Seacoast Banking Q4 2025 Seacoast Banking Corp of Florida Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Seacoast Banking Corp of Florida Earnings Call
Speaker #1: Seacoast Banking Corporation's fourth quarter and full year 2025 earnings conference call. My name is Mark and I will be your operator. Before we begin, I would like to direct your attention to the statements for the fourth quarter and full year 2025 earnings conference call.
Speaker #1: My name is Mark and I will be operator. Before we begin, I have been asked to direct your attention to the statements at the end of the company's press release regarding forward-looking statements.
Speaker #1: Seagulls will be discussing issues that constitute forward looking statements within the meaning of the Securities and Exchange Act comments and his today are intended to be covered within the meaning of the act .
Speaker #1: Please note that this conference is being recorded. I will now turn the call over to Charles Shaffer, Chairman and CEO of Seacoast Bank.
Charles Shaffer: All right. Thank you, Mark, and good morning, everyone. As we move through today's presentations, we'll reference the Q4 and full year earnings slide deck available at seacoastbanking.com. Joining me today are Tracey Dexter, our Chief Financial Officer, Michael Young, our Chief Strategy Officer, and James Stallings, our Chief Credit Officer. The Seacoast team delivered another exceptional quarter, highlighted by the closing of the Villages acquisition and strong growth in loans. Loan outstandings grew at an annualized rate of 15%, driven by the continued success of our commercial banking team and the additional mortgage volume contributed by the Villages acquisition. The addition of the Villages mortgage team expands our optionality for future portfolio decisions.
Charles Shaffer: All right. Thank you, Mark, and good morning, everyone. As we move through today's presentations, we'll reference the Q4 and full year earnings slide deck available at seacoastbanking.com. Joining me today are Tracey Dexter, our Chief Financial Officer, Michael Young, our Chief Strategy Officer, and James Stallings, our Chief Credit Officer. The Seacoast team delivered another exceptional quarter, highlighted by the closing of the Villages acquisition and strong growth in loans. Loan outstandings grew at an annualized rate of 15%, driven by the continued success of our commercial banking team and the additional mortgage volume contributed by the Villages acquisition. The addition of the Villages mortgage team expands our optionality for future portfolio decisions.
Speaker #1: Mr. Charles Shaffer: Begin.
Speaker #2: All right . Thank you , Mark , and good morning , everyone . As we move through today's presentation , we'll reference fourth quarter the and year full earnings slide deck , available at Seacoast Banking Corporation of Florida .
Q4 2025 Seacoast Banking Corp of Florida Earnings Call
Speaker #2: Joining me today are Tracey Dexter , our chief Chief Financial officer Michael Young . Our chief strategy officer . And James chief credit Stallings , our officer .
Speaker #2: The seacoast team delivered another exceptional quarter , highlighted by the closing of the villages acquisition and strong growth in loans , loan Outstandings grew at an annualized rate of 15% , driven by the continued success of our commercial banking team and the additional mortgage volume contributed by The villages acquisition .
Charles Shaffer: The residential loans we added this quarter were very high-quality credits with high FICOs, strong yields, and generally shorter expected lives than traditional mortgage products, given the unique characteristics of this borrower base. We also continue to see meaningful improvements in non-interest income, with stronger performance across almost every major category. Wealth management had an excellent year, adding $550 million in new AUM, and treasury management fees and other service charges also continued to grow as new clients were onboarded. On the expense side, overhead was well managed, our expense ratio improved from the prior quarter, and the ratio of adjusted non-interest expense to tangible assets declined to near 2%. Our plan to drive improved shareholder returns remains firmly on track.
The residential loans we added this quarter were very high-quality credits with high FICOs, strong yields, and generally shorter expected lives than traditional mortgage products, given the unique characteristics of this borrower base. We also continue to see meaningful improvements in non-interest income, with stronger performance across almost every major category. Wealth management had an excellent year, adding $550 million in new AUM, and treasury management fees and other service charges also continued to grow as new clients were onboarded. On the expense side, overhead was well managed, our expense ratio improved from the prior quarter, and the ratio of adjusted non-interest expense to tangible assets declined to near 2%. Our plan to drive improved shareholder returns remains firmly on track.
Speaker #2: The addition of the Villages mortgage team expands our optionality for future portfolio decisions . The residential loans we added this quarter were very high quality credits with high generally yields expected and ficos strong lives than the unique shorter traditional mortgage products .
Speaker #2: of this base , we Given also continue characteristics non-interest improvements in to see income with stronger performance across almost every major category . management had an excellent Wealth year , adding 550 million in new AUM and Treasury managed Treasury management fees and other service charges also continue to grow as new onboarded clients were on the expense side .
Speaker #2: Overhead was well managed and our expense ratio improved from the prior quarter in the ratio of adjusted non-interest expense to tangible assets declined to near 2% .
Charles Shaffer: Excluding the day one provision and merger-related expenses associated with The Villages acquisition, our ROA for Q4 was 1.22%, and the return on tangible equity was 15.72%. These results demonstrate the strong return profile of the combined institution, which will be fully realized following The Villages technology conversion in July 2026. The Villages acquisition also closed with materially higher tangible equity than initially projected, shortening the earn back period. We are deploying a portion of this excess capital into the securities portfolio reposition that was executed this week, and Michael will walk through these details here shortly. Overall, I'm very pleased with the progress we're making, and I remain highly confident in our outlook for 2026.
Excluding the day one provision and merger-related expenses associated with The Villages acquisition, our ROA for Q4 was 1.22%, and the return on tangible equity was 15.72%. These results demonstrate the strong return profile of the combined institution, which will be fully realized following The Villages technology conversion in July 2026. The Villages acquisition also closed with materially higher tangible equity than initially projected, shortening the earn back period. We are deploying a portion of this excess capital into the securities portfolio reposition that was executed this week, and Michael will walk through these details here shortly. Overall, I'm very pleased with the progress we're making, and I remain highly confident in our outlook for 2026.
Speaker #2: Our plan to drive improved shareholder returns remains firmly on track, excluding the Day One provision and merger-related expenses associated with the Village's acquisition.
Speaker #2: ROA for the fourth quarter was 1.22% , and the return on tangible equity was 15.72% . These results strong return demonstrate the profile of the combined institution , which will be fully realized following the villages technology conversion in July 2026 .
Speaker #2: The acquisition also closed , with materially higher tangible equity than initially projected , shortening the earn back period . We are deploying a portion of this excess capital into the securities portfolio reposition that was executed this week , these and Michael details here will walk through .
Charles Shaffer: As noted in the slide deck, we expect to achieve earnings per share for the full year in a range of $2.48 to $2.52, and anticipate exiting the year in Q4 of 2026 after the Villages technology conversion, with an ROA above 1.30% and a return on tangible equity of approximately 16%. Asset quality remains solid. Charge-offs were a modest 3 basis points for the fourth quarter, and the full year average for 2025 was only 12 basis points. Our CRE and construction and land development ratios remain low, following the addition of the Villages. As a reminder, our portfolio is composed almost entirely of franchise-quality relationships, longstanding borrowers across our footprint, which include consumers, businesses, nonprofits, and municipalities. Lastly, capital and liquidity remain exceptionally strong.
As noted in the slide deck, we expect to achieve earnings per share for the full year in a range of $2.48 to $2.52, and anticipate exiting the year in Q4 of 2026 after the Villages technology conversion, with an ROA above 1.30% and a return on tangible equity of approximately 16%. Asset quality remains solid. Charge-offs were a modest 3 basis points for the fourth quarter, and the full year average for 2025 was only 12 basis points. Our CRE and construction and land development ratios remain low, following the addition of the Villages. As a reminder, our portfolio is composed almost entirely of franchise-quality relationships, longstanding borrowers across our footprint, which include consumers, businesses, nonprofits, and municipalities. Lastly, capital and liquidity remain exceptionally strong.
Speaker #2: Overall , I'm pleased with very the progress we're making and I remain highly confident in our outlook for 2026 . As noted in the slide deck , we expect to achieve earnings per share for the full year in a range of $2.48 to $2.52 , and anticipate exiting the year in the fourth of quarter 2026 .
Speaker #2: After the Villages Technology conversion, with an ROA above 1.30% and a return on tangible equity of approximately 16%, asset quality remains solid.
Speaker #2: Charge offs were a modest three basis points for the fourth quarter , and full year average for 2025 was only 12 basis points .
Speaker #2: Our CRE and construction and land development ratios remained low following the addition of The Villages, and as a reminder, our portfolio is composed almost entirely of franchise-quality relationships.
Speaker #2: Long standing borrowers across our footprint , which include consumers , businesses , nonprofits and municipalities . And lastly , capital and remain liquidity exceptionally strong .
Charles Shaffer: We continue to operate with a fortress balance sheet, and we remain one of the strongest banks in the industry. With that, I'll turn it over to Tracey Dexter to walk through our financial results. Tracy?
We continue to operate with a fortress balance sheet, and we remain one of the strongest banks in the industry. With that, I'll turn it over to Tracey Dexter to walk through our financial results. Tracy?
Speaker #2: We continue to operate with a fortress balance sheet, and we remain one of the strongest banks in the industry. With that, I'll turn it over to Tracey Dexter to walk through our financial results.
Tracey Dexter: Thank you, Chuck. Good morning, everyone. Beginning with slide 4 and fourth quarter performance highlights. The Seacoast team delivered a strong quarter, with adjusted net income, which excludes merger-related charges, increasing 18% year-over-year to $47.7 million. Consistent with the accounting requirements, this includes the initial provisions for loans and unfunded commitments on The Villages Bank Corporation acquisition, which totaled $23.4 million... pre-tax, pre-provision earnings on an adjusted basis rose to $93.2 million in the fourth quarter, an increase of 39% from the third quarter, and an increase of 65% from the prior year quarter. The efficiency ratio improved, and on an adjusted basis, is below 55%. I'll note that our presentation of the efficiency ratio now includes the amortization of intangible assets, which added $10.4 million to expense in the fourth quarter.
Tracey Dexter: Thank you, Chuck. Good morning, everyone. Beginning with slide 4 and fourth quarter performance highlights. The Seacoast team delivered a strong quarter, with adjusted net income, which excludes merger-related charges, increasing 18% year-over-year to $47.7 million. Consistent with the accounting requirements, this includes the initial provisions for loans and unfunded commitments on The Villages Bank Corporation acquisition, which totaled $23.4 million... pre-tax, pre-provision earnings on an adjusted basis rose to $93.2 million in the fourth quarter, an increase of 39% from the third quarter, and an increase of 65% from the prior year quarter. The efficiency ratio improved, and on an adjusted basis, is below 55%. I'll note that our presentation of the efficiency ratio now includes the amortization of intangible assets, which added $10.4 million to expense in the fourth quarter.
Speaker #2: Tracy ,
Speaker #3: Thank you . Chuck . Good morning everyone . Beginning with slide four in fourth quarter performance highlights , the seacoast team delivered a strong quarter with adjusted net income , which excludes merger related charges increasing 18% year over year to Consistent with the accounting requirements .
Speaker #3: This includes the initial provisions for loans and unfunded commitments on the Village Bank Corporation acquisition, which totaled $23.4 million. Pre-tax, pre-provision earnings on an adjusted basis rose to $93.2 million in the fourth quarter, an increase of 39% from the third quarter and an increase of 65% from the prior year quarter.
Speaker #3: The efficiency ratio improved , and on an adjusted basis is 55% . I'll note that our presentation of the efficiency ratio now includes the amortization of intangible assets , which added 10.4 million to expense in the fourth quarter .
Tracey Dexter: Loan production was very strong, with organic growth in balances of 15% on an annualized basis. Higher commercial production, which increased 22% from the prior quarter, reflects the success of a multi-year hiring strategy. Deposit costs were well managed and also benefited from the addition of VBI, overall declining 14 basis points from the prior quarter to 1.67%. Net interest income was $174.6 million, an increase of 31% from the prior quarter. Net interest margin, excluding accretion on acquired loans, expanded 12 basis points to 3.44%, consistent with the guidance we provided. Our capital position continues to be very strong. Seacoast's Tier One capital ratio is 14.4%, and the ratio of tangible equity to tangible assets is 9.3%.
Loan production was very strong, with organic growth in balances of 15% on an annualized basis. Higher commercial production, which increased 22% from the prior quarter, reflects the success of a multi-year hiring strategy. Deposit costs were well managed and also benefited from the addition of VBI, overall declining 14 basis points from the prior quarter to 1.67%. Net interest income was $174.6 million, an increase of 31% from the prior quarter. Net interest margin, excluding accretion on acquired loans, expanded 12 basis points to 3.44%, consistent with the guidance we provided. Our capital position continues to be very strong. Seacoast's Tier One capital ratio is 14.4%, and the ratio of tangible equity to tangible assets is 9.3%.
Speaker #3: Loan was very production strong , with organic growth in balances of 15% on an annualized basis . Higher commercial production , which increased 22% from the prior quarter , reflects the success of a multiyear hiring strategy .
Speaker #3: Deposit costs were well managed and also benefited from the addition of VBI . Overall , declining 14 basis points from the prior 12:45 .67 percent , net interest income was 174.6 million , an increase of 31% from the prior quarter .
Speaker #3: Net interest margin , excluding accretion on acquired loans , expanded 12 basis points to 3.44% , consistent with the guidance we provided , our capital position continues to be very strong .
Speaker #3: Seacoast tier one capital ratio is 14.4% , and the ratio of tangible equity to tangible assets is 9.3% . We grew the branch footprint through two de novo openings in the fourth one in the quarter , greater Atlanta area and one on the Gulf Coast in Bradenton , Florida .
Tracey Dexter: We grew the branch footprint through two de novo openings in Q4, one in the Greater Atlanta area and one on the Gulf Coast in Bradenton, Florida. For the full year 2025, we opened five de novo branches. We completed our acquisition of VBI on 1 October 2025, with the technology conversion planned for July 2026. On to Slide 5. Tax equivalent net interest income increased by $42.3 million, or 32% compared to the prior quarter, and by $60.1 million, or 52% compared to the prior year quarter. The net interest margin expanded 9 basis points to 3.66%, and excluding accretion on acquired loans, expanded 12 basis points from the prior quarter to 3.44%. Loan yields increased 6 basis points to 6.02%.
We grew the branch footprint through two de novo openings in Q4, one in the Greater Atlanta area and one on the Gulf Coast in Bradenton, Florida. For the full year 2025, we opened five de novo branches. We completed our acquisition of VBI on 1 October 2025, with the technology conversion planned for July 2026. On to Slide 5. Tax equivalent net interest income increased by $42.3 million, or 32% compared to the prior quarter, and by $60.1 million, or 52% compared to the prior year quarter. The net interest margin expanded 9 basis points to 3.66%, and excluding accretion on acquired loans, expanded 12 basis points from the prior quarter to 3.44%. Loan yields increased 6 basis points to 6.02%.
Speaker #3: For the full year 2025 , we opened five de novo branches . We completed our acquisition of VBI on October 1st , 2025 , with the technology conversion planned for July of 2026 .
Speaker #3: On to slide five . Tax equivalent net interest income increased by 42.3 million , or 32% , compared to the prior quarter , and by 60.1 million , or 52% compared to the prior year quarter .
Speaker #3: The net interest margin expanded nine basis points to 3.66% , and excluding accretion on acquired loans , expanded 12 basis points from the prior 2:45 .44 percent .
Tracey Dexter: Excluding accretion, loan yields increased 7 basis points to 5.68%. Overall, cost of funds is down 16 basis points from the prior quarter. With strong momentum in loan growth, funding costs now lower, additional liquidity, and accretive acquisitions, we expect continued expansion in the net interest margin. Turning to Slide 6. Non-interest income was $28.6 million, increasing 20% from the prior quarter. Fee revenue continues to benefit from our growth in commercial customers, and with the addition of the villages in Q4, service charges on deposits increased 4% from the prior quarter. Mortgage banking activities have expanded with the acquisition of VBI. This includes increases in salable and portfolio production in Q4, along with servicing income introduced by the villages' activities. Moving to Slide 7.
Excluding accretion, loan yields increased 7 basis points to 5.68%. Overall, cost of funds is down 16 basis points from the prior quarter. With strong momentum in loan growth, funding costs now lower, additional liquidity, and accretive acquisitions, we expect continued expansion in the net interest margin. Turning to Slide 6. Non-interest income was $28.6 million, increasing 20% from the prior quarter. Fee revenue continues to benefit from our growth in commercial customers, and with the addition of the villages in Q4, service charges on deposits increased 4% from the prior quarter. Mortgage banking activities have expanded with the acquisition of VBI. This includes increases in salable and portfolio production in Q4, along with servicing income introduced by the villages' activities. Moving to Slide 7.
Speaker #3: Loan yields increased six basis points to 6.02% . Excluding accretion , loan yields increased basis seven points to 5.68% . Overall cost of funds is down 16 basis points from the prior quarter , with strong momentum in loan growth .
Speaker #3: Funding costs are now lower, providing additional liquidity and supporting accretive acquisitions. We expect continued expansion in the net interest margin. Turning to slide six.
Speaker #3: Non-interest income was $28.6 million, increasing 20% from the prior quarter. Fee revenue continues to benefit from our growth in commercial customers.
Speaker #3: And with the addition of The Villages in the fourth quarter, service charges on deposits increased 4% from the prior quarter. Mortgage banking activities have expanded with the acquisition of VBI.
Speaker #3: This includes increases in saleable and portfolio production in the fourth quarter , along with servicing income introduced by the villages . Activities . Moving to slide seven .
Tracey Dexter: Our wealth management team delivered another quarter of remarkable results, with income growing 21% from the prior quarter, largely attributed to organic growth, bringing new assets under management in 2025. Total AUM increased 37% year-over-year, with a 23% annual CAGR in the past 5 years. We're incredibly proud of our wealth team and their amazing success in 2025. Moving to Slide 8. Non-interest expense in the fourth quarter was $130.5 million, an increase of $28.5 million from the prior quarter. The fourth quarter included $18.1 million in merger and integration costs and $23.4 million in day one credit provisions for The Villages acquisition. Higher salaries and benefits and higher outsourced data processing costs reflect continued expansion and the addition of recent bank acquisitions, as well as higher performance-driven incentives.
Our wealth management team delivered another quarter of remarkable results, with income growing 21% from the prior quarter, largely attributed to organic growth, bringing new assets under management in 2025. Total AUM increased 37% year-over-year, with a 23% annual CAGR in the past 5 years. We're incredibly proud of our wealth team and their amazing success in 2025. Moving to Slide 8. Non-interest expense in the fourth quarter was $130.5 million, an increase of $28.5 million from the prior quarter. The fourth quarter included $18.1 million in merger and integration costs and $23.4 million in day one credit provisions for The Villages acquisition. Higher salaries and benefits and higher outsourced data processing costs reflect continued expansion and the addition of recent bank acquisitions, as well as higher performance-driven incentives.
Speaker #3: Our wealth management team delivered another quarter of remarkable results, with income growing 21% from the prior quarter, largely attributed to organic growth, bringing new assets under management in 2025.
Speaker #3: Total AUM increased 37% year over year, and 23% annually with CAGR in the past five years. We're incredibly proud of our wealth team and their amazing success in 2025.
Speaker #3: Moving to slide eight, non-interest expense in the fourth quarter was $130.5 million, an increase of $28.5 million from the prior quarter.
Speaker #3: The fourth quarter included 18.1 million in merger and integration costs and 23.4 million in day one credit the provisions for village's acquisition . Higher salaries and benefits , and higher outsourced data processing costs reflect continued expansion and the addition of recent bank acquisitions , as well as higher performance driven incentives .
Tracey Dexter: Other categories of expenses were in line with expectations. Our adjusted efficiency ratio improved to 54.5%, demonstrating continued operating leverage. We continue to remain focused on profitability and performance, and expect continued disciplined management of overhead and the efficiency ratio. As a reminder, looking ahead, Q1 typically has seasonally higher expenses from FICA and 401(k) resets. Turning to slides 9 and 10 on the loan portfolio. Loans outstanding, excluding the impact of the VBI acquisition, increased at an annualized 15%. We continue to see strong broad-based demand across our markets, and commercial production increased by 22% during Q4. Loan growth was further strengthened by strong mortgage production at VBI, much of which we chose to retain in the portfolio.
Other categories of expenses were in line with expectations. Our adjusted efficiency ratio improved to 54.5%, demonstrating continued operating leverage. We continue to remain focused on profitability and performance, and expect continued disciplined management of overhead and the efficiency ratio. As a reminder, looking ahead, Q1 typically has seasonally higher expenses from FICA and 401(k) resets. Turning to slides 9 and 10 on the loan portfolio. Loans outstanding, excluding the impact of the VBI acquisition, increased at an annualized 15%. We continue to see strong broad-based demand across our markets, and commercial production increased by 22% during Q4. Loan growth was further strengthened by strong mortgage production at VBI, much of which we chose to retain in the portfolio.
Speaker #3: Other categories of expenses were in line with expectations. Our adjusted efficiency ratio improved to 54.5%, demonstrating continued operating leverage. We continue to remain focused on profitability and performance and expect continued discipline of and the overhead management efficiency ratio.
Speaker #3: As a reminder , looking ahead , the first quarter typically has seasonally higher expenses from FICA and 401 resets . Turning to slide nine and ten on the loan portfolio .
Speaker #3: Loan outstandings, excluding the impact of the VBI acquisition, increased at an annualized 15%. We see strong, broad-based growth in our markets, and commercial demand across production increased by 22% during the fourth quarter.
Speaker #3: Loan growth was further strengthened by strong mortgage production at VBI, much of which we chose to retain in the portfolio. Loan yields increased six basis points, and excluding the effect of accretion, increased seven basis points from the prior quarter to 4.68 percent.
Tracey Dexter: Loan yields increased 6 basis points, and excluding the effect of accretion, yields increased 7 basis points from the prior quarter to 5.68%. The overall mix of loan types has remained generally consistent quarter-over-quarter. 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. 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 32% and 216% of consolidated risk-based capital, respectively. We've managed our loan portfolio with diverse distribution across categories and retained granularity to manage risk.
Loan yields increased 6 basis points, and excluding the effect of accretion, yields increased 7 basis points from the prior quarter to 5.68%. The overall mix of loan types has remained generally consistent quarter-over-quarter. 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. 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 32% and 216% of consolidated risk-based capital, respectively. We've managed our loan portfolio with diverse distribution across categories and retained granularity to manage risk.
Speaker #3: The overall mix of loan types has remained consistent generally quarter over quarter . Portfolio diversification . In terms of asset mix , industry , and type has been a critical element of the company's lending strategy .
Speaker #3: Broadly, exposure is distributed and we continue to be vigilant in maintaining our disciplined, conservative credit culture 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.
Speaker #3: guidance These measures are significantly below the peer group at 32% , and 216% of consolidated risk based capital , respectively . We've managed our loan portfolio with diverse distribution across categories and retained granularity to manage risk .
Tracey Dexter: Moving on to credit topics on Slide 11. The allowance for credit losses totaled $178.8 million, with coverage to total loans increasing to 1.42%.... Loans acquired from VBI have coverage of approximately 2% as we take a conservative approach while transitioning to Seacoast's portfolio management and monitoring practices. The allowance for credit losses, combined with the $150 million remaining unrecognized discount on acquired loans, totals $329 million, or 2.61% of total loans that's available to cover potential losses. The acquisition of VBI added approximately $59 million in accretable purchase mark. That's included in the figures presented on the slide, that if not needed to cover losses, will be recognized through yield over time. Moving to Slide 12, looking at quarterly trends and credit metrics, which remain strong.
Moving on to credit topics on Slide 11. The allowance for credit losses totaled $178.8 million, with coverage to total loans increasing to 1.42%.... Loans acquired from VBI have coverage of approximately 2% as we take a conservative approach while transitioning to Seacoast's portfolio management and monitoring practices. The allowance for credit losses, combined with the $150 million remaining unrecognized discount on acquired loans, totals $329 million, or 2.61% of total loans that's available to cover potential losses. The acquisition of VBI added approximately $59 million in accretable purchase mark. That's included in the figures presented on the slide, that if not needed to cover losses, will be recognized through yield over time. Moving to Slide 12, looking at quarterly trends and credit metrics, which remain strong.
Speaker #3: Moving on to credit topics on slide 11. The allowance for credit losses totaled $178.8 million, with coverage to total loans increasing to 1.42%.
Speaker #3: Loans acquired from VBI have coverage of approximately 2% . take a As we conservative approach , while transitioning to Seacoasts portfolio management and monitoring practices , the allowance for credit losses , combined with the unrecognized 150 million remaining discount on acquired loans , total 329 million , or 2.61% of total loans .
Speaker #3: That's available to cover potential losses . The acquisition of VBI added approximately purchase 59 million in accreted mark . That's included in the figures presented slide that , if not needed to cover losses , will be recognized yield over through time .
Tracey Dexter: We recorded net charge-offs of $936,000 during the quarter, or 3 basis points annualized, bringing the net charge-offs for the full year 2025 to 12 basis points of average loans. Non-performing, criticized, and classified loans grew slightly, with isolated additions from VBI, but remain low as a percentage of total loans. Turning to slides 13 and 14 on the deposit portfolio. Deposits increased to $16.3 billion, largely attributed to the acquired VBI deposits. Average balances in the fourth quarter were up 29% from the prior quarter, benefiting from the acquisition and the seasonal effect of higher public funds deposits. The cost of deposits declined to 1.67%, exiting the year at 1.64%. Seacoast continues to benefit from a diverse deposit base.
We recorded net charge-offs of $936,000 during the quarter, or 3 basis points annualized, bringing the net charge-offs for the full year 2025 to 12 basis points of average loans. Non-performing, criticized, and classified loans grew slightly, with isolated additions from VBI, but remain low as a percentage of total loans. Turning to slides 13 and 14 on the deposit portfolio. Deposits increased to $16.3 billion, largely attributed to the acquired VBI deposits. Average balances in the fourth quarter were up 29% from the prior quarter, benefiting from the acquisition and the seasonal effect of higher public funds deposits. The cost of deposits declined to 1.67%, exiting the year at 1.64%. Seacoast continues to benefit from a diverse deposit base.
Speaker #3: Moving to slide 12 , looking at quarterly trends in credit metrics , which remain strong , we recorded net charge offs of 936,000 during the quarter , or three basis points annualized , bringing the net charge offs for the full year 2025 to 12 basis points of average loans .
Speaker #3: Non-performing and criticized and classified loans grew slightly, with additions isolated from VBI, but remain low as a percentage of total loans.
Speaker #3: Turning to slide 13 and 14 on the deposit portfolio, deposits increased to $16.3 billion, largely attributed to the acquired VBI deposits. Balances in the fourth quarter were up.
Speaker #3: Average 29% from the prior quarter , benefiting from the acquisition and the seasonal effect of higher public funds deposits . The cost of deposits declined to 1.67% , exiting the year at 1.64% , continues to Zikos from a benefit diverse deposit base customer transaction accounts 48% of total represent deposits , which continues to highlight our long standing , relationship focused approach on slide our 15 , capital position continues to be very strong , tangible book value per share shows the initially dilutive impact of the VBI acquisition , which we expect to be earned back ahead of our original projection .
Tracey Dexter: Customer transaction accounts represent 48% of total deposits, which continues to highlight our long-standing relationship-focused approach. On Slide 15, our capital position continues to be very strong. Tangible book value per share shows the initially dilutive impact of the VBI acquisition, which we expect to be earned back ahead of our original projection. The ratio of tangible equity to tangible assets remains strong at 9.3%. As expected, return on tangible equity decreased, reflecting the impact of the acquisition. Our risk-based and Tier 1 capital ratios remain among the highest in the industry. I'll now turn the call over to Michael to discuss recent strategic capital actions in the securities portfolio. Michael?
Customer transaction accounts represent 48% of total deposits, which continues to highlight our long-standing relationship-focused approach. On Slide 15, our capital position continues to be very strong. Tangible book value per share shows the initially dilutive impact of the VBI acquisition, which we expect to be earned back ahead of our original projection. The ratio of tangible equity to tangible assets remains strong at 9.3%. As expected, return on tangible equity decreased, reflecting the impact of the acquisition. Our risk-based and Tier 1 capital ratios remain among the highest in the industry. I'll now turn the call over to Michael to discuss recent strategic capital actions in the securities portfolio. Michael?
Speaker #3: The ratio of tangible equity to tangible assets remains strong at 9.3%. As expected, return on tangible equity decreased, reflecting the impact of the acquisition.
Speaker #3: Our risk-based and Tier One capital ratios remain among the highest in the industry. I'll now turn the call over to Michael to discuss recent capital strategic actions in the securities portfolio.
Michael Young: Thank you, Tracy. I'll be referencing Slide 16 for the comments on the securities portfolio. With the closing of the VBI merger, our securities portfolio grew substantially to $5.75 billion in Q4, combining two low-cost, granular deposit franchises with a large, primarily agency-backed securities portfolio that has only further strengthened our balance sheet's liquidity position as we converted excess capital into low-risk earnings. Immediately following the merger close, we sold approximately $1.5 billion of the $2.5 billion securities portfolio at VBI, with an emphasis on reducing risk throughout the liquidation of over $600 million in corporate debt that was sold. We patiently redeployed that liquidity throughout the quarter, avoiding periods of low rates, which resulted in higher cash balances for much of the quarter, creating a slight drag on the NIM.
Michael Young: Thank you, Tracy. I'll be referencing Slide 16 for the comments on the securities portfolio. With the closing of the VBI merger, our securities portfolio grew substantially to $5.75 billion in Q4, combining two low-cost, granular deposit franchises with a large, primarily agency-backed securities portfolio that has only further strengthened our balance sheet's liquidity position as we converted excess capital into low-risk earnings. Immediately following the merger close, we sold approximately $1.5 billion of the $2.5 billion securities portfolio at VBI, with an emphasis on reducing risk throughout the liquidation of over $600 million in corporate debt that was sold. We patiently redeployed that liquidity throughout the quarter, avoiding periods of low rates, which resulted in higher cash balances for much of the quarter, creating a slight drag on the NIM.
Speaker #3: Michael .
Speaker #4: Thank you . Tracy , I'll be referencing slide 16 for the comments on the securities portfolio . With the closing of the VBI merger , our securities portfolio grew substantially to 5.75 billion in the fourth quarter , combining two low cost granular deposit franchises with a large , primarily agency backed securities portfolio that has only further strengthened our balance sheets liquidity position as we converted excess capital into low risk earnings immediately following the merger close , we sold approximately 1.5 billion of the 2.5 billion securities portfolio at VBI , with an emphasis on reducing risk throughout the liquidation of over 600 million in corporate debt .
Speaker #4: That was sold , we patiently redeployed that liquidity the throughout quarter , avoiding periods of low rates , which resulted for much balances quarter , slight drag Nim on the cash higher in of the creating a .
Michael Young: The net unrealized losses in the AFS portfolio improved by $18.5 million during Q4, leading to additional tangible book value accretion. This has been a hallmark of our 2025 performance, with the unrealized losses on the securities portfolio improving by $137 million, adding nearly $1 to tangible book value and materially reducing the dilution from the acquisitions of Heartland and VBI. The portfolio yield increased 21 basis points to 4.13% in Q4, with additional yield expansion expected in Q1 2026, with a full quarter benefit of the Q4 actions. Now turning to Slide 17. We have materially outperformed our conservative assumptions related to the VBI acquisition. The primary contribution came from lower marks on the securities portfolio at close, with additional benefits from lower credit marks on the loan portfolio.
The net unrealized losses in the AFS portfolio improved by $18.5 million during Q4, leading to additional tangible book value accretion. This has been a hallmark of our 2025 performance, with the unrealized losses on the securities portfolio improving by $137 million, adding nearly $1 to tangible book value and materially reducing the dilution from the acquisitions of Heartland and VBI. The portfolio yield increased 21 basis points to 4.13% in Q4, with additional yield expansion expected in Q1 2026, with a full quarter benefit of the Q4 actions. Now turning to Slide 17. We have materially outperformed our conservative assumptions related to the VBI acquisition. The primary contribution came from lower marks on the securities portfolio at close, with additional benefits from lower credit marks on the loan portfolio.
Speaker #4: Net losses in the unrealized AFS portfolio improved by $18.5 million during the fourth quarter, leading to additional tangible book value accretion.
Speaker #4: This has been a hallmark of our 2025 performance , with the unrealized losses on the securities portfolio improving by 137 million , adding nearly book $1 to tangible value and materially reducing the dilution from the acquisitions of heartland and VBI .
Speaker #4: The portfolio yield increased 21 basis points to 4.13% in the fourth quarter, with additional yield expansion expected in the first quarter of '26, with a full quarter benefit of the fourth quarter.
Speaker #4: Actions . Now turning to slide 17 . We have materially outperformed our conservative assumptions related to the VBI acquisition . The primary contribution came from lower marks on the securities portfolio at close , with additional lower the loan marks on benefits from credit portfolio .
Michael Young: These positive developments delivered significantly lower dilution and materially higher pro forma capital as you can see. We have about 90 basis points of additional total risk-based capital, or approximately $92 million, compared to the 14.7% that we originally articulated at deal announcement. Given the significant capital outperformance, we are once again trending towards elevated capital levels. As a result, we elected to convert one-third of that excess regulatory capital generation into higher future earnings profile, delivering what we believe is a win-win for shareholders, with no tangible book value dilution, but higher pro forma earnings, and allowing us to exceed the $2.46 that we originally articulated at deal announcement.
These positive developments delivered significantly lower dilution and materially higher pro forma capital as you can see. We have about 90 basis points of additional total risk-based capital, or approximately $92 million, compared to the 14.7% that we originally articulated at deal announcement. Given the significant capital outperformance, we are once again trending towards elevated capital levels. As a result, we elected to convert one-third of that excess regulatory capital generation into higher future earnings profile, delivering what we believe is a win-win for shareholders, with no tangible book value dilution, but higher pro forma earnings, and allowing us to exceed the $2.46 that we originally articulated at deal announcement.
Speaker #4: These positive developments delivered significantly lower dilution and materially higher pro forma capital. You can see, we have about 90 basis points of additional total risk-based capital, or approximately $92 million, compared to the 14.7% that we originally articulated at deal announcement.
Speaker #4: Given the significant capital outperformance , we are once again trending towards elevated capital levels . As a result , we elected to convert one third of that excess regulatory capital generation into higher earnings profile , delivering what we believe is a win win for shareholders with no tangible book value dilution but profile higher , higher pro forma earnings and allowing us to exceed the $2.46 that we originally articulated at deal announcement .
Michael Young: We sold $317 million in book value of available-for-sale securities with a projected book yield below 2%, and we received proceeds of $277 million that were invested at a taxable equivalent yield of 4.8%, for a pickup of almost 290 basis points, as part of the securities restructure action we took this week. And finally, on Slide 18, we felt it important to provide some additional guidance around our expectations for 2026. Our guidance numbers reflect adjusted performance metrics, largely calibrating for merger-related charges that may take place in 2026. We expected adjusted revenue growth of 29% to 31% for the full year 2026, compared to the full year 2025....
We sold $317 million in book value of available-for-sale securities with a projected book yield below 2%, and we received proceeds of $277 million that were invested at a taxable equivalent yield of 4.8%, for a pickup of almost 290 basis points, as part of the securities restructure action we took this week. And finally, on Slide 18, we felt it important to provide some additional guidance around our expectations for 2026. Our guidance numbers reflect adjusted performance metrics, largely calibrating for merger-related charges that may take place in 2026. We expected adjusted revenue growth of 29% to 31% for the full year 2026, compared to the full year 2025....
Speaker #4: We sold $317 million in book value of securities available for sale, with a projected book yield below 2%. And we received proceeds of $277 million that were invested at a taxable equivalent yield of 4.8% for a pickup of almost 290 basis points.
Speaker #4: As part of the Securities restructure action . We took this week . And finally , on slide 18 , we felt it important to provide some additional guidance around our expectations for 2026 .
Speaker #4: Our guidance numbers reflect adjusted performance metrics , largely calibrating for merger related charges that may take place in 2026 . We expected adjusted revenue growth of 29 to 31% for the full year 2026 , compared to the full year 2025 .
Michael Young: We believe our adjusted efficiency ratio will be in the 53% to 55% range for 2026, with the primary driver being the pace of banker hiring during the year. We plan to increase our banker count by approximately 15% in 2026, and the benefit will be fully realized in 2027 and 2028. Most importantly, however, we plan to manage these outcomes within tight bottom line performance of $2.48 to $2.52 in earnings, an increase from our articulation of the $2.46 target last year. We expect to exit the year with a 1.3% adjusted ROA and a 16% ROTE in the Q4 post-conversion activities as we balance the investments for future growth with strong current profitability.
We believe our adjusted efficiency ratio will be in the 53% to 55% range for 2026, with the primary driver being the pace of banker hiring during the year. We plan to increase our banker count by approximately 15% in 2026, and the benefit will be fully realized in 2027 and 2028. Most importantly, however, we plan to manage these outcomes within tight bottom line performance of $2.48 to $2.52 in earnings, an increase from our articulation of the $2.46 target last year. We expect to exit the year with a 1.3% adjusted ROA and a 16% ROTE in the Q4 post-conversion activities as we balance the investments for future growth with strong current profitability.
Speaker #4: We believe our adjusted efficiency ratio will be in the 53% to 55% range for 2026 , with a primary driver being the pace of banker hiring during the year .
Speaker #4: We plan to increase our bank account by approximately 15% in 2026, and the benefit will be fully realized in 2027 and 2028.
Speaker #4: Most importantly, we, however, plan to manage these outcomes within tight bottom line performance of $2.48 in earnings to $2.52 in earnings, an increase from our articulation of the $2.46 last target year.
Speaker #4: We expect to exit the year with a 1.3% adjusted ROA and a 16% ROI in the fourth quarter . Post conversion activities . As we balance the investments for future growth with strong current profitability , we plan to deliver all of these financial outcomes while continuing the organic growth momentum that we've seen in 2025 .
Michael Young: We plan to deliver all of these financial outcomes while continuing the organic growth momentum that we've seen in 2025, and we expect to deliver high single-digit loan growth and low to mid-single digit deposit growth as we move forward throughout the year. I'll now turn the call back to Chuck for final comments.
We plan to deliver all of these financial outcomes while continuing the organic growth momentum that we've seen in 2025, and we expect to deliver high single-digit loan growth and low to mid-single digit deposit growth as we move forward throughout the year. I'll now turn the call back to Chuck for final comments.
Speaker #4: And we expect to deliver high single-digit loan growth and low- to mid-single-digit deposit growth as we move forward throughout the year.
Charles Shaffer: Thank you, Michael. Before we open the line for questions, I'd like to once again express my deep appreciation for our Seacoast associates, our customers, and our shareholders. We closed out a truly transformational year, one marked by industry-leading loan growth, two exceptional acquisitions, and meaningful investments across our company that position us for long-term strength. We operate one of the best banking teams in the Southeast and some of the strongest markets in the country. We have an exceptionally strong balance sheet. I remain very confident in our growth outlook and our ability to deliver upon our strong return profile in 2026. It's especially gratifying to enter our hundredth anniversary in 2026 with such a strong foundation. As we celebrate a century of serving our communities, we do so with confidence, momentum, and tremendous optimism for what lies ahead.
Charles Shaffer: Thank you, Michael. Before we open the line for questions, I'd like to once again express my deep appreciation for our Seacoast associates, our customers, and our shareholders. We closed out a truly transformational year, one marked by industry-leading loan growth, two exceptional acquisitions, and meaningful investments across our company that position us for long-term strength. We operate one of the best banking teams in the Southeast and some of the strongest markets in the country. We have an exceptionally strong balance sheet. I remain very confident in our growth outlook and our ability to deliver upon our strong return profile in 2026. It's especially gratifying to enter our hundredth anniversary in 2026 with such a strong foundation. As we celebrate a century of serving our communities, we do so with confidence, momentum, and tremendous optimism for what lies ahead.
Speaker #4: I'll now turn the call back to Chuck for final comments .
Speaker #2: Thank you , Michael . And for open the line before we I'd like questions , to once again express my deep appreciation seacoast associates for our , our customers , and our shareholders .
Speaker #2: We closed out a truly transformational year, one marked by industry-leading loan growth, exceptional acquisitions, and meaningful investments across our company.
Speaker #2: That positions us for long-term strength. We operate one of the best banking teams in the Southeast, and in some of the strongest markets in the country.
Speaker #2: We have an exceptionally strong balance sheet. I mean, we remain very confident in our growth outlook and our ability to deliver upon our strong return profile in 2026.
Speaker #2: And it's especially gratifying to enter our 100th anniversary in 2026 with such a strong foundation. As we celebrate a century of serving our communities, we do so with confidence, momentum, and tremendous optimism for what lies ahead.
Charles Shaffer: And with that, operator, we'll open the line for questions.
And with that, operator, we'll open the line for questions.
Operator: Absolutely. We will now begin the question-and-answer session. If you would like to ask a question, simply press Star, followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of David Feaster with Raymond James. David, please go ahead.
Operator: Absolutely. We will now begin the question-and-answer session. If you would like to ask a question, simply press Star, followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of David Feaster with Raymond James. David, please go ahead.
Speaker #2: And with that, operator, we'll open the line for questions.
Speaker #1: Absolutely . We will now begin the question and answer session . If you would like to ask a question , simply press star , followed by the number one on your telephone keypad .
Speaker #1: We'll pause for just a moment to compile the Q&A roster. And our first question comes from the line of David Pfister with Raymond James.
David Feaster: Hey, good morning, everybody.
David Feaster: Hey, good morning, everybody.
Charles Shaffer: Good morning, David.
Charles Shaffer: Good morning, David.
David Feaster: I really appreciate you guys. It's very helpful. I want to start on-
Speaker #1: David, please go ahead.
David Feaster: I really appreciate you guys. It's very helpful. I want to start on-
Speaker #5: Hi .
Speaker #2: Good morning David .
Charles Shaffer: Hey, David. Hey, David. David, you're, you're a little garbled. I think maybe you got a bad connection. Do you want to drop and come back in? Sorry. Yeah, I think, operator, we'll go to the next one-
Charles Shaffer: Hey, David. Hey, David. David, you're, you're a little garbled. I think maybe you got a bad connection. Do you want to drop and come back in? Sorry. Yeah, I think, operator, we'll go to the next one-
Speaker #5: I really appreciate you guys. It's very helpful. Hey, David.
Speaker #2: Hey , David . David , you're a little garbled . I think maybe you got a bad connection . Do you want to drop and come back in ?
David Feaster: That better?
David Feaster: That better?
Charles Shaffer: And see if David can... Oh, yeah, better, David. Good. Perfect.
Charles Shaffer: And see if David can... Oh, yeah, better, David. Good. Perfect.
Speaker #2: Sorry . Yeah , I think operator will go to the next one . David . yeah . Oh , Better . David . Good .
David Feaster: Okay. Sorry. I was just saying, I appreciate the guidance this quarter. That is super helpful. I wanted to start on the efficiency side. You know, I guess first, I just wanted to clarify, when we talk about an adjusted efficiency ratio, does that exclude intangible amortization like we have in the past? And then, you know, just looking at the efficiency, it is a bit higher than where the street is. You know, it sounds like there's some new hiring invested, embedded in that. But just wanted to get your thoughts on how expenses are, specifically in investments, you know, kind of on the horizon.
David Feaster: Okay. Sorry. I was just saying, I appreciate the guidance this quarter. That is super helpful. I wanted to start on the efficiency side. You know, I guess first, I just wanted to clarify, when we talk about an adjusted efficiency ratio, does that exclude intangible amortization like we have in the past? And then, you know, just looking at the efficiency, it is a bit higher than where the street is. You know, it sounds like there's some new hiring invested, embedded in that. But just wanted to get your thoughts on how expenses are, specifically in investments, you know, kind of on the horizon.
Speaker #2: Perfect .
Speaker #6: Okay . Sorry . I was just saying , appreciate the guidance this quarter . That is super helpful . I wanted to start on the efficiency side .
Speaker #6: You know, I guess first I just wanted to clarify, when we talk about an adjusted efficiency ratio, does that exclude intangible amortization like we have in the past?
Speaker #6: And then , you know , just looking at the efficiency , it is a than higher where where the is . You bit sounds like street there's some new hiring invested embedded in that , but just wanted to get your thoughts on on how expenses are specifically in investments .
Tracey Dexter: Yeah. David, I can take the first part. This is Tracey. Our adjusted efficiency ratio includes, leaves in the expense for amortization of intangible assets. In the past, we had excluded that. We know that's been kind of a difference in the way you keep track of it, so, it's in there.
Tracey Dexter: Yeah. David, I can take the first part. This is Tracey. Our adjusted efficiency ratio includes, leaves in the expense for amortization of intangible assets. In the past, we had excluded that. We know that's been kind of a difference in the way you keep track of it, so, it's in there.
Speaker #6: You know, kind of on the horizon.
Speaker #3: David, I can. Yeah.
Speaker #3: part . our Tracy , adjusted This is efficiency ratio includes the in the leaves expense for amortization of intangible assets . In we had the past , excluded that .
Michael Young: And David, regarding the investments, you know, I think if you look back to the original deal deck, we had an efficiency ratio of about 52.5%. That was run rate post all the expense takeout with the acquisitions. We obviously won't have that impact until kind of the midway part of this year, so that naturally pushes the efficiency ratio up for 2026 guidance. But also, you know, as articulated in the prior prepared remarks, we plan to be aggressive in hiring bankers. We've had a lot of inbound demand, as Chuck has referenced many times in the past, but we've wanted to balance that growth in banker count with profitability.
Michael Young: And David, regarding the investments, you know, I think if you look back to the original deal deck, we had an efficiency ratio of about 52.5%. That was run rate post all the expense takeout with the acquisitions. We obviously won't have that impact until kind of the midway part of this year, so that naturally pushes the efficiency ratio up for 2026 guidance. But also, you know, as articulated in the prior prepared remarks, we plan to be aggressive in hiring bankers. We've had a lot of inbound demand, as Chuck has referenced many times in the past, but we've wanted to balance that growth in banker count with profitability.
Speaker #3: We know that's been kind of a difference in the way you keep track of it, so it's in there.
Speaker #4: And David , regarding the investments , you know , I think if you look back to the original deal deck , we had an efficiency ratio of about 52.5% .
Speaker #4: That was run rate post all the expenses taken out with the acquisitions. We obviously won't have that impact until kind of the midway part of this year.
Speaker #4: So that naturally pushes the efficiency ratio up for 2026 . Guidance . But also , you know , as articulated in the prior prepared remarks , we plan to be aggressive in hiring inbound bankers .
Speaker #4: We've had a lot of growth in the bank account, which Chuck has referenced many times in the past, but we've wanted to balance that growth with profitability.
Michael Young: We're in a much stronger profitability footing now, and given the merger disruption that we see in the industry, we want to be on the front foot in hiring. We articulated, you know, a 15% increase in the banker count as the expectation, and some of the driver will just be how successful we are and how early in the year as to when we see the expenses ramp versus, you know, kind of the future production.
We're in a much stronger profitability footing now, and given the merger disruption that we see in the industry, we want to be on the front foot in hiring. We articulated, you know, a 15% increase in the banker count as the expectation, and some of the driver will just be how successful we are and how early in the year as to when we see the expenses ramp versus, you know, kind of the future production.
Speaker #4: We're in a much stronger profitability footing now, and given the merger disruption that we see in the industry, we're on the front foot in hiring.
Speaker #4: We articulated , you know , a 15% increase in the bank account as the expectation and some of the driver will just be how successful we are and how early in the year as to when we see the expenses ramp versus , you know , kind of the future production .
David Feaster: That's helpful. And then maybe kind of staying on, on the hiring side, you have-- you've obviously had a lot of success. There's more opportunity on the horizon. I guess, first off, you know, the loan growth, I mean, 15% was great. I wanted to get a sense of how, how much of that would you attribute to the new hires versus improving demand or, or just increasing productivity from your existing team? And then is the hiring investment that you're contemplating key to the achievability of that high single digit growth guide, or would that be additive, just given the time it takes for these lenders to ramp up?
David Feaster: That's helpful. And then maybe kind of staying on, on the hiring side, you have-- you've obviously had a lot of success. There's more opportunity on the horizon. I guess, first off, you know, the loan growth, I mean, 15% was great. I wanted to get a sense of how, how much of that would you attribute to the new hires versus improving demand or, or just increasing productivity from your existing team? And then is the hiring investment that you're contemplating key to the achievability of that high single digit growth guide, or would that be additive, just given the time it takes for these lenders to ramp up?
Speaker #6: That's helpful. And then maybe, kind of on the hiring and staying side, you've obviously had a lot of success. There's more opportunity on the horizon, I guess.
Speaker #6: First off , you know , the loan growth , I mean , 15% was great . I wanted to get a sense of how much of that would you attribute to the new hires versus improving demand or or just increasing productivity from your existing team ?
Speaker #6: And then, is the hiring investment that you're contemplating keyed to the achievability of that high single-digit growth guide? Or would that be additive, just given it takes time for these lenders to ramp up?
Charles Shaffer: Yeah, maybe I'll take that one, David. So I think if you look back at the quarter, the way to break it down, and this is, this is rough, so this isn't super precise, but out of the 15%, I'd say roughly 10% came out of what was legacy Seacoast. So our commercial banking team, you know, the hiring we've done over the last couple of years, that drove about 10% of that annualized growth. There's another 2 to 3% that came from The Villages acquisition, as we talked about in my prepared comments. When you kind of look at the opportunity there, it's, you know, really high FICO credit, a more senior borrower and typically shorter life duration asset. So we really like that paper.
Charles Shaffer: Yeah, maybe I'll take that one, David. So I think if you look back at the quarter, the way to break it down, and this is, this is rough, so this isn't super precise, but out of the 15%, I'd say roughly 10% came out of what was legacy Seacoast. So our commercial banking team, you know, the hiring we've done over the last couple of years, that drove about 10% of that annualized growth. There's another 2 to 3% that came from The Villages acquisition, as we talked about in my prepared comments. When you kind of look at the opportunity there, it's, you know, really high FICO credit, a more senior borrower and typically shorter life duration asset. So we really like that paper.
Speaker #2: Yeah , maybe I'll take that one . David . I think if you look back at the quarter , the way to break it down and this is this is rough .
Speaker #2: So, this isn't super precise, but out of the 15%, I'd say roughly 10% came out of what was legacy Seacoast's or the commercial banking team.
Speaker #2: You know, the hiring we've done over the last couple of years drove about 10% of that annualized growth. There's another 2% to 3% that came from the Villages acquisition.
Speaker #2: As we talked about in my prepared comments , when you kind of look at the opportunity , there , it's you know , really high Fico credit , more senior borrower and typically shorter life duration assets .
Charles Shaffer: As a result, you know, we took the opportunity to portfolio it, and then there's probably another 1 to 2%. It's just a little bit slower pay downs, when you look into the coming year. We've contemplated arguably a little bit higher pay downs as we move into the coming year, but bake that into our model. And so we guided to that high single-digit growth rate. I would tell you that, you know, if you really think about the hiring profile, if we, you know, do exceptionally well here in the first half of the year and are able to add that 15%, while it will benefit late in 2026, really, we won't see the benefit till 2027, 2028.
As a result, you know, we took the opportunity to portfolio it, and then there's probably another 1 to 2%. It's just a little bit slower pay downs, when you look into the coming year. We've contemplated arguably a little bit higher pay downs as we move into the coming year, but bake that into our model. And so we guided to that high single-digit growth rate. I would tell you that, you know, if you really think about the hiring profile, if we, you know, do exceptionally well here in the first half of the year and are able to add that 15%, while it will benefit late in 2026, really, we won't see the benefit till 2027, 2028.
Speaker #2: So we really like that paper . And as a result , you know , we took the opportunity to portfolio . And then there's probably another 1 to 2% .
Speaker #2: It's just a little bit slower . Paydowns when you look into the coming year , we've contemplated arguably a little bit higher . as we Paydowns move into the coming year and bake that into our model .
Speaker #2: And so we've guided to that high single digit growth rate . I would tell you that , you know , if you really think about the hiring profile , if we , do you know , exceptionally well here in the first half of the year and are able to add that 15% , while it will benefit late really we won't see the benefit And the other thing that you sort of have to contemplate is the balance sheet will grow as we move through the year with a high single digit call it 8 to 9% growth achieve that , know , you got fairly sizable growth in the loan portfolio that we need to kind of continue originate to .
Charles Shaffer: And the other thing that you have to sort of contemplate is the balance sheet will grow as we move through the year with a high single digit, call it 8 to 9% growth rate. If we achieve that, you know, you got fairly sizable growth in the loan portfolio that we need to kind of continue to reoriginate to. And as we've talked about before, you know, we're always going to be thoughtful about what our credit risk appetite is and what we're willing to take into the portfolio. You know, we're going to do the loans we like in, in our, in our credit profile, and largely don't want to sort of be held to a such a high growth rate that we wouldn't be able to continue to be thoughtful and selective on what credits we're willing to put in the portfolio.
And the other thing that you have to sort of contemplate is the balance sheet will grow as we move through the year with a high single digit, call it 8 to 9% growth rate. If we achieve that, you know, you got fairly sizable growth in the loan portfolio that we need to kind of continue to reoriginate to. And as we've talked about before, you know, we're always going to be thoughtful about what our credit risk appetite is and what we're willing to take into the portfolio. You know, we're going to do the loans we like in, in our, in our credit profile, and largely don't want to sort of be held to a such a high growth rate that we wouldn't be able to continue to be thoughtful and selective on what credits we're willing to put in the portfolio.
Speaker #2: And as we've talked about before, you know, we're always going to be thoughtful about what our credit risk appetite is, and what we're willing to take into the portfolio.
Speaker #2: know , we're You going to do the loans we like in our in our credit profile . And largely don't want to sort of be held to a such a high growth rate that we able to continue wouldn't be to be and selective on what credits were put in the willing to portfolio .
Charles Shaffer: So I think if you're thinking about modeling, sort of that high single digit growth rate is the right way to think about it. We'll have optionality with the Villages portfolio to kind of move that in and out, depending on where rates are and where the yield curve is. And, as Michael mentioned, we still have a lot of opportunity to hire. So, you know, on the growth side, particularly loan growth side, I feel really confident about what's out ahead for us.
So I think if you're thinking about modeling, sort of that high single digit growth rate is the right way to think about it. We'll have optionality with the Villages portfolio to kind of move that in and out, depending on where rates are and where the yield curve is. And, as Michael mentioned, we still have a lot of opportunity to hire. So, you know, on the growth side, particularly loan growth side, I feel really confident about what's out ahead for us.
Speaker #2: So, I think if you're thinking about modeling, sort of that high single-digit growth rate is the right way to think about it.
Speaker #2: We'll have optionality with the village's portfolio to kind of move that in and out, depending on where rates are, where the—and yield curve is.
Speaker #2: And is . Michael mentioned , we still have a lot of opportunity to hire . So , you know , on the on the growth side , particularly loan growth side , I feel really confident about what's out ahead for us .
David Feaster: That's exciting. Maybe just last one for me, switching gears to capital. You know, you talked about capital pro forma being higher than expected, deployed a portion of that into the repositioning here in Q1. But look, based on your pro forma profitability, you're going to be accreting a lot of capital, even with high single-digit loan growth. How do you think about capital return going forward? Just as, you know, maybe M&A is less of a focus, like we've talked about, would you expect to see more capital return, or would you rather, you know, accrete capital back closer to maybe where you were previously?
David Feaster: That's exciting. Maybe just last one for me, switching gears to capital. You know, you talked about capital pro forma being higher than expected, deployed a portion of that into the repositioning here in Q1. But look, based on your pro forma profitability, you're going to be accreting a lot of capital, even with high single-digit loan growth. How do you think about capital return going forward? Just as, you know, maybe M&A is less of a focus, like we've talked about, would you expect to see more capital return, or would you rather, you know, accrete capital back closer to maybe where you were previously?
Speaker #6: That's exciting . Maybe just last one for me . Switching gears to capital , you know , you talked about capital pro forma being being higher than expected deployed a portion of that into the positioning here in the first quarter .
Speaker #6: But look, based on your pro forma profitability, you're going to be accreting a lot of capital even with high single-digit loan growth.
Speaker #6: How do you think about capital return going forward? Just as you know, maybe it's less of a focus, like we've talked about.
Speaker #6: Would you expect to see more capital return, or would you rather, you know, accrete capital back closer to maybe where you were previously?
Charles Shaffer: Yeah, we'll see how the year plays out, what opportunities emerge. You know, we took the opportunity here this quarter to do the securities loss trade, and I think that was a good use of capital, given the significant capital appreciation that we saw on the, on the Villages transaction and the shorter earn back than what we originally put in the deal modeling. And so we will continue to monitor, David. I mean, obviously, you know, we're going to have a lot of capital. That's going to give us opportunities to think about things like dividends and buybacks over time. As you mentioned, there's, you know, a lot less opportunity for M&A, and at the moment, we're heads down, highly focused on getting this Villages deal done. I mean, that's kind of the priority right now.
Charles Shaffer: Yeah, we'll see how the year plays out, what opportunities emerge. You know, we took the opportunity here this quarter to do the securities loss trade, and I think that was a good use of capital, given the significant capital appreciation that we saw on the, on the Villages transaction and the shorter earn back than what we originally put in the deal modeling. And so we will continue to monitor, David. I mean, obviously, you know, we're going to have a lot of capital. That's going to give us opportunities to think about things like dividends and buybacks over time. As you mentioned, there's, you know, a lot less opportunity for M&A, and at the moment, we're heads down, highly focused on getting this Villages deal done. I mean, that's kind of the priority right now.
Speaker #2: Yeah, we'll see how the year plays out and what opportunities emerge. You know, we took the opportunity here this quarter to do securities loss trade.
Speaker #2: I think that was a good use of capital, given the significant capital appreciation that we saw on the Villages transaction, and the shorter term back than what we originally put in the deal modeling.
Speaker #2: And we'll so continue to monitor . David . I mean , obviously , you know , we're going to have a lot of capital that's going to give us opportunities to think about things like dividends and buybacks over time .
Speaker #2: As you mentioned , there's , you know , a lot less opportunity for M&A . And at the moment , we're heads down highly focused on getting this done .
Charles Shaffer: We want to get through the middle part of the year, have an amazing conversion for our customers, deliver really solid experience in The Villages, come out of that, and then we'll see what opportunities present. But at the moment, we're. I hear you, we're growing a lot of capital. That's a conversation we continue to have with our board, and something we'll continue to monitor. But yeah, I mean, we'll continue to look at other options as we go through the year here. And, you know, there's buybacks and dividends and other things we can do through time.
We want to get through the middle part of the year, have an amazing conversion for our customers, deliver really solid experience in The Villages, come out of that, and then we'll see what opportunities present. But at the moment, we're. I hear you, we're growing a lot of capital. That's a conversation we continue to have with our board, and something we'll continue to monitor. But yeah, I mean, we'll continue to look at other options as we go through the year here. And, you know, there's buybacks and dividends and other things we can do through time.
Speaker #2: I deal mean , that's that's kind of the priority right now . We want to get through the middle part of the year , have an amazing conversion for our customers , deliver really solid experience in the villages .
Speaker #2: Come out of that and then we'll see what opportunities present . But at the moment we're I hear you , we're growing a lot of capital .
Speaker #2: That's a conversation we continue to have with our board . And something we'll continue to monitor . But yeah , I mean , we'll continue to look at other options .
David Feaster: Perfect. Thanks, everybody.
David Feaster: Perfect. Thanks, everybody.
Speaker #2: Options as we go through the year here. And, you know, there’s buybacks and dividends and other things we can do through time.
Operator: Your next question comes from the line of Russell Hunter with Stephens. Russell, please go ahead.
Operator: Your next question comes from the line of Russell Hunter with Stephens. Russell, please go ahead.
Speaker #6: Terrific . Thanks everybody .
Russell Hunter: Hey, good morning, guys.
Russell Gunther: Hey, good morning, guys.
Speaker #1: And your next question, the line comes from Russ Alcantar with Stephens. Russell, please go ahead.
Charles Shaffer: Hey, Russ.
Charles Shaffer: Hey, Russ.
Michael Young: Good morning.
Michael Young: Good morning.
Charles Shaffer: Good morning.
Charles Shaffer: Good morning.
Russell Hunter: Maybe I'd like to start, if I could, on kind of margin and NII. Really appreciate the revenue guide for the year. Given the securities actions taken within Q4 and then again here in Q1, kind of how are you thinking about where that first quarter margin could shake out? And then an adjacent question within the NII expectation for the year, kind of what is your overall level of purchase accounting embedded in that guide?
Russell Gunther: Maybe I'd like to start, if I could, on kind of margin and NII. Really appreciate the revenue guide for the year. Given the securities actions taken within Q4 and then again here in Q1, kind of how are you thinking about where that first quarter margin could shake out? And then an adjacent question within the NII expectation for the year, kind of what is your overall level of purchase accounting embedded in that guide?
Speaker #7: Hey good morning guys .
Speaker #2: Hey Russell, good morning. Good morning.
Speaker #7: I'd Maybe like to start if I could on kind of margin NII and really appreciate the revenue guide for the year given the securities actions taken within for Q and then again , here in one Q , how are you thinking about where that first quarter margin could shake out ?
Speaker #7: And then an adjacent question within the NII expectation for the year—kind of, what is your overall level accounting for purchase embedded in that guide?
Michael Young: Hey, Russell, I'll take the first part of that and turn the second part to Tracey. You know, two key things to think about. One is the margin side, but the other is the average earning asset balances. In the fourth quarter, we have public funds balances that tend to fund up and fund back down, as well as you had mentioned, kind of the taking our time on the repositioning, so we had some excess cash balances related to that as well. So both of those kind of weighed on the margin a little bit in the fourth quarter. We would expect the average earning asset base to be down in the first quarter by $200 million, but the margin will expand pretty nicely, probably in that 10 to 15 basis point range in the first quarter.
Michael Young: Hey, Russell, I'll take the first part of that and turn the second part to Tracey. You know, two key things to think about. One is the margin side, but the other is the average earning asset balances. In the fourth quarter, we have public funds balances that tend to fund up and fund back down, as well as you had mentioned, kind of the taking our time on the repositioning, so we had some excess cash balances related to that as well. So both of those kind of weighed on the margin a little bit in the fourth quarter. We would expect the average earning asset base to be down in the first quarter by $200 million, but the margin will expand pretty nicely, probably in that 10 to 15 basis point range in the first quarter.
Speaker #4: Hey , Russell , I'll take the first part of that . And turn the second part to Tracy . You know , two key things to think about .
Speaker #4: One is the margin side , but the other is the average earning asset balances . In the fourth quarter , we have public funds balances that tend to fund up and fund back down , as well as you mentioned , kind of the the taking our time on the repositioning .
Speaker #4: So, we had some excess cash balances related to that as well. So both of those kind of weighed on the margin a little bit in the fourth quarter. We would expect the average earning asset base to be down in the first quarter by a couple hundred million dollars.
Michael Young: So those are the dynamics you want to think about kind of the start of the year and then moving throughout the year, you know, to hit the guidance that we laid out. And I'll turn it to Tracey on the purchase accounting accretion question.
So those are the dynamics you want to think about kind of the start of the year and then moving throughout the year, you know, to hit the guidance that we laid out. And I'll turn it to Tracey on the purchase accounting accretion question.
Speaker #4: But the margin will expand pretty nicely , probably in that 10 to 15 basis point range in the first quarter . So those are the dynamics you want to think about kind of the start of the year and then moving throughout the year , you know , to hit the guidance that we laid out .
Tracey Dexter: Yeah. You know, Russell, the expectations for accretion are always kind of difficult to predict, maybe, maybe more so with the addition of this portfolio. The base level of accretion is derived using the loan's contractual life, and the maturities here in The Villages portfolio are relatively long. So the accretion will be accelerated upon payoff. That'll create a lot more volatility in the accretion, and we've got that baked into our forecast, too. But our model uses the Q4 of 2025 as the run rate for 2026, but do expect volatility in that accretion number.
Tracey Dexter: Yeah. You know, Russell, the expectations for accretion are always kind of difficult to predict, maybe, maybe more so with the addition of this portfolio. The base level of accretion is derived using the loan's contractual life, and the maturities here in The Villages portfolio are relatively long. So the accretion will be accelerated upon payoff. That'll create a lot more volatility in the accretion, and we've got that baked into our forecast, too. But our model uses the Q4 of 2025 as the run rate for 2026, but do expect volatility in that accretion number.
Speaker #4: And I'll turn it to Tracey on the purchase accounting accretion question.
Speaker #3: know , Russell , Yeah . You the the the expectations for accretion always kind of are difficult to predict . Maybe , maybe more so with the addition of this portfolio , the base level of accretion is derived using the loans contractual life and and the maturities here in the villages portfolio are relatively long .
Speaker #3: So the accretion would be accelerated upon payoff. That will create a lot more volatility in the accretion. And we've got that baked into our forecast, too.
Speaker #3: But our model uses the fourth quarter of '25 as the run rate for '26. But do expect volatility in that accretion number.
Michael Young: And Russell, do you-
Michael Young: And Russell, do you-
Russell Hunter: Okay. Yeah, no. Yeah, sure. Go ahead.
Russell Gunther: Okay. Yeah, no. Yeah, sure. Go ahead.
Michael Young: Sorry. Yeah, just one other point I wanted to make. We've been kind of calling this out a little bit more recently, but, you know, just the nature of our acquisitions being heavy core deposit franchises, there's more core deposit and tangible expense. And so if you look at the net effect of the purchase accounting marks in both revenue and expenses, they largely balance one another. So if you, you know, take kind of a low 40 number on purchase accounting accretion, and you see our kind of $38 million roughly number on core deposit and tangible expense, you know, you've got a pretty marginal contribution on a net basis to earnings.
Michael Young: Sorry. Yeah, just one other point I wanted to make. We've been kind of calling this out a little bit more recently, but, you know, just the nature of our acquisitions being heavy core deposit franchises, there's more core deposit and tangible expense. And so if you look at the net effect of the purchase accounting marks in both revenue and expenses, they largely balance one another. So if you, you know, take kind of a low 40 number on purchase accounting accretion, and you see our kind of $38 million roughly number on core deposit and tangible expense, you know, you've got a pretty marginal contribution on a net basis to earnings.
Speaker #4: And Russell .
Speaker #7: No. Yeah, sorry. Go ahead.
Speaker #8: Sorry .
Speaker #4: Yeah, just one other point I wanted to make. We've been kind of calling this out a little bit more recently.
Speaker #4: But you know just the nature of our acquisitions being heavy core deposit franchises , there's more core deposit , intangible expense . And so if you look at the net effect of the purchase accounting marks in both revenue expenses , and they largely balance one another .
Speaker #4: So if you take kind of a low $40 million number on purchase accounting accretion, and you see our kind of $38 million, roughly, number on core deposit intangible expense, you know, you've got a pretty marginal contribution on a net basis to earnings.
Michael Young: We just want to call out, you know, that our earnings, you know, guidance for the year is really not being contributed to on a net basis from purchase accounting accretion in a significant way.
We just want to call out, you know, that our earnings, you know, guidance for the year is really not being contributed to on a net basis from purchase accounting accretion in a significant way.
Speaker #4: So we just want to call out, you know, that our earnings guidance for the year is really not being contributed to on a net basis from purchase accounting accretion in a significant way.
Russell Hunter: Yeah, understood. Appreciate that, Michael and Tracey. And then I guess next question for me would be: given the overall excess capital you guys discussed, you know, how you're thinking about that, in the context of the actions already taken within the securities portfolio, is there room or appetite left for additional restructurings in 2026 beyond what's currently contemplated in the guide?
Russell Gunther: Yeah, understood. Appreciate that, Michael and Tracey. And then I guess next question for me would be: given the overall excess capital you guys discussed, you know, how you're thinking about that, in the context of the actions already taken within the securities portfolio, is there room or appetite left for additional restructurings in 2026 beyond what's currently contemplated in the guide?
Speaker #7: Yeah . Understood . Appreciate that Michael . And Tracy . And then I guess next question for me would be given the overall excess capital , you guys discussed , you know , how how you're thinking about that in the context of the actions already taken within the securities portfolio ?
Speaker #7: Is there room or appetite left for additional restructurings in '26 beyond what's currently in the contemplated guide?
Michael Young: Hey, Russell. I think we, you know, don't expect to execute any additional securities restructures, and that's certainly not reflected in the guide. So this is the only piece that's reflected in the guidance. You know, maybe zooming out more broadly, most of the other securities that are at, you know, loss positions or more material loss positions are in the HTM portfolio. You know, we don't have any plans to pierce the HTM portfolio. So I think we're pretty much done with this at capital action.
Michael Young: Hey, Russell. I think we, you know, don't expect to execute any additional securities restructures, and that's certainly not reflected in the guide. So this is the only piece that's reflected in the guidance. You know, maybe zooming out more broadly, most of the other securities that are at, you know, loss positions or more material loss positions are in the HTM portfolio. You know, we don't have any plans to pierce the HTM portfolio. So I think we're pretty much done with this at capital action.
Speaker #4: Hey Russell, I think we, you know, we don't expect to add additional securities, and that's certainly not guidance. So this is reflected in the—so this won't execute any restructures.
Speaker #4: Only piece that's reflected in the guidance. And, you know, maybe zooming out more broadly, most of the other securities that are at loss positions or more material loss positions are in the ATM portfolio.
Speaker #4: We don't have any plans to pierce the portfolio, so I think we're pretty much done with this capital action.
Russell Hunter: Okay. Yeah, thank you for that, Michael. Helpful. And then you touched on another one I had earlier in terms of just average earning asset expectations. So as we think about the mix within securities and into this high single digit loan growth expectations, you know, beyond the step down you mentioned in the first quarter, how are you expecting average earning asset levels to trend over the course of the year?
Russell Gunther: Okay. Yeah, thank you for that, Michael. Helpful. And then you touched on another one I had earlier in terms of just average earning asset expectations. So as we think about the mix within securities and into this high single digit loan growth expectations, you know, beyond the step down you mentioned in the first quarter, how are you expecting average earning asset levels to trend over the course of the year?
Speaker #7: Yeah . Okay . Thank you for that , Michael . Helpful . And then you touched on another one I had earlier in terms of just average earning asset expectations .
Speaker #7: So as we think about the mix within securities and into this high single digit loan growth expectations beyond the step down , you mentioned in the first quarter , how are you expecting average earning asset levels to trend over the course of the year ?
Michael Young: Hey, Russell. Yeah, pretty similar commentary to last quarter. The thing that's changed, you know, we started the year with a little higher loan-to-deposit ratio because of some of the proactive actions we mentioned. But, you know, we'll remix, you know, relatively slowly from here, and that's just going to be the delta between our loan growth versus our deposit growth really is going to be the driver of that. So if we're guiding to high single digit loan growth and low to mid single digit deposit growth, you know, depending on where you shake out in that mix of ranges, that's going to be really the driver of our remix throughout the year.
Michael Young: Hey, Russell. Yeah, pretty similar commentary to last quarter. The thing that's changed, you know, we started the year with a little higher loan-to-deposit ratio because of some of the proactive actions we mentioned. But, you know, we'll remix, you know, relatively slowly from here, and that's just going to be the delta between our loan growth versus our deposit growth really is going to be the driver of that. So if we're guiding to high single digit loan growth and low to mid single digit deposit growth, you know, depending on where you shake out in that mix of ranges, that's going to be really the driver of our remix throughout the year.
Speaker #4: Hey , Russell . Yeah , pretty similar commentary to to last The quarter . thing that's changed , you know , we started the year with a little higher loan to deposit ratio because of some of the proactive actions we mentioned .
Speaker #4: But you know , we'll remix , you know , relatively slowly from here . And it's just going to be the delta between our loan growth versus our deposit growth really is going to be the driver of that .
Speaker #4: So if we're guiding to high single digit loan growth and low to mid single digit deposit growth , depending on where you out shake in that mix of ranges , that's going to be really the driver of our our remix throughout the year .
Russell Hunter: Okay. And if I could sneak one last one in, guys, appreciate it. The efficiency ratio guide is helpful. Maybe could you just give us a sense for or reminder of the cadence of the cost saves within The Villages acquisition? I think you mentioned the conversion in July. Just kind of where an exit expense rate might be for the year. And then, perhaps more bigger picture, but how should we think about a normalized expense growth rate for Seacoast going forward?
Russell Gunther: Okay. And if I could sneak one last one in, guys, appreciate it. The efficiency ratio guide is helpful. Maybe could you just give us a sense for or reminder of the cadence of the cost saves within The Villages acquisition? I think you mentioned the conversion in July. Just kind of where an exit expense rate might be for the year. And then, perhaps more bigger picture, but how should we think about a normalized expense growth rate for Seacoast going forward?
Speaker #7: Okay. And if I could sneak one last one in, guys, appreciate it. The efficiency ratio guide is helpful. Maybe could you just give us a sense for— or a reminder of— the cadence of the cost savings within the Villages acquisition?
Speaker #7: I think you mentioned the conversion in July—just where any kind of exit expense rate might be for the year, and then perhaps more, bigger picture.
Michael Young: Hey, Russell. So in the acquisition deck, you know, the base run rate for them was about $64 million at inflation year-over-year to that. That's kind of their base expense rate that would come out post the conversion in early Q3. And so we would expect to see that kind of underlying drop. Now, the offset, though, is we are investing into banker hires and ramping that during the year. And so, you know, one will kind of impact the other and, you know, could see a little more stability, if you will, in the expense base, but with much higher production and productivity going forward. And then,
Michael Young: Hey, Russell. So in the acquisition deck, you know, the base run rate for them was about $64 million at inflation year-over-year to that. That's kind of their base expense rate that would come out post the conversion in early Q3. And so we would expect to see that kind of underlying drop. Now, the offset, though, is we are investing into banker hires and ramping that during the year. And so, you know, one will kind of impact the other and, you know, could see a little more stability, if you will, in the expense base, but with much higher production and productivity going forward. And then,
Speaker #7: But how should we think about a normalized expense growth rate for Seacoast going forward?
Speaker #4: Russell Hey , . Yeah . So the in the acquisition deck , you know , the the base run rate for them was about 64 million at inflation year over year to that .
Speaker #4: That's kind of their base expense rate . come That would out post the conversion in early third quarter . And so we would we would expect to see that kind of underlying drop .
Speaker #4: Now, the offset, though, is we are investing into banker hires and ramping that during the year. And so, you know, one will kind of impact the other.
Speaker #4: And you know, could see a little more stability, if you will, in the expense base, but with much higher production and productivity going forward.
Russell Hunter: Got you.
Michael Young: I forgot the last part of your question was? Remind me.
Russell Gunther: Got you.
Michael Young: I forgot the last part of your question was? Remind me.
Russell Hunter: I think, I think really just, yeah, as I'm thinking about sort of 27, and even, you know, beyond, given your commentary around the benefits from hiring in 27, 28, just as we exit, with a cleaner run rate post all the The Villages expense saves, what is a decent normalized growth rate to think about, that captures the franchise investment you guys are making?
Russell Gunther: I think, I think really just, yeah, as I'm thinking about sort of 27, and even, you know, beyond, given your commentary around the benefits from hiring in 27, 28, just as we exit, with a cleaner run rate post all the The Villages expense saves, what is a decent normalized growth rate to think about, that captures the franchise investment you guys are making?
Speaker #4: And then I forgot the last part of your question was, I think.
Speaker #7: I think really just yeah , as I'm thinking about sort of 27 and even , you know , beyond given your commentary around the benefits from hiring in 27 , 28 , just as we exit with a cleaner run rate post all the villages saves , what is a normalized growth rate to decent expense think about that captures the franchise investment you guys are making .
Michael Young: Thanks. Appreciate you reminding me the last part of the question. You know, I think as we zoom out, and this is, you know, hypothetical conversation, not guidance, obviously, but as a larger company, you know, today at $21 billion in assets, there's a lot of opportunity for us to drive scalability across the company and a lot of our processes, with, you know, investment into technology that leads to material, you know, expense rationalization and really our ability to grow into our existing expense base in many different areas. So I think we're, you know, really excited about that opportunity as we move forward into 2027 and 2028 and driving some of that scalability and operating leverage. But we obviously want to maintain our ability to invest into the company and into the future growth prospects.
Michael Young: Thanks. Appreciate you reminding me the last part of the question. You know, I think as we zoom out, and this is, you know, hypothetical conversation, not guidance, obviously, but as a larger company, you know, today at $21 billion in assets, there's a lot of opportunity for us to drive scalability across the company and a lot of our processes, with, you know, investment into technology that leads to material, you know, expense rationalization and really our ability to grow into our existing expense base in many different areas. So I think we're, you know, really excited about that opportunity as we move forward into 2027 and 2028 and driving some of that scalability and operating leverage. But we obviously want to maintain our ability to invest into the company and into the future growth prospects.
Speaker #4: Thanks . Appreciate you reminding me . The the last part of the question . You know , I think as we zoom out and this is , you know , hypothetical conversation , not guidance , obviously , but as a larger company , you know , today at $21 billion in assets , there's a lot of us to drive opportunity for scalability across the company .
Speaker #4: And a lot of our processes with investment into leads to technology, that material expense rationalization. And really our ability to existing expense base in many different areas.
Speaker #4: So I think we're, you know, really excited about that opportunity forward as we move into '27 and '28, and driving some of that scalability and operating leverage.
Michael Young: We're not running this for, you know, one year or two years. We're running it for, you know, continued growth and sustainable growth over a long period of time. So we will balance those two, as we've done in the past, and maintain a reasonable profitability level and efficiency level as we move forward, balancing those two key critical pieces.
We're not running this for, you know, one year or two years. We're running it for, you know, continued growth and sustainable growth over a long period of time. So we will balance those two, as we've done in the past, and maintain a reasonable profitability level and efficiency level as we move forward, balancing those two key critical pieces.
Speaker #4: But we obviously want to maintain our ability to invest into the company and into future growth prospects. We're not running this for one year or two years.
Speaker #4: We're running it for , you know , continued growth and sustainable growth over a long period of time . And you will so balance those two , as we've done in the past , and maintain a reasonable profitability level and efficiency level as we move forward .
Charles Shaffer: Just to add a little bit there, just in a long-term sort of view on efficiency ratio, one way to think about things is probably low to mid-50s type efficiency ratio target is where we want to operate the company over, over the cycle.
Charles Shaffer: Just to add a little bit there, just in a long-term sort of view on efficiency ratio, one way to think about things is probably low to mid-50s type efficiency ratio target is where we want to operate the company over, over the cycle.
Speaker #4: Balancing those two key, critical pieces.
Speaker #2: And just to add a little bit , there , in a just long term sort of view on efficiency ratio , it's one way to think about things is probably low to mid 50s type efficiency ratio target is where we want to operate .
Russell Hunter: Got it. Okay, guys. Hey, I'm going to step back. Thanks for your help with all my questions.
Russell Gunther: Got it. Okay, guys. Hey, I'm going to step back. Thanks for your help with all my questions.
Speaker #2: The company, over the cycle.
Charles Shaffer: Thanks, Russell.
Charles Shaffer: Thanks, Russell.
Speaker #7: Got it. Okay, guys. Hey, I'm going to step back. Thanks for your help with all my questions.
Operator: Our next question comes from the line of Steven Scouten with Piper Sandler. Steven, please go ahead.
Operator: Our next question comes from the line of Steven Scouten with Piper Sandler. Steven, please go ahead.
Speaker #2: Thanks , Ross .
Steven Scouten: Hey, good morning, guys.
Stephen Scouten: Hey, good morning, guys.
Speaker #1: And our next question comes from the line of Stephen Sheldon with Piper Sandler. Stephen, please go ahead.
Charles Shaffer: Morning, Steven.
Charles Shaffer: Morning, Steven.
Steven Scouten: Just one point of clarification, potentially. Do you guys have a good number for where the securities yield could kind of shake out for the Q1 after all the actions completed?
Stephen Scouten: Just one point of clarification, potentially. Do you guys have a good number for where the securities yield could kind of shake out for the Q1 after all the actions completed?
Speaker #9: Hey , good morning guys . Just one point of clarification . Potentially . Do you guys have a good number for where the securities yield could kind of shake out for the first quarter ?
Michael Young: Hey, Steven, this is Michael. It'll be a little bit dependent on, you know, the pace of prepayment speeds. We have a lot of discount mortgage backs in the portfolio, but, you know, generally, it's gonna be in that kind of 440 to 450 range.
Michael Young: Hey, Steven, this is Michael. It'll be a little bit dependent on, you know, the pace of prepayment speeds. We have a lot of discount mortgage backs in the portfolio, but, you know, generally, it's gonna be in that kind of 440 to 450 range.
Speaker #9: After all, the actions completed?
Speaker #4: Hey , Stephen , this is Michael . It'll be a little bit dependent on , you know , the pace of prepayment speeds .
Speaker #4: We have a lot of discount mortgage backs in the portfolio, but generally it's going to be in that kind of 4.40% to 4.50% range.
Steven Scouten: Okay, great. Appreciate the context there. And then anything in terms of updates on the Atlanta market? Just kind of curious what that may have contributed to growth, maybe this quarter, and how it plays into this 15% uptick in lenders. How much of those might be contemplated in the Atlanta MSA?
Stephen Scouten: Okay, great. Appreciate the context there. And then anything in terms of updates on the Atlanta market? Just kind of curious what that may have contributed to growth, maybe this quarter, and how it plays into this 15% uptick in lenders. How much of those might be contemplated in the Atlanta MSA?
Speaker #9: Okay , great . Appreciate the context . There . And then anything in terms of updates on the Atlanta market , just kind of curious what that may have contributed to growth .
Speaker #9: Maybe this quarter, and how it plays into this 15% uptick in lenders. How much of those might be contemplated in the Atlanta MSA?
Charles Shaffer: Yeah, thanks. Thanks, Steven. You know, as we've talked in the past, we've got a team of roughly 10 or so bankers up in that market. It's gone exceptionally well. I've been really pleased with the success we've had over the last couple of years there. We entered with an LPO about three years ago, built a CRE team and program, moved a little further into C&I, opened a branch here recently. As we've said in the past, I would expect over the next, call it three to three years or so, to roughly have about a five-branch footprint in the greater northern Atlanta market as we build out up in there, and roughly 15 to 20 bankers calling in that market with treasury support and the like. And so, you know, it's been helpful.
Charles Shaffer: Yeah, thanks. Thanks, Steven. You know, as we've talked in the past, we've got a team of roughly 10 or so bankers up in that market. It's gone exceptionally well. I've been really pleased with the success we've had over the last couple of years there. We entered with an LPO about three years ago, built a CRE team and program, moved a little further into C&I, opened a branch here recently. As we've said in the past, I would expect over the next, call it three to three years or so, to roughly have about a five-branch footprint in the greater northern Atlanta market as we build out up in there, and roughly 15 to 20 bankers calling in that market with treasury support and the like. And so, you know, it's been helpful.
Speaker #2: Yeah . Thanks . Thanks , Stephen . You know , as we've talked in the past , we've got a team of roughly ten or so bankers up in that market .
Speaker #2: It's gone exceptionally well. I've been really pleased with the success we've had over the last couple of years there. We entered with an LPO about three years ago, built the CRE team and program, moved a little further into CNI, and opened a branch here recently.
Speaker #2: As we've said in the past , I would expect over the next call it 3 to 3 years or so to roughly have about a five branch in footprint the in the greater northern Atlanta market , as we as we build out up in there and roughly 15 to 20 bankers calling in that market with Treasury support and the like .
Charles Shaffer: We've definitely seen a lot of success there, and we do expect to continue to build in the Atlanta market in the coming years.
We've definitely seen a lot of success there, and we do expect to continue to build in the Atlanta market in the coming years.
Speaker #2: And so , you know , it was it's been helpful . We've definitely seen a lot of success there . And expect to we do continue to build in the Atlanta market in the coming years .
Steven Scouten: Okay. Can you contextualize that 15% or just remind me, like, what would that be, ballpark, on a just FTE count perspective?
Stephen Scouten: Okay. Can you contextualize that 15% or just remind me, like, what would that be, ballpark, on a just FTE count perspective?
Speaker #9: Okay . And just and can you that 15% or just remind me like what would that be . Ballpark on a on a just FTE count perspective .
Charles Shaffer: It's roughly about 15 bankers.
Charles Shaffer: It's roughly about 15 bankers.
Steven Scouten: Okay, perfect. Great. And then just kind of, you know, lastly for me, in terms of, you know, and Chuck, you gave a lot of great color about the moving parts around growth, but the payoffs in particular, which you noted, you're kind of forecasting in higher payoffs next year. How do you think about the puts and takes of what you might see from a payoff perspective, especially within the context of rates? If we get lower rates, should that escalate payoffs, or do you think kind of increases in production activity might kind of actually lead to a better environment if we get, you know, lower rates from here?
Stephen Scouten: Okay, perfect. Great. And then just kind of, you know, lastly for me, in terms of, you know, and Chuck, you gave a lot of great color about the moving parts around growth, but the payoffs in particular, which you noted, you're kind of forecasting in higher payoffs next year. How do you think about the puts and takes of what you might see from a payoff perspective, especially within the context of rates? If we get lower rates, should that escalate payoffs, or do you think kind of increases in production activity might kind of actually lead to a better environment if we get, you know, lower rates from here?
Speaker #2: It's roughly about 15 bankers.
Speaker #9: Okay . Perfect . Great . And then just kind of , you know , lastly , for me , in terms of , you know , and Chuck , you gave a lot of great color about the moving parts around growth .
Speaker #9: But the payoffs in particular , which you noted , you're kind of forecasting in higher payoffs next year . How do you think about the puts and takes of what you might see from a payoff perspective , especially within the context of rates ?
Speaker #9: If we get lower rates , should that escalate Or do you payoffs ? think kind of increases in production activity might kind of actually lead to , to a better environment if we get , you know , lower rates from here ?
Michael Young: Hey, Steven, this is Michael. I'll take that one. Yeah, I think, you know, it is somewhat pretty heavily, you know, rate dependent, as we move into next year. You know, we have a fair bit, as we've talked about, of low fixed rate maturities that are coming due as well. You know, some clients or customers may choose to pay off or refinance elsewhere. But, you know, generally, it's just gonna be a nature of kind of where the rate environment heads, you know, clearly in the middle, you know, of that curve as to whether or not, you know, people pay off or refi, or if they, you know, continue to refinance with us.
Michael Young: Hey, Steven, this is Michael. I'll take that one. Yeah, I think, you know, it is somewhat pretty heavily, you know, rate dependent, as we move into next year. You know, we have a fair bit, as we've talked about, of low fixed rate maturities that are coming due as well. You know, some clients or customers may choose to pay off or refinance elsewhere. But, you know, generally, it's just gonna be a nature of kind of where the rate environment heads, you know, clearly in the middle, you know, of that curve as to whether or not, you know, people pay off or refi, or if they, you know, continue to refinance with us.
Speaker #4: Hey , Stephen , this is Michael . I'll take that one . Yeah . I think , you know , it is somewhat pretty heavily , you know , rate dependent as we move into next year know , we .
Speaker #4: We have a fair bit, as you've talked about, of low fixed-rate maturities that are coming due as well. Some clients or customers may choose to pay off or refinance elsewhere.
Speaker #4: But you know , generally it's just going to be a nature of of kind of where the rate environment heads , you know , particularly in the middle , of that curve as to whether or not , you know , people pay off or refi or if they continue to to refinance with us .
Charles Shaffer: Steven, I'll remind you, we, we really pulled back on lending and particularly construction lending in 2023, and so we didn't quite see the level of payoffs that others have dealt with probably here in 2025. And I think we'll probably still not quite see the level of payoffs that, others may feel in early 2025. You know, probably more of our challenge around that will emerge in 2027, 2028, 2029. But we did take that pause back then when rates were really low, given what we viewed as a higher risk environment and didn't want to be delivering into potentially a weaker economy. Obviously, that didn't fully play out. The economy's pretty doggone strong at the moment, but it's, nonetheless, that dynamic plays out for us.
Charles Shaffer: Steven, I'll remind you, we, we really pulled back on lending and particularly construction lending in 2023, and so we didn't quite see the level of payoffs that others have dealt with probably here in 2025. And I think we'll probably still not quite see the level of payoffs that, others may feel in early 2025. You know, probably more of our challenge around that will emerge in 2027, 2028, 2029. But we did take that pause back then when rates were really low, given what we viewed as a higher risk environment and didn't want to be delivering into potentially a weaker economy. Obviously, that didn't fully play out. The economy's pretty doggone strong at the moment, but it's, nonetheless, that dynamic plays out for us.
Speaker #2: Stephen , I'll remind you , we we really pulled back on lending and particularly construction lending in 2023 . And so we didn't quite see the level of payoffs that others have dealt with .
Speaker #2: Probably here in 2025, and I think we'll probably still not quite see the level of payoffs that others may feel in early '25.
Speaker #2: You know , probably more of our challenge around that will emerge in 27 , 28 , 29 . But we did take that pause back then when really rates were low , what we viewed as a higher risk environment and didn't want to be delivering into potentially a weaker economy .
Speaker #2: Obviously, that didn't fully play out. The economy's pretty doggone strong at the moment, but it's nonetheless—play that dynamic out for us.
Charles Shaffer: And so that issue hasn't been quite as strong for us as others in the industry.
And so that issue hasn't been quite as strong for us as others in the industry.
Steven Scouten: Got it. Really helpful. And then maybe just one last for me, actually. You know, we're seeing more headlines about, you know, potential weakness in residential housing, in certain pockets within Florida. Can you maybe contextualize that in any of your markets? Is there anything that you see that's concerning at all? I can't say that I'm really seeing it being that widespread or of a concern, but just wondering your context being in those markets.
Stephen Scouten: Got it. Really helpful. And then maybe just one last for me, actually. You know, we're seeing more headlines about, you know, potential weakness in residential housing, in certain pockets within Florida. Can you maybe contextualize that in any of your markets? Is there anything that you see that's concerning at all? I can't say that I'm really seeing it being that widespread or of a concern, but just wondering your context being in those markets.
Speaker #2: And so that issue hasn't been quite as strong for us as others in the industry.
Speaker #9: Got it really helpful . And then maybe just one last for me , actually , you know , we're seeing more headlines about , you know , potential weakness in residential housing in certain pockets within Florida .
Speaker #9: Can you maybe contextualize that in any of your markets ? Is there anything that you that's see concerning at all ? I can't say that I'm really seeing it being that widespread or of a concern , but just wondering your your being in context , those markets .
Charles Shaffer: Yeah, really high level, and just to remind you, we don't have a lot of exposure to builder lines, just to kind of point that out. That's not, you know, something we've done a lot of, particularly post-GFC. We've stayed out of the builder line, sort of, lending. We do a little bit here and there, but it's not a big part of our portfolio. But nonetheless, the way I'd characterize Florida is it is very market specific. You know, and then I'd start with saying the condo market has been weak, primarily driven by condo having to be retrofitted for new standards.
Charles Shaffer: Yeah, really high level, and just to remind you, we don't have a lot of exposure to builder lines, just to kind of point that out. That's not, you know, something we've done a lot of, particularly post-GFC. We've stayed out of the builder line, sort of, lending. We do a little bit here and there, but it's not a big part of our portfolio. But nonetheless, the way I'd characterize Florida is it is very market specific. You know, and then I'd start with saying the condo market has been weak, primarily driven by condo having to be retrofitted for new standards.
Speaker #2: Yeah , really high level . And just a remind you , we don't have a lot of exposure to builder lines just to kind of point that out .
Speaker #2: That's not, you know, something we've done a lot of, particularly post-GFC. We've stayed out of the builder line sort of lending.
Speaker #2: It's not not a real we do a little bit here and there , but it's not a big part of our portfolio . And but nonetheless , the way I'd characterize Florida is it is very market specific , you know , and then I'd start with saying the condo market has been weak , primarily driven by condo having to be retrofitted for new standards .
Charles Shaffer: And so, you know, that's put additional cost on associations that have to be passed on to the actual condo owners, and therefore, new buyers have slowed down in buying into that market until you have that retrofit done. Once the retrofit's done, those condos move pretty quickly. But we're going through this cycle where it's kind of the have and have-nots. Those that have gotten it done, you can sell your condo. Those that haven't, it's a weak market, so kind of got to pull that out. And then when you get to the residential market, there are pockets of weakness, and there's pockets of strength. You know, I describe Southeast Florida, Palm Beach County, down to Miami-Dade, as being exceptionally strong. Prices have not come down much. You know, demand for housing remains really strong in those markets.
And so, you know, that's put additional cost on associations that have to be passed on to the actual condo owners, and therefore, new buyers have slowed down in buying into that market until you have that retrofit done. Once the retrofit's done, those condos move pretty quickly. But we're going through this cycle where it's kind of the have and have-nots. Those that have gotten it done, you can sell your condo. Those that haven't, it's a weak market, so kind of got to pull that out. And then when you get to the residential market, there are pockets of weakness, and there's pockets of strength. You know, I describe Southeast Florida, Palm Beach County, down to Miami-Dade, as being exceptionally strong. Prices have not come down much. You know, demand for housing remains really strong in those markets.
Speaker #2: And so, you know, that's put additional cost on associations that have to be passed on to actual condo owners, and therefore new buyers have slowed down.
Speaker #2: into that until And buying market you have that retrofit done , once the retrofits done , those condos move pretty quickly . But we're going through this cycle where it's kind of the haves and have nots .
Speaker #2: Those that have gotten it done , you can sell your condo , those that haven't . It's a weak market . So you kind of got to pull that out .
Speaker #2: And then when you get to the residential market , are there pockets of weakness and there's pockets of strength . You know , I describe Southeast Palm Beach , Florida , County down to Miami-Dade as being exceptionally strong .
Charles Shaffer: But you move just directly over to the West Coast, into that Fort Myers, Cape Coral area, and there was a lot of sort of post-COVID boom that happened with a lot of development, a lot of overdevelopment, and now we're seeing prices come down. So it is very much sort of depending upon the market, in Florida, but I'd say generally, it's not, you know, as weak as probably advertised, but there are pockets of weakness where there's been some oversupply.
But you move just directly over to the West Coast, into that Fort Myers, Cape Coral area, and there was a lot of sort of post-COVID boom that happened with a lot of development, a lot of overdevelopment, and now we're seeing prices come down. So it is very much sort of depending upon the market, in Florida, but I'd say generally, it's not, you know, as weak as probably advertised, but there are pockets of weakness where there's been some oversupply.
Speaker #2: Prices have not come down much . You know , demand for housing remains really strong in those markets . But you move just directly over to the West Coast into that Fort Myers Cape Coral area .
Speaker #2: And there was a lot of sort of post-COVID boom that happened, with a lot of development, a lot of over-... And now we're seeing prices come down.
Speaker #2: So, it is very much sort of depending upon the market in Florida. But I'd say, generally, it's not, you know, as weak as probably advertised, but there are pockets of weakness where there's been some oversupply.
Steven Scouten: That's great color. Thanks, Chuck, and really great quarter, and congrats on a great year.
Stephen Scouten: That's great color. Thanks, Chuck, and really great quarter, and congrats on a great year.
Charles Shaffer: Thanks, Steven.
Charles Shaffer: Thanks, Steven.
Operator: Our next question comes from the line of David Bishop with Hovde Group. David, please go ahead.
Operator: Our next question comes from the line of David Bishop with Hovde Group. David, please go ahead.
Speaker #9: Thanks, Chuck. Really great end to the quarter, and congrats on a great year. Great color.
Speaker #2: Thanks , Steve .
David Bishop: Hey, guys. Good morning.
David Bishop: Hey, guys. Good morning.
Speaker #1: And our next question comes from the line of David Bishop with Holiday Group. David, please go ahead.
Charles Shaffer: Hey, David.
Charles Shaffer: Hey, David.
David Bishop: Hey, Chuck, curious, you guys also maybe get lost in the shuffle had pretty, pretty strong core deposit growth this quarter. Just curious if there's any sort of breakdown you have, you know, commercial versus consumer inflows there. I'm just curious what, what the main drivers were. Thanks.
David Bishop: Hey, Chuck, curious, you guys also maybe get lost in the shuffle had pretty, pretty strong core deposit growth this quarter. Just curious if there's any sort of breakdown you have, you know, commercial versus consumer inflows there. I'm just curious what, what the main drivers were. Thanks.
Speaker #10: Good morning . Hey Chuck . Curious you guys also maybe get lost in the shuffle . I had pretty , pretty strong core deposit growth this quarter .
Speaker #10: Just curious if there's any sort of breakdown—you have commercial versus consumer inflows there. I'm just curious what the main drivers were.
Charles Shaffer: I don't have that in front of me. We can pull that for you, David. We do have that table in the earnings release, but it's, it's hard to get to the number because the acquisition's in there. We can kind of pull that apart for you. I would say, generally, we saw a little bit of just on the high level sort of, we saw some deposit outflow in Q4, primarily in CDs, as we kind of backed off of, you know, the higher price CD options, just given all the liquidity we had, we didn't feel like we needed to compete there. But the underlying core dynamics, BDAs, you know, the typical operating accounts continues to be really strong with the growth and onboarding of new clients, particularly, the commercial client base that continues to, the CNI base continues to come on.
Charles Shaffer: I don't have that in front of me. We can pull that for you, David. We do have that table in the earnings release, but it's, it's hard to get to the number because the acquisition's in there. We can kind of pull that apart for you. I would say, generally, we saw a little bit of just on the high level sort of, we saw some deposit outflow in Q4, primarily in CDs, as we kind of backed off of, you know, the higher price CD options, just given all the liquidity we had, we didn't feel like we needed to compete there. But the underlying core dynamics, BDAs, you know, the typical operating accounts continues to be really strong with the growth and onboarding of new clients, particularly, the commercial client base that continues to, the CNI base continues to come on.
Speaker #10: Thanks .
Speaker #2: I don't have that in front of me . We can pull that for you , David . I we do have that table in the earnings release , but it's it's it's to the number because hard to get the acquisitions in there we can kind of pull that apart for you .
Speaker #2: I would say generally we saw a little bit of just on the high level , sort of we all saw some deposit outflow in Q4 primarily , in CDs as we kind of backed off of the higher CD given all the liquidity we , just priced didn't feel like we needed to compete had . there .
Speaker #2: I would say, generally, we saw a little bit of, just on the high level, sort of, we all saw some deposit outflow in Q4, primarily in CDs, as we kind of backed off of the higher CD, given all the liquidity we had. We just priced—didn't feel like we needed to compete.
Speaker #2: But the We underlying core dynamics DDA was , you know , the typical operating accounts continues to be really strong with the growth in onboarding of new clients , particularly the commercial client base that continues to to see .
Charles Shaffer: But we'll see if we can pull that apart a little bit for you and get you some detail after the call.
But we'll see if we can pull that apart a little bit for you and get you some detail after the call.
David Bishop: Perfect. So then, one follow-up, these, like, questions have been asked and answered, but, just curious, it sounds like some of your peers, new loan origination yields are, you know, quickly, actually more quickly than I thought they would, approaching what's rolling off. Just curious what the spread is between new originations and what's maturing. Thanks.
David Bishop: Perfect. So then, one follow-up, these, like, questions have been asked and answered, but, just curious, it sounds like some of your peers, new loan origination yields are, you know, quickly, actually more quickly than I thought they would, approaching what's rolling off. Just curious what the spread is between new originations and what's maturing. Thanks.
Speaker #2: Base continues to come on, so—but we'll see if we can pull that apart a little bit for you and get you some detail after the call.
Speaker #10: Perfect . So then one follow up , miss my questions have been asked and answered , but just curious . It sounds like some of your peers new loan origination yields are quickly , actually more quickly than I thought they would .
Michael Young: Hey, David, this is Michael. Yeah, our new originations in the quarter were kind of in the low 60s. You know, our roll-off yields, it'll depend. It's a little episodic throughout the year, given we have some periods of lower fixed rate maturities, and we have a lot of arms that are coming into reset windows from the pandemic vintage. So we're still getting that positive, you know, back book dynamic on repricing. But those portfolios are a little lower in aggregate now pro forma. So, but we're still probably picking up, you know, maybe 50 to 100 basis points, kind of, in terms of the new add-on rates versus the cumulative impact of the fixed rate, adjustable rate repricing and kind of fall off rates.
Michael Young: Hey, David, this is Michael. Yeah, our new originations in the quarter were kind of in the low 60s. You know, our roll-off yields, it'll depend. It's a little episodic throughout the year, given we have some periods of lower fixed rate maturities, and we have a lot of arms that are coming into reset windows from the pandemic vintage. So we're still getting that positive, you know, back book dynamic on repricing. But those portfolios are a little lower in aggregate now pro forma. So, but we're still probably picking up, you know, maybe 50 to 100 basis points, kind of, in terms of the new add-on rates versus the cumulative impact of the fixed rate, adjustable rate repricing and kind of fall off rates.
Speaker #10: Rolling off, just approaching—what's curious is what the spread is between new originations and what's maturing. Thanks.
Speaker #10: .
Speaker #4: this is Hey , Michael . Yeah , our new originations in the quarter were kind of in the low sixes . You know , our roll off yields , it'll depend .
Speaker #4: It's a little episodic throughout the year, given we have some periods of lower fixed-rate maturities. And we have a lot of ARMs that are coming into reset windows from the pandemic vintage.
Speaker #4: still getting So we're that positive back book dynamic on on repricing . those But portfolios are a little lower in aggregate . Now pro forma .
Speaker #4: So but we're still probably picking up you know maybe 50 to 100 basis points kind of in terms of the the new add on rates versus the cumulative impact of the fixed rate adjustable rate repricing and and kind of fall off rates .
David Bishop: Got it. Thank you.
David Bishop: Got it. Thank you.
Charles Shaffer: Thanks, David.
Charles Shaffer: Thanks, David.
Operator: Our final question comes from the line of Wood Lay with KBW. Wood Lay, please go ahead.
Operator: Our final question comes from the line of Wood Lay with KBW. Wood Lay, please go ahead.
Speaker #10: Got it. Thank you.
Speaker #2: David .
Wood Lay: Hey, good morning, guys.
Wood Lay: Hey, good morning, guys.
Speaker #1: And our final question comes from the line of Woodleigh with KBW. Woody, please go ahead.
Charles Shaffer: Hey, Woody.
Charles Shaffer: Hey, Woody.
Michael Young: Good morning, Woody.
Michael Young: Good morning, Woody.
Wood Lay: Wanted to touch on fee income. Fees this past quarter came in pretty, pretty well above the guidance you provided, and I know there were some questions on, especially Villages Mortgage unit and, you know, portfolioing that versus selling. So how do you think about the toggle between that going forward and just any expectations on the fee income side near term?
Wood Lay: Wanted to touch on fee income. Fees this past quarter came in pretty, pretty well above the guidance you provided, and I know there were some questions on, especially Villages Mortgage unit and, you know, portfolioing that versus selling. So how do you think about the toggle between that going forward and just any expectations on the fee income side near term?
Speaker #11: Hey good morning guys .
Speaker #2: Hey Woody .
Speaker #4: Good morning Woody .
Speaker #11: Wanted to touch on fee income fees . This past quarter came in pretty pretty well above the guidance you provided . I know there were some questions on the specialty Villages mortgage unit and you know , portfolio that versus versus selling .
Speaker #11: So, how do you think about the toggle between that going forward and just any expectations on the fee income side near term?
Michael Young: Hey, Woody, it's Michael. Yeah, we did retain, as we talked about, more of the mortgage production in Q4, which drove, you know, a little additional balance sheet growth as part of the restructure, to move us a little faster there. You know, I think we may still do that a little bit here in Q1, potentially, but then we'll start to ease off of that as we move throughout the year. But it just remains a really important lever for us as we move forward to kind of manage the overall balance sheet. And as Chuck mentioned, just the quality of that paper is so strong given the high quality borrowers that are in the market. You know, it's a very attractive asset to have on the balance sheet.
Michael Young: Hey, Woody, it's Michael. Yeah, we did retain, as we talked about, more of the mortgage production in Q4, which drove, you know, a little additional balance sheet growth as part of the restructure, to move us a little faster there. You know, I think we may still do that a little bit here in Q1, potentially, but then we'll start to ease off of that as we move throughout the year. But it just remains a really important lever for us as we move forward to kind of manage the overall balance sheet. And as Chuck mentioned, just the quality of that paper is so strong given the high quality borrowers that are in the market. You know, it's a very attractive asset to have on the balance sheet.
Speaker #4: it's Woody , Michael Hey . Yeah . We we did talked retain as we about more of the mortgage production in the fourth quarter , which drove , you know , a little additional balance sheet growth as part of the restructure to move us a little faster there .
Speaker #4: You know , I think may still we we do that a little bit here in the first quarter , potentially . But then we'll start to ease off of that as we move throughout the year .
Speaker #4: But it just remains a really important lever for us as we move forward to kind of manage the overall balance sheet. And as Chuck mentioned, just the quality of that paper is so strong, given the high-quality borrowers that are in the market.
Michael Young: So that's kind of how we're thinking about it from that side, and that will obviously have flow-through impacts into fee income in 2026, depending on the level of sold volume versus retention of the volume on balance sheet. And that's kind of why we just gave a total revenue guidance. It could flip between NII or fee income a little bit, depending on our optionality and how we lean into that. But, you know, we'll deliver the total revenue that we articulated.
So that's kind of how we're thinking about it from that side, and that will obviously have flow-through impacts into fee income in 2026, depending on the level of sold volume versus retention of the volume on balance sheet. And that's kind of why we just gave a total revenue guidance. It could flip between NII or fee income a little bit, depending on our optionality and how we lean into that. But, you know, we'll deliver the total revenue that we articulated.
Speaker #4: You know, we just, it's a very attractive asset to the balance sheet. So that's kind of how we're thinking about it from that side.
Speaker #4: And that will obviously have flow-through impacts into fee income in 2026, depending on the level of sold volume versus retention of the volume.
Speaker #4: On the balance sheet, and on why we just gave a total revenue guidance—it could flip between NII or fee income a little bit, depending on our optionality and how we lean into that.
Charles Shaffer: Yeah, just generally, we probably will see mortgage banking income a little higher than we have in the past. We picked up a servicing portfolio there that Citizens First, owner of The Villages was servicing, that was fairly sizable, and so that's a nice revenue stream that'll be continuing through the income statement.
Charles Shaffer: Yeah, just generally, we probably will see mortgage banking income a little higher than we have in the past. We picked up a servicing portfolio there that Citizens First, owner of The Villages was servicing, that was fairly sizable, and so that's a nice revenue stream that'll be continuing through the income statement.
Speaker #4: But, you know, we'll deliver the total revenue that we articulated.
Speaker #2: Yeah, just generally, we probably will see mortgage banking income a little higher than we have in the past. We picked up a servicing portfolio there that the Citizens First Mayor of The Villages was servicing.
Speaker #2: That was fairly sizable. And so that's a nice revenue stream that will be through the continuing income statement.
Wood Lay: Got it. And then maybe last for me, again, on Villages. We touched on, you know, at announcement, there could be several revenue synergy opportunities, and I know we're still very early on in the process, but are you seeing any early signs of those synergies?
Wood Lay: Got it. And then maybe last for me, again, on Villages. We touched on, you know, at announcement, there could be several revenue synergy opportunities, and I know we're still very early on in the process, but are you seeing any early signs of those synergies?
Speaker #11: Got it. And then maybe last for me again, on Villages. We touched on, you know, the announcement at B. Several, there could be revenue synergy opportunities.
Speaker #11: And I know we're early on in the process, but are you seeing any early signs of those synergies?
Charles Shaffer: Yeah, early on, we built a wealth management team. We're starting to see opportunities there. That's been great to see. As we talked about, the mortgage business is gone very well, really exceptionally well. We like everything we're seeing there with the mortgage business. Ultimately, with time, we'd like to get some insurance offerings in that market as we have an insurance agency just north of there, near Gainesville. So we're continuing to look at opportunities to expand our carrier rights into that market, and hopefully, with time, we'll find our way there. But the biggest driver that we've seen so far is just the wealth management side of the business is starting to get traction there.
Charles Shaffer: Yeah, early on, we built a wealth management team. We're starting to see opportunities there. That's been great to see. As we talked about, the mortgage business is gone very well, really exceptionally well. We like everything we're seeing there with the mortgage business. Ultimately, with time, we'd like to get some insurance offerings in that market as we have an insurance agency just north of there, near Gainesville. So we're continuing to look at opportunities to expand our carrier rights into that market, and hopefully, with time, we'll find our way there. But the biggest driver that we've seen so far is just the wealth management side of the business is starting to get traction there.
Speaker #2: Yeah . Early on we've built a wealth management team . We're starting to see opportunities there . That's been great to see . As we talked about the mortgage business gone , , is gone well , really exceptionally well .
Speaker #2: We like everything we're seeing there with the mortgage business. Ultimately, with time, we'd like to get some insurance offerings in that market, as we have an insurance agency up there just north near Gainesville.
Speaker #2: So we're continuing to look at opportunities to expand our carrier into that rates market. And hopefully, with time, we'll find our way there.
Speaker #2: But the biggest driver that we've seen so far is just the management side. Wealth, on the starting to business, is starting to get traction.
Wood Lay: Got it. All right. That's all for me. Thanks for taking my questions.
Wood Lay: Got it. All right. That's all for me. Thanks for taking my questions.
Charles Shaffer: Awesome, Woody. Thank you.
Charles Shaffer: Awesome, Woody. Thank you.
Speaker #2: There .
Operator: That concludes our question and answer session. I will now turn the call over to Chuck Shaffer for any closing remarks. Mr. Shaffer?
Operator: That concludes our question and answer session. I will now turn the call over to Chuck Shaffer for any closing remarks. Mr. Shaffer?
Speaker #11: Got it. All right, from me. Thanks for taking my questions.
Speaker #2: Awesome . Thank you .
Charles Shaffer: Okay, thank you, operator. Thank you all for joining us today. We appreciate the support. Thank you to our team for another great quarter, and on to an awesome 2026. So that'll wrap up our call.
Charles Shaffer: Okay, thank you, operator. Thank you all for joining us today. We appreciate the support. Thank you to our team for another great quarter, and on to an awesome 2026. So that'll wrap up our call.
Speaker #1: That concludes our question and answer session. I will now turn the call over to Chuck Shaffer for any closing remarks. Mr. Shaffer.
Speaker #2: Okay , thank you . Operator . Thank you all for joining us today . We appreciate the support and thank you to our team .
Operator: This concludes today's conference call. You may now disconnect.
Operator: This concludes today's conference call. You may now disconnect.
Speaker #2: For another great quarter. And on to an awesome 2026. So that'll wrap up our call.