Seacoast Reports Record Third Quarter 2019 Earnings Results

Published

Net Income Increased 57% Year-Over-Year to $25.6 Million

Improved Operating Leverage and Strong Performance in Both Commercial and Mortgage Banking Highlight 3Q Results

STUART, Fla., Oct. 24, 2019 (GLOBE NEWSWIRE) -- Seacoast Banking Corporation of Florida (“Seacoast” or the "Company”) (NASDAQ: SBCF) today reported third quarter 2019 net income of $25.6 million, or $0.49 per diluted share, up 57% or $9.3 million year-over-year. Seacoast reported third quarter 2019 adjusted net income1 of $27.7 million, or $0.53 per diluted share, an increase of 57% or $10.1 million compared to the third quarter of 2018.

For the third quarter of 2019, return on average tangible assets was 1.61%, return on average tangible shareholders’ equity was 14.7%, and the efficiency ratio was 48.6%, compared to 1.50%, 14.3% and 53.5%, respectively, in the prior quarter and 1.18%, 12.0%, and 57.0%, respectively, in the third quarter of 2018. Adjusted return on average tangible assets1 was 1.67%, adjusted return on average tangible shareholders’ equity1 was 15.3%, and the adjusted efficiency ratio1 was 49.0%, compared to 1.59%, 15.2%, and 51.4%, respectively, in the prior quarter, and 1.22%, 12.4%, and 56.3%, respectively, in the third quarter of 2018.

Dennis S. Hudson, III, Seacoast’s Chairman and CEO, said, "During the third quarter, Seacoast reported a record $25.6 million in net income. Both our mortgage and commercial banking units showed continued momentum in the quarter, with robust loan originations generating disciplined growth in loan outstandings and a new record in mortgage banking fees. We are generating this growth and improving our operating leverage, all while delivering a highly disciplined credit portfolio."

Charles M. Shaffer, Seacoast’s Chief Operating Officer and Chief Financial Officer, said, “We continue to steadily build shareholder value through consistent growth in our tangible book value per share, ending the period at $14.30, an increase of 19% compared to one year prior. Year to date, we have generated 11% operating leverage, with adjusted revenues1 increasing 18%, and adjusted noninterest expense1 increasing 7%, in spite of a more challenging interest rate environment. Despite two reductions in the Federal Reserve overnight rate and a declining 10-year treasury rate, our net interest margin, excluding the discount on purchased loans, decreased only 3 basis points, a testament to the high quality balance sheet we continue to cultivate. This balance sheet is fortified with a robust capital base, strong asset quality, and a prudent liquidity position. We ended the quarter with a tangible common equity ratio of 11.1% supporting our ability to deploy capital for organic growth and opportunistic acquisitions. As the banking and economic cycle continues to mature, Seacoast is committed to maintaining its fortress balance sheet, built around strong capital and strict credit underwriting.”

1Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and for a reconciliation to GAAP.

Third Quarter 2019 Financial Highlights

Income Statement

  • Net income was $25.6 million, or $0.49 per diluted share, compared to $23.3 million, or $0.45, for the prior quarter and $16.3 million, or $0.34, for the third quarter of 2018. For the nine months ended September 30, 2019, net income was $71.6 million, or $1.38 per diluted share, compared to $51.3 million, or $1.07, for the nine months ended September 30, 2018. Adjusted net income1 was $27.7 million, or $0.53 per diluted share, compared to $25.8 million, or $0.50, for the prior quarter and $17.6 million, or $0.37, for the third quarter of 2018. For the nine months ended September 30, 2019, adjusted net income1 was $77.8 million, or $1.50 per diluted share, compared to $55.2 million, or $1.15, for the nine months ended September 30, 2018.
  • Net revenues were $74.9 million, an increase of $1.2 million, or 2%, compared to the prior quarter, and an increase of $11.0 million, or 17%, compared to the third quarter of 2018. For the nine months ended September 30, 2019, net revenues were $222.2 million, an increase of $33.4 million, or 18%, compared to the nine months ended September 30, 2018. Adjusted revenues1 were $74.8 million, an increase of $0.6 million, or 1%, from the prior quarter and an increase of $10.9 million, or 17%, from the third quarter of 2018. For the nine months ended September 30, 2019, adjusted revenues1 were $222.6 million, an increase of $33.5 million, or 18%, compared to the nine months ended September 30, 2018.
  • Net interest income totaled $60.9 million, an increase of $0.8 million, or 1%, from the prior quarter and an increase of $9.4 million, or 18%, from the third quarter of 2018. For the nine months ended September 30, 2019, net interest income was $181.9 million, an increase of $30.3 million, or 20%, compared to the nine months ended September 30, 2018.
  • Net interest margin was 3.89% in the third quarter of 2019, 3.94% in the second quarter of 2019 and 3.82% in the third quarter of 2018. Quarter-over-quarter, the yield on loans contracted 10 basis points, the yield on securities contracted 4 basis points, and the cost of deposits decreased 3 basis points. The impact on net interest margin from accretion of purchase discounts on acquired loans was 25 basis points in the third quarter of 2019, compared to 27 basis points in the prior quarter and 18 basis points in the third quarter of 2018. The Federal Reserve reduced the overnight rate twice by 25 basis points during the third quarter and the 10-year treasury rate fell by approximately 30 basis points, resulting in lower new earning asset yields and further declines in our variable rate earning asset portfolios. This was partially offset by our success in lowering the cost of funding, the result of our focus on maintaining deposit pricing discipline.
  • Noninterest income totaled $13.9 million, an increase of $0.4 million, or 3%, compared to the prior quarter and an increase of $1.7 million, or 13%, from the third quarter of 2018. For the nine months ended September 30, 2019, noninterest income was $40.4 million, an increase of $3.0 million, or 8%, compared to the nine months ended September 30, 2018. Changes in noninterest income from the second quarter of 2019 consisted of the following:
    • Mortgage banking fees increased by $0.4 million, reflecting the combination of increased refinance activity due to lower long term rates and a greater focus on generating saleable volume.
    • Interchange income decreased by $0.2 million, reflecting lower customer activity as a result of Hurricane Dorian.
    • Other noninterest income includes a $1.0 million BOLI death benefit.
    • During the quarter, $49.6 million of securities were sold with an average yield of 1.85%, resulting in a loss of $0.9 million. These funds were reinvested at an average yield of 2.65%.
  • The provision for loan losses was $2.3 million compared to $2.6 million in the prior quarter and $5.8 million in the third quarter of 2018.
  • Noninterest expense was $38.6 million, a decrease of $2.4 million, or 6%, compared to the prior quarter, the result of our proven success at disciplined cost control, and an increase of $1.2 million, or 3%, from the third quarter of 2018. For the nine months ended September 30, 2019, noninterest expense was $122.7 million, an increase of $9.9 million, or 9%, compared to the nine months ended September 30, 2018. Changes from the second quarter of 2019 in noninterest expense consisted of the following:
    • Salaries and wages decreased by $0.8 million. The second quarter's results included $1.1 million of one-time severance costs associated with the previously announced expense reduction initiative. Offsetting in the current quarter were additional incentives aligned with driving continued earnings growth.
    • Our continued proactive focus on efficiency and streamlining operations resulted in an additional $1.4 million in operating expense reductions from several expense categories, including $0.4 million in occupancy, $0.4 million in legal and professional fees, $0.3 million in telephone and data lines and $0.3 million in marketing.
    • During the third quarter, the FDIC announced the achievement of their target deposit insurance reserve ratio, resulting in our ability to apply previously awarded credits to our deposit insurance assessment. This resulted in $0.3 million in lower FDIC assessment expense for the quarter. The Company has remaining credits of $1.2 million, which will be applied to future assessments if the FDIC’s reserve ratio remains above the target threshold.
    • In late August, communities across our footprint prepared for the potential landfall of Hurricane Dorian. To ensure the safety of our associates and customers and to maintain uninterrupted digital and telephone access for our customers, we executed on our business continuity plans, transitioned operational activities to our backup facility, and closed our branches and corporate offices for one business day. Florida was ultimately spared a direct hit and our expenses, which were limited to preparing physical locations and to standing up the offsite operations hub, totaled $0.1 million.
  • Seacoast recorded $8.5 million in income tax expense in the third quarter of 2019, compared to $6.9 million in the prior quarter and $4.4 million in the third quarter of 2018. In September 2019, the State of Florida announced a reduction in the corporate income tax rate from 5.5% to 4.458% for the years 2019, 2020 and 2021. This change resulted in additional income tax expense of $1.1 million upon the write down of deferred tax assets affected by the change, offset by a $0.4 million benefit upon adjusting the year-to-date provision to the new statutory tax rate.  Tax benefits related to stock-based compensation were negligible in the third quarter of 2019, compared to $0.1 million in the prior quarter and $0.4 million in the third quarter of 2018.
  • Year to date adjusted revenues1 increased 18% compared to prior year while adjusted noninterest expense1 increased 7%, generating 11% operating leverage.
  • The efficiency ratio was 48.6% compared to 53.5% in the prior quarter and 57.0% in the third quarter of 2018. The adjusted efficiency ratio1 was 49.0% compared to 51.4% in the prior quarter and 56.3% in the third quarter of 2018. The reduction in both ratios was the outcome of our continued focus on streamlining operations, in combination with driving top-line revenue growth.

Balance Sheet

  • At September 30, 2019, the Company had total assets of $6.9 billion and total shareholders' equity of $962.7 million. Book value per share was $18.70 and tangible book value per share was $14.30, compared to $18.08 and $13.65, respectively, at June 30, 2019 and $15.50 and $12.01, respectively, at September 30, 2018. Year-over-year, tangible book value per share increased 19%, evidencing our commitment to building shareholder value.
  • Debt securities totaled $1.2 billion at September 30, 2019, a decrease of $7.5 million compared to the prior quarter and a decrease of $96.1 million from September 30, 2018. During the quarter, $49.6 million of securities were sold, with an average yield of 1.85%, resulting in a loss of $0.9 million. Purchases of securities during the quarter totaled $77.0 million at an average yield of 2.65%.
  • Loans totaled $5.0 billion at September 30, 2019, an increase of $98.2 million, or 2.0%, compared to the prior quarter, and an increase of $927.0 million, or 23%, from September 30, 2018. Changes in total loans consisted of the following:
    • New loan originations of $488 million, compared to $407 million in the prior quarter, resulted in net loan growth in the quarter of 8% on an annualized basis. Excluding the impact of the First Green acquisition in October 2018, loan outstandings have grown 7% year-over-year.
    • Commercial originations during the third quarter of 2019 were $282.2 million, an increase of $125.3 million, or 80%, compared to the second quarter of 2019 and an increase of $151.2 million, or 115%, compared to the third quarter of 2018. Increases in loan production reflect the addition of business bankers across the Company's footprint, solid execution by the legacy banking team, and higher customer loan demand due to lower long term interest rates. The third quarter of 2019 results include the opportunistic purchase of a $52.1 million commercial real estate loan portfolio.
    • Closed residential loans retained in the portfolio for the third quarter of 2019 were $22.4 million, down 57% from the second quarter of 2019 and down 72% from the third quarter of 2018. Closed residential loans sold for the third quarter of 2019 were $80.8 million, up 32% from the second quarter of 2019 and up 45% from the third quarter of 2018.
    • Consumer and small business originations for the third quarter of 2019 were $103.1 million, a decrease of 24% compared to the second quarter of 2019 and a decrease of 18% compared to the third quarter of 2018.
    • We continue to manage carefully the Company's exposure to commercial real estate. Construction and land development and commercial real estate loans remain well below regulatory guidance at 42% and 204% of total bank-level risk based capital, respectively, down from 51% and 205%, respectively, in the second quarter of 2019. On a consolidated basis, construction and land development and commercial real estate loans represent 39% and 191%, respectively, of total consolidated risk based capital.
    • The funded balances of our top 10 and top 20 relationships represented 19% and 33%, respectively, of total consolidated risk based capital, down from 21% and 38% compared to the third quarter of 2018 and down from 32% and 53% compared to the third quarter of 2016. Our largest committed exposure totals $30 million and our average commercial loan size is $350,000.
  • Pipelines (loans in underwriting and approval or approved and not yet closed) increased over the prior quarter, totaling $504.6 million as of September 30, 2019.
    • Commercial pipelines were $359.7 million, an increase of 38% sequentially and 83% compared to the prior year.
    • Retained residential pipelines were $43.4 million, significantly higher than the prior quarter, the result of a test launch of a correspondent mortgage banking channel focused on acquiring mass affluent, affluent and ultra-high net worth Florida customers.
    • Saleable residential pipelines were $35.1 million, a decrease of 25% sequentially and an increase of 94% compared to the prior year. The decrease in the saleable pipeline from the prior quarter reflects slowing refinance activity late in the quarter.
    • Consumer and small business pipelines were $66.3 million, an increase of 1% sequentially and an increase of 11% compared to the prior year.                               
  • Total deposits were $5.7 billion as of September 30, 2019, an increase of $131.9 million, or 2%, sequentially and an increase of $1.0 billion, or 22%, from the prior year.
    • Interest-bearing deposits (interest-bearing demand, savings and money market deposits) increased year-over-year $400.7 million, or 17%, to $2.8 billion, noninterest bearing demand deposits increased $164.2 million, or 11%, to $1.7 billion, and CDs increased $464.7 million, or 62%, to $1.2 billion.
    • Third quarter balances reflect an increase from the prior quarter of $189.4 million in brokered deposits. We continue to actively manage our mix of brokered deposits and advances from the Federal Home Loan Bank to obtain the most advantageous rates.
    • Overall cost of deposits decreased to 73 basis points from 76 basis points in the prior quarter, reflecting the impact of the Federal Reserve's interest rate cuts and our focus on maintaining deposit pricing discipline.
  • Third quarter return on average tangible assets (ROTA) was 1.61%, compared to 1.50% in the prior quarter and 1.18% in the third quarter of 2018. Adjusted ROTA1 was 1.67% compared to 1.59% in the prior quarter and 1.22% in the third quarter of 2018.

Capital

  • Third quarter return on average tangible common equity (ROTCE) was 14.7%, compared to 14.3% in the prior quarter and 12.0% in the third quarter of 2018. Adjusted ROTCE1 was 15.3% compared to 15.2% in the prior quarter and 12.4% in the third quarter of 2018.
  • The tier 1 capital ratio was 14.9%, total capital ratio was 15.5% and the tier 1 leverage ratio was 12.0% at September 30, 2019.
  • Tangible common equity to tangible assets was 11.1% at September 30, 2019, compared to 10.7% at June 30, 2019 and 9.9% at September 30, 2018.

Asset Quality

  • Nonperforming loans to total loans outstanding was 0.52% at September 30, 2019, 0.47% at June 30, 2019, and 0.64% at September 30, 2018.
  • Nonperforming assets to total assets was 0.58% at September 30, 2019, 0.50% at June 30, 2019 and 0.52% at September 30, 2018. Nonperforming assets increased by $5.8 million to $39.6 million in the third quarter of 2019, primarily the result of five customer relationships moving to nonperforming status, all of which are either fully collateralized or previously written down to realizable values.
  • The ratio of allowance for loan losses to total loans was 0.67% at September 30, 2019, 0.69% at June 30, 2019, and 0.83% at September 30, 2018. The ratio of allowance for loan losses to non-acquired loans was 0.84% at September 30, 2019, 0.87% at June 30, 2019, and 0.98% at September 30, 2018.
  • Net charge-offs were $2.1 million or 0.17% of average loans for the third quarter of 2019 compared to $1.8 million, or 0.15% of average loans in the prior quarter.
FINANCIAL HIGHLIGHTS (Unaudited)
(Amounts in thousands except per share data)                
  Quarterly Trends
                   
  3Q'19   2Q'19   1Q'19   4Q'18   3Q'18
Selected Balance Sheet Data:                  
Total Assets $ 6,890,645     $ 6,824,886     $ 6,783,389     $ 6,747,659     $ 5,930,934  
Gross Loans 4,986,289     4,888,139     4,828,441     4,825,214     4,059,323  
Total Deposits 5,673,141     5,541,209     5,605,578     5,177,240     4,643,510  
                   
Performance Measures:                  
Net Income $ 25,605     $ 23,253     $ 22,705     $ 15,962     $ 16,322  
Net Interest Margin 3.89 %   3.94 %   4.02 %   4.00 %   3.82 %
Average Diluted Shares Outstanding 51,935     51,952     52,039     51,237     48,029  
Diluted Earnings Per Share (EPS) $ 0.49     $ 0.45     $ 0.44     $ 0.31     $ 0.34  
Return on (annualized):                  
Average Assets (ROA) 1.49 %   1.38 %   1.36 %   0.96 %   1.10 %
Average Tangible Assets (ROTA) 1.61     1.50     1.48     1.05     1.18  
Average Tangible Common Equity (ROTCE) 14.73     14.30     14.86     10.94     12.04  
Efficiency Ratio 48.62     53.48     56.55     65.76     57.04  
                   
Adjusted Operating Measures1:                  
Adjusted Net Income $ 27,731     $ 25,818     $ 24,205     $ 23,893     $ 17,626  
Adjusted Diluted EPS 0.53     0.50     0.47     0.47     0.37  
Adjusted ROTA 1.67 %   1.59 %   1.50 %   1.49 %   1.22 %
Adjusted ROTCE 15.30     15.17     15.11     15.44     12.43  
Adjusted Efficiency Ratio 48.96     51.44     55.81     54.19     56.29  
Adjusted Noninterest Expenses as a                  
Percent of Average Tangible Assets 2.22     2.34     2.55     2.46     2.48  
                   
Other Data:                  
Market capitalization2 $ 1,303,010     $ 1,309,158     $ 1,354,759     $ 1,336,415     $ 1,380,275  
Full-time equivalent employees 867     852     902     902     835  
Number of ATMs 80     81     84     87     86  
Full service banking offices 48     49     50     51     49  
Registered online users 107,241     104,017     102,274     99,415     94,400  
Registered mobile devices 96,384     92,281     87,844     83,151     73,300  
1Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP
2Common shares outstanding multiplied by closing bid price on last day of each period
 

Vision 2020

We remain confident in our ability to achieve our Vision 2020 targets announced in February 2017.

  Vision 2020 Targets
Return on Tangible Assets 1.30% +
Return on Tangible Common Equity 16% +
Efficiency Ratio Below 50%

Since announcing our Vision 2020 targets in February 2017, we have achieved a compounded annual growth rate in tangible book value per share of 13%, steadily building shareholder value.

Third Quarter Operating Highlights

Modernizing How We Sell

  • During the quarter the Company achieved record commercial and residential loan originations and pipelines are strong entering the fourth quarter.
  • Late in the quarter, the Company began testing a correspondent mortgage banking channel focused on acquiring mass affluent, affluent, and ultra-high net worth Florida customers. Our objective is to acquire customers using this channel and expand the value of these high quality relationships using data driven analytics.
  • Seacoast has partnered with a leading consumer insights firm to capture and analyze feedback from our customers. Program implementation and launch were completed in the third quarter, with the objective of identifying additional customer opportunities.

Lowering Our Cost to Serve

  • In the third quarter of 2019, average deposits per banking center exceeded $118.2 million, up from $94.8 million during the same period last year.
  • Seacoast consolidated one banking center location in the third quarter of 2019, in addition to the two locations consolidated earlier this year.
  • Seacoast has reduced its physical footprint by 20% to meet the evolving needs of customers in the most cost-effective manner. This reduction was achieved ahead of plan due to successful M&A and the repositioning of the banking center network in strategic growth markets.

Driving Improvements in How Our Business Operates

  • Earlier this year Seacoast further enhanced its interactive voice response (IVR) system in its Florida-based Customer Support Center. The system provides customers with additional secure, self-serve options and expedited call routing processes. This investment provides added scalability and elevates the customer experience.
  • Late last year Seacoast launched a large-scale initiative to implement a fully digital loan origination platform across all business banking units. Implementation and launch were completed in the second quarter and full conversion from the legacy system was completed in the third quarter. This investment should lead to further gains in operational efficiency and banker productivity in 2020 and beyond.

Scaling and Evolving Our Culture

  • Seacoast continues to invest in business bankers. In the third quarter Seacoast on-boarded three new bankers, 18 year to date, in order to fully support the strong markets we serve. Seacoast has a robust pipeline of talent entering the fourth quarter of 2019 and will continue to opportunistically add top-tier bankers in the Tampa and South Florida markets.

OTHER INFORMATION

Conference Call InformationSeacoast will host a conference call on October 25, 2019 at 10:00 a.m. (Eastern Time) to discuss the third quarter 2019 earnings results and business trends. Investors may call in (toll-free) by dialing (888) 517-2513 (passcode: 6648 701; host: Dennis S. Hudson). Charts will be used during the conference call and may be accessed at Seacoast's website at www.SeacoastBanking.com by selecting "Presentations" under the heading "News/Events" A replay of the call will be available for one month, beginning late afternoon of October 25, 2019 by dialing (888) 843-7419 (domestic) and using passcode: 6648 701#.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Seacoast's website at www.SeacoastBanking.com. The link is located in the subsection "Presentations" under the heading "Investor Services." Beginning the afternoon of October 25, 2019, an archived version of the webcast can be accessed from this same subsection of the website. The archived webcast will be available for one year.

About Seacoast Banking Corporation of Florida (NASDAQ: SBCF)Seacoast Banking Corporation of Florida is one of the largest community banks headquartered in Florida with approximately $6.9 billion in assets and $5.7 billion in deposits as of September 30, 2019. The Company provides integrated financial services including commercial and retail banking, wealth management, and mortgage services to customers through advanced banking solutions, and 48 traditional branches of its locally-branded, wholly-owned subsidiary bank, Seacoast Bank. Offices stretch from Fort Lauderdale, Boca Raton and West Palm Beach north through the Daytona Beach area, into Orlando and Central Florida and the adjacent Tampa market, and west to Okeechobee and surrounding counties. More information about the Company is available at www.SeacoastBanking.com.

Cautionary Notice Regarding Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning, and protections, 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, tax law changes, new initiatives and for integration of banks that we have acquired, or expect to acquire, as well as statements with respect to Seacoast's objectives, strategic plans, including Vision 2020, 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, assumptions, estimates and intentions about future performance 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.

All statements other than statements of historical fact could be 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", "plan", "point to", "project", "could", "intend", "target" 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, including interest rate policies of the Board of Governors of the Federal Reserve, 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; uncertainty related to the impact of LIBOR calculations on securities and loans; changes in borrower credit risks and payment behaviors; changes in the availability and cost of credit and capital in the financial markets; changes in the prices, values and sales volumes of residential and commercial real estate; our ability to comply with any regulatory requirements; the effects of problems encountered by other financial institutions that adversely affect us or the banking industry; our concentration in commercial real estate loans; the failure of assumptions and estimates, as well as differences in, and changes to, economic, market and credit conditions; the impact on the valuation of our investments due to market volatility or counterparty payment risk; statutory and regulatory dividend restrictions; increases in regulatory capital requirements for banking organizations generally; the risks of mergers, acquisitions and divestitures, including our ability to continue to identify acquisition targets and successfully acquire desirable financial institutions; changes in technology or products that may be more difficult, costly, or less effective than anticipated; our ability to identify and address increased cybersecurity risks; inability of our risk management framework to manage risks associated with our business; dependence on key suppliers or vendors to obtain equipment or services for our business on acceptable terms; reduction in or the termination of our ability to use the mobile-based platform that is critical to our business growth strategy; the effects of war or other conflicts, acts of terrorism, natural disasters or other catastrophic events that may affect general economic conditions; unexpected outcomes of, and the costs associated with, existing or new litigation involving us; our ability to maintain adequate internal controls over financial reporting; potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the risks that our deferred tax assets could be reduced if estimates of future taxable income from our operations and tax planning strategies are less than currently estimated and sales of our capital stock could trigger a reduction in the amount of net operating loss carryforwards that we may be able to utilize for income tax purposes; 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.

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, 2018, 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 www.sec.gov.

Charles M. ShafferExecutive Vice PresidentChief Operating Officerand Chief Financial Officer(772) 221-7003Chuck.Shaffer@seacoastbank.com

FINANCIAL HIGHLIGHTS (Unaudited)        
SEACOAST  BANKING  CORPORATION  OF  FLORIDA  AND  SUBSIDIARIES            
   
  Quarterly Trends   Nine Months Ended
                           
(Amounts in thousands, except ratios and per share data) 3Q'19   2Q'19   1Q'19   4Q'18   3Q'18   3Q'19   3Q'18
                           
Summary of Earnings                          
Net income $ 25,605     $ 23,253     $ 22,705     $ 15,962     $ 16,322     $ 71,563     $ 51,313  
Adjusted net income1 27,731     25,818     24,205     23,893     17,626     77,754     55,192  
Net interest income2 61,027     60,219     60,861     60,100     51,709     182,107     151,856  
Net interest margin2,3 3.89 %   3.94 %   4.02 %   4.00 %   3.82 %   3.95 %   3.79 %
                           
Performance Ratios                          
Return on average assets-GAAP basis3 1.49 %   1.38 %   1.36 %   0.96 %   1.10 %   1.41 %   1.17 %
Return on average tangible assets-GAAP basis3,4 1.61     1.50     1.48     1.05     1.18     1.53     1.25  
Adjusted return on average tangible assets1,3,4 1.67     1.59     1.50     1.49     1.22     1.59     1.29  
                           
Return on average shareholders' equity-GAAP basis3 10.73     10.23     10.47     7.65     8.89     10.48     9.65  
Return on average tangible common equity-GAAP basis3,4 14.73     14.30     14.86     10.94     12.04     14.63     13.14  
Adjusted return on average tangible common equity1,3,4 15.30     15.17     15.11     15.44     12.43     15.20     13.54  
Efficiency ratio5 48.62     53.48     56.55     65.76     57.04     52.85     57.75  
Adjusted efficiency ratio1 48.96     51.44     55.81     54.19     56.29     52.05     56.88  
Noninterest income to total revenue (excluding securities losses) 19.53     18.93     17.45     17.97     19.31     18.64     19.84  
Tangible common equity to tangible assets4 11.05     10.65     10.18     9.72     9.85     11.05     9.85  
Average loan-to-deposit ratio 88.35     87.27     90.55     89.14     86.25     88.70     84.62  
End of period loan-to-deposit ratio 88.36     88.53     86.38     93.43     87.77     88.36     87.77  
                           
Per Share Data                          
Net income diluted-GAAP basis $ 0.49     $ 0.45     $ 0.44     $ 0.31     $ 0.34     $ 1.38     $ 1.07  
Net income basic-GAAP basis 0.50     0.45     0.44     0.32     0.35     1.39     1.09  
Adjusted earnings1 0.53     0.50     0.47     0.47     0.37     1.50     1.15  
                           
Book value per share common 18.70     18.08     17.44     16.83     15.50     18.70     15.50  
Tangible book value per share 14.30     13.65     12.98     12.33     12.01     14.30     12.01  
Cash dividends declared                          
                           
                           
1Non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP.    
2Calculated on a fully taxable equivalent basis using amortized cost.    
3These ratios are stated on an annualized basis and are not necessarily indicative of future periods.    
4The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders' equity less intangible assets.
5Defined as noninterest expense less amortization of intangibles and gains, losses, and expenses on foreclosed properties divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains).
     

CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Unaudited)            
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                
   
  Quarterly Trends   Nine Months Ended
                           
(Amounts in thousands, except per share data) 3Q'19   2Q'19   1Q'19   4Q'18   3Q'18   3Q'19   3Q'18
                           
Interest on securities:                          
Taxable $ 8,802     $ 8,933     $ 9,119     $ 9,528     $ 9,582     $ 26,854     $ 28,332  
Nontaxable 131     143     151     200     225     425     684  
Interest and fees on loans 63,092     62,288     62,287     59,495     48,713     187,667     140,489  
Interest on federal funds sold and other investments 800     873     918     835     634     2,591     1,835  
Total Interest Income 72,825     72,237     72,475     70,058     59,154     217,537     171,340  
                           
Interest on deposits 4,334     4,825     3,873     3,140     2,097     13,032     5,623  
Interest on time certificates 6,009     5,724     4,959     3,901     2,975     16,692     7,783  
Interest on borrowed money 1,534     1,552     2,869     3,033     2,520     5,955     6,403  
Total Interest Expense 11,877     12,101     11,701     10,074     7,592     35,679     19,809  
                           
Net Interest Income 60,948     60,136     60,774     59,984     51,562     181,858     151,531  
Provision for loan losses 2,251     2,551     1,397     2,342     5,774     6,199     9,388  
Net Interest Income After Provision for Loan Losses 58,697     57,585     59,377     57,642     45,788     175,659     142,143  
                           
Noninterest income:                          
Service charges on deposit accounts 2,978     2,894     2,697     3,019     2,833     8,569     8,179  
Trust fees 1,183     1,147     1,017     1,040     1,083     3,347     3,143  
Mortgage banking fees 2,127     1,734     1,115     809     1,135     4,976     3,873  
Brokerage commissions and fees 449     541     436     468     444     1,426     1,264  
Marine finance fees 152     201     362     185     194     715     1,213  
Interchange income 3,206     3,405     3,401     3,198     3,119     10,012     9,137  
BOLI income 928     927     915     1,091     1,078     2,770     3,200  
SBA gains 569     691     636     519     473     1,896     1,955  
Other 3,198     2,503     2,266     2,810     1,980     7,967     5,542  
  14,790     14,043     12,845     13,139     12,339     41,678     37,506  
Securities losses, net (847 )   (466 )   (9 )   (425 )   (48 )   (1,322 )   (198 )
Total Noninterest Income 13,943     13,577     12,836     12,714     12,291     40,356     37,308  
                           
                           
Noninterest expenses:                          
Salaries and wages 18,640     19,420     18,506     22,172     17,129     56,566     48,939  
Employee benefits 2,973     3,195     4,206     3,625     3,205     10,374     9,320  
Outsourced data processing costs 3,711     3,876     3,845     5,809     3,493     11,432     10,565  
Telephone / data lines 603     893     811     602     624     2,307     1,879  
Occupancy 3,368     3,741     3,807     3,747     3,214     10,916     9,647  
Furniture and equipment 1,528     1,544     1,757     2,452     1,367     4,829     4,292  
Marketing 933     1,211     1,132     1,350     1,139     3,276     3,735  
Legal and professional fees 1,648     2,033     2,847     3,668     2,019     6,528     6,293  
FDIC assessments 56     337     488     571     431     881     1,624  
Amortization of intangibles 1,456     1,456     1,458     1,303     1,004     4,370     2,997  
Foreclosed property expense and net (gain)/loss on sale 262     (174 )   (40 )       (136 )   48     461  
Other 3,405     3,468     4,282     4,165     3,910     11,155     13,057  
Total Noninterest Expense 38,583     41,000     43,099     49,464     37,399     122,682     112,809  
                           
Income Before Income Taxes 34,057     30,162     29,114     20,892     20,680     93,333     66,642  
Income taxes 8,452     6,909     6,409     4,930     4,358     21,770     15,329  
                           
Net Income $ 25,605     $ 23,253     $ 22,705     $ 15,962     $ 16,322     $ 71,563     $ 51,313  
                           
Per share of common stock:                          
                           
Net income diluted $ 0.49     $ 0.45     $ 0.44     $ 0.31     $ 0.34     $ 1.38     $ 1.07  
Net income basic 0.50     0.45     0.44     0.32     0.35     1.39     1.09  
Cash dividends declared                          
                           
Average diluted shares outstanding 51,935     51,952     52,039     51,237     48,029     51,996     47,903  
Average basic shares outstanding 51,473     51,446     51,359     50,523     47,205     51,426     47,108  
                           
                           

CONDENSED CONSOLIDATED BALANCE SHEETS   (Unaudited)    
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES          
   
  September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands) 2019   2019   2019   2018   2018
                   
Assets                  
Cash and due from banks $ 106,349     $ 97,792     $ 98,270     $ 92,242     $ 101,920  
Interest bearing deposits with other banks 25,911     61,987     105,741     23,709     3,174  
Total Cash and Cash Equivalents 132,260     159,779     204,011     115,951     105,094  
                   
Time deposits with other banks 4,579     4,980     8,174     8,243     9,813  
                   
Debt Securities:                  
Available for sale (at fair value) 920,811     914,615     877,549     865,831     923,206  
Held to maturity (at amortized cost) 273,644     287,302     295,485     357,949     367,387  
Total Debt Securities 1,194,455     1,201,917     1,173,034     1,223,780     1,290,593  
                   
Loans held for sale 26,768     17,513     13,900     11,873     16,172  
                   
Loans 4,986,289     4,888,139     4,828,441     4,825,214     4,059,323  
Less: Allowance for loan losses (33,605 )   (33,505 )   (32,822 )   (32,423 )   (33,865 )
Net Loans 4,952,684     4,854,634     4,795,619     4,792,791     4,025,458  
                   
Bank premises and equipment, net 67,873     68,738     70,412     71,024     63,531  
Other real estate owned 13,593     11,043     11,921     12,802     4,715  
Goodwill 205,286     205,260     205,260     204,753     148,555  
Other intangible assets, net 21,318     22,672     23,959     25,977     16,508  
Bank owned life insurance 125,277     125,233     124,306     123,394     122,561  
Net deferred tax assets 17,168     19,353     24,647     28,954     25,822  
Other assets 129,384     133,764     128,146     128,117     102,112  
Total Assets $ 6,890,645     $ 6,824,886     $ 6,783,389     $ 6,747,659     $ 5,930,934  
                   
Liabilities and Shareholders' Equity                  
Liabilities                  
Deposits                  
Noninterest demand $ 1,652,927     $ 1,669,804     $ 1,676,009     $ 1,569,602     $ 1,488,689  
Interest-bearing demand 1,115,455     1,124,519     1,100,477     1,014,032     912,891  
Savings 528,214     519,732     508,320     493,807     451,958  
Money market 1,158,862     1,172,971     1,192,070     1,173,950     1,036,940  
Other time certificates 537,183     553,107     539,202     513,312     411,208  
Brokered time certificates 458,418     268,998     367,841     220,594     192,182  
Time certificates of more than $250,000 222,082     232,078     221,659     191,943     149,642  
Total Deposits 5,673,141     5,541,209     5,605,578     5,177,240     4,643,510  
                   
Securities sold under agreements to repurchase 70,414     82,015     148,005     214,323     189,035  
Federal Home Loan Bank borrowings 50,000     140,000     3,000     380,000     261,000  
Subordinated debt 71,014     70,944     70,874     70,804     70,734  
Other liabilities 63,398     60,479     59,508     41,025     33,824  
Total Liabilities 5,927,967     5,894,647     5,886,965     5,883,392     5,198,103  
                   
Shareholders' Equity                  
Common stock 5,148     5,146     5,141     5,136     4,727  
Additional paid in capital 784,661     782,928     780,680     778,501     668,711  
Retained earnings 168,637     143,032     119,779     97,074     81,112  
Treasury stock (6,079 )   (6,137 )   (4,959 )   (3,384 )   (2,854 )
  952,367     924,969     900,641     877,327     751,696  
Accumulated other comprehensive income/(loss), net 10,311     5,270     (4,217 )   (13,060 )   (18,865 )
Total Shareholders' Equity 962,678     930,239     896,424     864,267     732,831  
Total Liabilities & Shareholders' Equity $ 6,890,645     $ 6,824,886     $ 6,783,389     $ 6,747,659     $ 5,930,934  
                   
Common shares outstanding 51,482     51,461     51,414     51,361     47,270  
                   
                   

CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited)
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                
   
   
                   
(Amounts in thousands) 3Q'19   2Q'19   1Q'19   4Q'18   3Q'18
                   
Credit Analysis                  
Net charge-offs (recoveries) - non-acquired loans $ 2,106     $ 1,621     $ 762     $ 3,693     $ 800  
Net charge-offs (recoveries) - acquired loans 5     220     201     56     (3 )
Total Net Charge-offs (Recoveries) 2,111     1,841     963     3,749     797  
                   
TDR valuation adjustments $ 40     $ 27     $ 35     $ 35     $ 36  
                   
Net charge-offs (recoveries) to average loans - non-acquired loans 0.17 %   0.13 %   0.06 %   0.32 %   0.08 %
Net charge-offs (recoveries) to average loans - acquired loans     0.02     0.02          
Total Net Charge-offs (Recoveries) to Average Loans 0.17     0.15     0.08     0.32     0.08  
                   
Provision for loan losses - non-acquired loans $ 2,241     $ 2,326     $ 1,709     $ 2,343     $ 5,640  
Provision for (recapture of) loan losses - acquired loans 10     225     (312 )   (1 )   134  
Total Provision for Loan Losses $ 2,251     $ 2,551     $ 1,397     $ 2,342     $ 5,774  
                   
Allowance for loan losses - non-acquired loans $ 33,488     $ 33,393     $ 32,715     $ 31,803     $ 33,188  
Allowance for loan losses - acquired loans 117     112     107     620     677  
Total Allowance for Loan Losses $ 33,605     $ 33,505     $ 32,822     $ 32,423     $ 33,865  
                   
Non-acquired loans at end of period $ 4,010,299     $ 3,817,358     $ 3,667,221     $ 3,588,251     $ 3,383,571  
Purchased noncredit impaired loans at end of period 962,609     1,057,200     1,147,432     1,222,529     662,701  
Purchased credit impaired loans at end of period 13,381     13,581     13,788     14,434     13,051  
Total Loans $ 4,986,289     $ 4,888,139     $ 4,828,441     $ 4,825,214     $ 4,059,323  
                   
Non-acquired loans allowance for loan losses to non-acquired loans at end of period 0.84 %   0.87 %   0.89 %   0.89 %   0.98 %
Total allowance for loan losses to total loans at end of period 0.67     0.69     0.68     0.67     0.83  
Purchase discount on acquired loans at end of period 3.76     3.76     3.80     3.86     2.25  
                   
End of Period                  
Nonperforming loans - non-acquired $ 20,400     $ 15,810     $ 15,423     $ 15,783     $ 18,998  
Nonperforming loans - acquired 5,644     6,986     6,990     10,693     7,142  
Other real estate owned - non-acquired 5,177     66     831     386     418  
Other real estate owned - acquired 1,574     1,612     1,725     3,020     1,203  
Bank branches closed included in other real estate owned 6,842     9,365     9,365     9,396     3,094  
Total Nonperforming Assets $ 39,637     $ 33,839     $ 34,334     $ 39,278     $ 30,855  
                   
Restructured loans (accruing) $ 12,395     $ 14,534     $ 14,857     $ 13,346     $ 13,797  
                   
Nonperforming loans to loans at end of period - non-acquired 0.51 %   0.41 %   0.42 %   0.44 %   0.56 %
Nonperforming loans to loans at end of period - acquired 0.58     0.65     0.60     0.86     1.06  
Total Nonperforming Loans to Loans at End of Period 0.52     0.47     0.46     0.55     0.64  
                   
Nonperforming assets to total assets - non-acquired 0.47 %   0.37 %   0.38 %   0.38 %   0.38 %
Nonperforming assets to total assets - acquired 0.11     0.13     0.13     0.20     0.14  
Total Nonperforming Assets to Total Assets 0.58     0.50     0.51     0.58     0.52  
                   
  September 30,   June 30,   March 31,   December 31,   September 30,
Loans 2019   2019   2019   2018   2018
                   
Construction and land development $ 326,324     $ 379,991     $ 417,565     $ 443,568     $ 376,257  
Commercial real estate - owner occupied 1,025,040     1,005,876     989,234     970,181     829,368  
Commercial real estate - non-owner occupied 1,285,327     1,184,409     1,173,183     1,161,885     897,331  
Residential real estate 1,409,946     1,400,184     1,329,166     1,324,377     1,152,640  
Consumer 217,366     215,932     206,414     202,881     192,772  
Commercial and financial 722,286     701,747     712,879     722,322     610,955  
Total Loans $ 4,986,289     $ 4,888,139     $ 4,828,441     $ 4,825,214     $ 4,059,323  
                   
                   

AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1 (Unaudited)            
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                        
                                   
                                   
  3Q'19   2Q'19   3Q'18
  Average       Yield/   Average       Yield/   Average       Yield/
(Amounts in thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
                                   
Assets                                  
Earning assets:                                  
Securities:                                  
Taxable $ 1,171,393     $ 8,802     3.01 %   $ 1,169,891     $ 8,933     3.05 %   $ 1,284,774     $ 9,582     2.98 %
Nontaxable 21,194     164     3.09     24,110     179     2.96     31,411     283     3.60  
Total Securities 1,192,587     8,966     3.01     1,194,001     9,112     3.05     1,316,185     9,865     3.00  
                                   
Federal funds sold and other investments 84,705     800     3.75     91,481     873     3.83     51,255     634     4.91  
                                   
Loans, net 4,945,953     63,138     5.06     4,841,751     62,335     5.16     4,008,527     48,802     4.83  
                                   
Total Earning Assets 6,223,245     72,904     4.65     6,127,233     72,320     4.73     5,375,967     59,301     4.38  
                                   
Allowance for loan losses (33,997 )           (32,806 )           (29,259 )        
Cash and due from banks 88,539             91,160             110,929          
Premises and equipment 68,301             69,890             63,771          
Intangible assets 227,389             228,706             165,534          
Bank owned life insurance 125,249             124,631             121,952          
Other assets 121,850             126,180             94,433          
                                   
Total Assets $ 6,820,576             $ 6,734,994             $ 5,903,327          
                                   
Liabilities and Shareholders' Equity                                  
Interest-bearing liabilities:                                  
Interest-bearing demand $ 1,116,434     $ 1,053     0.37 %   $ 1,118,703     $ 1,150     0.41 %   $ 939,527     $ 426     0.18 %
Savings 522,831     531     0.40     513,773     586     0.46     444,935     170     0.15  
Money market 1,173,042     2,750     0.93     1,179,345     3,089     1.05     1,031,960     1,501     0.58  
Time deposits 1,159,272     6,009     2.06     1,089,020     5,724     2.11     779,608     2,975     1.51  
Federal funds purchased and securities sold under agreements to repurchase 75,785     300     1.57     91,614     355     1.55     204,097     463     0.90  
Federal Home Loan Bank borrowings 68,804     414     2.39     51,571     329     2.56     222,315     1,228     2.19  
Other borrowings 70,969     820     4.58     70,903     868     4.91     70,694     829     4.65  
                                   
Total Interest-Bearing Liabilities 4,187,137     11,877     1.13     4,114,929     12,101     1.18     3,693,136     7,592     0.82  
                                   
Noninterest demand 1,626,269             1,646,934             1,451,751          
Other liabilities 60,500             61,652             30,150          
Total Liabilities 5,873,906             5,823,515             5,175,037          
                                   
Shareholders' equity 946,670             911,479             728,290          
                                   
Total Liabilities & Equity $ 6,820,576             $ 6,734,994             $ 5,903,327          
                                   
Cost of deposits         0.73 %           0.76 %           0.43 %
Interest expense as a % of earning assets         0.76 %           0.79 %           0.56 %
Net interest income as a % of earning assets     $ 61,027     3.89 %       $ 60,219     3.94 %       $ 51,709     3.82 %
                                   
                                   
1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.        
Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.        
         

AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1 (Unaudited)
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                
   
  Nine Months Ended September 30, 2019   Nine Months Ended September 30, 2018
  Average       Yield/   Average       Yield/
(Amounts in thousands, except ratios) Balance   Interest   Rate   Balance   Interest   Rate
                       
Assets                      
Earning assets:                      
Securities:                      
Taxable $ 1,175,831     $ 26,854     3.05 %   $ 1,323,164     $ 28,332     2.85 %
Nontaxable 23,935     533     2.97     32,031     863     3.59  
Total Securities 1,199,766     27,387     3.04     1,355,195     29,195     2.87  
                       
Federal funds sold and other investments 89,084     2,591     3.89     52,253     1,835     4.70  
                       
Loans, net 4,875,975     187,808     5.15     3,943,617     140,635     4.77  
                       
Total Earning Assets 6,164,825     217,786     4.72     5,351,065     171,665     4.29  
                       
Allowance for loan losses (33,260 )           (28,660 )        
Cash and due from banks 93,171             111,781          
Premises and equipment 69,700             64,708          
Intangible assets 228,710             166,348          
Bank owned life insurance 124,535             121,742          
Other assets 128,016             90,888          
                       
Total Assets $ 6,775,697             $ 5,877,872          
                       
Liabilities and Shareholders' Equity                      
Interest-bearing liabilities:                      
Interest-bearing demand $ 1,088,605     $ 3,042     0.37 %   $ 979,148     $ 1,368     0.19 %
Savings 512,399     1,593     0.42     440,054     392     0.12  
Money market 1,170,494     8,397     0.96     1,012,259     3,863     0.51  
Time deposits 1,097,308     16,692     2.03     782,283     7,783     1.33  
Federal funds purchased and securities sold under agreements to repurchase 117,077     1,206     1.38     186,643     1,071     0.77  
Federal Home Loan Bank borrowings 115,337     2,164     2.51     219,652     2,999     1.83  
Other borrowings 70,903     2,585     4.87     70,623     2,333     4.42  
                       
Total Interest-Bearing Liabilities 4,172,123     35,679     1.14     3,690,662     19,809     0.72  
                       
Noninterest demand 1,628,634             1,446,488          
Other liabilities 62,123             29,533          
Total Liabilities 5,862,880             5,166,683          
                       
Shareholders' equity 912,817             711,189          
                       
Total Liabilities & Equity $ 6,775,697             $ 5,877,872          
                       
Cost of deposits         0.72 %           0.38 %
Interest expense as a % of earning assets         0.77 %           0.49 %
Net interest income as a % of earning assets     $ 182,107     3.95 %       $ 151,856     3.79 %
                       
                       
1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.
Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.
 

CONSOLIDATED QUARTERLY FINANCIAL DATA     (Unaudited)      
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES            
   
  September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands) 2019   2019   2019   2018   2018
                   
Customer Relationship Funding                  
Noninterest demand                  
Commercial $ 1,314,102     $ 1,323,743     $ 1,298,468     $ 1,217,842     $ 1,182,018  
Retail 241,734     251,879     275,383     259,318     233,472  
Public funds 65,869     65,822     73,640     68,324     42,474  
Other 31,222     28,360     28,518     24,118     30,725  
Total Noninterest Demand 1,652,927     1,669,804     1,676,009     1,569,602     1,488,689  
                   
Interest-bearing demand                  
Commercial 342,376     323,818     289,544     211,879     167,865  
Retail 622,833     634,099     646,522     650,490     655,429  
Public funds 150,246     166,602     164,411     151,663     89,597  
Total Interest-Bearing Demand 1,115,455     1,124,519     1,100,477     1,014,032     912,891  
                   
Total transaction accounts                  
Commercial 1,656,478     1,647,561     1,588,012     1,429,721     1,349,883  
Retail 864,567     885,978     921,905     909,808     888,901  
Public funds 216,115     232,424     238,051     219,987     132,071  
Other 31,222     28,360     28,518     24,118     30,725  
Total Transaction Accounts 2,768,382     2,794,323     2,776,486     2,583,634     2,401,580  
                   
Savings 528,214     519,732     508,320     493,807     451,958  
                   
Money market                  
Commercial 513,477     517,041     500,649     459,380     423,304  
Retail 583,917     590,320     602,378     607,837     524,415  
Public funds 61,468     65,610     89,043     106,733     89,221  
Total Money Market 1,158,862     1,172,971     1,192,070     1,173,950     1,036,940  
                   
Brokered time certificates 458,418     268,998     367,841     220,594     192,182  
Other time certificates 759,265     785,185     760,861     705,255     560,850  
  1,217,683     1,054,183     1,128,702     925,849     753,032  
Total Deposits $ 5,673,141     $ 5,541,209     $ 5,605,578     $ 5,177,240     $ 4,643,510  
                   
Customer sweep accounts $ 70,414     $ 82,015     $ 148,005     $ 214,323     $ 189,035  
                   
                   

Explanation of Certain Unaudited Non-GAAP Financial Measures

This presentation contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might define or calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.

GAAP TO NON-GAAP RECONCILIATION   (Unaudited)            
SEACOAST  BANKING  CORPORATION  OF  FLORIDA  AND  SUBSIDIARIES                    
                           
  Quarterly Trends   Nine Months Ended
                           
(Amounts in thousands, except per share data) 3Q'19   2Q'19   1Q'19   4Q'18   3Q'18   3Q'19   3Q'18
                           
Net Income $ 25,605     $ 23,253     $ 22,705     $ 15,962     $ 16,322     $ 71,563     $ 51,313  
                           
Total noninterest income 13,943     13,577     12,836     12,714     12,291     40,356     37,308  
Securities losses, net 847     466     9     425     48     1,322     198  
BOLI benefits on death (included in other income) (956 )           (280 )       (956 )    
Total Adjustments to Noninterest Income (109 )   466     9     145     48     366     198  
Total Adjusted Noninterest Income 13,834     14,043     12,845     12,859     12,339     40,722     37,506  
                           
Total noninterest expense 38,583     41,000     43,099     49,464     37,399     122,682     112,809  
Merger related charges         (335 )   (8,034 )   (482 )   (335 )   (1,647 )
Amortization of intangibles (1,456 )   (1,456 )   (1,458 )   (1,303 )   (1,004 )   (4,370 )   (2,997 )
Business continuity expenses - hurricane events (95 )                   (95 )    
Branch reductions and other expense initiatives (121 )   (1,517 )   (208 )   (587 )       (1,846 )    
Total Adjustments to Noninterest Expense (1,672 )   (2,973 )   (2,001 )   (9,924 )   (1,486 )   (6,646 )   (4,644 )
Total Adjusted Noninterest Expense 36,911     38,027     41,098     39,540     35,913     116,036     108,165  
                           
Income Taxes 8,452     6,909     6,409     4,930     4,358     21,770     15,329  
Tax effect of adjustments 572     874     510     2,623     230     1,956     1,211  
Taxes and tax penalties on acquisition-related BOLI redemption             (485 )            
Effect of change in corporate tax rate on deferred tax assets (1,135 )                   (1,135 )   (248 )
Total Adjustments to Income Taxes (563 )   874     510     2,138     230     821     963  
Adjusted Income Taxes 7,889     7,783     6,919     7,068     4,588     22,591     16,292  
Adjusted Net Income $ 27,731     $ 25,818     $ 24,205     $ 23,893     $ 17,626     $ 77,754     $ 55,192  
                           
Earnings per diluted share, as reported $ 0.49     $ 0.45     $ 0.44     $ 0.31     $ 0.34     $ 1.38     $ 1.07  
Adjusted Earnings per Diluted Share 0.53     0.50     0.47     0.47     0.37     1.50     1.15  
Average diluted shares outstanding 51,935     51,952     52,039     51,237     48,029     51,996     47,903  
                           
Adjusted Noninterest Expense $ 36,911     $ 38,027     $ 41,098     $ 39,540     $ 35,913     $ 116,036     $ 108,165  
Foreclosed property expense and net gain/(loss) on sale (262 )   174     40         137     (48 )   (460 )
Net Adjusted Noninterest Expense $ 36,649     $ 38,201     $ 41,138     $ 39,540     $ 36,050     $ 115,988     $ 107,705  
                           
Revenue $ 74,891     $ 73,713     $ 73,610     $ 72,698     $ 63,853     $ 222,214     $ 188,839  
Total Adjustments to Revenue (109 )   466     9     145     48     366     198  
Impact of FTE adjustment 79     83     87     116     147     249     325  
Adjusted Revenue on a fully taxable equivalent basis $ 74,861     $ 74,262     $ 73,706     $ 72,959     $ 64,048     $ 222,829     $ 189,362  
Adjusted Efficiency Ratio 48.96 %   51.44 %   55.81 %   54.19 %   56.29 %   52.05 %   56.88 %
                           
Average Assets $ 6,820,576     $ 6,734,994     $ 6,770,978     $ 6,589,870     $ 5,903,327     $ 6,775,697     $ 5,877,872  
Less average goodwill and intangible assets (227,389 )   (228,706 )   (230,066 )   (213,713 )   (165,534 )   (228,710 )   (166,348 )
Average Tangible Assets $ 6,593,187     $ 6,506,288     $ 6,540,912     $ 6,376,157     $ 5,737,793     $ 6,546,987     $ 5,711,524  
                           
Return on Average Assets (ROA) 1.49 %   1.38 %   1.36 %   0.96 %   1.10 %   1.41 %   1.17 %
Impact of removing average intangible assets and related amortization 0.12     0.12     0.12     0.09     0.08     0.12     0.08  
Return on Average Tangible Assets (ROTA) 1.61     1.50     1.48     1.05     1.18     1.53     1.25  
Impact of other adjustments for Adjusted Net Income 0.06     0.09     0.02     0.44     0.04     0.06     0.04  
Adjusted Return on Average Tangible Assets 1.67     1.59     1.50     1.49     1.22     1.59     1.29  
                           
Average Shareholders' Equity $ 946,670     $ 911,479     $ 879,564     $ 827,759     $ 728,290     $ 912,817     $ 711,189  
Less average goodwill and intangible assets (227,389 )   (228,706 )   (230,066 )   (213,713 )   (165,534 )   (228,710 )   (166,348 )
Average Tangible Equity $ 719,281     $ 682,773     $ 649,498     $ 614,046     $ 562,756     $ 684,107     $ 544,841  
                           
Return on Average Shareholders' Equity 10.73 %   10.23 %   10.47 %   7.65 %   8.89 %   10.48 %   9.65 %
Impact of removing average intangible assets and related amortization 4.00     4.07     4.39     3.29     3.15     4.15     3.49  
Return on Average Tangible Common Equity (ROTCE) 14.73     14.30     14.86     10.94     12.04     14.63     13.14  
Impact of other adjustments for Adjusted Net Income 0.57     0.87     0.25     4.50     0.39     0.57     0.40  
Adjusted Return on Average Tangible Common Equity 15.30     15.17     15.11     15.44     12.43     15.20     13.54  
                           
Loan interest income excluding accretion on acquired loans $ 59,279     $ 58,169     $ 58,397     $ 55,470     $ 46,349     $ 175,845     $ 133,395  
Accretion on acquired loans 3,859     4,166     3,938     4,089     2,453     11,963     7,240  
Loan interest income1 $ 63,138     $ 62,335     $ 62,335     $ 59,559     $ 48,802     $ 187,808     $ 140,635  
1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.
 
GAAP TO NON-GAAP RECONCILIATION   (Unaudited)            
SEACOAST  BANKING  CORPORATION  OF  FLORIDA  AND  SUBSIDIARIES                    
                           
  Quarterly Trends   Nine Months Ended
                           
(Amounts in thousands, except per share data) 3Q'19   2Q'19   1Q'19   4Q'18   3Q'18   3Q'19   3Q'18
                           
Yield on loans excluding accretion on acquired loans 4.76 %   4.82 %   4.89 %   4.77 %   4.59 %   4.82 %   4.52 %
Impact of accretion on acquired loans 0.30     0.34     0.33     0.35     0.24     0.33     0.25  
Yield on loans 5.06     5.16     5.22     5.12     4.83     5.15     4.77  
                           
Net interest income excluding accretion on acquired loans $ 57,168     $ 56,053     $ 56,923     $ 56,011     $ 49,256     $ 170,144     $ 144,616  
Accretion on acquired loans 3,859     4,166     3,938     4,089     2,453     11,963     7,240  
Net Interest Income1 $ 61,027     $ 60,219     $ 60,861     $ 60,100     $ 51,709     $ 182,107     $ 151,856  
                           
Net interest margin excluding accretion on acquired loans 3.64 %   3.67 %   3.76 %   3.73 %   3.64 %   3.69 %   3.61 %
Impact of accretion on acquired loans 0.25     0.27     0.26     0.27     0.18     0.26     0.18  
Net Interest Margin 3.89     3.94     4.02     4.00     3.82     3.95     3.79  
1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.

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Seacoast Banking Corporation of Florida

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