STUART, Fla., Feb. 14 /PRNewswire-FirstCall/ -- Seacoast Banking
Corporation of Florida (Nasdaq: SBCF), a bank holding company whose principal
subsidiary is First National Bank and Trust Company of the Treasure Coast,
today reported that net income for the year 2004 totaled $14.9 million, or
$0.95 diluted earnings per share ("DEPS"), compared to $14.0 million or $0.89
DEPS earned in 2003, an increase of 6.7 percent. Earnings for the fourth
quarter of 2004 totaled $3,700,000 or $0.24 DEPS.
The Company also announced that an interest rate swap transaction entered
into in January of 2003 should not be accounted for as a fair value hedge
under the Financial Accounting Standards Board ("FASB") Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities", but instead
should be accounted for as an interest rate swap with the change in fair value
of the swap recorded in current earnings. The impact of this accounting
change decreased earnings by $0.03 DEPS for the year 2004. The change is not
material to annual earnings results for the year 2003. The Company expects to
restate previously reported earnings information for certain prior quarters,
as appropriate. The restatement will not affect prior period operating
earnings (earnings excluding the impact of the swap) or capital adequacy. The
swap transaction was executed to hedge the fair value of $54 million in fixed
rate certificates of deposit issued prior to January of 2003 at market rates.
The transaction reduced the Company's exposure to declines in interest rates
that occurred in 2003, was effective in economic terms, and performed
consistent with the Company's expectations.
As in the past, Seacoast and its management continue to strongly support
integrity and transparency in its financial disclosures and reporting its
earnings results. The accounting for the interest rate swap as a hedge by the
Company was based upon the then current interpretation of the relevant
accounting pronouncements' documentation requirements. The change in method
announced today is the result of an unintentional misinterpretation of the
technical documentation required at the inception of the hedge. Operating
earnings per share, which exclude the impact of the swap, for the year 2004
totaled $0.98 up 10.1 percent from 2003. Operating earnings for the fourth
quarter of 2004 were $0.25 per share which represented a 4.2 percent growth
over operating earnings one year earlier.
"We regret that it was necessary to effect this change in accounting
method. We are pleased however to have ended the year with over $1.6 billion
in assets and double digit increases in total revenues throughout 2004.
Increases in net interest income combined with growth in key fee-based
businesses, indicate continued progress to provide strong long-term quality
growth," commented Dennis S. Hudson, III, Chief Executive Officer of Seacoast.
"We will be working with our current and prior auditors to complete the 2004
audit and any appropriate restatements of prior quarterly results to reflect
any material effects of this change in accounting method."
The increase in earnings and the Company's improving performance in 2004
results from the implementation of a strategy to improve net interest margins
and decrease interest rate risk by growing the commercial and consumer loan
portfolios while reducing the relative size of the residential portfolio.
These changes began to occur in late 2003 and continued throughout 2004 with
double-digit loan growth and margin expansion. Additionally, solid core
deposit growth combined with continued favorable low-cost funding aided in the
growth in net interest income. Earnings for the fourth quarter were reduced
by $350,000 ($0.02 DEPS) in additional direct costs associated with
implementing the requirements of the Sarbanes-Oxley Act and higher accounting
fees.
Highlights for the quarter and year included the following:
-- Record total revenues (net interest income and noninterest income
combined excluding profits or losses on the interest rate swap) of $72
million, up 12.7 percent for the year and 15.9 percent in the fourth
quarter;
-- Net interest margin expanded by 32 basis points to 3.89 percent for
2004;
-- Asset quality remained solid with total nonperforming assets of $1.4
million or a ratio of nonperforming assets to loans and other real
estate owned 0.16 percent, compared to 0.43 percent at year-end 2003,
and net charge-offs of 0.07 percent for the year compared to 0.10
percent for 2003;
-- Net interest income gained 19.8 percent on an annualized basis over the
third quarter and was up $2.3 million or 19.5 percent over prior year's
fourth quarter;
-- Fees from investment management services grew $181,000 or 18.3 percent
compared to the fourth quarter 2003;
-- Average interest bearing deposits increased $50.1 million or 21.4
percent annualized during the fourth quarter; and average noninterest
bearing deposits grew by $57.9 million or 92.1 percent annualized.
This growth reflects a combination of organic growth and the impacts
of proceeds from insurance settlements and increased business activity
as a result of recent hurricane damage in our markets;
-- Loan balances rose 18.8 percent on an annualized basis from third
quarter 2004 and were up $190.7 million or 26.9 percent for the year;
The net interest margin on a fully taxable equivalent basis for the
quarter was 3.88 percent, an increase from the 3.70 percent achieved in last
year's fourth quarter but a nine basis point decline from the 3.97 percent in
the third quarter of 2004. The improvement in the net interest margin from the
prior year resulted from increased asset yields, an improved earning asset
mix, as well as growth in the loans outstanding. The Company experienced
substantial deposit growth in the fourth quarter as a result of insurance
proceeds and increased business activity resulting from hurricane damage which
occurred in September 2004. These funds were invested in short term assets
with lower yields which compressed the net interest margin in the fourth
quarter. The net interest margin had steadily improved since the third quarter
2003.
Net interest income (on a tax equivalent basis) increased to $52,907,000
an increase of $8,597,000 or 19.4 percent compared to 2003's total of
$44,310,000. The increase in net interest income resulted from the growth in
the balance sheet and the favorable overall change in earning asset mix as the
intended transformation of the loan portfolio resulted in higher interest
income. Average earning assets for the fourth quarter reflected an increase
of $179.5 million or 14.1 percent over the last twelve months, and average
loans (net) were up $187.8 million or 27.2 percent.
The cost of interest bearing liabilities declined to 1.44 percent from
1.46 percent in the fourth quarter 2003, but was higher by 7 basis points from
the 1.37 percent in the third quarter. Interest expense as a percent of
earning assets for the three months ended December 31, 2004, increased only 3
basis points to 1.09 percent compared to the third quarter 2004 and was 6
basis points lower compared to the same quarter in 2003.
The expansion into Palm Beach County has contributed to overall loan
growth over the past twelve months. Total loans outstanding in the new market
grew to $134.7 million with a total of $79.4 million funded during the past
year. The addition of two full-service branches in Palm Beach County in the
first quarter of 2005 will further expand the Company's loan origination
capabilities. For the year 2004, loan officers in this market originated a
total of $ 126.5 million in loans (including unfunded commitments) and ended
the year with a pipeline of approximately $125.0 million in additional pending
loans. Deposit balances for the Company in Palm Beach County now total over
$68 million, of which 31.4 percent are noninterest bearing. In addition, the
cost of interest bearing deposits in the new market is comparable to the total
bank with an average cost of 1.68 percent.
Noninterest income, excluding securities gains and losses (and profits and
losses on the interest rate swap), increased 5.4 percent when compared to the
fourth quarter of 2003, reflecting growing revenues from investment management
services, deposit based debit card and other EFT transactions, offset by lower
revenues from mortgage banking operations (due to much lower refinance
activities compared to 2003), which were down 25.2 percent in the fourth
quarter compared to prior year quarter. Revenues from investment management
services began improving in the fourth quarter 2003. These fees were $786,000
or 20.1 percent higher for the year versus 2003 and increased $181,000 or 18.3
percent in the fourth quarter 2004 compared to fourth quarter 2003. Core
deposit growth continued to enhance EFT fees, which were up 13 percent for the
year, by increasing the customer base and usage of check cards. During the
year ended 2004, a total of $1.8 million in interchange income was earned
compared to $1.5 million in 2003.
The Company has maintained strong and consistent credit quality and
historically maintained low net charge-offs. At quarter-end, nonperforming
assets were $1,447,000, a decline of $1.6 million from last year.
Nonperforming loans to total loans stood at 16 basis points at year end and
net charge-offs for the year were $562,000 or seven basis points. Continued
strong loan quality supported an allowance for loan losses of 0.73 percent of
total loans at December 31, 2004, a level lower than that found in many other
banks. During the quarter and the year, the Company provided $450,000 and $1
million, respectively, for loan losses reflecting strong loan growth.
Noninterest expenses totaled $12.1 million, an increase of 19.7 percent
from the prior year's fourth quarter and an 11.3 percent increase for all of
2004 over 2003. A portion of the growth is a result of increased wages,
benefits, occupancy, marketing and other overhead due to the addition of
branches and personnel in the Palm Beach and Brevard County markets, and from
higher commissions, stock awards and other incentive compensation related to
the Company's improved performance. Also impacting overhead for the year was
higher professional fees associated with the Company's external audit and for
assistance with the requirements of the Sarbanes-Oxley Act. This added
approximately $500,000 in additional direct expenses to overhead in 2004.
Seacoast will host a conference call tomorrow, February 15th at 11:00 AM
(Eastern Time) to discuss the earnings results and business trends. Investors
may call in by dialing 800-693-5698 (pass code: 651588; moderator: Dennis S.
Hudson, III). A replay of the call will be available on February 16th by
dialing 866-837-8032 (domestic), using the pass code 651588.
Seacoast Banking Corporation of Florida has approximately $1.6 billion in
assets. It is one of the largest independent commercial banking organizations
in Florida, headquartered on Florida's Treasure Coast, one of the wealthiest
and fastest growing areas in the nation.
This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934.
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 Banking Corporation of
Florida ("Seacoast" or the "Company") to be materially different from future
results, performance or achievements expressed or implied by such forward-
looking statements. 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", "indicate", "would",
"believe", "contemplate", "expect", "estimate", "continue", "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
conditions; 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
and sensitivities; 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 the Company's market area
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; the failure of
assumptions underlying the establishment of reserves for possible loan losses;
the risks of mergers and acquisitions, including, without limitation, the
related costs, including integrating operations as part of these transactions,
and the failure to achieve the expected gains, revenue growth and/or expense
savings from such transactions; changes in accounting interpretations; and the
risks of possible further changes pending completion of the current audit and
review with the Company's current and prior auditors of the prior periods
during which the swap discussed herein was in effect.
All written or oral forward-looking statements attributable to the Company
are expressly qualified in their entirety by this Cautionary Notice including,
without limitation, those risks and uncertainties, described in the Company's
annual report on Form 10-K for the year ended December 31, 2003 under "Special
Cautionary Notice Regarding Forward-Looking Statements", and otherwise in the
Company's SEC reports and filings. Such reports are available upon request
from Seacoast, or from the Securities and Exchange Commission, including the
SEC's website at http://www.sec.gov.
SOURCE Seacoast Banking Corporation of Florida
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Related links:
http://www.seacoastbanking.net
CONTACT:
Dennis S. Hudson, III, President and Chief
Executive Officer, +1-772-288-6086, or William R. Hahl, Executive
Vice President/Chief Financial Officer, +1-772-221-2825, both of
Seacoast Banking Corporation of Florida
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