SBCF - Earnings call transcript Q2 2024 | Seacoast Banking Corporation of Florida

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Operator

Welcome to Seacoast Banking Corporation's Second Quarter 2024 Earnings Conference Call. My name is Pam, and I will be your operator.

Before we begin, I have been asked to direct your attention to the statement at the end of the company's press release regarding forward-looking statements. Seacoast will be discussing issues that constitute forward-looking statements within the meaning of the Securities and Exchange Act, and its comments today are intended to be covered within the meaning of that act. Please note that this conference is being recorded. I will now turn the call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. begin. may you Shaffer,

Charles Shaffer

and everyone. Pam, good you, morning, Thank

Dexter, As to had strong customer deck, the through Director performance our of with which Treasurer earnings and quarter Michael be Credit referring presentation, we'll continued Officer. The Tracey today acquisition. with second here Stallings, available Investor seacoastbanking.com. good we Financial and a strong at Officer; Young, go is I'm Chief James quarter Chief Relations; earnings and slide team Seacoast

marketing and commercial talent QX. in off the with quarter in investments Our record entering increase XX% paid late-stage loan previous a pipeline from originations $XXX and a million

deposits increase As we boost net QX, income Tracey been provide service single-digit seen performance quarter shortly. We've low in margin. the which wealth and quarters. and in anticipated past saw interest focused X on on second insurance details interest this fees, have the our to on more at X.X% quarter, noninterest we income in we each of growth and improved in and last will will management loan annualized, the net comments agency revenue production on increasing expect charges

to reduce noninterest declining quarters, also for been expenses successful expenses than X per with approximately ago. the adjusted past quarter million have sequentially $X lower efforts year Our a

asset lowering which reserved which points our During upon deposits higher quarter maintain to at annualized, begin ACL each of strong of at cost cost the charge-off. number basis in were for, offer mainly limited approximately performance. of due previously And we we worked Charge-offs the XX of a looking decreased saw our our this were slightly loans, continue grades, to quarter, we on deposits and to by reducing May. quality, stabilize

the classified While $XX criticized million. increased declined by from prior quarter, loans slightly nonperforming and

commitments. peer And us million, total have X.XX% additionally, amongst to our another $XXX to ratio reserve including and the purchase $XXX total group. discount. for strongly stands of loans, ACL of positioning loans million This of at unused moves Our equal X.XX% we

peers, Our balance ] to sheet a puts any navigate us previous may to areas. [ with solid cycle it quarter, line in challenges position all across Overall, guidance was present. allowing us compared generally in the great this

previous stated in an income -- margin quarters, as reached reached net second quarter inflection growth in in inflection the net back in in net and believe half point the interest we and net of interest the enter we we an XXXX. interest point expect in and As income income second we interest

to long-term We to remain Tracey are financial leading committed principles ensure to pass the we of Seacoast Tracey? results. success, our review establishing steadfast Florida. I'll sheet in and our player maintaining to balance goal call the our conservative in now as

Tracey Dexter

everyone. your $XX.X net Seacoast Thank in or per attention of you, share Slide Chuck. $X.XX Directing Good income quarter to with reported X. beginning second the quarter. results, morning, second million

As including adjusted we're revenue basis management as in the $X deposits in actions, quarter-over-quarter, June. Pretax expense and pre-provision growing increased reduction was from quarter May recent on an prior noninterest slowed year during expenses. the The increase Chuck wealth, and insurance mentioned, million seeing is flat well-controlled and expense sources, and benefiting cost XX% a the earnings and treasury to down of of of quarter. compared pace benefit result,

maturity if fair the common of assets presented ratio a the TCE held to Also X.X%. very our value, at grown X.X%. ratio XX.X%, capital to have still to share were tangible securities be per pipelines loan book to be continue trends. TA ratio increased Our all continues stable strong. Seacoast's and value is capital meaningfully, Tangible X position Tier we to to tangible equity would notable, and see and strong credit $XX.XX is

We price $XX dips the during on also over quarter. just at repurchased nearly XX,XXX shares

and costs declined basis Loan points to modestly income on from acquired higher increased X.XX%. exit X basis the to net higher to deposit deposits Slide month-over-month balances, contracted X offset excluding recent increased purchase yields, yields with margin million interest lower X.XX%, discounts points on X.XX%. points the quarter. portfolio, of XX to partially to basis X. The purchases. In Core and Accretion deposit accretion, Turning loans interest $X.X loans the with securities. growth flat to by at prior increased rate cost X.XX%. Net X.XX%, in during by securities quarter of benefiting compared was the yields

and in expect and interest driven and margin higher stabilizing quarter second was that growth costs. quarter, for net by trough we'll the income, yields the income the we ahead, deposit the net interest third Looking net loans both interest see in on

assumptions rate November. are point rate in cut basis unchanged Our and XXX include

income, will Noninterest million new Service customer securities acquisition. in of to which nonperforming income, X. Wealth into quarter periods. policies million. to the including resulting with income the million, $X In on and one continued gain higher increased restructured treasury $X.X capture second of Slide in grow. to expansion sale insurance commercial Moving real excluding to increased charges activity, estate management rates, our loans. continue Other portfolio, agency income $XX.X BOLI offerings higher continue by was a commercial future we higher and

third quarter we Looking in $XX to range million income income, from million. focus ahead, we on to noninterest growing continue $XX and noninterest the expect

X. to Moving Slide

have million, X rate increased year-to-date the growth to and have prior annual $X.X up billion quarter. $X.X to from Management in year quarter quarter a increased XX% Wealth record the from years. during the and XX% of prior at revenues compound the XX% management X% increased under a Assets last

a and significant relationships strong customers. internal our Our generating the with deepening family office style referrals to franchise and offering returns for contributor, continues are resonate

employee award expense every X. last stock annual the impact and we Investments than increases quarter. are in quarter grants. of including for first expense growth-focused quarter, Slide severance-related benefiting million, and occupancy salaries a talent in costs, $X.X Noninterest categories taxes range the the increase saw in these quarter. In payroll comparative consolidation million, lower wages also quarter, was onetime guidance quarter in of priority. expense quarter. provided initiatives processing data decline a second benefits merit in to category. seasonal the to the $XX.X in the the of a to Moving reduction Outside associated typical we Recent first leading the first incurred in outsourced in charges increased comparative charges decline leading be early in activities, second with and a annual and to nearly continue will We

marketing third in we be in quarter, efficiency will expense and a $XX be expenses around campaigns continue in investments and the Other expenses ratio state to between XX.X%. expenses. planned million. noninterest lower and led across Discipline were to higher several Our to expect the categories marketing to branding improved the million focus. And across $XX

pipeline And increased Turning Loan points to X.XX%. to we of has the expect strong. The Slide of to quarter. growth very outstandings coming to Average accretion the grown X. expect and an XX% mid-single-digit million. yields, X.X%, $XXX to is on acquired X in excluding and increase pipeline annualized the looking loan pace continue rate loans basis at growth increased forward, loan

across commercial loans maintaining is loan Turning estate types. XX. critical to our the loans Slide of continue asset Nonowner-occupied to vigilant XX% credit in has of terms and strategy. and be and industries lending of represent we element company's Portfolio all mix, distributed, real collateral conservative disciplined, and culture. broadly Exposure types are diversification a distributed been in industry

respectively. retaining we and keep XXX% managed years, development As commercial managed our significantly below We've for to well loans land below consistently loans capital, These risk. real have many our construction granularity at consolidated regulatory measures risk-based and we diverse the distribution of peer and categories portfolio manage portfolio guidance. with group and loan across are to estate XX%

on credit losses, period were X.XX% available of quarter. our totaled presented million bank the small consistently credit in allowance the a prior loans Slide Moving A credit $XXX specific number credit quality The applied credits or evaluated total off acquired asset the of our for separate individually stability X.X% providing X to that absorption trends, reflects on The loans substantial the includes million $XXX.X doubling during remaining a resolving on of during period XX. of discount that's the previously X.XX% and total loans, culture. quarter, capacity. On credit compared losses, discipline longer-term totaled to topics unrecognized for The losses combined experience charged allowance $XXX near reserves. Slide established asset of loss our to acquisitions stable of size. cover that of recall potential providing or view million XX, with

at XX, Moving to looking metrics. quarterly trends Slide in credit

remain of [ slightly loans declined resolved nonaccruals Accruing total as sale loans, ] remained credit each number Our paid either total loans a classified to loans with and strong. charge-offs, through or X.X% but criticized off. due metrics and increased of past low. a being Nonperforming percentage of loans

has points securities X.XX%. million. and average the Moving second increasing investment the as the yields during in higher benefited purchases quarters yield result, overall negatively value The to XX in on at increased recent by environment, securities with loss by $X quarter yield from portfolio. unrealized XX impacted a rate basis and position, portfolio the portfolio to the Changes Slide

previous expectations. portfolio. cost to XX periods, pace our this of in with by The deposit Slide quarter of deposits the to consistent than million. Turning and increased deposits Total increase increased X.XX%, $XXX slower a

month fact, in from In no we at saw X.XX%. the prior June, increase

to deposit and benefit core Looking franchise in approach. very we focus continues long-standing gathering. On remain stabilization XX% customer highlight we which activity encouraged to deposits relationship-focused transaction of about continued growth from a XX, and the diverse forward, Seacoast base, accounts deposits, costs, Slide total expect of and on continues represent deposit continued the our deposit across

$XX.XX history the Slide of we're of share continues nature fortress strong capital have relationship equity with and X.X%. reflect Our to ratio customers Tangible assets remains exceptionally committed average to position and our granular increased to to sheet. book tangible value and finally, long are highly very strong, balance our low per a XX, balances at common our the franchise. And maintaining tangible engaged and us be on

disciplined ratios call the remain the are we to the continue you. value risk-based in Tier and positions well regional us highest industry. we and I'll as turn to management steadfastly summary, X consistent, to among Our back build bank. Chuck, committed shareholder our driving leading In expense Florida's capital

Charles Shaffer

Tracey. right. ready think All Q&A. Pam, Thank you, I we're for

Operator

Your first of from line David question Raymond comes the of Instructions] [Operator Feaster James.

David Feaster

you Can morning, hear me everybody. -- me Good you hear now? can

right about improving. the majority Great And loan structurally it? where opportunities seems seeing stride. Sorry in just in trajectory how And the gain of from the inflection the Is think is this to hires new you see are like your perspective? And from broadly increase pipeline, to in of it growth kind that demand about just today? that you it share the most given it the sounds like And growth. way that. you

Charles Shaffer

I David, you think Yes, right characterized well. it

the in the and you was to That saw at when back prior X.X% about a quarter, look quarter. had step where think we growth. loan we annualized I guided

in the is what's seeing Tracey over guide demand I around months banks as out state. quarter. would really As about of primarily to the remains about balance what's we're current last made across pretty it, talent encouraging market of on large sheet. is bulk on as Seacoast continue clients, industry. just our [ like and And customers, coming moving the new ], digit seen last mentioned, regional The onboard talked you've our of in say, what the the is just is we're share XX we've of the coming But customer prospects light investments primarily the relationships quarter result the we mid-single a we to like

very the remain class where I'm excited very and I'm think as first about we've talked I is we're and so, about encouraged And and encouraged, quarter, team super headed. we built last

David Feaster

of how the think And a a the I'm curious, but balance you question moving difficult that perfect. improvement some you talked we that sheet securities the about, sheet. lot right and Is of about loan and you to of reduce to the kind core how it? there's about you you you because growth? how funding Would size deposit just returning. growth about curious, for with I'm maybe deposit do think balance stable? just think borrowings of core talked remaining some cash about parts, that growth plans about to I'm way of and That's think Would somewhat growth do relatively like just curious, then Obviously, answer, use the takes. do expect flows first? wholesale fund to puts

Charles Shaffer

one? Michael, to that take do you want

Michael Young

think the Michael. deposit Yes, at growing it as hey our David, would is balance growth I this here. sheet pace from of really about

on side, mentioned, Chuck As the side. building momentum got we've lending on the loan

We side benefits on and market well some as obviously, have customer kind as acquisitions. we expect take the share faster of deposit that

kind in may So, digits. the the we're low side thinking that single grow of of balance deposit the sheet

of from here. remix, bit little but we balance sheet So really a the grow want to

David Feaster

last Okay. me. That makes sense. And for then one

change, in guys anything be loan about curious you interested And move how like what up some has curious, additional any quarter, you some in. your the restructuring think changed know what maybe interest you rates, else move as the curious sales NPAs sheet balance Obviously, do opportunities? are could but given more optimization I sold Just appetite would this some but make or doors? rates opened it that? in just in

Michael Young

Michael this again. David, is

margin ours if step think you and whole, turbulent of optionality, still very of mentioned, as that et we volatility, to portfolio maintain restructurings the We do the optionality. in changing cetera, lot that be earnings. where as you've I things balance and are at seen times. can small back that's along high a that -- forward you with take We've and intentionally other kind and levels and way have great to ballast look of the a between on outlooks capital. we securities BOLI But as us optimize to some to of focus opportunities sheet have some there continue done a opportunities have

just out still right we're are And long term. Chuck says, the around earn focused really and obviously, back and disciplined as math there. the shareholders very opportunities, those doing So for thing often

Charles Shaffer

if And said, and balance step there's look do at importantly, the and sheet, some as David, edges around some with coming But some we to opportunities our the have you do think, that. growth we'll on inflect probably seeing year profitability the the of I of pretty are and I'm just have, Mike margin point costs. income and XXXX. this deposit back stabilizing half encouraged loan we for the about at interest net outlook back

Operator

comes of Woody the Lay question next from Your KBW. of line

Wood Lay

So it than to loan pipeline C&I how does more Is weighted historical past? the to the mix levels? of compared in the

Charles Shaffer

Yes.

mentioned the this way last we the think the call, on to C&I. pipeline I weigh think into about does it, quarter's more

on what the see. with into up we're will building the historically because is XX level that bringing super line bringing than operating and credit. next Again, full we're and company, an lower funding XX deposits to back But But the of months the -- next bringing through so momentum encouraged we And we on we're the half. is to as move take a we're We're relationship. year. would fund into what

is historically, little the strong. been And are lower funding they've levels so a than but momentum the very

Wood Lay

on then you side, sort it of disclosed the $XXX,XXX. loan And average commercial around Yes.

large Just side time? lending loan the given -- you you regionals, your average sort of revamped do that commercial increase over team, you're to competing more expect

Charles Shaffer

that's the as will Yes, generally on it is yes, move because there's it coming average a is the than large forward, looking notes But a portfolio loan that on there's some that in portfolio. But we're take as are very loans time low we granular that larger larger. new forward. adding there volume why of as But is. lot size

Wood Lay

mean, persist see a the trends. was I to costs. that -- is from deposit great it on think sounds trend like month-over-month you It over this can shifting then And here? maybe to

Michael Young

Yes, this last and on Michael. actions the is book back materialized cost the quarterly deposits. stability costs saw the the of on I and kind that repricing interest-bearing you we taken we've Woody, of that call, discussed in the quarter both total deposit think

still deposits market do still want to while think I we a so share good there's opportunity from to going we to here, grow want and And forward take so.

deposits to that so the we're loan Tracey might book terms at and forward, that expect going to improving, increase much expansion margin into slight a of the so, referenced. seeing but in our Chuck still cost yields that's back lower lead half what And pace and we than in some of going

that's about is there way feel So the stabilization kind of I pretty think we to it. and most Obviously, think DDA mix factor, right as the important about well. good

Operator

comes Securities. question the King Truist next of Brandon Your of from line

Brandon King

this So what NII you year? are magnitude margin of half in of back the expansion in expecting

Michael Young

that outlook Obviously, what this interest depends Brandon, your Michael. somewhat is on is. rate

a slightly cut but ]. is XXXX. sheet cost modeling first really, into new year, this for sensitive, But and balance liability kind X are November to followed [ by close only of tools the We greater cut

going So, of the balance on our and be of retention going it's versus of we the half. whether lot loan DDA get be the back that the it's drivers pace growth to kind in based do kind really of a management to sheet, our of much how active we

Charles Shaffer

play know Yes. there There's a And where going as don't the and going you lot a know, is so on. Brandon, long see providing year. much Fed the guidance -- run, things how to We got an you over out. we'll go, election wait there's lot

Brandon King

Okay. assume to that not expansion. material the I expecting guess it? you're about way think Is is modest -- to ramp that way about of it, fair think sort to is the it just any

Charles Shaffer

Yes.

benefit probably a fair we rates that of is have, into if modest is fixed we the though, think have characterization. I stepping book higher do that a The a little up is regime. again loan rate decline more further,

of should kind forward. breakthrough the buffering that lower. help us head that's tailwind really to that's And So going us also

Brandon King

on legacy the then expectation increase what remind ]? credits are. credit us were or side, charge-offs And you And those just net Seacoast with more the credits, for in the kind to [ the credit acquired could Okay. they small of

Tracey Dexter

off Brandon, this previously charge quarter reflects so the reserve largely balances.

reserves. of that along are loans. portion acquired And of in A that is number the so small a specific it's mode, number runoff a with small large of portfolios other

year-to-date still XX be elevated basis an our expect the points. a normalized would XX while average we do points of charge-offs basis level So on around this charge-offs are annualized quarter, basis

Brandon King

assume credit given acquired how with is to pieces discount. with going strong mean, the it I it reserve, the those all high Is And together? have continue lower, to putting fair to Okay. reserves that's also march you

Tracey Dexter

current may a through look our of each derived the reserve. course, conditions, We go each conditions. adjustments with or the outcomes. appropriate process we the really scenarios. quarter it quantitatively expected portfolio. quarter, model consider be forecast specific based economic end of at which in think The We so loss the circumstances markets to assess our we allowance on drive just comprehensive forecast changes drive also this at quarter depends. I Moody's metrics forward credit lot the the scenarios And Each

they I assume built, the losses we'll as that was purpose to for think use to the it's cover reasonable allowance arise. it

economic see with are So if than coverage have the portfolio we do end we lower level a improving we conditions may up the supportive, outlook and today.

Operator

Our [Operator from Stephen the of Scouten Sandler. Instructions] next comes line question of Piper

Stephen Scouten

I you guess year-to-date earlier in sheet loans. deposits line have said balance I probably deposit than growth moved growth, but know faster with obviously

loan move so the And XX% a of back sheet that and deposit is the range you bit. mean, could lever over balance we do bit to kind a see down ratio think I to time? more

Charles Shaffer

Michael?

Michael Young

Hey, Yeah. Stephen, Michael. this is

on stance that's liquidity. think obviously I conservative maintain We but also capital, fair. our

But the the pace sheet, us going at do build just you as growth momentum. So help see you're deposit momentum a loan earnings to bit. as year really to our in mentioned move we pipeline, decelerated to we as loan we balance going re-lever faster growth, think move slightly due growth But can to which posture, and with sort forward, after last than risk probably lending revenue don't too and coming building want intentionally of what building to you I that the is momentum, high. that's little building see a would

Stephen Scouten

about Q, to out to slightly sensitive. just And this the is appreciably versus past, sense. may still quarter's but then liability static Yeah. of it slightly causes that more sense. least in me and or talked modeling at you're -- last That really and guys know reality That of we've a believe sheet makes modeled that you I thinking asset as what makes play the sensitive. balance Has about changed

Charles Shaffer

Yes.

in I basically points. I with basis up sensitive. think on you we modeled a can about off-line XXX Stephen. revenue. slightly But We we're liability X% get pick that, down

looking static. quickly. or pretty been that dynamic sheet on balance moving if you're at depends Obviously, So has our

probably And balance so stronger. in our big sheet is has manage that just the impact a to pretty ability

proactively our at obviously, our amount little a fixed I pricing higher balance stable will where, their rate sheet, you should rates zoom assets automatically got that that's if more reprice. were of think, to really, would be some we But versus we've and repricing downward So out be if liabilities decline. that look in of terms

us scenario. rate kind of into And so the that's what a leverage down earnings will give

Stephen Scouten

is made You're reading thing And at X.X% conversations some And up whole this points, me issues apologies maybe up. or trending XXX right. smaller was about stock higher than of it conversations M&A today? that banks some is comprehension I quarter last market discussions. capital I around The those priorities and help obviously, do so have with basis up as morning the there. down you just yet? Does picking mean, appreciably a then of ago. all these M&A private think the how for

Charles Shaffer

story. price, an across I Yes. indicative our very for from industry, the encouraged growth would say Great stock of more opportunities Obviously, organic be multiples question. with a higher higher M&A M&A. perspective, that would by I'm

I inside think of there's the a lot company. momentum

point. think inflection are this at I we

So if do a would we going we're focused that sense. a it we to look of sense make to of But something, to have lot lot, deal, is kind off make of deal economic a us say, on. what not have but wouldn't lot to to take a at to really were

we it, kind that's So on where are of Stephen.

Stephen Scouten

a perfect like sounds dynamic. It Appreciate it. Great.

Operator

There are Chuck hand no the remarks. call to back will questions. other over I for closing

Charles Shaffer

Thank you team. for joining you it morning. very All to year. appreciate was and the half forward right. And everybody Pam. Thank the Awesome. of back quarter, I us to thought solid this joining this That call. a conclude. will I looking you, Thank the all Seacoast

Operator

all Thank call. today's for Ladies you and gentlemen, joining. that concludes

may disconnect. now You

Seacoast Banking Corporation of Florida (SBCF) 26 Jul 242024 Q2 Earnings call transcript