Seacoast (SBCF) Q1 2026 Earnings Transcript

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DATE

Wednesday, April 29, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Chuck Shaffer
• Chief Financial Officer — Tracey Dexter
• Chief Strategy Officer — Michael Young
• Chief Credit Officer — James Stallings

TAKEAWAYS

• Net Income -- $31.9 million, or $0.29 per share, reflecting a $39.5 million pretax securities repositioning loss.
• Adjusted Net Income -- $67.8 million, or $0.62 per share, up 42% sequentially and 111% year over year.
• Net Interest Income -- $178.2 million, up $1.9 million from the prior quarter with net interest margin expanding 17 basis points to 3.83%.
• Deposit Growth -- Organic deposits increased 7% annualized with noninterest-bearing demand deposits growing 29% annualized.
• Cost of Deposits -- Decreased 13 basis points to 1.54% compared to the prior quarter.
• Noninterest Income -- Adjusted at $26.9 million, down 6% sequentially but up 22% year over year; reported noninterest income reflects a net loss of $12.6 million due to securities repositioning.
• Wealth Management Revenue -- Rose 36% year over year, with assets under management increasing 33%, including $125 million new organic AUM in the quarter.
• Efficiency Ratio -- Adjusted efficiency ratio improved to 55.3%; reported efficiency ratio was 59.5%.
• Loan Portfolio -- Loans ended at $12.6 billion; commercial pipeline increased to over $1 billion as payoffs offset production.
• Asset Quality -- Allowance for credit losses at $176 million, or 1.39% of loans; nonperforming loans increased to 0.75% of total loans mainly due to movement of two credits, but no credit losses expected.
• Share Repurchases -- 317,000 shares repurchased in the quarter.
• Securities Portfolio Repositioning -- Sale of $277 million in securities generated a $39.5 million pretax loss, with proceeds reinvested into agency mortgage-backed securities at a 4.8% yield.
• 2026 Guidance -- Adjusted EPS outlook reaffirmed at $2.48-$2.52, full-year efficiency ratio expected in the 53%-55% range despite fewer rate cuts.
• Expansion Markets -- Growth in The Villages, North Florida (Gainesville, Ocala), and new Atlanta operations highlighted as key contributors to deposit and loan momentum.

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RISKS

• Tracey Dexter reported, "a $39.5 million pretax loss related to the strategic repositioning of a portion of our available-for-sale securities portfolio," directly impacting net income in the quarter.
• Management cited "seasonally softer" loan growth and "elevated payoffs," including $150 million of payoffs from three large credits, significantly reducing first quarter net loan growth.
• Nonperforming loans rose to 0.75% of total loans due to two commercial credits moving to nonaccrual status, though both had collateral well in excess of balance and no losses are expected.
• Michael Young stated, "We could see some stabilizing or increasing deposit costs potentially later this year without Fed rate cuts as we grow the deposit balances from here."

SUMMARY

Seacoast Banking Corporation of Florida (NASDAQ:SBCF) posted adjusted net income that more than doubled year over year, driven by strong net interest margin expansion, disciplined deposit cost management, and significant growth in noninterest-bearing deposits. The company executed a strategic securities portfolio repositioning that resulted in a material one-time loss but is projected to enhance forward earnings through higher-yield reinvestment. Commercial loan production remained high, though overall loan balances saw limited growth amid substantial payoffs, with management expecting a return to high single-digit growth in subsequent quarters. Management confirmed commitment to both the stated full-year EPS and efficiency ratio targets, despite updated expectations for fewer interest-rate cuts and some deposit cost headwinds. Capital ratios and share repurchase activity demonstrated ample balance-sheet flexibility throughout the quarter.

• The company highlighted broad-based deposit and loan growth across expansion markets, including notable momentum in The Villages and northern Florida regions.
• Asset quality remains strong with low net charge-offs and stable criticized/classified loan levels, despite a modest uptick in nonperforming loans attributed to specific credits backed by collateral.
• Management emphasized that M&A activity is paused in the near term to focus on flawless integration of The Villages Bank Corporation, yet indicated readiness to evaluate larger Florida opportunities after conversion completion.
• Efficiency improvements are proceeding as planned, with back-half cost-out related to The Villages conversion expected to bring the ratio closer to the lower end of the guidance range by year end.
• Hiring initiatives in banker headcount are at roughly 50% of the 2026 target, with additions concentrated in expansion and acquisition markets.

INDUSTRY GLOSSARY

• AUM (Assets Under Management): Total market value of assets that a wealth management division manages on behalf of clients.
• Efficiency Ratio: Noninterest expense as a percentage of net revenue (net interest income plus noninterest income), measuring cost efficiency in banking.
• Nonaccrual Loans: Loans for which the bank has stopped accruing interest due to borrower payment difficulties.
• CD (Certificate of Deposit): A time deposit with a fixed interest rate and maturity date offered by banks to customers.
• ROA: Return on Average Assets, calculated as net income divided by average total assets, an indicator of overall profitability and efficiency.
• ROTE (Return on Tangible Equity): A profitability metric that measures net income as a percentage of average tangible common equity, excluding goodwill and other intangibles.

Full Conference Call Transcript

Chuck Shaffer: Okay. Thank you, Kate, and good morning, everyone. And thank you for joining us. As we move through today's presentation, we will reference our first quarter 2026 earnings slide deck, which is available on our website, cecosbanking.com. Joining me today is Tracey Dexter, our chief financial officer, Michael Young, our chief strategy officer, and James Stallings, our chief credit officer. The Seacoast Banking Corporation of Florida team delivered another great quarter, highlighted by robust deposit growth, particularly in noninterest-bearing deposits, meaningful expansion in the net interest margin, and solid progress towards financial guidance we introduced last quarter.

Commercial loan production momentum remains strong, up 35% year over year, and as expected, the first quarter loan growth was seasonally softer and further impacted by elevated payoffs. Importantly, our loan pipeline remains strong, and we expect payoffs to moderate in the coming quarters, supporting a return to stronger loan growth as the year progresses. Asset quality remains exceptional with limited charge-offs, no change in criticized and classified assets from the prior quarter, and a modest uptick in nonaccrual loans. Noninterest income continued to perform well, driven by strength across wealth management, insurance, treasury, and our mortgage businesses. And our expansion in The Villages is already delivering results, with solid mortgage production and growing demand for wealth management services.

Expense discipline remained excellent this quarter. Overhead was well controlled. Adjusted efficiency ratio was 55%, and the ratio of adjusted noninterest expense to tangible assets remained near 2.1%, even as we continue to invest deliberately in growth. Our strategy to drive improved shareholder returns remains firmly on track. Excluding merger-related costs associated with the Villages Bank Corporation, our return profile continues to strengthen. For the quarter, adjusted return on assets was 1.31%, and the adjusted return on tangible equity was 16.3%. These results underscore the strong earnings power of the combined franchise. Looking ahead, we remain confident in our 2026 outlook.

As outlined in the slide deck, we continue to expect full-year earnings per share in a range of $2.48 to $2.52 despite two fewer rate cuts. And finally, capital and liquidity remain exceptionally strong. We continue to operate with a fortress balance sheet and remain one of the strongest banks in the industry. With that, I will turn it over to Tracey to walk through our financial results.

Tracey Dexter: Thank you, Chuck. Good morning, everyone. Beginning with slide four and first quarter performance highlights, Seacoast Banking Corporation of Florida reported net income of $31.9 million, or $0.29 per share, in the first quarter. Reported results include a $39.5 million pretax loss related to the strategic repositioning of a portion of our available-for-sale securities portfolio, which we executed in January. On an adjusted basis, net income was $67.8 million, or $0.62 per share, increasing 42% from the prior quarter and 111% year over year. These results reflect meaningful improvement in our core earnings power, driven by expanding net interest income, disciplined balance sheet management, and continued execution on organic growth initiatives.

During the quarter, we delivered 7% annualized organic deposit growth, including 29% annualized growth in noninterest-bearing demand deposits. We also delivered a 13 basis point decline in the cost of deposits to 1.54% and a 9 basis point decline in overall cost of funds to 1.71%. Expansion in the net interest margin was a highlight this quarter, driven largely by lower deposit costs and the bond portfolio restructure. On an adjusted basis, return on average assets was 1.31%, and return on average tangible equity was 16.26%. Our capital position remains very strong. We also were more active in share repurchases, buying back over 317 thousand shares.

Turning to net interest income and margin on slide five, net interest income totaled $178.2 million, up $1.9 million from the prior quarter. The net interest margin expanded 17 basis points to 3.83%, and excluding the impact of accretion on acquired loans, margin expanded 13 basis points to 3.57%. This improvement was driven by lower deposit costs combined with higher securities yields. Moving to noninterest income on slide six, reported noninterest income was a net loss of $12.6 million. Adjusted noninterest income, which excludes the securities repositioning, totaled $26.9 million, down 6% from the prior quarter and up 22% year over year, reflecting continued growth in fee-based businesses with the growth of the franchise.

Wealth management remains a key contributor with revenue up 36% year over year and assets under management increasing 33% year over year, including $125 million of new organic assets under management added during the quarter. Mortgage banking income declined from the fourth quarter primarily due to volatility in mortgage servicing rights acquired in the Villages transaction. Underlying loan volumes and pipelines remain strong in the business. Insurance agency income benefited from a seasonal contingent commission payment, increasing $200 thousand year over year.

Moving to slide seven, our wealth management team delivered another quarter of strong results, with income growing 36% year over year and AUM balances growing 33% year over year, with a 21% annual CAGR in the past five years. We expect to continue to see strong volumes throughout 2026. Moving to slide eight, noninterest expense totaled $122.2 million in the first quarter, which includes $8.5 million of merger and integration costs. On an adjusted basis, noninterest expense was $113.6 million, just slightly higher than the prior quarter. Importantly, we saw continued improvement in operating leverage, with the efficiency ratio improving to 59.5% and the adjusted efficiency ratio at 55.3%, reflecting disciplined expense control alongside core revenue growth.

Moving to loan growth and portfolio composition on slides nine and ten, loans ended the period at $12.6 billion, up modestly from year end. Production remained strong with growth largely offset by elevated payoffs during the first quarter. The commercial pipeline increased to over $1 billion at quarter end, supporting continued organic growth as we move through the year. Our loan portfolio remains well diversified by asset class, industry, and loan type, with average loan sizes that reflect the granular nature of our franchise, and exposure levels that remain well within regulatory guidance and that provide significant flexibility for forward growth. On credit quality shown on slides eleven and twelve, asset quality metrics remain solid.

The allowance for credit losses totaled $176 million, or 1.39% of loans, three basis points lower than the prior quarter. Combined with the remaining $138 million of unrecognized purchase discount on acquired loans, we continue to maintain meaningful loss absorption capacity. We saw a modest increase in nonperforming loans compared to the prior quarter, to 0.75% of total loans, though still well within the range of low historical levels. The increase in nonaccrual loans during the first quarter reflects the movement of two commercial credits to nonaccrual status, each having collateral values well in excess of balances outstanding and, therefore, no credit loss is expected. Accruing past-due loans declined.

Net charge-offs remained low at 11 basis points annualized, and criticized and classified loans were stable sequentially. Turning to deposits on slides thirteen and fourteen, total deposits increased $382 million during the quarter, or 9.5% annualized. Excluding brokered balances, growth remains solid and relationship-driven with organic growth of 7% annualized. Deposit costs are lower by 13 basis points. Transaction accounts represented 50% of total deposits, and the deposit base continues to be highly granular, with the top 10 depositors representing only 3% of total balances.

Moving to slide fifteen in the investment securities portfolio, as I mentioned, we took advantage of constructive market conditions and repositioned a portion of the available-for-sale portfolio in late January, which will enhance forward earnings while maintaining balance sheet flexibility. We sold securities with proceeds of approximately $277 million, resulting in a pretax loss of $39.5 million impacting first quarter results. The proceeds were reinvested in primarily agency mortgage-backed securities with a tax-equivalent book yield of approximately 4.8%. Turning to capital and liquidity on slide sixteen, Seacoast Banking Corporation of Florida continues to operate with a fortress balance sheet.

Tangible equity to tangible assets was 9.2%, and capital ratios remain very strong, providing significant flexibility to support organic growth, disciplined capital deployment, and opportunistic actions, as the approximately 317 thousand in share repurchases completed during the quarter. On slide seventeen, we reiterate the guidance we provided last quarter. The adjusted earnings per share outlook remains unchanged at $2.48 to $2.52, with the potential for slightly lower revenue resulting from the change in previously expected rate cuts, but with no change to bottom-line results. In summary, our results demonstrate meaningful improvement in core profitability, strong funding trends, and continued execution against our strategic priorities. We remain focused on disciplined growth and long-term shareholder value creation.

With that, Chuck, I will turn the call back to you.

Chuck Shaffer: Alright. Thank you, Tracey. And, Kate, I think we are ready for Q&A.

Operator: We will now open the call for questions. At this time, I would like to remind everyone, in order to ask a question, please press star then the number one on your telephone keypad. Your first question comes from the line of Woody Lay with KBW. Your line is open.

Woody Lay: Hey, good morning, guys. I just wanted to start on loan growth, and, you know, higher payoffs impacted the growth in the quarter. But I just wanted to get a sense of how the pipeline was shaping up in 2Q 2026, especially given some of the macro uncertainty that is out there?

Chuck Shaffer: Thanks, Woody. And just to go back to the quarter itself, payoffs were very elevated. We notated in the release and in the slides; you can see what it was year over year. In particular, in the first quarter, we did have three larger credits pay off, in aggregate, $150 million amongst the three. It was multiple loans to a couple borrowers in there. The good news is they paid off; they are great borrowers. The bad news is we got paid off, but that is the way the business operates. When we look forward into the remainder of the year, the pipeline remains strong.

We expect to return to high single digits here in the coming quarters and remain very confident throughout the remainder of the year. The impacts of the geopolitical concerns are unknown at this point, still probably too early to tell, and we will have to see how that all plays out over the back half of the year. But for now, we remain confident in the guidance and expect to return to high single digits.

Michael Young: Hey, Woody. This is Michael. Just adding on one thing at the end. We had 15% annualized growth in the fourth quarter. Our average loan growth in the first quarter was still high single digits, kind of 9% plus. We just had a lot of pull-through of the pipeline late in the quarter. We still feel like we remain on track and consistent; it is just our normal kind of seasonal trends here with strong fourth-quarter production and growth, and then first quarter generally as expected being a bit softer, severely impacted by the payoffs.

And maybe one callout headed into the second quarter, we have a stronger first-quarter seasonal deposit growth, and then second quarter we do see that come back a bit before we have seasonal trends return to tailwinds in the back half of the year.

Woody Lay: Got it. That is helpful. And then maybe on deposits, I believe the first quarter is typically a seasonally stronger quarter, but the noninterest-bearing deposit growth you saw in the quarter was really strong. Just trying to get a sense of how much you think that is seasonal versus actual core deposit growth?

Michael Young: Yeah, it is a good question. We typically see outflows related to tax payments at the end of first quarter and early second quarter. We did see that normal seasonal trend, but it is not that all of that came from DDA or noninterest-bearing deposits. Certainly, some did, but we expect to hold higher levels of noninterest-bearing deposits as we move forward, given growth in aggregate across the franchise and growth in customer count. We certainly see some tax-related outflows here in April, but not enough to backslide us on noninterest-bearing deposits.

Woody Lay: Got it. And then maybe just last for me. So you have The Villages conversion coming up here this summer. Can you just remind me how much cost saves are still set to come out of the run rate?

Michael Young: Yeah. We articulated a 26%–27% cost out at announcement. As we talked about on the last call, we have an expense step-up here in the second quarter with our normal annual pay cycle and increase. We will expect maybe a little tick up in the efficiency ratio headed into conversion as well in the second quarter, and then we will see the cost outs come in the back half of the year as our efficiency ratio begins to step back down into the fourth quarter. We are also hiring and growing as well, and that will offset some of the expense saves that are just discrete from the deal.

Chuck Shaffer: And I would just remind you to push back to the guidance we laid out last quarter that is reiterated in the slide. We think a full-year efficiency ratio is somewhere between 53%–55%. So as you are modeling, that is the ballpark where we expect to be for the full year.

Woody Lay: Perfect. Well, thanks for taking my questions. Congrats on the good quarter.

Operator: Thanks, Woody. Your next question comes from the line of Russell Elliott Gunther with Stephens. Your line is open.

Chuck Shaffer: Hey, Russell.

Russell Elliott Gunther: Hey, Chuck. Maybe to start on the core margin, would be helpful to get a sense for how you are expecting that to trend going forward. Maybe touching on incremental commercial loan yield versus deposit cost, and then on that last front, as it relates to the cost of deposits from here, do you think you have the ability to continue to lower, or is there, perhaps with the Fed on pause, an upward bias to deposit costs embedded in the revenue guide?

Michael Young: Hey, Russell. This is Michael. A couple questions in there, so I will try to hit each one. First, on the margin progression, we do expect continued margin expansion here in the second and third quarter. You saw we exited the quarter with lower deposit costs than we started the quarter as we continued to blend the rate/volume mix down. We are still at a 75% loan-to-deposit ratio, so we are in a really strong balance sheet position there. But as we have approached the 1.30% ROA and 16% RoTE that we have been targeting, we do want to be on the offensive and grow.

We will continue to try to do that throughout the year while maintaining the profitability levels and the guidance that we talked about. We do expect continued, pretty nice margin progression in the second and third quarter. On the deposit cost side, without Fed cuts, as you saw, we revised the revenue guidance low end by one percentage point. That is basically our rate sensitivity to two cuts. We could see some stabilizing or increasing deposit costs potentially later this year without Fed rate cuts as we grow the deposit balances from here. On the loan yields side, we still saw add-on yields in the low 6% this quarter.

We are seeing a little more mix of residential mortgage retention as we have talked about before, which, with the long end of the curve at higher levels, is pretty attractive rates and good risk-adjusted returns. On the commercial side, there have been competitive forces at play, but we are really holding around the 6% level.

Russell Elliott Gunther: Okay. Thank you, Michael. Maybe switching gears on the expense side, follow-up to the discussion already, appreciate the glide path. Maybe some color or clarification in terms of your efficiency target and how tethered that is to revenue. So if we are at the high end of revenue, should we be at the low end of efficiency, or is there some flex there? And then post conversion, how do you think about a normalized growth rate for Seacoast Banking Corporation of Florida given the franchise investment you see ahead of you at least on the lending hiring front?

Chuck Shaffer: Yeah, I would think about it this way. We put the guide out there, the 53% to 55%, to give you a sense of where we think we will land full year. If revenue is higher, I think that does fall to the bottom line and push us to the lower end of that range. Given the fact that, as Michael laid out, we may not have two Fed cuts, that will probably not drive as low deposit costs as we thought we would see in the back half of the year, and as such, that is going to require us to tighten a little bit on the expense side to navigate through that.

But we are confident in our ability to deliver on the overall EPS range. We will feather that depending on what the back half of the year looks like, but we have given ourselves room to be 100% confident delivering the EPS range. Long term, we would like to run the company in that same range—53% to 55% efficiency ratio—is probably where we land. The way we are thinking about the business is running with a return on tangible equity north of 16%, ROA north of 1.30%, and high single-digit growth rates with a 53% to 55% efficiency ratio. That delivers really strong shareholder return compounding over time.

That is the optimal run rate for the company and what we are working to deliver to shareholders.

Russell Elliott Gunther: Very helpful. Thank you, Chuck. Thanks, guys, for taking my questions.

Chuck Shaffer: Thanks, Russ.

Operator: Your next question comes from the line of Liam Cooley with Raymond James. Your line is open.

Liam Cooley: This is Liam on for David Feaster.

Chuck Shaffer: How are you doing? Hey, Liam.

Liam Cooley: So I appreciate all the color on loan and deposit growth. I am curious, where in your footprint have you been seeing the most success, and where do you expect the most opportunity to be moving forward? Is a lot of that deposit growth coming from The Villages, or is it more of the core markets?

Chuck Shaffer: It is broad-based. I would say that we are seeing good solid growth in The Villages. Some of the new offices in The Villages’ two developments are growing nicely. We have been very pleased with that. Some of the expansionary markets up into North Florida—up towards Gainesville and Ocala—have seen really solid growth as we continue to expand what was the legacy Drummond franchise, and then we layered on a really strong banking team up in that market. And Atlanta is also off to a really nice start. So it is fairly broad-based, with most of the growth coming from The Villages and the expansionary markets, some of the new markets we have opened up.

Liam Cooley: Great. Thanks. And then on deposit costs, do you expect noninterest balance growth to be the larger driver of total deposit cost reductions into the back half of the year, especially if we are assuming more of a stable rate environment?

Michael Young: Yeah, it is a good question. We have been optimizing particularly on the CD rate side, letting some of the higher-rate CDs roll down, which has been a driver along with growth in noninterest-bearing and just repricing the money market as the Fed cut rates. As we move forward, some of it will be mix-driven. Certainly, that will improve cost of funds or maybe keep cost of funds from going up as much over the medium term. Over time, it is really about the pace of growth. If we need to grow at higher paces, then we will see a little more pricing pressure.

So I think it is more geared to overall balance sheet growth and how quickly we are growing the deposit portfolio.

Liam Cooley: That makes sense. And last thing for me to touch on—it is really impressive to see the wealth management balance growth in a quarter where the market was down almost 5%. With new asset growth continuing and the market rebounding in April, would it be unreasonable to expect some nice balance growth into 2Q?

Chuck Shaffer: We do expect that to continue to grow. What we are really excited about in the first quarter is we saw almost $1 million of new AUM coming out of The Villages and $15-plus million coming out of what was the legacy Heartland market. It is great to see new opportunities coming out of those two new acquisitions from last year. The business is operating exceptionally well, and we expect it to continue to grow throughout the year. I remain very bullish on that business inside of Seacoast Banking Corporation of Florida. It continues to drive really solid returns on capital.

Ideally, as we move through time, we will continue to get opportunities in The Villages’ footprint and the remainder of the franchise. So far, everything is going right according to plan.

Liam Cooley: Appreciate all the color. Thanks, guys.

Chuck Shaffer: Awesome. Thanks, Liam.

Operator: Your next question comes from the line of Kyle Girman with Hovde Group.

Kyle Girman: Hi. This is Kyle on for David Bishop. Good morning.

Chuck Shaffer: Hey. Good morning.

Kyle Girman: In your prior guidance, you referenced plans for a meaningful banker headcount growth into 2026. I believe it was around 15%. I was wondering if you could update us on the progress so far this year, your target for net new producers for 2026, and how that hiring pace factors into your efficiency and revenue guidance.

Chuck Shaffer: I will take that. We are about halfway there—that would be a way to describe it. Through the first quarter, we got about half of what we wanted to get done. Through the remainder of the year, we will see what opportunities emerge. We are going to be thoughtful about making sure we manage efficiency and manage the EPS guide we have given, but we will see what opportunities emerge for us. So far, so good. We continue to focus on that, and particularly, as I mentioned earlier, in some of the expansionary markets, we continue to add bankers and remain excited about what is out there for us.

Kyle Girman: Thank you. And then maybe I was wondering how your M&A appetite has evolved heading into the back half of 2026, especially with The Villages conversion approaching. Are you actively evaluating in-market or adjacent opportunities in your Florida and Georgia markets, or is near-term focus squarely on the integration and organic growth?

Chuck Shaffer: Thanks. Great question. At the moment, it is heads down focused on integration. Obviously, the impacts of this transaction are substantial on the earnings profile of the company. We want to get this absolutely 100% right, and we are going to deliver a flawless conversion. The team is heads down, very focused on it, and I am confident we will get that done. As we come out of that, we would be available to do M&A. We remain focused only on Florida from an M&A perspective.

There are only about a handful of banks left that are big enough and in the right markets to be impactful, and if one of those were to emerge, we would certainly look at it. But there is a limited opportunity set as we move through time under that structure. It could be there; it might not be there. Right now, it is focused on The Villages.

Kyle Girman: Thank you for taking my questions.

Operator: I will now turn the call back over to Chuck Shaffer for closing remarks.

Chuck Shaffer: Alright. Well, thank you all for joining us this morning. I am really proud of the Seacoast Banking Corporation of Florida team this quarter. They continue to do an excellent job growing the franchise while working exceptionally hard to deliver an upcoming conversion. A lot of hard work is going on with building around other new tools and AI products, and we are going to come out of 2026 much stronger than we came into it. I could not be more excited about the year ahead, and thank you all for being on the call. We are available for follow-up calls if anybody has them. That will conclude our call. Thank you, Kate.

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

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