Detailed narrative
Strong Financial Performance
Seacoast reported net income of $59.5 million ($0.55 diluted EPS) and adjusted net income of $65.8 million ($0.61 diluted EPS) for the second quarter. Adjusted pretax pre-provision earnings increased 52% year-over-year to $95.5 million, driving improved operating leverage. The company achieved an adjusted return on assets of 1.25% and an adjusted return on tangible equity of 15.8%, up from 13.3% a year ago.
Robust Loan and Deposit Growth
Organic loan growth was 16% annualized for the quarter, with total loans ending the period at $13.1 billion, keeping the company on track for its full-year high single-digit growth guidance. The commercial pipeline reached a record $1.3 billion as of June 30. Total deposits increased $154 million, or 3.7% annualized, with noninterest-bearing demand deposits growing 4% annualized to $4.2 billion.
Net Interest Income and Margin Expansion
Net interest income totaled $182.2 million, representing a 2% increase from the prior quarter, driven by higher core yields and well-managed deposit costs. The reported net interest margin was stable at 3.83%. Excluding the impact of accretion on acquired loans, the core margin expanded 8 basis points quarter-over-quarter to 3.65%.
Successful Integration of Villages Acquisition
The company successfully converted clients of Citizens First Bank and The Villages onto Seacoast systems and platforms, marking one of its largest and most complex integrations. This successful conversion caps a transformative period of M&A activity and positions the company to focus its full attention on organic growth, operational execution, and disciplined financial performance for the remainder of the year.
Wealth Management and Fee Income Growth
Noninterest income, excluding the $39.5 million loss from securities repositioning in Q1, totaled $27.8 million, up 3% quarter-over-quarter and 14% year-over-year. The Wealth Management division was a key contributor, with assets under management increasing 45% year-over-year and adding $388 million in new AUM year-to-date 2026. Wealth Management income grew 42% year-over-year and achieved a 24% CAGR over the past five years.
Disciplined Expense Management and Capital
Noninterest expense totaled $123.1 million, including $8.4 million of merger and integration costs. Excluding these charges, noninterest expense was $114.8 million. The efficiency ratio improved to 58.5% on a GAAP basis and 54.5% on an adjusted basis, reflecting disciplined expense control. The company maintained strong capital levels, with tangible book value per share growing 8% annualized and tangible equity to tangible assets increasing to 9.3%. Seacoast repurchased 750,000 shares during the quarter, representing 1% of outstanding shares year-to-date.
Credit Quality and Underwriting Discipline
Credit quality remained strong, with nonperforming loans declining and net charge-offs remaining low at 10 basis points of average loans. The allowance for credit losses totaled 1.38% of total loans. Management emphasized maintaining conservative underwriting standards, particularly regarding leverage, despite increasing competition in the lending market where some competitors are allowing less equity in deals.