Seacoast Banking Corp. of Florida in Stuart said Wednesday that it expects to report a significant boost in its loan-loss reserves for the third quarter to account for a spike in nonperforming loans to residential real estate developers.
With demand for new homes in its markets continuing to soften and real estate values in decline, the $2.3 billion-asset Seacoast said that its nonperforming loan rate nearly tripled from a year earlier, to roughly 2.4% of its loans at the end of the third quarter. As a result, it expects to report a loss provision of $8.4 million for the quarter, up from $1.1 million in the second quarter.
Seacoast earned $4.8 million in the second quarter. It plans to report third-quarter earnings Tuesday.
Also Wednesday, Seacoast said that, as a result of lower-than-expected earnings, it is eliminating bonus compensation for senior executives this year. The elimination, as well as other cost-cutting measures that include branch consolidations and staff reductions, should save the company $2 million this year.
By midday Wednesday, Seacoast's shares had dropped more than 6% from Tuesday's close, to a 52-week low of $14.99.
