8-K

8-K – page # of 4

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)  October 27, 2008 (October 22, 2008)

    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 4

SEACOAST BANKING CORPORATION OF FLORIDA

Item 2.02

Results of Operations and Financial Condition

On October 22, 2008, the Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) announced its financial results for the third quarter ended September 30, 2008.  

A copy of the press release announcing Seacoast’s results for the third quarter ended September 30, 2008 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 future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls or 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 i n 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 and regulatory changes; the risks of changes in interest rates on the level and composition of de posits, loan demand, 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 mor e 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, 2007 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.

Item 7.01

Regulation FD Disclosure

On October 23, 2008, Seacoast held an investor conference call to discuss its financial results for the third quarter ended September 30, 2008.  A transcript of this conference call is attached hereto as Exhibit 99.2 and incorporated herein by reference.  All information included in the transcript is presented as of September 30, 2008, and the Company does not assume any obligation to correct or update said information in the future.

The information in the preceding paragraph, as well as Exhibit 99.2 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

(d) The following exhibits are filed herewith:

Exhibit Number	Description
99.1	Press Release dated October 22, 2008 with respect to Seacoast Banking Corporation of Florida’s financial results for the third quarter ended September 30, 2008
99.2	Transcript of Seacoast’s investor conference call held on October 23, 2008 to discuss the Registrant’s financial results for the third quarter ended September 30, 2008

8-K – page # of 4

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.

Date:  October 27, 2008	SEACOAST BANKING CORPORATION OF FLORIDA
	(Registrant)
	By:  /s/ Williams R. Hahl
	Executive Vice President and Chief
	Financial Officer

EX-99.1

EXHIBIT 99.1

To 8-K dated October 27, 2008

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 and

Chief Financial Officer

 (772) 221-2825

SEACOAST REPORTS EARNINGS FOR THE THIRD QUARTER

STUART, FL., October 22, 2008 – Seacoast Banking Corporation of Florida (NASDAQ-NMS:  SBCF), today reported net income (loss) for the third quarter of 2008 totaling $(3,448,000) or $(0.18) diluted earnings per share (DEPS), compared to $285,000 or $0.01 DEPS for the third quarter a year ago.  For the first nine months of 2008, net income (loss) totaled $(23,001,000) or $(1.21) DEPS, compared to $7,862,000 or $0.41 DEPS for 2007.  

 The Company’s capital position remains strong with a total risk-based capital ratio improving from 11.4 percent at June 30, 2008 to approximately 11.7 percent at September 30, 2008.  This ratio is expected to continue to improve due to an anticipated decline in risk-based asset levels in 2008, as a result of previously discussed declines in anticipated new loan production.  In recent years, the Company raised an aggregate of $52 million in new capital through three offerings of trust preferred securities, including one which was completed in mid-2007.  This new capital was raised at favorable rates and the proceeds were contributed to the Company’s banking subsidiary, Seacoast National Bank, which continues to maintain strong capital levels.  The Company filed a shelf registration statement during the se cond quarter this year relating to a variety of debt and equity instruments to provide future flexibility in raising capital in order to take advantage of opportunities that become available or should the need arise.  

Liquidity also improved during the quarter with available funding doubling to approximately $800 million from a variety of sources at quarter end.  None of the funding sources were utilized during the quarter.  The Company does not currently rely on wholesale funding and maintains a diverse retail deposit base in its markets.  Retail household growth improved as a result of the Company’s retail deposit program with the number of new retail relationships opened during the quarter accelerating by 25 percent over the same period in 2007.

Both the third quarter and year to date earnings were impacted by elevated nonperforming assets which reduced net interest income and produced higher net loan charge offs and legal and professional fees.  The provision for loan losses for third quarter this year was $10.2 million and $58.0 million year to date.  As forecasted last quarter, the provision was significantly lower than the $42.2 million provision charged to earnings for the second quarter of 2008, an indication that credit costs may have peaked in the second quarter 2008.  

The Company has no exposure to loans or investments with sub-prime collateral, nor has it ever originated or purchased Alt A loans or pay option ARM loans which have recently been a cause for concern in the industry.  The Company’s residential and consumer loan portfolios have performed well in light of current market conditions.  

Nonperforming assets declined by $400 thousand from the second quarter of 2008 and totaled approximately $80 million.  During the quarter the Company sold approximately $38 million in nonperforming loans.  The sale included several larger balance residential construction and development loans.  Over the past two quarters the Company has substantially reduced its exposure to large residential construction and development loans.  Loans in this portfolio with balances of $4 million or greater have declined by 40.0 percent from $163.7 million or 71 percent of total risk based capital at March 31, 2008 to $98.3 million or 49 percent of total risk based capital at September 30, 2008.  Of the remaining $98.3 million in larger residential construction and development loans $40.6 million are currently classified as nonperfo rming.  Loans in this portfolio less than $4 million in size have an average balance of approximately $560 thousand.        

“Our reduced exposure to residential construction and development loans this quarter improved our overall risk profile.  We intend to further reduce these exposures in the coming quarter and these efforts should lead to improved earnings performance in future quarters”, said Dennis S. Hudson, III, Chairman and Chief Executive Officer of Seacoast.  “Our efforts to address the slumping housing market began early, well ahead of the industry as a whole, and I am confident that we will be among the first to emerge from its negative effects.”  

Other results for third quarter 2008:

•

Loan loss reserve increased to a strong 1.87 percent from 1.75 percent the prior quarter and 1.19 percent in the prior year’s third quarter.

•

Nonperforming assets remained stable at $80.3 million down slightly from last quarter’s total of $80.7 million.

•

Net interest income totaled $19.2 million for the third quarter, and the net interest margin was 3.57 percent.

•

Total deposits declined by less than 1 percent compared to the prior year and seasonal deposit declines for the quarter were less than in past years due to strong consumer deposit growth in core markets.

•

Acquisitions of new personal checking accounts increased by 20 percent in the third quarter compared to the same period in 2007.

•

Average cost of interest bearing liabilities totaled 2.64 percent, down 4 basis points from the second quarter of 2008.  

Operating earnings pre-provision for loan losses and taxes for the quarter totaled approximately $4.3 million down from $7.1 million in the second quarter this year as a result of higher legal fees associated with the problem credits, seasonally weak noninterest income exacerbated by the economic downturn and lower net interest income caused by both negative loan growth and elevated nonaccrual loans.  

Noninterest expenses totaled $19.9 million, up $873,000 from the prior year's third quarter and $660,000 from the second quarter of 2008.  Legal and professional fees associated with loan collection efforts were the primary cause.  Year to date noninterest expenses totaled $57.8 million compared to $57.6 million a year ago.  The Company believes that it will have one more quarter of elevated legal costs before these expenses will decline.  In addition, the Company has plans to continue to reduce its overhead and expects to implement cost saving measures beginning in the first quarter of 2009.  The amount of these reductions will be communicated with the announcement of earnings for the full year in January 2009.

Noninterest income, excluding securities gains and losses, declined 13.1 percent when compared to the second quarter, reflecting decreased revenues from marine finance fees, mortgage banking fees and merchant income.  Market uncertainty and seasonal declines were responsible for lower marine finance activities and slower mortgage originations, as well as open positions in some markets for mortgage loan originators while merchant income was impacted by a seasonally slower period and the economic slow down.  The Company expects seasonal improvements in these fee income areas in the fourth quarter.

The net interest margin declined by 12 basis points to 3.57 percent in the third quarter 2008 compared to the second quarter of 2008 primarily as a result of nonperforming assets offset by lower costs for interest bearing liabilities.  Interest bearing deposit costs decreased 6 basis points to 2.60 percent in the third quarter 2008 and total interest bearing liabilities decreased from 2.68 percent for the second quarter to 2.64 percent in the third quarter.  Since the Federal Reserve Bank lowered rates 50 basis points on September 16, 2008, the Company has been successful in repricing many of the Company’s deposit products; therefore, future cost for deposits should be lower.  

Consistent with the prior quarters’ results for 2008, loan growth in the third quarter was much slower than in the prior year with total loans outstanding decreasing year-over-year by $150.5 million, or 7.9 percent, compared with an increase of $165.3 million or 9.5 percent for the year ended December 31, 2007.  Loan growth is expected to continue to be weak for the remainder of the year and the first half of 2009.  

 Total deposits declined by less than 1 percent at quarter end compared with the prior year.  Business deposit growth was weaker than expected due to the economic slowdown and deposit declines in the Company’s Orlando region.  Consumer deposit growth in most of the Company’s markets was stronger than expected.  New personal checking relationships have increased as a result of a new retail deposit growth strategy which has improved market share, increased average services per household and decreased customer attrition.  Since the promotion began in 2008, new household deposit balances and average services per household have each increased 16 percent compared to the same period in 2007.    Total deposits, excluding the Orlando region, increased $135.6 million or 8.8% from the quarter ended Se ptember 30, 2007.  

The Company will host a conference call on Thursday, October 23, 2008 at 10:00 a.m. (Eastern Time) to discuss its earnings results and business trends.  Investors may call in (toll-free) by dialing (800) 640-9765 (access code: 22914100; leader: Dennis S. Hudson).  A replay of the conference call will be available beginning the afternoon of October 24 by dialing (877) 213-9653 (domestic), using the passcode 22914100.

Alternatively, individuals may listen to the live webcast of the presentation by visiting the Company’s website at www.seacoastbanking.net.  The link to the live audio webcast is located in the subsection Presentations under the heading Investor Relations.  Beginning the afternoon of October 23, 2008, an archived version of the webcast can be accessed from this same subsection of the website.  This webcast will be archived and available for one year.  

Seacoast Banking Corporation of Florida has approximately $2.2 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 future financial and operating results, 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(s),” “contemplate,” “expect(s),” “expected,” “estimate,” “continue,” “further”, “point to,” “project,” “forecasted,” “could,” “intend,” “indication” 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 and regulatory change s; 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 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 busine sses 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, 2007 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.

- continued -

FINANCIAL HIGHLIGHTS				(Unaudited)
SEACOAST  BANKING  CORPORATION  OF  FLORIDA  AND  SUBSIDIARIES
		Three Months Ended					Nine Months Ended
(Dollars in thousands,		September 30,						September 30,
except per share data)		2008			2007				2008		2007
Summary of Earnings
Net income (loss)	$	(3,448)	$		285			$	(23,001)	$	7,862
Net income (loss), excluding securities restructuring losses (5)		(3,448)			285				(23,001)		11,159
Net interest income  (1)		19,186			21,147				59,982		64,047
Performance Ratios
Return on average assets-GAAP basis  (2), (3)		(0.60)	%		0.05	%			(1.32)	%	0.45	%
Return on average tangible assets (2),(3), (4),(5)		(0.58)			0.09				(1.32)		0.70
Return on average shareholders' equity–GAAP basis (2), (3)		(7.13)			0.51				(14.77)		4.79
Return on average tangible shareholders’ equity (2),(3),(4),(5)		(9.43)			1.18				(19.67)		9.71
Net interest margin  (1), (2)		3.57			3.94				3.67		3.99
Per Share Data
Net income (loss) diluted-GAAP basis	$	(0.18)	$		0.01			$	(1.21)	$	0.41
Net income (loss) basic-GAAP basis		(0.18)			0.02				(1.21)		0.41
Net income (loss) diluted-excluding securities restructuring losses (5)		(0.18)			0.01				(1.21)		0.58
Net income (loss) basic-excluding securities restructuring losses (5)		(0.18)			0.02				(1.21)		0.59
Cash dividends declared		0.01			0.16				0.33		0.48

(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 (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)

Excluding securities restructuring losses of $5,118 (or $3,297 net of taxes) recorded in the first quarter 2007.

FINANCIAL  HIGHLIGHTS	(Unaudited)
SEACOAST  BANKING  CORPORATION  OF  FLORIDA  AND  SUBSIDIARIES
			September 30,					Increase/
			2008		2007			(Decrease)
Credit Analysis
Net charge-offs year-to-date		$	47,232	$		1,307		3,513.8	%
Net charge-offs to average loans			3.41	%		0.10	%	3,310.0
Loan loss provision year-to-date		$	59,978	$		8,932		549.1
Allowance to loans at end of period			1.87	%		1.19	%	57.1
Nonperforming loans		$	75,793	$		45,654		66.0
Other real estate owned			4,551			240		1,796.3
Total non-performing assets			80,344	$		45,894		75.1
Nonperforming assets to loans and other real estate owned at end of period			4.60	%		2.42	%	90.1
Nonperforming assets to total assets			3.61	%		1.98	%	82.3
Selected Financial Data
Total assets		$	2,224,614	$		2,316,779		(4.0	)
Securities – Trading (at fair value)			0			17,955		(100.0	)
Securities – Available for sale (at fair value)			267,661			205,174		30.5
Securities – Held for investment (at amortized cost)			29,120			32,588		(10.6	)
Net loans			1,709,978			1,870,574		(8.6	)
Deposits			1,838,792			1,855,726		(0.9	)
Shareholders’ equity			184,449			213,880		(13.8	)
Book value per share			9.59			11.20		(14.4	)
Tangible book value per share			6.71			8.22		(18.4	)
Average shareholders' equity to average assets			8.93	%		9.48	%	(5.8	)
Average Balances (Year-to-Date)
Total assets		$	2,329,860	$		2,311,782		0.8
Less: Intangible assets			55,975			57,138		(2.0	)
Total average tangible assets		$	2,273,885	$		2,254,644		0.9
Total equity		$	208,010	$		219,252		(5.1	)
Less: Intangible assets			55,975			57,138		(2.0	)
Total average tangible equity		$	152,035	$		162,114		(6.2	)

(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 (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)

Excluding securities restructuring losses of $5,118 (or $3,297 net of taxes) recorded in the first quarter 2007.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (Unaudited)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

				Three Months Ended				Nine Months Ended
				September 30,				September 30,
(Dollars in thousands, except per share data)				2008		2007		2008		2007
Interest on securities:
Taxable	$			3,418	$	3,069	$	10,535	$	11,374
Nontaxable				90		88		270		274
Interest and fees on loans				27,146		34,316		86,525		99,796
Interest on federal funds sold and other investments				322		298		1,074		1,211
Total Interest Income				30,976		37,771		98,404		112,655
Interest on deposits				4,033		6,261		14,116		17,760
Interest on time certificates				6,334		7,806		19,463		22,085
Interest on borrowed money				1,492		2,645		5,061		8,979
Total Interest Expense				11,859		16,712		38,640		48,824
Net Interest Income				19,117		21,059		59,764		63,831
Provision for loan losses				10,241		8,375		57,978		8,932
Net Interest Income After Provision for Loan Losses			8,876			12,684		1,786		54,899
Noninterest income:
Service charges on deposit accounts				1,894		1,983		5,556		5,644
Trust income				597		658		1,770		1,948
Mortgage banking fees				216		260		934		1,131
Brokerage commissions and fees				452		620		1,650		2,363
Marine finance fees				371		687		1,986		2,269
Debit card income				620		578		1,879		1,743
Other deposit based EFT fees				82		101		276		348
Merchant income				510		688		1,912		2,165
Other income				332		444		1,115		1,340
				5,074		6,019		17,078		18,951
Securities restructuring losses				0		0		0		(5,118)
Securities gains, net				0		22		355		46
Total Noninterest Income				5,074		6,041		17,433		13,879
Noninterest expenses:
Salaries and wages				7,713		7,479		23,076		23,828
Employee benefits				1,770		1,700		5,509		5,419
Outsourced data processing costs				1,803		1,796		5,800		5,697
Telephone / data lines				471		460		1,398		1,437
Occupancy				2,112		1,928		6,036		5,721
Furniture and equipment				700		758		2,135		2,109
Marketing				545		875		2,014		2,368
Legal and professional fees				1,687		1,327		3,545		3,002
FDIC assessments				543		55		994		169
Amortization of intangibles				315		315		944		944
Other				2,241		2,334		6,373		6,937
Total Noninterest Expenses				19,900		19,027		57,824		57,631
Income (Loss) Before Income Taxes				(5,950	)	(302	)	(38,605	)	11,147
Provision (benefit) for income taxes				(2,502	)	(587	)	(15,604	)	3,285
Net Income (Loss)		$		(3,448	) $	285	$	(23,001	)   $	7,862
Per share common stock:
Net income (loss) diluted		$		(0.18	) $	0.01	$	(1.21	)   $	0.41
Net income (loss) basic				(0.18	)	0.02		(1.21	)	0.41
Cash dividends declared				0.01		0.16		0.33		0.48
Average diluted shares outstanding				19,030,758		19,165,880		18,981,944		19,180,773
Average basic shares outstanding				19,030,758		18,924,665		18,981,944		18,946,759

CONDENSED CONSOLIDATED BALANCE SHEETS  (Unaudited)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

		September 30,			December 31,			September 30,
(Dollars in thousands)		2008			2007			2007
Assets
Cash and due from banks	$	38,927		$		50,490	$	44,680
Federal funds sold and other investments		11,256				47,985		6,605
Total Cash and Cash Equivalents		50,183				98,475		51,285
Securities:
Trading (at fair value)		0				13,913		17,955
Available for sale (at fair value)		267,661				254,916		205,174
Held for investment (at amortized cost)		29,120				31,900		32,588
Total Securities		296,781				300,729		255,717
Loans available for sale		2,701				3,660		1,833
Loans, net of unearned income		1,742,626				1,898,389		1,893,114
Less: Allowance for loan losses		(32,648		)		(21,902)		(22,540	)
Net Loans		1,709,978				1,876,487		1,870,574
Bank premises and equipment, net		43,397				40,926		39,180
Other real estate owned		4,551				735		240
Goodwill and other intangible assets		55,508				56,452		56,767
Other assets		61,515				42,410		41,183
	$	2,224,614		$		2,419,874	$	2,316,779
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Demand deposits (noninterest bearing)	$	285,746		$		327,646	$	336,816
Savings deposits		829,470				1,056,025		886,806
Other time deposits		361,184				332,838		340,440
Brokered time certificates		40,100				0		0
Time certificates of $100,000 or more		322,292				270,824		291,664
Total Deposits		1,838,792				1,987,333		1,855,726
Federal funds purchased and securities sold under agreements to repurchase, maturing within 30 days	71,325					88,100		141,884
Borrowed funds			65,004			65,030		39,749
Subordinated debt			53,610			53,610		53,610
Other liabilities			11,434			11,420		11,930
			2,040,165			2,205,493		2,102,899
Shareholders' Equity
Preferred stock			0			0		0
Common stock			1,928			1,920		1,914
Additional paid in capital			92,327			90,924		90,752
Retained earnings			93,101			122,396		123,538
Treasury stock			(838	)		(1,193)		(1,430	)
			186,518			214,047		214,774
Accumulated other comprehensive income (loss), net			(2,069	)		334		(894	)
Total Shareholders’ Equity	$		184,449			214,381		213,880
	$		2,224,614	$		2,419,874	$	2,316,779
Common Shares Outstanding			19,229,363			19,110,089		19,104,027

CONSOLIDATED QUARTERLY FINANCIAL DATA   (Unaudited)
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES
		Quarters
		2008										2007				Last 12
(Dollars in thousands, except per share data)		Third					Second			First		Fourth				Months
Net income (loss)	$		(3,448		)   $		(21,316)	$		1,763	$		1,903	$		(21,098	)
Operating Ratios
Return on average assets-GAAP basis (2),(3)				(0.60	) %		(3.65)	%		0.30	%		0.32	%		(0.90	)%
Return on average tangible assets (2),(3),(4)				(0.58	)		(3.70)			0.34			0.36			(0.89	)
Return on average shareholders' equity GAAP basis (2),(3)				(7.13	)		(39.79)			3.28			3.48			(10.03	)
Return on average tangible shareholders’ equity (2),(3),(4)				(9.43	)		(53.27)			4.95			5.21			(13.15	)
Net interest margin (1),(2)				3.57			3.69			3.74			3.71			3.68
Average equity to average assets				8.43			9.17			9.17			9.20			9.00
Credit Analysis
Net charge-offs	$			9,290		$	33,541		$	4,401	$		4,451		$	51,683
Net charge-offs  to average loans				2.06	%		7.28	%		0.93	%		0.92	%		2.77	%
Loan loss provision	$			10,241	$		42,237	$		5,500	$		3,813	$		61,791
Allowance to loans at end of period				1.87	%		1.75	%		1.22	%		1.15	%
Nonperforming loans	$			75,793	$		76,224	$		64,730	$		67,834
Other real estate owned				4,551			4,547			940			735
Nonperforming assets				80,344			80,771			65,670			68,569
Nonperforming assets to loans and other real estate owned at end of period	4.60				%		4.45	%		3.50	%		3.61	%
Nonperforming assets to total assets	3.61						3.52			2.74			2.83
Nonaccrual loans and accruing loans 90 days or more past due to loans outstanding at end of period	4.42						4.23			3.46			3.57
Per Share Common Stock
Net income diluted-GAAP basis	$			(0.18	)   $		(1.12)	$		0.09	$		0.10	$		(1.11	)
Net income basic-GAAP basis				(0.18	)		(1.12)			0.09			0.10			(1.11	)
Cash dividends declared				0.01			0.16			0.16			0.16			0.49
Book value per share				9.59			9.90			11.25			11.22
Average Balances
Total assets	$			2,282,821	$		2,349,749	$		2,357,528	$		2,361,086
Less:  Intangible assets				55,662			55,976			56,291			56,605
Total average tangible assets	$			2,227,159	$		2,293,773	$		2,301,237	$		2,304,481
											&nbs p;
Total Equity	$			192,469	$		215,448	$		216,283	$		217,172
Less:  Intangible assets				55,662			55,976			56,291			56,605
Total average tangible equity	$			136,807	$		159,472	$		159,992	$		160,567

(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) on available for sale securities 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.  

CONSOLIDATED QUARTERLY FINANCIAL DATA   (Unaudited) (continued)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

(Dollars in thousands)

SECURITIES	September 30, 2008				December 31, 2007		September 30, 2007
U.S. Treasury and U.S. Government Agencies	$	0	$		13,913	$	17,995
Securities Trading		0			13,913		17,955
U.S. Treasury and U.S. Government Agencies		22,280			30,405		35,349
Mortgage-backed		239,936			218,937		164,452
Obligations of states and political subdivisions		1,986			2,057		2,117
Other securities		3,459			3,517		3,256
Securities Available for Sale		267,661			254,916		205,174
Mortgage-backed		22,997			25,755		26,441
Obligations of states and political subdivisions		6,123			6,145		6,147
Securities Held for Investment		29,120			31,900		32,588
Total Securities	$	296,781	$		300,729	$	255,717
LOANS	September 30, 2008			December 31, 2007			September 30, 2007
Construction and land development	$	484,989	$		609,567	$	627,003
Real estate mortgage		1,093,324			1,074,814		1,051,750
Installment loans to individuals		88,549			86,362		78,641
Commercial and financial		75,296			126,695		135,111
Other loans		468			951		609
Total Loans	$	1,742,626	$		1,898,389	$	1,893,114

AVERAGE BALANCES, YIELDS AND RATES (1) (Unaudited)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

		2008								2007
		Third Quarter		Second Quarter						Third Quarter
		Average	Yield/			Average	Yield/			Average		Yield/
(Dollars in thousands)		Balance	Rate			Balance	Rate			Balance	Rate
Assets
Earning assets:
Securities:
Taxable	$	276,777	4.94	%	$	280,623	5.03	%	$	233,809	5.25		%
Nontaxable		8,151	6.53			8,164	6.57			8,216	6.33
Total Securities		284,928	4.99			288,787	5.08			242,025	5.29
Federal funds sold and other
investments		53,220	2.41			64,558	2.83			21,364	5.53
Loans, net		1,798,357	6.01			1,854,015	6.12			1,866,954	7.30
Total Earning Assets		2,136,505	5.78			2,207,360	5.89			2,130,343	7.05
Allowance for loan losses		(37,705	)			(22,992)				(15,361)
Cash and due from banks		35,788				46,057				47,633
Premises and equipment		43,378				42,885				39,190
Other assets		104,855				76,439				77,231
	$	2,282,821		$		2,349,749		$		2,279,036
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW	$	72,691	1.65	%	$	70,135	1.47	%	$	53,842	2.78		%
Savings deposits		103,550	0.73			106,277	0.72			112,323	0.71
Money market accounts		716,166	1.97			788,389	1.95			715,885	3.15
Time deposits		691,486	3.64			641,092	3.99			629,479	4.92
Federal funds purchased and other short term borrowings		82,730	1.55			90,136	1.47			127,163	4.41
Other borrowings		118,705	3.92			118,816	3.89			69,860	7.00
Total Interest-Bearing Liabilities		1,785,328	2.64			1,814,845	2.68			1,708,552	3.88
Demand deposits (noninterest-bearing)		293,951				316,614				340,462
Other liabilities		11,073				2,842				9,154
Total Liabilities		2,090,352				2,134,301				2,058,168
Shareholders' equity		192,469				215,448				220,868
	$	2,282,821		$		2,349,749		$		2,279,036
Interest expense as a % of earning assets			2.21	%			2.21	%			3.11		%
Net interest income as a % of earning assets			3.57				3.69				3.94

(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.

QUARTERLY TRENDS – LOANS AT END OF PERIOD

(Dollars in Millions)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

			2008		Nonperforming
		1st Qtr	2nd Qtr	3rd Qtr	3rd Qtr	Number
Construction and Land Development
Residential:
Condominiums	>$4 million	$  30.6	$  26.3	$  19.6	-	-
	<$4 million	26.6	21.1	13.0	$  2.8	1
Town homes	>$4 million	19.4	17.1	17.1	5.4	1
	<$4 million	4.4	2.9	4.6	-	-
Single Family Residences	>$4 million	20.8	21.2	13.5	-	-
	<$4 million	35.9	28.3	23.7	5.3	9
Single Family Land & Lots	>$4 million	85.1	64.3	40.3	27.4	4
	<$4 million	27.0	30.8	29.9	4.0	21
Multifamily	>$4 million	7.8	7.8	7.8	7.8	1
	<$4 million	24.8	26.2	22.9	2.3	1
TOTAL	>$4 million	163.7	136.7	98.3	40.6	6
TOTAL	<$4 million	119.1	109.3	94.1	14.4	32
GRAND TOTAL		$ 282.4	$ 246.0	$ 192.4	$ 55.0	38

QUARTERLY TRENDS – LOANS AT END OF PERIOD

(Dollars in Millions)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

	2006	2007
	4th Qtr	1st Qtr	2nd Qtr	3rd Qtr	4th Qtr
Construction and land development
Residential
Condominiums	$ 94.8	$ 84.4	$ 74.2	$ 72.5	$ 60.2
Townhomes	10.4	9.9	11.3	25.0	25.0
Single family residences	80.3	100.9	66.6	63.9	59.0
Single family land and lots	106.3	107.7	129.0	128.4	116.4
Multifamily	48.2	48.7	46.6	33.8	34.5
	340.0	351.6	327.7	323.6	295.1
Commercial
Office buildings	14.1	17.6	19.2	22.4	30.9
Retail trade	16.1	12.5	26.4	50.2	69.0
Land	93.5	93.4	99.4	86.2	82.6
Industrial	6.3	8.9	13.1	16.9	13.0
Healthcare	2.0	2.5	3.0	1.0	1.0
Churches and educational facilities	2.1	1.8	1.9	1.9	-
Lodging	2.1	4.8	11.2	11.2	11.2
Convenience stores	0.5	0.5	1.0	1.4	1.7
Marina	2.2	2.2	2.2	21.9	23.1
Other	0.9	2.8	12.8	8.6	9.9
	139.8	147.0	190.2	221.7	242.4
Individuals
Lot loans	40.6	40.5	40.0	40.7	39.4
Construction	50.7	41.7	43.6	41.0	32.7
	91.3	82.2	83.6	81.7	72.1
Total construction and land development	571.1	580.8	601.5	627.0	609.6
Real estate mortgages
Residential real estate
Adjustable	277.7	285.4	298.4	313.0	319.5
Fixed rate	87.9	87.9	87.6	88.1	87.5
Home equity mortgages	95.9	97.3	90.0	90.8	91.4
Home equity lines	50.9	51.4	56.6	55.1	59.1
	512.4	522.0	532.6	547.0	557.5
Commercial real estate
Office buildings	109.2	113.4	116.1	125.6	131.7
Retail trade	50.9	62.0	62.8	74.9	76.2
Land	-	-	-	2.6	5.3
Industrial	64.3	66.3	84.7	100.2	105.5
Healthcare	40.7	40.5	39.7	33.2	32.4
Churches and educational facilities	32.3	32.9	32.7	36.0	40.2
Recreation	4.4	4.4	4.5	4.7	3.0
Multifamily	9.9	8.4	10.4	11.3	13.8
Mobile home parks	6.0	3.0	4.0	4.0	3.9
Lodging	19.1	16.9	16.8	22.3	22.7
Restaurant	11.7	11.2	9.6	7.2	8.2
Agricultural	26.1	24.5	23.4	19.6	12.9
Convenience stores	22.0	22.2	23.6	23.5	23.2
Other	40.8	38.8	30.5	39.7	38.3
	437.4	444.5	458.8	504.8	517.3
Total real estate mortgages	949.8	966.5	991.4	1,051.8	1,074.8
Commercial & financial	128.1	112.1	139.0	135.1	126.7
Installment loans to individuals
Automobile and trucks	22.3	23.3	23.6	24.8	25.0
Marine loans	32.5	30.1	26.6	24.8	33.2
Other	28.6	29.8	29.4	29.0	28.2
	83.4	83.2	79.6	78.6	86.4
Other	0.7	0.7	1.6	0.6	0.9
	$1,733.1	$1,743.3	$1,813.1	$1,893.1	$1,898.4

QUARTERLY TRENDS – LOANS AT END OF PERIOD (continued)

(Dollars in Millions)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

	2008
	1st Qtr	2nd Qtr	3rd Qtr
Construction and land development
Residential
Condominiums	$ 57.2	$ 47.4	$ 32.6
Townhomes	23.8	20.0	21.7
Single family residences	56.7	49.5	37.2
Single family land and lots	112.1	95.1	70.2
Multifamily	32.6	34.0	30.7
	282.4	246.0	192.4
Commercial
Office buildings	29.1	31.1	27.8
Retail trade	60.4	63.6	68.5
Land	92.5	75.4	73.9
Industrial	16.9	20.8	20.7
Healthcare	1.0	1.0	-
Churches and educational facilities	-	0.1	-
Lodging	-	-	-
Convenience stores	1.8	-	-
Marina	26.8	28.9	30.5
Other	11.3	6.3	5.4
	239.8	227.2	226.8
Individuals
Lot loans	39.4	40.0	38.4
Construction	32.4	27.1	27.4
	71.8	67.1	65.8
Total construction and land development	594.0	540.3	485.0
Real estate mortgages
Residential real estate
Adjustable	317.6	318.8	316.5
Fixed rate	89.1	90.2	93.4
Home equity mortgages	91.7	93.1	84.3
Home equity lines	56.3	59.4	59.7
	554.7	561.5	553.9
Commercial real estate
Office buildings	144.3	142.3	143.6
Retail trade	83.8	93.5	101.6
Land	-	-	0.6
Industrial	104.3	93.3	92.2
Healthcare	39.9	33.6	31.6
Churches and educational facilities	40.2	36.5	35.6
Recreation	2.8	1.8	1.8
Multifamily	20.0	19.1	19.2
Mobile home parks	3.2	3.1	3.1
Lodging	27.9	28.0	26.7
Restaurant	8.0	9.0	8.6
Agricultural	12.4	9.0	8.7
Convenience stores	23.1	24.9	23.6
Other	40.1	41.6	42.5
	550.0	535.7	539.4
Total real estate mortgages	1,104.7	1,097.2	1,093.3
Commercial & financial	93.9	94.8	88.5
Installment loans to individuals
Automobile and trucks	24.1	23.0	21.9
Marine loans	33.3	25.2	26.0
Other	27.5	27.9	27.4
	84.9	76.1	75.3
Other	0.5	0.4	0.5
	$1,878.0	$1,808.8	$1,742.6

QUARTERLY TRENDS – INCREASE (DECREASE) IN LOANS BY QUARTER

(Dollars in Millions)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

	2007
	1st Qtr	2nd Qtr	3rd Qtr	4th Qtr
Construction and land development
Residential
Condominiums	$ (10.4)	$   (10.2)	$   (1.7)	$  (12.3)
Townhomes	(0.5)	1.4	13.7	-
Single family residences	20.6	(34.3)	(2.7)	(4.9)
Single family land and lots	1.4	21.3	(0.6)	(12.0)
Multifamily	0.5	(2.1)	(12.8)	0.7
	11.6	(23.9)	(4.1)	(28.5)
Commercial
Office buildings	3.5	1.6	3.2	8.5
Retail trade	(3.6)	13.9	23.8	18.8
Land	(0.1)	6.0	(13.2)	(3.6)
Industrial	2.6	4.2	3.8	(3.9)
Healthcare	0.5	0.5	(2.0)	-
Churches and educational facilities	(0.3)	0.1	-	(1.9)
Lodging	2.7	6.4	-	-
Convenience stores	-	0.5	0.4	0.3
Marina	-	-	19.7	1.2
Other	1.9	10.0	(4.2)	1.3
	7.2	43.2	31.5	20.7
Individuals
Lot loans	(0.1)	(0.5)	0.7	(1.3)
Construction	(9.0)	1.9	(2.6)	(8.3)
	(9.1)	1.4	(1.9)	(9.6)
Total construction and land development	9.7	20.7	25.5	(17.4)
Real estate mortgages
Residential real estate
Adjustable	7.7	13.0	14.6	6.5
Fixed rate	-	(0.3)	0.5	(0.6)
Home equity mortgages	1.4	(7.3)	0.8	0.6
Home equity lines	0.5	5.2	(1.5)	4.0
	9.6	10.6	14.4	10.5
Commercial real estate
Office buildings	4.2	2.7	9.5	6.1
Retail trade	11.1	0.8	12.1	1.3
Land	-	-	2.6	2.7
Industrial	2.0	18.4	15.5	5.3
Healthcare	(0.2)	(0.8)	(6.5)	(0.8)
Churches and educational facilities	0.6	(0.2)	3.3	4.2
Recreation	-	0.1	0.2	(1.7)
Multifamily	(1.5)	2.0	0.9	2.5
Mobile home parks	(3.0)	1.0	-	(0.1)
Lodging	(2.2)	(0.1)	5.5	0.4
Restaurant	(0.5)	(1.6)	(2.4)	1.0
Agricultural	(1.6)	(1.1)	(3.8)	(6.7)
Convenience stores	0.2	1.4	(0.1)	(0.3)
Other	(2.0)	(8.3)	9.2	(1.4)
	7.1	14.3	46.0	12.5
Total real estate mortgages	16.7	24.9	60.4	23.0
Commercial & financial	(16.0)	26.9	(3.9)	(8.4)
Installment loans to individuals
Automobile and trucks	1.0	0.3	1.2	0.2
Marine loans	(2.4)	(3.5)	(1.8)	8.4
Other	1.2	(0.4)	(0.4)	(0.8)
	(0.2)	(3.6)	(1.0)	7.8
Other	-	0.9	(1.0)	0.3
	$       10.2	$     69.8	$   80.0	$     5.3

QUARTERLY TRENDS – INCREASE (DECREASE) IN LOANS BY QUARTER (Continued)

(Dollars in Millions)

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

	2008
	1st Qtr	2nd Qtr	3rd Qtr
Construction and land development
Residential
Condominiums	$  (3.0)	$       (9.8)	$  (14.8)
Townhomes	(1.2)	(3.8)	1.7
Single family residences	(2.3)	(7.2)	(12.3)
Single family land and lots	(4.3)	(17.0)	(24.9)
Multifamily	(1.9)	1.4	(3.3)
	(12.7)	(36.4)	(53.6)
Commercial
Office buildings	(1.8)	2.0	(3.3)
Retail trade	(8.6)	3.2	4.9
Land	9.9	(17.1)	(1.5)
Industrial	3.9	3.9	(0.1)
Healthcare	-	-	(1.0)
Churches and educational facilities	-	0.1	(0.1)
Lodging	(11.2)	-	-
Convenience stores	0.1	(1.8)	-
Marina	3.7	2.1	1.6
Other	1.4	(5.0)	(0.9)
	(2.6)	(12.6)	(0.4)
Individuals
Lot loans	-	0.6	(1.6)
Construction	(0.3)	(5.3)	0.3
	(0.3)	(4.7)	(1.3)
Total construction and land development	(15.6)	(53.7)	(55.3)
Real estate mortgages
Residential real estate
Adjustable	(1.9)	1.2	(2.3)
Fixed rate	1.6	1.1	3.2
Home equity mortgages	0.3	1.4	(8.8)
Home equity lines	(2.8)	3.1	0.3
	(2.8)	6.8	(7.6)
Commercial real estate
Office buildings	12.6	(2.0)	1.3
Retail trade	7.6	9.7	8.1
Land	(5.3)	-	0.6
Industrial	(1.2)	(11.0)	(1.1)
Healthcare	7.5	(6.3)	(2.0)
Churches and educational facilities	-	(3.7)	(0.9)
Recreation	(0.2)	(1.0)	-
Multifamily	6.2	(0.9)	0.1
Mobile home parks	(0.7)	(0.1)	-
Lodging	5.2	0.1	(1.3)
Restaurant	(0.2)	1.0	(0.4)
Agricultural	(0.5)	(3.4)	(0.3)
Convenience stores	(0.1)	1.8	(1.3)
Other	1.8	1.5	0.9
	32.7	(14.3)	3.7
Total real estate mortgages	29.9	(7.5)	(3.9)
Commercial & financial	(32.8)	0.9	(6.3)
Installment loans to individuals
Automobile and trucks	(0.9)	(1.1)	(1.1)
Marine loans	0.1	(8.1)	0.8
Other	(0.7)	0.4	(0.5)
	(1.5)	(8.8)	(0.8)
Other	(0.4)	(0.1)	0.1
	$(20.4)	$     (69.2)	$  (66.2)

EX-99.2

Third Quarter 2008 Conference Call

Page #

EXHIBIT 99.2

To 8-K dated October 27, 2008

Second Quarter Earnings Release

Seacoast Banking Corporation

October 23, 2008

10:00 a.m. Eastern Time

Operator:

Good morning, ladies and gentlemen, and welcome to the Third Quarter Earnings Release Conference 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 Chairman and CEO Mr. Dennis S. Hudson.  Mr. Hudson, you may begin.

Dennis S. Hudson III:

Thank you very much and welcome to Seacoast’s Third 2008 Conference Call.  Before I begin…  Before we begin, I’d like to direct your attention to the statement at the end of our press release regarding forward statements. During the call, we are going to be discussing a number of issues that constitute forward-looking statements within the meaning of the Securities and Exchange Act, and our statements are intended to be covered within the meaning of Section 27A of the Act.  

With me today is Jean Strickland, our President and Chief Credit Officer; Russ Holland, our Chief Banking Officer; and Bill Hahl, our CFO.  Also with us today is Doug Gilbert, our Vice Chairman.  

Today, I’m going to be spending a fair amount of time talking about our credit quality, and then Bill is going to update us on some of the factors impacting our earnings this past quarter before we break for a few questions.

As most of you know, last quarter we aggressively marked down a number of our larger residential construction and land development exposures.  We said at the time that taking aggressive action would place us in a stronger position as we moved to accelerate our liquidation activities in the coming months.  We are pleased to report this quarter that we made significant progress, progress in bringing down those exposures through our ongoing liquidation work and through a successful sale of approximately $40 million in loan balances.  We believe we have substantially lessened our risk profile over the past couple of quarters.  

Seacoast was among the first in Florida to recognize the housing deterioration that began in mid 2006 with an initial reserve build that occurred in the final quarter of that year. Since that time, we have committed significant resources to aggressively manage and quantify our exposure, which has provided us with a realistic and we think timely understanding of evolving market conditions.  This quarter saw significant progress.  We intend to be among the first to show marked improvement as we move forward.  

I’d like to direct your attention to some of the supplemental tables we included this quarter at the end of our press release.  We have provided you with an eight quarter detailed trending for end of quarter loan balances, as well as increases and decreases for each of these loan types.  If you take a look at this table, you can see that construction and land development loans have been reduced by $125 million since year end, with most of the decline occurring in the most recent two quarters.  If you take a closer look, you’ll see that the residential component of our construction portfolio has declined the most; in fact, it has declined by 32% over the last two quarters.  

This quarter we also provided you with a further breakout of the residential construction and development book split into five subcategories.  In this table, we have split each of those categories between larger loans (loans that are $4 million in size and greater) and smaller loans (under $4 million in size).  In this table, you will see that most of the liquidation has occurred in the large loan categories.  In fact, large residential construction loans have declined from $164 million in March of this year, March of 2008, to $98 million at the end of September.  This represents a 40% decline in this exposure and most of that occurred in the land and lot category, which is down by 53% over just the last two quarters.  So, again, we believe we have substantially reduced our exposure to residential land and land d evelopment loans over the past two quarters, and we remain committed to the execution of our systematic plan to reduce these exposures further in the coming months.

Now let’s turn to nonperforming assets.  We were pleased that our liquidation activities brought down the level of nonperformers this quarter.  Nonperformers, however, remain unacceptably high.  As we stated in late 2006 and as recently as last quarter, our problem assets are concentrated in our residential construction book.  Other parts of our loan portfolio are performing reasonably well considering market conditions. This performance reflects our decision to stay away from all of the exotic mortgage products that currently plague our industry.  We also chose not to participate in the aggressive programs to generate home equity loans and other consumer loans that now are showing signs of significant stress in the industry.  So, again, let me restate: Our problem assets are concentrated in our residen tial construction book.  That residential construction book has been under special scrutiny since late 2006.  We understand the risk profile.  We are focused on timely identification of loss potential and are in touch, real time, with market conditions.  

If you turn again to the table at the end of our press release, you’ll see that most of our nonperforming loans are related to the residential development book. In fact, $55 million of our total $80 million in nonperforming assets are located there.  The remainder, incidentally, includes $5 million in foreclosed properties, $10 million in consumer, which is primarily residential mortgages, and approximately $10 million in commercial real estate mortgages.  We have provided a breakout of our nonperformers in the residential construction book; and as you look at it, you will see that a substantial portion of the remaining larger exposures is currently classified as nonperforming.  This certainly reflects the severe conditions that exist in the residential markets today.  However, with a substantial portion of our r esidential construction book classified as nonperforming, we believe we will see incremental nonperforming asset growth moderate while we continue our efforts to aggressively pursue liquidation efforts and other opportunities.  

I guess to sum up, all of this points to reduced exposure going forward with respect to the residential problem.  We were on it early, and we plan to be the first to show marked improvement.

Now I’m going to turn the call over to Bill for a few more comments on the quarter. Bill.

William R. Hahl:

Thanks, Denny. Our third quarter 2008 net income and financial results declined when compared to 2007, driven by $1.9 million lower in net interest income and approximately $900,000 lower in noninterest income together with higher credit costs.  Loan balances outstanding compared to a year ago are down $150 million or 7.9% and nonperforming assets have increased from a year ago by $34 million, accounting for the lower net interest income results and a margin decline of 37 basis points compared to the third quarter a year ago.  On a linked-quarter basis, the margin declined 12 basis points to 3.57%, mostly due to the substantial competition for deposits keeping deposit interest rates disproportionately high even though the Fed cut rates back in April of 2008, while our prime-based loans have replaced lower.  

In this environment, our focus has been on building customer relationships and organic transaction deposit growth while avoiding the higher cost certificates of deposits that the competition has been heavily promoting. Our progress this quarter in acquiring new deposit households was much improved from a year ago with new deposit relationship acquisitions up 25% compared to new relationships a year ago.  Our year-over-year deposit growth, excluding the Orlando region, was $135 million or 8.8%. As of June 30, 2008, we have regained our number one market share position in Martin County for deposits in this legacy market where nearly 50% of our total deposits reside.  The bank we acquired in Orlando in 2005 had a deposit-base comprised of many large commercial relationships, which were dependent upon construction and sale of real estate, such as attorneys, title companies, construction companies, and others. Over the past year, these deposit relationships have declined as a result of the slowing of real estate transactions and have accounted for a decline of approximately $150 million in deposits in this market.  Going forward, we believe we will begin to see deposit growth in this market as our retail deposit strategy has been effective there, as well as in the other markets.  

As I mentioned earlier, we have experienced substantial certificate of deposit pricing pressure from competitors in all our markets. Our success in growing retail relationships and balances this quarter allowed us to rely less on certificate of deposits for deposit growth and liquidity and avoid the higher rates paid by competitors this quarter.  Our add-on rates for CDs in the third quarter averaged approximately 3.5%, versus the competitors’ rates of a low of 4% to a high of 4.8% for the same maturities.  As a result, the average cost of certificates for the third quarter were down 35 basis points to 3.64%, compared to the second quarter, and the cost of all deposits declined 6 basis points to 2.6%, compared to 2.66% in the second quarter.  

Looking at the noninterest income area, in light of the unprecedented economic challenges as a result of the deterioration in the housing market, fee-based revenues were lower when compared to 2007.  Compared to a year ago, marine finance fees were off approximately $300,000, wealth management revenues were down $200,000, and merchant service revenues were off nearly $200,000, accounting for the majority of the decline in noninterest income.  On a linked-quarter basis, the same revenues were also down as a result of normal seasonal slowness that impacts these businesses and the more general economic weakness impacting our markets.  We expect some improvement in the next two quarters for these fee-based businesses as these are normally seasonally strong quarters.

Lastly, overhead was in-line with expectations with slightly higher legal fees as a result of the increased number of problem credits both for the quarter and year-to-date. Year-to-date overhead was nearly unchanged from a year ago, and this is consistent with our prior guidance of no substantial increase or decrease in noninterest expenses for the year.

Going forward, management intends to continue with its cost reduction measures, and we’ll have more information on the size and the nature of those reductions in next quarter’s call.  Denny.

Dennis S. Hudson III:

Thanks, Bill. I want to end with a few comments on capital.  As you saw, our capital ratios grew this quarter as risk-based assets declined. In fact, our risk-based capital ratio now stands at 11.7%, which is up from 11.4% last quarter.  This is well in excess of the 10% level to be considered well capitalized.  Given the muted outlook for short-term growth, we will likely see our capital ratios continue to grow in the coming quarters.  As I have said, our number one priority for 2008 has been asset quality. Our capital strength has afforded us with the ability to move forward on a very aggressive basis as we continue our liquidation efforts that will bring the necessary improvements in asset quality.  

As we move through the balance of this cycle, we will see, as I said last quarter, an entirely new competitive dynamic develop in Florida; and boy, when you look at what has just happened over the last month or so, not a truer statement could be made. I find it instructive to see many of our business customers across a broad range of industries doing better today than anyone thought could be possible. The common factor, as I said last quarter, is a dramatic change in their competitive environment.  We are fast approaching that dynamic in our business as well.  That is why it is important for us to continue to maintain our focus on exiting out of our weaknesses as quickly as possible, as we also continue to build on our earnings momentum.  

I want to again this quarter thank our associates and officers who continue to work long and hard hours in remarkably difficult circumstances; and to our customers, I wish to express my confidence in our Board, our management team, and in our financial strength which continues to ensure our safe and sound operation in this difficult environment.  

Before I open it up for questions, let’s summarize. Our success on the problem asset liquidation front was very successful this quarter; in fact, more successful than we anticipated, and this liquidation success was focused on our largest credit exposures.  As a result, our credit profile has improved significantly over the past six months. Our capital and liquidity both improved this quarter.  Our capital levels increased and are expected to continue to grow in the coming months.  Our sources of liquidity were double this quarter to over $800 million, and we did not draw on any of those sources during the quarter due to, as Bill just said, very strong consumer deposit growth, much better in fact than any of us anticipated over this summer.  Our strong and diverse consumer funding base actually improved during th e quarter, and we don’t rely on any external sources of wholesale funding at all.  So as I see it, Seacoast remains a remarkable value today.  Our risks are well understood and well communicated with the Street.  We have made remarkable progress in reducing those risks.  Moreover, we are committed to continue our progress in the coming quarters, and we trade today at a negative premium to core deposits.  

So with that, I’m going to open up the line to questions, and we’d be glad to answer any questions you have.

Operator:

Thank you.  We will now begin the question-and-answer session. If you have a question, please press star, 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 may 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.

Our first question comes from Christopher Marinac from Fig Partners. Please go ahead.

Christopher Marinac:

Hey, Denny, it’s Chris Marinac.  How are you?

Dennis S. Hudson III:

Fine. Hey Chris.

Christopher Marinac:

Just want to ask a question I guess about your feeling about commercial real estate and to what extent it follows other issues into trouble, whether it be for you or for others?  I just wanted an update on how that feels to you, both from a Seacoast perspective as well as the market in general.  

Dennis S. Hudson III:

Well, we have been saying for several quarters that we’re seeing weakness in the commercial real estate market in terms of vacancies and the like. It’s pretty broadly felt, pretty significantly; most significant would be in some of the retail areas. Having said that, while we see that weakness that is there and we’re very concerned about it, we don’t see it affecting at this point our portfolio in any significant way.  If you think about it, Chris, those exposures are very, very different than the exposures we’re dealing with on the residential side. The common risk that is there on the residential side is the sale of residential product and most of our commercial real estate exposures are developed properties that are occupied and not dependent on the sale of product and the like.  So I’m sure we& #146;ll see some weakness as we go through time, but I don’t anticipate it being anywhere near as significant as the problems we have seen develop in the residential side over the last year.  I think that’s probably true for the whole industry.  

Having said all of that, as we said several quarters ago, we’ve restricted our lending in those areas due to very, very difficult market conditions, and we’ve been under that restriction for a year or more.  So I guess that’s my comment.

Christopher Marinac:

That’s great. Then just to follow-up on the statistics you gave in the press release about the various property types and loan types, how much more change do you see these coming down? I mean obviously there’s more to go, but I just want to get a gauge of how much through the decline of these balances do you think we are?

Dennis S. Hudson III:

You know now we are speculating, because we are not sure what those liquidation efforts are going to look like over this coming quarter and the next quarter, but we’ve moved significantly through it.  That is all I can tell you, and we’re probably half way there.  I mean we’ve made remarkable progress from the last two quarters, as you heard, and we have some more to go.  But I would also tell you that we focused first on the biggest, nastiest problems; and as we move forward, they get smaller and less nasty.

Christopher Marinac:

Would that mean that the loss content is a little bit different in your favor as they get less nasty?

Dennis S. Hudson III:

That would be the implication. I hesitate to say that because we’re just not sure what kind of market we’re moving into.  

Christopher Marinac:

Understand.  Okay great, Denny.  Thank you.

Dennis S. Hudson III:

Uh-huh.

Operator:

Thank you. Our next question comes from Dave Bishop from Stifel Nicolaus. Please go ahead.

Dave Bishop:

Hey Denny, how you doing?

Dennis S. Hudson III:

Hey.

Dave Bishop:

Hey, I was just looking to get some color in terms of the marks maybe you took in terms of the loans that were sold there—maybe give us a sense of what pricing is looking like in the market there and how that’s trended over the past 30 to 90 days?

Dennis S. Hudson III:

Well, Russ can weigh in here, but I think the general comment we probably make is that the marks are very wide.  In terms of the original principal balance, it’s going to range from $0.30 to $0.90. Russ, what did we say our average was?

H. Russell Holland:

We averaged $0.52.  

Dennis S. Hudson III:

$0.52, something like that, consistent with what you’re hearing from others.  The markets got squirrelly at the end of September; there’s no question about it. We were fortunate that we had concluded most of our negotiating prior to that period.  

Dave Bishop:

Is there any fall-throughs as a result of the market turmoil?

Dennis S. Hudson III:

Not really. I would say we had some other credits that we were very close to selling and you couldn’t say they fell through because we never quite got there; but we probably had others we were ready to pull the trigger on and we are probably going to push those into this quarter.

Dave Bishop:

Gotcha.  As we…

Dennis S. Hudson III:

The numbers weren’t huge though, maybe another 10-plus million.

Dave Bishop:

As we look at … turning of the page here in terms of the net interest margin as it relates to the Fed and the most recent rate cut and maybe perspective rate cut, the ability to hold the margin at these levels here.

Dennis S. Hudson III:

Generally I think they were in pretty good shape there.  I think the whole competitive deposit environment is changing now very rapidly as a result of what happened over the last couple of weeks. Comments, Bill?

William R. Hahl:

Yeah, it’s probably too early to tell, but even over the last couple of weeks, the number of ads for the extraordinarily high rates being paid in the market have disappeared down to a one or two now, and I have seen recently that they’ve come off their rates—not by the 50 basis points, but at least they have lowered them down.  We took immediate action in our rates and began lowering some of our product rates and so forth. But, as Denny said, it’s going to be probably a little bit more time before we can really see whether or not the market conditions will improve such that we can continue to have those lower rates. So that’ll be the margin. We are still forecasting loan repayments and reductions probably somewhere $50 to 60 million in the fourth quarter; and with stalled out new loan growth, that’s goi ng to put some pressure on the margin as well.

Dave Bishop:

Can you quantify the pressure from NPAs this quarter?

William R. Hahl:

No, not really.  I can’t quantify that at this time.

Dennis S. Hudson III:

I would say, though, that we had some accrued interest reversals and the like. It was probably comparable to what we felt last quarter.  

Dave Bishop:

Gotcha.

Dennis S. Hudson III:

As you saw, nonperforming assets stabilized this quarter, didn’t grow, went down slightly, so we had a lot of movement in them, as you can appreciate, given that we sold almost $40 million in nonperformers.  As that movement occurs, you know there’s some adjustment to accrued interest, that sort of thing.  So we continue to feel the pressure, I guess, that we felt last quarter when they increased.  As we go forward, we are looking for that to maintain its stability and begin to come down, we hope.  

Dave Bishop:

Thank you.

Dennis S. Hudson III:

Thanks.

Operator:

Once again, if there are any questions, please press star, then one.

Our next question comes from Paul Connolly from Southwell. Please go ahead.

Paul Connolly:

Good morning.

Dennis S. Hudson III:

Morning.

Paul Connolly:

Could you just… I didn’t hear you clearly, was it a $0.62 on the dollar or $0.52 on the dollar on the average loans sold?

Dennis S. Hudson III:

We said five-two, 52.

Paul Connolly:

Five-two, okay great. Thank you.  So…

Dennis S. Hudson III:

Just to be clear, there were many assets sold at a higher price, probably as high as 90s and others lower and that was kind of an average.  So it’s very dangerous to talk in those numbers because every asset is different and it has a great range.

Paul Connolly:

But along those lines…

Dennis S. Hudson III:

I would tell you the bids we get and the offers we get for purchase are very wide between buyers and so they can be significant.

Paul Connolly:

Along those lines, the provisions that you took previously on those loans were pretty much in line with market as when you sold these, you didn’t take additional marks did you?

Dennis S. Hudson III:

Yeah, that’s generally true; although, we sold a little more than we thought we would.  We were a little more successful. That created some credit costs. Again, we were pretty aggressive in pushing more of those residential credits into a nonperforming status; and as we did that, we took some marks in terms of reserve build and that sort of thing associated with those new credits.

Paul Connolly:

The $38 million sold in the third quarter, how does that compare to the second and the first quarter?

Dennis S. Hudson III:

Very little, right?

H. Russell Holland:

Yeah, to a significantly greater activity in the third quarter than the first and second.  We were doing maybe $5 to $10 million at most in the first and second quarter.

Dennis S. Hudson III:

Right.

Paul Connolly:

Okay.  Then could you comment just on 30 to 89 days past due?

Dennis S. Hudson III:

I think they were… Bill’s going to grab it here.  I didn’t see a lot of movement there in most of the categories. There was maybe a couple million.

William R. Hahl:

30 to 89…

Paul Connolly:

I think last quarter it was like 17.5 at the end of the quarter.  

Dennis S. Hudson III:

Yeah, and it’s maybe a couple million higher, something like that.  

Paul Connolly:

Okay, so just call it 20 today.

Dennis S. Hudson III:

A little under that.

Paul Connolly:

Okay, so when like this quarter basically you had $38 million of loans that slide into NPAs as you sold $38 million roughly, what are the trends that you’re seeing or you expect to see going forward?

Dennis S. Hudson:

Well, we provided some pretty granular information at the bottom of our press release. When you look carefully at those tables, you can begin to kind of see what the trends are looking like there.  I guess I would just state that we have seen some very dramatic reductions in larger exposures in the residential development book; and as those numbers come down, the potential for NPA growth becomes a little less.  Then second of all, you can see that, at this point in the cycle, we have a substantial portion of that book on nonaccrual today.  So when you understand that the problems are coming from the larger credits, which is no surprise to anybody, and they are concentrated in the residential book, it stands to reason that we will begin to moderate in terms of that growth, and that’s where we believe we are.  Also , we have been at this for a good long while, really since the middle of ’06, and super intensively over the last 12-13 months, so we think we have a pretty good handle on what’s good and what’s not.  So I think we are cautiously optimistic that we are going to see less flowing in over the next couple of quarters than we have in the last couple of quarters.  

Paul Connolly:

Okay.  Last question: You have a shelf out there, which you haven’t drawn under, drawn anything down under, any comments toward the TARP program and your desire to participate in that?

Dennis S. Hudson III:

We are looking at it.  We haven’t got anything to say about that other than we will carefully explore it.  It would appear to be very reasonably constructed and priced, and it’s something we will look at very, very carefully.

Paul Connolly:

Great. Thank you.

Operator:

Our next question comes from Jim Delisle from Cambridge Place. Please go ahead.

Jim Delisle:

It was asked and answered in the last question. Thank you.

Dennis S. Hudson III:

Thank you.

Operator:

Once again, if there are any questions, please press star, then one.  I’m showing that we have no further questions.

Dennis S. Hudson III:

Well thank you all for attending today.  I think we have made some remarkable progress this quarter.  We are committed to continue those efforts.  As we do so, we will hopefully begin to see some of our numbers improve in the next few quarters. Thank you for your attendance.

Operator:

Thank you, ladies and gentlemen. This concludes the Third Quarter Earnings Release. Thank you for your participation. You may all disconnect.