SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] Annual Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended Commission File DECEMBER 31, 2000 No. 0-13660
Florida 59-2260678
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(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
815 Colorado Avenue, Stuart, FL 34994
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(Address of principal executive offices) (Zip code)
(561) 287-4000
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(Registrant's telephone number,
including area code)
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Securities registered pursuant to Section 12 (b) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
State the aggregate market value of the voting stock held by non-affiliates of the registrant as of March 7, 2001:
CLASS A COMMON STOCK, $.10 par value - $128,008,792 based upon the closing sale price on March 7, 2001, using beneficial ownership stock rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934, to exclude voting stock owned by directors and certain executive officers, some of whom may not be held to be affiliates upon judicial determination.
CLASS B COMMON STOCK, $.10 par value - $10,559,526 based upon the closing sale price on March 7, 2001, of the Class A Common Stock, $.10 par value, into which each share of Class B Common Stock, $.10 par value, is immediately convertible on a one-for-one basis, using beneficial ownership stock rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934, to exclude voting stock owned by directors and certain executive officers, some of whom may not be held to be affiliates upon judicial determination.
Indicate the number of shares outstanding of each of the registrant's classes of common stock as of March 7, 2001:
Class A Common Stock, $.10 Par Value - 4,348,494 shares
Class B Common Stock, $.10 Par Value - 358,710 shares
Documents Incorporated by Reference:
1. Certain portions of the registrant's 2001 Proxy Statement for the Annual Meeting of Shareholders to be held April 19, 2001 ("2001 Proxy Statement") are incorporated by reference into Part III, Items 10 through 13. Other than those portions of the 2001 Proxy Statement specifically incorporated by reference herein pursuant to Items 10 through 13, no other portions of the 2001 Proxy Statement shall be deemed so incorporated.
2. Certain portions of the registrant's 2000 Annual Report to Shareholders (the "2000 Annual Report") are incorporated by reference in Part II, Items 6 through 8 and Item 14. Other than these portions of the 2000 Annual Report specifically incorporated by reference herein pursuant to Items 6 through 8 and Item 14, no other portions of the 2000 Annual Report shall be deemed so incorporated.
FORM 10-K CROSS-REFERENCE INDEX
Item 1. Business 1-12 --
Item 2. Properties 12-17 --
Item 3. Legal Proceedings 16 --
Item 4. Submission of Matters to a
Vote of Security-Holders 16 --
Part II
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Item 5. Market Price of and Dividends on the
Registrant's Common Equity and
Related Stockholder Matters 17-18 29
Item 6. Selected Financial Data 18 3
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 18 16-28
Item 7A. Market Risk 19-20 25
Item 8. Financial Statements and 20 29-31
Supplementary Data & 33-47
Item 9. Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure 20 --
Page of
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Form
10-K Proxy
Part III
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Item 10. Directors and Executive Officers 21 3-8
of the Registrant
Item 11. Executive Compensation 21 8-16
Item 12. Security Ownership of Certain 21 3-7
Beneficial Owners and Management & 16-17
Item 13. Certain Relationships and Related 21 16-17
Transactions
Page of
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Form Annual
10-K Report
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Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
(a)(1) List of All Financial Statements 22
Consolidated Balance Sheets as
of December 31, 2000 and 1999 -- 35
Consolidated Statements of Income
for the years ended December 31,
2000, 1999 and 1998 -- 34
Consolidated Statements of Shareholders'
Equity for the years ended December 31,
2000, 1999 and 1998 -- 37
Consolidated Statements of Cash Flows
for the years ended December 31,
2000, 1999, and 1998 -- 36,46
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Notes to Consolidated Financial
Statements -- 38-47
Report of Independent Certified
Public Accountants -- 33
(a)(2) List of Financial Statement Schedules 22 --
(a)(3) List of Exhibits 22-24 --
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(b) Reports on Form 8-K 24 --
(c) Exhibits 24 --
(d) Financial Statement Schedules 24 --
SPECIAL CAUTIONARY NOTICE
REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made herein under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere herein or in any information incorporated herein by reference to other documents are forward-looking statements for purposes of the Securities Act of 1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements include statements using the words such as "may", "will", "anticipate", "should", "would", "believe", "contemplate", "expect", "estimate", "continue", "may", "intend" or other similar words and expressions of the future.
These forward-looking statements involve risks and uncertainties, and may not be realized due to a variety of factors, including, without limitation: the effects of future economic conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and interest sensitive assets and liabilities; interest rate risks; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in the Company's market area and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; and the failure of assumptions underlying the establishment of reserves for possible loan losses. All written or oral forward looking statements attributable to the Company are expressly qualified in their entirety by this Cautionary Notice.
Seacoast is a bank holding company registered under the Bank Holding Company Act of 1956, as amended ("BHC Act"). Seacoast was incorporated under the laws of the State of Florida on January 24, 1983, by the management of its principal subsidiary, First National Bank and Trust Company of the Treasure Coast (the "Bank"), for the purpose of becoming a holding company for the Bank. On December 30, 1983, Seacoast acquired all of the outstanding shares of the common stock of the Bank in exchange for 810,000 shares of its $.10 par value Class A common stock ("Class A Common Stock") and 810,000 shares of its $.10 par value Class B common stock ("Class B Common Stock").
The Bank commenced operations in 1933 under the name "Citizens Bank of Stuart" pursuant to a charter originally granted by the State of Florida in 1926. The Bank converted to a national banking association on August 29, 1958.
Through the Bank and its broker-dealer subsidiary, Seacoast offers a full array of deposit accounts and retail banking services, engages in consumer and commercial lending and provides a wide variety of trust and asset management services, as well as securities and annuity products. Seacoast's primary service area is the "Treasure Coast", which, as defined by Seacoast, consists of the counties of Martin, St. Lucie and Indian River on Florida's southeastern coast. The Bank operates banking offices in the following cities: five in Stuart, two in Palm City, two in Jensen Beach, two on Hutchinson Island, one in Hobe Sound, four in Vero Beach, two in Sebastian, five in Port St. Lucie, and one in Ft. Pierce.
Most of the banking offices have one or more Automatic Teller Machines (ATM) which provide customers with 24-hour access to their deposit accounts. Seacoast is a member of the "Star System", the largest electronic funds transfer organization in the United States, which permits banking customers access to their accounts at over 180,000 locations throughout the United States.
Customers can also use the Bank's "MoneyPhone" system to access information on their loan or deposit account balances, to transfer funds between linked accounts, to make loan payments, and to verify deposits or checks that may have cleared. This service is accessible by phone 24 hours a day, seven days a week.
In addition, customers may access information via the Bank's Telephone Banking Center ("TBC"). From 7 A.M. to 7 P.M., Monday through Friday, servicing personnel in the TBC are available to open accounts, take applications for certain types of loans, resolve account problems and offer information on other bank products and services to existing and potential customers. The Company also offers PC/Internet banking for personal computers.
In February 2000, the Bank opened a lending office for its newly formed Seacoast Marine Finance division in Ft. Lauderdale, Florida. Seacoast Marine Finance is staffed with seasoned, experienced marine lending professionals with a marketing emphasis on marine loans of $200,000 and greater. All loans outside of the Bank's primary service area are generally sold.
Seacoast has four indirect subsidiaries. FNB Brokerage Services, Inc. ("FNB Brokerage") provides brokerage services. FNB Insurance Services, Inc. ("FNB Insurance") provides insurance services. South Branch Building, Inc. is a general partner in a partnership which constructed a branch facility of the Bank. Big O RV Resort, Inc. was formed to own and operate certain properties acquired through foreclosure, but is currently inactive. The operations of these subsidiaries contribute less than 10% of the consolidated assets and revenues of Seacoast.
As a bank holding company, Seacoast is a legal entity separate and distinct from its subsidiaries. Seacoast coordinates the financial resources of the consolidated enterprise and maintains financial, operational and administrative systems that allow centralized evaluation of subsidiary operations and coordination of selected policies and activities. Seacoast's operating revenues and net income are derived primarily from its subsidiaries through dividends, fees for services performed and interest on advances and loans. See "Supervision and Regulation".
As of December 31, 2000, Seacoast and its subsidiaries employed 340 full-time equivalent employees.
Expansion of Business
Seacoast has expanded its products and services to meet the changing needs of the various segments of its market and it expects to continue this strategy. Prior to 1991, Seacoast had expanded geographically primarily through the addition of branches, including the acquisition of a thrift branch in St. Lucie County.
Seacoast has from time to time acquired banks, bank branches and deposits, and has opened new branches and facilities.
Florida law permits state-wide branching, and Seacoast has expanded, and anticipates future expansion in its markets, by opening additional offices and facilities. New banking facilities were opened in November 1994 in St. Lucie West, a new community west of Port St. Lucie, and in May 1996 in a WalMart superstore in Sebastian, which is located in northern Indian River County. In January 1997, Seacoast opened a branch in Nettles Island, a predominately modular home community on Hutchinson Island in southern St. Lucie County. In May, June and July 1997, and in March 1998, four additional branch offices were opened in Indian River County. In July 2000, a new branch on U.S. 1 in northern Martin County near the St. Lucie County line was opened; at the same time a branch in St. Lucie County approximately one-half mile from the new branch was closed. See "Item 2. Properties".
Seacoast regularly evaluates possible acquisitions and other expansion opportunities.
Competition
Seacoast and its subsidiaries operate in the highly competitive markets of Martin, St. Lucie and Indian River Counties in southeastern Florida. The Bank not only competes with other banks in its markets, but it also competes with various other types of financial institutions for deposits, certain commercial, fiduciary and investment services and various types of loans and certain other financial services. The Bank also competes for interest-bearing funds with a number of other financial intermediaries and investment alternatives, including mutual funds, brokerage and insurance firms, governmental and corporate bonds, and other securities.
Seacoast and its subsidiaries compete not only with financial institutions based in the State of Florida, but also with a number of large out-of-state and foreign banks, bank holding companies and other financial institutions which have an established market presence in the State of Florida, or which offer products by mail, telephone or over the Internet. Many of Seacoast's competitors are engaged in local, regional, national and international operations and have greater assets, personnel and other resources than Seacoast. Some of these competitors are subject to less regulation and/or more favorable tax treatment than Seacoast.
Supervision and Regulation
Bank holding companies and banks are extensively regulated under federal and state law. This discussion is qualified in its entirety by reference to the particular statutory and regulatory provisions referred to below and is not intended to be an exhaustive description of the status or regulations applicable to the Company's and the Bank's business. Supervision, regulation, and examination of the Company and the Bank and their respective subsidiaries by the bank regulatory agencies are intended primarily for the protection of depositors rather than holders of Company capital stock. Any change in applicable law or regulation may have a material effect on the Company's business.
Bank Holding Company Regulation
The Company, as a bank holding company, is subject to supervision and regulation by the Board of Governors of the Federal Reserve System ("Federal Reserve") under the BHC Act. Bank holding companies are generally limited to the business of banking, managing or controlling banks, and other activities that the FRB determines to be so closely related to banking or managing or controlling banks as to be a proper incident there- to. The Company is required to file with the Federal Reserve periodic reports and such other information as the Federal Reserve may request. The Federal Reserve examines the Company, and may examine the Company's Subsidiaries.
The BHC Act requires prior Federal Reserve approval for, among other things, the acquisition by a bank holding company of direct or indirect ownership or control of more than 5% of the voting shares or substantially all the assets of any bank, or for a merger or consolidation of a bank holding company with another bank holding company. With certain exceptions, the BHC Act prohibits a bank holding company from acquiring direct or indirect ownership or control of voting shares of any company which is not a bank or bank holding company and from engaging directly or indirectly in any activity other than banking or managing or controlling banks or performing services for its authorized subsidiaries. A bank holding company, may, however, engage in or acquire an interest in a company that engages in activities which the Federal Reserve has determined by regulation or order to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
In November 1999, Congress enacted the Gramm-Leach-Bliley Act ("GLB") which made substantial revisions to the statutory restrictions separating banking activities from certain other financial activities. Under GLB, bank holding companies that are "well-capitalized" and "well-managed", as defined in Federal Reserve Regulation Y, which have and maintain "satisfac- tory" Community Reinvestment Act ("CRA") ratings and meet certain other conditions can elect to become "financial holding companies". As such, they and their subsidiaries are permitted to acquire or engage in previously impermissible activities such as insurance underwriting, securities underwriting and distribution, travel agency activities, broad insurance agency activities, merchant bank, and other activities that the Federal Reserve determines to be financial in nature or complementary thereto. In addition, under the merchant banking authority added by the GLB and Federal Reserve regulations, financial holding companies are authorized to invest in companies that engage in activities that are not financial in nature, as long as the financial holding company makes its investment with the intention of limiting the investment in duration, does not manage the company on a day-to-day basis, and the invested company does not cross-market with any of the financial holding company's controlled depository institutions. Financial holding companies continue to be subject to the overall oversight and supervision of the Federal Reserve, but GLB applies the concept of functional regulation to the activities conducted by subsidiaries. For example, insurance activities would be subject to super- vision and regulation by state insurance authorities. While the Company has not become a financial holding company, it may elect to do so in the future in order to exercise the broader activity powers provided by GLB.
The Company is a legal entity separate and distinct from the Bank and its other subsidiaries. Various legal limitations restrict the Bank from lending or otherwise supplying funds to the Company or its non-bank subsidiaries. The Company and the Bank are subject to Section 23A of the Federal Reserve Act. Section 23A defines "covered transactions", which include extensions of credit, and limits a bank's covered transactions with any affiliate to 10% of such bank's capital and surplus. All covered and exempt transactions between a bank and its affiliates must be on terms and conditions consistent with safe and sound banking practices, and banks and their subsidiaries are prohibited from purchasing low-quality assets from the bank's affiliates. Finally, Section 23A requires that all of a bank's extensions of credit to an affiliate be appropriately secured by acceptable collateral, generally United States government or agency securities. The Company and the Bank also are subject to Section 23B of the Federal Reserve Act, which generally limits covered and other transactions among affiliates to terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the bank or its subsidiary as prevailing at the time for transactions with unaffiliated companies.
The BHC Act, effective on September 29, 1995, repealed the prior statutory restrictions on interstate acquisitions of banks by bank holding companies, such that Seacoast and any other bank holding company located in Florida may now acquire a bank located in any other state, and any bank holding company located outside Florida may lawfully acquire any bank based in another state, regardless of state law to the contrary, in either case subject to certain deposit-percentage, age of bank charter requirements, and other restrictions. Federal law also permits national and state- chartered banks to branch interstate through acquisitions of banks in other states. Florida has an Interstate Branching Act ("the Florida Branching Act"), which permits interstate branching through merger transactions under the Interstate Banking Act. Under the Florida Branching Act, with the prior approval of the Florida Department of Banking and Finance, a Florida bank may establish, maintain and operate one or more branches in a state other than the State of Florida pursuant to a merger transaction in which the Florida bank is the resulting bank. In addition, the Florida Branching Act provides that one or more Florida banks may enter into a mer- ger transaction with one or more out-of-state banks, and an out-of-state bank resulting from such transaction may maintain and operate the branches of the Florida bank that participated in such merger. An out-of-state bank, however, is not permitted to acquire a Florida bank in a merger transaction unless the Florida bank has been in existence and continuously operated for more than three years.
Federal Reserve policy requires a bank holding company to act as a source of financial strength and to take measures to preserve and protect bank subsidiaries in situations where additional investments in a troubled bank may not otherwise be warranted. In addition, under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), where a bank holding company has more than one bank or thrift subsidiary, each of the bank holding company's subsidiary depository institutions are responsible for any losses to the Federal Deposit Insurance Corporation ("FDIC") as a result of an affiliated depository institution's failure. As a result, a bank holding company may be required to loan money to its subsidiaries in the form of capital notes or other instruments which qualify as capital under regulatory rules. However, any loans from the holding company to such subsidiary banks likely will be unsecured and subordinated to such bank's depositors and perhaps to other creditors of the bank.
Bank and Bank Subsidiary Regulation
The Bank is subject to supervision, regulation, and examination by the Office of the Comptroller of the Currency (the "OCC") which monitors all areas of the operations of the Bank, including reserves, loans, mortgages, issuances of securities, payment of dividends, establishment of branches, capital adequacy, and compliance with laws. The Bank is a member of the FDIC and, as such, its deposits are insured by the FDIC to the maximum extent provided by law. See "FDIC Insurance Assessments".
Under present Florida law, the Bank may establish and operate branches throughout the State of Florida, subject to the maintenance of adequate capital for each branch and the receipt of OCC approval.
The OCC has adopted a series of revisions to its regulations, including expanding the powers exercisable by operations subsidiaries. These changes also modernize and streamline corporate governance, investment and fiduciary powers.
The Federal Financial Institutions Examination Council's ("FFIEC") and the OCC utilize the "Uniform Financial Institutions Rating System" ("UFIRS"), effective January 1, 1997. UFIRS is an internal rating system to assess the soundness of financial institutions on a uniform basis and for identifying those institutions requiring special supervisory attention. Under prior UFIRS, each financial institution was assigned a confidential composite rating based on an evaluation and rating of five essential components of an institution's financial condition and operations including Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk, as well as the quality of risk management practices. For most institutions, the FFIEC has indicated that market risk primarily reflects exposures to changes in interest rates. When regulators evaluate this component, consideration is expected to be given to: manage- ment's ability to identify, measure, monitor, and control market risk; the institution's size; the nature and complexity of its activities and its risk profile, and the adequacy of its capital and earnings in relation to its level of market risk exposure. Market risk is rated based upon, but not limited to, an assessment of the sensitivity of the financial institution's earnings or the economic value of its capital to adverse changes in interest rates, foreign exchange rates, commodity prices, or equity prices; management's ability to identify, measure, monitor and control exposure to market risk; and the nature and complexity of interest rate risk exposure arising from nontrading positions.
GLB requires banks and their affiliated companies to adopt and disclose privacy policies regarding the sharing of personal information they obtain from their customers with third parties. GLB also permits banks to engage in "financial activities" through subsidiaries similar to that permitted financial holding companies. See the discussion regarding GLB in "Bank Holding Company Regulation" above.
FNB Brokerage, a Bank subsidiary, is registered as a securities broker-dealer under the Exchange Act and is regulated by the Securities and Exchange Commission ("SEC"). As a member of the National Association of Securities Dealers, Inc., it also is subject to examination and supervision of its operations, personnel and accounts by NASD Regulation, Inc., a NASD subsidiary. FNB Brokerage is a separate and distinct entity from the Bank, and must maintain adequate capital under the SEC's net capital rule. The net capital rule limits FNB Brokerage's ability to reduce capital by payment of dividends or other distributions to the Bank. FNB Brokerage is also authorized by the State of Florida to act as a securities dealer and investment advisor pursuant to Chapter 517 of the Florida Statutes.
FNB Insurance, a Bank insurance agency subsidiary, is authorized by the State of Florida to market insurance products. FNB Insurance is a separate and distinct entity from the Bank and is subject to supervision and regulation by state insurance authorities.
Community Reinvestment Act
The Company and the Bank are subject to the provisions of the Community Reinvestment Act of 1977, as amended (the "CRA") and the federal banking agencies' regulations thereunder. Under the CRA, all banks and thrifts have a continuing and affirmative obligation, consistent with their safe and sound operation to help meet the credit needs for their entire communities, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires a depository institution's primary federal regulator, in connection with its examination of the institution, to assess the institution's record of assessing and meeting the credit needs of the community served by that institution, including low- and moderate-income neighborhoods. The regulatory agency's assessment of the institution's record is made available to the public. Further, such assessment is required of any institution which has applied to: (i) charter a national bank; (ii) obtain deposit insurance coverage for a newly-chartered institution; (iii) establish a new branch office that accepts deposits; (iv) relocate an office; or (v) merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank holding company, and such records may be the basis for denying the application. A less than satisfactory CRA rating will slow, if not preclude expansion of banking activities and prevent a company from becoming a financial holding company.
GLB and federal bank regulations make various changes to the CRA. Among other CRA agreements with private parties must be disclosed and annual CRA reports must be made to a bank's primary federal regulator. A bank holding company will not be permitted to become a financial holding company and no new activities authorized under GLB may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a "satisfactory" CRA rating in its latest CRA examination.
The Bank is also subject to, among other things, the provisions of the Equal Credit Opportunity Act (the "ECOA") and the Fair Housing Act (the "FHA"), both of which prohibit discrimination based on race or color, religion, national origin, sex, and familial status in any aspect of a consumer or commercial credit or residential real estate transaction. Based on recently heightened concerns that some prospective home buyers and other borrowers may be experiencing discriminatory treatment in their efforts to obtain loans, the Department of Housing and Urban Development, the Department of Justice (the "DOJ"), and the federal banking agencies in April 1994 issued an Interagency Policy Statement on Discrimination in Lending in order to provide guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices. The DOJ has also increased its efforts to prosecute what it regards as violations of the ECOA and FHA.
Payment of Dividends
The Company is a legal entity separate and distinct from its banking and other subsidiaries. The prior approval of the OCC is required if the total of all dividends declared by a national bank (such as the Bank) in any calendar year will exceed the sum of such bank's net profits for the year and its retained net profits for the preceding two calendar years, less any required transfers to surplus. Federal law also prohibits any national bank from paying dividends that would be greater than such bank's undivided profits after deducting statutory bad debt in excess of such bank's allowance for loan losses.
In addition, the Company and the Bank are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The appropriate federal regulatory authority is authorized to determine under certain circumstances relating to the financial condition of a national or state member bank or a bank holding company that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. The OCC and the Federal Reserve have indicated that paying dividends that deplete a national or state member bank's capital base to an inadequate level would be an unsound and unsafe banking practice. The OCC and the Federal Reserve have each indicated that depository institutions and their holding companies should generally pay dividends only out of current operating earnings.
Capital
The Federal Reserve and the OCC have risk-based capital guidelines for bank holding companies and national banks, respectively. These guidelines require a minimum ratio of capital to risk-weighted assets (including certain off-balance- sheet activities, such as standby letters of credit) of 8%. At least half of the total capital must consist of common equity, retained earnings and a limited amount of qualifying preferred stock, less goodwill and certain core deposit intangibles ("Tier 1 capital"). The remainder may consist of non-qualifying preferred stock, qualifying subordinated, perpetual, and/or mandatory convertible debt, term subordinated debt and intermediate term preferred stock and up to 45% of pretax unrealized holding gains on available for sale equity securities with readily determinable market values that are prudently valued, and a limited amount of any loan loss allowance and up to 45% of pretax ("Tier 2 capital" and, together with Tier 1 capital, "Total Capital").
In addition, the Federal Reserve and the OCC have established minimum leverage ratio guidelines for bank holding companies and national banks, which provide for a minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets ("leverage ratio") equal to 3%, plus an additional cushion of 1.0% - 2.0%, if the institution has less than the highest regulatory rating. The guidelines also provide that institutions experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Higher capital may be required in individual cases, and depending upon a bank holding company's risk profile. All bank holding companies and banks are expected to hold capital commensurate with the level and nature of their risks including the volume and severity of their problem loans. Lastly, the Federal Reserve's guidelines indicate that the Federal Reserve will continue to consider a "tangible Tier 1 leverage ratio" (deducting all intangibles) in evaluating proposals for expansion or new activity. The Federal Reserve and OCC have not advised the Company or the Bank of any specific minimum leverage ratio or tangible Tier 1 leverage ratio applicable to them.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), among other things, requires the federal banking agencies to take "prompt corrective action" regarding depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: "well capitalized", "adequately capitalized", "undercapitalized", "significantly undercapitalized", and "critically undercapitalized". A depository institution's capital tier will depend upon how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation.
All of the federal banking agencies have adopted regulations establishing relevant capital measures and relevant capital levels. The relevant capital measures are the Total Capital ratio, Tier 1 capital ratio, and the leverage ratio. Under the regulations, a national bank will be (i) well capitalized if it has a Total Capital ratio of 10% or greater, a Tier 1 capital ratio of 6% or greater, and is not subject to any written agreement, order, capital directive, or prompt corrective action directive by a federal bank regulatory agency to meet and maintain a specific capital level for any capital measure, (ii) adequately capitalized if it has a Total Capital ratio of 8% or greater, a Tier 1 capital ratio of 4% or greater, and a leverage ratio of 4% or greater (3% in certain circumstances), (iii) undercapitalized if it has a Total Capital ratio of less than 8%, a Tier 1 capital ratio of less than 4% (3% in certain circumstances), or (iv) critically undercapitalized if its tangible equity is equal to or less than 2% of average quarterly tangible assets.
As of December 31, 2000, the consolidated capital ratios of the Company and the Bank were as follows:
Regulatory
Minimum Company Bank
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Tier 1 capital ratio 4.0% 11.2% 11.0%
Total capital ratio 8.0% 12.1% 12.0%
Leverage ratio 3.0-5.0% 7.4% 7.3%
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FDICIA
FDICIA directs that each federal banking regulatory agency prescribe standards for depository institutions and depository institution holding companies relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth compensation, a maximum ratio of classified assets to capital, minimum earnings sufficient to absorb losses, a minimum ratio of market value to book value for publicly traded shares, and such other standards as the federal regulatory agencies deem appropriate.
FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to growth limitations and are required to submit a capital restoration plan for approval. For a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of 5% of the depository institution's total assets at the time it became undercapitalized and the amount necessary to bring the institution into compliance with applicable capital standards. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized. If the controlling holding company fails to fulfill its obligations under FDICIA and files (or has filed against it) a petition under the federal Bankruptcy Code, the claim would be entitled to a priority in such bankruptcy proceeding over third party creditors of the bank holding company. Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. Critically undercapitalized institutions are subject to the appointment of a receiver or conservator. Because the Company and the Bank exceed applicable capital requirements, the respective managements of the Company and the Bank do not believe that the provisions of FDICIA have had any material impact on the Company and the Bank or their respective operations.
FDICIA also contains a variety of other provisions that may affect the operations of the Company and the Bank, including new reporting requirements, regulatory standards for real estate lending, "truth in savings" provisions, the requirement that a depository institution give 90 days' prior notice to customers and regulatory authorities before closing any branch, and a prohibition on the acceptance or renewal of brokered deposits by depository institutions that are not well capitalized or are adequately capitalized and have not received a waiver from the FDIC. Under regulations relating to brokered deposits, the Bank is well capitalized and not restricted.
Enforcement Policies and Actions
The Federal Reserve and the OCC monitor compliance with laws and regulations. Violations of laws and regulations, or other unsafe and unsound practices, may result in these agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees and others participating in the affairs of a bank or bank holding company.
Fiscal and Monetary Policy
Banking is a business which depends on interest rate differentials. In general, the difference between the interest paid by a bank on its deposits and its other borrowings, and the interest received by a bank on its loans and securities holdings, constitutes the major portion of a bank's earnings. Thus, the earnings and growth of Seacoast and the Bank are subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The Federal Reserve regulates the supply of money through various means, including open market dealings in United States government securities, the discount rate at which banks may borrow from the Federal Reserve, and the reserve requirements on deposits. The nature and timing of any changes in such policies and their effect on Seacoast and its subsidiaries cannot be predicted.
FDIC Insurance Assessments
The Bank is subject to FDIC deposit insurance assessments. The Bank's deposits are primarily insured by the FDIC's Bank Insurance Fund ("BIF"). The Bank is also a member of the Savings Association Insurance Fund ("SAIF") to the extent that the Bank holds deposits acquired in 1991 from the RTC. The FDIC assesses deposits under a risk-based premium schedule. Each financial institution is assigned to one of three capital groups, "well capitalized," "adequately capitalized" or "undercapitalized," and further assigned to one of three subgroups within a capital group, on the basis of supervisory evaluations by the institution's primary federal and, if applicable, state regulators and other information relevant to the institution's financial condition and the risk posed to the applicable insurance fund. The actual assessment rate applicable to a particular institution, therefore, depends in part upon the risk assessment classification so assigned to the institution by the FDIC. During the years ended December 31, 2000, and 1999, the Bank paid no deposit premiums, except for the Financing Corporation ("FICO") assessments of $184,000 and $146,000, respectively.
The FDIC's Board of Directors has continued the 2000 BIF and SAIF assessment schedule of zero to 27 basis points per annum for the first semiannual period of 2001. The Deposit Insurance Funds Act of 1996 (the "Funds Act") authorized FICO to levy assessments through the earlier of December 31, 1999 or the merger of BIF and SAIF, on BIF-assessable deposits at a rate equal to one-fifth of the FICO assessment rate applied to SAIF deposits. As of January 1, 2001, the FICO assessment rate was equivalent for BIF and SAIF-assessable deposits. The FICO assessments are set quarterly and ranged from 2.12 basis points for BIF and SAIF, in the first quarter of 2000, to 2.02 basis points in the last quarter of 2000. The assessment rate rate is 1.96 basis points for BIF and SAIF-assesable deposits in the first quarter of 2001.
Legislative and Regulatory Changes
Legislative and regulatory proposals regarding changes in banking, and the regulation of banks, thrifts and other financial institutions and bank and bank holding company powers are being considered by the executive branch of the Federal government, Congress and various state governments, including Florida. Among other items under consideration are the possible combination of the BIF and SAIF, and reforming the deposit insurance system. The FDIC also is considering possibly adding risk measures in determining deposit insurance assessments. Certain of these proposals, if adopted, could significantly change the regulation of banks and the financial services industry. It cannot be predicted whether any of these proposals will be adopted, and, if adopted, how these proposals will affect the Company and the Bank.
New Accounting Pronouncements
Derivative Financial Instruments: In September 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. In June of 1999, SFAS No. 133 was amended by Statement of Financial Accounting Standards No. 137, which delays the effective date of implementation until fiscal years beginning after June 15, 2000. In June of 2000, SFAS No. 133 was amended by Statement of Financial Accounting Standards No. 138, which addresses issues related to implementation difficulties. The Company will adopt SFAS No. 133 effective January 1, 2001. The Company has completed an in-depth analysis and determined it has no derivative instruments as defined under SFAS No. 133.
Statistical Information
Certain statistical information (as required by Guide 3) is included in response to Item 7 of this Annual Report on Form 10- K. Certain statistical information is included in response to Item 6 and Item 8 of this Annual Report on Form 10-K.
Item 2. Properties
Seacoast and the Bank's main office occupy approximately 62,000 square feet of a 68,000 square foot building in Stuart, Florida. The building, together with an adjacent 10-lane drive-in banking facility and an additional 27,000 square foot office building, are situated on approximately eight acres of land in the center of Stuart zoned for commercial use. The building and land are owned by the Bank, which leases out portions of the building not utilized by Seacoast and the Bank to unaffiliated third parties.
Adjacent to the main office, the Bank leases approximately 21,400 square feet of office space to house operational departments, consistly primarily of information systems and retail support. The Bank owns its equipment, which is used for servicing bank deposits and loan accounts as well as on-line banking services, providing tellers and other customer service personnel with access to customers' records.
In February, 2000 the Bank leased storefront space in Ft. Lauderdale, Florida for a lending office for its newly formed Seacoast Marine Finance division. The office occupies 1,913 square feet of space, with furniture and equipment all owned by the Bank.
As of December 31, 2000, the net carrying value of branch offices (excluding the main office) was approximately $9.0 million. Seacoast's branch offices are described as follows:
Jensen Beach, opened in 1977, is a free-standing facility located in the commercial district of a residential community contiguous to Stuart. The 1,920 square foot bank building and land are owned by the Bank. Improvements include three drive-in teller lanes and one drive-up ATM as well as a parking lot and landscaping.
East Ocean Boulevard, opened at its original location in 1978, was a 2,400 square foot building leased by the Bank. The acquisition of American Bank provided an opportunity for the Bank to move to a new location in April 1995. It is still located on the main thoroughfare between downtown Stuart and Hutchinson Island's beach-front residential developments. The first three floors of a four story office condominium were acquired in the acquisition. The 2,300 square foot branch area on the first floor has been remodeled and operates as a full service branch including five drive-in lanes and a drive-up ATM. The remaining 2,300 square feet on the ground floor was sold in June 1996, the third floor was sold in December 1995, and the second floor in December 1998.
Cove Road, opened in late 1983, is conveniently located close to housing developments in the residential areas south of Stuart known as Port Salerno and Hobe Sound. South Branch Building, Inc., a subsidiary of the Bank, is a general partner in a partnership which entered into a long term land lease for approximately four acres of property on which it constructed a 7,500 square foot building. The Bank leases the building and utilizes 3,450 square feet of the available space. The balance is sublet by the Bank to other business tenants. The Bank has improved its premises with three drive-in lanes, bank equipment, and furniture and fixtures, all of which are owned by the Bank. A drive-up ATM was added in early 1997.
Hutchinson Island, opened on December 31, 1984, is in a shopping center located on a coastal barrier island, close to numerous oceanfront condominium developments. In 1993, the branch was expanded from 2,800 square feet to 4,000 square feet and is under a long term lease to the Bank. The Bank has improved the premises with bank equipment, a walk-up ATM and three drive-in lanes, all owned by the Bank.
Rivergate originally opened October 28, 1985 and occupied 1,700 square feet of leased space in the Rivergate Shopping Center, Port St. Lucie, Florida. The Bank moved to larger facilities in the shopping center in April of 1999 under a long term lease agreement. Furniture and bank equipment located in the prior facilities were moved to the new facility, which occupies approximately 3,400 square feet, with three drive-in lanes and a drive-up ATM.
Northport was acquired on June 28, 1986 from Citizens Federal Savings & Loan Association of Miami. This property consists of a storefront under long term lease in the St. Lucie Plaza Shopping Center, Port St. Lucie, of approximately 4,000 square feet. This office was closed March 31, 1994, and the property is presently utilized by local community groups for meetings.
Wedgewood Commons, opened in April 1988, is located on an out-parcel under long term lease in the Wedgewood Commons Shopping Center, south of Stuart on U.S. Highway 1. The property consists of a 2,800 square foot building which houses four drive-in lanes, a walk-up ATM and various bank equipment, all of which are owned by the Bank and are located on the leased property.
Bayshore, opened on September 27, 1990, occupies 3,520 square feet of a 50,000 square foot shopping center located in Port St. Lucie. The Bank has leased the premises under a long term lease agreement and has made improvements to the premises, including the addition of three drive-in lanes and a walk-up ATM, all of which are owned by the Bank. A second location, acquired in the merger with Port St. Lucie National Holding Company (PSHC), and in close proximity to this location, was closed on June 1, 1997 and subsequently sold in September 1997.
Hobe Sound, acquired from the Resolution Trust Company (RTC) on December 23, 1991, is a two story facility containing 8,000 square feet and is centrally located in Hobe Sound. Improvements include two drive-in teller lanes, a drive-up ATM, and equipment and furniture, all of which are owned by the Bank.
Fort Pierce, acquired from the RTC on December 23, 1991, is a 2,895 square foot facility located in the heart of Fort Pierce and has three drive-in lanes and a drive-up ATM. Equipment and furniture are all owned by the Bank.
Martin Downs, purchased from the RTC in February 1992, is a 3,960 square foot bank building located at a high traffic intersection in Palm City, an emerging commercial and residential community west of Stuart. Improvements include three drive-in teller lanes, a drive-up ATM, equipment and furniture.
Tiffany, purchased from the RTC in May 1992, is a two story facility which contains 8,250 square feet and is located on a corner of U.S. Highway One in Port St. Lucie offering excellent exposure in one of the fastest growing residential areas in the region. The second story which contains 4,250 square feet is leased to tenants. Three drive-in teller lanes, a walk-up ATM, equipment and furniture are utilized and owned by the Bank.
Vero Beach, purchased from the RTC in February 1993, is a 3,300 square foot bank building located in Vero beach on U.S. Highway One and represents the Bank's initial presence in this Indian River County market. A leasehold interest in a long term land lease was acquired. Improvements include three drive-in teller lanes, a walk-up ATM, equipment and furniture, all of which are owned by the Bank.
Beachland, opened in February 1993, consists of 4,150 square feet of leased space located in a three-story commercial building on Beachland Boulevard, the main beachfront thoroughfare in Vero Beach, Florida. An additional 1,050 square feet were leased during 1996. This facility has 2 drive-in teller lanes, a drive-up ATM, and furniture and equipment, all owned by the Bank.
Sandhill Cove, opened in September 1993, is in an upscale life-care retirement community. The 135 square foot office is located within the community facilities which are located on a 36-acre development in Palm City, Florida. This community contains approximately 168 private residences.
St. Lucie West, opened in November 1994, was in a 3,600 square foot building located at 1320 S.W. St. Lucie Blvd, Port St. Lucie. As a result of the PSHC acquisition, this facility was closed in June 1997 and the property was sold in September 1997. On June 1, 1997, the Bank moved its St. Lucie West operations to the Renar Centre (previously occupied by PSHC). The Bank leases 4,320 square feet on the first floor of this facility and 2,468 square feet on the second floor. The facility includes three drive-in teller lanes, a drive-up ATM, and furniture and equipment.
Mariner Square, acquired from American Bank in April 1995, is a 3,600 square foot leased space located on the ground floor of a three story office building located on U.S.Highway 1 between Hobe Sound and Port Salerno. Approximately 700 square feet of the space is sublet to a tenant. The space occupied by the Bank has been improved to be a full service branch with two drive-in lanes, one serving as a drive-up ATM lane as well as a drive-in teller lane, all owned by the Bank.
Sebastian, opened in May 1996, is located within a 174,000 square foot WalMart Superstore on U.S. 1 in northern Indian River County. The leased space occupied by the Bank totals 865 square feet. The facility has a walk-up ATM, owned by the Bank.
Nettles Island was opened in January 1997 in southern St. Lucie County on Hutchinson Island. It occupies 350 square feet of leased space in a predominantly modular home community. Furniture and equipment are owned. No ATM or drive-in lanes are offered.
U.S. 1 and Port St. Lucie Boulevard office opened as a Bank location on June 1, 1997, upon the merger with PSHC. At the date of the merger, the leased space consisted of 5,188 square feet on the first floor and 1,200 square feet on the second floor. In October 1997, 1,800 square feet of the leased space on the first floor and 1,200 square feet of leased space on the second floor were assigned to another tenant, with the remaining space occupied by the Bank totaling 3,388 square feet. The facility has two drive-in lanes, a walk-up ATM, and furniture and equipment, all owned by the Bank. This facility was closed in July 2000, coinciding with the opening of a new, more visible office on a leased out-parcel in a new shopping center approximately one-half mile south of the closed location on U.S. 1.
South Vero Square opened in May 1997 in a 3,150 square foot building owned by the Bank on South U.S. 1 in Vero Beach. The facility includes three drive-in teller lanes, a drive-up ATM, and furniture and equipment, all owned by the Bank.
Oak Point opened in June 1997. It occupies 12,000 square feet of leased space on the first and second floor of a 19,700 square foot 3-story building in Indian River County. The office is in close proximity to Indian River Memorial Hospital and the peripheral medical community adjacent to the hospital. The facility includes three drive-in teller lanes, a walk-up ATM, and furniture and equipment, all owned by the Bank. Approximately 2,000 square feet of the second floor is sublet to tenants.
Route 60 Vero opened in July 1997. Similar to the Sebastian office, this facility is housed in a WalMart Superstore in western Vero Beach in Indian River County. The branch occupies 750 square feet of leased space and includes a walk-up ATM.
Sebastian West opened in March 1998 in a 3,150 square foot building owned by the Bank. It is located at the intersection of Fellsmere Road and Roseland Road in Sebastian. The facility includes three drive-in teller lanes, a drive-up ATM, and furniture and equipment, all owned by the Bank.
Jensen West, opened in July 2000, is located on an out-parcel under long term lease on U.S. Highway 1 in northern Martin County. The facility consists of a 3,930 square foot building, with four drive-up lanes, a drive up ATM and furniture and equipment, all of which are owned by the Bank and are located on the leased property. The opening of this office coincided with the closing of the Bank's U.S. 1 and Port St. Lucie Boulevard office, one-half mile north of this location.
For additional information, refer to Notes F and I of the Notes to Consolidated Financial Statements in the 2000 Annual Report of Seacoast incorporated herein by reference pursuant to Item 8 of this document.
Item 3. Legal Proceedings
The Company and its subsidiaries, because of the nature of their business, are at times subject to numerous legal actions, threatened or filed, in the normal course of their business. Although the amount of any ultimate liability with respect to such matters cannot be determined, in the opinion of management, after consultation with legal counsel, those claims and lawsuits, when resolved, should not have a material adverse effect on the consolidated results of operation or financial condition of Seacoast and its subsidiaries.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
Item 5 Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters
The Class A Common Stock is traded in the over-the-counter market and quoted on the Nasdaq National Market System ("Nasdaq Stock Market"). There is no established public trading market for the Class B Common Stock of Seacoast. As of March 7, 2001, there were approximately 915 record holders of the Class A Common Stock and 65 record holders of the Class B Common Stock.
Seacoast Class A Stock is traded in the over-the-counter market and is quoted on the Nasdaq Stock Market under the symbol "SBCFA". The following table sets forth the high, low and last sale prices per share of Seacoast Class A Stock on the Nasdaq Stock Market and the dividends paid per share of Seacoast Class A Stock for the indicated periods.
Sale Price Per Annual Dividends
Share of Seacoast Declared Per Share
Class A Stock of Seacoast Class
------------------- A Stock
High Low ------------------
------ ------
2000
First Quarter . . . . . $28.75 $24.75 $0.26
Second Quarter. . . . . 27.25 25.00 0.26
Third Quarter. . . . . 27.125 25.50 0.26
Fourth Quarter. . . . . 26.625 24.25 0.28
1999
First Quarter................. $28.25 $26.125 $0.24
Second Quarter................ 34.50 26.375 0.24
Third Quarter................. 32.50 28.75 0.24
Fourth Quarter................ 30.375 27.50 0.26
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Seacoast's Articles of Incorporation prohibit the declaration or payment of cash dividends on Class B Common Stock unless cash dividends are declared or paid on Class A Common Stock in an amount equal to at least 110% of any cash dividend on Class B Common Stock. Dividends on Class A Common Stock payable in shares of Class A Common Stock shall be paid to holders of Class A Common and Class B Common Stock at the same time and on the same basis.
In 1998, cash dividends of $.90 per share of Class A Common Stock and $.818 per share of Class B Common Stock were paid. In 1999, cash dividends of $.98 per share of Class A Common Stock and $.89 per share of Class B Common Stock were paid. In 2000, cash dividends of $1.06 per share of Class A Common Stock and $0.962 per share of Class B Common Stock were paid.
Dividends from the Bank are Seacoast's primary source of funds to pay dividends on Seacoast capital stock. Under the National Bank Act, the Bank may in any calendar year, without the approval of the OCC, pay dividends to the extent of net profits for that year, plus retained net profits for the preceding two years (less any required transfers to surplus). The need to maintain adequate capital in the Bank also limits dividends that may be paid to Seacoast. Information regarding a restriction on the ability of the Bank to pay dividends to Seacoast is contained in Note B of the "Notes to Consolidated Financial Statements" contained in Item 8 hereof. See "Supervision and Regulation" contained in Item 1 of this document.
The OCC and Federal Reserve have the general authority to limit the dividends paid by insured banks and bank holding companies, respectively, if such payment may be deemed to constitute an unsafe or unsound practice. If, in the particular circumstances, the OCC determines that the payment of dividends would constitute an unsafe or unsound banking practice, the OCC may, among other things, issue a cease and desist order prohibiting the payment of dividends. This rule is not expected to adversely affect the Bank's ability to pay dividends to Seacoast. See "Supervision and Regulation" contained in Item 1 of this document.
Each share of Class B Common Stock is convertible by its holder into one share of Class A Common Stock at any time prior to a vote of shareholders authorizing a liquidation of Seacoast.
Item 6 Selected Financial Data
Selected financial data is incorporated herein by reference under the caption "Financial Highlights" on page 1 of the 2000 Annual Report. See Exhibit 13.
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations, under the caption "Financial Review - 2000 Management's Discussion and Analysis", on pages 14 through 26 of the 2000 Annual Report is incorporated herein by reference. See Exhibit 13.
Item 7A. Market Risk
Market risk is inherent to all industries and all financial institutions' assets and liabilities are affected by market risks. The Company considers credit risk to be the most significant of these risks; however, interest rate risk is also significant. There are eight risks that must be considered in managing the Company. These risks are listed below in order of management's preceived level of risk imposed upon the Company. The Company does not condut foreign exchange transactions which would expose the Company to foreign exchange risk or trading activities which would produce price risk. Therefore, these risks are not addressed in this assessment. The Company has identified certain critical risks of the Bank.
Credit Risks
Credit risk is the risk to the Company's earnings or capital from the potential of an obligator or related group of obligators failing to fulfill its or their contractual commitments to the Bank. Credit risk is most closely associated with a bank's lending. It encompasses the potential of loss on a particular loan as well as the potential for loss from a group of related loans, i.e., a credit concentration. Credit risk extends also to less traditional bank activities. It includes the credit behind the Bank's investment portfolio, the credit of counterparties to interest rate contracts, and the credit of securities brokers holding the Bank's invest- ment portfolio in street name.
Interest Rate Risk
Interest rate risk is the risk to earnings or market value of portfolio equity (capital) from the potential movement in interest rates. The Company uses model simulations to estimate and manage its interest rate sensitivity. The Company has determined that an acceptable level of interest rate risk would be for net interest income to fluctuate no more 6 percent, given a change in interest rates (up or down) of 200 basis points. Based on the Company's most recent ALCO model simulations, the Company believes that net interest income would decline approximately 1.8 percent if interst rates would immediately rise 200 basis points. The Company is willing to accept a change in the estimated market value of portfolio equity of 5% given a 200 basis point increase in interest rates. At December 31, 2000, the Company's most recent estimates indicate compliance with this objective. However, these calculations incorporate the use of many assumptions (which the Company believe to be reasonable) to estimate the fair values of its assets and liabilities. In addition, seasonal increases and decreases in the volume of the various financial instruments can and do effect these calculations. Therefore, the Company monitors these calculations on a quarterly basis and more frequently during periods of interest rate volatility.
Liquidity Risk
Liquidity risk is the risk to earnings or capital from the Company's inability to meet its obligations when they come due without incurring unacceptable losses or costs such as when depositors withdraw their deposits and the Bank does not have the liquid assets to fund the with- drawals and to meet its loan funding obligations. The risk is particularly great with brokered deposits, of which the Company currently has none.
Transaction Risk
Transaction risk is the risk to earnings or capital arising from problems with service or product delivery or from failure in the Bank's operating processes. It is a risk of failure in a bank's automation, its employee integrity, or its internal controls.
Compliance Risk
Compliance risk is the risk to earnings or capital from noncompliance with laws, rules and regulations.
Strategic Risk
Strategic risk is the risk to earnings or capital arising from adverse business decisions or improper implementation of those decisions.
Reputation Risk
Reputation risk is the risk to earnings or capital from negative or other unfavorable public opinion, including with respect to competitors.
Most of these risk are interrelated, and thus all must be considered by management regardless of the implied risk. Management reviews performance against these ranges on a quarterly basis.
Item 8 Financial Statements and Supplementary Data
The report of Arthur Andersen LLP, independent certified public accountants, and the consolidated financial statements are included on pages 31 through 45 of the 2000 Annual Report and are incorporated herein by reference. "Selected Quarterly Information - Consolidated Quarterly Average Balances, Yields & Rates" and Quarterly Consolidated Income Statements" included on pages 27 through 29 of the 2000 Annual Report are incorporated herein by reference. See Exhibit 13.
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
Item 10. Directors and Executive Officers of the Registrant
Information concerning the directors and executive officers of Seacoast is set forth under the headings "Proposal One - Election of Directors", "Information About the Board of Directors and its Committees" and "Executive Officers" on pages 3 through 8 as well as under the heading "Section 16(a) Reporting" on page 20 in the 2001 Proxy Statement and is incorporated herein by reference.
Item 11. Executive Compensation
Information set forth under the headings "Proposal One - Election of Directors - Compensation of Executive Officers", "Salary and Benefits Committee Report", "Summary Compensation Table", "Grants of Options/SARs in 2000", "Aggregated Options/SAR Exercises in 2000 and 2000 Year-End Option/SAR Values", "Profit Sharing Plan", "Executive Deferred Compensation Plan", "Performance Graph", and "Employment and Severance Agreements" on pages 8 through 11 and pages 13 through 16 of the 2001 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information set forth under the headings, "Proposal One Election of Directors - General" on pages 3 through 8, "Proposal One - Election of Directors - Management Stock Ownership" on page 8, and "Principal Shareholders" on page 18 to 19 in the 2001 Proxy Statement, relating to the number of shares of Class A Common Stock and Class B Common Stock beneficially owned by the directors of Seacoast, all such directors and officers as a group and certain beneficial owners is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information set forth under the heading "Proposal One - Election of Directors - Salary and Benefits Committee Interlocks and Insider Participation" and "Certain Transactions and Business Relationships" on page 16 through 17 of the 2001 Proxy Statement is incorporated herein by reference.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
a)(1) List of all financial statements
The following consolidated financial statements and report of independent certified public accountants of Seacoast, included in the 2000 Annual Report are incorporated by reference into Item 8 of this Annual Report on Form 10-K.
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 2000 and 1999
Consolidated Statements of Income for the years ended December 31, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
a)(2) List of Financial Statement Schedules
Schedules to the consolidated financial statements required by Article 9 of Regulation S-X are not required under the related instructions or are inapplicable, and therefore have been omitted.
a)(3) Listing of Exhibits
The following Exhibits are filed as part of this report in Item 14 (c):
Financial Highlights
Financial Review - Management's Discussion and Analysis
Selected Quarterly Information - Quarterly Consolidated Income Statements
Selected Quarterly Information - Consolidated Quarterly Average Balances,
Yields & Rates
Financial Statements
Notes to Consolidated Financial Statements
Financial Statements - Report of Independent Certified Public Accountants
b) Reports on Form 8-K No reports on Form 8-K were filed during the last quarter of 2000.
c) Exhibits The response to this portion of Item 14 is submitted as a separate section of this report.
d) Financial Statement Schedules
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stuart, State of Florida, on the 28th day of March, 2001.
SEACOAST BANKING CORPORATION OF FLORIDA
(Registrant)
By: /s/ Dennis S. Hudson, III
--------------------------
Dennis S. Hudson, III
President and Chief Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
/s/ Dale M. Hudson March 28, 2001 ------------------ Dale M. Hudson, Chairman of the Board and Director /s/ Dennis S. Hudson, III March 28, 2001 ------------------------- Dennis S. Hudson, III, President, Chief Executive Officer and Director /s/ William R. Hahl March 28, 2001 ------------------- William R. Hahl, Executive Vice President and Chief Financial Officer /s/ Jeffrey C. Bruner March 28, 2001 --------------------- Jeffrey C. Bruner, Director /s/ John H. Crane March 28, 2001 ----------------- John H. Crane, Director /s/ Evans Crary, Jr. March 28, 2001 -------------------- Evans Crary, Jr., Director /s/ Christopher E. Fogal March 28, 2001 ------------------------ Christopher E. Fogal, Director /s/ Jeffrey S. Furst March 28, 2001 -------------------- Jeffrey S. Furst, Director /s/ Dennis S. Hudson, Jr. March 28, 2001 ------------------------- Dennis S. Hudson, Jr., Director __________________________________ March 28, 2001 John R. Santarsiero, Jr., Director /s/ Thomas H. Thurlow, Jr. March 28, 2001 -------------------------- Thomas H. Thurlow, Jr., Director |
Financial Highlights
(Dollars in thousands except
per share data)
FOR THE YEAR 2000 1999 1998 1997 1996
------------ ---- ---- ---- ---- ----
Net interest income $42,095 $43,089 $40,213 $38,077 $36,223
Provision for loan losses 600 660 1,710 913 1,090
Noninterest income:
Securities gains (losses) (12) 309 612 48 76
Other 13,150 12,148 11,775 10,896 10,331
Noninterest expenses 34,877 35,983 35,721 36,425 31,768
Income before income taxes 19,756 18,903 15,169 11,683 13,772
Provision for income taxes 7,668 7,119 5,606 4,251 4,933
Net income 12,088 11,784 9,563 7,432 8,839
Core earnings (1) 20,459 19,439 16,565 12,755 14,968
Per share data Net income:
Diluted 2.51 2.40 1.84 1.42 1.71
Basic 2.53 2.43 1.88 1.45 1.73
Cash dividends paid:
Class A common 1.06 0.98 0.90 0.82 0.65
Book value 17.87 15.96 15.87 15.75 15.08
Dividends to net income 41.6% 39.8% 47.4% 53.8% 30.9%
AT YEAR END
Assets $1,151,373 $1,081,032 $1,092,230 $943,037 $938,501
Securities 204,664 213,654 261,183 220,150 223,169
Net loans 837,328 771,294 695,207 608,567 570,667
Deposits 957,089 905,960 905,202 806,098 811,493
Shareholders' equity 84,263 77,111 78,442 81,064 76,995
Performance ratios:
Return on average assets 1.09% 1.11% 0.98% 0.83% 1.04%
Return on average equity 14.09 14.64 11.64 9.17 11.63
Net interest margin (2) 4.03 4.34 4.40 4.60 4.60
Average equity to average
assets 7.76 7.57 8.39 9.09 8.96
---------------------------------
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(1) Income before taxes excluding the provision for loan losses, securities
gains (losses) and expenses associated with foreclosed and repossessed
asset management and dispositions.
(2) On a fully taxable equivalent basis.
Net income for 2000 totaled $12,088,000 or $2.51 per share diluted, compared with $11,784,000 or $2.40 per share diluted in 1999 and $9,563,000 or $1.84 per share diluted in 1998. Return on average assets was 1.09 percent and return on average shareholders' equity was 14.09 percent for 2000, compared to the prior year's results of 1.11 percent and 14.64 percent, respectively, and 1998's results of 0.98 percent and 11.64 percent, respectively.
Earnings in 1998 were impacted by net non-recurring gains of $330,000 ($209,000 after tax). This includes a gain of $616,000 on the sale of the Company's credit card portfolio and a charge of $286,000 taken to cancel an information systems contract for processing of the Company's trust business.
In 2000, the Federal Reserve increased short term rates 100 basis points, with increases of 25 basis points in both February and March 2000 and another 50 basis points in May 2000. The Company, along with most other banks, has seen its net interest margin decline over the last twelve months as a result of the Federal Reserve's actions. In the fourth quarter of 2000, the net interest margin (on a fully tax equivalent basis)of 3.93 percent was three basis points higher than in the third quarter of 2000, but was 15 basis points lower when compared to the second quarter of 2000 and 31 basis points lower when compared to the first quarter 2000's margin performance. If the Federal Reserve adopts a preference to ease short term interest rates, Company management believes that its net interest margin (stable at present)will likely improve during 2001.
TABLE 1:
Condensed Income Statement as a Percent of Average Assets
(Tax equivalent basis)
2000 1999 1998
---- ---- ----
Net interest income 3.83% 4.09% 4.14%
Provision for loan losses 0.05 0.06 0.17
Noninterest income
Securities gains 0.00 0.03 0.06
Other 1.19 1.14 1.20
Noninterest expenses 3.16 3.39 3.64
---- ---- ----
Income before income taxes 1.81 1.81 1.59
Provision for income taxes
including tax equivalent
adjustment 0.72 0.70 0.61
---- ---- ----
Net Income 1.09% 1.11% 0.98%
==== ==== ====
|
For the twelve months ended December 31, 2000 (compared to last year), the cost of interest bearing liabilities increased 70 basis points to 4.33 percent with rates for NOW, savings, money market, time deposits, short term borrowings (entirely composed of repurchase agreements with customers and federal funds purchased), and other borrowings increasing 26, 96, 14, 74, 107, and 72 basis points, respectively. The rate for NOW accounts increased as a result of the success of a new product called Investor NOW, which requires a minimum balance of $100,000, offered at a competitive market rate tied to an index. Rates for savings accounts increased as a result of the success of two savings products called Grand Savings and Grand Savings Plus which were offered at higher rates than the Company's regular savings account. The products increased $6.2 million and $33.7 million, respectively, during 2000. Certificates of deposit grew $13.2 million during 2000, reflecting higher interest rates paid and customer desire to shift deposit balances from lower interest bearing core deposits into higher yielding time deposits. The increase in rate for short term borrowings (all maturing overnight) reflects the impact of the Federal Reserve's actions during 2000. The termination (call) of a $10 million borrowing with a rate of 5.40 percent with Donaldson, Lufkin & Jenrette (DLJ) at the end of August 2000 and the addition of $25 million of two-year fixed rate borrowings from the Federal Home Loan Bank (FHLB) in March 2000 at 6.99 percent (subsequently renewed for a three-year term at 6.55 percent in December 2000) effected the increase in the cost of other borrowings.
TABLE 2:
Changes in Average Earning Assets
(Dollars in thousands)
Increase/(Decrease) Increase/(Decrease)
2000 vs 1999 1999 vs 1998
------------ ------------
Securities:
Taxable ($26,734) (11.1)% $16,476 7.3%
Nontaxable (3,030) (28.7) (1,686) (13.8)
Federal funds sold
and other short
term investments 506 6.5 (8,778) (53.1)
Loans, net 77,419 10.4 73,593 11.0
------- -------
Total $48,161 4.8% $79,605 8.6%
======= =======
|
With regards to interest earned, the yield on earning assets for 2000 increased 24 basis points to 7.62 percent, compared to 7.38 percent for 1999. Increases in the yield on loans of 15 basis points to 8.0 percent, the yield on securities of 22 basis points to 6.27 percent, and the yield on federal funds sold of 125 basis points to 6.07 percent was enhanced by a changing earning assets mix (with a $77.4 million growth in average loans during 2000). The growth in loans, larger as an amount in 2000 than for 1999, was slightly slower as a percentage year-over-year, 10.4 percent versus 11.0 percent, respectively. The slowing of the economy in the fourth quarter impacted loan growth and is likely to impact loan growth in 2001.
TABLE 3:
Rate/Volume Analysis (On a Tax Equivalent Basis)
Amount of Increase/(Decrease)
(Dollars in thousands)
2000 vs 1999
Due to Change In:
-----------------
Volume Rate Mix Total
------ ---- --- -----
Interest income
Securities:
Taxable ($1,591) $625 $(69) ($1,035)
Nontaxable (253) (46) 13 (286)
--- -- -- ---
(1,844) 579 (56) (1,321)
Federal funds sold and
other short term
investments 24 98 6 128
Loans 6,078 1,095 114 7,287
----- ----- --- -----
Total Interest Income 4,258 1,772 64 6,094
Interest expense
NOW (105) 162 (15) 42
Savings deposits 600 1,058 257 1,915
Money market accounts (438) 300 (32) (170)
Time deposits 657 2,928 97 3,682
--- ----- -- -----
714 4,448 307 5,469
Federal funds purchased
and other short term
borrowings 13 411 3 427
Long term borrowings 976 179 122 1,277
--- --- --- -----
Total Interest Expense 1,703 5,038 432 7,173
----- ----- --- -----
Net Interest Income $2,555 ($3,266) ($368) ($1,079)
====== ======= ==== ======
---------------
|
Rate/Volume Analysis (On a Tax Equivalent Basis)(con't)
Amount of Increase (Decrease)
(Dollars in thousands)
1999 vs 1998
Due to Change In:
-----------------
Volume Rate Mix Total
------ ---- --- -----
Interest income
Securities:
Taxable $996 ($212) ($16) $768
Nontaxable (141) (3) 0 (144)
--- - - ---
855 (215) (16) 624
Federal funds sold and
other short term
investments (465) (80) 42 (503)
Loans 6,009 (2,118) (231) 3,660
----- ----- --- -----
Total Interest Income 6,399 (2,413) (205) 3,781
Interest expense
NOW (28) (143) 3 (168)
Savings deposits 407 210 47 664
Money market accounts 356 (400) (34) (78)
Time deposits 238 (1,093) (12) (867)
--- ----- -- ---
973 (1,426) 4 (449)
Federal funds purchased
and other short term
borrowings 496 68 32 596
Long term borrowings 771 (1) (1) 769
--- - - ---
Total Interest Expense 2,240 (1,359) 35 916
----- ----- -- ---
Net Interest Income $4,159 ($1,054) ($240) $2,865
====== ====== ==== ======
|
Average earning assets in 2000 were $48,161,000 or 4.8 percent higher when compared to prior year. Average interest bearing liabilities were $29,523,000 or 3.5 percent higher year-over-year. Loans (the highest yielding component of earning assets) as a percentage of average earning assets increased to 78.1 percent compared to 74.1 percent a year ago, while average securities (a lower yielding component) declined to 21.1 percent from 25.1 percent. Average other borrowings (the highest cost component of interest bearing liabilities) as a percentage of average interest bearing liabilities increased to 4.8 percent in 2000 compared to 3.0 percent in 1999. Lower cost core interest bearing deposits (NOW, savings and money market deposits) decreased $1,005,000 or 0.3 percent to $377,429,000 during 2000 and declined from 45.1 percent to 43.4 percent as a component of average interest bearing liabilities. Favorably affecting the Company's deposit mix, average noninterest bearing demand deposits grew $7,620,000 or 5.6 percent to $144,362,000.
TABLE 4:
Changes in Average Interest Bearing Liabilities
(Dollars in thousands)
Increase/(Decrease) Increase/(Decrease)
2000 vs 1999 1999 vs 1998
------------------- ------------------
NOW $(5,914) (9.6)% $(1,407) (2.2)%
Savings deposits 26,870 24.3 20,345 22.6
Money market
accounts (21,961) (10.7) 16,143 8.5
Time deposits 13,226 3.3 4,537 1.2
Federal funds
purchased and
other short term
borrowings 297 0.8 12,530 48.4
Other borrowings 17,005 68.1 13,421 116.2
------ ------
Total $29,523 3.5% $65,569 8.5%
======= =======
|
Net interest income (on a fully tax equivalent basis) increased $2,865,000 or 7.1 percent to $43,452,000 for 1999, compared to a year earlier. In 1999, the net interest margin decreased to 4.34 percent from 4.40 percent for 1998.
The cost on interest bearing liabilities in 1999 declined 19 basis points to 3.63 percent. While the cost for savings account balances increased 23 basis points (a direct result of the Company successfully increasing balances with its Grand Savings product that offers a higher interest for larger deposit balances), rates paid for NOW accounts, money market accounts, and certificates of deposits declined. The Company extended the average maturity of its time certificate of deposit funding by offering longer terms in early 1999 and locked in attractive rates before the Fed began increasing interest rates.
The yield on earning assets in 1999 declined 22 basis points year-over-year to 7.38 percent. Decreases in the yield on loans of 32 basis points, the yield on securities of 12 basis points and the yield on federal funds sold of 48 basis points were partially offset by a changing earning asset mix, with a $73,593,000 increase in average loans, accounting for nearly all of the $79,605,000 increase in earning assets. The yield on loans was affected by the full year impact of the sale of the credit card portfolio in July 1998 and the significant refinance activity that occurred in 1998.
Average investment securities grew $14,790,000 or 6.3 percent, while average federal funds sold decreased $8,778,000 or 53.1 percent. The growth in loans and an increase in lower cost interest bearing liabilities mitigated the decline in the margin. Loans (the highest yielding component of earning assets) as a percentage of average earnings assets increased to 74.1 percent in 1999, versus 72.6 percent in 1998. Average certificates of deposit (a higher cost component of interest bearing deposits) as a percentage of interest bearing liabilities decreased to 47.4 percent in 1999, compared to 50.8 percent in 1998. Lower cost interest bearing core deposits (NOW, savings and money market deposits) grew $35,081,000 or 10.2 percent to $378,434,000. Also favorably affecting the mix of deposits was an increase in average noninterest bearing demand deposits of $18,562,000 or 15.7 percent.
TABLE 5:
Three-Year Summary
Average Balances, Interest Income and Expenses, Yields and Rates (1)
(Dollars in
thousands) 2000
---------- ----
Average Yield/
Balance Interest Rate
------- -------- -----
Assets
Earning assets:
Securities
Taxable $214,096 $13,295 6.21%
Nontaxable 7,521 596 7.92
------ --- ----
Total Securities 221,617 13,891 6.27
Federal funds
sold and other
short term
investments 8,251 501 6.07
Loans (2) 820,429 65,616 8.00
------- ------ ----
Total Earning Assets 1,050,297 80,008 7.62
Allowance for loan
losses (7,099)
Cash and due from
banks 30,258
Bank premises and
equipment 17,024
Other assets 14,300
------
$1,104,780
==========
Liabilities and Shareholders Equity
Interest-bearing
liabilities:
NOW $55,926 $1,135 2.03%
Savings deposits 137,347 4,380 3.19
Money market
accounts 184,156 3,944 2.14
Time deposits 410,739 23,418 5.70
Federal funds
purchased and
other short
term borrowings 38,735 2,048 5.29
Other borrowings 41,975 2,710 6.46
------ ----- ----
Total Interest-Bearing
liabilities 868,878 37,635 4.33
Demand deposits 144,362
Other liabilities 5,774
-----
1,019,014
Shareholders'
equity 85,766
------
$1,104,780
==========
Interest expense
as % of earning 3.58%
assets
Net interest
income/yield on
earning assets $42,373 4.03%
======= ====
|
----------------------------- |
Three-Year Summary (con't)
Average Balances, Interest Income and Expenses, Yields and Rates (1)
(Dollars in
thousands) 1999
---------- ----
Average Yield/
Balance Interest Rate
------- -------- ----
Assets
Earning assets:
Securities
Taxable $240,830 $14,330 5.95%
Non Taxable 10,551 882 8.36
------ --- ----
Total Securities 251,381 15,212 6.05
Federal funds
sold and other
short term
investments 7,745 373 4.82
Loans (2) 743,010 58,329 7.85
------- ------ ----
Total Earning Assets 1,002,136 73,914 7.38
Allowance for loan
losses (6,713)
Cash and due from
banks 35,110
Bank premises and
equipment 17,213
Other assets 14,589
------
$1,062,335
=========
Liabilities and Shareholders Equity
Interest-bearing
liabilities:
NOW $61,840 $1,093 1.77%
Savings deposits 110,477 2,465 2.23
Money market
accounts 206,117 4,114 2.00
Time deposits 397,513 19,736 4.96
Federal funds
purchased and
other short
term borrowings 38,438 1,621 4.22
Other borrowings 24,970 1,433 5.74
------ ----- ----
Total Interest
Bearing
Liabilities 839,355 30,462 3.63
Demand deposits 136,742
Other liabilities 5,767
-----
981,864
Shareholders'
equity 80,471
------
$1,062,335
==========
Interest expense
as % of earning
assets 3.04%
Net interest
income/yield on
earning assets $43,452 4.34%
======= ====
-------------------------------
|
Three-Year Summary (con't)
Average Balances, Interest Income and Expenses, Yields and Rates (1)
(Dollars in
thousands) 1998
---------- ----
Average Yield/
Balance Interest Rate
---------------- ----
Assets
Earning assets:
Securities
Taxable $224,354 $13,562 6.04%
Nontaxable 12,237 1,026 8.38
------ ----- ----
Total Securities 236,591 14,588 6.17
Federal funds
sold and other
short term
investments 16,523 876 5.30
Loans (2) 669,417 54,669 8.17
------- ------ ----
Total Earning Assets 922,531 70,133 7.60
Allowance for loan
losses (5,739)
Cash and due from
banks 29,244
Bank premises and
equipment 18,620
Other assets 14,737
------
$979,393
========
Liabilities and Shareholders Equity
Interest-bearing
liabilities:
NOW $63,247 $1,261 1.99%
Savings deposits 90,132 1,801 2.00
Money market
accounts 189,974 4,192 2.21
Time deposits 392,976 20,603 5.24
Federal funds
purchased and
other short
term borrowings 25,908 1,025 3.96
Other borrowings 11,549 664 5.75
------ --- ----
Total
Interest
Bearing
Liabilities 773,786 29,546 3.82
Demand deposits 118,180
Other liabilities 5,277
-----
897,243
Shareholders'
equity 82,150
------
$979,393
========
Interest expense
as % of earning
assets 3.20%
Net interest
income/yield on
earning assets $40,587 4.40%
======= ====
-------------
|
(1) The tax equivalent adjustment is based on a 34% tax rate.
(2) Nonaccrual loans are included in loan balances. Fees on loans are included
in interest on loans.
Management determines the provision for loan losses which is charged to operations by constantly analyzing and monitoring delinquencies, nonperforming loans and the level of outstanding balances for each loan category, as well as the amount of net charge offs, and by estimating losses inherent in its portfolio. While the Company's policies and procedures used to estimate the monthly provision for loan losses charged to operations are considered adequate by management, and are reviewed from time to time by the Office of the Comptroller of the Currency, there exist factors beyond the control of the Company, such as general economic conditions both locally and nationally, which make management's judgment as to the adequacy of the provision necessarily approximate and imprecise. See "Nonperforming Assets" and "Allowance for Loan Losses."
Noninterest income, excluding gains(losses) from sales of securities, totaled $13,150,000 in 2000, an increase of $1,002,000 or 8.2 percent from 1999.
The Company intends to continue to diversify its sources of income. Noninterest income now makes up 23.8 percent of net revenue, compared with 21.8 percent in 1995. While service charges on deposits remained nearly unchanged in 2000 as compared to the prior year, reflecting the intense competition from savings banks, other commercial banks and non-banks, other sources of fees and commissions increased $1,013,000 or 13.9 percent. The Company added two new sources for fee-based income. Its new Seacoast Marine Finance division produced $42.5 million in loans, of which $16.3 million were added to the loan portfolio and the remainder were sold, increasing fee-based income by $361,000. Seacoast Marine Finance is headquartered in Fort Lauderdale, Florida and commenced operations in early February 2000 with an experienced, seasoned team of marine lending professionals. Seacoast Marine Finance's marketing emphasis is on marine loans of $200,000 and greater. Because the Company intends to continue expanding this business in 2001, it is believed that the growth in revenue will exceed the Company's other more traditional sources of fee income.
During 2000, the Company reorganized its traditional residential real estate portfolio lending division into a mortgage banking business. By the fourth quarter of 2000, this business generated $245,000 in revenue, a 41.6 percent increase over $173,000 earned in the third quarter. The Company expects the revenue from this business to continue this growth in 2001. By moving to a mortgage banking emphasis, the Company's exposure to market interest rate volatility on residential real estate lending in 2001 should be further limited as sales of mortgages increase and are more efficiently transacted.
Revenue from brokerage activities increased $92,000 or 3.9 percent and trust (fiduciary) income increased $215,000 or 8.6 percent in 2000 compared to a year ago. The financial markets during 2000 have been in turmoil as a result of an uncertain economic growth rate and fear of further Federal Reserve actions or increased inflation. While investment management revenue results were favorable and the Company hopes to see similar or improved results in 2001, economic uncertainties may impact growth in revenue from investment products.
Noninterest income, excluding gains from sales of securities, totaled $12,148,000 in 1999, an increase of $373,000 or 3.2 percent from 1998. Included in noninterest income for 1998 was a non-recurring gain of $616,000 from the sale of the Company's $7.1 million credit card portfolio. Without this gain, noninterest income increased $989,000 or 8.9 percent year-over-year.
During 1999, service charges on deposit accounts increased $517,000 or 11.9 percent, while other service charges and fees declined $264,000, primarily as a result of the loss of fees earned on the sold credit card portfolio. Income from brokerage services increased $224,000 or 10.6 percent and trust income increased $345,000 or 16.1 percent. The increased service charges resulted from growth in accounts for which fees are assessed and an increase in minimum balances required in order to avoid monthly service charges. Trust income increased due to higher fee schedules implemented in 1999 and increased fees from new trust management accounts.
Proceeds from sales of securities in 2000, totaled $10,203,000 and resulted in $12,000 in net losses. Proceeds from sales of securities in 1999 and 1998 were much greater, totaling $60,106,000 and $105,989,000, respectively, including net gains of $309,000 and $612,000, respectively. Proceeds from sales in 1999 and 1998 were utilized to fund lending demand and manage seasonal funding declines. Declining interest rates in 1998 generated larger gains on sales of securitized fixed rate residential loans originated by the Company's subsidiary bank.
Table 6:
Noninterest Income
(Dollars in thousands)
Year Ended % Change
---------- --------
2000 1999 1998 00/99 99/98
---- ---- ---- ----- -----
Service charges
on deposit
accounts $4,865 $4,876 $4,359 (0.2)% 11.9%
Trust fees 2,704 2,489 2,144 8.6 16.1
Other service
charges and
fees 1,225 1,204 1,468 1.7 (18.0)
Brokerage
commissions and
fees 2,421 2,329 2,105 3.9 10.6
Debit card income 428 249 187 71.9 33.2
Marine finance fee 361 0 0 N/M 0
Mortgage banking fee 770 633 690 21.6 (8.3)
Other 376 368 822 2.2 (55.2)
--- --- ---
13,150 12,148 11,775 8.2 3.2
Securities
gains(losses) (12) 309 612 (103.9) (49.5)
-- --- ---
Total $13,138 $12,457 $12,387 5.5% 0.6%
======= ======= =======
|
N/M = Not Meaningful
The Company's overhead ratio decreased from 68.2 percent in 1998 to 64.7 percent a year ago to 62.8 percent for 2000. This is reflective of initiatives to reduce overhead costs, particularly staffing, and streamlined operational and procedural changes implemented throughout 1999. The Company expects to continue to benefit from the lower operating overhead in future years and continue the process of realigning its systems and procedures to further improve operating efficiencies.
Compared to 1999, salaries and wages decreased $805,000 or 5.8 percent and employee benefits declined $621,000 or 16.4 percent. Most of the decrease in wage and benefit costs is related to lower performance award incentive accruals for 2000 and lower group health claims in 2000.
Occupancy expenses and furniture and equipment expenses on an aggregate basis increased $279,000 or 5.4 percent versus a year ago. Most of the increase resulted from higher lease payments for premises and additional computer equipment. In July 2000, the Company's bank subsidiary opened a branch on U.S. 1 in northern Martin County near the St. Lucie County line, at the same time closing a branch in St. Lucie County approximately one-half mile from the new branch. Enhanced exposure and higher traffic is expected at the new location on an out parcel in front of a major Florida grocery store. Overlap during the year of leasing the newly opened and closed branch offices, as well as costs associated with the new Seacoast Marine Finance office in Ft. Lauderdale, accounted for a portion of the increase. Increased computer hardware costs during the third and fourth quarter of 2000 included the installation of new imaging equipment in September 2000 to more efficiently handle transactional information, produce customer statements and perform research. It is anticipated that use of this technology will provide a reduction in staffing and postage, and will enhance customer service, further establishing the Company's banking subsidiary's image as the "SuperCommunity Bank."
Outside data processing costs increased $410,000 or 11.1 percent in 2000, compared to a year ago. The Company utilizes a third party for its core data processing system. Outsourced data processing costs are directly related to the number of transactions processed, which can be expected to increase as the Company's business volumes grow and new products such as bill pay, internet banking, etc. become more popular and the number of customer accounts increases.
Costs associated with foreclosed and repossessed asset management and disposition decreased $94,000 in 2000, a reflection of low nonperforming asset balances (see "Nonperforming Assets"). Legal and professional fees decreased $395,000 or 25.1 percent from last year. Most of this decrease was related to an expense in 1999 for hiring an outside consulting service to partner with the Company in assessing a number of internal processes for overhead improvement and revenue enhancement.
A modest growth of $262,000 or 0.7 percent in noninterest expenses was recorded in 1999. Salary expenses declined 1.2 percent, but the decrease was much larger, as the Company exceeded certain profit performance measures which necessitated the payment of salary incentives. In addition, employee benefits were $679,000 or 21.8 percent higher, reflecting increased profit sharing benefits.
Outsourced data processing expenses increased in 1999 by 28.3 percent as a result of the full-year impact of the complete outsourcing of the Company's main data processing systems in September 1998. Some of the decline in salaries in 1999 occurred due to the elimination of the in-house data processing department as a result of this decision. Marketing expenses declined in 1999 with the completion of the aggressive branch expansion started in 1997 and completed in 1998. Legal and professional fees increased $543,000 or 52.8 percent in 1999 and were related to the outside consulting services for overhead improvements and revenue enhancement.
TABLE 7:
Noninterest Expenses
(Dollars in thousands)
Year Ended % Change
---------- --------
2000 1999 1998 00/99 99/98
---- ---- ---- ----- -----
Salaries and wages $13,077 $13,882 $14,046 (5.8)% (1.2)%
Pension and other employee
benefits 3,177 3,798 3,119 (16.4) 21.8
Occupancy 3,343 3,135 3,129 6.6 0.2
Furniture and equipment 2,108 2,037 2,436 3.5 (16.4)
Outsourced data processing
Costs 4,106 3,696 2,881 11.1 28.3
Marketing 1,717 1,653 1,964 3.9 (15.8)
Legal and professional fees 1,177 1,572 1,029 (25.1) 52.8
FDIC assessments 184 146 135 26.0 8.1
Foreclosed and repossessed
asset management and
dispositions 91 185 298 (50.8) (37.9)
Amortization of intangibles 636 671 671 (5.2) 0.0
Other 5,261 5,208 6,013 1.0 (13.4)
----- ----- -----
Total $34,877 $35,983 $35,721 (3.1)% 0.7%
======= ======= =======
|
The Company has deferred tax assets, for which no valuation allowance is required, because the majority of the asset is deemed to be temporary and sufficient taxable income exists in the carry-back years to recover the asset.
TABLE 8:
Capital Resources
(Dollars in thousands)
December 31 2000 1999 1998
--------------------------------------------------- --------
TIER 1 CAPITAL
Common stock $ 518 $ 518 $ 518
Additional paid in capital 27,831 27,785 27,439
Retained earnings 72,562 66,174 59,738
Treasury stock (14,470) (11,640) (8,806)
Valuation allowance (173) (849) (627)
Intangibles (3,432) (4,021) (4,652)
----- ----- -----
TOTAL TIER 1 CAPITAL 82,836 77,967 73,610
TIER 2 CAPITAL
Allowance for loan losses,
as limited 7,218 6,870 6,343
----- ----- -----
TOTAL TIER 2 CAPITAL 7,218 6,870 6,343
----- ----- -----
TOTAL RISK-BASED CAPITAL $ 90,054 $ 84,837 $ 79,953
======== ======= =======
Risk weighted assets $741,590 $693,016 $665,913
======== ======== ========
Tier 1 risk based capital
ratio 11.17% 11.25% 11.05%
Total risk based capital ratio 12.14 12.24 12.01
Regulatory minimum 8.00 8.00 8.00
Tier 1 capital to adjusted
total assets 7.44 7.32 7.10
Regulatory minimum 4.00 4.00 4.00
Shareholders' equity to assets 7.32 7.13 7.18
Average shareholders' equity
to average total assets 7.76 7.57 8.39
|
Total loans increased $66,382,000 or 8.5 percent in 2000 compared to $76,614,000 or 10.9 percent in 1999. During 2000, the Company sold $13.3 million in fixed rate residential loans to manage interest rate risk, compared to $28.0 million in 1999 and $81.0 million in 1998. In addition, $26.2 million in marine loans produced by Seacoast Marine Finance (newly opened in 2000) were sold to other financial institutions.
At December 31, 2000, the Company's mortgage loan balances secured by residential properties amounted to $467,437,000 or 55.3 percent of total loans. The next largest concentration was loans secured by commercial real estate totaling $190,348,000 or 22.5 percent. Most of the commercial real estate loans were made to local businesses and professionals and are secured by owner occupied properties. Loans and commitments for 1-4 family residential properties and commercial real estate are generally secured with first mortgages on property, with the loan to fair value of the property not exceeding 80 percent on the date the loan is made. The Company was also a creditor for consumer loans to individual customers (primarily secured by motor vehicles) totaling $90,744,000 and real estate construction loans totaling $42,633,000 (of which approximately $16.7 million was secured by residential properties).
The Treasure Coast is a residential community with commercial activity centered in retail and service businesses serving the local residents and seasonal visitors. Therefore, real estate mortgage lending is an important segment of the Company's lending activities. Exposure to market interest rate volatility with respect to mortgage loans, is managed by attempting to match maturities and repricing opportunities for assets against liabilities, when possible. At December 31, 2000, approximately $193 million or 41 percent of the Company's mortgage loan balances secured by residential properties were adjustable.
Of the approximate $90 million of new residential loans originated in 2000, $59 million were adjustable rate and $31 million were fixed rate. Loans secured by residential properties having fixed rates totaled approximately $274 million at December 31, 2000, of which 15- and 30-year mortgages totaled approximately $114 million and $110 million, respectively. Remaining fixed rate balances were comprised of home improvement loans with maturities less than 15 years.
The Company's historical net charge offs for residential loans has been low, totaling $45,000 for the year 2000. The Company established new mortgage banking relationships in 2000 and expects to sell a larger portion of its residential mortgage production in 2001.
Fixed rate and adjustable rate loans secured by commercial real estate total approximately $117 million and $74 million, respectively, at December 31, 2000.
Commercial lending activities are directed principally towards businesses whose demand for funds are within the Company's lending limits, such as small to medium sized professional firms, retail and wholesale outlets, and light industrial and manufacturing concerns. Such businesses typically are smaller, often have short operating histories and do not have the sophisticated record keeping systems of larger entities. Most of such loans are secured by real estate used by such businesses, although certain lines are unsecured. Such loans are subject to the risks inherent to lending to small to medium sized businesses including the effects of a sluggish local economy, possible business failure, and insufficient cash flows. The Company's commercial loan portfolio totaled $39,465,000 at December 31, 2000 compared to $33,119,000 at December 31, 1999.
The Company makes a variety of consumer loans, including installment loans, loans for automobiles, boats, home improvements, and other personal, family and household purposes, and indirect loans through dealers to finance automobiles. Most consumer loans are secured.
Second mortgage loans and home equity lines are extended by the Company. No negative amortization loans or lines are offered at the present time. Terms of second mortgage loans include fixed rates for up to 10 years on smaller loans of $30,000 or less. Such loans are sometimes made for larger amounts, with fixed rates, but with balloon payments upon maturities, not exceeding five years.
At December 31, 1999, the Company's mortgage loan balances secured by residential properties amounted to $445,468,000 or 57.2 percent of total loans. The next largest concentration was mortgages secured by commercial real estate totaling $178,004,000 or 22.9 percent. Consumer loans to individual customers (primarily secured by motor vehicles) totaled $78,013,000 in 1999 and real estate construction loans totaled $42,899,000 (of which approximately $20.8 million was secured by residential properties).
Loans secured by residential properties having fixed rates totaled approximately $268 million at December 31, 1999, of which 15- and 30-year mortgages totaled approximately $125 million and $105 million, respectively. Remaining fixed rate balances were comprised of home improvement loans with maturities less than 15 years.
TABLE 9:
Loans Outstanding
(Dollars in thousands)
December 31 2000 1999 1998 1997 1996
----------- ---- ---- ---- ---- ----
Real estate mortgage $671,424 $623,472 $574,895 $492,410 $448,680
Real estate construction 42,633 42,899 22,877 16,363 18,458
Commercial and financial 39,465 33,119 31,908 31,239 35,459
Installment loans to
individuals 90,744 78,013 71,506 73,673 73,224
Other loans 280 661 364 245 503
--- --- --- --- ---
Total $844,546 $778,164 $701,550 $613,930 $576,324
========= ======== ======== ======== ========
TABLE 10:
Loan Maturity Distribution
(Dollars in thousands)
Commercial,
Financial & Real Estate
December 31, 2000 Agricultural Construction Total
----------------------- ------------- ------------- ---------
In one year or less $12,231 $41,568 $53,799
After one year but
within five years:
Interest rates are
floating or
adjustable 4,636 678 5,314
Interest rates are fixed 13,927 387 14,314
In five years or more:
Interest rates are
floating or
adjustable 1,778 0 1,778
Interest rates are fixed 6,893 0 6,893
----- - -----
Total $39,465 $42,633 $82,098
======= ======= =======
|
The allowance for loan losses totaled $7,218,000 at December 31, 2000, $348,000 higher than one year earlier. The allowance for loan losses as a percentage of nonaccrual loans was 343.9 percent at December 31, 2000, compared to 285.4 percent at December 31, 1999. The model utilized to analyze the adequacy of the allowance for loan losses takes into account such factors as credit quality, internal controls, audit results, staff turnover, local market economics and loan growth. The resulting lower allowance level necessitated is also reflective of the bank's favorable and consistent delinquency trends and historical loss performance. These performance results are attributed to conservative, long- standing and consistently applied loan credit policies and to a knowledgeable, experienced and stable staff. In 2000, net charge offs totaled only $252,000, compared to $133,000 a year ago.
Table 12 summarizes the Company's allocation of the allowance for loan losses to each type of loan and information regarding the composition of the loan port- folio at the dates indicated.
The allowance for loan losses represents management's estimate of an amount adequate in relation to the risk of future losses inherent in the loan portfolio. In its continuing evaluation of the allowance and its adequacy, management considers, among other factors, the Company's loan loss experience, the amount of past due and nonperforming loans, current and anticipated economic conditions, and the values of certain loan collateral, and other assets. The size of the allowance also reflects the large amount of permanent residential loans held by the Company whose historical charge offs and delinquencies have been superior by any comparison.
Concentration of credit risk, discussed on pages 20-21 of this discussion and analysis, may affect the level of the allowance. Concentrations typically involve loans to one borrower, an affiliated group of borrowers, borrowers engaged in or dependent upon the same industry, or a group of borrowers whose loans are predicated on the same type of collateral. The Company's significant concentration of credit is a collateral concentration of loans secured by real estate. At December 31, 2000, the Company had $700 million in loans secured by real estate, representing 82.9 percent of total loans, down from 85.6 percent at December 31, 1999. In addition, the Company is subject to a geographic concentration of credit because it operates in southeastern Florida. Although not material enough to constitute a significant concentration of credit risk, the Company has meaningful credit exposure to real estate developers and investors. Levels of exposure to this industry group, together with an assessment of current trends and expected future financial performance, are carefully analyzed in order to determine an adequate allowance level. Problem loan activity for this exposure needs to be evaluated over the long term to include all economic cycles when determining an adequate allowance level.
While it is the Company's policy to charge off in the current period loans in which a loss is considered probable, there are additional risks of future losses which cannot be quantified precisely or attributed to particular loans or classes of loans. Because these risks include the state of the economy as well as conditions affecting individual borrowers, management's judgment of the allowance is necessarily approximate and imprecise. It is also subject to regulatory examinations and determinations as to adequacy, which may take into account such factors as the methodology used to calculate the allowance for loan losses and the size of the allowance for loan losses in comparison to a group of peer companies identified by the regulatory agencies.
The unprecedented strong economic growth over the last five years has resulted in improved credit quality measures for the Company and the entire banking industry. At December 31, 2000, the Company's allowance equated to 8.8 times average charge offs for the last three years. In contrast, the allowance equated to approximately two times charge offs in the early 1990's when Florida experienced a real estate economic decline.
In assessing the adequacy of the allowance, management relies predominantly on its ongoing review of the loan portfolio, which is undertaken both to ascertain whether there are probable losses which must be charged off and to assess the risk characteristics of the portfolio in the aggregate. This review considers the judgments of management, and also those of bank regulatory agencies that review the loan portfolio as part of their regular examination process.
TABLE 11:
Summary of Loan Loss Experience
(Dollars in thousands)
Year Ended December 31 2000 1999 1998 1997 1996
---------------------- ---- ---- ---- ---- ----
Allowance for loan losses
Beginning balance $6,870 $6,343 $5,363 $5,657 $4,893
Provision for loan losses 600 660 1,710 913 1,090
Charge offs:
Commercial and
financial 98 2 112 443 80
Consumer 432 458 901 936 525
Commercial real estate 35 46 137 137 36
Residential real
estate 78 120 42 38 84
-- --- -- -- --
Total Charge Offs 643 626 1,192 1,554 725
Recoveries:
Commercial and
financial 93 111 117 76 72
Consumer 226 230 211 197 236
Commercial real estate 39 136 109 63 91
Residential real estate 33 16 25 11 0
-- -- -- -- -
Total Recoveries 391 493 462 347 399
--- --- --- --- ---
Net loan charge offs 252 133 730 1,207 326
--- --- --- ----- ---
Ending Balance $7,218 $6,870 $6,343 $5,363 $5,657
====== ====== ====== ====== ======
Loans outstanding at end of
year* $844,546 $778,164 $701,550 $613,930 $576,324
Ratio of allowance for loan
losses to loans outstanding
at end of year 0.85% 0.88% 0.90% 0.87% 0.98%
Daily average loans
outstanding* $820,429 $743,010 $669,417 $595,884 $538,330
Ratio of net charge offs to
average loans outstanding 0.03% 0.02% 0.11% 0.20% 0.06%
|
* Net of unearned income.
TABLE 12:
ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
Allowance Amount
December 31 2000 1999 1998 1997 1996
----------- ---- ---- ---- ---- ----
Commercial and
financial loans $ 844 $ 677 $ 576 $ 363 $ 665
Real estate loans 4,970 4,913 4,464 3,347 3,681
Installment loans 1,404 1,280 1,303 1,653 1,311
----- ----- ----- ----- -----
Total $7,218 $6,870 $6,343 $5,363 $5,657
====== ====== ====== ====== ======
|
Percent of Loans in Each Category to Total Loans
December 31 2000 1999 1998 1997 1996
----------- ---- ---- ---- ---- ----
Commercial and
financial loans 4.7% 4.3% 4.6% 5.1% 6.2%
Real estate loans 84.6 85.6 85.3 82.9 81.1
Installment loans 10.7 10.1 10.1 12.0 12.7
---- ---- ---- ---- ----
Total 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
|
Nonperforming assets are subject to changes in the economy, both nationally and locally, changes in monetary and fiscal policies, and changes in conditions affecting various borrowers from the Company's subsidiary bank. No assurance can be given that nonperforming assets will not in fact increase or otherwise change. A similar judgmental process is involved in the methodology used to estimate and establish the Company's allowance for loan losses.
TABLE 13:
Nonperforming Assets
(Dollars in thousands)
December 31 2000 1999 1998 1997 1996
----------- ---- ---- ---- ---- ----
Nonaccrual loans (1) $2,099 $2,407 $2,418 $2,254 $2,299
Renegotiated loans 0 0 0 0 0
Other real estate owned 346 339 288 536 1,064
--- --- --- --- -----
Total Nonperforming Assets $2,445 $2,746 $2,706 $2,790 $3,363
====== ====== ====== ====== ======
Amount of loans outstanding
at end of year (2) $844,546 $778,164 $701,550 $613,930 $576,324
Ratio of total nonperforming
assets to loans outstanding
and other real estate owned
at end of period 0.29% 0.35% 0.39% 0.45% 0.58%
Accruing loans past due
90 days or more $108 $498 $329 $478 $59
-----------------
|
(1) Interest income that could have been recorded during 2000 related to
nonaccrual loans was $241, none of which was included in interest income or net
income. All nonaccrual loans are secured.
(2) Net of unearned income.
LIQUIDITY MANAGEMENT
Contractual maturities for assets and liabilities are reviewed to meet current and future liquidity requirements. Sources of liquidity, both anticipated and unanticipated, are maintained through a portfolio of high quality marketable assets, such as residential mortgage loans, investment securities, and federal funds sold. The Company has access to federal funds and FHLB lines of credit and is able to provide short term financing of its activities by selling, under agreement to repurchase, United States Treasury securities and securities of United States Government agencies and corporations not pledged to secure public deposits or trust funds. At December 31, 2000, the Company had available lines of credit of $130,500,000. At December 31, 2000, the Company had $63,195,000 of United States Treasury and Government agency securities and mortgage backed securities not pledged and available for use under repurchase agreements. At December 31, 1999, the amount of securities available and unpledged was $59,695,000.
Liquidity, as measured in the form of cash and cash equivalents, totaled $72,505,000 at December 31, 2000, compared to $59,942,000 at December 31, 1999. Cash and equivalents vary with seasonal deposit movements and are generally higher in the winter than in the summer, and vary with the level of principal repayments occurring in the Company's investment securities portfolio and loan portfolio.
DEPOSITS AND BORROWINGS
Total deposits increased $51,129,000 or 5.6 percent to $957,089,000 at December 31, 2000, compared to one year earlier. In comparison to 1998, deposits increased only $758,000 in 1999 to $905,960,000. During 2000, lower cost interest bearing deposits (NOW, savings and money market deposits) increased $1,653,000 or 0.4 percent to $380,791,000, while all other deposits (exclusively certificates of deposit) grew $30,238,000 or 7.8 percent to $416,523,000. This increase reflects the higher interest rate environment in 2000 and customer desire to invest in higher yielding certificates of deposit. Noninterest bearing demand deposits increased $19,238,000 or 13.7 percent to $159,775,000.
Repurchase agreement balances declined $1,944,000 in 2000, compared to a decline of $10,794,000 in 1999. Repurchase agreements are offered by the Company's subsidiary bank to select customers who wish to sweep excess balances on a daily basis for investment purposes.
Other borrowings increased $15,030,000 to $40,000,000 at December 31, 2000, reflecting funding of $25.0 million obtained through the FHLB for a term of two years at 6.99 percent in mid-March 2000 and the termination (call) of $9,970,000 at 5.40 percent by DLJ at the end of August 2000. In December 2000, the $25.0 million borrowing was restructured to a three year term at 6.55 percent.
Table 14:
Maturity of Certificates of Deposit of $100,000 or More
(Dollars in thousands)
% of % of
December 31 2000 Total 1999 Total
------------------ --------- ---------- -------------------
Maturity Group:
Under 3 months $13,840 15.0% $18,185 19.9%
3 to 6 months 17,973 19.5 18,343 20.0
6 to 12 months 24,395 26.4 31,911 34.8
Over 12 months 36,075 39.1 23,163 25.3
------- ----- ------ ------
Total $92,283 100.0% $91,602 100.0%
======= ====== ======= =====
|
Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution's performance than the general levels of inflation. However, inflation affects financial institutions' increased cost of goods and services purchased, the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and stockholders' equity. Mortgage originations and refinancings tend to slow as interest rates increase, and likely will reduce the Company's earnings from such activities and the income from the sale of residential mortgage loans in the secondary market.
SECURITIES
Information relating to yields, maturities, carrying values, market values and unrealized gains (losses) of the Company's securities is set forth in Table 15.
At December 31, 2000, the Company had $182,230,000 of securities held for sale or 87.5 percent of total securities compared to $204,287,000 or 92.1 percent at December 31, 1999. Total securities decreased $13,554,000 or 6.1 percent in 2000. These proceeds were used to fund loan growth.
Management controls the Company's interest rate risk by maintaining a low average duration for the securities portfolio and with securities returning principal monthly which can be reinvested. The average life of the portfolio at December 31, 2000 was 3.4 years compared to 2.9 years in 1999.
At December 31, 2000, the Company had unrealized net losses of $3,372,000 or 1.6 percent of amortized cost. At December 31, 1999, unrealized net losses were $8,047,000. The Federal Reserve increased rates 75 basis points in 1999 and 100 basis points in 2000. The increases only effected short term rates, and the yield curve inverted, resulting in appreciation of market value.
Company management considers the overall quality of the securities portfolio to be high. No securities are held which are not traded in liquid markets or that meet the Federal Financial Institution Examination Counsel (FFIEC) definition of a high risk investment.
TABLE 15:
Investment Securities Yield, Maturity and Market Value
(Dollars in thousands)
U.S. Treasury and U.S.
Government Agencies
-------------------------------- ----------------------------
Amortized Market Weighted
Cost Value Yield
-------------------------------- ------------------ ---------
Maturity at December 31,2000
Held for Sale:
Within one year $ 996 $ 995 6.26%
One to five years 20,000 19,773 5.71%
Five to ten years
Over ten years
No contractual maturity
--------- -------- ---------
Total Value $ 20,996 $ 20,768 5.73%
========= ======== =========
Held for Investment:
Within one year
One to five years
Five to ten years
Over ten years
--------- -------- ---------
Total Value $0 $0 0%
========= ======== =========
Maturity at December 31, 1999
Held for Sale $ 30,012 $ 28,678 5.76%
========= ======== =========
Held for Investment $ 0 $ 0 0%
========= ======== =========
-----------------------------------
Investment Securities Yield, Maturity and Market Value (con't)
(Dollars in thousands)
Mortgage Backed Securities
(Fixed)
-------------------------------- ----------------------------
Amortized Market Weighted
Cost Value Yield
-------------------------------- ------------------ ---------
Maturity at December 31, 2000
Held for Sale:
Within one year $ 8,468 $ 8,405 5.64%
One to five years 92,947 90,448 6.21%
Five to ten years 20,385 20,131 6.82%
Over ten years
No contractual maturity
--------- -------- ---------
Total Value $121,800 $118,984 6.27%
========= ======== =========
Held for Investment
Within one year $ 72 $ 75 6.92%
One to five years 4,853 4,926 6.93%
Five to ten years 170 174 8.39%
Over ten years
--------- -------- ---------
Total Value $ 5,095 $ 5,175 6.98%
========== ======= =========
Maturity at December 31, 1999
Held for Sale $135,047 $129,016 6.05%
========== ======= =========
Held for Investment $ 6,358 $ 6,339 6.91%
--------------------------
|
Investment Securities Yield, Maturity and Market Value (con't)
(Dollars in thousands)
Mortgage Backed Securities
(Adjustable)
-------------------------------- ----------------------------
Amortized Market Weighted
Cost Value Yield
-------------------------------- ------------------ ---------
Maturity at December 31, 2000
Held for Sale:
Within one year $ 1,845 $ 1,832 6.49%
One to five years 2,168 2,133 6.45%
Five to ten years 3,331 3,186 5.13%
Over ten years 475 485 7.81%
No contractual maturity
--------- -------- ---------
Total Value $ 7,819 $ 7,636 5.98%
========= ======== =========
Held for Investment:
Within one year
One to five years $ 6,368 $ 6,319 7.76%
Five to ten years 8,065 8,068 8.04%
Over ten years
--------- ------- -----
Total Value $14,433 $14,387 7.92%
========= ======= =====
Maturity at December 31, 1999
Held for Sale $ 8,275 $ 7,986 5.80%
======= ======= =====
Held for Investment $ 2,069 $ 2,046 5.93%
--------------------------------
Investment Securities Yield, Maturity and Market Value (con't)
(Dollars in thousands)
Obligations of States and
Political Subdivisions (1)
-------------------------------- ----------------------------
Amortized Market Weighted
Cost Value Yield
-------------------------------- ------------------ ---------
Maturity at December 31, 2000
Held for Sale:
Within one year
One to five years
Five to ten years
Over ten years
No contractual maturity
------- ------- ---
Total Value $ 0 $ 0 0%
======= ======= =====
Held for Investment:
Within one year $ 1,941 $ 1,949 8.35%
One to five years 3,260 3,324 8.08%
Five to ten years 1,213 1,243 7.72%
Over ten years
------- ------- -----
Total Value $ 6,414 $ 6,516 8.09%
======= ======= =====
Maturity at December 31, 1999
Held for Sale $ 0 $0 0%
========== ======= =========
Held for Investment $ 8,912 $ 8,979 8.51%
========== ======= =========
--------------------------------
|
Investment Securities Yield, Maturity and Market Value (con't)
(Dollars in thousands)
Mutual Funds
-------------------------------- ----------------------------
Amortized Market Weighted
Cost Value Yield
-------------------------------- ------------------ ---------
Maturity at December 31, 2000
Held for Sale:
Within one year
One to five years
Five to ten years
Over ten years
No contractual maturity $23,881 $23,662 6.35%
------- ------- ----
Total Value $23,881 $23,662 6.35%
======= ======= ====
Held for Investment:
Within one year
One to five years
Five to ten years
Over ten years
------- ------- ----
Total Value $ 0 $ 0 0%
======= ======= ====
Maturity at December 31, 1999
Held for Sale $23,881 $23,477 5.25%
======= ======= =====
Held for Investment $ 0 $ 0 0%
======= ======= =====
|
(1) On a fully taxable equivalent basis.
Investment Securities Yield, Maturity and Market Value (con't)
(Dollars in thousands)
Other (1)
-------------------------------- ----------------------------
Amortized Market Weighted
Cost Value Yield
-------------------------------- ------------------ ---------
Maturity at December 31, 2000
Held for Sale:
Within one year
One to five years
Five to ten years
Over ten years
No contractual maturity $7,734 $7,672 7.02%
------ ------ ----
Total Value $7,734 $7,672 7.02%
====== ====== ====
Held for Investment:
Within one year
One to five years
Five to ten years
Over ten years
------ ------ ----
Total Value $ 0 $ 0 0%
====== ====== ====
Maturity at December 31, 1999
Held for Sale $7,072 $7,058 6.82%
====== ====== ====
Held for Investment $ 100 $ 100 8.13%
====== ====== ====
|
(1) On a fully taxable equivalent basis.
Investment Securities Yield, Maturity and Market Value (con't)
(Dollars in thousands)
Total
-------------------------------- -----------------------------
Amortized Market Weighted
Cost Value Yield
-------------------------------- ------------------- ---------
Maturity at December 31, 2000
Held for Sale:
Within one year $ 11,309 $ 11,232 5.83%
One to five years 115,115 112,354 6.13%
Five to ten years 23,716 23,317 6.58%
Over ten years 475 485 7.81%
No contractual maturity 31,615 31,334 6.51%
-------- -------- -----
Total Value $182,230 $178,722 6.24%
======== ======== =====
Held for Investment:
Within one year $ 2,013 $ 2,024 8.29%
One to five years 14,481 14,569 7.56%
Five to ten years 9,448 9,485 8.00%
Over ten years
------- ------- -----
Total Value $25,942 $26,078 7.78%
======= ======= =====
Maturity at December 31, 1999
Held for Sale $204,287 $196,215 5.93%
======== ======== =====
Held for Investment $ 17,439 $ 17,464 7.62%
======== ======== =====
|
Gross Gross
Amortized Unrealized Unrealized
(Dollars in Thousands) Cost Gains Losses
-------------------------- --------- ----------- ----------
Held for Sale:
U.S. Treasury and U.S.
Government agencies $ 20,996 $ 0 $ (228)
Mortgage backed securities:
Fixed 121,800 4 (2,820)
Adjustable 7,819 14 (197)
Mutual funds 23,881 0 (219)
Other securities 7,734 0 (62)
----- - -
$182,230 $18 $(3,526)
======== ===== ========
Held for Investment:
Mortgage backed securities:
Fixed $ 5,095 $ 84 (4)
Adjustable 14,433 29 (75)
Obligations of states and
political subdivisions 6,414 102 0
Other securities 0 0 0
--- - -
$25,942 $215 $(79)
======= ==== ===
---(con't)---
December 31, 2000
Market Average Years
(Dollars in Thousands) Value to Maturity
-------------------------- ---------- -----------
Held for Sale:
U.S. Treasury and U.S.
Government agencies $ 20,768 2.94
Mortgage backed securities:
Fixed 118,984 3.80
Adjustable 7,636 4.97
Mutual funds 23,662 **
Other securities 7,672 *
----- ----
$178,722 3.23
========= ====
Held for Investment:
U.S. Treasury and U.S.
Government agencies $ 0
Mortgage backed securities:
Fixed 5,175 3.39
Adjustable 14,387 5.88
Obligations of states and
political subdivisions 6,516 2.74
Other securities 0 *
--- ---
$ 26,078 4.60
======== ====
----------
|
*Other Securities excluded from calculated average for total securities. **Contractual maturity assumed to be immediate for total average years to maturity calculation
----(con't)----
December 31, 1999
Gross Gross
Amortized Unrealized Unrealized
(Dollars in Thousands) Cost Gains Losses
-------------------------- --------- ----------- ----------
Held for Sale:
U.S. Treasury and U.S.
Government agencies $ 30,012 $ 0 $ (1,334)
Mortgage backed securities:
Fixed 135,047 8 (6,039)
Adjustable 8,275 10 (299)
Mutual funds 23,881 0 (404)
Other securities 7,072 0 (14)
----- - -
$204,287 $ 18 $ (8,090)
======== ===== ========
Held for Investment:
U.S. Treasury and U.S.
Government agencies
Mortgage backed securities:
Fixed $ 6,358 $ 49 (68)
Adjustable 2,069 6 (29)
Obligations of states and
political subdivisions 8,912 100 (33)
Other securities 100 0 0
--- - -
$17,439 $155 (130)
======= ==== =====
---(con't)---
December 31, 1999
Market Average Years
(Dollars in Thousands) Value to Maturity
-------------------------- ---------- -----------
Held for Sale:
U.S. Treasury and U.S.
Government agencies $ 28,678 4.01
Mortgage backed securities:
Fixed 129,016 3.00
Adjustable 7,986 5.88
Mutual funds 23,477 **
Other securities 7,058 *
----- ----
$196,215 2.90
======== ====
Held for Investment:
U.S. Treasury and U.S.
Government agencies
Mortgage backed securities:
Fixed $ 6,339 3.31
Adjustable 2,046 3.31
Obligations of states and
political subdivisions 8,979 3.33
Other securities 100 *
--- ---
$ 17,464 3.32
======== ====
----------
|
*Other Securities excluded from calculated average for total securities. **Contractual maturity assumed to be immediate for total average years to maturity calculation.
INTEREST RATE SENSITIVITY
Interest rate exposure is managed by monitoring the relationship between earning assets and interest bearing liabilities, focusing primarily on those that are rate sensitive. Rate sensitive assets and liabilities are those that re-price at market interest rates within a relatively short period, defined here as one year or less. The difference between rate sensitive assets and rate sensitive liabilities represents the Company's interest sensitivity gap, which may be either positive (assets exceed liabilities) or negative (liabilities exceed assets).
On December 31, 2000, the Company had a negative gap position based on contractual maturities and prepayment assumptions for the next twelve months, with a negative cumulative interest rate sensitivity gap as a percentage of total earning assets of 25.9 percent.
The Company's ALCO uses model simulations to estimate and manage its interest rate sensitivity. The Company has determined that an acceptable level of interest rate risk would be for net interest income to fluctuate no more than 6 percent, given a change in interest rates (up or down) of 200 basis points. Based on the Company's most recent ALCO model simulations, net interest income would decline 1.8 percent if interest rates would immediately rise 200 basis points. It has been the Company's experience that non-maturity core deposit balances are stable and subjected to limited repricing when interest rates increase or decrease within a range of 200 basis points.
The Company does not presently use interest rate protection products in managing its interest rate sensitivity.
Table 16
INTEREST RATE SENSITIVITY ANALYSIS (1)
(Dollars in thousands) 0-3 4-12 1-5 Over 5
December 31, 2000 Months Months Years Years Total
Federal funds sold $ 39,000 $ 0 $ 0 $ 0 $ 39,000
Securities (2) 36,184 22,775 133,133 16,080 208,172
Loans (3) 131,243 170,700 409,567 130,937 842,447
--------- -------- -------- -------- ---------
Earning assets 206,427 193,475 542,700 147,017 1,089,619
Savings deposits (4) 380,791 0 0 0 380,791
Certificates of deposit 64,614 171,820 180,089 0 416,523
Borrowings 65,020 0 25,000 15,000 105,020
--------- --------- -------- -------- ---------
Interest bearing liabilities 510,425 171,820 205,089 15,000 902,334
--------- --------- -------- -------- ---------
Interest sensitivity gap $(303,998) $ 21,655 $337,611 $132,017 $ 187,285
--------- -------- -------- -------- =========
Cumulative gap $(303,998) $(282,343) $ 55,268 $187,285
========= ========= ======== ========
Ratio of cumulative gap to (27.9) (25.9) 5.1 17.2
total earning assets (%)
Ratio of earning assets to
interest bearing 40.4 112.6 264.6 980.1
liabilities (%)
|
1. The repricing dates may differ from maturity dates for certain assets due to
prepayment assumptions.
2. Securities are stated at amortized cost.
3. Excludes nonaccrual loans.
4. This category is comprised of NOW, savings, and money market deposits. If NOW
and savings deposits (totaling $219,678) were deemed to be repriceable in
"4-12 months," the interest sensitivity gap and cumulative gap would be
$84,320, indicating 7.7% of earning assets and 71.0% of earning assets to
interest bearing liabilities for the "0-3 months" category.
(Dollars in thousands, 2000 Quarters
except per share data) -------------
Fourth Third Second First
------------------------------------ --------- --------- ---------- ---------
Net interest income:
Interest income $20,575 $20,206 $19,896 $19,053
Interest expense 10,136 9,920 9,255 8,324
--------- --------- ---------- ---------
Net interest income 10,439 10,286 10,641 10,729
Provision for loan losses 150 150 150 150
--------- --------- ---------- ---------
Net interest income after provision
for losses 10,289 10,136 10,491 10,579
Noninterest income:
Service charges on deposit accounts 1,283 1,269 1,165 1,148
Trust fees 672 686 669 677
Other service charges and fees 391 421 429 412
Brokerage commissions and fees 485 510 532 894
Other 423 335 437 312
Securities gains (losses) (16) 2 1 1
--------- --------- ---------- ---------
Total noninterest income 3,238 3,223 3,233 3,444
Noninterest expenses:
Salaries and wages 3,292 3,173 3,242 3,370
Employee benefits 747 694 868 868
Occupancy 849 834 827 833
Furniture and equipment 553 529 506 520
Outsourced data processing costs 1,006 1,032 1,056 1,012
Marketing 448 416 408 445
Legal and professional fees 321 287 272 297
FDIC assessments 46 47 46 45
Foreclosed and repossessed asset
management and dispositions 1 42 (1) 49
Amortization of intangibles 138 162 168 168
Other 1,233 1,280 1,349 1,399
--------- --------- ----------- --------
Total noninterest expenses 8,634 8,496 8,741 9,006
--------- --------- ----------- --------
Income before income taxes 4,893 4,863 4,983 5,017
Provision for income taxes 1,957 1,881 1,920 1,910
--------- --------- ----------- --------
Net income $2,936 $2,982 $3,063 $3,107
========= ========= =========== ========
PER COMMON SHARE DATA
Net income diluted $ 0.62 $ 0.62 $ 0.63 $ 0.64
Net income basic 0.62 0.63 0.64 0.64
Cash dividends declared:
Class A common stock 0.28 0.26 0.26 0.26
Market price Class A common stock:
Low close 24 1/4 25 1/2 25 24 3/4
High close 26 5/8 27 1/8 27 1/4 28 3/4
Bid price at end of period 26 1/2 26 27 25 3/8
|
Quarterly Consolidated Income Statement
1999 Quarters
-------------
(Dollars in thousands,
except per share data) Fourth Third Second First
------------------------------------ --------- --------- -------- ---------
Net interest income:
Interest income $18,567 $18,489 $18,472 $18,023
Interest expense 7,955 7,661 7,473 7,373
--------- --------- -------- ---------
Net interest income 10,612 10,828 10,999 10,650
Provision for loan losses 150 150 0 360
--------- --------- -------- ---------
Net interest income after provision
for losses 10,462 10,678 10,999 10,290
Noninterest income:
Service charges on deposit accounts 1,268 1,221 1,189 1,198
Trust fees 649 635 608 597
Other service charges and fees 345 331 386 391
Brokerage commissions and fees 575 404 653 697
Other 298 229 230 244
Securities gains (losses) (19) 9 92 227
--------- --------- -------- ---------
Total noninterest income 3,116 2,829 3,158 3,354
Noninterest expenses:
Salaries and wages 3,271 3,362 3,772 3,477
Pension and other employee benefits 935 935 954 974
Occupancy 820 776 771 768
Furniture and equipment 500 495 514 528
Outsourced data processing costs 942 912 876 966
Marketing 394 397 411 451
Legal and professional fees 383 432 380 377
FDIC assessments 37 37 36 36
Foreclosed and repossessed asset
management and dispositions 18 69 50 48
Amortization of intangibles 167 168 168 168
Other 1,231 1,238 1,307 1,432
--------- --------- ------- ---------
Total noninterest expenses 8,698 8,821 9,239 9,225
--------- --------- ------- ---------
Income before income taxes 4,880 4,686 4,918 4,419
Provision for income taxes 1,839 1,746 1,826 1,708
--------- --------- -------- ---------
Net income $3,041 $2,940 $3,092 $2,711
========= ========= ======== =========
PER COMMON SHARE DATA
Net income diluted $ 0.62 $ 0.60 $ 0.63 $ 0.55
Net income basic 0.63 0.61 0.64 0.55
Cash dividends declared:
Class A common stock 0.26 0.24 0.24 0.24
Market price Class A common stock:
Low close 27 1/2 28 3/4 26 3/8 26 1/8
High close 30 3/8 32 1/2 34 1/2 28 1/4
Bid price at end of period 28 9/16 29 30 1/2 26 3/4
|
Fourth Third
-------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
-------------------------------------------------------------------------------
Assets
Earning Assets
Securities
Taxable $211,108 6.29% $214,467 6.25%
Nontaxable 6,822 7.86 7,427 7.86
-------- ---- -------- ----
Total Securities 217,930 6.34 221,894 6.30
Federal funds sold and
other short term investments 8,602 6.52 2,208 6.67
Loans (2) 837,035 8.10 830,947 8.01
-------- ---- -------- ----
Total Earning Assets 1,063,567 7.72 1,055,049 7.64
Allowance for loan losses (7,195) (7,168)
Cash and due from banks 28,343 25,409
Bank premises and equipment 16,931 17,407
Other assets 14,753 14,140
--------- ---------
$1,116,399 $1,104,837
========== ==========
Liabilities and Shareholders' Equity
Interest bearing liabilities
NOW $54,399 1.95% $50,210 2.20%
Savings deposits 140,903 3.27 139,691 3.33
Money market accounts 172,646 2.26 182,605 2.24
Time deposits 419,613 6.00 423,163 5.84
Federal funds purchased and
other short term borrowings 52,842 5.58 33,185 5.54
Other borrowings 40,000 6.60 46,611 6.55
------ ---- ------ ----
Total Interest Bearing
Liabilities 880,403 4.58 875,465 4.51
Demand deposits 142,591 137,097
Other liabilities 6,265 6,308
----- -----
Total 1,029,259 1,018,870
Shareholders' equity 87,140 85,967
------ ------
$1,116,399 $1,104,837
========== ==========
Interest expense as % of earning
assets 3.79% 3.74%
Net interest income as % of
earning assets 3.93 3.90
-------------------------
|
Consolidated Quarterly Average Balances, Yields and Rates (1) (con't)
2000 QUARTERS
Second First
-------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
-------------------------------------------------------------------------------
Assets
Earning Assets
Securities
Taxable $216,122 6.19% $214,715 6.11%
Nontaxable 7,555 7.89 8,287 8.06
--------- ------- --------- ------
Total Securities 223,677 6.25 223,002 6.18
Federal funds sold and
other short term investments 11,062 5.96 11,196 5.71
Loans (2) 821,854 7.98 791,580 7.89
--------- ------- --------- ------
Total Earning Assets 1,056,593 7.60 1,025,778 7.50
Allowance for loan losses (7,103) (6,930)
Cash and due from banks 33,790 33,566
Bank premises and equipment 17,060 16,693
Other assets 13,999 14,310
--------- -----------
$1,114,339 $1,083,417
========= ==========
Liabilities and Shareholders' Equity
Interest bearing liabilities
NOW $57,674 1.98% $61,501 2.01%
Savings deposits 139,477 3.28 129,252 2.84
Money market accounts 190,317 2.09 191,201 1.99
Time deposits 407,682 5.60 392,263 5.33
Federal funds purchased and
other short term borrowings 28,950 5.20 39,870 4.75
Other borrowings 49,970 6.40 31,289 6.21
--------- ----- -------- ----
Total Interest Bearing
Liabilities 874,070 4.26 845,376 3.96
Demand deposits 149,518 148,341
Other liabilities 5,519 4,993
--------- -------
Total 1,029,107 998,710
Shareholders' equity 85,232 84,707
--------- ----------
$1,114,339 $1,083,417
========= ==========
Interest expense as % of earning
assets 3.52% 3.26%
Net interest income as % of earning
assets 4.08% 4.24%
|
(1) The tax equivalent adjustment is based on a 34% tax rate. All yields/rates
are calculated on an annualized basis.
(2) Nonaccrual loans are included in loan balances. Fees on loans are included
in interest on loans.
Consolidated Quarterly Average Balances, Yields and Rates (1) (con't)
1999 QUARTERS
Fourth Third
-------------------------------------------------------------------------------
Average Yield Average Yield
Balance /Rate Balance /Rate
-------------------------------------------------------------------------------
Assets
Earning Assets
Securities
Taxable $218,751 6.02% $235,767 6.00%
Nontaxable 9,766 8.36 10,537 8.39
-------- ------- ------- -----
Total Securities 228,517 6.12 246,304 6.10
Federal funds sold and
other short term investments 3,641 5.34 130 5.25
Loans (2) 770,054 7.78 754,462 7.79
-------- ------- ------- -----
Total Earning Assets 1,002,212 7.38 1,000,896 7.36
Allowance for loan losses (6,862) (6,733)
Cash and due from banks 42,125 30,940
Bank premises and equipment 16,794 17,048
Other assets 14,403 15,038
--------- ----------
$1,068,672 $1,057,189
========= ==========
Liabilities and Shareholders' Equity
Interest bearing liabilities
NOW $59,254 1.87% $56,067 1.80%
Savings deposits 116,949 2.44 110,156 2.21
Money market accounts 196,517 2.04 206,049 2.01
Time deposits 385,375 5.08 397,206 4.93
Federal funds purchased and other
short term borrowings 56,419 4.54 40,094 4.55
Other borrowings 24,970 5.80 24,970 5.69
------ ---- ------ ----
Total Interest Bearing
Liabilities 839,484 3.76 834,542 3.64
Demand deposits 140,336 135,891
Other liabilities 6,007 5,727
------- -------
Total 985,827 976,160
Shareholders' equity 82,845 81,029
--------- ---------
$1,068,672 $1,057,189
========= =========
Interest expense as % of earning
assets 3.15% 3.04%
Net interest income as % of earning
assets 4.23 4.33
------------------------
|
(1) The tax equivalent adjustment is based on a 34% tax rate. All
yields/rates are calculated on an annualized basis.
(2) Nonaccrual loans are included in loan balances. Fees on loans
are included in interest on loans.
Consolidated Quarterly Average Balances, Yields and Rates (1) (con't)
1999 QUARTERS
Second First
----------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
----------------------------------------------------------------------------
Assets
Earning Assets
Securities
Taxable $256,076 5.88% $253,158 5.90%
Nontaxable 10,606 8.33 11,312 8.35
Total Securities 266,682 5.98 264,470 6.01
------- ---- -------- ----
Federal funds sold and
other short term investments 5,413 4.74 22,084 4.74
Loans (2) 737,383 7.86 709,349 7.94
------- ---- ------- ----
Total Earning Assets 1,009,478 7.35 995,903 7.38
Allowance for loan losses (6,775) (6,479)
Cash and due from banks 34,138 33,185
Bank premises and equipment 17,355 17,665
Other assets 15,055 13,848
------ ------
$1,069,251 $1,054,122
========= ==========
Liabilities and Shareholders' Equity
Interest bearing liabilities
NOW $63,726 1.72% $68,478 1.69%
Savings deposits 108,047 2.16 106,647 2.09
Money market accounts 211,385 1.97 210,673 1.97
Time deposits 410,745 4.86 396,855 5.00
Federal funds purchased and other
short term borrowings 25,161 3.86 31,789 3.50
Other borrowings 24,970 5.73 24,970 5.73
------ ---- ------ ----
Total Interest Bearing
Liabilities 844,034 3.55 839,412 3.56
Demand deposits 140,812 129,822
Other liabilities 5,455 5,876
------- -------
Total 990,301 975,110
Shareholders' equity 78,950 79,012
--------- -------
$1,069,251 $1,054,122
========= =========
Interest expense as % of earning
assets 2.97% 3.00%
Net interest income as % of earning
assets 4.38 4.38%
------------
|
(1) The tax equivalent adjustment is based on a 34% tax rate. All yields/rates
are calculated on an annualized basis.
(2) Nonaccrual loans are included in loan balances. Fees on loans are included
in interest on loans.
Management is responsible for the preparation and content of the accompanying financial statements and the other information contained in this report. Management believes that the financial statements have been prepared in conformity with appropriate generally accepted accounting principles applied on a consistent basis and present fairly Seacoast Banking Corporation of Florida's consolidated financial condition and results of operations. Where amounts must be based on estimates and judgments, they represent the best estimates of management.
Management maintains and relies upon an accounting system and related internal accounting controls to provide reasonable assurance that transactions are properly executed and recorded and that the company's assets are safeguarded. Emphasis is placed on proper segregation of duties and authorities, the development and dissemination of written policies and procedures and a complete program of internal audits and management follow-up. In recognition of cost-benefit relationships and inherent control limitations, some features of the control systems are designed to detect rather than prevent errors, irregularities and departures from approved policies and practices. Management believes the system of controls has prevented or detected on a timely basis any occurrences that could be material to the financial statements and that timely corrective actions have been initiated when appropriate.
The accompanying 2000 financial statements have been audited by Arthur Andersen LLP, certified public accountants. As part of their audit, Arthur Andersen LLP evaluated the accounting systems and related internal accounting controls only to the extent they deemed necessary to determine their auditing procedures.
Their audit would not necessarily disclose all internal accounting control weaknesses because of the limited purpose of their evaluation. Although the scope of Arthur Andersen LLP's audit did not encompass a complete review of and they have not expressed an opinion on the overall system of internal accounting control, they reported that their evaluation disclosed no conditions which they consider to be material internal accounting control weaknesses.
The Board of Directors pursues its oversight role for accounting and internal accounting control matters through an Audit Committee of the Board of Directors comprised entirely of outside Directors. The Audit Committee meets periodically with management, internal auditors and independent accountants. The independent accountants and internal auditors have full and free access to the Audit Committee and meet with it privately, as well as with management present, to discuss internal control accounting and auditing matters.
/s/ Dennis S. Hudson, III ------------------------- Dennis S. Hudson, III President and Chief Executive Officer /s/ William R. Hahl ------------------- William R. Hahl Executive Vice President and Chief Financial Officer /s/ John R. Turgeon ------------------- John R. Turgeon Senior Vice President and Controller |
Board of Directors and Shareholders
Seacoast Banking Corporation of Florida
Stuart, Florida
We have audited the accompanying consolidated balance sheets of Seacoast Banking Corporation of Florida (a Florida corporation) and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial state- ment presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Seacoast Banking Corporation of Florida and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States.
Arthur Andersen LLP
West Palm Beach, Florida,
January 12, 2001.
CONSOLIDATED STATEMENTS OF INCOME
Seacoast Banking Corporation of Florida and Subsidiaries
(Dollars in thousands, except share data)
Year Ended December 31 2000 1999 1998
---------------------------------------------------------------------
Interest on securities
Taxable $13,295 $14,330 $13,562
Nontaxable 413 605 704
Interest and fees on loans 65,521 58,243 54,617
Interest on federal funds sold 501 373 876
--- ----- -----
Total Interest Income 79,730 73,551 69,759
Interest on deposits 9,459 7,672 7,254
Interest on time certificates 23,418 19,736 20,603
Interest on borrowed money 4,758 3,054 1,689
----- --- ---
Total Interest Expense 37,635 30,462 29,546
------ ------ ------
Net Interest Income 42,095 43,089 40,213
Provision for loan losses 600 660 1,710
----- --- -----
Net Interest Income
After Provision for
Loan Losses 41,495 42,429 38,503
Noninterest income
Securities gains (12) 309 612
Other 13,150 12,148 11,775
Noninterest expenses 34,877 35,983 35,721
------ ------ ------
Income Before Income Taxes 19,756 18,903 15,169
Provision for income taxes 7,668 7,119 5,606
----- ----- -----
Net Income $12,088 $11,784 $9,563
======= ======= =======
---------------------------------------------------------------------
Net income per share common stock
Diluted $2.51 $2.40 $1.84
Basic 2.53 2.43 1.88
Average shares outstanding
Diluted 4,814,592 4,909,154 5,192,417
Basic 4,781,215 4,844,943 5,093,032
----------
|
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
Seacoast Banking Corporation of Florida and Subsidiaries
(Dollars in thousands)
December 31 2000 1999
----------- ---- ----
Assets
Cash and due from banks $ 33,505 $ 39,992
Federal funds sold 39,000 19,950
Securities:
Securities held for sale (at market) 178,722 196,215
Securities held for investment
(market values:
2000 - $26,078 and 1999 - $17,464) 25,942 17,439
------ ------
Total Securities 204,664 213,654
Loans 844,546 778,164
Less: Allowance for loan losses 7,218 6,870
----- -----
Net Loans 837,328 771,294
Bank premises and equipment 16,633 16,557
Other real estate owned 346 339
Core deposit intangibles 654 969
Goodwill 2,682 2,982
Other assets 16,561 15,295
------ ------
Total Assets $1,151,373 $1,081,032
========== ========
Liabilities and Shareholders' Equity
Liabilities
Deposits
Demand deposits (noninterest
bearing) $159,775 $140,537
Savings deposits 380,791 379,138
Other time deposits 324,240 294,683
Time certificates of $100,000 or more 92,283 91,602
------ ------
Total Deposits 957,089 905,960
Federal funds purchased and securities
sold under agreement to repurchase,
maturing within 30 days 65,020 66,964
Other borrowings 40,000 24,970
Other liabilities 5,001 6,027
----- -----
1,067,110 1,003,921
|
Commitments and Contingencies (Notes I and N)
Shareholders' Equity
Preferred stock, par value $1.00
per share - authorized 1,000,000
shares, none issued or outstanding. 0 0
Class A common stock, par value $.10 per share
(liquidation preference of $2.50 per share)
authorized 10,000,000 shares, issued 4,824,416
and outstanding 4,357,813 shares in 2000 and
4,822,538 and outstanding 4,469,819 shares in
1999. 482 482
Class B common stock, par value $.10 per share
authorized 810,000 shares, issued and outstanding
358,710 in 2000 and 360,588 shares in 1999. 36 36
Additional paid-in capital 27,831 27,785
Retained earnings 72,562 65,598
Less: Treasury Stock (466,603 shares
in 2000 and 352,719 shares in 1999),
at cost. (14,470) (11,640)
-------- -------
86,441 82,261
Securities valuation allowance (2,178) (5,150)
------- -------
Total Shareholders' Equity 84,263 77,111
------- ------
Total Liabilities and
Shareholders' Equity $1,151,373 $1,081,032
========== =========
----------
|
See notes to consolidated financial statements.
(Dollars in thousands))
Year Ended December 31 2000 1999 1998
---------------------- ---- ---- ----
Increase (Decrease) in Cash and
Cash Equivalents
Cash flows from operating activities
Interest received $78,619 $73,526 $69,675
Fees and commissions received 12,838 12,541 11,385
Interest paid (37,341) (30,527) (29,389)
Cash paid to suppliers and
employees (34,261) (33,405) (31,534)
Income taxes paid (7,566) (7,315) (5,074)
------ ------ ------
Net cash provided by operating
activities 12,289 14,820 15,063
Cash flows from investing activities
Maturities of securities held
for sale 19,699 85,078 141,048
Maturities of securities held
for investment 4,848 4,770 15,991
Proceeds from sale of
securities held for sale 10,203 60,106 105,989
Purchase of securities held for
sale (7,559) (110,258) (302,249)
Purchase of securities held for
investment (13,357) 0 (989)
Proceeds from sale of loans 40,012 3,128 8,312
Net new loans and principal
repayments (107,937) (77,597) (85,652)
Proceeds from sale of other
real estate owned 722 676 765
Additions to bank
premises and equipment (2,054) (804) (1,636)
Net change in other assets (627) 44 (943)
-------- ------- --------
Net cash used in investing
activities (56,050) (34,857) (119,364)
Cash flows from financing activities
Net increase in deposits 51,146 744 99,093
Net increase(decrease) in federal
funds purchased and repurchase
agreements (1,944) (10,794) 25,646
Net increase in other borrowings 15,030 0 24,970
Exercise of stock options 236 1,529 748
Treasury stock acquired (3,119) (4,243) (8,624)
Dividends paid (5,025) (4,695) (4,530)
------- ------- -------
Net cash(used in) provided by
financing activities 56,324 (17,459) 137,303
------- ------ -------
Net increase (decrease) in cash
and cash equivalents 12,563 (37,496) 33,002
Cash and cash equivalents at
beginning of year 59,942 97,438 64,436
------ ------- ------
Cash and cash equivalents at end
of year $72,505 $59,942 $97,438
======= ======= =======
----------
|
See Note P for supplemental disclosures. See notes to consolidated financial statements.
Common Stock
----------------------------
Additional
Class A Class B Paid-in
(Dollars in thousands) Stock Stock Capital
---------------------- ------- ------- ----------
Balance at December 31, 1997 $479 $38 $27,256
Comprehensive Income:
Net Income
Unrealized losses on securities
Comprehensive Income
Cash Dividends Declared
Exchange of Class B
common stock for
Class A common stock 1 (1)
Treasury stock acquired
Common stock issued from Treasury:
For employee benefit plans (2)
For stock options and awards 2
Exercise of stock
options and warrants 1 183
------- ------- ----------
Balance at December 31, 1998 481 37 27,439
Comprehensive Income:
Net Income
Unrealized losses on securities
Comprehensive Income
Cash Dividends Declared
Exchange of Class B
common stock for
Class A common stock 1 (1)
Treasury stock acquired
Common stock issued from Treasury:
For employee benefit plans
For stock options and awards 346
------ ------ ------
Balance at December 31, 1999 482 36 27,785
Comprehensive Income:
Net Income
Unrealized gains on securities
Comprehensive Income
Cash Dividends Declared
Exchange of Class B
common stock for
Class A common stock
Treasury stock acquired
Common stock issued from Treasury:
For employee benefit plans
For stock options and awards 46
Balance at December 31, 2000 $482 $36 $27,831
=== === =======
----------
|
See notes to consolidated financial statements.
Consolidated Statements of Shareholders' Equity (con't)
(In thousands of Retained Treasury
dollars) Earnings Stock
-------------------------- ---------- --------------
Balance at December 31, 1997 $54,673 $(1,289)
Comprehensive Income:
Net Income 9,563
Unrealized losses on securities
Comprehensive Income
Cash Dividends Declared (4,530)
Exchange of Class B
common stock for
Class A common stock
Treasury stock acquired (8,957)
Common stock issued
from Treasury:
For employee benefit plans 130
For stock options and awards (544) 1,310
Exercise of stock options
and warrants
------ ----
Balance at December 31, 1998 59,162 (8,806)
Comprehensive Income:
Net Income 11,784
Unrealized losses on securities
Comprehensive Income
Cash Dividends Declared (4,695)
Exchange of Class B
common stock for
Class A common stock
Treasury stock acquired (5,076)
Common stock issued
from Treasury:
For employee benefit plans 125
For stock options and awards (653) 2,117
------ ------
Balance at December 31, 1999 65,598 (11,640)
Comprehensive Income:
Net Income 12,088
Unrealized losses on securities
Comprehensive Income
Cash Dividends Declared (5,025)
Exchange of Class B
common stock for Class
A common stock
Treasury stock acquired (3,242)
Common stock issued
from Treasury:
For employee benefit plans 72
For stock options and awards (99) 340
------- ------
Balance at December 31, 2000 $72,562 $(14,470)
====== ======
----------
|
See notes to consolidated financial statements.
Securities
Valuation
(In thousands of Equity Comprehensive
dollars) (Allowance) Income
-------- ----------- ------
Balance at December 31, 1997 $ (93)
Comprehensive Income:
Net Income $9,563
Unrealized gains on securities 222 222
-----
Comprehensive Income 9,785
Cash Dividends Declared
Exchange of Class B
common stock for Class
A common stock
Treasury stock acquired
Common stock issued
from Treasury:
For employee benefit plans
For stock options and awards
Exercise of stock
options and warrants ------
Balance at December 31, 1998 129
Comprehensive Income:
Net Income 11,784
Unrealized losses on securities (5,279) (5,279)
------
Comprehensive Income 6,505
Cash Dividends Declared
Exchange of Class B
common stock for Class
A common stock
Treasury stock acquired
Common stock issued from Treasury:
For employee benefit plans
For stock options and awards
Exercise of stock
options and warrants ----
Balance at December 31, 1999 (5,150)
Comprehensive Income:
Net Income 12,088
Unrealized gains on securities 2,972 2,972
------
Comprehensive Income 15,060
Cash Dividends Declared
Exchange of Class B
common stock for
Class A common stock
Treasury stock acquired
Common stock issued from Treasury:
For employee benefit plans
For stock options and awards
Exercise of stock options
and warrants
Balance at December 31, 2000 $(2,178)
========
----------------------------------------------
|
See notes to consolidated financial statements.
Seacoast Banking Corporation of Florida and Subsidiaries
Note A
SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.
Nature of Operations: The company is a single segment bank holding company whose operations and locations are more fully described on page 13 of this annual report.
Use of Estimates: The preparation of these financial statements required the use of certain estimates by management in determining the Company's assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
Securities: Securities that may be sold as part of the Company's asset/liability management or in response to, or in anticipation of changes in interest rates and resulting prepayment risk, or for other factors are stated at market value. Such securities are held for sale with unrealized gains of losses reflected as a component of Shareholders' Equity net of tax. Debt securities that the Company has the ability and intent to hold to maturity are carried at amortized cost. Interest income on securities, including amortization of premiums and accretion of discounts is recognized using the interest method.
The Company generally anticipates prepayments of principal in the calculation of the effective yield for collateralized mortgage obligations and mortgage backed securities. The adjusted cost of each specific security sold is used to compute gains or losses on the sale of securities.
Other Real Estate Owned: Other real estate owned consists of real estate acquired in lieu of unpaid loan balances. These assets are carried at an amount equal to the loan balance prior to foreclosure plus costs incurred for improvements to the property, but no more than the estimated fair value of the property.
Bank Premises and Equipment: Bank premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed principally by the straight line method, over the estimated useful lives as follows: building - 25-40 years, furniture and equipment - 3-12 years.
Purchase Method of Accounting: Net assets of companies acquired in purchase transactions are recorded at fair value at date of acquisition. Core deposit intangibles are amortized on a straight line basis over estimated periods benefited, not exceeding 10 years. Goodwill is amortized on a straight line basis over 15 years.
Mortgage Servicing Rights: The Company acquires mortgage servicing rights through the origination of mortgage loans, and the Company may sell or securitize those loans with servicing rights retained. Under Statement of Financial Accounting Standards No. 122, the Company allocates the total cost of the mortgage loans to the mortgage servicing rights and the loans (without the mortgage servicing rights) based on their relative fair values.
The Company assesses its capitalized mortgage servicing rights for impairment based on the fair value of those rights. The portfolio is stratified by two predominant risk characteristics: loan type and fixed versus variable interest rate. Impairment, if any, is recognized through a valuation allowance for each impaired stratum. Mortgage servicing rights are amortized in proportion to, and over the period of, the estimated net future servicing income.
Revenue Recognition: Interest on loans is accrued based upon the principal amount outstanding. The accrual of interest income is discontinued when a loan becomes 90 days past due as to principal or interest.
When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the allowance for loan losses.
Management may elect to continue the accrual of interest when the estimated net realizable value of collateral is sufficient to cover the principal balance and accrued interest.
Provision for Loan Losses: The provision for loan losses is management's judgment of the amount necessary to increase the allowance for loan losses to a level sufficient to cover losses in the collection of loans.
Net Income Per Share: Net income per share is based upon the weighted average number of shares of both Class A and Class B common stock (Basic) and equivalents (Diluted) outstanding during the respective years.
Cash Flow Information: For the purposes of the consolidated statements of cash flows, the Company considers cash and due from banks and federal funds sold as cash and cash equivalents.
Derivative Financial Instruments: In September 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. In June of 1999, SFAS No. 133 was amended by Statement of Financial Accounting Standards No. 137, which delays the effective date of implementation until fiscal years beginning after June 15, 2000. In June of 2000, SFAS No. 133 was amended by Statement of Financial Accounting Standards No. 138, which addresses issues related to implementation difficulties. The Company will adopt SFAS No. 133 effective January 1, 2001. The Company has completed an in-depth analysis and determined it has no derivative instruments as defined under SFAS No. 133.
NOTE B
CASH, DIVIDEND AND LOAN RESTRICTIONS
In the normal course of business, the Company and its subsidiary bank enter into agreements, or are subject to regulatory agreements, that result in cash, debt and dividend restrictions. A summary of the most restrictive items follows:
The Company's subsidiary bank is required to maintain average reserve balances with the Federal Reserve Bank. The average amount of those reserve balances for the year ended December 31, 2000 was approximately $3,700,000.
Under Federal Reserve regulation, the Company's subsidiary bank is limited as to the amount it may loan to its affiliates, including the Company, unless such loans are collateralized by specified obligations. At December 31, 2000, the maximum amount available for transfer from the subsidiary bank to the Company in the form of loans approximated 20 percent of consolidated net assets.
The approval of the Comptroller of the Currency is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank's profits, as defined, for that year combined with its retained net profits for the preceding two calendar years. Under this restriction the Company's subsidiary bank can distribute as dividends to the Company in 2001, without prior approval of the Comptroller of the Currency, approximately $9,400,000.
NOTE C
SECURITIES
The amortized cost and market value of securities at December 31, 2000, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.
Held for
Investment Held for Sale
-----------------------------------
Amortized Market Amortized Market
(Dollars in thousands) Cost Value Cost Value
---------------------------------------------------------------
Due in less than one year $ 1,941 $ 1,949 $ 996 $ 995
Due after one year
through five years 3,260 3,324 20,000 19,773
Due after five years
through ten years 1,213 1,243 0 0
Due after ten years 0 0 0 0
------- ------ ------ ------
6,414 6,516 20,996 20,768
Mortgage backed
securities 19,528 19,562 129,619 126,620
No contractual maturity 0 0 31,615 31,334
- - ------ ------
$25,942 $26,078 $182,230 $178,722
======= ======= ======== ========
|
Proceeds from sales of securities during 2000 were $10,203,000 with gross gains of $10,000 and gross losses of $22,000. During 1999, proceeds from sales of securities were $60,106,000 with gross gains of $332,000 and gross losses of $66,000. During 1998, proceeds from sales of securities were $105,989,000 with gross gains of $737,000 and gross losses of $125,000.
Securities with a carrying value of $103,755,000 at December 31, 2000, were pledged to secure United States Treasury deposits, other public deposits and trust deposits. The amortized cost and market value of securities follow:
Gross Gross Gross
Amortized Unrealized Unrealized Market
(Dollars in thousands) Cost Gains Losses Value
-------------------------- --------- ----------- ---------- ---------
SECURITIES HELD FOR SALE-2000:
U.S. Treasury and U.S.
Government agencies $20,996 $(228) $20,768
Mortgage Backed
Securities: 129,619 $18 (3,017) 126,620
Mutual funds 23,881 0 (219) 23,662
Other securities 7,734 0 (62) 7,672
-------- ------ -------- --------
$182,230 $18 $(3,526) $178,722
======== ====== ======== ========
SECURITIES HELD FOR
INVESTMENT-2000:
Mortgage Backed Securities $19,528 $113 $(79) $19,562
Obligations of States and
Political Subdivisions 6,414 102 0 6,516
------- ---- ---- -------
$25,942 $215 $(79) $26,078
======= ==== ==== =======
SECURITIES HELD FOR SALE-1999:
U.S. Treasury and U.S.
Government agencies $30,012 $0 $(1,334) $28,678
Mortgage Backed Securities 143,322 18 (6,338) 137,002
Mutual Funds 23,881 0 (404) 23,477
Other Securities 7,072 0 (14) 7,058
-------- --- ------- --------
$204,287 $18 $(8,090) $196,215
======== === ======= ========
SECURITIES HELD FOR
INVESTMENT-1999:
Mortgage Backed Securities $8,427 $55 $(97) $8,385
Obligations of States and
Political Subdivisions 8,912 100 (33) 8,979
Other Securities 100 0 0 100
------- ---- ---- -------
$17,439 $155 $(130) $17,464
======= ==== ===== =======
|
NOTE D
LOANS
An analysis of loans at December 31, follows:
(Dollars in thousands) 2000 1999
----------------------- -------- --------
Real estate construction $ 42,633 $ 42,899
Real estate mortgage 671,424 623,472
Commercial and financial 39,465 33,119
Installment loans to
individuals 90,744 78,013
Other 280 661
-------- --------
$844,546 $778,164
======== ========
|
One of the sources of the Company's business is loans to directors, officers and other members of management. These loans are made on the same terms as all other loans and do not involve more than normal risk of collectability. The aggregate dollar amount of these loans was approximately $5,042,000 and $5,226,000 at December 31, 2000 and 1999, respectively. During 2000, $565,000 of new loans were made and repayments totaled $749,000.
See Page 20 of Management's Discussion and Analysis for information about concentrations of credit risk of all financial instruments.
NOTE E
IMPAIRED LOANS AND ALLOWANCE FOR LOAN LOSSES
Certain impaired loans are measured based on the present value of expected future cash flows discounted at the loan's original effective interest rate. As a practical expedient, impairment may be measured based on the loan's observable market price or the fair value of collateral if the loan is collateral dependent. When the measure of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through a valuation allowance.
The Company's recorded investment in impaired loans and related valuation allowance are as follows:
2000 1999
-------------------- --------------------
Recorded Valuation Recorded Valuation
(Dollars in thousands) Investment Allowance Investment Allowance
------------------------- -------------------- --------------------
Impaired loans:
Valuation allowance required $10 $10 $ 0 $0
No valuation allowance required 0 0 37 0
-- -- -- -
TOTAL $10 $10 $37 $0
=== === === ==
|
The valuation allowance is included in the allowance for loan losses. The average recorded investment in impaired loans for the years ended December 31, 2000 and 1999 were $23,000 and $58,000 respectively.
Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful at which time payments received are recorded as reductions to principal. The Company recognized interest income on impaired loans of $6,000 and $1,000 for the years ended December 31, 2000 and 1999, respectively.
Transactions in the allowance for loan losses for the two years ended December 31, are summarized as follows:
(Dollars in thousands) 2000 1999
------------------------- ---- ----
Balance, beginning of year $6,870 $6,343
Provision charged to operating expense 600 660
Charge offs (643) (626)
Recoveries 391 493
--- ---
Balance, end of year $7,218 $6,870
====== ======
----------
|
NOTE F
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized as follows:
Accumulated
Depreciation Net
& Carrying
(Dollars in thousands) Cost Amortization Value
-------------------------------------------------------------------
December 31, 2000
Premises (including land of
$2,967) $20,985 $8,107 $12,878
Furniture and equipment 13,545 9,790 3,755
---------- -----------------------
$34,530 $17,897 $16,633
========== =======================
December 31, 1999
Premises (including land of $20,331 $7,576 $12,755
$2,967)
Furniture and equipment 14,352 10,550 3,802
---------- -----------------------
$34,683 $18,126 $16,557
========== =======================
----------
|
NOTE G
BORROWINGS
All of the Company's short-term borrowings were comprised of federal funds purchased and securities sold under agreements to repurchase with maturities primarily from overnight to seven days:
(Dollars in thousands) 2000 1999 1998 ------------------------- ---- ---- ---- Maximum amount outstanding at any month end $68,352 $72,172 $77,758 Average interest rate outstanding at end of year 5.37% 4.24% 3.44% Average amount outstanding $38,735 $38,438 $25,908 Weighted average interest rate 5.29% 4.22% 3.96% ---------------------------------------------------------------- |
On July 31, 1998, the Company acquired $24,970,000 in other borrowings, $15,000,000 from the Federal Home Loan Bank (FHLB), principal payable on November 12, 2009 with interest payable quarterly at 6.10% and $9,970,000 from Donaldson, Lufkin & Jenrette (DLJ), principal payable on July 31, 2003, with interest payable quarterly at 5.40%. The DLJ borrowing was called on August 31, 2000. On March 9, 2000 the Company acquired $25,000,000 in additional borrowings from FHLB, principal payable on March 9, 2002 with interest payable quarterly at 6.99%; the borrowing was restructured to a 3 year term on December 1, 2000 at 6.55%. The FHLB $15,000,000 debt is subject to early termination on November 12, 2004 in accordance with the terms of the agreement.
The FHLB debt is secured by residential mortgage loans totaling $40,000,000.
The Company's subsidiary bank has unused lines of credit of $130,500,000 at December 31, 2000.
NOTE H
EMPLOYEE BENEFITS
The Company's profit sharing plan which covers substantially all employees after one year of service includes a matching benefit feature for employees electing to defer the elective portion of their profit sharing compensation. In addition, amounts of compensation contributed by employees are matched on a percentage basis under the plan. The profit sharing contributions charged to operations were $1,034,000 in 2000, $1,355,000 in 1999, and $859,000 in 1998.
The Company's stock option and stock appreciation rights plans were approved by the Company's shareholders on April 25, 1991, April 25, 1996 and April 20, 2000. The number of shares of Class A common stock that may be purchased pursuant to the 1991 and 1996 plans shall not exceed 300,000 shares for each plan and pursuant to the 2000 plan shall not exceed 400,000 shares. The Company has granted options on 250,000 shares and 286,000 shares for the 1991 and 1996 plans, respectively, through December 31, 2000;no options have been granted under the 2000 plan. Under the plans, the option exercise price equals the Class A common stock's market price on the date of grant. All options have a vesting period of four years and a contractual life of ten years.
The following table presents a summary of stock option activity for 1998, 1999 and 2000:
Weighted Weighted
Average Average
Number Fair Option Price Exercise
of Shares Value Per Share Price
---------- --------- ---------------------------
Options
outstanding,
January 1, 1998 285,000 $11.00 - 25.50 $19.33
Exercised (40,000) 11.75 - 21.75 18.10
Granted 156,000 $10.05 29.00 29.00
Cancelled (23,000) 17.50 - 25.50 23.73
---------------------------------------------
Options
outstanding,
December 31, 1998 378,000 11.00 - 29.00 23.14
Exercised (68,000) 11.75 - 21.75 16.99
---------------------------------------------
Options
outstanding,
December 31, 1999 310,000 11.75 - 29.00 24.51
Exercised (11,000) 11.75 - 19.00 17.42
Granted 7,000 6.98 24.63 - 27.13 25.70
Canceled (5,000) 29.00 29.00
Options
outstanding,
December 31, 2000 301,000 11.75 - 29.00 24.72
=============================================
Options
exercisable,
December 31, 2000 282,000 $24.66
======================================================================
|
The following table summarizes information about stock options outstanding at December 31, 2000:
Options Outstanding Options Exercisable
------------------------------------------------------------------------
Weighted
Average
Number of Remaining Weighted Number of Weighted
Range of Shares Contrac- Average Shares Average
Exercise Outstand- tual Life Exercise Exercis- Exercise
Prices ing in Years Price able Price
------------------------------------------------------------------------
$11.75 5,000 1.17 $11.75 5,000 $11.75
17.50 23,000 4.17 17.50 23,000 17.50
17.75 19,000 2.92 17.75 19,000 17.75
19.00 34,000 2.17 19.00 34,000 19.00
21.75 33,000 5.50 21.75 33,000 21.75
24.63 4,000 9.22 24.63 0 24.63
25.50 35,000 6.58 25.50 23,000 25.50
27.13 3,000 9.62 27.13 0 27.13
29.00 145,000 7.54 29.00 145,000 29.00
------------------------------------------------------------------------
301,000 5.99 $24.72 282,000 $24.66
========================================================================
|
The three stock option plans are accounted for under APB Opinion No. 25, and therefore no compensation cost has been recognized. Had compensation cost for these plans been determined consistent with FASB Statement No. 123, the Company's net income and earnings per share would have been reduced to the following pro forma amounts:
(Dollars in
thousands,
except per
share data) 2000 1999 1998
-------------- ---- ---- ----
Net Income:
As Reported $12,088 $11,784 $9,563
Pro Forma 11,771 11,427 9,164
Per Share:
(Diluted):
As Reported 2.51 2.40 1.84
Pro Forma 2.44 2.33 1.76
|
Because the statement 123 method of accounting has not been applied to options granted prior to January 1, 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in 2000 and 1998; risk-free interest rates of 5.65 percent for 2000 and 1998; expected dividend yield of 3.5 percent for the 2000 issue and 3.4 percent for the 1998 issue; expected lives of 7 years; expected volatility of 28.5 percent for 2000 and 38.6 percent for 1998.
NOTE I
LEASE COMMITMENTS
The Company is obligated under various noncancelable operating leases for equipment, buildings and land. At December 31, 2000, future minimum lease payments under leases with initial or remaining terms in excess of one year are as follows:
2001 $ 1,648
2002 1,325
2003 1,173
2004 1,164
2005 948
Thereafter 7,761
-----
$ 14,019
========
|
Rent expense charged to operations was $1,739,000 in 2000, $1,471,000 in 1999, and $1,474,000 in 1998. Certain leases contain provisions for renewal and change with the consumer price index.
Certain property is leased from related parties of the Company at prevailing rental rates. Lease payments to these individuals were $255,000 in 2000, $229,000 in 1999 and $227,000 in 1998.
NOTE J
INCOME TAXES
The provision for income taxes including tax effects of security transaction gains(losses)(2000 - ($5,000); 1999 - $115,000; 1998 - $224,000) are as follows:
(Dollars in thousands)
Year Ended December 31 2000 1999 1998
---------------------- ---- ---- ----
Current
Federal $6,666 $6,495 $5,417
State 1,149 821 664
Deferred
Federal (121) (138) (423)
State (26) (59) (52)
---- ---- ----
$7,668 $7,119 $5,606
====== ====== ======
|
Temporary differences in the recognition of revenue and expense for tax and financial reporting purposes resulted in deferred income taxes as follows:
(Dollars in thousands)
Year ended December 31 2000 1999 1998
---------------------- ---- ---- ----
Depreciation $(180) $(144) $(68)
Allowance for loan losses (78) (329) (420)
Interest and fee income 98 215 80
Other real estate owned 11 75 (57)
Other 2 (14) (10)
--- -- --
TOTAL $(147) $(197) $(475)
===== ===== =====
|
The difference between the total expected tax expense (computed by applying the U.S. Federal tax rate of 35% to pretax income in 2000, 34.4 percent to pretax income in 1999 and 34 percent to pretax income in 1998) and the reported income tax expense relating to income taxes is as follows:
(Dollars in thousands)
Year Ended December 31 2000 1999 1998
---------------------- ---- ---- ----
Tax rate applied to income
before income taxes $6,915 $6,503 $5,157
Increase (decrease) resulting
from the effects of:
Tax-exempt interest on
obligations of states and
political subdivisions (182) (235) (239)
State income taxes (393) (262) (208)
Dividend exclusion (8) (8) (8)
Amortization of
intangibles 201 202 200
Other 12 157 92
-- -- ---
Federal tax provision 6,545 6,357 4,994
State tax provision 1,123 762 612
--- --- ---
Applicable income taxes $7,668 $7,119 $5,606
====== ====== ======
|
The net deferred tax assets (liabilities) are comprised of the following:
(Dollars in thousands)
Year Ended December 31 2000 1999
---------------------- ---- ----
Allowance for loan losses $2,452 $2,374
Other real estate owned 3 14
Net unrealized securities losses 1,702 3,302
Other 87 81
-- --
Gross deferred tax assets 4,244 5,771
Depreciation (525) (705)
Interest and fee income (896) (798)
Other (37) (29)
--- ---
Gross deferred tax liabilities (1,458) (1,532)
Deferred tax asset valuation allowance 0 0
- -
Net deferred tax assets $2,786 $4,239
===== =====
|
The tax effects of unrealized gains (losses) included in the calculation of comprehensive income as presented in the statements of shareholder's equity for the three years ended December 31, are as follows:
2000 $1,600 1999 $3,044 1998 $ 152 ---------- |
NOTE K
NONINTEREST INCOME AND EXPENSES
Details of noninterest income and expenses follow:
(Dollars in thousands)
Year Ended December 31 2000 1999 1998
---------------------- ---- ---- ----
Noninterest income
Service charges on deposit accounts $4,865 $4,876 $4,359
Trust fees 2,704 2,489 2,144
Other service charges and fees 1,653 1,453 1,655
Brokerage commissions and fees 2,421 2,329 2,105
Other 1,507 1,001 1,512
--------- ---------- ---------
13,150 12,148 11,775
Securities gains(losses) (12) 309 612
--------- ---------- ---------
$13,138 $12,457 $12,387
========= ========== =========
Noninterest expenses
Salaries and wages $13,077 $13,882 $14,046
Employee benefits 3,177 3,798 3,119
Occupancy 3,343 3,135 3,129
Furniture and equipment 2,108 2,037 2,436
Outsourced data processing costs 4,106 3,696 2,881
Marketing 1,717 1,653 1,964
Legal and professional fees 1,177 1,572 1,029
FDIC assessments 184 146 135
Foreclosed and repossessed asset
management and dispositions 91 185 298
Amortization of intangibles 636 671 671
Other 5,261 5,208 6,013
--------- ---------- ---------
$34,877 $35,983 $35,721
========= ========== =========
----------
|
NOTE L
SHAREHOLDERS' EQUITY
The Company has reserved 100,000 Class A common shares for issuance in connection with an employee stock purchase plan and 150,000 Class A common shares for issuance in connection with an employee profit sharing plan. At December 31, 2000, an aggregate of 35,236 shares and 52,422 shares, respectively, have been issued as a result of employee participation in these plans.
Holders of Class A common stock are entitled to one vote per share on all matters presented to shareholders. Holders of Class B common stock are entitled to 10 votes per share on all matters presented to shareholders. Class A and Class B common stock vote together as a single class on all matters, except as required by law or as provided otherwise in the Company's Articles of Incorporation. Each share of Class B common stock is convertible into one share of Class A common stock at any time prior to a vote of shareholders authorizing a liquidation or dissolution of the Company.
The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital to average assets (as defined). Management believes, as of December 31, 2000, that the Company meets all capital adequacy requirements to which it is subject.
As of December 31, 2000, the most recent notification from the Company's regulator categorized the Company as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth below. There are no conditions or events since that notification that management believes have changed the institution's category.
Minimum for
Capital Adequacy
Purposes
---------------------
(Dollars in thousands) Amount Ratio Amount Ratio
---------------------- ------ ----- ------ -----
At December 31, 2000:
Total Capital (to risk-
weighted assets) $90,054 12.14% $59,327 >=8.00%
Tier 1 Capital (to
risk-weighted assets) 82,836 11.17 29,664 >=4.00%
Tier 1 Capital (to adjusted
average assets) 82,836 7.44 44,511 >=4.00%
At December 31, 1999:
Total Capital (to risk-
weighted assets) 84,837 12.24% $55,441 >=8.00%
Tier 1 Capital (to
risk-weighted assets) 77,967 11.25 27,721 >=4.00%
Tier 1 Capital (to adjusted
average assets) 77,967 7.32 42,598 >=4.00%
-------(con't)------
Minimum To Be
Well Capitalized
Under Prompt
Corrective Action
Provisions
---------------------
(Dollars in thousands) Amount Ratio
2000
Total Capital (to risk-
weighted assets) $74,159 >=10.00%
Tier 1 Capital (to
risk-weighted assets) 44,495 >= 6.00%
Tier 1 Capital (to adjusted
average assets) 55,639 >= 5.00%
1999
Total Capital (to risk-
weighted assets) 69,302 >=10.00%
Tier 1 Capital (to
risk-weighted assets) 41,581 >= 6.00%
Tier 1 Capital (to adjusted
average assets) 53,247 >= 5.00%
----------
|
The above ratios are comparable for the Company's wholly owned banking subsidiary.
NOTE M
SEACOAST BANKING CORPORATION OF FLORIDA
(PARENT COMPANY ONLY) FINANCIAL INFORMATION
BALANCE SHEETS
(Dollars in thousands)
December 31 2000 1999
---------------------- ---- ----
Assets
Cash $ 10 $ 10
Securities purchased under
agreement to resell with
subsidiary bank, maturing
within 30 days 785 2,881
Securities held for sale 425 473
Investment in subsidiaries 82,920 74,151
Other assets 291 195
--- ---
$84,431 $77,710
======= =======
Liabilities and Shareholders'
Equity
Liabilities $ 168 $ 599
Shareholders' Equity 84,263 77,111
------ ------
$84,431 $77,710
======= =======
|
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended December 31 2000 1999 1998
---------------------- ---- ---- ----
Increase (Decrease) in Cash
Cash flows from operating
activities
Interest received $ 106 $ 149 $ 187
Dividends received 6,682 11,140 7,148
Income taxes received 186 139 565
Cash paid to suppliers (1,162) (596) (534)
---- ------ ----
Net cash provided by operating
activities 5,812 10,832 7,366
Cash flows from investing
activities
Decrease (increase) in securities
purchased under agreement to
resell, maturing in 30 days 2,096 (2,881) 3,498
Maturities of securities held
for sell 0 1,000 0
------ ------ -----
Net cash provided by (used in)
investing activities 2,096 (1,881) 3,498
Cash flows from financing
activities
Advance (to)from subsidiary 0 (1,542) 1,542
Exercise of stock options 236 1,529 748
Treasury stock acquired (3,119) (4,243) (8,624)
Dividends paid (5,025) (4,695) (4,530)
------ ------ ------
Net cash used in financing
activities (7,908) (8,951) (10,864)
------- ------ ------
Net change in cash 0 0 0
Cash at beginning of year 10 10 10
-- -- --
Cash at end of year $ 10 $ 10 $ 10
==== ===== =====
|
RECONCILIATION OF NET INCOME TO
CASH PROVIDED BY OPERATING
ACTIVITIES
Net income $12,088 $11,784 $9,563
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in undistributed income
of subsidiaries (5,768) (977) (2,659)
Other net (508) 25 462
--- ---- ----
Net cash provided by operating
activities $5,812 $10,832 $7,366
====== ======= ======
|
STATEMENTS OF INCOME
(Dollars in thousands)
Year Ended December 31 2000 1999 1998
------------------------- ---- ---- ----
Income
Dividends
Subsidiary $6,650 $11,100 $7,123
Other 32 32 33
Interest 106 124 182
--- --- ---
6,788 11,256 7,338
Expenses 686 635 573
--- --- ---
Income before income tax credit
and equity in undistributed
income of subsidiaries 6,102 10,621 6,765
Income tax credit 218 186 139
--- --- ---
Income before equity in
undistributed income of
subsidiaries 6,320 10,807 6,904
Equity in undistributed income of
subsidiaries 5,768 977 2,659
----- ----- -----
Net income $12,088 $11,784 $9,563
====== ====== ======
----------
|
NOTE N
CONTINGENT LIABILITIES AND COMMITMENTS WITH OFF BALANCE SHEET RISK
The Company and its subsidiary bank, because of the nature of their business, are at all times subject to numerous legal actions, threatened or filed.
Management, based upon advice of legal counsel, does not expect that the final outcome of threatened or filed suits will have a materially adverse effect on its results of operations or financial condition.
The Company's subsidiary bank is a party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit.
The subsidiary bank's exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contract or notional amount of those instruments. The subsidiary bank uses the same credit policies in making commitments and standby letters of credit as it does for on balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The subsidiary bank evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the bank upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, equipment, and commercial and residential real estate. Of the $88,513,000 in outstanding commitments at December 31, 2000, $43,372,000 is secured by 1/4 family residential properties.
Contract or
Notional Amount
(Dollars in thousands)
Year Ended December 31 2000 1999
---------------------- ---- ----
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $ 88,513 $ 91,154
Standby letters of credit and
financial guarantees written:
Secured 1,256 844
Unsecured 558 498
|
NOTE O
MORTGAGE SERVICING RIGHTS, NET
The following is an analysis of the mortgage servicing rights, net at December 31:
(Dollars in Thousands) 2000 1999
---------------------- ---- ----
Unamortized Balance at
beginning of year $1,529 $1,701
Origination of mortgage
servicing rights 0 272
Amortization (233) (444)
------ ------
1,296 1,529
Less: Reserves (126) (126)
------ ------
TOTAL $1,170 $1,403
====== ======
(Dollars in Thousands)
Year Ended December 31 2000 1999
---------------------- ---- ----
Unpaid principal
balance of serviced
loans for which
mortgage servicing
rights are
capitalized $ 123,391 $ 140,271
========= =======
Unpaid principal
balance of serviced
loans for which
there are no
servicing rights
capitalized. $ 26,773 $ 31,334
========= =======
|
The fair value of capitalized mortgage servicing rights was estimated using a discounted cash flow model. Prepayment speed projections and market assumptions regarding discount rate, servicing cost, escrow earnings credits, payment float and advance cost interest rates were determined from guidelines provided by a third-party mortgage servicing rights broker.
NOTE P
SUPPLEMENTAL DISCLOSURES FOR CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Income to Net Cash Provided by Operating Activities for three years ended:
(Dollars in thousands)
Year Ended December 31 2000 1999 1998
------------------------------------ ------------------------------
Net Income $12,088 $11,784 $9,563
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation and amortization 2,559 2,925 3,020
Provision for loan losses 600 660 1,710
Credit for deferred taxes (147) (197) (475)
Gain (loss)on sale of securities 12 (309) (612)
Gain on sale of loans (546) (29) (683)
Loss on sale and write
down of foreclosed assets 16 77 185
Loss on disposition of
equipment 14 25 105
Change in interest receivable (836) 128 (47)
Change in interest payable 294 (65) 157
Change in prepaid expenses (677) (1) (814)
Change in accrued taxes 251 (25) 1,029
Change in other liabilities (1,339) (153) 1,925
----- ----- ----
TOTAL ADJUSTMENTS 201 3,036 5,500
----- ----- -----
Net cash provided by operating
activities $12,289 $14,820 $15,063
======= ======= =======
Supplemental disclosure of non-cash
investing activities:
Market value adjustment to
securities $4,564 $(8,297) $178
Transfers from loans to other real
estate owned 745 804 702
----------
|
NOTE Q
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value at December 31:
Cash and Cash Equivalents
The carrying amount was used as a reasonable estimate of fair value.
Securities
The fair value of U.S. Treasury and U.S. Government agency, mutual fund and mortgage backed securities are estimated based on bid prices published in financial newspapers or bid quotations received from securities dealers.
The fair value of many state and municipal securities are not readily available through market sources, so fair value estimates are based on quoted market price or prices of similar instruments.
Loans
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, mortgage, etc. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories.
The fair value of loans, except residential mortgage, is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan. For residential mortgage loans, fair value is estimated by discounting contractual cash flows adjusting for prepayment assumptions using discount rates based on secondary market sources adjusted to reflect differences in servicing and credit costs.
Deposit Liabilities
The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.
Commitments to Extend Credit and Standby Letters of Credit
The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the present credit-worthiness of the counterparties.
2000 1999
----------------------------------------
(Dollars in thousands) Carrying Fair Carrying Fair
Year Ended December 31 Amount Value Amount Value
---------------------- ------ ----- ------ -----
Financial Assets
Cash and cash
equivalents $ 72,505 $ 72,505 $ 59,942 $ 59,942
Securities 204,664 204,800 213,654 213,679
Loans, net 837,328 837,915 771,294 755,220
Financial Liabilities
Deposits 957,089 959,056 905,960 902,043
Borrowings 105,020 105,894 91,934 92,808
Contingent Liabilities
Commitments to extend
credit 0 787 0 842
Standby letters of
credit 0 19 0 16
|
NOTE R
EARNINGS PER SHARE
Basic earnings per common share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share were determined by including assumptions of stock option conversions.
Year ended December 31
(Dollars in thousands except Net Per-share
per share data) Income Shares Amount
---------------------- ------ ------ ------
2000
Basic Earnings Per Share
Income available to common
shareholders $12,088 4,781,215 $2.53
=====
Options issued to executives
(See Note H) 33,377
----- -------
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $12,088 4,814,592 $2.51
====== ========= =====
1999
Basic Earnings Per Share
Income available to common
shareholders $11,784 4,844,943 $2.43
=====
Options issued to executives
(See Note H) 64,211
----- -------
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $11,784 4,909,154 $2.40
====== ========= =====
1998
Basic Earnings Per Share
Income available to common
shareholders $ 9,563 5,093,032 $1.88
=====
Options issued executives
(See Note H) 99,385
----- -------
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $ 9,563 5,192,417 $1.84
====== ========= =====
|
Exhibit 10.12
FIRST NATIONAL BANK COMPANY OF THE TREASURE COAST
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE ONE
Purpose and Adoption of Plan
1.1 "Introduction" First National Bank Company of the Treasure Coast. (the "Company") and its affiliates hereby establish the FNBTC Compensation Deferral Plan (the "Plan") effective as of November 1, 2000.
1.2 "Purpose of Plan" The Plan is designed to permit a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of the Company to elect to defer a portion of their compensation until their termination of employment with the Company, and to receive a matching and other Company contributions which they are restricted from receiving because of legal limitations under the Company's tax-qualified savings plan.
ARTICLE TWO
Definitions
For purposes of the Plan, the following terms shall have the following meanings unless a different meaning is plainly required by the context. The words in the masculine gender shall include the feminine and neuter genders and words in the singular shall include the plural and words in the plural shall include the singular.
"Account" shall mean the account established and maintained by the Plan Committee for bookkeeping purposes to reflect the interest of a Participant in the Plan. The Plan Committee shall maintain separate sub-accounts within each Account to reflects elective contributions by the Participation under Article Four and Company contributions under Article Five, as well as additions, withdrawals, and adjustments (including adjustments for appreciation and depreciation in the deemed investments) to each of such sub-accounts. The Account shall be bookkeeping entries only and shall be utilized solely as devices for the measurement and determination of the amounts to be paid to a Participant or Beneficiary under the Plan.
"Base Pay" shall mean, with respect to each Participant, his regular base pay for a given payroll period, without reduction for 401(k), Section 125, or other pay reductions Bonus, and without regard to qualified plan limits under Code Section 401(a)(17).
"Beneficiary" shall mean any person, estate, trust, or organization entitled to receive any payment under the Plan upon the death of a Participant. The Participant shall designate his beneficiary on a form provided by the Plan Committee.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean First National Bank of Treasure Coast, with principal offices in Stuart, Florida.
"Compensation" shall include a Participant's Base Pay, Elective Profit Sharing Contributions, and Other Compensation.
"Deferral Election" shall mean the Participant's written election under the Plan to defer a portion of his Compensation pursuant to Article Four.
"Effective Date" shall mean October 1, 2000.
"Elective Profit Sharing" shall mean, with respect to each Participant, his profit sharing bonus paid by the Company, without reduction for 401(k), Section 125, or other pay reductions, and without regard to qualified plan limits under Code Section 401(a)(17).
"Employee" shall mean any person who is actively employed by the Company.
"Entry Date" shall mean the first day of the calendar month next following or coinciding with the date on which an Employee is designated by the Plan Committee as eligible for the Plan.
"ERISA" shall mean Public Law 93-406, popularly known as the "Employee Retirement Income Security Act of 1974", as amended.
"Investment Election" shall mean the Participant's election to have his Account invested pursuant to Section 7.1.
"Other Compensation" shall mean, with respect to each Participant, any
incentives or commissions paid by the Company, without reduction for 401(k),
Section 125, or other pay reductions, and without regard to qualified plan
limits under Code Section 401(a)(17).
"Participant" shall mean an Employee of the Company who meets all conditions of eligibility under Article Three and participates in the Plan in accordance with sections of Article Four.
"Plan" shall mean the FNBTC Executive Deferred Compensation Plan, as amended from time to time.
"Plan Committee" shall mean the Committee appointed to administer the Plan, as provided in Article Ten.
"Plan Year" shall mean the twelve (12) month period commencing January 1st and ending on the last day of December next following.
ARTICLE THREE
Eligibility
The Plan Committee determine which individuals or groups of employees shall be eligible to participate in the Plan. Participation shall be limited to persons who members of Executive Management of the Company, or who otherwise constitute members of a select group of management or highly compensated Employees of the Company, as determined by the Plan Committee.
ARTICLE FOUR
Deferral of Compensation by Participant
4.1 "Compensation Which May Be Deferred" A Participant may elect to defer from his Compensation otherwise payable to him during a given calendar year any whole percentage or specified dollar amount of his Compensation during such given calendar year. Such amount(s) shall be credited to his Account under the Plan. A Participant shall make separate deferral elections of Base Pay, Other Compensation, and Elective Profit Sharing (but only effective for the Elective Profit Sharing to be paid in January 2002).
Notwithstanding the foregoing, (i) the deferrals under this Plan shall be reduced by the maximum employee pre-tax contribution which can be made during such calendar year to the Company's tax-qualified savings plan under Section 402(g) of the Code; and (ii) no amount shall be withheld from a Participant's Compensation as a deferral under this Plan for a given calendar year until the Participant has made the maximum employee pre-tax contribution which can be made during such calendar year to the FNBTC 401(k) Plan.
4.2 "Establishment of Account" An Account shall be established for each Participant by the Plan Committee as of the Entry Date for of such Participant. The Participant's Account shall be credited at least quarterly with the Compensation he has deferred under the Plan.
4.3 "The Form of the Deferral Election" A Deferral Election shall be made in writing on a form prescribed by the Plan Committee. The Deferral Election shall state the percentage of such Compensation to be deferred
4.4 "Making and Modifications of Deferral Elections"
(a) The initial Deferral Election of a new Participant shall be made by written notice signed by the Participant and delivered to the Plan Committee in a form acceptable to the Plan Committee, not later than thirty (30) days after the later of October 1, 2000 or the Employee's Entry Date. Any modification or revocation of the most recent Deferral Election shall be made by written notice signed by the Participant and delivered to the Plan Committee not later than the first day of the next succeeding Plan Year and shall be effective on the first day of such succeeding Plan Year. A Deferral Election with respect to the deferral of future Compensation shall continue for each future Plan Year, unless and until the Participant submits a new election form on a timely basis as provided herein.
(b) At the time of the initial Deferral Election, the Participant shall elect the form of payment to be received pursuant to Section 8.1. The initial Deferral Election with respect to the form of payments and the time for the commencement of payments shall govern the distribution of an account, except as provided in Section 8.5.
ARTICLE FIVE
Company Contributions
5.1 "Company Match--Regular Employee Pre-tax Contributions" Each year, the Company shall credit for each Participant a matching contribution equal to the following, but only for each Participant who makes the maximum elective pre-tax deferral which is permitted under the terms of the FNBTC 401(k) Plan (taking into account limitations imposed under Section 402(g) of the Code):
(a) Determine the lesser of (i) the maximum matching contribution which would be available under the FNBTC 401(k) Plan for such calendar year respect to regular employee pre-tax contributions under the FNBTC 401(k) Plan; and (ii) the elective deferrals made by the Participant under this Plan with respect to his Base Pay and Other Compensation;
(b) Subtract from the amount determined under (a) immediately above the employer matching contribution actually allocated to the Participant under the FNBTC 401(k) Plan for such year with respect to regular employee pre-tax contributions under the FNBTC 401(k) Plan.
5.2 "Company Match--Elective Profit Sharing Contributions" Each year, the Company shall credit for each Participant a matching contribution equal to the following, but only for each Participant who makes the maximum elective pre-tax deferral which is permitted under the terms of the FNBTC 401(k) Plan (taking into account limitations imposed under Section 402(g) of the Code):
(a) Determine the lesser of (i) the maximum matching contribution which would be available under the FNBTC 401(k) Plan for such calendar year with respect to elective profit sharing contributions made by the Participant under the FNBTC 401(k) Plan; and (ii) the deferrals by the Participant under this Plan with respect to his Elective Profit Sharing Contributions;
(b) Subtract from the amount determined under (a) immediately above the employer matching contribution actually allocated to the Participant under the FNBTC 401(k) Plan for such year with respect to the Participant's elective profit sharing contributions under the FNBTC 401(k) Plan.
5.3 "Company Contribution--Retirement Contributions" Each year, the Company shall credit for each Participant a contribution equal to the following:
(a) Determine the the maximum Retirement Contribution which would be available under the FNBTC 401(k) Plan for such calendar year for the Participant;
(b) Subtract from the amount determined under (a) immediately above the
Retirement Contribution actually allocated to the Participant under the FNBTC
401(k) Plan for such year.
5.4 "Company Contribution--Non-Elective Profit Sharing Contributions" Each year the Company shall credit for each Participant a contribution equal to the following:
(a) Determine the the maximum Non-Elective Profit Sharing Contribution which would be available under the FNBTC 401(k) Plan for such calendar year for the Participant;
(b) Subtract from the amount determined under (a) immediately above the Non-Elective Profit Sharing Contribution actually allocated to the Participant under the FNBTC 401(k) Plan for such year.
5.5 "Maximum Contributions." For purposes of Sections 5.1 through 5.4 above, whenever a Section refers to the maximum contribution, it shall mean the maximum contribution which would be available without regard to any legal limitations under the Code, such as Sections 401(a)(17) and 402(g).
ARTICLE SIX
Vesting
A Participant shall be immediately vested in his sub-account attributable
to his elective contributions under Article Four. A Participant shall vest in
his sub-account attributable to Company contributions under Article Five at the
rate of 25% for each year of Vesting Service accrued by the Participant under
the FNBTC 401(k) Plan, with full vesting after such Participant has accrued four
(4) years of such Vesting Service. In addition, if a Participant would become
immediately vested in his Company contributions under the FNBTC 401(k) Plan for
any reason (such as death, disability, or retirement on or after age 55), then
such Participant shall also become immediately vested in his entire Account
under this Plan.
ARTICLE SEVEN
Investments
7.1 "In General The Accounts of each Participant shall be credited as of each quarter with its allocable share of deemed investment gains and losses. A Participant may direct how his Accounts are deemed to be invested, but only among such deemed investment vehicles as are made available by the Plan Committee from time to time. The Investment Request shall be made in accordance with procedures announced by the Plan Committee. The Investment Election made in accordance with this Article Seven shall continue unless the Participant changes the Investment Election in accordance with the procedures announced by the Plan Committee. Investment Elections and changes thereto directed by the Participant shall be permitted on a quarterly basis, but shall be effective prospectively only, in accordance with procedures announced by the Plan Committee.
7.2 "Gains Invested in Same Option" Dividends, interest and other distributions credited with respect to any deemed investment shall be deemed to be invested in the same investment option.
7.3 "Participant Reports on Account Values" At the end of each Plan Year (or on a more frequent basis as determined by the Plan Committee), a report shall be issued to each Participant who has an Account stating the value of such Account.
ARTICLE EIGHT
Distribution of Accounts
8.1 "Distribution upon Termination of Employment" Upon the Participant's termination of employment with the Company, the Participant shall receive the balance of his Account, in cash in one of the following forms:
(a) a lump sum;
(b) monthly installments over a period not to exceed five (5) years; or
(c) a combination of an initial lump sum of a specified dollar amount and the remainder in monthly installments over a period not to exceed five (5) years;
as specified on the Participant's initial Deferral Election, unless the Participant has amended the distribution date or form pursuant to Section 8.5 hereof. A lump sum distribution will be paid in lieu of installments if the total Plan balances is $25,000 or less. If the Participant fails to specify a form of payment, his Accounts shall be distributed in a lump sum.
In the event payment is made in installments, the Participant's Account
shall continue to be adjusted for earnings as provided in Article Seven, and the
amount of the payment to be made in a given year shall be equal to (i) times
(ii), where (i) equals the value of the Participant's Account as of the most
recent Valuation Date, and (ii) equals a fraction, the numerator of which is
one, and the denominator of which is the number of installments to be paid under
the Participant's election (including the current installment).
8.2 "Distribution on Participant's Death" Upon the death of a Participant prior to the complete distribution of his Accounts, the balance of his Accounts shall be paid in lump sum to his Beneficiary within sixty (60) days following the close of the calendar quarter in which the Plan Committee is provided evidence of the Participant's death (or as soon as reasonably practicable thereafter). In the event a beneficiary designation is not on file or the Beneficiary is deceased or cannot be located, payment will be made to the estate of the Participant . In the event of the death of a Participant subsequent to the commencement of installment payments but prior to the completion of the payments, the installment payments shall continue and shall be paid to the Beneficiary as if the Participant had not died; provided, however, if the Beneficiary is a trust or estate, the remaining benefits shall be paid in a lump sum.
8.3 "Change of Beneficiary Permitted" To the extent permitted by law, the beneficiary designation may be changed by the Participant at any time without the consent of the prior Beneficiary.
8.4 "Hardship Withdrawal" Upon written request by a Participant, the Chief Executive Officer of the Company, in his sole discretion, may distribute to the Participant prior to his termination of employment with the Company such amount of the Participant's Account balance which the Chief Executive Officer determines is necessary to provide for a financial hardship suffered by the Participant. For this purpose, "financial hardship" shall mean a severe financial hardship as determined under federal income tax law, regulations and rulings which are applicable to non-qualified deferred compensation plans. Notwithstanding the foregoing, if the Chief Executive Officer of the Company requests a hardship distribution, the determination of whether the Chief Executive Officer has suffered a financial hardship, and the amount to be distributed in relief thereof, shall be determined by a committee of three (3) members of the Board who are not officers or employees of the Company, such committee to be specially appointed as necessary by a majority of the members of the Board who are not officers or employees of the Company.
8.5 "Amending the Election to Change Form of Distribution at Termination of Employment" A Participant may amend his election as to the form of payment, provided that such change is made at least one year prior to the Participant's termination of employment. Any such amended election shall apply to all deferrals from all prior years which are payable at the Participant's retirement or termination of employment.
ARTICLE NINE
Nature of Employer Obligation and Participant Interest
9.1 "In General" A Participant, his Beneficiary, and any other person or persons having or claiming a right to payments under the Plan shall rely solely on the unsecured promise of the Company set forth herein, and nothing in this Plan shall be construed to give a Participant, Beneficiary, or any other person or persons any right, title, interest, or claim in or to any specified assets, fund, reserve, account, or property of any kind whatsoever owned by the Company or in which it may have any right, title or interest now or in the future; but a Participant shall have the right to enforce his claim against the Company in the same manner as any unsecured creditor.
9.2 "Benefits Payable from General Assets of Company" Except to the extent that amounts hereunder are paid from a so-called "rabbi" trust established by the Company as a funding vehicle for the Plan, all amounts paid under the Plan shall be paid in cash from the general assets of the Company. Benefits shall be reflected on the accounting records of the Company but shall not be construed to create, or require the creation of, a trust, custodial or escrow accounting. Nothing contained in this Plan, and no action taken pursuant to its provision, shall create or be construed to create a trust or fiduciary relationship of any kind between the Company and an Employee, Beneficiary of an Employee or any other person. Neither the Employee, Beneficiary of an Employee nor any other person shall acquire any interest greater than that of an unsecured creditor.
9.3 "Other Benefit Programs" Any benefits payable under the Plan shall be independent of, and in addition to, any other benefits or compensation of any sort, payable to or on behalf of the Participant under or pursuant to any other employee benefit program sponsored by the Company for its employees generally.
ARTICLE TEN
Administration of the Plan
10.1 "In General" The Plan Committee shall be responsible for the general administration of the Plan. The members of the Plan Committee shall be appointed by and may be removed by the Board, in each case by written notice delivered to the Plan Committee member. The Plan Committee may select a chairman and may select a secretary (who may, but need not, be a member of the Plan Committee) to keep its records or to assist it in the discharge of its duties. A majority of the members of the Plan Committee shall constitute a quorum for the transaction of business at any meeting. Any determination or action of the Plan Committee may be made or taken by a majority of the members present at any meeting thereof, or without a meeting by resolution or written memorandum concurred in by a majority of members. Meetings may be held electronically.
10.2 "No Special Compensation for Committee" No member of the Plan Committee shall receive any compensation from the Plan for his service.
10.3 "Powers of the Committee" The Plan Committee shall administer the Plan in accordance with its terms as interpreted by the Plan Committee and shall have all powers necessary to carry out the provisions of the Plan as interpreted by the Plan Committee. It shall interpret the Plan and shall determine all questions arising in the administration, interpretation and application of the Plan. It shall determine the eligibility for benefits, the amount of any benefit due and the manner in which any benefit is to be paid by the Plan. It will construe the Plan, supplying any omissions, reconciling any differences and determining factual issues relating to the Plan. Any such determination by it shall be conclusive and binding on all persons. It may adopt such regulations as it deems desirable for the conduct of its affairs. It may appoint such accountants, counsel, actuaries, specialists and other persons as it deems necessary or desirable in connection with the administration of this Plan, and shall be the agent for the service of process.
10.4 "Expenses of Committee Reimbursed" The Plan Committee shall be reimbursed by the Company for all reasonable expenses incurred by it in the fulfillment of its duties. Such expenses shall include any expenses incident to its functioning, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan.
10.5 "Appointment of Agents" The Plan Committee is responsible for the daily administration of the Plan. It may appoint other persons or entities to perform any of its fiduciary or other functions. The Plan Committee and any such appointee may employ advisors and other persons necessary or convenient to help it carry out its duties, including their respective fiduciary duties. The Plan Committee shall review the work and performance of each such appointee, and shall have the right to remove any such appointee from his position at any time, with or without notice. Any person, group of persons or entity may serve in more than one fiduciary capacity.
10.6 "Plan Accounting" The Plan Committee shall maintain accurate and detailed records and Accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers and other transactions concerning the Plan. Such Accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by the Board and by persons designated thereby.
10.7 "Plan to Comply with Law" The Plan Committee shall take all steps necessary to ensure that the Plan complies with applicable laws at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency; maintaining of adequate Participants' records; withholding of applicable taxes and filing of all required tax forms and returns; recording and transmission of all notices required to be given to Participants and their Beneficiaries; the receipt and dissemination, if required, of all reports and information received from the Company; and doing such other acts necessary for the administration of the Plan. The Plan Committee shall keep a record of all of its proceeding s and acts. and shall keep all such books of account, records and other data as may be necessary for proper administration of the Plan. The Plan Committee shall notify the Company upon its request of any action taken by it, and when required, shall notify any other interested person or persons.
10.8 "Claims and Appeals Procedures; Consistent Application of Procedures Required" Upon application for benefits made by a Participant or Beneficiary, the Plan Committee shall determine, no later than ninety (90) days after receipt of the claim, whether or not the benefits applied for shall be denied either in whole or in part and so notify the applicant in writing. If benefits applied for are denied either in whole or in part, the following provisions shall govern:
(a) Notice of Denial. The Plan Committee, upon its denial of a claim for benefits under the Plan, shall provide the applicant with the aforesaid written notice of such denial setting forth:
(i) the specific reason for the denial;
(ii) specific reference to pertinent Plan provisions upon which the denial is based;
(iii)a description of any additional material or information necessary for the claimant to perfect the claim; and
(iv) an explanation of the claimant's right with respect to the claims review procedure as provided in subsection (b) of this Section.
(b) Claims Review. Every claimant with respect to whom a claim is denied shall, upon written notice of such denial, have the right in the period which expires sixty (60) days after receipt by the claimant of the aforesaid written notice of denial to:
(i) request a review of the denial of benefits by written notice delivered to the Plan Committee;
(ii) review pertinent documents; and
(iii)submit issues and comments in writing.
(c) Decision on Review The Plan Committee, upon receipt of a request for review submitted by the claimant in accordance with subsection (b), shall conduct a review of its decision, and provide the claimant with written notice of the decision reached by the Plan Committee setting forth the specific reasons for the decision and specific references to the provisions of the Plan upon which the decision on review is based. Such notice shall be delivered to the claimant not later than 60 days following the receipt of the claimant's request, or, in the event that the Plan Committee shall determine that a hearing is needed, no later than 120 days following the receipt of such request.
The Plan Committee shall establish and consistently apply procedures hereunder.
10.9 "Modification of Eligibility Rules" Notwithstanding anything to the contrary in the Plan, the Plan Committee shall be authorized to modify the eligibility requirements and rescind the eligibility of any Participant if necessary to ensure that the Plans is maintained primarily for the purpose of providing additional benefits to a select group of management or highly compensated employees under ERISA.
ARTICLE ELEVEN
Miscellaneous Provisions
12.1 "No Assignment" Neither the Participant, his beneficiary, nor his legal representative shall have any rights to commute, sell, assign, transfer or otherwise convey, or hypothecate or pledge, the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.
12.2 "All Benefits Before Payment Subject to Company's Creditors" The assets from which Participant's benefits shall be paid shall at all times be subject to the claims of the creditors of the Company before payment to a Participant and a Participant shall have no right, claim or interest in any assets as to which such Participant's account is deemed to be invested or credited under the Plan.
12.3 "Plan Amendment or Termination" The Plan may be amended, modified, or terminated by the Board in its sole discretion at any time and from time to time. Such termination includes the right to pay to Participants upon Plan termination the full value of their Accounts in a lump sum, regardless of the prior elections made by the Participants. However, no such amendment, modification, or termination shall reduce the value of benefits credited under the Plan prior to such amendment, modification or termination. 12.4 "Benefits Under This Plan Are Additional to Other Benefits or Pay" It is expressly understood and agreed that the payments made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he may be eligible, whether funded or unfunded, by reason of his employment by the Company.
12.5 "Company to Withhold Taxes" The Company shall deduct from each payment under the Plan the amount of any tax (whether federal, state or local income taxes, Social Security taxes or Medicare taxes) required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of the person entitled to such distribution. 12.6 "Distributions Not Compensation for Purposes of Any Other Plan" Distributions from a Participant's Account shall not be considered wages, salaries or compensation under any other employee benefit plan.
12.7 "No Promise of Employment" No provision of this Plan shall be construed to affect in any manner the existing rights of the Company to suspend, terminate, alter, modify, whether or not for cause, the employment relationship of the Participant and the Company.
12.8 "Applicable Law" To the extent state law is not preempted by ERISA, this Plan, and all its rights under it, shall be governed and construed in accordance with the laws of the State of Florida.
12.9 "Binding Affects on Assigns and Successors" This Plan shall be binding upon the Company, its assigns, and any successor which shall succeed to substantially all of its assets and business through sale of assets, merger, consolidation or acquisition.
12.10 "Titles Do Not Prevail" The titles to the Sections of this Plan are included only for ease of use and are not terms of the Plan and shall not prevail over the actual provisions of the Plan.
12.11 "Electronic Administration" Notwithstanding anything to the contrary in the Plan, the Plan Committee may announce from time to time that Participant enrollments, Participant elections, and the any other aspect of plan administration may be made by telephonic or other electronic means rather than in paper form.
IN WITNESS WHEREOF, the Plan has been executed on the 17th day of October, 2000, but effective as of November 1, 2000.
FIRST NATIONAL BANK OF TREASURE COAST
By: /s/ Dennis S. Hudson, III
Its: Chairman and Chief Executive Officer
ATTEST:
|
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the incorporation of our report incorporated by reference in this Form 10-K of Seacoast Banking Corporation of Florida, into the Company's previously filed registration statements on Form S-8 (File Nos. 33-61925, 33-46504, 33-25627, 33-22846, 333-70399, 333-91859, and 333-49972).
/s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP |
West Palm Beach, Florida,
March 28, 2001.