Seacoast Banking Corporation of Florida

Good morning, and welcome to the Seacoast Third Quarter Earnings Conference Call. My name is Zanara, and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star, then 1 on your touchtone phone. Before we begin, I have been asked to direct your attention to the statement contained at the end of the 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 their comments today are intended to be covered within the meaning of that act. Please note that this conference is being recorded. I'll now turn the call over to Mr. Dennis Hudson, Chairman and CEO, Seacoast Bank. Mr. Hudson, you may begin.

Thank you all for joining us this morning. As we provide our comments, we will reference the third quarter 2020 earnings slide deck, which can be found at seacoastbanking.com. With me this morning is Chuck Schaefer, President and Chief Operating Officer, Tracy Dexter, Chief Financial Officer, Jeff Lee, Chief Digital Officer, David Houdeshell, Director of Credit Analytics and Policy, and Richard Rayford, our Chief Credit Officer. As you'll hear in a few minutes, despite the unprecedented operating environment for banks, we reported a strong Q3 with adjusted earnings per share of 50 cents. Tangible common equity per share rose 12% on an annualized basis in the quarter to $15.57. Our tangible common equity per share has grown at a compounded 12% annual rate over the past three years. During the quarter, we closed on the Freedom Bank acquisition, began the process of PPP forgiveness, and continued to operate the business safely and successfully for our associates and customers. I would again like to express my sincere appreciation to the entire Seacoast team for the hard work this quarter. They were able to onboard new customers and associates all while operating remotely and yet continue to achieve significant performance milestones, as Chuck and Tracy will cover in a minute. Chuck, I'll turn the call over to you to share a few thoughts on the quarter.

Thank you, Denny. I will also open by expressing my sincere appreciation for the Seacoast team for producing another solid quarter of impressive results despite the challenge of operating in a pandemic environment. The company generated earnings per share on an adjusted basis of $0.50, and tangible book value per share grew 12% on an annualized basis to $15.57. Asset quality, liquidity, and capital are all strong, and we continue to generate meaningful capital growth, bolstering our fortress balance sheet. Our capital ratios are more substantial than most of our peers, which provides strategic flexibility as we move through the coming period and ultimately an economic recovery. During the quarter, Florida's governor moved to phase three of the state's recovery plan, fully opening up Florida's businesses with no restrictions. We have seen our business customers return to full operation. We are encouraged by the state's economic recovery, but are maintaining a conservative stance in the face of COVID's uncertain path. Our ACL coverage increased modestly from the prior quarter, and we continue to model our ACL in line with a more severe downturn. Tracy will have more details on the ACL modeling in her prepared comments. We continue to be vigilant in maintaining our discipline, conservative credit culture. Additionally, we are passing on deals that are not pricing to an appropriate risk-adjusted return. Given our conservative position on both pricing and credit, weaker borrower demand, and increasing payoffs as anticipated, we saw our loan outstandings decline quarter over quarter when you remove the Freedom Bank acquisition contribution. We are comfortable with this dynamic and continue to manage the balance sheet holistically, carefully balancing the interest rate and credit environment while protecting and prudently growing capital. Loans on deferral status as of last Friday have fallen to 290 million or 5.6% of total non-PPP loans, compared to a peak back in June of over 20%. Overall, we are pleased with the deferred portfolio's performance to date and expect deferrals to continue to decline into the fourth quarter. Given the significant amount of loans returning to payment status in October, we will provide an updated disclosure in mid-November. We focused on building fee-based revenues during the quarter with mortgage banking, wealth management, and interchange income, all having record-breaking quarters. The mortgage banking business had the best quarter in its history, taking share from larger competitors. The team consistently hit service level standards while prioritizing purchase money volume, supporting our local realtors. The group generated over $5 million in fees in the third quarter, and is positioned for an outstanding fourth quarter. This increased performance contributed to the increase in expenses, in part quarter over quarter, as much of the expense base is variable, albeit more than offset by higher revenue production. We also completed the successful acquisition of Freedom Bank, headquartered in St. Petersburg, one of Florida's fastest growing markets. We are excited to have the Freedom Bank team join Seacoast and believe this combination will generate meaningful momentum looking forward. To conclude, given the full reopening of the Florida economy this quarter, the continued positive momentum of loans on deferral returning to payment status, and increasingly positive conversations with our customers, we are cautiously optimistic that the outlook may be improving. However, given the pandemic's unpredictable path and its broader impact on the economy, we will continue to maintain our conservative posture. Our goal remains to continue increasing market share in a disciplined manner while delivering consistent growth and tangible book value per share and positioning the company post pandemic to acquire weekend players across the state of Florida should those opportunities develop. I will now turn the call over to Tracy, who will walk through our financial results.