Seacoast Banking of Florida(US:SBCF)2023-01-27 20:12Financial 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]