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As filed with the Securities and Exchange Commission on July 18, 2017

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

SEACOAST BANKING CORPORATION OF FLORIDA

(Exact name of registrant as specified in its charter)

 

 

 

Florida		6022		59-2260678
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

815 Colorado Avenue

Stuart, Florida 34994

(772) 287-4000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Dennis S. Hudson, III

Chief Executive Officer

Seacoast Banking Corporation of Florida

815 Colorado Avenue

Stuart, Florida 34994

(772) 287-4000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Randolph A. Moore III Alston & Bird LLP One Atlantic Center 1201 W. Peachtree Street Atlanta, Georgia 30309 Telephone: (404) 881-7000		Scott Jacobsen NorthStar Banking Corporation 400 North Ashley Drive, Suite 1400 Tampa, Florida 33602 Telephone: (813) 549-5000		John N. Giordano Bush Ross, P.A. 1801 North Highland Avenue Tampa, Florida 33602 Telephone: (813) 224-9255

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the proposed merger described herein have been satisfied or waived.

If the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emergency growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☒
Non-accelerated filer		☐  (Do not check if a smaller reporting company)		Smaller reporting company		☐
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 14e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of Securities to be Registered		Amount to Be Registered		Proposed Maximum Offering Price Per Unit		Proposed Maximum Aggregate Offering Price (2)		Amount of Registration Fee (2)
Common Stock $0.10 par value		1,212,839 (1)		Not applicable		$19,819,154.93		$2,297.04

 

(1)	The maximum number of full shares issuable upon consummation of the transaction described herein. Pursuant to Rule 416, this registration statement also covers additional shares that may be issued as a result of stock splits, stock dividends or similar transactions.

(2)

Computed in accordance with Rule 457(f)(2) solely for the purpose of calculating the registration fee and based upon $25,012,397.33 (the book value as of June 30, 2017 of the 2,163,851 shares of NorthStar Banking Corporation common stock to be acquired, which includes the total number of shares of NorthStar Banking Corporation common stock outstanding or issuable pursuant to options), minus $5,193,242.40 (the estimated amount of cash to be paid to NSBC’s shareholders in the merger).

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

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The information in this preliminary proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED JULY 18, 2017

PROXY STATEMENT/PROSPECTUS

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

 

 

To the Shareholders of NorthStar Banking Corporation:

On May 18, 2017, Seacoast Banking Corporation of Florida, or Seacoast, Seacoast National Bank, or SNB, NorthStar Banking Corporation, or NSBC, and NorthStar Bank entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) that provides for the combination of our two banks. Under the merger agreement, NSBC will merge with and into Seacoast, with Seacoast as the surviving corporation (which we refer to as the “merger”). Immediately following the merger, NorthStar Bank will merge with and into SNB, with SNB as the surviving bank (which we refer to as the “bank merger”). The acquisition will expand Seacoast’s presence in the attractive Tampa market and strengthen its position in the state.

In the merger, each share of NSBC common stock (except for specified shares of NSBC common stock held by NSBC, Seacoast or SNB and any dissenting shares) will be converted into the right to receive: (i) 0.5605 of a share of Seacoast common stock (the “per share stock consideration”); and (ii) $2.40 per share of NSBC common stock in cash (the “per share cash consideration,” and collectively with the per share stock consideration, the “merger consideration”). In the event that NSBC’s consolidated tangible shareholders’ equity is less than NSBC’s target consolidated tangible shareholders’ equity (defined in the merger agreement as $22.25 million, less any permitted expenses including (i) those incurred in connection with the merger and the bank merger and (ii) the fee payable to NSBC’s financial advisor), then Seacoast shall have the option to adjust the merger consideration downward by an amount that equals the difference between NSBC’s target consolidated tangible shareholders’ equity and NSBC’s consolidated tangible shareholders’ equity.

The market value of the per share stock consideration will fluctuate with the market price of Seacoast common stock and other factors and will not be known at the time NSBC shareholders vote on the merger agreement. Based on the closing price of Seacoast’s common stock on the NASDAQ Global Select Market on             , 2017, the last practicable date before the date of this document, the value of the per share merger consideration payable to holders of NSBC common stock was approximately $            . We urge you to obtain current market quotations for Seacoast (trading symbol “SBCF”) because the value of the per share stock consideration will fluctuate.

Based on the current number of shares of NSBC common stock outstanding, Seacoast expects to issue up to approximately              million shares of common stock and pay $              in cash to NSBC shareholders in the aggregate upon completion of the merger. Upon completion of the merger, current NSBC shareholders will own approximately 2.3% of the common stock of Seacoast immediately following the merger. However, any increase or decrease in the number of shares of NSBC common stock outstanding that occurs for any reason prior to the completion of the merger will cause the actual number of shares issued upon completion of the merger to change.

NSBC will hold a special meeting of its shareholders in connection with the merger. Holders of NSBC common stock will be asked to vote to approve the merger agreement and related matters as described in this proxy statement/prospectus. NSBC shareholders will also be asked to approve the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger agreement and related matters, as described in this proxy statement/prospectus.

The special meeting of NSBC shareholders will be held on             , 2017 at             ,             , Tampa, Florida, at      local time.

NSBC’s board of directors has determined and declared that the merger agreement, the merger and the transactions contemplated by the merger agreement, are advisable and in the best interests of NSBC and its shareholders, has unanimously authorized, adopted and approved the merger agreement, the merger and the transactions contemplated by the merger agreement and recommends that NSBC shareholders vote “FOR” the proposal to approve the merger agreement and “FOR” the proposal to adjourn the NSBC special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the merger agreement.

This document, which serves as a proxy statement for the special meeting of NSBC shareholders and as a prospectus for the shares of Seacoast common stock to be issued in the merger to NSBC shareholders, describes the special meeting of NSBC, the merger, the documents related to the merger and other related matters. Please carefully read this entire proxy statement/prospectus, including “Risk Factors,” beginning on page 16, for a discussion of the risks relating to the proposed merger. You also can obtain information about Seacoast from documents that Seacoast has filed with the Securities and Exchange Commission.

If you have any questions concerning the merger, NSBC shareholders should contact Scott Jacobsen, President and Chief Executive Officer, Rivergate Tower, 400 North Ashley Drive, Suite 1400, Tampa, Florida 33602 at (813) 549-5000. We look forward to seeing you at the meeting.

 

Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, nor any state securities commission or any other bank regulatory agency has approved or disapproved the merger, the issuance of the Seacoast common stock to be issued in the merger or the other transactions described in this document or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either Seacoast or NSBC, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this proxy statement/prospectus is                     , 2017, and it is first being mailed or otherwise delivered to the shareholders of NSBC on or about                     , 2017.

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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON                     , 2017

To the Shareholders of NorthStar Banking Corporation:

NorthStar Banking Corporation (“NSBC”) will hold a special meeting of shareholders at      local time,     on                     , 2017, at                     , Tampa, Florida             , for the following purposes:

 

•

for holders of NSBC common stock to consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of May 18, 2017, by and among Seacoast Banking Corporation of Florida, Seacoast National Bank, NSBC and NorthStar Bank, pursuant to which NSBC will merge with and into Seacoast Banking Corporation of Florida, as more fully described in the attached proxy statement/prospectus; and

 

•

for holders of NSBC common stock to consider and vote upon a proposal to adjourn the NSBC special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the merger agreement.

We have fixed the close of business on                     , 2017 as the record date for the NSBC special meeting. Only holders of record of NSBC common stock at that time are entitled to notice of, and to vote at, the NSBC special meeting, or any adjournment or postponement of the NSBC special meeting. In order for the merger agreement to be approved, at least a majority of the outstanding shares of NSBC common stock must be voted in favor of the proposal to approve the merger agreement. The special meeting may be adjourned from time to time upon approval of holders of NSBC common stock without notice other than by announcement at the meeting of the adjournment thereof, and any and all business for which notices hereby given may be transacted at such adjourned meeting.

NSBC shareholders have appraisal rights under Florida state law entitling them to obtain payment in cash for the fair value of their shares, provided they comply with each of the requirements under Florida law, including not voting in favor of the merger agreement and providing notice to NSBC. For more information regarding appraisal rights, please see “The Merger — Appraisal Rights for NSBC Shareholders” beginning on page .

Your vote is very important. We cannot complete the merger unless NSBC’s shareholders approve the merger agreement.

Regardless of whether you plan to attend the NSBC special meeting, please vote as soon as possible. If you hold stock in your name as a shareholder of record, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope as described on the proxy card. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

The enclosed proxy statement/prospectus provides a detailed description of the special meeting, the merger, the documents related to the merger, including the merger agreement, and other related matters. We urge you to read the proxy statement/prospectus, including any documents incorporated in the proxy statement/prospectus by reference, and its appendices carefully and in their entirety. If you have any questions concerning the merger or

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the proxy statement/prospectus, would like additional copies of the proxy statement/prospectus or need help voting your shares of NSBC common stock, please contact Scott Jacobsen, President and Chief Executive Officer, at (813) 549-5000.

NSBC’s board of directors has determined and declared that the merger agreement, the merger and the transactions contemplated by the merger agreement, are advisable and in the best interests of NSBC and its shareholders, has unanimously authorized, adopted and approved the merger agreement, the merger and the transactions contemplated by the merger agreement and recommends that NSBC shareholders vote “FOR” the proposal to approve the merger agreement and “FOR” the proposal to adjourn the NSBC special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the merger agreement.

 

Tampa, Florida

                    , 2017

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WHERE YOU CAN FIND MORE INFORMATION

Seacoast Banking Corporation of Florida

Seacoast files annual, quarterly, current and special reports, proxy statements and other business and financial information with the Securities and Exchange Commission (the “SEC”). You may read and copy any materials that Seacoast files with the SEC at its Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. Please call the SEC at (800) SEC-0330 ((800) 732-0330) for further information on the public reference room. In addition, Seacoast files reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at http://www.sec.gov containing this information. You will also be able to obtain these documents, free of charge, from Seacoast by accessing Seacoast’s website at www.seacoastbanking.com. Copies can also be obtained, free of charge, by directing a written request to:

Seacoast Banking Corporation of Florida

815 Colorado Avenue

P.O. Box 9012

Stuart, Florida 34994

Attn: Investor Relations

Telephone: (772) 288-6085

Seacoast has filed a Registration Statement on Form S-4 to register with the SEC up to 1,212,839 shares of Seacoast common stock to be issued pursuant to the merger. This proxy statement/prospectus is a part of that Registration Statement on Form S-4. As permitted by SEC rules, this proxy statement/prospectus does not contain all of the information included in the Registration Statement on Form S-4 or in the exhibits or schedules to the Registration Statement on Form S-4. You may read and copy the Registration Statement on Form S-4, including any amendments, schedules and exhibits, at the SEC’s public reference room at the address set forth above. The Registration Statement on Form S-4, including any amendments, schedules and exhibits, is also available, free of charge, by accessing the websites of the SEC and Seacoast or upon written request to Seacoast at the address set forth above.

Statements contained in this proxy statement/prospectus as to the contents of any contract or other documents referred to in this proxy statement/prospectus are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the Registration Statement on Form S-4. This proxy statement/prospectus incorporates important business and financial information about Seacoast that is not included in or delivered with this document, including incorporating by reference documents that Seacoast has previously filed with the SEC. These documents contain important information about Seacoast and its financial condition. See “Documents Incorporated by Reference” beginning on page     . These documents are available free of charge upon written request to Seacoast at the address listed above.

To obtain timely delivery of these documents, you must request them no later than                     , 2017 in order to receive them before the NSBC special meeting of shareholders.

Except where the context otherwise specifically indicates, Seacoast supplied all information contained in, or incorporated by reference into, this proxy statement/prospectus relating to Seacoast, and NSBC supplied all information contained in this proxy statement/prospectus relating to NSBC.

NSBC

NSBC does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, and accordingly does not file documents and reports with the SEC.

 

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If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of NSBC common stock, please contact NSBC at:

NorthStar Banking Corporation

Rivergate Tower

400 North Ashley Drive, Suite 1400

Tampa, Florida 33602

Attention: Scott Jacobsen, Chief Executive Officer

Telephone: (813) 549-5000

You should rely only on the information contained in, or incorporated by reference into, this proxy statement/prospectus. No one has been authorized to give any information or make any representation about the merger or Seacoast or NSBC that differs from, or adds to, the information in this proxy statement/prospectus or in documents that are incorporated by reference herein and publicly filed with the SEC. Therefore, if anyone does give you different or additional information, you should not rely on it. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than the date of this proxy statement/prospectus, and you should not assume that any information incorporated by reference into this document is accurate as of any date other than the date of such other document, and neither the mailing of this proxy statement/prospectus to NSBC shareholders nor the issuance of Seacoast common stock in the merger shall create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this proxy statement/prospectus, or the solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer, solicitation of an offer or proxy solicitation in such jurisdiction.

 

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TABLE OF CONTENTS

 

		Page
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING			1
SUMMARY			6
Information Regarding Seacoast, SNB, NSBC and NorthStar Bank			6
Recent Developments			7
Regulatory Approvals			7
The Merger			7
Closing and Effective Time of Merger			7
Merger Consideration			7
Equivalent NSBC Common Stock Per Share Value			8
Procedures for Converting Shares of NSBC Common Stock into Merger Consideration			8
Material U.S. Federal Income Tax Consequences of the Merger			9
Appraisal Rights			9
Opinion of NSBC’s Financial Advisor			9
Recommendation of the NSBC Board of Directors			9
Interests of NSBC Directors and Executive Officers in the Merger			10
Treatment of NSBC Equity Awards			10
Conditions to Completion of the Merger			10
Third Party Proposals			11
Termination			12
Termination Fee			13
NASDAQ Listing			13
NSBC Special Meeting			13
Required Shareholder Votes			14
No Restriction on Resale			14
Market Prices and Dividend Information			14
Comparison of Shareholders’ Rights			15
Risk Factors			15
RISK FACTORS			16
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS			21
SEACOAST SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA			23
MARKET PRICES AND DIVIDEND INFORMATION			24
INFORMATION ABOUT THE NSBC SPECIAL MEETING			26
Time, Date, and Place			26
Matters to be Considered at the Meeting			26
Recommendation of the NSBC Board of Directors			26
Record Date and Quorum			26
Required Vote			27
How to Vote — Shareholders of Record			27
Revocation of Proxies			27
Shares Subject to Support Agreements; Shares Held by Directors and Executive Officers			28
Solicitation of Proxies			28
Attending the Meeting			28
Questions and Additional Information			29
PROPOSAL 1: THE MERGER			30
Background of the Merger			30
NSBC’s Reasons for the Merger and Recommendations of the NSBC Board of Directors			32

 

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		Page
Seacoast’s Reasons for the Merger			34
Opinion of NSBC’s Financial Advisor			35
Material U.S. Federal Income Tax Consequences of the Merger			46
Accounting Treatment			49
Regulatory Approvals			49
Appraisal Rights for NSBC Shareholders			50
Board of Directors and Management of Seacoast Following the Merger			53
Interests of NSBC Directors and Executive Officers in the Merger			53
PROPOSAL 2: ADJOURNMENT OF THE NSBC SPECIAL MEETING			56
THE MERGER AGREEMENT			57
The Merger and the Bank Merger			57
Closing and the Effective Time of the Merger			57
Merger Consideration			57
Treatment of NSBC Equity Awards			59
Exchange Procedures			58
Organizational Documents of Surviving Holding Company and Surviving Bank; Directors and Officers			59
Conduct of Business Pending the Merger			59
Company Shareholder Approval			61
Regulatory Matters			62
NASDAQ Listing			62
Employee Matters			62
Indemnification and Directors’ and Officers’ Insurance			63
Third Party Proposals			63
Approval of 280G Payments			65
Systems Integration; Operating Functions			65
Representations and Warranties			66
Conditions to Completion of the Merger			67
Termination			69
Termination Fee			70
Waiver; Amendment			70
Expenses			70
COMPARISON OF SHAREHOLDERS’ RIGHTS			71
BUSINESS OF NORTHSTAR BANKING CORPORATION AND NORTHSTAR BANK			82
BENEFICIAL OWNERSHIP OF NSBC COMMON STOCK BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF NSBC			85
DESCRIPTION OF SEACOAST CAPITAL STOCK			87
EXPERTS			91
LEGAL MATTERS			91
OTHER MATTERS			91
DOCUMENTS INCORPORATED BY REFERENCE			92
APPENDICES:
Appendix A — Agreement and Plan of Merger			A-1
Appendix B — Opinion of Sandler O’Neill  & Partners, L.P.			B-1
Appendix C — Provisions of Florida Business Corporation Act Relating to Appraisal Rights			C-1

We have not authorized any person to give any information or make any representation about the merger of Seacoast Banking Corporation of Florida or NorthStar Banking Corporation that differs from, or adds to, the information in this proxy statement/prospectus or in documents that are publicly filed with the SEC. Therefore, if anyone does give you different or additional information, you should not rely on it.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following are answers to certain questions that you may have regarding the special meeting and merger. The parties urge you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this document. In this proxy statement/prospectus we refer to Seacoast Banking Corporation of Florida as “Seacoast,” Seacoast National Bank as “SNB” and NorthStar Banking Corporation as “NSBC.”

 

Q:	Why am I receiving this proxy statement/prospectus?

 

A:

Seacoast, SNB, NSBC and NorthStar Bank have entered into an Agreement and Plan of Merger, dated as of May 18, 2017 (which we refer to as the “merger agreement”) pursuant to which NSBC will merge with and into Seacoast, with Seacoast continuing as the surviving company. Immediately following the merger, NorthStar Bank, a wholly owned bank subsidiary of NSBC, will merge with and into Seacoast’s wholly owned bank subsidiary, SNB, with SNB continuing as the surviving bank and using the name “Seacoast National Bank” (the “bank merger”). A copy of the merger agreement is included in this proxy statement/prospectus as Appendix A.

The merger cannot be completed unless, among other things, a majority of the outstanding shares of NSBC common stock vote in favor of the proposal to approve the merger agreement.

In addition, NSBC is soliciting proxies from holders of NSBC common stock with respect to a proposal to adjourn the NSBC special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the merger agreement if there are insufficient votes at the time of such adjournment to approve such proposal.

NSBC will hold a special meeting to obtain these approvals. This proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the special meeting, and you should read it carefully. It is a proxy statement because NSBC’s board of directors is soliciting proxies from its shareholders. It is a prospectus because Seacoast will issue shares of Seacoast common stock to holders of NSBC common stock in connection with the merger. The enclosed materials allow you to have your shares voted by proxy without attending the NSBC meeting. Your vote is important. We encourage you to submit your proxy as soon as possible.

 

Q:	What will I receive in the merger?

 

A:

If the merger is completed, for each share of NSBC common stock that you hold (other than dissenters shares) immediately prior to the effective time of the merger, you will receive: (1) 0.5605 of a share of Seacoast common stock, which we refer to as the exchange ratio (the “per share stock consideration”); and (2) $2.40 in cash (the “per share cash consideration”). The per share cash consideration, together with the per share stock consideration, is referred to as the “merger consideration.” If NSBC’s consolidated tangible shareholders’ equity is less than $22.25 million (less permitted expenses), Seacoast shall have the option to adjust the merger consideration downward by the amount that equals the difference between $22.25 million (less permitted expenses) and NSBC’s consolidated tangible shareholders’ equity.

Seacoast will not issue any fractional shares of Seacoast common stock in the merger. Rather, NSBC shareholders who would otherwise be entitled to a fractional share of Seacoast common stock upon the completion of the merger will instead receive cash (without interest) in an amount equal to such fractional part of a share of Seacoast common stock multiplied by the average closing price per share of Seacoast common stock on the NASDAQ Global Select Market for the five (5) trading day period preceding the closing date, less any applicable withholding taxes.

 

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Q:	Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time the merger is completed?

 

A:

Yes, the value of the merger consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value of Seacoast common stock and certain other adjustments. Any fluctuation in the market price of Seacoast common stock after the date of this proxy statement/prospectus will change the value of the shares of Seacoast common stock that NSBC shareholders will receive.

 

Q:	How does NSBC’s board of directors recommend that I vote at the special meeting?

 

A:	NSBC’s board of directors unanimously recommends that you vote “FOR” the proposal to approve the merger agreement and “FOR” the adjournment proposal.

 

Q:	When and where is the special meeting?

 

A:	The NSBC special meeting will be held at                 , Tampa, Florida, on         , 2017, at              local time.

 

Q:	Who can vote at the special meeting of shareholders?

 

A:	Holders of record of NSBC common stock at the close of business on                 , 2017, which is the date that the NSBC board of directors has fixed as the record date for the special meeting, are entitled to vote at the special meeting.

 

Q:	What do I need to do now?

 

A:

After you have carefully read this proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at the special meeting. You must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. If you hold your shares in your name as a shareholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. If you hold your shares in “street name” through a bank, broker or other nominee, you must direct your bank, broker or other nominee how to vote in accordance with the instructions you have received from your bank, broker or other nominee. “Street name” shareholders who wish to vote in person at the special meeting will need to obtain a proxy form from the institution that holds their shares.

 

Q:	What constitutes a quorum for the special meeting?

 

A:

The presence at the special meeting, in person or by proxy, of holders of a majority of the outstanding shares of NSBC common stock will constitute a quorum for the transaction of business. Abstentions, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:	What is the vote required to approve each proposal?

 

A:

Approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of NSBC common stock entitled to vote on the merger agreement as of the close of business on                 , 2017, the record date for the special meeting. If you (1) fail to submit a proxy or vote in person at the special meeting, (2) mark “ABSTAIN” on your proxy, or (3) fail to instruct your bank, broker, or other nominee how to vote with respect to the proposal to approve the merger agreement, it will have the same effect as a vote “AGAINST” the proposal and no effect on the adjournment proposal. The adjournment proposal will be approved if the votes of NSBC common stock cast in favor of the adjournment proposal exceed the vote cast against the adjournment proposal.

 

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Q:	Why is my vote important?

 

A:

If you do not submit a proxy or vote in person, it may be more difficult for NSBC to obtain the necessary quorum to hold its special meeting. In addition, your failure to submit a proxy or vote in person, or abstention will have the same effect as a vote against approval of the merger agreement. The merger agreement must be approved by the affirmative vote of a majority of the outstanding shares of NSBC common stock entitled to vote on the merger agreement. NSBC’s board of directors unanimously recommends that you vote “FOR” the proposal to approve the merger agreement.

 

Q:	How many votes do I have?

 

A:	You are entitled to one vote for each share of NSBC common stock that you owned as of the close of business on the record date. As of the close of business on the record date,              shares of NSBC common stock were outstanding and entitled to vote at the NSBC special meeting.

 

Q:	Do NSBC directors and executive officers have interests in the merger that are different from, or in addition to, my interests?

 

A:

Yes. In considering the recommendation of the NSBC’s board of directors with respect to the merger agreement, you should be aware that some of NSBC’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of NSBC’s shareholders generally. Interests of certain officers and directors that may be different from or in addition to the interests of NSBC’s shareholders include but are not limited to, the receipt of continued indemnification and insurance coverage under the merger agreement, the acceleration of the vesting of NSBC stock options and the receipt of cash payment in exchange for their cancellation, the payment of change in control payments to certain executives and the entry into employment agreements with Seacoast by certain executives.

 

Q:	If my shares are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote my shares for me?

 

A:

No. Your bank, broker, or other nominee cannot vote your shares without instructions from you. You should instruct your bank, broker, or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting form used by your bank, broker, or other nominee.

 

Q:	What if I abstain from voting or fail to instruct my bank, broker, or other nominee?

 

A:

If you (1) fail to submit a proxy or vote in person at the special meeting, (2) mark “ABSTAIN” on your proxy, or (3) fail to instruct your bank, broker, or other nominee how to vote with respect to the proposal to approve the merger agreement, it will have the same effect as a vote “AGAINST” the proposal. If you fail to submit a proxy or vote in person at the special meeting or mark “ABSTAIN” on your proxy with respect to the adjournment proposal, it will have no effect on such proposal.

 

Q:	Can I attend the special meeting and vote my shares in person?

 

A:

Yes. All NSBC shareholders, including shareholders of record and shareholders who hold their shares through nominees or any other holder of record, are invited to attend the special meeting. Holders of record of NSBC common stock can vote in person at the special meeting. If you are not a shareholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted. NSBC reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without NSBC’s express written consent.

 

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Q:	Can I change my vote?

 

A:

Yes. If you are a holder of record of NSBC common stock, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to NSBC’s corporate secretary or (3) attending the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting. Attendance at the special meeting will not automatically revoke your proxy. A revocation or later-dated proxy received by NSBC’s after the vote will not affect the vote. NSBC’s corporate secretary’s mailing address is: NorthStar Banking Corporation, Rivergate Tower, 400 North Ashley Drive, Suite 1400, Tampa, Florida 33602.

 

Q:	What are the U.S. federal income tax consequences of the merger to holders of NSBC common stock?

 

A:

The merger is expected to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code.” Holders of NSBC common stock are not expected to recognize any gain or loss for U.S. federal income tax purposes on the shares of Seacoast common stock they receive in the merger. However, holders of NSBC common stock generally will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess of the sum of the amount of cash and the fair market value of the Seacoast common stock received pursuant to the merger agreement over your adjusted tax basis in the shares of NSBC common stock surrendered) and (2) the amount of cash received pursuant to the merger (excluding any cash received in lieu of a fractional share). Holders of NSBC common stock may also recognize gain or loss on any cash received instead of a fractional share of Seacoast common stock assuming that the cash received is not treated as a dividend.

For further information, see “The Merger — Material U.S. Federal Income Tax Consequences of the Merger.”

The U.S. federal income tax consequences described above may not apply to all holders of NSBC stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your own tax advisor to determine the particular tax consequences of the merger to you.

 

Q:	Are NSBC shareholders entitled to appraisal rights?

 

A:

Yes. If a NSBC shareholder wants to exercise appraisal rights and receive the fair value of shares of NSBC common stock in cash instead of the merger consideration, then you must file a written objection with NSBC prior to the special meeting stating, among other things, that you will exercise your right to dissent if the merger is completed. Also, you may not vote in favor of the merger agreement and must follow other procedures, both before and after the special meeting, as described in Appendix C to this proxy statement/prospectus. Note that if you return a signed proxy card without voting instructions or with instructions to vote “FOR” the merger agreement, then your shares will automatically be voted in favor of the merger agreement and you will lose all appraisal rights available under Florida law. A summary of these provisions can be found under “The Merger — Appraisal Rights for NSBC Shareholders” beginning on page      and detailed information about the special meeting can be found under “Information About the Special Meeting” on page     . Due to the complexity of the procedures for exercising the right to seek appraisal, NSBC shareholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with the applicable Florida law provisions will result in the loss of the right of appraisal.

 

Q:	What should I do if I hold my shares of NSBC stock in book-entry form?

 

A:

You are not required to take any specific actions if your shares of NSBC stock are held in book-entry form. After the completion of the merger, shares of NSBC stock held in book-entry form automatically will be exchanged for the per share stock consideration, including shares of Seacoast common stock in book-entry

 

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form, the per share cash consideration and any cash to be paid in exchange for fractional shares in the merger, as applicable.

 

Q:	If I am a NSBC shareholder, should I send in my stock certificates now?

 

A:

No. Please do not send in your NSBC stock certificates with your proxy. Seacoast’s transfer agent, Continental Stock Transfer and Trust Company, will send you instructions for exchanging NSBC stock certificates for the applicable merger consideration. See “The Merger Agreement — Procedures for Converting Shares of NSBC Common Stock into Merger Consideration” beginning on page of this proxy statement/prospectus.

 

Q:	Whom may I contact if I cannot locate my NSBC stock certificate(s)?

 

A:

If you are unable to locate your original NSBC stock certificate(s), you should contact Felicia Lambdin at (813) 549-5000. Following the merger, any inquiries should be directed to Seacoast’s transfer agent, Continental Stock Transfer and Trust Company at 17 Battery Place, 8th Floor, New York, New York 10004, or at (800) 509-5586.

 

Q:	When do you expect to complete the merger?

 

A:	Seacoast and NSBC expect to complete the merger in the fourth quarter of 2017. However, neither Seacoast nor NSBC can assure you when or if the merger will occur. NSBC must first obtain the approval of NSBC shareholders for the merger and Seacoast must receive the necessary regulatory approvals.

 

Q:	Whom should I call with questions?

 

A:

If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of NSBC common stock, please contact: Scott Jacobsen, Chief Executive Officer, Rivergate Tower, 400 North Ashley Drive, Suite 1400, Tampa, Florida 33602 (813) 549-5000.

 

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RISK FACTORS

An investment in Seacoast common stock in connection with the merger involves risks. Seacoast describes below the material risks and uncertainties that it believes affect its business and an investment in Seacoast common stock. In addition to the other information contained in, or incorporated by reference into, this proxy statement/prospectus, including Seacoast’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and Seacoast’s Quarterly Report on Form 10-Q for the three-months ended March 31, 2017, and the matters addressed under “Forward-Looking Statements,” you should carefully read and consider all of the risks and all other information contained in this proxy statement/prospectus in deciding whether to vote to approve the merger agreement. Additional Risk Factors included in Item 1A in Seacoast’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and Seacoast’s Quarterly Report on Form 10-Q for the three months ended March 31, 2017 are incorporated herein by reference. You should read and consider those Risk Factors in addition to the Risk Factors listed below. If any of the risks described in this proxy statement/prospectus occur, Seacoast’s financial condition, results of operations and cash flows could be materially and adversely affected. If this were to happen, the value of the Seacoast common stock could decline significantly, and you could lose all or part of your investment.

Risks Associated with the Merger

The market price of Seacoast common stock after the merger may be affected by factors different from those currently affecting NSBC or Seacoast.

The businesses of Seacoast and NSBC differ in some respects and, accordingly, the results of operations of the combined company and the market price of Seacoast’s shares of common stock after the merger may be affected by factors different from those currently affecting the independent results of operations of each of Seacoast and NSBC. For a discussion of the business of Seacoast and of certain factors to consider in connection with that business, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Documents Incorporated by Reference.”

Because the sale price of Seacoast common stock will fluctuate, you cannot be sure of the value of the per share stock consideration that you will receive in the merger until the closing.

Under the terms of the merger agreement, each share of NSBC common stock outstanding immediately prior to the effective time of the merger (excluding shares of NSBC common stock owned by NSBC, Seacoast or SNB or the dissenting shares) will be converted into the right to receive 0.5605 shares of Seacoast common stock (plus cash in lieu of fractional shares), which is subject to adjustment based on the value of NSBC’s consolidated tangible shareholder’s equity, and $2.40 in cash. The value of the shares of Seacoast common stock to be issued to NSBC shareholders in the merger will fluctuate between now and the closing date of the merger due to a variety of factors, including general market and economic conditions, changes in the parties’ respective businesses, operations and prospects and regulatory considerations, among other things. Many of these factors are beyond the control of Seacoast and NSBC. We make no assurances as to whether or when the merger will be completed. NSBC shareholders should obtain current sale prices for shares of Seacoast common stock before voting their shares of NSBC common stock at the special meeting.

Shares of Seacoast common stock to be received by holders of NSBC common stock as a result of the merger will have rights different from the shares of NSBC common stock.

Upon completion of the merger, the rights of former NSBC shareholders will be governed by the articles of incorporation, as amended, and bylaws of Seacoast. The rights associated with NSBC common stock are different from the rights associated with Seacoast common stock, although both companies are organized under Florida law. See “Comparison of Shareholders’ Rights” beginning on page      for a discussion of the different rights associated with Seacoast common stock.

 

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NSBC shareholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

NSBC shareholders currently have the right to vote in the election of the board of directors of NSBC and on other matters affecting NSBC. Upon the completion of the merger, NSBC’s shareholders will be shareholders of Seacoast with a percentage ownership of Seacoast that is smaller than such shareholders’ current percentage ownership of NSBC. It is currently expected that the former shareholders of NSBC as a group will receive shares in the merger constituting approximately 2.3% of the outstanding shares of the combined company’s common stock immediately after the merger. Because of this, NSBC shareholders will have less influence on the management and policies of the combined company than they now have on the management and policies of NSBC.

Seacoast and NSBC will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees, customers, suppliers and vendors may have an adverse effect on the business, financial condition and results of operations of NSBC and Seacoast. These uncertainties may impair Seacoast’s or NSBC’s ability to attract, retain and motivate key personnel, depositors and borrowers pending the consummation of the merger, as such personnel, depositors and borrowers may experience uncertainty about their future roles following the consummation of the merger. Additionally, these uncertainties could cause customers (including depositors and borrowers), suppliers, vendors and others who deal with Seacoast or NSBC to seek to change existing business relationships with Seacoast or NSBC or fail to extend an existing relationship. In addition, competitors may target each party’s existing customers by highlighting potential uncertainties and integration difficulties that may result from the merger.

Seacoast and NSBC have a small number of key personnel. The pursuit of the merger and the preparation for the integration may place a burden on each company’s management and internal resources. Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration process could have a material adverse effect on each company’s business, financial condition and results of operations.

In addition, the merger agreement restricts NSBC from taking certain actions without Seacoast’s consent while the merger is pending. These restrictions may, among other matters, prevent NSBC from pursuing otherwise attractive business opportunities, selling assets, incurring indebtedness, engaging in significant capital expenditures in excess of certain limits set forth in the merger agreement, entering into other transactions or making other changes to NSBC’s business prior to consummation of the merger or termination of the merger agreement. These restrictions could have a material adverse effect on NSBC’s business, financial condition and results of operations. Please see the section entitled “The Merger Agreement — Conduct of Business Pending the Merger” beginning on page for a description of the covenants applicable to NSBC’ and Seacoast.

Seacoast may fail to realize the cost savings estimated for the merger.

Although Seacoast estimates that it will realize cost savings from the merger when fully phased in, it is possible that the estimates of the potential cost savings could turn out to be incorrect. For example, the combined purchasing power may not be as strong as expected, and therefore the cost savings could be reduced. In addition, unanticipated growth in Seacoast’s business may require Seacoast to continue to operate or maintain some facilities or support functions that are currently expected to be combined or reduced. The cost savings estimates also depend on Seacoast’s ability to combine the businesses of Seacoast and NSBC in a manner that permits those costs savings to be realized. If the estimates turn out to be incorrect or Seacoast is not able to combine the two companies successfully, the anticipated cost savings may not be fully realized or realized at all, or may take longer to realize than expected.

 

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The combined company expects to incur substantial expenses related to the merger.

The combined company expects to incur substantial expenses in connection with completing the merger and combining the business, operations, networks, systems, technologies, policies and procedures of Seacoast and NSBC. Although Seacoast and NSBC have assumed that a certain level of transaction and combination expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their combination expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the completion of the merger. In addition, prior to completion of the merger, each of NSBC and Seacoast will incur or have incurred substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement. If the merger is not completed, Seacoast and NSBC would have to recognize these expenses without realizing the anticipated benefits of the merger.

Seacoast and NSBC may waive one or more of the conditions to the merger without re-soliciting NSBC shareholder approval for the merger.

Each of the conditions to the obligations of Seacoast and NSBC to complete the merger may be waived, in whole or in part, to the extent permitted by applicable law, by agreement of Seacoast and NSBC, if the condition is a condition to both parties’ obligation to complete the merger, or by the party for which such condition is a condition of its obligation to complete the merger. The boards of directors of Seacoast and NSBC may evaluate the materiality of any such waiver to determine whether amendment of this proxy statement/prospectus and re-solicitation of proxies is necessary. Seacoast and NSBC, however, generally do not expect any such waiver to be significant enough to require re-solicitation of NSBC’s shareholders. In the event that any such waiver is not determined to be significant enough to require re-solicitation of NSBC’s shareholders, the companies will have the discretion to complete the merger without seeking further shareholder approval.

The merger is expected to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

It is expected that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If the merger does not qualify as a tax-free reorganization, then the holders of shares of NSBC common stock will recognize any gain with respect to the entire consideration received in the merger, including the per share stock consideration received. The consequences of the merger to any particular NSBC shareholder will depend on that shareholder’s individual situation. We strongly urge you to consult your own tax advisor to determine the particular tax consequences of the merger to you.

Regulatory approvals may not be received, may take longer than expected or impose conditions that are not presently anticipated.

Before the transactions contemplated by the merger agreement, including the merger, may be completed, various approvals must be obtained from bank regulatory authorities. These governmental entities may impose conditions on the granting of such approvals. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying completion of the merger or of imposing additional costs or limitations on Seacoast following the merger. The regulatory approvals may not be received at all, may not be received in a timely fashion, and may contain conditions on the completion of the merger that are not anticipated or have a material adverse effect. If the consummation of the merger is delayed, including by a delay in receipt of necessary governmental approvals, the business, financial condition and results of operations of each company may also be materially adversely affected.

 

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The fairness opinion of NSBC’s financial advisor will not reflect changes in circumstances between the date of the opinion and the completion of the merger.

NSBC’s board of directors received an opinion from its financial advisor to address the fairness of the merger consideration, from a financial point of view, to the holders of NSBC’s common stock as of May 17, 2017. Subsequent changes in the operation and prospects of Seacoast or NSBC, general market and economic conditions and other factors that may be beyond the control of Seacoast or NSBC, and on which NSBC’s financial advisor’s opinion was based, may significantly alter the value of Seacoast or the price of the shares of Seacoast common stock by the time the merger is completed. Because NSBC does not anticipate asking its advisor to update its opinion, the opinion will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed, or as of any other date other than the date of such opinion. For a description of the opinion that NSBC received from its financial advisor, please refer to the sections entitled “The Merger — Opinion of NSBC’s Financial Advisor” beginning on page     .

NSBC’s executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of NSBC shareholders.

Executive officers of NSBC, the Chairman of the board of directors of NSBC and the Mergers & Acquisitions committee of the board of directors of NSBC negotiated the terms of the merger agreement with Seacoast, and the NSBC board of directors unanimously approved and recommended that NSBC shareholders vote to approve the merger agreement. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that certain NSBC executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of NSBC shareholders generally. See “The Merger — Interests of NSBC Directors and Executive Officers in the Merger” on page      for information about these financial interests.

The termination fees and the restrictions on third party acquisition proposals set forth in the merger agreement may discourage others from trying to acquire NSBC.

Until the completion of the merger, with some limited exceptions, NSBC is prohibited from soliciting, initiating, encouraging or participating in any discussion concerning a proposal to acquire NSBC, such as a merger or other business combination transaction, with any person other than Seacoast. In addition, NSBC has agreed to pay to Seacoast in certain circumstances a termination fee equal to $1,650,000. These provisions could discourage other companies from trying to acquire NSBC even though those other companies might be willing to offer greater value to NSBC shareholders than Seacoast has offered in the merger. The payment of any termination fee could also have an adverse effect on NSBC’s financial condition. See “The Merger Agreement — Third Party Proposals” beginning on page      and “The Merger Agreement — Termination Fee” beginning on page     .

Failure of the merger to be completed, the termination of the merger agreement or a significant delay in the consummation of the merger could negatively impact Seacoast and NSBC.

If the merger is not consummated, the ongoing business, financial condition and results of operations of each party may be materially adversely affected and the market price of each party’s common stock may decline significantly, particularly to the extent that the current market price reflects a market assumption that the merger will be consummated. If the consummation of the merger is delayed, the business, financial condition and results of operations of each company may be materially adversely affected. If the merger agreement is terminated and a party’s board of directors seeks another merger or business combination, such party’s shareholders cannot be certain that such party will be able to find a party willing to engage in a transaction on more attractive terms than the merger.

 

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Some of the performing loans in the NSBC loan portfolio being acquired by Seacoast may be under collateralized, which could affect Seacoast’s ability to collect all of the loan amount due.

In an acquisition transaction, the purchasing financial institution may be acquiring under collateralized loans from the seller. Under collateralized loans are risks that are inherent in any acquisition transaction and are mitigated through the loan due diligence process that the purchaser performs and the estimated fair market value adjustment that the purchaser places on the seller’s loan portfolio. The year a loan was originated can impact the current value of the collateral. Many Florida banks have performing loans that are under collateralized because of the decline in real estate values during the 2006 through 2010 economic downturn. While real estate values generally commenced stabilizing in 2011, and in some markets began to increase in recent years, nonetheless like other financial services institutions, NSBC’s and Seacoast’s loan portfolios have under collateralized loans that are still performing.

When it acquires another loan portfolio, Seacoast will place what is referred to as a fair market value adjustment on the acquired loan portfolio to address certain risks, including those relating to under collateralized loans. With respect to the NSBC loan portfolio, Seacoast has placed a preliminary $4.8 million fair value adjustment which Seacoast believes is adequate to mitigate the risk of under collateralized performing loans. Seacoast has engaged a third party valuation firm that assisted in valuing the acquired loan portfolio as of the acquisition date. There is no assurance that the adjustment that Seacoast has placed on the NSBC loan portfolio to mitigate against under collateralized performing loans will be adequate or that Seacoast will not incur losses that could be greater than this adjustment.

Risks Associated with Seacoast’s Business

New lines of business or new products and services may subject Seacoast to additional risks.

From time to time, Seacoast may implement or may acquire new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, Seacoast may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of Seacoast’s system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on Seacoast’s business, financial condition and results of operations.

An interruption in or breach in security of Seacoast’s information systems may result in a loss of customer business and have an adverse effect on Seacoast’s results of operations, financial condition and cash flows.

Seacoast relies heavily on communications and information systems to conduct its business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in Seacoast’s customer relationship management, general ledger, deposits, servicing or loan origination systems. If any such failures, interruptions or security breaches of its communications or information systems occur, they may not be adequately addressed by Seacoast. Further, the occurrence of any such failures, interruptions or security breaches could damage Seacoast’s reputation, result in a loss of customer business, subject Seacoast to additional regulatory scrutiny or expose Seacoast to civil litigation and possible financial liability, any of which could have a material adverse effect on Seacoast’s results of operations, financial condition and cash flows.

 

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CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

Certain statements contained in this proxy statement/prospectus, including statements included or incorporated by reference in this proxy statement/prospectus, are not statements of historical fact and constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be protected by the safe harbor provided by the same. These statements are subject to risks and uncertainties, and include information about possible or assumed future results of operations of Seacoast after the merger is completed as well as information about the merger. Words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “would,” “continue,” “should,” “may,” or similar expressions, or the negatives thereof, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Many possible events or factors could affect the future financial results and performance of each of Seacoast and NSBC before the merger or Seacoast after the merger, and could cause those results or performance to differ materially from those expressed in the forward-looking statements. These possible events or factors include, but are not limited to:

 

•

the failure to obtain the approval of NSBC shareholders in connection with the merger;

 

•

the risk that the merger may not be completed in a timely manner or at all, which may adversely affect Seacoast’s and NSBC’s business and the price of Seacoast common stock;

 

•

the risk that a condition to closing of the proposed merger may not be satisfied;

 

•

the risk that a regulatory approval that may be required for the proposed merger is not obtained or is obtained subject to conditions that are not anticipated;

 

•

the parties’ ability to achieve the synergies and value creation contemplated by the proposed merger;

 

•

the parties’ ability to promptly and effectively integrate the businesses of Seacoast and NSBC, including unexpected transaction costs, including the costs of integrating operations, severance, professional fees and other expenses;

 

•

the diversion of management time on issues related to the merger;

 

•

the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;

 

•

the effect of the announcement or pendency of the merger on Seacoast’s customer, employee and business relationships, operating results, and business generally;

 

•

deposit attrition, operating costs, customer loss and business disruption following the proposed merger, including difficulties in maintaining relationships with employees, may be greater than expected;

 

•

reputational risks and the reaction of the companies’ customers to the proposed merger;

 

•

customer acceptance of the combined company’s products and services;

 

•

increased competitive pressures and solicitations of customers and employees by competitors;

 

•

the failure to consummate or delay in consummating the merger for other reasons;

 

•

the outcome of any legal proceedings that may be instituted against Seacoast or NSBC related to the merger agreement or the merger;

 

•

changes in laws or regulations;

 

•

changes in interest rates, deposit flows, loan demand and real estate values; and

 

•

changes in general business, economic and market conditions.

For additional information concerning factors that could cause actual conditions, events or results to materially differ from those described in the forward-looking statements, please refer to the “Risk Factors”

 

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section of this proxy statement/prospectus, as well as the factors set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Seacoast’s most recent Form 10-K report and to Seacoast’s most recent Form 10-Q and 8-K reports, which are available online at www.sec.gov, and are incorporated by reference herein. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of Seacoast or NSBC. The forward-looking statements are made as of the date of this proxy statement/prospectus or the date of the applicable document incorporated by reference into this proxy statement/prospectus. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

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SEACOAST SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following selected historical consolidated financial data as of and for the twelve months ended December 31, 2016, 2015, 2014, 2013 and 2012 is derived from the audited consolidated financial statements of Seacoast. The following selected historical consolidated financial data as of and for the three months ended March 31, 2017 and 2016, is derived from the unaudited consolidated financial statements of Seacoast and has been prepared on the same basis as the selected historical consolidated financial data derived from the audited consolidated financial statements and, in the opinion of Seacoast’s management, reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data for those dates.

The results of operations as of and for the three months ended March 31, 2017, are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2017 or any future period. You should read the following selected historical consolidated financial data in conjunction with: (i) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Seacoast’s audited consolidated financial statements and accompanying notes included in Seacoast’s Annual Report on Form 10-K for the twelve months ended December 31, 2016; and (ii) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Seacoast’s unaudited consolidated financial statements and accompanying notes included in Seacoast’s Quarterly Report on Form 10-Q for the three months ended March 31, 2017, both of which are incorporated by reference into this proxy statement/prospectus. See “Documents Incorporated by Reference.”

 

		(unaudited) Three Months ended March 31,								Year ended December 31,
		2017				2016				2016				2015				2014				2013				2012
Net interest income		$	38,165			$	30,222			$	139,588			$	109,487			$	74,907			$	65,206			$	64,809
Provision for loan losses			1,304				199				2,411				2,644				(3,486	)			3,188				10,796
Noninterest income:
Other			9,905				8,630				37,427				32,018				24,744				24,319				21,444
Bargain purchase gain			—				—				—				416				—				—				—
Loss on sale of loan			—				—				—				—				—				—				(1,238	)
Securities			—				89				368				161				469				419				7,619
Noninterest expenses			34,746				32,341				130,881				103,770				93,366				75,152				82,548
Income (loss) before income taxes			12,020				6,401				44,091				35,668				10,240				11,604				(710	)
Provision (benefit) for income taxes			4,094				2,435				14,889				13,527				4,544				(40,385	)			—
Net income (loss)		$	7,926			$	3,966			$	29,202			$	22,141			$	5,696			$	51,989			$	(710	)
Per Share Data
Net income (loss) available to common shareholders:
Diluted		$	0.20			$	0.11			$	0.78			$	0.66			$	0.21			$	2.44			$	(0.24	)
Basic			0.20				0.11				0.79				0.66				0.21				2.46				(0.24	)
Cash dividends declared			0				0				0				0				0				0				0
Book value per share common			12.34				10.91				11.45				10.29				9.44				8.40				6.16
Assets		$	4,769,775			$	4,001,323			$	4,680,932			$	3,534,780			$	3,093,335			$	2,268,940			$	2,173,929
Securities			1,288,932				1,103,413				1,323,001				994,291				949,279				641,611				656,868
Net loans			2,949,197				2,435,490				2,856,136				2,137,202				1,804,814				1,284,139				1,203,977
Deposits			3,678,645				3,222,447				3,523,245				2,844,387				2,416,534				1,806,045				1,758,961
Shareholders’ equity			502,494				413,788				435,397				353,453				312,651				198,604				165,546
Performance ratios(2):
Return on average assets			0.68	%			0.44	%			0.69	%			0.67	%			0.23	%			2.38	%			(0.03	)%
Return on average equity			6.89				4.28				7.06				6.56				2.22				28.36				(0.43	)
Net interest margin(1)			3.63				3.68				3.63				3.64				3.25				3.15				3.22
Average equity to average assets			9.93				10.30				9.85				10.21				10.34				8.38				7.81

 

(1)	On a fully taxable equivalent basis

(2)	Performance ratios for interim periods are presented on an annualized basis

 

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MARKET PRICES AND DIVIDEND INFORMATION

Seacoast common stock is listed and trades on the NASDAQ Global Select Market under the symbol “SBCF.” As of June 16, 2017, there were 43,426,091 shares of Seacoast common stock outstanding. Approximately 50.5% of these shares are owned by institutional investors, as reported by NASDAQ. Seacoast’s top institutional investor owns approximately 6.4% of its outstanding stock. Seacoast has approximately 2,264 shareholders of record.

To Seacoast’s knowledge, the only shareholders who owned more than 5% of the outstanding shares of Seacoast common stock on June 16, 2017 was BlackRock, Inc. (6.4%), 55 East 52^nd Street, New York, New York 10055.

NSBC common stock is not listed or traded on any established securities exchange or quotation system. Accordingly, there is no established public trading market for the NSBC common stock. Transactions in the shares are privately negotiated directly between the purchaser and the seller and sales, if they do occur, are not subject to any reporting system. The shares of NSBC are not traded frequently. As of June 30, 2017, there were 1,928,101 shares of NSBC common stock outstanding, which were held by 134 holders of record.

The following tables show, for the indicated periods, the high and low sales prices per share for Seacoast common stock, as reported on NASDAQ. Cash dividends declared and paid per share on Seacoast common stock are also shown for the periods indicated below. Seacoast did not pay cash dividends on its common stock during the periods indicated.

The high and low sales prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.

 

		Seacoast Common Stock												NSBC Common Stock(1)
		High				Low				Dividend				High				Low				Volume
2015
First Quarter		$	14.46			$	12.02			$	—			$	—			$	—				—
Second Quarter		$	16.09			$	13.81			$	—			$	—			$	—				—
Third Quarter		$	16.26			$	14.11			$	—			$	—			$	—				—
Fourth Quarter		$	16.95			$	14.10			$	—			$				$	—
2016
First Quarter		$	16.22			$	13.40			$	—			$	—			$	—				—
Second Quarter		$	17.19			$	15.21			$	—			$	—			$	—				—
Third Quarter		$	17.80			$	15.50			$	—			$	—			$	—				—
Fourth Quarter		$	22.91			$	15.85			$	—			$	—			$	—				—
2017
First Quarter		$	25.13			$	20.59			$	—			$	—			$	—				—
Second Quarter		$	25.88			$	21.65			$	—			$	—			$	—				—
Third Quarter (through                     , 2017)		$				$

 

(1)	NSBC common stock is not listed or traded on any established securities exchange or quotation system. Accordingly, there is no established public trading market for NSBC common stock. Transactions in the shares are privately negotiated directly between the purchasers and the sellers.

Dividends from SNB are Seacoast’s primary source of funds to pay dividends on its common stock. Under the National Bank Act, national banks may in any calendar year, without the approval of the OCC, pay dividends to the extent of net profits for that year, plus retained net profits for the preceding two years (less any required transfers to surplus). The need to maintain adequate capital in SNB also limits dividends that may be paid to Seacoast. Beginning in the third quarter of 2008, Seacoast reduced its dividend per share of common stock to a de minimis $0.01. On May 19, 2009, Seacoast’s board of directors voted to suspend quarterly dividends on its common stock entirely.

 

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Any dividends paid on Seacoast’s common stock would be declared and paid at the discretion of its board of directors and would be dependent upon Seacoast’s liquidity, financial condition, results of operations, capital requirements and such other factors as the board of directors may deem relevant.

NSBC does not pay dividends to its common shareholders.

 

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INFORMATION ABOUT THE NSBC SPECIAL MEETING

This section contains information about the special meeting that NSBC has called to allow NSBC shareholders to vote on the approval of the merger agreement. The NSBC board of directors is mailing this proxy statement/prospectus to you, as a NSBC shareholder, on or about                     , 2017. Together with this proxy statement/prospectus, the NSBC board of directors is also sending you a notice of the special meeting of NSBC shareholders and a form of proxy that the NSBC board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Time, Date, and Place

The special meeting is scheduled to be held on                     , 2017 at ,      local time, at             , Tampa, Florida.

Matters to be Considered at the Meeting

At the special meeting, NSBC shareholders will be asked to consider and vote on:

 

•

a proposal to approve the merger agreement, which we refer to as the merger proposal;

 

•

a proposal of the NSBC board of directors to adjourn or postpone the special meeting, if necessary or appropriate, including to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger agreement, which we refer to as the adjournment proposal; and

 

•

any other matters as may properly be brought before the special meeting or any adjournment or postponement of the special meeting.

At this time, the NSBC board of directors is unaware of any other matters that may be presented for action at the special meeting. If any other matters are properly presented, however, and you have completed, signed and submitted your proxy, the person(s) named as proxy will have the authority to vote your shares in accordance with his or her judgment with respect to such matters. A copy of the merger agreement is included in this proxy statement/prospectus as Appendix A, and we encourage you to read it carefully in its entirety.

Recommendation of the NSBC Board of Directors

The NSBC board of directors unanimously recommends that NSBC shareholders vote “FOR” the merger proposal and “FOR” the adjournment proposal. See “The Merger — NSBC’s Reasons for the Merger and Recommendations of the NSBC Board of Directors.”

Record Date and Quorum

                     , 2017 has been fixed as the record date for the determination of NSBC shareholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof. At the close of business on the record date, there were              shares of NSBC common stock outstanding and entitled to vote at the special meeting, held by approximately              holders of record.

A quorum is necessary to transact business at the special meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of NSBC common stock entitled to vote at the meeting is necessary to constitute a quorum. Shares of NSBC common stock represented at the special meeting but not voted, including shares that a shareholder abstains from voting, will be counted for purposes of establishing a quorum. Once a share of NSBC common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum not only at the special meeting but also at any adjournment or postponement of the special meeting. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed.

 

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Required Vote

The affirmative vote of a majority of the outstanding shares of NSBC common stock must vote in favor of the proposal to approve the merger agreement. If you vote to “ABSTAIN” with respect to the merger proposal or if you fail to vote on the merger proposal, this will have the same effect as voting “AGAINST” the merger proposal.

The adjournment proposal will be approved if the votes of NSBC common stock cast in favor of the adjournment proposal exceed the votes cast against the adjournment proposal. If you vote to “ABSTAIN” with respect to the adjournment proposal or if you fail to vote on the adjournment proposal, this will have no effect on the outcome of the vote on the adjournment proposal.

Each share of NSBC common stock you own as of the record date for the special meeting entitles you to one vote at the special meeting on all matters properly presented at the meeting.

How to Vote — Shareholders of Record

Voting in Person. If you are a shareholder of record, you can vote in person by submitting a ballot at the special meeting. Nevertheless, we recommend that you vote by proxy as promptly as possible, even if you plan to attend the special meeting. This will ensure that your vote is received. If you attend the special meeting, you may vote by ballot, thereby canceling any proxy previously submitted.

Voting by Proxy. Your proxy card includes instructions on how to vote by mailing in the proxy card. If you choose to vote by proxy, please mark each proxy card you receive, sign and date it, and promptly return it in the envelope enclosed with the proxy card. If you sign and return your proxy without instruction on how to vote your shares, your shares will be voted “FOR” the merger proposal and “FOR” the adjournment proposal. At this time, the NSBC board of directors is unaware of any other matters that may be presented for action at the special meeting. If any other matters are properly presented, however, and you have signed and returned your proxy card, the person(s) named as proxy will have the authority to vote your shares in accordance with his or her judgment with respect to such matters. Please do not send in your stock certificates with your proxy card. If the merger is completed, then you will receive a separate letter of transmittal and instructions on how to surrender your NSBC stock certificates for the merger consideration.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. SHAREHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

Revocation of Proxies

You can revoke your proxy at any time before your shares are voted. If you are a shareholder of record, then you can revoke your proxy by:

 

•

submitting another valid proxy card bearing a later date;

 

•

attending the special meeting and voting your shares in person; or

 

•

delivering prior to the special meeting a written notice of revocation to NSBC’s Corporate Secretary at the following address: NorthStar Banking Corporation, Rivergate Tower, 400 North Ashley Drive, Suite 1400, Tampa, Florida 33602.

If you choose to send a completed proxy card bearing a later date or a notice of revocation, the new proxy card or notice of revocation must be received before the beginning of the special meeting. Attendance at the

 

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special meeting will not, in and of itself, constitute revocation of a proxy. If you hold your shares in street name with a bank, broker or other nominee, you must follow the directions you receive from your bank, broker or other nominee to change your vote. Your last vote will be the vote that is counted.

Shares Subject to Support Agreement; Shares Held by Directors and Executive Officers

As of the record date, directors and executive officers of NSBC and their affiliates owned and were entitled to vote              shares of NSBC common stock, representing approximately             % of the outstanding shares of NSBC common stock entitled to vote on that date.

A total of              shares of NSBC common stock, representing approximately             % of the outstanding shares of NSBC common stock entitled to vote at the special meeting, are subject to a shareholder support agreement between Seacoast and each of NSBC’s directors and executive officers who held shares of NSBC common stock as of the date of the merger agreement, and certain holders of more than 5% of NSBC’s outstanding shares of common stock. Pursuant to the shareholder support agreement, each director and executive officer who held shares of NSBC common stock as of the date of the merger agreement, and certain holders of more than 5% of NSBC’s outstanding shares of common stock have agreed to, at any meeting of NSBC shareholders, however called, or any adjournment or postponement thereof (and subject to certain exceptions):

 

•

vote (or cause to be voted) all shares of NSBC’s common stock beneficially owned by such director and which such director has the right to vote in favor of the approval of the merger agreement, the merger and each of the transactions contemplated by the merger agreement;

 

•

not vote or grant any proxies to any third party, except where such proxies are directed to vote in favor of the merger agreement, the merger and the transactions contemplated by the merger agreement; and

 

•

vote (or cause to be voted) his shares against any competing transaction.

Pursuant to the shareholder support agreement, without the prior written consent of Seacoast, each director has further agreed not to sell or otherwise transfer any shares of NSBC common stock. The foregoing summary of the support agreement entered into by NSBC’s directors and executive officers who held shares of NSBC common stock as of the date of the merger agreement, and certain holders of more than 5% of NSBC’s outstanding shares of common stock does not purport to be complete, and is qualified in its entirety by reference to the form of shareholder support agreement attached as Exhibit B to the merger agreement, which is attached as Appendix A to this document.

For more information about the beneficial ownership of NSBC common stock by each greater than 5% beneficial owner, each director and executive officer and executive officers as a group, see “Beneficial Ownership of NSBC Common Stock by Management and Principal Shareholders of NSBC.”

Solicitation of Proxies

The proxy for the special meeting is being solicited on behalf of the NSBC board of directors. NSBC will bear the entire cost of soliciting proxies from you. NSBC will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of NSBC stock. Proxies will be solicited principally by mail, but may also be solicited by the directors, officers, and other employees of NSBC in person or by telephone, facsimile or other means of electronic communication. Directors, officers and employees will receive no compensation for these activities in addition to their regular compensation, but may be reimbursed for out-of-pocket expenses in connection with such solicitation.

Attending the Meeting

All holders of NSBC common stock, including shareholders of record and shareholders who hold their shares in street name through banks, brokers or other nominees, are cordially invited to attend the special

 

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meeting. Shareholders of record can vote in person at the special meeting. If you are not a shareholder of record and would like to vote in person at the special meeting, you must produce a legal proxy executed in your favor by the record holder of your shares. In addition, you must bring a form of personal photo identification with you in order to be admitted at the special meeting. We reserve the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without NSBC’s express written consent.

Questions and Additional Information

If you have more questions about the merger or how to submit your proxy or vote, or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card or voting instructions, please contact NSBC at:

NorthStar Banking Corporation

Rivergate Tower

400 North Ashley Drive, Suite 1400

Tampa, Florida 33602

Telephone: (813) 549-5000

Attn: Scott Jacobsen, Chief Executive Officer

 

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PROPOSAL 1: THE MERGER

Background of the Merger

As part of its ongoing consideration and evaluation of its long-term prospects and strategies, NSBC’s board of directors and senior management regularly review and assess its business strategies and objectives, including strategic opportunities and challenges, all with the goal of enhancing long term value for NSBC shareholders. Generally, these reviews centered on strategies to improve NSBC’s financial condition, asset quality, existing operations, whether to pursue opportunities in new markets or lines of business, organizational requirements, scale, and financial and operating structure necessary to deliver competitive risk adjusted returns on shareholders’ capital, in addition to the business environment facing financial institutions generally, and NSBC specifically, the direction and influences of growth, margins, cost structure, and regulatory dynamics. On occasion, these discussions centered on the possibility of merging with another banking organization as a means to enhance or improve shareholder value and provide for shareholder liquidity.

In this regard, and to assist in evaluating NSBC’s strategic considerations and analysis, the board of directors of NSBC and management, at least annually during the past three years, has met with various investment banking firms, including Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”). The meetings would typically include formal and informal presentations from each investment banking firm regarding the overall banking industry and markets, nationally and in Florida; merger and acquisition activity trends and pricing; comparable company analyses; valuation perspectives on NSBC; and analyses of potential acquisition targets and acquirers along with potential transaction pricing. The Chief Executive Officer and Chairman of the board of directors of NSBC also responded during this time, to unsolicited calls from, and introductions and meetings with, prospective buyers for NSBC, including Seacoast. Such meetings, during this time, were established as opportunities to develop relationships and with the intent of developing a more in-depth understanding of each prospective buyer and its respective potential fit and acquisition capacity for NSBC.

After receiving an unsolicited letter of intent on January 27, 2017, the board of directors of NSBC determined that it would be appropriate to give serious consideration to merging with a suitable merger partner as a possible means of enhancing long-term shareholder value. In furtherance of this decision, at its regularly scheduled board meeting on February 15, 2017, NSBC unanimously voted to engage Sandler O’Neill to act as its financial advisor in connection with a potential transaction. With input and review from NSBC’s legal counsel, Bush Ross, P.A. (“Bush Ross”), NSBC executed a final engagement letter with Sandler O’Neill on February 15, 2017.

During the period from February 16, 2017 through March 15, 2017, representatives of Sandler O’Neill, NSBC’s senior management team and the Merger & Acquisition Committee of the board of directors of NSBC advanced sale process preparations, including finalizing a targeted buyers list and the completion of customary marketing materials (including a confidential information memorandum and proposed form of nondisclosure agreement). This process also included population of a virtual data room with customary due diligence materials on NSBC and as commonly requested by prospective buyers. At NSBC’s direction, representatives of Sandler O’Neill proceeded to make contact with the buyers on the targeted list, which included a high priority group of ten (10) prospective buyers. The group included public and private banking companies, regional banks, non-Florida based banks, and Florida-based banks, and it included prospective buyers with total assets ranging from approximately $1 billion to $20 billion.

As a result of this process, NSBC entered into nondisclosure agreements with prospective buyers, including one with Seacoast, who performed varying levels of due diligence. NSBC’s senior executive management held various calls and in-person meetings with the prospective buyers. Similarly, the meetings presented management with initial opportunities for high-level reverse due diligence inquiries. NSBC ultimately received three letters of intent, including one from Seacoast.

 

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In mid—February, Seacoast asked Raymond James to assist Seacoast as it considered the merits of a potential transaction with NSBC. Later, on March 9, 2017, Seacoast formally engaged Raymond James as its financial advisor in connection with the potential NSBC transaction.

On March 15, 2017, the board of directors of NSBC held a regular meeting with representatives of Sandler O’Neill present via telephone to review the three offers from prospective buyers. Representatives of Sandler O’Neill provided a process overview and a summary of the bids received, and discussed financial aspects of each bid and bidder. The board of directors of NSBC also discussed and considered potential strategic and cultural fits, integration success histories, and client, employee, and community impacts of the prospective merger partners. The three bidders presented indications of interest, which included stock and cash mix, and with pricing ranging from approximately $14.00 to $16.25 per share of common stock of NSBC. Representatives of Sandler O’Neill were charged by the board with relaying the message to Seacoast to enhance its offer for further consideration.

Seacoast increased its offer to $16.38 and based on the board’s determination that Seacoast’s preliminary proposal offered substantial value to NSBC and its shareholders and was attractive for strategic reasons, the NSBC board of directors authorized NSBC to enter into the indication of interest and a limited exclusivity agreement with Seacoast. On March 16, 2017, Seacoast and NSBC executed a non-binding letter of intent for the potential acquisition of NSBC, along with an exclusivity agreement which expired on May 16, 2017.

Seacoast began its diligence review, including credit due diligence, of NSBC in early March 2017. Based on discussions between the parties, NSBC opened an electronic data room for Seacoast to review its due diligence requests and NSBC’s responses during this period. During due diligence, Seacoast reduced its offer from $16.38 to $16.00. Upon the conclusion of its preliminary review of NSBC’s loan portfolio, representatives of Seacoast’s financial advisor, Raymond James, communicated Seacoast’s continued interest in a strategic business combination. The parties continued to negotiate the principal terms of the transaction.

On April 24, 2017, Alston & Bird LLP, counsel to Seacoast (“Alston & Bird”), circulated an initial draft of the merger agreement, along with exhibits, based on the terms outlined in the letter of intent and certain revised terms agreed to by the parties, to Bush Ross and the parties began negotiations of the terms of the agreement.

On May 3, 2017, Bush Ross sent a revised draft of the merger agreement to Alston & Bird. On May 9, 2017, Bush Ross and Alston & Bird preliminarily reviewed and discussed issues relating to the terms of the merger agreement. Over the course of the following several weeks, Seacoast and its representatives continued negotiations with NSBC and its representatives with respect to the terms of the potential transaction and the draft merger agreement. The issues raised in these negotiations included the respective covenants of the parties pending closing of the transaction, the rights and obligations of the parties in the event the merger agreement is terminated prior to the consummation of the merger, the amount of the termination fee payable by NSBC in certain circumstances and certain price adjustments and pricing mechanics. Representatives of Seacoast and Alston & Bird had multiple telephonic conference calls with representatives of NSBC and Bush Ross to negotiate the terms of the draft merger agreement and ancillary agreements. On May 11, 2017, the Chief Executive Officer of NSBC sent a draft of the merger agreement to NSBC’s Merger & Acquisition Committee for review and comment.

On May 13, 2017, Alston & Bird circulated a revised draft of the merger agreement. Following a conference call among the parties on May 16, Alston & Bird circulated a revised draft of the merger agreement to the working group. On May 17, 2017, NSBC’s board of directors held a meeting to consider the merger agreement and the transactions contemplated therein. Representatives of Bush Ross summarized the merger agreement, the ancillary documents related to the merger agreement and the transactions contemplated therein. Representatives of Sandler O’Neill then reviewed the financial aspects of the proposed merger and rendered an oral opinion, which was subsequently confirmed by delivery of a written opinion, to the effect that, as of the date of such opinion and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sandler O’Neill as set forth in such opinion, the merger consideration to

 

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be received by NSBC’s common shareholders in the proposed transaction was fair, from a financial point of view, to NSBC’s common shareholders. The full text of the written opinion of Sandler O’Neill is attached to this proxy statement/prospectus as Appendix B and is incorporated by reference in its entirety. For further information, please see the section entitled “The Merger — Opinion of NSBC’s Financial Advisor” beginning on page     .

Following further discussion, the NSBC board of directors unanimously (i) determined and declared that the merger agreement, the merger, and the other transactions contemplated by the merger agreement are advisable and in the best interests of NSBC and its shareholders, (ii) authorized, adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, (iii) recommended the adoption of the merger agreement, the merger and the other transactions contemplated by the merger agreement to the NSBC shareholders and (iv) resolved that the merger agreement be submitted to the NSBC shareholders for adoption thereof.

On May 17, 2017, Seacoast’s board of directors met in special session to review and consider the merger agreement and the transactions and agreements contemplated by it. The management team made a presentation relating to the strategic and financial considerations and rationale of the transaction. Further to this discussion, a representative of Raymond James reviewed the principal terms of the proposed transaction and the financial impacts of the merger on Seacoast and provided comparable transaction analysis for Florida and national bank mergers. At the meeting, Alston & Bird reviewed for the directors the terms and conditions of the merger agreement, the merger and the various agreements to be signed in connection with the merger agreement, and engaged in discussions with the board members on such matters. After additional discussion and deliberation, the Seacoast board of directors adopted and approved the draft merger agreement and the transactions and agreements contemplated by it (subject to no material terms or conditions being revised) and determined that the merger agreement and the transactions contemplated by it were in the best interests of Seacoast and its shareholders.

The parties signed the merger agreement and a press release announcing the transaction was issued on May 18, 2017 prior to the opening of trading in Seacoast common stock. A conference call to discuss the merger was held later that morning.

NSBC’s Reasons for the Merger and Recommendation of the NSBC Board of Directors

After careful consideration, NSBC’s board of directors, at a meeting held on May 17, 2017, determined that the merger agreement is in the best interests of NSBC and its shareholders. Accordingly, NSBC’s board of directors adopted and approved the merger agreement and recommends that NSBC shareholders vote “FOR” the approval of the merger agreement.

In reaching its decision to adopt and approve the merger agreement and the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger agreement,, the NSBC board of directors consulted with NSBC’s management, as well as its financial and legal advisors, and considered a number of potentially positive factors, including, among others, the following factors (not necessarily in order of relative importance):

 

•

its belief that the transaction is likely to provide substantial value to NSBC’s shareholders;

 

•

each of NSBC’s, Seacoast’s and the combined company’s business, operations, financial condition, asset quality, earnings and prospects. In reviewing these factors, the NSBC board of directors considered its view that Seacoast’s business and operations complement those of NSBC and that the merger would result in a combined company with diversified revenue sources in desirable markets, a well-balanced loan portfolio and an attractive funding base, as evidenced by a significant portion of core deposit funding;

 

•

its understanding of the current and prospective environment in which NSBC and Seacoast operate, including national and local economic conditions, the interest rate environment, increasing operating

 

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costs resulting from regulatory initiatives and compliance mandates, the competitive environment for financial institutions, and the probable effect of these factors on NSBC both with and without the proposed transaction;

 

•

the strategic, business and legal considerations, as well as the risks and benefits relating to a potential transaction with Seacoast compared to the stand-alone prospects of NSBC, the results that NSBC could expect to achieve operating independently, and the likely risks and benefits to NSBC shareholders of that course of action. NSBC’s board of directors concluded that a potential transaction with Seacoast would likely deliver higher value to NSBC shareholders than continuing to operate independently;

 

•

the opinion, dated May 17, 2017, of Sandler O’Neill, NSBC’s financial advisor, delivered to NSBC’s board of directors, to the effect that, as of the date of such opinion, and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sandler O’Neill as set forth in its opinion, the merger consideration was fair to the holders of NSBC common stock from a financial point of view, as more fully described in the section entitled “The Merger — Opinion of NSBC’s Financial Advisor”;

 

•

its view that the size of the institution and related economies of scale are increasingly important to continued success in the current financial services environment, including the increased expenses of regulatory compliance, and that a merger with a larger bank holding company could provide those economies of scale, increase efficiencies of operations and enhance customer products and services;

 

•

its belief that the number of potential acquirers interested in smaller institutions like NSBC, with total assets less than $500 million and limited geographic markets, has diminished and may diminish even further over time;

 

•

the financial and other terms of the merger agreement, the expected tax treatment and deal protection provisions, including the ability of NSBC’s board of directors, under certain circumstances, to withdraw or materially adversely modify its recommendation to NSBC shareholders that they approve the merger agreement (subject to payment of a termination fee), each of which it reviewed with its outside financial and legal advisors;

 

•

its review and discussions with NSBC’s management regarding the benefits of an acquisition by Seacoast compared to other alternatives;

 

•

the complementary nature of the credit cultures of the two companies, which management believes should facilitate integration and implementation of the transaction;

 

•

management’s expectation that the combined company will have a strong capital position upon completion of the transaction;

 

•

the board’s belief that the combined enterprise would benefit from Seacoast’s ability to take advantage of economies of scale, including an enhanced platform to achieve critical mass and compete in the Tampa Bay market area, and grow in the current economic environment, making Seacoast an attractive partner for NSBC;

 

•

the fact that the merger consideration will consist of both cash and shares of Seacoast common stock which offers NSBC shareholders a balance of immediate certain value and the opportunity to participate in a significant portion of the future performance of the combined NSBC and Seacoast business and synergies resulting from the merger, and the value to NSBC shareholders represented by that consideration;

 

•

the greater liquidity in the trading market for Seacoast common stock relative to the market for NSBC common stock due to the listing of Seacoast’s shares on the Nasdaq Global Select Market;

 

•

the business reputation and capabilities of Seacoast and its management;

 

•

the fact that the terms of the merger agreement were the result of robust arm’s-length negotiations conducted by NSBC and its financial and outside legal advisors and the benefits that NSBC and its advisors were able to obtain during its extensive negotiations with Seacoast; and

 

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•

the belief that Seacoast would have the resources needed to complete the merger and the fact that the transaction was not subject to a financing contingency.

In reaching its decision, the NSBC board of directors also considered a number of potentially negative factors, including, among others, the following factors (not necessarily in order of relative importance):

 

•

the risks that the financial results or stock price of the combined entity might decline, including the possible adverse effects on the stock price and financial results of the combined entity if any expected benefits or synergies are not obtained on a timely basis or at all;

 

•

the potential risk of diverting management attention and resources from the operation of NSBC’s business and towards the completion of the merger;

 

•

the requirement that NSBC conduct its business in the ordinary course and the other restrictions on the conduct of NSBC’s business prior to the completion of the merger, which may delay or prevent NSBC from undertaking business opportunities that may arise pending completion of the merger;

 

•

the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Seacoast’s business, operations and workforce with those of NSBC;

 

•

the regulatory and other approvals required in connection with the merger and the expectation that such regulatory approvals will be received in a timely manner and without the imposition of unacceptable conditions;

 

•

the fact that some of NSBC’s directors and executive officers may have interests in the merger that may be different from, or in addition to, those of NSBC’s shareholders generally, including as result of employment and compensation arrangements and the manner in which they could be affected by the merger; and

 

•

the fact that there can be no assurance that all conditions to the parties’ obligations to consummate the merger will be satisfied and, as a result, the merger might be delayed or not be completed, including due to a failure to obtain required regulatory approvals in accordance with the terms agreed upon by the parties, or due to a failure of other closing conditions, and the resulting risks to NSBC and its shareholders (including with respect to the diversion of management and employee attention, potential employee attrition and potential adverse effects on NSBC’s customer or other commercial relationships following the announcement of a transaction).

While the NSBC board of directors considered potentially positive and potentially negative factors, the NSBC board of directors concluded that overall, the potentially positive factors outweighed the potentially negative factors. The foregoing discussion of the factors considered by the NSBC board of directors is not intended to be exhaustive, but rather includes the material factors considered by the NSBC board of directors. In reaching its decision to adopt and approve the merger agreement, the NSBC board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The NSBC board of directors considered all these factors as a whole, including discussions with, and questioning of, NSBC’s management and NSBC’s financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

FOR THE REASONS SET FORTH ABOVE, THE NSBC BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED AND APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE MERGER PROPOSAL AND “FOR” THE ADJOURNMENT PROPOSAL.

Seacoast’s Reasons for the Merger

As a part of Seacoast’s growth strategy, Seacoast routinely evaluates opportunities to acquire financial institutions. The acquisition of NSBC is consistent with Seacoast’s expansion strategy. Seacoast’s board of

 

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directors and senior management reviewed the business, financial condition, results of operation and prospects for NSBC, the market condition of the market area in which NSBC conducts business, the compatibility of the management and the proposed financial terms of the merger. In addition, management of Seacoast believes that the merger will expand Seacoast’s presence in the attractive Tampa market are, provide opportunities for future growth and provide the potential to realize cost savings. Seacoast’s board of directors also considered the financial condition and valuation for both NSBC and Seacoast as well as the financial and other effects the merger would have on Seacoast’s shareholders and stakeholders. The board considered the fact that the acquisition would significantly increase Seacoast’s existing footprint in Tampa, that market overlap would drive cost savings, and that cultural similarities supported the probability of an efficient, low risk integration with minimal customer attritions. In addition, the board of directors also considered the analysis and presentations from its outside financial advisor, Raymond James Financial, Inc.

While management of Seacoast believes that revenue opportunities will be achieved and costs savings will be obtained following the merger, Seacoast has not quantified the amount of enhancements or projected the areas of operation in which such enhancements will occur.

In view of the variety of factors considered in connection with its evaluation of the merger, the Seacoast board did not find it useful to and did not attempt to quantify, rank or otherwise assign relative weights to factors it considered. Further, individual directors may have given differing weights to different factors. In addition, the Seacoast board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination. Rather, the board conducted an overall analysis of the factors it considered material, including thorough discussions with, and questioning of, Seacoast’s management.

Opinion of NSBC’s Financial Advisor

NSBC retained Sandler O’Neill to act as financial advisor to NSBC’s board of directors in connection with NSBC’s consideration of a possible business combination. Sandler O’Neill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler O’Neill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

Sandler O’Neill acted as financial advisor in connection with the proposed transaction and participated in certain of the negotiations leading to the execution of the merger agreement. At the May 17, 2017 meeting at which NSBC’s board of directors considered and discussed the terms of the merger agreement and the merger, Sandler O’Neill delivered to NSBC’s board of directors its oral opinion, which was subsequently confirmed in writing on May 17, 2017, to the effect that, as of such date, the consideration provided for in the merger was fair the holders of NSBC common stock from a financial point of view. The full text of Sandler O’Neill’s opinion to is attached as Appendix B to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Holders of NSBC common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to NSBC’s board of directors in connection with its consideration of the merger agreement and the merger and does not constitute a recommendation to any shareholder of NSBC as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the merger agreement and the merger. Sandler O’Neill’s opinion was directed only to the fairness, from a financial point of view, of the merger consideration to the holders of NSBC common stock and does not address the underlying business decision of NSBC to engage in the merger, the form or structure of the merger or any other transactions contemplated in the merger agreement, the relative merits of the merger as compared

 

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to any other alternative transactions or business strategies that might exist for NSBC or the effect of any other transaction in which NSBC might engage. Sandler O’Neill did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by any officer, director or employee of NSBC or Seacoast, or any class of such persons, if any, relative to the compensation to be received in the merger by any other shareholder, including the merger consideration to be received by the holders of NSBC common stock. Sandler O’Neill’s opinion was approved by Sandler O’Neill’s fairness opinion committee.

In connection with its opinion, Sandler O’Neill reviewed and considered, among other things:

 

•

an execution copy of the merger agreement, dated May 18, 2017;

 

•

certain publicly available financial statements and other historical financial information of NSBC that Sandler O’Neill deemed relevant;

 

•

certain publicly available financial statements and other historical financial information of Seacoast that Sandler O’Neill deemed relevant;

 

•

certain internal financial projections for NSBC for the years ending December 31, 2017 through December 31, 2021, as provided by the senior management of NSBC;

 

•

publicly available consensus mean analyst earnings per share estimates for Seacoast for the years ending December 31, 2017 and December 31, 2018, as well as an estimated long-term earnings per share growth rate for the years thereafter;

 

•

the pro forma financial impact of the Merger on Seacoast based on certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses;

 

•

the publicly reported historical price and trading activity for Seacoast common stock, including a comparison of certain stock market information for Seacoast common stock and certain stock indices as well as publicly available information for certain other similar companies, the securities of which are publicly traded;

 

•

a comparison of certain financial information for NSBC and Seacoast with similar financial institutions for which information is publicly available;

 

•

the financial terms of certain recent business combinations in the banking industry (on a regional and nationwide basis), to the extent publicly available;

 

•

the current market environment generally and the banking environment in particular; and

 

•

such other information, financial studies, analyses and investigations and financial, economic and market criteria as Sandler O’Neill considered relevant.

Sandler O’Neill also discussed with certain members of the senior management of NSBC the business, financial condition, results of operations and prospects of NSBC and held similar discussions with certain members of the senior management of Seacoast regarding the business, financial condition, results of operations and prospects of Seacoast.

In performing its review, Sandler O’Neill relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by Sandler O’Neill from public sources, that was provided to Sandler O’Neill by NSBC or Seacoast or their respective representatives or that was otherwise reviewed by Sandler O’Neill, and Sandler O’Neill assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Sandler O’Neill relied on the assurances of the respective managements of NSBC and Seacoast that they were not aware of any facts or circumstances that would have made any of such information inaccurate or misleading. Sandler O’Neill was not asked to and did not undertake an independent verification of any of such information and did not assume any

 

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responsibility or liability for the accuracy or completeness thereof. Sandler O’Neill did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of NSBC or Seacoast or any of their respective subsidiaries, nor was Sandler O’Neill furnished with any such evaluations or appraisals. Sandler O’Neill rendered no opinion or evaluation on the collectability of any assets or the future performance of any loans of NSBC or Seacoast. Sandler O’Neill did not make an independent evaluation of the adequacy of the allowance for loan losses of NSBC or Seacoast, or of the combined entity after the merger, and it did not review any individual credit files relating to NSBC or Seacoast. Sandler O’Neill assumed, with NSBC’s consent, that the respective allowances for loan losses for both NSBC and Seacoast were adequate to cover such losses and would be adequate on a pro forma basis for the combined entity.

In preparing its analyses, Sandler O’Neill used certain internal financial projections for NSBC for the years ending December 31, 2017 through December 31, 2021, as provided by the senior management of NSBC. In addition, Sandler O’Neill used publicly available consensus mean analyst earnings per share estimates for Seacoast for the years ending December 31, 2017 and December 31, 2018, as well as an estimated long-term earnings per share growth rate for the years thereafter. Sandler O’Neill also received and used in its pro forma analyses certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses. With respect to the foregoing information, the senior management of NSBC confirmed to Sandler O’Neill that such information reflected (or, in the case of the publicly available consensus mean analyst earnings per share estimates referred to above, were consistent with) the best currently available projections, estimates and judgments of senior management as to the future financial performance of NSBC and the other matters covered thereby, and Sandler O’Neill assumed that the future financial performance reflected in such information would be achieved. Sandler O’Neill expressed no opinion as to such information, or the assumptions on which such information is based. Sandler O’Neill also assumed that there was no material change in the respective assets, financial condition, results of operations, business or prospects of NSBC or Seacoast since the date of the most recent financial statements made available to Sandler O’Neill. Sandler O’Neill assumed in all respects material to its analysis that NSBC and Seacoast will remain as going concerns for all periods relevant to its analysis.

Sandler O’Neill also assumed, with NSBC’s consent, that (i) each of the parties to the merger agreement would comply in all material respects with all material terms and conditions of the merger agreement and all related agreements, that all of the representations and warranties contained in such agreements were true and correct in all material respects, that each of the parties to such agreements would perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements were not and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on NSBC, Seacoast or the merger or any related transaction, (iii) the merger and any related transactions would be consummated in accordance with the terms of the merger agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements, and (iv) the merger would qualify as a tax-free reorganization for federal income tax purposes. Finally, with NSBC’s consent, Sandler O’Neill relied upon the advice that NSBC received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the merger and the other transactions contemplated by the merger agreement. Sandler O’Neill expressed no opinion as to any such matters.

Sandler O’Neill’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion. Events occurring after the date of its opinion could materially affect Sandler O’Neill’s opinion. Sandler O’Neill has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of its opinion. Sandler O’Neill expressed no opinion as to the trading values of NSBC common stock or Seacoast common

 

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stock at any time or what the value of Seacoast common stock would be once it is actually received by the holders of NSBC common stock.

In rendering its opinion, Sandler O’Neill performed a variety of financial analyses. The summary below is not a complete description of the analyses underlying Sandler O’Neill’s opinion or the presentation made by Sandler O’Neill to NSBC’s board of directors, but is a summary of all material analyses performed and presented by Sandler O’Neill. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O’Neill believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O’Neill’s comparative analyses described below is identical to NSBC or Seacoast and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of NSBC and Seacoast and the companies to which they are being compared. In arriving at its opinion, Sandler O’Neill did not attribute any particular weight to any analysis or factor that it considered. Rather, Sandler O’Neill made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler O’Neill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion, rather, Sandler O’Neill made its determination as to the fairness of the merger consideration on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.

In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which are beyond the control of NSBC, Seacoast and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solely for purposes of rendering its opinion and provided such analyses to NSBC’s board of directors at its May 17, 2017 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of NSBC common stock or the prices at which NSBC common stock or Seacoast common stock may be sold at any time. The analyses of Sandler O’Neill and its opinion were among a number of factors taken into consideration by NSBC’s board of directors in making its determination to approve the merger agreement and should not be viewed as determinative of the merger consideration or the decision of NSBC’s board of directors or management with respect to the fairness of the merger. The type and amount of consideration payable in the merger were determined through negotiation between NSBC and Seacoast.

 

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Summary of Proposed Merger Consideration and Implied Transaction Metrics. Sandler O’Neill reviewed the financial terms of the proposed merger. Using the per share cash consideration and the implied value of the per share stock consideration based on the closing price of Seacoast common stock on May 16, 2017, Sandler O’Neill calculated an aggregate implied transaction value of approximately $31.2 million, or an implied transaction price per share of $15.57. Based upon financial information for NSBC as of or for the last twelve months (“LTM”) ended March 31, 2017, as provided by the senior management of NSBC, Sandler O’Neill calculated the following implied transaction metrics:

 

Implied Transaction Price Per Share / Last Twelve Months Earnings Per Share:			34.3x
Implied Transaction Price Per Share / Tangible Book Value Per Share:			135.6	%
Implied Transaction Price Per Share / Adjusted Tangible Book Value Per Share1:			141.3	%
Tangible Book Premium / Core Deposits2:			6.9	%

 

1)	Adjusted tangible book value assumes normalized TCE / TA of 9.00%

2)	Core Deposits defined as total deposits less time deposits greater than $100,000

Stock Trading History. Sandler O’Neill reviewed the historical stock price performance of Seacoast common stock for the three-year period ended May 16, 2017. Sandler O’Neill then compared the relationship between the stock price performance of Seacoast to stock price movements in the Seacoast Peer Group (as described below) as well as certain stock indices.

Seacoast Three-Year Stock Price Performance

 

		Beginning May 16, 2014				Ending May 16, 2017
Seacoast			100	%			230.2	%
Seacoast Peer Group			100	%			165.4	%
NASDAQ Bank Index			100	%			151.8	%
S&P 500 Index			100	%			127.8	%

Comparable Company Analyses. Sandler O’Neill used publicly available information to compare selected financial information for NSBC with a group of financial institutions selected by Sandler O’Neill (the “NSBC Peer Group”). The NSBC Peer Group consisted of publicly-traded banks and thrifts headquartered in the Southeast with total assets between $100 million and $400 million and nonperforming assets/total assets less than 2.00%, excluding announced merger targets. The NSBC Peer Group consisted of the following companies:

 

Aquesta Financial Holdings, Inc.		CCB Bankshares, Inc.
Paragon Financial Solutions, Inc.		United Tennessee Bankshares, Inc.
First IC Corporation		Oak View National Bank
Premara Financial, Inc.		Security Bancorp, Inc.
Citizens Financial Corp.		Virginia Bank Bankshares, Incorporated
Virginia Community Bankshares, Inc.		Mountain-Valley Bancshares, Inc.
Exchange Bankshares, Inc.		Great State Bank
Farmers Bank of Appomattox

The analysis compared financial information for NSBC provided by NSBC as of or the twelve months ended March 31, 2017 with the corresponding publicly available data for the NSBC Peer Group as of or for the twelve months ended March 31, 2017 (or, if data as of or for the twelve months ended March 31, 2017 was not publicly available, as of or for the twelve months ended December 31, 2016), with pricing data as of May 16, 2017. The analysis also included certain other data for the NSBC Peer Group. The table below sets forth the data for NSBC and the high, low, median and mean data for the NSBC Peer Group.

 

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NSBC Peer Group Analysis

 

		NSBC				NSBC Peer Group Median				NSBC Peer Group Mean				NSBC Peer Group Low				NSBC Peer Group High
Total assets (in millions)		$	212			$	234			$	234			$	118			$	354
Loans/Deposits			81.5	%			86.2	%			84.0	%			54.3	%			99.6	%
Non-performing assets1/Total assets			0.00	%			0.77	%			0.87	%			0.03	%			1.95	%
Tangible common equity/Tangible assets			10.2	%			10.1	%			10.8	%			7.3	%			16.8	%
Leverage Ratio			9.8	%			10.5	%			11.3	%			8.3	%			16.3	%
Total RBC Ratio			13.7	%			15.9	%			17.3	%			11.6	%			25.1	%
Last Twelve Months Return on average assets			0.46	%			0.78	%			0.85	%			0.27	%			2.27	%
Last Twelve Months Return on average equity			4.57	%			7.75	%			7.47	%			2.76	%			14.02	%
Last Twelve Months Net interest margin			4.06	%			3.71	%			3.73	%			2.91	%			4.41	%
Last Twelve Months Efficiency ratio			82.0	%			72.3	%			71.9	%			48.3	%			89.9	%
Price/Tangible book value			—				94	%			97	%			77	%			125	%
Price/Last Twelve Months Earnings per share			—				12.8x				14.4x				10.0x				23.6x
Current Dividend Yield			—				2.1	%			2.4	%			0.0	%			5.7	%
Market value (in millions)			—			$	21			$	24			$	10			$	48

 

1)	Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans and leases, and real estate owned.

Sandler O’Neill used publicly available information to perform a similar analysis for Seacoast and a group of financial institutions selected by Sandler O’Neill (the “Seacoast Peer Group”). The Seacoast Peer Group consisted of nationwide publicly-traded banks and thrifts with total assets between $4.0 billion and $5.5 billion with last twelve months core return on average assets greater than 0.75%, and nonperforming assets/total assets less than 1.50%, excluding announced merger targets. The Seacoast Peer Group consisted of the following companies:

 

Central Pacific Financial Corp.		Great Southern Bancorp, Inc.
First Busey Corporation		Washington Trust Bancorp, Inc.
Westamerica Bancorporation		Lakeland Financial Corporation
CenterState Banks, Inc.		Univest Corporation of Pennsylvania
Lakeland Bancorp, Inc.		State Bank Financial Corporation
Sandy Spring Bancorp, Inc.		Pacific Premier Bancorp, Inc.
OceanFirst Financial Corp.		Oritani Financial Corp.
Enterprise Financial Services Corp.		City Holding Company
TrustCo Bank Corp NY		TriState Capital Holdings, Inc.
Hanmi Financial Corporation		Bridge Bancorp, Inc.
Meridian Bancorp, Inc.		MainSource Financial Group, Inc.
First Bancorp

 

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The analysis compared financial information for Seacoast provided by Seacoast as of or for the twelve months ended March 31, 2017 with the corresponding publicly available data for the Seacoast Peer Group as of or for the twelve months ended March 31, 2017 (or, if data as of or for the twelve months ended March 31, 2017 was not publicly available, as of or for the twelve months ended December 31, 2016), with pricing data as of May 16, 2017. The analysis also compared price to publicly available median analyst 2017 estimated earnings per share and price to publicly available median analyst 2018 estimated earnings per share multiples of Seacoast and the Seacoast Peer Group. The table below sets forth the data for SCBF and the high, low, median and mean data for the Seacoast Peer Group:

Seacoast Peer Group Analysis

 

		Seacoast1				Seacoast Peer Group Median				Seacoast Peer Group Mean				Seacoast Peer Group Low				Seacoast Peer Group High
Total assets (in millions)		$	4,770			$	4,442			$	4,668			$	4,042			$	5,443
Loans/Deposits			80.8	%			92.5	%			92.5	%			28.8	%			132.9	%
Non-performing assets2/Total assets			0.90	%			0.57	%			0.62	%			0.02	%			1.35	%
Tangible common equity/Tangible assets			9.0	%			9.0	%			9.4	%			7.3	%			13.5	%
Leverage Ratio			10.3	%			10.1	%			10.2	%			7.6	%			13.6	%
Total RBC Ratio			15.0	%			14.1	%			14.4	%			12.1	%			19.2	%
CRE/Total RBC Ratio			178.4	%			248.3	%			262.2	%			22.4	%			549.8	%
Last Twelve Months Core Return on average assets			0.95	%			1.11	%			1.09	%			0.79	%			1.44	%
Last Twelve Months Core Return on average equity			9.76	%			9.91	%			10.04	%			5.51	%			13.20	%
Last Twelve Months Net interest margin			3.62	%			3.50	%			3.53	%			2.20	%			4.68	%
Last Twelve Months Efficiency ratio			63.6	%			56.2	%			56.7	%			39.1	%			68.2	%
Price/Tangible book value			229	%			222	%			220	%			139	%			305.7	%
Price/Last Twelve Months Core Earnings per share			21.2x				18.3x				19.5x				15.3x				27.2x
Price/Median Analyst 2017E Earnings per share			18.8x				17.8x				18.2x				15.3x				23.5x
Price/Median Analyst 2018E Earnings per share			15.1x				15.4x				16.1x				13.7x				21.4x
Current Dividend Yield			0.0	%			2.2	%			2.1	%			0.0	%			4.1	%
Market value (in millions)		$	1,072			$	920			$	957			$	699			$	1,465

 

1)	Seacoast Price / Tangible book value and Market value pro forma for pending and recently closed acquisitions.

2)	Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans and leases, and real estate owned.

Analysis of Selected Nationwide Merger Transactions. Sandler O’Neill reviewed a group of selected nationwide merger and acquisition transactions involving U.S. banks and thrifts (the “Nationwide Transactions”). The Nationwide Transactions group consisted of transactions with disclosed deal values announced between January 1, 2015 and May 16, 2017 for targets with total assets between $100 million and $400 million, nonperforming assets/total assets less than 1.00% and last twelve months return on average assets between 0.25% and 0.75%. The National Transactions group was composed of the following transactions:

 

Acquiror		Target
Northwest Bancorp.		CenterPointe Community Bank
Kinderhook Bank Corp.		Patriot Federal Bank
Old Line Bancshares Inc.		DCB Bancshares Inc.
Trustmark Corp.		RB Bancorp.
Seacoast Banking Corp. of FL		GulfShore Bancshares Inc.
Heartland Financial USA Inc.		Founders Bancorp
IBM Southeast Employees’ CU		Mackinac SB FSB

 

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Acquiror		Target
Independent Bank Corp.		Island Bancorp Inc.
HomeTrust Bancshares Inc.		TriSummit Bancorp Inc.
Stonegate Bank		Insignia Bank
RCB Holding Co.		Cornerstone Alliance Ltd.
State Bank Financial Corp.		S Bankshares Inc.
Central Valley Community Bancorp		Sierra Vista Bank
Community Bancshares Corp.		IT&S of Iowa Inc.
County Bank Corp		Capac Bancorp Inc.
Pacific Commerce Bancorp		ProAmérica Bank
Renasant Corp.		KeyWorth Bank
Revere Bank		BlueRidge Bank
California Bank of Commerce		Pan Pacific Bank
National Commerce Corp.		Reunion Bank of Florida
FNB Bancorp		America California Bank
Merchants Bancshares Inc.		NUVO B&TC
Heritage Commerce Corp		Focus Business Bank
Overton Financial Corp.		Vision Bank—Texas
Sunshine Bancorp Inc.		Community Southern Holdings Inc.
Community & Southern Holdings Inc.		Community Business Bank

Using the latest publicly available information prior to the announcement of the relevant transaction, Sandler O’Neill reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to book value per share, transaction price to tangible book value per share, and core deposit premium. Sandler O’Neill compared the indicated transaction multiples for the merger to the high, low, mean and median multiples of the Nationwide Transactions group.

 

		NSBC/ Seacoast				Nationwide Transactions Median				Nationwide Transactions Mean				Nationwide Transactions High				Nationwide Transactions Low
Transaction price/Last Twelve Months earnings per share:			34.3x				27.2x				30.5x				68.8x				12.2x
Transaction price/Book value per share:			136	%			130	%			135	%			180	%			90	%
Transaction price/Tangible book value per share:			136	%			130	%			136	%			180	%			90	%
Core deposit premium:			6.9	%			6.0	%			5.5	%			10.9	%			0.3	%

Analysis of Selected Regional Merger Transactions. Sandler O’Neill also reviewed a regional group of selected merger and acquisition transactions involving U.S. banks and thrifts headquartered in the Southeast (the “Regional Transactions”). The Regional Transactions group consisted of transactions with disclosed deal values announced between January 1, 2015 and May 16, 2017 for targets headquartered in the Southeast with total assets between $100 million and $400 million, nonperforming assets/total assets less than 5.00% and last twelve months return on average assets between 0.25% and 0.75%. The Regional Transactions group was composed of the following transactions:

 

Acquiror		Target
First Community Corp.		Cornerstone Bancorp
West Town Bancorp Inc.		Sound Banking Co.
HCBF Holding Co.		Jefferson Bankshares Inc.
Little Bank Inc.		Union Banc Corp.
Trustmark Corp.		RB Bancorp.
Seacoast Banking Corp. of FL		GulfShore Bancshares Inc.
IBM Southeast Employees’ CU		Mackinac SB FSB
HomeTrust Bancshares Inc.		TriSummit Bancorp Inc.

 

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Acquiror		Target
Stonegate Bank		Insignia Bank
State Bank Financial Corp.		S Bankshares Inc.
Summit Financial Group Inc.		Highland County Bankshares Inc.
CenterState Banks		Hometown of Homestead Banking Co.
Fidelity Southern Corp.		American Enterprise Bankshares Inc.
Renasant Corp.		KeyWorth Bank
Citizens Bancshares of Batesville Inc.		Parkway Bank
HCBF Holding Co.		OGS Investments Inc.
Premier Financial Bancorp Inc.		First National Bankshares Corp
National Commerce Corp.		Reunion Bank of Florida
Hamilton State Bancshares		Highland Financial Services Inc.
Sunshine Bancorp Inc.		Community Southern Holdings Inc.
Community & Southern Holdings Inc.		Community Business Bank

Using the latest publicly available information prior to the announcement of the relevant transaction, Sandler O’Neill reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to tangible book value per share, and core deposit premium to core deposits. Sandler O’Neill compared the indicated transaction multiples for the merger to the high, low, mean and median multiples of the Regional Transactions group.

 

		NSBC/ Seacoast				Nationwide Transactions Median				Nationwide Transactions Mean				Nationwide Transactions High				Nationwide Transactions Low
Transaction price/Last Twelve Months earnings per share:			34.3x				25.2x				28.1x				66.3x				11.3x
Transaction price/Book value per share:			136	%			139	%			137	%			163	%			102	%
Transaction price/Tangible book value per share:			136	%			140	%			138	%			165	%			102	%
Core deposit premium:			6.9	%			6.1	%			5.4	%			9.4	%			0.3	%

Net Present Value Analyses. Sandler O’Neill performed an analysis that estimated the net present value per share of NSBC common stock assuming NSBC performed in accordance with internal financial projections for the years ending December 31, 2017 through December 31, 2021. To approximate the terminal value of a share of NSBC common stock at December 31, 2021, Sandler O’Neill applied price to 2021 earnings per share multiples ranging from 10.0x to 20.0x and price to December 31, 2021 tangible book value per share multiples ranging from 70% to 140%. The terminal values were then discounted to present values using different discount rates ranging from 11.0% to 15.0% which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of NSBC common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of NSBC common stock of $8.53 to $20.19 when applying multiples of earnings per share and $6.13 to $14.50 when applying multiples of tangible book value per share.

Earnings Per Share Multiples

 

Discount Rate		10.0x				12.0x				14.0x				16.0x				18.0x				20.0x
11.0%		$	10.10			$	12.11			$	14.13			$	16.15			$	18.17			$	20.19
11.7%		$	9.81			$	11.77			$	13.74			$	15.70			$	17.66			$	19.62
12.3%		$	9.54			$	11.45			$	13.35			$	15.26			$	17.17			$	19.08
13.0%		$	9.27			$	11.13			$	12.98			$	14.84			$	16.69			$	18.55
13.7%		$	9.02			$	10.82			$	12.63			$	14.43			$	16.23			$	18.04
14.3%		$	8.77			$	10.53			$	12.28			$	14.03			$	15.79			$	17.54
15.0%		$	8.53			$	10.24			$	11.95			$	13.65			$	15.36			$	17.07

 

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Tangible Book Value Per Share Multiples

 

Discount Rate		70%				82%				94%				106%				118%				140%
11.0%		$	7.25			$	8.49			$	9.74			$	10.98			$	12.22			$	14.50
11.7%		$	7.05			$	8.25			$	9.46			$	10.67			$	11.88			$	14.09
12.3%		$	6.85			$	8.02			$	9.20			$	10.37			$	11.55			$	13.70
13.0%		$	6.66			$	7.80			$	8.94			$	10.08			$	11.23			$	13.32
13.7%		$	6.48			$	7.59			$	8.70			$	9.81			$	10.92			$	12.95
14.3%		$	6.30			$	7.38			$	8.46			$	9.54			$	10.62			$	12.60
15.0%		$	6.13			$	7.18			$	8.23			$	9.28			$	10.33			$	12.25

Sandler O’Neill also considered and discussed with the NSBC board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming NSBC’s net income varied from 15% above projections to 15% below projections. This analysis resulted in the following range of per share values for NSBC common stock, applying the price to 2021 earnings per share multiples range of 10.0x to 20.0x referred to above and a discount rate of 12.62%.

Earnings Per Share Multiples

 

Annual Budget Variance		10.0x				12.0x				14.0x				16.0x				18.0x				20.0x
(15.0%)		$	8.01			$	9.61			$	11.21			$	12.82			$	14.42			$	16.02
(10.0%)		$	8.48			$	10.18			$	11.87			$	13.57			$	15.27			$	16.96
(5.0%)		$	8.95			$	10.74			$	12.53			$	14.32			$	16.12			$	17.91
0.0%		$	9.42			$	11.31			$	13.19			$	15.08			$	16.96			$	18.85
5.0%		$	9.90			$	11.87			$	13.85			$	15.83			$	17.81			$	19.79
10.0%		$	10.37			$	12.44			$	14.51			$	16.59			$	18.66			$	20.73
15.0%		$	10.84			$	13.01			$	15.17			$	17.34			$	19.51			$	21.68

Sandler O’Neill also performed an analysis that estimated the net present value per share of Seacoast common stock assuming that Seacoast performed in accordance with publicly available consensus mean analyst estimates for Seacoast for the years ending December 31, 2017 and December 31, 2018, and an estimated long-term earnings per share growth rate for the years thereafter. To approximate the terminal value of Seacoast common stock at December 31, 2020, Sandler O’Neill applied price to 2020 earnings per share multiples ranging from 16.0x to 21.0x and price to December 31, 2020 tangible book value per share multiples ranging from 185% to 260%. The terminal values were then discounted to present values using different discount rates ranging from 7.5% to 9.5% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Seacoast common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of Seacoast common stock of $20.95 to $29.46 when applying multiples of earnings per share and $21.99 to $33.12 when applying multiples of tangible book value per share.

 

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Earnings Per Share Multiples

 

Discount Rate		16.0x				17.0x				18.0x				19.0x				20.0x				21.0x
7.5%		$	22.45			$	23.85			$	25.25			$	26.66			$	28.06			$	29.46
7.8%		$	22.19			$	23.57			$	24.96			$	26.35			$	27.73			$	29.12
8.2%		$	21.93			$	23.30			$	24.67			$	26.04			$	27.42			$	28.79
8.5%		$	21.68			$	23.04			$	24.39			$	25.75			$	27.10			$	28.46
8.8%		$	21.43			$	22.77			$	24.11			$	25.45			$	26.79			$	28.13
9.2%		$	21.19			$	22.51			$	23.84			$	25.16			$	26.49			$	27.81
9.5%		$	20.95			$	22.26			$	23.57			$	24.88			$	26.18			$	27.49

Tangible Book Value Per Share Multiples

 

Discount Rate		185%				200%				215%				230%				245%				260%
7.5%		$	23.57			$	25.48			$	27.39			$	29.30			$	31.21			$	33.12
7.8%		$	23.29			$	25.18			$	27.07			$	28.96			$	30.85			$	32.74
8.2%		$	23.03			$	24.89			$	26.76			$	28.63			$	30.49			$	32.36
8.5%		$	22.76			$	24.61			$	26.45			$	28.30			$	30.14			$	31.99
8.8%		$	22.50			$	24.33			$	26.15			$	27.98			$	29.80			$	31.62
9.2%		$	22.25			$	24.05			$	25.85			$	27.66			$	29.46			$	31.26
9.5%		$	21.99			$	23.78			$	25.56			$	27.34			$	29.13			$	30.91

Sandler O’Neill also considered and discussed with the NSBC board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming Seacoast’s net income varied from 15% above estimates to 15% below estimates. This analysis resulted in the following range of per share values for Seacoast common stock, applying the price to 2020 earnings per share multiples range of 16.0x to 21.0x referred to above and a discount rate of 7.82%.

Earnings Per Share Multiples

 

Annual Budget Variance		16.0x				17.0x				18.0x				19.0x				20.0x				21.0x
(15.0%)		$	18.87			$	20.05			$	21.23			$	22.41			$	23.59			$	24.77
(10.0%)		$	19.98			$	21.23			$	22.48			$	23.73			$	24.98			$	26.22
(5.0%)		$	21.09			$	22.41			$	23.73			$	25.04			$	26.36			$	27.68
0.0%		$	22.20			$	23.59			$	24.98			$	26.36			$	27.75			$	29.14
5.0%		$	23.31			$	24.77			$	26.22			$	27.68			$	29.14			$	30.60
10.0%		$	24.42			$	25.95			$	27.47			$	29.00			$	30.53			$	32.05
15.0%		$	25.53			$	27.13			$	28.72			$	30.32			$	31.91			$	33.51

Sandler O’Neill noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Pro Forma Merger Analysis. Sandler O’Neill analyzed certain potential pro forma effects of the merger, assuming the merger closes at the end of the fourth calendar quarter of 2017. In performing its analysis, Sandler O’Neill utilized the following information: (i) financial projections for NSBC for the years ending December 31, 2017 through December 31, 2021, as provided by the senior management of NSBC; (ii) publicly available

 

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consensus mean analyst earnings per share estimates for Seacoast for the years ending December 31, 2017 and December 31, 2018, and an estimated long-term earnings per share growth rate for the years thereafter; and (iii) certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as provided by the senior management of Seacoast. The analysis indicated that the merger could be accretive to Seacoast’s earnings per share (excluding one-time transaction costs and expenses) in the years ended December 31, 2018, December 31, 2019, and December 31, 2020, dilutive to Seacoast’s estimated tangible book value per share at close and accretive to Seacoast’s estimated tangible book value per share at December 31, 2018 and thereafter.

In connection with this analysis, Sandler O’Neill considered and discussed with the NSBC board of directors how the analysis would be affected by changes in the underlying assumptions, including the impact of final purchase accounting adjustments determined at the closing of the transaction, and noted that the actual results achieved by the combined company may vary from projected results and the variations may be material.

Sandler O’Neill’s Relationship. Sandler O’Neill has acted as NSBC’s financial advisor in connection with the merger and will receive a fee for its services in an amount equal to 1.3% of the aggregate purchase price, which fee is estimated to be approximately $405,000 based on the market value of Seacoast’s common stock at the time the merger was announced. Sandler O’Neill’s fee is contingent upon the closing of the merger. Sandler O’Neill also received a $125,000 fee upon rendering its fairness opinion to the NSBC Board of Directors, which opinion fee will be credited in full towards the transaction fee which will become payable to Sandler O’Neill on the day of closing of the merger. NSBC has also agreed to indemnify Sandler O’Neill against certain claims and liabilities arising out of its engagement and to reimburse Sandler O’Neill for certain of its out-of-pocket expenses incurred in connection with its engagement.

Sandler O’Neill did not provide any other investment banking services to NSBC in the two years preceding the date of its opinion. In the two years preceding the date of its opinion, Sandler O’Neill has provided certain investment banking services to Seacoast and received fees for such services. Most recently, Sandler O’Neill acted as joint book-running manager in connection with Seacoast’s offer and sale of common stock, which transaction closed in February 2017, and financial advisor to the board of directors of Seacoast in connection with Seacoast’s acquisition of Grand Bankshares, Inc., which transaction closed in July 2015. In addition, in the ordinary course of its business as a broker-dealer, Sandler O’Neill may purchase securities from and sell securities to Seacoast and its affiliates. Sandler O’Neill may also actively trade the equity and debt securities of Seacoast and its affiliates for its own account and for the accounts of its customers.

Material U.S. Federal Income Tax Consequences of the Merger

The following discussion describes the anticipated material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) of NSBC common stock that exchange their shares of NSBC common stock for shares of Seacoast common stock and cash in the merger. This discussion is based on the Code, its legislative history, existing and proposed regulations thereunder and published rulings and decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the accuracy of the statements and conclusions set forth in this discussion.

For purposes of this discussion, a “U.S. holder” means a beneficial owner of NSBC common stock that is for U.S. federal income tax purposes (i) an individual citizen or resident of the United States, (ii) a corporation, or entity treated as a corporation, organized in or under the laws of the United States or any state or political subdivision thereof or the District of Columbia, (iii) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes, or (iv) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source. This discussion addresses only U.S. holders of NSBC common stock.

 

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If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds NSBC common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. Partners in a partnership holding NSBC common stock should consult their own tax advisors.

This discussion addresses only those NSBC common stockholders that hold their shares of NSBC common stock as a capital asset within the meaning of Section 1221 of the Code (generally, stock held for investment). Further, this discussion does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your particular circumstances or if you are subject to special treatment under the U.S. federal income tax laws, including if you are:

 

•

a financial institution;

 

•

a tax-exempt organization;

 

•

an S corporation or other pass-through entity (or an investor in an S corporation or other pass-through entity);

 

•

an insurance company;

 

•

a regulated investment company;

 

•

a real estate investment trust;

 

•

a dealer or broker in stocks and securities, commodities or currencies;

 

•

a trader in securities that elects the mark-to-market method of accounting;

 

•

a holder of NSBC stock that received such stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;

 

•

a person that is not a U.S. holder (as defined above);

 

•

a person that has a functional currency other than the U.S. dollar;

 

•

a holder of NSBC stock that holds such stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or

 

•

a U.S. expatriate.

In addition, the discussion does not address any alternative minimum tax or any state, local or foreign tax consequences of the merger, nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010. The actual tax consequences of the merger to you may be complex. These consequences will depend on your individual situation. You should consult with your own tax advisor to determine the tax consequences of the merger to you.

Tax Consequences of the Merger Generally

The parties intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. It is a condition to Seacoast’s obligation to complete the merger that Seacoast receive an opinion from Alston & Bird LLP, dated the closing date of the merger, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. It is a condition to NSBC’s obligation to complete the merger that NSBC receive an opinion from Bush Ross, P.A., dated the closing date of the merger, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. The opinion of Alston & Bird LLP provided on behalf of Seacoast and the opinion of Bush Ross, P.A. provided on behalf of NSBC, will be based on representation letters provided by Seacoast and NSBC and on customary factual assumptions. Neither of the opinions described above will be binding on the Internal Revenue Service or

 

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any court. NSBC and Seacoast have not sought and will not seek any ruling from the Internal Revenue Service regarding any matters relating to the merger. There can be no assurance that the Internal Revenue Service will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth in this discussion.

Provided the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, upon exchanging your NSBC common stock for Seacoast common stock and cash (other than cash received in lieu of a fractional share), you generally will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess of the sum of the amount of cash and the fair market value of the Seacoast common stock received pursuant to the merger over your adjusted tax basis in the shares of NSBC common stock surrendered) and (2) the amount of cash received pursuant to the merger (excluding any cash received in lieu of a fractional share). If you acquired different blocks of NSBC common stock at different times or different prices, you should consult your tax advisor regarding the manner in which gain or loss should be determined. Any recognized gain generally will be long-term capital gain if, as of the effective date of the merger, your holding period with respect to the NSBC common stock surrendered exceeds one year. If, however, the cash received has the effect of the distribution of a dividend, the gain will be treated as a dividend to the extent of the holder’s ratable share of accumulated earnings and profits as calculated for United States federal income tax purposes. See “—Possible Dividend Treatment” below.

The aggregate tax basis of in the Seacoast common stock you receive in the merger (including any fractional shares deemed received and redeemed for cash as described below) will be the same as the aggregate tax basis of the NSBC common stock surrendered in exchange therefor, reduced by the amount of cash received (excluding any cash received in lieu of a fractional share) and increased by the amount of gain, if any, recognized by you (excluding any gain recognized with respect to cash received in lieu of a fractional share) on the exchange. The holding period of the Seacoast common stock received (including any fractional shares deemed received and sold for cash as described below) will include the holding period of the NSBC shares surrendered.

Possible Dividend Treatment

In general, the determination of whether the gain recognized in the exchange will be treated as capital gain or has the effect of a distribution of a dividend depends upon whether and to what extent the exchange reduces the holder’s deemed percentage stock ownership of Seacoast. For purposes of this determination, the holder is treated as if it first exchanged all of its shares of NSBC common stock solely for Seacoast common stock and then Seacoast immediately redeemed, which we refer to in this document as the “deemed redemption,” a portion of the Seacoast common stock in exchange for the cash the holder actually received. The gain recognized in the deemed redemption will be treated as capital gain if the deemed redemption is (1) “substantially disproportionate” with respect to the holder or (2) “not essentially equivalent to a dividend.”

The deemed redemption will generally be “substantially disproportionate” with respect to a holder if the percentage described in (2) below is less than 80% of the percentage described in (1) below. Whether the deemed redemption is “not essentially equivalent to a dividend” with respect to a holder will depend upon the holder’s particular circumstances. At a minimum, however, in order for the deemed redemption to be “not essentially equivalent to a dividend,” the deemed redemption must result in a “meaningful reduction” in the holder’s deemed percentage stock ownership of Seacoast. In general, that determination requires a comparison of (1) the percentage of the outstanding stock of Seacoast that the holder is deemed actually and constructively to have owned immediately before the deemed redemption and (2) the percentage of the outstanding stock of Seacoast that is actually and constructively owned by the holder immediately after the deemed redemption. In applying the above tests, a holder may, under the constructive ownership rules, be deemed to own stock that is owned by other persons or stock underlying a holder’s option to purchase in addition to the stock actually owned by the holder.

Because the possibility of dividend treatment depends primarily on each holder’s particular circumstances, including the application of the constructive ownership rules, holders of NSBC common stock should consult their own tax advisors regarding the application of the foregoing rules to their particular circumstances.

 

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Cash Instead of Fractional Shares

If you receive cash instead of a fractional share of Seacoast common stock, you will be treated as having received the fractional share of Seacoast common stock pursuant to the merger and then as having sold that fractional share of Seacoast common stock for cash. As a result, assuming that the cash received is not treated as a dividend (as described above), you generally will recognize gain or loss equal to the difference between the amount of cash received and the tax basis allocated to such fractional share. This gain or loss generally will be capital gain or loss and generally will be long-term capital gain or loss if, as of the effective date of the merger, your holding period for the shares (including the holding period of the NSBC common stock deemed surrendered in exchange for a fractional share of Seacoast common stock) is greater than one year. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding

In certain instances you may be subject to information reporting and backup withholding (currently at a rate of 28%) on any cash payments you receive. You generally will not be subject to backup withholding, however, if you:

 

•

furnish a correct taxpayer identification number, certify that you are not subject to backup withholding on the substitute Form W-9 or successor form included in the letter of transmittal you will receive and otherwise comply with all the applicable requirements of the backup withholding rules; or

 

•

provide proof that you are otherwise exempt from backup withholding.

Any amounts withheld under the backup withholding rules are not additional tax and will generally be allowed as a refund or credit against your U.S. federal income tax liability, provided you timely furnish the required information to the Internal Revenue Service.

Exercise of Dissenters’ Rights

A U.S. Holder who receives cash pursuant to the exercise of dissenters’ rights generally will recognize capital gain or loss measured by the difference between the cash received and its adjusted basis in its shares of NSBC common stock.

The preceding discussion does not purport to be a complete analysis or discussion of all the potential tax consequences of the merger. It is for general information purposes and is not tax advice. You are urged to consult your own tax advisor with respect to the tax consequences to you, in light of your particular circumstances, of the merger (or exercise of dissenters’ rights), including tax return reporting requirements, United States federal estate or gift tax rules and the applicability and effect of federal, state, local, and foreign tax laws.

Accounting Treatment

The merger will be accounted for using the acquisition method of accounting with Seacoast treated as the acquiror. Under this method of accounting, NSBC’s assets and liabilities will be recorded by Seacoast at their respective fair values as of the date of completion of the merger. Financial statements of Seacoast issued after the merger will reflect these values and will not be restated retroactively to reflect the historical financial position or results of operations of Seacoast.

Regulatory Approvals

Under federal law, the merger must be approved by the Federal Reserve and the bank merger must be approved by the OCC. Once the Federal Reserve approves the merger (unless such requirement for approval has

 

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been waived), the parties must wait for up to 30 days before completing the merger. With the concurrence of the U.S. Department of Justice and permission from the Federal Reserve, however, the merger may be completed on or after the fifteenth day after approval from the Federal Reserve (unless such requirement for approval has been waived). Similarly, after receipt of approval of the bank merger from the OCC, the parties must wait for up to 30 days before completing the bank merger. If, however, there are no adverse comments from the U.S. Department of Justice and Seacoast receives permission from the OCC to do so, the bank merger may be completed on or after the fifteenth (15th) day after approval from the OCC.

As of the date of this proxy statement/prospectus, all of the required regulatory applications have been filed. There is no assurance as to whether the regulatory approvals will be obtained or as to the date of such approval. There also can be no assurance that the regulatory approvals received will not contain a condition that would increase any of the minimum regulatory capital requirements of Seacoast following the merger or have a material adverse effect. See “The Merger Agreement — Conditions to Completion of the Merger.”

Appraisal Rights for NSBC Shareholders

Holders of NSBC common stock as of the record date are entitled to appraisal rights under the FBCA. Pursuant to Section 607.1302 of the FBCA, a NSBC shareholder who does not wish to accept the merger consideration to be received pursuant to the terms of the merger agreement may dissent from the merger and elect to receive the fair value of his or her shares of NSBC common stock immediately prior to the consummation of the merger, excluding any appreciation or depreciation in anticipation of the merger unless exclusion would be inequitable. Under the terms of the merger agreement, if 5% or more of the outstanding shares of NSBC common stock validly exercise their appraisal rights, then Seacoast will not be obligated to complete the merger.

In order to exercise appraisal rights, a dissenting NSBC shareholder must strictly comply with the statutory procedures of Sections 607.1301 through 607.1333 of the FBCA, which are summarized below. A copy of the full text of those Sections is included as Appendix C to this proxy statement/prospectus. NSBC shareholders are urged to read Appendix C in its entirety and to consult with their legal advisors. Each NSBC shareholder who desires to assert his or her appraisal rights is cautioned that failure on his or her part to adhere strictly to the requirements of Florida law in any regard will cause a forfeiture of any appraisal rights.

Procedures for Exercising Dissenters’ Rights of Appraisal. The following summary of Florida law is qualified in its entirety by reference to the full text of the applicable provisions of the FBCA, a copy of which is included as Appendix C to this proxy statement/prospectus.

A dissenting shareholder who desires to exercise his or her appraisal rights must file with NSBC, prior to the taking of the vote on the merger agreement, a written notice of intent to demand payment for his or her shares if the merger is effectuated. A vote against the merger agreement will not alone be deemed to be the written notice of intent to demand payment and will not be deemed to satisfy the notice requirements under the FBCA. A dissenting shareholder need not vote against the merger agreement, but cannot vote, or allow any nominee who holds such shares for the dissenting shareholder to vote, any of his or her shares of NSBC common stock in favor of the merger agreement. A vote in favor of the merger agreement will constitute a waiver of the shareholder’s appraisal rights. A shareholder’s failure to vote against the merger agreement will not constitute a waiver of such shareholder’s dissenters’ rights. Such written notification should be delivered either in person or by mail (certified mail, return receipt requested, being the recommended form of transmittal) to:

NorthStar Banking Corporation

Rivergate Tower

400 North Ashley Drive, Suite 1400

Tampa, Florida 33602

Attn: Felicia Lambdin, Corporate Secretary

 

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All such notices must be signed in the same manner as the shares are registered on the books of NSBC. If a NSBC shareholder has not provided written notice of intent to demand fair value before the vote on the proposal to approve the merger agreement is taken at the special meeting, then the NSBC shareholder will be deemed to have waived his or her appraisal rights.

Within 10 days after the completion of the merger, Seacoast must provide to each NSBC shareholder who filed a notice of intent to demand payment for his or her shares a written appraisal notice and an election form that specifies, among other things:

 

•

the date of the completion of the merger;

 

•

Seacoast’s estimate of the fair value of the shares of NSBC common stock;

 

•

where to return the completed appraisal election form and the shareholder’s stock certificates and the date by which each must be received by Seacoast or its agent, which date with respect to the receipt of the appraisal election form may not be fewer than 40, nor more than 60, days after the date Seacoast sent the appraisal election form to the shareholder (and shall state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless such form is received by Seacoast by such specified date) and which with respect to the return of stock certificates must not be earlier than the date for receiving the appraisal election form;

 

•

that, if requested in writing, Seacoast will provide to the shareholder so requesting, within 10 days after the date set for receipt by Seacoast of the appraisal election form, the number of shareholders who return the forms by such date and the total number of shares owned by them; and

 

•

the date by which a notice from the NSBC shareholder of his or her desire to withdraw his or her appraisal election must be received by Seacoast, which date must be within 20 days after the date set for receipt by Seacoast of the appraisal election form from the NSBC shareholder.

The form must also contain Seacoast’s offer to pay to the NSBC shareholder the amount that it has estimated as the fair value of the shares of NSBC common stock and include NSBC’s financial statements, consisting of a balance sheet as of the end of the fiscal year ending not more than 15 months prior to the date of the corporation’s appraisal notice, an income statement for that year, a cash flow statement for that year, and the latest applicable interim financial statements if any, and a copy of Section 607.1301-607.1333, and request certain information from the NSBC shareholder, including:

 

•

the shareholder’s name and address;

 

•

the number of shares as to which the shareholder is asserting appraisal rights;

 

•

that the shareholder did not vote for the merger;

 

•

whether the shareholder accepts the offer of Seacoast to pay its estimate of the fair value of the shares of NSBC common stock to the shareholder; and

 

•

if the shareholder does not accept the offer of Seacoast, the shareholder’s estimated fair value of the shares of NSBC common stock and a demand for payment of the shareholder’s estimated value plus interest.

A dissenting shareholder must execute the appraisal election form and submit it together with the certificate(s) representing his or her shares, in the case of certificated shares, by the date specified in the notice. Any dissenting shareholder failing to return a properly completed appraisal election form and his or her stock certificates within the period stated in the form will lose his or her appraisal rights and be bound by the terms of the merger agreement. Upon returning the appraisal election form, a dissenting shareholder will be entitled only to payment pursuant to the procedure set forth in the applicable sections of the FBCA and will not be entitled to vote or to exercise any other rights of a shareholder, unless the dissenting shareholder withdraws his or her demand for appraisal within the time period specified in the appraisal election form.

 

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A dissenting shareholder who has delivered the appraisal election form and his or her NSBC common stock certificates may decline to exercise appraisal rights and withdraw from the appraisal process by giving written notice to Seacoast within the time period specified in the appraisal election form. Thereafter, a dissenting shareholder may not withdraw from the appraisal process without the written consent of Seacoast. Upon such withdrawal, the right of the dissenting shareholder to be paid the fair value of his or her shares will cease, and he or she will be reinstated as a shareholder and will be entitled to receive the merger consideration.

If the dissenting shareholder accepts the offer of Seacoast in the appraisal election form to pay Seacoast’s estimate of the fair value of the shares of NSBC common stock, payment for the shares of the dissenting shareholder is to be made within 90 days after the receipt of the appraisal election form by Seacoast or its agent. Upon payment of the agreed value, the dissenting shareholder will cease to have any interest in such shares.

A shareholder who is dissatisfied with Seacoast’s estimate of the fair value of the shares of Seacoast common stock must notify Seacoast of the shareholder’s estimate of the fair value of the shares and demand payment of that estimate plus interest in the appraisal election form within the time period specified in the form. A shareholder who fails to notify Seacoast in writing of the shareholder’s demand to be paid its stated estimate of the fair value of the shares plus interest within the required time period waives the right to demand payment and will be entitled only to the payment offered by Seacoast in the appraisal election form.

A shareholder must demand appraisal rights with respect to all of the shares registered in his or her name, except that a record shareholder may assert appraisal rights as to fewer than all of the shares registered in the record shareholder’s name but which are owned by a beneficial shareholder, if the record shareholder objects with respect to all shares owned by the beneficial shareholder. A record shareholder must notify NSBC in writing of the name and address of each beneficial shareholder on whose behalf appraisal rights are being asserted. A beneficial shareholder may assert appraisal rights as to any shares held on behalf of the beneficial shareholder only if the beneficial shareholder submits to NSBC the record shareholder’s written consent to the assertion of such rights before the date specified in the appraisal election form, and does so with respect to all shares that are beneficially owned by the beneficial shareholder.

Section 607.1330 of the FBCA addresses what should occur if a dissenting shareholder fails to accept the offer of Seacoast to pay the value of the shares as estimated by Seacoast, and Seacoast fails to comply with the demand of the dissenting shareholder to pay the value of the shares as estimated by the dissenting shareholder, plus interest.

If a dissenting shareholder refuses to accept the offer of Seacoast to pay the value of the shares as estimated by Seacoast, and Seacoast fails to comply with the demand of the dissenting shareholder to pay the value of the shares as estimated by the dissenting shareholder, plus interest, then within 60 days after receipt of a written demand from any dissenting shareholder, Seacoast shall file an action in any court of competent jurisdiction in the county in Florida where the registered office of Seacoast, maintained pursuant to Florida law, is located requesting that the fair value of such shares be determined by the court.

If Seacoast fails to institute a proceeding within the above-prescribed period, any dissenting shareholder may do so in the name of Seacoast. All dissenting shareholders whose demands remain unsettled shall be made parties to the proceeding as in an action against their shares and a copy of the initial pleading will be served on each dissenting shareholder as provided by law. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There shall be no right to a jury trial.

Seacoast is required to pay each dissenting shareholder the amount of the fair value of such shareholder’s shares plus interest, as found by the court, within 10 days after final determination of the proceedings. Upon payment of the judgment, the dissenting shareholder ceases to have any interest in such shares.

Section 607.1331 of the FBCA provides that the costs of a court appraisal proceeding, including reasonable compensation for, and expenses of, appraisers appointed by the court, will be determined by the court and

 

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assessed against Seacoast, except that the court may assess costs against all or some of the dissenting shareholders, in amounts the court finds equitable, to the extent that the court finds such shareholders acted arbitrarily, vexatiously or not in good faith with respect to their appraisal rights. The court also may assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable, against: (i) Seacoast and in favor of any or all dissenting shareholders if the court finds Seacoast did not substantially comply with the notification provisions set forth in Sections 607.1320 and 607.1322 of the FBCA; or (ii) either Seacoast or a dissenting shareholder, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the appraisal rights. If the court in an appraisal proceeding finds that the services of counsel for any dissenting shareholder were of substantial benefit to other dissenting shareholders, and that the fees for those services should not be assessed against Seacoast, the court may award to such counsel reasonable fees to be paid out of the amounts awarded the dissenting shareholders who were benefited. To the extent that Seacoast fails to make a required payment when a dissenting shareholder accepts Seacoast’s offer to pay the value of the shares as estimated by Seacoast, the dissenting shareholder may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from Seacoast all costs and expenses of the suit, including counsel fees.

For a discussion of tax consequences with respect to dissenting shares, see “The Merger — Material U.S. Federal Income Tax Consequences of the Merger.”

BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF FLORIDA LAW RELATING TO DISSENTERS’ APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISORS.

Board of Directors and Management of SNB Following the Merger

The members of the board of directors and officers of SNB immediately prior to the effective time of the merger will be the directors and officers of the surviving bank and will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

Information regarding the executive officers and directors of SNB is contained in documents filed by Seacoast with the SEC and incorporated by reference into this proxy statement/prospectus, including Seacoast’s Annual Report on Form 10-K for the year ended December 31, 2016 and its definitive proxy statement on Schedule 14A for its 2017 annual meeting, filed with the SEC on March 16, 2017 and April 6, 2017, respectively. See “Where You Can Find More Information” and “Documents Incorporated by Reference.”

Interests of NSBC Directors and Executive Officers in the Merger

In the merger, the directors and executive officers of NSBC will receive the same merger consideration for their NSBC shares as the other NSBC shareholders. In considering the recommendation of the NSBC board of directors that you vote to approve the merger agreement, you should be aware that some of the executive officers and directors of NSBC may have interests in the merger and may have arrangements, as described below, that may be considered to be different from, or in addition to, those of NSBC shareholders generally. The NSBC board of directors was aware of these interests and considered them, among other matters, in reaching its decision to adopt and approve the merger agreement and to recommend that NSBC shareholders vote in favor of approving the merger agreement. See “The Merger — Background of the Merger” and “The Merger — NSBC’s Reasons for the Merger and Recommendations of the NSBC Board of Directors.” NSBC’s shareholders should take these interests into account in deciding whether to vote “FOR” the proposal to adopt the merger agreement. These interests are described in more detail below, and certain of them are quantified in the narrative below.

Entry into New Employment Agreement with Jacobsen

In connection with the merger, Seacoast will enter into a new employment agreement with Mr. Jacobsen. The new employment agreement replaces Mr. Jacobsen’s existing employment agreement with NorthStar Bank

 

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and will be effective upon completion of the merger. The term of the new employment agreement will commence as of the effective date of the merger and will terminate on the third anniversary thereof. Pursuant to the new employment agreement, Mr. Jacobsen will serve as a Senior Vice President, Commercial Banking Manager of SNB, with an annual salary equal to $220,000, such bonuses or other compensation as may be authorized by the SNB Board of Directors, as well as participation in benefit plans applicable to similarly situated employees of Seacoast. Following completion of the merger, Mr. Jacobsen will receive a retention equity award consisting of restricted stock units relating to Seacoast common stock having a value equal to $33,000 on the grant date, and a one-time cash payment equal the cash severance that he would have received under his employment agreement with NorthStar Bank if his employment had been terminated. This cash payment will be equal to the sum of $428,480, plus $50,000 (which represents two times his 2016 bonus with NorthStar), plus an amount equal to two years of premium cost for the benefit plans in which he was participating prior to the merger, plus 24 times his monthly club dues and auto allowance under his employment agreement with NorthStar Bank, less applicable withholdings. If Mr. Jacobsen is terminated by Seacoast without “cause” (as defined in the new employment agreement) prior to the expiration of the term, then he will receive a severance payment equal to 12 months’ of salary payable in ten equal monthly installments, reimbursement for group health care premiums under COBRA for 12 months following termination of employment, and any annual incentive compensation earned but not yet paid for any completed full fiscal year immediately preceding the employment termination date. The new employment agreement contains customary confidentiality covenants, as well as covenants regarding the non-solicitation of customers and employees and non-competition that apply for the later of (i) the third anniversary of the effective date of the agreement and (ii) one year following the executive’s termination of employment.

Entry into New Employment Agreement with Shaw

In connection with the merger, Seacoast will enter into a new employment agreement with Mr. Shaw. The new employment agreement replaces Mr. Shaw’s employment agreement with NorthStar Bank and will be effective upon completion of the merger. The term of the new employment agreement will commence as of the effective date of the merger and will terminate on the first anniversary thereof. Pursuant to the new employment agreement, Mr. Shaw will serve as a Senior Vice President, Commercial Banking Manager of SNB, with an annual salary equal to $178,000, such bonuses or other compensation as may be authorized by the SNB Board of Directors, as well as participation in benefit plans applicable to similarly situated employees of Seacoast. Following completion of the merger, Mr. Shaw will receive a retention equity award consisting of restricted stock units related to Seacoast common stock having a value equal to $62,300 on the grant date, and a one-time cash payment equal the cash severance that he would have received under his employment agreement with NorthStar Bank if his employment had been terminated. This cash payment will be equal to the sum of $178,000, plus $22,000 (which represents one time his 2016 bonus with NorthStar), plus an amount equal to one year of premium cost for the benefit plans in which he was participating prior to the merger, plus 12 times his monthly club dues and auto allowance under his employment agreement with NorthStar Bank, less applicable withholdings. If Mr. Shaw is terminated by Seacoast without “cause” (as defined in the new employment agreement) prior to the expiration of the term, then he will receive a severance payment equal to 6 months’ of salary payable in four equal monthly installments. The new employment agreement contains customary confidentiality covenants, as well as covenants regarding the non-solicitation of customer and employees and non-competition that apply for one year following the executive’s termination of employment.

As noted in the new employment agreement, prior to the effective time of the merger, NorthStar Bank paid $100,000 in cash to Mr. Shaw, less applicable withholdings, in lieu of certain payments described in a letter agreement between Mr. Shaw and NorthStar Bank dated April 27, 2017.

Treatment of NSBC Equity Awards

The merger agreement requires NSBC to take all actions necessary to terminate all outstanding awards, grants, units, option to purchase or other right to receive (the “NSBC Equity Awards”) shares of NSBC common stock immediately prior to the effective time of the merger in exchange for an amount in cash, without interest, equal to the product of (x) the aggregate number of shares of NSBC common stock subject to such NSBC Equity

 

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Award immediately prior to its termination, multiplied by (y) the excess, if any, of $16.00 over the exercise price per share of the NSBC Equity Award.

The table below follows reflects securities authorized for issuance under equity compensation plans as of June 30, 2017.

Securities Authorized For Issuance Under Equity Compensation Plans

 

Plan Category		Number of Securities to be issued upon exercise of outstanding options, warrants and rights				Weighted-average exercise price of outstanding options, warrants and rights				Number of Securities remaining available for future issuance under equity compensation  plans (excluding securities reflected in column (a))
		(a)				(b)				(c)
Equity Compensation plans approved by security holders			235,750			$	10.95				406,439
Equity compensation plans not approved by security holders			—				—				—
Total			235,750			$	10.95				406,439

Director Restrictive Covenant Agreement; Claims Letters

Certain directors who are executive officers of NSBC have entered into a restrictive covenant agreement, covering a two year period commencing with the effective time of the merger, with Seacoast in the form attached as Exhibit C to the merger agreement attached as Appendix A to this document and certain directors who are not executive officers of NSBC have entered into a restrictive covenant agreement, covering a three year period commencing with the effective time of the merger, with Seacoast in the form attached as Exhibit C to the merger agreement attached as Appendix A to this document. In addition, certain officers and directors of NSBC have entered into a claims letter in the form attached as Exhibit B to the merger agreement attached as Appendix A to this document, by which they have agreed to release certain claims against NSBC, effective as of the effective time of the merger.

Indemnification and Insurance

As described under “The Merger Agreement — Indemnification and Directors’ and Officers’ Insurance,” after the effective time of the merger, Seacoast will indemnify and defend the present and former directors, officers and employees of NSBC and its subsidiaries against claims pertaining to matters occurring at or prior to the closing of the merger as permitted by NSBC’s articles of incorporation, bylaws and the FBCA. Seacoast also has agreed, for a period of no less than six years after the effective time of the merger, to provide coverage to present and former directors and officers of NSBC pursuant to NSBC’s existing directors’ and officers’ liability insurance. This insurance policy may be substituted, but must contain at least the same coverage and amounts, and contain terms no less advantageous than the coverage currently provided by NSBC. In no event shall Seacoast be required to expend for the tail insurance a premium amount in excess of 150% of the annual premiums paid by NSBC for its directors’ and officers’ liability insurance in effect as of the date of the merger agreement.

 

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PROPOSAL 2: ADJOURNMENT OF THE NSBC SPECIAL MEETING

NSBC shareholders are being asked to approve the adjournment proposal.

If this adjournment proposal is approved, the NSBC special meeting could be adjourned to any date. If the NSBC special meeting is adjourned, NSBC shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you sign and return a proxy and do not indicate how you wish to vote on the adjournment proposal, your shares of NSBC common stock will be voted in favor of the adjournment proposal.

The affirmative vote of a majority of the votes cast on the proposal, in person or by proxy, at the special meeting by holders of shares of NSBC common stock is required to approve the adjournment proposal.

THE NSBC BOARD OF DIRECTORS RECOMMENDS THAT NSBC SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

 

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THE MERGER AGREEMENT

The following is a summary of the material provisions of the merger agreement. This summary is qualified in its entirety by reference to the merger agreement, a copy of which is included as Appendix A to this proxy statement/prospectus and is incorporated herein by reference. You should read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

The Merger and the Bank Merger

The boards of directors of Seacoast and NSBC have each unanimously approved and adopted the merger agreement, which provides for the merger of NSBC with and into Seacoast, with Seacoast as the surviving company in the Merger.

The merger agreement also provides that immediately after the effective time of the merger, NorthStar Bank, a wholly-owned subsidiary of NSBC, will merge with and into SNB, with SNB surviving the merger as the surviving bank in the merger. Each share of NSBC common stock outstanding immediately prior to the effective time of the merger (excluding shares held by NSBC, SNB, Seacoast and their wholly-owned subsidiaries, and dissenting shares described below) shall be converted into the right to receive the merger consideration as described further below. Each share of Seacoast common stock outstanding immediately prior to the effective time of the merger will remain outstanding as one share of Seacoast common stock and will not be affected by the merger

All shares of Seacoast common stock received by NSBC shareholders in the merger will be freely tradable, except that shares of Seacoast common stock received by persons who become affiliates of Seacoast for purposes of Rule 144 under the Securities Act may be resold by them only in transactions permitted by Rule 144, or as otherwise permitted under the Securities Act.

Closing and Effective Time of the Merger

Seacoast and NSBC will use their reasonable best efforts to cause the closing to occur on a mutually agreeable date after the satisfaction or waiver of all closing conditions (other than those conditions that by their nature can only be satisfied at the closing, but subject to the satisfaction and waiver thereof) when the effective time is to occur. Simultaneously with the closing of the merger, Seacoast will file articles of merger with the Secretary of State of the State of Florida. The merger will become effective at such time as the articles of merger are filed or such other time as may be specified in the articles of merger.

We currently expect that the merger will be completed in the fourth quarter of 2017, subject to the approval of the merger agreement by NSBC shareholders and certain bank regulators and subject to other conditions as described further in this proxy statement/prospectus. However, completion of the merger could be delayed if there is a delay in satisfying any other conditions to the merger. No assurance is made as to whether, or when, Seacoast and NSBC will complete the merger. See “The Merger Agreement — Conditions to Completion of the Merger.”

Merger Consideration

Under the terms of the merger agreement, each share of NSBC common stock outstanding immediately prior to the effective time of the merger (excluding certain shares held by NSBC, Seacoast and their wholly-owned subsidiaries, and dissenting shares described below) will be converted into the right to receive: (1) 0.5605 of a share of Seacoast common stock, which we refer to as the “exchange ratio” or the “per share stock consideration”; and (2) $2.40 in cash, which we refer to as the “per share cash consideration.” The per share cash consideration and per share stock consideration are collectively referred to as the “merger consideration.” In the event that NSBC’s consolidated tangible shareholders’ equity is less than $22.25 million (less any permitted expenses), Seacoast may adjust the merger consideration downward by an amount that equals the difference between $22.25 million (less any permitted expenses) and NSBC’s consolidated tangible shareholders’ equity.

 

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No fractional shares of Seacoast common stock will be issued in connection with the merger. Instead, Seacoast will make to each NSBC shareholder who would otherwise receive a fractional share of Seacoast common stock a cash payment (rounded to the nearest whole cent), without interest, equal to: (i) the fractional share amount multiplied by (ii) the average closing price per share of Seacoast common stock on the NASDAQ for the five trading day period ending on the trading day immediately prior to the closing date less (iii) applicable withholding taxes. No such holder of fractional shares will be entitled to dividends, voting rights or any other rights as a shareholder in respect of any fractional shares.

A NSBC shareholder also has the right to obtain the fair value of his or her shares of NSBC common stock in lieu of receiving the merger consideration by strictly following the appraisal procedures under the FBCA. Shares of NSBC common stock outstanding immediately prior to the effective time of the merger and which are held by a shareholder who does not vote to approve the merger agreement and who properly demands the fair value of such shares pursuant to, and who complies with, the appraisal procedures under the FBCA are referred to as “dissenting shares.” Dissenting shares shall not be entitled to receive the applicable merger consideration unless and until such shareholder shall have failed to perfect or shall have effectively withdrawn or lost such holder’s right to dissent from the merger under the FBCA. See “The Merger — Appraisal Rights for NSBC Shareholders.”

If Seacoast or NSBC change the number of shares of Seacoast common stock or NSBC common stock outstanding prior to the effective time of the merger as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or similar recapitalization with respect to the Seacoast common stock or NSBC common stock, then the per share stock consideration shall be appropriately and proportionately adjusted.

Based upon the closing sale price of the Seacoast common stock on the NASDAQ Global Select Market of $             on                     , 2017, the last practicable trading date prior to the printing of this proxy statement/prospectus, each share of NSBC common stock will be entitled to be exchanged for total merger consideration with a value equal to approximately $             per share.

The value of the shares of Seacoast common stock to be issued to NSBC shareholders in the merger will fluctuate between now and the closing date of the merger. We make no assurances as to whether or when the merger will be completed, and you are advised to obtain current sale prices for the Seacoast common stock. See “Risk Factors — Because the sale price of the Seacoast common stock will fluctuate, you cannot be sure of the value of the stock consideration that you will receive in the merger until the closing.”

Treatment of NSBC Equity Awards

The merger agreement requires NSBC to take all actions necessary to exercise, vest, and/or terminate all outstanding awards, grants, units, option to purchase or other right to receive (the “NSBC Equity Awards”) shares of NSBC common stock immediately prior to the effective time of the merger in exchange for an amount in cash, without interest, equal to the product of (x) the aggregate number of shares of NSBC common stock subject to such NSBC Equity Award immediately prior to its termination, multiplied by (y) the excess, if any, of $16.00 over the exercise price per share of the NSBC Equity Award.

Exchange Procedures

Seacoast has appointed as the exchange agent under the merger agreement its transfer agent, Continental Stock Transfer and Trust Company. Any holder of book-entry shares will not be required to deliver a certificate or an executed letter of transmittal to receive the merger consideration. Instead, a holder of book-entry shares will automatically at the effective time of the merger be entitled to receive the merger consideration, which will be paid as soon as practicable by the exchange agent.

 

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Subject to applicable abandoned property, escheat or similar laws, following payment of the merger consideration in respect of book-entry shares, the holder of the book-entry shares will be entitled to receive, without interest: (i) the amount of unpaid dividends or other distributions with a record date after the effective time of the merger payable with respect to the whole shares of Seacoast common stock represented by such book-entry shares; and (ii) at the appropriate payment date, the amount of dividends or other distributions payable with respect to shares of Seacoast common stock represented by such book-entry shares with a record date after the effective time of the merger and with a payment date subsequent to the issuance of the shares of Seacoast common stock issuable in exchange for such book-entry shares.

After the effective time of the merger, there will be no transfers on the stock transfer books of NSBC other than to settle transfers of shares of NSBC common stock that occurred prior to the effective time of the merger.

Organizational Documents of Surviving Holding Company and Surviving Bank; Directors and Officers

The organizational documents of Seacoast in effect immediately prior to the effective time of the merger shall be the organizational documents of the surviving company after the effective time of the merger, and the directors and officers of Seacoast immediately prior to the effective time of the merger shall continue as the directors and officers of Seacoast following the effective time of the merger.

In addition, the organizational documents of SNB in effect immediately prior to the effective time of the bank merger shall be the organizational documents of the surviving bank after the effective time of the bank merger. The directors and officers of SNB immediately prior to the effective time of the bank merger shall continue as the directors and officers of the surviving bank following the effective time of the bank merger.

Conduct of Business Pending the Merger

Pursuant to the merger agreement, NSBC has agreed to certain restrictions on its activities until the effective time of the merger. In general, NSBC has agreed that, except as otherwise contemplated or permitted by the merger agreement, it will:

 

•

conduct its business in the ordinary course consistent with past practice;

 

•

use commercially reasonable efforts to maintain and preserve intact its business organization, employees and advantageous business relationships; and

 

•

maintain its books, accounts and records in the usual manner on a basis consistent with that previously employed.

Both Seacoast and NSBC have agreed to take no action that would adversely affect or delay (i) the receipt of regulatory or governmental approvals required for the transactions contemplated by the merger agreement, (ii) the performance of their respective covenants and agreements or (iii) the consummation of the transactions contemplated by the merger agreement.

NSBC has also agreed that except as otherwise permitted by the merger agreement, as required by applicable laws or a governmental entity, or with the prior written consent of Seacoast (not to be unreasonably withheld or delayed) it will not, and will not permit any of its subsidiaries, to do any of the following:

 

•

amend its organizational documents or any resolution or agreement concerning indemnification of its directors or officers;

 

•

adjust, split, combine, subdivide or reclassify any capital stock;

 

•

make, declare, set aside or pay any dividend or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares its capital stock;

 

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•

grant any securities or obligations convertible into or exercisable for or giving any person any right to subscribe for or acquire, or any options, calls, restricted stock, deferred stock awards, stock units, phantom awards, dividend equivalents, or commitments relating to, or any stock appreciation right or other instrument;

 

•

issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of its capital stock, except pursuant to the exercise of NSBC Equity Awards outstanding as of the date of the merger agreement;

 

•

make any change in any instrument or contract governing the terms of any of its securities;

 

•

make any investment in any other person, other than in the ordinary course of business;

 

•

charge off or sell (except in the ordinary course of business consistent with past practices or as required by GAAP) any of its portfolio of loans, discounts or financing leases or sell any asset held as other real estate owned (“OREO”) or other foreclosed assets for an amount less than its book value;

 

•

terminate or allow to be terminated any of the policies of insurance maintained on its business or property, cancel any material indebtedness owing to it or any claim that it may possess or waive any right of substantial value or discharge or satisfy any material noncurrent liability;

 

•

enter into any new line of business or change its lending, investment, underwriting, risk and asset liability management and other banking and operating policies other than as required by law or any regulatory agreement or order;

 

•

lend any money or pledge any of its credit in connection with any aspect of its business (except in the ordinary course of business consistent with past practices);

 

•

mortgage or otherwise subject to any lien, encumbrance or other liability any of its assets (except in the ordinary course of business consistent with past practices);

 

•

sell, assign or transfer any of its assets in excess of $50,000 in the aggregate (except in the ordinary course of business consistent with past practices and except for property held as OREO);

 

•

incur any material liability, commitment, indebtedness or obligation or cancel, release or assign any indebtedness of any person or any claims against any person (except (i) in the ordinary course of business consistent with past practice or (ii) pursuant to contracts in force as of the date of the merger agreement and disclosed in the disclosure schedules attached thereto);

 

•

transfer, agree to transfer or grant, or agree to grant a license to, any of its material intellectual property (other than in the ordinary course of business consistent with past practice);

 

•

except in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other than short-term indebtedness incurred to refinance short term indebtedness) or assume, guarantee, endorse or otherwise become responsible for the obligations of any other person;

 

•

other than purchases of investment securities in the ordinary course of business or in consultation with Seacoast, restructure or change its investment securities portfolio or its gap position, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported;

 

•

terminate or waive any material provision of any contract other than normal renewals of contracts without materially adverse changes of terms or otherwise amend or modify any material contract;

 

•

other than in the ordinary course of business and consistent with past practice or as required by benefit plans and contracts in effect as of the date of the merger agreement, (i) increase in any manner the compensation or fringe benefits of, or grant any bonuses to, any director, officer or employee, whether under a benefit plan or otherwise, (ii) pay any pension or retirement allowance not required by any existing benefit plan or contract to any director, officer or employee, (iii) become a party to, amend or

 

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commit itself to any benefit plan or contract (or any individual contracts evidencing grants or awards) or employment agreement, retention agreement or severance arrangement with or for the benefit of any director, officer or employee, (iv) accelerate the vesting of, or the lapsing of restrictions with respect to, rights pursuant to any NSBC stock plan, (v) make any changes to a benefit plan that are not required by law, or (vi) hire or terminate the employment of a chief executive officer, president, chief financial officer, chief risk officer, chief credit officer, internal auditor, general counsel or other officer holding the position of senior vice president or above or any employee with annual base salary and incentive compensation that is reasonably anticipated to exceed $100,000;

 

•

settle any litigation, except in the ordinary course of business;

 

•

revalue any of its assets or change any method of accounting or accounting practice used by it, other than changes required by GAAP or the FDIC or any regulatory authority;

 

•

file or amend any tax return except in the ordinary course of business or settle or compromise any tax liability or make, change or revoke any tax election or change any method of tax accounting, except as required by applicable law;

 

•

enter into any closing agreement as described in Section 7121 of the Internal Revenue Code or surrender any claim for a refund of taxes or consent to any extension or waiver of the limitations period applicable to any claim or assessment with respect to taxes;

 

•

knowingly take, or knowingly omit to take, any action that is reasonably likely to result in any of the conditions to the merger not being satisfied, except as may be required by applicable law;

 

•

merge or consolidate with any other person;

 

•

acquire assets outside of the ordinary course of business consistent with past practices from any other person with a value or purchase price in the aggregate in excess of $50,000, other than purchase obligations pursuant to contracts in effect prior to the execution of the merger agreement and set forth in the disclosure schedules attached to the merger agreement;

 

•

enter into any contract that is material and would have been material had it been entered into prior the execution of the merger agreement;

 

•

make any adverse changes in the mix, rates, terms or maturities of its deposits or other liabilities;

 

•

close or relocate any existing branch or facility;

 

•

make any extension of credit that, when added to all other extensions of credit to a borrower and its affiliates, would exceed its applicable regulatory limits;

 

•

take any action or fail to take any action that will cause NSBC’s consolidated tangible shareholders’ equity to be less than $22.25 million (less permitted expenses) at the effective time of the merger;

 

•

make any loans, or enter into any commitments to make loans, which vary other than in immaterial respects from its written loan policies (subject to certain exceptions and thresholds, provided that NorthStar Bank may extend or renew credit or loans in the ordinary course of business consistent with past lending practices or in connection with the workout or renegotiation of current loans);

 

•

take any action that at the time of taking such action is reasonably likely to prevent, or would materially interfere with, the consummation of the merger;

 

•

knowingly take any action that would prevent or impede the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or

 

•

agree or commit to take any of the actions set forth above.

Company Shareholder Approval

NSBC has agreed to call a meeting of its shareholders as soon as reasonably practicable after the Registration Statement on Form S-4 is declared effective by the SEC for the purpose of obtaining the approval of

 

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the merger agreement by the holders of at least a majority of the outstanding shares of NSBC common stock and such other matters as the NSBC board of directors may direct.

Regulatory Matters

This proxy statement/prospectus forms part of a Registration Statement on Form S-4 which Seacoast has filed with the SEC. Seacoast has agreed to use all reasonable efforts to cause the Registration Statement to be declared effective.

Each of Seacoast and NSBC has agreed to use all reasonable best efforts to obtain all permits required by the securities laws, including state securities law or “blue sky” permits, necessary to carry out the transactions contemplated by the merger agreement and each of Seacoast and NSBC has agreed to furnish all information concerning it and the holders of its capital stock as may be reasonably requested in connection with any such action.

Seacoast and NSBC have agreed to use all respective reasonable best efforts to take, or cause to be taken, in good faith, all actions and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, to permit the consummation of the merger as promptly as practicable.

Seacoast and NSBC will consult with each other with respect to the obtaining of all regulatory consents and other material consents advisable to consummate the transactions contemplated by the merger agreement, and each party will keep the other apprised of the status of material matters relating to the completion of the transactions contemplated by the merger agreement.

Seacoast and NSBC have agreed to promptly furnish to each other copies of applications filed with all governmental authorities and copies of written communications received by such party from any governmental authorities with respect to the transactions contemplated by the merger agreement. Additionally, each of Seacoast and NSBC has agreed to cooperate fully with and furnish information to the other party, and obtain all consents of, and give all notices to and making all filings with, all governmental authorities and other third parties that may be or become necessary for the performance of its obligations under the merger agreement and the consummation of the other transactions contemplated by the merger agreement.

In connection with seeking regulatory approval for the merger, Seacoast is not required to agree to any condition or consequence that would, after the effective time of the merger, have a material adverse effect on Seacoast or any its subsidiaries, including NSBC.

NASDAQ Listing

Seacoast has agreed to cause the shares of Seacoast common stock to be issued to the holders of NSBC common stock in the merger to be authorized for listing on the NASDAQ Global Select Market, subject to official notice of issuance, prior to the effective time of the merger.

Employee Matters

Following the effective time of the merger, Seacoast has agreed to maintain employee benefit plans and compensation opportunities for full-time active employees of NSBC on the closing date of the merger (referred to below as “covered employees”) that provide employee benefits and compensation opportunities which, in the aggregate, are substantially comparable to the employee benefits and compensation opportunities that are available on a uniform and non-discriminatory basis to similarly situated employees of Seacoast or its subsidiaries (provided that in no event are covered employees eligible to participate in any closed or frozen plan of Seacoast or its subsidiaries and provided further that in no event is Seacoast required to take into account any retention arrangements or equity compensation when determining whether employee benefits are substantially

 

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comparable). Seacoast will give the covered employees full credit for their prior service with NSBC for purposes of eligibility (including initial participation and eligibility for current benefits) and vesting under any qualified or non-qualified employee benefit plan maintained by Seacoast in which covered employees may be eligible to participate and for all purposes under any welfare benefit plans, vacation plans, and similar arrangements maintained by Seacoast.

With respect to any Seacoast health, dental, vision or other welfare plan in which any covered employee is eligible to participate following the closing date of the merger, Seacoast or its applicable subsidiary must use its commercially reasonable best efforts to (i) cause any pre-existing condition limitations or eligibility waiting periods under such plan to be waived with respect to the covered employee to the extent the condition was, or would have been, covered under the NSBC benefit plan in which the covered employee participated immediately prior to the effective time of the merger; and (ii) recognize any health, dental, vision or other welfare expenses incurred by the covered employee in the year that includes the closing date of the merger for purposes of any applicable deductible and annual out-of-pocket expense requirements.

If, within 6 months after the effective time of the merger, any covered employee is terminated by Seacoast or its subsidiaries other than “for cause” or as a result of a death or disability, then Seacoast will pay severance to the covered employee in an amount equal to the equivalent of one week of salary per year employed with the bank (but no less than four weeks’ severance). Any severance to which a covered employee may be entitled in connection with a termination occurring more than 6 months after the effective time of the merger will be the equivalent of (i) one week of salary per year employed with the bank (up to ten weeks’ severance, but no less than two weeks’ severance) for non-exempt employees and (ii) two weeks salary per year employed with the bank (up to 20 weeks’ severance, but not less than four weeks’ severance) for exempt employees.

Indemnification and Directors’ and Officers’ Insurance

From and after the effective time of the merger, Seacoast has agreed to indemnify, defend and hold harmless the present and former directors and officers of NSBC against any liability, judgments, fines and amounts paid in settlement in connection with any threatened or actual claim, action, suit, proceeding or investigation arising in whole or in part out of, or pertaining to the fact that such person is or was a director, officer or employee of NSBC or its subsidiaries, or the merger agreement or any of the transactions contemplated by the merger agreement, to the greatest extent as such persons are indemnified or have the right to advancement of expenses pursuant to the organizational documents of NSBC and the FBCA. All existing rights to indemnification and all existing limitations on liability existing in favor of the directors, officers and employees of NSBC as provided in its organizational documents shall survive the merger and continue in full force and effect and shall be honored by Seacoast.

For a period of no less than six years after the effective time of the merger, Seacoast will provide director’s and officer’s liability insurance that serves to reimburse the officers and directors of NSBC at or prior to the effective time of the merger with respect to claims against them arising from facts or events occurring at or before the effective time of the merger (including the transactions contemplated by the merger agreement). The directors’ and officers’ liability insurance will contain at least the same coverage and amounts, and contain terms and conditions no less advantageous to the indemnified person as the coverage currently provided by NSBC provided, however, that Seacoast may substitute policies of at least the same coverage and amounts containing terms and conditions that are not less advantageous than such NSBC policy. In no event shall Seacoast be required to expend for the tail insurance a premium an aggregate amount in excess of 150% of the annual premiums paid by NSBC for its directors’ and officers’ liability insurance in effect as of the date of the merger agreement.

Third Party Proposals

NSBC has agreed that it will not, and will cause its directors, officers, employees and representatives and affiliates not to: initiate, solicit, encourage or knowingly facilitate inquiries or proposals with respect to, or

 

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engage or participate in any negotiations concerning, or provide to any person any confidential or nonpublic information or data or have or participate in any discussions with any person relating to, any (i) merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving NSBC or its subsidiaries, (ii) tender or exchange offer, that if consummated, would result in any third-party owning 25% or more of any class of equity or voting securities of NSBC or NorthStar Bank, (iii) acquisition or purchase, direct or indirect, of 25% or more of the consolidated assets of NSBC and its subsidiaries or 25% or more of any class of equity or voting securities of NSBC or NorthStar Bank, or (iv) other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the merger or that could reasonably be expected to dilute materially the benefits to Seacoast of the transactions contemplated by the merger agreement (items (i)-(iv) collectively referred to as an “acquisition proposal”).

However, the merger agreement provides that at any time prior to the approval of the merger agreement by the NSBC shareholders, if NSBC receives an unsolicited acquisition proposal that does not violate the “no shop” provisions in the merger agreement and NSBC board of directors concludes in good faith that there is a reasonable likelihood that such proposal constitutes or is reasonably likely to result in a superior proposal (as defined below), then NSBC may: (i) enter into a confidentiality agreement with the third party making the acquisition proposal with terms and conditions no less favorable to NSBC than the confidentiality agreement entered into by NSBC and Seacoast prior to the execution of the merger agreement; (ii) furnish non-public information or data to the third party making the acquisition proposal pursuant to such confidentiality agreement; and (iii) participate in such negotiations or discussions with the third party making the acquisition proposal regarding such proposal, if the NSBC board of directors determines in good faith (and based upon the written advice of its outside counsel) that failure to take such actions would result in a violation of its fiduciary duties under applicable law. NSBC must promptly advise Seacoast within two (2) business days following receipt of any acquisition proposal and the substance of such proposal and must keep Seacoast apprised of any related developments, discussions and negotiations on a current basis.

A “superior proposal” means any bona fide, unsolicited, written “acquisition proposal” for at least a majority of the outstanding shares of NSBC common stock on terms that the NSBC board of directors concludes in good faith to be more favorable to the shareholders from a financial point of view than the merger and the other transactions contemplated by the merger agreement (including taking into account the terms, if any, proposed by Seacoast to amend or modify the terms of the transactions contemplated by the merger agreement in response to such proposal), (i) after receiving the written advice of its financial advisor, (ii) after taking into account the likelihood of consummation of such transaction on the terms set forth therein and (iii) after taking into account all legal (with the written advice of outside counsel), financial (including the financing terms of any such proposal), regulatory and other aspects of the proposal and any other relevant factors permitted under applicable law.

The merger agreement generally prohibits NSBC’s board of directors from making a change in recommendation (i.e., from withdrawing or modifying in a manner adverse to Seacoast the recommendation of the NSBC board of directors set forth in this proxy statement/prospectus that the NSBC shareholders vote to approve the merger agreement, or from making or causing to be made any third party or public communication proposing or announcing an intention to withdraw or modify in a manner adverse to Seacoast such recommendation). At any time prior to the approval of the merger agreement by the NSBC shareholders, however, the NSBC board of directors may effect a change in recommendation in response to a bona fide written unsolicited acquisition proposal that the NSBC board of directors concludes in good faith (and based upon the written advice of its outside counsel and after consultation with its financial advisor) constitutes a superior proposal and if the board concludes that the failure to accept such superior proposal would result in a violation of its fiduciary obligations to shareholders then the board may terminate the merger agreement and enter into a definitive agreement with respect to such superior proposal.

The NSBC board of directors may not make a change in recommendation, or terminate the merger agreement to pursue a superior proposal, unless: (i) NSBC has not breached any of the provisions of the merger

 

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agreement relating to third party acquisition proposals in any respect; (ii) the NSBC board of directors determines in good faith (after consultation with counsel and its financial advisors) that such superior proposal continues to be a superior proposal (after taking into account all adjustments to the terms of the merger agreement offered by Seacoast); (iii) NSBC has given Seacoast at least 4 business days’ prior written notice of its intention to take such action (which notice shall specify the material terms and conditions of any superior proposal including the identity of the person making such superior proposal) and has contemporaneously provided an unredacted copy of the relevant proposed transaction agreements with the person making such superior proposal; and (iv) before effecting such change in recommendation, NSBC has negotiated in good faith with Seacoast during the notice period (to the extent Seacoast wishes to negotiate) to enable Seacoast to revise the terms of the merger agreement so that such superior proposal no longer constitutes a superior proposal. In the event of any material change to the terms of a superior proposal, NSBC shall be required to deliver a new notice to Seacoast and the four business day negotiation period with Seacoast shall have recommenced.

If the NSBC board of directors makes a change in recommendation, or if NSBC terminates the merger agreement to enter into an agreement with respect to a superior proposal, NSBC could be required to pay Seacoast a termination fee of $1,650,000 in cash. See “The Merger Agreement — Termination,” and “The Merger Agreement — Termination Fee.”

Approval of 280G Payments

In the event that the execution of the merger agreement and the consummation of the transactions contemplated thereby would entitle any person who is a “disqualified individual” to a “parachute payment” (as such terms are defined in Section 280G of the Internal Revenue Code and the regulations promulgated thereunder) absent approval by the NSBC shareholders, then NSBC has agreed to take all necessary actions (including obtaining any required waivers or consents from each disqualified individual) to submit to a shareholder vote in a manner that satisfies the stockholder approval requirements for exemption under Section 280G of the Internal Revenue Code and the regulations promulgated thereunder, the right of each disqualified individual to receive or retain, as applicable, any payments and benefits to the extent necessary so that no payment or benefit received by such disqualified person shall be deemed a parachute payment. Such vote will establish the disqualified individual’s right to the payment or benefits.

Systems Integration; Operating Functions

From and after the date of the merger agreement, NSBC shall and shall cause its directors, officers and employees to and shall make all commercially reasonable best efforts (without undue disruption to their business) to cause NorthStar Bank’s data processing consultants and software providers to, cooperate and assist NSBC and Seacoast in connection with an electronic and systems conversion of all applicable data of NSBC and NorthStar Bank to the Seacoast systems, including the training of NSBC and NorthStar Bank employees during normal banking hours. Additionally, NSBC shall provide Seacoast access to its data files to facilitate the conversion process, including but not limited to (i) sample data files with data dictionary no later than 30 days following the date of the merger agreement, (ii) a full set of data files, including electronic banking and online bill payment data, for mapping and mock conversion no later than 90 days prior to the targeted conversion date as determined by Seacoast, (iii) a second full set of data files from which to establish CIS records, deposit shells, electronic banking accounts, bill payment, payees and order debit cards no later than 21 days prior to the targeted conversion date, and (iv) a final set of data files no later than the date of the targeted conversion date. NSBC shall cooperate with Seacoast in connection with the planning for the efficient and orderly combination of the parties and the operation of SNB after the merger, and in preparing for the consolidation of appropriate operating functions to be effective at the effective time of the merger, or such later time as may be decided by Seacoast. NSBC shall provide office space and support services in connection with the foregoing, and senior officers of NSBC and Seacoast shall meet from time to time as NSBC or Seacoast my reasonably request, to review the financial and operational affairs of NSBC and its subsidiaries, and NSBC shall give due consideration to Seacoast’s input on such matters, with the understanding that, neither Seacoast nor SNB will be permitted to

 

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exercise control of NSBC or NorthStar Bank prior to the effective time of the merger and NSBC and NorthStar Bank shall not be under any obligation to act in a manner that could reasonably be deemed to constitute anti-competitive behavior under federal or state antitrust laws.

Representations and Warranties

The merger agreement contains generally customary representations and warranties of Seacoast and NSBC relating to their respective businesses. The representations and warranties of each of Seacoast and NSBC have been made solely for the benefit of the other party, and these representations and warranties should not be relied on by any other person. In addition, these representations and warranties:

 

•

have been qualified by information set forth in confidential disclosure schedules in connection with signing the merger agreement — the information contained in these schedules modifies, qualifies and creates exceptions to the representations and warranties in the merger agreement;

 

•

will not survive consummation of the merger;

 

•

may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to the merger agreement if those statements turn out to be inaccurate;

 

•

are in some cases subject to a materiality standard described in the merger agreement which may differ from what may be viewed as material by you; and

 

•

were made only as of the date of the merger agreement or such other date as is specified in the merger agreement.

The representations and warranties made by Seacoast and NSBC to each other primarily relate to:

 

•

corporate organization, existence, power and standing;

 

•

capitalization;

 

•

ownership of subsidiaries;

 

•

corporate authorization to enter into the merger agreement and to consummate the merger;

 

•

absence of any breach of organizational documents, violation of law or breach of agreements as a result of the merger;

 

•

regulatory approvals required in connection with the merger;

 

•

reports filed with governmental entities, including, in the case of Seacoast, the SEC;

 

•

financial statements;

 

•

compliance with laws and the absence of regulatory agreements;

 

•

accuracy of the information supplied by each party for inclusion or incorporation by reference in this proxy statement/prospectus;

 

•

fees paid to financial advisors;

 

•

litigation; and

 

•

Community Reinvestment Act compliance.

NSBC has also made representations and warranties to Seacoast with respect to:

 

•

absence of a material adverse effect on NSBC since January 1, 2015;

 

•

tax matters;

 

•

the inapplicability to the merger of state takeover laws;

 

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•

employee benefit plans and labor matters;

 

•

material contracts;

 

•

environmental matters;

 

•

intellectual property;

 

•

real and personal property;

 

•

loan and investment portfolios;

 

•

adequacy of allowances for losses;

 

•

maintenance of insurance policies;

 

•

loans to executive officers and directors;

 

•

privacy of customer information;

 

•

technology systems;

 

•

transactions with affiliates;

 

•

corporate documents; and

 

•

fairness opinion.

Additionally, Seacoast has also made a representation and warranty to NSBC with respect to the legality of Seacoast common stock to be issued in connection with the merger.

Certain of the representations and warranties of NSBC and Seacoast are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, the term “material adverse effect” means, with respect to NSBC and Seacoast, any change, event, development, violation, inaccuracy or circumstance the effect, individually or in the aggregate, of which is or is reasonably likely to have a material adverse impact on the (i) executive management team, condition (financial or otherwise), property, business, assets (tangible or intangible) or results of operations or prospects of such party taken as a whole, or (ii) prevents or materially impairs, or would be reasonably likely to prevent or materially impair, the ability of such party to perform its obligations under the merger agreement or to timely consummate the merger, the bank merger or the other transactions contemplated by the merger agreement. The definition of “material adverse effect” excludes: (A) the impact of actions and omissions of a party (or its subsidiaries) taken with the prior written consent of the other party in contemplation of the transactions contemplated by the merger agreement; (B) changes in GAAP or regulatory accounting requirements for the financial services industry; (C) changes in laws, rules or regulations or interpretations of laws, rules or regulations by governmental authorities of general applicability to companies in the industry in which such party and its subsidiaries operate; and (D) changes in general economic or market conditions in the United States generally affecting banks and their holding companies, except, with respect to (B), (C) and (D), if the effects of such changes are disproportionately adverse to the condition (financial or otherwise), property, business, assets (tangible or intangible), liabilities or results of operations of such party and its subsidiaries, taken as a whole, as compared to other banks and their holding companies.

Conditions to Completion of the Merger

Mutual Closing Conditions. The obligations of Seacoast and NSBC to complete the merger are subject to the satisfaction of the following conditions:

 

•

the approval of the merger agreement by NSBC shareholders;

 

•

all regulatory approvals from the Federal Reserve, the OCC, and any other regulatory approval required to consummate the merger and the bank merger shall have been obtained and remain in full

 

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force and effect and all statutory waiting periods shall have expired, and such approvals or consents shall not be subject to any conditions or consequences that would have a material adverse effect on Seacoast or any of its subsidiaries after the effective time of the merger and the bank merger, including NSBC and NorthStar Bank;

 

•

the absence of any order, injunction or decree issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of the merger or the other transactions contemplated by the merger agreement;

 

•

the effectiveness of the Registration Statement on Form S-4, of which this proxy statement/prospectus is a part, under the Securities Act of 1933, as amended, and no order suspending such effectiveness having been issued;

 

•

the authorization for listing on the NASDAQ Global Select Market of the shares of Seacoast common stock to be issued in the merger;

 

•

the accuracy of the other party’s representations and warranties in the merger agreement on the date of the merger agreement and as of the effective time of the merger (or such other date specified in the merger agreement) other than, in most cases, inaccuracies that would not reasonably be likely to have a material adverse effect on such party;

 

•

the performance and compliance in all material respects by the other party of its respective obligations under the merger agreement;

 

•

the receipt by each party of corporate authorizations and other certificates from the other party;

 

•

the absence of any event which has had or is reasonably likely to have a material adverse effect on the other party; and

 

•

receipt by each party of an opinion of its counsel or accounting advisor to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code.

Additional Closing Conditions to the Obligations of Seacoast. In addition to the mutual closing conditions, Seacoast’s obligation to complete the merger is subject to the satisfaction or waiver of the following conditions:

 

•

the receipt of all consents required as a result of the transactions contemplated by the merger agreement pursuant to NSBC’s material contracts;

 

•

NSBC’s consolidated tangible shareholders’ equity as of the close of business on the fifth business day prior to the closing of the merger shall be an amount not less than $22.25 million (less permitted expenses) and general allowance for loan and lease losses shall be an amount not less than $1.82 million of total loans and leases outstanding;

 

•

all outstanding NSBC Equity Awards shall have been vested, exercised and/or terminated and NSBC’s stock plans shall have been terminated;

 

•

the completion of certain items set forth on the Seacoast disclosure schedule;

 

•

to the extent required, the receipt of shareholder approval for exemption under Section 280G of the Internal Revenue Code for certain payments and benefits payable to certain disqualified persons so that no payment or benefit received by such person will be deemed a parachute payment;

 

•

the receipt of executed claims letters and restrictive covenant agreements from certain executive officers and/or directors of NSBC; and

 

•

the receipt of a FIRPTA certificate stating that each of NSBC and NorthStar Bank is not and has not been a United Sates real property holding corporation.

 

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Termination

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the approval of the merger agreement by NSBC shareholders, as follows:

 

•

by mutual consent of the board of directors of NSBC and the board of directors or executive committee of the board of directors of Seacoast; or

 

•

by the board of directors of either Seacoast or NSBC, if there is a breach by the other party of any representation, warranty, covenant or other agreement set forth in the merger agreement, that would, if occurring or continuing on the closing date, result in the failure to satisfy the closing conditions of the party seeking termination and such breach cannot be or is not cured within 30 days following written notice to the breaching party; or

 

•

by the board of directors of either Seacoast or NSBC, if a requisite regulatory consent has been denied and such denial has become final and non-appealable; or

 

•

by the board of directors of either Seacoast or NSBC, if the NSBC shareholders fail to approve the merger agreement at a duly held meeting of such shareholders or any adjournment or postponement thereof; or

 

•

by the board of directors of either Seacoast or NSBC, if the merger has not been completed by February 28, 2018, unless the failure to complete the merger by such date is due to a breach of the merger agreement by the party seeking to terminate the merger agreement; or

 

•

by the board of directors of Seacoast, if (i) the NSBC board of directors withdraws, qualifies or modifies their recommendation that the NSBC shareholders approve the merger agreement in a manner adverse to Seacoast, or resolves to do any of the foregoing, (ii) NSBC fails to substantially comply with any of the provisions of the merger agreement relating to third party acquisition proposals, or (iii) NSBC’s board of directors recommends, endorses, accepts or agrees to a third party acquisition proposal; or

 

•

by the board of directors of NSBC, in order to enter into an agreement relating to a superior proposal in accordance with the provisions of the merger agreement relating to third party acquisition proposals (provided that NSBC has not materially breached any such provisions); or

 

•

by the board of directors of NSBC during the five day period commencing on the determination date (as defined in the merger agreement as the later of: (i) the date on which the last required regulatory approval is obtained without regard to any requisite waiting period; or (ii) the date on which the NSBC shareholder approval is obtained), if and only if the (a) buyer ratio (defined in the merger agreement to mean the number obtained by dividing the average closing price (defined in the merger agreement to mean the daily volume weighted average price of Seacoast common stock during the ten (10) consecutive full trading days ending on the trading day prior to the determination date) by $23.50) is less than 0.85 and (b) the buyer ratio is less than the number obtained by (i) dividing the average of the index price (defined in the merger agreement to mean the closing price on any given trading day) for the ten (10) consecutive trading days preceding the determination date by the average of the index price for the ten (10) consecutive trading days ending on the last trading day immediately preceding the date of the first public announcement of the entry into the merger agreement and (ii) subtracting 0.20 from the quotient; or

 

•

by the board of directors of Seacoast, if holders of more than 5% in the aggregate of NSBC common stock have voted such shares against the merger agreement or the merger at the NSBC special meeting and have given notice of their intent to exercise their dissenters’ rights in accordance with the FBCA.

 

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Termination Fee

NSBC will owe Seacoast a $1,650,000 termination fee if:

 

•

(A)(i) either party terminates the merger agreement in the event that approval by the shareholders of NSBC is not obtained at a meeting at which a vote was taken; or (ii) Seacoast terminates the merger agreement (a) as a result of a willful breach of a covenant or agreement by NSBC or NorthStar Bank; (b) because NSBC has withdrawn, qualified or modified its recommendation to shareholders in a manner adverse to Seacoast; or (c) because NSBC has failed to substantially comply with the no-shop covenant or its obligations under the merger agreement by failing to hold a special meeting of NSBC shareholders; and

 

•

(B)(i) NSBC receives or there is a publicly announced third party acquisition proposal that has not been formally withdrawn or abandoned prior to the termination of the merger agreement; and (ii) within 18 months of the termination of the merger agreement, NSBC either consummates a third party acquisition proposal or enters into a definitive agreement or letter of intent with respect to a third party acquisition proposal; or

 

•

Seacoast terminates the merger agreement as a result of the board of directors of NSBC recommending, endorsing, accepting or agreeing to a third party acquisition proposal; or

 

•

NSBC terminates the merger agreement because the board of directors of NSBC has determined in accordance with the provisions in the merger agreement relating to acquisition proposals that a superior proposal has been made and has not been withdrawn and none of NSBC or its representatives has failed to comply in all material respects with the terms of merger agreement relating to third party acquisition proposals.

Except in the case of a willful breach of the merger agreement, the payment of the termination fee will fully discharge NSBC from any losses that may be suffered by Seacoast arising out of the termination of the merger agreement.

Waiver; Amendment

The merger agreement, including the disclosure letters and exhibits, may be amended at any time before or after approval of the matters presented in connection with the merger by NSBC, in writing signed on behalf of each of the parties, provided that after any approval of the transactions contemplated by the merger agreement by the NSBC shareholders, there may not be, without further approval of the NSBC shareholders, any amendment of the merger agreement that requires the approval of NSBC shareholders.

At any time prior to the effective time of the merger, the parties may, to the extent legally allowed: (i) waive any default in the performance of any term of the merger agreement by the other party; (ii) waive or extend the time for the compliance or fulfillment of any of the obligations or other acts of the other party; and (iii) waive any or all of the conditions precedent to the obligations contained in the merger agreement on the part of the other party. Any agreement on the part of a party to any extension or waiver must be in writing signed on behalf of such party by a duly authorized officer of such party. Any such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition will not operate as a waiver of any subsequent or other failure.

Expenses

Regardless of whether the merger is completed, all expenses incurred in connection with the merger, the merger agreement and other transactions contemplated thereby will be paid by the party incurring the expenses, except that Seacoast has paid the filing fee for the Registration Statement on Form S-4 of which this proxy statement/prospectus is a part and will pay any other filings fees with the SEC in connection with the merger and Seacoast will pay one half of the costs and expenses of printing and mailing this proxy statement/prospectus.

 

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COMPARISON OF SHAREHOLDERS’ RIGHTS

Seacoast and NSBC are each incorporated under the laws of the State of Florida and, accordingly, the rights of their shareholders are governed by Florida law and their respective articles of incorporation and bylaws. After the merger, each share of NSBC common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive the merger consideration, which will consist of Seacoast common stock and cash. As a result, the rights of former shareholders of NSBC who receive shares of Seacoast common stock in the merger will be determined by reference to Seacoast’s articles of incorporation and bylaws and Florida law. Set forth below is a description of the material differences between the rights of NSBC shareholders and Seacoast shareholders. The following summary does not include a complete description of all differences between the rights of NSBC shareholders and Seacoast shareholders, nor does it include a complete discussion of the respective rights of NSBC shareholders and Seacoast shareholders.

The following summary is qualified in its entirety by reference to the FBCA, Seacoast’s articles of incorporation and bylaws, and NSBC’s articles of incorporation and bylaws. Seacoast and NSBC urge you to carefully read this entire proxy statement/prospectus, the relevant provisions of the FBCA, Seacoast’s articles of incorporation and bylaws, and NSBC’s articles of incorporation and bylaws and each other document referred to in this proxy statement/prospectus for a more complete understanding of the differences between the rights of Seacoast shareholders and the rights of NSBC shareholders. NSBC will send copies of its articles of incorporation and bylaws to you, without charge, upon your request. Seacoast’s articles and bylaws are filed as exhibits to its Form 10-K, filed on March 15, 2017 and are incorporated by reference herein. See the section entitled “Where You Can Find Additional Information” beginning on page of this proxy statement/prospectus.

 

		NSBC		SEACOAST
Capital Stock		Holders of NSBC capital stock are entitled to all the rights and obligations provided to capital shareholders under the FBCA and NSBC’s articles of incorporation and bylaws.		Holders of Seacoast capital stock are entitled to all the rights and obligations provided to capital shareholders under the FBCA and Seacoast’s articles of incorporation and bylaws.
Authorized		NSBC’s authorized capital stock consists of 7,500,000 shares of common stock, par value $0.01 per share, and 2,500,000 shares of preferred stock, par value $0.01 per share.		Seacoast’s authorized capital stock consists of 60,000,000 shares of common stock, par value $0.10 per share, and 4,000,000 shares of preferred stock, stated value $0.10 per share (2,000 of which are designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series A and 50,000 of which are designated as Mandatorily Convertible Noncumulative Nonvoting Preferred Stock, Series B).
Outstanding		As of June 30, 2017, there were 1,928,101 shares of NSBC common stock outstanding and no shares of NSBC preferred stock outstanding.		As of June 16, 2017, there were 43,426,091 shares of Seacoast common stock outstanding and no shares of Seacoast preferred stock outstanding.
Voting Rights		Holders of NSBC common stock are entitled to one vote per share in the election of directors and on all matters submitted to a vote at a meeting of shareholders.		Holders of Seacoast common stock generally are entitled to one vote per share in the election of directors and on all matters submitted to a vote at a meeting of shareholders.
Cumulative Voting		No shareholder has the right of cumulative voting in the election of directors.		No shareholder has the right of cumulative voting in the election of directors.

 

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		NSBC		SEACOAST
Dividends		Under the FBCA, a corporation may make a distribution, unless after giving effect to the distribution:   •    The corporation would not be able to pay its debts as they come due in the usual course of business; or   •    The corporation’s assets would be less than the sum of its total liabilities plus (unless the articles of incorporation provide otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.   In addition, under Federal Reserve policy adopted in 2009, a bank holding company should consult with the Federal Reserve and eliminate, defer or significantly reduce its dividends if:   •    its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends;   •    its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or   •    it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.		Holders of Seacoast common stock are subject to the same provisions of the FBCA and the Federal Reserve Policy adopted in 2009.

 

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		NSBC		SEACOAST
Number of Directors		NSBC’s bylaws provide that the number of directors serving on the NSBC board of directors shall be such number as determined from time to time by a resolution of a majority of the full board of directors, but in no event shall be fewer than three directors nor greater than twenty-five directors.   There are currently ten directors serving on the NSBC board of directors.   The NSBC board of directors is divided into three classes, with the members of each class of directors serving staggered three-year terms and with approximately one-third of the directors being elected annually. As a result, it would take a dissident shareholder or shareholder group at least two annual meeting of shareholders to replace a majority of the directors of NSBC. Each director holds office for the term for which he or she is elected and until his or her successor is elected and qualified, subject to such directors’ death, resignation or removal.		Seacoast’s bylaws provide that the number of directors serving on the Seacoast board of directors shall be such number as determined from time to time by a vote of 66 2/3% of the whole board of directors and a majority of the Continuing Directors (director who either (i) was first elected as a director of the company prior to March 1, 2002 or (ii) was designated as a Continuing Directors by a majority vote of the Continuing Directors), but in no event shall be fewer than three directors nor greater than fourteen directors (exclusive of the directors to be elected by the holders of one or more series of preferred stock voting separately as a class).   There are currently fourteen directors serving on the Seacoast board of directors.   The Seacoast board of directors is divided into three classes, with the members of each class of directors serving staggered three-year terms and with approximately one-third of the directors being elected annually. As a result, it would take a dissident shareholder or shareholder group at least two annual meeting of shareholders to replace a majority of the directors of Seacoast. Each director holds office for the term for which he or she is elected and until his or her successor is elected and qualified, subject to such directors’ death, resignation or removal.

 

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		NSBC		SEACOAST
Election of Directors		Under the FBCA, unless otherwise provided in the articles of incorporation, directors are elected by a plurality of the votes cast by the holders of the shares entitled to vote in an election of directors at a meeting at which a quorum is present. NSBC’s articles of incorporation do not otherwise provide for the vote required to elect directors.		Seacoast directors are similarly elected in accordance with FBCA and its articles of incorporation do not otherwise provide for the vote required to elect directors.   However, notwithstanding the plurality standard, in an uncontested election for directors, our Corporate Governance Guidelines provide that if any director nominee receives a greater number of votes “withheld” from his or her election than votes “for” such election, then the director will promptly tender his or her resignation to the board of directors following certification of the shareholder vote, with such resignation to be effective upon acceptance by the board of directors. The Compensation and Governance Committee would then review and make a recommendation to the board of directors as to whether the board should accept the resignation, and the board of directors would ultimately decide whether to accept the resignation.

 

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		NSBC		SEACOAST
Removal of Directors		NSBC’s bylaws provide that directors may be removed (a) for any reason at a meeting of shareholders, noticed and called expressly for that purpose, by a vote of the holders of at least a majority of the shares then entitled to vote at an election of directors; or (b) by a majority vote of “disinterested directors,” a director may be removed from the board for “cause.” For purposes of this section of the bylaws, a disinterested director is defined to be a director who is not the subject of the removal action and “cause” shall mean a director’s: (i) act of willful misconduct, self-dealing, malfeasance, gross negligence, personal dishonesty, breach of fiduciary duty including a breach resulting in personal profit, usurping a corporate opportunity, intentional failure to perform stated duties, or willful violation of any law, rule or regulation (other than traffic violations or similar offenses); (ii) conduct which could negatively reflect on NSBC in its market area or in the banking or regulatory communities; (iii) act or failure to act which is inconsistent with an oral or written commitment made to the board and which jeopardizes NSBC’s financial condition, business opportunities or reputation in its market area or in the banking and regulatory communities; or (iv) failure to attend any three consecutive board meetings, failure to attend any three consecutive meetings of any board committee on which that director serves, or failure to attend two-thirds of the board meetings in a calendar year. A director shall be deemed to have attended any board or committee meeting at which he was physically present or which he was present telephonically, provided the telephonic device used provides two-way communication between the director and all other directors attending the meeting.		Seacoast’s bylaws provide that directors may be removed only for cause upon the affirmative vote of (1) 66 2/3% of all shares of common stock entitled to vote and (2) holders of a majority of the outstanding common stock that are not beneficially owned or controlled, directly or indirectly, by any person (1) who is the beneficial owner of 5% or more of the common stock or (2) who is an affiliate of Seacoast and at any time within the past five years was the beneficial owner of 5% or more of Seacoast’s then outstanding common stock (“Independent Majority of Shareholders”) at a shareholders’ meeting duly called and held for that purpose upon not less than 30 days’ prior written notice.

 

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		NSBC		SEACOAST
Vacancies on the Board of Directors		NSBC’s bylaws provide that in the event of any vacancy on the board of directors, including any vacancy created by a failure to qualify or by any increase in the number of directors authorized, the board of directors may, but shall not be required to, fill such vacancy by the affirmative vote of a majority of the remaining directors. A director elected to fill a vacancy shall be elected for the unexpired portion of the term of his predecessor in office. A director elected to fill a newly created directorship shall serve until the next succeeding annual meeting of shareholders and until his successor shall have been elected and qualified.		Seacoast’s bylaws provide that vacancies in the Seacoast’s board of directors may be filled by the affirmative vote of (1) 66 2/3% of all directors and (2) majority of the Continuing Directors, even if less than a quorum exists, or if no directors remain, by the affirmative vote of not less than 66 2/3% of all shares of common stock entitled to vote and an Independent Majority of Shareholders.
Action by Written Consent		NSBC’s bylaws provide that any action of the board of directors or of any committee thereof, which is required or permitted to be taken at a meeting, may be taken without a meeting if consent in writing, setting forth the action to be taken, and signed by all members of the board of directors or of the committee, as the case may be, is filed in the minutes of the proceedings of the board of directors or such committee.		Seacoast’s articles of incorporation provide that no action may be taken by written consent except as may be provided in the designation of the preferences, limitations and relative rights of any series of Seacoast’s preferred stock. Any action required or permitted to be taken by the holders of Seacoast’s common stock must be effected at a duly called annual or special meeting of such holders, and may not be effected by any consent in writing by such holders.

 

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		NSBC		SEACOAST
Advance Notice requirements for Shareholder Nominations and Other Proposals		None.		Any Seacoast shareholder entitled to vote generally on the election of directors may recommend a candidate for nomination as a director. A shareholder may recommend a director nominee by submitting the name and qualifications of the candidate the shareholder wishes to recommend to Seacoast’s Compensation and Governance Committee, c/o Seacoast Banking Corporation of Florida, 815 Colorado Avenue, P. O. Box 9012, Stuart, Florida 34995.   To be considered, recommendations with respect to an election of directors to be held at an annual meeting must be received not less than 60 days nor more than 90 days prior to the anniversary of Seacoast’s last annual meeting of shareholders (or, if the date of the annual meeting is changed by more than 20 days from such anniversary date, within 10 days after the date that Seacoast mails or otherwise gives notice of the date of the annual meeting to shareholders), and recommendations with respect to an election of directors to be held at a special meeting called for that purpose must be received by the 10th day following the date on which notice of the special meeting was first mailed to shareholders.
Notice of Shareholder Meeting		Notice of each shareholder meeting must be mailed to each shareholder entitled to vote not less than 10, nor more than 60 days before the date of the meeting.		Notice of each shareholder meeting must be given to each shareholder entitled to vote not less than 10, nor more than 60 days before the date of the meeting.

 

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		NSBC		SEACOAST
Amendments to Charter		NSBC’s articles of incorporation may be amended in accordance with the FBCA.   Subject to certain requirements set forth in Section 607.1003 of the FBCA, amendments to a corporation’s articles of incorporation must be approved by a corporation’s board of directors and holders of a majority of the outstanding stock of a corporation entitled to vote thereon and, in cases in which class voting is required, by holders of a majority of the outstanding shares of such class. The board of directors must recommend the amendment to the shareholders, unless the board of directors determines that, because of a conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders with the amendment.   The FBCA also allows the board of directors to amend the articles of incorporation without shareholder approval in certain discrete circumstances (for example, to change the par value for a class or series of shares).		Seacoast’s articles of incorporation have similar amendment provisions, except that the affirmative vote of (1) 66 2/3% of all of shares outstanding and entitled to vote, voting as classes, if applicable, and (2) an Independent Majority of Shareholders will be required to approve any change of Articles VI (“Board of Directors”), VII (“Provisions Relating to Business Combinations”), IX (“Shareholder Proposals”) and X (“Amendment of articles of incorporation”) of the articles of incorporation.
Amendments to Bylaws		NSBC’s bylaws may be altered, amended or repealed in a manner consistent with the FBCA at any time by a majority of the full board of directors.		Seacoast’s bylaws may be amended by a vote of (1) 66 2/3% of all directors and (2) majority of the Continuing Directors. In addition, the shareholders may also amend the Bylaws by the affirmative vote of (1) 66 2/3% of all shares of common stock entitled to vote and (2) an Independent Majority of Shareholders.   Under the FBCA, Seacoast’s shareholders, by majority vote of all of the shares having voting power, may amend or repeal the bylaws even though they may also be amended or repealed by the Seacoast board of directors.

 

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		NSBC		SEACOAST
Special Meeting of Shareholders		NSBC’s bylaws provide that special meetings of shareholders of NSBC may be called by the chairman of the board or the president of NSBC and shall be called by the president or the chairman pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the board for adoption), or pursuant to a resolution adopted by shareholders holding at least 10% of the outstanding shares of NSBC. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice thereof.		Seacoast’s bylaws provide that special meetings of the shareholders, for any purpose or purposes unless prescribed by statute, may be called by the Chairman, Chief Executive Officer, the President or by the board of directors, and shall be called by the Chief Executive Officer at the request of the holders of shares representing not less than 50% of all votes entitled to be cast by all shares of Seacoast common stock outstanding.
Quorum		Except as otherwise provided in NSBC’s bylaws or articles of incorporation, a majority of the outstanding shares of NSBC entitled to vote shall constitute a quorum at a meeting of shareholders		A majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum at any shareholder meeting.
Proxy		At any meeting of shareholders, a shareholder may be represented by a proxy appointed by an instrument executed in writing by the shareholder, or by his duly authorized attorney-in fact; but no proxy shall be valid after one year from its date, unless the instrument appointing the proxy provides for a longer period.		Under the FBCA, a proxy is valid for 11 months unless a longer period in expressly provided in the appointment form.
Preemptive Rights		NSBC’s shareholders do not have preemptive rights.		Seacoast’s shareholders do not have preemptive rights.
Shareholder Rights Plan/Shareholders’ Agreement		NSBC does not have a rights plan or shareholder’s agreement.		Seacoast does not have a rights plan. Neither Seacoast nor Seacoast shareholders are parties to a shareholders’ agreement with respect to Seacoast’s capital stock.
Indemnification of Directors and Officers		NSBC’s bylaws provide that NSBC shall indemnify its officers, directors, employees, but not its agents unless specifically approved in writing by the board, to the fullest extent authorized by the FBCA.		Seacoast’s bylaws provide that Seacoast may indemnify its current and former directors, officers, employees and agents in accordance with that provided under the FBCA.
Certain Business Combination Restrictions		NSBC’s articles of incorporation do not contain any provision regarding business combinations between NSBC and significant shareholders.		Seacoast’s articles of incorporation do not contain any provision regarding business combinations between Seacoast and significant shareholders.

 

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		NSBC		SEACOAST
Fundamental Business Transactions		NSBC’s articles of incorporation do not contain any provision regarding fundamental business transactions.		Seacoast’s articles of incorporation provide that Seacoast needs the affirmative vote of 66 2/3% of all shares of common stock entitled to vote for the approval of any merger, consolidation, share exchange or sale, exchange, lease, transfer, purchase and assumption of assets and liabilities, or assumption of liabilities of Seacoast or any subsidiary of all or substantially all of the corporation’s consolidated assets or liabilities or both, unless the transaction is approved and recommended to the shareholders by the affirmative vote of 66 2/3% of all directors and a majority of the Continuing Directors.
Non-Shareholder Constituency Provision		NSBC’s articles of incorporation do not contain a provision that expressly permits the board of directors to consider constituencies other than the shareholders when evaluating certain offers.		Seacoast’s articles of incorporation provide that in connection with the exercise of its judgment in determining what is in the best interest of the corporation and its shareholders when evaluating certain offers, in addition to considering the adequacy and form of the consideration, the board shall also consider the social and economic effects of the transaction on Seacoast and its subsidiaries, its and their employees, depositors, loan and other customers, creditors, and the communities in which Seacoast and its subsidiaries operate or are located; the business and financial condition, and the earnings and business prospects of the acquiring person or persons, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the acquisition, and other likely financial obligations of the acquiring person or persons, and the possible effect of such conditions upon the corporation and its subsidiaries and the other elements of the communities in which the corporation and its subsidiaries operate or are located; the competence, experience, and integrity of the person and their management proposing or making such actions; the prospects for a successful conclusion of the business combination prospects; and Seacoast’s prospects as an independent entity.

 

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		NSBC		SEACOAST
Dissenters’ Rights		Under the FBCA, a shareholder generally has the right to dissent from any merger to which the corporation is a party, from any sale of all assets of the corporation, or from any plan of exchange and to receive fair value for his or her shares. See “The Merger — Appraisal Rights for NSBC Shareholders” and Appendix C.		Under the FBCA, dissenters’ rights are not available to holders of shares of any class or series of shares which is designated as a national market system security or listed on an interdealer quotation system by the National Association of Securities Dealers, Inc. Accordingly, holders of Seacoast common stock are not entitled to exercise dissenters’ rights under the FBCA.

 

 

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BUSINESS OF NORTHSTAR BANKING CORPORATION AND NORTHSTAR BANK

General Business

NSBC is a bank holding company under the Bank Holding Company Act of 1956, as amended, for NorthStar Bank, and is subject to the supervision and regulation of the Federal Reserve and Florida Office of Financial Regulation and is a corporation organized under the laws of the State of Florida. Its main office is located at 400 N. Ashley Drive, Suite 1400, Tampa, FL 33602. NorthStar Bank is a Florida state bank, which was established in 2007, and is subject to the supervision and regulation of the Florida Office of Financial Regulation and the Federal Deposit Insurance Corporation. NorthStar Bank is a full-service commercial bank, providing a wide range of business and consumer financial services to individual and corporate customers through its three banking offices located in Tampa and Belleair Bluffs, Florida, and is headquartered in Tampa, Florida.

At March 31, 2017, NorthStar Bank had total assets of approximately $212 million, total deposits of approximately $168 million, total net loans of approximately $135 million, and shareholders’ equity of approximately $22 million.

Banking Services

NorthStar Bank serves the Tampa Bay market and provides a range of commercial and consumer banking services to small to medium size businesses (typically a business with revenues under $25 million), professionals and executives, and individuals. The business model incorporates a community banking relationship approach, delivered by experienced and highly trained professionals. NorthStar Bank’s range of loan products to consumers and businesses includes, but is not limited to: secured and unsecured loans for owner-occupied and non-owner-occupied real estate, construction, multi-family properties, business assets, stand-by letters of credit, and other consumer loan needs. NorthStar Bank also provides a range of depository services to consumers and businesses, including, but not limited to: non-interest bearing and interest bearing demand deposit accounts, NOW and savings accounts, money market accounts, and certificates of deposits. NorthStar Bank’s services also include, but are not limited to: branch banking, ATM, wire, ACH, online and mobile banking products, and treasury management services.

The revenues of NorthStar Bank are primarily derived from interest on, and fees received in connection with lending activities, from interest and dividends on cash and investment securities, service charge income generated from depository and treasury management services, as well as premium income from guaranteed SBA loan sales. The principal sources of funds for NorthStar Bank’s lending activities are customer deposits, loan repayments, and proceeds from investment securities, as well as its equity. The principal expenses of NorthStar Bank include interest paid on deposits, and operating and general administrative expenses. As is the case with banking institutions generally, NorthStar Bank’s operations are materially and significantly influenced by general economic conditions and by related monetary and fiscal policies of financial institution regulatory agencies, including the Federal Reserve and the FDIC. Deposit flows and costs of funds are influenced by interest rates on competing investments and general market rates of interest. Lending activities are affected by the demand for financing of real estate, business, and other types of loans, which in turn is affected by the interest rates at which such financing may be offered and other factors affecting local demand and availability of funds. NorthStar Bank faces strong competition in the attraction of deposits (the primary source of lendable funds) and in the origination of loans.

Commercial Banking. NorthStar Bank focuses its commercial loan originations on small- and mid-sized businesses (generally up to $25 million in annual sales) and such loans are usually accompanied by significant related deposits. Commercial underwriting is driven by cash flow analysis supported by collateral analysis and review. Commercial loan products include commercial real estate construction and owner occupied and non-owner occupied term and construction loans; working capital loans and lines of credit; demand, term, and time loans; and equipment, inventory and accounts receivable financing. NorthStar Bank offers a range of treasury cash management services and deposit products to commercial customers. Online banking is available to commercial customers.

 

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Retail Banking. NorthStar Bank’s consumer banking activities include consumer deposit and checking accounts. In addition to traditional products and services, NorthStar Bank offers additional products and services, such as debit cards, online and mobile banking, and electronic bill payment services. Consumer loan products offered by NorthStar Bank include home equity lines of credit, other consumer loans, and unsecured personal credit lines.

Employees

As of April 30, 2017, NorthStar Bank had 42 full-time equivalent employees. The employees are not represented by a collective bargaining unit. NorthStar Bank considers relations with employees to be good.

Properties

The main office of NSBC is located at 400 N. Ashley Drive, Suite 1400, Tampa, Florida 33602. NorthStar Bank also has 3 branch offices located in Belleair Bluffs, Downtown Tampa, and South Tampa, Florida.

Legal Proceedings

NorthStar Bank is periodically a party to or otherwise involved in legal proceedings arising in the normal course of business, such as claims to enforce liens, claims involving the making and servicing of real property loans, and other issues incident to its business. As of the date hereof, management does not believe that there is any pending or threatened proceeding against NorthStar Bank which, if determined adversely, would have a material adverse effect on NorthStar Bank’s financial position, liquidity, or results of operations.

Competition

NorthStar Bank encounters strong competition both in making loans and in attracting deposits. In one or more aspects of its business, NorthStar Bank competes with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries. Most of these competitors, some of which are affiliated with bank holding companies, have substantially greater resources and lending limits, and may offer certain services that NorthStar Bank does not currently provide. In addition, many of NorthStar Bank’s non-bank competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally insured banks. Recent federal and state legislation has heightened the competitive environment in which financial institutions must conduct their business, and the potential for competition among financial institutions of all types has increased significantly. There is no assurance that increased competition from other financial institutions will not have an adverse effect on NorthStar Bank’s operations.

Management

Directors. The board of directors of NSBC is comprises 10 individuals. The directors are elected for terms of three years.

 

Name		Position Held with NorthStar Bank		Principal Occupation
James Cantonis		Chairman		President of Acme Sponge & Chamois Co., Inc.
Gene Marshall		Vice Chairman		Retired, former banker
Scott Jacobsen		Director, President and CEO		President and CEO, NorthStar Bank
Dr. James Brookins		Director		Retired, medical
Herbert Goetschius		Director		President of Help to Grow Services, LLC
Dr. Devanand Mangar		Director		Doctor
Joseph Merluzzi		Director		Retired, education
Pablo Santa Cruz		Director		Chairman & CEO of Topview International, Inc.
Martin Schaffel		Director		Entrepreneur
Dr. Rebecca White		Director		James W. Walter Distinguished Chair in Entrepreneurship and Professor of Entrepreneurship, University of Tampa

 

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Executive Officers. The following sets forth information regarding the executive officers of NorthStar Bank. The officers of NorthStar Bank serve at the pleasure of the board of directors.

 

Name		Position Held with NorthStar Bank
Scott Jacobsen		President and CEO
Rob Shaw		EVP, Chief Operating Officer
William “Mac” Fleming		SVP, Chief Financial Officer
Scott Muyskens		SVP, Chief Credit Officer
Ty Lindsey		SVP, Chief Administrative Officer
Thomas Gene Evans		SVP, Retail Division Executive

 

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BENEFICIAL OWNERSHIP OF NSBC COMMON STOCK BY

MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF NSBC

The following table sets forth the beneficial ownership of NSBC common stock as of June 30, 2017 by: (i) each person or entity who is known by NSBC to beneficially own more than 5% of the outstanding shares of NSBC common stock; (ii) each director and executive officer of NSBC; and (iii) all directors and executive officers of NSBC as a group.

Beneficial ownership is determined in accordance with the rules of the SEC, based on factors including voting and investment power with respect to shares. The percentage of beneficial ownership is calculated in relation to the 1,928,101 shares of NSBC common stock that were issued and outstanding as of June 30, 2017.

Unless otherwise indicated, to NSBC’s knowledge, the persons or entities identified in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them.

 

Name and Address of Beneficial Owner(a)		Number of shares of NSBC Common Stock Beneficially Owned(b)				Percent of Outstanding Shares of NSBC Common Stock
Directors:
James Brookins			36,500	(c)			1.89	%
James Cantonis			38,000	(d)			1.97	%
Herbert Goetschius			16,500	(e)				*
Scott Jacobsen			35,750	(f)			1.85	%
Devanand Mangar			40,000	(g)			2.07	%
Gene Marshall			39,500	(h)			2.05	%
Joseph Merluzzi			14,000	(i)				*
Pablo Santa Cruz			38,000	(j)			1.97	%
Martin Schaffel			89,200	(k)			4.63	%
Rebecca White			16,500	(l)				*
Executive Officers(m)			68,750	(n)			3.57	%
John Sykes			197,500	(o)			10.24	%
Kiran Patel			145,000	(p)			7.52	%
Melvin Cutler			124,300	(q)			6.45	%
H. Monty Weigel			110,000	(r)			5.71	%
All Directors, Executive Officers and Other Beneficial Owners as a Group (19 individuals)			1,009,500				52.36	%

 

*	Less than 1%

(a)	The address of each of GulfShore’s executive officers and directors is c/o NorthStar Banking Corporation, 400 North Ashley Drive, Suite 1400, Tampa, FL 33602.

(b)	Common shares owned include NSBC option awards vested or exercisable within 60 days of the date of this proxy statement/prospectus.

(c)	Includes 6,500 shares subject to options vested or exercisable within 60 days.

(d)	Includes (i) 15,000 shares held by MCG Precyse, LLC, (ii) 10,000 shares held by James M. Cantonis Directed IRA, and (iii) 13,000 shares subject to options vested or exercisable within 60 days.

(e)	Includes 6,500 shares subject to options vested or exercisable within 60 days.

(f)	Includes (i) 2,500 shares held by Scott Jacobsen’s IRA, and (ii) 25,750 shares subject to options vested or exercisable within 60 days.

(g)	Includes 7,500 shares subject to options vested or exercisable within 60 days.

(h)	Includes (i) 25,000 shares held jointly with his wife, and (ii) 14,500 shares subject to options vested or exercisable within 60 days.

(i)	Includes (i) 2,500 shares held jointly with his wife, and (ii) 5,500 shares subject to options vested or exercisable within 60 days.

 

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(j)	Includes (i) 25,000 shares held jointly with his wife, and (ii) 12,500 shares subject to options vested or exercisable within 60 days.

(k)	Includes 7,500 shares subject to options vested or exercisable within 60 days.

(l)	Includes (i) 10,000 shares held jointly with Giles T. Hertz, and (ii) 6,500 shares subject to options vested or exercisable within 60 days.

(m)	Does not include Scott Jacobsen

(n)	Includes 67,750 shares subject to options vested or exercisable within 60 days.

(o)	Includes 12,500 shares subject to options vested or exercisable within 60 days.

(p)	All shares are owned jointly with his wife.

(q)	Includes (i) 77,500 shares held by Cutler Investment Fund, LP, (ii) 33,300 shares held in the Melvin S. Cutler 2008 Revocable Trust, and (iii) 13,500 shares held by Cutler Income and Growth Fund, LP.

(r)	Includes (i) 69,000 shares held by Monty Weigel’s IRA, and (ii) 3,000 shares held by his wife’s IRA.

Other Principal Shareholders. Four individuals have beneficial ownership of NSBC’s outstanding common stock representing 5% or more of such shares: John Sykes (10.24%), Kiran and Pallavi Patel (7.52%), Melvin Cutler (6.45%) and H. Monty Weigel (5.71%).

 

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DESCRIPTION OF SEACOAST CAPITAL STOCK

Common Stock

General

The following description of shares of Seacoast’s common stock, par value $0.10 per share, is a summary only and is subject to applicable provisions of the FCBA and to Seacoast’s amended and restated articles of incorporation, as amended, and its amended and restated bylaws. Seacoast’s articles of incorporation provide that it may issue up to 60 million shares of common stock, par value of $0.10 per share. Seacoast common stock is listed on the NASDAQ Global Select Market under the symbol “SBCF.”

Voting Rights

Each outstanding share of Seacoast’s common stock entitles the holder to one vote on all matters submitted to a vote of shareholders, including the election of directors. The holders of Seacoast common stock possess exclusive voting power, except as otherwise provided by law or by articles of amendment establishing any series of Seacoast preferred stock.

There is no cumulative voting in the election of directors, which means that the holders of a plurality of Seacoast’s outstanding shares of common stock can elect all of the directors then standing for election. Since the closing of the CapGen Capital Group III LP, or CapGen, offering on December 17, 2009, which we refer to as the CapGen Offering, CapGen was entitled to appoint one director to Seacoast’s board of directors, so long as CapGen retained ownership of all of the shares of common stock purchased in that offering, adjusted as applicable. On September 11, 2015, such CapGen representative resigned. On November 13, 2015, CapGen sold an aggregate of 500,000 shares of Seacoast common stock. In addition, on February 21, 2017, CapGen sold 6,210,000 shares of its common stock in the Company. As reported with the SEC on February 22, 2017, CapGen ceased to be the beneficial owners of more than five percent of the outstanding shares of Seacoast and as of that date owned approximately 3.1% of the outstanding shares of Seacoast common stock.

When a quorum is present at any meeting, questions brought before the meeting will be decided by the vote of the holders of a majority of the shares present and voting on such matter, whether in person or by proxy, except when the meeting concerns matters requiring the vote of the holders of a majority of all outstanding shares under applicable Florida law. Seacoast’s articles of incorporation provide certain anti-takeover provisions that require super-majority votes, which may limit shareholders’ rights to effect a change in control as described under the section below entitled “Anti-Takeover Effects of Certain articles of incorporation Provisions.”

Registration Rights

On January 13, 2014, Seacoast completed the sale to CapGen of $25 million of its common stock pursuant to a Stock Purchase Agreement, dated November 6, 2013, entered into in connection with its $75 million offering of common stock in November 2013. In connection with such offering, Seacoast granted certain registration rights to CapGen pursuant to a Registration Rights Agreement, dated as of January 13, 2014.

Dividends, Liquidation and Other Rights

Holders of shares of common stock are entitled to receive dividends only when, as and if approved by Seacoast’s board of directors from funds legally available for the payment of dividends. Seacoast’s shareholders are entitled to share ratably in its assets legally available for distribution to its shareholders in the event of Seacoast’s liquidation, dissolution or winding up, voluntarily or involuntarily, after payment of, or adequate provision for, all of our known debts and liabilities and of any preferences of any series of our preferred stock that may be outstanding in the future. These rights are subject to the preferential rights of any series of Seacoast’s preferred stock that may then be outstanding.

 

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Holders of shares of Seacoast common stock have no preference, conversion, exchange, sinking fund or redemption rights and have no preemptive rights to subscribe for any of our securities. Seacoast’s board of directors, under its articles of incorporation, may issue additional shares of its common stock or rights to purchase shares of its common stock without shareholder approval.

Restrictions on Ownership

The Bank Holding Company Act requires any “bank holding company,” as defined in the Bank Holding Company Act, to obtain the approval of the Federal Reserve prior to the acquisition of 5% or more of our common shares. Any person, other than a bank holding company, is required to obtain prior approval of the Federal Reserve to acquire 10% or more of our common shares under the Change in Bank Control Act. Any holder of 25% or more of our common shares, or a holder of 5% or more if such holder otherwise exercises a “controlling influence” over us, is subject to regulation as a bank holding company under the Bank Holding Company Act.

Certain provisions included in our amended and restated articles of incorporation and bylaws, as described further below, as well as certain provisions of the Florida Business Corporation Act and federal law, may discourage, delay or prevent potential acquisitions of control of us, particularly when attempted in a transaction that is not negotiated directly with, and approved by, our board of directors, despite possible benefits to our shareholders. These provisions are more fully described in the documents and reports filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference into this prospectus.

Preferred Stock

General

Seacoast is authorized to issue 4 million shares of preferred stock, 2,000 shares of which have been designated as Series A Preferred Stock, and 50,000 of which have been designated as Series B Preferred Stock. On December 31, 2013, Seacoast redeemed in full all 2,000 shares of Series A Preferred Stock then issued and outstanding. Such Series A Preferred Stock was originally issued to the U.S. Treasury Department under the Capital Purchase Program and subsequently auctioned to private investors. No shares of Series B Preferred Stock are issued and outstanding as of the date of this proxy statement/prospectus.

Under Seacoast’s amended and restated articles of incorporation, its board of directors is authorized, without shareholder approval, to adopt resolutions providing for the issuance of up to 4 million shares of preferred stock, par value $0.10 per share, in one or more series. Seacoast’s board of directors may fix the voting powers, designations, preferences, rights, qualifications, limitations and restrictions of each series of preferred stock. A series of preferred stock upon issuance will have preference over Seacoast common stock with respect to the payment of dividends and the distribution of assets in the event of the liquidation or dissolution of Seacoast. The relative rights, preferences and limitations that Seacoast’s board of directors has the authority to determine as to any such series of such stock include, among other things, dividend rights, voting rights, conversion rights, redemption rights, and liquidation preferences. Because Seacoast’s board of directors has the power to establish the relative rights, preferences and limitations of each series of such stock, it may afford to the holders of any such series, preferences and rights senior to the rights of the holders of the shares of common stock, as well as the shares of preferred stock to be issued in the reclassification transaction. Although Seacoast’s board of directors has no intention at the present time of doing so, it could cause the issuance of any additional shares of preferred stock that could discourage an acquisition attempt or other transactions that some, or a majority of, the shareholders might believe to be in their best interests or in which the shareholders might receive a premium for their shares of common stock over the market price of such shares.

 

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Transfer Agent and Registrar

The transfer agent and registrar for Seacoast common stock is Continental Stock Transfer and Trust Company.

Anti-Takeover Effects of Certain Articles of Incorporation Provisions

Seacoast’s articles of incorporation contain certain provisions that make it more difficult to acquire control of it by means of a tender offer, open market purchase, a proxy fight or otherwise. These provisions are designed to encourage persons seeking to acquire control of Seacoast to negotiate with its directors. Seacoast believes that, as a general rule, the interests of its shareholders would be best served if any change in control results from negotiations with its directors.

Seacoast’s articles of incorporation provide for a classified board to which approximately one-third of its board of directors is elected each year at its annual meeting of shareholders. Accordingly, Seacoast’s directors serve three-year terms rather than one-year terms. The classification of Seacoast’s board of directors has the effect of making it more difficult for shareholders to change the composition of its board of directors. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of Seacoast’s board of directors. Such a delay may help ensure that its directors, if confronted by a shareholder attempting to force a proxy contest, a tender or exchange offer, or an extraordinary corporate transaction, would have sufficient time to review the proposal as well as any available alternatives to the proposal and to act in what they believe to be the best interests of Seacoast’s shareholders. The classification provisions apply to every election of directors, however, regardless of whether a change in the composition of Seacoast’s board of directors would be beneficial to Seacoast and its shareholders and whether or not a majority of its shareholders believe that such a change would be desirable.

The classification of Seacoast’s board of directors could also have the effect of discouraging a third party from initiating a proxy contest, making a tender offer or otherwise attempting to obtain control of Seacoast, even though such an attempt might be beneficial to Seacoast and its shareholders. The classification of Seacoast’s board of directors could thus increase the likelihood that incumbent directors will retain their positions. In addition, because the classification of Seacoast’s board of directors may discourage accumulations of large blocks of its stock by purchasers whose objective is to take control of Seacoast and remove a majority of its board of directors, the classification of its board of directors could tend to reduce the likelihood of fluctuations in the market price of its common stock that might result from accumulations of large blocks of its common stock for such a purpose. Accordingly, Seacoast’s shareholders could be deprived of certain opportunities to sell their shares at a higher market price than might otherwise be the case.

Seacoast’s articles of incorporation require the affirmative vote of the holders of not less than two-thirds of all the shares of its stock outstanding and entitled to vote generally in the election of directors in addition to the votes required by law or elsewhere in the articles of incorporation, the bylaws or otherwise, to approve: (a) any sale, lease, transfer, purchase and assumption of all or substantially all of its consolidated assets and/or liabilities, (b) any merger, consolidation, share exchange or similar transaction, or any merger of any significant subsidiary, into or with another person, or (c) any reclassification of securities, recapitalization or similar transaction that has the effect of increasing other than pro rata with the other shareholders, the proportionate amount of shares that is beneficially owned by an Affiliate (as defined in Seacoast’s articles of incorporation). Any business combination described above may instead be approved by the affirmative vote of a majority of all the votes entitled to be cast on the plan of merger if such business combination is approved and recommended to the shareholders by (x) the affirmative vote of two-thirds of Seacoast’s board of directors, and (y) a majority of the Continuing Directors (as defined in Seacoast’s articles of incorporation).

 

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Seacoast’s articles of incorporation also contain additional provisions that may make takeover attempts and other acquisitions of interests in it more difficult where the takeover attempt or other acquisition has not been approved by its board of directors. These provisions include:

 

•

A requirement that any change to Seacoast’s articles of incorporation relating to the structure of its board of directors, certain anti-takeover provisions and shareholder proposals must be approved by the affirmative vote of holders of two-thirds of the shares outstanding and entitled to vote;

 

•

A requirement that any change to Seacoast’s bylaws, including any change relating to the number of directors, must be approved by the affirmative vote of either (a) (i) two-thirds of its board of directors, and (ii) a majority of the continuing directors (as defined in Seacoast’s articles of incorporation) or (b) (i) two-thirds of the shares entitled to vote generally in the election of directors and (ii) an Independent Majority of Shareholders. An “Independent Majority of Shareholders” means the majority of the outstanding voting shares that are not beneficially owned or controlled, directly or indirectly by a related party. For these purposes, a “related party” means a beneficial owner of 5% or more of the voting shares, or any person who is an affiliate of Seacoast and at any time within five years was the beneficial owner of 5% or more of Seacoast’s then outstanding shares; provided, however, that this provision shall not include (i) any person who is the beneficial owner of more than 5% of Seacoast’s shares on February 28, 2003, (ii) any plan or trust established for the benefit of Seacoast’s employees generally, or (iii) any subsidiary of Seacoast that holds shares in a fiduciary capacity, whether or not it has the authority to vote or dispose of such securities;

 

•

A requirement that shareholders may call a meeting of shareholders on a proposed issue or issues only upon the receipt by Seacoast from the holders of 50% of all shares entitled to vote on the proposed issue or issues of signed and dated written demands for the meeting describing the purpose for which it is to be held; and

 

•

A requirement that a shareholder wishing to submit proposals for a shareholder vote or nominate directors for election comply with certain procedures, including advanced notice requirements.

Seacoast’s articles of incorporation provide that, subject to the rights of any holders of its preferred stock to act by written consent instead of a meeting, shareholder action may be taken only at an annual meeting or special meeting of the shareholders and may not be taken by written consent. The articles of incorporation also include provisions that make it difficult to replace directors. Specifically, directors may be removed only for cause and only upon the affirmative vote at a meeting duly called and held for that purpose upon not less than thirty days prior written notice of (i) two-thirds of the shares entitled to vote generally in the election of directors and (ii) an Independent Majority of Shareholders. In addition, any vacancies on the board of directors for any reason, and any newly created directorships resulting from any increase in the number of directors, may be filled only by the board of directors (except if no directors remain on the board, in which case the shareholders may act to fill the vacant board).

Seacoast believes that the power of its board of directors to issue additional authorized but unissued shares of its common stock or preferred stock without further action by its shareholders, unless required by applicable law or the rules of any stock exchange or automated quotation system on which its securities may be listed or traded, will provide Seacoast with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise. Seacoast’s board of directors could authorize and issue a class or series of stock that could, depending upon the terms of such class or series, delay, defer or prevent a transaction or a change in control that might involve a premium price for holders of Seacoast’s common stock or that its shareholders otherwise consider to be in their best interest.

 

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EXPERTS

The consolidated financial statements of Seacoast Banking Corporation of Florida and subsidiaries as of December 31, 2016 and 2015 and for each of the three years ending December 31, 2016 and the effectiveness of Seacoast Banking Corporation of Florida’s internal control over financial reporting as of December 31, 2016 have been audited by Crowe Horwath LLP, independent registered public accounting firm, as set forth in their report appearing in our Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated by reference herein, and upon the authority of said firm as expert in accounting and auditing.

LEGAL MATTERS

The validity of the shares of Seacoast common stock to be issued by Seacoast in connection with the merger will be passed upon by Alston & Bird LLP, Atlanta, Georgia.

OTHER MATTERS

No matters other than the matters described in this proxy statement/prospectus are anticipated to be presented for action at the special meeting, or at any adjournment or postponement of such meetings. If any procedural matters relating to the conduct of the meeting are presented, the persons named as proxies will vote the shares represented by properly executed proxies in accordance with their judgment with respect to those matters.

 

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DOCUMENTS INCORPORATED BY REFERENCE

The SEC allows Seacoast to “incorporate by reference” information in this proxy statement/prospectus. This means that Seacoast can disclose important business and financial information to you by referring you to another document filed separately with the SEC. The information that Seacoast incorporates by reference is considered to be part of this proxy statement/prospectus, and later information that Seacoast files with the SEC will automatically update and supersede the information Seacoast included in this proxy statement/prospectus. This document incorporates by reference the documents that are listed below that Seacoast has previously filed with the SEC, except to the extent that any information contained in such filings is deemed “furnished” in connection with SEC rules.

 

•

Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 16, 2017;

 

•

Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed on May 9, 2017;

 

•

The information incorporated by reference into Part III of our Annual Report from our Proxy Statement for 2017 Annual Meeting, filed on April 6, 2017;

 

•

Current Reports on Form 8-K or Form 8-K/A, as applicable, filed on January 27, 2017, February 3, 2017, February 6, 2017, February 13, 2017, February 14, 2017, February 21, 2017, April 10, 2017, May 5, 2017, May 9, 2017, May 18, 2017, May 24, 2017, May 26, 2017 and June 27, 2017; and

 

•

The description of our common stock contained in our Registration Statement filed with the SEC pursuant to Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), including any amendment or report filed for purposes of updating such description.

Seacoast also incorporates by reference any future filings it makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement/prospectus and before the NSBC shareholder meeting. Any statement contained in this proxy statement/prospectus or in a document incorporated or deemed to be incorporated by reference in this proxy statement/prospectus is deemed to be modified or superseded to the extent that a statement contained herein or in any subsequently filed document that also is, or is deemed to be, incorporated by reference herein modified or superseded such statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this proxy statement/prospectus.

Documents incorporated by reference are available from Seacoast without charge (except for exhibits to the documents unless the exhibits are specifically incorporated in the document by reference). You may obtain documents incorporated by following the instructions set forth under “Where You Can Find More Information”:

Seacoast Banking Corporation of Florida

815 Colorado Avenue

P.O. Box 9012

Stuart, Florida 34994

Attn: Investor Relations

Telephone: (772) 287-4000

To obtain timely delivery, you must make a written or oral request for a copy of such information by                     , 2017.

 

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APPENDIX A

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

SEACOAST BANKING CORPORATION OF FLORIDA

SEACOAST NATIONAL BANK

NORTHSTAR BANKING CORPORATION

AND

NORTHSTAR BANK

Dated as of May 18, 2017

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TABLE OF CONTENTS

 

				Page
Parties					1
Preamble					1
ARTICLE 1 – TRANSACTIONS AND TERMS OF MERGER					1
1.1		Merger			1
1.2		Bank Merger			1
1.3		Time and Place of Closing			2
1.4		Effective Time			2
1.5		Conversion of NorthStar Common Stock			2
1.6		SBC Common Stock			3
1.7		NorthStar Equity Awards			3
1.8		Organizational Documents of Surviving Corporation; Directors and Officers			3
1.9		Tax Consequences			3
ARTICLE 2 – DELIVERY OF MERGER CONSIDERATION					4
2.1		Exchange Procedures			4
2.2		Rights of Former NorthStar Shareholders			5
2.3		Dissenters’ Rights			6
ARTICLE 3 – REPRESENTATIONS AND WARRANTIES					6
3.1		Company Disclosure Letter			6
3.2		Standards			6
3.3		Representations and Warranties of the Company			7
3.4		Representations and Warranties of Seacoast			22
ARTICLE 4 – COVENANTS AND ADDITIONAL AGREEMENTS					26
4.1		Conduct of Business Prior to Effective Time			26
4.2		Forbearances			26
4.3		Litigation			28
4.4		State Filings			29
4.5		NorthStar Shareholder Approval; Registration Statement and Proxy Statement/Prospectus			29
4.6		Listing of SBC Capital Stock			29
4.7		Reasonable Best Efforts			30
4.8		Applications and Consents			30
4.9		Notification of Certain Matters			31
4.10		Investigation and Confidentiality			31
4.11		Press Releases; Publicity			31
4.12		Acquisition Proposals			31
4.13		Takeover Laws			33
4.14		Employee Benefits and Contracts.			33
4.15		Indemnification			34
4.16		Resolution of Certain Matters			35
4.17		Claims Letters			35
4.18		Restrictive Covenant Agreement			35
4.19		Systems Integration			35
4.20		Closing Payments			36
ARTICLE 5 – CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE					36
5.1		Conditions to Obligations of Each Party			36
5.2		Conditions to Obligations of Seacoast			36
5.3		Conditions to Obligations of The Company			38
ARTICLE 6 – TERMINATION					39
6.1		Termination			39
6.2		Effect of Termination			40

 

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				Page
ARTICLE 7 – MISCELLANEOUS					41
7.1		Definitions			41
7.2		Non-Survival of Representations and Covenants			47
7.3		Expenses			47
7.4		Termination Fee			48
7.5		Entire Agreement			48
7.6		Amendments			49
7.7		Waivers			49
7.8		Assignment			49
7.9		Notices			49
7.10		Governing Law			50
7.11		Counterparts			50
7.12		Captions			50
7.13		Interpretations			50
7.14		Severability			50
7.15		Attorneys’ Fees			51
7.16		Specific Performance			51
7.17		Waiver of Jury Trial			51

 

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LIST OF EXHIBITS

 

Exhibit		Description
A		Bank Merger Agreement
B		Form of Shareholder Support Agreement
C		Form of Claims Letter
D		Form of Restrictive Covenant Agreement

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of May 18, 2017, by and among Seacoast Banking Corporation of Florida, a Florida corporation (“SBC”), Seacoast National Bank, a national banking association and wholly owned subsidiary of SBC (“SNB” and collectively with SBC, “Seacoast”), NorthStar Banking Corporation, a Florida corporation (“NorthStar”) and NorthStar Bank, a Florida chartered bank and wholly-owned subsidiary of NorthStar (the “Bank” and collectively with NorthStar, the “Company”).

Preamble

WHEREAS, the Boards of Directors of SBC and NorthStar have approved this Agreement and the transactions described herein and have declared the same advisable and in the best interests of each of SBC and NorthStar and each of SBC and NorthStar’s shareholders;

WHEREAS, this Agreement provides for the acquisition of NorthStar by SBC pursuant to the merger of NorthStar with and into SBC (the “Merger”) and the merger of the Bank with and into SNB (the “Bank Merger”) pursuant to the terms of the Plan of Merger and Merger Agreement between SNB and the Bank attached hereto as Exhibit A (the “Bank Merger Agreement”); and

WHEREAS, concurrently with the execution and delivery of this Agreement, as a condition and inducement to Seacoast’s willingness to enter into this Agreement, (i) the Company’s directors, (ii) certain of the Company’s executive officers, and (iii) each beneficial holder of five percent (5%) or more of the outstanding shares of NorthStar Common Stock, have executed and delivered to SBC an agreement in substantially the form of Exhibit B (the “Shareholder Support Agreement”), pursuant to which they have agreed, among other things, subject to the terms of such Shareholder Support Agreement, to vote the shares of NorthStar Common Stock held of record by such Persons or as to which they otherwise have sole voting power to approve and adopt this Agreement and the transactions contemplated hereby, including the Merger and the Bank Merger.

Certain terms used and not otherwise defined in this Agreement are defined in Section 7.1.

NOW, THEREFORE, in consideration of the above and the mutual warranties, representations, covenants, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE 1

TRANSACTIONS AND TERMS OF MERGER

1.1 Merger. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.4 herein), NorthStar shall be merged with and into SBC in accordance with the provisions of the FBCA. SBC shall be the surviving corporation (the “Surviving Corporation”) resulting from the Merger and the separate corporate existence of NorthStar shall thereupon cease. SBC shall continue to be governed by the Laws of the State of Florida, and the separate corporate existence of SBC with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger.

1.2 Bank Merger. Prior to the Effective Time, the Boards of Directors of SNB and the Bank will execute the Bank Merger Agreement. Subject to the terms and conditions of this Agreement and the Bank Merger Agreement, the Bank shall be merged with and into SNB in accordance with the provisions of 12 U.S.C. Section 215 and with the effect provided in 12 U.S.C. Section 215. SNB shall be the surviving bank (the “Surviving Bank”) resulting from the Bank Merger and the separate existence of the Bank shall thereupon cease.

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SNB shall continue to be governed by the Laws of the United States, and the separate existence of SNB with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Bank Merger. Subject to the satisfaction of the conditions to closing set forth in the Bank Merger Agreement, the Bank Merger shall occur immediately following the Merger unless otherwise determined by Seacoast in its sole discretion.

1.3 Time and Place of Closing. Unless otherwise mutually agreed to by SBC and the Company, the closing of the Merger (the “Closing”) shall take place in the offices of Alston & Bird LLP, One Atlantic Center, 1201 West Peachtree Street, Atlanta, Georgia 30309 at 10:00 a.m., Atlanta time, on the date when the Effective Time is to occur (the “Closing Date”).

1.4 Effective Time. Subject to the terms and conditions of this Agreement, on the Closing Date, the Parties will cause articles of merger to be filed with the Secretary of State of the State of Florida as provided in the FBCA (the “Articles of Merger”). The Merger shall take effect when the Articles of Merger becomes effective (the “Effective Time”). Subject to the terms and conditions hereof, the Parties shall use their reasonable best efforts to cause the Effective Time to occur on a mutually agreeable date following the date on which satisfaction or waiver of the conditions set forth in Article 5 has occurred (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions).

1.5 Conversion of the NorthStar Common Stock.

(a) At the Effective Time, in each case subject to Section 1.5(d) and excluding Dissenting Shares and subject to certain adjustments, by virtue of the Merger and without any action on the part of the Parties or the holder thereof, each share of NorthStar Common Stock that is issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive: (i) the number of shares of SBC Common Stock that is equal to the Exchange Ratio (the “Stock Consideration”); and (ii) $2.40 per share of NorthStar Common Stock in cash (the “Cash Consideration” and, together with the Stock Consideration, the “Merger Consideration”); provided, however, that in the event the conditions set forth in Section 5.2(i)(A) of this Agreement are not satisfied, Seacoast shall have the option to adjust the Merger Consideration downward by an amount that equals the difference between the NorthStar Consolidated Tangible Shareholders’ Equity and the NorthStar Target Consolidated Tangible Shareholders’ Equity and waive the satisfaction of such condition set forth in Section 5.2(i)(A) herein. At least ten (10) days prior to the Closing Date, the Company and Seacoast shall agree on a schedule setting forth the expected NorthStar Consolidated Tangible Shareholders’ Equity amount as of the Closing Date. The consideration which all of NorthStar shareholders and option holders are entitled to receive pursuant to this Article 1 is referred to herein as the “Aggregate Merger Consideration.”

(b) At the Effective Time, all shares of NorthStar Common Stock shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist as of the Effective Time, and each certificate or electronic book-entry previously representing any such shares of NorthStar Common Stock (the “NorthStar Certificates”) shall thereafter represent only the right to receive the Merger Consideration and any cash in lieu of fractional shares pursuant to Section 1.5(c), and any Dissenting Shares shall thereafter represent only the right to receive applicable payments as set forth in Section 2.3.

(c) Notwithstanding any other provision of this Agreement, each holder of shares of NorthStar Common Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of SBC Common Stock (after taking into account all the NorthStar Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of SBC Common Stock multiplied by the average closing price per share of SBC Common Stock on the NASDAQ Global Select Market for the five (5) trading day period ending on the trading day preceding the Closing Date, less any applicable withholding Taxes. No such holder will be entitled to dividends, voting rights, or any other rights as a shareholder in respect of any fractional shares.

(d) If, prior to the Effective Time, the issued and outstanding shares of SBC Common Stock or NorthStar Common Stock shall have been increased, decreased, changed into or exchanged for a different

 

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number or kind of shares or securities as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization, then an appropriate and proportionate adjustment shall be made to the Stock Consideration.

(e) Each share of NorthStar Common Stock issued and outstanding immediately prior to the Effective Time and owned by any of the Parties or their respective Subsidiaries (in each case other than shares of NorthStar Common Stock held on behalf of third parties) shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding, shall be cancelled and retired without payment of any consideration therefore and shall cease to exist (together with the Dissenting Shares, the “Excluded Shares”).

1.6 SBC Common Stock. At and after the Effective Time, each share of SBC Common Stock issued and outstanding immediately prior to the Effective Time shall remain an issued and outstanding share of SBC Common Stock and shall not be affected by the Merger.

1.7 NorthStar Equity Awards. NorthStar shall take all actions necessary (including delivering all required notices and obtaining all necessary approvals and consents) to cause each NorthStar Equity Award issued and outstanding immediately prior to the Effective Time to be (a) vested in accordance with its terms, (b) exercised in accordance with its terms, and/or (c) terminated, so that no NorthStar Equity Awards shall be outstanding as of the Effective Time. If NorthStar Common Stock is issued to holders of NorthStar Equity Awards as a result of such vesting, exercise or termination, such shares of the NorthStar Common Stock shall be treated as all other shares of the NorthStar Common Stock under this Agreement. Each NorthStar Equity Award which is an option to purchase NorthStar Common Stock and which is not exercised and which is terminated immediately prior to the Effective Time pursuant to this Section 1.7, shall cease to be outstanding and shall be converted into the right to promptly receive from SBC following the Effective Time an amount in cash, without interest, equal to the product of (x) the aggregate number of shares of NorthStar Common Stock subject to such NorthStar Equity Award immediately prior to its termination, multiplied by (y) the excess, if any, of $16.00 over the exercise price per share of the NorthStar Equity Award. Prior to the Effective Time, NorthStar shall take all actions necessary to terminate the NorthStar Stock Plans as of the Effective Time and to cause the provisions in any other NorthStar Benefit Plan providing for the issuance, transfer or grant of any capital stock of NorthStar or any interest in respect of any capital stock of NorthStar to terminate and be of no further force and effect as of the Effective Time, and NorthStar shall ensure that following the Effective Time no person who was, immediately prior to the Effective Time, a holder of any NorthStar Equity Award or a participant in any NorthStar Stock Plan or other NorthStar Benefit Plan, shall have any right thereunder to acquire any capital stock of SBC, SNB, NorthStar or the Bank, except as provided in Section 1.5 of this Agreement with respect to NorthStar Common Stock which such person received or became entitled to receive in accordance with the vesting or exercise of such NorthStar Equity Award prior to the Effective Time.

1.8 Organizational Documents of Surviving Corporation; Directors and Officers.

(a) The Organizational Documents of SBC in effect immediately prior to the Effective Time shall be the Organizational Documents of the Surviving Corporation after the Effective Time until otherwise amended or repealed.

(b) The directors of SBC immediately prior to the Effective Time shall be the directors of the Surviving Corporation as of the Effective Time. The officers of SBC immediately prior to the Effective Time shall be the officers of the Surviving Corporation as of the Effective Time, until the earlier of their resignation or removal or otherwise ceasing to be an officer or until their respective successors are duly elected and qualified, as the case may be.

1.9 Tax Consequences. It is the intention of the Parties to this Agreement that the Merger and the Bank Merger, for federal income Tax purposes, shall qualify as “reorganizations” within the meaning of Section 368(a) of the Internal Revenue Code and that this Agreement shall constitute a “plan of reorganization” for purposes of

 

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Sections 354 and 361 of the Internal Revenue Code. The business purpose of the Merger and the Bank Merger is to combine two financial institutions to create a strong commercial banking franchise. SBC shall have the right to revise the structure of the Merger and/or the Bank Merger contemplated by this Agreement in order to assure that the Merger and the Bank Merger, for federal income Tax purposes shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code or to substitute an interim corporation that is wholly owned by SBC (“Interim”), which interim corporation may merge with and into NorthStar, provided, that no such revision to the structure of the Merger or the Bank Merger shall (a) result in any changes in the amount or type of the consideration that the holders of shares of NorthStar Common Stock are entitled to receive under this Agreement or (b) adversely affect the Tax treatment of the Merger and/or the Bank Merger with respect to NorthStar shareholders as a result of the transactions contemplated by this Agreement. SBC may exercise this right of revision by giving written notice to NorthStar in the manner provided in Section 7.9, which notice shall be in the form of an amendment to this Agreement.

ARTICLE 2

DELIVERY OF MERGER CONSIDERATION

2.1 Exchange Procedures.

(a) Delivery of Transmittal Materials. Prior to the Effective Time, SBC shall appoint an exchange agent (the “Exchange and Paying Agent”) to act as exchange agent hereunder. At or immediately prior to the Effective Time, SBC shall deposit, or cause to be deposited, with the Exchange and Paying Agent (i) SBC Common Stock issuable pursuant to Section 1.5(a) in book-entry form equal to the aggregate Stock Consideration (excluding any fractional share consideration), and (ii) cash in immediately available funds in an amount sufficient to pay the aggregate Cash Consideration, fractional share consideration and any dividends under Section 2.1(d). As promptly as practicable after the Effective Time (and within five Business Days), the Exchange and Paying Agent shall send to each former holder of record of shares of NorthStar Common Stock, including holders of NorthStar Equity Awards who received or became entitled to receive NorthStar Common Stock which in accordance with the vesting or exercise of such NorthStar Equity Award prior to the Effective Time as provided in Section 1.7, but excluding the holders, if any, of Dissenting Shares, immediately prior to the Effective Time transmittal materials for use in exchanging such holder’s NorthStar Certificates for the Merger Consideration (which shall specify that delivery shall be effected, and risk of loss and title to the NorthStar Certificates shall pass, only upon proper delivery of such NorthStar Certificates (or effective affidavit of loss in lieu thereof as provided in Section 2.1(e)) to the Exchange and Paying Agent).

(b) Delivery of Merger Consideration. After the Effective Time, following the surrender of a NorthStar Certificate to the Exchange and Paying Agent (or effective affidavit of loss in lieu thereof as provided in Section 2.1(e)) in accordance with the terms of the letter of transmittal, duly executed, the holder of such NorthStar Certificate shall be entitled to receive in exchange therefor the Merger Consideration in respect of the shares of the NorthStar Common Stock represented by its NorthStar Certificate or Certificates. If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name a NorthStar Certificate so surrendered is registered, it shall be a condition to such payment that such NorthStar Certificate shall be properly endorsed or otherwise be in proper form for transfer, and the Person requesting such payment shall pay to the Exchange and Paying Agent any transfer or other similar Taxes required as a result of such payment to a Person other than the registered holder of such NorthStar Certificate, or establish to the reasonable satisfaction of the Exchange and Paying Agent that such Tax has been paid or is not payable. Payments to holders of Dissenting Shares shall be made as required by the FBCA.

(c) Payment of Taxes. The Exchange and Paying Agent (or, after the agreement with the Exchange and Paying Agent is terminated, SBC) shall be entitled to deduct and withhold from the Merger Consideration (including cash in lieu of fractional shares of SBC Common Stock) otherwise payable pursuant to this Agreement to any holder of the NorthStar Common Stock such amounts as the Exchange and Paying Agent or SBC, as the

 

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case may be, is required to deduct and withhold under the Internal Revenue Code, or any provision of state, local or foreign Tax law, with respect to the making of such payment. To the extent the amounts are so withheld by the Exchange and Paying Agent or SBC, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of the NorthStar Common Stock in respect of whom such deduction and withholding was made by the Exchange and Paying Agent or SBC, as the case may be.

(d) Return of Merger Consideration to SBC. At any time upon request by SBC, SBC shall be entitled to require the Exchange and Paying Agent to deliver to it any remaining portion of the Merger Consideration not distributed to holders of the NorthStar Certificates that was deposited with the Exchange and Paying Agent (the “Exchange Fund”) (including any interest received with respect thereto and other income resulting from investments by the Exchange and Paying Agent, as directed by SBC), and holders shall be entitled to look only to SBC (subject to abandoned property, escheat or other similar laws) with respect to the Merger Consideration, any cash in lieu of fractional shares of SBC Common Stock and any dividends or other distributions with respect to SBC Common Stock payable upon due surrender of their NorthStar Certificates, without any interest thereon. Notwithstanding the foregoing, neither SBC nor the Exchange and Paying Agent shall be liable to any holder of a NorthStar Certificate for Merger Consideration (or dividends or distributions with respect thereto) or cash from the Exchange Fund in each case delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(e) Lost Certificates. In the event any NorthStar Certificates shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such NorthStar Certificate(s) to be lost, stolen or destroyed and, if required by SBC or the Exchange and Paying Agent, the posting by such Person of a bond in such sum as SBC may reasonably direct as indemnity against any claim that may be made against NorthStar or SBC with respect to such NorthStar Certificate(s), the Exchange and Paying Agent will issue the Merger Consideration deliverable in respect of the shares of NorthStar Common Stock represented by such lost, stolen or destroyed NorthStar Certificates.

2.2 Rights of Former NorthStar Shareholders. On or before the Closing Date, the stock transfer books of NorthStar shall be closed as to holders of NorthStar Common Stock and no transfer of NorthStar Common Stock by any such holder shall thereafter be made or recognized. Until surrendered for exchange in accordance with the provisions of Section 2.1, each NorthStar Certificate (other than NorthStar Certificates representing Excluded Shares) shall from and after the Effective Time represent for all purposes only the right to receive the Merger Consideration in exchange therefor and any cash in lieu of fractional shares of SBC Common Stock to be issued or paid in consideration therefor upon surrender of such certificate in accordance with Section 1.5(c), and any dividends or distributions to which such holder is entitled pursuant to this Article 2. No dividends or other distributions with respect to SBC Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered NorthStar Certificate with respect to the shares of SBC Common Stock represented thereby, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 1.5(c), and all such dividends, other distributions and cash in lieu of fractional shares of SBC Common Stock shall be paid by SBC to the Exchange and Paying Agent and shall be included in the Exchange Fund, in each case until the surrender of such NorthStar Certificate in accordance with this Article 2. Subject to the effect of applicable abandoned property, escheat or similar laws, following surrender of any such NorthStar Certificate there shall be paid to the holder of a SBC stock certificate representing whole shares of SBC Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of dividends or other distributions, if applicable, with a record date after the Effective Time theretofore paid with respect to such whole shares of SBC Common Stock and the amount of any cash payable in lieu of a fractional share of SBC Common Stock to which such holder is entitled pursuant to Section 1.5(c), and (ii) at the appropriate payment date, the amount of dividends or other distributions, if applicable, with a record date after the Effective Time but prior to such surrender and with a payment date subsequent to such surrender payable with respect to such whole shares of SBC Common Stock. SBC shall make available to the Exchange and Paying Agent cash for these purposes, if necessary.

 

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2.3 Dissenters’ Rights. Any Person who otherwise would be deemed a holder of Dissenting Shares (a “Dissenting Shareholder”) shall not be entitled to receive the applicable Merger Consideration with respect to the Dissenting Shares unless and until such Person shall have failed to perfect or shall have effectively withdrawn or lost such holder’s right to dissent from the Merger under the FBCA. Each Dissenting Shareholder shall be entitled to receive only the payment provided by the provisions of Sections 607.1301 through 607.1333 of the FBCA with respect to shares of NorthStar Common Stock owned by such Dissenting Shareholder. NorthStar shall give SBC (i) prompt notice of any written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law received by NorthStar relating to shareholders’ rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demand for appraisal under the FBCA. NorthStar shall not, except with the prior written consent of SBC, voluntarily make any payment with respect to any demands for appraisals of Dissenting Shares, offer to settle or settle any such demands or approve any withdrawal of any such demands. Any payments made in respect of Dissenting Shares shall be made by SBC as the Surviving Corporation.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

3.1 Company Disclosure Letter. Prior to the execution and delivery of this Agreement, the Company has delivered to Seacoast a letter (the “Company Disclosure Letter”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more of the Company’s representations or warranties contained in this Article 3 or to one or more of its covenants contained in Article 4; provided, that (a) no such item is required to be set forth in the Company Disclosure Letter as an exception to any representation or warranty of the Company if its absence would not result in the related representation or warranty being deemed untrue or incorrect under the standard established by Section 3.2, and (b) the mere inclusion of an item in the Company Disclosure Letter as an exception to a representation or warranty shall not be deemed an admission by the Company that such item represents a material exception or fact, event or circumstance or that such item is reasonably l