Seacoast Banking Corporation of Florida Stock

Welcome to the Seacoast Banking Corporation Second Quarter 2026 Earnings Conference Call. My name is Colby, and I will be your operator.

[Operator Instructions]

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.

Seacoast 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%, up from 13.3% a year ago.

Adjusted pretax pre-provision earnings increased 52% from a year ago, driving continued improvement in operating leverage. Growth remained a key highlight for the quarter, and organic loan growth was 16% annualized, supported by broad-based production across our commercial banking platform, and we finished the quarter with a record commercial pipeline of approximately $1.3 billion.

Importantly, we achieved this growth while maintaining underwriting discipline, and we continue to see strong opportunities to onboard additional banking talent and teams across multiple markets, and we expect to continue to deliver on our high single-digit growth rate target for the full year 2026.

Funding trends were also favorable. Total deposits increased at a 4% annualized rate, led by growth in noninterest-bearing 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 noninterest-bearing demand deposits as we continue to onboard full relationships.

Noninterest income improved from the prior quarter, and our efficiency ratio remains on track with our guidance. Credit quality remains strong. Nonperforming loans declined.

Net charge-offs remained low at 10 basis points of average loans, and accruing past-due loans improved. And while provision expense increased due to supporting strong loan growth, our overall portfolio performance continues to reflect our conservative underwriting standards and proactive risk management.

Beyond the financial results, this quarter marked an important milestone for Seacoast. Earlier this month, we successfully converted the clients of Citizens First Bank and 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 our full attention on organic growth, operational execution, and disciplined financial performance over the remainder of the year.

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.

As Seacoast 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.

And with that, I'll turn it over to Tracey to walk through our financial results.

Thank you, Chuck. Good morning, everyone. Beginning with Slide 4 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 pretax 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 in 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 noninterest-bearing demand deposits, and the cost of deposits declined 1 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 8 basis points from the prior quarter to 3.65%. Our capital position remains very strong, and we continue 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 5. Net interest income totaled $182.2 million, up $4 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 8 basis points to 3.65%.

Turning to noninterest income on Slide 6. Noninterest 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 noninterest 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 2/3 of total mortgage production in the second quarter coming from the Villages communities.

Moving to Slide 7. 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 5 years.

Moving to expenses on Slide 8. Noninterest 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, noninterest 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 30, 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 nonperforming 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.

Noninterest-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 and 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 disciplined 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.

All right. Thank you, Tracey. And before we jump into Q&A, I just want to reiterate my thank you to all the Seacoast associates on the call.

The conversion was an incredible incredibly well executed. They did an amazing job. It went flawlessly. And a lot of people were involved in that across all of our markets, and you all did an amazing job.

And so I just want to say thank you to them. And as we enter our 100th year here, we're excited to celebrate our 100th anniversary later in the year. We may be ringing the NASDAQ bell. We're working on that, but we couldn't be more excited about that, too.

So we're in really incredible shape here as we move through the year, and it's been exciting to get the conversion complete. And I just want to say thank you to everybody who worked so hard on that. And with that, operator, we'll go to Q&A.

[Operator Instructions] 

Your first question comes from the line of Russell Gunther with Stephens Inc.

The deck highlights an average commercial loan size of $1 million, and I think granularity is a staple of Seacoast's conservative risk profile.

As your balance sheet has grown and you hire commercial lenders from larger institutions, Chuck, how, if at all, will the complexion of your commercial loan growth profile shift at all towards larger loans or an expanded credit?

Yes. No, great question, Russell. The way I'd describe it is we are recruiting bankers out of larger institutions, primarily the super-regional banks.

That obviously brings opportunities to bank larger and more complex clients. We are very disciplined in managing to our hold limits and thoughtful about concentration limits.

And the real positive about our balance sheet is there's a lot of room to book some bigger credits and not really move the average loan size. If you look at the size of the portfolio and the way we've built it over many decades, there is a tremendous amount of granularity. 

I would tell you, we still do plenty of smaller credits when you look at the actual number of credits, and there are a few larger ones along the way. The larger ones bring, obviously, operating leverage. 

On the flip side, we have to manage concentration ratios, and we're always carefully navigating that over time. But we are very disciplined on where we hold, and we've got a great syndications desk where we need to syndicate credits to get above our hold limits.

But we are having opportunities to bank larger, more complex clients. And the beauty of that is they're bringing large operating balances, treasury management, in some cases, wealth management. It's been really great to see.

Then on the quarter, really strong organic results; the paydowns eased, and that helped as well, but the commercial pipeline is still up after this robust result. 

So maybe just try to get a sense for the sustainability of this double-digit growth rate. I know you've left the full-year guide unchanged, but perhaps there's upside to that or as we think about '27 organic growth expectations.

Yes. And I think when you think about the full year guide, just a reminder, the first quarter, we were about flat on growth because we had some large payoffs. 

So basically, if you combine the two, that brought us right in line with where we expected to be. I would describe to you, obviously, that the quarter was very strong.

As we look at the pipeline, it's very strong. The way to think about it, we hit 16% annualized growth. About 40% of that annualized growth was related to the residential mortgages we booked in the portfolio, primarily out of the villages market.

We do expect to probably sell a little more of that as we move through time. So that may move more into the fee item. And we'll obviously continue to service those credits, but probably we'll see more of that move to a salable category. But we'll move back and forth depending on growth there.

Then about half of the remainder of that, so you kind of get down to 13%, and split that in half. I'd say the other half of that came from all the talent we've onboarded over the last few years. 

We've talked about the high level of recruiting we've done and the quality of that recruiting coming out of the super-regional banks, and they're continuing to onboard clients. We continue to see opportunities to bank new prospects. It's been super exciting to see. 

And then I would tell you, too, the other 1/3 or the other 1/3 of that piece is just Florida really is doing really well. There is very strong loan demand across all of our markets. 

And we're now at a size, if you step back and look at the big picture, we cover just about every major market in Florida. We cover every major market in Florida, and then we cover most of the tertiary markets as well.

So, we've got a statewide brand that resonates with clients who really want to be with an organization that has the sophistication to grow with them. 

We've invested heavily in the treasury management side of the business. We've invested heavily in bankers. We invested heavily in credit. And so, we've made the overhead investments to be very competitive in the marketplace. And that's allowing us to get access to new clients every day.

There are a lot of clients that want to be with a headquartered bank that's generally local that can serve their needs with the sophistication. And so, we just see a lot of demand for what we're doing, and it's been really exciting to see, and I think there's a lot more to come.

Your next question comes from the line of David Feaster with Raymond James.

I want to talk about the Villages deal, just get an update. Obviously, you talked about the conversion going extremely smoothly, integration largely done.

But I mean, this is a huge deal. And there's a huge amount of opportunity. I'm just curious what's next for you all as you look forward and maybe execute on some of the efficiency initiatives and cross-selling initiatives. Just curious what you see there.

Yes. As we've talked in the past, it's the most transformative thing we've done in the history of our entire company. It is very meaningful. It's an incredible market. It's a growing market. We expect to grow with the market over time.

Still the fastest-growing MSA in the country. We still see a lot of inbound population growth there, which is super exciting. As we wind down the conversion activities, we still have probably another 6 to 8 weeks to help clients make sure they're fully onboarded, and branch traffic is still heavy, and call center traffic is still busy. 

So we need to continue to navigate that. But as we get past that, it will be back to full organic business. And there are opportunities to continue to cross-sell some of our consumer product base.

There are great opportunities to continue to build a wealth management business in that market. We're already seeing good inbound opportunities there. 

So we'll continue to focus on it, David, and we'll continue to build a branch network up there as that market continues to develop. And I think it will continue to be a really good source of deposits for us, a good source for wealth management. It's obviously an incredible mortgage business for us.

And over time, we'll build in and around there with our commercial banking platform. And the awesome part about this is now that we're getting through this, we hit our 16% growth rate, and we got all the pipeline build and everything alongside the conversion.

Now we'll have the conversion behind us to allow us to almost put our full attention to organic growth. So it makes me feel great about our outlook and what I think the remainder of the year looks like and moving into 2027.

And then maybe we talked on loan growth. I mean, there's a high degree of confidence in that from everything you alluded to. I'm curious on the funding side.

Obviously, there are some seasonal factors this quarter. Competition for deposits has obviously increased.

How do you think about core deposit growth, where you're having success and just how you can drive core deposit growth at this point while defending deposit costs, just given the competition that we're hearing about?

Yes. Maybe I'll open with just a few comments, and then I'll let Michael walk you through the dynamics.

But one, as we move forward, as we continue to onboard operating companies, we are seeing DDA, and Michael will talk a little bit about the dynamics here in a second. But the beauty of what we built in this balance sheet is we have a lot of flexibility. 

So we can manage margin, and we can manage growth. And so we can lean in where we want to on price, and we can lean out on price.

And so we don't have quite the constraints that maybe a lot of our peers do that are fully linked up and have loan-to-deposit ratios that are 90% plus. We've got a very low loan-to-deposit ratio, and that gives us flexibility.

I'm excited about all the new prospects, particularly on the commercial side. And as we get past this conversion, we'll be able to unleash our retail teams again because they've been heavily heads down. You can imagine what it took to get the conversion done.

We had 300 people working on that. So those 300 people will go back to focusing on growth. And so that will give us a lot of opportunity as well. But Michael, do you want to talk through the deposit cost dynamics there?

Yes. David, just maybe unpacking that just a little bit further. We've done a lot of work to get our CD cost down just on the customer side as rates have come down. I think that dynamic is largely done.

We want to be competitive and grow from here, as Chuck mentioned, but we're still adding on a blended basis: cost of deposits in the low 2s, blending with DDA, interest-bearing in the mid-2s.

So over time, with growth, we'll see those deposit costs move up a little bit, but it's more tactical versus us having to be aggressive, and that just gives us the ability to continue to grow profitably versus having to compress profitability as we grow given our low loan-to-deposit ratio and not having our backs against the wall there. 

So I think we feel really strong about the balance sheet positioning and where we stand and where we're headed from here.

Yes, definitely coming at it from a position of strength. Maybe just last one. We hear a lot of complaints about competition, especially on the pricing side, and I'm talking about loans here. 

I'm curious where new loan yields are in the pipeline today and whether you're starting to see pressure and competition start moving to the underwriting side as well? 

Appreciating, Chuck, you talked in the prepared remarks that you guys are very disciplined on underwriting. But I'm curious if you're seeing that competition start to migrate towards structures and standards and such.

Michael, why don't you jump in on add-on rates, and then I'll talk a little bit about the competition.

Yes, David. So just on the add-on rates, on the commercial side, we're in the low 6s for the quarter in terms of add-on rates, down maybe a little bit versus the first quarter with some of those competitive forces. I think one of the things that we've seen is we tend to operate in the lower risk segments of that.

And so you've seen more competitors move into the lower risk areas and some of the super regionals jump back in a bit, which has pressured some of those spreads, but still really good clients.

And when you blend that with the core deposits that we're bringing on board, it's still reasonable rates of return.

On the residential side, we have been retaining a little more resi through the first half of the year. Obviously, with the long end of the curve up, that's been positive and supportive of yields there. So more in the mid-6s.

So if you want to think about the dynamics there, that's what's been playing out. And Chuck, I don't know if you want to speak more to that.

Yes. And I would just say, and you've heard this on other calls, it is hypercompetitive at this point.

All the national banks are back in competing in commercial real estate that stepped out. You have a lot of competition for middle market companies. We're remaining very disciplined on underwriting and particularly leverage.

We are starting to see competitors allow clients to put less equity in deals. That's not something we're going to chase. So we're maintaining discipline around equity.

And to some extent, that comes a little bit on price because we're having to price a little lower to maintain equity in the transaction, but we're willing to make that trade to stay conservative on our underwriting approach.

So I would say we are starting to see things that we don't like seeing, but we're going to stick with our guns and stick with what we do, and we'll see how it all plays out. But it is as competitive as it's ever been; it's very competitive.

[Operator Instructions]

Since there are no further questions in the queue, I'd like to turn the call back over to Chuck Shaffer for closing remarks.

All right. Thank you, Colby. And I just want to reiterate, growth is on track. We are very pleased with the progress this quarter.

We have more balance sheet flexibility than I think most in the industry, which will allow us to operate here very profitably over the back half of the year.

The other thing I like about our story is we have strong durability of earnings, particularly on the backside of some of the bond repositions we did earlier in the year. And I just couldn't be more excited about what's out ahead of us now that the conversion distraction is behind us.

So I appreciate everybody on the call today, and we'll be around for questions if anybody has them. So operator, I'll conclude our call.

Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Welcome to Seacoast Banking Corporation's First Quarter 2026 Earnings Conference Call. My name is Kate, and I will be your operator. 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 call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin.

Okay. Thank you, Kate, and good morning, everyone, and thank you for joining us. As we move through today's presentation, we'll reference our first quarter 2026 earnings slide deck, which is available on our website, seacoastbanking.com. Joining me today is Tracey Dexter, our Chief Financial Officer; Michael Young, our Chief Strategy Officer; and James Stallings, our Chief Credit Officer.

The Seacoast team delivered another great quarter, highlighted by robust deposit growth, particularly in noninterest-bearing deposits, meaningful expansion in the net interest margin, and solid progress towards the financial guidance we introduced last quarter. Commercial loan production momentum remains strong, up 35% year-over-year. And as expected, the first quarter loan growth was seasonally softer and further impacted by elevated payoffs. Importantly, our loan pipeline remains strong, and we expect payoffs to moderate in the coming quarters, supporting a return to stronger loan growth as the year progresses.

Asset quality remains exceptional with limited charge-offs, no change in criticized and classified assets from the prior quarter, and a modest uptick in nonaccrual loans. Noninterest income continued to perform well, driven by strength across wealth management, insurance, treasury and our mortgage businesses. And our expansion in the villages is already delivering results with solid mortgage production and growing demand for wealth management services. Expense discipline remained excellent this quarter. Overhead was well controlled. The adjusted efficiency ratio was 55%, and the ratio of adjusted noninterest expense to tangible assets remained at near 2.1%, even as we continue to invest deliberately in growth.

Our strategy to drive improved shareholder returns remains firmly on track. Excluding merger-related costs associated with Villages Bancorporation, our return profile continues to strengthen. For the quarter, adjusted return on assets was 1.31%, and the adjusted return on tangible equity was 16.3%. These results underscore the strong earnings power of the combined franchise. And looking ahead, we remain confident in our 2026 outlook. As outlined in the slide deck, we continue to expect full year earnings per share in a range of $2.48 to $2.52 despite two less rate cuts. And finally, capital and liquidity remain exceptionally strong. We continue to operate with a fortress balance sheet and remain one of the strongest banks 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 4 and first quarter performance highlights.

Seacoast reported net income of $31.9 million, or $0.29 per share in the first quarter. Reported results include a $39.5 million pretax loss related to the strategic repositioning of a portion of our available-for-sale securities portfolio, which we executed in January. On an adjusted basis, net income was $67.8 million, or $0.62 per share, increasing 42% from the prior quarter, and 111% year-over-year. These results reflect meaningful improvement in our core earnings power, driven by expanding net interest income, disciplined balance sheet management and continued execution on organic growth initiatives.

During the quarter, we delivered 7% annualized organic deposit growth, including 29% annualized growth in noninterest-bearing demand deposits. We also delivered a 13 basis point decline in the cost of deposits to 1.54%, and a 9 basis point decline in overall cost of funds to 1.71%. Expansion in the net interest margin was a highlight this quarter, driven largely by lower deposit costs and the bond portfolio restructure. On an adjusted basis, return on average assets was 1.31%, and return on average tangible equity was 16.26%. Our capital position remains very strong. We also were more active in share repurchases, buying back over 317,000 shares.

Turning to net interest income and margin on Slide 5. Net interest income totaled $178.2 million, up $1.9 million from the prior quarter. The net interest margin expanded 17 basis points to 3.83%, and excluding the impact of accretion on acquired loans, margin expanded 13 basis points to 3.57%. This improvement was driven by lower deposit costs, combined with higher securities yields.

Moving to noninterest income on Slide 6. Reported noninterest income was a net loss of $12.6 million. Adjusted noninterest income, which excludes the securities repositioning, totaled $26.9 million, down 6% from the prior quarter, and up 22% 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 36% year-over-year, and assets under management increasing 33% year-over-year, including $125 million of new organic assets under management added during the quarter. Mortgage banking income declined from the fourth quarter, primarily due to volatility in mortgage servicing rights acquired in The Villages transaction. Underlying loan volumes and pipelines remain strong in the business. Insurance agency income benefited from a seasonal contingent commission payment, increasing $0.2 million year-over-year.

Moving to Slide 7. Our wealth management team delivered another quarter of strong results with income growing 36% year-over-year, and AUM balances growing 33% year-over-year, with a 21% annual CAGR in the past 5 years. We expect to continue to see strong volumes throughout 2026.

Moving to Slide 8. Noninterest expense totaled $122.2 million in the first quarter, which includes $8.5 million of merger and integration costs. On an adjusted basis, noninterest expense was $113.6 million, just slightly higher than the prior quarter. Importantly, we saw continued improvement in operating leverage, with the efficiency ratio improving to 59.5%, and the adjusted efficiency ratio at 55.3%, reflecting disciplined expense control alongside core revenue growth.

Moving to loan growth and portfolio composition on Slides 9 and 10. Loans ended the period at $12.6 million, up modestly from year-end. Production remains strong with growth largely offset by elevated payoffs during the first quarter. The commercial pipeline increased to over $1 billion at quarter end, supporting continued organic growth as we move through the year. Our loan portfolio remains well diversified by asset class, industry and loan type, with average loan sizes that reflect the granular nature of our franchise and exposure levels that remain well within regulatory guidance, and that provide significant flexibility for forward growth.

On credit quality, shown on Slides 11 and 12, asset quality metrics remain solid. The allowance for credit losses totaled $176 million, or 1.39% of loans, 3 basis points lower than the prior quarter. Combined with the remaining $138 million of unrecognized purchase discount on acquired loans, we continue to maintain meaningful loss absorption capacity. We saw a modest increase in nonperforming loans compared to the prior quarter to 0.75% of total loans, though still well within the range of low historical levels. The increase in nonaccrual loans during the first quarter reflects the movement of 2 commercial credits to nonaccrual status, each having collateral values well in excess of balances outstanding and therefore, no credit loss is expected. Accruing past due loans declined. Net charge-offs remained low at 11 basis points annualized, and criticized and classified loans were stable sequentially.

Turning to deposits on Slides 13 and 14. Total deposits increased $382 million during the quarter, or 9.5% annualized. Excluding brokered balances, growth remained solid and relationship-driven, with organic growth of 7% annualized. Deposit costs are lower by 13 basis points. Transaction accounts represented 50% of total deposits, and the deposit base continues to be highly granular, with the top 10 depositors representing only 3% of total balances.

Moving to Slide 15 and the investment securities portfolio. As I mentioned, we took advantage of constructive market conditions and repositioned a portion of the available-for-sale portfolio in late January, which will enhance forward earnings while maintaining balance sheet flexibility. We sold securities with proceeds of approximately $277 million, resulting in a pretax loss of $39.5 million impacting first quarter results. The proceeds were reinvested in primarily agency mortgage-backed securities with a tax equivalent book yield of approximately 4.8%.

Turning to capital and liquidity on Slide 16. Seacoast continues to operate with a fortress balance sheet. Tangible equity to tangible assets was 9.2%, and capital ratios remain very strong, providing significant flexibility to support organic growth, disciplined capital deployment and opportunistic actions, such as the approximately 317,000 in share repurchases completed during the quarter.

On Slide 17, we reiterate the guidance we provided last quarter. The adjusted earnings per share outlook remains unchanged at $2.48 to $2.52, with the potential for slightly lower revenue resulting from the change in previously expected rate cuts, but with no change to bottom line results.

In summary, our results demonstrate meaningful improvement in core profitability, strong funding trends and continued execution against our strategic priorities. We remain focused on disciplined growth and long-term shareholder value creation.

With that, Chuck, I'll turn the call back to you.

All right. Thank you, Tracey. And Kate, I think we're ready for Q&A.

[Operator Instructions] Your first question comes from the line of Woody Lay with KBW.

I just wanted to start on loan growth and higher payoffs impacted the growth in the quarter. But I just wanted to get a sense of how the pipeline is shaping up in 2Q '26, especially given some of the macro uncertainty that's out there?

Thanks, Woody. And just to kind of go back to the quarter itself, payoffs were very elevated. We notated in the release and in the slides, you can see what it was year-over-year. And in particular, in the first quarter, we did have three larger credits pay off in aggregate, $150 million amongst the three. So -- and it was multiple loans, so a couple of borrowers in there. But -- so it was -- good news is they paid off. They're great borrowers and the bad news is we got paid off. But that's kind of the way the business operates.

And so when we look forward into the remainder of the year, the pipeline remains strong. We expect to return to high single digits here in the coming quarters and remain very confident throughout the remainder of the year. The impact of the geopolitical concerns are unknown, I would describe at this point. It's still probably too early to tell. And so we'll have to see how that all plays out here over the back half of the year. But for now, we remain confident in the guidance and expect to return to high single digits.

Woody, this is Michael. Just adding on one thing at the end. We had 15% annualized growth in the fourth quarter. Our average loan growth in the first quarter was still high single digits, kind of 9% plus. We just had a lot of pull-through the pipeline late in the quarter. And so we still feel like we remain on track and consistent. It's just our normal kind of seasonal trends here with strong fourth quarter production and growth, and then first quarter generally as expected, being a bit softer, impacted by the payoffs.

And then just maybe one call headed into the second quarter, we have a stronger, kind of, first quarter seasonal deposit growth. And then second quarter, we do see that kind of come back a bit before we have seasonal trends return to tailwinds in the back half of the year.

Got it. That's helpful. And then maybe on deposits. I believe the first quarter is typically a seasonally stronger quarter, but, I mean, the noninterest-bearing deposit growth you saw in the quarter was really strong. Just trying to get a sense of how much you think that's seasonal versus actual core deposit growth?

Yes, it's a good question. We typically see outflows related to tax payments at the kind of end of first quarter, early second quarter. So we did see that normal kind of seasonal trend, but it's not that all of that came from DDA, or noninterest-bearing deposits. Certainly some did, but I think we'll expect to hold higher levels of noninterest-bearing deposits as we move forward, given just kind of growth in aggregate across the franchise and growth in customer account. So we certainly see some tax-related outflows here in April, but not enough to backslide us on noninterest-bearing deposits.

Got it. And then maybe just last for me. So you have The Villages conversion coming up here this summer. Can you just remind me how much cost saves are still set to come out of the run rate?

Yes. So we articulated a 26%, 27% cost out kind of at announcement. As we talked about, I think, on the last call, we have an earnings step -- or I'm sorry, an expense step-up here in the second quarter with our normal annual pay cycle and increase. We'll expect maybe a little tick up in the efficiency ratio headed into conversion as well in the second quarter. And then we'll see the cost out come in the back half of the year as our efficiency ratio begins to step back down into the fourth quarter. So that's kind of a way to think about it. We are, as we talked about, hiring and growing as well. And so that will offset some of the expense saves that are just discrete from the deal.

And I'd just remind you to push back to the guidance we laid out last quarter that's reiterated in the slide. We think a full year efficiency ratio is somewhere between 53% and 55%. So as you're modeling, that's kind of the ballpark where we expect to be full year.

Your next question comes from the line of Russell Gunther with Stephens.

Chuck, maybe to start on the core margin. It would be helpful to get a sense for how you are expecting that to trend going forward, maybe touching on incremental commercial loan yields versus deposit costs? And then on that last front, as it relates to the cost of deposits from here, do you think you have the ability to continue to lower? Or is there, perhaps with the Fed on pause an upward bias to deposit costs embedded in the revenue guide?

Russell, this is Michael. I'll take that one. A couple of questions in there, so I'll try to hit each one.

First, on the margin progression, we do expect continued margin expansion here in the second and third quarter. You saw we exited the quarter with lower deposit costs than we kind of started the quarter as we continue to blend the rate volume mix down. We're still at a 75% loan-to-deposit ratio. So we're in a really strong balance sheet position there. But I think as we've approached kind of this 1.30% ROA and 16% ROTE that we've been targeting, we do want to be on the offensive and grow. And so I think we'll continue to try to do that throughout the year while maintaining the profitability levels and the guidance that we talked about. But we do expect continued pretty nice margin progression here in the second quarter, third quarter.

That will -- on the deposit cost side, without Fed cuts, as you saw, we revised the revenue guidance low end down by 1 percentage point. That's basically our rate sensitivity to two cuts is really all that is. And so we could see some stabilizing to increasing deposit costs potentially later this year without Fed rate cuts as we grow the deposit balances from here.

On the loan yields side, the other part of your question. We still saw kind of add-on yields in the low 6s this quarter. We are seeing a little more mix of residential mortgage retention, as we've talked about before, which with the high -- the long end of the curve at higher levels is pretty attractive rates and good risk-adjusted returns. So we've seen that coming through as a benefit. On the commercial side, there's obviously been competitive forces at play, but we still are being disciplined there and really holding around kind of the 6% level.

Maybe switching gears on the expense side, a follow-up to the discussion already appreciate the glide path. Maybe just some color, or clarification in terms of your efficiency target and how tethered that is to revenue. So if we're at the high end of revenue, should we be at the low end of efficiency? Or is there some flex there?

And then kind of post conversion, how do you think about a normalized growth rate for Seacoast given the franchise investment you kind of see ahead of you, at least on the lending hiring front?

Yes. I would think about it this way. We put the guide out there, the 53% to 55% to give you a sense of where we think we'll land full year. If revenue is higher, I think that does fall to the bottom line and pushes us to the lower end of that range. We're -- given the fact that, as Michael laid out, we won't potentially have two Fed cuts, that's going to probably not drive as low deposit costs as we thought we'd see on the back half of the year. And as such, that's going to require us to, probably, tighten a little bit on the expense side to navigate through that.

But we're confident in our ability to deliver on the overall EPS range. We'll sort of feather that depending on what the back half of the year looks like, but we've given ourselves enough room to be 100% confident in delivering the EPS range. So that would be the way I think about it.

Long term, we'd like to run the company in that same range, kind of that 53% to 55% range is probably where we land. The way we're thinking about the business is running with a return on tangible equity north of 16% and ROA, north of 130% and high single-digit growth rates kind of with a 53% to 55% efficiency ratio delivers really strong shareholder return compounding over time. And so that's kind of where I think the optimal run rate is for the company and what we're working to deliver to shareholders.

Your next question comes from the line of Liam Coohill with Raymond James.

This is Liam on for David Feaster. So I appreciate all the color on loan and deposit growth. And I'm curious where in your footprint have you been seeing the most success? And where do you expect the most opportunity to be moving forward? Is a lot of that deposit growth coming from The Villages? Or is it more of the core markets?

It's broad-based. I mean I would say that we're seeing good solid growth in The Villages. Some of the new offices that have opened in the Villages II development are growing nicely. We've been very pleased with that. Some of the expansionary markets up into North Florida, up towards Gainesville, Ocala have seen really, really solid growth as we continue to expand what was the legacy Drummond franchise, and then we layered on a really strong banking team up in that market. And then Atlanta is also off to a really nice start. And so it's fairly broad-based with most of the growth coming from, probably, The Villages and the expansionary markets, some of the new markets we've opened up.

Great. And then on deposit costs, do you expect noninterest balance growth to be the larger driver of total deposit cost reductions in the back half of the year, especially if we're assuming kind of more of a stable rate environment?

Yes, it's a good question. I think we've been optimizing, particularly on the CD rate side, letting some of the higher rate CDs roll down, which has been a driver along with some noninterest-bearing growth and just repricing of money markets as the Fed cut rates. I think as we move forward, some of it will be mix driven, certainly that will improve cost of funds, or maybe keep cost of funds from going up as much over the medium term. But then over time, it's really about the pace of growth. So if we need to grow at higher paces of growth, then we'll see a little more pricing pressure. So I think it's more geared to overall balance sheet growth and how quickly we're growing the deposit portfolio.

That makes sense. And last thing for me to touch on was it was really impressive to see the wealth management balance growth in a quarter where the market was down almost 5%. And with new asset growth continuing and the market rebounding in April, would it be unreasonable to expect some nice balance growth into 2Q?

We do expect that to continue to grow in some of the -- what we're really excited about in the first quarter is we saw almost $17 million of new AUM coming out of The Villages, and $15-plus million coming out of what was the legacy Heartland market. So it's really great to see new opportunities coming out of those two new acquisitions from last year. And the business is operating exceptionally well, and we expect to continue to grow throughout the year.

I continue to be -- remain very bullish on that business inside of Seacoast, and it continues to drive really solid returns on capital. And so ideally, as we move through time, we'll continue to get opportunities in The Villages footprint and the remainder of the franchise. So, so far, everything is going right according to plan.

Your next question comes from the line of Kyle Gierman with Hovde Group.

This is Kyle on for Dave Bishop. I was wondering in your prior guidance, you referenced plans for a meaningful banker headcount growth into 2026. I believe it was around 15%. I was wondering if you could update us on the progress so far this year, your target for like net new producers for 2026, and how that hiring pace factors into your efficiency and revenue guidance?

Yes, I'll take that. We're about halfway there. That would be the way to describe it. We, through the first quarter, got about half of what we wanted to get done. Through the remainder of the year, we'll see what opportunities emerge. We're going to be thoughtful about making sure we manage efficiency and manage the EPS guide we've given, but we'll see what opportunities emerge for us.

But so far, so good. We continue to focus on that. And particularly, as I mentioned earlier, in some of the expansionary markets, we continue to add on bankers and I remain excited about what's out there for us.

And then maybe I was wondering how your M&A appetite, kind of, evolved heading into the back half of 2026, especially with The Villages conversion approaching. I was wondering if you are actively evaluating in market or adjacent opportunities in your Florida and Georgia markets? Or is the near-term focus squarely on integration and organic growth?

Yes. Great question. At the moment, it's heads down, focused on integration. Obviously, the impacts of this transaction are substantial on the earnings profile of the company. We want to get this absolutely 100% right, and we're going to deliver a flawless conversion. The team is heads down, very focused on it, and I'm confident we'll get that done.

As we come out of that, we'd obviously be available to do M&A. We remain kind of focused only on Florida from an M&A perspective. There's only about a handful of banks left that are big enough and in the right markets to be impactful. And if one of those were to emerge, we would certainly look at it. But it is -- there is a limited opportunity set as we move through time under that structure. And so it could be there. It might not be there. But right now, it's focused on The Villages.

I'll now turn the call back over to Chuck Shaffer for closing remarks.

All right. Well, thank you all for joining us this morning. And just for the Seacoast team, really proud of the team this quarter. They continue to do an excellent job growing the franchise amongst working exceptionally hard to deliver an upcoming conversion and a lot of hard work going on, on that as well with building around other new tools, AI products, and we're going to come out of '26 much stronger than we came into it. So I couldn't be more excited about the year ahead, and thank you all for being on the call, and we're available for follow-up calls if anybody has them. So that will conclude our call. Thank you, Kate.

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

Welcome to Seacoast Banking Corporation's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Mark, and I will be your operator. Before we begin, I have been asked to direct your attention to the statements at the end of the company's press release regarding forward-looking statements. Seacoast will be discussing 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 deck. Please note that this conference is being recorded.

I will now turn the call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin.

All right. Thank you, Mark, and good morning, everyone. As we move through today's presentation, we'll reference the fourth quarter and full year earnings slide deck 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. The Seacoast team delivered another exceptional quarter, highlighted by the closing of the Villages acquisition and strong growth in loans. Loan outstandings grew at an annualized rate of 15% driven by the continued success of our commercial banking team and the additional mortgage volume contributed by the Villages acquisition. The addition of the Villages mortgage team expands our optionality for future portfolio decisions. The residential loans we added this quarter were very high-quality credits with high FICOs, strong yields and generally shorter expected lives than traditional mortgage products, given the unique characteristics of this borrower base. We also continue to see meaningful improvements in noninterest income with stronger performance across almost every major category.

Wealth Management had an excellent year, adding $550 million in new AUM and and treasury managed fee, treasury management fees and other service charges also continue to grow as new clients were onboarded. On the expense side, overhead was well managed, and our expense ratio improved from the prior quarter in the ratio of adjusted noninterest expense to tangible assets declined to near 2%. Our plan to drive improved shareholder returns remains firmly on track. Excluding the day 1 provision and merger-related expenses associated with the Villages acquisition, our ROA for the fourth quarter was 1.22% and the return on tangible equity was 15.72%. These results demonstrate the strong return profile of the combined institution which will be fully realized following the Villages technology conversion in July 2026. The Village acquisition also closed with materially higher tangible equity than initially projected, shortening the earn-back period. We are deploying a portion of this excess capital into the securities portfolio reposition that was executed this week and Michael will walk through these details here shortly.

Overall, I'm very pleased with the progress we're making, and I remain highly confident in our outlook for 2026. As noted in the slide deck, we expect to achieve earnings per share for the full year in a range of $2.48 to $2.52 and anticipate exiting the year in the fourth quarter of 2026, and after the Villages technology conversion with an ROA above 1.30% and a return on tangible equity of approximately 16%. And asset quality remains solid. Charge-offs were a modest 3 basis points for the fourth quarter the full year average for 2025 was only 12 basis points. Our CRE and construction and land development ratios remain low following the addition of the villages. And as a reminder, our portfolio is composed almost entirely of franchise quality relationships. Long-standing borrowers across our footprint, which include consumers, businesses, nonprofits and municipalities. And lastly, capital and liquidity remain exceptionally strong. We continue to operate with a fortress balance sheet, we remain one of the strongest banks in the industry. And with that, I'll turn it over to Tracey Dexter to walk through our financial lots. Tracey?

Thank you, Chuck. Good morning, everyone. Beginning with Slide 4 and fourth quarter performance highlights. The Seacoast team delivered a strong quarter with adjusted net income, which excludes merger-related charges increasing 18% year-over-year to $47.7 million. Consistent with the accounting requirements, this includes the initial provisions for loans and unfunded commitments on the Villages Bank Corporation acquisition, which totaled $23.4 million. Pretax pre-provision earnings on an adjusted basis rose to $93.2 million in the fourth quarter, an increase of 39% from the third quarter and an increase of 65% from the prior year quarter. The efficiency ratio improved and on an adjusted basis, is below 55%. I'll note that our presentation of the efficiency ratio now includes the amortization of intangible assets which added $10.4 million to expense in the fourth quarter. Loan production was very strong with organic growth in balances of 15% on an annualized basis. Higher commercial production, which increased 22% from the prior quarter reflects the success of a multiyear hiring strategy.

Deposit costs were well managed and also benefited from the addition of VBI overall declining 14 basis points from the prior quarter to 1.67%. The Net interest income was $174.6 million, an increase of 31% from the prior quarter. Net interest margin, excluding accretion on acquired loans expanded 12 basis points to 3.44% consistent with the guidance we provided. Our capital position continues to be very strong. Seacoast Tier 1 capital ratio is 14.4% and the ratio of tangible equity to tangible assets is 9.3%. We grew the branch footprint through 2 de novo openings in the fourth quarter, 1 in the greater Atlanta area and 1 on the Gulf Coast in Bradenton, Florida. For the full year 2025, we opened 5 de novo branches.

We completed our acquisition of VBI on October 1, 2025, with the technology conversion planned for July of 2026. On to Slide 5. Tax equivalent net interest income increased by $42.3 million or 32% compared to the prior quarter and by $60.1 million or 52% compared to the prior year quarter. The net interest margin expanded 9 basis points to 3.66% and excluding accretion on acquired loans expanded 12 basis points from the prior quarter to 3.44%. Loan yields increased 6 basis points to 6.02%. Excluding accretion, loan yields increased 7 basis points to 5.68%. Overall cost of funds is down 16 basis points from the prior quarter. With strong momentum in loan growth, funding costs now lower, additional liquidity and accretive acquisitions, we expect continued expansion in the net interest margin.

Turning to Slide 6. Noninterest income was $28.6 million, increasing 20% from the prior quarter. Fee revenue continues to benefit from our growth in commercial customers and with the addition of the villages in the fourth quarter, service charges on deposits increased 4% from the prior quarter. Mortgage banking activities have expanded with the acquisition of VBI. This includes increases in saleable and portfolio production in the fourth quarter along with servicing income introduced by the Villages activities.

Moving to Slide 7. Our wealth management team delivered another quarter of remarkable results with income growing 21% from the prior quarter, largely attributed to organic growth, bringing new assets under management in 2025. Total AUM increased 37% year-over-year with a 23% annual CAGR in the past 5 years. We're incredibly proud of our wealth team and their amazing success in 2025.

Moving to Slide 8. Noninterest expense in the fourth quarter was $130.5 million, an increase of $28.5 million from the prior quarter. The fourth quarter included $18.1 million in merger and integration costs and $23.4 million in day 1 credit provisions for the Villages acquisition. Higher salaries and benefits and higher outsourced data processing costs reflect continued expansion and the addition of recent bank acquisitions as well as higher performance-driven incentives. Other categories of expenses were in line with expectations. Our adjusted efficiency ratio improved to 54.5%, demonstrating continued operating leverage. We continue to remain focused on profitability and performance and expect continued disciplined management of overhead and the efficiency ratio. As a reminder, looking ahead, the first quarter typically has seasonally higher expenses from FICA and 401(k) resets.

Turning to Slides 9 and 10 on the loan portfolio. Loan outstandings, excluding the impact of the VBI acquisition, increased at an annualized 15%. We continue to see strong broad-based demand across our markets and commercial production increased by 22% during the fourth quarter. Loan growth was further strengthened by strong mortgage production at VBI, much of which we chose to retain in the portfolio. Loan yields increased 6 basis points and excluding the effect of accretion, yields increased 7 basis points from the prior quarter to 5.68%. The overall mix of loan types has remained generally consistent quarter-over-quarter. Portfolio diversification in terms of asset mix, industry and loan type has been a critical element of the company's lending strategy. Exposure is broadly distributed, and we continue to be vigilant in maintaining our disciplined, conservative credit culture. As we have for many years, we consistently managed our portfolio to keep construction and land development loans and commercial real estate loans well below regulatory guidance. These measures are significantly below the peer group at 32% and 216% of consolidated risk-based capital, respectively. We've managed our loan portfolio with diverse distribution across categories and retain granularity to manage risk.

Moving on to credit topics on Slide 11. The allowance for credit losses totaled $178.8 million with coverage to total loans increasing to 1.42%. Loans acquired from VBI have coverage of approximately 2% as we take a conservative approach while transitioning to Seacoast portfolio management and monitoring practices. The allowance for credit losses, combined with the $150 million remaining unrecognized discount on acquired loans totaled $329 million or 2.61% of total loans that's available to cover potential losses. The acquisition of VBI added approximately $59 million in accretable purchase mark. That's included in the figures presented on the slide, but if not needed to cover losses will be recognized through yield over time.

Moving to Slide 12. Looking at quarterly trends and credit metrics, which remain strong. We recorded net charge-offs of $936,000 during the quarter or 3 basis points annualized bringing the net charge-offs for the full year 2025 to 12 basis points of average loans. Nonperforming and criticized and classified loans grew slightly with isolated additions from VBI but remain low as a percentage of total loans.

Turning to Slide 13 and 14 on the deposit portfolio. Deposits increased to $16.3 billion, largely attributed to the acquired VBI deposits. Average balances in the fourth quarter were up 29% from the prior quarter, benefiting from the acquisition and the seasonal effect of higher public funds deposits. The cost of deposits declined to 1.67%, exiting the year at 1.64%. Seacoast continues to benefit from a diverse deposit base, customer transaction accounts represent 48% of total deposits which continues to highlight our long-standing relationship-focused approach.

On Slide 15, our capital position continues to be very strong. Tangible book value per share shows the initially dilutive impact of the VBI acquisition, which we expect to be earned back ahead of our original projection. The ratio of tangible equity to tangible assets remained strong at 9.3%. As expected, return on tangible equity decreased, reflecting the impact of the acquisition, our risk-based and Tier 1 capital ratios remain among the highest in the industry. I'll now turn the call over to Michael to discuss recent strategic capital actions in the securities portfolio. Michael?

Thank you, Tracey. I'll be referencing Slide 16 for the comments on the securities portfolio. With the closing of the VBI merger, our securities portfolio grew substantially to $5.75 billion in the fourth quarter, combining 2 low-cost granular deposit franchises, with a large, primarily agency-backed securities portfolio that has only further strengthened our balance sheet's liquidity position as we converted excess capital into low-risk earnings. Immediately following the merger close, we sold approximately $1.5 billion of the $2.5 billion securities portfolio at VBI with an emphasis on reducing risk throughout the liquidation of over $600 million in corporate debt that was sold. We patiently redeployed that liquidity throughout the quarter, avoiding periods of low rates, which resulted in higher cash balances for much of the quarter, creating a slight drag on the NIM. The net unrealized losses in the AFS portfolio improved by $18.5 million during the fourth quarter, leading to additional tangible book value accretion. This has been a hallmark of our 2025 performance with the unrealized losses on the securities portfolio improving by $137 million, adding nearly $1 to tangible book value and materially reducing the dilution from the acquisitions of Heartland and VBI.

The portfolio yield increased 21 basis points to 4.13% in the fourth quarter with additional yield expansion expected in the first quarter of 2016 with a full quarter benefit of the fourth quarter actions. Now turning to Slide 17. We have materially outperformed our conservative assumptions related to the VBI acquisition. The primary contribution came from lower marks on the securities portfolio at close with additional benefits from lower credit marks on the loan portfolio. These positive developments delivered significantly lower dilution and materially higher pro forma capital, as you can see. We have about 90 basis points of additional total risk-based capital or approximately $92 million compared to the 14.7% that we originally articulated at deal announcement. Given the significant capital outperformance, we are once again trending towards elevated capital levels.

As a result, we elected to convert 1/3 of that excess regulatory capital generation into higher future earnings profile, delivering what we believe is a win-win for shareholders with no tangible book value dilution, but higher pro forma earnings and allowing us to exceed the $2.46 that we originally articulated at deal announcement. We sold $317 million in book value of available-for-sale securities with a projected book yield of below 2%, and we received proceeds of $277 million that were invested at a taxable equivalent yield of 4.8% for a pickup of almost 290 basis points as part of the securities restructure action we took this week.

And finally, on Slide 18, we felt it important to provide some additional guidance around our expectations for 2026. Our guidance numbers reflect adjusted performance metrics largely calibrating for merger-related charges that may take place in 2026. We expected adjusted revenue growth of 29% to 31% for the full year 2026 compared to the full year 2025. We believe our adjusted efficiency ratio will be in the 53% to 55% range for 2026, with the primary driver being the pace of banker hiring during the year. We plan to increase our banker count by approximately 15% in 2026, and the benefit will be fully realized in 2027 and 2028. Most importantly, however, we plan to manage these outcomes within tight bottom line performance of $2.48 in earnings to $2.52 in earnings, an increase from our articulation of the $2.46 target last year. We expect to exit the year with a 1.3% adjusted ROA and a 16% ROTE in the fourth quarter post conversion activities as we balance the investments for future growth with strong current profitability. We plan to deliver all these financial outcomes while continuing the organic growth momentum that we've seen in 2025 and and we expect to deliver high single-digit loan growth and low to mid-single-digit deposit growth as we move forward throughout the year. I'll now turn the call back to Chuck for final comments.

Thank you, Michael. And before we open the line for questions, I'd like to once again express my deep appreciation for our Seacoast associates, our customers and our shareholders. We closed out a truly transformational year, one marked by industry-leading loan growth, two exceptional acquisitions and meaningful investments across our company that position us for long-term strength. We operate one of the best banking teams in the Southeast and some of the strongest markets in the country. We have an exceptionally strong balance sheet. I remain very confident in our growth outlook and our ability to deliver upon our strong return profile in 2026. And it's especially gratifying to enter our 100th anniversary in 2026 with such a strong foundation. As we celebrate a century of serving our communities, we do so with confidence momentum and tremendous optimism for what lies ahead. And with that, operator, we'll open the line for questions.

[Operator Instructions] And our first question comes from the line of David Fister with Raymond James.

I was just saying I appreciate the guidance this quarter. That is super helpful. I wanted to start on the efficiency side. I guess, first, I just wanted to clarify, when we talk about an adjusted efficiency ratio, does that exclude intangible amortization like we have in the past. And then just looking at the efficiency, it is a bit higher than where the Street is. It sounds like there's some new hiring embedded in that -- but just wanted to get your thoughts on how expenses are, specifically in investments kind of on the horizon.

Yes. David, I can take the first part. This is Tracey. Our adjusted efficiency ratio includes leaves in the expense for amortization of intangible assets. the past, we had excluded that. We know that's been kind of a difference in the way you keep track of it. So it's in there.

And David, regarding the investments, I think if you look back to the original deal deck, we had an efficiency ratio of about 52.5%. That was run rate post all the expense takeout with the acquisitions. We obviously won't have that impact until kind of the midway part of this year. So that naturally pushes the efficiency ratio up for 2026 guidance. But also, as articulated in the prior prepared remarks, we plan to be aggressive in hiring bankers. We've had a lot of inbound demand, as Chuck has referenced many times in the past, but we wanted to balance that growth and banker count with profitability. We're in a much stronger profitability footing now. And given the merger disruption that we see in the industry, we want to be on the front foot in hiring. We articulated a 15% increase in the banker count is the expectation and some of the driver will just be how successful we are and how early in the year as to when we see the expenses ramp versus kind of the future production.

That's helpful. And then maybe kind of staying on the hiring side. You've obviously had a lot of success. There's more opportunity on the horizon. I guess, first off, the loan growth, I mean, 15% was great. I wanted to get a sense of how much of that would you attribute to the new hires or improving demand or just increasing productivity from your existing team? And then is the hiring investment that you're contemplating key to the achievability of that high single-digit growth guide or would that be additive just given the time it takes for these lenders to ramp up?

Yes. Maybe I'll take that one, David. So I think if you look back at the quarter, the way to break it down, and this is rough, so this isn't super precise, but out of the 15%, I'd say, roughly 10% came out of what was legacy Seacoast. So our commercial banking team. the hiring we've done over the last couple of years, that drove about 10% of that annualized growth. There's another 2% to 3% that came from the Villages acquisition, as we talked about in my prepared comments, when you kind of look at the opportunity there, it's really high FICO credit, a more senior borrower and typically shorter life duration assets. So we really like that paper. And as a result, we took the opportunity in the portfolio, and then there's probably another 1% to 2%. It's just a little bit slower paydowns. When you look into the coming year, we've contemplated arguably a little bit higher pay downs as we move into the coming year but bake that into our model.

And so we guided to that high single-digit growth rate. I would tell you that if you really think about the hiring profile, if we do exceptionally well here in the first half of the year and are able to add that 15%, while it will benefit late in 2016, really, we won't see the benefit until '27, '28. And the other thing that you have to sort of contemplate is the balance sheet will grow as we move through the year with a high single digit, call it, 8% to 9% growth rate. If we achieve that you got fairly sizable growth in the loan portfolio that we need to kind of continue to reoriginate to. And as we've talked about before, we're always going to be thoughtful about what our credit risk appetite is and what we're willing to take into the portfolio. We're going to do the loans we like in our credit profile and largely don't want to sort of be held to such a high growth rate that we wouldn't be able to continue to be thoughtful and selective on what credits we're willing to put in the portfolio. So I think if you're thinking about modeling sort of that high single-digit growth rate is the right way to think about it. We'll have optionality with the villages portfolio to kind of move that in and out depending on where rates are and where the yield curve is. And as Michael mentioned, we still have a lot of opportunity to hire. So on the growth side, particularly the loan growth side, I feel really confident about what's out ahead for us.

That's exciting. Maybe just last one for me. Switching gears to capital. You talked about capital pro forma being higher than expected, deployed a portion of that into the repositioning here in the first quarter. But look, based on your pro forma profitability, you're going to be accreting a lot of capital even with high single-digit loan growth. How do you think about capital return going forward, just as maybe M&A is less of a focus like you talked about, would you expect to see more capital return or would you rather accrete capital back closer to maybe where you were previously?

Yes. We'll see how the year plays out, what opportunities emerge. We took the opportunity here this quarter to do the securities loss trade. And I think that was a good use of capital given the significant capital appreciation that we saw on the Villages transaction and the shorter earn back than what we originally put in the deal modeling. And so we will continue to monitor, David. I mean, obviously, we're going to have a lot of capital that's going to give us opportunities to think about things like dividends and buybacks over time. As you mentioned, there's a lot less opportunity for M&A. And at the moment, we're heads down, highly focused on getting this Villages deal done. I mean that's kind of the priority right now. We want to get through the middle part of the year, have an amazing conversion for our customers, deliver really solid experience in the Villages come out of that and then we'll see what opportunities present. But at the moment, we're -- I hear you, we're growing a lot of capital. That's a conversation we continue to have with our Board and something we'll continue to monitor. But yes, I mean we'll continue to look at other options as we go through the year here. And there's buybacks and dividends and other things we can do through time.

And your next question comes from the line of Russell Gunther with Stephens.

Maybe I'd like to start, if I could, on kind of margin and NII. I really appreciate the revenue guide for the year. Given the securities actions taken within 4Q and then again here in 1Q how are you thinking about where that first quarter margin could shake out? And then an adjacent question within the NII expectation for the year. Kind of what is your overall level of purchase accounting embedded in that guide?

Russell, I'll take the first part of that and turn the second part to Tracey. Two key things to think about. One is the margin side, but the other is the average earning asset balances. In the fourth quarter, we have public funds balances that tend to fund up and fund back down as well as you mentioned kind of the -- taking our time on the repositioning. So we had some excess cash balances related to that as well. So both of those kind of weighed on the margin a little bit in the fourth quarter. We would expect the average earning asset base to be down in the first quarter by a couple of hundred million dollars, but the margin will expand pretty nicely probably in that 10 to 15 basis point range in the first quarter. So those are the dynamics you want to think about kind of the start of the year. and then moving throughout the year to hit the guidance that we laid out, and I'll turn it to Tracey on the purchase accounting accretion question.

Yes. Russell, the expectations for accretion are always kind of difficult to predict, maybe more so with the addition of this portfolio the base level of accretion is derived using the loan's contractual life and the maturities here in the villages portfolio are relatively long. So the accretion will be accelerated upon payoff that will create a lot more volatility in the accretion, and we've got that baked into our forecast, too. But -- our model uses the fourth quarter of 25% as the run rate for '26, but do expect volatility in that accretion number.

Yes. Just one other point I wanted to make, we've been kind of calling this out a little bit more recently, but just the nature of our acquisitions being heavy core deposit franchises, there's more core deposit intangible expense -- and so if you look at the net effect of the purchase accounting marks in both revenue and expenses, they largely balance one another, so if you take kind of a low 40% number on purchase accounting accretion and you see our kind of $38 million roughly number on core deposit intangible expense. You've got a pretty marginal contribution on a net basis to earnings. So we just want to call that our earnings guidance for the year has really not been contributed to on a net basis from purchase accounting accretion in a significant way.

And then, I guess, next question for me would be, given the overall excess capital you guys discussed how you're thinking about that in the context of the actions already taken within the securities portfolio. Is there room or appetite left for additional restructurings in 2016 beyond what's currently contemplated in the guide?

Russell, I think we don't expect to execute any additional securities restructures, and that's certainly not reflected in the guide. So this is the only piece that's reflected in the guidance. and maybe zooming out more broadly, most of the other securities that are at loss positions or more material loss positions are in the HTM portfolio. We don't have any plans to pierce the HTM portfolio. So I think we're pretty much done with this capital action.

Okay. Yes. Michael, helpful. And then you touched on another one I had earlier in terms of just average earning asset expectations, so as we think about the mix within securities and into this high single-digit loan growth expectations, beyond the step down you mentioned in the first quarter, how are you expecting average earning asset levels to trend over the course of the year?

Russell, had pretty similar commentary to last quarter. The thing that's changed. We started the year with a little higher loan-to-deposit ratio because of some of the proactive actions we mentioned but we'll remix relatively slowly from here, and that's just going to be the delta between our loan growth versus our deposit growth really is going to be the driver of that. So if we're guiding to high single-digit loan growth and low to mid-single-digit deposit growth depending on where you shake out in that mix of ranges, that's going to be really the driver of our remix throughout the year.

Okay. And if I could sneak one last one, guys. I appreciate it. The efficiency ratio guide is helpful. Maybe could you just give us a sense for the reminder of the cadence of the cost saves within the Villages acquisition. I think you mentioned the conversion in July. Just kind of where an exit expense rate might be for the year. And then perhaps more bigger picture, but how should we think about a normalized expense growth rate for Seacoast going forward?

Russell. Yes, so in the acquisition deck, the base run rate for them was about $64 million at inflation year-over-year to that. That's kind of their base expense rate that would come out post the conversion in early third quarter. And so we would expect to see that kind of underlying drop. Now to offset though is we are investing into banker hires and ramping that during the year. And so one will kind of impact the other and could see a little more stability, if you will, in the expense base, but with much higher production and productivity going forward. And then I forgot the last part of your question was...

I think really just Yes. I'm thinking about sort of 27% and even beyond, given your commentary around the benefits from hiring in '27, '28, just as we exit with a cleaner run rate post all the villages, expense saves, what is a decent normalized growth rate to think about that captures the franchise investment you guys are making?

I appreciate last part of the question. I think as we zoom out, and this is hypothetical conversation, not guidance, obviously, but as a larger company today at $21 billion in assets, there's a lot of opportunity for us to drive scalability across the company. A lot of our processes with investment into technology that leads to material expense rationalization and really our ability to grow into our existing expense base in many different areas. So I think we're really excited about that opportunity as we move forward into '27 and '28 and driving some of that scalability and operating leverage. But we obviously want to maintain our ability to invest into the company and into the future growth prospects. We're not running this for 1 year or 2 years. We're running it for continued growth and sustainable growth over a long period of time. And so we'll balance those 2 as we've done in the past and maintain a reasonable profitability level and efficiency level as we move forward, balancing those 2 key critical pieces.

Just to add a little bit there, just in a long-term sort of view on efficiency ratio is 1 way to think about things, it's probably low to mid-50s type efficiency ratio target is where we want to operate to come over the cycle.

And our next question comes from the line of Stephen Scouten with Piper Sandler.

Just one point of clarification potentially. Do you guys have a good number for where the securities yield can kind of shake out the first quarter after all the actions completed.

Stephen, this is Michael. It will be a little bit dependent on the pace of prepayment speeds. We have a lot of discount mortgage backs in the portfolio. But generally, it's going to be in that kind of $440 million to $450 million range.

Okay. I appreciate the context there. And then anything in terms of updates on the Atlanta market, just kind of curious what that may have contributed to growth maybe this quarter and how it plays into this 15% uptick in lenders? How much of those might be contemplated in the Atlanta MSA.

Yes. Thanks, Stephen. As we've talked in the past, we've got a team of roughly 10 or so bankers up in that market. It's gone exceptionally well. I've been really pleased with the success we've had over the last couple of years there. We entered with an LPO about 3 years ago, built a CRE team and program moved a little further into C&I, opened a branch here recently. As we've said in the past, I would expect over the next, call it, 3 years or so to roughly have about a 5 branch footprint in the Greater Northern Atlanta market as we build out up and there and roughly to 20 bankers calling in that market with treasury support and the like. And so it's been helpful. We've definitely seen a lot of success there, and we do expect to continue to build in the Atlanta market in the coming years.

Okay. And just -- and can you contextualize that 15%? Or just remind me like what would that be ballpark on just FTE count perspective?

It's roughly about 15 bankers.

Okay. Perfect. Great. And then just kind of lastly for me in terms of -- and then, Chuck, you gave a lot of great color about the moving parts around growth. But the payoffs in particular, which you noted, you're kind of forecasting in higher payoffs next year. How do you think about the puts and takes of what you might see from a payoff perspective, especially within the context of rates, if we get lower rates, should that escalate payoffs? Or do you think kind of increases in production activity might kind of actually lead to a better environment if we get lower rates from here?

Stephen, this is Michael. I'll take that one. Yes, I think it is somewhat pretty heavily rate dependent as we move into next year. We have a fair bit, as we've talked about, of low fixed rate maturities that are coming due as well. Some clients or customers may choose to pay off or refinance elsewhere. But generally, it's just going to be a nature of kind of where the rate environment heads early in the middle of that curve, as to whether or not people pay off or refi or if they continue to refinance with us?

Stephen, I'll remind you, we really pulled back on lending and particularly construction lending in 2023. And so we didn't quite see the level of payoffs that others have dealt with probably here in 2025. And I think we'll probably still not quite see the level of payoffs that others may feel in early '25. Probably more of our challenge around that will emerge in '27, '28, '29 but we did take that pause back then when rates were really low, given what we viewed as a higher risk environment and didn't want to be delivering into potentially a weaker economy. Obviously, that didn't fully play out the economies pretty dog on strong at the moment. But it's nonetheless, that dynamic plays out for us. And so that issue hasn't been quite as strong for us as others in the industry.

Got it. Really helpful. And then maybe just one last for me actually. We're seeing more headlines about potential weakness in residential housing in certain pockets within Florida. Can you maybe contextualize that in any of your markets? Is there anything that you see that's concerning at all? I can't say that I'm really seeing it being that widespread or of a concern, but just wondering your context being in those markets.

Yes, really high level. And just to remind you, we don't have a lot of exposure to builder lines, just to kind of point that out. That's not something we've done a lot of, particularly post GFC. We've stayed out of the builder line sort of lending to not a real -- we do a little bit here and there, but it's not a big part of our portfolio. And -- but nonetheless, the way I'd characterize Florida is it is very market specific and then I'd start with saying the condo market has been weak, primarily driven by condo having to be retrofitted for new standards. And so that's put additional cost on associations that have to be passed on to backfill condo owners and therefore, new buyers have slowed down and buying into that market until you have that retrofit done. Once the retrofits done, those condos move pretty quickly. but we're going through this cycle where you just kind of the have and have nots. Those have gotten done, you can sell your condo, those that haven't, it's a weak market. So you kind of got to pull that out.

And then when you get to the residential market, there are pockets of weakness, and there's pockets of strength. I described Southeast Florida, Palm Beach County down to Miami Data being exceptionally strong. Prices have not come down much. Demand for housing remains really strong in those markets. But you move just directly over to the West Coast into that 4 Myers, Cape Coral area, and there was a lot of sort of post-COVID boom that happened with a lot of development, a lot of overdevelopment and now we're seeing prices come down. So it is very much sort of depending upon the market. in Florida. But I'd say, generally, it's not as weak as probably advertised, but there are pockets of weakness where there's been some oversupply.

And a really great quarter. Congrats on a great year.

And our next question comes from the line of David Bishop with Hub Group. David

Chuck, I'm curious, you guys also maybe get lost in the shuffle had pretty strong core deposit growth this quarter. Just curious if there's any sort of breakdown you have commercial versus consumer inflows there? I'm just curious what the main drivers were.

I don't have that in front of me. We can pull that for you, David. We do have a table in the earnings release, but it's hard to get to the number because of the acquisitions in there. We can kind of pull that apart for you. I would say generally, we saw a little bit of -- just on the high level sort of we all saw some deposit outflow in Q4 primarily in CDs as we kind of backed off of the higher-priced CD options, just given all the liquidity we had, we didn't feel like we needed to compete there. But the underlying core dynamics, DDAs, the typical operating accounts continues to be really strong with the growth and onboarding of new clients particularly the commercial client base that continues to -- the C&I base continues to come on. So -- but we'll see if we can pull that apart a little bit for you and give you some detail after the call.

Perfect. And then one follow-up. Most of my questions have been asked and answered. But just curious, it sounds like some of your peers new loan origination yields or quickly, actually more quickly than I thought they would approaching what's rolling off. Just curious what the spread is between new originations and what's maturing.

David, this is Michael. Yes, our new originations in the quarter were kind of in the low 6s. Our roll off yields, it will depend a little episodic throughout the year, given we have some periods of lower fixed rate maturities, and we have a lot of arms that are coming in to reset windows from the pandemic vintage. So we're still getting that positive back book dynamic on repricing, but those portfolios are a little lower in aggregate now pro forma. So -- but we're still probably picking up maybe 50 to 100 basis points kind of in terms of the new add-on rates versus the cumulative impact of the fixed rate, adjustable rate repricing and kind of fall off rates.

And our final question comes from the line of Wood Lay with KBW.

I wanted to touch on fee income fees this past quarter came in pretty well above the guidance you provided, and I know there are some questions on specialty villages mortgage unit and portfolioing that selling. So how do you think about the toggle between that going forward? And just any expectations on the fee income side near term?

Woody, it's Michael. Yes, we did retain as we talked about, more of the mortgage production in the fourth quarter, which drove a little additional balance sheet growth as part of the restructure to move us a little faster there. I think we may still do that a little bit here in the first quarter, potentially but then we'll start to ease off of that as we move throughout the year, but it just remains a really important lever for us as we move forward to kind of manage the overall balance sheet. And as Chuck mentioned, just the quality of that paper is so strong given the high-quality borrowers that are in the market. We just -- it's a very attractive asset to have on the balance sheet. So that's kind of how we're thinking about it from that side. And that will obviously have flow-through impacts into fee income in 2026, depending on the level of sold volume versus retention of the volume on balance sheet, and that's kind of why we just gave a total revenue guidance, it could flip between NII or fee income a little bit depending on our optionality and how we lean into that. But we'll deliver the total revenue that we articulated.

Yes. Just generally, we probably will see mortgage banking income a little higher than we have in the past. We picked up a servicing portfolio there that the citizens first and of the Villages was servicing that was fairly sizable. And so it's a nice revenue stream that will be continuing through the income statement.

Got it. And then maybe last for me. Again, on Villages. We touched on at announcement, there could be several revenue synergy opportunities. And I know we're still very early on in the process. But are you seeing any early signs of those synergies

Yes, early on. We've built the wealth management team. We're starting to see opportunities there. That's been great to see. As we talked about the mortgage business has gone very well. really exceptionally well. We like everything we're seeing there at the mortgage business. Ultimately, with time, we'd like to get some insurance offerings in that market as we have an insurance agency just north of there, near Gainesville, so we're continuing to look at opportunities to expand our carrier rights into that market, and hopefully, with time, we'll find our way there. But the biggest driver that we've seen so far is just the wealth management side of the business is starting to get traction there.

That concludes our question-and-answer session. I will now turn the call over to Chuck Shaffer for any closing remarks. Mr. Shaffer?

Okay. Thank you, operator. Thank you all for joining us today. We appreciate the support, and thank you to our team for another great quarter and on to an awesome 2026. So that will wrap up our call.

This concludes today's conference call. You may now disconnect.

Welcome to Seacoast Banking Corporation's Third Quarter 2025 Earnings Conference Call. My name is Desiree, and I will be your operator.

Before we begin, I have been asked to direct your attention to the statements 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 at 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 call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin.

All right. Thank you, and good morning, everyone. As we proceed with our presentation, we'll refer to the third quarter earnings slide deck, which is available at seacoastbanking.com.

Joining me today is Tracey Dexter, our Chief Financial Officer; Michael Young, our Chief Strategy Officer; and James Stallings, our Chief Credit Officer. The Seacoast team delivered another exceptional quarter, which clearly demonstrated the progress we are making towards enhancing our return profile, while delivering strong growth on both sides of the balance sheet. Our competitive transformation has fully taken hold with loan and deposit growth near 8%, the result of a focused effort to recruit the most qualified and capable bankers across our footprint.

I was particularly pleased with the growth in noninterest-bearing DDA accounts and a balanced approach to loan growth with our commercial production spread across C&I and CRE with multiple asset classes and industries. The team also delivered strong performance across multiple revenue streams, including a record-breaking quarter in Wealth Management, and solid performance in treasury management fees, SBA, interchange and insurance agency income.

And impressively, the team accomplished all this while successfully closing and converted the Heartland transaction as well as closing the Villages transaction on October 1. Asset quality remains sound, nonperforming loans declined and net charge-offs were lower than our prior guidance, reflecting our continued focus on disciplined underwriting and proactive risk management. We have very limited exposure to shared national credits or NDFI. And just to remind you, our portfolio is almost entirely franchise quality relationships made to borrowers in our footprint, including consumers, businesses, nonprofits and municipalities that we have deep relationships with.

And lastly, capital and liquidity are industry-leading, and our liquidity profile will be further enhanced with the Villages transaction. We remain committed to our fortress balance sheet principles and continue to operate one of the strongest banks in the industry.

And in closing, I want to express my sincere appreciation to our dedicated associates for their commitment to advancing our growth and profitability goals. Their focus and executions continue to drive our success. We operate one of the best banking teams in the Southeast across some of the best markets in the United States with an exceptionally strong balance sheet. I remain confident in our growth outlook and our ability to continue to deliver continued improvements in returns into 2026.

With that, I'll turn the call over to Tracey Dexter to walk through our financial results. Tracey?

Thank you, Chuck. Good morning, everyone. Directing your attention to third quarter results, beginning with Slide 4. The Seacoast team delivered a strong quarter with adjusted net income, which excludes merger-related charges increasing 48% year-over-year to $45.2 million or $0.52 per share.

Organic deposits, excluding brokered and Heartland acquired deposits, grew $212 million, or 7% annualized and that organic growth included $80 million in noninterest-bearing deposits. Loan production continued to be strong with organic growth in balances of 8% on an annualized basis. The pipeline has reached a record high, reflecting the success of recent hiring and the increase in the balance sheet following the completion of the Villages acquisition in October. Net interest income was $133.5 million, an increase of 5% from the prior quarter, and net interest margin excluding accretion on acquired loans expanded 3 basis points to 3.32%.

Tangible book value per share increased 9% year-over-year to $17.61, remarkable given that the Heartland acquisition included 50% cash consideration. Our capital position continues to be very strong. Seacoast's Tier 1 capital ratio was 14.5%, and the ratio of tangible common equity to tangible assets is 9.8%. We completed our acquisition of Heartland Bancshares on July 11, adding 4 branches and approximately $824 million in assets. The technology conversion was fully completed in the third quarter. And on October 1, we finalized our acquisition of Villages Bancorporation, adding 19 branches and over $4 billion in assets. We expect the full technology conversion to happen early in the third quarter of 2026.

Turning to Slide 5. Net interest income increased by $6.6 million or 5%, compared to the prior quarter and by $26.9 million or 25%, compared to the prior year quarter. The net interest margin declined 1 basis point to 3.57% and excluding accretion on acquired loans expanded 3 basis points from the prior quarter to 3.32%.

In the securities portfolio, yields increased 5 basis points to 3.92%. Loan yields declined 2 basis points to 5.96%. Excluding accretion, loan yields increased 3 basis points to 5.61%. The cost of deposits remained near flat with only a 1 basis point increase during the quarter to 1.81%. And overall cost of funds is down 3 basis points from the prior quarter.

With strong momentum in loan growth, deposit costs now lower and stabilizing, additional liquidity and accretive acquisitions, we expect net interest income to continue to grow. Consistent with our previous guidance, we expect to exit the year with the core net interest margin reaching approximately 3.45%, inclusive of recent acquisitions.

Moving to Slide 6. Noninterest income, excluding securities activity was $24.7 million, increasing 5% from the prior year quarter. Fee revenue continues to benefit from our investments in talent and expansion of treasury management services to commercial customers with service charges on deposits increasing 12% from the prior quarter. Our wealth management team delivered a record quarter in new AUM, continuing its strong performance and reinforcing its position as a key growth driver for the organization. $258 million in new AUM was added in the third quarter, the highest quarterly result in the division's history and $473 million in new AUM in 2025 year-to-date. BOLI income increased to $3.9 million in the third quarter and included $1.3 million in benefits.

Other income totaled $6 million, and included higher gains on SBA loan sales and higher loan swap fees. Looking ahead to the fourth quarter, we expect noninterest income in a range from $22 million to $24 million.

Moving to Slide 7. Again, the Wealth division continues to grow entirely organic and with significant referrals from our commercial teams, with total AUM increasing 24% year-over-year and a 25% annual CAGR in the past 5 years.

On Slide 8, noninterest expense in the third quarter was $102 million, an increase of $10.3 million, and the third quarter included $10.8 million in merger-related expenses. Higher salaries and wages reflect continued expansion and the addition of Heartland as well as higher performance-driven incentives. Outsourced data processing costs totaled $9.3 million an increase of $0.8 million, reflecting higher transaction volume and growth in customers, including from the acquisition of Heartland. Other categories of expenses were in line with expectations.

Our adjusted efficiency ratio improved to 53.8%, down from 55.4% in the second quarter, demonstrating continued operating leverage. We continue to remain focused on profitability and performance and expect continued disciplined management of overhead and the efficiency ratio. With the addition of the Villages beginning in October, we expect adjusted expenses for the fourth quarter, excluding direct merger-related costs to be in the range of $110 million to $112 million.

Turning to Slide 9. Loan outstandings, excluding the impact of the Heartland acquisition, increased at an annualized 8%. The Pipelines increased 30% to $1.2 billion, and we continue to see strong broad-based demand across our markets. Loan yields declined 2 basis points with lower accretion on acquired loans with the prior quarter impacted by elevated payoffs. Excluding the effect of accretion, yields increased 3 basis points from the prior quarter to 5.61%.

Looking forward, the pipeline remains strong, and we expect continued high single-digit organic loan growth in the coming quarter. With the addition of the Villages in the fourth quarter, we expect loan-to-deposit ratio at year-end 2025 to be below 75%, allowing significant continued growth opportunities.

Turning to Slide 10. Portfolio diversification in terms of asset mix, industry and loan type has been a critical element of the company's lending strategy. Exposure is broadly distributed, and we continue to be vigilant in maintaining our disciplined, conservative credit culture. Nonowner-occupied commercial real estate loans represent 34% of all loans and are distributed across industries and collateral types. As we have for many years, we consistently managed our portfolio to keep construction and land development loans and commercial real estate loans well below regulatory guidance. These measures are significantly below the peer group at 32% and 223% of consolidated risk-based capital, respectively. We've managed our loan portfolio with diverse distribution across categories and retain granularity to manage risk.

Moving to credit topics on Slide 11. The allowance for credit losses totaled $147.5 million, with coverage to total loans remaining flat at 1.34%. The allowance for credit losses, combined with the $102.2 million remaining unrecognized discount on acquired loans, totals $249.7 million or 2.27% of total loans that's available to cover potential losses.

Moving to Slide 12, looking at quarterly trends in credit metrics, which remain strong. We recorded net charge-offs of $3.2 million during the quarter or 12 basis points annualized. Nonperforming loans declined by $3.6 million during the quarter and represent only 0.55% of total loans. Accruing past due loans moved slightly higher to 0.19% of total loans. The level of criticized and classified loans stands at 2.5% of total loans, generally in line with prior periods.

As Chuck mentioned in his opening remarks, Seacoast continues to have very limited exposure to shared national credits or nondepository financial institutions. We have no exposure to private equity debt funds.

Moving to Slide 13, and the Investment Securities portfolio. Net unrealized losses in the AFS portfolio improved by $36 million during the third quarter, driven by changes in long-term rates. The portfolio yield increased 5 basis points to 3.92%, reflecting $385 million in purchases of primarily agency mortgage-backed securities with an average yield of 5.03%.

Turning to Slide 14, and the Deposit portfolio. Seacoast continues to benefit from a diverse deposit base. Customer transaction accounts represent 48% of total deposits which continues to highlight our long-standing relationship-focused approach. Our customers are highly engaged and have a long history with us and low average balances reflect the granular relationship nature of our franchise.

On Slide 15, organic deposit growth, excluding changes in brokered deposits and the acquired Heartland deposits, was $212.3 million, or 7% annualized, of which $80.4 million was noninterest-bearing deposit growth. Cost of deposits increased slightly by 1 basis point to 1.81%. The Heartland acquisition added over $700 million in a strong core deposit franchise and the #1 market share in Highlands County. We continue to build share across our markets with a focus on core relationship deposits. For the fourth quarter 2025, we expect low to mid-single-digit organic deposit growth.

And finally, on Slide 16, our capital position continues to be very strong. Tangible book value per share has grown to $17.61, and the ratio of tangible common equity to tangible assets held strong at 9.8%. As expected, return on tangible common equity decreased reflecting the impact of the Heartland acquisition. And in the fourth quarter, we'll see the initial impact of the Villages acquisition on these metrics.

Into the first quarter of 2026 and moving forward, we expect to see meaningful improvements in return on equity measures. Our risk-based and Tier 1 capital ratios remain among the highest in the industry. Results this quarter reflect our ability to deliver strong sustainable performance. Our balance sheet is well positioned and our capital position is strong. We'll continue to execute on our organic growth and profitability goals as we integrate recent acquisitions and grow the franchise.

I'll now turn the call back over to Chuck.

All right. Thanks, Tracey. And operator, I think we're ready for Q&A.

[Operator Instructions] And our first question comes from the line of Will Jones with KBW.

So I just wanted to start on the growth outlook. It's impressive in a quarter where you're closing and converting a deal and closing another one that you're still able to just so consistently produce this mid- to high single-digit growth. And as I look back on the first half of the year, it's so consistent with what you produced this quarter. But at the same time, it feels like pipeline momentum being at all-time highs and then just kind of the added flexibility you're going to have with the Villages balance sheet, that there may be opportunity to kind of accelerate growth as you look into 2026. Could you just maybe talk about your willingness to scale up the growth opportunity to the extent that, that does present itself next year?

Thanks for the question, Will. And that was one of the things I thought was most impressive about the quarter is not only did the team grow strongly both sides of the balance sheet, we also converted a Heartland transaction, which went exceptionally well. And we continue to move with tremendous momentum. When you look at the building the pipeline, the building growth, we have a slide in there that shows the net loan growth quarter-to-quarter, and you're seeing consistent improvement.

When you kind of combine the liquidity we're picking up with the Villages transaction, which just to remind you, is a very granular, diverse, lower-cost deposit portfolio and connect that with what I think now is one of the strongest commercial banking teams across Florida and maybe in the whole Southeast is a really strong combination to put together to drive earnings as we move forward. The team we've built over the last 3 years has matured now.

And if you recall, we've been pretty hard at work recruiting consistently now for a good 36 months. We've moved past solicitation constraints and other things that the bankers would have had in terms of contractual arrangements. And they're now fully available to go out and call and build business. We've also moved to the point of where from a lending perspective, some of the very low-yielding loans that were kind of locked into some of those balance sheets that would be moving business from have reached maturity and/or have amortized down to the point where they're willing to refinance those arrangements.

And so when you put all that together, I just feel very confident about our ability to deliver our guide, which was high single digit as we move forward. I think I'd stick with that guide for now. I think that's an appropriate guide as we move through time. But I feel really confident in our ability to deliver that in the coming quarters.

And Will, this is Michael. I just wanted to add, I think when you compare that to what you're seeing in the industry right now, we did a lot of work over the last 2 years, and we're derisked kind of our portfolio, made sure that everything that we have is what we want to have going forward. I think a lot of others are going through that right now. And so just our production is leading to more net growth as we add new relationships and grow the book.

Yes. That's fair enough. Certainly an envious position to be in. And I guess, maybe more holistically, as you think about 2026 and the flexibility that villages will provide to you, as we kind of think about the size of the balance sheet next year, do you -- would you characterize 2026 more as a year of optimization and maybe you don't need as intensive of deposit growth to kind of just leverage the balance sheet on the loan side? Or do you still expect to see some modest balance sheet growth in 2026?

Will, yes, let me -- I'll take that one. This is Michael. I'll call out one trend in the fourth quarter quickly, and then I'll move to 2026 for a little bit of color there. So in the fourth quarter, we did add a little bit of leverage in the third quarter to prebuy some securities for the Villages restructuring about $350 million that was purchased that Tracey mentioned earlier. So we have about $167 million of brokered deposits at about 4.2% that will run off in November and another $175 million of FHLB advances at about 4.2% that will run off in November as well. So -- we will delever just a little bit here in the fourth quarter at higher yields and expanding margin. But then as we move to 2026, we really think that across the franchise, there's a lot of deposit growth opportunity. We've opened about 5 to 6 new locations by year-end across the footprint here. And then also with the villages continued expansion and growth with them opening new town centers and having a lot of net new and migration there as well. There's just a lot of tailwinds to deposit growth. So we will remix a little bit, but deposits are still likely to grow at a pretty decent clip in 2026. So the balance sheet will be expanding kind of in line with that deposit growth that we forecast for 2026.

Yes. Okay. I appreciate that detail, Michael. And then just lastly for me. You guys have been expanding into Atlanta more recently, and correct me if I'm wrong, maybe your first meaningful expansion outside the state of Florida, just in terms of where you have boots in the ground, that wholesale market that's seen quite a bit of M&A turnover in the past couple of months here. Maybe, Chuck, if you could just frame what you would like to see in terms of the build-out of Atlanta and where there may be opportunity to add talent here?

Sure. Thanks, Will. And you're right, what we see in that market and what we see as we entered it a few years ago is the opportunity to take advantage of what we think will be significant consolidation in the Northern Arc of Atlanta. We, about 3 years ago, began to enter that market carefully with the commercial real estate team. We saw a lot of success uniquely or maybe not uniquely, but interestingly, we found a lot of connectivity between Atlanta and Florida with a lot of -- particularly on the commercial real estate side, some of the institutional quality commercial real estate investors and developers doing a lot of work in Florida. So it's a natural segue.

As that continued to build, we've bolted on a C&I team that continues to grow in that market. I would expect us to ultimately open a handful of branches in the probably 3- to 5-year period as we move through the coming years and expand into the market. We've had a lot of success at this point. We're onboarding a lot of high-quality customers. And so I would expect us to build out that Northern Arc.

Beyond that, I don't think we have any plans outside of that at this point. That's kind of our focus in Atlanta. And then we still have markets to fill in around Florida that we're focused on as well. We're still getting a lot of inbound demand by bankers and banking teams wanting to join the franchise. We're carefully taking advantage of that as we move through time. And potentially, as there is more of market disruption consolidation, we'll have very good opportunities to bring on really high-quality talent.

Our next question comes from the line of David Feaster with Raymond James.

I wanted to touch on the Villages deal. I just kind of hoping to get maybe some of an update. I mean this is a transformational deal and an extremely exciting time for you all. How has the deal gone early on, right? I mean we're only a couple of weeks into it, I know. But where are you seeing the most opportunity to add value near term, the time line to cross-sell some additional products across the existing footprint? And then just maybe how are you prepping for that conversion to minimize disruption and ensure a seamless integration?

Great question, David. It's the most exciting thing that's ever happened to Seacoast. I really -- I am not overstating that. We are really excited to be in the Villages MSA. We've had a very great -- good reception in that market. The team there is -- fits incredibly well within Seacoast. The cultures are very much aligned, very customer focused. We've been really excited to have the team join us. It's gone incredibly smooth. Having done a lot of these through my career, this one is a good one, and it's going exceptionally well.

As we look at that market, as you mentioned, the most important thing we can do is have a very clean, smooth, easy conversion for the Villages customers. Citizens First customers, and that's what we're focused on. That will happen about July next year. We gave ourselves plenty of time to do lots of data integrity work, lots of mock conversions, lots of work. There's a full team here that is heads down on that. It is the most important thing we can do as we come into that year.

And the quality of that customer franchise we're acquiring is tremendous. And so we want to make it incredibly smooth for them, incredibly smooth for the Villages community in general and highly focused on that. We're also doing -- going to be doing lots of coffee meetings and training for the customer. I mean we have all kinds of things planned, events, cocktail parties, everything you can imagine.

So we're going to be deeply involved in the Villages and the growth of the Villages. And then we want to get this one right because we have Villages too coming that we're going to build alongside with. So lot of upside to getting that right, a lot of benefit in the coming years. We think we can build a bank that is twice the size of the bank there over time as it gets built in that market. And so we're super excited on it. That's step one.

Step 2 will be building around that franchise in terms of wealth management. We've got a wealth team built at this point. We've acquired a full team up in that market that is now calling in that market, and we're starting to already win business, particularly on the trust side. So we're off the races up there. Things are going incredibly well. I think the balance sheet came in a little bigger than we expected. Deposits are growing, and we're probably outperforming a bit of our model at this point.

That's terrific. And then on the other side, too, I mean, we touched on it a bit, but the pipelines continue to grow. It's at record levels. How much of that is just, a, I mean, obviously, Florida is a really strong market. How much of that is just the market backdrop versus maybe more confidence from your clients to start investing and maybe down rates some projects might pencil today that didn't before versus just like you talked about market share gains from your new hires.

And then just how is the complexion of the pipeline today, just both by segment and geography? Just kind of curious where you're seeing the most opportunity.

Yes. Market is strong. Demand is strong. We're seeing sort of broad-based demand, C&I and CRE. Pipeline is a mix of about 50-50 CRE and C&I. So it's pretty wide. It's pretty broad. The industries are pretty wide, too. So kind of across the board, market demand remains really good. It really hasn't slowed down as a result of tariffs or anything, we're still seeing quite a bit of demand. We've seen no real impact in terms of demand as a result of that. So we're feeling very good about market demand. And then probably more importantly, what we're seeing a significant amount on is offloading customers out of larger bank balance sheets onto our balance sheet as we continue to have the banking team mature into the investments we made a number of years ago.

And I'll just reiterate what I said to Will's question. A lot of those loans were locked in at very low rates. Customers are coming up on their terms. They've got to refinance and rather than going back to the bank they're at, they're falling their banker to Seacoast. And that is very exciting as we move forward. Combining that with the liquidity we're bolting on through the M&A is incredibly accretive in the years to come.

Okay. And then maybe just stepping back, kind of a higher-level question. I mean you've had pretty massive growth over the past several years. We went from -- looking back at the start of 2020, you were a $7 billion asset bank. Today, you're north of $21 billion in just 5 years organically and through the inclusion of several community banks.

Just given that massive growth, right, as you step back and look where you stand today and you think about how are you going to compete maybe against more some of your larger brethren -- curious, is there anything that you're missing or that you need to invest in, especially as you continue to move upstream, whether that be technology, infrastructure, product offerings? Just kind of curious what you're working on today and being a much larger institution, if there's anything that you need to add or where you're looking to invest?

I would say the good thing or the smart thing we did over the last few years is we invested heavily in building out our Line 2, Line 3 risk function. So we have a very strong ERM function that supports being a larger midsized bank. We continue to make investments over that period of time. I feel very confident in where we stand in regard to our overall enterprise risk management, our governance, the structure of the organization. We've also made a lot of investments on the technology side, particularly customer-facing technology.

There's probably some things we need to continue to build on, particularly around our commercial treasury stack that we remain focused on here as we move forward. We're working on getting Zelle for business inside the company. That's an important technology product that's important to our small business customers in particular. So there are things we're bolting on, David, that we'll be doing in the coming years.

But I think at this point, the good news around our size is that $21 billion, we have the ability to compete up market in a meaningful way. So we've brought in large regional bank quality talent into the organization, combine that with a really high-quality treasury management team, and you see that pulling further in our TMCs, and then we're letting them go to work and have the ability, the capacity now to go out and compete on market and win business.

And so I largely feel like we're there. There's investments we need to make, we'll continue to make. There's investments we need to make to continue to harden and build our IT infrastructure and other things as we get larger. But I think we've got that all in the plan. I think we've managed that and pace that appropriately and feel very good about our investments in the coming year and our earnings profile.

Next question comes from the line of Russell Gunther with Stephens Inc.

I wanted to start on the margin discussion. So I think the core NIM for this quarter came in a little bit lighter than this guide. Could you walk us through the glide path that gets us from 3.2% to that 3.45%? Maybe touch on where the September NIM shook out, if you could? And then what does this consider for continued excess liquidity deployment going forward?

Russell, this is Michael. I'll take that one. Yes. So we've been talking about a 3.45% NIM in the fourth quarter for a while. We were kind of unsure of the date of the close of the legal transaction with Villages that came in a little earlier. So that's certainly beneficial.

I mentioned the wholesale funding that will pay off here in November, early November that will benefit the margin as well into the fourth quarter. And then I think from there, just the completion of the securities restructure in the fourth quarter will be the other main driver. We are down in cost of funds. Our September cost of funds was about 1.92% versus 1.96% reported for the quarter. So we're already benefiting from the rate cut that happened in September, and then we'll add on the low-cost deposits from Villages as well that we talked about would add roughly about 10 basis points in total to the fourth quarter cost of funds improvement and therefore, NIM.

So I think we're right on schedule. Obviously, if we get a couple of rate cuts here, if we get October and December, that's beneficial to our slightly liability-sensitive balance sheet. So those give you some of the moving pieces, I think, as you move through the fourth quarter. And we still expect expanding margin, obviously, into 2026 with the securities reposition behind us and the low-cost deposit franchises that we've acquired.

Maybe one other piece there as you look out, while we're not giving 2026 guidance yet, we do expect the deposit beta to come down a little bit. We've really outperformed there at about a 48% deposit beta through these first 100 basis points of cuts through late last year. But we would expect with the lower cost deposit franchise, maybe we're closer to 30% beta going forward. Obviously, we hope to outperform that, but that's probably where we would model going forward.

Okay. Super helpful, Michael. And then maybe just a reminder in terms of what's left to do on the securities restructure, where that sort of pro forma securities to average earning asset contribution would likely shake out in 4Q? And then the type of progress you would expect to make toward ratcheting that down over '26?

Sure, Russell. So high level, we closed the deal October 1, and we began restructuring the securities book at that time. We've made a lot of great progress there, and we'll continue to do so throughout the fourth quarter with a focus on best execution versus speed to completion. But we're in good shape there and no real changes versus our initial expectations. The one positive is that original modeling of the deal, we recall that in April of this year, the tariff tension was going on and credit spreads were much wider and rates were higher at that point in time as well. And so as those have compressed to deal close, we would expect a lower AOCI than what we originally anticipated. So we should have a little higher book value and capital, which we hope will make the deal less dilutive.

And then getting more detailed into kind of the timing of the repositioning of the balance sheet in total in the fourth quarter, we expect the loan-to-deposit ratio, as Tracey mentioned, to be below 75%. But as we grow throughout 2026, we would expect some positive remix. Again, if you did just a high single-digit loan growth number for next year, that would be about $300 million more than kind of a low to mid-single-digit deposit growth number. So that kind of gives you an order of magnitude on what could happen next year. Obviously, with higher loan growth, we might remix faster.

Yes. Okay. Absolutely. Very helpful, Michael. And then just last one for me. I appreciate the look at where 4Q expenses could shake out. As we think about the pro forma franchise, maybe bigger picture, how should we contextualize sort of a decent core growth rate for Seacoast going forward?

Russell, this is Michael again. I think what we've said historically and continue to expect to be the case on just the organic side would be something in pace and in alignment with inflation, kind of a 3-ish, 3% to 4% growth rate on the core underlying. And then it depends on the success in sort of banker hires from there.

As Chuck mentioned, we do expect some merger disruption across our footprint in the Southeast broadly. So we may see a better appetite and a better opportunity to invest. As Chuck has mentioned before, we've had a lot of pipeline of opportunities to hire bankers, but we wanted to balance that hiring with profitability delivery to shareholders. I think you'll see, obviously, into '26, we're going to have strong profitability delivery to shareholders. So it gives us more capacity and ability to continue to expand and hire bankers and expand our commercial banking franchise. So I think those are kind of the things you want to think about. We're not giving 2026 guidance yet. We'll give more color on that in January.

Next question comes from the line of Stephen Scouten with Piper Sandler.

So appreciating you're not giving 2026 guide at all, but in the same vein, you did give like a 2026 kind of high-level run rate number in the Village slide deck. Do you feel like that [ 250 ] number you kind of disclosed there is probably on pace and maybe it even sounds like potentially ahead of schedule based on the deal closing sooner, better loan growth and those sort of things. Is that kind of a fair way to think about expectations versus that disclosure?

Yes, Stephen, this is Michael. I think we feel really comfortable with what we laid out originally. I think what you may see is, again, given kind of the rate movement, we may see better book value or less dilution than we initially expected, but we're still finalizing those rate marks, obviously, and everything right now. But that's -- as we currently model, that would be the biggest change on the earnings front, we still feel really comfortable with where we're headed and what we have initially laid out. Some obviously variability with how many rate cuts we get and what you all are modeling, but we feel really comfortable with the 246 number.

Yes. If you go back to that deck, Stephen, just to reiterate with some confidence, that's where we expect to land.

Fantastic. Perfect. And then just thinking about the balance sheet remix path over time, you guys have highlighted a couple of times this 75%-ish loan-to-deposit ratio, so a ton of potential to remix over time. Does that lead you to pursue any different paths? I mean I think the answer is no based on knowing you guys over time. But do you think about any loan portfolio purchases? Or I mean, you've always had a really low CRE exposure with this Atlanta push, do you think about maybe adding more CRE than you have in the past? Just kind of any changes to strategy around loan growth given all the dry powder you have to put to work?

I think a high single-digit guide is still appropriate, Stephen. We'll be disciplined and focus on granularity, focus on diversity and be thoughtful over time. Certainly, we'll have a lot of capacity to lend. But the way I'd describe it is we'll do it prudently and thoughtfully over the coming years.

Okay. Fair enough. And then just lastly for me, on the fee side of things, it looks like SBA had a particularly strong quarter. Were any of the hires in the recent past within that division? Is that something that we could see like sustainable strength in? Or was that more episodic in nature?

Within the Wealth Management division you focus on, or SBA.

SBA.

No, we've not added anything there, just volumes that come back. Teams remain focused, but it's the same group we've been operating with for a couple of years.

Yes. Gain on sales spreads there, Stephen, have gotten a little bit better, which is probably one of the drivers in that line item this quarter.

Okay. Great. And I guess the last thing is the conversion, I think you said is set for maybe third quarter '26 on Villages. So is that where we would expect to see more of the lion's share of the cost saves come out at that point in time?

That's right. The conversion is currently planned for early in the third quarter of '26. So looking still to achieve all those cost saves in the second half of '26.

Next question comes from the line of David Bishop with Hovde Group.

A quick question. Chuck, maybe comment on what you're seeing out there in the market in terms of loan pricing and spreads. I know it's still pretty competitive with credit holding in fairly nicely. Just curious what you're seeing on credit spread for us?

It's really low. It's definitely gotten hypercompetitive. I would say we're cautious around that, being thoughtful. But yes, credit spreads are incredibly tight, particularly for high-quality stabilized commercial real estate and really high-quality, strong cash flowing operating companies. It's remarkably tight. And it's -- everybody is back in the game in a big way. We saw after '23, some of the banks pull back. Now it feels like everybody is back in. And so credit spreads are super tight. We're navigating that carefully, picking our spots carefully, but it is -- credit spreads are remarkably low across the board.

Particularly in low-risk areas where we're most involved.

Got it. And you had mentioned the opportunity for the Villages 2 build-out. Just remind us of the time line and maybe I don't know if you ring-fenced the deposit or loan opportunity there? Just curious, just some more details around the Villages2 .

Yes. We think Villages 2 probably builds out over the next 10 to 15 years. It will take some time. They've got, Michael, correct me if I'm wrong, I think 2 town centers open at this point. We are opening our branch in that town center now currently. So I would expect -- I think they -- largely, if you think about it this way, they grew a $4 billion bank in Villages 1 with some inflation just on money in general, you could probably grow a $4 billion to $6 billion bank in Villages 2 over the next 10 years.

Got it. And final question, Chuck. It doesn't sound like it to this point, but obviously, there's a lot in media and papers about the impact of rising insurance costs in Florida. Are you seeing any sort of impact in that impacting shovels in the ground or borrower behavior?

Not really. It's noise. It's complicated. We actually are seeing insurance premiums stabilize, if not coming back down at this point. We've had premiums got to the point of where it brought a bunch of new entrants back into the market as well as there was some tort reform that went on about 18 months ago that, that's pulling through at this point as well.

So we've seen a fair amount of start-up capital come back into the market to provide insurance buydown policies from the state of Florida Citizens Win Pool. And so I do feel like insurance is still expensive. I mean, on a relative basis for sure, but it's stable. And in some cases, we're seeing it come down. It's still challenging for older properties, that's going to be your most expensive spot. But if you're buying or building a brand-new home, it's actually really inexpensive at this point. So it's kind of bifurcated inside the marketplace, but it isn't near as bad as it was, call it, 24 months ago.

That concludes the question-and-answer session. I would like to turn the call back over to Mr. Chuck Shaffer for closing remarks.

Okay. Thank you all for joining us this morning. I just want to reiterate my thanks, appreciation to the Seacoast team. Proud of our company. We produced an amazing quarter. I think our outlook is really good and just super, super excited to be where we are. So thanks to our team for everything they've done. Thanks to our shareholders for supporting us, and thank you all for joining this call. That will wrap us up, operator. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.