Seacoast Banking Corporation of Florida

Welcome to the Seacoast Banking Corporation's second quarter 2026 earnings conference call. My name is Colby and I'll be your operator. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, we will conduct a question and answer session. If you'd like to ask a question at that time, please press star then the number one on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw your question at any time, please press star one again. Before we begin, I have been asked to direct your attention to the statement at the end of the company's press release regarding forward-looking statements. 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'll now turn the call over to Chuck Shaffer Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin.

All right, thank you, Colby, and good morning, everyone, and thank you for joining us. As we move through today's presentation, we'll reference the second quarter 2026 earnings slide deck, which is 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. CECOS delivered another strong quarter, reflecting the strength of our diversified franchise, disciplined execution, and continued strict focus on delivering the earnings guidance we provided at the start of the year. Net income totaled $59.5 million, or $0.55 per diluted share, and adjusted earnings were $65.8 million, or $0.61 per diluted share. Adjusted return on assets for the quarter was 1.25%, and the adjusted return on tangible equity was 15.8%. Thank you for joining us. and we continue to see strong opportunities to onboard additional banking talent teams across multiple markets and we expect to continue to deliver on a high single-digit growth rate target for the full year of 2026. Funding trends were also favorable. Total deposits increased at a 4% annualized rate led by growth in non-sparing balances and while the broader industry felt more pressure on deposit costs, our cost of deposits declined to 1.53%, highlighting the strength of our relationship-based franchise and disciplined pricing strategies I was pleased to continue to see consistent quarterly growth in non-experient demand deposits as we continue to onboard full relationships. Non-experient income improved from the prior quarter, and our efficiency ratio remains on track with our guidance. And credit quality remains strong. Non-performing loans decline, net charge-offs remain low at 10 basis points of average loans, and accruing past due loans improve. And while provision expense increased due to support strong loan growth, Our overall portfolio performance continues to reflect our conservative underwriting standards and proactive risk management. And beyond the financial results, this quarter marked an important milestone for Seacoast. Earlier this month, we successfully converted the clients of Citizens First Bank in the villages onto Seacoast systems and platforms. This was one of our largest and most complex integrations in our history and was executed exceptionally well by our team. I was extremely impressed by the success of this conversion and couldn't be more proud of our team. They executed flawlessly. This successful conversion caps a transformative period of M&A activity for us and positions us to focus on full attention on organic growth, operational execution, and disciplined financial performance over the remainder of the year. And as we enter the second half of 2026, Seacoast is exceptionally well positioned. We maintain a strong balance sheet, substantial liquidity, robust capital levels, improving profitability, and attractive growth opportunities across all our markets. We also demonstrated confidence in our outlook through the repurchase of 750,000 shares during the quarter. And year-to-date, that represents 1% of our outstanding shares repurchased. And as SECO celebrates its 100th year, I want to thank our associates for their dedication and commitment. The one-team culture we operate has allowed us to manage integration complexity, build new products, invest in scalable platforms, grow customers across all our markets, and attract some of the best bankers in the industry. With that, I'll turn it over to Tracey to walk through our financial results.

Thank you, Chuck. Good morning, everyone. Beginning with slide four and second quarter performance highlights. Seacoast reported net income of $59.5 million, or $0.55 per share, in the second quarter, an increase of 87% from the prior quarter and 39% from the prior year quarter. On an adjusted basis, net income was $65.8 million, or $0.61 per share, and adjusted pre-tax pre-provision earnings were $95.5 million, up 4% from the prior quarter and up 52% from the prior year quarter. Continued strong loan origination volume and lower payoffs than the first quarter resulted in an overall increase in loan balances of $504 million, or 16% annualized during the second quarter and 8% annualized in the first half. We delivered 4% annualized organic growth in non-interest-bearing demand deposits and the cost of deposits declined one basis point to 1.53%. We saw growth in net interest income up 2% from the prior quarter with higher core yields and well-managed deposit costs. Net interest margin, excluding accretion on acquired loans, expanded eight basis points from the prior quarter to 3.65%. Our capital position remains very strong and we continued to be active in share repurchases buying back just over 750,000 shares in the second quarter. Moving to net interest income and margin on slide five. Net interest income totaled 182.2 million, up four million from the prior quarter, with higher yields and balances on both securities and loans, and lower funding costs, all partially offset by lower purchase loan accretion. The net interest margin was stable at 3.83%, and excluding the impact of accretion on acquired loans, core margin expanded eight basis points to 3.65%. Turning to non-interest income on slide six, non-interest income totaled 27.8 million, a significant increase from the prior quarter. Recall that the first quarter of 2026 included a $39.5 million loss from the strategic repositioning of the securities portfolio. adjusted non-interest income, which excludes the securities activity, totaled $27.8 million, up 3% from the prior quarter and up 14% year-over-year, reflecting continued growth in fee-based businesses with the growth of the franchise. Wealth management remains a key contributor, with revenue up 3% from the prior quarter and 42% year-over-year. Mortgage production continues to grow, with two-thirds of total mortgage production in the second quarter coming from the villages communities. Moving to slide seven, the Wealth Management Division delivered another quarter of exceptional results. Assets under management have increased 45% from this time last year. In 2026 so far, the team has added $388 million of new assets under management with income growing 42% year-over-year and a 24% CAGR in the past five years. Moving to expenses on slide 8, non-interest expense totaled $123.1 million in the second quarter, which includes $8.4 million of merger and integration costs. In the third quarter, we'll incur the last of the expected costs related to the Villages acquisition, with the full system conversion and merging of customer and back office systems coming to a close in the third quarter. In the second quarter, excluding merger charges, Non-interest expense was $114.8 million, modestly higher than the first quarter. Importantly, we saw continued improvement in operating leverage, with the efficiency ratio improving to 58.5% on a GAAP basis and 54.5% on an adjusted basis, reflecting disciplined expense control alongside core revenue growth. Turning to slides 9 and 10 on the loan portfolio, Loans ended the period at $13.1 billion, up 16% on an annualized basis from the prior quarter and 8% annualized year-to-date growth, keeping us right on track with our full-year high single-digit growth guidance. The commercial pipeline increased to $1.3 billion at June 30th, supporting continued organic growth as we move through the year. On credit quality, shown on slides 11 and 12, asset quality metrics remain solid. We saw low levels of charge-offs during the quarter, a decline in non-performings and past dues compared to the prior quarter, and stable levels of criticized and classified loans. The allowance for credit losses totaled 1.38% of total loans. Turning to deposits on slides 13 and 14, total deposits increased $154 million during the quarter, or 3.7% annualized. Non-interest-bearing demand deposits increased 4% on an annualized basis to $4.2 billion. Deposit costs and overall funding costs are lower, and we've used broker deposits strategically to fund the higher loan growth this quarter, offsetting what would otherwise be our typical seasonal low point during the year for deposits. Moving to slide 15 in the investment securities portfolio. Net unrealized losses in the AFS portfolio moved higher by $7.5 million during the quarter, driven by higher rates. Portfolio yields increased 10 basis points to 4.47% from the prior quarter, benefiting from the securities repositioning executed in the first quarter of 2026. Turning to capital and liquidity on slide 16, strong capital levels are a hallmark of the Seacoast franchise. Tangible book value per share grew 8% annualized during the quarter. The level of tangible equity to tangible assets increased to 9.3%, and we put some capital to work through share repurchases. Our robust capital levels provide significant flexibility to support organic growth and disciplined capital deployment. On slide 17, we reiterate our 2026 guidance. Our results for the quarter continue to evidence the improvements we've achieved in core profitability, strong funding trends, and continued execution against our strategic priorities. We remain focused on discipline growth and long-term shareholder value creation as we move to the second half of 2026. With that, I'll turn the call back to Chuck.