EXHIBIT 99.3
To Form 8-K dated July 27, 2009
Seacoast Banking Corporation of Florida
Second Quarter 2009
Cautionary Notice Regarding Forward-Looking Statements
This discussion and analysis may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls and for integration of banks that we have acquired, as well as statements with respect to Seacoast’s objectives, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.
Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of Seacoast to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements.
You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support”, “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further”, “point to,” “project,” “could,” “intend” or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the effects of future economic and market conditions, including seasonality; governmental monetary and fiscal policies, as well as legislative, tax and regulatory changes; changes in accounting policies, rules and practices; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest sensitive assets and liabilities; interest rate risks, sensitivities and the shape of the yield curve; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; and the failure of assumptions underlying the establishment of reserves for possible loan losses. The risks of mergers and acquisitions, include, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers by competitors; as well as the difficulties and risks inherent with entering new markets.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2008 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 Seacoast, or from the Securities and Exchange Commission, including through the SEC’s Internet website athttp://www.sec.gov.
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Highlights
• | Margin improvement of 21 basis points to 3.65%. |
• | Solid capital position; S-1 filed for future capital needs. |
• | GAAP EPS loss of $0.74 for quarter reflects stressed economic and credit environment. |
• | Liquidity remains strong with low cost core funding from deposits and sweep repos. |
• | Cost of deposits declined 39 basis points to 1.40%; total interest bearing liabilities down 40 basis points to 1.65%. |
• | The impact of asset quality deterioration on revenue was offset with better deposit mix and growth in low cost deposits. |
• | Focus remains on core deposit growth, risk mitigation and expense management. |
• | Expenses well managed; core operating expenses are declining; however credit related expenses continue to impact results. |
Funding & Liquidity
Stable Funding Profile and Very Strong Liquidity Position
Funding • | Deposits and sweep repo base - - Customer deposits and sweep repos of $1.809 billion (1) — Customer deposits and sweep repos compose 92% of total funding (2) — Can issue up to $40 million of FDIC – guaranteed bank notes | |
Liquidity | ||
• | Daily overnight borrowing position maintained at zero since year-end |
• | Combined available contingent liquidity from the Federal Reserve, FHLB, and free securities approximately $700 million |
(1) | Excludes brokered deposits; but includes Certificate of Deposit Account Registry Service (CDARS) deposits |
(2) | Total funding includes customer deposits, broker deposits, sweep repos, borrowed funds and subordinated debt. |
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Capital Ratios
Completed Sale of $50 million in Preferred Securities to U.S. Treasury
2Q-2009 | 1Q-2009 | 4Q-2008 | 3Q-2008 | |||||||||||||
Estimate | Actual | Actual | Actual | |||||||||||||
Tier 1 Capital Ratio | 11.83 | % | 12.72 | % | 12.75 | % | 9.90 | % | ||||||||
Total Capital Ratio | 13.41 | % | 14.00 | % | 14.01 | % | 11.69 | % | ||||||||
Total Average Equity to Total Average Assets | 9.40% | 9.45% | 8.68% | 8.43% | ||||||||||||
Tangible Equity to Tangible Assets | 6.75 | % | 7.05 | % | 7.12 | % | 5.94 | % | ||||||||
Tangible Common Equity to Tangible Assets | 4.66% | 5.09% | 5.18% | 5.94% | ||||||||||||
Tangible Common Equity to Risk Weighted Assets | 6.29% | 7.08% | 7.08% | 7.47% |
Received $50 million in proceeds and Tier 1 capital from sale of preferred securities to U.S. Treasury on December 22, 2008.
Noninterest Expense
Controllable Expenses Well Managed
($ in thousands) | 2Q 2009 | 1Q 2009 | ||||||||||||||||||
2Q–2009 | 1Q–2009 | 4Q–2008 | vs 1Q 2009 | vs 4Q 2008 | ||||||||||||||||
Noninterest Expenses | $ | 20,348 | $ | 19,109 | $ | 20,390 | 6.48 | % | -6.28 | % | ||||||||||
Nonrecurring: | ||||||||||||||||||||
Severance | 152 | 242 | — | |||||||||||||||||
Special Assessment FDIC | 996 | — | — | |||||||||||||||||
Consulting fees | 85 | — | 445 | |||||||||||||||||
Reversal of Incentive | — | (281 | ) | — | ||||||||||||||||
Legal settlement | 150 | 39 | 118 | |||||||||||||||||
Branch closures | 32 | 107 | 206 | |||||||||||||||||
Other | — | 57 | — | |||||||||||||||||
Professional Fees | — | — | 130 | |||||||||||||||||
Total nonrecurring expenses | $ | 1,415 | $ | 164 | $ | 899 | ||||||||||||||
Adjusted Noninterest Expense | $ | 18,933 | $ | 18,945 | $ | 19,491 | -0.06 | % | -2.80 | % | ||||||||||
Credit Costs(1) | 1,449 | 967 | 1,030 | |||||||||||||||||
Controllable Expenses | $ | 17,484 | $ | 17,987 | $ | 18,461 | -2.75 | % | -2.62 | % |
(1) Includes credit, collections and other real estate expenses
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Net Interest Margin
Margin Expanded in 2Q Driven by Deposit Mix and Pricing
(Dollars in thousands) | Q2-08 | Q3-08 | Q4-08 | Q1-09 | Q2-09 | |||||||||||||||
Net Interest Margin | 3.69 | % | 3.57 | % | 3.32 | % | 3.44 | % | 3.65 | % |
• | 2Q margin expansion driven primarily by improved deposit pricing and funding mix, with increased core deposits and decreased broker deposits. |
• | Focus on deposit and loan pricing benefited margin and offset continuing compression associated with rising NPA’s and sluggish loan demand. |
• | Based on current assumptions, margin expected to be relatively stable for the remainder of the year with some additional expansion possible. |
Existing Home Sales in Florida
Existing Home Sales Median Price
1994-2009
Year | State | Natural Growth | ||||||
1994 | $ | 87,800 | $ | 87,800 | ||||
1995 | $ | 87,900 | $ | 90,434 | ||||
1996 | $ | 91,800 | $ | 93,147 | ||||
1997 | $ | 95,800 | $ | 95,941 | ||||
1998 | $ | 101,500 | $ | 98,820 | ||||
1999 | $ | 106,900 | $ | 101,784 | ||||
2000 | $ | 115,900 | $ | 104,838 | ||||
2001 | $ | 127,700 | $ | 107,983 | ||||
2002 | $ | 137,800 | $ | 111,222 | ||||
2003 | $ | 158,400 | $ | 114,559 | ||||
2004 | $ | 182,400 | $ | 117,996 | ||||
2005 | $ | 235,100 | $ | 121,536 | ||||
2006 | $ | 248,300 | $ | 125,182 | ||||
2007 | $ | 233,600 | $ | 128,937 | ||||
2008 | $ | 187,800 | $ | 132,805 | ||||
Jan-09 | $ | 139,500 | $ | 136,790 | ||||
Feb-09 | $ | 141,900 | $ | 140,893 | ||||
Mar-09 | $ | 141,300 | $ | 145,120 | ||||
Apr-09 | $ | 138,500 | $ | 149,474 | ||||
May-09 | $ | 144,400 | $ | 153,958 | ||||
Jun-09 | $ | 148,000 | $ | 158,764 |
Source: Florida Association of Realtors
Existing Home Sales in Treasure Coast
Existing Home Sales Median Price
1994-2009
Year | Treasure Coast | Natural Growth | ||||||
1994 | $ | 80,200 | $ | 80,200 | ||||
1995 | $ | 78,100 | $ | 82,606 | ||||
1996 | $ | 76,900 | $ | 85,084 | ||||
1997 | $ | 84,900 | $ | 87,637 | ||||
1998 | $ | 89,000 | $ | 90,266 | ||||
1999 | $ | 89,100 | $ | 92,974 | ||||
2000 | $ | 93,100 | $ | 95,763 | ||||
2001 | $ | 108,200 | $ | 98,636 | ||||
2002 | $ | 128,300 | $ | 101,595 | ||||
2003 | $ | 153,900 | $ | 104,643 | ||||
2004 | $ | 193,900 | $ | 107,782 | ||||
2005 | $ | 254,000 | $ | 111,016 | ||||
2006 | $ | 253,200 | $ | 114,346 | ||||
2007 | $ | 226,100 | $ | 117,776 | ||||
2008 | $ | 153,600 | $ | 121,310 | ||||
Jan-09 | $ | 114,900 | $ | 124,949 | ||||
Feb-09 | $ | 122,100 | $ | 128,697 | ||||
Mar-09 | $ | 118,000 | $ | 132,558 | ||||
Apr-09 | $ | 116,400 | $ | 136,535 | ||||
May-09 | $ | 110,000 | $ | 140,631 | ||||
Jun-09 | $ | 109,900 | $ | 144,849 |
Source: Florida Association of Realtors
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Existing Home Sales in Palm Beach
Existing Home Sales Median Price
1994-2009
Year | Palm Beach | Natural Growth | ||||||
1994 | $117,600 | $117,600 | ||||||
1995 | $ | 122,700 | $ | 123,480 | ||||
1996 | $ | 126,900 | $ | 129,654 | ||||
1997 | $ | 132,700 | $ | 136,137 | ||||
1998 | $ | 128,100 | $ | 142,944 | ||||
1999 | $ | 133,800 | $ | 150,091 | ||||
2000 | $ | 138,600 | $ | 157,595 | ||||
2001 | $ | 149,600 | $ | 165,475 | ||||
2002 | $ | 194,600 | $ | 173,749 | ||||
2003 | $ | 241,300 | $ | 182,436 | ||||
2004 | $ | 300,900 | $ | 191,558 | ||||
2005 | $ | 390,100 | $ | 201,136 | ||||
2006 | $ | 384,700 | $ | 211,193 | ||||
2007 | $ | 369,400 | $ | 221,752 | ||||
2008 | $ | 302,800 | $ | 232,840 | ||||
Jan-09 | $ | 232,100 | $ | 244,482 | ||||
Feb-09 | $ | 228,100 | $ | 256,706 | ||||
Mar-09 | $ | 228,100 | $ | 269,541 | ||||
Apr-09 | $ | 232,400 | $ | 280,323 | ||||
May-09 | $ | 232,900 | $ | 291,536 | ||||
Jun-09 | $ | 250,300 | $ | 303,197 |
Source: Florida Association of Realtors
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Existing Home Sales in Orlando
Existing Home Sales Median Price
1994-2009
Year | Orlando | Natural Growth | ||||||
1994 | $ | 87,700 | $ | 87,700 | ||||
1995 | $ | 86,300 | $ | 92,085 | ||||
1996 | $ | 90,300 | $ | 96,689 | ||||
1997 | $ | 94,100 | $ | 101,524 | ||||
1998 | $ | 96,700 | $ | 106,600 | ||||
1999 | $ | 103,300 | $ | 111,930 | ||||
2000 | $ | 109,300 | $ | 117,526 | ||||
2001 | $ | 120,300 | $ | 123,403 | ||||
2002 | $ | 129,800 | $ | 129,573 | ||||
2003 | $ | 144,200 | $ | 136,051 | ||||
2004 | $ | 164,500 | $ | 142,854 | ||||
2005 | $ | 231,400 | $ | 149,997 | ||||
2006 | $ | 262,900 | $ | 157,497 | ||||
2007 | $ | 248,900 | $ | 165,371 | ||||
2008 | $ | 201,500 | $ | 173,640 | ||||
Jan-09 | $ | 150,500 | $ | 182,322 | ||||
Feb-09 | $ | 153,200 | $ | 191,438 | ||||
Mar-09 | $ | 151,500 | $ | 201,010 | ||||
Apr-09 | $ | 141,800 | $ | 209,050 | ||||
May-09 | $ | 142,400 | $ | 217,412 | ||||
Jun-09 | $ | 149,000 | $ | 226,108 |
Source: Florida Association of Realtors
Service Area
• | Seminole County |
• | Orange County |
• | Brevard County |
• | Indian River County |
• | Okeechobee County |
• | St. Lucie County |
• | Martin County |
• | Palm Beach County |
• | Broward County |
• | Hardee County |
• | Highlands County |
• | Desoto County |
• | Glades County |
• | Hendry County |
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