EX-99.3 4 exhibit993to8k.htm Exhibit 99

EXHIBIT 99.3

To 8-K dated April 30, 2007




Seacoast Banking Corporation of Florida

First Quarter 2007 Financial Highlights



Cautionary Notice Regarding Forward-Looking Statements


This discussion and analysis 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, 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 and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, 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, 2006 under “Special Cautionary Notice Regarding Forward-Looking Statements,” and otherwise in our SEC reports and filings.  Such reports are available upon request from Seacoast, or from the Securities and Exchange Commission, including through the SEC’s Internet website at http://www.sec.gov.



Capitalizing on Market Disruption



Treasure Coast Market


  

Martin

 

St. Lucie

 

Indian River

 

Total Offices

  

Deposits

Offices

 

Deposits

Offices

 

Deposits

Offices

  

Seacoast

 

755,626

11

 

285,461

7

 

230,440

8

 

26

National City

 

383,569

8

 

883,844

11

 

37,513

6

 

25

Wachovia

 

533,193

10

 

500,517

7

 

1,383,533

10

 

27

Bank of America

 

558,301

10

 

432,575

8

 

364,071

6

 

24

SunTrust

 

139,616

3

 

295,704

5

 

251,832

6

 

14

Riverside

 

151,346

3

 

998,661

8

 

169,781

4

 

15

Alabama National

 

--

  

--

  

403,496

5

 

5


Over $1.3 billion in local community bank deposits will transfer to Cleveland


Source:  SNL Financial June 2006




Capitalizing on Market Disruption



Local Community Banks in Treasure Coast Market

  

Deposits

 

Offices

Seacoast

 

1,271,527

 

26

Riverside

 

1,319,788

 

15

Gulfstream

 

268,166

 

2

Peoples Bank

 

134,523

 

3

First Bank of Indiantown

68,545

 

2

Marine Bank

 

89,754

 

2


Source:  SNL Financial June 2006





Balance Sheet Management – Adoption of SFAS 157 and SFAS 159



•

Seacoast began evaluating the potential impacts of SFAS 157 and 159 late in the first quarter of 2007.

–

Benefits were evident related to more active management of the balance sheet when considering broader use of fair value accounting.


•

$251 million of securities were transferred to trading from AFS and HTM portfolios on January 1, 2007.

–

The transfer to trading resulted in a $3.7 million adjustment to opening retained earnings and $561,000 in fair value appreciation in the first quarter income statement.


•

Prospective look

–

Smaller securities portfolio with approximately 40-50% more actively traded with earnings volatility managed with fair value interest rate swaps.




Items Impacting Q1 2007


  

Pretax Amount*

 

EPS Impact


Recapture of specific allowance for impaired loan

$

1,192

$

0.04

Impact of adoption of SFAS 157 and 159

 

561

 

0.02

Implied provision for loan losses related to:

    

Q1 2007 loan growth

 

(100)

 

-

Adjustment to more conservative ranges due to continuation of market conditions

 

(542)

 

(0.02)

Total

$

1,111

$

0.04


* In Thousands




Balance Sheet Impact of Adoption of SFAS 157 and 159



  

December 31, 2006

 

March 31, 2007


Held to Maturity

$

129,958

$

35,746

Available for Sale

 

313,983

 

157,965

Trading

 

-

 

125,000

Total Investment Securities

$

443,941

$

318,711

     

Net Borrowed Overnight Funds

$

206, 064

$

87,777


(In Thousands)




Estimated Quarterly Impact of Balance Sheet Restructuring



  

Impact

 

EPS Impact


Net Interest Income *

$

550

$

0.02

     

Net Interest Margin (current Q1 2007)

 

3.92

%

 

Increase

 

0.18

  

Net Interest Margin (proforma Q1 2007)

 

4.10

%

 
     

Decline in Average Earning Assets

$

(45,000)

  


* In Thousands





Total Revenues Increase



(Dollars in thousands)

QTR1 07

QTR1 06

Growth

% Growth

      

Net Interest Income

$ 21,432

$ 20,274

$ 1,158

5.7

%

Noninterest Income

6,216

5,304

912

17.2

 

Total Revenues

$ 27,648

$ 25,578

$ 2,070

8.1

%


•

Dollars in Thousands; Excludes Provision for Loan Losses and Trading Account Profits

•

Calculated on a Fully Taxable Equivalent Basis





Overhead Ratio


 

Q1-05

Q2-05

Q3-05

Q4-05

 

Overhead Ratio

65.4%

62.1%

62.5%

62.1%

 
      
 

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Overhead Ratio

62.5%

61.1%

64.7%

64.8%

66.5%



•

Noninterest Income Excludes Security Gains (Losses), Gain on Sale of Partnership Interest, Interest Rate Swap Profits (Losses) and Trading Account Profits

•

Noninterest Expense Excludes Merger/Nonrecurring Charges and Non-cash Core Deposit Intangible Amortization

•

Net Interest Income is included on a Tax Equivalent Basis




Loan Growth



(Dollars in thousands)

Q1-2006

Q2-2006

Q3-2006

Q4-2006

Q1-2007

Loans, net of unearned income

$1,339,070

$1,614,646

$1,656,061

$1,733,111

$1,743,294





Commercial Lending Originations



(Dollars in thousands)

Q1-2006

Q2-2006

Q3-2006

Q4-2006

Q1-2007

Commercial Originations*

$117,000

$106,000

$80,000

$140,000

$76,000


*  Includes Commercial Real Estate





Deposit Performance



(Dollars in millions)

Q1-05

Q2-05

Q3-05

Q4-05

Core Deposits

976

1,120

1,170

1,138

Time Deposits > $100,000

133

142

167

173

DDA

367

482

442

473

     

(Dollars in millions)

Q1-06

Q2-06

Q3-06

Q4-06

Core Deposits *

1,170

1,313

1,279

1,255

Time Deposits >$100,000

193

227

254

244

DDA

441

489

425

392

     

(Dollars in millions)

Q1-07 (1)

   

Core Deposits *

1,229

   

Time Deposits >$100,000

260

   

DDA

401

   



*Includes Time Deposits < $100,000


(1) 21% DDA Mix




Deposit Mix


 

QTR3 06

 

QTR4 06

 

QTR1 07

 

Demand

22

%

21

%

21

%

Core *

65

 

66

 

65

 

Time Deposits > $100,000

13

 

13

 

14

 

Total

100

%

100

%

100

%


*Includes Time Deposits < $100,000







Cost of Deposits


 

Q2-05

Q3-05

Q4-05

 

Fed Funds Rate

3.25%

3.75%

4.25%

 

Cost of Deposits

1.18%

1.32%

1.54%

 
     

 

Q1-06

Q2-06

Q3-06

Q4-06

Fed Funds Rate

4.75%

5.25%

5.25%

5.25%

Cost of Deposits

1.71%

1.99%

2.29%

2.54%

     

 

Q1-07

   

Fed Funds Rate

5.25%

   

Cost of Deposits

2.69%

   





Average Earning Asset Growth


(Dollars in billions)

Q2-05

Q3-05

Q4-05

Average Earning Assets

$1.83

$1.89

$1.97


(Dollars in billions)

Q1-06

Q2-06

Q3-06

Q4-06

Average Earning Assets

$1.98

$2.25

$2.18

$2.19

     


(Dollars in billions)

Q1-07

   

Average Earning Assets

$2.20

   
     


Average loans represent 79% of earning assets at March 31, 2007, compared to 77% at December 31, 2006 and 63% at December 31, 2005





Prime Based Loans


(Dollars in thousands)

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Prime Based Loans

$426,000

$496,000

$507,000

$528,000

$501,000






Total Floating Rate Assets


Floating Rate Assets (Loans, Investments, and Overnight Funds)


(Dollars in thousands)

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Ending Floating Rate Assets

$632,000

$644,000

$568,000

$593,000

$562,000

Prime Rate

7.75%

8.25%

8.25%

8.25%

8.25%





Net Interest Margin and Net Interest Income


(Dollars in thousands)

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Net Interest Margin

4.16%

4.29%

4.22%

3.95%

3.92%

Net Interest Income

$20,274

$24,030

$23,144

$21,846

$21,432


Excludes Provision for Loan Losses; Calculated on a Fully Taxable Equivalent Basis using Amortized Cost




Residential Market Events



2004

2005

2006

2007

2008

     

Value Run Up Begins

Peak of Market Cycle

Buyers Froze

Resales Begin

Resales Continue

     

Investors & Speculators Jump In

Investors Stop Buying


Speculators Leave

“Deer in the headlights”


Sales Stop

Inventory Eases


Adjustment Phase Begins

Foreclosures Rise as ARMs from Peak Adjust

     

Fuels More Inventory

Inventory Still Growing

Inventory Still Growing

Foreclosures Rise

Market Achieves Equilibrium




Service Area


•

Seminole County

•

Orange County

•

Brevard County

•

Indian River County

•

Okeechobee County

•

St. Lucie County

•

Martin County

•

Palm Beach County

•

Hardee County

•

Highlands County

•

Desoto County

•

Glades County

•

Hendry County