Seacoast Commerce Banc Holdings Announces First Quarter 2020 Results

Company Release - 4/16/2020 8:45 AM ET

First Quarter 2020 Highlights:

  • Net income of $3.8 million, up $272 thousand, or 7.7%
  • Earnings per share of $0.39, up $0.02, or 6.4%
  • Return on Average Tangible Common Equity of 15.88%, down 1.02%, or 6.1%
  • Return on Average Assets of 1.34%, down .04%, or 3.2%
  • Asset growth of $59.8 million, or 5.6% annualized
  • Gross loan growth of $56.2 million, or 6.2% annualized
  • Retained SBA guaranteed loan growth of $60.5 million, or 14.8% annualized
  • Deposit growth of $141.8 million, or 17.2% annualized
  • Non-interest bearing deposits represent 53.7% of total deposits
  • Specialty deposit growth of $169.7 million, or 28.0% annualized
  • SBA loan production of $71.5 million, up 4.4%

SAN DIEGO, CA / ACCESSWIRE / April 16, 2020 /Seacoast Commerce Banc Holdings (OTCPINK:SCBH) ("Company"), the holding company of Seacoast Commerce Bank ("Bank"), today reported unaudited consolidated net income for the first quarter ended March 31, 2020, of $3.8 million versus 2019 first quarter unaudited consolidated net income of $3.5 million, a 7.7% increase. On a per share basis, net income increased 6.4% to $0.39 per share versus $0.37 per share. Additionally, the Company reported first quarter return on average tangible common equity (ROATCE) and return on average assets (ROAA) of 15.88% and 1.34% respectively, compared to 16.90% and 1.38% for the first quarter of 2019.

Richard M. Sanborn, President & Chief Executive Officer, commented, "While we are reporting another good, consistent quarter, we know the effects of COVID-19 are going to have a significant impact on our whole nation going forward. While no one can predict the length of the current Governmental mandated shutdowns, we all know that at some point, we will get back to business, and we will be prepared. In the meantime, some important events have transpired that will be profoundly beneficial to our bank and our clients. With the passage of the CARES Act in March, or Stimulus Bill #3, all of our current SBA loan clients, and all new SBA loan clients between March 27, 2020 and September 27, 2020, will have their loan payments made for them for the next six months. This six-month loan payment "grant" will give all our SBA clients time to get over the disaster "hump", re-open, and return to generating revenue. In addition to the six-month loan payment grant, our clients are also applying for the SBA Paycheck Protection Program (PPP) loan, which will give them additional needed monies to assist with payroll, and other qualified expenses, which if used properly, will also be forgiven. In essence, our SBA loan clients are going to get six months of free loan payments and 2.5 months of payroll covered for them. As we have always been almost exclusively an SBA focused bank, Seacoast will benefit much more than other banks that do not have a focused SBA client base. Our business model is again proving to be a superior model."

Allan W. Arendsee, Chairman of the Board, stated, "The board of directors is beyond grateful for the work our staff is doing. They are working long hours, many seven days a week, assisting clients with loan deferrals and paycheck protection loans. We know the work our staff is doing is literally saving everything for some of our clients. The board of directors is 100% committed to putting people ahead of profits during this national disaster."

Quarterly Financial highlights (in millions):

03/31/202012/31/201903/31/201903/31 Change% Change
Consolidated Net Income
$3.792$3.807$3.520$0.2727.7%
ROATCE
15.88%16.22%16.90%(1.02%)(6.1%)
ROAA
1.34%1.35%1.38%(0.04%)(3.2%)
Earnings Per Share (Basic)
$0.39$0.39$0.37$0.046.4%
Dividend Paid
$0.12$0.12$0.10$0.0220.0%
Net Interest Margin
5.71%6.10%6.15%(0.44%)(7.2%)
Bank Efficiency Ratio
66.7%68.1%67.2%(0.50%)(0.7%)

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

03/31/2020
12/31/2019
03/31/2019
Change
% Change
SBA Loan Production
$ 71.504$ 95.716$ 68.499$ 3.0054.4%
SBA 7(a) guaranteed Loan Sales
$ 20.976$ 17.339$ 17.010$ 3.96623.3%
Percent of Guaranteed Loan Sales
39.1%24.2%33.1%6.0%18.1%
SBA Guarantee Portions Held
$ 470.384$ 450.090$ 409.906$ 60.47814.8%
Commercial Loan Production
$ 4.685$ 29.911$ 22.316$ (17.631)(79.0%)
1031 Exchange Deposits
$ 141.528$ 186.601$ 152.609$ (11.081)(7.3%)
Property Management Deposits
$ 260.686$ 253.161$ 186.805$ 73.88140.0%
Association Management Deposits
$ 288.523$ 238.993$ 184.804$ 103.71856.1%

Selected highlights for first-quarter 2020 versus first-quarter 2019:

Balance Sheet Metrics

  • Asset growthof 5.6%, or $59.8 million, to $1.1 billion;
  • Loan growth of 6.2%, or $56.2 million, to $965.6 million;
  • SBA guaranteed loans held up 14.8%, or $60.5 million, to $470.4 million;
  • Deposit growth of 17.2%, or $141.8 million, to $967.5 million;
  • Property Management focused deposit growth of 47.8%, up $177.6 million, to $549.2 million;
  • Non-Interest Bearing deposits represent 53.7% of total deposits;
  • Shareholders' Equity growth of 9.2%, or $11.4 million, to $134.9 million.

Income Statement Metrics

  • Interest Income up 1.5%, or $238 thousand, to $16.0 million;
  • Interest Expense down 39.5%, or $592 thousand, to $906 thousand;
  • Net-Interest Income up 5.8%, or $830 thousand to $15.1 million;
  • Non-Interest Income up 28.3%, or $541 thousand, to $2.5 million;
  • Non-Interest Expenses up 7.3%, or $800 thousand, to $11.7 million;
  • Net Income up 7.7%, or $272 thousand, to $3.8 million.

Other Metrics

  • SBA loans funded up 4.4%, or $3.0 million, to $71.5 million;
  • SBA 7(a) loan sales percentage up 18.1%, to 39.1% of guaranteed production;
  • Allowance for loan losses of $6.6 million was 1.39% of loans held for investment, net of PCI;
  • Allowance for loan losses stands at 284% of non-performing loans, net of guarantees;
  • Non-performing loans to total gross loans of 0.85%;
  • Non-performing assets to Tier 1 Capital plus ALLL (Texas Ratio) of 2.22%;
  • Since inception of the Bank's SBA program a little over nine years ago, the bank has funded 2,260 loans for $2.08 billion in small business financing;
  • The Bank services 1,307 SBA loans for $1.1 billion, of which $309 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 March 31, 2020, as follows:

Capital Ratios as of Mar. 31, 2020
CompanyBank"Well Capitalized" Level
Tier 1 Leverage Ratio:
8.89%8.83%5.00
Common Equity Tier 1 Ratio:
14.01%13.92%7.00
Tier 1 Risk-Based Capital Ratio:
14.01%13.92%8.50
Total Risk-Based Capital Ratio:
14.96%14.87%10.50

As reported by the U.S. Small Business Administration ("SBA") for their second quarter ending March 31, 2020, Seacoast Commerce Bank was the 10th largest SBA lender in the nation, out of over 3,000 financial institutions approved as SBA lenders. SBA rankings are based on total dollars approved, with Seacoast having $143.0 million in loans approved.

Seacoast Commerce Banc Holdings: Seacoast Commerce Banc Holdings is a bank holding company with one wholly owned banking subsidiary, Seacoast Commerce Bank. Both the holding company and the bank are headquartered in San Diego, California, with the Bank having five full-service banking branches in California and Nevada, and loan and deposit production offices throughout Arizona, California, Colorado, Georgia, Illinois, Indiana, Massachusetts, Nevada, New Jersey, Ohio, Oregon, Texas, Utah and Washington. For more information, please visit please visit www.scbholdings.com or www.sccombank.com, or contact Richard M. Sanborn, President and Chief Executive Officer at (725) 465-1919, or rsanborn@scbholdings.com.

Seacoast Commerce Banc Holdings
Selected Financial Data
Consolidated and Unaudited (000)

For the Quarters Ended% Change
03/31/202012/31/201903/31/201903/31 - 03/31
Balance Sheet Items
Total Gross Loans
965,647945,533909,4716.2%
SBA Guaranteed Loans Held (memo only)
470,384450,090409,90614.8%
Total Assets
1,132,8531,131,3551,073,1005.6%
Total Deposits
967,473958,367825,62517.2%
Non-Interest DDA (Memo Only)
519,857475,366404,77128.4%
Bank Borrowings
15,00025,000-NA
Shareholders' Equity
134,894132,250123,5409.2%
Bank Shareholders' Equity (Memo Only)
134,219132,373123,493(0.2%)
Income Statement Items
Total Interest Income
15,97516,28715,7371.5%
Total Interest Expense
9061,1001,498(39.5%)
Net Interest Income
15,06915,18714,2395.8%
Provision for Loan Losses
500167234113.7%
Non-Interest Income (excluding gains)
7115376499.6%
Gain on Sale Income
1,7391,4381,26038.0%
Non-Interest Expense
11,72911,97810,9297.3%
Pre-Tax Income
5,2905,0184,9866.1%
Our Fair Share of Income Taxes (28.3%)
1,4981,2111,4662.2%
Net Income
3,7923,8073,5207.7%
QTD Basic Earnings per Share
$0.39$0.39$0.376.4%
YTD Basic Earnings per Share
$0.39$1.51$0.376.4%
Book Value per Share
$14.00$13.83$12.958.1%
Tangible Book Value per Share
$10.16$9.95$9.0412.4%
QTD ROAA
1.34%1.35%1.38%(3.2%)
YTD ROAA
1.34%1.34%1.38%(3.2%)
QTD ROATCE
15.88%16.22%16.90%(6.1%)
YTD ROATCE
15.88%16.41%16.90%(6.1%)
Ending Shares Outstanding
9,6339,5649,5381.0%
Stock Price
12.26$18.20$20.15(39.2%)
Market Capitalization
$118,103$174,065$192,183(38.6%)
Cash Dividends Paid to Shareholders
$0.12$0.12$0.1020.0%
YTD Cash Dividend Paid to Shareholders
$0.12$0.44$0.1020.0%

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.

Contact:

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

SOURCE: Seacoast Commerce Bank



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