Seacoast Banking Corporation of Florida Q3 Earnings Call Highlights

Key Points

• Adjusted earnings strengthened: Third-quarter adjusted net income rose 9% sequentially and 59% year over year to $71.8 million, while the adjusted efficiency ratio improved to 53.9%. Completion of the Citizens First Bank technology conversion also marks the end of merger-related charges.
• Loan growth remained strong but may moderate: Loans increased $429 million to $13.6 billion, a 13% annualized pace, with management modeling about 10% annualized growth in the fourth quarter and high-single-digit growth longer term.
• Credit quality was stable and funding could support margins: Nonperforming loans fell to 54 basis points of total loans, while management expects roughly $300 million of seasonal deposit growth in the fourth quarter and plans to reduce reliance on brokered deposits and wholesale funding.

Seacoast Banking Corporation of Florida NASDAQ: SBCF reported third-quarter net income of $59.9 million, or $0.55 per share, as the regional bank completed the technology conversion of Citizens First Bank in The Villages and moved toward the end of merger-related expenses.

Adjusted net income rose 9% from the prior quarter and 59% from a year earlier to $71.8 million, or $0.66 per share. Chairman and CEO Chuck Shaffer said the quarter reflected continued progress in growth, profitability and operating leverage, while adjusted pretax, pre-provision earnings increased 58% year over year.

“The third quarter also represents the end of M&A-related charges flowing through our income statement, providing a cleaner earnings profile and greater visibility into the underlying earnings power of Seacoast,” Shaffer said.

Profitability and Margin

Net interest income on a fully tax-equivalent basis increased $3.2 million sequentially to $185.4 million. Net interest margin was unchanged from the previous quarter at 3.83%, while margin excluding acquired loan accretion increased by one basis point to 3.66%.

Chief Financial Officer Tracey Dexter said higher average loan balances and core loan yields supported net interest income, partly offset by higher deposit costs and lower average securities balances. Loan yields were 5.89%, up one basis point from the second quarter, while loan yields excluding accretion increased three basis points to 5.64%. The cost of deposits was 1.6%, and the overall cost of funds was 1.74%.

Adjusted return on assets improved to 1.34%, while adjusted return on tangible equity rose to 16.9%. The adjusted efficiency ratio improved to 53.9%, compared with 54.5% in the prior quarter and 57.6% a year earlier.

During the fourth quarter, Seacoast expects about $2.4 million in discrete expenses that it said will not recur in 2027. Shaffer said the company expects adjusted expenses to increase by roughly $2 million to $3 million from the third-quarter level of approximately $118 million, excluding merger-related expenses.

Management said it intends to continue investing in bankers and technology while targeting an operating profile above a 1.30% return on assets, above a 16% return on equity, and an efficiency ratio between 53% and 55%.

Loan Growth and Credit Trends

Loans ended the quarter at $13.6 billion, up $429 million from June 30, representing a 13% annualized growth rate. The company’s commercial loan pipeline stood at approximately $1.3 billion at Sept. 30.

Shaffer characterized the past two quarters as standout periods for loan growth, aided by banker recruiting and additions made earlier in 2026 and the prior year. Still, he said management expects a more moderate pace as interest rates affect demand, particularly in commercial real estate.

“The way we’re thinking about the longer-term outlook is remaining in that high single-digit growth rate,” Shaffer said. He added that management was modeling roughly 10% annualized loan growth for the fourth quarter, including some expected pipeline fallout.

Chief Strategy Officer Michael Young said loan payoffs declined to about $380 million in the third quarter from $420 million in the second quarter, meaning less production may be needed to generate similar net growth in a higher-rate environment. He also said mortgage production tied to new home deliveries in The Villages has been more durable than refinance- or rate-driven mortgage activity.

Credit quality metrics remained stable. Nonperforming loans fell 15% during the quarter to $73.3 million, or 54 basis points of total loans. Net charge-offs were $5.4 million, or 16 basis points of average loans, while criticized and classified loans were unchanged at 2.9% of total loans.

The allowance for credit losses rose to $191 million, or 1.41% of total loans, from 1.38% in the second quarter. Dexter said the increase included an $8.4 million adjustment to the purchase accounting valuation of a loan acquired in the Villages transaction, with a corresponding adjustment to goodwill.

Deposits, Funding and Securities

Total deposits were $16.6 billion at quarter-end, down from $16.8 billion at June 30. The decline reflected the company’s typical third-quarter seasonal low point as well as a $159 million decrease in brokered time deposits. Noninterest-bearing demand deposits were nearly flat at $4.2 billion, although average noninterest-bearing balances increased $40 million sequentially.

Year to date, noninterest-bearing deposits increased at a 10% annualized pace, according to management. Customer transaction accounts represented 48% of total deposits at the end of the quarter, and the 10 largest depositors accounted for 2% of total customer deposits.

Young said Seacoast expects roughly $300 million of seasonal deposit growth in the fourth quarter, led by the return of public funds. He said those funds are generally relationship-based and carry rates about 100 to 200 basis points below the wholesale funding used temporarily during the period of stronger loan growth, which could support margin expansion.

Management said it expects to reduce brokered certificates of deposit and Federal Home Loan Bank funding over time and focus on core customer deposit growth. Young said Seacoast does not anticipate additional securities sales to fund loan growth, noting that the company expects about $600 million annually in securities cash flows that can be redeployed toward loans.

Net unrealized losses in the available-for-sale securities portfolio increased by $237 million during the quarter, driven by higher interest rates and wider spreads. Dexter said the portfolio is primarily composed of agency-backed securities and that the company does not anticipate needing to sell the holdings.

Fee Income and Integration

Noninterest income totaled $31.6 million, up 14% sequentially. Excluding securities activity, adjusted noninterest income was $32.1 million, an increase of 15% from the second quarter. Mortgage banking income rose $2 million to $4.7 million, largely because of an increase in the value of mortgage servicing rights as market interest rates rose.

Insurance agency income increased $500,000, while other income rose $1.4 million on higher swap and syndication fees, gains on Small Business Administration loan sales and income from SBIC investments. Wealth management income increased 2% sequentially, and assets under management reached $3.2 billion, up 29% from a year earlier.

Shaffer said completion of the Citizens First Bank technology conversion allows Seacoast to redirect associates and resources toward business development, customer relationships, technology and artificial intelligence initiatives. The company also marked its 100th anniversary on Oct. 2.

About Seacoast Banking Corporation of Florida (NASDAQ:SBCF)

Seacoast Banking Corporation of Florida is a bank holding company headquartered in Stuart, Florida. It operates primarily through Seacoast National Bank, which provides banking and financial services to individuals, businesses and institutions across Florida.

The company offers checking and savings accounts, certificates of deposit, commercial and residential real estate loans, consumer lending, business financing, treasury management and other deposit services. Through affiliated operations, Seacoast also provides wealth management, investment advisory and mortgage-related services.

Seacoast National Bank traces its roots to 1926 and has expanded its presence throughout Florida, including the Treasure Coast, Central Florida and South Florida.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.