Seacoast Banking (SBCF)

Florida regional bank Seacoast Banking (NASDAQ:SBCF) met Wall Streets revenue expectations in Q3 CY2025, with sales up 20.7% year on year to $157.3 million. Its non-GAAP profit of $0.52 per share was 13.5% above analysts’ consensus estimates.

Company Overview

Founded during the Florida land boom of 1926 and surviving the Great Depression, Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is a financial holding company that provides commercial and retail banking, wealth management, and mortgage services throughout Florida.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Seacoast Banking competes with other regional banks operating in Florida such as First Horizon (NYSE:FHN), SouthState Corporation (NASDAQ:SSB), and Valley National Bancorp (NASDAQ:VLY), as well as larger national banks including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Wells Fargo (NYSE:WFC) that have significant Florida operations.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Luckily, Seacoast Banking’s revenue grew at a solid 12.8% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Seacoast Banking’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Seacoast Banking’s year-on-year revenue growth of 20.7% was excellent, and its $157.3 million of revenue was in line with Wall Street’s estimates.

Net interest income made up 83.5% of the company’s total revenue during the last five years, meaning Seacoast Banking barely relies on non-interest income to drive its overall growth.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Seacoast Banking’s efficiency ratio has increased by 3.6 percentage points, going from 52.3% to 56.2%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Seacoast Banking’s efficiency ratio came in at 53.8% this quarter, beating analysts’ expectations by 596 basis points (100 basis points = 1 percentage point). This result was 6 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Seacoast Banking to rein in some of its expenses as it anticipates an efficiency ratio of 54.3%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Seacoast Banking’s EPS grew at a weak 3.5% compounded annual growth rate over the last five years, lower than its 12.8% annualized revenue growth. However, its efficiency ratio actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Seacoast Banking, its two-year annual EPS declines of 1.5% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Seacoast Banking reported adjusted EPS of $0.52, up from $0.36 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Seacoast Banking’s full-year EPS of $1.90 to grow 22.1%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

Seacoast Banking’s TBVPS grew at a sluggish 2.7% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 11.5% annually over the last two years from $14.35 to $17.83 per share.

Over the next 12 months, Consensus estimates call for Seacoast Banking’s TBVPS to shrink by 1.8% to $17.51, a sour projection.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Seacoast Banking has averaged a Tier 1 capital ratio of 14%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Seacoast Banking has averaged an ROE of 7.3%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

We were impressed by how significantly Seacoast Banking blew past analysts’ tangible book value per share expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its net interest income was in line. Overall, we think this was a decent quarter with some key metrics above expectations. Investors were likely hoping for more, and shares traded down 3.3% to $30.51 immediately following the results.

Updated: December 3, 2025 at 11:43 PM EST

Are you wondering whether to buy Seacoast Banking or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

We see the value of companies driving economic growth, but in the case of Seacoast Banking, we’re out. Although its revenue growth was solid over the last five years and is expected to accelerate over the next 12 months, its estimated sales for the next 12 months are weak. And while the company’s estimated net interest income growth for the next 12 months is great, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders.

Seacoast Banking’s P/B ratio based on the next 12 months is 1.1x. This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $33.25 on the company (compared to the current share price of $32.57).