Press Release

Disciplined Loan Growth, Strong Deposit Growth, and Rising Net Interest Margin Highlight Q1 Results

Well-Positioned Balance Sheet with Strong Capital and Liquidity

STUART, Fla., April 28, 2022 (GLOBE NEWSWIRE) -- Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") (NASDAQ: SBCF) today reported net income in the first quarter of 2022 of $20.6 million, or $0.33 per diluted share, which includes merger-related costs and a $5.1 million increase in the provision for credit losses associated with acquisition activity during the quarter. First quarter 2022 results represent a decrease of 43% compared to the fourth quarter of 2021, and a decrease of 39% compared to the first quarter of 2021. Adjusted net income¹ for the first quarter of 2022 was $27.1 million, or $0.44 per diluted share, which includes the $5.1 million increase in the provision for credit losses associated with acquisition activity. First quarter 2022 adjusted results represent a decrease of 27% compared to the fourth quarter of 2021, and a decrease of 24% compared to the first quarter of 2021. At March 31, 2022, the ratio of tangible common equity to tangible assets was 9.89%, and tangible book value per share was $17.12. A decline in the value of the available for sale securities portfolio driven by rising interest rates during the period impacted the ratio of tangible common equity to tangible assets by 56 basis points and impacted tangible book value per share by $1.07.

For the first quarter of 2022, return on average tangible assets was 0.85%, return on average tangible shareholders' equity was 8.02%, and the efficiency ratio was 62.33%, compared to 1.51%, 14.29%, and 53.70%, respectively, in the prior quarter, and 1.70%, 15.62%, and 53.21%, respectively, in the prior year quarter. Adjusted return on average tangible assets¹ in the first quarter of 2022 was 1.06%, adjusted return on average tangible shareholders' equity¹ was 10.01%, and the adjusted efficiency ratio¹ was 54.86%, compared to 1.49%, 14.11%, and 53.43%, respectively, in the prior quarter, and 1.75%, 16.01%, and 51.99%, respectively, in the prior year quarter.

Charles M. Shaffer, Seacoast's Chairman and CEO, said, “Seacoast’s investments in high-performing commercial banking talent across Florida drove disciplined organic loan growth this quarter and a material increase in the late-stage pipeline entering the second quarter. With broad expectations for rising rates, we believe that Seacoast’s asset-sensitive balance sheet and ample liquidity position us well for growth and the continued expansion of net interest margin, which increased nine basis points during the first quarter of 2022, and rose 14 basis points excluding the effects of PPP and accretion on acquired loans.”

“In the first quarter of 2022, we established a new market presence in Naples, Sarasota, and Jacksonville, and announced the proposed acquisition of Apollo Bancshares, Inc., bringing us five locations in Miami-Dade County. We believe that this expansion into some of the best banking markets in the United States will lead to strong franchise value creation in the coming years,” Shaffer added.

Acquisitions Update

On January 3, 2022, the Company completed the acquisitions of Sabal Palm Bancorp, Inc. (“Sabal Palm”) in Sarasota, and Business Bank of Florida Corp. (“BBFC”) in Brevard County, which added a combined $367.9 million in loans, $562.3 million in deposits, and a $5.1 million provision for credit losses at acquisition. Consolidation activities for BBFC, including system conversion, are substantially complete. System conversion for Sabal Palm is planned early in the second quarter of 2022.

On March 29, 2022, the Company announced its proposed acquisition of Apollo Bancshares, Inc. (“Apollo”). The transaction, which is expected to close early in the fourth quarter of 2022, will expand the Company’s presence in Miami-Dade County, which is part of the Miami-Fort Lauderdale-Pompano Beach MSA, Florida’s largest MSA and the 8^th largest in the nation. Apollo operates five branches across Miami-Dade County with deposits of approximately $947 million and loans of $705 million as of March 31, 2022.

Financial Results

Income Statement

• Net income was $20.6 million, or $0.33 per diluted share for the first quarter of 2022, which includes $6.7 million in merger-related costs associated with acquisition activity during the quarter, and a $5.1 million increase in the provision for credit losses associated with onboarding Sabal Palm and BBFC. This compares to net income of $36.3 million, or $0.62, for the prior quarter, and $33.7 million, or $0.60, for the prior year quarter. Adjusted net income¹ for the first quarter of 2022 was $27.1 million, or $0.44 per diluted share, which includes the $5.1 million increase in the provision for credit losses associated with onboarding Sabal Palm and BBFC. This compares to $36.9 million, or $0.62, for the prior quarter, and $35.5 million, or $0.63, for the prior year quarter. In the first quarter of 2022, loan growth including bank acquisitions resulted in a provision for credit losses of $6.6 million, compared to a reversal of provision of $3.9 million in the fourth quarter of 2021 and a reversal of provision of $5.7 million in the first quarter of 2021. Excluded from adjusted net income are $6.7 million in merger-related expenses in the first quarter of 2022, compared to $0.5 million in the fourth quarter of 2021 and $0.6 million in the first quarter of 2021.
• Net revenues were $91.9 million in the first quarter of 2022, an increase of $0.9 million, or 1%, compared to the prior quarter, and an increase of $7.6 million, or 9%, compared to the prior year quarter. Adjusted revenues¹ were $92.3 million in the first quarter of 2022, an increase of $1.7 million, or 2%, compared to the prior quarter, and an increase of $8.0 million, or 9%, compared to the prior year quarter.
• Net interest income totaled $76.5 million in the first quarter of 2022, an increase of $4.2 million, or 6%, from the fourth quarter of 2021, and an increase of $9.9 million, or 15%, compared to the first quarter of 2021. Increases relating to higher balances and higher yields on securities and loans were partially offset by declines in PPP interest and fees, while interest expense remained flat.
• Net interest margin increased to 3.25% in the first quarter of 2022 compared to 3.16% in the fourth quarter of 2021, the result of higher yields on non-PPP loans and on securities. Excluding the effect of PPP and accretion on acquired loans, net interest margin increased 14 basis points to 3.05% in the first quarter of 2022 from 2.91% in the fourth quarter of 2021. Securities yields increased 11 basis points to 1.68%, reflecting the impact of the addition of higher yielding securities during the quarter. Non-PPP loan yields increased six basis points to 4.24%. The effect on net interest margin of accretion of purchase discounts on acquired loans in the first quarter of 2022 was an increase of 15 basis points, consistent with the prior quarter. The effect on net interest margin of interest and fees on PPP loans was an increase of five basis points in the first quarter of 2022 compared to an increase of ten basis points in the prior quarter. The cost of deposits remained at only six basis points for the first quarter of 2022. The margin benefited from the Company’s asset sensitivity, combined with disciplined growth across the balance sheet.
• Noninterest income totaled $15.4 million in the first quarter of 2022, a decrease of $3.3 million, or 18%, compared to the prior quarter, and a decrease of $2.3 million, or 13%, compared to the prior year quarter. The decrease from the prior quarter primarily reflects a decrease of $3.4 million in income on SBIC investments, which is expected to vary amongst periods. In addition, the sale of a website domain name resulted in a gain of $0.8 million, benefiting results in the fourth quarter of 2021. Results for the first quarter of 2022 included the following:
  • Wealth management income was $2.7 million in the first quarter of 2022, an increase of $0.3 million compared to the prior quarter, reflecting continued success in winning new relationships.
  • Mortgage banking fees were $1.7 million, compared to $2.0 million in the prior quarter, the result of lower saleable production due to low housing inventory and slowing refinance demand.
  • Other income decreased by $3.4 million in the first quarter of 2022, reflecting lower income on SBIC investments and a gain in the fourth quarter of 2021 on the sale of a website domain name, partially offset by higher loan-swap related income.
  • The Company recognized $0.5 million in securities losses in the first quarter of 2022 compared to $0.4 million in the fourth quarter of 2021.
• The provision for credit losses was $6.6 million in the first quarter of 2022, compared to a net benefit of $3.9 million in the prior quarter. The increase during the quarter included $5.1 million in provisioning for loans acquired in the Sabal Palm and BBFC transactions.
• Noninterest expense was $58.9 million in the first quarter of 2022, an increase of $8.7 million, or 17%, compared to the prior quarter, and an increase of $12.8 million, or 28%, compared to the prior year quarter. The first quarter of 2022 included $6.7 million in merger-related expenses. Changes from the fourth quarter of 2021 included the following:
  • Salaries and wages increased $3.2 million to $28.2 million, which included $3.0 million in merger-related expenses associated with the BBFC and Sabal Palm acquisitions.
  • Employee benefits increased by $0.7 million to $5.5 million, reflecting higher seasonal payroll taxes and 401(k) contributions.
  • Outsourced data processing costs increased by $1.0 million to $6.2 million, which included $0.6 million in merger-related expenses and costs associated with the launch of the Company’s upgraded online and mobile banking platform, which was completed during the first quarter of 2022.
  • Legal and professional fees increased by $2.3 million to $4.8 million, which included $2.5 million in merger-related expenses, compared to $0.4 million in the fourth quarter of 2021.
• Seacoast recorded $5.8 million of income tax expense in the first quarter of 2022, compared to $8.3 million in the prior quarter and $10.2 million in the first quarter of 2021. Changes to the Florida corporate income tax rate resulted in benefits of $1.5 million in the fourth quarter of 2021. Tax benefits related to stock-based compensation totaled $0.5 million in the first quarter of 2022, $0.6 million in the fourth quarter of 2021, and were nominal in the first quarter of 2021.
• The ratio of netadjusted noninterest expense¹ to average tangible assets was 1.99% in the first quarter of 2022, compared to 1.96% in the prior quarter and 2.16% in the first quarter of 2021.
• The efficiency ratio was 62.33% in the first quarter of 2022, compared to 53.70% in the prior quarter and 53.21% in the prior year quarter. The increase in the first quarter of 2022 primarily reflects the impact of merger-related expenses. The adjusted efficiency ratio¹ was 54.86% in the first quarter of 2022, compared to 53.43% in the prior quarter and 51.99% in the prior year quarter.

Balance Sheet

• At March 31, 2022, the Company had total assets of $10.9 billion and totalshareholders' equity of $1.4 billion. Book value per share was $22.15 on March 31, 2022, compared to $22.40 on December 31, 2021, and $20.89 on March 31, 2021. Tangible book value per share totaled $17.12 on March 31, 2022 compared to $17.84 on December 31, 2021 and $16.62 on March 31, 2021. A decline in the value of the available for sale securities portfolio driven by rising interest rates during the period impacted tangible book value per share by $1.07.
• Debt securities totaled $2.5 billion on March 31, 2022, an increase of $170.7 million, or 7%, compared to December 31, 2021. Purchases during the first quarter of 2022 totaled $379.3 million, consisting primarily of agency-issued securities. The Company continues to take a prudent and disciplined approach to reinvesting liquidity.
• Loans totaled $6.5 billion on March 31, 2022, an increase of $526.2 million, or 9%, compared to December 31, 2021. Changes during the first quarter of 2022 include $367.9 million added through bank acquisitions, and the purchase of a $111.3 million residential loan pool. Removing the impact of loans added through acquisitions, the purchased pool during the quarter and PPP loans, loans outstanding grew 7% on an annualized basis. The company continues to exercise a disciplined approach to loan growth, carefully underwriting loans to strict underwriting guidelines.
• Loan originations were $678.7 million in the first quarter of 2022, an increase of 13% compared to $599.9 million in the fourth quarter of 2021.
  • Commercial originations were $373.0 million during the first quarter of 2022, compared to $408.9 million in the fourth quarter of 2021, and $204.3 million in the first quarter of 2021. Despite a seasonally slower quarter, commercial originations remained strong and pipelines continued to build during the quarter.
  • Consumer originations in the first quarter of 2022 increased to $79.0 million from $72.6 million in the fourth quarter of 2021 and from $46.7 million in the first quarter of 2021.
  • Residential loans originated for sale in the secondary market totaled $51.2 million in the first quarter of 2022, compared to $69.2 million in the fourth quarter of 2021 and $138.3 million in the first quarter of 2021. Limited housing inventory and slowing refinance activity contributed to lower production.
  • Closed residential loans retained in the portfolio totaled $175.5 million in the first quarter of 2022, compared to $49.1 million in the fourth quarter of 2021, and $46.6 million in the first quarter of 2021. The first quarter of 2022 included the purchase of a $111.3 million high-quality wholesale residential home mortgage loan pool from a seller well known to Seacoast.
• Pipelines (loans in underwriting and approval or approved and not yet closed) totaled $794.9 million on March 31, 2022, an increase of 64% from December 31, 2021 and an increase of 83% from March 31, 2021.
  • Commercial pipelines were $619.5 million as of March 31, 2022, an increase of 56% from $397.8 million at December 31, 2021, and an increase of 157% from $240.9 million at March 31, 2021. The increase in pipeline reflects the addition of well-established commercial bankers and expansion into new markets across the state. The addition of experienced commercial bankers over the last 12 months is generating disciplined growth in full relationships, including credit facilities, deposit relationships, and wealth opportunities.
  • Consumer pipelines were $61.6 million as of March 31, 2022, compared to $29.7 million at December 31, 2021, and $28.1 million at March 31, 2021. The increase is primarily the result of consumer lending teams that joined in late 2021.
  • Residential saleable pipelines were $25.7 million as of March 31, 2022, compared to $30.1 million at December 31, 2021, and $92.1 million at March 31, 2021. Retained residential pipelines were $88.0 million as of March 31, 2022, compared to $25.6 million at December 31, 2021, and $72.4 million at March 31, 2021.
• Total deposits were $9.2 billion as of March 31, 2022, an increase of $1.2 billion, or 15%, compared to December 31, 2021, and an increase of $1.9 billion, or 25%, compared to March 31, 2021.
  • The acquisitions of BBFC and Sabal Palm resulted in additions of $562.3 million in total deposits during the first quarter of 2022. Removing the impact of acquisitions and wholesale activity, deposits increased 25% on an annualized basis.
  • Transaction account balances, excluding those acquired from BBFC and Sabal Palm, increased $498 million, or 10%, quarter-over-quarter, and at March 31, 2022, total transaction account balances represent 62% of overall deposit funding.
  • The Company manages excess liquidity on the balance sheet through participation in programs with third-party deposit networks. Through these programs, the Company can offer its customers access to FDIC insurance on large balances with attractive terms, and the Company can retain or sell, on an overnight basis, the underlying deposits. At March 31, 2022, the Company had sold, on an overnight basis, $231 million in deposits compared to $228 million at December 31, 2021, and $99 million at March 31, 2021. These deposits are not included in the consolidated balance sheet.
  • The overall cost of deposits remained flat quarter over quarter at six basis points.
  • As of March 31, 2022, deposits per banking center were $163.4 million, compared to $153.6 million at December 31, 2021.

Asset Quality

• Credit metrics remain strong with charge-offs, nonaccruals, and criticized assets at historically low levels.
• Nonperforming loans decreased by $4.4 million to $26.2 million at March 31, 2022. Nonperforming loans to total loans outstanding were 0.41% at March 31, 2022, 0.52% at December 31, 2021, and 0.62% at March 31, 2021.
• Nonperforming assets to total assets were 0.35% at March 31, 2022, 0.46% at December 31, 2021, and 0.58% at March 31, 2021.
• The ratio of allowance for credit losses to total loans was 1.39% at March 31, 2022, 1.41% at December 31, 2021, and 1.53% at March 31, 2021. Excluding PPP loans, the ratio of allowance for credit losses to total loans at March 31, 2022 was 1.40%, compared to 1.43% at December 31, 2021 and 1.71% at March 31, 2021.
• Net charge-offs were $0.1 million, or less than 0.01%, for the first quarter of 2022 compared to $0.6 million, or 0.04%, of average loans in the fourth quarter of 2021 and $0.4 million, or 0.03%, of average loans in the first quarter of 2021. Net charge-offs for the four most recent quarters averaged 0.05%.
• Portfolio diversification, in terms of asset mix, industry, and loan type, has been a critical element of the Company's lending strategy. Exposure across industries and collateral types is broadly distributed. Seacoast's average commercial loan size is $524,000, reflecting an ability to maintain granularity within the overall loan portfolio.
• Construc tion and land development and commercial real estate loans remain well below regulatory guidance at 22% and 189% of total bank-level risk-based capital, respectively, compared to 21% and 177% respectively, at December 31, 2021. On a consolidated basis, construction and land development and commercial real estate loans represent 20% and 172%, respectively, of total consolidated risk-based capital.

Capital and Liquidity

• The Company continues to operate with a fortress balance sheet, with a tier 1 capital ratio at March 31, 2022, of 16.8% compared to 17.4% at December 31, 2021, and 18.1% at March 31, 2021. The total capital ratio was 17.7% and the tier 1 leverage ratio was 11.7% at March 31, 2022.
• Cash and cash equivalents at March 31, 2022 totaled $1.2 billion, an increase of $484.8 million, or 66%, from December 31, 2021, reflecting the impact of deposit growth in the first quarter of 2022 and of strategic liquidity management activities.
• Tangible common equity to tangible assets was 9.89% at March 31, 2022, compared to 11.09% at December 31, 2021, and 10.71% at March 31, 2021. Declines in the value of available for sale securities due to rising interest rates in the first quarter of 2022 negatively impacted equity by $66.0 million.
  
  
• At March 31, 2022, the Company had available unsecured lines of credit of $165.0 million and lines of credit under lendable collateral value of $2.3 billion. Additionally, $2.0 billion of debt securities and $684.3 million of residential and commercial real estate loans are available as collateral for potential borrowings.

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

First Quarter 2022 Strategic Highlights

Capitalizing on Seacoast’s Commitment to Digital Transformation

• Seacoast successfully launched an upgraded online and mobile banking platform in February 2022 that unifies the user experience, offering new functionality and consistent features across all devices. New features include Zelle^®, account aggregation, reporting tools and more. The enhanced digital banking experience for both consumers and businesses complements exceptional branch, ATM, and telephone banking services to deliver a competitive value proposition.

Driving Sustainable Growth and Expanding our Footprint

• Seacoast’s balanced growth strategy includes organic growth initiatives across the state. Seacoast expanded its footprint in Naples/Southwest Florida and Jacksonville/Northeast Florida with key additions to its commercial banking leadership and teams. In the first quarter of 2022, Seacoast added 14 experienced bankers in the state’s most dynamic and fastest growing markets and expects to continue to invest in well-established seasoned bankers over the remainder of the year.
• With a focus on leading sustainable growth while maintaining Seacoast’s commitment to disciplined underwriting standards, James Stallings joined Seacoast as executive vice president and chief credit officer. Stallings’ career includes over two decades with BB&T where, as a senior credit executive, he oversaw a large team of credit officers and a $60 billion portfolio. In addition, he has held a diverse set of roles, including overseeing credit for the commercial community bank, corporate C&I, and specialty finance.

Scaling and Evolving Our Culture

• A strong history of value-creating acquisitions continues to benefit shareholders and provide new opportunities for associates. The Seacoast team grew during the first quarter of 2022 with the addition of experienced bankers and the merging of the teams from Sabal Palm Bank and Florida Business Bank. The combined scale and talent further supports our sustainable, profitable growth.
• Seacoast was recognized by the Human Rights Foundation for earning a perfect score of 100 for workplace equality on the 2022 Corporate Equality Index. This is the third consecutive year Seacoast has earned such recognition for its employment practices.

OTHER INFORMATION

Conference Call Information
Seacoast will host a conference call on April 29, 2022 at 10:00 a.m. (Eastern Time) to discuss the first quarter 2022 earnings results and business trends. Investors may call in (toll-free) by dialing (866) 374-5140 (passcode: 9139 5012; host: Charles Shaffer). Charts will be used during the conference call and may be accessed at Seacoast's website at www.SeacoastBanking.com by selecting "Presentations" under the heading "News/Events." A replay of the call will be available for one month, beginning late afternoon on April 29, 2022, and can be accessed via a link at www.SeacoastBanking.com under the heading “Corporate Information,” using the passcode EV00133935.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Seacoast's website at www.SeacoastBanking.com. The link is located under the heading “Corporate Information.” Beginning late afternoon on April 29, 2022, an archived version of the webcast can be accessed from this same subsection of the website. The archived webcast will be available for one year.

About Seacoast Banking Corporation of Florida (NASDAQ: SBCF)
Seacoast Banking Corporation of Florida (NASDAQ: SBCF) is one of the largest community banks headquartered in Florida with approximately $10.9 billion in assets and $9.2 billion in deposits as of March 31, 2022. Seacoast provides integrated financial services including commercial and consumer banking, wealth management, and mortgage services to customers at over 50 full-service branches across Florida, and through advanced mobile and online banking solutions. Seacoast National Bank is the wholly-owned subsidiary bank of Seacoast Banking Corporation of Florida. For more information about Seacoast, visit www.SeacoastBanking.com.

Cautionary Notice Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning, and protections, of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements about future financial and operating results, cost savings, enhanced revenues, economic and seasonal conditions in the Company’s markets, and improvements to reported earnings that may be realized from cost controls, tax law changes, new initiatives and for integration of banks that the Company has acquired, or expects to acquire, including Apollo Bancshares, Inc., as well as statements with respect to Seacoast's objectives, strategic plans, expectations and intentions and other statements that are not historical facts, any of which may be impacted by the COVID-19 pandemic and any variants thereof and related effects on the U.S. economy. Actual results may differ from those set forth in the forward-looking statements.

Forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates and intentions about future performance and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company’s control, and which may cause the actual results, performance or achievements of Seacoast to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect the Company to update any forward-looking statements.

All statements other than statements of historical fact could be forward-looking statements. You can identify these forward-looking statements through the use of words such as "may", "will", "anticipate", "assume", "should", "support", "indicate", "would", "believe", "contemplate", "expect", "estimate", "continue", "further", "plan", "point to", "project", "could", "intend", "target" or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation: the effects of future economic and market conditions, including seasonality; the adverse impact of COVID-19 (economic and otherwise) on the Company and its customers, counterparties, employees, and third-party service providers, and the adverse impacts to our business, financial position, results of operations and prospects; government or regulatory responses to the COVID-19 pandemic; governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes, including those that impact the money supply and inflation; changes in accounting policies, rules and practices, including the impact of the adoption of the current expected credit losses (“CECL”) methodology; the risks of changes in interest rates on the level and composition of deposits, loan demand, liquidity and the values of loan collateral, securities, and interest rate sensitive assets and liabilities; interest rate risks, sensitivities and the shape of the yield curve; uncertainty related to the impact of LIBOR calculations on securities, loans and debt; changes in borrower credit risks and payment behaviors including as a result of the financial impact of COVID-19; changes in retail distribution strategies, customer preferences and behavior (including as a result of economic factors); changes in the availability and cost of credit and capital in the financial markets; changes in the prices, values and sales volumes of residential and commercial real estate; our ability to comply with any regulatory requirements; the effects of problems encountered by other financial institutions that adversely affect Seacoast or the banking industry; the Company’s concentration in commercial real estate loans and in real estate collateral in Florida; inaccuracies or other failures from the use of models, including the failure of assumptions and estimates, as well as differences in, and changes to, economic, market and credit conditions; the impact on the valuation of Seacoast’s investments due to market volatility or counterparty payment risk; statutory and regulatory dividend restrictions; increases in regulatory capital requirements for banking organizations generally; the risks of mergers, acquisitions and divestitures, including Seacoast’s ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies; changes in technology or products that may be more difficult, costly, or less effective than anticipated; the Company’s ability to identify and address increased cybersecurity risks, including as a result of employees working remotely; inability of Seacoast’s risk management framework to manage risks associated with the Company’s business; dependence on key suppliers or vendors to obtain equipment or services for the business on acceptable terms, including the impact of supply chain disruptions; reduction in or the termination of Seacoast’s ability to use the online- or mobile-based platform that is critical to the Company’s business growth strategy; the effects of war or other conflicts, including the impacts related to or resulting from Russia’s military action in Ukraine, acts of terrorism, natural disasters, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions; unexpected outcomes of and the costs associated with, existing or new litigation involving the Company, including as a result of the Company’s participation in the Paycheck Protection Program (“PPP”); Seacoast’s ability to maintain adequate internal controls over financial reporting; potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the risks that deferred tax assets could be reduced if estimates of future taxable income from the Company’s operations and tax planning strategies are less than currently estimated and sales of capital stock could trigger a reduction in the amount of net operating loss carryforwards that the Company may be able to utilize for income tax purposes; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in the Company’s market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; the failure of assumptions underlying the establishment of reserves for possible credit losses.

The risks relating to the proposed Apollo Bancshares, Inc. merger include, without limitation, failure to obtain the approval of shareholders of Apollo Bancshares, Inc. and Apollo Bank in connection with the merger; the timing to consummate the proposed merger; the risk that a condition to the closing of the proposed merger may not be satisfied; the risk that a regulatory approval that may be required for the proposed merger is not obtained or is obtained subject to conditions that are not anticipated; the parties' ability to achieve the synergies and value creation contemplated by the proposed merger; the parties' ability to promptly and effectively integrate the businesses of Seacoast and Apollo Bancshares, Inc., including unexpected transaction costs, the costs of integrating operations, severance, professional fees and other expenses; the diversion of management time on issues related to the merger; the failure to consummate or any delay in consummating the merger for other reasons; changes in laws or regulations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers and employees by competitors; and the difficulties and risks inherent with entering new markets.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in the Company’s annual report on Form 10-K for the year ended December 31, 2021 under "Special Cautionary Notice Regarding Forward-Looking Statements" and "Risk Factors", and otherwise in the Company’s SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at www.sec.gov .

¹ Non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP.
² Calculated on a fully taxable equivalent basis using amortized cost.
³ These ratios are stated on an annualized basis and are not necessarily indicative of future periods.
⁴ The Company defines tangible assets as total assets less intangible assets, and tangible common equity as total shareholders' equity less intangible assets.
⁵ Defined as noninterest expense less amortization of intangibles and gains, losses, and expenses on foreclosed properties divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses).

 ¹On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.
Feeson loanshave beenincluded in intereston loans.Nonaccrual loansare included inloan balances.

Explanation of Certain Unaudited Non-GAAP Financial Measures

This presentation contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). Management uses these non- GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might define or calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.