Welcome to the Seacoast First Quarter Earnings Conference Call. My name is Christine and I will be the 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. Please note that this conference is being recorded. I will now turn the call over to Mr. Dennis Hudson. You may begin.

Thank you very much, and welcome to the Seacoast first quarter 2015 conference call. Before I begin as always I direct your attention to the statement contained at the end of the press release regarding forward-looking statements. During our call we're going to be discussing certain issues that constitute forward-looking statements within the meaning of the Securities and Exchange Act and as a result our comments are intended to be covered within the meaning of the Act. The earnings release and the slides that go along with this call are also posted on our Web site seacoastbanking.net and they can be found under presentations. With me today are Chuck Cross, who heads up our Commercial Business banking line and Chuck Shaffer, who heads up our Consumer and Small Business banking line and David Houdeshell, our Chief Credit Officer. Also with me today is Bill Hahl, who is retiring as our CFO and as served us very well over the past 25 years. And also our new CFO, Steve Fowle is here and as you know he joined our team just a few weeks ago. So welcome everybody. We started the year without missing a beat continuing to build on the momentum we established last year. Just a few months after we closed and successfully integrated the acquisition of Bankshares in Orlando, we announced our agreement to acquire Grand Bankshares in North Palm Beach. As we noted in the release both these acquisitions expand our presence in two of Florida's fastest growing market and position Seacoast to benefit from accelerating Florida economic – from the accelerating economic recovery here in the state. Profitability in the first quarter was strong with net income growing a 155% year-over-year to $5.9 million or $0.18 per share up from $2.3 million or $0.09 per share…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Joe Fenech from Hovde Group. Please go ahead.

Good morning, Danny.

Good morning, Joe.

More of a big picture question for you Danny, relative to where you were a year ago obviously the improvement in profitability has been to today has been pretty stark, and my question is how far do you think you could take this with the company as its structured today pro forma of course with Grand. In other words there is a sustainable 1% ROA achievable next 12 months or so, are there some things that are little out of your control like higher rates and maybe a deal that you need to have happened to get you there?

Good question. I think we continue to head towards the 1% return on asset mark to get our performance back to what I would consider an acceptable level. And I think that is certainly doable over time. The answer to the question what sort of investments are we making today? The investments we made two years ago are paying off big time today. You think about it our accelerate channel now has operating expenses of probably around $5 million a year those expenses didn't exist two years ago. And they are now producing tremendous results for us. So with the careful balance as you well know between the investments needed to get us accelerating down the road more quickly and the need for improved operating performance. I think we achieved significant milestone this quarter as we brought together all of the things we talked about in the short-term over the last year notably the cost outs that we worked on. And the impact of the acquisition being as good or better than we had advertised. We have another acquisition that as you know provides meaningful accretion starting in the second half of this year, and I think again, as we look forward we will continue to see growth in earnings and progress against this medium-term goal of getting to 1% return on asset. So I hope that helps.

Sure. And then Danny, you talked on that note about Grand, you talked about the purchase capital contribution to NIM this past quarter and your NIM outlook, does that outlook include your expectations pro forma from Grand and if not, what's your thought on the impact that has to that 350 or so NIM guidance you gave?

And the answer is that does not include the impact of the Grand acquisition. We were just simply looking at a steady state over the next quarter or two, just in kind of a steady to slightly down margin.

So your earlier read is that Grand accretive to that 350 or so margin or too early to tell?

This is Steve. Hi.

Hi.

I'd expect the acquisitions tend to be accretive but tend to be very lumpy in terms of when the accretion hits and doesn't hit.

Okay. And then Danny whether seasonal –

I think to answer your question though – I think what you are trying to ask is, what kind of impact does Grand going to have on margin. And as we know lots of merger charges in Q3, but the margin should be as good or probably slightly accretive when we looked at that.

Okay. And then Danny whether seasonal considerations, or anything unusual on the expense base this quarter, or is it just under $23 million a good quarterly run rate to [use here] [ph] on a core base system going forward?

No. I think it's a good run rate.

Okay. And then last one for me on the M&A front Danny, I know you have done some attractive smaller deals here, is there a larger one or two out there that makes sense for you or the smaller transactions more along the lines of what we could see going forward, what's your appetite generally for additional M&A?

I think our focus remains on continuing to grow organically that's our key objective here. That is tremendous value add to long-term shareholder value, right? We can get organic growth. The view of – obviously our priority would be acquisitions that would be tend to be smaller probably and would fit well into our franchise. But, our focus remains improving our performance growing organically and finding opportunistic type opportunities out ahead of us in terms of acquisition. The two that we have done over the last year or so, we think we are going to be very, very helpful to us. And we would hope if we did something else that would be equally good in terms of helping us improve our performance and build out an ability to grow organically over time.

It's great. Thanks.

Thank you. Our next question comes from Taylor Brodarick from Guggenheim Securities. Please go ahead.

Great. Thank you. I guess first question will be on deposit pricing, obviously, it's been kind of held in a low 30 bps. But, I'm wondering about the pricing pressure going forward given strength of your markets and are you willing to I guess not be as flexible on pricing given your loan to deposit ratio?

Hi. Thanks. This is Chuck Shaffer. I wouldn't expect pricing to go up much as we move forward. We will be – if we grow the deposit base we are continuing to focus on small business and consumer we have taken a few opportunities where some governmental things came along and with that in the base. But, as we move into Central Florida market and South Florida, it is more competitive on the [fiber] [ph] side there are more offers out there. But, I wouldn't expect it to materially impact what our cost of deposit is.

Okay. Great.

It's important to keep your eye on our strategic focus as we look ahead on our strategic focus is on no cost, low cost deposits period. And we see tremendous opportunity for us to gain share as we move forward and that's been proven over the last several years as we improved our loan mix – our deposit mix.

Great. Thank you, Danny. And I guess just hearing some of your other end market peers talk about rationality a little south of your core market, I'm just curious if any of that I guess that out size pricing has creeped into your markets?

No. We really haven't seen that yet.

Obviously, [on loan] [ph] of course, yes.

Oh, yes, on loans.

Yes, yes.

This is Chuck Cross. Florida and especially South Florida has always been a very competitive pricing market and it remains competitive today.

Yes. And I say that all the time that there has never been a time in my career where we couldn't complain about crazy competition in pricing and so forth. And when it gets too crazy, we exit the discussion is all I can say. And we really stay focused on relationships but it's a fight everyday. And never been a day when we haven't had those things you just – can't use it as an excuse. You move forward and talk to more customers. And ultimately you find customers that are interested in what we have to offer in terms of our values and we seem to be pretty successful.

Great. I guess one last for me, update on kind of what to expect, I think I had $1.5 million to $2 million of merger charges the next couple of quarters, does that seem like it's in ballpark?

We are going to have minor cost probably in the upcoming quarter. I would say that sounds if anything at or slightly high.

Okay.

And as we look to Q3 of course, we will have the charges related to the closing of Grand Bank.

Got it.

Which would be higher than that. And I think we had a number that we disclosed on the announcement for the total. I think was $3.5 million.

Total.

That's spread over multiple quarters than most of it in the third quarter. [Technical Difficulty]

Got it. Okay, great. Thank you everybody.

Thank you. [Operator Instructions] We have no further questions at this time.

Well, very good. Thank you all for attending today. And we look forward to updating you next quarter. Thank you.

Thank you. And thank you, ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.