SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
FOR THE ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual Report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 0-13660
SEACOAST BANKING CORPORATION OF FLORIDA
(Exact Name of Registrant as Specified in Its Charter)
Florida 59-2260678
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
815 Colorado Avenue, Stuart, FL 34994
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (772) 287-4000
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Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, Par Value $.10
(Title of class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
YES [X] NO [ ]
State the aggregate market value of the voting stock and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such common
equity, as of the last business day of the registrant's most recently completed
second fiscal quarter.
Common Stock, $.10 par value - $269,651,664 based upon the closing sale
price of $19.33 on February 28, 2003, using beneficial ownership stock
rules adopted pursuant to Section 13 of the Securities Exchange Act of
1934, to exclude voting stock owned by directors and executive officers,
some of whom may not be held to be affiliates upon judicial determination.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Common Stock, $.10 Par Value - 13,949,905 shares, as of February 28, 2003.
Documents Incorporated by Reference
1. Certain portions of the registrant's 2003 Proxy Statement for the Annual
Meeting of Shareholders to be held May 1, 2003 (the "2003 Proxy Statement")
are incorporated by reference into Part III, Items 10 through 13 of this
report. Other than those portions of the 2003 Proxy Statement specifically
incorporated by reference herein pursuant to Items 10 through 13, no other
portions of the 2003 Proxy Statement shall be deemed so incorporated.
2. Certain portions of the registrant's 2002 Annual Report to Shareholders
(the "2002 Annual Report") are incorporated by reference in Part II, Items
6 through 8 and Item 14 of this report. Other than those portions of the
2002 Annual Report specifically incorporated by reference herein pursuant
to Items 6 through 8 and Item 14, no other portions of the 2002 Annual
Report shall be deemed so incorporated.
FORM 10-K CROSS-REFERENCE INDEX
Page of
Form Annual
10-K Report
Part I
Item 1. Business 3-14 --
Item 2. Properties 14-19 --
Item 3. Legal Proceedings 19 --
Item 4. Submission of Matters to a
Vote of Security Holders 19 --
Part II
Item 5. Market For Common Equity and
Related Stockholder Matters 19-21 29
Item 6. Selected Financial Data 21 1
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 21-24 12-28
Item 7A. Market Risk 25-26 23, 26-27
Item 8. Financial Statements and 26 29-31
Supplementary Data & 34-47
Item 9. Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure 26 --
Page of
Form
10-K Proxy
Part III
Item 10. Directors and Executive Officers 26 3-9
of the Registrant
Item 11. Executive Compensation 26 9-11
& 14-18
Item 12. Security Ownership of Certain 26-27 4-8
Beneficial Owners and Management & 19-20
Item 13. Certain Relationships and Related Party 27 18
Transactions
Item 14. Evaluation of Disclosure Controls and 27
Procedures
Page of
Form Annual
10-K Report
Part IV
Item 15. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
(a)(1) List of All Financial Statements 27-28
Consolidated Balance Sheets as
of December 31, 2002 and 2001 -- 35
Consolidated Statements of Income
for the years ended December 31,
2002, 2001 and 2000 -- 34
Consolidated Statements of Shareholders'
Equity for the years ended December 31,
2002, 2001 and 2000 -- 37
Consolidated Statements of Cash Flows
for the years ended December 31,
2002, 2001, and 2000 -- 36, 46
Page of
Form Annual
10-K Report
Report of Independent Certified
Public Accountants -- 32-33
Notes to Consolidated Financial
Statements -- 38-47
(a)(2) List of Financial Statement Schedules 28 --
(a)(3) List of Exhibits 28-29 --
(b) Reports on Form 8-K 29 --
(c) Exhibits 29 --
(d) Financial Statement Schedules 30 --
SPECIAL CAUTIONARY NOTICE
REGARDING FORWARD-LOOKING STATEMENTS
Certain of the statements made herein under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
elsewhere including information incorporated herein by reference to other
documents, are "forward-looking statements" within the meaning of, and subject
to the protections of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements include statements with respect to our beliefs,
plans, objectives, goals, expectations, anticipations, assumptions, estimates,
intentions, and 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 Banking
Corporation of Florida ("Seacoast" or the "Company") to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements.
All statements other than statements of historical fact are statements that
could be forward-looking statements. You can identify these forward-looking
statements through our use of words such as "may", "will", "anticipate",
"assume", "should", "indicate", "would", "believe", "contemplate", "expect",
"estimate", "continue", "plan", "point to", "project", "could", "intend",
"target", 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:
- future economic or business conditions;
- governmental monetary and fiscal policies, as well as legislative and
regulatory changes;
- the risks of changes in interest rates on the levels, composition and
costs of deposits, loan demand, and the values of loan collateral,
securities, and interest sensitive assets and liabilities;
- the effects of competition from a wide variety of local regional
national and other providers of financial, investment, and insurance
services;
- the failure of assumptions underlying the establishment of reserves
for possible loan losses and other estimates;
- the risks of mergers and acquisitions, including, without limitation,
the related costs, including integrating operations as part of these
transactions and the failure to achieve expected gains, revenue growth
and/or expense savings from such transactions;
- changes in laws and regulations, including tax laws and regulations;
- changes in accounting policies, rules and practices;
- changes in technology or products may be more difficult, or costly, or
less effective than anticipated;
- the effects of war or other conflict, acts of terrorism or other
catastrophic events that may affect general economic conditions; and
- other factors and risks described in any of our subsequent reports
that we make with the Commission under the Exchange Act.
All written or oral forward-looking statements that are made by or are
attributable to us are expressly qualified in their entirety by this cautionary
notice. We have no obligation and do not undertake to update, revise or correct
any of the forward-looking statements after the date of this report, or after
the respective dates on which such statements otherwise are made.
Part I
Item 1. Business
General
Seacoast is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHC Act"). Seacoast was incorporated under the
laws of the State of Florida on January 24, 1983, by the management of its
principal subsidiary, First National Bank and Trust Company of the Treasure
Coast (the "Bank"), for the purpose of becoming a holding company for the Bank.
On December 30, 1983, Seacoast acquired all of the outstanding shares of the
common stock of the Bank in exchange for 810,000 shares of its $.10 par value
Class A common stock ("Class A Common Stock") and 810,000 shares of its $.10 par
value Class B common stock ("Class B Common Stock").
The Bank commenced operations in 1933 under the name "Citizens Bank of
Stuart" pursuant to a charter originally granted by the State of Florida in
1926. The Bank converted to a national bank on August 29, 1958.
Through the Bank and its broker-dealer subsidiary, Seacoast offers a full
array of deposit accounts and retail banking services, engages in consumer and
commercial lending and provides a wide variety of trust and asset management
services, as well as securities and annuity products. Seacoast's primary service
area is the "Treasure Coast," which, as defined by Seacoast, consists of the
counties of Martin, St. Lucie and Indian River on Florida's southeastern coast.
The Bank operates banking offices in the following cities: five in Stuart, two
in Palm City, two in Jensen Beach, two on Hutchinson Island, one in Hobe Sound,
five in Vero Beach, two in Sebastian, five in Port St. Lucie, and two in Ft.
Pierce. In August 2002, the Company opened a loan production office in Palm
Beach County, and intends to further expand its presence in Palm Beach County in
2003 and 2004. Two full service banking offices in northern Palm Beach County,
opened in January 2003. See "Item 2. Properties".
Most of our banking offices have one or more Automated Teller Machines
(ATMs) that provide customers with 24-hour access to their deposit accounts.
Seacoast is a member of the "Star System," the largest electronic funds transfer
organization in the United States, which permits banking customers access to
their accounts at over 241,000 locations throughout the United States.
Customers can also use the Bank's "MoneyPhone" system to access information
on their loan or deposit account balances, to transfer funds between linked
accounts, to make loan payments, and to verify deposits or checks that may have
cleared. This service is accessible by phone 24 hours a day, seven days a week.
In addition, customers may access information via the Bank's Customer
Service Center ("CSC"). From 7 A.M. to 7 P.M., Monday through Friday, and on
Saturdays from 9 A.M. to 4 P.M., servicing personnel in the CSC are available to
open accounts, take applications for certain types of loans, resolve account
problems and offer information on other bank products and services to existing
and potential customers.
The Company also offers PC/Internet banking from personal computers. The
Internet service allows customers to access transactional information on their
deposit accounts, review loan and deposit balances, transfer funds between
linked accounts and make loan payments from a deposit account, 24 hours a day.
In February 2000, the Bank opened a lending office of its newly formed
Seacoast Marine Finance Division in Ft. Lauderdale, Florida. Seacoast Marine
Finance is staffed with experienced marine lending professionals with a
marketing emphasis on marine loans of $200,000 and greater. In November 2002,
the Company announced a geographic expansion of its marine finance division,
which included the addition of key personnel in California to serve the western
markets. All loans that are originated by the Seacoast Marine Division outside
of the Bank's primary service area are generally sold.
Seacoast had four indirect subsidiaries:
o FNB Brokerage Services, Inc. ("FNB Brokerage"), which provides
brokerage and annuity services;
o FNB Insurance Services, Inc. ("FNB Insurance"), which provides
insurance services;
o South Branch Building, Inc., which is a general partner in a
partnership that constructed a branch facility of the Bank; and
o Big O RV Resort, Inc., which was formed to own and operate certain
properties acquired through foreclosure, but which currently is
inactive.
The operations of these subsidiaries contribute less than 10% of the
consolidated assets and revenues of Seacoast.
In May 2002, the Bank invested in and obtained a 55 percent ownership
position in a limited liability corporation, Seacoast Asset Management, LLC,
which is a registered investment adviser. Seacoast Asset Management, LLC was
dissolved in November 2002, based upon continuing economic weakness and related
equity market conditions, which presents an arduous environment in which to
continue this business initiative.
As a bank holding company, Seacoast is a legal entity separate and distinct
from its subsidiaries. Seacoast coordinates the financial resources of the
consolidated enterprise and maintains financial, operational and administrative
systems that allow centralized evaluation of subsidiary operations and
coordination of selected policies and activities. Seacoast's operating revenues
and net income are derived primarily from its subsidiaries through dividends,
fees for services performed and interest on advances and loans. See "Supervision
and Regulation."
As of December 31, 2002, Seacoast and its subsidiaries employed 335
full-time equivalent employees.
Seacoast's and the Bank's principal offices are located at 815 Colorado
Avenue, Stuart, Florida 34994, and the telephone number at that address is (772)
287-4000. Seacoast and the Bank maintain Internet websites at
www.seacoastbanking.net and www.fnbtc.net, respectively. Seacoast is not
incorporating the information on these websites into this report, and neither
the websites nor the information appearing on the websites is included in, or is
a part of, this report.
Expansion of Business
Seacoast has expanded its products and services to meet the changing needs
of the various segments of its market, and it presently expects to continue this
strategy. Prior to 1991, Seacoast had expanded geographically primarily through
the addition of branches, including the acquisition of a thrift branch in St.
Lucie County. Seacoast also has from time to time acquired banks, bank branches
and deposits, and has opened new branches and facilities.
Florida law permits state-wide branching, and Seacoast has expanded, and
anticipates future expansion in its markets, by opening additional offices and
facilities. New banking facilities were opened in November 1994 in St. Lucie
West, a new community west of Port St. Lucie, and in May 1996 in a Wal-Mart
superstore in Sebastian, which is located in northern Indian River County. In
January 1997, Seacoast opened a branch in Nettles Island, a predominately
modular home community on Hutchinson Island in southern St. Lucie County. In
May, June and July 1997, and in March 1998, four additional branch offices were
opened in Indian River County. In July 2000, a new branch on US 1 in northern
Martin County near the St. Lucie County line was opened; and at the same time a
branch in St. Lucie County approximately one-half mile from the new branch was
closed. In June 2001, a branch in a conveniently located Wal-Mart Superstore was
acquired in Ft. Pierce. An additional Wal-Mart branch was opened in Port St.
Lucie, Florida in October 2002. See "Item 2. Properties".
Seacoast regularly evaluates possible mergers, acquisitions and other
expansion opportunities.
Competition
Seacoast and its subsidiaries operate in the highly competitive markets of
Martin, St. Lucie and Indian River Counties, and recently entered Palm Beach
County, all of which are located in southeastern Florida. The Bank not only
competes with other banks in its markets, but it also competes with various
other types of financial institutions for deposits, certain commercial,
fiduciary and investment services and various types of loans and certain other
financial services. The Bank also competes for interest-bearing funds with a
number of other financial intermediaries and investment alternatives, including
mutual funds, brokerage and insurance firms, governmental and corporate bonds,
and other securities.
Seacoast and its subsidiaries compete not only with financial institutions
based in the State of Florida, but also with a number of large out-of-state and
foreign banks, bank holding companies and other financial institutions that have
an established market presence in the State of Florida, or that offer products
by mail, telephone or over the Internet. Many of Seacoast's competitors are
engaged in local, regional, national and international operations and have
greater assets, personnel and other resources than Seacoast. Some of these
competitors are subject to less regulation and/or more favorable tax treatment
than Seacoast.
Supervision and Regulation
Bank holding companies and banks are extensively regulated under federal
and state law. This discussion is qualified in its entirety by reference to the
particular statutory and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the Company's and the Bank's business. Supervision, regulation,
and examination of the Company and the Bank and their respective subsidiaries by
the bank regulatory agencies are intended primarily for the protection of
depositors rather than holders of Company capital stock. Any change in
applicable law or regulation may have a material effect on the Company's
business.
Bank Holding Company Regulation
The Company, as a bank holding company, is subject to supervision and
regulation by the Board of Governors of the Federal Reserve System ("Federal
Reserve") under the BHC Act. Bank holding companies are generally limited to the
business of banking, managing or controlling banks, and other activities that
the Federal Reserve determines to be so closely related to banking, or managing
or controlling banks, as to be a proper incident thereto. The Company is
required to file with the Federal Reserve periodic reports and such other
information as the Federal Reserve may request. The Federal Reserve examines the
Company, and may examine the Company's non-bank Subsidiaries.
The BHC Act requires prior Federal Reserve approval for, among other
things, the acquisition by a bank holding company of direct or indirect
ownership or control of more than 5% of the voting shares or substantially all
the assets of any bank, or for a merger or consolidation of a bank holding
company with another bank holding company. With certain exceptions, the BHC Act
prohibits a bank holding company from acquiring direct or indirect ownership or
control of voting shares of any company which is not a bank or bank holding
company, and from engaging directly or indirectly in any activity other than
banking or managing or controlling banks or performing services for its
authorized subsidiaries. A bank holding company, may, however, engage in or
acquire an interest in a company that engages in activities which the Federal
Reserve has determined by regulation or order to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
In November 1999, the Gramm-Leach-Bliley Act ("GLB") was enacted, which
substantially revises the statutory restrictions separating banking activities
from certain other financial activities. Under GLB, bank holding companies that
are "well-capitalized" and "well-managed", as defined in Federal Reserve
Regulation Y, which have and maintain "satisfactory" Community Reinvestment Act
("CRA") ratings, and meet certain other conditions, can elect to become
"financial holding companies". Financial holding companies and their
subsidiaries are permitted to acquire or engage in previously impermissible
activities such as insurance underwriting, securities underwriting, travel
agency activities, broad insurance agency activities, merchant bank, and other
activities that the Federal Reserve determines to be financial in nature or
complementary thereto. In addition, under the merchant banking authority added
by the GLB and Federal Reserve regulation, financial holding companies are
authorized to invest in companies that engage in activities that are not
financial in nature, as long as the financial holding company makes its
investment with the intention of limiting the term of its investment and does
not manage the company on a day-to-day basis, and the invested company does not
cross-market with any of the financial holding company's controlled depository
institutions. Financial holding companies continue to be subject to the overall
oversight and supervision of the Federal Reserve, but GLB applies the concept of
functional regulation to the activities conducted by subsidiaries. For example,
insurance activities would be subject to supervision and regulation by state
insurance authorities. While the Company has not become a financial holding
company, it may elect to do so in the future in order to exercise the broader
activity powers provided by GLB. The GLB Act also includes numerous consumer
privacy provisions, and the federal bank regulatory agencies have adopted
extensive privacy rules implementing the GLB Act.
The Company is a legal entity separate and distinct from the Bank and its
other subsidiaries. Various legal limitations restrict the Bank from lending or
otherwise supplying funds to the Company or its non-bank subsidiaries. The
Company and the Bank are subject to Section 23A of the Federal Reserve Act.
Section 23A defines "covered transactions", which include extensions of credit,
and limits a bank's covered transactions with any affiliate to 10% of such
bank's capital and surplus. All covered and exempt transactions between a bank
and its affiliates must be on terms and conditions consistent with safe and
sound banking practices, and banks and their subsidiaries are prohibited from
purchasing low-quality assets from the bank's affiliates. Finally, Section 23A
requires that all of a bank's extensions of credit to its affiliates be
appropriately secured by acceptable collateral, generally United States
government or agency securities. The Company and the Bank also are subject to
Section 23B of the Federal Reserve Act, which generally limits covered and other
transactions among affiliates to be on terms, including credit standards, that
are substantially the same or at least as favorable to the bank or its
subsidiary as those prevailing at the time for similar transactions with
unaffiliated companies.
The BHC Act permits acquisitions of banks by bank holding companies, such
that Seacoast and any other bank holding company located in Florida may now
acquire a bank located in any other state, and any bank holding company located
outside Florida may lawfully acquire any bank based in another state, subject to
certain deposit-percentage, age of bank charter requirements, and other
restrictions. Federal law also permits national and state-chartered banks to
branch interstate through acquisitions of banks in other states. Florida has an
Interstate Branching Act (the "Florida Branching Act"), which permits interstate
branching. Under the Florida Branching Act, with the prior approval of the
Florida Department of Banking and Finance, a Florida bank may establish,
maintain and operate one or more branches in a state other than the State of
Florida pursuant to a merger transaction in which the Florida bank is the
resulting bank. In addition, the Florida Branching Act provides that one or more
Florida banks may enter into a merger transaction with one or more out-of-state
banks, and an out-of-state bank resulting from such transaction may maintain and
operate the branches of the Florida bank that participated in such merger. An
out-of-state bank, however, is not permitted to acquire a Florida bank in a
merger transaction, unless the Florida bank has been in existence and
continuously operated for more than three years.
Federal Reserve policy requires a bank holding company to act as a source
of financial strength and to take measures to preserve and protect bank
subsidiaries in situations where additional investments in a troubled bank may
not otherwise be warranted. In addition, under the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), where a bank holding
company has more than one bank or thrift subsidiary, each of the bank holding
company's subsidiary depository institutions are responsible for any losses to
the Federal Deposit Insurance Corporation ("FDIC") as a result of an affiliated
depository institution's failure. As a result, a bank holding company may be
required to loan money to its subsidiaries in the form of capital notes or other
instruments that qualify as capital under regulatory rules. However, any loans
from the holding company to such subsidiary banks likely will be unsecured and
subordinated to such bank's depositors and perhaps to other creditors of the
bank.
Bank and Bank Subsidiary Regulation
The Bank is subject to supervision, regulation, and examination by the
Office of the Comptroller of the Currency (the "OCC") which monitors all areas
of the operations of the Bank, including reserves, loans, mortgages, issuances
of securities, payment of dividends, establishment of branches, capital
adequacy, and compliance with laws. The Bank is a member of the FDIC and, as
such, its deposits are insured by the FDIC to the maximum extent provided by
law. See "FDIC Insurance Assessments".
Under Florida law, the Bank may establish and operate branches throughout
the State of Florida, subject to the maintenance of adequate capital and the
receipt of OCC approval.
The OCC has adopted a series of revisions to its regulations, including
expanding the powers exercisable by operations subsidiaries of the Bank. These
changes also modernize and streamline corporate governance, investment and
fiduciary powers.
The OCC has adopted the Federal Financial Institutions Examination
Council's ("FFIEC") rating system and assigns each financial institution a
confidential composite rating based on an evaluation and rating of six essential
components of an institution's financial condition and operations including
Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity
to market risk, as well as the quality of risk management practices. For most
institutions, the FFIEC has indicated that market risk primarily reflects
exposures to changes in interest rates. When regulators evaluate this component,
consideration is expected to be given to: management's ability to identify,
measure, monitor, and control market risk; the institution's size; the nature
and complexity of its activities and its risk profile, and the adequacy of its
capital and earnings in relation to its level of market risk exposure. Market
risk is rated based upon, but not limited to, an assessment of the sensitivity
of the financial institution's earnings or the economic value of its capital to
adverse changes in interest rates, foreign exchange rates, commodity prices, or
equity prices; management's ability to identify, measure, monitor and control
exposure to market risk; and the nature and complexity of interest rate risk
exposure arising from nontrading positions.
GLB requires banks and their affiliated companies to adopt and disclose
privacy policies regarding the sharing of personal information they obtain from
their customers with third parties. GLB also permits bank subsidiaries to engage
in "financial activities" through subsidiaries similar to those permitted to
financial holding companies. See the discussion regarding GLB in "Bank Holding
Company Regulation" above.
FNB Brokerage, a Bank subsidiary, is registered as a securities
broker-dealer under the Exchange Act and is regulated by the Securities and
Exchange Commission ("SEC"). As a member of the National Association of
Securities Dealers, Inc., it also is subject to examination and supervision of
its operations, personnel and accounts by NASD Regulation, Inc. FNB Brokerage is
a separate and distinct entity from the Bank, and must maintain adequate capital
under the SEC's net capital rule. The net capital rule limits FNB Brokerage's
ability to reduce capital by payment of dividends or other distributions to the
Bank. FNB Brokerage is also authorized by the State of Florida to act as a
securities dealer and investment advisor.
FNB Insurance, a Bank insurance agency subsidiary, is authorized by the
State of Florida to market insurance products as agents. FNB Insurance is a
separate and distinct entity from the Bank and is subject to supervision and
regulation by state insurance authorities.
Community Reinvestment Act
The Company and the Bank are subject to the provisions of the Community
Reinvestment Act of 1977, as amended (the "CRA") and the federal banking
agencies' regulations thereunder. Under the CRA, all banks and thrifts have a
continuing and affirmative obligation, consistent with their safe and sound
operation to help meet the credit needs for their entire communities, including
low and moderate income neighborhoods. The CRA requires a depository
institution's primary federal regulator, in connection with its examination of
the institution, to assess the institution's record of assessing and meeting the
credit needs of the communities served by that institution, including low- and
moderate-income neighborhoods. The regulatory agency's assessment of the
institution's record is made available to the public. Further, such assessment
is required of any institution which has applied to: (i) charter a national
bank; (ii) obtain deposit insurance coverage for a newly-chartered institution;
(iii) establish a new branch office that accepts deposits; (iv) relocate an
office; (v) merge or consolidate with, or acquire the assets or assume the
liabilities of, a federally regulated financial institution, or (vi) expand
other activities, including engaging in financial services activities authorized
by GLB. A less than satisfactory CRA rating will slow, if not preclude,
expansion of banking activities and prevent a company from becoming a financial
holding company.
GLB and federal bank regulations have made various changes to the CRA.
Among other changes, CRA agreements with private parties must be disclosed and
annual CRA reports must be made to a bank's primary federal regulator. A bank
holding company will not be permitted to become or remain a financial holding
company and no new activities authorized under GLB may be commenced by a holding
company or by a bank financial subsidiary if any of its bank subsidiaries
received less than a "satisfactory" CRA rating in its latest CRA examination.
The Bank is also subject to, among other things, the provisions of the
Equal Credit Opportunity Act (the "ECOA") and the Fair Housing Act (the "FHA"),
both of which prohibit discrimination based on race or color, religion, national
origin, sex, and familial status in any aspect of a consumer or commercial
credit or residential real estate transaction. In 1994, the Department of
Housing and Urban Development, the Department of Justice (the "DOJ"), and the
federal banking agencies issued an Interagency Policy Statement on
Discrimination in Lending in order to provide guidance to financial institutions
in determining whether discrimination exists, how the agencies will respond to
lending discrimination, and what steps lenders might take to prevent
discriminatory lending practices. The DOJ has also increased its efforts to
prosecute what it regards as violations of the ECOA and FHA.
Payment of Dividends
The Company is a legal entity separate and distinct from its bank and other
subsidiaries. The prior approval of the OCC is required if the total of all
dividends declared by a national bank (such as the Bank) in any calendar year
will exceed the sum of such bank's net profits for the year and its retained net
profits for the preceding two calendar years, less any required transfers to
surplus. Federal law also prohibits any national bank from paying dividends that
would be greater than such bank's undivided profits after deducting statutory
bad debts in excess of such bank's allowance for possible loan losses.
In addition, the Company and the Bank are subject to various general
regulatory policies and requirements relating to the payment of dividends,
including requirements to maintain adequate capital above regulatory minimums.
The appropriate federal regulatory authority is authorized to determine under
certain circumstances relating to the financial condition of a national or state
member bank or a bank holding company that the payment of dividends would be an
unsafe or unsound practice and to prohibit payment thereof. The OCC and the
Federal Reserve have indicated that paying dividends that deplete a national or
state member bank's capital base to an inadequate level would be an unsound and
unsafe banking practice. The OCC and the Federal Reserve have each indicated
that depository institutions and their holding companies should generally pay
dividends only out of current operating earnings.
Capital
The Federal Reserve and the OCC have risk-based capital guidelines for bank
holding companies and national banks, respectively. These guidelines require a
minimum ratio of capital to risk-weighted assets (including certain
off-balance-sheet activities, such as standby letters of credit) of 8%. At least
half of the total capital must consist of common equity, retained earnings and a
limited amount of qualifying preferred stock, less goodwill and certain core
deposit intangibles ("Tier 1 capital"). The remainder may consist of
non-qualifying preferred stock, qualifying subordinated, perpetual, and/or
mandatory convertible debt, term subordinated debt and intermediate term
preferred stock and up to 45% of pretax unrealized holding gains on available
for sale equity securities with readily determinable market values that are
prudently valued, and a limited amount of any loan loss allowance ("Tier 2
capital" and, together with Tier 1 capital, "Total Capital").
In addition, the Federal Reserve and the OCC have established minimum
leverage ratio guidelines for bank holding companies and national banks, which
provide for a minimum leverage ratio of Tier 1 capital to adjusted average
quarterly assets ("leverage ratio") equal to 3%, plus an additional cushion of
1.0% to 2.0%, if the institution has less than the highest regulatory rating.
The guidelines also provide that institutions experiencing internal growth or
making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Higher capital may be required in individual cases
depending upon a bank holding company's risk profile. All bank holding companies
and banks are expected to hold capital commensurate with the level and nature of
their risks, including the volume and severity of their problem loans. Lastly,
the Federal Reserve's guidelines indicate that the Federal Reserve will continue
to consider a "tangible Tier 1 leverage ratio" (deducting all intangibles) in
evaluating proposals for expansion or new activity. The Federal Reserve and OCC
have not advised the Company or the Bank of any specific minimum leverage ratio
or tangible Tier 1 leverage ratio applicable to them.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, requires the federal banking agencies to take
"prompt corrective action" regarding depository institutions that do not meet
minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized", "adequately capitalized", "undercapitalized", "significantly
undercapitalized", and "critically undercapitalized". A depository institution's
capital tier will depend upon how its capital levels compare to various relevant
capital measures and certain other factors, as established by regulation.
All of the federal banking agencies have adopted regulations establishing
relevant capital measures and relevant capital levels. The relevant capital
measures are the Total Capital ratio, Tier 1 capital ratio, and the leverage
ratio. Under the regulations, a national bank will be (i) well capitalized if it
has a Total Capital ratio of 10% or greater, a Tier 1 capital ratio of 6% or
greater, and a leverage ratio of at least 5%, and is not subject to any written
agreement, order, capital directive, or prompt corrective action directive by a
federal bank regulatory agency to meet and maintain a specific capital level for
any capital measure, (ii) adequately capitalized if it has a Total Capital ratio
of 8% or greater, a Tier 1 capital ratio of 4% or greater, and a leverage ratio
of 4% or greater (3% in certain circumstances), (iii) undercapitalized if it has
a Total Capital ratio of less than 8%, a Tier 1 capital ratio of less than 4%
(3% in certain circumstances), (iv) significantly undercapitalized if it has a
total capital ratio of less than 6% or a Tier I capital ratio of less than 3%,
or a leverage ratio of less than 3%, or (v) critically undercapitalized if its
tangible equity is equal to or less than 2% of average quarterly tangible
assets.
As of December 31, 2002, the consolidated capital ratios of the Company
and the Bank were as follows:
Regulatory
Minimum Company Bank
Tier 1 capital ratio 4.0% 12.9% 12.6%
Total capital ratio 8.0% 13.8% 13.5%
Leverage ratio 3.0-5.0% 8.0% 7.8%
FDICIA
FDICIA directs that each federal banking regulatory agency prescribe
standards for depository institutions and depository institution holding
companies relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth compensation, a maximum ratio of classified assets to capital, minimum
earnings sufficient to absorb losses, a minimum ratio of market value to book
value for publicly traded shares, and such other standards as the federal
regulatory agencies deem appropriate.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to growth
limitations and are required to submit a capital restoration plan for approval.
For a capital restoration plan to be acceptable, the depository institution's
parent holding company must guarantee that the institution will comply with such
capital restoration plan. The aggregate liability of the parent holding company
is limited to the lesser of 5% of the depository institution's total assets at
the time it became undercapitalized and the amount necessary to bring the
institution into compliance with applicable capital standards. If a depository
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized. If the controlling holding company fails to
fulfill its obligations under FDICIA and files (or has filed against it) a
petition under the federal Bankruptcy Code, the claim would be entitled to a
priority in such bankruptcy proceeding over third party creditors of the bank
holding company. Significantly undercapitalized depository institutions may be
subject to a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to reduce
total assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator. Because the Company and the Bank exceed applicable
capital requirements, the respective managements of the Company and the Bank do
not believe that the provisions of FDICIA have had any material effect on the
Company and the Bank or their respective operations.
FDICIA also contains a variety of other provisions that may affect the
operations of the Company and the Bank, including reporting requirements,
regulatory standards for real estate lending, "truth in savings" provisions, the
requirement that a depository institution give 90 days' prior notice to
customers and regulatory authorities before closing any branch, and a
prohibition on the acceptance or renewal of brokered deposits by depository
institutions that are not well capitalized or are adequately capitalized and
have not received a waiver from the FDIC. The Bank is well capitalized, and
brokered deposits are not restricted.
Enforcement Policies and Actions
The Federal Reserve and the OCC monitor compliance with laws and
regulations. Violations of laws and regulations, or other unsafe and unsound
practices, may result in these agencies imposing fines or penalties, cease and
desist orders, or taking other enforcement actions. Under certain circumstances,
these agencies may enforce these remedies directly against officers, directors,
employees and others participating in the affairs of a bank or bank holding
company.
Fiscal and Monetary Policy
Banking is a business that depends on interest rate differentials. In
general, the difference between the interest paid by a bank on its deposits and
its other borrowings, and the interest received by a bank on its loans and
securities holdings, constitutes the major portion of a bank's earnings. Thus,
the earnings and growth of Seacoast and the Bank are subject to the influence of
economic conditions generally, both domestic and foreign, and also to the
monetary and fiscal policies of the United States and its agencies, particularly
the Federal Reserve. The Federal Reserve regulates the supply of money through
various means, including open market dealings in United States government
securities, the discount rate at which banks may borrow from the Federal
Reserve, and the reserve requirements on deposits. The nature and timing of any
changes in such policies and their effect on Seacoast and its subsidiaries
cannot be predicted.
FDIC Insurance Assessments
The Bank is subject to FDIC deposit insurance assessments. The Bank's
deposits are primarily insured by the FDIC's Bank Insurance Fund ("BIF"). The
Bank is also a member of the Savings Association Insurance Fund ("SAIF") to the
extent that the Bank holds deposits acquired in 1991 from the Resolution Trust
Corporation ("RTC"). The FDIC assesses deposits under a risk-based premium
schedule. Each financial institution is assigned to one of three capital groups,
"well capitalized," "adequately capitalized" or "undercapitalized," and further
assigned to one of three subgroups within a capital group, on the basis of
supervisory evaluations by the institution's primary federal and, if applicable,
state regulators and other information relevant to the institution's financial
condition and the risk posed to the applicable insurance fund. The actual
assessment rate applicable to a particular institution, therefore, depends in
part upon the risk assessment classification so assigned to the institution by
the FDIC. During the years ended December 31, 2002, and 2001, the Bank paid no
deposit premiums, except for the Financing Corporation ("FICO") assessments of
$173,000 and $177,000, respectively. The FDIC has indicated that, based on its
current level of reserves, deposit insurance premiums may increase.
The FDIC's Board of Directors has continued the 2002 BIF and SAIF
assessment schedule of zero to 27 basis points per annum for the first
semiannual period of 2003. The Deposit Insurance Funds Act of 1996 (the "Funds
Act") authorized FICO to levy assessments on BIF-assessable deposits. As of
January 1, 2003, the FICO assessment rate was equivalent for BIF and
SAIF-assessable deposits. The FICO assessments are set quarterly and ranged from
1.82 basis points for BIF and SAIF in the first quarter of 2002 to 1.70 basis
points in the last quarter of 2002. The assessment rate for BIF and SAIF
assessable deposits in the first quarter of 2003 is 1.68 basis points.
Each financial institution is assigned to one of three capital groups -
well capitalized, adequately capitalized or undercapitalized - and further
assigned to one of three subgroups within a capital group, on the basis of
supervisory evaluations by the institution's primary federal and, if applicable,
state regulators, and other information relevant to the institution's financial
condition and the risk posed to the applicable insurance fund. The actual
assessment rate applicable to a particular institution will, therefore, depend
in part upon the risk assessment classification so assigned to the institution
by the FDIC. During the three years ended December 31, 2002, the Bank paid $0 in
BIF deposit insurance premiums, and paid approximately $174,000, $60,000 and
$122,000 in FICO assessments during 2002, 2001 and 2000, respectively. The FDIC
has indicated that based on its current level of reserves, deposit insurance
premiums may increase in 2003.
Legislative and Regulatory Changes
The International Money Laundering Abatement and Anti-Terrorism Funding Act
of 2001 imposes new "know your customer" requirements that obligate financial
institutions to take actions to verify the identity of the account holders in
connection with opening an account at any U.S. financial institution. Banking
regulators are required to consider a financial institution's compliance with
this Act's money laundering provisions in making decisions regarding approval of
acquisitions and mergers, and the regulatory authorities may impose sanctions
for violations of this Act.
Legislative and regulatory proposals regarding changes in banking, and the
regulation of banks, thrifts and other financial institutions and bank and bank
holding company powers are being considered by the executive branch of the
Federal government, Congress and various state governments, including Florida.
The FDIC has proposed a restructuring of the federal deposit insurance system,
including provisions to better measure and price deposit insurance, to merge BIF
and SAIF and to increase deposit insurance coverage. Other proposals pending in
Congress would, among other things, allow banks to pay interest on checking
accounts, allow the Federal Reserve to pay interest on deposits, and would
permit interstate branching on a de novo basis. Certain of these proposals, if
adopted, could significantly change the regulation or operations of banks and
the financial services industry. It cannot be predicted whether any of these
proposals will be adopted, and, if adopted, how these proposals will affect the
Company and the Bank.
Statistical Information
Certain statistical information (as required by Guide 3) is included in
response to Item 7 of this Annual Report on Form 10-K. Certain statistical
information is also included in response to Item 6 and Item 8 of this Annual
Report on Form 10-K.
Item 2. Properties
Seacoast and the Bank's main office occupies approximately 62,000 square
feet of a 68,000 square foot building in Stuart, Florida. The building, together
with an adjacent 10-lane drive-in banking facility and an additional 27,000
square foot office building, are situated on approximately eight acres of land
in the center of Stuart zoned for commercial use. The building and land are
owned by the Bank, which leases out portions of the building not utilized by
Seacoast and the Bank to unaffiliated third parties.
Adjacent to the main office, the Bank leases approximately 21,400 square
feet of office space to house operational departments, consisting primarily of
information systems and retail support. The Bank owns its equipment, which is
used for servicing bank deposits and loan accounts as well as on-line banking
services, providing tellers and other customer service personnel with access to
customers' records.
In February 2000, the Bank leased storefront space in Ft. Lauderdale,
Florida for a lending office for its Seacoast Marine Finance division. The
office occupies 1,913 square feet of space, with furniture and equipment all
owned by the Bank. In November 2002, additional office space was acquired for
Seacoast Marine Finance in Alameda, California (430 square feet of leased
space), and Newport Beach, California (1,200 square feet of leased space). The
furniture and equipment at each location is owned by the Bank.
In August 2002, the Bank leased 2,385 square feet of space on U.S. Highway
One in Jupiter, Florida for a new loan production office. Located in northern
Palm Beach County, this office was opened in advance of planned branch openings
in 2003 and 2004. The office is staffed with two residential lending and two
commercial lending officers. All furniture and equipment is owned by the Bank.
As of December 31, 2002, the net carrying value of branch offices
(excluding the main office) was approximately $8.3 million. Seacoast's branch
offices are described as follows:
Jensen Beach, opened in 1977, is a free-standing facility located in the
commercial district of a residential community contiguous to Stuart. The
1,920 square foot bank building and land are owned by the Bank.
Improvements include three drive-in teller lanes and one drive-up ATM as
well as a parking lot and landscaping.
East Ocean Boulevard, opened at its original location in 1978, was a 2,400
square foot building leased by the Bank. The acquisition of American Bank
provided an opportunity for the Bank to move to a new location in April
1995. It is still located on the main thoroughfare between downtown Stuart
and Hutchinson Island's beachfront residential developments. The first
three floors of a four-story office condominium were acquired in the
acquisition. The 2,300 square foot branch area on the first floor has been
remodeled and operates as a full service branch including five drive-in
lanes and a drive-up ATM. The remaining 2,300 square feet on the ground
floor was sold in June 1996, the third floor was sold in December 1995, and
the second floor in December 1998.
Cove Road, opened in late 1983, is conveniently located close to housing
developments in the residential areas south of Stuart known as Port Salerno
and Hobe Sound. South Branch Building, Inc., a subsidiary of the Bank, is a
general partner in a partnership that entered into a long-term land lease
for approximately four acres of property on which it constructed a 7,500
square foot building. The Bank leases the building and utilizes 3,450
square feet of the available space. Remaining space is sublet by the Bank
to other business tenants. The Bank has improved its premises with three
drive-in lanes, bank equipment, and furniture and fixtures, all of which
are owned by the Bank. A drive-up ATM was added in early 1997.
Hutchinson Island, opened on December 31, 1984, is in a shopping center
located on a coastal barrier island, close to numerous oceanfront
condominium developments. In 1993, the branch was expanded from 2,800
square feet to 4,000 square feet and is under a long-term lease to the
Bank. The Bank has improved the premises with bank equipment, a walk-up ATM
and three drive-in lanes, all owned by the Bank.
Rivergate originally opened October 28, 1985 and occupied 1,700 square feet
of leased space in the Rivergate Shopping Center, Port St. Lucie, Florida.
The Bank moved to larger facilities in the shopping center in April of 1999
under a long-term lease agreement. Furniture and bank equipment located in
the prior facilities were moved to the new facility, which occupies
approximately 3,400 square feet, with three drive-in lanes and a drive-up
ATM.
Wedgewood Commons, opened in April 1988, is located on an out-parcel under
long term lease in the Wedgewood Commons Shopping Center, south of Stuart
on U.S. Highway 1. The property consists of a 2,800 square foot building
that houses four drive-in lanes, a walk-up ATM and various bank equipment,
all of which are owned by the Bank and are located on the leased property.
Bayshore, opened on September 27, 1990, occupies 3,520 square feet of a
50,000 square foot shopping center located in Port St. Lucie. The Bank has
leased the premises under a long-term lease agreement and has made
improvements to the premises, including the addition of three drive-in
lanes and a walk-up ATM, all of which are owned by the Bank. A second
location, acquired in the merger with Port St. Lucie National Holding
Company ("PSHC"), and in close proximity to this location, was closed on
June 1, 1997 and subsequently sold in September 1997.
Hobe Sound, acquired from the RTC on December 23, 1991, is a two-story
facility containing 8,000 square feet and is centrally located in Hobe
Sound. Of 2,800 square feet on the second floor, 1,225 square feet is
utilized by local community organizations. Improvements include two
drive-in teller lanes, a drive-up ATM, and equipment and furniture, all of
which are owned by the Bank.
Fort Pierce, acquired from the RTC on December 23, 1991, is a 2,895 square
foot facility in the heart of Fort Pierce that has three drive-in lanes and
a drive-up ATM. Equipment and furniture are all owned by the Bank.
Martin Downs, purchased from the RTC in February 1992, is a 3,960 square
foot bank building located at a high traffic intersection in Palm City, an
emerging commercial and residential community west of Stuart. Improvements
include three drive-in teller lanes, a drive-up ATM, equipment and
furniture.
Tiffany, purchased from the RTC in May 1992, is a two-story facility
containing 8,250 square feet and is located on a corner of U.S. Highway 1
in Port St. Lucie offering excellent exposure in one of the fastest growing
residential areas in the region. The second story contains 4,250 square
feet and was leased to tenants until December 2001. In 2002, the Bank
utilized the second story space to house brokerage and mortgage
solicitation personnel, a training facility and conference area. Three
drive-in teller lanes, a walk-up ATM, equipment and furniture are utilized
and owned by the Bank.
Vero Beach, purchased from the RTC in February 1993, is a 3,300 square foot
bank building located in Vero Beach on U.S. Highway One and represents the
Bank's initial presence in the Indian River County market. A leasehold
interest in a long-term land lease was acquired. Improvements include three
drive-in teller lanes, a walk-up ATM, equipment and furniture, all of which
are owned by the Bank.
Beachland, opened in February 1993, consists of 4,150 square feet of leased
space located in a three-story commercial building on Beachland Boulevard,
the main beachfront thoroughfare in Vero Beach, Florida. The lease on an
additional 1,050 square feet leased during 1996 expired in March 2002. This
facility has 2 drive-in teller lanes, a drive-up ATM, and furniture and
equipment, all owned by the Bank.
Sandhill Cove, opened in September 1993, is in an upscale life-care
retirement community. The 135 square foot office is located within the
community facilities on a 36-acre development in Palm City, Florida. This
community contains approximately 168 private residences.
St. Lucie West, opened in November 1994, was in a 3,600 square foot
building located at 1320 S.W. St. Lucie Blvd, Port St. Lucie, Florida. As a
result of the PSHC merger, this facility was closed in June 1997 and the
property was sold in September 1997. On June 1, 1997, the Bank moved its
St. Lucie West operations to the Renar Centre (previously occupied by
PSHC). The Bank leases 4,320 square feet on the first floor of this
facility and 1,200 square feet on the second floor. The facility includes
three drive-in teller lanes, a drive-up ATM, and furniture and equipment.
Mariner Square, acquired from American Bank in April 1995, is a 3,600
square foot leased space located on the ground floor of a three-story
office building located on U.S. Highway 1 between Hobe Sound and Port
Salerno. Approximately 700 square feet of the space is sublet to a tenant.
The space occupied by the Bank has been improved to be a full service
branch with two drive-in lanes, one serving as a drive-up ATM lane as well
as a drive-in teller lane, all owned by the Bank.
Sebastian, opened in May 1996, is located within a 174,000 square foot
Wal-Mart Superstore on U.S. Highway 1 in northern Indian River County. The
leased space occupied by the Bank totals 865 square feet. The facility has
a walk-up ATM, owned by the Bank.
Nettles Island was opened in January 1997 in southern St. Lucie County on
Hutchinson Island. It occupies 350 square feet of leased space in a
predominantly modular home community. Furniture and equipment are owned. No
ATM or drive-in lanes are offered. The Bank presently intends to close this
facility by May 2003.
U.S. Highway 1 and Port St. Lucie Boulevard office opened as a Bank
location on June 1, 1997, upon the merger with PSHC. At the date of the
merger, the leased space consisted of 5,188 square feet on the first floor
and 1,200 square feet on the second floor. In October 1997, 1,800 square
feet of the leased space on the first floor and 1,200 square feet of leased
space on the second floor were assigned to another tenant, with the
remaining space occupied by the Bank totaling 3,388 square feet. The
facility has two drive-in lanes, a walk-up ATM, and furniture and
equipment, all owned by the Bank. This facility was closed in July 2000,
coinciding with the opening of the Jensen West location, a new, more
visible office on a leased out-parcel in a new shopping center
approximately one-half mile south of the closed location on U.S. Highway 1.
The lease expired in April 2002 [and was not renewed].
South Vero Square opened in May 1997 in a 3,150 square foot building owned
by the Bank on South U.S. Highway 1 in Vero Beach. The facility includes
three drive-in teller lanes, a drive-up ATM, and furniture and equipment,
all owned by the Bank.
Oak Point opened in June 1997. It occupies 12,000 square feet of leased
space on the first and second floor of a 19,700 square foot 3-story
building in Indian River County. The office is in close proximity to Indian
River Memorial Hospital and the peripheral medical community adjacent to
the hospital. The facility includes three drive-in teller lanes, a walk-up
ATM, and furniture and equipment, all owned by the Bank. On the second
floor, 2,270 square feet is presently sublet to tenants.
Route 60 Vero opened in July 1997. Similar to the Sebastian office, this
facility is housed in a Wal-Mart Superstore in western Vero Beach in Indian
River County. The branch occupies 750 square feet of leased space and
includes a walk-up ATM.
Sebastian West opened in March 1998 in a 3,150 square foot building owned
by the Bank. It is located at the intersection of Fellsmere Road and
Roseland Road in Sebastian. The facility includes three drive-in teller
lanes, a drive-up ATM, and furniture and equipment, all owned by the Bank.
Jensen West, opened in July 2000, is located on an out parcel under
long-term lease on U.S. Highway 1 in northern Martin County. The facility
consists of a 3,930 square foot building, with four drive-up lanes, a
drive-up ATM and furniture and equipment, all of which are owned by the
Bank and are located on the leased property. The opening of this office
coincided with the closing of the Bank's U.S. Highway 1 and Port St. Lucie
Boulevard office, one-half mile north of this location.
Ft. Pierce Wal-Mart, opened in June 2001, is another Wal-Mart Superstore
location. The branch occupies 540 square feet of leased space and includes
a walk-up ATM, a night depository, and furniture and equipment, all owned
by the Bank.
Port St. Wal-Mart, the Bank's newest branch office, opened in October 2002
and occupies 695 square feet of leased space in a brand new Wal-Mart
Superstore in a highly visible location on U.S. Highway 1. The branch
includes a walk-up ATM, a night depository, and furniture and equipment,
all owned by the Bank.
For additional information regarding our properties, you should refer to
Notes F and I of the Notes to Consolidated Financial Statements in Seacoast's
2002 Annual Report, certain portions of which are incorporated herein by
reference pursuant to Part II, Item 8 of this report.
In January 2003, the Company opened two full-service branch offices in
northern Palm Beach County, Florida, one of which is located in Tequesta and the
other of which is located in Jupiter Bluffs. The Tequesta site is a 3,500 square
foot building acquired and owned by the Bank located on U.S. Highway 1 on
long-term leased property. The Tequesta location has two drive-up lanes, a
drive-up ATM, a night depository, and furniture and equipment, all owned by the
Bank. The Jupiter Bluffs office is located in 2,688 square feet of leased space
in a storefront on U.S. Highway One, with a walk-up ATM, and furniture and
equipment, all owned by the Bank.
Item 3. Legal Proceedings
The Company and its subsidiaries, because of the nature of their business,
are at times subject to numerous legal actions, threatened or filed, in the
normal course of their business. Although the amount of any ultimate liability
with respect to such matters presently cannot be determined, in the opinion of
management, after consultation with legal counsel, those claims and lawsuits,
when resolved, should not have a material adverse effect on the consolidated
results of operation or financial condition of Seacoast and its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Part II
Item 5. Market For Common Equity and Related Stockholder Matters
In 2002, the Company's shareholders approved amendments to its Articles of
Incorporation and eliminated the Company's Class B Common Stock, which was
converted, in accordance with its terms on a one-for-one basis into Class A
Common Stock. In addition, the Class A Common Stock liquidation preference was
eliminated, and Class A Common Stock was renamed "Common Stock." Holders of
Common Stock are entitled to one vote per share on all matters presented to
shareholders as provided in the Company's Amended and Restated Articles of
Incorporation (the "Articles").
The Common Stock is traded in the over-the-counter market and quoted on the
Nasdaq National Market ("Nasdaq Stock Market") under the symbol "SBCF." As of
February 28, 2003, there were approximately 13,949,905 shares of Common Stock
outstanding, held by approximately 897 record holders.
The following table sets forth the high and low sale prices per share of
Seacoast Common Stock on the Nasdaq Stock Market and the dividends paid per
share of Seacoast Common Stock for the indicated periods. All prices and
dividend amounts reflect the effect of a three-for-one stock split on the Common
Stock, which became effective on July 15, 2002 for shareholders of record on
July 1, 2002.
Sale Price Per Share of
Seacoast Common Stock Annual Dividends
Declared Per Shares of
High Low Seacoast Common Stock
2002
First Quarter..............$15.970 $14.683 $0.100
Second Quarter............. 19.243 15.417 0.100
Third Quarter.............. 21.600 15.980 0.100
Fourth Quarter............. 20.150 16.732 0.110
2001
First Quarter..............$10.187 $8.979 $0.093
Second Quarter............. 11.717 9.083 0.093
Third Quarter.............. 14.463 11.617 0.093
Fourth Quarter............. 15.667 12.533 0.100
During 2002, the Company did not issue or sell any of its securities in
transactions not registered under the Securities Act of 1933, as amended.
Prior to the change to the amendments approved by shareholders in April
2002, Seacoast's Articles of Incorporation prohibited the declaration or payment
of cash dividends on Class B Common Stock unless cash dividends were declared or
paid on Class A Common Stock in an amount equal to at least 110% of any cash
dividend on Class B Common Stock. In 2000, cash dividends of $0.353 per share of
Class A Common Stock and $0.321 of Class B Common Stock were paid. In 2001, cash
dividends of $0.380 per share of Class A Common Stock and $0.344 per share of
Class B Common Stock were paid. In the first quarter of 2002, cash dividends of
$0.100 per share of Class A Common Stock and $0.090 per share of Class B Common
Stock were paid. Over the remaining nine months of 2002 (after shareholder
approval of the changes to the Company's Articles simplifying the Company's
capital structure), cash dividends of $0.31 per share of Common Stock were paid.
Dividends from the Bank are Seacoast's primary source of funds to pay
dividends on Seacoast capital stock. Under the National Bank Act, the Bank may
in any calendar year, without the approval of the OCC, pay dividends to the
extent of net profits for that year, plus retained net profits for the preceding
two years (less any required transfers to surplus). The need to maintain
adequate capital in the Bank also limits dividends that may be paid to Seacoast.
Information regarding a restriction on the ability of the Bank to pay dividends
to Seacoast is contained in Note B of the "Notes to Consolidated Financial
Statements" contained in Part II, Item 8 hereof. See "Supervision and
Regulation" contained in Part I, Item 1 of this document.
The OCC and Federal Reserve have the general authority to limit the
dividends paid by insured banks and bank holding companies, respectively, if
such payment may be deemed to constitute an unsafe or unsound practice. If, in
the particular circumstances, the OCC determines that the payment of dividends
would constitute an unsafe or unsound banking practice, the OCC may, among other
things, issue a cease and desist order prohibiting the payment of dividends.
This rule is not expected to adversely affect the Bank's ability to pay
dividends to Seacoast. See "Supervision and Regulation" contained in Part I,
Item 1 of this document.
Item 6. Selected Financial Data
Selected financial data of the Company is set forth under the caption
"Financial Highlights" on page 1 of the 2002 Annual Report and is incorporated
herein by reference. See Exhibit 13 to this report for a complete copy of the
2002 Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis of Financial Condition and Results of
Operations is set forth under the caption "Financial Review - 2002 Management's
Discussion and Analysis," on pages 12 through 28 of the 2002 Annual Report, and
is incorporated herein by reference. See Exhibit 13 to this report for a
complete copy of the 2002 Annual Report.
Liquidity and Capital Resources
The Company is a financial entity, and as such its assets and liabilities
are financial in nature. The Company derives funding for its activities from a
number of sources. At present, these sources include deposits and repurchase
agreements with its customers, federal funds lines of credit with correspondent
banks, advances from the Federal Home Loan Bank of Atlanta (FHLB) and capital
investment by shareholders. The following table highlights funding amounts and
their contractual maturities at December 31, 2002:
Contractual Maturities
----------------------
(Dollars in millions) Total 0-3 Months 4-12 Months 1-5 Years >5 Years
- --------------------------------------------------------------------------------
Demand deposits $184.5
Savings deposits 473.0
Certificates of Deposit 373.0 $82.2 $127.9 $162.9
Repurchase Agreements 62.5 62.5
Federal Funds Lines 40.5 40.5
FHLB Advances 40.0 25.0 $15.0
Shareholders' Equity 100.7
Each of the sources of liquidity presently available to the Company is
described in turn below:
Demand and Savings Deposits - Transaction deposits have no contractual
maturity and include checking (both noninterest bearing and interest
bearing), savings and money market accounts. Together with certificates of
deposit less than $100,000, these deposits are generally referred to as
"core deposits." These deposits are derived from individuals, businesses
and public entities (comprised mostly of municipal, tax collection, and
other governmental bodies), generally all from within the Company's defined
market area (the "Treasure Coast"). Over time, customer needs change and
the Company has responded with innovative "core deposit" products that meet
these needs. As a result, the Company has been able to rely upon and grow
demand and savings deposits as a consistent and reliable funding source.
Over the past ten years, demand and savings deposits have experienced a
weighted average annual growth of 9.3 percent. During 2002, the Company's
growth in demand and savings deposits was slightly lower than the ten-year
average, increasing $41.1 million, or 6.7 percent. In part, the growth this
year reflects the Company's success in introducing new and improved
products to meet customer needs, such as the Bank's Tiered Money Market
Account that was updated in 2002 to appeal to customers focused on
obtaining a safe, liquid investment in the current economic environment.
This product increased substantively during the past year, by a total of
$30.6 million. Turmoil in financial markets, a less robust economy, and a
lower interest rate environment have resulted in customers focusing on
safeguarding assets, resulting in increases in funds maintained with
financial institutions, including the Company. If economic improvements
occur in 2003, some shifting of customer funds into investment vehicles
other than deposits will likely occur, and the Company's demand and savings
deposits likely will decrease.
Certificates of Deposit - These deposits have proven to be a reliable
source of funding as well, increasing a weighted average of 7.7 percent
annually over the past ten years. During 2001 and 2002, lower loan growth
and increases in demand and savings deposits diminished funding
requirements from certificates of deposit. As a result, the Company's
de-emphasis on advertising for certificates deposit beginning in 2001 was
continued in 2002, and certificates of deposit declined $25.8 million, or
6.5 percent. In 2003, with the probability that interest rates could
increase, the Company may again begin to promote certificates of deposits.
The Company generally does not accept brokered deposits that have a higher
retention risk.
Repurchase Agreements - Repurchase agreements are offered by the Company's
subsidiary bank to select customers who wish to sweep excess balances on a
daily basis for investment purposes. At December 31, 2002, the Company had
100 customers in its market providing $62.5 million in funding via these
arrangements. Repurchase agreement balances vary during the year, generally
peaking at year-end. During 2002, the lowest balance for repurchase
agreements at any month-end was $34.0 million and the highest balance at
any month-end was $82.5 million. The Company generally maintains a higher
balance in federal funds sold or other short-term investments when
repurchase agreement balances peak to offset their potential withdrawal.
The Company also has access to additional short-term funding of its
activities by selling, under agreement to repurchase, United States
Treasury securities and securities of United States Government agencies and
corporations and mortgage backed securities that are not pledged. At
December 31, 2002, the Company had $391 million in securities available and
not pledged.
Federal Funds and FHLB Lines of Credit - The Company has access to
liquidity via funding from federal funds and its FHLB lines of credit.
At December 31, 2002, the Company had federal funds balances totaling $40.5
million outstanding and had available federal funds lines of credit of
$20.0 million (comprised of lines of credit with a number of correspondent
banks). Federal funds lines are unsecured and short-term in nature,
maturing primarily from overnight to seven days. The Company periodically
borrows on its federal funds lines of credit, generally on an overnight
basis and at market rates.
The Company also has a $125.0 million line of credit with the FHLB with
$77.0 million available at December 31, 2002. All funding from the FHLB is
secured by residential mortgage loans contained in the Company's subsidiary
bank's loan portfolio. While the line may be utilized like a federal funds
line ($8.0 million was outstanding at December 31, 2002), the FHLB provides
numerous offerings, with rates fixed or adjustable and for various maturity
terms. At December 31, 2002, the Company had advances on its FHLB line of
credit totaling $48.0 million. Also see Note G, "Borrowings," on page 41 of
the 2002 Annual Report for additional information regarding our borrowings
from the FHLB.
Shareholders' Equity - The Company's earnings, generated principally by its
subsidiary bank, have consistently funded growth in total capital for the
Company and funded payments of dividends to shareholders. The Company
manages the size of equity through a program of share repurchases of its
outstanding Common Stock. At December 31, 2002, the Company held 1,659,377
of its own shares, representing approximately $18.6 million in treasury
stock. The Company is subject to rules and regulations pertaining to its
capital levels, on a consolidated basis and at a subsidiary level. Based
upon required capital ratio calculations, the Company and its subsidiaries
presently meet and exceed all measures of capital adequacy, as defined by
regulation.
Parent Company Revolving Line of Credit - On September 6, 2002, the parent
company, Seacoast Banking Corporation of Florida, renewed a revolving line
of credit totaling $5.0 million, which, if drawn upon, may be used for
general corporate purposes, including but not limited to the capital needs
of the Company and its subsidiaries and the repurchase of Common Stock (See
"Shareholders' Equity" above). Covenants pertaining to the line require an
interest coverage ratio not greater than 3.0x, a non-performing asset ratio
less than or equal to 1.00 percent, and capital ratios defined as
"well-capitalized" by regulatory standards. No amounts have been drawn on
this line.
Significant Future Financial Commitments - The Company is obligated under
various non-cancelable operating leases for equipment, buildings and land.
At December 31, 2002, future minimum lease payments under existing leases
with initial or remaining terms in excess of one year are as follows:
Committed Amount
----------------
(Dollars in millions) Total 1 Year 2-3 Years 4-5 Years >5 Years
- --------------------------------------------------------------------------------
Operating Leases $13.1 $1.8 $3.1 $1.9 $6.3
Rent expense charged to operations was $1.6 million in 2002, $1.6 million in
2001, and $1.7 million in 2000.
Certain property is leased on ordinary commercial terms from related
parties of the Company at prevailing rental rates. Lease payments to these
individuals were $263,000 in 2002, $260,000 in 2001, and $255,000 in 2000.
Commitments with Off Balance Sheet Risk
The Company's subsidiary bank is a party to financial instruments with off
balance sheet risk in the normal course of business to meet the financing needs
of its customers. These financial instruments include commitments to extend
credit and standby letters of credit. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. Standby letters of credit are
conditional commitments issued by the subsidiary bank to guarantee the
performance of a customer to a third party. Those guarantees are primarily
issued to support public and private borrowing arrangements, including
commercial paper, bond financing and similar transactions. The subsidiary bank's
exposure to credit loss in the event of non-performance by the other party to
the financial instrument for commitments to extend credit and standby letters of
credit is represented by the contract or notional amount of those instruments.
The subsidiary bank holds collateral supporting standby lines of credit for
which collateral is deemed necessary. At December 31, 2002, commitments to
extend credit totaled $135.7 million and standby letters of credit totaled $2.1
million.
Transactions with Related Parties
One of the sources of the Company's business is loans in the ordinary
course of its business to directors, officers and other members of management.
These loans are made on the same terms as all other loans and do not involve
more than normal risk of collectibility. The aggregate dollar amount of these
loans was approximately $4.0 million and $4.6 million at December 31, 2002 and
2001, respectively. During 2002, $1.5 million of new loans were made and
repayments totaled $2.1 million.
Trading Activities
The Company presently does not engage in any activities that it believes
would be defined as "trading."
Item 7A. Market Risk
The information regarding securities owned by the Company set forth in
Table 15, "Securities Held for Sale," and Table 16, "Securities Held for
Investment," on page 23 of the 2002 Annual Report is incorporated herein by
reference. Table 19, "Interest Rate Sensitivity Analysis", the narrative under
the heading of "Securities" on page 26, and the narrative under the heading of
"Interest Rate Sensitivity" on page 27 of the 2002 Annual Report are
incorporated herein by reference. See Exhibit 13 to this report for a complete
copy of the 2002 Annual Report.
Market risk refers to potential losses arising from changes in interest
rates, and other relevant market rates or prices.
Interest rate risk, defined as the exposure of net interest income and
Economic Value of Equity (EVE) to adverse movements in interest rates, is
Seacoast's primary market risk, and mainly arises from the structure of the
balance sheet (non-trading activities). Seacoast is also exposed to market risk
in its investing activities. The Asset and Liability Management Committee (ALCO)
meets regularly and is responsible for reviewing the interest rate sensitivity
position of the Company and establishing policies to monitor and limit exposure
to interest rate risk. The policies established by ALCO are reviewed and
approved by the Company's Board of Directors. The primary goal of interest rate
risk management is to control exposure to interest rate risk, within policy
limits approved by the Board. These limits reflect Seacoast's tolerance for
interest rate risk over short-term and long-term horizons.
Seacoast also performs valuation analysis, which is used for discerning
levels of risk present in the balance sheet that might not be taken into account
in the net interest income simulation analysis. Whereas net interest income
simulation highlights exposures over a relatively short time horizon, valuation
analysis incorporates all cash flows over the estimated remaining life of all
balance sheet positions. The valuation of the balance sheet, at a point in time,
is defined as the discounted present value of asset cash flows minus the
discounted value of liability cash flows, the net of which is referred to as
EVE. The sensitivity of EVE to changes in the level of interest rates is a
measure of the longer-term repricing risk and options risk embedded in the
balance sheet. In contrast to the net interest income simulation, which assumes
interest rates will change over a period of time, EVE uses instantaneous changes
in rates. EVE values only the current balance sheet, and does not incorporate
the growth assumptions that are used in the net interest income simulation
model. As with the net interest income simulation model, assumptions about the
timing and variability of balance sheet cash flows are critical in the EVE
analysis. Particularly important are the assumptions driving prepayments and the
expected changes in balances and pricing of the indeterminate deposit
portfolios. As of December 31, 2002, an instantaneous 100 basis point increase
in rates is estimated to increase the EVE 6.5% versus the EVE in a stable rate
environment. An instantaneous 100 basis point decrease in rates is estimated to
decrease the EVE 7.2% versus the EVE in a stable rate environment. These changes
are within the established policy limits.
While an instantaneous and severe shift in interest rates is used in this
analysis to provide an estimate of exposure under an extremely adverse scenario,
management believes that a gradual shift in interest rates would have a much
more modest impact. Since EVE measures the discounted present value of cash
flows over the estimated lives of instruments, the change in EVE does not
directly correlate to the degree that earnings would be impacted over a shorter
time horizon, i.e., the next fiscal year. Further, EVE does not take into
account factors such as future balance sheet growth, changes in product mix,
changes in yield curve relationships, and changing product spreads that could
mitigate the adverse impact of changes in interest rates.
Item 8. Financial Statements and Supplementary Data
The report of PricewaterhouseCoopers LLP, independent certified public
accountants, and the consolidated financial statements are included on pages 32
through 47 of the 2002 Annual Report and are incorporated herein by reference.
"Selected Quarterly Information - Consolidated Quarterly Average Balances,
Yields & Rates" and "Quarterly Consolidated Income Statements" are included on
pages 29 through 31 of the 2002 Annual Report and are incorporated herein by
reference. See Exhibit 13 to this report for a complete copy of the 2002 Annual
Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
Information concerning the directors and executive officers of Seacoast is
set forth under the headings "Proposal One - Election of Directors,"
"Information About the Board of Directors and its Committees" and "Executive
Officers" on pages 3 through 9 of the 2003 Proxy Statement, as well as under the
heading "Section 16(a) Reporting" on page 23 of the 2003 Proxy Statement and is
incorporated herein by reference.
Item 11. Executive Compensation
Information regarding the compensation paid by Seacoast to its executive
officers is set forth under the headings "Proposal One - Election of Directors -
Compensation of Executive Officers," "Salary and Benefits Committee Report,"
"Summary Compensation Table," "Grants of Options/SARs in 2002," "Aggregated
Options/SAR Exercises in 2002 and 2002 Year-End Option/SAR Values," "Profit
Sharing Plan," "Executive Deferred Compensation Plan," "Performance Graph," and
"Employment and Severance Agreements" on pages 9 through 11 and pages 14 through
17 of the 2003 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding the ownership of Seacoast's Common Stock is set forth
under the headings "Proposal One - Election of Directors - General" on pages 4
through 8, "Proposal One - Election of Directors - Management Stock Ownership"
on page 9, and "Principal Shareholders" on pages 19 and 20 of the 2003 Proxy
Statement, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and transactions between
Seacoast and its officers, directors and significant shareholders is set forth
under the heading "Proposal One - Election of Directors - Salary and Benefits
Committee Interlocks and Insider Participation" and "Certain Transactions and
Business Relationships" on page 18 of the 2003 Proxy Statement and is
incorporated herein by reference.
Item 14. Evaluation of Disclosure Controls and Procedures
The Company's management, including but not limited to Mr. Dennis S.
Hudson, III, as Chief Executive Officer, and Mr. William R. Hahl, as Chief
Financial Officer, have evaluated the Company's disclosure controls and
procedures. Under rules promulgated by the Securities and Exchange Commission,
disclosure controls and procedures are defined as those "controls or other
procedures of an issuer that are designed to ensure that information required to
be disclosed by the issuer in the reports filed or submitted by it under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms."
Based upon the evaluation of the Company's disclosure controls and
procedures, it was determined by management that such controls and procedures
were effective as of March 24, 2003, the date of the conclusion of the
evaluation.
Further, there were no significant changes in the internal controls or in
other factors that could significantly affect these controls after March 24,
2003, the date of the conclusion of the evaluation of disclosure controls and
procedures.
Part IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
a)(1) List of all financial statements
The following consolidated financial statements and report of independent
certified public accountants of Seacoast, included in the 2002 Annual Report,
are incorporated by reference into Part II, Item 8 of this Annual Report on Form
10-K.
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 2002 and 2001
Consolidated Statements of Income for the years ended
December 31, 2002, 2001 and 2000
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000
Notes to Consolidated Financial Statements
a)(2) List of Financial Statement Schedules
Schedules to the consolidated financial statements required by Article 9 of
Regulation S-X are not required under the related instructions or are
inapplicable, and therefore have been omitted.
a)(3) Listing of Exhibits
The following Exhibits are filed as part of this report in Item 14 (c):
Exhibit 3.1 Amended and Restated Articles of Incorporation
Exhibit 3.2 Amended and Restated By-laws of the Corporation
Exhibit 4.1 Specimen Common Stock Certificate
Exhibit 10.1 Amended and Restated Retirement Savings Plan, with Amendments
Exhibit 10.2 Employee Stock Purchase Plan
Incorporated herein by reference from the Company's Registration Statement
on Form S-8 File No. 33-25627, dated November 18, 1988.
Exhibit 10.3 Amendment #1 to the Employee Stock Purchase Plan
Incorporated herein by reference from the Company's Annual Reports on Form
10-K, dated March 29, 1991.
Exhibit 10.4 Executive Employment Agreement
Dated March 22, 1991 between A. Douglas Gilbert and the Bank, incorporated
herein by reference from the Company's Annual Reports on Form 10-K, dated
March 29, 1991.
Exhibit 10.5 Executive Employment Agreement
Dated January 18, 1994 between Dennis S. Hudson, III and the Bank,
incorporated herein by reference from the Company's Annual Reports on Form
10-K, dated March 28, 1995.
Exhibit 10.6 Executive Employment Agreement
Dated July 31, 1995 between C. William Curtis, Jr. and the Bank,
incorporated herein by reference from the Company's Annual Reports on Form
10-K, dated March 28, 1996.
Exhibit 10.8 1991 Stock Option & Stock Appreciation Rights Plan
Incorporated herein by reference from the Company's Registration Statements
on Form S-8 File No. 33-61925, dated August 18, 1995, and File No. 33-46504
dated March 18, 1992.
Exhibit 10.9 1996 Long Term Incentive Plan
Incorporated herein by reference from the Company's Registration Statement
on Form S-8 File No. 333-91859, dated December 1, 1999.
Exhibit 10.10 Non-Employee Director Stock Compensation Plan
Incorporated herein by reference from the Company's Registration Statement
on Form S-8 File No. 333-70399 dated January 11, 1999.
Exhibit 10.11 2000 Long Term Incentive Plan
Incorporated herein by reference from the Company's Registration Statement
on Form S-8 File No. 333-49972, dated November 15, 2000.
Exhibit 10.12 Executive Deferred Compensation Plan Dated October 17, 2000,
but effective November 1, 2000.
Exhibit 10.13 Line of Credit Agreement
Exhibit 13 2002 Annual Report
The following portions of the 2002 Annual Report are incorporated herein by
reference:
Financial Highlights
Financial Review - Management's Discussion and Analysis
Selected Quarterly Information - Quarterly Consolidated
Income Statements
Selected Quarterly Information - Consolidated Quarterly
Average Balances, Yields & Rates
Financial Statements
Notes to Consolidated Financial Statements
Financial Statements - Report of Independent Certified
Public Accountants
Exhibit 21 Subsidiaries of Registrant
Exhibit 23.1 Consent of Independent Certified Public Accountants
Exhibit 23.2 Notice of Inability to Obtain Consent From Arthur Andersen LLP
Exhibit 99.1 Section 1350 Certifications
b) Reports on Form 8-K No reports on Form 8-K were filed during the last
quarter of 2002.
c) Exhibits The response to this portion of Item 14 is submitted under a
separate section of this report.
d) Financial Statement Schedules None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Stuart,
State of Florida, on the 28th day of March 2003.
SEACOAST BANKING CORPORATION OF FLORIDA
(Registrant)
By: /s/ Dennis S. Hudson, III
----------------------------------------
Dennis S. Hudson, III
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date
/s/ Dale M. Hudson March 28, 2003
- ------------------------------
Dale M. Hudson, Chairman of the Board
and Director
/s/ Dennis S. Hudson, III March 28, 2003
- ------------------------------
Dennis S. Hudson, III, President,
Chief Executive Officer and Director
/s/ William R. Hahl March 28, 2003
-----------------------------
William R. Hahl, Executive Vice President and
Chief Financial Officer
/s/ Jeffrey C. Bruner March 28, 2003
-----------------------------
Jeffrey C. Bruner, Director
/s/ John H. Crane March 28, 2003
-----------------------------
John H. Crane, Director
/s/ Evans Crary, Jr. March 28, 2003
-----------------------------
Evans Crary, Jr., Director
/s/ Christopher E. Fogal March 28, 2003
-----------------------------
Christopher E. Fogal, Director
/s/ Jeffrey S. Furst March 28, 2003
-----------------------------
Jeffrey S. Furst, Director
/s/ A. Douglas Gilbert March 28, 2003
-----------------------------
A. Douglas Gilbert, Director, Senior Executive Vice
President, & Chief Operating & Credit Officer
/s/ Dennis S. Hudson, Jr. March 28, 2003
- ------------------------------
Dennis S. Hudson, Jr., Director
/s/ John R. Santarsiero, Jr. March 28, 2003
- ------------------------------
John R. Santarsiero, Jr., Director
/s/ Thomas H. Thurlow, Jr. March 28, 2003
-----------------------------
Thomas H. Thurlow, Jr., Director
EX-13
2002 ANNUAL REPORT
Financial Highlights
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------
FOR THE YEAR
Net interest income $47,422 $45,493 $42,095 $43,089 $40,213
Provision for loan losses 0 0 600 660 1,710
Noninterest income
Securities gains (losses) 457 915 (12) 309 612
Other 16,874 15,108 13,150 12,148 11,775
Noninterest expenses 39,790 38,060 34,877 35,983 35,721
Income before income taxes 24,963 23,456 19,756 18,903 15,169
Provision for income taxes 9,677 9,326 7,668 7,119 5,606
Net income 15,286 14,130 12,088 11,784 9,563
Core earnings (1) 24,461 22,624 20,459 19,439 16,565
Per share data
Net income
Diluted 1.07 0.99 0.84 0.80 0.61
Basic 1.10 1.00 0.84 0.81 0.63
Cash dividends declared 0.41 .38 0.35 0.33 0.30
Book value 7.25 6.70 5.96 5.32 5.29
Dividends to net income 37.30% 37.60% 41.60% 39.80% 47.40%
AT YEAR END
Assets $1,281,927 $1,225,964 $1,151,373 $1,081,032 $1,092,230
Securities 498,459 306,352 204,664 213,654 261,183
Net loans 681,335 777,993 837,328 771,294 695,207
Deposits 1,030,540 1,015,154 957,089 905,960 905,202
Shareholders' equity 100,747 93,519 84,263 77,111 78,442
Performance ratios
Return on average assets 1.26% 1.22% 1.09% 1.11% 0.98%
Return on average equity 15.75 15.62 14.09 14.64 11.64
Net interest margin (2) 4.13 4.12 4.03 4.34 4.40
Average equity to average
assets 7.99 7.78 7.76 7.57 8.39
- --------------------------------------------------------------------------------
(1) Income before taxes excluding the provision for loan losses, securities
gains (losses) and expenses associated with foreclosed and repossessed
asset management and dispositions.
(2) On a fully taxable equivalent basis.
================================================================================
FINANCIAL REVIEW
================================================================================
2002 Management's Discussion and Analysis
Net income for 2002 totaled $15,286,000 or $1.07 per share diluted, compared to
$14,130,000 or $0.99 per share diluted in 2001 and $12,088,000 or $0.84 per
share diluted in 2000. Return on average assets was 1.26 percent and return on
average shareholders' equity was 15.75 percent for 2002, compared to 2001's
results of 1.22 percent and 15.62 percent, respectively, and 2000's performance
of 1.09 percent and 14.09 percent, respectively.
Profits realized from investment securities sold of $457,000 ($281,000 after
tax) added $0.02 per share diluted to 2002's results. Earnings in 2001 were
impacted favorably by securities gains of $915,000 ($562,000 after tax) or $0.04
per share diluted. Note that earnings per share results for 2002 and prior
periods reflect the three-for-one stock split on Common Stock effective July 15,
2002 for shareholders of record on July 1, 2002.
Results of Operations
NET INTEREST INCOME
- -------------------
Net interest income (on a fully taxable equivalent basis) for 2002 totaled
$47,603,000, $1,890,000 or 4.1 percent higher than for 2001. For 2002, net
interest margin increased one basis point to 4.13 percent from 4.12 percent for
2001. Net interest margin fluctuated during 2002, increasing from 4.05 percent
for the first quarter to 4.23 percent for the second quarter, and then tapering
off to 4.15 percent for the third quarter and 4.02 percent for the fourth
quarter.
The yield curve flattened 75-100 basis points in the second half of 2002,
lowering long-term mortgage yields. This resulted in accelerated principal
repayments of loans and investment securities collateralized by residential
properties. These cash flows were reinvested at lower rates and resulted in
margin compression. With continued low rates in 2003, it is likely that the
Company will experience further margin declines in the range of 6-14 basis
points during the first six months of the year. It is believed that sufficient
commercial real estate loan fundings will occur during the first half of 2003 to
offset further margin declines for the remainder of the year.
- --------------------------------------------------------------------------------
TABLE 1 - Condensed Income Statement as a Percent of Average Assets
(Tax equivalent basis)
- --------------------------------------------------------------------------------
2002 2001 2000
------------------------
Net interest income 3.92% 3.93% 3.83%
Provision for loan losses 0.00 0.00 0.05
Noninterest income
Securities gains 0.04 0.08 0.00
Other 1.39 1.30 1.19
Noninterest expenses 3.28 3.27 3.16
------------------------
Income before income taxes 2.07 2.04 1.81
Provision for income taxes
including tax equivalent
adjustment 0.81 0.82 0.72
------------------------
Net Income 1.26% 1.22% 1.09%
========================
Since December 2000, the Federal Reserve has been aggressive in reducing
short-term interest rates. A 50 basis point reduction in December 2000 and
subsequent reductions totaling 400 basis points in 2001 were imposed (125 basis
points occurring in the fourth quarter of 2001). An additional 50 basis point
reduction occurred in November 2002. The average cost of interest bearing
liabilities for all of 2002 decreased 142 basis points to 2.46 percent from a
year ago results, with rates for certificates of deposit (CDs) and short-term
borrowings (principally composed of low cost sweep repurchase agreements and
federal funds purchased) decreasing the most, 162 and 182 basis points,
respectively. The average balance for time deposits decreased, $38.3 million to
$381.5 million, while short-term borrowings increased $3.4 million to $55.0
million. Also reduced were rates paid on NOW, savings and money market deposits
which declined 96, 119 and 80 basis points, respectively, during 2002 compared
to a year ago. The average balance for NOW, savings and money market balances
(aggregated) increased $61.4 million or 15.4 percent from 2001, and totaled
$461.7 million for the year. Average noninterest bearing deposits increased
$19.2 million or 12.4 percent to $174.2 million. Lower interest rates, an
uncertain economic environment, and turmoil in financial markets have aided
growth in low-cost/no cost funding sources as customers sought the stability and
safety of bank products. The Company continues to focus on its longstanding
strategy of building core customer relationships and tailoring its products and
services to satisfy these customers.
TABLE 2 - Changes in Average Earning Assets
Increase/(Decrease) Increase/(Decrease)
(Dollars in thousands) 2002 vs 2001 2001 vs 2000
- --------------------------------------------------------------------------------
Securities
Taxable $ 127,227 52.8% $ 26,818 12.5%
Nontaxable (1,583) (29.9) (2,234) (29.7)
Federal funds sold and
other short term
investments 941 3.0 22,950 278.1
Loans, net (82,157) 9.9 10,664 1.3
--------------------------------------------------------
TOTAL $ 44,428 4.0% $ 58,198 5.5%
========================================================
Lower interest rates generated higher loan and investment principal prepayments
with the funds reinvested in earning assets at lower rates. Therefore the yield
on earning assets for 2002 declined 119 basis points to 6.13 percent from 7.32
percent last year. Decreases in the yield on loans of 51 basis points to 7.42
percent, the yield on securities of 173 basis points to 3.92 percent and the
yield on federal funds sold of 257 basis points to 1.64 percent were realized in
2002. Average earning assets for 2002 increased $44.4 million or 4.0 percent
when compared to 2001. Average loan balances declined $82.2 million to $748.9
million, average investment securities increased $125.6 million to $371.8
million, and average federal funds sold increased $0.9 million to $32.1 million.
The decline in loans was principally in residential real estate credits,
reflecting the low interest rate environment that provided customers the
opportunity to refinance. Consistent with our strategy to generate more fee
income, and reduce interest rate risks, these loans were sold servicing
released. Activity in the Company's securities portfolio was significant, with
maturing securities of $309.4 million and purchases totaling $545.7 million
transacted during the year. A flatter yield curve in 2002 increased principal
repayments from the Company's fixed rate collateralized mortgage obligation
(CMO) investments. The average duration of the $440.9 million in fixed rate CMOs
is relatively short at 1.75 years at December 31, 2002. Cash returned from these
investments in the fourth quarter totaled $89.2 million. Should interest rates
decline further, monthly cash return could increase to $36 million per month. If
the yield curve would become steeper by 50 basis points, cash returned would
decrease to approximately $20-25 million per month. Because many of the
securities' original purchase prices were above par, the yield on the securities
portfolio fluctuates in inverse proportion to the changes in cash flows noted
above due to the amortization of the premium. Securities activity reflects an
effort to manage excess funding and maintain a stable net interest margin.
TABLE 3 - Rate/Volume Analysis (on a Tax Equivalent Basis)
2002 vs 2001
Due to change in:
(Dollars in thousands) ----------------------------------------------
Amount of increase (decrease) Volume Rate Mix Total
- ------------------------------------------------------------------------------
EARNING ASSETS
Securities
Taxable $ 7,120 $(4,141) $(2,187) $ 792
Nontaxable (126) (2) 1 (127)
----------------------------------------------
6,994 (4,143) (2,186) 665
Federal funds sold and
other short term
investments 39 (802) (24) (787)
Loans (6,514) (4,262) 421 (10,355)
----------------------------------------------
TOTAL EARNING ASSETS 519 (9,207) (1,789) (10,477)
INTEREST BEARING LIABILITIES
NOW 59 (561) (30) (532)
Savings deposits 53 (1,726) (29) (1,702)
Money market accounts 1,100 (1,571) (447) (918)
Time deposits (2,124) (6,809) 622 (8,311)
----------------------------------------------
(912) (10,667) 116 (11,463)
Federal funds purchased
and other short term
borrowings 98 (940) (62) (904)
Long term borrowings 0 0 0 0
----------------------------------------------
TOTAL INTEREST BEARING
LIABILITIES (814) (11,607) 54 (12,367)
----------------------------------------------
NET INTEREST INCOME $ 1,333 $ 2,400 $(1,843) $ 1,890
==============================================
TABLE 3 - Rate/Volume Analysis (on a Tax Equivalent Basis)- continued -
2001 vs 2000
Due to change in:
(Dollars in thousands) ----------------------------------------------
Amount of increase (decrease) Volume Rate Mix Total
- ------------------------------------------------------------------------------
EARNING ASSETS
Securities
Taxable $ 1,666 $(1,314) $ (165) $ 187
Nontaxable (177) 0 0 (177)
----------------------------------------------
1,489 (1,314) (165) 10
Federal funds sold and
other short term
investments 1,394 (154) (428) 812
Loans 853 (561) (7) 285
----------------------------------------------
TOTAL EARNING ASSETS 3,736 (2,029) (600) 1,107
INTEREST BEARING LIABILITIES
NOW 47 (72) (3) (28)
Savings deposits 258 (1,429) (84) (1,255)
Money market accounts 267 (322) (22) (77)
Time deposits 517 (660) (15) (158)
----------------------------------------------
1,089 (2,483) (124) (1,518)
Federal funds purchased
and other short term
borrowings 680 (939) (312) (571)
Long term borrowings (128) (17) 1 (144)
----------------------------------------------
TOTAL INTEREST BEARING
LIABILITIES 1,641 (3,439) (435) (2,233)
----------------------------------------------
NET INTEREST INCOME $ 2,095 $ 1,410 $ (165) $ 3,340
==============================================
The mix of earning assets and interest bearing liabilities has changed since
2001. Average loans (the highest yielding component of earning assets) as a
percentage of average earning assets totaled 65.0 percent in 2002 compared to
75.0 percent a year ago, while average securities increased from 22.2 percent to
32.2 percent and average federal funds sold remained the same at 2.8 percent.
While total loans did not increase, the Company successfully changed the mix of
loans, as commercial and consumer outstandings increased as a percentage of
total loans and lower yielding residential loan balances declined (see "Loan
Portfolio"). Average CDs (a higher cost component of interest bearing
liabilities) as a percentage of interest bearing liabilities decreased to 40.7
percent, compared to 46.0 percent in 2001, reflecting diminished funding
requirements and allowing for lower rates to be paid on CDs. Approximately $210
million in CDs will mature in 2003, providing opportunity for these volumes to
re-price to lower rates (assuming the Federal Reserve maintains short-term
interest rates at existing levels). Lower cost interest bearing deposits (NOW,
savings and money market balances) increased to 49.2 percent of interest bearing
liabilities, versus 43.9 percent a year ago, favorably affecting deposit mix.
Borrowings (including federal funds purchased, sweep repurchase agreements with
customers of the Company's subsidiary, and other borrowings, entirely comprised
of Federal Home Loan Bank advances) remained the same at 10.1 percent of
interest bearing liabilities.
Net interest income (on a fully tax equivalent basis) increased $3,340,000 or
7.9 percent to $45,713,000 for 2001, compared to a year earlier. For 2001, net
interest margin increased to 4.12 percent from 4.03 percent for 2000. During
2001, on a tax equivalent basis, net interest margin improved from 4.10 percent
in the first quarter to 4.12 percent in the second quarter, to 4.13 percent in
the third quarter, to 4.14 percent in the fourth quarter.
TABLE 4 - Changes in Average Interest Bearing Liabilities
Increase/(Decrease) Increase/(Decrease)
(Dollars in thousands) 2002 vs 2001 2001 vs 2000
- --------------------------------------------------------------------------------
NOW $ 3,097 5.3% $ 2,320 4.2%
Savings deposits 2,458 1.7 8,084 5.9
Money market
accounts 55,907 28.4 12,454 6.8
Time deposits (38,335) (9.1) 9,062 2.2
Federal funds
purchased and
other short term
borrowings 3,412 6.6 12,868 33.2
Other borrowings 0 0 (1,975) (4.7)
-----------------------------------------------
TOTAL $26,539 2.9% $42,813 4.9%
===============================================
In 2001 the cost of interest bearing liabilities declined 45 basis points to
3.88 percent from the prior year. The rates for NOW, savings, money market
accounts, CDs, and short-term borrowings declined 13, 104, 17, 16, and 243 basis
points, respectively. The rate for NOW accounts decreased less than what might
be expected as a result of the growth in balances in a product called Investor
NOW. The rate paid on this product is indexed to third party mutual funds for
balances in excess of $100,000. Average outstanding balances for this account
during 2001 increased to $28.9 million from $5.1 million a year earlier. Another
NOW account, Money Manager, also pays a premium rate and the average balance for
this account increased $8.8 million during 2001, versus 2000.
Lower interest rates significantly impacted prepayment of loans and investments
in 2001. These funds and funds from deposit increases had to be invested in
earning assets at lower rates. The yield on earning assets for 2001 decreased 30
basis points to 7.32 percent, compared to one year earlier. The yield on loans
declined 7 basis points to 7.93 percent, the yield on securities decreased 62
basis points to 5.65 percent, and the yield on federal funds sold declined 186
basis points to 4.21 percent. Average earning assets increased $58.2 million or
5.5 percent during 2001, with increases of $24.5 million to $246.2 million in
securities, $10.7 million to $831.1 million in loans, and $23.0 million to $31.2
million in federal funds sold.
The mix of earning assets, deposits and other interest bearing liabilities had a
positive impact on the margin during 2001. Average loans (the highest yielding
component of earning assets) as a percentage of earning assets decreased from
78.1 percent to 75.0 percent from prior year, while securities increased from
21.1 percent to 22.2 percent and federal funds sold increased from 0.8 percent
to 2.8 percent. Consumer and commercial volumes increased as a percentage of
total loans while residential loan balances declined, a favorable change.
Average CDs (a higher cost component of interest bearing liabilities) as a
percentage of interest bearing liabilities decreased to 46.0 percent from 47.3
percent in 2000. As in 2002, lower loan growth in 2001 diminished funding
requirements, thereby allowing for lower rates to be paid for CDs. Early in 2001
management concluded that interest rates would continue to decrease. Therefore,
short three to five month CDs were marketed so that they could be re-priced at
lower rates. Lower cost core interest bearing deposits (average NOW, savings and
money market deposits) grew $22.9 million or 6.1 percent to $400.3 million and
average noninterest bearing demand deposits grew $10.6 million or 7.4 percent to
$155.0 million, favorably affecting the Company's deposit mix. Borrowings
(including federal funds purchased, sweep repurchase agreements with customers
and other borrowings, entirely comprised of Federal Home Loan Bank advances)
increased to 10.1 percent of interest bearing liabilities from 9.3 percent in
2000, reflecting an increase in the balances maintained by customers utilizing
sweep arrangements.
Proceeds from securities sales totaled $154.0 million during 2001 and purchases
totaled $350.4 million. Activity in the first quarter of 2001 ($65.9 million in
sales and $106.1 million in purchases) reflected a restructuring effort to
maximize earnings in the declining rate environment. In the second quarter of
2001 $69.1 million in sales and $65.9 million in purchases were transacted, with
$58.8 million in sales transacted in late June, in part to meet seasonal
liquidity, but to also position the Company to benefit from possible future
interest rate increases. No sales occurred in the third quarter of 2001, but of
the $70.8 million in purchase transacted, $30.2 million was invested in floating
rate securities based on the expectation (prior to the terrorist event on
September 11, 2001) that further interest rate reductions by the Fed would be on
hold. Sales in the fourth quarter of 2001 totaling $19.0 million were transacted
to realize appreciation on securities that management believed had reached their
maximum potential total return, and securities of $107.6 million were acquired
with durations ranging from 0.4 years to 3.3 years.
PROVISION FOR LOAN LOSSES
- -------------------------
No provisioning was recorded in 2002 nor in 2001, reflecting the Company's
credit quality, low net charge-offs and nonperforming assets, and slower loan
growth. A provision of $600,000 was recorded in 2000. Net charge-offs totaled
$208,000 or 0.03 percent of average loans for 2002, compared to net charge-offs
of $184,000 or 0.02 percent of average loans for 2001, and $252,000 or 0.03
percent of average loans for 2000. These ratios are better than the banking
industry as a whole.
TABLE 5 - Three Year Summary
Average Balances, Interest Income and Expenses, Yields and Rates (1)
(Dollars in thousands) 2002
- ---------------------------------------------------
Average Yield/
Balance Interest Rate
-------------------------
EARNING ASSETS
Securities
Taxable $368,141 $14,274 3.88%
Nontaxable 3,704 292 7.88
-------------------------
371,845 14,566 3.92
Federal funds sold and
other short term
investments 32,142 526 1.64
Loans (2) 748,936 55,546 7.42
--------------------------
TOTAL EARNING ASSETS 1,152,923 70,638 6.13
Allowance for loan
losses (6,895)
Cash and due from
banks 39,886
Bank premises and
equipment 15,456
Other assets 13,096
---------------------------
$1,214,466
===========================
INTEREST BEARING LIABILITIES
NOW $61,343 $ 575 0.94%
Savings deposits 147,889 1,423 0.96
Money market
accounts 252,517 2,949 1.17
Time deposits 381,466 14,949 3.92
Federal funds
purchased and
other short
term borrowings 55,015 573 1.04
Other borrowings 40,000 2,566 6.42
------------------------
TOTAL INTEREST
BEARING LIABILITIES 938,230 23,035 2.46
Demand deposits 174,154
Other liabilities 5,010
--------------------------
1,117,394
Shareholders'
equity 97,072
--------------------------
$1,214,466
==========================
Interest expense
as % of earning
assets 2.00%
Net interest
income/yield on
earning assets $47,603 4.13%
===========================
TABLE 5 - Three Year Summary - continued -
Average Balances, Interest Income and Expenses, Yields and Rates (1)
(Dollars in thousands) 2001
- --------------------------------------------------
Average Yield/
Balance Interest Rate
--------------------------
EARNING ASSETS
Securities
Taxable $240,914 $13,482 5.60%
Nontaxable 5,287 419 7.93
--------------------------
246,201 13,901 5.65
Federal funds
sold and other
short term
investments 31,201 1,313 4.21
Loans (2) 831,093 65,901 7.93
---------------------------
TOTAL EARNING ASSETS 1,108,495 81,115 7.32
Allowance for loan
losses (7,187)
Cash and due from
banks 31,138
Bank premises and
equipment 16,057
Other assets 13,945
----------------------------
$1,162,448
============================
INTEREST BEARING LIABILITIES
NOW $58,246 $1,107 1.90%
Savings deposits 145,431 3,125 2.15
Money market
accounts 196,610 3,867 1.97
Time deposits 419,801 23,260 5.54
Federal funds
purchased and
other short
term borrowings 51,603 1,477 2.86
Other borrowings 40,000 2,566 6.42
---------------------------
TOTAL INTEREST
BEARING LIABILITIES 911,691 35,402 3.88
Demand deposits 154,990
Other liabilities 5,285
---------------------------
1,071,966
Shareholders'
equity 90,482
----------------------------
$1,162,448
============================
Interest expense
as % of earning 3.19%
assets
Net interest
income/yield on
earning assets $45,713 4.12%
============================
TABLE 5 - Three Year Summary - continued -
Average Balances, Interest Income and Expenses, Yields and Rates (1)
(Dollars in thousands) 2000
- ---------------------------------------------------
Average Yield/
Balance Interest Rate
--------------------------
EARNING ASSETS
Securities
Taxable $214,096 $13,295 6.21%
Non Taxable 7,521 596 7.92
--------------------------
221,617 13,891 6.27
Federal funds
sold and other
short term
investments 8,251 501 6.07
Loans (2) 820,429 65,616 8.00
--------------------------
TOTAL EARNING ASSETS 1,050,297 80,008 7.62
Allowance for loan
losses (7,099)
Cash and due from
banks 30,258
Bank premises and
equipment 17,024
Other assets 14,300
---------------------------
$1,104,780
===========================
INTEREST BEARING LIABILITIES
NOW $55,926 $1,135 2.03%
Savings deposits 137,347 4,380 3.19
Money market
accounts 184,156 3,944 2.14
Time deposits 410,739 23,418 5.70
Federal funds
purchased and
other short
term borrowings 38,735 2,048 5.29
Other borrowings 41,975 2,710 6.46
---------------------------
TOTAL INTEREST
BEARING LIABILITIES 868,878 37,635 4.33
Demand deposits 144,362
Other liabilities 5,774
---------------------------
1,019,014
Shareholders'
equity 85,766
---------------------------
$1,104,780
===========================
Interest expense
as % of earning
assets 3.58%
Net interest
income/yield on
earning assets $42,373 4.03%
===========================
- --------------------------------------------------------------------------------
(1) The tax equivalent adjustment is based on a 34% tax rate.
(2) Nonaccrual loans are included in loan balances. Fees on loans are included
in interest on loans.
The Company's loan portfolio mix has been changing (see "Table 9 - Loans
Outstanding"). The Company intends to continue to vary its loan portfolio mix by
emphasizing higher yield commercial and consumer credits while reducing its
exposure to 1-4 family lower yield residential loans. These changes may result
in loan loss provisions should the increased exposure result in greater inherent
losses in the loan portfolio. Besides loan mix, the overall level of net
charge-offs can be impacted by a decline in economic activity. Management
believes that its credit granting process contains a disciplined approach that
mitigates this risk and lowers the likelihood of significant increases in
charge-offs and nonperforming loans during economic slowdowns.
Management determines the provision for loan losses charged to operations by
constantly analyzing and monitoring delinquencies, nonperforming loans and the
level of outstanding balances for each loan classification, as well as the
amount of net charge-offs, and by estimating losses inherent in its portfolio.
While the Company's policies and procedures used to estimate the monthly
provision for loan losses charged to operations are considered adequate by
management and are reviewed from time to time by the Office of the Comptroller
of the Currency (OCC), there exist factors beyond the control of the Company,
such as general economic conditions both locally and nationally, which make
management's judgment as to the adequacy of the provision necessarily
approximate and imprecise (see "Nonperforming Assets" and "Allowance for Loan
Losses").
NONINTEREST INCOME
- -------------------
Table 6 shows noninterest income for the years indicated.
Noninterest income, excluding gains and losses from securities sales, totaled
$16,874,000 for 2002, an increase of $1,766,000 or 11.7 percent from a year ago.
Noninterest income was favorably impacted by growth in fee-based businesses.
Noninterest income accounted for 26.2 percent of operating revenue, compared to
24.9 percent last year and 23.8 percent in 2000.
Market turmoil began in late 2000 and carried through into 2001 affecting
brokerage revenues with consumers shifting from the purchase of investment
products to more conservative deposit products. Revenues rebounded somewhat in
2002 with brokerage commissions and fees increasing $240,000 or 13.3 percent
year over year. However, trust income was lower for 2002, declining $320,000 or
12.8 percent compared to last year. While financial markets improved recently
they are more likely to remain troubled. Even so, as demonstrated by 2002's
results, the Company believes it can be successful in its efforts to expand its
customer relationships through sales of investment management and brokerage
products, including insurance.
The Company is among the leaders in the production of residential mortgage loans
in its market. Beginning in late 2000, the Company began producing loans for
third party permanent investors to generate additional fee income and to better
manage interest rate risks. In 2002, residential loan production totaled $194
million and resulted in mortgage banking revenue of $3,364,000, an increase of
$908,000 or 37.0 percent compared to a year earlier. Mortgage banking revenue
for 2002 would have been higher if not for the addition of $100,000 to the
valuation allowance for mortgage servicing rights. Mortgage banking revenues are
partially dependent upon favorable interest rates, as well as, good overall
economic conditions. Both have been favorable in 2002. The Company expects to
derive further revenue growth in the future by increasing its market
penetration, market expansion and expanding the sources of fees collected from
this business. In August 2002, the Company opened a loan production office in
Northern Palm Beach County and added three loan originators. The expansion into
the fast growing Palm Beach market (Florida's top wealth market, expected to
grow at over 20 percent over the next ten years) is expected to generate
additional loan production and support ongoing increases in mortgage banking
fees should the interest rate and economic environment remain favorable.
Residential loans are processed by commissioned originators, as well as the
Company's branch personnel.
Greater usage of check cards during 2002 by core deposit customers and an
increased cardholder base increased interchange income to $980,000, an increase
of $245,000 or 33.3 percent from the prior year. Other deposit based electronic
funds transfer (EFT) fees increased $64,000 or 20.5 percent to $376,000. Service
charges on deposits decreased slightly, by 0.1 percent year over year to
$5,105,000.
Revenues from the sale of marine loans totaled $1,408,000 for 2002, an increase
of $665,000 or 89.5 percent from a year ago. The Company's marine financing
division (Seacoast Marine Finance) produced $92.3 million in luxury yacht loans
in 2002 compared to $72.5 million in 2001. Seacoast Marine Finance is
headquartered in Ft. Lauderdale, Florida, with personnel in Florida, Texas and
California. The Company announced in November 2002 a geographic expansion of its
marine finance division with the addition of key personnel in California to
serve the western marine markets. Their contribution to revenues since their
addition totaled approximately $340,000 for the year.
Noninterest income, excluding gains and losses from securities sales, totaled
$15,108,000 for 2001, an increase of $1,958,000 or 14.9 percent from 2000.
In 2001 brokerage revenue decreased $616,000 or 25.4 percent to $1,805,000.
Trust income was lower as well, declining $207,000 or 7.7 percent year over year
to $2,497,000. Market turmoil affected revenues significantly in 2001, with
consumers shifting from the purchase of investment products to more conservative
deposit products. Mortgage banking fees from loan sales totaled $1.7 million in
2001 and total fees earned from this business totaled $2,456,000, a 219.0
percent increase over year 2000. Significantly lower interest rates in 2001 were
partially responsible for loan production increasing from $90 million in 2000 to
$155 million in 2001. Also, the Company utilized correspondent lenders whose
mortgage programs allowed for attractive rates and increased the Company's
market share. Higher usage of check cards increased interchange income to
$735,000 in 2001, an increase of $307,000 or 71.7 percent. Other deposit based
EFT fees increased as well, by $85,000 or 37.4 percent to $312,000. Service
charges on deposits increased $245,000 or 5.0 percent to $5,110,000, largely due
to an increasing core deposit base from which to derive fees and greater
analysis fees collected from commercial customers as earnings credits declined
in the lower interest rate environment in 2001. The marine financing division
produced $72.5 million in loans, up $30.0 million year over year while adding
$26.4 million in marine assets to the loan portfolio and generating $743,000 in
fees from the sale of out of market loans, a $382,000 or 105.8 percent increase
year over year.
Proceeds from the sale of securities in 2002 totaled $38,131,000 with net gains
of $457,000 recognized. Proceeds from sales of securities in 2001 totaled
$154,018,000 and resulted in net gains of $915,000. Proceeds from sales of
securities in 2000 totaled $10,203,000, including net losses of $12,000. Sales
in 2002 were transacted to realize appreciation on securities that management
believed had reached their maximum potential total return. Sales of investments
in 2001 were transacted to restructure the portfolio for the new declining
interest rate environment, to manage seasonal funding declines, and in
mid-to-late 2001 to position the Company for possible future interest rate
increases.
TABLE 6 - Noninterest Income
Year Ended % Change
----------------------------------------------
(Dollars in thousands) 2002 2001 2000 02/01 01/00
- -----------------------------------------------------------------------
Service charges
on deposit
accounts $5,105 $5,110 $4,865 (0.1)% 5.0%
Trust fees 2,177 2,497 2,704 (12.8) (7.7)
Mortgage banking fees 3,364 2,456 770 37.0 219.0
Brokerage commissions
and fees 2,045 1,805 2,421 13.3 (25.4)
Marine finance fees 1,408 743 361 89.5 105.8
Debit card income 980 735 428 33.3 71.7
Other deposit based
EFT fees 376 312 227 20.5 37.4
Other 1,419 1,450 1,374 (2.1) 5.5
----------------------------------------------
16,874 15,108 13,150 11.7 14.9
Securities
gains(losses) 457 915 (12) (50.1) n/m
----------------------------------------------
TOTAL $17,331 $16,023 $13,138 8.2% 22.0%
==============================================
n/m = not meaningful
- --------------------------------------------------------------------------------
NONINTEREST EXPENSES
- --------------------
Table 7 shows the Company's noninterest expenses for the years indicated.
When compared to 2001, noninterest expenses for 2002 increased by $1,730,000 or
4.5 percent to $39,790,000. The Company's overhead ratio has decreased over the
last several years. For 2002, the ratio is 61.7 percent, versus 62.6 percent a
year ago.
Salaries and wages increased $985,000 or 6.7 percent in 2002 to $15,761,000,
compared to prior year, with base salaries increasing $1,066,000 or 8.4 percent
and commissions $79,000 or 6.0 percent higher. Partially offsetting was a
decline of $85,000 in temporary services and a higher deferral of loan
origination costs of $103,000. The increase in base salaries and commissions
included $38,000 for staff at the Company's new branch location at a WalMart in
Port St. Lucie, Florida, opened in October of this year, $39,000 for the
full-year impact of the WalMart branch in Ft. Pierce, Florida, opened in
mid-2001, $97,000 for commercial and residential lending personnel at the
Jupiter loan production office opened in August 2002, and $68,000 for additional
commercial lending personnel at the Company's Ft. Pierce location. Employee
benefits increased $438,000 or 11.3 percent to $4,304,000 from 2001, the primary
cause being higher group health insurance costs, up $280,000 year over year, but
also due to profit sharing and payroll taxes that were higher as well,
increasing $95,000 and $58,000, respectively.
Outsourced data processing costs totaled $4,795,000 for 2002, an increase of
$327,000 or 7.3 percent from a year ago. Of this increase, higher costs
associated with the Company's core data processing service provider of $168,000,
software maintenance of $55,000, merchant credit card processing costs of
$58,000, and check card processing fees of $33,000 were recorded. Outsourced
data processing costs are directly related to the number of transactions
processed, which can be expected to increase as the Company's business volumes
grow and new products such as bill pay, internet banking, etc. become more
popular and the number of customer accounts increases.
Occupancy expenses and furniture and equipment expenses, on an aggregate basis,
decreased $194,000 to $5,354,000 in 2002, versus last year. Depreciation for
furniture and equipment was $143,000 lower and lease payments on bank premises
declined $42,000.
Marketing expenses, including sales promotion costs, ad agency production and
printing costs, newspaper and radio advertising, and other public relations
costs associated with the Company's efforts to market products and services,
increased by $128,000 or 6.7 percent to $2,036,000 when compared to a year ago.
Of the increase, $76,000 was directly related to public relations activities.
Legal and professional costs increased $308,000 or 25.0 percent to $1,538,000
when compared to 2001, primarily a result of legal costs related to advice
concerning the formation of a registered investment advisor, and the change in
capital structure (eliminating the Company's Class B Common Stock) approved by
shareholders in April 2002.
Amortization of goodwill and other intangibles declined $300,000 or 54.3 percent
to $252,000 year over year, entirely due to a change in accounting. Under
Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible Assets," goodwill is no longer amortized as of January 1, 2002 (see
"Note A - Significant Accounting Policies").
Other expenses increased just 0.8 percent to $5,577,000, and included costs
associated with foreclosed and repossessed asset management and disposition that
were nominal, a reflection of low nonperforming asset balances (see "Table 13 -
Nonperforming Assets") in 2002.
Although noninterest expenses increased by $3,183,000 or 9.1 percent to
$38,060,000 in 2001 compared to 2000, a disciplined control of expenses was
maintained. Salaries, wages and benefits increased $2,388,000 or 14.7 percent
year over year, mostly due to higher commissions and incentive compensation
related to the significantly improved performance. Also impacting salaries,
wages and benefits, group health insurance costs were $307,000 or 26.8 percent
higher and temporary services were higher by $129,000, principally in data
processing and loan operations. Base salaries increased $798,000 or 6.7 percent,
with staffing on a full-time equivalent basis increasing by eighteen from
year-end 2000 to December 31, 2001, including additional staff at the Company's
newest branch location at a WalMart store in Ft. Pierce. All other overhead
expenses increased $795,000 or 4.3 percent.
Outsourced data processing costs were $362,000 or 8.8 percent higher, totaling
$4,468,000. Of the increase, higher costs associated with the Company's core
data processing service provider of $100,000, software licensing and maintenance
of $102,000, and automatic teller machine (ATM) switch and transaction
processing of $91,000 were recorded.
Marketing expenses increased by $191,000 or 11.1 percent to $1,908,000 for 2001,
compared to 2000. Of the increase, $62,000 was for higher sales promotion costs,
$41,000 for direct mail campaigns and $30,000 for local community support.
TABLE 7 - Noninterest Expenses
Year Ended % Change
---------------------------------------------
(Dollars in thousands) 2002 2001 2000 02/01 01/00
- ------------------------------------------------------------------------------
Salaries and wages $15,761 $14,776 $13,077 6.7% 13.0%
Employee benefits 4,304 3,866 3,177 11.3 21.7
Outsourced data processing
costs 4,795 4,468 4,106 7.3 8.8
Occupancy 3,365 3,358 3,343 0.2 0.5
Furniture and equipment 1,989 2,190 2,108 (9.2) 3.9
Marketing 2,036 1,908 1,717 6.7 11.1
Legal and professional fees 1,538 1,230 1,177 25.0 4.5
FDIC assessments 173 177 184 (2.3) (3.8)
Amortization of intangibles 252 552 636 (54.3) (13.2)
Other 5,577 5,535 5,352 0.8 3.4
---------------------------------------------
TOTAL $39,790 $38,060 $34,877 4.5% 9.1%
==============================================
INCOME TAXES
- ------------
Income taxes as a percentage of income before taxes were 38.8 percent for 2002,
39.8 percent for 2001, and 38.8 percent for 2000. The decline in rate from 2001
to 2002 reflects lower state income taxes, the result of a decline in
apportionment factors attributable to taxable income for the State of Florida.
The increase in rate in 2001 compared to 2000 can be attributed to higher state
income taxes, a result of lower tax credit, lower tax exempt income, and the
Company's effective federal tax rate increasing due to adjusted income before
taxes exceeding $18 million.
The Company has deferred tax assets, for which no valuation allowance is
required, because the majority of the asset is deemed to be temporary and
sufficient taxable income exists in the carry-back years to recover the asset.
FINANCIAL CONDITION
- -------------------
Total assets increased $55,333,000 or 4.5 percent to $1,281,297,000 in 2002,
after increasing $74,591,000 or 6.5 percent to $1,225,964,000 in 2001.
CAPITAL RESOURCES
- -----------------
Table 8 summarizes the Company's capital position and selected ratios. The
Company's ratio of shareholders' equity to period end total assets was 7.86
percent at December 31, 2002, compared with 7.63 percent one year earlier. The
Company manages the size of equity through a program of share repurchases of its
outstanding Common Stock. A total of 660,000 stock option shares are
outstanding, of which 646,000 are exercisable; during 2002, 69,000 shares were
exercised (see "Note H - Employee Benefits"). In treasury stock at December 31,
2002, there were 1,659,377 shares totaling $18,578,000, compared to 1,588,557
shares or $17,239,000 a year ago.
TABLE 8 - Capital Resources
At December 31
-----------------------------------
(Dollars in thousands) 2002 2001 2000
- ----------------------------------------------------------------
TIER 1 CAPITAL
Common stock $ 1,555 $ 1,555 $ 1,555
Additional paid in capital 26,994 26,887 26,794
Retained earnings 89,960 80,886 72,562
Treasury stock (18,578) (17,239) (14,470)
Valuation allowance (15) (12) (173)
Intangibles (2,840) (2,976) (3,432)
-----------------------------------
TOTAL TIER 1 CAPITAL 97,076 89,101 82,836
TIER 2 CAPITAL
Allowance for loan losses,
as limited 6,826 7,034 7,218
----------------------------------
TOTAL TIER 2 CAPITAL 6,826 7,034 7,218
----------------------------------
TOTAL RISK-BASED CAPITAL $103,902 $ 96,135 $ 90,054
==================================
Risk weighted assets $754,045 $760,640 $741,590
==================================
Tier 1 risk based capital
ratio 12.87% 11.71% 11.17%
Total risk based capital ratio 13.77 12.64 12.14
Regulatory minimum 8.00 8.00 8.00
Tier 1 capital to adjusted
total assets 7.99 7.49 7.44
Regulatory minimum 4.00 4.00 4.00
Shareholders' equity to assets 7.86 7.63 7.32
Average shareholders' equity
to average total assets 7.99 7.78 7.76
LOAN PORTFOLIO
- --------------
Table 9 shows total loans (net of unearned income) by category outstanding at
the indicated dates.
Total loans (net of unearned income and excluding the allowance for loan losses)
were $688,161,000 at December 31, 2002, $96,866,000 or 12.3 percent less than at
December 31, 2001.
During 2002, $137.5 million in fixed rate residential mortgage loans were sold
compared to $97.2 million during 2001. The Company also sold $81.1 million in
marine loans (generated by Seacoast Marine Finance), compared to $46.1 million
in 2001. The loan sales are without recourse. In addition, the loan portfolio
experienced higher prepayments as a result of the yield curve flattening in the
second half of the year, producing lower long-term interest rates in 2002.
TABLE 9 - Loans Outstanding
At December 31
------------------------------------------------------
(In thousands) 2002 2001 2000 1999 1998
- -----------------------------------------------------------------------------
Real estate mortgage $478,123 $574,585 $671,424 $623,472 $574,895
Construction and
land development 77,909 70,630 42,633 42,899 22,877
Commercial and financial 40,491 36,617 39,465 33,119 31,908
Installment loans to
individuals 91,307 102,760 90,744 78,013 71,506
Other loans 331 435 280 661 364
------------------------------------------------------
TOTAL $688,161 $785,027 $844,546 $778,164 $701,550
======================================================
At December 31, 2002, the Company's mortgage loan balances secured by
residential properties amounted to $266,519,000 or 38.7 percent of total loans
(versus $363,120,000 or 46.3 percent a year ago). The next largest concentration
was loans secured by commercial real estate. The Company's commercial real
estate lending strategy stresses quality loan growth from local businesses,
professionals, experienced developers and investors, with high net worth that
serve as secondary sources for repayment. At December 31, 2002, the Company had
funded commercial real estate loans totaling $253.8 million, compared to $255.1
million a year ago. This amount and unfunded commitments for commercial real
estate loans were comprised of the following types of loans:
(In millions) Funded Unfunded Total
- -----------------------------------------------------------------------
Office buildings $ 38.2 $ 0.1 $ 38.3
Retail trade 31.5 2.4 33.9
Land development 36.3 25.4 61.7
Industrial 27.6 0.2 27.8
Healthcare 26.1 6.7 32.8
Churches and educational facilities 13.6 0.2 13.8
Recreation 11.8 0.5 12.3
Multifamily 5.8 4.5 10.3
Mobile home parks 4.0 -- 4.0
Land 5.6 1.6 7.2
Lodging 3.4 -- 3.4
Restaurant 3.1 0.1 3.2
Miscellaneous 46.8 1.1 47.9
---------------------------------------
TOTAL $253.8 $ 42.8 $ 296.6
=======================================
Loans and commitments for one-to-four family residential properties and
commercial real estate are generally secured with first mortgages on property,
with the loan to fair value of the property not exceeding 80 percent on the date
the loan is made. The Company was also a creditor for consumer loans to
individual customers (primarily secured by motor vehicles) totaling $91,307,000
(versus $102,760,000 a year ago), real estate construction loans totaling
$11,800,000 secured by residential properties and residential lot loans (for
private and investor purposes) totaling $12,271,000.
The Treasure Coast is a residential community with commercial activity centered
in retail and service businesses serving the local residents and seasonal
visitors. Therefore, real estate mortgage lending is an important component of
the Company's lending activities. Exposure to market interest rate volatility
with respect to mortgage loans is managed by attempting to match maturities and
re-pricing opportunities for assets against liabilities, when possible. At
December 31, 2002, approximately $106 million or 40 percent of the Company's
residential mortgage loan balances were adjustable, compared to $139 million or
38 percent a year ago.
Of the approximate $194 million of new residential loans originated in 2002
($137.5 million were sold), $39 million were adjustable and $155 million were
fixed rate. Loans secured by residential properties having fixed rates totaled
approximately $160 million at December 31, 2002, of which 15- and 30-year
mortgages total approximately $68 million and $51 million, respectively.
Remaining fixed rate balances were comprised of home improvement loans, most
with maturities of 10 years or less.
The Company's historical charge-offs for residential loans has been low. For
2002, net recoveries totaling $22,000 were recorded. The Company considers
residential mortgages less susceptible to adverse effects from a downturn in the
real estate market, especially given the area's large percentage of retired
persons.
Fixed rate and adjustable rate loans secured by commercial real estate,
excluding construction loans, totaled approximately $88 million and $111
million, respectively, at December 31, 2002, compared to $111 million and $89
million, respectively, a year ago.
Commercial lending activities are directed principally towards businesses whose
demand for funds are within the Company's lending limits, such as small to
medium sized professional firms, retail and wholesale outlets, and light
industrial and manufacturing concerns. Such businesses typically are smaller,
often have short operating histories and do not have the sophisticated record
keeping systems of larger entities. Most of such loans are secured by real
estate used by such businesses, although certain lines are unsecured. Such loans
are subject to the risks inherent to lending to small to medium sized businesses
including the effects of a sluggish local economy, possible business failure,
and insufficient cash flows. The Company's commercial loan portfolio totaled
$40,491,000 at December 31, 2002, compared to $36,617,000 at December 31, 2001.
TABLE 10 - Loan Maturity Distribution
At December 31, 2002
--------------------------------------
Commercial, Construction
Financial and and Land
(In thousands) Agricultural Development Total
- -----------------------------------------------------------------
In one year or less $12,449 $68,311 $80,760
After one year but
within five years:
Interest rates are
floating or
adjustable 3,633 9,353 12,986
Interest rates are fixed 13,299 0 13,299
In five years or more:
Interest rates are
floating or
adjustable 2,717 0 2,717
Interest rates are fixed 8,393 245 8,638
------------------------------------
TOTAL $40,491 $77,909 $118,400
====================================
The Company makes a variety of consumer loans, including installment loans,
loans for automobiles, boats, home improvements, and other personal, family and
household purposes, and indirect loans through dealers to finance automobiles.
Most consumer loans are secured.
Second mortgage loans and home equity lines are extended by the Company. No
negative amortization loans or lines are offered at the present time. Terms of
second mortgage loans include fixed rates for up to 10 years on smaller loans of
$30,000 or less. Such loans are sometimes made for larger amounts with fixed
rates, but balloon payments upon maturity, not exceeding five years.
At December 31, 2001, the Company's mortgage loan balances secured by
residential properties amounted to $363,120,000 or 46.3 percent of total loans.
The next largest concentration was loans secured by commercial real estate
totaling $255.1 million. The Company was also a creditor for consumer loans to
individual customers (primarily secured by motor vehicles) totaling $102,760,000
and real estate construction loans totaling $15.6 million that were secured by
residential properties.
Loans secured by residential properties having fixed rates totaled approximately
$224 million at December 31, 2001, of which 15- and 30-year mortgages totaled
approximately $97 million and $85 million, respectively. Again, remaining fixed
rate balances were comprised of home improvement loans with maturities less than
10 years.
ALLOWANCE FOR LOAN LOSSES
- -------------------------
Table 11 provides certain information concerning the Company's allowance for
loan losses for the years indicated.
The allowance for loan losses totaled $6,826,000 at December 31, 2002, $208,000
lower than one year earlier. The allowance for loan losses as a percentage of
nonaccrual loans and loans 90 days or more past due was 303.5 percent at
December 31, 2002, compared to 290.3 percent at December 31, 2001. The model
utilized to analyze the adequacy of the allowance for loan losses takes into
account such factors as credit quality, loan concentrations, internal controls,
audit results, staff turnover, local market economics and loan growth. The
allowance as a percent of loans outstanding increased slightly from 0.90 percent
to 0.99 percent during 2002. The resulting allowance is reflective of the
Company's subsidiary bank's favorable and consistent delinquency trends, its
historical loss performance, an increase in riskier commercial and commercial
real estate loans and the decline in total loans outstanding over the last
twelve months. These performance results are attributed to conservative,
long-standing and consistently applied loan credit policies and to a
knowledgeable, experienced and stable staff. In 2002, net charge-offs totaled
$208,000, compared to $184,000 a year ago.
TABLE 11 - Summary of Loan Loss Experience
Year Ended December 31
--------------------------------------------------
(Dollars in thousands) 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------
Beginning balance $7,034 $7,218 $6,870 $6,343 $5,363
Provision for loan losses 0 0 600 660 1,170
Charge offs:
Commercial and
financial 152 32 98 2 112
Consumer 371 395 432 458 901
Commercial real estate 6 27 35 46 137
Residential real estate 2 2 78 120 42
-------------------------------------------------
TOTAL CHARGE OFFS 531 456 643 626 1,192
Recoveries:
Commercial and
financial 36 54 93 111 117
Consumer 261 182 226 230 211
Commercial real estate 2 22 39 136 109
Residential real estate 24 14 33 16 25
--------------------------------------------------
TOTAL RECOVERIES 323 272 391 493 462
--------------------------------------------------
Net loan charge offs 208 184 252 133 730
--------------------------------------------------
ENDING BALANCE $6,826 $7,034 $7,218 $6,870 $6,343
==================================================
Loans outstanding at end of
year* $688,161 $785,027 $844,546 $778,164 $701,550
Ratio of allowance for loan
losses to loans outstanding
at end of year 0.99% 0.90% 0.85% 0.88% 0.90%
Daily average loans
outstanding* $748,936 $831,093 $820,429 $743,010 $669,417
Ratio of net charge offs to
average loans outstanding 0.03% 0.02% 0.03% 0.02% 0.11%
- -------------------------------------------------------------------------------
* Net of unearned income.
Table 12 summarizes the Company's allocation of the allowance for loan losses to
each type of loan and information regarding the composition of the loan
portfolio at the dates indicated.
The allowance for loan losses represents management's estimate of an amount
adequate in relation to the risk of losses inherent in the loan portfolio. In
its continuing evaluation of the allowance and its adequacy, management
considers, among other factors, the Company's and peer bank's loan loss
experience, the amount of past due and nonperforming loans, current and
anticipated economic conditions, and the values of certain loan collateral, and
other assets. The size of the allowance also reflects the large amount of
permanent residential loans held by the Company whose historical charge offs and
delinquencies have been superior by any comparison.
Concentration of credit risk, discussed under "Loan Portfolio" of this
discussion and analysis, also impacts the level of the allowance. Concentrations
typically involve loans to one borrower, an affiliated group of borrowers,
borrowers engaged in or dependent upon the same industry, or a group of
borrowers whose loans are predicated on the same type of collateral. The
Company's significant concentration of credit is a collateral concentration of
loans secured by real estate. At December 31, 2002, the Company had $556 million
in loans secured by real estate, representing 80.8 percent of total loans, down
slightly from 82.1 percent at December 31, 2001. In addition, the Company is
subject to a geographic concentration of credit because it operates in
southeastern Florida. Although not material enough to constitute a significant
concentration of credit risk, the Company has meaningful credit exposure to real
estate developers and investors. Levels of exposure to this industry group,
together with an assessment of current trends and expected future financial
performance, are carefully analyzed in order to determine an adequate allowance
level. Problem loan activity for this exposure needs to be evaluated over the
long term to include all economic cycles when determining an adequate allowance
level.
TABLE 12 - Allowance for Loan Losses
At December 31
--------------------------------------------
(Dollars in thousands) 2002 2001 2000 1999 1998
- --------------------------------------------------------------------
ALLOCATION BY LOAN TYPE
Commercial and
financial loans $ 850 $ 738 $ 844 $ 677 $ 576
Real estate loans 4,745 4,924 4,970 4,913 4,464
Installment loans 1,231 1,372 1,404 1,280 1,303
----------------------------------------------
TOTAL $6,826 $7,034 $7,218 $6,870 $6,343
==============================================
YEAR END LOAN TYPES AS A
PERCENT OF TOTAL LOANS
Commercial and
financial loans 5.9% 4.7% 4.7% 4.3% 4.6%
Real estate loans 80.8 82.1 84.6 85.6 85.3
Installment loans 13.3 13.2 10.7 10.1 10.1
----------------------------------------------
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0%
==============================================
While it is the Company's policy to charge-off in the current period loans in
which a loss is considered probable, there are additional risks of future losses
that cannot be quantified precisely or attributed to particular loans or classes
of loans. Because these risks include the state of the economy as well as
conditions affecting individual borrowers, management's judgment of the
allowance is necessarily approximate and imprecise. It is also subject to
regulatory examinations and determinations as to adequacy, which may take into
account such factors as the methodology used to calculate the allowance for loan
losses and the size of the allowance for loan losses in comparison to a group of
peer companies identified by the regulatory agencies.
At year-end 2002, the Company's allowance for loan losses equated to 10.6 times
average charge-offs for the last three years. In contrast, the allowance equated
to approximately two times charge-offs in the early 1990's when Florida
experienced a real estate economic decline. In assessing the adequacy of the
allowance, management relies predominantly on its ongoing review of the loan
portfolio, which is undertaken both to ascertain whether there are probable
losses that must be charged off and to assess the risk characteristics of the
portfolio in aggregate. This review considers the judgments of management, and
also those of bank regulatory agencies that review the loan portfolio as part of
their regular examination process.
NONPERFORMING ASSETS
- --------------------
Of the $2,241,000 reported in nonaccrual loans at December 31, 2002, 75 percent
is secured with real estate. In addition, nonaccrual loans totaling $1,807,000
at December 31, 2002 were performing, however the Company has determined that
the collection of principal or interest in accordance with the terms of such
loans is uncertain and has placed such loans on nonaccrual status. Management
does not expect significant losses, for which an allowance for loan losses has
not been provided, associated with the ultimate realization of these assets.
Other real estate owned at December 31, 2002 was comprised of two properties,
totaling $8,000.
Nonperforming assets are subject to changes in the economy, both nationally and
locally, changes in monetary and fiscal policies, and changes in conditions
affecting various borrowers from the Company's subsidiary bank. No assurance can
be given that nonperforming assets will not in fact increase or otherwise
change. A similar judgmental process is involved in the methodology used to
estimate and establish the Company's allowance for loan losses.
TABLE 13 - Nonperforming Assets
At December 31
------------------------------------------
(Dollars in thousands) 2002 2001 2000 1999 1998
- -------------------------------------------------------------------------
Nonaccrual loans (1) $2,241 $2,423 $2,099 $2,407 $2,418
Renegotiated loans 0 0 0 0 0
Other real estate owned 8 119 346 339 288
------------------------------------------
TOTAL NONPERFORMING ASSETS $2,249 $2,542 $2,445 $2,746 $2,706
==========================================
Amount of loans outstanding
at end of year (2) $688,161 $785,072 $844,546 $778,164 $701,550
Ratio of total nonperforming
assets to loans outstanding
and other real estate owned
at end of period 0.33% 0.32% 0.29% 0.35% 0.39%
Accruing loans past due
90 days or more $ 0 $134 $108 $498 $329
- --------------------------------------------------------------------------------
(1) Interest income that could have been recorded during 2002 related to
nonaccrual loans was $316, none of which was included in interest income or net
income. All nonaccrual loans are secured.
(2) Net of unearned income.
LIQUIDITY MANAGEMENT
- --------------------
Contractual maturities for assets and liabilities are reviewed to adequately
maintain current and expected future liquidity requirements. Sources of
liquidity, both anticipated and unanticipated, are maintained through a
portfolio of high quality marketable assets, such as residential mortgage loans,
investment securities held for sale and federal funds sold. The Company has
access to federal funds and Federal Home Loan Bank (FHLB) lines of credit and is
able to provide short term financing of its activities by selling, under an
agreement to repurchase, United States Treasury securities and securities of
United States Government agencies and corporations not pledged to secure public
deposits or trust funds. At December 31, 2002, the Company had available lines
of credit of $97 million. At December 31, 2002, the Company had $391 million of
United States Treasury and Government agency securities and mortgage backed
securities not pledged and available for use under repurchase agreements. At
December 31, 2001, the amount of securities available and not pledged was $186
million.
Liquidity, as measured in the form of cash and cash equivalents, totaled
$49,822,000 at December 31, 2002, compared to $92,114,000 at December 31, 2001.
Cash and cash equivalents vary with seasonal deposit movements and are generally
higher in the winter than in the summer, and vary with the level of principal
repayments and investment activity occurring in the Company's investment
securities portfolio and loan portfolio. The Company believes its liquidity to
be strong and stable.
DEPOSITS AND BORROWINGS
- -----------------------
Total deposits increased $15,386,000 or 1.5 percent to $1,030,540,000 at
December 31, 2002, compared to one year earlier. In comparison to 2000, deposits
increased $58,065,000 or 6.1 percent in 2001 to $1,015,154,000. Certificates of
deposit decreased $25,757,000 or 6.5 percent to $373,040,000 over the past
twelve months, lower cost interest bearing deposits (NOW, savings and money
markets deposits) increased $28,747,000 or 6.5 percent to $472,976,000, and
noninterest bearing demand deposits increased $12,396,000 or 7.2 percent to
$184,524,000. Lower interest rates, an uncertain economic environment, and
turmoil in financial markets have aided growth in deposits as customers seek the
stability and safety of bank products. The Company's marketing of desirable
products in this environment, in particular its tiered money market and Money
Manager product offerings, enhanced growth in lower cost interest bearing
deposits.
Repurchase agreement balances decreased over the past 12 months by $9,237,000 or
12.9 percent to $62,467,000 at December 31, 2002. Repurchase agreements are
offered by the Company's subsidiary bank to select customers who wish to sweep
excess balances on a daily basis for investment purposes. The number of sweep
repurchase accounts declined from 114 a year ago to 100 at December 31, 2002,
with some customers closing sweep repurchase relationships due to the low
interest rate environment and diminished benefit of utilizing a sweep repurchase
agreement, and choosing to maintain balances in traditional deposit products.
In anticipation of asset and deposit growth in 2003 and to better utilize its
strong capital position, the Company acquired investment securities with average
lives of three to four years, a portion of which was funded with short-term
borrowings. As a result, at December 31, 2002, federal funds purchased totaled
$40,500,000, compared with no outstanding balance at year-end 2001.
At December 31, 2002, other borrowings were the same year over year at
$40,000,000, entirely comprised of funding from the FHLB.
TABLE 14 - Maturity of Certificates of Deposit of $100,000 or More
At December 31
-------------------------------------
% of % of
(Dollars in thousands) 2002 Total 2001 Total
- ----------------------------------------------------------
Maturity Group:
Under 3 months $22,666 24.2% $26,709 28.6%
3 to 6 months 16,526 17.6 24,049 25.8
6 to 12 months 22,139 23.6 22,811 24.5
Over 12 months 32,454 34.6 19,635 21.1
---------------------------------------
TOTAL $93,785 100.0% $93,204 100.0%
=======================================
EFFECTS ON INFLATION AND CHANGING PRICES
- ----------------------------------------
The financial statements and related financial data presented herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money, over time, due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities of
a financial institution are monetary in nature. As a result, interest rates have
a more significant impact on a financial institution's performance than the
general level of inflation. However, inflation affects financial institutions'
increased cost of goods and services purchased, the cost of salaries and
benefits, occupancy expense, and similar items. Inflation and related increases
in interest rates generally decrease the market value of investments and loans
held and may adversely affect liquidity, earnings, and shareholders' equity.
Mortgage originations and refinancings tend to slow as interest rates increase,
and likely will reduce the Company's earnings from such activities and the
income from the sale of residential mortgage loans in the secondary market.
SECURITIES
- ----------
Information related to yields, maturities, carrying values, fair values and
unrealized gains (losses) of the Company's securities is set forth in Tables
15-19.
At December 31, 2002, the Company had $464,495,000 of securities held for sale
or 93.5 percent of total securities, compared to $278,481,000 or 91.6 percent at
December 31, 2001. Total securities increased $193,115,000 or 63.5 percent in
2002, reflecting slower loan growth combined with a 1.5 percent increase in
deposits. During 2002, proceeds from the sale of securities totaled $38,181,000.
Maturities in 2002 totaled $309,404,000 and purchases totaled $545,730,000.
Securities activity reflects an effort to invest funds for better performance as
well as for the likely potential of an increasing interest rate environment in
the future. Sales in 2002 were transacted to realize appreciation on securities
that management believed had reached their maximum potential total return.
Management controls the Company's overall interest rate risk by maintaining a
low average duration for the securities portfolio through the acquisition of
securities returning principal monthly that can be reinvested. The estimated
average life of the investment portfolio at December 31, 2002 was less than two
years compared to approximately 3.8 years in 2001.
At December 31, 2002, the Company had unrealized net gains $2,320,000 or 0.5
percent of amortized cost. At December 31, 2001, unrealized net gains were
$3,041,000 or 1.0 percent. The Federal Reserve lowered interest rates only 50
basis points in 2002, after decreasing rates 450 basis points from December 2000
to December 2001. As a result, appreciation in the fair value of the Company's
securities portfolio was much greater in 2001, improving $6,413,000 from
December 31, 2000 to December 31, 2001.
Company management considers the overall quality of the securities portfolio to
be high. No securities are held which are not traded in liquid markets.
TABLE 15 - Securities Held For Sale
At December 31, 2002
------------------------------------------------
Amortized Fair Unrealized Unrealized
(In thousands) Cost Value Gains Losses
===============================================================================
U.S. Treasury and other U.S.
Government agencies and
corporations
2002 $ 2,493 $ 2,508 $ 15 -
2001 2,499 2,561 62 -
Mortgage-backed and asset-
backed securities
2002 455,314 456,655 2,452 (1,111)
2001 268,197 270,495 2,779 (481)
Mutual funds
2002 300 292 - (8)
2001 300 281 - (19)
Other
2002 6,838 6,823 - (15)
2001 7,485 7,485 - -
------------------------------------------------
Total Securities Held for
Sale
2002 $464,945 $466,278 $2,467 $(1,134)
2001 278,481 280,822 2,841 (500)
================================================
TABLE 16 - Securities Held For Investment
At December 31, 2002
------------------------------------------------
Amortized Fair Unrealized Unrealized
(In thousands) Cost Value Gains Losses
===============================================================================
Mortgage-backed and asset-
backed securities
2002 $28,555 $29,345 $800 $(10)
2001 20,793 21,359 576 (10)
Obligations of states and
political subdivisions
2002 3,626 3,823 197 -
2001 4,737 4,871 134 -
-----------------------------------------------
Total Securities Held for
Investment
2002 $32,181 $33,168 $997 $(10)
2001 25,530 26,230 710 (10)
===============================================
- -------------------------------------------------------------------------------
TABLE 17 - Maturity Distribution of Securities Held for Investment
At December 31, 2002
----------------------------------------------------------------------------
No Average
1 Year 1-5 5-10 After Contractual Maturity
(Dollars in Thousands) Or Less Years Years 10 Years Maturity Total In Years
=======================================================================================================
AMORTIZED COST
Mortgage-backed and asset-
backed securities $19,881 $ 8,490 $ 184 $ - $ - $ 28,555 0.89
Obligations of states and
political subdivisions 410 2,225 991 3,626 2.63
Total Securities Held for ----------------------------------------------------------------------------
Investments $20,291 $10,715 $ 184 $ 991 $ - $ 32,181 1.09
============================================================================
FAIR VALUE
Mortgage-backed and asset-
backed securities $20,202 $ 8,960 $ 183 $ - $ - $ 29,345
Obligations of states and
political subdivisions 420 2,339 1,064 3,823
----------------------------------------------------------------------------
Total Securities Held for
Investments $20,622 $11,299 $ 183 $ 1,064 $ - $ 33,168
============================================================================
WEIGHTED AVERAGE YIELD (FTE)
Mortgage-backed and asset-
backed securities 3.50% 4.39% 3.87% -% -% 3.77%
Obligations of states and
political subdivisions 7.49 8.60 7.57 8.19
Total Securities Held for ----------------------------------------------------------------------------
Investments 3.58% 5.27% 3.87% 7.57% -% 4.27%
============================================================================
TABLE 18 - Maturity Distribution of Securities Held for Sale
At December 31, 2002
----------------------------------------------------------------------------
No Average
1 Year 1-5 5-10 After Contractual Maturity
(Dollars in thousands) Or Less Years Years 10 Years Maturity Total In Years
=======================================================================================================
AMORTIZED COST
U.S. Treasury and other
U.S. government agencies
and corporations $ 2,493 $ - $ - $ - $ - $ 2,493 0.41
Mortgage-backed and
asset-backed securities 210,036 226,950 18,328 455,314 1.63
Mutual funds 300 300 **
Other 6,838 6,838 *
----------------------------------------------------------------------------
Total Securities Held for
Sale $212,529 $226,950 $ 18,328 $ - $ 7,138 $ 464,945 1.63
============================================================================
FAIR VALUE
U.S. Treasury and other
U.S. government agencies
and corporations $ 2,508 $ - $ - $ - $ - $ 2,508
Mortgage-backed and
asset-backed securities 210,201 227,932 18,522 456,655
Mutual funds 292 292
Other 6,823 6,823
---------------------------------------------------------------------------
Total Securities Held for
Sale $212,709 $227,932 $ 18,522 $ - $ 7,115 $ 466,278
===========================================================================
WEIGHTED AVERAGE YIELD (FTE)
U.S. Treasury and other
U.S. government agencies
and corporations 3.02% -% -% -% -% 3.02%
Mortgage-backed and
asset-backed securities 3.72 4.00 4.90 3.91
Mutual funds 3.37 3.37
Other 4.17 4.17
------------------------------------------------------------------
Total Securities Held for
Sale 3.71% 4.00% 4.90% -% 4.14% 3.91%
==================================================================
*Other Securities excluded from calculated average for total securities
**Contractual maturity assumed to be immediate for total average years to
maturity calculation
INTEREST RATE SENSITIVITY
- -------------------------
Fluctuations in interest rates may result in changes in the fair market value of
the Company's financial instruments, cash flows and net interest income. This
risk is measured using simulation modeling to calculate a most likely impact for
interest rate risk utilizing estimated loan and deposit growth. The objective is
to optimize the Company's financial position, liquidity, and net interest income
while limiting their volatility.
Senior management regularly reviews the Company's interest rate risk position
and evaluates strategies to manage the risk. The Company has determined that an
acceptable level of interest rate risk would be for net interest income to
fluctuate no more than 6 percent given a parallel change in interest rates (up
or down) of 200 basis points. The Company's most recent ALCO model simulation
indicated net interest income would increase 4.8 percent if interest rates would
gradually rise 200 basis points over the next 12 months. Although management
places a lower probability on further rate declines after the last 50 basis
point reduction on November 6, 2002, the model simulation indicates net interest
income would decrease 2.7% and 7.3% over the next 12 months given a gradual
decline in interest rates of 100 and 200 basis points respective. It has been
the Company's experience that non-maturity core deposit balances are stable and
subjected to limited re-pricing when interest rates increase or decrease within
a range of 200 basis points.
On December 31, 2002, the Company had a negative gap position based on
contractual maturities and prepayment assumptions for the next twelve months,
with a negative cumulative interest rate sensitivity gap as a percentage of
total earning assets of 14.8 percent.
The computations of interest rate risk do not necessarily include all actions
management may undertake to manage this risk in response to changes in interest
rates. Derivative financial instruments, such as interest rate swaps, options,
caps, floors, futures and forward contracts can and may be utilized as
components of the Company's risk management profile. The Company does not
presently use interest rate protection products in managing its interest rate
sensitivity.
TABLE 19 - Interest Rate Sensivitivy Analysis (1)
At December 31, 2002
------------------------------------------------
0-3 4-12 1-5 Over 5
(Dollars in thousands) Months Months Years Years Total
- --------------------------------------------------------------------------------
Federal funds sold and
interest bearing deposits $251 $0 $0 $0 $251
Securities (2) 116,043 158,269 214,465 8,349 497,126
Loans (3) 171,984 188,966 303,479 21,491 685,920
---------------------------------------------------
Earnings assets 288,278 347,235 517,944 29,840 1,183,297
Savings deposits (4) 472,976 0 0 0 472,976
Certificates of deposit 82,195 127,788 162,907 150 373,040
Borrowings 102,967 25,000 0 15,000 142,967
---------------------------------------------------
Interest bearing liabilities 658,138 152,788 162,907 15,150 988,983
---------------------------------------------------
Interest sensitivity gap $(369,860) $194,447 $355,037 $14,690 $194,314
===================================================
Cumulative gap $(369,860) $(175,413) $179,624 $194,314
===================================================
Ratio of cumulative gap to
total earning assets (%) (31.3) (14.8) 15.2 16.4
Ratio of earning assets to
interest bearing
liabilities (%) 43.8 227.3 317.9 197.0
- --------------------------------------------------------------------------------
1. The repricing dates may differ from maturity dates for certain assets due to
prepayment assumptions.
2. Securities are stated at amortized cost.
3. Excludes nonaccrual loans.
4. This category is comprised of NOW, savings, and money market deposits. If NOW
and savings deposits (totaling $146,692) were deemed to be repriceable in
"4-12 months", the interest sensitivity gap and cumulative gap would be
$223,168, indicating 18.9% of earning assets and 56.4% of earning assets to
interest bearing liabilities for the "0-3 months" category.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
Management, after consultation with the audit committee, believes that the most
critical accounting estimates which may affect the Company's financial status
and involve the most complex, subjective and ambiguous assessments are as
follows:
The allowance and provision for loan losses, securities available for sale
valuation and accounting, the value of goodwill, and the fair market value of
mortgage servicing rights at acquisition and any impairment of that value.
Disclosures intended to facilitate a reader's understanding of the possible and
likely events or uncertainties known to management which could have a material
impact on the reported financial information of the Company related to the most
critical accounting estimates are as follows:
Allowance and Provision for Loan Losses: The information contained on pages 15,
16, 18-22, 38 and 40 related to the "Provision for Loan Losses", "Loan
Portfolio", "Allowance for Loan Losses" and "Nonperforming Assets" is intended
to describe the known trends, events and uncertainties which could materially
impact the reported financial information.
Securities Held for Sale: On pages 23-25 and 38-40 of the Annual Report,
information is provided related to the Company's securities portfolio.
The fair value of the Held for Sale portfolio at December 31, 2002 exceeded
historical amortized cost, producing unrealized gains of $1,333,000. The fair
value of each security was obtained from independent pricing sources utilized by
many financial institutions. However, actual values can only be determined in an
arms-length transaction between a willing buyer and seller which can, and often
do, vary from these reported values. Furthermore, significant changes in
recorded values due to changes in actual and perceived economic conditions can
occur rapidly, eliminating reported gains and producing unrealized losses.
The credit quality of the Company's security holdings is such that negative
changes in the fair values, as a result of unforeseen deteriorating economic
conditions, should only be temporary. Further, management believes that the
Company's other sources of liquidity, as well as the cash flow from principal
and interest payments from the securities portfolios, reduces the risk that
losses would be realized as a result of needed liquidity from the securities
portfolio.
Value of Goodwill: Beginning January 1, 2002, the Company's goodwill was no
longer amortized, but tested for impairment. The amount of goodwill at December
31, 2002 totaled approximately $2.5 million and was acquired in 1995 as a result
of the purchase of a community bank within the Company's dominant market. The
Company has a commercial bank deposit market share of approximately 35 percent
in this market, which had a population increase of over 25 percent during the
past ten years.
The assessment as to the continued value for goodwill involves judgments,
assumptions and estimates regarding the future.
The population is forecast by the Bureau of Economic and Business Research at
the University of Florida to continue to grow at a 20 percent plus rate over the
next ten years. Our highly visible local market orientation, combined with a
wide range of products and services and favorable demographics, has resulted in
increasing profitability in all of the Company's markets. There is data
available indicating that both the products and customers serviced have grown
since the acquisition, which is attributable to the increased profitability and
supports the goodwill value at December 31, 2002.
Mortgage Servicing Rights: A large portion of the Company's loan production
involves loans for 1-4 family residential properties. As part of its efforts to
manage interest rate risk, the Company securitizes pools of loans and creates
U.S. Agency-guaranteed mortgage-backed securities. As part of the agreement with
the agency, the Company is paid a servicing fee to manage the loan and collect
the monthly loan payments. In accordance with FAS No. 140, the Company records
an asset (mortgage servicing rights) at the fair value of those rights. At
December 31, 2002, the total estimated fair value of those rights was $599,000.
The fair value of the mortgage servicing rights is based on the judgments,
assumptions and estimates as to the period the fee will be collected, current
and future interest rates, and loan foreclosures. These judgments, assumptions
and estimates are initially made at the time of securitization and reviewed at
least quarterly. Impairment, if any, is recognized through a valuation allowance
and charged against current earnings.
================================================================================
SELECTED QUARTERLY INFORMATION
================================================================================
Quarterly Consolidated Income Statement
2002 Quarters
(Dollars in thousands, ----------------------------------------
except per share data) Fourth Third Second First
- -----------------------------------------------------------------------------
Net interest income:
Interest income $16,614 $17,348 $18,134 $18,361
Interest expense 5,010 5,515 5,926 6,584
----------------------------------------
Net interest income 11,604 11,833 12,208 11,777
Provision for loan losses 0 0 0 0
----------------------------------------
Net interest income after provision
for losses 11,604 11,833 12,208 11,777
Noninterest income:
Service charges on deposit accounts 1,297 1,321 1,270 1,217
Trust fees 503 535 542 597
Mortgage banking fees 1,338 630 620 776
Brokerage commissions and fees 469 463 570 543
Marine finance fees 713 189 339 167
Debit Card income 252 253 252 223
Other deposit based EFT fees 97 88 90 101
Other income 335 375 350 359
Securities gains (losses) 2 (9) 398 66
----------------------------------------
Total noninterest income 5,006 3,845 4,431 4,049
Noninterest expenses:
Salaries and wages 4,206 3,940 3,855 3,760
Employee benefits 1,129 1,064 1,063 1,048
Outsourced data processing costs 1,181 1,183 1,185 1,246
Occupancy 874 831 831 829
Furniture and equipment 452 503 499 535
Marketing 511 498 514 513
Legal and professional fees 391 367 455 325
FDIC assessments 42 44 44 43
Amortization of intangibles 63 63 63 63
Other 1,250 1,428 1,493 1,406
----------------------------------------
Total noninterest expenses 10,099 9,921 10,002 9,768
----------------------------------------
Income before income taxes 6,511 5,757 6,637 6,058
Provision for income taxes 2,467 2,250 2,588 2,372
----------------------------------------
Net income $ 4,044 $3,507 $4,049 $3,686
========================================
PER COMMON SHARE DATA
Net income diluted $ 0.28 $ 0.25 $ 0.28 $ 0.26
Net income basic 0.29 0.25 0.29 0.26
Cash dividends declared:
Common stock 0.11 0.10 0.10 0.10
Market price common stock:
Low close 16.732 15.980 15.417 14.683
High close 20.150 21.600 19.243 15.970
Bid price at end of period 18.840 19.180 19.243 15.767
- --------------------------------------------------------------------------------
SELECTED QUARTERLY INFORMATION - continued -
- --------------------------------------------
Quarterly Consolidated Income Statement
2001 Quarters
--------------------------------------
(Dollars in thousands,
except per share data) Fourth Third Second First
- ---------------------------------------------------------------------------
Net interest income
Interest income $19,361 $20,137 $20,721 $20,676
Interest expense 7,564 8,687 9,373 9,778
--------------------------------------
Net interest income 11,797 11,450 11,348 10,898
Provision for loan losses 0 0 0 0
--------------------------------------
Net interest income after provision
for losses 11,797 11,450 11,348 10,898
Noninterest income
Service charges on deposit accounts 1,364 1,261 1,268 1,217
Trust fees 587 589 618 703
Mortgage banking fees 952 534 521 449
Brokerage commissions and fees 432 417 556 400
Marine finance fees 192 159 258 134
Debit Card income 196 191 182 166
Other deposit based EFT fees 99 78 65 70
Other income 336 332 381 401
Securities gains (losses) 340 8 422 145
-----------------------------------------
Total noninterest income 4,498 3,569 4,271 3,685
Noninterest expenses
Salaries and wages 3,905 3,792 3,677 3,402
Employee benefits 1,005 931 1,002 928
Outsourced data processing costs 1,171 1,130 1,074 1,093
Occupancy 868 837 839 814
Furniture and equipment 531 531 565 563
Marketing 462 456 472 518
Legal and professional fees 340 283 298 309
FDIC assessments 43 45 45 44
Amortization of intangibles 138 138 138 138
Other 1,455 1,298 1,412 1,370
--------------------------------------
Total noninterest expenses 9,918 9,441 9,522 9,179
--------------------------------------
Income before income taxes 6,377 5,578 6,097 5,404
Provision for income taxes 2,610 2,195 2,395 2,126
--------------------------------------
Net income $3,767 $3,383 $3,702 $3,278
======================================
PER COMMON SHARE DATA
Net income diluted $ 0.26 $ 0.24 $ 0.26 $ 0.23
Net income basic 0.27 0.24 0.26 0.23
Cash dividends declared:
Common stock 0.10 0.09 0.09 0.09
Market price Common stock:
Low close 12.533 11.617 9.083 8.979
High close 15.667 14.463 11.717 10.187
Bid price at end of period 15.340 14.043 11.400 9.458
- --------------------------------------------------------------------------------
SELECTED QUARTERLY INFORMATION - continued -
- --------------------------------------------
Consolidated Quarterly Average Balances, Yields and Rates (1)
2002 QUARTERS
(Dollars in thousands) Fourth Third
- -------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
- -------------------------------------------------------------------------------
EARNING ASSETS
Securities
Taxable $ 411,457 3.49% $374,898 3.86%
Nontaxable 3,505 7.99 3,653 7.99
----------------------------------------------
TOTAL SECURITIES 414,962 3.53 378,551 3.90
Federal funds sold and
other short term investments 17,001 1.40 9,933 1.72
Loans (2) 718,650 7.14 742,176 7.30
----------------------------------------------
TOTAL EARNING ASSETS 1,150,613 5.74 1,130,660 6.10
Allowance for loan losses (6,817) (6,867)
Cash and due from banks 44,982 34,386
Bank premises and equipment 16,161 15,257
Other assets 12,357 12,976
----------------------------------------------
$1,217,296 $1,186,412
==============================================
INTEREST BEARING LIABILITIES
NOW $ 61,321 0.77% $ 55,841 0.92%
Savings deposits 145,226 0.80 147,232 0.96
Money market accounts 254,627 1.01 256,811 1.20
Time deposits 376,043 3.36 376,684 3.71
Federal funds purchased and
other short term borrowings 54,876 0.88 35,664 0.90
Other borrowings 40,000 6.42 40,000 6.42
----------------------------------------------
TOTAL INTEREST BEARING
LIABILITIES 932,093 2.13 912,232 2.40
Demand deposits 180,763 171,255
Other liabilities 5,637 4,905
----------------------------------------------
TOTAL 1,118,493 1,088,392
Shareholders' equity 98,803 98,020
----------------------------------------------
$1,217,296 $1,186,412
==============================================
Interest expense as % of earning
assets 1.73% 1.94%
Net interest income as % of
earning assets 4.02 4.17
- --------------------------------------------------------------------------------
(1) The tax equivalent adjustment is based on a 35% tax rate. All yields/rates
are calculated on an annualized basis.
(2) Nonaccrual loans are included in loan balances. Fees on loans are included
in interest on loans.
- --------------------------------------------------------------------------------
SELECTED QUARTERLY INFORMATION - continued -
- --------------------------------------------
Consolidated Quarterly Average Balances, Yields and Rates (1)
2002 QUARTERS
(Dollars in thousands) Second First
- -------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
- -------------------------------------------------------------------------------
EARNING ASSETS
Securities
Taxable $ 371,208 4.11% $313,853 4.15%
Nontaxable 3,654 7.77 4,009 7.78
---------------------------------------------
TOTAL SECURITIES 374,862 4.15 317,862 4.20
Federal funds sold and
other short term investments 32,979 1.68 69,478 1.66
Loans (2) 754,021 7.53 781,662 7.59
---------------------------------------------
TOTAL EARNING ASSETS 1,161,862 6.28 1,169,002 6.33
Allowance for loan losses (6,906) (6,993)
Cash and due from banks 39,336 40,855
Bank premises and equipment 15,111 15,287
Other assets 13,265 13,806
---------------------------------------------
$1,222,668 $1,231,957
=============================================
INTEREST BEARING LIABILITIES
NOW $ 63,146 0.94% $65,168 1.11%
Savings deposits 151,219 0.97 147,916 1.12
Money market accounts 256,021 1.20 242,428 1.27
Time deposits 379,228 4.08 394,162 4.51
Federal funds purchased and
other short term borrowings 54,444 1.13 75,515 1.17
Other borrowings 40,000 6.41 40,000 6.42
--------------------------------------------
TOTAL INTEREST BEARNING
LIABILITIES 944,058 2.52 965,189 2.77
Demand deposits 176,869 167,618
Other liabilities 4,856 4,709
--------------------------------------------
TOTAL 1,125,783 1,137,516
Shareholders' equity 96,885 94,441
--------------------------------------------
$1,222,668 $1,231,957
============================================
Interest expense as % of earning
assets 2.05% 2.28%
Net interest income as % of earning
assets 4.23% 4.05%
- --------------------------------------------------------------------------------
(1) The tax equivalent adjustment is based on a 35% tax rate. All yields/rates
are calculated on an annualized basis.
(2) Nonaccrual loans are included in loan balances. Fees on loans are included
in interest on loans.
- --------------------------------------------------------------------------------
SELECTED QUARTERLY INFORMATION - continued -
- --------------------------------------------
Consolidated Quarterly Average Balances, Yields and Rates (1)
2001 QUARTERS
(Dollars in thousands) Fourth Third
- -------------------------------------------------------------------------------
Average Yield Average Yield
Balance /Rate Balance /Rate
- -------------------------------------------------------------------------------
EARNING ASSETS
Securities
Taxable $ 289,544 4.74% $234,675 5.66%
Nontaxable 4,755 7.82 5,126 7.88
---------------------------------------------
TOTAL SECURITIES 294,299 4.79 239,801 5.71
Federal funds sold and
other short term investments 21,001 2.04 29,871 3.53
Loans (2) 819,636 7.64 834,436 7.85
---------------------------------------------
TOTAL EARNING ASSETS 1,134,936 6.79 1,104,108 7.26
Allowance for loan losses (7,066) (7,171)
Cash and due from banks 34,982 30,517
Bank premises and equipment 15,584 15,941
Other assets 13,464 13,499
---------------------------------------------
$1,191,900 $1,156,894
=============================================
INTEREST BEARING LIABILITIES
NOW $ 61,541 1.39% $ 53,069 1.91%
Savings deposits 145,546 1.37 144,827 1.99
Money market accounts 217,198 1.52 203,379 2.03
Time deposits 408,551 5.01 421,180 5.39
Federal funds purchased and other
short term borrowings 59,634 1.38 43,421 2.68
Other borrowings 40,000 6.41 40,000 6.43
---------------------------------------------
TOTAL INTEREST BEARING
LIABILITIES 932,470 3.22 905,876 3.80
Demand deposits 161,521 154,372
Other liabilities 5,406 5,443
---------------------------------------------
TOTAL 1,099,397 1,065,691
Shareholders' equity 92,503 91,203
---------------------------------------------
$1,191,900 $1,156,894
=============================================
Interest expense as % of earning
assets 2.64% 3.12%
Net interest income as % of earning
assets 4.14 4.13
- --------------------------------------------------------------------------------
(1) The tax equivalent adjustment is based on a 35% tax rate. All
yields/rates are calculated on an annualized basis.
(2) Nonaccrual loans are included in loan balances. Fees on loans
are included in interest on loans.
- --------------------------------------------------------------------------------
SELECTED QUARTERLY INFORMATION - continued -
- --------------------------------------------
Consolidated Quarterly Average Balances, Yields and Rates (1)
2001 QUARTERS
(Dollars in thousands) Second First
- --------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
- --------------------------------------------------------------------------------
EARNING ASSETS
Securities
Taxable $ 239,956 6.00% $ 198,550 6.30%
Nontaxable 5,365 8.13 5,917 7.84
---------------------------------------------
TOTAL SECURITIES 245,321 6.05 204,467 6.34
Federal funds sold and
other short term investments 29,844 4.46 44,358 5.55
Loans (2) 834,967 8.04 835,472 8.20
---------------------------------------------
TOTAL EARNING ASSETS 1,110,132 7.51 1,084,297 7.76
Allowance for loan losses (7,224) (7,288)
Cash and due from banks 30,474 28,513
Bank premises and equipment 16,187 16,529
Other assets 14,113 14,722
---------------------------------------------
$1,163,682 $1,136,773
=============================================
INTEREST BEARING LIABILITIES
NOW $ 58,899 2.10% $59,509 2.24%
Savings deposits 146,002 2.36 145,354 2.90
Money market accounts 187,105 2.18 178,258 2.23
Time deposits 427,376 5.77 422,231 5.98
Federal funds purchased and other
short term borrowings 50,814 3.19 52,553 4.42
Other borrowings 40,000 6.41 40,000 6.42
---------------------------------------------
TOTAL INTEREST BEARING
LIABILITIES 910,196 4.13 897,905 4.42
Demand deposits 158,470 145,427
Other liabilities 5,111 5,179
---------------------------------------------
TOTAL 1,073,777 1,048,511
Shareholders' equity 89,905 88,262
---------------------------------------------
$1,163,682 $1,136,773
=============================================
Interest expense as % of earning
assets 3.39% 3.66%
Net interest income as % of earning
assets 4.12 4.10
- --------------------------------------------------------------------------------
(1) The tax equivalent adjustment is based on a 35% tax rate. All yields/rates
are calculated on an annualized basis.
(2) Nonaccrual loans are included in loan balances. Fees on loans are included
in interest on loans.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------
Board of Directors and Shareholders
Seacoast Banking Corporation of Florida
Stuart, Florida
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of Seacoast Banking
Corporation of Florida and its subsidiaries ("the Company") at December 31,
2002, and the results of their operations and their cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. The Company's consolidated
financial statements as of December 31, 2001 and for each of the two years in
the period ended December 31, 2001, prior to the revisions described in Notes A
and S, were audited by other independent accountants who have ceased operations.
Those independent accounts expressed an unqualified opinion on those financial
statements in their report dated January 14, 2002.
As discussed above, the financial statements of Seacoast Banking Corporation of
Florida and its subsidiaries as of December 31, 2001, and for each of two years
in the period ended December 31, 2001, were auditied by other independent
accounts who have ceased operations. As described in Note A, the Company's Board
of Directors approved a 3 for 1 common stock split effective July 1, 2002. These
financial statements have been restated to reflect the stock split for each of
the two years in the period ended December 31, 2001. As described in Note S,
these financial statements have also been revised to include the transitional
disclosures required by Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets", which was adopted by the Company as of
January 1, 2002. We audited the adjustments described in Note A that were
applied to restate common stock for the 2001 and 2000 financial statements. We
also audited the transitional disclosures described in Note S. In our opinion,
such adjustments are appropriate and have been properly applied. However, we
were not engaged to audit, review, or apply any procedures to the 2001 or 2000
financial statements of the Company other than with respect to such adjustments
and disclosures and, accordingly, we do not express an opinion or any other form
of assurance on the 2001 or 2000 financial statements taken as a whole.
PricewaterhouseCoopers LLP
West Palm Beach, Florida
January 15, 2003
The following is a copy of a report previously issued by Arthur Andersen
LLP("Andersen"). This report has not been reissued by Andersen.
Board of Directors and Shareholders
Seacoast Banking Corporation of Florida
Stuart, Florida
We have audited the accompanying consolidated balance sheets of Seacoast Banking
Corporation of Florida (a Florida corporation) and subsidiaries as of December
31, 2001 and 2000, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Seacoast Banking Corporation of
Florida and subsidiaries as of December 31, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States.
Arthur Andersen LLP
West Palm Beach, Florida
January 14, 2002.
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
Seacoast Banking Corporation of Florida and Subsidiaries
For The Year Ended December 31
(Dollars in thousands,
except share data) 2002 2001 2000
- ---------------------------------------------------------------------
INTEREST INCOME
Interest on securities
Taxable $14,274 $13,482 $13,295
Nontaxable 195 285 413
Interest and fees on loans 55,462 65,815 65,521
Interest on federal funds sold
and interest bearing deposits 526 1,313 501
----------------------------------
Total interest income 70,457 80,895 79,730
INTEREST EXPENSE
Interest on savings deposits 4,947 8,099 9,459
Interest on time certificates 14,949 23,260 23,418
Interest on borrowed money 3,139 4,043 4,758
----------------------------------
Total interest expense 23,035 35,402 37,635
----------------------------------
NET INTEREST INCOME 47,422 45,493 42,095
Provision for loan losses 0 0 600
----------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
Noninterest income 47,422 45,493 41,495
Securities gains (losses) 457 915 (12)
Other 16,874 15,108 13,150
----------------------------------
Total noninterest income 17,331 16,023 13,138
NONINTEREST EXPENSES 39,790 38,060 34,877
----------------------------------
INCOME BEFORE INCOME TAXES 24,963 23,456 19,756
Provision for income taxes 9,677 9,326 7,668
----------------------------------
NET INCOME $15,286 $14,130 $12,088
==================================
- ---------------------------------------------------------------------
PER SHARE DATA
Net income per share common stock
Diluted $1.07 $0.99 $0.84
Basic 1.10 1.00 0.84
==================================
Average shares outstanding
Diluted 14,288,933 14,324,529 14,443,776
Basic 13,954,866 14,110,241 14,343,645
- ---------------------------------------------------------------------
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
Seacoast Banking Corporation of Florida and Subsidiaries
December 31
---------------
(Dollars in thousands, except per share data 2002 2001
- -----------------------------------------------------------------
ASSETS
Cash and due from banks $ 49,571 $ 47,104
Federal funds sold and interest
bearing deposits 251 45,010
---------------------
Total cash and cash equivalents 49,822 92,114
Securities held for sale (at fair value) 466,278 280,822
Securities held for investment
(fair values: 2002 - $33,168
and 2001 - $26,230) 32,181 25,530
---------------------
Total securities 498,459 306,352
Loans sold and available for sale 13,814 19,135
Loans 688,161 785,027
Less: Allowance for loan losses (6,826) (7,034)
---------------------
Net Loans 681,335 777,993
Bank premises and equipment, net 16,045 15,357
Other real estate owned 8 119
Other assets 21,814 14,894
---------------------
TOTAL ASSETS $1,281,297 $1,225,964
=====================
LIABILITIES
Deposits
Demand deposits (noninterest bearing) $ 184,524 $ 172,128
Savings deposits 472,976 444,229
Other time deposits 279,255 305,593
Time certificates of $100,000 or more 93,785 93,204
---------------------
Total deposits 1,030,540 1,015,154
Federal funds purchased and securities
sold under agreement to repurchase,
maturing within 30 days 102,967 71,704
Other borrowings 40,000 40,000
Other liabilities 7,043 5,587
---------------------
1,180,550 1,132,445
Commitments and Contingencies (Notes I and N)
SHAREHOLDERS' EQUITY
Preferred stock, par value $1.00
per share - authorized 4,000,000
shares, none issued or outstanding. 0 0
Class A common stock, par value $.10 per share
authorized 22,000,000 shares, issued 15,549,378
and outstanding 13,890,001 shares in 2002, and
authorized 10,000,000 shares, issued 4,833,281
and outstanding 4,303,762 shares in 2001. 1,555 483
Class B common stock, par value $.10 per share
none authorized, issued or outstanding in 2002
and authorized 810,000 shares, issued and
outstanding 349,845 in 2001. 0 35
Additional paid-in capital 26,994 27,924
Retained earnings 89,960 80,886
Less: Treasury Stock (1,659,377 shares
in 2002 and 529,519 shares in 2001),
at cost (18,578) (17,239)
----------------------
99,931 92,089
Accumulated other comprehensive income, net 816 1,430
----------------------
TOTAL SHAREHOLDERS' EQUITY 100,747 93,519
----------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,281,297 $1,225,964
======================
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
Seacoast Banking Corporation of Florida and Subsidiaries
For The Year Ended December 31
------------------------------
(In thousands) 2002 2001 2000
- -------------------------------------------------------------------------
Increase (Decrease) in Cash and
Cash Equivalents
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 76,018 $ 82,120 $ 78,619
Fees and commissions received 17,382 15,450 13,384
Interest paid (23,383) (35,645) (37,341)
Cash paid to suppliers and
employees (36,094) (34,468) (34,261)
Income taxes paid (9,408) (9,761) (7,566)
---------------------------------
Net cash provided by operating
activities 24,515 17,696 12,835
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of securities held
for sale 306,103 97,156 19,699
Maturities of securities held
for investment 3,301 3,660 4,848
Proceeds from sale of
securities held for sale 38,131 154,018 10,203
Purchase of securities held for
sale (535,733) (334,597) (7,559)
Purchase of securities held for
investment (9,997) (15,798) (13,357)
Net new loans and principal
repayments 101,897 42,142 (68,471)
Proceeds from sale of other
real estate owned 216 305 722
Additions to bank
premises and equipment (2,583) (757) (2,054)
Net change in other assets (7,349) (485) (627)
--------------------------------
Net cash used in investing activities (106,014) (54,356) (56,596)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 15,388 58,068 51,146
Net increase(decrease) in federal
funds purchased and repurchase
agreements 31,263 6,684 (1,944)
Net increase in other borrowings 0 0 15,030
Exercise of stock options 653 1,281 236
Treasury stock acquired (2,391) (4,457) (3,119)
Dividends paid (5,706) (5,307) (5,025)
--------------------------------
Net cash provided by
financing activities 39,207 56,269 56,324
--------------------------------
Net increase (decrease) in cash
and cash equivalents (42,292) 19,609 12,563
Cash and cash equivalents at
beginning of year 92,114 72,505 59,942
--------------------------------
Cash and cash equivalents at end
of year $49,822 $92,114 $72,505
================================
- --------------------------------------------------------------------------------
See Note P for supplemental disclosures. See notes to consolidated financial
statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
- --------------------------------------------------------------------------------
Seacoast Banking Corporation of Florida and Subsidiaries
Common Accumulated
Stock Additional Other
------------------ Paid-in Retained Treasury Comprehensive Comprehensive
(Dollars in thousands) Class A Class B Capital Earnings Stock Income, Net Income
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 $ 482 $ 36 $ 27,785 $ 65,598 $ (11,640) $ (5,150)
Comprehensive Income
Net income 12,088 $ 12,088
Net unrealized gains on securities 2,972 2,972
------
Comprehensive Income 15,060
Cash dividends declared (5,025)
Treasury stock acquired (3,242)
Common stock issued from Treasury
For employee benefit plans 72
For stock options and awards 46 (99) 340
------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000 482 36 27,831 72,562 (14,470) (2,178)
Comprehensive income
Net income 14,130 14,130
Net unrealized gains on securities 3,608 3,608
------
Comprehensive Income 17,738
Cash dividends declared (5,307)
Exchange of Class B Common Stock
for Class A Common Stock 1 (1)
Treasury stock acquired (4,523)
Common stock issued from Treasury
For employee benefit plans 64
For stock options and awards 93 (499) 1,690
------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2001 483 35 27,924 80,886 (17,239) 1,430
Effect of capital simplification 35 (35)
Effect of three for one
stock split 1,037 (1,037)
Comprehensive income
Net income 15,286 15,286
Net unrealized (loss) on securities (844) (844)
Net reclassification adjustment 230
Comprehensive income 14,442
Cash dividends declared (5,706)
Treasury stock acquired (2,482)
Common stock issued from Treasury
For employee benefit plans 91
For stock options and awards 107 (506) 1,052
------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2002 $ 1,555 $ 0 $ 26,994 $ 89,960 $ (18,578) $ 816
==========================================================================================
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
Seacoast Banking Corporation of Florida and Subsidiaries
NOTE A
SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries.
Intercompany transactions and balances have been eliminated in consolidation.
Nature of Operations: The company is a single segment bank holding company with
one operating subsidiary bank, First National Bank and Trust Company. The bank's
service area includes Palm Beach, Martin, St. Lucie and Indian River counties
which are located on Florida's southeast coast. The bank operates 26 full
service branches within its markets.
Use of Estimates: The preparation of these financial statements required the use
of certain estimates by management in determining the Company's assets,
liabilities, revenues and expenses. Actual results could differ from those
estimates.
Securities: Securities that may be sold as part of the Company's asset/liability
management or in response to, or in anticipation of changes in interest rates
and resulting prepayment risk, or for other factors are stated at market value.
Such securities are held for sale with unrealized gains of losses reflected as a
component of Shareholders' Equity net of tax. Debt securities that the Company
has the ability and intent to hold to maturity are carried at amortized cost.
Interest income on securities, including amortization of premiums and accretion
of discounts is recognized using the interest method.
The Company generally anticipates prepayments of principal in the calculation of
the effective yield for collateralized mortgage obligations and mortgage backed
securities. The adjusted cost of each specific security sold is used to compute
gains or losses on the sale of securities.
Loans: Loans are typically carried at cost. Unearned income includes deferred
loan origination fees reduced by loan origination costs. Loans held for sale are
carried at the lower of cost or fair value. Unrealized losses from loans held
for sale and realized gains or losses from loan sales typically are included in
other income. Commercial letter of credit fees, and fees on unused, available
lines of credit, are recorded as service charges and commissions as earned.
Other Real Estate Owned: Other real estate owned consists of real estate
acquired in lieu of unpaid loan balances. These assets are carried at an amount
equal to the loan balance prior to foreclosure plus costs incurred for
improvements to the property, but no more than the estimated fair value of the
property.
Bank Premises and Equipment: Bank premises and equipment are stated at cost,
less accumulated depreciation and amortization. Depreciation is computed
principally by the straight line method, over the estimated useful lives as
follows: building - 25-40 years, furniture and equipment - 3-12 years.
Business Combinations: Net assets of companies acquired in purchase transactions
are recorded at fair value at date of acquisition. Core deposit intangibles are
amortized over estimated periods benefited, not exceeding 10 years. Goodwill was
amortized on a straight line basis over 15 years. Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," was
adopted on January 1, 2002, resulting in goodwill no longer being amortized, but
tested for impairment and the amount of loss recognized (if any). The effect of
the adoption of SFAS 142 was not material. Unamortized core deposit intangible
and goodwill totaled $150,000 and $2,639,000, respectively, at December 31,
2002. The carrying value of goodwill was reviewed and no impairment loss was
recognized.
Mortgage Servicing Rights: The Company acquires mortgage servicing rights
through the origination of mortgage loans, and the Company may sell or
securitize those loans with servicing rights retained. Under Statement of
Financial Accounting Standards No. 140, the Company allocates the total cost of
the mortgage loans to the mortgage servicing rights and the loans (without the
mortgage servicing rights) based on their relative fair values.
The Company assesses its capitalized mortgage servicing rights for impairment
based on the fair value of those rights. The portfolio is stratified by two
predominant risk characteristics: loan type and fixed versus variable interest
rate. Impairment, if any, is recognized through a valuation allowance for each
impaired stratum. Mortgage servicing rights are amortized in proportion to, and
over the period of, the estimated net future servicing income.
Revenue Recognition: Interest on loans is accrued based upon the principal
amount outstanding. The accrual of interest income is discontinued when a loan
becomes 90 days past due as to principal or interest.
When interest accruals are discontinued, interest credited to income in the
current year is reversed and interest accrued in the prior year is charged to
the allowance for loan losses.
Management may elect to continue the accrual of interest when the estimated net
realizable value of collateral is sufficient to cover the principal balance and
accrued interest.
Allowance for Loan Losses: The allowance for loan losses is the amount
considered necessary to absorb inherent losses in the portfolio based on
management's evaluations of the size and current risk characteristics of the
loan portfolio. Such evaluations consider the balance of problem loans and prior
loan loss experience as well as the impact of current economic conditions and
other risk factors. Prior loss experience is based on an analysis that examines
loss experience of the Company and its peers. General economic conditions and
other risk elements are determined by management and are based on knowledge of
specific economic factors that might affect the collectibility of loans. (Also
see Note E.)
Income Taxes: Income taxes have been provided using the liability method in
accordance with FASB Statement No. 109, "Accounting for Income Taxes."
Net Income Per Share: Net income per share is based upon the weighted average
number of shares of common stock (Basic) and equivalents (Diluted) outstanding
during the respective years. Prior year per share amounts reflect the issue of a
three for one stock split effective July, 2002.
Cash Flow Information: For the purposes of the consolidated statements of cash
flows, the Company considers cash and due from banks and federal funds sold as
cash and cash equivalents.
New Accounting Standards: In December 2002, the Financial Accounting Standards
Board (FASB) issued SFAS 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure", which addresses the accounting for voluntary change
to the fair value based method of accounting for stock-based compensation and
disclosures. The new standard is effective for fiscal years beginning after
December 15, 2002. The Company has not changed its accounting for stock options
(see Note H).
On November 25, 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others". The Company does not expect the adoption of this interpretation to have
a material impact on the Company's financial statements.
NOTE B
CASH, DIVIDEND AND LOAN RESTRICTIONS
In the normal course of business, the Company and its subsidiary bank enter into
agreements, or are subject to regulatory agreements, that result in cash, debt
and dividend restrictions. A summary of the most restrictive items follows:
The Company's subsidiary bank is required to maintain average reserve balances
with the Federal Reserve Bank. The average amount of those reserve balances for
the year ended December 31, 2002 was approximately $3,677,000.
Under Federal Reserve regulation, the Company's subsidiary bank is limited as to
the amount it may loan to its affiliates, including the Company, unless such
loans are collateralized by specified obligations. At December 31, 2002, the
maximum amount available for transfer from the subsidiary bank to the Company in
the form of loans approximated 20 percent of consolidated net assets.
The approval of the Comptroller of the Currency is required if the total of all
dividends declared by a national bank in any calendar year exceeds the bank's
profits, as defined, for that year combined with its retained net profits for
the preceding two calendar years. Under this restriction the Company's
subsidiary bank can distribute as dividends to the Company in 2003, without
prior approval of the Comptroller of the Currency, approximately $18,300,000.
NOTE C
SECURITIES
The amortized cost and fair value of securities at December 31, 2002, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or repay
obligations with or without call or prepayment penalties.
Held for Investment Held for Sale
---------------------------------------
Amortized Fair Amortized Fair
(In thousands) Cost Value Cost Value
- --------------------------------------------------------------------------------
Due in less than one year $ 410 $ 420 $ 2,493 $ 2,508
Due after one year through five years 2,225 2,339 - -
Due after five years through ten years - - - -
Due after ten years 991 1,064 - -
-----------------------------------------
3,626 3,823 2,493 2,508
Mortgage backed securities 28,555 29,345 455,314 456,655
No contractual maturity - - 7,138 7,115
-----------------------------------------
$32,181 $33,168 $464,945 $466,278
=========================================
Proceeds from sales of securities during 2002 were $38,131,000 with gross gains
of $517,000 and gross losses of $60,000. During 2001, proceeds from sales of
securities were $154,018,000 with gross gains of $1,053,000 and gross losses of
$138,000. During 2000, proceeds from sales of securities were $10,203,000 with
gross gains of $10,000 and gross losses of $22,000.
Securities with a carrying value of $98,434,000 and fair value of $98,634,000
at December 31, 2002, were pledged as collateral for repurchase agreements,
United States Treasury deposits, other public deposits and trust deposits.
At December, 2002
-----------------------------------------------
Gross Gross Gross
Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- --------------------------------------------------------------------------------
SECURITIES HELD FOR SALE
U.S. Treasury and U.S.
Government agencies $ 2,493 $ 15 $ - $ 2,508
Mortgage-backed securities 455,314 2,452 (1,111) 456,655
Mutual funds 300 - (8) 292
Other securities 6,838 - (15) 6,823
-----------------------------------------------
$ 464,945 $ 2,467 $ (1,134) $466,278
===============================================
SECURITIES HELD FOR INVESTMENT
Mortgage backed securities $ 28,555 $ 800 $ (10) $ 29,345
Obligations of states and
political subdivisions 3,626 197 - 3,823
-----------------------------------------------
$ 32,181 $ 997 $ (10) $ 33,168
===============================================
At December, 2001
-----------------------------------------------
Gross Gross Gross
Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- --------------------------------------------------------------------------------
SECURITIES HELD FOR SALE
U.S. Treasury and U.S.
Government agencies $ 2,499 $ 62 $ - $ 2,561
Mortgage backed securities 268,197 2,779 (481) 270,495
Mutual funds 300 - (19) 281
Other securities 7,485 - - 7,485
-----------------------------------------------
$ 278,481 $ 2,841 $ (500) $280,822
-----------------------------------------------
SECURITIES HELD FOR INVESTMENT
Mortgage backed securities $ 20,793 $ 576 $ (10) $ 21,359
Obligations of states and
political subdivisions 4,737 134 - 4,871
-----------------------------------------------
$ 25,530 $ 710 $ (10) $ 26,230
===============================================
NOTE D
LOANS
An analysis of loans at December 31 are summarized as follows:
(In thousands) 2002 2001
- ---------------------------------------------------------
Real estate construction $ 77,909 $ 70,630
Real estate mortgage 478,123 574,585
Commercial and financial 40,491 36,617
Installment loans to individuals 91,307 102,760
Other 331 435
-------------------------
TOTAL $ 688,161 $ 785,027
=========================
One of the sources of the Company's business is loans to directors, officers and
other members of management. These loans are made on the same terms as all other
loans and do not involve more than normal risk of collectability. The aggregate
dollar amount of these loans was approximately $4,010,000 and $4,564,000 at
December 31, 2002 and 2001, respectively. During 2002, $1,542,000 of new loans
were made and repayments totaled $2,096,000.
NOTE E
IMPAIRED LOANS AND ALLOWANCE FOR LOAN LOSSES
Certain impaired loans are measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate. As a
practical expedient, impairment may be measured based on the loan's observable
market price or the fair value of collateral if the loan is collateral
dependent. When the measure of the impaired loan is less than the recorded
investment in the loan, the impairment is recorded through a valuation
allowance.
At December 31, 2002 and 2001, the Company did not have a recorded investment in
impaired loans or related valuation allowance. When recorded, valuation
allowances are included in the allowance for loan losses. The average recorded
investment in impaired loans for the years ended December 31, 2002 and 2001 was
zero and $1,000, respectively.
Interest payments received on impaired loans are recorded as interest income
unless collection of the remaining recorded investment is doubtful at which time
payments received are recorded as reductions to principal. The Company did not
record any interest income on impaired loans for the year ended December 31,
2002. The Company recognized interest income on impaired loans of $4,000 for the
year ended December 31, 2001.
Transactions in the allowance for loan losses for the two years ended December
31, are summarized as follows:
(In thousands) 2002 2001
- --------------------------------------------------------------------
Balance, beginning of year $7,034 $7,218
Provision charged to operating expense 0 0
Charge offs (530) (455)
Recoveries 322 271
-----------------------
Balance, end of year $6,826 $7,034
=======================
NOTE F
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized as follows:
Accumulated Net
Depreciation & Carrying
(In thousands) Cost Amortization Value
- --------------------------------------------------------------------------------
December 31, 2002
Premises (including land of $2,967) $22,761 $9,509 $13,252
Furniture and equipment 12,390 9,597 2,793
--------------------------------------------
$35,151 $19,106 $16,045
============================================
December 31, 2001
Premises (including land of $2,967) $21,091 $8,792 $12,299
Furniture and equipment 12,519 9,461 3,058
--------------------------------------------
$33,610 $18,253 $15,357
============================================
NOTE G
BORROWINGS
All of the Company's short-term borrowings were comprised of federal funds
purchased and securities sold under agreements to repurchase with maturities
primarily from overnight to seven days:
(Dollars in thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
Maximum amount outstanding at any
month end $102,967 $71,704 $68,352
Average interest rate outstanding at
end of year 1.17% 1.19% 5.37%
Average amount outstanding $55,015 $51,603 $38,735
Weighted average interest rate 1.04% 2.86% 5.29%
- --------------------------------------------------------------------------------
On July 31, 1998, the Company acquired $24,970,000 in other borrowings,
$15,000,000 from the Federal Home Loan Bank (FHLB), principal payable on
November 12, 2009 with interest payable quarterly at 6.10%. On March 9, 2000 the
Company acquired $25,000,000 in additional borrowings from FHLB, principal
payable on March 9, 2002 with interest payable quarterly at 6.99%; the borrowing
was restructured to a 3 year term on December 1, 2000 at 6.55%. The FHLB
$15,000,000 debt is subject to early termination on November 12, 2004 in
accordance with the terms of the agreement.
The FHLB debt is secured by residential mortgage loans totaling $40,000,000.
The Company's subsidiary bank has unused lines of credit of $97,000,000 at
December 31, 2002. The parent, Seacoast Banking Corporation of Florida, has an
unused revolving line of credit totaling $5,000,000 which, if drawn upon, may be
used for general corporate purposes, including but not limited to the capital
needs of the Company and its subsidiaries and the repurchase of Common Stock.
NOTE H
EMPLOYEE BENEFITS
The Company's profit sharing plan which covers substantially all employees after
one year of service includes a matching benefit feature for employees electing
to defer the elective portion of their profit sharing compensation. In addition,
amounts of compensation contributed by employees are matched on a percentage
basis under the plan. The profit sharing contributions charged to operations
were $1,377,000 in 2002, $1,282,000 in 2001, and $1,034,000 in 2000.
The Company's stock option and stock appreciation rights plans were approved by
the Company's shareholders on April 25, 1991, April 25, 1996 and April 20, 2000.
The number of shares of common stock that may be purchased pursuant to the 1991
and 1996 plans shall not exceed 900,000 shares for each plan and pursuant to the
2000 plan shall not exceed 1,200,000 shares. The Company has granted options on
750,000 shares and 858,000 shares for the 1991 and 1996 plans, respectively,
through December 31, 2002; no options have been granted under the 2000 plan.
Under the plans, the option exercise price equals the common stock's market
price on the date of grant. All options have a vesting period of four years and
a contractual life of ten years. The following table presents a summary of stock
option activity for 2000, 2001 and 2002:
Weighted Weighted
Number Average Fair Option Price Average
of Shares Value Per Share Exercise Price
- --------------------------------------------------------------------------------
Options outstanding,
January 1, 2000 930,000 $3.92 - 9.67 $8.17
Exercised (33,000) 3.92 - 6.33 5.81
Granted 21,000 $2.33 8.21 - 9.04 8.57
Cancelled (15,000) 9.67 9.67
-------------------------------------------------------
Options outstanding,
December 31, 2000 903,000 3.92 - 9.67 8.24
Exercised (162,000) 5.83 - 9.67 7.32
Cancelled (12,000) 8.50 - 9.67 9.26
-------------------------------------------------------
Options outstanding,
December 31, 2001 729,000 3.92 - 9.67 8.42
Exercised (69,000) 3.92 - 9.67 7.79
Options outstanding
December 31, 2002 660,000 5.83 - 9.67 8.50
=======================================================
Options exercisable,
December 31, 2002 646,000 5.83 - 9.67 8.50
- --------------------------------------------------------------------------------
The following table summarizes information about stock options outstanding at
December 31, 2002:
Options Outstanding Options Exercisable
- --------------------------------------------------------------------------------------------------------------------
Weighted Average
Remaining
Number of Shares Contractual Life Weighted Average Number of Shares Weighted Average
Range of Exercise Outstanding in Years Exercise Price Exercisable Exercise Price
Prices
- --------------------------------------------------------------------------------------------------------------------
$5.83 31,000 2.17 $5.83 31,000 $5.83
5.92 31,000 .92 5.92 31,000 5.92
6.33 61,000 .17 6.33 61,000 6.33
7.25 84,000 3.50 7.25 84,000 7.25
8.21 12,000 7.22 8.21 4,000 8.21
8.50 92,000 4.58 8.50 92,000 8.50
9.04 9,000 7.62 9.04 3,000 9.04
9.67 340,000 5.54 9.67 340,000 9.67
- -------------------------------------------------------------------------------------------------------------------
660,000 4.34 8.50 646,000 8.50
==========================================================================================
The three stock option plans are accounted for under APB Opinion No. 25, and
therefore no compensation cost has been recognized. Had compensation cost for
these plans been determined consistent with FASB Statement No. 123, the
Company's net income and earnings per share would have been reduced to the
following pro forma amounts:
Year Ended December 31
---------------------------------
(In thousands, except per share data) 2002 2001 2000
- --------------------------------------------------------------------------------
Net income
As Reported $15,286 $14,130 $12,088
Stock Based Employee Compensation
Cost, Net of Tax (7) (244) (317)
Pro Forma 15,279 13,886 11,771
Per Share (Diluted):
As Reported 1.07 .99 .84
Pro Forma 1.07 .97 .81
- --------------------------------------------------------------------------------
Because the Statement 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2000; risk-free interest rates of 5.65 percent
for 2000; expected dividend yield of 3.5 percent for the 2000 issue; expected
life of 7 years; expected volatility of 28.5 percent for 2000.
NOTE I
LEASE COMMITMENTS
The Company is obligated under various noncancelable operating leases for
equipment, buildings and land. At December 31, 2002, future minimum lease
payments under leases with initial or remaining terms in excess of one year are
as follows:
(In thousands)
- --------------------------------------------------------------------------------
2003 $1,752
2004 1,731
2005 1,347
2006 1,098
2007 872
Thereafter 6,317
--------
$ 13,117
- --------------------------------------------------------------------------------
Rent expense charged to operations was $1,613,000 in 2002, $1,645,000 in 2001,
and $1,739,000 in 2000. Certain leases contain provisions for renewal and change
with the consumer price index.
Certain property is leased from related parties of the Company at prevailing
rental rates. Lease payments to these individuals were $263,000 in 2002,
$260,000 in 2001, and $255,000 in 2000.
NOTE J
INCOME TAXES
The provision for income taxes including tax effects of security transaction
gains (losses) (2002 - $176,000; 2001 - $353,000; 2000 - ($5,000)) are as
follows:
Year Ended December 31
---------------------------------
(In thousands) 2002 2001 2000
- ----------------------------------------------------------------------
Current
Federal $8,746 $8,034 $6,666
State 1,380 1,335 1,149
Deferred
Federal (379) (34) (121)
State (70) (9) (26)
--------------------------------------
TOTAL $9,677 $9,326 $7,668
======================================
Temporary differences in the recognition of revenue and expense for tax and
financial reporting purposes resulted in deferred income taxes as follows:
Year Ended December 31
---------------------------------
(In thousands) 2002 2001 2000
- ----------------------------------------------------------------------
Depreciation $ (100) $ (155) $ (180)
Allowance for loan losses 80 71 (78)
Interest and fee income (420) (428) 98
Other real estate owned 0 3 11
Other (9) 466 2
--------------------------------------
TOTAL $ (449) $ (43) $ (147)
======================================
The difference between the total expected tax expense (computed by applying the
U.S. Federal tax rate of 35% to pretax income in 2002, 2001 and 2000) and the
reported income tax expense relating to income before income taxes is as
follows:
Year Ended December 31
---------------------------------
(In thousands) 2002 2001 2000
- ----------------------------------------------------------------------
Tax rate applied to income
before income taxes $8,737 $8,210 $6,915
Increase (decrease) resulting
from the effects of:
Tax-exempt interest on
obligations of
states and political
subdivisions (117) (136) (182)
State income taxes (459) (464) (393)
Dividend exclusion 0 (7) (8)
Amortization of intangibles 88 193 201
Other 118 204 12
--------------------------------------
Federal tax provision 8,367 8,000 6,545
State tax provision 1,310 1,326 1,123
--------------------------------------
Applicable income taxes $9,677 $9,326 $7,668
======================================
The net deferred tax assets (liabilities) are comprised of the following:
Year Ended December 31
----------------------
(In thousands) 2002 2001
- --------------------------------------------------------------
Allowance for loan losses $ 2,301 $ 2,381
---------------------------
Gross deferred tax assets 2,301 2,381
Depreciation (270) (370)
Interest and fee income (48) (468)
Net unrealized securities gains (513) (871)
Other (46) (55)
---------------------------
Gross deferred tax liabilities (877) (1,764)
Deferred tax asset valuation allowance 0 0
---------------------------
Net deferred tax assets $ 1,424 $ 617
===========================
The tax effects of unrealized gains (losses) included in the calculation of
comprehensive income as presented in the Statements of Shareholder's Equity for
the three years ended December 31, are as follows:
(In thousands)
- ----------------------
2002 ($358)
2001 2,573
2000 1,600
- ----------------------
NOTE K
NONINTEREST INCOME AND EXPENSES
Details of noninterest income and expenses follow:
Year Ended December 31
-----------------------------
(In thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
Noninterest income
Service charges on deposit accounts $5,105 $5,110 $4,865
Trust fees 2,177 2,497 2,704
Mortgage banking fees 3,364 2,456 770
Brokerage commissions and fees 2,045 1,805 2,421
Marine finance fees 1,408 743 361
Debit card income 980 735 428
Other deposit based EFT fees 376 312 227
Other 1,419 1,450 1,374
---------------------------------------
16,874 15,108 13,150
Securities gains (losses) 457 915 (12)
---------------------------------------
TOTAL $17,331 $16,023 $13,138
=======================================
Noninterest expenses
Salaries and wages $15,761 $14,776 $13,077
Employee benefits 4,304 3,866 3,177
Outsourced data processing costs 4,795 4,468 4,106
Occupancy 3,365 3,358 3,343
Furniture and equipment 1,989 2,190 2,108
Marketing 2,036 1,908 1,717
Legal and professional fees 1,538 1,230 1,177
FDIC assessments 173 177 184
Amortization of intangibles 252 552 636
Other 5,577 5,535 5,352
---------------------------------------
TOTAL $39,790 $38,060 $34,877
=======================================
NOTE L
SHAREHOLDERS' EQUITY
The Company has reserved 300,000 common shares for issuance in connection with
an employee stock purchase plan and 450,000 common shares for issuance in
connection with an employee profit sharing plan. At December 31, 2002 an
aggregate of 105,708 shares and 157,226 shares, respectively, have been issued
as a result of employee participation in these plans.
In 2002, the Company's shareholders approved a capital simplification and
eliminated its Class B Common Stock which was converted on a one-for-one basis
into Class A Common Stock. In addition, the Class A Common Stock liquidation
preference was eliminated.
Holders of common stock are entitled to one vote per share on all matters
presented to shareholders as provided in the Company's Articles of
Incorporation.
The Company repurchases its common shares in an ongoing effort to manage its
capital position and to fund shares used for the Company's stock option and
stock purchase plans.
The Company is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory, and possibly additional discretionary, actions
by regulators that, if undertaken, could have a direct material effect on the
Company's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Company must meet
specific capital guidelines that involve quantitative measures of the Company's
assets, liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. The Company's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios of total and Tier 1
capital (as defined in the regulations) to risk-weighted assets (as defined) and
of Tier 1 capital to average assets (as defined). Management believes, as of
December 31, 2002, that the Company meets all capital adequacy requirements to
which it is subject.
The most recent notification from the Company's regulator categorized the
Company as well capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized, the Company must maintain minimum
total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth
above. There are no conditions or events since that notification that management
believes have changed the institution's category.
Minimum To Be Well
Minimum for Capital Capitalized Under Prompt
Adequacy Purposes Corrective Action Provisions
----------------------------------------------------------------------------------
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
- -----------------------------------------------------------------------------------------------------------------------
At December 31, 2002:
Total Capital (to risk-weighted $103,902 13.77% $60,327 > 8.00% $ 75,405 > 10.00%
assets) - -
Tier 1 Capital (to risk-weighted 97,076 12.87 30,164 > 4.00% 45,243 > 6.00%
assets) - -
Tier 1 Capital (to adjusted 97,076 7.99 48,599 > 4.00% 60,748 > 5.00%
average assets) - -
At December 31, 2001:
Total Capital (to risk-weighted $ 96,135 12.64% $60,851 > 8.00% $ 76,064 > 10.00%
assets) - -
Tier 1 Capital (to risk-weighted 89,101 11.71 30,426 > 4.00% 45,638 > 6.00%
assets) - -
Tier 1 Capital (to adjusted 89,101 7.49 47,557 > 4.00% 59,446 > 5.00%
average assets) - -
- --------------------------------------------------------------------------------
The above ratios are comparable for the Company's wholly owned subsidiary.
NOTE M
SEACOAST BANKING CORPORATION OF FLORIDA
(PARENT COMPANY ONLY) FINANCIAL INFORMATION
BALANCE SHEETS
At December 31
-------------------------------------
(Dollars in thousands) 2002 2001
- --------------------------------------------------------------------------------
Assets
Cash $ 10 $ 10
Securities purchased under agreement to
resell with subsidiary bank, maturing
within 30 days 2,105 1,039
Investment in subsidiaries 98,390 92,287
Other assets 463 340
-------------------------------------
$ 100,968 $ 93,676
=====================================
Liabilities and Shareholders' Equity
Liabilities $ 221 $ 157
Shareholders' equity 100,747 93,519
-------------------------------------
$ 100,968 $ 93,676
=====================================
STATEMENTS OF INCOME
Year Ended December 31
---------------------------------
(Dollars in thousands) 2002 2001 2000
- -----------------------------------------------------------------------------
Income
Dividends
Subsidiary $ 9,150 $ 8,700 $ 6,650
Other 0 27 32
Interest/other 25 70 106
-----------------------------------
9,175 8,797 6,788
Expenses 919 706 686
-----------------------------------
Income before income tax credit
and equity in undistributed
income of subsidiaries 8,256 8,091 6,102
Income tax credit 313 242 218
------------------------------------
Income before equity in
undistributed income of
subsidiaries 8,569 8,333 6,320
Equity in undistributed income of
subsidiaries 6,717 5,797 5,768
------------------------------------
Net income $15,286 $14,130 $12,088
====================================
STATEMENTS OF CASH FLOWS
Year Ended December 31
--------------------------
(Dollars in thousands) 2002 2001 2000
- ----------------------------------------------------------------------------
Increase (Decrease) in Cash
Cash flows from operating activities
Interest received $ 25 $ 57 $ 106
Dividends received 9,150 8,730 6,682
Income taxes received 335 264 186
Cash paid to suppliers (1,000) (814) (1,162)
---------------------------
Net cash provided by operating
activities 8,510 8,237 5,812
Cash flows from investing activities
Decrease (increase) in securities
purchased under agreement to
resell, maturing in 30 days (1,066) (254) 2,096
Maturities of securities held for sale 0 500 0
--------------------------
Net cash provided by (used in)
investing activities (1,066) 246 2,096
Cash flows from financing activities
Exercise of stock options 653 1,281 236
Treasury stock purchased (2,391) (4,457) (3,119)
Dividends paid (5,706) (5,307) (5,025)
---------------------------
Net cash used in financing
activities (7,444) (8,483) (7,908)
---------------------------
Net change in cash 0 0 0
Cash at beginning of year 10 10 10
---------------------------
Cash at end of year $ 10 $ 10 $ 10
===========================
RECONCILIATION OF NET INCOME TO
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $15,286 $14,130 $12,088
Adjustments to reconcile net cash provided
by operating activities
Equity in undistributed income
of subsidiaries (6,717) (5,797) (5,768)
Other, net (59) (96) (508)
----------------------------------
Net cash provided by operating
activities $ 8,510 $ 8,237 $ 5,812
==================================
NOTE N
CONTINGENT LIABILITIES AND COMMITMENTS WITH OFF BALANCE SHEET RISK
The Company and its subsidiary bank, because of the nature of their business,
are at all times subject to numerous legal actions, threatened or filed.
Management, based upon advice of legal counsel, does not expect that the final
outcome of threatened or filed suits will have a materially adverse effect on
its results of operations or financial condition.
The Company's subsidiary bank is a party to financial instruments with off
balance sheet risk in the normal course of business to meet the financing needs
of its customers. These financial instruments include commitments to extend
credit and standby letters of credit.
The subsidiary bank's exposure to credit loss in the event of non-performance by
the other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contract or notional amount of
those instruments. The subsidiary bank uses the same credit policies in making
commitments and standby letters of credit as it does for on balance sheet
instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The subsidiary bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the bank upon extension of credit, is based on
management's credit evaluation of the counterparty. Collateral held varies but
may include accounts receivable, inventory, equipment, and commercial and
residential real estate. Of the $135,685,000 outstanding at December 31, 2002,
$72,518,000 is secured by 1-4 family residential properties.
Standby letters of credit are conditional commitments issued by the subsidiary
bank to guarantee the performance of a customer to a third party. These
instruments have fixed termination dates and most end without being drawn;
therefore, they do not represent a significant liquidation risk. Those
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing, and similar
transactions. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
The subsidiary bank holds collateral supporting these commitments for which
collateral is deemed necessary. The extent of collateral held for the above
secured standby letters of credit at December 31, 2002 and 2001 amounted to
$4,491,000 and $3,893,000, respectively.
At December 31
---------------------
(In thousands) 2002 2001
- --------------------------------------------------------------------------------
Contract or
Notional Amount
- --------------------------------------------------------------------------------
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $135,685 $114,865
Standby letters of credit and
financial guarantees written:
Secured 1,439 837
Unsecured 621 515
- --------------------------------------------------------------------------------
NOTE O
MORTGAGE SERVICING RIGHTS, NET
The fair value of capitalized mortgage servicing rights was estimated using a
discounted cash flow model. Prepayment speed projections and market assumptions,
regarding discount rate, servicing cost, escrow earnings credits, payment float,
and advance cost interest rates were determined from guidelines provided by a
third-party mortgage servicing rights broker.
The following is an analysis of the mortgage servicing rights, net at December
31:
(In thousands) 2002 2001
- -----------------------------------------------------------------------
Unamortized balance at beginning of year $ 1,208 $ 1,296
Origination of mortgage servicing rights 57 222
Amortization (408) (310)
--------------------------
857 1,208
Valuation allowance
Beginning balance (158) (126)
Addition charged to operations (100) (32)
--------------------------
Ending balance (258) (158)
--------------------------
TOTAL $ 599 $ 1,050
==========================
At December 31
--------------------------
(In thousands) 2002 2001
- -----------------------------------------------------------------------
Unpaid principal balance of serviced loans
for which mortgage servicing rights are
capitalized $82,660 $115,921
=========================
Unpaid principal balance of serviced loans
for which there are no servicing rights
capitalized $13,582 $20,009
=========================
NOTE P
SUPPLEMENTAL DISCLOSURES FOR CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net income to Net Cash Provided by Operating Activities for
three years ended:
Year Ended December 31
----------------------
(In thousands) 2002 2001 2000
- --------------------------------------------------------------------------------
Net Income $15,286 $14,130 $12,088
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 8,187 3,565 2,559
Provision for loan losses 0 0 600
Credit for deferred taxes (449) (43) (147)
Gain (loss) on sale of securities (457) (915) 12
Loss (gain) on sale and write down of
foreclosed assets (23) 10 16
Loss on disposition of equipment 8 7 14
Change in interest receivable 21 580 (836)
Change in interest payable (348) (243) 294
Change in prepaid expenses 257 172 (677)
Change in accrued taxes 723 (382) 251
Change in other liabilities 1,310 815 (1,339)
-------------------------------------
TOTAL ADJUSTMENTS 9,229 3,566 747
-------------------------------------
Net cash provided by operating activities $24,515 $17,696 $12,835
=====================================
Supplemental disclosure of non cash investing activities:
Market value adjustment to securities $(1,008) $5,849 $4,564
Transfers from loans to other real
estate owned 82 88 745
- --------------------------------------------------------------------------------
NOTE Q
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate that
value at December 31:
Cash and Cash Equivalents: The carrying amount was used as a reasonable estimate
of fair value.
Securities: The fair value of U.S. Treasury and U.S. Government agency, mutual
fund and mortgage backed securities are estimated based on bid prices published
in financial newspapers or bid quotations received from securities dealers.
The fair value of many state and municipal securities are not readily available
through market sources, so fair value estimates are based on quoted market price
or prices of similar instruments.
Loans: Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial, mortgage, etc.
Each loan category is further segmented into fixed and adjustable rate interest
terms and by performing and nonperforming categories.
The fair value of loans, except residential mortgage, is calculated by
discounting scheduled cash flows through the estimated maturity using estimated
market discount rates that reflect the credit and interest rate risk inherent in
the loan. For residential mortgage loans, fair value is estimated by discounting
contractual cash flows adjusting for prepayment assumptions using discount rates
based on secondary market sources adjusted to reflect differences in servicing
and credit costs.
Loans Sold and Available for Sale: Fair values are based upon estimated values
to be received from independent third party purchasers.
Deposit Liabilities: The fair value of demand deposits, savings accounts and
money market deposits is the amount payable on demand at the reporting date. The
fair value of fixed maturity certificates of deposit is estimated using the
rates currently offered for deposits of similar remaining maturities.
Commitments to Extend Credit and Standby Letters of Credit: The fair value of
commitments to extend credit is estimated using the fees currently charged to
enter into similar agreements, taking into account the present creditworthiness
of the counterparties.
At December 31 .
------------------------------------------------
(In thousands) 2002 2001
- --------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- --------------------------------------------------------------------------------
Financial Assets
Cash and cash equivalents $ 49,822 $ 49,822 $ 92,114 $ 92,114
Securities 498,459 499,446 306,352 307,052
Loans, net 681,335 693,482 777,993 794,018
Loans sold and available
for sale 13,814 14,021 19,135 19,422
Financial Liabilities
Deposits 1,030,540 1,038,418 1,015,154 1,019,503
Borrowings 142,967 142,967 111,704 114,039
Contingent Liabilities
Commitments to extend credit 0 987 0 1,035
Standby letters of credit 0 21 0 14
- --------------------------------------------------------------------------------
NOTE R
EARNINGS PER SHARE
Basic earnings per common share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings per common share were determined by including assumptions of
stock option conversions.
Year Ended December 31
---------------------------------------
Per
(Dollars in thousands Share
except per share data) Net Income Shares Amount
- --------------------------------------------------------------------------------
2002
Basic Earnings Per Share
Income available to common
shareholders $15,286 13,954,866 $1.10
Options issued to executives ----------
(see Note H) 334,127
------------------------
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $15,286 14,288,993 $1.07
=======================================
2001
Basic Earnings Per Share
Income available to common
shareholders $14,130 14,110,242 $1.00
----------
Options issued to executives
(see Note H) 214,287
------------------------
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $14,130 14,324,529 $0.99
=======================================
2000
Basic Earnings Per Share
Income available to common
shareholders $12,088 14,343,645 $0.84
----------
Options issued to executives
(see Note H) 100,131
------------------------
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $ 12,088 14,443,776 $0.84
=======================================
NOTE S
GOODWILL AMORTIZATION TRANSITION DISCLOSURES
Reported net income for years ended December 31, 2002, 2001 and 2000 without
goodwill amortization expense were as follows:
(In thousands, except per share data) 2002 2001 2000
- --------------------------------------------------------------------------------
Reported net income $15,286 $14,130 $12,088
Goodwill amortization (net of tax) 0 184 184
---------------------------------
Adjusted net income $15,286 $14,314 $12,272
=================================
Net income per share Common Stock
Diluted as reported $1.07 $0.99 $0.84
Goodwill (net of tax) 0.00 0.01 0.01
---------------------------------
Adjusted net income $1.07 $1.00 $0.85
=================================
Basic as reported $1.10 $1.00 $0.84
Goodwill (net of tax) 0.00 0.01 0.01
---------------------------------
Adjusted net income $1.10 $1.01 $0.85
=================================
SEACOAST BANKING CORPORATION OF FLORIDA
CERTIFICATION PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Dennis S. Hudson, III, certify that:
1. I have reviewed this Annual Report on Form 10-K of Seacoast Banking
Corporation of Florida;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 24, 2003
/s/ Dennis S. Hudson, III
Dennis S. Hudson, III
President and Chief Executive Officer
SEACOAST BANKING CORPORATION OF FLORIDA
CERTIFICATION PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, William R. Hahl, certify that:
1. I have reviewed this Annual Report on Form 10-K of Seacoast Banking
Corporation of Florida;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
d) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
e) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
f) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
c) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
d) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 24, 2003
/s/ William R. Hahl
William R. Hahl
Executive Vice President and
Chief Financial Officer
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SEACOAST BANKING CORPORATION OF FLORIDA
ARTICLE I
NAME
The name of the corporation (the "Corporation") is: "Seacoast Banking
Corporation of Florida".
ARTICLE II
TERM OF EXISTENCE
The Corporation shall have perpetual duration and existence.
ARTICLE III
OBJECTS AND POWERS
The nature of the Corporation's business, and its objects, purposes and
powers are as follows:
3.01 Holding Company Activities. To purchase or otherwise acquire, to own
and to hold the stock of banks and other corporations, and to do every act and
thing covered generally by the denominations "holding corporation", "bank
holding company", and "financial holding company", and especially to direct the
operations of other entities through the ownership of stock or other interests
therein.
3.02 Investments, etc. To purchase, subscribe for, acquire, own, hold,
sell, exchange, assign, transfer, mortgage, pledge, hypothecate or otherwise
transfer or dispose of stock, scrip, warrants, rights, bonds, securities or
evidences of indebtedness created by any other corporation or corporations
organized under the laws of any state, or any bonds or evidences of indebtedness
of the United States or any state, district, territory, dependency or county or
subdivision or municipality thereof, and to issue and exchange therefor cash,
capital stock, bonds, notes or other securities, evidences of indebtedness or
obligations of the Corporation and while the owner thereof to exercise all
rights, powers and privileges of ownership, including the right to vote on any
shares of stock, voting trust certificates or other instruments so owned.
3.03 Other Business. To transact any business, to engage in any lawful act
or activity and to exercise all powers permitted to corporations by the Florida
Business Corporation Act (the "FBCA").
The enumeration herein of the objects and purposes of the Corporation shall
not be deemed to exclude or in any way limit by inference any powers, objects or
purposes that the Corporation is empowered to exercise, whether expressly, by
purpose or by any of the laws of the State of Florida or any reasonable
construction of such laws.
ARTICLE IV
CAPITAL STOCK
4.01 General. The total number of shares of all classes of capital stock
("Shares") which the Corporation shall have the authority to issue is 26,000,000
consisting of the following classes:
(1) 22,000,000 Shares of common stock, $.10 par value per share ("Common
Stock"); and
(2) 4,000,000 Shares of preferred stock, $.10 par value per share
("Preferred Stock").
4.02 Preferred Stock. Shares of Preferred Stock may be issued for any
purpose and in any manner permitted by law, in one or more distinctly designated
series, as a dividend or for such consideration as the Corporation's Board of
Directors may determine by resolution or resolutions from time to time adopted.
The Board of Directors is expressly authorized to fix and determine, by
resolution or resolutions from time to time adopted prior to the issuance of any
Shares of a particular series of Preferred Stock, the designations, voting
powers (if any), preferences, and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof,
including, but without limiting the generality of the foregoing, the following:
(1)The distinctive designation and number of Shares of Preferred Stock
that shall constitute a series, which number may from time to time be
increased or decreased (but not below the number of Shares of such series
then outstanding), by like action of the Board of Directors;
(2)The rate or rates and times at which dividends, if any, shall be
paid on each series of Preferred Stock, whether such dividends shall be
cumulative or non-cumulative, the extent of the preference, subordination
or other relationship to dividends declared or paid, or any other amounts
paid or distributed upon, or in respect of, any other class or series of
Preferred Stock or other Shares;
(3)Redemption provisions, if any, including whether or not Shares of
any series may be redeemed by the Corporation or by the holders of such
series of Preferred Stock, or by either, and if redeemable, the redemption
price or prices, redemption rate or rates, and such adjustments to such
redemption price(s) or rate(s) as may be determined, the manner and time or
times at which, and the terms and conditions upon which, Shares of such
series may be redeemed;
(4)Conversion, exchange, purchase or other privileges, if any, to
acquire Shares or other securities of any class or series, whether at the
option of the Corporation or of the holder, and if subject to conversion,
exchange, purchase or similar privileges, the conversion, exchange or
purchase prices or rates and such adjustments thereto as may be determined,
the manner and time or times at which such privileges may be exercised, and
the terms and conditions of such conversion, exchange, purchase or other
privileges;
(5)The rights, including the amount or amounts, if any, of
preferential or other payments or distributions to which holders of Shares
of any series are entitled upon the dissolution, winding-up, voluntary or
involuntary liquidation, distribution, or sale or lease of all or
substantially all of the assets of the Corporation; and
(6)The terms of the sinking fund, retirement, redemption or purchase
account, if any, to be provided for such series and the priority, if any,
to which any funds or payments allocated therefor shall have over the
payment of dividends, or over sinking fund, retirement, redemption,
purchase account or other payments on, or distributions in respect of,
other series of Preferred Stock or Shares of other classes.
All Shares of the same series of Preferred Stock shall be identical in all
respects, except there may be different dates from which dividends, if any,
thereon may cumulate, if made cumulative.
4.03 Dividends. Dividends upon all classes and series of Shares shall be
payable only when, as and if declared by the Board of Directors from funds
lawfully available therefor, which funds shall include, without limitation, the
Corporation's capital surplus. Dividends upon any class or series of Corporation
Shares may be paid in cash, property, or Shares of any class or series or other
securities or evidences of indebtedness of the Corporation or any other issuer,
as may be determined by resolution or resolutions of the Board of Directors.
4.04 Rights, Warrants, Options, etc. The Board of Directors is expressly
authorized to create and issue, by resolutions adopted from time to time,
rights, warrants or options entitling the holders thereof to purchase Shares of
any kind, class or series, whether or not in connection with the issuance and
sale of any Shares, or other securities or indebtedness. The Board of Directors
also is authorized expressly to determine the terms, including, without
limitation, the time or times within which and the price or prices at which
Shares may be purchased upon the exercise of any such right or option. The Board
of Directors' judgment shall be conclusive as to the adequacy of the
consideration received for any such rights or options.
4.05 No Preemptive Rights. No holder of any Shares of any kind, class or
series shall have, as a matter of right, any preemptive or preferential right to
subscribe for, purchase or receive any Shares of any kind, class or series or
any Corporation securities or obligations, whether now or thereafter authorized.
ARTICLE V
REGISTERED AGENT
The Corporation's registered office and initial registered agent at that
address shall be:
Dennis S. Hudson, III
815 Colorado Avenue
Stuart, Florida 34994
ARTICLE VI
BOARD OF DIRECTORS
6.01 Number. The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors, each of whose members shall
have the qualifications, if any, set forth in the Bylaws, and who need not be
residents of the State of Florida. The number of directors of the Corporation
(exclusive of directors to be elected by the holders of any one or more series
of Preferred Stock voting separately as a class or classes) that shall
constitute the Whole Board of Directors shall be between 3 and 14, with the
exact number determined from time to time by resolution adopted by the
affirmative vote of at least (i) two-thirds (66 2/3%) of the Whole Board of
Directors and (ii) a majority of the Continuing Directors. In no event shall the
Whole Board of Directors consist of less than 11 persons.
6.02 Classification; Vacancies. The Board of Directors shall be divided
into three classes, designated Classes I, II and III, as nearly equal in number
as the then total number of directors constituting the Whole Board of Directors
permits, with the term of office of one class expiring each year. At the annual
meeting of shareholders when the Board of Directors is first classified,
directors of Class I shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of Class II shall be elected to hold
office for a term expiring at the second succeeding annual meeting and directors
of Class III shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from any increase in the
number of directors, may be filled only by the Board of Directors, acting by
vote of (i) 66 2/3% of the directors then in office and (ii) a majority of the
Continuing Directors, although less than a quorum, or if no directors remain by
the affirmative vote of not less than (i) 66 2/3% of the Voting Shares and (ii)
an Independent Majority of Shareholders, and any directors so chosen shall hold
office until the next election of the class of the director they have replaced
and until their successors have been elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
Notwithstanding the foregoing, and except as otherwise required by law, whenever
the holders of any one or more series of Preferred Stock shall have the right,
voting separately as a class, to elect one or more directors of the Corporation,
the terms of the director or directors elected by such holders shall expire at
the next succeeding annual meeting of shareholders and vacancies created with
respect to any directorship of the directors so elected shall be filled in the
manner specified by such series of Preferred Stock. Subject to the foregoing, at
each annual meeting of shareholders, the successors to the class of directors
whose term is then expiring shall be elected to hold office for a term expiring
at the third succeeding annual meeting and until their successors have been
elected and qualified.
6.03 Nominations. In addition to the right of the Corporation's Board of
Directors to make nominations for the election of directors, nominations for the
election of directors may be made by any shareholder entitled to vote generally
in the election of directors if that shareholder complies with all of the
provisions of this Section 6.03.
(1) Advance notice of such proposed nomination shall be received by
the Secretary of the Corporation (a) with respect to an election of
directors to be held at an annual meeting, not less than 60 days nor more
than 90 days prior to the anniversary of the last annual meeting of
Corporation shareholders (or, if the date of the annual meeting is changed
by more that 20 days from such anniversary date, within 10 days after the
date that the Corporation mails or otherwise gives notice of the date of
such meeting) and (b) with respect to an election to be held at a special
meeting called for that purpose, not later than the close of the tenth day
following the date on which notice of the meeting was first mailed to
shareholders.
(2) Each notice under Section 6.03 (1) shall set forth (i) the name,
age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
each such nominee during the past five years, (iii) the number of Shares of
the Corporation which are Beneficially Owned by each such nominee; (iv)
whether such person or persons are or have ever been at any time directors,
officers or beneficial owners of 5% or more of any class of capital stock,
partnership interests or other equity interest of any Person and if so a
description thereof; any directorships or similar position, and/or
Beneficial Ownership of 5% or more of any class of capital stock,
partnership interests or other equity interest held by such person or
persons in any Person with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or subject to the requirements of Section 15(d) of the
Exchange Act or any company registered as an investment company under the
Investment Company Act of 1940, as amended; (v) whether, in the last five
years, such person or persons are or have been convicted in a criminal
proceeding or have been subject to a judgment, order, finding or decree of
any federal, state or other governmental, regulatory or self-regulatory
entity, concerning any violation of federal, state or other law, or any
proceeding in bankruptcy, in order to evaluate the ability or integrity of
the nominee; (vi) the name and address of the nominator and the number of
Shares of the Corporation held by the nominator, and a written confirmation
that the nominator is and will remain a shareholder of the Corporation
through the meeting; (vii) represent that the nominator intends to appear
in person or by proxy at the meeting to make such nomination, (viii) full
disclosure of the existence and terms of all agreements and understandings,
between the nominator or any other person and the nominee with respect to
the nominee's nomination, or possible election and service to the
Corporation's Board of Directors, or a confirmation that there are no such
arrangements or understandings; (ix) the written consent of each such
person to serve as a director if elected; and (x) any other information
reasonably requested by the Corporation.
(3) The nomination made by a shareholder may only be made in a meeting
of the shareholders of the Corporation called for the election of directors
at which such shareholder is present in person or by proxy, and can only be
made by a shareholder who has therefore complied with the notice provisions
of Sections 6.03 (1) and (2). The foregoing provisions are not intended to
and shall not limit the responsibilities of any nominator or nominees, or
their respective Affiliates or Associates responsibilities under applicable
law, including, without limitation, federal and state securities laws.
(4) The chairman of the shareholders' meeting may, if the facts
warrant, determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedures, and if he should so
determine, he shall so declare to the meeting and the defective nomination
shall be disregarded. The Corporation's Nominating Committee shall evaluate
any proper nomination and may, in its discretion, make a recommendation
thereon to the shareholders.
6.04 Removal. Directors may be removed only for cause upon the affirmative
vote of (a) 66 2/3 % of all Voting Shares and (b) an Independent Majority of
Shareholders at a meeting duly called and held for that purpose upon not less
than 30 days' prior written notice.
ARTICLE VII
PROVISIONS RELATING TO BUSINESS COMBINATIONS
7.01 Definitions. The following defined terms are used in other Articles,
and shall have the meanings specified below.
7.01.1 An "Affiliate" of, or a Person "affiliated with", a specified
Person, means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.
7.01.2 The terms "Associate" or "associated with", as used to indicate a
relationship with any Person, mean:
(1) Any corporation, organization or entity (other than the
Corporation) of which such Person is an officer or partner, or is directly
or indirectly the beneficial owner of 10% or more of any class of equity
securities;
(2) Any trust or other estate in which such Person has a 10% or
greater beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity;
(3) Any relative or spouse of such Person, or any relative of such
spouse who has the same home as such Person; or
(4) Any investment company registered under the Investment Company Act
of 1940 for which such Person or any Affiliate or Associate of such Person
serves as investment adviser.
7.01.3 A person shall be considered the "Beneficial Owner" of and shall be
deemed to "beneficially own" any shares of stock (whether or not owned of
record):
(1) With respect to which such Person or any Affiliate or Associate of
such Person directly or indirectly has or shares (i) voting power,
including the power to vote or to direct the voting of such shares of stock
and/or (ii) investment power, including the power to dispose of or to
direct the disposition of such shares of stock;
(2) Where such Person or any Affiliate or Associate of such Person has
(i) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange or
purchase rights, warrants, options, or otherwise, and/or (ii) the right to
vote pursuant to any agreement, arrangement or understanding (whether such
right is exercisable immediately or only after the passage of time); or
(3) Which are Beneficially Owned within the meaning of subsections (1)
or (2) of this Section 7.01.3 by any other Person with which such
first-mentioned Person or any of its Affiliates or Associates has any
agreement, arrangement or understanding, written or verbal, formal or
informal with respect to acquiring, holding, voting or disposing of any
shares of stock of the Corporation or any Subsidiary of the Corporation or
acquiring, holding or disposing of all or substantially all, or any
Substantial Part, of the assets or businesses of the Corporation or a
Subsidiary of the Corporation.
For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage specified in this Article VII of the outstanding Voting
Shares, such shares shall be deemed to include any interest in Voting Shares
which may be issuable, transferred or voted or disposed of pursuant to any
agreement, trust, arrangement or understanding or upon the exercise of
conversion rights, exchange or purchase rights, warrants, options or otherwise
and which Voting Shares are deemed to be beneficially owned by such Person
pursuant to the foregoing provisions of this Section 7.01.3.
7.01.4 A "Business Combination" means:
(1) The sale, exchange, lease, transfer or other disposition to or
with any Person or any Affiliate or Associate of any such Person by the
Corporation or any of its Subsidiaries (in a single transaction or in a
series of related transactions) of all or substantially all, or any
Substantial Part, of its or their assets or businesses (including, without
limitation, any securities issued by a Subsidiary and assets of a
Subsidiary);
(2) Any merger, consolidation or purchase and/or assumption ("P&A") of
assets and/or liabilities of the Corporation or any Subsidiary thereof into
or with another Person or any Affiliate or Associate of such person or into
or with another Person where, after such merger, consolidation or P&A, such
Person alone or together with its Affiliates or Associates would be a
Related Person or an Affiliate or an Associate of a Related Person, in each
case irrespective of which Person is the surviving entity in such merger or
consolidation;
(3) Any reclassification of securities (including, without limitation,
a reverse stock split), recapitalization or other transaction (other than a
redemption in accordance with the terms of the security redeemed) which has
the effect, directly or indirectly, of increasing other than pro rata with
other Corporation shareholders, the proportionate amount of Voting Shares
of the Corporation or any Subsidiary thereof which are Beneficially Owned
by a Related Person, or the adoption of any plan or proposal of partial or
complete liquidation, dissolution, spinoff, splitoff or splitup of the
Corporation or any Subsidiary thereof; and
(4) The acquisition after the date of adoption of these Amended and
Restated Articles of Incorporation by a Person of Voting Shares or
securities convertible into or exchangeable for 5% or more of the Voting
Shares or any voting securities or securities convertible into 5% or more
of the voting securities of any Subsidiary of the Corporation, or the
acquisition upon the issuance thereof of Beneficial Ownership by a Related
Person of any rights, warrants or options to acquire any of the foregoing
or any combination of the foregoing Voting Shares or voting securities of a
Subsidiary; provided, however, this subsection (4) shall not apply to the
acquisition of any such Voting Shares, securities, options, rights or
warrants issued pursuant to any stock option plan or any pension, profit
sharing, benefit or stock purchase plans maintained by the Corporation or
any of its Subsidiaries.
As used in this definition, a "series of related transactions" shall be
deemed to include a series of transactions with the same Person considered
together with all Affiliates and Associates of such Person.
The foregoing provision of this Section 7.01.4 notwithstanding, a Business
Combination shall not include any merger, consolidation, P&A or other
transaction described in the definition of Business Combination with the
Corporation and/or any of its Subsidiaries, as a result of which a Person who is
not a Related Person prior to such transaction does not become a Related Person.
7.01.5 A "Continuing Director" means a member of the Board of Directors who
either (i) was first elected as a director of the Corporation prior to March 1,
2002 or (ii) prior to any Person becoming a Related Person and was designated as
a Continuing Director by a majority vote of the Continuing Directors.
7.01.6 "Independent Majority of Shareholders" shall mean the holders of a
majority of the outstanding Voting Shares that are not Beneficially Owned or
controlled, directly or indirectly, by a Related Person.
7.01.7 The term "Person" shall mean any individual, partnership, trust,
firm, joint venture, corporation, group or other entity (other than the
Corporation, any Subsidiary of the Corporation or a trustee holding stock for
the benefit of employees of the Corporation or its Subsidiaries, or any one of
them, pursuant to one or more employee benefit plans or arrangements). When two
or more Persons act as a partnership, limited partnership, syndicate,
association or other group for the purpose of acquiring, holding, or disposing
of shares of stock, such partnership, syndicate, association or group shall be
deemed a "Person".
7.01.8 "Related Person" means any Person which is the Beneficial Owner as
of the date of determination by a majority of the Whole Board of Directors or
immediately prior to the consummation of a Business Combination, or both, of 5%
or more of the Voting Shares, or any Person who is an Affiliate of the
Corporation and at any time within five years preceding the determination of
such status by the Whole Board of Directors was the Beneficial Owner of 5% or
more of the Corporation's then outstanding Voting Shares; provided, however,
that "Related Person" shall not include (i) any Person who is the Beneficial
Owner of more than 5% of the Corporation's Voting Shares on March 1, 2002, (ii)
any plan or trust established for the benefit of the Corporation's employees
generally or (iii) any Subsidiary of the Corporation that holds Voting Shares in
a fiduciary capacity, whether or not it has the authority to vote or dispose of
such securities.
7.01.9 The term "Substantial Part" as used with reference to the assets of
the Corporation, of any Subsidiary or of any Related Person means assets having
a value of more than 10% of the total consolidated assets of the Corporation and
its Subsidiaries as of the end of the Corporation's most recent quarter ending
prior to the time the determination is being made.
7.01.10 "Subsidiary" shall mean any corporation or other entity of which
the Person in question owns not less than 50% of any class of equity securities,
directly or indirectly, and "Significant Subsidiary" shall mean a Subsidiary
that also meets the tests for a "significant subsidiary" under Securities and
Exchange Commission Regulation S-X, Rule 1-02(w).
7.01.11 "Voting Shares" means all Shares of the Corporation entitled to
vote generally in the election of Corporation directors.
7.01.12 "Whole Board of Directors" means the total number of directors that
the Corporation would have if there were no vacancies.
7.02 Approval and Voting Requirements. The affirmative vote of the holders
of two-thirds (66 2/3%) of all the shares of Common Stock outstanding and
entitled to vote, voting as a separate class, and the affirmative vote of the
holders of shares with two-thirds (66 2/3%) of all the votes entitled to be cast
by all shares of Common Stock of all classes outstanding, voting together as a
single class, shall be required to approve any of the following:
(a) any merger or consolidation of the Corporation with or into any
other corporation;
(b) any share exchange in which a corporation, person, or entity
acquires the issued or outstanding shares of stock of this Corporation
pursuant to a vote of shareholders;
(c) any sale, lease, exchange or other transfer of all, or
substantially all, of the assets of this Corporation or any significant
subsidiary of this Corporation to any other corporation, person or entity;
(d) any transaction similar to, or having a similar affect as, any of
the foregoing transactions.
Such affirmative votes shall apply and be required whether or not a vote of
the stockholders otherwise would be required by law or the rules of any
securities exchange or market (collectively, an "SRO") on which this Corporation
has shares of its capital stock listed or traded and notwithstanding that a
lesser vote of stockholders might otherwise be required by law or SRO; provided,
however no such affirmative votes shall be required where this Corporation is
issuing shares of its capital stock or paying cash or other consideration to
acquire, directly or indirectly, another corporation, person or entity.
7.03 Evaluation of Business Combinations, etc. In connection with the
exercise of its judgment in determining what is in the best interest of the
Corporation and its shareholders when evaluating an actual or proposed Business
Combination, a tender or exchange offer, a solicitation of options or offers to
purchase or sell Corporation Shares by another Person, or a solicitation of
proxies to vote Corporation Shares by another Person, the Corporation's Board of
Directors, in addition to considering the adequacy and form of the consideration
to be paid in connection with any such transaction, shall consider all of the
following factors and any other factors which it deems relevant: (i) the social
and economic effects of the transaction or proposal on the Corporation and its
Subsidiaries, its and their employees, depositors, loan and other customers,
creditors and the communities in which the Corporation and its Subsidiaries
operate or are located; (ii) the business and financial condition, and earnings
prospects of the acquiring Person or Persons, including, but not limited to,
debt service and other existing financial obligations, financial obligations to
be incurred in connection with the acquisition, and other likely financial
obligations of the acquiring Person or Persons, and the possible effect of such
conditions upon the Corporation and its Subsidiaries and the other elements of
the communities in which the Corporation and its Subsidiaries operate or are
located; (iii) the competence, experience, and integrity of the Person and their
management proposing or making such actions; (iv) the prospects for a successful
conclusion of the Business Combination; and (v) the Corporation's prospects as
an independent entity. This Section 7.03 shall not be deemed to provide any
constituency the right to be considered by the Board of Directors in connection
with any transaction or matter.
ARTICLE VIII
SPECIAL PROVISIONS
In furtherance and not in limitation of the powers conferred by law, the
following provisions for regulation of the Corporation, its directors and
shareholders are hereby established:
8.01 Bylaws. The Corporation's Board of Directors is authorized and
empowered, upon the affirmative vote of two-thirds (66 2/3%) of the Whole Board
of Directors and a majority of the Continuing Directors, to amend, alter, change
or repeal any and all of the Corporation's Bylaws and to adopt new Bylaws,
including, without limitation, establishing the exact number of directors to be
fixed by resolution adopted by the Board of Directors from time to time
consistent with Section 6.01 of these Articles of Incorporation. The
shareholders may also amend the Bylaws by the affirmative vote of 66 2/3% of all
Voting Shares entitled to vote on such amendment and by the affirmative vote of
an Independent Majority of Shareholders.
8.02 Shareholder Action by Consent. No action may be taken by written
consent except as may be provided in the designation of the preferences,
limitations and relative rights of any series of the Corporation's Preferred
Stock. Any action required or permitted to be taken by the holders of
Corporation Common Stock must be effected at a duly called annual or special
meeting of such holders, and may not be effected by any consent in writing by
such holders.
8.03 Shareholder Requests for Special Meetings. The Corporation will hold a
special meeting of shareholders on a proposed issue or issues at the request of
shareholders only upon the receipt from the holders of half (50%) of all the
votes entitled to be cast on the proposed issue or issues of signed, dated
written demands for the meeting describing the purpose for which it is to be
held.
ARTICLE IX
SHAREHOLDER PROPOSALS
9.01 Proposals. In addition to the right of the Corporation's Board of
Directors to submit proposals for a shareholder vote, proposals for a
shareholder vote may be made in connection with any annual meeting of
Corporation shareholders by any holder of voting shares ("Proponent") entitled
to vote generally in the election of directors if that shareholder complies with
all of the provisions of this Section 9.01.
(1) Advance notice of such proposal shall be received by the Secretary
of the Corporation (a) with respect to an annual meeting, not less than 60
days nor more than 90 days prior to the anniversary of the last annual
meeting of Corporation shareholders (or, if the date of the annual meeting
is changed by more that 20 days from such anniversary date, within 10 days
after the date that the Corporation mails or otherwise gives notice of the
date of such meeting) and (b) with respect to a special meeting, not later
than the close of the tenth day following the date on which notice of the
meeting was first mailed to shareholders.
(2) Each notice under Section 9.01(1) shall set forth (i) the names
and business addresses of the Proponent and all persons acting in concert
with the Proponent, (ii) the name and address of the Proponent and persons
identified in clause (i), as they appear on the Corporation's books (if
they so appear); (iii) the class and number of Voting Shares of the
Corporation that are beneficially owned by the Proponent and the persons
identified in clause (i); (iv) a description of the proposal containing all
material information relating thereto; and (v) such other information as
the Board of Directors reasonably determines is necessary or appropriate to
enable the Board of Directors and shareholders of the Corporation to
consider the proposal.
(3) The proposal made by a shareholder may only be made in a meeting
of the shareholders of the Corporation at which such shareholder is present
in person or by proxy, and can only be made by a shareholder who has
therefore complied with the notice provisions of Sections 9.01(1) and (2),
and is subject further to compliance with all applicable laws, including,
without limitation, federal and state securities laws.
(4) The Chairman of the shareholders' meeting may, if the facts
warrant, determine and declare to the meeting that a proposal was not made
in accordance with the foregoing procedures, and if he should so determine,
he shall so declare to the meeting and the defective proposal shall be
disregarded.
ARTICLE X
AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by statute or these Articles, and all rights conferred upon
shareholders herein are granted subject to this reservation. These Articles of
Incorporation may be amended as provided by law; provided, however, that the
affirmative vote of the holders of two-thirds (66 2/3%) of all of the Voting
Shares outstanding and entitled to vote, voting as classes, if applicable, and
an Independent Majority of Shareholders shall be required to approve any change
of Articles VI, VII, IX and X of these Articles of Incorporation.
EXHIBIT 3.2
-------------------------------------------
SEACOAST BANKING CORPORATION
OF FLORIDA
AMENDED AND RESTATED BYLAWS
-------------------------------------------
Adopted as of
December 17, 2002
-------------------------------------------
SEACOAST BANKING CORPORATION
OF FLORIDA
AMENDED AND RESTATED BYLAWS
-------------------------------------------
ARTICLE I
OFFICES
Section 1 Principal Office. The principal office of Seacoast Banking
Corporation of Florida (the "Corporation") shall be located in the city of
Stuart, County of Martin, State of Florida. The Corporation may have such other
offices, either within or without the State of Florida as the Board of Directors
may designate or as the business of the Corporation may from time to time
require.
Section 2 Registered Office. The registered office of the Corporation
required by the Florida Business Corporation Act (the "FBCA") to be maintained
in the State of Florida initially will be the Corporation's principal office,
but the address of the registered office may be changed from time to time by the
Board of Directors and upon the Corporation notifying the Florida Secretary of
State of such change.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held on a day set by the Board of Directors for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday, such
meeting shall be held on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the shareholders, for any
purpose or purposes unless otherwise prescribed by statute, may be called by the
Chairman, the President or by the Board of Directors, and shall be called by the
President at the request of the holders of Shares representing not less than 50%
of all votes entitled to be cast by all Shares of Common Stock of the
Corporation outstanding.
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Florida unless otherwise prescribed
by statute, as the place where any annual meeting or any special meeting of
shareholders shall be held.
Section 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting, and the purpose or purposes for which the meeting is
called, shall be delivered not less than 10 nor more than 60 days before the
date of the meeting, either personally or by mail, by or at the direction of the
President, or the Secretary, or the officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
postage prepaid, addressed to the shareholder at his or her address as it
appears on the stock transfer books of the Corporation.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
shareholders' meeting or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Corporation's Board of Directors
may close the Corporation's stock transfer books for a stated period not to
exceed 70 days. In lieu of closing the stock transfer books, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than 70 days
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a shareholders' meeting, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
shareholders' meeting has been made as provided in this section, such
determination shall apply to any adjournment thereof, except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired or where the Board of Directors fixes a
new record date.
Section 6. Voting Lists. The officer or agent having charge of the stock
transfer books for the Corporation's Shares shall make, at least 10 days before
each shareholders' meeting or such shorter time as exists between the record
date and the meeting, a complete list of the shareholders entitled to vote at
such meeting, or any adjournment thereof, arranged in alphabetical order, with
the address of and the number of Shares of each class held by each, which list
shall be kept on file at the Corporation's principal office and shall be
available for inspection by any shareholder at any time during usual business
hours. During such period, a shareholder or the shareholder's agent or attorney
is entitled, on written demand, to inspect the list during regular business
hours and at his or her expense, provided the demand is made in good faith for a
proper purpose and describes with reasonable particularity the shareholder's
purpose for such inspection. Such list shall also be produced and kept open at
the time and place of the meeting and shall be available for inspection by any
shareholder during the whole time of the meeting or any adjournment thereof. The
original stock transfer book shall be prima facie evidence as to the
shareholders entitled to examine such list or transfer books or to vote at the
shareholders' meeting.
Section 7. Quorum. At any shareholders' meeting, a majority of all votes
entitled to be cast by the holders of the outstanding Shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum.
If less than such number of the outstanding Shares are represented at a meeting,
a majority of the Shares so represented or present may adjourn the meeting from
time to time without further notice. Any business may be transacted at such
adjourned meeting at which a quorum is present or represented, that might have
been transacted at the meeting as originally called. The shareholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of shareholders resulting in less than a quorum
being presented or represented.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
11 months from the date of its execution, except as otherwise provided in the
proxy.
Section 9. Voting. Each shareholder entitled to vote in accordance with the
terms and provisions of the Corporation's Restated Articles of Incorporation and
these Bylaws shall be entitled to vote, in person or by proxy, the appropriate
number of votes as authorized by the Restated Articles of Incorporation for each
Share entitled to vote held by such shareholder. All elections for directors
shall be decided by plurality vote; all other questions shall be decided in
accordance with the laws of the State of Florida, except as otherwise provided
in the Restated Articles of Incorporation and these Bylaws.
Section 10. Order of Business. The order of business at all meetings of the
shareholders may, but need not include the following:
1. Call of roll or other method of ascertaining the amount of Shares
entitled to voting rights that is represented at the meeting in person
or by proxy.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting (unless waived).
4. Reports of officers.
5. Reports of committees.
6. Discussion
7. Election of directors.
8. Other business.
9. Closing of polls.
10. Announcement of results of voting, if available.
11. Adjournment.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors. The directors shall in all cases act
as a board, and they may adopt such rules and regulations for the conduct of
their meetings and the management of the Corporation as they may deem proper,
not inconsistent with these Bylaws or the laws of this State.
Section 2. Number, Tenure and Qualifications. The number of directors of
the Corporation shall be determined from time to time by the Board of Directors
pursuant to a resolution duly adopted by the affirmative vote of (i) 66 2/3% of
the Whole Board of Directors and (ii) a majority of the Continuing Directors. In
no event shall the Corporation have fewer than 3 directors nor greater than 14
directors (exclusive of directors to be elected by the holders of any one or
more series of Preferred Stock voting separately as a class or classes). Each
director shall hold office until his or her successor shall have been elected
and qualified in accordance with the Amended and Restated Articles of
Incorporation.
Section 3. Regular Meetings. The annual organizational meeting of the Board
of Directors shall be held without notice immediately after, and at the same
place as, the annual shareholders' meeting. The Board of Directors may provide,
by resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the Chairman, the President or any five
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix the place for holding any special meeting called by
them.
Section 5. Notice. Notice of any special meeting shall be given at least
two days previously thereto by written notice delivered personally, or by
facsimile, electronic mail or by United States mail to each director at his or
her address in the Corporation's records. If mailed, such notice shall be deemed
to be delivered five days following the date such notice is deposited in the
United States mail so addressed, with first class postage thereon prepaid. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business on the
grounds that the meeting is not lawfully called or convened.
Section 6. Quorum. At any meeting of the Board of Directors, a majority of
the directors then in office shall constitute a quorum for the transaction of
business, but, if less than said number is present at a meeting, a majority of
the directors present may adjourn the meeting from time to time without further
notice.
Section 7. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, except as otherwise provided in the Amended and Restated Articles
of Incorporation, these Bylaws or Florida law.
Section 8. Newly Created Directorships and Vacancies. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason may be filled by
the affirmative vote of (i) 66 2/3% of the Whole Board of Directors and (ii) a
majority of the Continuing Directors, although less than a quorum exists, or, if
no directors remain, by the affirmative vote of not less than (i) 66 2/3% of the
Voting Shares and (ii) an Independent Majority of Shareholders. A director
elected to fill a vacancy caused by resignation, death or removal shall hold
office for the unexpired term of his or her predecessor.
Section 9. Removal of Directors. Directors may be removed only for cause
upon the affirmative vote of (i) 66 2/3% of the Voting Shares and (ii) an
Independent Majority of Shareholders at a shareholders' meeting duly called and
held for that purpose upon not less than 30 days' prior written notice.
Section 10. Resignation. A director may resign at any time by giving
written notice to the Board of Directors, the Chairman of the Board, the
President or the Secretary of the Corporation. Unless otherwise specified in the
notice, the resignation shall take effect upon receipt thereof by the Board of
Directors or such officer, without any need for acceptance of such resignation.
Section 11. Compensation. The Board of Directors shall have the authority
to fix the compensation of the directors. Nothing therein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of committees also may be
compensated for their service on such committees.
Section 12. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
the director's contrary vote, dissent or abstention is recorded in the minutes
of the meeting, or unless the director shall file a written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall deliver such dissent to the Secretary of the
Corporation after the adjournment of the meeting. A director who voted in favor
of any such action shall not be entitled to claim that he has objected or
dissented from such action.
Section 13. Committees. The Board of Directors may, by resolution,
designate one or more committees, each committee to consist of three or more
directors. Any such committee, to the extent provided in the resolution or
resolutions of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation during intervals between meetings of the Board of
Directors, and may authorize the seal of the Corporation to be affixed to all
papers that may require it; but no such committee shall have any power or
authority to declare a dividend or distribution from capital or earned surplus,
issue Shares of the Corporation, amend the Amended and Restated Articles of
Incorporation, adopt an agreement of merger or consolidation, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommend to the shareholders a dissolution
of the Corporation or a revocation thereof, fill vacancies on the Board of
Directors, or amend these Bylaws or adopt any plan of bankruptcy or
reorganization. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors. The Corporation shall have an Audit Committee, a Compensation
Committee and such other committees as the Board of Directors may establish from
time to time. Such committees may adopt written charters approved by the Board
of Directors, provided the Audit Committee shall have a charter.
Section 14. Committee Minutes and Reports. Each committee designated by the
Board of Directors shall keep regular minutes of its meetings and shall report
the same to the Board of Directors whenever required or requested.
Section 15. Telephone Meetings. Members of the Board of Directors, or any
committee thereof, may participate in a meeting of such Board of Directors or
committee by means of a conference telephone, video conference or similar
communications equipment by means of which all persons participating in the
meeting can hear each other simultaneously. Participation by such means shall
constitute presence in person at such meeting.
Section 16. Action Without a Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a written consent setting forth the action taken is
signed by all members of the Board of Directors or committee, as the case may
be, and such written consent or consents are filed with the minutes of the
proceedings of the Board of Directors or of such committee. Such consents shall
have the same effect as a unanimous vote of the Board of Directors or committee,
as the case may be.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a President,
one or more Vice-Presidents, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. The Board of Directors may also elect or
appoint a Chairman of the Board and such other officers and assistant officers
as may be deemed necessary or appropriate. Any two or more offices may be held
by the same person.
Section 2. Election and Term of Office. The officers of the Corporation to
be elected by the Board of Directors shall be elected annually at the first
meeting of the directors held after each annual meeting of the shareholders, or
at such times as the Board of Directors shall determine. Each officer shall hold
office until his or her successor shall have been duly elected and shall have
qualified, or until his or her death, or until he or she shall resign or shall
have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its judgment
the Corporation's best interests would be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. Chairman of the Board. The Chairman of the Board, if one is
elected and serving, shall preside at all meetings of the shareholders and of
the Board of Directors. The Chairman shall have authority to execute bonds,
mortgages, and other contracts requiring a seal, under the seal of the
Corporation. The Chairman shall have power to endorse, when sold, assigned,
transferred or otherwise disposed of by the Corporation, all certificates or
shares of stock, bonds, or other securities issued by other corporations,
associations, trusts, whether public or private, or by any government agency
thereof, and owned or held by the Corporation, and to make, execute and deliver
all instruments or assignments of transfer of any of such stocks, bonds or other
securities. The Chairman may, with the approval of the Board of Directors, or
shall, at the Board's direction, delegate any or all of such duties to the
President.
Section 6. President. The President shall be the Corporation's chief
executive officer, shall be responsible for all of the operations of the
Corporation, and shall report to the Board of Directors.
The President shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall, under the direction of
the Board of Directors, have general supervision and direction of the other
officers, employees and agents of the Corporation and shall see that their
duties, as assigned by the Board of Directors, are properly performed. The
President shall designate and assign the duties of the officers under his or her
supervision, with the approval of the Board of Directors or at their direction.
The President shall have authority to execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation; he or she shall
have power to endorse, when sold, assigned, transferred or otherwise disposed of
by the Corporation, all certificates for shares, bonds, or other securities or
evidences of indebtedness issued by other corporations, associations, trusts,
whether public or private, or by any government or agency thereof, and owned or
held by the Corporation and to make, execute and deliver all instruments or
assignments or transfers of any such stocks, bonds, or other securities. In the
absence of the Chairman of the Board, or in the event a Chairman is not elected,
the President shall have authority to do any and all things delegated to the
Chairman of the Board by the Board of Directors or by any committee of the Board
of Directors having authority.
The President shall have general authority over the Corporation's business,
and if the office of Chairman of the Board is vacant, shall exercise the duties
and have the powers of the Chairman of the Board, and shall have such other
powers and perform such other duties as the Board of Directors may from time to
time prescribe.
Section 7. Vice Presidents. The Vice Presidents (in order of the Senior
Executive Vice Presidents, Executive Vice Presidents, Senior Vice Presidents and
other Vice Presidents, each class in order of the seniority of its respective
members or as designated by resolution of the Board of Directors) shall, in the
absence or disability of the Chairman and President, perform the duties and
exercise the powers of said officers, and shall perform such other duties and
exercise such other powers as the Board of Directors, the Chairman of the Board
or the President may prescribe. One or more Vice Presidents may be designated by
the Board of Directors as "Senior Executive Vice President," "Executive Vice
President" or "Senior Vice President."
Section 8. Secretary. The Secretary, if present, shall act as secretary at
all meetings of the Board of Directors and of the shareholders and keep the
minutes thereof in a book or books to be provided for that purpose; shall see
that all notices required to be given by the Corporation are duly given and
served; shall be custodian of the seal of the Corporation; shall have charge of
the stock records of the Corporation; shall see that all reports, statements and
other documents required by law are properly kept and filed; may sign, with any
other proper officer of the Corporation thereunto authorized, certificates for
shares, securities or evidences of indebtedness of the Corporation; and, in
general, shall perform all the duties incident to the office of the Secretary
and such other duties as from time to time may be assigned by the Chairman of
the Board or the Board of Directors.
Section 9. Treasurer. The Treasurer shall have charge and custody of and be
responsible for the funds and securities of the Corporation; shall receive and
give receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories and shall perform all of the duties
incident to the officer of Treasurer and such other duties as from time to time
may be assigned by the President or by the Board of Directors. If required by
the Board of Directors, the Treasurer shall give a bond for the faithful
discharge of the duties of the office of Treasurer in such sum and with such
surety or sureties as the Board of Directors shall determine.
Section 10. Compensation. The salaries of the Corporation's officers shall
be fixed from time to time by the Board of Directors, after taking account of
any recommendation of the Corporation's Compensation Committee. The Board of
Directors may, from time to time, delegate to any principal officer or the
Compensation Committee the power to fix the salaries of other officers, agents,
factors and employees. No officer shall be prevented from receiving such salary
by reason of the fact that he or she is also a director of the Corporation or a
member of any committee contemplated by these Bylaws.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
Section 2. Loans. Except for loans incurred in the ordinary course of
business and that mature in less than 12 months, no loans shall be contracted on
behalf of the Corporation and no evidences of indebtedness shall be issued in
its name unless authorized by a resolution of the Board of Directors. Such
authority may be general or confined to specific instances.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes or other evidences or indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing Shares of the
Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President and by the
Secretary, or by such other officers authorized by law and by the Board of
Directors. All certificates for Shares shall be consecutively numbered or
otherwise identified, and shall state (i) the name of the Corporation, (ii) that
the Corporation is incorporated in the State of Florida, (iii) the name of the
person to whom the Shares are issued, (iv) the number and class of Shares and
the designation of the series, if any, the certificate represents and (v) the
CUSIP number (if applicable) for such Shares. The name and address of the
shareholders, the number of Shares and date of issue shall be entered on the
stock transfer books of the Corporation or its stock. All certificates
surrendered to the Corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificate for a like number of
Shares shall have been surrendered and canceled, except that in case of a lost,
destroyed or mutilated certificate a new certificate may be issued therefor upon
such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
Section 2. Transfers of Shares. Transfer of Shares of the Corporation shall
be made only (a) on the stock transfer books of the Corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and (b) on surrender for cancellation of the certificate for
such Shares. The person in whose name Shares are listed on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes, except as otherwise provided by the Corporation's Restated Articles of
Incorporation.
Section 3. Appointment of Transfer Agent and Registrar. The Corporation
may, from time to time, appoint one or more transfer agents and registrars,
which shall maintain the Corporation's stock transfer books.
Section 4. Restriction on Transfer of Shares and Other Securities. A
written restriction on the transfer or registration of transfer of Shares or
other securities of the Corporation, if permitted by FBCA Section 607.0627 (or
any successor provision) and noted conspicuously on the certificate representing
such Shares or other securities or contained in an information statement
required by FBCA Section 607.0626(2) (or any successor provision), may be
enforced against the holder of the restricted Shares or other securities or any
successor or transferee of the holder, including an executor, administrator,
trustee, guardian or other fiduciary entrusted with like responsibility for the
person or estate of the holder. Stop transfer notices may be placed in the
Corporation's stock transfer books with respect to restricted Shares or other
securities.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year, unless
otherwise determined by the Board of Directors.
ARTICLE VIII
DIVIDENDS
The Board of Directors, from time to time, may declare, and the Corporation
may pay, dividends on its outstanding Shares in the manner and upon the terms
and conditions provided by law and the Amended and Restated Articles of
Incorporation.
ARTICLE IX
SEAL
The Board of Directors shall provide a Corporate Seal, which shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the state of incorporation, year of incorporation and the words, "Corporate
Seal".
ARTICLE X
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the Corporation under the provisions of
these Bylaws or under the provisions of the Amended and Restated Articles of
Incorporation, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE XI
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by a vote of (i) 66 2/3% of the Whole Board of Directors and (ii)a
majority of the Continuing Directors at any regular meeting of the Board of
Directors, or at any special meeting of the Board of Directors when the proposed
amendment has been set out in the notice of such special meeting. The
shareholders may also amend the Bylaws by the affirmative vote of (i) 66 2/3% of
the Voting Shares and (ii) an Independent Majority of Shareholders.
ARTICLE XII
INDEMNIFICATION
Section 1. Indemnification in Proceedings Other Than Those By or In the
Right of the Corporation. The Corporation shall indemnify any director of the
Corporation or any officer elected by the Board of Directors (and may indemnify
any other officer or any employee or agent of the Corporation) who was or is a
party to any proceeding (other than an action by or in the right of the
Corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, limited liability company, joint venture, trust or
other enterprise, against liability incurred in connection with such proceeding,
including any appeal thereof, if such person acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the Corporation's
best interests, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any proceeding by judgment, order, settlement or conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner that such person
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
Section 2. Indemnification in Proceedings By or In the Right of the
Corporation. The Corporation shall indemnify any director of the Corporation or
any officer elected by the Board of Directors (and may indemnify any other
officer or any employee or agent of the Corporation) who was or is a party to
any proceeding by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact such person is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, against expenses and amounts paid in settlement not exceeding, in
the judgment of the Board of Directors, the estimated expense of investigating,
litigating or otherwise bringing the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, if such person acted in good faith and
in a manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable unless and only to the extent that the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses that such court shall deem proper.
Section 3. Mandatory Indemnification of Expenses in Successful Defenses. To
the extent that a director, officer, employee or agent of the Corporation has
been successful on the merits or otherwise in defense of any proceeding referred
to in Section 1 or Section 2 of this Article XII, or in defense of any claim,
issue, or matter therein, such person shall be indemnified against expenses
actually and reasonably incurred by him or her in connection therewith.
Section 4. Determination of Propriety of Indemnification. Any
indemnification under Section 1 or Section 2 of this Article XII, unless
pursuant to a determination by a court, shall be made by the Corporation only
upon a determination in the specific case that indemnification of the director,
officer, employee or agent is proper in the circumstances because such person
has met the applicable standard of conduct set forth in Section 1 or Section 2
of this Article XII, as the case may be, and if indemnification is determined to
be proper, then, in the case of proposed indemnification of any person other
than a director of the Corporation or a board-elected officer, only as
authorized in the specific case. Such determination or authorization shall be
made (i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such proceeding, (ii) if such a quorum is not
obtainable, or, even if obtainable, by majority vote of a committee duly
designated by the Board of Directors (in which directors who are parties may
participate) consisting solely of two or more directors not at the time parties
to the proceeding, (iii) by a written opinion of independent legal counsel
selected by the Board of Directors as described in (i) above or by the committee
as described in (ii) above, or, if a quorum of the directors cannot be obtained
for (i) and the committee cannot be designated under (ii), selected by majority
vote of the full Board of Directors (in which directors who are parties may
participate), or (iv) by the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
Section 5. Authorization for Indemnification. Evaluation of the
reasonableness of expenses and authorization of indemnification shall be made in
the same manner as the determination that indemnification is permissible, as set
forth in Section 4 of this Article XII, except that, if the determination of
permissibility of indemnification is made by independent legal counsel, the
person who selected such independent legal counsel in accordance with Section
4(iii) of this Article XII shall evaluate the reasonableness of expenses and may
authorize indemnification.
Section 6. Advancement of Expenses. Expenses incurred by a director of the
Corporation or any officer elected by the Board of Directors in defending a
civil or criminal proceeding shall be paid by the Corporation in advance of the
final disposition of such proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that such person is not entitled to be indemnified by the
Corporation as authorized in this Article XII. Such expenses incurred by other
officers, employees or agents of the Corporation may, at the discretion of the
Board of Directors, be paid in advance upon such terms or conditions, including
receipt of the undertaking to repay as described above, as the Board of
Directors deems appropriate.
Section 7. Non-Exclusivity of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article XII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled, and
the Corporation may make any other or further indemnification or advancement of
expenses of any of its directors, officers, employees or agents, under any
bylaw, agreement, vote of shareholders or disinterested directors or otherwise,
both as to action by such a director, officer, employee or agent in such
person's official capacity and as to action in another capacity while holding
such office or position; provided, however, that indemnification shall not be
made to or on behalf of, and any advancement of expenses shall be repaid by, any
director, officer, employee or agent for expenses, penalties or other payments
incurred in an administrative proceeding or action instituted by an appropriate
regulatory agency, if the proceeding or action results in a final order
assessing civil money penalties or requiring affirmative action by an individual
or individuals in the form of payments to the Corporation; and provided further
that indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee or agent if a judgment or other final
adjudication establishes that such person's actions, or omissions to act, were
material to the cause of action so adjudicated and constitute:
(a) a violation of the criminal law, unless the director, officer,
employee or agent had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was
unlawful;
(b) a transaction from which the director, officer, employee or agent
derived an improper personal benefit;
(c) in the case of a director, a circumstance under which the
liability provisions of FBCA Section 607.0834 (or any successor provision)
are applicable; or
(d) willful misconduct or a conscious disregard for the best interests
of the Corporation in a proceeding by or in the right of the Corporation to
procure a judgment in its favor or in a proceeding by or in the right of a
shareholder.
Section 8. Insurance. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power to indemnify such person against such
liability under this Article XII.
Section 9. Exculpation for Monetary Damages. A director shall not be held
personally liable to the Corporation, its shareholders or any other persons for
monetary damages for breach of his or her fiduciary duty as a director,
including any statement, vote, decision or failure to act, regarding corporate
management or policy to the fullest extent permitted now or hereafter by FBCA
Section 607.0831 (or any successor provision).
Any repeal or modification of this Section 9 by the shareholders of the
Corporation shall not adversely affect any right of protection of a director of
the Corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification. If the FBCA
hereafter is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the Corporation, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended FBCA.
Section 10. Meaning of Certain Terms for Purposes of Article XII. For
purposes of this Article XII, references to "the Corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger that, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or who is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership joint venture, trust or other enterprise shall stand in the same
position under this Article XII with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Article XII, references to "other enterprises" shall include employee benefit
plans; references to "expenses" shall include reasonable attorney's fees and
charges, including those for appeal; references to "liability" shall include
obligations to pay a judgment, settlement, penalty, fine (including an excise
tax assessed with respect to any employee benefit plan), and expenses actually
and reasonably incurred with respect to a proceeding; references to "proceeding"
shall include any threatened, pending or completed action, suit, or other type
of proceeding, whether civil, criminal, administrative or investigative and
whether formal or informal; references to "agent" shall include a volunteer;
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation that
imposes duties on, or involves services by, such director, officer, employee, or
agent, including duties relating to an employee benefit plan, its participants,
or beneficiaries; and a person who acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article XII.
Section 11. Survival of Indemnification, Exculpation for Monetary Damages
and Advancement of Expenses. The indemnification, exculpation for monetary
damages and advancement of expenses provided by, or granted pursuant to, this
Article XII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors, and
administrators, and personal and legal representatives of such a person.
Section 12. Severability. In the event that any of the provisions of this
Article XII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
ARTICLE XIII
DEFINITIONS
Terms defined in the Amended and Restated Articles of Incorporation have
the same meanings when used in these Bylaws.
EXHIBIT 4.1
SEACOAST BANKING CORPORATION OF FLORIDA
SHARES
NUMBER
C SEE REVERSE FOR
CERTAIN DEFINITONS
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
COMMON STOCK
This certifies that CUSIP 811707 30 6
Is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF THE
PAR VALUE OF TEN CENTS ($.10) EACH OF
SEACOAST BANKING CORPORATION OF FLORIDA
transferable on the books of the Corporation by the holder hereof in person or
by duty authorized attorney upon surrender of this certificate properly
endorsed.
This certificate and the shares represented hereby are issued and shall be
subject to all of the provisions of the Articles of Incorporation and By-laws of
the Corporation as now or hereafter amended, to all of which the holder hereof
by acceptance hereby assents.
This certificate is not valued unless countersigned by the Transfer
Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/ Dale M. Hudson CORPORATE SEAL
- --------------------------
Chairman
Countersigned:
/s/ Dennis S. Hudson, III CONTINENTAL STOCK TRANSFER & TRUST COMPANY
- -------------------------
President TRANSFER AGENT
BY
AUTHORIZED OFFICER
SEACOAST BANKING CORPORATION OF FLORIDA
The Corporation will furnish without charge to any shareholder, upon
request a full statement of the designations, preferences, limitations, and
relative rights of the shares of each class or series of stock authorized to be
issued by the Corporation. Such request may be made to the Secretary of the
Corporation at its principal office or to the Transfer Agent names on the face
of this certificate.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common UNIF GIFT MIN ACT-______Custodian_______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _______________
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
shares of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated ___________________________
________________________________________
NOTICE THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN "ELIGIBLE GUARANTOR INSTITUTION" WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM PURSUANT TO
RULE 17-Ad-15 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AMENDED
SIGNATURE(S) GUARANTEED BY:
________________________________________
EXHIBIT 10.1
Retirement Savings Plan For
Employees of First National Bank & Trust
Company of the Treasure Coast
(As Amended and Restated Effective January 1, 1997)
Retirement Savings Plan For
Employees of First National Bank & Trust
Company of the Treasure Coast
(As Amended and Restated Effective January 1, 1997)
ARTICLE 1
INTRODUCTION
1.01 History of the Plan.
Effective January 1, 1983, Seacoast Banking Corporation of Florida
("Employer" or "Company") adopted and established the Retirement
Savings Plan For Employees of First National Bank & Trust Company of
the Treasure Coast for the exclusive benefit of its Eligible
Employees. Such Plan was thereafter amended and restated effective as
of January 1, 1993 (the "Prior Plan"). The Prior Plan was at all times
maintained as a plan meeting the requirements of qualification under
Section 401(a) of the Internal Revenue Code of 1986, as amended.
1.02 Amended and Restated Plan.
Effective January 1, 1997, the Prior Plan is continued in an amended
and restated form as set forth in its entirety in this document for
the purpose of complying with the provisions of the Employee
Retirement Income Security Act of 1974, as amended, and maintaining
qualification under Sections 401(a) and 401(k) of the Internal Revenue
Code of 1986, as amended. Certain provisions of this Plan have
effective dates later than January 1, 1997, and are noted accordingly.
1.03 Plan Governs Distribution of Benefits.
The distribution of benefits for all Participants (whether employed by
the Employer before or after the Effective Date) shall be governed by
the provisions of this Plan. Nevertheless, early retirement benefits,
retirement-type subsidies, or optional forms of benefits protected
under Code Section 411(d)(6) ("Protected Benefits") shall not be
reduced or eliminated with respect to benefits accrued under such
Protected Benefits unless such reduction or elimination is permitted
under the Code, Treasury Regulations, authority issued by the Internal
Revenue Service, or judicial authority.
1.04 Purpose.
The purpose of this Plan is to encourage savings on the part of
Participants by allowing them to accumulate tax-deferred savings while
providing an incentive through matching contributions made by the
Employer. Further, the benefits described in the Plan are provided for
the exclusive benefit of the Participants and their Beneficiaries and
this Plan shall be administered and interpreted in accordance with
such purpose.
1.05 Merger with Port St. Lucie National Bank Retirement Savings Plan.
Effective 12:01 a.m. on June 1, 1997, the Port St. Lucie National Bank
Retirement Savings Plan (the "Port St. Lucie Plan") merged with and
into this Plan.
ARTICLE 2
DEFINITIONS
Certain terms of this Plan have defined meanings which are set forth in this
Article and which shall govern unless the context in which they are used clearly
indicates that some other meaning is intended.
Account shall mean the Account established and maintained by the Committee
or Trustee for each Participant or their Beneficiaries to which shall be
allocated each Participant's interest in the Trust Fund. Each Account shall
be comprised of the sub-accounts described in Section 6.01.
Adjustment shall mean for any Valuation Date the aggregate earnings,
realized or unrealized appreciation, losses, expenses, and realized or
unrealized depreciation of the Trust Fund since the immediately preceding
Valuation Date. For purposes of such adjustment, all assets of the Trust
Fund shall be valued at their fair market value as of each Valuation Date.
The determination of the valuation of assets and the adjustment shall be
made by the Trustee and shall be final and binding.
Affiliate shall mean the Company and any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Company; any trade or business which is under common control
(as defined in Code Section 414(c)) with the Company; any organization
which is a member of an affiliated service group (as defined in Code
Section 414(m)) which includes the Company; and any other entity required
to be aggregated with the Company pursuant to regulations under Code
Section 414(o).
Affiliated Sponsor shall mean any corporation and any other entity that
wishes to adopt this Plan; provided, however, that any such entity
described in this paragraph must be designated by the Committee as an
Affiliated Sponsor under the Plan. See Section 17.13 for provisions
relating to an Affiliated Sponsor's adoption of the Plan. As of the
Effective Date, First National Bank and Trust Company of the Treasure Coast
is an Affiliated Sponsor. As of June 1, 1997, Port St. Lucie National Bank
and The Spirit Mortgage Corporation shall be Affiliated Sponsors.
Annuity Starting Date shall mean the first day of the first period for
which an account is payable as an annuity or, in the case of a benefit not
payable in the form of an annuity, the first day on which all events have
occurred which entitle the Participant to such benefit.
Authorized Leave of Absence shall mean any temporary layoff or any absence
authorized by the Employer under the Employer's standard personnel
practices provided that all persons under similar circumstances must be
treated alike in the granting of such Authorized Leaves of Absence and
provided further that the Participant returns within the period of
authorized absence. An absence due to service in the Armed Forces of the
United States shall be considered an Authorized Leave of Absence to the
extent required by federal law.
Beneficiary shall mean:
(a) Unmarried Participants. For unmarried Participants, any individual(s),
trust(s), estate(s), partnership(s), corporation(s) or other entity or
entities designated by the Participant in accordance with procedures
established by the Committee to receive any distribution to which the
Participant is entitled under the Plan in the event of the
Participant's death. The Committee may require certification by a
Participant in any form it deems appropriate of the Participant's
marital status prior to accepting or honoring any Beneficiary
designation. Any Beneficiary designation shall be void if the
Participant revokes the designation or marries. Any Beneficiary
designation shall be void to the extent it conflicts with the terms of
a "qualified domestic relations order," as defined in Code Section
414(p).
If an unmarried Participant fails to designate a Beneficiary or if the
designated Beneficiary fails to survive the Participant and the
Participant has not designated a contingent Beneficiary, the
Beneficiary shall be the Participant's estate.
(b) Married Participant. A married Participant's Beneficiary shall be his
Spouse at the time of his death unless the Participant has designated
a non-Spouse Beneficiary (or Beneficiaries) with the written consent
of his Spouse given in the presence of a notary public on a form
provided by the Committee, or unless the terms of a qualified domestic
relations order require payment to a non-Spouse Beneficiary. A married
Participant's designation of a non-Spouse Beneficiary in accordance
with the preceding sentence shall remain valid until revoked by the
Participant or until the Participant marries a Spouse who has not
consented to a designation in accordance with the preceding sentence.
A Spouse's consent to the Participant's designation of a non-Spouse
Beneficiary (or Beneficiaries) must state the specific non-spouse
Beneficiary (including any class of Beneficiaries or contingent
Beneficiaries) and the particular optional form of benefit. The
Participant may not subsequently substitute another non-spouse
Beneficiary or select another optional form of benefit without the
Spouse's consent. Notwithstanding the preceding sentence, the Spouse
may execute a general consent which allows the Participant to
subsequently change the designated Beneficiary or optional form of
benefit without Spousal consent, provided the Spouse acknowledges that
(i) the Spouse may limit consent to a specific beneficiary or a
specific optional form of benefit, and (ii) the Spouse voluntarily
elects to relinquish such rights.
For the purposes of this Section, revocation of prior Beneficiary
designations will occur when a Participant (i) files a subsequent
valid designation with the Committee; or (ii) files a signed statement
with the Committee evidencing his intent to revoke any prior
designations.
Break in Service shall mean a period of five consecutive One-Year Breaks in
Service.
Board shall mean the Board of Directors of the Company.
Code shall mean the Internal Revenue Code of l986, as amended.
Committee. The Committee appointed by the Board or its designee under
Article 10 to administer the Plan.
Company shall mean Seacoast Banking Corporation of Florida and its
successors and assigns which adopt this Plan.
Company Stock shall mean shares of common stock issued by the Company. The
Company Stock is intended to constitute "Qualifying Employer Securities" as
defined in ERISA Section 407(d)(5). It is hereby expressly provided that
the Plan may acquire and hold Qualifying Employer Securities.
Company Stock Fund shall mean the portion of the Plan and the Trust Fund
invested in Company Stock, including cash and cash equivalents to the
extent needed to facilitate transactions.
Compensation shall mean the gross annual earnings required to be reported
on a Participant's Form W-2 (box 1) under Code Sections 6041(d), 6051(a)(3)
and 6052. Compensation in subsection (a) or (b) shall also (i) include
Salary Savings Contributions, salary reduction Salary Savings contributions
to any Section 125 Plan maintained by the Employer, and salary deferrals
under Code Sections 402(a)(8), 402(h), 403(b), 457 and 414(h); (ii) exclude
reimbursements or other expense allowances, fringe benefits (cash and
non-cash), moving expenses, deferred compensation (and for this purpose
benefits under a stock option plan is "deferred compensation") and welfare
benefits (and for this purpose, worker's compensation payments of any type
and severance pay of any type shall be considered "welfare benefits," but
sick pay, short term disability and vacation pay are not considered
"welfare benefits"); (iii) ignore any income exclusions under Code Section
3401(a) based on the nature or location of employment.
No more than $150,000 in Compensation (adjusted annually as provided in
Code Section 401(a)(17)) shall be taken into account for any Participant
during a Plan Year.
Disability shall mean an illness or injury of a potentially permanent
nature certified by a physician selected by or satisfactory to the Company
which prevents the Employee from engaging in any occupation for wage or
profit for which the Employee is reasonably fitted by training, education
or experience. An Employee requesting payment under the Plan as a result of
a Disability, must be eligible for and receive disability benefits under
the Social Security Act.
Effective Date shall mean January 1, 1997.
Elective Profit Sharing Contribution shall have the meaning set forth in
Section 5.02.
Eligible Employee. Except for those Employees identified in the following
sentence, all Employees employed by the Company or an Affiliated Sponsor
shall be considered Eligible Employees. The following Employees shall not
be considered Eligible Employees: (i) any employee included in a collective
bargaining unit for which a labor organization is recognized as collective
bargaining agent unless such employee has been designated by the Board of
Directors as an "Eligible Employee" for the purposes of this Plan, (ii) any
Employee who is a nonresident alien and who does not receive earned income
from the Company which constitutes income from sources within the United
States, (iii) any "leased employee," within the meaning of Code ss.
414(n)(2), with respect to the Company or any Affiliated Sponsor; (iv) any
leased employee, regardless of whether such employee meets the definition
of leased employee in Code Section 414(n)(2); and (v) any person who is
classified by the Employer as an independent contractor for purposes of
withholding and payment of employment taxes, even if such person is later
determined, whether by the Employer or otherwise, to be a common law
Employee of the Employer.
Employee shall mean any person employed by or on Authorized Leave of
Absence from the Company or an Affiliated Sponsor, and any person who is a
"Leased Employee" within the meaning of Code ss. 414(n)(2) with respect to
the Company or Affiliated Sponsor. However, if such Leased Employees
constitute less than 20 percent of the Company's and Affiliated Sponsor's
combined non-highly compensated work force, within the meaning of Code ss.
414(n)(1)(C)(ii), the term "Employee" shall not include Leased Employees
covered by a plan described in Code ss. 414(n)(5).
Employee Contribution shall mean Salary Savings Contributions and/or
Voluntary After-Tax Contributions.
Employer shall mean the Company or any Affiliated Sponsor which may
hereafter adopt this Plan for the benefit of its Eligible Employees.
Employer Contribution shall mean Employer Matching Contributions, Profit
Sharing Contributions, Retirement Contributions or Qualified Non-Elective
Contributions.
Employer Matching Contribution shall have the meaning defined in Section
5.01.
Employer Matching Contribution Account shall mean the portion of a
Participant's total Account attributable to Employer Matching
Contributions, and the total of the Adjustments which have been credited to
or deducted from a Participant's Account with respect to Employer Matching
Contributions.
Entry Date shall mean the first day of the month coinciding with or
immediately following the date an Eligible Employee satisfies the
eligibility requirements in Article 3.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to a specific provision of ERISA shall
include any applicable regulations pertaining thereto.
Fiduciary shall mean any party named as a Fiduciary in Article 10 of the
Plan. Any party shall be considered a Fiduciary of the Plan only to the
extent of the powers and duties specifically allocated to such party under
the Plan.
Former Participant shall have the meaning set forth in Section 3.03.
Highly Compensated Employee shall have the meaning set forth in Section
13.02.
Hour of Service shall mean:
(a) Each hour for which an Employee is paid, or entitled to payment, for
performance of duties for an Employer. These hours shall be credited
to the Employee for the period during which the duties were performed;
(b) Each hour for which an Employee is paid, or entitled to payment, by an
Employer, on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity, layoff,
jury duty, military duty, or leave of absence. No more than 501 Hours
of Service will be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single
computation period).
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by an Employer. These hours shall be
credited to the Employee for the computation period or period to which
the award or agreement pertains, rather than the computation period in
which the award, agreement, or payment is made.
(d) In lieu of the foregoing, an Employee who is not compensated on an
hourly basis (such as salary, commission or piecework employees) shall
be credited with 45 Hours of Service for each week in which such
Employee would be credited with Hours of Service in hourly pay.
However, this method of computing Hours of Service may not be used for
any Employee whose Hours of Service is required to be counted and
recorded by any Federal law, such as the Fair Labor Standards Act. Any
such method must yield an equivalency of at least 1,000 hours per
computation period.
(e) Notwithstanding any provision of the plan to the contrary, an Employee
shall be credited with each hour for which the Employee is not paid
but which is required to be credited to such employee under the Family
and Medical Leave Act or the Uniformed Services Reemployment Rights
Act. Hours credited under this paragraph shall be credited to the
minimum extent and solely for the purpose required under the
applicable law.
Hours of Service shall be credited for employment with the Company and with
any Affiliate.
The following rules shall apply in determining whether an Employee
completes an Hour of Service:
1. The same hours shall not be credited under subparagraphs (a) or
(b) above, as the case may be, and subparagraph (c) above, nor
shall the same hours credited under subparagraphs (a) through (d)
above be credited under subparagraph (e) above.
2. The rules relating to determining Hours of Service for reasons
other than the performance of duties and for crediting Hours of
Service to particular periods of employment shall be those rules
stated in Department of Labor Regulations Title 29, Chapter XXV,
subchapter C, part 2530, Sections 200b2(b) and 200b2(c),
respectively.
Investment Fund shall mean the separate funds under the Trust Fund which
are distinguished by their investment objectives, as described in Section
6.03.
Non-Elective Profit Sharing Contribution shall have the meaning as set
forth in Section 5.02.
Normal Retirement Age shall mean age 65.
One-Year Break in Service shall mean any Plan Year during which an Employee
accrues 500 or fewer Hours of Service. A One-Year Break in Service shall
not occur during any Plan Year in which the Employee is on an Authorized
Leave of Absence, but only if the Employee returns to active employment
immediately upon expiration of such period.
Participant shall mean an Eligible Employee who becomes eligible to
participate in the Plan as provided in Article 3.
Plan shall mean the Retirement Savings Plan for Employees of First National
Bank & Trust Company of the Treasure Coast and any amendments thereto.
Plan Administrator or Administrator, within the meaning of ERISA Section
3(16) shall mean the Company.
Plan Year shall mean the calendar year.
Port St. Lucie Participant shall mean a participant in the Port St. Lucie
National Bank Retirement Savings Plan immediately prior to the merger of
such plan with this Plan.
Profit Sharing Contribution shall mean Elective Profit Sharing
Contributions and Non-Elective Profit Sharing Contributions. See Section
5.02.
Profit Sharing Contribution Account shall mean the portion of a
Participant's total Account attributable to Profit Sharing Contributions,
and the total of the Adjustments which have been credited to or deducted
from a Participant's Account with respect to Profit Sharing Contributions.
Elective Profit Sharing Contributions and Non-elective Profit Sharing
Contributions shall be separately accounted for under the Profit Sharing
Contribution Account.
Qualified Nonelective Contribution. See Section 5.04.
Qualified Plan shall mean any pension, profit-sharing, stock bonus, or
other plan which meets the requirements of Section 401 of the Code which
includes a trust exempt from tax under Section 501(a) of the Code; any
annuity plan described in Section 403(a) of the Code.
Retirement shall mean the Termination of Employment of a Participant on or
after his attaining age 55.
Retirement Contribution shall have the meaning provided in Section 5.03.
Retirement Contribution Account shall mean the portion of a Participant's
Account attributable to Retirement Contributions and the total of the
Adjustments which have been credited to or deducted from a Participant's
Account with respect to Retirement Contributions.
Rollover Contribution shall have the meaning defined in Section 4.05.
Rollover Contribution Account shall mean the portion of a Participant's
Account attributable to Rollover Contributions and the total of the
Adjustments attributable to such Rollover Contributions.
Salary Savings Agreement shall mean an agreement between the Employer and a
participating Eligible Employee whereby such Eligible Employee authorizes
the Employer to withhold a specified percentage of his or her Compensation
for deposit to the Plan on behalf of such Eligible Employee.
Salary Savings Contribution shall mean contributions made to the Plan
during the Plan Year by the Employer, at the election of the Participant,
in lieu of cash compensation and that are made pursuant to a Salary Savings
Agreement. Such contributions are fully vested and nonforfeitable when made
and distributable only as specified in Article 8 below.
Salary Savings Contribution Account shall mean the portion of a
Participant's Account attributable to Salary Savings Contributions, and the
total of the Adjustments which have been credited to or deducted from a
Participant's Account with respect to Salary Savings Contributions.
Spouse shall mean the person who is married to the Participant (in a civil
or religious ceremony recognized under the laws of the state where the
marriage was contracted) immediately prior to the date on which payments to
the Participant from the Plan begin. If the Participant dies prior to the
commencement of benefits, Spouse shall mean a person who is married to a
Participant (as defined in the immediately preceding sentence) on the date
of the Participant's death. A Participant shall not be considered married
to another person as a result of any common law marriage whether or not
such common law marriage is recognized by applicable state law.
Termination of Employment shall mean that an Employee has ceased to be
employed by the Employer for any of the following reasons:
(i) Voluntary resignation from the service of the Employer;
(ii) Discharge from the service of the Employer by the Employer;
(iii) Retirement;
(iv) Death; or
(v) Disability.
Notwithstanding the foregoing, an Employee who ceases to be actively
employed by reason of an Authorized Leave of Absence shall not be
considered as having a Termination of Employment.
Transfer Contribution shall mean a non-taxable transfer of a Participant's
benefit directly from a Qualified Plan to this Plan.
Transfer Contribution Account shall mean the portion of a Participant's
Account holding Transfer Contributions and which are not separately
allocated to an existing account under the Plan. Sub-accounts may be
established as necessary to separately account for pre-tax contributions,
after-tax contributions, etc. Any restriction or special rules applicable
to the Transfer Contribution Account (including optional forms of benefit
that are protected under Code Section 411(d)(6) shall be set forth in an
Appendix to this Plan.
Treasury Regulation means regulations pertaining to certain Sections of the
Code as issued by the Secretary of the Treasury.
Trust or Trust Agreement shall mean the separate trust agreement entered
into between the Employer and the trustee which governs the creation of the
Fund and all amendments thereto which may hereafter be made.
Trust Fund or Fund shall mean the cash and other properties held and
administered by the Trustee in accordance with the Plan and Trust
Agreement.
Trustee shall mean the Trust Department of the First National Bank & Trust
Company of the Treasure Coast.
Valuation Date shall mean the last day of each calendar quarter (March 31,
June 30, September 30 and December 31) or such other day as selected by the
Committee.
Voluntary After-Tax Contributions shall mean after-tax contributions made
to the Plan during the Plan Year by an Eligible Employee. Such
contributions are fully vested and nonforfeitable when made and
distributable only as specified in Article 8 below.
Voluntary After-Tax Contribution Account shall mean the portion of a
Participant's total Account attributable to Voluntary After-Tax
Contributions and the total of the Adjustments which have been credited to
or deducted from a Participant's Account with respect to Voluntary
After-Tax Contributions.
Year of Eligibility Service shall have the meaning as set forth in Section
3.02.
Year of Vesting Service shall have the meaning as set forth in Section
7.05.
Defined Terms. A defined term, such as "Retirement," will normally govern
the definitions of derivatives therefrom, such as "Retire," even though
such derivatives are not specifically defined and even if they are or are
not initially capitalized. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, unless the context
clearly indicates to the contrary. Singular and plural nouns and pronouns
shall be interchangeable as the factual context may allow or require. The
words "hereof," "herein," "hereunder" and other similar compounds of the
word "here" shall mean and refer to the entire Plan and not to any
particular provision or Section.
ARTICLE 3
PARTICIPATION
3.01 Participation.
(a) Participation on Effective Date. An Eligible Employee who was a
Participant in the Prior Plan on the day preceding the Effective Date
shall automatically become a Participant in this Plan on the Effective
Date, provided he is employed on the Effective Date.
(b) New Participant. An Eligible Employee who is not described in
subsection (a) above shall become a Participant in the Plan on the
Entry Date coinciding with or next following the later of (i) the date
on which the Employee has completed one Year of Eligibility Service or
(ii) the date the Employee becomes a member of the class of Eligible
Employees. See Section 3.04 below for special rules that apply to new
Employees following an acquisition.
(c) Break in Service. If an Eligible Employee either (i) is not employed
or (ii) is no longer an Eligible Employee on the earliest Entry Date
on or after which such Employee satisfied the requirements described
above, but returns to work or again becomes an Eligible Employee
before incurring a Break in Service, such Eligible Employee shall
commence participation on the date such Employee returns to work or
again becomes an Eligible Employee, whichever is later. If the
Employee returns to work or again becomes an Eligible Employee after a
Break in Service, such Employee must again satisfy the requirements of
Section 3.01(b).
(d) Enrollment in Plan. An Eligible Employee who becomes eligible to
participate in this Plan will be asked to follow certain procedures to
enroll in the Plan, and pursuant to which he will designate
Beneficiaries and may elect to make Salary Savings Contributions.
However, an Eligible Employee's participation in the Plan shall not be
contingent upon completion of such enrollment process.
3.02 Year of Eligibility Service.
A Year of Eligibility Service is determined under the 1,000 Hours of
Service method. Accordingly, an Employee shall receive one Year of
Eligibility Service upon completing a twelve (12) consecutive month period
of employment during which the Employee earns at least 1,000 Hours of
Service. The initial twelve month period shall be the twelve consecutive
month period commencing on the Employee's date of hire or rehire. If the
Employee fails to complete 1,000 Hours of Service during this 12-month
period, the Employee shall receive a Year of Eligibility Service upon
completing at least 1,000 Hours of Service during a Plan Year (commencing
with the Plan Year during which the Employee's first anniversary of his
date of hire occurs).
3.03 Participation and Rehire.
(a) Status as a Participant. A Participant's participation in the Plan
shall continue until the Participant's Termination of Employment. On
or after his Termination of Employment, the Employee shall be known as
a Former Participant and his benefits shall thereafter be governed by
the provisions of Article 8. The individual's status as a Former
Participant shall cease as of the date the individual ceases to have
any balance in his Account.
(b) Rehire of Person who was a Participant in this Plan. An Eligible
Employee who was a Participant in this Plan at the time of his
Termination of Employment and who is subsequently rehired by an
Employer, shall be eligible to immediately participate in this Plan on
the date of his rehire (provided he is an Eligible Employee on such
date). See Section 3.01(c) to determine if an Employee was a
Participant at the time of his Termination of Employment.
3.04 Acquisitions.
If a group of persons becomes employed by an Employer (or any of its
subsidiaries or divisions) as a result of an acquisition of another
employer, the Committee shall determine whether and to what extent
employment with such prior employer shall be treated as Years of
Eligibility Service, the applicable Entry Date (or special entry date) for
such acquired employees, and any other terms and conditions which apply to
eligibility to participate in this Plan. Such terms and conditions shall be
set forth in an appendix to this Plan. Except to the extent required by
law, employees of an acquired business which is not identified in an
appendix shall be treated as having first accrued an Hour of Service as of
the date of the Employer's acquisition of such business.
3.05 Not Contract for Employment.
Participation in the Plan shall not give any Employee the right to be
retained in the Employer's employ, nor shall any Employee, upon dismissal
from or voluntary termination of his employment, have any right or interest
in the Fund, except as herein provided.
ARTICLE 4
EMPLOYEE CONTRIBUTIONS
4.01 Employee Contributions.
Except during periods of suspension described in Section 4.03, a
Participant may elect to make Salary Savings Contributions, Voluntary
After-Tax Contributions, or both by means of payroll deduction as provided
below. For purposes of this Section 4.01, "Compensation" shall have the
meaning described in Article 2, but ignoring the second paragraph of such
definition (i.e., the Code Section 401(a)(17) limitation).
(a) Salary Savings Contributions. A Participant may contribute as a Salary
Savings Contribution any whole percentage from 1% to 18% (in 1%
increments) of his Compensation during any Plan Year. (However, see
Section 4.03(a) for circumstances where a Participant's Salary Savings
Contribution may increase to 100%). Because of the limitations
described in Section 4.02(c), a Participant may not be allowed to
contribute the maximum percentage.
(b) Voluntary After-Tax Contributions. A Participant may elect to make
Voluntary After-Tax Contributions. A Participant may contribute as a
Voluntary After-Tax Contribution any whole percentage of his
Compensation up to 10% during any Plan Year.
4.02 Elections Regarding Employee Contributions.
(a) Procedure for Making Elections. A Participant may enter a Salary
Savings Agreement with the Employer authorizing the Employer to
withhold a portion of such Participant's Compensation as a Salary
Savings Contribution and/or Voluntary After-Tax Contribution during
each pay period. The election to make Employee Contributions shall be
effective no later than the first day of the Participant's normal pay
period beginning at least 30 days after the Employer receives the
Salary Savings Agreement. The Committee may prescribe rules and
regulations regarding the manner and timing of the Participant's
election including a shorter or longer period of required notice.
(b) Treatment as 401(k) Contributions. It is expressly intended that, to
the extent allowable by law, Salary Savings Contributions shall not be
included in the gross income of the Employee for income tax purposes
and shall be deemed contributions under a cash or deferred arrangement
pursuant to Code Section 401(k).
(c) Additional Limitations of Salary Savings Contributions. Salary Savings
Contributions shall be subject to the limitations described in Section
12.02 (maximum dollar contribution limit), Section 12.03 (ADP
non-discrimination test) and Article 14 (Code Section 415 limit).
4.03 Change in Employee Contribution Percentage or Suspension of
Contributions.
(a) Change of Contribution Percentage. A Participant may increase or
decrease the percentage of his Compensation contributed as an Employee
Contribution only on January 1, April 1, July 1 or October 1 of each
Plan Year by delivery of written notice to the Committee. If a
Participant has not authorized the Employer to withhold at the maximum
rate and desires to increase the total withheld for a Plan Year, such
Participant may authorize the Employer to withhold a supplemental
amount up to 100% of his or her Compensation for one or more pay
periods. However, in no event shall the total of all such supplemental
contributions exceed 18% of the Participant's year-to-date
Compensation for Salary Savings Contributions or 10% of the
Participant's year-to-date Compensation for Voluntary After-Tax
Contributions. In order to be effective, the Participant must notify
the Committee of such increase or decrease at least 30 days prior to
the date that the increase or decrease will become effective or such
other number of days as determined by the Committee on a
nondiscriminatory basis.
(b) Suspension of Contributions. A Participant may suspend his Employee
Contributions at any time by properly completing a form prescribed by
the Committee. The suspension of Employee Contributions will be
effective on the first day of the Participant's normal payroll period
that begins 30 days after the Participant delivers the completed form
to the Committee. A Participant may resume making Salary Savings
Contributions or Voluntary After-Tax Contributions only on the next
January 1, April 1, July 1 or October 1 which is at least 90 days
after the effective date of such suspension of contributions and only
after informing the Committee in writing at least 30 days prior to the
date on which the Employee Contributions are to resume. The Committee,
on a nondiscriminatory basis, may prescribe a lesser number of days on
which the suspension or resumption of Employee Contributions is to be
effective. Employee Contributions automatically shall be suspended
beginning on the first payroll period that commences after the
Participant is not in receipt of Compensation, the Participant's
layoff or the Participant's Authorized Leave of Absence without pay.
(c) Other Rules.
(1) See Section 9.03 for circumstances under which a Participant's
Salary Savings Contributions could be suspended for a period of
at least 12 months after such Participant receives a hardship
distribution.
(2) In order to satisfy the provisions of Article 12 and Article 14,
the Committee may from time to time either temporarily suspend
the Employee Contributions of Highly Compensated Employees or
reduce the maximum permissible Employee Contribution that may be
made to the Plan by Highly Compensated Employees.
(3) Any reduction, increase, or suspension of Employee Contributions
described in this Section 4.03 shall be made in such manner as
the Committee may prescribe from time to time consistent with the
provisions of this Section.
4.04 Deadline for Contribution and Allocation of Salary Savings
Contributions.
Employee Contributions shall be paid to the Trustee as promptly as possible
after the end of each regular pay period but in no event later than 15 days
after the end of the calendar month in which such Employee Contributions
are retained by the Employer.
4.05 Rollover Contribution.
(a) Without regard to any limitation on contributions set forth in this
Article, a Participant shall be permitted, if the Committee consents
(based on non-discriminatory criteria), to transfer to the Trustee
during any Plan Year additional property acceptable to the Trustee,
provided such property:
(1) was received by the Participant from a Qualified Plan maintained
by a previous employer of the Participant and qualifies as a
Rollover Contribution within the meaning of Code Section
402(a)(5) or
(2) was received by the Participant from an individual retirement
account or individual retirement annuity and qualifies as a
Rollover Contribution within the meaning of Code Section
408(d)(3)(A)(ii).
(b) Such property shall be held by the Trustee in the Participant's
Rollover Contribution Account. All such amounts so held shall at
all times be fully vested and nonforfeitable. Such amounts shall
be distributed to the Participant upon Termination of Employment
in the manner provided in Article 8.
4.06 Transfer Contribution.
(a) If the Committee consents (based on nondiscriminatory criteria),
a trustee of another Qualified Plan may transfer the account
balance of a Participant held in such other Qualified Plan to the
Trustee of this Plan. After such transfer, the Trustee of this
Plan shall hold such transferred account balance in an account
designated by the Committee.
(b) Transfers from another Qualified Plan directly to this Plan shall
be permitted only if the transferred assets are acceptable to the
Trustee and only if the transfer will not adversely affect the
tax Qualified status of this Plan. On a nondiscriminating basis,
the Trustee may refuse to accept a transfer if the transfer will
increase the administrative burdens of the Plan (including the
addition of new optional forms of benefit).
(c) Information about the transferred assets and any limitations or
conditions imposed on sub-accounts held under the Plan shall be
specified in an appendix to this Plan. The Committee may amend
such appendix without the consent of the Board or of any
Employer.
ARTICLE 5
EMPLOYER CONTRIBUTIONS
5.01 Matching Employer Contribution.
(a) Eligibility to Receive Matching Contribution with respect to
Salary Savings Contributions. Each quarter the Employer shall
make an Employer Matching Contribution on behalf of each
Participant who made Salary Savings Contributions during the
quarter or such other period selected by the Company. An Employer
will not match Voluntary After-Tax Contributions.
(b) Eligibility to Receive Matching Contribution with respect to
Elective Profit Sharing Contributions. Each Plan Year the
Employer shall make an Employer Matching Contribution on behalf
of each Participant who elected to contribute his Elective Profit
Sharing Contribution to the Plan for the Plan Year.
(c) Amount of Match.
(1) Match on Salary Savings Contribution. A Participant's
Employer Matching Contribution with respect to Salary
Savings Contributions for a calendar quarter shall equal the
Participant's Salary Savings Contributions made during the
applicable quarter multiplied by the Employer Matching
Contribution Percentage determined by the Company for such
Plan Year. The Employer Matching Contribution Percentage
shall be a uniform percentage of a Participant's Salary
Savings Contribution up to 4% of the Participant's
Compensation for such calendar quarter. The Employer
Matching Contribution shall be allocated to the
Participant's Employer Matching Contribution Account within
a reasonable time after the end of the quarter for which the
Employer Matching Contribution is made or such other period
determined by the Employer. For purposes of this Section
5.01(c), Compensation shall have the meaning described in
Article 2, including the limitation prescribed by Code
Section 401(a)(17).
(2) Match on Elective Profit Sharing Contribution. A
Participant's Employer Matching Contribution with respect to
Elective Profit Sharing Contributions for a Plan Year shall
equal 100% of the Participant's Elective Profit Sharing
Contributions that the Participant elects to contribute to
the Plan for such Plan Year. The Employer Matching
Contribution shall be allocated to the Participant's
Employer Matching Contribution Account within a reasonable
time after the end of the Plan Year or such other period
determined by the Employer.
5.02 Profit Sharing Contributions.
(a) Eligibility To Receive Profit Sharing Contribution. Each year the
Employer may elect to make a discretionary Profit Sharing Contribution
to the Plan. This Profit Sharing Contribution shall be allocated to
the Profit Sharing Account of each Participant who is employed on the
last day of the Plan Year or who had a Termination of Employment
during the Plan Year on account of death, Disability or Retirement.
(b) Non-Elective and Elective Profit Sharing Contribution. Fifty percent
(50%) of the Profit Sharing Contribution (the "Non-Elective Profit
Sharing Contribution") shall be allocated to each eligible
Participant's Profit Sharing Contribution Account in the same
proportion that each such Participant's Eligible Compensation (as
defined below) for the Plan Year bears to the total Eligible
Compensation of all such Participants for the Plan Year. The remaining
fifty percent (50%) may, at the election of the Participant, be
distributed immediately to the Participant in cash or be contributed
to the Plan (the "Elective Profit Sharing Contribution"). See Section
5.01(c)(2) regarding a matching contribution with respect to Elective
Profit Sharing Contributions.
(c) Eligible Compensation. For purposes of this Section 5.02, "Eligible
Compensation" shall mean a Participant's base wages (including
commissions, but excluding overtime, bonuses and incentives) received
while a Participant in the Plan. Eligible Compensation received during
a Plan Year but prior to the time an Eligible Employee becomes a
Participant shall be excluded.
5.03 Retirement Contribution.
The Employer may (but shall not be required to) make an additional
contribution annually to the Plan each Plan Year on behalf of each
Participant who is employed on the last day of the Plan Year or who had a
Termination of Employment during the Plan Year on account of death,
Disability or Retirement. Such contribution shall be no more than 2% (or
such other percentage or amount as determined by the Committee) of a
Participant's Eligible Compensation (as defined in Section 5.02(c) above).
Such contribution shall be allocated to the Participant's Retirement
Contribution Account. Compensation received during a Plan Year but prior to
the time an Eligible Employee becomes a Participant shall be excluded from
a Participant's Eligible Compensation.
5.04 Qualified Non-Elective Contributions.
In the sole discretion of the Employer, an additional Employer Contribution
may be made to the Plan which shall be known as a "Qualified Non-Elective
Contribution". Such contribution shall be made in order to satisfy the
requirements of Article 12, and shall be allocated to the Qualified
Non-Elective Contribution Accounts of those Non-Highly Compensated
Employees selected by the Committee at the time such Qualified Non-Elective
Contribution is made, or as soon thereafter as possible.
5.05 Form and Timing of Contributions.
(a) Employer Contributions shall be made in cash or in property acceptable
to the Trustee valued at the property's fair market value on the date
the property is delivered to the Trustee. Employer Matching
Contributions, Profit Sharing Contributions and Retirement
Contributions shall be delivered to the Trustee on or before the date
prescribed by the Code for filing the Employer's federal income tax
return, including authorized extensions. Qualified Non-elective
Contributions shall be delivered to the Trustee on or before the first
day of the twelfth month following the close of the Plan Year to which
the contribution relates.
(b) Except as provided in this Section 5.05, all Employer Contributions
shall be irrevocable, shall never inure to the benefit of any
Employer, shall be held for the exclusive purpose of providing
benefits to Participants and their Beneficiaries (and contingently for
defraying reasonable expenses of administering the Plan), and shall be
held and distributed by the Trustees only in accordance with this
Plan.
(c) A contribution which was made by a mistake in fact or conditioned upon
the deductibility of the contribution under Section 404 of the Code
shall be returned to the Employer within one year after the payment of
the contribution or the disallowance of the deduction (to the extent
disallowed) whichever is applicable. All contributions made to this
Plan are conditional upon the deductibility of such contribution under
Code Section 404.
5.06 Forfeitures.
Forfeitures shall first be applied to restore amounts previously forfeited
pursuant to Section 7.06(c) and then shall be allocated as an additional
Non-Elective Profit Sharing Contribution (see Section 5.02). See Section
7.06 to determine when a forfeiture of a Participant's Account occurs.
5.07 Employment on Last Day of Plan Year.
To the extent necessary to comply with Code Sections 410(b), 401(a)(26),
401(a)(4) or any other applicable requirement, Employees who were not
otherwise eligible to receive an Employer Contribution shall be deemed to
be eligible. The Committee (in a nondiscriminatory manner) shall determine
which Employees may participate in the Plan, the extent of such
participation and the allocation of any Employer Contribution.
ARTICLE 6
ACCOUNTS AND ALLOCATIONS
6.01 Participant Accounts.
(a) Individual Account Plan. This Plan is an "individual account plan," as
that term is used in ERISA. A separate Account shall be maintained for
each Participant, Former Participant or Beneficiary, so long as he has
an interest in the Trust Fund.
(b) Sub-Accounts. Each Account shall be divided (as appropriate) into the
following parts and sub-parts:
(1) The Salary Savings Contribution Account;
(2) The Employer Matching Contribution Account (which Account shall
be divided into two subparts -- one subpart tracking Employer
Matching Contributions on Salary Savings Contributions and the
second subpart tracking Matching Contributions on Elective Profit
Sharing Contributions);
(3) The Profit Sharing Contribution Account (which Account shall be
divided into two subparts -- one subpart tracking Elective Profit
Sharing Contributions and the second subpart tracking
Non-Elective Profit Sharing Contributions);
(4) The Qualified Non-Elective Contribution Account;
(5) The Rollover Contribution Account;
(6) Voluntary After-Tax Contribution Account;
(7) Retirement Contribution Account; and
(8) Transfer Contribution Account.
In addition, the Committee may divide such sub-accounts into such
additional sub-portions as the Committee deems to be necessary or
advisable under the circumstances or to establish other accounts or
sub-accounts as needed.
(c) Value of Account as of Valuation Date. As of each Valuation Date, each
Participant's Account shall equal:
(1) his total Account as determined on the immediately preceding
Valuation Date, plus
(2) his Employee Contributions added to his Account since the
immediately preceding Valuation Date, plus
(3) his Employer Contributions added to his Account since the
immediately preceding Valuation Date, plus
(4) his Rollover Contributions and Transfer Contributions since the
immediately preceding Valuation Date, minus
(5) his distributions, if any, since the immediately preceding
Valuation Date, plus or minus
(6) his allocable share of Adjustments.
6.02 Allocation of Adjustments.
The Adjustment for each Investment Fund shall be calculated as of each
Valuation Date. The Adjustment for a given Investment Fund shall be
allocated to each Account invested in such Investment Fund in the
proportion that each such Account bears to the total of all such Accounts.
Such Valuation shall occur prior to the allocation of Employer
Contributions but after taking into account all distributions and all
Employee Contributions since the prior Valuation Date. Any Rollover
Contribution or Transfer Contribution made during the Plan Year shall be
weighted to reflect the number of full months such Rollover Contribution or
Transfer Contribution was held in the Plan. The Committee may direct that
expenses attributable to general Plan administration be allocated among the
Accounts of all Participants in proportion to their Account balances. The
Adjustment that is allocable to the Participant's directed investment of
his loan shall be the interest payments made by the Participant with
respect to such loan since the immediately preceding Valuation Date.
6.03 Investment Funds and Elections.
(a) Election of Investment Funds. Except for the Participant's Retirement
Contribution Account and the Non-elective Profit Sharing Contribution
portion of his Profit Sharing Contribution Account, each Participant
shall direct, following such procedures as may be specified by the
Committee, to have his Account allocated or reallocated in 10%
increments among the Investment Funds. References to a Participant's
investment of his "Account" in this Section 6.03 and other related
portions of this Plan shall mean the Participant's Account other than
the Participant's Retirement Contribution Account and the Non-elective
Profit Sharing Contribution portion of his Profit Sharing Contribution
Account. See Section 6.03(e) for the investment of the Participant's
non-directed Account.
(b) Initial Investment Direction. A Participant's initial investment
election must allocate his entire Account in 10% increments among the
Investment Funds, as of the date of the directive, and all subsequent
contributions to each sub-account for so long as the election remains
in effect. An Employee who fails to make a proper investment election
by the deadline established by the Committee for such purpose, shall
be deemed to have elected to allocate 100% of his Account in the
Investment Fund which, in the opinion of the Committee, best preserves
the principal amount of the Participant's Account.
(c) Subsequent Elections. Investment elections will remain in effect until
changed by a new election. New elections may be made in 10% increments
by a Participant effective on the first day of any calendar quarter in
a manner determined by the Committee, provided that new elections must
be received at least 30 days (or a shorter period established by the
Committee) prior to the desired effective date. New elections may
change future allocations to the Participant's Account, may reallocate
between the Investment Funds any amounts previously credited to the
Participant's Account, or may leave the allocation of such prior
amounts unchanged. Trust transactions reflecting investment elections
among the Investment Funds will occur as of the January 1, April 1,
July 1, or October 1 which immediately follows the timely receipt of
such investment election when such allocation or re-allocation can be
made and all Investment Fund values shall be determined as of such
dates.
(d) Investment Options. The Committee is authorized to select new
Investment Funds or to eliminate any Investment Fund as the Committee
shall deem appropriate from time to time. Any change in Investment
Funds shall be noted in the minutes of the Committee. The creation of
an Investment Fund shall not be effective until the Trustee has
consented in writing to the creation of such new Investment Fund. Any
creation or deletion of an Investment Fund shall not be effective
until such change is communicated to Participants and new investment
elections are solicited from Participants, if appropriate.
(e) Non-directed Accounts. The Participant may not direct the investment
of his Retirement Contribution Account nor the Non-elective Profit
Sharing Contribution portion of his Profit Sharing Contribution
Account. Instead such amounts shall be invested at all times (unless
the Committee determines otherwise and communicates its decision to
the Trustee) in the fund specified by the Trustee.
6.04 Errors.
Where an error or omission is discovered in any Participant's Account, the
Committee shall make appropriate corrective adjustments as of the end of
the Plan Year in which the error or omission is discovered. If it is not
practical to correct the error retroactively, then the Committee shall take
such action in its sole discretion as may be necessary to make such
corrective adjustments, provided that any such actions shall treat
similarly situated Participants alike and shall not discriminate in favor
of Highly Compensated Employees.
6.05 Valuation For Purposes of Distributions.
(a) For the purposes of Article 8, each Participant's Account shall be
valued as of the Valuation Date immediately preceding the distribution
of the Participant's Account.
(b) Notwithstanding the foregoing, if the Committee in its discretion
determines that there has been a significant change in the market
value of the assets held in the Fund since the Valuation Date which
precedes the proposed date of distribution, the Committee in its
discretion and on a non-discriminatory basis may postpone the
distribution until a reasonable time following the next Valuation Date
and shall use the value of the Account computed as of the later
Valuation Date in determining the amount of the distribution.
(c) No person entitled to a distribution shall receive interest or other
earnings on the Account from the applicable Valuation Date described
in subsection (a) or subsection (b) above, to the date of actual
distribution to such person.
(d) This Section 6.05 shall not apply to the valuation of Accounts for
purposes of in-service withdrawals or loans. Instead, see Section
9.05.
ARTICLE 7
VESTING
7.01 Retirement.
A Participant who has a Termination of Employment on or after attaining age
55 shall be 100% vested in his Account. Such Account will be distributed on
the date and in the form specified in Article 8.
7.02 Disability.
A Participant who has a Termination of Employment on account of Disability
shall become 100% vested in his Account as of the date of such Disability
and shall be entitled to a distribution of his Account on the date and in
the form specified in Article 8.
7.03 Death.
A Participant who has a Termination of Employment on account of death shall
become 100% vested in his Account. The Participant's Beneficiary shall
receive a distribution of such Account on the date and in the form
specified in Article 8.
7.04 Other Termination of Employment.
(a) In General. Upon a Participant's Termination of Employment for any
reason other than Retirement, Disability or death, the Participant
shall be entitled to the vested portion of his Account, which shall be
distributed on the date and in the form specified in Article 8.
(b) 100% Vesting in Certain Sub-Accounts. A Participant shall always be
one hundred percent (100%) vested in his Salary Savings Contribution
Account, Voluntary After-Tax Contributions Account, the Elective
Profit Sharing Contribution portion of the Participant's Profit
Sharing Contribution Account and Rollover Contributions Account.
Effective January 1, 1999, a Participant shall always be one hundred
percent (100%) vested in any portion of his Employer Matching
Contribution Account. The special vesting rule in the preceding
sentence shall not apply to any Participant whose Termination of
Employment occurs before January 1, 1999. If a Participant has a
Termination of Employment before January 1, 1999 but becomes a
Participant again on or after January 1, 1999, such special vesting
rule shall apply to any portion of his Employer Matching Contribution
Account which has not been forfeited pursuant to Section 7.06, or
which is forfeited but restored pursuant to Section 7.06(c)..
(c) Four Year Vesting For Certain Sub-Accounts. Any Participant who ceases
to be an Employee shall have a vested interest in his Employer
Matching Contribution Account (before January 1, 1999, as discussed in
(b) above), Retirement Contribution Account and the Non-Elective
Profit Sharing Contribution portion of the Participant's Profit
Sharing Contribution Account as follows:
Years of Vesting Service as of
Termination of Employment Vested Percentage
Less than 1 year 0%
1 year 25%
2 years 50%
3 years 75%
4 years 100%
(d) Forfeiture. That portion of the Participant's Account which is not
vested upon such Termination of Employment shall be forfeited in
accordance with Section 7.06.
(e) Transfer Contribution Account. See an appendix to this Plan for the
vesting schedule applicable to a Transfer Contribution Account upon a
Participant's Termination of Employment.
7.05 Year of Vesting Service.
(a) Vesting Credit Prior to Effective Date. An Employee's Vesting Service
prior to the Effective Date shall be determined under the terms of the
Prior Plan.
(b) Vesting Credit After Effective Date. On or after the Effective Date,
an Employee shall receive one Year of Vesting Service for any Plan
Year during which the Employee is credited with 1,000 or more Hours of
Service. An Employee shall not receive a Year of Vesting Service for
any period of employment during any Plan Year if the Employee is
credited with less than 1,000 Hours of Service during such Plan Year.
(c) Forfeiture of Vesting Service. A Year of Vesting Service shall not
include any period of employment which precedes a Break in Service if
as of the first day of the Break in Service, the Employee does not
have a vested interest in his Employer Contributions or Salary Savings
Contributions.
(d) Employment with Affiliates. Any period of employment with an Affiliate
shall be considered service with the Employer for purposes of
determining whether the Employee has a Year of Vesting Service.
(e) Authorized Leave of Absence. A Year of Vesting Service shall not
include any period of Authorized Leave of Absence or service in the
military except to the extent such service is required to be credited
under applicable federal law.
(f) Employment with Affiliated Sponsors or Predecessor Businesses. A
Participant shall not receive a Year of Vesting Service for any
employment with any Affiliated Sponsor prior to its designation as an
Affiliated Sponsor or any period of employment with a predecessor
business prior to its acquisition by Employer except to the extent
specifically set forth in an appendix to this Plan.
7.06 Forfeitures.
(a) No Distribution of Account Prior to Break In Service. A Participant
who incurs a Termination of Employment but who does not receive a
distribution of his vested Account prior to incurring a Break in
Service shall, upon incurring the Break in Service, forfeit the
non-vested portion of his Account. If the terminated Participant
resumes employment with the Employer prior to incurring a Break in
Service, then the Participant's entire Account, unreduced by any
forfeiture, shall become his beginning Account on the date he resumes
participation in the Plan.
(b) Distribution of Vested Account Prior to Break in Service. A
Participant who incurs a Termination of Employment and receives a
distribution of his entire vested Account prior to incurring a Break
in Service, shall, upon such distribution, forfeit the non-vested
portion of his Account. A Participant who is not vested in any portion
of his Account shall be deemed to have received a distribution of his
entire vested account upon his Termination of Employment and the
Participant's non-vested Account shall be immediately forfeited.
(c) Repayment of Account; Restoration of Non-Vested Account. Except as
provided below, a Participant who is re-hired by the Employer shall
have the right to repay to the Plan the portion of the Participant's
Account which was previously distributed to him. In the event the
Participant repays the entire distribution he received from the Plan,
the Employer shall restore the non-vested portion of the Participant's
Account. A Participant's Account shall first be restored, to the
extent possible, out of forfeitures under the Plan in the Plan Year in
which the distribution was restored. To the extent such forfeitures
are insufficient to restore the Participant's Account, restoration
shall be made from Employer Contributions. A Participant who was
deemed to have received a distribution of his vested Account (see
subsection (b) above) shall be deemed to have repaid such vested
Account if such Participant is rehired before incurring a Break in
Service.
(d) Restrictions on Repayment of Account. Notwithstanding anything to the
contrary in this Plan, a Participant shall not have the right to repay
to the Plan the portion of his Account which was previously
distributed to him after any of the following events: (i) the
Participant incurs a Break in Service before returning to employment,
(ii) the Participant fails to repay the prior distribution within five
(5) years after the Participant is re-employed by the Employer, or
(iii) the Participant received a distribution of his entire Account
balance at the time of such earlier distribution.
7.07 Amendment of Vesting Schedule.
If the vesting schedule of the Plan is amended, or the Plan is amended in
any way that directly or indirectly affects the computation of any
Participant's nonforfeitable percentage, or if the Plan is deemed amended
by an automatic change to or from a Top-Heavy vesting schedule, each
Participant with at least three (3) Years of Vesting Service with the
Employer may elect, within a reasonable period after the adoption of the
amendment, to have his or her nonforfeitable percentage computed under the
Plan without regard to such amendment. The period during which the election
may be made shall commence with the date the amendment is adopted and shall
end on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the
amendment by the Employer or Trustee.
ARTICLE 8
DISTRIBUTIONS
8.01 Commencement of Distribution.
(a) Distribution Following Termination of Employment. A Participant's
Account shall be distributed as soon as practicable after the later of
(i) the Valuation Date coinciding with or immediately following the
Participant's Termination of Employment or (ii) any later Valuation
Date which is at least 30 days (or such number of days as selected by
the Committee on a nondiscriminatory basis) after the Committee
receives the Participant's written request for a distribution. Except
as provided in Section 8.01(b), the Participant's Account shall not be
distributed without the Participant's consent.
(b) Consent of Participant. A Participant's consent to a distribution of
his Account shall not be required in the circumstances described
below, and the Committee shall direct the Trustee to distribute the
Participant's Account as provided below:
(i) Account does not exceed $3,500 or $5,000. If the Participant's
vested Account balance does not exceed $3,500 ($5,000, effective
January 1, 1998), such Account will be distributed in a lump sum
no later than ninety (90) days after the end of the Plan Year in
which such Termination of Employment occurred.
(ii) Age 70-1/2. If a distribution is required under Section 8.05
(relating to mandatory distributions for Participants age
70-1/2), the Participant's Account will be distributed as
provided in such Section.
(iii)Attainment of Age 65. If a Participant has incurred a Termination
of Employment and is age 65 or older (except in the case of a
Port St. Lucie Participant, as described below), the Plan shall
begin distribution of the Participant's Account no later than 60
days following the end of the Plan Year in which the Participant
attains age 65 or, if later, within 60 days following the end of
the Plan Year in which the Participant has a Termination of
Employment. Notwithstanding the foregoing, the distribution to a
Port St. Lucie Participant described in the preceding sentence
shall not begin before the fifth anniversary of the date as of
which the Participant first became eligible to participate in the
Port St. Lucie Bank Retirement Savings Plan. If no election is
made prior to the Participant's Annuity Starting Date, the
Participant's Account will be distributed in a lump sum or, if
the provisions of Section 8.03 apply, as provided in Appendix A.
(iv) Death of Participant. If the Participant dies, the Participant's
Account balance shall be distributed within 90 days after such
death unless the particular facts and circumstances require a
longer waiting period.
(c) Hardship Withdrawals. Hardship withdrawals (see Article 9) shall
commence no later than ninety (90) days after such request is approved
by the Committee.
(d) Direction to Trustee. The Committee shall issue directions to the
Trustee concerning the recipient and the distribution date of benefits
which are to be paid from the Trust pursuant to the Plan.
(e) Establishment of Guidelines. The Committee may establish for
administrative purposes, uniform and nondiscriminatory guidelines
concerning the commencement of benefits.
(f) Value of Account. See Section 6.06 for the method of determining the
value of a Participant's Account prior to its distribution pursuant to
this Article 8.
8.02 Method of Distribution.
The Participant's Account shall be distributed in accordance with one of
the following forms of payment as selected by the Participant (or
Beneficiary if applicable). If a Participant elects to receive either a
lump sum distribution or installment payments pursuant to Sections 8.02(a)
or 8.02(d), and if any portion of such Participant's Account is invested in
the Company Stock Fund, then the Participant may elect to receive any or
all of such portion invested in the Company Stock Fund in whole shares of
Company Stock, with cash paid for any fractional shares. Annuity
distributions may not be paid in Company Stock.
(a) Lump Sum Payment is a single lump sum payment of the Participant's
entire vested Account. This is the normal form of payment under the
Plan. If the Participant does not elect otherwise, his Account shall
be distributed in a single lump sum.
(b) Single Life Annuity is an annuity which may be purchased with the
Participant's vested Account that provides level monthly payments
during the Participant's lifetime, with payments ceasing upon the
Participant's death.
(c) Joint and Survivor Annuity is an annuity which may be purchased with
the Participant's vested Account that provides level monthly payments
during the Participant's life and upon the Participant's death, 50% of
such monthly payment shall be payable on a monthly basis to the
Participant's Spouse for the Spouse's life. Payments under the Joint
and Survivor Annuity shall cease on the later of the death of the
Participant or the death of the Participant's Spouse.
(d) Installment Payment is a form of distribution where equal installments
are made over the Participant's life expectancy, the Participant's and
his Beneficiary's joint life expectancy, or another period which does
not exceed the joint life expectancy of the Participant and his
Beneficiary. Installment payments will be made, at the Participant's
election, in monthly, quarterly, semi-annual or annual payments.
Effective June 1, 1998, a Participant who elects the installment form
of payment will have the following options:
(i) A Participant may, upon application to the Committee, request
that his entire Account be distributed in a lump sum payment
subsequent to the commencement of installment payments.
(ii) A Participant who has elected to have installments paid over his
life expectancy or over his and his Spouse's joint life
expectancy may, upon application to the Committee, and not more
than once in any 12-month period, request to have his and his
and/or his and his Spouse's joint life expectancy re-calculated
for purposes of determining the amount of his installment
payments, provided that such recalculation shall be made in a
manner consistent with Proposed Treasury Regulations
1.401(a)(9)-1E-8. An election under this paragraph shall not
constitute an election to have the Participant's life expectancy
recalculated for purposes of the minimum distribution rules in
Section 8.05, and if the amount required to be distributed for
the year under Section 8.05 exceeds the amount actually paid to
the Participant or his Beneficiary in installment payments under
this Section 8.02(d), the difference shall be paid to the
Participant or Beneficiary in a single lump sum before the date
on which such payment is due.
(iii)A Participant may, upon application to the Committee, request a
one-time withdrawal in a minimum of $10,000 from his Account
balance.
(e) Written Explanation of Benefit Options. At least thirty (30) days and
no more than ninety (90) days prior to the Annuity Starting Date, the
Committee shall provide the Participant with a written explanation of
the optional forms of payment described in Section 8.02. Such
explanation shall provide a general description of the eligibility
conditions (if any) and other material features of the optional forms
of payment including sufficient information regarding the relative
values of the optional forms of payment. The written explanation must
also inform the Participant of his right (if any) to defer receipt of
the distribution until his Normal Retirement Age. This written
explanation is not required if the Participant's Account is
distributed without his consent as provided in subsection (b) above.
8.03 Special Rules Applicable to Annuity Distributions.
(a) Application of Section 8.03. This Section 8.03 shall apply to a
Participant only if and when the Participant elects to receive an
annuity distribution. After a Participant elects to receive a
distribution of his Account in the form of an annuity, the
Participant's form of distribution and Beneficiary designation shall
be governed by Appendix A to the extent inconsistent with this Article
8. In addition, the notice requirements of Appendix A shall apply.
(b) Hardship Withdrawals. Hardship withdrawals (see Article 9) are payable
only in a single lump sum. Thus, a married Participant whose Account
is subject to Section 8.03 must obtain his Spouse's consent to such
distribution. The Spouse's consent must be obtained within 90 days of
the Participant's Annuity Starting Date and must be in the form
described in Appendix A.
8.04 Death Benefits.
(a) Death Benefits if Section 8.03 Applies. If the provisions of Section
8.03 apply to the Participant (i.e., the Participant previously
elected to receive a distribution of his Account in the form of an
annuity) and the Participant dies prior to his Annuity Starting Date,
the Participant's Account shall be distributed in accordance with the
Pre-Retirement Survivor Annuity rules contained in Appendix A.
(b) Death Benefits if Section 8.03 Does Not Apply. If the provisions of
Section 8.03 do not apply (i.e., the Participant has never elected to
receive a distribution of his Account in the form of an annuity) and
the Participant dies, the Participant's vested Account shall be
distributed to the Participant's Beneficiary in the form previously
selected by the Participant on behalf of the Beneficiary or if the
Participant made no such election, in the form selected by the
Beneficiary. The Participant's Account will not be distributed in the
form of a Joint and Survivor Annuity.
8.05 Special Distribution Rules For Participants Age 70-1/2.
(a) Scope of Section. To the extent that the distribution rules described
in this Section provide a limitation upon distribution rules stated
elsewhere in this Plan, the distribution rules stated in this Section
shall take precedence over such conflicting rules. However, under no
circumstances shall the rules stated in this Section be deemed to
provide distribution rights to Participants or their Beneficiaries
which are more expansive or greater than the distribution rights
stated elsewhere in this Plan. For example, if the only distribution
method permitted under the Plan is a lump sum, then distributions
under this Section may only be made in a lump sum. In addition, if the
Plan requires distributions to commence at age 65 for Participants who
have terminated Employment, distributions must commence at age 65 and
may not be delayed to age 70-1/2.
(b) Distributions Must Commence Before Age 70 1/2.
(1) Distribution to a Participant shall begin not later than April 1
following the later of the calendar year in which he (i) attains
age 70-1/2 or (ii) incurs a Termination of Employment; provided
however that for a Participant who is a 5% owner (as defined in
Code ss. 401(a)(9) and Treasury Regulations thereunder),
distribution to such Participant shall begin the April 1
following the calendar year in which the Participant attains age
70 1/2 (the "Required Beginning Date"), regardless of whether the
Participant consents to such distribution.
(2) Notwithstanding Section 8.05(b)(1) above, the Required Beginning
Date for any Participant who (i) has attained or will attain age
70 1/2 on or before December 31, 1998, and (ii) has an Account
under the Plan as of December 31, 1996, shall be April 1
following the calendar year in which the Participant attains age
70 1/2, regardless of whether the Participant is then employed by
the Employer. Furthermore, for any Participant who was receiving
minimum distributions under the Prior Plan as of December 31,
1996, such minimum distributions shall continue.
(c) Method of Distribution. The entire Account of each Participant shall
be distributed, beginning not later than the required beginning date,
in the manner elected by the Participant. However, if the Participant
fails to elect a distribution option by the required beginning date,
the Participant's vested Account will be distributed in a lump sum.
(d) Death After Required Beginning Date. If distribution of a
Participant's Account has begun in accordance with paragraph (b), and
if the Participant dies before his entire vested Account has been
distributed to him, then the remaining portion of such vested Account
will be distributed at least as rapidly as under the method of
distribution being used under paragraph (b) as of the date of the
Participant's death.
(e) Death Before Required Beginning Date. If a Participant dies before
distribution of the Participant's Account has begun in accordance with
paragraph (b) above, the Participant's entire vested Account must be
distributed in a lump sum within 90 days of the Participant's death
unless:
(i) the Participant's Account is payable to or for the benefit of his
Beneficiary;
(ii) such portion will be distributed for the life of the Beneficiary
or in installments over a period certain not extending beyond the
life expectancy of the Beneficiary; and
(iii)such distributions begin not later than one year after the date
of the Participant's death or such later date as may be
prescribed in Treasury Regulations.
If the conditions stated in clauses (i), (ii) and (iii) are met, then
the portion referred to in clause (i) shall be treated as distributed
on the date on which distributions begin. Furthermore, if the
Beneficiary is the Participant's Spouse, the date on which the
Distributions are required to begin under clause (iii) above shall not
be earlier than the date on which the Participant would have attained
age 70-1/2, and if the surviving Spouse dies before distributions to
such Spouse begin, this paragraph shall be applied as if the surviving
Spouse were the Participant.
The Participant's Beneficiary may elect whether the Participant's
entire vested Account will be distributed in a lump sum immediately
following the Participant's death or pursuant to the provisions of
paragraph (i)-(iii) above. Such election must be made within the time
limits described in Treasury Regulation ss. 1.401(a)(9)-1, C-4. If no
election is made and the Beneficiary is the Participant's Spouse, the
Committee shall distribute the Participant's entire vested Account
pursuant to the provisions of paragraphs (i)-(iii) above. If no
election is made and the Beneficiary is not the Participant's Spouse,
the Participant's entire vested Account will be distributed in a lump
sum.
(f) No Recalculation of Life Expectancy. For the purposes of this Section,
the life expectancy of the Participant and the Participant's
Beneficiary shall not be recomputed once benefits have commenced under
this Section.
(g) Minimum Distribution Rules. Notwithstanding anything to the contrary
herein, Distributions under the Plan will comply with Treasury
Regulations issued under Code Section 401(a)(9) and any other
provisions reflecting Code Section 401(a)(9) as prescribed by the
Commissioner of the Internal Revenue Service, including the minimum
distribution incidental benefit rules under Code Section 401(a)(9)(G)
and Treasury Regulations issued thereunder.
8.06 Application for Benefits.
The Committee may require a Participant or Beneficiary to complete and
file with the Committee certain forms as a condition precedent to the
payment of benefits. The Committee may rely upon all such information
given to it, including the Participant's current mailing address. It
is the responsibility of all persons interested in distributions from
the Trust Fund to keep the Committee informed of their current mailing
addresses.
8.07 Distributions Pursuant to Qualified Domestic Relations Orders.
Notwithstanding anything to the contrary in this Plan, a "qualified
domestic relations order," as defined in Code Section 414(p), may
provide that any amount to be distributed to an alternate payee may be
distributed immediately even though the Participant is not yet
entitled to a distribution under the Plan. The intent of this Section
is to provide for the distribution of benefits to an alternate payee
as permitted by Treasury Regulation 1.401(a)-13(g)(3).
8.08 Direct Transfer of Account to an Eligible Retirement Plan.
(a) In General. If a Participant is entitled to a distribution of his or
her Account, the Participant may elect to have all or part of such
Distribution paid directly to an "Eligible Retirement Plan" in the
form of a direct rollover.
(b) Election. The Participant must make the election described in
paragraph (a) above within ninety (90) but no later than thirty (30)
days (7 if the Participant executes the appropriate waiver) prior to
the Participant's Annuity Starting Date in the manner and on the form
provided by the Committee. The Participant must provide all
information requested by the Committee for the Trustee to make the
transfer. Failure to provide such information will void the
Participant's election.
(c) Definition of Eligible Retirement Plan. The term "Eligible Retirement
Plan" shall mean:
(i) an individual retirement account (as described in Code ss.
408(a));
(ii) an individual retirement annuity (as described in Code ss.
408(b), other than an endowment contract);
(iii)a defined contribution plan qualified under Code ss. 401(a) that
by its terms accepts rollover contributions; or
(iv) an annuity plan described in Code ss. 403(a).
(d) Exceptions. The Committee is not required to offer a direct transfer
of a Participant's Account if:
(i) The distribution is a series of substantially equal periodic
payments made at least annually for the life (or life expectancy)
of the Participant or for the joint lives (or joint life
expectancies) of the Participant and his or her Beneficiary;
(ii) The distribution is a series of substantially equal periodic
payments made at least annually for a period of at least ten
years; or
(iii)The distribution is required under Section 8.05 (required
minimum distribution).
(iv) The distribution is less than $200 in a lump sum form (or any
higher amount as established by the Internal Revenue Code or
other applicable authority) and withholding is therefore not
required.
(e) Income Tax Withholding. Under the Internal Revenue Code, the Committee
is generally required to withhold for federal income taxes on a
distribution made directly to a Participant. Federal income tax
withholding is not required for any direct transfer of a Participant's
Account to an Eligible Retirement Plan or for any distribution
described in paragraph (d) above.
ARTICLE 9
HARDSHIP WITHDRAWALS
9.01 Hardship Withdrawal of Account.
(a) In General. Any Participant may request the Committee to distribute to
him, on account of a financial hardship, part or all of his (i) Salary
Savings Contributions Account, (ii) the Elective Profit Sharing
Contribution portion of his Profit Sharing Contribution Account, (iii)
Rollover Contributions Account and (iii) before January 1, 1999, the
vested Employer Matching Contributions on Elective Profit Sharing
Contributions held in his Employer Matching Contribution Account. Such
Account shall be valued in accordance with Section 9.15. Effective as
of January 1, 1999, a Participant may not request a hardship
distribution of the Employer Matching Contributions on Elective Profit
Sharing Contributions.
(b) No Distribution of Earnings. Notwithstanding the above, income or gain
that is allocated to the Participant's Salary Savings Contribution
Account and to the Participant's Elective Profit Sharing Contributions
held in his Profit Sharing Contribution Account may not be distributed
in a hardship withdrawal.
9.02 Definition of Hardship.
Hardship shall mean an immediate and heavy financial need experienced by
reason of:
(a) Expenses of any accident or sickness of such Participant, his Spouse
or his dependents or expenses necessary to provide medical care for
such Participant, his Spouse or his dependents;
(b) Purchase of a primary residence for such Participant;
(c) Payment of tuition and related educational fees for the next twelve
months of post-secondary education for the Participant, his Spouse,
children or dependents;
(d) The need to prevent the eviction of the Participant from his principal
residence or foreclosure on the Participant's principal residence; or
(e) Other financial hardships as permitted by Treasury Regulations or
other regulatory or judicial authority and approved by the Committee.
9.03 Maximum Hardship Distribution.
(a) Maximum Hardship. A hardship distribution cannot exceed the amount
required to meet the immediate financial need created by the hardship
(after taking into account applicable federal, state, or local income
taxes and penalties) and not reasonably available from other resources
of the Participant. In order to ensure compliance with this
requirement, the Committee may require the Participant to satisfy any
or all of the provisions described below in (1), (2), or (3) below as
a condition precedent to the Participant receiving a hardship
distribution:
(1) No Other Sources Available. Certification by the Participant on a
form provided by the Committee for such purpose that the
financial need cannot be relieved (1) through reimbursement or
payment by insurance; (2) by reasonable liquidation of the
Participant's assets; (3) by ceasing Salary Savings Contributions
under the Plan; (4) by other in-service distributions (including
loans) under the Plan and under any other plan maintained by the
Employer; or (5) by borrowing from commercial lenders on
reasonable commercial terms.
(2) Receipt of All Distributions Available; Suspension of Future
Contributions. Receipt by the Participant of all distributions
that he is eligible to receive under this Plan and under any
other plan maintained by the Employer.
In addition, the Participant must agree to the following limitations and
restrictions:
(A) The Participant's Salary Savings Contributions shall automatically be
suspended beginning on the first payroll period that commences after
such Participant requests and receives a hardship distribution. Such
Participant may resume making Salary Savings Contributions only on the
January 1, April 1, July 1, or October 1 which is at least 12 months
after the effective date of such suspension and only after informing
the Committee in writing at least 30 days (or such lesser time as
specified by the Committee) prior to the date on which the Salary
Savings Contributions are to resume.
(B) The maximum Salary Savings Contribution the Participant may make for
the calendar year following his hardship distribution shall be reduced
by the amount of Salary Savings Contributions made by the Participant
during the calendar year in which he received his hardship
distribution.
(C) The Participant shall be prohibited under a legally enforceable
agreement from making an Employee contribution to any other plan
maintained by the Employer for at least 12 months after the receipt of
the hardship distribution. For this purpose, the phrase "any other
plan" includes all qualified and nonqualified plans of deferred
compensation, stock option plans and stock purchase plans. It does not
include a health or welfare plan including one that is part of a
Section 125 cafeteria plan.
(3) Other. Any other condition or method approved by the Internal
Revenue Service.
9.04 Procedure to Request Hardship.
The request to receive a hardship distribution shall be made in writing to
the Committee explaining the nature of the financial hardship and stating
the amount needed to meet the immediate need. Under no circumstances shall
the Committee permit a Participant to repay to the Plan the amount of any
hardship withdrawal by a Participant under this Section.
9.05 Valuation for Purposes of Withdrawals.
The Participant's Account for purposes of determining the amount of a
hardship withdrawal shall be determined as of the Valuation Date preceding
the date the Committee approves the hardship distribution. However, if the
Committee in its discretion determines that there has been a significant
change in the market value of the assets held in the Fund since the
Valuation Date which precedes the proposed date of distribution, the
Committee in its discretion and on a non-discriminatory basis may postpone
the hardship distribution until a reasonable time following the next
Valuation Date and shall use the value of the Account computed as of the
later Valuation Date in determining the amount of the distribution.
Alternatively, the Committee may implement such other measures as it deems
appropriate, including suspension of withdrawals or special valuations, to
insure that each Participant's Account receives an appropriate allocation
of income or loss.
ARTICLE 10
ADMINISTRATION OF THE PLAN
10.01 Named Fiduciaries.
The following parties are named as Fiduciaries of the Plan and shall have
the authority to control and manage the operation and administration of the
Plan:
(a) The Company;
(b) The Board;
(c) The Trustee;
(d) The Committee.
The Fiduciaries named above shall have only the powers and duties expressly
allocated to them in the Plan and in the Trust Agreement and shall have no
other powers and duties in respect of the Plan; provided, however, that if
a power or responsibility is not expressly allocated to a specific named
fiduciary, the power or responsibility shall be that of the Company. No
Fiduciary shall have any liability for, or responsibility to inquire into,
the acts and omissions of any other Fiduciary in the exercise of powers or
the discharge of responsibilities assigned to such other Fiduciary under
this Plan or the Trust Agreement.
10.02 Board of Directors.
The Board shall have the power to appoint and remove the Trustee and the
members of the Committee. The Board may delegate its authority to appoint
or remove the Trustee and the members of the Committee to an officer of the
Company. The Board shall have no other responsibilities with respect to the
Plan.
10.03 Trustee.
The Trustee shall exercise all of the powers and duties assigned to the
Trustee as set forth in the Trust Agreement. The Trustee shall have no
other responsibilities with respect to the Plan.
10.04 Committee.
(a) A committee of one or more individuals may be appointed by and serve
at the discretion of the Board to administer the Plan. Any
Participant, officer, or director of the Employer shall be eligible to
be appointed a member of the Committee and all members shall serve as
such without compensation. Upon termination of his employment with the
Employer, or upon ceasing to be an officer or director, if not an
employee, a member of the Committee automatically shall cease to be a
member of the Committee. The Board shall have the right to remove any
member of the Committee at any time, with or without cause. A member
may resign at any time by giving written notice to the Committee and
the Board. If a vacancy in the Committee should occur, a successor may
be appointed by the Board. The Committee shall by written notice keep
the Trustee notified of current membership of the Committee, its
officers and agents. The Committee shall furnish the Trustee a
certified signature card for each member of the Committee and for all
purposes hereunder the Trustee shall be conclusively entitled to rely
upon such certified signatures. If there are no members of the
Committee, the Company shall assume the authority, powers, duties and
privileges of the Committee.
(b) The Board or the Chief Executive Officer shall appoint a Chairman and
a Secretary from among the members of the Committee. All resolutions,
determinations and other actions shall be by a majority vote of all
members of the Committee. The Committee may appoint such agents, who
need not be members of the Committee, as it deems necessary for the
effective performance of its duties, and may delegate to such agents
such powers and duties, whether ministerial or discretionary, as the
Committee deems expedient or appropriate. The compensation of such
agents shall be fixed by the Committee; provided, however, that in no
event shall compensation be paid if such payment violates the
provisions of Section 406 of ERISA and is not exempted from such
prohibitions by Section 408 of ERISA.
(c) The Committee shall have complete control of the administration of the
Plan with all powers necessary to enable it to properly carry out the
provisions of the Plan. In addition to all implied powers and
responsibilities necessary to carry out the objectives of the Plan and
to comply with the requirements of ERISA, the Committee shall have the
following specific powers and responsibilities:
(1) To construe the Plan and Trust Agreement and to determine all
questions arising in the administration, interpretation and
operation of the Plan;
(2) To amend any or all of the provisions of the Plan and to
terminate the Plan in whole or in part pursuant to the procedures
provided hereunder;
(3) To decide all questions relating to the eligibility of Employees
to participate in the benefits of the Plan and Trust Agreement;
(4) To determine the benefits of the Plan to which any Participant,
Beneficiary or other person may be entitled;
(5) To keep records of all acts and determinations of the Committee,
and to keep all such records, books of accounts, data and other
documents as may be necessary for the proper administration of
the Plan;
(6) To prepare and distribute to all Plan Participants and
Beneficiaries information concerning the Plan and their rights
under the Plan, including, but not limited to, all information
which is required to be distributed by ERISA, the regulations
thereunder, or by any other applicable law;
(7) To file with the Secretary of Labor such reports and additional
documents as may be required by ERISA and regulations issued
thereunder, including, but not limited to, summary plan
description, modifications and changes, annual reports, terminal
reports and supplementary reports;
(8) To file with the Secretary of the Treasury all reports and
information required to be filed by the Code, ERISA and
regulations issued under each; and
(9) To do all things necessary to operate and administer the Plan in
accordance with its provisions and in compliance with applicable
provisions of federal law.
(d) To enable the Committee to perform its functions, the Employer shall
supply full and timely information of all matters relating to the
compensation and length of service of all Participants, their
Retirement, death or other cause of termination of employment, and
such other pertinent facts as the Committee may require. The Committee
shall advise the Trustee of such facts and issue to the Trustee such
instructions as may be required by the Trustee in the administration
of the Plan. The Committee and the Employer shall be entitled to rely
upon all certificates and reports made by a Certified Public
Accountant selected or approved by the Employer. The Committee, the
Employer and its officers shall be fully protected in respect of any
action suffered by them in good faith in reliance upon the advice or
opinion of any accountant or attorney, and all action so taken or
suffered shall be conclusive upon each of them and upon all other
persons interested in the Plan.
10.05 Standard of Fiduciary Duty.
Any Fiduciary, or any person designated by a Fiduciary to carry out
fiduciary responsibilities with respect to the Plan, shall discharge his
duties solely in the interests of the Participants and Beneficiaries for
the exclusive purpose of providing them with benefits and defraying the
reasonable expenses of administering the Plan. Any Fiduciary shall
discharge his duties with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matter would use in the conduct of an enterprise of
a like character and with like aims. Any Fiduciary shall discharge his
duties in accordance with the documents and instruments governing the Plan
insofar as such documents and instruments are consistent with the
provisions of ERISA. Notwithstanding any other provisions of the Plan, no
Fiduciary shall be authorized to engage in any transaction which is
prohibited by Sections 406 and 2003(a) of ERISA or Section 4975 of the Code
in the performance of its duties hereunder.
10.06 Claims Procedure.
Any Participant, former Participant, Beneficiary, or Spouse or authorized
representative thereof (hereinafter referred to as "Claimant"), may file a
claim for benefits under the Plan by submitting to the Committee a written
statement describing the nature of the claim and requesting a determination
of its validity under the terms of the Plan. Within ninety (90) days after
the date such claim is received by the Committee, it shall issue a ruling
with respect to the claim. If special circumstances require an extension of
time for processing the claim, the Committee shall send the Claimant
written notice of the extension prior to the termination of the 90-day
period. The written notice shall indicate the special circumstances
requiring an extension and the date by which the Committee believes a
decision will be made. In no case, however, shall the extension of time
delay the Committee's decision on such appeal request beyond 180 days
following receipt of the claim for benefits. If the claim is wholly or
partially denied, written notice shall be furnished to the Claimant, which
notice shall set forth in a manner calculated to be understood by the
Claimant:
(1) The specific reason or reasons for denial;
(2) Specific reference to pertinent Plan provisions on which the denial is
based;
(3) A description of any additional material or information necessary for
the Claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(4) An explanation of the claims review procedures.
Any Claimant whose claim for benefits has been denied, may appeal such
denial by resubmitting to the Committee a written statement requesting a
further review of the decision within sixty (60) days of the date the
Claimant receives notice of such denial. Such statement shall set forth the
reasons supporting the claim, the reasons such claim should not have been
denied, and any other issues or comments which the Claimant deems
appropriate with respect to the claim.
If the Claimant shall request in writing, the Committee shall make copies
of the Plan documents pertinent to his claim available for examination of
the Claimant. Within sixty (60) days after the request for further review
is received, the Committee shall review its determination of benefits and
the reasons therefor and notify the Claimant in writing of its final
decision. Such written notice shall include specific reasons for the
decision, written in a manner calculated to be understood by the Claimant,
with specific references to the pertinent Plan provisions on which the
decision is based. If special circumstances require an extension of time
for processing the appeal, the Committee shall send the Claimant written
notice of the extension prior to the termination of the 60-day period. In
no case, however, shall the extension of time delay the Committee's
decision on such appeal request beyond 120 days following receipt of the
appeal request.
10.07 Indemnification of Committee; Board.
To the extent permitted under ERISA, the Plan shall indemnify the Board and
the Committee against any cost or liability which they may incur in the
course of administering the Plan and executing the duties assigned pursuant
to the Plan. The Employer shall indemnify the Committee against any
personal liability or cost not provided for in the preceding sentence which
they may incur as a result of any act or omission in relation to the Plan
or its Participants. Notwithstanding the foregoing, however, no person
shall be indemnified for any act or omission which results from that
person's intentional or willful misconduct, or illegal activity. The
Employer may purchase fiduciary liability insurance to insure its
obligation under this Section. The Company shall have the right to select
counsel to defend the Board or Committee in connection with any litigation
arising from the execution of their duties under the Plan.
ARTICLE 11
AMENDMENT AND TERMINATION
11.01 Right to Amend.
The Company intends for the Plan to be permanent so long as the corporation
exists; however, it reserves the right to modify, alter, or amend this Plan
or the Trust Agreement, from time to time, to any extent that it may deem
advisable, including, but not limited to any amendment deemed necessary to
insure the continued qualification of the Plan under Sections 40l(a) and
401(k) of the Code or to insure compliance with ERISA; provided, however,
that the Company shall not have the authority to amend this Plan in any
manner which will:
(a) Permit any part of the Fund (other than such part as is required to
pay taxes and administrative expenses) to be used for or diverted to
purposes other than for the exclusive benefit of the Participants or
their Beneficiaries;
(b) Cause or permit any portion of the funds to revert to or become the
property of the Employer;
(c) Change the duties, liabilities, or responsibilities of the Trustee
without its prior written consent.
11.02 Termination and Discontinuance of Contributions.
The Company shall have the right at any time to terminate this Plan or to
discontinue permanently its contributions hereunder (hereinafter referred
to as "Plan Termination"). Upon termination of the Plan, the Committee
shall direct the Trustee with reference to the disposition of the Fund,
after payment of any expenses properly chargeable against the Fund. The
Trustee shall distribute all amounts held in Trust to the Participants and
others entitled to distributions in proportion to the Accounts of such
Participants and other distributees as of the date of such Plan
Termination. In the event that this Plan is partially terminated, the
provisions of this Section 11.02 shall apply solely with respect to the
Employees affected by the partial termination. If the Plan is terminated or
partially terminated, or if the Employer permanently discontinues its
contributions to the Plan, then all Participants (in the case of complete
plan termination or permanent discontinuance of contributions) or the
affected Participants (in the event of partial Plan termination), shall
become 100% vested in all of their Accounts under the Plan immediately upon
such event.
11.03 IRS Approval of Termination.
Notwithstanding Section 11.02, the Trustee shall not be required to make
any distribution from this Plan in the event of complete or partial
termination until the Internal Revenue Service has issued a favorable
determination with respect to the Plan's termination.
ARTICLE 12
SPECIAL DISCRIMINATION RULES
12.01 Definitions.
Actual Contribution Percentage or ACP shall mean the ratio (expressed as a
percentage) of (i) the sum of the Employer Matching Contributions and
Voluntary After-Tax Contributions on behalf of the Participant for the Plan
Year and, to the extent permitted in Treasury Regulations and elected by
the Employer, the Participant's Qualified Elective Deferrals and Qualified
Non-Elective Contributions to (ii) the Participant's Compensation for the
Plan Year. The Employer, on an annual basis, may elect to include or not to
include Qualified Elective Deferrals and Qualified Non-Elective
Contributions in computing the ACP for a Plan Year. An Employer may elect
on an annual basis to count a Participant's Employer Matching Contribution
toward satisfying the required minimum contribution under Section 15.03
(minimum contribution for Non-Key Employees in a Top-Heavy plan) in lieu of
including such contributions in the ACP. If a Participant (as defined
below) does not receive an allocation of Employer Contributions for a Plan
Year, such Participant's ACP for the Plan Year shall be zero.
Actual Deferral Percentage or ADP shall mean the ratio (expressed as a
percentage) of (i) the sum of Salary Savings Contributions and Elective
Profit Sharing Contributions contributed to the Plan on behalf of a
Participant for the Plan Year (excluding any Excess Deferrals by a
Non-Highly Compensated Employee) and, to the extent permitted in Treasury
Regulations and elected by the Employer, the Participant's Qualified
Non-Elective Contributions to (ii) the Participant's Compensation for the
Plan Year. The Employer, on an annual basis, may elect to include or not to
include Qualified Non-Elective Contributions in computing the ADP for a
Plan Year. In the case of a Participant (as defined below) who does not
make a Salary Savings Contribution for a Plan Year and is not allocated a
Qualified Non-Elective Contribution for such Plan Year, such Participant's
ADP for the Plan Year shall be zero.
Average Actual Contribution Percentage shall mean the average (expressed as
a percentage) of the Actual Contribution Percentages of the Participants in
a group. The percentage shall be rounded to the nearest one-hundredth of
one percent (four decimal places).
Average Actual Deferral Percentage shall mean the average (expressed as a
percentage) of the Actual Deferral Percentages of the Participants in a
group. The percentage shall be rounded to the nearest one-hundredth of one
percent (four decimal places).
Combined ADP and ACP Test shall have the meaning as defined in Section
12.11.
Compensation for purposes of this Article 12 shall be that definition
selected by the Committee that satisfies the requirements of Code Sections
414(s) and 401(a)(17). Such definition may change from year to year but
must apply uniformly among all Eligible Employees being tested under the
Plan for a given Plan Year and among all Employees being tested under any
other plan that is aggregated with this Plan during the Plan Year. If the
Committee fails to select a definition of Compensation for purposes of this
Article 12, Compensation (for purposes of Article 12) shall have the same
meaning as defined in Article 2.
Employer Matching Contributions. For purposes of this Article 12, an
Employer Matching Contribution for a particular Plan Year includes only
those contributions that are (i) allocated to the Participant's Account
under the Plan as of any date within such Plan Year, (ii) contributed to
the Trust no later than the end of the 12-month period following the close
of such Plan Year, and (iii) made on account of such Participant's Salary
Savings Contributions for the Plan Year.
Excess Deferrals shall have that meaning as defined in Section 12.02.
Excess ACP Contributions shall have that meaning as defined in Section
12.09.
Excess ADP Deferrals shall have that meaning as defined in Section 12.05.
Highly Compensated Employee. See Article 13.
Maximum Combined Percentage shall have the meaning as defined in Section
12.11(c).
Non-Highly Compensated Employee. See Article 13.
Participant. For purposes of this Article 12, a Participant shall mean any
Employee who (i) is eligible to receive an allocation of an Employer
Matching Contribution, even if no Employer Matching Contribution is
allocated due to the Employee's failure to make a required Salary Savings
Contribution, (ii) is eligible to make a Salary Savings Contribution,
including an Employee whose right to make Salary Savings Contribution has
been suspended because of an election not to participate or a hardship
distribution, and (iii) is unable to receive an Employer Matching
Contribution or make a Salary Savings Contribution because his Compensation
is less than a stated amount.
Salary Savings Contributions. For purposes of this Article 12, a Salary
Savings Contribution is taken into account only if the contribution (i) is
allocated to the Participant's Account under the terms of the Plan as of
any date within the Plan Year, and (ii) relates to Compensation that would
have been received by the Participant during the Plan Year or within 2 1/2
months after the Plan Year but for the deferral election. A Salary Savings
Contribution is considered to be allocated as of a date within a Plan Year
only if the allocation is not contingent on participation in the Plan or
performance of service after the Plan Year to which the Salary Savings
Contribution relates.
Qualified Elective Deferral shall mean Salary Savings Contributions or
Elective Profit Sharing Contributions designated by the Committee as
Qualified Elective Deferrals in order to meet the ACP testing requirements
of Section 12.07. In addition, the following requirements must be
satisfied:
(1) The aggregate of all Salary Savings Contributions and Elective Profit
Sharing Contributions for the Plan Year (including the Qualified
Elective Deferrals) must satisfy the ADP testing requirements set
forth in Section 12.03(a).
(2) The aggregate of all Salary Savings Contributions and Elective Profit
Sharing Contributions for the Plan Year (excluding the Qualified
Elective Deferrals) must satisfy the ADP testing requirements set
forth in Section 12.03(a).
(3) Qualified Elective Deferrals must satisfy all other provisions of this
Plan applicable to Salary Savings Contributions and Elective Profit
Sharing Contributions and shall remain part of the Participant's
Salary Savings Contribution Account or the Elective Profit Sharing
Contribution portion of the Participant's Profit Sharing Contribution
Account.
(4) Except as provided by this definition, Qualified Elective Deferrals
shall be excluded in determining whether any other contribution or
benefit satisfies the nondiscrimination requirements of Code Sections
401(a)(4) and 401(k)(3).
Qualified Non-Elective Contribution shall mean an Employer contribution
designated by the Committee as a Qualified Non-Elective Contribution in
order to meet the ADP testing requirements of Section 12.03 or the ACP
testing requirements of Section 12.07. In addition, the following
requirements must be satisfied:
(1) The Qualified Non-Elective Contribution, whether or not used to
satisfy the requirements of Sections 12.03 or 12.07, must meet the
requirements of Code Section 401(a)(4).
(2) Qualified Non-Elective Contributions which are taken into account in
order to meet the requirements of Section 12.03 or 12.07 (as
applicable) shall not be counted in determining whether the testing
requirements of any of such other Sections are met.
(3) The Qualified Non-Elective Contributions shall be subject to all
provisions of this Plan applicable to Salary Savings Contributions
(except that Qualified Non-Elective Contributions cannot be
distributed in a hardship distribution).
(4) Except as provided in this paragraph, the Qualified Non-Elective
Contributions shall be excluded in determining whether any other
contribution or benefit satisfies the nondiscrimination requirements
of Code Sections 401(a)(4) and 401(k)(3).
12.02 Limit on Salary Savings Contributions.
(a) Notwithstanding any other provision of the Plan to the contrary, the
aggregate of a Participant's Salary Savings Contributions and Elective
Profit Sharing Contributions actually contributed to the Plan during a
calendar year may not exceed $10,000 (for 1997) (or such greater
amount as established by the Secretary of the Treasury pursuant to
Code Section 402(g)(5)). Any Salary Savings Contributions or Elective
Profit Sharing Contributions in excess of the foregoing limit ("Excess
Deferral"), plus any income and minus any loss allocable thereto, may
be distributed to the applicable Participant no later than April 15
following the calendar year in which such contributions were made.
(b) Any Participant who has an Excess Deferral during a calendar year may
receive a distribution of the Excess Deferral during such calendar
year plus any income or minus any loss allocable thereto, provided (1)
the Participant requests (or is deemed to request) the distribution of
the Excess Deferral, (2) the distribution occurs after the date the
Excess Deferral arose, and (3) the Committee designates the
distribution as a distribution of an Excess Deferral. The distribution
of the Excess Deferral shall be adjusted for income or loss during the
Plan Year only, and not for the period between the end of the Plan
Year and the date of the distribution.
(c) If a Participant makes a Salary Savings Contribution or Elective
Profit Sharing Contribution under this Plan and in the same calendar
year makes a contribution to a Code Section 401(k) plan containing a
cash or deferred arrangement (other than this Plan), a Code Section
408(k) plan (simplified employee pension plan) or a Code Section
403(b) plan (tax sheltered annuity) and, after the return of any
Excess Deferral pursuant to Section 12.02(a) and (b) the aggregate of
all such contributions exceed the limitations contained in Code
Section 402(g), then such Participant may request that the Committee
return all or a portion of the Participant's Salary Savings
Contributions or Elective Profit Sharing Contributions for the
calendar year plus any income and minus any loss allocable thereto.
The amount by which such contributions exceed the Code Section 402(g)
limitations will also be known as an Excess Deferral.
(d) Any request for a return of Excess Deferrals arising out of
contributions to a plan described in Section 12.02(c) above which is
maintained by an entity other than the Employer must:
(1) be made in writing;
(2) be submitted to the Committee not later than the March 1
following the Plan Year in which the Excess Deferral arose;
(3) specify the amount of the Excess Deferral; and,
(4) contain a statement that if the Excess Deferral is not
distributed, it will, when added to amounts deferred under other
plans or arrangements described in Sections 401(k), 408(k),or
403(b) of the Code, exceed the limit imposed on the Participant
by Section 402(g) of the Code for the year in which the Excess
Deferral occurred.
In the event an Excess Deferral arises out of contributions to a plan
(including this Plan) described in Section 12.02(c) above which is
maintained by the Employer, the Participant making the Excess Deferral
shall be deemed to have requested a return of the Excess Deferral.
(e) Salary Savings Contributions and Elective Profit Sharing Contributions
may only be returned to the extent necessary to eliminate a
Participant's Excess Deferral. Excess Deferrals shall be treated as
Annual Additions under the Plan. In no event shall the returned Excess
Deferrals for a particular calendar year exceed the Participant's
aggregate Salary Savings Contributions and Elective Profit Sharing
Contributions for such calendar year.
(f) The income or loss allocable to a Salary Savings Contribution or
Elective Profit Sharing Contribution that is returned to a Participant
pursuant to this Section 12.02 shall be determined by multiplying the
income or loss allocable to the Participant's Account for the calendar
year in which the Excess Deferral arose by a fraction. The numerator
of the fraction is the Excess Deferral. The denominator of the
fraction is the value of the Participant's Account balance on the last
day of the calendar year in which the Excess Deferral arose reduced by
any income allocated to the Participant's Account for such calendar
year and increased by any loss allocated to the Participant's Account
for such calendar year. Alternatively, the income or loss allocable to
a Salary Savings Contribution or Elective Profit Sharing Contribution
may be calculated using any reasonable method for computing such
income or loss, provided the method does not discriminate in favor of
Highly Compensated Employees, is used consistently for all
participants and for all corrective distributions under the Plan for
the Plan Year, and is used by the Plan for allocating income to
Participants' Accounts.
(g) Any Employer Matching Contribution allocable to an Excess Deferral
that is returned to a Participant pursuant to this Section 12.02 shall
be forfeited notwithstanding the provisions of Article 7 (vesting).
For this purpose, however, the Salary Savings Contributions that are
returned to the Participant as an Excess Deferral shall be deemed to
be first those Salary Savings Contributions for which no Employer
Matching Contribution was made and second those Salary Savings
Contributions for which an Employer Matching Contribution was made.
Accordingly, if the Salary Savings Contributions that are returned to
the Participant as Excess Deferrals were not matched, no Employer
Matching Contribution will be forfeited. Salary Savings Contributions
shall be returned as an Excess Deferral before Elective Profit Sharing
Contributions.
12.03 Average Actual Deferral Percentage.
The provisions of this Section 12.03 shall apply for Plan Years beginning
before January 1, 1999. For Plan Years beginning on and after January 1,
1999, this Plan satisfies the safe harbor described in Code Section
401(k)(12), and thus is exempt from the ADP test described below. For Plan
Years for which the Plan is intended to satisfy the safe harbor, the Plan
Administrator shall comply with the notice requirement of Code Section
401(k)(12)(D).
(a) The Average Actual Deferral Percentage for Highly Compensated
Employees for each Plan Year and the Average Actual Deferral
Percentage for Non-Highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(1) The Average Actual Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed
the Average Actual Deferral Percentage for the preceding Plan
Year for Participants who are Non-Highly Compensated Employees
for such preceding Plan Year multiplied by 1.25; or
(2) The excess of the Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees for the Plan
Year over the Average Actual Deferral Percentage for the
preceding Plan Year for Participants who are Non-Highly
Compensated Employees for such preceding Plan Year is not more
than two percentage points, and the Average Actual Deferral
Percentage for Participants who are Highly Compensated Employees
is not more than the Average Actual Deferral Percentage for the
preceding Plan Year for Participants who are Non-Highly
Compensated Employees for such preceding Plan Year multiplied by
two.
(b) The permitted disparity between the Average Actual Deferral Percentage
for Highly Compensated Employees and the Average Actual Deferral
Percentage for Non-Highly Compensated Employees may be further reduced
as required by Section 12.11.
(c) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 12.03(a), the Employer may do any or all of the
following, except as otherwise provided in the Code or Treasury
Regulations:
(1) Distribute Salary Savings Contributions to certain Highly
Compensated Employees as provided in Section 12.05;
(2) Recharacterize the Participant's Salary Savings Contributions as
Voluntary After-Tax Contributions as provided in Section 12.06;
or
(3) Make a Qualified Non-Elective Contribution on behalf of any or
all of the Non-Highly Compensated Employees and aggregate such
contributions with the Non-Highly Compensated Employees' Salary
Savings Contributions Deferrals as provided in Section 12.01
(definition of ADP).
(4) Notwithstanding anything contained in Section 12.03(a)(1) or (2)
to the contrary, the Plan Administrator may elect to use the
Average Deferral Percentage for Non-highly Compensated Employees
for the Plan Year, rather than the preceding Plan Year, except
that if such an election is made, it may not be changed except by
an amendment to this Plan or as otherwise provided by the
Secretary of the Treasury.
12.04 Special Rules For Determining Average Actual Deferral Percentage.
(a) The Actual Deferral Percentage for any Highly Compensated Employee for
the Plan Year who is eligible to have Salary Savings Contributions
allocated to his Account under two or more arrangements described in
Section 401(k) of the Code that are maintained by an Employer or its
Affiliates shall be determined as if such Salary Savings Contributions
were made under a single arrangement.
(b) If two or more plans maintained by the Company or its Affiliates are
treated as one plan for purposes of the nondiscrimination requirements
of Code Section 401(a)(4) or the coverage requirements of Code Section
410(b) (other than for purposes of the average benefits test), all
Salary Savings Contributions that are made pursuant to those plans
shall be treated as having been made pursuant to one plan.
(c) The determination and treatment of the Salary Savings Contributions,
Elective Profit Sharing Contribution and Actual Deferral Percentage of
any Participant shall be in accordance with such other requirements as
may be prescribed from time to time in Treasury Regulations.
12.05 Distribution of Excess ADP Deferrals.
(a) Salary Savings Contributions and Elective Profit Sharing Contributions
exceeding the limitations of Section 12.03(a) ("Excess ADP Deferrals")
and any income or loss allocable to such Excess ADP Deferral shall be
designated by the Committee as Excess ADP Deferrals and shall be
distributed to Highly Compensated Employees whose Accounts were
credited with Excess ADP Deferrals in the preceding Plan Year. The
Committee shall determine the amount of Excess ADP Deferrals to be
distributed to each Highly Compensated Employee by first determining
the aggregate dollar amount of the distribution as follows:
(1) Determine the dollar amount by which the Pre-Tax Contributions of
the Highly Compensated Employee(s) with the highest ADP must be
reduced to equal the second highest ADP(s) under the Plan; then
(2) Determine the dollar amount by which the Pre-Tax Contributions
for the two (or more) Highly Compensated Employees with the
highest ADPs under the Plan must be reduced to equal the third
highest ADP(s) under the Plan; then
(3) Repeat the steps described in (1) and (2) above with respect to
the third and successive highest ADP levels under the Plan until
the Average Actual Deferral Percentage does not exceed the amount
allowable under Section 12.03(a); then
(4) Add the dollar amounts determined in each of steps (1), (2) and
(3) above.
The aggregate dollar amount of Excess ADP Deferrals determined under
steps (1) through (4) above shall be distributed as follows:
(1) First to those Highly Compensated Employees with the highest
amount of Pre-Tax Contributions until each such Employee's
Pre-Tax Contribution equals the second highest amount of Pre-Tax
Contributions under the Plan;
(2) Second, to the two (or more) Highly Compensated Employees with
the next highest dollar amount of Pre-Tax Contributions under the
Plan, until each such Employee's Pre-Tax Contribution equals the
third highest amount of Pre-Tax Contributions under the Plan; and
(3) Then the steps described in (1) and (2) shall be repeated for the
third and successive Highly Compensated Employees with the
highest amount of Pre-Tax Contributions under the Plan until all
Excess ADP Deferrals have been returned.
(b) To the extent administratively possible, the Committee shall
distribute all Excess ADP Deferrals and any income or loss allocable
thereto prior to 2 1/2months following the end of the Plan Year in
which the Excess ADP Deferrals arose. In any event, however, the
Excess ADP Deferrals and any income or loss allocable thereto shall be
distributed prior to the end of the Plan Year following the Plan Year
in which the Excess ADP Deferrals arose. Excess ADP Deferrals shall be
treated as Annual Additions under the Plan. The distribution of the
Excess ADP Deferrals shall be adjusted for income or loss during the
Plan Year only, and not for the period between the end of the Plan
Year and the date of the distribution.
(c) The income or loss allocable to Excess ADP Deferrals shall be
determined by multiplying the income or loss allocable to the
Participant's Account for the Plan Year in which the Excess ADP
Deferrals arose by a fraction. The numerator of the fraction is the
Excess ADP Deferral. The denominator of the fraction is the value of
the Participant's Account balance on the last day of the Plan Year in
which the Excess ADP Deferrals arose reduced by any income allocated
to the Participant's Account for such Plan Year and increased by any
loss allocated to the Participant's Account for the Plan Year.
Alternatively, the income or loss allocable to Excess ADP Deferrals
may be calculated using any reasonable method for computing such
income or loss, provided the method does not discriminate in favor of
Highly Compensated Employees, is used consistently for all
participants and for all corrective distributions under the Plan for
the Plan Year, and is used by the Plan for allocating income to
Participants' Accounts.
(d) If an Excess Deferral has been distributed to the Participant pursuant
to Section 12.02 for any taxable year of a Participant, then any
Excess ADP Deferral allocable to such Participant for the same Plan
Year in which such taxable year ends shall be reduced by the amount of
such Excess Deferral.
(e) Any Employer Matching Contribution allocable to an Excess ADP Deferral
that is returned to the Participant pursuant to this Section 12.05
shall be forfeited notwithstanding the provisions of Article 7
(vesting). For this purpose, however, the Salary Savings Contributions
that are returned to the Participant shall be deemed to be first those
Salary Savings Contributions for which no Employer Matching
Contribution was made and second those Salary Savings Contributions
for which an Employer Matching Contribution was made. Accordingly,
unmatched Salary Savings Contributions shall be returned as an Excess
ADP Deferral before matched Salary Savings Contributions. Salary
Savings Contributions shall be returned as an Excess ADP Deferral
before Elective Profit Sharing Contributions.
12.06 Salary Savings Contributions Recharacterized as Voluntary After-
Tax Contributions.
(a) A Participant's Excess ADP Deferrals may be reduced or eliminated by
recharacterizing, to the extent necessary, part or all of the
Participant's Salary Savings Contributions or Elective Profit Sharing
Contributions as Voluntary After-Tax Contributions. Such
recharacterized Salary Savings Contributions or Elective Profit
Sharing Contributions shall be allocated to a sub-account of the
Participant's Voluntary After-Tax Contribution Account. Such
recharacterization shall be permitted only to the extent the
Participant could have originally contributed such amounts as a
Voluntary After-Tax Contribution under the Plan (ignoring the
provisions of Section 12.07).
(b) The decision to recharacterize Salary Savings Contributions or
Elective Profit Sharing Contributions as Voluntary After-Tax
Contributions must be made within 2 1/2 months after the close of the
Plan Year in which the Excess ADP Deferral arose. The Committee shall
notify the Participant and the Internal Revenue Service that all or
part of the Participant's Salary Savings Contributions or Elective
Profit Sharing Contributions have been recharacterized as Voluntary
After-Tax Contributions. Such notification shall be made in the form
and in the manner prescribed by the Internal Revenue Service.
(c) Salary Savings Contributions or Elective Profit Sharing Contributions
that are recharacterized as Voluntary After-Tax Contributions shall be
ignored in computing the Participant's Actual Deferral Percentage.
However, such amounts shall be considered in computing the
Participant's Average Contribution Percentage.
(d) Notwithstanding the recharacterization of Salary Savings Contributions
or Elective Profit Sharing Contributions as Voluntary After-Tax
Contributions under this Section 12.06, Salary Savings Contributions
or Elective Profit Sharing Contributions recharacterized as Voluntary
After-Tax Contributions shall continue to be considered as Salary
Savings Contributions or Elective Profit Sharing Contributions for the
purposes of Article 14 (Maximum Benefits), Article 7 (Vesting),
Article 8 (Distributions), and Article 15 (Top Heavy Rules).
(e) Salary Savings Contributions or Elective Profit Sharing Contributions
recharacterized as Voluntary After-Tax Contributions are includable in
the Participant's gross income for the calendar year in which such
recharacterized Salary Savings Contributions or Elective Profit
Sharing Contributions were contributed to the Plan. For this purpose,
Salary Savings Contributions or Elective Profit Sharing Contributions
are deemed recharacterized in the order such Salary Savings
Contributions were contributed to the Plan beginning with the earliest
such Salary Savings Contributions or Elective Profit Sharing
Contributions for the Plan Year in which the Excess ADP Deferral
arose.
(f) The Committee may, but is not required to, permit Highly Compensated
Employees to elect whether to correct an Excess ADP Deferral by
recharacterizing Salary Savings Contributions or Elective Profit
Sharing Contributions as Voluntary After-Tax Contributions or by
distributing the Excess ADP Deferral as described in Section 12.05.
(g) Salary Savings Contributions shall be recharacterized as Voluntary
After-Tax Contributions before Elective Profit Sharing Contributions
are recharacterized.
(h) Any Employer Matching Contribution allocable to a Salary Savings
Contribution or Elective Profit Sharing Contribution that is
recharacterized as a Voluntary After-Tax Contribution pursuant to this
Section 12.06 shall be forfeited notwithstanding the provisions of
Article 7 (vesting). For this purpose, however, the Salary Savings
Contributions that are recharacterized shall be deemed to be first
those Salary Savings Contributions for which no Employer Matching
Contribution was made and second those Salary Savings Contributions
for which an Employer Matching Contribution was made. Accordingly,
unmatched Salary Savings Contributions shall be recharacterized before
matched Salary Savings Contributions.
12.07 Average Actual Contribution Percentage.
(a) The Average Actual Contribution Percentage for Highly Compensated
Employees for each Plan Year and the Average Actual Contribution
Percentage for Non-Highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(1) The Average Actual Contribution Percentage for Participants who
are Highly Compensated Employees for the Plan Year shall not
exceed the Average Actual Contribution Percentage for the
preceding Plan Year for Participants who are Non-Highly
Compensated Employees for such preceding Plan Year multiplied by
1.25; or
(2) The excess of the Average Actual Contribution Percentage for
Participants who are Highly Compensated Employees for the Plan
Year over the Average Actual Contribution Percentage for the
preceding Plan Year for Participants who are Non-Highly
Compensated Employees for such preceding Plan Year is not more
than two percentage points, and the Average Actual Contribution
Percentage for Participants who are Highly Compensated Employees
is not more than the Average Actual Contribution Percentage for
the preceding Plan Year for Participants who are Non-Highly
Compensated Employees for such preceding Plan Year multiplied by
two.
(b) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 12.07(a), the Employer may do any or all of the
following in order to comply with such provision as applicable (except
as otherwise provided in the Code or in Treasury Regulations):
(1) Aggregate Qualified Elective Deferrals with the Employer Matching
Contributions or Voluntary After-Tax Contributions of Non-Highly
Compensated Employees as provided in Section 12.01 (definition of
ACP).
(2) Distribute vested Employer Matching Contributions and/or
Voluntary After-Tax Contributions to certain Highly Compensated
Employees as provided in Section 12.09.
(3) Make a Qualified Non-Elective Contribution on behalf of any or
all of the Non-Highly Compensated Employees and aggregate such
contributions with the Non-Highly Compensated Employees' Employer
Matching Contributions or Voluntary After-Tax Contributions as
provided in Section 12.01 (definition of ACP).
(4) Forfeit non-vested Employer Matching Contributions of certain
Highly Compensated Employees as provided in Section 12.10.
(c) Notwithstanding anything contained in Section 12.07(a)(1) or (2) to
the contrary, the Plan Administrator may use the Average Contribution
Percentage for Non-highly Compensated Employees for the Plan Year,
rather than the preceding Plan Year, if the Plan is amended
accordingly. If such an amendment is made, however, it may not be
changed except as provided by the secretary of the Treasury.
12.08 Special Rules For Determining Average Actual Contribution Percentages.
(a) The Actual Contribution Percentage for any Highly Compensated Employee
for the Plan Year who is eligible to have Employer Matching
Contributions or Voluntary After-Tax Contributions allocated to his
Account under two or more arrangements described in Sections 401(a) or
401(m) of the Code that are maintained by an Employer or its
Affiliates shall be determined as if such contributions were made
under a single arrangement.
(b) If two or more plans maintained by the Employer or its Affiliates are
treated as one plan for purposes of the nondiscrimination requirements
of Code Section 401(a)(4) or the coverage requirements of Code Section
410(b) (other than for purposes of the average benefits test), all
Employer Matching Contributions and Voluntary After-Tax Contributions
that are made pursuant to those plans shall be treated as having been
made pursuant to one plan.
(c) The computation of the Average Actual Contribution Percentage shall be
performed after any recharacterization of Salary Savings Contributions
or Elective Profit Sharing Contributions as Voluntary After-Tax
Contributions pursuant to Section 12.06.
(d) The determination and treatment of the Actual Contribution Percentage
of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
12.09 Distribution of Employer Matching Contributions.
(a) Employer Matching Contributions and Voluntary After-Tax Contributions
exceeding the limitations of Section 12.07(a) ("Excess ACP
Contributions") and any income or loss allocable to such Excess ACP
Contribution may be designated by the Committee as Excess ACP
Contributions and may be distributed in the Plan Year following the
Plan Year in which the Excess ACP Contributions arose to those Highly
Compensated Employees whose Accounts were credited with the largest
amounts of Employer Matching Contributions during the preceding Plan
Year. The amount of Excess ACP Contributions to be distributed to a
Highly Compensated Employee shall be determined using the procedure
described in Section 12.05(a).
(b) To the extent administratively possible, the Committee shall
distribute all Excess ACP Contributions and any income or loss
allocable thereto prior to 2 1/2 months following the end of the Plan
Year in which the Excess ACP Contributions arose. In any event,
however, the Excess ACP Contributions and any income or loss allocable
thereto shall be distributed prior to the end of the Plan Year
following the Plan Year in which the Excess ACP Contributions arose.
The distribution of the Excess ACP Contributions shall be adjusted for
income or loss during the Plan Year only, and not for the period
between the end of the Plan Year and the date of the distribution.
(c) The income or loss allocable to Excess ACP Contributions shall be
determined by multiplying the income or loss allocable to the
Participant's Account for the Plan Year in which the Excess ACP
Contribution arose by a fraction. The numerator of the fraction is the
Excess ACP Contributions. The denominator of the fraction is the value
of the Participant's Account on the last day of the Plan Year reduced
by any income allocated to the Participant's Account by such Plan Year
and increased by any loss allocated to the Participant's Account for
the Plan Year. However, any income allocable to an Excess ACP
Contribution resulting from the distribution of a Salary Savings
Contribution or Elective Profit Sharing Contribution that was
recharacterized as a Voluntary After-Tax Contribution (See Section
12.06) shall be determined as if such recharacterized Salary Savings
Contribution or Elective Profit Sharing Contribution were an Excess
ADP Deferral (See Section 12.05). Alternatively, the income or loss
allocable to Excess ACP Contributions may be calculated using any
reasonable method for computing such income or loss, provided the
method does not discriminate in favor of Highly Compensated Employees,
is used consistently for all participants and for all corrective
distributions under the Plan for the Plan Year, and is used by the
Plan for allocating income to Participants' Accounts.
(d) Amounts distributed to Highly Compensated Employees under this Section
12.09 shall be treated as annual additions with respect to the
Employee who received such amount.
(e) Unless specifically identified to the contrary, any distributions of
Excess ACP Contributions shall be made first from Voluntary After-Tax
Contributions and second from Employer Matching Contributions.
(f) No unvested Employer Matching Contributions shall be distributed
pursuant to this Section 12.09. Such amounts may, however, be
forfeited pursuant to Section 12.10.
12.10 Forfeiture of Excess ACP Contributions.
(a) A nonvested Employer Matching Contribution and any income or loss
allocable to such nonvested Employer Matching Contribution for the
Plan Year may be forfeited and used to reduce an Excess ACP
Contribution. Such forfeited Employer Matching Contribution shall be
allocated as a forfeiture in accordance with Section 5.06.
(b) The amount of any Employer Matching Contribution to be forfeited by a
particular Highly Compensated Employee shall be determined pursuant to
the procedure described in Section 12.05(a).
(c) The income or loss allocable to Excess ACP Contributions shall be
determined pursuant to the formula described in Section 12.09(c).
(d) Amounts forfeited by Highly Compensated Employees under this Section
shall be treated as Annual Additions with respect to the Participant
who forfeited such amount and with respect to any Participant to whose
account the forfeiture was allocated.
(e) Vested Employer Matching Contributions may not be forfeited to correct
an Excess ACP Contribution.
12.11 Combined ACP and ADP Test.
(a) The Plan must satisfy the Combined ACP and ADP Test described in this
Section 12.11 only if (1) the Average Actual Deferral Percentage of
the Highly Compensated Employees exceeds 125% of the preceding Plan
Year's Average Actual Deferral Percentage for Non-Highly Compensated
Employees and (2) the Average Actual Contribution Percentage of the
Highly Compensated Employees exceeds 125% of the preceding Plan Year's
Average Actual Contribution Percentage for Non-Highly Compensated
Employees.
(b) The Combined ACP and ADP Test is satisfied if the sum of the Highly
Compensated Employees' Average Actual Deferral Percentage and Average
Actual Contribution Percentage is equal to or less than the Maximum
Combined Percentage defined in paragraph (c) below.
(c) The Maximum Combined Percentage shall be determined by adjusting the
preceding Plan Year's Non-Highly Compensated Employees' Average Actual
Deferral Percentage and Average Actual Contribution Percentage in the
following manner:
(1) The greater of the two percentages shall be multiplied by 1.25;
and
(2) The lesser of the two percentages shall be increased by two
percentage points; however, in no event shall such adjusted
percentage exceed twice the original percentage.
The sum of (1) and (2) shall be the Maximum Combined Percentage.
Notwithstanding the foregoing, the Maximum Combined Percentage shall
be determined in the following manner if such calculation results in a
higher Maximum Combined Percentage than the formula specified above:
(1) The lesser of the preceding Plan Year's Average Actual Deferral
Percentage and Average Actual Contribution Percentage of the
Non-Highly Compensated Employees shall be multiplied by 1.25; and
(2) The greater of such two percentages shall be increased by two
percentage points; however, in no event shall such percentage
exceed twice the original percentage.
(d) In the event the Plan does not satisfy the Combined ADP and ACP Test,
the Highly Compensated Employees' Average Actual Contribution
Percentage shall be decreased using any of the methods described in
Section 12.07(b) until the sum of such percentage and the Highly
Compensated Employees' Average Actual Deferral Percentage equals the
Maximum Combined Percentage.
(e) If Employer Matching Contributions or Voluntary After-Tax
Contributions are distributed or forfeited (if applicable) to satisfy
the Combined ADP and ACP Test, income or loss allocable to such
contributions shall also be distributed. The income or loss shall be
determined using the same procedures as Section 12.05(c). Only income
or loss allocable to the Plan Year, and not to the period between the
end of the Plan Year and the date of distribution, shall be
distributed.
(f) To the extent administratively possible, the Committee shall make the
necessary corrections prior to 2 1/2 months following the end of the
Plan Year for which the Combined ADP and ACP Test is computed. In any
event, however, all corrections must occur by the end of the Plan Year
following the Plan Year for which the Combined ADP and ACP Test is
computed. Employer Matching Contributions that are distributed or
forfeited pursuant to this Section 12.10 shall be treated as annual
additions under the Plan.
12.12 Order of Applying Certain Sections of Article.
In applying the provisions of this Article 12, the determination and
distribution of Excess Deferrals shall be made first, the
determination and elimination of Excess ACP Deferrals shall be made
second, the determination and elimination of Excess ADP Contributions
shall be made third and finally the determination and any necessary
adjustment related to the Combined ADP and ACP Test shall be made.
However, if the Committee determines to recharacterize Salary Savings
Contributions or Elective Profit sharing Contributions as Voluntary
After-Tax Contributions (see Section 12.06), then the determination
and elimination of Excess ADP Deferrals shall be made before the
determination and elimination of Excess ACP Contributions.
ARTICLE 13
HIGHLY COMPENSATED EMPLOYEES
13.01 In General.
For the purposes of this Plan, the term "Highly Compensated Employee"
is any active Employee described in Section 13.02 below and any Former
Employee described in Section 13.03 below. Various definitions used in
this Article are contained in Section 13.04. A Non-Highly Compensated
Employee is an Employee who is not a Highly Compensated Employee.
13.02 Highly Compensated Employees.
An Employee is a Highly Compensated Employee if the Employee:
(1) is a 5 Percent Owner at any time during the Determination
Year or the year preceding the Determination Year; or
(2) during the preceding Determination Year, receives
Compensation in excess of $80,000 and, if the Employee
elects, is among the Top Paid Group.
The dollar amount described above shall be increased as provided
in Code Section 414(q)(1).
13.03 Former Highly Compensated Employee.
A Former Employee is a Highly Compensated Employee if (applying the
rules of Section 13.02) the Former Employee was a Highly Compensated
Employee during a Separation Year or during any Determination Year
ending on or after the Former Employee's 55th birthday.
13.04 Definitions. The following special definitions shall apply to this
Article 13:
Determination Year shall mean the Plan Year for which the ACP and the
ADP are computed.
Employer for purposes of this Article 13 shall mean the Company and
its Affiliates.
5 Percent Owner shall mean any Employee who owns or is deemed to own
(within the meaning of Code Section 318), more than five percent of
the value of the outstanding stock of the Employer or stock possessing
more than five percent of the total combined voting power of the
Employer.
Former Employee shall mean an Employee (i) who has incurred a
Termination of Employment or (ii) who remains employed by the Employer
but who has not performed services for the Employer during the
Determination Year (e.g., an Employee on Authorized Leave of Absence).
Separation Year shall mean any of the following years:
(1) An Employee who incurs a Termination of Employment shall have a
Separation Year in the Determination Year in which such
Termination of Employment occurs;
(2) An Employee who remains employed by the Employer but who
temporarily ceases to perform services for the Employer (e.g., an
Employee on Authorized Leave of Absence) shall have a Separation
Year in the calendar year in which he last performs services for
the Employer;
(3) An Employee who remains employed by the Employer but whose
Compensation for a calendar year is less than 50% of the
Employee's average annual Compensation for the immediately
preceding three calendar years (or the Employee's total years of
employment, if less) shall have a Separation Year in such
calendar year. However, such Separation Year shall be ignored if
the Employee remains employed by the Employer and the Employee's
Compensation returns to a level comparable to the Employee's
Compensation immediately prior to such Separation Year.
Top Paid Group shall mean the top 20% of all Employees ranked on the
basis of Compensation received from the Employer during the applicable
year. The number of Employees in the Top Paid Group shall be
determined by ignoring Employees who are non-resident aliens and
Employees who do not perform services for the Employer during the
applicable year. The Employer elects to compute the Top Paid Group
without the age and service exclusion provided in applicable Treasury
Regulations. The Employer elects to apply the Top Paid Group election.
Any change in this election (i.e., a determination not to limit Highly
Compensated Employees to those in the Top Paid Group) shall be made by
an amendment to this Plan.
13.05 Other Methods Permissible.
To the extent permitted by the Code, judicial decisions, Treasury
Regulations and IRS pronouncements, the Committee may (without further
amendment to this Plan) take such other steps and actions or adopt
such other methods or procedures (in addition to those methods and
procedures described in this Article 13) to determine and identify
Highly Compensated Employees (including adopting alternative
definitions of Compensation which satisfy Code Section 414(q)(7) and
are uniformly applied).
ARTICLE 14
MAXIMUM BENEFITS
14.01 General Rule.
(a) Notwithstanding any other provision of this Plan, for any Plan
Year, the Annual Additions to a Participant's Account, when
combined with the Annual Additions to the Participant's Account
under all other Qualified individual account plans maintained by
the Employer or its Affiliates shall not exceed the lesser of (i)
$30,000 or (ii) twenty-five percent (25%) of the Participant's
Compensation for such Plan Year (the "maximum permissible
amount").
(b) The Employer hereby elects that the Limitation Year for purposes
of Code Section 415 shall be the Plan Year.
(c) For purposes of determining the limit on Annual Additions under
paragraph (a) of this Section, the dollar limit described
therein, to wit, $30,000, shall be increased for each Plan Year
to the extent permitted by law.
(d) If the amount to be allocated to a Participant's Account exceeds
the maximum permissible amount (and for this purpose Employer
Contributions shall be deemed to be allocated after Employee
Contributions), the excess will be disposed of as follows. First,
if the Participant's Annual Additions exceed the maximum
permissible amount as a result of (i) a reasonable error in
estimating the Participant's Compensation, (ii) a reasonable
error in estimating the amount of Employee Contributions that the
Participant could make under Codess.415, (iii) the allocation of
forfeitures or (iv) other facts and circumstances that the
Internal Revenue Service finds justifiable, the Committee may
direct the Trustee to return to the Participant his Employee
Contributions (and any income allocable to such Employee
Contributions) for such Plan Year to the extent necessary to
reduce the excess amount. Such returned Employee Contributions
shall be ignored in performing the discrimination tests of
Article 12. Second, any excess Annual Additions still remaining
after the return of Employee Contributions shall be reallocated
as determined by the Committee among the Participants whose
accounts have not exceeded the limit in the same proportion that
the Compensation of each such Participant bears to the
Compensation of all such Participants. If such reallocation would
result in an addition to another Participant's Account which
exceeds the permitted limit, that excess shall likewise be
reallocated among the Participants whose Accounts do not exceed
the limit. However, if the allocation or reallocation of the
excess amounts pursuant to these provisions causes the
limitations of Section 415 of the Code to be exceeded with
respect to each Participant for the limitation year, then any
such excess shall be held unallocated in a 415 Suspense Account.
If the 415 Suspense Account is in existence at any time during a
limitation year, other than the Limitation Year described in the
preceding sentence, all amounts in the 415 Suspense Account shall
be allocated and reallocated to Participants' Accounts (subject
to the limitations of Code Section 415) before any Contributions
which would constitute Annual Additions may be made to the Plan
for that Limitation Year.
(e) If the Participant is covered under another qualified defined
contribution plan maintained by an Employer during any Limitation
Year, the Annual Additions which may be credited to a
Participant's account under this Plan for any such Limitation
Year shall not exceed the maximum permissible amount reduced by
the Annual Additions credited to a Participant's account under
all such plans for the same Limitation Year. If a Participant's
Annual Additions under this Plan and such other plans would
result in an excess amount for a Limitation Year, the excess
amount will be deemed to consist of the Annual Additions last
allocated (and for this purpose, Employer Contributions shall be
deemed to be allocated after Employee Contributions). If an
excess amount is allocated to a Participant on an allocation date
of this Plan which coincides with an allocation date of another
plan, the excess amount attributed to this Plan will be the
product of
(i) the total excess amount as of such date, times
(ii) the ratio of (A) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this Plan to (B) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this and all the other qualified defined contribution plans
maintained by the Employer.
Any excess amount attributed to this Plan will be disposed of in the
manner described in this Section 14.01 above.
14.02 Combined Plan Limitation.
If the Company or its Affiliates maintains, or at any time maintained,
a qualified defined benefit plan covering any Participant in this
Plan, the sum of the Participant's defined benefit plan fraction and
defined contribution plan fraction shall not exceed 1.0 in any
Limitation Year and the annual benefit otherwise payable to the
Participant under such defined benefit plan shall be frozen or reduced
to the extent necessary so that the sum of such fractions shall not
exceed 1.0. This Section 14.02 shall not apply for any Plan Year which
begins after December 31, 1999.
14.03 Definitions.
For the purposes of this Article 14, the following definitions shall
apply:
"Annual Addition" shall mean the sum of:
(1) Employee Contributions;
(2) Employer Contributions;
(3) Forfeitures; and
(4) Amounts described in Code Sections 415(l)(1) and 419A(d)(2).
Annual Additions shall not include any amounts credited to the
Participant's Account resulting from Rollover Contributions.
"Affiliates" shall have that meaning contained in Article 2 except
that for purposes of determining who is an Affiliate the phrase "more
than 50 percent" shall be substituted for the phrase "at least 80
percent" each place it appears in Code Section 1563(a)(1).
"Defined Benefit Fraction" means a fraction, the numerator of which is
the sum of the Participant's projected annual benefits under all the
defined benefit plans (whether or not terminated) maintained by the
Company or its Affiliates, and the denominator of which is the lesser
of (i) 125 percent of the dollar limitation in effect for the
Limitation Year under Section 415(b)(1)(A) of the Code or (ii) 140
percent of the Highest Average Compensation. Notwithstanding the
foregoing, if the Participant was a Participant as of the first day of
the first Limitation Year beginning after December 31, 1986, in one or
more defined benefit plans maintained by the Employer or its
Affiliates which were in existence on May 6, 1986, the denominator of
this fraction will not be less than 125 percent of the sum of the
annual benefits under such plans which the Participant had accrued as
of the end of the last Limitation Year beginning before January 1,
1987, but determined without regard to any changes in the terms and
conditions of the Plan occurring after May 5, 1986. The preceding
sentence applies only if the defined benefit plans individually and in
the aggregate satisfied the requirements of Section 415 for all
Limitation Years beginning before January 1, 1987.
"Defined Contribution Fraction" means a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's account
under all the defined contribution plans (whether or not terminated)
maintained by the Company or its Affiliates for the current and all
prior Limitation Years, and the denominator of which is the sum of the
"Maximum Aggregate Amounts" for the current and all prior Limitation
Years of service with the Company or its Affiliates (regardless of
whether a defined contribution plan was maintained by the Employer or
its Affiliates). The "Maximum Aggregate Amount" in any Limitation Year
is the lesser of (i) 125 percent of the dollar limitation in effect
under Section 415(c)(1)(A) of the Code; or (ii) 35 percent of the
Participant's compensation for such year. If the Employee was a
Participant as of the first day of the first Limitation Year beginning
after December 31, 1986, in one or more defined contribution plans
maintained by the Company or its Affiliates which were in existence on
May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment, an
amount equal to the product of (i) the excess of the sum of the
fractions over 1.0 times and (ii) the denominator of this fraction,
will be permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would be
computed as of the end of the Limitation Year beginning before January
1, 1987, and disregarding any changes in the terms and conditions of
the plans made after May 5, 1986, but using the Section 415 limitation
applicable to the first Limitation Year beginning on or after January
1, 1987. The annual addition for any Limitation Year beginning before
January 1, 1987 shall not be recomputed to treat employee
contributions as Annual Additions.
Highest Average Compensation" means the average compensation for the
three consecutive years of service with the employer that produces the
highest average.
"Projected Annual Benefit" means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant would
be entitled under the terms of the plan assuming (i) the Participant
will continue employment until Normal Retirement Age under the Plan
(or current age, if later), and (ii) the Participant's compensation
for the current Limitation Year and all other relevant factors used to
determine benefits under the plan will remain constant for all future
Limitation Years.
ARTICLE 15
TOP HEAVY RULES
15.01 General.
The provisions of this Article of the Plan shall become effective in
any Plan Year in which the Plan is determined to be Top Heavy and
shall supersede any conflicting provision of this Plan.
15.02 Definitions.
(a) Top Heavy. The Plan shall be Top Heavy for the Plan Year if, as
of the Valuation Date which coincides with or immediately
precedes the Determination Date, the value of the Participant
Accounts of Key Employees exceeds 60% of the value of all
Participant Accounts. If the Employer maintains more than one
plan, all plans in which any Key Employee participates and all
plans which enable this Plan to satisfy the anti-discrimination
requirements of Code Sections 401(a)(4) or 410 must be combined
with this Plan ("Required Aggregation Group") for the purposes of
applying the 60% test described in the preceding sentence. Plans
maintained by the Employer which are not in the required
aggregation group may be combined at the Employer's election with
this Plan for the purposes of determining Top Heavy status if the
combined plan satisfies the requirements of Code Section
401(a)(4) and 410 ("Permissive Aggregation Group"). In
determining the value of Participant Accounts, all distributions
made during the five-year period ending on the Determination Date
shall be included and any unallocated Employer Contributions or
forfeitures attributable to the Plan Year in which the
Determination Date falls shall also be included. The Account of
(i) any Employee who at one time was a Key Employee but who is
not a Key Employee for any of the five Plan Years ending on the
Determination Date; and (ii) any Employee who has not performed
services for the Employer or a related employer maintaining a
plan in the aggregation group for the five Plan Years ending on
the Determination Date, shall be disregarded in determining Top
Heavy status.
If the Employer maintains a defined benefit plan during the Plan
Year which is subject to aggregation with this Plan, the 60% test
shall be applied after calculating the present value of the
Participants' accrued benefits under the defined benefit plan in
accordance with the rules set forth in that plan and combining
the present value of such accrued benefits with the Participant's
account balances under this Plan.
Solely for the purpose of determining if the Plan, or any other
plan included in the Required Aggregation Group, is Top-Heavy, a
Non-Key Employee's accrued benefit in a defined benefit plan
shall be determined under (i) the method, if any, that uniformly
applies for accrual purposes under all plans maintained by the
Affiliates, or (ii) if there is no such method, as if such
benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional accrual rate of Code Section
411(b)(1)(C).
(b) Key Employee. Any employee of the Employer who, during the Plan
Year or the four preceding Plan Years was an officer receiving
Compensation in excess of 50% of the limit described in Code
Section 415(b)(1)(A), one of the ten employees of the Employer
owning the largest interests in the Employer and receiving
Compensation equal to or greater than the dollar limit described
in Code Section 415(c)(1)(A), a greater than 5% owner of the
Employer, a greater than 1% owner of the Employer receiving
Compensation in excess of $150,000, or the Beneficiary of a Key
Employee. The Code Section 415(b)(1)(A) and 415(c)(1)(A) limits
referred to in the preceding sentence shall be the specified
dollar limit plus any increases reflecting cost of living
adjustments specified by the Secretary of the Treasury.
(c) Determination Date. The last day of the Plan Year immediately
preceding the Plan Year for which Top Heavy status is determined.
For the first Plan Year, the Determination Date shall be the last
day of the first Plan Year.
(d) Non-Key Employee. Any Participant who is not a Key Employee.
(e) Employer. The term "Employer" shall include any Affiliate of such
Employer.
15.03 Minimum Benefit.
(a) Except as provided below, the Employer Contributions allocated on
behalf of any Non-Key Employee who is employed by the Employer on
the last day of the Top Heavy Plan Year shall not be less than
the lesser of (i) 3% of such Non-Key Employee's Compensation or
(ii) the largest percentage of Employer Contributions, Salary
Savings Contributions and Elective Profit Sharing Contributions,
as a percentage of the Key Employee's Compensation, allocated on
behalf of any Key Employee for such Plan Year. Salary Savings
Contributions and Elective Profit Sharing Contributions allocated
to the Accounts of Non-Key Employees and Employer Matching
Contributions allocated to the Accounts of Non-Key Employees that
are used to satisfy the provisions of Article 12 shall not be
considered in determining whether a Non-Key Employee has received
the minimum contribution required by this Section 15.03.
(b) The minimum allocation is determined without regard to any Social
Security contribution and shall be made even though, under other
Plan provisions, the Non-Key Employee would have received a
lesser allocation or no allocation for the Plan Year because of
the Non-Key Employee's failure to complete 1,000 Hours of
Service, his failure to make mandatory employee contributions, or
his earning compensation less than a stated amount.
(c) If the Employer maintains a defined benefit plan in addition to
this Plan, the minimum contribution and benefit requirements for
both plans in a Top Heavy Plan Year may be satisfied by an
allocation of Employer Contributions to the Account of each
Non-Key Employee in the amount of 5% of the Non-Key Employee's
compensation.
15.04 Combined Plan Limitation For Top Heavy Years.
This Section shall apply only to Plan Years beginning before December
31, 1999. In any Plan Year during which more than 90% of the
Participant Account balances are attributable to Key Employees, 100%
or an equivalent factor shall be substituted for 125% or an equivalent
factor in the combined plan fraction denominators set forth in the
Section of this Plan which limits maximum benefits pursuant to Section
415 of the Code. In any Plan Year during which more than 60% but not
more than 90% of the Participant Account balances are attributable to
Key Employees, 100% or an equivalent factor shall be substituted for
125% or an equivalent factor in the combined plan fraction
denominators unless the Account of each Non-Key Employee participating
in the Plan receives an allocation which satisfies Section 15.03
above, except that for this purpose the figure "4%" shall be
substituted for "3%" where it appears in Section 15.03(a) and the
figure "7.5%" shall be substituted for "5%" where it appears in
Section 15.03(c).
ARTICLE 16
TRUST FUND AND TRUSTEE
16.01 General Nature of Trustee's Responsibilities.
(a) To the extent acceptable to it, the Trustee shall receive such
sums of money or other property as shall from time to time be
paid or delivered by the Employer to hold for management and
distribution under the terms of the Plan. All such money and
property so held, together with all investments made therewith
and proceeds thereof, and such earnings, profits, increments, and
accruals thereon as may occur from time to time, less any
payments which the Trustee, from time to time, may be authorized
to make therefrom, shall constitute the Trust Fund .
(b) The Fund shall be held by the Trustee in trust and shall be
administered, controlled and invested in accordance with the Plan
and Trust. In the management of the Fund and the discharge of its
duties hereunder, the Trustee shall act solely in the interests
of the Participants, Former Participants and their Spouses or
Beneficiaries. The Trustee shall discharge its duties in
accordance with this Plan and Trust with the care, skill,
prudence and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like
character and with like aims. The Trustee's obligations relate
solely to the Trust Fund and it shall have no responsibility
whatsoever for the control, management, administration or
revision of the Plan itself or for procuring contributions
required in the Plan.
(c) Anything contained in this Plan and Trust to the contrary
notwithstanding, it shall be impermissible at any time prior to
the satisfaction of all liabilities with respect to Participants,
Former Participants and their Spouses, except for payments of
benefits under the terms of the Plan, for any part of this Fund
to be used for or diverted to any purpose other than the
exclusive benefit of such Participants, former Participants and
their Spouses or Beneficiaries, except for payments of expenses
and charges properly payable out of the Fund as set forth herein.
16.02 Investment Powers.
(a) All investment determinations made by the Trustee shall be made
in conformity with the standard of fiduciary duty (especially the
prudent man rule) set forth in ERISA.
(b) The Trustee shall cause the investments of the Trust Fund to be
diversified to the extent necessary to minimize the risk of large
losses (unless such diversification would be imprudent).
(c) In no event shall the Trustee maintain the indicia of ownership
of any assets of the Fund outside the jurisdiction of the United
States District Courts.
(d) The Trustee shall exercise its investment discretion so as to
provide sufficient cash assets as the Committee may suggest will
be necessary from time to time to meet the liquidity requirements
for the administration of the Plan.
(e) The foregoing paragraphs of this Section 16.02 are limitations on
the investment powers of the Trustee and (except as expressly
provided) take precedence over the powers set forth in this
paragraph (e). Except as specifically limited above, the Trustee
is authorized and empowered to retain, invest and reinvest any
and all of the trust funds as it shall deem to be in the best
interests of the Participants and there shall be no other
additional restrictions--whether by law or otherwise--on the
investment powers of the Trustee. Consequently the Trustee may
invest the Fund in property (or a part interest therein) which is
real or personal, tangible or intangible, wherever located,
whether or not productive of income or consisting of wasting
assets, as the Trustee shall deem best for the Participants,
Former Participants and their Spouses and Beneficiaries.
Furthermore, the Trustee may, without regard to any law now or
hereafter in force limiting investments by fiduciaries, invest in
a range of investments which includes, inter alia, real estate
(whether income-producing or not) or securities issued by any
Employer which has adopted the Plan provided that such
investments are in conformity with ERISA Sections 406, 407 and
408; speculative common stocks; any common trust fund or mutual
fund held or administered by the Trustee, any of its
subsidiaries, or any other corporation; any real estate
investment trust in which the Trustee or any other corporation
may have any interest whatsoever; low risk bonds; mortgages on
real or personal property wherever situated; equipment trust
certificates; notes or other evidence of indebtedness; shares of
investment companies and mutual funds; interests in partnerships
and trusts; insurance policies and contracts; option contracts
such as those traded on an option exchange; and any other
property or joint or other part interest in property (including
without limitation, part interests in bonds and mortgages or
notes and mortgages), real or personal, of any kind, class or
character, which the Trustee may in its discretion deem suitable
for the Fund, and irrespective (except to the extent specifically
set forth above) of whether any Trustee, individually or as
Trustee, is acting as a participator of any part interest in
property that may be acquired.
(1) The Trustee is explicitly authorized to acquire and hold
"qualifying employer securities" and "qualifying employer
real property," as those terms are defined in ERISA, to the
maximum of such amounts and percentages allowed by ERISA.
(2) The Trustee is explicitly authorized to invest all or part
of the Fund in deposits which bear a reasonable rate of
interest in any bank, or trust company or other financial
institution, (including the Trustee).
(3) The Trustee is explicitly authorized to engage in a
transaction with a common or collective trust fund or pooled
investment fund maintained now or created and maintained at
a future time by any bank or trust company (including the
Trustee or its affiliates) supervised by a State or Federal
agency provided that such transaction is a sale or a
purchase of an interest in such common or collective trust
and further provided that such bank or trust company
receives not more than reasonable compensation. This general
power is meant to be broad enough to avoid specific
identification of all such funds in this document; and any
officer of the Employer, is authorized (A) to certify to
bank examiners and other parties which specific funds are
included in this general power and (B) to adopt any
Declarations or enter into any Agreements required so that
the Trustee may make investments in such funds.
16.03 Valuation.
The fair market value of the Fund shall be determined by the Trustee
as of each Valuation Date and on such other dates as the Trustee are
directed by the Employer.
16.04 Other Powers.
In the management, care and disposition of the Fund, the Trustee, and
its successors, may do all things and execute such instruments as may
be deemed necessary or proper in order to carry out the provisions of
the Plan, including the following powers (in addition to the
Investment powers set forth above), all of which may be exercised
without order of or report to any court and without giving bond:
(a) To sell, exchange, or otherwise dispose of any property at any
time held in the Fund at public or private sale, for cash or on
terms without advertisement; and no person dealing with the
Trustee shall be bound to see to the application of monies paid;
(b) To retain, manage, operate, repair and improve and to mortgage
and/or lease and/or grant options to sell (for any period
whatsoever) any real or personal property held by the Trustee;
(c) To compromise, compound, and settle any debt or obligation due to
or from it as Trustee hereunder and to reduce the rate of
interest on, to extend or otherwise modify, or to foreclose upon
default or otherwise enforce, and to abandon, if it shall deem it
advisable, any property, whether real or personal, which may at
any time be held by it, and in general to protect in every way
the interest of the Fund, either before or after default;
(d) To vote in person or by proxy on any stocks or other securities
held by it, unless by law or regulatory authority the right to
vote be proscribed as to it but vested in Participants of the
Fund, in which latter event the vote shall be only by the
Participants or as directed by them;
(e) To join in, or to dissent from or oppose, the reorganization,
capitalization, consolidation, sale or merger of corporations or
properties in which the Trustee may be interested as Trustee,
upon such terms and conditions as it may deem wise, and to accept
any securities which may be issued upon any such reorganization,
recapitalization, consolidation, sale or merger and thereafter to
hold the same;
(f) To register any stocks, bonds, or other securities except
interests in real property, held in the Fund in its own name as
Trustee or in the name of a nominee and to hold any investment in
bearer form, or to combine certificates representing such
investments with certificates of the same issue held by the
Trustee in other fiduciary capacities, or to deposit or to
arrange for the deposit of such securities in a qualified central
depository even though, when so deposited such securities may be
merged and held in bulk in the name of the nominee of such
depository with other securities deposited therein by any other
person, or to deposit or to arrange for the deposit of any
securities issued by the United States Government, or any agency
or instrumentality thereof, with a federal reserve bank, provided
that the books and records of the Trustee shall at all times show
that all such investments are part of the Fund;
(g) To borrow or raise monies for purposes deemed appropriate by the
Trustee, including the making of distributions under the Plan in
such amount and upon such terms and conditions as in its absolute
discretion the Trustee may deem advisable; and for any sums so
borrowed to issue its promissory note as Trustee and to secure
the repayment thereof by pledging all or any part of the Fund;
and no person lending money to the Trustee shall be bound to see
to the application of the money loaned or to inquire into the
validity, expediency or propriety of any such borrowing, it being
intended that the Trustee shall also have the power to borrow
from the Trustee's lending department, provided in such case the
interest charged on the loan does not exceed the prevailing
interest rates for a loan of the type made;
(h) To employ agents from time to time, at the expense of the Fund,
and to delegate to them such ministerial and limited duties as
the Trustee sees fit;
(i) To consult with counsel, who may be counsel to the undersigned
Employer, actuaries and other professional advisors, and to act
upon the legal advice of such counsel;
(j) To make, execute, and acknowledge and deliver any and all deeds,
leases, assignments and instruments and to do all acts which they
may deem necessary or proper to carry out the investment
provisions of the Plan;
(k) To make distributions wholly or partly in cash or in kind; and
(l) To reserve from investment and keep unproductive of income any
amounts or part of the Fund as it may from time to time deem
advisable.
16.05 Prohibited Transaction.
Anything in this Plan and Trust to the contrary notwithstanding (and
especially the powers granted to the Trustee herein), the Trustee
shall not be authorized to engage in any transaction which is
prohibited by Sections 406 and/or 2003(a) of ERISA or Section 4975 of
the Code unless the Trustee determines that such transaction is exempt
under the terms of ERISA and the Code therefrom.
16.06 Administration of the Plan; Payments of Benefits; Reliance on
Committee.
The Committee shall have the exclusive authority and responsibility
for communicating to the Trustee any and all decisions and directions
concerning the administration of the Plan and the payment of benefits
thereunder (including payees, amounts, addresses, dates of payments,
etc.). In the event the Trustee shall deem it necessary to withhold
any payments or distributions pending compliance with legal
requirements with respect to probate of Wills, appointment of personal
representative, payment of or provision for estate or inheritance
taxes, or for death duties or otherwise, the Trustee shall notify the
Committee and shall thereafter take no action pending compliance, or
pending receipt of the Committee's instructions to distribute. Orders
and directions from the Committee need not specify the purpose of the
payment so ordered, and the Trustee shall not be responsible in any
way respecting the purpose or propriety of such payments or for the
administration of the Plan and Trust. The Trustee shall not be
responsible in any respect for the adequacy of the Fund to meet or
discharge any payments or liabilities under the Plan; and payments
shall be limited to amounts available in the Fund. Any order or
direction from the Committee shall constitute a certification to the
Trustee that the action directed is one which is in conformity with
the provisions of the Plan and of ERISA. To the extent permitted by
law, the Trustee shall not be liable for any action taken (especially
any payment made from the Fund) at the direction of the Committee or
for any failure to act, if such action can under the terms of the Plan
and Trust be taken only after receipt from the Committee of specific
directions or for failure to act pending receipt of directions from
the Committee when direction is required or is requested in writing by
the Trustee.
16.07 Directing the Trustee.
(a) The Committee may from time to time direct the Trustee as to the
investment of all or part of the Trust Fund. The Committee may
also from time to time appoint an investment manager or managers,
or may give the Trustee sole responsibility to appoint an
investment manager for all, or any part, of the Trust Fund;
provided that no investment manager shall be appointed unless it
qualifies as an investment manager within the meaning of Section
3(38) of ERISA. Any such investment manager shall be a named
fiduciary of the Plan and shall qualify by accepting its
appointment as investment manager in writing. The Employer shall
advise the Trustee in writing regarding the retention of
investment powers to the Trustee. Any investment directive
hereunder shall be made in writing by the Employer or investment
manager, as the case may be. In the absence of such written
directive, the Trustee shall automatically invest the available
cash in its discretion in an appropriate interim investment until
specific investment directions are received. Such instructions
regarding the delegation of investment responsibility shall
remain in force until revoked or amended in writing. The Trustee
shall not be responsible for the propriety of any directed
investment made hereunder and shall not be required to consult
with or advise the Employer regarding the investment quality of
any directed investment held hereunder. If the Employer fails to
designate an investment manager, the Trustee shall have full
investment authority. If the Employer does not issue investment
directions, the Trustee shall have authority to invest the fund
in its sole discretion. While the Employer may direct the Trustee
with respect to Plan investments, the Employer may not:
(a) borrow from the Fund or pledge any of the assets of the Fund
as security for a loan;
(b) buy property or assets from or sell property or assets to
the Fund;
(c) charge any fee for services rendered to the Fund; or
(d) receive any services from the Fund on a preferential basis.
(b) Upon the appointment and qualification of an investment manager,
the investment manager shall have, subject to any guidelines
issued by the Committee, exclusive power and authority for the
investment and reinvestment of the portion of the Trust Fund
designated by the Committee and shall have the power to direct
the acquisition and disposition of any and all assets and
investment of the Trust Fund. The Trustee shall be relieved from
any liability for the making, retention, or sale of any
investment by or at the direction of an investment manager
appointed in the manner herein set forth or by or at the
direction of the Employer. If the Committee and the Trustee
consist of the same individuals, nothing herein shall be
construed to relieve the Committee of its obligation to review
the performance of the investment manager from time to time.
16.08 Records and Reports.
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements, and other transactions
hereunder. Within ninety (90) days following the close of each
fiscal year, the Trustee shall file a written report with the
Employer or the Committee setting forth all investments, receipts
and disbursements, and other transactions effected by the Trustee
during such fiscal year. Upon the expiration of ninety (90) days
from the date of filing such annual or other account, the Trustee
shall be forever released and discharged from any liability or
accountability to the Employer as respects the propriety of its
acts or transactions shown in such accounts (other than liability
for acts of fraud or willful misconduct), except with respect to
any such acts or transactions as to which the Employer shall
within such ninety (90) day period file with the Trustee a
written statement claiming a breach of the Trustee's fiduciary
duties or failure to fulfill the Trustee's obligations under the
Plan and Trust. The Trustee shall never be required to file any
inventory or appraisals, or any annual or other returns to any
court or to post bond.
(b) The Trustee shall be entitled to have a judicial settlement of
any account for which it is responsible. In any such proceeding
or for any judicial instructions required in connection with the
Fund, the only necessary parties thereto in addition to the
Trustee will be the Employer and the Committee. However, the
Trustee may bring in other persons as a party or party defendant.
16.09 Notification to Trustee.
(a) Any notice, direction, order, request, certification or
instruction of the Committee to the Trustee shall be in writing
signed by a member of the Committee or shall be presented at a
meeting with the Trustee. To the extent that the Trustee and the
Committee are the same individuals this requirement shall be
inapplicable. Any action by the Employer pursuant to any of the
provisions of the Plan or of this Article 16 shall be authorized
or evidenced by a resolution of the Board or by an officer of the
Employer authorized by resolution of the Board to take actions in
connection with this Plan and Trust. The Trustee and every other
person shall be entitled to rely conclusively upon any and all
such notices, directions, orders, requests, certifications and
instructions received from the Committee or from the Employer and
reasonably believed to be properly executed, and shall act and be
fully protected in acting in accordance therewith.
(b) The Trustee from time to time may request and be entitled to
certified copies of resolutions of the Employer, evidencing the
appointment and termination of office of any members of the
Committee and of successors to such members together with
specimens of their signatures, and the Trustee shall be entitled
to rely conclusively upon such resolutions and signatures as
evidence of the identity of the members of the Committee and
shall not be charged with notice of any change with respect
thereto until the Employer shall have furnished the Trustee with
certified copies of resolutions relative to such change.
16.10 Expenses.
All Plan expenses and expenses of making purchases and sales, other
expenses of managing the Fund (including the employment of agents and
advisors and the Trustee's compensation) and any taxes levied or
assessed against the Trustee in respect of the Fund shall constitute a
lien against the assets of the Fund and may be paid by the Trustee
(without approval of the Committee). No Trustee receiving compensation
from an Employer or Affiliate shall be paid compensation for services
as Trustee from the Fund. The Employer is authorized to reimburse the
Fund for all expenses and fees incurred in the administration of the
Plan or Trust and paid out of the assets of the Fund.
16.11 Trustee's Tenure and Succession.
(a) Any Trustee may be removed at any time upon sixty (60) days
notice in writing to the Trustee signed by an authorized officer
of the Employer.
(b) Any Trustee may resign at any time upon sixty (60) days notice in
writing to an authorized officer of the Employer. Within ninety
(90) days after such removal or resignation of a Trustee, the
removed or resigning Trustee shall file with the Employer or the
Committee a written account setting forth all investments,
receipts and disbursements, and other transactions in which such
Trustee has participated since the end of the latest fiscal year
in which such an accounting was filed with the Employer or
Committee and containing an exact description of all securities
purchased and sold, the cost or net proceeds of sale, and showing
the securities and investments held at the date of such removal
or resignation and the cost of each item thereof as carried on
the books of the Trustee. Except with respect to any such acts or
transactions as to which the Employer or Committee shall within
such ninety (90) day period file with the Trustee a written
statement claiming a breach of fiduciary duty or failure to
observe the terms of this Article 16, upon the expiration of
ninety (90) days from the date of filing such report, the Trustee
participating in such accounting shall be forever released and
discharged from any liability or accountability to the Employer
as respects the propriety of the Trustee's acts or transactions
shown in such report (other than liability for acts of fraud or
willful misconduct) and the Employer shall thereafter reimburse,
indemnify, and hold harmless the Trustee of and from any and all
costs, claims, losses, demands, or liabilities in respect of its
acts, transactions, duties, obligations or responsibilities as
Trustee during the period covered by such account except those
arising from the Trustee's breach of its fiduciary responsibility
under ERISA.
(c) Any party entitled to written notice or accounting may waive the
written notice and accounting required under this Section and
shall be deemed to waive the notice requirements by failing to
notify the party required to give notice of the intent to enforce
the requirements within the required notice period.
16.12 Successor Trustee.
Upon the removal or resignation of a Trustee acting under this Plan
and Trust, the Company shall appoint a successor Trustee. The Trustee
who has resigned or has been removed shall do anything required so
that the successor Trustee shall be able to carry out the rights,
duties and obligations of the Trustee set forth herein. The Trustee
shall deliver the Fund to its successor on the effective date of the
resignation or removal. A successor Trustee shall not be responsible
for any act or omission of a predecessor Trustee, and shall not be
required to make any claim or demand against a predecessor Trustee
unless the Committee shall in writing request the successor Trustee to
participate in a claim against a predecessor Trustee. A successor
Trustee shall have and may exercise all the rights, powers and duties
given to an original Trustee named herein, as such rights, powers and
duties may be amended from time to time. Such rights, powers and
duties attach to the office of Trustee and are not personal to any
specific Trustee which may be serving as Trustee under this Plan and
Trust at any given time.
If the Company fails to appoint a successor trustee, custodian, or
other funding agent within the said 60 days, or such longer period as
the Trustee may specify in writing, the Company shall be deemed the
successor trustee.
16.13 Bond and Security.
The Trustee shall not be required to give any bond or any other
security for the faithful performance of the Trustee's duties under
this Plan and Trust, except such as may be required by any law which
prohibits the waiver thereof.
16.14 Commingling.
If the Committee consents or directs, the trust assets of the Employer
which are held by the Trustee may be commingled with the trust assets
of any Affiliated Sponsor which adopts this Plan and Trust. No
individual Employer shall at any time own any specific assets in such
commingled Fund, its interest being an undivided interest of its pro
rata portion of the entire Fund.
16.15 Voting of Shares.
Notwithstanding any other provision of this Plan to the contrary, the
Trustee shall have no discretion or authority to vote Employer
Securities held in the Trust by the Trustee on any matter presented
for a vote by the shareholders of the Company, except in accordance
with timely directions received by the Trustee from Participants who
have Employer Securities allocated to their Accounts under the Plan,
or in the case of unallocated or nonvoted shares, as set forth below.
(a) "Employer Securities," for purposes of this Section 16.15, means
shares of common stock of Seacoast Banking Corporation of
Florida, or any corporate successor thereto, which are held in
the Seacoast Stock Fund described in Section 6.03(d)(iv). For
purposes of this Section 16.15, "Participant" shall include a
Beneficiary, in the case of a deceased Participant, or an
alternate payee under a qualified domestic relations order as
defined in Code Section 414(p).
(b) Each Participant, as a named fiduciary within the meaning of
Section 403(a)(1) of ERISA, shall be entitled to vote, at any
meeting of shareholders of the Company, all of the full and
fractional shares of Employer Securities allocated to a
Participant's Account in the Plan, as shown on the records of the
Plan as of the most recent valuation date for which information
is available prior to the record date for determining
shareholders entitled to vote at such meeting. The Company or the
Committee shall promptly deliver or cause to be delivered a copy
of all proxy solicitation materials to each Participant who is
entitled to vote one or more shares of Employer Securities before
each annual or special meeting of shareholders of the Company,
together with a form requesting confidential instructions on how
the shares which such Participant is entitled to vote are to be
voted at such meeting.
(c) The Trustee shall vote, or not vote, in its sole discretion, all
shares of Employer Securities which are (i) allocated to
Participants but for which timely voting instructions (within the
meaning of Section 16.15(d)) were not received, and (ii) held in
the Plan but which are not allocated to a Participant Account.
(d) For purposes of this Section, the Trustee shall follow the
directions of those Participants who provide voting instructions
to the Trustee at least three (3) business days before the
shareholders' meeting. Voting instructions from the individual
Participants (including information as to the Participant's act
of voting or failure to vote) shall be held by the Trustee in
strictest confidence and neither the name of, nor the voting
instructions given by, any individual Participant who chooses to
give voting instructions shall be divulged by the Trustee to the
Company or any Affiliate, or to any director, officer or employee
thereof, or to the Committee; provided, however, that to the
extent necessary for the operation of the Plan, such instructions
may be relayed by the Trustee to an independent recordkeeper,
auditor or other person providing services to the Plan if such
person agrees not to divulge such directions to any other person,
including employees, officers and directors of the Company or its
Affiliates.
ARTICLE 17
MISCELLANEOUS
17.01 Headings.
The headings and sub-headings in this Plan have been inserted for
convenience of reference only and are to be ignored in any
construction of the provisions hereof.
17.02 Action by Employer.
Any action by an Employer under this Plan shall be by resolution of
its Board of Directors, or by any person or persons duly authorized by
resolution of said Board to take such action.
17.03 Spendthrift Clause.
Except as otherwise required by a "qualified domestic relations order"
as defined in Code Section 414(p), none of the benefits, payments,
proceeds or distributions under this Plan shall be subject to the
claim of any creditor of any Participant or Beneficiary, or to any
legal process by any creditor of such Participant or Beneficiary, and
none of them shall have any right to alienate, commute, anticipate or
assign any of the benefits, payments, proceeds or distributions under
this Plan except for the extent expressly provided herein to the
contrary.
17.04 Distributions Upon Special Occurrences.
(a) Subject to Section 12.03, Salary Savings Contributions, Elective
Profit Sharing Contributions and any income attributable thereto,
shall be distributed to Participants or their Beneficiaries after
the termination of the Plan, provided that neither the Company
nor its Affiliates maintain a successor plan.
(b) Salary Savings Contributions, Elective Profit Sharing
Contributions and any income attributable thereto shall be
distributed to Participants after the sale, to an entity that is
not an Affiliate, of substantially all of the assets used by the
Company in the trade or business in which the Participant is
employed.
(c) After the sale of an incorporated Affiliate's interest in a
subsidiary to an entity that is not an Affiliate, Salary Savings
Contributions, Elective Profit Sharing Contributions and any
income attributable thereto of a Participant who continues to
work for such subsidiary shall be distributed.
(d) The provisions of this Section 17.04 including the definitions of
terms such as "successor plan" and "substantially all of the
assets" shall be governed by Treasury Regulation Section
1.401(k)-1(d).
17.05 Discrimination.
The Employer, the Committee, the Trustee and all other persons
involved in the administration and operation of the Plan shall
administer and operate the Plan and Trust in a uniform and consistent
manner with respect to all Participants similarly situated and shall
not permit discrimination in favor of Highly Compensated Employees.
17.06 Release.
Any payment to a Participant or Beneficiary, or to their legal
representatives, in accordance with the provisions of this Plan, shall
to the extent thereof be in full satisfaction of all claims hereunder
against the Trustee, Committee, Committee and the Employer, any of
whom may require such Participant, Beneficiary, or legal
representative, as a condition precedent to such payment, to execute a
receipt and release therefor in such form as shall be determined by
the Trustee, the Committee, or the Employer, as the case may be.
17.07 Compliance with Applicable Laws.
The Company, through the Committee, shall interpret and administer the
Plan in such manner that the Plan and Trust shall remain in compliance
with the Code, with ERISA, and all other applicable laws, regulations,
and rulings.
17.08 Merger.
In the event of any merger or consolidation of the Plan with any other
Plan, or the transfer of assets or liabilities by the Plan to another
Plan, each Participant must receive (assuming that the Plan would
terminate) the benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit such
Participant would have been entitled to receive immediately before the
merger, consolidation, or transfer (assuming that the Plan had then
terminated), provided such merger, consolidation, or transfer took
place after the date of enactment of ERISA.
17.09 Governing Law.
The Plan and Trust shall be governed by the laws of the State of
Florida to the extent that such laws are not preempted by Federal law.
17.10 Legally Incompetent.
If any Participant, former Employee or Beneficiary is a minor or, in
the judgment of the Committee is otherwise legally incapable of
personally receiving and giving a valid receipt for any payment due
him hereunder, the Committee may, unless and until a claim shall have
been made by a duly appointed guardian or committee of such person,
direct that such payment or any part thereof be made to such person's
Spouse, child, parent, brother, sister, or such other person deemed by
the Committee to have incurred expense for or assumed responsibility
for the expense of such person. Such payment shall fully discharge the
Trustee, Employer, Committee and Committee from further liability on
account thereof.
17.11 Location of Participant or Beneficiary Unknown.
In the event that all or any portion of the distribution payable to a
Participant or his Beneficiary shall remain unpaid solely by reason of
the Committee's inability to ascertain the whereabouts of such
Participant or Beneficiary, the amount unpaid shall be forfeited.
However, such forfeiture shall not occur until five (5) years after
the amount first became payable. The Committee shall make a diligent
effort to locate the Participant or Beneficiary including the mailing
of a registered letter, return receipt requested, to the last known
address of such Participant or Beneficiary. In the event a Participant
or Beneficiary is located subsequent to his benefit being forfeited,
such benefit shall be restored and distributed.
17.12 Protected Benefits.
Early retirement benefits, retirement-type subsidies, or optional
forms of benefits protected under Code Section 411(d)(6) ("Protected
Benefits") shall not be reduced or eliminated with respect to benefits
accrued under such Protected Benefits unless such reduction or
elimination is permitted under the Code authority issued by the
Internal Revenue Service, or judicial authority.
17.13 Adoption of Plan by Affiliated Sponsor.
(a) The Committee shall determine which employers shall become
Affiliated Sponsors within the terms of the Plan. In order for
the Committee to designate an Employer as an Affiliated Sponsor,
the Committee must designate in writing that the business
enterprise is an Affiliated Sponsor. The Committee may also
specify such terms and conditions pertaining to the adoption of
the Plan by the Affiliated Sponsor as the Committee deems
appropriate. An Affiliated Sponsor is entitled to adopt the Plan
with respect to certain of its Employees, while not adopting the
Plan with respect to the remainder of its Employees.
(b) The Plan of the Affiliated Sponsor and of the Company shall be
considered a single plan for purposes of Treasury
Regulationsss.1.414(1)-1(b)(1). All assets contributed to the
Plan by the Affiliated Sponsor shall be held in a single fund
together with the assets contributed by the Company (and with the
assets of any other Affiliated Sponsors); and so long as the
Affiliated Sponsor continues to be designated as such, all assets
held in such fund shall be available to pay benefits to all
Participants and Beneficiaries covered by the Plan irrespective
of whether such Employees are employed by the Company or by the
Affiliated Sponsor. Nothing contained herein shall be construed
to prohibit the separate accounting of assets contributed by the
Company and the Affiliated Sponsors for purposes of cost
allocation if directed by the Committee or the holding of Plan
assets in more than one Trust Fund with more than one Trustee.
(c) So long as the Affiliated Sponsor's designation as such remains
in effect, the Affiliated Sponsor shall be bound by, and subject
to all provisions of the Plan and the Trust Agreement. The
exclusive authority to amend the Plan and the Trust Agreement
shall be vested in the Committee and no Affiliated Sponsor shall
have any right to amend the Plan or the Trust Agreement. Any
amendment to the Plan or the Trust Agreement adopted by the
Committee shall be binding upon every Affiliated Sponsor without
further action by such Affiliated Sponsor.
(d) Each Affiliated Sponsor shall be solely responsible for making an
Employer Contribution with respect to its Employees and solely
responsible for making any contribution required by Article 15.
Furthermore, if an Affiliated Sponsor determines to make a
Qualified Nonelective Contribution on behalf of its Employees,
such Affiliated Sponsor shall be solely responsible for making
such contribution. Neither the Company nor any other Affiliated
Sponsor is obligated to make an Employer Contribution or Employee
Contribution on behalf of the Employees of a different Affiliated
Sponsor.
(e) The Company and each Affiliated Sponsor which is an Affiliate
will be tested on a combined basis to determine whether the
Company and such Affiliated Sponsors satisfy the Average Actual
Deferral Percentage Test described in Section 12.03 and the
Average Actual Contribution Percentage test described in Section
12.07. An Affiliated Sponsor which is not an Affiliate shall be
tested separately from the Company and those Affiliated Sponsors
that are Affiliates for purposes of the ADP test and ACP test
described in Article 12.
(f) No Affiliated Sponsor other than the Company shall have the right
to terminate the Plan. However, any Affiliated Sponsor may
withdraw from the Plan by action of its board of directors
provided such action is communicated in writing to the Committee.
The withdrawal of an Affiliated Sponsor shall be effective as of
the last day of the Plan Year following receipt of the notice of
withdrawal (unless the Committee consents to a different
effective date). In addition, the Committee may terminate the
designation of an Affiliated Sponsor to be effective on such date
as the Committee specifies. Any such Affiliated Sponsor which
ceases to be an Affiliated Sponsor shall be liable for all cost
accrued through the effective date of its withdrawal or
termination and any contributions owing as a result of Employee
Contributions by its Employees or any other contribution as
provided in paragraphs (d) and (e). In the event of the
withdrawal or termination of an Affiliated Sponsor as provided in
this paragraph, such Affiliated Sponsor shall have no right to
direct that assets of the Plan be transferred to a successor plan
for its Employees unless such a transfer is approved by the
Committee in its sole discretion.
17.14 Qualified Military Service.
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits, and service credit with respect to qualified
military service will be provided in accordance with Section 414(u) of
the Internal Revenue Code.
IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed
and adopted on behalf of the Company effective as of January 1, 1997.
COMPANY:
SEACOAST BANKING CORPORATION OF FLORIDA
By: /s/ Dennis S. Hudson, III
---------------------------------------
Title: President & Chief Executive Officer
Attest: Date: 6/3/99
---------------------------------------
/s/ Sharon Mehl
APPENDIX A
SPECIAL RULES APPLICABLE
TO ANNUITY DISTRIBUTIONS
(a) Automatic Form of Payment
If a Participant does not have a Spouse on his Annuity Starting Date,
the Participant's vested Account shall be distributed in the form
selected by the Beneficiary unless the Participant elects otherwise
under Paragraph(b). If a Participant has a Spouse on his Annuity
Starting Date, the Participant's vested Account shall be distributed
in the form of a Joint and Survivor Annuity unless the Participant
(with spousal consent) otherwise elects under Paragraph (b).
(b) Participant Election of an Optional Form of Payment
(i) Within 90 days and not later than seven (7) days prior to the
Participant's Annuity Starting Date, the Committee shall provide
an election form on which the Participant may elect an optional
form of benefit. In addition to the election form, the Committee
shall provide each Participant a written explanation of the
applicable automatic form of payment described in Paragraph (a)
and of the optional forms of payment described in Section 8.02.
Such explanation shall describe the circumstances under which the
Joint and Survivor Annuity will be provided and explanation of
the financial effect of electing not to have such form.
Furthermore, the written explanation shall provide a general
description of the eligibility conditions (if any) and other
material features of the optional forms of payment including
sufficient information regarding the relative values of the
optional forms of payment and the automatic form of payment. If
payment is scheduled to commence prior to the Participant's
Normal Retirement Age, the written explanation must also inform
the Participant of is rights (if any) to defer receipt of the
distribution until his Normal Retirement Age. If a Participant
makes a request for additional information that is received 90
days prior to the Annuity Starting Date, such information must be
furnished within 30 days. The Participant will then be entitled
to a 90 day period in which to make or change an election, even
if such 90-day period extends beyond the Participant's Annuity
Starting Date and, in such case, the Participant's first payment
shall be made after such election form has been received, on a
retroactive basis, if necessary.
The written explanation described above may be provided after the
Participant's Annuity Starting Date. The 90-day applicable
election period to waive the qualified joint and survivor annuity
described in Section 417(a)(6)(A) of the Code, shall not end
before the 30th day after the date on which such explanation is
provided. The Secretary may by regulations limit the period of
time by which the Annuity Starting Date precedes the provisions
of the written explanation other than by providing that the
Annuity Starting Date may not be earlier than the Participant's
Termination Date.
A Participant may elect (with any applicable spousal consent) to
waive any requirement that the written explanation be provided at
least 30 days before the Participant's Annuity Starting Date (or
to waive the 30-day requirement) if the distribution commences
more than 7 days after such explanation is provided.
(ii) A married Participant's election to receive an optional form of
payment shall be valid only if the Participant's Spouse (after
receipt of the written explanation described in Paragraph (b)(i)
consents in writing on a form provided by the Committee in the
presence of a notary public or Plan representative to the
Participant's election. The Spouse's consent must be made within
90 days of the Participant's Annuity Starting Date and must
acknowledge the effect of such consent. However, if the
Participant establishes to the satisfaction of the Committee that
his Spouse's consent cannot be obtained because he has no Spouse,
because his Spouse cannot be located, or because of other
circumstances as determined by applicable Treasury Regulations,
The Committee may treat the Participant's election as an election
for which spousal consent was obtained. A Spouse's consent
pursuant to this paragraph shall be irrevocable.
(iii)A Participant may revoke his election of an optional form of
payment or make a new election (provided any required spousal
consent is obtained) at any time prior to his Annuity Starting
Date. Furthermore, the Participant's election shall cease to be
valid upon the marriage of the Participant or upon the remarriage
of the Participant following the death or divorce of the Spouse
giving the consent to the Participant's election. If the
Participant revokes his election or if such election otherwise
ceases to be valid, the Participant's vested Account shall be
payable under the applicable automatic form of payment described
in Paragraph (a).
(c) Pre-Retirement Survivor Annuity
(i) Except as provided in subparagraph (iii) below, if a married
Participant dies prior to his Annuity Starting Date, the
Participant's vested Account shall be paid to the Participant's
Spouse in the form of a Single Life Annuity payable for the life
of the Spouse (the "Pre-Retirement Survivor Annuity"). The Spouse
may, however, elect to receive the Participant's vested Account
in a lump sum as provided in Section 8.04. The election of an
optional distribution form must be made within ninety (90) days
of the Participant's death on a form provided by the Committee
for such purpose.
(ii) During the Applicable Period (defined below), the Plan shall
provide each Participant with a written explanation of the
Pre-Retirement Survivor Annuity. Such explanation shall contain
comparable information as provided in the notice described in
paragraph (b)(i). The "Applicable Period" shall mean whichever of
the following periods ends last:
(A) The period beginning with the first Plan Year in which the
Participant attains age 32 and ending with the close of the
Plan Year in which the Participant attains age 34;
(B) A reasonable period of time ending after the Employee
becomes a Participant; or
(C) A reasonable period after Participant first becomes subject
to Code Section 417.
However, if a Participant terminates his employment prior to
the attainment of age 35, the "Applicable Period" shall mean
the one-year period immediately preceding and immediately
following the Participant's Termination Date. If the
Participant is subsequently re-hired on or after the
attainment of age 35, the Participant shall receive a new
explanation within the "Applicable Period" descried in the
preceding paragraph.
(iii)A married Participant may waive the Pre-Retirement Survivor
Annuity by properly completing and filing a form with the
Committee during the period beginning on the first day of the
Plan Year during which the Participant attains age 35 and ending
on the Participant's death. In addition, the married Participant
may name a non-Spouse Beneficiary to receive the death benefit.
However, the married Participant's waiver of the Pre-Retirement
Survivor Annuity shall be void unless the Participant's Spouse
(after receipt of the explanation of the Pre-Retirement Survivor
Annuity described in subparagraph (ii) above) consents in writing
on a form provided by the Committee in the presence of a notary
public or Plan representative to the Participant's waiver of the
Pre-Retirement Survivor Annuity. The Spouse's consent must
acknowledge the effect of such consent and must specifically
state the non-Spouse beneficiary, if any, selected by the
Participant. However, if the Participant establishes to the
satisfaction of the Committee that his Spouse's consent cannot be
obtained because he has no Spouse, because his Spouse cannot be
located, or because of other circumstances as determined by
applicable Treasury Regulations, the Committee may treat the
Participant's election as an election for which spousal consent
was obtained. A Spouse's consent pursuant to this paragraph shall
be irrevocable.
(iv) If the Participant waives the Pre-Retirement Survivor Annuity
(with spousal consent), the Participant's Account will be
distributed to the Participant's Beneficiary as provided in
Section 8.04. A married Participant may revoke his waiver of the
Pre-Retirement Survivor Annuity at any time prior to his death.
Furthermore, the Participant's waiver shall cease to be valid
upon the remarriage of the Participant following the death or
divorce of the Spouse giving the consent to the waiver of the
Pre-Retirement Survivor Annuity. If the Participant revokes his
waiver or if such election otherwise ceases to be valid, any
death benefit payable to the Participant's Spouse shall be
determined pursuant to subparagraph (i) above.
(v) If a nonmarried Participant dies prior to his Annuity Starting
Date, the Participant's vested Account shall be distributed to
the Beneficiary as provided in Section 8.04.
(vi) If a Participant dies on or after his Annuity Starting Date, no
death benefits will be paid under this Paragraph (c) or under
Section 8.04. Instead, any death benefits will be determined in
accordance with the distribution option selected by the
Participant. The Beneficiary may elect to accelerate any death
benefit into a lump sum by notifying the Committee within ninety
days of the Participant's death on a form provided by the
Committee for such purpose.
APPENDIX B
CREDIT FOR SERVICE WITH AFFILIATED SPONSORS
Pursuant to a resolution of the Committee, effective as of June 1, 1997,
Port St. Lucie National Bank and The Spirit Mortgage Corporation shall be
Affiliated Sponsors of the Plan, subject to the terms and conditions set forth
in the Plan. Each Employee of Port St. Lucie National Bank and The Spirit
Mortgage Corporation shall be credited with Vesting Service and Eligibility
Service under the Plan equal to such Employee's Years of Service under the Port
St. Lucie National Bank Retirement Savings Plan as of May 31, 1997.
AMENDMENT ONE TO THE
RETIREMENT SAVINGS PLAN FOR EMPLOYEES OF
FIRST NATIONAL BANK & TRUST COMPANY
OF THE TREASURE COAST
THIS AMENDMENT to the Retirement Savings Plan For Employees of First
National Bank & Trust Company of the Treasure Coast, as amended and restated
effective January 1, 1997 (the "Plan"), is adopted by Seacoast Banking
Corporation of Florida (the "Company"), effective as of the dates set forth
herein.
W I T N E S S E T H:
WHEREAS, the Company maintains the Plan, and such Plan is currently in
effect; and
WHEREAS, pursuant to Section 11.01 of the Plan, the Company may amend the
Plan from time to time;
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1.
Effective as of January 1, 1997, the definition of "Company" under Article
2 Definitions is revised to read as follows:
"Company shall mean Seacoast Banking Corporation of Florida, its successors
and assigns, and any Affiliate."
2.
Effective as of April 1, 2001, the definition of "Trustee" under Article 2
Definitions is revised to read as follows:
"Trustee shall mean the persons, corporation, association or a combination
of them acting as Trustee under the Trust Agreement with respect to the
assets held by such Trustee."
3.
Effective as of April 1, 2001, the definition of "Valuation Date" under
Article 2 Definitions is amended to read as follows:
"Valuation Date shall mean each business day of the Plan Year for which
Plan assets are traded on a national exchange."
4.
Effective as of April 1, 2001, the definition of "Voluntary After-Tax
Contributions" under Article 2 Definitions is amended to read as follows:
"Voluntary After-Tax Contributions shall mean after-tax contributions made
to the Plan during the Plan Year by an Eligible Employee. Such
contributions are fully vested and nonforfeitable when made and
distributable only as specified in Article 8 below. Effective as of April
1, 2001, no further Voluntary After- Tax Contributions shall be permitted
under this Plan."
5.
Effective as of April 1, 2001, Section 4.01 Employee Contributions is
deleted in its entirety, and a new Section 4.01 is substituted in lieu thereof,
as follows:
"4.01 Employee Contributions.
Except during periods of suspension described in Section 4.03, a
Participant may elect to make Salary Savings Contributions by means of
payroll deduction as provided below. For purposes of this Section 4.01,
"Compensation" shall have the meaning described in Article 2, but ignoring
the second paragraph of such definition (i.e., the Code Section 401(a)(17)
limitation).
(a) Salary Savings Contributions. A Participant may contribute as a
Salary Savings Contribution any whole percentage from 1% to 15%
(in 1% increments) of his Compensation during any Plan Year.
Because of the limitations described in Section 4.02(c), a
Participant may not be allowed to contribute the maximum
percentage.
(b) Voluntary After-Tax Contributions. Prior to April 1, 2001, a
Participant could contribute as a Voluntary After-Tax
Contribution any whole percentage of his Compensation up to 10%
during any Plan Year. Effective as of April 1, 2001, no further
Voluntary After- Tax Contributions shall be permitted under this
Plan. Any Voluntary After-Tax Contributions allocated to a
Participant's Account for payroll periods prior to April 1, 2001,
shall remain in such Participant's Account until such time as the
Account is distributed to the Participant."
6.
Effective as of April 1, 2001, Section 4.02(a) Procedure for Making
Elections is deleted in its entirety, and a new Section 4.02(a) is substituted
in lieu thereof, as follows:
"(a) Procedure for Making Elections. A Participant may enter a Salary
Savings Agreement with the Employer authorizing the Employer to
withhold a portion of such Participant's Compensation as a Salary
Savings Contribution during each pay period. The election to make
Salary Savings Contributions shall be effective as of the first day of
the Participant's normal pay period after the Employer receives the
Salary Savings Agreement or as soon as administratively feasible
thereafter. The Committee may prescribe additional rules and
regulations regarding the manner and timing of the Participant's
election including a shorter or longer period of required notice."
7.
Effective as of April 1, 2001, Sections 4.03(a) Change of Contribution
Percentage and 4.03(b) Suspension of Contributions are deleted in their
entirety, and new Sections 4.03(a) and (b) are substituted in lieu thereof, as
follows:
"(a) Change of Contribution Percentage. A Participant may increase or
decrease the percentage of his Compensation contributed as an Employee
Contribution at any time by delivery of a new written notice to the
Committee (or to its designee) using such forms and/or procedures
approved by the Committee.
(b) Suspension of Contributions. A Participant may suspend his Employee
Contributions at any time by properly completing a form using such
procedures as prescribed by the Committee. The suspension of Employee
Contributions will be effective on the first day of the Participant's
normal payroll period that begins after the Participant delivers the
completed form to the Committee or as soon as administratively
feasible thereafter. A Participant may resume making Salary Savings
Contributions only on the next January 1, April 1, July 1 or October 1
which is after the effective date of such suspension of contributions
and only after informing the Committee in writing prior to the date on
which the Employee Contributions are to resume. The Committee, on a
nondiscriminatory basis, may prescribe a lesser number of days on
which the suspension or resumption of Employee Contributions is to be
effective. Employee Contributions automatically shall be suspended
beginning on the first payroll period that commences after the
Participant is not in receipt of Compensation, the Participant's
layoff or the Participant's Authorized Leave of Absence without pay."
8.
Effective January 1, 2000, Section 5.02(a) Eligibility To Receive Profit
Sharing Contribution is revised to read as follows:
"(a) Eligibility To Receive Profit Sharing Contribution. Each year the
Employer may elect to make a discretionary Profit Sharing Contribution
to the Plan. This Profit Sharing Contribution shall be allocated to
the Profit Sharing Account of each Participant who completed at least
1,000 Hours of Service during the Plan Year and who is employed on the
last day of the Plan Year or who had a Termination of Employment
during the Plan Year on account of death, Disability or Retirement."
9.
Effective as of January 1, 2000, Section 5.03 Retirement Contribution is
revised to read as follows:
"5.03 Retirement Contribution.
The Employer may (but shall not be required to) make an additional
contribution annually to the Plan each Plan Year on behalf of each
Participant who completed at least 1,000 Hours of Service during the
Plan Year and who is employed on the last day of the Plan Year or who
had a Termination of Employment during the Plan Year on account of
death, Disability or Retirement. Such contribution shall be no more
than 2% (or such other percentage or amount as determined by the
Committee) of a Participant's Eligible Compensation (as defined in
Section 5.02(c) above). Such contribution shall be allocated to the
Participant's Retirement Contribution Account. Compensation received
during a Plan Year but prior to the time an Eligible Employee becomes
a Participant shall be excluded from a Participant's Eligible
Compensation."
10.
Effective as of January 1, 2001, Section 5.06 Forfeitures is deleted in its
entirety, and a new Section 5.06 is substituted in lieu thereof, as follows:
"5.06 Forfeitures.
(a) Forfeitures shall first be applied to restore amounts previously
forfeited pursuant to Section 7.06(c). See Section 7.06 to
determine when a forfeiture of a Participant's Account occurs.
(b) If any Forfeitures remain after the restoration of Forfeitures
described in Section 5.06(a), such remaining Forfeitures shall be
applied to reduce Plan administrative expenses and/or reduce
Employer Contributions."
11.
Section 6.03 Investment Funds and Elections is deleted in its entirety, and
a new Section 6.03 is substituted in lieu thereof, as follows:
"6.03 Investment Funds and Elections.
(a) Election of Investment Funds. Each Participant shall direct the
investment of his Account, following such procedures as may be
specified by the Committee (or its designee), to have his Account
allocated or reallocated among the Investment Funds.
(b) Initial Investment Direction. A Participant's initial investment
election must allocate his entire Account, together with all
subsequent contributions, for so long as the election remains in
effect. An Employee who fails to make a proper investment
election by the deadline established by the Committee for such
purpose, shall be deemed to have elected to allocate 100% of his
Account in the Investment Fund which, in the opinion of the
Committee, best preserves the principal amount of the
Participant's Account.
(c) Subsequent Elections. Investment elections will remain in effect
until changed by a new election. New elections may be made by a
Participant at any time in the same manner as set forth in
Section 6.03(a), and shall be effective as of the Valuation Date
immediately following delivery of the new election to the
Committee (or its designee). New elections may change future
allocations to the Participant's Account, may reallocate between
the Investment Funds any amounts previously credited to the
Participant's Account, or may leave the allocation of such prior
amounts unchanged. Trust transactions reflecting investment
elections among the Investment Funds will occur as of the
Valuation Date which immediately follows the timely receipt of
such investment election when such allocation or re-allocation
can be made and all Investment Fund values shall be determined as
of such dates.
(d) Investment Options. The Committee is authorized to select new
Investment Funds or to eliminate any Investment Fund as the
Committee shall deem appropriate from time to time. Any change in
Investment Funds shall be noted in the minutes of the Committee.
The creation of an Investment Fund shall not be effective until
the Trustee has consented in writing to the creation of such new
Investment Fund. Any creation or deletion of an Investment Fund
shall not be effective until such change is communicated to
Participants and new investment elections are solicited from
Participants, if appropriate."
12.
Effective as of April 1, 2001, Section 6.05 Valuation For Purposes of
Distributions is deleted in its entirety, and a new Section 6.05 is substituted
in lieu thereof, as follows:
"6.05 Valuation For Purposes of Distributions
(a) For the purposes of Article 8, each Participant's Account shall
be valued as of the Valuation Date immediately preceding the
distribution of the Participant's Account.
(b) No person entitled to a distribution shall receive interest or
other earnings on the Account from the applicable Valuation Date
described in subsection (a), to the date of actual distribution
to such person.
(c) This Section 6.05 shall not apply to the valuation of Accounts
for purposes of in-service withdrawals or loans. Instead, see
Section 9.05."
13.
Effective as of April 1, 2001, Section 8.01(a) Distribution Following
Termination of Employment is revised to read as follows:
"(a) Distribution Following Termination of Employment. A Participant's
Account shall be distributed as soon as administratively feasible
following the Participant's Termination of Employment and the
date the Committee receives the Participant's written request for
a distribution. Except as provided in Section 8.01(b), the
Participant's Account shall not be distributed without the
Participant's consent."
14.
Effective as of April 1, 2001, Section 8.01(c) Hardship Withdrawals is
revised to read as follows:
"(c) Hardship Withdrawals; In-Service Distributions. Hardship
withdrawals and in-service distributions (see Article 9) shall
commence no later than ninety (90) days after such request is
approved by the Committee."
15.
Effective as of June 1, 2001, the first paragraph of Section 8.02 Method of
Distribution shall be revised as follows:
"The Participant's Account shall be distributed in accordance with one of
the following forms of payment as selected by the Participant (or
Beneficiary if applicable). If a Participant elects to receive either a
lump sum distribution or installment payments pursuant to Sections 8.02(a)
or 8.02(d), and if any portion of such Participant's Account is invested in
the Company Stock Fund, then the Participant may elect to receive any or
all of such portion invested in the Company Stock Fund in whole shares of
Company Stock, with cash paid for any fractional shares. Annuity
distributions may not be paid in Company Stock.
Effective as of June 1, 2001, distributions from the Plan shall be made in
either a single lump sum payment or installment payments as provided in
Sections 8.02(a) or 8.02(d). See Sections 8.02(b) and (c) regarding the
elimination of certain annuity distribution options effective as of June 1,
2001."
16.
Effective as of April 1, 2001, Sections 8.02(b) Single Life Annuity and
8.02(c) Joint and Survivor Annuity are revised to read as follows:
"(b) Single Life Annuity is an annuity which may be purchased with the
Participant's vested Account that provides level monthly payments
during the Participant's lifetime, with payments ceasing upon the
Participant's death. Effective as of June 1, 2001, the Single
Life Annuity form of payment option shall be eliminated. Written
notice of the elimination of certain optional forms of payment
was provided to participants on March 2, 2001.
(c) Joint and Survivor Annuity is an annuity which may be purchased
with the Participant's vested Account that provides level monthly
payments during the Participant's life and upon the Participant's
death, 50% of such monthly payment shall be payable on a monthly
basis to the Participant's Spouse for the Spouse's life. Payments
under the Joint and Survivor Annuity shall cease on the later of
the death of the Participant or the death of the Participant's
Spouse. Effective as of June 1, 2001, the Joint and Survivor
Annuity form of payment option shall be eliminated. Written
notice of the elimination of certain optional forms of payment
was provided to participants on March 2, 2001."
17.
Effective as of January 1, 1997, Section 8.02(e) Written Explanation of
Benefit Options is revised to read as follows:
"(e) Written Explanation of Benefit Options. At least thirty (30) days
and no more than ninety (90) days prior to the Annuity Starting
Date, the Committee shall provide the Participant with a written
explanation of the optional forms of payment described in Section
8.02. Such explanation shall provide a general description of the
eligibility conditions (if any) and other material features of
the optional forms of payment including sufficient information
regarding the relative values of the optional forms of payment.
The written explanation must also inform the Participant of his
right (if any) to defer receipt of the distribution until his
Normal Retirement Age. This written explanation is not required
if the Participant's Account is distributed without his consent
as provided in subsection (b) above.
The written explanation described above may be provided after the
Participant's Annuity Starting Date. The 90-day applicable
election period to waive the qualified joint and survivor annuity
described in Section 417(a)(6)(A) of the Code shall not end
before the 30th day after the date on which such explanation is
provided. The Secretary may by regulations limit the period of
time by which the Annuity Starting Date precedes the provisions
of the written explanation other than by providing that the
Annuity Starting Date may not be earlier than the Participant's
Termination Date.
A Participant may elect (with any applicable spousal consent) to
waive any requirement that the written explanation be provided at
least 30 days before the Participant's Annuity Starting Date (or
to waive the 30-day requirement) if the distribution commences
more than 7 days after such explanation is provided."
18.
Effective as of April 1, 2001, Section 8.03 Special Rules Applicable to
Annuity Distributions is amended to add the following language immediately
preceding Subparagraph (a):
"Effective as of June 1, 2001, this Section 8.03 shall no longer apply. See
Section 8.02 regarding the elimination of certain annuity distribution
options effective as of June 1, 2001."
19.
Effective as of April 1, 2001, Section 8.04 Death Benefits is deleted in
its entirety, and a new Section 8.04 is substituted in lieu thereof, as follows:
"8.04 Death Benefits.
(a) Death Benefits if Section 8.03 Applies. If the provisions of
Section 8.03 apply to the Participant (i.e., the Participant
previously elected to receive a distribution of his Account
in the form of an annuity) and the Participant dies prior to
his Annuity Starting Date, the Participant's Account shall
be distributed in accordance with the Pre-Retirement
Survivor Annuity rules contained in Appendix A. Effective as
of June 1, 2001, this Section 8.04(a) shall no longer apply.
See Sections 8.02(b) and (c) regarding the elimination of
certain annuity distribution options effective as of June 1,
2001.
(b) If the Participant dies before Distribution of his Account
commences, the Participant's vested Account shall be
distributed to the Participant's Beneficiary in the form
previously selected by the Participant on behalf of the
Beneficiary or if the Participant made no such election, in
the form selected by the Beneficiary."
20.
Effective as of January 1, 2000, Section 8.08(d) Direct Transfer of Account
to an Eligible Retirement Plan is amended to add a new subparagraph (v), as
follows:
"(v) An eligible rollover distribution described in Code ss. 402(c)(4),
which the Participant can elect to rollover to another plan pursuant
to Code ss. 401(a)(31), excludes hardship withdrawals as defined in
Code ss. 401(k)(2)(B)(i)(IV), which are attributable to the
Participant's Salary Savings Contributions under Treasury Reg. Section
1.401(k)-1(d)(2)(ii)."
21.
Effective as of April 1, 2001, Article 9 Hardship Withdrawals is renamed as
follows:
"ARTICLE 9
HARDSHIP WITHDRAWALS; IN-SERVICE DISTRIBUTIONS"
22.
Effective as of April 1, 2001, Section 9.03(a)(2) (A) Receipt of All
Distributions Available; Suspension of Future Contributions shall be revised to
read as follows:
"(A) The Participant's Salary Savings Contributions and Elective Profit
Sharing Contributions shall automatically be suspended beginning on
the first payroll period that commences after such Participant
requests and receives a hardship distribution. Such Participant may
resume making Salary Savings Contributions and Elective Profit Sharing
Contributions only on the January 1, April 1, July 1, or October 1
which is at least 12 months after the effective date of such
suspension and only after informing the Committee in writing at least
30 days (or such lesser time as specified by the Committee) prior to
the date on which the Salary Savings Contributions and Elective Profit
Sharing Contributions are to resume."
23.
Effective as of April 1, 2001, Section 9.05 Valuation for Purposes of
Withdrawals is revised to read as follows:
"9.05 Valuation for Purposes of Hardship Withdrawals or In-Service
Distributions.
The Participant's Account for purposes of determining the amount of a
hardship withdrawal or in-service distribution shall be determined as
of the Valuation Date preceding the date the Committee approves the
hardship withdrawal or in-service distribution. "
24.
Effective as of April 1, 2001, a new Section 9.06 is added to the Plan, as
follows:
"9.06 Age 59 1/2 In-Service Distributions.
(a) A Participant who has not terminated employment may, at any
time after attaining age 59 1/2, elect to withdraw all or
part of his or her vested Account (including any earnings
thereon). A distribution shall be made no earlier than the
month following the calendar month in which the Participant
attains age 59 1/2.
(b) A Participant who receives an age 59 1/2 withdrawal shall
not be suspended from continuing or commencing to make (in
accordance with the Plan) Salary Savings contributions to
the Plan.
(c) No in-service withdrawal will be permitted unless the amount
to be withdrawn is at least $1,000 (or the entire amount
available for withdrawal, if less).
(d) In no event shall a Participant be permitted to repay the
amount of his in-service withdrawal.
(e) The Committee may establish additional uniform and
nondiscriminatory administrative procedures concerning
requests for in-service withdrawals."
25.
Effective as of January 1, 1997, Section 10.02 Board of Directors is
revised to read as follows:
"10.02 Board of Directors.
The Board shall have the following powers and duties with respect to the
Plan:
(a) The Board shall have the power to appoint and remove the
Trustee and the members of the Committee. The Board may
delegate its authority to appoint or remove the Trustee and
the members of the Committee to an officer of the Company.
(b) The Board shall have the power to amend the Plan, in whole
or in part, pursuant to Section 11.01; or to terminate the
Plan, in whole or in part."
26.
Effective as of January 1, 1997, Subparagraph (b)(2) of Section 10.04
Committee is deleted in its entirety, and a new Section 10.04(b)(2) is
substituted in lieu thereof, as follows:
"(2) [Reserved];"
27.
Effective as of April 1, 2001, Section 10.06 Claims Procedures is deleted
in its entirety, and a new Section 10.06 is substituted in lieu thereof, as
follows:
"10.06 Claims Procedure.
(a) Claims. If a Participant has any grievance, complaint, or
claim concerning any aspect of the operation or
administration of the Plan or Trust, including but not
limited to claims for benefits and complaints concerning the
performance or administration of the investments of Plan
assets (collectively referred to herein as "claim" or
"claims"), the Participant shall submit the claim to the
Committee, which shall have the initial responsibility for
deciding the claim. All such claims shall be submitted in
writing and shall set forth the relief requested and the
reasons the relief should be granted. All such claims must
be submitted within the "applicable limitations period." The
"applicable limitations period" shall be two years,
beginning on:
(i) in the case of any lump-sum payment, the date on which
the payment was made,
(ii) in the case of an annuity payment or installment
payment, the date of the first in the series of
payments, or
(iii)for all other claims, the date on which the action
complained or grieved of occurred.
To the extent that documentary or other evidence is relevant to
the relief sought, the Participant shall submit such evidence or,
if the evidence is in the possession of the Committee, the
Participant shall refer to such evidence in a manner sufficient
to allow the Committee to identify and locate such evidence.
(b) Denial of Claims. If a claim is denied in whole or in part,
the Committee shall give the claimant written notice of the
decision within ninety (90) days of the date the claim was
submitted. Such written notice shall set forth in a manner
calculated to be understood by the claimant:
(1) the specific reason or reasons for the denial;
(2) specific references to pertinent Plan provisions on
which the denial is based;
(3) a description of any additional material or information
necessary for the claimant to perfect the claim, along
with an explanation of why such material or information
is necessary; and
(4) appropriate information about the steps to be taken if
the claimant wishes to submit the claim for review of
the denial. The ninety-day period for review of a claim
for benefits may be extended for an additional ninety
(90) days by a written notice to the claimant setting
forth the reason for the extension. If the Committee
fails to respond to a claim within the time limits set
forth above, the claim shall be deemed denied and the
Participant may request review by the Committee as set
forth in Section 10.06(c).
(c) Appeals Procedure. If a claim is denied in whole or in part
or if the claimant has no response to such claim within
ninety (90) days of its submission (in which case the claim
for benefits shall be deemed to be denied), the claimant or
his duly authorized representative may appeal the denial to
the Committee within sixty (60) days of receipt of written
notice of denial or within sixty (60) days of the expiration
of the ninety-day period. In pursuing his appeal, the
claimant or his duly authorized representative:
(i) shall request in writing that the Committee review the
denial;
(ii) shall review pertinent documents; and
(iii)shall submit evidence as well as written issues,
comments or arguments.
The decision on review shall be made within sixty (60) days of receipt
of the request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after
receipt of the request for review. If such an extension of time is
required, written notice of the extension shall be furnished to the
claimant before the end of the original sixty-day period. The decision
on review shall be made in writing, shall be written in a manner
calculated to be understood by the claimant, and shall include
specific references to the provision of the plan on which the denial
is based. If the decision on review is not furnished within the time
specified above, the claim shall be deemed denied on review. The
decision shall be final and conclusive and a Participant shall not be
permitted to bring suit at law or in equity on a claim without first
exhausting the remedies available hereunder. No action at law or in
equity to recover under this Plan shall be commenced later than one
year from the date of the decision on review (or if no decision is
furnished within 120 days of receipt of the request for review, the
120th day after receipt of the request for review)."
28.
Effective as of January 1, 1997, the first paragraph of Section 11.01 Right
to Amend shall be revised to read as follows:
"The Company intends for the Plan to be permanent so long as the
corporation exists; however, it reserves the right (through action of the
Board) to modify, alter, or amend this Plan or the Trust Agreement, from
time to time, to any extent that it may deem advisable, including, but not
limited to any amendment deemed necessary to insure the continued
qualification of the Plan under Sections 40l(a) and 401(k) of the Code or
to insure compliance with ERISA; provided, however, that the Company shall
not have the authority to amend this Plan in any manner which will:"
29.
Effective as of April 1, 2001, the definition of "Actual Contribution
Percentage or ACP" under Section 12.01 Definitions [Special Discrimination
Rules] is amended to read as follows:
"Actual Contribution Percentage or ACP shall mean the ratio (expressed as a
percentage) of (i) the sum of the Employer Matching Contributions and, for
Plan Years beginning prior to April 1, 2001, Voluntary After-Tax
Contributions on behalf of the Participant for the Plan Year and, to the
extent permitted in Treasury Regulations and elected by the Employer, the
Participant's Qualified Elective Deferrals and Qualified Non-Elective
Contributions to (ii) the Participant's Compensation for the Plan Year. The
Employer, on an annual basis, may elect to include or not to include
Qualified Elective Deferrals and Qualified Non-Elective Contributions in
computing the ACP for a Plan Year. An Employer may elect on an annual basis
to count a Participant's Employer Matching Contribution toward satisfying
the required minimum contribution under Section 15.03 (minimum contribution
for Non-Key Employees in a Top-Heavy plan) in lieu of including such
contributions in the ACP. If a Participant (as defined below) does not
receive an allocation of Employer Contributions for a Plan Year, such
Participant's ACP for the Plan Year shall be zero."
30.
Effective as of April 1, 2001, Subparagraph (c) of Section 12.03 Average
Actual Deferral Percentage, is deleted in its entirety, and a new Section
12.03(c) is substituted in lieu thereof, as follows:
"(c) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 12.03(a), the Employer may do any or all of the
following, except as otherwise provided in the Code or Treasury
Regulations:
(1) Distribute Salary Savings Contributions to certain Highly
Compensated Employees as provided in Section 12.05;
(2) For Plan Years beginning prior to April 1, 2001, recharacterize
the Participant's Salary Savings Contributions as Voluntary
After-Tax Contributions as provided in Section 12.06; or
(3) Make a Qualified Non-Elective Contribution on behalf of any or
all of the Non-Highly Compensated Employees and aggregate such
contributions with the Non-Highly Compensated Employees' Salary
Savings Contributions Deferrals as provided in Section 12.01
(definition of ADP).
(4) Notwithstanding anything contained in Section 12.03(a)(1) or (2)
to the contrary, the Plan Administrator may elect to use the
Average Deferral Percentage for Non-highly Compensated Employees
for the Plan Year, rather than the preceding Plan Year, except
that if such an election is made, it may not be changed except by
an amendment to this Plan or as otherwise provided by the
Secretary of the Treasury."
31.
Effective as of April 1, 2001, Section 12.06 Salary Savings Contributions
Recharacterized as Voluntary After-Tax Contributions is revised to add the
following sentence immediately before Subparagraph (a):
"The provisions of this Section 12.06 shall not apply to any Plan Year
beginning on or after April 1, 2001."
32.
Effective as of April 1, 2001, Subparagraph (b) of Section 12.07 Average
Actual Contribution Percentage is revised to read as follows:
"(b) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 12.07(a), the Employer may do any or all of the
following in order to comply with such provision as applicable (except
as otherwise provided in the Code or in Treasury Regulations):
(1) Aggregate Qualified Elective Deferrals with the Employer Matching
Contributions or, for Plan Years beginning prior to April 1,
2001, Voluntary After-Tax Contributions of Non-Highly Compensated
Employees as provided in Section 12.01 (definition of ACP).
(2) Distribute vested Employer Matching Contributions and/or, for
Plan Years beginning prior to April 1, 2001, Voluntary After-Tax
Contributions to certain Highly Compensated Employees as provided
in Section 12.09.
(3) Make a Qualified Non-Elective Contribution on behalf of any or
all of the Non-Highly Compensated Employees and aggregate such
contributions with the Non-Highly Compensated Employees' Employer
Matching Contributions or, for Plan Years beginning prior to
April 1, 2001, Voluntary After-Tax Contributions as provided in
Section 12.01 (definition of ACP).
(4) Forfeit non-vested Employer Matching Contributions of certain
Highly Compensated Employees as provided in Section 12.10."
33.
Effective as of April 1, 2001, Section 12.08 Special Rules For Determining
Average Actual Contribution Percentages is revised to read as follows:
"12.08 Special Rules For Determining Average Actual Contribution
Percentages
(a) The Actual Contribution Percentage for any Highly Compensated
Employee for the Plan Year who is eligible to have Employer
Matching Contributions or, for Plan Years beginning prior to
April 1, 2001, Voluntary After-Tax Contributions allocated to his
Account under two or more arrangements described in Sections
401(a) or 401(m) of the Code that are maintained by an Employer
or its Affiliates shall be determined as if such contributions
were made under a single arrangement.
(b) If two or more plans maintained by the Employer or its Affiliates
are treated as one plan for purposes of the nondiscrimination
requirements of Code Section 401(a)(4) or the coverage
requirements of Code Section 410(b) (other than for purposes of
the average benefits test), all Employer Matching Contributions
and, for Plan Years beginning prior to April 1, 2001, Voluntary
After-Tax Contributions that are made pursuant to those plans
shall be treated as having been made pursuant to one plan.
(c) The computation of the Average Actual Contribution Percentage
shall be performed after any recharacterization of Salary Savings
Contributions or Elective Profit Sharing Contributions as
Voluntary After-Tax Contributions pursuant to Section 12.06. This
Section 12.06(c) shall not apply to Plan Years beginning after
April 1, 2001.
(d) The determination and treatment of the Actual Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury."
34.
Effective as of April 1, 2001, Section 12.09 Distribution of Employer
Matching Contributions is revised to read as follows:
"12.09 Distribution of Employer Matching Contributions.
(a) Employer Matching Contributions and, for Plan Years beginning
prior to April 1, 2001, Voluntary After-Tax Contributions
exceeding the limitations of Section 12.07(a) ("Excess ACP
Contributions") and any income or loss allocable to such Excess
ACP Contribution may be designated by the Committee as Excess ACP
Contributions and may be distributed in the Plan Year following
the Plan Year in which the Excess ACP Contributions arose to
those Highly Compensated Employees whose Accounts were credited
with the largest amounts of Employer Matching Contributions
during the preceding Plan Year. The amount of Excess ACP
Contributions to be distributed to a Highly Compensated Employee
shall be determined using the procedure described in Section
12.05(a).
(b) To the extent administratively possible, the Committee shall
distribute all Excess ACP Contributions and any income or loss
allocable thereto prior to 2 1/2 months following the end of the
Plan Year in which the Excess ACP Contributions arose. In any
event, however, the Excess ACP Contributions and any income or
loss allocable thereto shall be distributed prior to the end of
the Plan Year following the Plan Year in which the Excess ACP
Contributions arose. The distribution of the Excess ACP
Contributions shall be adjusted for income or loss during the
Plan Year only, and not for the period between the end of the
Plan Year and the date of the distribution.
(c) The income or loss allocable to Excess ACP Contributions shall be
determined by multiplying the income or loss allocable to the
Participant's Account for the Plan Year in which the Excess ACP
Contribution arose by a fraction. The numerator of the fraction
is the Excess ACP Contributions. The denominator of the fraction
is the value of the Participant's Account on the last day of the
Plan Year reduced by any income allocated to the Participant's
Account by such Plan Year and increased by any loss allocated to
the Participant's Account for the Plan Year. However, any income
allocable to an Excess ACP Contribution resulting from the
distribution of a Salary Savings Contribution or Elective Profit
Sharing Contribution that was recharacterized as a Voluntary
After-Tax Contribution during any Plan Year beginning prior to
April 1, 2001 (See Section 12.06) shall be determined as if such
recharacterized Salary Savings Contribution or Elective Profit
Sharing Contribution were an Excess ADP Deferral (See Section
12.05). Alternatively, the income or loss allocable to Excess ACP
Contributions may be calculated using any reasonable method for
computing such income or loss, provided the method does not
discriminate in favor of Highly Compensated Employees, is used
consistently for all participants and for all corrective
distributions under the Plan for the Plan Year, and is used by
the Plan for allocating income to Participants' Accounts.
(d) Amounts distributed to Highly Compensated Employees under this
Section 12.09 shall be treated as annual additions with respect
to the Employee who received such amount.
(e) Unless specifically identified to the contrary, for Plan Years
beginning prior to April 1, 2001, any distributions of Excess ACP
Contributions shall be made first from Voluntary After-Tax
Contributions and second from Employer Matching Contributions.
For Plan Years beginning on or after January 1, 2002,
distributions of Excess ACP Contributions shall be made from
Employer Matching Contributions.
(f) No unvested Employer Matching Contributions shall be distributed
pursuant to this Section 12.09. Such amounts may, however, be
forfeited pursuant to Section 12.10."
35.
Effective as of April 1, 2001, Subparagraph (e) of Section 12.11 Combined
ACP and ADP Test shall be revised to read as follows:
"(e) If Employer Matching Contributions or, for Plan Years beginning
prior to April 1, 2001, Voluntary After-Tax Contributions are
distributed or forfeited (if applicable) to satisfy the Combined
ADP and ACP Test, income or loss allocable to such contributions
shall also be distributed. The income or loss shall be determined
using the same procedures as Section 12.05(c). Only income or
loss allocable to the Plan Year, and not to the period between
the end of the Plan Year and the date of distribution, shall be
distributed."
36.
Effective as of April 1, 2001, Section 12.12 Order of Applying Certain
Sections of Article is revised to read as follows:
"12.12 Order of Applying Certain Sections of Article.
In applying the provisions of this Article 12, the determination and
distribution of Excess Deferrals shall be made first, the
determination and elimination of Excess ADP Deferrals shall be made
second, the determination and elimination of Excess ACP Contributions
shall be made third and finally the determination and any necessary
adjustment related to the Combined ADP and ACP Test shall be made.
However, if the Committee determines to recharacterize Salary Savings
Contributions or Elective Profit sharing Contributions as Voluntary
After-Tax Contributions for any Plan Year beginning prior to April 1,
2001 (see Section 12.06), then the determination and elimination of
Excess ADP Deferrals shall be made before the determination and
elimination of Excess ACP Contributions."
37.
Effective as of January 1, 1997, Section 14.03 Definitions [Maximum
Benefits] is amended to add the following:
"Compensation, for purposes of this Article 14, shall have that meaning as
defined in Article 2. For Plan Years beginning prior to January 1, 1998,
Compensation shall exclude Salary Savings Contributions made under this
Plan and any amount that is contributed or deferred by an Employer at the
election of the Employee that is not includable in the gross income of the
Employee by reason of Code Section 125 or 457."
38.
Effective as of April 1, 2001, Article 16 Trust Fund and Trustee is deleted
in its entirety, and a new Article 16 is substituted in lieu thereof, as
follows:
"ARTICLE 16
[RESERVED]"
39.
Effective as of August 5, 1997, Section 17.03 Spendthrift Clause is amended
to read as follows:
"17.03 Spendthrift Clause.
Except as otherwise required by a "qualified domestic relations order"
as defined in Code Section 414(p) or by any judgment, order, decree
and/or settlement agreement (as defined in Code Section 401(a)(13)(C))
entered on or after August 5, 1997, none of the benefits, payments,
proceeds or distributions under this Plan shall be subject to the
claim of any creditor of any Participant or Beneficiary, or to any
legal process by any creditor of such Participant or Beneficiary, and
none of them shall have any right to alienate, commute, anticipate or
assign any of the benefits, payments, proceeds or distributions under
this Plan except for the extent expressly provided herein to the
contrary."
40.
Effective as of January 1, 1997, subparagraph (c) of Section 17.13 Adoption
of Plan by Affiliated Sponsor shall be amended to read as follows:
(c) So long as the Affiliated Sponsor's designation as such remains in
effect, the Affiliated Sponsor shall be bound by and subject to all
provisions of the Plan and the Trust Agreement. The authority to amend
the Plan and the Trust Agreement shall be vested in the Company and no
Affiliated Sponsor shall have any right to amend the Plan or the Trust
Agreement. Any amendment to the Plan or the Trust Agreement adopted by
the Company shall be binding upon every Affiliated Sponsor without
further action by such Affiliated Sponsor."
41.
Effective as of April 1, 2001, Appendix A Special Rules Applicable to
Annuity Distributions is amended to add the following paragraph immediately
preceding Subparagraph (a):
"Effective as of June 1, 2001, this Appendix A shall no longer apply.
See Section 8.02 regarding the elimination of certain annuity
distribution options effective as of June 1, 2001."
42.
Except as amended herein, the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, the Company has adopted this Amendment on the date
shown below, but effective as of the dates indicated above.
SEACOAST BANKING CORPORATION OF FLORIDA
Date: 4/17/01 By: /s/ Dennis S. Hudson, III
-------------------- ------------------------------------------
Name: Dennis S. Hudson, III
------------------------------------------
Title: President & Chief Executive Officer
------------------------------------------
AMENDMENT TWO
TO THE RETIREMENT SAVINGS PLAN FOR EMPLOYEES OF
FIRST NATIONAL BANK & TRUST COMPANY OF THE
TREASURE COAST
THIS AMENDMENT TWO to the Retirement Savings Plan for Employees of First
National Bank & Trust Company of the Treasure Coast, as amended and restated
effective January 1, 1997 (the "Plan") is adopted by Seacoast Banking
Corporation of Florida (the "Company") effective as of January 1, 2001, unless
another date is set forth herein.
WITNESSETH:
WHEREAS, the Company maintains the Plan, and such Plan is currently in
effect; and
WHEREAS, pursuant to Section 11.01 of the Plan, the Company may amend the
Plan from time to time;
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1.
The definition of "Compensation" in Article 2 is deleted in its entirety,
and a new definition is substituted in lieu thereof, as follows:
"Compensation shall mean the gross annual earnings required to be reported
on a Participant's Form W-2 (box 1) under Code Sections 6041(d), 6051(a)(3)
and 6052. Compensation shall also (i) include Salary Savings Contributions,
salary reduction Salary Savings Contributions to any Section 125 Plan
maintained by the Employer, amounts applied at the election of the
Participant to purchase benefit under an arrangement described in Code
Section 132(f) (effective for Plan Years beginning after December 31, 1999)
and salary deferrals under Code Sections 402(a)(8), 402(h), 403(b), 457 and
414(h); (ii) exclude Nonelective Contributions under a Section 125 Plan
maintained by the Employer, reimbursements or other expense allowances,
fringe benefits (cash and non-cash), moving expenses, deferred compensation
(and for this purpose benefits under a stock option plan are `deferred
compensation') and welfare benefits (and for this purpose, worker's
compensation payments of any type and severance pay of any type shall be
considered `welfare benefits,' but sick pay, short term disability and
vacation pay are not considered `welfare benefits'); and (iii) disregard
any income exclusions under Code Section 3401(a) based on the nature or
location of employment.
No more than $170,000 in Compensation (as adjusted annually by the
Secretary the Treasury pursuant to Code Section 401(a)(17)) shall be taken
into account for any Participant during a Plan Year."
2.
The definition of "Employee Contribution" in Article 2 is deleted in its
entirety, and a new definition is substituted in lieu thereof, as follows:
"Employee Contribution shall mean Nonelective Contributions deferred to the
Plan under the Section 125 Plan maintained by the Employer, Salary Savings
Contributions and/or Voluntary After-Tax Contributions."
3.
Article 2 is amended by adding the following new definition:
"Nonelective Contribution shall mean contributions made to the Plan during
the Plan Year by the Employer, at the election of the Participant in lieu
of cash compensation, and that are made pursuant to the Section 125 Plan
maintained by the Employer. Such contributions are fully vested and
nonforfeitable when made and distributable only as specified in Article 8."
4.
Section 4.01 is amended by adding the following new Section 4.01(c):
"(c) Nonelective Contributions. A Participant may contribute as a
Nonelective Contributions any amount the Participant elects to
contribute to the Plan under the Section125 Plan maintained by the
Employer. Such amounts shall be allocated to a Participant's Salary
Savings Contributions Account under the Plan."
5.
Section 4.02(b) is amended by inserting "and Nonelective Contributions"
before "Salary Savings Contributions".
6.
Section 4.02(c) is deleted in its entirety and a new Section 4.02(c) is
substituted in lieu thereof, as follows:
"(c) Additional Limitations of Salary Savings Contributions and Nonelective
Contributions. Salary Savings Contributions and Nonelective
Contributions shall be subject to the limitations described in Section
12.02 (maximum dollar contribution limit), Section 12.03 (ADP
nondiscrimination test) and Article 14 (Code Section 415 limit)."
7.
Effective as of December 31, 2001, Section 8.05 is amended by adding the
following new Section 8.05(h):
"(h) Model Amendment for Minimum Distribution Requirements. With respect to
distributions under the Plan made for calendar years beginning on or
after January 1, 2002, the Plan will apply the minimum distribution
requirements of Section 401(a)(9) of the Internal Revenue Code in
accordance with the regulations under Section 401(a)(9) that were
proposed on January 17, 2001, notwithstanding any provision of the
Plan to the contrary. This amendment shall continue in effect until
the end of the last calendar year beginning before the effective date
of the final regulations under Section 401(a)(9) or such other date as
may be specified in guidance published by the Internal Revenue
Service."
8.
Section 12.01 shall be amended by adding the following new definition:
"Nonelective Contributions. For purposes of this Article 12, a Nonelective
Contribution is taken into account only if the contribution is (i)
allocated to the Participant's Account under the terms of the Plan as of
any date within the Plan Year, and (ii) would have been received by the
Participant as cash, but for the deferral election during the Plan Year.
Any Nonelective Contribution taken into account under this Article 12 shall
be deemed to be a Salary Savings Contribution for purposes of the limits
set forth in Article 12."
9.
The definition of "Salary Savings Contribution" in Section 12.01 shall be
amended by adding the following new sentence to the end thereof:
"In addition, for purposes of this Article 12, unless otherwise stated,
Salary Savings Contributions shall include Nonelective Contributions taken
into account under this Plan."
10.
Section 12.02(g) shall be amended by deleting the last sentence therein and
substituting the a new sentence in lieu thereof, as follows:
"Nonelective Contributions shall be returned as an Excess Deferral before
Salary Savings Contributions, and Salary Savings Contributions shall be
returned as an Excess Deferral before Elective Profit Sharing
Contributions."
11.
The definition of "Compensation" in Section 14.03 is deleted in its
entirety, and a new definition is substituted in lieu thereof, as follows:
" `Compensation' for purposes of this Article 14 shall have that meaning as
defined in Article 2, modified to include Nonelective Contributions. For
Plan Years beginning prior to January 1, 1998, Compensation shall exclude
Salary Savings Contributions made under this Plan and any amount that is
contributed or deferred by an Employer at the election of the Employee that
is not included in the gross income of the Employee by reason of Code
Section 125 or 457."
12.
Effective June 25, 2001, a new Appendix C, PREDECESSOR EMPLOYERS AND PAST
SERVICE CREDIT RULES, shall be added to read as follows:
"APPENDIX C
PREDECESSOR EMPLOYERS AND PAST SERVICE CREDIT RULES
I. Employees of the Walmart Branch of Bank Atlantic in Fort Pierce, Florida.
Immediate Eligibility. Persons employed at the Walmart Branch of Bank
Atlantic in Fort Pierce, Florida (`Bank Atlantic') who become Eligible
Employees of the Employer on June 25, 2001, shall be eligible to
participate in this Plan as soon as administratively feasible on or after
June 25, 2001.
Past Service Credit for Vesting. Employment with Bank Atlantic or any other
corporation or business entity controlled by Bank Atlantic prior to June
25, 2001 shall be considered employment with the Employer for purposes of
satisfying the vesting requirements of Section 7.04(c)."
13.
This amendment shall be effective January 1, 2001, except where another
date is specified therein. Except as amended herein, this Plan shall continue in
full force and effect.
IN WITNESS WHEREOF, the Company has adopted Amendment Two on the date shown
below, but effective as of the dates indicated above.
SEACOAST BANKING CORPORATION OF FLORIDA
Date: 10/16/01 By: /s/ Dennis S. Hudson, III
--------------------- ------------------------------------------
Name: Dennis S. Hudson, III
------------------------------------------
Title: President & Chief Executive Officer
------------------------------------------
AMENDMENT THREE
TO THE RETIREMENT SAVINGS PLAN FOR EMPLOYEES OF
FIRST NATIONAL BANK & TRUST COMPANY OF THE
TREASURE COAST
THIS AMENDMENT THREE to the Retirement Savings Plan for Employees of First
National Bank & Trust Company of the Treasure Coast, as amended and restated
effective January 1, 1997 (the "Plan") is adopted by Seacoast Banking
Corporation of Florida (the "Company") effective as of the dates set forth
herein.
WITNESSETH:
WHEREAS, the Company maintains the Plan, and such Plan is currently in
effect; and
WHEREAS, pursuant to Section 11.01 of the Plan, the Company may amend the
Plan from time to time;
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1.
Section 5.01(a) is deleted in its entirety and the following new Section
5.01(a) is substituted in lieu thereof as follows:
"(a) Eligibility to Receive Matching Contribution with respect to Salary
Savings Contributions. Each payroll period the Employer shall make an
Employer Matching Contribution on behalf of each Participant who made
Salary Savings Contributions during the payroll period or such other period
selected by the Company. An Employer will not match Voluntary After-Tax
Contributions."
2.
Section 5.01(c)(1) is deleted in its entirety and the following new Section
5.01(c)(1) is substituted in lieu thereof as follows:
"(1) Match on Salary Savings Contribution. A Participant's Employer
Matching Contribution with respect to Salary Savings Contributions
each payroll period shall be a uniform percentage of a Participant's
Salary Savings Contribution for the Plan Year up to 4% of the
Participant's Compensation for such Plan Year. The Employer Matching
Contribution shall be allocated to the Participant's Employer Matching
Contribution Account within a reasonable time after the end of the
payroll period for which the Employer Matching Contribution is made or
such other period determined by the Employer. For purposes of this
Section 5.01(c), Compensation shall have the meaning described in
Article 2, including the limitations prescribed by Code Section
401(a)(17)."
3.
Effective December 1, 2001, Section 8.05 is deleted in its entirety and the
following new Section 8.05(h) is substituted in lieu thereof as follows:
"(h) Model Amendment for Minimum Distribution Requirements. With respect to
distributions under the Plan on or after December 1, 2001 for calendar
years beginning on or after January 1, 2001, the Plan will apply the
minimum distribution requirements of Section 401(a)(9) of the Internal
Revenue Code in accordance with the regulations under Section
401(a)(9) that were proposed on January 17, 2001 (the "2001 Proposed
Regulations"), notwithstanding any provision of the Plan to the
contrary. If the total amount of required minimum distributions made
to a Participant for 2001 prior to December 1, 2001 are equal to or
greater than the amount of required minimum distributions determined
under the 2001 Proposed Regulations, then no additional distributions
are required for such Participant for 2001 on or after such date. If
the total amount of required minimum distributions made to a
Participant for 2001 prior to December 1, 2001 are less than the
amount determined under the 2001 Proposed Regulations, then the amount
of required minimum distributions for 2001 is the amount determined
under the 2001 Proposed Regulations. This amendment shall continue in
effect until the end of the last calendar year beginning before the
effective date of the final regulations under Section 401(a)(9) or
such other date as may be specified in guidance published by the
Internal Revenue Service."
3.
This amendment shall be effective January 1, 2001, except where another
date is specified therein. Except as amended herein, this Plan shall continue in
full force and effect.
IN WITNESS WHEREOF, the Company has adopted Amendment Three on the date
shown below, but effective as of the dates indicated above.
SEACOAST BANKING CORPORATION OF FLORIDA
Date: May 30, 2002 By: /s/ Dennis S. Hudson, III
----------------------- ------------------------------------------
Name: Dennis S. Hudson, III
------------------------------------------
Title: President & Chief Executive Officer
------------------------------------------
AMENDMENT FOUR TO THE RETIREMENT SAVINGS PLAN
FOR EMPLOYEES OF FIRST NATIONAL BANK & TRUST
COMPANY OF THE TREASURE COAST
THIS AMENDMENT FOUR to the Retirement Savings Plan for Employees of First
National Bank & Trust Company of the Treasure Coast, as amended and restated
effective January 1, 1997 (the "Plan") is adopted by Seacoast Banking
Corporation of Florida (the "Company") effective as of the dates set forth
herein:
WITNESSETH:
WHEREAS, the Company maintains the Plan, and such Plan is currently in
effect; and
WHEREAS, pursuant to Section 11.01 of the Plan, the Company may amend the
Plan from time to time;
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1.
Article 1 is amended to add a new Section 1.06 as follows:
"1.06 EGTRRA Provisions.
Effective for Plan Years beginning after December 31, 2001, the
provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001 (`EGTRRA') incorporated in the Plan are intended to demonstrate
good faith compliance with the requirements of EGTRRA and are to be
construed in accordance with EGTRRA and the guidance issued
thereunder. The provisions of EGTRRA incorporated in the Plan shall
supercede the provisions of the Plan to the extent, if any, that those
provisions are inconsistent with the provisions of EGTRRA."
2.
The definition of "Compensation" in Article 2 is amended by deleting the
second paragraph and substituting a new second paragraph in lieu thereof, as
follows:
"The annual Compensation of each Participant taken into account in
determining allocations for any Plan Year beginning after December 31,
2001 shall not exceed $200,000 as adjusted for cost-of-living
increases in accordance with Section 401(a)(17)(B) of the Code. Annual
Compensation means Compensation during the Plan Year or such other
consecutive 12-month period over which Compensation is otherwise
determined under the Plan (the determination period). The
cost-of-living adjustment in effect for a calendar year applies to
annual Compensation for the determination period that begins with or
within such calendar year. For Plan Years beginning prior to January
1, 2002, the Compensation of a Participant taken into account under
the Plan for a Plan Year is $170,000 for any Plan Year beginning in
2001 or 2000, and $160,000 for any Plan Year beginning in 1999, 1998
or 1997."
3.
Effective as of June 1, 2002 , Section 4.01(a) shall be deleted in its
entirety and replaced with the following new Section 4.01(a):
"(a) Salary Savings Contributions. A Participant may contribute as a Salary
Savings Contribution any whole percentage from 1% to 75% (in 1%
increments) of his Compensation during any Plan Year. Because of the
limitations described in Section 4.02(c), a Participant may not be
allowed to contribute the maximum percentage."
4.
Section 4.01 shall be amended by adding a new Section 4.01(d) as follows:
"(d) Catch-Up Contributions. All Employees who are eligible to make Salary
Savings Contributions under this Plan and who have attained age 50
before the close of the calendar year shall be eligible to make
catch-up contributions in accordance with, and subject to the
limitations of, Section 414(v) of the Code. Such catch-up
contributions shall not be taken into account for purposes of the
provisions of the Plan implementing the required limitations of
sections 402(g) and 415 of the Code. The Plan shall not be treated as
failing to satisfy the provisions of the Plan implementing the
requirements of Section 401(a)(4), 401(k)(3), 401(k)(11), 401(k)(12),
410(b), or 416 of the Code, as applicable, by reason of the making of
such catch-up contributions.
(i) This Section 4.01(d) shall apply to contributions made after
January 1, 2002.
(ii) Catch-up contributions shall be deemed to be Salary Savings
Contributions for purposes of the Employer Matching Contribution
provided under Section 5.01 of the Plan."
5.
Section 4.03(c)(1) shall be deleted in its entirety and replaced with the
following new Section 4.03(c)(1):
"(1) See Section 9.03 for circumstances under which a Participant's Salary
Savings Contributions could be suspended for a period of at least 6
months after such Participant receives a hardship distribution."
6.
Section 4.05(a) shall be deleted in its entirety and replaced with the
following new Section 4.05(a):
"(a) Without regard to any limitation on contributions set forth in this
Article, a Participant shall be permitted, if the Committee consents
(based on non-discriminatory criteria), to transfer to the Trustee
during any Plan Year additional property acceptable to the Trustee,
provided such property was received in a distribution made after
December 31, 2001 from the following types of plans:
(1) a qualified plan described in Section 401(a) or 403(a) of the
Code, including after-tax employee contributions,
(2) an annuity contract described in Section 403(b) of the Code,
excluding after-tax employee contributions, or
(3) an eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state or any
agency or instrumentality of a state or political subdivision of
a state."
7.
Section 4.05 shall be amended by adding the following new Section 4.05(c)
as follows:
"(c) The Plan will accept a participant rollover contribution of the
portion of a distribution from an individual retirement account or
annuity described in Section 408(a) or 408(b) of the Code that is
eligible to be rolled over and would otherwise be includible in gross
income."
8.
Section 8.01(b)(i) shall be deleted in its entirety and replaced with the
following new Section 8.01(b)(i):
"(i) Account does not exceed $5,000. If the Participant's vested
Account balance does not exceed $5,000, such Account shall be
distributed in a lump sum no later than ninety (90) days after
the end of the Plan Year in which such Termination of Employment
occurred.
The value of a Participant's vested Account balance shall be
determined without regard to that portion of the Account balance
that is attributable to rollover contributions (and earnings
allocable thereto) within the meaning of Sections 402(c),
403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16) of the
Code. If the value of the Participant's vested Account balance as
so determined is $5,000 or less, the Plan shall distribute the
Participant's entire nonforfeitable account balance.
This Section 8.01(b)(i) shall apply with respect to distributions
made after December 31, 2001 with respect to Participants who
separated from service after December 31, 2001."
9.
Section 8.01(d), Section 8.01(e) and Section 8.01(f) shall be redesignated
as Section 8.01(e), Section 8.01(f), and Section 8.01(g), respectively.
10.
Section 8.01 shall be amended by adding the following new Section 8.01(d):
"(d) Distribution Upon Severance From Employment. A Participant's Account
shall be distributed on account of the Participant's severance from
employment. However, such a distribution shall be subject to the other
provisions of the Plan regarding distributions, other than provisions
that require a separation from service before such amounts may be
distributed.
(i) This Section 8.01(d) shall apply for distributions and severances
from employment occurring after the dates specified in paragraph
(ii) below.
(ii) This Section 8.01(d) shall apply for distributions after December
31, 2001 for severances from employment occurring after December
31, 2001."
11.
Section 8.08(c) shall be deleted in its entirety and replaced with the
following new Section 8.08(c):
"(c) Definition of Eligible Retirement Plan. The term `Eligible Retirement
Plan' shall mean:
(i) A qualified plan described in Section 401(a) or 403(a) of the
Code, including after-tax employee contributions.
(ii) An annuity contract described in Section 403(b) of the Code,
excluding after-tax employee contributions.
(iii)An eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision or a state or any
agency or instrumentality of a state or political subdivision of
a state.
The definition of `Eligible Retirement Plan' shall also apply in
the case of a distribution to a surviving spouse, or to a spouse
or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code."
12.
Section 8.08(d)(v) shall be deleted in its entirety and replaced with a new
Section 8.08(d)(v) as follows:
"(v) For purposes of the direct rollover provisions in this Section 8.08 of
the Plan, any amount that is distributed on account of hardship shall
not be an eligible rollover distribution and the distributee may not
elect to have any portion of such distribution paid to an Eligible
Retirement Plan."
13.
Section 8.08 shall be amended by adding a new Section 8.08(f) as follows:
"(f) For purposes of the direct rollover provisions in this Section 8.08 of
the Plan, a portion of the distribution shall not fail to be an
eligible rollover distribution merely because the portion consists of
after-tax employee contributions which are not includible in gross
income. However, such portion may be transferred only to an individual
retirement account or annuity described in Section 408(a) or (b) of
the Code, or to a qualified defined contribution plan described in
Section 401(a) or 403(a) of the Code that agrees to separately account
for amounts so transferred, including separately accounting for the
portion of such distribution which is not so includable."
14.
Section 9.03(a)(2)(A) shall be deleted in its entirety and replaced with a
new Section 9.03(a)(2)(A) as follows:
"(A) The Participant's Salary Savings Contributions and Elective Profit
Sharing Contributions shall automatically be suspended beginning on
the first payroll period that commences after such Participant
requests and receives a hardship distribution. Such Participant may
resume making Salary Savings Contributions and Elective Profit Sharing
Contributions only on the January 1, April 1, July 1 or October 1
which is at least 6 months after the effective date of such suspension
and only after informing the Committee in writing at least 30 days (or
such lesser time as specified by the Committee) prior to the date on
which the Salary Savings Contributions and Elective Profit Sharing
Contributions are to resume."
15.
Section 9.03(a)(2)(B) shall be deleted in its entirety and replaced with a
new Section 9.03(a)(2)(B) as follows:
"(B) [Reserved]"
16.
Section 9.03(a)(2)(C) shall be deleted in its entirety and replaced with a
new Section 9.03(a)(2)(C) as follows:
"(C) The Participant shall be prohibited under a legally enforceable
agreement from making an Employee contribution to any other plan
maintained by the Employer for at least 6 months after the receipt of
the hardship distribution. For this purpose, the phrase `any other
plan' includes all qualified and nonqualified plans of deferred
compensation, stock option plans and stock purchase plans. It does not
include a health or welfare plan including one that is part of a
Section 125 cafeteria plan."
17.
Section 12.02(a) shall be deleted in its entirety and replaced with a new
Section 12.02(a) as follows:
"(a) Notwithstanding any other provision of this Plan to the contrary, the
aggregate of a Participant's Salary Savings Contributions and Elective
Profit Sharing Contributions actually contributed to the Plan during a
calendar year may not exceed the dollar limitation contained in
Section 402(g) of the Code in effect for such taxable year, except to
the extent permitted under Section 4.01(d) of the Plan and Section
414(v) if applicable. Any Salary Savings Contributions or Elective
Profit Sharing Contributions in excess of the foregoing limit (`Excess
Deferral'), plus any income and minus any loss allocable thereto, may
be distributed to the applicable Participant no later than April 15
following the calendar year in which such contributions were made."
18.
Section 12.11 shall be amended by adding the following new Section
12.11(g):
"(g) The Combined ADP and ACP Test described in this Section 12.11 shall
not apply for Plan Years beginning after December 31, 2001."
19.
Section 14.01(a) shall be deleted in its entirety and replaced with a new
Section 14.01(a) as follows:
"(a) Except to the extent permitted by Section 4.01(d) of the Plan and
Section 414(v) of the Code, if applicable, the Annual Addition that
may be contributed or allocated to a Participant's account under the
plan for any Limitation Year shall not exceed the lesser of:
(i) $40,000, as adjusted for increases in the cost-of-living under
Section 415(d) of the Code, or
(ii) 100 percent (100%) of the Participant's Compensation for the
Limitation Year. The compensation limit referred to in this
paragraph (ii) shall not apply to any contribution for medical
benefits after separation from service (within the meaning of
401(h) or Section 419A(f)(2) of the Code which is otherwise
treated as an Annual Addition."
20.
Section 14.01(c) is amended by deleting "$30,000" and substituting
"$40,000" in lieu thereof.
21.
Section 14.02 is deleted in its entirety and replaced with the following:
"[Reserved]"
22.
Effective January 1, 2001, the definition of "Compensation" in Section
14.03 is deleted in its entirety and replaced with the following new definition:
"`Compensation' for purposes of this Article 14 shall mean the gross annual
earnings required to be reported on a Participant's Form W-2 (box 1)
under Code Sections 6041(d), 6051(a)(3) and 6052. Compensation shall
also include Salary Savings Contributions, salary reduction Salary
Savings Contributions to any Section 125 Plan maintained by the
Employer, Nonelective Contributions and for Plan Years beginning after
December 31, 1999, amounts applied at the election of the Participant
to purchase benefits under an arrangement described in Code Section
132(f). For Plan Years beginning prior to January 1, 1998,
Compensation shall exclude Salary Savings Contributions made under
this Plan and any amount that is contributed or deferred by an
Employer at the election of the Employee that is not included in the
gross income of the Employee by reason of Code Section 125 or 457."
23.
Section 14.03 is amended by deleting the terms "Defined Benefit Fraction"
and "Defined Contribution Fraction".
24.
Section 15.02(a) shall be deleted in its entirety and replaced with the
following new Section 15.02(a):
"(a) Top Heavy. The Plan shall be Top Heavy for the Plan Year if, as of the
Valuation Date which coincides with or immediately precedes the
Determination Date, the value of the Participant Accounts of Key
Employees exceeds 60% of the value of all Participant Accounts. If the
Employer maintains more than one plan, all plans in which any Key
Employee participates and all plans which enable this Plan to satisfy
the anti-discrimination requirements of Code Sections 401(a)(4) or 410
must be combined with this Plan (`Required Aggregation Group') for the
purposes of applying the 60% test described in the preceding sentence.
Plans maintained by the Employer which are not in the required
aggregation group may be combined at the Employer's election with this
Plan for the purposes of determining Top Heavy status if the combined
plan satisfies the requirements of Code Section 401(a)(4) and 410
(`Permissive Aggregation Group'). In determining the value of
Participant Accounts, all distributions made with respect to the
Employee under the Plan and any plan aggregated with the Plan under
Section 416(g)(2) of the Code during the one-year period ending on the
Determination Date shall be included and any unallocated Employer
Contributions or forfeitures attributable to the Plan Year in which
the Determination Date falls shall also be included. The preceding
sentence shall also apply to distributions under a terminated plan
which, had it not been terminated, would have been aggregated with the
Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a
distribution made for a reason other than separation from service,
death or disability, this provision shall be applied by substituting
"five-year period" for "one-year period". The Account of (i) any
Employee who at one time was a Key Employee but who is not a Key
Employee for any of the five Plan Years ending on the Determination
Date; and (ii) any Employee who has not performed services for the
Employer or a related employer maintaining a plan in the aggregation
group for the one Plan Years ending on the Determination Date, shall
be disregarded in determining Top Heavy status.
If the Employer maintains a defined benefit plan during the Plan Year
which is subject to aggregation with this Plan, the 60% test shall be
applied after calculating the present value of the Participants'
accrued benefits under the defined benefit plan in accordance with the
rules set forth in that plan and combining the present value of such
accrued benefits with the Participant's account balances under this
Plan.
Solely for the purpose of determining if the Plan, or any other plan
included in the Required Aggregation Group, is Top-Heavy, a Non-Key
Employee's accrued benefit in a defined benefit plan shall be
determined under (i) the method, if any, that uniformly applies for
accrual purposes under all plans maintained by the Affiliates, or (ii)
if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional
accrual rate of Code Section 411(b)(1)(C)."
25.
Section 15.02(b) shall be deleted in its entirety and replaced with the
following new Section 15.02(b):
"(b) Key Employee. Any employee or former employee (including any deceased
employee) who at any time during the Plan Year that includes the
determination date was an officer of the Employer having annual
compensation greater than $130,000 (as adjusted under section
416(i)(1) of the Code for Plan Years beginning after December 31,
2002), a 5-percent owner or the Employer, or a 1-percent owner of the
Employer having annual compensation of more than $150,000. For this
purpose, annual compensation means compensation within the meaning of
Section 415(c)(3) of the Code. The determination of who is a Key
Employee will be made in accordance with Section 416(i)(1) of the Code
and the applicable regulations and other guidance of general
applicability issued thereunder."
26.
Section 15.03(a) shall be deleted in its entirety and replaced with the
following new Section 15.03(a):
"(a) Except as provided below, the Employer Contributions allocated on
behalf of any Non-Key Employee who is employed by the Employer on the
last day of the Top Heavy Plan Year shall not be less than the lesser
of (i) 3% of such Non-Key Employee's Compensation or (ii) the largest
percentage of Employer Contributions, Salary Savings Contributions and
Elective Profit Sharing Contributions, as a percentage of the Key
Employee's Compensation, allocated on behalf of any Key Employee for
such Plan Year. Employer Matching Contributions allocated to the
Accounts of Non-Key Employees shall be taken into account for purposes
of satisfying the minimum contribution requirements of Section
416(c)(2) of the Code and the Plan. The preceding sentence shall apply
with respect to Employer Matching Contributions under the Plan.
Employer Matching Contributions that are used to satisfy the minimum
contribution requirements shall be treated as matching contributions
for purposes of the actual contribution percentage test and other
requirements of Section 401(m) of the Code."
27.
Section 15.04 shall be deleted in its entirety.
28.
This amendment shall be effective January 1, 2002, except where another
date is specified therein. Except as amended herein, this Plan shall continue in
full force and effect.
IN WITNESS WHEREOF, the Company has adopted this Amendment Four on the date
shown below, but effective as of the dates indicated above.
SEACOAST BANKING CORPORATION OF FLORIDA
Date: May 30, 2002 By: /s/ Dennis S. Hudson, III
------------------------ ------------------------------------------
Name: Dennis S. Hudson, III
------------------------------------------
Title: President & Chief Executive Officer
------------------------------------------
EXHIBIT 10.13
Letter Amendment
As of September 6, 2002
Mr. William R. Hahl
Executive Vice President & Chief Financial Officer
Seacoast Banking Corporation of Florida
815 Colorado Avenue
Stuart, FL 34994
Re: Loan Agreement dated September 6, 2001 between Seacoast Banking
Corporation of Florida (the "Borrower") and SunTrust Bank, a Georgia
corporation (the "Bank") (the "Loan Agreement")
Dear Mr. Hahl:
The Bank previously extended a revolving line of credit to the Borrower pursuant
to the above-referenced Loan Agreement. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Loan Agreement.
The Borrower has requested the Bank to extend the Revolving Period applicable to
the Line of Credit Loan through September 6, 2003. The Bank has agreed to do so.
Therefore, effective September 6, 2002 (the "Effective Date") in Article I,
Section 1.1 of the Loan Agreement, the definition of the term "Maturity Date"
contained herein is hereby changed to September 6, 2003.
The consents and agreements contained in this Letter Amendment shall be
effective as of the Effective Date, shall satisfy all notice and consent
provisions and all other terms and conditions contained in the Loan Agreement
that may pertain or apply to the actions as set forth in this Letter Amendment,
and shall apply only to the specific items and events described herein, for the
purposes set forth herein, and do not apply to any other provisions of the Loan
Agreement or any other Loan Document, nor to any future events, defaults,
violations or requirements, whether or not of a similar nature. Except as
specifically modified by this Letter Amendment, the Loan Agreement remains in
full force and effect.
Feel free to contact me at 407.237.2446 or via E-Mail at
adam.weinstein@suntrust.com if you have any questions or clarifications.
Very truly yours,
Adam J. Weinstein
Vice President
Financial Institutions Group
REVOLVING LOAN AGREEMENT
THIS REVOLVING LOAN AGREEMENT is made and entered into as of the 6th
day of September, 2001, by and between:
SEACOAST BANKING CORPORATION OF FLORIDA, a Florida
corporation, 815 Colorado Avenue, Stuart, Florida 34994
(hereinafter referred to as the "Borrower");
and
SUNTRUST BANK, a Georgia corporation, 200 South Orange Avenue,
P.O. Box 3833, Orlando, Florida 32897 (hereinafter referred to
as the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Bank to extend to it a
revolving line of credit loan in the maximum principal amount of
$5,000,000.00; and
WHEREAS, the Bank is willing to do so upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements contained herein, the Borrower and the Bank
agree to amend and restate the Existing Loan Agreement in its entirety as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Definitions. For the purposes of this Agreement, the
following terms shall have the respective meanings specified in this
Section 1.1 (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Advance" shall mean individually and collectively the proceeds of the
Loan delivered to the Borrower by the Bank pursuant to Section 2.2 hereof.
"Agreement" shall mean this Revolving Loan Agreement as originally
executed by the parties hereto and all permitted amendments and
modifications hereof.
"Banking Day" shall mean any Day other than a Saturday, Sunday or Day
on which commercial banks are authorized to close under the laws of State
of Florida.
"Cash Basis Loans" shall mean loans in which the accrual of interest
has been discontinued due to a deterioration in the financial condition of
any borrower.
"Covenant Compliance Certificate" shall mean a certificate, in form
and content satisfactory to the Bank, which shall (i) set forth the various
financial covenants and ratios which the Borrower and FNBT are required to
comply with during the term of this Agreement, (ii) contain calculations
reflecting whether or not the Borrower or FNBT, as the case may be, is in
compliance with each such financial covenant or ratio requirement, (iii)
contain a statement as to whether or not the Borrower is in default under
the Loan Agreement or any of the other Loan Documents, and, if the Borrower
is in default, such statement shall indicate the nature thereof as well as
the steps which Borrower proposes to take in order to cure said default,
and (iv) be certified to be true and correct by an authorized financial
officer of the Borrower acceptable to the Bank.
"Day" shall mean a calendar day, unless the context indicates
otherwise.
"Default Rate" shall mean the lesser of (i) twenty-five percent (25%)
per annum or (ii) the highest rate of interest permitted from time to time
by applicable law.
"Due Date" shall mean the date any payment of principal or interest is
due and payable on the Loan or Note.
"Event of Default" shall mean an event of default specified in Article
Six of this Agreement.
"FNBT" shall mean First National Bank and Trust of the Treasure Coast,
a national banking association and a wholly-owned Subsidiary of the
Borrower.
"GAAP" shall mean generally accepted accounting principles
consistently applied to the particular item.
"Interest Coverage Ratio" shall mean the ratio of (a) fifty percent
(50%) of FNBT's total Net Operating Income during the four quarters
immediately preceding the date of calculation divided by (b) the actual
interest payable in respect of the Loan for the same period.
"Interest Payment Date" shall mean the last Day of each and every
calendar quarter, commencing on the last Day of the calendar quarter in
which the Borrower obtains its first Advance, except that if an Interest
Payment Date is not a Banking Day, such Interest Payment Date shall be the
first Banking Day following the Day on which such interest payment would
have been payable, which Day shall be deemed to be the original Interest
Payment Date for purposes of determining the amount and timeliness of the
interest payment.
"Interest Period" shall mean 90 Days or any other period requested by
the Borrower and approved by the Bank in its sole and absolute discretion;
provided, that (a) the first Day of an Interest Period must be a Banking
Day, (b) any Interest Period that would otherwise end on a Day that is not
a Banking Day shall be extended to the next succeeding Banking Day, unless
such Banking Day falls in the next calendar month, in which case the
Interest Period shall end on the next preceding Banking Day, and (c) no
interest Period may extend beyond the Maturity Date.
"Interest Rate" shall mean the applicable rate of interest to be borne
by the Note (except when the Default Rate is in effect), which shall be a
rate per annum equal to LIBOR plus one hundred thirty basis points (i.e.,
1.30%), provided however, that the interest rate shall never exceed the
maximum rate allowable by applicable law from time to time.
"Interest Rate Determination Date" shall mean each date for
calculating LIBOR, as the case may be, for purposes of determining the
Interest Rate in respect of an Interest Period, and which shall be the
second Banking Day prior to the first Day of the applicable Interest Period
for any Interest Period.
"Liabilities" shall mean all liabilities and obligations of the
Borrower, all as determined in accordance with GAAP.
"LIBOR" shall mean the interest rate per annum equal to the ninety
(90) Day London Interbank Offered Rate for deposits in Dollars as published
in the Wall Street Journal in effect on the Interest Rate Determination
Date. If the foregoing rate is unavailable from the Wall Street Journal for
any reason, then such rate shall be determined by the Bank from any other
publication or interest rate reporting service of recognized standing
designated in writing from time to time by the Bank to the Borrower; in any
such case rounded, if necessary, to the next higher 1/16 of 1.0%, if the
rate is not such a multiple.
"Loan" shall mean the revolving line of credit loan extended to the
Borrower by the Bank pursuant to the terms hereof.
"Loan Documents" shall mean this Agreement, the Note, the Negative
Pledge and all of the other documents, agreements, certificates, schedules,
notes, statements and opinions, however described, referenced herein or
executed or delivered pursuant hereto or in connection with or arising with
the Loan or the transactions contemplated by this Agreement.
"Maturity Date" shall mean September 6, 2002.
"Negative Pledge" shall mean that certain Agreement Not to Sell,
Transfer or Encumber Stock dated of even date herewith executed by the
Borrower in favor of the Bank pursuant to which the Borrower agrees not to
encumber or sell any of the stock of FNBT, together with all amendments,
modifications, restatements or replacements thereof.
"Net Operating Income" shall mean, with respect to any given fiscal
year of FNBT, its income after taxes but before extraordinary items and
securities gains and losses.
"Non-Performing Assets" shall mean the aggregate sum of the Borrower's
consolidated (i) Cash Basis Loans, (ii) loans 90 Days or more past due,
(iii) Renegotiated Loans, (iv) Other Real Estate and (v) other assets
described as "other non-performing assets" on Borrower"s consolidated
financial statements.
"Non-Performing Assets Ratio" shall mean the ratio of Non-Performing
Assets to Total Loans plus Other Real Estate.
"Non-Usage Fee" shall mean the fee payable by the Borrower to the Bank
for the unused portion of the Loan, determined in accordance with Section
2.12 hereof.
"Note" shall mean the Borrower's promissory note or notes evidencing
the Loan together with all amendments, modifications, renewals, supplements
or replacements thereof.
"Obligations", with respect to the Borrower, shall mean, individually
and collectively, all payment and performance duties, obligations and
liabilities of the Borrower to the Bank under and pursuant to the Loan
Documents and all renewals, modifications or extensions of any thereof.
"Other Real Estate" shall mean real estate acquired by the Borrower or
any of its Subsidiaries as a result of a deterioration in the financial
position of any borrower.
"Permitted Loan Limit" shall mean $5,000,000.00.
"Person" shall mean any individual, joint venturer, partnership, firm,
corporation, trust, unincorporated organization or other organizational
entity, or a governmental body or any department or agency thereof, and
shall include both the singular and the plural.
"Principal Place of Business" shall mean the principal place of
business and the headquarters of the Borrower at which all of its records
are kept which is noted in the preamble of this Agreement.
"Revolving Period" shall mean the period during the term of the Loan,
commencing on the date hereof and ending on the occurrence of (i) an Event
of Default or (ii) the Maturity Date, whichever first occurs, or such later
date as the Bank may in its absolute discretion agree to in writing.
"Subsidiary" shall mean any corporation whose assets and income are
includible in the financial statements of the Borrower in accordance with
GAAP, and shall include subsidiaries of a subsidiary.
"Total Loans" shall mean all loans and leases, net of unearned income.
"UCC" shall mean the Florida Uniform Commercial Code, Chapters 671 to
680, inclusive.
SECTION 1.2 Accounting Terms; Financial Data. All accounting terms
used herein shall be construed in accordance with GAAP consistently applied
and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with GAAP.
ARTICLE II
AMOUNT AND TERMS OF THE LOAN
SECTION 2.1 The Loan. The Bank agrees from time to time during the
Revolving Period to lend to the Borrower upon the request of the Borrower
up to the aggregate principal amount of the Permitted Loan Limit on the
terms and conditions set forth herein. During the Revolving Period, the
Borrower shall be entitled to receive up to the amount of the Permitted
Loan Limit in one or more Advances pursuant to Section 2.2 hereof, except
as otherwise specifically set forth in this Agreement. Advances under the
Loan shall be evidenced by the Note and shall be payable as set forth in
Section 2.8 hereof. The Borrower shall not be liable under the Note except
with respect to funds actually advanced to the Borrower by the Bank
pursuant to the terms hereof. The Loan may revolve during the Revolving
Period; accordingly, during the Revolving Period, the Borrower may borrow
up to the Permitted Loan Limit, repay all or any portion of such principal
amount of the Loan, and reborrow up to such amount, subject to the terms
and conditions set forth herein. After the expiration of the Revolving
Period, the Borrower shall not be entitled to receive any further Advance.
SECTION 2.2 Advance of Proceeds on Loan. The Bank has previously made
certain Advances to the Borrower under and pursuant to the Existing Loan
Agreement. After the date hereof, and upon satisfaction of the conditions
precedent set forth in Article Five hereof, the Borrower shall be entitled
to obtain additional Advances under the Loan. The Borrower shall give the
Bank written notice (or facsimile transmission, immediately confirmed by
telephone and further confirmed by sending the original notice to the Bank
so that the same is received by the Bank no later than three (3) Banking
Days after the date of the facsimile transmission) (a "Notice of
Borrowing"), which Notice of Borrowing shall be given prior to 2:00 p.m.
Orlando, Florida time and such Notice of Borrowing shall be in the form
attached hereto as Exhibit "A" or in such other form as may be acceptable
to the Bank in its sole and absolute discretion, and shall specify (a) the
proposed date of the Advance (which shall be a Banking Day), (b) the amount
of the proposed borrowing (minimum principal amount of $100,000.00) and (c)
that on the date of the Notice of Borrowing there has been no material
adverse change in the financial condition of the Borrower from that set
forth on the most recent annual financial statements furnished to the Bank
as provided in this Agreement. The Bank shall have no duty or obligation to
verify or confirm the authority of the representative of the Borrower
requesting any such Advance as long as said person identifies
himself/herself as an employee or representative of the Borrower. The Bank
shall make each Advance hereunder on the date proposed by the Borrower
therefor by crediting the amount of each Advance requested by the Borrower
to the general deposit account of the Borrower maintained with the Bank.
Each request for an Advance shall be deemed to restate and verify all
representations of the Borrower made herein as of the date of such request.
SECTION 2.3 Interest on the Note. The Loan shall be evidenced by the
Note and shall be due and payable in accordance with and as required by
Section 2.8. The Note shall bear interest from the date thereof through
maturity (whether by acceleration or otherwise) on the unpaid principal
balance thereof from time to time outstanding at the Interest Rate and
shall be payable as set forth in Section 2.8 hereof.
From and after the Due Date, interest shall accrue on the unpaid
principal balance of the Loan and on all accrued but unpaid interest
thereon, or on such defaulted payment, at the Default Rate from and after
the date that the Borrower has been notified in writing that an Event of
Default has occurred. Such interest shall continue to accrue until the date
of payment in full of all principal and accrued but unpaid interest of such
defaulted payment, if applicable.
SECTION 2.4 Prepayment of the Loan. The Borrower may at any time and
from time to time prepay all or any part of the principal amount of the
Loan outstanding without penalty; provided, however, on the date of the
prepayment, there shall exist no Default and, in the event of a prepayment
in full, all accrued but unpaid interest on the amount of the prepayment
through the prepayment date, whether or not due and payable, shall be paid
in full prior to any prepayment. Each prepayment other than full payment
shall be made prior to 2:00 p.m. (Orlando time) on the date of the
prepayment, and shall be made on a Banking Day in immediately available
funds.
SECTION 2.5 Calculation of Interest. Any interest due on the Loan or
any other Obligations arising hereunder shall be calculated on the basis of
a year containing 360 Days. The interest due on any date for payment of
interest hereunder shall be that interest to the extent accrued as of
midnight on the last Day immediately prior to that Interest Payment Date.
Notwithstanding anything herein or in any Loan Document to the contrary,
the sum of all interest and all other amounts deemed interest under Florida
or other applicable law which may be collected by the Bank hereunder shall
not exceed the maximum lawful interest rate permitted by such law from time
to time. The Bank and the Borrower intend and agree that under no
circumstance shall the Borrower be required to pay interest on the Loan or
on any other Obligations at a rate in excess of the maximum interest rate
permitted by applicable law from time to time, and in the event any such
interest is received or charged by the Bank in excess of that rate, the
Borrower shall be entitled to an immediate refund of any such excess
interest by a credit to and payment toward the unpaid balance of the Loan
(such credit to be considered to have been made at the time of the payment
of the excess interest) with any excess interest not so credited to be
immediately paid to the Borrower by the Bank.
SECTION 2.6 Place of Payment. All payments by the Borrower under the
Loan Documents shall be made to the Bank at its banking house at Orlando,
Florida, in lawful money of the United States of America and in immediately
available funds.
SECTION 2.7 Set-Off. The Borrower hereby grants to the Bank a lien on,
and a security interest in, the deposit balances, accounts, items,
certificates of deposit and monies of the Borrower in the possession of or
on deposit with the Bank to secure and as collateral for the payment and
performance of the Obligations. Upon default, the Bank may at any time and
from time to time, appropriate and set-off against and apply the same to
the Obligations when and as due and payable.
SECTION 2.8 Payment of Note. The Borrower shall pay the Note together
with interest at the rate set forth in Section 2.3 as follows:
(a) Interest. Interest shall be payable on each Interest
Payment Date, upon the occurrence of an Event of Default and on
the Maturity Date.
(b) Principal. The entire outstanding principal balance and
all accrued but unpaid interest shall be due and payable in full
on the earlier of (i) the Maturity Date or (ii) the occurrence of
an Event of Default.
SECTION 2.9 Application of Payments. All payments made on the Note
shall be applied first to interest accrued to the date of payment and next
to the unpaid principal balance; provided, however, in the event an Event
of Default occurs, payments shall be applied first to any costs or
expenses, including reasonable attorneys fees, that the Bank may incur in
exercising its rights under the Loan Documents, as the Bank may determine.
SECTION 2.10 Late Charges. If any Loan payment is not made within
fifteen (15) Days after the Due Date, then, in that event, there shall also
be paid to the Bank, a late charge equal to five percent (5%) of the
payment that is due on the Due Date and not paid. The purpose of such late
charge shall be to reimburse the Bank for its costs and expenses in
connection with servicing a delinquent account.
SECTION 2.11 Determination of Interest Rate. As soon as practicable
after 11:00 A.M. Orlando, Florida time, on the Interest Rate Determination
Date, Bank shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the Interest Rate
which shall apply to the Loan for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in
writing) to the Borrower.
SECTION 2.12 Non-Usage Fee. The Borrower shall pay to the Bank a
Non-Usage Fee in the amount of fifteen basis points (0.15%) per annum on
the average unused portion of the Loan, payable quarterly, in arrears. Such
fee shall accrue from the date of this Agreement until the Bank's
obligations to advance funds under the Loan pursuant to this Agreement are
terminated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
SECTION 3.1 Organization, Corporate Powers, Etc.
(a) The Borrower (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida
(ii) has all requisite power and authority, corporate and otherwise,
to own its properties and assets and to carry on its business as now
conducted and proposed to be conducted, (iii) is duly qualified to do
business and is in good standing in every jurisdiction in which the
character of its properties or assets owned or the nature of its
activities conducted makes such qualification necessary including the
State of Florida, and (iv) has the corporate power and authority to
execute and deliver, and to perform its obligations under this
Agreement, the Note, and the other Loan Documents.
(b) FNBT (i) is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States, (ii) has all requisite power and authority, corporate and
otherwise, to own its properties and assets and to carry on its
business as now conducted and proposed to be conducted, (iii) is duly
qualified to do business and is in good standing in every jurisdiction
in which the character of its properties or assets owned or the nature
of its activities conducted makes such qualification necessary
including the State of Florida, and (iv) has the corporate power and
authority to execute and deliver, and to perform its obligations under
any of the Loan Documents to which it is a party.
SECTION 3.2 Authorization of Loan, Etc. The execution, delivery and
performance of the Loan Documents by the Borrower (a) have been duly
authorized by all requisite corporate action (no shareholder action being
required pursuant to applicable law) and (b) will not (i) violate (A) any
provision of law, any governmental rule or regulation, any order of any
court or other agency of government or the Articles of Incorporation or
Bylaws of the Borrower or (B) any provision of any indenture, agreement or
other instrument to which the Borrower is a party or by which it or any of
its properties or assets are bound, (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or (iii)
result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Borrower
other than as permitted by the terms hereof.
SECTION 3.3 Tax Returns and Payments. All federal, state and local tax
returns and reports of the Borrower required to be filed have been filed,
and all taxes, assessments, fees and other governmental charges upon the
Borrower, or upon any of its properties, assets, incomes or franchises,
which are due and payable in accordance with such returns and reports, have
been paid, other than those presently (a) payable without penalty or
interest, or (b) contested in good faith and by appropriate and lawful
proceedings prosecuted diligently. The aggregate amount of the taxes,
assessments, charges and levies so contested is not material to the
condition (financial or otherwise) and operations of the Borrower. The
charges, accruals, and reserves on the books of the Borrower in respect of
federal, state and local taxes for all fiscal periods to date are adequate
and the Borrower knows of no other unpaid assessment for additional
federal, state or local taxes for any such fiscal period or of any basis
therefor.
SECTION 3.4 Agreements.
(a) The Borrower is not a party to any agreement, indenture,
lease or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree, rule or
regulation materially and adversely affecting its business,
properties, assets, operations or condition (financial or otherwise).
There are no unrealized losses with respect to any such agreement,
indenture, lease or instrument.
(b) The Borrower is not in default in the performance, observance
or fulfillment of any of the material obligations, covenants or
conditions contained in any material agreement or instrument to which
it is a party.
SECTION 3.5 Financial Statements. The Borrower has furnished the Bank
with the Borrower's annual audited financial statements for the fiscal year
ended December 31, 2000 and FNBT's call report for the quarter ended on
June 30, 2001. Such financial statements and call reports (including any
related schedules) are true and correct in all material respects. There has
been no material adverse change in the business, condition or operations
(financial or otherwise) of the Borrower and FNBT taken as a whole since
the date of the call report and the financial statements referred to above.
SECTION 3.6 Changes in Financial Conditions; Adverse Developments.
From the date of the annual financial statements and call report referenced
in Section 3.5 hereof, to the date of this Agreement, there has been, and
with respect to each Advance, to the date of such Advance, there has been,
no material adverse change in the assets, liabilities, financial condition,
business, operations, affairs or prospects of the Borrower from that set
forth or reflected in the Borrower's most recent federal income tax return
or in the fiscal year-end financial statements referred to in Section 3.5,
other than changes in the ordinary course of business, including
acquisitions, none of which have been, either in any case or in the
aggregate, materially adverse.
SECTION 3.7 Litigation, Etc. There are no actions, proceedings or
investigations pending against the Borrower or affecting the Borrower (or
any basis therefor known to the Borrower) which, either in any case or in
the aggregate, might result in any material adverse change in the financial
condition, business, prospects, affairs or operations of the Borrower or in
any of its properties or assets, or in any material impairment of the right
or ability of the Borrower to carry on its operations as now conducted or
proposed to be conducted, or in any material liability on the part of the
Borrower and none which questions the validity of this Agreement, the Note
or any of the other Loan Documents or of any action taken or to be taken in
connection with the transactions contemplated hereby or thereby.
SECTION 3.8 Principal Place of Business. The Principal Place of
Business of the Borrower is at the address noted in the preamble of this
Agreement.
SECTION 3.9 Consents and Approvals. No authorization, license,
consent, approval, or undertaking is required under any applicable law in
connection with the execution, delivery and performance by the Borrower of
this Agreement, the Note or any of the other Loan Documents.
SECTION 3.10 Title to Properties and Assets, Liens, Etc. The Borrower
has good and marketable title to its respective real properties other than
properties which it leases and good title to all of its other personal
property and assets subject to no encumbrances, liens, security interests
or other rights of third parties except as previously disclosed to the Bank
in the financial statements provided to the Bank. The Borrower enjoys
peaceful and undisturbed possession of all leases necessary in any material
respect for the operation of its properties and assets, none of which
contains any unusual or burdensome provisions which might materially affect
or impair the operation of such properties and assets. All such leases are
valid and subsisting and are in full force and effect.
SECTION 3.11 Outstanding Debt. On the date of this Agreement, the
Borrower has no outstanding indebtedness except as reflected on the
financial statements of the Borrower which have been provided to the Bank.
SECTION 3.12 Patents, Trademarks, Franchises, Etc. The Borrower owns
or has the right to use all of the patents, trademarks, service marks,
trade names, copyrights, franchises and licenses, and rights with respect
thereto, necessary for the conduct of its business as now conducted or
proposed to be conducted, without any known conflict with the rights of
others, and, in each case, subject to no mortgage, pledge, lien, lease,
encumbrance, charge, security interest, title retention agreement or
option. Each such asset or agreement is in full force and effect, and the
holder thereof has fulfilled and performed all of its obligations with
respect thereto. No event has occurred or exists which permits, or after
notice or lapse of time or both would permit, revocation or termination, or
which materially adversely affects or in the future may (so far as the
Borrower now foresees) materially adversely affect, the rights of such
holder thereof with respect thereto. No other license or franchise is known
by the Borrower to be necessary to the operations of the business of the
Borrower as now conducted or proposed to be conducted.
SECTION 3.13 Subsidiaries. As of the date of this Agreement, the only
Subsidiary of the Borrower is FNBT.
ARTICLE IV
COVENANTS OF THE BORROWER
SECTION 4.1 Affirmative Covenants. The Borrower covenants, for so long
as any of the principal amount of or interest on the Note is outstanding
and unpaid or any duty or obligation of the Borrower or the Bank hereunder
or under any other Obligation remains unpaid or unperformed, as follows:
(a) Accounting; Financial Statements; Etc. The Borrower will
deliver to the Bank copies of each of the following:
(i) Quarterly, as soon as practicable and in any event
within forty-five (45) Days after the end of each quarter of
Borrower's fiscal year, (A) an internally generated financial
statement of Borrower, certified to the Bank by an authorized
financial officer of the Borrower acceptable to the Bank, (B) a
Covenant Compliance Certificate and (C) a copy of the quarterly
call report for FNBT for the most recent calendar quarter;
(ii) As soon as practicable and in any event within one
hundred twenty (120) Days after the end of each fiscal year, year
end audited financial statements of the Borrower (consisting of
profit and loss statement, balance sheet and report on changes in
stockholders equity) that are examined and reviewed by a
certified public accountant selected by Borrower and acceptable
to the Bank, together with the unqualified opinion of such
accountant;
(iii) Promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices, and reports as
it shall send to its stockholders and of all registration
statements (with exhibits) and all reports which it is or may be
required to file with the Securities and Exchange Commission or
any governmental body or agency succeeding to the functions of
such Commission; and
(iv) Promptly upon receipt thereof, a copy of each other
report submitted to the Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Borrower or any
Subsidiary.
(b) Inspection. The Borrower will permit the Bank or Bank's
designated representative, at the expense of the Bank, to (i) visit
any place of business of the Borrower and/or its Subsidiaries, (ii)
inspect its properties, (iii) inspect and make extracts from the
Borrower's or any Subsidiary's books and records, and (iv) discuss the
affairs, finances and accounts of the Borrower or any Subsidiary with
the officers of the Borrower or such Subsidiary, all at such
reasonable times and as often as may reasonably be requested by the
Bank.
(c) Maintenance of Corporate Existence; Compliance with Laws. The
Borrower shall at all times preserve and maintain in full force and
effect its corporate existence, powers, rights, licenses, permits and
franchises in the jurisdiction of its incorporation; continue to
conduct and operate its business substantially as conducted and
operated during the present and preceding fiscal year of the Borrower;
operate in full compliance with all applicable laws, statutes,
regulations, certificates of authority and orders in respect of the
conduct of its business; and qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is
necessary or appropriate in view of its business and operations.
(d) Notice of Default. The Borrower shall immediately notify the
Bank in writing upon the happening, occurrence or existence of any
Event of Default, or any event or condition which with the passage of
time or giving of notice, or both, would constitute an Event of
Default, and shall provide the Bank with such written notice, a
detailed statement by a responsible officer of the Borrower of all
relevant facts and the action being taken or proposed to be taken by
the Borrower with respect thereto.
(e) Maintenance of Properties. Except to the extent that a
failure to do so would not have a material adverse effect on the
Borrower or the value of its properties taken as a whole, the Borrower
shall (i) maintain or cause to be maintained in good repair, working
order and condition all properties used or useful in its businesses
and from time to time will make or cause to be made all appropriate
repairs, renewals, improvements and replacements thereof so that the
businesses carried on in connection therewith may be properly and
advantageously conducted at all times, (ii) not do or permit any act
or thing which might impair the value or commit or permit any waste of
its properties or any part thereof (other than acts of nature beyond
its control), or permit any unlawful occupation, business or trade to
be conducted on or from any of its properties and (iii) to the extent
the Borrower leases any of its places of business, maintain and keep
current at all times all leases for said places of business.
(f) Notice of Suit, Proceedings, Adverse Change. The Borrower
shall promptly give the Bank notice in writing (a) of all actions or
suits (at law or in equity) and of all investigations or proceedings
by or before any court, arbitrator or any governmental department,
commission, board, bureau, agency or other instrumentality, state,
federal or foreign, affecting the Borrower or its Subsidiaries or the
rights or other properties of the Borrower or its Subsidiaries which a
reasonably prudent Person would consider likely to have a material
adverse effect on the Borrower or any Subsidiary if decided against
the Borrower or any Subsidiary; (b) of any material adverse change in
the condition (financial or otherwise) of the Borrower; and (c) of any
seizure or levy upon any part of the properties of the Borrower under
any process or by a receiver.
(g) Correspondent Banking Relationship. The Borrower and FNBT
shall maintain correspondent banking relationships with the Bank.
(h) Execution and Delivery of Loan Documents. The Borrower shall
execute and deliver to the Bank all Loan Documents (to be executed by
the Borrower) as and when requested by the Bank.
(i) Insurance. The Borrower shall timely procure and maintain and
comply with such insurance and policies of insurance (including
without limitation public liability insurance) as may be required by
law and such other insurance including, but not limited to, coverage
of real property and improvements, to such extent and against such
hazards and liabilities, as is customarily maintained by companies
similarly situated, and, if requested by the Bank, to furnish to the
Bank a certificate of said insurance and further providing for thirty
(30) Days notice to the Bank prior to any material amendment,
expiration or cancellation.
(j) Debts and Taxes and Liabilities. Except to the extent that a
failure to do so would not have a material adverse effect on the
Borrower, the Borrower shall pay and discharge (i) all of its
indebtedness and obligations in accordance with their terms and before
it shall become in default, (ii) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income and
profits or against its properties, prior to the date on which
penalties attach thereto, and (iii) all lawful claims which, if
unpaid, might become a lien or charge upon any of its properties;
provided, however, that the Borrower shall not be required to pay any
such indebtedness, obligation, tax, assessment, charge, levy or claim
which is being contested in good faith by appropriate and lawful
proceedings diligently pursued and for which adequate reserves have
been set aside on its books. The Borrower shall also set aside and/or
pay as and when due all monies required to be set aside and/or paid by
any federal, state or local statute or agency in regard to F.I.C.A.,
withholding, sales or excise or other similar taxes.
(k) Notification of Change of Name or Business Location. The
Borrower shall notify the Bank of each change in the name of the
Borrower and of each change of the location of any place of business
and the office where the records of the Borrower are kept, and, in
such case, shall execute such documents as the Bank may reasonably
request to reflect said change of name or change of location, as the
case may be; provided, however, the Principal Place of Business of the
Borrower and the office where the records of the Borrower are kept may
not be kept out of or removed from Stuart, Florida without the prior
written consent of the Bank.
(l) Change in Management, Control and Ownership. During the term
of the Loan, the Borrower shall provide written notification to the
Bank of any material change in management, control or ownership of the
Borrower and/or its Subsidiaries, including, without limitation, FNBT.
(m) Negative Pledge Agreement. At all times during the term of
this Agreement, the Negative Pledge Agreement shall be in full force
and effect and the Borrower shall not sell or encumber any of the
stock of FNBT.
(n) Financial Covenants. FNBT shall meet or exceed the financial
covenants set forth on Exhibit "B" attached hereto, tested quarterly
by the Bank, commencing with the fiscal quarter ending December 31,
2001. In addition, FNBT shall maintain capital ratios which meet the
"well capitalized" standards as provided by 12 C.F.R. ss.6.4(b)(1) or
other applicable law, as they apply for commercial banks, including
Core Capital (Leverage) Ratio, Tier 1 Risk-Based Capital Ratio and
Total Risk-Based Capital Ratio, as in effect as of the date of this
Agreement, measured quarterly, beginning with the quarter ending
December 31, 2001. The Borrower shall maintain capital ratios which
meet the "adequately capitalized" standards as provided by 12 C.F.R.
ss.6.4(b)(1) or other applicable law, as they apply for bank holding
companies, including Core Capital (Leverage) Ratio, Tier 1 Risk-Based
Capital Ratio and Total Risk-Based Capital Ratio, as in effect on the
date of this Agreement, measured quarterly, beginning with the quarter
ending December 31, 2001.
(o) Use of Proceeds. The proceeds of the Loan shall be used for
the general working capital needs of the Borrower and FNBT, and the
repurchase of common capital stock of the Borrower.
(p) Dividends of FNBT. The Borrower shall cause FNBT to, during
each fiscal year during the term of the Loan, pay dividends to the
Borrower in amounts sufficient to accommodate the payment of the debt
service in respect of the Loan, unless otherwise prohibited by law,
court order or regulatory authority.
SECTION 4.2 Negative Covenants. The Borrower covenants, for so long as
any of the principal amount of or interest on the Note is outstanding and
unpaid or any Obligation remains unpaid or unperformed, as follows:
(a) Merger, Consolidation, Dissolution, Etc. During the term of
the Loan, the Borrower will not (i) consolidate or merge with any
other corporation or Person where the Borrower is not the entity
surviving such merger or consolidation or dissolve or take or omit to
take any action which would result in its dissolution or (ii) enter
into any arrangement, directly or indirectly, with any Person whereby
the Borrower shall sell or transfer any property, real or personal,
whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property which the Borrower intends to use for
substantially the same purpose or purposes as the property being sold
or transferred, without the prior written consent of the Bank.
Notwithstanding the foregoing, mergers between the Borrower and any
Subsidiary in which the Borrower is the survivor or between
Subsidiaries of the Borrower would be permitted
(b) Changes in Business. The primary business of the Borrower
will not change from that conducted by it on the date of this
Agreement without the prior written consent of the Bank.
(c) Other Agreements. The Borrower will not enter into any
arrangements, contractual or otherwise, which would materially and
adversely affect its duties or the rights of the Bank under the Loan
Documents, or which is inconsistent with or limits or abrogates the
Loan Documents.
(d) Additional Indebtedness. The Borrower will not create, incur,
assume, or suffer to exist any indebtedness or Liabilities (other than
the Loan) for borrowed money, any indebtedness evidenced by notes,
debentures or similar obligations or any conditional sales or title
retention agreements or capitalized leases, which in any single case,
or in the aggregate, exceed $5,000,000.00, without the prior written
consent of the Bank.
ARTICLE V
CONDITIONS OF LENDING
The obligations of the Bank to lend hereunder and to make any Advance
from time to time are subject to the following conditions precedent:
SECTION 5.1 Representations and Warranties. The representations and
warranties set forth in the Loan Documents are true and correct on and as
of the date hereof, and on the date of each Advance or disbursement
hereunder.
SECTION 5.2 No Default. On the date hereof and on the date of each
Advance or disbursement, the Borrower shall be in compliance with all the
terms and provisions set forth in the Loan Documents on its part to be
observed or performed, and no Event of Default nor any event that, upon
notice or lapse of time or both, would constitute such an Event of Default,
shall have occurred and be continuing at such time.
SECTION 5.3 Loan Documents; Non-Usage Fee. The Borrower shall have
delivered or caused to be delivered to the Bank, in fully executed form,
all the Loan Documents, in form and substance satisfactory to the Bank, as
the Bank may request and all of the Loan Documents shall be in full force
and effect. The Borrower shall have paid the Non-Usage Fee to the Bank,
when and as due.
SECTION 5.4 Supporting Documents. On or prior to the date hereof, the
Bank shall have received the following supporting documents, all of which
shall be satisfactory in form and substance to the Bank:
(a) a certificate or certificates, dated as of the date hereof, of (i)
the Secretary or any Assistant Secretary of the Borrower certifying (A)
that contained therein is a true and correct copy of certain resolutions
adopted by the Board of Directors of the Borrower authorizing the
execution, delivery and performance of the Loan Documents and the
performance of the obligations of the Borrower and the borrowings
thereunder, which resolutions have not been altered or amended in any
respect, and remain in full force and effect at all times since their
adoption; (B) that attached thereto is a true and correct copy of the
Articles of Incorporation of the Borrower, and that such Articles of
Incorporation have not been altered or amended, and no other charter
documents have been filed, since the date of the filing of the last
amendment thereto or other charter document as indicated on the certificate
of the Secretary of State of the State of Florida attached thereto; (C)
that attached thereto is a true and correct copy of the Bylaws of the
Borrower and that such Bylaws are in full force and effect and no amendment
thereto is pending which would in any way affect the ability of the
Borrower to enter into and perform the Obligations contemplated hereby; and
(D) the incumbency and signatures of the officers of the Borrower signing
the Loan Documents and any report, certificate, letter or other instrument
or document furnished by the Borrower in connection therewith, and (ii)
another authorized officer of the Borrower certifying the incumbency and
signature of the Secretary or Assistant Secretary of the Borrower; and
(b) certificate or certificates of the Florida Secretary of State
dated as of a recent date, as to the good standing of the Borrower; and
SECTION 5.5 Additional Notes. To the extent the principal amount then
outstanding under the Loan together with the Advance requested would exceed
the face amount of the Note then outstanding (which collectively includes
all notes executed by the Borrower in favor of the Bank to evidence the
Loan), the Borrower agrees to then execute and deliver to the Bank the
additional note of the Borrower in such face amount as is necessary so that
the total principal amount outstanding on the Loan after the making of said
Advance shall not exceed the face amount of the Note (which collectively
includes all notes executed by the Borrower in favor of the Bank concerning
said Loan and will include the note described in this Section). At the time
of the execution of said additional Note, the Borrower shall pay to the
Bank all documentary and other taxes required under applicable law.
SECTION 5.6 Existing Liens and Indebtedness. The Borrower shall cause
all existing liens, encumbrances and security interests (if any) held by
any secured party other than the Bank on any assets or properties of the
Borrower to be assigned to the Bank or fully released and terminated of
record.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1 Events of Default. The following each and all are Events
of Default hereunder:
(a) Monetary Default. If the Borrower shall default in any payment of
the principal of or interest on the Loan when and as the same shall become
due and payable, whether at maturity, by acceleration at the discretion of
the Bank or otherwise; or
(b) Non-Monetary Default. If the Borrower shall default in the
performance of or compliance with any term or covenant contained in the
Loan Documents; or
(c) Financial Condition of Borrower. If the Bank determines in its
sole and absolute discretion that the financial condition of the Borrower
shall have deteriorated from the date of this Agreement to the date of any
such determination; or
(d) Third Party Default. If the Borrower shall suffer a material
default in the performance of any material agreement with any Person other
than the Bank; or
(e) Misrepresentation. If any representation or warranty made in
writing by or on behalf of the Borrower or any Subsidiary or in any other
Loan Document shall prove to have been false or incorrect in any material
respect on the date as of which made or reaffirmed; or
(f) Dissolution. Any order, judgment, or decree is entered in any
proceedings against Borrower or any Subsidiary decreeing the dissolution of
Borrower and such order, judgment, or decree remains unstayed and in effect
for more than thirty (30) Days; or
(g) Default Under Loan Documents. If the Borrower fails to fulfill or
comply with the terms of any Loan Document or there shall be a default
under any Loan Document; or
(h) Bankruptcy, Failure to Pay Debts, Etc. If the Borrower or FNBT
shall admit in writing its inability, or be generally unable, to pay its
debts as they become due or shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, petition or apply to any tribunal
for the appointment of a custodian, receiver or trustee for the Borrower or
FNBT or a substantial part of its assets, or shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect, or if there shall have been filed any such petition
or application, or any such proceeding shall have been commenced against
the Borrower or FNBT, in which an order for relief is entered or which
remains undismissed for a period of thirty (30) Days or more, or the
Borrower or FNBT by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application, or
proceeding or order for relief or the appointment of a custodian, receiver
or any trustee for the Borrower or FNBT or any substantial part of any of
its properties, or shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of thirty (30) Days or
more; or
(i) Fraudulent Conveyance. The Borrower or any Subsidiary shall have
concealed, removed, or permitted to be concealed or removed, any part of
its properties, with intent to hinder, delay or defraud its creditors or
any of them, or made or suffered a transfer of any of its properties which
may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law, or shall have made any transfer of its properties to or for the
benefit of a creditor at a time when other creditors similarly situated
have not been paid, or shall have suffered or permitted, while insolvent,
any creditor to obtain a lien upon any of its properties through legal
proceedings or distraint which is not vacated within thirty (30) Days from
the date thereof.
(j) Split-Up. If any order, judgment, or decree is entered in any
proceedings against the Borrower decreeing a split-up of the Borrower which
requires the divestiture of a substantial part of the assets of the
Borrower or which requires the divestiture of assets or stock of a
Subsidiary and such order, judgment, or decree remains unstayed and in
effect for more than sixty (60) Days.
ARTICLE VII
RIGHTS UPON DEFAULT
Upon the occurrence or continuing of any Event of Default, the Bank
shall have and may exercise any or all of the rights set forth herein
(provided, however, the Bank shall be under no duty or obligation to do
so):
SECTION 7.1 Acceleration. To declare the indebtedness evidenced by the
Note and all other Obligations to be forthwith due and payable, whereupon
the Note and all other Obligations shall become forthwith due and payable,
both as to principal and interest, without presentment, demand, protest or
any other notice or grace period of any kind, all of which are hereby
expressly waived, anything contained herein or in the Note or in such other
Obligations to the contrary notwithstanding, and, upon such acceleration,
the unpaid principal balance and accrued interest upon the Note shall from
and after such date of acceleration bear interest at the Default Rate.
SECTION 7.2 Right of Setoff. To exercise its right of setoff as
permitted under Section 2.7.
SECTION 7.3 Other Rights. To exercise such other rights as may be
permitted under any of the Loan Documents or applicable law.
SECTION 7.4 Uniform Commercial Code. To exercise from time to time any
and all rights and remedies of a secured creditor under the UCC and any and
all rights and remedies available to it under any other applicable law.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Cumulative Remedies. The remedies provided in this
Agreement and in the Loan Documents are cumulative and not exclusive of any
remedies provided by law or in equity. Upon an Event of Default, the Bank
may elect to exercise any one or more of such remedies and such election
shall not waive or cause the Bank to have elected not to subsequently
exercise any other such remedies available to it under the Agreement or any
Loan Document.
SECTION 8.2 Amendments, Etc. No amendment, modification, termination
or waiver of any provision of this Agreement, the Note or the other Loan
Documents, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by
the Bank, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 8.3 Addresses for Notices, Etc. All notices, requests, demands
and other communications provided for hereunder shall be in writing and
shall be deemed to have been given (i) in the case of delivery, when
addressed to the other party and delivered to the address set forth below,
(ii) in the case of mailing, three (3) Days after said notice has been
deposited in the United States Mails, postage prepaid, by certified or
return mail, and addressed to the other party as set forth below, and (iii)
in all of the cases, when received by the other party. The address at which
notices may be sent under this Section are the following:
If to the Borrower: SEACOAST BANKING CORPORATION OF FLORIDA
815 Colorado Avenue
Stuart, FL 34994
Attention: William R. Hahl
Executive Vice President and
Chief Financial Officer
If to the Bank: SUNTRUST BANK
200 South Orange Avenue
P. 0. Box 3833 Orlando, FL 32897
Attention: Adam J. Weinstein
Vice President
with a copy to: Charles T. Brumback, Jr., Esq.
Akerman, Senterfitt & Eidson, P.A.
255 South Orange Avenue, 17th Floor
P.O. Box 231 Orlando, FL 32802-0231
Any party may at any time change the address to which notices may be
sent under this Section by the giving of notice of such change to the other
party in the manner set forth herein.
SECTION 8.4 Applicable Law. This Agreement, and each of the Loan
Documents and transactions contemplated herein (unless specifically
stipulated to the contrary in such document) shall be governed by and
interpreted in accordance with the laws of the State of Florida.
SECTION 8.5 Survival of Representations and Warranties. All
representations, warranties, covenants and agreements contained herein or
made in writing by the Borrower in connection herewith shall survive the
execution and delivery of this Agreement, the Note and the other Loan
Documents and be true and correct during the term of the Loan.
SECTION 8.6 Time of the Essence. Time is of the essence of this
Agreement, the Note and the other Loan Documents.
SECTION 8.7 Headings. The headings in this Agreement are intended to
be for convenience of reference only, and shall not define or limit the
scope, extent or intent or otherwise affect the meaning of any portion
hereof.
SECTION 8.8 Severability. In case any one or more of the provisions
contained in this Agreement, the Note or the other Loan Documents shall for
any reason be held to be invalid, illegal or unenforceable in any respect,
the same shall not affect any other provision of this Agreement, the Note
or the other Loan Documents, but this Agreement, the Note and the other
Loan Documents shall be construed as if such invalid or illegal or
unenforceable provision had never been contained therein; provided,
however, in the event said matter would in the reasonable opinion of the
Bank adversely effect the rights of the Bank under any or all of the Loan
Documents, the same shall be an Event of Default.
SECTION 8.9 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
SECTION 8.10 Conflict. In the event any conflict arises between the
terms of this Agreement and the terms of any other Loan Document, the Bank
shall have the option of selecting which conditions shall govern the loan
relationship evidenced by this Agreement and, if the Bank does not so
indicate, the terms of this Agreement shall govern in all instances of such
conflict.
SECTION 8.11 Term. The term of this Agreement shall be for such period
of time until the Loan and Note have been repaid in full, the Borrower has
no further right to request any Advance on the Loan and all Obligations
have been paid to the Bank in full. At such time, the Bank shall mark all
the Loan Documents "Canceled" and return them to the Borrower.
SECTION 8.12 Cross Defaults. A default under any Loan Document,
including a default under this Agreement, shall be and constitute a default
under each and every Loan Document, including this Agreement and under all
other loan documents evidencing or executed in connection with any other
loan or credit facility now existing or hereafter extended by the Bank or
any other subsidiary of SunTrust Banks, Inc. to the Borrower or any
Subsidiary of the Borrower. A default under any other loan or credit
facility now existing or hereafter extended by the Bank or any other
subsidiary of SunTrust Banks, Inc., to the Borrower or any Subsidiary of
the Borrower shall be and constitute a default under each and every Loan
Document, including this Agreement.
SECTION 8.13 Expenses. The Borrower agrees, whether or not the
transactions hereby contemplated shall be consummated, to pay, and save
Bank harmless against liability for the payment of, all out-of-pocket
expenses arising in connection with this transaction, all taxes including,
without limitation, documentary stamp taxes, together in each case with
interest and penalties, if any, and any income tax payable by Bank in
respect of any reimbursement therefor, which may be payable in respect of
the execution, delivery and performance of this Agreement or the execution,
delivery, acquisition and performance of any Note issued under or pursuant
to this Agreement (excepting only any tax on or measured by net income of
Bank determined substantially in the same manner, other than the rate of
tax, as net income is presently determined under the Federal Internal
Revenue Code), and the reasonable fees and expenses of any counsel to Bank
in connection with this Agreement and any subsequent modification or
enforcement thereof or consent thereunder including, without limitation,
attorneys fees and court costs incurred in any legal proceeding whether at
the trial or appellate level or in any bankruptcy proceeding. The
obligations of Borrower under this Section 8.13 shall survive payment of
any Note.
SECTION 8.14 Successors and Assigns. All covenants and agreements in
this Agreement contained by or on behalf of either of the parties hereto
shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not; provided,
however, this clause shall not by itself authorize any delegation of duties
by the Borrower or any other assignment which may be prohibited by the
terms and conditions of this Agreement.
SECTION 8.15 Further Assurances. The Borrower shall, from time to
time, execute such additional documents as may reasonably be requested by
the Bank or the counsel, to carry out and fulfill the intent and purpose of
this Agreement and the Loan Documents.
SECTION 8.16 No Third Party Beneficiaries. The parties intend that
this Agreement is solely for their benefit and no Person not a party hereto
shall have any rights or privileges under this Agreement whatsoever either
as the third party beneficiary or otherwise.
SECTION 8.17 No Waiver. No failure or delay on the part of the Bank in
exercising any right, power or remedy hereunder, or under the Note or the
other Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power
or remedy hereunder or thereunder.
SECTION 8.18 Entire Agreement. Except as otherwise expressly provided,
this Agreement and the other Loan Documents embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements
and understandings relating to the subject matter hereof.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed, sealed and delivered, as applicable, by their
duly authorized officers on the day and year first above written.
BORROWER:
SEACOAST BANKING CORPORATION OF FLORIDA
By: /s/ William R. Hahl
Name: William R. Hahl
Title: Chief Financial Officer
SUNTRUST BANK
By: /s/ Adam J. Weinstein
Adam J. Weinstein
Vice President
EXHIBIT A
Notice of Borrowing
SunTrust Bank
Financial Institutions Group
200 So. Orange Avenue
Mail Code O-2068
Orlando, Florida 32801
Attn: Adam J. Weinstein
Vice President
Re: Advances under that certain Revolving Loan Agreement (the "Loan Agreement")
by and between Seacoast Banking Corporation of Florida (the "Borrower")
and SunTrust Bank (the "Bank") dated ________, 2001
The undersigned, duly authorized representative of the Borrower hereby
furnishes the Bank a "Notice of Borrowing" and specifies that:
1. The date the Advance is requested (which shall be a Banking Day) is
_______________, ______.
2. The amount of the proposed borrowing is $_____________ (minimum
principal amount of $100,000.00).
3. The Advance requested hereby under the above referenced Loan
Agreement shall be made by the Bank by depositing it to the bank account
maintained by the Borrower with the Bank or by such other method as may be
mutually satisfactory to the Borrower and the Bank.
4. As of the date hereof there has been no material adverse change in
the financial condition of the Borrower from that set forth in the most
recent annual financial statements furnished to the Bank.
As used herein, the terms "Advance" and "Banking Day" shall have the
respective meanings assigned to such terms in the above-referenced Loan
Agreement.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Notice of Borrowing as of the ____ day of ____________, 200_.
SEACOAST BANKING CORPORATION OF FLORIDA
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT B
FINANCIAL COVENANTS
COVENANT REQUIREMENT WHEN TESTED
- -------- -----------
Non-Performing Assets Ratio <1.00% Quarterly
Interest Coverage Ratio >3.0:1 Quarterly
EXHIBIT 21
LIST OF SUBSIDIARIES
The Company had the following subsidiaries as of the date of this report:
NAME INCORPORATED
2. First National Bank & Trust Company United States
of the Treasure Coast
3. FNB Brokerage Services, Inc. Florida
4. FNB Insurance Services, Inc. Florida
5. South Branch Building, Inc. Florida
6. Big O RV Resort, Inc. Florida
7. FNB Property Holdings, Inc. Delaware
8. FNB RE Services, Inc. Florida
EXHIBIT 23.1
PRICEWATERHOUSECOOPERS LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 33-61925, 33-46504, 33-25627, 33-22846, 333-91859,
333-70399 and 333-49972) of Seacoast Banking Corporation of Florida of our
report dated January 15, 2003 relating to the financial statements, which
appears in the Annual Report to Shareholders, which is incorporated in this
Annual Report on Form 10-K.
/s/PricewaterhouseCoopers LLP
West Palm Beach, Florida
March 28, 2003
EXHIBIT 23.2
NOTICE OF INABILITY TO OBTAIN CONSENT FROM ARTHUR ANDERSEN LLP
The financial statements of Seacoast Banking Corporation of Florida as of
December 31, 2001 and 2000, and for years then ended, included in this annual
report on Form 10-K have been audited by Arthur Andersen, LLP, independent
public accountants. Arthur Andersen LLP has since ceased operations. Arthur
Andersen LLP has not reissued its report on those financial statements in
connection with this annual report on Form 10-K. In addition, after reasonable
efforts, and in reliance upon Rule 437a under the Securities Act of 1933, we
have not been able to obtain the consent of Arthur Andersen LLP with respect to
the incorporation by reference of such report in any of our registration
statements or prospectuses. Because Arthur Andersen LLP has not consented to the
inclusion of such report in any of our registration statements or prospectuses,
purchasers under such prospectuses will not be able to recover against Arthur
Andersen LLP under Section 11(a) of the Securities Act for any untrue statements
of a material fact contained in the financial statements audited by Arthur
Andersen LLP or for any omissions to state a material fact required to be stated
therein.
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Seacoast Banking Corporation of
Florida (the "Company") on Form 10-K for the period ending December 31, 2002, as
filed with the Securities and Exchange Commission as of the date hereof (the
"Report"), I, Dennis S. Hudson, III, President and Chief Executive Officer of
the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:
(2) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(3) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
/s/ Dennis S. Hudson, III
- --------------------------
Dennis S. Hudson, III
President and Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Seacoast Banking Corporation of
Florida (the "Company") on Form 10-K for the period ending December 31, 2002, as
filed with the Securities and Exchange Commission as of the date hereof (the
"Report"), I, William R. Hahl, Chief Financial Officer and Executive Vice
President of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
/s/ William R. Hahl
- --------------------
William R. Hahl
Executive Vice President and
Chief Financial Officer