Seacoast Banking Corp. agreed Friday to pay $110 million in cash and stock for Heartland Bancshares, a 26-year-old institution with four branches, an abundance of low-cost deposits and a dominant position in a growing Central Florida market.
The $734 million-asset Heartland, the parent company of the Sebring, Florida-based Heartland National Bank, reported deposits of $641 million at Dec. 31, according to the Federal Deposit Insurance Corp. The company's lending portfolio, comprised primarily of residential and commercial real estate loans, was smaller at $161 million.
Charles Shaffer, Seacoast's chairman and CEO, said the deal was a negotiated transaction and the culmination of a nearly five-year courtship. "I would say we both chose each other very carefully over a lot of conversations over a lot of years. I think both organizations have tremendous respect for each other," Shaffer said on a conference call with analysts.
The Sebring metropolitan area is located about 75 miles east of Sarasota and about 85 miles south of Orlando. Its population grew more than 6% between 2020 and 2023 to 107,614, according to the Census Bureau.
Bank deposits in the region have grown at an even faster clip, increasing 30% between 2019 and 2024, according to the FDIC. Heartland grew its deposits by 74% during that span. It held 31% of the Sebring metropolitan area's $4 billion deposit market on June 30, 2024.
Janney Montgomery Scott Research Director Christopher Marinac characterized Seacoast's planned acquisition as an "excellent way" for the Stuart, Florida-based company to scoop up a supply of low-cost deposits with limited risk.
"[Heartland's] small loan portfolio can be consolidated and excess liquidity loaned out elsewhere" across the $15.2 billion-asset Seacoast's much larger footprint, Marinac wrote in a research note.
The $110 million price tag works out to a price-per-tangible-book-value-per-share ratio of 168%. That premium is considerably higher than the average of 120% for bank mergers in 2024, according to Mercer Capital. Shaffer, however, said the consideration reflects Heartland's "incredibly valuable" franchise.
"It's a very granular, relationship-oriented deposit base," Shaffer said. "What's unique about this franchise is the discipline executed by the team over almost three decades to pick the right borrowers, the right relationships, people that are well-heeled, people that know how to operate these businesses. It is a very crafted portfolio of customers and credit exposures."
Seacoast anticipates completing the deal in the third quarter. The acquisition is expected to be 7% accretive to 2026 earnings, boosting the combined company's return on average assets to 1.08%, up from 1.03% at standalone Seacoast. The combined company plans to generate growth by deploying Heartland's excess liquidity into higher-yielding loans and by marketing its broader product set to the acquired company's clients.
"We see great opportunity in complementing Heartland's strengths with Seacoast's innovative products and breadth of offerings to grow our presence and expand our position in the state," Shaffer said.
Seacoast is projecting cost savings equal to 25% of Heartland's operating expenses, which totaled $9.8 million in 2024. It plans no branch closures and no major changes to the Heartland business model.
"It's a phenomenal team," Shaffer said. "We're going to leverage it to do what they do in the market."
Friday's deal announcement ends a two-and-a-half-year merger-and-acquisition lull for Seacoast, which completed six deals between March 2020 and January 2023. It announced its last deal — for the $2.6 billion-asset Professional Holding Corp. in Coral Gables, Florida — in August 2022.
"We've been pretty disciplined over the past few years," Shaffer said. "We've looked at a few things, passed on a few things that didn't make sense from a pricing standpoint."
The Seacoast CEO said the process of acquiring Heartland would likely not keep his company on the M&A sidelines.
"We're always looking for high-quality franchises," Shaffer said. "We're out looking for opportunities. We're looking for well-diversified, granular organizations. There are certainly more of them out there in the state of Florida ... I don't think this transaction stops up from looking at or announcing another one if it comes along."
