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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] Annual Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended Commission File
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December 31, 1999 No.0-13660
SEACOAST BANKING CORPORATION OF FLORIDA
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(Exact name of registrant as specified in its charter)
Florida 59-2260678
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(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
815 Colorado Avenue, Stuart, FL 34994
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(Address of principal executive offices) (Zip code)
(561) 287-4000
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(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
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Securities registered pursuant to Section 12 (g) of the Act:
Class A Common Stock, Par Value $.10
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non- affiliates of
the registrant as of February 11, 2000:
Class A Common Stock, $.10 par value - $97,560,586 based upon the closing sale
price on February 11, 2000, using beneficial ownership stock rules adopted
pursuant to Section 13 of the Securities Exchange Act of 1934, to exclude voting
stock owned by directors and executive officers, some of whom may not be held to
be affiliates upon judicial determination.
Class B Common Stock, $.10 par value - $1,649,442 based upon the closing sale
price on February 11, 2000, of the Class A Common Stock, $.10 par value, into
which each share of Class B Common Stock, $.10 par value, is immediately
convertible on a one-for-one basis, using beneficial ownership stock rules
adopted pursuant to Section 13 of the Securities Exchange Act of 1934, to
exclude voting stock owned by directors and executive officers, some of whom may
not be held to be affiliates upon judicial determination.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of February 11, 2000:
Class A Common Stock, $.10 Par Value - 4,474,668 shares
Class B Common Stock, $.10 Par Value - 360,588 shares
Documents Incorporated by Reference:
1. Portions of the registrant's 2000 Proxy Statement for the Annual Meeting
of Shareholders to be held April 20, 2000 ("2000 Proxy Statement") are
incorporated by reference into Part III, Items 10 through 13.
SPECIAL CAUTIONARY NOTICE
REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made herein under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and elsewhere are
forward-looking statements for purposes of the Securities Act of 1933, as
amended (the "Securities Act") and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"),and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Seacoast Banking Corporation of Florida ("Seacoast" or the
"Company") to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Such
forward looking statements include statements using the words such as "may",
"will", "anticipate", "should", "would", "believe", "contemplate", "expect",
"estimate", "continue", "may", "intend" or other similar words and expressions
of the future.
These forward looking statements involve risks and uncertainties and actual
results may differ significantly due to a variety of factors, including, without
limitation: the effects of future economic conditions; governmental monetary and
fiscal policies, as well as legislative and regulatory changes; the risks of
changes in interest rates on the level and composition of deposits, loan demand,
and the values of loan collateral, securities, and interest sensitive assets and
liabilities; interest rate risks; the effects of competition from other
commercial banks, thrifts, mortgage banking firms, consumer finance companies,
credit unions, securities brokerage firms, insurance companies, money market and
other mutual funds and other financial institutions operating in the Company's
market area and elsewhere, including institutions operating regionally,
nationally and internationally, together with such competitors offering banking
products and services by mail, telephone, computer and the Internet; and the
failure of assumptions underlying the establishment of reserves for possible
loan losses. All written or oral forward looking statements attributable to the
Company are expressly qualified in their entirety by this Cautionary Notice.
Part I
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Item 1. Business
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General
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Seacoast is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHC Act"). Seacoast was incorporated
under the laws of the State of Florida on January 24, 1983, by the
management of its principal subsidiary, First National Bank and Trust
Company of the Treasure Coast (the "Bank") for the purpose of becoming a
holding company for the Bank. On December 30, 1983, Seacoast acquired all
of the outstanding shares of the common stock of the Bank in exchange for
810,000 shares of its $.10 par value Class A common stock ("Class A Common
Stock") and 810,000 shares of its $.10 par value Class B common stock
("Class B Common Stock"). The Bank commenced operations in 1933 under the
name "Citizens Bank of Stuart" pursuant to a charter originally granted by
the State of Florida in 1926. The Bank converted to a national banking
association on August 29, 1958.
Through the Bank and its broker-dealer subsidiary, Seacoast offers a full
array of deposit accounts and retail banking services, engages in consumer
and commercial lending and provides a wide variety of trust and asset
management services, as well as securities and annuity products. Seacoast's
primary service area is the "Treasure Coast", which, as defined by
Seacoast, consists of the counties of Martin, St. Lucie and Indian River on
Florida's southeastern coast. The Bank operates banking offices in the
following cities: five in Stuart, two in Palm City, one in Jensen Beach,
two on Hutchinson Island, one in Hobe Sound, five in Vero Beach, two in
Sebastian, five in Port St. Lucie, and one in Ft. Pierce.
Most of the banking offices have one or more Automated Teller Machines
(ATMs) which provide customers with 24-hour access to their deposit
accounts. Seacoast is a member of the "Star System", the largest electronic
funds transfer organization in the United States, which permits banking
customers access to their accounts at over 115,000 locations throughout the
United States.
Customers can also use the Bank's "MoneyPhone" system to access information
on their loan or deposit account balances, to transfer funds between linked
accounts, to make loan payments, and to verify deposits or checks that may
have cleared. This service is accessible by phone 24 hours a day, seven
days a week.
In addition, customers may access information via the Bank's Telephone
Banking Center ("TBC"). From 7 A.M. to 7 P.M., Monday through Friday,
servicing personnel in the TBC are available to open accounts, take
applications for certain types of loans, resolve account problems and offer
information on other bank products and services to existing and potential
customers. The Company also offers PC banking for personal computers.
Seacoast has three indirect subsidiaries. FNB Brokerage Services, Inc.
("FNB Brokerage") provides brokerage and annuity services. South Branch
Building, Inc. is a general partner in a partnership which constructed a
branch facility. Big O RV Resort, Inc. was formed to own and operate
certain properties acquired through foreclosure, but is currently inactive.
The operations of these subsidiaries contribute less than 10% of the
consolidated assets and revenues of Seacoast.
As a bank holding company, Seacoast is a legal entity separate and distinct
from its subsidiaries. Seacoast coordinates the financial resources of the
consolidated enterprise and maintains financial, operational and
administrative systems that allow centralized evaluation of subsidiary
operations and coordination of selected policies and activities. Seacoast's
operating revenues and net income are derived primarily from its
subsidiaries through dividends, fees for services performed and interest on
advances and loans. See "Supervision and Regulation".
As of December 31, 1999, Seacoast and its subsidiaries employed 347
full-time equivalent employees.
Expansion of Business
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Seacoast has expanded its products and services to meet the changing needs
of the various segments of its market and it expects to continue this
strategy. Prior to 1991, Seacoast had expanded geographically primarily
through the addition of branches, including the acquisition of a thrift
branch in St. Lucie County.
Seacoast has from time to time has acquired banks, bank branches and
deposits, and has opened new branches and facilities.
Florida law permits state-wide branching and Seacoast has expanded, and
anticipates future expansion in its markets, by opening additional offices
and facilities. New banking facilities were opened in November 1994 in St.
Lucie West, a new community west of Port St. Lucie, and in May 1996 in a
WalMart superstore in Sebastian in northern Indian River County. In January
1997, Seacoast opened a branch in Nettles Island, a predominately modular
home community on Hutchinson Island in southern St. Lucie County. In May,
June and July 1997, and in March 1998, four additional branch offices were
opened in Indian River County. See "Item 2. Properties".
Seacoast regularly evaluates possible acquisitions and other expansion
opportunities.
Competition
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Seacoast and its subsidiaries operate in the highly competitive markets of
Martin, St. Lucie and Indian River Counties in southeastern Florida. The
Bank not only competes with other banks in its markets, but it also
competes with various other types of financial institutions for deposits,
certain commercial, fiduciary and investment services and various types of
loans and certain other financial services. The Bank also competes for
interest-bearing funds with a number of other financial intermediaries and
investment alternatives, including mutual funds, brokerage and insurance
firms, governmental and corporate bonds, and other securities.
Seacoast and its subsidiaries compete not only with financial institutions
based in the State of Florida, but also with a number of large out-of-state
and foreign banks, bank holding companies and other financial institutions
which have an established market presence in the State of Florida, or which
offer products by mail, telephone or over the Internet. Many of Seacoast's
competitors are engaged in local, regional, national and international
operations and have greater assets, personnel and other resources than
Seacoast. Some of these competitors are subject to less regulation and/or
more favorable tax treatment than Seacoast.
Supervision and Regulation
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Bank holding companies and banks are extensively regulated under federal
and state law. This discussion is qualified in its entirety by reference to
the particular statutory and regulatory provisions referred to below and is
not intended to be an exhaustive description of the status or regulations
applicable to the Company's and the Bank's business. Supervision,
regulation, and examination of the Company and the Bank and their
respective subsidiaries by the bank regulatory agencies are intended
primarily for the protection of depositors rather than holders of Company
capital stock. Any change in applicable law or regulation may have a
material effect on the Company's business.
Bank Holding Company Regulation
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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. The Company is required to file with
the Federal Reserve periodic reports and such other information as the
Federal Reserve may request. The Federal Reserve examines the Company, and
may examine the Company's Subsidiaries.
The BHC Act requires prior Federal Reserve approval for, among other
things, the acquisition by a bank holding company of direct or indirect
ownership or control of more than 5% of the voting shares or substantially
all the assets of any bank, or for a merger or consolidation of a bank
holding company with another bank holding company. With certain exceptions,
the BHC Act prohibits a bank holding company from acquiring direct or
indirect ownership or control of voting shares of any company which is not
a bank or bank holding company and from engaging directly or indirectly in
any activity other than banking or managing or controlling banks or
performing services for its authorized subsidiaries. A bank holding
company, may, however, engage in or acquire an interest in a company that
engages in activities which the Federal Reserve has determined by
regulation or order to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.
In November 1999, Congress enacted the Gramm-Leach-Bliley Act("GLB") which
made substantial revisions to the statutory restrictions separating banking
activities from certain other financial activities. Under GLB, bank holding
companies that are well-capitalized and well-managed and meet certain other
conditions can elect to become "financial holding companies". As such, they
and their subsidiaries are permitted to acquire or engage in previously
impermissible activities such as insurance underwriting, securities
underwriting and distribution, travel agency activities, board insurance
agency activities, merchant bank, and other activities that the Federal
Reserve determines to be financial in nature or complementary thereto.
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 does not
currently intend to become a financial holding company in order to exercise
the boarder activity powers provided by GLB, it may elect to do so in the
future.
The Company is a legal entity separate and distinct from the Bank and its
other subsidiaries. Various legal limitations restrict the Bank from
lending or otherwise supplying funds to the Company or its non-bank
subsidiaries. The Company and the Bank are subject to Section 23A of the
Federal Reserve Act. Section 23A defines "covered transactions", which
include extensions of credit, and limits a bank's covered transactions with
any affiliate to 10% of such bank's capital and surplus. All covered and
exempt transactions between a bank and its affiliates must be on terms and
conditions consistent with safe and sound banking practices, and banks and
their subsidiaries are prohibited from purchasing low-quality assets from
the bank's affiliates. Finally, Section 23A requires that all of a bank's
extensions of credit to an affiliate be appropriately secured by acceptable
collateral, generally United States government or agency securities. The
Company and the Bank also are subject to Section 23B of the Federal Reserve
Act, which generally limits covered and other transactions among affiliates
to terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the bank or its
subsidiary as prevailing at the time for transactions with unaffiliated
companies.
The BHC Act, effective September 29, 1995, repealed the prior statutory
restrictions on interstate acquisitions of banks by bank holding companies,
such that Seacoast and any other bank holding company located in Florida
may now acquire a bank located in any other state, and any bank holding
company located outside Florida may lawfully acquire any bank based in
another state,regardless of state law to the contrary, in either case
subject to certain deposit-percentage, age of bank charter requirements,
and other restrictions. Federal law also permits national and
state-chartered banks to branch interstate through acquisitions of banks in
other states. Florida has an Interstate Branching Act (the "Florida
Branching Act"), which permits interstate branching. 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.
Federal Reserve policy requires a bank holding company to act as a source
of financial strength and to take measures to preserve and protect bank
subsidiaries in situations where additional investments in a troubled bank
may not otherwise be warranted. In addition, under the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), where
a bank holding company has more than one bank or thrift subsidiary, each of
the bank holding company's subsidiary depository institutions are
responsible for any losses to the Federal Deposit Insurance Corporation
("FDIC") as a result of an affiliated depository institution's failure. As
a result, a bank holding company may be required to loan money to its
subsidiaries in the form of capital notes or other instruments which
qualify as capital under regulatory rules. However, any loans from the
holding company to such subsidiary banks likely will be unsecured and
subordinated to such bank's depositors and perhaps to other creditors of
the bank.
Bank and Bank Subsidiary Regulation Generally
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The Bank is subject to supervision, regulation, and examination by the
Office of the Comptroller of the Currency (the "OCC") which monitors all
areas of the operations of the Bank, including reserves, loans, mortgages,
issuances of securities, payment of dividends, establishment of branches,
capital adequacy, and compliance with laws. The Bank is a member of the
FDIC and, as such, its deposits are insured by the FDIC to the maximum
extent provided by law. See "FDIC Insurance Assessments".
Under present Florida law, the Bank may establish and operate branches
throughout the State of Florida, subject to the maintenance of adequate
capital and the receipt of OCC approval.
The OCC has adopted a series of revisions to its regulations, including
expanding the powers exercisable by operations subsidiaries. These changes
also modernize and streamline corporate governance, investment and
fiduciary powers.
The Federal Financial Institutions Examination Council's ("FFIEC") and the
OCC utilize the "Uniform Financial Institutions Rating System" ("UFIRS"),
effective January 1, 1997. UFIRS is an internal rating system to assess the
soundness of financial institutions on a uniform basis and for identifying
those institutions requiring special supervisory attention. Under prior
UFIRS, each financial institution was assigned a confidential composite
rating based on an evaluation and rating of five essential components of an
institution's financial condition and operations including Capital
adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to
market risk, as well as the quality of risk management practices. For most
institutions, the FFIEC has indicated that market risk primarily reflects
exposures to changes in interest rates. When regulators evaluate this
component, consideration is expected to be given to: management's ability
to identify, measure, monitor, and control market risk; the institution's
size; the nature and complexity of its activities and its risk profile, and
the adequacy of its capital and earnings in relation to its level of market
risk exposure. Market risk is rated based upon, but not limited to, an
assessment of the sensitivity of the financial institution's earnings or
the economic value of its capital to adverse changes in interest rates,
foreign exchange rates, commodity prices, or equity prices; management's
ability to identify, measure, monitor and control exposure to market risk;
and the nature and complexity of interest rate risk exposure arising from
nontrading positions.
GLB requires banks and their affiliated companies to adopt and disclose
privacy policies regarding the sharing of personal information they obtain
from their customers with third parties. GLB also permits banks to engage
in "financial activities" through subsidiaries similar to that permitted
financial holding companies. See the discussion regarding GLB in "Bank
Holding Company Regulation" above.
FNB Brokerage, a Bank subsidiary, is registered as a securities
broker-dealer under the Exchange Act and is regulated by the Securities and
Exchange Commission ("SEC"). As a member of the National Association of
Securities Dealers, Inc., it also is subject to examination and supervision
of its operations, personnel and accounts by NASD Regulation, Inc., a NASD
subsidiary. FNB Brokerage is a separate and distinct entity from the Bank,
and must maintain adequate capital under the SEC's net capital rule, Rule
15c3-1 under the Exchange Act. The net capital rule limits FNB Brokerage's
ability to reduce capital by payment of dividends or other distributions to
the Bank. FNB Brokerage is also authorized by the State of Florida to act
as a securities dealer and investment advisor pursuant to Chapter 517 of
the Florida Statutes.
Community Reinvestment Act
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The Company and the Bank are subject to the provisions of the Community
Reinvestment Act of 1977, as amended (the "CRA") and the federal banking
agencies' regulations thereunder. Under the CRA, all banks and thrifts have
a continuing and affirmative obligation, consistent with their safe and
sound operation to help meet the credit needs for their entire communities,
including low and moderate income neighborhoods. The CRA requires a
depository institution's primary federal regulator, in connection with its
examination of the institution, to assess the institution's record of
assessing and meeting the credit needs of the community served by that
institution, including low- and moderate-income neighborhoods. The
regulatory agency's assessment of the institution's record is made
available to the public. Further, such assessment is required of any
institution which has applied to: (i) charter a national bank; (ii) obtain
deposit insurance coverage for a newly-chartered institution; (iii)
establish a new branch office that accepts deposits; (iv) relocate an
office; (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. In the case of a bank holding company applying for
approval to acquire a bank or other bank holding company or to become a
"financial holding company", the Federal Reserve will assess the records of
each subsidiary depository institution of the applicant bank holding
company, and such records may be the basis for denying the application. A
less than satisfactory CRA rating will slow, if not preclude, expansion of
banking activities and prevent a company from becoming a financial holding
company.
The recently enacted GLB makes various changes to the CRA. Among other
changes, CRA agreements with private parties must be disclosed and annual
CRA reports must be made to a bank's primary federal regulator. A bank
holding company will not be permitted to become a financial holding company
and no new activities authorized under GLB may be commenced by a holding
company or by a bank financial subsidiary if any of its bank subsidiaries
received less than a "satisfactory" CRA rating in its latest CRA
examination.
The Bank is also subject to, among other things, the provisions of the
Equal Credit Opportunity Act (the "ECOA") and the Fair Housing Act (the
"FHA"), both of which prohibit discrimination based on race or color,
religion, national origin, sex, and familial status in any aspect of a
consumer or commercial credit or residential real estate transaction. 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.
Payment of Dividends
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The Company is a legal entity separate and distinct from its banking and
other subsidiaries. The prior approval of the OCC is required if the total
of all dividends declared by a national bank (such as the Bank) in any
calendar year will exceed the sum of such bank's net profits for the year
and its retained net profits for the preceding two calendar years, less any
required transfers to surplus. Federal law also prohibits any national bank
from paying dividends that would be greater than such bank's undivided
profits after deducting statutory bad debts in excess of such bank's
allowance for possible loan losses.
In addition, the Company and the Bank are subject to various general
regulatory policies and requirements relating to the payment of dividends,
including requirements to maintain adequate capital above regulatory
minimums. The appropriate federal regulatory authority is authorized to
determine under certain circumstances relating to the financial condition
of a national or state member bank or a bank holding company that the
payment of dividends would be an unsafe or unsound practice and to prohibit
payment thereof. The OCC and the Federal Reserve have indicated that paying
dividends that deplete a national or state member bank's capital base to an
inadequate level would be an unsound and unsafe banking practice. The OCC
and the Federal Reserve have each indicated that financial depository
institutions should generally pay dividends only out of current operating
earnings.
Capital
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The Federal Reserve and the OCC have risk-based capital guidelines for bank
holding companies and national banks, respectively. These guidelines
require a minimum ratio of capital to risk-weighted assets (including
certain off-balance- sheet activities, such as standby letters of credit)
of 8%. At least half of the total capital must consist of common equity,
retained earnings and a limited amount of qualifying preferred stock, less
goodwill and certain core deposit intangibles ("Tier 1 capital"). The
remainder may consist of non-qualifying preferred stock, qualifying
subordinated, perpetual, and/or mandatory convertible debt, term
subordinated debt and intermediate term preferred stock and up to 45% of
pretax unrealized holding gains on available for sale equity securities
with readily determinable market values that are prudently valued, and a
limited amount of any loan loss allowance ("Tier 2 capital" and, together
with Tier 1 capital, "Total Capital").
In addition, the Federal Reserve and the OCC have established minimum
leverage ratio guidelines for bank holding companies and national banks,
which provide for a minimum leverage ratio of Tier 1 capital to adjusted
average quarterly assets ("leverage ratio") equal to 3%, plus an additional
cushion of 1.0% 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, and depending upon a
bank holding company's risk profile. All bank holding companies and banks
are expected to hold capital commensurate with the level and nature of
their risks, including the volume and severity of their problem loans.
Lastly, the Federal Reserve's guidelines indicate that the Federal Reserve
will continue to consider a "tangible Tier 1 leverage ratio" (deducting all
intangibles) in evaluating proposals for expansion or new activity. The
Federal Reserve and OCC have not advised the Company or the Bank of any
specific minimum leverage ratio or tangible Tier 1 leverage ratio
applicable to them.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, requires the federal banking agencies to
take "prompt corrective action" regarding depository institutions that do
not meet minimum capital requirements. FDICIA establishes five capital
tiers: "well capitalized", "adequately capitalized", "undercapitalized",
"significantly undercapitalized", and "critically undercapitalized". A
depository institution's capital tier will depend upon how its capital
levels compare to various relevant capital measures and certain other
factors, as established by regulation.
All of the federal banking agencies have adopted regulations establishing
relevant capital measures and relevant capital levels. The relevant capital
measures are the Total Capital ratio, Tier 1 capital ratio, and the
leverage ratio. Under the regulations, a national bank will be (i) well
capitalized if it has a Total Capital ratio of 10% or greater, a Tier 1
capital ratio of 6% or greater, and 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.
As of December 31, 1999, the consolidated capital ratios of the Company and
the Bank were as follows:
Regulatory
Minimum Company Bank
Tier 1 capital ratio 4.0% 11.3% 10.8%
Total capital ratio 8.0% 12.2% 11.8%
Leverage ratio 3.0-5.0% 7.3% 7.0%
FDICIA
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FDICIA directs that each federal banking regulatory agency prescribe
standards for depository institutions and depository institution holding
companies relating to internal controls, information systems, internal
audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth compensation, a maximum ratio of classified assets
to capital, minimum earnings sufficient to absorb losses, a minimum ratio
of market value to book value for publicly traded shares, and such other
standards as the federal regulatory agencies deem appropriate.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee
to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
growth limitations and are required to submit a capital restoration plan
for approval. For a capital restoration plan to be acceptable, the
depository institution's parent holding company must guarantee that the
institution comply with such capital restoration plan. The aggregate
liability of the parent holding company is limited to the lesser of 5% of
the depository institution's total assets at the time it became
undercapitalized and the amount necessary to bring the institution into
compliance with applicable capital standards. If a depository institution
fails to submit an acceptable plan, it is treated as if it is significantly
undercapitalized. If the controlling holding company fails to fulfill its
obligations under FDICIA and files (or has filed against it) a petition
under the federal Bankruptcy Code, the claim would be entitled to a
priority in such bankruptcy proceeding over third party creditors of the
bank holding company. Significantly undercapitalized depository
institutions may be subject to a number of requirements and restrictions,
including orders to sell sufficient voting stock to become adequately
capitalized, requirements to reduce total assets, and cessation of receipt
of deposits from correspondent banks. Critically undercapitalized
institutions are subject to the appointment of a receiver or conservator.
Because the Company and the Bank exceed applicable capital requirements,
the respective managements of the Company and the Bank do not believe that
the provisions of FDICIA have had any material impact on the Company and
the Bank or their respective operations.
FDICIA also contains a variety of other provisions that may affect the
operations of the Company and the Bank, including reporting requirements,
regulatory standards for real estate lending, "truth in savings"
provisions, the requirement that a depository institution give 90 days
prior notice to customers and regulatory authorities before closing any
branch, and a prohibition on the acceptance or renewal of brokered deposits
by depository institutions that are not well capitalized or are adequately
capitalized and have not received a waiver from the FDIC. The Bank is well
capitalized, and brokered deposits are not restricted.
Enforcement Policies and Actions
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The Federal Reserve and the OCC monitor compliance with laws and
regulations. Violations of laws and regulations, or other unsafe and
unsound practices, may result in these agencies imposing fines or
penalties, cease and desist orders, or taking other enforcement actions.
Under certain circumstances, these agencies may enforce these remedies
directly against officers, directors, employees and others participating in
the affairs of a bank or bank holding company.
Fiscal and Monetary Policy
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Banking is a business which depends on interest rate differentials. In
general, the difference between the interest paid by a bank on its deposits
and its other borrowings, and the interest received by a bank on its loans
and securities holdings, constitutes the major portion of a bank's
earnings. Thus, the earnings and growth of Seacoast and the Bank are
subject to the influence of economic conditions generally, both domestic
and foreign, and also to the monetary and fiscal policies of the United
States and its agencies, particularly the Federal Reserve. The Federal
Reserve regulates the supply of money through various means, including open
market dealings in United States government securities, the discount rate
at which banks may borrow from the Federal Reserve, and the reserve
requirements on deposits. The nature and timing of any changes in such
policies and their effect on Seacoast and its subsidiaries cannot be
predicted.
FDIC Insurance Assessments
- --------------------------
The Bank is subject to FDIC deposit insurance assessments. The Bank's
deposits are primarily insured by the FDIC's Bank Insurance Fund ("BIF").
The Bank is also a member of the Savings Association Insurance Fund
("SAIF") to the extent that the Bank holds deposits acquired in 1991 from
the RTC. The FDIC assesses deposits under a risk-based premium schedule.
Each financial institution is assigned to one of three capital groups,
"well capitalized," "adequately capitalized" or "undercapitalized," and
further assigned to one of three subgroups within a capital group, on the
basis of supervisory evaluations by the institution's primary federal and,
if applicable, state regulators and other information relevant to the
institution's financial condition and the risk posed to the applicable
insurance fund. The actual assessment rate applicable to a particular
institution, therefore, depends in part upon the risk assessment
classification so assigned to the institution by the FDIC. During the years
ended December 31, 1999, and 1998, the Bank paid no deposit premiums,
except for the Financing Corporation ("FICO") assessments of $146,000 and
$135,000, respectively.
The FDIC's Board of Directors has continued the 1999 BIF and SAIF
assessment schedule of zero to 27 basis points per annum for the first
semiannual period of 2000. The Deposit Insurance Funds Act of 1996 (the
"Funds Act") authorized FICO to levy assessments through the earlier of
December 31, 1999 or the merger of BIF and SAIF, on BIF-assessable deposits
at a rate equal to one-fifth of the FICO assessment rate applied to SAIF
deposits. As of January 1, 2000, the FICO assessment rate is equivalent for
BIF and SAIF - assessable deposits. The FICO assessments are set quarterly
and ranged from 1.22 and 6.10 basis points for BIF and SAIF, respectively,
in the first quarter of 1999, to 1.184 and 5.92 basis points in the last
quarter of 1999. The assessment rate is 2.12 basis points for BIF and SAIF,
in the first quarter of 2000.
Legislative and Regulatory Changes
- ----------------------------------
The newly enacted GLB requires banks and their affiliated companies to
adopt and disclose policies regarding the sharing of personal information
they obtain from their customers with third parties. The GLB also permits
banks to engage in "financial activities" through subsidiaries similar to
that permitted financial holding companies. See the discussion regarding
GLB in "Bank Holding Company Regulation" above.
Other legislative and regulatory proposals regarding changes in banking,
and the regulation of banks, thrifts and other financial institutions and
bank and bank holding company powers are being considered by the executive
branch of the Federal government, Congress and various state governments,
including Florida. Among other items under consideration is the possible
combination of the BIF and SAIF. The FDIC is considering possibly adding
risk measures in determining deposit insurance assessments. Certain of
these proposals, if adopted, could significantly change the regulation of
banks and the financial services industry. It cannot be predicted whether
any of these proposals will be adopted, and, if adopted, how these
proposals will affect the Company and the Bank. In a case presented to the
United States Supreme Court in 1996, the Court permitted bank affiliates to
conduct insurance agency activities in the State of Florida.
New Accounting Pronoucements
- ----------------------------
The FASB has issued Statement of Financial Accounting Standard Number 133,
Accounting for Derivative Instruments and for Hedging Activities (SFAS
133). The Company is required to adopt this statement in the future.
Management does not believe the adoption of SFAS 133 will have a
significant impact on the Company's financial statements or related
disclosures.
The Year 2000 Issue
- -------------------
The Company had recognized the scope and potential problems that required a
comprehensive Year 2000 compliance program. The Company had adopted a plan
of action and over a period of three years implemented the plan to assure
minimal disruptions to its various activities and operations that could be
experienced as a result of the century date rollover. Due to this high
level of preparedness, the Company experienced no disruptions at December
31, 1999.
There remains six dates which have been identified as potentially causing
system problems. The Company tested the dates during the testing phase of
its Year 2000 plan and anticipates no problems relating to the dates.
The Year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates that have been
sorted as two digits rather than four (e.g., "99" for 1999). On January 1,
2000, any clock or date recording the year may have recognized a date using
"00" as the year 1900 rather than the year 2000. This could result in
system failures or miscalculations causing disruption of operations,
including, among other things, a temporary inability to process
transactions, send invoices or perform similar tasks.
The Company budgeted expenses of approximately $750,000 to modify its
information system to accurately process information for the year 2000 and
beyond. A significant portion of the cost constituted a reallocation of
existing internal systems technology resources and, accordingly, was funded
from normal operations. No significant future costs for this project are
anticipated.
Statistical Information
- -----------------------
Certain statistical information (as required by Guide 3) is included in
response to Item 7 of this Annual Report on Form 10- K. Certain statistical
information is included in response to Item 6 and Item 8 of this Annual
Report on Form 10-K.
Item 2. Properties
- -------------------
Seacoast and the Bank's main office occupy approximately 62,000 square feet
of a 68,000 square foot building in Stuart, Florida. The building, together
with an adjacent 10-lane drive-in banking facility and an additional 27,000
square foot office building, are situated on approximately eight acres of
land in the center of Stuart zoned for commercial use. The building and
land are owned by the Bank, which leases out portions of the building not
utilized by Seacoast and the Bank to unaffiliated parties.
Adjacent to the main office, the Bank leases approximately 21,400 square
feet of office space to house operational departments, primarily
information systems and retail support. The Bank owns its equipment which
is used for servicing bank deposits and loan accounts as well as on-line
banking services, providing tellers and other customer service personnel
with access to customers' records.
As of December 31, 1999, the net carrying value of branch offices
(excluding the main office) was approximately $8.8 million. Seacoast's
branch offices are described as follows:
Jensen Beach, opened in 1977, is a free-standing facility located in the
commercial district of a residential community contiguous to Stuart. The
1,920 square foot bank building and land are owned by the Bank.
Improvements include three drive-in teller lanes and one drive-up ATM as
well as a parking lot and landscaping.
East Ocean Boulevard, opened at its original location in 1978, was a 2,400
square foot building leased by the Bank. The acquisition of American Bank
provided an opportunity for the Bank to move to a new location in April
1995. It is still located on the main thoroughfare between downtown Stuart
and Hutchinson Island's beach-front residential developments. The first
three floors of a four story office condominium were acquired in the
acquisition. The 2,300 square foot branch area on the first floor has been
remodeled and operates as a full service branch including five drive-in
lanes and a drive-up ATM. The remaining 2,300 square feet on the ground
floor was sold in June 1996, the third floor was sold in December 1995, and
the second floor in December 1998.
Cove Road, opened in late 1983, is conveniently located close to housing
developments in the residential areas south of Stuart known as Port Salerno
and Hobe Sound. South Branch Building, Inc., a subsidiary of the Bank, is a
general partner in a partnership which entered into a long term land lease
for approximately four acres of property on which it constructed a 7,500
square foot building. The Bank leases the building and utilizes 3,450
square feet of the available space. The balance is sublet by the Bank to
other business tenants. The Bank has improved its premises with three
drive-in lanes, bank equipment, and furniture and fixtures, all of which
are owned by the Bank. A drive-up ATM was added in early 1997.
Hutchinson Island, opened on December 31, 1984, is in a shopping center
located on a coastal barrier island, close to numerous oceanfront
condominium developments. In 1993, the branch was expanded from 2,800
square feet to 4,000 square feet and is under a long term lease to the
Bank. The Bank has improved the premises with bank equipment, a walk-up ATM
and three drive-in lanes, all owned by the Bank.
Rivergate originally opened October 28, 1985 and occupied 1,700 square feet
of leased space in the Rivergate Shopping Center,Port St. Lucie, Florida.
The Bank moved to larger facilities in the shopping center in April of 1999
under a long term lease agreement. Furniture and bank equipment located in
the prior facilities were moved to the new facility which occupies
approximately 3,400 square feet, with three drive-in lanes and a drive-up
ATM.
Northport was acquired on June 28, 1986 from Citizens Federal Savings &
Loan Association of Miami. This property consists of a storefront under
long term lease in the St. Lucie Plaza Shopping Center, Port St. Lucie, of
approximately 4,000 square feet. This office was closed March 31, 1994 and
the property is presently utilized by local community groups for meetings.
Wedgewood Commons, opened in April 1988, is located on an out parcel under
long term lease in the Wedgewood Commons Shopping Center, south of Stuart
on U.S. Highway 1. The property consists of a 2,800 square foot building
which houses four drive-in lanes, a walk-up ATM and various bank equipment,
all of which are owned by the Bank and are located on the leased property.
Bayshore, opened on September 27, 1990, occupies 3,520 square feet of a
50,000 square foot shopping center located in Port St. Lucie. The Bank has
leased the premises under a long term lease agreement and has made
improvements to the premises, including the addition of three drive-in
lanes and a walk-up ATM, all of which are owned by the Bank. A second
location, acquired in the merger with PSHC, and in close proximity to this
location, was closed on June 1, 1997 and subsequently sold in September
1997.
Hobe Sound, acquired from the RTC on December 23, 1991, is a two story
facility containing 8,000 square feet and is centrally located in Hobe
Sound. Improvements include two drive-in teller lanes, a drive-up ATM, and
equipment and furniture, all of which are owned by the Bank.
Fort Pierce, acquired from the RTC on December 23, 1991, is a 2,895 square
foot facility located in the heart of Fort Pierce and has three drive-in
lanes and a drive-up ATM. Equipment and furniture are all owned by the
Bank.
Martin Downs, purchased from the RTC in February 1992, is a 3,960 square
foot bank building located at a high traffic intersection in Palm City, an
emerging commercial and residential community west of Stuart. Improvements
include three drive-in teller lanes, a drive-up ATM, equipment and
furniture.
Tiffany, purchased from the RTC in May 1992, is a two story facility which
contains 8,250 square feet and is located on a corner of U.S. Highway One
in Port St. Lucie offering excellent exposure in one of the fastest growing
residential areas in the region. The second story which contains 4,250
square feet is leased to tenants. Three drive-in teller lanes, a walk-up
ATM, equipment and furniture are utilized and owned by the Bank.
Vero Beach, purchased from the RTC in February 1993, is a 3,300 square foot
bank building located in Vero beach on U.S. Highway One and represents the
Bank's initial presence in the Indian River County market. A leasehold
interest in a long term land lease was acquired. Improvements include three
drive-in teller lanes, a walk-up ATM, equipment and furniture, all of which
are owned by the Bank.
Beachland, opened in February 1993, consists of 4,150 square feet of leased
space located in a three-story commercial building on Beachland Boulevard,
the main beachfront thoroughfare in Vero Beach, Florida. An additional
1,050 square feet were leased during 1996. This facility has 2 drive-in
teller lanes, a drive- up ATM, and furniture and equipment, all owned by
the Bank.
Sandhill Cove, opened in September 1993, is in an upscale life- care
retirement community. The 135 square foot office is located within the
community facilities which are located on a 36-acre development in Palm
City, Florida. This community contains approximately 168 private
residences.
St. Lucie West, opened in November 1994, was in a 3,600 square foot
building located at 1320 S.W. St. Lucie Blvd, Port St. Lucie. As a result
of the PSHC merger, this facility was closed in June 1997 and the property
was sold in September 1997. On June 1, 1997, the Bank moved its St. Lucie
West operations to the Renar Centre (previously occupied by PSHC). The Bank
leases 4,320 square feet on the first floor of this facility and 2,468
square feet on the second floor. The facility includes three drive-in
teller lanes, a drive-up ATM, and furniture and equipment.
Mariner Square, acquired from American Bank in April 1995, is a 3,600
square foot leased space located on the ground floor of a three story
office building located on U.S. Highway 1 between Hobe Sound and Port
Salerno. Approximately 700 square feet of the space is sublet to a tenant.
The space occupied by the Bank has been improved to be a full service
branch with two drive-in lanes, one serving as a drive-up ATM lane as well
as a drive-in teller lane, all owned by the Bank.
Sebastian, opened in May 1996, is located within a 174,000 square foot
WalMart Superstore on U.S. 1 in northern Indian River County. The leased
space occupied by the Bank totals 865 square feet. The facility has a
walk-up ATM, owned by the Bank.
Nettles Island was opened in January 1997 in southern St. Lucie County on
Hutchinson Island. It occupies 350 square feet of leased space in a
predominantly modular home community. Furniture and equipment are owned. No
ATM or drive-in lanes are offered.
U.S. 1 and Port St. Lucie Boulevard office opened as a Bank location on
June 1, 1997, upon the merger with PSHC. At the date of the merger, the
leased space consisted of 5,188 square feet on the first floor and 1,200
square feet on the second floor. In October 1997, 1,800 square feet of the
leased space on the first floor and 1,200 square feet of leased space on
the second floor were assigned to another tenant. The present space leased
by the Bank totals 3,388 square feet. The facility has two drive-in lanes,
a walk-up ATM, and furniture and equipment, all owned by the Bank. This
facility will be closing in July 2000, coinciding with the opening of a
new, more visible office on a leased outparcel in a new shopping center
approximately a mile south of the closed location on U.S. 1. The new office
will occupy 3,930 square feet, have four drive-up lanes, a drive-up ATM and
furniture and equipment, all owned by the Bank.
South Vero Square opened in May 1997 in a 3,150 square foot building owned
by the Bank on South U.S. 1 in Vero Beach. The facility includes three
drive-in teller lanes, a drive-up ATM, and furniture and equipment, all
owned by the Bank.
Oak Point opened in June 1997. It occupies 12,000 square feet of leased
space on the first and second floor of a 19,700 square foot 3-story
building in Indian River County. The office is in close proximity to Indian
River Memorial Hospital and the peripheral medical community adjacent to
the hospital. The facility includes three drive-in teller lanes, a walk-up
ATM, and furniture and equipment, all owned by the Bank. Approximately
2,000 square feet of the second floor is sublet to tenants.
Route 60 Vero opened in July 1997. Similar to the Sebastian office, this
facility is housed in a WalMart Superstore in western Vero Beach in Indian
River County. The branch occupies 750 square feet of leased space and
includes a walk-up ATM.
Sebastian West opened in March 1998 in a 3,150 square foot building owned
by the Bank. It is located at the intersection of Fellsmere Road and
Roseland Road in Sebastian. The facility includes three drive-in teller
lanes, a drive-up ATM, and furniture and equipment, all owned by the Bank.
For additional information, refer to Notes F and I of the Notes to
Consolidated Financial Statements in the 1999 Annual Report of Seacoast
incorporated herein by reference pursuant to Item 8 of this document.
Item 3. Legal Proceedings
- --------------------------
The Company and its subsidiaries, because of the nature of their business, are
at times subject to numerous legal actions, threatened or filed, in the normal
course of their business. Although the amount of any ultimate liability with
respect to such matters cannot be determined, in the opinion of management,
after consultation with legal counsel, those claims and lawsuits, when
resolved, should not have a material adverse effect on the consolidated
results of operation or financial condition of Seacoast and its subsidiaries.
Item 4. Submission of Matters to a Vote of Security-Holders
- ------------------------------------------------------------
None.
Part II
-------
Item 5. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters
- ----------------------------
The Class A Common Stock is traded in the over the counter market and quoted
on the Nasdaq National Market ("Nasdaq Stock Market"). There is no established
public trading market for the Class B Common Stock of Seacoast. As of February
11, 2000, there were approximately 1,046 record holders of the Class A Common
Stock and 72 record holders of the Class B Common Stock.
Seacoast Class A Stock is traded in the over-the-counter market and is quoted
on the Nasdaq Stock Market under the symbol "SBCFA". The following table sets
forth the high, low and last sale prices per share of Seacoast Class A Stock
on the Nasdaq Stock Market and the dividends paid per share of Seacoast Class
A Stock for the indicated periods.
Annual Dividends
Sale Price Per Declared Per
Share of Seacoast Share of
Class A Stock Seacoast Class A Stock
-------------------- ----------------------
High Low
1999
First Quarter $28.25 $26.125 $0.24
Second Quarter 34.50 26.375 0.24
Third Quarter 32.50 28.75 0.24
Fourth Quarter 30.375 27.50 0.26
1998
First Quarter $38.50 $34.00 $0.22
Second Quarter 39.50 35.75 0.22
Third Quarter 40.00 29.75 0.22
Fourth Quarter 29.00 23.00 0.24
- --------------------------------------------------------------------------------
Seacoast's Articles of Incorporation prohibit the declaration or payment of
cash dividends on Class B Common Stock unless cash dividends are declared or
paid on Class A Common Stock in an amount equal to at least 110% of any cash
dividend on Class B Common Stock. Dividends on Class A Common Stock payable in
shares of Class A Common Stock shall be paid to holders of Class A Common and
Class B Common Stock at the same time and on the same basis.
In 1997, cash dividends of $.82 per share of Class A Common Stock and $.74 per
share of Class B Common Stock were paid. In 1998, cash dividends of $.90 per
share of Class A Common Stock and $.818 per share of Class B Common Stock were
paid. In 1999, cash dividends of $.98 per share of Class A Common Stock and
$.89 of Class B Common Stock were paid.
Dividends from the Bank are Seacoast's primary source of funds to pay
dividends on Seacoast capital stock. Under the National Bank Act, the Bank may
in any calendar year, without the approval of the OCC, pay dividends to the
extent of net profits for that year, plus retained net profits for the
preceding two years (less any required transfers to surplus). The need to
maintain adequate capital in the Bank also limits dividends that may be paid
to Seacoast. Information regarding a restriction on the ability of the Bank to
pay dividends to Seacoast is contained in Note B of the "Notes to Consolidated
Financial Statements" contained in Item 8 hereof. See "Supervision and
Regulation" contained in Item 1 of this document.
The OCC and Federal Reserve have the general authority to limit the dividends
paid by insured banks and bank holding companies, respectively, if such
payment may be deemed to constitute an unsafe or unsound practice. If, in the
particular circumstances, the OCC determines that the payment of dividends
would constitute an unsafe or unsound banking practice, the OCC may, among
other things, issue a cease and desist order prohibiting the payment of
dividends. This rule is not expected to adversely affect the Bank's ability to
pay dividends to Seacoast. See "Supervision and Regulation" contained in Item
1 of this document.
Each share of Class B Common Stock is convertible by its holder into one share
of Class A Common Stock at any time prior to a vote of shareholders
authorizing a liquidation of Seacoast.
Item 6. Selected Financial Data
- ----------------------------------
Selected financial data is incorporated herein by reference under the caption
"Financial Highlights" on page 3 of the 1999 Annual Report. See Exhibit 13.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- ------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations, under the caption "Financial Review - 1999 Management's Discussion
and Analysis", on pages 16 through 28 of the 1999 Annual Report is
incorporated herein by reference. See Exhibit 13.
Item 7A. Market Risk
- ---------------------
Market risk is inherent to all industries and all financial institutions'
assets and liabilities are affected by market risks. The Company considers
credit to be the most significant; however, interest rate risk is a close
second. There are eight risks that must be considered in managing the Company.
These risks are listed in order of the perceived level of risk imposed upon
the Company. The Company does not conduct foreign exchange transactions which
would expose the Company to foreign exchange risk or trading activities which
would produce price risk. Therefore, these risks are not addressed in this
assessment. The Company has identified certain critical risks to the Bank.
Credit Risks
------------
Credit risk is the risk to the Company's earnings or capital from the
potential of an obligator or related group of obligators failing to fulfill
its or their contractual commitments to the Bank. Credit risk is most closely
associated with a bank's lending. It encompasses the potential of loss on a
particular loan as well as the potential for loss from a group of related
loans, i.e., a credit concentration. Credit risk extends also to less
traditional bank activities. It includes the credit behind the Bank's
investment portfolio, the credit of counterparties to interest rate contracts,
and the credit of securities brokers holding the Bank's investment portfolio
in street name.
Interest Rate Risk
------------------
Interest rate risk is the risk to earnings or market value of portfolio equity
(capital) from the potential movement in interest rates. The Company uses
model simulations to estimate and manage its interest rate sensitivity. The
Company has determined that an acceptable level of interest rate risk would be
for net interest income to fluctuate no more than 6 percent, given a change in
interest rates (up or down) of 200 basis points. Based on the Company's most
recent ALCO model simulations, net interest income would decline 2.7 percent
if interest rates would immediately rise 200 basis points. The
Company is willing to accept a change in the estimated market value of
portfolio equity of 5%, given a 200 basis point increase in interest rates. At
December 31, 1999, the Company's most recent estimates indicate compliance
with this objective. However, these calculations incorporate the use of many
assumptions (which the Company believe to be reasonable) to estimate the fair
values of its assets and liabilities. In addition, seasonal increases and
decreases in the volume of the various financial instruments can and do effect
these calculations. Therefore, the Company monitors these calculations on a
quarterly basis and more frequently during periods of interest rate
volatility.
Liquidity Risk
--------------
Liquidity risk is the risk to earnings or capital from the Company's inability
to meet its obligations when they come due without incurring unacceptable
losses or costs such as when depositors withdraw their deposits and the Bank
does not have the liquid assets to fund the withdrawals and to meet its loan
funding obligations. The risk is particularly great with brokered deposits, of
which the Company currently has none.
Transaction Risk
----------------
Transaction risk is the risk to earnings or capital arising from problems with
service or product delivery. Transaction risk is the risk of failure in a
bank's operating processes. It is a risk of failure in a bank's automation,
its employee integrity, or its internal controls.
Compliance Risk
---------------
Compliance risk is the risk to earnings or capital from noncompliance with
laws, rules and regulations.
Strategic Risk
--------------
Strategic risk is the risk to earnings or capital arising from adverse
business decisions or improper implementation of those decisions.
Reputation Risk
---------------
Reputation risk is the risk to earnings or capital from negative public
opinion.
Most of these risk are interrelated and thus all must be considered by
management regardless of the implied risk. Management reviews performance
against these ranges on a quarterly basis.
Item 8. Financial Statements and Supplementary Data
- ------------------------------------------------------
The report of Arthur Andersen LLP, independent certified public accountants,
and the consolidated financial statements are included on pages 33 through 47
of the 1999 Annual Report and are incorporated herein by reference. "Selected
Quarterly Information - Consolidated Quarterly Average Balances, Yields &
Rates" and "Quarterly Consolidated Income Statements" included on pages 29
through 31 of the 1999 Annual Report are incorporated herein by reference. See
Exhibit 13.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
- -----------------------------------------------------------
Not applicable.
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", "Information
About the Board of Directors and its Committees" and "Executive Officers" on
pages 3 through 8, as well as under the heading "Section 16(a) Reporting" on
page 23, in the 2000 Proxy Statement and is incorporated herein by reference.
Item 11. Executive Compensation
- --------------------------------
Information set forth under the headings "Proposal One - Election of Directors
- Compensation of Executive Officers", "Salary and Benefits Committee Report",
"Summary Compensation Table", "Grants of Options/SARs in 1999", "Aggregated
Options/SAR Exercises in 1999 and 1999 Year-End Option/SAR Values", "Profit
Sharing Plan", "Performance Graph", and "Employment and Severance Agreements"
on pages 9 through 15 of the 2000 Proxy Statement is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------------------------------------------------------------------------
Information set forth under the headings, "Proposal One - Election of
Directors - General" on pages 3 through 7, "Proposal One - Election of
Directors - Management Stock Ownership" on page 8, and "Principal
Shareholders" on pages 16 and 17 in the 2000 Proxy Statement, relating to the
number of shares of Class A Common Stock and Class B Common Stock beneficially
owned by the directors of Seacoast, all such directors and officers as a group
and certain beneficial owners is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Information set forth under the heading "Proposal One - Election of Directors
- Salary and Benefits Committee Interlocks and Insider Participation" and
"Certain Transactions and Business Relationships" on pages 15 and 16 of the
2000 Proxy Statement is incorporated herein by reference.
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- --------------------------------------------------------------------------
a)(1) List of all financial statements
The following consolidated financial statements and report of independent
certified public accountants of Seacoast, included in the 1999 Annual Report
are incorporated by reference into Item 8 of this Annual Report on Form 10-K.
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Income for the years ended December 31, 1999,
1998 and 1997
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997
Notes to Consolidated Financial Statements
a)(2) List of Financial Statement Schedules
Schedules to the consolidated financial statements required by Article 9 of
Regulation S-X are not required under the related instructions or are
inapplicable, and therefore have been omitted.
a)(3) Listing of Exhibits
The following Exhibits are filed as part of this report in Item 14 (c):
Exhibit 3.1 Amended and Restated Articles of Incorporation
----------------------------------------------------------
Incorporated herein by reference from registrant's Current Report on Form
8-K, File No. 0-13660, dated June 6, 1997.
Exhibit 3.2 Amended and Restated By-laws of the Corporation
----------------------------------------------------------------
Incorporated herein by reference from Exhibit 3.2 of Registrant's Current
Report on Form 8-K, File No. 0-13660, dated June 6, 1997.
Exhibit 4.1 Specimen Class A Common Stock Certificate
-----------------------------------------------------
Incorporated herein by reference from Exhibit 4.1 of the Registrant's
Registration Statement on Form S-1, File No. 2- 88829.
Exhibit 4.2 Specimen Class B Common Stock Certificate
-----------------------------------------------------
Incorporated herein by reference from Exhibit 4.2 of registrant's
Registration Statement on Form S-1, File No. 2-88829.
Exhibit 10.1 Profit Sharing Plan, as amended
--------------------------------------------
Incorporated herein by reference from registrants' Registration Statement
on Form S-8, File No. 33-22846, dated July 18, 1988, and as amended, from
Exhibit 10.1 of registrant's Annual Reports on Form 10-K, dated March 27,
1998.
Exhibit 10.2 Employee Stock Purchase Plan
-----------------------------------------
Incorporated herein by reference from registrant's 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 registrant's Annual Reports on Form
10-K, dated March 29, 1991.
Exhibit 10.4 Executive Employment Agreement
---------------------------------------------
Dated March 22, 1991 between A. Douglas Gilbert and the Bank, incorporated
herein by reference from registrant's Annual Reports 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 registrant's Annual Reports 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 registrant's Annual Reports on Form
10-K, dated March 28, 1996.
Exhibit 10.8 1991 Stock Option & Stock Appreciation Rights Plan
-----------------------------------------------------------------
Incorporated herein by reference from registrant's Registration Statement
on Form S-8 File No. 33-61925, dated August 18, 1995.
Exhibit 10.9 1996 Long Term Incentive Plan
------------------------------------------
Incorporated herein by reference from registrant's 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 registrant's Registration Statement
on Form S-8 File No. 333-70399 dated January 11, 1999.
Exhibit 13 1999 Annual Report
------------------------------
The following portions of the 1999 Annual Report are incorporated herein by
reference:
Financial Highlights
Financial Review - Management's Discussion and Analysis
Selected Quarterly Information - Quarterly Consolidated Income Statements
Selected Quarterly Information - Consolidated Quarterly, Average Balances,
Yields & Rates
Financial Statements
Notes to Consolidated Financial Statements
Financial Statements - Report of Independent Certified Public Accountants
Exhibit 21 Subsidiaries of Registrant
--------------------------------------
Incorporated herein by reference from Exhibit 22 of Registrant's Annual
Report on Form 10-K, File No. 0-13660, dated March 17, 1992.
Exhibit 23 Consent of Independent Certified Public Accountants
---------------------------------------------------------------
Exhibit 27 Financial Data Schedule (for SEC use only)
------------------------------------------------------
b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of 1999.
c) Exhibits
The response to this portion of Item 14 is submitted as a separate section
of this report.
d) Financial Statement Schedules
None
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Stuart,
State of Florida, on the 29th day of March, 2000.
SEACOAST BANKING CORPORATION OF FLORIDA
(Registrant)
By: /s/ Dennis S. Hudson, III
-------------------------
Dennis S. Hudson, III
President 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/ Dale M. Hudson March 29, 2000
- ------------------------- --------------
Dale M. Hudson, Chairman of the Board
and Director
/s/ Dennis S. Hudson, III March 29, 2000
- ------------------------- --------------
Dennis S. Hudson, III, President,
Chief Executive Officer and Director
/s/ William R. Hahl March 29, 2000
- ------------------------- --------------
William R. Hahl, Executive Vice President
and Chief Financial Officer
______________________________________
Jeffrey C. Bruner, Director
/s/ John H. Crane March 29, 2000
- ------------------------- --------------
John H. Crane, Director
______________________________________
Evans Crary, Jr., Director
______________________________________
Christopher E. Fogal, Director
______________________________________
Jeffrey S. Furst, Director
/s/ Dennis S. Hudson, Jr. March 29, 2000
- ------------------------- --------------
Dennis S. Hudson, Jr., Director
/s/ John R. Santareiero, Jr. March 29, 2000
- --------------------------- --------------
John R. Santarsiero, Jr., Director
/s/ Thomas H. Thurlow, Jr. March 29, 2000
- -------------------------- --------------
Thomas H. Thurlow, Jr., Director