Welcome to the Seacoast’s First Quarter Earnings Conference Call. My name is Victoria, 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. Please note that this conference is being recorded. I will now turn the call over to Dennis Hudson. Dennis, you may begin.

Thank you very much and thank you all for joining us today for first quarter 2016 earnings conference call. Our press release released yesterday after the market close and slides with some supplementary information are posted on our website at seacoastbanking.com and you can find that information under presentations. Before we begin, I’ll direct your attention as always do to the statement contained at the end of the press release regarding Forward-Looking Statements that we will be making during our call. We’ll be discussing issues that constitute forward-looking statements within the meaning of the Securities and Exchange Act, and our comments are intended to be covered within the meaning of the Act. With me today is Steve Fowle, our Chief Financial Officer, who will be discussing our financial and operating results. Also joining us in the room are Chuck Shaffer, who heads Community Banking Division; David Houdeshell, our Chief Risk Officer and Jeff Lee, Marketing and Analytic. All of us are going to be available to answer your questions following the conclusion of our prepared remarks. Earnings for the first quarter came in very close to our expectation. Adjusted earnings per share were $0.19 for the quarter with an adjusted ROA of 0.76% and an adjusted return on tangible common of 8.5%. Our earnings for the quarter were not at a level that we feel are at all acceptable and we are forecasting significant improvements in coming quarters. We are reiterating our previous targets of an adjusted $1 per share for 2016 and obviously this means we expect to see meaningful improvement in Q2 and even greater improvement in the second half of the year as we post better earnings. Steve is going to give us some additional details later in the call but I would the elements that will…

Pardon the interruption, this is the conference operator. Can I get your company please [indiscernible] Pardon the interruption, this is the conference operator, we’re currently one on one, [Operator Instructions]. Alright, I'll sequence you back in.

A year ago and up 10% -- 10.3% sequentially. Looking specifically at mobile adoption, more than 27% of our eligible primary customer -- checking customers are now actively engaged on a regular basis with our mobile banking app. That represents a 19% increase in users in just the last six months, nearly 9% of cheque deposits were made just in mobile phones in March of this year. And we're beginning the catch up in a favorable way with a lot of the top tier money center banks, Bank of America I think reported mobile deposits accounted for 16% of all deposits. Turning to acquisitions, we're pleased to have completed the Floridian acquisition this quarter in March. After a flawless conversion, we look forward to serving our new customers and expanding our communities both in Orlando and in Daytona Beach. Later this quarter we expect to complete our acquisition of the BMO Harris Orlando banking franchise which will bring us another 8,000 customers both consumers, small business and medium businesses and this will help us further solidify our position in Orlando where we will then become a top 10 bank in the metro area with almost $1 billion in low cost deposits. We announced during the quarter of the closing of four Seacoast's legacy branches and I think four or five Floridian branches. Our ability to keep Seacoast's net promoter score and other customer satisfaction metrics high by delivering services in ways that our customers prefer, whether it be to our ATMs, mobile or online banking or even our Florida based 24x7 call center will increasingly benefit shareholders. It will enable us to reduce our infrastructure, boost our ROA and help generate additional income producing assets. Becoming a digital savvy but homegrown community bank benefits from here in Florida being based…

Thank you Dennis and thanks all of you for taking the time to join us this afternoon. First quarter results were largely as we had anticipated and discussed with you last quarter. We reported GAAP earnings of 3.2 million or $0.09 per share included several non-core items. First a 5.5 million in expenses related to closing and successfully integrating our Floridian acquisition late in the second quarter. This acquisition will provide a 20% of better IRR for Seacoast. Two, a $700,000 charge related to our decision to close four legacy Seacoast branches in slower growth, Central Florida. This will provide nearly $1 million in annual savings following the second quarter book branch closing date. And third $450,000 in unanticipated debt benefit from our bank owned life insurance program. While it can be argued is that this benefit is ongoing as it is part of bullies all in return, we believe it’s appropriate to adjust this benefit out of our core earnings as this kind of gain will occur but only on a very periodic and unpredictable basis. Excluding these items, adjusted net income increased 10% compared to last year’s 6.8 million, and our adjusted diluted earnings per share was $0.19 flat with last year and last quarter. Let me take you through our income statements. First quarter performance was a result of significant revenue growth supported by and offset by increased expenses related to franchise growth and a regular first quarter impact of higher payroll taxes and other increased benefits. Revenue improved considerably increasing nearly $6 million of 18% over prior year levels to 38.9 million and $2 billion, or 5% not annualized from fourth quarter 2015 levels. Despite a seasonally slow quarter for loan growth due in part to larger than normal paydowns. We continue to grow existing households…

Yes, thank you Steve. And I think we’ll just open the floor to question if we have any.

[Operations Instructions] And our first question comes from Michael Young from SunTrust.

I wanted to start with the re-affirmation of $1 EPS target. Does that still includes sort of $0.06 benefit from rate hikes and assuming now that, that maybe a little less likely, should we really set our sights slightly below $1 or do you think you can make up the ground on that?

Yes. Hi. This is Steve Fowle. The forward expectations don’t include anywhere near that level. We typically look to the forward curve as our best guess for where rates are going to go and use that in our continued analysis of forward earnings. What we do so reiterate the $1 per share and where we’re expecting less in terms of upraise benefit and we’ll make that up with two things. First the accelerated cost saving from the acquisition and also from continued initiatives that we undertake internally to manage expenses.

Well said in another way we are committed to producing the dollar and we will get them.

Got it. And was there anything on the elevated payoffs that was specifically unusual, the backup in rates driving that and should we expect that level to continue or should that normalize in the second quarter?

This is Chuck Shaffer. No I wouldn’t expect it to continue. We have some onetime payoff that came through and we let a couple of deals go due to term that we were unwilling to match, so I wouldn’t expect it.

And when we looked at it in compared I think Steve over the last couple of quarters really wasn’t -- it was elevated but it was not significantly elevated. It was little higher than normal, what do you think Danny?

[Indiscernible] than normal run rate over two to here quarters view so may have just received a couple [indiscernible].

I mean we’ve been concerned about that that’s a great question and hard to say that I guess or outlook is where things continue to kind of normalize as we go forward but again the up number on payoffs was not materially up it was just up somewhat and I think there were some other factors as we dug in [Multiple speakers].

So, I’d actually consider that part of net pay downs. Number of smaller changes as opposed to one big [Multiple Speakers].

Yeah, our lines usage was little under where we had expected it.

Just piggy back on the back of our pipelines going into Q2 remains strong and we expect loan growth and loan [indiscernible] here in the second quarter.

They’ve grown considerably on the commercial side, also residential is up very nicely. So we’re looking at having better performance in terms of production in Q2 and beyond.

And just to be clear, the pay downs that you did see where those going to sort of permanent financing markets, maybe outside the banking industry, are you seeing and as Steve you also comment on the pressure on loan yields from competitive pressures. Is that more driven by new entrants into the market that you've seen over the last six months to a year? Any color there?

You know, I mean David may have something to say, in terms of the competition I would say everybody is now fully engaged. And included in that would be the larger mega banks, Wells Fargo, BofA, Chase, in particular with Wells Fargo I would say are fully engaged in this space. And I would say it's less of smaller community banks, more of the larger banks which are able competitors. David any other comments there?

I would say we’ve seen the life’s companies -- from the permanent market factor be stronger up just this quarter, but it’s been a comeback in the last few quarters [ph]. I think it's the full reflection of the power of the economy for us, [indiscernible] back and their investment cycle, so this is an environment we're [indiscernible].

Just one last -- question, just be the level of purchase accounting accretion in the margin this quarter and maybe any outlook going forward for that once the deals closing in a full run rate?

Yes, so we did not have a significant amount of excess accretion this quarter like we had in the year ago period and to back that point we decided that there was over 10 basis points of excess accretion. Our normal accretion has been running about 10 basis points. As we -- as older deals lifecycle mature and we put on new deals I don't expect that change materially.

So, we had really no excess accretion this quarter, it was a very standard quarter and this is what it is.

You also asked for an outlook and I would guess we continue to base all of our forecast on no excess accretion metric and that's our plan going forward and when it comes it's very difficult to predict as you well know.

And our next question comes from Christopher Marinac from FIG Partners. Please go ahead.

Danny if we look at the operating expenses this quarter and also in the second quarter, are we going to see improvement in second quarter, or is there more noise in 2Q and there we're going to see more real improvement in second half of this year. Just want to understand the timing?

You'll see both.

Yes, so I think you deal with adjusted earnings, my comment there was those should remain relatively flat quarterly through the course of the year, we do expect additional one-timers in the next two quarters, probably 2 million to 2.5 million next quarter, near 1 million in the third quarter related to primarily the BMO Harris acquisition.

You said adjusted earnings remain flat.

Adjusted expenses.

I'm sorry adjusted expenses, okay.

So BMO is a level of adjusted expenses now at the end of the quarter, BMO will have that increased slightly and then those business will fall?

Right.

And then there was a slightly fall…

That's right, so the acquisitions will add on through this legacy expense run rate.

So, I would think about it this way Chris, Q2 will receive the full force and effect of the Floridian acquisition and we'll be down to -- in this quarter I think we only have 20 days of revenue and expense in there and virtually none of the cost savings. So, a significant chunk, I say substantially all of the cost savings related to Floridian will be realized in Q2 and we'll have another call it 20 days of impact from BMO, I think our closing date is early June, forget the date, but it's early June and so we'll have handful of days in Q2, just as we did with Floridian in Q1. And we will realize substantially all of the BMO cost savings in Q3 on top of the remaining cost savings related to Floridian in Q3, so you add it all together and we have substantial improvement in Q2. And we have even greater improvement in Q3 and then full improvement in Q4, Q4 should be a very clean quarter. And we're going to be disclosing next quarter kind of where we are on the cost out related, so you'll have a lot more visibility I think till later in the year and the kind of run rate we're going to create as we approach the end of the year which will be a substantial improvement over where we started this year as you know.

Got it. So from a standpoint of the branches going forward, there are still additional branch rationalization that will see later as you integrate BMO and kind of look at the whole enterprise.

We will do a substantial amount of that work this year and again next quarter I think we’ll have some very specific information to share with you about kind of where we are in that process and I think they have much more visibility around what the second half of the year is going to reveal.

Got it, okay. And then last question I guess also from the strategic standpoint. Are there additional opportunities on the M&A front and do you think that the price expectations you can kind of overlap with where they can be accretive and productive financially for Seacoast?

As you know there was very little activity earlier in the year I think due to currency value issues just generally. But we stick to what we’ve been saying which is we do not believe we deserve continued operation unless we can produce decent organic growth and we have focused a tremendous amount of internal activity over the last couple of years on rebuilding our capability to create organic growth. That drives real value for shareholders overtime and we’re very pleased with our progress. We have more progress to make as we get deeper into the year and we found opportunities we think for M&A to supplement that growth in the ways that fit really nicely with for example our cross sell engine and the other processes we have in place around organic growth and we’ve actually proven conclusively that not only do we achieve the cost out and not only do we achieve tremendous integration work that has been very, very smooth with our streamline playbook that we developed a couple of acquisition before but on top of that we’re beginning to generate the revenue growth on top of that customer base. I’ll give you one specific, when you look at a month-to-month result coming out on the last couple of acquisitions our customer attrition in the first 90 days was no different than our gross attrition rate for the company as a whole. So we saw some net attrition rate, but they were not elevated compared with growth attrition rates for the company as a whole. After a 90 day period, we saw things dramatically pickup in terms of cross sell and in terms of new accounting acquisition on top of that customer base. So as I said earlier in the call, I don’t think this will continue…

Great. Thank you. Thanks Steve.

Thanks Chris.

And there are no further questions at this time.

Great. Thank you for attending today. We look forward to updating you on our results in July. Thank you.

Thank you ladies and gentlemen and this concludes today’s call. Thank you for participating. You may now disconnect.