Seacoast Banking Corp. of Florida in Stuart remains committed to working on its long game even as its biggest investor presses management to consider selling.
The $4.5 billion-asset company recently agreed to buy GulfShore Bancshares, choosing to enter Tampa, Fla., by acquisition rather than by hiring lenders and opening branches. The deal is Seacoast's third since October 2015.
Over that time, Seacoast's biggest investors — CapGen Capital and Basswood Capital Management — have indicated a preference to see the company sell itself. Basswood reached a truce with Seacoast earlier this year that provided the investor with a nonvoting board seat; the agreement is set to expire on Nov. 30, but it can be extended.
Dennis Hudson, the company's chief executive, said an eventual sale is possible, although he is intent on building value for now.
"We're just focused on growing," Hudson said in an interview. "As we continue to grow profitably and improve our performance, it obviously continues to push up our valuation. That's what we're for."
Industry observers typically view acquisitions as a bank's way of signaling a preference to be buyers rather than sellers. Still, management teams often discuss a willingness to entertain a sale if doing so is in the best interest of their company's shareholders.
Florida, meanwhile, continues to have a fair amount of bank M&A, based on data from S&P Global Market Intelligence. Eleven banks in the state have announced plans to be sold this year, including Giant Holdings in Fort Lauderdale, which agreed on Monday to be sold to Home BancShares in Conway, Ark. Last year, 20 Florida banks found buyers.
Some shareholders — especially those who bought in after the bigger funds invested — might be surprised that Seacoast announced another deal, said Joseph Fenech, an analyst at Hovde Group. "But I think for people that know the company well, they wouldn't be surprised that Seacoast is choosing to pursue an independent path," he said.
Seacoast's performance has improved since May, when CapGen derided the company's financial results as "anemic" and "disappointing" despite using two deals to bulk up around Orlando, Fla.
The company's third-quarter profit rose 72% from a quarter earlier, to $9.1 million, largely because of 6% loan growth and a wider net interest margin. Seacoast's return on assets increased to 0.82% on Sept. 30 from 0.51% a quarter earlier.
"I think the management team is continuing to make an effort to earn its independence and is running the bank businesses as usual," said Jefferson Harralson, an analyst at Keefe, Bruyette & Woods.
For Hudson, buying GulfShore allows Seacoast to obtain scale in a new market while avoiding "some of the startup burden that comes from de novo entry." GulfShore, formed in 2007, has three branches, $279 million in deposits and $253 million in loans.
It could have taken Seacoast years to build that kind of operation from scratch, said Tom Rudkin, a principal for DD&F Consulting Group.
"To do a de novo bank in Tampa would be extremely difficult," Rudkin said. "I think this is probably the best strategy for them."
The big question heading into 2017 might involve CapGen's response to Seacoast's most recent financial results and its latest acquisition. A representative for the New York firm did not respond to a request for comment.
"I think the longer-term question is … how will those activist shareholders react to this news and what's sort of the return volley, if you will, down the road," Fenech said.
Paul Davis contributed to this report.