Seacoast Banking Corporation of Florida
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 |
For the fiscal year ended December 31, 2005
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 |
For the transition period from _______ to _________
Commission File No. 0-13660
SEACOAST BANKING CORPORATION OF FLORIDA
(Exact Name of Registrant as Specified in Its Charter)
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Florida
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59-2260678 |
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.) |
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815 Colorado Avenue, Stuart, FL
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34994 |
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(Address of Principal Executive Offices)
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(Zip Code) |
Registrants telephone number, including area code (772) 287-4000
Securities registered pursuant to Section 12 (b) of the Act: None.
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Title of Each Class
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Name of Each Exchange on Which Registered |
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.10
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule-405 of the Securities Act.
Yes o No
x
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act.
Yes o No
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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
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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 registrants 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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (check one):
Large
accelerated filer o
Accelerated filer x Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of
the Exchange Act).
Yes o No
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The aggregate market value of Seacoast Banking Corporation of Florida Common Stock, par value
$0.10 per share, held by non-affiliates, computed by reference to the price at which the stock was
last sold on February 23, 2006, as reported on the Nasdaq
National Market, was $457,613,160.
The number of shares outstanding of Seacoast Banking Corporation of Florida Common Stock, par
value $0.01 per share, as of February 23, 2006, was
17,107,034.
DOCUMENTS INCORPORATED BY REFERENCE
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Certain portions of the registrants 2006 Proxy Statement for the Annual Meeting of
Shareholders to be held April 27, 2006 (the 2006 Proxy Statement) are incorporated by
reference into Part III, Items 10 through 14 of this report. Other than those portions of the
2006 Proxy Statement specifically incorporated by reference herein pursuant to Items 10
through 14, no other portions of the 2006 Proxy Statement shall be deemed so incorporated. |
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Certain portions of the registrants 2005 Annual Report to Shareholders (the 2005 Annual
Report) are incorporated by reference in Part II, Items 6 through 8 of this report. Other
than those portions of the 2005 Annual Report specifically incorporated by reference herein
pursuant to Items 6 through 8, no other portions of the 2005 Annual Report shall be deemed so
incorporated. |
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FORM 10-K CROSS-REFERENCE INDEX
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Page of |
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Form |
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10-K |
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Proxy |
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35 |
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3-12 |
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28 |
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35 |
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12-14 |
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& 17-22 |
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35-37 |
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3-9, 12 |
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& 23-24 |
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37 |
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22-23 |
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37 |
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27 |
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37 |
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Certain statistical data required by the Securities and Exchange Commission are included on pages
15-50 of Exhibit 13.
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SPECIAL CAUTIONARY NOTICE
REGARDING FORWARD-LOOKING STATEMENTS
Certain of the statements made herein under the caption Managements Discussion and Analysis
of Financial Condition and Results of Operations, Risk Factors, and elsewhere including
information incorporated herein by reference to other documents, are forward-looking statements
within the meaning of, and subject to the protections of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).
Forward-looking statements include statements with respect to our beliefs, plans, objectives,
goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and
involve known and unknown risks, uncertainties and other factors, which may be beyond our control,
and which may cause the actual results, performance or achievements of Seacoast 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.
All statements other than statements of historical fact are statements that could be
forward-looking statements. You can identify these forward-looking statements through our use of
words such as may, will, anticipate, assume, should, indicate, would, believe,
contemplate, expect, estimate, continue, plan, point to, project, could, intend,
target, and other similar words and expressions of the future. These forward-looking statements
may not be realized due to a variety of factors, including, without limitation:
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the effects of future economic or business conditions; |
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governmental monetary and fiscal policies, as well as legislative and regulatory
changes, including changes in banking, securities and tax laws and regulations; |
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the risks of changes in interest rates on the levels, composition and costs of
deposits, loan demand, and the values of loan collateral, securities, and interest
sensitive assets and liabilities; |
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credit risks of borrowers; |
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the effects of competition from a wide variety of local, regional, national and
other providers of financial, investment, and insurance services; |
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the failure of assumptions underlying the establishment of reserves for possible
loan losses and other estimates; |
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the risks of mergers, acquisitions and divestitures (including the acquisition
of Big Lake National Bank), including, without limitation, the related time and
costs of implementing such transactions, integrating operations as part of these
transactions and the possible failure to achieve expected gains, revenue growth
and/or expense savings from such transactions; |
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changes in accounting policies, rules and practices; |
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changes in technology or products that may be more difficult, or costly, or less
effective, than anticipated; |
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the effects of war or other conflicts, acts of terrorism or other catastrophic
events that may affect general economic conditions; and |
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other factors and risks described under Risk Factors herein and in any of our
subsequent reports that we make with the Securities and Exchange Commission (the
Commission) under the Exchange Act. |
All written or oral forward-looking statements that are made by or are attributable to us are
expressly qualified in their entirety by this cautionary notice. We have no obligation and do not
undertake to update, revise or correct any of the forward-looking statements after the date of this
report, or after the respective dates on which such statements otherwise are made.
5
Part I
Item 1. Business
General
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 (First National), for the purpose of becoming a holding company for First
National. On December 30, 1983, Seacoast acquired First National in exchange for Seacoast common
stock.
First National commenced operations in 1933 under the name Citizens Bank of Stuart pursuant
to a charter originally granted by the State of Florida in 1926. First National converted to a
national bank on August 29, 1958.
Through its banking subsidiaries and its broker-dealer and insurance agency subsidiaries,
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. Seacoasts primary service area is the Treasure Coast,
which, as defined by Seacoast, consists of the counties of Martin, St. Lucie and Indian River on
Floridas southeastern coast, however, in mid-2002 Seacoast entered Palm Beach County, the next
county immediately south of the Treasure Coast, and in April 2005, Seacoast acquired Century
National Bank (Century) in Orlando, Florida with three offices, two in Orange County and one in
Seminole County. The Company operates banking offices in the following cities: five in Stuart,
two in Palm City, two in Jensen Beach, one on Hutchinson Island, one in Hobe Sound, six in Vero
Beach, two in Sebastian, five in Port St. Lucie, two in Ft. Pierce, five in northern Palm Beach
County, and three in Orlando. First National opened a loan production office in Brevard County in
June 2004, and will open two banking offices in Brevard County, one in mid-2006 in the Viera area,
the other in 2007. First National intends to further expand its presence into Palm Beach County in
2006 with an additional office opening in April. The Company has also entered into an agreement to
acquire Big Lake National Bank (Big Lake), which operates nine banking offices in seven counties,
including DeSoto, Glades, Hardee, Hendry, Highlands, Okeechobee, and St. Lucie Counties. This
acquisition is expected to close subject to Big Lake shareholder approvals and regulatory approvals
in April 2006. See Item 2. Properties.
Most of our banking offices have one or more automated teller machine (ATMs) that 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 240,000 participating ATM locations throughout
the United States.
Customers can also use First Nationals 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.
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In addition, customers may access information via First Nationals Customer Service Center
(CSC). From 7 A.M. to 7 P.M., Monday through Friday, and on Saturdays from 9 A.M. to 4 P.M., our
CSC staffs 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 Internet banking. The Internet service allows customers to access
transactional information on their deposit accounts, review loan and deposit balances, transfer
funds between linked accounts and make loan payments from a deposit account, 24 hours a day.
In February 2000, we opened an office of Seacoast Marine Finance Division, a division of First
National, in Ft. Lauderdale, Florida. Seacoast Marine Finance Division is staffed with experienced
marine lending professionals with a marketing emphasis on marine loans of $200,000 and greater. In
November 2002, the Seacoast Marine Finance Division added offices and key personnel in California
to serve the western markets, and this past year added personnel in the New England market. All
loans that are originated by the Seacoast Marine Finance Division outside of First Nationals
primary service area are generally sold.
Seacoast has six indirect, wholly-owned subsidiaries:
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FNB Brokerage Services, Inc. (FNB Brokerage), which provides brokerage and annuity
services; |
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FNB Insurance Services, Inc. (FNB Insurance), which provides insurance agency
services; |
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South Branch Building, Inc., which is a general partner in a partnership that
constructed a branch facility of First National; |
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Big O RV Resort, Inc., which was formed to own and operate certain properties acquired
through foreclosure, but which currently is inactive; |
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FNB Property Holdings, Inc., a Delaware holding company, whose primary asset is an
investment in FNB RE Services, Inc.; and |
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FNB RE Services, Inc., a real estate investment trust. |
Seacoast directly owns all the common equity in two statutory trusts:
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SBCF Capital Trust I, formed on March 31, 2005 in Delaware for the purpose of issuing $20 million in
trust preferred securities; |
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SBCF Statutory Trust II, formed on December 16, 2005 in Connecticut, also for the
purpose of issuing $20 million in trust preferred securities. |
Seacoast also has direct ownership of Century in Orlando Florida, a commercial bank that
operates under a national charter. Seacoast intends to merge this institution into First National
in August 2006.
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With the exception of FNB Property Holdings, Inc., FNB RE Services, Inc., and Century,
the operations of each of these direct and indirect 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. Seacoasts 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, 2005, Seacoast had total consolidated assets of approximately $2,132
million, total deposits of approximately $1,784 million, total consolidated liabilities, including
deposits, of approximately $1,979 million and consolidated shareholders equity of approximately
$153 million. Seacoasts operations are discussed in more detail under Managements Discussion and
Analysis of Consolidated Financial Condition and Results of Operations incorporated by reference
from our 2005 Annual Report.
Seacoasts and First Nationals principal offices are located at 815 Colorado Avenue, Stuart,
Florida 34994, and the telephone number at that address is (772) 287-4000. Seacoast and First
National maintain Internet websites at www.seacoastbanking.net
and www.fnbtc.net,
respectively. We file annual, quarterly and current reports, proxy statements, and other
information with the SEC. You may read and copy any document we file with the SEC at the SECs
public reference rooms at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at
1-800-SEC-0330 for more information on the operation of the public reference rooms. Our SEC
filings are also available to the public free of charge from the
SECs web site at www.sec.gov.
In addition, Seacoast makes available, free of charge, its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports,
as soon as reasonably practicable after Seacoast electronically files such material with or
furnishes it to the Commission. Seacoast is not incorporating the information on its or First
Nationals website into this report, and none of these websites nor the information appearing on
these websites is included or incorporated in, or is a part of, this report.
Employees
As of December 31, 2005, Seacoast and its subsidiaries employed 426 full-time equivalent
employees. Seacoast considers its employee relations to be good, and it has no collective
bargaining agreements with any 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 presently expects to continue this strategy. Prior to 1991,
Seacoast had expanded geographically primarily through the addition of branches, including the
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acquisition of a thrift branch in St. Lucie County. Seacoast also from time to time has acquired
banks, bank branches and deposits, and has opened new branches and facilities.
On April 30, 2005, Seacoast acquired Century, a national bank headquartered in Orlando,
Florida. Century currently operates as a wholly owned subsidiary of Seacoast.
On November 22, 2005 Seacoast announced the signing of a definitive Agreement and Plan of
Merger (the Merger Agreement) to acquire Big Lake, a national bank headquartered in Okeechobee,
Florida, inland from our primary market. This transaction is expected to close in April 2006. Upon
the closing of this acquisition, each share of Big Lake common stock issued and outstanding held by
Big Lake shareholders immediately prior to the effective time of the Merger, other than shares with
respect to which dissenters rights are properly exercised, will be automatically converted, at the
effective time, into the right to receive shares of Seacoast common stock. Under the Merger
Agreement, Seacoast will issue 1,775,000 shares of its common stock to holders of Big Lake common
stock in exchange for their shares. The actual value of common stock to be received by each Big
Lake shareholder will depend upon the market price of Seacoast common stock prior to the effective
time of the Merger. The transactions contemplated by the Merger Agreement are subject to certain
conditions set forth in the Merger Agreement, including the approval of the shareholders of Big
Lake and the receipt of all necessary regulatory approvals. Regulatory applications seeking the
necessary approvals are pending.
Big Lake is a national banking association headquartered in Okeechobee, Florida. Big Lake
currently provides banking services through nine banking locations in seven counties in central
Florida. As of December 31, 2005, Big Lake had total consolidated assets of approximately $324
million, deposits of approximately $298 million and shareholders equity of approximately $22.5
million.
Seacoast expects to merge Century and Big Lake into First National, consistent with product
and systems conversions and other considerations. Seacoast presently intends to operate only one
bank subsidiary by the end of August 2006.
Florida law permits statewide branching, and Seacoast has expanded, and anticipates future
expansion in its markets, by opening additional offices and facilities. In January 2003, two
branches were acquired on US 1 in northern Palm Beach County. A branch in northern St. Lucie
County was closed in early 2003. In December 2004, two additional branches were opened in northern
Palm Beach County, one in Jupiter and the other in Juno Beach, the latter replacing a nearby branch
closed simultaneously. First National further expanded its presence into Palm Beach County in
February 2005 with an additional office and acquired a sixth office in Vero Beach in January 2005.
The Seacoast Marine Finance Division operates loan production offices, or LPOs, in Ft.
Lauderdale, Florida and in Newport Beach and Alameda, California. First National also has an LPO
in Melbourne, Florida. See Item 2. Properties.
Seacoast regularly evaluates possible mergers, acquisitions and other expansion opportunities.
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Seasonality; Cycles
Seacoast does not consider its commercial banking operations to be seasonal in nature.
Due to Hurricanes Frances and Jeanne in the fall of 2004, Seacoasts deposits increased as
insurers disbursed insurance proceeds and hurricane-related damage began to be repaired. In the
fall of 2005, Hurricane Wilma had a much smaller effect on us.
Competition
Seacoast and its subsidiaries operate in the highly competitive markets of Martin, St. Lucie,
Indian River, Brevard and Palm Beach Counties, all of which are located in southeastern Florida.
Following the acquisition of Century in April 2005, Seacoast also operates in the highly
competitive Orlando MSA. First National and Century not only compete with other banks in their
markets, but also compete 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. First National and Century also compete 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 that have an established market presence in the State of Florida,
or that offer products by mail, telephone or over the Internet. Many of Seacoasts 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. Many of these institutions have
greater resources, broader geographic markets and higher lending limits than Seacoast and may offer
various services that Seacoast does not offer. In addition, these institutions may be able to
better afford and make broader use of media advertising, support services, and electronic and other
technology than Seacoast. To offset these competitive disadvantages, Seacoast depends on its
reputation as an independent, super community bank headquartered locally, its personal service,
its greater community involvement and its ability to make credit and other business decisions
quickly and locally.
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 statutes or
regulations applicable to the Companys and it bank subsidiaries business. Supervision,
regulation, and examination of the Company and its banking subsidiaries and their respective
subsidiaries by the bank regulatory agencies are intended primarily for the protection of bank
depositors rather than holders of Company capital stock. Any change in applicable law or
regulation may have a material effect on the Companys business.
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Seacoast is required to comply with various corporate governance and financial reporting
requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations adopted by
the SEC, the Public Company Accounting Oversight Board and Nasdaq. In particular, Seacoast is
required to include management and independent auditor reports on internal control over financial reporting as part of its
annual report on Form 10-K pursuant to Section 404 of the Sarbanes-Oxley Act. Seacoast has
evaluated its controls, including compliance with the SEC rules on internal controls, and has and
expects to continue to spend significant amounts of time and money on compliance with these rules.
Seacoasts failure to comply with these internal control rules may materially adversely affect its
reputation, ability to obtain the necessary certifications to financial statements, and the values
of its securities. The assessments of financial reporting controls as of December 31, 2005 are
included elsewhere in this report with no material weaknesses reported.
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 Federal Reserve determines to be so closely related to banking, or
managing or controlling banks, as to be a proper incident thereto. 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 Companys non-bank
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.
The Gramm-Leach-Bliley Act of 1999 (GLB) was enacted, which substantially revises 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 satisfactory Community Reinvestment Act
(CRA) ratings, and meet certain other conditions, can elect to become financial holding
companies. Financial holding companies and their subsidiaries are permitted to acquire or engage
in previously impermissible activities such as insurance underwriting, securities underwriting,
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 regulation,
financial holding companies are authorized to invest in
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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 term of its investment and
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 companys 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 supervision 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 GLB Act also
includes consumer privacy provisions, and the federal bank regulatory agencies have adopted
extensive privacy rules implementing the GLB Act.
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 bank subsidiaries to engage in financial activities through subsidiaries similar
to those permitted to financial holding companies.
The Company is a legal entity separate and distinct from its bank subsidiaries and its other
subsidiaries. Various legal limitations restrict its banking subsidiaries from lending or
otherwise supplying funds to the Company or its non-bank subsidiaries. The Company and its banking
subsidiaries are subject to Section 23A of the Federal Reserve Act and Federal Reserve Regulation W
thereunder. Section 23A defines covered transactions, which include extensions of credit, and
limits a banks covered transactions with any affiliate to 10% of such banks 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 banks affiliates. Finally, Section 23A
requires that all of a banks extensions of credit to its affiliates be appropriately secured by
acceptable collateral, generally United States government or agency securities. The Company and
its banking subsidiaries also are subject to Section 23B of the Federal Reserve Act, which
generally limits covered and other transactions among affiliates to be on terms, including credit
standards, that are substantially the same or at least as favorable to the bank or its subsidiary
as those prevailing at the time for similar transactions with unaffiliated companies.
The BHC Act permits 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, 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. Floridas Interstate Branching Act (the Florida
Branching Act) permits interstate branching. 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 merger 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.
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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 companys
subsidiary depository institutions are responsible for any losses to the Federal Deposit Insurance
Corporation (FDIC) as a result of an affiliated depository institutions 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 that 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 banks
depositors and perhaps to other creditors of the bank.
Bank and Bank Subsidiary Regulation Generally
First National and Century are subject to supervision, regulation, and examination by the
Office of the Comptroller of the Currency (the OCC) which monitors all areas of operations,
including reserves, loans, mortgages, issuances of securities, payment of dividends, establishment
of branches, capital adequacy, and compliance with laws. First National and Century are members of
the FDIC and, as such, their deposits are insured by the FDIC to the maximum extent provided by
law. See FDIC Insurance Assessments.
Under Florida law, First National and Century may establish and operate branches throughout
the State of Florida, subject to the maintenance of adequate capital 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 of banks. These changes also modernize and streamline
corporate governance, investment and fiduciary powers. The OCC also recently has strengthened its
ability to preempt state laws purporting to regulate the activities of national banks.
The OCC has adopted the Federal Financial Institutions Examination Councils (FFIEC) rating
system and assigns each financial institution a confidential composite rating based on an
evaluation and rating of six essential components of an institutions 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:
managements ability to identify, measure, monitor, and control market risk; the institutions
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 institutions earnings
or the economic value of its capital to adverse changes in interest rates, foreign exchange rates,
commodity prices, or equity prices; managements ability to identify, measure,
13
monitor, and control exposure to market risk; and the nature and complexity of interest rate risk
exposure arising from nontrading positions.
FNB Brokerage, a First National subsidiary, is registered as a securities broker-dealer under
the Exchange Act and is regulated by the Securities and Exchange Commission (Commission or
SEC). As a member of the National Association of Securities Dealers, Inc. (NASD), it also is
subject to examination and supervision of its operations, personnel and accounts by NASD
Regulation, Inc. FNB Brokerage is a separate and distinct entity from First National, and must
maintain adequate capital under the SECs net capital rule. The net capital rule limits FNB
Brokerages ability to reduce capital by payment of dividends or other distributions to First
National. FNB Brokerage is also authorized by the State of Florida to act as a securities dealer
and investment advisor.
FNB Insurance, a First National insurance agency subsidiary, is authorized by the State of
Florida to market insurance products as an agent. FNB Insurance is a separate and distinct entity
from First National and is subject to supervision and regulation by state insurance authorities.
The Internal Revenue Code of 1986 (Code), as amended, provides requirements that must be met
with respect to First Nationals indirect subsidiary, FNB RE Services, Inc., which has elected to
be taxed as a real estate investment trust under the Code.
Community Reinvestment Act
The Company and its banking subsidiaries are subject to the provisions of the Community
Reinvestment Act of 1977, as amended (the CRA) and the federal banking agencies regulations
thereof. 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 requires a depository
institutions primary federal regulator, in connection with its examination of the institution, to
assess the institutions record of assessing and meeting the credit needs of the communities served
by that institution, including low- and moderate-income neighborhoods. The regulatory agencys
assessment of the institutions 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; (v) merge or consolidate with, or acquire the assets or
assume the liabilities of, a federally regulated financial institution, or (vi) expand other
activities, including engaging in financial services activities authorized by GLB. 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.
Following GLB, CRA agreements with private parties must be disclosed and annual CRA reports
must be made to a banks primary federal regulator. A bank holding company will not be permitted
to become or remain 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 OCC and other
federal bank regulators have revised their CRA regulations
14
that would, among other things, require that evidence of discrimination against applicants on a
prohibited basis, illegal or abusive lending practices be considered in the CRA evaluation.
First National and Century are 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. In 1994,
the Department of Housing and Urban Development, the Department of Justice (the DOJ), and the
federal banking agencies 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.
Payments of Dividends
The Company is a legal entity separate and distinct from its bank subsidiaries and other
subsidiaries. The prior approval of the OCC is required if the total of all dividends declared by
a national bank (such as First National and Century) in any calendar year will exceed the sum of
such banks 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 banks undivided profits after deducting statutory
bad debts in excess of such banks allowance for possible loan losses.
In addition, the Company and its banking subsidiaries 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 banks
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.
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 banks profits, as defined, for that
year combined with its retained net profits for the preceding two calendar years. Under this
restriction the Companys subsidiary banks can distribute as dividends to the Company in 2005,
without prior approval of the Comptroller of the Currency, approximately $20.1 million.
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
15
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 (Tier 2 capital and, together with Tier 1 capital,
Total Capital). The Federal Reserve recently reaffirmed that voting common Tier 1 equity should
be the predominant form of 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% to 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 depending upon a bank holding companys 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
Reserves 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 its banking subsidiaries 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 institutions 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 a leverage ratio of at least 5%, 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), (iv) significantly undercapitalized if it has a total capital ratio of less than 6%
or a Tier I capital ratio of less than 3%, or a leverage ratio of less than 3%, or (v) critically
undercapitalized if its tangible equity is equal to or less than 2% of average quarterly tangible
assets.
16
As of December 31, 2005, the consolidated capital ratios of the Company, First National and
Century were as follows:
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Regulatory |
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First |
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Minimum |
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Seacoast |
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National |
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Century |
Tier 1 capital ratio |
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4.0 |
% |
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11.1 |
% |
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10.6 |
% |
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16.1 |
% |
Total capital ratio |
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8.0 |
% |
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11.8 |
% |
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11.2 |
% |
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16.8 |
% |
Leverage ratio |
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3.0-5.0 |
% |
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7.9 |
% |
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7.7 |
% |
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7.3 |
% |
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 institutions
parent holding company must guarantee that the institution will comply with such capital
restoration plan. The aggregate liability of the parent holding company is limited to the lesser
of 5% of the depository institutions 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 its banking subsidiaries exceed applicable
capital requirements, the respective managements of the Company and its banking subsidiaries do not
believe that the provisions of FDICIA have had any material effect on the Company and its banking
subsidiaries or their respective operations.
FDICIA also contains a variety of other provisions that may affect the operations of the
Company and its banking subsidiaries, including 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
17
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.
First National and Century are well capitalized, and brokered deposits are 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.
The International Money Laundering Abatement and Anti-Terrorism Funding Act of 2001 specifies
new know your customer requirements that obligate financial institutions to take actions to
verify the identity of the account holders in connection with opening an account at any U.S.
financial institution. Banking regulators will consider compliance with the Acts money laundering
provisions in acting upon acquisition and merger proposals, and sanctions for violations of the Act
can be imposed in an amount equal to twice the sum involved in the violating transaction, up to $1
million.
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT) Act of 2001. Under the USA PATRIOT Act, financial institutions
are subject to prohibitions against specified financial transactions and account relationships as
well as enhanced due diligence and know your customer standards in their dealings with foreign
financial institutions and foreign customers.
The USA PATRIOT Act requires financial institutions to establish anti-money laundering
programs. The USA PATRIOT Act sets forth minimum standards for these programs, including:
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The development of internal policies, procedures, and controls; |
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The designation of a compliance officer; |
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an ongoing employee training program; and |
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an independent audit function to test the programs. |
Fiscal and Monetary Policy
Banking is a business that 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 banks
earnings. Thus, the earnings and growth of Seacoast and its bank subsidiaries 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
18
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
First National and Century are subject to FDIC deposit insurance assessments. First
Nationals and Centurys deposits are primarily insured by the FDICs Bank Insurance Fund (BIF).
First National is also a member of the Savings Association Insurance Fund (SAIF) to the extent
that First National holds deposits acquired in 1991 from the Resolution Trust Corporation (RTC)
or from SAIF-insured institutions. 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 institutions primary
federal and, if applicable, state regulators and other information relevant to the institutions
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 three years ended December
31, 2005, First National paid $0 in BIF and SAIF deposit insurance premiums, and paid approximately
$199,000, $171,000 and $163,000 in FICO assessments during 2005, 2004 and 2003, respectively.
Since April 30, 2005, the date Century was acquired, Century paid $0 in BIF deposit insurance
premiums and paid $26,000 in FICO assessments.
The FDICs Board of Directors has continued the 2005 BIF and SAIF assessment schedule of zero
to 27 basis points per annum for the first semiannual period of 2006. The Deposit Insurance Funds
Act of 1996 (the Funds Act) authorized FICO to levy assessments on BIF-assessable deposits.
Since 1999, the FICO assessment rate has been equal for BIF and SAIF-assessable deposits. The FICO
assessments are set quarterly and ranged from 1.54 basis points for BIF and SAIF in the first
quarter of 2004 to 1.46 basis points in the last quarter of 2004 and from 1.44 basis points in the
first quarter of 2005 to 1.34 basis points in the last quarter of 2005. The FICO assessment rate
for the first quarter of 2006 is 1.32 basis points.
Recent Legislative and Regulatory Changes
Congress passed the Federal Deposit Insurance Reform Act of at the beginning of February 2006.
Among other things, this new law will merge BIF and SAIF during 2006. Deposits will remain
insured up to a maximum of $100,000, but will be adjusted every five years based upon inflation.
Retirement accounts will be insured for up to $250,000, and a bank that is less than adequately
capitalized will not be able to accept employee benefit deposits. This law also changes the way
FDIC insurance assessments and credits are calculated, and authorizes the FDIC to revise its
risk-based deposit insurance assessment scheme.
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. The FDIC has proposed a restructuring of the federal deposit
insurance system, including provisions to better measure and price deposit insurance, to merge
19
BIF and SAIF and to increase deposit insurance coverage. Other proposals pending in Congress
would, among other things, allow banks to pay interest on checking accounts, allow the Federal
Reserve to pay interest on revenues, and would permit interstate branching on a de novo basis.
Certain of these proposals, if adopted, could significantly change the regulation or operations 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 its bank
subsidiaries.
On January 10, 2006, the federal bank regulatory agencies released proposed guidance on
Concentrations in Commercial Real Estate Lending (the Proposed Guidance). This proposal
defines commercial real estate (CRE) loans as exposures secured by raw land, land development and
construction (including 1-4 family residential construction), multi-family property, and non-farm
nonresidential property where the primary or a significant source of repayment is derived from
rental income associated with the property (that is, loans for which 50% or more of the source of
repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale,
refinancing, or permanent financing of the property. Loans to REITs and unsecured loans to
developers that closely correlate to the inherent risks in CRE markets would also be considered CRE
loans under the Proposed Guidance. Loans on owner occupied CRE are generally excluded.
The Proposed Guidance requires that appropriate processes be in place to identify, monitor and
control risks associated with real estate lending concentrations. This could include enhanced
strategic planning, CRE underwriting policies, risk management, internal controls, portfolio stress
testing and risk exposure limits as well as appropriately designed compensation and incentive
programs. Higher allowances for loan losses and capital levels may also be required. The Proposed
Guidance is triggered when CRE loan concentrations exceed either:
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Total reported loans for construction, land development, and other land of
100% or more of a banks total capital; or |
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Total reported loans secured by multifamily and nonfarm nonresidential
properties and loans for construction, land development, and other land of 300% or
more of a banks total capital. |
The Proposed Guidance may also be required to be adopted when a bank has a sharp increase in CRE
loans or has significant concentrations of CRE secured by a particular property type.
The Company believes that the Proposed Guidance, if adopted in its current form, may apply to the
Companys CRE lending activities due to its concentration in construction and land development
loans. The Company had outstanding $344.6 million in commercial construction and residential land
development loans and $82.6 in residential construction loans to individuals, which represents
approximately 280% of capital at December 31, 2005. (See Loan Portfolio on page 17 of this
narrative) The Company has always had meaningful exposures to loans secured by commercial real
estate due to the nature of its growing markets and the loan needs of both its retail and
commercial customers. The Company believes its long term experience in CRE lending, underwriting
policies, internal controls, and other policies currently in place are generally appropriate to
managing its concentrations as required under the Proposed Guidance. Furthermore the Company has
recently adopted additional enhancements to its analysis and review of CRE concentrations
consistent with many of the requirements found in the Proposed Guidance and is in the process of
establishing a more detailed approach for managing its exposure to CRE concentrations. Should the
Proposed Guidance be
adopted by the agencies, the Company may need to consider additional enhancements to its existing
policies and procedures.
Statistical Information
Certain statistical and financial 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 also included in
response to Item 6 and Item 8 of this Annual Report on Form 10-K.
Item 1A. Risk Factors
Any of the following risks could harm our business, results of operations and financial
condition and an investment in our stock. The risks discussed below also include forward-looking
statements, and our actual results may differ substantially from those discussed in these
forward-looking statements.
Risks Related to Our Business
We could encounter operational difficulties as a result of our growth.
Our loans, deposits, fee businesses and employees have increased rapidly as a result of our
organic growth and acquisitions. Our failure to successfully manage and support this growth with
sufficient human resources, training and operational, financial and technology resources could have
a material adverse effect on our operating results and financial condition. We may not be able to
sustain or manage our growth.
Future acquisitions and expansion activities may disrupt our business, dilute shareholder value and
adversely affect our operating results.
To the extent that we grow through acquisitions, we cannot assure you that we will be able to
adequately or profitably manage this growth. Acquiring other banks, branches or businesses, as well
as other geographic and product expansion activities, involve various risks including:
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risks of unknown or contingent liabilities; |
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unanticipated costs and delays; |
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risks that acquired new businesses do not perform consistent with our
growth and profitability expectations; |
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risks of entering new markets or product areas where we have limited experience; |
20
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risks that growth will strain our infrastructure, staff, internal
controls and management, which may require additional personnel, time
and expenditures; |
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exposure to potential asset quality issues with acquired institutions; |
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difficulties, expenses and delays of integrating the operations and
personnel of acquired institutions, and start-up delays and costs of
other expansion activities; |
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potential disruptions to our business; |
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possible loss of key employees and customers of acquired institutions; |
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potential short-term decreases in profitability; and |
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diversion of our managements time and attention from our existing
operations and business. |
We are required to maintain capital to meet regulatory requirements, and if we fail to maintain
sufficient capital, our financial condition, liquidity and results of operations would be adversely
affected.
We and the Bank must meet regulatory capital requirements. If we fail to meet these capital
and other regulatory requirements, our financial condition, liquidity and results of operations
would be materially and adversely affected. Our failure to remain well capitalized and well
managed for regulatory purposes could affect customer confidence, our ability to grow, our costs
of funds and FDIC insurance, our ability to pay dividends on common stock, our ability to make
acquisitions, and we would no longer meet the requirements for remaining a financial holding
company.
Our continued pace of growth may require us to raise additional capital in the future, but that
capital may not be available when it is needed or on favorable terms.
We anticipate that our current capital resources will satisfy our capital requirements for the
foreseeable future. We may, however, need to raise additional capital to support our continued
growth. Our ability to raise additional capital, if needed, will depend, among other things, on
conditions in the capital markets at that time, which are outside our control, and on our financial
performance. If we cannot raise additional capital on acceptable terms when needed, our ability to
further expand our operations through internal growth and acquisitions could be limited.
Attractive acquisition opportunities may not be available to us in the future.
While we seek continued organic growth, we will continue to consider the
acquisition of other businesses. We expect that other banking and financial companies, many of
21
which have significantly greater resources, will compete with us to acquire financial services
businesses. This competition could increase prices for potential acquisitions that we believe are
attractive. Also, acquisitions are subject to various regulatory approvals. If we fail to receive
the appropriate regulatory approvals, we will not be able to consummate an acquisition that we
believe is in our best interests. Among other things, our regulators consider our capital,
liquidity, profitability, regulatory compliance and levels of goodwill and intangibles when
considering acquisition and expansion proposals.
Our cost of funds may increase as a result of general economic conditions, interest rates and
competitive pressures.
Our cost of funds may increase as a result of general economic conditions, interest rates and
competitive pressures. We have traditionally obtained funds principally through local deposits and we have employed lower cost transaction deposits. Our deposits have also increased recently due to acquisitions and insurance and other payments received by our customers as a result of hurricanes in the fall of 2004. Generally, we believe local deposits are a cheaper and
more stable source of funds than other borrowings because interest rates paid for local deposits are
typically lower than interest rates charged for borrowings from other institutional lenders. Our
costs of funds and our profitability and liquidity are likely to be adversely affected when we have
to rely upon higher cost borrowings from other institutional lenders or brokers to fund loan demand. Changes in our deposit mix and growth could adversely affect our profitability and the ability to expand our loan portfolio at present levels of profitability.
Our profitability and liquidity may be affected by changes in interest rates and economic
conditions.
Our profitability depends upon net interest income, which is the difference between interest
earned on assets, and interest expense on interest-bearing liabilities, such as deposits and
borrowings. Net interest income will be adversely affected if market interest rates change such
that the interest we pays on deposits and borrowings increases faster than the interest earned on
loans and investments. Interest rates, and consequently our results of operations, are affected by
general economic conditions (domestic and foreign) and fiscal and monetary policies. Monetary and
fiscal policies may materially affect the level and direction of interest rates. Beginning in June
2004, the Federal Reserve has raised the federal funds rate 14 times from 1.0% to 4.50%. Increases
in interest rates generally decrease the market values of fixed-rate, interest-bearing investments
and loans held and the production of mortgage and other loans and the value of collateral securing our loans, and therefore may adversely affect
our liquidity and earnings.
Regulatory Risks of Commercial Real Estate ending Growth and Concentrations
Commercial real estate or CRE is cyclical and poses risks of possible loss due to
concentration levels and similar risks of the asset, especially since the Company has 52.4% of its
portfolio in CRE loans at year 2005 compared to 49.6% for 2004. The banking regulators are giving
CRE lending greater scrutiny, and may require banks with higher levels of CRE loans to implement
improved underwriting, internal controls, risk management policies and portfolio stress testing, as
well as possibly higher levels of allowances for possible losses and capital levels as a result of
CRE lending growth and exposures. See Supervision and Regulation Commercial Real Estate
Lending and Concentrations.
Our future success is dependent on its ability to compete effectively in highly competitive
markets.
We and our principal bank subsidiary operate in the highly competitive markets of Martin, St. Lucie,
Brevard, Indian River, and Palm Beach Counties, located in southeastern Florida. Another Seacoast
bank subsidiary also operates three offices in Orange and Seminole Counties, in the Orlando,
Florida metropolitan statistical area. Our future growth and success will depend on its ability to
compete effectively in these markets, as well as the markets served by Big Lake National Bank, with
whom we entered into a definitive agreement to merge in late 2005. We
22
compete for loans, deposits and other financial services in geographic markets with other local,
regional and national commercial banks, thrifts, credit unions, mortgage lenders, and securities
and insurance brokerage firms. Many of our competitors offer products and services different from
us, and have substantially greater resources, name recognition and market presence than we do,
which benefits them in attracting business. In addition, larger competitors may be able to price
loans and deposits more aggressively than us and have broader customer and geographic bases to draw
upon.
We operate in a heavily regulated environment.
Seacoast and its subsidiaries are regulated by several regulators, including the Federal
Reserve, the OCC, the SEC and the FDIC. Our success is affected by state and federal regulations
affecting banks, bank holding companies and the securities markets. Banking regulations are
primarily intended to protect depositors, not shareholders.
The financial services industry also is subject to frequent legislative and regulatory changes
and proposed changes, the effects of which cannot be predicted.
We are subject to internal control reporting requirements that increase compliance costs and
failure to comply timely could adversely affect our reputation and the value of our securities.
We are required to comply with various corporate governance and financial reporting
requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the
SEC, the Public Company Accounting Oversight Board and Nasdaq. In particular, we are required to
include management and independent auditor reports on internal controls as part of its annual
report on Form 10-K pursuant to Section 404 of the Sarbanes-Oxley Act. We have evaluated our
controls, including compliance with the SEC rules on internal controls, and have and expect to
continue to spend significant amounts of time and money on compliance with these rules. Our failure
to comply with these internal control rules may materially adversely affect our reputation, ability
to obtain the necessary certifications to financial statements, and the value of our securities.
Technological changes affect Seacoasts business, and Seacoast may have fewer resources than many
competitors to invest in technological improvements.
The financial services industry is undergoing rapid technological changes with frequent
introductions of new technology-driven products and services. In addition to serving clients
better, the effective use of technology may increase efficiency and may enable financial
institutions to reduce costs. Seacoasts future success will depend, in part, upon its ability to
use technology to provide products and services that provide convenience to customers and to create
additional efficiencies in operations. Seacoast may need to make significant additional capital
investments in technology in the future, and it may not be able to effectively implement new
technology-driven products and services. Many competitors have substantially greater resources
to invest in technological improvements.
23
The anti-takeover provisions in Seacoasts articles of incorporation and under Florida law may make
it more difficult for takeover attempts that have not been approved by Seacoasts board of
directors.
Florida law and Seacoasts articles of incorporation include anti-takeover provisions, such as
provisions that encourage persons seeking to acquire control of Seacoast to consult with its board,
and which enable the board to negotiate and give consideration on behalf of Seacoast and its
shareholders and other constituencies to the merits of any offer made. Such provisions, as well as
supermajority voting and quorum requirements, may make any takeover attempts and other acquisitions
of interests in Seacoast that have not been approved by Seacoasts board of directors more
difficult and more expensive. These provisions may discourage possible business combinations that a
majority of Seacoasts shareholders may believe to be desirable and beneficial.
Hurricanes or other adverse weather events would negatively affect Seacoasts local economies or
disrupt Seacoasts operations, which would have an adverse effect on Seacoasts business or results
of operations.
Seacoasts market areas in Florida are susceptible to hurricanes and tropical storms and related flooding. Such
weather events can disrupt operations, result in damage to properties and negatively affect the
local economies in the markets where they operate. Seacoast cannot predict whether or to what
extent damage that may be caused by future hurricanes will affect its operations or the economies
in Seacoasts current or future market areas, but such weather events could result in a decline in
loan originations, a decline in the value or destruction of properties securing our loans and an
increase in the delinquencies, foreclosures or loan losses. Seacoasts business or results of
operations may be adversely affected by these and other negative effects of future hurricanes or
tropical storms including flooding.
Item 1B. Unresolved SEC Staff Comments
None.
Item 2. Properties
Seacoast and First Nationals main office occupies 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 First National, which leases out portions of the building not utilized by
Seacoast and First National to unaffiliated third parties.
24
Adjacent to the main office, First National leases approximately 21,400 square feet of office
space to house operational departments, consisting primarily of information systems and retail
support. First National 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, First National leased storefront space (1,913 square feet) in Ft.
Lauderdale, Florida for a lending office for its Seacoast Marine Finance Division. In November
2002, additional office space was acquired for the Seacoast Marine Finance Division in Alameda,
California (430 square feet of leased space), and Newport Beach, California (1,200 square feet of
leased space). In January 2005, First National relocated the Ft. Lauderdale, Florida location
after its lease expired; the new office occupies 2,009 square feet of space. The furniture and
equipment at these locations is owned by First National.
In June 2004, First National also opened a loan production office in Melbourne, Florida.
Located in a three story waterfront office building, the office occupies 1,533 square feet of
leased space on the third floor. All furniture and equipment utilized is owned.
As of December 31, 2005, the net carrying value of branch offices of First National (excluding
the main office) was approximately $14.8 million. First Nationals 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 First National. 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 First National. The acquisition of American Bank provided an
opportunity for First National to move to a new location in April 1995. It is still located
on the main thoroughfare between downtown Stuart and Hutchinson Islands beachfront
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 was sold 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 First National, is a general partner in a
partnership that entered into a long-term land lease for approximately four acres of
property on which it constructed a 7,500 square foot building. First National leases the
building and utilizes 3,450 square feet of the available space. Remaining space is sublet
by First National to other business tenants. First National has improved the premises with
three drive-in lanes, bank equipment, and furniture and fixtures, all of which are owned by
First National. A drive-up ATM was added in early 1997.
25
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 First National. First National has improved the premises with bank equipment, a
walk-up ATM and three drive-in lanes, all owned by First National.
Rivergate, opened October 28, 1985, originally occupied 1,700 square feet of leased
space in the Rivergate Shopping Center, Port St. Lucie, Florida. First National moved the
branch to larger facilities in the shopping center in April 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.
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 that houses four drive-in lanes, a walk-up
ATM and various bank equipment, all of which are owned by First National 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. First National 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
First National.
Hobe Sound, acquired on December 23, 1991, is a two-story facility containing 8,000
square feet and is centrally located in Hobe Sound. Of 2,800 square feet on the second
floor, 1,225 square feet is utilized by local community organizations. Improvements include
two drive-in teller lanes, a drive-up ATM, and equipment and furniture, all of which are
owned by First National.
Fort Pierce, acquired from the RTC on December 23, 1991, is a 2,895 square foot
facility in the heart of Fort Pierce that has three drive-in lanes and a drive-up ATM.
Equipment and furniture are all owned by First National.
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 containing
8,250 square feet and is located on a corner of U.S. Highway 1 in Port St. Lucie offering
excellent exposure in one of the fastest growing residential areas in the region. First
National uses the second story space to house brokerage and loan origination personnel, a
training facility and conference area. Three drive-in teller lanes, a walk-up ATM,
equipment and furniture are utilized and owned by First National.
26
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 1 and represents First Nationals initial
presence in the Indian River County market. First National holds a long-term land lease on
the property. Improvements include three drive-in teller lanes, a walk-up ATM, equipment
and furniture, all of which are owned by First National.
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. This facility has 2 drive-in teller lanes, a drive-up
ATM, and furniture and equipment, all owned by First National.
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 on a
36-acre development in Palm City, Florida. This community contains approximately 168
private residences.
St. Lucie West, opened in November 1994, was originally located at 1320 S.W. St.
Lucie Blvd., Port St. Lucie, Florida. First National moved the branch to the Renar Centre,
located at 1100 SW St. Lucie West Blvd., Port St. Lucie, Florida, on June 1, 1997, where
First National leases 4,320 square feet on the first 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 First National 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 First National.
Sebastian, opened in May 1996, is located within a 174,000 square foot Wal-Mart
Superstore on U.S. Highway 1 in northern Indian River County. The leased space occupied by
First National totals 865 square feet. The facility has a walk-up ATM, owned by First
National.
South Vero Square, opened in May 1997 in a 3,150 square foot building owned by First
National on South U.S. Highway 1 in Vero Beach. The facility includes three drive-in teller
lanes, a drive-up ATM, and furniture and equipment, all owned by First National.
Oak Point, opened in June 1997, 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 First National. First National
sublets 2,270 square feet of space on the second floor.
27
Route 60 Vero, opened in July 1997. Similar to the Sebastian office, this facility
is housed in a Wal-Mart 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 First
National. 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 First National.
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 First National and are located on the leased property. The opening of this
office coincided with the closing of First Nationals U.S. Highway 1 and Port St. Lucie
Boulevard office, one-half mile north of this location, which originally opened on June 1,
1997.
Ft. Pierce Wal-Mart, opened in June 2001, is another Wal-Mart Superstore location.
The branch occupies 540 square feet of leased space and includes a walk-up ATM, a night
depository, and furniture and equipment, all owned by First National.
Port St. Lucie Wal-Mart, opened in October 2002, occupies 695 square feet of leased
space in a brand new Wal-Mart Superstore in a highly visible location on U.S. Highway 1.
The branch includes a walk-up ATM, a night depository, and furniture and equipment, all
owned by First National.
Jupiter, this office opened as a loan production office in August 2002 and converted
to a full-service branch during 2003. Commercial and residential lending personnel as well
as executive offices are maintained at this location. The office occupies 3,718 square feet
of leased space on U.S. Highway 1 in Jupiter, Florida. No ATM or night depository exists
for this location. First National owns all furniture and equipment at the branch.
Tequesta, opened in January 2003. The Tequesta office is a 3,500 square foot
building acquired and owned by First National located on U.S. Highway 1 on property subject
to a long term ground lease. The Tequesta location has two drive-up lanes, a drive-up ATM,
a night depository, and furniture and equipment, all owned by First National.
Jupiter Indiantown, opened in December 2004, is a free standing office located on
Indiantown Road, a prime thoroughfare in Jupiter, Florida. First National owns the building
and leases the land. The building is 2,881 square feet and includes three drive-up lanes, a
drive-up ATM, a night depository, and furniture and equipment, all owned by First National.
Juno Beach, is a location acquired during 2004. Previously utilized by another
financial institution, First Nationals Jupiter Bluffs branch was relocated to this
facility at the end of December 2004, following renovation of the building. The building is
2,891 square feet, located on U.S. Highway 1 in Juno Beach, and includes three drive-up
lanes, a
drive-up ATM, a night depository, and furniture and equipment, all owned by First National.
28
60 West, in January 2005, First National acquired from another financial institution
an office on Route 60 in Vero Beach. First National owns the land and the 2,500 square foot
building at this location. The office has three drive-up lanes, a drive-up ATM, a night
depository, and furniture and equipment, all owned by First National.
Northlake, is a 2,881 square foot location built on land owned by First National and
opened in February 2005. Located on a bustling east / west thoroughfare in northern Palm
Beach County, the facility includes 3 drive-up lanes, a drive-up ATM, a night depository,
and furniture and equipment, all owned by First National.
Century National Bank, acquired by Seacoast in 2005, has three locations in Orlando, Florida.
All three locations are leased. The net carrying value of Centurys three offices at December 31,
2005 was $0.4 million.
Downtown Orlando, is a 6,752 square foot location occupying the ground floor of a
six floor 62,100 square foot commercial office building on Orange Avenue in the heart of
downtown Orlando. The location includes a walk-up ATM, a night depository, and furniture
and equipment, all owned by Century.
Maitland/Winter Park, occupies 4,536 square feet of the first floor of a three story
32,975 square foot office building on Orlando Avenue. The location includes 3 drive-up
lanes, a drive-up ATM, a night depository, and furniture and equipment, all owned by
Century.
Longwood, occupies 4,596 square feet of the first floor of a three story 35,849
square foot office building on North State Road 434. The location includes 3 drive-up
lanes, a drive-up ATM, a night depository, and furniture and equipment, all owned by
Century.
For additional information regarding our properties, you should refer to Notes G and K of the
Notes to Consolidated Financial Statements in Seacoasts 2005 Annual Report, certain portions of
which are incorporated herein by reference pursuant to Part II, Item 8 of this report.
PGA Blvd., a signature Palm Beach headquarters office is opening in April 2006 in Palm
Beach Gardens in northern Palm Beach County. Located across the street from the Gardens Mall on
PGA Blvd., this office will occupy leased space in a high-rise office building containing
approximately 67,500 square feet of rentable space. First National will occupy a total of 13,454
square feet: 5,600 square feet on the first floor and 7,854 square feet on the second floor. The
office will have three drive-up lanes, a drive-up ATM and night depository.
Viera-The Avenues, opening in mid- to late-2006 is First Nationals first branch
location in Brevard County, located in the Viera area. The branch will be 5,999 square feet in
size, with 3 drive-up lanes, a drive-up ATM, night depository, and furniture and equipment, all
owned by First National. This location will be under a ground lease.
29
Item 3. Legal Proceedings
The Company and its subsidiaries are subject, in the ordinary course, to litigation incident
to the businesses in which they are engaged. Management presently believes that none of the legal
proceedings to which it is a party are likely to have a material adverse effect on the Companys
consolidated financial position, operating results or cash flows, although no assurance can be
given with respect to the ultimate outcome of any such claim or litigation.
We have incurred no penalties for failing to include on our tax returns any information
required to be disclosed under Section 6011 of the Internal Revenue Code of 1986, as amended (the
Code) with respect to a reportable transaction under the Code and that is required to be
reported under Code Section 6707 A (e).
Item 4. Submission of Matters to a Vote of Security Holders
None.
Part II
|
|
Item 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
In 2002, the Companys shareholders approved amendments to its Articles of Incorporation and
eliminated the Companys Class B Common Stock, which was converted, in accordance with its terms on
a one-for-one basis into Class A Common Stock. In addition, the Class A Common Stock liquidation
preference was eliminated, and Class A Common Stock was renamed Common Stock. Holders of Common
Stock are entitled to one vote per share on all matters presented to shareholders as provided in
the Companys Amended and Restated Articles of Incorporation (the Articles).
The Common Stock is traded in the over-the-counter market and quoted on the Nasdaq National
Market (Nasdaq Stock Market) under the symbol SBCF. As of February 23, 2006, there were
approximately 17,107,034 shares of Common Stock outstanding, held
by approximately 1,097 record
holders.
The following table sets forth the high and low sale prices per share of Seacoast Common Stock
on the Nasdaq Stock Market and the dividends paid per share of Seacoast Common Stock for the
indicated periods.
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale Price Per Share of |
|
|
|
|
Seacoast Common Stock |
|
Annual Dividends |
|
|
|
|
|
|
|
|
|
|
Declared Per Share of |
|
|
High |
|
Low |
|
Seacoast Common Stock |
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
22.580 |
|
|
$ |
19.340 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter |
|
|
20.580 |
|
|
|
18.030 |
|
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
25.620 |
|
|
|
19.100 |
|
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
25.070 |
|
|
|
21.610 |
|
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
21.199 |
|
|
$ |
17.550 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter |
|
|
21.350 |
|
|
|
18.510 |
|
|
|
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
22.020 |
|
|
|
18.850 |
|
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
23.900 |
|
|
|
20.000 |
|
|
|
0.14 |
|
Dividends from its bank subsidiaries are Seacoasts primary source of funds to pay dividends
on Seacoast capital stock. Under the National Bank Act, banks 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 Seacoasts bank subsidiaries also limits dividends that may be paid to
Seacoast. Additional information regarding restrictions on the ability of Seacoasts bank
subsidiaries to pay dividends to Seacoast is contained in Note C of the Notes to Consolidated
Financial Statements contained in Part II, Item 8 hereof. See Supervision and Regulation
contained in Part I, Item 1 of this annual report.
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 First Nationals or Centurys ability to pay dividends to
Seacoast. See Supervision and Regulation contained in Part I, Item 1 of this document.
Recent Sales of Unregistered Securities
During 2005, the Company did not issue or sell any of its securities in transactions not
registered under the Securities Act of 1933, as amended.
31
Issuer Purchases of Equity Securities (1) (2) (3)
The following table sets forth the shares of Common Stock repurchased by the Company during the
fourth quarter of 2005.
|
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|
|
(c) Total Number of |
|
|
(d) Maximum |
|
|
|
|
|
|
|
|
|
|
|
of Shares |
|
|
Number of Shares |
|
|
|
|
|
|
|
|
|
|
|
Purchased as Part |
|
|
that May Yet Be |
|
|
|
(a) Total Number |
|
|
(b) Average |
|
|
of Publicly |
|
|
Purchased Under |
|
|
|
of Shares |
|
|
Price Paid per |
|
|
Announced Plans |
|
|
the Plans or |
|
Period |
|
Purchased |
|
|
Share |
|
|
or Programs |
|
|
Programs |
|
10/1/05 to
10/31/05 |
|
|
0 |
|
|
$ |
0 |
|
|
|
489,286 |
|
|
|
335,714 |
|
11/1/05 to 11/30/05 |
|
|
827 |
|
|
$ |
24.06 |
|
|
|
490,113 |
|
|
|
334,887 |
|
12/1/05 to 12/31/05 |
|
|
502 |
|
|
$ |
24.70 |
|
|
|
490,615 |
|
|
|
334,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,329 |
|
|
$ |
24.30 |
|
|
|
490,615 |
|
|
|
334,385 |
|
(1) Plan authorized on September 18, 2001
(2) Total shares approved: 825,000
(3) Expiration date: None
Item 6. Selected Financial Data
Selected financial data of the Company is set forth under the caption Financial Highlights
in the 2005 Annual Report and is incorporated herein by reference.
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations is set
forth under the caption Financial Review 2005 Managements Discussion and Analysis, in the 2005
Annual Report, and is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The narrative under the heading of Market Risk in the 2005 Annual Report is incorporated
herein by reference. Table 19, Interest Rate Sensitivity Analysis, the narrative under the
heading of Securities, and the narrative under the heading of Interest Rate Sensitivity in the
2005 Annual Report are incorporated herein by reference. The information
32
regarding securities owned by the Company set forth in Table 15, Securities Held for Sale,
Securities Held for Investment, in the 2005 Annual Report is incorporated herein by reference.
See Exhibit 13 to this report for a complete copy of the 2005 Annual Report.
Risk Management Derivative Financial Instruments
|
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|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2005 |
|
(Dollars in thousands) |
|
Notional Amount |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Equity |
|
|
Ineffectiveness |
|
|
Maturity In Years |
|
LIABILITY HEDGES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
Interest rate swaps -
pay fixed |
|
$ |
25,000 |
|
|
$ |
19 |
|
|
$ |
|
|
|
$ |
12 |
|
|
$ |
|
|
|
|
0.08 |
|
Fair value hedges
Interest rate swaps
-receive fixed |
|
|
15,000 |
|
|
|
|
|
|
|
515 |
|
|
|
|
|
|
|
|
|
|
|
3.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
40,000 |
|
|
$ |
19 |
|
|
$ |
515 |
|
|
$ |
12 |
|
|
$ |
|
|
|
|
1.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management Derivative Financial Instruments Expected Maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2005 |
|
|
|
1 Year |
|
|
1 - 2 |
|
|
2 - 5 |
|
|
Over 5 |
|
|
|
|
(Dollars in Thousands) |
|
or Less |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Total |
|
CASH FLOW LIABILITY HEDGES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional Amount Swaps Pay Fixed |
|
$ |
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
25,000 |
|
Weighted average receive rate |
|
|
4.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.24 |
% |
Weighted average pay rate |
|
|
3.12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.12 |
% |
Unrealized gain |
|
$ |
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE LIABILITY HEDGES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional Amount Swaps Receive
Fixed |
|
|
|
|
|
|
|
|
|
$ |
15,000 |
|
|
|
|
|
|
$ |
15,000 |
|
Weighted average receive rate |
|
|
|
|
|
|
|
|
|
|
6.10 |
% |
|
|
|
|
|
|
6.10 |
% |
Weighted average pay rate |
|
|
|
|
|
|
|
|
|
|
6.63 |
% |
|
|
|
|
|
|
6.63 |
% |
Unrealized loss |
|
|
|
|
|
|
|
|
|
$ |
(515 |
) |
|
|
|
|
|
$ |
(515 |
) |
33
Item 8. Financial Statements and Supplementary Data
The reports of KPMG LLP and PricewaterhouseCoopers LLP, registered public accounting firms,
and the consolidated financial statements are included in the 2005 Annual Report and are
incorporated herein by reference. Selected Quarterly Information Consolidated Quarterly Average
Balances, Yields & Rates and Quarterly Consolidated Income Statements are included in the 2005
Annual Report and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed in the Companys reports under the
Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed,
summarized and reported within the time periods specified in the SECs rules and forms, and that
such information is accumulated and communicated to management, including the Companys Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives.
In connection with the preparation of this Annual Report on Form 10-K, as of the end of the
period, an evaluation was performed with the participation of the CEO and CFO, of the effectiveness
of the Companys disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act. Based
upon that evaluation, the CEO and CFO concluded that the Companys disclosure controls and procedures were
effective as of the end of the period covered by this report.
34
Accordingly, management has concluded that, as of the end of the period covered by this
report, the Companys internal control over financial reporting was effective based on the criteria
set forth by the COSO in Internal ControlIntegrated Framework.
The Companys independent registered public accounting firm, KPMG LLP, has issued an
attestation report on managements assessment of the Companys internal control over financial
reporting.
Change in Internal Control Over Financial ReportingThere were no changes in the Companys
internal control over financial reporting that occurred during the Companys last fiscal quarter
that have materially affected, or are reasonably likely to materially affect, the Companys
internal control over financial reporting.
Item 9B. Other Information.
None.
Part III
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, Corporate Governance and Executive Officers in
the 2006 Proxy Statement, as well as under the heading Section 16(a) Reporting in the 2006 Proxy
Statement and is incorporated herein by reference.
Item 11. Executive Compensation
Information regarding the compensation paid by Seacoast to its executive officers is 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
2005, Aggregated Options/SAR Exercises in 2005 and 2005 Year-End Option/SAR Values, Long-Term
Incentive Plans Awards in 2005, Profit Sharing Plan, Executive Deferred Compensation Plan,
Performance Graph, and Employment and Severance Agreements in the 2006 Proxy Statement which
are incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information about the Common Stock that may be issued under all
of the Companys existing compensation plans as of December 31, 2005.
35
Equity Compensation Plan Information
December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Number of |
|
|
(b)Weighted |
|
|
|
|
|
|
securities to be |
|
|
average exercise |
|
|
(c)Number of |
|
|
|
issued upon |
|
|
price of |
|
|
securities |
|
|
|
exercise of |
|
|
outstanding |
|
|
remaining |
|
|
|
outstanding |
|
|
options, |
|
|
available for |
|
|
|
options, warrants |
|
|
warrants and |
|
|
future |
|
Plan category |
|
and rights |
|
|
rights |
|
|
issuance |
|
Equity compensation plans approved by
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
1996 Plan
(1) |
|
|
390,989 |
|
|
$ |
8.32 |
|
|
|
34,938 |
|
2000 Plan
(2) |
|
|
345,700 |
|
|
|
18.77 |
|
|
|
746,968 |
|
Employee
Stock Purchase Plan (3) |
|
|
|
|
|
|
|
|
|
|
101,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
736,689 |
|
|
|
13.22 |
|
|
|
883,865 |
|
Equity compensation plans not approved by
shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Employee
Directors Plan (4) |
|
|
|
|
|
|
|
|
|
|
61,024 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
736,689 |
|
|
|
|
|
|
|
944,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Seacoast Banking Corporation of Florida 1996 Long-Term Incentive Plan. Shares reserved under
this plan are available for issuance pursuant to the exercise of stock options and stock
appreciation rights granted under the plan, and may be granted as awards of restricted stock,
performance shares, or other stock-based awards, including unrestricted stock. |
|
(2) |
|
Seacoast Banking Corporation of Florida 2000 Long-Term Incentive Plan. Shares reserved
under this plan are available for issuance pursuant to the exercise of stock options and stock
appreciation rights granted under the plan and may be granted as awards of performance shares,
and up to 330,000 shares may be granted as awards of restricted stock or unrestricted stock. |
|
(3) |
|
Seacoast Banking Corporation of Florida Employee Stock Purchase Plan, as amended. |
|
(4) |
|
Seacoast Banking Corporation of Florida 1998 Non-Employee Directors Compensation Plan.
Shares reserved under this plan are available for grant to non-employee directors who elect to
receive their board retainer and meeting fees in the form of common stock. |
The Seacoast Banking Corporation of Florida 1998 Non-Employee Directors Compensation Plan
authorizes the Company to grant up to 82,500 shares of Common Stock to non-employee directors
of the Company who elect to receive some or all of their quarterly board retainer and meeting
fees in the form of Common Stock, rather than cash. Shares of Common Stock will automatically
be granted to each non-employee director making such an election on the last business day of
each fiscal quarter for which an election is in effect. The number of shares included in each
grant will be determined by dividing the designated
36
percentage or dollar amount of the quarterly retainer and meeting fees to be received in Common
Stock by the fair market value per share of Common Stock on the applicable grant date. If, on
any grant date, the Company does not have enough shares of Common Stock to grant the full
amount of shares contemplated by the plan, each award will be reduced pro rata. Fractional
shares will not be granted, and any shortfall resulting from such proration will be paid in the
form of cash. The plan will remain in effect until August 18, 2008, the tenth anniversary of
its effective date, unless terminated earlier. The Board or the Compensation Committee may
terminate or amend the plan at any time. As of December 31, 2005, 61,024 shares of Common Stock
remained available for grant under the plan.
Additional information regarding the ownership of Seacoasts Common Stock is set forth under
the headings Proposal One Election of Directors, General, Proposal One Election of
Directors, Management Stock Ownership, and Principal Shareholders in the 2006 Proxy Statement,
which are incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and transactions between Seacoast and its
officers, directors and significant shareholders is set forth under the heading Proposal One -
Election of Directors Salary and Benefits Committee Interlocks and Insider Participation and
Certain Transactions and Business Relationships in the 2006 Proxy Statement and is incorporated
herein by reference.
Item 14. Principal Accountant Fees and Services
Information concerning the Companys principal accountant fees and services is set forth under
the heading Independent Auditors in the 2006 Proxy Statement, which is incorporated herein by
reference.
Part IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) List of all financial statements
The following consolidated financial statements and reports of independent registered public
accounting firms of Seacoast, included in the 2005 Annual Report, are incorporated by reference
into Part II, Item 8 of this Annual Report on Form 10-K.
Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheets as of December 31, 2005 and 2004
Consolidated Statements of Income for the years ended
December 31, 2005, 2004 and 2003
Consolidated Statements of Shareholders Equity for the
years ended December 31, 2005, 2004 and 2003
Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003
Notes to Consolidated Financial Statements
37
(a)(2) List of financial statement schedules
All schedules normally required by Form 10-K are omitted, since either they are not applicable or
the required information is shown in the financial statements or the notes thereto.
(a)(3) Listing of Exhibits
PLEASE NOTE: It is inappropriate for readers to assume the accuracy of, or rely upon any
covenants, representations or warranties that may be contained in agreements or other documents
filed as Exhibits to, or incorporated by reference in, this report. Any such covenants,
representations or warranties may have been qualified or superseded by disclosures contained in
separate schedules or exhibits not filed with or incorporated by reference in this report, may
reflect the parties negotiated risk allocation in the particular transaction, may be qualified
by materiality standards that differ from those applicable for securities law purposes, may not
be true as of the date of this report or any other date, and may be subject to waivers by any or
all of the parties. Where exhibits and schedules to agreements filed or incorporated by
reference as Exhibits hereto are not included in these Exhibits, such exhibits and schedules to
agreements are not included or incorporated by reference herein.
The following Exhibits are attached hereto or incorporated by reference herein:
Exhibit 3.1 Amended and Restated Articles of Incorporation
Incorporated herein by reference from the Companys Annual Report on Form 10-K, dated March 15,
2004.
Exhibit 3.2 Amended and Restated By-laws of the Corporation
Incorporated herein by reference from the Companys Annual Report on Form 10-K, dated March 28,
2003.
Exhibit 4.1 Specimen Common Stock Certificate
Incorporated herein by reference from the Companys Annual Report on Form 10-K, dated March 28,
2003.
Exhibit 10.1 Amended and Restated Retirement Savings Plan, with Amendments*
Incorporated herein by reference from the Companys Annual Report on Form 10-K, dated March 28,
2003.
Exhibit 10.2 Employee Stock Purchase Plan*
Incorporated herein by reference from the Companys Registration Statement on Form S-8 File No.
33-25627, dated November 18, 1988.
Exhibit 10.3 Amendment #1 to the Employee Stock Purchase Plan*
Incorporated herein by reference from the Companys Annual Report on Form 10-K, dated March 29,
1991.
38
Exhibit 10.4 Executive Employment Agreement*
Dated March 22, 1991 between A. Douglas Gilbert and the Bank, incorporated herein by reference
from the Companys Annual Report on Form 10-K, dated March 29, 1991.
Exhibit 10.5 Executive Employment Agreement*
Dated January 18, 1994 between Dennis S. Hudson, III and the Bank, incorporated herein by
reference from the Companys Annual Report on Form 10-K, dated March 28, 1995.
Exhibit 10.6 Executive Employment Agreement*
Dated July 31, 1995 between C. William Curtis, Jr. and the Bank, incorporated herein by reference
from the Companys Annual Report on Form 10-K, dated March 28, 1996.
Exhibit 10.8 1991 Stock Option & Stock Appreciation Rights Plan*
Incorporated herein by reference from the Companys Registration Statements on Form S-8 File No.
33-61925, dated August 18, 1995, and File No. 33-46504 dated March 18, 1992.
Exhibit 10.9 1996 Long Term Incentive Plan*
Incorporated herein by reference from the Companys Registration Statement on Form S-8 File No.
333-91859, dated December 1, 1999.
Exhibit 10.10 Non-Employee Director Stock Compensation Plan*
Incorporated herein by reference from the Companys Registration Statement on Form S-8 File No.
333-70399 dated January 11, 1999.
Exhibit 10.11 2000 Long Term Incentive Plan*
Incorporated herein by reference from the Companys Registration Statement on Form S-8 File No.
333-49972, dated November 15, 2000.
Exhibit 10.12 Executive Deferred Compensation Plan
Incorporated herein by reference from the Companys Annual Report on Form 10-K, dated March 30,
2001.
Exhibit 10.13 Line of Credit Agreement
Incorporated herein by reference from the Companys Annual Report on Form 10-K, dated March 28,
2003.
Exhibit 10.14 Change of Control Employment Agreement
Dated December 24, 2003 between Dennis S. Hudson, III and the Registrant, incorporated herein by
reference from the Companys Form 8-K, dated December 24, 2003.
Exhibit 10.15 Change of Control Employment Agreement
Dated December 24, 2003 between A. Douglas Gilbert and the Registrant, incorporated herein by
reference from the Companys Form 8-K, dated December 24, 2003.
39
Exhibit 10.16 Change of Control Employment Agreement
Dated December 24, 2003 between C. William Curtis, Jr. and the Registrant, incorporated herein by
reference from the Companys Form 8-K, dated December 24, 2003.
Exhibit 10.17 Change of Control Employment Agreement
Dated December 24, 2003 between William R. Hahl and the Registrant, incorporated herein by
reference from the Companys Form 8-K, dated December 24, 2003.
Exhibit 10.18 Change of Control Employment Agreement
Dated December 24, 2003 between Jean Strickland and the Registrant, incorporated herein by
reference from the Companys Form 8-K, dated January 7, 2004.
Exhibit 10.19 Change of Control Employment Agreement
Dated December 24, 2003 between Thomas H. Wilkinson and the Registrant, incorporated herein by
reference from the Companys Form 8-K, dated January 7, 2004.
Exhibit 10.20 Change of Control Employment Agreement
Dated December 24, 2003 between Teresa Idzior and the Registrant, incorporated herein by
reference from the Companys Form 8-K, dated January 7, 2004.
Exhibit 10.21 Agreement and Plan of Merger
Dated November 30, 2004, by and among the Company, the Bank and Century National Bank,
incorporated herein by reference from the Companys Form 8-K, filed on December 1, 2004.
Exhibit 10.22 First Amendment to Revolving Loan Agreement
Dated as of January 18, 2005, by and between the Company and SunTrust Bank (filed with the SEC as
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on January 21, 2005 (File No.
0-13660) and incorporated herein by reference).
Exhibit 10.23 Directors Deferred Compensation Plan
Dated June 15, 2004, but effective July 1, 2004,
incorporated herein by reference from the Companys Annual
Report on Form 10-K, dated December 31, 2004.
Exhibit
10.24 Agreement & Plan of Merger
Dated November 22, 2005, by and among the Company, the Bank and
Big Lake Financial Corporation, incorporated herein by reference from
the Companys Form 8-K, filed on November 29, 2005.
Exhibit 10.25
Amended & Restated
Revolving & Term Loan Agreement
Dated as of February 17, 2006, by and between the Company and
SunTrust Bank (filed with the SEC as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed on March 8,
2006 and incorporated herein by reference).
Exhibit 13
2005 Annual Report
The following portions of the 2005 Annual Report are
incorporated herein by reference:
Financial Highlights
Financial Review Managements 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
40
Exhibit 21 Subsidiaries of Registrant
Exhibit 23.1 Consent of Independent Registered Public Accounting Firm
Exhibit 23.2 Consent of Independent Registered Certified Public Accounting Firm
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Exhibit 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
* |
|
The certifications attached as Exhibits 32.1 and 32.2 accompany this Annual Report on
Form 10-K and are furnished to the Securities and Exchange Commission pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
(b) Exhibits
The response to this portion of Item 15 is submitted under a separate section of this
report.
(c) Financial Statement Schedules
None.
41
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 15th day of March 2006.
|
|
|
|
|
|
SEACOAST BANKING CORPORATION OF FLORIDA
(Registrant)
|
|
|
By: |
/s/ Dennis S. Hudson, III
|
|
|
|
Dennis S. Hudson, III |
|
|
|
Chairman of the Board and Chief
Executive Officer |
|
|
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/ Dennis S. Hudson, III
Dennis S. Hudson, III, Chairman of the Board, Chief Executive Officer
and Director |
|
March 15, 2006 |
/s/ Dale M. Hudson
Dale M. Hudson, Vice-Chairman of the Board
and Director |
|
March 15, 2006 |
/s/ A. Douglas Gilbert
A. Douglas Gilbert, President, Chief Operating
& Credit Officer and Director |
|
March 15, 2006 |
/s/ William R. Hahl
William R. Hahl, Executive Vice President and
Chief Financial Officer |
|
March 15, 2006 |
/s/ Stephen E. Bohner
Stephen E. Bohner, Director |
|
March 15, 2006 |
/s/ Jeffrey C. Bruner
Jeffrey C. Bruner, Director |
|
March 15, 2006 |
/s/ John H. Crane
John H. Crane, Director |
|
March 15, 2006 |
/s/ Evans Crary, Jr.
Evans Crary, Jr., Director |
|
March 15, 2006 |
42
|
|
|
|
|
Date |
/s/ T. Michael Crook
T. Michael Crook, Director |
|
March 15, 2006 |
/s/ Christopher E. Fogal
Christopher E. Fogal, Director |
|
March 15, 2006 |
/s/ Jeffrey S. Furst
Jeffrey S. Furst, Director |
|
March 15, 2006 |
Dennis S. Hudson, Jr., Director |
|
|
/s/ Thomas E. Rossin
Thomas E. Rossin, Director |
|
March 15, 2006 |
/s/ John R. Santarsiero, Jr.
John R. Santarsiero, Jr., Director |
|
March 15, 2006 |
/s/ Thomas H. Thurlow, Jr.
Thomas H. Thurlow, Jr., Director |
|
March 15, 2006 |
43