Seacoast Reports Second Quarter 2021 Results
07/22/2021 - 04:45 PM
Pipelines Expand Sequentially, in Line with a Flourishing Florida Economy
Record Quarter for Wealth Management, Interchange Income, and Growth in Transaction Account Balances
STUART, Fla., July 22, 2021 (GLOBE NEWSWIRE) -- Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") (NASDAQ: SBCF) today reported net income in the second quarter of 2021 of $31.4 million , or $0.56 per diluted share, a decrease of 7% compared to the first quarter of 2021, and an increase of 25% compared to the second quarter of 2020. Adjusted net income1 for the second quarter of 2021 was $33.3 million , or $0.59 per diluted share, a decrease of 6% compared to the first quarter of 2021, and an increase of 31% compared to the second quarter of 2020. The ratio of tangible common equity to tangible assets was 10.43% , tangible book value per share increased to $17.08 and Tier 1 capital increased to 18.3% .
For the second quarter of 2021, return on average tangible assets was 1.48% , return on average tangible shareholders' equity was 13.88% , and the efficiency ratio was 54.93% , compared to 1.70% , 15.62% , and 53.21% , respectively, in the prior quarter, and 1.37% , 13.47% , and 50.11% , respectively, in the prior year quarter. Adjusted return on average tangible assets1 in the second quarter of 2021 was 1.52% , adjusted return on average tangible shareholders' equity1 was 14.27% , and the adjusted efficiency ratio1 was 53.49% , compared to 1.75% , 16.01% , and 51.99% , respectively, in the prior quarter, and 1.33% , 13.09% , and 49.60% , respectively, in the prior year quarter.
Charles M. Shaffer, Seacoast's President and CEO, said, “Our investments over the last six months in commercial banking talent and technology are evident in the pipeline growth this quarter, and we continue to see strong economic expansion in our markets. Our transaction account balances have grown $860 million from the start of the year, a reflection of the strength of our customer franchise. While this significant growth in deposits is impacting our net interest margin, our low-cost funding base positions us for success as rates increase and as demand for credit continues to expand in the coming periods.”
Mr. Shaffer further commented, “We continue to steadily build shareholder value through consistent growth in our tangible book value per share, which has increased 13% year-over-year to $17.08, overcoming the challenge of the pandemic. The Company is committed to maintaining our fortress balance sheet, supported by a robust capital position and a strictly underwritten credit portfolio. Our prudent capital levels, low cost of funds, and ample liquidity support further disciplined organic growth and opportunistic acquisitions as we move forward.”
Financial Results
Income Statement
Net income was $31.4 million , or $0.56 per diluted share for the second quarter of 2021, compared to $33.7 million , or $0.60, for the prior quarter, and $25.1 million , or $0.47, for the prior year quarter. For the six months ended June 30, 2021, net income was $65.1 million , or $1.17 per diluted share, compared to $25.8 million , or $0.49, for the six months ended June 30, 2020. Adjusted net income1 was $33.3 million , or $0.59 per diluted share for the second quarter of 2021, compared to $35.5 million , or $0.63, for the prior quarter, and $25.5 million , or $0.48, for the prior year quarter. For the six months ended June 30, 2021, adjusted net income1 was $68.7 million , or $1.23 per diluted share, compared to $30.9 million , or $0.59, for the six months ended June 30, 2020.Net revenues were $81.1 million in the second quarter of 2021, a decrease of $3.2 million , or 4% , compared to the prior quarter, and a decrease of $1.2 million , or 1% , compared to the prior year quarter. For the six months ended June 30, 2021, net revenues were $165.4 million , an increase of $5.3 million , or 3% , compared to the six months ended June 30, 2020. Adjusted revenues1 were $81.2 million in the second quarter of 2021, a decrease of $3.2 million , or 4% , from the prior quarter, and an increase of $0.1 million , or 0.2% , compared to the prior year quarter. For the six months ended June 30, 2021 net revenues were $165.6 million , an increase of $6.7 million , or 4% , compared to the six months ended June 30, 2020.Net interest income totaled $65.8 million in the second quarter of 2021, a decrease of $0.8 million , or 1% , from the prior quarter reflecting lower income from Paycheck Protection Program (“PPP”) loans, partially offset by lower interest expense on deposits. During the second quarter of 2021, net interest income included $5.1 million in interest and fees earned on PPP loans compared to $6.9 million in the first quarter of 2021. For the six months ended June 30, 2021, net interest income was $132.4 million , an increase of $2.0 million , or 2% , compared to the six months ended June 30, 2020. As of June 30, 2021, remaining deferred fees on PPP loans total $10.6 million , which will be recognized over the loans' remaining contractual maturity or earlier, as loans are forgiven.Net interest margin declined from 3.51% in the first quarter of 2021 to 3.23% in the second quarter of 2021, largely as the result of significant growth in transaction account deposit balances during the second quarter. This increase in funding occurred across our customer base at near-zero rates, as new clients were onboarded and existing clients continue to see expansion in cash balances. The resulting increase in liquidity negatively impacted net interest margin by 23 basis points. Excluding this increase in liquidity, the remaining decline in net interest margin is attributed to lower PPP interest and fees as a result of declining balances as PPP loans are forgiven. Excess liquidity has been partially invested through securities purchases; however, cash deployment remains disciplined and prudent, with careful reinvestment of liquidity over time. Securities yields declined by only two basis points to 1.63% in the second quarter of 2021. Non-PPP loan yields declined by only one basis point to 4.36% during the second quarter of 2021. Offsetting and favorable was the decline in the cost of deposits from 13 basis points in the first quarter of 2021 to eight basis points in the second quarter of 2021. The effect on net interest margin of accretion of purchase discounts on acquired loans was an increase of 14 basis points in the second quarter compared to an increase of 15 basis points in the prior quarter. The effect on net interest margin of interest and fees on PPP loans was an increase of six basis points in the second quarter and an increase of 11 basis points in the prior quarter.Noninterest income totaled $15.3 million in the second quarter of 2021, a decrease of $2.3 million , or 13% , compared to the prior quarter, and an increase of $0.3 million , or 2% , compared to the prior year quarter. For the six months ended June 30, 2021, noninterest income was $33.0 million , an increase of $3.3 million , or 11% , compared to the six months ended June 30, 2020. Results for the second quarter of 2021 included the following: Interchange revenue reached a new record of $4.1 million , compared to $3.8 million in the prior quarter, reflecting higher transactional volume and higher per-card spending, both indicative of the strength and confidence in our consumer and small business franchise. Wealth management income increased to a record $2.4 million in the current quarter, compared to $2.3 million in the first quarter of 2021. The team continues to deliver strong growth in assets under management, which increased $133 million quarter-over-quarter, bringing total assets under management to $1.2 billion . The team is successfully winning business with commercial relationships and high net worth families across the Company’s footprint. Mortgage banking fees were $3.0 million , compared to $4.2 million in the prior quarter, due to slowing refinance activity and low housing inventory levels. Other income declined by $1.5 million in the second quarter of 2021, reflecting the impact in the first quarter of 2021 of $1.7 million in income associated with the resolution of contingencies on two loans acquired in 2017. The provision for credit losses was a net benefit of $4.9 million in the second quarter of 2021, compared to a net benefit of $5.7 million in the prior quarter, and provision expense of $7.6 million in the prior year quarter. The ratio of allowance for credit losses to total loans declined to 1.49% at June 30, 2021, compared to 1.53% at March 31, 2021 and 1.58% at June 30, 2020. Excluding PPP loans, the ratio declined to 1.60% at June 30, 2021, compared to 1.71% at March 31, 2021 and 1.76% at June 30, 2020, reflecting a continued improvement in the economic outlook. Noninterest expense was $45.8 million in the second quarter of 2021, a decrease of $0.3 million , or 1% , compared to the prior quarter, and an increase of $3.4 million , or 8% , compared to the prior year quarter. For the six months ended June 30, 2021, noninterest expense was $91.9 million , an increase of $1.7 million , or 2% , compared to the six months ended June 30, 2020. Changes from the first quarter of 2021 consisted of the following: Salaries and wages increased $1.6 million , or 7% , to $23.0 million . In the first quarter of 2021, PPP loan production resulted in higher deferrals of related salary costs, impacting the first quarter by $1.9 million . This deferral slowed in the second quarter, as the PPP program ended. Employee benefits decreased $1.0 million , or 21% , with the prior quarter reflecting the seasonal impact of higher payroll taxes and 401(k) plan contributions. Occupancy expenses decreased $0.5 million , or 13% . Three branch consolidations were completed in the first quarter of 2021, resulting in associated charges in the first quarter of $0.3 million . Legal and professional fees decreased by $0.4 million , or 15% , compared to the first quarter, reflecting lower legal fees, including a $0.1 million decrease in merger-related costs. Seacoast recorded $8.8 million of income tax expense in the second quarter of 2021, compared to $10.2 million in the prior quarter and $7.2 million in the second quarter of 2020. A tax benefit related to stock-based compensation totaled $0.6 million in the second quarter of 2021, compared to a tax benefit of $0.1 million in the first quarter of 2021, and tax expense of $0.2 million in the second quarter of 2020. The ratio of net adjusted noninterest expense 1 1.98% in the second quarter of 2021, compared to 2.16% in the prior quarter and 2.11% in the second quarter of 2020. The efficiency ratio was 54.93% compared to 53.21% in the prior quarter and 50.11% in the prior year quarter. The adjusted efficiency ratio 1 53.49% compared to 51.99% in the prior quarter and 49.60% in the prior year quarter. The Company remains committed to efficiency through disciplined, proactive management of its cost structure. Balance Sheet
At June 30, 2021, the Company had total assets of $9.3 billion and total shareholders' equity of $1.2 billion . Book value per share increased to $21.33 from $20.89 on March 31, 2021, and $19.45 on June 30, 2020. Tangible book value per share of $17.08 on June 30, 2021 has increased 11% on an annualized basis compared to March 31, 2021, and 13% compared to June 30, 2020. Debt securities totaled $1.8 billion on June 30, 2021, an increase of $252.5 million , or 16% , compared to March 31, 2021. Purchases during the quarter were primarily in agency-issued collateralized mortgage obligations and had an average yield of 1.39% and a duration of 3.1 years. The Company continues to take a prudent and disciplined approach to reinvesting liquidity.Loans totaled $5.4 billion on June 30, 2021, a decrease of $224.4 million , or 4% , compared to March 31, 2021. The decrease includes $243.0 million in PPP loan forgiveness during the second quarter of 2021. Removing the impact of declines in PPP loans outstanding, loans declined only $6.9 million from the prior quarter.Loan originations, excluding PPP, were $456.5 million in the second quarter of 2021, compared to $436.0 million in the first quarter of 2021, an increase of 5% . Commercial originations during the second quarter of 2021 were $193.0 million , compared to $204.3 million in the first quarter of 2021 and $106.9 million in the second quarter of 2020. Consumer originations in the second quarter of 2021 increased to $63.7 million from $46.7 million in the first quarter of 2021, and $58.0 million in the second quarter of 2020. Residential loans originated for sale in the secondary market totaled $120.1 million in the second quarter of 2021, compared to $138.3 million in the first quarter of 2021, and $122.5 million in the second quarter of 2020. While we expect to continue to see the benefit of the inflow of new residents and businesses into Florida, refinance activity has slowed from the peaks seen in the last several quarters, and housing inventory is low. Closed residential loans retained in the portfolio totaled $79.7 million in the second quarter of 2021, compared to $46.6 million in the first quarter of 2021, and $23.5 million in the second quarter of 2020. Pipelines (loans in underwriting and approval or approved and not yet closed) totaled $468.5 million on June 30, 2021, an increase of 8% from March 31, 2021 and an increase of 83% from June 30, 2020. Commercial pipelines were $322.0 million as of June 30, 2021, an increase of 34% from $240.9 million at March 31, 2021 and an increase of 175% from $117.0 million at June 30, 2020. With significant economic growth in the State of Florida and the addition of top talent across our footprint, we expect production to increase in the second half of 2021. Consumer pipelines were $31.7 million as of June 30, 2021, compared to $28.1 million at March 31, 2021 and $30.6 million at June 30, 2020. Residential saleable pipelines were $60.6 million as of June 30, 2021, compared to $92.1 million at March 31, 2021 and $94.7 million at June 30, 2020. Retained residential pipelines were $54.1 million as of June 30, 2021, compared to $72.4 million at March 31, 2021 and $13.2 million at June 30, 2020. Total deposits were $7.8 billion as of June 30, 2021, an increase of $450.7 million , or 6% , compared to March 31, 2021. The overall cost of deposits declined to 8 basis points in the second quarter of 2021 from 13 basis points in the prior quarter. Total transaction account balances increased $382.9 million , or 9% , quarter-over-quarter, and at June 30, 2021 represent 60% of overall deposit funding. The increase in funding occurred across our customer base at near-zero rates, as new clients were onboarded and existing clients continue to see expansion in cash balances. Interest-bearing deposits (interest-bearing demand, savings, and money market deposits) increased $295.1 million , or 7% , quarter-over-quarter to $4.4 billion , noninterest-bearing demand deposits increased $266.9 million , or 10% , to $3.0 billion , and CDs (excluding brokered) declined $37.8 million , or 7% , to $481.7 million . As of June 30, 2021, deposits per banking center were $163 million , compared to $154 million at March 31, 2021 and $133 million on June 30, 2020. Asset Quality
Nonperforming loans decreased by $2.4 million to $32.9 million at June 30, 2021. Nonperforming loans to total loans outstanding were 0.61% at June 30, 2021, 0.62% at March 31, 2021, and 0.52% at June 30, 2020.Nonperforming assets to total assets were 0.49% at June 30, 2021, 0.58% at March 31, 2021, and 0.57% at June 30, 2020.The ratio of allowance for credit losses to total loans was 1.49% at June 30, 2021, 1.53% at March 31, 2021, and 1.58% at June 30, 2020. Excluding PPP loans, the ratio of allowance for credit losses to total loans at June 30, 2021, was 1.60% , compared to 1.71% at March 31, 2021 and 1.76% at June 30, 2020. The decline in coverage reflects continued improvement in the economic outlook.Net charge-offs were $0.7 million , or 0.05% , of average loans for the second quarter of 2021 compared to $0.4 million , or 0.03% , of average loans in the first quarter of 2021 and $1.8 million , or 0.12% , of average loans in the second quarter of 2020. Net charge-offs for the four most recent quarters averaged 0.10% .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. Excluding PPP loans, Seacoast's average commercial loan size is $420 thousand , reflecting an ability to maintain granularity within the overall loan portfolio.Construc tion and land development and commercial real estate loans remain well below regulatory guidance at 24% and 164% of total bank-level risk-based capital, respectively, compared to 23% and 168% respectively, in the first quarter of 2021. On a consolidated basis, construction and land development and commercial real estate loans represent 22% and 150% , respectively, of total consolidated risk-based capital.Capital and Liquidity
The tier 1 capital ratio increased to 18.3% from 18.1% at March 31, 2021, and 16.4% at June 30, 2020. The total capital ratio was 19.2% and the tier 1 leverage ratio was 11.7% at June 30, 2021. Cash and cash equivalents at June 30, 2021 totaled $1.4 billion , an increase of $469.5 million , or 48% , from March 31, 2021, largely the result of increased deposit balances during the quarter.Tangible common equity to tangible assets was 10.43% at June 30, 2021, compared to 10.71% at March 31, 2021 and 10.19% at June 30, 2020. The ratio declined quarter-over-quarter largely as a result of a continued increase in liquidity on the balance sheet. The Company will deploy this liquidity in a disciplined and prudent manner.At June 30, 2021, the Company had available unsecured lines of credit of $135.0 million and lines of credit under lendable collateral value of $1.7 billion . Additionally, $1.5 billion of debt securities and $688.4 million of 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 2Q'21 1Q'21 4Q'20 3Q'20 2Q'20 Selected Balance Sheet Data: Total Assets $ 9,316,833 $ 8,811,820 $ 8,342,392 $ 8,287,840 $ 8,084,013 Gross Loans 5,437,049 5,661,492 5,735,349 5,858,029 5,772,052 Total Deposits 7,836,436 7,385,749 6,932,561 6,914,843 6,666,783 Performance Measures: Net Income $ 31,410 $ 33,719 $ 29,347 $ 22,628 $ 25,080 Net Interest Margin 3.23 % 3.51 % 3.59 % 3.40 % 3.70 % Average Diluted Shares Outstanding 55,901 55,992 55,739 54,301 53,308 Diluted Earnings Per Share (EPS) $ 0.56 $ 0.60 $ 0.53 $ 0.42 $ 0.47 Return on (annualized): Average Assets (ROA) 1.40 % 1.61 % 1.39 % 1.11 % 1.27 % Average Tangible Assets (ROTA)2 1.48 1.70 1.49 1.20 1.37 Average Tangible Common Equity (ROTCE)2 13.88 15.62 13.87 11.35 13.47 Tangible Common Equity to Tangible Assets2 10.43 10.71 11.01 10.67 10.19 Tangible Book Value Per Share2 $ 17.08 $ 16.62 $ 16.16 $ 15.57 $ 15.11 Efficiency Ratio 54.93 % 53.21 % 48.23 % 61.65 % 50.11 % Adjusted Operating Measures1 : Adjusted Net Income $ 33,251 $ 35,497 $ 30,700 $ 27,336 $ 25,452 Adjusted Diluted EPS 0.59 0.63 0.55 0.50 0.48 Adjusted ROTA2 1.52 % 1.75 % 1.50 % 1.38 % 1.33 % Adjusted ROTCE2 14.27 16.01 14.00 13.06 13.09 Adjusted Efficiency Ratio 53.49 51.99 48.75 54.82 49.60 Net Adjusted Noninterest Expense as a 2 1.98 2.16 2.00 2.24 2.11 Other Data: Market capitalization3 $ 1,893,141 $ 2,003,866 $ 1,626,913 $ 994,690 $ 1,081,009 Full-time equivalent employees 946 953 965 968 924 Number of ATMs 75 75 77 77 76 Full-service banking offices 48 48 51 51 50 Registered online users 129,568 126,352 123,615 121,620 117,273 Registered mobile devices 122,815 117,959 115,129 110,241 108,062 1 Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP. 2 The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders' equity less intangible assets. 3 Common shares outstanding multiplied by closing bid price on last day of each period.
Second Quarter Strategic Highlights
Legacy Bank of Florida Acquisition
Seacoast’s balanced growth strategy, combining organic growth with value-creating acquisitions, continues to benefit shareholders and expand the franchise across Florida. The upcoming acquisition of Legacy Bank of Florida, which is expected to close in the third quarter of 2021, will add experienced bankers in the rapidly growing South Florida market, and should further support disciplined, profitable growth for the Company.
Capitalizing on Seacoast’s Early Commitment to Digital Transformation
Seacoast and its customers are benefiting from the Company’s automated online PPP forgiveness solution, which streamlines the process for clients while integrating with Seacoast’s existing technology infrastructure. In the second quarter of 2021, Seacoast processed $243 million in PPP loan forgiveness. The Company completed a significant investment in its nCino digital commercial loan origination platform. This investment will accelerate speed to market, provide a quicker renewal process, and provide a streamlined workflow for bankers and underwriters. Scaling and Evolving Our Culture
Seacoast recently announced the continued expansion of its commercial banking leadership team with three new additions, each bringing significant market expertise and has been successful in developing high performing commercial banking teams. James Norton joined Seacoast as executive vice president and commercial real estate executive. James brings 20 years of experience in commercial real estate to Seacoast Bank. Most recently, James served as a real estate banking director covering the Mid-Atlantic market at JPMorgan Chase. He previously served in executive positions with the BB&T Corporation, IronStone Bank, and SunTrust Bank in the Southeast region. Based out of Tampa, James led the expansion of BB&T’s commercial real estate business in Florida prior to relocating to the Mid-Atlantic region. Chris Rolle joined Seacoast as president of the West Florida region, covering the west coast from the Tampa Bay area to Naples-Ft. Myers. Rolle is a former executive at Synovus Bank, Florida Community Bank, and the BB&T Corporation covering both the Tampa-St. Petersburg and Orlando MSAs. Robert Hursh joined Seacoast as market president for Pinellas County (St. Petersburg/Clearwater). Robert, a Pinellas County native, has more than 20 years of experience in leading commercial banking teams in the Tampa-St. Petersburg MSA, most recently as senior vice president with Synovus Bank. The Company also added two new operational leaders to support growth. Anthony Cavallaro joined Seacoast as senior vice president and operations executive and brings more than 25 years of experience, having led operations and risk management teams at Civista Bank and KeyBank. Robert Walla joined Seacoast as senior vice president and director of loan operations. Bob brings 30 years of operations leadership, most recently at First Midwest Bank in Chicago, Illinois. During the second quarter, Seacoast Bank was named among the Orlando Business Journal's 2021 Best Places to Work. This recognition acknowledges Seacoast’s commitment to employees’ well-being, especially throughout the pandemic, as well as the Company’s numerous diversity and inclusion initiatives. Seacoast was also recently recognized as part of the Human Rights Campaign Foundation’s 2021 Corporate Equality Index as a Best Place to Work for LGBTQ Equality, earning a top score of 100% . 1 Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and for a reconciliation to GAAP.
OTHER INFORMATION
Conference Call Information
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 “Corporate Information.” Beginning late afternoon on July 23, 2021, 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) $9.3 billion in assets and $7.8 billion in deposits as of June 30, 2021. The Company provides integrated financial services including commercial and retail banking, wealth management, and mortgage services to customers through advanced banking solutions, and 48 traditional branches of its locally-branded, wholly-owned subsidiary bank, Seacoast National 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 Information
Investors may obtain (when available) these documents free of charge at the SEC’s website (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.
Legacy Bank, 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 proposed merger of Legacy Bank with and into Seacoast Bank. Information regarding the participants in the proxy solicitation of Legacy Bank 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 Statements This 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, loan growth, 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 Legacy Bank of Florida, as well as statements with respect to Seacoast's objectives, strategic plans, expectations and intentions and other statements that are not historical facts, any of which may be impacted by the COVID-19 pandemic and any variants thereof 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, including those that impact the money supply and inflation; changes in accounting policies, rules and practices, including the impact of the adoption of CECL; our participation in the Paycheck Protection Program ("PPP"); 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; changing retail distribution strategies, customer preferences and behavior; 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; inaccuracies or other failures from the use of models, including 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 Legacy Bank of Florida 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 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 expectation; the risk of customer and employee loss and business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures on solicitations of customers by competitors; as well as difficulties and risks inherent with entering new markets.
Actual results and capital and other financial conditions may differ materially from those included in these statements due to a variety of factors. These factors include, among others described above, macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, such as the duration and severity of the impact on public health, the U.S. and global economies, financial markets and consumer and corporate customers and clients, including economic activity and employment, as well as the various actions taken in response by governments, central banks and others, including Seacoast, and the precautionary statements included in this release.
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, 2020 and quarterly report on Form 10-Q for the quarter ended March 31, 2021 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 Six Months Ended (Amounts in thousands, except ratios and per share data) 2Q'21 1Q'21 4Q'20 3Q'20 2Q'20 2Q'21 2Q'20 Summary of Earnings Net income $ 31,410 $ 33,719 $ 29,347 $ 22,628 $ 25,080 $ 65,129 $ 25,789 Adjusted net income1 33,251 35,497 30,700 27,336 25,452 68,748 30,914 Net interest income2 65,933 66,741 68,903 63,621 67,388 132,674 130,679 Net interest margin2,3 3.23 % 3.51 % 3.59 % 3.40 % 3.70 % 3.37 % 3.81 % Performance Ratios Return on average assets-GAAP basis3 1.40 % 1.61 % 1.39 % 1.11 % 1.27 % 1.50 % 0.69 % Return on average tangible assets-GAAP basis3,4 1.48 1.70 1.49 1.20 1.37 1.58 0.78 Adjusted return on average tangible assets1,3,4 1.52 1.75 1.50 1.38 1.33 1.63 0.86 Net adjusted noninterest expense to average tangible assets1,3,4 1.98 2.16 2.00 2.24 2.11 2.07 2.28 Return on average shareholders' equity-GAAP basis3 10.76 12.03 10.51 8.48 9.96 11.39 5.17 Return on average tangible common equity-GAAP basis3,4 13.88 15.62 13.87 11.35 13.47 14.73 7.27 Adjusted return on average tangible common equity1,3,4 14.27 16.01 14.00 13.06 13.09 15.12 8.02 Efficiency ratio5 54.93 53.21 48.23 61.65 50.11 54.05 54.88 Adjusted efficiency ratio1 53.49 51.99 48.75 54.82 49.60 52.72 51.53 Noninterest income to total revenue (excluding securities gains/losses) 18.94 21.07 17.85 21.06 17.00 20.03 17.90 Tangible common equity to tangible assets4 10.43 10.71 11.01 10.67 10.19 10.43 10.19 Average loan-to-deposit ratio 74.13 81.39 84.48 87.83 88.48 77.62 90.59 End of period loan-to-deposit ratio 69.93 77.48 83.72 85.77 87.40 69.93 87.40 Per Share Data Net income diluted-GAAP basis $ 0.56 $ 0.60 $ 0.53 $ 0.42 $ 0.47 $ 1.17 $ 0.49 Net income basic-GAAP basis 0.57 0.61 0.53 0.42 0.47 1.18 0.49 Adjusted earnings1 0.59 0.63 0.55 0.50 0.48 1.23 0.59 Book value per share common 21.33 20.89 20.46 19.91 19.45 21.33 19.45 Tangible book value per share 17.08 16.62 16.16 15.57 15.11 17.08 15.11 Cash dividends declared 0.13 — — — — 0.13 — 1 Non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP. 2 Calculated on a fully taxable equivalent basis using amortized cost. 3 These ratios are stated on an annualized basis and are not necessarily indicative of future periods. 4 The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders' equity less intangible assets. 5 Defined 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).
1 Non-GAAP measure, see “Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and for a reconciliation to GAAP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES Quarterly Trends Six Months Ended (Amounts in thousands, except per share data) 2Q'21 1Q'21 4Q'20 3Q'20 2Q'20 2Q'21 2Q'20 Interest on securities: Taxable $ 6,559 $ 6,298 $ 6,477 $ 6,972 $ 7,573 $ 12,857 $ 16,269 Nontaxable 147 148 86 125 121 295 243 Fees on PPP loans 3,877 5,390 3,603 161 4,010 9,267 4,010 Interest on PPP loans 1,251 1,496 1,585 1,558 1,058 2,747 1,058 Interest and fees on loans - excluding PPP loans 55,220 55,412 60,407 58,768 59,776 110,632 123,216 Interest on federal funds sold and other investments 709 586 523 556 684 1,295 1,418 Total Interest Income 67,763 69,330 72,681 68,140 73,222 137,093 146,214 Interest on deposits 980 1,065 1,228 1,299 1,203 2,045 4,393 Interest on time certificates 524 1,187 2,104 2,673 3,820 1,711 8,588 Interest on borrowed money 457 468 558 665 927 925 2,784 Total Interest Expense 1,961 2,720 3,890 4,637 5,950 4,681 15,765 Net Interest Income 65,802 66,610 68,791 63,503 67,272 132,412 130,449 Provision for credit losses (4,855 ) (5,715 ) 1,900 (845 ) 7,611 (10,570 ) 37,124 Net Interest Income After Provision for Credit Losses 70,657 72,325 66,891 64,348 59,661 142,982 93,325 Noninterest income: Service charges on deposit accounts 2,338 2,338 2,423 2,242 1,939 4,676 4,764 Interchange income 4,145 3,820 3,596 3,682 3,187 7,965 6,433 Wealth management income 2,387 2,323 1,949 1,972 1,719 4,710 3,586 Mortgage banking fees 2,977 4,225 3,646 5,283 3,559 7,202 5,767 Marine finance fees 177 189 145 242 157 366 303 SBA gains 232 287 113 252 181 519 320 BOLI income 872 859 889 899 887 1,731 1,773 Other 2,249 3,744 2,187 2,370 2,147 5,993 5,499 15,377 17,785 14,948 16,942 13,776 33,162 28,445 Securities (losses) gains, net (55 ) (114 ) (18 ) 4 1,230 (169 ) 1,249 Total Noninterest Income 15,322 17,671 14,930 16,946 15,006 32,993 29,694 Noninterest expenses: Salaries and wages 22,966 21,393 21,490 23,125 20,226 44,359 43,924 Employee benefits 3,953 4,980 3,915 3,995 3,379 8,933 7,634 Outsourced data processing costs 4,676 4,468 4,233 6,128 4,059 9,144 8,692 Telephone / data lines 838 785 774 705 791 1,623 1,505 Occupancy 3,310 3,789 3,554 3,858 3,385 7,099 6,738 Furniture and equipment 1,166 1,254 1,317 1,576 1,358 2,420 2,981 Marketing 1,002 1,168 1,045 1,513 997 2,170 2,275 Legal and professional fees 2,182 2,582 509 3,018 2,277 4,764 5,640 FDIC assessments 515 526 528 474 266 1,041 266 Amortization of intangibles 1,212 1,211 1,421 1,497 1,483 2,423 2,939 Foreclosed property expense and net (gain) loss on sale (90 ) (65 ) 1,821 512 245 (155 ) (70 ) Provision for credit losses on unfunded commitments — — (795 ) 756 178 — 224 Other 4,054 4,029 3,869 4,517 3,755 8,083 7,449 Total Noninterest Expense 45,784 46,120 43,681 51,674 42,399 91,904 90,197 Income Before Income Taxes 40,195 43,876 38,140 29,620 32,268 84,071 32,822 Income taxes 8,785 10,157 8,793 6,992 7,188 18,942 7,033 Net Income $ 31,410 $ 33,719 $ 29,347 $ 22,628 $ 25,080 $ 65,129 $ 25,789 Per share of common stock: Net income diluted $ 0.56 $ 0.60 $ 0.53 $ 0.42 $ 0.47 $ 1.17 $ 0.49 Net income basic 0.57 0.61 0.53 0.42 0.47 1.18 0.49 Cash dividends declared 0.13 — — — — 0.13 — Average diluted shares outstanding 55,901 55,992 55,739 54,301 53,308 55,827 52,807 Average basic shares outstanding 55,421 55,271 55,219 53,978 52,985 55,347 52,394
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES June 30, March 31, December 31, September 30, June 30, (Amounts in thousands) 2021 2021 2020 2020 2020 Assets Cash and due from banks $ 97,468 $ 89,123 $ 86,630 $ 81,692 $ 84,178 Interest bearing deposits with other banks 1,351,377 890,202 317,458 227,876 440,142 Total Cash and Cash Equivalents 1,448,845 979,325 404,088 309,568 524,320 Time deposits with other banks 750 750 750 2,247 2,496 Debt Securities: Available for sale (at fair value) 1,322,776 1,051,396 1,398,157 1,286,858 976,025 Held to maturity (at amortized cost) 493,467 512,307 184,484 207,376 227,092 Total Debt Securities 1,816,243 1,563,703 1,582,641 1,494,234 1,203,117 Loans held for sale 42,793 60,924 68,890 73,046 54,943 Loans 5,437,049 5,661,492 5,735,349 5,858,029 5,772,052 Less: Allowance for credit losses (81,127 ) (86,643 ) (92,733 ) (94,013 ) (91,250 ) Net Loans 5,355,922 5,574,849 5,642,616 5,764,016 5,680,802 Bank premises and equipment, net 69,392 70,385 75,117 76,393 69,041 Other real estate owned 12,804 15,549 12,750 15,890 15,847 Goodwill 221,176 221,176 221,176 221,176 212,146 Other intangible assets, net 14,106 15,382 16,745 18,163 17,950 Bank owned life insurance 158,506 132,634 131,776 130,887 127,954 Net deferred tax assets 21,839 24,497 23,629 25,503 21,404 Other assets 154,457 152,646 162,214 156,717 153,993 Total Assets $ 9,316,833 $ 8,811,820 $ 8,342,392 $ 8,287,840 $ 8,084,013 Liabilities and Shareholders' Equity Liabilities Deposits Noninterest demand $ 2,952,160 $ 2,685,247 $ 2,289,787 $ 2,400,744 $ 2,267,435 Interest-bearing demand 1,763,884 1,647,935 1,566,069 1,385,445 1,368,146 Savings 811,516 768,362 689,179 655,072 619,251 Money market 1,807,190 1,671,179 1,556,370 1,457,078 1,232,892 Other time certificates 335,370 373,297 425,878 457,964 445,176 Brokered time certificates 20,000 93,500 233,815 381,028 572,465 Time certificates of more than $250,000 146,316 146,229 171,463 177,512 161,418 Total Deposits 7,836,436 7,385,749 6,932,561 6,914,843 6,666,783 Securities sold under agreements to repurchase 119,973 109,171 119,609 89,508 92,125 Federal Home Loan Bank borrowings — — — 35,000 135,000 Subordinated debt 71,506 71,436 71,365 71,295 71,225 Other liabilities 106,571 90,115 88,455 78,853 88,277 Total Liabilities 8,134,486 7,656,471 7,211,990 7,189,499 7,053,410 Shareholders' Equity Common stock 5,544 5,529 5,524 5,517 5,299 Additional paid in capital 862,598 858,688 856,092 854,188 811,328 Retained earnings 314,584 290,420 256,701 227,354 204,719 Treasury stock (10,180 ) (8,693 ) (8,285 ) (7,941 ) (8,037 ) 1,172,546 1,145,944 1,110,032 1,079,118 1,013,309 Accumulated other comprehensive income, net 9,801 9,405 20,370 19,223 17,294 Total Shareholders' Equity 1,182,347 1,155,349 1,130,402 1,098,341 1,030,603 Total Liabilities & Shareholders' Equity $ 9,316,833 $ 8,811,820 $ 8,342,392 $ 8,287,840 $ 8,084,013 Common shares outstanding 55,436 55,294 55,243 55,169 52,991
CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited) SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES (Amounts in thousands) 2Q'21 1Q'21 4Q'20 3Q'20 2Q'20 Credit Analysis Net charge-offs - non-acquired loans $ 214 $ 292 $ 3,028 $ 1,112 $ 1,714 Net charge-offs - acquired loans 441 78 99 624 37 Total Net Charge-offs 655 370 3,127 1,736 1,751 Net charge-offs to average loans - non-acquired loans 0.02 % 0.02 % 0.20 % 0.08 % 0.12 % Net charge-offs to average loans - acquired loans 0.03 0.01 0.01 0.04 — Total Net Charge-offs to Average Loans 0.05 0.03 0.21 0.12 0.12 Allowance for credit losses - non-acquired loans $ 64,525 $ 66,523 $ 69,786 $ 70,388 $ 73,587 Allowance for credit losses - acquired loans 16,602 20,120 22,947 23,625 17,663 Total Allowance for Credit Losses $ 81,127 $ 86,643 $ 92,733 $ 94,013 $ 91,250 Non-acquired loans at end of period $ 4,290,622 $ 4,208,911 $ 4,196,205 $ 4,157,376 $ 4,315,892 Acquired loans at end of period 782,315 870,928 972,183 1,061,853 879,710 Paycheck Protection Program loans at end of period1 364,112 581,653 566,961 638,800 576,450 Total Loans $ 5,437,049 $ 5,661,492 $ 5,735,349 $ 5,858,029 $ 5,772,052 Non-acquired loans allowance for credit losses to non-acquired loans at end of period 1.50 % 1.58 % 1.66 % 1.69 % 1.71 % Total allowance for credit losses to total loans at end of period 1.49 1.53 1.62 1.60 1.58 Total allowance for credit losses to total loans, excluding PPP loans 1.60 1.71 1.79 1.80 1.76 Purchase discount on acquired loans at end of period 2.98 2.93 2.86 3.01 3.29 End of Period Nonperforming loans $ 32,920 $ 35,328 $ 36,110 $ 36,897 $ 30,051 Other real estate owned 11,019 10,836 10,182 12,299 10,967 Properties previously used in bank operations included in other real estate owned 1,785 4,713 2,569 3,592 4,880 Total Nonperforming Assets $ 45,724 $ 50,877 $ 48,861 $ 52,788 $ 45,898 Accruing troubled debt restructures (TDRs) $ 4,037 $ 4,067 $ 4,182 $ 10,190 $ 10,338 Nonperforming Loans to Loans at End of Period 0.61 % 0.62 % 0.63 % 0.63 % 0.52 % Nonperforming Assets to Total Assets at End of Period 0.49 0.58 0.59 0.64 0.57 June 30, March 31, December 31, September 30, June 30, Loans 2021 2021 2020 2020 2020 Construction and land development $ 234,347 $ 227,117 $ 245,108 $ 280,610 $ 298,835 Commercial real estate - owner occupied 1,127,640 1,133,085 1,141,310 1,125,460 1,076,650 Commercial real estate - non-owner occupied 1,412,439 1,438,365 1,395,854 1,394,464 1,392,787 Residential real estate 1,226,536 1,246,549 1,342,628 1,393,396 1,468,171 Commercial and financial 900,206 860,813 854,753 833,083 757,232 Consumer 171,769 173,910 188,735 192,216 201,927 Paycheck Protection Program 364,112 581,653 566,961 638,800 576,450 Total Loans $ 5,437,049 $ 5,661,492 $ 5,735,349 $ 5,858,029 $ 5,772,052 1 3Q'20 includes $54 million in Paycheck Protection Program loans acquired from Freedom Bank.
AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES 1 (Unaudited) SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES 2Q'21 1Q'21 2Q'20 Average Yield/ Average Yield/ Average Yield/ (Amounts in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets Earning assets: Securities: Taxable $ 1,629,410 $ 6,559 1.61 % $ 1,550,457 $ 6,298 1.62 % $ 1,135,698 $ 7,573 2.67 % Nontaxable 25,581 186 2.90 25,932 187 2.89 19,347 152 3.14 Total Securities 1,654,991 6,745 1.63 1,576,389 6,485 1.65 1,155,045 7,725 2.68 Federal funds sold and other investments 925,323 709 0.31 377,344 586 0.63 433,626 684 0.63 Loans excluding PPP loans 5,092,897 55,313 4.36 5,149,642 55,504 4.37 5,304,381 59,861 4.54 PPP loans 505,339 5,127 4.07 609,733 6,886 4.58 424,171 5,068 4.81 Total Loans 5,598,236 60,440 4.33 5,759,375 62,390 4.39 5,728,552 64,929 4.56 Total Earning Assets 8,178,550 67,894 3.33 7,713,108 69,461 3.65 7,317,223 73,338 4.03 Allowance for credit losses (86,042 ) (91,735 ) (84,965 ) Cash and due from banks 327,171 255,685 103,919 Premises and equipment 70,033 74,272 71,173 Intangible assets 235,964 237,323 230,871 Bank owned life insurance 133,484 132,079 127,386 Other assets 166,686 164,622 147,395 Total Assets $ 9,025,846 $ 8,485,354 $ 7,913,002 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand $ 1,692,178 $ 235 0.06 % $ 1,600,490 $ 258 0.07 % $ 1,298,639 $ 297 0.09 % Savings 790,734 118 0.06 722,274 137 0.08 591,040 165 0.11 Money market 1,736,481 627 0.14 1,609,938 670 0.17 1,193,969 741 0.25 Time deposits 533,350 524 0.39 711,320 1,187 0.68 1,293,766 3,820 1.19 Securities sold under agreements to repurchase 115,512 35 0.12 112,834 41 0.15 74,717 34 0.18 Federal Home Loan Bank borrowings — — — — — — 199,698 312 0.63 Other borrowings 71,460 422 2.37 71,390 427 2.43 71,185 581 3.28 Total Interest-Bearing Liabilities 4,939,715 1,961 0.16 4,828,246 2,720 0.23 4,723,014 5,950 0.51 Noninterest demand 2,799,643 2,432,038 2,097,038 Other liabilities 116,093 88,654 79,855 Total Liabilities 7,855,451 7,348,938 6,899,907 Shareholders' equity 1,170,395 1,136,416 1,013,095 Total Liabilities & Equity $ 9,025,846 $ 8,485,354 $ 7,913,002 Cost of deposits 0.08 % 0.13 % 0.31 % Interest expense as a % of earning assets 0.10 % 0.14 % 0.33 % Net interest income as a % of earning assets $ 65,933 3.23 % $ 66,741 3.51 % $ 67,388 3.70 % 1 On 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.
Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Average Yield/ Average Yield/ (Amounts in thousands, except ratios) Balance Interest Rate Balance Interest Rate Assets Earning assets: Securities: Taxable $ 1,590,152 $ 12,857 1.62 % $ 1,144,086 $ 16,269 2.84 % Nontaxable 25,756 373 2.90 19,544 304 3.11 Total Securities 1,615,908 13,230 1.64 1,163,630 16,573 2.85 Federal funds sold and other investments 652,847 1,295 0.40 260,775 1,418 1.09 Loans excluding PPP loans 5,121,114 110,817 4.36 5,259,808 123,385 4.72 PPP loans 557,247 12,013 4.35 212,085 5,068 4.81 Total Loans 5,678,361 122,830 4.36 5,471,893 128,453 4.72 Total Earning Assets 7,947,116 137,355 3.49 6,896,298 146,444 4.27 Allowance for credit losses (88,873 ) (70,948 ) Cash and due from banks 291,626 97,002 Premises and equipment 72,141 69,379 Intangible assets 236,640 228,791 Bank owned life insurance 132,785 126,939 Other assets 165,658 136,811 Total Assets $ 8,757,093 $ 7,484,272 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand $ 1,646,587 $ 493 0.06 % $ 1,236,285 $ 1,131 0.18 % Savings 756,693 255 0.07 558,883 513 0.18 Money market 1,673,559 1,297 0.16 1,161,363 2,749 0.48 Time deposits 621,844 1,711 0.55 1,222,758 8,588 1.41 Securities sold under agreements to repurchase 114,181 76 0.13 72,891 201 0.55 Federal Home Loan Bank borrowings — — — 224,860 1,279 1.14 Other borrowings 71,425 849 2.40 71,149 1,304 3.69 Total Interest-Bearing Liabilities 4,884,289 4,681 0.19 4,548,189 15,765 0.70 Noninterest demand 2,616,856 1,861,126 Other liabilities 102,450 71,413 Total Liabilities 7,603,595 6,480,728 Shareholders' equity 1,153,499 1,003,544 Total Liabilities & Equity $ 8,757,093 $ 7,484,272 Cost of deposits 0.10 % 0.43 % Interest expense as a % of earning assets 0.12 % 0.46 % Net interest income as a % of earning assets $ 132,674 3.37 % $ 130,679 3.81 % 1 On 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 June 30, March 31, December 31, September 30, June 30, (Amounts in thousands) 2021 2021 2020 2020 2020 Customer Relationship Funding Noninterest demand Commercial $ 2,431,928 $ 2,189,564 $ 1,821,361 $ 1,973,494 $ 1,844,288 Retail 401,988 379,257 350,783 322,559 314,723 Public funds 88,057 83,315 90,973 70,371 74,674 Other 30,187 33,111 26,670 34,320 33,750 Total Noninterest Demand 2,952,160 2,685,247 2,289,787 2,400,744 2,267,435 Interest-bearing demand Commercial 545,797 497,047 454,909 413,513 412,846 Retail 958,619 895,853 839,958 777,078 733,772 Public funds 259,468 255,035 271,202 194,854 221,528 Total Interest-Bearing Demand 1,763,884 1,647,935 1,566,069 1,385,445 1,368,146 Total transaction accounts Commercial 2,977,725 2,686,611 2,276,270 2,387,007 2,257,134 Retail 1,360,607 1,275,110 1,190,741 1,099,637 1,048,495 Public funds 347,525 338,350 362,175 265,225 296,202 Other 30,187 33,111 26,670 34,320 33,750 Total Transaction Accounts 4,716,044 4,333,182 3,855,856 3,786,189 3,635,581 Savings 811,516 768,362 689,179 655,072 619,251 Money market Commercial 787,894 692,537 611,623 634,697 586,416 Retail 737,554 701,453 661,311 613,532 579,126 Brokered 187,023 197,389 196,616 141,808 — Public funds 94,719 79,800 86,820 67,041 67,350 Total Money Market 1,807,190 1,671,179 1,556,370 1,457,078 1,232,892 Brokered time certificates 20,000 93,500 233,815 381,028 572,465 Other time certificates 481,686 519,526 597,341 635,476 606,594 501,686 613,026 831,156 1,016,504 1,179,059 Total Deposits $ 7,836,436 $ 7,385,749 $ 6,932,561 $ 6,914,843 $ 6,666,783 Customer sweep accounts $ 119,973 $ 109,171 $ 119,609 $ 89,508 $ 92,125
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 Six Months Ended (Amounts in thousands, except per share data) 2Q'21 1Q'21 4Q'20 3Q'20 2Q'20 2Q'21 2Q'20 Net Income $ 31,410 $ 33,719 $ 29,347 $ 22,628 $ 25,080 $ 65,129 $ 25,789 Total noninterest income 15,322 17,671 14,930 16,946 15,006 32,993 29,694 Securities losses (gains), net 55 114 18 (4 ) (1,230 ) 169 (1,249 ) Total Adjustments to Noninterest Income 55 114 18 (4 ) (1,230 ) 169 (1,249 ) Total Adjusted Noninterest Income 15,377 17,785 14,948 16,942 13,776 33,162 28,445 Total noninterest expense 45,784 46,120 43,681 51,674 42,399 91,904 90,197 Merger related charges (509 ) (581 ) — (4,281 ) (240 ) (1,090 ) (4,793 ) Amortization of intangibles (1,212 ) (1,211 ) (1,421 ) (1,497 ) (1,483 ) (2,423 ) (2,939 ) Business continuity expenses — — — — — — (307 ) Branch reductions and other expense initiatives (663 ) (449 ) (354 ) (464 ) — (1,112 ) — Total Adjustments to Noninterest Expense (2,384 ) (2,241 ) (1,775 ) (6,242 ) (1,723 ) (4,625 ) (8,039 ) Total Adjusted Noninterest Expense 43,400 43,879 41,906 45,432 40,676 87,279 82,158 Income Taxes 8,785 10,157 8,793 6,992 7,188 18,942 7,033 Tax effect of adjustments 598 577 440 1,530 121 1,175 1,665 Total Adjustments to Income Taxes 598 577 440 1,530 121 1,175 1,665 Adjusted Income Taxes 9,383 10,734 9,233 8,522 7,309 20,117 8,698 Adjusted Net Income $ 33,251 $ 35,497 $ 30,700 $ 27,336 $ 25,452 $ 68,748 $ 30,914 Earnings per diluted share, as reported $ 0.56 $ 0.60 $ 0.53 $ 0.42 $ 0.47 $ 1.17 $ 0.49 Adjusted Earnings per Diluted Share 0.59 0.63 0.55 0.50 0.48 1.23 0.59 Average diluted shares outstanding 55,901 55,992 55,739 54,301 53,308 55,827 52,807 Adjusted Noninterest Expense $ 43,400 $ 43,879 $ 41,906 $ 45,432 $ 40,676 $ 87,279 $ 82,158 Provision for credit losses on unfunded commitments — — 795 (756 ) (178 ) — (224 ) Foreclosed property expense and net gain / (loss) on sale 90 65 (1,821 ) (512 ) (245 ) 155 70 Net Adjusted Noninterest Expense $ 43,490 $ 43,944 $ 40,880 $ 44,164 $ 40,253 $ 87,434 $ 82,004 Revenue $ 81,124 $ 84,281 $ 83,721 $ 80,449 $ 82,278 $ 165,405 $ 160,143 Total Adjustments to Revenue 55 114 18 (4 ) (1,230 ) 169 (1,249 ) Impact of FTE adjustment 131 131 112 118 116 262 230 Adjusted Revenue on a fully taxable equivalent basis $ 81,310 $ 84,526 $ 83,851 $ 80,563 $ 81,164 $ 165,836 $ 159,124 Adjusted Efficiency Ratio 53.49 % 51.99 % 48.75 % 54.82 % 49.60 % 52.72 % 51.53 % Net Interest Income $ 65,802 $ 66,610 $ 68,791 $ 63,503 $ 67,272 $ 132,412 $ 130,449 Impact of FTE adjustment 131 131 112 118 116 262 230 Net Interest Income including FTE adjustment $ 65,933 $ 66,741 $ 68,903 $ 63,621 $ 67,388 $ 132,674 $ 130,679 Total noninterest income 15,322 17,671 14,930 16,946 15,006 32,993 29,694 Total noninterest expense 45,784 46,120 43,681 51,674 42,399 91,904 90,197 Pre-Tax Pre-Provision Earnings $ 35,471 $ 38,292 $ 40,152 $ 28,893 $ 39,995 $ 73,763 $ 70,176 Total Adjustments to Noninterest Income 55 114 18 (4 ) (1,230 ) 169 (1,249 ) Total Adjustments to Noninterest Expense (2,294 ) (2,176 ) (2,801 ) (7,510 ) (2,146 ) (4,470 ) (8,193 ) Adjusted Pre-Tax Pre-Provision Earnings $ 37,820 $ 40,582 $ 42,971 $ 36,399 $ 40,911 $ 78,402 $ 77,120 Average Assets $ 9,025,846 $ 8,485,354 $ 8,376,396 $ 8,086,890 $ 7,913,002 $ 8,757,093 $ 7,484,272 Less average goodwill and intangible assets (235,964 ) (237,323 ) (238,631 ) (228,801 ) (230,871 ) (236,640 ) (228,791 ) Average Tangible Assets $ 8,789,882 $ 8,248,031 $ 8,137,765 $ 7,858,089 $ 7,682,131 $ 8,520,453 $ 7,255,481 Return on Average Assets (ROA) 1.40 % 1.61 % 1.39 % 1.11 % 1.27 % 1.50 % 0.69 % Impact of removing average intangible assets and related amortization 0.08 0.09 0.10 0.09 0.10 0.08 0.09 Return on Average Tangible Assets (ROTA) 1.48 1.70 1.49 1.20 1.37 1.58 0.78 Impact of other adjustments for Adjusted Net Income 0.04 0.05 0.01 0.18 (0.04 ) 0.05 0.08 Adjusted Return on Average Tangible Assets 1.52 1.75 1.50 1.38 1.33 1.63 0.86 Average Shareholders' Equity $ 1,170,395 $ 1,136,416 $ 1,111,073 $ 1,061,807 $ 1,013,095 $ 1,153,499 $ 1,003,544 Less average goodwill and intangible assets (235,964 ) (237,323 ) (238,631 ) (228,801 ) (230,871 ) (236,640 ) (228,791 ) Average Tangible Equity $ 934,431 $ 899,093 $ 872,442 $ 833,006 $ 782,224 $ 916,859 $ 774,753 Return on Average Shareholders' Equity 10.76 % 12.03 % 10.51 % 8.48 % 9.96 % 11.39 % 5.17 % Impact of removing average intangible assets and related amortization 3.12 3.59 3.36 2.87 3.51 3.34 2.10 Return on Average Tangible Common Equity (ROTCE) 13.88 15.62 13.87 11.35 13.47 14.73 7.27 Impact of other adjustments for Adjusted Net Income 0.39 0.39 0.13 1.71 (0.38 ) 0.39 0.75 Adjusted Return on Average Tangible Common Equity 14.27 16.01 14.00 13.06 13.09 15.12 8.02 Loan interest income1 $ 60,440 $ 62,390 $ 65,684 $ 60,573 $ 64,929 $ 122,830 $ 128,453 Accretion on acquired loans (2,886 ) (2,868 ) (4,448 ) (3,254 ) (2,988 ) (5,754 ) (7,275 ) Interest and fees on PPP loans (5,127 ) (6,886 ) (5,187 ) (1,719 ) (5,068 ) (12,013 ) (5,068 ) Loan interest income excluding PPP and accretion on acquired loans $ 52,427 $ 52,636 $ 56,049 $ 55,600 $ 56,873 $ 105,063 $ 116,110 Yield on loans1 4.33 4.39 4.42 4.11 4.56 4.36 4.72 Impact of accretion on acquired loans (0.21 ) (0.20 ) (0.30 ) (0.22 ) (0.21 ) (0.20 ) (0.27 ) Impact of PPP loans 0.01 (0.04 ) 0.11 0.33 (0.04 ) (0.02 ) (0.01 ) Yield on loans excluding PPP and accretion on acquired loans 4.13 % 4.15 % 4.23 % 4.22 % 4.31 % 4.14 % 4.44 % Net Interest Income1 $ 65,933 $ 66,741 $ 68,903 $ 63,621 $ 67,388 $ 132,674 $ 130,679 Accretion on acquired loans (2,886 ) (2,868 ) (4,448 ) (3,254 ) (2,988 ) (5,754 ) (7,275 ) Interest and fees on PPP loans (5,127 ) (6,886 ) (5,187 ) (1,719 ) (5,068 ) (12,013 ) (5,068 ) Net interest income excluding PPP and accretion on acquired loans $ 57,920 $ 56,987 $ 59,268 $ 58,648 $ 59,332 $ 114,907 $ 118,336 Net Interest Margin 3.23 3.51 3.59 3.40 3.70 3.37 3.81 Impact of accretion on acquired loans (0.14 ) (0.15 ) (0.23 ) (0.17 ) (0.16 ) (0.15 ) (0.25 ) Impact of PPP loans (0.06 ) (0.11 ) 0.01 0.19 (0.08 ) (0.08 ) — Net interest margin excluding PPP and accretion on acquired loans 3.03 % 3.25 % 3.37 % 3.42 % 3.46 % 3.14 % 3.56 % Security interest income1 $ 6,745 $ 6,485 $ 6,586 $ 7,129 $ 7,725 $ 13,230 $ 16,573 Tax equivalent adjustment on securities (39 ) (39 ) (23 ) (32 ) (31 ) (78 ) (61 ) Security interest income excluding tax equivalent adjustment $ 6,706 $ 6,446 $ 6,563 $ 7,097 $ 7,694 $ 13,152 $ 16,512 Loan interest income1 $ 60,440 $ 62,390 $ 65,684 $ 60,573 $ 64,929 $ 122,830 $ 128,453 Tax equivalent adjustment on loans (92 ) (92 ) (89 ) (86 ) (85 ) (184 ) (169 ) Loan interest income excluding tax equivalent adjustment $ 60,348 $ 62,298 $ 65,595 $ 60,487 $ 64,844 $ 122,646 $ 128,284 Net Interest Income1 $ 65,933 $ 66,741 $ 68,903 $ 63,621 $ 67,388 $ 132,674 $ 130,679 Tax equivalent adjustment on securities (39 ) (39 ) (23 ) (32 ) (31 ) (78 ) (61 ) Tax equivalent adjustment on loans (92 ) (92 ) (89 ) (86 ) (85 ) (184 ) (169 ) Net interest income excluding tax equivalent adjustment $ 65,802 $ 66,610 $ 68,791 $ 63,503 $ 67,272 $ 132,412 $ 130,449 1 On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.
