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SBCF Seacoast Banking Corp. Of Florida

Participants
Dennis Hudson Chairman and CEO
Chuck Shaffer Chief Financial Officer
Julie Kleffel Community Banking Executive
Chuck Cross Commercial Banking Executive
David Houdeshell Chief Risk Officer
Jeff Lee Chief Marketing and Analytics Officer
Jeff Bray Executive Vice President, Service and Operations
David Feaster Raymond James
Graham Dick Sandler O’Neill
Michael Young SunTrust
Jeff Cantwell Guggenheim Securities
Steve Moss B. Riley FBR
Call transcript
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Operator

Welcome to the Seacoast’s Fourth Quarter Earnings Conference Call. My name is Christine and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Before we begin, I have been asked to direct your attention to the statement contained at the end of the press release regarding forward-looking statements. covered issues Securities forward-looking their and are to discussing meaning within comments be of intended the meaning of Exchange be will that statements constitute the today that Seacoast Act. the within Act, and recorded. this being Please note is that conference I over Mr. the call turn will now to Hudson, Dennis and Seacoast CEO, Chairman Bank. Mr. begin. Hudson, you may

Dennis Hudson

for Operator. XXXX conference quarter Good you Thank fourth And you, everybody for Seacoast’s thank morning. joining us today call.

Executive; found investor on released yesterday will investor Jeff Julie discuss Community Cross, Marketing after market presentation Banking Our can our results. website Also financial Banking release, Chief our be is Chuck operating our Chuck Chief Presentations. which we of Officer. Kleffel, Financial Houdeshell, Shaffer, press Officer; title our Risk with With David the us Lee, today and our and closed our and today Analytics portion the the Executive; are; Commercial Chief our and under who our Officer, us

and us XXXX strengthen our results our we to organically balanced continuing in objective last controls, to were as was Our our acquisition fundamentals execute our so, year to -- our we The the loan as outstanding, franchise fourth customers. history. maintained our in risk best serve focus continued objective quarter granularity giving enter growth our growing and and on XXXX reducing prudent cost strategy. did We by by the

efficiency return by net growth, adjusted our roughly last per reported of within fourth net better tangible commercial revenue We loan XX% Turning million exit an to we adjusted last We up XX% originations, than on ratio numbers substantially we nearly our XXXX. achieved adjusted X.XX% interest return common was year-over-year. year in This adjusted and earnings XX% margin income achieving record quarter from well reach and to the $X.XX of adjusted million, expansion. expense tangible driven of of XX% target equity Both increase $XX strong quarter’s assets grew results, including as and $XX share, control XX.X%. of net on below fourth achieved and are year.

well Our Vision to meet strong positions performance objectives. XXXX XXXX us our

growth successful operating expectations, Florida as as Orlando, new key is bankers financial Green, include which the initiatives the Our last Tampa our and acquisition and addition First well exceeding markets. of of year in other

boost Specifically, production, ratio. our customer platforms, consumers. and and in the and low tools, keep of improve digital loan market power customers help increasing businesses our significantly, our cost and and help we organic to continue of by our we our how both use our deepen to serve deposits us efficiency mobile to tools These analytics productivity, and

customer analytics we of customers’ our are banks our also in continue bank to be competitive to year, invest platforms us our strength markets. the Beyond compared In in attractive Florida will model, platforms. the meet These deepen other leading benefit community a and coming performing to as top and better continuing proprietary very we significant relationships to operating us advantage, needs. a differentiating enabling

our of continued benefited lending will First commercial in the bankers Another growth of team new We quarter. the fourth expansion onboarding driver Green be the the from both teams. and

team strategy the advantage our market maintain will scale opportunity. to take we of We as

MSAs. acquisitions footprint strategic attractive continue that We most Florida’s or also to seek our deepen extend in will

to generate to leader. a playbook that Florida will We and the as a proven that has have compelling model follow positioned continue returns integration we market us allows us

signs see while weakness here our there there, markets. out of no we ahead, certainly are questions some Looking structural in macro

relocations. which We tax is attracting are in loans strong a seeing status growth Florida’s C&I jurisdiction, as corporate reflecting advantaged

Broward in nation’s have a in and County. MSAs, Orlando presence growing benefit the continue two fastest to growing Tampa from also presence of the We and MSAs, our

franchise by our In sheet to fact, we organic deploy M&A continuing see our strong across initiatives. balance to strengthen and opportunities many

one associates. nation’s coming Finally, the to our to work Their Florida’s growing of ethic is in Seacoast with reason like are look choice. all you thank our top and the business year. bank performing the forward of of devotion I I’d banks in

well-positioned some clear. value And and achieving increasing our be for XXXX to and hope objectives roadmap in strategy Boca and us person via will healthy visit So, like Vision to some I XXXX going two more, item, beyond to more XXth, our ago. proven in I’d equity, the model. on we we about as Investor that, enter With assets position our month Florida’s to the hosting be To in to in ambitious Raton on over summary, or we next liquidity growing website, an seacostbank.com/investordayrsvp. discuss you will the years find refine XXXX review Chuck With exciting sheet, It who’s and we able as out of are we webcast. February information one creating please and be continue our presence returns on our last join quarter. build call to an fastest MSAs, in vision will operating a greater our Day event to balance either our goals remains set detail turn

Chuck Shaffer

this Thank morning. Dennis, and you for you, thank all us joining

the business Starting year which fourth we my with our full As can seacostbanking.com. also the the comments, across four, on I First excellent strong be I units, provide integration. found earnings at while Green quarter and XXXX note completing performance year with finished slide a deck, will slide reference

five an did also and branches, onboarding customers job team Our outstanding overlapping Green’s First while consolidating successfully associates.

XXXX. sustain into expense reinvest We growth continue expect to into legacy and momentum operating

we Vision Our our growth, objectives. on balance achieve XXXX to support path this a sheet clear well-positioned remain is to

Green and million, GAAP income share. diluted net $X.XX year-over-year assets adjusted $XX.XX per net grew to on the for share, the quarter per tangible return adjusted we reported to First the quarter effect saw equity. adjusted per to acquisition. initial to tangible and grew by We overcoming Turning XX% book Highlights increased share or share XX.X% include. income on value diluted dilutive to a common per sequentially, And of fourth results, $X.XX the tangible return X.XX% $X.XX $XX.X

sequentially quarter commercial year, which Commercial originations, from and of record robust XX% increased prior we had Florida Banking a our the of for team. a expansion the result First, and economy XX%

we This across of growth loan was delivered growth new Second, annualized geographies XX%. Broward coming Tampa. driven strong both and with all organic in bankers online

We the on-boarded team also the Banking in Green new First Commercial quarter.

delivers this long-term for franchise generates deposits, continue for We company, service portfolio, and with on value. strategy developing loan demand to opportunities granularity our focus in operating which creating all relationships relationships, include full important generates as Management, Wealth greater

of increased the largest significant the and Green X%, all completed. of as margin position result lastly, net growing MSA October. Third, acquisition consolidation expansion closed we the the value acquisition and margin in strong to organic XX points Green basis the increase First already Seacoast’s of gone quarter-over-quarter And First the community Orlando bank extremely expanded our activities Fort well This has fast acquisition solidified in This with Lauderdale the presence. acquisition.

five, slide $X.X net the XX to and was was income sequentially net up to the margin the million up basis X%. interest interest previous from Turning quarter points

yield yield our accretion XX and up fourth cost liabilities basis basis interest of expanded line deposits of XX expectation yield Quarter-over-quarter, the points. basis on result X of better interest-bearing loan the expected than increased Green of the and increased points loans acquired to loans range increase We cost on in X.XXs, a up originally basis of our margin Excluding loans, was and exceeded points the the quarter First guidance XX cost net from remain was and deposits quarter’s securities with was the growth, prior pricing. points was higher XXXX. sequentially the basis low disciplined line in in in on The The XX deposit organic greater the points, X.XXs the increase high last of than forecasted than on call. with on provided margin and accretion expansion in anticipated. loan for purchase

above in and small change curve, the business fourth new continue XX add-on average Our lending year the of basis points rates accelerated increases increase pricing the are up credit, the over to rates pricing drive in and with marketing investments loans average sequentially in increased X.XX% and and rate points in analytics the from XX to as X.X% year. The add-on quarter. for basis prior prior consumer an add-on treasury

Commercial XX which keenly net basis up saw origination quarter-over-quarter increase add-on XX the as Banking Mortgage are yields points margin spreads, interest from business focused points. Our spread, basis the and which year. rates new Banking will increased points increasing we In forward. by be loan loan supports -- quarter-over-quarter also we prior move XX basis XXXX, on

consolidated margin than XXXX. basis the in be quarter in most believe into we of range We our manage we expect the deposits point to moving first are positioned better cost and to mid-XX

one-to-four replace And volatile, reduce the assets, earning loan We ability all family have with points remix growing and yielding portfolio, to half basis our XX while higher model to yielding first while accretion mortgage book imbalances. commercial of our over to continue be accounting balances approximately purchase investment the XXXX. our we lower

change with of margin to funds to rate, of interest assuming the and no the forward in first Looking line expect the net in quarter federal we quarter XXXX. XXXX the be fourth

and $X.X grew increased prior from the Moving or the noninterest quarter prior year. adjusted slide six, $X.X from million million to income XX%

in customer SBA-related engagement. fees. to to from customers service AUM Banking driven broader by levels we on continues Other fees, Mortgage continued from XXXX, as in construction. we AUM. due and acquisition, shift valuations, customer increase pressured million assets a fee growth the benefit customer and and tight saleable ongoing in to We organically by lower premiums, quarter, $XXX driven XXXX. $XXX During opportunities release saw under related pressure Wealth income total was through downward bringing experience inventory in fee both Florida and headwinds, million, a was in lower to face income, service SBIC’s demand acquired continued XX% growth new and but interchange by management other equity to increased income charge and in income income

due seven, slide commercial and adjusted to fourth the and prior Green. non-interest the our added of the of of up our quarter, Moving to team million adding was to organization. million sequentially banking continuing up largely small trend XX growth First scale In addition business and we year, talent to expense $X.X bankers, the $X.X

to strong candidates. a XXXX of are XX targeting another and have hires in XX pipeline We proven

execution our on expense growth. discretionary resulting support sustain expense was quarter for bonuses functions we and due successful talent and growth cash high Fourth This driving Green non-interest investing from our the leadership, guidance reductions initiatives. our was second range. Additionally, added integration, to largely level the $XXX,XXX an expense for end of to while in of the compliance risk First and accrual appropriately all

expense removing higher expense the reduced -- ways and initiatives. activities the return reengineer look lower from in X.XX% X.XX% control for We average non-interest continue prior This off. to is in to investing paying quarter. of expense to strategic costs reduced tangible organization non-interest this the from assets, Adjusted adjusted by return down

last well closer efforts successfully reduction a As by million announced XXXX. Since program with actions $X are in supplier, to Seacoast will the and then, and way plan. contract a a $X.X quarter’s aggregate, these began our In on executing in in we executed expenses in a identified key we million expense brands a XXXX. call, reduction on legacy force renegotiated reduce

have execute over remaining opportunities of on million We identified half already first additional the to XXXX. $X.X the

drive will XXXX We loan origination in XXXX. and organization fulfillment in allow our South out digital objectives, investments a and and Vision and the our up to through for digital Florida. These growth Small will for reduction team setting with reinvest direct Business further line us Tampa expense beyond fully operating Banking leverage this while Commercial building growth installing platform

management. discipline disciplined focus maintain -- our and to expense focus on will We efficiency

quarter amortization $X.X adjusted to the to first quarter. expect toward excluding per we of non-interest be intangible which $XX million, million is XXXX, Looking the approximately assets, of million expense $XX approximately

seasonal first related by the and XXX(k) FICA quarter a expenses. reminder, As is impacted

eight, in ratio achieve Moving laid efficiency Vision to to as XXXX improved our from remain quarter. that to XX% our efficiency We our slide the are in plan. out XX%, on below confident track XX% prior adjusted ratio down we

$XXX increased during outstandings the quarter. to million Turning loan slide nine,

acquired originating loans the XX% a loan commercial a from First business Excluding year quarter. robust annualized basis. and QX prior grew production in was on through record with quarterly Loan Green, million, $XXX the outstandings organic XX% our

bankers continue drive we technologies pipelines investments new growth. Looking loan in forward, making and have to strong to are and

given growth XXXX We loan be originating cycle. continue are as single-digit for to CRE credits a targeting about of and the selective high transactional-related maturity we such the

are The We business mortgage supports lending our we will sale volumes and challenge, with away levels the we be offset portfolio and from inventory continue expect to our a low to market declines given reductions. revenue of going in mortgage volume. If business stronger to shift challenging, markets. proving corresponding unit. into NIM and shift is expense mortgage a This returns the expansion constructions from we saleable continue

the XX, increased slide the deposit First quarter-over-quarter, $XXX million to outstandings impact of Turning Green. primarily of acquisition reflecting

Looking at loan Green, First the fund back for quarter to core ability acquisition, began accelerate volumes to second these balances First Green with outpacing the during accounts. their

chose a of volatile they pool for result, in We deposit run-off compete balances. not allowed and As this acquired funding non-relationship a it based to the quarter. to

this economy. at the Looking and, Banking with Based business Business saw for outflows we Seacoast from deposit positive our customer in a believe and C&I Florida Small demand core for lending a is banking demand we the conjunction, base, legacy saw on strong very signal customers. related team, conversations Commercial

a economy Rates basis points points with interest-bearing on quarter’s increased in basis the of are making our expectation. quarter-over-quarter line call. provided points range for increased strong in Our The on XX business paid growth XX deposits Florida in with outlook basis given XXXX. liabilities their cost line in overall to customers last investments XX

quarter X%, loan loan high growth, a -- range costs to change Looking for deposit XXXX. points of funds are of low approximately a ahead, in first we the XXXX. in in deposit assuming period time rates, with and growth Targeting growth a in expect Fed be the we mid-XX combination no single-digit results rate a X%, of assuming targeting in deposit the in in the ratio XXs basis of deposit

beta slide deposit book. perform XX, continues to our of the nature very our transactional reflecting to deposit well Turning

past of of accounts points the the deposit XX% if line Non-interest-bearing effect transaction book the deposit re-priced quarters, represent And the same our franchise and represent XX basis only to First XXX back fed demand XX% rate with legacy over the only increased you beta four was of Looking deposits and period. deposit our basis quarter. basis the in deposit funds over prior book Green, points points. remove XX

the The Turning to on loans and rigorous well credit well overall cycle in down orientation, slide selection XX, diversity known mix from credit sectors, and granularity. through as loan emphasizes total markets allowance of was benefit as continues maintaining to builds relationships and XX that understood customer to single basis being and approximately points basis discussed applied retail First points points prior quarter X the note, from at which we end, of to to portfolio. consumer the XX basis in Green-acquired to points basis including due charge-off discount two the quarters the a purchase X loan

In acquired a points This in retail moment loans Green as commercial is applied from you purchase loan retail result rate X basis We acquisition. portfolio, an remind Let a of placed ended characteristics charging and we me single a to accretive single Removing loan quarter’s take loan of percentage ALLL coverage that through that both loans basis under credit mark, prior applied prior sequentially. and XX discussed. the previously credit originate including X% flat the portfolio at portfolio paydown quarter from down ALLL these to of outstandings, net reserve note the the the remained at loan off the acquired a the for are accounting, and in purchase interest points the as income quarter. on mature. ratio, outstandings this the the First acquisition are the mark non-acquired through portfolio back

XXX%. for the estate development capital We as percentage the continue exposure including $X commercial real of loans to $X.X capital commercial at XX% a land percentage note. were with manage commercial million of a as quarter, million retail estate single our real real Net prudently estate construction charge-offs for and at and

four quarters, inclusive the this past basis charge-off points, to rate annualized our wasXX charge-off. back net of Looking

will we annualized XXXX, The cycle for to net influenced XX forward economic continue approximately points Looking charge-offs forecast net losses growth to loan provision by of basis and be matures. the charge-offs. as loan

common total our capital manage positions opportunities, balanced capital slide delivering organic to XXXX ratio a additional XX, provides equity was generation possess returns and equity strong growth capital slide This Tier options The us And healthy the and and asset through acquisition forward. well solid and moving to Turning XX.X% XX, based balance was X are sheet The and for growth tangible strategy. X.X% to to quarter XXst. December end, for wrap growth additional up ratio capital was on at common providing XXXX. footing. we in tangible ratio XX.X% at risk on ended we

to well-positioned are We in XXXX. the and sustain momentum maintain

and fastest Florida’s well cost remain a on continued remain opportunities we we with in strong very low robust remains of Overall, funding some and see sheet to we growth confident, growing -- our fundamentals Our balance confident. overall, enhance balance markets. we strategy remain capitalized

track prior, Raton, upcoming to host Vision XXXX Florida. targets. we our are in XXXX Boca Day our are Investor on mentioned meet We Dennis XX, to And on as February excited

more questions. For back turn look to now forward your can you Dennis. We visit information, seacoastbank.com/investordayrsvp. to I will the call

Dennis Hudson

take Thank pleased you, be questions few Chuck. this at And point. we’d a to

Operator, you proceed So, could forward?

Operator

Please [Operator is Instructions] Feaster question of David from Raymond go James. first you. ahead. Our Thank

David Feaster

guys. Hey. Good morning,

Dennis Hudson

Good morning.

Chuck Shaffer

Hi, Dave.

David Feaster

First expansion your was And the can your I follow-on, the kind as a of do NIM impressive. So I’d move, walk earning are from rate of assuming some start hikes? Could drove like outlook some from the NIM, much how to LIBOR you guidance expansion through of what additional of Green remixing hike do September in that, see and how in think the guess just NIM from much you on and what was you exclusive you assets? -- NIM you core was think

Dennis Hudson

Sure.

say the start I I quarter-over-quarter. there’s expansion -- really factors. key three with would me Let will

rate sold same really modest as loan was -- we some in beneficial. have at you to the that ability remix We we acquisition, saw increase talked margin. certainly off purchase did we removing at securities we robust the past, just that decline, -- have accretion we allow to the earning due continue growth was importantly, assets. a securities loss it the a get to certainly look increase the the to If But portfolio to and continue time, very at the supported allow quarter-over-quarter

asset so the was we modeled First acquired well. were that when I we sort But book as, of Green rate mortgage well loan in have higher forward, to As things flexibility us it’s start lending, supported classes important portfolio of yields what their that commercial transaction, and business SBA out, we we as portfolio. sort some the is five lending small than consumer how put that allowing really originally pick that between beneficial move yield as on having on we and a and came in point will banking, the that

the manage go as helping loan as that’s -- So yield move we forward. we

mentioned we on keenly we increased focused are I spreads, keenly on, pricing. As we see loan to continue in are comments, focused my that something

think positioned I -- that, combination but it’s I move So think well we to a something of it’s forward. are we all

On we that the assume guidance around guidance. no hikes in NIM, rate

David Feaster

Okay.

But it’s give to Could too? tell the loan Thanks. little inclusion growth exactly us Okay. hard That’s segment drove a by organic our growth. of the terrific. your you First On some what just perspective into growth, was Green, from region, given that terrific. and insight

Dennis Hudson

when but high-single you add comments commercial. high to And this, digits we quarter, the we online come Sure. quarter, ground Chuck that I brought out the run team on on assuming say rate. can the team the I Chuck, the were say of really really our fourth also bank just broadly, business commercial guide this. the But few the saw kind can would we of in running. hit -- and maybe shorter We a will last Yeah. a put make

of and into want full seeing loan have to growth moving you continues Tampa that in expansionary Chuck, to anything next that? Orlando, think the place help growth across Broward, I we it’s So helping and year. been to the putting we the are kind add got efforts geography, you

Chuck Cross

David, Yeah. Cross. this is Chuck

Banking, have invested Small Tampa who I the we the growth and growth we are in think said, both seeing in Chuck well to Schaffer saw have markets and Fort Commercial bankers building it was for for in also. Chuck strong, we the Lauderdale pipelines and and and Business as in where the growth added Consumer, come said, we on pretty year that of this bodes staff. the And that hired

David Feaster

savings? for in from of how hires the one million talked could of timing you expenses, That’s the are rate. your already helpful. of savings you realized, XX% expenses just Okay. And XX in have the about about the Last that much already expense talk the been run me, $X remaining

the give seasonal of Just first -- us the remind the in impacts seasonal quarter?

Dennis Hudson

of on Yeah. you gave I to million there guidance And Sure. interest million $XX expense… some $XX

David Feaster

Yeah.

Dennis Hudson

XX number. the They in amortization the are exclusive are probably quarter guidance of but … the includes that intangibles, so hires. on they those early of in and

David Feaster

Yeah.

Dennis Hudson

is said, side, $X much almost of what like we looking on at this identified got point have we cost the all And done it. forward the pretty $X I million of million,

David Feaster

Yeah.

Dennis Hudson

mentioned $X.X next million, we oriented really that we that in support plan, ratably realize got But another growth growth expect to our pretty year. that We over in I activities reinvest moving but beyond as to XXXX. plan

David Feaster

Okay.

of keeping So flattish basis expenses quarterly on throughout… kind relatively a

Dennis Hudson

provided have that we guidance the not that’s still remains today. last quarter Again, and

David Feaster

guys. Okay. Terrific. Thanks,

Dennis Hudson

Thanks, David.

Operator

you. Thank

question Scouten next O’Neill. Sandler Please ahead. of Stephen go from Our is

Graham Dick

This Stephen is on How doing? today. Dick guys. Graham you Hey, are for

Dennis Hudson

Graham. Hi,

Graham Dick

All right.

just question and you So just are loans? fees the thinking mortgage rather production than about here revenues in realizing the you portfolio one all, how through for

Dennis Hudson

objective big include was a -- part we of last of more ours. -- introducing rotating Late began year of products us our moved That’s to No. salables. inclusive salable Yeah. a number of We that toward originators.

we out over middle rest We doing that are is the of the bottomline our to of important to as returns business XXXX. year, and move that’s for kind that for improve of the for delivering unit move expectations we But now. through continue as the in

coming to move is the year. So focuses that as our of one we key

Graham Dick

guys. That’s me the on All right. quarter. it for Congrats Great.

Dennis Hudson

Graham. Thanks,

Operator

you. Thank

is ahead. next of Young go Michael SunTrust. from Our Please question

Michael Young

Hey. Good morning.

Dennis Hudson

Hey, Michael.

Michael Young

might other the there being year, to thought of you of anything challenge given shifted was basically achieve on more the when I kind just terms earlier hiring, you easier guidance, curious than a banks. just of very your appreciate provided thoughts little guidance But kind this look out, I clear. that originally? the are you be it in the where Is color you versus some XQ this areas in generally what last at point most as provided all of or now materially a curious are of guidance

Dennis Hudson

Yeah.

feel generally the we in momentum a a on I XXXX a us, like third great as -- year think quarter. same level, felt We, basically still year, high was at we into a Michael, we the coming great XXXX year. coming robust looks for got

we bankers, in companies out move customers to is want those half and Those improve the increase will will a on. to big if that I of focus other move oriented. as So know we are key we growth And for the we of through and transformation we of on there’s materially investments the as back out than are continue good of cost the to deposit doing loan we in It’s growth anything and to operating and around as incredibly markets forward result, the a and building different focused It’s sort the and building growing of don’t and in we continue really that of as I XXXX, pieces in lending continue legacy have growth think a to footprint. markets kind operating companies. XXXX, really our Broward. out year about we structure focus that, on expense and invest Tampa remixing talked move lot so core into around piece

Chuck Shaffer

Yeah.

Dennis Hudson

look environment we as that to go becomes ahead. critical we the time, forward As through

Chuck Shaffer

Yeah.

Dennis Hudson

said, part the we forward kind press we think been a both the result going to big NIM across our asset continue we as as of and have to flexibility over Chuck well time. are how always and of to that’s a it’s we as improve as about as classes strategy, And out of geography and there, to continue look working, lot

Chuck Shaffer

a say leaning just one is like… that on a And focus on returns thing It’s I that’s that, maybe keen mix, and little different. would just

Dennis Hudson

Right.

Chuck Shaffer

focus. more to …key risk in getting that’s returns strong of are is making we and lending, adjusted spreads good even on sure us hitting XXXX

Dennis Hudson

investment Beginning, in the we perform wanted at to areas of I the that looking environment we that transfer year, likely and think, into less last middle at. better were to began in that invest areas see we

Michael Young

me, just Chuck, growth similarly deposit also the Okay. can then and the outflows seasonality you remind and loan the side. And some on as of

some I to guard think this caught wanted year. people clearly that off how know year, just last that reflected but

Chuck Shaffer

Yeah. Sure. I that. will to No. talk

stronger this the side, it quarter our deposit the deposit first the in year first it up is well. the summer the loan trend And as So through the quarter side of of probably as that coming usually decline builds quarter begins pipeline strongest sort get That’s is, is quarter on we fourth on and see the quarter through clean then generally sort for of up and than first year. growth, the well, seasonal for kind to to and what second, natural will we happens and our the late to rebuilds a year. geared the

Michael Young

that then through just in you Can that walk one of that just end-to-end up place on then of statement we And higher, the kind grinding process when just that the fully should me guys real or impact you be slow kind digital putting there running? on last to and is going any lending And that guess, Okay. a for around income initial of kind I of flywheel see over is be should time? kind side. are

Chuck Shaffer

this the inclusive provided key to and is and will it focus probably, launched the see that for about June a get year, But we into that benefit goal of of is into launch -- project. guidance That’s full probably this our us, year by late that of and year. it No. next

to of that and going sort a one on. it’s But things lot our like our for place. of and is So it in training that nine-month get a implementation, technology priority strategy

Dennis Hudson

around in work Michael, could be interesting of It’s over create but the forth, two The we marketing. together have together those seen, the competencies really something we pair pair customer of you developed that analytics done with and have other few particularly last you have remarkable. so kind years, that you that some and you

Michael Young

Congrats Well, right. a on thanks, quarter. All guys. good

Chuck Shaffer

Mike. Thanks,

Operator

Thank you.

Jeff of from go is Guggenheim question Our Cantwell Securities. next ahead. Please

Jeff Cantwell

morning. Good Hi.

Dennis Hudson

Hi, Jeff. Good morning.

Jeff Cantwell

won’t ask I credit digital wanted for -- Good for I your these growth NIM loan I quality. I strategy. questions. morning. guess I know context the to that Thanks first. Hi. ask or my But my like should provide some related and usual wanted questions to I But be about things to taking questions of you technology couple your a or you

in the and new focus So actually there’s in in how and right significant better future. combination now Fiserv-First financial could Data on ways the the deal impact that market institutions

to a benefit So Data maybe, for thoughts first get what want as thought have your deal financial have combination banks, perspectives on I some you interesting Do love level, would just think institutions might am community share? might I how you means I you of the such eventually to ask you to perspective ultimately any off, the there, Fiserv-First Thanks. yours. high

Dennis Hudson

operations ask am going room Yeah. who’s maybe I few comments. Jeff us groups. with to make runs Jeff service technology a and Bray, to our the in

So Jeff, well.

Jeff Bray

a to out lot firms a into relates as banking of a merchant be Sure. that thought corporation, and particularly today. immediately, the have a initial combined as space from create of corporation the with create services the on merchant Absolutely. both the standpoint data space, in will with new that space, impact it will merger The have both both amount delivered around well that banking will advantage the was will the As products payment probably and standpoint us, that we it relationship

and program relation relationship acquired do a a which through Data. the through with First customers Fiserv they with First PC with our we that have have Data services a year, last lender, to to sell we merchant We

merger scales obviously, the is tip that, to the is So going completed. to are belong where going once services around the to

think I to would would me, and -- our it’s provide better capabilities their out, us, simplify are through how take to tool between For enable that Fiserv hopefully stack. cost going enable our interactions tool made customers and employees

out years. hold it’s of payment they I $XXX kind part am excited move aggressive they that that --I their especially with are really I think million a into space and think comes next investment their see over innovation the in the to five putting of pretty on what

Jeff Cantwell

think serve those that help is Fiserv customers, those relationship business of drive to changing in follow-up business right, ultimate that. more And small I Thanks of a we rapidly where business topic, his providers more sort First environment. a customers guess seamless a how banking and those technology plenty the make the for combination I you terms appreciate businesses. it might you to you or do bank’s very is a rapidly of banking in way have Data plus much. goal, improvement with for just impactful better like customers about think or

First small First Data’s you serve there of anything or of So core of is other Clover’s Thanks. businesses? how like and platform STAR or sale processing think impactful you Data’s account terms point any adding be other in between capabilities could that

Jeff Bray

Absolutely.

think, Clover platform. happens -- I is plays obviously, what with and a strategic strategic of the the Clover one

think that. I Fiserv be interesting to through Data that -- see what First does it will ultimately with

move from their to banking tool small I businesses For terms data us it that a small how use of banking with those sets put data. and better business It things to that and of effectively, how better to serve it and the better would bank the and we be holistic will lot able and that ability helps in tools that us enabling relates engagement services acquire business of for accumulation from me, and be could transparency bring hopefully data data a being of it’s in that institution will customers, through as provider that that this they efficiently, about through in merger. business something more data impacted think with more business participating the

So efficiencies very can I the really create of to business align beneficial that you for that well bank. payment services like the out or with banking bank, small probably come deal, some the business the with when that is you will clients the tremendous both hub be value. think working Then those there as

Jeff Cantwell

Thanks for that.

Dennis Hudson

the competitive of what and is mid-sized issue, will happen and generally. to payments the a their when the critical the probably combine there. together those banks, to out for think, just dollar have look I trillion terms some it developed better two happening add of very, in continue going banks to is think, around will And payments I you some own a of to support that good organizations at banks innovation that in very like, large players be move and was platforms I

lot, a Thanks. So Jeff. interesting question. Thanks

Jeff Cantwell

services appreciate consumer questions could competitor for so emerging have We a an and deposits. my on you digital last time an opinion fintechs providing question am strategy. Square digital your in where seem I Appreciate the time I strategy. and how be to interesting one much I I this, squeeze it guess, thank both asking guys at on more a it. is, in you any would if about If think lot like of side answering just be bank invested here, your your figured own and have here business last for given patiently I my But care do you point as deposits? on will bank what with strong you

as you just would you have see on appreciate future I any thoughts a Square Thanks. So them whether and competitor?

Jeff Lee

and we I Lee. mean, on the our other own who lines. that. customer it’s territory, of mean, for now a those fray. on number are to into I the fertile that have as more is eye companies I as Jeff it’s folks most weigh will a certainly of It’s battle along in well all going mean, I

points. to it’s very with it’s something how our out, a the of kind serve get have that remain of trying it’s customers little we lot early to we is think we the a on got one relationships because I it’s see to relationship of to critical going and entire net obviously have focused still which businesses,

Dennis Hudson

Yeah.

Jeff Cantwell

and… again Thanks

Dennis Hudson

[Inaudible]

Jeff Cantwell

that. … congrats on

Dennis Hudson

Thanks, Jeff.

Chuck Shaffer

Thanks, Jeff.

Jeff Cantwell

you. Thank

Operator

next And of Steve go you. our Riley ahead. Moss from B. is FBR. question Thank Please

Steve Moss

guys. morning, Good Hey.

Dennis Hudson

Hi, Steve.

Chuck Shaffer

Good morning.

Steve Moss

It margin seems has there? of flat margin up, December are moved implies Just LIBOR and we again. of rate kind touch kind the quarter-over-quarter, given the like wondering basically in what underlying the just and want a just guidance drivers to hike core on had a and

Chuck Shaffer

be we see We -- will together. takes we how got see Yeah. things we come loan are where yields. and in we investment purchased could The to quarter XX will model in something but the flat guidance, fourth The gives will see book, it’s expansion accretion We really accretion to first move purchase quarter. in believe XX basis closer the as were the that forward. or we I points almost modeling had goes, some hard

outlook guidance QX. there QX we occurred, in and to then offset that the inversion a similar together and it’s but around all and prudent to we we again, that’s guide some something volatile to -- cost have So deposits. some given will just that’s that’s think in given of curve some reasonable When push you

Steve Moss

wondering Okay. a accretion just That’s accounting point second I kind the some purchase am that year it’s more meaningful or is a I And the in XXXX know wondering later step-down, helpful. Chuck. of but am at hard accounting half event? about step-down type I purchase is there in model of XXXX, of accretion to this a

Chuck Shaffer

year, Yeah. this down and you I any later years. it of know, that say, on meaningful depends the as takes wouldn’t burn there’s the portfolio step-down,

portfolio be off. So start how fast that model it tough will it and depend to is but on step-down we to a pays while will any before see there, it

Steve Moss

just market updated here, the days? M&A kind Green the on And are after fair. That’s is in Okay. thoughts First these what or and activity scene what your wondering of

Dennis Hudson

have There there. amazingly of from astounds still market unions recently, here in there there’s But still transactions, a are the transactions announced credit still out Well, by small been a standpoint. tax me purchases state number which there. out conversations

we of we contact through different go with We maintain have and as lots list, time. our parties

the value good a We wouldn’t forward to everything to forward. standpoint, hesitate sense and position. move makes are in creation align from If move we stars a if

Chuck Shaffer

Yeah. see a out around we targets come been if would of there, see conversations high the lot so together conversations of about or change a coming We And activity. say, will from Steve, I things you lot in in year. things just level, really have how and no momentum there’s thinking are a still still

Steve Moss

you All right. very Thank much.

Dennis Hudson

Terrific.

Operator

Thank turn call remarks. the you. I over to back Dennis for now Hudson closing will

Dennis Hudson

quarter. again, being you We and to us Operator. with quarter had today. you, And Thank a forward thanks next we everybody look updating for terrific

Operator

Thank for you. today’s And concludes this thank gentlemen, conference. you, participating. ladies Thank and you

disconnect. now may You