Seacoast Banking Corporation of Florida

Ladies and gentlemen, please stand by. The conference will begin shortly. We ask you to please hold the line. We will begin shortly. Thank you. Greetings. And welcome to the Seacoast Banking Corporation's fourth quarter and full year 2022 earnings conference call. My name is Malika, and I will be your operator for today. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. 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 conference over to Chuck Schaefer, Chairman and CEO of Seacoast Bank. Mr. Schaefer, you may now begin.

Thank you all for joining us this morning.

As we provide our comments, we'll reference the fourth quarter and full year 2022 earnings slide deck, which you can find at seacoastbanking.com. I'm joined today by Tracy Dexter, Chief Financial Officer, and Michael Young, Treasurer and Director of Investor Relations. Looking back at 2022, we made remarkable progress in expanding the franchise throughout Florida, Through acquisitions and new market launches, we strengthened our competitive position across the state and crossed the $10 billion in assets threshold. We started the year with the completion of the Sable Palm Bank and Florida Business Bank of Florida transactions, putting us in the desirable Sarasota market and continuing our growth in Brevard County. Also in the first quarter, we entered Naples and Jacksonville with DeNovo teams, resulting in better than expected customer growth in both markets over the last 12 months. In early October, we completed the acquisition of Drummond Bank, expanding our presence in North Florida, including Ocala and Gainesville, and added an exceptional C&I team covering both markets. Also in October, we expanded our franchise into the dynamic Miami-Dade County market with the Apollo acquisition. And during the third quarter, we announced the addition of Professional Bank, expanding our reach in South Florida even further. Moreover, in early 2022, we continued our focus on delivering better digital experiences to our customers, completing a significant digital conversion, adding Zelle, budgeting tools, account aggregation, improved digital onboarding, Spanish language, and several other digital customer experience improvements. We enhanced our commercial banking team in 2022 with a transformative year of recruiting well-seasoned commercial bankers, treasury officers, and credit officers throughout Florida, meaningfully increasing productivity over the prior year. Our wealth team also had an outstanding year, adding $425 million to bring assets under management to near $1.4 billion at year end. Throughout the year, we made investments across all of our operational areas in technology and talent, building resilience and scalability as Seacoast transitions to a mid-sized bank. Seacoast had an exceptional 2022, setting ourselves apart as Florida's leading community bank. Turning to our financial results, the team finished the year with excellent performance. We materially expanded our net interest margin during the fourth quarter, increasing 69 basis points from the prior quarter with loan yields rising 84 basis points. At the same time, the cost of deposits increased only 12 basis points. This represents an impressive cycle-to-date beta of less than 5%. We believe the strength of our relationship-focused lending model our granular deposit franchise, is finally becoming more evident during a period of higher interest rates versus other more transactional, wholesale, or rapid growth business models. We generated $67 million in adjusted fourth quarter pre-tax pre-provision earnings, an increase of $17.7 million from the prior quarter, while achieving a 52% efficiency ratio. Our fourth quarter adjusted pre-tax pre-provision return on tangible assets improved to 2.28%, And our adjusted return on tangible equity improved to 15%, up from 12.5%. SECOS continues to operate from a position of strength, with capital allowance ratios at the top of our peer group. We ended the quarter with a TCE ratio of 9.1% and an ACL coverage ratio of 1.40%. And considering the loss absorption included in the purchase accounting marks, the company's backstop at a 2.60% coverage rate. Additionally, should a downturn materialize, Florida has the potential to outperform the rest of the country, given the wealth accumulation and population growth over the last few years. Florida has exceeded every state in the nation in attracting affluent, wealthy individuals and corporations, adding materially to the state's GDP and further bolstering the state's economic drivers. Our credit metrics remain outstanding, and we continue to be a disciplined, conservative lender focused on building a carefully underwritten and diversified portfolio by nurturing full client relationships that bring low-cost funding. And as a reminder, our portfolio has been built over the long term with a consistent growth rate while driving diversification by product type, segment, and vintage. A final thought. Considering the continued economic strength of Florida, our carefully underwritten credit portfolio with low CRA and C&D concentrations, peer-leading capital levels, and peer-leading capital levels, we believe we have a very strong balance sheet that can weather any challenges ahead. Further, such strengths should provide optionality to be offensive and potentially more volatile economic environment, including opportunistic market share gains, organic growth, and acquisition opportunities. I'll now turn the call over to Tracy.