Seacoast Banking Corp. of Florida in Stuart defended its performance after its biggest investor pressed for improved results or a sale.

CapGen Capital Group III, which holds a roughly 20% stake in Seacoast, recently complained that the $4 billion-asset company hadn't delivered strong enough returns. In a rebuttal, Dennis Hudson 3rd, Seacoast's chairman and chief executive, said his company had outperformed the KBW Bank Index and S&P 500 over the last five years.

Hudson, in a Friday letter to John Sullivan, the fund's managing director, called the investor's position "puzzling," given the support the fund had shown for five years while occupying a seat on its board. CapGen gave up its directorship last fall. Hudson argued that CapGen's position reflected short-term considerations, "specifically given our understanding that the fund in which CapGen holds its investment in Seacoast will terminate in the near term."

Sullivan wasn't immediately available to comment.

Seacoast could aim to "outlast" the life of the CapGen fund, Joseph Fenech, an analyst at Hovde Group, wrote in a note to clients. Shares in the fund would be distributed if it is dissolved, making it harder to press for changes, Fenech added.

Seacoast should be able to reach its goal of $1 of adjusted diluted earnings per share, Hudson wrote in his letter. The company's balance sheet has increased by 73% in the last two years, Hudson noted. Over that period, Seacoast has bought three banks and more than a dozen branches.

Those acquisitions "are producing better growth than modeled, which together with our digital transformation is enabling rapid improvement in operating leverage," Hudson wrote. "We believe this is only the beginning, and we expect to continue to achieve robust earnings growth well beyond this year," he added.

CapGen had also criticized Seacoast's corporate governance, arguing that the company should switch from plurality to majority voting for electing directors. The investor also complained that some of the company's directors had served too long.

Seacoast's "governance record is strong," Hudson wrote, adding that its five director nominees for this year are "highly qualified." The company has added seven new directors with "significant retail banking, corporate governance, operations, capital markets, technology and consulting experience" since 2012, he said, adding that two leading proxy advisory firms, had recommended shareholders vote for its nominees.

"Seacoast's board … and management view 2015 as an inflection point in the implementation of our strategic vision for Seacoast," Hudson wrote. "Last year, we delivered our best performance since the financial crisis of 2008 while continuing to invest in the future of our franchise, driving significant progress in the transformation of our company."

Hudson's letter made no mention of activist Basswood Capital Management, which was recently given nonvoting observer status on its board.

The situation at Seacoast is likely to "play out sooner rather than later, as the best chance for the activists to press the issue and push for a sale would seem to be while Basswood has observer rights … and also while the CapGen fund is still intact," Fenech wrote.

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