Q2 2025 Seacoast Banking Corp of Florida Earnings Call
Unknown Executive: If you would like to withdraw your question, simply press star 1 again.
Unknown Executive: Before we begin, I have been asked to direct your attention to the statement at the end of the company's press release regarding forward-looking statements. 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.
Question during that time, please press star 1 on your telephone keypad. And if you would like to withdraw your question, simply press star 1. Again, before we begin, I have been asked to direct your attention to the statement. At the end of the company's press release. Regarding forward-looking statements secos will be discussing issues that constitute forward-looking statements within the meeting of the Securities and Exchange act and its comments today. Are intended to be covered within the meaning of the ACT.
Charles Shaffer: I will now turn the call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin. Okay, thank you, Angela, and good morning, everyone. As we proceed with our presentation, we'll refer to the second quarter earnings slide deck available at seacoastbanking.com.
Please note that this conference is being recorded, I will now turn the call over to Chuck Schaefer chairman and CEO of seco's Bank, Mr. Schaefer, you may begin,
Okay, thank you. Angela and good morning everyone.
Charles Shaffer: Joining me today are Tracey Dexter, our Chief Financial Officer, Michael Young, our Treasurer, Head of Corporate Development and Investor Relations, and James Stallings, our Chief Credit Officer. The Seacoast team delivered exceptional results in the second quarter of 2025, reflecting the strength of our growing franchise, the discipline and focus of our team, and the momentum we continue to build across all of our markets. This quarter was highlighted by a substantial increase in net income, up 36% from the prior quarter, largely driven by a 10 basis point expansion in the net interest rate. And this was the result of robust loan growth and disciplined deposit cost management.
As we proceed with our presentation, we'll refer to the second quarter. Earnings slide deck available at Seco spanking.com
Speaker Change: joining me today are Tracy, Dexter our Chief Financial Officer, Michael Young, our Treasurer head of corporate development, investor relations, and James Stallings, our chief credit officer
The SOS team delivered exceptional results in the second quarter of 2025 reflecting the strength of our growing franchise, the discipline and focus of our team and the momentum we continue to build across all of our markets.
Charles Shaffer: We also delivered solid performance in non-interest income and continue to demonstrate effective expense control. Profitability improved across the board. We made meaningful progress in our strategic priorities. Annualized loan growth reached 6.4%, supported by a strong commercial pipeline, an outcome of a multi-year strategy to attract top talent from larger institutions. This talent continues to drive high-quality loan production and deepen customer relations. We also successfully closed the Heartland Bankshares transaction a few weeks ago and remain on track to close the Villages Bank Corporation acquisition in the fourth quarter. Both franchises bring high-quality deposit bases and complementary balance sheets.
This quarter was highlighted by a substantial increase in net income up, 36% from the prior quarter, largely driven by a 10 basis, point expansion in the net, interest margin. And this was the result of robust loan, growth and discipline deposit cost management.
Speaker Change: We also delivered solid performance and non-interest income, and continue to demonstrate effective expense control.
Speaker Change: Profitability improved across the board.
Speaker Change: We made meaningful progress in our strategic priorities, annualized loan growth, reached 6.4% supported by a strong commercial Pipeline and outcome of a multi-year strategy to attract, top talent. From larger institutions. This Talent continues to drive high-quality Loan, Production, and deepen customer relationships.
We also successfully closed the Heartland Bank shares transaction, a few weeks ago and remain on track to close the villages Bank Corporation acquisition and the fourth quarter.
Charles Shaffer: Once fully integrated, we expect these transactions to significantly enhance Seacoast's profitability profile. And turning to credit, asset quality remained sound, non-performing loans declined to 0.61% of total loans, and net charge-offs were just $2.5 million, reflecting our continued focus on discipline, underwriting, and proactive risk management. Criticized and classified loans remain stable.
Speaker Change: Both franchises bring high-quality deposit bases and complimentary balance sheets.
And once fully integrated, we expect these transactions to the significantly, enhanced Sea Coast profitability profile.
Speaker Change: And turning the credit asset quality remains sound non-performing, loans declined to 0.61% of total loans, and net charge offs were just 2.5 million reflecting. Our continued focus on discipline underwriting and proactive risk management.
Charles Shaffer: And in closing, I want to express my sincere appreciation to our dedicated associates for the commitment to advancing our growth and profitability goals. Their focus and execution continue to drive our success. We remain very confident in our strategic direction, and we're enthusiastic about the opportunity to lie ahead.
Speaker Change: Criticizing classified. Loans remain stable.
Speaker Change: And in closing, I want to express my sincere appreciation to our dedicated Associates for the commitment, to advancing our growth and profitability goals their focus and execution continue to drive our success.
Tracey Dexter: With that, I'll turn it over to Tracey to walk through our financial results. Tracey? Thank you, Chuck. Good morning, everyone. Directing your attention to second quarter results, beginning with slide four. The Seacoast team delivered a strong quarter with net income of $42.7 million or $0.50 per share, increasing 36% from the prior quarter, and adjusted net income, which excludes merger-related charges, increasing 39% sequentially to $44.5 million or $0.52 per share. Profitability metrics are all improved and include a return on assets of 1.08%, return on tangible common equity of 12.8%, and an improvement in the efficiency ratio, which excluding merger-related charges, was 55%.
Speaker Change: We remain very confident in our strategic Direction and we're enthusiastic about the opportunity, to lie ahead. And with that, I'll turn it over to Tracy to walk through our financial results Tracy.
Tracy: Thank you, Chuck. Good morning, everyone.
Directing your attention to second quarter results, beginning with slide 4.
Tracy: The C code. Team delivered a strong quarter with net, income of 42.7 million, or 50 cents per share. Increasing 36% from the prior quarter and adjusted net income, which excludes merger related, charges increasing. 39% sequentially to 44.5 million or 52 cents per share.
Tracey Dexter: Loan production was solid, with growth in balances over 6% on an annualized basis. Net interest income was $126.9 million, an increase of 7% from the prior quarter, and net interest margin expanded 10 basis points to 3.58%. Excluding accretion on acquired loans, net interest margin expanded 5 basis points to 3.29%. Contributing to the NIM improvement is a decline in deposit costs from 1.93% in the prior quarter to 1.8% in the second quarter, reflecting our continued focus on relationship-based funding and disciplined pricing. Tangible book value per share of $17.19 represents a 12% year-over-year increase. Our capital position continues to be very strong.
Tracy: Profitability metrics are all improved and include a return on assets. Of 1.08%. Return on tangible, common Equity of 12.8% and an improvement in the efficiency ratio, which excluding merger related charges with 55%.
Loan, Production with solid with growth and balances over 6% on an annualized basis.
Net interest income was 126.9 Million. An increase of 7% from the prior quarter and net interest margin expanded 10 basis points to 3.58%.
Tracy: Excluding accretion on acquired loans net interest margin expanded 5 basis points to 3.29%.
Contributing to the Nim Improvement is a decline in deposit costs from 1.93% in the prior quarter to 1.8% in the second quarter reflecting our continued focus on relationship based funding and discipline pricing.
Tracy: Tangible book value per share of 17.19 represents a 12% year-over-year, increase.
Tracey Dexter: Seacoast tier one capital ratio is 14.6% and the ratio of tangible common equity to tangible assets is 9.75. We completed our acquisition of Heartland Bank shares on July 11th, adding four branches and approximately $777 million in assets. We announced our proposed acquisition of Villages Bank Corporation, which will add a significant additional presence in Central Florida and approximately $4.1 billion in assets.
Our Capital position continues to be very strong. Seos. Tier 1, Capital ratio is 14.6% and the ratio of tangible common Equity to tangible assets is 9.75%. We completed our acquisition of Heartland Bank. Shares on July 11th, adding 4 branches and approximately 777 million in assets.
Tracey Dexter: That acquisition is expected to close in late October 2025. Turning to slide five. Net interest income increased by $8.4 million during the quarter, driven by loan growth and by lower deposit costs. The net interest margin expanded 10 basis points to 3.58%, and excluding accretion on acquired loans expanded 5 basis points to 3.29%. In the securities portfolio, yields decreased one basis point to 3.87%. Loan yields expanded 8 basis points to 5.98%. Excluding accretion, loan yields were flat compared to the prior quarter. Through proactive deposit cost management, we've brought the cost of deposits down by 13 basis points during the quarter to 1.8%.
Tracy: We announced our proposed acquisition of villages Bank Corporation, which will add a significant additional presence in Central Florida and approximately 4.1 billion in assets.
Tracy: That acquisition is expected to close in late, October 2025.
Tracy: Turning to slide 5.
not interest income increased by 8.4 million during the quarter driven by loan growth and by lower deposit costs,
the net interest margin expanded 10 basis points to 3.58% and excluding accretion on acquired loans expanded 5 basis points to 3.29%
In the Securities portfolio, yields decreased 1 basis. Point to 3.87%.
Tracy: Loan, yields expanded 8 basis points? To 5.98% excluding accretion loan. Yields were flat compared to the prior quarter.
Through proactive deposit cost management. We've brought the cost of deposits down by 13 basis points during the quarter to 1.8%
Tracey Dexter: With strong momentum in loan growth, deposit costs now lower and stabilizing, additional liquidity and accretive acquisitions, we expect net interest income to continue to grow through the remainder of the year. Additionally, we continue to expect to exit the year with the core net interest margin of approximately 3.35%, inclusive of one expected rate cut in September and one in December, and with the two acquisitions, that could add approximately 10 basis points to that figure.
with strong momentum in loan growth deposit costs. Now lower and stabilizing additional liquidity and accretive Acquisitions. We expect net interest income to continue to grow through the remainder of the year.
Tracy: Additionally, we continue to expect to exit the year with the core net interest margin of approximately 3.35%, inclusive of 1, expected rate, cut in September and 1 in December.
Tracy: And with the 2 acquisition, that could add approximately 10 basis points to that figure.
Tracey Dexter: Moving to slide six. Non-interest income excluding securities activity was $24.5 million, increasing 10% from the second quarter of 2024. Fee revenue continues to benefit from our expansion of treasury management services to commercial customers. Our wealth and insurance businesses provide consistent, strong results. Salable mortgages originated during the quarter generated gains of $0.7 million. Boatley income increased to $3.4 million in the second quarter and included a $0.9 million benefit. Other income totaled $7.5 million and included a $3 million payroll tax credit received during the quarter, claimed by a bank that we previously acquired.
Moving to slide 6.
Tracy: Non-interest income excluding Securities activity with 24.5 million increasing 10% from the second quarter of 2024.
Tracy: Fee Revenue continues to benefit from our expansion of Treasury Management Services to commercial customers.
Tracy: Our wealth and insurance businesses provide consistent strong results.
Tracy: Sailable mortgages originated during the quarter generated gains of 0.7 million.
Tracy: Bully income increased to 3.4 million in the second quarter and included a 0.9 million benefit.
Tracy: Other income totaled, 7.5 million, and included a 3 million. Payroll tax credit received during the quarter claimed by a bank that we previously acquired,
Tracey Dexter: Looking ahead to the third quarter, we expect non-interest income in a range from $20 million to $22 million.
Tracy: Looking ahead to the third quarter, we expect non-interest income in a range from 20 million to 22 million.
Tracey Dexter: Moving to slide 7. Our wealth division continued its strong growth, adding $215 million in new assets under management so far this year, with total AUM increasing 16% compared to this time last year. Moving to slide 8, non-interest expense in the second quarter was $91.7 million, an increase of $1.1 million. The current quarter includes $2.4 million in merger-related expense. Higher salaries and wages reflect annual merit increases and performance-driven incentives. Other categories of expenses are in line with our expectations and reflect our continued focus on profitability and performance. Our adjusted efficiency ratio improved to 55.4%, down from 59.5% in the first quarter, demonstrating continued operating leverage.
Tracy: Moving to slide 7.
Our wealth division continued, its strong growth, adding 215 million in new assets under management. So far this year with total AUM increasing 16% compared to this time last year.
Tracy: moving to slide 8, non-interest expense in the second quarter was 91.7 million, an increase of 1.1 million,
The current quarter includes 2.4 million in merger related expenses.
Higher salaries and wages, reflect annual Merit, increases and performance-driven incentives.
Tracy: Other categories of expenses are in line with our expectations and reflect. Our continued, focus on profitability and performance.
Tracey Dexter: We continue with that focus, and with the addition of the Heartland franchise, we expect adjusted expenses for the third quarter, which excludes direct merger-related costs, to be in a range of $92 to $94 million.
Tracy: our adjusted efficiency ratio improved to 55.4% down from 59.5% in the first quarter demonstrating continued, operating Leverage
Tracy: We can continue with that focus. And with the addition of the Heartland franchise, we expect adjusted expenses for the third quarter, which excludes direct merger related costs to be in a range of 92 to 94 million.
Tracey Dexter: Turning to slide nine. Loan outstandings increased at an annualized 6.4% with production of $854 million in the second quarter. Pipelines remain strong at 921 million and we continue to see strong demand across our market. Loan yields expanded 8 basis points, with higher accretion on acquired loans, resulting from elevated payoffs. Looking forward, the pipeline is very strong and we expect continued mid to high single digit organic loan growth in the coming quarter and for the full year 2025, though the impact of tariffs may add some uncertainty.
Tracy: Turning to slide 9.
Tracy: Loan outstandings increased at an annualized 6.4% with production of 854 million in the second quarter.
Pipelines, remain strong at 921 million and we continue to see strong demand across our markets.
Loan, yields expanded 8 basis points with higher accretion on acquired loans resulting from elevated. Payoffs
Tracy: Looking forward the pipeline is very strong and we expect continued mid to high single-digit, organic loan growth in the coming quarter. And for the full year 2025 though, the impact of tariffs may add some uncertainty
Tracey Dexter: Turning to slide 10, portfolio diversification in terms of asset mix, industry, and loan type has been a critical element of the company's lending strategy. Exposure is broadly distributed and we continue to be vigilant in maintaining our disciplined conservative credit culture. Non-owner-occupied commercial real estate loans represent 34% of all loans and are distributed across industries and collateral types. As we have for many years, we consistently manage our portfolio to keep construction and land development loans and commercial real estate loans well below regulatory guidance. These measures are significantly below the peer group at 33% and 221% of consolidated risk-based capital respectively.
Tracy: Turning to the slide 10.
Tracy: Portfolio diversification, in terms of asset mix industry and Loan type has been a critical element of the company's lending strategy. Exposure is broadly distributed and we continue to be vigilant in our disciplined conservative credit culture.
Tracy: Non-owner occupied commercial real estate loans represent. 34% of all loans and are distributed across Industries and collateral types.
Tracy: As we have for many years, we consistently manage our portfolio to keep construction and Land, Development loans and commercial real estate loans. Well, below regulatory guidance.
Tracey Dexter: We've managed our loan portfolio with diverse distribution across categories and retaining granularity to manage risk.
Tracy: these measures are significantly below the peer group at 33% and 221% of Consolidated risk based Capital respectively,
Tracy: We've managed our loan portfolio with diverse distribution across categories and retaining granularity to manage risk.
Tracey Dexter: Moving on to credit topics on slide 11. The allowance for credit losses totaled $142.2 million, or 1.34% of total loans, with no change in allowance coverage compared to the prior quarter. Our allowance estimation process includes consideration of recent volatility in the markets and macroeconomic environment, and we continue to closely monitor the potential impact of economic and fiscal policy decisions on our borrowers. The allowance for credit losses, combined with the $108.5 million remaining unrecognized discount on acquired loans, totals $250.6 million, or 2.36% of total loans that's available to cover potential losses, providing substantial loss absorption capacity.
Tracy: Moving on to credit topics on slide 11.
Tracy: Our allowance estimation process, includes consideration of recent volatility in the markets and macroeconomic environment and we continue to closely monitor the potential impact of Economic and fiscal policy decisions. On our borrowers, the allowance for credit losses combined with the 108.5 million remaining unrecognized discount on acquired loans, totals 250.6 million or 2.36% of total loans, that's available to cover potential losses, providing substantial loss of absorption capacity.
Tracey Dexter: Moving to slide 12, looking at quarterly trends and credit metrics. Credit quality remains strong. We recorded net charge-offs of 2.5 million during the quarter, or nine basis points annualized. Non-performing loans declined by $6.8 million during the quarter and represent only 0.61% of total loans. and accruing past due loans moved lower to 0.13% of total loans. The level of criticized and classified loans declined slightly to 2.39% of total loans.
Tracy: Moving to slide 12 looking at quarterly Trends in credit metrics.
Tracy: Credit quality remains strong. We recorded net charge offs of 2.5 million during the quarter or 9 basis points. Annualized
non-performing loans declined by 6.8 million during the quarter and represent only 0.61% of total loans.
And accruing past due loans. Moved lower to 0.13% of total loans.
Tracy: The level of criticizing classified loans declined slightly to 2.39% of total loans.
Tracey Dexter: Moving to slide 13 in the investment securities portfolio. We leveraged wholesale funding to purchase securities in the first half of the year in advance of the Heartland acquisition, adding primarily agency securities to the portfolio with an average book yield near 5%. Interest rate swaps that had been beneficial to prior quarters matured in April, with the impact of the overall portfolio yield offset by the new purchase. Net unrealized losses in the AFS portfolio improved by $16 million during the quarter, driven by changes in long-term rates.
Moving to slide 13 and the investment Securities portfolio.
Tracy: We leveraged wholesale funding to purchase Securities. In the first half of the year in advance of the Heartland acquisition.
Tracy: Adding primarily agency, security to the portfolio with an average book yield near 5%.
Interest rate swaps that had been beneficial to Prior quarters matured in April with the impact to the overall portfolio, yield offset by the new purchases.
Tracy: Net, unrealized losses, in the AFS portfolio, improved by 16 million during the quarter driven by changes in long-term rates.
Tracey Dexter: Turning to slide 14 in the Deposit Portfolio. Total deposits dipped $77 million, reflecting, as expected, typical seasonal slowness and a strategic focus on exiting very high-rate deposit relationships. We took proactive steps to manage down the cost of deposits, which declined 13 basis points to 1.8. This funding will be replaced with lower-cost core franchise deposits from Heartland, improving our margin outlook. We continue to onboard new relationships and build market share with a focus on core deposits.
Tracy: Turning to slide 14 and the deposit portfolio.
Tracy: Total deposits dipped 777 million reflecting as expected, typical, seasonal, slowness, and a strategic focus on exiting very high rate deposit relationships.
We took proactive steps to manage down the cost of deposits which declined 13 basis points to 1.8%.
Tracy: this funding will be replaced with lower cost core franchise, deposits from Heartland, improving our margin Outlook,
Tracey Dexter: We expect low single-digit deposit growth, organic deposit growth, for the full year 2025.
Tracy: We continue to onboard new relationships and build market share with a focus on core deposits.
Tracy: we expect low single digit, deposit growth, organic deposit growth for the full year 2025
Tracey Dexter: On slide 15, Seacoast continues to benefit from a diverse deposit. Customer transaction accounts represent 47% of total deposits, which continues to highlight our longstanding relationship-focused approach. Our customers are highly engaged and have a long history with us, and low average balances reflect the granular, relationship nature of our franchise.
Tracy: on slide, 15 cico continues to benefit from a diverse deposit base
Customer transaction accounts represent 47% of total deposits, which continues to highlight our long-standing relationship focused approach.
Tracy: Our customers are highly engaged and have a long history with us and low. Average, balances reflect the granular relationship nature of our franchise,
Tracey Dexter: And finally, on slide 16, our capital position continues to be very strong and we're committed to maintaining our fortress balance. Tangible book value per share has grown to $17.19, and the ratio of tangible common equity to tangible assets is exceptionally strong at 9.8%. We saw meaningful improvements in return on equity measures, and our risk-based and Tier 1 capital ratios remain among the highest in the industry. As a reminder, we'll be putting some of this capital to work in the Heartland and Villages transactions which will materially improve our return on capital.
Tracy: And finally, on slide 16.
Our Capital position continues to be very strong and we're committed to maintaining our Fortress balance sheet.
Tracy: Tangible book value per share has grown to 17 dollars 19 cents.
And the ratio of tangible common Equity to tangible assets is exceptionally strong at 9.8%.
Tracy: We saw meaningful improvements in return on Equity measures, and our risc-based and Tier 1. Capital ratios remain among the highest in the industry.
Tracy: As a reminder, we'll be putting some of this Capital to work in the Heartland and Villages transactions, which will materially improve our return on Capital.
Tracey Dexter: In summary, results this quarter reflect the strength of our core franchise and disciplined execution across the organization. We remain confident in our ability to deliver strong, sustainable performance. Our balance sheet is well-positioned and our capital position is strong. We'll continue to execute on our organic growth and profitability goals as we integrate recent acquisitions and grow the franchise.
Tracy: In summary results, this quarter reflect the strength of our core franchise and disciplined execution across the organization. We remain confident in our ability to deliver strong sustainable performance.
Tracy: Our balance sheet is well positioned and our Capital position is strong.
Charles Shaffer: I'll now turn the call back to you, Chuck. All right. Thank you, Tracey.
Tracy: We'll continue to execute on our organic growth and profitability goals as we integrate recent acquisitions and grow the franchise.
Unknown Executive: And operator, we'll take some questions. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Tracy: I'll now turn the call back to you Chuck. All right, thank you, Tracy, and uh operator we'll uh take some questions.
Unknown Executive: If you are called upon to ask your question and are listening by a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
David Feaster: And your first question comes from the line of David Feaster with Raymond James. Your line is now open. Hey, good morning, everybody. Um, I want to start on the growth side, um, you know, really encouraged by the growth trends that you've been seeing over the past few quarters and the strength, the continued strength of the pipeline. I just wanted to get a sense, first off on the competitive landscape from your standpoint in Florida, and then some of the drivers behind this growth.
Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 and your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1. Again, if you are called upon to ask your question and are listening, well loud, speaker on your device, please pick up your handset and ensure that your phone is not on mute, and asking your question. And your first question comes from the line of David pester with reman James, your line is now open.
David Pester: Hey, good morning everybody.
David Pester: Good morning. David morning, Dave?
David Feaster: I mean, is the growth, like is it increased demand and activity from your clients as maybe things have settled down, or less maybe the worst case scenario with trade wars is kind of off the table, or is this the hires that you've made really just gain and share, and that's the biggest driver. Just kind of curious some of those dynamics. That's great. That's helpful.
David Pester: Activity from your clients, is, maybe things have settled down, uh, or less. Maybe the worst case scenario with trade Wars is kind of off the table, or is this the hires that you've made really just gain and share. And, and, uh, that's the biggest driver. Just kind of curious some of those Dynamics.
David Pester: Thanks, David, and I'll start with the drivers to growth and then come back around to the competitive landscape.
David Pester: You know, obviously we've had a very focused approach to
David Pester: Take advantage of the ability to recruit Bankers uh, across all of our markets. We've had significant success with that, over the last
2 or 3 years and it built, you know, as I've described in the past, what I think is a, you know,
David Pester: Exceptionally strong commercial and treasury management team across our organization. And that is, uh, that is driving growth as we continue to onboard clients from that recruiting effort, that's 1 driver. The second driver is economic conditions, remain really strong across the footprint. Uh, demand for credit remains strong, uh, the impact of terrorists tariffs. At this point has been fairly limited and, uh, really we've not, uh, seen any, um, sort of confidence weaken or or anything along those lines. Sort of the market remains, uh, still is, uh, focused, as it has been, uh, the pipeline, uh, going into the third quarter remains continues to be strong. And so, I, I feel confident in our ability to deliver that mid to high single-digit growth rate, at least over the next few quarters and into 2026. Um,
David Pester: Teams doing exceptionally well. And, uh, so I I feel very confident David on on our path forward there. And it is largely driven by Talent. It's also driven by demand in the marketplace and, uh, you know, kind of on the other side of the big beautiful bill. It seems like we've gotten past, uh, any lack of confidence in the forward Direction. And I think that's all supportive of growth as we move, move forward in the, in the coming quarters, and into the coming year. The competitive landscape, I would say continue to probably increase more competitive. We saw a particularly in commercial real estate, a lot of the large Banks, pull out of the space, uh, and, and 24, uh, and 23 and 24 in particular. And now I've come back in in a material way, uh, it's it's competitive as it's ever been kind of a cross the board across all of our markets. So, you know, it's, uh, it's full-on competitive at this point. And, um, so but we continue to do well there we pick our spots carefully and, um, I'm pleased with the growth this quarter and pleased with the Outlook.
David Pester: For growth.
David Feaster: Um, and maybe just switching gears to the other side of the balance sheet, right? You've done a great job actively managing funding costs, continue to push deposit costs lower. Obviously, we've got the Heartland and the Villages deal coming online. But I guess, at a high level, how do you think about funding costs? Is there much deposit cost leverage left? And where do you see the most opportunity to drive the core deposit growth that you were talking about?
That's great, uh, that's helpful. Um, and maybe just
Michael Young: I'll let Michael take the deposit cost side and maybe come back with a few comments around drive and growth. But Michael, you want to talk a little bit about the outlook for deposit costs? Sure, David. Just what, you know, we had a great quarter, great work by the team, just kind of proactive management. You know, we've been speaking to the fact that, you know, we were very, you know, customer friendly through the liquidity constrained environment, 23 and 24. We've been bringing deposit costs down as the Fed cut rates and then just some proactive and tactical moves this quarter that really, you know, moved the needle for us and improved the ROA that we've been focused on.
David Pester: Switching gears to the other side of the balance sheet, right? You've done, a great job, actively managing funding costs, continue to push deposit. Costs lower. Obviously we've got the Heartland and and The Villages deal coming online. But I guess at a high level, how how do you think about funding costs? Is there much deposit cost leverage left. Um, and where do you see the most opportunity to drive the core deposit growth that you were talking about?
Michael Young: So we've done a lot of that work. You know, I think we want to be judicious here and we don't want to constrain growth. So we're going to balance, you know, between growth and volume and, you know, rate management from here. But I think really the opportunity at this point is growing those core operating accounts and blending down our cost of funds through DDA growth over time. And with all the bankers we've added, you know, that's been really beneficial to them bringing over relationships and full relationships that should be additive to that. On the volume side, just as a reminder, we're kind of at the seasonal low point for us with public funds at seasonal low points.
Hello. Michael take the deposit cost side. Maybe come back with a few comments around driving growth. But Michael, you want to talk a little bit about the outlook for deposit cost. Sure, David. Uh, just want, you know, we had a great quarter, a great work by the team, just kind of ProActive Management. You know, we've been speaking to the fact that, you know, we were very, you know, customer friendly, uh, through the liquidity, constrained environment, 23 and 24, and we've been bringing deposit costs down, um, as the FED cut rates, and then just some proactive and tactical moves this quarter that really, you know, moved the needle for us and and improved the Roa that we've been focused on. So we've done a lot of that work, you know. I think we want to be judicious here and we don't want to constrain growth. So we're going to balance, you know, between, uh, growth and volume and, you know, rate management from here. But I think really the opportunity at this point is growing. Those core operating accounts and, uh, blending down our cost of funds through DDA growth over time and with all the bankers, we've added, you know, that's been really beneficial to them. Bring
Michael Young: And then we had the tax related outflows at the end of the first quarter headed into the second quarter. So we should also see the seasonal trends, you know, turn to tailwinds from headwinds in the second quarter.
Charles Shaffer: Yeah, the only thing I'd add to that, Michael, I think you answered that really well, is we don't have any deposit verticals or any sort of wholesale deposits in the franchise. We win deposits and loans customer by customer, and the entire balance sheet is relationship-based. And so as we move forward, as we onboard customers and prospects, particularly those coming off the balance sheets of the larger banks, we'll continue to add to our core deposit franchise. And we're not focused on driving high-rate deposits and sort of more transactional-based deposits. It is about net new checking, core accounts, and driving business growth over time.
David Pester: Bringing over relationships and full relationships, that should be added to that, um, on the, on the volume side. Just as a reminder, we're kind of at the seasonal low point for us, uh, with public funds, um, at seasonal low points and then we have the tax related outflows at the end of the first quarter um, headed into the second quarter. So we should also see the seasonal Trends, you know, turn to Tailwind from headwinds in the second half.
David Pester: is about net new checking core accounts and
David Pester: Uh, driving driving business growth over time.
Unknown Executive: Okay, that's good.
David Feaster: And then just kind of curious, maybe some some balance sheet optimization thoughts. I mean, you guys have been very active, we got these two deals, it gives you a ton of financial flexibility and optionality. You've already done some pre purchasing for the Heartland deal, you know, you touched on some of the moves with swaps. I'm just curious, you know, I guess with these two deals and anticipation of Fed cuts, and just kind of where we are today, how you think about as your as your plans to manage and optimize the balance sheet change and just some of your priorities.
David Pester: Okay, that's good. Uh, and then just kind of curious, maybe some some balance sheet optimization thoughts. I mean, you guys have been very active, we got these 2 deals that gives you a ton of financial flexibility and optionality. You've already done some pre-purchasing, uh, for the Heartland deal. You know, you touched on some of the moves with swaps. I'm just curious, you know, I guess with these 2 deals and and anticipation of fed cuts and just kind of where we are today, how you think about as your as your plans to manage and optimize the balance sheet change, and just some of your priorities here,
Michael Young: Sure, David. This is Michael. I think the long-term plan is the same. These acquisitions are super valuable deposit franchises, and we're super glad to have them as part of the overall Seacoast franchise. It looks a lot like who we are and who we've always been, and so it'll just continue to add ballast to the balance sheet and keep us very steady through various rate cycles that may emerge. Obviously, there's a lot of different permutations and outcomes that may transpire in terms of interest rates over the medium term, and we're just very focused on managing that interest rate risk appropriately.
Michael Young: But I think it really gives us a lot of raw material and opportunity to optimize earnings and profitability for the franchise as we move forward, and particularly as time progresses. We've talked a lot about just the fixed-rate repricing trend on our balance sheet and even the acquired balance sheet. So, we're stepping into margin expansion assets, repricing higher, and then this really core sticky deposit franchise that I think we've re-evidenced through the second quarter that'll be positive for us. So, we'll get an initial lift as we reposition the securities portfolios here in the back half of 25, and then the upside comes from that low 70s loan to deposit ratio remixing up towards 80 and eventually 85% loan to deposit ratio as we deploy that with banker hires and loan growth over the coming years.
Sure, David. This is Michael um, you know, I think the the long-term plan is the same. You know, these Acquisitions are super valuable deposit franchises and we're super happy, you know, glad to have them as part of the overall, CCO franchise. It looks a lot like, you know, who we are and who we've always been. And so, it'll just continue to add, you know, balance to the balance sheet. Um, and keep us very steady through various rates cycles, that may emerge. Obviously there's a lot of different permutations and outcomes. That may, uh, transpire in terms of interest rates over the medium term and where, you know, just very focused on managing that interest rate risk uh appropriately. But I think it really gives us a lot of raw material and opportunity to optimize, you know, earnings and profitability.
Michael Young: Yeah, and I would point investors and shareholders back to the deck we put out on the Villages transaction that contemplated both bank deals in the forward direction of Seacoast. And what you can see in that deck is 130 plus ROA emerges, you know, fairly, very strong return on tangible common equity, and that's the result of that repositioning. So we believe we're right on track with what we presented in the Villages deck there. And we also put some earnings guidance in there as well. So if sort of you're looking for where we think we're headed, just go back to that deck.
David Pester: Um, for the franchises, we move forward and particularly as time progresses, we've talked a lot about, you know, just the fixed rate repricing trends, um, on our balance sheet, and even the acquired balance sheet. So, you know, we're stepping in to sort of margin expansion assets, re-pricing higher, and then this really core sticky deposit franchise that I think we've ree through the second quarter. Um, that'll be positive for us. So we'll get an initial lift as we, reposition the Securities portfolios, uh, here in the back half of 25. And then the upside comes from, you know, that 70 low 70s loan to deposit ratio remixing up towards, you know, 80 and eventually 85% loan to deposit ratio as we deploy that with uh, Banker hires and Loan, growth, you know, over the coming years.
Unknown Executive: That's the outlook.
Speaker Change: Yeah, and I would Point investors and shareholders back to the deck, we put out on the villages, transaction that contemplated both Bank deals and the 4 direction of Sea Coast. And what you can see in that deck is 130, plus Roa emerges, you know, fairly, uh, very strong return on tangible, common equity, and that's the result of that repositioning. So we we believe we're right on track with what we presented in The Villages, uh, deck there. And, uh, we also put some earnings, uh, guidance in there as well. So, if if, uh, sort of you're looking for where we think we're headed, just go back to that deck. That that's the Outlook.
Unknown Executive: That's helpful. Thanks, everybody. Thank you, David.
David Pester: That's helpful. Thanks everybody.
Speaker Change: Thank you, Dave.
Unknown Executive: All right, operator, I think we're ready for another question.
All right. Operator, I think we're ready for another question.
Wood Lay: Your next question comes from the line of Wood Lay with KBW. Your line is now open. Hey, good morning, guys. Morning Woody. wanted to follow up on deposit costs. I think so far through the season cycle, your interest bearing deposit beta is around 80%. Obviously, there's kind of been some one time corrections in there, stemming from 2023. But how do you think about the deposit beta going forward with incremental rate cuts? Yeah, hey, Woody, this is Michael. I'll take that one. You know, I think what we had articulated is that we were kind of aggressive late in the cycle on betas on the way up to protect liquidity and we expected to be aggressive on the way down.
Speaker Change: Your next question, tell us from the line of wood.
Speaker Change: Line is now open.
Speaker Change: Hey, good morning, guys.
Speaker Change: Hey, good morning, Woody.
Wanted to uh, follow up on deposit costs. Um, I think so far through the season cycle, your your interest bearing deposit based around 80%. Um obviously there's kind of been some 1 time Corrections in their stemming from you know 2023 but how do you think about um,
Speaker Change: the deposit data going forward with incremental rate cuts,
Michael Young: And, you know, reestablishing because we do think we have a very strong deposit franchise, those lower deposit costs that Seacoast is known for. And I think we've evidenced that here through this quarter. So I think you've seen kind of the more aggressive move down in betas. And then from here, you know, we'll return to more normalized betas as we have incremental Fed cuts potentially through next year. So, you know, we had a 45 percent cumulative beta this cycle versus prior cycles closer in the low 30s. I would expect we kind of return to that low 30s kind of.
Speaker Change: Yeah. Hey Woody, this is Mike. I'll take that 1. Um you know I think what we had articulated is that we were kind of aggressively late in the cycle on betas, on the way up to protect liquidity and we expected to be aggressive on the way down and, you know, reestablishing because we do think we have a very strong deposit franchise. Those lower deposit costs that cost is known for, and I think we've evidenced that here through this quarter. So I think you've seen kind of the more aggressive move down in betas. And then from here, you know, we'll return to more normalized bettas. Um, as we have incremental fed Cuts, uh, potentially through next year. So,
Michael Young: Top of the House Beta. Again, not on interest bearing, just total deposits. Criminal Fed Cuts.
um, you know, we had a 45% cumulative beta this cycle versus prior Cycles closer and the low 30s, I would expect we kind of return to that low 30s kind of, uh, you know,
Top of the house. Beta again, not on interest bearing, just total deposits. As we see incremental fed Cuts, uh, move in from here.
Michael Young: Got it. And then I can't remember off the top of my head what, or if you even specified what the sort of the beta assumptions were at the start of the year for the 335 core NEM for Seacoast, but it feels like you, you would have outperformed expectations a little bit. Have there been any offsets on the, on the asset side that sort of maintaining that core NEM guidance at 335, or I guess, could there be potential upside? Yeah, it's a it's a good question, Woody. You know, I think we've, you know, we certainly moved more on the deposit side than where we, you know, maybe expected to be at this point.
Speaker Change: First EOS but it feels like you you've would have outperformed expectations a little bit. Um have there been any offsets on the on the asset side that sort of maintaining that coordinate guidance at 335 or um I guess could there be potential upside.
Michael Young: But also the Fed cuts are occurring later in the year, and maybe we'll only have 1 instead of 2. And so if you think about it that way, we're kind of ahead of the game. But where we'll land at the end of the year, you know, is maybe just slightly different because of the delay in the Fed cuts doesn't change the cumulative outcome. And then the one other thing I would just call out is on the asset yield side, we've had those benefits from the payfix swaps in 2024, kind of handed off to some higher, you know, just prepayment and interest recovery benefits as we work through some, some credit resolution in the first half of this year.
Michael Young: And then we'll expect that continued back book fixed rate repricing to really take the lead in the second half of the year, combined with, you know, I think balance sheet growth. And so I think we're just leaning a little more towards growth versus, you know, margin optimization in the back half, which should land us in a similar spot. And then we, we basically spoke to, you know, the deals will add roughly once we close the villages about 10 basis points to the margin at that point in time. And so just a little bit cagey on when that will, you know, close if that'll be early in the fourth quarter or late in the fourth quarter will kind of dictate how much margin expansion we get there.
Speaker Change: Yeah. It's a it's a good question. Woody, you know, I think we've you know, we've certainly moved um, more on the deposit side um, than where we, you know, maybe expected to be at this point. But also the FED cuts are occurring later in the year and and maybe we'll only have 1 instead of 2. And so if you think about it that way, we're kind of ahead of the game but where we'll land at the end of the year, you know, is maybe just slightly different because of the delay in the FED. Cuts doesn't change the cumulative out outcome. And then the 1 other thing, I would just call out, is on the asset yield side. We've had those benefits from the payfix swaps in 2024 kind of hand it off to some higher, you know, just prepayment and interest recovery benefits as we work through some, um, some credit resolution in the first half of this year and then we'll expect that continued. Bakbuk fixed rate re-pricing to really take the lead in the second half of the year, uh, combined with, you know, I think balance sheet growth. And so, I think we're just leaning a little more towards growth, um, versus, you know, margin
Optimization in the back half which should land us in a similar spot and then we we basically spoke to you know the deals will add roughly once we close the villages about 10 basis points to the margin at that point in time. Um and so just a little bit cagey on when that will you know, clothes if that'll be early in the fourth quarter or late in the fourth quarter, we'll kind of dictate how much margin expansion we get there.
Wood Lay: Got it. Super helpful. And then just last for me, I know over the past year, you've kind of been toggling between investing in the franchise while recognizing the profitability improvement story. We got a pretty notable inflection in the second quarter. I know there's a couple of one-time items that might have benefited, but profitability is still at a really nice level. Um, just given that and given some of the disruption we've seen in your backyard, how do you think about reinvesting into the franchise? Yeah, that's a great question, Woody. And we'll see what opportunities present their self.
Speaker Change: Got it, super helpful and and then just last for me um, I I know over, you know, the past year investing in the you've kind of been toggling between investing in the franchise while recognizing you know the profitability Improvement story. We, we got a pretty notable inflection in the second quarter. I know there's a couple of 1 time items that that might have benefited but you know, profitability is still at a really nice level, um, just giving that and giving some of the disruption we've seen in year backyard. How do you think about reinvesting into the franchise?
Wood Lay: Obviously, last time there was significant disruption, we materially capitalized on that disruption, and you're seeing the benefits of that now pull through our financials. As we move forward, we'll opportunistically look at opportunity and we'll weigh that against delivering what we've committed to shareholders in terms of returns. You know, I'd say my primary focus is what we have in our village's deck and getting our profitability up to where I think it needs to be. But if unique opportunities present themselves, we'll obviously look at that. Alright, thanks for taking my questions. Thank you, Wood.
Yeah, it's a that's a that's a great question. Woody and we'll um we'll see what opportunities present their self. Obviously, the last time there was significant uh disruption we materially capitalized on that destruction and you're seeing the benefits of that. Now, pull through our financials. Uh, as we move forward, we'll opportunistically look at opportunity and um, we'll weigh that against delivering, what? Uh, We've committed to shareholders in terms of returns. You know, I'd say my, my primary focus.
Speaker Change: Is delivering what we have in the in our Villages deck and getting our profitability up to where I think it's needs to be. But uh, if you need opportunities present themselves, well obviously, look at them.
Speaker Change: All right, thanks for taking my questions.
Thank you, Woody.
David Bishop: Your next question comes from the line of David Bishop with Hovde Group. Your line is now open. Yeah, good morning, guys. We keep hearing about, and I think maybe you alluded to in the preamble or one of the questions about large banks coming back into the commercial real estate market and such. Just curious what you're seeing out there in terms of loan pricing and spreads, how they've trended over the past 90 days or so. It's been tough.
David Bishop: Your next question comes from the line of David Bishop with half the group, your line is now open.
David Bishop: Yeah, good morning, guys.
Um, we keep we keep hearing about that and I think maybe alluded to in the, the Preamble or 1 of the questions about, um, you know, large Banks coming back into the commercial real estate market and such just curious what you're seeing out there in terms of loan pricing and spreads how they've uh trended over the past uh, 90 days or so.
James Stallings: I don't know, James Stallings, you want to talk about what you're seeing? He's our chief credit officer. He's looking at deals every day, commercial real estate pricing. Yeah, thanks, Chuck. And thanks, David. It's a good question. You know, we're seeing, I think, for the top tier sponsors and for really quality assets, we're continuing to see increased competition where, you know, we probably didn't see as many banks bidding as aggressively 18, 24 months ago. That has changed in the last 90 days. And I would say we're starting to see some spread compression below a two-handle. You know, we're seeing 180, 190 basis point spreads on some really quality transactions.
Speaker Change: It's been tough. I don't know. James Stallings, you want to talk about what you're seeing, he's our chief credit officer, he's looking at deals every day. Commercial real estate pricing.
Yeah, thanks Chuck. Um and and thanks David, it's it's a good question. You know, we are seeing I think for the for the top tier sponsors and for really quality assets, we're we're continuing to see uh increase competition where you know we probably we didn't see as many banks bidding
James Stallings: And then there's some pressure on structure. You know, we're seeing sponsors really push for longer I.O. periods, even with stabilized properties to try to drive their cash-on-cash returns for their investors. So, there's some competition. But, you know, the good news is that the credit quality is holding up. And so, it's still supportive of of the structures that we're that we're having to do to win business. Yeah, so we're carefully walking the line there of getting the right risk based returns. But I don't think I think our growth outlook remains very stable, but we'll pick our spots carefully.
Charles Shaffer: We're always thoughtful and disciplined is how we approach credit and will continue to be. And as pricing compresses, we'll we'll pick our spots there, too. Obviously, we'll support our high quality tier one sponsors as we as we have in the past. But we'll be thoughtful as we move through time and it's definitely more competitive than it was a year ago.
The structures that were that were having to do to win business. Yep. So we're carefully walking the line there of getting the right risc-based returns but I don't think I think our growth Outlook remains very, um, stable but uh, we'll pick our spots carefully. We're always thoughtful and disciplined is how we approach credit and we'll continue to be and it's pricing compresses. We'll we'll pick our spots there too. Obviously we'll support our high quality Tier 1 sponsors as as we as we have in the past.
Speaker Change: But uh, we'll be thoughtful as we move through time and it's definitely more competitive than it was a year ago.
Unknown Executive: Got it.
Charles Shaffer: That's a good segue, Chuck, maybe to that next question here, or sticking with credit. Unusually low, lost content this quarter. I think our charge-offs were sub-10 basis points. Just curious, as you look across the horizon, just maybe any sort of thoughts where you think, you know, you've seen that charge-off stabilizing here in the near term. Yeah, credit quality remains very stable and our outlook is for it to remain stable. We're not seeing any deterioration across the portfolio. If anything, we're seeing it sort of clean up as we've moved through past some of the M&A from sort of 22 and 23.
Got it. That's a good segue, Chuck. Maybe in the next question here, or, or sticking with credit um, unusually low, uh,
Speaker Change: Lost content, this quarter. I think a charge offs were were Sub, Sub sub 10 basis points just curious. Um, as you look across the Horizon, just maybe any sort of thoughts, where you think, uh, you know, you you've seen that charge all stabilizing here in the near term.
Charles Shaffer: So, you know, I feel pretty good about our outlook on asset quality. I think it does remain, you know, very stable moving forward.
Speaker Change: Yeah, correct, quality remains very stable in our Outlook, is for it to remain stable. Um, we're, we're not seeing, uh, any deterioration across the portfolio. If anything, we're seeing it sort of clean up, as we've moved through past some of the m&a from sort of 22 and 23. So, you know, I what I can tell you is I feel pretty good about our outlook on asset quality. I think it does remain, you know, very stable, moving forward.
Michael Young: And David, this is Michael. Just as a reminder, in 2024, you know, we had the consumer fintech portfolio that we called out before that we largely liquidated in the fourth quarter, and it added about eight basis points to net charge offs. So yeah, that's kind of removed and gone. And so you're seeing, you know, kind of the benefits of that pull through, but you know, longer term, we we expect mid cycle to be 20 to 25. level for us. Got it.
Speaker Change: And David. This is Michael just uh, as a reminder in 2024, you know, we had the consumer fintech portfolio that we've called out before that we largely liquidated in the fourth quarter, that it added about 8 basis points to net, charge offs. So, you know, that's kind of removed and gone. And so, you're seeing, you know, kind of the benefits of that pull through but, you know, longer term. We we expect mid-cycle to be 20 to 25 basis points, so it's just kind of a mid-cycle level for us.
Michael Young: And then one sort of housekeeping question like, I know into the the Heartland deal, you know, the the add to the securities in front of that, should we expect that to unwind here in the third quarter and have some runoff on both the securities and barring such? Yeah, not on the security side, because those wouldn't have been a part of our financials, so the securities balances will remain fairly consistent, but we will delever a little bit, or plan to on the wholesale funding side. So we had a little higher, you know, broker and FHLB borrowings in the second quarter, and you'll see those, you know, likely come down depending on, you know, kind of a path forward for us into the villages.
got it and then 1 uh sort of housekeeping question like um
Speaker Change: I know into the uh, the Heartland deal. You know, the the you add the uh, the Securities in front of that. Should we expect that to to unwind here in the third quarter? And, uh, have some Rod off on on both the Securities and borrowing. So I think
Michael Young: But that's really the plan as we stand here today.
Speaker Change: Mhm. Yeah, not not on the security side because those wouldn't have been a part of our financials. So the security is balances, will remain fairly consistent, but we will de-lever a little bit, um, or plan to on the wholesale, uh, funding side. So we had a little higher, you know, broker an fhlb borrowing, uh, in the second quarter and you'll see those, you know, likely come down, uh, depending on, you know, kind of the path forward, uh, for us into the villages. But that's, that's really the plan as we stand here today,
Unknown Executive: Great, thank you.
Speaker Change: Great. Thank you.
Russell Gunther: Your next question comes from the line of Russell Gunther with Stephens, Inc. Your line is now open. Hey, good morning, guys. I wanted to morning, Chuck, maybe just following up on the loan growth discussion a little bit. Make sure I understand. I think more recently, you committed to being able to kind of keep with this mid to high single digit pace as you as you look ahead to 26. Even on the bigger balance sheet with these deals, want to make sure that's the case. And then maybe we just address the transaction specifically that transpired last night.
Speaker Change: Your next question comes from the line of Russell Gunther with Stevens Inc. Your line is now open.
Hey, good morning, guys.
Charles Shaffer: What type of opportunity do you think that might represent? And how Seacoast would plan to try to capitalize on this? Yeah, sure. Thanks, Russell. Just to reiterate, you know, we still feel very confident amid the high single-digit growth rate on the loan side going into the back half of this year and into 26. So I think that guidance remains sound, and I'm confident in our ability to deliver that. And then the transaction last night, obviously, like I mentioned earlier, we, you know, any disruption is always beneficial. We'll see how that all plays out and see where opportunities may come to us.
Speaker Change: Um I wanted to morning Jack. Um maybe just following up on the loan growth discussion a little bit. Uh make sure I understand I I think more recently you committed to being able to kind of keep with this mid to high single-digit Pace as you as you look ahead to 26. Uh even on the bigger balance sheet with these deals want to make sure that's the case and then maybe just address uh the transaction specifically that that transpired last night. What type of opportunity do you think that might represent and how Sea Coast would plan to try to capitalize on this location?
Charles Shaffer: You know, we operate with a very sound, strong capital position, sorted. in a differentiated way are going to have a lot of liquidity to put to work over the coming years and have a really strong culture inside the organization of supporting front line bankers. You know, as you see from a lot of the awards we've won around best places to work, et cetera, we've got a very strong, capable, sustainable business here. And I think it'll be attractive to banking talent over time. And as that opportunity come up, we'll look at them. And, you know, anytime there's upstream disruption that's beneficial, and even beyond the transaction announced last night, I suspect there will be more over time.
Yeah, sure. Thanks Russell. Uh, just to reiterate, you know, we still feel very confident in our mid to high single-digit growth rate on the loan side going into the back half of this year and into 26. So I think that guidance remains sound and um, I'm confident in our ability to deliver that. Um and then the transaction last night, obviously, like I mentioned earlier we you know, any disruptions always beneficial. We'll see how that all plays out. Um, and see where opportunities may come to us. You know, we operate with a very sound, strong Capital position, sort of in a differentiated way or going to have a lot of liquidity to put to work over the coming years and
Speaker Change: Have a really strong culture inside the organization of supporting front line bankers. And
Russell Gunther: And so we'll look to take advantage of that across all our markets. Yeah, I appreciate that Chuck and a good point, certainly on, you know, excess liquidity, capital and culture. And then I had a follow up on on the margin expectation just to make sure I heard it right. So core 335 NIM for the back half of the year. And then as you fold in the two deals is the guide for a reported margin of 345 in the back half of the A core margin would be 345. So we're guiding the core with, you know, accretion income can come in high or low quarter to quarter.
You know, as you see from a lot of the awards, we've won around best places to work etc. We've got a very strong capable sustainable business here and I think it'll be attractive to banking Talent over time. And is that opportunities come come up. We'll look at them and, um, you know, anytime there's Upstream disruption, it's beneficial. And even beyond the transaction announced last night, I suspect, there will be more over time and so we'll look to take advantage of that across all our markets.
Speaker Change: Cassidy or and then as you fold in the 2 deals is the guide for a reported margin of 345 in the back half of the year.
Russell Gunther: So we're just guiding off the core. So 335 in the fourth quarter was the guide with acquisitions adding about the margin from the lower cost of funding those. Just to make it really clear, 345 includes the transactions plus accretion. Okay, very good. I appreciate the clarification guys. Rest of my questions are asked and answered. Thank. Awesome, Russell. Thank you.
Speaker Change: A, a core, uh, margin would be 345. So we're we're guiding the core. We, you know, accretion income can come in higher low quarter to quarter so we're just guiding off the core. So 335 in the fourth quarter was the guide with uh, Acquisitions adding about 10 basis points to the margin from the lower cost of of funding that those will bring in.
Yeah. Okay. So the Step Up was part of core. Yep. Yeah, just to make it really clear. 345 inclusive of the transactions plus accretion gets you to the market.
Okay, very good. I appreciate the clarification guys. Uh, rest of my questions were asked and answered, thank you.
Speaker Change: Awesome Russell. Thank you.
Charles Shaffer: As there are no further questions, I would now like to turn the call back over to Mr. Shaffer for closing remarks. All right. Thank you, Angela. And I just want to say thank you to the Seacoast team. We've got a very focused effort here to grow in that high single-digit range over time and deliver upper quartile returns, and the team heads down focused on that this quarter. I think this quarter evidence is the outcome of that, and I feel really good about where we're headed here into the coming year. So appreciate everybody on the Seacoast team for all their hard work, and welcome to the Heartland team joining the franchise here in the last few weeks, and looking forward to the conversion, and looking forward to the Villages transaction in the fourth quarter.
Speaker Change: There are no further questions, I would now like to turn the call back over to Mr. Schaefer for closing remarks.
Mr. Schaefer: All right. Thank you, Angela. And uh, you know, just want to say thank you to the Sea Coast team. You know, we've got a very focused effort here to
Uh, grow in that high single digit range over time and deliver upper Courthouse returns and the team, you know, was heads down focused on that this quarter, I think this quarter evidence is the, the outcome of that and I feel really good about where we're headed here into the coming year. So appreciate everybody on the Sea Coast team for all their hard work and welcome to the Heartland team joining the franchise here in the last few weeks and looking forward to the conversion.
Unknown Executive: We've had a lot of great interaction with that team. It's been a really solid cultural combination, and we're super excited about what that looks like later this year. So thank you to everybody on our team. You guys did an awesome job, and we'll be around if anybody has questions on the quarter. And that'll conclude our call. Ladies and gentlemen, that concludes today's conference call. Thank you all for joining. You may now disconnect.
Mr. Schaefer: And, uh, we're looking forward to the Villages transaction in the fourth quarter. We've uh, had a lot of great interaction with that team. It's been a really solid cultural, uh, combination and we're super excited about what that looks like later this year. So, thank you to everybody on our team. You guys did an awesome job and uh, we'll be around if anybody has questions on the quarter.
Mr. Schaefer: And that'll conclude our call.
Ladies and gentlemen, that concludes today's conference call. Thank you all for joining you may now. Disconnect