Seacoast Banking Corporation of Florida NASDAQ: SBCF reported first-quarter 2026 results that management said showed improving core profitability, driven by deposit growth, margin expansion, and continued momentum in fee-based businesses, while also reflecting a sizeable one-time loss tied to a securities portfolio repositioning.
Quarterly results included securities repositioning loss
Chief Financial Officer Tracey Dexter said Seacoast posted reported net income of $31.9 million, or $0.29 per share, for the first quarter. Results included a $39.5 million pre-tax loss from “the strategic repositioning of a portion of our available-for-sale securities portfolio,” which was executed in January.
On an adjusted basis excluding that repositioning impact, Dexter said net income was $67.8 million, or $0.62 per share, up 42% from the prior quarter and 111% year-over-year. Chairman and CEO Chuck Shaffer said adjusted return on assets was 1.31% and adjusted return on tangible equity was 16.3%, excluding merger-related costs associated with The Villages Bancorporation, Inc.
Net interest margin expanded as deposit costs declined
Dexter said net interest income totaled $178.2 million, up $1.9 million from the prior quarter, while net interest margin expanded 17 basis points to 3.83%. Excluding the impact of accretion on acquired loans, margin expanded 13 basis points to 3.57%.
Management attributed the improvement primarily to lower funding costs and the impact of the bond portfolio restructure. Dexter said the cost of deposits declined 13 basis points during the quarter to 1.54%, and overall cost of funds fell 9 basis points to 1.71%. Seacoast delivered 7% annualized organic deposit growth, including 29% annualized growth in non-interest-bearing demand deposits, she added.
During the Q&A, Chief Strategy Officer Michael Young said the company expects “continued margin expansion here in the second and third quarter,” but noted deposit costs could stabilize or rise later in the year if the Federal Reserve does not cut rates and the bank needs to price for growth. Young said loan-to-deposit was still about 75%, which he characterized as a strong balance sheet position. He also said add-on loan yields remained “in the low sixes” in the quarter, while Seacoast is seeing more residential mortgage retention at what he described as “pretty attractive rates” given the long end of the curve.
Deposits grew; management cited broad-based momentum
Total deposits increased $382 million in the quarter, or 9.5% annualized, according to Dexter. Excluding brokered balances, she said organic deposit growth was 7% annualized. Transaction accounts represented 50% of deposits, and the top 10 depositors accounted for only 3% of total balances, she added.
Asked about the strength in non-interest-bearing deposit growth, Young said Seacoast typically experiences seasonal outflows related to tax payments at the end of the first quarter and early in the second quarter, and he said the bank did see that trend. However, he said management expects to “hold higher levels of non-interest-bearing deposits as we move forward,” citing growth in the overall franchise and customer counts.
On geographic performance, management described deposit growth as “broad-based,” with CEO Chuck Shaffer pointing to solid growth in The Villages as well as expansion markets including areas of North Florida such as Gainesville and Ocala. He also said Atlanta is “off to a really nice start.”
Loan growth tempered by elevated payoffs; pipeline over $1 billion
Shaffer said commercial loan production momentum remained strong, up 35% year-over-year, but first-quarter loan growth was “seasonally softer and further impacted by elevated payoffs.” Dexter said loans ended the period at $12.6 billion, up modestly from year-end, as strong production was “largely offset by elevated payoffs.”
In response to analysts, management provided additional detail on the payoff activity. The company noted three larger credits paid off during the quarter, totaling about $150 million. Young said average loan growth in the first quarter was still “high single digits,” but payoffs weighed on period-end growth.
Looking ahead, Dexter said the commercial pipeline increased to over $1 billion at quarter-end. Shaffer said the pipeline remains strong and payoffs are expected to moderate, supporting a return to stronger loan growth as 2026 progresses. While management acknowledged uncertainty tied to geopolitical developments, Shaffer said the company remains confident in guidance and expects to return to “high single digits” growth in coming quarters.
Fee income supported by wealth management and other businesses
Dexter said reported non-interest income was a net loss of $12.6 million due to the securities repositioning. On an adjusted basis, non-interest income totaled $26.9 million, down 6% from the prior quarter and up 22% year-over-year, which she said reflected continued growth in fee-based businesses including wealth management, insurance, treasury, and mortgage.
Wealth management was a standout contributor. Dexter said wealth management revenue rose 36% year-over-year and assets under management increased 33% year-over-year, including $125 million of new organic AUM added during the quarter. Shaffer later highlighted new AUM contributions from The Villages and the legacy Heartland market, and said he remained “very bullish” on the business inside Seacoast.
Mortgage banking income declined from the fourth quarter due primarily to volatility in mortgage servicing rights acquired in The Villages transaction, Dexter said, while adding that underlying loan volumes and pipelines remain strong. Insurance agency income benefited from a seasonal contingent commission payment, increasing $0.2 million year-over-year, according to Dexter.
On expenses, Dexter said non-interest expense was $122.2 million, including $8.5 million of merger and integration costs. Adjusted non-interest expense was $113.6 million, slightly higher than the prior quarter. She said the adjusted efficiency ratio was 55.3% for the quarter.
In the Q&A, management reiterated expectations for a full-year efficiency ratio of about 53% to 55%. Shaffer said higher revenue would tend to move efficiency toward the low end of that range, while fewer expected rate cuts could require “tighten[ing] a little bit on the expense side” to deliver the EPS outlook.
On credit, Dexter said asset quality remained solid, with net charge-offs at 11 basis points annualized and criticized and classified loans stable sequentially. Non-performing loans increased modestly to 0.75% of total loans due to two commercial credits moving to non-accrual, but she said collateral values exceed balances outstanding and “therefore no credit loss is expected.”
Dexter also detailed the securities repositioning, saying Seacoast sold about $277 million of securities, generating the $39.5 million pre-tax loss, and reinvested proceeds primarily into agency mortgage-backed securities with a tax-equivalent book yield of about 4.8%.
Capital and liquidity were described as strong. Dexter said tangible equity to tangible assets was 9.2%, and the company repurchased more than 317,000 shares during the quarter.
Management reiterated its 2026 adjusted EPS outlook of $2.48 to $2.52. Shaffer said the company remains confident in its full-year outlook “despite 2 less rate cuts.”
On strategic priorities, Shaffer said Seacoast is focused on integrating The Villages conversion this summer and delivering a “flawless conversion.” He said the bank’s near-term focus is “heads down” on integration, while adding that Seacoast would evaluate potential M&A opportunities in Florida after the conversion, though he described the opportunity set as limited.
About Seacoast Banking Corporation of Florida NASDAQ: SBCF
Seacoast Banking Corporation of Florida operates as a bank holding company through its principal subsidiary, Seacoast National Bank. Headquartered in Stuart, Florida, Seacoast National Bank provides a full range of commercial and retail banking services across the coastal region of Florida. Its network of branches serves customers from Martin County through Miami-Dade County, offering deposit accounts, lending solutions, cash management and payment services to individuals, small businesses and middle-market companies.
In addition to traditional banking, Seacoast offers specialized mortgage lending and wealth management services.
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