Seacoast Commerce Banc Holdings Announces Fourth Quarter and Full Year 2018 Results

Company Release - 1/17/2019 9:00 AM ET

Full-Year 2018 Highlights

  • Net income for the full-year of $12.9 million, up $10.6 million, or 463.7% *
  • Earnings per share of $1.37, up $1.04, or 314.5% *
  • ROATCE of 16.99%, up 270.0% *
  • ROAA of 1.33%, up 296.7% *
  • Asset growth of $101.2 million, or 10.8%
  • Gross loan growth of $102.3 million, or 13.2%
  • SBA guaranteed loan retention growth of $42.3 million, or 11.8%
  • Deposit growth of $87.9 million, or 12.2%
  • Specialty focused deposit growth of $170.7 million, or 40.4%
  • Non-interest bearing deposits represent 43.4% of total deposits
  • Hired six new SBA and three new Deposit Business Development Officers

*2017 results include $2 million in one-time merger expenses and $3.8 million in adjustments associated with tax reform.

SAN DIEGO, Jan. 17, 2019 (GLOBE NEWSWIRE) -- Seacoast Commerce Banc Holdings (OTC Pink: SCBH) (“Company”), the holding company of Seacoast Commerce Bank (“Bank”), reported consolidated unaudited net income for 2018 of $12.9 million, or $1.37 per share, compared with net income of $2.3 million, or $0.33 per share, for 2017.  2017 results include two significant one-time items; $2.0 million in merger expenses and $3.8 million in Deferred Tax Asset write-downs as a result of tax reform.   Excluding those two items 2017 operating net income would have been $8.1 million, with 2018 net income up $4.8 million, or 59.3%.  For the fourth quarter of 2018, the Company reported net income of $3.1 million, compared to a net loss of ($2.1) million for the fourth quarter of 2017.  Fourth quarter 2017 results include one-time merger related expenses of $1.6 million and $3.8 million in DTA write-downs.  The Company’s 2018 full-year return on average tangible common equity (ROATCE) and return on average assets (ROAA) were 16.99% and 1.33%, respectively, versus 4.59% and 0.34%, respectively, for 2017.

Richard M. Sanborn, President & Chief Executive Officer, commented, “2018 was a significant year for us on many fronts.  We fully integrated and received great benefits from our acquisition of Capital Bank, crossed over the $1 billion asset threshold, and expanded our SBA and specialty deposit platforms.  Our strategy of originating and holding variable-rate SBA loans, and funding those loans with low-cost core deposits, 43% of which are non-interest bearing, continues to achieve superior operating results.  This strategy resulted in our net interest margin expanding 63 basis points to 5.97% (YTD) and is driving consistent, predictable spread income.   Also of significance was the success our specialty deposit groups had growing our core deposits by $170.7 million, or 40.4%, to $593.2 million, which allowed us to further reduce higher cost deposits associated with Capital Bank and repay $13.1 million in bank holding company debt.  We feel confident that in the current rate and economic cycle that we will continue to be able to outperform our peers and deliver superior returns for our shareholders.”

Allan W. Arendsee, Chairman of the Board, stated, “As our CEO discussed, 2018 was a tremendous year for the Company.  We have continually looked for and sought opportunities to enhance our performance and we will continue to do that so long as the economic impact of any decision is in the best interests of our shareholders.  The Board of Directors fully believes that the strategies we have been implementing are the right strategies to drive the company’s growth and profitability in a safe and sound manner, and in a way that provides an exemplary return to our shareholders.”

Quarterly Financial highlights (in millions):

 12/31/2018 09/30/2018 12/31/2017 12/31 Change % Change
Consolidated Net Income$3.079 $3.471  ($2.142) $5.221 243.8%
ROATCE15.13% 17.81%  (11.52%) 26.65% 231.3%
ROAA1.22% 1.46%  (0.91%) 2.13% 234.6%
Earnings Per Share (Basic)$0.32 $0.37  ($0.23) $0.56 239.3%
Net Interest Margin YTD5.97% 5.85%  5.34% 0.63% 11.8%
Efficiency Ratio68.6% 67.9%  74.7% (6.10%) (8.2%)
           

Divisional quarter-to-date results (in millions):

          
 12/31/2018 09/30/2018 12/31/2017  Change % Change
SBA Loan Production$73.719 $81.314 $69.627 $4.093 5.9%
SBA 7(a) guaranteed Loan Sales$12.225 $23.157 $18.151 ($5.926) (32.6%)
Percent of Guaranteed Loan Sales22.1% 38.0% 34.8% (12.6%) (36.6%)
SBA Guaranteed Loan Inventory$401.732 $389.231 $359.436 $42.297 11.8%
Commercial Loan Production$26.288 $18.460 $11.451 $14.837 129.6%
1031 Exchange Deposits$174.807 $149.160 $80.460 $94.348 117.3%
Property Management Deposits$167.434 $159.440 $112.329 $55.107 49.1%
Association Management Deposits$172.386 $163.930 $151.632 $20.754 13.7%
          

As previously discussed, the Company’s growth and long-term shareholder value creation strategy is based on consistently generating and holding saleable SBA loans.  Holding loans, versus selling for a one-time gain, results in more consistent, predictable, and re-occurring spread income.

Selected highlights for fourth-quarter 2018 versus fourth-quarter 2017:

Balance Sheet Metrics

  • Asset growth of 10.8%, or $101.2 million, to $1.0 billion;
  • Loan growth of 13.2%, or $102.3 million, to $878.1 million;
  • SBA loans held for sale up 11.8%, or $42.3 million, to $401.7 million;
  • Deposit growth of 12.2%, or $87.9 million, to $808.8 million;
  • Non-Interest Bearing deposits represent 43.4% of total deposits;
  • Shareholders’ Equity growth of 10.6%, or $11.5 million, to $120.1 million.

Income Statement Metrics

  • Interest Income up 22.3 %, or $2.9 million, to $16.0 million;
  • Interest Expense up 61.3%, or $613 thousand, to $1.6 million;
  • Net-Interest Income up 19.0%, or $2.3 million to $14.4 million;  
  • Non-Interest Income down (42.9%), or ($916) thousand, to $1.2 million;
  • Non-Interest Expenses down (3.1%), or ($362) thousand, to $11.2 million;
  • Net Income up 243.8%, or $5.2 million, to $3.1 million.

Other Metrics

  • SBA loans funded QTD up 5.9%, or $4.1 million, to $73.7 million;
  • SBA loans funded YTD up 0.4%, or $1.0 million, to $256.1 million;
  • Allowance for loan losses of $4.9 million was 1.51% of loans held for investment;
  • Non-performing loans to total gross loans of 0.62%;
  • Non-performing assets to Tier 1 Capital plus ALLL (Texas Ratio) of 3.45%;
  • Since inception of the Bank’s SBA program a little over nine years ago, the bank has funded 1,976 loans for $1.7 billion in small business financing;
  • The Bank services a total of 1,316 SBA loans for $1 billion, of which $344 million has been sold in the secondary market and is not reflected on the banks balance sheet.

The Bank has always maintained capital levels well above the regulatory highest designation, “well capitalized”, and had capital ratios at December 31, 2018, as follows:

       
Capital Ratios as of Dec. 31, 2018 Company Bank “Well Capitalized” Level
Tier 1 Leverage Ratio:  8.63% 8.59% 5.00%
Common Equity Tier 1 Ratio:  13.02% 12.97% 7.00%
Tier 1 Risk-Based Capital Ratio: 13.02% 12.97% 8.50%
Total Risk-Based Capital Ratio: 13.80% 13.75% 10.50%
       

As reported by the U.S. Small Business Administration (“SBA”) for their fiscal year ending September 30, 2018, Seacoast Commerce Bank was the 14th largest SBA lender in the nation, out of over 3,000 financial institutions that are approved as an SBA lender.  SBA rankings are based on total dollars approved with Seacoast having $293 million approved. 

About Seacoast Commerce Banc Holdings: Seacoast Commerce Banc Holdings is a bank holding company with one wholly-owned banking subsidiary, Seacoast Commerce Bank, which also operates as Capital Bank, a division of Seacoast Commerce Bank.  Both the holding company and the bank are headquartered in San Diego, California, with the Bank having four full-service banking branches in San Diego and Orange County, California, and loan and deposit production offices throughout Arizona, California, Colorado, Georgia, Illinois, Ohio, Oregon, Massachusetts, Minnesota, Missouri, Nevada, Texas, Utah and Washington.  For more information on Seacoast Commerce Banc Holdings or Seacoast Commerce Bank, please visit www.scbholdings.com or www.sccombank.com, or contact Richard M. Sanborn, President and Chief Executive Officer at 858-432-7001, or rsanborn@scbholdings.com.

_______________

This press release contains some non-GAAP financial analysis provided to supplement information regarding the Bank’s performance, and to enhance investors' overall understanding of such financial performance. Certain statements in this press release, including statements regarding the anticipated development and expansion of the Bank’s business, and the intent, belief or current expectations of the Bank, its directors or its officers, are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such “forward-looking” statements. These risks and uncertainties include, but are not limited to, risks related to the local and national economy, the Bank’s performance and regulatory matters.



Seacoast Commerce Banc Holdings
 
Selected Financial Data 
Consolidated and Unaudited (000) 
 For the Quarters Ended % Change 
 12/31/2018 09/30/2018 12/31/2017 12/31 - 12/31 
Balance Sheet Items         
Total Gross Loans 878,142   821,256   775,859  13.2%  
SBA Loans Available for Sale (Memo Only) 401,732   389,231   359,436  11.8%  
Total Assets 1,040,131   1,022,248   938,927  10.8%  
Total Deposits 808,760   765,402   720,854  12.2%  
Non-Interest DDA (Memo Only) 350,694   323,546   295,694  18.6%  
Shareholders' Equity 120,066   117,566   108,518  10.6%  
Bank Shareholders’ Equity (Memo Only) 119,659   129,117   121,589  (1.6%)  
         
Income Statement Items        
Total Interest Income 15,974   14,181   13,064  22.3%  
Total Interest Expense 1,613   1,355   1,000  61.3%  
Net Interest Income 14,361   12,826   12,064  19.0%  
Provision for Loan Losses 350   0   0  -  
Non-Interest Income 1,217   2,362   2,133  (42.9%)  
Non-Interest Expense (inc. merger expenses) 11,183   10,737   11,545  (3.1%)  
Pre-Tax Income 4,045   4,451   2,652  52.5%  
Income Taxes (inc. DTA adj.) (23.9%) 966   979   4,793  (79.9%)  
         
Net Income (inc. merger and DTA adj.) 3,079   3,471   (2,142)  243.8%  
         
QTD Basic Earnings per Share$0.32  $0.37  ($0.23)  239.3%  
Book Value per Share$12.84  $12.57  $11.89  8.0%  
Tangible Book Value per Share$8.84  $8.56  $7.74  14.1%  
QTD ROAA 1.22%   1.46%   (0.91%)  234.6%  
QTD ROATCE 15.13%   17.81%   (11.52%)  231.3%  
Ending Shares Outstanding 9,353   9,353   9,129  2.46%  
Stock Price$20.50  $22.65  $20.35  0.74%  
Market Capitalization$191,743  $211,843  $185,766  3.22%  
Cash Dividends Paid to Shareholders$0.09  $0.09  $0.08  12.5%  
             

                                                               


Seacoast Commerce Banc Holdings
 
Selected Financial Data 
Consolidated and Unaudited (000) 
 For the Years Ended    
 12/31/2018 12/31/2017 $ Change % Change 
Balance Sheet Items         
Total Gross Loans 878,142   775,859   102,283  13.2%  
SBA Loans Available for Sale (Memo Only) 401,732   359,436   42,297  11.8%  
Total Assets 1,040,131   938,927   101,204  10.8%  
Total Deposits 808,760   720,854   87,906  12.2%  
Non-Interest DDA (Memo Only) 350,694   295,694   55,000  18.6%  
Shareholders' Equity 120,066   108,518   11,518  10.6%  
Bank Shareholders’ Equity (Memo Only) 119,659   121,589   (1,930)  (1.6%)  
         
Income Statement Items        
Total Interest Income 57,147   35,580   21,567  60.6%  
Total Interest Expense 5,307   2,143   3,143  147.7%  
Net Interest Income 51,839   33,437   18,402  55.0%  
Provision for Loan Losses 550   0   550  -  
Non-Interest Income 7,944   9,678   (1,733)  (17.9%)  
Non-Interest Expense (inc. merger expenses) 41,754   32,679   9,076  27.8%  
Pre-Tax Income 17,479   10,436   7,043  67.5%  
Income Taxes (inc. DTA adj.) (26.2%) 4,579   8,148   (3,569)  (43.8%)  
         
Net Income (inc. merger and DTA adj.) 12,900   2,288   10,612  463.7%  
         
YTD Basic Earnings per Share$1.37  $0.33  $1.04  314.5%  
Book Value per Share$12.84  $11.89  $0.95  8.0%  
Tangible Book Value per Share$8.84  $7.74  $1.10  14.1%  
YTD ROAA 1.33%   0.34%  $0.99  296.7%  
YTD ROATCE 16.99%   4.59%   12.40%  270.7%  
Ending Shares Outstanding 9,353   9,129   224,762  2.46%  
Stock Price$20.50  $20.35  $0.15  0.74%  
Market Capitalization$191,743  $185,766  $5,977  3.22%  
YTD Cash Dividends Paid to Shareholders$0.34  $0.32  $0.02  6.3%  
             

Contact:
Richard M. Sanborn
President & Chief Executive Officer
Phone: 858-432-7001
Email: rsanborn@scbholdings.com

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Source: Seacoast Commerce Banc Holdings