kind of what the macro environment looks like. Those are, you know, two, you know, caveats, I guess, but we, you know, the teams engaged and locked in and focused on growing core relationships.

Okay.

Sure.

Sure.

[music].

Michael Young: And as we do that, we'll, you know, we'll continue to see balance sheet growth. As we mentioned earlier, you know, some of the dynamics in the market improving, I think you're seeing, you know, some of that a crew to our benefit. We've been patient and now we're seeing, you know, good opportunities to be active. And so that's kind of where we're at right now. Okay. That's all for me. Take my questions.

Michael Young: Thanks, Brian. Chuck Schaefer, there are no further questions at this time. I will turn the call back over to you. Okay. Thank you all for joining us this morning. That will conclude our call. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Thank you.