Seacoast Banking Corporation of Florida (NASDAQ:SBCF) Q3 2023 Earnings Conference Call October 27, 2023 10:00 AM ET Company Participants Chuck Shaffer - Chairman and Chief Executive Officer Tracey Dexter - Executive Vice President and Chief Financial Officer Michael Young - Treasurer and Director of Investor Relations David Houdeshell - Director of Credit Risk Analytics Conference Call Participants David Feaster - Raymond James & Associates Stephen Scouten - Piper Sandler Companies Brady Gailey - KBW Russel ...

| --- | --- | |-------|-------| | | | | | | | | | | | | | EARNINGS PRESENTATION | | | THIRD QUARTER 2023 | 2023 | Cautionary Notice Regarding Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning, and protections, of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, eco ...

[Part I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including income, comprehensive income, balance sheets, cash flows, and shareholders' equity, with detailed explanatory notes [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20statements%20of%20income%20%E2%80%93%20Three%20and%20six%20months%20ended%20June%2030%2C%202023%20and%202022) Net income for the three and six months ended June 30, 2023, decreased compared to the same periods in 2022, despite significant increases in total interest income, which were largely offset by a substantial rise in total interest expense | Metric (in thousands, except per share data) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:-----------------------------------|:----------------------------------|:----------------------------------|:---------------------------------|:---------------------------------| | Total Interest Income | $174,283 | $83,749 | $332,274 | $161,981 | | Total Interest Expense | $47,320 | $2,102 | $74,159 | $3,812 | | Net Interest Income | $126,963 | $81,647 | $258,115 | $158,169 | | Provision for credit losses | $(764) | $822 | $30,834 | $7,378 | | Total Noninterest Income | $21,576 | $16,964 | $44,021 | $32,337 | | Total Noninterest Expense | $107,865 | $56,148 | $215,340 | $115,065 | | Net Income | $31,249 | $32,755 | $43,076 | $53,343 | | Diluted Net income per share | $0.37 | $0.53 | $0.52 | $0.86 | | Basic Net income per share | $0.37 | $0.53 | $0.52 | $0.87 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20statements%20of%20comprehensive%20income%20%E2%80%93%20Three%20and%20six%20months%20ended%20June%2030%2C%202023%20and%202022) Comprehensive income for the three and six months ended June 30, 2023, showed a significant positive shift compared to the prior year, primarily driven by a reduction in unrealized losses on available-for-sale securities and the recognition of unrealized gains on derivatives designated as fair value hedges | Metric (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | 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Seacoast Banking Corporation of Florida (NASDAQ:SBCF) Q2 2023 Earnings Conference Call July 28, 2023 10:00 AM ET Company Participants Chuck Shaffer - Chairman and Chief Executive Officer Tracey Dexter - Chief Financial Officer Michael Young - Treasurer and Director of Investor Relations Conference Call Participants Brady Gailey - Keefe, Bruyette, & Woods David Feaster - Raymond James & Associates Brandon King - Truist Securities Stephen Scouten - Piper Sandler Companies Operator Greetings. Welcome to Seacoa ...

This presentation contains "forward-looking statements" within the meaning, and protections, of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in the Company's markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives a ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to __________________. Commission File No. 0-13660 Seacoast Banking Corporation of Florida (Exact Name of Registrant as Specified in its Charter ...

Financial Data and Key Metrics Changes - The company reported a 10% increase in net interest income, reaching over $131 million, supported by higher loan yields and balances [50][63] - Adjusted pretax pre-provision earnings grew by 7% to $71.1 million, with a pretax pre-provision return on assets of 2.18% [49] - The net interest margin (NIM) slightly declined by 5 basis points to 4.31% [51][65] - The allowance for credit losses increased to $155.6 million, representing 1.54% of total loans [95] Business Line Data and Key Metrics Changes - Loan originations were primarily driven by the acquisition of Professional Bank, with a loan-to-deposit ratio of 82% [53][54] - Average loan yields increased by 57 basis points to 5.86%, including 69 basis points of accretion [58] - Adjusted noninterest income rose to $20.2 million, a 15% increase year-over-year [66] Market Data and Key Metrics Changes - The company has a strong deposit base with transaction accounts representing 59% of total deposits, highlighting a relationship-focused approach [83] - The cost of deposits increased to 77 basis points, reflecting competitive pressures in the market [84] - The Florida market continues to show strength, with significant population growth and economic resilience [76][141] Company Strategy and Development Direction - The company is focused on profitability and strong risk-adjusted returns, with a prudent approach to loan growth amid economic uncertainty [1][73] - There is an emphasis on maintaining a fortress balance sheet and capital generation, particularly following recent acquisitions [22][100] - The company aims to leverage its strong deposit franchise and customer relationships to drive future growth [40][112] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic environment remains dynamic, with potential impacts from further rate hikes and quantitative tightening [13][31] - The company is prepared for potential downturns, with a strong capital position and disciplined credit culture [112][141] - Management expressed confidence in the stability of deposits despite recent banking sector volatility [61][99] Other Important Information - The company completed the acquisition of Professional Bank, which added $2 billion in deposits and increased market share in South Florida [44][54] - The efficiency ratio on an adjusted basis was 53%, reflecting disciplined expense management [56] - The company has a robust common equity Tier 1 ratio of 12.8% and a tangible common equity to tangible assets ratio of 8.4% [46] Q&A Session Summary Question: Impact of recent bank failures on deposits - Management confirmed no impact on deposits from recent bank failures, indicating stability in the deposit base [105] Question: Loan growth outlook - Management noted a conservative approach to lending, focusing on C&I loans and reducing exposure to construction and land development [108][120] Question: Customer growth trends - Management highlighted strong net customer growth in March, attributed to new talent and marketing efforts [116][118] Question: Reserve levels and economic conditions - Management discussed the allowance for credit losses and the potential need for adjustments based on evolving economic conditions [128] Question: Outlook for yield accretion - Management indicated that yield accretion is expected to trend down over time, but remains a significant contributor to net interest income [154]

This presentation contains "forward-looking statements" within the meaning, and protections, of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in the Company's markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives and for integration of ban ...

Part I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Seacoast Banking Corporation of Florida is a Florida-based financial holding company with $12.1 billion in assets as of December 31, 2022, offering diverse financial services through its subsidiary, Seacoast National Bank, and pursuing growth via organic expansion and strategic acquisitions while operating under extensive regulation - Seacoast is a financial holding company with its principal subsidiary being Seacoast National Bank. As of December 31, 2022, it had **total consolidated assets of $12.1 billion** and **total deposits of $10.0 billion**[21](index=21&type=chunk) - The company's growth strategy combines organic growth with opportunistic acquisitions. In 2022, Seacoast completed the acquisitions of **Sabal Palm Bancorp, Inc., Business Bank of Florida Corp., Drummond Banking Company, and Apollo Bancorp, Inc.**, significantly expanding its footprint in Florida[22](index=22&type=chunk)[26](index=26&type=chunk) - As of December 31, 2022, the company employed **1,490 full-time equivalent employees** and maintained a **high associate engagement score of 83.1%**, which is above the banking and finance industry benchmarks[29](index=29&type=chunk)[30](index=30&type=chunk) Regulatory Capital Ratios as of December 31, 2022 | Capital Ratio | Seacoast (Consolidated) | Seacoast Bank | Minimum to be Well-Capitalized (Bank) | | :--- | :--- | :--- | :--- | | Total Risk-Based Capital Ratio | 15.79% | 14.47% | 10.00% | | Tier 1 Capital Ratio | 14.79% | 13.46% | 8.00% | | Common Equity Tier 1 Capital Ratio (CET1) | 13.87% | 13.46% | 6.50% | | Leverage Ratio | 11.46% | 10.44% | 5.00% | - Due to exceeding the **$10 billion asset threshold** in 2022, Seacoast Bank will be subject to the Durbin Amendment's limits on debit card interchange fees starting July 1, 2023. This is expected to reduce the company's annualized after-tax revenue by approximately **$10 million**[77](index=77&type=chunk) [Item 1A. Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company identifies several material risks to its business, including credit concentration in real estate, interest rate sensitivity, LIBOR transition challenges, intense competition, increased regulatory burdens from exceeding $10 billion in assets, and acquisition integration risks - A substantial portion of the loan portfolio is secured by real estate, with **50% of the portfolio comprised of loans secured by commercial real estate (CRE)** as of December 31, 2022, exposing the company to concentration risk and cyclical downturns[94](index=94&type=chunk)[95](index=95&type=chunk) - The company's profitability is highly dependent on net interest income, which is sensitive to interest rate changes. The Federal Reserve's policies on interest rates and inflation create uncertainty and could adversely affect loan demand, borrower repayment ability, and funding costs[101](index=101&type=chunk)[102](index=102&type=chunk) - The transition from LIBOR to alternative reference rates like SOFR is complex and may lead to significant expenses, litigation risk with borrowers, and a potential reduction in interest income. As of December 31, 2022, the company had approximately **$244 million in existing loans tied to LIBOR**[109](index=109&type=chunk)[110](index=110&type=chunk) - The company faces increasing competition from non-bank financial technology providers and the trend of "disintermediation," where consumers complete financial transactions without banks, which could result in the loss of fee income and low-cost customer deposits[117](index=117&type=chunk)[118](index=118&type=chunk) - Having exceeded **$10 billion in assets** in 2022, the company is subject to additional regulations, including limits on debit card interchange fees (Durbin Amendment) and direct supervision by the Consumer Financial Protection Bureau (CFPB), which could increase compliance costs and reduce revenue[147](index=147&type=chunk)[148](index=148&type=chunk) - The company's growth strategy involves acquisitions, which carry risks such as difficulties in integration, potential loss of key employees and customers, exposure to unknown liabilities, and failure to realize anticipated benefits and synergies[161](index=161&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) [Item 1B. Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - **None**[174](index=174&type=chunk) [Item 2. Properties](index=29&type=section&id=Item%202.%20Properties) Seacoast's corporate headquarters is a 68,000 square foot building in Stuart, Florida, owned by Seacoast Bank, which operated from 78 branch offices and other commercial lending offices throughout Florida as of December 31, 2022 - The company's headquarters is located at **815 Colorado Avenue in Stuart, Florida**[175](index=175&type=chunk) - As of December 31, 2022, Seacoast Bank operated **78 branch offices in Florida**, in addition to other commercial lending offices[176](index=176&type=chunk) [Item 3. Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company and its subsidiaries are involved in litigation incidental to their business operations in the ordinary course, with management believing no current proceedings will materially affect financial position, results, or cash flows - Management believes that **no ongoing litigation is likely to have a material effect** on the company's consolidated financial position, operating results, or cash flows[177](index=177&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[178](index=178&type=chunk) Part II [Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20For%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Seacoast's common stock trades on the NASDAQ Global Select Market under "SBCF", with the Board authorizing a $100 million share repurchase program renewal in December 2022, though no shares were repurchased in 2022 - The company's common stock is traded on the **NASDAQ Global Select Market** under the symbol "**SBCF**"[181](index=181&type=chunk) - On December 15, 2022, the Board of Directors renewed the share repurchase program, authorizing the purchase of up to **$100 million** of its common stock through December 31, 2023. The company **did not repurchase any shares** during the year ended December 31, 2022[185](index=185&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For the year ended December 31, 2022, Seacoast reported net income of $106.5 million, a decrease from 2021 due to a higher provision for credit losses, while net interest income grew 33% with an expanded net interest margin, and the loan portfolio and deposits increased significantly, supported by acquisitions [Overview – Strategy and Results](index=31&type=section&id=Overview%20%E2%80%93%20Strategy%20and%20Results) Seacoast is one of Florida's largest community banks, with $12.1 billion in assets as of year-end 2022, executing a balanced growth strategy combining organic expansion with strategic acquisitions in Florida's high-growth markets, including four in 2022 and one in early 2023 - Seacoast is executing a balanced growth strategy of organic growth and strategic acquisitions, having completed **16 acquisitions since 2014** to expand its footprint in Florida's fastest-growing markets[194](index=194&type=chunk) Recent Acquisition Activity | Acquired Company | Primary Market(s) | Year | Acquired Loans ($M) | Acquired Deposits ($M) | | :--- | :--- | :--- | :--- | :--- | | Drummond Banking Company | Gainesville and Ocala | 2022 | $545 | $881 | | Apollo Bancshares, Inc. | Miami-Dade County | 2022 | $667 | $855 | | Florida Business Bank | Melbourne | 2022 | $122 | $166 | | Sabal Palm Bank | Sarasota | 2022 | $246 | $396 | | Legacy Bank of Florida | Boca Raton/Palm Beach | 2021 | $477 | $495 | [Results of Operations](index=33&type=section&id=Results%20of%20Operations) In 2022, net income was $106.5 million, down from $124.4 million in 2021, primarily due to a $26.2 million provision for credit losses, while net interest income rose 33% to $366.2 million with a net interest margin of 3.69%, and noninterest income and expenses saw declines and increases respectively Key Financial Results (2022 vs. 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | $106.5 million | $124.4 million | | Diluted EPS | $1.66 | $2.18 | | Net Interest Income | $366.2 million | $276.0 million | | Net Interest Margin (FTE) | 3.69% | 3.27% | | Provision for Credit Losses | $26.2 million | ($9.4 million) | | Noninterest Income (excl. gains/losses) | $67.2 million | $71.3 million | | Noninterest Expense | $267.9 million | $197.4 million | - The increase in net interest income was driven by the rising interest rate environment, which increased yields on loans and securities. The yield on loans rose to **4.62% from 4.38%**, and the yield on securities increased to **2.21% from 1.61%**[201](index=201&type=chunk) - The cost of deposits remained low, increasing only **three basis points to 0.11%** in 2022, reflecting a favorable deposit mix with noninterest-bearing demand deposits representing **41% of total deposits** at year-end[201](index=201&type=chunk)[209](index=209&type=chunk) - Noninterest income was negatively impacted by a **70% decrease in mortgage banking fees to $3.5 million**, as rising rates slowed refinance and purchase activity. This was partially offset by a **15% increase in wealth management income to $11.1 million**[217](index=217&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Financial Condition](index=48&type=section&id=Financial%20Condition) As of December 31, 2022, total assets grew 25% to $12.1 billion, with net loans increasing 37% to $8.1 billion and deposits growing 24% to $10.0 billion, while asset quality remained strong despite significant unrealized losses in the securities portfolio due to rising interest rates - Total assets increased by **$2.5 billion (25%) to $12.1 billion** at year-end 2022, reflecting both organic growth and acquisitions[249](index=249&type=chunk) Loan Portfolio Composition (December 31, 2022) | Loan Category | Amount ($M) | % of Total | | :--- | :--- | :--- | | Commercial real estate - non-owner occupied | $2,589.8 | 32% | | Residential real estate | $1,849.5 | 23% | | Commercial real estate - owner occupied | $1,478.3 | 18% | | Commercial and financial | $1,348.6 | 17% | | Construction and land development | $587.3 | 7% | | Consumer | $286.6 | 3% | | Paycheck Protection Program | $4.6 | 0% | | **Total Loans** | **$8,144.7** | **100%** | - Asset quality remained strong, with nonperforming assets decreasing to **$31.1 million, or 0.26% of total assets**, down from 0.46% at year-end 2021. Nonperforming loans as a percentage of total loans decreased to **0.35% from 0.52%**[277](index=277&type=chunk)[278](index=278&type=chunk) - The allowance for credit losses on loans increased to **$113.9 million**, representing **1.40% of total loans** (excluding PPP), compared to $83.3 million, or 1.43%, at the end of 2021[285](index=285&type=chunk)[286](index=286&type=chunk) - Total deposits grew **24% to $10.0 billion**. The deposit mix remained favorable, with noninterest-bearing demand deposits increasing to **41% of total deposits** from 38% in the prior year[302](index=302&type=chunk)[303](index=303&type=chunk) [Capital Resources and Management](index=57&type=section&id=Capital%20Resources%20and%20Management) At December 31, 2022, shareholders' equity increased 23% to $1.6 billion, with capital ratios remaining strong and well above regulatory requirements, though tangible book value was impacted by increased accumulated other comprehensive loss from unrealized securities losses Consolidated Capital Ratios (December 31, 2022 vs. 2021) | Ratio | Dec 31, 2022 | Dec 31, 2021 | Regulatory Minimum (for adequacy) | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 13.87% | 16.31% | 4.50% | | Tier 1 Capital | 14.79% | 17.40% | 6.00% | | Total Risk-Based Capital | 15.79% | 18.21% | 8.00% | | Leverage Ratio | 11.46% | 11.68% | 4.00% | - Shareholders' equity increased by **$297.0 million (23%) to $1.6 billion**, driven by net income and stock issuance for acquisitions, but was partially offset by a **$181.0 million increase in accumulated other comprehensive loss** due to declining securities values[318](index=318&type=chunk)[319](index=319&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, which it manages through simulation modeling to optimize net interest income (NII) and Economic Value of Equity (EVE), projecting an asset-sensitive position where rate increases benefit NII and EVE Projected Impact of Interest Rate Changes on Net Interest Income (as of Dec 31, 2022) | Change in Interest Rates | % Change in NII (1-12 months) | % Change in NII (13-24 months) | | :--- | :--- | :--- | | +2.00% | 7.1% | 9.9% | | +1.00% | 3.5% | 4.8% | | -1.00% | (3.7)% | (5.9)% | | -2.00% | (8.9)% | (14.4)% | Projected Impact of Interest Rate Changes on Economic Value of Equity (EVE) | Change in Interest Rates | % Change in EVE (2022) | % Change in EVE (2021) | | :--- | :--- | :--- | | +2.00% | 8.1% | 18.6% | | +1.00% | 4.3% | 10.2% | | -1.00% | (5.4)% | (10.8)% | | -2.00% | (13.9)% | N/A | [Item 8. Financial Statements and Supplementary Data](index=72&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, including balance sheets, income statements, and cash flows, along with notes, and an unqualified opinion from Crowe LLP on both financial statements and internal control effectiveness [Note 17 - Business Combinations](index=124&type=section&id=Note%2017%20-%20Business%20Combinations) In 2022, Seacoast completed four acquisitions—Apollo Bancshares, Drummond Banking Company, Business Bank of Florida, and Sabal Palm Bancorp—issuing common stock and recognizing $228.2 million in goodwill, significantly expanding its Florida presence, with a further acquisition of Professional Holding Corp. completed in January 2023 2022 Acquisitions Summary | Acquired Company | Closing Date | Total Purchase Price ($M) | Goodwill Recognized ($M) | Key Market | | :--- | :--- | :--- | :--- | :--- | | Apollo Bancshares, Inc. | Oct 7, 2022 | $145.8 | $90.2 | Miami-Dade | | Drummond Banking Company | Oct 7, 2022 | $158.3 | $103.5 | North Florida | | Sabal Palm Bancorp, Inc. | Jan 3, 2022 | $62.1 | $26.5 | Sarasota | | Business Bank of Florida, Corp. | Jan 3, 2022 | $32.0 | $8.0 | Melbourne | - On January 31, 2023, the Company completed its acquisition of Professional Holding Corp., which operated nine branches in South Florida with approximately **$2.2 billion in deposits** and **$2.1 billion in loans** as of December 31, 2022[639](index=639&type=chunk) [Item 9A. Controls and Procedures](index=134&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with the assessment for internal controls excluding the recently acquired Drummond Banking Company as permitted by SEC guidance - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the period covered by the report[644](index=644&type=chunk) - Management's assessment of internal control over financial reporting concluded that **controls were effective** as of December 31, 2022. This assessment excluded the internal controls of Drummond Banking Company, acquired on October 7, 2022, in accordance with SEC guidance for recent acquisitions[646](index=646&type=chunk)[647](index=647&type=chunk) Part III [Items 10-14](index=135&type=section&id=Items%2010-14) Information for Items 10 through 14, covering Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Certain Relationships and Related Transactions, and Principal Accountant Fees and Services, is incorporated by reference from the registrant's 2023 Proxy Statement - Information for Part III, Items 10 through 14, is **incorporated by reference from the company's 2023 Proxy Statement**[652](index=652&type=chunk)[654](index=654&type=chunk)[658](index=658&type=chunk)[659](index=659&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=137&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements included in Item 8 and provides a comprehensive list of exhibits filed with the report or incorporated by reference, with all required financial statement schedules omitted as not applicable or included elsewhere - This section lists all exhibits filed with the Form 10-K, including merger agreements, articles of incorporation, bylaws, indentures, and various management and compensation plans[662](index=662&type=chunk)[663](index=663&type=chunk)[664](index=664&type=chunk)[665](index=665&type=chunk)

Financial Data and Key Metrics Changes - The company generated $67 million in adjusted fourth quarter pre-tax, pre-provision earnings, an increase of $17.7 million from the prior quarter, achieving a 52% efficiency ratio [6] - Adjusted pre-tax pre-provision return on tangible assets improved to 2.28% and adjusted return on tangible equity improved to 15%, up from 12.5% [6] - The net interest margin expanded 69 basis points to 4.36%, with core basis expanding 43 basis points to 4.01% [19] - Net interest income expanded 36% during the quarter, adding $31.5 million [22] Business Line Data and Key Metrics Changes - Wealth Management was a bright spot, adding $425 million in assets under management over the last 12 months, bringing total assets under management to nearly $1.4 billion [10][15] - Adjusted non-interest income was $17.6 million, an increase of $1.2 million from the previous quarter [41] - Loan outstandings increased $241 million or 14% on an annualized basis, excluding acquisitions [28] Market Data and Key Metrics Changes - The cost of deposits increased only 12 basis points during the fourth quarter to 21 basis points, with expectations of a quicker increase in the coming months due to competitive environment [8][47] - Non-accrual loans represented 0.35% of total loans compared to 0.32% in the prior quarter [21] - The allowance for credit losses stands at 1.4% of total loans, reflecting potential economic conditions [10][49] Company Strategy and Development Direction - The company focused on expanding its franchise throughout Florida through acquisitions and new market launches, strengthening its competitive position [13][14] - Investments were made across operational areas to enhance digital experiences and commercial banking capabilities [4][5] - The company aims to maintain an efficiency ratio in the low 50s for the full-year 2023 [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Florida's economic strength, suggesting it could outperform the rest of the country during a downturn [17] - The company expects continued expansion of net interest income driven by balance sheet growth and modestly increasing yields on loans and securities [23] - Management remains cautious about loan growth expectations, guiding for mid-single digits in the first quarter [51][52] Other Important Information - The company completed the acquisition of Drummond Bank and Apollo, expanding its presence in North Florida and Miami-Dade County [14] - The efficiency ratio on an adjusted basis improved to 52%, reflecting disciplined investment pacing [27] - The company ended the quarter with a tangible common equity ratio of 9.1% and an allowance for credit losses coverage ratio of 1.40% [34][50] Q&A Session Summary Question: Loan growth expectations for the first quarter - Management indicated a mid-single digit growth expectation for the first quarter, driven by strong loan production and new talent [51][52] Question: Accretable yield forecast for 2023 - Management noted that accretable yield was difficult to model but expected it to be around $10 million to $11 million in the first quarter [68] Question: Future M&A activity - Management stated that future M&A would depend on market conditions and pricing, with readiness to pursue opportunities as they arise [69][99] Question: Deposit outflows and funding strategies - Management observed that most deposit outflows came from non-interest bearing accounts and emphasized a focus on maintaining low deposit costs while managing funding strategies [101][102]