Seacoast Reports $2.9 Million in Net Income for the Quarter

STUART, Fla., July 29, 2013 /PRNewswire/ --  

Revenue and growth initiatives produce results

• Noninterest income (excluding securities gains) up 21.4 percent
• Ending net loan balances up 4.1 percent compared to a year ago and were up 14.6 percent linked quarter annualized
• Noninterest income to total revenue increased to 28.2 percent compared to 24.6 percent a year ago

Expense reductions are on target

• Total expenses down $1.7 million or 8.1 percent for the quarter
• Core expenses down 3.0 percent year to date compared to year ago
• Targeting at least $7.4 million in reduced expenses for 2013

Investments in loan production personnel producing results

• Higher loan production for the quarter of $183.0 million a sequential increase of 53.3 percent
• Much stronger commercial production of $68.4 million, a  $31.4 million sequential increase
• Consumer loan production increased $32.4 million sequentially and totaled $114.4 million

Seacoast Banking Corporation of Florida (NASDAQ-NMS: SBCF), today reported second quarter 2013 net income of $2,954,000 compared to a net loss of $2,335,000 for the same quarter last year.  Net income available to common shareholders for the second quarter 2013 totaled $2,017,000 or $0.02 per diluted common share, compared with a net loss of $3,272,000 or $0.03 per diluted common share for 2012.

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"Revenue growth continued to pick up momentum during the quarter as loan production was much improved.  Noninterest revenue continued to increase as core expense and total expenses declined when compared to the prior year," said Dennis S. Hudson, III Chairman and CEO. 

Growth Initiatives Build Core Earnings

• Total revenues, excluding securities gains for the quarter ended June 30, 2013 were $22.4 million, compared to $21.9 million for the first quarter 2013 and up $1.2 million compared to second quarter 2012. Year to date revenues were $44.4 million compared to $42.8 million a year ago;
• Period-end noninterest bearing deposits totaled $468.5 million at June 30, 2013, up $74.8 million or 19.0 percent from the same quarter last year;
• Second quarter average loans increased $22.1 million linked quarter or 7.1 percent annualized and were up $38.6 million year over year or a growth rate of 3.1 percent; and
• Average total deposits increased $32.3 million or 1.9 percent year over year.

Over the last several years, our focused tactical initiatives have produced strong organic core customer deposit account growth and increased core customer funding.  Core customer funding totaled $1.6 billion at June 30, 2013, up $147 million from last year's second quarter and up 27.6 percent since the second quarter 2011.  In addition deposit mix continued to improve with noninterest bearing deposits increasing to almost 27 percent of total deposits at quarter end 2013.

Additional growth highlights for second quarter 2013:

• Interchange fees and service charges on deposit accounts grew by 20.3% and 10.4%, respectively, compared to last year's second quarter;
• Fees from wealth management services totaled $1,037,000 for the second quarter, up $175,000 or 20.3 percent compared to a year ago; and
• Mortgage Banking fees increased $354,000 or 39.2 percent for the quarter compared to the second quarter a year ago.

The following details noninterest income for the second quarter ended June 30, 2013 compared to the last four quarters:

Credit Quality Improves

• Net charge-offs declined to $2.0 million in the second quarter 2013 compared to $6.3 million a year ago;
• Nonperforming loans totaled 2.63 percent of loans, compared with 2.88 percent last quarter and 3.97 percent one year ago;
• Nonperforming assets to total assets of 1.98 percent is lower compared to 2.64 percent a year ago;
• Net charge-offs as a ratio of average loans for the first six months declined to 0.57 percent compared to 1.59 percent for 2012;
• Restructured loans reduced to $29.6 million down 28.1% linked quarter; and
• Net loss on other real estate owned and repossessed assets declined by $297,000 or 37.6% during the second quarter year over year.

Noninterest Expenses

Previously announced plans to reduce both core operating expenses and total expenses were fully implemented at year end which meaningfully reduced our expense structure for 2013.  Total noninterest expenses fell by $1.7 million or 8.1 percent for the quarter compared with the prior year.  Contributing to the decline were much lower expenses related to OREO and other asset disposition costs as overall asset quality continued to improve as well as reduced core operating expenses.

Core Operating Expenses for the quarter were reduced by $220 thousand or 1.1 percent compared with the prior year and were down $1.1 million or 3.0 percent for the first six months compared to 2012.  Core operating expenses for the quarter included $585 thousand in salaries and employee benefits expense associated with investments in new lending and credit personnel related to our growth initiatives.

Noninterest expenses for the second quarter 2013 are presented below compared to the prior four quarters:

Over the past year, we redeployed overhead into additional loan production personnel while simultaneously reducing overall operating expenses.  We believe these investments are particularly important in the current low rate environment.  Investments in additional lending and credit support personnel have been significant over the past year and are a critical component of our commercial and business banking growth plan.  Annual salaries and benefits added to our lending and credit support teams during each of the past two years and year-to-date for 2013 are presented in the table below:

Annual Salaries and Benefits Added to Lending and Credit Support Teams

As shown in the table below, total loan originations and pipeline balances have been growing over the prior four quarters and now total over $115 million for the second quarter 2013 as a result of the investments in revenue producing personnel in 2011 and 2012.  Also included in the table below, are the salaries and benefits associated with new commercial loan officers and credit support personnel with tenures of six months or less for each quarter of 2013 and the last three quarters of 2012.  These costs are included in core operating expenses, are significant and are considered investments that impact our efficiency in the short run. 

Our revenue growth is being positively impacted with increased loan production by our investment in new loan production personnel and core operating leverage is expected to improve in the future as productivity improves.

The Company's tier 1 capital ratio was 17.0 percent and the total risk based capital ratio was 18.3 percent at June 30, 2013.  The tangible common equity ratio was 5.31 percent at June 30, 2013. Adjusting the tangible common equity ratio for the reversal of the deferred tax valuation allowance would increase the ratio to approximately 7.25 percent.  Our improved earnings and lower credit risk continue to increase the likelihood that the allowance will be recovered as early as this year.

The Company will host a conference call on Monday, July 29, 2013 at 10:00 a.m. (Eastern Time) to discuss its earnings results and business trends.  Investors may call in (toll-free) by dialing (888) 517-2458 (access code: 6117222; leader: Dennis S. Hudson).  Charts will be used during the conference call and may be accessed at Seacoast's website at www.seacoastbanking.net by selecting "Presentations" under the heading "Investor Services".  A replay of the conference call will be available beginning the afternoon of July 29 by dialing (888) 843-7419 (domestic), using the passcode 6117222.

Alternatively, individuals may listen to the live webcast of the presentation by visiting the Company's website at www.seacoastbanking.net.  The link to the live audio webcast is located in the subsection "Presentations" under the heading "Investor Services".  Beginning the afternoon of July 29, 2013, an archived version of the webcast can be accessed from this same subsection of the website.  This webcast will be archived and available for one year. 

With over $2 billion in assets, 34 traditional branches and offering business banking loan and deposit products and services in 5 Accelerate offices fueled by the power of Seacoast National Bank, Seacoast is one of the largest community banks headquartered in Florida.  Offices stretch from Broward County north through the Treasure Coast and into Orlando, and west to Okeechobee and surrounding counties.

Cautionary Notice Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, ability to realized deferred tax assets, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls and for integration of banks that we have acquired, as well as statements with respect to Seacoast's objectives, expectations and intentions and other statements that are not historical facts.  Actual results may differ from those set forth in the forward-looking statements.

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of Seacoast to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements. 

You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "support", "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "further", "point to," "project," "could," "intend" or other similar words and expressions of the future.  These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the effects of future economic and market conditions, including seasonality; governmental monetary and fiscal policies, as well as legislative, tax and regulatory changes; changes in accounting policies, rules and practices; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest sensitive assets and liabilities; interest rate risks, sensitivities and the shape of the yield curve; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; and the failure of assumptions underlying the establishment of reserves for possible loan losses.  The risks of mergers and acquisitions, include, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers by competitors; as well as the difficulties and risks inherent with entering new markets.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2012 under "Special Cautionary Notice Regarding Forward-Looking Statements" and "Risk Factors", and otherwise in our SEC reports and filings.  Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov.  

SOURCE Seacoast Banking Corporation of Florida