Seacoast Reports Second Quarter 2022 Results

·30-min read
Seacoast Banking Corporation of Florida
Seacoast Banking Corporation of Florida

Record Commercial Loan Originations, Strong Growth in Demand Deposits, and Significant Expansion in Net Interest Margin Highlight Q2 Results

Well-Positioned Balance Sheet with Strong Capital and Liquidity

STUART, Fla., July 28, 2022 (GLOBE NEWSWIRE) -- Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") (NASDAQ: SBCF) today reported net income in the second quarter of 2022 of $32.8 million, or $0.53 per diluted share. Second quarter 2022 net income grew 59% compared to the first quarter of 2022, and increased 4% compared to the second quarter of 2021. Adjusted net income1 for the second quarter of 2022 was $36.3 million, or $0.59 per diluted share. Second quarter 2022 adjusted net income grew 34% compared to the first quarter of 2022, and increased 9% compared to the second quarter of 2021. At June 30, 2022, the ratio of tangible common equity to tangible assets was 9.74%, and tangible book value per share was $16.66. A decline in the value of the available for sale securities portfolio driven by rising interest rates during the first half of 2022 impacted the ratio of tangible common equity to tangible assets by 99 basis points and impacted tangible book value per share by $1.90 compared to December 31, 2021.

For the second quarter of 2022, return on average tangible assets was 1.29%, return on average tangible shareholders' equity was 13.01%, and the efficiency ratio was 56.22%, compared to 0.85%, 8.02%, and 62.33%, respectively, in the prior quarter, and 1.48%, 13.88%, and 54.93%, respectively, in the prior year quarter. Adjusted return on average tangible assets1 in the second quarter of 2022 was 1.38%, adjusted return on average tangible shareholders' equity1 was 13.97%, and the adjusted efficiency ratio1 was 53.15%, compared to 1.06%, 10.01%, and 54.86%, respectively, in the prior quarter, and 1.52%, 14.27%, and 53.49%, respectively, in the prior year quarter.

Charles M. Shaffer, Seacoast's Chairman and CEO, said, “Our quarterly results demonstrate the continued success of our balanced growth strategy, with steady, disciplined organic growth and financially attractive and well-integrated acquisitions combining to deliver strong returns for our shareholders. The quarter was highlighted by a significant increase in our net interest margin, strong loan originations, and continued growth in demand deposits. Adjusted pre-tax pre-provision earnings1 increased 11% over the prior quarter to $46.4 million, driving improvements in the overhead ratio, return on tangible assets, and return on tangible common equity.”

“I would like to thank the Seacoast team for their dedication and hard work, and I am very excited to continue our momentum as we build a statewide brand as Florida’s leading bank. As we enter the second half of 2022, we have already this year added new markets in Naples, Jacksonville, and Sarasota, and in the fourth quarter we will add Miami, Ocala, and Gainesville. This expansion into some of the best banking markets in the United States, in combination with a statewide highly competitive brand of banking, will generate disciplined growth and strong returns in the years to come,” Shaffer added.

Shaffer concluded, “We continue to operate the company with a solid balance sheet, fortified with a tangible common equity ratio of 9.74%. We see continued strong credit quality metrics, and the allowance for credit losses totals $90.8 million, with an additional $21.4 million in purchase discount on acquired loans. This provides meaningful loss absorption capacity, which when aggregated, represents 1.71% of loans outstanding. In addition, our balance sheet is supported by one of the best customer franchises in the industry and a strictly underwritten credit portfolio.”

Acquisitions Update

Seacoast’s balanced growth strategy, combining organic growth with value-creating acquisitions, continues to benefit shareholders and expand the franchise across Florida.

In the first quarter of 2022, Seacoast completed the acquisitions of Sabal Palm Bancorp, Inc. (“Sabal Palm”) in Sarasota, and Business Bank of Florida Corp. (“BBFC”) in Brevard County, which collectively added a combined $367.9 million in loans and $562.3 million in deposits. Seacoast recorded a $5.1 million provision for credit losses on acquired loans at the acquisition date. Integration activities, including system conversion, are now complete.

The pending acquisition of Apollo Bancshares, Inc. will add a premier, locally-focused franchise in the rapidly growing South Florida market. We expect this transaction to close and the system conversion to be complete by early October 2022. The addition of Drummond Banking Company will expand Seacoast’s footprint into the emerging Gainesville and Ocala markets with low-cost core deposits and diversified business lines. We expect this transaction to close in early October 2022, with the system conversion in the first quarter of 2023. Each acquisition provides the opportunity for Seacoast to leverage its proven integration capabilities to preserve and build on Apollo’s and Drummond’s strong customer-focused relationships. The two acquisitions are expected to add a combined $1.2 billion in loans and $1.9 billion in deposits in the fourth quarter of 2022.

Financial Results
Income Statement

  • Net income was $32.8 million, or $0.53 per diluted share for the second quarter of 2022 compared to net income of $20.6 million, or $0.33, for the prior quarter, and $31.4 million, or $0.56, for the prior year quarter. For the six months ended June 30, 2022, net income was $53.3 million, or $0.86 per diluted share, compared to $65.1 million, or $1.17 per diluted share, for the six months ended June 30, 2021. Adjusted net income1 for the second quarter of 2022 was $36.3 million, or $0.59 per diluted share. This compares to $27.1 million, or $0.44, for the prior quarter, and $33.3 million, or $0.59 per diluted share, for the prior year quarter. Excluded from adjusted net income are $3.0 million in merger-related expenses in the second quarter of 2022, compared to $6.7 million in the first quarter of 2022 and $0.5 million in the second quarter of 2021. For the six months ended June 30, 2022, adjusted net income1 was $63.4 million, or $1.03 per diluted share, compared to $68.7 million, or $1.23 per diluted share, for the six months ended June 30, 2021.

  • Net revenues were $98.6 million in the second quarter of 2022, an increase of $6.7 million, or 7%, compared to the prior quarter, and an increase of $17.5 million, or 22%, compared to the prior year quarter. For the six months ended June 30, 2022 net revenues were $190.5 million, an increase of $25.1 million, or 15%, compared to the six months ended June 30, 2021. Adjusted revenues1 were $98.9 million in the second quarter of 2022, an increase of $6.6 million, or 7%, compared to the prior quarter, and an increase of $17.7 million, or 22%, compared to the prior year quarter. For the six months ended June 30, 2022 adjusted revenues1 were $191.3 million, an increase of $25.7 million, or 16%, compared to the six months ended June 30, 2021.

  • On an adjusted basis, pre-tax pre-provision earnings1 was $46.4 million, an increase of 11% compared to the first quarter of 2022 and an increase of 23% compared to the second quarter of 2021. The increase from the prior quarter was the result of higher net interest income driven by expanding margin, increasing noninterest income, and a reduction in noninterest expense.

  • Net interest income totaled $81.6 million in the second quarter of 2022, an increase of $5.1 million, or 7%, from the first quarter of 2022, and an increase of $15.8 million, or 24%, compared to the second quarter of 2021. For the six months ended June 30, 2022, net interest income was $158.2 million, an increase of $25.8 million, or 19% compared to the six months ended June 30, 2021.

  • Net interest margin increased to 3.38% in the second quarter of 2022 compared to 3.25% in the first quarter of 2022, the result of higher yields on securities and loans and a stable cost of deposits. Excluding the effect of PPP and accretion on acquired loans, net interest margin increased 19 basis points to 3.24% in the second quarter of 2022 from 3.05% in the first quarter of 2022. Securities yields increased 30 basis points to 1.98%, reflecting the impact of the addition of higher yielding securities during the quarter. Non-PPP loan yields increased three basis points to 4.27%. The effect on net interest margin of accretion of purchase discounts on acquired loans in the second quarter of 2022 was 12 basis points, a decrease of 3 basis points compared to the prior quarter. The effect on net interest margin of interest and fees on PPP loans was an increase of two basis points in the second quarter of 2022 compared to an increase of five basis points in the prior quarter. The cost of deposits remained only six basis points for the second quarter of 2022. The margin benefited from the Company’s asset sensitivity, disciplined growth across the balance sheet, and no increase in the cost of deposits from the prior quarter.

  • Noninterest income totaled $17.0 million in the second quarter of 2022, an increase of $1.6 million, or 10%, compared to the prior quarter, and an increase of $1.6 million, or 11%, compared to the prior year quarter. For the six months ended June 30, 2022, noninterest income was $32.3 million, a decrease of $0.7 million, or 2%, compared to the six months ended June 30, 2021. Results for the second quarter of 2022 included the following:

    • Service charges on deposits increased $0.6 million to $3.4 million, reflecting growth in commercial deposit relationships and service charge fee increases.

    • Despite the impact of broad based declining equity market valuations, the wealth management group continues to win relationships, resulting in $2.8 million in fee income for the quarter, an increase of $0.1 million from the prior quarter.

    • Mortgage banking fees were $0.9 million, compared to $1.7 million in the prior quarter, reflecting the continued impact of rising rates and limited housing inventory on saleable loan production.

    • Gains on sale of SBA loans were $0.5 million, an increase of $0.3 million compared to the prior quarter, reflecting higher production during the quarter.

    • Other income increased by $0.9 million in the second quarter of 2022 to $3.8 million and included the benefit of higher loan-swap related income.

    • The Company recognized $0.3 million in securities losses in the second quarter of 2022, compared to $0.5 million in the first quarter of 2022 and $0.1 million in the second quarter of 2021.

  • The provision for credit losses was $0.8 million in the second quarter of 2022, compared to $6.6 million in the prior quarter. The prior quarter included $5.1 million in provisioning for loans acquired in the Sabal Palm and BBFC transactions.

  • Noninterest expense was $56.1 million in the second quarter of 2022, a decrease of $2.8 million, or 5%, compared to the prior quarter, and an increase of $10.4 million, or 23%, compared to the prior year quarter. Noninterest expense was $115.1 million for the six months ended June 30, 2022, compared to $91.9 million in the six months ended June 30, 2021. Changes from the first quarter of 2022 included the following:

    • Salaries and wages decreased $0.2 million to $28.1 million in the second quarter of 2022. The second quarter of 2022 reflects higher compensation costs, with ongoing investments in commercial banking talent and production support roles, which were more than offset by a $2.4 million decline in merger-related expenses quarter over quarter.

    • Employee benefits declined by $1.4 million to $4.2 million, reflecting seasonally higher payroll taxes and 401(k) contributions in the first quarter of 2022.

    • Marketing expense increased $0.7 million to $1.9 million in the second quarter of 2022, the result of marketing campaigns primarily focused on our expansion markets.

    • Legal and professional fees declined by $1.8 million to $2.9 million in the second quarter of 2022, reflecting lower merger-related expenses in the current quarter.

    • Other expenses increased by $0.6 million, reflecting higher recruiting and production-related costs.

  • Seacoast recorded $8.9 million of income tax expense in the second quarter of 2022, compared to $5.8 million in the prior quarter and $8.8 million in the second quarter of 2021. During the second quarter of 2022, the Company received a $1.0 million refund of Florida corporate income tax paid in prior periods. The State of Florida reported that, for the second year in a row, corporate income tax collections significantly exceeded projections, triggering an automatic refund of excess funds. Tax benefits related to stock-based compensation totaled $0.4 million in the second quarter of 2022, $0.5 million in the first quarter of 2022, and $0.6 million in the second quarter of 2021.

  • The ratio of net adjusted noninterest expense1 to average tangible assets was 2.00% in the second quarter of 2022, compared to 1.99% in the prior quarter and 1.98% in the second quarter of 2021.

  • The efficiency ratio was 56.22% in the second quarter of 2022, compared to 62.33% in the prior quarter and 54.93% in the prior year quarter. The adjusted efficiency ratio1 was 53.15% in the second quarter of 2022, compared to 54.86% in the prior quarter and 53.49% in the prior year quarter. The Company continues to remain keenly focused on disciplined expense control.

Balance Sheet

  • At June 30, 2022, the Company had total assets of $10.8 billion and total shareholders' equity of $1.3 billion. Book value per share was $21.65 on June 30, 2022, compared to $22.15 on March 31, 2022, and $21.33 on June 30, 2021. Tangible book value per share totaled $16.66 on June 30, 2022 compared to $17.12 on March 31, 2022 and $17.08 on June 30, 2021. A continued decline in the value of the available for sale securities portfolio driven by rising interest rates impacted tangible book value per share by $1.90 when compared to December 31, 2021.

  • Debt securities totaled $2.6 billion on June 30, 2022, an increase of $142.0 million, or 6%, compared to March 31, 2022. Purchases during the second quarter of 2022 totaled $300.8 million, consisting primarily of agency-issued securities at an average duration of 3.3 and average add on yield of 3.31%. The Company continues to take a prudent and disciplined approach to reinvesting excess liquidity.

  • Loans totaled $6.5 billion on June 30, 2022, an increase of $90.3 million, or 1%, compared to March 31, 2022. Loans outstanding, excluding PPP, grew 7% on an annualized basis. The Company continues to exercise a disciplined approach to loan growth, carefully underwriting loans to strict underwriting guidelines.

  • Loan originations were $734.0 million in the second quarter of 2022, an increase of 8% compared to $678.7 million in the first quarter of 2022.

    • Commercial originations were a record $461.9 million during the second quarter of 2022, compared to $373.0 million in the first quarter of 2022, and $193.0 million in the second quarter of 2021.

    • Consumer originations in the second quarter of 2022 increased to $126.5 million from $79.0 million in the first quarter of 2022 and from $63.7 million in the second quarter of 2021. The increase is primarily the result of consumer lending teams that joined in late 2021.

    • Residential loans originated for sale in the secondary market totaled $42.7 million in the second quarter of 2022, compared to $51.2 million in the first quarter of 2022 and $120.1 million in the second quarter of 2021. Limited housing inventory and slowing refinance activity contributed to lower production.

    • Closed residential loans retained in the portfolio totaled $103.0 million in the second quarter of 2022, compared to $175.5 million in the first quarter of 2022, and $118.1 million in the second quarter of 2021. The first quarter of 2022 and the second quarter of 2021 included the purchases of $111.3 million and $38.4 million, respectively, of high-quality wholesale residential home mortgage loan pools from sellers well known to Seacoast.

  • Pipelines (loans in underwriting and approval or approved and not yet closed) totaled $620.0 million on June 30, 2022, a decrease of 22% from March 31, 2022 and an increase of 32% from June 30, 2021.

    • Commercial pipelines were $476.7 million as of June 30, 2022, a decrease of 23% from $619.5 million at March 31, 2022, and an increase of 48% from $322.0 million at June 30, 2021. The Company continues to add experienced commercial bankers across Florida focused on generating disciplined growth in full relationships, including credit facilities, deposit relationships, and wealth opportunities.

    • Consumer pipelines were $75.5 million as of June 30, 2022, an increase of 23% from $61.6 million at March 31, 2022, and an increase of 138% from $31.7 million at June 30, 2021. The increase is primarily the result of consumer lending teams that joined in late 2021.

    • Residential saleable pipelines were $14.7 million as of June 30, 2022, compared to $25.7 million at March 31, 2022, and $60.6 million at June 30, 2021. Retained residential pipelines were $53.1 million as of June 30, 2022, compared to $88.0 million at March 31, 2022, and $54.1 million at June 30, 2021.

  • Total deposits were $9.2 billion as of June 30, 2022, a decrease of $54.8 million, or 1%, compared to March 31, 2022, and an increase of $1.4 billion, or 17%, compared to June 30, 2021.

    • Transaction account balances increased $86 million, or 1%, quarter-over-quarter, and at June 30, 2022, total transaction account balances represent 64% of overall deposit funding. This continued growth in commercial relationships reflects the benefit of adding experienced, well-seasoned commercial bankers across the state of Florida.

    • The overall cost of deposits remained at six basis points.

    • As of June 30, 2022, deposits per banking center were $158.4 million, compared to $163.4 million at March 31, 2022, and $163.3 million at June 30, 2021.

Asset Quality

  • Credit metrics remain strong with charge-offs, nonaccruals, and criticized assets at historically low levels.

  • Nonperforming loans increased by $0.2 million to $26.4 million at June 30, 2022. Nonperforming loans to total loans outstanding were 0.40% at June 30, 2022, 0.41% at March 31, 2022, and 0.61% at June 30, 2021.

  • Due primarily to the sale during the quarter of a residential construction project held in other real estate owned since early 2020, nonperforming assets to total assets declined to 0.27% at June 30, 2022, compared to 0.35% at March 31, 2022, and 0.49% at June 30, 2021.

  • The ratio of allowance for credit losses to total loans was 1.39% at June 30, 2022, 1.39% at March 31, 2022, and 1.49% at June 30, 2021. Excluding PPP loans, the ratio of allowance for credit losses to total loans at June 30, 2022 was 1.39%, compared to 1.40% at March 31, 2022 and 1.60% at June 30, 2021.

  • Net recoveries of $0.1 million for the second quarter of 2022 compared to net charge-offs of $0.1 million in the first quarter of 2022 and $0.7 million in the second quarter of 2021. Net charge-offs for the four most recent quarters averaged 0.04%.

  • Portfolio diversification, in terms of asset mix, industry, and loan type, has been a critical element of the Company's lending strategy. Exposure across industries and collateral types is broadly distributed. Seacoast's average commercial loan size is $558 thousand, reflecting an ability to maintain granularity within the overall loan portfolio.

  • Construction and land development and commercial real estate loans remain well below regulatory guidance at 29% and 192% of total bank-level risk-based capital, respectively, compared to 22% and 189% respectively, at March 31, 2022. On a consolidated basis, construction and land development and commercial real estate loans represent 27% and 176%, respectively, of total consolidated risk-based capital.

Capital and Liquidity

  • The Company continues to operate with a fortress balance sheet, with a tier 1 capital ratio at June 30, 2022, of 16.8% compared to 16.8% at March 31, 2022, and 18.3% at June 30, 2021. The total capital ratio was 17.7% and the tier 1 leverage ratio was 11.6% at June 30, 2022.

  • Cash and cash equivalents at June 30, 2022 totaled $901.4 million, a decrease of $321.1 million, or 26%, from March 31, 2022, resulting from loan growth, investment in the securities portfolio, and deposit outflows, primarily attributed to seasonally higher tax payments by commercial customers.

  • Tangible common equity to tangible assets was 9.74% at June 30, 2022, compared to 9.89% at March 31, 2022, and 10.43% at June 30, 2021. Declines in the value of available for sale securities due to rising interest rates in the first half of 2022 negatively impacted equity year to year by $116.5 million.

  • At June 30, 2022, the Company had available unsecured lines of credit of $165.0 million and lines of credit under lendable collateral value of $2.2 billion. Additionally, $2.1 million of debt securities and $0.7 million of residential and commercial real estate loans are available as collateral for potential borrowings.

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

FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

(Amounts in thousands except per share data)

(Unaudited)

 

Quarterly Trends

 

 

 

 

 

 

 

 

 

 

 

2Q'22

 

1Q'22

 

4Q'21

 

3Q'21

 

2Q'21

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

Total Assets

$

10,811,704

 

 

$

10,904,817

 

 

$

9,681,433

 

 

$

9,893,498

 

 

$

9,316,833

 

Gross Loans

 

6,541,548

 

 

 

6,451,217

 

 

 

5,925,029

 

 

 

5,905,884

 

 

 

5,437,049

 

Total Deposits

 

9,188,953

 

 

 

9,243,768

 

 

 

8,067,589

 

 

 

8,334,172

 

 

 

7,836,436

 

 

 

 

 

 

 

 

 

 

 

Performance Measures:

 

 

 

 

 

 

 

 

 

Net Income

$

32,755

 

 

$

20,588

 

 

$

36,330

 

 

$

22,944

 

 

$

31,410

 

Net Interest Margin

 

3.38

%

 

 

3.25

%

 

 

3.16

%

 

 

3.22

%

 

 

3.23

%

Average Diluted Shares Outstanding

 

61,923

 

 

 

61,704

 

 

 

59,016

 

 

 

57,645

 

 

 

55,901

 

Diluted Earnings Per Share (EPS)

$

0.53

 

 

$

0.33

 

 

$

0.62

 

 

$

0.40

 

 

$

0.56

 

Return on (annualized):

 

 

 

 

 

 

 

 

 

Average Assets (ROA)

 

1.21

%

 

 

0.79

%

 

 

1.43

%

 

 

0.93

%

 

 

1.40

%

Average Tangible Assets (ROTA)2

 

1.29

 

 

 

0.85

 

 

 

1.51

 

 

 

1.00

 

 

 

1.48

 

Average Tangible Common Equity (ROTCE)2

 

13.01

 

 

 

8.02

 

 

 

14.29

 

 

 

9.56

 

 

 

13.88

 

Tangible Common Equity to Tangible Assets2

 

9.74

 

 

 

9.89

 

 

 

11.09

 

 

 

10.62

 

 

 

10.43

 

Tangible Book Value Per Share2

$

16.66

 

 

$

17.12

 

 

$

17.84

 

 

$

17.52

 

 

$

17.08

 

Efficiency Ratio

 

56.22

%

 

 

62.33

%

 

 

53.70

%

 

 

59.55

%

 

 

54.93

%

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Measures1:

 

 

 

 

 

 

 

 

 

Adjusted Net Income

$

36,327

 

 

$

27,056

 

 

$

36,854

 

 

$

29,350

 

 

$

33,251

 

Adjusted Diluted EPS

 

0.59

 

 

 

0.44

 

 

 

0.62

 

 

 

0.51

 

 

 

0.59

 

Adjusted ROTA2

 

1.38

%

 

 

1.06

%

 

 

1.49

%

 

 

1.23

%

 

 

1.52

%

Adjusted ROTCE2

 

13.97

 

 

 

10.01

 

 

 

14.11

 

 

 

11.72

 

 

 

14.27

 

Adjusted Efficiency Ratio

 

53.15

 

 

 

54.86

 

 

 

53.43

 

 

 

51.50

 

 

 

53.49

 

Net Adjusted Noninterest Expense as a
Percent of Average Tangible Assets2

 

2.00

 

 

 

1.99

 

 

 

1.96

 

 

 

1.95

 

 

 

1.98

 

 

 

 

 

 

 

 

 

 

 

Other Data:

 

 

 

 

 

 

 

 

 

Market capitalization3

$

2,028,996

 

 

$

2,144,586

 

 

$

2,070,465

 

 

$

1,972,784

 

 

$

1,893,141

 

Full-time equivalent employees

 

1,095

 

 

 

1,066

 

 

 

989

 

 

 

995

 

 

 

946

 

Number of ATMs

 

79

 

 

 

79

 

 

 

75

 

 

 

72

 

 

 

75

 

Full-service banking offices

 

58

 

 

 

58

 

 

 

54

 

 

 

52

 

 

 

48

 

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

2The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders' equity less intangible assets.

3Common shares outstanding multiplied by closing bid price on last day of each period.

Second Quarter 2022 Strategic Highlights

Capitalizing on Seacoast’s Commitment to Digital Transformation

  • Consistent investments in recent years in client-facing technology and high-performing bankers continue to generate solid performance in new customer acquisition and organic balance sheet growth. As we seek to build the most competitive banking franchise in Florida, we are driving continued transformation across our technology capabilities.

  • Early in 2022, we successfully launched a unified customer user experience by upgrading our digital platforms including mobile, consumer internet banking and business internet banking. These digital investments have dramatically improved our customer experience, reflected in a 20% reduction of inbound calls to our telephone support center. We expect to introduce additional digital features in the third and fourth quarters.

  • Use of online and mobile features including Zelle® have surpassed our estimates, with ten times the utilization of payment features compared to our previous platform. Over 15,000 online banking users have opted into our account aggregation service.

  • During the second quarter, we completed the first phase of our enhanced digital account opening solution, which streamlined account opening for customers while positioning the bank to more effectively scale across the state.

Driving Sustainable Growth and Expanding our Footprint

  • Seacoast’s balanced growth strategy includes organic growth and expansion initiatives across the state. Thus far in 2022, Seacoast has expanded the franchise into Naples, Sarasota, and Jacksonville. The combination of a strong Florida economy, the build-out of our commercial franchise across the state, and additions to our consumer and mortgage lending teams drove diversified loan production during the quarter.

  • During the second quarter, the Company continued to strengthen its commercial banking franchise, adding five commercial bankers across the footprint. In addition, Tom Lambert, previously with Truist, joined Seacoast as Market President for the Tampa Bay region. Tom is a well-known leader in the Tampa Bay market, having spent the last several years leading middle market for heritage BB&T.

  • The Company added six new treasury officers across the state during the second quarter, providing additional support and treasury management expertise further, supporting the Company’s middle market buildout.

Scaling and Evolving Our Culture

  • For the third consecutive year, Seacoast has been recognized by the Human Rights Foundation, earning a perfect score for Workplace Equality in the 2022 Corporate Equality index. In addition, the Orlando Business Journal recognized Seacoast as a Best Place to Work for 2022. These honors highlight our commitment to employees’ well-being, as well as our numerous diversity and inclusion initiatives.

OTHER INFORMATION

Conference Call Information
Seacoast will host a conference call on July 29, 2022 at 10:00 a.m. (Eastern Time) to discuss the second quarter 2022 earnings results and business trends. Investors may call in (toll-free) by dialing (866) 374-5140 (passcode: 1306 5710#; host: Charles Shaffer). 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 on July 29, 2022, and can be accessed via a link at www.SeacoastBanking.com under the heading “Corporate Information,” using the passcode EV00135641.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Seacoast's website at www.SeacoastBanking.com. The link is located under the heading “Corporate Information.” Beginning late afternoon on July 29, 2022, 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 (NASDAQ: SBCF) is one of the largest community banks headquartered in Florida with approximately $10.8 billion in assets and $9.2 billion in deposits as of June 30, 2022. Seacoast provides integrated financial services including commercial and consumer banking, wealth management, and mortgage services to customers at over 50 full-service branches across Florida, and through advanced mobile and online banking solutions. Seacoast National Bank is the wholly-owned subsidiary bank of Seacoast Banking Corporation of Florida. For more information about Seacoast, visit www.SeacoastBanking.com.

Additional Information

Seacoast has filed a registration statement on Form S-4 with the United States Securities and Exchange Commission (the "SEC") in connection with the proposed merger of Apollo Bancshares, Inc. and Apollo Bank with and into Seacoast and Seacoast National Bank, respectively. Seacoast has also filed a registration statement on Form S-4 with the SEC in connection with the proposed merger of Drummond Banking Company and Drummond Community Bank with and into Seacoast and Seacoast National Bank, respectively. The registration statements in connection with the mergers include a proxy statement of Apollo Bancshares, Inc., Apollo Bank and Drummond Banking Company, respectively, and a prospectus of Seacoast. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. WE URGE INVESTORS TO READ THE PROXY STATEMENTS/PROSPECTUSES AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGERS OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENTS/PROSPECTUSES BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Investors may obtain (when available) these documents free of charge at the SEC’s website (www.sec.gov). In addition, documents filed with the SEC by Seacoast will be available free of charge by contacting Investor Relations at (772) 288-6085.

Apollo Bancshares, Inc. and Apollo Bank, their directors, and executive officers and other members of management and employees may be considered participants in the solicitation of proxies in connection with the proposed mergers with and into Seacoast and Seacoast National Bank. Information regarding the participants in the proxy solicitation of Apollo Bancshares, Inc. and Apollo Bank and a description of its direct and indirect interests, by security holdings or otherwise, is contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC.

Drummond Banking Company and Drummond Community Bank, their directors, and executive officers and other members of management and employees may be considered participants in the solicitation of proxies in connection with the proposed mergers with and into Seacoast and Seacoast National Bank. Information regarding the participants in the proxy solicitation of Drummond Banking Company and a description of its direct and indirect interests, by security holdings or otherwise, is contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC.

Cautionary Notice Regarding Forward-Looking Statements

This 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 the Company’s markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives and for integration of banks that the Company has acquired, or expects to acquire, including Apollo Bancshares, Inc. and Drummond Banking Company, as well as statements with respect to Seacoast's objectives, strategic plans, expectations and intentions and other statements that are not historical facts, any of which may be impacted by the COVID-19 pandemic and any variants thereof and related effects on the U.S. economy. Actual results may differ from those set forth in the forward-looking statements.

Forward-looking statements include statements with respect to the Company’s 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 the Company’s 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 the Company 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 the 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; the adverse impact of COVID-19 (economic and otherwise) on the Company and its customers, counterparties, employees, and third-party service providers, and the adverse impacts to our business, financial position, results of operations and prospects; government or regulatory responses to the COVID-19 pandemic; 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, including those that impact the money supply and inflation; changes in accounting policies, rules and practices, including the impact of the adoption of the current expected credit losses (“CECL”) methodology; 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 rate 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, loans and debt; changes in borrower credit risks and payment behaviors including as a result of the financial impact of COVID-19; changes in retail distribution strategies, customer preferences and behavior (including as a result of economic factors); 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 Seacoast or the banking industry; the Company’s concentration in commercial real estate loans and in real estate collateral in Florida; inaccuracies or other failures from the use of models, including 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 Seacoast’s 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 Seacoast’s ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies; changes in technology or products that may be more difficult, costly, or less effective than anticipated; the Company’s ability to identify and address increased cybersecurity risks, including as a result of employees working remotely; inability of Seacoast’s risk management framework to manage risks associated with the Company’s business; dependence on key suppliers or vendors to obtain equipment or services for the business on acceptable terms, including the impact of supply chain disruptions; reduction in or the termination of Seacoast’s ability to use the online- or mobile-based platform that is critical to the Company’s business growth strategy; the effects of war or other conflicts, including the impacts related to or resulting from Russia’s military action in Ukraine, acts of terrorism, natural disasters, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions; unexpected outcomes of and the costs associated with, existing or new litigation involving the Company, including as a result of the Company’s participation in the Paycheck Protection Program (“PPP”); Seacoast’s 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 deferred tax assets could be reduced if estimates of future taxable income from the Company’s operations and tax planning strategies are less than currently estimated and sales of capital stock could trigger a reduction in the amount of net operating loss carryforwards that the Company 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, non-bank financial technology providers, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in the Company’s 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; the failure of assumptions underlying the establishment of reserves for possible credit losses.

The risks relating to the proposed Apollo Bancshares, Inc. and Drummond Banking Company mergers include, without limitation, failure to obtain the approval of shareholders of Apollo Bancshares, Inc., Apollo Bank and Drummond Banking Company in connection with the mergers; the timing to consummate the proposed mergers; the risk that a condition to the closing of the proposed mergers may not be satisfied; the risk that a regulatory approval that may be required for the proposed mergers is not obtained or is obtained subject to conditions that are not anticipated; the parties' ability to achieve the synergies and value creation contemplated by the proposed mergers; the parties' ability to promptly and effectively integrate the businesses of Seacoast, Apollo Bancshares, Inc. and Drummond Banking Company, including unexpected transaction costs, the costs of integrating operations, severance, professional fees and other expenses; the diversion of management time on issues related to the mergers; the failure to consummate or any delay in consummating the mergers for other reasons; changes in laws or regulations; 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 and employees by competitors; and 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 the Company’s annual report on Form 10-K for the year ended December 31, 2021 and quarterly report on Form 10-Q for the quarter ended March 31, 2022 under "Special Cautionary Notice Regarding Forward-Looking Statements" and "Risk Factors", and otherwise in the Company’s 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.


FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

 

 

 

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

 

 

 

 

 

 

 

Quarterly Trends

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands, except ratios and per share data)

2Q'22

 

1Q'22

 

4Q'21

 

3Q'21

 

2Q'21

 

2Q'22

 

2Q'21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

32,755

 

 

$

20,588

 

 

$

36,330

 

 

$

22,944

 

 

$

31,410

 

 

$

53,343

 

 

$

65,129

 

Adjusted net income1

 

36,327

 

 

 

27,056

 

 

 

36,854

 

 

 

29,350

 

 

 

33,251

 

 

 

63,383

 

 

 

68,748

 

Net interest income2

 

81,764

 

 

 

76,639

 

 

 

72,412

 

 

 

71,455

 

 

 

65,933

 

 

 

158,403

 

 

 

132,674

 

Net interest margin2,3

 

3.38

%

 

 

3.25

%

 

 

3.16

%

 

 

3.22

%

 

 

3.23

%

 

 

3.32

%

 

 

3.37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets-GAAP basis3

 

1.21

%

 

 

0.79

%

 

 

1.43

%

 

 

0.93

%

 

 

1.40

%

 

 

1.00

%

 

 

1.50

%

Return on average tangible assets-GAAP basis3,4

 

1.29

 

 

 

0.85

 

 

 

1.51

 

 

 

1.00

 

 

 

1.48

 

 

 

1.07

 

 

 

1.58

 

Adjusted return on average tangible assets1,3,4

 

1.38

 

 

 

1.06

 

 

 

1.49

 

 

 

1.23

 

 

 

1.52

 

 

 

1.23

 

 

 

1.63

 

Net adjusted noninterest expense to average tangible assets1,3,4

 

2.00

 

 

 

1.99

 

 

 

1.96

 

 

 

1.95

 

 

 

1.98

 

 

 

2.00

 

 

 

2.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average shareholders' equity-GAAP basis3

 

9.73

 

 

 

5.96

 

 

 

11.06

 

 

 

7.29

 

 

 

10.76

 

 

 

7.82

 

 

 

11.39

 

Return on average tangible common equity-GAAP basis3,4

 

13.01

 

 

 

8.02

 

 

 

14.29

 

 

 

9.56

 

 

 

13.88

 

 

 

10.46

 

 

 

14.73

 

Adjusted return on average tangible common equity1,3,4

 

13.97

 

 

 

10.01

 

 

 

14.11

 

 

 

11.72

 

 

 

14.27

 

 

 

11.95

 

 

 

15.12

 

Efficiency ratio5

 

56.22

 

 

 

62.33

 

 

 

53.70

 

 

 

59.55

 

 

 

54.93

 

 

 

59.17

 

 

 

54.05

 

Adjusted efficiency ratio1

 

53.15

 

 

 

54.86

 

 

 

53.43

 

 

 

51.50

 

 

 

53.49

 

 

 

53.97

 

 

 

52.72

 

Noninterest income to total revenue (excluding securities gains/losses)

 

17.45

 

 

 

17.14

 

 

 

20.89

 

 

 

21.09

 

 

 

18.94

 

 

 

17.30

 

 

 

20.03

 

Tangible common equity to tangible assets4

 

9.74

 

 

 

9.89

 

 

 

11.09

 

 

 

10.62

 

 

 

10.43

 

 

 

9.74

 

 

 

10.43

 

Average loan-to-deposit ratio

 

70.60

 

 

 

71.25

 

 

 

70.29

 

 

 

69.97

 

 

 

74.13

 

 

 

70.92

 

 

 

77.62

 

End of period loan-to-deposit ratio

 

71.34

 

 

 

70.01

 

 

 

73.84

 

 

 

71.46

 

 

 

69.93

 

 

 

71.34

 

 

 

69.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income diluted-GAAP basis

$

0.53

 

 

$

0.33

 

 

$

0.62

 

 

$

0.40

 

 

$

0.56

 

 

$

0.86

 

 

$

1.17

 

Net income basic-GAAP basis

 

0.53

 

 

 

0.34

 

 

 

0.62

 

 

 

0.40

 

 

 

0.57

 

 

 

0.87

 

 

 

1.18

 

Adjusted earnings1

 

0.59

 

 

 

0.44

 

 

 

0.62

 

 

 

0.51

 

 

 

0.59

 

 

 

1.03

 

 

 

1.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share common

 

21.65

 

 

 

22.15

 

 

 

22.40

 

 

 

22.12

 

 

 

21.33

 

 

 

21.65

 

 

 

21.33

 

Tangible book value per share

 

16.66

 

 

 

17.12

 

 

 

17.84

 

 

 

17.52

 

 

 

17.08

 

 

 

16.66

 

 

 

17.08

 

Cash dividends declared

 

0.17

 

 

 

0.13

 

 

 

0.13

 

 

 

0.13

 

 

 

0.13

 

 

 

0.30

 

 

 

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 and losses).


CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

 

 

 

 

 

 

 

Quarterly Trends

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands, except per share data)

2Q'22

 

1Q'22

 

4Q'21

 

3Q'21

 

2Q'21

 

2Q'22

 

2Q'21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

$

12,387

 

 

$

10,041

 

 

$

8,574

 

 

$

7,775

 

 

$

6,559

 

 

$

22,428

 

 

$

12,857

 

Nontaxable

 

138

 

 

 

140

 

 

 

139

 

 

 

143

 

 

 

147

 

 

 

278

 

 

 

295

 

Fees on PPP loans

 

676

 

 

 

1,373

 

 

 

3,011

 

 

 

5,218

 

 

 

3,877

 

 

 

2,049

 

 

 

9,267

 

Interest on PPP loans

 

65

 

 

 

150

 

 

 

341

 

 

 

699

 

 

 

1,251

 

 

 

215

 

 

 

2,747

 

Interest and fees on loans - excluding PPP loans

 

68,566

 

 

 

65,595

 

 

 

61,049

 

 

 

58,507

 

 

 

55,220

 

 

 

134,161

 

 

 

110,632

 

Interest on federal funds sold and other investments

 

1,917

 

 

 

933

 

 

 

828

 

 

 

867

 

 

 

709

 

 

 

2,850

 

 

 

1,295

 

Total Interest Income

 

83,749

 

 

 

78,232

 

 

 

73,942

 

 

 

73,209

 

 

 

67,763

 

 

 

161,981

 

 

 

137,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

994

 

 

 

767

 

 

 

711

 

 

 

849

 

 

 

980

 

 

 

1,761

 

 

 

2,045

 

Interest on time certificates

 

436

 

 

 

468

 

 

 

494

 

 

 

583

 

 

 

524

 

 

 

904

 

 

 

1,711

 

Interest on borrowed money

 

672

 

 

 

475

 

 

 

448

 

 

 

453

 

 

 

457

 

 

 

1,147

 

 

 

925

 

Total Interest Expense

 

2,102

 

 

 

1,710

 

 

 

1,653

 

 

 

1,885

 

 

 

1,961

 

 

 

3,812

 

 

 

4,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

81,647

 

 

 

76,522

 

 

 

72,289

 

 

 

71,324

 

 

 

65,802

 

 

 

158,169

 

 

 

132,412

 

Provision for credit losses

 

822

 

 

 

6,556

 

 

 

(3,942

)

 

 

5,091

 

 

 

(4,855

)

 

 

7,378

 

 

 

(10,570

)

Net Interest Income After Provision for Credit Losses

 

80,825

 

 

 

69,966

 

 

 

76,231

 

 

 

66,233

 

 

 

70,657

 

 

 

150,791

 

 

 

142,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

3,408

 

 

 

2,801

 

 

 

2,606

 

 

 

2,495

 

 

 

2,338

 

 

 

6,209

 

 

 

4,676

 

Interchange income

 

4,255

 

 

 

4,128

 

 

 

4,135

 

 

 

4,131

 

 

 

4,145

 

 

 

8,383

 

 

 

7,965

 

Wealth management income

 

2,774

 

 

 

2,659

 

 

 

2,356

 

 

 

2,562

 

 

 

2,387

 

 

 

5,433

 

 

 

4,710

 

Mortgage banking fees

 

932

 

 

 

1,686

 

 

 

2,030

 

 

 

2,550

 

 

 

2,977

 

 

 

2,618

 

 

 

7,202

 

Marine finance fees

 

312

 

 

 

191

 

 

 

147

 

 

 

152

 

 

 

177

 

 

 

503

 

 

 

366

 

SBA gains

 

473

 

 

 

156

 

 

 

200

 

 

 

812

 

 

 

232

 

 

 

629

 

 

 

519

 

BOLI income

 

1,349

 

 

 

1,334

 

 

 

1,295

 

 

 

1,128

 

 

 

872

 

 

 

2,683

 

 

 

1,731

 

Other

 

3,761

 

 

 

2,870

 

 

 

6,316

 

 

 

5,228

 

 

 

2,249

 

 

 

6,631

 

 

 

5,993

 

 

 

17,264

 

 

 

15,825

 

 

 

19,085

 

 

 

19,058