Welcome to Seacoast Banking Corporation's third quarter 2022 earnings conference call. My name is Cheryl, and I will be your operator. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you have a question, please press zero one on your touch-tone phone. Before we begin, I have been asked to direct your attention to the statement at the beginning 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 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. Thank you, Cheryl, and thank you all for joining us this morning. As we provide our comments, we will reference the third quarter 2022 earnings slide deck, which you can find at seacoastbanking.com. I'm joined today by Tracey Dexter, Chief Financial Officer, and Michael Young, Treasurer and Director of Investor Relations. Let me start by thanking the entire Seacoast team for their tremendous effort in recovering from Hurricane Ian last month. All Seacoast branches opened within a few short days, and the group quickly transitioned to assisting our customers and communities. Additionally, the team promptly reverted to closing the Drummond and Apollo acquisitions, and one week after the storm passed, they completed the technology conversion at Apollo, of which I'll say a little more in a moment. I'm very proud of their hard work and resilience and for supporting our communities in the face of such a challenging weather event. To comment further on Hurricane Ian, we reserved a little over $2 million during the quarter related to the storm based on an analysis of our exposure in the hardest hit counties of Florida and an outreach prior program executed by our banking team. The results of the qualitative feedback from our bankers and customers and the quantitative analysis performed by our credit analytics team has been favorable, leading us to believe the impact on Seacoast may be limited given the path of the storm, which primarily impacted Southwest Florida, where Seacoast has less exposure when compared to the remainder of the state. We expect to have a more complete understanding of the impact by the end of the fourth quarter, but at this point, we believe any impact on our financial results will be inconsequential. Turning to the third quarter results, the Seacoast team delivered another outstanding quarter of earnings while continuing to execute against our balanced growth strategy. The quarter was highlighted by a material expansion of our net interest margin, which excluding PPP and accretion on acquired loans, increased 29 basis points from the prior quarter, and net interest income increased 32% on an annualized basis. The cost of deposits only increased by 3 basis points, and annualized loan growth for the quarter was 10%. The company generated $49 million in pre-tax, pre-provision earnings, an increase of 6% from the prior quarter while achieving a 53% efficiency ratio. Since the start of 2022, the team completed the Sabal Palm Bank and Business Bank of Florida transactions, enabling us to enter the highly attractive and growing Sarasota market and to continue to grow our presence in Brevard County. In early October, we completed the acquisitions of Drummond Community Bank and Apollo Bank, expanding our presence in North Florida, including Ocala and Gainesville, and expanded our franchise in the dynamic Miami-Dade County market. Also in October, the Apollo and Seacoast teams completed a flawless technology conversion of Apollo Bank, which despite the disruption of Hurricane Ian, was our smoothest conversion to date. Finally, we announced during the third quarter the acquisition of Professional Bank, expanding our reach further in South Florida. We continue to expect to close this transaction early in the first quarter of 2023. Consistent with our continued focus on organic growth and our goal of being the best commercial bank in Florida, we hired a team consisting of well-seasoned C&I commercial bankers, treasury officers, and credit officers in North Florida, complementing our acquisition of Drummond and further expanding our reach into Ocala and Gainesville. Additionally, we augmented our commercial banking team in West and Central Florida with several hires from national and regional banks, and we also hired several credit and operational roles as we scaled the franchise. The timing of these expenses came a little earlier than anticipated, but a very strong opportunity presented itself and the payback period on this investment will be short. I want to take a moment to discuss our credit metrics. Seacoast continues to be a disciplined, conservative lender focused on building a carefully underwritten and diversified portfolio by nurturing full client relationships that bring low cost funding. As a reminder, our portfolio has been built over the long term with a consistent growth rate while driving diversification by product type, by segment, and by vintage. As a result of this discipline, our credit metrics for the quarter were outstanding, with almost zero net charge-offs, declining non-performing loans, and declining criticized and classified loans. Moreover, our relationship-based philosophy and heavier focus on operating companies compared to peers will pay off in the environment ahead by providing a lower deposit repricing, as evidenced by our cost of deposits increasing only three basis points this quarter. Seacoast is operating from a position of strength with capital allowance ratios at the top of our peer group. During the quarter, our ACL ratio increased to 1.42%, and considering the loss absorption including in our purchase accounting marks, the company is reserved at a 1.71% coverage rate. Our TCE ratio was 9.8% and our tier one ratio was 16.5%. Additionally, we believe Florida has the potential to outperform the rest of the country if a downturn materializes given the wealth accumulation and population growth over the prior few years. Florida has exceeded every state in the nation in attracting affluent, wealthy individuals and corporations during the last two years, adding materially to the state's GDP. To conclude, considering the continued economic strength of Florida, our carefully underwritten credit portfolio, peer-leading capital levels, and our high-quality customer franchise, we have one of the strongest balance sheets in the industry, providing optionality if a recession materializes. This will allow us more flexibility than most to be opportunistic in client selection, organic growth, and acquisition opportunities. I'll now turn the call over to Tracey. Thank you, Chuck. Good morning, everyone. Directing your attention to third quarter results, beginning with highlights on slide seven. The net interest margin expanded 29 basis points to 3.67%, and on a core basis expanded 33 basis points to 3.57%. Loan originations at higher yields and the low cost of deposits we maintained during the quarter supported higher net interest margin. Our asset-sensitive balance sheet is beneficial in this rising rate environment, which will continue to benefit net interest income and the margin in the coming period. Our loan to deposit ratio ended the quarter at 76%, leaving us room to continue to fund growth at higher yields in the coming quarters. Our cost of deposits increased only 3 basis points during the third quarter to 9 basis points. We continue to manage deposit pricing on an exception basis, though we do expect to see an increase in the cost of deposits in the fourth quarter given the velocity of rates over the last 120 days. Pre-tax, pre-provision earnings continue to increase with results on an adjusted basis up by 6% compared to prior quarter and 16% compared to the start of the year. We grew loans at an annualized rate of 10% this quarter with the strong commercial talent that we've added to the team in recent periods. I'll emphasize that the growth is in keeping with the bank's credit standards and is a combination of solid production in the quarter and slowing loan prepayments. Average core loan yields increased 20 basis points to 4.3%, and the September weighted average add-on yields reached 5.5%. Credit risk metrics remain strong, with non-accrual loans lower compared to the previous quarter and only $100,000 in net charge-offs. The quarterly provision for credit losses includes the estimate we made at quarter end to provide for losses potentially resulting from the impact of Hurricane Ian, though we've not seen any specific concerns at this point, and overall coverage reflecting economic factors, including persistent high inflation and expectations for higher rates. In deposits, while balances were down overall, which I will discuss shortly, average balances in non-interest bearing demand accounts increased quarter-over-quarter despite the typical summer seasonal decline. Wealth management was a particular bright spot during the quarter, with large wins in assets under management and also our ability to provide existing client relationships with access to higher rates. Notably, we moved $100 million of cash deposits into either money market funds or the bond market to achieve returns for our clients while keeping the funds within the Seacoast relationship. An update on Hurricane Ian. We suffered no notable damage to any of our properties, nor was there any damage to the Apollo, Drummond, or Professional locations. Branches were quickly reopened after the storm, and only a small percentage of loans in our portfolio are collateralized by properties in the most highly impacted areas. Our borrowers so far appear to have fared well. In the allowance for credit losses as of September 30, we included an estimated $2 million for potential losses, having limited information at the time about the economic impact from the storm. Now that we're a few weeks on, we've been able to confirm that for the large majority of our borrowers, things are back to business as usual. As you know, there's been significant activity on the M&A front, including the October closings of the Apollo and Drummond transactions on October 7, and the announcement of the upcoming acquisition of Professional Bank in South Florida. Closing is expected early in the first quarter of 2023, with system conversion late in the second quarter of 2023. Turning to slide eight. Net interest income expanded 8% during the quarter, adding $6.6 million with higher yields and a shift in asset mix. Net interest margin expanded 29 basis points to 3.67%. Excluding PPP and accretion on acquired loans, which introduced significant variability, net interest margin increased by 33 basis points to 3.57%. In the securities portfolio, we've continued to place our investments of excess liquidity and yields increased 38 basis points to 2.36%. Core loan yields expanded 20 basis points to 4.3%, and in September, add-on rates averaged 5.5%. We continue to benefit from a strong low cost funding base with 65% transaction accounts at September 30, and this strength was further enhanced in October with the acquisitions of Apollo and Drummond Banks, which have similarly long-standing granular relationships. Looking ahead, we expect net interest income and margin to continue to benefit from rising rates. In the fourth quarter, we expect the core NIM, excluding purchase accounting accretion, to expand to the high 3.90%. We expect net interest income in the fourth quarter in a range between $115 million and $120 million. Moving to slide nine. Adjusted non-interest income was $16.5 million, a decrease of $0.8 million from the previous quarter and a decrease of $2.6 million from the prior year quarter. The decrease from the prior quarter and prior year is largely driven by lower mortgage banking activity impacted by rising rates and limited housing inventory. I'll point out that wealth revenue overcame third quarter market conditions to remain flat with the addition of significant new relationships. Other categories were generally stable, with increases in SCIC investment income offset by lower loan swap related income and lower SBA gains during the quarter. Looking ahead, we continue to focus on growing our broad base of revenue sources, and with the benefit of the expanded franchise, we expect fourth quarter non-interest income in a range from $18 million-$22 million, which is inclusive of the operations of both Apollo and Drummond. Moving to Slide 10. Adjusted non-interest expense for the quarter increased $5.2 million to $56.9 million. Included in the quarter are approximately $2.6 million in unique expenses, including the provision for unfunded commitments, elevated recruiting costs, and project related expenses that are not expected to recur in the coming periods. Salaries and benefits increased $0.9 million, reflecting successful recruiting, particularly with the addition of new commercial banking talent. All in, there were 15 new commercial bankers and treasury sales professionals, including a new team in Ocala. Expansion and support functions reflect the acceleration of investments to scale the growing organization. Non-interest expense includes the provision for credit losses on unfunded commitments, reflecting modeled results of changes in economic factors. In other expense, $1 million of the increase from prior quarter relates to a gain in the prior quarter on the sale of an REO property, causing a decline in the comparative results. Also included within the other category are non-recurring charges related to investments and initiatives in the third quarter. Not reflected in adjusted results is $900,000 in write-offs of certain leasehold improvements. We took the opportunity during the third quarter to purchase two branch properties that we had been leasing, which will lower ongoing occupancy expense by approximately $300,000 annually. Looking ahead, we expect to maintain our expense discipline while continuing investments to support growth. We expect fourth quarter expenses scaling with the growing size of the organization and excluding the amortization of intangible assets to be in the range of $72 million-$77 million, inclusive of the operating results of both the Apollo and Drummond entities. As a reminder, the full benefit of cost synergies on both the Apollo and Drummond transactions will not be recognized until the second quarter of 2023. On Slide 11, the efficiency ratio on an adjusted basis remained flat quarter-over-quarter. As we scale the company for growth and become the leading bank in our Florida market, we continue to pace our investments with discipline, evidenced by our consistent focus on efficiency. Looking forward to the fourth quarter, we expect the efficiency ratio to be in the low to mid-fifties with the addition of both banks, and then we'll move lower from that point forward as we execute against the cost synergies of the combined organization. Turning to slide 12, highlighting the continued diversity of our exposure and concentration levels well below regulatory guidance and the peer group. This diversification highlights our disciplined approach to managing concentrations. Construction and commercial real estate concentrations remain well below regulatory guidelines. Turning to slide 13, loan outstandings increased $161 million or 10% excluding PPP on an annualized basis. The commercial pipeline increased to $530 million at quarter end and includes a number of loans where closings were delayed into the fourth quarter due to the disruption of the hurricane in the last few days of September. Average core loan yields increased by 20 basis points during the quarter, with the September weighted average add-on yields reaching 5.5%. Importantly, since the majority of our variable rate loans are tied to Prime and the Prime rate didn't reset until the end of September, we can compare ending portfolio yields at September 30th to those at June 30th. Ending portfolio yields increased 35 basis points to around 4.5% at September 30th. Much of the benefit then of third quarter rate movement will be seen in the fourth quarter. Loan yields will continue to benefit from the higher rate environment, and we expect core yields in the fourth quarter, excluding purchase accounting accretion, to expand meaningfully to the 4.70s range. Also in the fourth quarter, we expect loan growth to continue with an annualized growth rate in the high single digits. Turning to slide 14. In the investment securities portfolio, the average yield increased during the quarter by 38 basis points to 2.36%, with purchases concentrated early in the quarter near 4%. The value of the portfolio continues to be negatively affected by higher rates. We will opportunistically seek to redeploy portfolio runoff and take advantage of higher rates while prioritizing the utilization of cash for loan production. Turning to slide 15. Deposits outstanding were $8.8 billion, and I'll take a moment to address the decline in deposits. The team did an excellent job managing our deposit costs this quarter, with our cost of deposits increasing by only 3 basis points. Deposits declined by $423 million, with $100 million that moved to wealth AUM, $110 million decline in public funds as municipalities moved funds to the state's investment program, $41 million with time deposits, and $25 million with broker deposits. When you look at the components of the outflows, only about $150 million exited the bank with some impact from rate sensitivity and a general absorption of liquidity in the market, but not otherwise inconsistent with our typical seasonal trends during the Florida summer period. I'll remind you that our deposit book is primarily small business and consumer operating accounts in keeping with the relationship nature of our business model. These accounts are typically less rate sensitive when compared to other deposit funding categories. Transaction accounts represent 65% of total deposits, and the strength of the deposit base, we think, will start to show up as a differentiator amongst the peer group. On deposit pricing, we expect the competitive environment to become increasingly dynamic. We have a very strong deposit base and expect that we'll continue to outperform our peers on deposit data while we do expect to see our own cost of deposits start to increase at a faster pace than in the third quarter. Moving to slide 16, the allowance for credit losses increased during the quarter by $4.6 million to an overall $95.3 million, with an increase in coverage of three basis points to 1.42%. The provision this quarter was $4.7 million. We remain watchful of inflation pressures and are carefully considering the impact of higher rates on the economy, though our credit metrics remain very strong and continue to improve. We'll continue to take a conservative approach to provisioning and have considered the potential for losses related to the impact of Hurricane Ian in the estimate. On to credit metrics on slide 17. We're seeing sustained positive trends with net charge-offs near zero, non-performing loans decreasing to 0.32% of total loans, and the percentage of criticized loans to risk-based capital moving lower this quarter. We continue to assess the environment and the factors that might affect loan performance, and this quarter, the allowance for credit losses is modestly higher at 1.42% of total loans. Turning to slide 18. Our capital position continues to be very strong. Tangible book value per share is $15.98, a decline from last quarter that's attributed solely to the decline in accumulated other comprehensive income, the result of recording increasing unrealized losses in the securities portfolio. Without the year-to-date impact of securities valuations on AOCI, tangible book value per share would have been $18.92. The ratio of tangible common equity to tangible assets increased to 9.8% and remains among the highest in our peer group. Regulatory capital ratios were not affected by changes in securities valuations. The tier one capital ratio was 16.5%, and the total risk-based capital ratio was 17.5%. Finally, on slide 19, a longer term look at tangible book value per share. Over the last five years, we've achieved a compound annual growth rate of 8%, driving shareholder value creation. Without the impact of securities valuation declines impacting AOCI, that compound annual growth rate was 11% over the five-year period. Our growth outlook remains favorable, evidenced by growth in commercial loans driven by the expansion of our commercial banking franchise. Rising rates will continue to have a material positive impact on net interest income and margin in the fourth quarter. All this on a foundation of strong liquidity and capital, positioning us to maximize opportunities and continue to execute on our strategic growth initiatives. We look forward to your questions. Chuck, I'll turn the call back to you. Thank you, Tracey. Cheryl, I think we're ready for Q&A. Thank you. We will now begin the question-and-answer session. If you have a question, please press zero one on your touchtone phone. If you are using a speakerphone, you may need to pick up your handset first before pressing any numbers. Once again, if you have a question, please press zero one on your touchtone phone. Our first question comes from Brandon King from Truist Securities. Your line is now open. Thank you. Good morning. Morning, Brandon. Yes, good morning. I wanna start on deposits. I understand you're bringing on a sizable amount of deposits with the acquisitions, but I wanted to know what was the outlook for organic growth in deposits in the near term? Hey, Brandon, this is Tracey. You know, outflows and transaction accounts in the third quarter really didn't appear to be largely rate driven. I kind of broke down the balances there, but we expect to continue to see headwinds to overall deposit growth in the fourth quarter. We do expect to see others move quickly on deposit pricing and just general absorption of liquidity across the system will likely be a factor. All that said, Q4 is typically an active and pretty strong quarter for deposits with seasonal inflows for us. We're conscious of the velocity of change in the market, but we'll continue to be intentional in our actions. We're competitive and focused on relationships. So far, we've been willing to let some of the transaction and rate focus deposits go, but we'll just continue to be intentional about that. With the acquisitions coming online and them being closed, could you update us on what the marks were and kinda what you're expecting for purchase accounting accretion in the fourth quarter? Yeah, it's all pretty recent, so we're still in the process of finalizing the marks. We really don't have anything to share at this point about the October 7 th close. Okay. That high 3.90% net interest margin, that's on a reported basis and not a core basis? That's it. The high 3.90% margin is a core basis. Core. Okay. All right. Well, I'll step back in the queue. Thank you for taking my questions. Thank you, Brandon. Thank you. Our next question comes from Stephen Scouten from Piper Sandler. Your line is now open. Hey, good morning, everyone. Morning, Stephen. I'd love to hear what you're seeing more holistically throughout your market environment, loan demand. Looks like the pipelines were back up a bit quarter-over-quarter, which is nice to see. Just I'm kind of wondering, you know, what you're hearing from your customers, how you're thinking about demand into the next quarter and into 2023, given the environment and all we're seeing and hearing. Yeah, when you step back, I mean, I guess I'll start with you know, now's the time to be thoughtful as we move through this period. We continue to be very deliberate in what we're willing to put in the portfolio and what we're not. You know, kind of looking back over time, we've talked about you know, our intention to be a conservative lender, remain disciplined, remain focused on diversity. You know, I think that's positioned us incredibly well as to where we are. You know, a lot of what we've seen coming in, you know, we've done a lot of hiring over the last 18 months, and so we've seen material relationships moving over. What gives me a lot of excitement is the fact that not only are we bringing over, you know, the loans, we're bringing over deposits, wealth, and other full sort of relationships out of other organizations. You know, I think that, you know, that momentum continues. We've put together an incredibly strong commercial banking team over the recent period and continue to grow that team. You know, at least looking into the coming quarter, we expect still high single-digit growth rate. Continue to be very intentional on maintaining underwriting standards. In some asset classes we've backed away from given where we are. We continue to be very careful around monitoring the ability for operating companies to manage margins in an inflationary period. You know, ultimately, we continue to be cautious, thoughtful, but have momentum going here in the fourth quarter. When you look out into the coming year, it's tough to give, you know, any further guidance. We'll see how things continue to play out through the fourth quarter. I do think, you know, now is the time to be cautious. Now is the time to be thoughtful. The good news is I think that as everybody somewhat is moving back to a more conservative position, it opens up the ability for us to get the structures that we like and pricing that we like. We remain disciplined early through this cycle. This allows us to be thoughtful as we move through this part of the cycle and ultimately get the risk-adjusted returns where we want them. Yeah, that's great color. Are you seeing any kind of changing dynamics from competitors? That last comment made me think maybe so. Are you seeing any, I don't know, whether it's the larger regional banks or smaller banks or what have you, pull back at all, to a degree that does create opportunity for you guys? There definitely is a significant pullback in commercial real estate across the markets. I would say that you're seeing commercial real estate spreads moving wider way out. We definitely see the competition pulling back, Stephen. Okay, great. I think I know the answer to this question based on some of your earlier commentary, but it would seem to me that the strength of Florida in a weakening environment nationally would only shine through more. I mean, it seems like population flows are still strong. The real estate market is still relatively strong there compared to the rest of the country. I mean, would you expect, you know, your deposits and your geography to be a big differentiator in a maybe less certain environment? What I like about where we are is we have optionality as we move through time, right? If you step back and look at the position of our balance sheet and look at the capital we carry, the reserves and the allowance, the reserves and the purchase marks, the strong, diverse core customer base and the discipline we've executed over time, and then you combine that with what Florida has been, particularly over the last three or four years. You know, if you look at the amount of wealth accumulation that's come in the market, the economic drivers, I definitely think that Florida outperforms through this cycle. What gives me comfort is we do have the strength in this balance sheet. We have the optionality that will provide opportunities again to take advantage of organic growth through, you know, well-priced, well-structured credit relationships, deposit relationships, as well as potential acquisitions over time, you know. I think we are about as positioned as best as we can be. I think, you know, this is a moment where a company like ours tends to outperform. When you step back and look even more broadly, as we pull these three deals together, you know, our ultimate goal is to come out the other side of these deals with a 160+ ROTA on the back half of the year after we execute against the cost saves. When you have that profitability momentum, the capital and the position of strength, and then the last thing I'd add is just the momentum with our culture and the company and the desire to be a part of our company, we're in really good shape. But you know, as we move through this period, we need to be thoughtful, cautious, conservative and you know, be very aware of the risks that are emerging in the economy. Yeah. Great color. If I could squeeze in one last question, just kind of around the pro forma balance sheet with Professional? I see they're up to around a 90% loan to deposit ratio. Do you guys have a feel for where, you know, with the two recently closed deals and then Professional, where you might be on a loan to deposit ratio perspective and kind of how you have to think about, I guess, protecting your deposits with the absorption of that? You know, for instance. Yeah, I mean, we're in the mid- to high 70s probably when you put all three organizations together as we move through this period. You know, the good news is on all of our transactions, they're tracking right in line with the models when you look at the income that's being generated. In all cases, just like you're seeing across the banking system, balance sheets tend to be a little smaller, but margins tend to be a lot higher. You know, I think we're in good shape going into this period. You know, their loan deposit ratio is a little higher, ours is a little lower. Drummond's is certainly way lower. You know, I think when you put it all together, it really probably doesn't move the needle from where we are much, which still gives us a lot of, you know, liquidity as we move through time to redeploying the loans. Stephen, this is Michael. I was just gonna add that, you know, really, we're just working to optimize the rate volume mix, you know, as we move forward. We're obviously in a very dynamic environment, so we'll continue to monitor that and manage through that to just optimize profitability and returns to shareholders. Perfect. Appreciate the color. Sounds like a lot of good things to come. Thanks, guys. Thanks, Steph. Thank you. Our next call, question comes from Brady Gailey from KBW. Your line is now open. Thank you. Good morning. Morning, Brady. I just want to be clear on the expense guidance, the $72-$77. That includes the two acquisitions and that excludes the intangible amortization. Does it also exclude merger charges? It does. It excludes merger charges. Okay. It seems like that's just a pretty big step up kind of from where consensus was. You know, I hear you pointing to the hiring that you've made, but I mean, is it just the hiring or is there any other inflationary pressure that's pushing those expenses higher? A couple things. I think consensus didn't fully contemplate a full quarter's worth. You know, given that we had guided that we'd close in Q4, we closed early. The other sort of issue is, Drummond. I think when consensus picked it up, doesn't file a FR Y-9C, so it's hard to see the full consolidated, which includes the insurance sub. So when you work the math all the way through that, you know, I think we're kind of right on our run rate. Just kind of to talk about expenses in Q2, Q3, looking back, you know, we took the opportunity to bring in what I believe to be probably the best group of people up in sort of the I-75 corridor. Very solid, well performing, well executing team that's, you know, probably our largest team we've acquired to date. That impacted the quarter with some one-time signing bonuses, et cetera. You know, the payback on that will be material in terms of our ability to grow in that market. When you bolt that together with Drummond, you know, it's a really nice group to put together. Yep. When you think about, I know you guys are always looking for the next acquisition or looking for the next, you know, hire opportunities to keep up the growth. Do you think you will still be, you know, very focused on the hiring effort? Like, do you think that, you know, expense growth could be a little higher. I know it'll pay off over time. You know, do you expect to continue to hire at kind of an above average pace here? I think it probably slows, Brady, to some extent. You know, given where we're going into potentially a slower economy. You know, in all likelihood, we won't be hiring at the pace we are. I think there will be hires along the way, but I think there'll be some cost that comes out along the way. I don't think it moves at the pace it is over time. That being said, if we see great opportunities, we're going to take them. You know, the market for that has been better than I've ever sort of seen in many, many years. We'll be careful and cautious. Ultimately, you know, again, just kind of pointing back to, you know, coming out the other side of the deals, I'd like to be at a, you know, north of a ROTA of 1.60%. I think that'll generate strong operating profits, strong returns as we move through time. We'll continue to manage towards that. You know, we've got to balance the cost out through these deals. We've got to manage the investments we're making for growth. When you go through all the math of that, you know, that's where I want to land. Okay. Chuck, you guys have been so active on the M&A front over the last few years. You know, Professional is a fairly large transaction for y'all. I mean, do you take a breather after you close Professional on the M&A side, especially considering kind of the economic uncertainty, or do you keep on going on that front? Yeah, you know, I describe it this way. Our short-term focus right now is integrating, you know, the three banks. I mean, that's got to be our focus. You know, we'll potentially look at more deals as we move through next year. The challenge is right now, given the dynamic environment, modeling deals right now is, you know, particularly challenging when you look at deposit funding cost and a weaker economy. You know, it is possible, but for now, we're focused, you know, sort of laser focused on integrating these deals and coming out with a strong profit profile. Great. Thanks, guys. Once again, if you have a question, please press zero one on your touchtone phone. Our next question comes from David Feaster from Raymond James. Your line is now open. Hey, good morning, everybody. Good morning, David. Maybe can we just touch a bit on the middle market expansion efforts and whether the new hires you've made, you know, to kind of support that? I guess just any updates on the treasury management build out? Anything else that you may need in order to support that expansion more towards the lower end of the middle market and support some larger, more sophisticated borrowers? Yeah, as we've talked, you know, we've been focused on executing against the lower end of middle market. You know, moderate size operating companies has been a target for us. We're seeing very good reception in that regard. You know, a fair amount of the commercial banking hiring we've done over the last year are C&I operating-focused hires, including the team we just put inside the company. We've made great progress on that. We continue to onboard relationships and very pleased with our progress. I'd say we're about two-thirds to three-quarters of the way through the treasury build, and there's probably a little more cost to come on that. It's not anything material, but we still got some build to do there. As you know, as we go into this period and when I look forward into what probably is the most important thing we can be focused on, which is funding and deposits, you know, having a really, well, put-together C&I-focused commercial banking team and then complementing that with really strong, treasury officers in combination with a lot of the investment we made in technology, you know, late last year, early this year. I think it really does put us in a position to begin to take material market share over the next few years. We've made real progress there, David. That's great. Glad to hear it. Then, you know, asset quality, it remains phenomenal. You always have a great pulse on the local economy and you talked about some of the competitive dynamics that you're seeing in CRE. I'm just curious, as you look out there, I mean, we're not seeing anything necessarily in your book, but is there anything that you're watching more closely? Are you starting to see higher rates impact cap rates at all? I guess any other trends within your portfolio or even the industry from a competitive standpoint that might be worth pointing out? You know, I feel really good about our book. I think it's performing extremely well. I feel good about it over the cycle. I think we've been very focused on maintaining discipline. You know, I'm sure cap rates really have not yet adjusted to the reality of higher rates. I still think that is a risk. You know, probably the biggest risk to all banks right now is higher, longer moderate to long-term rates on the treasury curve. You know, if that were to move up, I think the impact on commercial real estate valuations would be, you know, an issue we would be dealing with. I think you need to be really cautious there. You know, we've really sort of pulled out of non-medical office, kind of pulled out of retail unless it's, you know, truly credit tenant anchored. We pulled out of hotels. We're not bringing on any builder lines, ALS, land, very cautious with self-storage. You know, we've taken a pretty conservative approach on what we're willing to do. With the potential impact of higher rates on cap rates, we're expecting a lot more equity in transactions and basically demanding more equity in transactions on the commercial real estate side. You know, it's definitely a this is not an environment where you wanna get over your skis. It's not an environment you wanna be driving really high growth rates. It's an environment to be thoughtful and cautious and make sure you have the right sponsors. Apparently, probably most importantly, along with sponsorship, would be having underwriting structures that will, you know, protect the bank through cycles. It's a constant conversation here. It's a key focus of ours. That being said, in Florida, things remain very benign. You can see by our portfolio, past dues are well contained. Classified criticized keep coming down. It's probably the most pristine credit environment we've ever seen. It's a concern about the future, but not the current period. David, just to rewind, you know, a quarter or two as well, you know, when other peers were growing at much faster rates, you know, we were stressing a lot of our CRE deals at those higher, you know, kind of leverage points and a lot of those pushed out of our pipeline. We grew slower, you know, in the prior two quarters. You know, now we're seeing that market come back to us, where people are willing to be accepting of those higher, you know, amounts of equity that we force in the deals. That's a good point. Then last one from me, just maybe touching on rate sensitivity. You guys have done a great job driving margin expansion. The balance sheet's naturally rate sensitive, right? You know, I'm just curious, how do you think about managing rate sensitivity going forward? Obviously, we've got another 75 supposed to be coming next week and probably another 75 in December. You know, just curious, how you think about managing rate sensitivity and potentially locking some of this in and how you would look to approach that? Yeah, we continue to be really thoughtful there and careful, David. You know, it's over the last couple years, we've demanded a lot of our commercial real estate go to swap, and therefore saw a much bigger portion of our portfolio move into variable. On the deposit side, we've, you know, really followed the national banks and have been slow to reprice deposits, you know, basically focused on profitability. You know, we've always been an asset-sensitive organization. The sort of crown jewel of the company is the deposit franchise. I think the deposit franchise will outperform. That being said, like Tracey talked about earlier, you know, it's definitely got more dynamic. We're seeing rate specials from the national banks and things hitting the market now. It's definitely gotten more competitive. Ultimately, you know, we'll see the margin expand into this quarter, maybe a little bit into the first quarter, and then we'll have to see where rates go. Beyond that, it's hard to say. We'll continue to be thoughtful there. We've been thoughtful on managing the duration of the investment portfolio. Most of the liquidity at this point will be used to fund loan growth as we move through time, and we'll focus on driving, you know, strong margins and strong profits. That's helpful. All right. Thanks, everybody. Thanks, buddy. Thank you. Our next question comes from David Bishop from Hovde Group. Your line is now open. Yeah, good morning. Thanks for taking my question. Good morning. Skipping on the topic, good morning. In terms of how we should think about loan funding into next year. You mentioned a lot of the cash has been used up. You know, given what you're seeing in terms of the competitive backdrop for deposits and such, especially with the state, does wholesale funding, maybe brokered CDs, play a bigger role in the near to intermediate term in terms of funding that growth? You know, I think we still got plenty of liquidity to fund growth for a period of time. The acquired balance sheets will bring liquidity to fund growth. We'll be able to reposition the bond books and use that liquidity for growth with time. I think we still got a long road ahead before we're gonna get into brokered or other higher cost funding sources. That being said, we probably will begin to compete more with rates in the marketplace with our core customers. I do expect us to continue to move some of our deposits over under our wealth management business. Just it's the right thing for the customer when you can ladder CD or ladder treasuries for those customers. I don't think we'll be dipping into core for a period of time or into non-core related or wholesale funding for a period of time. Got it. I think Tracey mentioned, maybe the September core loan yields, I think, at some point earlier on the call. Any chance you have the cost of deposits at the same time frame? That's all I have. Thanks. Yeah. We've been a little cautious to give a guide on that, just given the dynamic environment. I just point you back to the NIM guidance, as you model it out, David. You know, it's really too dynamic to get too specific on cost of deposits. I still think we'll be better than most, and I don't think you'll see a dramatic change, but we do expect it to go up. I'll just add that our cost of deposits wasn't meaningfully different, you know, at the end of the quarter than what we reported for the full quarter. Great. Thank you. We have no further questions in queue. At this time I will turn the call back to your Mr. Shaffer for closing comments. Okay. Thank you, Cheryl. Appreciate everybody's time this morning, and we'll talk to everybody soon. Thanks, Cheryl. You're welcome. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.