After striking 3 deals this year, Seacoast still looking for more Florida M&A

Stuart, Fla.-based Seacoast Banking Corp. of Florida is still hungry for M&A in its home state, and analysts think more could come.

Seacoast's Aug. 23 announcement that it plans to acquire Sarasota, Fla.-based Sabal Palm Bancorp Inc. and Melbourne, Fla.-based Business Bank of Florida Corp. marks the company's second and third whole-bank deal announcements this year, and management did not close the door on striking yet another deal before year-end.

"There's over 85 banks remaining in Florida. So there's plenty of opportunities for us to continue our balanced growth strategy," President and CEO Chuck Shaffer said on a conference call to discuss the transactions. "It's possible that we can announce another deal by the end of the year."

Seacoast is focused on expanding throughout the state with particular interest in the southwest region from Naples up to Tampa, he said. The acquisition of Sabal Palm will expand the bank's footprint into Sarasota, just south of Tampa.

"[Seacoast] clearly remains the acquirer of choice in the state of [Florida], having entered into 3 of the 7 acquisitions announced this year (~43%), with more activity likely to come," Raymond James analyst David Feaster wrote in an Aug. 23 note.

During a conference call in March, Shaffer said the bank is only interested in targets below $2 billion in total assets. On the Aug. 24 call, one analyst estimated that there are about 70 banks headquartered in the state that fall within Seacoast's targeted size range.

"There's probably about half of them that we'd be more focused on that are in more growing parts of the state Florida. Obviously, we'll be opportunistic where things make sense," Shaffer said.

The company is also open to and "constantly looking at" nonbank M&A, he said. The joint deal announcements mark the ninth and 10th whole-bank deal announcements since 2016 for the serial acquirer and comes on the heels of its acquisition of Boca Raton, Fla.-based Legacy Bank of Florida, which closed Aug. 6.

The addition of Sabal Palm and Business Bank of Florida will add about $600 million in assets to Seacoast, boosting the bank's total assets above the critical $10 billion threshold. Seacoast estimates that the two banks will provide an aggregate of $14.5 million in pretax income and provide a 60% offset of the financial impact from the Durbin amendment, which caps interchange revenue for banks over $10 billion in assets.

"We expect the remaining 40% to be resolved through further acquisitions in our target Florida markets," Shaffer said.

Analysts were positive on the bite-sized deals, given the expansion into growing markets, attractive financial metrics and their manageable size leaving capacity for more M&A. Cumulatively, the deals are expected to be 4% accretive to 2023 earnings per share and carry a tangible book value earnback period of just 1.25 years. Analysts and investors have said the Street looks for earnback periods of three years or less.

"Entering the wealthy Sarasota market and deepening its footprint further in Brevard County with low-risk transactions fits [Seacoast's] strategy well, and we have been impressed with the recent string of deals announced since CEO Shaffer took the helm, consistently putting the bank's favorable currency to work," Piper Sandler analyst Stephen Scouten wrote in an Aug. 24 report.