Michael Young: Yes. No problem, Eric. So we are baking in three rate cuts into our expectations for 2024. But if we had six cuts, that would be even more beneficial just to getting us back to a, we’ll call it, a more normal operating environment with the yield curve that might be more flat to up eventually. So the faster we can get to that, the better, but we’ve got three cuts built in for ’24 based on what we expect kind of starting mid-year.
Operator: We’ll go next to Brady Gailey at KBW.
Brady Gailey: Hey, thanks. Good morning, guys.
Chuck Shaffer: Hey, Brady.
Brady Gailey: Maybe just a follow-up on what Michael just said. So the impact to net interest margin of down rates, would you consider Seacoast to be liability sensitive like the more rate cuts we get the better the margin will be?
Michael Young: Yes, it’s a good question, Brady. I think the reality will depend on the deposit lag that we may or may not see as an industry. So that’s more of an industry comment if in a quantitative tightening environment as rates go down, will banks be able to lower deposit rates commensurate like mini May model. I think for us, we assume a little bit of a deposit pricing lag that might occur, but we’ll see in that environment kind of how pricing adjusts. So the reality is that if rates move down faster, we are mostly a fixed rate asset book. So we will benefit certainly over the long term and really even over the medium term, but over the very short-term, it could, for a quarter be kind of more a question of timing.
Chuck Shaffer: Yes. If you look at it in the long term, 2025, 2026 it’s materially beneficial.
Brady Gailey: Okay. All right. And then, Tracey, when you were talking about the expense guide of $82 million to $84 million for the first quarter, does that include all of the impact of the cost saves that you all just realized? Or is that going to be more of a full boat thing in 2Q?
Tracey Dexter: The impact of the cost saves, the $5 million we expect is kind of a onetime set aside outside the $82 million to $84 million.
Chuck Shaffer: The $82 million to $84 million is kind of fully baked in what we expect in Q1 and probably a little bit of modest improvement into Q2 and then kind of — that’s kind of the run rate going into the next year.
Brady Gailey: Okay. All right. And then finally for me, I just I know Seacoast’s historically been a pretty acquisitive company. It feels like a lot of bank CEOs are pointing to the back half of this year as when M&A will start to become a little more active. What are your updated thoughts on M&A, Chuck?
Chuck Shaffer: The conversations are picking back up. That would be a way to describe the market. That being said, I think we’ll continue to be very thoughtful in the market of where we’d be looking would be something similar to what we’ve done in the past, typically smaller end market community banks under $1 billion in general. And — but that being said, prices have to make sense and earn backs have to make sense. And so as long as the market allows for appropriate pricing in deals, we could be there. But we don’t have a lot of appetite for a lot of earn back right now. So the deals will have to be priced appropriately. And if it makes sense and we can sort of have a conservative view on that, we’d look at it. But otherwise, we probably wouldn’t do something if it’s outsized in price. Price is going to matter a lot and particularly. We want to be careful with capital and dilution. And so we’ll be thoughtful would be the way to describe it.
Brady Gailey: And Chuck, I mean, Seacoast is at $15 billion. I know the focus is still within the state lines of Florida. I mean are there still some targets out there that would be not too small, but more meaningful that you guys could seriously consider? Is there a target list that makes sense for you, guys?
Chuck Shaffer: Yes. There’s about 10 to 15 banks in the state that are very attractive to us that at the right sort of structure and the right situation, we would certainly be active in.
Brady Gailey: Okay. All right, great. Thanks, guys.
Chuck Shaffer: Thanks, Brady.
Michael Young: And one clean up, Brady, or just a reminder that on the expense guide, the $82 million, 84 million, that is inclusive of a tangible asset amortization. We made that shift, as Tracey mentioned in our comments. So I just want to make sure, Brady, that we’re talking all-in expenses now.
Operator: We’ll move next to Stephen Scouten at Piper Sandler.
Stephen Scouten: Hey, thanks, guys. Good morning. Just a follow-up on that expense point and clarify. So it sounds like the $15 million in savings maybe half or $10 million or so of that annualized might be in the 1 quarter run rate and then there’s a little bit of incremental run rate that helps 2Q expenses. Is that the right way to think about it?
Michael Young: Yes, Stephen, I’d just say, keep in mind, Q1 is usually a little higher with FICA taxes and kind of the annual resets there. And so you kind of got the expense saves with that as an offset. And then in 2Q, that starts to burn back down, so you get to kind of more of the normalized run rate at next Q1. That makes sense?
Stephen Scouten: Okay. And then how should we think about noninterest-bearing deposits moving forward? The decline this quarter was a little more pronounced at year-end. Just kind of wondering what you’re thinking, how you’re thinking that trends moving forward?
