Seacoast Banking of Florida : Fourth Quarter 2024 Conference Call Presentation

Published: 2025-01-27 16:29:39 ET SBCF

EARNINGS PRESENTATION

FOURTH QUARTER 2024

2024

Cautionary Notice Regarding Forward-Looking Statements

This presentation contains "forward-looking statements" within the meaning, and protections, of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in the Company's markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives and for integration of banks that the Company has acquired, or expects to acquire, as well as statements with respect to Seacoast's objectives, strategic plans, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.

Forward-looking statements include statements with respect to the Company's 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 the Company's control, and which may cause the actual results, performance or achievements of Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") or its wholly-owned banking subsidiary, Seacoast National Bank ("Seacoast Bank"), to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. You should not expect the Company 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 the 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 impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within Seacoast's primary market areas, including the effects of inflationary pressures, changes in interest rates, slowdowns in economic growth, and the potential for high unemployment rates, as well as the financial stress on borrowers and changes to customer and client behavior and credit risk as a result of the foregoing; potential impacts of adverse developments in the banking industry including those highlighted by high- profile bank failures, and including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto (including increases in the cost of our deposit insurance assessments), the Company's ability to effectively manage its liquidity risk and any growth plans, and the availability of capital and funding; 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 overdraft and late fee caps (if implemented), including those that impact the money supply and inflation; the risks of changes in interest rates on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities, and interest rate sensitive assets and liabilities; interest rate risks (including the impacts of interest rates on macroeconomic conditions, customer and client behavior, and on our net interest income), as well as the impact of prolonged elevated interest rates on our financial projections and models, sensitivities and the shape of the yield curve; changes in accounting policies, rules and practices; changes in retail distribution strategies, customer preferences and behavior generally and as a result of economic factors, including heightened or persistent inflation; 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, especially as they relate to the value of collateral supporting the Company's loans; the Company's concentration in commercial real estate loans and in real estate collateral in Florida; Seacoast's ability to comply with any regulatory requirements; the risk that the regulatory environment may not be conducive to or may prohibit or delay the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and may reduce the anticipated benefit; 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 Seacoast's investments due to market volatility or counterparty payment risk, as well as the effect of a decline in stock market prices on our fee income from our wealth management business; statutory and regulatory dividend restrictions; increases in regulatory capital requirements for banking organizations generally; the risks of mergers, acquisitions and divestitures, including Seacoast's ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies; changes in technology or products that may be more difficult, costly, or less effective than anticipated; the Company's ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties which may be exacerbated by developments in generative artificial intelligence; fraud or misconduct by internal or external parties, which Seacoast may not be able to prevent, detect or mitigate; inability of Seacoast's risk management framework to manage risks associated with the Company's business; dependence on key suppliers or vendors to obtain equipment or services for the business on acceptable terms; reduction in or the termination of Seacoast's ability to use the online- or mobile-based platform that is critical to the Company's business growth strategy; the effects of war or other conflicts, acts of terrorism, natural disasters, including hurricanes in the Company's footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions and/or increase costs, including, but not limited to, property and casualty and other insurance costs; Seacoast's ability to maintain adequate internal controls over financial reporting; potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the risks that deferred tax assets could be reduced if estimates of future taxable income from the Company's operations and tax planning strategies are less than currently estimated, the results of tax audit findings, challenges to our tax positions, or adverse changes or interpretations of tax laws; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions; the failure of assumptions underlying the establishment of reserves for expected credit losses; risks related to, and the costs associated with, environmental, social and governance matters, including the scope and pace of related rulemaking activity and disclosure requirements; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the federal budget and economic policy, including the impact of tariffs and trade policies; the risk that balance sheet, revenue growth, and loan growth expectations may differ from actual results; and other factors and risks described herein and under "Risk Factors" and in any of the Company's subsequent reports filed with the SEC and available on its website at www.sec.gov.

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 the Company's annual report on Form 10-K for the year ended December 31, 2023 and in other periodic reports that the Company files with the SEC. 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.

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Valuable Florida Franchise with Strong Capital and Liquidity

1Estimated

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Fourth Quarter 2024 Highlights

Comparisons are to the third quarter of 2024 unless otherwise stated

1Non-GAAP measure, see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP. 2Excludes $8.0 million in losses from securities repositioning

3Estimated

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Net Interest Income

Net Interest Margin

NIM, excluding accretion on acquired loans

($ in thousands)

$111,035

$106,975

$116,115

$105,298

$104,657

3.36%

3.39%

3.24%

3.18%

3.17%

3.02%

3.05%

2.91%

2.87%

2.90%

4Q'23

1Q'24

2Q'24

3Q'24

4Q'24

1Calculated on a fully taxable equivalent basis using amortized cost.

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Noninterest Income

($ in thousands)

$19,775

Noninterest income decreased 2% and adjusted noninterest income1, which excludes securities activity, increased 29% year over year.

$187

$23,492

$229$22,228 $20,268

$25,456

Noninterest income decreased $6.6 million from the prior quarter to $17.1 million, and adjusted noninterest income1 increased $2.0 million to $25.5 million. Changes from the prior quarter include:

Service charges on deposits totaled $5.1 million, a decrease of $0.3 million, or 5%. The fourth quarter of 2024 was modestly impacted by hurricane-related fee waivers, while our investments in talent and significant market expansion across the state have resulted in continued growth in treasury management services to commercial customers.

Wealth management income totaled $4.0 million, an increase of $0.2 million, or 5%. During 2024, assets under management increased $341.7 million, or 20%, reaching $2.1 billion at December 31, 2024.

Insurance agency income totaled $1.2 million, a decrease of 18%, reflecting typical fourth quarter seasonality.

$(2,437)

$(44)

$(8,388)

4Q'23

1Q'24

2Q'24

3Q'24

4Q'24

Adjusted noninterest income 1

Securities (losses) gains

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

Other income totaled $10.3 million, an increase of $2.5 million, or 31%. Fourth quarter results include gains on SBIC investments and gains on the sale of two nonperforming commercial real estate loans.

Recognized $8.0 million in pre-tax losses on the sale of securities with an average book yield of 2.8%. The proceeds of $113 million were reinvested in agency mortgage-backed securities with an average book yield of 5.4% for an estimated earnback of less than three years.

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Continued Focus on Building Wealth Management

Assets under management totaled $2.1 billion at December 31, 2024, increasing 20% year over year.

The wealth management team continued its business growth in the fourth quarter of 2024, closing out the strongest production and growth year on record, including nearly $450 million in new assets under management.

Since 2020, assets under management have increased at a compound annual growth rate ("CAGR") of 24%.

$870

Assets Under Management End-of-Period ($ in millions)

$2,053

$1,711

$1,387

$1,239

2020

2021

2022

2023

2024

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Noninterest Expense

($ in millions)

Noninterest Expense

$86.4

$7.1

$0.3

$83.3

$82.5

$84.8

$85.3

60.3%

61.1%

60.2%

59.8%

56.1%

($ in millions)

Adjusted Noninterest Expense1

$16.3

$13.8

$13.4

$13.9

$13.4

$6.9

$6.3

$6.0

$5.6

$9.1

$9.5

$9.2

$9.1

$9.2

$8.6

$8.0

$8.2

$8.0

$8.3

$48.9

$45.1

$46.0

$45.8

$47.7

Noninterest expense totaled $85.6 million, an increase of $0.8 million, or 1%, from the prior quarter, and a decrease of $0.8 million, or 1%, compared to the prior year quarter. Changes on an adjusted basis compared to the prior quarter include:

Employee compensation and benefits totaled $48.9 million, an increase of $1.2 million, or 3%, reflecting continued onboarding of banking teams and talent across our footprint, partially offset by seasonally lower 401(k) and payroll tax expense.

Outsourced data processing costs totaled $8.3 million, an increase of $0.3 million, or 4%, resulting from higher customer transaction volume.

Occupancy, furniture and equipment costs totaled $9.1 million, a decrease of $0.1 million, or 1%. Excluded are $0.2 million in preparation and recovery costs related to Hurricane Milton.

4Q'23

1Q'24

2Q'24

3Q'24

4Q'24

4Q'23

1Q'24

2Q'24

3Q'24

4Q'24

Adjusted noninterest expense1

Employee compensation and benefits

NonGAAP adjustments

Outsourced data processing costs

Adjusted efficiency ratio 1

Occupancy, furniture, and equipment

Amortization of intangibles

Other

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

Other expense decreased $0.5 million, or 4%, primarily associated with the timing of various marketing campaigns. We will continue to invest in marketing and branding supporting growth initiatives.

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Disciplined Approach to Lending in a Strong Florida Economy

Record originations of $903 million in the fourth quarter. Net annualized growth near 4%, with headwinds presented by elevated payoffs and strategic loan sales.

Loan yields declined one basis point from the prior quarter to 5.93%. Excluding the effect of accretion on acquired loans, yields declined 10 basis points to 5.48%. Yields were impacted by the lower Fed Funds rate and by interest adjustments associated with consumer fintech sales.

Loan Pipeline End-of-Period vs Originations

($ in millions)

Pipeline

Originations

$903

$834

$831

$573

$658

$693

$478

$538

$393

$394

4Q'23

1Q'24

2Q'24

3Q'24

4Q'24

Total Loans End-of-Period ($ in millions)

$10,063

$9,978

$10,039

$10,205

$10,300

5.85%

5.90%

5.93%

5.94%

5.93%

5.52%

5.58%

5.48%

5.40%

4Q'23

1Q'24

2Q'24

3Q'24

4Q'24

Yield Excluding

Reported Yield

Total Loans

Accretion on

Acquired Loans

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Loan Portfolio Mix

At December 31, 2024

Consumer, 2%

Residential, 25%

Commercial & Financial, 16%

Construction & Land Development, 6%

CRE-Retail, 12%

CRE-Office, 6%

CRE-Multifamily 5+, 4%

CRE-Hotel/Motel, 3%

CRE-Industrial/Warehouse, 4%

CRE-Other, 6%

OOCRE, 16%

Seacoast's lending strategy results in a diverse and granular loan portfolio. Seacoast's average loan size is $383 thousand and the average commercial loan size is $814 thousand.

Portfolio diversification in terms of asset mix, industry, and loan type, has been a critical element of the Company's lending strategy. Exposures across industries and collateral types are broadly distributed.

Construction and land development and commercial real estate loans, as defined in regulatory guidance, represent 36% and 224%, respectively, of total consolidated risk based capital1.

1Estimated

FOURTH QUARTER 2024 EARNINGS PRESENTATION

Disclaimer

Seacoast Banking Corporation of Florida published this content on January 27, 2025, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on January 27, 2025 at 21:27:54.451.