This information contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, ability to realized deferred tax assets, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls and for integration of banks that we have acquired, as well as statements with respect to Seacoast’s objectives, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.
Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of Seacoast to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements.
You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support”, “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further”, “point to,” “project,” “could,” “intend” or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the effects of future economic and market conditions, including seasonality; governmental monetary and fiscal policies, as well as legislative, tax and regulatory changes; changes in accounting policies, rules and practices; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest sensitive assets and liabilities; interest rate risks, sensitivities and the shape of the yield curve; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; and the failure of assumptions underlying the establishment of reserves for possible loan losses. The risks of mergers and acquisitions, include, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers by competitors; as well as the difficulties and risks inherent with entering new markets.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2010 under “Special Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors”, and otherwise in our SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC’s Internet website athttp://www.sec.gov.
1
Highlights
•
Loss of $579,000, or $0.01 per share, improved significantly compared to last year
•
Solid capital position with estimated tangible common equity (TCE) ratio of 7.7% when DTA valuation allowance of $47.7 million is recaptured.
•
Nonperforming loans declined from $68.2 million at December 31, 2010 to $66.2 million during the quarter
•
Liquidity remains strong with low cost core funding from deposits and sweep repos
•
Cost of deposits for the quarter declined 4 basis points to 0.72%; total interest bearing liabilities down 3 basis points to .98%
•
Improved asset quality trends continued with nonperforming assets, nonaccrual loans and net charge-offs all declining
• •
Favorable deposit volume and mix trends continued Expenses remain well managed
•
Operating trends continue to be encouraging and we remain acutely focused on executing client satisfaction and retention initiatives to drive steadily improving results
Capital Ratios
1Q-2011
4Q-2010
3Q-2010
2Q-2010
Estimate
Actual
Actual
Actual
Tier 1 Capital Ratio
16.94
%
16.57
%
17.11
%
17.62
%
Total Risk Based Capital Ratio
18.21
%
17.84
%
18.38
%
18.89
%
YTD Average Equity to YTD Average Assets
8.14
%
8.27
%
8.15
%
7.82
%
Tangible Equity to Tangible Assets
7.84
%
8.10
%
8.76
%
8.78
%
Tangible Common Equity to Tangible Assets
5.60
%
5.81
%
6.48
%
6.60
%
Tangible Common Equity to Risk Weighted Assets
9.47
%
9.43
%
10.32
%
10.78
%
Credit Analysis
($ in thousands)
1Q-2011
4Q-2010
3Q-2010
2Q-2010
1Q-2010
Net charge-offs
$
4,031
$
4,678
$
10,700
$
20,209
$
3,541
Net charge-offs to average loans
1.32
%
1.47
%
3.29
%
5.95
%
1.03
%
Loan loss provision
$
640
$
3,975
$
8,866
$
16,771
$
2,068
Allowance to loans at end of period
2.80
%
3.04
%
3.04
%
3.10
%
3.18
%
2
Funding & Liquidity Stable Funding Profile and Strong Liquidity Position
Funding
•
Deposits and sweep repo base
- Customer deposits and sweep repos were $1.800 billion at March 31, 2011(1)
- Customer deposits and sweep repos compose 95% of total funding (2)
Liquidity
•
Daily overnight borrowing position maintained at zero since year-end 2008
•
On balance sheet cash liquidity averaged approximately $204 billion for the first quarter
•
Combined available contingent liquidity from the Federal Reserve, FHLB, and free securities approximately $739 million
(1)
Excludes brokered deposits; but includes Certificate of Deposit Account Registry Service (CDARS) deposits
(2)
Total funding includes customer deposits, broker deposits, sweep repos, borrowed funds and subordinated debt.
3
Noninterest Expenses Controllable Expenses Well Managed
($ in thousands)
1Q–2011
4Q–2010
1Q–2010
Noninterest expenses
$
19,667
$
27,834
$
22,972
Strategic plan & credit related professional fees
247
179
771
OREO and REPO expenses (1)
1,397
1,414
527
Net loss on OREO & repossessed Assets
449
8,763
3,824
Nonrecurring expenses
$
2,093
$
10,356
$
5,122
Core operating expenses
$
17,574
$
17,478
$
17,850
1Q 2011
1Q 2011
vs 4Q 2010
vs 1Q 2010
Noninterest expenses
-29.3
%
-14.4
%
Strategic plan & credit related professional fees
OREO and REPO expenses (1)
Net loss on OREO & repossessed Assets
Nonrecurring expenses
-79.8
%
-59.1
%
Core operating expenses
0.5
%
-1.5
%
(1)
Does not include personnel expense related to credit administration or default management costs
4
Core Deposit Growth Favorable Mix Shift
($ in thousands)
1Q-2011
Mix
1Q-2010
Mix
Demand deposits (noninterest bearing)
$
324,879
19.27
%
$
278,205
15.81
%
Savings deposits
828,130
49.11
%
865,909
49.22
%
Total Demand and Savings
$
1,153,009
68.37
%
$
1,144,114
65.03
%
Other time certificates
278,437
16.51
%
304,807
17.32
%
Brokered time certificates
7,371
0.44
%
24,640
1.40
%
Time certificates of $100,000 or more
247,393
14.67
%
285,872
16.25
%
Total Time Deposits
$
533,201
31.63
%
$
615,319
34.97
%
Total Deposits
$
1,686,210
$
1,759,433
Net Interest Margin
1Q-10
2Q-10
3Q-10
4Q-10
1Q-11
Net Interest Margin
3.48
%
3.27
%
3.35
%
3.42
%
3.48
%
•
Focus on deposit pricing and favorable deposit trends benefited the margin
•
Margin is expected to remain stable until accruing loans outstanding begin to increase
5
Noninterest Income (excluding securities gains)
$ in thousands
Q-1-2011
Q-4-2010
Q-3-2010
Q-2-2010
Q-1-2010
Total Noninterest Income (excluding securities gains)
$
4,209
$
5,283
$
4,801
$
4,601
$
4,163
Gains on sale of merchant services
—
600
—
—
—
$
4,209
4,683
$
4,801
$
,4601
$
4,163
Highlights include:
Service Charges
$
1,442
$
1,590
$
1,511
$
1,452
$
1,372
Trust Income
523
510
500
491
476
Mortgage Banking
395
580
654
464
421
Brokerage
320
325
306
257
286
Marine
298
355
330
310
339
Debit Card
891
814
810
822
717
Service Area
[Map of Franchise]
•
Seminole County
•
Orange County
•
Brevard County
•
Indian River County
•
Okeechobee County
•
St. Lucie County
•
Martin County
•
Palm Beach County
•
Hardee County
•
Highlands County
•
Desoto County
•
Glades County
•
Hendry County
6
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