Welcome to Seacoast's Banking Corporation's First Quarter 2024 Earnings Conference Call. My name is Marvelo, and I will be your operator. Later, we will come back to the question-and-answer session. If you would like to ask a question, please follow the 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 the 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, and thank you all for joining us this morning. As we provide our comments, we'll reference the first quarter earnings slide deck, which you can find at seacoastbanking.com. I'm joined today by Tracey Dexter, Chief Financial Officer; Michael Young, Treasurer and Director of Investor Relations; and James Stallings, Chief Credit Officer. We started 2024 on solid footing, one of the strongest quarters on record for customer acquisition. This results from our focused investment over the last 24 months in acquiring the most talented, revenue-producing bankers in Florida, strong execution by our retail team, and further investments in marketing and branding across all of our markets. We saw significant new opportunities throughout the state, which drove growth in DDA and supported an annualized deposit growth rate of 8%. Additionally, we had an outstanding quarter in Wealth Management with fee-based assets under management increasing by $160 million and exited the quarter with a significant wealth pipeline. Both our SBA team and our insurance agency had solid quarterly results, and our treasury team continues to win middle-market commercial depository accounts. Our loan pipeline reached its highest point in over a year, with a large proportion of that in C&I, and we expect a meaningful second quarter for closings. I was incredibly proud of the team's focus on customer acquisition, and we saw deposit growth in nearly every market we operate in. Given all the significant business development activity occurring across the franchise, I'm very excited about our prospects for new client acquisition over the remainder of 2024. And turning to expense management. As we discussed on last quarter's call, we fully executed our cost savings initiative earlier this quarter. This initiative was designed to reduce overhead to offset revenue compression associated with the current interest rate environment. At this point, we are done with this exercise and expect adjusted noninterest expense in 2024 to be down significantly from 2023 and do not expect further one-time expenses. Tracey will provide further guidance shortly. Taking a deeper dive into lending and asset quality, we are encouraged by the growth in our pipelines while maintaining a prudent approach in the current economic climate. Loan outstandings were down about $80 million from the prior quarter, primarily due to a handful of closings that pushed into the second quarter, elevated paydowns in our construction portfolio, and $30 million in credits we purposely exited. Our loan pipeline grew substantially by nearly 50% to $573 million, and new loan add-on rates were approximately 8% during the quarter. Looking forward, we continue to expect low single-digit growth for the remainder of the year. Additionally, it's important to emphasize that we continue to acquire a comprehensive banking relationship with Seacoast for all of our lending activities, ensuring a mutually beneficial partnership with our clients. Our asset quality continues to show sustained strength and charge-offs for the quarter were just 15 basis points, annualized, and classified and criticized assets remained nearly flat from the prior quarter. Our ACL stands at $147 million, equating to 1.47% of total loans. This figure places us in a strong position with an allowance ratio among the highest in our peer group. Additionally, we have another $163 million in purchase discount. Our fortress balance sheet positions us exceptionally well compared to our peers, allowing us to navigate and adapt to any developments this cycle may present. As we progress through 2024, our steadfast commitment to upholding conservative balance sheet principles remains unwavering. We are resolute in our efforts to prudently manage our expenses while strategically investing to stimulate growth in low-cost deposits as evidenced by our performance this quarter. This focus will not only help us maintain a diverse and stable funding base but also fortify our company's already robust balance sheet. Ultimately, these endeavors are geared towards building the long-term value of our franchise, ensuring resilience and prosperity in the years to come and establishing an exceptional financial institution in one of the nation's most economically attractive states. I'll now turn the call over to Tracey to walk through our financial results.

Thank you, Chuck. Good morning, everyone. Directing your attention to first quarter results, beginning with Slide 4. Seacoast reported net income of $0.31 per share in the first quarter, and on an adjusted basis, net income was $0.37 per share. On an adjusted basis, return on tangible assets was 1.04%, ROTCE was 11.15%, and the efficiency ratio was 61.1%. Deposit growth was strong at 8% annualized, with solid results in growing new customers across the entire franchise. Our wealth management team continues to deliver strong results with assets under management increasing 9% during the quarter. Highlighting our continued focus on expense discipline, we're seeing the benefit of recent actions we've taken to streamline expenses with adjusted noninterest expense down $3.1 million from the prior quarter. Our loan pipelines have grown meaningfully, and we continue to see stable credit trends. Tangible book value per share increased to $15.26, overcoming the negative impact of the rate environment on unrealized losses on securities in AOCI. Our capital position continues to be very strong, and we're committed to maintaining our fortress balance sheet. Seacoast's Tier 1 capital ratio was 14.6%, and the ratio of tangible common equity to tangible assets is 9.3%. Also notable, if all held-to-maturity securities were presented at fair value, the TCE/TA ratio would still be a strong 8.6%. Our first quarter results include a $4.1 million gain on the liquidation of our Visa B shareholdings. The gain offset a $3.8 million loss on the sale of approximately $87 million in securities. The opportunistic repositioning has an expected earn-back of approximately 1.9 years. Before we continue, I'd like to draw your attention to a change in our presentation. Beginning in the first quarter of 2024, our presentation format no longer excludes amortization of intangibles from adjusted expenses, and we've updated the presentation of prior periods for comparability. On to Slide 5. Net interest income declined by $5.7 million, or 5%, during the quarter with higher deposit costs and growth in deposit balances, partially offset by higher yields on loans and securities. Core net interest margin contracted by 11 basis points to 2.91%, outside the range of guidance we provided, due largely to better-than-forecast growth in deposit balances and in part due to the investment in securities creating leverage on the balance sheet. In the securities portfolio, yields increased 5 basis points to 3.47%. Loan yields, excluding accretion, increased 8 basis points to 5.48%. Accretion of purchase discounts on acquired loans was lower by $0.7 million compared to the prior quarter. The cost of deposits increased to 2.19%, and we added an overall $239 million in deposit balances, including growth in noninterest-bearing DDA. Looking ahead, we expect net interest income to stabilize in the second quarter and to grow from that point forward. Our assumptions include 1 25-basis point rate cut in November and 1 in December. Moving to Slide 6. Noninterest income, excluding securities activity, increased $0.5 million in the first quarter to $20.3 million. Service charges increased with continued expansion of our commercial treasury management offerings and new customer acquisition. Interchange income during the fourth quarter of 2023 included an annual volume-based incentive from the payment network, resulting in a comparative decline in the first quarter. Other income was higher by $0.5 million with higher saleable production in our marine lending business and higher income from SBIC investments. Looking ahead, we continue to focus on growing noninterest income, and we expect second quarter noninterest income in a range from $20 million to $22 million. Moving to Slide 7. Assets under management increased 9% this quarter to a record $1.9 billion and have increased at a compound annual growth rate of 28% over the last 5 years. Wealth Management revenues during the quarter increased to $3.5 million, up 9% from the prior quarter and 16% from the prior year quarter. With a significant pipeline at the quarter's end, we expect continued strong client acquisition in Wealth Management over the remainder of 2024. On to Slide 8. Noninterest expense for the quarter was $90.4 million, and on an adjusted basis, was $83.3 million, in line with the guidance we provided last quarter. We saw a typical seasonal increase in employee benefits and payroll taxes, leading to an increase of $1.2 million. In outsourced data processing costs, we incurred $4.1 million in one-time charges associated with consolidation activities and began to see the benefits this quarter with a decline of $0.6 million on an adjusted basis. Legal and professional fees were lower, with the fourth quarter reflecting expenses associated with legal matters, which are now complete. The efficiency ratio moved somewhat higher, affected by higher deposit costs associated with growth and seasonal payroll tax expenses. The successful execution of our recent expense reduction initiatives have begun to positively impact results and lower ongoing costs, and we'll maintain this discipline around expenses. We expect second quarter noninterest expense to be in a similar range to the first quarter, between $83.5 million and $84.5 million. Turning to Slide 9. Loan outstandings declined by $84.9 million during the quarter, partially attributed to elevated payoffs and paydowns across our construction portfolio. Average loan yields, excluding accretion on acquired loans, increased by 8 basis points to 5.48%, and in the first quarter, we continued to see new loan yields in the 8% range. The pipeline is very strong, with a large portion in C&I, and looking forward, we expect loan growth in the low single digits. 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. Non-owner-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 36% and 222% of consolidated risk-based capital, respectively. We've managed our loan portfolio with diverse distribution across categories and retaining granularity to manage risk. Moving on to credit topics on Slide 11. The allowance for credit losses totaled $146.7 million or 1.47% of total loans compared to 1.48% in the prior quarter. The allowance for credit losses, combined with the $163 million remaining unrecognized discount on acquired loans, totaled $310 million or 3.1% of total loans that's available to cover potential losses, providing substantial loss absorption capacity. Moving to Slide 12, looking at quarterly trends and credit metrics. Our credit metrics are strong, and we remain watchful of the ongoing impact of higher rates on the economy. The annualized charge-off rate during the quarter was 15 basis points. Nonperforming loans represent 0.77% of total loans, and accruing past due loans remain at 0.3% of total loans. Criticized and classified loans were near flat at 2.4% of total loans. On Slide 13, providing a longer-term view of our stable asset quality trends. Also recall that the period presented includes 8 separate bank acquisitions and a near doubling of asset size. The stability of our credit experience during that period reflects the consistently applied discipline of our credit culture. Moving to Slide 14 and the investment securities portfolio. During the first quarter, we sold all our holdings of Visa Class B shares and recognized a net gain of $4.1 million. We also recognized the opportunity to sell low-yielding bonds with modest losses on a small percentage of the investment portfolio. The proceeds, approximately $87 million, were reinvested into bonds with an average yield of 5.5%. With an expected earn-back of less than 2 years, this was an opportunity to increase interest income and improve our securities yields. In the overall portfolio, the average yield on securities increased during the quarter by 5 basis points to 3.47%. Changes in the rate environment negatively impacted portfolio values, and as a result, the overall unrealized loss position increased by $14.5 million. Turning to Slide 15 and the deposit portfolio. Seacoast has been keenly focused on deposit growth, and the 8% annualized growth this quarter demonstrates our success in acquiring relationships. Noninterest demand deposits grew by $10.4 million. And while growth in money market and other interest-bearing accounts has resulted in higher deposit costs, this relationship-based funding supports our continued progress in deepening market share as we become Florida's leading regional bank. The cost of deposits increased this quarter to 2.19%, and we expect in the second quarter a continued increase, albeit at a slower pace. Looking forward, we expect continued growth in deposits, and are very encouraged about the activity and focus across the franchise on deposit gathering. On Slide 16, Seacoast continues to benefit from a diverse deposit base. Noninterest-bearing deposits represent 30% of total deposits, which was flat from the prior quarter, and transaction accounts represent 52% 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. And finally, on Slide 17. Our capital position continues to be very strong, and we're committed to maintaining our fortress balance sheet. Tangible book value per share increased to $15.26, and the ratio of tangible common equity to tangible assets remains exceptionally strong at 9.3%. Our risk-based and Tier 1 capital ratios are among the highest in the industry. In summary, we remain steadfastly committed to driving shareholder value, and our consistent, disciplined expense management positions us well as we continue to build Florida's leading regional bank. Chuck, I'll turn the call back to you.

Thank you, Tracey, and to our Seacoast bankers on the call, we had an exceptional quarter for customer growth. I'm proud of everything you all did. Thank you for your hard work. And at this point, operator, we'll take questions.

We will now begin the question-and-answer session. If you have dialed in, please wait for your name to be announced. Your first question comes from the line of Brandon King with Truist Securities.

So just on the margin, could you kind of give us a sense of how you're thinking about how the margin could trend this year and kind of your rate forward curve assumptions?

Yes. Sure, Brandon. This is Michael. Just to start, the updated assumptions, I take the last part first, as Tracey mentioned in the prepared comments, one cut in November and then one in December. Obviously, that last one doesn't have a lot of impact on the shift versus our prior forecast where the delay in cuts being later in the year created some upward pressure on the cost of funds related to that. So in general, though, we still expect the margin to bottom in the first half of the year this year and expand from there, but the pace of Fed cuts will be kind of the ultimate driver of the pace or magnitude of expansion in the back half of the year. So with a delay in that, we would expect less expansion of the margin in the back half.

Okay. So is it fair to say that if the funds are stable, the margins just kind of stay stable at this current range?

In the near term, in the long run, we expect the margin to begin to expand. And importantly, as Tracey said in her prepared comments, we think net interest income is starting to stabilize and then starts to grow very strongly on the back half of the year in '25.

I would like to discuss the increase in pipelines from the previous quarter. Can you provide some context regarding this? Specifically, where is this growth coming from—is it related to existing customers, gaining market share, or adding talent?

Yes. Thanks, Brandon. I'm super excited about the efforts by our banking team this quarter on business development. We saw deposit growth across nearly every market in the state, we saw growing pipelines across almost every market in the state, and we also saw a larger percentage of our pipeline growing in C&I. What we're seeing at a broad level is the opportunity to continue to take clients from some of the national and large regional banks, and a lot of that is coming from heavy investment in talent over the last 24 months. We're now starting to mature into that investment, and we're starting to see material client aggregation. If you think about a moderate-size operating company, they're typically going to have about 5 or 6 products: a line of credit tied to SOFR plus a spread, an operating account, a money market account or a sweep account, treasury management, the merchant. We're moving that over. We're collecting the TM, the merchant, and the treasury. What we're leaving behind is the 4% equipment loan and the 4% building loan, but the next equipment request that comes up, we're going to do that equipment request for that client. When you look at the blended add-on rate on the depository side for that, what you're seeing is maybe a 30-70 type cost to that money coming into the franchise. I'm really pumped up about what I'm seeing in terms of all the wins that are sort of across the franchise. There's a lot of incredible business development being done by our team. That team is now maturing, so we're moving past nonsolicits and other things. We had restrictions we had to work through, so we're now seeing a lot of clients onboarding with the bank. We've worked really hard to focus our entire company on deposit gathering and client acquisition, and we saw a phenomenal quarter for new clients leading to strong wealth pipeline and strong deposit growth in the quarter. So I'm pumped up about what the quarter had and what the rest of the year could look like.

Got it. And lastly, I was encouraged to see a slight uptick in noninterest-bearing deposits. Do you think you could grow from this base here? Or is there any seasonality to point out that might lead to a decline in the near term?

Yes. We're keenly focused on growing that. That's one of our core objectives for this year. We will see some tax payments here in April that are naturally going to occur, but as that happens, we expect to continue building DDA and that is our focus. What we're trying to achieve is moving on full relationships that include DDA. I was really pleased with what I saw in the quarter. It came from a lot of new prospect growth, and we will continue to focus on growing DDA. I think we're running about 30% DDA to total deposits, which I think is very solid in the industry, and we'll continue to work to keep it as close to that as we can. Operator, I think we're ready for another question.

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

Good morning, everybody. Great. I am curious, maybe a high-level question. Curious how you're thinking about managing the balance sheet today. I mean you're a bit liability sensitive at this point. The rate outlook continues to change pretty rapidly. So I'm just curious how you think about managing the balance sheet at this point, given the uncertainty on rates and the increased likelihood of a higher-for-longer environment. You guys have obviously been active with securities optimization; I'm just curious if there's any other initiatives or what else you might be considering?

Yes. Sure, David. This is Michael. At a high level, we have been focused on market share gain, and you saw the really strong deposit growth in the first quarter. As we deploy that into loans throughout the rest of the year, I think you'll see the benefits pull through with better support for overall margin at that point in time. I would also add, we're not going to stand still here. There was a propensity to kind of wait until the Fed cuts take action on the deposit book, but I think you're going to see us lean into that a little more than we haven't yet this cycle. That could be another kind of tailwind, but we will continue to actively manage it and try to drive the best return profile we can for shareholders in the interim.

At a high level, David, considering our balance sheet, we have a strong allowance, a purchase discount, and substantial capital. This capital gives us flexibility. If there's an opportunity for buybacks, we will pursue it; if there’s a chance for stock repurchase, we will consider that too. If an acquisition opportunity arises, we will evaluate that as well. We have options, and as Michael mentioned, we are focused on gaining market share throughout Florida. We will continue to manage these options and watch for opportunities as they arise.

And on that same topic, it seems like we are increasingly focused on organic growth. You've successfully recruited high-quality talent to the bank. I'm curious about your thoughts on hiring at this point. We're starting to see the impact of those hires, and I'm wondering if you are still interested in bringing on new talent and if you are still having success with recruitment.

Yes, definitely. There's more to come there. We're going to manage expenses carefully. Our goal is to keep our expense load in line, and so we'll have to find ways to offset those investments as we find them. But yes, where we find really high-quality bankers, either in wealth, commercial, or otherwise, and they can bring a bag of business, we're going to take a look at it. There is still a lot of opportunity in that regard; there's a lot of talent that still wants to join the franchise, and I still think we're in the early innings of that investment pulling through. If you think about acquiring teams back before rates kind of where they were, you move all those clients with credit as you initiated loans; it's difficult when those loan books are sitting at 3.5%, 4%, so we're moving those clients with deposits; which just takes longer. It's taken a little while to see that pull through. But now we're starting to really see a pull through. A lot of those distractions have moved away. I think last time we had a conversion was June of last year, so we're 9 months out from our last conversion and more than 12 months out from our last announced acquisition. So a lot of those distractions have moved away. It allows us to focus on organic growth and allows us to focus on taking market share across the state. So like I said earlier, I'm very excited about what I'm seeing, with numbers of wins happening all over the place in wealth, commercial, and retail.

That's terrific. And maybe switching gears to the fee line. It was great to see the increase in fees. I know it's been a big focus. It seems like insurance has been especially strong, wealth has also had some nice AUM wins. You talked about being interested in potentially recruiting some wealth advisers; I'm curious if you could touch on those business lines, what you're seeing and your thoughts on expanding or investing in those and potential cross-sell opportunities.

Yes. I'll begin with the insurance agency. The integration into SGOs has been remarkably smooth, and we have an outstanding team in that agency. We're thrilled to have them join us and are dedicating significant time to collaboration. I believe there’s more potential to explore. We haven't really commenced building a cross-sell business around that agency yet, but that's something we plan to tackle in the latter half of the year. Last quarter was a record for that agency, marking the best performance in our history. I’m very satisfied with our progress. I appreciate the business; the return on capital is impressive, and the wealth segment continues to perform exceptionally well. They had a fantastic quarter, with AUM increasing by $160 million. The pipeline looks very strong, positioning us for a successful year in wealth; the returns there are impressive. Both of these businesses require time to develop, but they yield excellent returns. Additionally, we've made considerable investments in our treasury management team. Our treasury management capabilities regarding technology, service offerings, and personnel have improved significantly compared to two years ago. We are acquiring operating companies and treasury management accounts effectively. This is an emerging line of business that still has plenty of room for growth and benefits. There are promising opportunities ahead. Mortgage banking has faced challenges due to the current market conditions, as there’s limited inventory and movement. However, we will maintain a strong focus on fees and prioritize growth in that area. I’m genuinely excited about the developments happening in wealth.

Your next question comes from the line of Woody Lay with KBW.

It's great to hear you so upbeat on the customer acquisition front. We saw really strong deposit growth in the first quarter. Do you think this is a trend that can carry on throughout the year?

That's the goal. We're in this moment where we do see tax payments going out; we'll probably see a little bit of decline in public funds that seasonally happens here in the second quarter. But given the focus across the franchise, I'd like to have another quarter before I tell you for certain, but it was a really solid quarter. The pipelines are good, and deposit pipelines are good. So I'm feeling pretty confident about it, Woody.

Yes. And what are you seeing on the loan competition side? I mean, there are a lot of peers that don't have the balance sheet flexibility that you all have, so are you seeing competitors sort of pull out? Any thoughts there?

Yes, we did see some pullback late last year and early this year. But over the last 60-90 days, we've seen competitors really pull back in. I would say the one challenge is that some of the regional banks pulling relationships have gotten really aggressive on cutting pricing to hold relationships. That wasn't happening; that's a little bit of an emergence. There seems to be a number of banks reentering the commercial real estate and construction space. So it did feel like there was some pullback, but we are seeing the competitiveness return. That being said, I like where we're at. I like our optionality and our ability to continue to win business, and that's what we're doing, but it has gotten a little more competitive here recently.

Yes. And then I know internally you are very focused on your overall exposure and concentration of certain loan segments. As you look at the loan portfolio today, are there segments that you feel you're underweighted to that you could look to grow? And vice versa, are there segments that are more full and likely won't see much growth?

Yes. We're fully open to business for C&I operating companies pretty much across the board. There are a couple of industries in there that obviously we wouldn't do. But generally, manufacturing, distribution, business services, all the healthcare, all the things you could name, we're opening and targeting. On the commercial real estate side, there's plenty of room to pursue commercial real estate. Obviously, office is something we're not going to really look at right now and our hotel exposure is generally at its max. We've been working on reducing that; in fact, we worked out a couple of hotel loans to refinance those out from us to work that down. So hotel and hospitality is kind of on hold at this point; office is definitely on hold. Outside of that, we're looking at pretty much anything else that comes to retail. We'll look at opportunities, particularly grocery-anchored retail. Multifamily is stabilized and that's working; we'll look at that as well. Industrial, we'll look at those projects as well. But really, the only thing where we're on max cap is hospitality and office.

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

You might have just answered one of my questions here. I think you noted like $30 million in loans that you allowed to leave the bank. Was that indeed in the hospitality portfolio?

Yes, most of it was. There were weaker credits that came due through renewal, and there were other banks that were willing to take us out of that, and we let that happen, Stephen.

Perfect. And then what would it take for you guys to get a bit more aggressive around growth? I'm hearing that you're being conservative because you have a great bank and a great franchise, and you don't want to disrupt that. That being said, it sounds like you've got a great team in place, and the pipelines have grown significantly. What would give you more confidence to be a bit more aggressive in putting that stuff on the balance sheet?

Clarity of the economic environment, I'd say the biggest thing. It's a struggle right now to get your head around where rates are headed, where growth is headed, GDP underperformed here recently. We talk a lot internally about stagflation and its impacts. We're always going to be cautious, prudent, exercise discipline, but clarity around where we're headed would be super helpful. The team we've built is amazing; I'd love that clarity to emerge because I think we could really run incredibly hard, but we have to continue to pick our sponsors carefully and pick our winners, and that's what we're doing.

Yes. Makes sense. It was interesting to hear you say that some of your competitors are coming back into the market a bit. Do you think that affects what is out there from a talent acquisition perspective? Has there been any shift in who you might be talking to in terms of large regionals or like-sized competitors or anything like that in terms of the potentially available talent?

No, we're still pulling the same thread and still working down the same angle. We like regional bank talent. It fits well with our credit appetite, fits well with our risk posture, and fits well with our cross-sell model. They come equipped to sell wealth and TM and the full gamut, which is what we want to see. We'll continue to recruit from the same place, Steve.

And your next question comes from the line of David Bishop with Hovde Group.

Yes, Chuck, you sound pretty optimistic, especially as we get into 2025 for the direction of spread income and the margin. Any sort of top-level holistic guidance you can give us into 2025, if rates do stabilize and we start to get Fed rate cuts, what might be the impact on spread income or the margin?

David, it's Michael. I will share some insights. We are not providing guidance for 2025 right now. However, many trends remain consistent. We have about $1 billion in lower fixed-rate assets set to mature in the next year, which will reprice at higher rates. We anticipate that the rate of deposit increases will slow down as we implement some proactive measures in that area shortly. As these developments unfold, our balance sheet will start to grow again, leading to a more favorable revenue path as we approach 2025. This should establish a more stable earnings foundation; we don't have ongoing issues to address like other banks, we don't need to increase our reserves or build capital, so we are in a position to progress and enhance the bank and franchise value.

Got it. And then accretion income has been under a bit of pressure here. Is that $10 million sort of a good run rate under this interest rate environment? If rates do start to fall, is that affected by potentially prepayments or payoffs? Just curious how we should think about the pace of purchase accounting accretion.

David, as you said, as expected, the accretion has tapered off since the period immediately following the recent acquisitions. Generally, accretion runs higher when the individual loans with high marks have payoffs or meaningful paydowns, so we've seen notably fewer prepayments on loans with high marks. That's going to continue to be difficult to predict, but just a point of emphasis: it does come back eventually, but there’s uncertainty around timing. What you're seeing in the first quarter, that $10 million to $10.5 million would be a reasonable estimate.

Got it. Then Chuck, you’re pretty bullish on the commercial loan pipeline. Any chance you'd share the commercial deposit pipeline and how that looks from a dollar perspective or a percentage basis of that pipeline?

I don't have it in front of me, David, and I don't have a number to give you. I just don't have it in front of me.

Maybe just a gearing ratio on that; we do require compensating balances. You can see what we're seeing in terms of the loan pipeline and assume some percentage, right, those loans or a percentage of the balances of those loans would be coming in, in terms of deposit funding.

And the trick for modeling there is just to remind you again, we are going to see some tax payments here made. I think we're going to see tax payments across the industry, which will not be a heavy tax year for all banks for a lot of reasons, but we'll have that battling through April here. But as we continue to grow, we'll grow through it.

Got it. And the final question, there's been a little bit of pickup in the substandard criticized. I'm curious, when you look at that book, is there a material difference in the average size of those loans compared to the average portfolio being chunkier than what we see on average?

No, no. It's kind of the average portfolio; classified criticized were generally flat quarter-over-quarter, up just a hair. Generally, we're seeing just normal seasoning of the cycle. When you look at the NPL book, that book is generally spread across a number of smaller transactions as well. We feel pretty good, our asset quality is strong, and we've got the allowance to cover anything that comes our way.

That concludes our Q&A session. I will now turn the conference back over to Mr. Shaffer for closing remarks.

Okay. Thank you very much. Thank you all for joining us this morning. I do think we had an exceptional quarter. The Seacoast team did an amazing job, and I'm excited to see what we can do over the remainder of the year. If anybody has any questions, feel free to reach out. Okay. Thank you, operator. That will conclude our call.

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