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Seacoast (SBCF) to Buy Sabal Palm and Business Bank of Florida

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Seacoast Banking Corporation of Florida (SBCF - Free Report) , the holding company for Seacoast National Bank, has announced two separate merger agreements. It agreed to acquire Sabal Palm Bancorp, Inc., the parent company of Sabal Palm Bank based in Sarasota, FL, and Business Bank of Florida, Corp., the parent company of Florida Business Bank based in Melbourne, FL. Both deals are expected to close in the first quarter of 2022.

Sabal Palm Bank, which has three branches across the Sarasota market, had deposits worth $377 million and loans of $272 million as of Jun 30, 2021. Florida Business Bank has one branch in Melbourne. As of the same date, it had deposits worth $166 million and loans of $136 million. It is expected that the deals will add $600 million in assets.

Terms of the Deals and Financial Impact

The Sabal Palm merger deal is valued at $53.9 million or $6.96 per share. Per the terms of the agreement, shareholders of Sabal Palm will receive 0.2203 shares of Seacoast common stock for each of their own shares held. Notably, the exchange ratio is fixed and, hence, any fluctuation in the transaction value will be a result of changes in Seacoast’s share price.

The merger deal with Business Bank of Florida has been currently valued at $28.4 million or $25.25 per share. Under the terms of the deal, shareholders of Business Bank of Florida will receive 0.7997 shares of Seacoast common stock for each of their shares. Here also, the exchange ratio is fixed.

The deals are expected to help Seacoast deepen its presence in Brevard County. Also, they will allow Seacoast to establish its presence in the growing Sarasota markets. Once the transactions are closed, both banks will merge with and into Seacoast National Bank.

The deals are anticipated to be 4% accretive to Seacoast’s earnings per share in 2023, which will be the first full year of combined operations. The company expects a minimal upfront tangible book value dilution from the two mergers, which will be earned back within 1.25 years.

Management Comments

The president and CEO of Seacoast, Charles M. Shaffer, stated, “Sabal Palm Bank and Florida Business Bank are two highly successful, local community banking franchises. Both institutions are customer-focused franchises with an outstanding reputation for service excellence and deep customer relationships in their markets. We see great opportunity to complement their strengths with Seacoast’s innovation and breadth of offerings to grow our presence and expand our position in two very attractive Florida markets.”

Neil D. McCurry Jr., Sabal Palm’s president and CEO, said, “Sabal Palm Bank has always been passionate about serving the needs of our community and working side by side with our customers to help them achieve their financial goals. We are delighted to partner with Seacoast, which shares our values and has been serving Florida consumers and businesses for more than 90 years.”

Business Bank of Florida’s chairman and CEO, Zuheir Sofia, commented, “We are delighted to partner with one of Florida’s major and fast-growing regional banks. We share Seacoast’s commitment to providing best in class customer service, local decision making, and building a highly motivated management team. Our customers will be able to take advantage of Seacoast’s convenient statewide network and an impressive array of products and services.”

So far this year, shares of Seacoast have gained 8.2% compared with 24.3% growth recorded by the industry.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our Take

In the current scenario, banks are moving toward consolidation to dodge the heightened costs of regulatory compliance and increased investments in technology in a bid to remain competitive. The prevalent low interest-rate environment and other economic challenges following the pandemic have taken a toll on banks’ profitability.

Recently, Webster Financial Corporation (WBS - Free Report) and Sterling Bancorp (STL - Free Report) received respective shareholder approval for the all-stock merger between the companies, which was announced in April.

Another merger deal, announced in April, recently received shareholder approval. Shareholders of New York Community Bancorp, Inc. (NYCB - Free Report) and Flagstar Bancorp, Inc. approved the proposed all-stock merger deal between the companies.