SBCF - Seacoast Reports Third Quarter 2020 Results

Focus on Growing Noninterest Income Delivers Record Results in Mortgage Banking,

Wealth Management, and Interchange Income

Well-Positioned Balance Sheet with Strong Capital and Liquidity

STUART, Fla., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") (NASDAQ: SBCF) today reported net income in the third quarter of 2020 of $22.6 million, or $0.42 per diluted share. Adjusted net income ¹ for the third quarter of 2020 was $27.3 million, or $0.50 per diluted share. The ratio of tangible common equity to tangible assets was 10.67%, tangible book value per share increased to $15.57 and Tier 1 capital increased to 16.8%.

For the third quarter of 2020, return on average tangible assets was 1.20%, return on average tangible shareholders' equity was 11.35%, and the efficiency ratio was 61.65%, compared to 1.37%, 13.47%, and 50.11%, respectively, in the prior quarter. Adjusted return on average tangible assets ¹ was 1.38%, adjusted return on average tangible shareholders' equity ¹ was 13.06%, and the adjusted efficiency ratio ¹ was 54.82%, compared to 1.33%, 13.09%, and 49.60%, respectively, in the prior quarter.

Dennis S. Hudson, III, Seacoast's Chairman and CEO, said, "We delivered another quarter of disciplined performance. Tangible book value per share grew 12% on an annualized basis, and the tangible common equity to tangible asset ratio increased to 10.67%. I am incredibly proud of the Seacoast team's ability to adapt quickly, overcoming the challenges presented by the pandemic operating environment. The team has provided highly competitive service through our bankers, call center, retail branches, and digital products and is consistently winning new customer relationships."

Hudson added, "I am also excited to welcome the Freedom Bank team and their customers to the Seacoast franchise. St. Petersburg is an outstanding, growing business community. I look forward to the combined organization driving growth in that important market in the years to come."

Charles M. Shaffer, Seacoast's President and Chief Operating Officer, said, "Our longstanding commitment to maintaining a fortress balance sheet with robust capital levels has positioned us with a solid foundation for operating in the pandemic environment. We continue to support our communities while maintaining strict underwriting standards, and carefully navigating the economy's uncertain outlook. Our results in the quarter highlighted innovative agility from our mortgage banking team and continued growth in assets under management by our wealth management group. Our focus on driving interchange income has resulted in performance that outpaces pre-pandemic levels. We are operating from a position of strength and are well-positioned when compared to peers to take advantage of opportunities that will materialize in the years ahead."

Paycheck Protection Program Impact on the Quarter

Fees earned by Seacoast to originate Paycheck Protection Program (“PPP”) loans, net of loan-specific costs, totaled $17.2 million, and are deferred and recognized as an adjustment to yield over time. At the end of the second quarter of 2020, we expected that the PPP forgiveness process would begin quickly, with a significant proportion of loans forgiven within nine months of origination. By the end of the third quarter of 2020, the U.S. Small Business Administration (“SBA”) had not processed any forgiveness applications. Changes by the SBA including streamlining of the forgiveness process are still being considered. As a result of the SBA delays, we have changed from the accelerated fee recognition schedule used in the second quarter of 2020, and have begun recognizing fees on a schedule aligned with the full contractual maturity of the loans. This resulted in only $0.2 million in PPP fees recognized in the third quarter compared to $4.0 million in the second quarter. The uncertainty in the SBA's forgiveness process may result in significant variability of fee recognition in future periods. This is only a timing issue and does not affect the total fee income Seacoast will recognize of $17.2 million. If the contractual term, rather than an accelerated term, had been used to recognize fees since the inception of the PPP program, PPP fee income in each of the second and third quarters of 2020 would have been $2.1 million. If early forgiveness does not occur, we expect to recognize approximately $2.1 million in each of the next six quarters.

Acquisition of Fourth Street Banking Company

In August 2020, Seacoast completed the acquisition of Fourth Street Banking Company (“Fourth Street”) and its wholly-owned subsidiary Freedom Bank, which added $303 million in loans and $330 million in deposits. The acquisition supports Seacoast’s growing presence in the attractive St. Petersburg MSA. Consolidation activities and related expenses are mostly complete.

Financial Results

Income Statement

• Net income was $22.6 million, or $0.42 per diluted share, compared to $25.1 million, or $0.47, for the prior quarter. For the nine months ended September 30, 2020, net income was $48.4 million, or $0.91 per diluted share, compared to $71.6 million, or $1.38, for the nine months ended September 30, 2019. Adjusted net income ¹ was $27.3 million, or $0.50 per diluted share, compared to $25.5 million, or $0.48, for the prior quarter. For the nine months ended September 30, 2020, adjusted net income ¹ was $58.3 million, or $1.09 per diluted share, compared to $77.8 million, or $1.50, for the nine months ended September 30, 2019.
• Net revenues were $80.4 million, a decrease of $1.8 million, or 2%, compared to the prior quarter. For the nine months ended September 30, 2020, net revenues were $240.6 million, an increase of $18.4 million, or 8%, compared to the nine months ended September 30, 2019. Adjusted revenues ¹ were $80.4 million, a decrease of $0.6 million, or 1%, from the prior quarter. For the nine months ended September 30, 2020, adjusted revenues ¹ were $239.3 million, an increase of $16.8 million, or 8%, compared to the nine months ended September 30, 2019.
• Net interest income totaled $63.5 million, a decrease of $3.8 million, or 6%, from the prior quarter. For the nine months ended September 30, 2020, net interest income was $194.0 million, an increase of $12.1 million, or 7%, compared to the nine months ended September 30, 2019. During the third quarter of 2020, net interest income included $0.2 million in fees earned on PPP loans compared to $4.0 million in the second quarter of 2020.
• Net interest margin was 3.40% in the third quarter of 2020, compared to 3.70% in the second quarter of 2020. Lower yield on PPP loans reduced net interest margin by 19 basis points in the third quarter of 2020, compared to an increase of eight basis points in the second quarter. Accretion of purchase discounts on acquired loans increased net interest margin by 17 basis points in the third quarter of 2020, compared to 16 basis points in the second quarter of 2020. Excluding these items, net interest margin declined only four basis points to 3.42%. The yield on loans declined nine basis points, reflecting higher paydowns and refinancings. The yield on securities declined 56 basis points, affected by rate resets and faster prepayments as well as additional investments of excess liquidity into securities this quarter. These declines were partially offset by lower cost of deposits, which decreased seven basis points, from 31 basis points in the second quarter to 24 basis points in the third quarter. This reflects a favorable product mix, including a higher proportion of noninterest bearing demand deposits to total deposits. We expect the cost of deposits to continue to decline in the fourth quarter of 2020.
• Noninterest income totaled $16.9 million, an increase of $1.9 million, or 13%, compared to the prior quarter. For the nine months ended September 30, 2020, noninterest income was $46.6 million, an increase of $6.3 million, or 16%, compared to the nine months ended September 30, 2019. Results for the third quarter of 2020 included the following:
  • When Seacoast originates residential mortgage loans intended for sale, they are sold at a premium to investors in the secondary market. Mortgage banking fees increased $1.7 million, or 48%, compared to the second quarter of 2020 to a record $5.3 million, as Seacoast continues to capitalize on the robust residential refinance market and strength in the Florida housing market. Seacoast's mortgage team has adapted quickly to the heightened demand by increasing customer service level standards with realtors, refinance customers, and new home buyers, resulting in stronger performance than competitors. The Company uses rate locks with investors at the time of application, thereby eliminating interest rate risk.
  • Interchange revenue increased by $0.5 million to a record $3.7 million at September 30, 2020, reflecting the benefit of recent growth in business banking customers and marketing targeted at increasing spend behavior by our customers.
  • Service charges on deposits increased $0.3 million compared to the second quarter of 2020. Service charges remain lower than pre-pandemic levels, the result of higher average deposit balances for both business and consumer customers.
  • Wealth management income increased $0.3 million to a record $2.0 million, reflecting the benefit of continued growth in assets under management, reaching $793 million at September 30, 2020, a 31% increase from the prior year.
  • Gains on the sale of securities were negligible in the third quarter of 2020, compared to gains of $1.2 million in the second quarter of 2020, and losses of $0.8 million in the third quarter of 2019.
• The total ratio of allowance for credit losses to total loans was 1.60% at September 30, 2020, compared to 1.58% at June 30, 2020. Excluding PPP loans, the ratio was 1.80% at September 30, 2020 compared to 1.76% at June 30, 2020. Seacoast recorded a reversal of the provision for credit losses of $0.8 million, the result of a decline in Seacoast-originated loan balances during the quarter, offset by an increase related to acquired loans. An allowance for loans acquired with indications of credit deterioration since origination is recorded through purchase accounting with no impact on the provision. In addition, Seacoast recorded a provision for credit losses on unfunded commitments of $0.8 million during the third quarter of 2020, compared to $0.2 million in the prior quarter.
• Noninterest expense was $51.7 million, an increase of $9.3 million, or 22%, compared to the prior quarter. For the nine months ended September 30, 2020, noninterest expense was $141.9 million, an increase of $19.2 million, or 16%, compared to the nine months ended September 30, 2019. Changes from the second quarter of 2020 consisted of the following:
  • Salaries and wages increased by $2.9 million, or 14%, of which $0.6 million was merger-related. In the second quarter of 2020, higher loan production driven by the PPP program resulted in higher deferrals of related salary expenses in that quarter, impacting the quarter over quarter comparison by $2.9 million. Commission expenses were higher due to increased production volume by the mortgage banking group, offset by lower temporary staffing costs associated with our call center.
  • Employee benefits increased by $0.6 million, or 18%, primarily the result of higher health insurance costs. Seacoast maintains a self-funded health insurance plan, and low claims activity resulting from pandemic-related restrictions in the second quarter resulted in lower costs in the second quarter. In the third quarter, as government-mandated restrictions on access to healthcare providers eased, claims activity returned. We expect claims to normalize in the coming quarter.
  • Higher occupancy expenses are the result of the consolidation of the existing St. Petersburg branch upon acquisition of Freedom Bank. Charges include a lease termination fee of $0.3 million and the write-off of $0.2 million in leasehold improvements. This consolidation is expected to result in $0.5 million in ongoing annual savings. Further consolidation activity is expected in 2021.
  • Data processing costs increased by $2.1 million, or 51%, including $1.9 million in merger-related costs associated with data conversion.
  • Furniture and equipment increased by $0.2 million, or 16%, reflecting the impact of equipment disposals associated with the Freedom Bank acquisition.
  • Marketing expense increased by $0.5 million, or 52%, the result of increased investment to capture the opportunity presented by dissatisfied business customers affected by unsatisfactory PPP execution by national banks.
  • Legal and professional fees increased $0.7 million, which included an increase of $1.1 million in merger-related costs compared to the second quarter of 2020, partially offset by lower legal fees in the third quarter of 2020.
  • FDIC assessments increased $0.2 million, or 78%, reflecting the return to standard assessment expense after full utilization of previous credits.
  • Provision for credit losses on unfunded commitments increased $0.6 million, primarily associated with loan commitments acquired from Freedom Bank.
  • Other expenses increased $0.8 million, or 20%, which reflected the impact of higher mortgage loan production-related expenses associated with higher production volumes and higher executive recruiting fees in the quarter.
• Seacoast recorded $7.0 million of income tax expense in the third quarter of 2020, compared to $7.2 million in the prior quarter. Tax impacts related to stock-based compensation were nominal each period.
• The ratio of net adjusted noninterest expense ¹ to average tangible assets was 2.24% in the third quarter of 2020, compared to 2.11% in the prior quarter. Net adjusted noninterest expense ¹ in the second quarter of 2020 benefited from the impact of higher loan production driven by the PPP program, resulting in higher deferrals of related salary expenses.
• The efficiency ratio was 61.6% compared to 50.1% in the prior quarter. The adjusted efficiency ratio ¹ was 54.8% compared to 49.6% in the prior quarter. The efficiency ratio in the second quarter of 2020 benefited from the impact of higher PPP fee accretion and the impact of higher loan production driven by the PPP program, resulting in higher deferrals of related salary expenses.

Balance Sheet

• At September 30, 2020, the Company had total assets of $8.3 billion and total shareholders' equity of $1.1 billion. Book value per share was $19.91, and tangible book value per share was $15.57, compared to $19.45 and $15.11, respectively, on June 30, 2020. This resulted in annualized growth in tangible book value per share of 12% compared to June 30, 2020.
• Debt securities totaled $1.5 billion on September 30, 2020, an increase of $291.1 million compared to June 30, 2020. Purchases during the quarter were primarily in government-sponsored mortgage-backed securities with  an average yield of 1.31%.
• Loans totaled $5.9 billion on September 30, 2020, an increase of $86.0 million, or 1%, compared to June 30, 2020. Excluding loans acquired from Freedom Bank and PPP loans originated in the third quarter, loans outstanding declined by $231 million compared to June 30, 2020. The decline resulted from the Company's continuing strict underwriting and conservative credit posture, given the economic uncertainty, combined with lesser pipeline-building activities during the periods of government shutdown earlier in the year, and lower demand for credit facilities from business customers. Additionally, during the quarter, early payoffs of loans accelerated, primarily in the commercial real estate and residential real estate portfolios.
  • The Company acquired $309.2 million in loans from Freedom Bank, including $54.2 million in PPP loans and $35.2 million of loans on deferred payment status.
  • Other loan originations were $346.7 million in the third quarter of 2020, compared to $901.5 million in the second quarter of 2020.
    • Commercial originations during the third quarter of 2020 were $88.2 million, compared to $106.9 million in the second quarter of 2020. Originations in the third quarter reflect the Company's adherence to conservative underwriting guidelines in the current economic environment, lesser pipeline-building activities during the periods of government shutdown earlier in the year, and lower demand for credit facilities from business customers during the quarter.
    • Residential loans originated for sale in the secondary market were $162.5 million in the third quarter of 2020, compared to $122.5 million in the second quarter of 2020. The residential lending team has adapted quickly to heightened demand and has increased service levels to homebuyers, refinance customers, and local real estate professionals. As a result, the Company has recognized outsized growth in market share.
    • Closed residential loans retained in the portfolio totaled $25.4 million in the third quarter of 2020, compared to $23.5 million in the second quarter of 2020.
    • Consumer originations in the third quarter of 2020 were $62.3 million, compared to $58.0 million in the second quarter of 2020.
    • PPP loan originations in the third quarter of 2020 were $8.3 million, compared to $590.7 million in the second quarter of 2020.
  • Seacoast provided borrowers financially impacted by the pandemic the ability to defer payments for periods ranging from three to six months. As of September 30, 2020, $702.7 million in loans were in payment deferral status, 97% of which are scheduled to resume regular payments in the fourth quarter of 2020. During the payment deferral period, Seacoast has generally continued to recognize interest income. An allowance for potentially uncollectible accrued interest totaled $0.4 million as of September 30, 2020, established with a corresponding charge to provision for credit losses.
• Pipelines (loans in underwriting and approval or approved and not yet closed) totaled $456.6 million on September 30, 2020. Seacoast remains committed to maintaining strict and careful underwriting standards, given the continuing economic uncertainty.
  • Commercial pipelines were $256.2 million as of September 30, 2020, compared to $117.0 million as of the prior quarter end.
  • Residential saleable pipelines were $149.9 million as of September 30, 2020, compared to $94.7 million as of the prior quarter end. Retained residential pipelines were $33.4 million as of September 30, 2020, compared to $13.2 million as of the prior quarter end.
  • Consumer pipelines were $17.1 million as of September 30, 2020, compared to $30.6 million as of the prior quarter-end. The decrease was the result of lower demand for HELOC products in the third quarter of 2020 as customers are using first mortgage refinancing as an economically beneficial alternative.
• Total deposits were $6.9 billion as of September 30, 2020, an increase of $248.1 million, or 4%, sequentially. The increase includes $330 million in deposits from Freedom Bank, partially offset by lower brokered time deposits balances.
  • The overall cost of deposits declined to 24 basis points in the third quarter of 2020 from 31 basis points in the prior quarter, reflecting the impact of an increase in the proportion of noninterest-bearing deposits as well as lower costs on time deposits. We expect the cost of deposits to continue to decline in the fourth quarter.
  • Total transaction accounts increased 37% year-over-year and, as a percentage of overall deposit funding, remained at 55%.
  • Interest-bearing deposits (interest-bearing demand, savings, and money market deposits) increased quarter-over-quarter $277.3 million, or 9%, to $3.5 billion, noninterest-bearing demand deposits increased $133.3 million, or 6%, to $2.4 billion, and CDs (excluding brokered) increased $28.9 million, or 5%, to $635.5 million.
  • On September 30, 2020, average deposits per banking center were $136 million, compared to $133 million on June 30, 2020, and $118 million on September 30, 2019.
  • We estimate 60% of funds from PPP originations remain in deposit accounts at Seacoast as of the end of the quarter.

Asset Quality

• Nonperforming loans increased by $7.2 million to $37.2 million at September 30, 2020. Of the $7.2 million increase, $3.0 million was acquired from Freedom Bank. Nonperforming loans to total loans outstanding were 0.64% at September 30, 2020, 0.52% at June 30, 2020, and 0.52% at September 30, 2019.
• Nonperforming assets to total assets were 0.64% at September 30, 2020, 0.57% at June 30, 2020 and 0.58% at September 30, 2019.
• The ratio of allowance for credit losses to total loans was 1.60% at September 30, 2020, 1.58% at June 30, 2020, and 0.67% at September 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 September 30, 2020, was 1.80%, compared to 1.76% at June 30, 2020.
• Net charge-offs were $1.7 million, or 0.12% of average loans for the third quarter of 2020 compared to $1.8 million, or 0.12% of average loans in the second quarter of 2020 and $2.1 million, or 0.17% of average loans in the third quarter of 2019. Net charge-offs for the four most recent quarters averaged 0.14%.
• 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 $386,000, 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 .
• Construc tion and land development and commercial real estate loans remain well below regulatory guidance at 30% and 176% of total bank-level risk based capital, respectively, compared to 34% and 188% respectively, in the second quarter of 2020. On a consolidated basis, construction and land development and commercial real estate loans represent 28% and 165%, respectively, of total consolidated risk-based capital.
• As the trajectory of the economic recovery remains unclear as the negative impact of COVID-19 continues and further fiscal stimulus is uncertain, Seacoast will remain vigilant in maintaining its conservative credit posture.

Capital and Liquidity

• The tier 1 capital ratio increased to 16.8% from 16.4% at June 30, 2020, and 14.9% September 30, 2019. The total capital ratio was 17.9% and the tier 1 leverage ratio was 11.9% at September 30, 2020.
• Tangible common equity to tangible assets was 10.67% at September 30, 2020, compared to 10.19% at June 30, 2020 and 11.05% at September 30, 2019.
• Cash and cash equivalents at September 30, 2020 totaled $309.6 million, an increase of $185.0 million from December 31, 2019, as Seacoast maintained a prudent liquidity position.
• At September 30, 2020, the Company had available unsecured lines of credit of $135.0 million and lines of credit under lendable collateral value of $1.7 billion. $1.2 billion of debt securities and $646.1 million in residential and commercial real estate loans are available as collateral for potential borrowings.

Third Quarter Strategic Highlights

Capitalizing on Seacoast's Early Commitment to Digital Transformation

• Digital adoption and usage remain strong. Registered mobile devices have increased 14% compared to the third quarter of 2019, while online users have increased 13% in the same time period. Growth is coming from both consumer and business customers utilizing the convenience of mobile and online channels.
• In 2019, Seacoast enhanced the interactive voice response (IVR) system in our Florida-based Customer Support Center, which provides customers with secure, self-serve options and expedites call routing processes. This investment has provided scalability to our operations and has elevated the customer experience with shorter wait times and quicker access. Since the pandemic began, 50% of callers choose to utilize the IVR for routine service and information requests, and call center service levels remain high. Seacoast has partnered with a leading consumer insights firm to capture and analyze feedback from customers, which indicates a high level of satisfaction with the call center experience.
• Approximately 50% of all deposit transactions were completed outside of the branch network for consumer and business customers, an increase of 9% over the same time period last year. Routine transactions continue to migrate from the branch network to lower cost channels.

Driving Improvements to Operations

• As the Paycheck Protection Program begins to accelerate processing of loan forgiveness applications, Seacoast will leverage an automated solution aimed at streamlining the process for customers while integrating with its existing technology infrastructure. Customers will benefit from self-service and banker-led loan forgiveness solutions, which our customers will be able to choose from based on their individual needs and personal preferences. Initial beta testing is complete and the solution is now processing forgiveness applications.
  
• Early in 2020, the residential lending team quickly adapted to heightened demand and increased service levels by leveraging the digital origination platform and transacting fully remote closings. Using Seacoast’s analytics-based marketing, the residential lending team also targeted opportunities identified through digital channels. These efforts resulted in approximately 20% of the third quarter originations and 20% of the pipeline at period end.

Scaling and Evolving Our Culture

Prioritizing how we lead through strategic initiatives and streamlined decision making enables us to keep the customer at the center of everything we do and deliver greater value in every customer interaction.

• In July, we welcomed Austen Carroll to Seacoast as EVP, Chief Lending Officer. In this role, Austen leads our commercial banking division, including treasury sales and operations. Austen is a well-known and highly regarded banker in the Southeast. Prior to joining Seacoast, Austen served as Chief Banking Officer for Ameris Bank where he was responsible for the oversight of core banking activities throughout the bank's footprint including Alabama, Florida, South Carolina and a majority of Georgia. He has achieved great success in his prior roles and will help accelerate the growth of our Commercial Banking business.
• In August, Richard Raiford joined the Seacoast leadership team as EVP, Chief Credit Officer. Richard brings a wealth of experiences from large and well-respected institutions, which will add depth to our credit team, and position us for growth while maintaining our commitment to rigorous underwriting and credit monitoring standards. Prior to joining Seacoast, Richard served as Chief Credit Officer for East West Bank, and earlier in his career spent 28 years with JPMorgan Chase in a number of risk management, middle-market banking and investment banking leadership roles. David Houdeshell, who has served as Seacoast's Chief Credit Officer since 2010, has taken on the newly created role of EVP, Director of Credit Analytics and Policy, where he will continue to refine our differentiated credit analytics capabilities to support Seacoast's disciplined growth.
• In October, Daniel "Dan" Hilken joined the bank's commercial banking team as regional market president in Central Florida. Dan brings 30 years of banking experience, leadership, and knowledge of the Central Florida marketplace, including from his most recent role as the Central Florida commercial banking leader at Wells Fargo. Dan will be focused on organic growth in this strategically important market for Seacoast.

Fourth Street Banking Company Acquisition

• Seacoast’s balanced growth strategy, combining organic growth with value-creating acquisitions, continues to benefit shareholders and provide new opportunities for associates. The purchase of Fourth Street Banking Company, the holding company for Freedom Bank of St. Petersburg, in the third quarter of 2020 added experienced bankers in a growing market, further supporting sustainable, profitable growth. The acquisition increases Seacoast’s market share to the #2 Florida-based community bank in the attractive Tampa MSA.

OTHER INFORMATION

Conference Call Information
Seacoast will host a conference call on October 28, 2020 at 10:00 a.m. (Eastern Time) to discuss the third quarter 2020 earnings results and business trends. Investors may call in (toll-free) by dialing (800) 774-6070 (passcode 9888 543#; 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 October 28, 2020, by clicking here and using passcode 49937710.

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 the afternoon of October 28, 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 $8.3 billion in assets and $6.9 billion in deposits as of September 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 51 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 .

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, including 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 (including potential future legislation enacted as a result of the upcoming 2020 election); changes in accounting policies, rules and practices, including the impact of the adoption of CECL; our participation in the PPP program; 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 Fourth Street merger include, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the 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 fourth quarter and 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 reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 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 .