UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported)       April 28, 2015

 

SEACOAST BANKING CORPORATION OF FLORIDA
(Exact Name of Registrant as Specified in Charter)

 

Florida   0-13660   59-2260678

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number

 

(IRS Employer

Identification No.)

 

815 Colorado Avenue, Stuart, FL   34994
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code     (772) 287-4000     

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.)

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

  

SEACOAST BANKING CORPORATION OF FLORIDA

 

Item 2.02          Results of Operations and Financial Condition

 

On April 28, 2015, the Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) announced its financial results for the first quarter ended March 31, 2015.

 

A copy of the press release announcing Seacoast’s results for the first quarter ended March 31, 2015 is attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

Item 7.01          Regulation FD Disclosure

 

On April 29, 2015, Seacoast held an investor conference call to discuss its financial results for the first quarter ended March 31, 2015. A transcript of this conference call is attached hereto as Exhibit 99.2 and incorporated herein by reference. Also attached as Exhibit 99.3 are charts (available on the Company’s website at www.seacoastbanking.com) containing information used in the conference call and incorporated herein by reference. All information included in the transcript and the charts is presented as of March 31, 2015, and the Company does not assume any obligation to correct or update said information in the future.

 

The information in Items 2.02 and 7.01, as well as Exhibits 99.1, 99.2 and 99.3, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

 

page 2 of 6
 

 

Item 9.01          Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit No.   Description
99.1   Press Release dated April 28, 2015 with respect to Seacoast’s financial results for the first quarter ended March 31, 2015
     
99.2   Transcript of Seacoast’s investor conference call held on April 29, 2015 to discuss the Company’s financial results for the first quarter ended March 31, 2015
     
99.3  

Data on website containing information used in the conference call held on April 29, 2015

 

Exhibits 99.1, 99.2 and 99.3 referenced herein contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, ability to realized deferred tax assets, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls and for integration of banks that we have acquired, as well as statements with respect to Seacoast’s objectives, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.

 

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of Seacoast to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements.

 

page 3 of 6
 

  

You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support”, “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further”, “point to,” “project,” “could,” “intend” or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the effects of future economic and market conditions, including seasonality; governmental monetary and fiscal policies, as well as legislative, tax and regulatory changes; changes in accounting policies, rules and practices; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest sensitive assets and liabilities; interest rate risks, sensitivities and the shape of the yield curve; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; and the failure of assumptions underlying the establishment of reserves for possible loan losses. The risks of mergers and acquisitions, include, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers by competitors; as well as the difficulties and risks inherent with entering new markets.

 

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2014 under “Special Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors”, and otherwise in our SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC’s Internet website at http://www.sec.gov.

 

page 4 of 6
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  SEACOAST BANKING CORPORATION OF FLORIDA
  (Registrant)
     
Date: May 1, 2015 By:  /s/ Dennis S. Hudson, III
    Dennis S. Hudson, III
    Chairman and Chief Executive Officer

 

page 5 of 6
 

  

EXHIBIT INDEX

 

Exhibit No.    Description
     
99.1   Press Release dated April 28, 2015 with respect to Seacoast’s financial results for the first quarter ended March 31, 2015
     
99.2   Transcript of Seacoast’s investor conference call held on April 29, 2015 to discuss the Company’s financial results for the first quarter ended March 31, 2015
     
99.3  

Data on website containing information used in the conference call held on April 29, 2015

 

page 6 of 6



 

EXHIBIT 99.1

To Form 8-K dated April 28, 2015

 

NEWS RELEASE

 

SEACOAST BANKING CORPORATION OF FLORIDA

 

Dennis S. Hudson, III

Chairman and Chief Executive Officer

Seacoast Banking Corporation of Florida

(772) 288-6085

 

William R. Hahl

Executive Vice President

(772) 221-2825

 

Stephen Fowle

Executive Vice President

Chief Financial Officer

(772) 463-8977

 

Seacoast Banking Earnings Increase 155% YOY to $5.9 Million, or $0.18 per Share, in 1Q15 Fueled by Strong Growth, Improving Operating Efficiency and Margin Expansion

First Quarter 2015 Earnings Highlights

 

·Net income grew 155% to $5.9 million, or $0.18 per diluted share, from $2.3 million, or $0.09 per diluted share, in the first quarter of 2014. In the fourth quarter of 2014, the net loss was $1.5 million, or $0.05 per diluted share.

 

·Adjusted net income,(1) (excluding merger costs and other adjustments) increased 48% to $6.2 million or $ 0.19 per diluted share, for the first quarter 2015, compared to $4.2 million, or $0.13 per diluted share in 4Q14. 

 

- continued -
 
·Revenues increased as Seacoast continued to grow its businesses. Revenues increased $11.2 million or 52% above first quarter 2014 levels and $1.1 million or 15%, annualized, linked quarter.

 

·Net interest margin improved to 3.62% compared with 3.56% in preceding quarter, and 3.07% in the first quarter a year ago due to loan growth, including the acquisition of The BANKshares, Inc., and investment of excess cash.

 

·Operating efficiencies improved significantly with fully implemented previously announced expense reductions. The efficiency ratio improved to 68.3% for the quarter, compared to 84.3% in the first quarter a year ago.

 

(1) Non-GAAP measure

 

First Quarter 2015 Growth Highlights

 

·Total loans increased $32.6 million or 7% (annualized) from the fourth quarter 2014, and increased 41.3% from a year ago. Excluding the acquisition of The BANKshares, loans increased $218.7 million or 15.9% from prior year levels.

 

·Deposits increased $193.3 million or 8.0% (not annualized) from the prior quarter and 43.4% from a year earlier. Excluding the acquisition of The BANKshares, deposits increased $273.7 million or 15.0% from prior year levels.

 

·Noninterest bearing deposits grew to 30.4% of total deposits, from 28.2% one year ago.

 

·During the first quarter, Seacoast announced the agreement to acquire Grand Bankshares, Inc. which will add approximately $208 million in assets, $184 million in deposits, and $127 million in gross loans to Seacoast's operations, along with 3 branch locations in Palm Beach County.

 

- continued -
 

 

STUART, FL., April 28, 2015 – Seacoast Banking Corporation of Florida (NASDAQ-NMS: SBCF) today reported that first quarter 2015 profits more than doubled from a year ago, fueled by expanding net interest margin, growing operating efficiencies and strong loan and deposit growth. Net income increased 154.8% to $5.9 million, or $0.18 per diluted share, from $2.3 million, or $0.09 per share, in the first quarter of 2014. The company reported a loss of $1.5 million, or $0.05 per diluted share, in the fourth quarter of 2014. Excluding merger related charges and other adjustments as described below, adjusted net income (non-GAAP measure) increased 47.8% to $6.2 million or $0.19 per diluted common share, compared to $4.2 million, or $0.13 per diluted common share in the preceding quarter and $2.5 million, or $0.10 per diluted common share, a year ago.

 

“Our results this quarter reflect our focus on controlling risk, improving profitability and making the necessary investments to drive our future growth. Effectively managing each of these areas is key to helping our organization take advantage of the opportunities we see ahead. Consistent growth in our core business continues to improve, driven by ongoing sales effectiveness and expanded marketing efforts. Given these factors, revenue growth during the quarter exceeded our expectations, in part due to better than expected results from customers acquired via the Central Florida acquisition, as well as better household growth in our legacy markets,” said Dennis S. Hudson, III, Chairman and CEO. “Additionally, we were also pleased to announce another acquisition this quarter, which will strengthen our business in the attractive Palm Beach County market. This acquisition, along with our prior acquisition in the Central Florida market, positions us to further capitalize on the improving Florida economy.”

 

- continued -
 

  

FINANCIAL
HIGHLIGHTS:

(Dollars in thousands,
except per share data)

 

First Quarter

2015

  

Fourth
Quarter

2014

  

Third
Quarter

2014

  

Second
Quarter

2014

  

First
Quarter

2014

 
                     
Total Assets  $3,231,956   $3,093,335   $2,361,813   $2,294,156   $2,315,992 
                          
Loans  $1,854,487   $1,821,885   $1,391,082   $1,335,192   $1,312,456 
                          
Deposits  $2,609,825   $2,416,534   $1,808,550   $1,805,537   $1,819,795 
                          
Net Income (Loss) Available to Common  Shareholders  $5,859   $(1,517)  $2,996   $1,918   $2,299 
Diluted Earnings Per Share  $0.18   $(0.05)  $0.12   $0.07   $0.09 
Return on Average Assets   0.75%   (0.20)%   0.52%   0.33%   0.41%
                          
Net Interest Margin   3.62%   3.56%   3.17%   3.10%   3.07%
Efficiency Ratio   68.3    104.5    82.8    89.4    84.3 
                          
Pretax, Pre-provision Income (1)  $9,832   $(2,029)  $3,832   $1,938   $3,013 
Average Diluted Shares Outstanding   33,135    33,124    26,026    25,998    25,657 
Adjusted Diluted Earnings Per Share (1)  $0.19   $0.13   $0.13   $0.12   $0.10 
Adjusted Return on Average Assets (1)   0.79%   0.55%   0.57%   0.52%   0.45%
                          
Adjusted Efficiency Ratio (1)   67.4    74.8    80.2    82.1    83.3 
Adjusted Pretax, Pre-provision Income (1)  $10,342   $7,464   $4,341   $3,821   $3,395 

Annualized Adjusted Core

Operating Expenses as

a Percent of Average

Assets (1)

   2.92    3.19    3.24    3.27    3.26 

 

(1)Non-GAAP measure

 

- continued -
 

 

Balance Sheet Highlights

 

“The investments we made last year in digital access and automated and digital marketing technology are paying off, as our sales team continues to build momentum. These new tools for data mining, automated outreach and targeted product offerings are generating strong results and helping to fuel growth in low-cost customer funding and loans,” said Hudson. “These investments, along with improvements in face to face sales effectiveness, are reflected in a 5% annualized growth in net households over the last three months.”

 

Seacoast Continues to Expand its Low-Cost Funding Base through Organic Growth and Acquisitions

 

Total deposits increased a strong $193.3 million, or 8.0% (not annualized), from fourth quarter levels. Core customer funding increased $221.6 million, or 9.9% (not annualized), during the same period. The growth is the result of increased focus on growing small business relationships in the more populated metropolitan areas of Palm Beach County and Central Florida. In addition, the Company continues to expand its focus on growing relationships with governmental entities, resulting in an increase of $95.8 million in new public funding relationships.

 

Total deposits were $2.61 billion at March 31, 2015, an increase of $790.0 million above the first quarter of 2014. Excluding deposits acquired in the BANKshares transaction, total deposits increased $273.7 million or 15.0% from one year ago. Core customer funding totaled $2.47 billion at March 31, 2015, a $753.4 million increase from the first quarter of 2014. Excluding the acquisition, core customer funding increased by $306.0 million or 15.1%. Demand deposits increased $68.1 million, or 9.4% from the prior quarter and $279.4 million or 54.4% from the first quarter of 2014 and represent 30.4% of total deposits, up from 28.2% one year ago.

 

- continued -
 

 

(Dollars in thousands) 

First

Quarter

2015

  

Fourth
Quarter

2014

  

First

Quarter

2014

  

1Q15 vs

4Q14

Change

  

1Q15 vs

1Q14

Change

 
Customer Relationship Funding                         
Demand deposits (noninterest bearing)  $793,336   $725,238   $513,925    9.4%   54.4%
NOW   634,854    652,353    504,698    (2.7)   25.8 
Money market accounts   596,600    450,172    337,408    32.5    76.8 
Savings deposits   272,963    264,738    202,170    3.1    35.0 
Time certificates of deposit   312,072    324,033    261,594    (3.7)   19.3 
Total deposits   2,609,825    2,416,534    1,819,795    8.0    43.4 
Sweep repurchase agreements   170,023    153,640    156,136    10.7    8.9 
Total core customer funding (1)   2,467,776    2,246,141    1,714,337    9.9    43.9 

Demand deposit mix

(noninterest bearing)

   30.4%   30.0%   28.2%          

 

(1)Total deposits and sweep repurchase agreements, excluding certificates of deposits.

 

Strong Loan Growth Reflects Seacoast Sales Momentum and a Vibrant Florida Economy

 

Total loans were $1.85 billion at March 31, 2015, up $542.0 million from a year ago. Excluding loans acquired in the BANKshares transaction, loans increased $218.7 million or 15.9% from the prior year.

 

- continued -
 

  

Commercial loan originations for the quarter totaled $61.4 million despite a seasonally slower quarter for commercial loan closing. Commercial loan closings increased $24.0 million or 64.1% over the first quarter 2014. The commercial pipeline (in underwriting and approval or approved and not yet closed) totaled $82.1 million at March 31, 2015, the highest in the trailing four quarters, indicating continued strength.

 

(Dollars in thousands)  First
Quarter
2015
   Fourth
Quarter
2014
   Third
Quarter
2014
   Second
Quarter
2014
   First
Quarter
2014
 
                     
Commercial pipeline  $82,143   $60,136   $45,534   $58,168   $29,936 
Commercial loans closed   61,357    94,719    72,630    53,250    37,386 
Total loan originations and pipeline  $143,500   $154,855   $118,164   $111,418   $67,322 

 

Closed residential production totaled $55.8 million compared to $57.9 million in the fourth quarter and $40.0 million in the first quarter of 2014. The residential pipeline totaled $48.5 million at March 31, 2015 compared to $21.4 million at December 31, 2014 and $26.7 million one year ago. Consumer loan and small business originations (inclusive of lines of credit) totaled $38.9 million in the first quarter of 2015 compared to $10.5 million one year ago.

 

Income Statement Highlights

 

Net interest Income at Record Level, Margin Increases Meaningfully

 

Net interest income for the quarter totaled $25.7 million, a $1.0 million or 4% (not annualized) increase from the prior quarter. Net interest margin for the quarter increased to 3.62% versus 3.56% in the fourth quarter of 2014. Improvement in net interest income and margin was the result of increased loan growth (a $54.5 million average balance increase), the reinvestment of excess cash balances, and additional accretion on purchased loans.

 

- continued -
 

 

Noninterest Income Increase Reflects Customer Growth and Strong Mortgage Banking Results

 

Noninterest income (excluding security gains) increased $167,000 from fourth quarter 2014. Mortgage banking fees and interchange income, up $372,000 and $134,000, respectively, over the prior quarter offset seasonally (fewer number of days) and lower service charges on deposits and marine finance fees.

 

(Dollars in thousands)  First
Quarter
2015
   Fourth
Quarter
2014
   Third
Quarter
2014
   Second
Quarter
2014
   First
Quarter
2014
 
                          
Service charges on deposit accounts  $2,002   $2,208   $1,753   $1,484   $1,507 
Trust fees   801    795    817    703    671 
Mortgage banking fees   1,088    716    825    855    661 
Brokerage commissions and fees   441    417    408    410    379 
Marine finance fees   197    445    281    340    254 
Interchange income   1,737    1,603    1,452    1,514    1,403 
Bank owned life insurance   330    252    0    0    0 
Other deposit based EFT fees   114    92    70    83    98 
Other   598    613    543    507    585 
Total   7,308    7,141    6,149    5,896    5,558 
                          
Securities gains, net   0    108    344    0    17 
   $7,308   $7,249   $6,493   $5,896   $5,575 

 

Noninterest Expense Decreases Significantly Linked Quarter as Cost Efficiencies Register

 

Non-interest expense dropped significantly from fourth quarter 2014 levels, when sizable merger and restructuring charges were recorded. Core operating expense (non-GAAP) totaled $22.7 million for the first quarter of 2015 compared to $24.4 million in the fourth quarter of 2014. The improvement in core operating expense and our adjusted efficiency ratio (non-GAAP measure) (67.4% in 1Q15 versus 74.8% in 4Q14) is reflective of a full quarter benefit from expense reduction initiatives. The strategic cost initiatives we completed in the fourth quarter of 2014 became fully realized this quarter and are reflected in our lower employee costs (salaries and wages) and other fixed cost (primarily occupancy expense) infrastructure. We achieved these savings with our revenue producing staff intact to continue the sales momentum we have established over the prior quarters.

 

- continued -
 

 

Merger related charges for the Grand Bankshares acquisition totaled $212,000 in the first quarter and are estimated to total approximately $3.6 million in aggregate.

 

(Dollars in thousands) 

First
Quarter

2015

  

Fourth
Quarter

2014

  

Third
Quarter

2014

  

Second
Quarter

2014

  

First
Quarter
2014

 
Noninterest Expense:                         
                          
Salaries and wages  $8,777   $9,998   $7,868   $7,587   $7,412 
Employee benefits   2,415    2,461    2,049    2,081    2,182 
Outsourced data processing costs   2,184    1,925    1,769    1,811    1,695 
Telephone / data lines   496    419    313    306    293 
Occupancy expense   2,023    2,325    1,879    1,888    1,838 
Furniture and equipment expense   732    683    628    604    571 
Marketing expense   975    1,072    717    675    813 
Legal and professional fees   1,388    1,741    884    924    935 
FDIC assessments   589    476    387    411    386 
Amortization of intangibles   315    446    195    196    196 
Other   2,781    2,863    2,155    2,317    2,063 
Total Core Operating Expense   22,675    24,409    18,844    18,800    18,384 
Non-GAAP adjustments                          
Severance   12    478    328    181    212 
Merger related charges   275    2,722    399    1,234    6 
Branch closure charges and costs related to expense initiatives   0    4,261    68    114    0 
Marketing and brand refresh expense   0    697    0    0    0 
Stock compensation expense and other incentive costs related to improved outlook   0    1,213    0    0    0 
Miscellaneous losses (gains)   0    119    (45)   144    0 
Net loss on OREO and repossessed assets   81    9    156    92    53 
Asset dispositions expense   143    103    139    118    128 
Total Non-Interest Expenses  $23,186   $34,011   $19,889   $20,683   $18,789 

 

- continued -
 

 

Income Taxes

 

The effective tax rate in the first quarter decreased to 37.7 % from 44.4% (higher from nondeductible merger related charges) for the 2014 calendar year. The improvement over the prior year also reflects the full effect of income from the acquisition of tax exempt bank owned life insurance policies and tax exempt investments in the fourth quarter of 2014.

 

Other Highlights

 

Credit Quality Maintains Strong Trends

 

The provision for loan losses was $433,000 for the first quarter of 2015 compared to $118,000 in the fourth quarter of 2014 and a recapture of $735,000 in the first quarter 2014. The allowance for loan losses to loans for non-acquired loans ended at 1.13%, in line with the fourth quarter 2014 of 1.14%. Additional highlights include:

 

·Nonperforming loans to total loans outstanding at the end of the first quarter of 1.1%, down from 2.0 % at March 31, 2014;

 

·Nonperforming assets to total assets declined to 0.8%, compared to 1.4% a year ago;

 

Earnings Continue to Expand Already Strong Capital Ratios

 

Capital ratios remain healthy and well above regulatory requirements for well-capitalized institutions. The common equity tier 1 capital ratio (CET1) under the new Basel III standardized transition approach is estimated at 13.2% at March 31, 2015, well above the 6.5% regulatory threshold for well-capitalized institutions. The total risk based capital ratio is estimated at 15.6% at March 31, 2015 compared to 16.3% at year end 2014. The tier 1 leverage ratio is estimated at 10.0% at March 31, 2015 compared to 10.3% at December 31, 2014. Tangible book value per share increased from year end 2014 by $0.29 per share to $8.74.

 

- continued -
 

 

Explanation of Certain Unaudited Non-GAAP Financial Measures

 

This press release contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). The financial highlights provide reconciliations between GAAP net income and adjusted net income, GAAP income and adjusted pretax, pre-provision income. Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP. Reconciliations of GAAP to non-GAAP measures - all amounts are in thousands except per share data (unaudited).

 

To better evaluate its earnings, the Company removes certain items to arrive at Adjusted net income, Adjusted pretax, pre-provision income and Adjusted diluted earnings per share (non-GAAP measures) as detailed in the table below:

 

- continued -
 

 

(Dollars in thousands) 

First
Quarter

2015

  

Fourth
Quarter

2014

  

Third
Quarter

2014

  

Second
Quarter

2014

  

First
Quarter

2014

 
                     

Net income

  $5,859   $(1,517)  $2,996   $1,918   $2,299 
Severance   12    478    328    181    212 
Merger related charges   275    2,722    399    1,234    6 
Branch closure charges and costs related to expense initiatives   0    4,261    68    114    0 
Marketing and brand refresh expense   0    697    0    0    0 
Stock compensation expense and other incentive costs related to improved outlook   0    1,213    0    0    0 
Security (gains)   0    (108)   (344)   0    (17)
Miscellaneous losses (gains)   0    119    (45)   144    0 
Recovery of nonaccrual loan interest   0    0    (192)   0    0 
Net loss on OREO and repossessed assets   81    9    156    92    53 
Asset dispositions expense   143    103    139    118    128 
Effective tax rate on adjustments   (193)   (3,798)   (219)   (811)   (148)
                          

Adjusted Net Income (1)

  $6,177   $4,179   $3,286   $2,990   $2,533 
Provision (recapture) for loan losses   433    118    (1,425)   (1,444)   (735)
Income taxes   3,732    3,167    2,480    2,275    1,597 
Adjusted pretax, pre-provision income (1)  $10,342   $7,464   $4,341   $3,821   $3,395 
Adjusted earnings per diluted share (1)  $0.19   $0.13   $0.13   $0.12   $0.10 
Average shares outstanding   33,135    33,124    26,026    25,998    25,657 

 

(1)Non-GAAP measure

 

Conference Call Information

 

Seacoast will host a conference call on Wednesday, April 29, 2015 at 9:00 a.m. (Eastern Time) to discuss the earnings results. Investors may call in at (800) 774-6070 (passcode: 7789246; host: Dennis S. Hudson).  Slides will be used during the conference call and may be accessed at Seacoast’s website at SeacoastBanking.net by selecting “Presentations” under the heading “Investor Services.”  A replay of the call will be available for one month, the afternoon of April 29, by dialing (888) 843-7419 (domestic), using the passcode 7789246.

 

- continued -
 

 

Alternatively, individuals may listen to the live webcast of the presentation by visiting Seacoast’s website at SeacoastBanking.net.  The link is located in the subsection “Presentations” under the heading “Investor Services.”  Beginning the afternoon of April 29, an archived version of the webcast can be accessed from this same subsection of the website.  The archived webcast will be available for one year.   

 

About Seacoast Banking Corporation of Florida (NASDAQ: SBCF)

 

Seacoast Banking Corporation of Florida is one of the largest community banks headquartered in Florida with approximately $3.1 billion in assets and $2.4 billion in deposits as of December 31, 2014. The Company provides integrated financial services including commercial and retail banking, wealth management, and mortgage services to customers through advanced banking solutions, 42 traditional branches of its locally-branded wholly-owned subsidiary bank, Seacoast Bank, and five commercial banking centers. Offices stretch from Ft. Lauderdale, Boca Raton and West Palm Beach north through the Space Coast of Florida, into Orlando and Central Florida, and west to Okeechobee and surrounding counties. More information about the Company is available at SeacoastBanking.com.

Sources:

https://www08.wellsfargomedia.com/downloads/pdf/com/insights/economics/regional-reports/FL_Economic_Outlook_03202015.pdf

 

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_____________________________________________________________

Cautionary Notice Regarding Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, ability to realized deferred tax assets, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls and for integration of banks that we have acquired, as well as statements with respect to Seacoast’s objectives, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.

 

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of Seacoast to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements.

 

You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support”, “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further”, “point to,” “project,” “could,” “intend” or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the effects of future economic and market conditions, including seasonality; governmental monetary and fiscal policies, as well as legislative, tax and regulatory changes; changes in accounting policies, rules and practices; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest sensitive assets and liabilities; interest rate risks, sensitivities and the shape of the yield curve; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; and the failure of assumptions underlying the establishment of reserves for possible loan losses. The risks of mergers and acquisitions, include, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers by competitors; as well as the difficulties and risks inherent with entering new markets.

 

 
 

 

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2014, under “Special Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors”, and otherwise in our SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC’s Internet website at http://www.sec.gov.

 

 
 

 

FINANCIAL HIGHLIGHTS (Unaudited)  
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

  

(Dollars in thousands, except share data)  Three Months Ended 
   March 31,   December 31,   March 31, 
   2015   2014   2014 
Summary of Earnings               
Net income (loss)  $5,859   $(1,517)  $2,299 
Net interest income (1)   25,834    24,883    16,277 
Net interest margin (1), (2)   3.62    3.56    3.07 
                
Performance Ratios               
Return on average assets-GAAP basis (2), (3)   0.75%   (0.20)%   0.41 
Return on average shareholders' equity-GAAP basis (2), (3)   7.42    (1.89)   4.02 
Return on average tangible shareholders' equity-GAAP basis (2), (3), (4)   8.51    (1.71)   4.26 
Efficiency ratio (5)   68.33    104.46    84.30 
Noninterest income to total revenue   22.13    22.40    25.52 
                
Per Share Data               
Net income (loss) diluted-GAAP basis  $0.18   $(0.05)  $0.09 
Net income (loss) basic-GAAP basis   0.18    (0.05)   0.09 
Book value per share common   9.71    9.44    8.79 
Tangible book value per share   8.74    8.45    8.77 
Cash dividends declared   0.00    0.00    0.00 

 

(1) Calculated on a fully taxable equivalent basis using amortized cost.
(2) These ratios are stated on an annualized basis and are not necessarily indicative of future periods.
(3) The calculation of ROA and ROE do not include the mark-to-market unrealized gains (losses) because the unrealized gains (losses)are not included in net income (loss).
(4) The Company defines tangible common equity as total shareholder's equity less intangible assets.
(5) Defined as (noninterest expense less foreclosed property expense and amortization of intangibles) divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains).

 

 

FINANCIAL HIGHLIGHTS
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

   March 31,   December 31,   March 31, 
(Dollars in thousands, except share data)  2015   2014   2014 
             
Selected Financial Data               
Total assets  $3,231,956   $3,093,335   $2,315,992 
Securities available for sale (at fair value)   730,232    741,375    658,512 
Securities held for investment (at amortized cost)   223,061    207,904    0 
Net loans   1,836,766    1,804,814    1,292,984 
Deposits   2,609,825    2,416,534    1,819,795 
Total shareholders' equity   321,844    312,651    228,382 
                
Average Balances (Year-to-Date)               
Total average assets  $3,151,132   $2,485,259   $2,286,998 
Less: intangible assets   31,221    8,840    629 
Total average tangible assets  $3,119,911   $2,476,419   $2,286,369 
                
Total average equity  $320,346   $256,867   $231,769 
Less: intangible assets   31,221    8,840    629 
Total average tangible equity  $289,125   $248,027   $231,140 
                
Credit Analysis               
Net charge-offs (recoveries) year-to-date - non-acquired loans  $(263)  $(489)  $(139)
Net charge-offs year-to-date - acquired loans   46    -    - 
Total net charge-offs (recoveries) year-to-date   (217)   (489)   (139)
                
Net charge-offs (recoveries) to average loans (annualized) - non-acquired loans   (0.06)%   (0.03)%   (0.04)
Net charge-offs to average loans (annualized) - acquired loans   0.01    -    - 
Total net charge-offs (recoveries) to average loans (annualized)   (0.05)%   (0.03)%   (0.04)
                
Loan loss provision (recapture) year-to-date - non-acquired loans  $292   $(3,550)  $(735)
Loan loss provision year-to-date - acquired loans   141    64    - 
Total loan loss provision (recapture) year-to-date   433    (3,486)   (735)
                
Allowance to loans at end of period - non-acquired loans   1.13%   1.14%   1.48 
Discount for credit losses to acquired loans at end of period   3.56    3.56    - 
                
Nonperforming loans - non-acquired loans  $16,860   $18,563   $26,220 
Nonperforming loans - acquired loans   4,196    2,577    - 
Other real estate owned - non-acquired   4,738    5,567    6,369 
Other real estate owned - acquired   1,431    1,895    - 
Total nonperforming assets  $27,225   $28,602   $32,589 
                
Restructured loans (accruing)  $23,847   $24,997   $24,537 
                
Purchased noncredit impaired loans  $296,839   $326,066   $- 
Purchased credit impaired loans   7,119    7,814    - 
Total acquired loans  $303,958   $333,880   $- 
                
Nonperforming loans to loans at end of period - non-acquired loans   0.91%   1.02%   2.00 
Nonperforming loans to loans at end of period - acquired loans   0.23    0.14    - 
Total nonperforming loans to loans at end of period   1.14%   1.16%   2.00 
                
Nonperforming assets to total assets - non-acquired   0.67%   0.78%   1.41 
Nonperforming assets to total assets - aquired   0.17    0.14    - 
Total nonperforming assets to total assets   0.84%   0.92%   1.41 

  

 
 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Unaudited)    
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

   Three Months Ended 
   March 31, 
(Dollars in thousands, except per share data)  2015   2014 
         
Interest on securities:          
Taxable  $4,898   $3,434 
Nontaxable   150    12 
Interest and fees on loans   22,021    13,798 
Interest on federal funds sold and other investments   249    268 
Total Interest Income   27,318    17,512 
           
Interest on deposits   401    194 
Interest on time certificates   347    407 
Interest on borrowed money   860    690 
Total Interest Expense   1,608    1,291 
           
Net Interest Income   25,710    16,221 
Provision (recapture) for loan losses   433    (735)
Net Interest Income After Provision for Loan Losses   25,277    16,956 
           
Noninterest income:          
Service charges on deposit accounts   2,002    1,507 
Trust fees   801    671 
Mortgage banking fees   1,088    661 
Brokerage commissions and fees   441    379 
Marine finance fees   197    254 
Interchange income   1,737    1,403 
Other deposit based EFT fees   114    98 
BOLI income   330    0 
Other   598    585 
    7,308    5,558 
Securities gains, net   0    17 
Total Noninterest Income   7,308    5,575 
           
Noninterest expenses:          
Salaries and wages   8,789    7,624 
Employee benefits   2,415    2,182 
Outsourced data processing costs   2,184    1,695 
Telephone / data lines   496    293 
Occupancy   2,023    1,838 
Furniture and equipment   732    571 
Marketing   975    813 
Legal and professional fees   1,663    941 
FDIC assessments   589    386 
Amortization of intangibles   315    196 
Asset dispositions expense   143    128 
Net loss on other real estate owned and repossessed assets   81    53 
Other   2,781    2,063 
Total Noninterest Expenses   23,186    18,783 
           
Income Before Income Taxes   9,399    3,748 
Income taxes   3,540    1,449 
           
Net Income  $5,859   $2,299 
           
Per share of common stock:          
           
Net income diluted  $0.18   $0.09 
Net income basic   0.18    0.09 
Cash dividends declared   0.00    0.00 
           
Average diluted shares outstanding   33,135,618    25,656,775 
Average basic shares outstanding   32,971,444    25,489,630 

 

 
 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)      
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES      

 

   March 31,   December 31,   March 31, 
(Dollars in thousands, except share data)  2015   2014   2014 
             
Assets               
Cash and due from banks  $65,097   $64,411   $44,984 
Interest bearing deposits with other banks   134,832    36,128    173,794 
Total Cash and Cash Equivalents   199,929    100,539    218,778 
                
Securities:               
Available for sale (at fair value)   730,232    741,375    658,512 
Held for investment (at amortized cost)   223,061    207,904    0 
Total Securities   953,293    949,279    658,512 
                
Loans available for sale   18,851    12,078    11,038 
                
Loans, net of deferred costs   1,854,487    1,821,885    1,312,456 
Less: Allowance for loan losses   (17,721)   (17,071)   (19,472)
Net Loans   1,836,766    1,804,814    1,292,984 
                
Bank premises and equipment, net   48,189    45,086    35,057 
Other real estate owned   6,169    7,462    6,369 
Other intangible assets   7,139    7,454    522 
Goodwill   25,222    25,309    0 
Bank owned life insurance   35,983    35,679    0 
Other assets   100,415    105,635    92,732 
   $3,231,956   $3,093,335   $2,315,992 
                
Liabilities and Shareholders' Equity               
Liabilities               
Deposits               
Demand deposits (noninterest bearing)  $793,336   $725,238   $513,925 
NOW   634,854    652,353    504,698 
Savings deposits   272,963    264,738    202,170 
Money market accounts   596,600    450,172    337,408 
Other time certificates   166,905    173,247    148,971 
Brokered time certificates   7,985    7,034    9,619 
Time certificates of $100,000 or more   137,182    143,752    103,004 
Total Deposits   2,609,825    2,416,534    1,819,795 
                
               
Federal funds purchased and securities sold under agreements to repurchase, maturing within 30 days   170,023    233,640    156,136 
Borrowed funds   50,000    50,000    50,000 
Subordinated debt   64,627    64,583    53,610 
Other liabilities   15,637    15,927    8,069 
    2,910,112    2,780,684    2,087,610 
                
Shareholders' Equity               
Common stock   3,300    3,300    2,599 
Additional paid in capital   379,740    379,249    301,918 
Accumulated deficit   (59,140)   (65,000)   (68,396)
Treasury stock   (83)   (71)   (39)
    323,817    317,478    236,082 
Accumulated other comprehensive (loss), net   (1,973)   (4,827)   (7,700)
Total Shareholders' Equity   321,844    312,651    228,382 
   $3,231,956   $3,093,335   $2,315,992 
                
Common Shares Outstanding   33,136,152    33,136,592    25,984,488 

 

 

Note: The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date. 

 

 
 

 

CONSOLIDATED QUARTERLY FINANCIAL DATA         (Unaudited)          
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                  

 

   QUARTERS 
   2015   2014 
(Dollars in thousands, except per share data)  First   Fourth   Third   Second   First 
Net income (loss)  $5,859   $(1,517)  $2,996   $1,918   $2,299 
                          
Operating Ratios                         
Return on average assets-GAAP basis (2),(3)   0.75%   (0.20)%   0.52%   0.33%   0.41%
Return on average tangible assets (2),(3),(4)   0.79    (0.16)   0.54    0.36    0.43 
Return on average shareholders' equity-GAAP basis (2),(3)   7.42    (1.89)   4.97    3.25    4.02 
Efficiency ratio (5)   68.33    104.46    82.78    89.42    84.30 
Noninterest income to total revenue   22.13    22.40    26.30    26.06    25.52 
                          
Net interest margin (1),(2)   3.62    3.56    3.17    3.10    3.07 
Average equity to average assets   10.17    10.51    10.37    10.27    10.13 
                          
Credit Analysis                         
Net charge-offs (recoveries) - non-acquired loans  $(263)  $618   $(856)  $(112)  $(139)
Net charge-offs - acquired loans   46    -    -    -    - 
Total net charge-offs (recoveries)   (217)   618    (856)   (112)   (139)
                          
Net charge-offs (recoveries) to average loans - non-acquired loans   (0.06)%   0.14%   (0.25)%   (0.03)%   (0.04)%
Net charge-offs (recoveries) to average loans - acquired loans   0.01    -    -    -    - 
Toral net charge-offs (recoveries) to average loans   (0.05)   0.14    (0.25)   (0.03)   (0.04)
                          
Loan loss provision (recapture) - non-acquired loans  $292   $54   $(1,425)  $(1,444)  $(735)
Loan loss provision (recapture) - acquired loans   141    64    -    -    - 
Total loan loss provision (recapture)   433    118    (1,425)   (1,444)   (735)
                          
Allowance to loans at end of period - non-acquired loans   1.13%   1.14%   1.26%   1.36%   1.48%
Discount for credit losses to acquired loans at end of period   3.56%   3.56%   -%   -%   -%
                          
Nonperforming loans - non-acquired loans  $16,860   $18,563   $18,942   $21,745   $26,220 
Nonperforming loans - acquired loans   4,196    2,577    -    -    - 
Other real estate owned - non-acquired   4,738    5,567    5,018    6,198    6,369 
Other real estate owned - acquired   1,431    1,895    -    -    - 
Total nonperforming assets  $27,225   $28,602   $23,960   $27,943   $32,589 
                          
Restructured loans (accruing)  $23,847   $24,997   $28,969   $28,157   $24,537 
                          
Purchased noncredit impaired loans  $296,839   $326,066   $-   $-   $- 
Purchased credit impaired loans   7,119    7,814    -    -    - 
Total acquired loans  $303,958   $333,880   $0   $0   $0 
                          
Nonperforming loans to loans at end of period - non-acquired loans   0.91%   1.02%   1.36%   1.63%   2.00%
Nonperforming loans to loans at end of period - acquired loans   0.23    0.14    -    -    - 
Total nonperforming loans to loans at end of period   1.14%   1.16%   1.36%   1.63%   2.00%
                          
Nonperforming assets to total assets - non-acquired   0.67%   0.78%   1.01%   1.22%   1.41%
Nonperforming assets to total assets - acquired   0.17    0.14    -    -    - 
Total nonperforming assets to total assets   0.84    0.92    1.01    1.22    1.41 
                          
Per Share Common Stock                         
Net income (loss) diluted-GAAP basis  $0.18   $(0.05)  $0.12   $0.07   $0.09 
Net income (loss) basic-GAAP basis   0.18    (0.05)   0.12    0.07    0.09 
                          
Cash dividends declared   0.00    0.00    0.00    0.00    0.00 
Book value per share common   9.71    9.44    9.07    9.02    8.79 
                          
Average Balances                         
Total average assets  $3,151,132   $3,037,061   $2,305,799   $2,304,870   $2,286,998 
Less: Intangible assets   31,221    33,803    237    422    629 
Total average tangible assets  $3,119,911   $3,003,258   $2,305,562   $2,304,448   $2,286,369 
                          
Total average equity  $320,346   $319,233   $239,031   $236,632   $231,769 
Less: Intangible assets   31,221    33,803    237    422    629 
Total average tangible equity  $289,125   $285,430   $238,794   $236,210   $231,140 

(1) Calculated on a fully taxable equivalent basis using amortized cost.
(2) These ratios are stated on an annualized basis and are not necessarily indicative of future periods.
(3) The calculation of ROA and ROE do not include the mark-to-market unrealized gains (losses), because the unrealized gains (losses) are not included in net income (loss).
(4) The Company believes that return on average assets and equity excluding the impacts of noncash amortization expense on intangible assets is a better measurement of the Company's trend in earnings growth.
(5) Defined as (noninterest expense less foreclosed property expense and amortization of intangibles) divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains).

 

   March 31,   December 31,   March 31, 
SECURITIES   2015   2014   2014 
             
U.S. Treasury and U.S. Government Agencies  $3,863   $3,899   $100 
Mortgage-backed   575,907    587,933    619,951 
Collateralized loan obligations   126,375    125,225    32,215 
Obligations of states and political subdivisions   24,087    24,318    6,246 
Securities Available for Sale   730,232    741,375    658,512 
                
Mortgage-backed   181,762    182,076    0 
Collateralized loan obligations   41,299    25,828    0 
Securities Held for Investment   223,061    207,904    - 
Total Securities  $953,293   $949,279   $658,512 

   March 31,   December 31,   March 31, 
LOANS  2015   2014   2014 
             
Construction and land development  $100,341   $87,036   $67,197 
Real estate mortgage   1,532,522    1,524,044    1,121,027 
Installment loans to individuals   57,239    52,897    44,601 
Commercial and financial   164,050    157,396    79,401 
Other loans   335    512    230 
Total Loans  $1,854,487   $1,821,885   $1,312,456 

 

 
 

 

AVERAGE BALANCES (Unaudited)
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

   QUARTER   Percent Change vs. 
   2015   2014   4th Qtr   1st Qtr 
(Dollars in thousands)  First   Fourth   Third   Second   First   2014   2014 
                             
Assets                                   
Earning assets:                                   
Securities:                                   
Taxable  $939,015   $897,472   $698,274   $677,600   $653,646    4.6%   43.7%
Nontaxable   15,617    15,871    742    827    1,016    (1.6)   1437.1 
Total Securities   954,632    913,343    699,016    678,427    654,662    4.5    45.8 
                                    
Federal funds sold and other investments   92,934    63,690    98,711    153,410    188,048    45.9    (50.6)
                                    
Loans, net   1,848,965    1,794,423    1,365,978    1,338,415    1,307,796    3.0    41.4 
                                    
Total Earning Assets   2,896,531    2,771,456    2,163,705    2,170,252    2,150,506    4.5    34.7 
                                    
Allowance for loan losses   (17,385)   (18,723)   (17,972)   (19,784)   (20,205)   (7.1)   (14.0)
Cash and due from banks   63,689    88,745    44,172    35,735    37,186    (28.2)   71.3 
Premises and equipment   46,605    47,379    34,717    34,948    34,731    (1.6)   34.2 
Intangible assets   31,221    33,803    237    422    629    (7.6)   n/m 
Bank owned life insurance   35,793    24,417    0    0    0    46.6    n/m 
Other assets   94,678    89,984    80,940    83,297    84,151    5.2    12.5 
                                    
   $3,151,132   $3,037,061   $2,305,799   $2,304,870   $2,286,998    3.8    37.8 
                                    
Liabilities and Shareholders' Equity                                   
Interest-bearing liabilities:                                   
NOW  $628,480   $585,895   $489,138   $498,285   $507,313    7.3%   23.9%
Savings deposits   268,041    263,066    212,479    205,686    197,300    1.9    35.9 
Money market accounts   519,526    457,364    339,937    336,772    330,787    13.6    57.1 
Time deposits   318,343    327,327    252,179    259,325    270,215    (2.7)   17.8 
                                   
Federal funds purchased and other short term borrowings   212,123    227,806    153,696    150,108    155,656    (6.9)   36.3 
Other borrowings   114,606    114,560    103,610    103,610    103,610    0.0    10.6 
                                    
Total Interest-Bearing Liabilities   2,061,119    1,976,018    1,551,039    1,553,786    1,564,881    4.3    31.7 
                                    
Demand deposits (noninterest-bearing)   753,620    728,410    506,478    505,892    481,048    3.5    56.7 
Other liabilities   16,047    13,400    9,251    8,560    9,300    19.8    72.5 
Total Liabilities   2,830,786    2,717,828    2,066,768    2,068,238    2,055,229    4.2    37.7 
                                    
Shareholders' equity   320,346    319,233    239,031    236,632    231,769    0.3    38.2 
                                    
   $3,151,132   $3,037,061   $2,305,799   $2,304,870   $2,286,998    3.8    37.8 

 

n/m = not meaningful

  

AVERAGE YIELDS / RATES (1) (Unaudited)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

 

   QUARTER 
   2015   2014 
(Dollars in thousands)  First   Fourth   Third   Second   First 
                     
Assets                         
Earning assets:                         
Securities:                         
Taxable   2.09%   2.13%   2.09%   2.14%   2.10%
Nontaxable   5.89    5.90    7.01    6.77    6.69 
Total Securities   2.15    2.19    2.10    2.15    2.11 
                          
Federal funds sold and other investments   1.09    1.82    0.85    0.64    0.58 
                          
Loans, net   4.84    4.67    4.26    4.24    4.29 
                          
Total Earning Assets   3.84    3.78    3.40    3.33    3.31 
                          
Liabilities and Shareholders' Equity                         
Interest-bearing liabilities:                         
NOW   0.08    0.08    0.07    0.08    0.08 
Savings deposits   0.06    0.06    0.04    0.04    0.05 
Money market accounts   0.19    0.12    0.09    0.08    0.08 
Time deposits   0.44    0.45    0.58    0.60    0.61 
Federal funds purchased and other short term borrowings   0.19    0.17    0.18    0.17    0.17 
Other borrowings   2.70    2.67    2.43    2.43    2.44 
                          
Total Interest-Bearing Liabilities   0.32    0.31    0.32    0.33    0.33 
                          
Interest expense as a % of earning assets   0.23    0.22    0.23    0.23    0.24 
Net interest income as a % of earning assets   3.62    3.56    3.17    3.10    3.07 

 

 

(1)On a fully taxable equivalent basis. All yields and rates have been computed on an annualized basis using amortized cost. Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.

 

 
 

 

INTEREST INCOME / EXPENSE (1) (Unaudited)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

 

   QUARTER   Percent Change vs. 
   2015   2014   4th Qtr   1st Qtr 
(Dollars in thousands)  First   Fourth   Third   Second   First   2014   2014 
                             
Assets                                   
Earning assets:                                   
Securities:                                   
Taxable  $4,898   $4,773   $3,656   $3,630   $3,434    2.6%   42.6%
Nontaxable   230    234    13    14    17    (1.7)   1,252.9 
Total Securities   5,128    5,007    3,669    3,644    3,451    2.4    48.6 
                                    
Federal funds sold and other investments   249    292    211    246    268    (14.7)   (7.1)
                                    
Loans, net   22,065    21,123    14,665    14,151    13,849    4.5    59.3 
                                    
Total Earning Assets   27,442    26,422    18,545    18,041    17,568    3.9    56.2 
                                    
Liabilities                                   
Interest-bearing liabilities:                                   
NOW   117    112    91    94    102    4.5    14.7 
Savings deposits   39    42    24    23    24    (7.1)   62.5 
Money market accounts   245    143    74    67    68    71.3    260.3 
Time deposits   347    375    370    386    407    (7.5)   (14.7)
Federal funds purchased and                                   
other short term borrowings   98    97    69    65    66    1.0    48.5 
Other borrowings   762    770    635    627    624    (1.0)   22.1 
                                    
Total Interest-Bearing Liabilities   1,608    1,539    1,263    1,262    1,291    4.5    24.6 
                                    
Net interest income   25,834    24,883    17,282    16,779    16,277    3.8    58.7 

 

 

(1) On a fully taxable equivalent basis. Fees on loans have been included in interest on loans

 

 
 

  

CONSOLIDATED QUARTERLY FINANCIAL DATA       (Unaudited)        
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES            

   2015   2014 
(Dollars in thousands)  First Quarter   Fourth Quarter   Third Quarter   Second Quarter   First Quarter 
                     
Customer Relationship Funding (Period End)                         
Demand deposits (noninterest bearing)                         
Commercial  $546,876   $481,327   $301,630   $293,515   $291,221 
Retail   191,262    190,120    162,392    167,172    173,698 
Public funds   38,529    41,201    39,329    33,223    34,636 
Other   16,669    12,590    18,650    15,888    14,370 
    793,336    725,238    522,001    509,798    513,925 
                          
NOW accounts                         
Commercial   66,532    58,173    41,131    41,423    41,281 
Retail   416,766    407,653    324,690    327,762    329,226 
Public funds   151,556    186,527    114,006    124,742    134,191 
    634,854    652,353    479,827    493,927    504,698 
                          
Total Transaction Accounts                         
Commercial   613,408    539,500    342,761    334,938    332,502 
Retail   608,028    597,773    487,082    494,934    502,924 
Public funds   190,085    227,728    153,335    157,965    168,827 
Other   16,669    12,590    18,650    15,888    14,370 
    1,428,190    1,377,591    1,001,828    1,003,725    1,018,623 
                          
Savings accounts   272,963    264,738    215,076    208,333    202,170 
                          
Money market accounts                         
Commercial   185,668    172,417    118,385    114,662    109,158 
Retail   274,203    264,725    218,376    213,927    221,762 
Public funds   136,729    13,030    7,965    6,657    6,488 
    596,600    450,172    344,726    335,246    337,408 
                          
Time certificates of deposit   312,072    324,033    246,920    258,233    261,594 
Total Deposits  $2,609,825   $2,416,534   $1,808,550   $1,805,537   $1,819,795 
                          
Sweep repurchase agreements  $170,023   $153,640   $124,436   $141,662   $156,136 
                          
Total core customer funding (1)  $2,467,776   $2,246,141   $1,686,066   $1,688,966   $1,714,337 

 

(1) Total deposits and sweep repurchase agreements, excluding certificates of deposits.

 

 
 

  

QUARTERLY TRENDS - LOANS AT END OF PERIOD (Dollars in Millions)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

 

   2015   2014 
   1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr 
Installment loans to individuals                         
Automobile and trucks  $10.0   $7.8   $6.6   $6.1   $6.2 
Marine loans   28.7    26.2    24.4    23.3    20.8 
Other   18.5    18.9    16.6    15.8    17.6 
    57.2    52.9    47.6    45.2    44.6 
Construction and land development to individuals                         
Lot loans   16.0    15.5    13.3    13.1    13.3 
Construction   23.0    18.2    17.0    16.7    24.4 
    39.0    33.7    30.3    29.8    37.7 
Residential real estate                         
Adjustable   436.3    441.2    417.0    407.7    392.5 
Fixed rate   93.0    93.9    92.2    91.0    89.8 
Home equity mortgages   69.6    71.8    52.1    54.9    60.6 
Home equity lines   84.7    80.0    62.0    53.2    49.7 
    683.6    686.9    623.3    606.8    592.6 
                          
TOTAL CONSUMER   779.8    773.5    701.2    681.8    674.9 
                          
Commercial & financial   164.1    157.4    91.3    87.3    79.4 
                          
Construction and land development for commercial                         
Residential                         
Single family residences   9.1    6.8    4.8    5.1    1.8 
Single family land and lots   5.9    6.1    4.3    4.5    4.7 
Townhomes   1.1    0.3    -    1.1    0.5 
Multifamily   2.8    3.0    3.5    3.5    3.6 
    18.9    16.2    12.6    14.2    10.6 
Commercial                         
Office buildings   2.8    1.6    -    -    - 
Retail trade   1.0    0.7    2.5    2.4    2.9 
Restaurant   1.0    -    -    -    - 
Land   20.9    18.2    4.2    4.1    4.4 
Healthcare   -    -    -    -    7.1 
Churches and educational facilities   1.7    2.9    1.0    1.6    1.1 
Lodging   7.1    7.1    6.9    5.2    3.4 
Convenience stores   3.5    3.2    0.3    0.1    - 
Industrial buildings   2.3    2.7    -    -    - 
Auto and RV dealerships   0.3    0.3    -    -    - 
Other   1.9    0.4    -    -    - 
    42.5    37.1    14.9    13.4    18.9 
                          
Total construction and land development   61.4    53.3    27.5    27.6    29.5 
                          
Commercial real estate                         
Office buildings   239.3    235.7    127.1    122.8    120.0 
Retail trade   201.8    205.5    163.4    142.8    142.0 
Industrial   164.5    157.3    89.6    82.2    76.7 
Healthcare   50.9    50.6    40.7    41.6    44.1 
Churches and educational facilities   27.1    26.1    26.0    26.7    26.9 
Recreation   3.2    3.2    3.3    3.3    2.4 
Multifamily   17.1    17.4    17.0    18.7    17.2 
Mobile home parks   1.6    1.7    1.7    1.7    1.8 
Lodging   16.7    16.9    16.9    17.0    16.9 
Restaurant   5.5    3.3    3.3    3.9    3.7 
Agricultural   2.4    2.6    2.6    4.6    4.7 
Convenience stores   20.7    21.2    23.3    20.9    22.0 
Marina   18.3    18.5    18.6    18.5    20.6 
Other   79.8    77.2    37.2    33.5    29.4 
    848.9    837.2    570.7    538.2    528.4 
                          
TOTAL COMMERCIAL   1,074.4    1,047.9    689.5    653.1    637.3 
                          
Other   0.3    0.5    0.4    0.3    0.2 
   $1,854.5   $1,821.9   $1,391.1   $1,335.2   $1,312.4 

   

 
 

 

QUARTERLY TRENDS - INCREASE (DECREASE) IN LOANS BY QUARTER (Dollars in Millions)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

 

   2015   2014 
   1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr 
Installment loans to individuals                         
Automobile and trucks  $2.2   $1.2   $0.5   $(0.1)  $(0.4)
Marine loans   2.5    1.8    1.1    2.5    0.6 
Other   (0.4)   2.3    0.8    (1.8)   (0.3)
    4.3    5.3    2.4    0.6    (0.1)
Construction and land development to individuals                         
Lot loans   0.5    2.2    0.2    (0.2)   0.4 
Construction   4.8    1.2    0.3    (7.7)   3.1 
    5.3    3.4    0.5    (7.9)   3.5 
Residential real estate                         
Adjustable   (4.9)   24.2    9.3    15.2    0.6 
Fixed rate   (0.9)   1.7    1.2    1.2    (1.3)
Home equity mortgages   (2.2)   19.7    (2.8)   (5.7)   (1.4)
Home equity lines   4.7    18.0    8.8    3.5    2.0 
    (3.3)   63.6    16.5    14.2    (0.1)
                          
TOTAL CONSUMER   6.3    72.3    19.4    6.9    3.3 
                          
Commercial & financial   6.7    66.1    4.0    7.9    0.8 
                          
Construction and land development for commercial                         
Residential                         
Single family residences   2.3    2.0    (0.3)   3.3    (0.2)
Single family land and lots   (0.2)   1.8    (0.2)   (0.2)   (0.2)
Townhomes   0.8    0.3    (1.1)   0.6    0.5 
Multifamily   (0.2)   (0.5)   -    (0.1)   (0.1)
    2.7    3.6    (1.6)   3.6    0.0 
Commercial                         
Office buildings   1.2    1.6    -    -    - 
Retail trade   0.3    (1.8)   0.1    (0.5)   (4.8)
Restaurant   1.0    -    -    -    - 
Land   2.7    14.0    0.1    (0.3)   (0.5)
Healthcare   -    -    -    (7.1)   1.7 
Churches and educational facilities   (1.2)   1.9    (0.6)   0.5    (2.7)
Lodging   -    0.2    1.7    1.8    2.5 
Convenience stores   0.3    2.9    0.2    0.1    - 
Industrial buildings   (0.4)   2.7    -    -    - 
Auto and RV dealerships   -    0.3    -    -    - 
Other   1.5    0.4    -    -    - 
    5.4    22.2    1.5    (5.5)   (3.8)
                          
Total construction and land development   8.1    25.8    (0.1)   (1.9)   (3.8)
                          
Commercial real estate                         
Office buildings   3.6    108.6    4.3    2.8    1.3 
Retail trade   (3.7)   42.1    20.6    0.8    11.4 
Industrial   7.2    67.7    7.4    5.5    (4.4)
Healthcare   0.3    9.9    (0.9)   (2.5)   (1.4)
Churches and educational facilities   1.0    0.1    (0.7)   (0.2)   1.6 
Recreation   -    (0.1)   -    0.9    (0.1)
Multifamily   (0.3)   0.4    (1.7)   1.5    0.4 
Mobile home parks   (0.1)   -    -    (0.1)   (0.1)
Lodging   (0.2)   -    (0.1)   0.1    (0.2)
Restaurant   2.2    -    (0.6)   0.2    - 
Agricultural   (0.2)   -    (2.0)   (0.1)   (2.3)
Convenience stores   (0.5)   (2.1)   2.4    (1.1)   1.2 
Marina   (0.2)   (0.1)   0.1    (2.1)   (0.7)
Other   2.6    40.0    3.7    4.1    1.3 
    11.7    266.5    32.5    9.8    8.0 
                          
TOTAL COMMERCIAL   26.5    358.4    36.4    15.8    5.0 
                          
Other   (0.2)   0.1    0.1    0.1    (0.1)
   $32.6   $430.8   $55.9   $22.8   $8.2 

  

 



 

EXHIBIT 99.2

To Form 8-K dated April 28, 2015

 

Seacoast Banking Corporation of Florida

First Quarter 2015 Earnings Conference Call

April 29, 2015

9:00 AM Eastern Time

 

Company Participants:

 

Dennis S. Hudson, III, Chairman and Chief Executive Officer, Seacoast Banking Corporation of Florida

 

Charles K. Cross, Jr., Executive Vice President, Commercial Banking, Seacoast Banking Corporation of Florida

 

Charles Shaffer, Executive Vice President, Community Banking, Seacoast Banking Corporation of Florida

 

Stephen A. Fowle, Executive Vice President and Chief Financial Officer, Seacoast Banking Corporation of Florida

 

William R. Hahl, Executive Vice President and Former Chief Financial Officer, Seacoast Banking Corporation of Florida

 

Other Participants:

 

Taylor Brodarick, Vice President, Guggenheim Securities, LLC

 

Joseph Fenech, Managing Director - Equity Research, Hovde Group

 

Management Remarks:

 

Operator: Welcome to the Seacoast First Quarter Earnings Conference call. My name is Christine and I will be the operator for today’s call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded.

 

I will now turn the call over to Mr. Dennis Hudson. You may begin.

 

Dennis Hudson: Thank you very much, and welcome to the Seacoast’s First Quarter 2015 Conference Call. Before I begin, as always, I direct your attention to the statement contained at the end of the press release regarding forward-looking statements. During our call we are going to be discussing certain issues that constitute forward-looking statements within the meaning of the Securities and Exchange Act and as a result our comments are intended to be covered within the meaning of the Act. The earnings release and the slides that go along with this call are also posted on our website SeacoastBanking.net and they can be found under Presentations.

 

- 1 -
 

 

With me today are Chuck Cross, who heads up our Commercial Business banking line; Chuck Shaffer, who heads up our Consumer and Small Business banking line; and David Houdeshell, our Chief Credit Officer. Also with me today is Bill Hahl, who is retiring as our CFO and has served us very well over the past 25 years. Also our new CFO, Steve Fowle is here, and as you know he joined our team just a few weeks ago. So welcome, everybody.

 

We started the year without missing a beat, continuing to build on the momentum we established last year. Just a few months after we closed and successfully integrated the acquisition of BANKshares in Orlando, we announced our agreement to acquire Grand Bankshares in North Palm Beach. As we noted in the release, both these acquisitions expand our presence in two of Florida’s fastest growing markets and position Seacoast to benefit from the accelerating economic recovery here in the state.

 

Profitability in the first quarter was strong with net income growing 155% year-over-year to $5.9 million or $0.18 per share, up from $2.3 million or $0.09 per share in the first quarter a year ago. If you exclude the cost for mergers and acquisitions in the quarter, adjusted net income in the first quarter grew 48% to $6.2 million or $0.19 per share from $4.2 million or $0.13 per share in the preceding quarter.

 

Our loan pipelines remain very strong. We are up 37% in the quarter, jumping to $82.1 million, which is the highest level we have seen for some time. Net loans increased at a 7% annualized rate in the quarter and grew 41% year-over-year. Excluding the BANKshares loans that were acquired in the fourth quarter, the loan portfolio grew 15.9% year-over-year. Deposits are also growing at a darn good clip, up 8% in the quarter and 43% in the year, and that growth was about 15% in terms of total deposits when you exclude the impact of the acquisition.

 

Our loan portfolio and our customer growth rates, as well as product penetration within our customer base, is continuing to build momentum, and we think the potential for both our existing markets and our new markets is very favorable. Over the first quarter, revenues grew 52% year-over-year, reflecting the acquisition, the growing impact of our strategic investment and an improving Florida marketplace.

 

And Florida continues to generate a pretty sunny economic forecast. According to the University of Central Florida, 2014 had solid job growth, declining unemployment and high consumer confidence—and it just keeps getting better. Economic growth picked up considerably across Florida over the past year. Non-farm employment rose 3.7% as businesses and the public sector created some 285,000 new jobs. Growth continues to be exceptionally broad based in every key industry category, posting solid gains over the past year. Construction employment accounts for just 5.2% of Florida’s employment base, down from 8.7% at the height of the housing boom and the long run average of around 6.5%.

 

Florida’s job market has improved on a number of important fronts. Job gains are much more diverse than they had been earlier, and the few sectors that had been lagging, most notably financial services and government, are now growing modestly. Job growth has also picked up across the stage with all of the state’s 24 metropolitan areas posting solid year-to-year job gains. Our unemployment rate has also fallen dramatically and now stands at 5.7% for March, down from 6.5% a year ago.

 

- 2 -
 

 

Housing demand is also on solid ground. Home sales in Florida are picking up, with the number of closed sales in Florida 10% higher than a year ago and even more growth in pending sales, indicating the number of closed sales should remain high in the near-term. However, despite the stronger than average growth in sales, home price appreciation is merely tracking the national average and prices are still far below their pre-recession peak. We are seeing strong demand for new housing with new permits for both single-family and multifamily units rebounding, but not anywhere close to the levels that we saw before the recession, which is a good thing.

 

As we announced a couple of weeks ago, we are expanding our presence in the Palm Beach County market with the acquisition of Grand Bankshares, and we think it’s a terrific market. West Palm Beach also posted solid gains in 2014, with non-farm payrolls 3.3% higher than a year earlier. Home prices are up 8.2% from a year ago as rapidly growing population and strong immigration into the state continues to fuel demand for housing. West Palm Beach should continue to see reasonable improvements, I think, in its economy. An aging population will increase demand for already large and rapidly growing health services industry. Above average population growth and in-migration is going to drive gains as well in the local economy.

 

So we like operating in the Florida economy. We think we have a franchise in some of the best territory in the state, and frankly in the U.S., and we think it’s starting to show on our financial results.

 

Which brings me back to the first quarter financial performance: Our adjusted earnings for the quarter increased 48% to $6.2 million or $0.19 a share, up from $4.2 million or $0.13 per share last quarter, and more than double the $2.5 million or $0.10 a share earned in the first quarter a year ago. These numbers exclude adjustments for one-timers, and those one-timers were primarily our merger related costs, branch closing costs and a few other items we listed in the press release.

 

Our adjusted pretax pre-provision earnings were up 39% over the fourth quarter, and they were more than triple what we generated in the first quarter of last year. This improvement in adjusted pretax pre-provision earnings shows the growing earnings power of our franchise fueled by the addition of the Greater Orlando market which came from our acquisition, the streamlining initiatives we put in place last year, the organic growth we are generating from our lending teams and our technology-based marketing efforts.

 

Loan growth continued to build as well during the first quarter, with the portfolio increasing 41% year-over-year, with solid organic growth in every category as our lending teams continue to reach out to new and existing customers. Total loans grew at a 7% annualized rate to $1.85 billion at quarter end. Our commercial pipeline of loans in the first quarter, which is normally seasonally slow, came in, as I said earlier, at $82.1 million and was much better than we have seen for several years. The residential pipeline showed even more strength, more than doubling to $48.5 million at the end of the quarter from $21.4 million at the end of December and up from $26.7 million a year ago. We are very pleased with the pace of activity and the quality of loans that are coming to our lenders.

 

- 3 -
 

 

While commercial lending is seasonally slow in the first quarter, deposit gathering is typically just the opposite—and this year was no exception. Our low cost funding growth was robust in the first quarter, with non-interest deposits up 9.4% in the quarter and up 13.8% for the year, excluding any impact from the acquisition. Overall deposit growth was up 33% for the year and was up 15% without the contribution from the BANKshares acquisition. Much of the growth in our non-interest bearing deposits over the past couple of quarters reflects our success in attracting commercial and small business customers, both through our Accelerate channel and also across our branch system. In fact, our DDA mix has now improved to 30.4% of total deposits, up from 28.2% of total deposits just over the last year. Our total cost to deposits in the first quarter was 12 basis points.

 

In addition to solid loan growth, the accretion from the acquired portfolio contributed to margin expansion in the quarter. Our NIM came in at 3.62%, which was a bit better than we had estimated last quarter. We have been predicting that margin will stabilize at best and possibly trend a few basis points lower if interest rates remain unchanged. So while a four basis point improvement was good news in the quarter, we are still predicting that, all things equal, the margin will be in a range closer to 3.5% or perhaps slightly lower over the remainder of 2015.

 

Accretion from prepayments of some of our purchased loans added 9 or 10 basis points to the NIM this quarter. If interest rates increase, we could see further improvement in the net interest margin in the short-term. We are asset-sensitive and our ALCO model indicates that when rates increase 100 basis points, net interest income should increase approximately 9%.

 

Our non-interest income grew 2.3% in the quarter and 31.5% year-over-year with strong contributions from mortgage banking fees and interchange income. As we noted last quarter, we added a new source of income from bank-owned life insurance compared to last year’s first quarter, which was partially generated from investments acquired with BANKshares and from new investments we initiated during the quarter. Marine finance fees were down in the quarter reflecting our decision to start portfolioing a few of these loans rather than selling them in the secondary market.

 

We’ve talked about our efforts to reduce overhead costs and streamline our operating platform over the past year, and our non-interest expense shows solid improvement in operating efficiencies. Our core operating expenses were down $1.7 million in the quarter or 7%, which includes the operations of BANKshares. Our efficiency ratio came in at 67.4% excluding merger costs for the quarter. So we are pretty happy with this progress and we are looking to continue to make further improvements to get down to our goal in the mid-60s in the near future.

 

In summary, I’m delighted with our performance this quarter. Our team has really come together to put in place some great programs that are starting to show some very interesting results. I think we even have more potential opportunities to capitalize as we look forward in the coming quarters. So we will keep you posted. At this point let’s open it up for a few questions for the team.

 

- 4 -
 

 

Q & A Session:

 

Operator: Our first question comes from Joe Fenech from Hovde Group.

 

Joe Fenech: More of a big picture question for you, Denny. Relative to where you were a year ago, obviously the improvement in profitability to today has been pretty stark. My question is how far do you think you could take this with the company as it’s structured today, pro forma of course with Grand? In other words, is a sustainable 1% ROA achievable in next 12 months or so; or are there some things that are little out of your control like higher rates and maybe a deal that you need to happen to get you there?

 

Dennis Hudson: Good question. I think we continue to head towards the 1% return on asset mark to get our performance back to what I would consider an acceptable level, and I think that is certainly doable over time. The answer to the question will depend on what kind of investments we are making today and the investments we made two years ago are paying off big time today. If you think about it, our Accelerate channel now has operating expenses of probably around $5 million a year; those expenses didn’t exist two years ago, and they are now producing tremendous results for us.

 

So it’s a careful balance, as you well know, between the investments needed to get us accelerating down the road more quickly and the need for improved operating performance. I think we achieved a significant milestone this quarter as we brought together all of the things we talked about in the short-term over the last year, notably the cost-outs that we worked on, and the impact of the acquisition being as good or better than we had advertised. We have another acquisition that, as you know, provides meaningful accretion starting in the second half of this year, and I think, again, as we look forward we will continue to see growth in earnings and progress against this medium-term goal of getting to a 1% return on assets. I hope that helps.

 

Joe Fenech: Denny, you talked in your notes about Grand, you talked about the purchase capital contribution to NIM this past quarter and your NIM outlook. Does that outlook include your expectations pro forma from Grand? And if not, what is your thought on the impact that has to that 3.50% or so NIM guidance you gave?

 

Dennis Hudson: And the answer is that it does not include the impact of the Grand acquisition. We were just simply looking at a steady rate over the next quarter or two, just kind of a steady to slightly down margin.

 

Joe Fenech: So your early read is that Grand is accretive to that 3.50% or so margin, or too early to tell?

 

Steve Fowle: I’d expect that acquisitions tend to be accretive but tend to be very lumpy in terms of when the accretion hits and doesn’t hit.

 

Joe Fenech: And then, Denny, whether seasonal—

 

 

- 5 -
 

 

Dennis Hudson: I think what you are trying to ask is, what kind of impact is Grand going to have on margin? As we know, there will be lots of merger charges in Q3, but the margin should be as good or probably slightly accretive.

 

Joe Fenech: And then, Denny, were there seasonal considerations or anything unusual on the expense base this quarter, or is the just under $23 million a good quarterly run rate to use here on a core basis going forward?

 

Dennis Hudson: I think it’s a good run rate.

 

Joe Fenech: Then last one for me, on the M&A front, Denny, I know you have done some attractive smaller deals here. Is there a larger one or two out there that makes sense for you, or are these smaller transactions more along the lines of what we could see going forward? What’s your appetite, generally, for additional M&A?

 

Dennis Hudson: I think our focus remains on continuing to grow organically; that’s our key objective here. There is tremendous value-add to long-term shareholder value if we can get organic growth. Obviously, our priority would be acquisitions that would tend to be smaller probably and would fit well into our franchise, but our focus remains on improving our performance, growing organically, and finding opportunistic type opportunities out ahead of us in terms of acquisition. The two that we have done over the last year or so we think are going to be very, very helpful to us. And we would hope if we did something else, that it would be equally good in terms of helping us improve our performance and build out our ability to grow organically over time.

 

Operator: Our next question comes from Taylor Brodarick from Guggenheim Securities.

 

Taylor Brodarick: I guess, the first question will be on deposit pricing. Obviously, it’s been kind of held in a low 30 bps, but I’m wondering about the pricing pressure going forward given the strength of your markets, and are you willing to not be as flexible on pricing given your loan to deposit ratio?

 

Chuck Shaffer: I wouldn’t expect pricing to go up much as we move forward. If we grow the deposit base, we are continuing to focus on small business and consumer. We have taken a few opportunities where some governmental things came along and put that in the base. As we move into Central Florida market and South Florida, it is more competitive on the deposit side, there are more offers out there, but I wouldn't expect it to materially impact our cost of deposits.

 

Dennis Hudson: It’s important to keep your eye on our strategic focus as we look ahead, and our strategic focus is on no cost, low cost deposits, period. We see tremendous opportunity for us to gain share as we move forward, and that’s been proven over the last several years as we improved our deposit mix.

 

Taylor Brodarick: I guess just hearing some of your other in-market peers talk about rationality a little south of your core market, I’m just curious if any of that out-sized pricing has creeped into your markets?

 

- 6 -
 

 

Chuck Shaffer: No. We really haven’t seen that yet.

 

Taylor Brodarick: I’m just talking about loans, of course.

 

Chuck Shaffer: Oh, on loans?

 

Taylor Brodarick: Yes.

 

Chuck Cross: Florida, especially South Florida, has always been a very competitive pricing market and it remains competitive today.

 

Dennis Hudson: Yes, and I say all the time that there has never been a time in my career where we couldn’t complain about crazy competition in pricing and so forth. When it gets too crazy, we exit the discussion, is all I can say. We really stay focused on relationships, but it’s a fight every day. There has never been a day when we haven’t had those things, but you can’t use it as an excuse. You move forward and talk to more customers, and ultimately you find customers that are interested in what we have to offer in terms of our value, and we seem to be pretty successful.

 

Taylor Brodarick: I guess one last for me, an update on what to expect. I think I had $1.5 million to $2 million of merger charges the next couple of quarters, does that seem like it’s in the ball park?

 

Dennis Hudson: We are going to have minor costs probably in the upcoming quarter. I would say that sounds, if anything, at or slightly high. As we look to Q3, of course, we will have the charges related to the closing of Grand Bank, which would be higher than that. I think we had a number that we disclosed in the announcement. For the total, I think it was $3.5 million. That’s spread over multiple quarters, but most of it is in the third quarter.

 

Bill Hahl: …both Seacoast and Grand Bank’s total merger costs.

 

Taylor Brodarick: Thank you everyone.

 

Operator: We have no further questions at this time.

 

Dennis Hudson: Well, very good. Thank you all for attending today and we look forward to updating you next quarter. Thank you.

 

Operator: Thank you, and thank you ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.

 

- 7 -



Exhibit 99.3

 

First Quarter 2015 April 29 th , 2015

 
 

2 Cautionary Notice Regarding Forward - Looking Statements This press release contains “forward - looking statements” within the meaning of Section 27 A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934 , including, without limitation, statements about future financial and operating results, ability to realized deferred tax assets, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls and for integration of banks that we have acquired, as well as statements with respect to Seacoast’s objectives, expectations and intentions and other statements that are not historical facts . Actual results may differ from those set forth in the forward - looking statements . Forward - looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of Seacoast to be materially different from future results, performance or achievements expressed or implied by such forward - looking statements . You should not expect us to update any forward - looking statements . You can identify these forward - looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support”, “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further”, “point to,” “project,” “could,” “intend” or other similar words and expressions of the future . These forward - looking statements may not be realized due to a variety of factors, including, without limitation : the effects of future economic and market conditions, including seasonality ; governmental monetary and fiscal policies, as well as legislative, tax and regulatory changes ; changes in accounting policies, rules and practices ; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest sensitive assets and liabilities ; interest rate risks, sensitivities and the shape of the yield curve ; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet ; and the failure of assumptions underlying the establishment of reserves for possible loan losses . The risks of mergers and acquisitions, include, without limitation : unexpected transaction costs, including the costs of integrating operations ; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time - consuming or costly than expected ; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected ; the risk of deposit and customer attrition ; any changes in deposit mix ; unexpected operating and other costs, which may differ or change from expectations ; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees ; increased competitive pressures and solicitations of customers by competitors ; as well as the difficulties and risks inherent with entering new markets . All written or oral forward - looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10 - K for the year ended December 31 , 2014 under “Special Cautionary Notice Regarding Forward - Looking Statements” and “Risk Factors”, and otherwise in our SEC reports and filings . Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC’s Internet website at http : //www . sec . gov . First Quarter 2015

 
 

First Quarter 2015 3 Financial Highlights Growth Highlights Q1 2015 Financial and Growth Highlights • Total loans increased $32.6 million or 7% (annualized) from Q4 14, and increased 41.3% from a year ago. Excluding the acquisition of BANKshares , loans increased $218.7 million or 15.9% from prior year levels. • Deposits increased $193.3 million or 8.0% from the prior quarter and 43.4% from a year earlier. Excluding the acquisition of BANKshares , deposits increased $273.7 million or 15.0% from prior year levels. • Acquired Grand Bankshares , Inc. (estimated to close in 3Q 15) adding approximately $208 million in assets, $184 million in deposits, and $127 million in gross loans to Seacoast's operations, along with 3 branch locations in Palm Beach County . • Net income grew 155% to $5.9 million, or $0.18 per diluted share, versus $2.3 million, or $0.09 per diluted share, in 1Q 14 and a net loss of $1.5 million, or ($0.05) per diluted share in Q4 14. • Adjusted net income (1) , for the Q1 2015 increased 47.8 % to $6.2 million or $ 0.19 per diluted share, compared to $4.2 million, or $0.13 per diluted share in 4Q14. • Net interest margin improved to 3.62% compared with 3.56% in preceding quarter due to loan growth, acquisition, and investment purchases . (1) Non - GAAP measure, excludes merger related charges, branch closure expenses, and other adjustments (See Appendix for reconciliation to GAA P)

 
 

First Quarter 2015 4 Earnings Trend Improve • The effective tax rate in the first quarter decreased to 37.7 % from 44.4% (higher from nondeductible merger related charges) for the 2014 calendar year. • Adjusted Pretax, pre - provision income (1) significantly improved indicative of higher quality earnings. (Dollars in thousands) First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter 2015 2014 2014 2014 2014 GAAP Net Income $5,859 ($1,517) $2,996 $1,918 $ 2,299 GAAP Earnings per diluted share $ 0.18 ($0.05) $ 0.12 $ 0.07 $ 0.09 Adjusted Net Income (1) $6,177 $4,179 $3,286 $2,990 $2,533 Adjusted Pretax, pre - provision income (1) $10,342 $7,464 $4,341 $3,821 $3,395 Adjusted Earnings per diluted share (1) $0.19 $0.13 $0.13 $0.12 $0.10 Average shares outstanding 33,135 33,124 26,026 25,998 25,657 (1) Non - GAAP measure, excludes merger related charges, branch closure expenses, and other adjustments (See Appendix for reconciliation to GAA P)

 
 

First Quarter 2015 5 Loan Growth Momentum Continues • Total loans were $ 1.854 billion at March 31, 2015, up $32.6 million from December 31, 2014, or 1.8% (7% annualized) from the fourth quarter. • The commercial pipeline (in underwriting and approval or approved and not yet closed) totaled $82.1 million at March 31, 2015, the highest in the trailing four quarters and suggests continued strength. • T he residential pipeline totals $48.5 million at March 31, 2015 compared to $21.4 million at December 31, 2014 and $26.7 million one year ago. $675 $682 $701 $774 $780 $637 $653 $690 $1,048 $ 1,074 $1,312 $1,335 $1,391 $ 1,822 $ 1,854 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Total Loans ($ in Millions) Consumer Commercial

 
 

First Quarter 2015 6 Deposit Balances Extend Growth Trends • Average noninterest bearing demand deposits increased to 30.3% of total deposits compared with 26.9% for the first quarter 2014 • Average Low/No cost deposits increased to 87.2% of total deposits compared to 84.9% one year ago $481 $506 $506 $728 $754 $ 1,036 $ 1,041 $1,042 $ 1,307 $ 1,416 $270 $259 $252 $327 $318 $1,787 $1,806 $1,800 $2,362 $2,488 $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Average Deposit Balances ($ in Millions) Non Interest Bearing Low Cost Deposits Time Deposits

 
 

First Quarter 2015 7 Funding Costs Remain Low 14 13 12 11 12 33 33 32 31 32 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Funding Costs (in BPS) Deposit Costs Interest Bearing

 
 

First Quarter 2015 8 • Net interest income for the quarter totaled $ 25.7 million, a $1 million or 15% annualized linked quarter . • Net interest margin for the quarter increased to 3.62% versus prior quarter of 3.56% in the fourth quarter 2014. • Improvement in net interest income and margin was the result of increased loan growth (a $54.5 million average balance increase), the reinvestment of excess cash balances, and additional accretion on purchased loans. $16,277 $16,779 $17,282 $24,883 $25,834 3.07% 3.10% 3.17% 3.56% 3.62% 0 5,000 10,000 15,000 20,000 25,000 30,000 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Net Interest Income and Net Interest Margin ($ in thousands) Net Interest Income Net Interest Margin Net Interest Income and Margin Meaningfully Improved

 
 

First Quarter 2015 9 Non Interest Income • Non interest income (excluding security gains) increased $167,000 from December 31, 2014. • Mortgage Banking fees increased $372,000 over the prior quarter and interchange income increased $134,000 over the prior quarter offset seasonally with fewer number of days for service charges on deposits and by marine finance fees. $1,507 $1,484 $1,753 $2,208 $2,002 $661 $855 $825 $716 $1,088 $1,050 $1,113 $1,225 $1,212 $1,242 $254 $340 $281 $445 $197 $1,403 $1,514 $1,452 $1,603 $1,737 $252 $330 $683 $590 $613 $705 $712 $5,558 $5,896 $6,149 $7,141 $7,308 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Non Interest Income ($ in Thousands) Service Charges on Deposits Mortgage Banking Fees Wealth Management Income Marine Finance Interchange Income BOLI Other

 
 

First Quarter 2015 10 Non Interest Expense Moderates $9,594 $9,668 $9,917 $12,459 $ 11,192 $1,695 $1,811 $1,769 $1,925 $2,184 $2,702 $2,798 $2,820 $ 3,427 $ 3,251 $813 $675 $717 $1,072 $975 $935 $924 $884 $1,741 $1,388 $386 $411 $387 $476 $589 $2,259 $2,513 $2,350 $ 3,309 $ 3,096 $18,384 $18,800 $18,844 $ 24,409 $ 22,675 $0 $3,000 $6,000 $9,000 $12,000 $15,000 $18,000 $21,000 $24,000 $27,000 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Core Operating Expenses (1) ($ in Thousands) Salaries and Benefits Data Processing Cost Occupancy / Telephone Marketing Legal and Professional FDIC Other • Core operating expense (non - GAAP) totaled $22.7 million for the first quarter of 2015 compared to $24.4 million in the fourth quarter of 2014. • The improvement in core operating expense and our adjusted efficiency ratio (67.4% in 1Q15 versus 74.8% in 4Q14) is reflective of a full quarter benefit from expense reduction initiatives completed in Q4 14. (1) Non - GAAP measure, excludes merger related charges, branch closure expenses, and other adjustments (See Appendix for reconciliation to GAA P)

 
 

SBCF Florida’s Economic Improvement • Employment increased 3.7% in 2014 with 285,00 net new jobs • Construction employment accounts for just 5.2% of jobs, down from 8.7% at the peak and 6.5% on average • Unemployment as of March is down to 5.7% from 6.5% a year ago. First Quarter 2015 11

 
 

12 Source: Wells Fargo Securities Florida Economic Outlook March 2015 . First Quarter 2015

 
 

13 Source: Wells Fargo Securities Florida Economic Outlook March 2015 . First Quarter 2015

 
 

14 Source: Wells Fargo Securities Florida Economic Outlook March 2015 . First Quarter 2015

 
 

15 Source: Wells Fargo Securities Florida Economic Outlook March 2015 . First Quarter 2015

 
 

First Quarter 2015 16 Appendix

 
 

First Quarter 2015 17 Explanation of Certain Unaudited Non - GAAP Financial M easures • This press release contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). The financial highlights provide reconciliations between GAAP net income and adjusted net income, GAAP income and adjusted pretax, preprovision income. Management uses these non - GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non - GAAP measures enhance investors’ understanding of the Company’s business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. The Company provides reconciliations between GAAP and these non - GAAP measures. These disclosures should not be considered an alternative to GAAP.

 
 

First Quarter 2015 18 Net Income - GAAP to Non - GAAP Reconciliation: Presented below is net income excluding adjustments for merger related charges, branch closure charges, and other non core expenses. The Company believes that these results of operations are a more meaningful depiction of the underlying fundamentals of its business and ove rall performance. (1) Non - GAAP measure, excludes merger related charges, branch closure expenses, and other adjustments (See Appendix for reconciliation to GAA P) (Dollars in thousands) First Quarter 2015 Fourth Quarter 2014 Third Quarter 2014 Second Quarter 2014 First Quarter 2014 Net income $5,859 ($1,517) $2,996 $1,918 $2,299 Severance 12 478 328 181 212 Merger related charges 275 2,722 399 1,234 6 Branch closure charges and costs related to expense initiatives 0 4,261 68 114 0 Marketing and brand refresh expense 0 697 0 0 0 Stock compensation expense and other incentive costs related to improved outlook 0 1,213 0 0 0 Security (gains) 0 (108) (344) 0 (17) Miscellaneous losses (gains) 0 119 (45) 144 0 Recovery of nonaccrual loan interest 0 0 (192) 0 0 Net loss on OREO and repossessed assets 81 9 156 92 53 Asset dispositions expense 143 103 139 118 128 Effective tax rate on adjustments (193) (3,798) (219) (811) (148) Adjusted Net Income (1) $6,177 $4,179 $3,286 $2,990 $2,533 Provision (recapture) for loan losses 433 118 (1,425) (1,444) (735) Income taxes 3,732 3,167 2,480 2,275 1,597 Adjusted pretax, pre-provision income (1) $10,342 $7,464 $4,341 $3,821 $3,395 Adjusted earnings per diluted share (1) $0.19 $0.13 $0.13 $0.12 $0.10 Average shares outstanding 33,135 33,124 26,026 25,998 25,657

 
 

First Quarter 2015 19 Non - Interest Expense - GAAP to Non - GAAP Reconciliation: Presented below is core operating expenses and other non core expenses. The Company believes that these results of operations are a more meaningful depiction of the underlying fundamentals of its business and overall performance. (1) Non - GAAP measure, excludes merger related charges, branch closure expenses, and other adjustments (See Appendix for reconciliation to GAA P) (Dollars in thousands) First Quarter 2015 Fourth Quarter 2014 Third Quarter 2014 Second Quarter 2014 First Quarter 2014 Noninterest Expense: Salaries and wages $8,777 $9,998 $7,868 $7,587 $7,412 Employee benefits 2,415 2,461 2,049 2,081 2,182 Outsourced data processing costs 2,184 1,925 1,769 1,811 1,695 Telephone / data lines 496 419 313 306 293 Occupancy expense 2,023 2,325 1,879 1,888 1,838 Furniture and equipment expense 732 683 628 604 571 Marketing expense 975 1,072 717 675 813 Legal and professional fees 1,388 1,741 884 924 935 FDIC assessments 589 476 387 411 386 Amortization of intangibles 315 446 195 196 196 Other 2,781 2,863 2,155 2,317 2,063 Total Core Operating Expense 22,675 24,409 18,844 18,800 18,384 Non-GAAP adjustments Severance 12 478 328 181 212 Merger related charges 275 2,722 399 1,234 6 Branch closure charges and costs related to expense initiatives 0 4,261 68 114 0 Marketing and brand refresh expense 0 697 0 0 0 Stock compensation expense and other incentive costs related to improved outlook 0 1,213 0 0 0 Miscellaneous losses (gains) 0 119 (45) 144 0 Net loss on OREO and repossessed assets 81 9 156 92 53 Asset dispositions expense 143 103 139 118 128 Total Adjusted Operating Expenses $23,186 $34,011 $19,889 $20,683 $18,789

 

 

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