SBCF - Seacoast Reports Second Quarter 2020 Results

Second Consecutive Quarter of Record Results in Mortgage Banking and Wealth Management

Well Positioned Balance Sheet with Strong Capital and Liquidity

STUART, Fla., July 23, 2020 (GLOBE NEWSWIRE) -- Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") (NASDAQ: SBCF) today reported net income in the second quarter of 2020 of $25.1 million, or $0.47 per diluted share, up 8% or $1.8 million year-over-year. The ratio of tangible common equity to tangible assets was 10.19%, tangible book value per share increased to $15.11 and Tier 1 capital increased to 16.4%.

For the second quarter of 2020, return on average tangible assets was 1.37%, return on average tangible shareholders' equity was 13.47%, and the efficiency ratio was 50.11%, compared to 0.11%, 0.95%, and 59.85%, respectively, in the prior quarter and 1.50%, 14.30%, and 53.48%, respectively, in the second quarter of 2019. Adjusted return on average tangible assets¹ was 1.33%, adjusted return on average tangible shareholders' equity¹ was 13.09%, and the adjusted efficiency ratio¹ was 49.81%, compared to 0.32%, 2.86%, and 53.61%, respectively, in the prior quarter and 1.59%, 15.17%, and 51.44%, respectively, in the second quarter of 2019.

Dennis S. Hudson, III, Seacoast's Chairman and CEO, said, "Maintaining support for our customers continues to be a top priority for us in this dynamic and challenging environment. Our branches remain open for drive-thru activity and lobby appointments only, and the significant majority of our non-retail associates are working effectively from home. We continue to maintain safety standards for both customers and associates, and I am grateful to the Seacoast associates for their continued dedication to serving our customers and communities in this unprecedented time."

Charles M. Shaffer, Seacoast's President and Chief Operating Officer said, "We have had a longstanding commitment to maintaining a fortress balance sheet and strong capital levels, positioning us with a solid foundation despite the uncertainty of the economic outlook. Seacoast is committed to supporting its communities while maintaining strict underwriting standards and a robust liquidity position. Our mortgage banking and wealth teams delivered another quarter of record results, and we delivered $591 million in Paycheck Protection Program funding to our business customers. We continue to grow tangible book value per share, ending the period at $15.11, up 11% over the prior year. As circumstances evolve, we will continue to manage our balance sheet carefully and will help support the economic recovery of our communities from a position of strength."

Paycheck Protection Program ("PPP") Loans

Seacoast worked with existing customers, and later with new customers, to help businesses access the Paycheck Protection Program. Through June 30, 2020, Seacoast has funded over 5,000 loans to companies totaling $591 million with an average loan size of $116,000 and a median loan size of $43,000. Fees earned by Seacoast, net of loan-specific costs, total $17 million and are deferred and recognized as an adjustment to yield over the expected life of the loans. Seacoast recognized net fees of $4.0 million and contractual interest of $1.1 million on PPP loans in the second quarter of 2020, resulting in a yield of 4.81%. There is significant uncertainty about how borrowers will seek and qualify for forgiveness, and therefore uncertainty about the expected life of these loans and the timing of recognition of the remaining $13 million in net fees.

Financial Results

Income Statement

• Net income was $25.1 million, or $0.47 per diluted share, compared to $0.7 million, or $0.01, for the prior quarter and $23.3 million, or $0.45, for the second quarter of 2019. For the six months ended June 30, 2020, net income was $25.8 million, or $0.49 per diluted share, compared to $46.0 million, or $0.88 for the six months ended June 30, 2019. Adjusted net income¹ was $25.5 million, or $0.48 per diluted share, compared to $5.5 million, or $0.10, for the prior quarter and $25.8 million, or $0.50, for the second quarter of 2019. For the six months ended June 30, 2020, adjusted net income¹ was $30.9 million, or $0.59 per diluted share, compared to $50.0 million, or $0.96, for the six months ended June 30, 2019.
• Net revenues were $82.3 million, an increase of $4.4 million, or 6%, compared to the prior quarter and an increase of $8.6 million, or 12%, compared to the second quarter of 2019. For the six months ended June 30, 2020, net revenues were $160.1 million, an increase of $12.8 million, or 9%, compared to the six months ended June 30, 2019. Adjusted revenues¹ were $81.0 million, an increase of $3.2 million, or 4%, from the prior quarter and an increase of $6.9 million, or 9%, from the second quarter of 2019. For the six months ended June 30, 2020, adjusted revenues¹ were $158.9 million, an increase of $11.1 million, or 8%, compared to the six months ended June 30, 2019.
• Net interest income totaled $67.3 million, an increase of $4.1 million, or 6%, from the prior quarter and an increase of $7.1 million, or 12%, from the second quarter of 2019. For the six months ended June 30, 2020, net interest income was $130.4 million, an increase of $9.5 million, or 8%, compared to the six months ended June 30, 2019. During the second quarter of 2020, net interest income includes $5.1 million in interest and fees earned on PPP loans.
• Net interest margin was 3.70% in the second quarter of 2020, 3.93% in the first quarter of 2020, and 3.94% in the second quarter of 2019. Compared to the first quarter of 2020, increased liquidity levels through higher cash and cash equivalent balances that position Seacoast conservatively for market uncertainty resulted in 17 basis points of margin compression. Accretion of purchase discounts on acquired loans increased net interest margin by 16 basis points in the second quarter of 2020, compared to 27 basis points in the first quarter of 2020 and 27 basis points in the second quarter of 2019, with the lower impact in the second quarter of 2020 resulting from lower levels of prepayments. The effect on net interest margin of interest and fees earned on PPP loans was 8 basis points in the second quarter of 2020. Excluding the impact of fee accretion on acquired loans and interest and fees earned on PPP loans, the yield on loans contracted 26 basis points, impacted by lower market rates. Reflecting Seacoast's continued attractive deposit franchise, the cost of deposits decreased 26 basis points to 0.31%, the result of higher deposit balances and lower rates paid on deposits.
• Noninterest income totaled $15.0 million, an increase of $0.3 million, or 2%, compared to the prior quarter and an increase of $1.4 million, or 11%, compared to the second quarter of 2019. For the six months ended June 30, 2020, noninterest income was $29.7 million, an increase of $3.3 million, or 12%, compared to the six months ended June 30, 2019. Results for the second quarter of 2020 included the following:
  • Mortgage banking fees increased $1.4 million, or 61%, compared to the first quarter of 2020 to a record $3.6 million, reflecting continued strong demand in the residential refinance market and strength in the Florida housing market.
  • Interchange revenue declined in April but recovered to pre-pandemic levels by June, resulting in overall results consistent with the first quarter of 2020.
  • Service charges on deposits decreased $0.9 million compared to the first quarter of 2020 with lower NSF and overdraft fees resulting from higher customer deposit balances.
  • Seacoast's wealth management division reported a record-breaking quarter of new production in assets under management, with assets increasing $125.0 million in the quarter, resulting in AUM of $707.6 million. A majority of the new assets under management came late in the quarter, which should benefit revenue in future periods.
  • A decrease of $1.2 million in other income reflects the recognition of $0.9 million in revenue from SBIC investments in the first quarter of 2020 which did not recur in the second quarter of 2020, as well as fees waived to assist customers in the pandemic.
  • Gains on the sale of securities represented $1.2 million in the second quarter of 2020, compared to negligible activity in the first quarter of 2020 and losses of $0.5 million on securities sales in the second quarter of 2019. Activity in the second quarter of 2020 included prudent repositioning of investments in collateralized lending obligation ("CLO") securities, with "A" rated securities sold and replaced with "AAA" rated securities.
• The provision for credit losses was $7.6 million compared to $29.5 million in the prior quarter and $2.6 million in the second quarter of 2019. In the first quarter of 2020, Seacoast adopted the new current expected credit losses ("CECL") methodology, which requires that the allowance for credit losses reflect an estimate of the full amount of expected credit losses in the portfolio as of the measurement date. On March 31, 2020, the ratio of allowance for credit losses to total loans was 1.61%. The estimate on June 30, 2020 which, excluding PPP loans, totals 1.76%, builds prudent additional reserves in response to ongoing economic uncertainty.
• Noninterest expense was $42.4 million, a decrease of $5.4 million, or 11%, compared to the prior quarter and an increase of $1.4 million, or 3%, from the second quarter of 2019. For the six months ended June 30, 2020, noninterest expense was $90.2 million, an increase of $6.1 million, or 7%, compared to the six months ended June 30, 2019. Changes from the first quarter of 2020 consisted of the following:
  • Salaries and wages decreased by $3.5 million, or 15%. The first quarter of 2020 included $2.2 million in costs associated with the acquisition of First Bank of the Palm Beaches ("FBPB"), and $0.3 million in bonuses for retail associates who kept critical functions operating at full capacity through the early stages of the pandemic. In the second quarter, higher loan production driven by the PPP program resulted in higher deferrals of related salary costs, in accordance with ASC 310-20, lowering costs by $2.9 million. Offsetting increases resulted from the addition of staff from the FBPB acquisition, and temporary staffing in the customer support center to accommodate increased call volumes associated with the pandemic operating environment.
  • Employee benefits decreased by $0.9 million, or 21%, due to the seasonal impact on the first quarter of higher payroll taxes and 401(k) contributions, and lower health insurance costs in the second quarter of 2020.
  • Data processing costs decreased by $0.6 million. The first quarter of 2020 included merger-related costs of $0.8 million. In the second quarter of 2020, the Company incurred higher lending-related costs to support the administration of the PPP program.
  • Legal and professional fees reflect a decrease of $1.1 million attributed to merger-related costs incurred in the first quarter of 2020.
  • In the second quarter of 2020, the Company utilized the remainder of its previously issued FDIC small bank assessment credits to offset the current period expense. FDIC assessments expense is expected to be $0.5 million in each of the remaining quarters of 2020.
• Seacoast recorded $7.2 million of income tax expense in the second quarter of 2020, compared to a tax benefit of $0.2 million in the prior quarter and income tax expense of $6.9 million in the second quarter of 2019. Tax expense related to stock-based compensation totaled $0.2 million in the second quarter of 2020, compared to a tax benefit of $0.3 million in the first quarter of 2020 and a tax benefit of $0.1 million in the second quarter of 2019.
• Second quarter adjusted revenues¹ increased 4% compared to the prior quarter while adjusted noninterest expense¹ decreased 3%, generating 7% operating leverage.
• The ratio of adjusted noninterest expense¹ to average tangible assets was 2.13% in the second quarter of 2020, compared to 2.44% in the prior quarter and 2.34% in the second quarter of 2019.
• Continuing Seacoast's commitment to careful expense management, the efficiency ratio was 50.1% compared to 59.8% in the prior quarter and 53.5% in the second quarter of 2019. The adjusted efficiency ratio¹ was 49.8% compared to 53.6% in the previous quarter and 51.4% in the second quarter of 2019.

Balance Sheet

• At June 30, 2020, the Company had total assets of $8.1 billion and total shareholders' equity of $1.0 billion. Book value per share was $19.45, and tangible book value per share was $15.11, compared to $18.82 and $14.42, respectively, on March 31, 2020, and $18.08 and $13.65, respectively, on June 30, 2019. This resulted in a year-over-year increase in tangible book value per share of 11%.
• Debt securities totaled $1.2 billion on June 30, 2020, an increase of $40.4 million compared to March 31, 2020, and an increase of $1.2 million from June 30, 2019. During the quarter, $64.5 million of securities were sold resulting in a net gain of $1.2 million. Purchases of securities during the quarter totaled $165.0 million.
• Loans totaled $5.8 billion on June 30, 2020, an increase of $454.8 million, or 9%, compared to March 31, 2020, and an increase of $883.9 million, or 18%, from June 30, 2019. Excluding PPP loans, loans outstanding declined by $121.6 million compared to March 31, 2020.
  • Seacoast originated over 5,000 loans totaling $590.7 million through the PPP program through June 30, 2020, with an average loan size of $116,000.
  • Other loan originations were $310.8 million in the second quarter of 2020, compared to $323.5 million in the first quarter of 2020 and $406.6 million in the second quarter of 2019.
    • As anticipated, and reflecting the economic impact of the pandemic, commercial originations during the second quarter of 2020 were $106.9 million, compared to $183.3 million in the first quarter of 2020 and $238.1 million in the second quarter of 2019.
    • Residential saleable loan originations were robust at $122.5 million in the second quarter of 2020, compared to $62.9 million in the first quarter of 2020 and $61.4 million in the second quarter of 2019.
    • Closed residential loans retained in the portfolio totaled $23.5 million in the second quarter of 2020, compared to $25.8 million in the first quarter of 2020 and $51.8 million in the second quarter of 2019.
    • Consumer originations in the second quarter of 2020 were $58.0 million, compared to $51.5 million in the first quarter of 2020 and $55.4 million in the second quarter of 2019.
  • Seacoast provided borrowers affected by the pandemic the ability to defer payments of loan principal and interest for periods ranging from three to six months. As of June 30, 2020, $1.1 billion in loans were in payment deferral status, 39% of which are scheduled to return to regular payments in the third quarter of 2020, and 61% in the fourth quarter of 2020. During the payment deferral period, Seacoast continues to recognize interest income.
• Pipelines (loans in underwriting and approval or approved and not yet closed) totaled $255.6 million on June 30, 2020. Seacoast remains committed to maintaining strict and careful underwriting, given the unknown impact of the pandemic on the economy.
  • Commercial pipelines were $117.0 million as of June 30, 2020, compared to $171.1 million as of the prior quarter end and $300.2 million as of June 30, 2019. The decline in the pipeline quarter over quarter was the result of a continued conservative approach on new credits given the uncertain economic outlook.
  • Residential saleable pipelines were $94.7 million as of June 30, 2020, compared to $75.2 million as of the prior quarter end and $46.7 million as of June 30, 2019. The increase reflects the impact of a vibrant refinance market and strength in the Florida housing market. Retained residential pipelines were $13.2 million as of June 30, 2020, compared to $11.8 million as of the prior quarter end and $3.8 million as of June 30, 2019.
  • Consumer pipelines were $30.6 million as of June 30, 2020, compared to $29.1 million as of the prior quarter-end and $26.9 million as of June 30, 2019.
• Total deposits were $6.7 billion as of June 30, 2020, with Seacoast's strong deposit base showing an increase of $779.3 million, or 13%, sequentially and an increase of $1.1 billion, or 20%, from the prior year with increases in transaction and money market accounts partially offset by a decline in CDs, highlighting a continued attractive deposit mix. Increases in transaction and money market deposit accounts reflect customer growth, lower overall consumer spending levels, and the impact of government support programs enacted in the second quarter of 2020, including PPP and individual stimulus payments.
  • The overall cost of deposits declined to 31 basis points in the second quarter of 2020 from 57 basis points in the prior quarter, following rate cuts by the Federal Reserve in March 2020.
  • Total transaction accounts increased 30% quarter-over-quarter and, as a percentage of overall deposit funding, increased to 55% of overall deposit funding from 50% at March 31, 2020.
  • Interest-bearing deposits (interest-bearing demand, savings, and money market deposits) increased year-over-year $403.1 million, or 14%, to $3.2 billion, noninterest-bearing demand deposits increased $597.6 million, or 36%, to $2.3 billion, and CDs (excluding brokered) decreased $178.6 million, or 23%, to $606.6 million.
  • On June 30, 2020, deposits per banking center were $133 million, compared to $118 million on March 31, 2020, and $113 million on June 30, 2019.

Asset Quality

• Nonperforming loans to total loans outstanding were 0.52% at June 30, 2020, 0.48% at March 31, 2020, and 0.47% at June 30, 2019.
• Nonperforming assets to total assets were 0.57% at June 30, 2020, 0.55% at March 31, 2020 and 0.50% at June 30, 2019.
• The ratio of allowance for credit losses to total loans was 1.58% at June 30, 2020, 1.61% at March 31, 2020, and 0.69% at June 30, 2019. The Company has assigned no allowance for credit losses to PPP loans, as the United States government contractually guarantees repayment. Excluding PPP loans, the ratio of allowance for credit losses to total loans at June 30, 2020, was 1.76%.
• Net charge-offs were $1.8 million, or 0.12%, of average loans for the second quarter of 2020 compared to $1.0 million, or 0.07%, of average loans in the first quarter of 2020 and $1.8 million, or 0.15% of average loans in the second quarter of 2019. Net charge-offs for the four most recent quarters averaged 0.15%.
• 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 $384,000, reflecting an ability to maintain granularity within the overall loan portfolio.
• 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.
• Construction and land development and commercial real estate loans remain well below regulatory guidance at 34% and 188% of total bank-level risk based capital, respectively, compared to 35% and 193% respectively, in the first quarter of 2020. On a consolidated basis, construction and land development and commercial real estate loans represent 32% and 176%, respectively, of total consolidated risk-based capital.
• In this uncertain time, Seacoast will remain vigilant in maintaining its conservative credit posture.

Capital and Liquidity

• The tier 1 capital ratio increased to 16.4% from 15.5% at March 31, 2020, and 14.6% June 30, 2019. The total capital ratio was 17.6% and the tier 1 leverage ratio was 11.4% at June 30, 2020.
• Tangible common equity to tangible assets was 10.19% at June 30, 2020, compared to 10.68% at March 31, 2020 and 10.65% at June 30, 2019. The decrease in the second quarter of 2020 when compared to the prior quarter was due to growth in the balance sheet, the result of PPP loans and associated liquidity increasing total assets.
• Cash and cash equivalents at June 30, 2020 totaled $524.3 million, an increase of $399.8 million from December 31, 2019, as Seacoast took a conservative stance at the outset of the pandemic.
• At June 30, 2020, the Company had available unsecured lines of credit of $135.0 million and lines of credit under lendable collateral value of $1.4 billion. $881.7 million of debt securities and $764.1 million in residential and commercial real estate loans are available as collateral for potential borrowings.

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

Second Quarter Strategic Highlights

Capitalizing on Seacoast's Early Commitment to Digital Transformation

• The COVID-19 pandemic has influenced how customers interact with Seacoast, accelerating the shift to digital for many customer segments. While branches remain open by drive-thru or lobby appointments, customers are also seeking the convenient security of mobile banking. Mobile banking logins have increased 11% compared to pre-pandemic periods, and have increased 20% compared to one year ago.
• As the Paycheck Protection Program became available, Seacoast was able to adapt quickly to an automated solution with an existing technology partner to provide customers with faster access at the application stage. To support the forgiveness process, enhancements to the existing loan origination platform were rapidly developed, including a customer portal, which allows documents and loan information to be digitally uploaded directly onto the platform.
• Substantially all non-branch staff have been working remotely since the beginning of the pandemic. In April of 2020, Seacoast conducted an associate survey, gaining feedback on the organization's response to the pandemic. Of the respondents who were working remotely, 95% stated that their productivity had increased or stayed the same as a result of working from home.

Driving Improvements to Operations

• During the second quarter of 2020, Seacoast's website launched an artificial intelligence-enabled "chat-bot" tool that provides users with answers to frequently asked questions. This interactive self-service feature has facilitated nearly 10,000 interactions, giving customers quick access to the information they need while reducing call center volume and wait times.
• Low interest rates fueling refinance demand combined with a strong Florida housing market have driven record levels of mortgage volume. In the first quarter of 2020, Seacoast introduced digital closing and notarization capabilities for residential mortgages and, in the second quarter, rolled out an end-to-end fully-electronic closing capability.

Fourth Street Banking Company Acquisition

• Seacoast's acquisition of Fourth Street Banking Company, the holding company for Freedom Bank of St. Petersburg, is expected to be completed in August 2020, subject to shareholder approval and other customary closing conditions. Freedom Bank has also been supporting its customers in accessing the PPP program, with $55 million in PPP loans as of June 30, 2020. Loans on deferral represent 19% of Freedom Bank's total non-PPP loans outstanding. On June 30, 2020, Freedom Bank's total net loans were $312 million and total deposits were $359 million.

OTHER INFORMATION

Conference Call Information
Seacoast will host a conference call on July 24, 2020 at 10:00 a.m. (Eastern Time) to discuss the second quarter 2020 earnings results and business trends. Investors may call in (toll-free) by dialing (800) 774-6070 (passcode 6599 321#; 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 July 24, 2020, by clicking here and using passcode 49804232.

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 July 24, 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 $8.1 billion in assets and $6.7 billion in deposits as of June 30, 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 Information
Seacoast has filed a registration statement on Form S-4, as amended, 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 has been 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 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, 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 and Fourth Street, 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, and our quarterly report on Form 10-Q for the quarter ended March 31, 2020 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.