Seacoast Banking Corporation of Florida Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 25, 2025

Key Takeaways

  • Positive Sentiment: Net income rose 36% sequentially to $42.7 million, driving a 1.08% return on assets and a 12.8% return on tangible common equity.
  • Positive Sentiment: Annualized loan growth reached 6.4% with a $921 million pipeline, and management expects mid- to high-single digit growth to continue.
  • Positive Sentiment: Closed the Heartland acquisition and remain on track to complete the Villages deal in Q4, both adding high-quality deposits and enhancing profitability.
  • Positive Sentiment: Deposit costs declined to 1.8%, contributing to a 3.58% net interest margin and an anticipated core NIM of ~3.35% by year-end (plus ~10 bps from acquisitions).
  • Positive Sentiment: Asset quality remains strong with nonperforming loans at 0.61% and net charge-offs of $2.5 million, while allowance coverage held at 1.34% of outstanding loans.
AI Generated. May Contain Errors.
Earnings Conference Call
Seacoast Banking Corporation of Florida Q2 2025
00:00 / 00:00

There are 6 speakers on the call.

Speaker 2

Welcome to Seacoast Banking Corporation of Florida's second quarter 2025 earnings conference call. My name is Angela and I will be your operator. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Before we begin, I have been asked to direct your attention to the statement at the end 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 and 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.

Speaker 2

I will now turn the call over to Charles Shaffer, Chairman and CEO of Seacoast Banking Corporation of Florida. Mr. Shaffer, you may begin.

Speaker 1

Okay, thank you, Angela, and good morning everyone. As we proceed with our presentation, we'll refer to the second quarter earnings slide deck available at seacoastbanking.com. Joining me today are Tracey Dexter, our Chief Financial Officer, Michael Young, our Treasurer, Head of Corporate Development, Investor Relations, and James Stallings, our Chief Credit Officer. The Seacoast team delivered exceptional results in the second quarter of 2025, reflecting the strength of our growing franchise, the discipline and focus of our team, and the momentum we continue to build across all of our markets. This quarter was highlighted by a substantial increase in net income, up 36% from the prior quarter, largely driven by a 10 basis point expansion in the net interest margin. This was the result of robust loan growth and disciplined deposit cost management. We also delivered solid performance in noninterest income and continued to demonstrate effective expense control.

Speaker 1

Profitability improved across the board. We made meaningful progress in our strategic priorities. Annualized loan growth reached 6.4%, supported by a strong commercial pipeline, an outcome of a multi-year strategy to attract top talent from larger institutions. This talent continues to drive high quality loan production and deepen customer relationships. We also successfully closed the Heartland Bancshares transaction a few weeks ago and remain on track to close The Villages Bank Corporation acquisition in the fourth quarter. Both franchises bring high quality deposit bases and complementary balance sheets, and once fully integrated, we expect these transactions to significantly enhance Seacoast's profitability profile. Turning to credit, asset quality remains sound. Nonperforming loans declined to 0.61% of total loans, and net charge-offs were just $2.5 million, reflecting our continued focus on disciplined underwriting and proactive risk management. Criticized and classified loans remain stable.

Speaker 1

In closing, I want to express my sincere appreciation to our dedicated associates for the commitment to advancing our growth and profitability goals. Their focus and execution continue to drive our success. We remain very confident in our strategic direction, and we're enthusiastic about the opportunities that lie ahead. With that, I'll turn it over to Tracey to walk through our financial results.

Speaker 3

Tracey, thank you, Chuck. Good morning, everyone. Directing your attention to second quarter results beginning with slide four, the Seacoast team delivered a strong quarter with net income of $42.7 million or $0.50 per share, increasing 36% from the prior quarter and adjusted net income, which excludes merger related charges, increasing 39% sequentially to $44.5 million or $0.52 per share. Profitability metrics are all improved and include a return on assets of 1.08%, return on tangible common equity of 12.8%, and an improvement in the efficiency ratio, which excluding merger related charges was 55%. Loan production was solid with growth in balances over 6%. On an annualized basis, net interest income was $126.9 million, an increase of 7% from the prior quarter, and net interest margin expanded 10 basis points to 3.58%. Excluding accretion on acquired loans, net interest margin expanded 5 basis points to 3.29%.

Speaker 3

Contributing to the NIM improvement is a decline in deposit costs from 1.93% in the prior quarter to 1.8% in the second quarter, reflecting our continued focus on relationship based funding and disciplined pricing. Tangible book value per share of $17.19 represents a 12% year over year increase. Our capital position continues to be very strong. Seacoast's Tier 1 capital ratio is 14.6% and the ratio of tangible common equity to tangible assets is 9.75%. We completed our acquisition of Heartland Bancshares on July 11, adding four branches and approximately $777 million in assets. We announced our proposed acquisition of The Villages Bank Corporation, which will add a significant additional presence in Central Florida and approximately $4.1 billion in assets. That acquisition is expected to close in late October 2025.

Speaker 3

Turning to slide five, net interest income increased by $8.4 million during the quarter, driven by loan growth and by lower deposit costs. The net interest margin expanded 10 basis points to 3.58% and excluding accretion on acquired loans expanded 5 basis points to 3.29%. In the securities portfolio, yields decreased 1 basis point to 3.87%. Loan yields expanded 8 basis points to 5.98%. Excluding accretion, loan yields were flat compared to the prior quarter. Through proactive deposit cost management, we brought the cost of deposits down by 13 basis points during the quarter to 1.8%. With strong momentum in loan growth, deposit costs now lower, and stabilizing additional liquidity and accretive acquisitions, we expect net interest income to continue to grow through the remainder of the year.

Speaker 3

Additionally, we continue to expect to exit the year with the core net interest margin of approximately 3.35% inclusive of one expected rate cut in September and one in December and with the two acquisitions that could add approximately 10 basis points to that figure. Moving to Slide 6, noninterest income excluding securities activity was $24.5 million, increasing 10% from the second quarter of 2024. Fee revenue continues to benefit from our expansion of treasury management services to commercial customers. Our wealth and insurance businesses provide consistent strong results. Saleable mortgages originated during the quarter generated gains of $0.7 million. BOLI income increased to $3.4 million in the second quarter and included a $0.9 million benefit. Other income totaled $7.5 million and included a $3 million payroll tax credit received during the quarter claimed by a bank that we previously acquired.

Speaker 3

Looking ahead to the third quarter, we expect noninterest income in a range from $20 million to $22 million. Moving to Slide 7, our wealth division continued its strong growth, adding $215 million in new assets under management so far this year with total AUM increasing 16% compared to this time last year. Moving to Slide 8, noninterest expense in the second quarter was $91.7 million, an increase of $1.1 million. The current quarter includes $2.4 million in merger related expenses. Higher salaries and wages reflect annual merit increases and performance driven incentives. Other categories of expenses are in line with our expectations and reflect our continued focus on profitability and performance. Our adjusted efficiency ratio improved to 55.4%, down from 59.5% in the first quarter, demonstrating continued operating leverage.

Speaker 3

We continue with that focus and with the addition of the Heartland franchise we expect adjusted expenses for the third quarter, which excludes direct merger related costs, to be in a range of $92 million to $94 million. Turning to Slide 9, loan outstandings increased at an annualized 6.4% with production of $854 million in the second quarter. Pipelines remain strong at $921 million and we continue to see strong demand across our markets. Loan yields expanded 8 basis points with higher accretion on acquired loans resulting from elevated payoffs. Looking forward, the pipeline is very strong and we expect continued mid to high single digit organic loan growth in the coming quarter and for the full year 2025, though the impact of tariffs may add some uncertainty.

Speaker 3

Turning to Slide 10, portfolio diversification in terms of asset mix, industry, and loan type has been a critical element of the company's lending strategy. Exposure is broadly distributed and we continue to be vigilant in maintaining our disciplined, conservative credit culture. Non owner occupied commercial real estate loans represent 34% of all loans and are distributed across industries and collateral types. As we have for many years, we consistently manage our portfolio to keep construction and land development loans and commercial real estate loans well below regulatory guidance. These measures are significantly below the peer group at 33% and 221% of consolidated risk based capital, respectively. We've managed our loan portfolio with diverse distribution across categories and retaining granularity to manage risk.

Speaker 3

Moving on to credit topics on Slide 11, the allowance for credit losses totaled $142.2 million, or 1.34% of total loans, with no change in allowance coverage compared to the prior quarter. Our allowance estimation process includes consideration of recent volatility in the markets and macroeconomic environment, and we continue to closely monitor the potential impact of economic and fiscal policy decisions on our borrowers. The allowance for credit losses combined with the $108.5 million remaining unrecognized discount on acquired loans totals $250.6 million, or 2.36% of total loans, that's available to cover potential losses, providing substantial loss absorption capacity. Moving to Slide 12, looking at quarterly trends in credit metrics, credit quality remains strong. We recorded net charge-offs of $2.5 million during the quarter, or 9 basis points.

Speaker 3

Annualized nonperforming loans declined by $6.8 million during the quarter and represent only 0.61% of total loans, and accruing past due loans moved lower to 0.13% of total loans. The level of criticized and classified loans declined slightly to 2.39% of total loans. Moving to slide 13 and the investment securities portfolio, we leveraged wholesale funding to purchase securities in the first half of the year in advance of the Heartland acquisition, adding primarily agency securities to the portfolio with an average book yield near 5%. Interest rate swaps that had been beneficial to prior quarters matured in April, with the impact to the overall portfolio yield offset by the new purchases. Net unrealized losses in the AFS portfolio improved by $16 million during the quarter, driven by changes in long term rates.

Speaker 3

Turning to slide 14 on the deposit portfolio, total deposits dipped $77 million, reflecting as expected typical seasonal slowness and a strategic focus on exiting very high rate deposit relationships. We took proactive steps to manage down the cost of deposits, which declined 13 basis points to 1.8%. This funding will be replaced with lower cost core franchise deposits from Heartland, improving our margin outlook. We continue to onboard new relationships and build market share with a focus on core deposits. We expect low single digit deposit growth, organic deposit growth for the full year 2025. On slide 15, Seacoast continues to benefit from a diverse deposit base. Customer transaction accounts represent 47% of total deposits, which continues to highlight our long standing relationship focused approach. Our customers are highly engaged and have a long history with us, and low average balances reflect the granular relationship nature of our franchise.

Speaker 3

Finally, on slide 16, our capital position continues to be very strong, and we're committed to maintaining our fortress balance sheet. Tangible book value per share has grown to $17.19, and the ratio of tangible common equity to tangible assets is exceptionally strong at 9.8%. We saw meaningful improvements in return on equity measures, and our risk based and Tier 1 capital ratios remain among the highest in the industry. As a reminder, we'll be putting some of this capital to work in the Heartland and Villages transactions, which will materially improve our return on capital. In summary, results this quarter reflect the strength of our core franchise and disciplined execution across the organization. We remain confident in our ability to deliver strong, sustainable performance. Our balance sheet is well positioned, and our capital position is strong.

Speaker 3

We'll continue to execute on our organic growth and profitability goals as we integrate recent acquisitions and grow the franchise. I'll now turn the call back to you, Charles.

Speaker 1

All right, thank you, Tracey and operator. We'll take some questions.

Speaker 2

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you are called upon to ask your question and are listening by a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of David Feaster with Raymond James. Your line is now open.

Speaker 4

Hey, good morning, everybody.

Speaker 1

Morning, David.

Operator

Morning, Dave.

Speaker 4

I want to start on the growth side. I'm really encouraged by the growth trends that you've been seeing over the past few quarters and the continued strength of the pipeline. I just wanted to get a sense first off on the competitive landscape from your standpoint in Florida and then some of the drivers behind this growth. Is the growth increased demand and activity from your clients as maybe things have settled down or maybe the worst case scenario with trade wars is kind of off the table, or is this the hires that you've made really just gaining share and that's the biggest driver? I'm just kind of curious, some of those dynamics.

Speaker 1

Thanks, David. I'll start with the drivers to growth and then come back around to the competitive landscape. Obviously, we've had a very focused approach to take advantage of the ability to recruit bankers across all of our markets. We've had significant success with that over the last two or three years and have built, as I've described in the past, what I think is an exceptionally strong commercial and treasury management team across our organization. That is driving growth as we continue to onboard clients from that recruiting effort. That's one driver. The second driver is economic conditions remain really strong across the footprint. Demand for credit remains strong. The impact of tariffs at this point has been fairly limited. We've not seen any sort of confidence weaken or anything along those lines. The market remains still as focused as it has been.

Speaker 1

The pipeline going into the third quarter continues to be strong. I feel confident in our ability to deliver that mid to high single digit growth rate at least over the next few quarters and into 2026. The team's doing exceptionally well. I feel very confident, David, on our path forward there. It is largely driven by talent. It's also driven by demand in the marketplace and on the other side of the big beautiful bill. It seems like we've gotten past any lack of confidence in the forward direction. I think that's all supportive of growth as we move forward in the coming quarters and into the coming year. The competitive landscape continues to probably increasingly get more competitive.

Speaker 1

We saw particularly in commercial real estate, a lot of the large banks pull out of the space in 2023 and 2024 in particular and now have come back in in a material way. It's as competitive as it's ever been, kind of across the board, across all of our markets. It's full on competitive at this point, but we continue to do well there. We pick our spots carefully. I'm pleased with the growth this quarter and pleased with the outlook for.

Speaker 4

Growth, that's great, that's helpful. Maybe just switching gears to the other side of the balance sheet. You've done a great job actively managing funding costs. Continue to push deposit costs lower. Obviously, we've got the Heartland and The Villages deal coming online. I guess at a high level, how do you think about funding costs? Is there much deposit cost leverage left, and where do you see the most opportunity to drive the core deposit growth that you were talking about?

Speaker 1

I'll let Michael take the deposit cost side and maybe come back with a few comments around driving growth. Michael, you want to talk a.

Operator

Little bit about the outlook for deposit costs? Sure, David. We had a great quarter, great work by the team, just kind of proactive management. We've been speaking to the fact that we were very customer friendly through the liquidity constrained environment 2023 and 2024 and we've been bringing deposit costs down as the Fed cut rates. There were some proactive and tactical moves this quarter that really moved the needle for us and improved the ROA that we've been focused on. We've done a lot of that work. I think we want to be judicious here and we don't want to constrain growth. We're going to balance between growth and volume and rate management from here. I think really the opportunity at this point is growing those core operating accounts and blending down our cost of funds through DDA growth over time.

Operator

With all the bankers we've added, that's been really beneficial to them, bringing over relationships and full relationships that should be additive to that. On the volume side, just as a reminder, we're kind of at the seasonal low point for us with public funds at seasonal low points. We have the tax related outflows at the end of the first quarter headed into the second quarter. We should also see the seasonal trends turn to tailwinds from headwinds in the second half.

Speaker 1

Yeah, the only thing I'd add to that, Michael, I think you answered that really well, is we don't have any deposit verticals or any sort of wholesale deposits in the franchise. We win deposits and loans customer by customer, and the entire balance sheet is relationship based. As we move forward, as we onboard customers and prospects, particularly those coming off the balance sheets of the larger banks, we will continue to add to our core deposit franchise. We're not focused on driving high rate deposits and more transactional based deposits. It is about net new checking core accounts and driving business growth over time. Okay, that's good.

Speaker 4

I am just kind of curious, maybe some balance sheet optimization thoughts. You guys have been very active. We got these two deals that give you a ton of financial flexibility and optionality. You've already done some pre-purchasing for the Heartland deal. You touched on some of the moves with swaps. I'm just curious, with these two deals and anticipation of Fed cuts and just kind of where we are today, how do you think about, has your plans to manage and optimize the balance sheet changed, and just some of your priorities here? Sure.

Operator

David, this is Michael. I think the long term plan is the same. These acquisitions are super valuable deposit franchises and we're super glad to have them as part of the overall Seacoast franchise. It looks a lot like who we are and who we've always been. It will just continue to add ballast to the balance sheet and keep us very steady through various rate cycles that may emerge. Obviously, there's a lot of different permutations and outcomes that may transpire in terms of interest rates over the medium term and we're just very focused on managing that interest rate risk appropriately. I think it really gives us a lot of raw material and opportunity to optimize earnings and profitability for the franchise as we move forward, particularly as time progresses.

Operator

We've talked a lot about just the fixed rate repricing trends on our balance sheet and even the acquired balance sheet. We're stepping into margin expansion, assets repricing higher, and then this really core sticky deposit franchise that I think we've re-evidenced through the second quarter that'll be positive for us. We'll get an initial lift as we reposition the securities portfolios here in the back half of 2025, and the upside comes from that low 70% loan to deposit ratio remixing up towards 80% and eventually 85% loan to deposit ratio as we deploy that with banker hires and loan growth over the coming years.

Speaker 1

Yeah, I would point investors and shareholders back to the deck we put out on The Villages transaction that contemplated both bank deals in the forward direction of Seacoast. What you can see in that deck is 1.30% plus ROA emerges, fairly very strong return on tangible common equity. That's the result of that repositioning. We believe we're right on track with what we presented in The Villages deck there, and we also put some earnings guidance in there as well. If you're looking for where we think we're headed, just go back to that deck. That's the outlook.

Operator

That's helpful.

Speaker 1

Thanks, everybody. Thank you, David. All right, operator, I think we're ready for another question.

Speaker 2

Your next question comes from the line of Woody Lay with KBW. Your line is now open.

Operator

Good morning, guys.

Speaker 1

Good morning, Woody.

Operator

Wanted to follow up on deposit costs. I think so far through this easing cycle your interest bearing deposit beta is around 80%. Obviously there's kind of been some one time corrections in there stemming from 2023. How do you think about the deposit beta going forward with incremental rate cuts? Yeah, hey Woody, this is Michael. I'll take that one. I think what we had articulated is that we were kind of aggressive late in the cycle on betas on the way up to protect liquidity and we expected to be aggressive on the way down and reestablishing because we do think we have a very strong deposit franchise. Those lower deposit costs that Seacoast is known for and I think we've evidenced that here through this quarter.

Operator

I think you've seen kind of the more aggressive move down in betas and then from here we'll return to more normalized betas as we have incremental Fed cuts potentially through next year. We had a 45% cumulative beta this cycle versus prior cycles closer in the low 30s. I would expect we kind of return to that low 30s kind of, you know, top of the house beta. Again not on interest bearing, just total deposits as we see incremental Fed cuts move in from here. Got it. I can't remember off the top of my head what or if you even specified what the sort of the beta assumptions were at the start of the year for the 3.35% core net interest margin for Seacoast. It feels like you would have outperformed expectations a little bit.

Operator

Have there been any offsets on the asset side that sort of maintaining that core net interest margin guidance at 3.35% or I guess could there be potential upside?

Speaker 5

Yeah, it's a good question, Woody.

Operator

I think we've certainly moved more on the deposit side than where we maybe expected to be at this point. Also, the Fed cuts are occurring later in the year and maybe we'll only have one instead of two. If you think about it that way, we're kind of ahead of the game. Where we'll land at the end of the year is maybe just slightly different because the delay in the Fed cuts doesn't change the cumulative outcome. One other thing I would just call out is on the asset yield side, we've had those benefits from the pay fixed swaps in 2024 kind of handed off to some higher just prepayment and interest recovery benefits as we work through some credit resolution in the first half of this year.

Operator

We'll expect that continued back book fixed rate repricing to really take the lead in the second half of the year combined with, I think, balance sheet growth. I think we're just leaning a little more towards growth versus margin optimization in the back half, which should land us in a similar spot. We basically spoke to the deals. We'll add roughly, once we close The Villages, about 10 basis points to the margin at that point in time. We're just a little bit cagey on when that will close. If that'll be early in the fourth quarter or late in the fourth quarter will kind of dictate how much margin expansion we get there.

Speaker 4

Got it.

Operator

Super helpful. Just last for me, I know over the past year you've kind of been toggling between investing in the franchise while recognizing the profitability improvement story. We got a pretty notable inflection in the second quarter. I know there's a couple of one-time items that might have benefited, but profitability is still at a really nice level. Just given that and given some of the disruption we've seen in your backyard, how do you think about reinvesting into the franchise?

Speaker 1

Yeah, that's a great question, Woody. We'll see what opportunities present themselves. Obviously, last time there was significant disruption, we materially capitalized on that disruption and you're seeing the benefits of that now pull through our financials as we move forward. We'll opportunistically look at opportunity and we'll weigh that against delivering what we've committed to shareholders in terms of returns. I'd say my primary focus is delivering what we have in our Villages deck and getting our profitability up to where I think it needs to be. If unique opportunities present themselves, we'll obviously look at them.

Operator

All right, thanks for taking my questions.

Speaker 1

Thank you.

Operator

Willie.

Speaker 2

Your next question comes from the line of David Bishop with Hovde Group. Your line is now open.

Operator

Yeah, good morning guys.

Speaker 5

We keep hearing about, I think.

Operator

Maybe you alluded to in the preamble or one of the questions about large banks coming back into the commercial real estate market and such. Just curious what you're seeing out there in terms of loan pricing and spreads, how they've trended over the past 90 days or so.

Speaker 1

It's been tough. I don't know. James Stallings, you want to talk about what you're seeing?

Speaker 5

He's our Chief Credit Officer.

Speaker 1

He's looking at deals every day. Commercial real estate pricing.

Speaker 5

Yeah, thanks Chuck, and thanks David. It's a good question. You know, we're seeing, I think for the top tier sponsors and for really quality assets, we're continuing to see increased competition where we probably didn't see as many banks bidding as aggressively 18, 24 months ago. That has changed in the last 90 days. I would say we're starting to see some spread compression below a two handle. You know, we're seeing 180, 190 basis point spreads on some really quality transactions. There's some pressure on structure. We're seeing sponsors really push for longer I O periods even with stabilized properties to try to drive their cash on cash returns for their investors. There's some competition, but the good news is the credit quality is holding up and it's still supportive of the structures that we're having to do to win business.

Operator

Yep.

Speaker 1

We're carefully walking the line there of getting the right risk-based returns. I think our growth outlook remains very stable, and we'll pick our spots carefully. We're always thoughtful and disciplined as to how we approach credit, and we'll continue to be. As pricing compresses, we'll pick our spots there too. Obviously, we'll support our high-quality Tier 1 sponsors as we have in the past, but we'll be thoughtful as we move through time. It's definitely more competitive than it was a year ago.

Operator

Got it. That's a good segue, Chuck. Maybe to my next question here, or sticking with credit.

Speaker 5

Unusually low loss content this quarter.

Operator

I think charge-offs were sub 10 basis points. Just curious as you look across the horizon, maybe any sort of thoughts where you think you've seen that charge-off stabilizing here in the near term?

Speaker 1

Yeah, credit quality remains very stable, and our outlook is for it to remain stable. We're not seeing any deterioration across the portfolio. If anything, we're seeing it sort of clean up as we've moved through past some of the M&A from 2022 and 2023. What I can tell you is I feel pretty good about our outlook on asset quality. I think it does remain strong, very stable, moving forward.

Operator

David, Michael, just as a reminder, in 2024 we had the consumer fintech portfolio that we've called out before that we largely liquidated in the fourth quarter that had added about 8 basis points to net charge-offs. That is kind of removed and gone, and you are seeing kind of the benefits of that pull through. Longer term we expect mid cycle to be 20 to 25 basis points. It is just kind of a mid cycle level for us. Got it. One sort of housekeeping question, Mike. I know into the Heartland deal you add the securities in front of that.

Speaker 1

Should we expect that to unwind here?

Operator

In the third quarter and have some runoff on both the securities and borrowing side?

Speaker 4

Thanks.

Operator

Yeah, not on the securities side because those wouldn't have been a part of our financials. The securities balances will remain fairly consistent, but we will delever a little bit or plan to on the wholesale funding side. We had a little higher broker and FHLB borrowings in the second quarter, and you'll see those likely come down depending on the path forward for us into The Villages. That's really the plan as we stand here today.

Speaker 5

Great, thank you.

Speaker 2

Your next question comes from the line of Russell Gunther with Stephens. Your line is now open.

Speaker 5

Hey, good morning guys. Morning Chuck. Maybe just following up on the loan growth discussion a little bit. Make sure I understand. I think more recently you committed to being able to kind of keep with this mid to high single digit pace as you look ahead to 2026 even.

Operator

On the bigger balance sheet with these deals.

Speaker 5

Want to make sure that's the case, and then maybe just address the transaction specifically that transpired last night. What type of opportunity you think that might represent, and how Seacoast would plan to try to capitalize on dislocation.

Speaker 1

Yeah, sure. Thanks, Russell. Just to reiterate, you know, we still feel very confident our mid to high single digit growth rate on the loan side going into the back half of this year and into 2026.

Operator

So.

Speaker 1

I think that guidance remains sound and I'm confident in our ability to deliver that. The transaction last night, obviously like I mentioned earlier, any disruption is always beneficial. We'll see how that all plays out and see where opportunities may come to us. We operate with a very sound, strong capital position in a differentiated way. Are going to have a lot of.

Operator

Liquidity to put to work over the.

Speaker 1

Coming years and have a really strong culture inside the organization of supporting front line bankers. As you know, as you see from a lot of the awards we've won around best places to work, etc., we've got a very strong, capable, sustainable business here, and I think it'll be attractive to banking talent over time. As opportunities come up, we'll look at them. Anytime there's upstream disruption, that's beneficial. Even beyond the transaction announced last night, I suspect there'll be more over time, so we'll look to take advantage of that across all our markets.

Speaker 5

Yeah, I appreciate that, Chuck, and a good point certainly on excess liquidity, capital and culture. I had a follow up on the margin expectation just to make sure I heard it right. Core 335 nimble for the back.

Operator

Half of the year, and then as.

Speaker 5

You fold in the two deals as the guide for a reported margin of 3.45% in the back half of the year.

Operator

Core margin would be 345. We're guiding the core. Accretion income can come in high or low quarter to quarter, so we're just guiding off the core. 335 in the fourth quarter was the guide, with acquisitions adding about 10 basis points to the margin from the lower cost of funding that those will bring in. The step up was core to core.

Speaker 1

Yep.

Operator

Yeah.

Speaker 1

Just to make it really clear, $345 million includes the transactions plus accretion, gets you to the margin. Okay, very good.

Speaker 5

I appreciate the clarification, guys. The rest of my questions were asked and answered.

Operator

Thank you.

Speaker 1

Awesome, Russell, thank you.

Speaker 2

There are no further questions. I would now like to turn the call back over to Mr. Shaffer for closing remarks.

Speaker 1

All right, thank you, Angela. I just want to say thank you to the Seacoast team. We've got a very focused effort here to grow in that high single digit range over time and deliver upper quartile returns. The team was heads down focused on that this quarter. I think this quarter evidences the outcome of that, and I feel really good about where we're headed here into the coming year. I appreciate everybody on the Seacoast team for all their hard work and welcome to the Heartland team joining the franchise here in the last few weeks. I'm looking forward to the conversion and looking forward to the Villages transaction in the fourth quarter. We've had a lot of great interaction with that team. It's been a really solid cultural combination, and we're super excited about what that looks like later this year.

Speaker 1

Thank you to everybody on our team. You guys did an awesome job and will be around if anybody has questions on the quarter. That will conclude our call.

Speaker 2

Ladies and gentlemen, that concludes today's conference call. Thank you all for joining. You may now disconnect.

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