Seacoast Commerce Banc Holdings Announces First Quarter 2018 Results

First Quarter 2018 Highlights

• Net income of $3.1 million; earnings per share of $0.33
• ROATCE of 17.31%; ROAA of 1.30%
• Asset growth of $41.2 million, or 17.6% annualized
• Gross loan growth of $28.6 million, or 14.8% annualized
• Retained SBA guaranteed loan growth of $13.1 million, or 14.5% annualized
• Non-maturity (core) deposit growth of $31.1 million, or 18.8% annualized
• Noninterest-bearing deposits represent 44.1% of total deposits
• Opened loan production offices in Salt Lake City, UT, and St. Louis, MO, as well as expanded our specialty deposit production sales force.

SAN DIEGO, April 19, 2018 (GLOBE NEWSWIRE) -- Seacoast Commerce Banc Holdings (OTC Pink:SCBH) (“Company”), the holding company of Seacoast Commerce Bank (“Bank”), today reported unaudited consolidated net income for the first quarter ended March 31, 2018, of $3.1 million versus 2017 first quarter unaudited consolidated net income of $1.6 million, a 92.8% increase.  On a per share basis, net income increased 26.5% to $0.33 per share versus $0.26 per share.  Additionally, the Company reported first quarter return on average tangible common equity (ROATCE) of 17.31% compared to 15.33% for the first quarter of 2017, a 12.9% increase.

Richard M. Sanborn, President & Chief Executive Officer, commented, “The first quarter of 2018 was our first full quarter operating with the Capital Bank acquisition fully integrated and we are very pleased with the results.  We completed the acquisition on October 1, 2017, and completed the systems integration on October 28, 2017.  Since then the teams have worked very hard to ensure both the Seacoast and Capital clients have the best-in-class products and services so their businesses can grow and prosper, and the results show it's working.  Since the close of our acquisition six months ago, we have seen no loan balance reductions, far less than the 15% run-off typically experienced in acquisitions.  This speaks volumes to the high acceptance rate of our products and services by the Capital Bank clientele, and the amazing service our employees provide to our new client base.”

Allan W. Arendsee, Chairman of the Board, stated, “The board of directors is very pleased with how the Capital Bank acquisition, and the bank in total, is performing, especially from a financial and risk management perspective.   It’s gratifying to see the results from an acquisition come in ahead of plan and it is a testament to the effectiveness of the management team’s due diligence before the deal was announced, and to the entire staff’s dedication to close the transaction, integrate the systems, and maintain client relationships in a way that preserves the value that was acquired.  As always, the board of directors believes that the right plan is in place to continue providing shareholders with an exceptional return on their investment over the long-term.”

Quarterly Financial highlights (in millions):

SBA Division’s quarter-to-date results (in millions):

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

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

Balance Sheet Metrics

• Asset growth of 71.4%, or $408.2 million, to $980.2 million;
• Loan growth of 78.6%, or $354.0 million, to $804.5 million;
• SBA loans held for sale up 23.4%, or $70.5 million, to $372.5 million;
• Deposit growth of 45.2%, or $232.0 million, to $744.9 million;
• Non-Interest Bearing deposits represent 44.1% of total deposits;
• Shareholders’ Equity growth of 156.9%, or $67.8 million, to $110.9 million.

Income Statement Metrics

• Interest Income up 92.7%, or $6.2 million, to $12.9 million;
• Interest Expense up 195.5%, or $721 thousand, to $1.1 million;
• Net-Interest Income up 86.7%, or $5.5 million to $11.9 million;  
• Non-Interest Income down (26.7%), or ($776) thousand, to $2.1 million;
• Non-Interest Expenses up 44.2%, or $2.9 million, to $9.6 million;
• Net Income up 92.8% or $1.5 million, to $3.1 million.

Other Metrics

• SBA loans funded down (8.6%), or ($4.5) million, to $47.6 million;
• SBA 7(a) loan sales down (16.3%), or ($2.7) million, to $13.9 million;
• Allowance for loan losses of $4.5 million was 1.93% of loans held for investment, net of PCI;
• Allowance for loan losses stands at 88.7% of non-performing loans, net of PCI;
• Non-performing loans to total gross loans of 0.64%;
• Non-performing assets to Tier 1 Capital plus ALLL (Texas Ratio) of 2.20%;
• No charge-offs in 2016, 2017, or YTD 2018;
• Since inception of the Bank’s SBA program a little over eight years ago, the bank has funded 1,788 loans for $1.5 billion in small business financing;
• The Bank services a total of 1,348 SBA loans for $1.0 billion, of which $428 million has been sold in the secondary market and is not reflected on the bank's balance sheet.

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

As reported by the U.S. Small Business Administration (“SBA”) for their second quarter ending March 31, 2018, Seacoast Commerce Bank was the 14^th 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 $130.3 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, Oregon, Massachusetts, 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.