UPDATE: This article includes additional information about the strategic rationale for the deal.
Seacoast Banking Corporation of Florida is making a $710.8 million play for entrée into the largest retirement community in the United States.
The Stuart, Florida-based company plans to buy Villages Bancorp., a $4.1 billion-asset institution that operates primarily in the eponymous neighborhood outside of Orlando. The deal, expected to close in the fourth quarter, fills a gap in Seacoast's footprint in "one of the last untapped and historically inaccessible growth markets in the state."
Seacoast has been looking for ways to deploy its outsized capital cushion, which it padded over the last five years due to economic uncertainty, according to Chairman and CEO Charles Shaffer.
"[This acquisition] enhances our long-term growth trajectory, improves profitability and delivers reinvestment capacity and expands our ability to support future loan growth, all through low-risk deployment of excess capital," Shaffer told investors Friday.
Seacoast said in an investor presentation that the deal provides an "ample source of long-term, low-cost liquidity" and a "new and growing customer base primarily composed of affluent retirees with predictable income streams and a need for multiple banking products."
Seacoast expects the deal to be about 22% accretive to its earnings per share in 2026, with a less than three-year timeline to earn back tangible book value dilution.
Villages Bancorp. operates 19 branches — with deposits of $3.5 billion and loans of about $1.3 billion — through its Citizens First Bank subsidiary.
The selling bank was established in 1991 by the developers of The Villages, a community for people over the age of 55, which currently has a population of about 150,000. The Villages region has seen 28% population growth since 2020.
Villages Bancorp. holds more than 50% of the deposit share in the Villages region, and holds exclusivity provisions in the community's town centers, which Seacoast will maintain, Shaffer said.
Piper Sandler analyst Stephen Scouten said in a note Friday that the deal is "highly unique."
"The acquisition represents a rare opportunity to enter a high-growth, demographically favorable market with a well-entrenched, low-risk deposit franchise," Scouten wrote. "Citizens First Bank's exclusivity provisions and branch rights also provide Seacoast with a long runway for growth as The Villages continues its planned expansion."
Piper Sandler is advising Seacoast on its acquisition of Villages Bancorp.
The deal marks Seacoast's latest move to expand its footprint, and scoop up low-cost deposits, in the Sunshine State.
In February, Seacoast announced that it would
Following the close of the Heartland and Villages acquisitions, Seacoast projects to have total assets of $21 billion, deposits of $17 billion and gross loans of $12 billion. Seacoast also expects to see what it called "material" growth and improvement on returns over the next two to three years.
The two banks that Seacoast has announced plans to purchase in 2025 both have relatively low loan-to-deposit ratios, limiting Seacoast's credit risk and giving the bank flexibility to reposition bond portfolios, Shaffer said.
"Both transactions are truly unique in their own way, and you will find very few financial institutions with these profiles in the industry," Shaffer said.
The acquisition will also free Citizens First Bank from lending restrictions it had been under due to Section 23A of the Federal Reserve Act, which relates to transactions between banks and their affiliates.
"Not only are we going to have the opportunity to lend into The Villages directly," Shaffer said, "it opens up more ability to drive loan growth across our franchise. And so it really reloads us in terms of liquidity concentration ratios and gives us the ability to really put all these low-cost deposits to work."
The selling bank was founded by Harold Schwartz, who also founded and developed The Villages community.
While Citizens First had been limited in the volume of loans it could hold on its balance sheet, Seacoast will be able to expand commercial and consumer lending opportunities when the deal closes, Shaffer said. He added that the bank can also introduce a more robust trust and investment management platform than what First Citizens previously offered.
Seacoast will also increase mortgage product offerings, which Shaffer called "a tremendous opportunity" for revenue synergies.
Shaffer added that "one of the most interesting and compelling" factors of the acquisition is the fact that — due to the loan restrictions Citizens First had been operating under — the lower loan-to-deposit ratio reduces Seacoast's commercial real estate lending ratio "materially."
"Additional strategic upside includes loan growth unlocked by the removal of 23A restrictions, cross-sell potential across wealth and insurance, and margin expansion by deploying low-cost deposits into higher-yielding assets," Scouten wrote in his note.
Banks have been rushing to expand in Florida as its population and economy continue to grow at a faster pace than many other U.S. states. But in a hot market — literally and for business — Seacoast is one of the few Florida-native banks pushing to take additional market share.
Seacoast is on track to become what the company described Friday as "the largest pure play Florida public bank."
"What we're now developing and what we've seen develop, and this will help further develop, is a statewide brand," Shaffer said. "A statewide ability to service customers, a larger balance sheet — the ability to bring a wider product set and really bring a unique, Florida-focused, relationship-based bank that we see the market [wanting]."
