Q2 2026 Seacoast Banking Corp of Florida Earnings Call

July 29, 2026

Speaker #1: Welcome to the Seacoast Banking Corporation's second quarter 2026 earnings conference call. My name is Colby, and I'll be your operator. All lines have been placed on mute to prevent any background noise, and after the speakers are marked, we will conduct a question-and-answer session.

Operator 2: Welcome to the Seacoast Banking Corporation Q2 2026 Earnings Conference Call. My name is Colby, I'll be your operator. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will conduct a question and answer session. If you would like to ask a question at that time, please press star then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, please press star one again. Before we begin, I have been asked to direct your attention to the statement at the end of the company's press release regarding forward-looking statements. Seacoast will be discussing issues that constitute forward-looking statements within the meaning of the Securities Exchange Act, its comments today are intended to be covered within the meaning of that act.

Operator: Welcome to the Seacoast Banking Corporation Q2 2026 Earnings Conference Call. My name is Colby, I'll be your operator. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will conduct a question and answer session. If you would like to ask a question at that time, please press star then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, please press star one again. Before we begin, I have been asked to direct your attention to the statement at the end of the company's press release regarding forward-looking statements. Seacoast will be discussing issues that constitute forward-looking statements within the meaning of the Securities Exchange Act, its comments today are intended to be covered within the meaning of that act.

Speaker #1: If you would like to ask a question at that time, please press star, then the number 1 on your telephone keypad to raise your hand and enter the queue.

Speaker #1: If you would like to withdraw your question at any time, please press star 1 again. Before we begin, I have been asked to direct your attention to the statement at the end of the company's press release regarding forward-looking statements.

Speaker #1: Seacoast will be discussing issues that constitute forward-looking statements within the meaning of the securities and exchange act. And it's comments today are intended to be covered within the meaning of that act.

Speaker #1: Please note that this conference is being recorded. I'll now turn the call over to Chuck Schaefer. Chairman, and CEO of Seacoast Bank. Mr. Schaefer?

Operator 2: Please note that this conference is being recorded. I'll now turn the call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin.

Operator: Please note that this conference is being recorded. I'll now turn the call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin.

Speaker #1: You may begin.

Speaker #2: All right. Thank you, Colby, and good morning, everyone. And thank you for joining us. As we move through today's presentation, we'll reference the second quarter 2026 earnings slide deck, which is available at Seacoastbanking.com.

Chuck Shaffer: All right. Thank you, Colby, and good morning, everyone, and thank you for joining us. As we move through today's presentation, we'll reference the Q2 2026 earnings slide deck, which is available at seacoastbanking.com. Joining me today are Tracey Dexter, our chief financial officer; Michael Young, our chief strategy officer; and James Stallings, our chief credit officer. Seacoast delivered another strong quarter reflecting the strength of our diversified franchise, disciplined execution, and continued strict focus on delivering the earnings guidance we provided at the start of the year. Net income totaled $59.5 million or $0.55 per diluted share, and adjusted earnings were $65.8 million or $0.61 per diluted share. Adjusted return on assets for the quarter was 1.25% and the adjusted return on tangible equity was 15.8%, up from 13.3% a year ago.

Speaker #2: Joining me today are Tracey Dexter, our Chief Financial Officer; Michael Young, our Chief Strategy Officer; and James Stallings, our Chief Credit Officer. Seacoast delivered another strong quarter, reflecting the strength of our diversified franchise, disciplined execution, and continued strict focus on delivering the earnings guidance we provided at the start of the year.

Speaker #2: Net income totaled $59.5 million, or $55 cents per diluted share, and adjusted earnings were $65.8 million, or $61 cents per diluted share. Adjusted return on assets for the quarter was equity was $15.8%, up from $13.3% a year ago.

Speaker #2: Adjusted pre-tax, pre-provision earnings increased 52% from a year ago, driving continued improvement in operating leverage. Growth remained a key highlight for the quarter, and organic loan growth was 16% annualized, supported by broad-based production across our commercial banking platform. We finished the quarter with a record commercial pipeline of approximately $1.3 billion.

Chuck Shaffer: Adjusted pre-tax, pre-provision earnings increased 52% from a year ago, driving continued improvement in operating leverage. Growth remained a key highlight for the quarter and organic loan growth was 16% annualized Supported by broad-based production across our commercial banking platform, and we finished the quarter with a record commercial pipeline of approximately $1.3 billion. Importantly, we achieved this growth while maintaining underwriting discipline, and we continue to see strong opportunities to onboard additional banking talent and teams across multiple markets. We expect to continue to deliver on our high single-digit growth rate target for the full year of 2026. Funding trends were also favorable. Total deposits increased at a 4% annualized rate, led by growth in non-interest-bearing balances. While the broader industry felt more pressure on deposit costs, our cost of deposits declined to 1.53%, highlighting the strength of our relationship-based franchise and disciplined pricing strategies.

Speaker #2: Importantly, we achieved this growth while maintaining underwriting discipline, and we continue to see strong opportunities to onboard additional banking talent and teams across multiple markets.

Speaker #2: And we expect to continue to deliver on our high single-digit growth rate target for the full year 2026. Funding trends were also favorable. Total deposits increased at a 4% annualized rate, led by growth in non-expiring balances, and while the broader industry felt more pressure on deposit costs, our cost of deposits declined to $1.53%, highlighting the strength of our relationship-based franchise and disciplined pricing strategies.

Speaker #2: I was pleased to continue to see consistent quarterly growth in non-expiring demand deposits, as we continue to onboard full relationships. Non-expiring income improved from the prior quarter, and our efficiency ratio remains on track with our guidance.

Chuck Shaffer: I was pleased to continue to see consistent quarterly growth in non-interest-bearing demand deposits as we continue to onboard full relationships. Non-interest income improved from the prior quarter, and our efficiency ratio remains on track with our guidance. Credit quality remains strong. Non-performing loans decline, net charge-offs remain low at 10 basis points of average loans, and accruing past due loans improved. While provision expense increased due to support strong loan growth, our overall portfolio performance continues to reflect our conservative underwriting standards and proactive risk management. Beyond the financial results, this quarter marked an important milestone for Seacoast. Earlier this month, we successfully converted the clients of Citizens First Bank in The Villages onto Seacoast systems and platforms. This was one of our largest and most complex integrations in our history and was executed exceptionally well by our team.

Speaker #2: And credit quality remained strong, not performing loans declined, net chargebacks remained low at 10 basis points of average loans, and accruing past-due loans improved.

Speaker #2: And while provision expense increased due to supporting strong loan growth, our overall portfolio performance continues to reflect our conservative underwriting standards and proactive risk management.

Speaker #2: And beyond the financial results, this quarter marked an important milestone for Seacoast. Earlier this month, we successfully converted the clients of Citizen's First Bank and the Villages onto Seacoast Systems and Platforms.

Speaker #2: This was one of our largest and most complex integrations in our history, and was executed exceptionally well by our team. I was extremely impressed by the success of this conversion and couldn't be more proud of our team.

Chuck Shaffer: I was extremely impressed by the success of this conversion and couldn't be more proud of our team. They executed flawlessly. This successful conversion caps a transformative period of M&A activity for us and positions us to focus on full attention on organic growth, operational execution, and disciplined financial performance over the remainder of the year. As we enter the H2 of 2026, Seacoast is exceptionally well-positioned. We maintain a strong balance sheet, substantial liquidity, robust capital levels, improving profitability, and attractive growth opportunities across all our markets. We also demonstrated confidence in our outlook through the repurchase of 750,000 shares during the quarter. In year to date, that represents 1% of our outstanding shares repurchased. As Seacoast celebrates its 100th year, I want to thank our associates for their dedication and commitment.

Speaker #2: They executed flawlessly. This successful conversion caps a transformative period of M&A activity for us and positions us to focus our full attention on organic growth, operational execution, and disciplined financial performance over the remainder of the year.

Speaker #2: And as we enter the second half of 2026, Seacoast is exceptionally well positioned. We maintain a strong balance sheet, substantial liquidity, robust capital levels, improving profitability, and attractive growth opportunities crossed all our markets.

Speaker #2: We also demonstrated confidence in our outlook through the repurchase of 750,000 shares during the quarter, and year-to-date, that represents 1% of our outstanding shares repurchased.

Speaker #2: And as Seacoast celebrates its 100th year, I want to thank our associates for their dedication and commitment. The one-team culture we operate has allowed us to manage integration complexity, build new products, invest in scalable platforms, grow customers across all our markets, and attract some of the best bankers in the industry.

Chuck Shaffer: The one-team culture we operate has allowed us to manage integration complexity, build new products, invest in scalable platforms, grow customers across all our markets, and attract some of the best bankers in the industry. With that, I'll turn it over to Tracey to walk through our financial results.

Speaker #2: And with that, I'll turn it over to Tracey to walk through our financial results.

Speaker #3: Thank you, Chuck. Good morning, everyone. Beginning with slide 4 and second quarter performance highlights. Seacoast reported net income of $59.5 million, or $55 cents per share in the second quarter, an increase of 87% from the prior quarter, and $39% from the prior year quarter.

Tracey Dexter: Thank you, Chuck. Good morning, everyone. Beginning with slide four and Q2 performance highlights. Seacoast reported net income of $59.5 million or $0.55 per share in the Q2, an increase of 87% from the prior quarter and 39% from the prior year Q2. On an adjusted basis, net income was $65.8 million or $0.61 per share, and adjusted pre-tax, pre-provision earnings were $95.5 million, up 4% from the prior quarter and up 52% from the prior year Q2. Continued strong loan origination volume and lower payoffs than the Q1 resulted in an overall increase in loan balances of $504 million or 16% annualized during the Q2 and 8% annualized in the H1. We delivered 4% annualized organic growth in non-interest-bearing DDA, and the cost of deposits declined one basis point to 1.53%.

Speaker #3: On an adjusted basis, net income was $65.8 million, or $0.61 per share, and adjusted pre-tax, pre-provision earnings were $95.5 million, up 4% from the prior quarter and up 52% from the prior year quarter.

Speaker #3: Continued strong loan origination volume and lower payoffs than the first quarter resulted in an overall increase in loan balances of $504 million, or 16% annualized during the second quarter, and 8% annualized in the first half.

Speaker #3: We delivered 4% annualized organic growth in non-interest-bearing demand deposits, and the cost of deposits declined 1 basis point to 1.53%. We saw growth in net interest income, up 2% from the prior quarter, with higher core yields and well-managed deposit costs.

Tracey Dexter: We saw growth in net interest income up 2% from the prior quarter, with higher core yields and well-managed deposit costs. Net interest margin, excluding accretion on acquired loans, expanded eight basis points from the prior quarter to 3.65%. Our capital position remains very strong, and we continued to be active in share repurchases, buying back just over 750,000 shares in the Q2. Moving to net interest income and margin on slide five. Net interest income totaled $182.2 million, up $4 million from the prior quarter, with higher yields and balances on both securities and loans and lower funding costs, all partially offset by lower purchase loan accretion. The net interest margin was stable at 3.83%, and excluding the impact of accretion on acquired loans, core margin expanded eight basis points to 3.65%. Turning to non-interest income on slide six.

Speaker #3: Net interest margin, excluding accretion on acquired loans, expanded 8 basis points from the prior quarter to 3.65%. Our capital position remains very strong, and we continued to be active in share repurchases, buying back just over 750,000 shares in the second quarter.

Speaker #3: Moving to net interest income and margin on slide 5. Net interest income totaled $182.2 million, up 4 million from the prior quarter, with higher yields and balances on both securities and loans, and lower funding costs, all partially offset by lower purchase loan accretion.

Speaker #3: The net interest margin was stable at 3.83%, and excluding the impact of accretion on acquired loans, core margin expanded 8 basis points to 3.65%.

Speaker #3: Turning to non-interest income on slide 6. Non-interest income totaled $27.8 million, a significant increase from the prior quarter, recall that the first quarter of 2026 included a 39.5 million dollar loss from the strategic repositioning of the securities portfolio.

Tracey Dexter: Non-interest income totaled $27.8 million, a significant increase from the prior quarter. Recall that Q1 2026 included a $39.5 million loss from the strategic repositioning of the securities portfolio. Adjusted non-interest income, which excludes the securities activity, totaled $27.8 million, up 3% from the prior quarter and up 14% 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 3% from the prior quarter and 42% year over year. Mortgage production continues to grow, with two-thirds of total mortgage production in Q2 coming from The Villages communities. Moving to slide seven. The wealth management division delivered another quarter of exceptional results. Assets under management have increased 45% from this time last year.

Speaker #3: Adjusted non-interest income, which excludes the securities activity, totaled $27.8 million, up 3% from the prior quarter and up 14% year-over-year, reflecting continued growth in fee-based businesses with the growth of the franchise.

Speaker #3: Wealth management remains a key contributor, with revenue up 3% from the prior quarter and 42% year-over-year. Mortgage production continues to grow, with two-thirds of total mortgage production in the second quarter coming from the Villages communities.

Speaker #3: Moving to slide 7. The Wealth Management division delivered another quarter of exceptional results. Assets under management have increased 45% from this time last year.

Speaker #3: In 2026 so far, the team has added $388 million in new assets under management, with income growing 42% year-over-year and a 24% CAGR over the past five years.

Tracey Dexter: In 2026 so far, the team has added $388 million of new assets under management, with income growing 42% year over year and a 24% CAGR in the past 5 years. Moving to expenses on slide eight. Non-interest expense totaled $123.1 million in Q2, which includes $8.4 million in merger and integration costs. In Q3, we will incur the last of the expected costs related to The Villages acquisition, with the full system conversion and merging of customer and back office systems coming to a close in Q3. In Q2, excluding merger charges, non-interest expense was $114.8 million, modestly higher than Q1. Importantly, we saw continued improvement in operating leverage with the efficiency ratio improving to 58.5% on a GAAP basis and 54.5% on an adjusted basis, reflecting disciplined expense control alongside core revenue growth.

Speaker #3: Moving to expenses on slide 8. Non-interest expense totaled $123.1 million in the second quarter, which includes $8.4 million of merger and integration costs. In the third quarter, we'll incur the last of the expected costs related to the Villages acquisition, with the full system conversion and merging of customer and back-office systems coming to a close in the third quarter.

Speaker #3: In the second quarter, excluding merger charges, non-interest expense was $114.8 million, modestly higher than the first quarter. Importantly, we saw with the efficiency ratio improving to 58.5% on a gap basis and 54.5% on an adjusted basis, reflecting disciplined expense control alongside core revenue growth.

Speaker #3: Turning to slides 9 and 10 on the loan portfolio, loans ended the period at $13.1 billion, up 16% on an annualized basis from the prior quarter, and 8% annualized year-to-date growth, keeping us right on track with our full-year, high single-digit growth guidance.

Tracey Dexter: Turning to slides nine and 10 on the loan portfolio. Loans ended the period at $13.1 billion, up 16% on an annualized basis from the prior quarter and 8% annualized year to date growth, keeping us right on track with our full year high single-digit growth guidance. The commercial pipeline increased to $1.3 billion at 30 June, supporting continued organic growth as we move through the year. On credit quality, shown on slides 11 and 12, asset quality metrics remain solid. We saw low levels of charge-offs during the quarter, a decline in non-performings and past dues compared to the prior quarter, and stable levels of criticized and classified loans. The allowance for credit losses totaled 1.38% of total loans. Turning to deposits on slides 13 and 14. Total deposits increased $154 million during the quarter, or 3.7% annualized.

Speaker #3: The commercial pipeline increased to $1.3 billion at June 30th, supporting continued organic growth as we move through the year. On credit quality, shown on slides 11 and 12, asset quality metrics remain solid.

Speaker #3: We saw low levels of charge-offs during the quarter, a decline in non-performings and past dues compared to the prior quarter, and stable levels of criticized and classified loans.

Speaker #3: Non-interest-bearing demand deposits increased 4% on an annualized basis to 4.2 billion. Deposit costs and overall funding costs are lower, and we've used brokered deposits strategically to fund the higher loan growth this quarter, offsetting what would otherwise be our typical seasonal low point during the year for deposits.

Tracey Dexter: Non-interest-bearing demand deposits increased 4% on an annualized basis to $4.2 billion. Deposit costs and overall funding costs are lower, and we have used broker deposits strategically to fund the higher loan growth this quarter, offsetting what would otherwise be our typical seasonal low point during the year for deposits. Moving to slide 15 and the investment securities portfolio. Net unrealized losses in the AFS portfolio moved higher by $7.5 million during the quarter, driven by higher rates. Portfolio yields increased 10 basis points to 4.47% from the prior quarter, benefiting from the securities repositioning executed in Q1 2026. Turning to capital and liquidity on slide 16. Strong capital levels are a hallmark of the Seacoast franchise. Tangible book value per share grew 8% annualized during the quarter.

Speaker #3: Moving to slide 15 in the investment securities portfolio. Net unrealized losses in the AFS portfolio moved higher by $7.5 million during the quarter, driven by higher rates.

Speaker #3: Portfolio yields increased 10 basis points to 4.47% from the prior quarter, benefiting from the securities repositioning executed in the first quarter of 2026. Turning to capital and liquidity on slide 16.

Speaker #3: Strong capital levels are a hallmark of this company's franchise. Tangible book value per share grew 8% annualized during the quarter, the level of tangible equity to tangible assets increased to 9.3%, and we put some capital to work through share repurchases.

Tracey Dexter: The level of tangible equity to tangible assets increased to 9.3%. We put some capital to work through share repurchases. Our robust capital levels provide significant flexibility to support organic growth and disciplined capital deployment. On slide 17, we reiterate our 2026 guidance. Our results for the quarter continue to evidence the improvements we've achieved 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 as we move to H2 of 2026. With that, I'll turn the call back to Chuck.

Speaker #3: Our robust capital levels provide significant flexibility to support organic growth and disciplined capital deployment. On slide 17, we reiterate our 2026 guidance. Our results for the quarter continue to evidence the improvements we've achieved in core profitability, strong funding trends, and continued execution against our strategic priorities.

Speaker #3: We remain focused on disciplined growth and long-term shareholder value creation as we move to the second half of 2026. With that, I'll turn the call back to Chuck.

Speaker #1: All right. Thank you, Tracey. And before we jump into Q&A, I just want to reiterate my thank you to all the Seacoast associates on the call.

Chuck Shaffer: All right. Thank you, Tracey. Before we jump into Q&A, I just want to reiterate my thank you to all the Seacoast associates on the call. The conversion was incredibly well executed. They did an amazing job. It went flawlessly and a lot of people involved in that across a lot of our markets, and you all did an amazing job. Just want to say thank you to them. As we enter our 100th year here, we're excited to celebrate our 100th anniversary later in the year. We may be ringing the Nasdaq bell. We're working on that. We couldn't be more excited about that too. We're in really incredible shape here as we move through the year and it's been exciting to get the conversion complete and just want to say thank you to everybody that worked so hard on that.

Speaker #1: The conversion was an incredible well-executed. They did an amazing job. It went flawlessly. And a lot of people involved in that, across a lot of our markets and you all did an amazing job.

Speaker #1: And so, just want to say thank you to them. And as we enter our 100th year here, we're excited to celebrate our 100th anniversary later in the year.

Speaker #1: We may be ringing the NASDAQ bell. We're working on that. But we couldn't be more excited about that, too. So we're really incredible shape here as we move through the year, and it's been exciting to get the conversion complete and just want to say thank you to everybody that worked so hard on that.

Speaker #1: With that, operator, we'll go to Q&A.

Chuck Shaffer: With that, operator, we'll go to Q&A.

Speaker #2: Thank you. We will now begin the question-and-answer session. Again, if you would like to ask a question, please press star then the number 1 on your telephone keypad to raise your hand and enter the queue.

Operator 2: Thank you. We will now begin the question and answer session. Again, if you would like to ask a question, please press star then 1 on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question anytime, you can press star 1 again. Your first question comes from the line of Russell Gunther with Stephens Inc.. Your line is open.

Operator: Thank you. We will now begin the question and answer session. Again, if you would like to ask a question, please press star then 1 on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question anytime, you can press star 1 again. Your first question comes from the line of Russell Gunther with Stephens Inc.. Your line is open.

Speaker #2: If you would like to withdraw your question at any time, you can press star 1 again. Your first question comes from the line of Russell Gunther with Stephens, Inc. Your line is open.

Speaker #4: Hey, good morning, guys.

Russell Gunther: Hey, good morning, guys.

Speaker #1: Good morning, Russell.

Chuck Shaffer: Good morning, Russell.

Speaker #4: The deck highlights an average commercial loan size of a million, and I think granularity is a staple of Seacoast conservative risk profile. As you're balance sheet has grown and you hire commercial lenders from larger institutions, Chuck, how, if at all, will the complexion of your kind of loan commercial loan growth profile shift at all towards larger loans or an expanded credit box?

Russell Gunther: The deck highlights an average commercial loan size of $1 million. I think granularity is a staple of Seacoast conservative risk profile. As your balance sheet has grown and you hire commercial lenders from larger institutions, Chuck, how, if at all, will the complexion of your commercial loan growth profile shift at all towards larger loans or an expanded credit box?

Speaker #1: Yeah, no, great question, Russell. The way I describe it is, we are recruiting bankers out of larger institutions, primarily the super-regional banks. That obviously brings opportunities to bank larger and more complex clients.

Chuck Shaffer: Yeah, no. Great question, Russell. The way I describe it is we are recruiting bankers out of larger institutions, primarily the super-regional banks. That obviously brings opportunities to bank larger and more complex clients. We are very disciplined in managing to our hold limits and thoughtful about concentration limits. The real positive about our balance sheet is there's a lot of room to book some bigger credits and not really move the average loan size. If you look at the size of the portfolio and the way we've built it over many decades, there is a tremendous amount of granularity. I would tell you, we still do plenty of smaller credits when you look at the actual number of credits, and there's a few larger ones along the way. The larger ones bring, obviously, operating leverage.

Speaker #1: We are very disciplined in managing to our hold limits and thoughtful about concentration limits. The real positive about our balance sheet is there's a lot of room to book some bigger credits and not really move the average loan size.

Speaker #1: If you look at the size of the portfolio and the way we've built it over many decades, there is a tremendous amount of granularity.

Speaker #1: And I would tell you, we still do plenty of smaller credits when you look at the actual number of credits, and there's a few larger ones along the way.

Speaker #1: The larger ones bring, obviously, operating leverage. On the flip side, we have to manage concentration ratios, and we're always carefully navigating that over time.

Chuck Shaffer: On the flip side, we have to manage concentration ratios, and we're always carefully navigating that over time. We are very disciplined on where we hold, and we've got a great syndications desk where we need to syndicate credits to get above our hold limits. We are having opportunities to bank larger, more complex clients. The beauty of that is they're bringing large operating balances, treasury management, in some cases, wealth management. It's been really great to see.

Speaker #1: But we are very disciplined on where we hold, and we've got a great syndications desk where we need to syndicate credits to get above our hold limits.

Speaker #1: But we are having opportunities to bank larger, more complex clients. And the beauty of that is they're bringing large operating balances, treasury management, and in some cases, wealth management.

Speaker #1: It's been really great to see.

Speaker #4: I appreciate your talk there, Chuck. Thank you. And then on the quarter, really strong organic results. The pay downs eased and that helped as well.

Russell Gunther: I appreciate your thoughts there, Chuck. Thank you. On the quarter, really strong organic results. The pay-downs eased and that helped as well, the commercial pipeline's still up after this robust result. Maybe just try to get a sense for the sustainability of this double-digit growth rate. I know you've left the full year guide unchanged, perhaps there's upside to that, or as we think about 2027 organic growth expectations.

Speaker #4: But the commercial pipeline is still up after this robust result, so maybe just try to get a sense for the sustainability of this double-digit growth rate.

Speaker #4: I know you've left the kind of full year guide unchanged, but perhaps there's upside to that or as we think about 27 organic growth expectations.

Speaker #1: Yeah, and I think, when you think about the full-year guide, just a reminder—in the first quarter we were about flat on growth because we had some large payoffs.

Chuck Shaffer: Yeah. I think when you think about the full year guide, just a reminder, Q1, we were about flat on growth because we had some large payoffs. Basically, if you combine the two, that brought us right in line with where we expected to be. I would describe it to you as, obviously, the quarter was very strong. As we look at the pipeline, it's very strong. The way to think about it, we hit 16% annualized growth. About 3% of that annualized growth was related to the residential mortgages we booked in the portfolio, primarily out of The Villages market. We do expect to probably sell a little more of that as we move through time, so that may move more into the fee item. We'll obviously continue to service those credits, probably we'll see more of that move to a saleable category.

Speaker #1: So basically, if you combine the two, that brought us right in line with where we expected to be. I would describe it to you as obviously the quarter was very strong.

Speaker #1: As we look at the pipeline, it's very strong. The way to think about it, we hit 16% annualized growth, about 3% of that annualized growth was related to the residential mortgages we booked in the portfolio, primarily out of the villages market.

Speaker #1: We do expect to probably sell a little more of that as we move through time. So that may move more into the fee item.

Speaker #1: We'll obviously continue to service those credits, but we'll probably see more of that move to a saleable category. We'll kind of move back and forth depending on growth there.

Chuck Shaffer: We'll kind of move back and forth depending on growth there. About half of the remainder of that, so you kind of get down to 13 and split that in half. I'd say the other half of that came from all the talent we've onboarded over the last few years. We've talked about the high level of recruiting we've done and the quality of that recruiting coming out of the super regional banks, and they're continuing to onboard clients. We continue to see opportunities to bank new prospects. It's been super exciting to see. I would tell you too, the third of the other third of that piece is just Florida really is doing really well. There is very strong loan demand across all of our markets.

Speaker #1: Then about half of the remainder of that—so you kind of get down to 13 and split that in half. I’d say the other half of that came from all the talent we’ve onboarded over the last few years.

Speaker #1: We've talked about the high level of recruiting we've done. And the quality of that recruiting coming out of the super regional banks. And they're continuing to onboard clients.

Speaker #1: We continue to see opportunities to bank new prospects. It's been super exciting to see. And then I would tell you too, sort of the other third of that piece is just that Florida really is doing really well.

Speaker #1: There is very strong loan demand across all of our markets. And we're now at a size, if you kind of step back and look at the big picture, we cover just about every major market in Florida.

Chuck Shaffer: We're now at a size, if you kind of step back and look at the big picture, we cover just about every major market in Florida, we cover most of the tertiary markets as well. We've got a statewide brand that resonates. We have clients really want to be with an organization that has the sophistication to grow with them. We've invested heavily in the treasury management side of the business. We've invested heavily in bankers. We invested heavily in credit. We've made the overhead investments to be very competitive in the marketplace, and that's allowing us to get access to new clients every day. There's a lot of clients that want to be with a headquartered bank that's generally local, that can serve their needs with the sophistication.

Speaker #1: We cover every major market in Florida. And then we cover most of the tertiary markets as well. So we've got a statewide brand that resonates.

Speaker #1: We have clients really want to be with an organization that has this sophistication to grow with them. We've invested heavily into treasury management side of the business.

Speaker #1: We've invested heavily in bankers. We've invested heavily in credit. And so, we've made the overhead investments to be very competitive in the marketplace, and that's allowing us to get access to new clients every day.

Speaker #1: There's a lot of clients that want to be with a headquartered bank that's generally local, that can serve their needs with a sophistication. And so we just see a lot of demand for what we're doing.

Chuck Shaffer: We just see a lot of demand for what we're doing, and it's been really exciting to see, and I think there's a lot more to come.

Speaker #1: And it's been really exciting to see, and I think there's a lot more to come.

Speaker #4: That's really helpful. Thanks for your thoughts, Chuck. That's it for me.

Russell Gunther: That's really helpful. Thanks for your thoughts, Chuck. That's it for me.

Speaker #1: Awesome. Thanks, Russell.

Chuck Shaffer: Awesome. Thanks, Russ.

Speaker #2: Your next question comes on the line of David Dexter with Raymond James. Your line is open.

Operator 2: Your next question comes from the line of David Feaster with Raymond James. Your line is open.

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

Speaker #5: Hey, good morning, everybody.

David Feaster: Hey, good morning, everybody.

Speaker #1: Hey, David.

Chuck Shaffer: Hey, David. Morning.

Speaker #6: Morning.

Speaker #5: I want to talk about the Villages—just to get an update. Obviously, you mentioned the conversion went extremely smoothly, and the integration is largely done.

David Feaster: I want to talk on The Villages deal, just kind of get an update. Obviously, you talked about the conversion went extremely smooth, integration largely done. This is a huge deal, right? There's a huge amount of opportunity. I'm just curious what's next for you all as you look forward and maybe executing on some of the efficiency initiatives and cross-selling initiatives. Just kind of curious what you see there.

Speaker #5: But I mean, this is a huge deal, right? And there's a huge amount of opportunity. I'm just curious, what's next for y'all as you look forward and maybe executing on some of the efficiency initiatives and cross-selling initiatives?

Speaker #5: Just kind of curious, what do you see there?

Speaker #1: Yeah. As we've talked in the past, it's the most transformative thing we've done in the history of our entire company. It is very meaningful.

Chuck Shaffer: Yeah. As we've talked in the past, it's the most transformative thing we've done in the history of our entire company. It is very meaningful. It's an incredible market. It's a growing market. We expect to grow with the market over time. Still the fastest-growing MSA in the country. We still see a lot of inbound population growth there, which is super exciting. As we wind down the conversion activities, which we still got probably another 6 to 8 weeks to help clients to make sure they're fully onboarded, and our branch traffic's still busy and call center traffic's still busy, we need to continue to navigate that. As we get past that, it'll be back to full organic business. There's opportunities to continue to cross-sell some of our consumer product base. There is great opportunities to continue to build a wealth management business in that market.

Speaker #1: It's an incredible market. It's a growing market. We expect to grow with the market over time. Still the fastest-growing MSA in the country.

Speaker #1: We still see a lot of inbound population growth there, which is super exciting. As we wind down the conversion activities, which we still got, probably another six to eight weeks to help clients make sure they're fully onboarded and we're branch traffic still busy and call center traffic still busy.

Speaker #1: So we need to continue to navigate that. But as we get past that, it'll be back to full organic business, and there are opportunities to continue to cross-sell some of our consumer product base.

Speaker #1: There are great opportunities to continue to build a wealth management business in that market. We're already seeing good inbound opportunities there, so we'll continue to focus on it, David.

Chuck Shaffer: We're already seeing good inbound opportunities there. We'll continue to focus on it, David, and we'll continue to build a branch network up there as that market continues to develop. I think it'll continue to be a really good source of deposits for us, a good source for wealth management. It's obviously an incredible mortgage business for us. Over time, we'll build in and around there with our commercial banking platform. Kind of the awesome part about this is now that we're getting through this, we hit our 16% growth rate and we got all the pipeline build and everything alongside with the conversion. Now we'll have the conversion behind us to allow us to almost put our full attention to organic growth. Makes me feel great about our outlook and what I think the remainder of the year looks like and moving into 2027.

Speaker #1: And we'll continue to build a branch network up there as that market continues to develop. And I think it'll continue to be a really good source of deposits for us, a good source for wealth management.

Speaker #1: It's obviously an incredible mortgage business for us. And over time, we'll build in and around there, whether our commercial banking platform and kind of the awesome part about this is now that we're getting through this, we got all the we hit our 16% growth rate, and we got all the pipeline building everything alongside with the conversion.

Speaker #1: Now we'll have the conversion behind us to allow us to almost put our full attention to organic growth. So it makes me feel great about our outlook and what I think the remainder of the year looks like.

Speaker #1: And moving into 2027.

Speaker #5: That's great. And then maybe we talked about loan growth, right? I mean, there's a high degree of confidence in that from everything you alluded to.

David Feaster: That's great. Maybe, we talked on loan growth, right? There's a high degree of confidence in that from everything you alluded to. I'm curious on the funding side. Obviously, there's some seasonal factors this quarter. Competition for deposits has obviously increased. How do you think about core deposit growth, where you're having success, and just how you can drive core deposit growth at this point while defending deposit costs, just given the competition that we're hearing about?

Speaker #5: I'm curious on the funding side. Obviously, there are some seasonal factors this quarter, and competition for deposits has clearly increased. How do you think about core deposit growth?

Speaker #5: Where are you having success? And just how you can drive core deposit growth at this point while defending deposit costs just given the competition that we're hearing about?

Speaker #1: Yeah, maybe I'll open with just a few comments, and then I'll have Michael walk you through the dynamics. But, one, as we move forward and continue to onboard operating companies, we are seeing DDA—and Michael can talk a little bit about the dynamics here in a second.

Chuck Shaffer: Yeah, maybe I'll open with just a few comments, then I'll let Michael walk you through the dynamics. One, as we move forward, as we continue to onboard operating companies, we are seeing DDA and Michael will talk a little about the dynamics here in a second, the beauty of what we built in this balance sheet is we have a lot of flexibility. We can manage margin and we can manage growth. We can lean in where we want to on price, and we can lean out on price. We don't have quite the constraints that maybe a lot of our peers do that are fully lent up and have loan deposit ratios that are 90% plus. We've got a very low loan deposit ratio, and that gives us flexibility.

Speaker #1: But the beauty of what we built and this balance sheet is we have a lot of flexibility. So we can manage margin, and we can manage growth.

Speaker #1: And so, we can lean in where we want to on price, and we can lean out on price. We don't have quite the constraints that maybe a lot of our peers do—those that are fully lent up and have loan-to-deposit ratios that are 90% plus.

Speaker #1: We've got a very low loan-to-deposit ratio, and that gives us flexibility. I'm excited about all the new prospects, particularly on the commercial side.

Chuck Shaffer: I'm excited about all the new prospects, particularly on the commercial side. As we get past this conversion, we'll be able to unleash our retail teams again because they've been heavily heads down. You can imagine what it took to get that conversion done. We had 300 people working on that. Those 300 people will go back to focusing on growth. That will give us a lot of opportunity as well. Michael, you want to talk through the deposits cost dynamics there?

Speaker #1: And as we get past this conversion, we'll be able to sort of unleash our retail teams again because they've been heavily heads down. You can imagine what it took to get that conversion done.

Speaker #1: We had 300 people working on that, so those 300 people will go back to focusing on growth. That will give us a lot of opportunity as well.

Speaker #1: But Michael, do you want to talk through the deposit cost dynamics there?

Speaker #6: Yeah. David, just maybe unpacking that just a little bit further. We've done a lot of work to get our CD costs down, just on the customer side as rates have come down.

Michael Young: Yeah, David, just maybe unpacking that just a little bit further. We've done a lot of work to get our CD costs down, just on the customer side as rates have come down. I think that dynamic's largely done. We want to be competitive and grow from here, as Chuck mentioned. We're still adding on a blended basis cost of deposits in the low twos, blending with DDA, interest bearing in the mid twos. Over time with growth, we'll see those deposit costs move up a little bit, but it's more tactical versus us having to be aggressive. That just gives us the ability to continue to grow profitably versus having to compress profitability as we grow given our low loan to deposit ratio and not having our backs against the wall there.

Speaker #6: I think that dynamic's largely done. We want to be competitive and grow from here as Chuck mentioned. But we're still adding on a blended basis, cost of deposits in the low twos.

Speaker #6: Blending with DDA, interest-bearing kind of in the mid twos. So over time, with growth, we'll see those deposit costs move up a little bit.

Speaker #6: But it's more tactical versus us having to be aggressive. And that just gives us the ability to continue to grow profitably versus having to compress profitability as we grow.

Speaker #6: Given our low loan to deposit ratio and not having our backs against the wall there. So I think we feel really strong about the balance sheet positioning and where we stand and where we're headed from here.

Michael Young: I think we feel really strong about the balance sheet positioning and where we stand and where we're headed from here.

Speaker #5: Yeah, definitely coming at it from a position of strength. Maybe just one last question. We hear a lot of complaints about competition, especially on the pricing side.

David Feaster: Yeah, definitely coming at it from a position of strength. Maybe just last one. We hear a lot of complaints about competition, especially on the pricing side, and I'm talking about loans here. I'm curious where are new loan yields in the pipeline today and whether you're starting to see pressure and competition start moving to the underwriting side as well? Appreciating, Chuck, you talked about in your prepared remarks that you guys are very disciplined on underwriting, but I'm curious if you're seeing that competition start to migrate towards structures and standards and such.

Speaker #5: And I'm talking about loans here. I'm curious, where are new loan yields in the pipeline today? And are you starting to see pressure and competition move to the underwriting side as well?

Speaker #5: Appreciating it, Chuck, you talked about and you prepared remarks that you guys are very disciplined on underwriting. But I'm curious if you're seeing that competition start to migrate towards structures and standards and such.

Speaker #1: Yeah. Michael, why don't you jump in on that—on rates? And then I'll talk a little bit about the competition.

Chuck Shaffer: Yeah. Michael, why don't you jump in on add-on rates, and then I'll talk a little bit about the competition.

Speaker #6: Yeah, David, so just on add-on rates on the commercial side, we’re kind of in the low sixes for the quarter in terms of add-on rates—down maybe a little bit versus the first quarter.

Michael Young: Yeah. David, just on the add-on rates, on the commercial side, say we're in the low sixes for the quarter in terms of add-on rates, down maybe a little bit versus Q1 with some of those competitive forces. I think one of the things that we've seen is we tend to operate in the lower risk segments of that. You've seen more competitors move into the lower risk areas and some of the super regionals jump back in a bit, which has pressured some of those spreads. Still really good clients. When you blend that with the core deposits that we're bringing on board, it's still reasonable rates of return. On the residential side, we have been retaining a little more resi through H1 of the year.

Speaker #6: With some of those competitive forces, I think one of the things that we've seen as we tend to operate in the lower-risk segments of that.

Speaker #6: And so you've seen more competitors kind of move into the lower-risk areas. And some of the super regionals jump back in a bit. Which is pressured some of those spreads.

Speaker #6: But still, really good clients. And when you blend that with the core deposits that we're bringing on board, it's still reasonable rates of return.

Speaker #6: On the residential side, we have been retaining a little more resi through the first half of the year. Obviously, with the long end of the curve up, that's been positive.

Michael Young: Obviously, with the long end of the curve up, that's been positive and supportive of yields there. More in the mid sixes. If you want to think about the dynamics there, that's what's been playing out. Chuck, I don't know if you want to speak more to that.

Speaker #6: And supportive of yields there. So kind of more in the mid sixes. So if you want to think about the dynamics there, that's kind of what's been playing out.

Speaker #6: And Chuck, I don't know if you want to speak more to that.

Speaker #1: Yeah. And I would just say, and if you've heard this on others' calls, it is hyper-competitive. At this point, all the national banks are back in.

Chuck Shaffer: Yeah. I would just say, and clearly you've heard this on others' calls, it is hyper-competitive at this point. All the national banks are back in competing in commercial real estate that stepped out. You have a lot of competition for middle market companies. We're remaining very disciplined on underwriting and particularly leverage. We are starting to see competitors allow clients to put less equity in deals. That's not something we're going to chase. We're maintaining discipline around equity, and to some extent, that comes a little bit on price because we're having to price a little lower to maintain equity in the transaction, but we're willing to make that trade to stay conservative on our underwriting approach.

Speaker #1: Competing in commercial real estate that stepped out. You have a lot of competition for middle market companies. We're remaining very disciplined on underwriting, and particularly leverage.

Speaker #1: We are starting to see competitors allow clients to put less equity in deals. That's not something we're going to chase, so we're maintaining discipline around equity.

Speaker #1: And to some extent, that comes a little bit on price, because we're having to price a little lower to maintain equity in the transaction.

Speaker #1: But we're willing to make that trade to stay conservative in our underwriting approach. So, I would say we are starting to see things that we don't like seeing, but we're going to stick with our guns and stick with what we do.

Chuck Shaffer: I would say we are starting to see things that we don't like seeing, we're going to stick with our guns and stick with what we do, and we'll see how it all plays out. It is as competitive as it's ever been. It's very competitive.

Speaker #1: And we'll see how it all plays out. But it is as competitive as it's ever been. It's very competitive.

Speaker #5: Okay. That's helpful. Thanks, everybody.

David Feaster: Okay. That's helpful. Thanks, everybody.

Speaker #1: Awesome, David. Thank you.

Chuck Shaffer: Awesome, David. Thank you.

Speaker #2: Again, if you'd like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and enter the queue.

Operator 2: Again, if you'd like to ask a question, please press star then the number one on your telephone keypad to raise your hand and enter the queue. We'll pause just for a moment to compile our roster. Since there are no further questions in queue, I'd like to turn the call back over to Chuck Shaffer for closing remarks.

Operator: Again, if you'd like to ask a question, please press star then the number one on your telephone keypad to raise your hand and enter the queue. We'll pause just for a moment to compile our roster. Since there are no further questions in queue, I'd like to turn the call back over to Chuck Shaffer for closing remarks.

Speaker #2: We'll pause just for a moment to compile our roster. Since there are no further questions in queue, I'd like to turn the call back over to Chuck Schaefer for closing remarks.

Speaker #4: All right. Thank you, Colby. I just want to reiterate that growth is on track. We are very pleased with the progress this quarter. We have more balance sheet flexibility than I think most in the industry, which will allow us to operate very profitably over the back half of the year.

Chuck Shaffer: All right. Thank you, Colby, just want to reiterate, growth is on track. We are very pleased with the progress this quarter. We have more balance sheet flexibility than I think most in the industry, which will allow us to operate here very profitably over the back half of the year. The other thing I like about our story is we have strong durability of earnings, particularly on the backside of some of the bond repositions we did earlier in the year. Just couldn't be more excited about what's out ahead of us now that conversion distraction is behind us. Appreciate everybody on the call today, and we'll be around for questions if anybody has them. Operator, that'll conclude our call.

Speaker #4: The other thing I like about our story is we have strong durability of earnings, particularly on the backside of some of the bond repositions we did earlier in the year.

Speaker #4: And I just couldn't be more excited about what's out ahead of us, now that conversion distraction is behind us. So, appreciate everybody on the call today.

Speaker #4: And we'll be around for questions if anybody has them. So operator, I'll conclude our call.

Operator 2: Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Q2 2026 Seacoast Banking Corp of Florida Earnings Call

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