As filed with the Securities and Exchange Commission on August 30, 2022

Registration No. 333-265988​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Pre-Effective
Amendment No. 1
to
Form S-4
REGISTRATION STATEMENT

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)

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 “emerging growth company” in Rule 12b-2 of the Exchange Act.

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) ☐

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.

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.

and its shareholders. Drummond’s board of directors has unanimously authorized, adopted and approved the merger agreement, the merger and the transactions contemplated by the merger agreement and recommends that Drummond shareholders vote “FOR” the proposal to approve the merger agreement and “FOR” the proposal to adjourn the Drummond 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 Drummond shareholders and as a prospectus for the shares of Seacoast common stock to be issued in the merger to Drummond shareholders, describes the special meeting of Drummond, 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, Drummond shareholders should contact Todd Battle at (352) 528-1706. We look forward to seeing you at the meeting.

Luther Drummond
Chairman and President
Drummond Banking Company

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 Drummond, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this proxy statement/prospectus is            , 2022, and it is first being mailed or otherwise delivered to the shareholders of Drummond on or about September 1, 2022.

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 4, 2022

To the Shareholders of Drummond Banking Company:

Drummond Banking Company (“Drummond”) will hold a special meeting of shareholders at 8:30 A.M. local time , on October 4, 2022, at the Drummond Community Bank Operations Center located at 1713 N. Young Boulevard, Chiefland, Florida 32626, for the following purposes:

•

for holders of Drummond common stock to consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of May 4, 2022, by and among Seacoast Banking Corporation of Florida, Seacoast National Bank, Drummond Banking Company and Drummond Community Bank, pursuant to which Drummond will merge with and into Seacoast Banking Corporation of Florida and Drummond Community Bank will merge with and into Seacoast National Bank, as more fully described in the attached proxy statement/prospectus; and

​

•

for holders of Drummond common stock to consider and vote upon a proposal to adjourn the Drummond 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 August 22, 2022 as the record date for the Drummond special meeting. Only holders of record of Drummond common stock at that time are entitled to notice of, and to vote at, the Drummond special meeting, or any adjournment or postponement of the Drummond special meeting. In order for the merger agreement to be approved, at least a majority of the outstanding shares of Drummond 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 Drummond 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.

Drummond 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 Drummond. For more information regarding appraisal rights, please see “The Merger — Appraisal Rights for Drummond Shareholders” beginning on page 51.

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

We expect to hold the Drummond special meeting in person, but we continue to monitor the situation regarding COVID-19 closely. Accordingly, we are planning for the possibility that the Drummond special meeting may be subject to special precautions, including limitations on the number of participants in one room or other limitations. In that regard, only Drummond shareholders will be admitted to the special meeting. No guests will be permitted.

Regardless of whether you plan to attend the Drummond 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 the proxy statement/prospectus, would like additional copies of the proxy statement/​prospectus or need help voting your shares of Drummond common stock, please contact Todd Battle at (352) 528-1706.

Drummond’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 Drummond 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 Drummond shareholders vote “FOR” the proposal to approve the merger agreement and “FOR” the proposal to adjourn the Drummond special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the merger agreement.

By Order of the Board of Directors,

Luther Drummond
Chairman and President

Chiefland, Florida
           , 2022

 

 

 

or Seacoast or Drummond 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 Drummond 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.

 

ii

 

 

 

iv

 

We have not authorized any person to give any information or make any representation about the merger or Seacoast Banking Corporation of Florida or Drummond Banking Company 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.

 

v

 

 

Seacoast common stock after the date of this proxy statement/prospectus will change the value of the shares of Seacoast common stock that Drummond shareholders will receive.

Q:

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

​

A:

Drummond’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 Drummond special meeting will be held at the Drummond Community Bank Operations Center located at 1713 N. Young Boulevard, Chiefland, Florida, 32626, on October 4, 2022, at 8:30 A.M. local time. We expect to hold the Drummond special meeting in person, but we continue to monitor the situation regarding COVID-19 closely. Accordingly, we are planning for the possibility that the Drummond special meeting may be subject to special precautions, including limitations on the number of participants in one room or other limitations. In that regard, only Drummond shareholders will be admitted to the special meeting. No guests will be permitted.

​

Q:

Who can vote at the special meeting of shareholders?

​

​

A:

Holders of record of Drummond common stock at the close of business on August 22, 2022, which is the date that the Drummond 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 Drummond 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 Drummond common stock entitled to vote on the merger agreement as of the close of business on August 22, 2022, 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 merger proposal.

​

The adjournment proposal will be approved if the votes of Drummond common stock cast in favor of the adjournment proposal exceed the votes cast against the adjournment proposal. If you (1) fail to submit a proxy or vote in person at the special meeting, or (2) mark “ABSTAIN” on your proxy, it will have no effect on the adjournment proposal.

A total of 70,879 shares of Drummond common stock, representing approximately 71% of the outstanding shares of Drummond common stock entitled to vote at the special meeting, are subject to a voting agreement with Seacoast whereby the holders have agreed to vote their shares in favor of the approval of the merger agreement.

 

2

 

Q:

Why is my vote important?

​

A:

If you do not submit a proxy or vote in person, it may be more difficult for Drummond 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 Drummond common stock entitled to vote on the merger agreement. Drummond’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 Drummond 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, 98,846 shares of Drummond common stock were outstanding and entitled to vote at the Drummond special meeting.

​

Q:

Do Drummond 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 Drummond’s board of directors with respect to the merger agreement, you should be aware that some of Drummond’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of Drummond’s shareholders generally. Interests of certain officers and directors that may be different from or in addition to the interests of Drummond’s shareholders include but are not limited to, the receipt of continued indemnification and insurance coverage under the merger agreement and entry into employment agreements by executive officers with Seacoast and SNB.

​

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 merger proposal. 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 adjournment proposal, it will have no effect on the adjournment proposal.

​

Q:

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

​

A:

Yes. All Drummond 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 Drummond 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. Drummond 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 Drummond’s express written consent.

​

Q:

Can I change my vote?

​

A:

Yes. If you are a holder of record of Drummond common stock, you may revoke any proxy at any

​

 

3

 

time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to Drummond’s Chairman and President 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 Drummond’s Secretary after the vote will not affect the vote. Drummond’s mailing address is: Drummond Banking Company, 1627 North Young Boulevard, Chiefland, Florida 32626.

Q:

What are the U.S. federal income tax consequences of the merger to holders of Drummond 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 Drummond 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 Drummond common stock may 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” beginning on page 47.

The U.S. federal income tax consequences described above may not apply to all holders of Drummond 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 Drummond shareholders entitled to appraisal rights?

​

​

A:

Yes. If you are a Drummond shareholder and you want to exercise appraisal rights and receive the fair value of shares of Drummond common stock in cash instead of the merger consideration, then you must file a written objection with Drummond 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 Drummond Shareholders” beginning on page 51 and detailed information about the special meeting can be found under “Information About the Special Meeting” on page 27. Due to the complexity of the procedures for exercising the right to seek appraisal, Drummond 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:

As a Drummond shareholder, should I send in my stock certificates now?

​

​

A:

No. Please do not send in your Drummond stock certificates with your proxy. Seacoast’s transfer agent, Continental Stock Transfer and Trust Company, will send you instructions for exchanging Drummond stock certificates for the applicable merger consideration after the merger has been consummated. See “The Merger Agreement — Procedures ‘‘The Merger Agreement — Exchange Procedures” for Converting Shares of Drummond Common Stock into Merger Consideration” beginning on page 60 of this proxy statement/prospectus.

​

Q:

Whom may I contact if I cannot locate my Drummond stock certificate(s)?

​

A:

If you are unable to locate your original Drummond stock certificate(s), you should contact Todd Battle at (352) 528-1706. Following the merger, any inquiries should be directed to Seacoast’s transfer agent, Continental Stock Transfer and Trust Company at 1 State Street, 30th Floor, New York, New York 10004, or at (212) 509-4000.

​

 

4

 

Q:

When do you expect to complete the merger?

​

A:

Seacoast and Drummond expect to complete the merger early in the fourth quarter of 2022. However, neither Seacoast nor Drummond can assure you when or if the merger will occur. Drummond must first obtain the approval of Drummond 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 Drummond common stock, please contact Todd Battle at (352) 528-1706.

​

 

5

 

 

7

 

Date

​

​

Seacoast closing sale price

​

​

Equivalent Drummond per share value

​

May 3, 2022

​

​

​

$

33.72

​

​

​

​

$

1,751.96

​

​

, 2022

​

​

​

$

​

​

​

​

$

​

​

​

8

 

9

 

​

10

 

​

11

 

​

12

 

13

 

​

​

​

Seacoast Common Stock

​

​

​

​

High

​

​

Low

​

​

Dividends

​

2020

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

First Quarter

​

​

​

$

30.87

​

​

​

​

$

13.30

​

​

​

​

$

—

​

​

Second Quarter

​

​

​

$

25.89

​

​

​

​

$

16.02

​

​

​

​

$

—

​

​

Third Quarter

​

​

​

$

22.23

​

​

​

​

$

17.00

​

​

​

​

$

—

​

​

Fourth Quarter

​

​

​

$

30.26

​

​

​

​

$

17.62

​

​

​

​

$

—

​

​

2021

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

First Quarter

​

​

​

$

40.93

​

​

​

​

$

28.52

​

​

​

​

$

—

​

​

Second Quarter

​

​

​

$

38.87

​

​

​

​

$

33.00

​

​

​

​

$

0.13

​

​

Third Quarter

​

​

​

$

34.56

​

​

​

​

$

29.28

​

​

​

​

$

0.13

​

​

Fourth Quarter

​

​

​

$

38.48

​

​

​

​

$

32.38

​

​

​

​

$

0.13

​

​

2022

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

First Quarter

​

​

​

$

39.31

​

​

​

​

$

32.40

​

​

​

​

$

0.13

​

​

Second Quarter

​

​

​

$

35.96

​

​

​

​

$

30.82

​

​

​

​

$

0.17

​

​

Third Quarter (through August 29, 2022)

​

​

​

$

36.92

​

​

​

​

$

31.17

​

​

​

​

$

—

​

​

14

 

15

 

 

such consents must not be subject to any condition or consequence that would have a material adverse effect on Seacoast or any of its subsidiaries, including Drummond, after the effective time of the merger;

•

No order issued by any governmental authority preventing the consummation of the merger shall be in effect and no law or order shall have been enacted, entered, promulgated or enforced by any governmental authority that prohibits, restrains or makes illegal the consummation of the merger;

​

•

The registration statement (of which this proxy statement/prospectus is a part) registering shares of Seacoast common stock to be issued in the merger must have been declared effective, no stop order may have been issued by the SEC and no action, suit, proceeding or investigation by the SEC to suspend the effectiveness of the registration statement shall have been initiated and continuing;

​

•

The holders of no more than 5% of Drummond common stock shall have taken the actions required by the FBCA to qualify their common stock as dissenting shares;

​

•

Since the date of the merger agreement, no fact, circumstance or event shall have occurred that has had or is reasonably likely to have a material adverse effect on either party;

​

•

Directors and certain executive of Drummond and Drummond Bank shall have entered into claims letters and/or restrictive covenant agreements;

​

•

Drummond’s consolidated tangible shareholders’ equity as of the close of business on the 5th business day prior to the closing date shall not be less than $104.539 million, less the impact of after-tax permitted expenses, and Drummond Bank’s general allowance for loan and lease losses shall not be less than 1.77% of total loans and leases outstanding (excluding loans originated under the PPP);

​

•

Seacoast shall have received from its tax counsel a U.S. federal income tax opinion that the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code;

​

•

Drummond shall have received from its tax counsel a U.S. federal income tax opinion that the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code;

​

•

Drummond shall have taken all actions necessary and, to the extent required, the Drummond shareholders have approved any payment, to prevent certain payments and benefits received by executives of Drummond in connection with the merger from being deemed a parachute payment as defined in Section 280G of the Code; and

​

•

The shares of Seacoast common stock to be issued pursuant to the merger shall have been approved for listing on the NASDAQ.

​

For a more detailed description of the conditions set forth in the merger agreement that must be satisfied or waived to complete the merger, see “The Merger Agreement  —  Conditions to Completion of the Merger” beginning on page 69.

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

Upon completion of the merger, the rights of former Drummond shareholders will be governed by the articles of incorporation, as amended, and bylaws of Seacoast. The rights associated with Drummond 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 73 for a discussion of the different rights associated with Seacoast common stock.

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

Drummond shareholders currently have the right to vote in the election of the board of directors of Drummond and on other matters affecting Drummond. Upon the completion of the merger, Drummond’s shareholders will be shareholders of Seacoast with a percentage ownership of Seacoast that is smaller than such shareholders’ current percentage ownership of Drummond. It is currently expected that the former

 

17

 

shareholders of Drummond as a group will receive shares in the merger constituting approximately 7.7% of the outstanding shares of the combined company’s common stock immediately after the merger. Because of this, Drummond shareholders will have less influence on the management and policies of the combined company than they now have on the management and policies of Drummond.

If a Drummond shareholder exercises statutory appraisal rights, the value such shareholder receives could be less than the value of the merger consideration such shareholder would otherwise receive pursuant to the merger agreement.

Pursuant to the FBCA, a Drummond shareholder who perfects appraisal rights as provided in such section is entitled to receive payment in cash of the value of each share of Drummond common stock held by such shareholder. The value of the share of Drummond common stock, as determined in accordance with the Florida statutes, may be less than the value of a share of the Drummond common stock such shareholder would otherwise receive pursuant to the merger agreement. See “The Merger  —  Appraisal Rights for Drummond Shareholders” beginning on page 51.

Seacoast and Drummond 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 Drummond and Seacoast. These uncertainties may impair Seacoast’s or Drummond’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 Drummond to seek to change existing business relationships with Seacoast or Drummond 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 Drummond 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 Drummond from taking certain actions without Seacoast’s consent while the merger is pending. These restrictions may, among other matters, prevent Drummond 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 Drummond’s business prior to consummation of the merger or termination of the merger agreement. These restrictions could have a material adverse effect on Drummond’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 60 for a description of the covenants applicable to Drummond 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 Drummond 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.

 

18

 

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 Drummond. Although Seacoast and Drummond 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 Drummond 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 Drummond would have to recognize these expenses without realizing the anticipated benefits of the merger.

Seacoast and Drummond may waive one or more of the conditions to the merger.

Prior to or at the effective time of the merger, either party has the right to waive any default in the performance of any term of the merger agreement by the other party, to waive or extend the time for the compliance or fulfillment by the other party of any and all of such other party’s obligations under the merger agreement, and to waive any or all of the conditions to its obligations under the merger agreement.

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 and the obligation of Seacoast to complete the merger is conditioned upon the receipt of a U.S. federal income tax opinion to that effect from Seacoast’s tax counsel. This tax opinion represents the legal judgment of counsel rendering the opinion and is not binding on the Internal Revenue Service or the courts. If the merger does not qualify as a tax-free reorganization, then the holders of shares of Drummond common stock will recognize any gain with respect to the entire consideration received in the merger, including any shares of Seacoast stock received as well as any cash received in lieu of fractional shares of Seacoast common stock. The consequences of the merger to any particular Drummond 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.

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

Drummond’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 Drummond’s common stock as of May 3, 2022. Subsequent changes in the operation and prospects of Seacoast or Drummond, general market and economic conditions and other factors that may be beyond the control of Seacoast or Drummond, and on which Drummond’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 Drummond 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 Drummond received from its financial advisor, please refer to the sections entitled “The Merger — Opinion of Drummond’s Financial Advisor” beginning on page 36.

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

Executive officers and the board of directors of Drummond negotiated the terms of the merger agreement with Seacoast, and the Drummond board of directors unanimously approved and recommended that Drummond shareholders vote to approve the merger agreement. In considering these facts and the

 

19

 

other information contained in this proxy statement/prospectus, you should be aware that certain Drummond executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of Drummond shareholders generally. See “The Merger — Interests of Drummond Directors and Executive Officers in the Merger” on page 54 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 Drummond.

Until the completion of the merger, with some limited exceptions, Drummond is prohibited from soliciting, initiating, encouraging or participating in any discussion concerning a proposal to acquire Drummond, such as a merger or other business combination transaction, with any person other than Seacoast. In addition, Drummond has agreed to pay to Seacoast in certain circumstances a termination fee equal to $7.8 million. These provisions could discourage other companies from trying to acquire Drummond even though those other companies might be willing to offer greater value to Drummond shareholders than Seacoast has offered in the merger. The payment of any termination fee could also have an adverse effect on Drummond’s financial condition. See “The Merger Agreement — Third Party Proposals” beginning on page 65 and “The Merger Agreement — Termination Fee” beginning on page 71.

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 Drummond.

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.

If the mergers with Drummond, Apollo and Professional are not completed, Seacoast, Drummond, Apollo and Professional will have incurred substantial expenses without realizing the expected benefits of the mergers.

Each of Seacoast, Drummond, Apollo and Professional has incurred and will incur substantial non-recurring expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreements, as well as the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus and all filing and other fees paid to the SEC and other regulatory agencies in connection with the mergers. While each of Seacoast, Drummond, Apollo and Professional have assumed that a certain level of expenses would be incurred in connection with the mergers, there are many factors beyond their control that could affect the total amount or the timing of the integration and implementation expenses. If the mergers are not completed, Seacoast, Drummond, Apollo and/or Professional will have to recognize these expenses without realizing the expected benefits of the merger.

Some of the performing loans in the Drummond 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. When it acquires a loan portfolio, Seacoast will establish an allowance for credit losses to recognize the full amount of expected credit losses over the life of the acquired loans. With respect to the Drummond loan portfolio, Seacoast has preliminarily estimated a $13.3 million allowance for credit losses which Seacoast believes is adequate to mitigate the risk of under-collateralized, non- performing loans. There is no assurance that the allowance for credit losses that Seacoast will place on the Drummond loan portfolio to mitigate against under-collateralized, non-performing loans will be adequate or that Seacoast will not incur losses that could be greater than this estimate.

 

20

 

Sales of substantial amounts of Seacoast common stock in the open market by former Drummond shareholders could depress Seacoast’s stock price.

Shares of Seacoast common stock that are issued to Drummond shareholders in the merger will be freely tradable without restrictions or further registration under the Securities Act, except that shares of Seacoast common stock received by persons who are or 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. Based on the number of shares of Drummond common stock outstanding as of the Drummond record date, Seacoast currently expects to issue approximately 5,135,652 shares of Seacoast common stock in connection with the merger. If the merger is completed and if former shareholders of Drummond sell substantial amounts of Seacoast common stock in the public market following completion of the merger, the market price of Seacoast common stock may decrease. These sales might also make it more difficult for Seacoast to sell equity or equity-related securities at a time and price that it otherwise would deem appropriate.

Litigation may be filed against the board of directors of Seacoast or Drummond that could prevent or delay the completion of the merger or result in the payment of damages following completion of the merger.

In connection with the merger, it is possible that Seacoast shareholders or Drummond shareholders may file putative class action lawsuits against the board of directors of Seacoast or Drummond. Among other remedies, these shareholders could seek to enjoin the merger. The outcome of any such litigation is uncertain. If a dismissal is not granted or a settlement is not reached, such potential lawsuits could prevent or delay completion of the merger and result in substantial costs to Seacoast and Drummond, including any costs associated with indemnification obligations of Seacoast or Drummond. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is consummated may adversely affect the combined company’s business, financial condition, results of operations, cash flows and market price.

 

21

 

 

•

the sale price of Seacoast common stock could decline before the completion of the merger, including as a result of the financial performance of Seacoast or Drummond or more generally due to broader stock market movements and the performance of financial companies and peer group companies;

​

•

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” 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 Form 10-Q, which are available online at www.sec.gov, and is 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 Drummond. 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.

 

23

 

 

 

Drummond 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 Drummond common stock. Since January 1, 2020, (i) Drummond management is not aware of any sales of shares of Drummond common stock (except for the sale of 30 shares on March 8, 2022 at $1,085.49 per share), and (ii) Drummond has not paid has not paid any dividends on the shares of Drummond common stock.

 

26

 

INFORMATION ABOUT THE DRUMMOND SPECIAL MEETING

This section contains information about the special meeting that Drummond has called to allow Drummond shareholders to vote on the approval of the merger agreement and the adjournment proposal. The Drummond board of directors is mailing this proxy statement/prospectus to you, as a Drummond shareholder, on or about September 1, 2022. Together with this proxy statement/prospectus, the Drummond board of directors is also sending you a notice of the special meeting of Drummond shareholders and a form of proxy that the Drummond 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 October 4, 2022 at 8:30 A.M., local time, at the Drummond Community Bank Operations Center located at 1713 N. Young Boulevard, Chiefland, Florida 32626.

Matters to be Considered at the Meeting

At the special meeting, Drummond 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 Drummond board of directors to adjourn or postpone the special meeting, if necessary or appropriate, including to permit further solicitation of proxies if there are insufficient 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 Drummond 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 Drummond Board of Directors

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

Record Date and Quorum

August 22, 2022 has been fixed as the record date for the determination of Drummond 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 98,846 shares of Drummond common stock outstanding and entitled to vote at the special meeting, held by approximately 45 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 Drummond common stock entitled to vote at the meeting is necessary to constitute a quorum. Shares of Drummond 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 Drummond 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.

 

27

 

Required Vote

The affirmative vote of a majority of the outstanding shares of Drummond 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 Drummond 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 Drummond 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 Drummond 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 Drummond 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 Drummond’s Chairman and President at the following address: Drummond Banking Company, 1627 North Young Boulevard, Chiefland, Florida 32626.

​

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 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.

 

28

 

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

As of the record date, directors and executive officers of Drummond and Drummond Bank owned and were entitled to vote 8,730 shares of Drummond common stocks, representing approximately 8.83% of the outstanding shares of Drummond common stock entitled to vote on that date.

A total of 70,879 shares of Drummond common stock, representing approximately 71% of the outstanding shares of Drummond common stock entitled to vote at the special meeting, are subject to a voting agreement between Seacoast and certain of Drummond’s and Drummond Bank’s directors and certain affiliates who held shares of Drummond common stock as of the date of the merger agreement. Pursuant to the voting agreement, these director of Drummond and Drummond Bank and certain affiliates who held shares of Drummond common stock as of the date of the merger agreement, have agreed to, at any meeting of Drummond shareholders, however called, or any adjournment or postponement thereof (and subject to certain exceptions):

•

vote (or cause to be voted) all shares of Drummond’s common stock beneficially owned by such director or holder, as applicable, and which such director or holder 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 voting agreement, without the prior written consent of Seacoast, each party to the voting agreement has further agreed not to sell or otherwise transfer any shares of Drummond common stock. The foregoing summary of the voting entered into by Drummond’s and Drummond Bank’s directors and affiliates who held shares of Drummond common stock as of the date of the merger agreement, does not purport to be complete, and is qualified in its entirety by reference to the form of voting 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 Drummond common stock by each director and executive officer, directors and executive officers as a group, and holders of 5% or more of the outstanding shares of Drummond common stock see “Beneficial Ownership of Drummond Common Stock by Management and Principal Shareholders of Drummond.”

Solicitation of Proxies

The proxy for the special meeting is being solicited on behalf of the Drummond board of directors. Drummond will bear the entire cost of soliciting proxies from you. Drummond 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 Drummond stock. Proxies will be solicited principally by mail, but may also be solicited by the directors, officers, and other employees of Drummond 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 Drummond 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 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 Drummond’s express written consent.

 

29

 

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 Drummond at:

Drummond Banking Company
1627 North Young Boulevard
Chiefland, Florida 32626
Telephone: (352) 493-2277
Attn: Luther Drummond, Chairman and President

 

30

 

 

the aggregate, based on Seacoast’s 20-day volume weighted average price ended March 4, 2022 of $36.43). The equivalent exchange ratio for a 100% Seacoast stock transaction and the deal value implied by the letter of intent would have been 53.9918.

During the remainder of March and April 2022, Seacoast conducted an on-going formal due diligence review of Drummond, including a credit review, and held meetings with Drummond management. During this time, the parties exchanged drafts of a definitive merger agreement and continued discussions and negotiations of its terms. Also, during this time, Seacoast and its outside legal counsel reviewed and analyzed diligence material that were added by Drummond and its representatives to the data room.

In April 2022, Drummond hired Saltmarsh, Cleaveland & Gund (“Saltmarsh”) to conduct a reverse due diligence review of Seacoast. The reverse due diligence was provided across customary venues including the virtual data room, conference calls and meetings with Seacoast senior management. The reverse due diligence included, among other things, review of Seacoast public filings, corporate strategy, earnings, asset quality, deposit franchise, sensitivity and interest rate risk, legal and regulatory matters, and capital adequacy.

Due to the increasing interest rate environment, the value of Drummond Bank’s securities portfolio as of March 31, 2022 decreased by approximately $21 million compared to December 31, 2021 and Seacoast elected to revisit the transaction price in April 2022. The parties then continued discussions and on April 30, 2022 agreed to a 100% Seacoast stock transaction and set the exchange ratio at 51.9561 shares of Seacoast common stock for each share of Drummond common stock outstanding. On that day, the revised exchange ratio represented a deal value of $1,755.08 per share and $173.5 million in the aggregate (based on Seacoast’s 20-day volume weighted average price ended April 29, 2022 of $33.78, which represented approximately 192% of Drummond tangible book value).

On April 12, 2022, Seacoast’s legal counsel circulated a preliminary draft of the merger agreement and ancillary documents. Thereafter and continuing until the merger agreement was executed, the parties and their respective counsel exchanged several drafts of the merger agreement and related transaction documents, reflecting ongoing discussions and negotiations between the parties regarding transaction terms.

During April 2022 and early May 2022, Seacoast and Drummond representatives continued to exchange, review, discuss and negotiate the terms of the definitive transaction agreements, including the merger agreement, voting agreements for directors, noncompetition agreements for directors and officers, claims letters for directors, and agreements with executive officers of Drummond. The parties, with the assistance of their respective advisors, proceeded to finalize negotiations of the merger agreement and the other related transaction documents.

On May 3, 2022, the boards of directors of Drummond and Drummond Bank met to discuss the proposed merger agreement and related documents. During this meeting, legal counsel reviewed for the directors the fiduciary duties of directors under law. Legal counsel also reviewed the drafts of the various agreements providing for the merger. A representative of Hovde delivered its May 3, 2022 written fairness opinion to the Drummond board of directors. A representative of Saltmarsh discussed the results of its reverse due diligence review of Seacoast. Following discussion among the directors, the directors (i) determined that the merger agreement and the other transactions contemplated thereby were advisable and in the best interest of Drummond and its shareholders, (ii) approved the merger agreement and the transactions contemplated thereby, (iii) directed that the merger agreement be submitted for approval by Drummond shareholders, and (iv) subject to the exercise of their fiduciary duties, recommended that Drummond shareholders approve the merger agreement and the transactions contemplated by it.

On May 4, 2022, 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. Members of Seacoast management also reviewed their diligence findings across major functional areas and described their diligence meetings with Drummond representatives. Further to the overall discussion, a representative of Piper Sandler & Co. reviewed the principal terms of the proposed transaction and the potential financial impacts of the merger on Seacoast and provided comparable transaction analysis for other Florida and national bank mergers. At the meeting, Seacoast’s legal counsel, Alston & Bird, reviewed for the directors the

 

32

 

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 and determined that the merger agreement and the transactions contemplated by it were in the best interests of Seacoast and its shareholders.

On May 4, 2022, the parties signed the merger agreement and the related agreements and the transactions were announced in a press release issued that evening after the closing of the financial markets in New York. An investor conference call to discuss the merger was held by Seacoast the next morning on May 5, 2022.

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

After careful consideration, Drummond’s board of directors, at a meeting held on May 3, 2022, determined that the merger agreement is advisable, fair to and in the best interests of Drummond and its shareholders. Accordingly, Drummond’s board of directors adopted and approved the merger agreement and the merger and the other transactions contemplated by the merger agreement and recommends that Drummond 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 Drummond board of directors evaluated the merger and the merger agreement in consultation with Drummond’s management, as well as its financial and legal advisors, and considered a number of factors, including the following material factors:

•

each of Drummond’s, Seacoast’s and the combined company’s business, operations, financial condition, asset quality, earnings and prospects. In reviewing these factors, the Drummond board of directors considered its view that Seacoast’s business and operations complement those of Drummond and that the merger would result in a combined company with diversified revenue sources, 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 Drummond and Seacoast operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, the competitive environment for financial institutions generally, and the likely effect of these factors on Drummond both with and without the proposed transaction;

​

•

the reduction in the number of financial institutions with an interest in acquiring Florida banks as a result of the continued consolidation in the banking industry and the acquisition by other financial institutions of several of the banks that were historically active in acquiring Florida banks;

​

•

the exchange ratio is fixed so that if the market price of Seacoast common stock is higher at the time of the closing of the merger, the economic value of the merger consideration to be received by Drummond shareholders in exchange for their shares of Drummond common stock will also be higher;

​

•

the results that Drummond could expect to achieve operating independently, and the likely risks and benefits to Drummond shareholders of that course of action, as compared to the value of the merger consideration to be received from Seacoast;

​

•

its view that the size of the institution and related economies of scale were becoming 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 review and discussions with Drummond’s management regarding strategic alternatives available to Drummond for enhancing value over the long term and the potential risks, rewards and uncertainties associated with such alternatives and the benefits of an acquisition by Seacoast compared to such other alternatives;

​

 

33

 

•

the complementary nature of the 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;

​

•

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

​

•

the financial analyses by Hovde, Drummond’s financial advisor, and the opinion delivered by Hovde to Drummond’s board of directors on May 3, 2022, 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 Hovde as set forth in its opinion, the merger consideration to be received by the shareholders of Drummond in the merger pursuant to the merger agreement is fair from a financial point of view to the shareholders of Drummond, as more fully described in the section entitled “The Merger — Opinion of Drummond’s Financial Advisor”;

​

•

the financial and other terms of the merger agreement, the expected tax treatment and deal protection provisions, including the ability of Drummond’s board of directors, under certain circumstances, to withdraw or materially adversely modify its recommendation to Drummond 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;

​

•

the fact that the merger consideration will consist of shares of Seacoast common stock, which would allow Drummond shareholders to participate in a significant portion of the future performance of the combined Drummond and Seacoast business and synergies resulting from the merger, and the value to Drummond shareholders represented by that consideration;

​

​

•

that the proforma ownership by Drummond shareholders in Seacoast following the closing of the merger will be approximately 7.7% of the outstanding Seacoast shares;

​

•

that Drummond’s directors and executive officers have financial interests in the merger in addition to their interests as Drummond shareholders, including financial interests that are the result of compensation arrangements with Drummond, and the manner in which such interests would be affected by the merger;

​

•

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 merger consideration will generally be tax-free to Drummond shareholders based on the expected tax treatment of the merger as a “reorganization” for U.S. federal income tax purposes, as further described under “The Merger — U.S. Federal Income Tax Consequences of the Merger”;

​

•

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

​

•

the opportunity for Drummond shareholders to receive Seacoast common stock which has historically paid a cash dividend as compared to the Drummond shares for which no cash dividend has been paid since its organization.

​

The Drummond board of directors also considered a number of potential risks and uncertainties associated with the merger in connection with its deliberation of the proposed transaction, including, without limitation, the following:

•

the risk that the merger may not be consummated or that the closing may be unduly delayed, including as a result of factors outside either party’s control;

​

•

the potential risk of diverting management attention and resources from the operation of Drummond’s business and towards the completion of the merger and the possibility of employee attrition or adverse effects on client and business relationships as a result of the announcement and pendency of the merger;

​

 

34

 

•

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

​

•

that under the merger agreement, subject to certain exceptions, Drummond cannot solicit competing acquisition proposals;

​

•

the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Drummond’s business, operations and workforce with those of Seacoast and the risk of not realizing all of the anticipated benefits of the merger or not realizing them in the expected timeframe;

​

•

the possibility that Drummond will have to pay a $7.8 million termination fee to Seacoast if the merger agreement is terminated under certain circumstances;

​

•

that the exchange ratio is fixed so that if the market price of Seacoast common stock is lower at the time of the closing of the merger, the economic value of the merger consideration to be received by Drummond shareholders in exchange for their shares of common stock will also be lower; and

​

•

the other risks under the sections entitled “Cautionary Statement About Forward-Looking Statements” and “Risk Factors.”

​

In considering the recommendation of the Drummond board of directors, you should be aware that certain directors and officers of Drummond may have interests in the merger that are different from, or in addition to, interests of Drummond shareholders generally and may create potential conflicts of interest. The Drummond board of directors was aware of these interests and considered them when evaluating and negotiating the merger agreement, the merger and the other transactions contemplated by the merger agreement, and in recommending to Drummond’s shareholders that they vote in favor of the proposal to approve the merger agreement. See “Interests of Drummond Executive Officers and Directors in the Merger.”

The foregoing discussion of the factors considered by the Drummond board of directors is not intended to be exhaustive, but, rather, includes the material factors considered by the Drummond board of directors. In reaching its decision to adopt and approve the merger agreement and the merger and the other transactions contemplated by the merger agreement, the Drummond 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 Drummond board of directors considered all these factors as a whole, including discussions with, and questioning of, Drummond’s management and Drummond’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 Drummond board of directors has adopted and approved the merger agreement and the transactions contemplated thereby and recommends that you vote “FOR” the merger proposal and “FOR” the adjournment proposal.

Each of the directors of Drummond has entered into a voting agreement with Seacoast, pursuant to which they have agreed to vote in favor of the merger proposal and the other proposals to be voted on at the Drummond special meeting, subject to the terms of the voting agreement. The voting agreements are discussed in more detail in the section entitled “Information About the Drummond Special Meeting — Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers.”

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 Drummond is consistent with Seacoast’s expansion strategy. Seacoast’s board of directors and senior management reviewed the business, financial condition, results of operations and prospects for Drummond, the market condition of the market area in which Drummond 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 into new and growing Florida markets including Ocala and Gainesville, provide opportunities for future growth and provide the potential to realize operational efficiencies. Seacoast’s board of directors also considered the financial

 

35

 

condition and valuation for both Drummond and Seacoast as well as the financial and other effects the merger would have on Seacoast’s shareholders. In addition, the board of directors also considered the analysis and presentations from its outside financial advisor, Piper Sandler.

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 Seacoast board conducted an overall analysis of the factors it considered material, including thorough discussions with, and questioning of, Seacoast’s management.

Opinion of Drummond’s Financial Advisor

The fairness opinion and a summary of the underlying financial analyses of Drummond’s financial advisor, Hovde Group, LLC or Hovde, are described below. Capitalized terms not otherwise defined in the following summary and description shall have the meanings as set forth in the draft of the Merger Agreement dated May 2, 2022 provided to Hovde by Drummond (the “Agreement”) and all section and article references herein shall refer to sections and articles in the Agreement. Hovde has been informed by Drummond that the terms of the definitive Merger Agreement dated May 4, 2022 and executed by Drummond and Seacoast do not differ in any respect that would be material to its financial analyses from the terms set forth in the draft Agreement dated May 2, 2022 and utilized by Hovde for purposes of its analysis and opinion. The summary and description contain projections, estimates and other forward-looking statements about the future earnings or other measures of the future performance of Drummond and Drummond Bank. You should review the copy of the Hovde opinion, which is attached to this proxy statement/prospectus as Appendix B.

Hovde acted as Drummond’s financial advisor in connection with the Merger. Hovde is a nationally recognized investment banking firm with substantial experience in transactions similar to the Merger contemplated by the Agreement and is familiar with Drummond and its operations. As part of its investment banking business, Hovde is continually engaged in the valuation of businesses and their securities in connection with, among other things, mergers and acquisitions. Hovde has experience in, and knowledge of, banks, thrifts and their respective holding companies, and is familiar with Drummond and Drummond Bank. Drummond’s Board of Directors selected Hovde to act as its financial advisor in connection with the Merger based on the firm’s reputation and expertise in transactions such as the Merger as set forth in the Agreement.

Hovde reviewed the financial aspects of the Merger with Drummond’s Board of Directors and, on May 3, 2022, delivered a written opinion to Drummond’s Board of Directors that, as of such date and subject to the matters, assumptions and limitations set forth in the opinion, the Aggregate Merger Consideration to be received by the shareholders of Drummond in the Merger pursuant to the Agreement is fair from a financial point of view to the shareholders of Drummond. In requesting Hovde’s advice and opinion, no limitations were imposed by Drummond upon Hovde with respect to the investigations made or procedures followed by Hovde in rendering its opinion.

The full text of Hovde’s written opinion is included in this proxy statement/prospectus as Appendix B and is incorporated herein by reference. You are urged to read the opinion in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Hovde. The summary of Hovde’s opinion included in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion.

Hovde’s opinion was directed to Drummond’s Board of Directors and addresses only the fairness of the Aggregate Merger Consideration to be received by the shareholders of Drummond pursuant to the Agreement in connection with the Merger. Hovde did not opine on any individual stock, cash, or other

 

36

 

components of consideration payable in connection with the Merger. Hovde’s opinion does not constitute a recommendation to Drummond as to whether or not Drummond should enter into the Agreement or to any shareholders of Drummond as to how such shareholders should vote at any meetings of shareholders called to consider and vote upon the Merger. Hovde’s opinion does not address the underlying business decision to proceed with the Merger or the fairness of the amount or nature of the compensation, if any, to be received by any of the officers, directors or employees of Drummond relative to the amount of consideration to be received by the shareholders of Drummond with respect to the Merger. Hovde’s opinion should not be construed as implying that the Aggregate Merger Consideration is necessarily the highest or best price that could be obtained by Drummond in a sale, merger, or combination transaction with a third party. Other than as specifically set forth in the opinion, Hovde is not expressing any opinion with respect to the terms and provisions of the Agreement or the enforceability of any such terms or provisions. Hovde’s opinion is not a solvency opinion and does not in any way address the solvency or financial condition of Drummond or Seacoast. Hovde’s opinion was approved by Hovde’s opinion committee.

Drummond engaged Hovde on December 31, 2021 to serve as a financial advisor to Drummond in connection with a potential transaction and to issue an opinion to the Drummond Board of Directors in connection with a potential transaction. Pursuant to Drummond’s engagement agreement with Hovde, Hovde received from Drummond an opinion fee of $200,000 upon the delivery of the opinion to Drummond which would be fully credited one time against any completion fee due Hovde. Drummond’s engagement agreement with Hovde also provides for a completion fee to be paid to Hovde upon consummation of the Merger, which is estimated to be $1,722,498 (or approximately $1,522,498 after applying credit for the opinion fee paid) based upon Hovde’s assumption for purposes of its analysis and opinion that the Aggregate Merger Consideration will be $172,249,790 (as set forth below). In addition to Hovde’s fees, and regardless of whether the Merger is consummated, Drummond has agreed to reimburse Hovde for certain of its reasonable out-of-pocket expenses. Drummond has also agreed to indemnify Hovde and its affiliates for certain liabilities that may arise out of Hovde’s engagement.

Other than in connection with this present engagement, during the two years preceding the date of the opinion, Hovde has not provided investment banking or financial advisory services to Drummond for which it received a fee. During the two years preceding the date of the opinion, Hovde has not provided any investment banking or financial advisory services to Seacoast for which it received a fee. Hovde or its affiliates may presently or in the future seek or receive compensation from Seacoast in connection with future transactions, or in connection with potential advisory services and corporate transactions, although to Hovde’s knowledge none are expected at this time. In the ordinary course of its business as a broker/dealer, Hovde may from time to time purchase securities from, and sell securities to, Drummond or Seacoast or their affiliates. Except for the foregoing, during the two years preceding the date of the opinion, there have not been, and there currently are no mutual understandings contemplating in the future, any material relationships between Hovde and Drummond or Seacoast.

In its opinion, Hovde noted the following: (i) subject to the terms and conditions of the Agreement, at the Effective Time, Drummond shall be merged with and into Seacoast in accordance with the provisions of the FBCA (the “Merger”); (ii) Seacoast shall be the Surviving Corporation resulting from the Merger and the separate corporate existence of Drummond shall cease; (iii) Seacoast shall continue to be governed by the Laws of the State of Florida, and the separate corporate existence of Seacoast shall continue unaffected by the Merger; (iv) prior to the Effective Time, the Boards of Directors of SNB and Drummond Bank will execute the Bank Merger Agreement; (v) subject to the terms and conditions of the Agreement and the Bank Merger Agreement, Drummond Bank shall be merged with and into SNB (the “Bank Merger”) in accordance with the provisions of 12 U.S.C. Section 215a, SNB shall be the Surviving Bank resulting from the Bank Merger, and the separate existence of Drummond Bank shall thereupon cease; (vi) SNB shall continue to be governed by the Laws of the United States, and the separate existence of SNB shall continue unaffected by the Bank Merger; and (vii) 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 discretion.

Hovde also noted the following in its opinion: (i) at the Effective Time by virtue of the Merger and without any action on the part of the Parties or the holder thereof, each share of Drummond Common Stock that is issued and outstanding immediately prior to the Effective Time (excluding Dissenting Shares

 

37

 

and subject to certain adjustments set forth in the Agreement) shall be converted into the right to receive, subject to the terms of the Agreement, (a) 51.9561 (the “Exchange Ratio”) shares of Seacoast Common Stock (the “Merger Consideration”); and (b) in lieu of fractional shares as specified pursuant to Section 1.5(c) of the Agreement, cash (without interest) in an amount equal to such fractional part of a share of Seacoast Common Stock multiplied by the Average Closing Price less any applicable withholding Taxes; provided, however, that in the event the conditions set forth in Section 5.2(j) of the Agreement are not both satisfied, Seacoast shall have the option to adjust the Merger Consideration downward by a number (the “Merger Consideration Adjustment”) calculated in accordance with Schedule 1.5(a) of the Seacoast Disclosure Letter and waive the satisfaction of such condition set forth in Section 5.2(j) which provides that Drummond’s Consolidated Tangible Shareholders’ Equity as of the Measuring Date shall be an amount not less than $104.539 million and Drummond Bank’s general allowance for loan and lease losses shall be an amount not less than 1.77% of total loans and leases outstanding; (ii) if instead of adjusting the Merger Consideration, Seacoast elects not to close the Merger and terminate the Agreement in accordance with Article 6, the Agreement provides that Seacoast will also waive any breach of Section 4.2(v) (Drummond’s Consolidated Tangible Shareholders’ Equity at the Effective Time); (iii) at least ten (10) days prior to the Closing Date, Drummond and Seacoast shall agree on a schedule setting forth the expected Drummond Consolidated Tangible Shareholders’ Equity amount as of the Closing Date; and (iv) the consideration which all of the Drummond shareholders are entitled to receive pursuant to the Agreement is collectively referred to as the “Aggregate Merger Consideration.”

Additionally, Hovde noted that, in accordance with Section 6.1 of the Agreement and among other termination events, the Agreement and the Bank Merger Agreement may be terminated, and the Merger and the Bank Merger abandoned at any time prior to the Effective Time (a) by the Board of Directors of either Party in the event that (i) any Regulatory Consent required to be obtained from any Governmental Authority has been denied by final non-appealable action of such Governmental Authority, or (ii) the Drummond Shareholder Approval has not been obtained by reason of the failure to obtain the required vote at the Drummond shareholders’ meeting where the Agreement was presented to such shareholders for approval and voted upon, (b) by the Board of Directors of either Party in the event that the Merger has not been consummated by November 30, 2022, if the failure to consummate the transactions contemplated in the Agreement on or before such date is not caused by any breach of the Agreement by the Party electing to terminate, (c) by the Board of Directors of Seacoast in the event that (i) Drummond has withdrawn, qualified or modified the Drummond Directors’ Recommendation in a manner adverse to Seacoast or shall have resolved to do so, (ii) Drummond has failed to substantially comply with its obligations under Sections 4.5 or 4.12, or (iii) the Board of Directors of Drummond has recommended, endorsed, accepted or agreed to an Acquisition Proposal, (d) by the Board of Directors of Drummond in the event that (i) the Board of Directors of Drummond has determined in accordance with Section 4.12 that a Superior Proposal has been made with respect to it and has not been withdrawn, and (ii) neither Drummond nor any of its Representatives have failed to comply in all material respects with Section 4.12; or (e) by the Board of Directors of Seacoast if holders of more than five percent (5.0%) in the aggregate of the outstanding Drummond Common Stock shall have voted such shares against the Agreement or the Merger at any meeting called for the purpose of voting thereon and shall have given notice of their intention to exercise their dissenters’ rights in accordance with the FBCA.

Additionally, Hovde noted that Section 6.1(h) provides that the Agreement may be terminated by the Board of Directors of Drummond in the event the Board of Directors of Drummond so determines at any time during the five (5)-day period commencing with the Determination Date if both of the following conditions are satisfied: (i) the number obtained by dividing the Average Closing Price of Seacoast Common Stock by the Starting Price of Seacoast Common Stock (the “Buyer Ratio”) shall be less than 0.85; and (ii) the Buyer Ratio shall be less than the number (the “Index Ratio”) obtained by (a) dividing the Final Index Price by the Initial Index Price and (b) subtracting 0.20 from the quotient.

However, if Drummond elects to exercise the termination right pursuant to Section 6.1(h), Drummond shall give written notice to Seacoast not later than the end of the five (5)-day period referred to above. During the five (5)-day period commencing with its receipt of such notice, Seacoast shall have the option to increase the consideration to be received by the holders of Drummond Common Stock by adjusting the Merger Consideration (calculated to the nearest one ten-thousandth (1/10,000)) to equal the lesser of (x) the quotient (rounded to the nearest one ten-thousandth (1/10,000)) of (A) the product of (i) the Starting

 

38

 

Price, multiplied by (ii) 0.85, and further multiplied by (iii) the Merger Consideration (as then in effect), divided by (B) the Average Closing Price, and (y) the quotient (rounded to the nearest one ten-thousandth (1/10,000)) of (A) the product of (i) the Index Ratio, multiplied by (ii) the Merger Consideration (as then in effect), divided by (B) the Buyer Ratio. If Seacoast so elects this option within such five (5)-day period, it shall give prompt written notice to Drummond of such election and the revised Merger Consideration, whereupon no termination shall have occurred pursuant to Section 6.1(h), and the Agreement shall remain in effect in accordance with its terms (except as the Merger Consideration shall have been so modified).

Hovde also noted that as set forth in Section 7.4, in the event the Agreement is terminated pursuant to certain conditions of Section 6.1, including termination if Drummond shall have received or there shall have been publicly announced an Acquisition Proposal that has not been formally withdrawn or abandoned prior to such termination, and within twelve (12) months following such termination an Acquisition Proposal is consummated or a definitive agreement or letter of intent is entered into by Drummond with respect to an Acquisition Proposal, Drummond shall pay Seacoast the amount of $7.8 million (the “Termination Fee”) within five (5) Business Days after the date it becomes payable by wire transfer of immediately available funds.

With the knowledge and consent of Drummond and for purposes of its analysis and opinion, Hovde assumed that (i) the Merger will be consummated as provided in the Agreement, (ii) the closing price of Seacoast Common Stock on May 2, 2022 is $33.54 per share, (iii) the Exchange Ratio is 51.9561 and there has been no downward adjustment in the Exchange Ratio as provided in Section 5.2(j), (iv) there are 98,846 shares of Drummond Common Stock outstanding as of May 2, 2022, (v) the value of the Merger Consideration is $1,742.61 per share of Drummond Common Stock, and (vi) the Aggregate Merger Consideration is valued at $172,249,790.

During the course of its engagement and for the purposes of its opinion, Hovde:

(i)

reviewed a draft of the Agreement dated May 2, 2022 as provided to Hovde by Drummond;

​

(ii)

reviewed unaudited financial statements for Drummond for the three-month period ended March 31, 2022;

​

(iii)

reviewed certain historical annual reports of Drummond, including Drummond’s audited annual report for the years ended December 31, 2021 and 2020;

​

(iv)

reviewed certain historical publicly available business and financial information concerning Drummond;

​

(v)

reviewed certain internal financial statements and other financial and operating data concerning Drummond;

​

(vi)

reviewed financial projections prepared by certain members of senior management of Drummond;

​

(vii)

discussed with certain members of senior management of Drummond the business, financial condition, results of operations and future prospects of Drummond, the history and past and current operations of Drummond, and Drummond’s and Seacoast’s assessment of the rationale for the Merger;

​

(viii)

reviewed and analyzed materials detailing the Merger prepared by Drummond;

​

(ix)

assessed current general economic, market and financial conditions;

​

(x)

reviewed the terms of recent merger, acquisition and control investment transactions, to the extent publicly available, involving financial institutions and financial institution holding companies that Hovde considered relevant;

​

(xi)

took into consideration Hovde’s experience in other similar transactions and securities valuations as well as Hovde’s knowledge of the banking and financial services industry;

​

(xii)

reviewed certain publicly available financial and stock market data relating to selected public companies that Hovde deemed relevant to its analysis; and

​

 

39

 

(xiii)

performed such other analyses and considered such other factors as Hovde deemed appropriate.

​

In performing its review, Hovde assumed, without investigation, that there have been, and from the date of its opinion through the Effective Time there will be, no material changes in the financial condition and results of operations of Drummond or Seacoast since the date of the latest financial information described above. Hovde further assumed, without independent verification, that the representations and financial and other information included in the Agreement and all other related documents and instruments that are referred to therein or otherwise provided to Hovde by Drummond and Seacoast are true and complete. Hovde relied upon the management of Drummond as to the reasonableness and achievability of the financial forecasts, projections and other forward-looking information provided to Hovde by Drummond, Seacoast and Drummond’s professionals, and Hovde assumed such forecasts, projections and other forward-looking information were reasonably prepared by Drummond, Seacoast and Drummond’s professionals on a basis reflecting the best currently available information and Drummond’s, Seacoast’s and Drummond’s professionals judgments and estimates. Hovde assumed that such forecasts, projections and other forward-looking information would be realized in the amounts and at the times contemplated thereby, and Hovde does not assume any responsibility for the accuracy or reasonableness thereof. Hovde was authorized by Drummond to rely upon such forecasts, projections and other information and data, and Hovde expresses no view as to any such forecasts, projections or other forward-looking information or data, or the bases or assumptions on which they were prepared.

In performing its review, Hovde assumed and relied upon the accuracy and completeness of all of the financial and other information that was available to Hovde from public sources, that was provided to Hovde by Drummond or Seacoast or their respective representatives or that was otherwise reviewed by Hovde for purposes of rendering its opinion. Hovde further relied on the assurances of the management of Drummond that they were not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Hovde was not asked to undertake, and did not undertake, an independent verification of any of such information, and Hovde does not assume any responsibility or liability for the accuracy or completeness thereof. Hovde assumed that each party to the Agreement would advise Hovde promptly if any information previously provided to Hovde became inaccurate or was required to be updated during the period of Hovde’s review.

Hovde is not expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect thereto. Hovde assumed that such allowances for Drummond and Seacoast are, in the aggregate, adequate to cover such losses and will be adequate on a pro forma basis for the combined entity. Hovde was not requested to make, and did not make, an independent evaluation, physical inspection or appraisal of the assets, properties, facilities, or liabilities (contingent or otherwise) of Drummond or Seacoast, the collateral securing any such assets or liabilities, or the collectability of any such assets, and Hovde was not furnished with any such evaluations or appraisals, nor did Hovde review any loan or credit files of Drummond or Seacoast.

Hovde undertook no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities to which Drummond or Seacoast was or is a party or may be subject, and Hovde’s opinion makes no assumption concerning, and therefore does not consider, the possible assertion of claims, outcomes or damages arising out of any such matters. Hovde also assumed, with Drummond’s consent, that Drummond and Seacoast are not parties to any material pending transactions unannounced as of the date of Hovde’s opinion, including without limitation any financing, recapitalization, acquisition or merger, divestiture or spin-off, other than the Merger contemplated by the Agreement.

Hovde relied upon and assumed, with Drummond’s consent and without independent verification, that the Merger will be consummated substantially in accordance with the terms set forth in the Agreement, without any waiver of material terms or conditions by Drummond or Seacoast and that the final Agreement would not differ materially from the draft Hovde reviewed. Hovde assumed that the Merger will be consummated in compliance with all applicable laws and regulations. Drummond advised Hovde that they were not aware of any factors that would impede any necessary regulatory or governmental approval of the Merger. Hovde assumed that the necessary regulatory and governmental approvals as granted will not be subject to any conditions that would be unduly burdensome on Drummond or Seacoast or would have a material adverse effect on the contemplated benefits of the Merger.

 

40

 

Hovde’s opinion does not consider, include or address: (i) any legal, tax, accounting, or regulatory consequences of the Merger on Drummond or its shareholders; (ii) any advice or opinions provided by any other advisor to the Board of Directors of Drummond; (iii) any other strategic alternatives that might be available to Drummond; or (iv) whether Seacoast has sufficient cash or other sources of funds to enable it to pay the consideration contemplated by the Merger.

Hovde’s opinion was based solely upon the information available to Hovde and described above, and the economic, market and other circumstances as they existed as of the date of the opinion. Events occurring and information that becomes available after the date of the opinion could materially affect the assumptions and analyses used in preparing the opinion. Hovde has not undertaken to update, revise, reaffirm or withdraw the opinion or to otherwise comment upon events occurring or information that becomes available after the date of the opinion.

In arriving at the opinion, Hovde did not attribute any particular weight to any single analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Hovde believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all analyses, would create an incomplete view of the process underlying the opinion.

The following is a summary of the material analyses prepared by Hovde and delivered to Drummond’s Board of Directors on May 3, 2022 in connection with the delivery of its opinion. This summary is not a complete description of all the analyses underlying the opinion or the presentation prepared by Hovde, but it summarizes the material analyses performed and presented in connection with such opinion. The preparation of an opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis, and the application of those methods to the particular circumstances of the contemplated Merger. The financial analyses summarized below include information presented in tabular format. The analyses and the summary of the analyses must be considered as a whole and selecting portions of the analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying the analyses and opinion of Hovde. The tables alone are not a complete description of the financial analyses.

Market Approach — Comparable Merger and Acquisition Transactions. As part of its analysis, Hovde reviewed publicly available information related to two comparable groups (a “Regional Group” and a “Nationwide Group”) of select bank and thrift merger and acquisition transactions based on data obtained from S&P Global Market Intelligence as of May 2, 2022. The Regional Group consisted of transactions where targets were headquartered in Alabama, Arkansas, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia announced since January 1, 2019, in which the targets’ total assets were between $500 million and $3.0 billion, last-twelve-months return on average assets was greater than 0.75%, and nonperforming assets to total assets was less than 2.00%. The Nationwide Group consisted of transactions in the United States announced since January 1, 2019, in which the targets’ total assets were between $750 million and $1.5 billion, last-twelve-months return on average assets was between 0.90% and 1.50%, tangible equity to tangible assets was less than 12.0%, and nonperforming assets to total assets was less than 2.00%. In each case for which financial information was available, no transaction that fit the above selection criteria was excluded unless such transaction was deemed a “Merger of Equals” by S&P Global Market Intelligence. Information for the target institutions was based on balance sheet data as of, and income statement data for, the twelve months preceding the most recent quarter prior to announcement of the transactions as determined by S&P Global Market Intelligence. The resulting two groups consisted of the following precedent transactions (15 transactions for the Regional Group and 20 transactions for the Nationwide Group):

 

41