Key Highlights

  • Adjusted diluted EPS was $0.66, up from $0.52 a year earlier; GAAP diluted EPS was $0.55 versus $0.42.
  • Net revenues were $215.0 million, up 37% year over year.
  • Net interest margin was 3.83%, or 3.66% excluding acquired-loan accretion.
  • Total loans were $13.57 billion, with organic growth at a 13% annualized pace in the quarter.
  • The adjusted efficiency ratio improved to 53.9% from 57.6% a year earlier.

Seacoast Earnings: Why Did Adjusted EPS Rise 59% to $0.66?

Seacoast Banking (NASDAQ:SBCF) reported third-quarter results after the close on Tuesday, October 27, with adjusted diluted EPS of $0.66 on a non-GAAP basis, up from $0.61 in the second quarter and $0.52 a year earlier. GAAP diluted EPS was $0.55 against $0.42. The screen listed a $0.65 estimate and a $0.66 reported figure, a 1.23% surprise as screened.

GAAP net income was $59.9 million, up 64% from $36.5 million, and adjusted net income was $71.8 million, up 59% from $45.2 million. The release gave no numeric guidance and said the outlook for continued consistent growth remains strong, backed by a $1.3 billion commercial loan pipeline.

The company, the parent of Seacoast National Bank, operates 105 full-service branches in Florida after completing integration of the VBI acquisition.

Margin and Revenue: What Drove the 37% Jump?

Net revenues were $215.0 million, up 3% from the second quarter and 37% from a year earlier, aided by acquisition scale. Net interest income was $183.4 million, and noninterest income was $31.6 million, up 14% sequentially.

The net interest margin was 3.83%, flat with the second quarter and up 26 basis points year over year. Excluding acquired-loan accretion of $8.5 million, the margin was 3.66%. The cost of deposits was 1.60%, down 21 basis points from a year earlier.

Mortgage banking income rose 73% from the second quarter to $4.7 million on higher servicing rights values, and wealth management income was $6.1 million.

Credit and Capital: Did Rising Commercial Real Estate Exposure Offset the Growth?

Total loans were $13.57 billion, up $428.8 million in the quarter, with non-owner-occupied commercial real estate at $4.49 billion. Commercial real estate stood at 250% of bank-level risk-based capital, up from 230% in the second quarter, and construction and land development was 45%, up from 40%. Both remain below regulatory guidance.

The provision was $6.3 million, net charge-offs were $5.4 million, and the allowance was 1.41% of loans. Nonperforming loans fell to $73.3 million, or 0.54% of loans, from $86.5 million, while criticized and classified loans were 2.90% of loans.

Book value per share was $26.83 against $28.20 in the second quarter, and tangible book value per share was $15.96, with management pointing to higher rates and securities marks. CET1 was 11.3% and tangible equity to tangible assets was 8.63%. The company repurchased more than 1.2 million shares year to date and paid a $0.19 dividend.

Expenses and Deposits: What Is Next After the Call on Wednesday, October 28?

Noninterest expense was $133.3 million, including $15.5 million of merger and integration costs. The efficiency ratio was 61.0% on a GAAP basis and 53.9% adjusted. Deposits were $16.6 billion, down from $16.8 billion as brokered deposits fell $159.0 million and public funds fell $105.9 million.

Management holds a call on Wednesday, October 28 at 10:00 a.m. Eastern. Investors will watch loan growth against the $1.3 billion pipeline, commercial real estate concentration ratios, deposit costs and the fall in integration expenses.