ANNUAL REPORT

Transcription

1 ANNUAL REPORT

2 We chose a watercolor design throughout our annual report for a number of reasons. This medium utilizes water-soluble paints, which are transparent and appear luminous because the pigments are laid down in a pure form with few fillers obscuring the colors. Watercolor painting has the reputation of being quite demanding. Many difficulties occur because watercolor paints do not have high hiding power, so previous efforts cannot simply be painted over or scraped off. Watercolor painters take great care and detail with their technique in order to produce a beautiful piece of art. The watercolor technique mirrors the attention and individual efforts that we give to each of our clients at Seaside. We operate in an open and transparent environment built on a solid foundation of trust and understanding. Every Client Advisor at Seaside carefully approaches each new piece of business not as a transaction, but as part of an ongoing relationship, beneficial to our clients and to Seaside.

3 AT THE BEGINNING OF THE NOVEL ANNA F R O M T H E C E O KARENINA, Leo Tolstoy wrote, Happy families are all alike; every unhappy family is unhappy in its own way. This is equally true for companies. Because corporations only exist on paper, it is the people that surround you everyday who become your work family, and all happy work families are alike. 32 There are thousands if not millions of companies in our economy, but truly great companies are not commonplace. Perhaps the primary differentiator that all great companies share is a very strong, unique and visible culture. Culture is the look and feel of the place, and more importantly it s how things get done both formally and informally. Last year in our annual report we introduced our transformation process, which is intended to be a multi-year epoch of Seaside s development. Our focus this past year has been on taking our process, products and technology to the next level while reestablishing our emphasis on building, protecting and preserving our unique culture that focuses on delivering our client promise. The transformational process of this past year has been an excellent reminder that everything we do is secondary to the superior delivery of our client promise. Our promise implies that we will employ ethical selling as well as active management. As we understand your preferences, we will be able to create customized solutions and anticipate your future needs as change dictates. With a compassionate sense of urgency, we will provide timely, attentive and friendly service. A brand is nothing more than the expectation of the fulfillment of a promise. Great care was taken in the development of our promise. Once our client promise was established, everything we do, own, or employ in our business must be in support of our promise. As we look forward to 2013, our goal is to continue the positive momentum we have built this past year. We enjoy a well-capitalized bank with superior credit quality and a liquid balance sheet. Seaside has a broad infrastructure to support growth and we plan to add capital as necessary to support and continue this growth. Our 12 statewide offices are located in very attractive markets, and we have the good fortune of financially sound clients served by an experienced and productive team of financial professionals. Seaside enjoys diversified lending and funding capabilities, and we have maintained consistent profitability. In short, I am pleased to report that our model is working, and we look to deliver exceptional long-term shareholder value and financial returns for you. We are grateful for the confidence you have placed in Seaside. We wish you and your family a happy and healthy year. Sincerely, Gideon T. Haymaker Gideon Haymaker President & CEO 2012 TRANSFORMATIONS HIRED SIX NEW HIGHLY EXPERIENCED CLIENT ADVISORS WITH EXTENSIVE MARKET KNOWLEDGE AND EXISTING CLIENTS MADE KEY HIRES IN NORTH FLORIDA WITH THE ADDITION OF A SEASONED AND HIGHLY REGARDED REGIONAL PRESIDENT, DON ROBERTS, AND OUR CHAIRMAN OF THE NEWLY CREATED NORTH FLORIDA ADVISORY BOARD, BETH MCCAGUE EXPANDED OUR SUPPORT TEAM TO INCLUDE FIVE NEW ROLES IN THE OPERATIONS AND CREDIT GROUPS COMPLETELY REDESIGNED OUR SEASIDEBANK.COM WEBSITE, WHICH WILL INCLUDE A SERIES OF VIDEOS TO HELP ARTICULATE THE SEASIDE STORY, DIFFERENCE, PROMISE, APPROACH AND PEOPLE. AN EARLY 2013 LAUNCH DATE IS PLANNED DEVELOPED A ROBUST SET OF MOBILE BANKING APPLICATIONS WITH A MID-2013 LAUNCH DATE PLANNED EXPANDED OUR TREASURY MANAGEMENT CAPABILITIES IMPLEMENTED A YEAR-LONG SERIES OF WEEKLY INTERNAL COMMUNICATIONS EMPHASIZING VARIOUS COMPONENTS OF OUR CULTURE IMPLEMENTED COMPANY-WIDE TRAINING INITIATIVES IN AN EFFORT TO STRENGTHEN OUR VALUE PROPOSITION OF SUPERIOR CLIENT SERVICE, WHILE CONTINUALLY FOCUSING ON OPERATIONAL SAFETY AND SOUNDNESS EXITED ALL REGULATOR RESTRAINTS OR AGREEMENTS PURSUED ADDITIONAL CORPORATE EXPANSION AND ACQUISITION OPPORTUNITIES EXITED THE CAPITAL PURCHASE PROGRAM (TARP) FUNDING PROGRAM FIRST YEAR OF PROFITABILITY Seaside Client Promise We will get to know you, your family and your business. After we understand your needs, goals and aspirations, we will recommend product-neutral, needs-based solutions.

4 { W H A T W E B E L I E V E } WE BELIEVE THAT INVESTORS ARE ENTITLED TO OBJECTIVE ADVICE. For us this means that we do not engage in the sale of proprietary investment products. It is simply not possible to maintain objectivity while selling one s own funds. Furthermore, there is no shortage of investment product available to objective advisors. There are presently 27,800 mutual funds, 7,800 separate account managers and more than 5,000 hedge funds offered in the United States. An advisor should be able find performance in this field of choice without sacrificing objectivity. We also believe that objectivity requires full freedom to select, hire and fire managers without any economic influence in the exercise of that choice. That is why we do not accept finders fees, marketing fees, revenue sharing or any sort of compensation based on the selection of one manager over another. In fact, we have a single source of revenue in the delivery of investment advice: the explicit fee paid by our clients. If you want to know where loyalties lie in the investment business, it is usually sufficient to follow the money. At Seaside, that trail always leads back to the client. WE BELIEVE THAT INVESTMENT ADVICE should be based on a thorough understanding of the client s needs, obligations and willingness to assume risk, not an abstract theory or pre-determined formula. At social events, I am frequently asked What would you do with $100,000 right now? I typically answer, I don t know. While this never fails to disappoint, my reason is that unless you tell me what it is you want your money to accomplish in the context of your life, I cannot intelligently suggest even the most rudimentary investment strategy. WE BELIEVE THAT PRESERVATION OF CAPITAL IS AN IMPORTANT CONSIDERATION in any investment strategy, and therefore real, absolute returns are as important as comparisons to market indices. WE BELIEVE THAT THE ARGUMENT BETWEEN PASSIVE (INDEXING) AND ACTIVE INVESTMENT MANAGEMENT can be resolved in favor of both, because both strategies can be advantageous to the client. Indexing affords broad diversification within a market at the lowest cost; active management is most effective at defending asset values in a declining market. WE BELIEVE THAT OUR OBLIGATION TO MANAGE MONEY EXTENDS TO THE MANAGEMENT OF FEES. If we find two managers with similar performance records and one is notably less expensive than the other, we will use the less expensive manager. WE BELIEVE THAT THE FIDUCIARY STANDARD IS THE HIGHEST STANDARD OF OUR INDUSTRY. We embrace that standard and are proud to apply it to all of our actions in the areas of trust and investment management. Serving as trustee requires a deep understanding of fiduciary principals, governing documents and the intentions that motivated the creation of the trust. This is not a service that can be delivered remotely or without the involvement of experienced professionals. While others may try to avoid this high standard or commoditize its delivery, we embrace it. We take pride in delivering trust services at the highest level of professionalism and personal involvement. Most of all, WE BELIEVE THAT OUR CLIENTS ARE THE REASON WE ARE HERE, and we are grateful for the opportunity to serve them with the best advice we can deliver. Philip Rich Chief Market Strategist Philip Rich 3

5 { R E s I d E n T I A L L E n d I n g } Over the past year, Seaside has rounded out its team of residential lending professionals who represent the best in the business not only in sales, but also from an operations and compliance perspective. On average, Seaside s Residential Lending Advisors have more than 25 years of industry experience and have been selected for their high-touch service and ability to advise clients on every aspect of the loan process. Our Residential Lending Advisors offer custom solutions for clients looking to build, buy or refinance a residential property. The quality of our Residential Lending team is reflective in their production. Average loan production in 2012 was $6.5 million per month All of seaside s Residential Lending Advisors finished the year ahead of plan net contribution from the Residential Lending group exceeded $1,100,000 noninterest income from Residential Lending activities increased from $641,000 in 2011 to $953,000 in 2012 In January 2012, Seaside launched an online residential lending application. This new and efficient technology is now coupled with our high-touch service in order to enhance our client experience. Seaside s Residential Lending group continues to receive excellent ratings on client surveys, both for the overall process and people, as well as for the online experience. Here are a few examples of what our clients say about their residential lending experience at Seaside: We really appreciate both the quality of people we have worked with at Seaside and quality of service for all the Bank s services we have used. Seaside provides our best banking experience of any bank with whom we have worked. Our banker was wonderfully patient and a knowledgeable asset throughout the entire process! I would definitely recommend Seaside to anyone looking for a high service level banking relationship. Seaside has earned a customer for life! Thanks again guys! We had a great experience from start to finish. The whole team of folks we worked with were exceptional. Great rates and outstanding service! Awesome!! 4

6 { W E A L T H M A n A g E M E n T } Seaside Wealth Management offers a wide array of services that allows us to tailor solutions to each of our clients diverse needs. This includes a brokerage capability through our affiliation with International Assets Advisory, through which we also offer variable annuities. In addition, Seaside Insurance offers life insurance and long-term care policies. We provide services for 401(k) plan sponsors, including investment advisory services, and through affiliates all the record-keeping, third-party accounting and other services needed to operate a retirement plan. But the core of the wealth management services we offer is made up of discretionary asset management and trust services. In both areas, we have developed our business model so that we can act exclusively in our clients best interests. In our role managing assets for clients, our sole source of income is explicitly disclosed fees paid by our clients. This allows us to provide objective advice something that s impossible for advisors to do if they have a vested interest in one product line over another. That s a distinction that sets us apart from others, who typically offer their own proprietary mutual funds or have in-house portfolio managers. Even when we use mutual funds that have a revenue-sharing arrangement, such as a 12b-1 fee (a fee for marketing and distribution of fund shares) that is automatically rebated to us, we do not keep the money. We put it back in your account. This open architecture approach to investing gives us the freedom to choose independent investment managers based solely on their performance and an alignment to your objectives. We also offer a full range of trust services where we can serve as corporate trustee or co-trustee on family trusts and guardianship accounts. We established trust powers when our charter was granted and have embraced our fiduciary calling. Being a fiduciary means acting on our clients behalf under circumstances that require total trust, good faith and honesty. We are held to a high standard of conduct in which we act solely in our clients best interests. In working with clients to transfer and manage wealth between generations, we believe that face-to-face meetings are the best way to ensure that our clients objectives are met. At Seaside, we work closely with our clients and their accountants, attorneys and other advisors to devise and implement strategies to help clients realize their objectives. Having the flexibility to offer any service our wealth management clients might need and the discipline to always act in the clients best interest are two key ways Seaside Wealth Management stands above the rest. W E A LT H M A N AG E M E N T R E S U LT S seaside s Wealth Management team continues to produce solid year-over-year gains in Assets Under Management (AUM) In six years of operation we have grown to over $272 million of AUM In 2012, we posted a 30 percent growth of AUM Our annual revenues are consistently growing and we ended 2012 with $1,032,000 of total Wealth Management revenue or a 20 percent increase year over year Retirement Plan Investment Advisory services now manages more than $20,000,000 in retirement plan assets or a 33 percent increase year over year. NOT FDIC insured or a deposit NOT guaranteed by Seaside National Bank & Trust or any federal government agency Subject to investment risk and may do down in value 5

7 { O U T s T A n d I n g C R E d I T Q U A L I T Y } Florida Average 6 Leverage Ratio % 9.43% 9.69% 9.39% 9.20% Texas Ratio 2 6% 5% 5% 8% 43% NPA/Assets %.62%.66%.95% 4.82% Bauer Rating BankRate Rating Seaside s credit quality remains very strong. In fact, our credit quality is among the best in the state with nonperforming assets, as a percentage of total assets, less than 1 percent and our Texas ratio ended the year at 6percent. Our capital ratios also remain strong, with a tier 1 leverage ratio of 9.30 percent. The combination of our capital strength, excellent credit quality and earnings has caused external rating agencies to continue to elevate our company in the excellent category status. Our outstanding ratings differentiate us from the vast majority of Florida based financial institutions. 1 Leverage Ratio: a leverage ratio is the measurement of a bank s capital base, which is a measure of capital to assets. Per current banking regulations, a bank is considered to be well capitalized with a leverage ratio above 5 percent. 2 Texas Ratio: the Texas ratio takes the amount of a bank's non-performing assets and loans, as well as loans delinquent for more than 90 days, and divides this number by the firm's tangible capital equity plus its loan loss reserve. A ratio of more than 100 percent (or 1:1) is considered a warning sign. The lower the ratio the better. Seaside s Texas Ratio is strong and significantly better than the state average. 3 Non-Performing Assets (NPA): the lower the NPA ratio, the better. Seaside maintains a very strong NPA ratio. 6 4 Bauer Rating: Bauer is an independent bank and credit union rating company. It gathers its financial data from financial reports submitted to federal regulators. After Bauer s analysis, a star-rating is assigned based on a scale of zero to five stars with five stars being the strongest. (0=lowest rating, 1=troubled, 2=problematic, 3=good, 4=excellent, 5=superior) 5 Florida Average: SNL database information

8 { O P E R A T I O n s } Throughout 2012, the Operations area was constantly evaluating our processes and products for ways to reduce costs, increase efficiencies and maintain a safe and sound financial institution. After a thorough evaluation of the types and quantity of daily reports that were being printed, the Operations Group found a way to significantly reduce the number of reports printed and has moved almost all daily reports to electronic files. These changes have led to a tremendous cost savings and further enhanced our green initiatives. In addition to the cost efficiencies, the operations group also introduced a new product to all clients called Trusteer Rapport. This is a free online fraud protection software from Trusteer that delivers extra security while our clients are signed into their Online Banking account. This extra protection is outstanding for our clients and for Seaside. The Operations department experienced a change in leadership in After five years at Seaside, Jim Hindman decided to retire. Jim was among the first 13 professionals hired and worked countless hours helping to shape Seaside s culture to expand the bank from an idea to a leading Florida-based financial institution. We will always be grateful to Jim for all the knowledge and operational expertise he brought to Seaside. We are pleased to report that Gary Young was promoted from within the Seaside family and now fills this critical role for Seaside. G A R Y Y O U N G As Seaside s Chief Operations Officer, Gary is responsible for the Bank s core operations by directing and coordinating activities consistent with established goals, objectives and sound operating philosophies. Gary and his team implement programs to ensure attainment of our business plan for growth, operating soundness and ability to meet our strategic goals. He also provides direction and structure for all of Seaside s operation units. Prior to joining Seaside five years ago, Gary worked at Healthcare Services Group, Inc., out of Bensalem, Pa., as the Senior Regional Operations Manager. In this position, he was responsible for more than 100 contracted service operations in an eight state region. While at Healthcare Service Group, he found ways to save the company substantial money while increasing sales and improving profit margins. Prior to working at Healthcare Service Group Inc. he held other consulting and cost management leadership positions within the hotel, resort and service industries. Gary Young Chief Operations Officer Gary is a graduate of Stockton State College in Pomona, New Jersey. In addition, he has completed a number of professional development programs at Cornell University. In addition to Gary, Bridget Lemelle-Phillips joined our Operations Group as the Bank Secrecy Act (BSA) and Compliance Officer. B R I D G E T L E M E L L E - P H I L L I P S, J. D. Bridget Lemelle-Phillips joined Seaside as the Bank Secrecy Act (BSA) and Compliance Officer. She has more than 12 years of legal, consulting and regulatory experience. In her current role, she is responsible for formulating and maintaining a compliance program designed to ensure that Seaside achieves optimum compliance with federal and state laws and regulations and sees that reporting requirements are consistently met. Prior to Seaside, Bridget worked at both Sheshunoff and RSM McGladrey, Inc., two of the most prestigious and well-known financial compliance consulting companies in the country. At Sheshunoff and McGladrey, she developed and monitored the compliance functions and programs covering applicable federal regulatory statues and conducted onsite reviews of regulatory compliance programs, along with a number of other responsibilities. Prior to her consulting roles, Bridget worked as a lawyer in both a private practice and in the State Attorney s Office, Florida First Judicial District. Bridget LeMelle-Phillips BSA and Compliance Officer She is a graduate from Grambling State University in Grambling, La. with a Bachelor of Science in Accounting. She obtained her Juris Doctor from Southern University Law Center in Baton Rouge. She is a member of both the Louisiana (inactive) and Florida State Bar Associations. Both Gary and Bridget are based in Seaside s downtown Orlando executive office. 7

9 { H U M A n C A P I T A L } T A L E N T E X PA N S I O N I N N O R T H F L O R I D A Seaside made two key hires in the North Florida market this past year with the addition of a Regional President, Don Roberts and our North Florida Advisory Board Chair, Beth McCague. D O N R O B E R T S Don joins Seaside with more than 40 years of experience in the banking and financial services industries. He has worked for more than 20 years in the Jacksonville market and has held several top executive management roles at financial institutions within the North Florida market, including a long career at Barnett Bank. In his current role, Don leads Seaside s North Florida banking team. This includes all aspects of extensions of credit, deposit management, financial and estate planning, investments and risk management. In addition, he will be responsible for implementing Seaside s strategic vision within the North Florida market. Don is a graduate of the University of Texas at Austin with a Bachelor of Business Administration in International Business. He also gradated from the Southwestern Graduate School of Banking in Dallas, Tx. Don Roberts North Florida Regional President Don is very involved in the Jacksonville community, having served on many boards, including the YMCA of Florida s First Coast, Rotary Club of Jacksonville, United Ways, Chamber of Commerce and the Arts Council of Jacksonville B E T H M C C AG U E Beth is a 37 year financial services veteran, who worked at First Union/Wachovia Bank (now Wells Fargo) for more than 32 years. She held numerous executive management positions of increased responsibility including EVP/Director of Service Excellence for Wachovia Corp., and most recently as the EVP/Managing Director of Wachovia Wealth Management in the North Florida market. Beth is also active in the Jacksonville community and throughout the State of Florida. She currently serves on the Board of Directors of Shands Hospital, Jacksonville. In addition, she has served in community leadership roles as the past chair of Daniel Memorial, Florida s oldest social service agency serving disadvantaged children. She served as one of six members of the State of Florida Board of Administration Investment Advisory Council and was the co-chair of a recently completed University of Florida Capital Campaign that raised $1.5 billion over a six year period. Beth is the Chair of the North Florida Regional Board of Directors. Beth, Don and the rest of the North Florida team are actively working to recruit a top-notch group of local executives to serve on the inaugural North Florida Regional Board. Beth McCague North Florida Regional Board of Directors, Chair 8

10 { M A R k E T I n g } As a means of further re-energizing Seaside s brand, we have been working on the following four marketing initiatives: S E A S I D E B A N K. C O M W E B S I T E We are designing an entirely new website for Seaside. Seaside s corporate culture, facilities, advisory model and client promise position us very uniquely in the financial services industry. In order to create a strong brand personality, our new website will feature emotional and coastal imagery, look distinctly different from our competitors sites and focus on relationship banking, especially the critical role of our dedicated Client Advisors. Here is a sneak peek of the new design. We are working toward an early 2013 launch date. C L I E N T L I B R A R Y As part of our new website, we are developing a section called the Client Library. This will be a password protected area of the website for clients only and will feature useful industry articles, timely news and our newly created blog posts. We will update the content on a regular basis and inform all clients when fresh content has been posted. W E B V I D E O S Online videos have recently proven to be an important marketing tool. Videos are a key component for storytelling and are a great way to educate our clients while strengthening our brand. The current statistics on online video support our decision to add videos to our website. Video will account for 80 percent of internet traffic by 2015 Websites with video capture audiences 5 times longer than those without Websites with video are 53 times more likely to have a front-page google result YouTube is the #2 search engine, with 200 million views daily Our website will host videos on the following topics: our story, services, difference, promise, approach and people. Each video will be approximately 30 seconds in length. S E A R C H E N G I N E O P T I M I Z AT I O N Seaside has begun the process of a Search Engine Optimization (SEO) for our website. Our goal is to rank higher in searches, increase the number of monthly visitors, have our visitors view more pages per session and stay on our site longer. 9

11 2012 financial growth statement stuffer

12 { FInAnCIALs 2012 } E A R N I N G S G R OW T H $2,000 Our earnings have been trending upward over the past three years and 2012 marked our first annual profit. Net earnings were $1.4 million or $.07/per share. Total revenue (net interest income plus noninterest income) increased $4.9 million or 21 percent year over year. We anticipate continuing to increase core earnings while investing and expanding our current infrastructure as we execute our strategic plan to add scale to our balance sheet. While our expansion will slightly impact short-term earnings, it will strongly improve long-term earnings, which is our primary goal in creating value to our shareholders , ,000-6,000 $600,000 LO A N G R OW T H We have continued lending in the markets we serve. Our loan portfolio increased $76 million or 15 percent during 2012, while nationwide and statewide figures showed peer bank loan portfolios declined. Our loan portfolio is nearly $600 million, with approximately 60 percent comprised of commercial and industrial (C&I) loans. Our percentage of C&I loans ranks us near the top nationwide for business lending. 500, , ,000 $500,000 N O N - T I M E D E P OS I T G R OW T H 400, , ,000 We have been able to fund our loan growth with core deposit growth. During 2012, we increased non-interest bearing DDA, NOW and money-market accounts over $85 million or 23 percent. Noninterest bearing DDA accounts comprise 16 percent of total deposits. This has helped reduce our overall cost of deposits from 0.87 percent in 2011 to 0.61 percent at December 31, $300,000 A S S E T S U N D E R M A N AG E M E N T 250, , , ,000 As noted earlier in this annual report, our assets under management increased 30 percent to $272 million in Wealth Management revenue increased $169,000 or 20 percent to more than $1 million in We are proud to be one of Florida s leading banks with trust powers to offer wealth management services to our clients , % 5% N O N - P E R F O R M I N G A S S E T S ( N PA S ) 4% 3% 2% 1% 0% Florida Banks All Commercial Banks Seaside Seaside s NPAs as a percentage of total assets declined to 0.69 percent at December 31, This compares very favorably to the state average of 4.82 percent. Net loan charge-offs during 2012 were approximately 0.25 percent of total loans. These ratios along with our Texas Ratio of less than 6 percent are proof of our strong credit culture and underwriting discipline. 11

13 C O N S O L I D A T E D B A L A N C E S H E E T S THREE SHORES BANCORPORATION, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (in thousands) At december 31, A S S E T S Cash and due from banks $ 27,218 30,828 46,934 Federal funds sold Total cash and cash equivalents $ 27,657 30,994 47,350 Securities available for sale 159, , ,030 Loans held for sale 984 3,026 2,849 Loans, gross 598, , ,900 Allowance for loan losses (7,492) (6,644) (9,988) Accrued interest receivable 2,232 2,285 2,209 Premises and equipment, net 4,235 5,177 6,331 Restricted securities 4,190 5,187 4,994 Deferred income taxes 15,466 16,190 17,475 Other assets 8,646 4,756 3,941 Total assets $ 814, , ,091 L I A B I L I T I E S Noninterest-bearing demand deposits $ 114,154 75,722 71,250 NOW deposits 57,762 62,001 45,832 Money-market and savings deposits 283, , ,599 Time deposits 247, , ,964 Total deposits $ 702, , ,645 Other borrowings 10,719 35,131 39,946 Accrued interest payable ,381 Official checks 1,673 2,398 1,192 Other liabilities 8,380 8,778 8,497 Total liabilities $ 723, , ,661 S T O C K H O L D E R S E Q U I T Y Preferred stock $ 56,307 56,250 48,193 Common stock and additional paid-in capital 62,014 60,663 60,700 Accumulated deficit (28,765) (29,770) (28,174) Accumulated other comprehensive income (loss) (2,289) Total stockholders equity $ 90,258 88,014 78,430 Total liabilities & stockholders equity $814, , ,

14 C O N S O L I D A T E D S T A T E M E N T S O F O P E R A T I O N S THREE SHORES BANCORPORATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS) Year ended december 31, I N C O M E INTEREST INCOME: Loans $ 25,899 24,172 23,186 Securities 3,854 4,251 7,417 Other Total interest income $ 29,982 28,636 30,846 INTEREST ExPENSE: Deposits 4,941 6,331 9,938 Borrowings 317 1,615 1,621 Total interest expense $ 5,258 7,946 11,559 Net interest income 24,724 20,690 19,287 Provision for loan losses 2,426 2,666 6,024 Net interest income after provision for loan losses $ 22,298 18,024 13,263 NONINTEREST INCOME: Wealth management income 1, Service charges on deposit accounts Gain on sales of loans held for sale Other 1, Total noninterest income $3,919 3,045 2,963 NONINTEREST ExPENSES: Salaries and employee benefits 14,736 13,003 14,263 Occupancy and equipment 4,275 4,507 4,648 FDIC insurance premiums 780 1,111 1,434 Data processing 1,255 1,072 1,240 Professional fees Advertising Other general and administrative 2,326 2,676 2,452 Total noninterest expenses $ 23,935 22,920 25,331 Earnings (loss) before income taxes (benefit) 2,282 (1,851) (9,105) Income taxes (benefit) 911 (621) (3,335) Net earnings (loss) $1,371 (1,230) (5,770) 1 3

15 seaside national bank & trust { B O A R d O F d I R E C T O R s } { C E n T R A L F L O R I d A B O A R d } { s E n I O R L E A d E R s H I P } 1 4

16 Thomas Yochum 1,7 * Chairman of the Board, Seaside National Bank & Trust 2 Charles Chas Bailes III 1,3,6 * Chairman & CEO, ABC Fine Wine & Spirits 3 Steven Barnett 2,5 Principal, Dunmore Management 4 John Cochran 4,5,7 * Principal, Lovell Minnick Partners LLC 5 Glen Davis 3,4,6 President & CEO, Schuff Steel-Atlantic, Inc. 6 Anil Deshpande 2.4 Co-Founder, Park Square Homes 7 Michael Fess 5,6 Founder & Owner, Equity Partners, Inc. 8 Brian Golson 1,2,7 * Managing Partner, Parthenon Capital Partners San Francisco Office 9 Gideon Haymaker 1,7 * President & CEO, Seaside National Bank & Trust 10 Thomas O Shane 1,3,5 * Retired Banker 11 Ed Timberlake 3,4 Chairman, Seaside National Bank & Trust Central Florida Board of Directors 12 Charles Valentine 2 Retired Banker 13 Rick Walsh 3,5,6 * President, KnobHill Group Darrell Kelley Business Consultant 2 Rita Lowndes Community Volunteer 3 Alex Martins CEO, Orlando Magic 4 Tim Myers President, Seaside National Bank & Trust Central Florida & Tampa Bay 5 Ed Timberlake Chairman, Seaside National Bank & Trust Central Florida Board of Directors Gideon Haymaker President & CEO 2 Jane Ashley Director of Residential Lending 3 Nancy Elberg Director of Human Capital 4 Tom Grant Chief Credit Officer 5 Barry Griffiths Chief Financial Officer 6 Lea Anne Groover Chief Fiduciary Officer 7 Chuck Hicks South Florida President 8 Lara Lee Chief Marketing Officer 9 Tim Myers Central Florida & Tampa Bay President 10 Philip Rich Chief Market Strategist 11 Don Roberts President, North Florida 12 Stuart Scott Director of Wealth Management 13 Gary Young Chief Operations Officer BOARD COMMITTEES: 1 Asset/Liability Management: Thomas J. O Shane, Chair 2 Audit, Compliance & CRA: Charles Valentine, Chair 3 Credit Policy: Ed Timberlake, Chair 4 Fiduciary: Glen Davis, Chair 5 Compensation: Steven Barnett, Chair 6 Corporate Responsibility: Rick Walsh, Chair 7 Executive Committee: Thomas Yochum, Chair * THREE SHORES BOARD OF DIRECTORS: Thomas Yochum, Chair Gideon Haymaker Charles Chas Bailes III Thomas O Shane John Cochran Rick Walsh Brian Golson 1 5