Market Overview

Seacoast Commerce Banc Holdings Announces Second Quarter 2018 Results

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Second quarter 2018 versus 2017 highlights

  • Net income of $3.3 million, up $1.9 million or 132.0%
  • Earnings per share of $0.35, up $0.12, or 52.3%
  • ROATCE of 17.84%, up from 13.19%, or 35.3%
  • ROAA of 1.34%, up from 0.97%, or 38.8%
  • Asset growth of $408.4 million, or 69.2%
  • Loan growth of $333.6 million, or 70.7%
  • Deposit growth of $257.6 million, or 49.7%
  • Non-Interest Bearing Deposit growth of $93.7 million, or 37.3%
  • Noninterest-bearing deposits represent 44.6% of total deposits
  • Opened a deposit production office in Chicago, Illinois

SAN DIEGO, July 19, 2018 (GLOBE NEWSWIRE) --  Seacoast Commerce Banc Holdings (OTC:SCBH) ("Company"), the holding company of Seacoast Commerce Bank ("Bank"), today reported unaudited consolidated net income for the second quarter ended June 30, 2018, of $3.3 million versus 2017 second quarter unaudited consolidated net income of $1.4 million, a 132.0% increase.  On a per share basis, net income increased 52.3% to $0.35 per share versus $0.23 per share in 2017.  Additionally, the Company reported second quarter return on average tangible common equity (ROATCE) of 17.84% and return on average assets (ROAA) of 1.34%, compared to 13.19% and 0.97% for the second quarter of 2017, a 35.3% and 38.8% increase respectively.

Richard M. Sanborn, President & Chief Executive Officer, commented, "The second quarter of 2018 was our second full quarter operating with the Capital Bank acquisition fully integrated and we are very pleased with the results.  Over the last two quarters, Capital Bank core deposits have grown 2.4% with loan balances only decreasing 1.4%, which is much better than the 15% run-off typically experienced in acquisitions.  With the additional scale our efficiency ratio also improved to 68% from 74% a year ago.  On the production side, we experienced excellent growth in our specialty deposit verticals, with specialty core deposit growth of 11.7% in the second quarter alone, driven by our expanded specialty banking group.  On the lending front, our strong second quarter financial performance allowed us to sell fewer loans than planned, which is a significant focus for us.  Our unique banking model of focusing on specialty lending and deposit platforms is proving to be a strong and financially compelling model."

Allan W. Arendsee, Chairman of the Board, stated, "Our partnership with Capital Bank last year is proving to be very beneficial to the bank financially and to our shareholders.  It has always been our focus to pursue a strategy that creates long-term shareholder value in a safe and sound manner and our team is doing just that.  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):

  06/30/2018   03/31/2018   06/30/2017   06/30 Change   % Change
Consolidated Net Income $3.296     $3.053     $1.421     $1.875     132.0 %
ROATCE   17.84 %     17.31 %     13.19 %     4.65 %   35.3 %
ROAA   1.34 %     1.30 %     0.97 %     0.37 %   38.8 %
Earnings Per Share (Basic) $0.35     $0.33     $0.23     $0.12     52.3 %
Net Interest Margin YTD   5.67 %     5.59 %     4.96 %     0.71 %   14.3 %
Efficiency Ratio   68.0 %     68.8 %     74.2 %     (6.20 %)   (8.4 %)

Specialty Division quarter-to-date results (in millions):

  06/30/2018   03/31/2018   06/30/2017    Change   % Change
SBA Loan Production $53.480     $47.580     $65.657     ($12.176 )   (18.5 %)
Other Specialty Loan Production $5.974     $14.339     $0.00     $5.974     NA
SBA 7(a) guaranteed Loan Sales $21.246     $13.925     $20.503     $0.743     3.6 %
Percent of Guaranteed Loan Sales   53.0 %     39.0 %     41.6 %     11.4 %   27.4 %
SBA Guaranteed Loan Inventory $373.772     $372.487     $318.693     $55.079     17.3 %
1031 Exchange Deposits $141.039     $112.742     $102.468     $38.571     37.6 %
Commercial Management Deposits $146.693     $124.883     $88.895     $57.798     65.0 %
HOA Management Deposits $162.423     $159.291     $143.209     $19.214     13.4 %

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 second-quarter 2018 versus second-quarter 2017:

Balance Sheet Metrics

  • Asset growth of 69.2%, or $408.4 million, to $998.4 million;
  • Loan growth of 70.7%, or $333.6 million, to $805.3 million;
  • SBA loans held for sale up 17.3%, or $55.1 million, to $373.8 million;
  • Deposit growth of 49.7%, or $257.6 million, to $776.4 million;
  • Non-Interest Bearing deposits represent 44.6% of total deposits;
  • Shareholders' Equity growth of 156.9%, or $69.6 million, to $114.0 million.

Income Statement Metrics

  • Interest Income up 86.9%, or $6.5 million, to $14.0 million;
  • Interest Expense up 225.6%, or $0.865 million, to $1.2 million;
  • Net-Interest Income up 79.5%, or $5.7 million to $12.8 million;  
  • Non-Interest Income down (13.5%), or ($0.360) million, to $2.3 million;
  • Non-Interest Expenses up 41.3%, or $3.0 million, to $10.3 million;
  • Net Income up 132.0% or $1.9 million, to $3.3 million.

Other Metrics

  • SBA loans funded down (18.5%), or ($12.2) million, to $53.5. million;
  • SBA 7(a) loan sales up 3.6%, or $0.743 million, to $21.2 million;
  • Allowance for loan losses of $4.6 million was 1.83% of loans held for investment, net of PCI;
  • Allowance for loan losses stands at 139.8% of non-performing loans, net of PCI;
  • Non-performing loans to total gross loans of 0.41%;
  • Non-performing assets to Tier 1 Capital plus ALLL (Texas Ratio) of 2.59%;
  • Since inception of the Bank's SBA program a little over nine years ago, the bank has funded 1,839 loans for $1.6 billion in small business financing;
  • The Bank services a total of 1,376 SBA loans for $1.0 billion, of which $425.3 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 June 30, 2018, as follows:

Capital Ratios as of Jun. 30, 2018 Company Bank "Well Capitalized" Level
Tier 1 Leverage Ratio:  7.89 % 9.38 % 5.00 %
Common Equity Tier 1 Ratio:  13.13 % 15.58 % 7.00 %
Tier 1 Risk-Based Capital Ratio: 13.13 % 15.58 % 8.50 %
Total Risk-Based Capital Ratio: 13.96 % 16.40 % 10.50 %

As reported by the U.S. Small Business Administration ("SBA") for their third quarter ending June 30, 2018, Seacoast Commerce Bank was the 16th 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 $187 million approved.  

About Seacoast Commerce Banc Holdings: Seacoast Commerce Banc Holdings is a bank holding company with one wholly-owned banki

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