• Adjusted Pre-Tax Pre-Provision Earnings: $56.6 million, a 22% increase from the prior quarter.
• Net Interest Margin: Expanded by 22 basis points to 3.39%.
• Cost of Deposits: Reduced by 26 basis points to 2.08%.
• Loan Growth: Increased by 4% on an annualized basis.
• Adjusted Return on Tangible Assets: Improved to 1.24% from 0.98%.
• Adjusted Efficiency Ratio: Declined from 59.8% to 56.1%.
• Tangible Common Equity Ratio: 9.6%.
• CET1 Ratio: 14.8%.
• Net Income: $34.1 million or $0.40 per share.
• Adjusted Net Income: $40.6 million or $0.48 per share.
• Net Interest Income: $115.8 million, up 9% from the prior quarter.
• Noninterest Income: Increased 8% from the prior quarter to $25.5 million.
• Loan Production: Record originations of $900 million during the quarter.
• Tangible Book Value Per Share: $16.12, a 7% year-over-year increase.
• Allowance for Credit Losses: $138.1 million or 1.34% of total loans.
• Nonperforming Loans: Represented 0.9% of total loans.
• Investment Securities Yield: Increased to 3.77%.
• Total Deposits: $12.2 billion, flat from the prior quarter.

• Warning! GuruFocus has detected 6 Warning Sign with SBCF.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Seacoast Banking Corp of Florida (NASDAQ:SBCF) reported a 22% increase in adjusted pre-tax pre-provision earnings, reaching $56.6 million.
• The net interest margin expanded by 22 basis points to 3.39%, indicating improved profitability.
• Loan production set a record with $900 million in originations, showcasing strong growth in both C&I and commercial real estate.
• The company's capital position remains robust with a tangible common equity ratio of 9.6% and a CET1 ratio of 14.8%.
• Asset quality metrics improved, with a significant decline in classified and criticized assets, enhancing the bank's financial stability.

Negative Points

• The cost of deposits, although reduced, remains a concern at 2.08%, which could impact future profitability if not managed effectively.
• Loan yields decreased by 10 basis points excluding accretion, reflecting potential pressure on interest income.
• Non-interest income is expected to decline slightly in the first quarter due to the absence of favorable items like loan sales and SBIC income.
• The company faces competition in loan rates, which could affect its ability to maintain favorable loan yields.
• There is a potential risk of increased deposit costs if the Federal Reserve does not cut rates as anticipated.

Q & A Highlights

Q: How is Seacoast Banking Corp of Florida planning for loan growth in the upcoming year? A: Charles Shaffer, CEO, mentioned that they expect low to mid-single-digit growth early in the year, moving to high single digits later. The pipeline is expected to build up after a typical seasonal slowdown at the start of the year. The company is confident due to a strong team and onboarding of new relationships.

Q: What are the current trends in loan yields and competition? A: Michael Young, EVP, noted that loan add-on rates were slightly above 7% in the fourth quarter. The higher long end of the yield curve entering 2025 is supportive of loan yields. While competition exists, Seacoast remains focused on maintaining structure over price.

Q: Are there opportunities for deploying excess capital, and what is the company's stance on M&A? A: Charles Shaffer indicated that post-election, M&A conversations have accelerated, particularly in Florida. The company is active in the M&A market and will be opportunistic if favorable opportunities arise.

Q: Can you clarify the loan sales in the fourth quarter? A: Tracey Dexter, CFO, explained that the fourth quarter included sales of $20 million in consumer fintech loans and $20 million in non-performing commercial real estate loans, which resulted in a gain on sale due to remaining purchase discounts.

Q: How is Seacoast Banking managing deposit costs and what is the outlook for 2025? A: Michael Young stated that deposit costs have decreased and are expected to stabilize. Even without a rate cut, deposit costs might see a slight upward drift, but loan yield repricing is expected to outpace deposit costs, leading to margin expansion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.