Click here to view financial statement
STUART, FL., January 23, 2008 ¿ Seacoast Banking Corporation of Florida (NASDAQ-NMS: SBCF), a bank holding company whose principal subsidiary is Seacoast National Bank, today reported net income totaling $1,903,000 or $0.10 diluted earnings per share (¿DEPS¿) for the fourth quarter of 2007, an increase of $1.6 million compared to the third quarter 2007, but lower when compared to $5,685,000 or $0.30 DEPS for the fourth quarter a year ago. For the year 2007, net income totaled $9.8 million, or $0.51 DEPS, compared to $23.9 million or $1.28 earned in 2006. Excluding securities restructuring losses, earnings for the year totaled $13.1 million or $0.68 DEPS.

¿This quarter our earnings continued to be impacted by the sluggish Florida residential real estate market with growth in non performing assets and an elevated provision for loan losses. Our deposit performance for the quarter was strong and our revenue performance remained solid. Overhead was essentially unchanged from the prior quarter and we are on track to implement cost savings of approximately $3.5 million (annually) in early 2008. Our capital ratios remain strong and in fact have improved over the past year,¿ said Dennis S. Hudson, III, CEO of Seacoast. Seacoast ended the year with assets of $2.4 billion up 1.3 percent over the prior year and deposits of $2.0 billion up 5.1 percent for the year. Deposit growth during the quarter experienced strong seasonal growth reflecting continued strength in the Company¿s core deposit franchise.

In the fourth quarter loan growth slowed with a modest growth of $5.3 million on a linked quarter basis. Total loans increased $165.3 million for the year, up 9.5 percent over the prior year. Total deposits for the year increased by $96.3 million or 5.1 percent and during the fourth quarter deposits increased by $131.6 million or 7.1 percent. Deposit growth during the quarter resulted from normal seasonal deposit increases and higher average public fund deposit balances due to credit concerns relating to the state run municipal investment pools. It is believed that a portion of the increased public fund deposits may ultimately be placed in investments other than bank deposits.

Operating results for the quarter excluding the impact of the provision for loan losses totaled approximately $4.2 million or approximately $0.22 per share down from $5.4 million or $0.28 per share for the third quarter. Noninterest expenses were positively impacted in the third quarter with the elimination of year to date accrued executive bonuses, incentive payouts for senior officers and profit sharing all as a result of lower than expected earnings performance. If the third quarter¿s operating results are adjusted to include only one quarter¿s impact for the reversal of these expenses, cash earnings for the fourth quarter were comparable to the prior quarter. In addition, the Company recorded in the fourth quarter 2007, $275,000 for its portion of the VISA litigation and settlement costs.

The net interest margin declined 23 basis points on a linked quarter basis to 3.71 percent in the fourth quarter as a result of higher average nonaccrual loan balances and the repricing of prime based loans as a result of lower interest rates. Competition for deposits throughout the quarter did not allow for the full benefit to be realized from the Federal Reserve reducing rates by 100 basis points beginning in September 2007. In addition, the normal seasonal increase in deposits and repurchase agreements from municipal customers was invested in short term agencies and Federal funds sold at lower spreads. Deposit costs were lower in the fourth quarter and totaled 2.93 percent compared to 3.01 percent for the third quarter of 2007. Total cost of interest bearing liabilities declined 17 basis points linked quarter to 3.71 percent and increased by 19 basis points from 3.52 percent for the fourth quarter 2006.

Net interest income for the fourth quarter totaled $20.7 million compared to $21.1 million earned in the third quarter and $21.8 for the fourth quarter a year ago. Total revenue for the quarter was $26.6 million compared to the third quarter¿s $27.1 million and the prior years fourth quarter¿s $27.4 million (excluding gain on sale of partnership interest).

For the full year 2007 noninterest expenses totaled $77.4 million, up 6.0 percent from the prior year. Total noninterest expense in the fourth quarter was $19.8 million, in line with guidance provided last quarter after excluding one time costs for VISA litigation and settlement costs and costs associated with increased problem credits. Noninterest expenses for the quarter were lower as a result of the previously announced expense savings totaling approximately $2.0 million for the year. The expense reductions primarily relate to the elimination of executive bonus compensation for the year, lower incentive payouts for senior officers and reduced profit-sharing compensation. This action reduced compensation expense by approximately $500,000 in the fourth quarter, and will remain in effect until the Company produces meaningful earnings improvements. The Company has also identified additional savings totaling approximately $3.5 million annually that it intends to implement over the next two quarters which include consolidation of branch offices, reductions in staff and a reduction in marketing costs and other professional fees. Therefore, overhead is targeted to increase modestly in 2008.

Noninterest income for the fourth quarter, excluding securities and other gains and losses, increased 4.2 percent when compared to the prior year quarter, reflecting increased revenues from service charges on deposits, merchant fee income and marine finance fees offset by reduced revenues from wealth management services and mortgage banking. Noninterest income for the year was up $1.8 million or 7.8 percent. For the year, noninterest income related to mortgage loan production, marine loan production, service charges on deposits and merchant fees were up and wealth management fees were lower.

Loans placed on nonaccrual this quarter impacted net interest income. Net interest income will continue to be impacted by increased nonaccrual loans and OREO which may continue to grow through the first half of 2008. The majority of the nonaccrual loans are land and acquisition and development loans related to the residential market which are being monitored monthly and are in the process of collection through foreclosure, refinancing or sale. During the fourth quarter nonperforming assets increased $21.7 million to $67.6 million. The Company¿s land and acquisition and development loans related to the residential market total approximately $299 million or 15.7 percent of total loans. Focused and intensive monitoring over the past eighteen months resulted in a reduction of the total exposure to this portfolio from pay downs, guarantor performance, as well as, obtaining of additional collateral. Of the $299 million approximately $51 million of loans are classified as impaired at year end compared to $40 million at the end of the third quarter 2007. The valuation allowance provided for these loans at year end totaled approximately $4 million compared to approximately $6.8 million last quarter a decline of $2.8 million related to charge offs of applicable loans.

Net loan charge offs for the fourth quarter 2007 totaled $4.5 million, up $3.4 million from the third quarter 2007 and totaled $5.8 million or 0.31 percent of total loans for the full year of 2007, compared to net recoveries of $106,000 for 2006. Nonaccrual loans and accruing loans past due 90 days to total loans increased to 3.52 percent at December 31, 2007, compared to 0.72 percent for the year end 2006. Nonperforming assets totaled $67.6 million at December 31, 2007, consisting of $66.9 million in nonperforming loans and $735,000 in other real estate owned. The allowance for loan losses totals $21.9 million and represents 1.15 percent of year end loans, compared to 0.86 percent in the prior year.

The Company¿s capital ratios all remain strong with Tier 1 capital in excess of 10 percent and total risk based capital of approximately 12 percent at year end. The Company is well capitalized under the regulatory framework for prompt corrective action. In addition the Company¿s operating subsidiary also has strong capital ratios with all of its ratios substantially above the required minimums required for well capitalized banks as defined by the federal banking agencies.

Seacoast will host a conference call on Thursday, January 24 at 10:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Investors may call in (toll-free) by dialing (800) 640-9765 (access code: 19349003; leader: Dennis S. Hudson). Charts will be used during the conference call and may be accessed at Seacoast¿s website at www.seacoastbanking.net by selecting Presentations under the heading Investor Services. A replay of the call will be available beginning the afternoon of January 24 by dialing (877) 213-9653 (domestic), using the passcode 19349003.

Seacoast Banking Corporation of Florida has approximately $2.4 billion in assets. It is one of the largest independent commercial banking organizations in Florida, headquartered on Florida¿s Treasure Coast, one of the wealthiest and fastest growing areas in the nation.

Cautionary Notice Regarding Forward-Looking Statements

This press release contains ¿forward-looking statements¿ within the meaning 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 our markets, and improvements to reported earnings that may be realized from cost controls and for integration of banks that we have acquired, as well as statements with respect to Seacoast¿s objectives, expectations and intentions and other statements that are not historical facts. Actual results may differ from those set forth in the forward-looking statements.

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

You can identify these forward-looking statements through our use of words such as ¿may,¿ ¿will,¿ ¿anticipate,¿ ¿assume,¿ ¿should,¿ ¿support¿, ¿indicate,¿ ¿would,¿ ¿believe,¿ ¿contemplate,¿ ¿expect,¿ ¿estimate,¿ ¿continue,¿ ¿further¿, ¿point to,¿ ¿project,¿ ¿could,¿ ¿intend¿ 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; 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, sensitivities and the shape of the yield curve; 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 our 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; and the failure of assumptions underlying the establishment of reserves for possible loan losses. The risks of mergers and acquisitions, include, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected; the risk of deposit and customer attrition; any changes in deposit mix; unexpected operating and other costs, which may differ or change from expectations; 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 by competitors; as well as 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 our annual report on Form 10-K for the year ended December 31, 2006 under ¿Special Cautionary Notice Regarding Forward-Looking Statements,¿ and otherwise in our SEC reports and filings. Such reports are available upon request from Seacoast, or from the Securities and Exchange Commission, including through the SEC¿s Internet website at http://www.sec.gov.