EX-99.3 4 v319887_ex99-3.htm EXHIBIT 99.3

 

EXHIBIT 99.3

To Form 8-K dated July 26, 2012

 

Seacoast Banking Corporation of Florida

 

Second Quarter 2012

 

Cautionary Notice Regarding Forward-Looking Statements

 

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

 

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

 

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

 

 
 

 

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2010 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.

 

 
 

 

Highlights

 

•Growth initiatives producing results

 

•Organic growth in households continued to increase this quarter resulting in 2,638 new household relationships up 543 or 26% compared to second quarter 2011

 

•Noninterest bearing demand deposit organic growth was $71.8 million or 22% year over year

 

•Residential mortgage production was strong supporting both loan and noninterest income growth

 

•Growth in fee-based noninterest income up 14.8%

 

•Asset quality improves

 

•Other real estate owned declined by 54% from the prior quarter and 72% year over year

 

•Nonperforming assets declined $16.3 million to $55.7 million compared to last year

 

•Further improvements expected as a result of more aggressive actions taken to accelerate problem asset liquidations

 

•Capital strong and stable

 

•Solid capital position with estimated tangible common equity (TCE) ratio of 7.5% when DTA valuation allowance of $45.4 million is recaptured.

 

•Total risk-based capital stable at 18.4%

 

•Profitability initiative underway

 

•Aggressive reduction in OREO balances achieved during quarter

 

•Additional credit marks taken to reflect faster wind down of problem assets

 

•Comprehensive review of cost structure and revenue opportunities under review

 

 
 

 

Aggressively Dealing with Credit Issues

 

 

 
 

 

Growth Initiatives Producing Results

 

 

 

 
 

 

Growth Initiatives Producing Results

 

 

 
 

 

Growth Initiatives Producing Results

 

Momentum is Increasing

 

Net Loan Growth

 

 

 
 

 

DDA Trends Reflect Household Growth Success

 

 

 

 
 

 

Core Ending Deposit Growth
Favorable Mix Shift

 

   ($ in thousands) 
   2Q-2012   Mix   4Q-2011   Mix   2Q-2011   Mix 
                         
Demand deposits (noninterest bearing)  $393,681    23.3%  $328,356    19.1%  $321,876    19.1%
Savings deposits   922,659    54.6%   922,361    53.7%   831,371    49.4%
Total Demand and Savings  $1,316,340    77.9%  $1,250,717    72.8%  $1,153,247    68.6%
                               
Other time certificates   207,062    12.3%   244,886    14.2%   274,565    16.3%
Brokered time certificates   7,130    0.4%   4,558    0.3%   7,532    0.4%
Time certificates of $100,000 or more   159,052    9.4%   218,580    12.7%   246,117    14.6%
Total Time Deposits  $373,244    22.1%  $468,024    27.2%  $528,214    31.4%
                               
Total Deposits  $1,689,584        $1,718,741        $1,681,461      

 

 
 

 

Noninterest Expenses

Aggressively Dealing with Credit Issues

 

   ($ in thousands)         
  

 

2Q–2012

  

 

1Q–2012

  

 

2Q–2011

  

2Q 2012

vs 1Q 2012

  

2Q 2012

vs 2Q 2011

 
                     
Noninterest expenses  $20,721   $21,710   $19,073    -4.6%   8.6%
                          
Loss on mortgage buy-backs   126    —    —           
Severance   138    —    13           
TARP Legal and Professional Expenses   —    235    —           
Branch Consolidation Expense   125    —    —           
OREO and REPO expenses (1)   719    843    768           
Net loss on OREO and repossessed assets   790    1,959    1,142           
Nonrecurring expenses  $1,898   $3,037   $1,923    -37.5%   -1.3%
Investments in future growth (2)   1,574    1,255    1,141    25.4%   37.9%
Recurring operating expenses  $17,249   $17,418   $16,009    -1.0%   7.7%

 

(1)Does not include personnel expense related to credit administration or default management costs

 

(2)Expenses related to new commercial relationship managers and mortgage loan originators

 

 
 

 

Credit Analysis

 

   ($ in thousands) 
   2Q-2012   1Q-2012   4Q-2011   3Q-2011   2Q-2011 
                     
Net charge-offs  $6,275   $3,415   $3,268   $2,830   $4,024 
Net charge-offs to average loans   2.05%   1.13%   1.07%   0.94%   1.32%
                          
Loan loss provision  $6,455   $2,305   $432    —   $902 
Allowance to loans at end of period   2.02%   2.01%   2.12%   2.35%   2.63%
Coverage ratio – NPLs   50.81%   58.62%   89.62%   87.05%   67.65%

 

Capital Ratios

 

   2Q-2012
Estimate		   1Q-2012
Actual		   4Q-2011
Actual		   3Q-2011
Actual		 
                 
Tier 1 Capital Ratio   17.17%   17.36%   17.51%   17.42%
Total Risk Based Capital Ratio   18.43%   18.62%   18.77%   18.68%
YTD Average Equity to YTD Average Assets   7.87%   7.85%   8.01%   8.06%
Tangible Equity to Tangible Assets   7.78%   7.79%   7.86%   8.22%
Tangible Common Equity to Tangible Assets   5.49%   5.58%   5.63%   5.91%
Tangible Common Equity to Risk Weighted Assets   9.52%   9.90%   9.81%   9.97%

 

 
 

 

Net Interest Margin

 

·Focus on deposit pricing and favorable deposit mix trends benefited the margin
·Increasing loan growth will result in margin improvement
·Excess liquidity has reduced margin expansion in recent quarters

 

 

 
 

 

Noninterest Income (excluding securities gains)

 

$ in thousands  Q-2-2012   Q-1-2012   Q-4-2011   Q-3-2011   Q-2-2011 
Total Noninterest Income (excluding securities gains)  $5,219   $4,937   $4,883   $4,706   $4,547 
                          
Highlights include:                         
Service Charges  $1,487   $1,461   $1,599   $1,675   $1,546 
Trust Income   564    573    530    541    517 
Mortgage Banking   902    623    680    556    509 
Brokerage   298    234    258    321    223 
Marine   244    330    333    229    349 
Interchange Income   1,154    1,071    953    969    995 

 

Service Area