Seacoast Reports Third Quarter 2021 Results

·33 min read

Strong Quarter for Commercial Loan Originations and Pipeline Generation

Tangible Book Value Per Share Expands to $17.52, Up 13% from the Prior Year

STUART, Fla., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") (NASDAQ: SBCF) today reported net income in the third quarter of 2021 of $22.9 million, or $0.40 per diluted share, which includes merger related costs associated with acquisition activity during the quarter and an increase in the provision for loan losses associated with onboarding Legacy Bank of Florida. Third quarter 2021 results represent a decrease of 27% compared to the second quarter of 2021, and an increase of 1% compared to the third quarter of 2020. Adjusted net income1 for the third quarter of 2021 was $29.4 million, or $0.51 per diluted share, which includes an increase in the provision for loan losses associated with onboarding Legacy Bank of Florida. Third quarter 2021 adjusted results represent a decrease of 12% compared to the second quarter of 2021, and an increase of 7% compared to the third quarter of 2020. The ratio of tangible common equity to tangible assets was 10.62%, tangible book value per share increased to $17.52 and Tier 1 capital was 17.7%.

For the third quarter of 2021, return on average tangible assets was 1.00%, return on average tangible shareholders' equity was 9.56%, and the efficiency ratio was 59.55%, compared to 1.48%, 13.88%, and 54.93%, respectively, in the prior quarter, and 1.20%, 11.35%, and 61.65%, respectively, in the prior year quarter. Adjusted return on average tangible assets1 in the third quarter of 2021 was 1.23%, adjusted return on average tangible shareholders' equity1 was 11.72%, and the adjusted efficiency ratio1 was 51.50%, compared to 1.52%, 14.27%, and 53.49%, respectively, in the prior quarter, and 1.38%, 13.06%, and 54.82%, respectively, in the prior year quarter.

Charles M. Shaffer, Seacoast's President and CEO, said, “The Seacoast team delivered another impressive quarter, resulting in 13% year-over-year growth in tangible book value per share, ending the period at $17.52, despite the noise of acquisition related activity during the quarter. Additionally, pre-tax pre-provision adjusted earnings1 improved to a record $43.9 million, up from $37.8 million in the preceding quarter. We continue to see economic expansion in our markets and increasing demand for credit. With our recent investments in commercial banking leadership and technology, we are capitalizing on this growth, as evidenced in our growth in loan originations, increasing loan pipelines, new bankers, and solid recruiting pipelines. Additionally, growth in fee income quarter over quarter included new records in wealth management and Small Business Administration fees.”

Mr. Shaffer further commented, “I am also excited to welcome the Legacy Bank of Florida team and their customers to the Seacoast franchise. The team’s deep experience and extensive relationships in the important South Florida market provide a tremendous opportunity for growth in the coming periods. I am proud of both the Seacoast and Legacy teams’ effort to successfully integrate the bank while accelerating growth through the closing of the acquisition.”

Acquisition of Legacy Bank of Florida

In August 2021, the Company completed the acquisition of Legacy Bank of Florida (“Legacy Bank”), which added $477 million in loans, including $39 million in Paycheck Protection Program (“PPP”) loans, and $495 million in deposits. The acquisition strengthens the Company’s position in South Florida, one of the strongest and fastest growing markets in the country, and complements prior acquisitions in the market. Consolidation activities and related expenses are substantially complete.

Pending Acquisitions of Sabal Palm Bancorp, Inc. and Business Bank of Florida Corporation

During the third quarter, the Company announced the proposed acquisitions of Sabal Palm Bancorp, Inc., and Business Bank of Florida Corporation. The proposed transactions, which are expected to close in early 2022, will provide an entry into the desirable Sarasota market and deepen the Company’s presence in Brevard County. Sabal Palm Bank operates three branches across the Sarasota market with deposits of approximately $377 million and loans of $272 million as of June 30, 2021. Florida Business Bank, the banking subsidiary of Business Bank of Florida Corporation, operates with one branch in Melbourne with deposits of approximately $166 million and loans of $136 million as of the same period. In total, the two transactions will add approximately $600 million in assets. The transactions in aggregate are expected to be 4% accretive to earnings per share in 2023, the first full year of combined operations, with limited tangible book value dilution.

Financial Results

Income Statement

  • Net income was $22.9 million, or $0.40 per diluted share for the third quarter of 2021, which includes merger related costs associated with acquisition activity during the quarter, and an increase in the provision for loan losses associated with onboarding Legacy Bank of Florida. This compares to $31.4 million, or $0.56, for the prior quarter, and $22.6 million, or $0.42, for the prior year quarter. For the nine months ended September 30, 2021, net income was $88.1 million, or $1.56 per diluted share, compared to $48.4 million, or $0.91, for the nine months ended September 30, 2020. Adjusted net income1 was $29.4 million, or $0.51 per diluted share, which includes an increase in the provision for loan losses associated with onboarding Legacy Bank of Florida. This compares to $33.3 million, or $0.59, for the prior quarter, and $27.3 million, or $0.50, for the prior year quarter. For the nine months ended September 30, 2021, adjusted net income1 was $98.1 million, or $1.74 per diluted share, compared to $58.3 million, or $1.09, for the nine months ended September 30, 2020.

  • Pre-tax pre-provision adjusted earnings1 were $43.9 million in the third quarter of 2021, an increase of $6.1 million, or 16%, compared to the prior quarter, and an increase of $7.5 million, or 21%, compared to the prior year quarter. For the nine months ended September 30, 2021, pre-tax pre-provision adjusted earnings1 were $122.3 million, an increase of $8.8 million, or 8%, compared to the nine months ended September 30, 2020.

  • Net revenues were $90.4 million in the third quarter of 2021, an increase of $9.2 million, or 11%, compared to the prior quarter, and an increase of $9.9 million, or 12%, compared to the prior year quarter. For the nine months ended September 30, 2021, net revenues were $255.8 million, an increase of $15.2 million, or 6%, compared to the nine months ended September 30, 2020. Adjusted revenues1 were $90.4 million in the third quarter of 2021, an increase of $9.2 million, or 11%, from the prior quarter, and an increase of $9.9 million, or 12.4%, compared to the prior year quarter. For the nine months ended September 30, 2021, net revenues were $256.0 million, an increase of $16.6 million, or 7%, compared to the nine months ended September 30, 2020.

  • Net interest income totaled $71.3 million in the third quarter of 2021, an increase of $5.5 million, or 8%, from the prior quarter, with increases including the addition of loans from the Legacy Bank acquisition, and higher recognition of fees from an increase in forgiveness of PPP loans. For the nine months ended September 30, 2021, net interest income was $203.7 million, an increase of $9.8 million, or 5%, compared to the nine months ended September 30, 2020. As of September 30, 2021, remaining deferred fees on PPP loans total $5.4 million, which will be recognized over the loans' remaining contractual maturity or earlier, as loans are forgiven.

  • Net interest margin declined from 3.23% in the second quarter of 2021 to 3.22% in the third quarter of 2021, with continued high levels of liquidity and low interest rates. The excess liquidity has been partially deployed into purchases of securities and loans, with $451.1 million in securities purchases with a weighted average yield of 1.42% and $197.9 million in loan pool purchases with a weighted average yield of 2.68%. Securities yields declined by only four basis points to 1.59% in the third quarter of 2021, with lower rates partially offset by a $0.4 million (eight basis point) benefit from a contractual yield maintenance provision. Non-PPP loan yields declined seven basis points to 4.29% during the third quarter of 2021. Offsetting and favorable was the decline in the cost of interest bearing liabilities from 16 basis points to 14 basis points, which includes a decline in the cost of deposits from eight basis points in the second quarter of 2021 to seven basis points in the third quarter of 2021. The effect on net interest margin of accretion of purchase discounts on acquired loans was an increase of 15 basis points in the third quarter compared to an increase of 14 basis points in the prior quarter. The effect on net interest margin of interest and fees on PPP loans was an increase of 18 basis points in the third quarter compared to an increase of six basis points in the prior quarter.

  • Noninterest income totaled $19.0 million in the third quarter of 2021, an increase of $3.7 million, or 24%, compared to the prior quarter, and an increase of $2.1 million, or 12%, compared to the prior year quarter. For the nine months ended September 30, 2021, noninterest income was $52.0 million, an increase of $5.4 million, or 12%, compared to the nine months ended September 30, 2020. Results for the third quarter of 2021 included the following:

    • Interchange revenue was flat compared to the prior quarter at $4.1 million, reflecting stable transactional volume despite the impact of the COVID-19 delta variant on spending early in the quarter. Economic conditions in Florida remain strong, and indications of consumer confidence are high.

    • Wealth management income increased to a record $2.6 million in the third quarter, compared to $2.4 million in the second quarter of 2021. With total assets under management of $1.2 billion, the wealth management team continues to successfully win business with commercial relationships and high net worth families across the Company’s footprint.

    • Mortgage banking fees were $2.5 million, compared to $3.0 million in the prior quarter, due to slowing refinance activity and low housing inventory levels.

    • SBA gains were a record $0.8 million, compared to $0.2 million in the prior quarter, reflecting a renewed focus on saleable lending activity as PPP activity winds down.

    • The Company acquired $25 million in BOLI late in the second quarter of 2021, and $9.1 million in BOLI from Legacy Bank, contributing to an increase of $0.3 million in related income during the quarter. Late in the third quarter, the Company purchased an additional $25.0 million in BOLI.

    • Other income increased by $3.0 million in the third quarter of 2021, attributed to gains on an SBIC investment during the quarter. These gains resulted from the liquidation of an investment made by the fund. The amounts recognized on SBIC investments will vary and are not expected to occur on a routine basis.

  • The provision for credit losses was $5.1 million in the third quarter of 2021, an increase of $9.9 million when compared to the reversal of provision of $4.9 million in the prior quarter. The increase during the quarter reflects the impact of higher loans outstanding, including loans acquired in the Legacy Bank acquisition.

  • Noninterest expense was $55.3 million in the third quarter of 2021, an increase of $9.5 million, or 21%, compared to the prior quarter, and an increase of $3.6 million, or 7%, compared to the prior year quarter. For the nine months ended September 30, 2021, noninterest expense was $147.2 million, an increase of $5.3 million, or 4%, compared to the nine months ended September 30, 2020. Changes from the second quarter of 2021 consisted of the following:

    • Salaries and wages increased $5.0 million to $27.9 million, which includes $2.6 million in merger-related expenses, as well as increases relating to the addition of the Legacy Bank branch franchise, and increases resulting from investments in commercial banking talent.

    • Outsourced data processing increased by $0.9 million, with the increase wholly attributable to the impact of merger-related costs.

    • Occupancy and furniture and equipment costs increased collectively by $0.6 million, including costs associated with the addition of the Legacy Bank branch franchise and acquisition-related equipment disposals.

    • Legal and professional fees increased by $2.0 million, including an increase of $1.5 million in merger-related expenses, and other increases primarily supporting technology initiatives.

  • Seacoast recorded $7.0 million of income tax expense in the third quarter of 2021, compared to $8.8 million in the prior quarter and $7.0 million in the third quarter of 2020. A tax benefit related to stock-based compensation totaled $0.3 million in the third quarter of 2021, compared to a tax benefit of $0.6 million in the second quarter of 2021. The impact of stock-based compensation was nominal in the third quarter of 2020.

  • The ratio of net adjusted noninterest expense1 to average tangible assets was 1.95% in the third quarter of 2021, compared to 1.98% in the prior quarter and 2.24% in the third quarter of 2020.

  • The efficiency ratio was 59.55% compared to 54.93% in the prior quarter and 61.65% in the prior year quarter. The increase from the prior quarter reflects higher net interest income and higher non-interest income, which were more than offset by the impact of higher expenses, primarily resulting from the Legacy Bank acquisition during the third quarter of 2021. The adjusted efficiency ratio1 was 51.50% compared to 53.49% in the prior quarter and 54.82% in the prior year quarter. Without the positive impact of the SBIC investment gain, the adjusted efficiency ratio would have been 53.27% in the third quarter of 2021. The Company remains committed to efficiency through disciplined, proactive management of its cost structure.

Balance Sheet

  • At September 30, 2021, the Company had total assets of $9.9 billion and total shareholders' equity of $1.3 billion. Book value per share increased to $22.12 on September 30, 2021 from $21.33 on June 30, 2021, and $19.91 on September 30, 2020. Tangible book value per share of $17.52 on September 30, 2021 increased 13% compared to September 30, 2020.

  • Debt securities totaled $2.1 billion on September 30, 2021, an increase of $256.4 million, or 14%, compared to June 30, 2021. Purchases during the quarter consisted of agency-issued collateralized mortgage obligations and collateralized lending obligations with an average yield of 1.42% and a duration of 3.0 years. The Company continues to take a prudent and disciplined approach to reinvesting liquidity.

  • Loans totaled $5.9 billion on September 30, 2021, an increase of $476.8 million, or 9%, compared to June 30, 2021, inclusive of PPP loans, which declined $173.5 million during the quarter. Growth in loans includes $438.6 million of non-PPP loans acquired from Legacy Bank, and an additional $26 million in commercial categories.

  • Loan originations, excluding PPP, were $744.0 million in the third quarter of 2021, compared to $495.0 million in the second quarter of 2021, an increase of 50%.

    • Commercial originations, excluding PPP, were $331.6 million during the third quarter of 2021, compared to $193.0 million in the second quarter of 2021 and $88.2 million in the third quarter of 2020. Recent investments in commercial banking talent contributed to the increase in production. During the quarter, the Company also purchased a $17.1 million single-tenant commercial real estate portfolio from a seller well known to Seacoast. The portfolio is comprised of loans made to high-quality borrowers on stabilized properties with credit tenant leases. The Company fully underwrote the loan portfolio prior to executing the transaction. The portfolio is comprised of loans with an average yield of 3.27%, made to high-quality borrowers on stabilized properties with credit tenant leases.

    • Consumer originations in the third quarter of 2021 increased to $66.4 million from $63.7 million in the second quarter of 2021, and $62.3 million in the third quarter of 2020.

    • Residential loans originated for sale in the secondary market totaled $95.1 million in the third quarter of 2021, compared to $120.1 million in the second quarter of 2021, and $162.5 million in the third quarter of 2020. While we expect to continue to see the benefit of the inflow of new residents and businesses into Florida, refinance activity has slowed and housing inventory remains low.

    • Closed residential loans retained in the portfolio totaled $250.8 million in the third quarter of 2021, compared to $118.1 million in the second quarter of 2021, and $25.4 million in the third quarter of 2020. As an alternative to purchasing lower yielding bonds in the investment portfolio, the Company purchased $180.8 million in high-quality residential home mortgage loans during the quarter with an average yield of 2.62%.

  • Pipelines (loans in underwriting and approval or approved and not yet closed) totaled $478.1 million on September 30, 2021, an increase of 2% from June 30, 2021 and an increase of 5% from September 30, 2020.

    • Commercial pipelines were $368.9 million as of September 30, 2021, an increase of 15% from $322.0 million at June 30, 2021 and an increase of 44% from $256.2 million at September 30, 2020. We expect commercial production and pipelines to continue to grow, including as the result of success in recruiting high quality commercial bankers to the franchise in recent quarters.

    • Consumer pipelines were $31.0 million as of September 30, 2021, compared to $31.7 million at June 30, 2021 and $17.1 million at September 30, 2020.

    • Residential saleable pipelines were $42.8 million as of September 30, 2021, compared to $60.6 million at June 30, 2021 and $149.9 million at September 30, 2020. Retained residential pipelines were $35.4 million as of September 30, 2021, compared to $54.1 million at June 30, 2021 and $33.4 million at September 30, 2020.

  • Total deposits were $8.3 billion as of September 30, 2021, an increase of $497.7 million, or 6%, compared to June 30, 2021.

    • Deposits added through the acquisition of Legacy Bank totaled $494.9 million, driving the increase quarter-over-quarter. Excluding the impact of the acquisition and deposits held off balance sheet, deposits grew 5.5% on an annualized basis.

    • The Company manages excess liquidity on the balance sheet through participation in programs with third-party deposit networks. Through these programs, the Company can offer its customers access to FDIC insurance on large balances with attractive terms, and the Company can retain or sell, on an overnight basis, the underlying deposits. At September 30, 2021, the Company had sold, on an overnight basis, $233 million in deposits compared to $116 million at June 30, 2021. These deposits are not included in the consolidated balance sheet.

    • The overall cost of deposits declined to seven basis points in the third quarter of 2021 from eight basis points in the prior quarter.

    • Total transaction account balances increased $215.6 million, or 5%, quarter-over-quarter, and at September 30, 2021 represent 59% of overall deposit funding. The increase includes $150.7 million from Legacy Bank.

    • Interest-bearing deposits (interest-bearing demand, savings, and money market deposits) increased $248.5 million, or 6%, quarter-over-quarter to $4.6 billion, noninterest-bearing demand deposits increased $134.3 million, or 5%, to $3.1 billion, and CDs (excluding brokered) increased $114.9 million, or 24%, to $596.6 million. Increases from Legacy Bank include $189.1 million in interest-bearing deposits, $150.7 million in noninterest-bearing demand deposits, and $154.8 million in CDs.

    • As of September 30, 2021, deposits per banking center were $165 million, compared to $138 million on September 30, 2020. The acquisition of Legacy Bank and the consolidation of one existing branch location added a net of four new branch locations during the third quarter of 2021.

Asset Quality

  • Nonperforming loans decreased by $0.3 million to $32.6 million at September 30, 2021. Nonperforming loans to total loans outstanding were 0.55% at September 30, 2021, 0.61% at June 30, 2021, and 0.63% at September 30, 2020.

  • Nonperforming assets to total assets were 0.47% at September 30, 2021, 0.49% at June 30, 2021, and 0.64% at September 30, 2020.

  • The ratio of allowance for credit losses to total loans was 1.49% at September 30, 2021, 1.49% at June 30, 2021, and 1.60% at September 30, 2020. Excluding PPP loans, the ratio of allowance for credit losses to total loans at September 30, 2021, was 1.54%, compared to 1.60% at June 30, 2021 and 1.80% at September 30, 2020. The decline in coverage reflects continued improvement in the economic outlook.

  • Net charge-offs were $1.4 million, or 0.10%, of average loans for the third quarter of 2021 compared to $0.7 million, or 0.05%, of average loans in the second quarter of 2021 and $1.7 million, or 0.12%, of average loans in the third quarter of 2020. Net charge-offs for the four most recent quarters averaged 0.10%.

  • 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. Excluding PPP loans, Seacoast's average commercial loan size is $457 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 21% and 175% of total bank-level risk-based capital, respectively, compared to 24% and 164% respectively, in the second quarter of 2021. On a consolidated basis, construction and land development and commercial real estate loans represent 19% and 160%, respectively, of total consolidated risk-based capital.

Capital and Liquidity

  • The tier 1 capital ratio decreased to 17.7% from 18.3% at September 30, 2021, and 16.8% at September 30, 2020. The total capital ratio was 18.6% and the tier 1 leverage ratio was 11.7% at September 30, 2021.

  • Cash and cash equivalents at September 30, 2021 totaled $1.2 billion, a decrease of $221.2 million, or 15%, from June 30, 2021, reflecting the impact of securities purchases, loan pool purchases and other cash management strategies.

  • Tangible common equity to tangible assets was 10.62% at September 30, 2021, compared to 10.43% at June 30, 2021 and 10.67% at September 30, 2020.

  • At September 30, 2021, the Company had available unsecured lines of credit of $165.0 million and lines of credit under lendable collateral value of $1.3 billion. Additionally, $1.7 billion of debt securities and $694.6 million of residential and commercial real estate loans are available as collateral for potential borrowings.

FINANCIAL HIGHLIGHTS

(Amounts in thousands except per share data)

(Unaudited)

Quarterly Trends

3Q'21

2Q'21

1Q'21

4Q'20

3Q'20

Selected Balance Sheet Data:

Total Assets

$

9,893,498

$

9,316,833

$

8,811,820

$

8,342,392

$

8,287,840

Gross Loans

5,905,884

5,437,049

5,661,492

5,735,349

5,858,029

Total Deposits

8,334,172

7,836,436

7,385,749

6,932,561

6,914,843

Performance Measures:

Net Income

$

22,944

$

31,410

$

33,719

$

29,347

$

22,628

Net Interest Margin

3.22

%

3.23

%

3.51

%

3.59

%

3.40

%

Average Diluted Shares Outstanding

57,645

55,901

55,992

55,739

54,301

Diluted Earnings Per Share (EPS)

$

0.40

$

0.56

$

0.60

$

0.53

$

0.42

Return on (annualized):

Average Assets (ROA)

0.93

%

1.40

%

1.61

%

1.39

%

1.11

%

Average Tangible Assets (ROTA)2

1.00

1.48

1.70

1.49

1.20

Average Tangible Common Equity (ROTCE)2

9.56

13.88

15.62

13.87

11.35

Tangible Common Equity to Tangible Assets2

10.62

10.43

10.71

11.01

10.67

Tangible Book Value Per Share2

$

17.52

$

17.08

$

16.62

$

16.16

$

15.57

Efficiency Ratio

59.55

%

54.93

%

53.21

%

48.23

%

61.65

%

Adjusted Operating Measures1:

Adjusted Net Income

$

29,350

$

33,251

$

35,497

$

30,700

$

27,336

Adjusted Diluted EPS

0.51

0.59

0.63

0.55

0.50

Adjusted ROTA2

1.23

%

1.52

%

1.75

%

1.50

%

1.38

%

Adjusted ROTCE2

11.72

14.27

16.01

14.00

13.06

Adjusted Efficiency Ratio

51.50

53.49

51.99

48.75

54.82

Net Adjusted Noninterest Expense as a
Percent of Average Tangible Assets2

1.95

1.98

2.16

2.00

2.24

Other Data:

Market capitalization3

$

1,972,784

$

1,893,141

$

2,003,866

$

1,626,913

$

994,690

Full-time equivalent employees

995

946

953

965

968

Number of ATMs

72

75

75

77

77

Full-service banking offices

52

48

48

51

51

Registered online users

133,977

129,568

126,352

123,615

121,620

Registered mobile devices

126,730

122,815

117,959

115,129

110,241

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.

Third Quarter Strategic Highlights

Capitalizing on Seacoast’s Early Commitment to Digital Transformation

  • The Company continues to invest in providing a best-in-class customer experience across our branch network, call center, ATMs, and digital banking. We will introduce a fully upgraded online banking and mobile experience to both consumers and businesses in the first quarter of 2022. We believe investing in a leading data analytics practice, best-in-class digital offerings, exceptional branch services, and recruiting the highest quality commercial bankers in growth markets creates a unique and very competitive value proposition for customers across Florida.

  • A large-scale initiative to upgrade all ATMs across the network through a third-party partnership is nearly complete, providing our customers with an improved ATM experience and offering even more convenience through access to the Allpoint network. Allpoint provides the world’s largest surcharge-free ATM network, granting Seacoast customers fee-free access at more than 55,000 Allpoint ATM locations, with more than 2,700 throughout Florida. Allpoint ATMs can be found at local and national retailers including Walgreens, CVS, Target, Costco and RaceTrac.

Driving Sustainable Growth and Expanding our Footprint

  • Seacoast continues to make investments to expand its footprint organically across the state, including into Northeast Florida and Naples/Ft. Myers, with key additions to its leadership and commercial banking team.

  • Brannon Fitch joined the leadership team as executive vice president and regional president for Northeast Florida to lead the bank’s strategic expansion into the region. Fitch joins Seacoast after almost two decades of executive leadership experience at BB&T, and will lead Seacoast’s strategic expansion into this important and fast growing market.

  • Additionally, Seacoast continues investing in expanding the footprint of its real estate lending division with the addition of Tim McLean as senior vice president of commercial real estate, who brings 33 years of commercial banking experience in the Naples market.

  • The Company expects to support further organic growth with the opening of two de novo branch locations, in Naples and in Plantation (Broward County), in the coming quarters.

  • Building on the recent expansion in commercial banking leadership, including the announcements in the prior quarter of James Norton, executive vice president and commercial real estate executive in Tampa, Chris Rolle, West Florida regional president, and Robert Hursh, Pinellas County market president, Seacoast has also continued building the commercial banking teams in its existing markets. This includes the addition of five commercial bankers across the franchise organically during the third quarter, and five additional bankers joining through the acquisition of Legacy Bank. These professionals all demonstrate a history of strong performance, generating growth through consistently winning new banking relationships and delivering exceptional customer experiences.

  • The Company’s recruiting pipeline is robust entering the fourth quarter. We expect to continue to make announcements regarding talent additions in the coming quarters.

Scaling and Evolving Our Culture

  • Seacoast Bank has been named among Forbes Magazine’s 2021 America’s Best-In-State Banks and Credit Unions. Seacoast has the distinction of being the only Florida-based community bank to make the list. Forbes partnered with market research firm Statista to survey nearly 25,000 people in the U.S. about their banking relationships. Banks and credit unions were rated on overall recommendations and satisfaction, consumer trust, terms and conditions, branch services, digital services, and financial advice. Only 2.7% of all banks made the list.

  • In July, Seacoast Bank was named to the Orlando Business Journal’s 2021 Best Places to Work. This recognition reflects Seacoast’s commitment to employee well-being, as well as the Company’s numerous diversity and inclusion initiatives.

OTHER INFORMATION

Conference Call Information
Seacoast will host a conference call on October 29, 2021 at 10:00 a.m. (Eastern Time) to discuss the third quarter 2021 earnings results and business trends. Investors may call in (toll-free) by dialing (800) 774-6070 (passcode: 6626 535; 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 October 29, 2021, and can be accessed via a link at www.SeacoastBanking.com under the heading “Corporate Information,” using the passcode 50236528.

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 “Corporate Information.” Beginning late afternoon on October 29, 2021, 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 $9.9 billion in assets and $8.3 billion in deposits as of September 30, 2021. The Company provides integrated financial services including commercial and retail banking, wealth management, and mortgage services to customers through advanced banking solutions, and 52 traditional branches of its locally-branded, wholly-owned subsidiary bank, Seacoast National 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.

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 Business Bank of Florida Corp. and Florida Business Bank with and into Seacoast and Seacoast Bank, respectively. Seacoast has also filed a registration statement on Form S-4 with the SEC in connection with the proposed merger of Sabal Palm Bancorp, Inc. and Sabal Palm Bank with and into Seacoast and Seacoast Bank, respectively. The registration statements in connection with the mergers include a proxy statement of Business Bank of Florida Corp. and Sabal Palm Bancorp, Inc., 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.

Business Bank of Florida Corp. and Florida Business 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 Bank. Information regarding the participants in the proxy solicitation of Business Bank of Florida Corp. 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.

Sabal Palm Bancorp, Inc. and Sabal Palm 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 Bank. Information regarding the participants in the proxy solicitation of Sabal Palm Bancorp, Inc. 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, loan growth, 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, including Legacy Bank of Florida, Florida Business Bank and Sabal Palm Bank, 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 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 and the adverse impact of COVID-19 (economic and otherwise); 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 CECL; our participation in the Paycheck Protection Program ("PPP"); 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; changing retail distribution strategies, customer preferences and behavior; 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; 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 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, 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 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.

The risks relating to the Sabal Palm Bancorp, Inc. and Business Bank of Florida Corporation proposed mergers include, without limitation: the timing to consummate the proposed mergers; the risk that a condition to closing of the proposed mergers may not be satisfied; the risk that either proposed merger is not completed at all; the diversion of management time on issues related to the proposed mergers; unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the mergers being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectation; the risk of customer and employee loss and business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures on solicitations of customers by competitors; as well as difficulties and risks inherent with entering new markets.

Actual results and capital and other financial conditions may differ materially from those included in these statements due to a variety of factors. These factors include, among others described above, macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, such as the duration and severity of the impact on public health, the U.S. and global economies, financial markets and consumer and corporate customers and clients, including economic activity and employment, as well as the various actions taken in response by governments, central banks and others, including Seacoast, and the precautionary statements included in this release.

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, 2020 and quarterly report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 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.


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'21

2Q'21

1Q'21

4Q'20

3Q'20

3Q'21

3Q'20

Summary of Earnings

Net income

$

22,944

$

31,410

$

33,719

$

29,347

$

22,628

$

88,073

$

48,417

Adjusted net income1

29,350

33,251

35,497

30,700

27,336

98,098

58,250

Net interest income2

71,455

65,933

66,741

68,903

63,621

204,129

194,300

Net interest margin2,3

3.22

%

3.23

%

3.51

%

3.59

%

3.40

%

3.32

%

3.67

%

Performance Ratios

Return on average assets-GAAP basis3

0.93

%

1.40

%

1.61

%

1.39

%

1.11

%

1.29

%

0.84

%

Return on average tangible assets-GAAP basis3,4

1.00

1.48

1.70

1.49

1.20

1.37

0.93

Adjusted return on average tangible assets1,3,4

1.23

1.52

1.75

1.50

1.38

1.48

1.04

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

1.95

1.98

2.16

2.00

2.24

2.03

2.26

Return on average shareholders' equity-GAAP basis3

7.29

10.76

12.03

10.51

8.48

9.93

6.32

Return on average tangible common equity-GAAP basis3,4

9.56

13.88

15.62

13.87

11.35

12.89

8.71

Adjusted return on average tangible common equity1,3,4

11.72

14.27

16.01

14.00

13.06

13.91

9.80

Efficiency ratio5

59.55

54.93

53.21

48.23

61.65

55.99

57.15

Adjusted efficiency ratio1

51.50

53.49

51.99

48.75

54.82

52.29

52.64

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

21.09

18.94

21.07

17.85

21.06

20.40

18.96

Tangible common equity to tangible assets4

10.62

10.43

10.71

11.01

10.67

10.62

10.67

Average loan-to-deposit ratio

69.97

74.13

81.39

84.48

87.83

74.86

89.60

End of period loan-to-deposit ratio

71.46

69.93

77.48

83.72

85.77

71.46

85.77

Per Share Data

Net income diluted-GAAP basis

$

0.40

$

0.56

$

0.60

$

0.53

$

0.42

$

1.56

$

0.91

Net income basic-GAAP basis

0.40

0.57

0.61

0.53

0.42

1.57

0.91

Adjusted earnings1

0.51

0.59

0.63

0.55

0.50

1.74

1.09

Book value per share common

22.12

21.33

20.89

20.46

19.91

22.12

19.91

Tangible book value per share

17.52

17.08

16.62

16.16

15.57

17.52

15.57

Cash dividends declared

0.13

0.13

0.26

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

Nine Months Ended

(Amounts in thousands, except per share data)

3Q'21

2Q'21

1Q'21

4Q'20

3Q'20

3Q'21

3Q'20

Interest on securities:

Taxable

$

7,775

$

6,559

$

6,298

$

6,477

$

6,972

$

20,632

$

23,241

Nontaxable

143

147

148

86

125

438

368

Fees on PPP loans

5,218

3,877

5,390

3,603

161

14,485

4,171

Interest on PPP loans

699

1,251

1,496

1,585

1,558

3,446

2,616

Interest and fees on loans - excluding PPP loans

58,507

55,220

55,412

60,407

58,768

169,139

181,984

Interest on federal funds sold and other investments

867

709

586

523

556

2,162

1,974

Total Interest Income

73,209

67,763

69,330

72,681

68,140

210,302

214,354

Interest on deposits

849

980

1,065

1,228

1,299

2,894

5,692

Interest on time certificates

583

524

1,187

2,104

2,673

2,294

11,261

Interest on borrowed money

453

457

468

558

665

1,378

3,449

Total Interest Expense

1,885

1,961

2,720

3,890

4,637

6,566

20,402

Net Interest Income

71,324

65,802

66,610

68,791

63,503

203,736

193,952

Provision for credit losses

5,091

(4,855

)

(5,715

)

1,900

(845

)

(5,479

)

36,279

Net Interest Income After Provision for Credit Losses

66,233

70,657

72,325

66,891

64,348

209,215

157,673

Noninterest income:

Service charges on deposit accounts

2,495

2,338

2,338

2,423

2,242

7,171

7,006

Interchange income

4,131

4,145

3,820

3,596

3,682

12,096

10,115

Wealth management income

2,562

2,387

2,323

1,949

1,972

7,272

5,558

Mortgage banking fees

2,550

2,977

4,225

3,646

5,283

9,752

11,050

Marine finance fees

152

177

189

145

242

518

545

SBA gains

812

232

287

113

252

1,331

572

BOLI income

1,128

872

859

889

899

2,859

2,672

Other

5,228

2,249

3,744

2,187

2,370

11,221

7,869

19,058

15,377

17,785

14,948

16,942

52,220

45,387

Securities (losses) gains, net

(30

)

(55

)

(114

)

(18

)

4

(199

)

1,253

Total Noninterest Income

19,028

15,322

17,671

14,930

16,946

52,021

46,640

Noninterest expenses:

Salaries and wages

27,919

22,966

21,393

21,490

23,125

72,278

67,049

Employee benefits

4,177

3,953

4,980

3,915

3,995

13,110

11,629

Outsourced data processing costs

5,610

4,676

4,468

4,233

6,128

14,754

14,820

Telephone / data lines

810

838

785

774

705

2,433

2,210

Occupancy

3,541

3,310

3,789

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