A couple of years ago, Seacoast Banking (SBCF)
was a “show me” story where investors were uncertain if the company
could execute on opportunities to reduce costs, improve its utilization
of technology, and drive better loan growth. Over the past three years,
not only has Seacoast delivered on multiple growth and quality metrics,
but the shares have roughly doubled since then, roughly doubling the
regional bank indices and eking out a small win over CenterState (CSFL) over that time.
There
are a lot of things I still find very attractive about Seacoast,
including its strong core deposit franchise, its data-driven business
model, and its leverage to significantly above-average growth potential
in its home state of Florida. While I don’t think there are serious
credit risks yet, I do have some concerns about where we are in the
cycle and how that might impact a higher-multiple growth bank like
Seacoast.
Although the valuation on a P/E basis
isn’t bad, I find the long-term discounted earnings valuation a little
stretched and I’m worried that bank multiples could re-rate lower. While
I think M&A appeal is a back-stop to the valuation, I’d rather see a
wider discount to fair value as compensation for some of those risks.
Read more here:
Seacoast Banking Making Money In The Sunshine State
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