SECURITIES AND EXCHANGE COMMISSION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EeR/Q/nwwIBVofhenedMCB+wlWydL2eZVJzkfuupRxvFnLwxxyZgEQZAvp+h7Aqh 2sLAuS8lSxn3epbpr2qlJQ== 0001086715-06-000002.txt : 20060127 0001086715-06-000002.hdr.sgml : 20060127 20060126183056 ACCESSION NUMBER: 0001086715-06-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060126 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060127 DATE AS OF CHANGE: 20060126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEACOAST BANKING CORP OF FLORIDA CENTRAL INDEX KEY: 0000730708 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 592260678 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13660 FILM NUMBER: 06554795 BUSINESS ADDRESS: STREET 1: 815 COLORADO AVE STREET 2: P O BOX 9012 CITY: STUART STATE: FL ZIP: 34994 BUSINESS PHONE: 5612874000 MAIL ADDRESS: STREET 1: 815 COLORADO AVE STREET 2: P O BOX 9012 CITY: STUART STATE: FL ZIP: 34995 8-K 1 f8k4q054.htm SECURITIES AND EXCHANGE COMMISSION

8-K – page # of 5

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) January 26, 2006

SEACOAST BANKING CORPORATION OF FLORIDA

(Exact Name of Registrant as Specified in Charter)

Florida

1-13660

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))

8-K – page # of 5

SEACOAST BANKING CORPORATION OF FLORIDA

Item 2.02

Results of Operations and Financial Condition

On January 23, 2006, the Registrant announced its financial results for the fourth quarter ended December 31, 2005.

A copy of the press release announcing the Registrant’s results for the fourth quarter ended December 31, 2005 is attached hereto as Exhibit 99.1 and incorporated herein by reference. 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 the benefits and timing of the merger between Seacoast and Big Lake, including future financial and operating results, cost savings, enhanced revenues, and accretion to reported earnings that may be realized from the merger, as well as statements with respect to Seacoast’s and Big Lake’s plans, objectives, expectations and intentions and other statements that are not historical facts. Actual results may differ from thos e 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,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “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 conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and interest sensitive ass ets and liabilities; interest rate risks and sensitivities; 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 of Seacoast and Big Lake 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 reali ze 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; the risk of obtaining necessary governmental approvals of the merger on the proposed terms and schedule; the potential failure of Big Lake’s shareholders to approve the merger; increased competitive pressures and solicitations of Big Lake’s customers by competitors; as well as the difficulties and risks inherent with entering the Central Florida market.

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, 2004 under “Special Cautionary Notice Regarding Forward-Looking Statements,” and otherwise in our SEC reports and filings. Such reports are available upon request from Seacoast, or from the Securities and Exchange Commission, including through the SEC’s Internet website at http://www.sec.gov.

Item 7.01

Regulation FD Disclosure

On January 24, 2006, the Registrant held an investor conference call to discuss its financial results for the fourth quarter ended December 31, 2005. 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 Registrant’s website) referenced in the conference call and incorporated herein by reference. All information included in the transcript and the charts is presented as of December 31, 2005, and the Registrant does not assume any obligation to correct or update said information in the future.

The information in the preceding paragraph, as well as Exhibits 99.2 and 99.3 referenced therein, 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 filing under the Securities Act of 1933.

Item 9.01

Financial Statements and Exhibits

Exhibit Number		Description
99.1		Press Release dated January 23, 2006 with respect to Seacoast Banking Corporation of Florida’s financial results for the fourth quarter ended December 31, 2005.
99.2		Transcript of Registrant’s investor conference call held on January 24, 2006 to discuss the Registrant’s financial results for the fourth quarter and year ended December 31, 2005.
99.3		Data of charts referenced in the conference call held on January 24, 2006 to discuss the Registrant’s financial results for the fourth quarter and year ended December 31, 2005.

8-K – page # of 5

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)

Dated:

January 26, 2006

By:

/s/ William R. Hahl

Name:

William R. Hahl

Title:

Executive Vice President &

Chief Financial Officer

EX-99.1 2 exhibit209914.htm Converted by FileMerlin

EXHIBIT 99.1

To 8-K dated January 23, 2006

NEWS RELEASE

SEACOAST BANKING CORPORATION OF FLORIDA

Dennis S. Hudson, III

Chairman and Chief Executive Officer

Seacoast Banking Corporation of Florida

(772) 288-6086

William R. Hahl

Executive Vice President/

Chief Financial Officer

(772) 221-2825

SEACOAST REPORTS NET INCOME PER SHARE OF

$0.34 FOR THE QUARTER, UP 41.1 PERCENT FROM THE PRIOR YEAR AND $1.24 PER SHARE FOR THE FULL YEAR

STUART, FL., January 23, 2006 – Seacoast Banking Corporation of Florida (NASDAQ-NMS: SBCF), a bank holding company whose principal subsidiary is First National Bank and Trust Company of the Treasure Coast, today reported net income totaling $5,833,000 or $0.34 diluted earnings per share (“DEPS”) for the fourth quarter of 2005, compared to $3,700,000 or $0.24 for the fourth quarter a year ago. For the year 2005, net income totaled $20.8 million, or $1.24 DEPS, an increase of 30.5 percent from $0.95 DEPS earned in 2004.

Cash operating earnings per diluted share was $1.27 for the year, up 29.6 percent from the annual results for 2004. (The Company believes that cash operating earnings, which excludes the after tax impact of noncash interest rate swap fair value changes and noncash amortization expense, is a better measurement of the Company’s trend in earnings growth. Net cash payments and receipts from the interest rate swap have been immaterial for the periods presented. The Company terminated the interest rate swap that did not qualify for hedge accounting under FAS 133 in the second quarter of 2005.)

“Our fourth quarter results benefited from the positive impacts of continued growth including particularly robust loan production, which increased net interest income and produced continued margin expansion. We finished the year with strong operating results and significant momentum, which we believe will continue to produce benefits helpful in meeting potential interest rate and other economic challenges in the coming year,” commented Dennis S. Hudson, III, Chairman and Chief Executive Officer. “Seacoast ended 2005 with excellent credit quality, positive trends for all loan portfolio segments, and a growing customer base with commercial account additions particularly strong.”

Highlights for the fourth quarter 2005 include:

•

Net income was $0.34 DEPS, up 41.7 percent over 2004;

•

Return on average assets (ROA) was 1.10 percent, compared to fourth quarter 2004 ROA of 0.97 percent;

•

Return on average equity remained strong at 14.96 percent versus 13.38 percent in the same quarter in 2004, and return on average tangible equity using cash operating earnings totaled 19.48 percent for the fourth quarter, up from 14.79 percent last year;

•

Net interest margin of 4.04 percent which represented an increase from the 4.01 percent achieved in the third quarter of 2005, and was higher than the fourth quarter 2004’s result of 3.88 percent;

•

Loan outstandings for the fourth quarter totaled $1.290 billion, increasing 23.7 percent annualized from the third quarter 2005 and up $390 million or 43.4 percent from December 31, 2004;

•

While the Fed raised interest rates 200 basis points over the last twelve months, the cost for interest bearing deposits increased only 70 basis points to 2.05 percent:

•

Compared to the third quarter, average interest bearing deposits increased $48.1 million or 3.8 percent;

•

Fees from investment management services grew $60,000 compared to the fourth quarter 2004, or 5.1 percent, and were up 9.4 percent for the full year;

•

Nonperforming assets to loans and other real estate owned totaled 0.03 percent, a decline from 0.16 percent for 2004;

Growth in the balance sheet and a favorable overall change in earning asset mix resulting from the intended transformation of the loan portfolio continue to produce solid growth in net interest income and the margin. Loans now comprise 64.7 percent of earning assets, up from 58.5 percent a year earlier, with floating rate assets comprising 34.0 percent at year-end 2005 compared to 22.1 percent a year earlier. Net interest income increased $972,000 or 5.1 percent on a linked quarter basis in the fourth quarter, and 20.4 percent annualized. For the full year, net interest income totaled $72.2 million, up $19.4 million or 36.8 percent.

Positively impacting the full year’s results was the Company’s acquisition of Century National Bank (“Century”) on April 30, 2005, which added $107 million in loans and $304 million in deposits. Century’s deposit mix remains favorable with 35.8 percent of deposits comprised of noninterest bearing demand deposits at year end, reflecting continued success in the Orlando market. Increases in short-term interest rates and continued growth have resulted in strong margin expansion at Century.

While interest rates have increased a total of 325 basis points since the Fed began raising rates, the Company’s overall deposit mix has allowed average cost of deposits to remain low. Total cost of deposits, including noninterest bearing demand deposits, increased only 51 basis points over the prior year to 1.54 percent. Average interest bearing deposits were up $344 million or 34.9 percent over the past year and increased $48 million or 3.8 percent linked quarter for the three months ended December 31, 2005. Ending noninterest bearing demand deposits now comprise 26.5 percent of total deposits, up from 25.1 percent a year ago. Total deposits increased to $1.784 billion or 30 percent from the prior year-end.

The Company’s loan-to-deposit ratio, currently 72.3 percent, is up from 65.5 percent in the prior year. Continued favorable economic conditions and loan growth may allow for further increase in the loan-to-deposit ratio and an improvement in the net interest margin during 2006.

The Company’s expansion into Palm Beach County with a total of 5 offices, the loan production office for Brevard County, and the acquisition of Century National in Orlando has contributed to overall loan growth, as well as an improved loan mix and lending capacity over the past twelve months. Total loans outstanding in these new markets grew to $396 million at year end. This market expansion has provided the Company with greater opportunities to profitably grow the loan portfolio and low-cost deposits, which has in turn contributed to gains in net interest income and the margin.

In November 2005, the Company signed a definitive merger agreement to acquire Big Lake Financial Corporation. Big Lake, headquartered in Okeechobee, Florida, will add approximately $312 million in assets, $200 million in loans and $286 million in deposits, as well as nine offices in six Central Florida counties where it is the region’s largest community bank. This acquisition is expected to be slightly accretive to earnings without any cost reductions or revenue enhancements.

Noninterest expenses totaled $15.7 million, an increase of 8.6 percent annualized from the third quarter 2005. The fourth quarter overhead ratio improved to 62.6 percent from the third quarter’s 63.2 percent and the prior year’s ratio of 65.0 percent. The growth in full year noninterest expenses is a result of increased wages, benefits, occupancy, marketing and other overhead due to the addition of branches and personnel in the Palm Beach and Brevard County markets, the acquisition of Century, as well as higher commissions, stock awards and other incentive compensation related to the Company's improved performance. Salary and wages for the most recent quarter were impacted by additional expenses related to the Company assisting employees in dealing with their individual losses as a result of Hurricane Wilma whic h affected the Company’s Treasure Coast market in October. This added approximately $180,000 to salary and wages in the fourth quarter. Also impacting the most recent quarter was higher stock-based incentive costs related to improved performance in the Orlando market.

Noninterest income, excluding securities gains and losses and profits and losses on the interest rate swap, increased 8.5 percent for the year. This growth was led by service charges on deposit accounts, debit card and other EFT transactions, which grew 13.6 percent, with lower growth for the year in revenues from mortgage banking operations, marine finance fees and investment management services. While mortgage banking production totaled $206 million in 2005 compared to $224 million in 2004, more of the production was retained in the bank’s loan portfolio and not sold which reduced mortgage banking revenues. The marine finance division was impacted by higher energy costs and the hurricanes during the year which significantly disrupted sales opportunities at major boat shows in the Florida market. M ortgage banking fees were particularly soft in the most recent quarter due to lower production, while Marine fees improved to a record $806,000.

Net charge-offs for the year 2005 totaled $135,000, compared to $562,000 for 2004. Nonperforming loans declined as well, by $1,075,000, and now total only $372,000. Improvement in credit quality continued to positively impact the loan loss provision for both the year and quarter.

Seacoast will host a conference call on Tuesday, January 24 at 10:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Investors may call in (toll-free) by dialing (800) 640-9765 (access code: 13662120; leader: Dennis Hudson). Charts will be used during the conference call and may be accessed at Seacoast’s website at www.seacoastbanking.net under “Presentations”. A replay of the call will be available beginning the afternoon of January 24 by dialing (877) 213-9653 (domestic), using the passcode 13662120.

Seacoast Banking Corporation of Florida has approximately $2.1 billion in assets. It is one of the largest independent commercial banking organizations in Florida, headquartered on Florida’s Treasure Coast, one of the wealthiest and fastest growing areas in the nation.

- continued -

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 the benefits and timing of the merger between Seacoast and Big Lake, including future financial and operating results, cost savings, enhanced revenues, and accretion to reported earnings that may be realized from the merger, as well as statements with respect to Seacoast’s and Big Lake’s plans, 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.

You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “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 conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and inte rest sensitive assets and liabilities; interest rate risks and sensitivities; 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 of Seacoast and Big Lake will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to ful ly 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; the risk of obtaining necessary governmental approvals of the merger on the proposed terms and schedule; the potential failure of Big Lake’s shareholders to approve the merger; increased competitive pressures and solicitations of Big Lake’s customers by competitors; as well as the difficulties and risks inherent with entering the Central Florida market.

Other Important Information About this Press Release

Big Lake’s shareholders are urged to read the proxy statement/prospectus regarding the proposed transaction when it becomes available, because it will contain important information about Seacoast, Big Lake and the proposed transaction. Big Lake’s shareholders will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about Seacoast and Big Lake, without charge, at the SEC’s Internet website at http://www.sec.gov. Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference into, or otherwise referred to in, the proxy statement/prospectus can also be obtained, without charge, by directing a written request to Seacoast Banking Corporation of Florida, 815 Colorado Avenue, Stuart, Florida 34994, Attention: Office of the Se cretary, or to Big Lake Financial Corporation, 1409 South Parrott Avenue, Okeechobee, Florida 34974, Attention: President.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, shares of Seacoast’s common stock, or the solicitation of any proxies from Big Lake’s shareholders.

- continued -

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

	Three Months Ended				Twelve Months Ended
(Dollars in thousands,	December 31,				December 31,
except per share data)	2005		2004		2005		2004

Summary of Earnings
Net income (GAAP)	$ 5,833	$	3,700	$	20,759	$	14,922
Amortization of core deposit premium	77		--		346		--
Net interest rate swap (profits) losses	--		287		173		456
Cash operating earnings*	$ 5,910	$	3,987	$	21,278	$	15,378

Net interest income (1)	20,062		14,158		72,297		52,907

Performance Ratios
Return on average assets (2), (3)
Using GAAP earnings	1.10	%	0.97	%	1.07	%	1.05	%
Using cash operating earnings* on average tangible assets	1.13		1.04		1.11		1.08
Return on average
shareholders' equity (2), (3)
Using GAAP earnings	14.96		13.38		14.95		13.75
Using cash operating earnings* on average tangible equity	19.48		14.79		18.45		14.54
Net interest margin (1), (2)	4.04		3.88		3.97		3.89

Per Share Data
Net income diluted (GAAP)	$ 0.34	$	0.24	$	1.24	$	0.95
Amortization of core deposit premium	--		--		0.02		--
Net interest rate swap (profits) losses	--		0.02		0.01		0.03
Cash operating earnings* diluted	$ 0.34	$	0.26	$	1.27	$	0.98
Net income basic (GAAP)	0.35		0.24		1.27		0.97
Cash dividends declared	0.15		0.14		0.58		0.54

(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 calculations 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.

The Company believes that cash operating earnings excluding the impacts of noncash interest rate swap fair value changes and amortization of core deposit intangible is a better measurement of the Company’s trend in earnings growth. Net cash payments and receipts from the interest rate swap have not been material for the periods presented.

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

			December 31,					Increase/
			2005		2004			(Decrease)
Credit Analysis
Net charge-offs year-to-date		$	135	$		562		(76.0	)
Net charge-offs to average loans			0.01	%		0.07	%	(85.7	)
Loan loss provision year-to-date		$	1,317	$		1,000		31.7
Allowance to loans at end of period			0.70	%		0.73	%	(4.1	)
Nonperforming assets		$	372	$		1,447		(74.3	)
Nonperforming assets to loans and other
real estate owned at end of period			0.03	%		0.16	%	(81.3	)

Selected Financial Data
Total assets		$	2,132,174	$		1,615,876		32.0
Securities – Available for sale (at fair value)			401,152			395,207		1.5
Securities – Held for investment (at amortized cost)			150,072			198,551		(24.4	)
Net loans			1,280,989			892,949		43.5
Deposits			1,784,219			1,372,466		30.0
Shareholders' equity			152,720			108,212		41.1
Book value per share			8.94			7.00		27.7
Tangible book value per share			6.95			6.85		1.5
Average shareholders' equity
to average assets			7.17	%		7.63	%	(6.0	)

Average Balances (Year-to-Date)
Total assets		$	1,937,361	$		1,422,992		36.1
Less: Intangible assets			23,573			2,802		741.3
Total average tangible assets		$	1,913,788	$		1,420,190		34.8

Total equity		$	138,875	$		108,552		27.9
Less: Intangible assets			23,573			2,802		741.3
Total average tangible equity		$	115,302	$		105,750		9.0

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

				Three Months Ended				Twelve months Ended
				December 31,				December 31,
(Dollars in thousands, except per share data)				2005		2004		2005		2004

Interest on securities:
Taxable	$			5,482	$	4,459	$	21,752	$	18,245
Nontaxable				15		18		66		103
Interest and fees on loans				21,564		13,404		72,958		48,411
Interest on federal funds sold and interest bearing deposits				1,531		227		3,624		293
Total Interest Income				28,592		18,108		98,400		67,052

Interest on deposits				2,998		1,228		9,095		3,997
Interest on time certificates				3,863		2,115		12,225		8,159
Interest on borrowed money				1,694		638		4,895		2,122
Total Interest Expense				8,555		3,981		26,215		14,278

Net Interest Income				20,037		14,127		72,185		52,774
Provision for loan losses				330		450		1,317		1,000
Net Interest Income After Provision for Loan Losses			19,707			13,677		70,868		51,774

Noninterest income:
Service charges on deposit accounts				1,327		1,077		5,022		4,479
Trust income				605		639		2,573		2,250
Mortgage banking fees				290		347		1,810		1,824
Brokerage commissions and fees				627		533		2,562		2,442
Marine finance fees				806		600		3,068		2,997
Debit card income				416		347		1,714		1,344
Other deposit based EFT fees				94		123		417		476
Merchant income				530		454		2,230		1,962
Interest rate swap profits (losses)				--		(441	)	(267	)	(701)
Other income				394		338		1,388		1,389
				5,089		4,017		20,517		18,462
Securities gains (losses), net				50		18		128		44
Total Noninterest Income				5,139		4,035		20,645		18,506

Noninterest expenses:
Salaries and wages				6,730		5,007		23,783		19,119
Employee benefits				1,575		1,080		6,313		5,031
Outsourced data processing				1,609		1,380		6,477		5,716
Occupancy expense				1,388		1,014		5,126		4,229
Furniture and equipment expense				525		439		2,121		1,919
Marketing expense				689		630		3,194		2,465
Legal and professional fees				765		806		2,595		1,843
FDIC assessments				56		45		225		171
Amortization of intangibles				119		--		533		--
Other expense				2,282		1,706		8,733		6,788
Total Noninterest Expenses				15,738		12,107		59,100		47,281

Income Before Income Taxes				9,108		5,605		32,413		22,999
Provision for income taxes				3,275		1,905		11,654		8,077

Net Income		$		5,833	$	3,700	$	20,759	$	14,922

Per share common stock:
Net income diluted		$		0.34	$	0.24	$	1.24	$	0.95
Net income basic				0.35		0.24		1.27		0.97
Cash dividends declared				0.15		0.14		0.58		0.54

Average diluted shares outstanding				17,287,715		15,697,957		16,749,386		15,745,445
Average basic shares outstanding				16,883,719		15,281,941		16,361,196		15,335,731

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES


					December 31,		December 31,
(Dollars in thousands, except per share data)					2005		2004

Assets
Cash and due from banks				$	67,373	$		44,920

Federal funds sold and interest bearing deposits					153,120			44,758

Securities:
Available for sale (at fair value)					401,152			395,207
Held for investment (at amortized cost)					150,072			198,551
Total Securities					551,224			593,758

Loans available for sale					2,440			2,346

Loans					1,289,995			899,547
Less: Allowance for loan losses					(9,006	)		(6,598	)
Net Loans					1,280,989			892,949

Bank premises and equipment					22,218			18,965
Intangible assets					33,973			2,774
Other assets					20,837			15,406
				$	2,132,174	$		1,615,876

Liabilities and Shareholders’ Equity
Liabilities
Deposits
Demand deposits (noninterest bearing)				$	472,996	$		345,122
Savings deposits					882,031			669,059
Other time deposits					256,484			238,188
Time certificates of $100,000 or more					172,708			120,097
Total Deposits					1,784,219			1,372,466

Federal funds purchased and securities sold under agreements to repurchase, maturing within 30 days		96,786						86,919
Other borrowings			86,723					39,912
Other liabilities			11,726					8,367
			1,979,454					1,507,664

Shareholders' Equity
Preferred stock			--					--
Common stock			1,710					1,710
Additional paid in capital			46,116					26,950
Retained earnings			112,413					101,501
Restricted stock awards			(3,447			)		(3,333	)
Treasury stock			(218			)		(16,172	)
			156,574					110,656
Accumulated other comprehensive loss			(3,854			)		(2,444	)
Total Shareholders’ Equity			152,720					108,212
	$		2,132,174			$		1,615,876

Common Shares Outstanding			17,084,315					15,468,357

Note: The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date.

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

					Quarters
					2005													Last 12
(Dollars in thousands, except per share data)					Fourth				Third			Second		First				Months

Net income (GAAP)	$				5,833	$			5,565	$		5,475	$		3,886	$		20,759
Amortization of core deposit premium					77				118			144			7			346
Net income rate swap (profits) losses					--				--			(162	)		335			173
Cash operating earnings*	$				5,910	$			5,683	$		5,457	$		4,228	$		21,278

Operating Ratios
Return on average assets (GAAP) (2),(3)
Using GAAP earnings					1.10	%			1.09	%		1.13	%		0.94	%		1.07	%
Using cash operating earnings* on average tangible assets		1.13							1.14			1.14			1.03			1.11
Return on average shareholders' equity (GAAP) (2),(3)
Using GAAP earnings		14.96							14.59			16.07			14.08			14.95
Using cash operating earnings* on average tangible equity		19.48							19.50			18.87			15.69			18.45

Net interest margin (1),(2)					4.04				4.01			3.91			3.90			3.97
Average equity to average assets					7.35				7.50			7.03			6.69			7.17

Credit Analysis
Net charge-offs (recoveries)	$				(32	)	$		(35	)	$	15	$		187		$	135
Net charge-offs (recoveries) to average loans				(0.01		)%			(0.01	)%		0.01	%		0.08	%		0.01	%
Loan loss provision	$				330	$			280	$		269	$		438	$		1,317
Allowance to loans at end of period					0.70	%			0.71	%		0.73	%		0.70	%
Nonperforming assets	$				372	$			325	$		200	$		1,040
Nonperforming assets to loans and other real estate owned at end of period				0.03		%			0.03	%		0.02	%		0.11	%
Nonaccrual loans and accruing loans 90 days or more past due to loans outstanding at end of period					0.06				0.03			0.02			0.11

Per Share Common Stock
Net income diluted (GAAP)			$		0.34	$			0.32	$		0.33	$		0.25	$		1.24
Amortization of core deposit premium					--				0.01			0.01			--			0.02
Net interest rate swap (profit) losses					--				--			(0.01	)		0.02			0.01
Cash operating earnings* diluted			$		0.34			$	0.33	$		0.33	$		0.27	$		1.27

Net income basic (GAAP)			$		0.35	$			0.33	$		0.33	$		0.25	$		1.27
Cash dividends declared					0.15				0.15			0.14			0.14			0.58
Book value per share					8.94				8.76			8.63			7.04

Average Balances
Total assets			$		2,103,978	$			2,017,521	$		1,945,079	$		1,677,295
Less: Intangible assets					34,337				35,676			20,627			3,176
Total average tangible assets			$		2,069,641	$			1,981,845	$		1,924,452	$		1,674,119

Total equity			$		154,681	$			151,299	$		136,659	$		112,257
Less: Intangible assets					34,337				35,676			20,627			3,176
Total average tangible equity	$				120,344	$			115,623	$		116,032	$		109,081

(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 calculations 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.

CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited) (continued)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

(Dollars in thousands)

SECURITIES

December 31,

2005

December 31,

2004

U.S. Treasury and U. S. Government Agencies

71,189

20,656

Mortgage-backed

319,906

366,806

Other securities

10,057

7,745

Securities Available for Sale

401,152

395,207

U.S. Treasury and U. S. Government Agencies

5,000

4,999

Mortgage-backed

143,877

192,128

Obligations of states and political subdivisions

1,195

1,424

Securities Held for Investment

150,072

198,551

Total Securities

551,224

593,758

LOANS

December 31,

2005

December 31,

2004

Construction and land development

427,440

252,329

Real estate mortgage

680,653

498,692

Installment loans to individuals

82,942

81,831

Commercial and financial

98,653

66,240

Other loans

307

455

Total Loans

1,289,995

899,547

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

		2005										2004
		Fourth Quarter				Third Quarter						Fourth Quarter
		Average		Yield/				Average	Yield/			Average	Yield/
(Dollars in thousands)		Balance		Rate				Balance	Rate			Balance		Rate

Assets
Earning assets:
Securities:
Taxable	$	567,382		3.86	%		$	603,477	3.71	%	$	526,604		3.39	%
Nontaxable		1,196		7.69				1,196	7.36			1,409		7.38
Total Securities		568,578		3.87				604,673	3.71			528,013		3.40

Federal funds sold and other
short-term investments		154,144		3.94				107,000	3.33			47,386		1.91

Loans, net		1,249,461		6.85				1,175,992	6.61			877,153		6.09

Total Earning Assets		1,972,183		5.76				1,887,665	5.48			1,452,552		4.97

Allowance for loan losses		(8,800		)				(8,490	)			(6,594		)
Cash and due from banks		70,150						67,683				45,680
Premises and equipment		21,674						21,397				18,879
Other assets		48,771						49,266				12,767

	$	2,103,978						2,017,521		$		1,523,284

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW (including Super NOW)	$	137,457		0.89	%		$	125,211	0.67	%	$	84,639		0.52	%
Savings deposits		152,807		0.51				163,675	0.51			166,779		0.50
Money market accounts		589,275		1.68				585,395	1.45			381,957		0.95
Time deposits		449,657		3.41				406,813	3.07			351,838		2.39
Federal funds purchased and securities sold under agreements to repurchase			94,719	3.25				79,167	2.72			71,931		1.53
Other borrowings		72,504		5.02				64,386	4.57			40,028		3.59

Total Interest-Bearing Liabilities		1,496,419		2.27				1,424,647	1.95			1,097,172		1.44

Demand deposits (noninterest-bearing)		442,534						431,476				308,654
Other liabilities		10,344						10,099				7,444
Total Liabilities		1,949,297						1,866,222				1,413,270

Shareholders' equity		154,681						151,299				110,014

	$	2,103,978						2,017,521				1,523,284

Interest expense as a % of earning assets				1.72	%				1.47	%				1.09	%
Net interest income as a % of earning assets				4.04					4.01					3.88

(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.

EX-99.2 3 exhibit209924.htm Capgemini GOA

EXHIBIT 99.2

To 8-K dated January 23, 2006

Page #

EXHIBIT 99.2

To 8-K dated January 23, 2006

Seacoast Banking Corporation of Florida

January 24, 2006

10 am Eastern Time

Operator:

Good morning ladies and gentlemen. Welcome to the Fourth Quarter Earnings Release Teleconference. 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 would now like to turn the call over to Mr. Dennis Hudson. Mr. Hudson, you may begin sir.

Dennis Hudson:

Thank you very much and welcome to Seacoast Banking Corporation’s Fourth Quarter 2005 Conference Call. Before we begin, I would like to direct your attention to a statement contained at the end of our press release regarding forward statements we may make today during this call. We will be discussing certain issues that constitute forward-looking statements within the meeting of the Securities and Exchange Act, and our comments are therefore intended to be covered by the meaning of Section 27(a) of the Act.

We have also posted a few slides on our website that we are going to be referring to in our comments. Feel free to visit www.seacoastbanking.net, seacoastbanking (one word).net, and click on “Presentations” at the bottom of the investor relations listing to view the slides as we continue with our comments.

With me today is Bill Hahl, our Chief Financial Officer, as well as Doug Gilbert, President and Chief Credit Officer. All of us will be available to answer any questions you may have following our prepared remarks.

This quarter, we are again reporting earnings on a cash operating basis which excludes non-cash amortization expense and profit and losses on our interest rate swaps in prior periods. The non-cash swap adjustments have not impacted the current quarter, and will not impact them going forward, but have affected prior quarters, so we are discussing our performance in this manner to better demonstrate our operating trends. Most of our comments will therefore be based on this non-GAAP measure of operating performance. You should refer to our press release for a reconciliation of these non-GAAP measures.

Seacoast again reported record earnings for the quarter and for the full year. Operating earnings for the year totaled $21.3 million or $1.27 per share. Operating earnings for the quarter were a record-breaking $5.9 million or $0.34 per share. The results produced operating earnings growth for the year of 29.6% and earnings growth for the quarter of 30.8%. Our cash return on tangible equity stood at 18.4% for the year and 19.48% for the quarter.

Clearly 2005 was an outstanding year for our company, and I would like to pause and sincerely thank the many outstanding leaders at Seacoast and all of our associates for their tireless dedication to excellence and support for our culture of personal responsibility. Persistent and consistent application of this value, together with the right talent, has indeed produced great value for shareholders.

Our earnings improvement over the past year has been aided by a successful expansion into new markets and we have also seen an acceleration of business activity over the past year in our Treasure Coast markets. But a very important component of our improved earnings this year has been our consistent effort over the past couple of years to transform our operating earning asset mix, while maintaining our historically low-cost deposit mix. Over that period of time, we have moved our mix of lower-cost residential loans down significantly as we have increased our loan-to-deposit ratio. Add to this lower credit costs associated with our credit discipline—a discipline that I would remind you has not changed in over 15 years—and we believe you get a high quality earnings stream over the long run.

I am going to repeat something I said during last quarter’s conference call and that is this: many banks and thrifts are now experiencing margin compression. Some companies in Florida have seen their loan-to-deposit ratios grow to well over 100% and are now feeling the effects of a flat or even inverted yield curve. Others around the country have suggested that deposit growth is expected to slow, as they struggle to control their funding costs. Many have had to reposition, at great cost, wholesale leveraging that was placed on the balance sheet when rates bottomed out a couple of years ago.

The actions taken by Seacoast over the last couple of years to reduce our exposure to long-term fixed rate assets, including residential loans when rates were low, and to carefully build our exposure to shorter term, higher yielding commercial relationships, and our relentless focus on building our business around a relationship-focused strategy rather than transaction-based, has significantly improved our ability, we think, to perform in the environment we now clearly find ourselves in. We continue to operate with a very short duration investment portfolio and low loan-to-deposit ratio. These components, together with a continued positive local economy, give us great opportunity for further growth in the year ahead.

I would like to invite you all now to pull up the slides we have posted on our website, www.seacoastbanking.net. We have presented a number of slides that will better depict some of the recent growth trends impacting our business. You will find them under “Presentations” at the bottom of the list under Investor Relations. Bill will now review a few of the highlights for the quarter and, following his comments and a few closing comments from me, we will open the call for a few questions. Bill?

Bill Hahl:

As Denny mentioned, I will be referring to some of our slides, which we have posted for this conference call, in my remarks this morning. I will not necessarily go in the order of the slides, so I will warn you in advance, but I will start out with the first slide which shows that total revenues increased in the fourth quarter of 2005, compared to the prior year, by 35%. Net interest income increased 42% as a result of increased loans and other earning assets in 2005.

As Denny mentioned and I want to remind everyone, about two and a half years ago we decided to remix our loan portfolio by reducing the size of our fixed rate residential loans held by the company from about 50% to 30%, while increasing our capabilities to produce and book commercial and commercial real estate loans and consumer loans. The outstanding revenue and earning asset growth is a measure of our success as well as net interest margin improvement noted this year.

Total assets have increased 32% as a result of our prior de novo expansion into Palm Beach and Brevard Counties and this year’s acquisition of Century National Bank in Orlando. In addition, the company’s net interest margin improved each quarter in 2005, increasing a total of 16 basis points for the year, as a result of the improving earning asset mix and the maintaining of a very favorable deposit mix emphasizing low-cost interest-bearing core deposits and non-interest bearing DDA deposits. Noninterest income grew 14% compared to last year’s fourth quarter. Several revenue categories were negatively impacted by Hurricane Wilma, but still improved over the prior year which was also impacted by two hurricanes that hit our market.

Another slide we have posted shows the overhead ratio over the past eight quarters. In 2004, we opened branches in Palm Beach County and expanded into Brevard County with a loan production office. The overhead investments initially increased our ratio into the mid-60’s, consistent with our expectations and past experience. Also consistent with expectations, the overhead ratio has declined as revenues from these new markets have increased. In addition, the acquisition of Century in April, which had a ratio in the mid-40’s, further aided in lowering this ratio. If we achieve our strategies and planned income objectives in 2006—in which we plan to open an additional two to three branches, one in approximately March or April, one in July, and one in November—and we successfully integrate our Big Lake acquisition, which is scheduled to close in the second quarter, we believe the overhead ratio will continue to move lower throughout the next two years.

We have a slide that shows loan growth, with the new and existing markets contributing about 32% of last year’s growth of 43% overall, which also included Century’s acquired loans. Our markets are some of the most desirable in the state of Florida and continue to grow, producing strong lending opportunities. Commercial loans and commercial real estate loan originations for the year by quarter are shown in another slide and totaled a record $429 million (for the year). As I mentioned before, we were impacted by Hurricane Wilma and the decline in the fourth quarter commercial real estate originations is more the result of projects being delayed, rather than any significant decline in activity.

Total deposits were up 30% for the year, with around 8% attributable to organic growth of the Treasure Coast franchise and the remainder from the acquisition of Century. The deposit mix, consisting of 90% lower cost core deposits and DDAs, was unchanged as a result of this outstanding growth. The value of our relationship banking strategy, we believe, can be measured by the low cost of deposits. The company has a long history of the lowest quartile ranking compared to peers for cost of deposits. We have a slide that shows that our cost of deposits over the last seven quarters has increased a remarkably low 56 basis points, while the Fed funds rate has increased 300. This metric, along with increasing loans as a percentage of earning assets and deposits, has allowed for improving net interest margin during ea ch quarter of 2005, while mitigating the negative impacts of the flat yield curve environment.

We have a couple of slides that show how our floating rate loans and assets have grown over the last year and that they now comprise 34% of earning assets. We have benefited over the last 12 months from the Fed raising rates 200 basis points, thus increasing the yields on these assets. With the Fed nearing the end of their increases, this source of margin improvement, we believe, can be overcome by further growth of loans as a percent of earning assets and deposits. In summary, 2005 was a very good year and we believe the prospects for continued earnings growth for the next several years looks bullish from our viewpoint. Denny?

Dennis Hudson:

Thank you very much Bill. As Bill just said, the year we just completed was a record year for Seacoast and again, we think concentrating our resources exclusively in some of the top growth markets and highest growth wealth markets in the state of Florida uniquely positions us to benefit in the coming years. At this point, this concludes our prepared remarks and we would be pleased to take a few questions—if we could have our moderator please take a few questions.

Operator:

Thank you. We will now begin the question and answer session. If you have a question, please press star and then one on your touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you are using a speakerphone, you need to pick up the handset first before pressing the numbers. Once again, if there are any questions, please press star then one on your touchtone phone. We have Barry McCarver from Stephens. Please go ahead.

Barry McCarver:

Hey, good morning guys. Great quarter.

Several:

Good morning. Good morning Barry.

Barry McCarver:

Denny or Bill, whichever, in your comments I know you talked about cost of deposits, cost of funding coming up; I just noticed on this chart and in the press release, the fourth quarter was really the biggest jump you have had thus far. Was there anything in the quarter in terms of the mix that you guys did that may have caused that or was it really more competition?

Bill Hahl:

Well, I think that as the quarters progress along, and throughout 2005, there has been more and more movement out of some of the lower cost core deposit categories into certificates through typical intermediation; and we have seen that pick up a little more speed the higher interest rates got on a relative basis versus, let us say, money market accounts, etc. So I think that is all that is.

Barry McCarver:

So just playing the devil’s advocate here, is it fair to guess that that trend could continue, more likely than not, in future quarters?

Bill Hahl:

Yes, I think it is fair to say that we are going to continue to see it. Obviously it is going to stop at some point because all the people that want to move into a CD or a higher (paying) CD will get there.

Barry McCarver:

Okay, and then secondly, on Slide 6 where you show the commercial originations, fourth quarter was by far was the lowest. What was the affecting that number?

Bill Hahl:

Well, I think, and I mentioned in my comments, I think that the hurricane definitely was impactful but I think it was primarily—and, Doug, you probably can speak to this more—just delays in projects getting to the point where we needed to act on them.

Doug Gilbert:

Well, that is absolutely the case—the hurricanes did have a definite affect on slowing down project approvals and the ability to get the materials needed to start jobs—so that is really what caused it.

Dennis Hudson:

Just commenting on our overall loan growth, as we look at our pipelines, I would not say that any of us see any particular significant change in trends in terms of pipelines—and that is pretty predictive out about six months—so we are still seeing pretty strong numbers out there.

Bill Hahl:

The other thing that the hurricane will have an impact on, and did, at least that is what we are hearing, is the construction periods—the funding periods have been pushed out by about 12 months. Isn’t that right Doug?

Doug Gilbert:

Yes.

Bill Hahl:

… Because of the same things: materials, etc. So the funding will not be quite as impactful, you might say, but they will be longer. Ultimately it will all get funded. I guess they will be with us a little bit longer though.

Barry McCarver:

Okay, fair enough. And then just lastly, do you have an update on how the Big Lake acquisition is going and, if I am reading correctly in that recent filing, it looks like you lowered the purchase price by just a little bit. Can you give us an idea of what is going on there?

Dennis Hudson:

Well, the adjustment in purchase price, as described in the S-4, resulted from the completion of our diligence work—nothing particularly significant there. I just think it had to do with looking more carefully at what we could expect out of the acquisition going forward. Doug, do you have any comments?

Doug Gilbert:

No, not really. Basically, after the due diligence, we recognized a little bit of risk in some customer losses, so the price was adjusted for that.

Dennis Hudson:

Barry, I would not say it was anything remarkable, or overly concerning to us; just part of the overall process.

Barry McCarver:

It sounds like there was an issue maybe in the loan portfolio?

Doug Gilbert:

Not really. Their loan portfolio was reasonably clean. I think it was more a matter of overlaying our credit culture on theirs, and what potential possible affect that may have. We have some slight concerns about that.

Dennis Hudson:

And I would again reiterate, Barry, that part of the overall process includes diligence and that includes further negotiation. We think the deal was properly priced, and fairly priced, and looking forward to modest accretion this year, and more substantial accretion in the out years as we carefully put the organizations together.

Barry McCarver:

Right. That is very helpful. Thanks guys.

Dennis Hudson:

I think we said in our announcement at the time that we expected accretion to continue indefinitely in the out years.

Operator:

Our next question comes from Lauren Johnson from SunTrust Robinson Humphrey. Please go ahead.

Lauren Johnson:

Good morning.

Several:

Good morning.

Lauren Johnson:

I have two related questions. The first thing: if you could share what the mortgage originations were in the third quarter versus the fourth quarter; and secondly, if you could just give us color on what we should expect going forward in the mortgage banking fee line. I know in your press release you discussed that you were keeping more of the loans on the books and therefore have less gain on the sale.

Dennis Hudson:

I do not think though that we have those numbers to disclose, do we?

Bill Hahl:

No, I do not. Needless to say, the fourth quarter originations were a little bit less due to hurricane impacts, certainly less than what we anticipated.

Dennis Hudson:

We also have a number of open positions that existed in the fourth quarter on the origination side, and I think that probably helped contribute to that decline. I would say our outlook is for originations to continue to be strong; it’s probably somewhat speculative, but somewhat stronger than what we saw in the fourth quarter for the reasons Bill just indicated.

Bill Hahl:

The thing I can tell you is total originations—and I do not know whether we disclosed this in the first three quarters and you can back into the fourth quarter—I believe were $187 million.

Doug Gilbert:

One hundred and eighty-seven, yes.

Bill Hahl:

…in total originations of mortgages.

Lauren Johnson:

For ’05?

Bill Hahl:

Yes.

Lauren Johnson:

All right, thank you.

Operator:

Our next question is from Terry Maltese from Sandler O’Neill Asset Management. Please go ahead.

Terry Maltese:

Hi, good morning. Nice quarter. Two quick questions: Could you give us… your margin…. you talked a little bit about it—that it has held up very well and then you talked about some of the factors affecting it going forward. What should we be thinking about in terms of the margin outlook over the next few quarters?

Bill Hahl:

Well, there is various speculation as to what the Fed is going to do over this next 12 months. I guess the consensus is that there will be at least one more rate hike, and maybe another, and some people believe maybe even one after that. I think as I mentioned, with 34% of our assets being in floating rate prime based, etc., that we would continue to actually benefit from further rate hikes by the Fed; and so, under that scenario, we see the margin improving more substantially than what we really believe—we are in that camp of maybe one more rate hike. But given the fact that we continue to see strong production capabilities and growth in the loan portfolio in the range of 15% to 20%, we see the margin consistently improving quarter-to-quarter. It is all going to be a function of how well we control core deposit co sts and growth, and how much it will be, but we do see, provided we do continue to expand loans as a percent of earning assets, that the margin does improve throughout the year.

Terry Maltese:

Great. And then just on the loan loss reserve, what are your thoughts there? It is obviously, relative to your losses, very high because you have almost no losses. Relative to loans, it looks sort of low at 70 basis points. What is the thought there? Are we going to see that reserve trend down anymore or should we be expecting it to grow from here?

Dennis Hudson:

Well, we have, Terry, consistently applied a methodology to creating that number and we will continue to do that. The only driver today to the provisioning is growth—and the growth has been substantial in the portfolio, so we expect that to continue. I do not know that we would expect the relative size of the reserve to decline substantially. If we did, we would be saying that; and if there were credit issues that came up, which we do not expect nor do we see, you could see some additional provisioning. So we think it will continue to slide along about where it is in terms of provisioning, and do not see any other factors that will come into play here. The current reserve is supported by our long, consistent history of very low losses, and a long and very consistent history of very low past dues and int ernally identified issues in the portfolio. We continue to see a very strong environment here and do not have any present thoughts on that changing substantially.

Terry Maltese:

Great, thanks very much. Nice quarter.

Dennis Hudson:

Thank you.

Operator:

Our next question comes from Brett Villaume with Fig Partners. Please go ahead.

Brett Villaume:

Hi fellows, this is Brett Villaume.

Several:

Hi Brett.

Brett Villaume:

Chris could not be on the call, but I wanted to ask you about the Big Lake acquisition. I wanted to see whether or not… Well, it is one general question about acquisitions and that is: Big Lake and also Century National were acquired with relatively good deposit bases, a lot of free funds, and also on the cheap, in my opinion, and I wanted to see if you could give me some color on what you think is out there still and what your appetite for more acquisitions in 2006 would be. Then also, with Big Lake, how seasonal do you think the deposits are— because the footprint does not seem to be, as on the Treasure Coast and in Orlando, as “winter-resident” prone.

Dennis Hudson:

Starting with your second question, Doug and others have spent a fair amount of time in the Big Lake region in the last couple of months. I would say you are absolutely right. We do not anticipate them being as seasonal as they are on the coast. Would you agree Doug?

Doug Gilbert:

Oh, absolutely. They do not have the same cyclical behavior there.

Dennis Hudson:

Yes, and so I think you are right-on with that. As to your earlier comment about the two acquisitions we did over the last two months, we think they were fairly priced from both shareholders’ perspective. I think the execution of business in the Orlando market has gone extremely well, and is absolutely a credit to the high quality management team in place there led by Mike Sheffey. His whole team has done an excellent job continuing to grow the bank; and we have seen, as we said, some very nice margin expansion come out of that. It has been a great thing, I think, for both shareholder bases. I would remind you that their shareholders are now part of our overall shareholder base. I would also point out that, in the case of the Big Lake acquisition, that deal will be closed with 100% stock; and agai n, those shareholders, I think, viewed this as a nice trade into a high quality company with a great future associated with it. So I think they were both fairly priced and are good for both shareholder bases.

To your final comment about more acquisitions, it remains to be seen what we will see out there. It is kind of interesting that a lot of the more disruptive buyers are kind of on the sidelines—although you continue to see whopper deals being announced in the last few months, particularly on the West Coast of Florida. I have seen some. I think we have a great story and a great future and, with the right kind of opportunity, we would like to do more; but the requirements would be having a good management team in place—which both of these did—having high quality folks that can continue to lead in those markets, and priced in a way that is fair to both sides as we go forward—and those deals are very hard to come by. I will tell you there are not a lot of opportunities out there that meet those requ irements, but we will continue to look. We can really be more opportunistic in our approach, but will remain very disciplined, I guess is my point, if we were to do anything. Good question though.

Brett Villaume:

Okay, thank you very much.

Operator:

We now have Peyton Green online from FTN Midwest Securities. Please go ahead.

Peyton Green:

Good morning.

Several:

Good morning, Peyton.

Peyton Green:

If I could just get an update on what your thoughts for the loan to earning asset mix might be. I think Bill mentioned that you would hope that loan growth can stay in the 15% to 20% range for ’06, excluding the Big Lake transaction. Is that correct, number one. Then also, would you reduce the size of the securities booked or do you see it more as just maintaining a consistent balance over the year?

Dennis Hudson:

Bill can weigh in, but I just would like to point out that you are right. We are looking at loan growth in the area of 15 plus percent; and I would point out to everybody that that is a decline in growth from what we have produced the last couple of years, as the surge in new market impact works its way through the portfolio. Bill, do you have any other comments?

Bill Hahl:

Yes, I think we have said in the past, more or less I guess, in terms of the loan-deposit ratio, that we would be comfortable with it in the high 80’s—so we do have quite a ways to go from the 72% that we are at right now. I think that we still share comfort in that the 15% to 20% growth will make a nice dent in 2006 into that, depending on what our deposit growth can get to. Doug, any comments on the outlook for loan growth?

Doug Gilbert:

Well, I think 15% to 20% is a reasonable number. We still see a great deal of activity in our markets. We have yet to experience the slowdown that maybe some of the other parts of the country are starting to experience. That does not mean that we will not see some slowdown; but from what we can see today out to at least the next six months, we see some great, robust things happening.

Peyton Green:

Okay. Then in terms of expense growth going forward, what is a baseline number in terms of the three branches that you have already got in the works and then just overall growth measures that continue on?

Bill Hahl:

Well, I think you can look back over what occurred in 2004 when we had similar type branch expansion or addition, and go by that. I’ll point out that part of the growth will occur in the lending area, as well as the Brevard market where we do plan, I believe, to open one branch this year. I think that has a July opening, so there is not a great deal of additional overhead being added, Peyton; but we have some catch-up overhead from the expansion that occurred in 2004 and 2005 as well.

Peyton Green:

Okay, so excluding Big Lake, 10% to 12%; is that fair?

Bill Hahl:

Yes, I think that is probably reasonable.

Peyton Green:

Good enough. Thank you very much.

Operator:

Our next question comes from Cory Shipman from the Stanford Group. Please go ahead.

Cory Shipman:

Good morning gentlemen. I have two unrelated questions. The first is very simple, just give us an update on the duration of the securities portfolio.

Dennis Hudson:

Down below two years, providing about $15 million to $20 million per month in run-off.

Cory Shipman:

Secondly, now that it has been in the fold for about two quarters, a little more than two quarters, can you give us a status report on how Century National is doing. Specifically, the opportunities you are seeing in Orlando, particularly on the commercial lending front; how are deposit retentions going with that acquisition; and what you have been able to do thus far with the under-utilized balance sheet that you acquired?

Dennis Hudson:

Well, generally, it is doing extremely well. With all of the factors you just questioned, each one of them I would say is going as well or better than our expectations at the beginning. Again, I attribute that back to the management team and the commitment they have for moving forward and building things together. I think the loan growth has been better since the acquisition than it was prior to. It has been incrementally better which is what our goal was, and what their goal was. I would point out if you look very carefully at Century, historically, you would see that their loan growth was accelerating in the last year or so prior to the announcement, and that acceleration continued out beyond the announcement and certainly all the way through this year. We are very pleased with the progress and we think th e longer term opportunities in the market have clearly yet to be realized. We expect those trends to continue, and the key to that will be the right people, and recruiting additional help over time, and we are in the process of working on that right now.

Cory Shipman:

All right, thank you, and have a good quarter.

Dennis Hudson:

Thank you.

Operator:

We now have Alan Savastano from Jamie Montgomery. Please go ahead.

Al Savastano:

Good morning guys; how are you?

Several:

Good morning Al.

Al Savastano:

Just a question. With your loan deposit ratio where it is, what is your outlook for deposit growth since you really do not need it?

Bill Hahl:

Well, yes. But (deposits) are kind of the lifeblood, though, of the organization. I think one of our challenges over the next couple of years is going to be to better rationalize our entire footprint that we have. There are really a lot of opportunities, and I think that goes for deposit growth as well. As I mentioned, in the Brevard market, we are going to be opening an office there. If we have any kind of experience like we did down in Palm Beach County, that could be and should be very positive. The Orlando market is very, very competitive right now with a lot of new de novo branches opening up there, but that team is doing remarkably well against all that competition. Then in the Treasure Coast markets, we do have the biggest, or nearly the biggest footprint, in market-share—so we are lo oking at somewhere in the probably 4% to 8% deposit growth for 2006. It just depends on how certain of these things come out. Some of the down draft on that is that, as the large commercial construction projects—where we have taken in quite a bit of deposit money on the sale of the units—are completed, some fairly large deposit relationships go away—not relationships, but just overall deposits.

Dennis Hudson:

Yes…escrow deposits will begin to decline. We are seeing that in this last quarter—some declining large escrow deposits—not a huge number and again, that is being replaced with new stuff coming in on the front-end. So I think we feel comfortable with the overall growth number that Bill just talked about.

Al Savastano:

Does that impact your pricing at all on deposits?

Bill Hahl:

No, we are relationship bankers. That is our strategy and we really do not compete for deposits on a price basis.

Dennis Hudson:

And, Al, I would say that with the current position we are in, with the liquidity that we have in the balance sheet, we will stick to our discipline in terms of how we grow the deposit portfolio. We are not feeling any pressure to replace any of those deposits due to liquidity concerns—and you see that in a lot of other companies. That is not something that is here, so it gives us an advantage and an ability to respond more carefully to the market and where the pricing is going. So we will continue to remain disciplined, and on the positive side, we will grow as best we can grow in the low-cost deposit categories.

Al Savastano:

Okay, very good. Thank you.

Operator:

If there are any further questions, please press star and one on your touchtone phone. We have Bill McCrystal from McConnell, Budd, Romano. Please go ahead.

Bill McCrystal:

Good morning gentlemen.

Several:

Good morning Bill.

Bill McCrystal:

Just one question. You mentioned that 34% of assets are tied to prime or are at least floating rate. Do you have any loans that have caps written into them, and does that create an issue as we look forward to some more rate increases in ’06?

Doug Gilbert:

Generally speaking, we do not have loans that have caps tied to them.

Dennis Hudson:

Probably the bigger issue is whether those things get refinanced at some point, and that depends on the twists and turns and the curves as we move out over the next year. At this point, I do not think we see any pressure.

Bill McCrystal:

Well, very good. Thanks very much.

Operator:

There are no further questions at this time.

Dennis Hudson:

Great. Well, thank you very much for your attendance today. We look forward to reporting good things in the first quarter and thank you for attending.

Operator:

Thank you. This does conclude today’s conference. Thank you for participating. You may now disconnect.

EX-99.3 4 exhibit209934.htm Exhibit 99

EXHIBIT 99.3

To 8-K dated January 23, 2006

Seacoast Banking Corporation of Florida

Fourth Quarter 2005 Financial Highlights

Cautionary Notice Regarding Forward-Looking Statements

You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “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 conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, se curities, and interest sensitive assets and liabilities; interest rate risks and sensitivities; 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 of Seacoast and Big Lake will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potent ial 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; the risk of obtaining necessary governmental approvals of the merger on the proposed terms and schedule; the potential failure of Big Lake’s shareholders to approve the merger; increased competitive pressures and solicitations of Big Lake’s customers by competitors; as well as the difficulties and risks inherent with entering the Central Florida market.

Other Important Information About this Press Release

Big Lake’s shareholders are urged to read the proxy statement/prospectus regarding the proposed transaction when it becomes available, because it will contain important information about Seacoast, Big Lake and the proposed transaction. Big Lake’s shareholders will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about Seacoast and Big Lake, without charge, at the SEC’s Internet website at http://www.sec.gov. Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference into, or otherwise referred to in, the proxy statement/prospectus can also be obtained, without charge, by directing a written request to Seacoast Banking Corporation of Florida, 815 Colorado Avenue, Stuart, Florida 34994, Attention : Office of the Secretary, or to Big Lake Financial Corporation, 1409 South Parrott Avenue, Okeechobee, Florida 34974, Attention: President.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, shares of Seacoast’s common stock, or the solicitation of any proxies from Big Lake’s shareholders.

Total Revenues Increase

(Dollars in thousands)	4Q-2005	4Q-2004	Growth	% Growth
Net Interest Income	$ 20,062	$ 14,158	$ 5,904	41.7	%
Noninterest Income	5,089	4,458	631	14.2
Total Revenues	$ 25,151	$ 18,616	$ 6,535	35.1	%

Excludes provision for loan losses, interest rate swap profits and losses, and securities gains and losses; calculated on a fully taxable equivalent basis using amortized cost

Overhead Ratio

	1Q-2004	2Q-2004	3Q-2004	4Q-2004
Overhead Ratio*	66.7%	65.1%	65.6%	65.0%

	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Overhead Ratio*	65.4%	63.1%	63.2%	62.6%

* Excludes security gains (losses) and interest rate swap profits (losses)

Loan Growth Remains Strong at a 31.5% Growth Rate Year-Over-Year, Excluding Acquisition of $107 Million in Loans

(Dollars in thousands)	4Q-2004	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Loan Outstandings	$ 899,547	$ 978,095	$1,148,373	$1,217,919	$1,289,995

Commercial Lending Originations Remain Strong

(Dollars in thousands)	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Commercial Originations*	$ 108,827	$ 118,827	$ 124,777	$ 76,509

* Includes Commercial Real Estate

Deposits Up 7.9% over Last Twelve Months, Excluding Acquisition of $304 Million in Deposits

(Dollars in thousands)	4Q-2004	4Q-2005
Total Deposits	$ 1,372,466	$ 1,784,219

Deposit Mix

	4Q-2004		4Q-2005
Demand	25	%	27	%
Core *	66		63
Time Deposits > $100,000	9		10
Total	100	%	100	%

*Includes Time Deposits < $100,000

Cost of Deposits

	2Q-2004	3Q-2004	4Q-2004	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Fed Funds Rate	1.25%	1.75%	2.25%	2.75%	3.25%	3.75%	4.25%
Cost of Deposits	0.98%	1.02%	1.03%	1.09%	1.18%	1.32%	1.54%

Average Earning Asset Growth

Average loans represent 63% of earning assets at December 31, 2005, compared to 60% at December 31, 2004.

(Dollars in billions)	2Q-2004	3Q-2004	4Q-2004	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Average Earning Assets	$1.34	$1.35	$1.45	$1.59	$1.83	$1.89	$1.97

Prime Based Loans

(Dollars in thousands)	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Prime Based Loans	$233,000	$355,000	$390,000	$416,000

Total Floating Rate Assets

(Dollars in thousands)	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Ending Floating Rate Assets *	$439,000	$582,000	$617,000	$677,000

* Loans, Investments and Overnight Funds

	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Prime Rate	5.75%	6.25%	6.75%	7.25%

Net Interest Margin

	4Q-2004	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Net Interest Margin	3.88%	3.90%	3.91%	4.01%	4.04%

Net Interest Income

(Dollars in thousands)	4Q-2004	1Q-2005	2Q-2005	3Q-2005	4Q-2005
Net Interest Income	$14,158	$15,277	$17,867	$19,091	$20,062

Excludes provision for loan losses; calculated on a fully taxable equivalent basis using amortized cost

Service Area (Map)

•

Seminole County

•

Orange County

•

Brevard County

•

Indian River County

•

St. Lucie County

•

Martin County

•

Palm Beach County

•

Broward County (Fort Lauderdale)

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