KBRA Affirms Ratings for Seacoast Banking Corporation of Florida

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Stuart, Florida-based Seacoast Banking Corporation of Florida (NASDAQ: SBCF) ("the company"). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for its bank subsidiary, Seacoast National Bank. The Outlook for the long-term ratings is Stable.

Key Credit Considerations

SBCF’s ratings reflect its solid core profitability, underpinned by its strong deposit franchise, strong core capital position as well as low credit costs over time. The ratings are also supported by the execution of a strategy that’s transformed the company into a leading regional banking franchise in the demographically attractive state of Florida. SBCF has grown meaningfully over the past decade, largely via digestible whole bank M&A in its home state. Most recently, in 4Q25, the company completed its acquisition of The Villages Bancorporation Inc. (“VBI”), which added $4.1 billion of assets and provides SBCF a strong foothold in central Florida, namely The Villages megadevelopment.

Overall, KBRA considers SBCF’s core capital profile to be strong and appropriate for its risk profile despite some consumption of relative common equity capital at VBI deal closing. Notably, approximately $343 million of convertible preferred stock, issued as part of the remuneration for the VBI acquisition, is included in SBCF’s Tier 1 capitalization. While excluded from the CET1 ratio, KBRA views this instrument as quasi- common equity given features, such as its low cost (equivalent to the common stock dividend) and convertibility under certain conditions. If the instrument was included in common equity, SBCF’s core capital measures would align with historical levels and compare favorably to peers.

SBCF’s 1Q26 earnings post-VBI are very solid - generating a core ROA of approximately 1.3% - supported by a firmly improved NIM, itself boosted by an additional repositioning of low-yielding securities into higher-coupon positions, and the addition of VBI’s low-cost deposit base. We also note that, if consistently achieved, such a level of returns would compare favorably to leading peers. Looking ahead, we expect the VBI acquisition to further enhance SBCF’s earnings (assuming full achievement of cost saves and a successful integration) as VBI’s low-cost deposit base is deployed into loan growth while wealth, insurance, and other offerings should benefit from VBI’s affluent customer base.

SBCF’s favorable credit performance is also supportive of its ratings. With the exception of somewhat elevated net charge-off (NCO) activity in 3Q23 and 2Q24 related to isolated loan relationships or run-off of acquired portfolios in prior M&A deals, recent NPAs and NCOs have been solid and generally in line with, or slightly better, than rated peers. We believe this reflects SBCF’s conservative underwriting practices and favorable loan portfolio composition, characterized by greater-than-peer exposure to residential mortgage and below-peer concentration of investor CRE, which represents just above 200% of total risk-based capital. That said, while Florida continues to benefit from demographic tailwinds, we remain watchful of the potential deterioration of consumer confidence and spending tied to any weakening in stock market performance – which could lead to a pullback in Florida’s CRE and residential markets.

Rating Sensitivities

Positive rating momentum could develop over the longer term should SBCF successfully integrate recent acquisitions and continue to scale, all while reflecting capital, funding, and asset quality profiles that compare favorably to its peers. Conversely, negative ratings pressure could ensue should SBCF take a distinctly more aggressive approach to capital management. Additionally, should acquired loan portfolios cause credit disruption to the extent that the broader institution reflects greater-than-peer deterioration in credit quality metrics, negative rating movement could occur.

To access ratings and relevant documents, click here.

Methodology