Seacoast Banking Corporation of Florida (“Seacoast” or the "Company”) (NASDAQ: SBCF) today reported net income in the first quarter of 2020 of $0.7 million, or $0.01 per diluted share, including $4.6 million in merger-related charges and provision for loan losses of $29.5 million. The net interest margin increased 9 basis points to 3.93%, the ratio of tangible common equity to tangible assets was 10.68% and Tier 1 capital was 15.5% at March 31, 2020.

Dennis S. Hudson, III, Seacoast’s Chairman and CEO, said, “Our results for the first quarter of 2020, as with all businesses, must be framed within the context of COVID-19 and its impact on our communities. Our priority in addressing the pandemic thus far has been to carefully adjust our operations to protect the health and welfare of our associates and customers while continuing to offer digital banking products and services that can be accessed anywhere.”

Hudson added, “With over 90 years’ experience in an area prone to hurricanes, Seacoast has a robust and well tested business continuity program that has rapidly mobilized our response to this crisis. We shifted branch operations to remain open by drive-thru or lobby appointment only, implemented enhanced cleaning protocols, and our operational teams are working remotely or in staggered shifts. As an SBA preferred lender, we are well-positioned to help our business customers access the Paycheck Protection Program (“PPP”). We processed over 1,600 loans, totaling over $388 million in the first round of the program. I am proud of our team's exceptional effort to support our communities through this unprecedented time.”

Charles M. Shaffer, Seacoast’s Chief Operating Officer and Chief Financial Officer, said, “In 2019, Seacoast delivered record financial performance, driven by our balanced growth strategy and emphasis on efficient operations. With extraordinary circumstances now facing all of us, we believe that we are well-positioned when compared to peers for the challenges that lie ahead. We enter this period from a position of strength, with our prior strategic initiatives resulting in a robust capital base, a diverse loan portfolio and a prudent liquidity position that should allow us to support our customers despite the uncertain environment. First quarter results include strong performance across multiple business lines, including record new asset acquisition in wealth management and maximizing market opportunities in mortgage banking. We will continue our commitment to maintaining a fortress balance sheet, demonstrating resilience while generating shareholder value over the long term.”

Adoption of CECLOn January 1, 2020, the Company adopted new accounting guidance that introduces the current expected credit losses (“CECL”) methodology for estimating allowances for credit losses. The adoption resulted in an increase to the allowance for credit losses on loans of $21.2 million and an addition to the reserve for unfunded commitments of $1.8 million. Under the accounting rules, adoption had no impact on the income statement and resulted in an adjustment to retained earnings, net of taxes, of $16.9 million. In March 2020, regulatory guidance was issued that allows banking organizations to delay the effects of CECL on regulatory capital calculations for two years, followed by a three-year transition period.  As a result, initial adoption at January 1, 2020 had no impact on the Company’s regulatory capital ratios.

Acquisition of First Bank of the Palm BeachesThe purchase of First Bank of the Palm Beaches ("FBPB") in the first quarter of 2020 increases Seacoast’s market share as the #1 community bank in the attractive Palm Beach market. FBPB operated two branches, which have converted to Seacoast branches, with deposits of $174 million and loans of $147 million at the time of acquisition. The Company increased its allowance for credit losses at the time of acquisition by $2.3 million, recording provision for credit losses of $1.8 million. The remaining $0.5 million, which represents the allowance on purchased credit deteriorated loans, was recorded as part of the purchase price in accordance with the new CECL guidance.

First Quarter 2020 Financial Results

Income Statement

  • Net income was $0.7 million, or $0.01 per diluted share, compared to $27.2 million, or $0.52, for the prior quarter and $22.7 million, or $0.44, for the first quarter of 2019. Adjusted net income1 was $5.5 million, or $0.10 per diluted share, compared to $26.8 million, or $0.52, for the prior quarter and $24.2 million, or $0.47, for the first quarter of 2019.
  • Net revenues were $77.9 million, a decrease of $0.3 million compared to the prior quarter, and an increase of $4.3 million, or 6%, compared to the first quarter of 2019. Adjusted revenues1 were $77.8 million, an increase of $2.2 million, or 3%, from the prior quarter and an increase of $4.2 million, or 6%, from the first quarter of 2019.
  • Net interest income totaled $63.2 million, an increase of $1.4 million, or 2%, from the prior quarter and an increase of $2.4 million, or 4%, from the first quarter of 2019.
  • Net interest margin was 3.93% in the first quarter of 2020, 3.84% in the fourth quarter of 2019 and 4.02% in the first quarter of 2019. Compared to the fourth quarter of 2019, the yield on loans increased 1 basis point due to an increase in accretion of purchase discounts on acquired loans offset by the impact of Federal Reserve rate cuts in March 2020. The effect on net interest margin from accretion of purchase discounts on acquired loans was 27 basis points in the first quarter of 2020, compared to 21 basis points in the fourth quarter of 2019 and 26 basis points in the first quarter of 2019. Excluding the impact of accretion, the net interest margin increased 3 basis points from the prior quarter and the yield on loans contracted 6 basis points. The 13 basis point increase in the yield on securities reflects prepayment penalties received on early payoffs of mortgage-backed securities. The cost of deposits decreased 4 basis points to 0.57%. The full benefit resulting from reductions in offered customer deposit rates was muted by strategic efforts to increase brokered deposit funding, bolstering the Company's liquidity, a prudent action arising from the current economic environment.
  • Noninterest income totaled $14.7 million, a decrease of $1.7 million, or 10%, compared to the prior quarter and an increase of $1.9 million, or 14%, compared to the previous year. Results for the fourth quarter of 2019 included $2.5 million in realized gains on sales of securities. Other changes in noninterest income compared to the fourth quarter of 2019 consisted of the following:
    • Mortgage banking fees increased $0.7 million to $2.2 million, reflecting a vibrant residential refinance market.
    • Wealth management income increased by $0.3 million, or 18%, to a record $1.9 million, with an additional $44 million in new assets under management acquired in the first quarter of 2020.
    • Other income increased $0.8 million on higher revenue from SBIC investments.
    • SBA gains were lower by $0.4 million, the result of lower production of saleable SBA loans.
  • The provision for credit losses was $29.5 million compared to $4.8 million in the prior quarter and $1.4 million in the first quarter of 2019. Under the CECL approach, the Company establishes a reserve for the full amount of expected credit losses over the life of the loans. The estimate is based on current conditions and reasonable and supportable forecasts. The use of CECL requires earlier recognition, when compared with the previous accounting guidance, of credit losses that are deemed expected but not yet probable. Given the uncertainty of the current economic environment, management applied significant judgment in estimating the impact on the portfolio of potential economic downturn scenarios, including the severity and duration of these scenarios and the potential impact of the government's economic support programs.
  • Noninterest expense was $47.8 million, an increase of $9.7 million, or 26%, compared to the prior quarter and an increase of $4.7 million, or 11%, from the first quarter of 2019. The first quarter of 2020 included $4.6 million in merger-related charges, including change in control payments, legal and investment banking fees, and technology contract termination fees associated with the FBPB and Fourth Street Banking Company acquisitions. Merger-related charges are removed from the presentation of adjusted results. Changes from the fourth quarter of 2019 consisted of the following:
    • Salaries, wages, and employee benefits increased $7.4 million, of which $2.2 million was acquisition- related. The remaining increase was the result of recruiting seasoned bankers, a return of payroll taxes and 401(k) contribution expenses, and the reactivation of incentive accruals, all in line with prior years' seasonality. Additionally, the first quarter included $0.3 million in bonuses for retail associates, who are keeping critical functions operating at full capacity through this pandemic. Lastly, deferred loan origination costs were impacted by $0.5 million, the result of fewer loans originated.
    • Legal and professional fees increased $1.3 million, of which $1.1 million was acquisition-related.
    • Marketing expenses increased by $0.4 million, reflecting acquisition-related costs of $0.1 million and first quarter 2020 deposit promotions.
    • Data processing costs increased $1.0 million, including $0.8 million in merger-related data conversion expenses.
    • The sale of a former branch property resulted in a $0.3 million gain.
  • Seacoast recorded $0.2 million of income tax benefit in the first quarter of 2020, compared to tax expense of $8.1 million in the prior quarter and $6.4 million in the first quarter of 2019. Tax benefits related to stock-based compensation totaled $0.3 million in the first quarter of 2020, compared to $0.1 million in the fourth quarter of 2019 and $0.6 million in the first quarter of 2019.
  • First quarter adjusted revenues1 increased 6% compared to prior year quarter while adjusted noninterest expense1 increased 1%, generating 5% operating leverage.
  • The efficiency ratio was 59.8% compared to 48.4% in the prior quarter and 56.6% in the first quarter of 2019. The adjusted efficiency ratio1 was 53.6% compared to 47.5% in the preceding quarter, impacted by typical seasonality, and was 55.8% in the first quarter of 2019.

1Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and for a reconciliation to GAAP.

Balance Sheet

  • At March 31, 2020, the Company had total assets of $7.4 billion and total shareholders' equity of $991.8 million. Book value per share was $18.82, and tangible book value per share was $14.42, compared to $19.13 and $14.76, respectively, at December 31, 2019 and $17.44 and $12.98, respectively, at March 31, 2019. Year-over-year, tangible book value per share increased by 11%.
  • Debt securities totaled $1.2 billion at March 31, 2020, a decrease of $45.5 million compared to December 31, 2019 and a decrease of $10.4 million from March 31, 2019.
  • Loans totaled $5.3 billion at March 31, 2020, an increase of $118.8 million, or 2%, compared to December 31, 2019, and an increase of $488.8 million, or 10%, from March 31, 2019. Excluding FBPB acquired loans, which were valued at $146.9 million, loans outstanding declined by $28.1 million, driven by a purposeful slowing of originations during the quarter as the impact of COVID-19 on our local economies became apparent.
    • Seacoast began accepting applications from customers on Friday, April 3 for the Paycheck Protection Program ("PPP") established by the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). In the first round of the program, Seacoast processed over 1,600 loans for its customers, totaling over $388 million. As an SBA preferred lender, the Company will continue its focus in helping small businesses access the program in the second quarter.
    • New loan originations were $323.5 million in the first quarter of 2020, compared to $587.1 million in the fourth quarter of 2019 and $309.8 million in the first quarter of 2019.
      • Commercial originations during the first quarter of 2020 were $183.3 million, compared to $304.3 million in the fourth quarter of 2019 and $186.0 million in the first quarter of 2019.
      • Residential loan originations were $88.6 million in the first quarter of 2020, compared to $126.0 million in the fourth quarter of 2019 and $82.2 million in the first quarter of 2019.
      • Consumer originations in the first quarter of 2020 were $51.5 million, compared to $57.7 million in the fourth quarter of 2019 and $41.6 million in the first quarter of 2019.
  • Pipelines (loans in underwriting and approval or approved and not yet closed) totaled $287.3 million at March 31, 2020, with notable decreases in commercial and small business due to COVID-19 and the resulting economic impacts, offset by continued residential refinancing activity. Early in the second quarter of 2020, the Company's business bankers and operational resources have been focused on supporting borrowers with access to PPP program funds.
    • Commercial pipelines were $171.1 million as of March 31, 2020, compared to $277.8 million as of the prior quarter end and $193.7 million as of March 31, 2019. The decline in pipeline quarter over quarter was the result of a more selective approach on new credits given the economic outlook associated with COVID-19.
    • Residential saleable pipelines were $75.2 million as of March 31, 2020 compared to $19.0 million as of the prior quarter end and $25.9 million as of March 31, 2019. The increase reflects the impact of a vibrant refinance market.
    • Retained residential pipelines were $11.8 million as of March 31, 2020, compared to $19.1 million as of the prior quarter end and $19.3 million as of March 31, 2019. The decrease is the result of the Company's focus on generating saleable production.
    • Consumer pipelines were $29.1 million as of March 31, 2020, compared to $23.3 million as of the prior quarter end and $51.3 million as of March 31, 2019.
  • Total deposits were $5.9 billion as of March 31, 2020, an increase of $302.7 million, or 5%, sequentially and an increase of $281.9 million, or 5%, from the prior year.
    • The acquisition of FBPB contributed $174 million in deposits.
    • The overall cost of deposits declined to 57 basis points in the first quarter of 2020 from 61 basis points in the prior quarter, reflecting the impact of rate cuts by the Federal Reserve during the first quarter of 2020, moderated by the strategic use of brokered deposits to bolster liquidity.
    • Total transaction accounts increased 6% quarter-over-quarter, including $72.1 million acquired from FBPB. Transaction accounts continue to represent 50% of overall deposit funding.
    • Interest-bearing deposits (interest-bearing demand, savings and money market deposits) increased year-over-year $112.5 million, or 4%, to $2.9 billion, noninterest-bearing demand deposits increased $27.6 million, or 2%, to $1.7 billion, and CDs (excluding brokered) decreased $88.1 million, or 12%, to $672.7 million.

Asset Quality

  • Seacoast is supporting the needs of its communities with access to payment deferral programs for borrowers experiencing financial hardship. As of April 22, 2020, approximately 2,500 borrowers with $1 billion in outstanding balances were participating in a payment deferral plan. Our bankers are taking proactive steps to assist our borrowers in evaluating their circumstances, planning for cash needs, and identifying CARES Act and other programs that can provide further support in these uncertain times. Our relationship-based approach, with bankers that are deeply knowledgeable about their customers and communities, will continue to provide valuable information and insight as we carefully manage credit decisions in the coming months.
  • Nonperforming loans to total loans outstanding were 0.48% at March 31, 2020, 0.52% at December 31, 2019, and 0.46% at March 31, 2019.
  • Nonperforming assets to total assets were 0.55% at March 31, 2020, 0.55% at December 31, 2019 and 0.51% at March 31, 2019. Activity in other real estate owned included a $5.5 million loan transferred in, offset by the sale of a $3.3 million former branch property.
  • The ratio of allowance for credit losses to total loans was 1.61% at March 31, 2020, 0.68% at December 31, 2019, and 0.68% at March 31, 2019.
  • Net charge-offs were $1.0 million, or 0.07%, of average loans for the first quarter of 2020 compared to $3.2 million, or 0.25%, of average loans in the fourth quarter of 2019 and $1.0 million, or 0.08% of average loans in the first quarter of 2019. Net charge-offs for the four most recent quarters averaged 0.16%.
  • Portfolio diversification, in terms of asset mix, industry, and loan type, has been a critical element of the Company's lending strategy. Exposure across industries and collateral types is broadly distributed.
  • The Company does not have any purchased loan syndications, shared national credits, or mezzanine finance.
  • Since the outbreak of COVID-19, the Company has not experienced any material increase in consumer or commercial line utilization.
  • The funded balances of the top 10 and top 20 relationships represented 20% and 37%, respectively, of total consolidated risk-based capital, a decrease compared to 27% and 46% three years ago, in the first quarter of 2017. Seacoast's average commercial loan size is $375,000.
  • Construction and land development and commercial real estate loans remain well below regulatory guidance at 35% and 193% of total bank-level risk based capital, respectively, compared to 40% and 204% respectively, in the fourth quarter of 2019. On a consolidated basis, construction and land development and commercial real estate loans represent 32% and 181%, respectively, of total consolidated risk-based capital.

Capital and Liquidity

  • The tier 1 capital ratio was 15.5%, total capital ratio was 16.5% and the tier 1 leverage ratio was 12.4% at March 31, 2020
  • Tangible common equity to tangible assets was 10.7% at March 31, 2020, compared to 11.1% at December 31, 2019 and 10.18% at March 31, 2019.
  • Cash and cash equivalents at March 31, 2020 totaled $314.9 million, an increase of $190.3 million from December 31, 2019.
  • At March 31, 2020, the Company had available unsecured lines of credit of $160.0 million and lines of credit under lendable collateral value of $1.2 billion. $851.5 million of debt securities and $830.0 million in residential and commercial real estate loans are available as collateral for potential borrowings.
FINANCIAL HIGHLIGHTS              
(Amounts in thousands except per share data) (Unaudited)
  Quarterly Trends
                   
  1Q'20   4Q'19   3Q'19   2Q'19   1Q'19
Selected Balance Sheet Data:                  
Total Assets $ 7,352,894     $ 7,108,511     $ 6,890,645     $ 6,824,886     $ 6,783,389  
Gross Loans 5,317,208     5,198,404     4,986,289     4,888,139     4,828,441  
Total Deposits 5,887,499     5,584,753     5,673,141     5,541,209     5,605,578  
                   
Performance Measures:                  
Net Income $ 709     $ 27,176     $ 25,605     $ 23,253     $ 22,705  
Net Interest Margin 3.93 %   3.84 %   3.89 %   3.94 %   4.02 %
Average Diluted Shares Outstanding 52,284     52,081     51,935     51,952     52,039  
Diluted Earnings Per Share (EPS) $ 0.01     $ 0.52     $ 0.49     $ 0.45     $ 0.44  
Return on (annualized):                  
Average Assets (ROA) 0.04 %   1.54 %   1.49 %   1.38 %   1.36 %
Average Tangible Assets (ROTA) 0.11     1.66     1.61     1.50     1.48  
Average Tangible Common Equity (ROTCE) 0.95     14.95     14.73     14.30     14.86  
Efficiency Ratio 59.85     48.36     48.62     53.48     56.55  
                   
Adjusted Operating Measures1:                  
Adjusted Net Income $ 5,462     $ 26,837     $ 27,731     $ 25,818     $ 24,205  
Adjusted Diluted EPS 0.10     0.52     0.53     0.50     0.47  
Adjusted ROTA 0.32 %   1.57 %   1.67 %   1.59 %   1.50 %
Adjusted ROTCE 2.86     14.19     15.30     15.17     15.11  
Adjusted Efficiency Ratio 53.61     47.52     48.96     51.44     55.81  
Adjusted Noninterest Expense as a Percent of Average Tangible Assets 2.44     2.11     2.22     2.34     2.55  
                   
Other Data:                  
Market capitalization2 $ 965,097     $ 1,574,775     $ 1,303,010     $ 1,309,158     $ 1,354,759  
Full-time equivalent employees 919     867     867     852     902  
Number of ATMs 76     78     80     81     84  
Full-service banking offices 50     48     48     49     50  
Registered online users 113,598     109,684     107,241     104,017     102,274  
Registered mobile devices 104,108     99,361     96,384     92,281     87,844  
1Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP
2Common shares outstanding multiplied by closing bid price on last day of each period
 

Vision 2020

Prior to the emergence of COVID-19, Seacoast was on track to achieve its announced Vision 2020 performance targets exiting 2020, which included an efficiency ratio below 50%, return on tangible assets above 1.30%, and a return on tangible common equity above 16%. Changes in the outlook for the economy as a result of COVID-19 will affect achievement of these targets, though it is difficult to predict to what extent. The Company intends to continue to carefully manage operating efficiency, maintain prudent credit oversight and a robust capital position. Although the business and economic impacts of COVID-19 present obvious challenges to Seacoast's operating environment, the Company is confident that its established conservative posture entering this uncertain period should serve it well.

First Quarter Operating Highlights

Modernizing How Seacoast Sells

  • During the first quarter of 2020, Seacoast introduced digital closing and notarization capabilities for residential mortgages. This technology allows the borrower, closing agent, loan officer, witnesses and a notary public to digitally participate in the electronic signing of all mortgage documents, enabling secure and fully remote loan closings. This technology has allowed remote loan closings to occur despite the stay-at-home orders that have been issued across our footprint.
  • Seacoast's continuous focus on and recent investments in operational resilience have provided a reliable experience for customers. Utilization of remote capabilities, web-enabled conferencing and digital tools ensure associates can serve their clients safely and effectively.

Lowering Cost to Serve

  • At March 31, 2020, deposits per banking center were $118 million, compared to $116 million at December 31, 2019 and $112 million at March 31, 2019.
  • Registered online users have increased by 11% from one year ago, with the number of registered mobile devices in March exceeding 100,000. Customers are seeking the convenient security of mobile banking. Since the beginning of the pandemic, online logins have increased by 42%, visits to the Seacoast website increased 47%, and customer requests made through the website increased more than 200%.

Driving Improvements to Operations

  • During the first quarter of 2020, Seacoast completed projects to improve the speed and quality of the items processing workflow and scale its source document archiving capabilities through outsourcing, while redeploying associates to other projects.
  • In response to heightened call volumes in the call center, Seacoast installed a virtual assistant that is allowing customers to chat with an automated response unit to resolve everyday banking needs such as checking balances or payments. This technology will be useful in lowering the cost to serve customers in future periods.

Scaling and Evolving Seacoast's Culture

  • Seacoast's balanced growth strategy, combining organic growth with value-creating acquisitions, continues to benefit shareholders and provide new opportunities for associates. The purchase of FBPB in the first quarter of 2020 added experienced bankers in a growing market, further supporting sustainable, profitable growth. The acquisition increases Seacoast’s market share as the #1 community bank in the attractive Palm Beach market, bringing the combined company to over $821 million in total deposits in Palm Beach County.
  • The proposed acquisition of Fourth Street Banking Company, the holding company for Freedom Bank of St. Petersburg, is expected to be completed in August 2020, with the COVID-19 pandemic prompting a delay from the anticipated June closing.

OTHER INFORMATION

Conference Call InformationSeacoast will host a conference call on April 29, 2020 at 10:00 a.m. (Eastern Time) to discuss the first quarter 2020 earnings results and business trends. Investors may call in (toll-free) by dialing (888) 517-2513 (passcode: 7733 193; host: Dennis S. Hudson). Charts will be used during the conference call and may be accessed at Seacoast's website at www.SeacoastBanking.com by selecting "Presentations" under the heading "News/Events." A replay of the call will be available for one month, beginning late afternoon of April 29, 2020 by dialing (888) 843-7419 (domestic) and using passcode: 7733 193#.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Seacoast's website at www.SeacoastBanking.com. The link is located in the subsection "Presentations" under the heading "Investor Services." Beginning the afternoon of April 29, 2020, an archived version of the webcast can be accessed from this same subsection of the website. The archived webcast will be available for one year.

About Seacoast Banking Corporation of Florida (NASDAQ: SBCF)Seacoast Banking Corporation of Florida is one of the largest community banks headquartered in Florida with approximately $7.4 billion in assets and $5.9 billion in deposits as of March 31, 2020. The Company provides integrated financial services including commercial and retail banking, wealth management, and mortgage services to customers through advanced banking solutions, and 50 traditional branches of its locally-branded, wholly-owned subsidiary bank, Seacoast Bank. Offices stretch from Fort Lauderdale, Boca Raton and West Palm Beach north through the Daytona Beach area, into Orlando and Central Florida and the adjacent Tampa market, and west to Okeechobee and surrounding counties. More information about the Company is available at www.SeacoastBanking.com.

Additional InformationSeacoast has filed a registration statement on Form S-4 with the United States Securities and Exchange Commission (the “SEC”) in connection with the proposed merger of Fourth Street Banking Company (“Fourth Street”) with and into Seacoast and Freedom Bank with and into Seacoast Bank. The registration statement in connection with the Fourth Street merger includes a proxy statement of Fourth Street and a prospectus of Seacoast. A definitive proxy statement/prospectus will be mailed to shareholders of Fourth Street. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  WE URGE INVESTORS TO READ THE PROXY STATEMENTS/PROSPECTUSES AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGERS OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENTS/PROSPECTUSES BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Investors may obtain (when available) these documents free of charge at the SEC’s Web site (www.sec.gov).  In addition, documents filed with the SEC by Seacoast will be available free of charge by contacting Investor Relations at (772) 288-6085.

Fourth Street, its directors, and executive officers and other members of management and employees may be considered participants in the solicitation of proxies in connection with the merger of the proposed merger of Fourth Street with and into Seacoast. Information regarding the participants in the proxy solicitation of Fourth Street and a description of its direct and indirect interests, by security holdings or otherwise, is contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC.

Cautionary Notice Regarding Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning, and protections, of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in our markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives and for integration of banks that we have acquired, or expect to acquire, including FBPB, as well as statements with respect to Seacoast's objectives, strategic plans, including Vision 2020, expectations and intentions and other statements that are not historical facts, any of which may be impacted by the COVID-19 pandemic and related effects on the U.S. economy. Actual results may differ from those set forth in the forward-looking statements.

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

All statements other than statements of historical fact could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may", "will", "anticipate", "assume", "should", "support", "indicate", "would", "believe", "contemplate", "expect", "estimate", "continue", "further", "plan", "point to", "project", "could", "intend", "target" or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the effects of future economic and market conditions, including seasonality and the adverse impact of COVID-19 (economic and otherwise); governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes; changes in accounting policies, rules and practices, including the impact of the adoption of CECL; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest sensitive assets and liabilities; interest rate risks, sensitivities and the shape of the yield curve; uncertainty related to the impact of LIBOR calculations on securities and loans; changes in borrower credit risks and payment behaviors; changes in the availability and cost of credit and capital in the financial markets; changes in the prices, values and sales volumes of residential and commercial real estate; our ability to comply with any regulatory requirements; the effects of problems encountered by other financial institutions that adversely affect us or the banking industry; our concentration in commercial real estate loans; the failure of assumptions and estimates, as well as differences in, and changes to, economic, market and credit conditions; the impact on the valuation of our investments due to market volatility or counterparty payment risk; statutory and regulatory dividend restrictions; increases in regulatory capital requirements for banking organizations generally; the risks of mergers, acquisitions and divestitures, including our ability to continue to identify acquisition targets and successfully acquire desirable financial institutions; changes in technology or products that may be more difficult, costly, or less effective than anticipated; our ability to identify and address increased cybersecurity risks; inability of our risk management framework to manage risks associated with our business; dependence on key suppliers or vendors to obtain equipment or services for our business on acceptable terms; reduction in or the termination of our ability to use the mobile-based platform that is critical to our business growth strategy; the effects of war or other conflicts, acts of terrorism, natural disasters, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions; unexpected outcomes of and the costs associated with, existing or new litigation involving us; our ability to maintain adequate internal controls over financial reporting; potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the risks that our deferred tax assets could be reduced if estimates of future taxable income from our operations and tax planning strategies are less than currently estimated and sales of our capital stock could trigger a reduction in the amount of net operating loss carryforwards that we may be able to utilize for income tax purposes; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; and the failure of assumptions underlying the establishment of reserves for possible loan losses.

The risks relating to the FBPB merger and Fourth Street proposed merger include, without limitation: the timing to consummate the proposed merger; the risk that a condition to closing of the proposed merger may not be satisfied; the risk that the merger is not completed at all; the diversion of management time on issues related to the proposed merger; 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 mergers being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; the risks of customer and employee loss and business disruptions, 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.

Given the many unknowns and risks being heavily weighted to the downside, our forward-looking statements are subject to the risk that conditions will be substantially different than we are currently expecting. If efforts to contain COVID-19 are unsuccessful and restrictions on movement last into the third quarter or beyond, the recession would be much longer and much more severe. Ineffective fiscal stimulus, or an extended delay in implementing it, are also major downside risks. The deeper the recession is, and the longer it lasts, the more it will damage consumer fundamentals and sentiment. This could both prolong the recession, and/or make any recovery weaker. Similarly, the recession could damage business fundamentals. And an extended global recession due to COVID-19 would weaken the U.S. recovery. As a result, the outbreak and its consequences, including responsive measures to manage it, have had and are likely to continue to have an adverse effect, possibly materially, on our business and financial performance by adversely affecting, possibly materially, the demand and profitability of our products and services, the valuation of assets and our ability to meet the needs of our customers.

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, 2019, under "Special Cautionary Notice Regarding Forward-looking Statements" and "Risk Factors", and otherwise in our SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at www.sec.gov.

FINANCIAL  HIGHLIGHTS                 (Unaudited)                
SEACOAST  BANKING  CORPORATION  OF  FLORIDA  AND  SUBSIDIARIES                                  
   
  Quarterly Trends
                   
(Amounts in thousands, except ratios and per share data) 1Q'20   4Q'19   3Q'19   2Q'19   1Q'19
                   
Summary of Earnings                  
Net income $ 709     $ 27,176     $ 25,605     $ 23,253     $ 22,705  
Adjusted net income1 5,462     26,837     27,731     25,818     24,205  
Net interest income2 63,291     61,846     61,027     60,219     60,861  
Net interest margin2,3 3.93 %   3.84 %   3.89 %   3.94 %   4.02 %
                   
Performance Ratios                  
Return on average assets-GAAP basis3 0.04 %   1.54 %   1.49 %   1.38 %   1.36 %
Return on average tangible assets-GAAP basis3,4 0.11     1.66     1.61     1.50     1.48  
Adjusted return on average tangible assets1,3,4 0.32     1.57     1.67     1.59     1.50  
                   
Return on average shareholders' equity-GAAP basis3 0.29     11.04     10.73     10.23     10.47  
Return on average tangible common equity-GAAP basis3,4 0.95     14.95     14.73     14.30     14.86  
Adjusted return on average tangible common equity1,3,4 2.86     14.19     15.30     15.17     15.11  
Efficiency ratio5 59.85     48.36     48.62     53.48     56.55  
Adjusted efficiency ratio1 53.61     47.52     48.96     51.44     55.81  
Noninterest income to total revenue (excluding securities gains/losses) 18.84     18.30     19.53     18.93     17.45  
Tangible common equity to tangible assets4 10.68     11.05     11.05     10.65     10.18  
Average loan-to-deposit ratio 93.02     90.71     88.35     87.27     90.55  
End of period loan-to-deposit ratio 90.81     93.44     88.36     88.53     86.38  
                   
Per Share Data                  
Net income diluted-GAAP basis $ 0.01     $ 0.52     $ 0.49     $ 0.45     $ 0.44  
Net income basic-GAAP basis 0.01     0.53     0.50     0.45     0.44  
Adjusted earnings1 0.10     0.52     0.53     0.50     0.47  
                   
Book value per share common 18.82     19.13     18.70     18.08     17.44  
Tangible book value per share 14.42     14.76     14.30     13.65     12.98  
Cash dividends declared                  
                   
                   
1Non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP.
2Calculated on a fully taxable equivalent basis using amortized cost.
3These ratios are stated on an annualized basis and are not necessarily indicative of future periods.
4The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders' equity less intangible assets.
5Defined as noninterest expense less amortization of intangibles and gains, losses, and expenses on foreclosed properties divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses).
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME         (Unaudited)    
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                              
   
  Quarterly Trends
                   
(Amounts in thousands, except per share data) 1Q'20   4Q'19   3Q'19   2Q'19   1Q'19
                   
Interest on securities:                  
Taxable $ 8,696     $ 8,500     $ 8,802     $ 8,933     $ 9,119  
Nontaxable 122     130     131     143     151  
Interest and fees on loans 63,440     62,868     63,092     62,288     62,287  
Interest on federal funds sold and other investments 734     788     800     873     918  
Total Interest Income 72,992     72,286     72,825     72,237     72,475  
                   
Interest on deposits 3,190     3,589     4,334     4,825     3,873  
Interest on time certificates 4,768     5,084     6,009     5,724     4,959  
Interest on borrowed money 1,857     1,853     1,534     1,552     2,869  
Total Interest Expense 9,815     10,526     11,877     12,101     11,701  
                   
Net Interest Income 63,177     61,760     60,948     60,136     60,774  
Provision for credit losses 29,513     4,800     2,251     2,551     1,397  
Net Interest Income After Provision for Credit Losses 33,664     56,960     58,697     57,585     59,377  
                   
Noninterest income:                  
Service charges on deposit accounts 2,825     2,960     2,978     2,894     2,697  
Interchange income 3,246     3,387     3,206     3,405     3,401  
Wealth management income 1,867     1,579     1,632     1,688     1,453  
Mortgage banking fees 2,208     1,514     2,127     1,734     1,115  
Marine finance fees 146     338     153     201     362  
SBA gains 139     576     569     691     636  
BOLI income 886     904     928     927     915  
Other 3,352     2,579     3,197     2,503     2,266  
  14,669     13,837     14,790     14,043     12,845  
Securities gains (losses), net 19     2,539     (847 )   (466 )   (9 )
Total Noninterest Income 14,688     16,376     13,943     13,577     12,836  
                   
                   
Noninterest expenses:                  
Salaries and wages 23,698     17,263     18,640     19,420     18,506  
Employee benefits 4,255     3,323     2,973     3,195     4,206  
Outsourced data processing costs 4,633     3,645     3,711     3,876     3,845  
Telephone / data lines 714     651     603     893     811  
Occupancy 3,353     3,368     3,368     3,741     3,807  
Furniture and equipment 1,623     1,416     1,528     1,544     1,757  
Marketing 1,278     885     933     1,211     1,132  
Legal and professional fees 3,363     2,025     1,648     2,033     2,847  
FDIC assessments         56     337     488  
Amortization of intangibles 1,456     1,456     1,456     1,456     1,458  
Foreclosed property expense and net (gain)/loss on sale (315 )   3     262     (174 )   (40 )
Other 3,740     4,022     3,405     3,468     4,282  
Total Noninterest Expense 47,798     38,057     38,583     41,000     43,099  
                   
Income Before Income Taxes 554     35,279     34,057     30,162     29,114  
Income taxes (155 )   8,103     8,452     6,909     6,409  
                   
Net Income $ 709     $ 27,176     $ 25,605     $ 23,253     $ 22,705  
                   
Per share of common stock:                  
                   
Net income diluted $ 0.01     $ 0.52     $ 0.49     $ 0.45     $ 0.44  
Net income basic 0.01     0.53     0.50     0.45     0.44  
Cash dividends declared                  
                   
Average diluted shares outstanding 52,284     52,081     51,935     51,952     52,039  
Average basic shares outstanding 51,803     51,517     51,473     51,446     51,359  
                   
                   
CONDENSED CONSOLIDATED BALANCE SHEETS   (Unaudited)    
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES          
   
  March 31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands) 2020   2019   2019   2019   2019
                   
Assets                  
Cash and due from banks $ 82,111     $ 89,843     $ 106,349     $ 97,792     $ 98,270  
Interest bearing deposits with other banks 232,763     34,688     25,911     61,987     105,741  
Total Cash and Cash Equivalents 314,874     124,531     132,260     159,779     204,011  
                   
Time deposits with other banks 3,742     3,742     4,579     4,980     8,174  
                   
Debt Securities:                  
Available for sale (at fair value) 910,311     946,855     920,811     914,615     877,549  
Held to maturity (at amortized cost) 252,373     261,369     273,644     287,302     295,485  
Total Debt Securities 1,162,684     1,208,224     1,194,455     1,201,917     1,173,034  
                   
Loans held for sale 29,281     20,029     26,768     17,513     13,900  
                   
Loans 5,317,208     5,198,404     4,986,289     4,888,139     4,828,441  
Less: Allowance for credit losses (85,411 )   (35,154 )   (33,605 )   (33,505 )   (32,822 )
Net Loans 5,231,797     5,163,250     4,952,684     4,854,634     4,795,619  
                   
Bank premises and equipment, net 71,540     66,615     67,873     68,738     70,412  
Other real estate owned 14,640     12,390     13,593     11,043     11,921  
Goodwill 212,085     205,286     205,286     205,260     205,260  
Other intangible assets, net 19,461     20,066     21,318     22,672     23,959  
Bank owned life insurance 127,067     126,181     125,277     125,233     124,306  
Net deferred tax assets 19,766     16,457     17,168     19,353     24,647  
Other assets 145,957     141,740     129,384     133,764     128,146  
Total Assets $ 7,352,894     $ 7,108,511     $ 6,890,645     $ 6,824,886     $ 6,783,389  
                   
Liabilities and Shareholders' Equity                  
Liabilities                  
Deposits                  
Noninterest demand $ 1,703,628     $ 1,590,493     $ 1,652,927     $ 1,669,804     $ 1,676,009  
Interest-bearing demand 1,234,193     1,181,732     1,115,455     1,124,519     1,100,477  
Savings 554,836     519,152     528,214     519,732     508,320  
Money market 1,124,378     1,108,363     1,158,862     1,172,971     1,192,070  
Other time certificates 489,669     504,837     537,183     553,107     539,202  
Brokered time certificates 597,715     472,857     458,418     268,998     367,841  
Time certificates of more than $250,000 183,080     207,319     222,082     232,078     221,659  
Total Deposits 5,887,499     5,584,753     5,673,141     5,541,209     5,605,578  
                   
Securities sold under agreements to repurchase 64,723     86,121     70,414     82,015     148,005  
Federal Home Loan Bank borrowings 265,000     315,000     50,000     140,000     3,000  
Subordinated debt 71,155     71,085     71,014     70,944     70,874  
Other liabilities 72,730     65,913     63,398     60,479     59,508  
Total Liabilities 6,361,107     6,122,872     5,927,967     5,894,647     5,886,965  
                   
Shareholders' Equity                  
Common stock 5,271     5,151     5,148     5,146     5,141  
Additional paid in capital 809,533     786,242     784,661     782,928     780,680  
Retained earnings 179,646     195,813     168,637     143,032     119,779  
Treasury stock (7,422 )   (6,032 )   (6,079 )   (6,137 )   (4,959 )
  987,028     981,174     952,367     924,969     900,641  
Accumulated other comprehensive income/(loss), net 4,759     4,465     10,311     5,270     (4,217 )
Total Shareholders' Equity 991,787     985,639     962,678     930,239     896,424  
Total Liabilities & Shareholders' Equity $ 7,352,894     $ 7,108,511     $ 6,890,645     $ 6,824,886     $ 6,783,389  
                   
Common shares outstanding 52,709     51,514     51,482     51,461     51,414  
                   
                   
CONSOLIDATED QUARTERLY FINANCIAL DATA                 (Unaudited)                
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                      
   
   
                   
(Amounts in thousands) 1Q'20   4Q'19   3Q'19   2Q'19   1Q'19
                   
Credit Analysis                  
Net charge-offs - non-acquired loans $ 1,316     $ 2,930     $ 2,106     $ 1,621     $ 762  
Net (recoveries) charge-offs - acquired loans (342 )   295     5     220     201  
Total Net Charge-offs 974     3,225     2,111     1,841     963  
                   
TDR valuation adjustments $ 24     $ 27     $ 40     $ 27     $ 35  
                   
Net charge-offs to average loans - non-acquired loans 0.10 %   0.23 %   0.17 %   0.13 %   0.06 %
Net (recoveries) charge-offs to average loans - acquired loans (0.03 )   0.02         0.02     0.02  
Total Net Charge-offs to Average Loans 0.07     0.25     0.17     0.15     0.08  
                   
Provision for credit losses - non-acquired loans $ 25,688     $ 4,041     $ 2,241     $ 2,326     $ 1,709  
Provision for (recapture of) credit losses - acquired loans 3,825     759     10     225     (312 )
Total Provision for Credit Losses $ 29,513     $ 4,800     $ 2,251     $ 2,551     $ 1,397  
                   
Allowance for credit losses - non-acquired loans $ 69,498     $ 34,573     $ 33,488     $ 33,393     $ 32,715  
Allowance for credit losses - acquired loans 15,913     581     117     112     107  
Total Allowance for Credit Losses1 $ 85,411     $ 35,154     $ 33,605     $ 33,505     $ 32,822  
                   
Non-acquired loans at end of period $ 4,373,378     $ 4,317,919     $ 4,010,299     $ 3,817,358     $ 3,667,221  
Acquired loans at end of period 943,830     880,485     975,990     1,070,781     1,161,220  
Total Loans $ 5,317,208     $ 5,198,404     $ 4,986,289     $ 4,888,139     $ 4,828,441  
                   
Non-acquired loans allowance for credit losses to non-acquired loans at end of period 1.59 %   0.80 %   0.84 %   0.87 %   0.89 %
Total allowance for credit losses to total loans at end of period 1.61     0.68     0.67     0.69     0.68  
Purchase discount on acquired loans at end of period 3.36     3.83     3.76     3.76     3.80  
                   
End of Period                  
Nonperforming loans - non-acquired $ 17,898     $ 20,990     $ 20,400     $ 15,810     $ 15,423  
Nonperforming loans - acquired 7,684     5,965     5,644     6,986     6,990  
Other real estate owned - non-acquired 10,676     5,177     5,177     66     831  
Other real estate owned - acquired 372     372     1,574     1,612     1,725  
Bank branches closed included in other real estate owned 3,592     6,842     6,842     9,365     9,365  
Total Nonperforming Assets $ 40,222     $ 39,346     $ 39,637     $ 33,839     $ 34,334  
                   
Restructured loans (accruing) $ 10,833     $ 11,100     $ 12,395     $ 14,534     $ 14,857  
                   
Nonperforming loans to loans at end of period - non-acquired 0.41 %   0.49 %   0.51 %   0.41 %   0.42 %
Nonperforming loans to loans at end of period - acquired 0.81     0.68     0.58     0.65     0.60  
Total Nonperforming Loans to Loans at End of Period 0.48     0.52     0.52     0.47     0.46  
                   
Nonperforming assets to total assets - non-acquired 0.44 %   0.46 %   0.47 %   0.37 %   0.38 %
Nonperforming assets to total assets - acquired 0.11     0.09     0.11     0.13     0.13  
Total Nonperforming Assets to Total Assets 0.55     0.55     0.58     0.50     0.51  
                   
  March 31,   December 31,   September 30,   June 30,   March 31,
Loans 2020   2019   2019   2019   2019
                   
Construction and land development $ 295,405     $ 325,113     $ 326,324     $ 379,991     $ 417,565  
Commercial real estate - owner occupied 1,082,893     1,034,963     1,025,040     1,005,876     989,234  
Commercial real estate - non-owner occupied 1,381,096     1,344,008     1,285,327     1,184,409     1,173,183  
Residential real estate 1,559,754     1,507,863     1,409,946     1,400,184     1,329,166  
Consumer 202,022     208,205     217,366     215,932     206,414  
Commercial and financial 796,038     778,252     722,286     701,747     712,879  
Total Loans $ 5,317,208     $ 5,198,404     $ 4,986,289     $ 4,888,139     $ 4,828,441  
                   
1See section titled "Current Expected Credit Losses ("CECL") Adopted on January 1, 2020
 
AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1 (Unaudited)            
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES                        
                                   
                                   
  1Q'20   4Q'19   1Q'19
  Average       Yield/   Average       Yield/   Average       Yield/
(Amounts in thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
                                   
Assets                                  
Earning assets:                                  
Securities:                                  
Taxable $ 1,152,473     $ 8,696     3.02 %   $ 1,179,843     $ 8,500     2.88 %   $ 1,186,374     $ 9,119     3.07 %
Nontaxable 19,740     152     3.09     20,709     162     3.13     26,561     190     2.86  
Total Securities 1,172,213     8,848     3.02     1,200,552     8,662     2.89     1,212,935     9,309     3.07  
                                   
Federal funds sold and other investments 87,924     734     3.36     84,961     788     3.68     91,136     918     4.09  
                                   
Loans, net 5,215,234     63,524     4.90     5,104,272     62,922     4.89     4,839,046     62,335     5.22  
                                   
Total Earning Assets 6,475,371     73,106     4.54     6,389,785     72,372     4.49     6,143,117     72,562     4.79  
                                   
Allowance for credit losses (56,931 )           (34,072 )           (32,966 )        
Cash and due from banks 90,084             99,008             99,940          
Premises and equipment 67,585             67,485             70,938          
Intangible assets 226,712             226,060             230,066          
Bank owned life insurance 126,492             125,597             123,708          
Other assets 126,230             122,351             136,175          
                                   
Total Assets $ 7,055,543             $ 6,996,214             $ 6,770,978          
                                   
Liabilities and Shareholders' Equity                                  
Interest-bearing liabilities:                                  
Interest-bearing demand $ 1,173,930     $ 834     0.29 %   $ 1,190,681     $ 983     0.33 %   $ 1,029,726     $ 839     0.33 %
Savings 526,727     348     0.27     528,771     422     0.32     500,347     477     0.39  
Money market 1,128,757     2,008     0.72     1,148,453     2,184     0.75     1,158,939     2,557     0.89  
Time deposits 1,151,750     4,768     1.67     1,078,297     5,084     1.87     1,042,346     4,959     1.93  
Securities sold under agreements to repurchase 71,065     167     0.95     73,693     226     1.22     185,032     550     1.21  
Federal funds purchased and Federal Home Loan Bank borrowings 250,022     968     1.56     181,134     845     1.85     227,378     1,421     2.53  
Other borrowings 71,114     722     4.08     71,045     782     4.37     70,836     898     5.14  
                                   
Total Interest-Bearing Liabilities 4,373,365     9,815     0.90     4,272,074     10,526     0.98     4,214,604     11,701     1.13  
                                   
Noninterest demand 1,625,215             1,680,734             1,612,548          
Other liabilities 62,970             67,206             64,262          
Total Liabilities 6,061,550             6,020,014             5,891,414          
                                   
Shareholders' equity 993,993             976,200             879,564          
                                   
Total Liabilities & Equity $ 7,055,543             $ 6,996,214             $ 6,770,978          
                                   
Cost of deposits         0.57 %           0.61 %           0.67 %
Interest expense as a % of earning assets         0.61 %           0.65 %           0.77 %
Net interest income as a % of earning assets     $ 63,291     3.93 %       $ 61,846     3.84 %       $ 60,861     4.02 %
                                   
                                   
1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.        
Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.        
         
CONSOLIDATED QUARTERLY FINANCIAL DATA     (Unaudited)      
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES            
   
  March 31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands) 2020   2019   2019   2019   2019
                   
Customer Relationship Funding                  
Noninterest demand                  
Commercial $ 1,336,352     $ 1,233,475     $ 1,314,102     $ 1,323,743     $ 1,298,468  
Retail 271,916     246,717     241,734     251,879     275,383  
Public funds 71,029     85,122     65,869     65,822     73,640  
Other 24,331     25,179     31,222     28,360     28,518  
Total Noninterest Demand 1,703,628     1,590,493     1,652,927     1,669,804     1,676,009  
                   
Interest-bearing demand                  
Commercial 349,315     319,993     342,376     323,818     289,544  
Retail 671,378     641,762     622,833     634,099     646,522  
Public funds 213,500     219,977     150,246     166,602     164,411  
Total Interest-Bearing Demand 1,234,193     1,181,732     1,115,455     1,124,519     1,100,477  
                   
Total transaction accounts                  
Commercial 1,685,667     1,553,468     1,656,478     1,647,561     1,588,012  
Retail 943,294     888,479     864,567     885,978     921,905  
Public funds 284,529     305,099     216,115     232,424     238,051  
Other 24,331     25,179     31,222     28,360     28,518  
Total Transaction Accounts 2,937,821     2,772,225     2,768,382     2,794,323     2,776,486  
                   
Savings 554,836     519,152     528,214     519,732     508,320  
                   
Money market                  
Commercial 487,759     494,803     513,477     517,041     500,649  
Retail 572,785     553,075     583,917     590,320     602,378  
Public funds 63,834     60,485     61,468     65,610     89,043  
Total Money Market 1,124,378     1,108,363     1,158,862     1,172,971     1,192,070  
                   
Brokered time certificates 597,715     472,857     458,418     268,998     367,841  
Other time certificates 672,749     712,156     759,265     785,185     760,861  
  1,270,464     1,185,013     1,217,683     1,054,183     1,128,702  
Total Deposits $ 5,887,499     $ 5,584,753     $ 5,673,141     $ 5,541,209     $ 5,605,578  
                   
Customer sweep accounts $ 64,723     $ 86,121     $ 70,414     $ 82,015     $ 148,005  
                   
                   
CURRENT EXPECTED CREDIT LOSSES ("CECL") ADOPTED ON JANUARY 1, 2020        
SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES    
                   
  January 1,                
($ in thousands) 2020                
                   
Impact of Adoption                  
Increase to allowance for non-acquired loans $ 10,577                  
Increase to allowance for acquired loans 10,649                  
Reversal of contra-loan balances for purchased credit impaired loans, now included in allowance (706 )                
Increase to reserve for unfunded commitments (included in Other Liabilities) 1,837                  
Tax effect (5,481 )                
Decrease to retained earnings upon adoption $ 16,876                  
                   
                   

Explanation of Certain Unaudited Non-GAAP Financial Measures

This presentation contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might define or calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.

GAAP TO NON-GAAP RECONCILIATION           (Unaudited)            
SEACOAST  BANKING  CORPORATION  OF  FLORIDA  AND  SUBSIDIARIES                          
                   
  Quarterly Trends
                   
(Amounts in thousands, except per share data) 1Q'20   4Q'19   3Q'19   2Q'19   1Q'19
                   
Net Income $ 709     $ 27,176     $ 25,605     $ 23,253     $ 22,705  
                   
Total noninterest income 14,688     16,376     13,943     13,577     12,836  
Securities (gains) losses, net (19 )   (2,539 )   847     466     9  
BOLI benefits on death (included in other income)         (956 )        
Total Adjustments to Noninterest Income (19 )   (2,539 )   (109 )   466     9  
Total Adjusted Noninterest Income 14,669     13,837     13,834     14,043     12,845  
                   
Total noninterest expense 47,798     38,057     38,583     41,000     43,099  
Merger related charges (4,553 )   (634 )           (335 )
Amortization of intangibles (1,456 )   (1,456 )   (1,456 )   (1,456 )   (1,458 )
Business continuity expenses (307 )       (95 )        
Branch reductions and other expense initiatives         (121 )   (1,517 )   (208 )
Total Adjustments to Noninterest Expense (6,316 )   (2,090 )   (1,672 )   (2,973 )   (2,001 )
Total Adjusted Noninterest Expense 41,482     35,967     36,911     38,027     41,098  
                   
Income Taxes (155 )   8,103     8,452     6,909     6,409  
Tax effect of adjustments 1,544     (110 )   572     874     510  
Effect of change in corporate tax rate on deferred tax assets         (1,135 )        
Total Adjustments to Income Taxes 1,544     (110 )   (563 )   874     510  
Adjusted Income Taxes 1,389     7,993     7,889     7,783     6,919  
Adjusted Net Income $ 5,462     $ 26,837     $ 27,731     $ 25,818     $ 24,205  
                   
Earnings per diluted share, as reported $ 0.01     $ 0.52     $ 0.49     $ 0.45     $ 0.44  
Adjusted Earnings per Diluted Share 0.10     0.52     0.53     0.50     0.47  
Average diluted shares outstanding 52,284     52,081     51,935     51,952     52,039  
                   
Adjusted Noninterest Expense $ 41,482     $ 35,967     $ 36,911     $ 38,027     $ 41,098  
Foreclosed property expense and net gain/(loss) on sale 315     (3 )   (262 )   174     40  
Net Adjusted Noninterest Expense $ 41,797     $ 35,964     $ 36,649     $ 38,201     $ 41,138  
                   
Revenue $ 77,865     $ 78,136     $ 74,891     $ 73,713     $ 73,610  
Total Adjustments to Revenue (19 )   (2,539 )   (109 )   466     9  
Impact of FTE adjustment 115     87     79     83     87  
Adjusted Revenue on a fully taxable equivalent basis $ 77,961     $ 75,684     $ 74,861     $ 74,262     $ 73,706  
Adjusted Efficiency Ratio 53.61 %   47.52 %   48.96 %   51.44 %   55.81 %
                   
Average Assets $ 7,055,543     $ 6,996,214     $ 6,820,576     $ 6,734,994     $ 6,770,978  
Less average goodwill and intangible assets (226,712 )   (226,060 )   (227,389 )   (228,706 )   (230,066 )
Average Tangible Assets $ 6,828,831     $ 6,770,154     $ 6,593,187     $ 6,506,288     $ 6,540,912  
                   
Return on Average Assets (ROA) 0.04 %   1.54 %   1.49 %   1.38 %   1.36 %
Impact of removing average intangible assets and related amortization 0.07     0.12     0.12     0.12     0.12  
Return on Average Tangible Assets (ROTA) 0.11     1.66     1.61     1.50     1.48  
Impact of other adjustments for Adjusted Net Income 0.21     (0.09 )   0.06     0.09     0.02  
Adjusted Return on Average Tangible Assets 0.32     1.57     1.67     1.59     1.50  
                   
Average Shareholders' Equity $ 993,993     $ 976,200     $ 946,670     $ 911,479     $ 879,564  
Less average goodwill and intangible assets (226,712 )   (226,060 )   (227,389 )   (228,706 )   (230,066 )
Average Tangible Equity $ 767,281     $ 750,140     $ 719,281     $ 682,773     $ 649,498  
                   
Return on Average Shareholders' Equity 0.29 %   11.04 %   10.73 %   10.23 %   10.47 %
Impact of removing average intangible assets and related amortization 0.66     3.91     4.00     4.07     4.39  
Return on Average Tangible Common Equity (ROTCE) 0.95     14.95     14.73     14.30     14.86  
Impact of other adjustments for Adjusted Net Income 1.91     (0.76 )   0.57     0.87     0.25  
Adjusted Return on Average Tangible Common Equity 2.86     14.19     15.30     15.17     15.11  
                   
Loan interest income excluding accretion on acquired loans $ 59,237     $ 59,515     $ 59,279     $ 58,169     $ 58,397  
Accretion on acquired loans 4,287     3,407     3,859     4,166     3,938  
Loan interest income1 $ 63,524     $ 62,922     $ 63,138     $ 62,335     $ 62,335  
                   
1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.
Yield on loans excluding accretion on acquired loans 4.57 %   4.63 %   4.76 %   4.82 %   4.89 %
Impact of accretion on acquired loans 0.33     0.26     0.30     0.34     0.33  
Yield on loans 4.90     4.89     5.06     5.16     5.22  
                   
Net interest income excluding accretion on acquired loans $ 59,004     $ 58,439     $ 57,168     $ 56,053     $ 56,923  
Accretion on acquired loans 4,287     3,407     3,859     4,166     3,938  
Net Interest Income1 $ 63,291     $ 61,846     $ 61,027     $ 60,219     $ 60,861  
                   
Net interest margin excluding accretion on acquired loans 3.66 %   3.63 %   3.64 %   3.67 %   3.76 %
Impact of accretion on acquired loans 0.27     0.21     0.25     0.27     0.26  
Net Interest Margin 3.93     3.84     3.89     3.94     4.02  
                   
Security interest income excluding tax equivalent adjustment $ 8,817     $ 8,630     $ 8,933     $ 9,076     $ 9,270  
Tax equivalent adjustment on securities 31     32     33     36     39  
Security interest income1 $ 8,848     $ 8,662     $ 8,966     $ 9,112     $ 9,309  
                   
Loan interest income excluding tax equivalent adjustment $ 63,440     $ 62,867     $ 63,091     $ 62,287     $ 62,287  
Tax equivalent adjustment on loans 84     55     47     48     48  
Loan interest income1 $ 63,524     $ 62,922     $ 63,138     $ 62,335     $ 62,335  
                   
Net interest income excluding tax equivalent adjustment $ 63,176     $ 61,759     $ 60,947     $ 60,135     $ 60,774  
Tax equivalent adjustment on securities 31     32     33     36     39  
Tax equivalent adjustment on loans 84     55     47     48     48  
Net Interest Income1 $ 63,291     $ 61,846     $ 61,027     $ 60,219     $ 60,861  
                   
1On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.
 

Charles M. ShafferExecutive Vice PresidentChief Operating Officer andChief Financial Officer(772) 221-7003Chuck.Shaffer@seacoastbank.com

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