Seacoast Banking Corporation of Florida — Q1 2024 Form 10-Q
Business context and reporting period. This unaudited filing covers the three months ended March 31, 2024; balance-sheet comparisons are with December 31, 2023. Seacoast is a Florida-based bank holding company operating primarily through Seacoast Bank. The prior-year comparison includes the January 2023 acquisition of Professional Holding Corp., which added approximately $2.1 billion in deposits and $2.0 billion in loans.
Key financial metrics
| Metric | Q1 2024 | Comparable period / change |
|---|---|---|
| Total interest income | $175.7 million | $158.0 million in Q1 2023 |
| Net interest income | $105.1 million | Down 20% year over year; $131.2 million in Q1 2023 |
| Net interest margin, fully taxable equivalent | 3.24% | 4.31% in Q1 2023; 3.36% in Q4 2023 |
| Net income / diluted EPS | $26.0 million / $0.31 | $11.8 million / $0.15 in Q1 2023 |
| Adjusted net income / adjusted diluted EPS | $31.1 million / $0.37 | $23.7 million / $0.29 in Q1 2023; non-GAAP |
| Noninterest income / expense | $20.5 million / $90.4 million | Income down 9%; expense down 16% year over year |
| Provision for credit losses | $1.4 million | $31.6 million in Q1 2023 |
| Operating cash flow | $24.7 million | $13.0 million in Q1 2023 |
| Total assets / loans, before allowance | $14.83 billion / $9.98 billion | Assets up 2%; loans down 1% from year-end |
| Deposits / cash and cash equivalents | $12.02 billion / $682.7 million | Deposits up 2%; cash was $447.2 million at year-end |
| Allowance for credit losses / nonperforming loans | $146.7 million / $77.2 million | Allowance 1.47% of loans; nonperforming loans were $65.1 million at year-end |
| FHLB borrowings / long-term debt | $110.0 million / $106.5 million | FHLB borrowings were $50.0 million at year-end |
| Shareholders’ equity | $2.12 billion | Equity-to-assets ratio 14.28%, versus 14.46% at year-end |
Material changes versus prior periods
- Net income rose 120% year over year, while adjusted net income rose 31%. The comparison benefited from the prior-year $26.6 million acquisition-related day-one credit provision and $17.5 million in acquisition costs; Q1 2024 also included $7.1 million of expense-reduction and branch-consolidation charges.
- Net interest income and margin declined as deposit costs rose. The average cost of deposits was 2.19%, compared with 0.77% a year earlier; acquired-loan discount accretion contributed $10.6 million to Q1 2024 interest income.
- Deposits increased $238.9 million from year-end, while loans declined $84.9 million. Average transaction deposits fell 5% from Q4 2023, and customer sweep balances ended the quarter 13% lower than at year-end.
- Nonperforming assets increased to $84.5 million from $72.7 million at year-end; nonperforming assets were 0.57% of total assets, versus 0.50%. Net charge-offs were $3.6 million.
- Q1 securities transactions included a $4.1 million gain on sale of Visa Class B shares and $3.8 million of losses on $86.8 million of securities sold. Management said sale proceeds were reinvested at a 5.53% yield, with an expected 1.9-year earnback.
Outlook, commentary, risks and unusual items
- The filing provides no specific earnings, revenue, margin, or loan-growth guidance. Management describes a $498.6 million commercial and CRE loan pipeline, up 63% from year-end, while noting that higher rates affected customer demand and originations.
- Management cites ongoing sensitivity to deposit pricing, interest rates, inflation, economic conditions, commercial real estate values, and borrower credit quality. Florida and CRE lending concentrations, market-related securities valuation changes, and deposit outflows are among the stated risks.
- Liquidity sources included $682.7 million of cash and $5.1 billion of available borrowing capacity. Estimated uninsured deposits were $4.2 billion, or 35% of deposits; excluding Florida public funds covered by the state program, uninsured and uncollateralized deposits were 29% of total deposits.
- Regulatory capital ratios exceeded well-capitalized thresholds. At March 31, consolidated CET1 was 14.01%, total risk-based capital 16.14%, and the leverage ratio 11.06%.
- Available-for-sale securities had $223.6 million of gross unrealized losses at quarter-end. Management attributed losses to interest rates and investment spreads, expected recovery of amortized cost, and recorded no securities credit-loss allowance. HTM securities had a fair value of $540.2 million against a $669.9 million carrying amount.
- Interest-rate simulations show projected net interest income declines of 3.5% over months 1–12 and 3.1% over months 13–24 for an instantaneous 100-basis-point increase; estimated economic value of equity declines 6.0%. These are model scenarios, not forecasts.
- Management said pending or threatened legal matters are not expected to have a material adverse effect. No material changes to previously disclosed risk factors were reported. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Whether deposit costs and the net interest margin stabilize, and how much future earnings depend on acquired-loan accretion.
- Trends in nonaccrual loans, nonperforming assets, charge-offs, and allowance coverage, especially in CRE and commercial lending.
- The assumptions and sensitivity underlying management’s expectation that unrealized securities losses will recover, including liquidity needs that could require sales.
- Actual effects and timing of branch, workforce, and systems-reduction initiatives versus the related Q1 charges.
- Deposit composition, uninsured and uncollateralized funding, and the availability and terms of reported borrowing capacity.
- Adjusted earnings and efficiency metrics are non-GAAP measures; compare them with the filing’s GAAP results and reconciliations.